12 Apr Ohmae’s 3C Model
Many different strategic planning tools helping organisations to compete effectively exist. One of the most famous of these is Ohmae’s 3C Model, developed in 1982. The model integrates what the author believes to be the 3 most critical elements that managers initiating a strategy should be focusing on. The elements are: The Customer, The Corporation and The Competitors. The model states that neglecting any one of these factors when designing a strategy will have serious consequences for its success. Not only is it important to analyse each of these factors in isolation, but also how they interact with each other.
The author goes into more detail into exactly how to analyse these components in the model and we have outlined the key points below.
Ohmae suggests it is important to segment customers in any way that is possible. This may be in terms of how they use the product, which customers can be reached at a reasonable cost or there may be a dramatic shift in customer preferences. Analysing make-up of these customer segments, and tailoring your strategy based on this, is crucial for long-term success.
Selectivity and sequencing is a strategy Ohmae argues is essential for generating long-term profits. There are an infinite number of different ways an organisation could function, but deciding on one that plays to your strengths and pursuing it is the first step to success. The organisation can then branch out once this strategy has started to raise capital. Trying to pursue too many different ventures can have catastrophic consequences. Another important decision is make or buy; the organisation must decide whether it will manufacture its own products and parts or buy them in.
Brand image is one of the most common ways an organisation attempts to set itself out from the crowd and it is particularly important in markets where all products are very similar. Different profit and cost structures are also often used to differentiate your own products from your competitors.
The key aim of the 3C Model is to capitalise on your organisational strengths and match these to the market needs and do so in a way to set yourself apart from your competitors. If this can be achieved, you can expect to generate long-term profits and experience high growth rates.
Ohmae, K. (1991). The Mind Of The Strategist: The Art of Japanese Business, McGraw-Hill, 1991