Data that has changed

Celebrity using the product

Some diff developments in market not linked such as nationalistic feeling
Some environmental concerns.
has the use of the product changed

has someone shifted the production outside

Lay out a roadmap in the beginning of the case
Summarize in the end
Don’t assume the product ask about it fridge can be used for industrial cooling or home
Have a recommendation

It’s all about geometry

Demographic stats
Brain teasers
Guessestimates
 Attribute 1 Attribute2 Attribute 3
Product 1/ Competitor1 Yes No Strong
Product 2/ Competitor2
Price Product 3/ Competitor3

Differentiation Current MB

Fat rabbit

Quality

Market share

Solving the puzzle

Facttor 1

Factor 4
 Attribute4
Weak

The Lifecycle

Current MBA Class

Academics

Se Assessments
Pr Ap Ac pte
e- pli ce Besides Work
mb
ap cat pta er
Career Services
pli ion nc &
cat Pr e W
ion oc & ee
Ma es Tr k0
Previous MBA
rke Class s an
tin
Academics
Assessments siti
Alumn
g on
Career Services
Besides Work
i

Solving the puzzle

Next MBA Class
Facttor 1 Factor 2 Pre-
applic
Applic
ation
ation Proce
Marke ss
ting

The Goal

Factor 4 Factor 3
s
ents Al
um
Work ni

Applic Accep Septe

ation tance mber
Proce & &
ss Transi Week
tion 0
 Product:
How is the product used ? sbsm4075:
How is it manufactured ? always when pinning
Suppliers ? down a approach as if I sbsm4
Price change in product? Whenever suggesting go down this route is it Well I w
Where is it in the market place? to increse spending on resonable to you ? basic a
Has the market taste changed or is it the same? marketing first make then I w
How do consumers buy based on their market current process efficent interna
decision? then increase change
allocation. change
impacti
What is the data we are looking at to draw the conclusion ?
What is the accuracy of the data ? If the process has remained the same then I would question the human factor. I would
The precise defination of the term like cost ? What is it exactly, what are the things I am using to measure ? state w
long ter
Once I am sure the basic parameters have not changed I would go further chasing
What are the trends in similar scenes from past ? at diffe
Is it me only that has experienced this phenomena or someone else in the same market?
If not in my market has the effect been passed on by someone I am linked to? Someone like buyers and suppliers?
If it not by someone I am linked sbsm4075:
Always have
implementation

Annother thing which needs to be addressed is what is the type of market I am in ?

Industry lifecycle If the answer is NO then
Monopoly, Olgipoly, … it is a good thing to ask
why No?
what is the kind of demand which is generally there ? Changes with season or ??
How are the goods typically produced and distributed
sbsm4075:
what is the type of company? Pvt, public, The moment you nail down
cost of capital a parameter pin it down and
draw a matrix. Eg: market
share/quality see the matrix
Always have something for remainder section.

How is the product is it used in conjunction with some product ?

if there is a change in product there is a strong possibility of the production process changing ?
There can be change in raw materials. Maybe with this change the consumers like or hate the product.
The use of the product might change
 sbsm4075:
Well I would attack this problem by first questioning the
basic assumptions. Then if all my assumptions hold true
then I would check the external factors and then
internal. If there is a external factor which has led to the
change then is it the external factor only or has it
changed some internal factor too. Same for internal
impacting the external.

on the human factor. I would also re-verify what is my desired state or perfect
g to measure ? state which i am looking for. Is it high sales low cost over
long term or there is some different motives i am
chasing now. Like maybe my aim is to innovate as i am
at different level in the product cycle.

buyers and suppliers?

sbsm4075:
Always have
implementation

answer is NO then Always when conveying

good thing to ask a decision say the pro's
No? and con's and hightlight
the unknown which
might be there.
Estimate of population of various cities
Middle position where you are audible and in vision of everyone.
Response rate

types
cataloges
television
radio
internet
mailing
sites
Billboards
mailers
tele-marketing
schemes
events
merchantdise
My profits have fallen what do I do ?
Frameworks
Which industry ? BCG
What is the data you comparing against ? Product Mix
Internal Factors/ External factors Market Assesment
Internal
To tell that lets run through all items and then What has changed since last data
we get to production or efficiency collection
Run down the Balance sheet and
income statement Run through all subjects
What was last time profit it might
have eaten into this one
Any major long time expense
Operations

Don’t stop at iternal even though you identify

something. Ask and be sure about external. BCG matrix
Industry lifecycle
Innovation Revenue increase but losses
Cyclical demand Product mix
Cost per item down so not profitable
Labor policy Then look at items which constiute cost

Price cutting by competitor

 Dying market
Market Issues
Supply shrinks
New equilibrium- lower price-Lower quantity

Competitor response

all subjects Possible substitutes

Strategic Alternatives
New Markets for new products
new products with existing capabilities

Fight it out
Acquire new capabilities
ease but losses Exit-after milking
Company issues
down so not profitable Change affect client
ems which constiute cost product mix
Rent strategic
Wages shareholder perspective
Utility bill labor flexibilities
Price Increase

Would basically see if it is a price increase caused by some real changes in internals or it’s a virtual change.
In terms of vitual or un real terms would be
How is the cost being calculated such in terms of average cost. Factors affecting price sentivity

Change in virtual could be because of following factors

Some exceptional circumstance such as next week being a holiday or strike
Change in collecting data
Change in how I am viewing data
Strategic change: maybe cutting down cost in this product is linked to something else
I am attacking annother customer in his present market.
Maybe discounts on this product might lead to benefits on annother.
Charity IF CHANGES ARE TEMPORARY T
Excess inventories and I am moving to annother product.
Some scheme which 2 for 1 which has changed product prices

Change due to factors which do not affect the product externally

Change in regulation
Change in market structure due to player moving in or out
predatory pricing
exceptional or other circumstance
Innovation coming in the market.
Moving the product up in value chain by a marketting campaighn
Change in distribution channel- more direct buying
Production moving closer to market.
seasonal resons
Has the market size grown

Change due to factors which do not affect internally

Cost to manafacture goods has changed
First always check data if a parameter previously considered has been moved in or out or changes in es
Estimation policy could be such as computing the man hours put into the product
labour expenses
raw material suppliers
machine costs
distribution costs
marketting and advertisement

Cost of good sold

selling and distribution
administrative expense
research and development

Am I just increasing my surplus without any additional change in product intrinsic qualities ?

If not changing intrinsic qualities, have I launched a marketting campaighn or something similar to increase the prod
Factors affecting price sentivity

Product Based
Product differenciation: few factors to differentiate
Product is an input which the buyers use to produce the final good. So there is a tendency to pass on th
Network externalities.
Using one product in conjunction with annother.
Substitutability

Market Factors
Competition - Monopoly, oligopoly
Market growth rate
Total demand in the market
Total production capacity in the market
Collusion

Customer Factors
Buyers expenditure are a large proption of total costs. A reverse example is a health care service where

Comparison between prices is difficult. That is a form of first degree discrimination.

Switching costs.

Other
Regulation
Anti-trust practices
Inflation
fecting price sentivity

GES ARE TEMPORARY THEN DON’T RECOMMEND CHANGES

in or out or changes in estimation policy

similar to increase the product value?

s a tendency to pass on the costs.

health care service where expenditure is less.

motive to expand ? Dispose excessive cash, attack competitor, derisk in terms or market, use excessive capacity, better servic
Get to know the type of industry ?

External Internal Market

Porter Frameworks
whether it is a local or a global market Market Assesment
Get about product info from new Product info sheet Product portfolio analysis
Core competency cash flow with coc

BCG matrix
Concentration in the industry Run through all subjects
Nash equibilirium Strategy
Motivation - attack the competitor in his market Finance- NPV,
Move into a new market Employee- OB, type of people, skills,
Expand ME- Nash,
Acquire new capability FR- Run through balance sheet, Look at ratio
DS- Market data of profitability in other industry, try and run a regre

What is the present position and what is the desired position.

Situation
What am I doing presently (ex I am a software firm)
complication
Should we enter the new market
Key question
Would entering the market add value
Is entering the market the best alternative

Increased revenue of the combined business

Is it profitable venture
Cost benefit analysis

Other uses of cash or investment (what returns I would get)

Impact on revenues if not in business

Strategic resons
Competitor in business

Market trend

Acquire new capability

Competitive Response
e excessive capacity, better service for alredy existing market

My productCompetitor
Cost
Features
positioning
R&D
Suppliers
Design
Dependencies
manufacturing process

Look at ratio
other industry, try and run a regression
First look internally in the orginasation
Data
Expertise
External sources
Data
Expertise

Market surveys
Exchanges and find out about forms
National stats
Industry reports
Consultants
Identify the oppurtunity
Quantify the business benefits
Calculate the payback period
Conclusion and Recommendations
e
Identify the oppurtunity

Enterprise/Application sugested Benefits

Do a SWOT Frameworks
Type of market 4 P's
Network externalities Market analysis
Whether they entering this market Competitor Analysis
If not entering what was te previous product Product Portfolio Assesment
Is this a new enhancement cash flow
If entering the market what was the previous line of business
Can distribution channels be applied across. Run through all subjects Sunk Costs
Reaction of competitors.

Way to go ahead: Market

Franchising What drives demand
collobration Revenues Is demand incresing
New joint venture What subsitutes
Independent marketing Outlook of prices given demand/supply trends
Licensing Outlook of prices given competitive rivalry trends
Regulatory environment

Are industry cost increasing or decreasing

Costs Is the industry becoming commpetitive
Is technology shift likely

Capital More capital required in future

 Sunk Costs

Why do consumers buy target products

Will market share increase or decrease
Price premium or discount
upply trends target market position sustainable
e rivalry trends strength in supply chain

Own cost versus competitor

What kind of plant or product line

plant capacity
changes in working capital
Identifying the acquisition potential of a firm

Motivation sucessful acquisitions

business they understand
Improving market share integrate vertically - buying suppliers, customers
Gaining economies of scale business should be cash generative
gaining better and more complete market range acquired business is cash cow
acquiring cash subsideries sold off and itself is profitable
diversify under utilised assets
Acquire technical knowhow if patented poorly managed
killing competition asset value more than market value
poor performance which can be turned around
liers, customers

nd itself is profitable

n market value
turned around
Non interest based and non personal based example vault case study page 84
Check the motive behind the cost reduction

See cost based chapter in strategy

A H A
B Y O See common tasks and see the linkages. Can
C T L
D D X
E E E Essential Benefit/Cost

A
1 2 3 B
4 5 6 common pool C
7 8 9

Optimization
Making it common
Outsourcing
Is it required ?
Major categories
nd see the linkages. Can be reduced to common pool

Impact Optimized or not

Short term Long term

Sample: Vault new airplanes page 80
To consider the impact go on two ways
considering present stats is it profitable deal
use cost of capital to delve further
If desirable but negative cost of capital or some similar factor see som
Is it a sizable acquisition of new resources with respect to present ass
What are the old assets are they linked with the new ones ?
Company snapshot and trends?
Market and industry trends?

Short term impact Impact:

long term impact How does it help? What are the motives we see behind acquiring the
Three aspects Building synergies
Solvency, Profitability, Investor affect economies of scale
economies of scope
hygine factor to survive
How are we proposing to finance the deal? market demand

solvency Cash flow

Positive net worth operating activities
Short term tax
Current liabilities financing
Currrent assets
Interest cover
Longterm

Payment schedule
positive net worth

Profitability
Check if positive for cost of capital calculation
increase revenues
decrease cost
product mix

Profit marg.
Asset turn over
Fixed asset
Working capital
Creditors days
Debitors days
stock days
ome similar factor see some alternative like leasing? Getting max out of min
with respect to present assets?
the new ones ?

see behind acquiring the new resource?

Cost benefit analysis
Cost to shut down
Bad publicity because of layoff
Are cost indicative of fututre cost
Long term and short term impact
Product mix