Competitor Analysis [1] · Scope Creep Mitigation 255 •Ensure all stakeholder requirements are...

Copyright © 2012-15 Vibazone Private Limited All Rights Reserved

Competitor Analysis [1]

• Before developing a business strategy, managers should take competitors’ strategies into account.

• In this highly fragmented commodities industry, the moves of the a competitor may be less important.

• However, in those concentrated industries, competitor analysis is a must as it becomes a vital part of the business’s strategic planning.

• The two most important primary activities in competitor analysis is: o Obtaining information about important competitors.

o Using those information to predict the behaviour of the competitors.


Competitor Analysis [2]

• The analysis of the competitor analysis should answer the following questions:

o Which are the competitors to compete?

o What are the competitors’ strategies and planned actions?

o How competitors might to a company’s actions?

o How to influence the competitor’s behaviour and make it to the company’s own advantage?


Competitor Analysis Framework

• Michael Porter’s competitor analysis framework is very useful where it is based on four key aspects: o Competitor’s objectives

o Competitor’s assumptions

o Competitor’s strategy

o Competitor’s capabilities

• Objectives and assumptions are referring to what drive the competitor, while strategy and capabilities refers to what are the competitor is doing or is capable of doing.

• Further, the competitor analysis should include existing key competitors as well as potential competitors in order to develop a strategic plan.


Competitor’s Current Strategy

• The two most important key factors about a competitor’s strategy is about what the competitor says and what they do.

• All these information can be found in: o Annual shareholder report, interviews, press releases and etc.

• However, all the stated information might be different from what the competitor is doing. Thus, it is important to investigate competitor’s cash flow direction. o Hiring activity, R&D projects, capital investments, promotional

campaigns, strategic partnership and etc.


Competitor’s Objective

• Knowing competitor’s objective can ease the prediction of the competitor’s reaction based on different competitive moves.

o E.g. A competitor that focuses on long term financial goal might not be willing to spend additional money to respond to the competitive attack.

• The objective of the competitors may be financial factors which includes market share, growth rate, technology leadership and etc.

• Further, the competitor’s organizational structure will provide some clues to which functions of the company are more important.

• Other indicators of the objectives includes risk tolerance, management incentives, backgrounds of the high level management and etc.


Competitor’s Assumptions

• The assumptions that a competitor made reflects the moves that they will consider.

o E.g. If the competitor had introduced a product in the past and the product failed, the executives may assumed that there is no market for the product.

• However, based on the situation, such assumptions might not be accurate and it might reflects opportunities.

• Thus, new entrants can may have the opportunity to introduce a similar product to the market and the existing company will not take the threat seriously as they had failed previously.

o E.g. Honda was able to enter US motorcycle market with small motorbike due to US manufacturer assumed that there was no market for small bikes based on their past experience.


Competitor’s Resources and Capabilities

• After knowing competitor’s assumptions, objectives and current strategy, it is very important to understand how the competitor might respond to a competitive attack. o However, all the decisions made are linked directly to the resources and

capabilities the competitor has and its ability to respond to the attack effectively.

• Competitor’s capabilities can be analyzed by using SWOT analysis where competitor’s strength reflects its capabilities.

• Financial analysis can be done as well to reveal competitor’s sustainable growth rate.

• Other factors such as cash reserves, investments, fixed assets and etc. must be taken into account as all these reflects the competitor’s ability to react in the competitive environment that is dynamic


Competitor Response Profile

• Summarizing all the information such as competitor’s objectives, assumptions, strategy and capabilities can be compiled into a response profile of possible decisions that might be made by the competitor.

• The profile will includes both potential offensive and defensive moves which can ease the business in their strategic planning to create competitive advantage.

• Further, specific moves and expected strengths can as well be predicted using the response profile.


Exercise

• My 3 major markets

• My 3 major competitors

• My 3 major advantage

• My 3 major disadvantage

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SCOPING COMMERCIALIZATION


What is Scoping?

• A process whereby an individual identifies all main issues such as specific research goals, deliverables, tasks, costs and deadlines, that have the potential to cause problems during the implementation stages.

• It is a continuous process; effective scoping will prevent too much diversion from the main goals set out prior to implementation (research creep).

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Copyright © 2012-15 Vibazone Private Limited All Rights Reserved 251

Research Scope

Justification

Scope Description

Acceptance Criteria

Deliverables Research

Exclusions

Constraints

Assumptions


Justification – what business does this product address and how does it address that need?

Scope Description – what are the characteristics of the product produced from this project?

Acceptance criteria – what must the product fulfill before being accepted?

Deliverables – what will be the outcome of the project?

Project Exclusions – what will not be delivered?

Constraints – what is the maximum feasible output from this project?

Assumptions – how will uncertain information be dealt with for the duration of the project?


What Can Go Wrong

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Scope Creep

• Scope creep a.k.a. focus creep/ feature creep/ function creep/ requirement creep, occurs when the scope of a project is not properly documented, defined, or controlled

• Inclusion and introduction of more requirements that weren’t part of the initial scope will cause a project to divert from its schedule and budget.

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Scope Creep Mitigation

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•Ensure all stakeholder requirements are documented properly. If there are clashing requirements, mitigate accordingly.

Document the Requirements

• If there are changes to be made to the original project scope, ensure that any and all changes are done in a systematic manner

Set Up Change Control Process

•The schedule will show all requirements and how they are to be achieved i.e. via tasks. Indispensable for determining project progress according to requirements.

Create a Clear Project Schedule

•Show the stakeholders the project scope and schedule and explain everything to them in detail. This ensures there is no unnecessary confusion, and that the stakeholders understand the limitations of the project.

Verify the Scope with Stakeholders

•Regular communication will prevent unapproved changes, proper documentation, and identification and mitigation of any problems that might arise during the implementation stage of the project.

Talk to the Project Team


Commercialization Questions

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When to launch – is the current market conducive? Are there any improvements to be made to the product? Will the product interfere with the company’s existing products?

How to launch – how much allocations have been made for marketing and promotions? Is it feasible to use several mediums for launching?

Where to launch – single/ multiple locations, single/ multiple regions? Does available resources allow for multi-area launching?

Whom to target – who is the main intended demographic of the product? Has a primary consumer group been identified? Is there leeway to allow product adoption by other non-target consumer groups?

Commercialization


Key Requirements for Commercialization

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Key requirements for commercialisation

• Create the right academic environment;

• Develop effective commercialization support structures;

• Develop and expand relationships with existing companies;

• Facilitate and increase the number of new spin-off companies resulting from university research activities;

• Strengthen the corporate base; and

• Increase the amount of finance available for commercialization of research and technological innovation.

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Key requirements for commercialisation

• Convergence

• Trust and Shared Perceptions

• University Reward Systems

• Researchers as Entrepreneurs

• Financial and Taxation Regime

• Intellectual Property

• Management of IP Arising from Grants

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Success Factors for Commercialization


Content

• Critical Commercialization Best Practices

• Critical Success Factors o Unique superior idea

o Top management support

o Well balanced team

o Effective commercialization strategy

o Market orientation

o Commercialization speed

o Knowledge management


Critical Commercialization Best Practices [1]

Existing Companies

• Properly structured company or business is crucial

• Top level management such as board of directors and employees are very well focused and must share a common vision, mission and strategic goal.

• An updated strategic business plan with 3-5 upcoming years have to be open to all employees for their better understanding. o The business plan has to cover new and existing products/ services.

• There must be a good corporate culture of caring, sharing and excellent communication in place.


Critical Commercialization Best Practices [2]

• All employees are encourage to provide innovative ideas and good ideas that move forwards will be given rewards. o Employees are encourage to work together and observe the

customers.

If all the 5 listed best practice are in place, the business is said to be meeting the definitions of commercialization and is ready to move forward to take up the challenge of commercializing new products.


Critical Success Factors

Critical Success Factors

Unique Superior Idea Top

Management Support

Well Balanced Team

Effective Commercialization

Strategy

Market Orientation

Commercialization Speed

Knowledge Management


(1) Unique Superior Idea

• Products that are differentiated will be more attractive to a particular target market.

• This is due to the product is able to offers unique benefits and superior value to the customer.

• As a result, the business is said to be posses a competitive advantage over its competitors.

• Thus, the business is able create a superior profits for itself.


(2) Top Management Support

• Developing the “right” corporate culture is very important for a leader as it emphasized that without management commitment, improvement efforts fail.

• This is to develop leadership that is open-minded, supportive and professional.

• Commercialization involves different people and departments with different perspectives about how things are to be done.

• Thus, conflict might occur and top management plays an important role in dissolving all the conflicts.

• Top management should generate enthusiasm, provides clear vision, assures sufficient allocation of resources and etc.


(3) Well Balanced Team

• It is critical to have a well balanced team to plan and implement the commercialization of a product.

• The team must consist of people that had experience to understand the needs of the commercial markets and how to serve them.

• Research shown that failures that happened were due to lack of a full analysis of commercial market needs and the development of an effective market penetration strategy.

• Thus, if the company does not have in-house team who have commercial experience, talents can be found by hiring consultants or strategic partners.


(4) Effective Commercialization Strategy

• One of the most effective strategy will be developing a clear understanding of customers’ buying behaviours.

• Conjoint analysis will be best in understanding customer behaviours as it enables companies to forecast price elasticity of demand and sales potential.

• It is important to consider the fact that most of the time, customers may not know their true preference. o E.g. Customers may think that they are brand loyal, but in reality, they are

more sensitive to price or a specific feature.

• Thus, by conducting conjoint analysis, companies will gain all the market information they need. o E.g. What pricing strategy should be use.


(5) Market Orientation

• A company’s orientation towards customers or competitors is likely to influence how they respond to changes in the highly competitive marketplace.

• If a company is market orientated, decisions made will be based on customers’ needs and wants, rather than what the company thinks that it is right for the customer.

• Thus, most of the successful businesses take a market oriented approach.

• In addition, great potential benefits can be achieved by the company if customers and suppliers are involved in the commercialization process as early as possible.


(6) Commercialization Speed

• The current high competitive market environment rewards businesses that are able to develop and commercialize products quickly and on-time.

• This is due to companies who rapidly develop new products enjoy substantial competitive advantage.

• Speedy, reliable new product development and commercialization will help companies to gain higher returns in the marketplace.

• Early product introduction can improves profitability by extending product’s sales life, charging premium price as well as achieving economies of scales.


(7) Knowledge Management

• Knowledge management is very important to a company as knowledge that has been created can be transferred from one to another within the company.

• Thus, maintaining good management will lead to a positive effect on commercialization process.

• Further, integrating internal and external knowledge (knowledge integration) would reduce market uncertainty and obtain comparatively high success opportunities.

• Companies with good knowledge management method will be successful in commercialization.


Other Success Factors

• Clusters

• Innovation Platforms

• New Technology-Based Enterprises

• Technology Transfer

• University Human Resource Policies and Practices

• Innovation Forums

• Researchers as Entrepreneurs

• Technology Incubators

• Conflict of Interest Considerations

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• Need long-term goal of research

• Must have short and long term business models and short-term cash generating activities to fund the long-term research.

• Short-term activities include testing, licensing out non-core aspects of technology, selling the rights to some lead companies.

• Avoiding large fixed costs

• Looking for funding

• Exploring overseas market

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• Knowledge about doing business in Malaysia

• The right technology that are valuable to Malaysia

• A tailored business model that is based on long-term partnership

• Flexible approached to cater to the varied needs of partners

• The right level of “connections”

• A solution to provide local technical support

• The right partner

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KEY DRIVERS FOR COMMERCIALIZATION


INTRODUCTION

“What makes commercialization work?”

• In developing new products the word commercialization gets thrown a lot but what actually are the key drivers/component of commercialization.

• To break it down in a simple manner there are two components to making it work. There is the supply and demand side of it. If one were to use and analogy it to answer the above question it would be the key and lock.

• The appropriate key is needed to unlock the market potential in order to obtain success.


INTRODUCTION [2]

• Basing one the key and lock analogy it becomes apparent that the

– Key is the supply side

• Makes up the majority component of activity taking place.

• More weightage is attributed to the supply side key drivers due to the number of activity taking place

• All activity that takes place until the stage that which the good reaches the customer

– Lock is the demand side

• Makes up the minority component of activity taking place.

• This stage represent the activity taken at the customer end of consuming the product.


KEY DRIVERS

• Key drivers that play a role in commercialization are

– Product

• Type of product

• Differentiation factor

– Supply chain

• SCM

• Production

– Regulations

• Gov. regulation

– Business environment

• Market

• Product Competition

– Consumer

• Need vs. Want


KEY DRIVERS – PRODUCT

Type of products

• Identifying what class of product that being dealt with is important in determining the target market of the product.

– There are various types of product such as services which are intangible and physical products which are tangible.

– One way to profile product is by using the product commercialising triad

– The triad is a useful tool that can be used to identify the products commercial performance.

NEED

WANT PRICE


KEY DRIVERS – PRODUCT [2]

Differentiation factor

• Product differentiation is what makes the product different when compared to all other products in the similar class segment. It is done in order to make the product more attractive and appealing to consumers.

• There are 3 types of product differentiation:

SIMPLE

• based on a variety of characteristics

HORIZONTAL

• based on a single characteristic but consumers are not clear on quality

VERTICAL

• based on a single characteristic and consumers are clear on its quality


KEY DRIVERS – SUPPLY CHAIN

Supply chain management (SCM)

• The SCM system is a management flow of goods that start from the point of origin up to the point of consumption.

• How this affect the commercialization is through the level of infrastructure needed in order to get the production process up and running.

• Questions such as Is there sufficient infrastructure in place to ensure the success of the product?

• The SCM normally draws from areas of operations management, logistics, procurement, and information technology, and strives for an integrated approach


KEY DRIVERS – SUPPLY CHAIN [2]

Production

• The production is a another key element in affecting the commercialization drive.

• Critical success factors such as skill set, raw materials, labour and cost of production are contributing factors that is needed for the purpose of production.

• However today these factors have become less focused upon due to the ease of outsourcing production floor to countries such as China, Philippine and Indonesia.

• The proliferation of internet has provided information at the tips of our fingertips making the process of obtaining information much more easier.

• It can be said that the more easier it is to create production facility will undeniably make it easier for commercialization to happen.


KEY DRIVERS – REGULATION

Government Regulation

• The scale of Gov. regulation is another factor that impacts commercialization.

• In many developed countries Gov. regulations are often tedious and time consuming and consumes a lot of resources.

• There is a fine balance needed in regards to the amount of regulation needed in order to stimulate the commercialisation activity.

• Too much will hinder the growth and too little will result in a lack of oversight possibly resulting in violation or basic standards.

• It is also possible to create regulations that are geared towards enhancing the commercialization activity.


KEY DRIVERS – BUSINESS ENVIRONMENT

MARKET

• The market conditions is capable in influencing commercialization activities.

• Its evident during economic downturn commercialization activities reduces as investors are reluctant to spend resources investing when the risk factor is much higher of possible product failure.

• The situation is vice versa when the market conditions are performing well the ease of capital expenditure occurring is higher as the markets condition is favourable with everyone doing the exact opposite of hording resources.

• This however is not a certainty but a mere general outlook that give the feel product performance.


KEY DRIVERS – BUSINESS ENVIRONMENT [2]

Product Competition

• The type of product and the segment it will operate in need to be analysed.

• A saturated market will result in low profit margins which might make the commercialization effort not worth the resource taken.

• However an unsaturated market is ideal as it provides room for the product to grow and expand .

• Reasons on why the market segment is unsaturated is also important as it may be an indicator of existing market issues.

• In short if a segment is highly saturated and competitive may result in commercialization activity being not undertaken and vice versa.


KEY DRIVERS – CONSUMER

Need vs. Want

• The most important factor that need to be consider is that the end stage consumer. Does the product meet their needs or does the product possess unique traits that will be desired by the consumers.

• At the end of the day if there isn't any need or want from the consumers then regardless of how well the product is it will fail to be successful.


Key Drivers

• Endorsements by Universities and Governments that commercialisation is a core activity alongside teaching and research

• Adequate environment in place covering – Structures and policies

– Quality research output

– Availability of risk capital

– Receptive businesses

– Attitudes of academics, etc.

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IDENTIFYING COMMERCIALIZATION ISSUES


COMMERCIALIZATION ISSUES

Lack of time & difficulties regarding financing Economic risks Lack of personal interest in commercialization Friction with the local university administration Difficulties related to ownership rights Lack of services related to the commercialization of research Lack of support from the work environment


Lack of time & difficulties regarding financing

• A commercialization activity is a long process over time.

• It requires initial investment before making profit.

• Where initial investments are normally for:- – Intellectual property filing

– Company registration

– Hiring qualified entrepreneur

– Marketing of products


Economic risks

• Commercial endeavours have to be financed more based on proprietary resources

• This could translate into significant economic risks to individual.

• Considering that high‐technology start‐ups often require significant long‐term investments before reaching self sufficiency.


Lack of personal interest in commercialization

• commercialization still occupies only a marginal space in – the cultural, organizational, individual and normative

dimensions of academic work.

Until transfer of research results to commercial is external to the academic mandate

no one can expect the research community to develop a keen interest in it on a broader scale.


Friction with the local university administration

• This can be a consequence of many different issues:-

– function of simple bureaucratic encumbrance manifesting itself as prolonged decision times and etc.

– lack of university resources dedicated to university technology transfer

– lack of an explicit strategy guiding issues of technology transfer at a given university


Difficulties related to ownership rights

• Researchers’ clearly feeble familiarity

• The principles that govern the allocation of ownership rights, which is a prerequisite to any commercial endeavours.

• Basically, the juxtaposition between science and commercialization in academia still seems to be fairly pronounced.


Lack of services related to the commercialization of research

• Services that need to be produced in close vicinity of the academia‐industry interface or even in direct interaction with companies fail

• Service units systematically suffer from a lack of both dedicated resources and the skills required for industry interaction


Lack of support from the work environment

• This issue is not very alarming but they are nevertheless non‐negligible.

• Researchers who have explicitly decided not to commercialize a particular invention assess the lack of support from the environment to have influenced the decision to “some extent”.


Issues

• Not enough knowledge in utilizing the research. • No clear Goals and Strategy • Unclear Policies • Funding mechanism • Lack of human resources • Industry's lack of interest in the results of public research • Researchers’ lack of interest in business • Researchers’ denial of support for TLOs • Financial problems • Lack of dynamism in the surrounding society • Incubation challenge • Organizational boundaries and location • Overvalue technology

– Development takes many folds cost of research – Marketing requires many folds of cost of development – Market changes – Price or cost of the research does not create value – Value is only what others are willing to pay

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Misconceptions

• Universities represent a vast untapped source of intellectual property

• Academic researchers despise the very concept of business and wealth creation

• We are going to solve all our financially imposed problems and limitations

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CONCLUSION

• Commercialization university researchers are facing:- – long time to introduce to the market

– little attention has focused to the commercialization.

• The changes in university and not static environment provide learning – For the researcher and practitioner to integrate

their expertise for the sustainable of the university in the future.


Elevator Pitch

• 30 to 45 second pitch essence of your business plan

• Make it short and simple

• Concentrate

– What is the burning problem?

– How big is the opportunity?

– What is so unique?

– So what are the benefits?

– What is the mission statement?

– Call to action


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Competitor Analysis [1] · Scope Creep Mitigation 255 •Ensure all stakeholder requirements are...

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