Favorite Business Models... 30 Slides
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Markets and Structure of Flow Resources
Resources
Resource markets
Money
Taxes, goods
Services, money
Services, money
Manufacturer markets
Taxes, goods
Government markets
Services, money
Money Goods and services
Money
Taxes Services
Taxes, goods
Middlemen markets
Money Goods and services
Consumer markets
A Company‘s Macroenvironment
MACROENVIRONMENT IMMEDIATE INDUSTRY & COMPETITVE ENVIRONMENT Suppliers
Substitute
COMPANY Rival Firms
Buyers New Entrants
The Economy at large
Break-even Analysis 35
Total Revenue
30
$ Millions
25
Total Costs
20 15
Fixed Expenses*
10
5 0 50
Profit
Loss
100 Break-Even Volume (90,000)
* Fixed Expenses = Marketing Expenses and Other Direct Expenses
150
200 Units Sold (000)
Demand and Supply
S
D
Price
F
G
E
B
A S
0
D
Quantity
Price
Price
Elasticity e=-∞
e = 0 (total inelastic demand)
e<-1
e=-â&#x2C6;&#x17E; (total elastic demand)
e=-1 e>-1
Quantity
e=0
P1 (-)
Price
Quantity
P2 Price
P1 (+)
(-) P2 (+)
0
Quantity
Demand is elastic and expenditure increases when price falls from P1 to P2
0
Quantity
Demand is inelastic and expenditure increases when price falls from P1 to P2
Sales over profits
The Product Life Cycle
Sales
Profits Introduction
Growth
Maturiy
Shake-out
Stages over Time
Decline
The Life-Cycle Portfolio Matrix THE BUSINESS UNIT‘S COMPETITIVE POSITION Strong Average Weak
Development A C Growth
B
D THE INDUSTRY‘S STAGE IN THE EVOLUTIONARY LIFE CYCLE
Competitive shakeout
F E
Maturity Saturation G H Decline
The Product-Positioning Map High quality
E A
B
Low price
High price
C D
Low quality
The Four Pâ&#x20AC;&#x2DC;s of McCarthy Environment
Product
Place
Price
Promotion
Environment
Efficiency vs. Effectiveness STRATEGIC MANAGEMENT Effective
Ineffective
1 Efficient
Thrive
OPERATIONAL MANAGEMENT
2 Die slowly
3 Inefficient
Survive
4 Die quickly
SWOT Analysis
Strengths
Opportunities
Weaknesses
Threats
The Generic Value Chain Firm infrastructure Human resources management Technology development Procurement
Inbound logistics
Operations
Outbound logistics
Primary Activities
Marketing and sales
Service
The Ansoff Matrix
PRODUCTS AND/OR SERVICES Existing
Existing
New
Market penetration
New product development
Market development
Diversification
MARKETS
New
BCG’s Growth-Share Matrix
RELATIVE MARKET SHARE High
High
Star
Low
Question Mark
MARKET GROWTH RATE
Low
Cash Cow
Dog
McKinsey 7-S Framework
Structure
Systems
Strategy
Superordinate Goals
Skills
Style
Staff
Core Competencies
Banner Brand
Business Units
Core Products (Platforms)
Core Competencies
The General Electric Business Screen COMPETITIVE POSITION Strong
Low
INDUSTRY ATTRACITVENESS
Medium
High
Average
Weak
GE / McKinsey Multifactor Portfolio Matrix
BUSINESS STRENGTH
INDUSTRY ATTRACTIVENESS
Invest
Invest
Manage Selectively for Earnings
Invest
Manage Selectively for Earnings
Harvest or Divest
Manage Selectively for Earnings
Harvest or Divest
Harvest or Divest
Market and Technology Risk Bubble Diagram
Very high
MARKET RISK
Moderate
Very low
Very low
Moderate TECHNOLOGY RISK
Very high
A Nine-Cell Industry AttractivenessCompetitive Strength Matrix COMPETITIVE STRENGTHS/BUSINESS POSITION Strong
High
LONG-TERM INDUSTRY ATTRACTIVENESS
Average
Business F
Weak
Business A
Medium Business C
Business B
High priority for investment Low Business E
Business D
Medium priority for investment Low priority for investment
Porterâ&#x20AC;&#x2DC;s Five Forces Potential Entrants
Threat of new entrants
Bargaining power of suppliers
Industry competitors
Suppliers Rivalry among existing firms Threat of substitute products or services Substitutes
Bargaining power of buyers
Buyers
The Generic Strategies
COMPETITIVE ADVANTAGE Lower Cost
Differentiation
Broad Target
Cost Leadership
Differentiation
Narrow Target
Cost Focus
Differentiation Focus
COMPETITIVE SCOPE
Leavittâ&#x20AC;&#x2DC;s Diamond
Task
Structure
People
Technology
Maslowâ&#x20AC;&#x2DC;s Hierarchy of Human Needs
Self-Actualization Needs (self-development and realization)
Esteem Needs (self-esteem, recognition, status)
Social Needs (sense of belonging, love)
Safety Needs (security, protection)
Physiological Needs (hunger, thirst)
9
Team management (9,9)
Production is incidental to lack of conflict and „good fellowship“
Production is from integration of task and human requirements
7
8
Country Club Management (1,9)
6
Dampened Pendulum (5,5)
4
5
(Middle of the road.) Push for production but don‘t go „all out“. Give some but not all all: „be fair but firm“
2
3
Impoverished Management (1,1)
1
concern for people
Managerial Grid
Task Management (9,1)
Effective production is unobtainable becaus people are lazy, apathetic and indifferent. Sound and mature relationships are difficult to achieve because, (human nature being what it is) conflict is inevitable 1
2
3
Men are a commodity just as machines. A manager‘s responsibility is to plan, direct and control the work of those subordinate to him
4
5
6
7
8
9
concern for production
The Business Process Re-engineering Approach
Activity 1
Activity 2
Activity 3
Activity 4
Micro operations
Customer needs
Customer needs fulfilled
Function 4
Customer needs fulfilled
Function 3
Business processes
Function 2
Customer needs
Function 1
Business processes
Micro operations
Total Quality Management
• • • • •
Whole operation involved Quality srategy Teamwork Staff empowerment Involves customers and suppliers
• • • •
Quality systems Quality costing Problem solving Quality planning
Inspection
Quality control
• Statistical methods • Process performance • Quality standards • Error detection • rectification
Quality assurance Total quality management
Supply Chain Management Second-tier suppliers
First-tier suppliers
First-tier customers
Second-tier customers
The Operation
Supply side
Demand side
Purchasing and supply management
Physical distribution management Logistics
Materials management Supply chain management
Du Pont Scheme Return on equity ROE =
Earnings after tax Owner‘s equity
Return on invested capital ROIC =
Earnings before interest and tax Invested capital
Financial leverage multiplier
Operating profit margin
Capital turnover
Financial structure ratio
Earnings before interest and tax Sales
Sales Invested capital
Invested capital Owner‘s equity
Invested capital
Owner‘s equity
Sales
Operating costs
Cash Working Capital requirement Fixed assets
Financial cost ratio
Tax effects
Tax effect ratio
Earnings before tax Earnings after tax Earnings before interest and tax Earnings before tax
Cost of debt
Tax rate
Financing Life Cycle Venture Capitalist
FFF & Angels
Seed Capital & Early Stage
Early Growth
Enterprise Cash Flow
Investment Banks & Banks
Later Growth
Mezzanine 3rd
Public Market
2nd
Initial Public Offering
1st
Valley of Death
Break-even point
Emerging Growth
Time
Enterprise Financing
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