【文章內容簡介】 OMC Mercury Chrysler Outboard Motors volume 22 ROS/RMS Steps Define the business Calculate profitability Calculate relative market shares Draw normative band Determine action implications Key Success Factors ?Calculate the normative normative band using regression analysis 23 Drawing the Normative Band (1 of 2) *The Bain Graphics Wizard draws the normative band automatically when the RMS and ROS data points are given. It will not however, calculate an R2 The first step in drawing the normative band is to run a regression on ROS and the log of RMS. We then calculate the best fit, or regression line. Competitor Units (MM) RMS In (RMS) Cannon Castle Holmes Peabody 4,960 3,400 2,178 6,200 Multiple R R square Adjusted R square Standard error Observations Intercept Xvariable 1 Coefficients Standard error T stat P value Regression statistics 5 ROS % % % % Whitman 3,182 % Regression output (from Excel) Y = mx + b ROS = (ln RMS) + Best Fit Line 24 Drawing the Normative Band (2 of 2) RMS One standard deviation The normative band is drawn by applying plus or minus one standard deviation to the best fit line. Profitability Best fit line (regression line) Where, n = number of observations x = observed value m = mean = ? 1 n1 ? n i = 1 (Xi m)178。 25 Normative Band 0%5%10%15% 1 2 5H ol m e sW h i t m a nC as tleC an nonP eab od yROSR M S4,000U ni tsThe Bain Graphics Wizard will draw a normative band automatically based on the input values of ROS and RMS. 26 Adjusted Normative Band 0%5%10%15% 1 2 4H ol m e sW h i t m a nC as tleC an nonP eab od yROSR M S4,000U ni tsIf we believe that a player has mismanaged its costs and has not gotten the full benefits of its experience, we can exclude it from the calculation of the normative band.* The resulting normative band will be more narrow. *In the Wizard, go to the “Series” menu and select “remove series from normative band.” 27 ROS/RMS Steps Define the business Calculate profitability Calculate relative market shares Draw normative band Determine action implications Key Success Factors ?Determine if strategic or operational improvements are required 28 Action Implications A firm’s position on the ROS/RMS graph helps case teams to determine whether a business should pursue strategic positioning or operational improvements. Examples: Suggested actions: Peabody is below the normative band。 its profitability is low given its relative market share ?Cost reduction strategy Blandford can improve its profitability if it increases its market share and captures experience benefits ?Growth strategy ?Mergers and acquisitions 0%5%10%15%20%25%30% 1 2 5 10LeeW es t v ie wPeab odyW al nutROSR M SOperational Improvement 0%3%5%8%10%13% 1 2 5 10ChesterB landf or dH en ric oROSR M SStrategic Positioning 29 Agenda ?ROS/RMS overview ?Applications ?ROS/RMS steps ?Client examples –wireless infrastructure –drug retailing ?Challenges ?Key takeaways 30 LAGTEL* Background *Disguised client case Situation: LAGTEL is a $6B tele player. Wireless infrastructure is a $2B business unit of LAGTEL, and it is the only “star” business in LAGTEL’s portfolio. All other business units are dogs. Complication: The wireless infrastructure division’s profitability is falling amid rising overcapacity in North America. Management expects that the overcapacity will continue to drive prices downward. Moreover, LAGTEL’s returns are 2% while four petitors earn in excess of 10% operating margins Question: How can LAGTEL improve its longterm profitability? Bain used ROS/RMS analysis to develop a strategy for a wireless telemunications business. 31 Source: Natwest Securities。 CS First Boston。 Killen Associates。 Wireless Operating Plan 25% 20% 15% 10% 5% 0% (5%) (10%) .1 .2 .3 .5 1 2 5 10 20 LAGTEL Callums Etel Lucia Alliance $2B 1995 Wireless Infrastructure revenue Relative Market Share (Total Tele) Operating Profit Margin Telco The profitability vs. overall scale did not demonstrate or clear normative band. LAGTEL Background 32 LAGTEL Wireless RMS Source: Natwest Securities。 CS First Boston。 Killen Associates。 Wireless Operating Plan The team “peeled the onion” and found a stronger relationship between wireless only RMS and wireless infrastructure profitability. $2B 1995 Wireless Infrastructure Revenue 25% 20% 15% 10% 5% 0% (5%) (10%) .1 .2 .3 .5 1 2 5 10 Lucia Alliance Etel Telco LAGTEL Callums Relative Market Share (Wireless) Operating Profit Margin Billtel R178。 = 33 LAGTEL TechnologyWeighted RMS * Weighted by manufacturer revenue by technology When RMS was adjusted for the mix of wireless technology, an even stronger relationship appeared. LAGTEL’s profitability was low considerin