Profitability

Big Picture
Product
Change in features

market
growth
developmental stage
Profitability levels
Demand elasticity

Competition
Rivalry
New entrants
Substitutes

Revenues
Price:
Premium pricing
Market power
Product mix

Volume
Volume per type of
product
Distribution issues
Supply chain / logistics /
inventory management

Costs

FC
VC
Capacity utilization
Short run / long run costs
Benchmark vs. competition
Weighing of different costs
components (COGS, etc.)

Consumers
Change in needs /
preferences
Segments
WTP
What is most important

Page 1

Decrease in sales
Big Picture
Product
Change in features

market
growth
developmental stage
Profitability levels
Demand elasticity

Competition
Rivalry
New entrants
Substitutes

Revenues
Price:
Premium pricing
Market power
Price war
Product mix

Company
Core competencies /
resources
Positioning

Volume
Volume per type of
product
Distribution issues
Supply chain / logistics /
inventory management

Customers
Change in needs /
preferences
Segments
WTP
What is most important

Page 2

Expansion
Big Picture
Market
Competition
Consumer

Success Factors
Current profitability:
Volume
Prices
Product mix
Costs

Alternative Opportunities

Acquisition
JV
Outsourcing / leasing
Franchise

Core competences and BTE

for other potential entrants
Potential benefits of
expansion
How to expand:
Available location /
resources
Proximity to customers
Technology
Capital costs
Labor costs
Time required to complete
expansion

Cost/benefit analysis
Risks

Page 3

Market Entry
Big Picture
Market
Size and growth
Profitability
Developmental stage
Relevant trends

Competition
Rivalry
Substitutes
Core competences &
resources
Likely reaction to entry

Consumer
Drivers of purchase
behavior
Segmentation
Gap in needs
WTP

Success Factors
Investments and costs
Revenues
Fit of company with the
new market:
Core competences
Potential positioning
Source of volume (steal
share? Expand category)
Cost structure
(economies of scale /
scope)

Alternative methods of entry

Build/acquire/partner
Investments costs and
risks
Past experience has the
firm been successful in
penetrating markets in the
past?

BTE:
Product differentiation
Brand loyalty
Switching costs
Regulation
Access to distribution
channels
Other

Page 4

Industry analysis (how to increase market

share?)
Big Picture
Market
Size and growth
Profitability
Developmental stage
Relevant trends

Competition
Rivalry
Substitutes
Positioning

Consumer

Company
Revenues
Price
Volume

Costs
Core competences &
resources
Product
Features vs. competition

Opportunities and risks

Opportunities:
Expand to new product
categories
Change focus

Risks:
Competitors reaction
Loss of focus
Lack of fit between new
business and companys
competences

Drivers of purchase
behavior
Segmentation
Gap in needs

Page 5

Acquisition
Rationale for acquisition
Company (acquiring and
acquired)
Value chain
Core competences and
resources
Profitability

Market and competition

(acquiring and acquired)
Size and growth
Rivalry
Developmental stage
Relevant trends

Consumers of acquiring and

acquired
Potential synergies
Economies of scale
Economies of scope
Brand expansion
Technology
Access to distribution
channels / customers

Success factors
Investment
Revenue increase / costs
decrease
NPV analysis
Financing
Discount factor
Growth

Strategic aspects
If NPV positive
Organizational issues:
Realization of synergies
Changes that need to be
made pre-acquisition

Risks:
Likely response of
competition

Sensitivity for main

assumptions
If NPV negative
Alternatives to acquisition:
Other target
JV
Organic growth

In what conditions would

the acquisition be
economical

Page 6