摘自本人的ＭＢＡ学位论文
In this chapter, we will focus on the combination of services for the target marketplaces. A portfolio matrix, which is very similar to GE business matrix,[1] can be applied to define service development strategies for every specific geographical marketplace. This tool will be used here to reveal services combination in the SGD area. Then Scenario analysis will be conduct to expose the direction of pricing.
3.1 Portfolio Matrix and Analysis
The proposed services (shown in 1.4.2) will be taken as the strategic choices of TSC, the portfolio will be conducted for the targeted geographical marketplaces.
In SDG area, it is the most developed geographic marketplace for MC.
We build a matrix of market attractiveness & competence level for Production & Quality Management as below.
|
|
Factor |
Weight |
Rating |
Value |
Remarks |
|
Market Attractiveness |
A1.Market Volume |
0.25 |
4 |
1 |
The biggest portion of MC demands |
|
A2.Annual Growth Rate |
0.25 |
3 |
0.75 |
Stable but lower | |
|
A3.Previous Profit |
0.15 |
4 |
0.60 |
90% of total profit | |
|
A4.Competition Intensity |
0.20 |
5 |
1 |
Very intensive | |
|
A5.Technical Complexity |
0.15 |
1 |
0.15 |
Very low | |
|
Total Value 1.0 3.50 | |||||
Table 10. Market Attractiveness Matrix
|
|
Factor |
Weight |
Rating |
Value |
Remarks |
|
Competence Level |
C1.Market Share |
0.05 |
0.5 |
0.03 |
|
|
C2.Product & Service Quality |
0.15 |
4.5 |
0.68 |
| |
|
C3.Brand Awareness |
0.20 |
2 |
0.4 |
| |
|
C4.Consultant resources |
0.10 |
3 |
0.3 |
| |
|
C5.Price Level C6.Product Uniqueness C7.Management & Sales Force Competence |
0.15 0.15 0.20 |
2 3 3 |
0.3 0.45 0.6 |
| |
|
Total Value 1.0 2.76 | |||||
Table 11. Competence Level Matrix
For the other product line, we generate a summarized matrix to get the data.
|
|
|
Human Resource Management & Organization Design |
Management Techniques Training |
Management Software Application |
Strategy & Restructuring | |||||
|
Factor |
Weight |
Rating |
Weighted Score |
Rating |
Weighted Score |
Rating |
Weighted Score |
Rating |
Weighted Score | |
|
A1 |
0.25 |
2 |
0.5 |
4.5 |
1.13 |
3 |
0.75 |
1 |
0.25 | |
|
A2 |
0.25 |
3 |
0.75 |
4 |
1 |
3 |
0.75 |
3 |
0.75 | |
|
A3 |
0.15 |
0 |
0 |
1 |
0.15 |
1 |
0.15 |
0 |
0 | |
|
A4 |
0.20 |
2 |
0.4 |
4 |
0.8 |
2 |
0.4 |
1 |
0.2 | |
|
A5 |
0.15 |
1 |
0.15 |
3.5 |
0.56 |
4.5 |
0.68 |
5 |
0.75 | |
|
Total |
|
|
1.77 |
|
3.51 |
|
2.73 |
|
1.95 | |
|
C1 |
0.05 |
0 |
0 |
1 |
0.05 |
1 |
0.05 |
0 |
0 | |
|
C2 |
0.15 |
3.5 |
0.56 |
4.5 |
0.68 |
2.5 |
0.38 |
4 |
0.60 | |
|
C3 |
0.20 |
1 |
0.2 |
1 |
0.2 |
1 |
0.2 |
1 |
0.2 | |
|
C4 |
0.10 |
3 |
0.3 |
4 |
0.4 |
3.5 |
0.35 |
2 |
0.2 | |
|
C5 |
0.15 |
3 |
0.45 |
3 |
0.45 |
4 |
0.60 |
5 |
0.75 | |
|
C6 |
0.15 |
3 |
0.45 |
4 |
0.60 |
4 |
0.60 |
3.5 |
0.56 | |
|
C7 |
0.20 |
1 |
0.20 |
1 |
0.20 |
1 |
0.20 |
1 |
0.20 | |
|
Total |
|
|
2.16 |
|
2.58 |
|
2.38 |
|
2.51 | |
Table 12. Portfolio Matrix of SGD Area
The above results will be used to draw a GE Business Screen. Ratings of A1 & A2
Will be used to determine the length and direction of the arrow to show future trend.
Notes:
Figure
Figure 4. Market Attractiveness – Competitive Position Portfolio
As per Kotler’s comments[2], TSC has not set up distinguished competitive advantages in SGD area. The proposed strategies are:
l Harvest Human Resource & Organization Design and pay more attention to be not over-investing in this product line.
l For Strategy & Restructuring, TSC is recommended to upgrade the capability to search for the most profit order. Investment would be minimized and might it come from earnings of this product.
l For management software application, concentration is needed to protect the good profitability segments.
l For Management techniques training and Production & Quality Management, intensive investment and push to challenge leadership is a selective choice. The products should be selected to avoid intensive competition on low price.
3.2 General Assumptions and Scenario Analysis
General Assumptions:
As what has been discussed in section 2.3, we will aim at the 2 alternatives on pricing strategy in the SGD area. It is assumed to keep quality image whichever alternative will be discussed.
It is also assumed the suggestions to strategies in 2.3 & 3.1 will be adopted. 2 options will be generated as follows:
Option 1
With Middle-High price level
Option 2
With Middle-Low price level
The author has conducted a survey among TSC sales persons and management to make a rough estimate on the sales figures. There are some data to be referenced in Appendix III to get the following results in Table 11 & Table 12.※
Table 11. Scenario Box for Option 1
|
|
|
|
|
Projections | ||||||||
|
Factor |
Last Year |
Historical Average |
Trend Analysis |
2002 |
2003 |
2004 | ||||||
|
|
* |
** |
|
O P ML |
O P ML |
O P ML | ||||||
|
Sales Units/Cases |
3 |
8 |
Up |
21 |
12 |
15 |
30 |
24 |
26 |
46 |
32 |
38 |
|
Dollars( in millions RMB) |
0.25 |
0.60 |
Up |
0.81 |
0.36 |
0.51 |
0.90 |
0.64 |
0.73 |
1.11 |
0.82 |
0.97 |
|
COGS, Q&A |
0.03 |
0.11 |
Up |
0.11 |
0.33 |
0.59 | ||||||
|
Advertising and Marketing |
0.003 |
0.01 |
Up |
0.01 |
0.02 |
0.03 | ||||||
|
Interest expense |
0 |
0 |
Up |
0 |
0 |
0 | ||||||
|
Office expansion |
0.06 |
0.05 |
Stable |
0 |
0.05 |
0.05 | ||||||
|
Dividends |
0.02 |
0.10 |
Stable |
0.18 |
0.22 |
0.30 | ||||||
|
Net profits |
0.11 |
0.27 |
Up |
0.41 |
0.05 |
0.18 |
0.24 |
0.02 |
0.09 |
0.12 |
-0.15 |
0 |
|
Avg. Sales growth rate |
/ |
/ |
Up |
/ |
41% |
50% | ||||||
|
Avg. Gross margin to sales |
/ |
/ |
Up |
79% |
55% |
39% | ||||||
|
Avg. Ratio of sales achievement |
/ |
/ |
Up |
1.05 |
0.74 |
0.65 | ||||||
|
Rectify |
|
|
|
Good Performance |
Not Good Performance |
Poor Performance | ||||||
Table 12. Scenario Box for Option 2※
|
|
|
|
|
Projections | ||||||||
|
Factor |
Last Year |
Historical Average |
Trend Analysis |
2002 |
2003 |
2004 | ||||||
|
|
* |
** |
|
O P ML |
O P ML |
O P ML | ||||||
|
Sales Units/Cases |
3 |
8 |
Up |
50 |
40 |
44 |
80 |
60 |
70 |
110 |
97 |
102 |
|
Dollars( in millions RMB) |
0.25 |
0.60 |
Up |
1.49 |
1.20 |
1.27 |
1.82 |
1.29 |
1.55 |
2.27 |
2.03 |
2.08 |
|
COGS, Q&A |
0.03 |
0.11 |
Up |
0.11 |
0.33 |
0.59 | ||||||
|
Advertising and Marketing |
0.003 |
0.01 |
Up |
0.01 |
0.02 |
0.03 | ||||||
|
Interest expense |
0 |
0 |
Up |
0 |
0 |
0 | ||||||
|
Office expansion |
0.06 |
0.05 |
Stable |
0 |
0.05 |
0.05 | ||||||
|
Dividends |
0.02 |
0.10 |
Stable |
0.18 |
0.22 |
0.30 | ||||||
|
Net profits |
0.11 |
0.27 |
Up |
1.01 |
0.77 |
0.82 |
0.24 |
0.02 |
0.09 |
0.12 |
-0.15 |
0 |
|
Avg. Sales growth rate |
/ |
/ |
Up |
/ |
21% |
35% | ||||||
|
Avg. Gross margin to sales |
/ |
/ |
Up |
91% |
79% |
72% | ||||||
|
Avg. Ratio of sales achievement |
/ |
/ |
Up |
2.33 |
1.55 |
1.39 | ||||||
|
Rectify |
|
|
|
Excellent Performance |
Good Performance |
Good Performance | ||||||
From the above 2 scenarios, we can recognize only option 2 enable us to approach our strategies and operations goals. Since it is not accessible to compare all projected figures as proposed in 1.4.2 & 2.1, here we only put sales growth rate, gross margin to sales and ratio of sales achievement to projected sales as benches.
We conclude:
l With option 2, we can achieve our sales targets and even better we will have 1.79 millions RMB exceeding the project sales. We can not achieve the target with option 1.
l We will achieve annual sales growth rates that are higher than the proposed target of 60% with option 2. It can not be achieved through option 1.
l We can not achieve 50% sales growth rate either by option 1 or by option 2. Might we it is a not realistic targets. Through option 2, we can do better. Since we exclude the positive results of intensive investment on research and training, we can expect a higher raise might be achieved in the actual situation.
3.3 Business Development Strategies in Other Target Regions
It is important to expand TSC operations in countrywide range to meet the goal of making TSC as a major local MC firm in China. As it is proposed that China marketplace are divided into six regions. We have discussed business development model in the SDG area. The methodology we use to determine operations goals and strategies will be applicable for the other target marketplaces. The East China area is another intensive competition area besides the SDG area. We need to conduct similar analysis to get to proper strategies.
We consider the following regions as to be developed areas:
° Mid-China Area
° North China Area
° North-East China Area
° West China Area
In these marketplaces, there will be less competition and the market is not mature enough to welcome MC services. PEST analysis will help us to study feasibility and timing of entering those marketplaces. Detailed survey will be carried out to define services combination and portfolio analysis might give different strategies to develop the market. The pricing policy should be very flexible to meet big deviation with various industries and economic status.
It is a competitive advantage for TSC to penetrate into these marketplaces when it set TSC professional image and distinctive reputation in the SDG area. The background of headquartered in Shenzhen will convince the potential client that TSC is a better choice comparing with the other local counter-partners.
I will suggest TSC to consider the following proposals on strategy formulation in general:
Positioning Strategy
TSC is positioned as a leading management consulting to offer total solutions integrated or configured with IT approaches to match its clients’ demands on rapid growth in this rapid changing business world. TSC will build an image as an expert in operations management and IT, and also has good capabilities to offer the other management consulting services through well managed outside consultant network. TSC positioned himself as a good coach mainly to small and medium sized domestic firms and a good assistant to foreign firms. TSC will not compete with low price management consulting service providers unless it is a good opportunity to enter a propitious targeted market.
Pricing Strategy
Most consulting projects are billed on a daily basis to pre-determined levels dictated by project schedule milestones. For local market, survey on price level will be conducted to determine a competitive price level. For general consulting projects, a middle-low price level will be adopted as a powerful competitive edge to win orders. When TSC expands its business to these inland regions, it will adjust the rates to meet the middle level of the specific geographical marketplaces. It will be flexible enough to maximize the sales or profit margin.
Promotion Strategy
TSC is suggested to use the Internet extensively in sales promotion. It is recommended to acquire or set up its own web site to spread its fame by offering public more instructive reference/articles without any charge. It can be helpful to collect information through building a membership network.
TSC will focus our limited advertising budgets to promote community events. We will also offer free charge training program 1 time per month to public. Other training/seminars will be offered at discount rates to public.
TSC will write some columns in local and professional periodicals to build our image as an expert and leading edge of management consulting services.
TSC will give its clients newly developed services at discount rate and encourage them to recommend TSC to get to new clients.
TSC will work with government offices to co-sponsor some nonprofit training and seminars. It is very critical to win trust from the government to grasp more opportunities to develop in the government driving industries.
Sales Strategy
Success in a consulting market is to focus on client service and relation management, it typically translates into repeat business and new clients recommended by current customers. TSC will avoid sacrificing quality to compete at low price and loose control of its consultants’ performance.
Training will be priority to be sold to the clients to keep TSC onto a basic operation platform. It is also considered to give more exposure to the potential clients.
Certification consulting will still be of a big portion of the sales revenues. It is necessary to highlight on the following perspectives that are pushed by the Chinese government within the coming a few years:
l HACCP & GMP
l ISO/TS16949/QS9000
l TL9000
l CMM
The most part of the customized projects is supposed to be management formalization, sales techniques and human resources management.
Management Control Strategies
TSC office in Shenzhen will be built into headquarter to direct all branch offices. It will be R&D center and trial market for new products. TSC will take 60% shares of every branch offices to be dominant for decision making. The left shares will be allocated to the key employees of the branch offices. The branch offices are considered as profit centers. All finance & accounting managers of branch offices will report to the management in headquarter directly.
[1] Kotler P, Marketing Management: Analysis, Planning, Implementation, and Control(9th ed.), USA: Prentice Hall, pp76.
[2] Kotler, P. Marketing Management: Analysis, Planning, Implementation, and Control(9th ed.), USA: Prentice Hall, pp75.
※Notes:
1. The normal price level is defined as the historical average of the similar products. Middle-High level and Middle-Low level refer to a 25% increase and decrease of the normal price respectively.
2. Expenses on training and research will be allocated as 10%, 17% and 23% for the 3 years respectively.
3. Employee headcount will be 13, 21, 31 for the 3 years respectively. Payroll includes only basic salary. It will be calculated as 1000RMB for all staff.
4. Sales commission is calculated on 20% of sales and has been covered into the dividends.
5. Office expansion refers to capital of setting up new branch office.
6. Expenses on training and research will be allocated as 10%, 17% and 23% for the 3 years respectively.
7. We will calculate average ratios as per weights 1, 1, 8 for O, P, ML respectively. This method is used to calculate average sales and average gross margin.
8. The figures are estimated on a conservative base that the expenses on training and research will not raise the market price.
※Notes:
* Provided by Shi Yang, Managing Director of Total Solution Management
Consulting Co., Ltd.
** Provided by Wan Shihong, VP of Study Management Consulting. It is a rough
estimate of historical average level of typical MC firms.
