international traders of iowa | growing business in a changing world
DESCRIPTION
President and CEO of Blue Canyon Partners, Atlee Valentine Pope, on April 17 delivered a presentation to the International Traders of Iowa. The presentation focused on Overseas Market Opportunity Analysis.TRANSCRIPT
© 2014 Blue Canyon Partners, Inc.
ATLEE VALENTINE POPE
APRIL 17, 2014
Growing a Business in a Changing World
International Traders of Iowa
© 2014 Blue Canyon Partners, Inc.
Sea Change in the Sources of Global Growth
As recently as 2002, North America and
Europe were the world’s growth drivers,
accounting for 70% of global market
growth.
As recently as 1992, Asian developing
countries accounted for less of global
market growth than Japan alone.
The past 5 years have seen developing Asia
account for 60% of all the market growth
in the world, nearly 40% of it in China
alone.
Regions not shown in the chart now
account for about 30% of global growth,
three times as high as in the 90’s and
higher even than during the oil crises
of the 70’s.
Sources: World Bank, WDI, Blue Canyon analysis
Percentage of 5-Year Global GDP Growth
Accounted for by Selected Regions
2
© 2014 Blue Canyon Partners, Inc.
Asian Emerging Markets Still Lead,
Frontier Markets Have Emerged
With some exceptions such as Argentina and Vietnam, the Frontier markets are outside the mainstream of prior rapid growth: Asia and Latin America.
With global growth faltering over the past 5 years, the Middle East and Africa were home to some substantial growth. The old adage of the developing world getting pneumonia when the US and Europe catch cold seems quite outdated now.
The reasons can be debated, but the demands on the world’s resources created by explosive growth by China are a factor.
Even with a substantial slowdown in China from this level of growth, China will still outweigh the importance of all the Frontier group for some time to come. But positioning for the future requires attention.
Sources: World Bank, WDI, Blue Canyon analysis
Percentage of 5-Year Global GDP Growth
Accounted for by Selected Regions
3
© 2014 Blue Canyon Partners, Inc.
China Dominates in Scale ….
….Growth Slowdown Makes for Shocking Headlines
“Slowdown” scenarios to below 8% must
be seen in context of less than 2.5%
growth in the US and Europe
China’s policymakers are determined to
build a more balanced economy:
▫ Services vs manufacturing
▫ Personal consumer choice vs
government spending
▫ Interior regions vs coastal
▫ Environment vs growth
Sources: World Bank, WDI, Blue Canyon analysis
China’s Real Annual GDP Growth
4
© 2014 Blue Canyon Partners, Inc.
Underlying Economics
Will the future sustain this global growth?
Which countries will prosper?
Priorities for Success
Which countries are most attractive to you and why?
Do these opportunities fit with your company’s strategic goals and outlook?
How can you capture these rewards?
Global Growth - Options and Opportunities
5
© 2014 Blue Canyon Partners, Inc.
Methodology
6
© 2014 Blue Canyon Partners, Inc.
Global Growth Opportunities
Define Your Current Served Market
Defining the current market…
What are you selling?...
Services/products
Who are you selling it to?...
Customers/markets
Where and how is it being used?...
Application
Common challenges of defining current served
market…
Too broad:
Overlook attractive opportunities that are right
in front of you
Too narrow:
Leave possibly attractive opportunities out of your
market universe
7
© 2014 Blue Canyon Partners, Inc.
Opportunity-Fit
Opportunity
Size: Is this country large enough to make an important contribution to us?
Growth: Does this country offer the potential for sustained growth?
Market Share: Are you positioned to make significant financial returns in this country?
Fit
Business Drivers: Does this country help play to your strengths -- with product lines, logistics, relationships and other resources?
Competitor Intensity: What is the competitive landscape in this country and how would this challenge you?
Purchase Decision Factors: Do customers in this market offer rewards to suppliers in terms of either a price premium, a share premium, or scale economies that drop to the bottom line?
8
© 2014 Blue Canyon Partners, Inc.
Opportunity-Fit Scoring
Option Size Growth Market
Share
Opportunity
Score
Competitor
Intensity
Purchase
Decision
Factors
Business
Drivers
Probability
of Success
Score
Composite
Score
China 9 9 8 26 7 6 9 22 48
Brazil 4 8 7 19 8 6 7 21 40
UK 7 6 8 21 7 5 4 16 37
Spain 6 6 5 16 5 6 7 18 34
Etc.
After the various metrics are developed and quantified for each country,
scores are developed for each country under consideration
ILLUSTRATIVE
9
© 2014 Blue Canyon Partners, Inc.
Metro Area Market Opportunity and Internal Considerations Assessment
Internal Considerations
Mar
ket
Op
po
rtu
nit
y
StrongerWeaker
Hig
her
Lo
wer
Higher if…
Larger market
Faster growth
Higher value add opportunity
etc.
Lower if…
Smaller market
Slower growth
Minimal value add opportunity
etc.
Country A
Country B
Country C
Op
po
rtu
nit
y
Strong Weak
Lo
w
Hig
h
Fit
Weaker if…
Poor product match
Higher competitive
intensity
etc.
Stronger if…
Good product match
Lower competitive
intensity
etc.
Opportunity-Fit Assessment
10
© 2014 Blue Canyon Partners, Inc.
Metro Area Market Opportunity and Internal Considerations Assessment
Internal Considerations
Mar
ket
Op
po
rtu
nit
y
StrongerWeaker
Hig
her
Lo
wer
Country A
Country B
Country C
Strong Weak
Lo
w
Hig
h
Fit
Selecting Countries
Some segments will be chosen based on High Degree of Market Opportunity and Strong Fit
Some segments will be chosen based on “Easy Wins” (e.g., strong fit)
11
Op
po
rtu
nit
y
Some countries will be chosen based on High Market Opportunity assuming gaps can be addressed (e.g., partnership, acquisition)
© 2014 Blue Canyon Partners, Inc.
Case Studies
12
© 2014 Blue Canyon Partners, Inc.
Beverage
Multi-pack Packaging
Follow the Customer
Case Study 1
13
© 2014 Blue Canyon Partners, Inc.
Beverage Packaging
Opportunity
Metrics Weight
Packaging Value 100%
Metrics Weight
Margins 100%
Metrics Weight
Forecasted 5-Year
CAGR Percentage 50%
Forecasted 5-Year
New Incremental
Dollars
50%
OPPORTUNITY
SCORE
33.3%
SCALE
33.3%
GROWTH
33.3%
PROFITABILITY
14
© 2014 Blue Canyon Partners, Inc.
Beverage Packaging
Fit
15
Metrics Weight
Vehicles Per Household 25%
Weekly Shopping
Frequency 25%
Variety of Beverages 25%
Percent Households with
Refrigerator 25%
FIT
SCORE
20%
Demo-
graphics
20%
Brand
Owner
Activities
20%
Trade /
Channel
Activities
20%
Consumer /
Lifestyle
20%
Competitive
Intensity
Example: Refer to slides 16-19 for details.
© 2014 Blue Canyon Partners, Inc.
Consumer / Lifestyle: Vehicles Per Household
Definition: The number of vehicles per household for each country
Measurement: Quantitative, later transformed into a 0-10 index
Rationale: Segments with higher numbers of vehicles per household are
more able to transport multi-packs of packaged beverages home from
point-of-purchase. Therefore, they represent larger short- and long-term
opportunities for XYZ
Sources: World Bank and Blue Canyon sources
Fit Dimension
16
© 2014 Blue Canyon Partners, Inc.
Consumer / Lifestyle: Weekly Shopping Frequency
Definition: The average number of shopping trips per household per
week for each country (an inverse metric–fewer is better)
Measurement: Quantitative, later transformed into a 0-10 index
Rationale: Segments that shop less frequently per week purchase more
per incident and therefore are more likely to purchase multi-packs.
Therefore, they represent larger short- and long-term opportunities for XYZ
Sources: XYZ Country Subject Matter Experts (SMEs) by country
Fit Dimension
17
© 2014 Blue Canyon Partners, Inc.
Consumer / Lifestyle: Variety of Beverages
Definition: The total number of beverage brands in the market by country
Measurement: Quantitative, later transformed into a 0-10 index
Rationale: Segments that have more brands have higher competition and
thus more need to differentiate through packaging [‘Billboarding’].
Therefore, they represent larger short- and long-term opportunities for XYZ
Sources: Euromonitor
Fit Dimension
18
© 2014 Blue Canyon Partners, Inc.
Consumer / Lifestyle: Percent of Households with Refrigerators
Definition: The percentage of households with refrigerators by country
Measurement: Quantitative, later transformed into a 0-10 index
Rationale: Segments in which households are able to refrigerate
packaged beverages play to XYZ’s paperboard ‘wet strength’ and
FridgeMaster®, and thus represent larger short- and long-term
opportunities for XYZ
Sources: Euromonitor 2003
Fit Dimension
19
© 2014 Blue Canyon Partners, Inc.
Op
po
rtu
nit
y A
sse
ssm
ent
Lim
ite
d A
ttra
ctiv
en
ess
Str
on
g A
ttra
ctiv
en
ess
Limited Fit Strong FitFit Assessment
China
Mexico
Brazil Russia
South
Africa
Indonesia
IndiaUkraine
Turkey
China
Sources: Blue Canyon analysis of data from the
CIA World Factbook, The World Bank, Euromonitor, and XYZ SMEs 20
© 2014 Blue Canyon Partners, Inc.
Case Study 2
21
Commercial Vehicles
Roads & Highways
European Expansion
© 2014 Blue Canyon Partners, Inc.
Opportunity
PROFITABILITY
Metrics Wt.
Margins 60%
Competitive
Intensity (Inverse) 20%
Strength of
Competition
(Inverse)
20%
GROWTH
Metrics Wt.
Forecasted New
Vehicle Demand
Growth Rate
70%
Historical New
Vehicle Demand
Growth Rate
30%
SCALE
Metrics Wt.
Annual New
Vehicle Unit
Demand
70%
Size of Potential
Customer Base 30%
40%
30% 30%
22
© 2014 Blue Canyon Partners, Inc.
Fit
PURCHASE DECISION FACTORS
Metrics Wt.
Importance of greater hopper
capacity 15%
Importance of vehicle
maneuverability 15%
Importance of strong service and
parts capabilities (inverse scoring) 15%
Loyalty to local or long-time dealer
(inverse scoring) 15%
Importance of costs to switch
vehicle OEMs (inverse scoring) 10%
Importance of ease of equipment
operation 10%
Preference for national or local
brands (inverse scoring) 10%
Importance of dust suppression
(inverse scoring) 5%
Importance of noise suppression
(inverse scoring) 5%
35%
25% 40%
23
Example
© 2014 Blue Canyon Partners, Inc.
UK
FR
IT
DE
ES
RU
TR
UA PT
CZ
HR HU
PL
EE
Limited Fit Strong Fit
Fit Assessment
Op
po
rtu
nit
y A
ssessm
en
t
Lim
ite
d A
ttra
cti
ve
ne
ss
Ve
ry A
ttra
cti
ve
Opportunity Fit Map – By Country
Source: Blue Canyon Opportunity-Fit Model 24
0 - 10%
10 - 20%
20 - 30%
30 - 50%
over 50%
Market Share UNITS
Croatia HR 10
Czech Republic CZ 23
Estonia EE 5
France FR 371
Germany DE 199
Hungary HU 8
Italy IT 374
Poland PL 6
Portugal PT 34
Russia RU 80
Spain ES 157
Turkey TR 80
Ukraine UA 50
United Kingdom UK 400
COUNTRY
© 2014 Blue Canyon Partners, Inc.
Lessons Learned
25
Unbundle the Complex
Be strategic
Fact-based
© 2014 Blue Canyon Partners, Inc.
Atlee Valentine Pope, President and CEO
Atlee Valentine Pope
Current Responsibilities
Atlee Valentine Pope is president and chief executive officer of Blue Canyon Partners, Inc., and the co-
author of the growth strategy book CoDestiny: Overcome Your Growth Challenges By Helping Your
Customers Overcome Theirs. In addition to overseeing Blue Canyon’s operations, Atlee works directly
with a number of clients to produce market-driven answers and actions plans that foster profitable growth.
More recently, Atlee’s work has included helping clients in areas such as channel management, strategy
implementation, pricing strategies and adjacencies.
PRESIDENT AND CEO
T (847) 967-0288
Experience
Atlee’s work has covered numerous business-to-business issues across myriad industries.
A representative sample of Atlee’s deep experience includes:
Identifying global growth opportunities for multiple U.S. manufacturers
Advising clients on how to solve pressing growth problems in their toughest, most competitive markets
Bringing new business models to clients uncertain about how to use data analytics to create value for
their customers
Helping clients understand how to motivate their customers to focus on value rather than price
Before building Blue Canyon, Atlee served in leadership roles in several start-up ventures and was a vice
president in global corporate finance with First Chicago.
Education and Affiliations
Atlee earned a BA from the University of the South in Sewanee, Tennessee, and an MBA from
Northwestern University’s Kellogg Graduate School of Management.
Thought Leadership
In addition to CoDestiny, Atlee has co-authored more than 40 papers and has been a guest speaker at
numerous business events on topics ranging from market-driven strategy, best-in-class strategy
implementation practices, business-to-business growth, and many more.