Strategic tringle
The 3C's Model is a strategical look at the factors needed for success. It was developed by Kenichi Ohmae, a business and corporate strategist.The 3Cís model points out that a strategist should focus on three key factors for success. In the construction of a business strategy, three main players must be taken into account:

  • A. The Corporation
  • B. The Customer
  • C. The Competitors

Only by integrating these three Cís (Corporation, Customer, Competitors) in a strategic triangle, a sustained competitive advantage can exist. Ohmae refers to these key factors as the three Cís or strategic triangle. The 3 C's also has another meaning. It is a type of urban accronym used for "Calm, cool and collective."

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

Selectivity and sequencing : The corporation does not have to lead in every function to win. If it can gain decisive edge in one key function, it will eventually be able to improve its other functions which are now average.

Make or buy : In case of rapidly rising wage costs, it becomes a critical decision for a company to subcontract a major share of its assembly operations. If its competitors are unable to shift production so rapidly to subcontractors and vendors, the resulting difference in cost structure and/ or in the companies ability to cope with demand fluctuations may have significant strategic implications.

Cost-effectiveness : Improving the cost-effectiveness can be done in three ways. First by reducing basic costs, second by exercising greater selectivity (orders accepted, products offered, functions performed) and third by sharing certain key functions with a corporationís other businesses or even other companies.

The Customer
Clients are the base of any strategy according to Ohmae. Therefore, the primary goal supposed to be the interest of the customer and not those of the shareholders for example. In the long run, a company that is genuinely interested in its customers will be interesting for its investors and take care of their interests automatically. Segmentation is helping to understand the customer.

Segmenting by objectives The differentiation is done in terms of the different ways that various customers use a product.

Segmenting by customer coverage This segmentation normally emerges from 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 corporationís task is to optimize its range of market coverage, geographically and/ or channel wise.

Segmenting the market once more In fierce competition, competitors are likely to be dissecting the market in similar ways. Over an extended period of time, the effectiveness of a given initial strategic segmentation will tend to decline. In such situations it is useful to pick a small group of customers and reexamine what it is that they are really looking for.

The Competitors
Competitor based strategies can be constructed by looking at possible sources of differentiation in functions such as: purchasing, design, engineering, sales and servicing. The following aspects show ways in order to achieve this differentiation:

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

Capitalizing on profit- and cost structure differences Firstly, the difference in source of profit might be exploited, from new products sales etc. Secondly, a difference in the ratio of fixed costs and variable costs might also be exploited strategically. A company with lower fixed cost ratio can lower prices in a sluggish market and hence gain market share.

Copyright 2008, All rights reserved.
Designed and Hosted by
Mirage Solutions