Business strategy can be understood via the “Strategic Triangle,” or the “3 C’s,” proposed by Kenichi Ohmae in an article published in McKinsey Quarterly.
According to the author, this model is based on three key factors that must be balanced for any business strategy to succeed: the competition, the corporation and the customer (see Figure 1).
Strategy development should include a clear definition of the target market, correspondence between company strengths and market needs, and superior performance in some critical success factor, as compared to the competition.
With regard to competition, the author recommends that it be analyzed comprehensively. Observing merely what competitors offer to the market is not sufficient; one must observe also how they produce and which path they have chosen. For this reason, it is essential to anticipate possible shifts in the competition.
The corporation / company needs to focus on the maximization of its strengths. It is important that the strategy development process take into account all critical functions of the company, not just those related to a specific venture. Differentiation should be established based on the company’s strengths. A well-established differentiation will only be possible with the coordination of the different areas. It is also important that the company make decisions about subcontracting (capacity, cost structure, significant strategic advantages) and how effectively this can be accomplished in relation to cost reduction (selective purchasing, inventory management, choice of commodities, and use of automation).Regarding the client / customer, Ohmae argues that the company should analyze its proposition by evaluating the market comprehensively, rather than just a few niches; customer needs must be fulfilled in a comprehensive way. Through the use of surveys, the company can identify what customers are thinking and use this information when making strategic decisions.
By adopting the 3 C’s model proposed by Ohmae, it will be possible to focus on the three key components critical for business success.