The Business Side. Presented at #ATCConf2015

GAJAH ANNUAL REPORT 2015 | 1

The Business Side#ATCConf15

Richard BrooksK International09.35 - 10.20am FRIDAY, 25 SEPTEMBERATC Conference 2015Old Trafford, Manchester, England

GAJAH ANNUAL REPORT 2015 | 2

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“If you need a friend, get a dog.”

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DOWNLOAD THIS SLIDEDECK

http://tinyurl.com/ATC2015TBS

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#ATCConf15@RichardMBrooks

#L10n #i18n #CAT #MT #xl8 #t9n#localisation #translation #language

#oldtrafford #manutd

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“Let’s get a consultant in”

More management nonsense at http://dilbert.com/

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Strengths

Opportunities

Weaknesses

Threats

Located

in UK

From

outside

the UK

Not be

located in

UK

Located

in UKDiverse

portfolio

Diverse

portfolio

Diverse

portfolio

Diverse

portfolio

More

nonsense

More

nonsense

More

nonsense

More

nonsense

Stupid

Waste

Of

Time

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• PEST(LE) Analysis • Porter’s Five Forces• Resourced Based View• Business Model Canvas• Strategy Canvas

Tools to Actually Help you Analyse

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Environmental AnalysisPESTLE Framework

Political Environmental Social Technology Legislation Economic

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• Ut wisi enim ad minim veniam, quisnostrud.

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• Duis autem vel eumiriure dolor in hendrerit in vulputate.

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Industry AnalysisPorter's five forces of competitive position

Threat of New Market Entrants

Threat of Substitute Products

Rivalry within the Industry

Bargaining Power of Buyers

Power ofSuppliers

More Reading >http://www.exed.hbs.edu/assets/documents/hbr-shape-strategy.pdf

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Bargaining Power of Suppliers

Suppliers are POWERFUL if...

• There is a credible forward integration threat by suppliers.

• Suppliers are concentrated.

• There is a significant cost to switch suppliers.

• The customers are powerful.

Suppliers are WEAK if...

• The product is standardized.

• There are many competitive suppliers.

• They are supplying commodity products.

• There is a credible backward integration threat by purchasers.

• There are concentrated purchasers.

• The customers are weak.

What does the bargaining power of suppliers in our industry look like?

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Bargaining Power of Customers

Customers are POWERFUL if...

• There are a few buyers with significant market share.

• Buyers purchase a significant proportion of the output.

• Buyers possess a credible backward integration threat.

Customers are WEAK if...

• Producers can threaten forward integration, taking over customers’ position.

• There are significant buyer switching costs.

• There are many customers – significant influence on a particular product or price is small.

• Producers supply critical portions of the customers’ input

What does the bargaining power of customers in our industry look like?

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Resource Based View

• Looks internally at a firm’s Resources (and Capabilities and Competences) and how these can be arranged to deliver sustainable competitive advantage.

• Often used as a response to the Environment (PESTLE) and Industry (5 Forces) Analysis.

• Resources that are simultaneously Valuable, Rare, Imperfectly Imitable and Non-Sustitutable deliver sustainable competitive advantage.

• Look for these in your competitors businesses… Look for resources you have that are rare and try and add value to them.

More Reading >http://business.illinois.edu/josephm/BA545_Fall%202011/S10/Barney%20(1991).pdf

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Use these tools to help your customers

develop their strategy.

To add value…

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Customer Segments

Who is your customer? What market segments are you providing a service/product for?

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What value do we deliver to your clients? or To your client’s supply chain?Is it based on > performance, brand, value, convenience, price…

Value Propositions

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Channels to Market

How are you going to get your product/service to your clients? Is it virtual? Or is it a physical product?Are our channels integrated into our client’s supply chain?

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Customer Relationships

For each segment… what's the relationship like?Transactional, self-service, account/relationship managers, community.

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Revenue Streams

For what value are our customers willing to pay for? Per unit charge, hourly, subscription, licenses, leasing. Price discrimination or fixed price.

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Key Resources

What key resources do we need for the right hand side? Are they human, intellectual, financial or physical.

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Key Activities

The most important actions needed to make you business model work. e.g. problem solving (for consultants).

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Key Partnerships

Who do you need as your key partners.Used to optimise your business model, reduce risk or acquire resources.

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Cost Structure

Describes all costs involved in operating a business model. Is this business… cost driven, value driven, % of fixed and variable costs and are there economies of scale/scope?

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Commodity Good?

from Investopedia.com

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Is translation a commodity?

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No it bloody isn’t.But some of us sell it on price, so it feels like price is the only differentiator (a bit like a commodity).

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Your ProductPotential Customer Awesome person who can do amazing things.

+ =

This isn’t what you sell This is

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Pretium = Price

Pretium = Value

The thinking in 10 B.C.

Price = Value

The problem in 2015 A.D.

Price ≠ Value

Pretium

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… 4G is “the communications equivalent of the change the jet engine made over steam”

>>> Inability to monetise value creation

Olaf Swantee, CEO EE

3G1GB£31

4G1GB£26

When Value > Price

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Becky Williams M&S Apology

When Price > Value

>>> lack of understanding of an emotive reaction to a small price change

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• The last time you met an Accoutant?

• The last time you met someone from procurement (or vendor management?

• The last time you met someone from the pricing department?

Rich ponders…

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Of all the 7 Ps Price has the single most

immediate effect on the bottom line.

(hint hint… would make a nice tweet)

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“the single most important decision in evaluating a business is pricing power”

“if you’ve got the power to raise prices without losing business to a competitor, you’ve got a good business. And if you have a prayer session before raising the price by 10% you have a terrible business”

- Warren Buffet/MIT 2011

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What does a 2% rise in price do to your

profits?

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P&L #1

Income £100 000

Cost of Sales -£50 000

Gross Profit £50 000

Overheads -£40 000

PBIT £10 000

Interest -£5 000

Tax -£1 000

Profit £4 000

P&L #2 (2% increase in price)

Income £102 000

Cost of Sales -£50 000

Gross Profit £52 000

Overheads -£40 000

PBIT £12 000

Interest -£5 000

Tax -£1 400

Profit £5 600

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2% rise in price =40% Increase in profits

All other things being equal (tax calculated at 20%)

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Cost Plus.Amounts to a mark-up on costs… is widely used but rarely the most profitable.

Competition driven.Amounts to using price within a game theoretic framework for strategic advantage.

Customer Driven.Amounts to using price to achieve short-term sales objectives rather than profits.

Value Based.Amounts to understanding the value created and then maximising its capture.

Pricing Strategies

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The butter costs more than the corn and the paper bag/cup it

comes in costs more than both together.

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Created shareholder value by forecasting revenue streams.

Move from providing a product to a bespoke service.

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Built in the quality of the product to the pricing model. Extracting the

right about of $$$ in relation to the value added.

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“… a unique mix of attributes that companies provide through their products, interactions, ethos and pricing to create loyalty and satisfaction in targeted customer segments.

It is the unique set of benefits a business offers its target customers.”

- P Kotler

Value Proposition

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Value = Benefits - Cost

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Add Value…

Think how the impact, capability and cost change as you increase the complexity of your product/service to have a larger impact on your customer. Increasing (and demonstrating) value as you go.

… and extract some of it

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The Total Share of Wallet

Made up of

• What you do for the client

• What your competitors do for the client

• What the client does themselves

• What the client doesn’t do but should

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Therefore Different Strategies

Or Marketing Approaches…

• To retain our key clients

• To take business from competitors

• To convince the client to outsource

• To educate the client

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“we have totally

screwed up”

Michael Horn, CEO Volkswagen Group of America

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P&G paid $57 Billion for Gillette (in 2005) but they only acquired $6 Billion of tangible assets*.

*David Haigh, Brand Finance, Marketing Magazine, 1st April 2005

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• Better price

• Higher sales

• Lower prices

• Better terms

• Higher Search Engine Results

• More partners

• Better retention

• Lower salary expectations

• Better qualified candidates

• Higher PE ratio

• Lower volatility

• Lower borrowing costs

What does a Brand give you? Its way more than your logo…

@RichardMBrooks #ATCConf2015 | 62Bennis, Warren, 1989. On Becoming a Leader. New York: Addison Wesley.

Bennis’ list of differences• The manager administers; the leader innovates.

• The manager is a copy; the leader is an original.

• The manager maintains; the leader develops.

• The manager focuses on systems and structure; the leader focuses on people.

• The manager relies on control; the leader inspires trust.

• The manager has a short-range view; the leader has a long-range perspective.

• The manager asks how and when; the leader asks what and why.

• The manager has his or her eye always on the bottom line; the leader’s eye is on the horizon.

• The manager imitates; the leader originates.

• The manager accepts the status quo; the leader challenges it.

• The manager is the classic good soldier; the leader is his or her own person.

• The manager does things right; the leader does the right thing.

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http://hackthesystem.com/blog/why-i-hired-a-girl-on-craigslist-to-slap-me-in-the-face-and-why-it-quadrupled-my-productivity/

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Richard Brooks

uk.linkedin.com/in/richardbrooks

twitter.com/@RichardMBrooks

plus.google.com/+RichardBrooks_L10N

0044 1908 557900Richard.Brooks@k-international.comwww.k-international.com