The underlying theory of business strategy

  Strategy is the strategy with the highest ROI (input-output ratio) in different time and space. Among them, space contains multiple meanings, and different regions and businesses are spaces; ROI is not easy to quantify, but from the perspective of God, it exists objectively, but humans cannot calculate it; strategy is determined by Insight that forms strategic decision-making. (Insight) and the action plan that matches Insight. In different time and space, different strategies change. How to develop a valuable business strategy in the market? Need certain theoretical knowledge to support.
Market size

  The rationality of the investment depends on the judgment of the market size. There are three ways to judge the size of the market:
  one is to fit the existing industry size and growth rate, but it takes a period of time for the industry to develop to fit; the
  other is to return to the most fundamental human needs-humanity The trajectory of development is to hand over some things originally derived from self-sufficiency to the division of labor in the society. With the progress of global urbanization, cooking tends to be replaced by socialized division of labor. From the perspective of the supply side, China’s high population density, popularization of mobile phones, and the lowest cost of motorcycles in the world, each of which will lead to lower customer unit prices, thereby expanding the market space; the
  third is the analogy method, referring to the market size of Japanese convenience stores. To measure the volume of China’s food delivery market.
Scale effect

  The scale effect is the universal gravitation in the business world. The guidance for business thinking is very large. If the gravitation is large enough, it will attract other materials and revolve around itself. Today’s scale effect is that the transaction volume/customer usage is large enough, and then there is a customer experience advantage or cost advantage. Whether it is a cost advantage or a customer experience advantage depends on the specific business model. The first level is that different businesses have different scale effects, and some businesses are not big by nature; the second level is that in the process of enterprise development, the earlier you grasp those factors that have scale effects, the more It will achieve better development because of the scale effect.
Matthew effect

  The Matthew effect is the subjective theory of sociology and the evolutionary theory of the business world. How does the Matthew effect work in the business world? One is venture capital, and the other is taking the reputation of investors as a reference factor. When multiple factors are aggregated, the Matthew effect will work.
  The Matthew effect is very important for early entrepreneurs. Early products and teams may have many problems. But once the Matthew effect is formed, many problems are easily solved. If everything is perfect at the beginning, and your peers have not yet stood out, it means that you have entered the wrong industry. In almost all fields, most decision makers do not rely on effective information, knowledge structure and judgment methods to make independent judgments. Everyone can only rely on experts or follow the crowd, which produces the Matthew effect.
Market concentration

  The market concentration is not high enough to give birth to a large company, so don’t think that this industry is large, and invest in a large scale immediately, because investors will also see whether this industry can produce large companies, if it is a large industry, small business industry , It will also fall into the pit. If there are 2 to 3 companies left in an industry, what we have to do in the early stage is to become the leader as soon as possible and form a positive cycle. However, it is not advisable to overinvest here, otherwise it will lead to a low input-output ratio, which will become a burden in the long run. If there is no strong competitive relationship, the most important thing at this time is not to compete with your peers, but to make your customers feel that you are unique.

Different businesses have different scale effects. The earlier you grasp those elements with scale effects, the better development will be achieved because of the effect of scale effects.
Industry chain

  There are different theories about the industrial chain, such as the smile curve theory, that is, the best survivors in an industry are the companies that are located in the most upstream and close to core supply resources and in the most downstream and close to consumers. This theory is common in industries with relatively long chains, and some industries are more complex and involve ecological enterprises. Of course, some industries do not have ecology. If you insist on ecology, you will fall into the pit. Conversely, if doing ecology can improve efficiency, you must either become an ecological builder, or join the ecology and become a member, otherwise you will be eliminated by the ecology. There is also a more classic theory, Porter’s five forces model. What factors will affect the relationship between upstream and downstream? A core factor is the concentration of upstream or downstream markets. For a company, the best situation is that the concentration of upstream and downstream is very scattered, and only you have a high concentration.
First and second

  First-mover advantage is very important. First-mover advantage is the main body in business. The late-mover advantage is also very important. One of the late-mover advantages is that you don’t need to convince many people. The first mover has to convince many people. At the abstract level, human beings love innovation, and at the concrete level, human beings are afraid of innovation. The second advantage of latecomer is that knowing that this thing will definitely be realized. The difficulties encountered in the first and second launch of the atomic bomb are completely different, and the uncertainties faced by the two are completely different. The third advantage of latecomers is that latecomers usually have more conventional business thinking, while innovators usually have unique thinking, but this also brings cognitive blind spots. In a nutshell, the difference between first-mover advantage and late-mover advantage, the fundamental difference between innovators and latecomers, is that innovators usually have blind areas of thinking, while those of latecomers have smaller blind areas.
Increment and stock

  At any point in time, we must know whether we are doing incremental or stock markets. Once a market becomes a stock market, the possibility of changes in the industry structure is very small. In addition, the stock market also has high requirements on the organization, so it is best to develop in the incremental market. In Internet business, one of the influencing factors of increment and inventory is the difference in customer acquisition costs. The difference between incremental and inventory market customer acquisition costs is at least ten times. This leads to a single user acquisition cost in the inventory market. Cause the business to fail. But there are opportunities in the stock market, depending on how much you can differentiate from the first place.
High frequency and low frequency

  High frequency, low frequency and the Internet have a great relationship. A commonly used strategy on the Internet is to use high-frequency apps and low-frequency apps. For most people, booking a hotel online is a relatively low frequency behavior, which will lead to a tendency to open an APP already installed on the mobile phone that happens to have a hotel reservation function instead of going to the app market when they want to book a hotel. Download another APP in it. High frequency and low frequency will have advantages in terms of user acquisition cost and retention rate. If you are doing low-frequency business and want to maintain a competitive advantage, it is very important to go deep into the industry chain of low-frequency business, and another means is to cooperate with high-frequency.
Timing of admission

  Timing is very important. Admission too early or too late will not work. Even for a large company, judging the timing of entry will not be easier than for a small company. There are two conclusions. One is Mark Anderson’s conclusion. If you believe that something will happen sooner or later, you will try it every 3 years. The second is my own conclusion, as long as you do not go bankrupt, it is better to enter the venue early than late.
  All great needs must be tried many times in the wrong way or at the wrong time, so the correct cognition is not in someone’s mind at the beginning, but in the process, different people catch After living in different shining points, someone finally aggregated all the shining points to form a comprehensive product. This cognition is the common intellectual property of all entrepreneurial communities.
Standardization strategy and effective strategy

  Theories that are widely circulated in the market are often ineffective when they fall into a specific company, and effective strategies may often not be widely circulated. Standardization strategies are popular because they can be scaled and replicated, but the strategies of many companies require many elements to be superimposed to take effect. Just as human beings can evolve to this day, in fact, many complex elements are gathered together to have the present. Effectual. If a simple one or two strategies can be effective, it proves that your business operations, organizational conditions, and industrial conditions have not yet reached the deep water zone.