The Value Disciplines Model-Treacy and Wiersema - Assignment Example

Managers in every success-oriented organization are faced with three key decisions to make; First, the decision on the company’s value proposition. Second, the decision on the company’s value-driven operational model, and thirdly, the decision on the company’s value disciplines. The company’s value proposition entails the implicit promise to the customers outlining all values combination (Iacobucci 2011, p. 89). The company’s value-driven operational model involves the integration of operational processes with the systems of management and culture, required to deliver an effective value proposition (Cooper 1999, p. 56). The company’s value disciplines entail the integration of operational models and value proposition to achieve leadership in the market through competitive advantage.

The Treacy and Wiersema value disciplines have impacted greatly on CRM as reviewed in the following discussion of the value disciplines. The first value discipline is operational excellence which involves the provision of reliable products to the customers and pricing services competitively, with less or no difficulties and inconveniences to the customers. A good example of a company that has embraced this discipline is Dell (Egan 2008, p. 83). Operational excellence stresses a specified strategic approach to the production and delivery of products and services. The companies following this discipline strive for leadership in the industry through price and convenience. The companies seek ways on; overhead minimization, elimination of unnecessary production cost, and business processes optimization across all organization frontiers (Mukerjee 2011, p. 167).

The companies in pursuance of Operational Excellence concentrate on direct sales to customers, sales based on order rather than inventory, and low cost. Dell, General Electricals, Wal-Mart, America Airlines, and Federal Express are some of the companies that have had a significant adoption of operational excellence. This has helped them to be leaders in their industries by undercutting their competitors through discipline. The companies witnessed an increase in their customer base and their sales (Kincaid 2003, p. 48). However, Operational excellence possesses key challenges in maintaining consistent customer loyalty. This is because the discipline does not focus on product innovation and long-lasting customer relationships. Instead, it concentrates largely on price and convenience in products and services. This results in high switching in buyers as they seek more innovative products, hence leading to low customer loyalty (Kincaid 2003, p. 43).

The other discipline indicated by Treacy and Wiersema is product leadership. This discipline entails product excellence through differentiation. The companies that choose to embrace the discipline shift their focus on making the product different from those of the competitors (Rafinejad 2007, p. 58). Customers may be required to pay a price premium on the products which are differentiated from the competitors’ products. Companies in this discipline strive for the ‘’state-of-art products” characterized by high creativity.

 Product leadership requires increased product innovation, commercialization of ideas, and the pursuance of new solutions, and a risk-taking management structure (Rafinejad 2007, p. 67). This means that companies need to invest heavily in research and development by employing good researchers who will enhance creativity in products. Customers choose products based on their design. Product leaders are therefore required to deliver products that suit the customers’ needs (Pearson 2012, p. 33). According to Treacy and Wiersema, product leaders do the following; first, they seek to establish an open-mildness culture in the organization (Cooper 2005, p. 28). This encourages employees to create new ideas on product improvements, hence gaining a leading product differentiation in the market. Secondly, Product leaders avoid bureaucratic structures which slow the commercialization of ideas generated in relation to product differentiation. Managers need to make decisions on product improvement quickly (Cooper 2005, p. 33). Thirdly product leaders do not plan for eventualities whose like the hood of occurrences is uncertain. They do not spend much time on detailed analysis; instead, their strength lies in the reactions based on the occurrences of the situation (Cooper 2005, p. 43). Fourthly, product leaders protect their entrepreneurial environment through the establishment of sales mechanisms that fit the organization’s culture. Lastly, product leaders require an effective risk management structure since product innovation is a risky venture with greater returns as well as increased risks (Cooper 2005, p. 45).

Johnson & Johnson Ltd, Intel, and Nike have embraced the product excellence discipline. The companies have achieved leadership positions in their industries through continuous product differentiation. Customers consider their products more valuable because of the products’ design. However, product leadership poses a challenge in maintaining effective customer loyalty because much focus is on product innovation rather than on customer relationships. Companies that embrace this discipline experiences challenges in maintaining their market share because of inadequate customer loyalty (Wiersema 2003, p. 85). Competition through product differentiation is usually stiff resulting in high customer switch from one product to another.

The third value discipline is indicated by Treacy and Wiersema Customer intimacy. This discipline focuses on Customer relationships as a key weapon in market leadership.