Posts Tagged ‘business strategy’

Boston Consulting Group Lessons: Business Strategy Template

Thursday, January 12th, 2012

The product lifecycle concept can be explained in relation to substitution analysis business strategy. The trend of consumers switching to emerging replacement products is often called the technology S-curve, since the diffusion rate of new technology generally follows an S-shaped curve. As products move through its lifecycle, the probability of consumers switching to a replacement product goes up.

We can say business strategy is a process requiring creativity business strategy frameworks. As we evaluate other strategic considerations, we must shape and adapt our conventional points of view by coming up with new products. If a simple spreadsheet would solve our problems in business strategies, then there would not be much opportunities for differentiating and winning in the market. In developing a strategic response, the business often must solve emerging business issues and draw conclusions from disparate pieces of information.

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In the strategy development process, it is always critical to conduct rigorous business market analysis corporate strategy. Understanding what is a business strategy involves both supply analysis and demand analysis, the latter of which includes segmentation and segment analysis, understanding business strategy, and industry analysis. There are also a number of market place evaluation variables, including market place sizing, pricing changes, research and development, market place characteristics, market force structure, and historical trends. Proper business market analysis involves defining the market scale and the study scope, understanding the core business issues, and planning effectively. It is important to understand what makes a market unique, such as a high degree of government regulations, high industry fragmentation, and importance of CapEx.

If you are do not have enough pricing data, your other option is to formulaically calculate pricing sensitivity business strategy. Perceived substitute products can vary by consumer buyer segment, by situation, and other key drivers. Deriving a formula for pricing sensitivity is a multi step process, starting with determining the key pricing sensitivity drivers. There are 9 main drivers to price sensitivity. Switching costs effect typically is a direct driver to customer price sensitivity. Pick the price drivers that are most relevant to your situation. Reference price effect is a common pricing driver. When you take a look at your product, only a subset of these drivers are relevant. The higher the product-specific cost of investment to the consumer applied to find alternate suppliers, the less price sensitive that buyer is when determining between organic growth options of the pricing strategy. Buyer’s price sensitivity for a given product becomes higher the higher the product’s price relative to substitute products.

In the business strategy process, it is critical to develop a cohesive and definitive understanding of the market growth strategy. Market analysis is derived from both supply and demand side forces that affect the market, which is comprised of consumer offerings. Conducting a market study will allow us to understand the market environmental factors, the market dynamics, and the trends and market outlook. By first analyzing the market, a business can develop informed strategic options and recommendations leading to the overall strategy development.

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HBR Training Course: Business Strategy Analysis

Thursday, January 12th, 2012

If you are do not have enough price data, your alternative is to quantitatively calculate pricing sensitivity marketing strategy. Depending on your product offering, only a subset of these drivers are relevant. The higher the offering-specific cost of investment to the consumer must make to find alternate suppliers, the less price sensitive the supplier’s pricing driver is when determining between substitute products. Score the impact of each skimming business strategy driver. Marketing experts suggest 9 main drivers to price sensitivity. Consumer driven alternatives can vary by consumer buyer segment, by occasion, and other factors. Consumer price sensitivity for any given product grows the higher the product’s price relative to perceived substitute products. Calculating a mathematical equation for business strategy is a multi step process, starting with choosing the key pricing sensitivity drivers. Switching costs effect often is a direct driver to consumer’s price sensitivity. Choose the price drivers that are most relevant.

In developing a product market entry or product marketing strategy, one critical strategic business framework for any marketer is business strategy growth strategy. Product lifecycle analysis framework is used to predict sales growth, understand customer and competitive trends, and, in return, develop the appropriate product marketing strategy. When developing product lifecycle analysis, you may find it useful to map the lifecycle stages against the consumer adoption curve. The length of each stage in the lifecycle varies tremendously, from less than a year to a century or more.

Financial ratios are measures of a firm’s specific financial features growth strategy. These ratios are typically used by investors to value a company. Financial ratios help us diagnose the financial state of a firm. Investment comparable ratios are indicative of the market’s viewpoint of a company. Financial comparables typically fall into four buckets: efficiency ratios, liquidity ratios, solvency ratios, and investment ratios. Accounting principles can differ making accurate comparable ratios and comparisons difficult. Financial ratios are often employed to determine potential areas of improvement for a company. Liquidity ratios measure a business’s ability to meet short-term liabilities. They affect the mix of funds in the balance sheet and affect business’s ability to undertake operating setbacks. A frequently used solvency ratio is debt equity ratio. Profitability business strategy delineate how well a company leverages its assets to create profits.

A number time tested niche corporate strategies have been identified based on synthesizing well over 750 thousand private companies blue ocean strategy. Each niche business strategy is most beneficial at particular phases of industry consolidation. For every global consolidator, there are many acquisition opportunities. If you’re a niche player, make sure you adopt the right strategy for the present stage of your respective industry’s development. Adopting the best niche technique is critical. 80% of businesses around today are not around in 25 years. When the outgrows the effectiveness of a selected niche business strategy, the company should either sell or evolve its business strategy. For any niche company, there is certainly to your time and energy to fight then there is time and energy to sell. Selling with the wrong time could cost a lot of cash.

Many companies are inconsistent in managing short-term and long-term thinking and investment to fuel growth-enabled businesses business strategy. It isn’t uncommon for an organization to experience a slowdown in growth in its primary business and lack innovative ideas and blue ocean strategy in the pipeline to propel continued growth. There are examples of when external triggers (such as regulatory change, blue ocean strategy) for a company to transition out of core business to unexplored areas. It can be the case that businesses experience unjustified focus on new business without developing the core, spreading the organization and management team thin.

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Deloitte : Product Life Cycle Analysis against Competitive Forces

Tuesday, January 10th, 2012

In any product launch plan, developing the pricing strategy is one of the core driver to a successful product product life cycle. It can be said, the product positioning along its consumer adoption curve will dictate its high level pricing strategy. To create the an effective pricing strategy, our company need to evaluate within the context of the consumer adoption curve. Taking a broad perspective, pricing is fueled by the strategic intent of whether our corporate objective is to skim the market or to penetrate the market.

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All the financial statements of a company are connected with each other and relate back to the periodic activities of the business product lifecycle management. As a result, assets are depreciated charged to P&L over time as the asset is “used up” over its useful life span to allow for revenues to be instantiated. The balance sheet takes into account the value of what a business‘s product life cycle owns less what the business owes, and balances them with the sources of financing (shareholders funds). Profit-loss statements match costs to relevant sales line items in a fiscal year to give a complete depiction of financial performance. Financial statements depict an ongoing stream of events, which compromise of all the transactions for the year, trading, and other financial events. The cash flow statement illustrates the real cash flows related with income and costs in a given year, to illustrate the actual change in position.

When we look at the product life cycle process, it is important to come up with a a clear and definitive qualitative model for the market place product life cycle. Marketing strategy is derived from both supply and demand side factors that affect the market, which is comprised of consumer offerings. Developing a market study involves understanding the market environmental factors, the market dynamics, and the market outlook. The market environment can be analyzed by using the PEST analysis framework, which evaluates the political, legal, economic, socio-demographic, cultural, and technology factors that are existent in the market.

Strategy development process has gone through 5 key phases since the early 1900s product life cycle. A lot of growth product life cycle is also hinged on ideas in the 1970s, where the focus of what business leaders devote their efforts to was around thinking strategically to out maneuver competition and the product life cycle business frameworks of alternative strategies, portfolio analysis, and the BCG Growth Share Matrix were developed. Shifts in strategic mindset represent an ever evolving, new thought leaders, and emergence of disruptive technologies and changes. Today, the strategic development theme is on integrating strategic planning and execution with a stress on the key concepts of core competencies, strategy planning and execution, and balance scorecard analysis.

Product Life Cycle Nevertheless, the functional completion of jobs is comparatively challenging, as many inter linked projects are connected with precise departments and folks in the business product lifecycle stages. Solution lifecycle administration (PLM) simply one-way links associated individuals to operate jointly by utilizing centralized facts concerning the merchandise and thus strengthen their product or service administration. Consequently, automating the best products, course of action and undertaking lifecycle conduite remedy will help to extend accuracy and minimize complexity. For this reason, every single organization aims to improve their organization merchandise so as to achieve these difficult sector disorders; by making use of the most recent and verified item lifecycle administration software package. This in the long run allows to streamline each of the elements in addition to the techniques of making, production and keeping the solution, through the original stage of formation as much as the ultimate phase of retirement.

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Boston Consulting Group Market Research Report: Product Lifecycle Management in an Unregulated Environment

Monday, January 2nd, 2012

Product life cycle analysis is a business strategy framework created to improve upon the accuracy of traditional forms of costing, so that business decisions can be performed in a way that is fact based product life cycle management. Activity Based Costing allows for true profitability to be understood around crucial areas of product lines, customer segments, distribution channels, among other markets. Whereas, in conventional costing methods, indirect/overhead costs are allocated across all offerings based on a standard, volume-based cost driver, which is quite inaccurate and misleading, thus lends itself to leading to risky business decisions.

The appropriate strategy for a business unit relies on the lifecycle stage for the industry in question product life cycle. The increase in sales more than makes up for the decrease in pricing , driven by competitive pressures, during the growth stage, resulting in positive cash flow. During the decline stage, consumers switch to substitute products—the top 3 players take an increasing piece of the pie. Initial market awareness is minimal in the introduction stage, so the focus is on informing consumers to encourage a free trial usage. The maturity stage is defined by the reduction in the rate of sales growth and a continued decline in costs. During the growth stage financials are negative. Some players maintain profitability during the decline stage by being the niche company with specialized offerings. In the decline phase, we see continued decline in sales growth, cash flows, and profitability. In the introduction stage, there are large expenses across the areas of advertising, selling, promotion, distribution to generate product awareness of and demand for the emerging product. In the growth stage, expenditures will remain relatively high, however, the focus shifts toward building and holding a loyal consumer base. The product life cycle management is signaled by a remarkable increase in sales growth and profitability.

Strategy development has evolved through several key stages over the years product lifecycle management. Shifts in strategic mindset represent an ever evolving, emerging thought leaders, and emergence of disruptive technologies and changes. A lot of business strategy is also hinged on ideas in the 1970s, where the focus was around thinking strategically to out maneuver competition and the product life cycle business frameworks of alternative strategies, portfolio analysis, and the BCG Growth Share Matrix were developed. In the current day, the strategic development theme is on integrating strategic planning and execution with a stress on the key concepts of core competencies, strategy planning and execution, and balance scorecard analysis.

Product Lifecycle Analysis is a framework for predicting industry sales product life cycle. To exemplify using lifecycle analysis to forecast sales, if your current products are in the late Maturity stage, you should start looking in Introduction or Growth stage products. Similar to the BCG Growth-Share Matrix, the product lifecycle framework is useful in managing a company’s portfolio of businesses or products.

Penetrating the market is best used when the product reaches the majority of the market and growth is the name of the game product lifecycle management. In this state of competition, this is a race to fight for 10% plus of the market. Penetration pricing strategy works well for a late entrant who wants to capture share quickly. Large businesses may engage in product life cycle to put up barriers to entry and drive out small players. In the mainstream market, rapid market penetration is necessary for survival. Penetration pricing is typically used when adoption it at its highest rate. Most competitors, incumbents and new entrants will be using penetration strategy.

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