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International Traders of Iowa | Growing Business in a Changing World

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President and CEO of Blue Canyon Partners, Atlee Valentine Pope, on April 17 delivered a presentation to the International Traders of Iowa. The presentation focused on Overseas Market Opportunity Analysis.

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International Traders of Iowa | Growing Business in a Changing World

  1. 1. © 2014 Blue Canyon Partners, Inc. ATLEE VALENTINE POPE APRIL 17, 2014 Growing a Business in a Changing World International Traders of Iowa
  2. 2. © 2014 Blue Canyon Partners, Inc. Sea Change in the Sources of Global Growth  As recently as 2002, North America and Europe were the world’s growth drivers, accounting for 70% of global market growth.  As recently as 1992, Asian developing countries accounted for less of global market growth than Japan alone.  The past 5 years have seen developing Asia account for 60% of all the market growth in the world, nearly 40% of it in China alone.  Regions not shown in the chart now account for about 30% of global growth, three times as high as in the 90’s and higher even than during the oil crises of the 70’s. Sources: World Bank, WDI, Blue Canyon analysis Percentage of 5-Year Global GDP Growth Accounted for by Selected Regions 2
  3. 3. © 2014 Blue Canyon Partners, Inc. Asian Emerging Markets Still Lead, Frontier Markets Have Emerged  With some exceptions such as Argentina and Vietnam, the Frontier markets are outside the mainstream of prior rapid growth: Asia and Latin America.  With global growth faltering over the past 5 years, the Middle East and Africa were home to some substantial growth. The old adage of the developing world getting pneumonia when the US and Europe catch cold seems quite outdated now.  The reasons can be debated, but the demands on the world’s resources created by explosive growth by China are a factor.  Even with a substantial slowdown in China from this level of growth, China will still outweigh the importance of all the Frontier group for some time to come. But positioning for the future requires attention. Sources: World Bank, WDI, Blue Canyon analysis Percentage of 5-Year Global GDP Growth Accounted for by Selected Regions 3
  4. 4. © 2014 Blue Canyon Partners, Inc. China Dominates in Scale …. ….Growth Slowdown Makes for Shocking Headlines  “Slowdown” scenarios to below 8% must be seen in context of less than 2.5% growth in the US and Europe  China’s policymakers are determined to build a more balanced economy: ▫ Services vs manufacturing ▫ Personal consumer choice vs government spending ▫ Interior regions vs coastal ▫ Environment vs growth Sources: World Bank, WDI, Blue Canyon analysis China’s Real Annual GDP Growth 4
  5. 5. © 2014 Blue Canyon Partners, Inc. Underlying Economics  Will the future sustain this global growth?  Which countries will prosper? Priorities for Success  Which countries are most attractive to you and why?  Do these opportunities fit with your company’s strategic goals and outlook?  How can you capture these rewards? Global Growth - Options and Opportunities 5
  6. 6. © 2014 Blue Canyon Partners, Inc. Methodology 6
  7. 7. © 2014 Blue Canyon Partners, Inc. Global Growth Opportunities Define Your Current Served Market Defining the current market…  What are you selling?... Services/products  Who are you selling it to?... Customers/markets  Where and how is it being used?... Application Common challenges of defining current served market…  Too broad: Overlook attractive opportunities that are right in front of you  Too narrow: Leave possibly attractive opportunities out of your market universe 7
  8. 8. © 2014 Blue Canyon Partners, Inc. Opportunity-Fit Opportunity  Size: Is this country large enough to make an important contribution to us?  Growth: Does this country offer the potential for sustained growth?  Market Share: Are you positioned to make significant financial returns in this country? Fit  Business Drivers: Does this country help play to your strengths -- with product lines, logistics, relationships and other resources?  Competitor Intensity: What is the competitive landscape in this country and how would this challenge you?  Purchase Decision Factors: Do customers in this market offer rewards to suppliers in terms of either a price premium, a share premium, or scale economies that drop to the bottom line? 8
  9. 9. © 2014 Blue Canyon Partners, Inc. Opportunity-Fit Scoring Option Size Growth Market Share Opportunity Score Competitor Intensity Purchase Decision Factors Business Drivers Probability of Success Score Composite Score China 9 9 8 26 7 6 9 22 48 Brazil 4 8 7 19 8 6 7 21 40 UK 7 6 8 21 7 5 4 16 37 Spain 6 6 5 16 5 6 7 18 34 Etc. After the various metrics are developed and quantified for each country, scores are developed for each country under consideration ILLUSTRATIVE 9
  10. 10. © 2014 Blue Canyon Partners, Inc. Metro Area Market Opportunity and Internal Considerations Assessment Internal Considerations MarketOpportunity StrongerWeaker HigherLower Higher if…  Larger market  Faster growth  Higher value add opportunity  etc. Lower if…  Smaller market  Slower growth  Minimal value add opportunity  etc. Country A Country B Country C Opportunity StrongWeak LowHigh Fit Weaker if…  Poor product match  Higher competitive intensity  etc. Stronger if…  Good product match  Lower competitive intensity  etc. Opportunity-Fit Assessment 10
  11. 11. © 2014 Blue Canyon Partners, Inc. Metro Area Market Opportunity and Internal Considerations Assessment Internal Considerations MarketOpportunity StrongerWeaker HigherLower Country A Country B Country C StrongWeak LowHigh Fit Selecting Countries Some segments will be chosen based on High Degree of Market Opportunity and Strong Fit Some segments will be chosen based on “Easy Wins” (e.g., strong fit) 11 Opportunity Some countries will be chosen based on High Market Opportunity assuming gaps can be addressed (e.g., partnership, acquisition)
  12. 12. © 2014 Blue Canyon Partners, Inc. Case Studies 12
  13. 13. © 2014 Blue Canyon Partners, Inc.  Beverage  Multi-pack Packaging  Follow the Customer Case Study 1 13
  14. 14. © 2014 Blue Canyon Partners, Inc. Beverage Packaging Opportunity Metrics Weight Packaging Value 100% Metrics Weight Margins 100% Metrics Weight Forecasted 5-Year CAGR Percentage 50% Forecasted 5-Year New Incremental Dollars 50% OPPORTUNITY SCORE 33.3% SCALE 33.3% GROWTH 33.3% PROFITABILITY 14
  15. 15. © 2014 Blue Canyon Partners, Inc. Beverage Packaging Fit 15 Metrics Weight Vehicles Per Household 25% Weekly Shopping Frequency 25% Variety of Beverages 25% Percent Households with Refrigerator 25% FIT SCORE 20% Demo- graphics 20% Brand Owner Activities 20% Trade / Channel Activities 20% Consumer / Lifestyle 20% Competitive Intensity Example: Refer to slides 16-19 for details.
  16. 16. © 2014 Blue Canyon Partners, Inc. Consumer / Lifestyle: Vehicles Per Household  Definition: The number of vehicles per household for each country  Measurement: Quantitative, later transformed into a 0-10 index  Rationale: Segments with higher numbers of vehicles per household are more able to transport multi-packs of packaged beverages home from point-of-purchase. Therefore, they represent larger short- and long-term opportunities for XYZ  Sources: World Bank and Blue Canyon sources Fit Dimension 16
  17. 17. © 2014 Blue Canyon Partners, Inc. Consumer / Lifestyle: Weekly Shopping Frequency  Definition: The average number of shopping trips per household per week for each country (an inverse metric–fewer is better)  Measurement: Quantitative, later transformed into a 0-10 index  Rationale: Segments that shop less frequently per week purchase more per incident and therefore are more likely to purchase multi-packs. Therefore, they represent larger short- and long-term opportunities for XYZ  Sources: XYZ Country Subject Matter Experts (SMEs) by country Fit Dimension 17
  18. 18. © 2014 Blue Canyon Partners, Inc. Consumer / Lifestyle: Variety of Beverages  Definition: The total number of beverage brands in the market by country  Measurement: Quantitative, later transformed into a 0-10 index  Rationale: Segments that have more brands have higher competition and thus more need to differentiate through packaging [‘Billboarding’]. Therefore, they represent larger short- and long-term opportunities for XYZ  Sources: Euromonitor Fit Dimension 18
  19. 19. © 2014 Blue Canyon Partners, Inc. Consumer / Lifestyle: Percent of Households with Refrigerators  Definition: The percentage of households with refrigerators by country  Measurement: Quantitative, later transformed into a 0-10 index  Rationale: Segments in which households are able to refrigerate packaged beverages play to XYZ’s paperboard ‘wet strength’ and FridgeMaster®, and thus represent larger short- and long-term opportunities for XYZ  Sources: Euromonitor 2003 Fit Dimension 19
  20. 20. © 2014 Blue Canyon Partners, Inc. OpportunityAssessment LimitedAttractivenessStrongAttractiveness Limited Fit Strong Fit Fit Assessment China Mexico Brazil Russia South Africa Indonesia India Ukraine Turkey China Sources: Blue Canyon analysis of data from the CIA World Factbook, The World Bank, Euromonitor, and XYZ SMEs 20
  21. 21. © 2014 Blue Canyon Partners, Inc. Case Study 2 21  Commercial Vehicles  Roads & Highways  European Expansion
  22. 22. © 2014 Blue Canyon Partners, Inc. Opportunity PROFITABILITY Metrics Wt. Margins 60% Competitive Intensity (Inverse) 20% Strength of Competition (Inverse) 20% GROWTH Metrics Wt. Forecasted New Vehicle Demand Growth Rate 70% Historical New Vehicle Demand Growth Rate 30% SCALE Metrics Wt. Annual New Vehicle Unit Demand 70% Size of Potential Customer Base 30% 40% 30%30% 22
  23. 23. © 2014 Blue Canyon Partners, Inc. Fit PURCHASE DECISION FACTORS Metrics Wt. Importance of greater hopper capacity 15% Importance of vehicle maneuverability 15% Importance of strong service and parts capabilities (inverse scoring) 15% Loyalty to local or long-time dealer (inverse scoring) 15% Importance of costs to switch vehicle OEMs (inverse scoring) 10% Importance of ease of equipment operation 10% Preference for national or local brands (inverse scoring) 10% Importance of dust suppression (inverse scoring) 5% Importance of noise suppression (inverse scoring) 5% 35% 25% 40% 23 Example
  24. 24. © 2014 Blue Canyon Partners, Inc. UK FR IT DE ES RU TR UA PT CZ HRHU PL EE Limited Fit Strong Fit Fit Assessment OpportunityAssessment LimitedAttractivenessVeryAttractiveOpportunity Fit Map – By Country Source: Blue Canyon Opportunity-Fit Model 24 0 - 10% 10 - 20% 20 - 30% 30 - 50% over 50% Market ShareUNITS Croatia HR 10 Czech Republic CZ 23 Estonia EE 5 France FR 371 Germany DE 199 Hungary HU 8 Italy IT 374 Poland PL 6 Portugal PT 34 Russia RU 80 Spain ES 157 Turkey TR 80 Ukraine UA 50 United Kingdom UK 400 COUNTRY
  25. 25. © 2014 Blue Canyon Partners, Inc. Lessons Learned 25 Unbundle the Complex Be strategic Fact-based
  26. 26. © 2014 Blue Canyon Partners, Inc. Atlee Valentine Pope, President and CEO Atlee Valentine Pope Current Responsibilities Atlee Valentine Pope is president and chief executive officer of Blue Canyon Partners, Inc., and the co- author of the growth strategy book CoDestiny: Overcome Your Growth Challenges By Helping Your Customers Overcome Theirs. In addition to overseeing Blue Canyon’s operations, Atlee works directly with a number of clients to produce market-driven answers and actions plans that foster profitable growth. More recently, Atlee’s work has included helping clients in areas such as channel management, strategy implementation, pricing strategies and adjacencies. PRESIDENT AND CEO T (847) 967-0288 E avp@bluecanyonpartners.com Experience Atlee’s work has covered numerous business-to-business issues across myriad industries. A representative sample of Atlee’s deep experience includes:  Identifying global growth opportunities for multiple U.S. manufacturers  Advising clients on how to solve pressing growth problems in their toughest, most competitive markets  Bringing new business models to clients uncertain about how to use data analytics to create value for their customers  Helping clients understand how to motivate their customers to focus on value rather than price Before building Blue Canyon, Atlee served in leadership roles in several start-up ventures and was a vice president in global corporate finance with First Chicago. Education and Affiliations Atlee earned a BA from the University of the South in Sewanee, Tennessee, and an MBA from Northwestern University’s Kellogg Graduate School of Management. Thought Leadership In addition to CoDestiny, Atlee has co-authored more than 40 papers and has been a guest speaker at numerous business events on topics ranging from market-driven strategy, best-in-class strategy implementation practices, business-to-business growth, and many more.

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