【文章內(nèi)容簡介】 with an hypothesis that is tested along three dimensions.Degree of emphasisLessimportantMoreimportant?Is there substantial cost sharing??Is there substantial customer sharing??Does business definition pass the petitor acid tests?Cost sharingCustomer sharingCompetitor acidtests19CU7121997ECAbcBOS 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 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 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 DefinitionExperience Transfer Product A Product BLessons learned from product A can improve manufacture of product BProcessor CFeGrindPaintDistributor YCustomersSupplier AProcessor DFe GrindPaintDistributor ZCustomersSupplier B(Raw materials)(Semifinished product)(Finished product)Firms can benefit from experience transfer when two products share similar high volume, valueadded processes. 23CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. Business DefinitionBusiness Definition Steps Degree of emphasisLess importantMoreimportant Cost sharingCustomer sharingCompetitor acidtestsIs 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?24CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. 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 substitutionCustomer base overlap Perceptual barriers?Do customers perceive significant differences among the products?25CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. Business DefinitionCustomer Sharing () ?Customer base overlap?Functional substitution?Perceptual barriersLowLowLowHighHighHighHighLowProbably separate businessesProbably one businessCustomer sharingGenerally, high customer base overlap, high functional substitution and low perceptual barriers suggest one business. 26CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. Business DefinitionCustomer Base Overlap Customer 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 sameindividual or groupLimited customer base overlap27CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. 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?28CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. Business Definition Functional Substitution Product Utility If products offer very similar nonprice attributes or functional benefits, they are potential substitutes. 29CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. Business DefinitionFunctional Substitution Cross Elasticity If a price increase in one product increases the demand for another, the two products are probably substitutes. Demand for ButterHigh elasticityPrice of Margarine30CU7121997ECAbcBOS Copyright169。 1998 Bain Company, Inc. Business DefinitionPerceptual Barriers Customer’s perceptions can be indicators of business definition。 however, what customers perceive can often conflict with the economic boundaries. Perce