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150 Business Models

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  1. Product Price Promotion Customer Service Place People Processes Management Models... 150 Slides Powered by www.drawpack.com. All rights reserved.

  2. Key Words... Break-even – Financing Life Cycle – Economies of Scale – Elasticity – Sales Cycles – Market Potential – Portfolio Matrix – Product Model – Four P’s – Push/Pull Strategy – Marketing Mix – PDCA Cycle – SWOT– Value Chain – Ansoff Matrix – BCG Matrix – 7-S Model – Core Competencies – GE Business Screen – Nine Cell Industry – Risk/Reward Diagram – Porter’s Five Forces – Industry Competition – Generic Strategies – Geobusiness Model – Porter’s Diamond – Matrix Design – PIMS – Leavitt’s Diamond – Belbin’s Team Roles – Theory X/Y – Maslow’s Hierarchy – Herzberg’s Theory – Cultural Web – Pareto Curve – CIM Concept – Value Drivers

  3. Resources Money Resources Resource markets Money Taxes, goods Services, money Services, money Taxes Manufacturer markets Government markets Consumer markets Taxes, goods Services Services, money Taxes, goods Money Money Middlemen markets Goods and services Goods and services Markets and Structure of Flow

  4. MACROENVIRONMENT IMMEDIATE INDUSTRY & COMPETITVE ENVIRONMENT Technology Legislation and regulations Suppliers Substitute COMPANY Rival Firms Buyers New Entrants Population demographics Social Values and Lifestyles The Economy at large A Company‘s Macroenvironment

  5. Value $ Sales Profit Break-even Point Total costs Variable costs Fixed costs Current sales level 0 0 Units sold Break-even Point

  6. Dollars (in thousands) Total revenue 1200 Target profit 1000 Total cost 800 600 Sales Volume in Units (in thousands) Fixed cost 400 200 0 10 20 30 40 50 Break-even Chart

  7. Total Revenue 35 30 Total Costs 25 $ Millions 20 15 Fixed Expenses* 10 5 0 50 100 150 200 Break-even Volume (90,000) Units Sold (‘000) Profit Loss * Fixed Expenses = Marketing Expenses and Other Direct Expenses Break-even Volume

  8. Break-even Regions Cash flow Returned capital break-even Cumulative revenue Cash flow breakeven $ EVA break-even Opportunity cost based on capital risk assumed P&L break-even

  9. Financing Life Cycle Venture Capitalist Investment Banks & Banks FFF & Angels Early Growth Later Growth Seed Capital & Early Stage Enterprise Cash Flow Enterprise Financing Mezzanine Public Market 3rd 2nd Initial Public Offering 1st Time Valley of Death Break-even point Emerging Growth

  10. S D F G E Price B A S D 0 Quantity Demand and Supply

  11. Average cost LACs* Output *Long-run average costs (LACs) Increasing returns to scale, or economies of scale Economies of Scale

  12. (total inelastic demand) e = 0 Price Price e = - 8 e < - 1 e = - 8 e = - 1 (total elastic demand) e > - 1 Quantity Quantity e = 0 P1 Price (-) P2 P1 (-) (+) Price P2 (+) 0 0 Quantity Quantity Demand is elastic and expenditure increases when price falls from P1 to P2 Demand is inelastic and expenditure increases when price falls from P1 to P2 Elasticity

  13. P’2 P2 Price P’1 P1 Quantity Demanded per Period (a) Inelastic demand Quantity Demanded per Period (b) Elastic demand Q’1 Q’2 Q1 Q2 Inelastic and Elastic Demand

  14. Sales Sales and Profits ($) Profit Introduction Growth Maturity Decline Time Sales and Profit Life Cycles

  15. Volume or value Market potential Market volume Market share Time Market Potential, Market Volume, Market Share

  16. Sales over profits Sales Profits Introduction Growth Maturiy Shake-out Decline Stages over Time The Product Life Cycle I

  17. The Product Life Cycle II Introduction Growth Unit Sales Volume A B C Maturity Commodity or Decline Time Note: A = Moderate Growth, B = Commodity, C = Decline

  18. THE BUSINESS UNIT‘S COMPETITIVE POSITION Strong Average Weak Development A C Growth B D Competitive shakeout THE INDUSTRY‘S STAGE IN THE EVOLUTIONARY LIFE CYCLE F E Maturity Saturation G H Decline The Life Cycle Portfolio Matrix

  19. Continuity Incremental Flux Global Patterns of Strategic Change

  20. The Whole Product Model Potential Product Augmented Product Expected Product Generic Product

  21. High quality E A High price Low price B C D Low quality The Product-Positioning Map

  22. Environment Product Price Environment Environment Place Promotion Environment The Four P‘s of McCarthy I

  23. High quality Marketing Mix Channels Coverage Assortments Locations Inventory Transport Place Product Product variety Quality Design Features Brand name Packaging Sizes Services Warranties Returns Target Market Low quality Promotion Sales promotion Advertising Salesforce Public relations Direct marketing Price List price Discounts Allowances Payment period Credit terms The Four P‘s of McCarthy II

  24. Marketing activities Demand End users Manufacturer Intermediaries Push Strategy Demand Marketing activities Demand Demand End users Manufacturer Intermediaries Pull Strategy Push versus Pull Strategy

  25. Product Price Promotion Customer Service Place People Processes The Expanded Marketing Mix

  26. Situation (SWOT) Action plan 1 firm market industry competition environment budget allocation product promotion price distribution Objectives Forecasts Marketing Plan sales market share market expansion leadership satisfaction quantify: costs sales profits market share Strategy Control segment – target price / quality product positioning differentiation diversification organization structure measurement tools check frequency => Corrective actions 3 2 5 4 6 The 6 – Step Marketing Plan

  27. Plan Act Do Performance Check Path of continous improvement Time The PDCA Cycle

  28. Enterprise Management Process Decision Process Enterprise Structure Mission & Strategy Customer Satisfaction Value Improvement Enterprise Learning Benchmarking

  29. Numerous environmental opportunities Cell 3: Supports a turnaround- oriented strategy Cell 1: Supports an aggressive strategy Substantial internal strengths Critical internal weaknesses Cell 4: Supports a defensive strategy Cell 2: Supports an diversification strategy Major environmental threats SWOT Analysis Diagram

  30. Weaknesses Strengths Opportunities Threats SWOT Analysis I

  31. STRENGTHS / WEAKNESSES Firm, Organization OPPORTUNITIES / THREATS Environment, Market, Industry • Market share • Key account share • Growth rate • Supply diversity • Influence • On market • Purchasing / selling deadline • New products cycles • Negotiation power • - firm suppliers • - customers • Market size • Key account size • Annual growth rate • Market diversity • Price sensitivity • Seasonality • Cycles • Negotiation power • - suppliers • - consumers MARKET COMPETITION • Firm competitivity • - Product, service • - Profitability, H.R., … • Segments invested in • Firm’s integration level • High-tech vulnerability • Competitor types • Concentration level • Intrants / extrants • Market share evolution • Vertical / horizontal integration • Technology substitution SWOT Analysis II

  32. STRENGTHS / WEAKNESSES Firm, Organization OPPORTUNITIES / THREATS Environment, Market, Industry • Firm margins • Economies of scale • Barriers • Production capacity level • Global benefits • Economies of scale • Barriers • Production capacity level FINANCE / BUSINESS • Adaptability to change • Expertise / Know-How • Patent ownership • Production technology • Maturity / volatility • Complexity • Differentiation • Patents and copyrights • Production technology TECHNOLOGY SOCIO - POLITICAL • Reactivity / Flexibility level • Adaptability • Agressiveness • Working relationships • Attitudes / Social trends • Laws and regulations • Pressure groups • Trade union activities SWOT Analysis III

  33. Support activities Firm infrastructure Human resource management Technology development Procurement Margin Inbound logistics Operations Outbound logistics Marketing and sales Service Margin Primary activities The Generic Value Chain I

  34. FIRM INFRASTRUCTURE HUMAN RESOURCES MANAGEMENT TECHNOLOGY DEVELOPMENT PROCUREMENT MARGIN INBOUND LOGISTICS MARKETING & SALES OUTBOUND LOGISTICS OPERATIONS SERVICE Marketing Management Sales Force Operations Technical Literature Sales Force Administration Advertising Promotion The Generic Value Chain II

  35. Firm infrastructure Human resources management Margin Technology development Procurement Margin Inbound logistics Outbound logistics Marketing and sales Service Operations Primary Activities The Generic Value Chain III

  36. Current Products New Products Market penetration Product development Current Markets Market development New Markets Diversification The Ansoff Matrix I

  37. PRODUCTS AND/OR SERVICES Existing New New product development Market penetration Existing MARKETS Market development Diversification New The Ansoff Matrix II

  38. PRODUCTS AND/OR SERVICES Existing New Customer loyalty Customer extension Existing CUSTOMERS Customer acquisition Customer diversification New The Customer Growth Matrix

  39. Broad Moderate Product Diversification Narrow Market Diversification Narrow Moderate Broad Product-Market Diversification

  40. RELATIVE MARKET SHARE High Low Question Mark Star High MARKET GROWTH RATE Cash Cow Dog Low BCG’s Growth-Share Matrix I

  41. RELATIVE MARKET SHARE High Low Question Mark Star A High Divest E B D MARKET GROWTH RATE F C Low G Divest Dog Cash Cows Targeted future position in the corporate portfolio Present position in the corporate portfolio BCG’s Growth-Share Matrix II

  42. RELATIVE MARKET SHARE High 1.0x Low 0.1x 10x Star businesses Question marks Low MARKET GROWTH RATE 10% Cash generating businesses Dog businesses High BCG’s Growth-Share Matrix III

  43. Stars Question Marks 22% 20% 18% 4 1 16% Market Growth Rate 3 Dogs 14% Cash Cows 2 12% 5 10% 8% 6 6% 7 4% Relative Market Share 8 2% 10 x 1 x 0.1 x BCG‘s Growth-Share Matrix IV

  44. Small Large Fragmented Specialization Many NUMBER OF APPROACHES TO ACHIEVE ADVANTAGE Stalemate Volume Few SIZE OF ADVANTAGES The New BCG Matrix

  45. SIZE OF THE ADVANTAGE Small Large Volume Stalemate ROI ROI Few Market share Market share NUMBER OF WAYS TO ACHIEVE COMPETITVE ADVANTAGE Specialization Fragmented ROI ROI Many Market share Market share Underlying Relationship Between ROI and Market Share in the New BCG Matrix

  46. Structure Systems Strategy Superordinate Goals Skills Style Staff McKinsey‘s Seven ‚S‘s Framework

  47. VISION PLANNING • Vision for Disruption • Identifying and creating • opportunities for • temporary advantage • through understanding • Stakeholder Satisfaction • Strategic Soothsaying • directed at identifying new ways to serve • existing customers better or new • customers that no one else • serves now. • Capability for Disruption • Sustaining for momentum by • developing flexible capacities for • Speed • Surprise • that can be applied across • many actions to build a series • of temporary advantages • Tactics for Disruption • Seizing the initiative to gain • advantage by • Shifting the Rules • Signaling • Simultaneous and • Sequential Strategic • Thrusts • with actions that shape, mold, or • influence the direction or nature of • the competitors‘ responses. Market Disruption RESOURCE PLANNING PUNCH-COUNTERPUNCH PLANNING Disruption and the New 7-S’s

  48. Banner Brand Business Units Core Products (Platforms) Core Competencies Core Competencies I

  49. Core Competencies II Processes Core Competencies Technologies Capabilities

  50. Core Competencies III Low Company View High Competency 1 Competency 5 Competency 4 Low Market View High Competency 6 Competency 2 Competency 3