Gallup Final
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Transcript of Gallup Final
Presented by:TarinPunda Pantharee Panthira
Company Background
Situation Analysis
Issues and objectives
Recommendation
Financial Forecast
Key Success Factors
Conclusion
Today’s Agenda
Company Background
•Started off as a polling and market research company•Financially healthy
- 15% revenue growth per year- $200 million worldwide (2000)
•Revenue breakdown- 55% market research- 15% employee selection and development research- 22% management/leadership development- 7% consulting- 1% Gallup Poll
•Focus on serving large clients
•Core Competencies- research-based services- management program tailor down to individual level
Situation Analysis
•Recently entered two new markets- HR management consulting- training/development
•Competes in 4 markets
Market Research
Training/Development
Pure MGT Consulting
HR Consulting
Measuring all internal and external factors
Building engaging cultures
• Research-based Tailor to individualsTo find strengths
Trend: Replacement of Research with HR Consulting and Training
Growth: 107%
Growth: 5% Growth: 14%
Growth: 14%
Situation Analysis
Where We want to be
At Present
$200 million in revenues
Where We want to be
At Present
Achieve $1 Billion RevenuesWithin 5 years
Situation Analysis
Where We want to be
At Present
Situation Analysis
•Achieve 20% sales growth annually •Build a sustainable business around Gallup’s
core competencies
Where We want to be
At Present
Issues Identification
•Current core competencies fit with existing business model•Foundation supporting sustainable profitability•New Opportunities for revenue enhancement
Issues At Hand
Segment Analysis
Training/Development
HR Consulting
Researc
h
Customer Looking for one-stop serviceAnd value added service
HR Consulting& Training/Developmentgrew out of research modules
Leverage on existing product
Core Competency ‘fit’
Complementary Portfolio
A Closer Look at Each Segment
Segment Analysis
Training/Development
HR Consulting
Industry Growth
Firm Growth
MarketResearch
20.49% 10.21%
13.67% 5.19%107%
NA
A Closer Look at Each Segment
HR Consulting-High Industry Growth & moderate firm growthTraining/Development-High firm growth
Revenue GrowthS
eg
men
ts
Promising Segments
High Medium Low
Hig
hM
ed
ium
Lo
w
Training/Development
HRConsulting
Pure MgtConsultingC
om
peti
tive S
tren
gth
Market Attractiveness
Market Research
Mckinsey/GE Matrix
Strategic Unit Analysis
Strategy Overview
Intermediate-term
Short-term
II. Revenue Enhancement
I. Lean Organization
Strategy I: Lean Organization
Objective: Build strong foundation in order to achieve sustainable growth
•Identify best and worst performers(by net income % change)
•Liquidate worst performers and shift funding to best performers
America
Best PerformerLos AngelesWorst PerformersLincolnAssociate (Martin)
Strategy I: Lean Organization
Objective: Build strong foundation in order to achieve sustainable growth
•Identify best and worst performers(by net income % change)
•Liquidate worst performers and shift funding to best performers
Latin AmericaBest PerformerVenezuellaBrazilWorst PerformersChilleArgentina
Strategy I: Lean Organization
Objective: Build strong foundation in order to achieve sustainable growth
•Identify best and worst performers(by net income % change)
•Liquidate worst performers and shift funding to best performers
EuropeBest PerformerHungaryWorst PerformersLithuniaPolandCzech
Strategy I: Lean Organization
Objective: Build strong foundation in order to achieve sustainable growth
•Identify best and worst performers(by net income % change)
•Liquidate worst performers and shift funding to best performers
AsiaBest PerformerJapanChinaSingaporeThailandWorst PerformersIndiaIsrael
ResultMore efficient allocation of fund and better focused on maximizing growth
Total8 best performers identified9 worst performers identified
Strategy II: Revenue Enhancement
Increase Customer Base
Increase Revenue
/customer
Objective: maximize revenue by taking advantage of the opportunities of internet and leveraging existing products
Capitalize Internet Growth: Training Segment
• High Growth Potential (50-100%)• Minimal Costs• Scaleable program larger customer base
RationaleMarketing
CommunicationTarget
Customers
Capitalize Internet Growth
Objective: maximize revenue by taking advantage of the opportunities of internet and leveraging existing products
• Product Specification: basic, initial development modules• Suitable for preliminary development or if classroom training not affordable Primary Target: Small-to-Medium Businesses
RationaleMarketing
CommunicationTarget
Customers
Strategy II: Revenue Enhancement
Increase Customer Base
Increase Revenue
/customer
Capitalize Internet Growth
Objective: maximize revenue by taking advantage of the opportunities of internet and leveraging existing products
•Mass Marketing Strategies: - reach Small-to-Medium businesses• New Product Communications:
- Trade/Business Publications(along with existing marketing communication.)
RationaleMarketing
CommunicationTarget
Customers
Strategy II: Revenue Enhancement
Increase Customer Base
Increase Revenue
/customer
Strategy II: Revenue Enhancement
Objective: maximize revenue by taking advantage of the opportunities of internet and leveraging existing products
Enter Market Consulting Segment
•Research done relates to understanding of customers •Ability to consult based on research findings •Leveraging existing product and core competency•“Consumer Insights consulting”
Increase Customer Base
Increase Revenue
/customer
Time Line
2000 2001 2002 2003 2004 2005Activities
Marketing Communication
I. Short-TermLean Organization
II. Intermediate-TermA. Capitalize Internet Growth
B. Enter Market Consulting
Identify Target Group and Develop Marketing Strategies
A. Liquidate Worst Performers
B. Invest in BestPerformers
Recommendation1 Capital Expenditure in high potential area 15,000Lean StrategyRecommedation 2 Marketing Expense Revenue enhancement Trade Publication
(specific publishing for each industries) 7,500Business Magazines 7,500Internet Advertising 5,000
Total 35,000
ESTIMATED COST
Financial Justification
Figures in 1000$
• Debt financing for CAPEX– in total amount of $15 million
• Finance marketing expenditure by internally generated funds
How to finance our expenditure?
Sales
0
100,000
200,000
300,000
400,000
500,000
1998 1999 2000F 2001F 2002F 2003F 2004F
Year
Sal
es (
$000
's)
Sales
Sales
Net Income
CAGR (Compounded Annual Growth Rate)19.79%
9%
Income
0
5,000
10,000
15,000
20,000
1998 1999 2000F 2001F 2002F 2003F 2004F
Year
Net
In
com
e ($
oo
o's
)
Income
Sales
0
100,000
200,000
300,000
400,000
500,000
1998 1999 2000F 2001F 2002F 2003F 2004F
Year
Sal
es (
$000
's)
Sales
Sales
Net Income
CAGR (Compounded Annual Growth Rate)19.79%
9%
Lean organization
Revenue Enhancement
Income
0
5,000
10,000
15,000
20,000
1998 1999 2000F 2001F 2002F 2003F 2004F
Year
Net
In
com
e ($
oo
o's
)
Income
Marketing SpendingRevenue Enhancement
Lean organization
NPV = $156,212,000
Key Success Factors
Core Competency
Fit
OperationalEfficiency
CapitalizeOpportunities
SustainableBusiness
Issues Are SolvedIssues At Hand
•Core competencies fit with business model
•Foundation supporting sustainable profitability
•New Opportunities forrevenue enhancement
Proposed Strategies
Strategic Direction-HR Consulting, Training/Development,Market Research
Lean Organization-Liquidate worst performers & invest in best performers
A. Capitalize Internet Growth-Increase customer base
B. Enter Market Consulting-Increase sales per customer-completes Gallup path
Objective• Achieve 20% sales growth annually •Build a sustainable business around Gallup’s core competencies
Preliminary Analysis
Q & A Session
Back-up
SWOT AnalysisStrengths:•Research-based•Integrated Services•Services Tailor to individual•Gallup Poll brand reputationWeaknesses:Limited Area of ExpertiseThreats:Competition from pure management ConsultingOpportunities:•Internet Growth•Enter New Markets•Small Client
Internal to OrganizationCurrent Services
- Research Modules- Consulting & Training
Market RelatedCurrent Service
- Research
Market Consulting Will “Completes the Gallup Path”
Why Enter Market Consulting?
Results: Increase Revenue Per Customer Become more competitive on overall strategy consulting
Segment Analysis
Segment Differentiation Point
Competitors Disadvantages
Market Research Measuring and making sense of both internal and external market variables
•One measure at a time•Less integrated
None
Pure MGT Consulting
Research-based approach
Rely on secondary, theory, conventional thinking, and anecdotal evidence
• No Operations consulting• Narrow Strategy (people & market based)
HR Consulting • Financial Incentives not long-term drivers• Focus on creating engaging cultures
Mostly focused on pay and benefits consulting
None
Training Focus on individual Strengths development
Training can provide any reasonably talented person to become productive
Limited to framework of finding strengths
Region Analysis
Region E1998 E1999 % change Worst performer E1998 E1999 % Change Highest performer E1998 E1999 % ChangeUSA 13577 16933 24.72% Lincoln 2209 812 -63.24% Los Angeles 549 2790 408.20%
Associate (Martin) 3913 70 -98.21% Citibank (Emond) 570 1308 129.47%Education 345 978 183.48%
Latin America -161 147 191.30% Argentina -10 -30 -200.00% Venezuela -339 4 101.18%Chile -156 -290 -85.90% Brazil -149 58 138.93%
Europe -2491 -1975 20.71% Lithunia 8 -10 -225.00% Hungary -163 260 259.51%Poland -2 -45 -2150.00%Czech -2 -25 -1150.00%
Asia 12 727 5958.33% India -7 -19 -171.43% Japan 181 347 91.71%Israel 0 -327 #DIV/0! China 66 123 86.36%
Singapore 71 284 300.00%Thailand -186 -101 45.70%
Lean Organization: Regional Analysis
Cost of Capital
Cost of debt (average) 7.98%Cost of Equity 15.00%Debt ratio 0.6824Tax 35.99%WACC 8.25%
Cost of Capital
Revenue Proportion
2000 2004FTraining 22% 64.95%Mgt consulting 22% 14.03%Marketing research 55% 20.51%Gallup Poll 1% 0.51%
Industry Growth Assumption
Industry Competitors 1-Yr. Sales Growth Sales weighedMarket Research Taylor Nelson 8.50% 615.7 1.06%total sales AC Nielsen 7.00% 1525.4 2.15%
4957.5 Market Facts 36.40% 136.5 1.00%10.21% Maritz 1.40% 2200 0.62%
JD Power 2.40% 175 0.08%NPD 127.30% 135 3.47%Opinion Research Corporation 43.10% 118.6 1.03%Harris 76.90% 51.3 0.80%
HRM Consulting Towers Perrin n/a 1125 n/a1699.6 Hewitt 25.30% 1075 16.00%
20.49% Watson-Wyatt 12.20% 624.6 4.48%
Pure Management Consulting McKinsey 13.60% 2500 0.46%73589.3 Booz Allen Hamilton 14.30% 1600 0.31%12.73% Ranaissance -4.30% 742.6 -0.04%
Boston Consulting Group 11.50% 730 0.11%Arthur D. Little 3.20% 608 0.03%Bain 3.90% 498.7 0.03%Anderson Consulting 17.30% 16300 3.83%Price Waterhouse Coopers 2.00% 15300 0.42%KPMG 15.10% 12200 2.50%Ernst & Young 14.80% 12510 2.52%Deloitte Touche Tohmatsu 17.80% 10600 2.56%
Training and Development n/a n/a
Result of debt financing
Debt Ratio Before 68.14%After 83.19%