3c's Model

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Illuminations

3C's Model of Ohmae
T
he3C'sModelisastrategicallookatthefactorsneeded for success. It was developed by Kenichi Ohmae, a businessandcorporatestrategist. The3C’smodelpointsoutthatastrategistshouldfocuson threekeyfactorsforsuccess.Intheconstructionofabusiness strategy,threemainplayersmustbetakenintoaccount:

CORPORATION

1. The Corporation 2. The Customer 3. The Competitors

OnlybyintegratingthesethreeC’s(Corporation,Customer, Competitors)inastrategictriangle,asustainedcompetitive advantagecanexist.Ohmaereferstothesekeyfactorsas thethreeC’sorstrategictriangle.

CUSTOMER

COMPETITION

1. The Corporate-Based Strategy

The Corporation needs strategies aiming to maximize the corporation’s strengths relative to the competition in the functional areas that are critical to achieve success in the industry.

high-impact operations so that as others are eliminated, functional costs will drop faster than sales revenues. The third method is to share a certain key function among the corporation'sotherbusinessesorevenwithothercompanies. Experienceindicatesthattherearemanysituationsinwhich sharing resources in one or more basic sub-functions of marketingcanbeadvantageous.

2. The Customer-Based Strategy
- The Customer
Clients are the base of any strategy according to Ohmae. Therefore, the primary goal supposed to be the interest of thecustomerandnotthoseoftheshareholdersforexample. Inthelongrun,acompanythatisgenuinelyinterestedinits customerswillbeinterestingforitsinvestorsandtakecare of their interests automatically. Segmentation is helping to understandthecustomer.

- Selectivity and sequencing
Thecorporationdoesnothavetoleadineveryfunction.Ifit cangaindecisiveedgeinonekeyfunction,itwilleventually be able to improve its other functions of the competition whicharenowaverage.

- Make or buy
In case of rapidly rising wage costs, it becomes a critical decisionforacompany tosubcontractamajorshareofits assembly operations. If its competitors are unable to shift production so rapidly to subcontractors and vendors, the resultingdifferenceincoststructureand/orinthecompanies ability to cope with demand fluctuations may have significant strategicimplications.

- Segmenting by objectives
Here,thedifferentiationisdoneintermsofthedifferentways differentcustomersusetheproduct.Takecoffee,forexample. Somepeopledrinkittowakeuporkeepalert,whileothers viewcoffeeasawaytorelaxorsocialize(coffeebreaks).

- Cost-effectiveness
This can be done in three basic methods. The first is by reducing basic costs much more effectively than the competition.Thesecondmethodissimplytoexercisegreater selectivity in terms of orders accepted, product offered, or functions to be performed which means cherry-picking the

- Segmenting by customer coverage
Thistypeofstrategicsegmentationnormallyemergesfrom a trade-off study of marketing costs versus market coverage. There appears always to be a point of diminishing returns in the cost-versus-coverage relationship. The corporation's task,therefore,istooptimizeitsrangeofmarketcoverage,



THE CERTIFIED ACCOUNTANT

4th Quarter 2007 ‫ ـ ـ‬Issuse #32

Illuminations

be it geographical or channel, so that its cost of marketing willbeadvantageousrelativetothecompetition

- Power of image
When product performance and mode of distribution are very difficult to distinguish, image may be the only source of positivedifferentiation.

- Re-segmenting the market once more
In a fiercely competitive market, the corporation and its head-on competitors are likely to be...
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