We, as co-managers of Club z Inc., used differentiation strategy which “seeks to provide products or services that offer benefits that are different from those of competitors and that are widely valued by buyers”(Johnson, Scholes and Whittington, p.229, 2008) in order to meet the shareholders/investor’s expectations which were:
1. Grow earnings per share(EPS) 7% annually through year 15 and 5% annually thereafter.
2. Maintain a ROE(Return On average Equity) investment of 15% or more every year.
3. Maintain B+ credit rating or higher.
4. Achieve image rating of 70 or higher, and
5. Stock price gains averaging about 7%per year through year 15 and 5%per year thereafter. (Thompson, Stappenbeck and Reidenbach, 2012).
We are in the athletic footwear industry competing against five other companies. To formulate our strategies, we carried out an analysis of our company’s resources using VRIO model(see appendix 1). The strategies we used were mostly emergent as we experienced some unforeseen reactions from our competitors most of the time. We engaged logical inrementalism which is “the deliberate development of strategy by experimentation and learning from partial commitment”(Johnson, Scholes and Whittington, p.408, 2008) in our strategy formulation to deal with the new challenges we were faced with each year of our decision making. In the five years of our decision making, we met and exceeded the investors’ expectations. YEAR 11
We chose differentiation strategy because cost leadership was not sustainable as all the companies had equal market share, same price for their products and same number of models. We were now well aware of our main competitors’ weaknesses who were companies A, B and D and we decided to focus on those weaknesses to build on our strengths.