Harvard Business School MBA in 30 Minutes: Strategy, Marketing & Finance

This article summarizes key concepts taught at Harvard Business School, covering strategy, marketing, product development, and finance. We'll explore these topics using real-world examples and frameworks, offering a mini-MBA experience.

Strategy

Harvard Business School distinguishes itself with its emphasis on strategy, viewing it as a roadmap for success in the competitive marketplace. A well-defined strategy is crucial for any company, regardless of its products or services.

Porter's Five Forces

A foundational tool taught at HBS is Michael Porter's Five Forces, which analyzes industry attractiveness and competitive intensity. These forces include:

1. Threat of New Entrants: The ease with which new competitors can enter the market.
2. Bargaining Power of Suppliers: The ability of suppliers to influence prices.
3. Bargaining Power of Buyers: The ability of customers to influence prices.
4. Threat of Substitutes: The availability of alternative products or services.
5. Rivalry Among Existing Competitors: The intensity of competition among existing players.

Starbucks Example:

• Threat of New Entrants: Low, due to Starbucks' established brand, supply chain, and real estate presence.

• Bargaining Power of Suppliers: High, due to Starbucks' large scale and bulk purchasing power.

• Bargaining Power of Buyers: Moderate, influenced by brand loyalty, loyalty programs and the third space created.

• Threat of Substitutes: Moderate, due to Starbucks' expansion into adjacent categories like coffee pods and beans.

• Rivalry Among Competitors: Starbucks differentiates itself through customer experience and premium pricing.

Competitive Positioning: Cost Leadership vs. Differentiation

Another core principle is choosing how to compete: either through cost leadership (being the lowest-cost producer) or differentiation (offering unique value).

• Cost Leadership: Examples include Walmart, which focuses on low prices and cost-cutting.

• Differentiation: Examples include Starbucks, which offers a premium experience with higher prices and a focus on customer service.

Starbucks Example: Starbucks pursues a differentiation strategy by offering a premium experience, third space location, and focus on customer service. It writes names on cups for a personalized experience.

A key takeaway: Companies cannot simultaneously be the cheapest, the best, and the highest quality. They must choose a competitive positioning.

Marketing

STP: Segmenting, Targeting, and Positioning

STP is a cornerstone of marketing strategy. It involves identifying customer groups (Segmenting), choosing the right customer group to serve (Targeting), and crafting a compelling message and brand identity (Positioning).

Warby Parker Example:

• Segmenting:

  • High-end buyers who want very fancy glasses

  • Cost-conscious buyers who want the lowest possible price

  • Millennials who want trendy and cute but not expensive glasses

• Targeting: Cost-conscious Millennials.

• Positioning: Modern, chic, accessible, digital-first, and socially conscious. Warby Parker's online try-on phase, affordable prices, and "buy a pair, give a pair" program appeal to its target demographic.

Warby Parker disrupted the eyewear market by catering to the needs and values of its target segment. The main conclusion is that hyper-focus on the population to serve is important for the brand.

Product Development

The key to successful product development is deeply understanding the customer's problem and working to solve that specific need. Avoid making assumptions.

User Feedback and Iteration

Gather user feedback through methods like A/B testing. Iterate based on the data collected. Don't be afraid to pivot when new information arises.

Netflix Example: Netflix continuously runs A/B tests to understand customer preferences, even down to thumbnail selection for movies and shows. This helps them tailor the user experience and increase engagement.

Finance

Finance at HBS focuses on enabling future leaders to understand financial conversations and make informed decisions.

Key Financial Concepts:

1. Revenue vs. Profit:

   • Revenue is the total income. For example, Netflix's subscription fees.

   • Profit is the remaining income after expenses.

2. Cash Flow: The actual cash available, differentiating from accounting assets.

   *   Example: Netflix invests billions upfront in shows.
   

   1. Unit Economics: The cost and margin per unit.

   2. Example: Netflix cost per subscriber.

   3. Forecast and Runway:

   4. Runway is how long a company can operate with existing funds.

3. Valuation Metrics: Measures used to assess a company's worth.

   • Examples: Price-to-earnings ratio (P/E), Enterprise Value to EBITDA (EV/EBITDA).

   • These should be evaluated within the context of the category.

This overview summarizes the core financial concepts emphasized at HBS, aiming to provide a foundational understanding for future business leaders.