complete business frameworks reference guide

Business Framework

Complete Consulting Frameworks ToolkitThis 300+ slide presentation contains 50 commonly used consulting frameworks and methodologies, spanning Strategy to Operations to Finance.

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• ABC Analysis

• Adoption Cycle

• Ansoff Market Strategies

• Balanced Scorecard

• BCG Growth-Share Matrix

• Benchmarking

• Blue Ocean Strategy

• Break-even Analysis

• Business Unit Profitability

• Economies of Scale

• Environmental Analysis

• Experience Curve

• Cluster Analysis

• Company & Competitor Analysis

• Core Competence Analysis

• Cost Structure Analysis

• Customer Experience

• Customer Satisfaction Analysis

• Customer Value Proposition

• Fiaccabrino Selection Process

• Financial Ratios Analysis

• Gap Analysis

• Industry Attractiveness & Business Strength Assessment

• Key Purchase Criteria

• Key Success Factors (KSF)

• Market Sizing & Share

• McKinsey 7-S

• Net Present Value

• PEST Analysis

• Porter Competition Strategies

• Porter’s Five Forces

• Portfolio Strategies

• Price Elasticity

• Product Life Cycle

• Product Substitution

• Relative Cost Positioning

• Rogers' Five Factors

• Scenario Techniques

• Scoring Models

• Segment Attractiveness

• Segmentation & Targeting

• Six Thinking Hats

• Stakeholder Analysis

• Strengths & Weaknesses Analysis

• Structure-Conduct-Performance (SCP)

• SWOT Analysis

• SWOT Strategies

• Treacy / Wiersema Market Positioning

• Value Chain Analysis

• Venkat Matrix

2

About This Preview Document

This document is just a preview. The full toolkit has 340 slides and covers 50 unique

business frameworks. You can preview and download the full document here:

https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644

This document will showcase sample slides from a handful of the 50 frameworks.





3

Contents

1. ABC Analysis

6

2. Adoption Cycle

11

3. Ansoff Market Strategies

16

4. Balanced Scorecard

21

5. BCG Growth-Share Matrix

29

6. Benchmarking

35

7. Blue Ocean Strategy

42

8. Break-even Analysis

48

9. Business Unit Profitability

53

10. Economies of Scale

58

11. Environmental Analysis

64

12. Experience Curve

71

13. Cluster Analysis

78

14. Company & Competitor Analysis

82

15. Core Competence Analysis

92

FRAMEWORK SLIDE

4

Contents

16. Cost Structure Analysis

97

17. Customer Experience

102

18. Customer Satisfaction Analysis

108

19. Customer Value Proposition

113

20. Fiaccabrino Selection Process

116

21. Financial Ratios Analysis

123

22. Gap Analysis

145

23. Industry Attractiveness & Business Strength Assessment

149

24. Key Purchase Criteria

155

25. Key Success Factors (KSF)

160

26. Market Sizing & Share

168

27. McKinsey 7-S

182

28. Net Present Value

190

29. PEST Analysis

199

30. Porter Competition Strategies

202

FRAMEWORK SLIDE

5

Contents

31. Porter’s Five Forces

206

32. Portfolio Strategies

231

33. Price Elasticity

238

34. Product Life Cycle

244

35. Product Substitution

251

36. Relative Cost Positioning

254

37. Rogers' Five Factors

262

38. Scenario Techniques

268

39. Scoring Models

274

40. Segment Attractiveness

280

41. Segmentation & Targeting

285

42. Six Thinking Hats

293

43. Stakeholder Analysis

398

44. Strengths & Weaknesses Analysis

303

45. Structure-Conduct-Performance (SCP)

310

FRAMEWORK SLIDE

6

Contents

46. SWOT Analysis

313

47. SWOT Strategies

318

48. Treacy / Wiersema Market Positioning

322

49. Value Chain Analysis

330

50. Venkat Matrix

336

FRAMEWORK SLIDE

7

4. Balanced Scorecard

8

Balanced scorecard

Derive strategic objectives within the respective perspectives from the strategy

Determine perspectives

Set up cause/ effect relationships

Determine target values

Determine activities and state respon-sibilities

Ensure consistent commitment and incorporate it in daily work

1 2 3 5 6 7

Select measures

4

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9

Balanced scorecard

Activi

ty

In which processes do we need to excel?

Internal Processes

Targe

t

Strate

gic ta

rget

KPI

Activi

ty

Targe

t

What do we want to achieve in finance?

Finance

Strate

gic ta

rget

KPI

Targe

t

Activi

ty

How can we remain flexible and able to improve?

Learning & Development

Strate

gic ta

rget

KPI

How can we satisfy our customers’ needs?

Customers

Targe

t

Activi

ty

Strat.

targ

et

KPI

Strategy and Vision




10

Balanced scorecard

Finance Perspective

How do the investors appraise our present position?

…

…

Learning and Development Perspective

How can we ensure that our customers’ needs are satisfied also in future and what are the critical success factors of the future?

…

…

Internal Process Perspective

How well do we satisfy our customers’ needs?

…

…

Customer Perspective

How do our customers appraise our performance?

…

…




11

Balanced scorecard

Strategic Objective

Finance

What do we want to achieve in finance?

Customers

How can we satisfy our customers’ needs?

Internal Processes

In which processes do we need to excel?

Learning and Development

How can we remain flexible and able to improve?

• …

• …

• …

• …

• …

• …

• …

• …

• …

• …

• …

• …

KPI

• …

• …

• …

• …

• …

• …

• …

• …

• …

• …

• …

• …

Target

• …

• …

• …

• …

• …

• …

• …

• …

• …

• …

• …

• …




12

Balanced scorecard

Strategic Objective KPIs Frequency of Evaluation

Responsibility for Data Maintenance

Recipient of Reports

…

…

…

…

…

…

…

…

…

…

…

…

…

…

…

…

…

…

…

…

…




13

Total 100% … %

Perspective Strategic Objective KPI Weighting Frequency of Survey

Comp. Year 2004

Pres. Year2005Ongoing

Pres. Year2005 Ex-trapolated

2005 Target

2006 Target

Extrapol. in % of Target

Ongoing in % of Target

Finance … … ... … … … … … … …% …%

Learning and development … … ... … … … … … … …% …%

Internal processes … … ... … … … … … … …% …%

Customers … … ... … … … … … … …% …%

Balanced scorecard

y yearlyhytwice a yearqquarterlymmonthly

Targetachievement

…%




14

Balanced scorecard

Vision

Financial Perspective

• …

• If we are successful, how do out shareholders know?

Customer Perspective

• …

• How should I see the customer to achieve the vision?

Internal Perspective

• …

• Which processes do I need to optimize to satisfy the customers?

Learning and Development

• …

• How should I enhance my organization to achieve the vision?

…

…

…

…

…




15










16

7. Blue Ocean Strategy

17

Blue Ocean Strategy is growth strategy framework focused on the idea of creating an uncontested market space--i.e. a "blue ocean." This framework is very innovative, as its principles challenge the traditional business strategy principles of fighting competitors head-on.

Traditional business strategy is based on Michael Porter’s teachings of developing a sustaintable Competitive Advantage over other players in the market.

The Blue Ocean Strategy framework evolved from a framework called Value Innovation developed by Gemini Consulting (now Capgemini Consulting) in the late 90s.

Blue Ocean Strategy – introduction

What It Is




18

The modern strategy thinking of Blue Ocean Strategy focuses on enabling innovation, value creation, and effective execution

Growth Focus

Source: C. Kim, R. Mauborgne, Harvard Business Review (1997).

Value Identification

Value Creation

Effective Execution

• Start with customer needs• Look beyond traditional

markets, industries and competitors

• Create multi-horizon portfolio

• Develop growth platforms for “market mining”

• Understand what the customer values

• Prioritize initiatives

Growth Platform

Consumer Need

Market Trends

Val

ue

• Select and develop growth option

• Align operating model to deliver value and fair value Concept Execution

• Venture Launch• Organizational alignment• Funding / Resource

Allocation• Measurements• Accountability

Sustainable Growth Structure

• Infrastructure• Culture• Alliance Management• M&A

Eliminate Reduce Raise Create

Costs

Value

ValueInnovation




19

Modern thinking moves away from a traditional focus on competition to “blue oceans” of opportunity


Traditional Thinking Modern Thinking

IndustryIndustry conditions are given – compete in existing market space

Industry conditions can be shaped – create uncontested market space

StrategyCompanies must build competitive advantages to beat competition

Make competition irrelevant

MarketExploit existing demand Create and capture new demand

ResourcesMake the value-cost trade-off Break the value-cost trade-off

OrganizationAlign the whole system of a firm’s activities with its strategic choice of differentiation or low cost

Align the whole system of a firm’s activities in pursuit of differentiation and low cost

OfferingsMaximizing the offering’s value within industry boundaries

Offering buyers the total solution that transcends the industry




20

Building a new value curve is at the heart of Blue Ocean Strategy


Which of the attributes that our industry takes for granted should be eliminated?

Which attributes should be reduced well below the industry’s standards?

Which attributes should be raised well above the industry’s standards?

Which attributes should be created that the industry has never offered?

Evolution of Value Curves

Eliminate

Value Innovator

Val

ue

+

-

Reduce Raise Create

Traditionals




21

Value Curve – template

Source: Blue Ocean Strategy, Kim and Mauborgne

Insert bumper – takeaway statement.

Eliminate Reduce Raise Create

Company

Val

ue

+

_

Competition




22

20. Fiaccabrino Selection Process

23

The Fiaccabrino Selection Process is a powerful methodology for interviewing and screening the best people for your organization. The objective is to select those people who will be the highest performers with the lowest turnover.

The methodology was developed by Charles Fiaccabrino, a sales executive who helped grow Roche Diagnostics from its onset to a multi-billion dollar company. He worked at Roche for 22 years, where each year, he was the top sales performer each year. During his career at Roche, he earned the Presidents Achievement Award 20 times and was known internally as “Mr. Roche.” He credits much of his success to his ability to build a winning team, which he later condensed in this methodology.

In most sales organizations, your top 20% sales performers generate 80% of the revenues. The question is, why are the other 80% hired? What would happen if sales managers hired sales people who were more like the top 20% and less like the bottom 80%? The result is your sales would significantly multiply and your sales turnover will also drop. This framework teaches you how to identify the top 20% sales performers--the best of the best.

The core of the framework is to understand 16 critical Humanistic Attributes. In order for candidate to be hired, he or she must excel across all 16 of the Humanistic Attributes.

While the genesis of this framework is within a salesperson or sales manager context, it can be applied to a variety of other fields (e.g. marketing, research, pharmacist).

Fiaccabrino Selection Process – introduction

What It Is




24

16 Humanistic Attributes - overview

The basis of this methodology is to evaluate our candidate across 16 humanistic attributes, as listed below. A

successful candidate must excel across each of these attributes.

With the exception of the last attribute, Behavioral Quadrant, each attribute can be numerically scored on a 10

point scale. For the Behavioral Quadrant attribute, the candidate is categorized into one of 4 behavior

buckets.

INTELLIGENCE ORGANIZATION AND PLANNINGABILITY TO RELATE TO

CONCEPTSCOMPETITIVENESS

AND DRIVE

HONESTY AND INTEGRITYVERBALIZATION AND

COMMUNICATIONVALUES SYSTEM ENERGY LEVEL

FLEXIBILITY OF THOUGHT PROCESS

SUCCESS FACTORS LEADERSHIP TEAM ORIENTATION

EMPATHY WORK ETHIC LOYALTY [EXPRESSED] BEHAVIORAL QUADRANT [Q4]




25

Behavioral Quadrant analysis

• The last of the 16 Humanistic Attributes seeks to evaluate what behavioral model the candidate falls under.

• There are 4 basic behavior quadrants:

• Dominant Hostile [Q1]

• Dominant Warm [Q4]

• Submissive Hostile [Q2]

• Submissive Warm [Q3]

• For the sake of brevity, as part of my humanistic attributes evaluation, perhaps the crowning aspect of the entire process is the evaluation of the behavioral quadrants as it relates to the candidate.

• The candidate must be perceived by the evaluation process as a definitive Q4 or Dominant Warm individual.

• Without this designation, the candidate is rejected.

DOMINANT

HOSTILE

[Q1]

DOMINANT

HOSTILE

[Q1]

SUBMISSIVE

HOSTILE

[Q2]

SUBMISSIVE

HOSTILE

[Q2]

DOMINANT

WARM

[Q4]

DOMINANT

WARM

[Q4]

SUBMISSIVE

WARM

[Q3]

SUBMISSIVE

WARM

[Q3]

BEHAVIORAL QUADRANT

Dominant

Submissive

Hostile Warm




26

It is important to understand how to translate one’s evaluation of the candidate to a numerical score on the 10-point scale

There are a number of interpretive uses of the 10-point scale. The most obvious is of course the clear cut

comparative use in evaluating more than one candidate for a particular position. By comparing the graphs of

each candidate, the evaluator has another specific set of attribute parameters to refer to in the decision

making process.

Below, let's review the actual numbers and what they mean.

5 6 7 8 1098.510-POINT SCALE

• Let’s start with #5.

• This score indicates "meets standards." Candidates that achieve that evaluation can be considered qualified, but to what extent and are these candidates "the best of the best?"

• In my set of circumstances, these candidates do not meet my expectations and are therefore not considered.

• What about numbers 6, 7, and 8?

• As the hiring manager makes these evaluations, they should be noted and can be stored for future reference.

• Again, based upon my overall experience, any number less than an 8.5 score would not be considered.

• Let us now consider a score of 8.5 and greater.

• Looking back on historical perspectives, candidates scoring in the 8.5 to 10.0 range are the very best and therefore designated the "best of the best."




27

Sometimes, the difference between each candidate can be marginal—and sometimes, there may only be a single candidate to evaluate

As we consider candidates in this high level area, the difference between each is usually marginal. The graph can help to determine the most qualified by virtue of this system when the evaluator can only select one of the two to three candidates. At this high level of virtually marginal differences between candidates, it is usually true that any one of the three finalists can be selected for the position with the same potential for success.

This situation might be analogous to the final contest at an Olympic event where tenths of seconds separate the gold, silver, and bronze finalists. In hiring the best of the best, one would tend to select the gold medal winner and why not. But, let's not forget that the silver and bronze winners are at the virtually same level of the champion with the potential to be number one at the next event.

Clearly, sales and sales management are a science and the foregoing is in my judgment analogous to that with one additional caveat. Its implementation is an Art.

Learning the science of the system is not difficult. The art form is in its implementation. It takes practice, perception, sensitivity, and the ability to ask the best question—and to learn and understand through the power of listening.

Not all positions require two to three candidates to evaluate and that is optional as it relates to the hiring manager.

For example, understanding and with prior positive evaluation results, there might come a time when the hiring manager has only one candidate to evaluate. Because of a full understanding and success in using the system, should the one candidate be at the 'best of the best" level, there is very little reason to look further if that is the decision of the manager/leader.




28

Worksheet:Candidate:

§ Intelligence

§ Organization and Planning

§ Ability to Relate to Concepts

§ Competition and Drive

§ Honesty and Integrity

§ Verbalization and Communication

§ Values System

§ Energy Level

§ Flexibility of Thought Process

§ Success Factors

§ Leadership

§ Team Orientation

§ Empathy

§ Work Ethic

§ Loyalty [Expressed]

§ Behavioral Quadrant [Q4]

5.0 8.5 10.0

Q1 Q2 Q3 Q4

Legend: 5.0 Meets standards8.5+ “best of the best” and considered qualified for consideration

Notes and comments: It is important to make notes and comments, which can aid in the selection process. Also, the grid system allows for a comparative evaluation of candidates.

NOTES




29










30

27. McKinsey 7-S

31

The McKinsey 7-S Model is a business framework used to evaluate organizational effectiveness. The basic premise of the model is that there are seven internal, interrelated aspects of an organization that need to be aligned for the organization to be successful.

This framework can be used to understand our organization and leverage it to maximize efficiency and profitability. It can also be used in situations where an alignment perspective is useful. The scope of these situations doesn’t matter—for instance, it can be applied to elements of a project or of a team.

The 7-S Model was developed by two McKinsey consultants, Tom Peters and Robert Waterman.

McKinsey 7-S Model – introduction

What It Is

Structure

Systems

Style

Staff

Skills

Strategy

SharedValues




32

This diagram is the typical presentation of the McKinsey 7-S Model

We must act on all S’s in parallel—as all S’s are interrelated and must align equally.

Structure

Systems

Style

Staff

Skills

Strategy

SharedValues




33

Shared Values is centrally located, because all others elements stem and evolve from it

Structure

Systems

Style

Staff

Skills

Strategy

SharedValues

• Placing Shared Values in the middle of the model emphasizes that these values are central to the development of all other critical elements

• The company's structure, strategy, systems, style, staff and skills all stem from why the organization was originally created, and what it stands for

• The original vision of the company was formed from the values of the founders--as these Shared Values evolve, so do all the other elements




34

1

These seven elements are categorized into so-called Hard S’s and Soft S’s

Hard vs. Soft Elements

Structure

Systems

Style

Staff

Skills

Strategy

SharedValues

HARD ELEMENTS

• Hard elements are Strategy, Structure, Systems

• They are feasible and easily identified

• These elements are also easier to change than soft elements

• They can be found in strategy statements, corporate plans, organizational charts, and other business documents

SOFT ELEMENTS

• Soft elements are Shared Values, Skills, Staff, and Style

• These are harder to change directly and usually take longer to change

• They are harder to describe, since capabilities, values, and elements of corporate culture and continually evolving

• These elements are highly determined by the employees of the organization

HARD ELEMENTS

SOFT ELEMENTS




35

When conducting 7-S analysis, it’s best to use an iterative approach starting with Shared Values, followed by hard S’s, and then soft S’s

Approach

Start with your Shared Values.

Are they consistent with your structure, strategy, and systems? If not, what needs to change?

Next, look at the hard elements.

How well does each one support the others? Identify where changes need to be made.

Then, evaluate the other soft elements.

Do they support the desired hard elements? Do they support one another? If not, what needs to change?

As you adjust and align the elements, you will need to use an iterative and typically time-consuming process of making adjustments; and then reanalyzing how that impacts other elements and their alignments.

1

2

3

4




36

McKinsey 7-S – template

Structure

Systems

Style

Staff

Skills

Strategy

SharedValues

Hard S

Soft S

Insert kicker.




37

McKinsey 7-S – current state template

Shared Values

Strategy Structure Systems Style Staff Skills

Shared Values

Strategy

Structure

Systems

Style

Staff

Skills




38

32. Portfolio Strategies

39

Portfolio strategies

Strategic planning

Derivation ofNorm Strategies

Analyze portfolio

Determine target system of company

Evaluate as-is portfolio

Develop target portfolio

Derive measures and control progress

1

2

3

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40


Strategic planning

Question marks

• Selection of business units rich of opportunities

• Investment strategy, when market share can be significantly increased by employing resources

• Otherwise, disinvestment

Stars

• Growth strategies

• Investments in ensuring the competitive advantages, aiming at confirming the own market leadership via competitive barriers

Poor dogs

• Consistent disinvestment strategy

• Fastest possible withdrawal from stagnating markets to employ capital in a more effective fashion

Cash cows

• Absorption strategy

• Low direct reinvestments

• Transfer of generated funds to finance Question Marks and Stars

Relative market share

Ma

rke

t gro

wth

– +

+

–

Market share/ market growth portfolio norm strategies (BCG)




41


Strategic planning – example

Question marks Stars

Poor dogs Cash cows


Ma

rke

t gro

wth

– +

+

–

Dis-investment

Dis-investment

Dis-investment

= as-is position of business unit

= target position of business unit




42


Strategic planning – template

Question marks Stars

Poor dogs Cash cows


Ma

rke

t gro

wth

– +

+

–

= as-is position of business unit

= target position of business unit

= failure path

= success path

= market dynamics




43


Strategic planning

Selection Selective growth/ investment

Growth and investment

Absorption/ disinvestment Selection Selective growth/

investment

Disinvestment Absorption/ disinvestment Selection

low middle high

low

mid

dle

hig

h

Competitive strength

Ind

ust

ry a

ttra

ctiv

enes

s

• Attractive markets with profit potential

• Gone competitors

• Attractive industry = high growth rates

• High capital need

• High competi-tiveness

• Neutral conditions

• No specific opportunities

• No specific strengths

• Saturated markets

• Insignificant market presence

• Poor prospects of success

• Predominance on weak market

• High influence of own actions

low middle high

low

mid

dle

hig

h


Ind

ust

ry a

ttra

ctiv

enes

s

Implications Norm strategies

Market attractiveness/ competitive strengths portfolio norm strategies (McKinsey)




44


Strategic planning – template

… … …

… … …

… … …

low middle high

low

mid

dle

hig

h


Ind

us

try

att

rac

tiv

en

es

s

Market attractiveness/ competitive strengths portfolionorm strategies (McKinsey)




45










46

34. Product Life Cycle

47

Based on the age of a product category, predicts how sales will develop

Distinguishes five stages of development:

– Introduction

– Growth

– Maturity

– Saturation

– Decline/termination

Length of time in each period varies tremendously:

– Some products have very short cycles, others take decades or even centuries to go through the cycle

Growth is still possible in mature categories, but typically will require greater investment or greater creativity than in less mature categories

Product life cycle – introduction

Phases of sales growth

Phases of sales decline

What It Is Why We Use It

Strengths:

– Most useful as one of several sources of evidence, e.g. with conjoint analysis

Limitations:

– Any prediction is tricky

– Companies can affect the shape of the growth curve through product innovation and repositioning

Strengths & Limitations

Predict sales growth, and associated customer and competitor behaviours

Prescribe appropriate marketing strategy

Assess strengths/weaknesses of product portfolio




48

Product life cycle – how to use it

Establish if the concept is applicable

Predict how sales will develop

Predict the timing of future developments

Look to the category’s past behaviour and compare with similar products

Look out for:

– Technology shifts

– Lead markets

– Substitute products

– Telecoms/e-commerce

It is important to predict the highest level that sales will reach, e.g. for a household appliance the simplified formula might be:

Annual Sales =

(Number of new households) x (percentage who will buy) +

(Number of existing owners) x (percentage who replace each year)

The uptake percentage must be established using:

– Customer surveys

– Industry forecasting models where available

Data required:

– Sales figures/timeframe:

• Either actual past/current sales

• Or forecasted figures

Use statistical/graphical analysis:

Plot past category sales data in a spreadsheet, in such a way that a long term pattern is easily shown

Use strategic/judgmental analysis:

– Use the theoretical curve to evaluate where the category stands

Consider use of conjoint analysis




49

Product life cycle – illustrative output

Household Durables in Early 1970s

Time

Sa

tura

tio

n/S

ale

s

Introduction

Introduction Growth Maturity SaturationDecline/

Termination

Compactor

Dishwasher

Colour TV

Room A/C

Automatic WashersFreezers

Refrigerators

Ranges & Ovens

B&W TV

Wringer

Ad

op

tion

Innovators2.5%

Early Majority

34%

Late Majority

34%

Laggards16%

Early Adopters13.5%

Source:Mac Group Core Practice Manual.




50

Product life cycle – potential insightTypical Insight Provided by Product Life Cycle Analysis (1 of 2)

Buyers and Buyer Behaviour

Introduction

• High-income purchaser• Buyer inertia• Buyers must be convinced

to try the product

Growth

• Widening buyer groups uneven quality

Maturity

• Mass market• Saturation• Repeat buying• Choosing among brands is the rule

Decline

• Customers are sophisticated buyers of the product

Products and Product Change

• Poor quality• Product design and

development key• Many different product

variations; no standards• Frequent design changes• Basic product designs

• Products have technical and performance differentiation

• Reliability key for complex products

• Competitive product improvements

• Good quality

• Superior quality• Less product differentiation• Standardisation• Less rapid product changes—more minor annual

model changes• Trade-ins become significant

• Little product differentiation

• Spotty product quality

Marketing • Very high advertising/sales (a/s)

• Creaming prices strategy• High marketing costs

• High advertising, but lower percent of sales than introductory

• Most promotion of ethical drugs

• Advertising and distribution key for non-technical products

• Market segmentation• Efforts to extend life cycle• Broaden line• Service and deals more prevalent• Packaging important• Advertising competition• Lower a/s

• Low a/s and other marketing

Manufacturing and Distribution

• Over capacity• Short production runs• High skilled-labour content• High production costs• Specialised channels

• Under capacity• Shift toward mass

production• Scramble for

distribution• Mass channels

• Some over capacity• Optimum capacity• Increasing stability of manufacturing process• Lower labour skills• Long production runs with stable techniques• Distribution channels pare down their lines to improve

their margins• High physical distribution costs due to broad lines• Mass channels

• Substantial over capacity

• Mass production

• Speciality channels

Source:M.E. Porter, Competitive Strategy, 1980, pp. 159–161.




51

Product life cycle – potential insight (cont.)

R&D

Introduction

• Changing production

Growth Maturity Decline

Foreign Trade • Some exports • Significant exports• Few imports

• Falling exports• Significant imports

• No exports• Significant imports

Overall Strategy

• Best period to increase market share

• R&D engineering are key functions

• Practical to change price or quality image

• Marketing the key function

• Bad time to increase market share particularly if low-share company

• Having competitive costs becomes key• Bad time to change price image or

quality image• “Marketing effectiveness” keys

• Cost control key

Competition • Few companies • Entry• Many competitors• Lots or mergers and

casualties

• Price competition• Shakeout• Increase in private brands

• Exits• Fewer competitions

Risk • High risk • Risks can be taken here because growth covers them up

• Cyclically sets in

Margins and Profits

• High prices and margins

• Low profits• Price elasticity to

individual seller not as great as in maturity

• High profits• Highest profits• Fairly high prices• Lower prices than

introductory phase• Recession resistant• High P/Es• Good acquisition

climate

• Falling prices• Lower profits/lower margins• Lower dealer margins• Increased stability of market shares

and price structure• Poor acquisition climate:

–Tough to sell companies• Lowest prices and margins

• Low prices and margins

• Falling prices• Prices might rise in

late decline

Source:M.E. Porter, Competitive Strategy, 1980, pp. 159–161.

Typical Insight Provided by Product Life Cycle Analysis (2 of 2)




52

Product life cycle – top tips

Hints and Pitfalls

Data Sources

Related Analytics

Market surveys, Nielsen databases for:– Benchmarks against similar products– Consumer take up– Segment sales

Client sales data

Do:

– When creating the curve, beware of seasonal, non-recurring sources of fluctuations:

• May be necessary to smooth those fluctuations

– Ensure you understand if life cycle of a product has been extended by line extensions/modifications

Don’t:

– Ignore version change

Key purchase criteria and comb analysis

Needs-based segmentation

Product portfolio analysis

Scenario modeling




53

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DESCRIPTION

• This is a discussion deck template for a corporate strategy development session.

• In this discussion, we go through a 2-prong approach to growth and evaluate the merits of various growth drivers.

• From the 2-prong approach, various scenarios can be generated in the discussions and dashboards are used to evaluate each scenario.

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