Ohmae’s 3C Model | Strategic Triangle (3C’s)
What is Ohmae’s 3C Model
The 3C Model by Ohmae was developed by the Japanese organizational theorist Kenichi Ohmae, by the successful and optimum integration of these 3 factors (Customers, Competitors, and Corporation), the aim of sustained competitive advantage can be accomplished.
It offers a strategic look at the factors needed for success. These are the customer, the competitors, and the corporation. The primary goal of the 3C model should be the interest of the customer and not those of the shareholders because a company that is genuinely interested in its customers will automatically take care of shareholder interests.
The Factor of 3 C’s Model
The primary goal should be the interest of the customer and not those of the shareholders because a company that is genuinely interested in its customers will automatically take care of shareholder interests, as well as they need a full understanding of who the competition is, and what that competition is capable of doing. If a company can bring together those 3 C’s successfully in the strategy, they should be able to find the way into the right part of the market. Rather than focusing on what it is that they do best, they might feel the pull of going in several different directions while hoping to hit it big.
Customers – The customers have needs and want and the company understands the requirements of the customers. The company should be able to understand, meet, and cater to the needs and demands of the customers rather than of the shareholders of the company.
Competitors – The business needs to conduct a thorough competitive analysis in the market figuring out that who are the direct competitors and who are the indirect competitors. Finding out their core strengths, business strategies, values, objectives, sales strategies, marketing strategies, and other such crucial facets is important to work out the plan to beat the competition and gain the advantage.
Corporation / Company – The company should be genuinely interested in the customers as doing the same will automatically take care of the shareholders, profits, sales, and other crucial objectives of the business. The customer should always be at the focal point of every business aspect.
The 3C’s provide a great framework within which you can think about your business. This isn’t the most complex model for making strategic business decisions, but that is exactly the point – it doesn’t have to be. By boiling business down to these three basic C’s – the customer, competitors, and corporation – you should be able to think clearly and make sound, logical strategic decisions consistently.
1. The corporation
The Corporation needs to focus on the maximization of its strengths. As a result, the corporation can influence the functional areas of the competition that are critical to achieve success within a certain industry. Focusing on a key functional area may create a decisive improvement in other functions of the competition. (for example quality improvement). By functional areas is meant for example culture, image, products, services, technology, etc.
It is also important for a corporation to make informed decisions about subcontracting (capacity, cost structure, significant strategic advantages) and how effectively this can be realized with respect to cost reduction (selective purchasing, stock management, choice of commodities, use of automation).
It’s certainly not necessary for a company to excel in one specific function. If there’s a clear advantage in one important function, the company can then also reinforce and improve other functions from that strength.
If labour costs are rising, it can be an attractive option for companies to outsource part of the work. They then do need to consider the competition; if their production is outsourced to subcontractors, it can influence the cost price. To counter this, a company can improve the cost effectiveness. Firstly, by trying to lower the basic costs compared to their competitors. And secondly, by lowering the functional costs, including those for transport. A third option would be to combine certain key functions with other businesses, sharing overhead costs. Examples could be transport, warehousing or call centres.
2. The customer
The customers are the basis for any corporation according to Kenichi Ohmae. Without a doubt, a corporation’s foremost objective ought to be the interests of its customers rather than those of its stock holders or other parties. What is important are elements like needs, requirements, demands, problem areas, buying motives, value components, decision-makers, etcetera. Segmentation of objectives (use of products) and customers (geography, age, social interests ) and the market (potential customers, competitors) are important for constructing and adopting a strategy. Using (digital) questionnaires, reviews and platforms, a company can find out what customers are thinking and seriously include this information in strategic decisions.
3. The competition
According to Kenichi Ohmae these strategies can be constructed by looking at possible differentiation in functions such as purchasing, design, engineering, operational capacity, sales and maintenance. One of the most important factors is image and this can provide the necessary power. Both Sony and Honda for example, sell more than their competitors because they invest more in public relations and advertising. Smaller corporations and organizations can use franchise concepts or low margins and make the necessary investments in service.
Something that’s sometimes overlooked, is using the difference in profit source. Where does the company get most of its profits? With selling existing products, selling new products, selling services, etc. Related to this is the difference in the ratio between fixed and variable costs, which can be particularly important to low-turnover companies. Fixed costs can for instance lower prices in a slow market and help gain market share.