Professional Documents
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Profitability: Big Picture Revenues Costs
Profitability: Big Picture Revenues Costs
Big Picture
Product
Change in features
market
growth
developmental stage
Profitability levels
Demand elasticity
Competition
Rivalry
New entrants
Substitutes
Revenues
Price:
Premium pricing
Market power
Product mix
Volume
Volume per type of
product
Distribution issues
Supply chain / logistics /
inventory management
Costs
FC
VC
Capacity utilization
Short run / long run costs
Benchmark vs. competition
Weighing of different costs
components (COGS, etc.)
Consumers
Change in needs /
preferences
Segments
WTP
What is most important
Page 1
Decrease in sales
Big Picture
Product
Change in features
market
growth
developmental stage
Profitability levels
Demand elasticity
Competition
Rivalry
New entrants
Substitutes
Revenues
Price:
Premium pricing
Market power
Price war
Product mix
Company
Core competencies /
resources
Positioning
Volume
Volume per type of
product
Distribution issues
Supply chain / logistics /
inventory management
Customers
Change in needs /
preferences
Segments
WTP
What is most important
Page 2
Expansion
Big Picture
Market
Competition
Consumer
Success Factors
Current profitability:
Volume
Prices
Product mix
Costs
Alternative Opportunities
Acquisition
JV
Outsourcing / leasing
Franchise
Cost/benefit analysis
Risks
Page 3
Market Entry
Big Picture
Market
Size and growth
Profitability
Developmental stage
Relevant trends
Competition
Rivalry
Substitutes
Core competences &
resources
Likely reaction to entry
Consumer
Drivers of purchase
behavior
Segmentation
Gap in needs
WTP
Success Factors
Investments and costs
Revenues
Fit of company with the
new market:
Core competences
Potential positioning
Source of volume (steal
share? Expand category)
Cost structure
(economies of scale /
scope)
BTE:
Product differentiation
Brand loyalty
Switching costs
Regulation
Access to distribution
channels
Other
Page 4
Competition
Rivalry
Substitutes
Positioning
Consumer
Company
Revenues
Price
Volume
Costs
Core competences &
resources
Product
Features vs. competition
Risks:
Competitors reaction
Loss of focus
Lack of fit between new
business and companys
competences
Drivers of purchase
behavior
Segmentation
Gap in needs
Page 5
Acquisition
Rationale for acquisition
Company (acquiring and
acquired)
Value chain
Core competences and
resources
Profitability
Success factors
Investment
Revenue increase / costs
decrease
NPV analysis
Financing
Discount factor
Growth
Strategic aspects
If NPV positive
Organizational issues:
Realization of synergies
Changes that need to be
made pre-acquisition
Risks:
Likely response of
competition
Page 6