【正文】 Bain Analysis E co a tS B / W BP o w d e rE co a tS B / W BE c o a tP o w d e rS B / W BE c o a tP o w d e rSB / W BPowderE c o a tSB/WBSB/WBE c o a tSB / W BSB/WBUVE c o a tS B / W BUVSB/WBS B / W BPowderSB/WBUVSB/WBUVS B / W BSB/WBEcoatPowderUVS B / W BUVSB/WBG e n .m e ta l /o th e rEl e c.e q u i p .M F FIM / A C EA u t op a r t sMillworkTruck/bus/RRAircraftC o n ta i n e rOverprint C o i lAlum. extru.Comp. boardW o o dF FAppliancePl a st i cElectronics0%2 0 %4 0 %6 0 %8 0 %1 0 0 %Percent of Total$403 $206 $209 $149 $170 $52 $164 $42 $284 $91 $257 $36 $57 $201 $47 $193 $67 Total sales = $2,578MM JJR Coatings UsageThe usage of the five coating types varies significantly across the enduse segments. 48 CU7121997ECA Business Definition JJR Direct Cost Sharing Using SB as a baseline, the team used limited cost data along with qualitative assessments from manufacturing and industry experts to determine that the only signific。 . Census。 Frost Sullivan。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 probably substitutes. Demand for Butter High elasticity Price of Margarine 30 CU7121997ECA Business Definition Perceptual Barriers Customer’s perceptions can be indicators of business definition。 = $1 $2 $5 10 20 50 100 200 500 1,000 Cost per Transaction Now + Savings Accounts Slope =% R178。Gisele Garraway Susan Caraviello, Paul DiPaola, and Todd Senturia bc Business Definition March 1998 Author: Contributors: Todd Senturia Reviewer: Copyright169。 1998 Bain Company, Inc. 1 CU7121997ECA Business Definition Agenda ?The business definition concept ?Applications ?Business definition steps ?Client examples –Bunker Hill Door Systems –JJR Industrial Coatings ?Key takeaways 2 CU7121997ECA Business Definition Agenda ?The business definition concept ?Applications ?Business definition steps ?Client examples –Bunker Hill Door Systems –JJR Industrial Coatings ?Key takeaways 3 CU7121997ECA Business Definition What is Business Definition? ?Indicates whether two business segments should be operated as one business or as separate businesses ?Helps identify what drives superior profitability in an industry ?Serves as the foundation for strategic analysis and sound decision making Business definition delineates the economic boundaries within which panies should pete. 4 CU7121997ECA Business Definition One Business vs. Separate Businesses ?Same customers ?Same cost structure ?Same petitors ?Different customers ?Different cost structure ?Different petitors If two business segments have the same customers, the same cost structure, and the same petitors, they are one business. If they are different on all of these dimensions, they are separate businesses. One business Separate businesses Compete in both segments to take advantage of synergies Do not pete in both segments 5 CU7121997ECA Business Definition Why Bain Uses Business Definition Strategic 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 purchases for VMRs (value managed relationships? ?How should we configure our manufacturing plants? The correct business definition can lead to casecracking insights. 6 CU7121997ECA Business Definition Consequences 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 position Customers ?Neglect profitable customer segments ?Overinvest in unprofitable customers ?Fo opportunities to capture synergies ?Misjudge relevant market trends ?Overlook relevant geographies 7 CU7121997ECA Examples of Incorrect Business Definition Business Definition Some respected panies have missed profit opportunities or suffered unnecessary losses because they did not define their businesses correctly. ? American Express ? Allegis ? Saatchi Saatchi Charge cards and credit cards are separate Charge cards and credit cards are one business plastic money Charge card division lost money due to poor cost position and misguided marketing efforts Airlines, hotels and rental cars are one business caring for travelers worldwide Airlines, rental cars and hotels are three separate businesses The bination provided little value to customers: Allegis was split up Advertising and consulting are one business service to global business executives Advertising and consulting are separate businesses Company suffered se