Analysis Without Paralysis
Analysis WithoutParalysis12 Tools to MakeBetter Strategic DecisionsBabette E. BensoussanCraig S. Fleisher
Vice President, Publisher: Tim MooreAssociate Publisher and Director of Marketing: Amy NeidlingerExecutive Editor: Jeanne GlasserEditorial Assistant: Pamela BolandOperations Specialist: Jodi KemperMarketing Manager: Megan GraueCover Designer: Alan ClementsManaging Editor: Kristy HartProject Editor: Anne GoebelCopy Editor: Gayle JohnsonProofreader: Jess DeGabrieleIndexer: Lisa StumpfCompositor: Nonie RatcliffManufacturing Buyer: Dan Uhrig 2013 by Pearson Education, Inc.Upper Saddle River, New Jersey 07458For information about buying this title in bulk quantities, or for special sales opportunities(which may include electronic versions; custom cover designs; and content particular to yourbusiness, training goals, marketing focus, or branding interests), please contact our corporatesales department at corpsales@pearsoned.com or (800) 382-3419.For government sales inquiries, please contact governmentsales@pearsoned.com.For questions about sales outside the U.S., please contact international@pearsoned.com.Company and product names mentioned herein are the trademarks or registered trademarksof their respective owners.All rights reserved. No part of this book may be reproduced, in any form or by any means,without permission in writing from the publisher.Printed in the United States of AmericaThird Printing February 2014ISBN-10: 0-13-310102-9ISBN-13: 978-0-13-310102-7Pearson Education LTD.Pearson Education Australia PTY, LimitedPearson Education Singapore, Pte. Ltd.Pearson Education Asia, Ltd.Pearson Education Canada, Ltd.Pearson Educación de Mexico, S.A. de C.V.Pearson Education—JapanPearson Education Malaysia, Pte. Ltd.Library of Congress Cataloging-in-Publication DataBensoussan, Babette E.Analysis without paralysis : 12 tools to make better strategic decisions / Babette E.Bensoussan,Craig S. Fleisher. -- 2nd ed.p. cm.Rev. ed. of: Analysis without paralysis : 10 tools to make better strategic decisions. c2008.ISBN 978-0-13-310102-7 (hbk. : alk. paper)1. Business intelligence--Evaluation. 2. Competition--Evaluation. 3. Strategic planning. 4.Business planning. I. Fleisher, Craig S. II. Title.HD38.7.B4555 2013658.4’01--dc232012026808
This book is dedicated not only to ourwonderful family and friends but to all thededicated business people who are seeking betterinsights in a constantly changing world
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ContentsAcknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ixAbout the Authors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiChapter 1The Role of Analysis in Business Management. . . . . . . . . . .1The Increasing Need for Effective Analysis . . . . . . . . . . . . . . . 7Concluding Observations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Chapter 2The Analysis Process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13What Is Analysis? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Chapter 3BCG Growth/Share Portfolio Matrix . . . . . . . . . . . . . . . . . .23Description and Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23Link to the Experience Curve . . . . . . . . . . . . . . . . . . . . . . . . . 24Link to the Product Life Cycle . . . . . . . . . . . . . . . . . . . . . . . . 25Combining the Experience Curve and ProductLife Cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26Strengths. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30How to Do It . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32Case Study: Google as Viewed in a BCG PortfolioPlanning Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39Chapter 4Competitor Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45Description and Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45Strengths. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47How to Do It . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48Case Study: Chinese Mobile Phone Market. . . . . . . . . . . . . . 59Chapter 5Driving Forces Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . .63Description and Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63Strengths. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
viANALYSIS WITHOUT PARALYSISHow to Do It . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66Case Study: Driving Forces in the Digital MusicMarket . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75Chapter 6Financial Ratios and Statement Analysis. . . . . . . . . . . . . . .81Description and Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81Basic Concepts Underlying Financial Ratioand Statement Analysis (FRSA) . . . . . . . . . . . . . . . . . . . . . . . 81Components of Financial Statements . . . . . . . . . . . . . . . . . . . 82Assessing the Appropriateness of Ratios. . . . . . . . . . . . . . . . . 83Strengths. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84How to Do It . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86Activity or Efficiency Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . 87Leverage or Solvency Analysis Ratios . . . . . . . . . . . . . . . . . . . 90Liquidity Analysis Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91Profitability Analysis Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . 93Other Analysis Ratios: Capital Market or ShareholderReturns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95Methods of Ratio or Measure Comparison . . . . . . . . . . . . . . 98Consolidation and Segmented Analysis . . . . . . . . . . . . . . . . 102Case Study: FRSA of the Three Large North AmericanWarehouse Clubs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104Chapter 7Five Forces Industry Analysis . . . . . . . . . . . . . . . . . . . . . .109Description and Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109Threat of New Entrants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111Bargaining Power of Suppliers . . . . . . . . . . . . . . . . . . . . . . . 112Bargaining Power of Buyers . . . . . . . . . . . . . . . . . . . . . . . . . 113Threat of Substitute Products or Services . . . . . . . . . . . . . . 114Degree of Rivalry Among Existing Players. . . . . . . . . . . . . . 115Strengths. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117How to Do It . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118Case Study: Applying the Five Forces Modelto the U.S. Passenger Airline Industry . . . . . . . . . . . . . . . . . 120Case Study: Applying the Five Forces Modelto the Global Pharmaceutical Industry . . . . . . . . . . . . . . . . . 123
CONTENTSviiChapter 8Issue Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .127Description and Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127Strengths. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130How to Do It . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131Examples of Issue Analysis in Practice . . . . . . . . . . . . . . . . . 144Chapter 9Product Life Cycle Analysis . . . . . . . . . . . . . . . . . . . . . . . .147Description and Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147Strengths. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157How to Do It . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158Case Study: Apple’s Product Life Cycles andGrowth Potential from the iPod to the iPad . . . . . . . . . . . . . 163Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165Chapter 10Scenario Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .167Description and Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167Methods for Generating Scenarios . . . . . . . . . . . . . . . . . . . . 168Strengths. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173How to Do It . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174Case Study: Scenarios for Traditional andEmerging Forest Products Enterprises . . . . . . . . . . . . . . . . 179Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184Chapter 11Macroenvironmental(STEEP/PEST) Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . .187Description and Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187Strengths. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192How to Do It . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193Case Study: STEEP Analysis of the Life and Deathof Brands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197Chapter 12SWOT Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .199Description and Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199Strengths. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202
viiiANALYSIS WITHOUT PARALYSISHow to Do It . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204Case Study: Lockheed Martin Corporation . . . . . . . . . . . . . 213Endnote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222Chapter 13Value Chain Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . .223Description and Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223Strengths. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230How to Do It . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231Case Study: Value Chain Analysis of Walmart Stores . . . . . 242Chapter 14Win/Loss Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .249Description and Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249Strengths. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250Weaknesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252How to Do It . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254Win/Loss Case Study: Email Marketing Solutions. . . . . . . . 260Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 263
AcknowledgmentsTo write this book I had to stand on the shoulders of many. Mycoauthor, Craig Fleisher, gave me so much support and understanding during my moments of crisis. My wonderful husband’s patience,nurturing, and understanding provided a safe space for me to work.My family and dear friends understood the many times I was not therefor them while completing this book. To the many broad shouldersat Pearson, thank you for making this book happen and, to JeanneGlasser, for asking us to do it again. We could not have done it withoutyou.Finally, I would like to thank my many clients and colleagues forthe challenges and questioning that made me realize there had to bea simpler way to do business analysis without being left in a state ofparalysis. I hope this little book provides you with the necessary toolsto solve some of your problems.—Babette BensoussanI would like to express my gratitude to my longtime coauthor andfriend, Babette Bensoussan, for her thoughtful work toward realizingthis book. I also want to thank my family members, friends, and colleagues for their patience and understanding while I was completingthe book. My former outstanding BBA student and mentee DarbyE. Chancey gets my special appreciation for being a great help withreviewing and adding useful ideas to several chapters, as well as BBAstudent Jason Grooms, my spring semester 2012 intern. I also wantto thank individuals at several universities who have worked withand supported me. They include the Leicester Business School–DeMontfort University (UK) and my good friend Dr. Sheila Wright, withwhom I have supervised several doctoral students as well as numerousresearch projects, and Tampere University of Technology (Finland)and Professor Mika Hannula, who is Dean of the Faculty of Businessand Technology Management. There I am a docent and also supportstudents in the doctoral program. Jeanne Glasser and her efficient
xANALYSIS WITHOUT PARALYSISPearson colleagues and staff have also been helpful throughout thiseffort. Last, but not least, I want to thank my outstanding colleaguesat Aurora WDC, particularly Arik and Derek Johnson, who often haveto put up with my working many late hours completing books like thisone.—Dr. Craig S. FleisherMany of the techniques described in this book were conceptualized by leading economists, financial and cost accountants, futurists,business professors, consultants, and other insightful practitionersor scholars. They often developed their ideas to solve pressing analytical problems they faced. We are grateful to these individuals forincreasing our understanding of business, competitive, and strategicanalysis. We have made a sincere effort to acknowledge the originators of these techniques in this book. Nevertheless, sometimes accurately making this acknowledgment can be difficult, such as when thetechnique (for example, SWOT) was quickly and widely accepted andcame to form the commonly held body of knowledge underlying organizational decision-making.
About the AuthorsBabette E. Bensoussan is Managing Director of the MindShiftsGroup, a consulting firm specializing in strategy and competition inthe Australasia region. She is widely recognized and sought after forher international expertise in competitive analysis. She has mentoredand trained executives and organizations to deliver and implementcompetitive analysis and competitive intelligence programs. She hasundertaken over 300 major studies and undertaken consulting forAustralian and global Fortune 500 companies as well as SMEs in strategic business and marketing planning, competitive intelligence, andstrategic analysis.She is a Fellow and a Meritorious Award winner of the international association of Strategic and Competitive Intelligence Professionals (SCIP). She has taught competitive intelligence in undergraduatebusiness and MBA programs at universities in Australia and China.She is an adjunct professor at the School of Business, University ofTechnology, Sydney.She has published numerous articles on strategic planning, competitive intelligence, and strategic marketing, and is an invited speakerand guest lecturer both domestically and internationally. She is thecoauthor of five books on business strategy, competition, and analysis. Her first two books, Strategic and Competitive Analysis (PrenticeHall, 2003) and Business and Competitive Analysis (FT Press, 2007),have been the top-selling books in this field and have been translatedinto multiple languages.Craig S. Fleisher, Ph.D., is the Chief Learning Officer andDirector of Professional Development at Aurora WDC, Madison,Wisconsin, a leading professional services firm in the intelligence field.A former dean at two business schools, university research chair, andfull professor, he is widely considered to be the “Dean of IntelligenceAnalysis.” He has won several outstanding professor, book, research,and speaking awards and was recognized as one of Canada’s top MBAprofessors by Canadian Business. He is a docent of the graduate Faculty of Business and Technology Management at Tampere University
xiiANALYSIS WITHOUT PARALYSISof Technology (Finland) and is a member of the Executive MScomgraduate faculty at Università della Svizzera italiana (Switzerland). Hehas held or holds adjunct positions at leading universities in Australia,Canada, New Zealand, South Africa, the United Kingdom, and theU.S. His PhD is from the Katz Graduate School of Business, University of Pittsburgh.A contributing member of various association, corporate, andjournal editorial boards, he is a past President, Chapter director,Meritorious Award winner, and Fellow of the international association of Strategic and Competitive Intelligence Professionals (SCIP).He was founder and inaugural chair of the Board of Trustees of theCompetitive Intelligence Foundation (Washington, DC), editor ofthe Journal of Competitive Intelligence and Management, and founding member of the International Association of Business and Society. He was recognized as an Advisor of the Year in Canada by theGolden Key International Honor Society. A highly cited expert, he hasauthored, coauthored, or edited 10 books (several have had multipletranslations) and over 100 articles and chapters in the areas of appliedstrategy, competitive intelligence and analysis, and performance management. A well-traveled keynoter, speaker, and workshop leader, heregularly advises leading global companies, associations, and publicsector agencies on competition and strategy.
1The Role of Analysisin Business ManagementHow many pilots can fly their planes without receiving signalsabout what lies in front of them, how fast they are going, what theweather conditions are, and how well their airplane is performing?How many generals would lead their armies into battle without having first scouted the terrain, acknowledged the enemy, understoodtheir own and rivals’ forces, and thought about the moves and countermoves they and their opponents might make? The answer to thosetwo questions should be “very few.” Yet, how many business executives are surprised by new competitive strategies and tactics, do notunderstand why their organizations are losing, or make poor decisionsdue to the absence of key information or insights? If you go by thenumber of examples that are offered up every day in the businessmedia, the answer is “far too many.”In today’s information age, businesspeople must increasingly beable to make sense of their competition, environments, organizations,and strategies to be successful. Analysis, the way we approach it in thisbook, is a sense-making activity. Successful analysts generate actionable, relevant, and timely insights and give that sense (sense-giving) toothers, who act on it to create a more desirable future for their organization. In essence, an analyst defines and produces a better futurereality (insights) for clients (executives) whose decisions will create it.Business management is a way of conducting an organization. Itsobjective is to develop valu
Analysis Without Paralysis 12 Tools to Make Better Strategic Decisions Babette E. Bensoussan Craig S. Fleisher
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EUROPEAN BANKING SYSTEM DECEMBER 2020. RISK SSESSMENT TE EREN NKIN SSTEM 3 Contents Abbreviations 8 Executive summary 10 Introduction 12 1. Macroeconomic environment and market sentiment 13 2. Asset side 22 2.1. Assets: volume and composition 22 2.2. Asset-quality trends 32 3. Liability side: funding and liquidity 44 3.1. Funding 44 3.2. Liquidity 52 4. Capital 57 5. Profitability 65 6 .
