can you give me short summary abstract and conclusion on the below which is take

Question

can you give me short summary abstract and conclusion on the below which is taken from chapter 11-Leveraging the Business, chapter-12-Creating New Businesses in Strategic Market Management, 9th Edition, by David A. Aaker

Growth Options

• Which assets and competencies can be leveraged?

• What brand extensions are possible?

• Can the scope of the offering be expanded?

• Do viable new markets exist?

Which Assets and Competencies Can be Leveraged?

• Marketing Skills • Capacity in Sales or Distribution • Manufacturing Skills • R&D Skills • Achieving Economies of Scale

Brand Extensions

• Does the brand fit the new product context?

• Does the brand add value to the offering in the new product class?

• Will the extension enhance the brand name and image?

Brand Extension Logic : Brand New Offering, Add Value, Enhance Brand ,Fit

New Products for Existing Markets

• Expand boundaries: – From laundering rags to maintaining factories – From salty potato chips to all snacks

• Explore customer use context

New Markets for Existing Products : • Expanding Geographically • Expanding into New Market Segments

– Distribution Channel – Age – Home vs. Office

Evaluating Business Leveraging Options

• Is the product-market Attractive? • Is the core business successful? • Can the core business be transferred to the new product-market? How much of a stretch is it? • Will the new business be successful, become a market leader? • Is the leverage strategy repeatable?

Question: If the criteria are clear, why do so may new businesses fail? What judgments go wrong?

The Mirage of Synergy: • Potential Synergy Does Not Exist • Potential Synergy Exists But is Unattainable • Potential Synergy is Overvalued

Key Learnings

• Leveraging assets and competencies involves identifying them and creatively determining in what business areas they might be able to contribute.

• Brand extensions should both help and be enhanced by the new offering, in addition to being perceived to have a fit with it.

• The business can be leveraged by introducing new products to the market or expanding the market for the existing products. In doing so, the new product market should be attractive, be accessible to the business with its current assets and competencies and have access to the needed resources to be successful.

• Entering a new product market is risky, as the new offering might lack market acceptance or needed resources. Success likelihood goes up if the core business is healthy, if the new product market is attractive (competitors will be profitable), if the business model is repeatable, if market leadership is possible, and if the stretch from the core is small.

• Synergy can be a mirage. Too often, it does not exist, or it exists but is unattainable or overvalued.

The New Business :• Change what the customer is buying • Transformational innovation • Different business strategy including new assets & competencies

Blue       vs.             Red Oceans

• New market space • Create demand • Make competitors irrelevant • Create new strategy • Transformational innovation • High risk-high return

• Existing market space • Beat competitors • Improve market share • Improve existing strategy • Incremental innovation • Lower risk

Barriers to Long-Term Success of Improving Existing Businesses

• Competitors response – fast and vigorous

• Hard to hide incremental innovations

• Market dynamics – easy to get behind & become less relevant

• Overcapacity

The Innovator’s Advantage : • Competitors inhibited from responding – Fear cannibalization – Fear taking eye off existing business • Competitors unable to respond – Lack assets, competencies, culture etc. • Innovator can create customer loyalty & authenticity

Early Market Leaders Strategy : • Envision the Mass Market • Managerial Persistence • Financial Commitment • Relentless Innovation • Asset Leverage

Managing Category Perceptions :• Focus at outset on attributes and functional benefits   • Labels help define the category—use them. Make your brand the exemplar (the best example of the new category)

Creating New Business Arenas

• Creating a dramatically lower price point • Technological innovation • From components to systems • Customer insights—unmet needs • Market trends • Niche markets

From Ideas to Market • Fatal Biases Inhibiting New Business Creation – The short-term financial pressure curse – The silo curse – The curse of success – The incumbent curse – The commitment curse – The size curse • Making New Business Viable in Established Organizations

• In general, above-average earnings come from new business arenas, and those attempting to excel in existing business arenas on average do less well financially.

• A business can vary in its “newness” depending on how much it departs from existing businesses in terms of value proposition, target market, assets and competencies employed, and how it defines what a customer is buying.

• An innovator has an advantage because it can build up a core loyal customer segment and because competitors, committed to their own business, may lack the motivation and capability to respond.

• Successful market leaders envision a mass market, are persistent, make a commitment, continue to innovate, leverage firm assets, and manage category perception.

• Transformational new business arenas can be based on offering a dramatically lower price point, analyzing alternative industries to find white space, offering systems rather than components building on customer insights or market trends, and by collaborating with other people and firms.

• Established firms tend to be focused on their own business and regard new ventures as a distraction that is unlikely to help their financials and may make them worse. To overcome these biases they need to create a space for entrepreneurial initiatives and a mechanism that ensures new ventures will get the

Explanation / Answer

Answers:

Creating a new business from scratch or expanding an existing business demands leveraging assets and competencies and aligning them to business goals,brand extension to manage the perception of fitment of new product, expanding scope of offering , expanding market etc.Often leveraging existing business to pave the way for new business fails due to lack of synergy, mis interpretation of synergy or failed synergy. Assets and competenties have to be evaluated and analysed thoroughly to determine the product and market entry strategies for creation of new business. Creating a new business or expanding an existing business can be done either by entering a new market(market expansion) or by introducing a new product in the same market depending upon the market conditions, competitive landscape and synergy and strength of existing business (deep pockets would give greater leverage).The business model can be either based on blue ocean strategy wherein competitor risk is minimised,opportunities are maximised by exploring new boundaries or it can be Red ocean strategy wherein you can compete with the players in the same market space and within the same defined boundaries to gain a greater share of the demand. The barriers to long term success for new business can be handled by fostering innovation, exploring and entering market early and managing product perceptions.The article summarizes what constitutes the recipes of a successful new business and the corresponding barriers .The success factors include cost leadership, product differentiation, taping customer aspirational values/willingness to pay ,unmet needs and technology disruption.The barriers include strong biases with its roots in incumbency , mindset of the entrepreneur ,preferences and obligations, low apetite of established organizations for portfolio diversification etc.

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