贝恩工具9803-战略分析方法之三ppt课件

1、Gisele GarrawaySusan Caraviello, Paul DiPaola, andTodd Senturia bcBusiness DefinitionMarch 1998Author:Contributors:Todd SenturiaReviewer:Copyright 1998 Bain & Company, Inc. Business DefinitionAgenda The business definition conceptApplicationsBusiness definition stepsClient examplesBunker Hill Door S

2、ystemsJJR Industrial CoatingsKey takeawaysBusiness DefinitionAgenda The business definition conceptApplicationsBusiness definition stepsClient examplesBunker Hill Door SystemsJJR Industrial CoatingsKey takeawaysBusiness DefinitionWhat is Business Definition? Indicates whether two business segments s

3、hould be operated as one business or as separate businessesHelps identify what drives superior profitability in an industryServes as the foundation for strategic analysis and sound decision makingBusiness definition delineates the economic boundaries within which companies should compete.Business De

4、finitionOne Business vs. Separate Businesses Same customersSame cost structureSame competitorsDifferent customersDifferent cost structureDifferent competitorsIf two business segments have the same customers, the same cost structure, and the same competitors, they are one business. If they are differ

5、ent on all of these dimensions, they are separate businesses.One businessSeparate businessesCompete in both segments to take advantage of synergiesDo not compete in both segmentsBusiness DefinitionWhy Bain Uses Business DefinitionStrategic insightsTactical insights with strategic importanceShould we

6、 buy or sell the restaurant business?Should we expand into China?Are we vulnerable to Japanese competitors?Should we vertically integrate into growing vegetables?Should we drop this product line?Should we cross-train our salesforce?How should we group purchases forVMRs (value managed relationships?H

7、ow should we configure our manufacturing plants?The correct business definition can lead to case-cracking insights.Business DefinitionConsequences of Incorrect Business Definition Companies that define their businesses incorrectly make poor strategic decisions.CostsCompetitorsIncur unnecessary costs

8、Forgo opportunities to capture synergiesDo not transfer experienceUnderinvest in important R&D initiativesOverlook relevant competitive threatsMiscalculate “market share Set inappropriate performance targetsOverlook relevant capacity changesMisjudge true cost positionCustomersNeglect profitable cust

9、omer segmentsOver-invest in unprofitable customersForgo opportunities to capture synergiesMisjudge relevant market trendsOverlook relevant geographiesExamples of Incorrect Business Definition Business DefinitionSome respected companies have missed profit opportunities or suffered unnecessary losses

10、because they did not define their businesses correctly.American ExpressAllegisSaatchi & SaatchiCharge cards and credit cards are separateCharge cards and credit cards are one business - plastic moneyCharge card division lost money due to poor cost position and misguided marketing effortsAirlines, ho

11、tels and rental cars are one business - caring for travelers worldwide Airlines, rental cars and hotels are three separate businessesThe combination provided little value to customers: Allegis was split up Advertising and consulting are one business -service to global business executivesAdvertising

12、and consulting are separate businessesCompany suffered severe losses due to inability to transfer experience, lack of focus, and tainted imageCompanyA better business definitionConsequences of incorrect business definitionHow management defined the businessBusiness DefinitionAnalytic Consequences of

13、 Incorrect Business Definition (p.1) Business definition must be the starting point of any Bain case because defining a business incorrectly can adversely affect strategic analysis and decision making.If we definea business incorrectly.Incorrect Business DefinitionCorrect Business DefinitionThe unde

14、rlying normative band will not emergeA business may look deceptively attractive or unattractiveROS/RMSGrowth/ShareBusiness DefinitionAnalytic Consequences of Incorrect Business Definition (p.2) Defining a business incorrectly can lead to problems in conducting E-Curve and RCP analysis.If we definea

15、business incorrectly.Incorrect Business DefinitionCorrect Business DefinitionWe may ignore relevant experienceWe may benchmark the wrong competitors$1$2$5125102050100 Cost per TransactionNow AccountsSlope = 70.1%R = 0.98$1$2$51020501002005001,000 Cost per TransactionNow + Savings AccountsSlope =57.2

16、%R = 1.00Experience CurveRCPBusiness DefinitionComplexity of Business Definition A simple catalog of logical arguments is not robust enough to delineate the competitive battlefields for our clients.Is it one business or not?One BusinessSeparate BusinessesTouring quality microphones and speakersMadon

17、na and rappers use bothSimilar distribution channelsDifferent manufacturers (Audio Technica vs. Bose)Little manufacturing process knowledge is transferableLimited direct cost sharingCross pens and BIC pensBeer and distilled spiritsBoth used for same function, writingSimilar raw materialsSome manufac

18、turing steps sharedBrand name sharing opportunitiesSame distribution channelsSold by same salesforceHigh perceptual barriers to customersLimited customer base overlapLimited benefits of shared R&DKey manufacturing processes are differentDifferent raw materials Business Definition Business Definition

19、 MatrixBain uses the business definition matrix to delineate economic boundaries. Cost sharing and customer sharing are the primary determinants of defining a business.HighCost SharingLowLowHighCustomer SharingOne business (charge cards and credit cards)One business with potential for differentiatio

20、n or niche position(Cross pens and BIC pens)Separate businesses with potential for cost leadership (oil and refinery by-products)Separate businesses(beer and distilled spirits)Separate businesses with potential for bundling (touring quality microphones and speakers)One business with potential for su

21、bstitution (milk cartons and glass milk bottles)Business DefinitionDynamics of Business Definition Business definition is dynamic. Temporary barriers, such as price premiums and technology advantages, will erode unless they are consistently reinforced.Business DefinitionTechnologyGovernment regulati

22、onInput pricesProduct innovationChannel economicsCustomer needsBusiness DefinitionLocal vs. Regional vs. National vs. Global Businesses Global scaleNational scaleRegional scaleLocal scaleProfessional online financial data Overnight package deliveryBanking - lendingHospital textile launderingBanking

23、- deposit gatheringResidential laundromatsBarber shopsClients often cite the need for national or global participation. However, in many businesses, local or regional scale drives profitability.Driver of ProfitabilityExampleBusiness DefinitionExamples of Changes in Business Definition There are seve

24、ral examples of companies that have gained significant competitive advantage by changing the definition of a business.Federal Express revolutionized the package delivery business by introducing an overnight delivery serviceCharles Schwab dramatically altered the mutual funds business by introducing

25、a no-fee service whereby customers could purchase many companies mutual funds through SchwabCalyx & Corolla transformed the flower distribution business by using information technology to cut out traditional distributors and ship flowers directly from growers to customersStarbucks redefined the coff

26、ee shop business from providing coffee to providing a social experienceThe Body Shop revolutionized the cosmetics business by merging the ideas of beauty, health, and environmental consciousnessStaples, by adapting the business model of a different industry (grocery stores) and taking advantage of e

27、conomies of scale in purchasing, changed the office supplies business from a local one to a national oneBusiness DefinitionAgenda The business definition conceptApplicationsBusiness definition stepsClient examplesBunker Hill Door SystemsJJR Industrial CoatingsKey takeawaysBusiness DefinitionApplicat

28、ions Financial ServicesElectrical and ElectronicsA large residential realty company was considering entering the commercial real estate market and wanted to evaluate the attractiveness of the marketAn electronics company had the opportunity to outsource its electronics testing service but was unsure

29、 if test outsourcing would define a viable new businessBain has used business definition in hundreds of cases and dozens of industries. Some examples of our work are: Bain developed a business definition for commercial real estate services which identified it as a separate business from residential

30、real estate, requiring vastly different competencies and economics. Client accepted recommendation to stay out of commercial businessBain determined that the test outsourcing business was not a single business with high cost and customer sharing, but rather six separate business which could be bundl

31、ed, and defined the few specific entry strategies which might be successful. Client ultimately agreed that critical entry barriers were too highSituation:Result:TextilesA large U.K. textile launderer with 23% ROS enters the U.S. market and earns only 5%Bain found that the business definition is not

32、national textile laundering - there are three separate businesses: healthcare, industrial and linen. All three are regional, not national. Client sold two businesses in New York and made two acquisitions in the SoutheastBusiness DefinitionAgenda The business definition conceptApplicationsBusiness de

33、finition stepsClient examplesBunker Hill Door SystemsJJR Industrial CoatingsKey takeawaysBusiness DefinitionBusiness Definition Steps To appropriately define a business, Bain uses an iterative approach that is both qualitative and quantitative and relies heavily upon data external to the client. The

34、 process starts with an hypothesis that is tested along three dimensions.Degree of emphasisLessimportantMoreimportantIs there substantial cost sharing?Is there substantial customer sharing?Does business definition pass the competitor acid tests?Cost sharingCustomer sharingCompetitor acidtestsBusines

35、s DefinitionBusiness Definition Steps Degree of emphasisIs there substantial cost sharing?Is there substantial direct cost sharing?Are there substantial opportunities for experience transfer?Less importantMoreimportantCost sharingCustomer sharingCompetitor acidtestsBusiness Definition *On a cost bas

36、is only, we must also look at customers and competitors to determine whether the businesses are one or separate.Cost Sharing An assessment of cost sharing involves examining direct cost sharing and experience transfer.Probably separate businessesOne business*Separate businesses*Probably one business

37、HighExperience transferLowLowHighDirect cost sharingBusiness DefinitionHow Businesses Share Costs Businesses can share costs in a variety of ways.Value Chain StepsHow Direct Costs Can Be SharedExamplesR&DProcurementManufacturingDistributionSales and MarketingAdministrative SupportMultiple applicatio

38、ns of some R&D effortsShared raw materialsShared inbound logisticsSimilar manufacturingfacilitiesprocessesSame distribution channelsBrand name sharingSame sales forceShared info systemsTape and Post-it Notes (3M)Gasoline and petrochemicalsVitreous china toilets and sinks (Kohler)Cigarettes and candy

39、 (Philip Morris)Healthy Choice dinners and cerealSoda and orange juice (Coca-Cola)BankBoston NOW accounts and savings accountsBusiness DefinitionExperience Transfer Product AProduct BLessons learned from product A can improve manufacture of product BProcessor CForgeGrindPaintDistributor YCustomersSu

40、pplier AProcessor DForge GrindPaintDistributor ZCustomersSupplier B(Raw materials)(Semi-finished product)(Finished product)Firms can benefit from experience transfer when two products share similar high volume, value-added processes. Business DefinitionBusiness Definition Steps Degree of emphasisLes

41、s importantMoreimportantCost sharingCustomer sharingCompetitor acidtestsIs there substantial customer sharing?How great is the degree of functional substitution?How great is the degree of customer base overlap?How high are customers perceptual barriers?Business Definition Customer Sharing (p.1)Custo

42、mer sharing analysis includes measuring the customer base overlap and degree of functional substitution, and, to a lesser extent, looking at perceptual barriers.Do different products currently or potentially fulfill the same customer usage needs?product utility analysiscross-elasticity analysisDo th

43、e suppliers of the different products share many of the same customers?who makes the purchase decision?who uses the product?what else is purchased with the product?Functional substitutionCustomer base overlapPerceptual barriersDo customers perceive significant differences among the products?Business

44、 DefinitionCustomer Sharing (p.2) Customer base overlapFunctional substitutionPerceptual barriersLowLowLowHighHighHighHighLowProbably separate businessesProbably one businessCustomer sharingGenerally, high customer base overlap, high functional substitution and low perceptual barriers suggest one bu

45、siness. Business DefinitionCustomer Base Overlap Customer base overlap can be determined by comparing purchasers or decision makers for the two products. Common Customer Base Overlap CriteriaUsed by same organization or customersPurchased by same individual or groupPurchase decision made by sameindi

46、vidual or groupLimited customer base overlapBusiness Definition Functional SubstitutionThere are two ways to evaluate whether products are substitutes.Product utility analysisCross-elasticity analysisDo products offer similar value along non-price attributes (e.g., scissors and knives cut cloth well

47、)?Is product bundled with other products (e.g., razors and blades)?How much does share change between the two products as relative prices change?If scissor prices go up will customers buy knives as a substitute?Business Definition Functional Substitution - Product Utility If products offer very simi

48、lar non-price attributes or functional benefits, they are potential substitutes. Business DefinitionFunctional Substitution - Cross Elasticity If a price increase in one product increases the demand for another, the two products are probably substitutes. Demand for ButterHigh elasticityPrice of Marg

49、arineBusiness DefinitionPerceptual Barriers Customers perceptions can be indicators of business definition; however, what customers perceive can often conflict with the economic boundaries. Perceptual barriersLowHighCustomers view : Examples:Products are similarProducts serve different functionsWood

50、en canoes and aluminum canoesWomens fragrances and mens aftershaveBusiness DefinitionBusiness Definition Steps Degree of emphasisDoes business definition pass the competitor acid tests?Do competitors offer similar products and serve similar customers and channels?Does profitability correlate with de

51、finition of market share?Do decisions a competitor makes in one business affect the decisions that a competitor makes in another business?Less importantMoreimportantCost sharingCustomer sharingCompetitor acidtestsBusiness DefinitionCompetitor Acid Tests Does business profitability correlate with mar

52、ket share as implied by the business definition hypothesis?What impact do decisions made in one business have on another?pricinginvestmentWhat products do individual competitors offer?Which customers/channels do competitors service?ConsistencyProfit explanationIndependent actionsTo validate our busi

53、ness definition hypothesis, we use three competitor acid tests.Is there substantial customer sharing?How great is the degree of functional substitution?How great is the degree of customer base overlap?How high are customers perceptual barriers?Is there substantial cost sharing?Is there substantial d

54、irect cost sharing?Are there substantial opportunities for experience transfer?Does business definition pass the competitor acid tests?Do competitors offer similar products and serve similar customer/channels? Does profitability correlate with the definition of market share?Do decisions a competitor

55、 makes in one business affect the decisions that a competitor makes in another business?Degree of emphasisLess importantMoreimportantCost sharingCustomer sharingCompetitor acidtestsBusiness DefinitionBusiness Definition Steps - Summary Business DefinitionAgenda The business definition conceptApplica

56、tionsBusiness definition stepsClient examplesBunker Hill Door SystemsJJR Industrial CoatingsKey takeawaysBusiness DefinitionBunker Hill Door Systems* - Background Bain used business definition to set a strategic foundation for Bunker Hill Door Systems. The team started with a hypothesis that there w

57、ere three separate businesses. Situation:Complication:Question:Bunker Hill is a $400MM division of Hills Worldwide. This division manufactures entry doors, garage doors (GDS), and garage door openers (GDOs). Hills Worldwide has set aggressive growth targets for all divisionsBunker Hill has suffered

58、a continued financial decline in recent years and performance varies widely across the product lines. Moreover, Bunker Hill faces a strong set of well-established, low-cost competitorsHow can Bunker Hill grow profitably?Assertion 1Assertion 2Assertion 3GD, GDO and entry doors are separate businesses

59、 and therefore require different strategies for profitable growth*Disguised client caseBusiness DefinitionBunker Hill - Direct Cost Sharing (p.1)Source: Bunker Hill FinancialsThe Bain team found that materials accounted for a substantial proportion of Bunker Hills costs in all three business segment

60、s.CostsCustomersCompet- itorsBusiness DefinitionBunker Hill - Direct Cost Sharing (p.2)*Includes gates and electronicsSource: Purchase Price Variance ReportHowever, in peeling the onion, the team discovered very little material cost sharing, suggesting that on a cost basis there were 3 separate busi