Adjust Answer
Increasing Factors
Adjust Answer
Analyze Results
Implications?
Calculate
Use Round Numbers!
Common sense check!
Make Assumptions
Decreasing
Comp. pressure?
Price
Increase
Decrease
- Market Conditions
- Competition
Volume
Revenues
Analyze Using
Profit Equation
Selling Less
Profitable Items
Fixed Costs
- Added Capacity?
Gather Information
What's Driving
the Decline?
Product Mix
Variable Costs
Expenses
- Writeoffs
- Lawsuits
Unusual Expenses
Declining Profits
New Markets
- Geographic
- Economies of Scope
Competitive Environ.
- Substitutes
Inventory Mgmt.
- Carrying Costs
- Shrinkage
Scale Economies
/Diseconomies
- Supply Constraints
Direct Material
Replace w/machines
- Union?
Direct Labor
COGS
Cost Acctg.
- Allocation Drivers
- Does pricing
reflect Cost
Variable O/H
SG&A
Increase Profitability
Existing Market
- Promotion
- Place
Unit Volume
Price Sensitivity
- Elasticity
Price
Revenues
Competitors Plans
Substitutes
Global Competition
Threats
Industry Capacity
Market Demand
Economy
Consumer tastes
Bottlenecks
Improve Productivity
Outsource
Acquire
Add shifts
Add Capacity
Increase Capacity?
Cyclical / Seasonal
Market Trends
Disposable income?
Price
Have sensitivities changed?
Overpriced versus our competition?
Place
Is our distribution getting squeezed out?
Are Customers Changing Channels?
Promotion
Are we spending?
Push vs. pull?
Tastes changing?
Customer
Product
Is quality sagging?
Company
Do new tax
incentives exist?
Regulatory
Customer Turnover
Competition
Normal good?
Bundled product?
Distribution channel
Purchasing Habits
Promotion
Price
Place
Product
Competitor
- Where are we positioned?
- Where is the competition?
Finances
Intangible
Tangible
Cost structure
Resources to respond?
Customer
Vendor
Distributor
Business relationships
Company
- How do we add value?
Competitive Response
Mature market?
Demographic changes
New customers?
Disposable income
Price Sensitivity
Susbsitutes
Values/Tastes
Customer
- What do they want?
- How do they choose?
Place
Is distribution aligned with customer?
Are we experienced in this channel?
Promotion
Push or Pull?
Cost of launch?
Will current promotions help?
Price
Have we explored sensitivity?
Can we make a profit at this price?
Product
Have we done homework?
What does the segment want?
Proliferation of products already?
Customer
Does product met a need?
Is market growing?
Many
Yes
No
Can we erect some?
Yes
Can we beat them?
No
M arketing
Will we cannibalize existing products?
Is this a complement / bundled good
Does it build on resources?
Operations
D0 we have capacity?
Supply network?
Finance
Are we able to finance the launch?
Should we buy an existing producer?
Company
Can we do it?
Competition
Is there any?
Few
Educational Differences
Seasonality
- Weather
Is organization consistent
with overseas 'autonomy'
Corporate Values
- Bribery
Worker's conditions / child labor
Local Market
- Size
- Competition
Political Climate
- Instability
Distribution system
- Transportation infrastructure
- Different channels
External
Discount Rate
Timing
- Startup / disposition
- Operating
Amount
Cash Flows
Quantitative
International Expansion
Internal
Useful Life
Timing
- Opportunity Cost
Size
- Market Potential
- Outflows
- Working Capital
Discount Rate
Cash Flows
NPV Analysis
Strategic Fit
- Missing Links
of Value Chain
Synergies
Investment Decision
- Seasonality
- Volatility
- Inflation
Demand Cycle
Environmental
Other Factors
Stability
Regulation
Political
- Current Supply
Potential Demand
Competitors
Investment Decision
Acquisition Fit
Strategic Objective
Resources
Internal Factors
Hard Issues
- Price
- Balance Sheet
Soft Issues
- Culture/Fit
- Management
Identify Acquisition
Candidates
External Factors
Company Acquisition
Industry Attractiveness
Analyze Opportunity
Understand Purpose
Diversification?
Gain Market Share?
Geographic Expansion?
No
Can We Release Good News
to Raise Stock Price?
Do We Have Cash?
Yes
Then Buy Back Stock
to Raise Stock Price
No
Cultural Fit
Strategic Compatability
Classic M&A
Is there a Firm That...
Yes
White Knight
Self-Help