1Industry Analysis
Business Plan PreparationBusiness Plan PreparationBusiness Plan PreparationBusiness Plan Preparation
Frank MoyesFrank MoyesLeeds School of BusinessLeeds School of BusinessUniversity of ColoradoUniversity of ColoradoBoulder, ColoradoBoulder, Colorado
2Industry Analysis
Tonight's AgendaTonight's Agenda
TopicsTopics Industry AnalysisIndustry Analysis Competitive AdvantageCompetitive Advantage Value ChainValue Chain
Discuss MRP & Hecho en Casa Business PlansDiscuss MRP & Hecho en Casa Business Plans ReadRead
BP pp 11-13, 27BP pp 11-13, 27 Business Model AssignmentBusiness Model Assignment
In the Fire & Hand-inIn the Fire & Hand-in Opportunity/NeedOpportunity/Need Value PropositionValue Proposition
3Industry Analysis
Next WeekNext Week TopicsTopics
Features & BenefitsFeatures & Benefits MarginsMargins Elevator SpeechElevator Speech Investor PresentationsInvestor Presentations
Read BP pp 6-7Read BP pp 6-7 Practice Elevator SpeechPractice Elevator Speech In the Fire In the Fire Preliminary Market Analysis ResultsPreliminary Market Analysis Results
Preliminary Interview ResultsPreliminary Interview Results
Week Number 1 to 3 4 5 6 7 8 9 10 11 12 13 14 15Market & Industry Analysis
Market Research Market ResearchInterviews InterviewsModel Company Model CompanyCOMP's COMP'sOpportunity/Need Opport/Need Opp/Need (rev)Value Proposition Value PropositionWrite-up Write-up
Product/Service Product/ServiceFeatures & Benefits Features & Benefits
Marketing PlanCustomer Surveys Customer SurveysTarget Market Target MarketPositioning PositioningChannel ChannelProduct/Service Strategy Prod/Service StragegyPricing PricingE-commerce E-commerceRevenue Model Revenue ModelCommunications CommunicationsWrite-up Write-up
Operations PlanWalk an Order Walk an Order
Development PlanMilestones Milestones
Management Plan
Competitive Advantage Competitive Advantage
Financial PlanIncome Statement 5 yr Income Statement 5 yrBalance Sheet & Cash Flow 5 yr Bal Sheet & Cash Flow Monthly & Qrtly Statements Monthly & Qrtly StmtsAssumptions AssumptionsCustomer Acquisition Costs Cust Acq CostsRisks Risks
Funding PlanValuation ValuationOffering OfferingSource & Uses Source & Uses
Company Overview Company Over
Executive Summary Exec Summ
Publish & Present Publish & PresentElevator Speech Elevator SpeechInvestor Presentation Investor Pres Investor PresQ & A In the Fire SessionsRevise BP sections Revise BP sections
Funding Plan
Market & Industry Analysis
Opertations Plan
Financial Plan
Marketing Plan
Development Plan
Management Plan
5Industry Analysis
Business ModelBusiness Model
Present Oct 24 PowerPoint 10 minutes, 10 slidesPresent Oct 24 PowerPoint 10 minutes, 10 slides Hand-in 3 ring binderHand-in 3 ring binder
Market Analysis - draftMarket Analysis - draft Industry Analysis - draftIndustry Analysis - draft Product/Service Description - draftProduct/Service Description - draft Value Chain analysisValue Chain analysis Competitive matrixCompetitive matrix Financial COMP’sFinancial COMP’s Revenue ModelRevenue Model 20 interview Call Reports20 interview Call Reports
6Industry Analysis
Market & IndustryMarket & Industry
Market: “group of current and potential customers Market: “group of current and potential customers having the willingness and ability to buy having the willingness and ability to buy product/services to satisfy a need.”product/services to satisfy a need.”
Industry: “group of sellers that offer product/services Industry: “group of sellers that offer product/services that are similar and close substitutes for one another.”that are similar and close substitutes for one another.”
JW Mullins, New Business Road Test
7Industry Analysis
Market & Industry SectionsMarket & Industry Sections
MarketMarket Market size & growthMarket size & growth TrendsTrends Target MarketTarget Market Channels of distributionChannels of distribution
IndustryIndustry Industry StructureIndustry Structure Competitive EnvironmentCompetitive Environment CompetitionCompetition
Opportunity
8Industry Analysis
Industry StructureIndustry Structure
Organization – how & where are products/services Organization – how & where are products/services produced and delivered?produced and delivered?
Supply chain Supply chain
9Industry Analysis
Sources
SuppliersManfg
Distrib
Retailers
Consumer
Goods
Information
Funds
A T Kearney, Integrating the Supply Chain
Supply ChainSupply Chain
10Industry Analysis
Competitive EnvironmentCompetitive Environment
How do companies compete – quality, price, new How do companies compete – quality, price, new products, customer serviceproducts, customer service
Degree of rivalryDegree of rivalry Response to new entriesResponse to new entries
11Industry Analysis
Control Control
Setting prices – bargaining strength of customersSetting prices – bargaining strength of customers Lowering costs – technology, process design, Lowering costs – technology, process design,
resources, bargaining strength of competitorsresources, bargaining strength of competitors Channels of distribution – access, creating new channelChannels of distribution – access, creating new channel
12Industry Analysis
Barriers to EntryBarriers to Entry
Economies of scale: manufacturing, marketing, technologicalEconomies of scale: manufacturing, marketing, technological Customer loyalty: well established brands, long established Customer loyalty: well established brands, long established
relationshipsrelationships Agreements with customers, suppliers, strategic partnersAgreements with customers, suppliers, strategic partners Switching costsSwitching costs Capital requirements: high investmentCapital requirements: high investment
13Industry Analysis
Barriers to Entry (continued)Barriers to Entry (continued)
Access to distribution channels: exclusive distribution Access to distribution channels: exclusive distribution agreements, dominant position of competitorsagreements, dominant position of competitors
Intellectual property: patents, trade secrets, copyrights, Intellectual property: patents, trade secrets, copyrights, trademarks, know-howtrademarks, know-how
Government regulations: defense contracts, import Government regulations: defense contracts, import restrictionsrestrictions
Industry hostility to new entrants. Will use all means to Industry hostility to new entrants. Will use all means to drive out new competition: pricing, legal, spreading drive out new competition: pricing, legal, spreading rumorsrumors
14Industry Analysis
CompetitionCompetition
Describe key competitors Describe key competitors Direct, indirect, futureDirect, indirect, future InertiaInertia Prepare a competitive matrixPrepare a competitive matrix
Product/ServicesProduct/Services MarketingMarketing ManagementManagement FinancialFinancial
Image – website, brochures, literature, advertisementsImage – website, brochures, literature, advertisements
15Industry Analysis
OpportunityOpportunity
Last section Last section Make case attractive opportunity - validateMake case attractive opportunity - validateDraw conclusions based on your research, Draw conclusions based on your research,
interviews and customer surveysinterviews and customer surveys
16Industry Analysis
Sustainable Competitive AdvantagesSustainable Competitive Advantages
Resources and capabilitiesResources and capabilities InnovationInnovation Differentiation Differentiation TechnologyTechnology
17Industry Analysis
A Model of Competitive AdvantageA Model of Competitive Advantage
Resources
DistinctiveCompetencies
Capabilities
Value Creation
Cost Advantage or Differentiation Advantage
18Industry Analysis
Identify Your ResourcesIdentify Your Resources
Financial:Financial: access to capital (equity & debt), cash reserves, access to capital (equity & debt), cash reserves, government grants, etc.government grants, etc.
Physical assets:Physical assets: plant & equipment, raw materials, location, plant & equipment, raw materials, location, working capital, etc.working capital, etc.
Human:Human: social, employee knowledge, experience, accumulated social, employee knowledge, experience, accumulated wisdom, labor cost and skills, etc.wisdom, labor cost and skills, etc.
Intangible:Intangible: patents, trade secrets, know-how, copyrights, patents, trade secrets, know-how, copyrights, databases, etc.databases, etc.
Organizational:Organizational: culture, contacts, policies, Boards of Directors & culture, contacts, policies, Boards of Directors & Advisors, suppliers, service providers, etc.Advisors, suppliers, service providers, etc.
19Industry Analysis
Identify Your CapabilitiesIdentify Your Capabilities World class management (serial entrepreneur)World class management (serial entrepreneur) Network - well developed, high-quality, accessible contacts that Network - well developed, high-quality, accessible contacts that
take years to buildtake years to build ExpertiseExpertise
Sales and marketing Sales and marketing Science or technologyScience or technology Supply chain Supply chain Product/service design Product/service design
Sales & distribution organizationSales & distribution organization Total operational approach (e.g. Dell, Wal-Mart)Total operational approach (e.g. Dell, Wal-Mart)
20Industry Analysis
What Barriers What Barriers Can You Establish?Can You Establish?
Intellectual property: patents, trade secrets, copyrights, Intellectual property: patents, trade secrets, copyrights, trademarks, etctrademarks, etc
Switching costs to your target marketSwitching costs to your target market Customer loyaltyCustomer loyalty Agreements with customers, suppliers, strategic Agreements with customers, suppliers, strategic
partnerspartners Control of the distribution channelControl of the distribution channel
21Industry Analysis
Competitive Advantage ChallengesCompetitive Advantage Challenges
Intellectual propertyIntellectual property Agreements with customers Agreements with customers
or suppliersor suppliers Long term contractsLong term contracts Control of costs Control of costs Control of pricesControl of prices Control of channelControl of channel LocationLocation
First to marketFirst to market World class managementWorld class management ExpertiseExpertise Development lead timeDevelopment lead time BrandBrand QualityQuality ServiceService ExecutionExecution RelationshipsRelationships
22Industry Analysis
Sustainable Competitive AdvantageSustainable Competitive Advantage
Understand the marketUnderstand the market Understand the competitionUnderstand the competition SustainableSustainable
InnovationInnovation DifferentiationDifferentiation Resources & capabilitiesResources & capabilities
Really understand the market & competitionReally understand the market & competition
Why is this so hard?
23Industry Analysis
Competitive Advantages Difficult to Competitive Advantages Difficult to Achieve & SustainAchieve & Sustain
Most are easily copiedMost are easily copied Entrepreneur ignorant of or ignores competitionEntrepreneur ignorant of or ignores competition Entrepreneur is not realistic about own resources & Entrepreneur is not realistic about own resources &
capabilitiescapabilities Entrepreneur ignores futureEntrepreneur ignores future Entrepreneur must be intellectually honestEntrepreneur must be intellectually honest
24Industry Analysis
Market, competition, resources, and capabilities are continually changing.
Sustaining Competitive Advantage Sustaining Competitive Advantage Is a Dynamic ProcessIs a Dynamic Process
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