Complete Business Frameworks Reference Guide
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Transcript of Complete Business Frameworks Reference Guide
Business Framework
Complete Consulting Frameworks ToolkitThis 300+ slide presentation contains 50 commonly used consulting frameworks and methodologies, spanning Strategy to Operations to Finance.
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• ABC Analysis
• Adoption Cycle
• 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
• 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
2
About This Preview Document
This document is just a preview. The full toolkit has 340 slides and covers 50 unique
business frameworks. You can preview and download the full document here:
https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644
This document will showcase sample slides from a handful of the 50 frameworks.
This document is just a preview. The full toolkit has 340 slides and covers 50 unique
business frameworks. You can preview and download the full document here:
https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644
This document will showcase sample slides from a handful of the 50 frameworks.
3
Contents
1. ABC Analysis
6
2. Adoption Cycle
11
3. Ansoff Market Strategies
16
4. Balanced Scorecard
21
5. BCG Growth-Share Matrix
29
6. Benchmarking
35
7. Blue Ocean Strategy
42
8. Break-even Analysis
48
9. Business Unit Profitability
53
10. Economies of Scale
58
11. Environmental Analysis
64
12. Experience Curve
71
13. Cluster Analysis
78
14. Company & Competitor Analysis
82
15. Core Competence Analysis
92
FRAMEWORK SLIDE
4
Contents
16. Cost Structure Analysis
97
17. Customer Experience
102
18. Customer Satisfaction Analysis
108
19. Customer Value Proposition
113
20. Fiaccabrino Selection Process
116
21. Financial Ratios Analysis
123
22. Gap Analysis
145
23. Industry Attractiveness & Business Strength Assessment
149
24. Key Purchase Criteria
155
25. Key Success Factors (KSF)
160
26. Market Sizing & Share
168
27. McKinsey 7-S
182
28. Net Present Value
190
29. PEST Analysis
199
30. Porter Competition Strategies
202
FRAMEWORK SLIDE
5
Contents
31. Porter’s Five Forces
206
32. Portfolio Strategies
231
33. Price Elasticity
238
34. Product Life Cycle
244
35. Product Substitution
251
36. Relative Cost Positioning
254
37. Rogers' Five Factors
262
38. Scenario Techniques
268
39. Scoring Models
274
40. Segment Attractiveness
280
41. Segmentation & Targeting
285
42. Six Thinking Hats
293
43. Stakeholder Analysis
398
44. Strengths & Weaknesses Analysis
303
45. Structure-Conduct-Performance (SCP)
310
FRAMEWORK SLIDE
6
Contents
46. SWOT Analysis
313
47. SWOT Strategies
318
48. Treacy / Wiersema Market Positioning
322
49. Value Chain Analysis
330
50. Venkat Matrix
336
FRAMEWORK SLIDE
7
4. Balanced Scorecard
8
Balanced scorecard
Derive strategic objectives within the respective perspectives from the strategy
Determine perspectives
Set up cause/ effect relationships
Determine target values
Determine activities and state respon-sibilities
Ensure consistent commitment and incorporate it in daily work
1 2 3 5 6 7
Select measures
4
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Balanced scorecard
Activi
ty
In which processes do we need to excel?
Internal Processes
Targe
t
Strate
gic ta
rget
KPI
Activi
ty
Targe
t
What do we want to achieve in finance?
Finance
Strate
gic ta
rget
KPI
Targe
t
Activi
ty
How can we remain flexible and able to improve?
Learning & Development
Strate
gic ta
rget
KPI
How can we satisfy our customers’ needs?
Customers
Targe
t
Activi
ty
Strat.
targ
et
KPI
Strategy and Vision
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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?
…
…
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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?
• …
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KPI
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Target
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Balanced scorecard
Strategic Objective KPIs Frequency of Evaluation
Responsibility for Data Maintenance
Recipient of Reports
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Total 100% … %
Perspective Strategic Objective KPI Weighting Frequency of Survey
Comp. Year 2004
Pres. Year2005Ongoing
Pres. Year2005 Ex-trapolated
2005 Target
2006 Target
Extrapol. in % of Target
Ongoing in % of Target
Finance … … ... … … … … … … …% …%
Learning and development … … ... … … … … … … …% …%
Internal processes … … ... … … … … … … …% …%
Customers … … ... … … … … … … …% …%
Balanced scorecard
y yearlyhytwice a yearqquarterlymmonthly
Targetachievement
…%
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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?
…
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About This Preview Document
This document is just a preview. The full toolkit has 340 slides and covers 50 unique
business frameworks. You can preview and download the full document here:
https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644
This document will showcase sample slides from a handful of the 50 frameworks.
This document is just a preview. The full toolkit has 340 slides and covers 50 unique
business frameworks. You can preview and download the full document here:
https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644
This document will showcase sample slides from a handful of the 50 frameworks.
16
7. Blue Ocean Strategy
17
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
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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
Val
ue
• 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
ValueInnovation
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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
IndustryIndustry conditions are given – compete in existing market space
Industry conditions can be shaped – create uncontested market space
StrategyCompanies must build competitive advantages to beat competition
Make competition irrelevant
MarketExploit existing demand Create and capture new demand
ResourcesMake the value-cost trade-off Break the value-cost trade-off
OrganizationAlign 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
OfferingsMaximizing the offering’s value within industry boundaries
Offering buyers the total solution that transcends the industry
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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
Val
ue
+
-
Reduce Raise Create
Traditionals
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Value Curve – template
Source: Blue Ocean Strategy, Kim and Mauborgne
Insert bumper – takeaway statement.
Eliminate Reduce Raise Create
Company
Val
ue
+
_
Competition
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20. Fiaccabrino Selection Process
23
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
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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 PLANNINGABILITY TO RELATE TO
CONCEPTSCOMPETITIVENESS
AND DRIVE
HONESTY AND INTEGRITYVERBALIZATION AND
COMMUNICATIONVALUES SYSTEM ENERGY LEVEL
FLEXIBILITY OF THOUGHT PROCESS
SUCCESS FACTORS LEADERSHIP TEAM ORIENTATION
EMPATHY WORK ETHIC LOYALTY [EXPRESSED] BEHAVIORAL QUADRANT [Q4]
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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]
DOMINANT
HOSTILE
[Q1]
SUBMISSIVE
HOSTILE
[Q2]
SUBMISSIVE
HOSTILE
[Q2]
DOMINANT
WARM
[Q4]
DOMINANT
WARM
[Q4]
SUBMISSIVE
WARM
[Q3]
SUBMISSIVE
WARM
[Q3]
BEHAVIORAL QUADRANT
Dominant
Submissive
Hostile Warm
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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 1098.510-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."
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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.
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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 standards8.5+ “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
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About This Preview Document
This document is just a preview. The full toolkit has 340 slides and covers 50 unique
business frameworks. You can preview and download the full document here:
https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644
This document will showcase sample slides from a handful of the 50 frameworks.
This document is just a preview. The full toolkit has 340 slides and covers 50 unique
business frameworks. You can preview and download the full document here:
https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644
This document will showcase sample slides from a handful of the 50 frameworks.
30
27. McKinsey 7-S
31
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
SharedValues
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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
SharedValues
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Shared Values is centrally located, because all others elements stem and evolve from it
Structure
Systems
Style
Staff
Skills
Strategy
SharedValues
• 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
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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
SharedValues
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
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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
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McKinsey 7-S – template
Structure
Systems
Style
Staff
Skills
Strategy
SharedValues
Hard S
Soft S
Insert kicker.
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McKinsey 7-S – current state template
Shared Values
Strategy Structure Systems Style Staff Skills
Shared Values
Strategy
Structure
Systems
Style
Staff
Skills
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32. Portfolio Strategies
39
Portfolio strategies
Strategic planning
Derivation ofNorm Strategies
Analyze portfolio
Determine target system of company
Evaluate as-is portfolio
Develop target portfolio
Derive measures and control progress
1
2
3
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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
Ma
rke
t gro
wth
– +
+
–
Market share/ market growth portfolio norm strategies (BCG)
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Portfolio strategies
Strategic planning – example
Question marks Stars
Poor dogs Cash cows
Relative market share
Ma
rke
t gro
wth
– +
+
–
Dis-investment
Dis-investment
Dis-investment
= as-is position of business unit
= target position of business unit
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Portfolio strategies
Strategic planning – template
Question marks Stars
Poor dogs Cash cows
Relative market share
Ma
rke
t gro
wth
– +
+
–
= as-is position of business unit
= target position of business unit
= failure path
= success path
= market dynamics
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Portfolio strategies
Strategic planning
Selection Selective growth/ investment
Growth and investment
Absorption/ disinvestment Selection Selective growth/
investment
Disinvestment Absorption/ disinvestment Selection
low middle high
low
mid
dle
hig
h
Competitive strength
Ind
ust
ry a
ttra
ctiv
enes
s
• Attractive markets with profit potential
• Gone competitors
• Attractive industry = high growth rates
• High capital need
• High competi-tiveness
• 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
low
mid
dle
hig
h
Competitive strength
Ind
ust
ry a
ttra
ctiv
enes
s
Implications Norm strategies
Market attractiveness/ competitive strengths portfolio norm strategies (McKinsey)
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Portfolio strategies
Strategic planning – template
… … …
… … …
… … …
low middle high
low
mid
dle
hig
h
Competitive strength
Ind
us
try
att
rac
tiv
en
es
s
Market attractiveness/ competitive strengths portfolionorm strategies (McKinsey)
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About This Preview Document
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business frameworks. You can preview and download the full document here:
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This document will showcase sample slides from a handful of the 50 frameworks.
This document is just a preview. The full toolkit has 340 slides and covers 50 unique
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This document will showcase sample slides from a handful of the 50 frameworks.
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34. Product Life Cycle
47
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
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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
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Product life cycle – illustrative output
Household Durables in Early 1970s
Time
Sa
tura
tio
n/S
ale
s
Introduction
Introduction Growth Maturity SaturationDecline/
Termination
Compactor
Dishwasher
Colour TV
Room A/C
Automatic WashersFreezers
Refrigerators
Ranges & Ovens
B&W TV
Wringer
Ad
op
tion
Innovators2.5%
Early Majority
34%
Late Majority
34%
Laggards16%
Early Adopters13.5%
Source:Mac Group Core Practice Manual.
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Product life cycle – potential insightTypical 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.
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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)
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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
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You can download a Strategy Development Discussion deck for free from Flevy.com
PARTIAL PREVIEW
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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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About This Preview Document
This document is just a preview. The full toolkit has 340 slides and covers 50 unique
business frameworks. You can preview and download the full document here:
https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644
This document will showcase sample slides from a handful of the 50 frameworks.
This document is just a preview. The full toolkit has 340 slides and covers 50 unique
business frameworks. You can preview and download the full document here:
https://flevy.com/browse/business-document/complete-business-frameworks-reference-guide-644
This document will showcase sample slides from a handful of the 50 frameworks.
55
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