Chapter Eleven © 2007 2005 John Wiley & Sons Leveraging the Business Copyright © 2010 John Wiley & Sons, Inc All rights reserved Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United States Copyright Act without the express written permission of the copyright owner is unlawful Requests for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc The purchaser may make back-up copies for his/her own use only and not for distribution or resale The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein Chapter 11 – Leveraging the Business PPT 11-1 Growth Options • Which assets and competencies can be leveraged? © 2007 2005 John Wiley & Sons • What brand extensions are possible? • Can the scope of the offering be expanded? • Do viable new markets exist? Chapter 11 – Leveraging the Business PPT 11-2 Which Assets and Competencies Can be Leveraged? • Marketing Skills • Capacity in Sales or Distribution © 2007 2005 John Wiley & Sons • Manufacturing Skills • R&D Skills • Achieving Economies of Scale Chapter 11 – Leveraging the Business PPT 11-3 © 2007 2005 John Wiley & Sons Brand Extensions • Does the brand fit the new product context? • Does the brand add value to the offering in the new product class? • Will the extension enhance the brand name and image? Chapter 11 – Leveraging the Business PPT 11-4 Brand Extension Logic Add Value © 2007 2005 John Wiley & Sons Brand Fit New Offering Enhance Brand Chapter 11 – Leveraging the Business Figure 11.1 PPT 11-5 New Products for Existing Markets • Expand boundaries: – From laundering rags to maintaining factories © 2007 2005 John Wiley & Sons – From salty potato chips to all snacks • Explore customer use context Chapter 11 – Leveraging the Business PPT 11-6 New Markets for Existing Products • Expanding Geographically © 2007 2005 John Wiley & Sons • Expanding into New Market Segments – Distribution Channel – Age – Home vs Office Chapter 11 – Leveraging the Business PPT 11-7 © 2007 2005 John Wiley & Sons Evaluating Business Leveraging Options • Is the product-market Attractive? • Is the core business successful? • Can the core business be transferred to the new product-market? How much of a stretch is it? • Will the new business be successful, become a market leader? • Is the leverage strategy repeatable? Question: If the criteria are clear, why so may new businesses fail? What judgments go wrong? Chapter 11 – Leveraging the Business PPT 11-8 The Mirage of Synergy • Potential Synergy Does not Exist © 2007 2005 John Wiley & Sons • Potential Synergy Exists But is Unattainable • Potential Synergy is Overvalued Chapter 11 – Leveraging the Business PPT 11-9 © 2007 2005 John Wiley & Sons Key Learnings • Leveraging assets and competencies involves identifying them and creatively determining in what business areas they might be able to contribute • Brand extensions should both help and be enhanced by the new offering, in addition to being perceived to have a fit with it • The business can be leveraged by introducing new products to the market or expanding the market for the existing products In doing so, the new product market should be attractive, be accessible to the business with its current assets and competencies, and have access to the needed resources to be successful • Entering a new product market is risky, as the new offering might lack market acceptance or needed resources Success likelihood goes up if the core business is healthy, if the new product market is attractive (competitors will be profitable), if the business model is repeatable, if market leadership is possible, and if the stretch from the core is small • Synergy can be a mirage Too often, it does not exist, or it exists but is unattainable or overvalued Chapter 11 – Leveraging the Business PPT 11-10 © 2007 2005 John Wiley & Sons Ancillary Slides Chapter 11 – Leveraging the Business PPT 11-11 © 2007 2005 John Wiley & Sons “Results are gained by exploiting opportunities, not be solving problems.” Peter Drucker Chapter 11 – Leveraging the Business PPT 11-12 © 2007 2005 John Wiley & Sons “The more opportunities I seize, the more opportunities multiply before me.” Sun Tzu Chapter 11 – Leveraging the Business PPT 11-13 “The most dangerous moment comes with victory.” - © 2007 2005 John Wiley & Sons Napoleon Chapter 11 – Leveraging the Business PPT 11-14 ... image? Chapter 11 – Leveraging the Business PPT 11- 4 Brand Extension Logic Add Value © 2007 2005 John Wiley & Sons Brand Fit New Offering Enhance Brand Chapter 11 – Leveraging the Business Figure 11. 1... the offering be expanded? • Do viable new markets exist? Chapter 11 – Leveraging the Business PPT 11- 2 Which Assets and Competencies Can be Leveraged? • Marketing Skills • Capacity in Sales or... customer use context Chapter 11 – Leveraging the Business PPT 11- 6 New Markets for Existing Products • Expanding Geographically © 2007 2005 John Wiley & Sons • Expanding into New Market Segments –