Relative Cost Position英文版).ppt

Author:LairdReed,CostPosition,Relative,March1998,2,Agenda,Therelativecostposition(RCP)conceptApplicationsRCPStepsClientexampleChallengesKeytakeaways,3,Context,RelativeCostPositionExperienceCurveCostSharingAnalysisBestDemonstratedPracticeValueChainAnalysisProfitHuntProductLineProfitability/CostAllocation/ActivityBasedCostingOverheadAnalysisFixed/VariableAnalysisDirect/IndirectAnalysis,Costs,Customers,Competitors,Capabilities,Relativecostposition(RCP)isakeyanalyticaltoolusedforcostanalysis.,4,FullPotential,BainusesRCPtodetermineacompanyspracticalfullpotentialcostpositionbasedonacomparisonofitsunitcostswiththoseofitscompetitorsandanunderstandingoftheclientsbusiness.,Lowestcost,Practicalcost,5,QuestionsRCPCanHelpAnswer,RCPanalysishelpsanswerbothstrategicandtacticalquestions.,Strategicquestions,Tacticalquestions,Inwhatareasdoourcompetitorshavethebiggestcostadvantage?Whatisdrivingcompetitorsprofitability?Howmuchflexibilitywouldourcompetitorshaveinapricewar?Whatistheclientsmarketposition?Whatarethestrategicimplicationsofthefullpotentialcostposition?,Whereshouldwefocusourcostreductionefforts?(e.g.,wagerates,amountsofrawmaterialinputs)Whichcostelementswoulddecreasesignificantlywithanincreaseinscale?Whichcostelementsmightbenefitfromdifferentbusinesspractices?,6,Agenda,Therelativecostposition(RCP)conceptApplicationsRCPStepsClientexampleChallengesKeytakeaways,7,Applications,Bainidentified$29MMinannualsavingsforachewinggummanufacturer.AnRCPanalysisledtoadecreaseinrawmaterialsusage,betterrawmaterialspurchasing,processimprovements,andmoreefficientinventorymanagement.Bainhelpedaclientinthediaperbusinesstakebackmarketshareithadlost;itsshareincreasedby10%theclienthadascale-drivencostadvantage,butwasmaintainingasignificantpriceumbrellaBainusedanRCPtoidentifyapriceabovetheclientsbreakevenbutbelowthecompetitorsbreakeventhisstrategyhadasubstantialpositiveimpactontheclientssalesandprofitsBainpreventedaclientfrommakingapooracquisitiondecisioninthebakeryproductsmarket.TheRCPshowedthatonecompetitorofthetargethada30%costadvantageandthatthetargetwouldnotbeabletoclosethatgap.,BainhasusedRCPeffectivelyformanyclients.ExamplesofBainworkinclude:,8,Agenda,Therelativecostposition(RCP)conceptApplicationsRCPStepsClientexampleChallengesKeytakeaways,9,Approaches,TherearetwowaystoapproachanRCP:detailedbottom-upanalysisortop-downanalysis.,Detailedbottom-upanalysis,Top-downanalysis,BuildupeachmajorcostelementforkeycompetitorsbasedonprimarydataTriangulateusingcostdatafrommultiplesources,Lessaccurate,lesstimeintensive,Comparecompetitorscoststructurestoclientscoststructureatmacroleveldefinekeyprocess/businesspracticedifferencesformajorcostelementsmakeassumptionsaboutthecostimpactofdifferencesTestassumptionsvs.overallfinancialdata,Moreaccurate,moretimeintensive,Oftentimesweuseacombinationofthesetwoapproaches,10,RCPSteps,Mapthebusinessvaluechain,Identifycostelementsanddrivers,Scourinformationsourcesforcostdataonclientsandcompetitors,Build,compare,andrealitycheckcostbars,Calculatepracticalfullpotentialcostpositionandsavings,Drawstrategicimplications,ProcessSteps,KeySuccessFactors,Mapvaluechainfromendtoend(e.g.,rawmaterialstofinishedproductordelivery),Tiecoststooperationsnotaccountingcategories,BuildupcostbarscategorybycategoryRealitycheckresultsagainstsimilarcompanies,FocusonareaswiththegreatestpotentialforcostsavingsAdjustforclientssituation(e.g.,differentstrategy(highqualityvs.lowquality),differentequipment,differentplantlocations),Determinehowtotakeadvantageoftheimprovedcostposition,Bepersistentandcreative,butethical,DoinganRCPinvolvesseveralsteps:,11,Agenda,Therelativecostposition(RCP)conceptApplicationsRCPStepsClientexampleChallengesKeytakeaways,12,YummyGum*-Background,*Disguisedclientcase,Yummygumhasasolidhitchhikerpositioninthepremiumgumcategory.However,Yummys1997returnsarewellbelowexpectations,YummyhastriedtocompetebyintroducingnewandcostlySKUsandincreasingadvertising.Itsmaincompetitorhasfocusedoncostreduction,HowcanYummyimproveprofitsinapremiummarketthatrequiresinnovationandstrongbrandequity?,Situation:,Complication:,Question:,BainusedRCPtohelpitsclientYummyGumimproveitsprofitability.,13,RCPSteps,Mapthebusinessvaluechain,Identifycostelementsanddrivers,Scourinformationsourcesforcostdataonclientsandcompetitors,Build,compare,andrealitycheckcostbars,Calculatepracticalfullpotentialcostpositionandsavings,Drawstrategicimplications,ProcessSteps,KeySuccessFactors,Mapvaluechainfromendtoend(e.g.,rawmaterialstofinishedproductordelivery),14,YummyGum-ValueChain,TherearesixmajorstepsinYummysvaluechain:,Rawmaterialspurchasing,Basemaking,Mixing,Rolling,Curing,Packaging,Understandingthevaluechainfacilitatesanunderstandingofthecostelements,15,RCPSteps,Mapthebusinessvaluechain,Identifycostelementsanddrivers,Scourinformationsourcesforcostdataonclientsandcompetitors,Build,compare,andrealitycheckcostbars,Calculatepracticalfullpotentialcostpositionandsavings,Drawstrategicimplications,ProcessSteps,KeySuccessFactors,Tiecoststooperationsnotaccountingcategories,16,YummyGum-Costs(1of7),Rawmaterialsare25%oftotalcosts.Costdriversanddatasourcesarenoted.,QualityofingredientsMixofingredientsVolumeofingredientsAmountofwasteCostofingredients,ReverseengineeringSuppliersPurchasingmanagersIndustryreports,Costdrivers,Datasources,17,YummyGum-Costs(2of7),Packagingis7%oftotalcosts.Costdriversanddatasourcesarenoted.,TypesofpackagingusedPackagingmaterialPackagesizeCostperpackage,ReverseengineeringSuppliers10K/annualreportOperationsmanager,Costdrivers,Datasources,18,YummyGum-Costs(3of7),Directlaboris17%oftotalcosts.Costdriversanddatasourcesarenoted.,NumberofworkersNumberofhoursworkedHourlywages/benefitsMixofovertimevs.regularpay,10K/annualreportJobpostingsPlanttourUnioncontractsOperationsmanagerCompetitorphonebookFormeremployeesofcompetitorHumanresourcemanagerDepartmentofLabor,Costdrivers,Datasources,ManufacturingprocessLinespeed/throughput,PlanttourMachinerysuppliers,19,YummyGum-Costs(4of7),Indirectoverheadis8%oftotalcosts.Costdriversanddatasourcesarenoted.,NondirectlaborWagesandbenefitsUtilitiesNumberofmachinesCostofmachinesAgeofmachinesMaintenancecosts,JobpostingsPlanttourOperationsmanagersCompetitorphonebookFormeremployeesofcompetitorHumanresourcemanagerBlueprintsUtilitycompanyEnvironmentalProtectionAgencySuppliersSupplierproductsupportdepartmentWorkshopmanager,Costdrivers,Datasources,20,YummyGum-Costs(5of7),Advertisingis15%oftotalcosts.Costdriversanddatasourcesarenoted.,Advertisingcost,10K/annualreportAdvertisingAge(periodical)LeadingNationalAdvertisersAdDollarSummary,Costdrivers,Datasources,21,YummyGum-Costs(6of7),Salesandmarketingis20%oftotalcosts.Costdriversanddatasourcesarenoted.,TradepromotionsConsumerpromotionsNumberofsalespeopleWagesandbenefits,10K/annualreportHumanresourcemanagerMarketingdirectorInvestor/publicrelationsSalespeopleSalesmanagerJobpostings,Costdrivers,Datasources,22,YummyGum-Costs(7of7),Generalandadministrativeexpensesare8%oftotalcosts.Costdriversanddatasourcesarenoted.,HeadcountWagesandbenefits,10K/annualreportDuntyingcoststooperations,notaccountingcategories;beingpersistentandcreative(butethical)ingatheringdata;realitycheckingresults;andadjustingfortheclientssituation,KeySuccessFactors,DoinganRCPinvolvesthefollowingsteps:mapthebusinessvaluechainidentifycostelementsanddriversscourinformationsourcesforcostdataonclientsandcompetitorsbuild,compare,andrealitycheckcostbarscalculatepracticalfullpotentialcostpositionandsavingsdrawstrategicimplications,RCPSteps,StrategicToolkit-KeyTakeaways,46,TakeawaySlides(1of3),Understandingthevaluechainfacilitatesanunderstandi