【文章內(nèi)容簡介】 ive and relies heavily upon data external to the client. The process starts with an hypothesis that is tested along three dimensions. Degree of emphasis Less important More important ?Is there substantial cost sharing? ?Is there substantial customer sharing? ?Does business definition pass the petitor acid tests? Cost sharing Customer sharing Competitor acid tests 19 CU7121997ECA Business Definition Business Definition Steps Degree of emphasis Is there substantial cost sharing? ?Is there substantial direct cost sharing? ?Are there substantial opportunities for experience transfer? Less important More important Cost sharing Customer sharing Competitor acid tests 20 CU7121997ECA 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 businesses One business* Separate businesses* Probably one business High Experience transfer Low Low High Direct cost sharing 21 CU7121997ECA Business Definition How Businesses Share Costs Businesses can share costs in a variety of ways. Value Chain Steps How Direct Costs Can Be Shared Examples RD Procurement Manufacturing Distribution Sales and Marketing Administrative 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 accounts 22 CU7121997ECA Business Definition Experience Transfer Product A Product B Lessons learned from product A can improve manufacture of product B Processor C Fe Grind Paint Distributor Y Customers Supplier A Processor D Fe Grind Paint Distributor Z Customers Supplier B (Raw materials) (Semifinished product) (Finished product) Firms can benefit from experience transfer when two products share similar high volume, valueadded processes. 23 CU7121997ECA Business Definition Business Definition Steps Degree of emphasis Less important More important Cost sharing Customer sharing Competitor acid tests Is there substantial customer sharing? ?How great is the degree of functional substitution? ?How great is the degree of customer base overlap? ?How high are customers’ perceptual barriers? 24 CU7121997ECA Business Definition Customer Sharing () Customer sharing analysis includes measuring the customer base overlap and degree of functional substitution, and, to a lesser extent, looking at perceptual barriers. ? Do different products currently or potentially fulfill the same customer usage needs? – product utility analysis – crosselasticity analysis ? Do the suppliers of the different products share many of the same customers? – who makes the purchase decision? – who uses the product? – what else is purchased with the product? Functional substitution Customer base overlap Perceptual barriers ? Do customers perceive significant differences among the products? 25 CU7121997ECA Business Definition Customer Sharing () ?Customer base overlap ?Functional substitution ?Perceptual barriers Low Low Low High High High High Low Probably separate businesses Probably one business Customer sharing Generally, high customer base overlap, high functional substitution and low perceptual barriers suggest one business. 26 CU7121997ECA Business Definition Customer Base Overlap C o rpora t i o nsIn di v i dua lsG o v e rn m e n t sP art ne r s h i psC o rpora t i o nsIns titut i onsR esid entia lc ustom ersC om m ercialC ustom ers0%20%40%60%80%100%Percent of Total CustomersCustomer base overlap can be determined by paring purchasers or decision makers for the two products. Common Customer Base Overlap Criteria ? Used by same anization or customers ? Purchased by same individual or group ? Purchase decision made by same individual or group Limited customer base overlap 27 CU7121997ECA Business Definition Functional SubstitutionThere are two ways to evaluate whether products are substitutes. Product utility analysis Crosselasticity analysis ?Do products offer similar value along nonprice attributes (., scissors and knives cut cloth well)? ?Is product bundled with other products (., razors and blades)? ?How much does share change between the two products as relative prices change? – If scissor prices go up will customers buy knives as a substitute? 28 CU7121997ECA Business Definition Functional Substitution Product Utility C uts m i s c el la ne ous ob je c tsC ut s c lothC an b e u s ed as a sc rew driv erC uts f oodC ut s f ur /h ai rC ut s c lothC uts m i s c el la ne ous ob je c tsC uts P ape rKn iv es Scis s ors0%20%40%60%80%10 0%Percent of Product39。s UtilityIf products offer very similar nonprice attributes or functional benefits, they are potential substitutes. 29 CU7121997ECA Business Definition Functional Substitution Cross Elasticity If a price increase in one product increases the demand for another, the two products are p