iim ranchi iguanas round 1

The Maverick 2013

Submitted by: Team Iguanas, IIM Ranchi

Pulkit Bohra M106/12 [email protected] 8986733521

Pulkit Mathur M107/12 [email protected] 8051173946

Tarun Gupta M044/12 [email protected] 9000015915

Team Members

Recommen-

dation

Go-To-Market

Framework Regional Analysis

Opportunity

Assessment

Value

Proposition

To assess global markets and

gauge market attractiveness

Analysed the global gas power

generation market

North America, Middle East &

Asia are the most attractive

regions

Compared E10 grade filters

with E9 and E12

Performed a Cost-Benefit

analysis for different types of

filters using case data and

team estimates

E10 has cost savings of

~1% & 10% over E9 & E12

due to lower downtime

GTM strategy is focused on

product life cycle and

target market

Competitor response may

vary from maintaining status

quo to JVs and hostile

takeover depending upon

their own competencies

To analyse the health of

individual regions and their

business prospects

Strategic

objectives

Analysis

Insights

It is an appropriate time for ABC to enter into gas-turbine air filter market. However, all regions do not provide equal

opportunities. It should target replacement market in North America; Growth market in Middle East and Rest of Asia in the

same order of priority; Restrain from entering into rest of the markets for now.

To determine the Value

Proposition for Client

Offerings

To determine the Go-To-

Market strategy

Used equivalents to estimate

global filter market size by

value and volume

Performed macro-economic

analysis and used market size

to identify most attractive

markets

Developed a GTM

framework based on

existing GTM frameworks

and case specifications

Analysed each of the

shortlisted region in detail

to identify favourable and

unfavourable factors

Applied GTM: Analysed

prospects for JVs/

acquisitions

Identified entry and exit

barriers

Analysed the potential

response from existing

competitors

Middle East & Rest of Asia

reaches US$122m and US$75

m by 2022

North America is the biggest

annual replacement market of

~ US$333 m

Cartridge (synth) filters are

more cost efficient than

cartridge (cell) filters

NA has the biggest

replacement market, hence

ABC should focus on

customer centric

marketing

Middle east & Rest of Asia

has the highest growth

numbers, hence GTM should

be channel focused

ABC has expertise in air

filter servicing

Executive Summary: ABC should target N America, Middle East & Asia

Opportunity Assessment

Value Proposition Go-To-Market Competitors

Response Regional Analysis Recommendation

$0

$50

$100

$150

$200

$250

$300

$350

Synth-Catridge

Cell-Catridge

Europe Middle East

Rest Of Asia

Africa North America

Latin America

Europe Middle East

Rest Of Asia


Latin America

Europe Middle East

Rest Of Asia


Latin America 2012 2017 2022

North America

Rest Of Asia

Value :

Volume:

0

200

400

600

800

1,000

1,200

Cell-Catridge

Synth-Catridge

Vo

lum

e(in '0

00

un

its) V

alu

e(in

mill

ion

$)

There is a tremendous growth in air filter market by volume and value in Middle East and Rest of Asia regions. North America has the largest market in the initial years, but has almost stagnant growth.

Europe, Africa & Latin America have either very small markets or have shown negligible growth in market.

Inlet Air Filter For Gas Turbines-Market Sizing (>= 150 MW)

Source: Team analysis based on data accessed from Global Gas Observatory and case data

Gas Turbine Industry Drivers

Increasing global power demand Environmental concerns & regulations

opposing coal and oil fired power plants Mature technology Nature of Gas Turbines: Efficient and

Flexible Availability & Price

North America, Middle East & Rest of Asia seem to be most attractive regions

Gas Turbine Industry Constraints

Global economic slowdown Fluctuation and availability of natural gas

supplies Volatile fuel prices Emphasis on renewable energy

Trends & Issues in Global Gas

Turbine Industry

Biggest gas-fired power market

Shale gas boom Slow growth

Growing, but still a small market for gas power

Growing on a very small base

Leveraging its hydro-electric sources

Moderate base Low growth Decommission-

ing of old plants

Large natural gas reserve

Rise in power demand

Limited regional pipeline cooperation

High growth markets Rising power demand Increased government

spending Stalled pipeline

projects

Gas Turbine Industry: Regional & Global Trends




Source: Frost & Sullivan; International Energy Agency; MarketWire company website; TurbineTech company website; US Energy Information Administration

E9 E10 E12 E12

Market status Available Testing Available Available

Probable Type Cart/Synth Cart/Synth Cart/Cell Panel/Synth

No. of filters per

MW of power

generated 10 10 12 15

Filter price $300 $330 $100 $100

Filter replace-

ment rate

(months) 24 24 12 12

Filter Cost/yr $1,500 $1,650 $1,200 $1,500

Turbine wash time

(hrs/yr) 90 120 180 180

Downtime for

filter cleaning

(hrs/yr) 60 20 300 300

Avg turbine

Capacity (MW) 160-180 150-190 160-180 160-180

Avg Turbine

Uptime 98% 99% 96% 96%

Net Turbine

Operation 8610 8620 8280 8280

Net Uptime

(hours) 8437.8 8533.8 7948.8 7948.8

Potential Elec

Production (MW) 8437.8 8533.8 7948.8 7948.8

Arid (Middle East)

Avg Power Gen

Losses 2% 2% 4% 5%

Net Production 8269 8363 7631 7551

Price of Elec (per

MWh) $60

Revenue $496,143 $501,787 $457,851 $453,082

Revnue Net Filter $494,643 $500,137 $456,651 $451,582

Cost Savings $5,495 $43,487 $48,556

Mixed (Asia, North America)

Avg Power Gen

Losses 3.7% 3.7% 6.0% 3.7%

Net Production 8128 8221 7472 7657

Price of Elec (per

MWh) $60

Revenue $487,705 $493,254 $448,312 $459,441

Revnue Net Filter $479,267 $484,720 $440,364 $451,492

Cost Savings $5,453 $44,356 $33,228

High efficiency filter consideration set (Calculation per MW/12 months)

ABC: Providing unmatched value to the customers

Huge Cost

Savings

Lower

Turbine

Downtimes

Filter

Servicing

Expertise

ABC E10 Filters

To provide the best customer experience in filter industry

with the technologically most advanced filters and expert

after sales services




Source: Team analysis based on data accessed from Global Gas Observatory and case data

Marketing

Channel Product

Customer

Based on the product life cycle and the target market in a specific geography , one or more of the three pillars has been chosen as focus to meet our clients business needs.

Customer

Product Channel

New Product Entry

Customer

Product Channel

Entry of Competition Mature Markets

Customer

Product Channel

Primary focus Secondary focus

Post analyzing the primary and secondary focus for E10 in a region, we have studied the market entry strategy from various perspectives and suggested the most preferred route.

From Product

To customers

JVs/ Acquisitions

Distributors/ Agents

Channel Partners

Marketing Strategies

Maintenance & Service Providers

Source: From-To Approach, BCG; Redefining GTM, AT Kearney

GTM Framework

Competitors Potential Response




North America

Among all regions, North America currently has the highest air filters penetration and about 75 % of which are either Panel filters or Cartridge (cell) filters.

Considering the advantages of Cartridge (Synthetic) filters over other filters , all of which have a filter lifetime value of

Middle east shows the highest growth among all the regions, making it an attractive market for new product sales.

The replacement market is also growing at a steady rate , which can be harnessed by using customer centric marketing.

22 % of the market in middle east for air filters is captured by Cartridge (cellulose) filters. Given our value proposition, this is a prime market to target replacements.

The majority of energy requirements of Middle east is fulfilled by gas powered power plants, further the dependence on oil fired power plants is set to reduce.


Market Sizing

Go-To-Market Strategy

Significant Annual Replacement market can be targeted by targeting the Customer pillar of the GTM model. Tie ups with Turbine operators, Maintenance providers, OEMs . Focus Agents, sales representatives in matured markets like UAE, Egypt , Qatar etc.

Opportunities in New Growth market can be harnessed by focusing on building the Channel pillar Collaboration with Distributors in the region to enhance the reach. Tie-up with other companies operating in this region, on share of margin basis.

Risks/Concerns

Burgeoning gas demand in the region combined with concern over security of long term gas supply

Increased domestic gas demand, delayed supply response, limited regional pipeline cooperation, and below-market pricing pose long term threats

Growing investments by countries over alternative sources of energy (Solar & Nuclear).

Non-Homogenous distribution of gas reserves.

Middle East

Customer

Product Channel

Tapping the New Growth market

0

200

400

600

800

1,000

1,200

1,400

1,600

2012 2017 2022

Volume ('000 units)

Existing Total No.of Filters

AnnualReplacementMarketNew growthMarket




Source: Team analysis based on data accessed from Global Gas Observatory and case data; Frost & Sullivan; Redefining GTM, AT Kearney; International Energy Agency

Rest of Asia

ASEAN countries along with Japan, South Korea, Australia and New Zealand have more than 35% of their energy requirements met by Gas Power plants.

The share of gas in the overall fuel mix is expected to rise strongly in the above countries in the current decade.

ASEAN is promoting the development of a trans-ASEAN gas pipeline system (TAGP) by 2020, aimed at improved cross-national links.

The Fukushima nuclear accident has marked a fundamental shift in Japanese energy policy, turning away from nuclear energy towards other sources. This implies strong growth for gas-fired power generation as a substitute.


Customer

Product Channel

Tapping the New Growth market

Go-To-Market Strategy

To tap the opportunity in the Replacement and New Growth Market India & China (Growing Market)

Salesmen to take brochures to new plant owners, explaining the cost benefits of their air filter.

Joint venture with similar companies operating & maintenance providers in the region. ASEAN Countries & OPAC (Mature Market)

Tie ups with Turbine operators, Maintenance providers, OEMs . Existing filter distributors should be approached. Tie-up with other companies operating in this region, on margin share basis.

Market Sizing

Risks/Concerns

India and China have a high dependence on coal making the role of natural gas in fuel mix extremely limited.

Unstable regulatory environment in some of the Asian countries. Lack of gas resources, Japan and South Korea are highly dependent on foreign

supplies. Capacity expansion has been significant till now, however, countries like China and

India are also investing heavily in Solar & Wind Energy 0

200

400

600

800

1,000

1,200

1,400

2012 2017 2022

Volume ('000 Units)

Existing TotalNo. of Filters

AnnualReplacementMarket

New growthMarket




Source: Team analysis based on data accessed from Global Gas Observatory and case data; Frost & Sullivan; Redefining GTM, AT Kearney; International Energy Agency

Appendix

North America Latin America

MW No of Powerplants

Total Installed Capacity (MW) MW

No of Powerplants

Total Installed Capacity (MW)

180 65 37833.8

Africa Middle East

MW No of Powerplants


No of Power Plants


180 148 123515.5

Rest of Asia Europe

MW No of Power Plants


No of Power Plants


180 225 154671.5

Gas Turbines Installation Over The World Breakup by Plant Capacity

capacity in '000 MW

Year

5year CAGR 10 year CAGR

0 1 2 3 4 5 6 7 8 9 10

Europe 2.40% 1.10% 71.52 73.24 75.00 76.80 78.64 80.53 76.37 77.21 78.06 78.92 79.79

Middle East 8.10% 4.70% 83.55 90.32 97.64 105.54 114.09 123.33 110.06 115.23 120.65 126.32 132.26

Rest Of Asia 5.20% 4.50% 73.15 76.95 80.96 85.16 89.59 94.25 95.26 99.55 104.03 108.71 113.60

Africa 7.30% 5.00% 0.42 0.45 0.49 0.52 0.56 0.60 0.57 0.60 0.63 0.66 0.69

North America 0.40% 0.40% 369.36 370.84 372.32 373.81 375.31 376.81 378.31 379.83 381.35 382.87 384.40

Latin America 4.30% 3.80% 41.84 43.63 45.51 47.47 49.51 51.64 52.33 54.32 56.38 58.52 60.75

Europe, 79.79

Middle East, 132.26

Rest Of Asia, 113.60

Africa, 0.69

North America, 384.40

Latin America, 60.75

Europe, 80.53

Middle East, 123.33

Rest Of Asia, 94.25

Africa, 0.60

North America, 376.81

Latin America, 51.64

71.52

83.55

73.15 0.42

369.36

41.84

Year 10

Year 5

Year 0

Gas Turbine Market With capacity >150 MW

North American Market Biggest by Volume but Stagnant in Growth

Middle East Strong Growth & Market presence by 2022

Rest Of Asia Strong Growth till 2022

Global Gas-powered Electricity Generation, by Region

Year 4 Year 5

Panel Cartridge Panel Cartridge

Cell Synth Cell Synth Cell Synth Cell Synth

Europe 78.64 235.92 471.84 94.37 157.28 80.53 241.58 483.16 96.63 161.05

Middle East 114.09 114.09 171.14 273.82 684.55 123.33 123.33 185.00 296.00 740.00

Rest Of Asia 89.59 268.78 268.78 215.02 268.78 94.25 282.76 282.76 226.21 282.76

Africa 0.56 1.40 2.10 1.35 1.68 0.60 1.50 2.26 1.44 1.81

North America 375.31 562.96 1,407.39 450.37 1,876.53 376.81 565.21 1,413.02 452.17 1,884.03

Latin America 49.51 123.77 185.66 178.23 99.02 51.64 129.09 193.64 185.89 103.27

Year 9 Year 10



Europe 78.92 236.77 473.54 94.71 157.85 79.79 239.37 478.75 95.75 159.58

Middle East 126.32 126.32 189.48 303.17 757.92 132.26 132.26 198.39 317.42 793.55

Rest Of Asia 108.71 326.12 326.12 260.90 326.12 113.60 340.80 340.80 272.64 340.80

Africa 0.66 1.64 2.46 1.58 1.97 0.69 1.72 2.58 1.65 2.07

North America 382.87 574.31 1,435.77 459.45 1,914.36 384.40 576.60 1,441.51 461.28 1,922.02

Latin America 58.52 146.30 219.46 210.68 117.04 60.75 151.86 227.80 218.68 121.49

Inlet Air Filter Market for capacity >150MW Gas Turbines

Year 0

Panel Cartridge

Cell Synth Cell Synth

Europe 71.52 214.57 429.14 85.83 143.05

Middle East 83.55 83.55 125.33 200.52 501.31

Rest Of Asia 73.15 219.45 219.45 175.56 219.45

Africa 0.42 1.06 1.59 1.02 1.27

North America 369.36 554.04 1,385.10 443.23 1,846.80

Latin America 41.84 104.59 156.88 150.61 83.67

annual replacement market

Panel Cartridge


321.85 429.14 85.83 71.52

125.33 125.33 200.52 250.65

329.17 219.45 175.56 109.72

1.59 1.59 1.02 0.63

831.06 1,385.10 443.23 923.40

156.88 156.88 150.61 41.84

annual replacement market market growth



353.88 471.84 94.37 78.64 5.66 11.32 2.26 3.77

171.14 171.14 273.82 342.28 9.24 13.86 22.18 55.45

403.17 268.78 215.02 134.39 13.98 13.98 11.18 13.98

2.10 2.10 1.35 0.84 0.10 0.15 0.10 0.12

844.44 1,407.39 450.37 938.26 2.25 5.63 1.80 7.51

185.66 185.66 178.23 49.51 5.32 7.98 7.66 4.26

annual replacement market market growth



355.15 473.54 94.71 78.92 2.60 5.21 1.04 1.74

189.48 189.48 303.17 378.96 5.94 8.91 14.25 35.62

489.18 326.12 260.90 163.06 14.68 14.68 11.74 14.68

2.46 2.46 1.58 0.98 0.08 0.12 0.08 0.10

861.46 1,435.77 459.45 957.18 2.30 5.74 1.84 7.66

219.46 219.46 210.68 58.52 5.56 8.34 8.01 4.45

2012

2017

2022

Inlet Air Filter Market: Annual Replacement Market Market Growth

Panel Cartridge


No. of filters per MW of power generated 30 30 24 10

Filter lifetime (months) 24 24 24 24

Avg. Price $80 $100 $100 $300

Total Price 2400 3000 2400 3000

Average retention in power generation (%) post subtracting losses.

Marine 0.92 0.98 0.92 0.95

Arid 0.94 0.95 0.96 0.98

Humid sub-tropical 0.96 0.96 0.94 0.96

Price of Usable Generation (60$ /MW)

Marine 55.2 58.8 55.2 57

Arid 56.4 57 57.6 58.8

Humid sub-tropical 57.6 57.6 56.4 57.6

Revenue advantage of Cartridge (Syn) filters

Marine 1.8 -1.8 1.8 0

Arid 2.4 1.8 1.2 0

Humid sub-tropical 0 0 1.2 0

Cartridge (Syn) filters become cost effective for plant capacities greater than below mentioned

Marine 333 0 333

Arid 250 333 500

Humid sub-tropical 0 0 500

Cost effectiveness of Cartridge (synth) filters

iim ranchi iguanas round 1

Documents

north america growth

market strategy

largest market

rest of asia regions

africa latin america

biggest replacement

global filter market

gauge market attractiveness