G1RD-CT-2002-00698 e-Volution Page 1 Task 2.2: MARKET MODULE CONCEPT e-Volution II - Roadmap for e-business implementation in Extended Enterprises Mr

G1RD-CT-2002-00698 e-Volution

Page 1

Task 2.2: MARKET MODULE CONCEPT

e-Volution II - Roadmap for e-business implementation in Extended Enterprises

Mr. Roberto Citarella, UNISA

Innova Rome, 13 May 2004


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MARKET MODULE CONCEPT

1. PRELIMINARY OT ANALYSIS- Product and Market Assessment- Purchasing criteria analysis- Competitors analysis- Comparison analysis- Influence of e-business on the EE market

2. OT ANALYSIS FOCUSED ON E-SOLUTIONS

- E-sales

- E-procurement


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MARKET ANALYSIS: preliminary approach1. P/M assessment, by using Market segmentation analysis

and Portfolio matrix;

2. Purchasing criteria analysis guide customers in their choice during the purchasing process. They are identified and prioritised and then assessed by managers who identify the internal value creating processes that most heavily influences them.

3. This activity aims to describe the most important competitors and gain an understanding of their strengths and weaknesses, compared to the EE under analysis.

4. The qualitative comparison with the previous analysed competitors, using charts and graphics in order to support the manager to recognise the areas on which improving actions have to be taken.

5. This step aims to provide understanding about the O.T. that e-business represents for the market environment and for the specific EE. These activities are designed in two step: gathering detailed information together with OT identification and description.

Internal Analysis

External Analysis

Final Summary

Situation Analysis

Strategy Development

Project Description

Project Implementation and Results evaluation

Check List for Situation Analysis1. Assess Products and markets

2. Analyse Purchasing Criteria

5. E-business impact analysis on the market and the EE

4. Comparison with the competitor

Summary of the analysis

3. Competitors analysis


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Product and Market assessment

Product Market table

Financial data in the P/M table

P/M area attractiveness“E” assessment of :-P/M area-Competitive position

– Product definition– Market definition

– Contribution margin analysis

– Matrix representation– Total assessment

Competitive position in P/M area

Matrix portfolio assessment

– P/M area choice

Internediate SWOT analysis

– SWOT item identification


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– P/M area choice


–SWOT item identification

1. Determine the Market (segments) of the EE

• Identification through Market segmentation of the relevant Market segments.

Description

Objectives• Identification of the USP

components:extended products and services

• Identification of the most attractive P/Ms through anactual and future matrix positioning

2. Identify EE Products and Services (USP)

3. Matrix portfolio assessment

Assessment of P/MDefine the productsStep Define the Markets

1. Determine the Market (segments) of the EE

• Identification through Market segmentation of the relevant Market segments.

Description

Objectives• Identification of the USP

components:extended products and services

• Identification of the most attractive P/Ms through anactual and future matrix positioning

2. Identify EE Products and Services (USP)

3. Matrix portfolio assessment

Assessment of P/MDefine the productsStep Define the Markets

Wooden products to large customers

Wooden products to distributors

Wooden products straight to consumer

(marginal)Bicycles to large

customersBicycles to distributors

Bicycles straight to consumer (marginal)

Plastic sledges etc. to large customers

Plastic sledges etc. to distributors

Plastic sledges etc. straight to consumer

(marginal)

Additional equipment to large customers

Additional equipment to distributors

Additional equipment straight to consumer

(marginal)

Market (segments)Product/market area covered

Large customers (Public institutions)

Distributors of outdoor toys

Straight to consumerProduct/service (groups)

Additional equipment (import/wholesale)

Chair sledges and wooden sledges (production)

Bicycles (production)

Plastic sledges, (import/wholesale)

PRODUCT – MARKET MATRIX IDENTIFICATION


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– P/M area choice


–SWOT items identification

TurnoverCM/CR 2020 40,5 % 2329 38,0 % 168 44,8 % 0,0 % 4517 39,3 %

TurnoverCM/CR 2699 38,0 % 2923 36,0 % 204 39,1 % 0,0 % 5826 37,0 %

TurnoverCM/CR 1076 20,7 % 998 18,1 % 78 25,2 % 0,0 % 2152 19,5 %

TurnoverCM/CR 95 19,4 % 108 17,6 % 5 23,8 % 0,0 % 208 18,5 %

TurnoverCM/CR 0,0 % 0,0 % 0,0 % 0,0 % 0 0,0 %TurnoverCM/CR 5890 33,1 % 6358 31,2 % 455 37,1 % 0 0,0 % 12703 32,3 %

11014

1123

0

39370Total market

17777 20365 1228

15748

Chair sledges and wooden sledges (production)

375

7103 8123 522

Product (groups)

Market (segments) Large customers (Public institutions)

Distributors of outdoor toys

21

310

Total product (groups)

Straight to consumer

114854987 6123

5507

612Additional equipment to all toys (import/wholesale)

490

Plastic sledges, (import/wholesale)

5197

Bicycles (production)

• TURNOVER

• CONTRIBUTION MARGIN

• CONTRIBUTION RATIO

• The values of this matrix will influence the following assessment of the market attractiveness, providing automatic default values for filling in the P/M attractiveness table;

• Future financial data are foreseen by using Neural Network algorithm;


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– P/M area choice


– SWOT items identification

I = I = PPiiLLii

PPii

0. Definition of the scale used on the two axis of the matrix (Attractiveness e Competitive position)

1. Choice of the most important factors related with the Attractiveness and Competitive position

2. Evaluation of factors relevance (weighting phase - Pi -) for the Attractiveness and competitive position of each P/M areas

3. Evaluation of the level (Li) for each analysed factors (Qualitative assessment of predefined questions)

4. Total assessment determined by Attractiveness and Competitive position index for the specific P/M area, according to the following formula


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– P/M area choice



Evaluation

RemarksEvaluation

Remarks

One large market in Italy

It has not been given priority to outdoor toys, but this has improved lately

Expected stability, but only marginal growth.

A certain growth is expected - breed improvement is given priority

No competition from other producers, but from distributors who offer more products.

The competition from other Italian and international companies are high.

Rules in the kindergartens: rules regarding replacement of toys/equipment

No new regulations are known

Total assessment: On a scale of 0 - 1, assess the P/M area's attractiveness

1The prospects for the future are good

1The prospects for the future are good

How attractive is the P/M area regarding future potential for growth?

How attractive is the competitive situation of the P/M area?

How attractive is the P/M area regarding laws and regulation?

First P/M area Second P/M area

How attractive is the P/M area's size (total turnover)? H H

H

M

M

M

MM

High market shares concerning chair - medium in other areas, but stabile

High market shares concerning chair - medium in other areas, but stabile

Expected growth, good prices are more important than international trademarks.

The competition may increase regarding international trademarks.

Reasonably good , but it can be improved

Because of the companies weak trademark the prices are forced.

Stabile

The margin could decrease because of the pressure from the store chains.

1 OK 1

Not part of the standard assortment in the chain stores, hence the prices are forced.

Total assessment: On a scale of0 - 1: assess the company'sposition in the P/M area

How good is the EE market share in the P/M area?

How good is the expected development in the EE's market shares?

How good are the EE's margins in the P/M area?

How good is the expected development in the EE's margins?


M

M

M

M

H

L

L

L

I = I = PPiiLLii

PPiiTotal evaluation for each P/M areas

P/M ATTRACTIVENESS TABLE

COMPETITIVE POSITION TABLE


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– P/M area choice



Assume that the large customer will prefer electronic purchase solutions.

Electronic purchase solutions.Producers as ourselves are becoming distributors.

e-buiness will probably be used by most of the suppliers towards the large customers.

- e-business will probably be used by most suppliers towards their distributors. Possible suppliers downwards integration

To which extent to you believe that e-solutions may contribute to strengthening the company's position in the P/M area?


To what extent do you believe that the implementation of e-solutions may increase the attractiveness of the P/M area?

Product/market area 1 Product/market area 2 Product/market area 3

H = HighM = MediumL = Lowfor qualitative answer.

Graduation of influence of e-business on attractiveness and EE position on the specific P/M area

The answers influence directly the position of the second bubble in the following Matrix representation.The 2nd bubble provide a clear picture of the future tendency


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– P/M area choice


–SWOT items identification

First P/M area

Second P/M area

P/M

are

a at

trac

tive

nes

s

Weak

Low

High

Strong

2nd priority

Not a priority 3rd priority

EE position in the P/M area

1.st priority2nd priority

Not a priority 3rd priority

Matrix area Description

1st Priority: High score on both attractiveness and competitive position.

2nd Priority: High score on attractiveness but not on the EE competitive position the EE should decide whether it is possible to achieve a better position in the market.

3rd Priority: High score on EE competitive position but a low score on attractiveness assessment of how attractive is this market, and if this is enough to render an acceptable profit ('milk' the P/M areas for as long as possible without making too large investments)

Not a priority: Low score on both attractiveness and EE position consider withdrawing from the market if profits are not satisfactory or future prospects are not brighter.

The position of the bubbles in the Matrix quadrants influence the P/M areas choice.


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Purchasing criteria analysis 1/41. Gather information about customers' purchasing criteria, and

about the way in which your organisation accomplish them;• Internal workshop by Marketing department• Direct or phone interview• Market research

2. Research results documentation;

3. Assess how your main competitors satisfy customers' purchasing criteria and benchmarking;

4. Conclusion: EE’s SWOT assessment according to the investigation of consumers' purchasing criteria

– Product quality– Delivery precision– …

Purchasing criteria

prioritised

Value creating activities’

identification

– Production– Distribution–…..

Performance assessment

– Qualitative assessment of each internal value creating activities

– Comments– e-solution id.

INTERMEDIATE SWOT ANALYSIS

EE Purchasing criteria analysis

Competitors Purchasing

criteria analysis

FINAL SUMMARYBenchmarking between the EE criteria and the competitor n°1 for each specific criterion.


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Purchasing criteria analysis 2/4

1. Purchasing Criteria identified & prioritised

2. Value creating activites identification

3. Performance assessment4. Cause description5. E-solution contribution

3. Performance - assessment

4. Comments5. e-solution which may contribute to solve a problem

Product quality Production + High product quality

Access to satisfactionfeedback amongst internetcustomers .

Product selection and additional services

Product development 0

Good selection of products and additional equipment, but lack of additional services as order status.

Cooperate with more foreignsuppliersanddistributeseveraldifferent product typesby theinternet (establish amarketplace), offer additionalequipment and services asmounting, display the orderstatus via the internet, products adjustedfor special purposes,etc.

Delivery precision Distribution -

Not always positive because of delays by the forwarding agent.

Use of the existing market

places on the internet to locate

forwarding agents who provide

better service (service

warranties etc.)

Prices compared to quality

Marketing/ sales +

Product's prices are on the average, but they are well known for their high quality products.

Purchase and sales solutions.

Handle customer requests

Service and support -

Not able to handlerequests from thecustomersasfastastheywishandthey oftenlackinformation (e.g. orderstatus)

Customer support via the internet.

1. Purchasing criteria

prioritised:

2. Value creating activity(ies) that most heavily influence(s)

the purchasing criterion

Extended Enterprise


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1. Purchasing Criteria identified & prioritised

2. Performance assessment

3. Cause description4. E-solution contribution

TEMPLATE FOR COMPETITOR ANALYSIS

Competitor 1 - name

Competitor 1

Performance - assessment

Comments (Description of cause)

Any e-solution making your

competitor better

Product quality + Top quality

Product selection and additional services

- Produces outdoor products for wintertime use (snow racers and plastic sledges).

Delivery precision+ The distributors believe that

they are good.Prices compared to quality

0 High prices, but they ensure high quality

Handle customer requests

+ Fast and friendly feedback

Purchasing criteria prioritised


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EE and the customers' needs

EE and its top competitor

Any comments

Product quality Production + 0

Product selection and additional servicesProduct development 0 0

Delivery precision Distribution - -

Prices compared to quality Marketing/ sales + +

Handle customer requests Service and support - -

SummaryValuecreatingactivitiesthatmostheavily influence the purchasingcriterion

Purchasing criteria (from market research-

prioritised


These qualitative values are picked from the previously analysed tables.

Summary: the EE vs competitors


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Competitor analysis 1/2

Competitor's position in the market and competitive advantages

Assessment of competitor's value creating activities – S.W.

–P/M areas served by the competitor – Competitor's market position and market share

Description of competitors’ current e-solution

Intermediate OT Analysis

– Information (one way) – Communication (two way)– Trade/e-Commerce– Business Integration

– Based on the description and the assessment of main competitors – describe intermediate OT elements

Procurement ProductionMarketing/ sales

DistributionService and support

+ + 0 +

Excellent at branding

None in particular

Are known as quick and friendly

Uncertain

The production is somewhat unstable.

Some distributors say

that the salesmen are to

pushing. None in particular

Assessment of cost efficiency

Strengths

Weaknesses

Effective on purchase, large quantities and hence low prices.

Very new the equipment

used.

Primary activities


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Competitor analysis 2/2

Procurement ProductionMarketing/ sales

DistributionService and support

Information (one way)

Present the products on the Web site

Communication(two ways)

Distributors can order the products through the internet.

Trade/eCommerceBusiness integration

Types o

f eB

usin

ess

-Inte

rnet-

solu

tions

Primary activities

The value-creating activities

Description of competitors’ current e-solution for each value creating activities


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Comparison with competitors 1/3

1. Summary assessment of how the EE fulfils the customers' purchasing criteria in comparison with its competitors;

2. Summary assessment of EE’s productivity compared to those of the direct competitors;

3. Assessment of EE’s current e-solutions (if any) compared with its competitors‘;

4. Description of strengths, weaknesses, opportunities and threats based on the summaries above.

INTERMEDIATE SWOT ANALYSIS

- Purchasing criteria analysis

- Value creating act. analysis

- E-solution analysis

Extended Enterprise Competitors

FINAL SUMMARYBenchmarking between the EE and the competitors

Purchasing criteria comparison


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Comparison with competitors (Value creating act. Analysis) 2/3O

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Procurement Production Marketing/ sales Distribution Service and supportManagement and administration

Product development

Support activitiesPrimary activities


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Comparison with competitors (e-solution) 3/3

Procurement ProductionMarketing/

salesDistribution

Service and support

EE

A Web sitecontaining information aboutthe offeredproducts

Competitor 1Present theproducts on theWeb site

Competitor 2Publishing information aboutproducts

Competitor 3

Information (one way)

The value-creating activities

Primary activities

Examples of e-solution– Information (one way) – Communication (two way)– Trade/e-Commerce– Business Integration


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E-business impact on the EE market

Information gathering O.T description of EE partners

• Specific e-business related survey (MM help on line - CSP);

• External link by using the Information Selector (CSP - WWW)

• EE networks

• Trade association

DESCRIPTION OF OPPORTUNITY

• Opportunity definition

• Improvement of current business /new business model

• Improvement the Opportunity create in term of cost, revenues, market situation

DESCRIPTION OF THREATS

• Threats definition

• Threats description

• Description of how this threat may influence costs, revenues or market position

Opportunity Impact on business model

Opportunity description Costs Improvements

Access to more customers both national and international

Improvement of existing business models

Internet sales allows to sell to more customers. They may use their own Web site or a marketplace for buying the products.

Less sales costs per customer


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COMPLETE FRAMEWORK PRELIMINARY APPROACH


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OT ANALYSIS (based on the ranking algorithm): STEPS and STAGES

Market

requirements

Trend

Analysis

Customers

Analysis

Competition

Analysis

Products/services

Analysis

TREND FINDING

TREND FILTERING

TREND FORMATTING

TREND FOCUSING

Suppliers

Analysis

IN CASE OF E-PROCUREMENT ANALYSIS

Three kind of analysis allowed:

1. E-SALES 2. E-PROCUREMENT

Each analysis is divided in steps and each step is divided in stages.

1. Collecting data2. Ordering data table3. Charts and Histograms4. Ranking Algorithm

1. Collecting data2. Ordering data table3. Charts and Histograms4. Ranking Algorithm


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OT ANALYSIS (based on the ranking algorithm) : FINAL SCENARIOS

SWOT SWOT SWOT

SWOT SWOT

Opportunities

Start from trend analysis:

Country C (rank=60)

Customer analysis:

Customers G (rank=33)

Customers M (rank=30)

Customers H (rank=29)

Competitors analysis:

Competitor W (rank=10)Competitor B (rank=13)Competitor A (rank=22)

Product analysis:

Product T (rank=48)Product J (rank=37)Product S (rank=32)

Threats

Start from trend analysis:

Country H (rank=12)

Customers analysis:

Customers D (rank=15)

Customers K (rank=22)

Customers E (rank=26)

Competitors analysis:

Competitor E (rank=43)Competitor J (rank=36)Competitor Q (rank=35)

Product analysis:

Product O (rank=15)Product C (rank=26)Product R (rank=27)

OUTPUT

OPPORTUNITIES AND THREATS QUANTITATIVE PORTFOLIO GENERATION

OUTPUT

OPPORTUNITIES AND THREATS QUANTITATIVE PORTFOLIO GENERATION

At the end of the Market Analysis, four final classifications generated by the system concerning the four stages of analysis (TREND, CUSTOMERS/SUPPLIERS, COMPETITORS, PRODUCTS AND SERVICES).

Possibility of choosing the stage considered the most interesting to start the final scenario from.

Automatic alignment for each of the three elements of other stages having the highest rank for the country/region of the segment selected.

Documents

G1RD-CT-2002-00698 e-Volution Page 1 Task 2.2: MARKET MODULE CONCEPT e-Volution II - Roadmap for e-business implementation in Extended Enterprises Mr