Business Strategy: Nintendo, La Fageda, Patagonia, and Uber
Nintendo’s Blue Ocean Strategy
Creating New Markets
If you would like to create a new market as Nintendo did, what would you do?
To create a new market, I would conduct a study of a wider market that hasn’t been targeted yet by any company. I would create a product that would compete by itself and position myself outside the competition zone of my potential competitors within the industry.
Nintendo’s Success
Explain why Nintendo’s successful consoles were a blue ocean.
Blue ocean occurs when there is no competition in the market, basically when your company is targeting a market that no other competition is selecting. This may lead to strategies that do not try to take away clients from other companies. On the contrary, those strategies will lead to the acquisition of new clients who were not considered by the industry, as they were viewed as not part of the market.
La Fageda: Social Enterprise
Real vs. Fictitious Jobs
The mission of La Fageda is “provide the mentally handicapped of La Garrotxa with meaningful jobs.” What is the difference between a real job and a fictitious job in the context of the teaching case?
A real job might be those that add value to the company to its full potential. So, those jobs that are not subsidized in order to maintain them. On the other hand, a fictitious job is a position where the functions to develop are not enough to add the value needed to compensate the salary paid to the employee. That could be a full-salary worker in La Fageda for someone who works for not a full-time job.
Growth Strategy
Does it make sense for La Fageda to grow in size (more sales, more employees, etc.)?
It makes sense to increase sales as La Fageda finances and survives mainly on the subsidies that the government is giving to the enterprise. If in the long term they want to survive somehow, they need to increase the revenue that they perceive. Because of it, one good way of doing that would be increasing sales. Even though, I believe it should be in another market where the margins are higher. I do believe that because the company needs to compensate the cost it generates with higher revenue.
On the other hand, you may say that it doesn’t make sense for La Fageda to grow in size because the company would go against its principles, but personally, I see more advantages for the Garrotxan company growing in size than staying on the same path.
Patagonia: Sustainable Business
Balancing Growth and Mission
How could Patagonia continue growing in sales and making money and simultaneously fulfill their mission of solving the environmental crisis?
Opening its products to new markets, competing with other companies that give indispensable products but without this added value that Patagonia has. Thanks to that, they would be able to increase awareness of the environmental crisis, encouraging their customers to buy less, but attracting new markets that would compensate for the downfall in sales by their long-term customers.
Sharing Competitive Advantage
Why could we say that Patagonia is giving away their competitive advantage to their competitors?
The added value of Patagonia is the quality of their products while maintaining a lead in their environmental responsibility. But they have a shared objective. They try to find a balance between profits and the least amount of footprint in the ecosystem. At the same time, they try to encourage others to do the same. Because of it, they reveal their way of working and progressing, trying to encourage other companies to reduce their harmful emissions, so the protection of the overall environment, which is their main objective.
Uber: Market Disruption
Uber is a technology and communication company that lives off an algorithm that connects customers with drivers.
Competitor Rivalry
There are four competitors. They compete in the quality of the taxi service (the problem is moving someone from point A to point B). There are no price agreements, no price wars, and local governments set the price for the industry ought to the company to make money.
Suppliers
- Gas
- Tires
- Insurance service
- Vehicle maintenance
- Drivers (self-employed)
Low bargaining power. They don’t belong to unions. (If they were, they could ask for better prices and conditions).
Buyers
Customers. No bargaining power, they are just individuals.
Potential Entrants
There is a fifth company that wants to enter. The government is reluctant to allow it (high barriers, the main barrier is the license). Another barrier is money, technology, investors, etc.
Substitute Products
Public transport, limousine, walking, motorcycle. All of them aren’t perfect substitutes.
Disrupt the industry by offering something cheaper, better, etc.