Case In Point Reading Notes 1.
Mexican Bank (Industry: bank, type: profitability) Two types of banking revenue: interest income, fees (p.g 70). Decreasing average revenue/customer vs. constant average cost/customer. Due to incentive system encouraging branch manager to acquire more clients (the newer clients are not as profitable as older clients). Also had to increase # of tellers and # of branches to serve new customer. Soln: segment by customer tiers. Offer more profitable customer more access to expensive service channels and customized products. Offer less profitable customer cost-effective service channels like ATM and online services. 2. Yellowstuff (Industry: manufacturing, type business strategy) - sales are decreasing, industry decline, wants to enter a new market that s more profitable. How to identify the right markets? First, what is the target growth rate (10 percent?) How much risk is the company willing to take? What type of synergy can it leverage? Similar customer base? Strong brand/quality? Expertise in B2B? strong distribution channel? Strong sales force? Strong supply chain? What are the BTE? - regulations? FDA, EPA? Patents? Oligopoly (like Coke & Pepsi)? Long investment (green energy, R&D), limited raw material and supply (oil & gas) What are the growth trends? Is the market growing or shrinking? Are competitors entering or leaving? How much market activity? A lot of M&A? What are the exit strategy Soln: Identify the relevant industries, analyze synergy + growth patterns, and figure out how to enter (acquisition? Parternship? Start from scratch). Would it be better than just investing the money in stock market (better return, and a lot more liquid) 3. Eastern Training Network (Industry: services, type: business trategy competitive responses) Problem: IBM is entering its segment of market, what should it do? The objective is to keep it out or to maintain as much of an market share as possible. Are there any other firms in the area? What is our market share? What are other clients doing to protect its market share? Strategy (1) defensive - protect what s mine, keep IBM out (2) offensive acquire new customers, steal IBM s clients Defensive (protect what s mine) increase switching cost, create loyalty programs, long-term contracts (use incentive system to get SF to re-sign client and lock them into long-term programs) Strategy (2) raise BTE limit the supply? Use regulations? Patent? Make monopoly? NONE.
(2) stay at the same price (3) lower prices. grow through acquisitions. If treated with this chemical. However you will lose market share by 5m which is 2. break even analysis business strategy. price elasticity) Problem: coke is trying to become more profitable domestically by raising their prices.27m Implications: So by raising prices you will make more sales about 3m more which is about 12. So two options: (1) stay the same or (2) raise prices by 4 cents Next years revenue = next years volume * next years price (1) 100m (1. volume Costs not relevant Competitors market share (not relevant) Sales 100m cans at 23 cents each. growth is 6%. Volume is high and margins are low.
5. Road Chemical Compound (market size.3%. The cost of the chemical is $50/mile. conventions. supply/demand. Differentiate the services. Starts with 80m at 0.06) * 0. political issues) Company developed a compound that extends the life of highways. Do not use price wars 4.25m + 2. Coke decides to do a marketing campaign to maintain market share. Currently.01*2 = 25.5%.27 = 101m * 0. Structure: revenue. Currently the government spends $1k/mile to replace the roads. If they raise prices by 5 cents.23 = 106m * 0. How many cans of Pepsi can be sold under each scenario. if they don t raise prices.06 *3 = 21.6 * 2 + 1.38m = 25m (2) 100m (1. you should run numbers for the 3 scenarios and let the numbers talk.02 = 27.18m = 24.23 = 10.2m + 3. life of highway is extended to 20 years. profitability. Coke (retail/consumer goods. and at point of sales.01) * 0. costs. Coke will draw customer into the store.27 = 101m/4 + 1. growth is 1%. Pepsi can entice customers with lower price (depends on if the customers are price conscious and sensitive). government must replace highway every 5 years. To determine if how competitor should respond. If they lower its prices. new product pricing. competitive response Revenue price. so that 23m dollars in sales annually. What are the economics of raising prices and is this a good idea.Strategy (3) go after more customers marketing efforts (ads.
. PR events) lobby for state contracts. it maybe able to get even more market share.23 cents a piece. steal sales staff and customer from my competition. Competitive Response is 3 options: (1) raise prices to match.
unit cost of production: $5 Substitute prices: $0.5 to store. Never out Lightbulbs (New product pricing) Problem: how to price a lightbulb that never burns out Structure price-based costing. Reduced construction means higher unemployment and welfare payments. So in order to sell. but selling to commercial and
. Other business issues: . WTP (substitutes.this product reduces government labour force. How should they price the product.Problems: estimate # of miles of state and federal highway in the US. there will be construction lobbying and labour union unrest. Structures: cost-based pricing. Each segment has 10 hwys. At our cost. if we use an 100% markup. CBP: cost is $50/mile. We can look at competitive pricing but there s no competitors so no PBC. over 20 years.5m to $200m. a bulb that last 50 years.50. then $50 to store. we are looking at $4k/mile. and Willingness-to-pay.75 = $37. If we have 50k miles of highway. $0.25 to distributor. CPB: Conventional bulb pricing based on cost is 5x markup on cost of manufacuture which means $25 for us to sell to distributor. Then 50 * 0. cost-based pricing. w e are looking at 50k miles * $50/mile = 2500k = 2. $75 to consumer. Cannibalizing: for every eternal light bulb we sale. existing payment) No competitors Costs: fixed R&D: $20m. No one will buy a bulb for $75 so no. Price per mile = $100m/50k miles = $100 000/50 = $2000/mile $100m over a period of 2-3 years. Selling to consumer market is not good business. So the range we are looking at is $2. So 3k*10 + 2k*10= 50k miles . N2S is 2k miles.75 to consumer.
6. we are looking at $200m over 20 years. Other business issue? # of miles of highway = # of major highway * average length Segment to coast to coast and North to South: Coast to coast average length is 3k miles. they are saving $100m which can be used for other infrastructure projects so no one gets laid off. $0. If we charge them $100m. price-based costing. cost of manufacture is 0. We can substitute pricing (WTP): $1k/miles every 5 years. Other method is to check WTP: a bulb that lasts one year vs.5 m.05. that s 50 or 75 conventional lightbulb we won t sell. we price at $100/mile. it must be priced so that the government will look fiscally responsible if they choose this over the existing process.
entry methods Diaper market size: There s 280m Americans and avg life expectancy of 80 years.4b diapers a year. joint venture. marketing team. a truck driver. Same # of 73 year old vs 3 year old. Let s say they each use 3 diapers a day which means there s 36m diapers used each day. If each diaper is $1 then that s a $14. market sizing) Problem: NYC Opera wants to develop a growth strategy for the next 5 years. but doable Second we can for a JV with an established company.4b market. They cost $20 in bulbs and a lot more in labour like $150/bulb in labour. do we want to manufacture or manufacture and market? 4.
7. For example. establish distribution channel. Time consuming & expensive. Pricing differentials competitive landscape. growth. Cons: limiting to our profit since we are manufacturing and only able to sell to one outlet (our JV partner) 3. risk of merger. Pros: don t have to do too much other than figuring out licensing fee structure. p.industrial markets. Start a own company name recognition (does it translate over to a different industry? Set up manufacturing plant. And let s say kids under 3 wears diapers. Dupont (new product market size. small players Way of entering: start a own company. distribution channels. city of Cambridge has 2k street lamps. (two union workers. buy a smaller player.
8. The pros: don t have to establish name recognition. The number of people is evenly distributed so the same number of people in each age group. profits. License product to a variety of company. 84) Problem: Dupond has invented a material that would be perfect for diapers. major players. capital expenditure. How do they take advantage of this invention? How do they make a profit? Structure: market size. hire a management team. or license the technology. can sell to a variety of companies and have them fight each other. management/marketing team. become an OEM supplier and do just the manufacturing of material. There s approximately 4 million in each age group. Opera (growth strategy. What should they look at and what would be your recommendations?
. salesforce. A year that would be 365 * 36 m = 360 * 40m = 14400m = 14. One step further would be go to different diaper companies and get pre-orders to ensure that the market is there and our pricing is in line. business strategy. Solution: manufacture and license the rights. Acquire a small player pros: same as JV cons: do we want to integrate two organization. sales force team. So that 12m kids who wear diapers. marketshare. insurance).
solutions). g=20%. revenue streams (customers. or we can grow the company. Ice cream (manufacture. food products. placement. what are some other risks to watch out for. Us: Y1 size = 600m. regions. products (merchandising) placement (travelling shows) reduce cost per unit of production
. product mix. increase products and promotions. Repeat this calculation for all relevant contenders (how to identify relevant contenders? By eliminating the obvious ones that s not going to beat us and the ones that we are not going to beat) Solution: if you see a table of numbers. Discount brokerage (numbers) Problem: growth rate is falling and its ranked below its competitor G. g = 10%. increase places we sell them in. We can increase sales by increasing price per unit sold. identify the profitable customers/the growing segment.Structure: what is they growth target (percentage). products. promotions) customer. competitor growth rates. competitor G would grow to 720+72+72 = 720+144 = 864m. other markets to enter? Solution: segment the customers. customer loyalty programs) promotions (advertisement. What is the target growth rate it should aim for to regain its 6th place ranking Structure: what is our own growth rate. play with pricing (establish membership programs. So it doesn t seem likely that by increasing sales of ice cream alone isn t going to give us a growth rate of 25%. What is our price and how does it compare to the competitors? Can we market as super premium? Last year s industry growth was 12%. segment the revenue streams. Y2 = 720m If we assume the g stays the same then in Y3. our growth rates. current industry growth rates. solutions Background questions last years growth rate. We can increase the sales of existing product. Y2 size = 660 Competitor: Y1 size = 600m. what is our competitors growth rate. join alliances). do the numbers
10. compare to industry and competitor growth rate. volume. communication channels. volume sold per transaction. regions. products. increasing sales) Problem: how to grow sales from $200m to $250m (25%)? Structure: Growth revenue (price per unit sold. reason for growth.
Oriental carpets (P&L)
. willingness-to-pay Competitors: two. So the existing market size is 20m. market sizing. thicker hair). we can charge $40 and drive the other pill company out of business and then jack up the prices. product. or just don t care. So we can charge somewhere between $2 to $165 100% markup to 165x markup. Estimate the percentage w/thinning hair in each group. so if we do a markup of 100% we are at $2/month. Our product is 3x times better (faster. What is the customer s wtp? Maybe $3/day? So we are at $90/month. we can increase places where we sale. acquire competitors. comb over. Pricing: price-based costing. Age Group Men % w/thinning hair 0 10% 25% 50% Women %/ thinking hair 0 0 5% 10% 0 0 2 4 6
1-20 21-40 41-60 61-80
40m 40m 40m 40m
0 4 10 20 34
40m 40m 40m 40m
Total is 40m people with thinning hair. shave their head. cost is $1 for a month. and each group is segmented based on gender. Cure for baldness (new product. so we can charge $165/month. we can increase sizes. Maybe 50% will try to do something about it through ointments or drugs. Each type costs $55/month average. consumer preference) Problem: estimate the size of the market for a cure for baldness and price it.
11. cost based pricing. 12. We can acquire smaller regional producers. realizing a percentage of them will never switch. alliances) We can increase flavours. side effects (1) Estimating market size break the market into 4 age group segments (20 years each segment). pricing. Others will wear a hat. toupee. Drugs products: men/women? insured? overcounter/prescription. one s lotion form. Cost-based pricing: R&D is 0. customer. we can view ourselves as in the premium dairy group rather than just premium ice cream and diversify that way. If we want to undercut the competitor. solutions (is what we make a part of something larger). But also note that some customer would prefer to use the lotion s application process. drugs. promotions. It s 3x as effective as the leading products. one s a pill form.Additional growth strategies (regional.
Then we can make appropriate strategy.000. Economy is bad. All we ll be doing is moving inventory. Last years sales was $250k/month = $3m/year. How much can we sell the rugs for in two years: $40. Leasing pros (larger marker. Current year 2 rugs/month. At $30. but our profits would drop by $10k/month. How many rugs can we lease in one year? 60 Ho w much lease income will be generated over the year (60*9)/2 = $270k.2m/year Price $50k $40k $30k # sold/month 2 3 5 Monthly sales $100k $120k $150k Profit $20k $10k 0 Monthly profit $40k $30k 0
At $40. its not worth dropping the prices. Price/unit is $50k and profit of $20k so a 66% markup over our cost of $30k per rug. relieve inventory debt. so unless the it saves us inventory debt of greater than $10k/month. Each rug will make $9k/year for two years.Problem: retailer of expensive oriental rugs is experiencing declining profits Structure: we want to understand what are the drivers of the profit decline so we want to look at revenues and costs and understand what has changed in each of those categories. service contracts new revenue stream) cons (lowers value. Then we want to look at the industry and market to understand if this is a particular problem of the client or not.
. So that s $10k profit so we d be making $10k + $18k . leads to acquisition. we aren t making any profit. how do we compare to our direct competitors? Our products? Our customers? Taste and preference Trends? Looks like sales are declining due to movements in style. Volume is changing. How do we compare to the industry. reduce inventory. does that affect our clients? Externally. Last year 5 rugs/month. Let s look at the revenues (price per unit and volume). we would make more sales. which lowers the inventory debt.$6k = $22k which is better than if we sold it for $50k. that is if the incoming cashflow is more than what we are baying on debt and leads to acquisitions. won t o cover debts) We can lease 5 rugs a month. this year its $100k/month = $1. This is a good deal if the profitable. Each rug incurs $3k in debt per year so that s $180k less so we make $90k.
7m customers times $50 = $135m Revenue = $75*. Price: changes in pricing 3.25*6m=$75*1.5m customer in Q4. what s going on? Structure: 1. 103) Bad debt collecting bad debt requires time. Strategies: shed the high risk-late payers. and 45% pay late so we are looking at 2. identify changes 4. reducing costs!) Problem: our client s profits are up but market share is shrinking. That takes into account a loss of 2. Volume: segment the volume. customer behavior 2.5% or 1. start charging a late fee. effort. and maybe go after the customer collections every two month instead of every one then each bill becomes $150 instead of $75. Average revenue to be collected * margin collection cost Collection cost = cost/each customer number of customer who pay late We shed 6m customers.5m = 112. Multiply to base to find out how many customers to shed. they don t pay for the rugs up front! 13. Environment: growth rate (industry vs competitor vs us). so we are losing $8m going after these customers. College Mail (Marketing Strategy) Problem: how to reach the students with marketing mail for regional and national advertisers Segment based on stage of life: (1) going to college first time (2) moving back home for summer (3) moving to new city for internship (4) heading back to school (5) leaving school for their first job. technology shifts. market share. Reading charts identify the most significant portion (where are the biggest bars).
14. requiring them to have a credit rateing of 600+. By sheding these customer.5m. (P. Competitive actions We closed the year with 60m customer.Inventory fact: the company just pays interest charges on the rugs. vet new customers better.5m =75m+37.
. and money. how much cost savings do we generate. Wireless Carriers (business strategy.
E. Bull Moose Financial Services (business strategy.g. any experience in M&A. profitability and profit margin Syergies of strategies: brand? Similar in quality? Similar in customer base (too little overlaps might means they are not compatible. growth in stores). competitors. perstore economics (growth in sales per store. try to quantify it. a better management system or even faster expansion.
15.Describe different channels: strategic partnerships. synergies of strategies. VS finances. synergies of management operations. operations improvement. capital investment. how are the operations different? How do you integrate the different process and systems? Video sTore s D/E ratio. public or private. Segment your customers then match service based on tier. What is the standalone value of the HoP: growth in industry? Competitors and market share? Past and future projected cash flow. better real estate decisions leading to better store performance. how to exit
Analysis: Revenue synergies: selling videos in pizza store or selling pizza in video store or having them side by side. when making operational improvement. I recommend consolidating all those accounts under one account number How many customers does BM have and what is the average number of accounts? 2. how big is the top tier?
. Also quantify the size of the tier 1 i. online. word of mouth Strategy: work with schools to get them to place USPS web address in their acceptance letters. working capital. too much means there s not enough new customer generation) Synergy of management: how different are the cultures? How can management team adapt and who won t be able to. reducing cost) Problem: how do you ensure the big investors get treated like royalty when they call into Bull Moose? Structure: how to keep costs down. Key learning points: 1. House of Pizza (acquisition) Problem: Which areas should we think about Structure: standalone value of HoP.e. Faster domestic expansion.
275 of 1100 is 2. break the chart into segments. So total new membership needed to generate net gain of 165 is 275 new members. You should allow the customers to view accounts online. It depends on the state of the market and our marketing efforts last year. Is this feasible? Last year we did 200. We would have to explore what we did last year and if there s room for improvement. I would try to get people to use the internet to reduce cost. You don t want to pay traders to handle customer complaints when they should be trading. Key learning points: 1. i. I would segment the customer. decreasing. Baseball batting cage (numbers) Pr oblem: if you want to meet your new target growth rate of 15% is it feasible? Analysis: Last year: 200 new members. Estimating # of units of batting time sold: hours of operation * number of days * percentage usage*# of units available
. If all the segment sales as a percentage of total revenue remained the same then all divisions has held steady. Last year gained 200. we will lose 110. 3. New target is 15% of 1100 which is 165 net addition.3. When estimating operating profits as a percentave of revenue. I would differentiate the service levels and match labor skill based on the service. use division total. from 10001100.75 of 11 which is about 25% increase over last year. but net gain was 100. Revenue /year = price per unit * # of units sold over a year. segment the type of services use different level of expert for different services. Pepsico (chart analysis) Problem: summarize a chart Key learning points: 1.
18.e. So if we lose 10% of customer base this year. Describe the changes in each of the segment in terms of share in the overall pie (is net revenue of frito-lay as a percentage of total sales has been increasing. Summary: I would recommend investing in technology that consolidates accounts under one customer so that all phone reps view the same info. 2. so lost 100 which was 10% of customer base. revenue grew by10% and net membership grew 10%.
17. Estimating revenue per year. Figure out what is the price per unit or the fee structure. you should hire college grads to handle the complaints. or remaining constant?) 2.
tell me what s happening with this company. Red Rocket Sports (Sports. merchandise. 5. and where they should be concentrating their efforts Learning points: 1. To figure out whether you would sell at a certain price. The markets that don t change much has matured while the other markets have higher growth rates. number. company analysis. look at percentage change by product types and by region.
19. The drivers of a growth rates are the segment that account for more the change in sales than its representation of total sales. food & concession. Things that are inferred: .
2. lessons 4. look at percentage make up or what part of the business each product line and market represents. see what kind of a multiple is it over revenue. Possible revenue streams are: batting time.3. At this rate they will bypass the UK in total sales by next year. They grew by 20% in 2003 and 30% in 2004. However the mature markets represent the bulk of the business cash cows 2/3 of the business. First. from20% in 2002/2003 to just under 10% in 03/04 US market has had dramtic declining growth from 12 to 2 % although it is still by far our biggest market UK growth has remained steady at approximately 7% Same is true EU market with consistent growth rate of 15% Most promising markets are the other markets which are probably emerging ones like Asia and latin America.
. Second. 2004 64% 36% 55% 12% 20% 11% 2003 64% 36% 60% 12% 20% 8% 2002 65% 35% 60% 12 20 8
Footwear Apparel US UK EU OT
3. business strategy) Problem: look at the chart. Implications: which product are the biggest proportion of sales? And how has this changed over the years? which region represents biggest proportion of sales? How has this changed over the years? 4.footwear has grown consistently by about 10% over the last two years Apparel growth has slowed. or annual profit.
how many seats does a plane have. profit was 2% or 3%. how many trips per day? How many days a year? 6. reinforce sales force. 3. Actions are based on what to do: (1) concentrate efforts on growth areas like other markets: increase product line. increase distribution channels.2 to 7. If it s a first-to-market something. % return. 8%.6. (3) investigate market trends to anticipate future changes: ask industry analysts for expert opinion on trends. all over the place. pricing. capacity. Profit margin is very thin the best years ( 01 and 04). Selling only when the buyer can pay more than 3 years of profit. business model/strategy) Problem: how to take advantage of this invention to make a profit Learning points: 1. Revenue has grown steadly from 5. Fixed cost spread over life of invention. 2. Ask about other objectives. Apparel
21. 4. The percentage change has been 4%. particularly in the driver of the growth. but a period of 2-3 year of growth is followed by one year of declining profit. 3%. ask about potential BTE like patents. 5. 10%. Profit has been positive. Capacity . elaborate on strategies 7. increase marketing. (2) secure the mature markets to protect business: marketing and identify best performing distribution points and stores. How much does it cost per unit? Fixed cost and variable cost. If patents are involved.
. The average over the six years have been 6b. Multiple of profit =3. Company analysis can be performed using 2x2 matrix Footwear Growing Stable Declining 20. size of US market: depends on the Price! 2. use cost-based pricing and WTP since no competitors so can t do price based costing. 2%. Electronic Manufacture (Company Analysis. 3. ask how long the patents lasts to find out when we have to deal with competitors. bottomline) Problem: look at the chart and tell me what s going on with the company 1. World spacelines (market estimation. Pricing.
Find out the leftover stock how many bought last year. organizational better management? Better infrastructure? b) Increase sales get more customer focused. organization related)
22. are they all the same.1% Learning Points 1. sales and distribution channels. 4.competitors from lower-cost producers will take away market share. increase product mix. promotions. increasing sales) Problem: would a partnership between an airline and a coffeehouse prove profitable Learning Points: 1. innovation c) Lower costs lower the cost of doing business (product related. how many carried over from the year before 2. safety stock. There could be substation to plasma due to other technologies becoming more popular like LCD. Segment based on product lines: car stereo. how many sold last year. Probability of outcome . brand). market sizing) Problem: how many shovels should the client order 4 months in advance to maximize profits with the lowest amount of risk and the least amount of inventory to be had on hand Learning points 1. The drop in profits despite increasing sales can be because of a) Price . the %profit was 80m/7b = 80/7000 = 8/700 = 1. Figure out unit price and unit cost and calculated the expected profit for each decision
23. Find out the demand from last year where there orders unfilled. Do we know how many they can sell in various scenarios? Scenario analysis: in outcome 1 how many sold. new product. in outcome 2 how many sold. what is the duration of each route. DVD recorders. b) Volume . home stereo and ask about how the sales are divided (the percentage of sale represented by each line) 2. Increase competition will drive the prices down. (functionality. In 05.other players getting into the market. Strategy: a) competition differentiation. how many flights per route 2) fleet what kind of planes. C) costs are rising labour? Manufacturing? Raw material? 4.1/100 =1. Snow Job (inventory. outcome 2. economy. GPS. 3. what is the carrying capacity? what is the occupancy rate? 3)
. Ask about the competitors and the industry. hardrives. Airline Coffee (business strategy.4. figure out if it s an inside or outside problem 3. Airline sells things on flights so important features to consider are 1) routes what routes do they serve.
the economics of the convenience store. joint venture). Figure out # of sales made per day over all flights
24. Sales on long and early flight average $100 and sales on long and late flights are $200. what s the return on investment and is it better than simply investing in stockmarkets Learning Points: 1. Business Strategy.
25. price. how to enter the market (start from scratch. Long early Long late Short early Short late
Average per passenger spending is $5 for those who purchase. Clinets of mostly business travelers making day trips. loyalty.Clientele are they business or leisure travelers. Grocery chain in Texas (entering a new business. spending patterns? 2. acquire. considering entering into convenience stores. is this a good idea Analysis: it s a good idea if its profitable growing business. production)
. Profit. market entry) Problem: Wants to grow the company. how much is the average per passenger spending. Average occupancy rate per flight is 95%. So we want to figure out the growth rate in this industry. Sales on morning and early afternoon short flights average $50 per flight. Summarizing spending patterns based on flights all planes are same size with occupancy of 200 passengers per plane. the major competitors. any potential synergies. Profitability of convenience chain stores depends on location. service. Alcohol (Competitive Response.
3. the risks for client to enter this market.
design more efficient route for trucks to save gas and maintenance. figure out the competitive advantage of the client 2. future flexibility vs. Up-in-smoke (cigarettes. Do a scenario calculation: i. per unit price. if they didn t do anything what would be their projft. change management) Problem: should they outsource or should they upgrade the fleet? Analysis: do cost analysis for the two scenarios: 1) outsource 2) upgrade fleet 3) Other risks and benefits with each option Learning points: 1. supply chain. Protect existing customers. 3. what s the effect of the competition on client s growth rate (number) 2. what would be the new profit. What should Hector do? Your Answer: BTE. A four-year payback on all its investments . cost of gasoline.
27. government regulation. units sold 3. you can try to a) lower the cost of investment by leasing or renting b) extend the payback period beyond 4 years c) increase savings d) increase savings through incrasing # of deliveries. Figure out per unit cost. Figure out what s the industry growth rate. distribution chain. Do economic benefits and risks cultural impact and impacts on labor potentials of a strike. How to make the investment work? Given the investment amount and the required savings per year over the payback period. reduce maintenance costs. if they raised prices what would be the new profit
26. competition 2.Problem: Hector s competitor Mike is planning to make the same product as Hector and two more variety. steal Mike s customers Learning Points: 1. Batteries (market sizing. what s client s growth rate. market entry) Problem: when should Jamaican Battery enter the Cuban Market Learning Points: 1. When entering a new market consider: (1) who are the major players? (2)What market share do they have?
.e. if they made two addition flavors. Do a cost analysis.
Full Speed Ahead (Clothing. profit & sales. supply & demands) Problem: how to increase production Learning Point: 1. what s competitor s growth
. product mix. Substitutes Learning points: 1. internet) Competitors. increase defects Less time for maintenance Supplier might not meet our demand
29. retailer. Profits. Cabana Feet (apparel. business strategies) Problem: how to increase profits and sales using short and long term strategies Analysis Revenue unit price. what s client growth. stock. utilities. Costs Cons Possible worker burnout Lower profit per pair Higher wear and tear on itinerary Might lower quality of products. regional. distribution channels Costs fixed (property & SG&A. Pros and cons off adding a third shift Pros Able to meet demands of up to (new production capacity) More total profit Help keep competitors out Save on hiring and training costs Easy to get back to normal production levels Better utilization of equipment Employees Suppliers Products Equipment Production level.(3) What is the differentiation between their product and ours? (4) Are there barriers to entry?
28. volume. marketing) and variable (cost of sales. Growth what s industry growth.
what s the strategy Analysis: Market Size Market Share Revenue Costs depends on which part of the value chain we enter (analyze the scenarios) Competitive responses Entry strategy Learning Points: 1. terminal manufacturing. A biometric security feature could be placed on smart cards as well as on credit cards. build the supporting infrastructure (terminals. how to enter) Problem: wants to get into smart card. value chain. processing. MNC (market entry. Synergy of this product with rest of business lines. What are the components of the value chain? Manufacture the cards. Retailers & Cataloges: 30. 3. service centers). maintenance 4.
.2. processing and collect fees. distribute the cards. Smart card value chain: card development. maintenance (expiration) 2.