Industry Building Blocks Overview

Make your decision with IBB Precision TM

Contact: Alan S. Michaels

[email protected]

© 2015 Industry Building Blocks

IndustryBuildingBlocks.com

The first company to define the

global economy at the granular

(five forces) industry level.

Industry Building Blocks

Company Overview

January 2, 2015

Market terminology was at too high a level to make

great decisions.

Big Data means what?

Internet of Things includes what?

You develop Medical Equipment – what type?

The IT Marketplace is how big; and what’s in it?

You need a Consultant; can you be specific?

You want Fruit Salad?

2

© 2015 Industry Building Blocks Make your decision with IBB Precision™

Yesterday’s Problem

Sure, I’ll make fruit salad.

Damn if I know what kind of

fruit salad you want.

Lack of Precision

• Industry Building Blocks provides information on the top 17,000 industries, covering over 99% of the global economy.

• The format for each 7 page industry analysis is the same.

• Granular (line-of-business) industry information supports:

Corporate planning, including selecting new industries to enter

Business unit planning

Market segmentation and strategic marketing

Opportunity identification

Competitor analysis (and vendor and business customer analysis)

Merger, acquisition, and joint venture planning

• Make your decision with IBB precision TM

3


Industry Building Blocks (IBB)

Provides Market Precision

Make your

decision with

IBB Precision TM

Improve opportunity identification, competitor analysis, and corporate and business unit strategy development

with and the

Industry Building Blocks Classification System TM (IBBCS)

IBB leverages Michael E. Porter’s five forces industry model

IBB precision is 15x more granular than NAICS

The IBB research team has been perfecting the Industry Building Blocks Classification System for more than 14 years. (Industry Building Blocks is a private company located in NY.)

4


Industry (Line-of-Business Level) Information Is

Step #1 for Strategy Development

5


A Global View of the World Economy by Industry

Is Logically Straightforward

Industry # Business 1 Business 2 Business 3 . . . Business N

1

2

3

4

5

…

N

There are “N” number of industries

There are “N’ number of competitors (companies / brands)

Industry Name

Bus

1

Bus

2

Bus

3

Bus

4

Bus

5

Bus

N

1 Industry Data

2 Industry Data

3 Industry Data

4 Industry Data

5 Industry Data

…

17,000 Industry Data

6


IBB Presents the IBB Global

Industry Game Board

Company Name (and Brand Names)

…

By Industry

By Industry Sector

By Industry Subsector

By Industry Group

By Industry Subgroup

By Industry (17,000 granular industries)

By Company

By Top Parent Company

By Intermediary Parent (Ex: by Subsidiary)

By Brand

7


IBB Industry & Company Segmentation

Is Built From the Bottom Up

8


Companies Typically Compete In More Than One

Industry (Line of Business)

Industry # Company Names (and Brand Names)

1 Global 500 companies, (such as HP, IBM, Oracle,

PepsiCo, Caterpillar, P&G,

Pfizer, BASF, KPMG & Sony)

compete, on average,

in 30 lines of business

2

3

4

5

6

7

…

17,000

Using a common

industry analysis framework

any number of companies

can be analyzed side-by-side,

at the line-of-business level,

where true competition takes

place. 9


IBB Normalization of All Company Data

Enables Apples-to-Apples Comparisons

10


Comparing Companies at the Granular Industry Level Is

Much More Precise and Relevant to Decision Makers

Industry Name Apple Dell IBM Other

…

Desktop PC Manufacturing Yes Yes

Tablet PC Manufacturing Yes Yes

Mainframe Manufacturing Yes

Cloud Consulting Services Yes Yes

Disaster Recovery Services Yes Yes

Relational Databases Yes

…

YES = This company competes in this specific industry.

11


The IBB Classification System TM Enables the Grouping

of Industries. One such example: by Broad Industry Sectors

Industry Sector Name # of Industries

1 Aerospace & Defense 446

2 Agriculture, Forestry, Fishing & Hunting 247

3 Auto, Truck, Train & Ship Manufacturing 598

4 Banking, Financial Markets & Financial Services 521

5 Chemicals Manufacturing 812

6 Construction & Engineering Services 472

7 Consumer Products Manufacturing 1,552

8 Consumer Services & Real Estate 596

9 Food Services, Hospitality & Lodging 127

10 Food, Beverage & Tobacco Manufacturing 1,083

11 Healthcare, Life Sciences & Pharmaceuticals 1,240

12 Insurance, Annuities & Healthcare Plans 374

13 IT & Business Services 3,026

14 Media, Communications & Entertainment 930

15 Mining, Metals, Energy & Environmental Services 972

16 Other Commercial Products Manufacturing 2,629

17 Retail Trade 265

18 Travel, Transportation, Wholesale & Distribution 368

19 Unlawful Industries & Industries to Be Classified 592

Total Number of IBB (Granular) Industries 17,000

Group Industries By:

Text in the Industry Name (Ex: “Consulting”)

Industry Revenue or Industry Attractiveness Score

Targeted Customers (Ex: “Seniors” or “Banks”)

Buyer Type (Ex: “Sales” or “Market Researcher”)

Economic Trend (Ex: “Inflation”)

Technology Trend (Ex: “Internet of Things”)

And 10,000 more selection criteria options

12


IBB Provides an Unlimited Number of Ways to

Group (and Target) the 17,000 Granular Industries

One or more products and / or services that

are direct substitutes

Sold by one or more businesses

To one or more external customers

Requires similar activities to produce the

product or provide the service (hence, sugar manufacturing and manufacturing

sugar substitutes are distinct industries)

13


A Working Definition of “Industry” for Those Not

Familiar with Porter’s Five Forces Model

A Molecule & A Chemical Element

Examples of Industry Groups:

• Financial Services

• Banking

• Corporate Banking

• Corporate Cash Management

• Wholesale Payment Systems

An Example of An Industry:

• Wholesale Funds Transfer Services

14


The Difference Between An Industry Group &

An Industry, Is Like the Difference Between…

An “Industry

Group” =

Two or more

Industries

An “Industry”

Is the Right

Level for a

Five Forces

Analysis

• Aircraft De-Icing Systems Manufacturing

• Commercial Auto Insurance

• Data Center Consulting Services

• Frozen Pizza Manufacturing

• Hydrogen Car Manufacturing

• Mainframe Computer Manufacturing

• Offshore Oil Rig Construction

• Payroll Software

• Pneumatic Air Preparation Dryer Manufacturing

• Replacement Knee Joints Manufacturing

• Soft Serve Ice Cream Machine Manufacturing

15


Additional Examples of Industries at the (Granular)

Industry Level, Include:

Each Industry

Has Its Own

Five Forces

Industry

Structure

Examples:

• Clock Radio Industry

• Dinner Theater Industry

• Office Suite Software Industry

• ERP Software

• CRM Software

16


New Industries Can Be Created By Integrating

Previously Distinct Industries

Combining products into new industries requires more than

just selling complementary products.

For example: apples, pears, pineapples, walnuts, and wicker baskets –

are all distinct industries. The cellophane is what helps create a new

industry: the Fresh Fruit Basket Industry.

Industry leaders often bundle products to raise barriers to entry

– making it harder for small competitors to compete.

Previously distinct software

solutions are bundled into larger

solutions with APIs and sold as

one package.

17


Each (7 page) Industry Analysis Provides the

Following Categories of Information

Industry Revenue Competitors, by: • Top Corporate Parent

• Immediate Parent

• Brand

Industry Attractiveness

Product Segments

Customer Segments

Channel Segments Industry Substitutes

End Users Industry Complements

Industry Trends Industry Vendors

Economic Trends Buyer Purchase Criteria

Technology Trends Industry Uncertainties

Geopolitical Trends & More, including keywords*

* For optional link to www.DiscoveryPatterns.com

Ability to segment any global market arena into its component industries to better address market opportunities.

Ability to group any combination of industries to analyze any ecosystem.

Enhanced ability to commercialize new ideas and products by quickly finding the relevant industry players.

Superior ability to objectively analyze competitors across all product lines to compete on a more holistic basis.

Side-by-side company comparisons at the line of business level (using data normalized with the IBBCS) to facilitate better marketing and planning processes overall because of the granularity.

Better corporate training because every industry and company is analyzed using the same framework.

18


Line-of-Business (Industry Five Forces) Level

Information Offers Many Advantages

Industry Group Analysis / Market Area Analysis (A list of industries which make up the general market)

Industry Analysis Report (A seven page PDF analyzing one specific industry)

Company Lines-of-Business Summary Report (An objective list of industries the company competes in)

Company Lines-of-Business Detailed Analysis (An objective list of industries the company competes in with a seven-page Industry Analysis or a one-page Industry Summary for each of the company’s lines of business)

Companies Side-by-Side Analysis (Compares ten companies or fewer, by line-of-business)

19


Industry Building Blocks Provides the Following Standard

Industry & Company Reports + Much More

Define An

Industry

Group

Define An

Industry

Define A

Company

Compare

Companies

Key IBB Data Sources

• Daily news sources like the Wall Street Journal

• Websites – Financial websites (Google Finance; CNBC.com; Economist.com; SEC.gov; etc.) – Websites for Industry Associations, Industry Conferences, etc. – Company Websites

• Annual Reports

• Company brochures and company product catalogs

• Industry reports

• Industry journals & industry trade magazines

• Google Alerts (set for companies, products, brands, and industries)

• In some cases, we call companies directly. (Half the time this is helpful.)

• DiscoveryPatterns.com for collecting and analyzing global news content and for discovering competitive patterns in the news

20


Industry Building Blocks Leverages a Wide Array

of Data Sources

Most Frequent

Sources

• All industries are viewed with a 100% global perspective

• Approximately 75% of research is by company (public companies, private companies, associations, joint ventures, governments – any entity that provides a product or a service)

• Approximately 25% of research is by industry

• All information is developed via analysis and then manually entered into the IBB database because companies rarely report information at the line-of-business (five forces) industry level.

• Total company revenue is computed by adding the revenue of each of the company’s lines of business.

• Total industry revenue is typically estimated after analyzing eight to ten market leaders in an industry.

21


IBB Research Methods Are Proprietary, But a High

Level View Provides General Insights

• Industry Attractiveness is a metric of the likely overall profitability of an industry for the next few years based on an analysis of the underlying industry structure, including: 1. Competitive rivalry 2. Potential entrants 3. Customer power (including channel power) 4. Substitutes 5. Vendors * As well as: Industry size, Industry growth & Industry stability / risk

• A key goal for any company is to select the best portfolio of industries to compete in (as well as maximizing linkage across the company’s lines of business).

• For B2B companies, it’s important to understand their business customers’ industry dynamics to better address their needs.

– Note, however, that even if a target industry is not attractive from the industry competitors’ points of view (say because of a price war), it may still be an attractive industry to go after.

22


Industry Attractiveness,

A Few Things to Think About

23


A Very, Very Brief Window Into the

Components of Industry Attractiveness*

Component Example

1. Competitive

Rivalry

The more industry competitors compete on differentiating features,

rather than just on pricing, the higher the industry attractiveness.

2. Potential

Entrants

The harder it is for an outside company to enter the industry, the

higher the industry attractiveness

3. Customers The more customers the more attractive the industry (for revenue

reasons and because it’s harder for any customer to dictate terms).

Customers include intermediary distribution channels.

4. Substitutes The fewer and less realistic the substitutes the better.

5. Vendors The more vendors to select from the better.

* Plus: Industry Size;

Industry Growth;

Industry Stability

In addition to the components above, all else equal,

- the larger the industry,

- the faster the growth rate,

- the more stable the industry (less risk)

the more attractive the industry.

In-depth source:

“Competitive

Strategy” 1979 by

Michael E. Porter.

“The Five Competitive Forces That Shape Strategy” Jan 2008.

Plus

HBR’s

Porter

article:

24


Decision Makers Want Information That Enables

Them To Make Better Decisions Definitions of the term “Industry”

Industry (used loosely)

Anything you want it to mean. For example:

– The financial services “industry” includes

the banking “industry” which includes

the corporate banking “industry” which includes

the cash management “industry” which includes

the wholesale funds transfer services “industry”

(Strategically

Relevant)

Industry

1. A definition for strategic planners & industry analysts:

The right level to conduct an industry analysis.

– For example: a Michael Porter 5-forces industry analysis.

Example: Wholesale Funds Transfer Services Industry

2. A definition for those not familiar with industry analyses:

One or more products and/or services that are direct substitutes sold by one or more businesses to one or more external customers (and where the processes for manufacturing the product,

or for providing the service, are similar).

Sounds obvious.

I hope our strategy and

marketing teams know

the specific industries

that we compete in.

Compare

competitors

at the

LoB level.

25


Holistic Corporate Strategic Intelligence:

The Big Picture Starts with Lots of Industry Analyses

Company & Industry

Information Sources

(External & Internal)

Activity 2

Activity N

Activity 1

Corporate Strategy

Operational Plan

Financial Plan

< Your Company >

Group Strategy

Operational Plan

Financial Plan

Group A

Group Strategy

Operational Plan

Financial Plan

Group X

© 2003 Alan S Michaels

[email protected]

Strategic

Planning

Activities Performed( Support Function = Activity Shared

by two or morebusinesses)

The basics:

• Ongoing, iterative improvement.

• One-page plans = 80% of the benefit.

• Alignment is critical.

• Speed and flexibility are key.

• All parts are interconnected.

[Holistic]Planning Framework

Business 1

Products/Services& Buyer Types---------------

IndustryAnalysis

& Business Strategy

with linkages to

Support Functions

Operational Plan

Financial Plan

Op Plan Fin Plan

Op Plan Fin Plan

Op Plan Fin Plan

Group Strategy

Operational Plan

Financial Plan

Group B

Group Strategy

Operational Plan

Financial Plan

Group C

Business 2


IndustryAnalysis

& Business Strategy

with linkages to

Support Functions

Operational Plan

Financial Plan

Business 3


IndustryAnalysis

& Business Strategy

with linkages to

Support Functions

Operational Plan

Financial Plan

Business 4


IndustryAnalysis

& Business Strategy

with linkages to

Support Functions

Operational Plan

Financial Plan

Business N


IndustryAnalysis

& Business Strategy

with linkages to

Support Functions

Operational Plan

Financial Plan

Corporate

Decision-Making

Framework

Decision

Makers

CEO

Corporate

Planner

Group Execs

LOB Execs

Marketing -

Sales -

CIOs -

Other

Functional

Managers

17,000

Industries

Industry

Analysis

26


Use Structured IBB Data + Unstructured Big Data to

Best Support Corporate & Business Unit Planning

Using Big Data Analytics

Leverage the swarm intelligence of news from companies

like Discovery Patterns to adjust strategies when needed.

27


Market Research Without IBB Is Like Reading

Without Glasses

NAICS View (1 NAICS Industry)

• 333111 Farm Machinery & Equipment Manufacturing

IBB View (There are 50 IBB Industries for Farm Equipment)

• Tractors / Compact & Sub-Compact Tractor Manuf.

• Tractors / Farm Tractor & Agricultural Tractor Manuf.

• Tractors / Row Crop Tractor Manufacturing

• Tractors / Specialty & Custom Tractor Manufacturing

• Tractors / Utility Tractor Manufacturing

• Tractors / Walking Tractor Manufacturing

• Fellers / Tracked Fellers & Feller Buncher Manuf.

• Fellers / Wheeled Fellers Manufacturing

• Harvester Head Manufacturing

• Harvesters / Combine Harvester Manufacturing

• Harvesters / Grape Harvester Manufacturing

And 39 additional IBB industries (related to 333111)

IBB

Precision

Wins

IBB Industries are

the Correct Level for

a Five Forces

Industry Analysis

28


Competitive Profile Report for Company XYZ

Industry Name Industry

Revenue

XYZ Inc.

Share %

XYZ Inc.

Revenue

Industry 1 List of

Industries in which Company XYZ Inc

competes

% $

Industry 2 % $

Industry 3 % $

% $ …

% $ Industry N

Total

Revenue $ ____

Leveraging Objective industry information ensures that

information on: competitors, market share, products, etc.,

supports decision makers.

29


Company Side-By-Side Report

Row # Industry Name A V

s B 1 $ $

2 Listing of

industries where

companies

A & B

compete.

No Compete

$

3 $ $

4 $ $

$ 5 No

Compete

N $ $

30


Prior to Now, Company & Industry Information

Came From Three Basic Categories of Vendors

There are hundreds of

vendors that provide

information on companies -

and they group the companies

into “ industry sectors .”

This “industry sector data” is

usually at way too high a level

to be actionable.

There are many data vendors

that use NAICS (and old) SIC

codes in providing industry and

company data. These coding

schemes are also at too high a

level to meet the needs of most

decision makers.

Niche (often premium) vendors for industry and

company information are typically focused on a

narrow set of industries and / or they only cover a

limited geographic area.

2

3

1

31


Decision Makers Increasingly Want Information at

the Line-of-Business Level

Company 10k Historical Data

& Industry Sector

Data Providers

SIC & NAICS

Government Classification

Data Providers

Deep Dive, Narrowly Focused:

Management Consultants,

Industry Analysts

& Market Research Firms

Information Providers

Industry & Company

Line-of-Business Strategic Intelligence Provider

1 2

3 The New Category 4

32


Industry Segmentation & Target Marketing

with IBB Precision Is So Easy

Each of the IBB 17,000

industries has its own

Industry Matrix.

Over 30,000 members

19 Industry Sector Subgroups

33


Join Our LinkedIn Group: “Corporate Planning,

Strategy & Strategic Market Segmentation”

Top 17,000

Industries

Aerospace & Defense Food, Beverage & Tobacco Manufacturing

Agriculture, Forestry, Fishing & Hunting Healthcare, Life Sciences & Pharmaceuticals

Apparel Manufacturing Insurance, Annuities & Healthcare Plans

Auto, Truck, Train & Ship Manufacturing IT & Business Services

Banking, Financial Markets & Financial Serv. Media, Communications & Entertainment

Chemicals Manufacturing Mining, Metals, Energy & Environmental Serv.

Construction & Engineering Services Other Commercial Products Manufacturing

Consumer Products Manufacturing Retail Trade

Consumer Services, Ed. & Real Estate Travel, Transportation, Wholesale & Distribution

Food Services, Hospitality & Lodging

SUBGROUPS

Sample IBB REPORTS

&

Sample IBB Data Extracts

34


Sample Views of IBB Data

35


Caterpillar (NYSE: CAT) Line-of-Business Analysis

Sample

Data Extract

36


Oracle (NYSE: ORCL) Line-of-Business Analysis

Sample

Data Extract

37


Travelers (NYSE: TRV) Line-of-Business Analysis

Sample

Data Extract

38


Sample

Page 1 of 6

Procter & Gamble

PG (NYSE)

Line-of-Business

Analysis

39


Sample

Page 1 of 5

40


Analyzing Companies at the Granular Level:

Apple AAPL (NASDAQ) v. Google GOOGL (NASDAQ)

• Apple competes in

41 industries

• Google competes

in 42 industries

• Each of these

industries has its

own focused

groups of

competitors,

buyers, suppliers,

etc.

Example is page 1 of 3

41


Analyzing Companies at the Granular Level:

EMC EMC (NYSE) v. Oracle ORCL (NYSE)

• EMC competes in

128 industries

• Oracle competes

in 224 industries

• EMC and Oracle

compete in 331

unique industries

(overlap in 21)

• Each of these

industries has its

own focused

groups of

competitors,

buyers, suppliers,

etc.

Example is page 1 of 10

42


The Global Economic Pie With 17,000 Industry Building Blocks (Pie Slices)

19 Sectors

127 .Subsectors

497 ..Groups

2,370 ...Subgroups

43


Go From Viewing the Global Economy to Viewing A

Single Industry of Interest in 5 Clicks

7

7

Drill down the default IBB hierarchy:

(Alternatively, use filters or search

criteria to select industries of interest.)

5

4

3

2

1

44


Industries for Industry Subgroup:

Heart-Related Products & Equipment Manufacturing

Cardiac Event Recorder Manufacturing Heart Insertable Diagnostic Tool Manufacturing

Combination Monitor/Defibrillator Manufacturing Heart Monitor Disposables, ECG, AED & ECG Accessory Manuf.

CPR Pocket Resuscitator & CPR Accessories Manuf. Heart Monitors / Ambulatory ECG Electrocardiograph Manufacturing

ECG Acquisition Units & ECG Data Transmission Device Manuf. Heart Monitors / PC Based ECG Diagnostic Solutions

Heart / Integrated Anatomic Mapping & EP Recording System Manuf. Heart Monitors / Prenatal Heart Monitor Manufacturing

Heart / Radio Frequency Ablation Catheters Manufacturing Heart Monitors / Resting ECG, EKG & Electrocardiograph Manuf.

Heart / Radio Frequency Cardiac Ablation System Manufacturing Heart Monitors / Stress ECG & Exercise Testing Device Manufacturing

Heart Defibrillator / AED - Automated External Defibrillator Manuf. Heart Pacemaker & CRT Systems Manufacturing

Heart Defibrillator / External Home Defibrillator Manufacturing Heart Pacing Lead Manufacturing

Heart Defibrillator / External Professional Defibrillator Manufacturing Heart Replacement / Artificial Heart Manufacturing

Heart Defibrillator / ICDs - Implanted Defibrillator Manufacturing Hemostasis Introducers Manufacturing

Heart Defibrillator / Semi Automatic & Semi Manual Defibrillator Manuf. Monitors / Holter Monitor System Manufacturing

Heart Defibrillator / Wearable Defibrillator Manufacturing Stents / Heart Stent & Vascular Stent Manufacturing

Heart Defibrillator Training Equip & AED Training Accessories Manuf. VADs / Ventricular Assist Device Manufacturing

45


Stents / Heart Stent & Vascular Stent Manufacturing

Industry Definition

Competitors • Abbott Laboratories

• Boston Scientific

• OrbusNeich

• Johnson & Johnson

• Medtronic Inc

• Datascope

• B Braun Melsungen

• Biosensors

• Aeon Bioscience

• Amaranth Medical

• Etc.

Rev / Attractiveness

Product Segments

Customer Segments

Channel Segments

Industry Substitutes

Industry Vendors

Industry Trends

. . . A Lot More

It would be nice to

show the seven page

industry analysis

here, but that would

require 25 slides or

more.

46


Sample

Data Extract

Example is an extract

from the standard IBB

7-page industry analysis


Contact: Alan S. Michaels

[email protected]

© 2015 Industry Building Blocks

IndustryBuildingBlocks.com

The first company to define the

global economy at the granular

(five forces) industry level.

Industry Building Blocks


Thank You

Documents

Industry Building Blocks Overview