HW3_Jhaveri_Manav

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ME553 – Product and Process Design Homework - 03 Individual Assignment Grade – 2.5% Due: Sunday 11:59 PM EST of Week 03 Instructions • Type your responses to the questions. • Name your file HW3_LastName_FirstName.pdf. • Turn in your assignment on Brightspace. Question 01 – Value Opportunities Value can be broken down into attributes that contribute to a product’s success. The reading material - R1 (attached to this handout) identifies a set of seven opportunities classes called Value Opportunities (VO) that add value to the product. These seven VO classes – emotion, aesthetics, identity, ergonomics, impact, core technology and quality – differentiate a product from the competition in the way that people’s needs, wants, and desires influence the purchase of that product. Further, the material discusses the use of the Value Opportunity Chart in evaluating and analyzing the value across the seven VO classes. Based on your understanding of the reading material, we would like you to perform a Value Opportunity Analysis for Starbucks vs. Generic Coffee Shop. Your response should compare the two companies based on the seven VO classes discussed and should include VO charts to support your analysis. NOTE: The reading material mentions the word ‘ Upper Right’ at several instances. This is in reference to the product’s Positioning Map - which shows the positioning of different products in the same category when located in a matrix with style and technology as the two axes. Refer to Fig. 01 for further clarity. Moving to the upper right on this map is an indication of a successful integration of style and technology that results in creation of breakthrough products having high value.

Fig 01 – Positioning Map of Style versus Technology Question 02 – Blue Ocean Strategy Analytical Tools and Frameworks for Formulation and Execution of Blue Ocean Strategy Chan Kim and Renée Mauborgne have created a comprehensive set of analytic tools and frameworks to create blue oceans of new market space. In their 2017 New York Times bestselling book, Blue Ocean Shift , Kim and Mauborgne share how to put these practical market-creating tools into practice to move from red to blue oceans and to do so in a way that people can own and drive the process. Reading material R2 presents Analytical Techniques and Frameworks for formulating and executing Blue Ocean that allows companies to break from the competition and unlock uncontested market space. a) Based on your understanding of the section Strategy Canvas (As-Is Value Curve) we would like you to thoroughly study the companies listed below and draw the strategy canvas considering the range of factors (parameters for the horizontal axis) that the company competes on and invests in. Make sure you provide justification for rating the company low/high on the vertical axis. 1) Amazon vs. Alibaba b) Based on your understanding of the sections The Four Actions Framework and The Eliminate-Reduce-Raise-Create (ERRC) Grid draw the ERRC grids for-

1) Tesla 2) Walmart c) The value curves can reveal a wealth of strategic knowledge on the current and future of a company. We would like you to draw the Strategy Canvas for companies X, Y and Z competing in the same market segment. Companies X and Y are caught in the Red Ocean while company Z is on the right track - in the Blue Ocean. NOTE • Assume all companies to be competing in the same market segment (entertainment, transportation, dining, manufacturing, etc.). • Draw the value curves for companies X, Y and Z on the same strategy canvas. • We are not concerned about the parameters that go on the horizontal axes. You may use a, b, c, d... as the parameters for the horizontal axis.

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Question 1 Figure 1 Value Opportunity Charts for Starbucks (left) and Generic (right) Emotion – Starbucks has mastered the art of creating an emotional connection with its patrons. It exudes a sense of calm, has become a haven for people to relax and even work at. A generic coffee shop may lack the same level of personalization and emotional engagement. It might not invest as much in creating a warm and welcoming atmosphere, which could result in a more transactional experience for customers. Ergonomics - The ergonomics of its seating arrangements, counter layouts, and mobile ordering options cater to the needs of customers. Starbucks stores are often spacious and well-organized, ensuring a pleasant experience. A generic coffee shop may not prioritize ergonomics to the same

extent. Its layout and seating might be more basic, and it may not offer the same level of convenience in terms of ordering and payment options. Aesthetics – Starbucks has a lot of emphasis on its aesthetics. The stores are well designed, filled with ambient lighting, high rooftops, and comfortable seating. The Starbucks logo is the iconic green mermaid, and that combined with its aesthetic ambience makes it very social media worthy. A generic coffee shop may not invest as heavily in aesthetics. Its design might be more functional and less focused on creating a visually striking environment. This can lead to a less memorable and immersive experience. Identity - Starbucks has a strong brand identity that extends beyond coffee. It represents a lifestyle, a commitment to quality, and a sense of community. The green mermaid logo is instantly recognizable, and customers often proudly display Starbucks cups as a symbol of their affiliation with the brand. A generic coffee shop may lack a distinct brand identity, and may not be able to build a loyal fan base. Core Technology - In terms of core technology, both Starbucks and generic coffee shops use similar coffee-making equipment and technology. Starbucks might have bigger faster machine but there's typically no significant difference in this aspect. Quality - Starbucks is known for maintaining consistent quality across its beverages and food items. However, since it is so vast it might not always be possible to maintain quality, and there might be some issues. A generic coffee shop might not have the same ambience or technology, but their quality control would be ensured since it is operating over a much smaller scale. Impact – Starbucks has been transformed into a cultural phenomenon in the 21 st century. It has now transcended its function as a mere coffee provider, and serves as a spot to relax, work and hang out with friends. It has also made bold statements to be environmentally conscious, such as reducing its carbon, water, and waste footprint by half by 2030. Generic coffee shops usually

merely exist to serve coffee and that’s it. They might not have the resources to commit towards sustainability, and hence have a lower environmental impact. They might operate on a smaller scale with fewer locations, resulting in a lesser social impact. Question 2 Figure 2 Strategy Canvas for Amazon vs Alibaba Price – Alibaba is placed higher up in this regard since it prices are generally much lower than those of Amazon. This is because it is a B2B platform that provides higher quantities for a much lower unit cost, unlike amazon which is B2C selling individual items. Shipping Time – Alibaba is known for its longer shipping times, which can extend to over a few months. This is because all the products are shipped from China, as compared to Amazon which has a lot of local fulfillment centers in the different countries it operates. Quality - Amazon places a strong emphasis on product quality and customer satisfaction. It has quality control measures in place to ensure that products sold on its platform meet certain standards. Alibaba also values product quality, but the platform's focus is on facilitating

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transactions between buyers and sellers. The quality of products can vary significantly, as it depends on individual sellers and manufacturers. Customer Service - Amazon is renowned for its customer service, with features like easy returns and responsive support. Alibaba is not that great with its customer service, especially for buyers not from China. Variety – Almost everything present on Amazon can be found on Alibaba and it will usually cost the same or even lesser. Since everything on Alibaba is made in China, they have huge quantities and different varieties of everyday items, which might not be available on Amazon. From consumer goods to industrial equipment, Alibaba offers it all. Ecosystem – Amazon as a brand has a much stronger, more global ecosystem compared to Alibaba. It has products like the Echo, the FireStick and many more diversifications that make it an easy ecosystem to enter. Alibaba to many people is still unfamiliar. Market Cap – Amazon has a much larger market cap of $1.3 trillion, compared to Alibaba’s $225 billion. Reputation - Amazon’s diverse ecosystem, their global presenc e combined with their B2C business model has made it globally known and is trusted by the masses. Alibaba targets a smaller group of users and aims at connecting buyers and sellers rather than selling directly to the customer.

b) Figure 3 Tesla ERRC grid Figure 4 Walmart ERRC grid

c) Figure 5 Strategy curves of 3 companies in the fast food segment Although not required, I added the horizontal parameters to aid my understanding of the concept.

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