Title: Standard 2000
1Università di Udine
CORSO DI STRATEGIA DIMPRESA Prof. Cristiana
Compagno
Corso Integrativo Modelli e Tecniche di Business
Plan Alessandro Diana
Udine, 8 Aprile 2005
- Sessione 2 Business Plan - parte 1 e 2
2Agenda
Agenda
- Business Plan parte 1
- Vision, mission and business model
- Offering and Value Proposition to Customers
- Business Plan parte 2
- Market Analysis
- Competitor Analysis
3Agenda
Agenda
- Business Plan parte 1
- Vision, mission and business model
- Offering and Value Proposition to Customers
- Business Plan parte 2
- Market Analysis
- Competitor Analysis
4Defining a solid vision and mission statement for
the new venture forces a team to completely and
cohesively understand the purpose and direction
Vision, Mission, Biz Model
- Vision -
- Mission -
- The client thought when he thinks to us
- States purpose and scope
- Answers Why we are in the market?
- A shared idea of where you want to land
- The organization dream at which every employes
should try to tend
BeActive Mission to create a web destination for
people with the life intention to Be Active
Ford vision Put a car in every garage
- Business Model -
The organizations core logic to create value. It
describes, in short, the operative model, the
organizational form, the channel model, the
revenue model, and the value proposition to
clients
5A vision can be articulated in many different ways
Vision, Mission, Biz Model
- Examples of vision statements -
6Una business idea può essere definita
promettente se possiede, almeno in parte, una
serie di elementi distintivi
Vision, Mission, Biz Model
Gli elementi chiave di una promising business
idea
There is nothing in the world as powerful as an
idea whose time has come Victor Hugo
7Una valida business idea deve innanzitutto
possedere un intrinseco valore per il cliente ed
avere un adeguato mercato di riferimento
Vision, Mission, Biz Model
1. Clear Customer Value
2. Market of adequate size
- Focus sul cliente, non sul prodotto (no techie
stuff!) - Definire la Unique Selling Proposition (USP)
- Qual è il valore per il cliente?
- Quali sono gli elementi distintivi?
- Effettuare un market assessment Quick and Dirty
- Individuare i target clients
- Effettuare un competitor assessment preliminare
8Il grado di innovazione delle business idea può
essere rilevato con riferimento ad alcune
dimensioni di analisi
Vision, Mission, Biz Model
3. Degree of innovation
Frame Prodotto / Mercato
Frame Prodotto / Business System
New
New
Enter New Markets (Research in Motion)
Develop New Business System (Dell)
Diversify / Innovate (Siemens)
New Industry (Netscape)
Business System
Markets
Existing Industry
Develop New Products (Intel)
Existing Industry
Develop New Products (Microsoft)
Old
Old
Old
New
Old
New
Products
Products
9La business idea deve consistere in concetti
realistici, realizzabili con costi e tempi
accettabili. Lutilizzo di alcune key questions è
un valido acid test
Vision, Mission, Biz Model
4. Feasibility and profitability key Questions
Who will buy your product? Why should
customers buy the product? What need does it
fulfill? How will the product be distributed to
the customer? What, exactly, is innovative
about your business concept? How is the
business concept unique? Is it protected by
patent? How is the product better than
comparable alternatives? What competitive
advantages will the new company have, and why
can't a competitor simply copy them? Can money
be made with the product? What costs will be
incurred, what price will be asked?
10Agenda
Agenda
- Business Plan parte 1
- Vision, mission and business model
- Offering and Value Proposition to Customers
- Business Plan parte 2
- Market Analysis
- Competitor Analysis
11Product description must give the first answer to
the basic issue tree created for the start up
Offering and value proposition
- Startup Basic Issue Tree -
Will this be valuable for customers?
Is this industry attractive?
Is this an attractive opportunity?
Is the competitive situation favorable?
Will Company X create shareholder value by doing Y
Processes
Organization
Can Company X have the right capabilities?
Human Performance
Technology
12The set of offering can be built considering the
basic Intentions of the targeted communities
Offering and value proposition
How Intention Value Networks Work
13It is very effective, in this phase, to visualize
a prototype or a first tangible concept of the
proposed products/services
Offering and value proposition
Prototype (esempio)
- A successful web portal enabling community
members to improve work-life, enjoy personal life
and enrich their business - A value network of internet and physical products
and services for European Trucking and
Transportation - A virtual place where mobile and resident truck
people can easily but effectively access and
navigate such network
14Also, it might be useful to refer to some key
questions to acid test the completeness of the
section
Offering and value proposition
Key Questions
- Which end consumer will you address?
- What are the customer's needs?
- What customer value does your product/service
provide? - What is the nature of your innovation? How far
along is the technical development? - What partnerships are necessary to achieve full
customer value? - What are the prerequisites for development and
manufacturing? - What stage of development has your product or
service reached? - Do you need patents or licenses?
15Agenda
Agenda
- Business Plan parte 1
- Vision, mission and business model
- Offering and Value Proposition to Customers
- Business Plan parte 2
- Market Analysis
- Competitor Analysis
16Agenda
Agenda
- Business Plan parte 1
- Vision, mission and business model
- Offering and Value Proposition to Customers
- Business Plan parte 2
- Market Analysis
- Competitor Analysis
17In this section the focus will be posed on
industry analysys, as the second step in
answering our Issue Tree first branch
Market Analysis
- Startup Basic Issue Tree -
Will this be valuable for customers?
Is this industry attractive?
Is this an attractive opportunity?
Is the competitive situation favorable?
Will Company X create shareholder value by doing Y
Processes
Organization
Can Company X have the right capabilities?
Human Performance
Technology
18Industry refers to producer groups or the supply
side and Market to customer groups or the
demand side, but they can be defined in a
number of ways
Market Analysis
- Industry -
- Market -
- Dictionary A distinct group of productive or
profit-making enterprises - Industries are whatever have industry
associations - Porters industry analysis uses the term in a
more specific sense
- Dictionary a place or group providing...(for) a
demand - Typically markets focus on customers or
customer segments for a particular product (e.g.,
the small car market) - Markets are often a proxy for customer needs
19Several basic frameworks are widely used to
assess industry dynamics
Market Analysis
- Industry Assessment Frameworks -
1. Trend and Margin Analysis 2. Porter Forces
Model 3. Market Share Structure Analysis 4.
Industry Life Cycle Analysis
- Provides quick insights
- Assumes industry structure stable
- Robust and customizable
- Static view of industry
- Gives insight on competition overall
- General high-level trends
- Applies differently to all industries difficult
to apply in rapidly evolving industries
Identifies industry changes by tracking
performance metrics to determine meaningful
trends Identifies forces that determine degree
of competition and level of profit potential
within an industry Identifies shifts in market
share relative overall growth of
market Illustrates industry growth over time to
determine industrys current position in life
cycle
20(contd)
Market Analysis
- Industry Assessment Frameworks (follows) -
5. Supply Curve 6. Value Migration 7. 5-Cs
Model 8. Industry Structure Matrix 9. Organ.
Structure Ind. Life Cycle Linkage10. Industry
Profitability Audit
Maps market supply to demand in order to analyze
industry capacity Focuses on value creation
intrinsic to companys business system and how it
must migrate to customers Defines 5 ways to
create profit competing for surplus,
concentrating surplus from channels, capturing
consumer surplus, creating new demand,
cooperating to capture surplus Characterizes
style of competition within an industry based on
importance of scale and number of
competitors Combines organization structure
types and industry life cycle to drive out
performance and success implications Identifies
and catalogs main drivers of profitability in a
company
21Frame 1. Trend Analysis of key financial and
market data can show industry development and
provide a benchmark for comparing performance
across key players
Market Analysis
- Trend Analysis Examples -
Sales Growth
Return on Equity
Industry Average
Sales
ROE
Industry A
Related Industry B
Time
Market Concentration
Market Consolidation
(Market Share of top x Players)
of Industry Competitors
198X
199X
22Many types of trend analysis can be performed,
depending on the key question(s) at hand
Market Analysis
- Other Important Trend Analyses -
- Volume Trends
- Growth Rate Trends
- Gross Margin Trends
- Profit Margin Trends
- Channel Trends
- Shareholder Return Trends
- Pricing Trends
- Industry-Specific Information
23Frame 2. Porter Forces ModelAccording to Porter,
five forces determine industry attractiveness
Market Analysis
Threat of New Entrants
Intensity of Competition
Buyer Power
Supplier Power
Threat of Substitutes
Source Michael E. Porter, How Competitive
Forces Shape Strategy, Harvard Business Review,
Mar-Apr 1979
24Each of the five forces is only a headline for
the fundamental drivers of attractiveness
Market Analysis
Threat of New Entrants
- Economies of scale
- Proprietary differences (e.g., patents, exclusive
products) - Brand identity
- Switching costs
- Capital requirements
- Access to distribution
- Government policy
- Expected retaliation
Intensity of Competition
Supplier Power
Buyer Power
- Differentiation of inputs
- Switching costs
- Concentration
- Importance of volume to supplier
- Cost relative to total purchases in the industry
- Impact of inputs on cost or differentiation
- Threat of forward integration
- Industry growth
- Fixed costs
- Intermittent overcapacity
- Exit barriers
- Corporate stakes
- Degree of commoditization
- Switching costs
- Concentration
- Buyer v. industry concentration
- Buyer volume
- Buyer switching costs
- Buyer information
- Ability to backward integrate
- Availability of substitute products
Threat of Substitutes
- Relative price performance of substitutes
- Switching costs
- Buyer propensity to switch
Source Michael E. Porter
25Although old and much abused, the Porter model
can still be very useful if used properly
Market Analysis
- How To Use the Porter Model -
- Do not use the Porter model explicitly in a
business plan - Use it as a checklist of items to consider as
part of an industry analysis - Use it to identify significant industry forces
that require deeper analysis - Use it with reference to a correct Business
definition, that is fundamental since it defines - the boundaries within which you need to look to
evaluate all potential opportunities and threats - the competitors against whom you need to evaluate
your strengths and weaknesses
26Frame 4. The Industry Life Cycle framework
provides insight to industry success criteria and
potential strategies during each stage of
industry maturity
Market Analysis
Industry Life Cycle Characteristics
Growth
Embryonic
Mature
Aging
- Automotive
- Hold market share
- Operational efficiencies
- Promotions/discounts
- Customer service
Industry Sales
- Defense
- Move to niche market
- Partner/acquire to gain share
- Divest/consolidate operations
- Exit market
Limitations
- Biotechnology
- (Amgen)
- Access to raw materials
- Develop demand
- RD investment
- Static view
- Full benefits accrue only to early movers
- Simplistic view of industry and firm portfolio
- Computer SW
- New product development
- Skilled labor
- Capture market share
- Develop organizational infrastructure
Time
27A segmentation process will be necessary in order
to better reach each target customer
Market Analysis
Segmentation criteria
- Possible customer segmentation criteria for the
consumer goods markets - Location country, urban/rural (population
density) - Demographics age, sex, income, profession,
company size - Lifestyle techies, counterculture, active
seniors - Behavior frequency of product use, product
application - Buying habits brand preferences, price
consciousness - Possible customer segmentation criteria for
industrial goods markets - Demographics company size, industry, location
- Operations technology employed (e.g., digital,
analog) - Buying habits centralized or decentralized
purchasing, purchasing criteria, supplier
agreements - Situational factors urgency of need, order size,
etc.
28Also, it might be useful to refer to some key
questions to acid test the completeness of the
section
Market Analysis
Key Questions
- How is the industry developing?
- Which factors are decisive for success in your
industry? - What role do innovation and technological
advances play? - What market volume do you estimate for your
segments over the next 5 years? - What will influence growth in the market
segments? - What is your estimate of current and future
profitability of each market segment? - Which segments are you targeting?
- How will you segment the market?
- Who are your target customer groups?
- What customer examples can you give?
- How much do you depend on large customers?
29Agenda
Agenda
- Business Plan parte 1
- Vision, mission and business model
- Offering and Value Proposition to Customers
- Business Plan parte 2
- Market Analysis
- Competitor Analysis
30Finally, the analysis is shift towards
competitors, in order to understand and identify
favorable spaces for our start-up
Competitor Analysis
- Startup Basic Issue Tree -
Will this be valuable for customers?
Is this industry attractive?
Is this an attractive opportunity?
Is the competitive situation favorable?
Will Company X create shareholder value by doing Y
Processes
Organization
Can Company X have the right capabilities?
Human Performance
Technology
31From a competitive strategy viewpoint, a
competitor is someone who poses some threat to
you or in whose business there is some
opportunity for you
Competitor Analysis
- What is a Competitor -
- Dictionary a rival in business or commerce
- Any player that competes for your customers for
the same product - BA Virgin Atlantic
- Any player or substitute that directly competes
for the same value stream that you satisfy
(substitutes) - British Telecom vs. Post Office vs. BA
- Unilever (Food Division) vs. McDonalds
- Any player that has the same production
capability or technology as you even if they are
not in your market today (potential entrants) - ATT vs. France Télécom
Defining who is your competitor is not always
that easy
32A solid competitive analysis will typically
consist of three components.
Competitor Analysis
Approach to Competitor Analysis
Analyze Competitor Performance
DefineRelevant Competitor Set
Position All Relevant Competitors
Define the initial competitive set and screening
criteria to focus analysis on most relevant
competitors
Summarize competitor performance information in a
common format to aide in comparison. Information
includes strategic intent, competitive strength
and weakness, product offering, etc.
Comparison of competitors along common evaluation
criteria (e.g., capabilities, important customer
attributes) to identify potential threats and
opportunities
33Agenda
Agenda
- Business Plan parte 1
- Vision, mission and business model
- Offering and Value Proposition to Customers
- Business Plan parte 2
- Market Analysis
- Competitor Analysis
- Competitor Set definition
- Competitor Performance Analysis
- Competitor Positioning
34Defining the set of relevant competitors is
perhaps the most important step in competitive
analysis. Performing market value and volume
share analysis is an obvious starting point to
identify the key players.
Competitor Analysis
Competitive Set Definition
35The Porter Forces Model can help identify current
competitors, possible substitute products, and
potential new entrants.
Competitor Analysis
Competitive Set Definition
Porter Forces Model
Initial Competitive Set
Substitutes
Intensity of Competition
- Product that can serve the same underlying need
- Difficult to identify
- Competitors offer products in the same product
class - Competition is high if
- Numerous, balanced competitors
- Mature mkt. growth
- High exit barriers
Power of Buyers
- Buyers are the purchasers of industry product
class - Power is high if there is/are
- A relatively small number of informed buyers or
buyer groups purchasing high volume - Little or no perceived product differentiation
- Low switching costs
New Entrants
- Can quickly come into market due to similar
products, capital, etc. - Identification depends on market
Defining the Competitive Set Limitations
- Often difficult to identify full breadth of
competitors - Ignores new business design (e.g., reinvention of
traditional industry)
36It is important to consider all potential
competitors up front, and then screen the list to
focus on those that represent the most
significant threat.
Competitor Analysis
Competitor Screening Framework
Relevant Competitor Set
Initial Competitor Set
Reason Selected
Competitor Screening Criteria
Traditional Set Competitor A Competitor
B Competitor C New Set New EntrantA Potential
A
Financial Data Market Share Competitive
Advantages (patent, govt regulation) Geographic
Coverage Recommendation of Industry
Experts Historical Direct Competition Markets/Cust
omers Served Evidence of Market Entry Access to
Resources / Competitive Advantage
Company A Company B Company D Company F New
Entrant A
Direct Competitor Direct Competitor Direct
Competitor Partner with Largest Competitor
37Agenda
Agenda
- Business Plan parte 1
- Vision, mission and business model
- Offering and Value Proposition to Customers
- Business Plan parte 2
- Market Analysis
- Competitor Analysis
- Competitor Set definition
- Competitor Performance Analysis
- Competitor Positioning
38Another key aspect of competitive analysis is to
understand competitor performance. This can be
done by analyzing all aspects of a competitor
with each part evaluated within the context of
the entire organization.
Competitor Analysis
Competitor Analysis Framework
- Business Unit Strategy
- Resource Allocation
- Competitors Value Prop.
- Strengths/Weaknesses
- Core Competencies
- Sales
- Profits
- ROE, ROA
- Markets Served
- Product Mix
- Organizational Structure
- Major Processes
- Business Value Chain
- Value Delivery Strategy
- Acquisition/Divestitures
- Supply Chain Partnerships
- Sustainable Competitive Advantages
- Market Share
- Operational Efficiencies
- Financial Capacity
- Geographic Coverage
- RD/New Product Pipeline
- Marketing and Advertising
- Manufacturing Distribution
- High Level Cost Structure
Strategic Intent
Competitive Strength
Performance
Product Offerings
Business System
Note For comparisons to be made, it is
important to apply the performance framework to
yourself and to the competitor
39Agenda
Agenda
- Business Plan parte 1
- Vision, mission and business model
- Offering and Value Proposition to Customers
- Business Plan parte 2
- Market Analysis
- Competitor Analysis
- Competitor Set definition
- Competitor Performance Analysis
- Competitor Positioning
40The first steps in developing a competitive
positioning map are to establish criteria for
measuring how competitors rank relative to key
buyer values and to structure the initial
positioning map.
Competitor Analysis
Competitive Positioning Map Initial Steps
Initial Positioning Map
Customer Assessment/Buyer Values
Product Performance Price Service Produc
t Breadth
Low Medium High
Low Medium High
Low Medium High
Criteria
Buyer Value
Specialty Full-line
Mega-Breadth
High, Med, Low High, Med, Low High, Core,
Low Specialty, Full-line, Mega-breadth
Performance Price Service Offerings
41Competitors should be evaluated by their ability
to be ranked against positioning map buyer
values. Opportunities for exposing current or
expected future gaps should then be identified.
Competitor Analysis
Competitive Positioning Map Identify
Opportunities
Positioning Opportunity
Competitor 1
Competitor 3
Competitor 2
Low Medium High
Positioning Opportunity
Competitor 1
Competitor 3
Competitor 2
Low Medium High
Positioning Opportunity
Competitor 2
Competitor 3
Competitor 1
Low Medium High
Positioning Opportunity
Positioning Opportunity
Competitor 3
Competitor 1
Competitor 2
Specialty Full-line
Mega-breadth
42In this healthcare example, competitor
positioning shows that leading competitors are
becoming more differentiated along several
attributes.
Competitor Analysis
Competitor Positioning example 2
Competitor
Membership
Cost Position
Employer Service
Geographic Coverage
Physician Choice
Hospital Choice
Strategic Focus
Network Rationalization
Membership Growth and Diversification
Low Cost Focus
Survival/Direction Setting
250K
Leader
Exceeds Needs
6 counties
2K PCPs
100 Hospitals
100 Hospitals
150K250K
010 Higher
Meets Most Needs
5 counties
1K2K PCPs
51100 Hospitals
51100 Hospitals
75K150K
1020 Higher
Meets Some Needs
4 counties
3001K PCPs
2550 Hospitals
2550 Hospitals
20 Higher
Unacceptable
43Again, it might be useful to refer to some key
questions to acid test the completeness of the
section
Competitor Analysis
Key Questions
- What are the barriers to market entry and how can
they be overcome? - How does the competition operate? Which
strategies are pursued? - What major competitors offer similar
products/services? - What market share does your competition have in
the various market segments? - What target groups do your competitors address?
- How profitable are your competitors?
- What are your competitors' marketing strategies?
- What distribution channels do your competitors
use? - How will competitors react to your market launch?
How will you respond to this reaction?