2. Agenda for today
1. Introduction: Why have a strategy?
2. Frameworks and concepts
3. Building a strategic plan
GBSA Ltd.
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3. Introduction: What is strategy?
Definition of strategy:
A method or plan chosen to bring about a desired future, such as achievement
of a goal or solution to a problem
www.businessdictionary.com
“Strategy is about winning.”
“Strategy is a unifying theme that gives coherence and direction to
the actions and decisions of an individual or an organization”
Strategy is about how to allocate resources to build competitive advantage
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4. Introduction: What are the benefits an drawbacks?
Benefits… ..and possible drawbacks
• Sets direction ..not blinkered to danger
• Focuses effort …lack of peripheral vision
• Defines the organisation … but not stereotypes it
• Provides consistency …but doesn’t crush creativity
Strategy helps keep you focused on where
you want to go
....but it has to be responsive
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5. Agenda for today
1. Introduction: Why have a strategy?
2. Frameworks and concepts
3. Building a strategic plan
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6. Frameworks and concepts:
Competitive strategy framework
INDUSTRY KEY SUCCESS
FACTORS
Competitive External assessment of:
STRATEGY
advantage • Threats
• Opportunities
DISTINCTIVE COMPETENCIES
Internal assessment of
Analyses:
organisational capability: - SWOT
• Strengths -Porter’s five forces
• weaknesses -“right to win”
• Goals and Values
• Resources and Capabilities
GBSA Ltd. (tangible, intangible, human)
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7. Frameworks and concepts:
Porter’s five forces of competition framework
SUPPLIERS
Bargaining power of suppliers
INDUSTRY
POTENTIAL Threat Threat of
of new
COMPETITORS SUBSTITUTES
substitutes
ENTRANTS entrants
Rivalry amongst
firms
Bargaining power of buyers
BUYERS
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8. Frameworks and concepts:
SWOT
Strengths Weaknesses
What strengths does the Where is it weak:
business have: -Depth of talent
-Technology -- acces to cash
-Reputation -Route to market
-Contacts
Opportunities Threats
What opportunities are Where are the threats that
there: could de-rail the strategy:
-New customers -Look externally (e.g. new
-- extensions to existing entrants or technology
products -- internally Cash, resource?
-New regions
GBSA Ltd.
A structured evaluation as input to strategy
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9. Frameworks and concepts:
“Right to play”
Do we have competitive advantage that will drive success and
sustainable profitability?
Brand permission
– are we credible in this space?
Differentiation
- Is our technology/quality/service proposition different?
- Could it command a higher price?
Business system
- Do we have a more effective “route to market”? Does it have
lower costs (scale)? Greater negotiating strength ?
- Does it have an advantaged supply chain (lower conversion?
better buying?)?
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10. Agenda for today
1. Introduction: Why have a strategy?
2. Frameworks and concepts
3. Building a strategic plan
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11. What Should We Expect To see In The 3 Year Plan?
The •Business scorecard (key metrics)
Situation •Macro factors (Market, Consumer, Trade, Competitors)
Where are we? Get real and factual !
Analysis:
Develop The Growth Plan Fund It Sell it
Develop market map Address opportunity: Marketing plan:
How much
investment/from
•Strategic cuts based • “Right to play” •How do I reach
where:
on consumers/ (Brand technology, customers? What
competitive set business system) does it cost?
•Capex
•Segment •What can we do? •What do I tell them
•WC (stocks and
attractiveness How? (viable volume (USP)
creditors)
(growth, profitability) scenarios) •Sources of funds
(loans, investors)
Big areas of
opportunity Big things we want to Inform and
“white space” do and CAN do convince customers
Be realistic
Wrap into Financial Algorithm
•Pull together different initiatives (profitability, investments, growth)
•Iterate / flex to meet timing, growth risk needs
GBSA Ltd.
THE BUSINESS 3 YEAR STRATEGIC PLAN 1
12. The Situation Analysis: What’s Needed
The objective is to identify the issues that we need to address as a business:
• By understanding what has driven our business performance
• By quantifying the macro-environmental factors that affect us
To ensure the strategic plan is firmly rooted in reality
Business Scorecard Checklist Macro/Environmental Back drop
Financial Performance
Category trends and driver
What are the trends that worry us?
Are we aligned with these trends?
Market performance
Competitive and trade dynamics
Are we increasing our market
presence? What impact on our run rate?
There is real benefit in quantifying and formalising what you know!
Link to SWOT to get implications
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13. Section 2
Develop market map: where to play “large growing
segments?”
GBSA Ltd.
14. Develop The Market Map
Not a huge exercise – you
have all the data.
Uncoated Kids Adult food
Snacks Premium Etc.
1. Get the right dimensions
- Practical vs. where the “rules of
ROB the game” are similar (consumer
occasion and competitive set)
- Self contained (few substitutes)
(include chilled and fresh?)
Other
2. Growth:
Comp. 1
Understand consumer drivers of
growth for each? Is it attractive? Wil
Comp growth continue?
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Competitive 3. Profitability:
X Volume Repeat Understand competitive set and
set
X Value by the “rules of the road” (pricing,
X Profit (indicative) segment brand, quality?), plus indications of
profitability (best estimates)
Where are the big areas of attractive opportunity
GBSA Ltd. What is the competitive set we need to fight
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15. Section 3
Address Opportunity: Competitive position and
where do we have a “right to play”, what rules by
segment
GBSA Ltd.
16. Address The Opportunities
To drive profitable growth we need to move from “white space”
to areas where we have a “right to play”.
client
Consumer Competitor Do we have competitive If we do … what are the viable volume
Price advantage? Scenarios at acceptable profitability?
Trade Margin Brand Credibility What will we do in each
/technology/quality area?
to drive a higher price
Demand +
building Establish our proposition
Selling and More effective “route to market” Identify likely share steal
Distribution - lower cost (scale?) /distribution
- negotiating strength (trade
margin) Develop Pricing
Supply Chain
+ /differentiation and
Advantaged supply chain demand building approach
Raw Materials - lower conversion
- better buying
Profit
The “Right to Play” means The big things we want to do
GBSA Ltd. Sustainable Profitability
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17. Wrap Into Financial Algorithm
Define the Algorithm that delivers our profit target Pull together the initiatives to give
(% CAGR, 07-10) A "Strawman" an acceptable algorithm
Category Growth • Overall category back into growth
Volume – steal share from "chilled" and Fresh!
Growth 0-5? • Aligned to growth
– push on growth
country/segment/channel "cells".
10-15? Share Steal
Profit • Push back private label (pricing,
Growth Target 10+ differentiation, trade story).
• Attack weaker branded specialists.
20+ Manage the trade-off
Pricing/Unit
• Premiumize (innovation, segment/occasion
Margin/Unit choice, overall brand building, trade
Growth +5
support).
• Optimised pricing architecture.
+5? Cost/Unit • Close "profit holes" in existing business.
• Innovation/quality/brand building
investment.
–
• Efficiencies (especially leverage cross-
segment and cross country scale).
GBSA Ltd. Bigger, more sustainable growing business
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18. Choosing your position on the growth/margin curve is a big decision
- but pricing/ margin will be a big part
20.00
18.00
16.00
14.00
Volume growth (%)
12.00
((0.25), 11.0)
10.00
8.00
(0.50, 5.7)
6.00
4.00
2.00
0.00
(1.50) (1.00) (0.50) 0.00 0.50 1.00 1.50
Change in gross margin (ppt)
GBSA Ltd.
19. ..but there are lots of ways to do it: pricing/mix/trade terms
and trade offs (investments vs. savings)
9% EBITDA growth per annum
3-4% annual volume 0.75 ppt of EBITDA margin
1% pricing
growth (4% pa growth)
• €200+ million of
incremental sales in 3
years (€50 million of
which is to offset decline
in non –core categories)
A&P Trade terms Mix Fixed costs Supply Chain
• More and • Holding flat • Managing • Up to • 0.5ppt p.a.
more vs. channel mix, but 0.25ppt p.a. needed or
effective dynamics entering from volume (50% pass
A&P needed and trade some lower leverage through)
to to drive power margin above
growth (no already a sectors
saving) stretch.
GBSA Ltd.
20. Building a strategic plan: Summary
1. Situation analysis – get real, get factual and link to SWOT
to get implications
2. Develop market map: where to play “large growing
segments?”
3. Address Opportunity: Competitive position and where
do we have a “right to play”, what rules by segment
4. Fund it and sell it (enough financial and human resources
to do both)
5. Wrap Into Financial Algorithm – manage the
margin/volume trade-offs
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