Work on the Margin to Improve Performance

Copyright 2008 Ernest R. Cadotte Work on the Margin to Improve Performance Copyright 2008 Ernest R. Cadotte Your strategy is probably fixed at this point Shift your focus to adjusting your tactics to improve performance Copyright 2008 Ernest R. Cadotte Things to think about Licensing technology Management of strategy Using the tools of management Improving resource productivity Borrowing money to improve opportunities Keeping an eye on the balanced scorecard Copyright 2008 Ernest R. Cadotte Consider Licensing Technology From or To a Competitor New in brand design area Multiply resources Sell technologies for 50% or more of what you paid Buy technologies for 50% or less of the cost to develop them yourself Develop markets more quickly by being able to offer more want-satisfying features than you can afford Copyright 2008 Ernest R. Cadotte Licensing R&D Team A Invest in more memory Design in new brand Receive income Team B Receive memory/ Pay fee Q5 Q6 Q7 License R&D from Team A Copyright 2008 Ernest R. Cadotte Cross-Licensing R&D Team A Q5 Invest in new monitor Design in new brand Team B Receive Monitor /Pay Fee Invest in bigger hard drive Design in new brand Receive Hard drive /Pay Fee Q6 Q7 License to B License to A Copyright 2008 Ernest R. Cadotte Licensing Requires a Different Kind of Competitive Thinking Negotiations to find a mutually beneficial opportunity Competition or cooperation - strategic alliances with competitors Game theory and prisoner?s dilemma (if I do this and they do that, then ??.?) Copyright 2008 Ernest R. Cadotte Management of Strategy Discover the causes of performance shortfalls Adapt to new opportunities and problems Manage the future (take the initiative now and expend resources that will shape the events and opportunities of the future) Copyright 2008 Ernest R. Cadotte Use the Tools of Management to Discover SWOT Market feedback Competitor analysis Employee productivity data Manufacturing reports Accounting reports (financial statements) Industry financial benchmarks (industry financial ratios) Profitability analysis Copyright 2008 Ernest R. Cadotte Competitor Benchmarks Brand and ad designs Prices and sale priorities Channel strategy Sales staffing Ad placements Demand by brand by segment Copyright 2008 Ernest R. Cadotte Goals of Competitive Benchmarking Reverse engineer the strategy of each competitor Determine who is a threat and who is not Determine strengths and weakness of competition Emulate good decisions Predict direction of competitive moves Adjust strategy and tactics in reaction to competitor strengths and weaknesses and in anticipation of future moves. Copyright 2008 Ernest R. Cadotte What is the elasticity or market response function of each decision Where should the next 500,000 be spent? More advertising More sales people Lower prices More R&D More sales outlets More capacity Better compensation Improve Resource Productivity Copyright 2008 Ernest R. Cadotte How can we get more out of our current investments? Is it better to Hire more sales people in Paris or New York Hire more sales people for Traveler or Workhorse Expand sales offices or web marketing Add more advertising in New Venture Magazines or Trade Journals Introduce another brand to a target segment Increase salary, health benefits or vacation time Increase or decrease your price by 100 Improve Resource Productivity Copyright 2008 Ernest R. Cadotte When is it a good idea to use debt versus internally generated funds? Is the firm?s ROI better with the addition of debt or without it? Can you do things and make more money with the addition of debt than the cost of the interest (cost of capital)? Which is better, short-term or long-term debt? Capital Structure Copyright 2008 Ernest R. Cadotte Businesses use it to guide decision-making to insure all important areas are managed effectively Think and manage multidimensionally Drill down to find sources of weakness and strengths Your business acumen will be judged by your cumulative performance of the last 4 quarters Keep an Eye the Balanced Scorecard Copyright 2008 Ernest R. Cadotte Total Business Performance Financial performance Market performance Marketing effectiveness Investments in the firm?s future Creation of wealth Asset management Manufacturing productivity Human Resources Copyright 2008 Ernest R. Cadotte Work on the Margin to Improve Performance Copyright 2008 Ernest R. Cadotte