Mck

Question 1

Possible Revenue Segments to get data for, isolate & explore:

Answer 1

• By product / product line
• By distribution channel
• By region
• By customer type (new/old, big/small)
• By industry vertical

Question 2

Possible Cost Segments to get data for, isolate & explore:

Answer 2

• Segment cost by logical components
• Segment costs by value chain
  Value Chain Example:
  Identify fixed costs in each of the following:
  Raw Materials -> Factory -> Distribution ->Customers

Question 3

Customer

Answer 3

Who is the customer?
- identify segments (segment size, growth rate, % of total market)
- compare current year metrics to historical metrics (look for trends)
What does each customer segment want? - identify keys needs
What price is each segment willing to pay? - determine price points and price elasticity/sensitivity
Distribution channel preference for each segment
Customer concentration and power* (does one customer control all the demand, the “ Wal-Mart” effect)

Question 4

Product

Answer 4

Nature of product (think out loud about the product, it’s benefits, why someone would buy it)
Commodity good or easily differentiable goods (could company increase differentiation)
Identify complimentary goods (can we piggy back off growth in compliments or near compliments?)
Identify substitutes* (are we vulnerable to indirect competitors namely substitutes?)
Determine product’s lifecycle (new vs. almost obsolete)
Packaging (optional) - what’s bundled, included (ex. Razor vs. razor blades, with w/o service contract… can
change in packaging make product more likely to meet needs of specific customer segments.)

Question 5

Company

Answer 5

Capabilities and expertise
Distribution channels used
Cost structure (mainly fixed vs. variable - is it better to have higher fixed cost with lower variable, or vice versa.
High fixed cost = barrier to entry.... compare to industry, often insightful)
Investment cost (optional: only if case involves an investment decision)
Intangibles (e.g., brands, brand loyalty)
Financial situation - does the co have enough capital for the invesment
Organizational structure (optional: e.g., is team organization in conflict with how customers want to do business.
Ex: We're organized by product line, but customers want one point of contact across all product lines)

Question 6

Competition

Answer 6

Competitor Concentration* & Structure (monopoly, oligopoly, competitive, market share concetration)
Competitor behaviors (Target customer segments, products, pricing strategy, distribution strategy, brand loyalty)
Best practices (are they doing things we’re not?)
Barriers to entry* (do we need to worry any new entrants to market)?
Supplier concentration* (optional: ex: Microsoft or Intel in PC Market… use full 5 forces if this is a likely issue)
Industry regulatory environment
Life-cycle of industry