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LOYOLA UNIVERSITY GRADUATE SCHOOL OF BUSINESS ISOM 799 High-Tech Strategy & Business Development Spring Quarter, 2000 Growth Driver Analysis & Management.

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Presentation on theme: "LOYOLA UNIVERSITY GRADUATE SCHOOL OF BUSINESS ISOM 799 High-Tech Strategy & Business Development Spring Quarter, 2000 Growth Driver Analysis & Management."— Presentation transcript:

1 LOYOLA UNIVERSITY GRADUATE SCHOOL OF BUSINESS ISOM 799 High-Tech Strategy & Business Development Spring Quarter, 2000 Growth Driver Analysis & Management

2 Copyright © 1999-2000, Mark Bills Associates, Inc. All rights reserved. Growth Drivers Refer to the Dynamic Interactions Between Members of a Value Web That Result in a Set of Mutually Reinforcing Actions That Benefit Each Participant. Core Products Channels Customers Complementary Products Business Unit Growth Drivers Interact to Create Increasing Returns Active Management of Growth Drivers is Key to Rapid and Sustained Growth

3 Copyright © 1999-2000, Mark Bills Associates, Inc. All rights reserved. Potential Growth Drivers are Found Throughout the Value Web uBusiness Unit –Buyer Power uCore Product –Scale uComplementary Service Providers –Web Attractiveness uChannels –Attractiveness –Market Power uCustomers –Network Effects –Learning Effects A Few Examples...

4 Copyright © 1999-2000, Mark Bills Associates, Inc. All rights reserved. Growth Driver Management Process Select/Adjust for Specific Application Construct Model(s) Simulate & Analyze Dynamics Develop Set of Management Initiatives

5 Copyright © 1999-2000, Mark Bills Associates, Inc. All rights reserved. Active Growth Driver Management Helps TravelWorld.com Succeed The following is an amended example from Net Gain, by John Hagel III and Arthur Armstrong Revenue Active Members Transaction Volume Advertising Fees Content Attractiveness Member Loyalty Member Profiling Transaction Offerings

6 Copyright © 1999-2000, Mark Bills Associates, Inc. All rights reserved. Content Attractiveness Builds Membership Base Member-to-Member Interaction Content Attractiveness Member-Generated Content Hours Spent at Site Marketing Effectiveness Members

7 Copyright © 1999-2000, Mark Bills Associates, Inc. All rights reserved. Loyalty Maintains Membership Base Contributions to Site Content Member Loyalty Relationships with Other Members Hours Spent at Site Churn Rate Members

8 Copyright © 1999-2000, Mark Bills Associates, Inc. All rights reserved. Member Profiling Increases Revenue Transaction Volume Profile Detail Advertising Effectiveness Targeted Transactions Advertising Revenue Click-Through Rate Transaction Revenue

9 Copyright © 1999-2000, Mark Bills Associates, Inc. All rights reserved. Transaction Offerings Drive Transaction Revenue Attractiveness to Vendors Transaction Offerings Vendors Members Transaction Revenue Transactions Marketing Expenditures

10 Copyright © 1999-2000, Mark Bills Associates, Inc. All rights reserved. Ten-Year Forecasts Demonstrate Power of Efficiency, Scope and Reach uInitial Investment: $15M uYear 10 Revenue: $620M –Estimate $285M Due to Interaction of Growth Drivers uYear 10 Travel Commissions: $170M –At 5% Commission, $3.3B in Implied Transactions sLess Than 4% of Total Leisure Travel Spending, but 8x Travel & Leisure Magazine and 200x Average Travel Office

11 Copyright © 1999-2000, Mark Bills Associates, Inc. All rights reserved. Growth Driver Analysis Highlights Strategic Issues uBusiness Development Stages –Critical Mass of Members –“” Usage Profiles –“” Advertisers/Vendors –“” Transaction Profiles –“” Transactions uMember Development Stages –Attract Members –Promote Participation –Build Loyalty –Capture Value


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