The Challenge
What is strategy development? At its most basic level, the definition is incredibly simple. It's determining what products your company is going to sell and how it is going provide them. But, how you answer the questions matters significantly. Attention needs to be paid to the drivers that dramatically impact profitability.

• Industry: Some companies have already made the decision of what industry to operate within. But, for young companies, or companies wishing to reinvent themselves, or companies that are diversifying, the question is important. The answer matters. For example, a retailer with $800M in revenues would probably have a market cap of $400M if it was a grocery chain vs $1 billion if it were a drugstore chain (e.g., CVS).
  
  
• Industry Sub-Market: The decision to operate in a particular industry is typically too broad. A more specific focus is often appropriate. For example, networking company Cisco focused primarily on routers rather than the more commodity-oriented products like hubs and PC cards. As a result, Cisco has 60% gross margins and a price-to-sales ratio of 5.8 compared to 3Com's 37% gross margins and 1.3 price-to-sales ratio.
  
  
• Industry Role: Is it best to be the company that makes the product, sells the product, installs the products, supports the product, provides some other role, or does it all? It's a question that companies in all industries should consider because it also impacts profitability and financial performance. For example, service companies like Accenture that make money recommending and deploying CRM solutions have price-to-sales ratios around 1.5 vs CRM software companies like Siebel Systems that have price-to-sales ratios around 6.
  
  
• Unfair Advantage: Much of a company's financial performance will be determined by overall performance of the industry, the industry sub-market, and the role they choose. But, companies can differentiate themselves from the "average" by finding ways to secure an unfair advantage over the competition. Wal-Mart has successfully achieved a 4.5% cost advantage by gaining sustainable advantages in distribution costs, real estate costs, inventory management, payroll and advertising expense. This "small" advantage drops an additional $10 billion to Wal-Mart's bottom line. This cost advantage enables Wal-Mart to successful fight competition and expand rapidly - providing even more fuel to its cost advantage.

The Solution
Accèvero Group can help your company craft a strategy that focuses on the most financially attractive opportunities. Typical activities in a Market Focus project include:

• Evaluating attractiveness of markets currently targeted and markets being considered
• Analyzing customer needs and competitor activity
• Identifying requirements and success factors for serving each market
  
• Evaluating your company's ability to execute against each success factor
• Recommending ways to close any executional "gaps"

Projects are always custom-tailored and, depending on client needs, can range in scope from a detailed financial analysis of various markets to a "quick and dirty" review of current and potential markets. Review a case study or contact us about your specific needs.

The Benefits
Client benefits typically include:

• Knowing whether your company should be focusing its resources on other markets
• Understanding how to win in its selected markets