3Cs model

The 3C's Model is a business model, which offers a strategic look at the factors needed for success. It was developed by business and corporate strategist Kenichi Ohmae.

The 3C’s model points out that a strategist should focus on three key factors for success. In the construction of a business strategy, three main players must be taken into account:

1. The Customer
2. The Competitors
3. The Corporation

Only by integrating these three, a sustained competitive advantage can exist. Ohmae refers to these key factors as the three C’s or strategic triangle.

There are certain needs that arise from the customer end. They include core benefit or service and expected product. Recognizing this need the corporation or company offers a basic product. To cater to their expectations and also to differentiate from competitors who tend to morph their products, corporations offer augmented products. Also, both the corporation and the competitors eventually tap the existence of potential products.

There is also a new 3 C's model emerging which centers on sustainability. This model is:

1. Capability
2. Consistency
3. Cultivation

The idea behind the new 3 C's model revolves around the concept of shared value to the firm, the environment, and the community.

The Customer

Customers are the base of any strategy according to Kenichi Ohmae. Therefore, the primary goal is supposed to be the interest of the customer and not those of the shareholders. A company that is genuinely interested in its customers will be interesting for its investors.

Segmenting by objectives

The differentiation is done in terms of the different ways that various customers use a product.

Segmenting by customer coverage

This segmentation normally emerges from a trade-off study of marketing costs versus market coverage. The corporation’s task is to optimize its range of market coverage, geographically and/ or channel wise.

Segmenting the market once more

In fierce competition, competitors are likely to be dissecting the market in similarly. Over an extended period of time, the effectiveness of a given initial strategic segmentation will tend to decline. In such situations it is useful to pick a small group of customers and reexamine what it is that they are really looking for.

A market segment change occurs where the market forces are altering the distribution of the user-mix over time by influencing demography, distribution channels, customer size, etc.

The Competitors

Competitor based strategies can be constructed by looking at possible sources of differentiation in functions such as: purchasing, design, engineering, sales and servicing. The following aspects show ways in order to achieve this differentiation:

Capitalizing on profit and cost structure differences

Firstly, the difference in the source of profit might be exploited, from new products sales etc. Secondly, a difference in the ratio of fixed costs and variable costs might also be exploited strategically. A company with lower fixed cost ratio can lower prices in a sluggish market and hence gain market share.

Hito-Kane-Mono

Stands for people, money and things. The thought is that streamlined management is achieved when these three critical resources are in balance. Of the three critical resources, funds should be used last. The corporation should first look at management talent. Once the hito have developed creative and imaginative ideas to capture the business’s potential, the kane should be given to the specific ideas and programs generated by the individual managers.

The Corporation

Selectivity and sequencing

The corporation does not have to lead in every function. If it can gain an advantage in one function, it will eventually be able to improve its other functions.

Make or buy

With rising wage costs, there may be a decision for a company to subcontract a major share of its assembly operations. If its competitors can't shift production so rapidly to subcontractors and vendors, the difference in cost or in the company's ability to cope with market fluctuations may have significant implications.

See also

5C Analysis under Situation analysis

Bibliography

• Kenichi Ohmae, The Mind Of The Strategist: The Art of Japanese Business, McGraw-Hill, 1991

External links

• kohmae.com