The Business Side | Translating and the Computer

GAJAH ANNUAL REPORT 2015 | 1
The
Business Side
#TC37
Richard Brooks
K International
10:00 - 10:50am Thursday, 26 November 2015
Translating and the Computer 2015
Westminster, London
Translating and the
Computer

DOWNLOAD
THIS SLIDEDECK
http://tinyurl.com/TC35Brooks

“If you need a friend,
get a dog.”

“Let’s get a consultant in”
More management nonsense at http://dilbert.com/

@RichardMBrooks #TC37 | 9
Strengths
Opportunities
Weaknesses
Threats
Located
in UK
From
outside
the UK
Not be
located in
UK
Located
in UKDiverse
portfolio
Diverse
portfolio
Diverse
portfolio
Diverse
portfolio
More
nonsense
More
nonsense
More
nonsense
More
nonsense
Stupid
Waste
Of
Time

• PEST(LE) Analysis
• Porter’s Five Forces
• Resourced Based View
• Business Model Canvas
• Strategy Canvas
Tools to Actually Help you Analyse

Environmental Analysis
PESTLE Framework
Political Environmental Social Technology Legislation Economic
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Industry Analysis
Porter's five forces of competitive position
Threat of New
Market Entrants
Threat of
Substitute
Products
Rivalry within
the Industry
Bargaining
Power of Buyers
Power of
Suppliers
More Reading >
http://www.exed.hbs.edu/assets/documents/hbr-shape-strategy.pdf

Bargaining Power of Suppliers
Suppliers are POWERFUL if...
• There is a credible forward integration
threat by suppliers.
• Suppliers are concentrated.
• There is a significant cost to switch
suppliers.
• The customers are powerful.
Suppliers are WEAK if...
• The product is standardized.
• There are many competitive suppliers.
• They are supplying commodity products.
• There is a credible backward integration
threat by purchasers.
• There are concentrated purchasers.
• The customers are weak.
What does the bargaining power of suppliers in our industry look like?

Bargaining Power of Customers
Customers are POWERFUL if...
• There are a few buyers with significant
market share.
• Buyers purchase a significant
proportion of the output.
• Buyers possess a credible backward
integration threat.
Customers are WEAK if...
• Producers can threaten forward integration,
taking over customers’ position.
• There are significant buyer switching costs.
• There are many customers – significant
influence on a particular product or price is
small.
• Producers supply critical portions of the
customers’ input
What does the bargaining power of customers in our industry look like?

Resource Based View
• Looks internally at a firm’s Resources (and Capabilities and
Competences) and how these can be arranged to deliver sustainable
competitive advantage.
• Often used as a response to the Environment (PESTLE) and Industry (5
Forces) Analysis.
• Resources that are simultaneously Valuable, Rare, Imperfectly Imitable
and Non-Sustitutable deliver sustainable competitive advantage.
• Look for these in your competitors businesses… Look for resources you
have that are rare and try and add value to them.
More Reading >
http://business.illinois.edu/josephm/BA545_Fall%202011/S10/Barney%20(1991).pdf

Use these tools to help
your customers
develop their strategy.
To add value…

Customer Segments
Who is your customer?
What market segments are you providing a service/product for?

What value do we deliver to your clients? or To your client’s supply chain?
Is it based on > performance, brand, value, convenience, price…
Value Propositions

Channels to Market
How are you going to get your product/service to your clients?
Is it virtual? Or is it a physical product?
Are our channels integrated into our client’s supply chain?

Customer Relationships
For each segment… what's the relationship like?
Transactional, self-service, account/relationship managers, community.

Revenue Streams
For what value are our customers willing to pay for?
Per unit charge, hourly, subscription, licenses, leasing.
Price discrimination or fixed price.

Key Resources
What key resources do we need for the right hand side?
Are they human, intellectual, financial or physical.

Key Activities
The most important actions needed to make you business model work.
e.g. problem solving (for consultants).

Key Partnerships
Who do you need as your key partners.
Used to optimise your business model, reduce risk or acquire resources.

Cost Structure
Describes all costs involved in operating a business model.
Is this business… cost driven, value driven, % of fixed and variable costs and are
there economies of scale/scope?

Differentiate – Don’t
Discount
“The truth is that if you are in an overcrowded market
where you don’t stand out, all lowering prices will
achieve is to erode your margins. Unless your business
has lower costs than EVERYONE else’s, discounting is a
losing game.
There is an alternative – successful differentiation.
If you can’t come up with something genuinely different
and superior, nothing else will save you”
- Alastair Dryburgh. Management Today. December
2012, P16.

Commodity Good?
from Investopedia.com

Is translation a
commodity?

No it bloody isn’t.
But some of us sell it on price, so it feels like price is the
only differentiator (a bit like a commodity).

Your ProductPotential Customer Awesome person who can
do amazing things.
+ =
This isn’t what you sell This is

Nurture Client
Expand Business
Seek New
Opportunities
Core
Nuisance
Give Low Attention
Lose Without Pain
Exploitable
Drive Premium Price
Seek Short Term Adv.
Risk Losing Customer
VALUE OF BUSINESS
A
T
T
R
A
C
T
I
V
E
N
E
S
S
Development
Cosset Client
Defend Vigorously
High Level of Service
High Responsiveness
Only 1% of
suppliers are here,
bad news. When
you’re here you
can charge 15%
more, good news.
Used by the vast
majority of buying
directors.
Supplier preferencing matrix | Kraljic 1983 HBR

Pretium = Price
Pretium = Value
The thinking in 10 B.C.
Price = Value
The problem in 2015 A.D.
Price ≠ Value
Pretium

… 4G is “the
communications
equivalent of the
change the jet
engine made over
steam”
>>> Inability to monetise value creation
Olaf Swantee, CEO EE
3G
1GB
£31
4G
1GB
£26
When Value > Price

Becky Williams M&S Apology
When Price > Value
>>> lack of understanding of an emotive
reaction to a small price change

• The last time you met an Accoutant?
• The last time you met someone from
procurement (or vendor management?
• The last time you met someone from the
pricing department?
Rich ponders…

Of all the 7 Ps Price has
the single most
immediate effect on the
bottom line.
(hint hint… would make a nice tweet)

“the single most
important decision in
evaluating a business is
pricing power”
“if you’ve got the power to
raise prices without losing
business to a competitor,
you’ve got a good
business. And if you have
a prayer session before
raising the price by 10%
you have a terrible
business”
- Warren Buffet/MIT 2011

What does a 2% rise
in price do to your
profits?

P&L #1
Income £100 000
Cost of Sales -£50 000
Gross Profit £50 000
Overheads -£40 000
PBIT £10 000
Interest -£5 000
Tax -£1 000
Profit £4 000
P&L #2 (2% increase in price)
Income £102 000
Cost of Sales -£50 000
Gross Profit £52 000
Overheads -£40 000
PBIT £12 000
Interest -£5 000
Tax -£1 400
Profit £5 600

2% rise in price =
40% Increase in profits
All other things being equal (tax calculated at 20%)

Cost Plus.
Amounts to a mark-up on costs… is
widely used but rarely the most
profitable.
Competition driven.
Amounts to using price within a
game theoretic framework for
strategic advantage.
Customer Driven.
Amounts to using price to achieve
short-term sales objectives rather
than profits.
Value Based.
Amounts to understanding the
value created and then
maximising its capture.
Pricing Strategies

The butter costs more than the
corn and the paper bag/cup it
comes in costs more than both
together.

Created shareholder value by
forecasting revenue streams.
Move from providing a product to a
bespoke service.

“… a unique mix of attributes that
companies provide through their products,
interactions, ethos and pricing to create
loyalty and satisfaction in targeted
customer segments.
It is the unique set of benefits a business
offers its target customers.”
- P Kotler
Value Proposition

Value = Benefits - Cost

Add Value…
Think how the impact, capability and cost change as
you increase the complexity of your product/service
to have a larger impact on your customer. Increasing
(and demonstrating) value as you go.
… and extract some of it

The Total Share of Wallet
Made up of
• What you do for the client
• What your competitors do for the client
• What the client does themselves
• What the client doesn’t do but should

Therefore Different Strategies
Or Marketing Approaches…
• To retain our key clients
• To take business from competitors
• To convince the client to outsource
• To educate the client

P&G paid $57 Billion for Gillette (in 2005) but
they only acquired $6 Billion of tangible assets*.
*David Haigh, Brand Finance, Marketing Magazine, 1st April 2005

• Better price
• Higher sales
• Lower prices
• Better terms
• Higher Search Engine Results
• More partners
• Better retention
• Lower salary expectations
• Better qualified candidates
• Higher PE ratio
• Lower volatility
• Lower borrowing costs
What does a Brand give you?
Its way more than your logo…

If you put
lipstick on a
gorilla you’ve
still have to
kiss it.

@RichardMBrooks #TC37 | 62Bennis, Warren, 1989. On Becoming a Leader. New York: Addison Wesley.
Bennis’ list of differences
• The manager administers; the leader innovates.
• The manager is a copy; the leader is an original.
• The manager maintains; the leader develops.
• The manager focuses on systems and structure; the leader focuses on people.
• The manager relies on control; the leader inspires trust.
• The manager has a short-range view; the leader has a long-range perspective.
• The manager asks how and when; the leader asks what and why.
• The manager has his or her eye always on the bottom line; the leader’s eye is on the horizon.
• The manager imitates; the leader originates.
• The manager accepts the status quo; the leader challenges it.
• The manager is the classic good soldier; the leader is his or her own person.
• The manager does things right; the leader does the right thing.

http://hackthesystem.com/blog/why-i-hired-a-girl-on-craigslist-to-slap-me-in-the-face-and-why-it-quadrupled-my-productivity/

Richard Brooks
uk.linkedin.com/in/richardbrooks
twitter.com/@RichardMBrooks
plus.google.com/+RichardBrooks_L10N
0044 1908 557900
Richard.Brooks@k-international.com
www.k-international.com
Look after yourselves. All the best for 2016.

The Business Side | Translating and the Computer

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