Business Situation Framework

Question 1

New Market Entry - big picture

Answer 1

1. CUSTOMER

a. Segments
- size
- % growth
- market share
- channel preferences

b. Concentration and power
2. COMPETITION

a. Barriers to entry
b. Target customers
c. Strategic advantage
- products
- pricing
- distribution
- brand loyalty
d. Concentration

3. COMPANY

a. Profitability on the product:
- Revenues
- Costs –> FC, MC
b. Capabilities -
- Brand/marketing/reputation
- Management
- Operations feasibility

4. RISKS

Question 2

New Product or New Business - big picture

Answer 2

Need the goal - market share, profit, etc.

1. Product:
   - Complements –> piggy back off growth?
   - Life Cycle - new or almost obsolete?
   - Appeal
   - Differentiation –> can we improve, or is it a commodity?
   - Substitutes
2. COMPANY

A. Profit –> Revenues - Costs - Costs of cannibalization

B. Capabilities - BLRC

• Brand/Marketing/Reputation
• Locations
• R+D (not so much)
• Core competencies

3. Market - CRMMT

A. Competition
- New entrants
- Market leader and why
B. Regulation
C. Macro
D. Market size change
E. Trends in preferences

4. RISKS

Question 3

Additional Considerations if Client is a PE firm

Answer 3

They are looking to manage costs and revenues to maximize profits in the short term, don’t care about the long term as much, need exit opportunities to get the companies off their portfolio and return gains to investors.

1. How easy will it be to sell the company in several years?
   - -> Market cycles, will it be easy to sell or will the market be in a recession?
   - -> Political stability
   - -> Climate risks, etc.
   - -> Is this business going to be attractive several years from now?

Question 4

Business Situation Framework - complete

Answer 4

PCCC

1. PRODUCT - CLADS
   A. Complements –> piggy back off growth?
   B. Life cycle - new or almost obsolete?
   C. Appeal of product
   D. Differentiation –> can we improve, or commodity?
   E. Substitutes

2. CUSTOMER
A. Segments 
- Size
- % Growth
- Market Share
- Channel Preferences

B. Concentration and Power

3. COMPANY - FRCCC
A. Financial Health
B. Reputation
C. Cost Structure
- FC
- VC
D. Channels
E. Capabilities
- R+D
- Expertise
- Competitive advantages

4. COMPETITION - BTSC (the competition gives me BTSC!)
   - A. Barriers to Entry
   - B. Target Customers
   - C. Strategic Advantage
   – Products
   – Pricing
   – Distribution
   – Brand Loyalty
   D. Concentration and power