Applied Business Development

1. Applied Business Development Welcome to IBCDP 6:2 – 2011-08-30 Matti Kaulio Royal Institute of Technology (KTH) Dept. of Industrial Economics and Management, KTH mkaulio@kth.se

2. Roadmap • Recapitulation • Best Assignment • Understanding Business Environment • Business Case Work

3. F2F 2 • Strategicawarness • Understanding Business Environments • Adding Value (Service Design) • Service Production & Launch • “Making it Happen” & Examination

4. Howcould new business opportunities look like in your industry? Whatcompetencies are needed for spotting and developingthem? LearningGoal

5. Last Meeting: BussinessModels and Offerings

6. 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.

7. The Business Model I C Customers Value Propositions Business Concept O R Revenue model Offering Costs BS Business System Costs Costs Source: Based on SIAR Normann, 1977, & Dr. Tommy Bergkvist, Strategic Management Institute, modified

8. Problem-Segment-Offering (PSO) model The Problem/need a customer face An identifiedmarket - Segment ”Offering”and Revenue Model

9. Revenue Models • Producermodel • Brokermodel • Consultancymodel • Performance-basedmodel • The TelCommodel/combinationmodel (fixedcost + openingcost + variable cost; openingfee + downloaded data) • The TechTrademodel: Licenciering + royalty • The ”Gilette” model • The ”DrugDealer” model • The ”Gore-Texmodel” • The ”Adobe” model • The ”Singer” model • The Construction Industry model • ”Free” models

10. Last HomeworkAssigmnent June 2011

11. Assigmnent and deliverable Assignment: Make an divergent analysisof your casetopic. That mean that you shoulddevelop a few (3-5) different possibleapplications, analyze and characterizedthem, and when you meet in the nextmodule be prepared to chose one of theseapplications to continue with. Deliverables Hand in: A report including a comparison of generatedpossibleapplications. 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.

12. Process • Do research: Whatsimilarapplicationsexists? What are theirofferings? Etc. Use internet and othersources • Redflectupon the findings • Generate alternatives: Develop 3-5 new PSO descriptions of new applications • Summarize your findings in a power Point Presentation where your potential applications are presented in text and in a table- do not selectwhichapplication to continue work with! This is a task för the next F2F module • Before leaving today you shouldhaveshowed your preliminaryapplications for the coaches • Coacheswill be walkingaroundbewteen the groups. Theyshould be seen as resources for your work.

13. Best Assignment. . .

14. Best Assignment • Group 4

15. Understanding Business Environments ” Industry Attractivness”

16. The Landscape: Which Road to Go?

17. Content • PEST(EL) • Porter’s 5-Forces • Genericstrategies • Market estimates

18. 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

19. Industry Analysis: 5-forces Source: DeWitt & Meyer, 2004.

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

21. 1. The Disruptive Innovation Theory Sustaining Innovation Bring betterproductsintoestablished markets Performance Different performance measure Low-EndDisruption Target overshopcustomerswith lower-cost business model • Discountretailing • Stellminimills New-MarketDisruption Competeagainstnonconsumption • Telephone • Personal computers • Photocopiers Time Nonconsumers or nonconsumingcontexts Time Company improvementtrajectory Customerdemandtrajectory

22. 5-Forces & Macro Environment Source: DeWitt & Meyer, 2004. Modified

23. Some Generic Strategies Alternative Generic Strategies • Niche players • Pioneers • Local producers • Dominant firms • Mee-too firms • Worldwide replicators • Professionals • Rationalizers • Conglomerates Generic Competitive Strategies (Porter) • Cost leadership • Differentiation • Focus Aggressiveness (Miles & Snow) • Prospector • Analyzer • Defender • (Reactor)

24. Market estimates

25. Howmanypetrol stations are there in the USA?

26. Approaches • Top-down • Bottom up • Iterative process

27. 126 889!

28. Understanding Business Environments ”Uniqueness”

29. Content • Value Chain vs Value Star • 4-action framework

30. Porter’s Value Chain

31. Question? • What is the strategy of Skistar?

32. Value star

33. Uniqueness? Value Chain vs Value Star

34. Reduce Whichfactorsshould be reducedwellbelow the industry’sstandards Eliminate Which of the factors that the industrytakes for grantedshould be eliminated? Create Whichfactorsshould be createdthat the industry hasneveroffered? A new valuecurve Raise Whichfactorsshould be rasiedwellabove the industry’sstandards? The Four-ActionFramework (Blue Ocean)

35. Summary

36. Your challenge this time . . . • ”Paint the landscape” • ”Developuniqueofferings”

37. Assessmentmatrix, example

38. Homeworkassignment 2 To be handed in on the 9th of September

39. Homework, to beereported on the 9th of September • Chose one of your applications (or a combination of) • Conduct a deeperanalysis of your applicationbased on the 5-Forces & PEST. Try the 4 action framework • If you are not satisfied – chose anotherapplication and iterate 1-2 • The outcomeshould be one (1) selectedapplication with a ”thick” backgrounddescription!

40. Process • Chose one of your applications (or a combinations of), use the assessmentmatrix • Create a PEST(EL) analysis of this application • Are someaspectsmoreimportantthan the others? • Create the 5-forces map. • TIPS: The delimitation of the industrycan be tricky, and this issue is strongly linked to the final result • Whenconduction your 5-force analysis, use easy market estimates • Try the 4-action frameworktofurtherdevelopyourproduct • Summarize your findings in a Power Point Presentation • Before leaving today you shouldhaveshowed your preliminaryapplications for the coaches • Coacheswill be walkingaroundbewteen the groups. Theyshould be seen as resources for your work.

41. 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

42. Industry Analysis: 5-forces Source: DeWitt & Meyer, 2004.

43. Reduce Whichfactorsshould be reducedwellbelow the industry’sstandards Eliminate Which of the factors that the industrytakes for grantedshould be eliminated? Create Whichfactorsshould be createdthat the industry hasneveroffered? A new valuecurve Raise Whichfactorsshould be rasiedwellabove the industry’sstandards? The Four-ActionFramework (Blue Ocean)

44. Assessmentmatrix, example