Complete Business Frameworks Toolkit - Strategy, Marketing, Operations, Consulting, Change, Finance

1. Business Framework Compilation Complete Business Frameworks Toolkit This 350+ slide presentation contains 51 commonly used business frameworks and methodologies, spanning Strategy to Operations to Finance. Find more business frameworks & methodologies @ flevy.com

2. Business Framework Compilation Complete Business Frameworks Toolkit This 350+ slide presentation contains 51 commonly used consulting frameworks and methodologies, spanning Strategy to Operations to Finance. Find our other documents at http://flevy.com/seller/learnppt • ABC Analysis • Adoption Cycle (Consumer Adoption Curve) • Ansoff Market Strategies • Balanced Scorecard • BCG Growth-Share Matrix • Benchmarking • Blue Ocean Strategy • Break-even Analysis • Business Unit Profitability • Economies of Scale • Environmental Analysis • Experience Curve • Cluster Analysis • Company & Competitor Analysis • Consumer Decision Journey • Core Competence Analysis • Cost Structure Analysis • Customer Experience • Customer Satisfaction Analysis • Customer Value Proposition • Fiaccabrino Selection Process • Financial Ratios Analysis • Gap Analysis • Industry Attractiveness & Business Strength Assessment • Key Purchase Criteria • Key Success Factors (KSF) • Market Sizing & Share • McKinsey 7-S • Net Present Value • PEST Analysis • Porter Competition Strategies • Porter’s Five Forces • Portfolio Strategies • Price Elasticity • Product Life Cycle • Product Substitution • Relative Cost Positioning • Rogers' Five Factors • Scenario Techniques • Scoring Models • Segment Attractiveness • Segmentation & Targeting • Six Thinking Hats • Stakeholder Analysis • Strengths & Weaknesses Analysis • Structure-Conduct-Performance (SCP) • SWOT Analysis • SWOT Strategies • Treacy / Wiersema Market Positioning • Value Chain Analysis • Venkat Matrix

3. 3 About This Preview Document This document is just a preview. The full toolkit has 350+ slides and covers 51 unique business frameworks. You can preview and download the full document here: https://flevy.com/browse/document/complete-business-frameworks-644 This document will showcase sample slides from a handful of the 51 frameworks.

4. 4 Contents 1. ABC Analysis 6 2. Adoption Cycle (Consumer Adoption Curve) 11 3. Ansoff Market Strategies 17 4. Balanced Scorecard 22 5. BCG Growth-Share Matrix 34 6. Benchmarking 40 7. Blue Ocean Strategy 47 8. Break-even Analysis 53 9. Business Unit Profitability 58 10. Economies of Scale 63 11. Environmental Analysis 69 12. Experience Curve 76 13. Cluster Analysis 83 14. Company & Competitor Analysis 87 15. Consumer Decision Journey 97 FRAMEWORK SLIDE

5. 5 Contents 16. Core Competence Analysis 105 17. Cost Structure Analysis 110 18. Customer Experience 115 19. Customer Satisfaction Analysis 121 20. Customer Value Proposition 126 21. Fiaccabrino Selection Process 129 22. Financial Ratios Analysis 136 23. Gap Analysis 158 24. Industry Attractiveness & Business Strength Assessment 162 25. Key Purchase Criteria 168 26. Key Success Factors (KSF) 173 27. Market Sizing & Share 181 28. McKinsey 7-S 195 29. Net Present Value 203 30. PEST Analysis 212 FRAMEWORK SLIDE

6. 6 Contents 31. Porter Competition Strategies 215 32. Porter’s Five Forces 219 33. Portfolio Strategies 244 34. Price Elasticity 251 35. Product Life Cycle 257 36. Product Substitution 266 37. Relative Cost Positioning 269 38. Rogers' Five Factors 277 39. Scenario Techniques 283 40. Scoring Models 289 41. Segment Attractiveness 295 42. Segmentation & Targeting 300 43. Six Thinking Hats 308 44. Stakeholder Analysis 313 45. Strengths & Weaknesses Analysis 318 FRAMEWORK SLIDE

7. 7 Contents 46. Structure-Conduct-Performance (SCP) 325 47. SWOT Analysis 328 48. SWOT Strategies 333 49. Treacy / Wiersema Market Positioning 337 50. Value Chain Analysis 345 51. Venkat Matrix 351 FRAMEWORK SLIDE

8. 8 4. Balanced Scorecard

9. 9 Balanced scorecard Derive strategic objectives within the respective perspectiv es from the strategy Determine perspectives Set up cause/ effect relationshi ps Determine target values Determine activities and state respon- sibilities Ensure consisten t commitm ent and incorporat e it in daily work 1 2 3 5 6 7 Select measures 4 This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

10. 10 Balanced scorecard In which processes do we need to excel? Internal Processes What do we want to achieve in finance? Finance How can we remain flexible and able to improve? Learning & Development How can we satisfy our customers’ needs? Customers Strategy and Vision This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

11. 11 Balanced scorecard Finance Perspective How do the investors appraise our present position? … … Learning and Development Perspective How can we ensure that our customers’ needs are satisfied also in future and what are the critical success factors of the future? … … Internal Process Perspective How well do we satisfy our customers’ needs? … … Customer Perspective How do our customers appraise our performance? … … This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

12. 12 Balanced scorecard Strategic Objective Finance What do we want to achieve in finance? Customers How can we satisfy our customers’ needs? Internal Processes In which processes do we need to excel? Learning and Development How can we remain flexible and able to improve? • … • … • … • … • … • … • … • … • … • … • … • … KPI • … • … • … • … • … • … • … • … • … • … • … • … Target • … • … • … • … • … • … • … • … • … • … • … • … This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

13. 13 Balanced scorecard Strategic Objective KPIs Frequency of Evaluation Responsibility for Data Maintenance Recipient of Reports … … … … … … … … … … … … … … … … … … … … … This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

14. 14 Total 100% … % Perspective Strategic Objective KPI Weighting Frequency of Survey Comp. Year 2004 Pres. Year 2005 Ongoing Pres. Year 2005 Ex- trapolated 2005 Target 2006 Target Extrapol. in % of Target Ongoing in % of Target Finance … … ... … … … … … … …% …% Learning and development … … ... … … … … … … …% …% Internal processes … … ... … … … … … … …% …% Customers … … ... … … … … … … …% …% Balanced scorecard y yearly hy twice a year q quarterly m monthly Target achievement …% This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

15. 15 Balanced scorecard Vision Financial Perspective • … • If we are successful, how do out shareholders know? Customer Perspective • … • How should I see the customer to achieve the vision? Internal Perspective • … • Which processes do I need to optimize to satisfy the customers? Learning and Development • … • How should I enhance my organization to achieve the vision? … … … … … This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

17. 17 7. Blue Ocean Strategy

18. 18  Blue Ocean Strategy is growth strategy framework focused on the idea of creating an uncontested market space--i.e. a "blue ocean." This framework is very innovative, as its principles challenge the traditional business strategy principles of fighting competitors head-on.  Traditional business strategy is based on Michael Porter’s teachings of developing a sustaintable Competitive Advantage over other players in the market.  The Blue Ocean Strategy framework evolved from a framework called Value Innovation developed by Gemini Consulting (now Capgemini Consulting) in the late 90s. Blue Ocean Strategy – introduction What It Is This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

19. 19 The modern strategy thinking of Blue Ocean Strategy focuses on enabling innovation, value creation, and effective execution Growth Focus Source: C. Kim, R. Mauborgne, Harvard Business Review (1997). Value Identification Value Creation Effective Execution • Start with customer needs • Look beyond traditional markets, industries and competitors • Create multi-horizon portfolio • Develop growth platforms for “market mining” • Understand what the customer values • Prioritize initiatives Growth Platform Consumer Need Market Trends Value • Select and develop growth option • Align operating model to deliver value and fair value Concept Execution • Venture Launch • Organizational alignment • Funding / Resource Allocation • Measurements • Accountability Sustainable Growth Structure • Infrastructure • Culture • Alliance Management • M&A Eliminate Reduce Raise Create Costs Value Value Innovation This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

20. 20 Modern thinking moves away from a traditional focus on competition to “blue oceans” of opportunity Source: C. Kim, R. Mauborgne, Harvard Business Review (1997). Traditional Thinking Modern Thinking Industry Industry conditions are given – compete in existing market space Industry conditions can be shaped – create uncontested market space Strategy Companies must build competitive advantages to beat competition Make competition irrelevant Market Exploit existing demand Create and capture new demand Resources Make the value-cost trade-off Break the value-cost trade-off Organization Align the whole system of a firm’s activities with its strategic choice of differentiation or low cost Align the whole system of a firm’s activities in pursuit of differentiation and low cost Offerings Maximizing the offering’s value within industry boundaries Offering buyers the total solution that transcends the industry This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

21. 21 Building a new value curve is at the heart of Blue Ocean Strategy Source: C. Kim, R. Mauborgne, Harvard Business Review (1997). Which of the attributes that our industry takes for granted should be eliminated? Which attributes should be reduced well below the industry’s standards? Which attributes should be raised well above the industry’s standards? Which attributes should be created that the industry has never offered? Evolution of Value Curves Eliminate Value Innovator Value + - Reduce Raise Create Traditionals This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

22. 22 Value Curve – template Source: Blue Ocean Strategy, Kim and Mauborgne Insert bumper – takeaway statement. Eliminate Reduce Raise Create Company Value + _ Competition This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

23. 23 20. Fiaccabrino Selection Process

24. 24  The Fiaccabrino Selection Process is a powerful methodology for interviewing and screening the best people for your organization. The objective is to select those people who will be the highest performers with the lowest turnover.  The methodology was developed by Charles Fiaccabrino, a sales executive who helped grow Roche Diagnostics from its onset to a multi-billion dollar company. He worked at Roche for 22 years, where each year, he was the top sales performer each year. During his career at Roche, he earned the Presidents Achievement Award 20 times and was known internally as “Mr. Roche.” He credits much of his success to his ability to build a winning team, which he later condensed in this methodology.  In most sales organizations, your top 20% sales performers generate 80% of the revenues. The question is, why are the other 80% hired? What would happen if sales managers hired sales people who were more like the top 20% and less like the bottom 80%? The result is your sales would significantly multiply and your sales turnover will also drop. This framework teaches you how to identify the top 20% sales performers--the best of the best.  The core of the framework is to understand 16 critical Humanistic Attributes. In order for candidate to be hired, he or she must excel across all 16 of the Humanistic Attributes.  While the genesis of this framework is within a salesperson or sales manager context, it can be applied to a variety of other fields (e.g. marketing, research, pharmacist). Fiaccabrino Selection Process – introduction What It Is This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

25. 25 16 Humanistic Attributes - overview The basis of this methodology is to evaluate our candidate across 16 humanistic attributes, as listed below. A successful candidate must excel across each of these attributes. With the exception of the last attribute, Behavioral Quadrant, each attribute can be numerically scored on a 10 point scale. For the Behavioral Quadrant attribute, the candidate is categorized into one of 4 behavior buckets. INTELLIGENCE ORGANIZATION AND PLANNING ABILITY TO RELATE TO CONCEPTS COMPETITIVENESS AND DRIVE HONESTY AND INTEGRITY VERBALIZATION AND COMMUNICATION VALUES SYSTEM ENERGY LEVEL FLEXIBILITY OF THOUGHT PROCESS SUCCESS FACTORS LEADERSHIP TEAM ORIENTATION EMPATHY WORK ETHIC LOYALTY [EXPRESSED] BEHAVIORAL QUADRANT [Q4] This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

26. 26 Behavioral Quadrant analysis • The last of the 16 Humanistic Attributes seeks to evaluate what behavioral model the candidate falls under. • There are 4 basic behavior quadrants: • Dominant Hostile [Q1] • Dominant Warm [Q4] • Submissive Hostile [Q2] • Submissive Warm [Q3] • For the sake of brevity, as part of my humanistic attributes evaluation, perhaps the crowning aspect of the entire process is the evaluation of the behavioral quadrants as it relates to the candidate. • The candidate must be perceived by the evaluation process as a definitive Q4 or Dominant Warm individual. • Without this designation, the candidate is rejected. DOMINANT HOSTILE [Q1] SUBMISSIVE HOSTILE [Q2] DOMINANT WARM [Q4] SUBMISSIVE WARM [Q3] BEHAVIORAL QUADRANT Dominant Submissive Hostile Warm This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

27. 27 It is important to understand how to translate one’s evaluation of the candidate to a numerical score on the 10-point scale There are a number of interpretive uses of the 10-point scale. The most obvious is of course the clear cut comparative use in evaluating more than one candidate for a particular position. By comparing the graphs of each candidate, the evaluator has another specific set of attribute parameters to refer to in the decision making process. Below, let's review the actual numbers and what they mean. 5 6 7 8 1098.5 10-POINT SCALE • Let’s start with #5. • This score indicates "meets standards." Candidates that achieve that evaluation can be considered qualified, but to what extent and are these candidates "the best of the best?" • In my set of circumstances, these candidates do not meet my expectations and are therefore not considered. • What about numbers 6, 7, and 8? • As the hiring manager makes these evaluations, they should be noted and can be stored for future reference. • Again, based upon my overall experience, any number less than an 8.5 score would not be considered. • Let us now consider a score of 8.5 and greater. • Looking back on historical perspectives, candidates scoring in the 8.5 to 10.0 range are the very best and therefore designated the "best of the best." This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

28. 28 Sometimes, the difference between each candidate can be marginal—and sometimes, there may only be a single candidate to evaluate As we consider candidates in this high level area, the difference between each is usually marginal. The graph can help to determine the most qualified by virtue of this system when the evaluator can only select one of the two to three candidates. At this high level of virtually marginal differences between candidates, it is usually true that any one of the three finalists can be selected for the position with the same potential for success. This situation might be analogous to the final contest at an Olympic event where tenths of seconds separate the gold, silver, and bronze finalists. In hiring the best of the best, one would tend to select the gold medal winner and why not. But, let's not forget that the silver and bronze winners are at the virtually same level of the champion with the potential to be number one at the next event. Clearly, sales and sales management are a science and the foregoing is in my judgment analogous to that with one additional caveat. Its implementation is an Art. Learning the science of the system is not difficult. The art form is in its implementation. It takes practice, perception, sensitivity, and the ability to ask the best question—and to learn and understand through the power of listening. Not all positions require two to three candidates to evaluate and that is optional as it relates to the hiring manager. For example, understanding and with prior positive evaluation results, there might come a time when the hiring manager has only one candidate to evaluate. Because of a full understanding and success in using the system, should the one candidate be at the 'best of the best" level, there is very little reason to look further if that is the decision of the manager/leader. This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

29. 29 Worksheet: Candidate: § Intelligence § Organization and Planning § Ability to Relate to Concepts § Competition and Drive § Honesty and Integrity § Verbalization and Communication § Values System § Energy Level § Flexibility of Thought Process § Success Factors § Leadership § Team Orientation § Empathy § Work Ethic § Loyalty [Expressed] § Behavioral Quadrant [Q4] 5.0 8.5 10.0 Q1 Q2 Q3 Q4 Legend: 5.0 Meets standards 8.5+ “best of the best” and considered qualified for consideration Notes and comments: It is important to make notes and comments, which can aid in the selection process. Also, the grid system allows for a comparative evaluation of candidates. NOTES This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

31. 31 27. McKinsey 7-S

32. 32  The McKinsey 7-S Model is a business framework used to evaluate organizational effectiveness. The basic premise of the model is that there are seven internal, interrelated aspects of an organization that need to be aligned for the organization to be successful.  This framework can be used to understand our organization and leverage it to maximize efficiency and profitability. It can also be used in situations where an alignment perspective is useful. The scope of these situations doesn’t matter—for instance, it can be applied to elements of a project or of a team.  The 7-S Model was developed by two McKinsey consultants, Tom Peters and Robert Waterman. McKinsey 7-S Model – introduction What It Is Structure Systems Style Staff Skills Strategy Shared Values This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

33. 33 This diagram is the typical presentation of the McKinsey 7-S Model We must act on all S’s in parallel—as all S’s are interrelated and must align equally. Structure Systems Style Staff Skills Strategy Shared Values This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

34. 34 Shared Values is centrally located, because all others elements stem and evolve from it Structure Systems Style Staff Skills Strategy Shared Values • Placing Shared Values in the middle of the model emphasizes that these values are central to the development of all other critical elements • The company's structure, strategy, systems, style, staff and skills all stem from why the organization was originally created, and what it stands for • The original vision of the company was formed from the values of the founders--as these Shared Values evolve, so do all the other elements This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

35. 35 1 These seven elements are categorized into so-called Hard S’s and Soft S’s Hard vs. Soft Elements Structure Systems Style Staff Skills Strategy Shared Values HARD ELEMENTS • Hard elements are Strategy, Structure, Systems • They are feasible and easily identified • These elements are also easier to change than soft elements • They can be found in strategy statements, corporate plans, organizational charts, and other business documents SOFT ELEMENTS • Soft elements are Shared Values, Skills, Staff, and Style • These are harder to change directly and usually take longer to change • They are harder to describe, since capabilities, values, and elements of corporate culture and continually evolving • These elements are highly determined by the employees of the organization HARD ELEMENTS SOFT ELEMENTS This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

36. 36 When conducting 7-S analysis, it’s best to use an iterative approach starting with Shared Values, followed by hard S’s, and then soft S’s Approach Start with your Shared Values. Are they consistent with your structure, strategy, and systems? If not, what needs to change? Next, look at the hard elements. How well does each one support the others? Identify where changes need to be made. Then, evaluate the other soft elements. Do they support the desired hard elements? Do they support one another? If not, what needs to change? As you adjust and align the elements, you will need to use an iterative and typically time-consuming process of making adjustments; and then reanalyzing how that impacts other elements and their alignments. 1 2 3 4 This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

37. 37 McKinsey 7-S – template Structure Systems Style Staff Skills Strategy Shared Values Hard S Soft S Insert kicker. This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

38. 38 McKinsey 7-S – current state template Shared Values Strategy Structure Systems Style Staff Skills Shared Values Strategy Structure Systems Style Staff Skills This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

39. 39 32. Portfolio Strategies

40. 40 Portfolio strategies Strategic planning Derivation of Norm Strategies Analyze portfolio Determine target system of company Evaluate as-is portfolio Develop target portfolio Derive measures and control progress 1 2 3 4 This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

41. 41 Portfolio strategies Strategic planning Question marks • Selection of business units rich of opportunities • Investment strategy, when market share can be significantly increased by employing resources • Otherwise, disinvestment Stars • Growth strategies • Investments in ensuring the competitive advantages, aiming at confirming the own market leadership via competitive barriers Poor dogs • Consistent disinvestment strategy • Fastest possible withdrawal from stagnating markets to employ capital in a more effective fashion Cash cows • Absorption strategy • Low direct reinvestments • Transfer of generated funds to finance Question Marks and Stars Relative market share Marketgrowth – + + – Market share/ market growth portfolio norm strategies (BCG) This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

42. 42 Portfolio strategies Strategic planning – example Question marks Stars Poor dogs Cash cows Relative market share Marketgrowth – + + – Dis- investment Dis- investment Dis- investment = as-is position of business unit = target position of business unit This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

43. 43 Portfolio strategies Strategic planning – template Question marks Stars Poor dogs Cash cows Relative market share Marketgrowth – + + – = as-is position of business unit = target position of business unit = failure path = success path = market dynamics This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

44. 44 Portfolio strategies Strategic planning Selection Selective growth/ investment Growth and investment Absorption/ disinvestment Selection Selective growth/ investment Disinvestment Absorption/ disinvestment Selection low middle high lowmiddlehigh Competitive strength Industryattractiveness • Attractive markets with profit potential • Gone competitors • Attractive industry = high growth rates • High capital need • High competitiveness • Neutral conditions • No specific opportunities • No specific strengths • Saturated markets • Insignificant market presence • Poor prospects of success • Predominance on weak market • High influence of own actions low middle high lowmiddlehigh Competitive strength Industryattractiveness Implications Norm strategies Market attractiveness/ competitive strengths portfolio norm strategies (McKinsey) This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

45. 45 Portfolio strategies Strategic planning – template … … … … … … … … … low middle high lowmiddlehighCompetitive strength Industryattractiveness Market attractiveness/ competitive strengths portfolio norm strategies (McKinsey) This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

47. 47 34. Product Life Cycle

48. 48  Based on the age of a product category, predicts how sales will develop  Distinguishes five stages of development: – Introduction – Growth – Maturity – Saturation – Decline/termination  Length of time in each period varies tremendously: – Some products have very short cycles, others take decades or even centuries to go through the cycle  Growth is still possible in mature categories, but typically will require greater investment or greater creativity than in less mature categories Product life cycle – introduction Phases of sales growth Phases of sales decline What It Is Why We Use It  Strengths: – Most useful as one of several sources of evidence, e.g. with conjoint analysis  Limitations: – Any prediction is tricky – Companies can affect the shape of the growth curve through product innovation and repositioning Strengths & Limitations  Predict sales growth, and associated customer and competitor behaviours  Prescribe appropriate marketing strategy  Assess strengths/weaknesses of product portfolio This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

49. 49 Product life cycle – how to use it Establish if the concept is applicable Predict how sales will develop Predict the timing of future developments  Look to the category’s past behaviour and compare with similar products  Look out for: – Technology shifts – Lead markets – Substitute products – Telecoms/e-commerce  It is important to predict the highest level that sales will reach, e.g. for a household appliance the simplified formula might be: Annual Sales =  (Number of new households) x (percentage who will buy) +  (Number of existing owners) x (percentage who replace each year)  The uptake percentage must be established using: – Customer surveys – Industry forecasting models where available  Data required: – Sales figures/timeframe: • Either actual past/current sales • Or forecasted figures  Use statistical/graphical analysis:  Plot past category sales data in a spreadsheet, in such a way that a long term pattern is easily shown  Use strategic/judgmental analysis: – Use the theoretical curve to evaluate where the category stands  Consider use of conjoint analysis This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

50. 50 Product life cycle – illustrative output Household Durables in Early 1970s Time Saturation/Sales Introduction Introduction Growth Maturity Saturation Decline/ Termination Compactor Dishwasher Colour TV Room A/C Automatic Washers Freezers Refrigerators Ranges & Ovens B&W TV Wringer Adoption Innovators 2.5% Early Majority 34% Late Majority 34% Laggards 16% Early Adopters 13.5% Source: Mac Group Core Practice Manual. This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

51. 51 Product life cycle – potential insight Typical Insight Provided by Product Life Cycle Analysis (1 of 2) Buyers and Buyer Behaviour Introduction • High-income purchaser • Buyer inertia • Buyers must be convinced to try the product Growth • Widening buyer groups uneven quality Maturity • Mass market • Saturation • Repeat buying • Choosing among brands is the rule Decline • Customers are sophisticated buyers of the product Products and Product Change • Poor quality • Product design and development key • Many different product variations; no standards • Frequent design changes • Basic product designs • Products have technical and performance differentiation • Reliability key for complex products • Competitive product improvements • Good quality • Superior quality • Less product differentiation • Standardisation • Less rapid product changes—more minor annual model changes • Trade-ins become significant • Little product differentiation • Spotty product quality Marketing • Very high advertising/sales (a/s) • Creaming prices strategy • High marketing costs • High advertising, but lower percent of sales than introductory • Most promotion of ethical drugs • Advertising and distribution key for non-technical products • Market segmentation • Efforts to extend life cycle • Broaden line • Service and deals more prevalent • Packaging important • Advertising competition • Lower a/s • Low a/s and other marketing Manufacturing and Distribution • Over capacity • Short production runs • High skilled-labour content • High production costs • Specialised channels • Under capacity • Shift toward mass production • Scramble for distribution • Mass channels • Some over capacity • Optimum capacity • Increasing stability of manufacturing process • Lower labour skills • Long production runs with stable techniques • Distribution channels pare down their lines to improve their margins • High physical distribution costs due to broad lines • Mass channels • Substantial over capacity • Mass production • Speciality channels Source: M.E. Porter, Competitive Strategy, 1980, pp. 159–161. This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

52. 52 Product life cycle – potential insight (cont.) R&D Introduction • Changing production Growth Maturity Decline Foreign Trade • Some exports • Significant exports • Few imports • Falling exports • Significant imports • No exports • Significant imports Overall Strategy • Best period to increase market share • R&D engineering are key functions • Practical to change price or quality image • Marketing the key function • Bad time to increase market share particularly if low-share company • Having competitive costs becomes key • Bad time to change price image or quality image • “Marketing effectiveness” keys • Cost control key Competition • Few companies • Entry • Many competitors • Lots or mergers and casualties • Price competition • Shakeout • Increase in private brands • Exits • Fewer competitions Risk • High risk • Risks can be taken here because growth covers them up • Cyclically sets in Margins and Profits • High prices and margins • Low profits • Price elasticity to individual seller not as great as in maturity • High profits • Highest profits • Fairly high prices • Lower prices than introductory phase • Recession resistant • High P/Es • Good acquisition climate • Falling prices • Lower profits/lower margins • Lower dealer margins • Increased stability of market shares and price structure • Poor acquisition climate: –Tough to sell companies • Lowest prices and margins • Low prices and margins • Falling prices • Prices might rise in late decline Source: M.E. Porter, Competitive Strategy, 1980, pp. 159–161. Typical Insight Provided by Product Life Cycle Analysis (2 of 2) This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

53. 53 Product life cycle – top tips Hints and Pitfalls Data Sources Related Analytics  Market surveys, Nielsen databases for: – Benchmarks against similar products – Consumer take up – Segment sales  Client sales data  Do: – When creating the curve, beware of seasonal, non-recurring sources of fluctuations: • May be necessary to smooth those fluctuations – Ensure you understand if life cycle of a product has been extended by line extensions/modifications  Don’t: – Ignore version change  Key purchase criteria and comb analysis  Needs-based segmentation  Product portfolio analysis  Scenario modeling This document is a partial preview. Full document can be found here: https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644 Find similar business frameworks here: http://flevy.com/business-frameworks

54. 54 You can download a Strategy Development Discussion deck for free from Flevy.com PARTIAL PREVIEW Download a Strategy Development Discussion Deck for Free here: http://flevy.com/share DESCRIPTION • This is a discussion deck template for a corporate strategy development session. • In this discussion, we go through a 2-prong approach to growth and evaluate the merits of various growth drivers. • From the 2-prong approach, various scenarios can be generated in the discussions and dashboards are used to evaluate each scenario.

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Complete Business Frameworks Toolkit - Strategy, Marketing, Operations, Consulting, Change, Finance