Market Intelligence - Tools & Frameworks

Jawahar Sheit

July 2015

Agenda

• Types of Intelligence• Intelligence Process• Analysis/Presentation Frameworks

– SWOT– PESTLE– Porter’s 5 Forces– Matrix/Grid Analysis– Minto Pyramid

• Q&A

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INTELLIGENCE IN CORPORATE ENVIRONMENT

Types of Intelligence in Corporate Environment (1/2)

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Corporate Strategy

Market Intelligence Financial IntelligenceOperational Intelligence

• Market Research• Competitive Intelligence• Customer Intelligence• Channel Intelligence• Economic/Industry

Analysis

• Financial Analysis• Financial Forecasting• M&A Deal Analysis

• Supply Chain Analytics• Operational Data

Analytics• Human Capital Analysis

Types of Intelligence in Corporate Environment (2/2)

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Intelligence Factors

Macro Environment Meso Environment Micro Environment

• Factors that cannot be controlled

• Covered through Market Intelligence

• E.g. – Economy, Politics, etc.

• Factors that can be controlled to an extent

• Covered through Market Intelligence

• E.g. – Customers, Competitors, Vendors, etc.

• Factors that can be fully controlled

• Covered through Financial and Operational intelligence

• E.g. – Pricing, Cost-efficiency, Materials Management, Production, etc.

Intelligence Roadmap

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Newsletter• Social Media

Listening• Key

Developments

Customer/Competitor Profiling

Market/ Competitor Assessment

Deal Assist• Bid Analysis• Battle Cards• Win/Loss

Analysis

Strategic Planning• Hypothesis

Testing• Scenario

Planning• PoV Analysis

Stakeholders

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Complexity

Au

die

nce

Information Collection

Information Synthesis

Analysis

Sales/BD

Leadership/ Strategic Planning

Newsletter ProfilesMarket

Landscape

Battle Cards

Win/Loss Analysis

Hypothesis Testing

PoV Analysis

Business Units/ Enabling Functions

ScenarioPlanning

Intelligence Process

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Process

• Set research/analysis objectives with stakeholders

• Understand requirements

• Identify resources• Set expectations on

deliverables

Objectives & Expectations Setting

Description

Data Collection AnalysisPresentation of

Findings

Tools/Frameworks

• Terms of References• RFPs/RFQs• SLAs• KIQs (Key

Intelligence Questions)

• Any other internal documents

• Collect relevant data from both internal and external sources

• Data can be quantitative or qualitative

• Primary or secondary sources

• Questionnaire• Focus Groups• In-depth Interviews• Internal datasets• HUman INTelligence

(HUINT)• Internet• Social Media• Paid resources

• Synthesize and analyze data/ information to derive meaningful (futuristic) insights

• BI Tools• SWOT• PEST or PESTLE• Porter’s Five Forces• Matrix method• Minto Pyramid

• Quality check for analysis and grammar

• Addresses the problem

• Keeps the audience engaged

• Graphs & Charts• SWOT• PEST or PESTLE• Porter’s Five Forces• Matrix method• Minto Pyramid

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ANALYSIS/PRESENTATION FRAMEWORKS

SWOT Analysis

• SWOT is a structured analysis tool, utilized for assessing any individual person, place or business and/or for an industry• SWOT assesses Strengths and Weaknesses based on micro/meso environment and Opportunities and Threats based on

macro/meso environment• Limitations: (i) the macro environment would be the same for all similar subjects, hence differentiation of

opportunities/threats amongst peers is not possible; (ii) the information used may not be critically/scientifically arrived at but very subjective based on the individual doing the analysis; (iii) not an effective benchmarking tool but can be used to assess oneself very quickly

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Strengths:• Advantages of the subject in

comparison with others• Based on internal or micro

environment

Weakness:• Dis-advantages of the subject in

comparison with others• Based on internal or micro

environment

Opportunities:• Factors in favor of the subject• Based on external or macro

environment

Threats:• Factors against the subject• Based on external or macro

environment

SWOT Analysis: Example 1 – An IT Services Company

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SWOT Analysis

Strengths:• Subject Matter Expertise in Public Sector

Domain • Strong technical capabilities in ERP, CRM

and Managed Services• Strong Capital back-up and financial

position• Relationship with existing clients

Weakness:• Un-clear strategic direction on future

growth markets and services• Growing dis-satisfaction among certain

key customers due to:• Inconsistent staffing • Lack of interpersonal skills among

professionals

Opportunities:• Growing opportunities in private sector• Increasing government spend on IT and

related projects• Availability of local talent due to

development of local universities

Threats:• Increasing competition from local and

international IT Service providers• Non-presence in the growing private

sector• Customer’s preference for directly dealing

with Vendors like SAP/Oracle instead of having a System Integrator or IT Services intermediate

SWOT Analysis: Example 2 – A Global Financial Services Group

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SWOT Analysis

Strengths:• Growth in revenue and income margin in

key business segments and geographies in 2013, compared to 2012

• Increased regulatory capital to meet 2014 CCAR requirements with Fed

• Recent settlement with DoJ• Presence in growing economies

Weakness:• Expected operation efficiency is yet to be

achieved and is in short by $1.5 billion of 2015 target

• Litigations and other regulatory issues still pose a threat to growth

• Internal controls and compliance issues with subsidiaries

Opportunities:• Expected access to capital markets, once

regulatory pressure eases• Opening up of growth economies like India

and China

Threats:• Growing regulatory pressures at both US

and foreign locations• Stiff competition from US banks and

underperformance in the sector, might cause stakeholder pressure

• Shortage of specialized vendors/resources would stimulate higher spending

PESTLE Analysis

• PESTLE (Political, Economical, Social, Technological, Legal and Environmental) Analysis is a macro environment analysis that helps an organization understand the external factors that would affect their business operations

• Predominantly used for (i) new market (region or country) entry; (ii) new product launch; (iii) understanding current scenario for business planning

• Limitations: (i) Subjective depending upon the individual performing the analysis; (ii) Longevity of the analysis as most of the factors analyzed tend to change within a short span

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• Government stability

• Political leadership• Trade restrictions

and reforms• Tax regulations• Corruption• Relationship with

neighbors and home countries

• Executional and Judicial issues

POLITICAL

• GDP & NDP• Inflation• Exchange rates• Interest rates• Credit policies• Stock market

performance• Cost of living

ECONOMICAL

• Population and demographics

• Life style• Culture and

tradition• Ethics and religion• Belief system• Education

SOCIAL

• Innovation and knowledge management

• Research and development

• Intellectual property

• Technical infrastructure

• Acceptance of technical innovations

TECHNLOGICAL

• Employment laws• Tax regulations• Consumer laws• Health & Safety

laws• Import & Export

regulations• Regulatory bodies

LEGAL

• Weather conditions• Ecological

consequences• Energy availability

and usage• Pollution

regulations• Waste disposal

and contamination laws

• Social implications and CSR

ENVIRONMENTAL

PESTLE Analysis – Example 1 – Assessment of a Global Financial Services Group

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• Impending settlements with US Government

• Increasing restrictions of entry from governments of other countries

POLITICAL

• Availability of capital through debts

• Restriction from SEC from selling hedge and PE funds

ECONOMICAL

• Changing consumer demographics

• Consumers moving away from mortgage loans

SOCIAL

• Increasing use of Net Banking by consumers

• Cyber-security and data-theft issues

TECHNLOGICAL

• Money-laundering issues with foreign subsidiaries

• Newer laws like Dodd-Frank and Basel

• Existing litigations

LEGAL

• Continuing litigations pertaining to affordable homes to be built for loan defaulters

ENVIRONMENTAL

ISS

UE

SB

US

INE

SS

IM

PA

CT

• Settlement to continue for next few quarters

• Increasing spend on regulatory compliance on foreign branches

• Access to funds only after regulatory restriction eases

• Increasing spend on promotional and advertising campaigns

• Increasing spend on IT infrastructure and security spending

• Increasing spend on compliance control measures with foreign subsidiaries

• Continuing complying with newer acts while lobbying for eased restrictions

• Write-off to an extent of US $2.5 billion towards building affordable homes towards forbearance of default loans

PESTL Analysis – Example 2 – A Retail Giant Entering New Market

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• Fractured (government) relationship with home country

• Need to have local partner with almost equal share to start a business

POLITICAL

• Expected decrease in government subsidies/grants to citizens

ECONOMICAL

• Very demanding youth population

• Disapproval of foreign brands by local public (to a small extent)

SOCIAL

• High connectivity costs

• High labor and operational (technology) cost

• Scarce skilled/technical resources

TECHNLOGICAL

• Stringent local laws related to labor, workplace safety and quality

LEGALIS

SU

ES

BU

SIN

ES

S

IMP

AC

T

• Delay in license approvals

• Might affect consumer spending as government reduces grants

• Training requirement for customer facing staff

• Corporate policies related to promotion and brand building might be required to change

• Connectivity might hit operations for shorter term

• Higher acquisition and operational costs related to skilled resources (expats) hiring

• Increase in operational cost

Porter’s Five Forces Analysis

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• Porter’s Five Forces Model is used to analyze meso/micro environment factors that will influence the business/industry’s growth and profitability

• Predominantly used for Industry/Sector Analysis while entering a new market, by assessing the “attractiveness” based on competition

• Limitations: (i) Subjective depending upon the individual performing the analysis; (ii) Non-inclusive elements of analysis (customer, vendor, competitor may not be linked together); and (iii) very qualitative

Industry CompetitorsSuppliers Customers

Substitutes

New Entrants

Porter’s Five Forces – Example 1 – A Global Financial Services Group

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Industry CompetitorsSuppliers Customers

Substitutes

New EntrantsThreat of New Entrants• Regulatory requirements pose barrier to new

entrants• Competitors are re-evaluating their product mix

to enter into newer services (e.g. investment banks entering into retail banking).

• The industry environment and competition for the Banking Industry is highly varied, from thrifts (regional banks) to large global banks. .

• As the products and services gets more commoditized, there are very little or no options for the industry participants (banks) to differentiate or innovate.

Bargaining Power of Customers• While individual customers pose little or no

threat, regulations are mostly customer/buyer oriented

• With little differentiation to provide with products/services, banks try to win customers with differentiation in augmented services

Bargaining Power of Suppliers• Access to capital/debt has become very limited

post 2007 meltdown• Human capital availability for specialized areas

has always been a challenge• Limited availability of specialized technology,

outsourcing and business consulting vendors

Threat of Substitutes• While stringent regulatory requirements provide

barrier to new entrants, substitutes like Fund Houses, NBFCs, Home Mortgage providers, offer competition for selective products/services

Matrix Analysis – Grid Analysis – Multi-Attribute Analysis

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• Matrix/Grid Analysis is a tool utilized across environmental factors for quick decision making purpose• Extremely helpful when multiple attributes are involved in analysis. • Can be used for both qualitative and quantitative data• Limitations: (i) Subjective (if the data turns out be subjective); (ii) Used mostly for short term decision making• Popular examples: BCG Matrix; Ansoff Matrix

Attribute 1

Attribute 2

Cluster 1 Cluster 2

Cluster 4 Cluster 3

BCG Matrix – Portfolio Mix Analysis

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MARKET GROWTH

RELATIVE MARKET SHARELow High

High

STARS

CASH COWS

QUESTION MARKS

DOGS

• BCG Matrix uses market growth and relative market share to identify products/businesses, to allocate resources and decide on portfolio mix

• Businesses/products are scattered around in a graph on the basis of market share/size and growth

• Stars are businesses/products that offer high growth with a relatively high market share. These are businesses that will be able to maximize revenue in future

• Cash Cows are businesses that have high market share in a matured (or slowing) market

• Question Marks are high growth-low share businesses, mostly the starting point for many businesses. Business might move to any direction from here

• Dogs are low growth-low share businesses that often tend to get sold/killed off

BCG Matrix – Example – Portfolio of an IT Services Company

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STARS

CASH COWS

QUESTION MARKS

DOGS

Ansoff Matrix – Product-Market Strategy

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Products/Services

MarketExisting New

New

Market Penetration

• Ansoff Matrix helps to assess strategies for future growth of a business

• Market Penetration: The company grows using its existing offerings (products and services) in existing markets (increase its market share in current market scenario) by increasing sales with existing customers (increase Share of Wallet) or by getting newer clients within the existing market

• Market Development: The company tries to expand into new markets (geographies, countries, sectors etc.) using its existing offerings.

• Product/Services Development: The company tries to create new products and services targeted at its existing markets to achieve growth

• Diversification: An organization tries to grow its market share by introducing new offerings in new markets. It is the most risky strategy because both product and market development is required.

Product/Services Development

Market Development

Diversification

Ansoff Matrix – Example – An IT Services Company

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Products/Services

MarketExisting New

New

Market Penetration:

• Increase Awareness in existing market

• Design efficient Account Planning to improve sales effort

• Build successful Business Stories / Use Cases to promote offerings

Market Development:

• Identify key set of Partners to enter new markets

• Build teams for core consulting and implementation capabilities

• Build Domain expertise in new verticals

Product/Services Development:

• Identify Delivery Partners for JV or Acquisition

• Design Offerings with well defined methodology and clear business benefits

• Develop expertise in new offerings

Diversification:

• Identify Delivery/Technology Partners for JV or Acquisition

• Design an Organization Structure to integrate new businesses units

• Identify and Build core capabilities

Customized Matrices – eCommerce – Online Consumer Marketplace

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Low High

High

Customer Involvement

Medium

Medium

Books Clothing Jewelry

Movie tickets Mobile phones Consumer durables

Groceries Travel tickets

Minto Pyramid

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• Minto Pyramid principle uses the logical grouping of facts to arrive at meaningful insight• Minto Pyramid can be used both as an analysis as well as a presentation tool, across any type of data/facts• The principle is used to arrive at decisions based on various factors as well as able to provide recommendation.• Limitations: (i) availability of facts that are related yet exclusive (Mutually Exclusive Collectively Exhaustive MECE)

and; (ii) may not be able to give a “big picture” with limited data/facts

Finding Finding Finding Finding

Answer/recommendation

Data Data Data Data Data Data Data Data

Conclusion Conclusion

So what?

So what?

So what?

Finding

Data Data

Minto Pyramid – Example – A Global Financial Company (1/2)

• ABC Corp is considering exiting retail business in Japan, citing weak loan growth and interest rates remaining close to zero

• The Federal Reserve rejected ABC Corp’s capital plan, citing not meeting its requirements for “supervisory expectations”

• ABC Corp’s Mexican subsidiary lost US $400 million, due to bad loans made • ABC Corp for the past 18 months eliminated $2.8 billion in annual expenses by way of layoffs, assorted

reorganization and productivity steps• The Fed raised concerns about deficiencies including ABC Corp’s inability to develop scenarios for internal stress

testing and project revenue and losses under stressful scenario• ABC Corp has been facing restrictions from SEC from selling hedge funds and private equity funds to clients, due to

the “bad actor” rule.• ABC Corp plans to retrench 10,000 more employees by year end, due to excessive pressure from shareholders to

go lean and achieve efficiency• ABC Corp recently reduced its exposure in Russia and Ukraine citing instability in these countries due to recent

conflicts

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Minto Pyramid – Example – A Global Financial Company (2/2)

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ABC Corp has been facing restrictions from SEC from selling hedge funds and private equity funds to clients

The Federal Reserve rejected ABC Corp’s capital plan, citing not meeting requirements for “supervisory-expectations”

The Fed raised concerns about deficiencies including ABC Corp’s inability to develop scenarios for internal stress testing

ABC Corp is considering exiting retail business in Japan, citing weak loan growth and interest rates remaining close to zero

ABC Corp recently reduced its exposure in Russia and Ukraine citing instability in these countries due to recent conflicts

ABC Corp’s Mexican subsidiary lost US $400 million, due to bad loans made

ABC Corp for the past 18 months eliminated $2.8 billion in annual expenses by way of layoffs, and reorganization

ABC Corp plans to retrench 10,000 more employees by year end, due to excessive pressure to go lean and achieve efficiency

ABC Corp will continue to face challenges to raise capital and achieve organic growth in the US Market (due to restrictions from US authorities) in the near future

ABC Corp’s Non-US market growth would also face challenges with losses and business closures in few countries

ABC has to increase its expenses related to retrenchment, expecting to achieve efficiency in the longer run

To achieve growth in near future, ABC Corp should focus on winning shareholders and government’s trust by achieving operational efficiency and by re-organizing its foreign subsidiaries, so that it could get access to the much needed capital

THANK YOU!

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For further questions, reach out to:Jawahar Sheit (jawahar.sheit@gmail.com)