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MME-34 - Group 4• HEPI MOHAMAD FAIZAL• INDAH PANCAWARDANI• SIURI WIDJAJA• ZAKARIA N.D. HALIM
Written by David Rodes & Daniel Stelter
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Causes by :
15%
85%
o industri jatuh, semua perusahaan di di industri tersebut terpengaruh jatuh
o industri tidak jatuh, tetapi karena masuknya beberapa perusahaan baru, maka perusahaan yang ada di industri tersebut ada yang jatuh
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o regulatory action Wajib melaksanakan Politic Capital. Kasus Hero supermarket jatuh karena asing diperbolehkan masuk
o economic down turn
o geopolitical changes
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B,C
D, E
Industry Sales Growth Stall :
B,C
D,E B
C
Growth Stall Period
Back on Track
Living in Sales Growth Stall(protect current business)
STALL POINT
Reborn from growth crisis
o industry sales goes into free fall
Kasus Auto 2000 di USA. Stall point : fixed cost tinggiJika sales turun, maka dampaknya besar sekali
is a moment when company’ sales growth rate ships into
prolonged decline
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When DownTurn Happens :
ECONOMIC CRISIS
Industry
AB
C
INACTION- Riskiest response
RASH ACTION- Scattershot- uncoordinated moves- generate a sense of panic- expensive recovery when economic rebounds- distract from seeing significant opportunities among in crisis
RAPID but Measured o research by Boston Consulting Groupo known as “Comprehensive & Aggressive Approach”
Turbocharged
Suffice
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Comprehensive & Aggresive Approach
- stabilize your business- protecting it from downside risk - ensuring that it has the liquidity necessary to weather the crisis.
- identify ways to capitalize on the downturn in the longer term
- partly by exploiting the mistakes of less savvy rivals
IMPLEMENTATION
OBJECTVEo Help to identify particular areas where vulnerable & where action is most immediately neededo Help to communicate to the entire organization
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Stabilize your business• protecting from downside risk
A. Assess our vulnerabilities in a systematic manner at :o the company levelo by business unit
OBJECTVEo Help to identify particular areas where vulnerable & where action is most immediately neededo Help to communicate to the entire organization
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Protecting from Downside Risk• assess our vulnerabilities
1. Consider several scenarios o a modest downturno a more severe recessiono a full blown depression
1
Step
Based on available data and analysis
2. Quantify the impacto run simulation for each scenario that generate financial outcome
o sales volumeo prices o variable costs etc
o be sure to confront head at the worst caseo Operating margins (EBIT) around 10%
o Decline in volume and priceso current profit into huge lossesso cash flow deep into red
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Protecting from Downside Risk• assess our vulnerabilities
1
Step
Risk Exposure Matrix
Catastrophic
Major
Moderate
Minor
Insignificant
Rare Unlikely Possible Likely Almost Certain
Based on available data and analysis current global downturn truly stand apart
o United States savings (1986 – 1995)o The Japanese Banking Crisis (1990 – 1999)o The Asian Financial Crisis (1998 – 1999)
stall – indebtedness (in USA – 380% of GDP)
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Protecting from Downside Risk• assess our vulnerabilities
B. Assess rival’s vulnerabilities o SWOT Analysis relative to competitors :
o cost structureso financial positiono sourcing strategieso product mixeso customer focus etc
o calibrate the actions plan that the competitors most likely to takeo example :
assess potential acquisitions with a focus on vulnerable customers groups of weaker competitors
1
Step
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Stabilize your business• ensuring the liquidity
A. Protect financial fundamentals
OBJECTVEo Help to identify particular areas where vulnerable & where action is most immediately neededo Help to communicate to the entire organization
2
Step
Adequate cash flow and access to capital
Free up cash
Improve cash Protect
Optimize
& financing options
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Stabilize your business• ensuring the liquidity
B. Protect The Existing Business
OBJECTVEo Help to identify particular areas where vulnerable & where action is most immediately neededo Help to communicate to the entire organization
2
Step
Effective & Efficiency Manage Top Line Rethinking Strategies
ReinInvestment
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Stabilize your business• ensuring the liquidity
C. Maximize valuation relative to rivals
OBJECTVEo Help to identify particular areas where vulnerable & where action is most immediately neededo Help to communicate to the entire organization
2
Step
Secure Equity Capital
a strong balance sheet with low debt levels and secured access to capital
Create a compelling investor communications strategyo Drivers of relative valuationo Seeking attractive M&A
Reassess dividend policy and share buyback plans
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IMPLEMENTATION
RAPID
Establish Turbo Charged Team• a formal crisis management team• dedicated crisis management team
Develop different economic scenarios and determine how they might affect the business
identify recession-related risks and opportunities
prioritize initiatives designed to mitigate the risks and capitalize on the opportunities
Oversee implementation of the initiatives
monitoring their progress and continually reevaluating them in the light of changes in the economic landscape.
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IMPLEMENTATION
RAPID
Establish Turbo Charged Team• a formal crisis management team• dedicated cris is management team
To Avoid :
Insufficient understanding and appreciation of the evolving crisis
o create and maintain a sense of urgency within the organization
creating a transparent, consistent, and fact-based process for carrying out the necessary initiatives.
o continually monitor the economic situation a modest downturn scenario to a worst-case action plan.
1
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IMPLEMENTATION
RAPID
Establish Turbo Charged Team• a formal crisis management team
To Avoid :
Senior leaders’ lack of preparation and commitment
o close working relationship with the sponsor of the company’s recession response (often the CEO)
well informed of progress direct them for their participation
2
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IMPLEMENTATION
RAPID
Establish Turbo Charged Team• a formal crisis management team
To Avoid :
Failure to see how individual initiatives are part of a comprehensive plan
o establish the priority and timing of initiatives ensure that the individual measures reinforce one another continually evaluate initiatives both individually and collectively
• suspending• accelerating• combining existing efforts• Initiating New Ones
3
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IMPLEMENTATION
RAPID
Establish Turbo Charged Team• a formal crisis management team
To Avoid :
Lack of attention to the human element
o articulate the threats facing the organization
explain why change is needed clearly communicate to individuals how they will be affected
4
Page 19
How You Gain
LONG TERMADVANTAGE
Invest for the future
• compromise your ability to capitalize on opportunities when the economy rebounds
• Prioritize the different options, protecting investments likely to have a major impact on the long-term health of the company
Sanofi -Synthélabo
the economic recession that began in 2001 with a solid product portfolio.
R&D spending in order to keep its product pipeline robust.
R&D expenditure from €950,000 in 2000to €1.3 million in 2003
gained market share and outperformed peers in the stock market
Page 20
How You Gain
LONG TERMADVANTAGE
Pursue opportunistic and transformative M&A
• Exploit your competitors’ vulnerabilities to redefine your industry through consolidation
• Closely monitor the financial and operational health of your competitors
Carnival
only weeks aft er the 9/11 terrorist attacks, interceded in the planned friendly merger of Royal Caribbean and P&O Princess Cruises.
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How You Gain
LONG TERMADVANTAGE
Rethink your business models
• wrenching transformation for companies and industries
• increase revenue through expansion into adjacent product categories or horizontal integration
IBM
redefi ned the company’s business model,transforming IBM from a hardware producerinto a computer services and solutionsprovider
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RASH ACTION- Scattershot- uncoordinated moves- generate a sense of panic- expensive recovery when economic rebounds- distract from seeing significant opportunities among in crisis- partly/serial, defensive and then offensive
INACTION- Riskiest response
RAPID but Measured-RAPID means simultaneously, Defensive & Offensive
HOW MUCH Business Exposure ?
Build several scenario
Quantify the impact on the business
Assess rivals’ vulnerabilities
“Business Exposure”
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“Business Exposure”
Managing business exposure
Gain long term advantage
Protect the financial
fundamentals
Protect the existing business
Maximize your valuation relative to
rivals.
Invest for the future
Pursue opportunistic and transformative
M&A
Rethink your business models
Implementation by Establish Team
Page 24
developdifferent economic
scenarios and determine how they
might affect the business
Implementation by Establish Team
REBORN FROM CRISIS
identify recession-
related risks and
opportunities
prioritize initiatives designed to mitigate
the risks and capitalize on the
opportunities
monitoring their progress and continually reevaluating them in the light of changes in the
economic landscape
overseeimplementation of
the initiatives
Page 25
Strategic factors1. Premium position backfires Contoh Kodak innovation management breakdown premature core business abandon
Organizational factors
talent benchmark shortfall
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Company Sales Growth Stall :
A,
B, C
Option 1
Growth Stall Period
Back on Track
Living in Sales Growth Stall(protect current business)
STALL POINT
Reborn from growth crisis
D & E adalah New EntrantsA jatuh sendiri, yang lainnya naik terusStall point bisa karena new entrants
is a moment when company’ sales growth rate ships into
prolonged decline
A,B,C
D, E
A
A
B,C
D, E
B,C
D, E
Option 2Causes of s
ales
growth stall
Page 27
Strategic factors
- Is the inability of a company to respond effectively
a) To new – low cost competitive challenges, or
b) To a significant shift in customer valuation of product features
Clues in Market Dynamics o The company has lost market share to non premium
competitor in its current marketso The key customer increasingly are unwilling to pay
premiums for product enhancements
1. Premium Position Backfires
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Strategic factors
- Is some chronic problems in managing the internal business processes for updating existing product and services and creating New Ones
Clues in Innovation Management Controlo The Senior Executive Team resist the proposition
that Non-Premium competitors are operate in the same business offering better product and process innovation
o The Senior Executive Team commonly dismiss the possibility that Non-Premium competitors and Low End Entrants will penetrate the upper ends of our markets
2. Innovation Management Breakdown
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Strategic factors
- Is the failure to fully exploit growth opportunities in the existing core business
Clues in Market & Competitor Researcho The Company fails to track shifts in secondary and
tertiary customer group behavioro The Company excludes Non-Premium players and
Low-End Entrants from its tracking of competitive threats
3. Core Business is Abandoned
Dibuat maksimum, jangan ditelantarkan, bisa jatuh
Page 30
Organizational factors
- Is a lack of Leaders and Staffs with the skills and capabilities required for strategy execution
Clues in Market & Competitor Researcho The Company fails to track shifts in secondary and
tertiary customer group behavioro The Company excludes Non-Premium players and
Low-End Entrants from its tracking of competitive threats
1. When Talent Comes Up Short
DELL jago di Desktop, tapi tidak di Notebook (tidak punya)
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company’s core customers are increasingly unwilling to pay a premium for its brand reputation or superior performance
company is less effective than its competitors at translating Customer Insights into New Product & Services Categories
company did not revise about the capabilities that are critical to support company’s strategy
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LESS IS MOREhasilkan more result feature yang dibutuhkan saja, semaksimal mungkin
CRAFTING ‘Power’ offers kekuatan daya tarik yang diperjuangkan
MOBILIZING for GROWTH innovation logic (Blackberry vs Nokia)
- Is a coherent set of actions focused on creating the specific conditions needed to produce momentum – succeeds effort lessly
How ?
AB
CD
Rancangan baruDari Research, dicari apa sich daya tariknya (black box customers)
Persaingan bukan A/B/C/D, tetapi attractiveness
Contoh : Blackberry bikin pusing Nokia