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ValueMagicsa	
  road	
  map	
  from	
  cost	
  to	
  value	
  
a	
  new	
  road	
  map	
  to	
  global	
  markets	
  
1.  The model The Magic Pallet
2.  The tool SWAT analysis
3.  The b...
a	
  new	
  road	
  map	
  to	
  global	
  markets	
  
1.  The model The Magic Pallet
ValueMagics
BUSINESS BUSINESS CONSUMER
COST OF
MEANS
VALUE
ADDED COSTOF
OWNERSHIP
VALUE
SPACE
BENEFITS
VALUE
ADDED
SACRIFICES
BENEFITS...
©2004 TGVC
Every time a shipment sails to its final
destination, seller and buyer have done
business because the transacti...
The same applies whenever a
service is delivered to a buyer
Then again, seller and buyer have
different perceptions of “value”.
“The Magic Pallet” is a graphical
presentation of the ...
SELLER
For the seller, value is the sales price
of his goods minus the cost of means
(fixed and variable costs);
the net p...
The Magic Pallet uses
concise concepts
with precise
descriptions to
identify the elements
that constitute the
value propos...
VALUE CHAIN
The chain of
activities performed
by a single firm,
which add value
for its customer
TECHNOLOGY
PRODUCTION
LOG...
The costs of means are
the comparative
resources of a firm or
sector.
For most, these costs
are a given
- hard to improve ...
……..…..contains the value added;
the value chain of a firm or sector,
which is the source of competitive
advantages.
Not t...
VALUECREATION
TECHNOLOGY
SUPPORT
PRODUCCTION
LOGISTICS
MARKETING
1900
1950
1950
2000
Value, a historical perspective
Materials -fabric, button, tread, etc. $ 4,18 $ 7,54
Production –“Cut, make and trim” $ 1,40 $ 1,74
Logistics –in bound/ou...
Seller’s value equals
buyer’s total cost of
ownership……..
Next crate: cost of ownership
COST = Purchasing price on a DDP b...
……………..perceived
benefits from the
purchase.
These benefits can be of
technical, social,
economic or any other
nature and ...
Higher cost of means
(MMMMM) will cause higher
cost of ownership (CCCCC)
without necessary
increasing perceived
benefits (...
If total cost of ownership (CCCCC) is
higher than the benefits (PASIS), the
buyer will not buy, postpone the
purchase or l...
The value proposition of a seller is composed by his
cost of means –comparative advantages-
plus value added –competitive ...
Value addition and profits
Capturing Value in Global Networks: Apple’s iPad and iPhone, Distribution of profits iPhone 201...
ValueMathics applied….
In the SWAT analysis, we
show how to use The Magic
Pallet to find the most
successful road to globa...
a	
  new	
  road	
  map	
  to	
  global	
  markets	
  
2. The tool SWAT analysis
ValueMagics
2. The tool…….
SWAT analysis
PRODUCT
ACCESS
SPEED
IMAGE
SERVICE
TCO
TOTAL
TECHNOLOGY -5 -11 -1 2 -9 13 -11
PRODUCTION 21 2...
The SWAT analysis is a new
generation balanced scorecard
that uses elements of The
Magic Pallet to analyse the
potential o...
“SWAT” stands for…..
§  Sources
§  Cost of means, like technical and commercial people,
manpower, money, machines and ra...
The SWAT analysis
PRODUCT
ACCESS
SPEED
IMAGE
SERVICE
TCO
TOTAL
TECHNOLOGY -5 -11 -1 2 -9 13 -11
PRODUCTION 21 25 19 13 -11...
TPLMS are the value activities
of a firm -the source for
competitive advantages
–its value chain.
Being the drivers for va...
On the horizontal axe, we list the PASIS
- required product, process and vendor’s
benefits of a given buyer’s segment.
TEC...
TECHNOLOGY
PRODUCTION
LOGISTICS
MARKETING
SUPPORT
VALUECHAIN SWAT
analysis
PRODUCT
ACCESS
SPEED
IMAGE
SERVICE
TCO
CUSTOMER...
PRODUCT
ACCESS
SPEED
IMAGE
SERVICE
TCO
TECHNOLOGY
PRODUCTION
LOGISTICS
MARKETING
SUPPORT
CUSTOMER VALUES
VALUECHAIN SWAT
a...
PRODUCT
ACCESS
SPEED
IMAGE
SERVICE
TCO
TOTAL
TECHNOLOGY
PRODUCT
DEVELOPMENT
MATERIALS
R&D PROCESS
TIME-TO-
PRODUCTION
TECH...
Is the MD-2 variety available in the country ? Are there certified test
faciltities to guarantee the quality of the pineap...
SWAT - methodology
1.  Gather 3-5 persons; 3=minimum, 5 = maximum
•  one/three persons from the firm; one/two from TPO,
cl...
This is an example of an
individual SWAT sheet.
You start filling the
numbers column by
column. The question at
each cross...
PRODUCT
ACCESS
SPEED
IMAGE
SERVICE
TCO
TOTAL
TECHNOLOGY -5 -11 -1 2 -9 13 -11
PRODUCTION 21 25 19 13 -11 21 88
LOGISTICS 1...
PRODUCT
ACCESS
SPEED
IMAGE
SERVICE
TCO
TOTAL
TECHNOLOGY -5 -11 -1 2 -9 13 -11
PRODUCTION 21 25 19 13 -11 21 88
LOGISTICS 1...
PRODUCT
ACCESS
SPEED
IMAGE
SERVICE
TCO
TOTAL
TECHNOLOGY -5 -11 -1 2 -9 13 -11
PRODUCTION 21 25 19 13 -11 21 88
LOGISTICS 1...
PRODUCT
ACCESS
SPEED
IMAGE
SERVICE
TCO
TOTAL
TECHNOLOGY -5 -11 -1 2 -9 13 -11
PRODUCTION 21 25 19 13 -11 21 88
LOGISTICS 1...
PRODUCT
ACCESS
SPEED
IMAGE
SERVICE
TCO
TOTAL
TECHNOLOGY -5 -11 -1 2 -9 13 -11
PRODUCTION 21 25 19 13 -11 21 88
LOGISTICS 1...
SWAT – in a nutshell
1.  The SWAT analysis uses elements of The Magic Pallet from
supply side -value chain- and demand sid...
a	
  new	
  road	
  map	
  to	
  global	
  markets	
  
3. The business Market Mode
ValueMagics
3. The business……..
Market Mode
TECHNOLOGY - Qualified engineers,
designers, equipment, research, product
development, des...
The business
•  “The business” is reflected in
the market mode. This is the
way in which a company uses
its strongest valu...
PRODUCT
ACCESS
SPEED
IMAGE
SERVICE
TCO
TOTAL
TECHNOLOGY 13 11 4 11 7 17 41
PRODUCTION 19 25 17 6 4 20 91
LOGISTICS 4 6 19 ...
COST
Market Mode - who does what ?
SUPPORT
LOGISTICS
MARKETING
PRODUCTION
TECHNOLOGY
SELLER BUYER CONSUMER
CUSTOMER
VALUE
VALUE
PRODUCTION
PATENT BRAND
Market Mode – how to upgrade ?
T P L M S
FRESH
PRODUCTS
GARMENTS
APPAREL
MANUFACTURED
PRODUCTS
SERVICES ITO/
BPO/KPO
Contract
manufacturing
CTC CMTP, Maq...
SELLER BUYER CONSUMER
COST
1. Contract manufacturing
SUPPORT
LOGISTICS
MARKETING
PRODUCTION
TECHNOLOGY Seller concentrates...
COST
TECHNOLOGY
PRODUCTION
1.1. CMTP/maquila
CMT CONSUMER
TECHNOLOGY
LOGISTICS
MARKETING
SUPPORT
1.2. BPO/call centre
CALL CENTRE CONSUMER
COST
SUPPORT
LOGISTICS
MARKETING
PRODUCTION
TECHNOLOGY
HSBC
SELLER BUYER CONSUMER
COST
2. Sub-contracting
SUPPORT
MARKETING
TECHNOLOGY
PRODUCTION
LOGISTICS
TECHNOLOGY Seller produces...
SPRAYER LTD. “CHANEL” CONSUMER
COST
2.1. Cosmetics - sprayers
SUPPORT
MARKETING
TECHNOLOGY
LOGISTICS
TECHNOLOGY
PRODUCTION
Tier 2 –piston manufacturer
Tier 1 – engine manufacturer
OEM – truck manufacturer
2.1. Automotive – T2
ENGINEERING FIRM KEMA CONSUMER
COST
2.3. Engineering services
SUPPORT
MARKETING
TECHNOLOGY
PRODUCTION
LOGISTICS
TECHNOLOGY
SELLER LEVIS CONSUMER
COST
2.4. “FOB”
SUPPORT
MARKETING
TECHNOLOGY
PRODUCTION
LOGISTICS
TECHNOLOGY
COST
3. License manufacturing
SUPPORT
LOGISTICS
MARKETING
PRODUCTION
TECHNOLOGY
SELLER BUYER CONSUMER
Seller has captive
(...
“License and buy back” :
•  Buyer provides the design, drafts, formulation of product,
often trough a design studio
•  Buy...
LICENSOR
LICENSEE
LICENSEE
LICENSEE
FREE MARKETS
BLOCKED MARKETS
3. License manufacturing
COST
3.1. Food processing
SUPPORT
MARKETING
TECHNOLOGY
BOTTLER COCA COLA CONSUMER
LOGISTICS
PRODUCTION
COST
4. Private label manufacturing
SUPPORT
LOGISTICS
MARKETING
PRODUCTION
TECHNOLOGY
LOGISTICS
SELLER BUYER CONSUMER
Sell...
COST
4.1. Automotive – car assembly
SUPPORT
LOGISTICS
MARKETING
PRODUCTION
TECHNOLOGY
LOGISTICS
MAGNA STEYR CHRYSLER CONSU...
COST
4.2. Oil industry
SUPPORT
LOGISTICS
MARKETING
PRODUCTION
TECHNOLOGY
LOGISTICS
SHELL CONSUMER
COST
SUPPORT
LOGISTICS
MARKETING
PRODUCTION
TECHNOLOGY
LOGISTICS
SELLER MORNING FRESH CONSUMER
4.4. Food processing
A -BRAND
4.4. The supermarket shelf
HOUSE
BRAND
FIGHTING
BRAND
COST
4.4. Accessories – sourcing
SUPPORT
LOGISTICS
MARKETING
PRODUCTION
TECHNOLOGY
LOGISTICS
UMBRALLA MNF. VODAFONE CONSUM...
COST
5. Own IP/brand
SUPPORT
MARKETING
PRODUCTION
TECHNOLOGY
LOGISTICS
SELLER BUYER CONSUMER
Seller has own
technology, co...
COST
5.1. Games
SUPPORT
MARKETING
PRODUCTION
TECHNOLOGY
LOGISTICS
APPLE CONSUMER
COST
5.2. Garments - brand
SUPPORT
MARKETING
PRODUCTION
TECHNOLOGY
LOGISTICS
CLEVER MODA S.A. RETAIL CONSUMER
COST
5.3. Food processing - brand
SUPPORT
MARKETING
PRODUCTION
TECHNOLOGY
LOGISTICS
BUYER CONSUMER
TECHNOLOGY - Qualified engineers,
designers, equipment, research, product
development, design, laboratory,
+ ++ + +++ +++
...
a	
  new	
  road	
  map	
  to	
  global	
  markets	
  
1.  The Magic Pallet – understanding value
2.  SWAT analysis – buil...
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ValueMagics - a road map from cost to value

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ValueMagics describes the high road to global markets for companies in economies in transition. For more details visit ww.valuemagics.com

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ValueMagics - a road map from cost to value

  1. 1. ValueMagicsa  road  map  from  cost  to  value  
  2. 2. a  new  road  map  to  global  markets   1.  The model The Magic Pallet 2.  The tool SWAT analysis 3.  The business Market Mode ValueMagics
  3. 3. a  new  road  map  to  global  markets   1.  The model The Magic Pallet ValueMagics
  4. 4. BUSINESS BUSINESS CONSUMER COST OF MEANS VALUE ADDED COSTOF OWNERSHIP VALUE SPACE BENEFITS VALUE ADDED SACRIFICES BENEFITS 1. The model……. The Magic Pallet
  5. 5. ©2004 TGVC Every time a shipment sails to its final destination, seller and buyer have done business because the transaction represents a value for each of them.
  6. 6. The same applies whenever a service is delivered to a buyer
  7. 7. Then again, seller and buyer have different perceptions of “value”. “The Magic Pallet” is a graphical presentation of the business transaction. It demystifies “value” and explains the different elements that build up to those perceptions.
  8. 8. SELLER For the seller, value is the sales price of his goods minus the cost of means (fixed and variable costs); the net profit on the transaction BUYER For the buyer, value is the worth in monetary terms of the perceived benefits in return for the price he pays plus the additional costs incurred, called “total cost of ownership”. This is the “value proposition” of the seller. Value SELLER BUYER VALUE ADDED COST OF MEANS PERCEIVED BENEFITS COSTOF OWNERSHIP
  9. 9. The Magic Pallet uses concise concepts with precise descriptions to identify the elements that constitute the value proposition of a firm VALUE ADDED COSTOFOWNERSHIP CUSTOMERVALUES Q UALITY IMAGE DESIGN SPEED CHANGE CHANCE
  10. 10. VALUE CHAIN The chain of activities performed by a single firm, which add value for its customer TECHNOLOGY PRODUCTION LOGISTICS MARKETING SUPPORT TECHNOLOGY PRODUCTION LOGISTICS MARKETING SUPPORT TECHNOLOGY PRODUCTION LOGISTICS MARKETING SUPPORT TECHNOLOGY PRODUCTION LOGISTICS MARKETING SUPPORT VALUE SYSTEM The set of value chains that come together including suppliers, manufacturers processors, distributors, traders, etc. CUSTOMER VALUE The sum of perceived benefits – in monetary terms- in turn for the total cost of ownership Let us first agree on some definitions…. COSTOF OWNERSHIP PERCEIVED BENEFITS VALUE
  11. 11. The costs of means are the comparative resources of a firm or sector. For most, these costs are a given - hard to improve upon We start loading the pallet…… MINDS = Cost of people with a higher education and/or creativity. MONEY = Cost of money: own financial resources or financing MAN POWER = Cost of labor: skilled, proficient or experienced workers MACHINES = Cost of machines, infrastructure and other means. MATERIALS = Cost of raw materials, seeds, ingredients a/o SELLER BUYER MINDS MONEY MANPOWER MACHINES MATERIALS
  12. 12. ……..…..contains the value added; the value chain of a firm or sector, which is the source of competitive advantages. Not the comparative “What do you have?”, but “What do you do with it?” The second crate……. TECHNOLOGY = Creating new, developing or adapting existing products PRODUCTION = Transformation of inputs into a final product LOGISTICS = All in-bound, in-house, out-bound movement of goods MARKETING = Attracting new and retaining existing customers SUPPORT = All pre/after sales support, personalization of processes SELLER BUYER MINDS MONEY MANPOWER MACHINES MATERIALSTECHNOLOGY PRODUCTION LOGISTICS MARKETING SUPPORT
  13. 13. VALUECREATION TECHNOLOGY SUPPORT PRODUCCTION LOGISTICS MARKETING 1900 1950 1950 2000 Value, a historical perspective
  14. 14. Materials -fabric, button, tread, etc. $ 4,18 $ 7,54 Production –“Cut, make and trim” $ 1,40 $ 1,74 Logistics –in bound/out bound $ 0,27 $ 0,31 Taxes -quota, duties $ 0,11 $ 0,14 Sub-total $ 5,96 $ 9,73 Technology -design, fit, color, model $ ……. $ ……. Marketing –branding, promotion $ ……. $ ……. Retail price -exclusive of VAT $ 39,00 $ 89,00 ABC The value of production
  15. 15. Seller’s value equals buyer’s total cost of ownership…….. Next crate: cost of ownership COST = Purchasing price on a DDP basis CHRONO = Time involved in purchasing, control and corrective actions CHANGE = Change and adaptation to new products, processes or suppliers CHANCE = Number of potential suppliers, reliability, barriers, distances CONFLICT = Disputes on incompetence, unresponsiveness, non-transparancy SELLER BUYER MINDS MONEY MANPOWER MACHINES MATERIALSTECHNOLOGY PRODUCTION LOGISTICS MARKETING SUPPORT COST CHANGE CHANCE CHRONO CONFLICT
  16. 16. ……………..perceived benefits from the purchase. These benefits can be of technical, social, economic or any other nature and are related to the product and processes The last crate contains the………. SELLER BUYER MINDS MONEY MANPOWER MACHINES MATERIALS TECHNOLOGY PRODUCTION LOGISTICS MARKETING SUPPORT COST CHANGE CHANCE CHRONO CONFLICT PRODUCT ACCESS SPEED IMAGE SERVICE PRODUCT = Design, shape, color, taste, feel, texture, packing ACCESS = Compliance with product and process standards and norms SPEED = Availability and/or delivery time, convenience of purchasing IMAGE = Contribution to profit by reputation supplier/country or brand SERVICE = Level of pre- and after sales service, customization of processes
  17. 17. Higher cost of means (MMMMM) will cause higher cost of ownership (CCCCC) without necessary increasing perceived benefits (PASIS) Higher value added (TPLMS) will lead to higher benefits (PASIS) . Therefore, higher cost of means (MMMMM) need to be compensated by higher value added (TPLMS). Competitiveness…. SELLER BUYER COST OF MEANS PERCEIVED BENEFITS COSTOF OWNERSHIP SELLER BUYER VALUE ADDED COST OF MEANS PERCEIVED BENEFITS COSTOF OWNERSHIP
  18. 18. If total cost of ownership (CCCCC) is higher than the benefits (PASIS), the buyer will not buy, postpone the purchase or look for other suppliers. Business or no business …… SELLER BUYER COST OF MEANS VALUE ADDED PERCEIVED BENEFITS COSTOF OWNERSHIP
  19. 19. The value proposition of a seller is composed by his cost of means –comparative advantages- plus value added –competitive advantages That value proposition should contain product, process and vendor’s benefits, which are higher than the total total cost of ownership for the buyer Competitive advantages Comparative advantages The business equation SELLER BUYER VALUE ADDED COST OF MEANS PERCEIVED BENEFITS COSTOF OWNERSHIP
  20. 20. Value addition and profits Capturing Value in Global Networks: Apple’s iPad and iPhone, Distribution of profits iPhone 2010, Kenneth L. Kraemer, Greg Linden, and Jason Dedrick, University of California, Irvine, University of California, Berkeley and Syracuse University Though not designed to be a mathematical model, The Magic Pallet serves to give indications of value to players in global supply chains
  21. 21. ValueMathics applied…. In the SWAT analysis, we show how to use The Magic Pallet to find the most successful road to global markets. Go to “THE TOOL” on www.valuemagics.com SELLER BUYER MINDS MONEY MANPOWER MACHINES MATERIALS TECHNOLOGY PRODUCTION LOGISTICS MARKETING SUPPORT COST CHANGE CHANCE CHRONO CONFLICT PRODUCT ACCESS SPEED IMAGE SERVICE
  22. 22. a  new  road  map  to  global  markets   2. The tool SWAT analysis ValueMagics
  23. 23. 2. The tool……. SWAT analysis PRODUCT ACCESS SPEED IMAGE SERVICE TCO TOTAL TECHNOLOGY -5 -11 -1 2 -9 13 -11 PRODUCTION 21 25 19 13 -11 21 88 LOGISTICS 19 -1 21 7 15 -15 46 MARKETING -21 3 -17 -15 5 -5 -50 SUPPORT -19 9 -19 3 -25 11 -40 TOTAL -5 25 3 10 -25 25 SWAT analysis VALUECHAIN CUSTOMER VALUES
  24. 24. The SWAT analysis is a new generation balanced scorecard that uses elements of The Magic Pallet to analyse the potential of a firm or a sector in a given market segment. SELLER BUYER MINDS MONEY MANPOWER MACHINES MATERIALS TECHNOLOGY PRODUCTION LOGISTICS MARKETING SUPPORT COST CHANGE CHANCE CHRONO CONFLICT PRODUCT ACCESS SPEED IMAGE SERVICE PRODUCT ACCESS SPEED IMAGE SERVICE TCO TOTAL TECHNOLOGY -5 -11 -1 2 -9 13 -11 PRODUCTION 21 25 19 13 -11 21 88 LOGISTICS 19 -1 21 7 15 -15 46 MARKETING -21 3 -17 -15 5 -5 -50 SUPPORT -19 9 -19 3 -25 11 -40 TOTAL -5 25 3 10 -25 25 SWAT analysis VALUECHAIN CUSTOMER VALUES TCO 1.  Value added reflected as “VALUE CHAIN” on vertical axe 2.  Perceived benefits and total cost of ownership* reflected as “CUSTOMER VALUES “ on horizontal axe. * TCO is the result of MMMMM plus CCCCC The tool
  25. 25. “SWAT” stands for….. §  Sources §  Cost of means, like technical and commercial people, manpower, money, machines and raw materials – “Minds, Money, Manpower, Machines, Materials” §  Winners §  Core competencies of the firm which create competitive advantages in the value system – “Technology, Production, Logistics, Marketing, Support” §  Alliances §  Forward or backward alliances with technology providers, marketing companies, logistical service providers and others §  Trends §  General direction of changes in customer values, like product characteristics, process requirements, delivery and stocking, desired image and service requirements as well as CSR issues – “Product, Access, Speed, Image, Service”
  26. 26. The SWAT analysis PRODUCT ACCESS SPEED IMAGE SERVICE TCO TOTAL TECHNOLOGY -5 -11 -1 2 -9 13 -11 PRODUCTION 21 25 19 13 -11 21 88 LOGISTICS 19 -1 21 7 15 -15 46 MARKETING -21 3 -17 -15 5 -5 -50 SUPPORT -19 9 -19 3 -25 11 -40 TOTAL -5 25 3 10 -25 25 SWAT analysisVALUECHAIN CUSTOMER VALUES
  27. 27. TPLMS are the value activities of a firm -the source for competitive advantages –its value chain. Being the drivers for value creation, we put them on the vertical axe of the SWAT analysis. TECHNOLOGY PRODUCTION LOGISTICS MARKETING SUPPORT VALUECHAIN SWAT analysis
  28. 28. On the horizontal axe, we list the PASIS - required product, process and vendor’s benefits of a given buyer’s segment. TECHNOLOGY PRODUCTION LOGISTICS MARKETING SUPPORT VALUECHAIN SWAT analysis PRODUCT ACCESS SPEED IMAGE SERVICE TCO CUSTOMER VALUES
  29. 29. TECHNOLOGY PRODUCTION LOGISTICS MARKETING SUPPORT VALUECHAIN SWAT analysis PRODUCT ACCESS SPEED IMAGE SERVICE TCO CUSTOMER VALUES TCO – Total Cost of Ownership is the column for the comparative and competitive advantages of the firm or sector. We know them as MMMMM – “Minds, Money, Man power, Machines, Materials” and CCCCC – “Cost, Change, Chance, Chrono, Conflict”
  30. 30. PRODUCT ACCESS SPEED IMAGE SERVICE TCO TECHNOLOGY PRODUCTION LOGISTICS MARKETING SUPPORT CUSTOMER VALUES VALUECHAIN SWAT analysis The crossroads of rows and colums give us the relevant issues in supply and demand that are subject the SWAT analysis
  31. 31. PRODUCT ACCESS SPEED IMAGE SERVICE TCO TOTAL TECHNOLOGY PRODUCT DEVELOPMENT MATERIALS R&D PROCESS TIME-TO- PRODUCTION TECHNICAL REPUTATION CO-DESIGN ACTIVITIES SUPPLIERS FORMULATION PRODUCTION PRODUCTION TECHNIQUES PRODUCTION PROCESSES SPEED WINDOWS HOUSEKEEPING AND OHS PRODUCTION FLEXIBILITY LABOR COST PRODUCTIVITY LOGISTICS QUALITY OF LOGISTIC CHAIN PACKAGING STORAGE SWIFTNESS OF LOGISTICS APPEARANCE OF LSP SPECIAL DELIVERIES COST OF LOGISTICS MARKETING BRANDING PACKING LEGAL AND SALES TERMS RESPONSE TIME ON RFQ BROCHURES WEBSITE ETC CONVENIENCE OF ORDERING SALES TERMS DISCOUNTS SUPPORT MAINTENANCE INFORMATION GUARANTEE DATA SHEETS COMPLAINT HANDLING COMPETENCE OF PERSONNEL PERSONAL SERVICES COST OF SERVICE TOTAL CUSTOMER VALUES VALUECHAIN SWAT analysis
  32. 32. Is the MD-2 variety available in the country ? Are there certified test faciltities to guarantee the quality of the pineapple? Can ripeness be tested to get the product at the right ripeness on the shelf ? Is the growing and harvesting process adequate to preserve the unique characteristics of the pineapple? Does the region have the proper temperature range for this variety? How are post harvest conditions? Is transport and warehousing adequate for the chill sensitiveness of pineapples? Are transit times suitable for the riping period of the pineapple ? Does the company communicate the unique properties of this variety to its prospects or custiomers ? Is there appropriate information on the specifications in brochures or on a website ? Does the company provide product information for consumers –on labels or leaflets. Are there suggestions as how to serve the pineapple or ideas for recipes ? TECHNOLOGY PRODUCTION LOGISTICS MARKETING SUPPORT MD-2variety,ovalshape,no spinesexeptattheleaftip, clearyellowishcolour inside,sweettaste,hardgreen leaves,equalpatches DESIGN 5 3 -5 -1 -3 PRODUCT
  33. 33. SWAT - methodology 1.  Gather 3-5 persons; 3=minimum, 5 = maximum •  one/three persons from the firm; one/two from TPO, client or supplier; one independent expert/facilitator 2.  Fill in the SWAT analysis individually without consultation with other persons •  5 or 3 or 1 or -1 or -3 or -5 for scroes per column •  Use each number only once, leave blank if no correlation 3.  Add up individual scores for total group results 4.  Add up columns and rows for first assessment 5.  Circle areas of high scores green = USP/CORE COMPETENCIES 6.  Circle areas of low scores red= CHALLENGES/ALLIANCES 7.  Define knock-out criteria and desirable areas per sector/market 8.  Decide on go or no-go for exports 9.  Define corrective actions in the red areas 10.  Construct the business model around the green areas.
  34. 34. This is an example of an individual SWAT sheet. You start filling the numbers column by column. The question at each crossroad is “To what extent does the value chain of the firm meet the specific customer values of the buyer ? In each column, numbers can be used only once. If you cannot find a correlation between a certain value activity and a specific customer benefit, leave the space blank PRODUCT ACCESS SPEED IMAGE SERVICE TCO TECHNOLOGY -1 -1 1 -3 5 PRODUCTION 3 5 5 5 -1 3 LOGISTICS 5 1 3 -1 3 -3 MARKETING -3 -3 -1 -3 -1 SUPPORT -5 -5 3 -5 1 SWAT analysis CUSTOMER VALUES VALUECHAIN
  35. 35. PRODUCT ACCESS SPEED IMAGE SERVICE TCO TOTAL TECHNOLOGY -5 -11 -1 2 -9 13 -11 PRODUCTION 21 25 19 13 -11 21 88 LOGISTICS 19 -1 21 7 15 -15 46 MARKETING -21 3 -17 -15 5 -5 -50 SUPPORT -19 9 -19 3 -25 11 -40 TOTAL -5 25 3 10 -25 25 SWAT analysis VALUECHAIN CUSTOMER VALUES This is an example of a consolidated SWAT sheet. Individual results are added up. First analysis is whether the numbers close to zero are the result of consensus or opposite opinions in the group. If all members have interpreted the respective box in the same way, but still have different opinions, the scores are left untouched.
  36. 36. PRODUCT ACCESS SPEED IMAGE SERVICE TCO TOTAL TECHNOLOGY -5 -11 -1 2 -9 13 -11 PRODUCTION 21 25 19 13 -11 21 88 LOGISTICS 19 -1 21 7 15 -15 46 MARKETING -21 3 -17 -15 5 -5 -50 SUPPORT -19 9 -19 3 -25 11 -40 TOTAL -5 25 3 10 -25 25 SWAT analysis VALUECHAIN CUSTOMER VALUES Second analysis is a quick scan of the firm and its potential to enter in a certain market segment From the horizontal totals, we see a company that excels in production and logistics, but with a low level of technology, and serious shortcomings in marketing and support From the vertical scores, we see that the firm does not meet the buyer’s requirements in product attributes and support, but scores wel in compliance with norms and standards; it meets the buyer’s expectations in reputation. Delivery and availability are acceptable.
  37. 37. PRODUCT ACCESS SPEED IMAGE SERVICE TCO TOTAL TECHNOLOGY -5 -11 -1 2 -9 13 -11 PRODUCTION 21 25 19 13 -11 21 88 LOGISTICS 19 -1 21 7 15 -15 46 MARKETING -21 3 -17 -15 5 -5 -50 SUPPORT -19 9 -19 3 -25 11 -40 TOTAL -5 25 3 10 -25 25 SWAT analysis VALUECHAIN CUSTOMER VALUES However, the unique asset of the SWAT analysis is its detailed analysis of “focus” - green areas- and “challenge” –red areas- of a firm. These are the basis for the selection of the right product/ market combination, the unique selling proposition and corrective actions to be taken. SWAT - consolidated results
  38. 38. PRODUCT ACCESS SPEED IMAGE SERVICE TCO TOTAL TECHNOLOGY -5 -11 -1 2 -9 13 -11 PRODUCTION 21 25 19 13 -11 21 88 LOGISTICS 19 -1 21 7 15 -15 46 MARKETING -21 3 -17 -15 5 -5 -50 SUPPORT -19 9 -19 3 -25 11 -40 TOTAL -5 25 3 10 -25 25 SWAT analysis VALUECHAIN CUSTOMER VALUES The product brand(1) does not represent a value in the target market, product support (2) is bad. The firm’s response time is insufficient (3). It needs an alliance with a trade partner that will take care of the service needs of the market (4). Cost of logistics make the offer uncompetitive (5) 1 2 3 4 5 SWAT - challenge
  39. 39. PRODUCT ACCESS SPEED IMAGE SERVICE TCO TOTAL TECHNOLOGY -5 -11 -1 2 -9 13 -11 PRODUCTION 21 25 19 13 -11 21 88 LOGISTICS 19 -1 21 7 15 -15 46 MARKETING -21 3 -17 -15 5 -5 -50 SUPPORT -19 9 -19 3 -25 11 -40 TOTAL -5 25 3 10 -25 25 SWAT analysis VALUECHAIN CUSTOMER VALUES This company’s unique selling proposition to its target market is its production technique, meeting all international standards and norms (1) at a globally competitive price (3) The firm is capable to deliver JIT or maintain stocks where necessary (2) A license contract with a technology provider will convert this firm into a globally competitive private label manufacturer 1 2 3 SWAT - focus
  40. 40. SWAT – in a nutshell 1.  The SWAT analysis uses elements of The Magic Pallet from supply side -value chain- and demand side -customer values 2.  Core analysis is a firm’s capability to make a competitive value proposition to a targeted market segment 3.  Outcome of the analysis give tangible –not subjective- strengths and weaknesses –focus and challenge 4.  This outcome is the basis for •  An appropriate product/market combination •  A unique selling proposition •  A market entry strategy 5.  Multiple SWAT’s are the most reliable input for sector analyses and sector strategies To see how the SWAT results are converted into the business model, go to www.valuemagics.com “THE BUSINESS”
  41. 41. a  new  road  map  to  global  markets   3. The business Market Mode ValueMagics
  42. 42. 3. The business…….. Market Mode TECHNOLOGY - Qualified engineers, designers, equipment, research, product development, design, laboratory, + ++ + +++ +++ PRODUCTION - Manpower, machines, buildings, processes, internal routing +++ +++ ++ +++ +++ LOGISTICS - Logistical infrastructure, sourcing, materials managements, storage capacity, transport equipment (own or outsourced) + ++ ++ + ++ MARKETING - Marketing/sales management, promotional activities, customer retention, relation mgmt. + + +++ + +++ SUPPORT - Personalized service, pre- and after sales service, maintenance, helpdesks, product information, application engineering. + + +++ ++ ++ Required amount/nature of value addition CONTRACT MANUFACTURING SUB CONTRACTING LICENSIE MANUFACTURING PRIVATELABEL MANUFACTURING OWNIP BRAND
  43. 43. The business •  “The business” is reflected in the market mode. This is the way in which a company uses its strongest value activities (TPLMS) to enter a market and leave other value activities to the trade channel. •  These strong value activities - competitive advantages- are the green areas in the SWAT + + ++ +++ ++ +++ ++ +++ ++ + ++ + + +++ +++ ++ ++ +++ +++ +++ + SUPPORT - Personalized service, pre- and after sales service, maintenance, helpdesks, product information, application engineering. + MARKETING - Marketing/sales management, promotional activities, customer retention, relation mgmt. + LOGISTICS - Logistical infrastructure, sourcing, materials managements, storage capacity, transport equipment (own or outsourced) +++ PRODUCTION - Manpower, machines, buildings, processes, internal routing + TECHNOLOGY - Qualified engineers, designers, equipment, research, product development, design, laboratory, + + ++ +++ ++ +++ ++ +++ ++ + ++ + + +++ +++ ++ ++ +++ +++ +++ + SUPPORT - Personalized service, pre- and after sales service, maintenance, helpdesks, product information, application engineering. + MARKETING - Marketing/sales management, promotional activities, customer retention, relation mgmt. + LOGISTICS - Logistical infrastructure, sourcing, materials managements, storage capacity, transport equipment (own or outsourced) +++ PRODUCTION - Manpower, machines, buildings, processes, internal routing + TECHNOLOGY - Qualified engineers, designers, equipment, research, product development, design, laboratory, SUBCONTRACT, CUSTOMMNF FOB,KPO LICENSIE MANUFACTURING PRIVATELABEL, SOURCING,IP/OC FULLVALUE, BRAND JOBBING,BPO CMTP/MAQUILA MARKET MODES SUBCONTRACT, CUSTOMMNF FOB,KPO LICENSIE MANUFACTURING PRIVATELABEL, SOURCING,IP/OC FULLVALUE, BRAND JOBBING,BPO CMTP/MAQUILA MARKET MODES •  analysis. The red areas need to be taken care of by the trade partner or need to be improved by the exporter •  Each market mode focuses one or two of the specific value activities (TPLMS) and shows, which is the best way to escape the downward price spiral and enter the high road to global markets.
  44. 44. PRODUCT ACCESS SPEED IMAGE SERVICE TCO TOTAL TECHNOLOGY 13 11 4 11 7 17 41 PRODUCTION 19 25 17 6 4 20 91 LOGISTICS 4 6 19 8 1 12 28 MARKETING 4 8 12 11 2 7 10 SUPPORT 5 2 13 3 17 4 18 TOTAL 37 52 23 21 31 36 CUSTOMER VALUES VALUECHAIN SWAT ANALYSIS From Tool to Business + + ++ +++ ++ +++ ++ +++ ++ + ++ + + +++ +++ ++ ++ +++ +++ +++ + SUPPORT - Personalized service, pre- and after sales service, maintenance, helpdesks, product information, application engineering. + MARKETING - Marketing/sales management, promotional activities, customer retention, relation mgmt. + LOGISTICS - Logistical infrastructure, sourcing, materials managements, storage capacity, transport equipment (own or outsourced) +++ PRODUCTION - Manpower, machines, buildings, processes, internal routing + TECHNOLOGY - Qualified engineers, designers, equipment, research, product development, design, laboratory, + + ++ +++ ++ +++ ++ +++ ++ + ++ + + +++ +++ ++ ++ +++ +++ +++ + SUPPORT - Personalized service, pre- and after sales service, maintenance, helpdesks, product information, application engineering. + MARKETING - Marketing/sales management, promotional activities, customer retention, relation mgmt. + LOGISTICS - Logistical infrastructure, sourcing, materials managements, storage capacity, transport equipment (own or outsourced) +++ PRODUCTION - Manpower, machines, buildings, processes, internal routing + TECHNOLOGY - Qualified engineers, designers, equipment, research, product development, design, laboratory, SUBCONTRACT, CUSTOMMNF FOB,KPO LICENSIE MANUFACTURING PRIVATELABEL, SOURCING,IP/OC FULLVALUE, BRAND JOBBING,BPO CMTP/MAQUILA MARKET MODES SUBCONTRACT, CUSTOMMNF FOB,KPO LICENSIE MANUFACTURING PRIVATELABEL, SOURCING,IP/OC FULLVALUE, BRAND JOBBING,BPO CMTP/MAQUILA MARKET MODES
  45. 45. COST Market Mode - who does what ? SUPPORT LOGISTICS MARKETING PRODUCTION TECHNOLOGY SELLER BUYER CONSUMER CUSTOMER VALUE
  46. 46. VALUE PRODUCTION PATENT BRAND Market Mode – how to upgrade ?
  47. 47. T P L M S FRESH PRODUCTS GARMENTS APPAREL MANUFACTURED PRODUCTS SERVICES ITO/ BPO/KPO Contract manufacturing CTC CMTP, Maquila JOBBING, TOLL CONVERSION, CKD ASSEMBLY BUSINESS PROCESS OUTSOURCING Sub-contracting OUTGROWING FOB SUBCONTRACTING CUSTOM MNF. SKD, EMS KNOWLEDGE PROCESS OUTSOURCING License manufacturing GROWING LICENSE MANUFACTURING, BOX EMS BRAND Private label manufacturing SOURCING PRIVATE LABEL MNF. ODM IP/OWN CONTENT Own IP/brand UNIQUE VARIETY OWN BRAND OWN DESIGN OWN BRAND OWN TECHNOLOGY OWN BRAND IP/OWN CONTENT OWN BRAND Market Modes We distinguish five general types of business models/ market entry modes: each model has a different amount and nature of value addition.
  48. 48. SELLER BUYER CONSUMER COST 1. Contract manufacturing SUPPORT LOGISTICS MARKETING PRODUCTION TECHNOLOGY Seller concentrates on production or execution and leaves technology, design, marketing to buyer -low value adding. Typical trade partners are A-brands, companies with simple after sales requirements
  49. 49. COST TECHNOLOGY PRODUCTION 1.1. CMTP/maquila CMT CONSUMER TECHNOLOGY LOGISTICS MARKETING SUPPORT
  50. 50. 1.2. BPO/call centre CALL CENTRE CONSUMER COST SUPPORT LOGISTICS MARKETING PRODUCTION TECHNOLOGY HSBC
  51. 51. SELLER BUYER CONSUMER COST 2. Sub-contracting SUPPORT MARKETING TECHNOLOGY PRODUCTION LOGISTICS TECHNOLOGY Seller produces under specifications of buyer,sources all materials. Buyer concentates on logistics, marketing and after sales. Typical trade partners are large retail chains, T1/ OEM’s, firms with more complex after sales requirements.
  52. 52. SPRAYER LTD. “CHANEL” CONSUMER COST 2.1. Cosmetics - sprayers SUPPORT MARKETING TECHNOLOGY LOGISTICS TECHNOLOGY PRODUCTION
  53. 53. Tier 2 –piston manufacturer Tier 1 – engine manufacturer OEM – truck manufacturer 2.1. Automotive – T2
  54. 54. ENGINEERING FIRM KEMA CONSUMER COST 2.3. Engineering services SUPPORT MARKETING TECHNOLOGY PRODUCTION LOGISTICS TECHNOLOGY
  55. 55. SELLER LEVIS CONSUMER COST 2.4. “FOB” SUPPORT MARKETING TECHNOLOGY PRODUCTION LOGISTICS TECHNOLOGY
  56. 56. COST 3. License manufacturing SUPPORT LOGISTICS MARKETING PRODUCTION TECHNOLOGY SELLER BUYER CONSUMER Seller has captive (regional) markets, but lacks the technology or design capacity. Sources technology from third parties and concentrates on marketing. Typical alliances are with enineering firms, design studios, laboratories
  57. 57. “License and buy back” : •  Buyer provides the design, drafts, formulation of product, often trough a design studio •  Buyer provides sometimes a “secret component” •  Seller takes care of production Other modes : •  Seller takes care of marketing, sometimes under own label, sometimes under licensor’s brand •  Seller takes care of outgoing logistics •  Suitable for regional markets, beware of marketing restrictions from licensor 3. License manufacturing – 2 options
  58. 58. LICENSOR LICENSEE LICENSEE LICENSEE FREE MARKETS BLOCKED MARKETS 3. License manufacturing
  59. 59. COST 3.1. Food processing SUPPORT MARKETING TECHNOLOGY BOTTLER COCA COLA CONSUMER LOGISTICS PRODUCTION
  60. 60. COST 4. Private label manufacturing SUPPORT LOGISTICS MARKETING PRODUCTION TECHNOLOGY LOGISTICS SELLER BUYER CONSUMER Seller has a unique technology or design, production or execution facilities, but lacks/does not want to get involved in marketing after sales. Typical trade partners are retail stores, B-brands, OEM’s.
  61. 61. COST 4.1. Automotive – car assembly SUPPORT LOGISTICS MARKETING PRODUCTION TECHNOLOGY LOGISTICS MAGNA STEYR CHRYSLER CONSUMER
  62. 62. COST 4.2. Oil industry SUPPORT LOGISTICS MARKETING PRODUCTION TECHNOLOGY LOGISTICS SHELL CONSUMER
  63. 63. COST SUPPORT LOGISTICS MARKETING PRODUCTION TECHNOLOGY LOGISTICS SELLER MORNING FRESH CONSUMER 4.4. Food processing
  64. 64. A -BRAND 4.4. The supermarket shelf HOUSE BRAND FIGHTING BRAND
  65. 65. COST 4.4. Accessories – sourcing SUPPORT LOGISTICS MARKETING PRODUCTION TECHNOLOGY LOGISTICS UMBRALLA MNF. VODAFONE CONSUMER
  66. 66. COST 5. Own IP/brand SUPPORT MARKETING PRODUCTION TECHNOLOGY LOGISTICS SELLER BUYER CONSUMER Seller has own technology, content or design, markets its products or service under own brand through trade channels or on the web. Typical trade partners are distributors, retail, publishers-or direct sales
  67. 67. COST 5.1. Games SUPPORT MARKETING PRODUCTION TECHNOLOGY LOGISTICS APPLE CONSUMER
  68. 68. COST 5.2. Garments - brand SUPPORT MARKETING PRODUCTION TECHNOLOGY LOGISTICS CLEVER MODA S.A. RETAIL CONSUMER
  69. 69. COST 5.3. Food processing - brand SUPPORT MARKETING PRODUCTION TECHNOLOGY LOGISTICS BUYER CONSUMER
  70. 70. TECHNOLOGY - Qualified engineers, designers, equipment, research, product development, design, laboratory, + ++ + +++ +++ PRODUCTION - Manpower, machines, buildings, processes, internal routing +++ +++ ++ +++ +++ LOGISTICS - Logistical infrastructure, sourcing, materials managements, storage capacity, transport equipment (own or outsourced) + ++ ++ + ++ MARKETING - Marketing/sales management, promotional activities, customer retention, relation mgmt. + + +++ + +++ SUPPORT - Personalized service, pre- and after sales service, maintenance, helpdesks, product information, application engineering. + + +++ ++ ++ Required amount/ nature of value addition CONTRACT MANUFACTURING SUB CONTRACTING LICENSIE MANUFACTURING PRIVATELABEL MANUFACTURING OWNIP BRAND
  71. 71. a  new  road  map  to  global  markets   1.  The Magic Pallet – understanding value 2.  SWAT analysis – building value 3.  Market Mode – selling value ValueMagics

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