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ekly/Monthly Nielsen data – Budgets: actuals versus mitments。A activities in Retail USD b, deal volume* 1994 1995 1996 1997 1998 1999 to September There is a war out there Demand ?Flat/falling share of wallet ?Flat/falling prices ?More demanding and plex consumers ?Shifting lifestyle and work patterns Supply ?Overcapacity ?New entrants (etailers and retailers) ?Supplier consolidation ?Low availability/ rising cost of frontline labour ?Increasing real estate costs Power shifting to consumers Inter is accelerating trends Source: McKinsey HOW WILL WE WIN? Sweden ? Most consolidated retail market in the world – the BIG are already BIG ? ICA owned 50% by Ahold ? Ahold highly financially driven pany – EVA ? More pressure on ICA……more pressure on suppliers ? Wants higher profits, higher turnover, happier consumers (differentiate themselves vs. Competition) HOW WILL WE WIN? Now we know the customer…can we find a sweet spot? ? How will we win? – Consumer is the BOSS – Core Brands – Win with winning customers Competitive retail margins strong Tailor Investments By Customer Be Strong With Global Customers ? How will we win – Sweet Spot? – Launch a product, with unique consumer benefits, with higher customer margins, that drive total TSR for Pamp。G Nordic Agenda ? Recap of previous lecture ? From global to local strategymaking ? Strategy example: Yes handdish ? Management Control Systems Choice Cascade to Define the Choices What are our goals and Aspirations? Where will we Play? What Capabilities must be in place to win? How will we Win in chosen market? What Management Systems are required? Choice Cascade to Define the Choices What are our goals and Aspirations? Where will we Play? What Capabilities must be in place to win? How will we Win in chosen market? What Management Systems are required? Recap on lecture 1 ? Where will we play? – Total Shareholder Return calculations by Global Business Unit ? How will we win? Commercial Strategy – Focus on core brands – Consumer Is Boss – Win with winning customers Competitive retail margins strong Tailor Investments By Customer Be Strong With Global Customers – Get the value equation right – Know the petitors ? What capabilities must be in place? – Global matrix structure: Global Business Units (GBUs) and Market Development Organizations (MDOs) – Individual accountability, Work amp。 Development Plans HOMEWORK What share of shelf does YES have ? What do you think it has in market share ? What do you learn from the pricing and sizing you see? Why might it be so ? What influences the shelf positioning ? What would your YES strategy be? HOMEWORK What share of shelf does YES have ? Ca. 60% What do you think it has in market share ? Same as shelf share (6070%) What do you learn from the pricing and sizing you see? Why might it be so ? Smaller sizes offer “extra benefits, but are more expensive pr. ml What influences the shelf positioning ? Looks like the big bottles are at the bottom What would your YES strategy be? Choice Cascade to Define the Choices What are our goals and Aspirations? Where will we Play? What Capabilities must be in place to win? How will we Win in chosen market? What Management Systems are required? Implementing strategy First: Understanding the customer HOW WILL WE WIN? Retail is still fragmented Share of top 50 public panies, 1998 999995918633322616Energy Automotive Pharmaceuticals。G Having the right capabilities ? Pamp。 $/unit – Value contribution (Brand/Product/Country): monthly Brand Profit Estimates (BPEs) FINANCIAL FIRM PROCTER amp。 offtake high where distributed + repurchase rate high ? Organizational capability – Do we have enough sales rep coverage? Does Yes have priority in sales cycle? –