Business situation framework

Question 1

In what cases is the business situation framework useful?

Answer 1

Cases regarding:

1. new market entry
2. new product
3. new business
4. how to grow
5. strategy
6. turnaround
7. company position assessment

Question 2

What is the 4 main aspects to consider using the business situation framework?

Answer 2

1. Company
2. Customer
3. Competition
4. Product

Question 3

What relevant aspects should be considered regarding the company?

Answer 3

Analyze the companies:
1. capabilities and expertise

2. distribution channels used
3. cost structure
   —> high in fixed costs or variable costs? (high fixed cost could e.g. be a barrier to entry the market.
   —> investment costs needed?
4. Intangibles
   —> brands
   —> brand loyalty
5. Financial situation
6. organizational structure
   —> e.g. organized by product line but customer want one contact point
7. What are their core strategy?
8. What markets are they currently in?

9.

Question 4

What relevant aspects should be considered regarding the customer?

Answer 4

1. Who is the customer?
   - Segment
   —> segment size
   —> growth rate
   —> % of total market
   - look for trends
   —> compare metrics to historical metrics
2. What does each customer segment want?
   - Identify key needs
3. What price is each segment willing to pay?
   - Price points
   —> price sensitivity
4. Preferred distribution channel for each segment?
5. Customer concentration and power
   - wall-mart effect?

Question 5

What relevant aspects should be considered regarding the competitors?

Answer 5

1. Competitor concentration and structure?
   —>monopoly/oligopoly/competitive?
   —> market share concentration?

2. Competitor behaviors?
—> target customer segments
—> products
—> pricing strategy
—> distribution strategy
—> brand loyalty

3. what are their best practices?
   —> are they doing things we’re not?
4. Are there any barriers to entry?
   —> new entrants to market?
5. supplier concentration
6. Industry regulatory environment
7. life-cycle of industry

Question 6

What relevant aspects should be considered regarding the product?

Answer 6

1. Nature of product
   —> it’s benefits
   —> selling points
2. Commodity good or differentiable goods?
   —> possible to increase differentiation?
3. Identify complementary goods
4. Identify substitutes
   —> vulnerable to indirect competitors
5. Determine product life-cycle
   —> new product or in stagnation phase?
6. packaging
   —> how should the product be packaged to meet the needs of the specific customer segment?

Question 7

Common variable costs?

Answer 7

1. Raw material

2.

Question 8

Common fix costs?

Answer 8

1. Labour
2. rent
3. maintenance costs
   —> electricity
   —> wifi
   —> water
   —> heat
   —> repairs
   —> security

Question 9

Common investment costs?

Answer 9

1. New machines
2. New facilities
3. Technology investments
4. new furniture