e-volution

1
e-volution Road map for e-business
implementation in Extended EnterprisesTraining
material for e-volution methodology
2
Table of content
Introduction Methodology Module 1 Definition of
Business Objective System Methodology Module 2
Organisation Analysis Methodology Module 3
Market Analysis Methodology Module 4 E-business
Strategy and Roadmap Formulation
3
Introduction
4
The e-volution concept - successful
implementation of e-business in Extended
Enterprises
e-business road mapping methodology
Software tools
Based on approved models, e-volution offers an
e-business road mapping methodology that fulfils
the requirements of a systematic and
goal-oriented planning of e-business
implementation.
The methodology is the starting point for the use
of phase specific, supporting software tools.
Training package
Content Service
The e-volution training package is for transfer
and teaching how to apply the e-business road
mapping model, methods and tools.
The e-volution Content Service disseminates the
e-business road mapping model with its methods
and tools but also know-how about e-business.
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Methodology

• Purpose
• Enabling methodology for implementation,
  adaptation and optimisation of e-business
  strategies for Extended Enterprises, covering the
  whole supply chain
• Consolidation of existing and new know-how,
  methods and instruments, and expertise from
  science and consulting praxis for e-business
  strategy development in an integrative approach
• Framework for integration, processing and
  coordination of e-business related management
  activities
• Fields of application
• Strategic e-business planning inside EE
  constellation as enabler for the EE business
  concept
• Preparation of e-business related decision making

• Concept
• Thematic modules
• Methods
• Instruments

6
Software tool-kit

• Purpose
• Integrated software suite to support and enable
  efficient methodology application (e-volution
  tool-kit)
• Interactive tools for use within workshops,
  individual or remote working sessions
• Data and information processing, documentation
  and reporting
• Fields of application
• Data and information processing
• Management decision support
• Data warehousing

WEB
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Objectives and benefits of the training concept

• Development of overall understanding about the
  e-volution concept and how to use the methodology
  and software tool-kit in practice
• Development of skills for method and software
  tool application by target groups in practice

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Agenda Training on Methodology Module 1

• Step 1 Introduction
• Purpose and objectives, structure, positioning
• Practical application environment
• Step 2 Methodological approach
• Step 3 Tool-kit support

9
Module 1 purpose and objectives
Module purpose

• development of a common and homogeneous
  understanding about the enterprise, its
  high-level business objectives and strategies
• analysis, description and presentation of
  hierarchy of business objectives for the Extended
  Enterprise as well as the single enterprise
• Provision of
• decision support regarding solution alternatives
• transparency about the position of an entity
  resp. its contribution to the organisations
  success
• communication of changing framework conditions in
  an entity

10
Module 1 purpose and objectives
Field of application

• strategic enterprise positioning
• strategic enterprise planning
• development of corporate enterprise identity
• business model specification
• enterprise presentation and business purpose
  communication

11
Module 1 structure
12
Relationships to other methodology modules

• Module 2 Organisation Analysis
• Detailed analysis about the EE organisation from
  structural, competence and ability points of view

• Module 4 e-business strategy
• formulation
• Strategy development and assessment
• Roadmap definition

• Module 3 Market Analysis
• Detailed analysis about markets segments,
  position, competitors and customers

13
Agenda Training on Methodology Module 1

• Step 1 Introduction
• Purpose and objectives, structure, positioning
• Practical application environment
• Step 2 Methodological approach
• Step 3 Tool-kit support

14
Module 1 practical application environment
Organisation

• Intra- or inter-enterprise workshops or online
  session
• Definition of key personnel participants (max. 20
  participants) from different entities

Demands on participants

• Knowledge about enterprise, direct enterprise
  environment, market, and general business
  environment

Time need

• Central workshop approach 1-2 workshops
• Decentralised web-based online sessions
  predefined period of time

15
Module 1 practical application environment
Preparation of coordinator/moderator

• Workshop
• In-advance information and invitation of
  participants
• Presentation material
• Moderation methods and instruments (e.g.
  Flipchart, Overhead, Beamer, Meta-Plan)
• Documentation and minutes

• Web-based online sessions
• Platform configuration and preparation
• In-advance information (purpose, objectives,
  benefits, participants, organisation)
• Invitation (access information, time schedule)
• Reporting

16
Agenda Training on Methodology Module 1

• Step 1 Introduction
• Purpose and objectives, structure, positioning
• Practical application environment
• Step 2 Methodological approach
• Step 3 Tool-kit support

17
Module 1 overview
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Enterprise business vision/mission definition
Fundamentals

• enduring statement that distinguishes one
  enterprise from other similar enterprises
• important to
• insure unanimity of purpose,
• arouse positive feelings about the enterprises,
• provide direction,
• provide a basis for objectives and strategies,
• serve as a focal point,
• create consensus on specific strategies and
  objectives,
• resolve divergent views among managers

19
Enterprise business vision definition
Writing the business vision for the enterprise
Visualisation, discussion and assessment of
individual business visions
Decision about vision statement of the enterprise
Formulation and publication of business vision
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Enterprise business vision definition
Purpose

• "What does the enterprise want to become?"
• first step in strategic business planning
• clear vision provides the foundation for
  development of a comprehensive mission statement
• direction of all business actions toward this
  vision

Content

• enterprise's sense of future direction
• dream for an ideal state
• concise declaration of the direction that an
  enterprise is planning to take into the future

21
Enterprise business vision definition
Design guidelines

• short
• preferably
• meaningful
• one sentence
• Instigation and inspiration for action and
  achievement among employees
• Integration of motivation
• Integration of changing aspects or motivation

22
Enterprise business mission definition
Writing the business vision for the enterprise
Visualisation, discussion and assessment of
individual business mission
Decision about mission statement of the enterprise
Formulation and publication of business mission
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Enterprise business mission definition
Purpose

• Enterprise definition in a concise and clear
  manner
• Provision of vivid picture of what is unique
  about the enterprise to the reader
• Alignment of every program and activity in the
  enterprise to the mission

Design guidelines

• less than 200 words
• longer than a phrase or sentence, but not a two
  page document
• not be too specific (can alienate managers and
  stifle creativity)
• Inspiring
• enduring though not cast in stone

24
Enterprise business mission definition
Content

• Customers and target markets
• Products/Services for customers
• Geographic markets
• Technology
• Concern for Survival/Growth/Profits
• Philosophy (values, ethics, beliefs)
• Public Image
• Employees
• Distinctive competence and Unique Selling
  Position (USP)

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Enterprise business objective definition
Information of participants
Definition and collection of business problems
and objectives by means of creativity methods
Clustering of business objectives
Presentation and completion of clustered business
objectives
Systems Thinking of business objectives
Priority definition and presentation of business
objectives
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Need for business objectives
Common objectives ...
Different objectives ...
... align all entities to the same business
objectives
... result in different priorities for actions
No wind is good for someone who does not know
where he wants to sail to. (Montaigne)
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Information of participants
Information by Moderator overall aim, purpose
and approach by management enterprise vision,
mission, guidelines
Participants Enterprise(s) management, head of
departments, works council, employees Moderator D
iscussion leader and assistants
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Fundamentals
Business strategy
Serves the purpose of definition of high-level
business objectives and of general framework for
long term enterprise development.

Sicherung der Arbeitsplätze durch Umsatzsteigerun
g von 10 pro Jahr Gewinnsteigerung neue
Produkte und von 6 auf 10 Leistungen in
alten Märkten
Tactics
are mid term specifications of the business
strategy in the sense of selection and assessment
of relevant business activities
Functional activities
Are for short term realisation of business
strategy in practice by means of business
activities defined by tactics
Source Kreikebaum 1989 Pfeiffer/Randolph 1981
Steinmann/Schreyögg 1990 Zäpfel 1989 -gt
Planungssysteme
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Business objective definition process
?
?
Business structure design
Strategy formulation
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Definition of business objectives

• Suitable creativity methods
• Open discussion
• Brainstorming
• Feedback method
• Instruments and tools
• Flipchart
• Pin wall
• Empty sheet of paper

Shorter delivery times
Staff training
Better delivery quality
Higher productivity
Less process interfaces
Closer customer relationships
Better coordination
Work time concepts

• Tools
• Web-based discussion and communication platform

WEB
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Clustering of business objectives
e.g. Balanced Scorecard (BSC) concept
e.g. Main business objectives
Time/Costs/Quality/Flexibility/Ecology/
Information
Product
Service
Marketing
Reklamations-quote Anforde-rungsgerech-tes
Produkt ...
Qualität der Unterlagen Übersichtliche
Kataloge ...
Ständige Ansprechbar-keit Kundenservice ...
Verbindliche Zusagen Liefertreue ...
external
Kundenge-rechte Verpackung ...
Reklamations-bearbeitung ...
Reaktion auf Kundennach-fragen ...
internal
Source Kaplan, R. S. Norton, D. P. Balanced
Scorecard, 1997
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Cause effect analysis of business objectives
e.g. System Thinking and System Dynamics
Definition of interactions and dependencies of
business objectives and identification of system
impact and control variables
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Priority definition by means of one-by-one
comparison
Objective clusters are prioritised by means of
one-by-one comparison
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Presentation of business objectives by means of
pyramid of objectives
Saving jobs by annual turnover increase of
10 Profit increase from New products and von
6 auf 10 services in existing markets
Flexi- bility

Time
Innovation
Costs
Quality Ecology
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Agenda Training on Methodology Module 1

• Step 1 Introduction
• Purpose and objectives, structure, positioning
• Practical application environment
• Step 2 Methodological approach
• Step 3 Tool-kit support

36
OrganisationAnalyser

• General features
• features the resource based strategic business
  situation analysis in an EE regarding mainly
  qualitative aspects of an organisation
• based on an interview approach
• provides a set of basic, interview and
  questionnaire templates
• open for individual configuration
• runs as a web application on Windows
  95/98/2000/NT/XP systems
• The OM tool features identification of EE
  partners goal system (mission, vision, goals),
  competences and e-abilities as basis for strength
  and weakness analysis
• The OM software tool is
• Interactive The user is provided with
  appropriate questionnaires for data and
  information input, inputs are recorded,
  information is assimilated, analyses are
  performed, and results are displayed for the user
• Participative The tool provides a network
  environment for collaboration between different
  users. Users complete the process and all of
  their responses are combined and analysed as a
  group to accurately account for all individuals
  and to effectively represent the collective
  knowledge of all participants
• Configurable The tool provides functionalities
  for customisation or development of user specific
  analyses

Analysis of EE partners system of business
objectives (mission, vision, objectives)
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OrganisationAnalyser

• General Features
• Data acquisition and analysis software for
  inquires
• Web-based for decentralize, time independent
  processing
• Online (Internet and Intranet) and offline
  (local) applicable
• Project oriented user management
• Inquiry management
• numeral inquire methods
• Free configurable inquire possibilities
• Free scaling (number of users and inquires)
• Analysis- and documentation function
• e-volution Features
• Analysis instrument for specific EE levels
• Strategic level (goal system)
• Socio-informal level (competencies and skills)
• Information level (competencies and
  IT-infrastructure)

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Administration

• User roles and rights
• Administrator user management
• Interview manager interview management (design,
  invitation, processing, analysis)
• User registration, interview processing

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Interview processing

• Structure Interview\questionnaire\question
• By going step by step the user will be introduced
  to the structure
• Fixed structure, designed by interview manager
• There can be numerous questions to different
  topics
• Each question has its own evaluation
• No need to do answer questions at, multi-session
  option

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Interview analysis

• Analysis by Interview manager
• Standard analysis and report options diagrams,
  lists
• Export function to MS-Excel

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Agenda Training on Methodology Module 2

• Step 1 Introduction
• Purpose and objectives, structure, positioning
• Practical application environment
• Step 2 Methodological approach
• Step 3 Tool-kit support

42
Module 2 purpose and objectives
Module purpose

• identification and analysis of organisational
  aspects which have affects on the development of
  an e-business strategy and how they affect the
  decision making process
• Methodological approach and supporting software
  tool for resource based EE analysis
• Identification of e-business use, practices and
  potentials based on organizational hard and
  soft facts
• Identification of organization related strengths
  and weaknesses as basis for e-business strategy
  development within the scope of EE concept
  realisation
• Provision of
• decision support regarding solution alternatives
• transparency about the position of an entity
  resp. its contribution to the organisations
  success
• communication of changing framework conditions in
  an entity

43
Module 2 purpose and objectives
Field of application

• Business objective system definition
• analysis of organisational, technological and
  human e-competences
• strategic forecasting and early warning analysis
• core competence analysis, the life-blood of the
  EE, as basis for realisation of extended, more
  competitive products and services
• collaborative and transparent EE benefit
  definition

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Module 2 structure
45
Relationships to other methodology modules

• Module 4 e-business strategy
• formulation
• Organizational analysis is basis for
  identification of interfaces for the roadmap
  definition

• Module 1 Business Objectives
• Analysis
• Create common understanding of EE business
  objectives
• Basis for targeted e-business strategy formulation

• Module 3 Market Analysis
• Detailed analysis about markets segments,
  position, competitors and customers

46
Agenda Training on Methodology Module 2

• Step 1 Introduction
• Purpose and objectives, structure, positioning
• Practical application environment
• Step 2 Methodological approach
• Step 3 Tool-kit support

47
Module 2 practical application environment
Organisation

• Intra- or inter-enterprise workshops or online
  session
• Definition of key personnel participants (max. 20
  participants) from different departments
• No need for different EE-partners at one point of
  time

Demands on participants

• Knowledge about enterprise, certain departments,
  financial situation, strategic background and
  purpose, e-business situation for the whole
  enterprise and strategic objectives, as well as
  about direct enterprise environment

Time need

• Central workshop approach 2-3 workshops
• Followed by decentralised web-based online
  sessions predefined period of time

48
Module 2 practical application environment
Preparation of coordinator/moderator

• Workshop
• In-advance information and invitation of
  participants
• Presentation material to prepare online session
• Moderation methods and instruments (e.g.
  Flipchart, Overhead, Beamer, Meta-Plan)
• Documentation and minutes

• Web-based online sessions
• Platform configuration and preparation
• In-advance information (purpose, objectives,
  benefits, participants, organisation)
• In-advance need for information collection from
  the participants side scripts handed over at
  workshop
• Invitation (access information, time schedule)
• Reporting

49
Agenda Training on Methodology Module 2

• Step 1 Introduction
• Purpose and objectives, structure, positioning
• Practical application environment
• Step 2 Methodological approach
• Step 3 Tool-kit support

50
Module 2 structure
51
Input data from Module 1

• enduring statement that distinguishes one
  enterprise from other similar enterprises
• enterprise's sense of future direction

Business vision definition
Business mission definition

• Enterprise definition in a concise and clear
  manner

Business objectives definition

• Basis for strategy development
• Definition of all objectives
• Clustering of objectives
• Prioritising of goals (e.g. with BSC)

52
EE benefit analysis

• Objectives
• Definition of expected performance potentials of
  EE members
• Possible benefit potentials are complex
• can be divided into four main categories
  resources, risks, costs, and results
• Independent assignment
• Results
• Overview of benefits for all independent and
  interdependent enterprises
• Results should be used for the OM analysis
• Results should be pointed out and used in the
  ongoing analysis

53
EE benefit analysis

• balancing of partners resource deficits
• Development of resource compound effect
  (synergy), addition and/or supplementation

RESOURCE benefit

• error adjustment due to the availability of
  increased partners know-how within areas such as
  development, production or marketing.

RISK benefit

• Cost digression can be reached because of size
  advantages with the help of determined merging
  activities and a resulting better use of
  technical and human resources

COST benefit

• broader utilization spectrum of single
  performances and/or products by the combination
  of the product and service spectrum, which are
  brought by the partner into co-operation, to
  complete performance, which makes the development
  of the extended and quantitatively attractive
  field of application possible

RESULT benefit
54
E-business ability analysis

• Objectives
• Identification used e-applications in each
  organization regarding the processes
• Identification of processes where e-applications
  are used most
• Evaluation of product employee competencies
  regarding the e-applications
• Additional questions regarding the awareness and
  the importance of e-abilities in the screened
  organization
• Results
• Overview about existing bought or self-made
  e-applications, there importance to the
  enterprise and the importance given to
  e-applications and e-abilities at all
• Information should be used for the following
• Interface design between EE partners
  (compatibility analysis)
• Intra- und inter-enterprise strengths and
  weaknesses analysis regarding e-abilities and
  e-business strategy development

55
E-business ability analysis
Identification of currently already IT-supported
business operations
identification of used applications
specification of e-business application type
assessment average user qualification regarding
e-business application type
analysis of additional issues
56
Strategic Early Warning System Analysis
Locating the position
Monitoring of targets
Monitoring of environment
harbour
ICEBERG
57
Sequence of methods - FInd, FIlter, FOrmat, FOcus
approx.100 trends
Trends relevant max. 20
FIND
FILTER
FORMAT
FOCUS

• find all trends linked to a enterprises future.
  What are the trends in society, business, economy
  and technology with relevance to our enterprise?
  Methods used to help this process are
  Brainstorming and - writing or so called
  trend-workshops.
• filter all strategic issues. The result of the
  first step are sometimes between 70 to 100
  trends. There is no way to handle this amount of
  information, the number has to be reduced.
• format all strategic issues. This includes an
  analysis and search for drivers of the situation,
  the identification of links between the drivers,
  the reconfiguration of links and the definition
  of easy scenarios.
• focus on practical actions When does a
  enterprise has to react immediately on strategic
  issues and how can it monitor future developments
  with indicators? Monitoring allows a continuous
  focusing on important aspects.

58
Trend Finding
Kick-off

• Invitation
• Search for experts
• internal/external investigation
• Market and customer analysis

• Moderation
• Initial Lecture
• Global Trends

• Clustering and consolidation
• if needed further internal/ external
  investigation or market and customer analysis

• Presentation of results
• Discussion, moderation
• conclusion

• Define aims
• Know-how required
• Define participants
• Check for external experts
• Design workshop

59
The trend 3 Layer-model
60
Filter with the 3 Layer-Model
Workshop Construction 3 Layer-Model
Workshop 3 Layer-Model

• Complete Model with global trends
• Construction of the 3 Layer-Model

• Work with the Model
• Identification of strategic options based on
  trends and competences
• Discussion, clustering and consolidation of the
  strategic options

• Sort Trends
• if needed Analysis of the characteristics, core
  competencies or strength and weaknesses
• if needed Presentation of global trends
• Moderation, discussion

61
Format by Sytem Thinking/Dynamics approach
Format-Workshop
Network-Workshop

• Identification of trends linked to the strategic
  option
• Defining the strength and the correlation of
  impact
• Building the network

• Computer based modeling
• Analysis of the network

• Presentation of the network and analysis results
• if needed online simulation

62
Example Formatting of a strategic option for
action
Question on networking Which trends affect the
strategic option for action XY?
63
Focussing Analysis of the network
Impact
Aim of analysis Which trends have a huge impact
in the network? Result Identification of the
active influencing factors
reactive
critical
The right appraisement of efforts for the
observation of elements is fundamental here
Elements dont have to be observed, represent
only impacts but no cause
uncritical
active
These elements have to be observed marginally,
elements only have weak influence
Observation of elements in any case Early
indicators
Exertion of influence
64
Focussing Analysis of the network example
producer of office furniture
Observation of the indicator How important is
the trend?
65
Results and benefits
Results Benefit

• Reduction of efforts for observation and
  improvement of ability for early detection at the
  same time
• Visualisation and thus clarification of the
  developments
• Gain of knowledge about trends
• Stimulation of creativity in order to use
  opportunities of external developments

• Presentation of the enterprise with trends and
  strengths or weaknesses
• Evaluation of trends
• Deduction of strategic problems and
  Identification of options for action
• Identification of Indicators

66
E-business core competency analysis

• Objectives
• Selection of basic competencies from set of
  competences by means of assessment due to factors
  like
• Organization
• Technique
• Human Resource
• Analysis of balanced, critical, over valuated and
  basic competencies from set of competencies
• Results
• Overview of core competencies of each EE partner,
  the trends, the competitive relevance and the
  degree of mastery
• Information should be used further regarding the
  following concerns
• Evaluation and visualization of companies
  situation
• Determining core competencies as a starting point
  for new products and new target markets
• Determine core competencies as a starting point
  for resource development in the enterprise

67
Core competence analysis

• Identification of organisations abilities along
  the value chain
• E-ability analysis is input
• Separation due to human, technological and
  organizational aspects
• Identification of organisation's product and
  service abilities
• Identification and evaluation due to the
  uniqueness/ USP of the product/ service
• Summary
• Information should be aggregated for the next
  step
• Done by an external person who is more objective
• Filter main aspects and double counts

68
Core competence analysis

• 4. Identification of competences from abilities
• Each ability is assessed due to the question to
  figure the competencies out
• Each ability needs to be assessed due to the
  three next points
• Potential door opener to a variety of markets
• Significant contributor to customer benefit
• Difficult to imitate by competitor
• Done on a scale from 1-5 (1 means not correct, 5
  correct)
• 5. Summary
• Abilities should get a value between 3 and 15
• Threshold value of 10 ? all abilities scoring 10
  or higher should be included in the further
  analysis

69
Core competence analysis

• 6. Competence assessment
• The competencies that have been identified during
  the previous steps are assessed and evaluated
  concerning two evaluation criteria competitive
  relevance and degree of mastery by the
  organisation
• Depending on the answers given by the users, the
  strengths or competences may be labelled core
  competences or not

5
1
4
3
21
2
12
14
critical
6
high
17
competences
very
18
relevance
25
15
28
10
22
13
high
24
19
basis
-
competences
26
8
7
competetive
low
11
20
27
16
low
23
9
very
balanced
Over valued
competences
competences
very
low
low
high
very
high
degree
of
mastery
70
Core competence analysis

• 7. Core competence definition
• Depending on where (in which quadrant) the
  competence is positioned, different types of
  competences can be identified.
• balanced competences (these are positioned along
  a diagonal axis, where the degree of mastery
  equals the relevance of the competence)
• overrated competences (where the degree of
  mastery is much higher than the relevance)
• critical competences (where the degree of mastery
  is not as high as the relevance)
• basic competences (where the degree of mastery
  and the relevance or both very high)

5
1
4
3
21
2
12
14
critical
6
high
17
competences
very
18
relevance
25
15
28
10
22
13
high
24
19
basis
-
competences
26
8
7
competetive
low
11
20
27
16
low
23
9
very
balanced
Over valued
competences
competences
very
low
low
high
very
high
degree
of
mastery
71
Core competence analysis

• 8. Strategic forecasting
• need for strategic core competences derives from
  the comparison of current competences with future
  requirements
• Early recognition in strategic management as
  systematic process for getting and processing
  information
• used for early data collection of environmental
  changes, which threat or support current and
  future potentials
• aims at the guarantee of sufficient reaction time
  for developing or implementing adapted strategies
• Method Find Filter Format Focus (FiFiFoFo)
  analysis
• 9. Definition of core competency development
  strategy
• Depending on the position in the evaluation
  graph, different actions should be taken for
  different outcomes
• competences are ideally positioned in the
  diagonal sector of the balanced competences ? may
  be very important to increase the level of
  mastery for critical competences, while for
  overrated competences no efforts should be taken
  and investments should be cut

72
Focus on the indicators of active trends
Indicator-Workshop
Presentation

• Computer based network analysis
• Set up of matrix
• if needed Further investigation

• Analysis of elements behind the active trends
• Building a Mind maps
• Discussion, moderation

• Search for leading indicators for the observation
  of the active trends
• Definition of appropriate measurement units
• Development of a indicator report system or
  integration in BSC

• Presentation of the defined indicators
• Definition of the research sources
• Definition of responsibilities

73
Strength and weakness definition
TOWS-Analysis
Module 2
Results of enterprise internal, resource based
analyses
Results of enterprise external, market based
analyses (Module 3)
Strategies to improve current situation
74
Agenda Training on Methodology Module 2

• Step 1 Introduction
• Purpose and objectives, structure, positioning
• Practical application environment
• Step 2 Methodological approach
• Step 3 Tool-kit support

75
OrganisationAnalyser

• General Features
• Data acquisition and analysis software for
  inquires
• Web-based for decentralize, time independent
  processing
• Online (Internet and Intranet) and offline
  (local) applicable
• Project oriented user management
• Inquiry management
• numeral inquire methods
• Free configurable inquire possibilities
• Free scaling (number of users and inquires)
• Analysis- and documentation function
• e-volution Features
• Analysis instrument for specific EE levels
• Strategic level (goal system)
• Socio-informal level (competencies and skills)
• Information level (competencies and
  IT-infrastructure)

76
Example e-business ability analysis in the
OrganisationAnalyser

• Objective
• Partner spanning analysis of the value chain from
  the IT-resource point of view
• Organization
• Human
• Information technique
• Evaluation of the current situation and
  projection on the reference side
• Results
• Mapping of EE-partner abilities and Gap-Analysis
• Identification of interfaces
• Strengths- and Weakness Analysis
• Goal and provision formulation

77
Agenda Training on Methodology Module 3

• Step 1 Introduction
• Purpose and objectives, structure, positioning
• Practical application environment
• Step 2 Methodological approach

78
Module 3 purpose and objectives
Module purpose

• Identification of customer requirements regarding
  products and services that could have an impact
  on the e-business strategy
• General product, market, customer and competitor
  analysis as basis for realisation of competitive
  business model and realisation of results
  benefits from the EE by use of collaborative
  e-business model
• e-business related opportunity and threat
  analysis on enterprise and EE level by comparison
  with competitors as basis for e-business strategy
  development
• enabling a collaborative philosophy (if EE
  partners withhold critical market data those
  farther away from the end user customer cannot
  make intelligent decisions)

79
Module 3 purpose and objectives
Field of application

• Market and product assessment
• Market attractiveness
• Product attractiveness
• Consumer analysis
• Competitor analysis
• Target market search
• Opportunity and Threat analysis

80
Module 3 structure
81
Relationships to other methodology modules

• Module 2 Organizational analysis
• As the counterpart to the market analysis here
  the internal environment is reviewed

• Module 1 Business Objectives Analysis
• Create common understanding of enterprise and its
  objectives
• Basis for organizational analysis

• Module 4 e-business strategy formulation
• The market analysis is the basis for the
  SWOT/TOWS analysis

82
Agenda Training on Methodology Module 3

• Step 1 Introduction
• Purpose and objectives, structure, positioning
• Practical application environment
• Step 2 Methodological approach

83
Module 3 practical application environment
Organisation

• Intra- or inter-enterprise workshops or online
  session
• Definition of key personnel participants (max. 10
  participants) from sales and marketing
  departments
• No need for different EE-partners at one point of
  time

Demands on participants

• Knowledge about enterprise, certain departments,
  financial situation, strategic background and
  purpose, e-business situation for the whole
  company and future goals, as well as about
  enterprise markets

Time need

• Central workshop approach
• Followed by decentralised web-based online
  sessions predefined period of time

84
Module 3 practical application environment
Preparation of coordinator/moderator

• Workshop
• In-advance information and invitation of
  participants
• Presentation material to prepare online session
• Moderation methods and instruments (e.g.
  Flipchart, Overhead, Beamer, Meta-Plan)
• Documentation and minutes

• Web-based online sessions
• Platform configuration and preparation
• In-advance information (purpose, objectives,
  benefits, participants, organisation)
• In-advance need for information collection from
  the participants side scripts handed over at
  workshop
• Invitation (access information, time schedule)
• Reporting

85
Agenda Training on Methodology Module 3

• Step 1 Introduction
• Purpose and objectives, structure, positioning
• Practical application environment
• Step 2 Methodological approach

86
Module 3 structure
87
Market segmentation

• Objectives
• detailed specification and verification of the
  existing market segment definitions
• realisation of a common working basis for the
  application of the e-volution concept inside a
  company or EE
• Results
• Definition of
• product/market combinations
• customer groups
• and / or product groups
• The market segments are the basis for market
  segment assessment

88
Market segmentation approach

1. Customer description
2. Identification and definition of homogeneity
   criteria
3. Development of homogeneous customer groups and
   grouping of similar homogeneity profiles
4. Combination of similar groups into economic
   market segment

89
Leading questions concerning market segmentation

• Initial situation What is the initial situation?
• Customer groups, product groups, distribution
  channels,
• distribution regions worksheet initial situation
• Product/client criteria What is the difference
  concerning the customer groups?
• Customer groups criteria, product groups
  criteria, characteristics
• worksheets Customer groups criteria, product
  groups criteria, characteristics
• Segmentation Which homogenous customer groups
  does the company have?
• Testing of product and customer group combination
  by criteria and determination of homogenous
  combinations
• Segmentation Is it possible to process
  product-market combinations economically?
• Testing and delimitation of product and group
  combinations to turn over power and strategic
  importance.

90
Detailed description of components

• main products / product groups and customer
  groups and their importance/priority for turnover
  are defined
• Afterwards sales channels are distinguished
  between direct and indirect sales (resellers,
  sales partners) and the relevant sales
  markets/regions are identified
• Then, the connections between products / product
  groups and the market are defined
• products / product groups are ranked and
  prioritised by its turnover importance (e.g. A, B
  and C)

Description of initial situation
Differentiation of customer groups and
identification of homogeneous customer groups

• Several criteria are used to differentiate
  customers and therefore identify groups of
  customers with the same characteristics
• E.g. Purchased volume and trends, sales channel,
  e-solution description
• By using such criteria, customers with similar
  characteristics are identified and therefore
  merged to form homogeneous customer groups
• Assignment to product/ market groups

91
Market segmentation1. Customer description -
description of initial situation
Customers
Trade channel
Region
Kühlager Pflanzenproduktion Heizung/Sanitär Rohrle
itungsbau Baugewerbe Anlagenüberwachung, -steuerun
g Wasser-, Boden verbände ...
Criteria
Händler Ing.-Büros Direkt Kooperationen Systeminte
gration
Norddeutschland Deutschland gesamt EU
Turnover priority
Products
Kühlwächter Druckschreiber Hackenzähleinrichtung B
dAT ...
Sequence 1. Products 2. Customers 3. Trade
channel 4. Geographic regions
x
x
x
x
x
A

x
A
x
x
x
x
x
B
x
x
x
x
x
x
C
x
x
x
x
x
92
Market segmentation 2. Identification of
homogeneity criteria
Relevant criteria and its characteristics for
classification of customers into homogeneous
customer groups
Distinctive features of the customer groups
Criteria selection, resp. completion
Key question Different customer demands on
marketing and sales activities regarding
Key question Different customer demands on
products regarding ...
Turnover relevance Strategic relevance Image Decis
ion maker Consulting needs After Sales
Service Customer specifics Quality needs
(TQM) Ordering Delivery time / Flexibility Logisti
c features
Region Ecologic issues Demographic
characteristics cultural characteristics advertise
ment Competition Costs Faith Acquisition ...
Product performance Product use Innovation Design
Costs ... ...?
x
x
x
x
x
x
x
93
Market segmentation 2. Identification of
homogeneity criteria
Criteria selection according to its relevance
according to segmentation objectives - Market
development (advertisement, distribution, costs,
products) - Enterprise strategy (development of
enterprise functions)
Criteria description and characteristics
Criteria
Characteristics
Product performance Decision maker After Sales
Service Ordering Customer specifics Acquisition Co
mpetition
high o medium - low
Technician o Buyer - Buying Centre
yes - no
periodically o irregular - one time
high o medium - low
long-time o medium-time - short-time
low o medium - high
94
Market segmentation 3. Development of
homogeneous customer groups and grouping of
similar homogeneity profiles - Differentiation by
customer groups
Kühlager Medizin. Einricht. Kühllogistik Pflanzenp
roduktion Heizung/Sanitär Rohrleitungsbau Baugewer
be Anlagenüberwachung, -steuerung Wasser-,
Boden verbände ...
Homogeneous customer groups
Product performance Decision maker Ordering Custom
er specifics Acquisition
-
o

o
-


-
-

-





-
-
-
o
o
o
o
-
-

-
-
-
-
-


o
-
-
-
-
o
-
-
-
-


Reason for division
Reason for combination
95
Guidelines for segment definition
Definition of market segments

• Check-up and validation of identified
  product/market combinations is done with
  reference to the criteria adopted and the
  requirements of the market segments
• identification and analysis of strategic issues
  for product-market-combinations
• check-up if product/market combinations are
  homogeneous internally and among each other
• analysis of timely stability of market segments
• analysis of turnover potentials of
  product/market combinations for economic market
  development
• If these criteria are not fulfilled, customer
  groups with similar or only slightly different
  characteristics of segmentation criteria are
  integrated into the market segments until
  check-up criteria are fulfilled

96
Market segmentation4. Combination of similar
groups into economic market segments
Customers
Trade channel
Region
Definition of homogeneous customer groups in
respect to marketing and enterprise specifics.
Definition of single markets for transparent
performance and activity monitoring and
controlling.

• Analysis of strategic business units (SBU) in
  case of need for more in depth information for
  product-market combinations

97
Market segmentation4. Check
Testing identified customer groups concerning
market segments demands

• Are there any questions concerning the identified
  customer groups?
• Are the customer groups homogenous themselves and
  inhomogeneous to each other?
• Are the differences time-stable?
• Are the sales potentials into the customer groups
  sufficient for an economical market processing?

If need be unit customer groups with similar or
insignificant different characteristics in the
homogeneity criteria to market segments, which
fulfil the test criteria.
98
Customer purchase criteria analysis

• Objectives
• A consumer's purchasing criteria are the criteria
  (conscious or unconscious) on which the consumer
  bases his decision to purchase a product or
  service and supplier
• Satisfying the consumer's purchasing criteria are
  therefore crucial to the company's/EEs
  revenues.
• Understand how the EE and its competitors satisfy
  the consumers' purchasing criteria
• Results
• The most important purchase criteria of the EEs
  customers
• The features of purchase criteria

99
Customer purchase criteria analysis
Gather information about customers' purchasing
criteria, and about why the company/EE satisfies
these purchasing criteria
Document the results from the research
Assess how the three main competitors satisfy
customers purchasing criteria
Assess the company's/EEs opportunities and
threats according to the investigation of
consumers' purchasing criteria
100
Competitor analysis

• Objectives
• describe the most important competitors and gain
  an understanding of their strengths and
  weaknesses, compared to your company (Often, this
  can be realised by using information that already
  exists in the company/EE)
• Supplement is obtained by gathering information
  externally e.g. by using the Internet, networks
  etc.
• gain a good understanding of the aspects of the
  competitors that constitute an opportunity or a
  threat for the company/EE (both in relation to
  "e" and relating to the business in general)
• Results
• Description of most important competitors
• Information for OT-analysis

101
Competitor analysis
Description and assessment of the most important
competitors
Conclusion drawing based on the description and
the assessment of the competitors - opportunities
and threats
102
Competitor analysis
Competitor's position in the market and
competitive advantages
Assessment of competitor's value creating
activities S.W.
Description of competitors current e-solution
Intermediate OT Analysis

• P/M areas served by the competitor
• Competitor's market position and market share

• Information (one way)
• Communication (two way)
• Trade/e-Commerce
• Business Integration

• Based on the description and the assessment of
  main competitors describe intermediate OT
  elements

103
Competitor analysis
Description of competitors current e-solution
for each value creating activities
104
Market attractiveness assessment

• Objectives
• definition of both the competitive position and
  attractiveness of each of the companys or EEs
  product/market combinations for identification of
  strategic options for actions as well as
  opportunities and threats of market segments
• Results
• visualisation of the previous, on basis of which
  a list of priorities for development activities
  can be created, and which can be also used as a
  tool for disseminating common understanding of
  the qualities of different product/market
  combinations within the company or EE
• A by-product is the identification of information
  gaps about single market segments
• starting point for market research activities

105
Market attractiveness assessment

1. Specify drivers of each dimension/ Identify the
   critical internal and external drivers
2. Weight drivers (assign relative importance
   weights to drivers)
3. Score SBUs each driver
4. Position SBU in Attractiveness-Strength Matrix
   and interpretation
5. Specify opportunities and threats, strengths and
   weaknesses (SWOT-analysis)

106
Step 1a Specify drivers of each dimension/
Identify the critical internal and external
drivers

• Market size and growth, e.g.
• market volume, consumer concentration, number of
  (potential) customers, structure of (potential)
  customers
• Purchasing patterns, investment rate
• Market quality, e.g.
• Industry sector factors (efficiency of branch,
  profit margin, price level, clearance for price
  politic, investment intensity, requirement for
  service and distribution, position in the market
  life-cycle, threat of substitutes,customer
  behaviour)
• Economic factors (economies of scale, capital
  demand, high investments, currency costs and
  risks, starting loss, long-term capital
  commitment, brand loyalty, quality of existing
  channels, access to existing channels,
  environmental impact, promotion alternative,
  transport, dependence on the public attitude,
  infrastructure market entry barriers,
  communication network, power supply, existence of
  alternative resources, interference in the supply
  of power and resources)

Market attractiveness
107
Step 1a Specify drivers of each dimension/
Identify the critical internal and external
drivers

• Market quality, e.g.
• Technological factors (technological level and
  innovation potential, possibility to protect
  knowledge, differences in fabric size,
  differences in performances, different ports,
  difference in standard, special needed know-how,
  know-how competitive edge of the benchmark,
  general technological standard, production
  technology)
• Political factors (political and legal market
  entry barriers, political instability, legal
  system, legal security, labour law, dependence of
  legislation, dependence of the public meaning,
  risk of state intervention, tax-, trade- and
  competitor legal systems, particular
  environmental determinations, import quota,
  import taxes and custom duty)
• Sociological factors (religious special features,
  language, cultural characteristics, social
  organizations)
• Competition factors (competitor structure,
  competitor intensity)

Market attractiveness
108
Step 1b Specify drivers of each dimension/
Identify the critical internal and external
drivers

• Relative market position, e.g.
• Marketing potential (price advantage, quality
  advantage, service, delivery time, technique,
  range of products, functionality, reliability,
  design, customer service, environmental
  compatibility)
• Financial output (company growth, revenue,
  turnover development, profit margin, operating
  margin, capital turnover)
• Position of the company (financial risk ,USP,
  cost-performance ratio, customer loyalty, degree
  of establishment of the company, size of
  financial power of the company, image advantage/
  disadvantage, innovation standard, customer
  relationship)
• Market share and market share development (market
  share, market share growth)

Competitive strength
109
Step 1b Specify drivers of each dimension/
Identify the critical internal and external
drivers

• Relative enterprise potentials, e.g.
• Marketing potential (distribution network,
  customer information, customer loyalty,
  consultant know-how, distribution efficiency)
• RD potential ( innovation potential, fundamental
  research, innovation continuity, technical
  know-how, RD capacities, patents)
• Production ( action flexibility of machinery,
  production conditions, productivity, level of
  automation, capacities)
• Information (Controlling, reporting, customer
  data base)
• Logistics Organisation (cost advantages, terms
  of a license, supplier relations, customer
  service, advantage of location)
• Employee skills (professionalism, power of
  judgement, cadre, quality of the management
  system, know-how, personal capacities,
  motivation, culture)
• Finance (financial capacities, participations,
  investments, return on investment, own capital,
  cash flow, savings)

Competitive strength
110
Step 2 and 3 weight and score drivers by means
of value-benefit analysis (option)
111
Step 2 and 3 weight and score drivers by means
of value-benefit analysis (option)
112
Step 4 Position Strategic Business Units (SBU)
in Attractiveness-Strength matrix Option A
Market size and growth
Ideal
Threat
Unattractive
Neutral
Relative market position
SBU1
SBU3
SBU2
Market quality
Unattractive
Threat
Neutral
Ideal
Relative SBU potential
113
Step 4 Guidelines for Strategic Business Units
(SBU) in Attractiveness-Strength matrixOption A
SBU Market Call for action/ Option
Threat Threat Control if development of SBU potentials are justifiable through market attractiveness.
Threat Unattractive Further actions in this segment are not profitable.
Threat Neutral Verifying of SBU potentials. Operating expenses checking. Detail analysis.
Threat Ideal Develop the SBU potentials. Checking of operating expense. Prioritisation.
Unalluring Threat Prepare for strategic decisions. (Analysis, costs earnings, opportunities and threats)
Unalluring Unattractive Further actions in this segment are not profitable.
Unalluring Neutral Analysis of further development of market Opportunity or flop.
Unalluring Ideal Take actions for potential build-up and market penetration.
114
Step 4 Guidelines for Strategic Business Units
(SBU) in Attractiveness-Strength matrixOption A
SBU Market Call for action/ Option
Develop Threat Analysis of market development. Evaluation of cost and earnings of market attractiveness.
Develop Unattractive Analysis of market development (prognosis). If market development is constant than pull-out.
Develop Neutral Analysis. Verification of cost/ earnings to market penetration.
Develop Ideal Take action for market penetration and market development.
Ideal Threat Take action to secure the market position.
Ideal Unattractive No further investments. Pull-out.
Ideal Neutral Take action for sales increase.
Ideal Ideal No call for action.
115
Step 4 Position Strategic Business Units (SBU)
in Attractiveness-Strength matrix Option B
Market size is represented by the size of the
circle. Market share is shown by using the circle
as a pie chart.
116
Step 5 Specify opportunities and threats,
strengths and weaknesses (SWOT-analysis)
117
Target market search

• Identification and evaluation of new products and
  services for the single organisation or EE
• Identification of additional demands of present
  customers for enlargement of product program
• Identification of new market opportunities by new
  products
• Evaluation of product ideas by means of market
  and company relevant criteria
• Selection of promising product/market
  combinations for a detailed analysis as
  preparatory work for new product developments.

Objectives
Results

• Definition of promising product/market
  combinations, customer groups and / or product
  groups for which a more detailed market analysis
  c