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Terms in this set (30)

FIRST
economy/environment(P=R-C)market -> E(P=R-C)M
- look at external factors first to see if this is a company problem or industry-wide problem (have our competitors' profits also fallen?). Also look at the environment (hurricanes, tornadoes, and wildfires impacted the U.S. in 2017 which caused some companies' profits to drop whereas others' rose)
-look at market to see how company has been doing in relation to competitors

- look at consumer confidence, disposable income, unemployment rate, gas prices?
- dollar versus other currencies, interest rates, petrol prices, commodities

NEXT
- ask questions about the company (market leader, size in terms of revenues and profits for past 3 yrs, public or private, product mix with revenue mix and trends, customer segmentation, what constitutes success?)
- trends!! consultants are really focused on trends

NEXT
- come up with solutions to raise profits (write down two headings: revenue-based and cost-based strategies)
- divide into short-term and long-term solutions
- divide cost-based ideas into production, labor, and finance

KEY Q'S
revenues:
- what are major revenue streams, and what percentage of total revenue does each stream represent
- does anything seem unusual in the balance of percentages
- have the percentages changed lately? if so, why?

costs:
- any major shifts in costs?
- do any costs seem out of line?
- if we benchmarked our costs against our competitors', what would we find?

products:
- ask about advantages or disadvantages (layoffs, side effects for new drugs, product cannibalization) to new products
Why does the company want to enter this market?
-company, current market, how to best enter the market
- internal (company and how to enter), external (market and competition)

step 1: start off with company questions
- profits and revenues for past years, company's product mix, new products (product cannibalization potential?, is customer segmentation in new market the same, can we use same distribution channels, can we use same sales force, how/where will this new product be produced, will we have to hire new workers), how strong is the brand, what constitutes success

step 2: determine the state of the current and future market
- size of current market, growth rate (trends!!), where is industry in its life cycle, customers/segmentation, role of technology in the industry, how will competition respond

step 3: investigate market to determine whether entry makes good business sense
- who are competitors and what is their market share, how do their products differ from ours, how will we price our products/services, are substitutes available, barriers to entry?, barriers to exit?

step 4: if we decide to enter this market, what is the best way to become a player? here are the four ways to enter a market:
- start from scratch and grow organically
- acquire an existing player from within the industry (grow inorganically)
- form a joint venture with another player with a similar interest (think about what each side brings to the venture)
- outsource -> have someone else manufacture the product, with the client still handling marketing and distribution

do cost-benefit analysis and analyze pros/cons of each strategy. If answer is no don't enter, come up with an alternative idea to help company reach its goal