El Modelo DELTA:

Estrategia Digital
April 24, 2008

Arnoldo C. Hax
Alfred P. Sloan Professor of
Management Emeritus
M.I.T.
 EL MODELO DELTA
Tres alternativas de
posicionamiento estratégico
Consolidación del Sistema
• Economía del Sistema
• Dominio del Mercado
• Participación de empresas complementarias

… a través de un
uso efectivo de la
tecnología

Solución Integral al Cliente Mejor Producto

• Economía del cliente • Economía del producto
• Cooperación • Rivalidad
• Participación del cliente • Participación del producto
 EL TRIANGULO
Casos de posicionamiento estratégico
CONSOLIDACIÓN DEL SISTEMA

Mercado dominante Estándares de propiedad registrada

eBay, Yellow Pages Microsoft, Intel

Canal exclusivo
rural Wal-Mart

Liderazgo en costo
Southwest Airlines,
Amplitud horizontal
Nucor
Fidelity

SOLUCIÓN INTEGRAL Integración MEJOR PRODUCTO

con el cliente
AL CLIENTE EDS
Redefir la relación con el cliente Diferenciación
Saturn Sony Wega
Desde la Segmentación de Clientes
a la Agenda Estratégica
Propuesta de valor
Conjunto Integrado de
competencias
System
Lock-In

Posicionamiento
estratégico
Total Customer Best Product
Solution

1
Misión
2
5 3 6 4
Scope

Clasificación “From” “To”

de clientes

Agenda estratégica
Segmentación de
clientes
Tier 1: Exclusive Partner
Tra
Tier 2: Strategic/Integrated Partner
Tier 3: Project Solution Seekers
Tier 4: Body Shoppers
 Current Sony VC Competencies and Desired Sony
VC Competencies
Tier 1: Total Office Solution Seeker
System
• International & large firms, large educational
Lock-In
firms who need “total office solution”
• Sony could provide all solutions including many
Tier 6: Price Seeker
kinds of products besides VC products,
• Large, middle, small size firms who need
customized system software, system design with
affordable products
system integrators
• These seekers pursue product price rather
• Long run service & maintenance for all system
than quality
• Customized VC products
• Necessary for wide product line-up range for
• Very long term relationship
many affiliated offices

Customer
Solutions
Tier 2: Total VC Solution
Seeker
• International & large firms,
large educational firms, & large
exhibitions who need “total VC
solution”
• VC vendors could provide
solutions including appropriate
VC products in each office,
customized system software,
system design with system
integrators
• Long run service &
maintenance for all system
• Customized VC products
• Long term relationship
Ideal
Customer
Segmentation
Total
Tier 3: Negotiated Solution Seeker
• Large, middle, small size firms,
large education firms, & large
exhibitions who need “customized
solution or products”
• VC vendors could provide
customized solutions or products
including appropriate or
customized VC products in each
office, customized system
software, system design with
system integrators.
• Long term relationship
• Occasional special projects
Best
Product
Tier 4: Heavy-Use Seeker
• Large, middle, small size firms
who need “heavy product usage”
• Effective customer service for
products rather than system
• VC vendor could provide long
run product support including
software version-up & updated
functions
• Needs guarantees of
connectivity between old VC
model & new VC model
• Collaboration with potential
customers to fix VC
specifications
Tier 5: High Quality VC Seeker
• Large, middle, small size firms
who need “differentiated & best
products with very high quality”
• These seekers pursue not heavy
usage but very high quality &
differentiated functions
• Wide product line-up range for
many affiliated offices
• Needs guarantees of connectivity
between old VC model & new VC
model
• Product reputation & brand power
necessary
 Competencies of Sony VC Business
Dominant exchange System Proprietary standard
• Patents & dominant manufacturing CCD Lock-In • Patents
camera for all competitors’ products
Low cost
Exclusive Channel • Powerful Sony procurement system
• Advantage with regulators of 80 countries • Economies of scale with other Sony
through world-wide developed sales consumer products
channels • Efficient supply chain system
• Advantage with IETF & IEEE that make • High yield manufacturing technology
specification of video transmitting • Experienced electronics technology to
technology reduce components
• Offering products, system software &
system integration all together will
Sony • High development capability to reduce
product development time
discourage switching
• Sales & service channel for 80 countries
Competencies • Experienced quality assurance system

Horizontal breadth Total Best

• Multiple channels (direct,
resellers, distributors,
system integrators)
• A complete set of product
& service offerings with
Sony VC, other Sony
products, system software &
system integration
• Complementor
development
Customer Product
Solutions
Customer engagement Customer integration Differentiation
• Collaborative product • Joint forecasting & planning • Strong brand power
development with with suppliers, distributors & • Totally well-balanced product line-up
potential customers resellers • Advanced Audio & Video technology
• Event to hear customer • Collaboration with distributors & • Sophisticated product design
needs through periodic resellers • Connectivity with other Sony products (I.e.
promotion events • Collaboration with System memory stick)
• Sales campaign to sales software integrators • Sophisticated CCD Video camera (All
channels over the world • Periodic introduction & competitors purchase it from Sony)
• Special sales promotion seminars for customers • Time to market
to potential large • Continuous customer support • Launch product for 80 countries
customers by dedicated web page for • Quality (Video, audio, & product itself)
customers • Collaboration with huge potential customers
• High R&D spending
 Competencies of Polycom VC Business
Dominant exchange Proprietary standard
• Patents & dominant manufacturing CCD • Patents
System
camera for all competitors’ products • Communication protocol so that all
Lock-In
• Lead to fix next generation’s other competitors should adapt that
communication protocol
Low cost
Exclusive Channel • Powerful Sony procurement system
• Advantage with regulators of 80 countries • Economies of scale with other Sony
through world-wide developed sales consumer products
channels • Efficient supply chain system
• Advantage with IETF & IEEE that make • High yield manufacturing technology
specification of video transmitting • Experienced electronics technology to
technology reduce components
• Offering products, system software &
system integration all together will
Polycom • High development capability to reduce
product development time
discourage switching
• Sales & service channel for 80 countries
Competencies • Experienced quality assurance system

Horizontal breadth
• Multiple channels (direct,
resellers, distributors, system
integrators)
• A complete set of product &
service offerings with Sony
VC, other Sony products,
system software & system
integration
• Complementor development
• Very detailed sales manual
book for multiple channels
• Detailed comparison chart
to compete with Sony &
Tandberg
• Attractive cash back system
Company policy “customer’s
satisfaction first”
• Annual big event to motivate
horizontal players
Total
Customer
Solutions
Customer engagement
• Collaborative product
development with potential
customers
• Event to hear customer needs
through periodic promotion events
• Sales campaign to sales
channels over the world
• Special sales promotion to
potential large customers
• A lot of innovative programs to
make good relationship with
distribution channels
• Company policy “good
relationship with customers!”
Customer integration
• Joint forecasting & planning with
suppliers, distributors & resellers
• Collaboration with distributors &
resellers
• Collaboration with System
software integrators
• Periodic introduction & seminars
for customers
• Continuous customer support by
dedicated web page for customers
• Hundreds of employees for sales
& customer services
• Not product business but
“solution business”
Best
Product
Differentiation
• Strong brand power
• Totally well-balanced product line-up
• Advanced Audio & Video technology
• Sophisticated product design
• Connectivity with other Sony products (I.e.
memory stick)
• Sophisticated CCD Video camera (All
competitors purchase it from Sony)
• Time to market
• Launch product for 80 countries
• Quality (Video, audio, & product itself)
• Collaboration with huge potential customers
• High R&D spending
• Outstanding experiences for VC & Audio
conference as communication company
• Long history dedicating VC business
• Sophisticated functions for customer satisfaction
• Great connectivity to other products
 HP - Viewed Through the Delta Model
Dominant Exchange
• Owning the industry’s largest IT Supply Chain havs
the ability to “mandate” suppliers to out-perform, set
standards, meet other IT needs by
challenge/motivation
• Tough bargainer with suppliers/partners
• Play a leading part in many standards-setting bodies
(e.g. RFID, EPC Global, W3C, etc.).
Exclusive Channel
• Sold direct, online, & via technology,
software, systems integration &
channel partners
Horizontal Breadth
• PDA, PC, Notebook, camera, printer, ink, scanner,
server - big & small, storage, software, solutions &
services to name a few
• Financial services & leasing options offered for
customers in need.,
Total Customer
Solutions
Customer Integration
• Long-term vision
• Exceed customer expectation
• Strong regional, national & growing international
presence - doing business in 178 countries
• Community involvement - grants to schools & other
institutions, charities, scholars, etc.
• Rise to occasions like the recent Tsunami, Katrina,
SE Asian Earthquake, etc. by donating cash &
products & by encouraging employees to donate &
match their contributions.
Source: Popsi Narasimhan, “Hewlett-Packard Company”, 15.902 research paper, Fall 2005
Proprietary Channel
• Non-Stop (Tandem) Platform proprietary; e.g. 95% of
World Stock exchanges, 2 out of 3 credit card
transactions, mobile & telecomm exchanges, public
safety 911 systems
• Printers & supplies
• Customers using specialized system flavors like
HPUX, Tru 64 and FAX have a lot invested in it & are
System Lock-In locked-in.
Low Cost Pricing
• Consumer goods & even low-end servers, PCs &
other systems are priced very low - Dell & HP/Compaq
play a see-saw game almost every quarter when it
comes to pricing & overall revenue
hp • Printers are practically given away
• Services & solutions sold used a global delivery
model using a combination of in-store, off-store & near-
store to offer the best price for customer
Best Product
Differentiation
Reduce Customer Experience • Achieve high sales by offering broad assortment of
innovative products, services solutions at relatively
• Total-customer experience is something HP prides low prices
itself on & it actively measures this using metrics
• Offer specific targeted solutions to each customer
• Go to market using the best solution which may be a segment - consumer, enterprise, public-sector
partner’s product on HP platform
• Focus on catering to regional requirements, e.g.
• Create the best customer experience using the best N. American solution offering maybe different than one
team - one face to the customer & one throat to choke for Asia-Pacific or Europe.
idea
• Demo-days & other shows to help people understand
& enjoy the technology coming out of HP Labs
 HP - Viewed Through the Delta Model
Dominant Exchange
• Owning the industry’s largest IT Supply Chain havs the
ability to “mandate” suppliers to out-perform, set standards,
meet other IT needs by challenge/motivation
• Tough bargainer with suppliers/partners
• Play a leading part in many standards-setting bodies (e.g.
RFID, EPC Global, W3C, etc.).
Exclusive Channel
• Sold direct, online, & via technology,
software, systems integration & channel
partners
Horizontal Breadth
• PDA, PC, Notebook, camera, printer, ink, scanner, server -
big & small, storage, software, solutions & services to name
a few
• Financial services & leasing options offered for customers in
need.,
Total Customer
Solutions
Customer Integration
• Long-term vision
• Exceed customer expectation
• Strong regional, national & growing international presence -
doing business in 178 countries
• Community involvement - grants to schools & other
institutions, charities, scholars, etc.
• Rise to occasions like the recent Tsunami, Katrina, SE
Asian Earthquake, etc. by donating cash & products & by
encouraging employees to donate & match their
contributions.
Source: Popsi Narasimhan, “Hewlett-Packard Company”, 15.902 research paper, Fall 2005
Proprietary Channel
• Non-Stop (Tandem) Platform proprietary;
e.g. 95% of World Stock exchanges, 2 out of
3 credit card transactions, mobile & telecomm
exchanges, public safety 911 systems
• Printers & supplies
System Lock-In • Customers using specialized system flavors
like HPUX, Tru 64 and FAX have a lot
invested in it & are locked-in.
Low Cost Pricing
• Consumer goods & even low-end servers, PCs & other
systems are priced very low - Dell & HP/Compaq play a see-
hp saw game almost every quarter when it comes to pricing &
overall revenue
• Printers are practically given away
• Services & solutions sold used a global delivery model
using a combination of in-store, off-store & near-store to offer
the best price for customer
Best Product
Differentiation
• Achieve high sales by offering broad assortment of
Reduce Customer Experience
innovative products, services solutions at relatively low
• Total-customer experience is something HP prides itself on prices
& it actively measures this using metrics
• Offer specific targeted solutions to each customer segment
• Go to market using the best solution which may be a - consumer, enterprise, public-sector
partner’s product on HP platform
• Focus on catering to regional requirements, e.g. N.
• Create the best customer experience using the best team - American solution offering maybe different than one for Asia-
one face to the customer & one throat to choke idea Pacific or Europe.
• Demo-days & other shows to help people understand &
enjoy the technology coming out of HP Labs
 HP - Viewed Through the Delta Model
Dominant Exchange Proprietary Channel
• Owning the industry’s largest IT Supply Chain havs the • Non-Stop (Tandem) Platform proprietary; e.g. 95% of World
ability to “mandate” suppliers to out-perform, set standards, Stock exchanges, 2 out of 3 credit card transactions, mobile
meet other IT needs by challenge/motivation & telecomm exchanges, public safety 911 systems
• Tough bargainer with suppliers/partners • Printers & supplies
• Play a leading part in many standards-setting bodies (e.g. • Customers using specialized system flavors like HPUX, Tru
RFID, EPC Global, W3C, etc.). 64 and FAX have a lot invested in it & are locked-in.

Low Cost Pricing

System Lock-In
Exclusive Channel
• Consumer goods & even low-end
• Sold direct, online, & via technology,
software, systems integration & channel servers, PCs & other systems are
partners priced very low - Dell & HP/Compaq
play a see-saw game almost every
Horizontal Breadth quarter when it comes to pricing &
• PDA, PC, Notebook, camera, printer, ink, scanner, server -
hp overall revenue
big & small, storage, software, solutions & services to name
a few • Printers are practically given away
• Financial services & leasing options offered for customers in
need., • Services & solutions sold used a
Total Customer global delivery model using a
Best combination of in-store, off-store &
Solutions
Customer Integration
Product near-store to offer the best price for
• Long-term vision customer
• Exceed customer expectation
Reduce Customer Experience
• Strong regional, national & growing international presence -
doing business in 178 countries • Total-customer experience is something HP prides itself on
& it actively measures this using metrics Differentiation
• Community involvement - grants to schools & other
institutions, charities, scholars, etc. • Go to market using the best solution which may be a • Achieve high sales by offering broad assortment of
partner’s product on HP platform innovative products, services solutions at relatively low
• Rise to occasions like the recent Tsunami, Katrina, SE prices
Asian Earthquake, etc. by donating cash & products & by • Create the best customer experience using the best team -
encouraging employees to donate & match their one face to the customer & one throat to choke idea • Offer specific targeted solutions to each customer segment
contributions. - consumer, enterprise, public-sector
• Demo-days & other shows to help people understand &
enjoy the technology coming out of HP Labs • Focus on catering to regional requirements, e.g. N.
American solution offering maybe different than one for Asia-
Pacific or Europe.

Source: Popsi Narasimhan, “Hewlett-Packard Company”, 15.902 research paper, Fall 2005
 HP - Viewed Through the Delta Model
Dominant Exchange Proprietary Channel
• Owning the industry’s largest IT Supply Chain havs the • Non-Stop (Tandem) Platform proprietary; e.g. 95% of World
ability to “mandate” suppliers to out-perform, set standards, Stock exchanges, 2 out of 3 credit card transactions, mobile
meet other IT needs by challenge/motivation & telecomm exchanges, public safety 911 systems
• Tough bargainer with suppliers/partners • Printers & supplies
• Play a leading part in many standards-setting bodies (e.g. • Customers using specialized system flavors like HPUX, Tru
RFID, EPC Global, W3C, etc.). 64 and FAX have a lot invested in it & are locked-in.

System Lock-In
Exclusive Channel
• Sold direct, online, & via technology, Low Cost Pricing
software, systems integration & channel
partners • Consumer goods & even low-end servers, PCs & other
systems are priced very low - Dell & HP/Compaq play a see-
saw game almost every quarter when it comes to pricing &
overall revenue
Horizontal Breadth
• PDA, PC, Notebook, camera, printer, ink, scanner, server -
hp • Printers are practically given away
big & small, storage, software, solutions & services to name • Services & solutions sold used a global delivery model
a few using a combination of in-store, off-store & near-store to offer
the best price for customer
• Financial services & leasing options offered for customers in
need.,

Total Customer Best Product

Solutions
Customer Integration Differentiation
• Long-term vision
• Exceed customer expectation • Achieve high sales by offering broad
Reduce Customer Experience assortment of innovative products, services
• Strong regional, national & growing international presence -
doing business in 178 countries • Total-customer experience is something HP prides itself on solutions at relatively low prices
& it actively measures this using metrics
• Community involvement - grants to schools & other
institutions, charities, scholars, etc. • Go to market using the best solution which may be a • Offer specific targeted solutions to each
partner’s product on HP platform
• Rise to occasions like the recent Tsunami, Katrina, SE customer segment - consumer, enterprise,
Asian Earthquake, etc. by donating cash & products & by • Create the best customer experience using the best team -
one face to the customer & one throat to choke idea public-sector
encouraging employees to donate & match their
contributions. • Demo-days & other shows to help people understand & • Focus on catering to regional requirements,
enjoy the technology coming out of HP Labs
e.g. N. American solution offering maybe
different than one for Asia-Pacific or Europe.
Source: Popsi Narasimhan, “Hewlett-Packard Company”, 15.902 research paper, Fall 2005
 HP - Viewed Through the Delta Model
Dominant Exchange Proprietary Channel
• Owning the industry’s largest IT Supply Chain havs the • Non-Stop (Tandem) Platform proprietary; e.g. 95% of World
ability to “mandate” suppliers to out-perform, set standards, Stock exchanges, 2 out of 3 credit card transactions, mobile
meet other IT needs by challenge/motivation & telecomm exchanges, public safety 911 systems
• Tough bargainer with suppliers/partners • Printers & supplies
• Play a leading part in many standards-setting bodies (e.g. • Customers using specialized system flavors like HPUX, Tru
RFID, EPC Global, W3C, etc.). 64 and FAX have a lot invested in it & are locked-in.

System Lock-In
Exclusive Channel
• Sold direct, online, & via technology, Low Cost Pricing
software, systems integration & channel
partners • Consumer goods & even low-end servers, PCs & other
systems are priced very low - Dell & HP/Compaq play a see-
saw game almost every quarter when it comes to pricing &
overall revenue
Horizontal Breadth
• PDA, PC, Notebook, camera, printer, ink, scanner, server -
hp • Printers are practically given away
big & small, storage, software, solutions & services to name • Services & solutions sold used a global delivery model
a few using a combination of in-store, off-store & near-store to offer
the best price for customer
• Financial services & leasing options offered for customers in
need.,

Total Customer Best Product

Customer Integration
• Long-term vision
• Exceed customer expectation
• Strong regional, national & growing international
presence - doing business in 178 countries
• Community involvement - grants to schools &
other institutions, charities, scholars, etc.
• Rise to occasions like the recent Tsunami,
Katrina, SE Asian Earthquake, etc. by donating
cash & products & by encouraging employees to
donate & match their contributions.
Source: Popsi Narasimhan, “Hewlett-Packard Company”, 15.902 research paper, Fall 2005
Solutions
Differentiation
Reduce Customer Experience • Achieve high sales by offering broad
assortment of innovative products, services
• Total-customer experience is something HP prides itself on & solutions at relatively low prices
• Offer specific targeted solutions to each
it actively measures this using metrics customer segment - consumer, enterprise,
public-sector
• Go to market using the best solution which may be a partner’s
• Focus on catering to regional
product on HP platform requirements, e.g. N. American solution
offering maybe different than one for Asia-
• Create the best customer experience using the best team - Pacific or Europe.
one face to the customer & one throat to choke idea
• Demo-days & other shows to help people understand & enjoy
the technology coming out of HP Labs
 HP - Viewed Through the Delta Model
Dominant Exchange
• Owning the industry’s largest IT Supply Chain havs the
ability to “mandate” suppliers to out-perform, set standards,
meet other IT needs by challenge/motivation
• Tough bargainer with suppliers/partners
• Play a leading part in many standards-setting bodies (e.g.
RFID, EPC Global, W3C, etc.).
Exclusive Channel
• Sold direct, online, & via technology,
software, systems integration & channel
partners
Horizontal Breadth
• PDA, PC, Notebook, camera, printer, ink, scanner, server -
big & small, storage, software, solutions & services to name
a few
• Financial services & leasing options offered for customers in
need.,
Customer Integration Total Customer
Solutions
• Long-term vision
• Exceed customer expectation
• Strong regional, national & growing international
presence - doing business in 178 countries
• Community involvement - grants to schools &
other institutions, charities, scholars, etc.
• Rise to occasions like the recent Tsunami,
Katrina, SE Asian Earthquake, etc. by donating
cash & products & by encouraging employees to
donate & match their contributions.
Source: Popsi Narasimhan, “Hewlett-Packard Company”, 15.902 research paper, Fall 2005
Proprietary Channel
• Non-Stop (Tandem) Platform proprietary; e.g. 95% of World
Stock exchanges, 2 out of 3 credit card transactions, mobile
& telecomm exchanges, public safety 911 systems
• Printers & supplies
• Customers using specialized system flavors like HPUX, Tru
64 and FAX have a lot invested in it & are locked-in.
System Lock-In
Low Cost Pricing
• Consumer goods & even low-end servers, PCs & other
systems are priced very low - Dell & HP/Compaq play a see-
saw game almost every quarter when it comes to pricing &
overall revenue
hp • Printers are practically given away
• Services & solutions sold used a global delivery model
using a combination of in-store, off-store & near-store to offer
the best price for customer
Best Product
Differentiation
• Achieve high sales by offering broad
Reduce Customer Experience
assortment of innovative products, services
• Total-customer experience is something HP prides itself solutions at relatively low prices
on & it actively measures this using metrics
• Offer specific targeted solutions to each
• Go to market using the best solution which may be a customer segment - consumer, enterprise,
partner’s product on HP platform public-sector
• Create the best customer experience using the best • Focus on catering to regional
team - one face to the customer & one throat to choke requirements, e.g. N. American solution
idea offering maybe different than one for Asia-
Pacific or Europe.
• Demo-days & other shows to help people understand &
enjoy the technology coming out of HP Labs
 HP - Viewed Through the Delta Model
Dominant Exchange
• Owning the industry’s largest IT Supply Chain havs the
ability to “mandate” suppliers to out-perform, set standards,
meet other IT needs by challenge/motivation
• Tough bargainer with suppliers/partners
• Play a leading part in many standards-setting bodies (e.g.
RFID, EPC Global, W3C, etc.).
Exclusive Channel
• Sold direct, online, & via technology,
software, systems integration & channel
partners
Horizontal Breadth
• PDA, PC, Notebook, camera, printer,
ink, scanner, server - big & small,
storage, software, solutions & services to
name a few
• Financial services & leasing options
offered for customers in need.,
Total Customer
Solutions
Customer Integration
• Long-term vision
• Exceed customer expectation
• Strong regional, national & growing international presence -
doing business in 178 countries
• Community involvement - grants to schools & other
institutions, charities, scholars, etc.
• Rise to occasions like the recent Tsunami, Katrina, SE
Asian Earthquake, etc. by donating cash & products & by
encouraging employees to donate & match their
contributions.
Source: Popsi Narasimhan, “Hewlett-Packard Company”, 15.902 research paper, Fall 2005
System Lock-In
hp
Best Product
Reduce Customer Experience
• Total-customer experience is something HP prides itself on prices
& it actively measures this using metrics
• Go to market using the best solution which may be a
partner’s product on HP platform
• Create the best customer experience using the best team - American solution offering maybe different than one for Asia-
one face to the customer & one throat to choke idea
• Demo-days & other shows to help people understand &
enjoy the technology coming out of HP Labs
Proprietary Channel
• Non-Stop (Tandem) Platform proprietary; e.g. 95% of World
Stock exchanges, 2 out of 3 credit card transactions, mobile
& telecomm exchanges, public safety 911 systems
• Printers & supplies
• Customers using specialized system flavors like HPUX, Tru
64 and FAX have a lot invested in it & are locked-in.
Low Cost Pricing
• Consumer goods & even low-end servers, PCs & other
systems are priced very low - Dell & HP/Compaq play a see-
saw game almost every quarter when it comes to pricing &
overall revenue
• Printers are practically given away
• Services & solutions sold used a global delivery model
using a combination of in-store, off-store & near-store to offer
the best price for customer
Differentiation
• Achieve high sales by offering broad assortment of
innovative products, services solutions at relatively low
• Offer specific targeted solutions to each customer segment
- consumer, enterprise, public-sector
• Focus on catering to regional requirements, e.g. N.
Pacific or Europe.
 HP - Viewed Through the Delta Model
Dominant Exchange Proprietary Channel
• Owning the industry’s largest IT Supply Chain havs the • Non-Stop (Tandem) Platform proprietary; e.g. 95% of World
ability to “mandate” suppliers to out-perform, set standards, Stock exchanges, 2 out of 3 credit card transactions, mobile
meet other IT needs by challenge/motivation & telecomm exchanges, public safety 911 systems
• Tough bargainer with suppliers/partners • Printers & supplies
• Play a leading part in many standards-setting bodies (e.g. • Customers using specialized system flavors like HPUX, Tru
RFID, EPC Global, W3C, etc.). 64 and FAX have a lot invested in it & are locked-in.

Exclusive Channel System Lock-In

• Sold direct, online, & via Low Cost Pricing
technology, software, systems • Consumer goods & even low-end servers, PCs & other
integration & channel partners systems are priced very low - Dell & HP/Compaq play a see-
saw game almost every quarter when it comes to pricing &
overall revenue
Horizontal Breadth
• PDA, PC, Notebook, camera, printer, ink, scanner, server -
hp • Printers are practically given away
big & small, storage, software, solutions & services to name • Services & solutions sold used a global delivery model
a few using a combination of in-store, off-store & near-store to offer
the best price for customer
• Financial services & leasing options offered for customers in
need.,

Total Customer Best Product

Solutions
Customer Integration
• Long-term vision
• Exceed customer expectation
• Strong regional, national & growing international presence -
doing business in 178 countries
• Community involvement - grants to schools & other
institutions, charities, scholars, etc.
• Rise to occasions like the recent Tsunami, Katrina, SE
Asian Earthquake, etc. by donating cash & products & by
encouraging employees to donate & match their
contributions.
Differentiation
• Achieve high sales by offering broad assortment of
Reduce Customer Experience
innovative products, services solutions at relatively low
• Total-customer experience is something HP prides itself on prices
& it actively measures this using metrics
• Offer specific targeted solutions to each customer segment
• Go to market using the best solution which may be a - consumer, enterprise, public-sector
partner’s product on HP platform
• Focus on catering to regional requirements, e.g. N.
• Create the best customer experience using the best team - American solution offering maybe different than one for Asia-
one face to the customer & one throat to choke idea Pacific or Europe.
• Demo-days & other shows to help people understand &
enjoy the technology coming out of HP Labs

Source: Popsi Narasimhan, “Hewlett-Packard Company”, 15.902 research paper, Fall 2005
 HP - Viewed Through the Delta Model
Dominant Exchange
Proprietary Channel
• Owning the industry’s largest IT Supply Chain • Non-Stop (Tandem) Platform proprietary; e.g. 95% of World
havs the ability to “mandate” suppliers to out- Stock exchanges, 2 out of 3 credit card transactions, mobile
& telecomm exchanges, public safety 911 systems
perform, set standards, meet other IT needs by • Printers & supplies
challenge/motivation
• Customers using specialized system flavors like HPUX, Tru
64 and FAX have a lot invested in it & are locked-in.
• Tough bargainer with suppliers/partners
• Play a leading part in many standards-setting
System Lock-In
bodies (e.g. RFID, EPC Global, W3C, etc.).
Low Cost Pricing
Exclusive Channel • Consumer goods & even low-end servers, PCs & other
• Sold direct, online, & via technology, systems are priced very low - Dell & HP/Compaq play a see-
software, systems integration & channel saw game almost every quarter when it comes to pricing &
partners overall revenue

Horizontal Breadth hp • Printers are practically given away

• PDA, PC, Notebook, camera, printer, ink, scanner, server - • Services & solutions sold used a global delivery model
big & small, storage, software, solutions & services to name using a combination of in-store, off-store & near-store to offer
a few the best price for customer

• Financial services & leasing options offered for customers in

need.,
Total Customer Best Product
Solutions
Customer Integration
• Long-term vision Differentiation
• Exceed customer expectation • Achieve high sales by offering broad assortment of
Reduce Customer Experience
• Strong regional, national & growing international presence - innovative products, services solutions at relatively low
doing business in 178 countries • Total-customer experience is something HP prides itself on prices
& it actively measures this using metrics
• Community involvement - grants to schools & other • Offer specific targeted solutions to each customer segment
institutions, charities, scholars, etc. • Go to market using the best solution which may be a - consumer, enterprise, public-sector
partner’s product on HP platform
• Rise to occasions like the recent Tsunami, Katrina, SE • Focus on catering to regional requirements, e.g. N.
Asian Earthquake, etc. by donating cash & products & by • Create the best customer experience using the best team - American solution offering maybe different than one for Asia-
encouraging employees to donate & match their one face to the customer & one throat to choke idea Pacific or Europe.
contributions. • Demo-days & other shows to help people understand &
enjoy the technology coming out of HP Labs

Source: Popsi Narasimhan, “Hewlett-Packard Company”, 15.902 research paper, Fall 2005
 Partnerships and alliances
Leveraging the best of the industry

Technology
Partners

Software
Partners

System
Integration
Partners

Channel
Partners

Source: Popsi Narasimhan, “Hewlett-Packard Company”, 15.902 research paper, Fall 2005
 Gartner Magic Quadrant - December 2006

Source: Flavio Fomin, “Strategic Analysis of EMC Corporation”, 15.902 research

paper, Fall 2007
 The Delta Model: Singapore’s Strategic Positioning
Dominant Exchange
• Comprehensive networks of Free Trade Agreements Proprietary Channel
• Key node in the global network linked to all major • International hubs for specific sectors like
economies finance, commerce, trade & R&D
2000-2010s
• Gateway into & out of Asia

Future:
Exclusive Channel
System Lock-In
• External ties with major economies
• Network of Free Trade Agreements
• Gateway into & out of Asia Low Cost of Doing Business
• Low labor & business cost
Horizontal Breadth • Low personal & corporate tax rates
• Broad & diversified base of economic • Avoid fiscal budget deficits
players
• Twin engines of economic growth in
manufacturing & services 1960-1980s
1990-2000s
Current: Total
Customer Solutions Past: Best Product

Redefining Customer Relationship 1980-1990s

• High quality human capital
• Entrepreneurship & innovative economy Differentiation - Value-Added Proposition

• Long-term vision • Pro-market, pro-competition environment

• Competitiveness & flexibility Customer Integration • Efficient & effective government

• World-class legal, regulatory & • Expand international & regional trade networks • First-class business infrastructure
telecommunications infrastructure • Implement international best practices for accounting • Educated & trained labor force
& compliance framework

Source: Fook-Chuen Ow, “The Delta Model Analysis of the Competitiveness of Singapore
Inc.”, 15.902 research paper, Fall 2005
 The Delta Model: Singapore’s Strategic Positioning
Dominant Exchange
• Comprehensive networks of Free Trade Agreements
Proprietary Channel
• Key node in the global network linked to all major
economies
• International hubs for specific
• Gateway into & out of Asia 2000-2010s sectors like finance, commerce,
trade & R&D
Future:
Exclusive Channel
System Lock-In
• External ties with major economies
• Network of Free Trade Agreements
• Gateway into & out of Asia
Low Cost of Doing Business
• Low labor & business cost
Horizontal Breadth • Low personal & corporate tax rates
• Broad & diversified base of economic players • Avoid fiscal budget deficits
• Twin engines of economic growth in
manufacturing & services
1960-1980s
1990-2000s
Current: Total
Customer Solutions Past: Best Product

Redefining Customer Relationship 1980-1990s

• High quality human capital
• Entrepreneurship & innovative economy Differentiation - Value-Added Proposition
• Long-term vision • Pro-market, pro-competition environment
• Competitiveness & flexibility Customer Integration • Efficient & effective government
• World-class legal, regulatory & telecommunications • Expand international & regional trade networks • First-class business infrastructure
infrastructure
• Implement international best practices for accounting & • Educated & trained labor force
compliance framework

Source: Fook-Chuen Ow, “The Delta Model Analysis of the Competitiveness of Singapore
Inc.”, 15.902 research paper, Fall 2005
 The Delta Model: Singapore’s Strategic Positioning
Dominant Exchange
• Comprehensive networks of Free Trade Agreements Proprietary Channel
• Key node in the global network linked to all major • International hubs for specific sectors like
economies finance, commerce, trade & R&D
• Gateway into & out of Asia 2000-2010s

Future:
Exclusive Channel
System Lock-In
• External ties with major economies Low Cost of Doing Business
• Network of Free Trade Agreements
• Gateway into & out of Asia
• Low labor & business cost
• Low personal & corporate tax
Horizontal Breadth
rates
• Broad & diversified base of economic players • Avoid fiscal budget deficits
• Twin engines of economic growth in
manufacturing & services
1960-1980s
1990-2000s
Current: Total
Customer Solutions Past: Best Product

Redefining Customer Relationship 1980-1990s

• High quality human capital
• Entrepreneurship & innovative economy Differentiation - Value-Added Proposition
• Long-term vision • Pro-market, pro-competition environment
• Competitiveness & flexibility Customer Integration • Efficient & effective government
• World-class legal, regulatory & telecommunications • Expand international & regional trade networks • First-class business infrastructure
infrastructure
• Implement international best practices for accounting & • Educated & trained labor force
compliance framework

Source: Fook-Chuen Ow, “The Delta Model Analysis of the Competitiveness of Singapore
Inc.”, 15.902 research paper, Fall 2005
 The Delta Model: Singapore’s Strategic Positioning
Dominant Exchange
• Comprehensive networks of Free Trade Agreements Proprietary Channel
• Key node in the global network linked to all major • International hubs for specific sectors like
economies finance, commerce, trade & R&D
• Gateway into & out of Asia 2000-2010s

Future:
Exclusive Channel
System Lock-In
• External ties with major economies
• Network of Free Trade Agreements
• Gateway into & out of Asia Low Cost of Doing Business
• Low labor & business cost
Horizontal Breadth • Low personal & corporate tax rates
• Broad & diversified base of economic players • Avoid fiscal budget deficits
• Twin engines of economic growth in
manufacturing & services
1960-1980s
1990-2000s
Current: Total
Customer Solutions Past: Best Product

Redefining Customer Relationship

1980-1990s
• High quality human capital
Differentiation - Value-Added Proposition
• Entrepreneurship & innovative economy
• Long-term vision • Pro-market, pro-competition
• Competitiveness & flexibility Customer Integration environment
• World-class legal, regulatory & telecommunications • Expand international & regional trade networks
infrastructure • Efficient & effective government
• Implement international best practices for accounting &
compliance framework • First-class business infrastructure
• Educated & trained labor force

Source: Fook-Chuen Ow, “The Delta Model Analysis of the Competitiveness of Singapore
Inc.”, 15.902 research paper, Fall 2005
 The Delta Model: Singapore’s Strategic Positioning
Dominant Exchange
• Comprehensive networks of Free Trade Agreements Proprietary Channel
• Key node in the global network linked to all major • International hubs for specific sectors like
economies finance, commerce, trade & R&D
• Gateway into & out of Asia 2000-2010s

Future:
Exclusive Channel
System Lock-In
• External ties with major economies
• Network of Free Trade Agreements
• Gateway into & out of Asia
Low Cost of Doing Business
• Low labor & business cost
Horizontal Breadth • Low personal & corporate tax rates
• Broad & diversified base of economic players • Avoid fiscal budget deficits
• Twin engines of economic growth in
manufacturing & services
1960-1980s
1990-2000s
Current: Total
Customer Solutions Past: Best Product

Redefining Customer Relationship 1980-1990s

• High quality human capital
• Entrepreneurship & innovative economy Differentiation - Value-Added Proposition
• Long-term vision • Pro-market, pro-competition environment
Customer Integration
• Competitiveness & flexibility • Efficient & effective government
• World-class legal, regulatory & telecommunications • Expand international & regional trade • First-class business infrastructure
infrastructure
networks • Educated & trained labor force

• Implement international best practices

for accounting & compliance framework

Source: Fook-Chuen Ow, “The Delta Model Analysis of the Competitiveness of Singapore
Inc.”, 15.902 research paper, Fall 2005
 The Delta Model: Singapore’s Strategic Positioning
Dominant Exchange
• Comprehensive networks of Free Trade Agreements Proprietary Channel
• Key node in the global network linked to all major • International hubs for specific sectors like
economies finance, commerce, trade & R&D
• Gateway into & out of Asia 2000-2010s

Future:
Exclusive Channel
System Lock-In
• External ties with major economies
• Network of Free Trade Agreements
• Gateway into & out of Asia
Low Cost of Doing Business
• Low labor & business cost
Horizontal Breadth • Low personal & corporate tax rates
• Broad & diversified base of economic players • Avoid fiscal budget deficits
• Twin engines of economic growth in
manufacturing & services
1960-1980s
1990-2000s
Current: Total
Customer Solutions Past: Best Product

Redefining Customer Relationship

• High quality human capital
• Entrepreneurship & innovative economy
• Long-term vision
• Competitiveness & flexibility
• World-class legal, regulatory &
telecommunications infrastructure
1980-1990s
Differentiation - Value-Added Proposition
• Pro-market, pro-competition environment
Customer Integration • Efficient & effective government
• Expand international & regional trade networks • First-class business infrastructure
• Implement international best practices for accounting & • Educated & trained labor force
compliance framework

Source: Fook-Chuen Ow, “The Delta Model Analysis of the Competitiveness of Singapore
Inc.”, 15.902 research paper, Fall 2005
 The Delta Model: Singapore’s Strategic Positioning
Dominant Exchange
• Comprehensive networks of Free Trade Agreements Proprietary Channel
• Key node in the global network linked to all major • International hubs for specific sectors like
economies finance, commerce, trade & R&D
• Gateway into & out of Asia 2000-2010s

Exclusive Channel Future:

• External ties with major economies System Lock-In
• Network of Free Trade Agreements
• Gateway into & out of Asia

Horizontal Breadth Low Cost of Doing Business

• Low labor & business cost
• Broad & diversified base of • Low personal & corporate tax rates
economic players • Avoid fiscal budget deficits

• Twin engines of economic growth

in manufacturing & services 1960-1980s
1990-2000s
Current: Total
Customer Solutions Past: Best Product

Redefining Customer Relationship 1980-1990s

• High quality human capital
• Entrepreneurship & innovative economy Differentiation - Value-Added Proposition
• Long-term vision • Pro-market, pro-competition environment
• Competitiveness & flexibility Customer Integration • Efficient & effective government
• World-class legal, regulatory & telecommunications • Expand international & regional trade networks • First-class business infrastructure
infrastructure
• Implement international best practices for accounting & • Educated & trained labor force
compliance framework

Source: Fook-Chuen Ow, “The Delta Model Analysis of the Competitiveness of Singapore
Inc.”, 15.902 research paper, Fall 2005
 The Delta Model: Singapore’s Strategic Positioning
Dominant Exchange
• Comprehensive networks of Free Trade Agreements Proprietary Channel
• Key node in the global network linked to all major • International hubs for specific sectors like
economies finance, commerce, trade & R&D
• Gateway into & out of Asia 2000-2010s

Exclusive Channel Future:

System Lock-In
• External ties with major economies
• Network of Free Trade Agreements
Low Cost of Doing Business
• Gateway into & out of Asia • Low labor & business cost
• Low personal & corporate tax rates
• Avoid fiscal budget deficits
Horizontal Breadth
• Broad & diversified base of economic players
• Twin engines of economic growth in
1960-1980s
manufacturing & services 1990-2000s
Current: Total
Customer Solutions Past: Best Product

Redefining Customer Relationship 1980-1990s

• High quality human capital
• Entrepreneurship & innovative economy Differentiation - Value-Added Proposition
• Long-term vision • Pro-market, pro-competition environment
• Competitiveness & flexibility Customer Integration • Efficient & effective government
• World-class legal, regulatory & telecommunications • Expand international & regional trade networks • First-class business infrastructure
infrastructure
• Implement international best practices for accounting & • Educated & trained labor force
compliance framework

Source: Fook-Chuen Ow, “The Delta Model Analysis of the Competitiveness of Singapore
Inc.”, 15.902 research paper, Fall 2005
 The Delta Model: Singapore’s Strategic Positioning
Dominant Exchange
• Comprehensive networks of Free Trade Proprietary Channel

Agreements • International hubs for specific sectors like

finance, commerce, trade & R&D
• Key node in the global network linked to all 2000-2010s
major economies
Future:
• Gateway into & out of Asia System Lock-In
Exclusive Channel
• External ties with major economies
Low Cost of Doing Business
• Network of Free Trade Agreements
• Low labor & business cost
• Gateway into & out of Asia
• Low personal & corporate tax rates
Horizontal Breadth
• Avoid fiscal budget deficits
• Broad & diversified base of economic players
• Twin engines of economic growth in
manufacturing & services
1960-1980s
1990-2000s
Current: Total
Customer Solutions Past: Best Product

Redefining Customer Relationship 1980-1990s

• High quality human capital
• Entrepreneurship & innovative economy Differentiation - Value-Added Proposition
• Long-term vision • Pro-market, pro-competition environment
• Competitiveness & flexibility Customer Integration • Efficient & effective government
• World-class legal, regulatory & telecommunications • Expand international & regional trade networks • First-class business infrastructure
infrastructure
• Implement international best practices for accounting & • Educated & trained labor force
compliance framework

Source: Fook-Chuen Ow, “The Delta Model Analysis of the Competitiveness of Singapore
Inc.”, 15.902 research paper, Fall 2005
 Putting it all Together -
How to capture the critical tasks
of strategy
From the Customer Segmentation to Strategic
Agenda
Value Proposition

Bundle of Competencies
System
Lock-In

Strategic Positioning
Total Customer Best Product
Solution

1
2 Mission Statement
5 3 6 4
Scope
Customer
“From” “To”
Classification

Strategic Thrusts
Customer Segment
Tier 1: Exclusive Partner
Tra
Tier 2: Strategic/Integrated Partner
Tier 3: Project Solution Seekers
Tier 4: Body Shoppers
 DMK:
Outsourcing Information Technology from China

Task #1: Customer Segmentation

 Customer Segmentation
Tier 1: Exclusive Partner Tier 4: Body Shoppers
• Japan based orgs requiring • Transactional relationship to provide
outsourcing of IBM mainframe supplemental staff without much end -
applications client relationship
System Lock-In
• Opportunity for customer lock-in
• IBM JV • Existing customers: IBM
• Existing customers: GE Japan, JBCC,
AIG

Total Customer Best

Solutions Product

Tier 3: Project Solution Seekers

Tier 2: Strategic/Integrated Partner
• Long term symbiotic partnership with
high value added
• Existing customers: GE China, GE US,
Kawasaki, Unisys
• Full project ownership and solution
delivery responsibility without
established (but potential) for long-
term client relationship
• Existing customer: Toyota, Honda,
US prospects, Dept. of Transportation
China
 Customer Segmentation
Business Dimension for Tier 1 - “Exclusive Partner”
Customer Dimension Description

Products Critical partner to client providing highly integrated, customer

specific, high-value added turnkey solutions for legacy mainframe
applications in Japanese market
Services 24x7 Maintenance of mission-critical mainframe legacy
applications. Application extension through analysis, design and
development of new, integrated modules.
Customer Japanese Corporations in Financial Services, Insurance, etc.
industries

Channels Direct, Referrals from highly satisfied existing clients

End Users Japanese Corporations, Japanese Government organizations

Complementors IBM (as an h/2 and s/2 partner), existing clients, Accenture

Unique Competencies 1. Combination of deep knowledge of mainframe applications and

deep understanding of Japanese culture (not available to other
companies in China.
2. Very high level of quality (only CMM level 5 and Six-Sigma
company in China) combined with all the other cost advantages
available to Chinese companies not available anywhere else in
the world.
 Customer Segmentation
Value Proposition for Tier 1 - “Exclusive Partner”

Value Proposition
Description
Element
Experiences Seamless extension of Client team with integrated culture, skilled
technologists with deep understanding of clients business.

Value Delivery Systems • Dedicated client-focused team immersed in all aspects of client’s
culture
• Network integration to seamlessly extend client environment
• Open communication of all relevant information on both sides
• Executive sponsor, CEO oversight, an full corporate reach
• CMM and Six-Sigma delivery methodologies for delivery
• Value added reselling of hardware and software for one-stop-
shopping
Value Appropriation • Value gained by customer: Superior ROI, improved time-to-
market, Security, Resource stability
• Value gained by DMK: Exclusive long-term relationship, higher
margins, predictable revenue
• Value shared by both: Shared IP, shared learning, shared risk
 Customer Segmentation
Business Dimension for Tier 2 - “Strategic Partner”

Customer Dimension Description

Products Long-term relationship with client to provide customized and

integrated solutions across multiple business units

Services • T&M and Fixed price application development across multi-phase

projects
• Joint application development enabled through deep
understanding of client culture and methodology
• Dedicated retained teams as extension of clients IT organization
Customer GE US, GE China, Kawasaki, Unisys

Channels Direct

End Users N/A

Complementors Other GE partners, IBM, other software partners, Accenture

Unique Competencies 1. One of 12 exclusive outsourcing vendors or GE

2. Six-Sigma/CMM level-5 quality combined with China’s cost
advantage.
 Customer Segmentation
Value Proposition for Tier 2 - “Strategic Partner”

Value Proposition
Description
Element
Experiences Integrated teams of skilled technologists with deep understanding
of client’s business

Value Delivery Systems • Dedicated client-focused teams fully rained in clients

methodologies and processes
• Joint development plans
• Cross-training and periodic two-way knowledge transfer
• Business Relationship Manager, CEO oversight and full corporate
reach
Value Appropriation • Value gained by customer: Superior ROI, improved time-to-
market, Security, Resource stability, Shared risk, Continuous
improvement
• Value gained by DMK: Access to client network as sales channel,
credibility, learning
• Value shared by both: Co-development of shared standards and
processes
 Customer Segmentation
Business Dimension for Tier 3 - “Project Solution
Seekers”

Customer Dimension Description

Products Individual project solutions without committed long-term

relationship
Services T&M and Fixed price application development of discrete projects

Customer Toyota, Honda, Department of Transportation China, US prospects

Channels • Direct
• Consulting partners such as IBM
• Strategic partners such as GE
End Users N/A

Complementors IBM, GE, other software partners, Accenture

Unique Competencies Six-Sigma/CMM level-5 quality combined with China’s cost

advantage.
 Customer Segmentation
Value Proposition for Tier 3 - “Project Solution
Seekers”

Value Proposition
Description
Element
Experiences End-end-end delivery of a project with high quality and
competitive price
Value Delivery Systems • Structured processes and teams with high quality of performance
• Ability to quickly ramp-up on clients business and culture
• Process for seamless transition at end of project
• Dedicated project team manager with executive oversight
Value Appropriation • Value gained by customer: Experimentation , learning, flexibility,
reduced time-to-market, high quality, ROI
• Value gained by DMK: Opportunity for long-term relationship,
ROI, learning
• Value shared by both: Shared learning in business domain and
new technology
 Customer Segmentation
Business Dimension for Tier 4 - “Body Shoppers”

Customer Dimension Description

Products Individual resources to supplement existing project teams and fill

skills gaps (transactional)
Services • T&M and retained resources for fixed time durations
• Provide specific technology development skills on projects

Customer IBM Japan, NEC

Channels • Direct
• Consulting partners such as IBM
End Users Corporations

Complementors N/A

Unique Competencies 1. Consulting partnerships

2. Technology skill differentiation
 Customer Segmentation
Value Proposition for Tier 4 - “Body Shoppers”

Value Proposition
Description
Element
Experiences Supplement team with individual resources and fill gaps with skill
expertise
Value Delivery Systems • Strong bench that can be tapped on demand
• Mix of skills and expertise

Value Appropriation • Value gained by customer: Resources of demand and skills on

demand
• Value gained by DMK: Opportunity to up-sell, learning, improved
bonding
• Value shared by both: Exchange of skills
 DMK:
Outsourcing Information Technology from China

Task #2: Firm as a Bundle of

Competencies
 Bundle of competencies analysis
Dominant Exchange
(current)
1. No specific competence Systems Lock-In
that creates strong 1. No specific competence
brokerage position that creates industry standards
Exclusive Channel
1. One of few firms with
low cost mainframe
expertise (customer’s low
entry barriers)
2. High switching costs for Low Cost
fully integrated clients 1. Wage differential w.
(customer’s high exit Japan, US, EU and
barriers) India
2. Large pool of skill in
Customer Integration area
1. Dedicated teams 3. Experience leveraging
2. Experience in work loads and
outsourcing resources profitably
3. IBM JV
Horizontal Breadth Differentiation
Redefining Experience
1. Mainframe & newer 1. Japanese speaking
1. Processes and
languages expertise personnel
expertise at end-to-
2. Multiple industry 2. Compatibility with
end projects
verticals customer’s culture
3. System development, 3. IBM Mainframe expertise
testing and maintenance 4. Six-Sigma, CMM5
 Bundle of competencies analysis
Dominant Exchange
(desired)
1. Opportunity to Systems Lock-In
create dominant
exchange for Tier 1
customers

Exclusive Channel

Low Cost

Customer Integration
1. Recruit teams that can
easily integrate with
customers across countries

Horizontal Breadth Redefining Experience Differentiation

1. System design and 1. Integration with US, 1. English, western forms
Architecture expertise EU IS providers
2. Consulting expertise
Bundle of competencies analysis
Low Cost (location specific)

• Chinese wages are not only below those of

developed countries where DMK’s clients reside but
also below India.
• Over 100.000 technology and computer sciences
graduates per year in Dalian make this region a
contender for the long term. Also capacity for rapid
operation upscaling

Low Cost (firm specific)

• Expertise in managing sudden changes in demand

and supply profitably

Differentiation (location specific)

• Large population (old immigrants from Japan) that can speak and are familiar
with the social and business manners of that country

Differentiation (firm specific)

• IBM mainframe expertise that comes from core team acquired when a Chinese
bank was dismantled.
• Six sigma certification and first company in China to get CMM5 certification
 Bundle of competencies analysis
Horizontal Breath

• DMK’s strength in mainframes is complemented with

expertise in newer programming platforms

• DMK is particularly strong at the development,

testing and maintenance end of projects; developing
design, architecture and consulting expertise is one of
its challenges

• DMK business strengths lie in the financial and

insurance sectors although it is slowly developing
expertise in other verticals

Customer Integration
Redefining Customer Experience
• Due to its expertise in Mainframe systems DMK
has been able to integrate some of their • DMK has developed quite a remarkable level of
customers’ key operations with its own expertise at carrying out end-to-end projects
with smooth transition at end of project and tight
• Outsourcing from mainframe clients has also cost management
allowed DMK develop customer integration
expertise that are transferable to other industries,
functions and newer technologies
 Bundle of competencies analysis
Systems Lock In

• DMK has not developed any industry

standard that allows for a systems
lock-in position
Dominant Exchange

• DMK should pursue a dominant exchange position

with selected Tier 1 customers

• One such position might be achieved if DMK

developed strong coordination expertise between sub-
contractors or specialists in China and IS firms or final
customers in more developed markets

Exclusive Channel

• DMK has been capable to develop some high barriers of entry for its competitors due to the
limited amount of expertise available in mainframe systems at relatively low costs

• As DMK has integrated with its “main partners”, it has also created high barriers of entry for
its competitors due to the high costs its clients would incur if they switched IS suppliers. These
costs stem, mainly, from the highly tacit knowledge about the clients operations acquired
through continuous interaction
 DMK:
Outsourcing Information Technology from China

Task #3: The Mission Statement

DMK - Building the Outsourcing Model of
the Future
Become the #1 provider of Business Process Outsourcing and IT
Services in China:

• Analyzing, designing, developing, deploying, and

maintaining software systems and solutions.
• Delivering the highest quality of service and unparalleled
value
• Integrating seamlessly with complementary local service
providers
• Servicing large and mid-sized corporations, government
departments and non-profit organizations
• Through experienced, passionate and hard-working
associates driven to provide outstanding service
• Focusing first on Japan, China and US, and expanding next
into Europe and Latin American markets
 The Transformation of DMK
Now Future
Customer Scope Primarily large corporations, Government departments Expand to include Service providers at the high-end of the software
of China services value chain.

End-User Scope Large Corporations, Government departments in China Expand to include mid-sized corporations, State and Federal
government departments, non-profit organization

Channel Scope Direct, Joint Venture Exclusive offshore service delivery partner-ships that allow white
labeling of DMK services

Complementor Hardware and software product companies Business Consulting, IT Strategy/Architecture consulting firms
Scope
Geographical Japan and China with limited presence in the U.S. U.S. and U.K. expand into countries where language of business is
non-English and where cost of IT services is higher than China.
Scope (Indian firms do not have language advantage while China-based
firms have significant cost advantage.)

Service Scope Lower end of software services value chain: Application Integrated service that captures the entire value chain through
development, system integration, system strong collaboration with complementors at the high-end of the
conversion/migration, maintenance and support software services value chain

Product Scope Technology base such as J2EE framework, 1. Horizontal Application frameworks such as Portal toolkits, Content
Microsoft.NET framework, etc. for rapid code Management toolkits, etc.
development 2. Solutions frameworks such as wealth management solutions for
financial services, employee portals as HR solutions, etc. that
leverage competencies/expertise of strategic and exclusive partners

Unique 1. High maturity in Software development process -
First company to obtain SEI CMM level 5 certification in
Competencies China.
2. Six-Sigma certified project and operations managers
to ensure data-driven analysis and predictability.
3. Low cost of China-based delivery
4. Japanese language and cultural strength
1. Ability to build teams that can integrate seamlessly to form
extensions of other service organizations
2. Develop familiarity and comfort in business/professional
relationships with other cultures based on geographic expansions
3. Develop strength in technical design and knowledge of specific
business domains for solutions development
 DMK:
Outsourcing Information Technology from China

Task #4: Strategic Agenda

 Strategic Agenda
Organizational Units

VP Operations

Businesess
Processes
VP Mktng
RP Japan
RP China

VP Sales
VP HR
RP US
CEO

CFO
Strategic T hrusts Performance
Build Internal Capabilities
1 Inv est in people, train and m otiv ate. Hire outstanding talent. Dev elop
strong technical design capabilities. 2 2 2 1 1 2 OE Attrition, # of recruits, per
2 Expand nationally lev eraging gov ernm ent program s to dev elop global Growth in GDC, # of emp
deliv ery centers throughout China. 1 2 1 1 2 2 2 OE profit margin
3 W ork with exclusiv e channel partners to dev elop horizontal
fram eworks (portals, content/doc m anagem ent) and industry specific Decrease in project execu
solution sets (energy, publishing, financial serv ices) for rapid in client satisfaction, incre
dev elopm ent. 1 2 2 2 1 2 1 I competitiveness
Solidify Core Markets
4 Dom inate IBM m ainfram e outsourcing m arket in Japan through
aggressing sales and m arketing program s. 2 1 2 2 1 1 CT Increase in profitable mar
5 Strengthen strategic relationships (e.g. IBM, G E, Kawasaki, Unisys)
through deep custom er understanding/integration and continuous Increase in client satisfac
im prov em ent. 1 2 1 1 1 2 OE size of relationship and p
Build US m arket
6 Dev elop strong direct-m arketing program to target the interm ediary High quality sales leads in
serv ice prov ider channel. 2 2 1 2 2 1 CT consulting and IT service
7 Activ ely pursue US based Consulting/high-end IT Serv ice firm s to
becom e their exclusiv e prov ider of design, dev elopm ent, & Increase in US market sh
m aintenance serv ices 2 1 2 1 2 CT # of exclusive partners an
8 Dev elop an engagem ent program with processes to ensure long-term , Client satisfaction, increa
successful integration of offshore DMK team with local serv ice firm . 1 1 2 2 I profitability of client
Expand to other m arkets
9 Expand to UK and test EU (Germ any, France, Italy) using an Increase in UK market sh
interm ediary partnership network sim ilar to US-strategy. 1 1 2 2 1 1 2 B partners/projects
10 Enter and test the Latin Am erican m arket (Brazil, Mexico, Chille) also Targeted relationships/pr
through an interm ediary partnership network. 1 1 2 2 1 1 2 B geographies
Strategic Agenda: Quality Tests
Dimension Description

Comprehensiveness The agenda extends across all of DMK’s services,

geographies and market segments including customers,
end users, channels and complementors
Stretch Performance measures for each thrust provides achievable
but stretch goals for the organization.

Monitoring and Control Milestones established throughout the process allow for
continuous monitoring and change in strategy if and as
required.
Motivation The mission combined with clear strategic thrust energizes
the organization with a common set of goals and flexibility
to innovate and grow.
Vulnerability No material vulnerabilities have been identified at this
time. Aligning execution with this strategic agenda will be
critical to the success of DMK.