Strategy Diamond Report
The key challenge with luck is that it is difficult to recognize it. In addition, capitalizing on luck and running a company consistently on the path of luck is problematic. Therefore, it is absolutely necessary to develop a unified strategy before setting up any business operation. The strategy diamond was advanced by two researchers - Don Hambrick and Jim Fredrickson – as a framework that a firm can use to check and communicate a strategy. When focusing and choosing a strategy, it is important to note that the ingredients of a strategy are not spelled out by value disciplines or generic plans. Three components of the strategy - differentiators, arena, and economic logic – focus on the longstanding hallmarks of developing a strategy.
More specifically, the unique features of a company and its market needs (including opportunities) are matched up by a strategy to produce positive performance. The distinctive features are shown by a firm’s differentiators; the market opportunities and needs are situated in arenas; the economic logic is evidenced by a positive performance, which not only concerns finances but also environmental and social components. Some naive managers have only majored on two or three components of a strategy diamond. Others have had the five facets of the strategy but did not understand how the elements fit into each other. The various athletic apparel can be sold through a number of channels including their stores and the company’s website. Lululemon’s mission is to provide components that will enable people to live healthier, fun and longer lives (Lululemon).
As such, the company’s target market in Iceland include both men and women because health is central to everyone. In addition, Lululemon’s strategists should identify the regions where the firm’s stores will be set up, and the technologies that will be adopted for continuous innovation of their products and services in Iceland. Second, strategists should decide on the vehicles that will be used to participate in the identified arenas. It is aimed at identifying the uniqueness that makes a firm’s products and services different from those of the rivals. So the executives of Lululemon should decide in advance how they will win their share of customers and profits in Iceland. They will need to ask pertinent questions such as: how will the company beat its competitors in Iceland? How will the company develop loyalty to a brand over its rivals and how will it excel in its business? To do this, strategists will have to take a range of actions with regard to the company’s branding, reliability, products’ customization options and competitiveness of their prices.
Sometimes, a company can have a tremendous marketplace advantage by having the right combination of differentiators. If deliberate choices are not made in advance, no unique differentiation will occur and none of the differentiators will materialize (Hambrick and Fredrickson 52). Hambrick and Fredrickson maintains that a strategy should clearly show the profits above the cost of capital (53). Lululemon strategists should have the economic logic element at the center of the company’s strategy diamond. This involves determining the logic that Lululemon will use to make profits in Iceland. To yield long-term and sustained shareholder returns, profits that are above the company’s cost of capital are essential (Burgelman 151). Although social and environmental profits may be included in the economic logic, a strategy diamond must enable a firm to make enough financial profits that will encourage investor to fund the firm’s business operations.
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