0903 10 Core Tools To Drive Growth
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Transcript of 0903 10 Core Tools To Drive Growth
APAC
Chairman’s Series on Growth
The 10 Core Tools To Drive Growth
Presented by
Craig Baty Martin Gilliland
Global VP, IT Practice, VP, IT Go To Market Strategies
Sydney, Australia Singapore
Frost & Sullivan Frost & Sullivan
March 2009
Agenda
1. Recap of Poll Result from Previous webcast
2. Brief Overview: Where We Are in the Series
3. The 10 Growth Processes
4. Why Look at Growth Processes?
5. Growth Process Analysis
6. What is the Right Growth Strategy?
7. Geographic Expansion
8. Merger and Acquisition
9. Outsourcing to Drive Growth
10. New Product Launch
11. New Product Development
Wait
and see
strategy
12%Cutting
operationaal
costs
19%
M&A
strategy
0%
Market share
expansion
12%
Rebound
Strategy
19%$ in growth
strategy
0%
Product
Developmen
t:
19%
Distribution
Channel
Strategies
19%
Q3 2009
17%
Q4 2009
50%
Q4 2010
33%
Q4 2011
0%
Beyond
0%
Polling Questions from February APAC CSG (Chairman’s Series on Growth)
Have you cut back your 2009 business plans due to the fear of an economic downturn?
What strategies are your company utilising during this period of economic turmoil? Please select all that apply:
Which of the following Growth Processes is your company depending more heavily on to drive growth?
Which member(s) of your "Growth Team" are currently driving your company's growth strategy?
The Growth Acceleration System
The 10 Core Tools To Drive Growth
• Mergers & Acquisitions
• New Product Development
• Geographic Expansion
• Strategic Partnering
• New Product Launch
• Growth Sourcing…Outsourcing
• Distribution Channel Optimisations
• New Customer Application
• Competitive Strategy
• Marketing/Sales Strategy
Why Look at the 10 Core Tools?
1. Optimising Impact of Growth Pipeline
2. Comprehensive Review of All Opportunities
3. Avoids Over-Reliance on One Growth Process
4. Checklist System Identifies Undiscovered Opportunities
5. Supports Innovation and the Creative Process
6. Global Environment is Increasingly Competitive
Annual CEO Survey on Growth StrategyCore Tool Analysis: 4 Measurements
• Where is the Growth Coming From?
• The Current Utilisation of Growth Tools and Processes
• The Most Difficult Growth Tools to Utilise
• Evaluation of Organisations Skills per Growth Process
Sources of Growth…An Over-reliance on New Product Development
Top Successes Regarding Growth..
26%
16%
9%
12% 12%
5%
9% 10%
17%
20%
12%14%
7%
16%
8%6%
14%
10%
21%
14% 13%11% 11%
5%
0%
10%
20%
30%
Technology
Development
Product
Strategy
Marketing
Strategy
Competitive
Strategy
Customer
Orientation &
Support
Sales Strategy General
Growth
Strategy
Geographic
Expansion
#1 Success #2 Success #3 Success
What are the top three areas that you have had the most success in growth?
Total SampleSelecting… 57% 47% 42% 39% 31% 31% 28%
21%
Growth Tools & Techniques…Underutilized Management Tools
Most Underutilized Management Tools...
34%
26%
20% 20%18%
16%15%
14% 14% 14%
0%
10%
20%
30%
40%
Strategic
Partnering
Customer
Research
Strategic
Planning
Market
Analysis
Sales
Strategy
R&D Marketing
Strategy
New Product
Launch
What are the main three management tools utilized by your organization to drive growth?
By far, Strategic Partnering is the most underutilized management tool, as reported by 34% of CEOs.
And, while Customer Research is the second most underutilized, various other management tools appear
to be used more often.
TechnologyImplementation
Mergers & Acquisitions
Difficult Growth Processes to Implement
Most Difficult Management Tools to Implement...
39%
34%
22%20% 19%
16%15% 15%
13%12%
0%
10%
20%
30%
40%
Mergers &
Acquisitions
Strategic
Partnering
Strategic
Planning
New Product
Launch
Market
Analysis
Growth
Strategy
Sales
Strategy
Customer
Research
What are the main three management tools utilized by your organization to drive growth?
As previously reported, only 2% of CEOs report they strictly utilize Mergers & Acquisitions as a growth
strategy…and most likely the primary reason is that Mergers & Acquisitions are considered the most
difficult tool to implement (39%). Also notable, the same proportion (34%) citing that Strategic Partnering
is underutilized also report that it is difficult to implement…thus, this seems to explain the earlier results.
TechnologyImplementation
Competitive Benchmarking
Very Good/Good… 61% 58% 57% 54% 53% 53% 48% 46% 46% 41%
Growth Processes – The CEO’s Assessment of Skill
Organization's Skill/Techniques
12%21%
12% 13% 9% 9% 14%7% 9%
49%37%
43% 42% 40% 44% 39% 32%39% 32%
29%24% 31% 33% 37% 32% 38%
36% 41% 47%
9%
10%10% 10% 7% 12% 12% 14% 10% 8%
14%
8%
0%
20%
40%
60%
80%
100%
R&D Strategic
Planning
Growth
Strategy
Marketing
Strategy
Sales
Strategy
Customer
Research
Strategic
Partnering
Best
Practices
New Product
Launch
Very Good Good Fair Poor Very Poor Not Applicable
How would you rate your organization regarding the following growth skill/techniques?
Note: Proportions less than 5 percent are not shown.
TechnologyImplementation
Geographical Expansion Model - Indicators
Factors Description Indicators
Business Environment • Political stability
• Political Stability
• Degree of Openness
• Corruption
Economy• Economic stability • Purchasing power
• Economic Growth
• GDP Per Capita
• Exchange Rate
• Inflation
Labor• Labor force • Labor cost trends
• Employment
• Youth Unemployment
• Minimum Wages
• Labor Cost
Infrastructure • Cost of operation • Quality of Infrastructure
• Computers and Internet Users
• Real Estate Prices
• Telephone and Cellular Subscribers
• Telephone Charges and Broadband Subscribers
Education • Workforce availability• Number of Graduates
• Graduate Enrolment Ratio
• Language Skills - English and other languages
Market Indicators
• Revenue potential • Competition • Resources
• Revenues and Revenue Potential
• Revenues and Revenue Potential (Region)
• Availability of Qualified staff
• Number of Competitors
• Foreign Language skills
Geographical Expansion Model - Ranking
Rankings 2000 2005 2010 2015
1 UK UK UK UK
2 Argentina Argentina Argentina Poland
3 Czech Poland Poland Argentina
4 Poland Germany Czech Czech
5 Germany Czech Germany Germany
6 Hungary Hungary Hungary Hungary
7 Slovakia Slovakia Slovakia Slovakia
8 Slovenia Slovevia Slovenia Slovenia
9 Lithuania Lithuania Lithuania Lithuania
10 Estonia Estonia Estonia Estonia
11 Latvia Serbia Latvia Latvia
12 Croatia Croatia Croatia Croatia
13 Serbia Latvia Serbia Serbia
14 Macedonia Macedonia Bulgaria Bulgaria
15 Bulgaria Bulgaria Macedonia Romania
16 Albania Romania Romania Bosnia
17 Bosnia Albania Albania Macedonia
Sam
ple
What is the Right Growth Strategy?
Advantages
• Greater control
• Less capital structure risk
• Involves less uncertainty
• Allows focus on core competencies
• Greater investor transparency
Advantages
• Speed
• Diversification/access to new product/ service line, intellectual property, and capabilities
• Increase global reach and market share
• Acquire talent and human resources
• Game changing potential
• Accelerate revenue growth
ORGANIC
Disadvantages
• Takes time and long-term focus
• More reliant on own capabilities
M&A
Disadvantages
• Integration issues
• Increased potential to destroy shareholder value over long term
Key Challenges
Source: Frost & Sullivan
Key Challenges to an Organic Growth Strategy
Talent, 26.9%
Shareholder
demand for near-
term impact,
21.5%
Cost of Capital,
15.4%
Ideas, 10.4%
Material Costs,
5.8%
Political, 5.4%
Other, 14.6%
Key Barriers to a Successful M&A Strategy
Valuations, 36.1%
Lack of Targets, 16.2%Competition from
Financial Buyers
(Private Equity), 12.0%
Legal Issues, 9.1%
Shareholder Concerns,
7.5%
Market Reaction, 5.0%
Other, 14.1%
What is the right approach?
Organic Growth – Process Acquisition Growth - Issues
Successful firms have higher IRR hurdle
rates
Disciplined capital allocation process
Internal communication
Pipeline measurement and growth
budgets
Effective understanding of strengths and
weaknesses
Clear goals and objectives
Proactive approach and opportunistic
Ongoing process
Setting the right expectations
Clear goals and objectives
Systematic due diligence takes time and
creativity
Focus on pipeline creation as well as
execution
The right structure and process are important for both options
• M&A should be used as a tool for growth - not necessarily a strategy in itself
• A combination of organic and inorganic is best
• Explore and understand alternative ways of measuring success, risk, and
growth opportunities (cost of not doing a deal)
M&A Thought Leadership
We break the M&A process into four steps:
1. Sector or trend overview
2. Target specific analysis
3. Transaction specific due diligence
4. Post-deal integration and strategy
Leverage specific tools and processes that support each step
Sector and Trend Overview
Target SpecificAnalysis
Deal Origination
Transaction Due Diligence
Post-Deal Integration and Strategy
Frost & Sullivan
Outsourcing Model
Off-shoringGrowth
Objectives
Financial Benefit –ROI/EVA
External Internal
Internal
GROWTH ZONE &
STRATEGY
Our Approach to Growth-Sourcing
Our highly-skilled team of
consultants can help you meet your
growth objectives by:
• Assessing the external outsourcing
opportunities utilising Frost & Sullivan
Growth Sourcing Model
• Evaluating your internal growth
objectives and execution capabilities
• Partnering with your team to translate
these opportunities into measurable
growth
Review of Current Outsourcing Status
and Growth Objectives
Secondary/Primary
Research
Quantitative and Qualitative
Analysis
Financial Impact and
Economic Benefit
Client Briefing on Objectives and Current
Outsourcing Status
Frost & Sullivan Industry Database, Country economic forecasts,
primary research with successful companies in
industry or adjacent markets, case studies
Frost & Sullivan outsourcing model-
Destination of choice. Growth Thought Leader:
Growth Workshop, Operational Best Practices,
Outsource Strategy
Return On Investment, Economic Value Add. Outsourcing for growth on top-line and bottom-
line
STRATEGIC REVIEW COMMITTEE
Frost & Sullivan's Strategic Review Committee, composed of Senior Partners, reviews the research strategies, findings, and recommendations at key points throughout the project. This process is designed to ensure that 1) the project objectives are completely met, 2) the findings and recommendations provide the utmost strategic value to clients, and 3) the client’s research investment is fully maximized.
Growth Sourcing Methodology
Frost & Sullivan Growth-Sourcing Model
In d ic a to r M e a s u re m e n tF ro s t & S u lliv a n -
S u b W e ig h t
F ro s t & S u lliv a n -
T o ta l W e ig h t
U s e r - S u b
W e ig h t
U s e r - T o ta l
W e ig h t
F ro s t & S u lliv a n -
T h re s h o ld
U s e r -
T h re s h o ldP o litic a l S ta b ility 4 0 .0 0
B u s in e s s E n v iro n m e n t D e g re e o f O p e n n e s s 3 0 .0 0
C o rru p tio n 3 0 .0 0
1 0 0 .0 0 0 .0 0
F ive Y e a r G ro w th 1 0 .0 0
G D P P e r C a p ita 5 0 .0 0
E c o n o m y E x c h a n g e R a te 1 5 .0 0
In fla tio n 1 5 .0 0
F D I 1 0 .0 0
1 0 0 .0 0 0 .0 0
E m p lo ym e n t 1 2 .0 0
L a b o r Y o u th U n e m p lo ym e n t 2 4 .0 0
M in W a g e s 2 0 .0 0
L a b o r C o s t 4 4 .0 0
1 0 0 .0 0 0 .0 0
C o m p u te rs ( p e r 1 0 0 ) 1 3 .0 0
C o m p u te rs ( 1 0 0 0 0 0 0 ) 4 .0 0
In te rn e t U s e rs (p e r 1 0 0 ) 1 3 .0 0
In fra s tru c tu re In te rn e t U s e rs (p e r 1 0 0 0 ) 8 .0 0
R e a l e s ta te p r ic e s 1 4 .0 0
T e le p h o n e 6 .0 0
T e l C h a rg e s 1 7 .0 0
B ro a d b a n d S u b s c rib e rs 2 5 .0 0
1 0 0 .0 0 0 .0 0
G ra d u a te s 3 7 .0 0
E d u c a tio n G ra d u a te E n ro lm e n t 1 3 .0 0
S ize o f E n g lis h S p e a k in g P o p u la tio n 5 0 .0 0
1 0 0 .0 0 1 0 0 0 .0 0 0
7 .5
7 .5
5 0
2 0
1 5 1
1
0 .7 5
1
1
Business Environment
For doing business, stable political conditions, consistent policy, and regulatory environment are important and have a greater degree of influence
on the decisions relating to the choice of offshore locations.
Economy
Consistent economic growth helps in stable economic indicators such as inflation, exchange rate, and interest rate has significant impact on costs and
business and profits.
Labor
For outsourcing decisions, wage differential among the countries is the key. Employment and unemployment and labor cost trends are
Infrastructure
Measures use and penetration of ICT technologies and trends in telephone and internet charges
Education
Resource availability and quality of the workforce are important determinants of location choice decisions.
Frost & Sullivan Growth-Sourcing Model
Rankings 2000 2005 2010 2015
1 India India India India
2 The fYR of Macedonia Estonia Lithuania Lithuania
3 Serbia and Montenegro The fYR of Macedonia Estonia Estonia
4 Estonia Serbia and Montenegro Poland Poland
5 Bulgaria Poland Bulgaria Bulgaria
6 Latvia Lithuania Serbia and Montenegro Serbia and Montenegro
7 Poland Bulgaria The fYR of Macedonia Slovakia
8 Lithuania Slovakia Latvia Latvia
9 Croatia Croatia Slovakia The fYR of Macedonia
10 Slovakia Hungary Croatia Croatia
11 Czech Republic Latvia Czech Republic Czech Republic
12 Hungary Czech Republic Hungary Romania
13 Albania Romania Argentina Hungary
14 Romania Argentina Romania Argentina
15 Bosnia and Herzegovina Albania Malta Slovenia
16 Argentina Malta Slovenia Malta
17 Slovenia Slovenia Albania Bosnia and Herzegovina
18 Cyprus UK Bosnia and Herzegovina Albania
19 Malta Bosnia and Herzegovina USA USA
20 USA Cyprus UK UK
21 UK USA Cyprus Cyprus
22 Germany Germany Germany Germany
• Allows quantitative analysis of location (country and city) attractiveness
• Detailed investigation based on 22 critical indicators
• Allows users to assign weights
• Built-in flexibility to factor industry-specific or company-specific issues
• Frost & Sullivan consultants utilize model in context of company objective and industry dynamics to develop optimal strategy
• Provides ranking for Business Environment, Economy, Labor, Infrastructure and Education. Also provides overall rankings
Product Launch Process
The Growth Acceleration System
(FGP)
Vision: What We Do for You
What:
Frost & Sullivan helps
clients perform at industry
best-in-class levels for
growth, innovation and
leadership
Vision: How We Do IT
How:
Frost & Sullivan clients
leverage our Growth
Acceleration System
which provides disciplined
research and functional best
practices to generate,
evaluate and implement
powerful growth strategies
Vision: When Should We Start
Now:
Now is the time to partner
with Frost & Sullivan and
leverage our Growth
Partnership Service to
drive your career and
company
An Unrivaled Value Proposition to Drive Growth
External Challenges Internal Challenges
TEAM Research
Industry Insights
Best Practices
Career Insights
Growth
Acceleration
Single User-License
Annual Membership Program
The Growth Partnership Service: User LicenseIndustry-Focused Research: External Growth Environment
• Technical Insights Research & Alerts
• Country Industry Forecasts
• Decision Support Databases
• Economic Impact Articles
• Analyst Briefings
• Analyst Inquiry Hours
• Best Practices Research
• Financial Benchmarking & Analysis
Industry and market intelligence for critical growth decision making
• Growth Opportunity Newsletters
• Movers & Shakers Interviews
• Market Engineering Research
• Market Insights
• Client Value Enhancement
• Client Councils
• Client Portal
• Industry Tracker
The Growth Partnership Service User LicenseCareer-Focused Research and Services: Internal Growth Environment
• Ask the Thought Leader Webcast
• Growth Process Toolkits
• Best Practice Guidebooks
• Executive MindXchange
• Growth Innovation & Leadership Global Congress
• Executive Briefings
• Growth Strategy Dialogues
• Online Executive Forum
• Growth Excellence Matrix Diagnostic
• Client Councils
Supporting the CEO & the Growth
Team with Growth Strategy
www.frost.com/gilglobalGIL GLOBAL 2009A global community focused on Growth, Innovation and Leadership
October 2009
Kuala Lumpur
October 2009
Shanghai
December 2009
Sao Paulo
February 2010
Tel Aviv
May 2009
London
September 2009
San Francisco
October 2009
Middle East
October 2009
India
Next Steps
� Request a proposal for Growth Partnership Services to support you and your team to
accelerate the growth of your company.
� Attend Frost & Sullivan Executive MindXchange best practice networking events
(http://www.frost.com/cal) to share and address strategic challenges
� Consider Conducting a 360 Degree Growth Workshop to support your long-term growth
strategy
� Join us at a Growth, Innovation and Leadership 2009: A Frost & Sullivan Global Congress
on Corporate Growth (www.frost.com/gilglobal)
� Register for the next Chairman’s Series on Growth: (http://www.frost.com/growthapac)
� Schedule a Recession Strategy Session with a Frost & Sullivan Industry consultant (email
us: [email protected])
� Schedule a One-on-One Growth Strategy Dialogue with a Frost & Sullivan Growth
Consultant (email us: [email protected])
� Register for Frost & Sullivan’s Growth Opportunity Newsletter and Growth Team
Membership e Bulletin to keep abreast of growth opportunities in your industry and best
practices in your career track. (www.frost.com)
Contact Us
If you have questions or would like further information about anything we discussed, please send your query to the email provided below and we will get back to you shortly.
Alvin Chua
Account Manager
Automotive, Transportation & Logistics
DID: +65 6890 0997
Mob: +65 9199 4566
eMail: [email protected]