Business & Industry Growth & Competition Framework - Aditya Yadav

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Business & Industry Growth & Competition Framework - Aditya Yadav

Business & Industry Growth & Competition Framework - Aditya Yadav

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  • 1. “Running an Agile Fortune 500 Company”Aditya Yadav, aditya.yadav@gmail.comin.linkedin.com/in/adityayadav76*
  • 2. **A Typical Global Company*Fortune 500/1000*200 Divisions*40 Countries*25000 Employees
  • 3. @ Acme Inc.*
  • 4. **Original Question “We need to put our Firmand Industry Growth in perspective”*The Correct Question - “…. And thanks to DataScience there is a Strategic Framework forthat… You have already seen the BusinessCapacity & Organic Business GrowthFramework which was Inward Facing… This isOutward Facing… You need to use Bothtogether to understand Growth. Allow me toexplain.”
  • 5. And The Philosophy Behind The Answer*
  • 6. **Assume two firms A and B growing by 10% and20% respectively*Assume Industry/Market Growth is 5% from1000 units to 1050 units*In One Year*How do we model this?*What conclusions can we make?
  • 7. *Year 1GrowthRateYear 2ProjectedScaled Year2GrowthRateYear 3ProjectedA 500 10.00% 550 502 0.43% 504B 500 20.00% 600 548 9.57% 600Industry/Market 1000 5.00% 1050 1050 0.00% 1050Competitive Index 1.10 1.05Scaled Year3GrowthRateYear 4ProjectedScaled Year4GrowthRateYear 5Projected479 -4.53% 458 457 -4.71% 435571 4.15% 594 593 3.96% 6171050 0.00% 1050 1050 0.00% 10501.00 1.00Scaled Year5GrowthRateYear 5ProjectedScaled Year5GrowthRate435 -4.88% 413 330 -24.05%615 3.76% 639 510 -17.14%1050 -20.00% 840 840 -20.00%1.25
  • 8. **Start with Firm & Industry Growth Projections*Scale The Projections down/up to ActualGrowth and calculate the Competitive Indexe.g. In Year 2 projected is 1150 while Actual is1050 hence CI = ~1.1*Do this every Quarter using Publically availableInformation and Financial and Research Reports
  • 9. *Year 1 2 3 4 5 6Industry/MarketGrowth 5.00% 0.00% 0.00% 0.00% -20.00% -20.00%Competitive Index 1.10 1.05 1.00 1.00 1.25A 10.00% 0.43% -4.53% -4.71% -4.88% -24.05%B 20.00% 9.57% 4.15% 3.96% 3.76% -17.14%-40.00%-20.00%0.00%20.00%40.00%60.00%80.00%100.00%120.00%140.00%1 2 3 4 5 6Industry/Market GrowthCompetitive IndexAB
  • 10. ** This Chart Seems Uninterestingbecause its made using MockData. Real Charts using Industryand Firms Growth Projections andActual Growths are extremelyinsightful* The Industry/ Market GrowthCurve is Normally U shaped* Competitive Index of 1.0 impliesStatus Quo* Competitive Index Below 1.0implies Detrimental MonopolisticCompetition. Yay! Now we candetect this…* Firm Growth Follows/LagsIndustry/Market Projections-40.00%-20.00%0.00%20.00%40.00%60.00%80.00%100.00%120.00%140.00%1 2 3 4 5 6Industry/Market GrowthCompetitive IndexAB
  • 11. ** Rule: Your Survivability inyour Industry isProportional to (i) YourGrowth Rate, and then (ii)your Market Share* GE has always harpedabout the need for beingin the Top 3 in anyindustry. Now we can seewhy that’s true!* When your Firm (A)Growth Declines lowerthan Industry Growth It isTime for M&A…. See Year 2& 6. This is consistent withour Mental Understanding.-40.00%-20.00%0.00%20.00%40.00%60.00%80.00%100.00%120.00%140.00%1 2 3 4 5 6Industry/Market GrowthCompetitive IndexAB
  • 12. *
  • 13. **If you super impose multiple of such chartsfrom multiple industries, you can*Compare Cross-Industry Competitive Index’s*Industry Growth*Firm Growths*Economic Policy Impact*…
  • 14. *Firm Competitive Index Industry Growth Firm GrowthA 1.05 0.03 0.02B 1.02 0.16 0.2C 1.1 0.11 0.15D 0.87 -0.12 -0.1E 0.96 -0.05 -0.02F 1.2 0.3 0.35G 1.4 0.2 0.25-0.15-0.1-0.0500.050.10.150.20.250.30.350 0.5 1 1.5The World Map1.051.021.10.870.961.21.4
  • 15. ** You get a Composite Viewof Industry Growth (Y-Axis)vs Firm Growth (Area) vsCompetitive Index (X-Axis)* You can Spot Monopolies* You can Virtually Concludethat High Growth Firmscorrespond to High GrowthIndustries i.e. The FirmsInherit The Industry GrowthAdvantage-0.15-0.1-0.0500.050.10.150.20.250.30.350 0.5 1 1.5The World Map1.051.021.10.870.961.21.4
  • 16. *Aditya!!!