8/8/2019 Selection of Benchmark Business Models
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Markets and Structure of Flow
Governmentmarkets
Middlemenmarkets
Resourcemarkets
Manufacturer markets
Services, money
Resources
Money
Taxes, goods
Goods and services
Services,money
Taxes,goods
Money
Consumer marketsServices
Resources
Money
Taxes
Money
Goods and services
Taxes,goods
Services,money
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A Companys Macroenvironment
COMPANY
Substitute
Buyers
New Entrants
Rival Firms
Suppliers
IMMEDIATE INDUSTRY &COMPETITVE ENVIRONMENT
MACROENVIRONMENT
The Economy at large
S o c i a l V a l u e s a n d L i f e s t y l e s P o
p u l a t
i o n d e
m o g r a p
h i c s
T e c h n
o l o g y
L e g i s l a t i o n a n d r e g u l a t i o n s
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Break-even Analysis
TotalRevenue
Total Costs
FixedExpenses*
* Fixed Expenses = Marketing Expenses and Other Direct
Expenses
$Millions
15
30
35
20
10
25
5
050 150100
Break-Even Volume(90,000)
200
Units Sold (000)
Profit Loss
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Demand and Supply
Price
Quantity0
G
B
E
D
F
S
A
D
S
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Elasticity
Demand is elastic and expenditure increaseswhen price falls from P1 to P2
(-)
(+)Price
P1
P2
0 Quantity
Demand is inelastic and expenditure increaseswhen price falls from P1 to P2
(+)
(-)
Price
P2P1
0 Quantity
e = 0
Quantity
Price e = 0
e = -
(totalinelasticdemand)
(total elasticdemand)
Quantity
Price
e = - e < - 1
e = - 1
e > - 1
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The Product Life Cycle
Salesoverprofits
Stages over Time
Introduction Growth Maturiy Shake-out Decline
Sales
Profits
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The Life-Cycle Portfolio Matrix
C
A
Strong Average Weak
Development
Growth
Competitiveshakeout
Maturity
Decline
Saturation
THE BUSINESS UNITS COMPETITIVEPOSITION
THE INDUSTRYS STAGEIN THE EVOLUTIONARY
LIFE CYCLEE
F
D
B
H
G
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The Product-Positioning Map
High price
Low quality
High quality
Low price
C
D
AE
B
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The Four Ps of McCarthy
Product
Place Promotion
Price
Environment
Environment
E n
v i ro
n m
e n t E
n v i r o n m e n t
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Efficiency vs. Effectiveness
ThriveEfficient
Die quicklySurvive
Die slowly
STRATEGIC MANAGEMENT
OPERATIONALMANAGEMENT
Inefficient
Effective Ineffective
1
43
2
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SWOT Analysis
Strengths
Opportunities Threats
Weaknesses
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The Generic Value Chain
Inboundlogistics
Outboundlogistics
Operations Marketingand sales
Service
Primary Activities
Procurement
Technology development
Human resources management
Firm infrastructure
M a r g i n
M a r g i n
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The Ansoff Matrix
Existing
New
Existing New
New product
development
Marketdevelopment
Market penetration
Diversification
PRODUCTS AND/OR SERVICES
MARKETS
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BCGs Growth-Share Matrix
High
Low
LowHigh
MARKETGROWTH
RATE
RELATIVE MARKET SHARE
Star
Cash Cow Dog
QuestionMark
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McKinsey 7-S Framework
SuperordinateGoals
Structure
Staff
Strategy Systems
StyleSkills
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Core Competencies
Banner Brand
Business
Units
CoreProducts(Platforms)
CoreCompetencies
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The General Electric Business Screen
Low
High
Medium
Strong Average Weak
COMPETITIVE POSITION
INDUSTRYATTRACITVENESS
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GE / McKinsey Multifactor Portfolio Matrix
INDUSTRY ATTRACTIVENESS
BUSINESSSTRENGTH
InvestManage
Selectivelyfor Earnings
Invest
Invest
ManageSelectively
for Earnings
ManageSelectively
for Earnings
Harvest or Divest
Harvest or Divest
Harvest or Divest
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Very low Moderate Very high
Very low
Moderate
Very high
MARKETRISK
TECHNOLOGY RISK
Market and Technology Risk Bubble Diagram
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Porters Five Forces
Potential Entrants
Industrycompetitors
Rivalry amongexisting firms
Substitutes
BuyersSuppliers
Threat of substitute productsor services
Bargaining power of suppliers
Bargaining power of buyers
Threat of new entrants
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The Generic Strategies
Cost Leadership Differentiation
Cost Focus Differentiation Focus
BroadTarget
Narrow
Target
Lower Cost Differentiation
COMPETITIVE ADVANTAGE
COMPETITIVESCOPE
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Leavitts Diamond
Task
Technology
PeopleStructure
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Maslows Hierarchy of Human Needs
Esteem Needs(self-esteem, recognition, status)
Self-Actualization Needs(self-development and
realization)
Social Needs(sense of belonging, love)
Safety Needs(security, protection)
Physiological Needs(hunger, thirst)
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Managerial Grid
1 2 3 4 5 6 7 8 9
1
2
3
4
5
6
7
8
9
concern for production
concernforpeople
Country Club Management (1,9)
Production is incidentalto lack of conflict andgood fellowship
Team management (9,9)
Production is fromintegration of task and human requirements
Dampened Pendulum (5,5)
(Middle of the road.)Push for production butdont go all out. Give some
but not all all: be fair but firm
Task Management (9,1)
Men are a commodity just as machines.A managers responsibilityis to plan, direct andcontrol the work of thosesubordinate to him
Impoverished Management (1,1)
Effective production isunobtainable becaus people arelazy, apathetic and indifferent.Sound and mature relationshipsare difficult to achieve because,(human nature being what it is)conflict is inevitable
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The Business Process Re-engineeringApproach
Function 1 Function 2 Function 3 Function 4
Micro operations
Customer needs fulfilled
Business processes
Customer needs
Business pro
Customer
Customer nee
Micro operat
Activity 1 Activity 2 Activity 3 Activity 4
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Total Quality Management
Whole operation involved Quality srategy Teamwork Staff empowerment Involves customers and suppliers
Quality systems Quality costing Problem solving Quality planning
Statistical methods Process performance Quality standards
Error detection rectification
Inspection
Total quality management
Quality control
Quality assurance
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Supply Chain Management
TheOperation
Second-tier suppliers
First-tier suppliers
First-tier customers
Second-tier customers
Supply side Demand side
Purchasing and supplymanagement
Physical distributionmanagement
Logistics
Materials management
Supply chain management
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Du Pont SchemeReturn on equity
ROE =Earnings after tax
Owners equity
Financial leverage multiplier Tax effectsReturn on invested capital
ROIC =Earnings before interest and tax
Invested capital
Operating profit margin
Earnings before interest and taxSales
Capital turnover
SalesInvested capital
Financial structure ratio
Invested capitalOwners equity
Financial cost ratio
Earnings before taxEarnings before interest and tax
Tax effect ratio
Earnings after taxEarnings before tax
Sales
Operating costs
Invested capital Owners equity Cost of debt Tax rate
Cash
Working Capitalrequirement
Fixed assets
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Valleyof Death
EnterpriseCash Flow
EnterpriseFinancing
TimeBreak-even
point
Emerging Growth
FFF & Angels
Venture
CapitalistInvestment Banks &
Banks
Seed Capital& Early Stage
EarlyGrowth
Later Growth
PublicMarket
InitialPublic
Offering
Mezzanine
1st
2nd
3rd
Financing Life Cycle
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