11/30/2018 RocketBlocks: Structure

An emerging dragon
Category: Uncategorized, Competitive response
6

Your client is the senior management of heavy manufacturing company Caterpillar, which manufactures
heavy machinery like dump trucks and fork-lifts. Recently, it witnessed massive growth in the Chinese
economy and is beginning to suspect that it won't be long until a major Chinese competitor emerges
from the country. Currently, its main competition comes from Volvo of Sweden and Komatsu of Japan.
The leadership team has asked us to review the situation and lay out options to mitigate this potential
threat. What key issues would you investigate?

Your structure (Time taken: 6 seconds, avg. time: 4 minutes, 27 seconds)

What! No buckets - lets turn up the effort here!

 RocketBlocks suggested answer

Problem statement: Evaluate potential threat

Leading Chinese manufacturers

Analysis of direct competitors

Analysis of potential switch-over competitors
Chinese govt support?

Development timeline

How long before leaders expand outside China?

Preemptive actions?

Competitive strategies

Build strong-holds in likely expansion countries

Establish joint-venture in China
Push for trade-deals which level playing field
Protectionist US trade deals?
Partner with Chinese firms?

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Key considerations

This is an interesting flavor of competitive response situation because here the client is
thinking preemptively about the future environment
Thus, a strong framework here will start by sussing out the likely competitive players and
assess what type of responses might most effectively position them to address the looming
threat

Framework strengths

This framework does a very good job of setting aside time to think about who the key
competitive players will be, both in terms of direct competitors and large Chinese
manufacturers which might crossover into their market
In addition, it covers a prospective competitive timeline, which is a nice touch to understand
how much time the company has, and then jumps into some good strategic options for the
company can combat the challenge
There is a really nice specificity calling out important considerations like trade deals,
protectionist tariffs or establishing pre-emptory strongholds

Framework improvements

One area for improvement is to clarify the pre-emptive actions sub-bucket, which appears to
be a duplicate of the robust competitive strategies bucket which is explored in full below

 RocketBlocks alum, currently Associate at McKinsey & Co.

Problem statement: How to mitigate potential threat?

Current economics

Market growth
Market share
Share growth

Cost of entry

High variable cost

Also high fixed cost?
Can we drive up the price of supply?

Possible responses

Acquisition
Patents
Price war

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Product segmentation

Which products under threat?

Which products produce the most money?
Which products are growing fastest?

 RocketBlocks alum, currently Principal at The Boston Consulting Group

Problem statement: Chinese competitor threat

Suppliers

Securing supplies
Hedging energy futures

Manufacturing

Inventory management
Lean Six-Sigma
Cut costs (labor)

Distribution

Expand reach
Secure customers

Quick response

Acquire?
Partner?

 Anonymous user answer

Problem statement: How to mitigate potential threat?

Current economics

Market growth
Market share
Share growth

Cost of entry

High variable cost

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11/30/2018 RocketBlocks: Structure

Also high fixed cost?

Can we drive up the price of supply?

Possible responses

Acquisition
Patents
Price war

Product segmentation

Which products under threat?

Which products produce the most money?
Which products are growing fastest?

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