Cases Flashcards
Main principles for Market Entry
- Understand company currently
- Understand market of interest
- Evaluate Financials
- Economic Implications
ME:
Company Currently
Revenue, Strengths and weaknesses, Product mix, Customers, Distribution, Finances
ME:
Market of Interest
Growth rate, Customers, Stage of Life Cycle, Trends, Key players, Substitutions
ME:
Financials
Barrier costs (investment costs), Fixed/variable costs, Revenue, years to breakeven.
ME:
Economic Implications
If entering: How, Competitive advantage, timing and speed, orgnaization. If not, what can we do?
Profitability Formula
Profit = Revenue - Costs
Profit:
Revenue Breakdown
Revenue per unit x units sold. Has either changed? Over what time period?
Profit:
Questions to ask about Revenue
Is this an everyone thing or an us thing? Competitor, Decreased demand? Decrease quality?
Profit:
Cost breakdown
Cost per product (fixed and variable costs. (Variable = cost per unit x unit sold). Has anything changed?
Profit
Questions to ask about Cost
Is this an us thing or an everyone thing?
Materials gone up? Labor gone up?
Main principles of growth strategy
Products
Price
Marketing
Financials
GS:
Products questions
Product mix and lifecycle, state of those industries, biggest potential, driver of customer satisfaction, growth rate compared to competition.
GS:
Price questions
Price in comparison to competition, customer price sensisitvity
GS:
Marketing questions
Current marketing and sales strategy vs competitors
GS:
Financials questions
Current funds available for growth, shareholders demands
GS:
Growth strategies
Increase market penetration (market campaign), develop a new product for the same market, use current product in new market, or make an entirely new product for a new market.
Main principles of mergers and acquisitions
Analyze which and why acquiring, the target industry and market, the target company, and the feasibility
M+A:
Questions for analyzing client company
Why acquiring? - strategic, defensive, synergistic (cost saving, etc), undervalued (client can bring target company potential value). Which industry, what other buisnesses does the client have? Clients key customers
M+A:
Questions about target industry
Where does company fit within larger market, how big is market, growth of market, focus (high volume or high margin), barriers to entry, competitors, profitability of competitiors, possible threats.
M+A:
Questions about target company
Company market share, company growth, company profit, synergies, key customers, valuation
M+A:
Questions about feasibility
Is target open for acquisition, are there funds available, client experienced in integration, risks
Competitive Response: Relevant questions
What is the nature of the product and how does it differ from what we offer? (how important are new features, what will they let the competitor do, why is it being introducted?), what market segment is addressed by new product, does client have resources to be used in new market/product
Competitive Response: Recommendations
- Make current product more attractive: redesign, change market segment, increase marketing, build loyalty, cut prices
- Introduce new product: Acquire different products: acquire competitor/capabilities, or copy with resources
- Do nothing
Pricing: main concepts
Investigate the company and the product and then choose a strategy.
Pricing: Investigating company
What products does the company cell, where does company stand in market.
What is companys key objective? (profit, market share, growth, brand position, competitive response) clarify before starting analysis.
Pricing: Investigating product
How does product differ from competition, what are alternatives/substitutes, what stage lifecycle, is supply and demand foreseeable.
Pricing: Pricing strategies
- Competitive analysis- price based on competitors (are there comparable products, how do they compare, how are they priced?)
- Cost-based- breakeven + profit. Considered outdated
- Price-baseed: determine value of product in customers eyes.
Valuation: Methods
Discounted cash flow or industry multiple method
Valuation: Discounted Cash flow
Divide projected annyal cash flow by interest rate.
Valuation: Industry multiple method
Ratio of actual firm valuation to book value of same firm. Do for multiple industry players and find average.
