【正文】 Chemical Marketing Reporter。 1998 Bain Company, Inc. Business DefinitionBunker Hill Door Systems* Background Bain used business definition to set a strategic foundation for Bunker Hill Door Systems. The team started with a hypothesis that there were three separate businesses. Situation:Complication:Question:Bunker Hill is a $400MM division of Hills Worldwide. This division manufactures entry doors, garage doors (GDS), and garage door openers (GDOs). Hills Worldwide has set aggressive growth targets for all divisionsBunker Hill has suffered a continued financial decline in recent years and performance varies widely across the product lines. Moreover, Bunker Hill faces a strong set of wellestablished, lowcost petitorsHow can Bunker Hill grow profitably?Assertion 1 Assertion 2 Assertion 3GD, GDO and entry doors are separate businesses and therefore require different strategies for profitable growth*Disguised client case 36CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. Business Definition *On a cost basis only, we must also look at customers and petitors to determine whether the businesses are one or separate.Cost Sharing An assessment of cost sharing involves examining direct cost sharing and experience transfer.Probably separate businessesOne business*Separate businesses*Probably one businessHighExperience transferLowLow HighDirect cost sharing21CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. Business DefinitionConsequences of Incorrect Business Definition Companies that define their businesses incorrectly make poor strategic decisions.Costs Competitors?Incur unnecessary costs?Fo opportunities to capture synergies?Do not transfer experience?Underinvest in important RD initiatives?Overlook relevant petitive threats?Miscalculate “market share” ?Set inappropriate performance targets?Overlook relevant capacity changes?Misjudge true cost positionCustomers?Neglect profitable customer segments?Overinvest in unprofitable customers?Fo opportunities to capture synergies?Misjudge relevant market trends?Overlook relevant geographies7CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. Examples of Incorrect Business Definition Business DefinitionSome respected panies have missed profit opportunities or suffered unnecessary losses because they did not define their businesses correctly.? American Express? Allegis? Saatchi SaatchiCharge cards and credit cards are separateCharge cards and credit cards are one business plastic moneyCharge card division lost money due to poor cost position and misguided marketing effortsAirlines, hotels and rental cars are one business caring for travelers worldwide Airlines, rental cars and hotels are three separate businessesThe bination provided little value to customers: Allegis was split up Advertising and consulting are one business service to global business executivesAdvertising and consulting are separate businessesCompany suffered severe losses due to inability to transfer experience, lack of focus, and tainted imageCompany A better business definitionConsequences of incorrect business definitionHow management defined the business8CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. Business DefinitionHow Businesses Share Costs Businesses can share costs in a variety of ways.Value Chain StepsHow Direct Costs Can Be Shared ExamplesRDProcurementManufacturingDistributionSales and MarketingAdministrative Support?Multiple applications of some RD efforts?Shared raw materials?Shared inbound logistics?Similar manufacturing– facilities– processes?Same distribution channels?Brand name sharing?Same sales force?Shared info systems?Tape and Postit Notes (3M)?Gasoline and petrochemicals?Vitreous china toilets and sinks (Kohler)?Cigarettes and candy (Philip Morris)?Healthy Choice dinners and cereal?Soda and orange juice (CocaCola)?BankBoston NOW accounts and savings accounts22CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. Business DefinitionBunker Hill Direct Cost Sharing ()Source: Bunker Hill FinancialsThe Bain team found that materials accounted for a substantial proportion of Bunker Hill’s costs in all three business segments.CostsCustomersCompet itors37CU7121997ECAbcBOS Copyright169。 Bain Analysis$403 $206$209 $149 $170$52$164$42$284$91$257$36$57$201$47$193$67Total sales = $2,578MMJJR Coatings UsageThe usage of the five coating types varies significantly across the enduse segments. 48CU7121997ECAbcBOS Copyright169。 . Census。 1998 Bain Company, Inc. Business DefinitionAgenda ?The business definition concept?Applications?Business definition steps?Client examples–Bunker Hill Door Systems–JJR Industrial Coatings?Key takeaways35CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. Business DefinitionBusiness Definition Steps Degree of emphasisIs there substantial cost sharing??Is there substantial direct cost sharing??Are there substantial opportunities for experience transfer?Less importantMoreimportant Cost sharingCustomer sharingCompetitor acidtests20CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. Business DefinitionWhy Bain Uses Business DefinitionStrategic insights Tactical insights with strategic importance?Should we buy or sell the restaurant business??Should we expand into China??Are we vulnerable to Japanese petitors??Should we vertically integrate into growing vegetables??Should we drop this product line??Should we crosstrain our salesforce??How should we group purcha