Strategizing and Business Planning

How does Kim and Mauborgne’s business plan standard compare to the approach to strategy in the textbook?

Kim & Mauborgne (2000) offer a customer-focused approach to creating a business plan that first begins with a buyer utility map, or an assessment of how the new business idea aligns with the actual needs of customers and what customers perceive as useful. The second tool or the price corridor mass focuses on what is the best price to generate buyers. The third tool, the business model guide, determines if the idea can be delivered at this optimal price point.
Thompson (et al. 2013) instead uses Porter’s generic strategies to define how to create a business plan in a non-sequential fashion. These generic strategies include cost leadership by offering the lowest possible price on a product versus competitors, a differentiated strategy in which the product satisfies a unique need that no other competitor can, or a focus strategy upon a relatively narrow segment of buyers. The focus of Thompson (et al. 2013) is on the positioning of the product in relation to competitors. Kim & Mauborgne (2000) are less interested in the competition and more on whether buyers’ needs are being met; the idea is to find the ideal price so competitors cannot easily produce comparable imitations at a lower price point, to “identify where the largest groups of potential customers are and what prices they are prepared to pay for the products and services they currently use” (par. 23).
Both authors stress the need for strategic pricing within the industry and producing a product that is different enough to satisfy the customer’s desire for additional value. Kim & Mauborgne’s (2000) methodology is suggested for use for all products and organizations, while the classic textbook strategy using Porter’s generic strategies offers a different positioning technique depending upon the nature of the product, the industry, and the feasibility of a price-focused, differentiated, or niche approach.
References
Kim, W. & Mauborgne. R. (2000). Knowing a winning business idea when you see one. The Harvard Business Review. Retrieved from: https://hbr.org/2000/09/knowing-a- winning-business-idea-when-you-see-one
Thompson, A., Peteraf, M, Gamble, J., & Stricklannd, A., (2013). Crafting & executing strategy: The quest for competitive advantage: Concepts and cases, (20th edition). New York, NY: McGraw-Hill.