150 Management models and diagrams for your powerful business presentations. Content: Powerpoint, presentations, business, slides, diagrams, charts, Break-even, Financing Life Cycle, Economies of Scale, Elasticity, Sales Cycles Market Potential, Portfolio Matrix, Product Model, Four P's, Push/Pull Strategy, Marketing Mix, PDCA Cycle, SWOT, Value Chain, Ansoff Matrix, BCG Matrix, 7-S Modell, Core Competencies, GE Business Screen, Nine Cell Industry Risk/Reward Diagram, Porter's Five Forces, Industry Competition, Generic Strategies, Geobusiness Modell, Porter's Diamond, Matrix Design, PIMS, Leavitt's Diamond, Belbin's Team Roles, Theory X/Y, Maslow's Hierarchy, Herberg's Theory, Cultural Web, Pareto Curve, CIM Concept, Value Drivers Download these diagrams on http://www.drawpack.com (try our free membership offer)

1. Management Models ... 150 Slides Powered by www.drawpack.com . All rights reserved. Product Price People Processes Place Promotion Customer Service

2. Key Words ... Break-even – Financing Life Cycle – Economies of Scale – Elasticity – Sales Cycles – Market Potential – Portfolio Matrix – Product Model – Four P’s – Push/Pull Strategy – Marketing Mix – PDCA Cycle – SWOT – Value Chain – Ansoff Matrix – BCG Matrix – 7-S Model – Core Competencies – GE Business Screen – Nine Cell Industry – Risk/Reward Diagram – Porter’s Five Forces – Industry Competition – Generic Strategies – Geobusiness Model – Porter’s Diamond – Matrix Design – PIMS – Leavitt’s Diamond – Belbin’s Team Roles – Theory X/Y – Maslow’s Hierarchy – Herzberg’s Theory – Cultural Web – Pareto Curve – CIM Concept – Value Drivers

3. Markets and Structure of Flow Government markets Middlemen markets Resource markets Manufacturer markets Services, money Resources Money Taxes, goods Goods and services Services, money Taxes, goods Money Consumer markets Services Resources Money Taxes Money Goods and services Taxes, goods Services, money

4. A Company‘s Macroenvironment COMPANY Substitute Buyers New Entrants Rival Firms Suppliers IMMEDIATE INDUSTRY & COMPETITVE ENVIRONMENT MACROENVIRONMENT The Economy at large Social Values and Lifestyles Population demographics Technology Legislation and regulations

5. Break-even Point Value $ Units sold Break-even Point Variable costs Fixed costs Profit Total costs Sales 0 0 Current sales level

6. Break-even Chart Sales Volume in Units (in thousands) Total cost Total revenue Target profit Fixed cost Dollars (in thousands) 10 30 20 50 40 0 200 800 600 400 1200 1000

7. Break-even Volume Total Revenue Total Costs Fixed Expenses* * Fixed Expenses = Marketing Expenses and Other Direct Expenses $ Millions 15 30 35 20 10 25 5 0 50 150 100 Break-even Volume (90,000) 200 Units Sold (‘000) Profit Loss

8. Break-even Regions P&L break-even Cash flow breakeven Returned capital break-even Cash flow Cumulative revenue EVA break-even Opportunity cost based on capital risk assumed $

9. Financing Life Cycle Valley of Death Enterprise Cash Flow Enterprise Financing Time Break-even point Emerging Growth FFF & Angels Venture Capitalist Investment Banks & Banks Seed Capital & Early Stage Early Growth Later Growth Public Market Initial Public Offering Mezzanine 1st 2nd 3rd

10. Demand and Supply Price Quantity 0 G B E D F S A D S

11. Economies of Scale *Long-run average costs (LACs) Increasing returns to scale, or economies of scale Average cost Output LACs*

12. Elasticity Demand is elastic and expenditure increases when price falls from P1 to P2 (-) (+) Price P 1 P 2 0 Quantity Demand is inelastic and expenditure increases when price falls from P1 to P2 (+) (-) Price P 2 P 1 0 Quantity e = 0 Quantity Price e = 0 e = - (total inelastic demand) (total elastic demand) 8 Quantity Price e = - 8 e > - 1 e = - 1 e < - 1

13. Inelastic and Elastic Demand Price Quantity Demanded per Period (a) Inelastic demand Quantity Demanded per Period (b) Elastic demand P 1 P’ 1 P’ 2 Q’ 2 Q 2 Q’ 1 Q 1 P 2

14. Sales and Profit Life Cycles Sales and Profits ($) Time Profit Sales Maturity Growth Introduction Decline

15. Market Potential, Market Volume, Market Share Volume or value Time Market potential Market volume Market share

16. The Product Life Cycle I Sales over profits Stages over Time Introduction Growth Maturiy Shake-out Decline Sales Profits

17. The Product Life Cycle II Introduction Growth Maturity Commodity or Decline Time Unit Sales Volume Note: A = Moderate Growth, B = Commodity, C = Decline A B C

18. The Life Cycle Portfolio Matrix C A Strong Average Weak Development Growth Competitive shakeout Maturity Decline Saturation THE BUSINESS UNIT‘S COMPETITIVE POSITION THE INDUSTRY‘S STAGE IN THE EVOLUTIONARY LIFE CYCLE E F D B H G

19. Patterns of Strategic Change Continuity Incremental Flux Global

20. The Whole Product Model Generic Product Expected Product Augmented Product Potential Product

21. The Product-Positioning Map High price Low quality High quality Low price C D E A B

22. The Four P‘s of McCarthy I Product Place Promotion Price Environment Environment Environment Environment

23. The Four P‘s of McCarthy II Low quality High quality Target Market Product variety Quality Design Features Brand name Packaging Sizes Services Warranties Returns Product Channels Coverage Assortments Locations Inventory Transport Promotion Sales promotion Advertising Salesforce Public relations Direct marketing Place Price List price Discounts Allowances Payment period Credit terms Marketing Mix

24. Push versus Pull Strategy Push Strategy Manufacturer Intermediaries Demand Marketing activities Demand End users Pull Strategy Manufacturer Intermediaries Demand Marketing activities Demand End users

25. The Expanded Marketing Mix Product Price People Processes Place Promotion Customer Service

26. The 6 – Step Marketing Plan 1 2 3 budget allocation product promotion price distribution 4 5 6 Action plan Forecasts Control quantify: costs sales profits market share organization structure measurement tools check frequency => Corrective actions firm market industry competition environment Situation (SWOT) Objectives Strategy sales market share market expansion leadership satisfaction segment – target price / quality product positioning differentiation diversification Marketing Plan

27. The PDCA Cycle Performance Time Path of continous improvement Check Do Act Plan

28. Enterprise Management Process Decision Process Enterprise Structure Mission & Strategy Enterprise Learning Value Improvement Customer Satisfaction Benchmarking

29. SWOT Analysis Diagram Substantial internal strengths Critical internal weaknesses Numerous environmental opportunities Major environmental threats Cell 1: Supports an aggressive strategy Cell 2: Supports an diversification strategy Cell 3: Supports a turnaround- oriented strategy Cell 4: Supports a defensive strategy

30. SWOT Analysis I Strengths Opportunities Threats Weaknesses

33. The Generic Value Chain I Support activities Service Margin Margin Firm infrastructure Human resource management Technology development Procurement Primary activities Inbound logistics Operations Outbound logistics Marketing and sales

34. The Generic Value Chain II Marketing Management Advertising Sales Force Administration Sales Force Operations Technical Literature Promotion INBOUND LOGISTICS OPERATIONS OUTBOUND LOGISTICS MARKETING & SALES SERVICE TECHNOLOGY DEVELOPMENT PROCUREMENT HUMAN RESOURCES MANAGEMENT FIRM INFRASTRUCTURE MARGIN

35. The Generic Value Chain III Inbound logistics Outbound logistics Operations Marketing and sales Service Primary Activities Procurement Technology development Human resources management Firm infrastructure Margin Margin

36. The Ansoff Matrix I Current Markets New Markets New Products Current Products Market penetration Market development Diversification Product development

37. The Ansoff Matrix II Existing New Existing New New product development Market development Market penetration Diversification PRODUCTS AND/OR SERVICES MARKETS

38. The Customer Growth Matrix Existing New Existing New Customer extension Customer acquisition Customer loyalty Customer diversification PRODUCTS AND/OR SERVICES CUSTOMERS

39. Product-Market Diversification Market Diversification Broad Product Diversification Narrow Moderate Moderate Broad Narrow

40. BCG’s Growth-Share Matrix I High Low Low High MARKET GROWTH RATE RELATIVE MARKET SHARE Star Cash Cow Dog Question Mark

41. BCG’s Growth-Share Matrix II High Low High Low RELATIVE MARKET SHARE MARKET GROWTH RATE A B C E D F G Divest Divest Dog Cash Cows Question Mark Star Targeted future position in the corporate portfolio Present position in the corporate portfolio

42. BCG’s Growth-Share Matrix III Low High High Low Question marks Cash generating businesses Star businesses Dog businesses RELATIVE MARKET SHARE MARKET GROWTH RATE 10x 1.0x 0.1x 10%

43. BCG‘s Growth-Share Matrix IV 7 3 2 1 4 6 Market Growth Rate Relative Market Share Dogs Stars Question Marks Cash Cows 0.1 x 1 x 10 x 8 2% 8% 6% 4% 12% 10% 20% 18% 16% 14% 22% 5

44. The New BCG Matrix SIZE OF ADVANTAGES Many Fragmented Stalemate Volume Specialization Small Large Few NUMBER OF APPROACHES TO ACHIEVE ADVANTAGE

45. Underlying Relationship Between ROI and Market Share in the New BCG Matrix Few Many Small Large SIZE OF THE ADVANTAGE NUMBER OF WAYS TO ACHIEVE COMPETITVE ADVANTAGE Market share Market share Volume Stalemate Specialization Fragmented Market share Market share ROI ROI ROI ROI

46. McKinsey‘s Seven ‚S‘s Framework Superordinate Goals Structure Staff Strategy Systems Style Skills

48. Core Competencies I Banner Brand Business Units Core Products (Platforms) Core Competencies

49. Core Competencies II Processes Capabilities Technologies Core Competencies

50. Core Competencies III Low Company View High Low Market View High Competency 5 Competency 3 Competency 4 Competency 1 Competency 6 Competency 2

51. The General Electric Business Screen Low High Medium Strong Average Weak COMPETITIVE POSITION INDUSTRY ATTRACITVENESS

53. Company Position/Industry Attractiveness Screen HOLD HARVEST HARVEST BUILD BUILD HARVEST HOLD HOLD BUILD Industry attractiveness Medium Low High Low Medium High Business unit strengths

54. A Representative Nine-Cell Industry Attractiveness-Competitive Strength Matrix Business C Business E Strong Average High Low Business F Business A Business B Business D Weak Medium Low priority for investment Medium priority for investment High priority for investment COMPETITIVE STRENGTHS/BUSINESS POSITION LONG-TERM INDUSTRY ATTRACTIVENESS

55. GE / McKinsey Multifactor Portfolio Matrix INDUSTRY ATTRACTIVENESS BUSINESS STRENGTH Invest Manage Selectively for Earnings Invest Invest Manage Selectively for Earnings Manage Selectively for Earnings Harvest or Divest Harvest or Divest Harvest or Divest

56. Portfolio Positions and Defensive Strategic Market Plans Very Attractive Market Attractiveness Very Unattractive Very Strong Very Weak Competitive Advantage Harvest or Divest Protect Protect or Harvest Harvest or Divest Protect or Harvest Protect or Focus Protect or Focus Protect

57. Market Attractiveness – Portfolio Classification and Strategies MARKET ATTRACTIVENESS Medium Weak 5.00 3.67 2.33 1.00 Strong Joints Hydraulic Pumps Clutches BUSINESS STRENGHT Low Medium High (a) Classification Aerospace Fittings Relief Valves Fuel Pumps Flexible Diaphragms 2.33 3.67 5.00 1.00 Invest / grow Harvest / divest Selectivity / earnings

58. The Risk-Reward Diagrams High Low Low High REWARD (NPV) RISK

59. Contrasting Characteristics of Upstream and Downstream Companies Raw Primary Product Consumer materials manufacturer Fabricator producer marketer Retail Supply flow UPSTREAM ORGANIZATIONS DOWNSTREAM ORGANIZATIONS Centre of gravity of a manufacturing industry Consumer Contrasting characteristics of upstream and downstream companies Upstream Commodity Standardize Maximize end users Low-cost producers Sales push Line-driven organization Process innovation Capital budget Capital-intensive Technological know-how Supply and trading/manufacturing and engineering Downstream Proprietary Customize Target end users High margins Marketing pull Line/staff Product innovation R & D/advertising budget People-intensive Marketing skills Product development/marketing Supply stages in a manufaturing industry (supply chain)

60. Porter‘s Five Forces I Potential Entrants Substitutes Buyers Suppliers Industry competitors Rivalry among existing firms Threat of substitute products Threat new entrants Bargaining power of suppliers Bargaining power of buyers

61. Porter‘s Five Forces II RIVALRY AMONG COMPETING SELLERS Potential New Entrants Buyers Suppliers of raw materials, parts, components or other resource inputs Firms in other industries offering Substitute Products

62. Forces Driving Industry Competition Potential Entrants Industry competitors Rivalry among existing firms Substitutes Buyers Suppliers Threat of substitute products or services Bargaining power of suppliers Bargaining power of buyers Threat of new entrants

63. Barriers and Profitability Low High High Low ENTRY BARRIERS EXIT BARRIERS PROFITS=LOW RETURNS=STABLE PROFITS=HIGH RETURNS=STABLE PROFITS=HIGH RETURNS=RISKY PROFITS=LOW RETURNS=RISKY

64. Four Routes to Strategic Advantage KFS Intensify funtional differentiation Relative superiority Exploit competitor‘s weakness Strategic degrees of Freedom Maximize user benefit Aggressive initiatives Ask „why-why‘s“ Compete (wisely) Route 1 Avoid head-on competition Route 2 Route 4 Route 3 Business/Product Offered Old/Existing New/Creative

65. The Generic Strategies I D ifferentiation C ost L eadership F ocus

66. The Generic Strategies II Cost Leadership Differentiation Cost Focus Differentiation Focus Broad Target Narrow Target Lower Cost Differentiation COMPETITIVE ADVANTAGE COMPETITIVE SCOPE

67. Five Modified Competitive Strategies Overall Low-Cost Leadership Strategy Broad Differentiation Strategy Focused Low-Cost Strategy Focused Differentiation Strategy Best-Cost Provider Strategy A Narrow Buyer-Segment (or Market Niche) A Broad Cross-Section of Buyers Lower Cost Differentiation TYPE OF COMPETITVE ADVANTAGE BEING PURSUED MARKET TARGET

69. Geobusiness Model CONDITIONING VARIABLES CONTROL VARIABLES MOTIVATION VARIABLES

70. Porter‘s Diamond RELATED AND SUPPORTING INDUSTRIES FIRM STRATEGY, STRUCTURE AND RIVALRY FACTOR CONDITIONS DEMAND CONDITIONS

71. Resource Allocation at Corporate Level Low High High Low EXTENT OF CENTRAL DIRECTION PERCEIVED NEED FOR CHANGE Free bargaining Open competition Imposed priorities „ Formula“

73. International Strategy Options Export Licensing/ Foreign subsidiary Joint venture Licensing/ Joint venture Foreign branch Joint venture Foreign branch High Low Low High PRODUCT DIVERSITY MARKET COMPLEXITY

74. The Wheel of Competitive Strategy Product Line Target Market Marketing Sales Distribution Manufacturing Labor Purchasing R & D Finance and Control GOALS Definition of how the business is going to compete Objectives for profitability, growth, market share, social responsiveness etc.

75. Generic Competitive Strategies Return on Investment Market Share

76. The Strategic Triangle I Customers Competitors Corporation Multiple market segments Target segments Value Value Cost Product/service differentiation

77. The Strategic Triangle II Needs seeking benefits at acceptable prices Customers Competitor Company Value Value Cost differentials Assets and utilization Assets and utilization

78. Trilogy Strategy - Culture - Structure Strategy Culture Structure Environment Environment Environment Environment

79. Optimum Degree of Formal Organization Degree of formal organization Organizational effectiveness

80. The Flow of Formal Authority

81. Functional, Divisional, Multidivisional Structures Logistics Manufacturing Sales Finance CEO CEO Cement Concrete Chemicals R&D Controlling CEO Europe Asia Motor Marine North America Motor Marine Fire Motor Marine Fire CEO Europe North America Asia Cement Concrete Chemicals

82. A Matrix Design Marketing Department Manager Research and Development Department Manager Purchasing Department Manager Production Department Manager FUNCTIONAL DEPARTMENTALIZATION PROJECT DEPARTMENTALIZATION Alpha Project Project Leader Beta Project Project Leader Gamma Project Project Leader E E E E E E E E E E E E

83. Models of Virtuality The Virtual Face Co-alliance Model Star-alliance Model Value-alliance Model

84. Leavitt‘s Diamond: The Interaction of Social Forces in an Organization Task Technology People Structure

85. Action-centred Leadership GROUP NEEDS INDIVIDUAL NEEDS TASK NEEDS

86. Belbin‘s Team Roles Company Worker Plant Shaper Finisher Resource-Investigator Team Worker Monitor-Evaluator Chairman TEAM

87. Group Development Stage V Adjourning Stage IV Performing Stage III Norming Stage II Storming Stage I Forming Group effectiveness Time

88. Theory X and Theory Y Theory X no responsability, no Initiative passive work attitude strong rules and control confirms following leads to leads to V icious circle of theory X Theory Y no responsability, no Initiative passive work attitude strong rules and control strenghten following allow leads to Strenghten effect of Theory Y

89. Maslow‘s Hierarchy of Human Needs I Esteem Needs (self-esteem, recognition, status) Self-Actualization Needs (self-development and realization) Social Needs (sense of belonging, love) Safety Needs (security, protection) Physiological Needs (hunger, thirst)

90. Maslow‘s Hierarchy of Human Needs II Self- Actualization Needs Esteem Needs Belongingness Needs Security Needs Physiological Needs GENERAL EXAMPLES ORGANIZATIONAL EXAMPLES Challenging Job Job Title Friends in Work Group Pension Plan Base Salary Achievement Status Friendship Stability Shelter

92. Parallels Among Need Theories of Motivation Achievement Work Itself Responsibility Advancement and Growth Recognition Supervision Interpersonal Relations Security Company Policies Pay Working Conditions Self-Actualization Needs Self-Esteem Esteem Needs Respect of Others Belongingness Needs Interpersonal Security Security Needs Physical Security Physiological Needs Growth Needs Relatedness Needs Existence Needs Need for Affiliation Need for Power Need for Achievement Herzberg‘s Two-Factor Theory Maslow‘s Hierarchy of Needs Alderfer‘s ERG Theory Other Key Needs Motivation Factors Hygiene Factors

93. Managerial Grid 1 2 3 4 5 6 7 8 9 1 2 3 4 5 6 7 8 9 Concern for production Concern for people Country Club Management (1,9) Production is incidental to lack of conflict and „ good fellowship“ Team management (9,9) Production is from integration of task and human requirements Dampened Pendulum (5,5) (Middle of the road.) Push for production but don‘t go „all out“. Give some but not all all: „be fair but firm“ Task Management (9,1) Men are a commodity just as machines. A manager‘s responsibility is to plan, direct and control the work of those subordinate to him Impoverished Management (1,1) Effective production is unobtainable becaus people are lazy, apathetic and indifferent. Sound and mature relationships are difficult to achieve because, (human nature being what it is) conflict is inevitable

94. Situational Leadership R4 Able and Willing or Confident R3 Able but Unwilling or Insecure R2 Unable but Willing or Confident R1 Unable and Unwilling or Insecure FOLLOWER READINESS MODERATE LOW HIGH FOLLOWER DIRECTED LEADER DIRECTED Share ideas and facilitate in decision- making Explain decisions and provide opportunity for clarification Turn over responsibility for decisions and implementation Provide specific instructions and closely supervise performance S3 S2 S4 S1 LEADER BEHAVIOUR TASK BEHAVIOUR (Guidance) (HIGH) (LOW) (Supportive Behaviour) RELATIONSHIP BEHAVIOUR PARTICIPATING SELLING TELLING DELEGATING

95. Cultural Web THE PARADIGM Power structures Control systems Rituals and routines Symbols Stories Organizational structures

96. Dynamics of Paradigm Change The paradigm Development of strategy Corporate Performance Implementation Step 1 Tighter controls Step 2 Reconstruct or develop new strategy Step 3 Abandon paradigm and adopt new one if unsatisfactory

97. Four Organizational Cultures Power Culture Task Culture Role Culture Person Culture

99. M-O-S-T Mission Objectives Strategy Tactics WHAT an organization is seeking to do HOW an organization will achieve it

100. Network Analysis, PERT, CPA 1 0 0 3 4 4 5 9 9 6 12 12 2 5 6 4 7 8 A 5 C 2 G 4 E 5 H 3 F 5 D 1 B 4 KEY: Activity Critical path Event Event number Earliest event time Latest event time

101. The Five Phases of Growth Large Small SIZE OF ORGANIZATION AGE OF ORGANIZATION Young Mature creativity direction delegation coordination collaboration leadership autonomy control red tape &quot;?&quot; evolution: stages of growth revolution: stages of crisis

102. The Chasm Technology Enthusiasts Visionaries Pragmatists Conservatives Skeptics The Chasm The Mainstream Market The Early Market

103. Inventory Profile Order quantity Q Time Inventory level Steady and predictable demand (D) Slope = demand rate Average inventory = Q / 2 Instantaneous deliveries at rate of D / Q per period Q / D

104. Economic Order Quantity Costs Order quantity Order costs Economic order quantity (EOQ) Total costs Holding costs

105. Pareto Curve for ABC-Products Cumulative % of total value % of total number of items Class C items Class A items Class B items

106. CIM-Concept CAD/CAM CAD CAP CAM C A D PPS Production Programm Planning Quantity Planning Time and Capacity Planning Place Order Control Order CIM

107. The Business Process Re-engineering Approach Function 1 Function 2 Function 3 Function 4 Micro operations Customer needs fulfilled Business processes Customer needs Business processes Customer needs fulfilled Customer needs Micro operations Activity 1 Activity 2 Activity 3 Activity 4

109. Supply Chain Management The Operation Second-tier suppliers First-tier suppliers First-tier customers Second-tier customers Supply side Demand side Purchasing and supply management Physical distribution management Logistics Materials management Supply chain management

110. Internal Rate of Return (IRR) R eturn on I nvestment ROI P ay B ack D iscounted C ash F low (DCF) Main methods of capital expenditure appraisal Net Present Value (NPV) Internal Rate of Return (IRR)

111. Net Present Value (NPV) R eturn on I nvestment (ROI) P ay B ack I nternal R ate of R eturn (IRR) N et P resent V alue (NPV) D iscounted C as h F low (DCF) Main methods of capital expenditure appraisal

112. Variance Analysis Materials Usage Variance Wage Rate Variance Labour Efficiency Variance Materials Price Variance Materials Price Variance Labour Variance Variable Overhead Variance Fixed Overhead Variance Total Cost Variance Sales Volume Variance Sales Price Variance Total Sales Variance Profit Variance

113. The Link Between the Balance Sheets and the Income Statement Assets $170 Liabilities $100 Owner‘s equity $70 Revenues $480 Expenses $469.8 Net Profit $10.2 Assets $190 Liabilities $113 Owner‘s equity $77 Retained earnings $7 Dividends $3.2 Balance Sheet December 31, 2002 Income Statement Year 2002 Balance Sheet December 31, 2001

114. Working Capital Simple cycle of operations Cash Finished goods inventory Receivables Raw materials inventory

115. Financial Strategy Framework Due dilligence process Investor Investment strategy Alternative Investments Time to close deal Risk/Reward Space Financial Strategy Opportunity Time to out of cash Entrepreneurial concerns Future alternatives Sources and Deal Structure Debt Equity Other Business Strategy Technological Strategy Market Strategy Financial Requirements Asset Requirement Burn Rate Operating Requirements Working Capital

116. Investor Perceived Risk-Return Space High Moderate Low Low Moderate High PERCEIVED RETURN PERCEIVED RISK Banks FFF Entrepreneur Angels VCs Realistic Investors

117. Du Pont Scheme Return on equity ROE = Earnings after tax Owner‘s equity Financial leverage mul ti plier Tax effects Return on invested capital ROIC = Earnings before interest and tax Invested capital Operating profit margin Earnings before interest and tax Sales Capital turnover Sales Invested capital Financial structure ratio Invested capital Owner‘s equity Financial cost ratio Earnings before tax Earnings before interest and tax Tax effect ratio Earnings after tax Earnings before tax Sales Operating costs Invested capital Owner‘s equity Cost of debt Tax rate Cash Working Capital requirement Fixed assets

118. The Drivers of Value Creation Operating margin = EBIT Sales Capital turnover = Sales Invested capital Tax effect = (1 – Taxe rate) Aftertax cost of debt Estimated cost of equity Economic, political, and social environments Market structure Competitive advantages and core competencies EBIT Invested capital (pretax ROIC) Expected after tax ROIC Return spread (ROIC – WACC) Percent of debt financing Percent of equity financing Weighted average cost of capital WACC Sustainability of growth Market Value Added (MVA) If the present value of the future stream of expected return spreads is positive, MVA is positive and the higher the growth, the more value created. If the present value of the future stream of expected return spreads is negative, MVA is negative and the higher the growth, the more value destroyed.

119. Business Design Process What are my choices now? In the future? What are the key assumptions About customers and economics? What‘s important to customers? How can profit be made? What dimensions matter the most? How can I prepare for ongoing redesign? Which ones are best? Are the best choices internally consistens integratable? What‘s my best business design? How long will this design be valid? Economics Changing Customer Priorities Technology

120. The Company Center of Gravity The Company The Customers The center of gravity The Company The Customers The Center of Gravity The Company The Customers The Center of Gravity The Entrepreneurial Phase The Growth Phase The Success Phase

121. The Traditional Value Chain The Traditional Value Chain Start with Assets, Core Competencies Assets/ Core Competencies Inputs, Raw Material The Customer Channels Product/ Service Offering The Modern Value Chain Start with the Customer The Customer Channels Assets/ Core Competencies Inputs, Raw Material Offering

122. The Modern Value Chain Truly Understanding the Customer Customer Priorities Channels Assets/ Core Competencies Inputs, Raw Material Offering Purchase Criteria Customer Anger Preferences Power Decision-Making Process Buyer Behavior Functional Needs Systems Economics Purchase Occasion

123. Customer Solutions Profit Profit 0

124. Product Pyramid Profit Volume Price

125. Multicomponent Profit Base Business Other Components

126. Switchboard Profit Buyers Sellers

127. Time Profit Cost Price $/Unit Time

128. Blockbuster Profit Cost Revenue $/Project Project Type

129. Profit Multiplier Model Key Asset Other Forms

130. Entrepreneurial Profit Base Business Spin-Outs

131. Specialization Profit Return on Sales Generalist Specialist

132. Installed Base Profit Profit Margin Hardware/Base Product Consumables/ Follow-on Product

133. De Facto Standard Profit Market Share Profit Margin

134. Brand Profit Price/Unit Market Price Brand Price

135. Specialty Product Profit Revenue Five Years Ago Today S C S C 100 %

136. Local Leadership Profit Profitability by Region Local Market Share 0

137. Transaction Scale Profit Cost Revenue $/Unit Size of Transaction

138. Value Chain Position Profit

139. Cycle Profit $/Unit Utilization Cost Price

140. After-Sale Profit Follow-on Products/Services Base Product

141. New Product Profit Time

142. Relative Market Share Profit Relative Market Share Return on Sales

143. Experience Curve Profit Cumulative Experience Cost/Unit

144. Low-Cost Business Design Profit $/Unit Conventional Business Design Low Cost Business Design

145. GE's Business Design: „Sell the Solution, Not Just the Box“ The Profit Zone Sell the Box, or ... Product ... Sell the Whole Solution Product Options Accessories Services Financing

146. The SMH Product Pyramid The Profit Zone Omega, Longines, Rado Tissot, Certina, Mido, Pierre Balmain, Hamilton, Calvin Klein Swatch, Flik Flak Endura Lanco Blancpain

147. Coca-Cola's Business Design: Manage the Value Chain Consumer Syrup Vending Fountain Bottling Logistics Grocery Distribution Coca-Cola Brand 1980 The Profit Zone Consumer Syrup Vending Fountain Bottling Logistics Grocery Distribution Coca-Cola Mega Brand Coca-Cola, diet Coca- Cola, Caff. Free, diet Caff. Free, Cherry, Diet Cherry 1996 Coca-Cola‘s participation, influence no participation

148. The Charles Schwab &quot;Switchboard&quot; The Profit Zone Investors Mutual Fund Companies Schwab One Source Investors Mutual Fund Companies

149. Intel's Business Design: „Two Steps Ahead“ The Profit Zone Cost Price $/Unit Quarters Post-Launch Q2 Q4 Q6 Q8 Q10 Intel AMD

150. Disney‘s Business Design Reinvention The Profit Zone The Value Capture Cruises Publishing Videocassette Merchandise Hotels Retail Television Music Theme Parks Animated and Live-Action Films The Foundation

151. The Thermo-Electron &quot;Spin-Out“ Business Design The Profit Zone Thermo-Electron Thermo Trex Thermo Instrument Systems Thermedics Thermo Optek Thermo Spectra Thermo Voltek Thermo Sentron Thermolase Trex Medical

152. Microsoft's Business Design: Create-the-Standard OEMs Windows Microsoft Applications Applications Developers Customers The Profit Zone

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