Do we enter a new market? CURRENT MARKET ENTERING MAJOR PLAYERS AND MARKET SHARE PRODUCT DIFFERENTIATION BARRIERS TO ENTRY NO IF YES, HOW? START FROM SCRATCH ACQUISITION JOINT VENTURE COST-BENEFIT ANALYSIS OF EACH Example: Your client manufactures hair products. It’s thinking about entering the sunscreen market. Is this a good idea?
Mergers & acquisitions Example: Ben & Jerry’s is buying a mid-size cream cheese manufacture. Does this make sense? FOR HOW LONG? BREAK OR KEEP IT? EXIT STRATEGIES LEGAL REASONS COMPETITORS MARKET / INDUSTRY / CUSTOMERS INFORMATION FAIR? AFFORDABLE? HOW TO PAY? DIVERSIFY HOLDINGS INCREASE MARKET ACCESS PRE-EMPT COMPETI-TORS GOALS PRICE SYNERGIES (MARKETING, FINANCIAL, OPERATIONS)
Reducing costs BREAKDOWN OF COSTS ANY COSTS OUT OF LINE? BENCHMARK COMPETITORS INVESTIGATE WHY YES NO DETERMINE LABOR-SAVING TECHNOLOGIES INTERNAL/EX-TERNAL COSTS Example: 1) A publishing company is having a cash flow problem and needs to reduce its costs, otherwise it will have to layoff staff. How should the company proceed? 2) Walmart’s sales are flat and profits are taking a header. How to fix things?
Increasing sales Example: BBB electronics want to increase its sales. What to do? GROWTH RELATIVE TO INDUSTRY MARKET SHARE UP/DOWN? CUSTOMER SURVEY INCREASE VOLUME INCREASE AMOUNT INCREASE PRICES SEASONAL BALANCE ACTION COMPETITORS SALES↑ but not PROFITS↑ INFORMATION
Increasing bottom line Example: Our client manufactures high-end athletic footwear. Sales are up, but profits are flat. What do we need to look at? PROFIT = (REVENUES - COSTS)×VOLUME COSTS REVENUE STREAMS (%) % CHANGES / UNUSUAL? REVENUE / PRICE FIXED / VARIABLE SHIFTS / UNUSUAL? HOW TO REDUCE? NEW AREAS SALES / MARKETING ↑ VOLUME PRICES↓
Turnaround Example: CitiGroup is in trouble and you’ve been brought to save it. What do you do? COMPANY / INDUSTRY COMPETITORS FACE SAME PROBLEMS? WHY IS IT FAILING? INFORMATION CAPITAL PRODUCTS MANAGEMENT ECONOMY BAD REVIEW EMPLOYEES & PRODUCTS SECURE FINANCING BUSINESS PLAN SHORT LONG TAKE ACTION REASSURE CLIENTS GOALS
Competitive response Example: FootLocker introduced a new non-slip sailing shoe that has been eating into the sales of our bestseller. How can we respond? PRODUCT DIFFERENTIATION ANY OTHERS PICKED MARKET SHARE? MERGER ACQUISITION COPY AMAZON.COM VS BLOCKBUSTER COST-BENEFIT ANALYSIS OF EACH MARKETING CAMPAIGN HIRE MANAGEMENT RESPONSE INFORMATION
Develop new product Example: Our client has developed a new biodegradable product, which is both a soft drink and a car wax. What should they be thinking about? MARKET STRATEGY PRODUCT CUSTOMERS FINANCING
Pricing strategies Example: Our client developed a new Hollywood screenwriting software package. How should we price it? PRICE OF SIMILAR PRODUCTS? PRODUCT DIFFERENTIATION MARKET SIZE COST-BASED VS. PRICE-BASED MARKET PRICE COST TO MAKE SUPPLY & DEMAND (*) PRICING STRATEGY GROWTH PHASE? (GROWTH/TRANSITION/MATURITY) PRODUCT INFORMATION
Growth strategies Example: Microsoft Corporation has a high cash reserve. How can we best use that money to grow the company? INDUSTRY GROWING? ARE WE? FUNDING? WHAT DID COMPETITORS DO? DISTRIBUTION CHANNELS ↑ PRODUCT LINE ↑ MARKETING ↑ DIVERSIFY PRODUCTS GROWTH STRATEGY FEELER QUESTIONS MERGER
Starting new business Example: Should I start a travel magazine? MARKET & STRATEGIC PLAN DISTRIBUTION CHANNELS PRODUCT CUSTOMERS MANAGEMENT WOULD VCs INVEST IN COMPANY? FINANCE ENTER NEW MARKET ? NO YES BARRIERS TO ENTRY