中训师大.ppt

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1、Profit Pools and Core CompetenceDarral G ClarkeProfessor of ManagementThe Marriott SchoolBrigham Young University 中国培训师大联盟中国培训师大联盟 www.china-12/21/20221Darral G.Clarke for BM 499Profit Pools:A Fresh Look at StrategyOrit Gadiesh and James L.GilbertHarvard Business ReviewMay-June 199812/21/20222Darral

2、 G.Clarke for BM 499THE PC INDUSTRYS PROFIT POOLnValue chain focusnAxesnVerticaloperating marginnHorizontalshare of industry data40%30201000100%share of industry revenuemicroprocessorsother componentspersonal computerssoftwareperipheralsservicesThe value chain for the PC industry includes six key ac

3、tivities;the profitability of the activities varies widely.Manufacturers compete in the largest but least-profitable segment of the chain.12/21/20223Darral G.Clarke for BM 499The Profit Pool LensnThe profit pool is the total profit earned in an industry at all points along the industrys value chainn

4、Segment profitability may vary by customer group,product category,geographic market,or distribution channelnProfit concentration may be very different than revenue concentrationnShape of the profit pool reflects the competitive dynamics of a businessInteractions of companies and customersCompetitive

5、 strategies of competitorsnProduct pools are not stagnant12/21/20224Darral G.Clarke for BM 499THE U.S.AUTO INDUSTRYS PROFIT POOL100%operating marginsource:Harvard Business Review,May-June 1998auto rental25%1510500share of industry revenueauto manufacturingnew car dealersused car dealersauto loansaut

6、o insuranceaftermarket parts20leasingwarrantygasolineservice repairThe automotive industry encompasses many value-chain activities.The way that profits and revenues are distributed among these activities varies greatly.The most profitable areas of the car business are not the ones that generate the

7、biggest revenues.12/21/20225Darral G.Clarke for BM 499Profit Pools:Company ExamplesCompaniesAutomakersU-HaulElevators(OTIS)Harley DavidsonPolaroidCore BusinessAuto manufacturingTruck RentalElevator ManufacturingMotorcyclesInstant Photography CamerasSources of Highest ROIAuto leasing,insurancePacking

8、 materials,storageServiceAccessories(consumer products),leasing,service,restaurantsFilm12/21/20226Darral G.Clarke for BM 499Managerial ImplicationsnFocus on growth and market share can lead a company to focus on unprofitable segments of an industrynTodays deep revenue revenue pool may be tomorrows d

9、ry hole.nThe goal should be to focus on profitable opportunitiesnIndustry should be considered more broadly than traditional definitionnAutomobile industry includesComponent manufacture and supplyNew car assembly and deliveryNew car warrantee and serviceNew car financing and insuranceUsed car sales

10、and service12/21/20227Darral G.Clarke for BM 499Turbulent industriesnProfit pools are especially important and useful in industries undergoing deregulation and/or technological changenSuch changes can open new profit pool opportunities and drain old onesnChoke points may change or be eliminatednOppo

11、rtunities for either forward or vertical integration may emergenCurrent vertical integration may be disintermediated12/21/20228Darral G.Clarke for BM 499Creating and managing a profit poolnProfit pool analysis may indicate new opportunities or threatsnImperativesnBe open to a new perspective on your

12、 business and industrynDeveloping new strategy may require overturning elements of the current strategynBe open to reevaluate the role played by current competitorsnBe vigilant to identify possibility that new entrants may seek to enter your industry with radical strategies 12/21/20229Darral G.Clark

13、e for BM 499Looking Ahead:Profit Pools and the Five ForcesnProfit pools are computed by multiplying the size of the revenue by the unit profit marginnEssentially an accounting process-no theorynMost valuable in situations in which external conditions are essential stable and/or unimportantn(Often do

14、minated by internal data alone)nThe five forces tells us(which will study next)nthe underlying determinants that determine both the revenue size and the unit profit marginnThe profit drivers which allow us to forecast the direction of change12/21/202210Darral G.Clarke for BM 499Marakon RunnersThomas

15、 A.StewartFortuneSept.28,199812/21/202211Darral G.Clarke for BM 499Marakon Associatess Approach to Corporate StrategynConsultants to many large corporationsnCoca Cola,HP,GM,CitiCorp,etc.nClients have returns 3.1%higher than industry peer groupnGoal is to increase shareholder value through analysis o

16、f economic profitnDeep drilling in business data to measure value creationProduct segmentsCustomer segments12/21/202212Darral G.Clarke for BM 499How Strategy HappensnLearning where value is creatednWaterfall charts by product and customer segmentsnEvaluating strategynIndustry average profit per unit

17、nCompanys profit vs industry averagenManaging valuenCurrent strategynChange product focusnChange customer focus12/21/202213Darral G.Clarke for BM 499Learning where value is createdProduct segmentsCustomer segmentsProfit/loss($per unit)Volume(units)Volume(units)012/21/202214Darral G.Clarke for BM 499

18、Evaluating StrategyCompany profit per unitIndustry-average profit per unit12/21/202215Darral G.Clarke for BM 499Managing for valueCurrentstrategyChangeproductfocusChange CustomerfocusValue12/21/202216Darral G.Clarke for BM 499Application to our casesnRetail industry(Wal*Mart)nSoft drink industry(Coc

19、a-Cola and PepsiCo)nSteel(Nucor)and aluminum cans(CC&S)nHi tech(Intel,Cisco,and Dell)nVideo games(Nintendo)nWeb businesses(eBay and Yahoo!)12/21/202217Darral G.Clarke for BM 499The Core Competence of the CorporationPrahalad,C.K.and Gary HamelHarvard Business Review,May-June 199012/21/202218Darral G.

20、Clarke for BM 499Core CompetencenA Firm is made up of resourcesnpeople,patents,brand names,plant&equipment,processes,etcnA competence is the ability to employ diverse skills and resources to perform tasks and activities.nA core competence is a broadly based and/or a broadly applied fundamental capab

21、ility.12/21/202219Darral G.Clarke for BM 499Competence and TechnologynCompetence is not the same as technologynCompetence requiresntechnologiesnsocial organizationncollective learning12/21/202220Darral G.Clarke for BM 499Core competence questions:nWhat are we really good at?nHow can we build upon it

22、?nWhat do we need to be good at?12/21/202221Darral G.Clarke for BM 499Characteristics of Effective CompetenciesnDurability:Technical equipment can be short lived.Reputation or knowledge may depreciate more slowly.nTransparency:The more complex the source of competence,the harder it is to imitate it.

23、nTransferability:The availability of resources to competitors.nReplicability:A competitors internal ability to replicate a competence using available resources.12/21/202222Darral G.Clarke for BM 499Choosing CompetenciesnHow central is this competence to our success in the market?nHow long could we p

24、reserve our competitiveness in this business without this particular competence?nWhat future opportunities would be foreclosed if we were to lose this particular competence?12/21/202223Darral G.Clarke for BM 499Core Competence and Core Products12/21/202224Darral G.Clarke for BM 499A Hierarchy of Com

25、petencies12/21/202225Darral G.Clarke for BM 499Building Strategy from CapabilitiesStrategyCapabilitiesResources1.Identify resources,appraiserelative strengths and weaknesses.Leverage use of resources2.Identify capabilities.What do we domore effectively than competitors?Identify resource inputs to ca

26、pabilities.3.Appraise rent-generating potential resources and capabilities in terms of:sustainable advantage,inappropriability4.Select strategy that best exploits the firms resources and capabilities rela-tive to external opportunities.5.Identify resourcegaps that need to befilled.Invest in replenis

27、hing,augmenting,and up-grading the firmsresource base.CompetitiveAdvantageSource:Robert M.Grant,“The Resource-Based Theory of Competitive Advantage,”California Management Review,Spring,1991,page 151.12/21/202226Darral G.Clarke for BM 499How to map your industrys profit poolOrit Gadiesh and James L.G

28、ilbertHarvard Business ReviewMay-June 199812/21/202227Darral G.Clarke for BM 499A straight forward exercise with complicationsnConcept is straight forwardnDefine value chain activitiesnDetermine their size and profitabilitynApplication of concept is complicatednFinancial data doesnt correspond to va

29、lue chain activitiesnCompany data is aggregated across businessesnProducts,customer purchases,channel volumes rarely match up with boundaries of an activitynConsiderable creativity is required12/21/202228Darral G.Clarke for BM 499Four step processnDefine the poolnDetermine the size of the poolnDeter

30、mine the distribution of profitsnReconcile the estimates12/21/202229Darral G.Clarke for BM 499Four step processDefine the poolDetermine the size of the poolDetermine profit distributionReconcile the estimatesTask:determine which value-chain activity influence profits now and in the futureDevelop a b

31、aseline estimate of cumulative profits generated by all profit pool activitiesDevelop estimate of the profits generated by each activityCompare the outputs of steps 2&3GuidelinesTake a broad view of the value chain(beyond traditional industry definition)Seek a rough but accurate estimateShift betwee

32、n aggregation and disaggregation in your analysisIf numbers dont add up,Check assumption and calculationsExamine industry from three perspective:own,other players,customersTake easiest route:go where the data areDo own economics first,then large pure players,large mixed,smallerCollect additional dat

33、aDont disaggregate more than necessaryTake at least two viewpoints:company level and product levelUse proxy measures where necessaryResolve inconsistenciesdont ignore themOutputProfit pool listEstimate of total pool profits,(range)Point estimate of profits for each value chain activityFinal estimate

34、s of activity and total pool profits12/21/202230Darral G.Clarke for BM 499What is“profit”anyway?nCan be thought of in three ways(all of which may be relevant for profit pool analysis)nAccounting profitnReturn on investmentEconomic value added=after-tax operating profits cost of all invested capitaln

35、Cash-flowEarnings before taking fixed-asset and capital costs into account12/21/202231Darral G.Clarke for BM 499Example:Credit cards at RegionBankAcquisitionFundingServicing$80 value of a subscriber$279 average annual revenues per subscriber$60 annual payment to servicer per subscriber-$64 cost of a

36、cquiring a subscriber-$235 average annual costs per subscriber$50 average annual cost to servicer$16 acquisition profit per subscriber$44 annual funding profit per subscriber$10 annual servicing profit per subscriber$3.20 annual acquisition profit per subscriber amortized over 5 year average lifeX26

37、0 million subscribersX260X260$800 million profit$11.4 billion profit$2.6 billion profit12/21/202232Darral G.Clarke for BM 499RegionBanks Profit Pool Map100%acquisition funding servicingShare of industry revenue20%Operating margin12/21/202233Darral G.Clarke for BM 499RegionBanks Profit Pool MosaicBanksShare of industry profitsacquisition funding servicingShare of activity profits100%100%BanksBanks12/21/202234Darral G.Clarke for BM 499