Ohmae’s 3Cs Model

The topic of competitive advantage is one of the most frequently discussed topics in business theory and practice. One of the many models that have caught significant attention is Ohmae’s 3Cs Model. The model took its name from its pioneer, Kenichi Ohmae; a Japanese strategy guru.

The model examines three key factors necessary for success; the corporation, the customer and the competition. Kenichi Ohmae propounds that these three factors must balance in the form of a strategic triangle and only by integrating these three factors a business can gain a competitive advantage over competitors.

1. The Corporation

Here, the focus is shifted on maximizing the company’s strengths and enhancing the functional areas of the business including its culture, the product, the technology used and the brand image. The organizational structure and company functions play a significant role not only in decision-making but also in daily operations. Another important area to consider is subcontracting and outsourcing. Here, the business must make informed decisions on whether it will do things in-house or whether it will use third parties for that. The choice depends on cost efficiency and all respective areas affected should be examined, such as purchasing, stock management, and inventory. The corporation does not have to excel at every single function, but leaping forward over competitors in one key function is a vital step to eventually progress and improve in other functions as well.

2. The Customer

Customers are everything; it’s where it all starts and ends. That’s why a business must carefully study and understand their target customers. In order to successfully do this, a company needs to employ a Segmentation, Targeting and Positioning (STP) strategy in order to segment the market according to particular characteristics and select the most attractive one to enter and position themselves in the mind of consumers. It is important that the business strategy employed is customer-driven; with the demands and needs of the customer being the center of attention. In order to understand the real customer needs, companies might need to utilize various tools such as quantitative analysis (e.g. questionnaires) as well as qualitative analysis (e.g. interviews, focus groups). This also implies that the business strategy might need to be adapted often in order to meet the continuously changing customer demands and evolving market trends.

3. The Competition

All corporations should have a clear understanding of their competition. It is important to examine who the competition is, what are the key strengths of your competition and what are their key weaknesses? Also, it is important to examine the competition’s moves in order to understand their business strategy. Are they trying to differentiate themselves on quality or pricing? What is their perceived brand image in the mind of the consumer? By answering all these questions, businesses can better understand what their competition is doing and use that information in order to exploit potential opportunities. This will help in taking a step ahead of the competition and attaining a competitive advantage.

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