Common Questions to ask_most impt v2 Flashcards
(13 cards)
Industry Analysis_drivers
Brand/street cred Price Quality Endorsements Fads Marketing Products Size Economics Technologies
Competitive Response_come for your market share
What is their new product and how does it differ from what we have
What has the competitor done differently? What changed?
Have any other competitors picked up market share?
Have the consumers needs changes
Did they increase or expand into new channels
Competitive Response_responses
Analyze our current product and redesign, repackage, or move upmarket
Introduce a new product
Increase our profile with a marketing and pr campaign
Build customer loyalty
Cut prices
Lock up raw materials and talent
Acquire them or another player in the same market
Merge with a comp to create a strategic advantage and become more powerful
Copy the comp
Due Diligence for MA (company and industry)_general
What kind of shape is the target company in?
Management?
Products?
Profitability?
Brand?
What is the standalone
value?
What has been its
growth rate?
Why is it on the market?
Consider all the items in
the core box about
analyzing a company
How secure are the markets, customers, and suppliers
What are the margins like? Are they high volume, low margin, or low-volume-high-margin
How is the industry doing overall? And how is the company doing compared with the industry? Is it a leader in the field
How will competitors respond
Are there any legal reasons we can’t or should not acquire the target company
Are there technology risks
How much will it cost? Will the client overpay
Does the buyer have enough cash or access to capital markets
Would You Invest in New Business_finances
How is the project funded
What is the best allocation of funds
Can we support the debt under various economic conditions
MA_possible synergies
Cost Side
Reduction of employees
Reduction of administrative and factory overheads
Elimination of excess facilities and integration of
complementary technologies
Increase in purchasing power
Revenue Side
Cross-selling
Marketing, selling and distribution of similar or
complementary products
Gaining access to new markets
Sharing of distribution channels
Reduction or elimination of competition
Would You Invest in New Business_management
How experienced is the mgmt team
What are its core competencies
Have they worked together before
Is there an advisory board
Market Entry_ways to enter
Start from scratch and grow organically
Acquire an existing player from within the industry (grow inorganically)
Form a joint venture/strategic alliance with another player with a similar interest. What can wash side bring to the venture
Outsourcing. have someone else manufacture the product, with the client still handling marketing and distribution
MA_general reasons to purchase
Increase market access, boost the brand, and increase market share
Diversify the company’s holdings
Preempt the competition from acquiring the company
Target company is a threat
Inherit management talent
Obtain patents or licenses or products
Gain from synergies, cost savings, cultural integration, expansion of distribution channels, and customer base. Cross-sell products
Gain tax advantages
Increase shareholder value
Market Entry_barriers to entry
Lack of brand or street cred Capital requirements Access to raw materials Access to distribution channels Lack of human capital Government policy Industries dominated by a small number of big players can be a barrier
Growth_increasing revenues
Expand the number of distribution channels
Increase the product line through diversification of products or services (esp with products that won’t cannibalize sales of existing products)
Analyze the segments of the business with the highest future potential and margins
Invest in a marketing campaign
Acquire a competitor (esp if the question is an increasing market share)
Adjust prices (take price sensitivity of the customer into account. Lower price to inc volume and raise them to dec demand or inc profits per unit)
Create a seasonal balance (diff product each quarter)
Developing a New Product_funding
How is the product being funded? Does out company have the cash or are we taking on debt? Can we support the debt under various economic conditions
What is the best allocation of funds
Market Entry_general
Who are the competitors and what size market share do they have
How do their products differ from ours
How will we price our products or services
Are substitutions available
Are there any barriers to entry
Are there barriers to an exit? How would we exit if this market sours
What are the risks? Examples include changing market regulations or technology
