Applied Business Development

Welcome to IBCDP 6:2 – 2011-08-30

Matti Kaulio Royal Institute of Technology (KTH)Dept. of Industrial Economics and Management, KTHmkaulio@kth.se

Roadmap

• Recapitulation• Best Assignment• Understanding Business Environment• Business Case Work

F2F 2

• Strategic awarness• Understanding Business Environments• Adding Value (Service Design)• Service Production & Launch• “Making it Happen” & Examination

Learning Goal

• How could new business opportunities look like in your industry?

• What competencies are needed for spotting and developing them?

Last Meeting: Bussiness Models and Offerings

Market and Technology Evolution:Past – Present – Future?

Generative Network• New Industry Entrants• Converging Tech., Industries &

Businesses“Open” Network• Deregulation• Competiton• IP-based Tech.

Propritarian Network• Market monopoly• Switch-based Tech.

The Business Model IC

ORRevenuemodel

BSCosts Costs

Costs

Value Propositions

Business Concept

Customers

Offering

BusinessSystem

Source: Based on SIAR Normann, 1977, & Dr. Tommy Bergkvist, Strategic Management Institute, modified

Problem-Segment-Offering (PSO) model

An identified market - Segment

The Problem/need a customer face

”Offering” and Revenue Model

Revenue Models

• Producer model• Broker model• Consultancy model• Performance-based model• The TelCom model/combination model (fixed cost +

opening cost + variable cost; opening fee + downloaded data)

• The TechTrade model: Licenciering + royalty• The ”Gilette” model• The ”Drug Dealer” model• The ”Gore-Tex model”• The ”Adobe” model• The ”Singer” model• The Construction Industry model• ”Free” models

Last Homework AssigmnentJune 2011

Assigmnent and deliverableAssignment:Make an divergent analysis of your case topic. That mean

that you should develop a few (3-5) different possible applications, analyze and characterized them, and when you meet in the next module be prepared to chose one of these applications to continue with.

DeliverablesHand in: A report including a comparison of generated

possible applications. The report is written in Power Point and covers the ssigmnemnt, description of your research findings, description of 3-5 PSO offerings and a summarizing table

The report should be written in and handed in no later than on the 24st of June.

Process1. Do research: What similar applications exists? What are their

offerings? Etc. Use internet and other sources2. Redflect upon the findings3. Generate alternatives: Develop 3-5 new PSO descriptions of new

applications4. Summarize your findings in a power Point Presentation where

your potential applications are presented in text and in a table- do not select which application to continue work with! This is a task för the next F2F module

5. Before leaving today you should have showed your preliminary applications for the coaches

6. Coaches will be walking around bewteen the groups. They should be seen as resources for your work.

Best Assignment. . .

Best Assignment

• Group 4

Understanding Business Environments

” Industry Attractivness”

The Landscape: Which Road to Go?

Content

• PEST(EL)• Porter’s 5-Forces• Generic strategies• Market estimates

PEST, PEST(EL)• Political

- Regulations, tax policy, trade restrictions, and political stability- Promotion of: health, education, and infrastructure of a nation.

• Economic - Economic growth, interest rates, exchange rates and the inflation rate,

• Social factors - cultural aspects, population growth rate, age distribution, career attitudes and

emphasis on safety and demographic changes such as aging population.• Technological factors include technological aspects such as

- R&D activity, automation, technology incentives and the rate of technological change.

• Environmental factors- environmental law, ecological and environmental aspects such as weather,

climate, and climate change. This aspect is linked to Political and leagal factors• Legal factors

- labour law, discrimination law, consumer law, antitrust law, employment law, and health and safety law

Industry Analysis: 5-forces

Source: DeWitt & Meyer, 2004.

Generic Competitive Strategies (Porter)

• Cost leadership• Differentiation• Focus

Time

Diff

eren

t per

form

ance

mea

sure

TimeNonconsumers or

nonconsuming contexts

New-Market Disruption

Compete against nonconsumption• Telephone• Personal

computers• Photocopiers

Company improvement trajectoryCustomer demand trajectory

Perf

orm

ance

• Discount retailing• Stell minimills

Low-End Disruption

Target overshop customers with

lower-cost business model

Sustaining Innovation

Bring better products into

established markets

1. The Disruptive Innovation Theory

5-Forces & Macro Environment

Source: DeWitt & Meyer, 2004. Modified

Some Generic Strategies

Generic Competitive Strategies (Porter)• Cost leadership• Differentiation• Focus

Aggressiveness (Miles & Snow)• Prospector• Analyzer• Defender• (Reactor)

Alternative Generic Strategies• Niche players• Pioneers• Local producers• Dominant firms• Mee-too firms• Worldwide replicators• Professionals• Rationalizers• Conglomerates

Market estimates

• How many petrol stations are there in the USA?

Approaches

• Top-down• Bottom up• Iterative process

• 126 889!

Understanding Business Environments

”Uniqueness”

Content

• Value Chain vs Value Star• 4-action framework

Porter’s Value Chain C

ORRevenuemodel

BSCosts Costs

Costs

Value Propositions

Business Concept

Customers

Offering

BusinessSystem

Question?• What is the strategy of Skistar?

Value star

Uniqueness? Value Chain vs Value Star

The Four-Action Framework (Blue Ocean)

A new valuecurve

ReduceWhich factors should be reduced

well below the industry’sstandards

CreateWhich factors should be created

that the industry hasnever offered?

RaiseWhich factors should be rasied

well above the industry’sstandards?

EliminateWhich of the factors

that the industry takes for granted should be

eliminated?

Summary

Your challenge this time . . .

• ”Paint the landscape”• ”Develop unique offerings”

Assessment matrix, example

Application #1 Application #2 Application #3

Relative(Four-action framework) Customer ValueUniqeness(Four-action framework)

Industry attractivness/ Intensity of Competition(Pest, 5-Forces)Protection

Revenue Potential

Growth Potential

Diversification potential

. . .

Homework assignment 2To be handed in on the 9th of September

Homework, to bee reported on the 9th of September

1. Chose one of your applications (or a combination of)

2. Conduct a deeper analysis of your application based on the 5-Forces & PEST. Try the 4 action framework

3. If you are not satisfied – chose another application and iterate 1-2

4. The outcome should be one (1) selected application with a ”thick” background description!

Process1. Chose one of your applications (or a combinations of), use the

assessment matrix2. Create a PEST(EL) analysis of this application

1. Are some aspects more important than the others?3. Create the 5-forces map.

1. TIPS: The delimitation of the industry can be tricky, and this issue is strongly linked to the final result

2. When conduction your 5-force analysis, use easy market estimates4. Try the 4-action framework to further develop your product5. Summarize your findings in a Power Point Presentation

1. Before leaving today you should have showed your preliminary applications for the coaches

2. Coaches will be walking around bewteen the groups. They should be seen as resources for your work.

PEST, PEST(EL)• Political

- tax policy, labour law, environmental law, trade restrictions, and political stability- Promotion of: health, education, and infrastructure of a nation.

• Economic - economic growth, interest rates, exchange rates and the inflation rate.

• Social factors - cultural aspects, population growth rate, age distribution, career attitudes and

emphasis on safety and demographic changes such as aging population.• Technological factors include technological aspects such as

- R&D activity, automation, technology incentives and the rate of technological change.

• Environmental factors- ecological and environmental aspects such as weather, climate, and climate

change. This aspect is linked to Political and leagal factors• Legal factors

- discrimination law, consumer law, antitrust law, employment law, and health and safety law

Industry Analysis: 5-forces

Source: DeWitt & Meyer, 2004.

The Four-Action Framework (Blue Ocean)

A new valuecurve

ReduceWhich factors should be reduced

well below the industry’sstandards

CreateWhich factors should be created

that the industry hasnever offered?

RaiseWhich factors should be rasied

well above the industry’sstandards?

EliminateWhich of the factors

that the industry takes for granted should be

eliminated?

Assessment matrix, example

Application #1 Application #2 Application #3

Relative(Four-action framework) Customer ValueUniqeness(Four-action framework)

Industry attractivness/ Intensity of Competition(Pest, 5-Forces)Protection

Revenue Potential

Growth Potential

Diversification potential

. . .