Purple ocean strategy: how to support smes recovery

This mainly conceptual paper suggests a new approach, aimed at supporting SMEs' strategic realign-ment in the recovery phase after the economic crisis of 2008-2009. The analysis of the impact of the recent crisis on the performance of the Italian medium-size firms [MSEs], allows the identification of the levers on which their recovery can be based. Italian MSEs represent an interesting laboratory for experimentation for many reasons. In particular, their experiences in reacting to the crisis show the critical importance of strategic moves enhancing the competitive profile in terms of value of the firm's investments, and can be easily applied to their SMEs counterparts, provided that specific and rigorous methodological guidelines are identified for their practical application. The model suggested in this article, starting from the Blue Ocean Strategy's approach, identifies the weaknesses of its original formulation, and proposes its integration and development, aimed at pro-viding SMEs with a more articulated and systematic framework (i.e. the "strategic and economic con-trol dashboard" or, in short, Strateco Dashboard ®), that equips managers with the qualitative and quantitative tools for "piloting" the key competitive success factors [KCSFs], in terms of both man-aging the components of value, and measuring its economic and financial impact. In particular, the methodology suggested in the article introduces three operational and quantifiable constructs: (a) the "investment curve", which specifies the actual amount of resources invested in the tools that have an impact on the KCSFs, (b) the actual "value" generated by these investments, based on the relative importance attributed by the market to these KCSFs, and (c) the relative "value/price ratio", that has an impact on the firm's market position, based on assumptions about the demand elasticity and the expected competitors' behavior, if any. Furthermore, our methodology complements the assessment of the market value of strategy with a construct that estimates its impact on financial performance, in terms of value creation. With appro-priate metrics, we develop the logical approach for translating the investment curve and the value/price ratio into the main value drivers, and therefore measure the value created by the strategy. Spe-cifically, our attention is focused on the "surplus" value: it is not how much income a firm makes that marks its success, but how much it makes in excess of its cost of capital.

Strategies For Facing Crises ,

Blue Ocean Strategy (BOS) ,

Small And Medium-Sized Firms (Smes) ,

Value Creation Of Strategy ,

Financial Feasibility Of Strategy,Economic Crisis,Decision Support Systems ,

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Strategic Management Simulation ,