The Psychological Sell: Grab the minds of the audience, navigate them through themes and ideas, never letting go. Then finish off with the call to action.
Don't make the audience think - make your points very clear.
The Person who is able to tell an effective business story is perceived as being in command - and deserving of the confidence of the others.
5 Cardinal Sins of making a presentation
I. No Clear Point: What was that about? What was the key point of the presentation?
II. No audience benefit: The presentation fails to show how the audience can benefit from the information presented. The audience is left thinking – so what?
III. No clear flow: the sequence of ideas is so confusing that it leaves the audience behind and unable to follow. “how did the presenter get there”?
IV. Too detailed: Too many detailed facts – some of which are irrelevant. Sometimes – the main point is obscured.
V. Too Long: The audience loses focus and gets bored before the presentation ends.
Focus: Separate the wheat from the chaff and give the audience what they need to know.
I. Start with the objective in sight
II. Shift the focus from the features to the benefits
III. Outline WIIFY – what benefit does your presentation offer the audience? (triggers include the following)
a) This is impt to you because
b) What does this mean to you?
c) Why I’m I telling you this?
d) Who cares?
e) So What?
f) Here’s WIIFY
Capture the audience early with an opening Gambit
1. Question: Provide a question directed at the members of the audience.
2. Factoid: A striking statistic or little-known fact.
3. Retrospective / Introspective: A reflective look backward or forward.
4. Anecdote: A short human interest story.
5. Quotation: An endorsement about your business from a respected source.
6. Aphorism: A familiar saying.
7. Analogy: A comparison between two seemingly unrelated items that helps illuminate a complex, arcane or obscure topic.
Key Flow Structures - For Presentations
a. Modular: A sequence of similar parts, units or components in which the order of the units is interchangeable
b. Chronological order: Organizes clusters of ideas along a timeline, reflecting events in the order in which they occurred or might occur
c. Physical: organizes clusters according to their physical or geographic location
d. Problem/Solution: organizes the presentation around a problem and the solution offered by you and your company
e. Issues/Actions: Organizes the presentation around one or more issues and the actions you propose to address them
f. Opportunity/leverage: organizes the presentation around a business opportunity and the leverage you or your company will implement to take advantage of it.
g. Features/Benefits: organizes the presentation around a series of your product or service features and the concrete benefits provided by those features
h. Rhetorical Questions: Asks, and then answers questions that are likely to be the foremost in the minds of your audience
Establish links between the key objectives for the presentation, WIIFY and the flow structures
Saturday, January 9, 2010
Saturday, December 12, 2009
Apple - Mac Business, iPods, iTunes & iPhone
Mac sales remain important for Apple, even though they accounted for only 43% of apples total revenue, in ’07.
Strategic Positioning: Apple put a high premium on creating machines which offered a cutting-edge, tightly integrated user experience.
High Premium , high priced software, hardware & peripheral products
Emphasized ease of use, interoperability with other machines, security, high quality software applications
Apple has become a less closed system, incorporating standard interfaces such as the usb port.
Technology & Innovation
June ’05 – Apple announced that it would move away from PowerPC chips in favor of Intel microprocessors.
The PowerPC chip couldn’t mach Intel’s performance and this was affecting apples ability to compete effectively in the laptop segment. Intel chips also enabled apple to build faster, more powerful laptops, capable of running Windows and other 3rd party operating systems. (this capability offset a longstanding disadvantage to choosing a Mac. By loading software applications such as VMware Fusion, Parallels Desktop - Macintosh users could operate both Windows & Mac-based applications.
Apple introduced a fully overhauled OS in ’01, called the Mac OS X, the new OS offered a more stable environment than previous Mac platforms. Apple introduced updates every 12-18 months with the aim of generating incremental revenue and new interest/awareness about Mac products (thereby driving increased loyalty amongst Mac users). In Oct ‘ 07 – apple launched Leopard, it’s 6th OS release.
Proprietary Software Applications
Apple developed proprietary software applications to support its Mac line. (iLife suite – iPhoto, iTunes, iWeb). In ’03, Apple launched its Safari web browser to compete with Internet Explorer and Firefox
Distribution & Sales
Apple opened it’s first retail store in may ’01. By June ’08, it operated 215 stores and its retail division accounted for almost 20% of total revenue. (Apple has retail stores in U.S and key international markets including Australia, Canada, Japan, Italy, China and the UK.
The retail stores logged over 350M visits in less than a year, many visitors were new to the Mac – over half of the 1.4M maces sold in ’07 were purchased in Mac stores. One key factor which brought people to Mac stores was the popularity of iPods
Results of Job’s strategy
By fiscal year ’07, Mac revenue came to over e$10B, a YoY increase of +40%. Unit sales exceeded 7M, Mac sales grew 3 times as fast as the overall PC market
By mid ’08 – apples US share had grown to 8.5%, yet it’s Worldwide share of the Global PC market – had edged up only slightly and remained in the same 2-3% range for almost a decade
PC Manufacturing
By ’08 PCs consisted of 4 key components (a microprocessor, a motherboard, memory storage & peripherals - monitor, keyboard, mouse, printers).
PC manufacturers also bundled their PCs with an OS
The industry had moved from desktop machines to lap tops, notebooks, netbooks, and work stations (more powerful desktops) & server computers
~$400 to produce a mass-market desktop computer, which would retail at $500. Manufacturers could push down the price by cutting back on hard drive capacity & memory and/or offering lower quality peripherals.
Microprocessor: $50 - $500
Motherboard, hard drive, memory, chassis, packaging: $120 - $250
Peripherals: Keyboard, Mouse, CD-ROM, floppy drives & speakers: $50 - $140
OS – Windows vista $70
As PC manufacture became standardized – leading manufacturers cut expenditure on R&D and focused on driving innovations & efficiency through distribution, manufacturing and marketing – in order to gain a competitive edge.
PC Supplier Categories (General Products & Key Products)
-> General: memory chips, disk drives, keyboards – several sources, buyer advantage, competitive pricing
Key Products: micro processors and operating systems – only available through Intel & MSFT
Target Audience – PC Buyers fall into 5 Categories
1. Home Buyers: 42%
2. Small & Mid Sized Businesses: 32%
3. Corporate – Business Customers: 12%
4. Education – institutions of learning: 8%
5. Government: 6$
Key buying factors: price, service/support, software availability, product design, mobility and wireless networking capability
By early 2000s, web retailers like Dell, which sold PCs at steep discounts, saw an increase in demand for generic machines. (very popular especially in emerging markets).
Key Manufacturers: HP, Dell, Lenovo & Acer
I. HP became the market leader by emphasizing product design, consumer marketing and improved R&D spending). The company also leveraged its very strong retail channel (110K outlets).
II. Dell has followed suit with an increase in investment in design and a focus on consumer-friendly products. Dell also made deals to sell its PCs through large retailers, (best buy, staples & wal-mart), in addition to its well established online channel.
a. International Revenue: Dell also partnered with retail chains in Europe, China & Japan, to push international sales – this was a new priority, as Dell had focused on the U.S market for some time
III. Acer/Lenovo: focused on emerging markets but also acquired U.S PC manufacturers – Gateway and IBM’s PC business
Operating Systems – Trends
1980’s: Microsoft introduced MS-DOS
1990: Microsoft introduced Windows 3.0 – which featured Macintosh like graphical interface. Although not as good as Apple, it was adopted by corporate managers. MSFT built on that momentum of 3.0, with new releases every few years. (Windows 95, XP, Vista) – revenue per copy was approx $45-$60
Note: value of an os corresponds directly to the quantity and quality of application software, available on that platform.
Apple II – did well because it supported some software applications which were very popular with business users (VisiCalc – spreadsheet application)
Other impt OS segments include – word processing, presentation graphics, desktop publishing, database management, personal finance & internet browsing.
Between 1990 and 2008 – the sheer volume of applications available on PCs, exploded, while ave price of PC’s & PC software, fell. MSFT – was the largest software vendor for Wintel PCs & second largest for Macs, and it benefited immensely from this trend.
Apple’s other products
iPod: portable music player based on MP3 compression standard – launched in Nov ’01 . It was geared towards consumes, offered a variety of devise ranges and ultimately sold at prices ranging from $49 - $499, with margins of 30%-35%
Apple built its share by innovating on the use of flash memory instead of hard drives (which cost more). Maintaining relationships with key suppliers of key components (especially flash drive components), was crucial to its strategy to maintain the low costs of manufacturing iPods. (Samsung: video-audio chip,
Toshiba: hard disk drives). Apple made a strategic decision to pay $500M to Intel/micron to secure output from a new flash-memory joint venture. It also struck deals with Hynix, Samsun & Toshiba for flash components, thereby cornering 25% of the market for flash production – to use in its iPods & iPhone’s (both of which rely on flash memory). Note – key source of competitive advantage
By mid ’08 – apple had sold 150M iPods, commanded 70% of US market for portable music players. Rivals have not developed software which rivals iPods or iTunes offering.
Learning from past mistakes: Initially the iPod could only synch with Macs – in Aug ’02, Apple introduced an iPod for windows. (it’s development of the iPod was also, much more collaborative than was the case with its approach to developing the Macintosh). iPod’s accessory market became very important – primarily because iPods were more widely available to a larger customer base. Apple also licensed its “made for iPod” logo to 3rd parties - who created over 1K iPod accessory items, and over $1B in incremental sales.
iTunes Music Store – Steve Jobs master stroke, in realizing that for the iPod to be successful, it had to have a legit music downloading component and a repository for iPod users to go download music, legally. He created iTunes Music Store in April ’03, to serve that purpose.
By June ’08 – it had sold over 5B songs & claimed 70% of the share of the worldwide digital music market. iTunes became the largest music retailer in the world and drove iPod sales from 113K/quarter to over 733K/quarter.
However, iTunes was a loss leader because apple basically used it as an enabler to move iPod units. Of the $0.99 cents charged for each music downloads, apple got less than $0.10. “the variable element served s a lows leader for a profit0driving durable goods”
iPod’s have since expanded from serving digital music to now included digital video, users can now download and watch TV shows and movies as well, making iTunes the world’s most popular online movie store.
iPhone – Jobs strived to “reinvent the phone” with the launch of the iPhone, in June ’07. iPhone was a multifunction communication device – internet in your pocket.
Strategic Positioning: Apple put a high premium on creating machines which offered a cutting-edge, tightly integrated user experience.
High Premium , high priced software, hardware & peripheral products
Emphasized ease of use, interoperability with other machines, security, high quality software applications
Apple has become a less closed system, incorporating standard interfaces such as the usb port.
Technology & Innovation
June ’05 – Apple announced that it would move away from PowerPC chips in favor of Intel microprocessors.
The PowerPC chip couldn’t mach Intel’s performance and this was affecting apples ability to compete effectively in the laptop segment. Intel chips also enabled apple to build faster, more powerful laptops, capable of running Windows and other 3rd party operating systems. (this capability offset a longstanding disadvantage to choosing a Mac. By loading software applications such as VMware Fusion, Parallels Desktop - Macintosh users could operate both Windows & Mac-based applications.
Apple introduced a fully overhauled OS in ’01, called the Mac OS X, the new OS offered a more stable environment than previous Mac platforms. Apple introduced updates every 12-18 months with the aim of generating incremental revenue and new interest/awareness about Mac products (thereby driving increased loyalty amongst Mac users). In Oct ‘ 07 – apple launched Leopard, it’s 6th OS release.
Proprietary Software Applications
Apple developed proprietary software applications to support its Mac line. (iLife suite – iPhoto, iTunes, iWeb). In ’03, Apple launched its Safari web browser to compete with Internet Explorer and Firefox
Distribution & Sales
Apple opened it’s first retail store in may ’01. By June ’08, it operated 215 stores and its retail division accounted for almost 20% of total revenue. (Apple has retail stores in U.S and key international markets including Australia, Canada, Japan, Italy, China and the UK.
The retail stores logged over 350M visits in less than a year, many visitors were new to the Mac – over half of the 1.4M maces sold in ’07 were purchased in Mac stores. One key factor which brought people to Mac stores was the popularity of iPods
Results of Job’s strategy
By fiscal year ’07, Mac revenue came to over e$10B, a YoY increase of +40%. Unit sales exceeded 7M, Mac sales grew 3 times as fast as the overall PC market
By mid ’08 – apples US share had grown to 8.5%, yet it’s Worldwide share of the Global PC market – had edged up only slightly and remained in the same 2-3% range for almost a decade
PC Manufacturing
By ’08 PCs consisted of 4 key components (a microprocessor, a motherboard, memory storage & peripherals - monitor, keyboard, mouse, printers).
PC manufacturers also bundled their PCs with an OS
The industry had moved from desktop machines to lap tops, notebooks, netbooks, and work stations (more powerful desktops) & server computers
~$400 to produce a mass-market desktop computer, which would retail at $500. Manufacturers could push down the price by cutting back on hard drive capacity & memory and/or offering lower quality peripherals.
Microprocessor: $50 - $500
Motherboard, hard drive, memory, chassis, packaging: $120 - $250
Peripherals: Keyboard, Mouse, CD-ROM, floppy drives & speakers: $50 - $140
OS – Windows vista $70
As PC manufacture became standardized – leading manufacturers cut expenditure on R&D and focused on driving innovations & efficiency through distribution, manufacturing and marketing – in order to gain a competitive edge.
PC Supplier Categories (General Products & Key Products)
-> General: memory chips, disk drives, keyboards – several sources, buyer advantage, competitive pricing
Key Products: micro processors and operating systems – only available through Intel & MSFT
Target Audience – PC Buyers fall into 5 Categories
1. Home Buyers: 42%
2. Small & Mid Sized Businesses: 32%
3. Corporate – Business Customers: 12%
4. Education – institutions of learning: 8%
5. Government: 6$
Key buying factors: price, service/support, software availability, product design, mobility and wireless networking capability
By early 2000s, web retailers like Dell, which sold PCs at steep discounts, saw an increase in demand for generic machines. (very popular especially in emerging markets).
Key Manufacturers: HP, Dell, Lenovo & Acer
I. HP became the market leader by emphasizing product design, consumer marketing and improved R&D spending). The company also leveraged its very strong retail channel (110K outlets).
II. Dell has followed suit with an increase in investment in design and a focus on consumer-friendly products. Dell also made deals to sell its PCs through large retailers, (best buy, staples & wal-mart), in addition to its well established online channel.
a. International Revenue: Dell also partnered with retail chains in Europe, China & Japan, to push international sales – this was a new priority, as Dell had focused on the U.S market for some time
III. Acer/Lenovo: focused on emerging markets but also acquired U.S PC manufacturers – Gateway and IBM’s PC business
Operating Systems – Trends
1980’s: Microsoft introduced MS-DOS
1990: Microsoft introduced Windows 3.0 – which featured Macintosh like graphical interface. Although not as good as Apple, it was adopted by corporate managers. MSFT built on that momentum of 3.0, with new releases every few years. (Windows 95, XP, Vista) – revenue per copy was approx $45-$60
Note: value of an os corresponds directly to the quantity and quality of application software, available on that platform.
Apple II – did well because it supported some software applications which were very popular with business users (VisiCalc – spreadsheet application)
Other impt OS segments include – word processing, presentation graphics, desktop publishing, database management, personal finance & internet browsing.
Between 1990 and 2008 – the sheer volume of applications available on PCs, exploded, while ave price of PC’s & PC software, fell. MSFT – was the largest software vendor for Wintel PCs & second largest for Macs, and it benefited immensely from this trend.
Apple’s other products
iPod: portable music player based on MP3 compression standard – launched in Nov ’01 . It was geared towards consumes, offered a variety of devise ranges and ultimately sold at prices ranging from $49 - $499, with margins of 30%-35%
Apple built its share by innovating on the use of flash memory instead of hard drives (which cost more). Maintaining relationships with key suppliers of key components (especially flash drive components), was crucial to its strategy to maintain the low costs of manufacturing iPods. (Samsung: video-audio chip,
Toshiba: hard disk drives). Apple made a strategic decision to pay $500M to Intel/micron to secure output from a new flash-memory joint venture. It also struck deals with Hynix, Samsun & Toshiba for flash components, thereby cornering 25% of the market for flash production – to use in its iPods & iPhone’s (both of which rely on flash memory). Note – key source of competitive advantage
By mid ’08 – apple had sold 150M iPods, commanded 70% of US market for portable music players. Rivals have not developed software which rivals iPods or iTunes offering.
Learning from past mistakes: Initially the iPod could only synch with Macs – in Aug ’02, Apple introduced an iPod for windows. (it’s development of the iPod was also, much more collaborative than was the case with its approach to developing the Macintosh). iPod’s accessory market became very important – primarily because iPods were more widely available to a larger customer base. Apple also licensed its “made for iPod” logo to 3rd parties - who created over 1K iPod accessory items, and over $1B in incremental sales.
iTunes Music Store – Steve Jobs master stroke, in realizing that for the iPod to be successful, it had to have a legit music downloading component and a repository for iPod users to go download music, legally. He created iTunes Music Store in April ’03, to serve that purpose.
By June ’08 – it had sold over 5B songs & claimed 70% of the share of the worldwide digital music market. iTunes became the largest music retailer in the world and drove iPod sales from 113K/quarter to over 733K/quarter.
However, iTunes was a loss leader because apple basically used it as an enabler to move iPod units. Of the $0.99 cents charged for each music downloads, apple got less than $0.10. “the variable element served s a lows leader for a profit0driving durable goods”
iPod’s have since expanded from serving digital music to now included digital video, users can now download and watch TV shows and movies as well, making iTunes the world’s most popular online movie store.
iPhone – Jobs strived to “reinvent the phone” with the launch of the iPhone, in June ’07. iPhone was a multifunction communication device – internet in your pocket.
Apple - Case Study (Historical Context)
Jan ’07 – Apple shed’s “computer” from its name, and becomes Apple Inc. (Mac Sales now account for less than half of Apple’s total revenue).
June ’08: Apple earned a net profit of $1.07B on $7.46B, in revenue – 38% increase in YoY quarterly sales.
Total sales in fiscal ’07 – topped $24B, up 24% YoY
However, Apple’s strategic profile remained largely unchanged – Apple’s share of worldwide PC market, peaked at 3%.
Key Question: Was Apple’s recent success just another temporary “up” in it’s up and down history, or had Steve Jobs finally established a sustainable strategy for the company.
Historical Context
1976: Apple Computer – founded in ’76. Jobs was the visionary who sought to change the world through technology.
1978: Apple II is launched – it helped drive PC industry to $1B in annual sales – in less than 3 years. Apple becomes the industry leader, selling more than 100K units by the end of 1980.
1981: IBM enters the PC Market – with the MS DOS operating system (OS), vs. Apple’s proprietary hardware & software (closed syst)
I. BM compatibles grew in popularity, Apple sales slowed and market share dropped to 6.2%
1983/84: Apple launches the Macintosh – breakthrough PC in terms of ease of use, industrial design and technical elegance – but slow processor speed and lack of widely compatible software, limited sales. (net income fell 17% and jobs was removed from his operational role and replaced by John sculley.
1985 – ’93: Sculley focused on making apple a leader in desktop publishing and education.
Competitive Advantage: Superior proprietary software and peripherals – provided extraordinary capabilities in desktop publishing. Sales grew and by 1990 and Apple’s worldwide share stabilized at 8%, $1B in cash and was the most profitable PC maker in the world.
Software/Hardware
Apple practiced horizontal and vertical integration – it designed it’s products from scratch using unique chips, disk drives and monitors. The company also manufactures its own proprietary operating system, application software and hardware peripherals.
This enabled apple to control all aspects of its computer and offer customers a complete desktop solution (hardware, software and peripherals) – at the time the only credible competitor, IBM-compatible machines, could not offer the same level of integration. Apple’s competitive advantage enabled the company to chart a premium price for its products – gross profit was ~50%. IBM-compatibles dropped prices and competed on price points, with the more high end Apple products.
1990: Sculley became CTR & CTO – and strove to move apple to mainstream by offering “products & prices designed to regain market share. That meant becoming a low-cost producer of computers with mass market appeal.
I. Oct ’90: apple shipped the Mac Classic, a $999 computer designed to compete head on with lower priced IBM-clones.
1991: apple launched the PowerBook laptop, to rave reviews
1991: Apple formed an alliance with IBM (Taligent) – the goal was to create a revolutionary new OS @ the cost of $500M. Apple also undertook another cooperative project with Novella and Intel – to rework the Mac OS to run intel chips.
1993: Apple introduced the Newton – a high profile PDA, unfortunately – the product failed
Cost Cutting: Apple tried to cut costs by shifting manufacturing to subcontractors = but profitability still declined. Apples gross margin dropped to 34%, down 14pts from 10 year averages. Sculley was eased out and replaced by Michael Spindler
1993 – ’97: Spindler/Amelio
Back to basics: Spindler tried to reinvigorate Apple’s core markets – (education & desktop publishing), in which Apple held 60% and 80% share, respectively. Spindler killed the plan to put the Mac OS on Intel chips and instead announced that Apple would license a handful of companies to make Mac clones.
II. International Growth became a key objective for Apple – by 1992, 45% of the company’s sales came from outside the U.S.
III. Cut costs: Apple slashed its work force by 16% and reduced R&D spending
Still, apple lost momentum – and by 1995, Intel based PCs were in the ascendancy
1995: Taligent fell through at a cost of ($500M) – and in early ’96, apple reported a ($69M) loss and more layoffs. Splinder was replaced by Gilbert Amelio
1996: Amelio sought to push Apple into high-margin segments – (servers, internet access devices and PDAs).
Amelio soon declared that Apple would return to its premium-price differentiation strategy.
Amelio cancelled the Devpt of the proposed new Mac OS, and in Dec ’96, announced that apple would acquire NeXT software and develop an new OS based on the work done by NeXT. (the company started by Steve Jobs, after he was kicked out of Apple
Amelio led Apple through 3 reorgs and several deep payroll cuts, despite these cost cutting initiatives, apple lost $1.6B on his watch and it’s WW mkt share, dropped from 6% to 3%. The board forced Amelio out and in ‘’97, brought back Steve Jobs as the interim CEIO
1997: August – jobs announced that MSFT would invest $150M & develop MS Office for the Mac.
Steve Jobs – Strategic moves
He ended the Mac licensing program (Mac clones had reached 20% of Mac sales at that point) and Mac market had fallen to 11%
He refused to license the latest Mac OS – his belief was that Mac Clones were cannibalizing sales of the Mac Units
Jobs consolidated Apple’s product range – reducing the number of its lines from 15 to 3
1998: Jobs launches the iMac, in Aug ’98. (low end CPU, CD-ROM drive & modem)
The imac supported key peripherals which were designed for Windows –based machines (previous Macs had required peripherals which were built of the Apple platform only).
Imac sold about 6M units vs. 300M PCs during that same time frame. (2% share).
More Strategic Moves / restructuring efforts
It outsourced manufacturing of Mac products to Taiwanese contract assemblers and revamped its distribution system
Apple eliminated relationships with thousands of smaller outlets & instead built relationships with national chains.
New Distribution Channel: In Nov ’97 apple launched a website to sell its products directly to consumers – for the first time
Internally (jobs worked to streamline operations and reinvigorate innovation – apple pared down its inventory significantly and increased its R&D spending
Brand Image
Jobs also took steps to reenergize apples image – the company started promoting itself as a hip alternative to other computer brands. Jobs had a vision for apple – as a cultural force.
June ’08: Apple earned a net profit of $1.07B on $7.46B, in revenue – 38% increase in YoY quarterly sales.
Total sales in fiscal ’07 – topped $24B, up 24% YoY
However, Apple’s strategic profile remained largely unchanged – Apple’s share of worldwide PC market, peaked at 3%.
Key Question: Was Apple’s recent success just another temporary “up” in it’s up and down history, or had Steve Jobs finally established a sustainable strategy for the company.
Historical Context
1976: Apple Computer – founded in ’76. Jobs was the visionary who sought to change the world through technology.
1978: Apple II is launched – it helped drive PC industry to $1B in annual sales – in less than 3 years. Apple becomes the industry leader, selling more than 100K units by the end of 1980.
1981: IBM enters the PC Market – with the MS DOS operating system (OS), vs. Apple’s proprietary hardware & software (closed syst)
I. BM compatibles grew in popularity, Apple sales slowed and market share dropped to 6.2%
1983/84: Apple launches the Macintosh – breakthrough PC in terms of ease of use, industrial design and technical elegance – but slow processor speed and lack of widely compatible software, limited sales. (net income fell 17% and jobs was removed from his operational role and replaced by John sculley.
1985 – ’93: Sculley focused on making apple a leader in desktop publishing and education.
Competitive Advantage: Superior proprietary software and peripherals – provided extraordinary capabilities in desktop publishing. Sales grew and by 1990 and Apple’s worldwide share stabilized at 8%, $1B in cash and was the most profitable PC maker in the world.
Software/Hardware
Apple practiced horizontal and vertical integration – it designed it’s products from scratch using unique chips, disk drives and monitors. The company also manufactures its own proprietary operating system, application software and hardware peripherals.
This enabled apple to control all aspects of its computer and offer customers a complete desktop solution (hardware, software and peripherals) – at the time the only credible competitor, IBM-compatible machines, could not offer the same level of integration. Apple’s competitive advantage enabled the company to chart a premium price for its products – gross profit was ~50%. IBM-compatibles dropped prices and competed on price points, with the more high end Apple products.
1990: Sculley became CTR & CTO – and strove to move apple to mainstream by offering “products & prices designed to regain market share. That meant becoming a low-cost producer of computers with mass market appeal.
I. Oct ’90: apple shipped the Mac Classic, a $999 computer designed to compete head on with lower priced IBM-clones.
1991: apple launched the PowerBook laptop, to rave reviews
1991: Apple formed an alliance with IBM (Taligent) – the goal was to create a revolutionary new OS @ the cost of $500M. Apple also undertook another cooperative project with Novella and Intel – to rework the Mac OS to run intel chips.
1993: Apple introduced the Newton – a high profile PDA, unfortunately – the product failed
Cost Cutting: Apple tried to cut costs by shifting manufacturing to subcontractors = but profitability still declined. Apples gross margin dropped to 34%, down 14pts from 10 year averages. Sculley was eased out and replaced by Michael Spindler
1993 – ’97: Spindler/Amelio
Back to basics: Spindler tried to reinvigorate Apple’s core markets – (education & desktop publishing), in which Apple held 60% and 80% share, respectively. Spindler killed the plan to put the Mac OS on Intel chips and instead announced that Apple would license a handful of companies to make Mac clones.
II. International Growth became a key objective for Apple – by 1992, 45% of the company’s sales came from outside the U.S.
III. Cut costs: Apple slashed its work force by 16% and reduced R&D spending
Still, apple lost momentum – and by 1995, Intel based PCs were in the ascendancy
1995: Taligent fell through at a cost of ($500M) – and in early ’96, apple reported a ($69M) loss and more layoffs. Splinder was replaced by Gilbert Amelio
1996: Amelio sought to push Apple into high-margin segments – (servers, internet access devices and PDAs).
Amelio soon declared that Apple would return to its premium-price differentiation strategy.
Amelio cancelled the Devpt of the proposed new Mac OS, and in Dec ’96, announced that apple would acquire NeXT software and develop an new OS based on the work done by NeXT. (the company started by Steve Jobs, after he was kicked out of Apple
Amelio led Apple through 3 reorgs and several deep payroll cuts, despite these cost cutting initiatives, apple lost $1.6B on his watch and it’s WW mkt share, dropped from 6% to 3%. The board forced Amelio out and in ‘’97, brought back Steve Jobs as the interim CEIO
1997: August – jobs announced that MSFT would invest $150M & develop MS Office for the Mac.
Steve Jobs – Strategic moves
He ended the Mac licensing program (Mac clones had reached 20% of Mac sales at that point) and Mac market had fallen to 11%
He refused to license the latest Mac OS – his belief was that Mac Clones were cannibalizing sales of the Mac Units
Jobs consolidated Apple’s product range – reducing the number of its lines from 15 to 3
1998: Jobs launches the iMac, in Aug ’98. (low end CPU, CD-ROM drive & modem)
The imac supported key peripherals which were designed for Windows –based machines (previous Macs had required peripherals which were built of the Apple platform only).
Imac sold about 6M units vs. 300M PCs during that same time frame. (2% share).
More Strategic Moves / restructuring efforts
It outsourced manufacturing of Mac products to Taiwanese contract assemblers and revamped its distribution system
Apple eliminated relationships with thousands of smaller outlets & instead built relationships with national chains.
New Distribution Channel: In Nov ’97 apple launched a website to sell its products directly to consumers – for the first time
Internally (jobs worked to streamline operations and reinvigorate innovation – apple pared down its inventory significantly and increased its R&D spending
Brand Image
Jobs also took steps to reenergize apples image – the company started promoting itself as a hip alternative to other computer brands. Jobs had a vision for apple – as a cultural force.
Mergers & Acquisitions - Pitney Bowes
Pitney Bowes has acquired 70 companies in 6 years – in doing so, the company made a deliberate decision to treat each acquisition as a business process. (each company should have a disciplined approach to making acquisitions and learning from them as an organization.
Key guidelines for making acquisitions.
1. Stick to Adjacent Spaces – pursue adjacencies, logical extensions of a company’s current business mix which can provide incremental value. P&G: uses acquisitions to expand it’s product lines – it then grows acquired brands through aggressive marketing and powerful distribution capabilities. adjacent acquisitions correlate with increased shareholder value – whereas diversification into non related areas actually reduces shareholder value.
I. take advantage of tacit strengths of an org (mgt experience, custome insights, cultural orientation
II. Brand consistent = because the adjacent products often have features and functionality which are consistent with those of the product (offerings) of the acquirer
Key adjacency question from Pitnew Bowes: “Can we really add more value to the target company than any other acquirer can? Ideally, the company pursues acquisitions in which the acquired company’s mgt believes that it brings something unique to the table.
Adjacent acquisitions make for a much more compelling growth strategy than diversification does. It’s much more logical to explain the rationale behind an adjacent purchase, to key stakeholders and interested parties (including customers, employees, financial analysts, shareholders, management). Key stakeholders have to believe in an acquisitions potential for it to succeed.
2. Bet on Portfolio Performance
Manage like an investment portfolio, make multiple, smart acquisitions, instead of one or two big bets. The portfolio approach to acquisitions means that acquisitions will not only be of a manageable size but will also be sufficient in number to hedge the risk that any one will go awry.
Classics benefit of this strategy: produces more predictable financial results, over time. Which is helpful to companies which hope to attract investors b being consistent performance in a broad range of macroeconomic environments. (buy, invest, profit – model)
Diversification also helps meet investment requirements of business that are in varying stages of development.
I. Large Deals vs. Small Deals: One can learn as much from a small deal, as from a large one – however, the learning curve experience is itself a valuable asset. (the risks of learning whilst executing a smaller deal are often much lower than the risks from larger deals).
3. Get a Business Sponsor
It’s a good idea to create a corporate development group to help drive the acquisition process – however that team should never be allowed to drive the acquisitions. The leaders of business units are in the best position to gauge a potential acquisitions strategic and cultural fit, identify potential business synergies and establish the roadmap for delivering expected outcomes.
Sponsorship by business leaders is especially important to talent retention, people must be encourage to establish and maintain strong working relationships with new management teams, smooth out org culture shifts and help drive operating procedures.
Business Unit Managers - should be the sources and owners of acquisition proposals – the corporate development groups role should be to facilitate and execute the details of the transaction.
Biz Mgrs should appoint integration managers to oversee the actual execution of the acquisition – achieving revenue targets, engineering cost synergies and delivering expected ROI.
Snr Mgt should follow up with The Business Unit sponsor frequently, in order to make sure that the acquisition integration plan, remains on track
4. Be Clear on how the acquisition should be judged?
I. What does success look like? What are we looking for in terms of growth potential, market leadership, financial objectives?
Types of Acquisitions: (Bolt-on vs. platform) Important to distinguish between these two types of adjacent acquisitions – because it leads to diff criteria for evaluating potential deals.
Platform Acquisition: purchase of an existing business which allows acquire to establish a beachhead in a new market space
Bolt-on: fits neatly into an existing business or market of the acquirer
II. Less complex, lower risk, potential lower reward
III. Performance measurement: focus on probably business synergies, short term rev opportunities, cost savings, efficiencies, economies of scale, complementarytechnology, IP, features & functionality? Opportunities to cross sell / upsell products & services?
o Incremental ROI – within 1 – 3 years (short term growth)
Platform: takes the acquirer into a new (though adjacent) business space or adctivity
I. Higher degree of complexity, higher risk – higher reward
II. Performance measurement: near-term revenue opportunities an cost savings are less important
o Strategic questions become paramount – right business, right value proposition vis-à-vis are current offering, marketing intelligence, brand extensibility, faster growth potential, cultural fit?
o Long term growth
5. Don’t shop when you’re Hungry
I. Grocery shopping analogy: people purchase more than is needed and are less price sensitive about it, when their hungry, or shopping on an empty stomach
o This often results in buyers remorse
II. Expand from a position of strength, not from weakness (HP + Compaq)??
III. Avoid this habit by displaying analytical and emotional discipline
Due Diligence: The more you do, the more you know. (All companies in the midst of an acquisition must perform a due diligence review to identify and eliminate major sources of potential risk before the transaction is closed.
I. Start small, keep doing deals, learn as much and as fast as you can
II. Don’t expect to get by with a light checklist – dig deep, ask key questions and make sure you do your research
III. Build a due diligence team and use that same team to perform each due diligence review
IV. Use your due diligence data to guide the integration effort – after the acquisition has been completed
Pitney Bowes has a bottom’s up approach – acquisition ideas emanate from business units. This requires balanced disciplined thinking and consistent governance procedures.
Key guidelines for making acquisitions.
1. Stick to Adjacent Spaces – pursue adjacencies, logical extensions of a company’s current business mix which can provide incremental value. P&G: uses acquisitions to expand it’s product lines – it then grows acquired brands through aggressive marketing and powerful distribution capabilities. adjacent acquisitions correlate with increased shareholder value – whereas diversification into non related areas actually reduces shareholder value.
I. take advantage of tacit strengths of an org (mgt experience, custome insights, cultural orientation
II. Brand consistent = because the adjacent products often have features and functionality which are consistent with those of the product (offerings) of the acquirer
Key adjacency question from Pitnew Bowes: “Can we really add more value to the target company than any other acquirer can? Ideally, the company pursues acquisitions in which the acquired company’s mgt believes that it brings something unique to the table.
Adjacent acquisitions make for a much more compelling growth strategy than diversification does. It’s much more logical to explain the rationale behind an adjacent purchase, to key stakeholders and interested parties (including customers, employees, financial analysts, shareholders, management). Key stakeholders have to believe in an acquisitions potential for it to succeed.
2. Bet on Portfolio Performance
Manage like an investment portfolio, make multiple, smart acquisitions, instead of one or two big bets. The portfolio approach to acquisitions means that acquisitions will not only be of a manageable size but will also be sufficient in number to hedge the risk that any one will go awry.
Classics benefit of this strategy: produces more predictable financial results, over time. Which is helpful to companies which hope to attract investors b being consistent performance in a broad range of macroeconomic environments. (buy, invest, profit – model)
Diversification also helps meet investment requirements of business that are in varying stages of development.
I. Large Deals vs. Small Deals: One can learn as much from a small deal, as from a large one – however, the learning curve experience is itself a valuable asset. (the risks of learning whilst executing a smaller deal are often much lower than the risks from larger deals).
3. Get a Business Sponsor
It’s a good idea to create a corporate development group to help drive the acquisition process – however that team should never be allowed to drive the acquisitions. The leaders of business units are in the best position to gauge a potential acquisitions strategic and cultural fit, identify potential business synergies and establish the roadmap for delivering expected outcomes.
Sponsorship by business leaders is especially important to talent retention, people must be encourage to establish and maintain strong working relationships with new management teams, smooth out org culture shifts and help drive operating procedures.
Business Unit Managers - should be the sources and owners of acquisition proposals – the corporate development groups role should be to facilitate and execute the details of the transaction.
Biz Mgrs should appoint integration managers to oversee the actual execution of the acquisition – achieving revenue targets, engineering cost synergies and delivering expected ROI.
Snr Mgt should follow up with The Business Unit sponsor frequently, in order to make sure that the acquisition integration plan, remains on track
4. Be Clear on how the acquisition should be judged?
I. What does success look like? What are we looking for in terms of growth potential, market leadership, financial objectives?
Types of Acquisitions: (Bolt-on vs. platform) Important to distinguish between these two types of adjacent acquisitions – because it leads to diff criteria for evaluating potential deals.
Platform Acquisition: purchase of an existing business which allows acquire to establish a beachhead in a new market space
Bolt-on: fits neatly into an existing business or market of the acquirer
II. Less complex, lower risk, potential lower reward
III. Performance measurement: focus on probably business synergies, short term rev opportunities, cost savings, efficiencies, economies of scale, complementarytechnology, IP, features & functionality? Opportunities to cross sell / upsell products & services?
o Incremental ROI – within 1 – 3 years (short term growth)
Platform: takes the acquirer into a new (though adjacent) business space or adctivity
I. Higher degree of complexity, higher risk – higher reward
II. Performance measurement: near-term revenue opportunities an cost savings are less important
o Strategic questions become paramount – right business, right value proposition vis-à-vis are current offering, marketing intelligence, brand extensibility, faster growth potential, cultural fit?
o Long term growth
5. Don’t shop when you’re Hungry
I. Grocery shopping analogy: people purchase more than is needed and are less price sensitive about it, when their hungry, or shopping on an empty stomach
o This often results in buyers remorse
II. Expand from a position of strength, not from weakness (HP + Compaq)??
III. Avoid this habit by displaying analytical and emotional discipline
Due Diligence: The more you do, the more you know. (All companies in the midst of an acquisition must perform a due diligence review to identify and eliminate major sources of potential risk before the transaction is closed.
I. Start small, keep doing deals, learn as much and as fast as you can
II. Don’t expect to get by with a light checklist – dig deep, ask key questions and make sure you do your research
III. Build a due diligence team and use that same team to perform each due diligence review
IV. Use your due diligence data to guide the integration effort – after the acquisition has been completed
Pitney Bowes has a bottom’s up approach – acquisition ideas emanate from business units. This requires balanced disciplined thinking and consistent governance procedures.
Getting Offshoring Right
Advantages: Reduce Costs, Become more efficient, gain strategic advantage
Potential Disadvantages: Consumer Dissatisfaction, resistance from employees.
Note. Businesses don't make decisions about off shoring systematically enough. (3 fundamental mistakes)
1. Focus their effort on choosing countries , cities and vendors, and negotiating prices - instead o evaluating which process they should offshore and which they shouldn't. First – Distinguish between what processes can be offshore or outsource – and what processes must stay in house
I. Core Processes – (which you must control)
II. Critical Processes = which you can procure from best in class vendors
III. Commodity process – which you can outsource
2. Organizations don’t take into account the risks that accompany off shoring – due diligence must go beyond the cost/benefit analysis to making decisions. (how much power are you handing over to your vendors? How much of your value is now being captured by your vendors?
3. Off shoring or off shoring is no longer an all or nothing choice. There are options – companies can execute some processes in house, offshore/outsource others. Buy services from local providers, entire into joint ventures or set up captive centers overseas (internal off shoring).
Note: Both location and organizational form – decide the fate of off shoring strategies.
Rank Process by Value:
1. Create a Value Hierarchy of core processes: How does each process help create value for customers? The relative importance of each process determined the risks/rewards of off shoring
2. Identify & Manage Risk - (Operational Risk, Structural Risk)
Operational Risk – risk that processes won’t operate smoothly after being offshore or outsourced. (transparent processes, Opaque processes, codifiable processes
Structural Risk – primarily based on the behavior of vendors, based on contractual obligations, lack of resources, qualified staff. Vendor captures value and then changes terms, Vendors may steal intellectual property.
3. Choose the right organizational form: match org structures to the needs boy considering structural and operational risks of off shoring processes.
Use location to combat operational risk and captive centers/joint ventures or alliances – to combat structural risks
Potential Disadvantages: Consumer Dissatisfaction, resistance from employees.
Note. Businesses don't make decisions about off shoring systematically enough. (3 fundamental mistakes)
1. Focus their effort on choosing countries , cities and vendors, and negotiating prices - instead o evaluating which process they should offshore and which they shouldn't. First – Distinguish between what processes can be offshore or outsource – and what processes must stay in house
I. Core Processes – (which you must control)
II. Critical Processes = which you can procure from best in class vendors
III. Commodity process – which you can outsource
2. Organizations don’t take into account the risks that accompany off shoring – due diligence must go beyond the cost/benefit analysis to making decisions. (how much power are you handing over to your vendors? How much of your value is now being captured by your vendors?
3. Off shoring or off shoring is no longer an all or nothing choice. There are options – companies can execute some processes in house, offshore/outsource others. Buy services from local providers, entire into joint ventures or set up captive centers overseas (internal off shoring).
Note: Both location and organizational form – decide the fate of off shoring strategies.
Rank Process by Value:
1. Create a Value Hierarchy of core processes: How does each process help create value for customers? The relative importance of each process determined the risks/rewards of off shoring
2. Identify & Manage Risk - (Operational Risk, Structural Risk)
Operational Risk – risk that processes won’t operate smoothly after being offshore or outsourced. (transparent processes, Opaque processes, codifiable processes
Structural Risk – primarily based on the behavior of vendors, based on contractual obligations, lack of resources, qualified staff. Vendor captures value and then changes terms, Vendors may steal intellectual property.
3. Choose the right organizational form: match org structures to the needs boy considering structural and operational risks of off shoring processes.
Use location to combat operational risk and captive centers/joint ventures or alliances – to combat structural risks
Globalization & International Strategies - II
Emerging Giants
Key Objective: Focus on the role that strategies and business models have played in creating global companies – from emerging markets
Competing in International markets, examples include
1. Brazil’s: AmBev – (merged with Interbrew to form INBev
2. Chile’s SACI
3. China’s Baosteel, Lenovo
4. India: Tata, Wipro, Infosys
5. Israel: Teva Pharmaceuticals
6. Mexico: CEMEX
The advantage which western, Japanese and s/Korean companies seem to have, in emerging markets include: (well known brand names, efficient innovation processes and management systems and sophisticated technologies. Also – they have vast reservoirs of financing and leadership/mgt talent.
Institutional voids, absence of specialized intermediaries, regulatory systems and contract-enforcing mechanism, corporations in emerging markets cannot access capital or talent as readily as more established companies from eh west or developed Asian markets. However, these factors are also distinct advantages for indigenous companies who are used to operating without well developed institutional infrastructure. Local companies understand the business terrain and are adept at working through the 4 institutional contexts (Openness, Products markets, socio political systems, labor markets and capital markets). The structure of markets in developing countries helps local companies counter their multinational rivals.
Emerging giants create systems and mechanisms for raising capital and developing talent. They know where to go to get strong mgt talent and how to train employees to be successful in navigating the peculiar challenges which each developing market presents. Once they’ve achieved a certain level of success, emerging giants can start to tap international talent from the West and other developed countries. They can raise capital by listing themselves on the New York Stock exchange or Nasdaq
Multinationals are reluctant to tailor their strategies to every developing market in which they operate. The find it costly and cumbersome to modify their products, services and communications to suit local tastes – especially in cases where the opportunities in the developing market, are small or risky
Market Structures In Developing Countries – 4 Distinct Tiers
1. A global tier - customer segment – wants product of global quality with global quality features and attributes
2. A Glocal segment which demands product so global quality but with local features
3. A local segment, which wants local products with local features at local prices
4. Bottom-of-the-pyramid segment – for folks who can afford to buy only the most inexpensive products.
Multinationals can only service the global tier segment – but emerging giants are capable of servicing all 4 segments. Over time, the Glocal tier becomes competitive for multinationals and emerging giants.
Nando’s provides special cooked chicken for south Africans
Haier thrives over GE, Electrolux and Whirlpool in China, because it provides products tailored to the needs of Chinese consumers (custom machines for 1 set of clothes, cleaning vegetables). Distribution & service network for semi-urban and rural china – is a competitive advantage.
Haier demonstrated a structured and patient approach to International expansion first in Asia, Europe and finally in the U.S. It took time to establish relationships and partnerships with American retailers such as Best Buy, Home Depot and Wal-Mart. As of ’05, Haier had 26% of the U.S market for compact refrigerators and 50% of the market for low end wine cellars.
Key Characteristics of Emerging Giants – Expanding Into Large Intl. Markets
1. Emerging giants generally start off by expanding into other developing markets
2. Leverage their knowledge of products, cost bases in smaller markets
3. Enter advanced markets by attacking niche opportunities which allow them to capitalize on their strengths. They don’t attack established players, head on
4. Haier’s experience in Europe and Asia, prepared it well for the U.S and will serve the company well as western retailers enter its home market, in china.
Advantages For Emerging Giants – they treat institutional voids as business opportunities.
1. Recruit local talent – it’s hard for multi-nationals to identify and recruit local talent.
2. In many cases – institutional voids are sources of competitive advantage for indigenous firms, and help them become emerging giants. This is one reason why multinationals sometimes choose to acquire local giants or align with them, through partnerships.
3. Note: Execution and Governance determine whether companies in emerging markets can realize their potential. This is especially critical in emerging markets.
Good Governance: laws differ across nations.
Note: what is important is whether global scope results in competitive advantage – rather than being the result of advantage derived in some other fashion.
Emerging giants can be successful without leaving their local markets & companies, same goes for companies in developed markets.
Key Objective: Focus on the role that strategies and business models have played in creating global companies – from emerging markets
Competing in International markets, examples include
1. Brazil’s: AmBev – (merged with Interbrew to form INBev
2. Chile’s SACI
3. China’s Baosteel, Lenovo
4. India: Tata, Wipro, Infosys
5. Israel: Teva Pharmaceuticals
6. Mexico: CEMEX
The advantage which western, Japanese and s/Korean companies seem to have, in emerging markets include: (well known brand names, efficient innovation processes and management systems and sophisticated technologies. Also – they have vast reservoirs of financing and leadership/mgt talent.
Institutional voids, absence of specialized intermediaries, regulatory systems and contract-enforcing mechanism, corporations in emerging markets cannot access capital or talent as readily as more established companies from eh west or developed Asian markets. However, these factors are also distinct advantages for indigenous companies who are used to operating without well developed institutional infrastructure. Local companies understand the business terrain and are adept at working through the 4 institutional contexts (Openness, Products markets, socio political systems, labor markets and capital markets). The structure of markets in developing countries helps local companies counter their multinational rivals.
Emerging giants create systems and mechanisms for raising capital and developing talent. They know where to go to get strong mgt talent and how to train employees to be successful in navigating the peculiar challenges which each developing market presents. Once they’ve achieved a certain level of success, emerging giants can start to tap international talent from the West and other developed countries. They can raise capital by listing themselves on the New York Stock exchange or Nasdaq
Multinationals are reluctant to tailor their strategies to every developing market in which they operate. The find it costly and cumbersome to modify their products, services and communications to suit local tastes – especially in cases where the opportunities in the developing market, are small or risky
Market Structures In Developing Countries – 4 Distinct Tiers
1. A global tier - customer segment – wants product of global quality with global quality features and attributes
2. A Glocal segment which demands product so global quality but with local features
3. A local segment, which wants local products with local features at local prices
4. Bottom-of-the-pyramid segment – for folks who can afford to buy only the most inexpensive products.
Multinationals can only service the global tier segment – but emerging giants are capable of servicing all 4 segments. Over time, the Glocal tier becomes competitive for multinationals and emerging giants.
Nando’s provides special cooked chicken for south Africans
Haier thrives over GE, Electrolux and Whirlpool in China, because it provides products tailored to the needs of Chinese consumers (custom machines for 1 set of clothes, cleaning vegetables). Distribution & service network for semi-urban and rural china – is a competitive advantage.
Haier demonstrated a structured and patient approach to International expansion first in Asia, Europe and finally in the U.S. It took time to establish relationships and partnerships with American retailers such as Best Buy, Home Depot and Wal-Mart. As of ’05, Haier had 26% of the U.S market for compact refrigerators and 50% of the market for low end wine cellars.
Key Characteristics of Emerging Giants – Expanding Into Large Intl. Markets
1. Emerging giants generally start off by expanding into other developing markets
2. Leverage their knowledge of products, cost bases in smaller markets
3. Enter advanced markets by attacking niche opportunities which allow them to capitalize on their strengths. They don’t attack established players, head on
4. Haier’s experience in Europe and Asia, prepared it well for the U.S and will serve the company well as western retailers enter its home market, in china.
Advantages For Emerging Giants – they treat institutional voids as business opportunities.
1. Recruit local talent – it’s hard for multi-nationals to identify and recruit local talent.
2. In many cases – institutional voids are sources of competitive advantage for indigenous firms, and help them become emerging giants. This is one reason why multinationals sometimes choose to acquire local giants or align with them, through partnerships.
3. Note: Execution and Governance determine whether companies in emerging markets can realize their potential. This is especially critical in emerging markets.
Good Governance: laws differ across nations.
Note: what is important is whether global scope results in competitive advantage – rather than being the result of advantage derived in some other fashion.
Emerging giants can be successful without leaving their local markets & companies, same goes for companies in developed markets.
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