Prepared by Ted Dean,

1
Consulting in Emerging Markets

• Prepared by Ted Dean,
• President, bda
• April 23, 2008
• For Professor Tom Kosnik,
• Global Entrepreneurial Marketing
• www.bdaconnect.com

2
Table of Contents

• Introduction to BDA and Consulting in China/India
• Key Challenges in Emerging Markets
• Appendix A Typical Project

3
BDA Telecom, media technology consulting,
investment advisory research

• BDA (www.bdaconnect.com) provides strategy
  consulting and research to leading TMT firms and
  investors with a focus on emerging markets and
  emerging technologies in Asia
• The first TMT consultancy in China, BDA was
  founded in 1994 and is the leading firm of its
  kind, now having a team of over 45 based in
  Beijing
• Active in India since 2004, advising TRAI as well
  as international carriers, vendors and investors
  active in, or seeking to enter, the market. New
  Delhi office opened in 2006, team of 10 and
  growing
• Typical projects Market assessment, market
  entry strategy, product launch strategy,
  distribution or partner strategy, and due
  diligence.
• Typical clients Discovery, Disney, Hitachi,
  Nokia, NTT DoCoMo, Qualcomm, SK, and Vodafone.

4
BDA supports firms as they enter the market and
grow their businesses
Market Entry Strategy Help clients to enter
China, India other emerging markets
Market and regulation overview
Hypo-thesis

• Financial Implications
• Market Potential
• Pro forma financials
• Project NPV

Validated by primary market research
Business options partnership strategy
Partner screening selection
Competitive landscape
Existing products, distribution and pricing
MARKET ENTRY GROWTH
Industry Trends
Status-quo Review
Phase I
Competitive Analysis
Phase III
Phase II
Opportunity Identification
Capability Assessment
Financial Analysis
Growth Opportunity Prioritization
Partnership Strategy Partner Selection
Market Growth Strategy Help clients to identify
and prioritize new business opportunities, define
growth strategies, and identify partners
5
BDA provides support to private equity investors
and venture capital firms throughout the
investment cycle
Investment Assessment Help TMT companies or
financial investors to assess investment
opportunities and conduct due diligence
Term Negotiation and follow up
Industry Competitive Analysis
CORPORATEFINANCE
Candidate Screening
Valuation
Tiger Global
Deal Sourcing
Due Diligence

• BDAs work with private equity investors has led
  us to work in new high growth sectors including
  education, healthcare, alternative energy,
  business services, consumer goods, and retail.
• In the last year, we have completed due diligence
  assignments in all of these areas.

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Key Challenges in Emerging Markets

• Operating in opaque markets Understanding the
  market and gathering reliable data upon which to
  make informed business decisions.
• Segmenting the market effectively Economic
  development and growth in consumption has
  occurred at all levels of the pyramid, but large
  gaps remain. This makes market segmentation, a
  key to business planning.
• Managing global teams Ultimately, all
  businesses are people businesses. Managing
  teams, the rising expectations and aspirations of
  employees, and building a company culture and
  organization are the keys to success.
• Discipline Investing in an emerging market only
  when it makes business sense and not because we
  have to be there.
• Organization Fitting international initiatives
  into your organization. Localizing too much or
  too little.
• Managing growth Managing the rapid growth in
  the opportunity and in your operations is a
  challenge at all levels of the business.

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Questions and Answers
8
Questions and Answers about

• Opportunities and Challenges facing BDA in China
  and India?
• Next Target markets?
• Lessons learned as an entrepreneurial leader one
  who grew up in one culture building a company in
  another
• Future of Mobile VAS in China or India
• Mobile Momentum?
• Anything you wish

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Table of Contents

• Appendix A Typical Project

10
Project background
Whats the Situation
How BDA Helps

• The client is one of the worlds leading media
  companies focusing on delivering
  business/financial news.
• The client wanted to build a comprehensive
  understanding of the business and financial news
  market in China, for both publication and online
  markets.
• The client wanted to develop a practical strategy
  to enter China, including a roadmap product
  design.
• The client wanted to identify companies in China
  with which they could form partnerships.
• The client wanted to project the financial
  implications of their strategy.

• BDA provided the client with a comprehensive
  assessment of the Chinese media market (for both
  traditional and new media sectors), including
  general market assessment, market sizing,
  regulation and competitive landscape.
• BDA provided business model options, partner
  strategy, candidate shortlist, product strategy
  and customer strategy.
• BDA built financial models for the simulation of
  the clients financial revenue, CAPEX, OPEX, net
  income and free cash flow over the next 5 years,
  as well as NPV analysis for initiatives in China.

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Project approach and deliverables
Phase 1
Phase 2
Phase 3
1
4
2
Partnership
Strategy
Market Analysis
Operation Strategy
Follow-up
Financial Implications

• Identify and screen candidates

• Approach evaluate candidates
• Define strategy

• Market scanning
• Competitive landscape
• Regulatory analysis

• 1-year detailedaction plan
• 5-year business roadmap
• - Preliminaryproposals on marketing mix

• Refined pro forma financials
• Sensitivity analysis
• - Refined project NPV

• Partnership negotiation
• Possible MA
• - Pre-launch marketing plan

Preliminary Financial Analysis
3
Product Design
Focus Group

• Market sizing
• High-level cost estimation
• Preliminary NPV analysis

Analysis
Consumer Survey
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BDA conducted a market scan based on interviews
and secondary research
1
Primary Research
Market Scan Summary
BDA Analysis
Financial Info Market Environment

• Key features in print and new media markets
• Current and projected revenues of different
  market sectors
• Industry players KSF
• Regulation incentives and barriers, especially
  for new foreign entrants
• Competitive landscape of market sectors in China

BDA Repository
Expert interviews
Satisfied and Unsatisfied Needs
Secondary Research
13
BDA identified key competitors in the market and
defined the competitive landscape
1
Competitive Landscape
Competitor Profile
Case study of successful player
Note The numbers are hidden to protect
confidentiality.
14

BDA understands the media industrys regulatory
environment and provides insightful
recommendations to the client
1
Regulatory Environment
15

BDA determined the addressable market and
clients market size target with a precise
methodology
1
Market Size
Market Sizing Summary
To determine the market size, BDA classified the
market into three parts ad, circulation and new
media service. BDA then analyzed the market
based on different content delivery formats
including print, online and mobile.

• The market size for ...... in China reached USD
  for ad, USD . for circulation, and USD .
  for WVAS in 2005. The market size is expected to
  grow to USD , USD ..., USD . respectively
  by 2008.
• The clients market size in 2007 is USD ..
  million for print, USD .. million for online,
  and USD . million for mobile service.

Note The numbers are hidden to protect
confidentiality.
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BDA formulated partnership and product strategies
based on extensive industry interviews, team
discussions, and potential partner interviews
2
How BDA Works
Partnership Strategy Summary
Industry Interviews
Team Discussion

• BDA recommends that the client partner with local
  publishers active in the .. field upon entrance
  into Chinas market. Recommended partners
  resources and competency will assist the client
  in bypassing regulatory barriers and shortening
  the time to market.
• BDA believes the most qualified potential
  partners are and

BDA Analysis
Potential Partner Interview
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BDA conducted a three-step partner selection
process identify, prioritize, compare
2
Identify and Screen Candidates
Evaluate, Profile and Prioritize High Potential
Targets
Compare Partner Candidates' Strengths Weaknesses
Candidates for further evaluation and
prioritization
What is the partnerships purpose?
Evaluation prioritization criteria
Government relationship?
Key market penetration?
Distribution concerns?
Targets
Rev. (MM)
Availability
Highest Priority

• Company T
• Company W

High Low
60 120
Full List of Candidates

• Company A
• Company B
• Company C

High Low Medium
285 100 33
Second Priority
LowestPriority

• Company H
• Company L
• Company M

75 50 400
Medium Low Medium
Preliminary screening criteria (government
background, market position, etc.)
Partnership Scenario
Company Profile
List for further prioritization (lt 10 firms)
Company Profile
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To develop product design and segment customers,
BDA verified ideas and explored user habits
through focus groups and online surveys
3
Methodologies
Sample Survey
Insights

• Frequency analysis
• Crosstab analysis
• Descriptive analysis
• Segmentation

Focus Group
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6 focus groups and a 1,486-sample survey were
conducted to analyze consumer behavior for
product design and customer segmentation
3
Survey
Beijing
Dalian
Tianjin
Jinan
Nanjing
Chengdu
Shanghai
Hangzhou
Guangzhou
Shenzhen
Focus Groups Beijing Shanghai
Three groups each with six attendants
City where survey was conducted
Group Design
Heavy user
Heavy users of finance channel portals
Heavy users of vertical financial sites
City where focus group interview was conducted
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BDA suggested a product strategy in four areas
content, delivery format, pricing and branding
3
Four Areas of Product Strategy
Delivery Format
Content
Product Strategy
Pricing
Branding
Note Numbers shown are not actual to protect
confidentiality.
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After all scenarios were determined, models were
built to determine the financial implications of
each strategic option
4
Market
Revenue, Cost, Expense, Tax Net Income
Cash Flow NPV Analysis
Action Plan
Note Numbers shown are not actual to protect
confidentiality.
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Contact Details

• ted.dean_at_bdaconnect.com
• India 91 11 4700 3100
• China 86 10 8529 6164
• contactus_at_bdaconnect.com
• www.bdaconnect.com