Business Situation Framework

Question 1

VC* Customer

Answer 1

Who is the customer - segments (size, growth rate, % of market), compare current to historical
What does each segment want/need
What price is each segment willing to pay - price points and price elasticity/sensitivity - what is each segments profitability
Distribution channel preference for each segment
Customer concentration and power (does one customer control all the demand)

How can you best reach them
How can you ensure you retain them

Question 2

VC* Product

Answer 2

Nature of the product (think about it out loud, its benefits, why someone would buy it)
Commodity or differentiable good (could company increase differentiation)
Complementary goods (piggyback off of growth in compliments)
Substitutes (vulnerable to indirect competitors)/Are there similar products out there?
Product lifestyle (new vs almost obsolete)

What’s the competitive edge
What are the advantages and disadvantages
What’s special or proprietary about it? Is it patented? For how long

New product
How does this strategy affect our existing product line
Are we cannibalizing our own sales from existing product/Are we replacing an existing product
How will this product’s strategy expand our customer base and increase our sales
Is the customer segmentation(s) the same
Can we use the same distribution channels
Can we use the same sales force – dont want a new sales force for just one product
How and where will this new product be produced
Will we have to hire new workers or retrain current workers
How does the new product fit in with the rest of our product line

Question 3

VC* Company

Answer 3

Capabilities and expertise
Distribution channels – which and how many
Cost structure (fixed vs variable, which is better to be higher, high fixed is a barrier to entry, compare to industry)
Intangibles (brands and brand loyalty - strength and what is it)
Financial situation

How have we been doing compared with the industry

Profits and revenues for the last three years
Customer segmentations - Characteristics, Changing needs, Profitability by segment
Product mix - Costs/margins, Product differentiation, Market share
Production capabilities/capacity
WCS (what constitutes success?) - Which metric is used

Question 4

VC* Competition

Answer 4

Competitor concentration and structure
Competitor behavior (target customers, products, pricing, distribution, brand loyalty)
Barriers to entry/will their be new entrants
Supplier concentration

Question 5

Market

Answer 5

Market size, growth rate, and trends
Where is it in its lifecycle (emerging? Mature? declining?)
Industry drivers
Customer segmentations
Margins – what are the typical margins in the industry
Industry changes - MA? New players?, Changes in technology?, Regulations?
Distributions channels
Major players and their market share (who has the rest of the market) and potential competitive responses
Product differentiation
Barriers to entry/exit

What role does technology play in the industry and how quickly will it change