So as you've listened, you may had come to your mind some disagreements with what I've said, and that's fine. Those disagreements should come to your mind because that's part of the learning process. But I have made the argument over and over that Dr. Porter has, which is that companies should choose one of these strategies or the other. But you may have asked yourself, well Professor Thomas, you used the example of Ford Motor Company, which makes automobiles, and used the example of the Focus, which is one vehicle. How is it that Ford does the opposite of what this model says? They make multiple cars, some are more expensive and differentiated, and higher end or more premium, and some are more entry level like the Focus. Professor Thomas, you might say to yourself, you said to choose one or the other. Well let's go back to the beginning. Remember the image I showed you of corporate strategy and multiple business units? If you find a company, or if you start a company, where you find one of these strategies being employed in one area and another one in another area, what you're seeing is a company with multiple business units, or multiple divisions. You're seeing a company that's choosing to develop multiple divisions and having different strategies, maybe a cost leader strategy in one, and maybe a differentiation in another. Maybe a focused cost leader in another segment. The car companies are a classic example of this. Think of the Japanese automobile company, Honda. Honda has another brand called Acura. Think of Toyota, another Japanese automobile manufacturer. They have the Toyota line and they also have the Lexus line. And what they do within those different business units is they have different strategies. Lexus is a premium vehicle, it's unique, and it's targeting the smaller segment of the market who has the resources to pay for additional bells and whistles, we say in English, or extra benefits. And that is differentiated from Toyota, which are also very nice vehicles, but are considered to be less differentiated. More of the average acceptable experience to a bigger segment of the market. Another example is the hotel or motel industry, which I've referred to in the past. Think of major hotel brands from across the globe, whether it's Sheraton, Hilton, Hyatt, or Marriott. Each one of those companies, through acquisitions and other strategies, operates in different segments of the market. It does so with different brand names in most cases, and these different business units. For example, Marriott owns the Ritz-Cartlon line, which is one of the highest-end hotel chains in the world. The most expensive, the best experience for that segment of the market that can afford or has the resources and values that, and is willing to pay that. But it also has a chain called Fairfield Inn, which is an entry level, a basic hotel experience. The prices are lower. Obviously, Marriott is doing something with that particular business unit to keep costs down to pass those lower costs on to the customer. They have another brand called Residence Inn, which is more of a extended stay or family experience, with multiple bedrooms and some of the comforts of home like a barbecue grill, or a basketball court, and hence the name Residence. Each one of these different brands or business unit is exploiting a different segment of the market. And these companies have a headquarters or a corporate overall unit that is coordinating to some degree these multiple business units. And so you can choose to do that as you start up your company. But recognizing that companies on purpose, deliberately develop these different business units often with different brands because of the difficulty of having one brand and doing multiple versions of this strategy at the same time. Here's another example, there's a major clothing company around the world called the Gap. The Gap has multiple clothing lines. It has one called Old Navy, if you're not familiar with that, you look that up. Old Navy is an entry level cost leader brand. The quality of the clothing is not the same as two of the other business units of the Gap. One is called the Gap, and another is called Banana Republic, and that's a differentiated line, Banana Republic is, of the same corporation. And so, if you thought to yourself that you disagree, that's okay, and hopefully this makes sense, what these companies are doing by developing different business units with different strategies. This is just one way of trying to understand business success. The main takeaway you should have from this module with your own company, whether you're a manager or an entrepreneur, is the power of understanding your industry or sector and how you fit into that sector. And trying to understand the dynamics of the demand of your customers that you're attempting to please with your product or service, and what you're choosing not to do. The customers you're, on purpose, deliberately ignoring because you can't be everything to everyone or else you might get stuck in the middle. So that is a partial answer to the question, how can a company achieve success? Is by understanding the dynamics of their industry or sector and undertaking one of these strategies. We'll see you back next time. Thank you very much.
