Second set of two - Consulting Models 2.pptx

a second set of slides describing the most famous consulting models.

1. Framework #3 Porter’s Five Forces Decoded Industry Dynamics If the 7-S framework is about looking inward, Porter’s Five Forces is about looking outward. It’s your lens for understanding the competitive landscape of any industry. The five forces are: The threat of new entrants Bargaining power of suppliers Bargaining power of buyers Threat of substitute products or services Rivalry among existing competitors

2. Continued Competition isn’t just about who has the best product at the best price or who is available in what distribution channels. It’s easy to fixate on one specific element of a competitor (like price or distribution) and lose the forest for the trees. Using Porter’s Five Forces really forces (no pun intended) you to take a step back, which is often exactly what we need when we’re facing competition. Here’s a real-world example. Imagine a player in the soft drink industry. It’d be natural to fixate on their direct competitors (rivalry among existing competitors). On one hand, this makes sense: soft drink companies have had the same few competitors for years. But the bigger threat might actually be from outside the traditional industry: the rising popularity of healthier beverages (threat of substitute products). If I were working with the CEO of our hypothetical soft drinks player, I’d suggest they use Porter’s 5 Forces like this: Start by clearly defining the industry. Is it “beverages” generally, “all carbonated soft drinks” specifically, or “carbonated sugar drinks”? For each force, list out specific factors. For example, under “Threat of new entrants,” they might consider factors like economies of scale, brand loyalty, or government regulations. Rate each force as high, medium, or low in terms of its impact on industry profitability. Identify the most significant forces and brainstorm strategies to address them. The beauty of Porter’s Five Forces is that it’s not just a snapshot – it’s a tool for anticipating future changes in your industry. By regularly revisiting this analysis, you can stay ahead of industry shifts and make proactive strategic decisions. This framework forces you to think beyond the obvious. It’s not just about your direct competitors, but about the entire ecosystem your business operates in.

3. Framework #4:  The BCG Growth/Share Matrix Helps You Balance Your Product Portfolio If you’ve ever felt overwhelmed trying to manage multiple products or consider multiple business units, the BCG Matrix will help you. Developed by the Boston Consulting Group, this framework helps you visualize and balance your product portfolio. The matrix categorizes products into four quadrants: Stars: High growth, high market share Cash Cows: Low growth, high market share Question Marks: High growth, low market share Dogs: Low growth, low market share

4. It’s easy to bring this to life imagining a consumer goods company. Conglomerates like Unilever and Procter & Gamble often play in dozens of categories and have multiple brands within each category they compete in. Each brand and category is often managed as an independent business with its own P&L. An individual brand might be profitable while the category it’s a part of or even the company as a whole is struggling with profitability. In a situation like this, it can be difficult to know what to prioritize. Applying the brands to a matrix like this might reveal that certain cash cows (stable & profitable) are being neglected in favor of question marks (unproven products in growing markets). To use the BCG Matrix effectively: Plot your products or business units on the matrix based on their market growth rate and relative market share. Analyze the balance of your portfolio. Do you have enough cash cows to fund the development of potential stars? Develop strategies for each category. For example, you might decide to invest heavily in stars, milk your cash cows for profit, selectively invest in question marks with high potential, and divest from dogs. Regularly update your matrix as market conditions change. Remember, the goal isn’t to eliminate all dogs or question marks. It’s about finding the right balance for sustainable growth and profitability.