某咨询分析方法rosrms2cjdk.pptx

《某咨询分析方法rosrms2cjdk.pptx》由会员分享，可在线阅读，更多相关《某咨询分析方法rosrms2cjdk.pptx（50页珍藏版）》请在淘文阁 - 分享文档赚钱的网站上搜索。

1、 Author:Gisele GarrawayROS/RMSMarch 19981ROS/RMSBOS Agenda ROS/RMS overviewApplicationsROS/RMS stepsClient exampleswireless infrastructuredrug retailingChallengesKey takeaways2ROS/RMSBOS Agenda ROS/RMS overviewApplicationsROS/RMS stepsClient exampleswireless infrastructuredrug retailingChallengesKey

2、 takeaways3ROS/RMSBOS ROS/RMS GraphROS/RMS is a diagnostic tool used to compare a business units actual profitability to its potential profitability.0%5%10%15%20%25%30%0.1 0.2 0.5 1 2 5DunsterEliotCurrierCabotProfitability$150MMRevenueNormative band(Predicted potential profitability)Relative Market

3、Share4ROS/RMSBOS ROS/RMS Components What is measured:How it is measured?Scale:There are three main components of an ROS/RMS graph:profitability,relative market share and the normative band.*This tool is typically called ROS/RMS since ROS is the most common profitability measure used*Allows for easy

4、viewing of a doubling in relative market shareProfitability(y-axis)Current profitabilityreturn on capital employed return on equityreturn on assets return on sales*LinearRMS(x-axis)Accumulated experience and strategic positionRelative market share(RMS)Logarithmic*Normative band Range of predicted pr

5、ofitability Plus and minus one standard deviation from regression line-5ROS/RMSBOS ROS/RMS Relationship Companies with higher relative market share tend to have more accumulated experience.Higher accumulated experience gives the potential for lower costs and higher profitability.Higher accumulated e

6、xperience is positively correlated with RMSHigher accumulated experience provides an opportunity for lower costs and higher profitsRMS is a proxy for accumulated experience.RMS is positively correlated with profitabilityAccumulated ExperienceRMSRMSProfitabilityAccumulated ExperienceCost per unit6ROS

7、/RMSBOS Importance of Market ShareSource:PIMS(Data from 1970 to the present of 3,200 businesses-66%manufacturing,20%consumer businesses,14%services)Using relative market share as a predictor of profitability is supported by empirical evidence.The PIMS database demonstrates that,on average,across ind

8、ustries,companies with greater market share have higher profitability.7ROS/RMSBOS Agenda ROS/RMS overviewApplicationsROS/RMS stepsClient exampleswireless infrastructuredrug retailingChallengesKey takeaways8ROS/RMSBOS ApplicationsBain has used ROS/RMS effectively for many clients.Examples of Bain wor

9、k are:Computers&Office EquipmentElectric&Power EquipmentSituation:Result:A major PC manufacturer recently suffered significant operating losses and was experiencing severe cash flow problems An electric&power equipment company was evaluating a manufacturer of discrete semiconductors for purchase.The

10、 client was concerned about industry cyclicality and whether the targets profit margins were unsustainably highBain used ROS/RMS analysis to examine the PC industry and found that moving the client into the normative band through operational improvements would result in a$174MM profit before tax imp

11、rovementRMS/ROS analysis revealed that the targets margins reflected its market share position and accumulated experience and were therefore sustainable;the targets high RMS helped drive EBIT margins in excess of 20%9ROS/RMSBOS Agenda ROS/RMS overviewApplicationsROS/RMS stepsClient exampleswireless

12、infrastructuredrug retailingChallengesKey takeaways10ROS/RMSBOS ROS/RMS Steps There are five basic steps involved in ROS/RMS analysis:Define the businessCalculate profitabilityCalculate relative market sharesDraw normative bandDetermine action implicationsKey Success FactorsDetermine the economic bo

13、undaries of the businessIdentify relevant competitorsAchieve comparability across competitorsInclude any shared experienceIf business is local or regional,weight market sharesCalculate the normative band using regression analysisDetermine if strategic or operational improvements are required11ROS/RM

14、SBOS ROS/RMS StepsDefine the businessCalculate profitabilityCalculate relative market sharesDraw normative bandDetermine action implicationsDetermine the economic boundaries of the businessIdentify relevant competitorsKey Success Factors12ROS/RMSBOS Defining the Business Effective ROS/RMS analysis d

15、epends on correctly defining the economic boundaries of a business.Cost sharing and customer sharing are the primary determinants of business definition.HighCost sharingLowLow High Customer sharingOne business(charge cards and credit cards)One business with potential for differentiation or niche pos

16、ition(Cross pens and BIC pens)Separate business with potential for cost leadership(oil and refinery by-products)Separate businesses(beer and distilled spirits)Separate businesses with potential for bundling(touring quality microphones and speakers)One business with potential for substitution(milk ca

17、rtons and glass milk bottles)13ROS/RMSBOS Correct Market Share Measure*Statistical market areasDetermining whether a business is local,regional,or national is also important.Incorrectly defined businessNational discount department store Correctly defined business Regional discount department stores

18、0.31 0.96 R-squared:When business definition is correct,there is a meaningful predictive relationship14ROS/RMSBOS Relevant Competitors-Incorrect Business Definition An incorrect business definition may exclude relevant competitors from ROS/RMS analysis.National Textile LaunderingIt appears Gibb has

19、three major competitors and is underperforming15ROS/RMSBOS Relevant Competitors-Correct Business Definition Regional healthcare laundering Regional industrial launderingGibb has six competitors.Gibb is in three separate businesses,all of which are regional.The correct business definition will ensure

20、 that all relevant competitors are considered.Regional linen laundering16ROS/RMSBOS ROS/RMS Steps Define the businessCalculate profitabilityCalculate relative market sharesDraw normative bandDetermine action implicationsKey Success FactorsAchieve comparability across competitors17ROS/RMSBOS Net inco

21、me after taxSalesAfter tax operating profitAverage assetsNet income after taxesAverage equityNet income after taxesCapital employed*Pre-tax profitability measures are preferable because they exclude any firm-specific tax issuesROCE(Return on capital employed)ROE(Return on equity)Disadvantages:Diffic

22、ult to make comparable across companiesDifficult to make comparable across companiesNot always clear which asset measures to use(Book value?Before depreciation or after?)ROA(Return on assets)Advantages:Best proxy for return on investmentsBest proxy for return on shareholders investmentsEasy to colle

23、ct comparable measures across competitorsBain example:Drug store chains Retail department storesBeverage industryCalculation:*ROS(Return on sales)The profitability measure used varies from case to case.The key is to use a measure that will allow for an apples-to-apples comparison across relevant com

24、petitors.Eliminates the effects of how assets are financedResults are sometimes unclear when some competitors command a large price premiumBuilding productsCalculating Profitability18ROS/RMSBOS ROS/RMS Steps Define the businessCalculate profitabilityCalculate relative market sharesDraw normative ban

25、dDetermine action implicationsKey Success FactorsInclude any shared experienceIf business is local or regional,weight market shares19ROS/RMSBOS Calculating Relative Market Share*Revenues or points of share can be used when units are not available.The relative market share for the market leader is ca

26、lculated in relation to the#2 player;the RMS for all other players is calculated in relation to the market leader.Leaders RMS:Any other players RMS:Market leaders units sold#2 players units soldOther players units soldMarket leaders units soldIt is preferable to use units*instead of revenue since we

27、 believe accumulated units of experience drive the potential for higher relative profitability20ROS/RMSBOS Shared Experience(1 of 2)When potential shared experience is ignored,the predictive power of ROS/RMS is limited.In this example,market share in outboard motors does not explain profitability.21

28、ROS/RMSBOS Shared Experience(2 of 2)When the benefits of shared experience with lawnmowers and motorcycles is included,a positive correlation appears.Worldwide Relative Market Share of Outboards,Including Shared Experience With Motorcycles and LawnmowersPretax Return on Capital6x 5 4 3 2 1.5 1 0.7 0

29、.5 0.4 0.3 0.2 0.180%60%40%20%0%(20%)(40%)YamahaOMCMercuryChryslerOutboard Motors volume 22ROS/RMSBOS ROS/RMS Steps Define the businessCalculate profitabilityCalculate relative market sharesDraw normative bandDetermine action implicationsKey Success FactorsCalculate the normative normative band usin

30、g regression analysis23ROS/RMSBOS Drawing the Normative Band(1 of 2)*The Bain Graphics Wizard draws the normative band automatically when the RMS and ROS data points are given.It will not however,calculate an R2The first step in drawing the normative band is to run a regression on ROS and the log of

31、 RMS.We then calculate the best fit,or regression line.CompetitorUnits(MM)RMS In(RMS)CannonCastleHolmesPeabody4,9603,4002,1786,2000.800.550.351.25-0.22-0.60-1.05-0.22Multiple RR squareAdjusted R squareStandard errorObservations0.7412980.5495230.3993630.399363 Intercept 0.1145 X-variable 1Coefficient

32、sStandard errorT-statP-value0.0154 7.45 0.0050.04650.0243 1.1913 0.152Regression statistics5ROS12.3%10.8%4.5%10.5%Whitman 3,182 0.51-0.67 8.4%Regression output(from Excel)Y=mx+bROS=0.0465(ln RMS)+0.1145Best Fit Line24ROS/RMSBOS Drawing the Normative Band(2 of 2)RMSOne standard deviationThe normative

33、 band is drawn by applying plus or minus one standard deviation to the best fit line.ProfitabilityBest fit line(regression line)Where,n=number of observationsx=observed valuem=mean=1n-1ni=1(Xi-m)25ROS/RMSBOS Normative BandThe Bain Graphics Wizard will draw a normative band automatically based on the

34、 input values of ROS and RMS.26ROS/RMSBOS Adjusted Normative BandIf we believe that a player has mismanaged its costs and has not gotten the full benefits of its experience,we can exclude it from the calculation of the normative band.*The resulting normative band will be more narrow.*In the Wizard,g

35、o to the“Series”menu and select“remove series from normative band.”27ROS/RMSBOS ROS/RMS Steps Define the businessCalculate profitabilityCalculate relative market sharesDraw normative bandDetermine action implicationsKey Success FactorsDetermine if strategic or operational improvements are required28

36、ROS/RMSBOS Action Implications A firms position on the ROS/RMS graph helps case teams to determine whether a business should pursue strategic positioning or operational improvements.Examples:Suggested actions:Peabody is below the normative band;its profitability is low given its relative market shar

37、eCost reduction strategyBlandford can improve its profitability if it increases its market share and captures experience benefitsGrowth strategyMergers and acquisitionsOperational Improvement Strategic Positioning29ROS/RMSBOS Agenda ROS/RMS overviewApplicationsROS/RMS stepsClient exampleswireless in

38、frastructuredrug retailingChallengesKey takeaways30ROS/RMSBOS LAGTEL*-Background*Disguised client caseSituation:LAGTEL is a$6B telecom player.Wireless infrastructure is a$2B business unit of LAGTEL,and it is the only“star”business in LAGTELs portfolio.All other business units are dogs.Complication:T

39、he wireless infrastructure divisions profitability is falling amid rising overcapacity in North America.Management expects that the over-capacity will continue to drive prices downward.Moreover,LAGTELs returns are 2%while four competitors earn in excess of 10%operating marginsQuestion:How can LAGTEL

40、 improve its long-term profitability?Bain used ROS/RMS analysis to develop a strategy for a wireless telecommunications business.31ROS/RMSBOS Source:Natwest Securities;CS First Boston;Killen&Associates;Wireless Operating Plan25%20%15%10%5%0%(5%)(10%).1.2.3.5 1 1.5 2 5 10 20LAGTELCallumsE-telLuciaAll

41、iance$2B1995 Wireless Infrastructure revenue Relative Market Share(Total Telecom)Operating Profit MarginTelcoThe profitability vs.overall scale did not demonstrate or clear normative band.LAGTEL-Background32ROS/RMSBOS LAGTEL-Wireless RMSSource:Natwest Securities;CS First Boston;Killen&Associates;Wir

42、eless Operating PlanThe team“peeled the onion”and found a stronger relationship between wireless only RMS and wireless infrastructure profitability.$2B1995 Wireless Infrastructure Revenue25%20%15%10%5%0%(5%)(10%).1.2.3.5 1 1.5 2 5 10LuciaAllianceE-telTelcoLAGTELCallumsRelative Market Share(Wireless)

43、Operating Profit MarginBilltelR=0.5233ROS/RMSBOS LAGTEL-Technology-Weighted RMS*Weighted by manufacturer revenue by technologyWhen RMS was adjusted for the mix of wireless technology,an even stronger relationship appeared.LAGTELs profitability was low considering its share,and LAGTEL was considerabl

44、y behind four key competitors.$2B1995 Wireless Infrastructure Revenue Source:Natwest Securities;CS First Boston;Killen&Associates;Wireless Operating Plan20%15%10%5%0%(5%)(10%).2.3.5 1 1.5 2 5 10LuciaE-telAllianceTelcoLAGTELCallumsBilltel.1Technology-weighted RMS*Operating Profit MarginR=0.7334ROS/RM

45、SBOS LAGTEL-Strategic Recommendation*Weighted by manufacturer revenue by technologyAfter additional competitor analysis,the team recommended a possible merger with one of the top four players to improve LAGTELs profitability.$2B1995 Wireless Infrastructure Revenue Source:Natwest Securities;CS First

46、Boston;Killen&Associates;Wireless Operating Plan20%15%10%5%0%(5%)(10%).2.3.5 1 1.5 2 5 10LuciaE-telAllianceTelcoCallumsBilltel.1Technology-weighted RMS*Operating Profit MarginLAGTEL(current)LAGTEL(projected)R=0.7335ROS/RMSBOS LAGTEL-Regression Predicted Synergy Values Source:Bain ROS/RMS Regression

47、ModelThe team used the ROS/RMS regression to predict the synergy value of possible competitor combinations.The synergy values ranged from$1.2B to$2.3B.36ROS/RMSBOS Agenda ROS/RMS overviewApplicationsROS/RMS stepsClient exampleswireless infrastructuredrug retailingChallengesKey takeaways37ROS/RMSBOS

48、Pillz*-Background*Disguised client exampleSituation:Complication:Pillz is a leading retailer of pharmaceuticals in Canada.It participates in the sale of prescriptions and over-the-counter drugs in traditional drug stores.Pillzs management has asked Bain to assist in repositioning Pillz to become the

49、 most profitable drug retailer in North AmericaPillzs dominance is being threatened by the entry of non-traditional competitors including food retailers and mass merchantsBain used ROS/RMS analysis to understand the profitability potential of a Canadian drug store retail chain.38ROS/RMSBOS Pillz-Ind

50、ustry ROS/RMS The Bain team identified two normative bands:one for food/drug combos and discount merchandisers and another for traditional drug stores.Source:IMS,Chain Store Guide,annual reports,Pillz internal data(5%)(3%)(1%)1%3%5%7%8%Regional ROS0.2 0.4 1.0 2.0 4.0 10.0Regional RMS$500M revenue LD