The Duck and the Lemonade Stand - Case Study Example

The Duck and the Lemonade Stand. Name Institutional Affiliation Date Table of Contents Table of Contents 2 Executive summary. 3 Introduction. 4 Case video review and the correct stand. 4 The basis of brilliant strategies that work even when poorly applied. 6 The business definition on the basis of Abell’s framework. 6 The business definition on the basis of the environment. 7 The business definition on the basis of scenarios. 8 Application of the strategic management principles in business brilliant strategies. 9 The Industry Organization (I/O), model of above-average returns, vision, mission, and values. 10 Productivity strategies. 11 Employee engagement/motivation. 11 Management of the extremes. 12 Opportunity recognition. 13 Change management. 14 Conclusion. 15 References. 16 The Duck and the Lemonade Stand. Executive summary. This essay disagrees with the statement that “Better a consistently applied mediocre strategy, than a series of ad hoc brilliant strategies.” The disagreement comes from the observation that the man running the lemonade stand does not close any sales with duck; that is attributable to his consistent mediocre approach to business. The essay has three parts; video review, the basis of the more beneficial brilliant ad hoc strategies that can outweigh consistent mediocre approaches and brilliant productivity strategies likely to bring success regardless of how poorly they are applied. In the video review, the essay examines the series of events present in the video to identify the strategy of the man running the lemonade stand. In the section that describes the business strategies, the essay demonstrates the strategic aspects that can lead to more sales regardless of how poorly they are applied than the consistent mediocre strategy applied by the man running the lemonade stand. The last section contains the recognition of the productive strategies that can lead to better performance than consistent mediocre strategies regardless of how poorly they are applied in business. Introduction. Applying the best strategy in business allows it to achieve its objectives, primarily increase the sales and profitability. For a business to apply a good strategy it needs to be aware of its situation as well as its environment, both internal and external. Businesses that apply brilliant strategies has a characteristic high level of success because all contexts and needs of the business are covered by the strategy. On the other hand, businesses that apply mediocre strategies record characteristic failure because of lack of alignment with the situational/environmental needs and opportunities. It is, therefore, recommendable to apply brilliant ad hoc strategies in business that would lead to some success than mediocre consistent strategies that guarantee ultimate failure in business. The video titled “the duck story” demonstrates this school of thought through the ultimate failure of the man running the lemonade stand to close any sale with the duck. Case video review and the correct stand. This funny video has a myriad of business lessons both to the business attendants and the customers. Every day the duck walks up to the lemonade stand with the hope to find and buy grapes. However, the lemonade stand owner does not stock grapes, and this potential customer ends up going back home without the product. A consistency seek for the grapes from the lemonade stand shows the need of the duck in taking grapes as the only fruit. It also shows the duck’s lack of knowledge of any other fruits’ supplier who perhaps stocks the product. It is the reason that makes it possible for the duck to visit the unpromising stockist so helplessly that till the man on the stand takes it to the store. On the other hand, the man running the lemonade stand seems so consistent in providing the lemonade even though the most consistent requester expresses no interest in taking it. He seems so ignorant to the market needs that changing his area of business to suit the market needs is not an option. His is a consistent business strategy that does not make much entrepreneurial opportunism sense. In the end, he takes the duck to the store and promises that it would take as many grapes as it needs to satisfy all its consumption desires. But to the surprise of the man, the duck takes the grapes and goes on to ask for lemonade (ODEN). This video shows that the consumer needs occur in cycles and are insatiable. As a business owner, one requires to have highly flexible plans to execute the business activities with a high level of agility (HISRICH, PETERS & SHEPHERD, 2008). From that perspective, it is not agreeable to say that “Better a consistently applied mediocre strategy, than a series of ad hoc brilliant strategies.” A consistently applied mediocre business strategy does not make sense as far as the dynamic nature of business processes, and opportunities are concerned (GUTEK & WELSH, 2000). It is, therefore, advisable for the business to make and follow brilliant business strategies in order to position the business on a creative platform to help it exploit opportunities, motivate the workers and increase productivity (BEST & WALLER, 1997). Brilliant business strategies even if poorly applied can help clearly define the business according to the situations and can be achieved through the application of the strategic management principles. Brilliant business strategies even when poorly applied can help motivate the employees, recognize the opportunities and successfully manage change. If the man who is running the lemonade stand ever applied brilliant business stand, he would ultimately win a customer who could end up consuming both grapes and lemonade however the strategy would be poorly applied. Besides, had the duck applied the brilliant strategies it would discover the one-stop store where both grapes and lemonade are sold, and satisfy the desires under one roof. The basis of brilliant strategies that work even when poorly applied. Brilliant strategies for business depend on the situation and are adaptive in nature. In order to adequately benefit from these strategies, it is necessary to define the business and apply the fundamental business approaches to utilizing the opportunities and the benefit would accrue regardless of how poorly they are applied. A business can be defined on the basis of Abell’s framework analysis, its environment, and its scenarios. The business definition on the basis of Abell’s framework. Abell’s business definition framework is based on such aspects as customer identification, customer needs’ segregation and the distinctive competencies necessary for the satisfaction of the customers’ needs (ART, 2011). It should be kept in mind that the customer needs, composition and methods of needs satisfaction are dynamic making it a necessity to devise and follow brilliant strategies to successfully define the business at any point of its lifecycle. On the basis of Abell’s framework, a clear business definition can be found to enable the business face any of the business situation at hand. For the business to be well aware of the customers, it needs to examine and establish the characteristics of the target customer segment and the trends that define it. Besides, it needs to characterize the needs of this target segment and how their needs vary with time (PALEY, 2005). Finally, the business needs to analysis the needs and the characteristics of the target customer group and devise creative as well as flexible ways of meeting these needs (DE KLUYVER, 2000). A business that has good definition will record more success as compared to the one that is undefined regardless of how well the mediocre consistent strategy is applied. The man running this lemonade stand seems not able to tailor his business according the needs of the potential customer, the duck. It is simply that he has established a consistent plan that is not adaptive. Despite the consistent request of the duck for grapes, the man fails to adapt to the business requests making it difficult to align opportunistically his business with the prevailing market needs. It is a business failure. Through Abell’s framework, the man running the lemonade stand could have identified a new customer segment on the first day of the duck’s visit. Secondly, he could have assessed the needs of the customers and devised means of meeting them as well as adapting to the preferences of the new customer segment (FINNE & SIVONEN, 2009). Ultimately, he could have won a new customer segment that consumers both lemonade and grapes through brilliant business definition however poorly it would be applied. The business definition on the basis of the environment. Besides the use of the Abell’s framework in the definition of business, a business can be defined through the environmental analysis to bring a consideration of both the internal and the external environmental factors that might influence the business strategy (CHOO, 1998). The analysis of the external business environment enables the business operator identify the existing opportunities as well as threats. Threats and opportunities to business come in the form of technology, economy, demography, politics and social-cultural influences (WARNER, 2010). These aspects enable the business to set a series of strategies to align itself with the identified opportunities as well as avoid any pitfalls likely to be presented by the identified threats (CAPON, 2009). On the other hand, internal analysis determines the strengths and weaknesses likely to be present in the business. The man running the lemonade stand seems less aware of the existing opportunities as well as threats existing in his environment thus describing him as a follower of consistent mediocre strategies. He fails to identify the opportunity presented in the new market segment, the duck. Besides, he fails to understand the characteristics of his major competitor. His consistent mediocre strategy in business makes him lose a customer with an interest in both grapes and lemonade. Had the man running the lemonade stand applied brilliant strategies he would have located the opportunity. The opportunity would be located however poorly the environment would be analyzed. It should always be remembered that a business that does not understand its environment will always fail despite its consistency with its strategies. The business definition on the basis of scenarios. A business can successfully be defined through the understanding of both its scenarios and its ideas (SCHOEMAKER, 1998). When the business owner understands the scenarios he/she can be able to determine whether his ideas are worth utilizing and the possible returns as dictated by the environment (KIM & MAUBORGNE, 2005). As a result, a business can be able to make adaptive moves towards its success. Adaptive moves entail a series of brilliant strategies that ensure a business thrives despite the existing environment (CAMPBELL & CRAIG, 2005). A red ocean strategy has a set of consistent mediocre strategies that are clear enough to attract every business person leading to a high level of competition in a specific line of business (GAMBLE & THOMPSON, 2013). In a red ocean, the entry is easy, and every willing entrepreneur can practice the business with ease. On the other hand, the blue ocean entails difficult situations that require a high level of adaptation through brilliant steps and approaches that not many people can use. In the blue ocean, the environment is unpredictable, and the opportunities are inexhaustible (DONOVAN, TULLY & WORTMAN, B. (1998). The man in the running the lemonade stand seems to have identified an area of business in the red ocean through a consistent product strategy that is not adaptive at all. On the other hand, the fruit store must have been established in a blue ocean through a range of products in its strategy. The man running the lemonade stand does not have a diversified range of products and cannot cater for the needs of grapes consumers. The analysis the scenario, however, poor would be done, would help the man running the lemonade stand to include more varieties to cater for duck’s needs. Application of the strategic management principles in business brilliant strategies. The business entities with adaptive strategies seem to have mastered the art of strategic business planning and are able to make ad hoc strategies to align with the needs of the market. The principles of strategic planning that can help a business make a set of successful ad hoc strategies include some inter-related concepts like perspective, pattern, plan, position, and ploy (MINTZBERG, 1987). If a business follows a set of consistent mediocre strategies, these elements of the strategy lost their validity at some point in the business cycle because of the dynamism of the business success factors presented by the environment (WITCHER, & CHAU, 2010). The man running the lemonade stand seems to have the least understanding of the aspects of business strategy. His consistently applied mediocre strategies fail to give him success. He does not have a plan for the unexpected consumer needs, he does not have a sound ploy to outwit the fruit store, he does not understand his environment, his pattern is rigid, and it places his business in a confusing position (CARSRUD & BRÄNNBACK, 2007). The Industry Organization (I/O), model of above-average returns, vision, mission, and values. From an external point of view, a firm’s strategy can be seen through its mission and vision statement as well as its values. Vision, mission and values of a firm make up a part of the organizational culture and play a significant role towards business success. A business vision describes the business’ endeavors in the achievement of a future successful state. The mission of the business describes the activities that will be carried out to serve the customer. The values describe the company’s practices as pertains to relationships, and business activities, to accomplish the mission of the business (TRAPP, 2014). If the business mission, vision, and values support each other it is likely for the firm to perform above average. The business mission, values, and vision help advance the aims of the resource-based model of above average returns by optimizing the resources, capability and core competence in business activities. Brilliant business strategies have inclusions of vision, mission, and values to help utilize the resources, core competence and capability. The significance of business resources, core competencies, capability, mission, values and vision in business makes their inclusion in business strategy imperative. The man running the lemonade stand fails to close any sale with the duck because his strategy is mediocre and cannot help regardless of how consistent it is applied. Productivity strategies. A business that follows adaptive series of brilliant strategies tends to be more productive as compared with those that follow mediocre strategies. Productivity is exhibited in such business aspects as employee motivation and engagement, management of extremes, management of change and recognition of growth/profit opportunities (AAKER, 1992). Employee engagement/motivation. For the successful businesses, employees make up the most valuable asset. The successful business entities leave no option to employees’ demotivation as a way of ensuring a successful cycle of business activities. Employees contribute to the success of the business through such aspects as laying the business strategies and executing the plans towards growth and profitability (GALE (FIRM), 2012). One of the aspects of employees, motivation tat, determine their input to the business is engagement. Workers can become motivated, and ultimately more productive, through such things as meaningful work, sound leadership, recognition, and rewards, as well as growth and opportunity. Lack of these perspectives in the work environment leads to employees’ disengagement as well as low motivation (GRENSING-POPHAL, 2005). A lowly disengaged workforce has a characteristic set of symptoms that include minimal performance, low innovation, absenteeism, low morale, and lack of energy, lack of attachment, cynicism, and mistakes, amongst others (PECH & SLADE, 2006). The lemonade stand as a business entity does not offer high levels of engagement to the worker, perhaps because of its consistently rigid mediocre strategies that do not bring motivation to the man running the business. Management of the extremes. Sometimes in business exist extreme decisions with sophistications emanating from time and resource constraints. Some of the decisions come during the most unexpected periods of the business cycle driving the key decision makers in critical situations (SLADE, 2003). The critical situations of the business cycle determine how successfully a business would forge ahead in the face of unforeseen circumstances such as the change of customers’ preferences, physical environmental change and loss of key employees, amongst other circumstances. Business cycle’s future has a plethora of unforeseen events that ultimately influence the life of the business (HENDON, 2013). There is no single strategy that is sound enough to embrace and provide solutions to the unforeseen events. Business cycles of such entities with rigid, consistent set of strategies tend to record halts every time an unforeseen event strikes because they are no adaptive enough to mitigate the extremely sophisticated events that occur in the business cycles (FINNE & SIVONEN, 2009). On the other hand, business entities that employ brilliant strategies to their problems have higher levels of adaptation and can handle the extremes of the business (Hendon, 2013). Even the most poorly applied brilliant strategies are adaptive and can allow the business entity to respond to most, if not all, developments in its cycle. In the case of the lemonade stand, the business attendant does not foresee any change of duck’s preferences and thinks that its desires will be fully satisfied with getting the grapes. However, to his surprise, the duck changes the preference from grapes to lemonade leaving the man without many options. Had he been using adaptive strategies, he could be able to meet all the needs of the duck with much more ease regardless of how poorly the strategies would be applied. Opportunity recognition. Opportunities are part of the business’ external environment and come in the form of customer segment expansion, development of new segments, new technologies, the favourable political environment, and favourable demographic changes, amongst others. Business productivity increases when it increases its capability to recognize worthwhile business opportunities to drive sales, improve growth and increase the business profitability (WARREN, 2002). For the business to identify the available opportunities, it ought to have flexible strategies to enable it scans the environment successfully for opportunities. Besides, these adaptive strategies enable the business entity to make innovative moves towards tailoring its position to meets the specifications of successful exploitation of the business opportunities at hand (BALTRUŠIATYTĖ-AXELSON, 2006). Besides, such strategies guide the business decision makers in embracing the newly recognized opportunities as well as facilitating their funding (PECH & CAMERON, 2006). On the other hand, consistent mediocre strategies are of less importance in the recognition of the new opportunities in the market because opportunities come in many forms, some of which are not recognized by the business entity. A business entity that uses a consistent strategy like the one depicted by the man running the lemonade stand fails to recognize opportunities until it is too late to locate it (DE KLUYVER & PEARCE, 2003). The man in the lemonade stand seems less adaptive and cannot exploit opportunities presented by the situations. In the case, he seems to fail to recognize the business opportunity in diversified business products because of his consistent mediocre strategies. Change management. Change is a component of every business cycle. Most often, change is seen as the growth of business in terms of business practices, organizational structure, customers and other perspectives (GREINER, 1972). How a business navigates the change events determines how it faces the future. Change can successfully be navigated through brilliant ad hoc strategies that suit the situations of change. Ad hoc strategies that can enable navigate successfully through change include employees’ engagement, stage-wise implementation of the change and change communication, amongst others (ALKHAFAJI, 2003). Employees’ engagement in business change, evolution and revolution creates a spirit of teamwork, clarifies their roles, and creates accountability among the players. Besides, when change is implemented in phases, it gives time for preparation, management and reinforcement of change (MORDEN, 2007). Moreover, the communication of change notifies all the stakeholders about the newly designed business future (HEROLD, FEDOR & HEROLD, 2008). Change management can only become successful if the business has adaptive approaches to enabling it recognize the change necessities as well as the needs of the change process (DAVID, 2005). Nonetheless, entities that follow rigid and consistent strategies cannot navigate through change to give many successful outcomes because of the inability to use the fundamental principles of change management. Otherwise, the man running the lemonade stand would have recognized the need for product change during the first duck’s visit and effect it as a brilliant strategy to make a profit from the new customer segment. Even when poorly applied, this strategy would win duck as a new customer because of its needs. Conclusion. It is disagreeable to claim that “Better a consistently applied mediocre strategy, than a series of ad hoc brilliant strategies.” Businesses with mediocre strategies always fail despite their consistency in their practices. The video titled “the duck story” demonstrates a number of week areas that lead to business failure after the use of mediocre strategies. It also highlights areas that would result in business success after the use of brilliant strategies however ad hoc the might be. The man running the lemonade stand applies consistent mediocre strategies in the business leading to loss of potential customers like the duck. Some of the aspects of the business that would have been successful with ad hoc brilliant strategies include business definition, situational analysis, and change management and workers motivation, amongst others. 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