Transcript Database Management I

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Copyright  2002 Alex Coman
“It is not enough to succeed; others must fail”. Gore Vidal
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Copyright  2002 Alex Coman
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The ARENA Genome: Harmonic Strategic Planning
Refinement Stages:
Arena, Focus, Action
Create Strategy
Arena Layers:
Corporate,
Business
FunctionDefine Hierarchy
Corporate Layer:
Portfolio Businesses
Maximize Value
Business Layer:
Positioning Products by
Market Strategy
A
A
R
E
N
A
F
O
C
U
S
C
T
I
Function Layer:
O
Process, Project and Product
N
Agile value drive
Arena actors:
Partners, Threats; Current, Future
Tailored Patterns. Target Criteria
Prioritize attention
Manage Control span Dynamic Vectors:
Vision, Resource, Deliver
Guru 2 Gorilla
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Copyright  2002 Alex Coman
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Shareholder value
Warren Buffett, The Focus Investor’s Golden Rules:
«I’m 15% Phil Fisher and 85% Benjamin Graham»
Benjamin Graham, quantitative: Fixed assets, current earnings, dividends.
Corporate filings and annual reports: cheap stocks.
Phil Fisher, qualitative: future prospects, management capability.
Customers, competitors, managers: intrinsic value, long term.
Invest: “Know nothing”: Index funds. “Know something”: 5-10 companies. Diversification
overrated. It increases the chances of buying something you don’t know enough about.
Volatility happens: thing long term 5 to 10 years.
% Increase
200%
150%
100%
Dow
Jones
50% Dow
Euro Average
Jones Average Stoxx 50 European
Euro European
fund
Stoxx 50 fund
0
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1 Year
Dow
Jones
Euro
Stoxx 50
3 Year
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Average
European
fund
5 Year
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2001 - Annual Report
Copyright  2002 Alex Coman
Stratus:…manufacturer of fault-tolerant computer systems…$267M Revenues…were estimated to be $84M in 1999 and $345M in
2000…expected to peak in fiscal year 2002 and decline thereafter through the end of the product’s life (2009) as new product
technologies were expected to be introduced by us. A risk-adjusted discount rate of 35% was used to discount projected cash flows.
The actual results to date have been consistent, in all material respects, with our assumptions at the time of the acquisition,
except as noted below…Product development relating to the…projects was discontinued due to our reprioritization of product
direction…Consequently, we did not realize the forecasted revenues from these projects. During fiscal year 2001, substantially all of
the goodwill and acquired intangibles related to the purchase of Stratus were written off as part of our restructuring
program…
Chromatis Networks: Next generation optical transport solutions that provide telecommunications carriers with improvements in the
cost, efficiency, scale and management of multi-service metropolitan networks…integrate data, voice and video services…and combine
this traffic onto a wave division multiplexing system.…$428M represented its estimated fair value using the methodology described
above…Revenues were estimated to be $375M in fiscal year 2001 and $1 billion in fiscal year 2002. Revenue was expected to peak in
fiscal year 2005 and decline thereafter…A risk-adjusted discount rate of 25% was used…As part of our restructuring program in fiscal
year 2001, the Chromatis product portfolio was discontinued and all of the remaining assets…were written off.
Spring Tide Networks: Carrier-class network equipment..that enables service providers to offer new Value-added IP services and
VPNs with low cost and complexity…IP service switch carrier class platforms that combine the connectivity of a remote access server,
the network intelligence of a remote access server, and the switching capacity and quality of service capabilities of an ATM switch in one
integrated switch.
In-Process Research and Development « IPRD »
In connection with the acquisitions in fiscal years 2000 and 1999 of Chromatis, Spring Tide and Stratus, we allocated non-tax
impacting charges of $428 million, $131 million and $267 million, respectively of the total purchase price to IPRD. As part of the process
of analyzing each of these acquisitions, we made a decision to buy technology that had not yet been commercialized rather than
develop the technology internally. We based this decision on a number of factors including the amount of time it would take to bring the
technology to market. We also considered Bell Labs’ resource allocation and its progress on comparable technology, if any. We expect
to use the same decision process in the future.
We estimated the fair value of IPRD for each of the above acquisitions using an income approach. This involved estimating the fair
value of the IPRD using the present value of the estimated after-tax cash flows expected to be generated by the IPRD, using riskadjusted discount rates and revenue forecasts as appropriate. The selection of the discount rate was based on consideration of our
weighted average cost of capital, as well as other factors, including the useful life of each technology, profitability levels of each
technology, the uncertainty of technology advances that were known at the time, and the stage of completion of each technology. We
believe that the estimated IPRD amounts so determined represented fair value and did not exceed the amount a third party
would pay for the projects.
Financial highlights: Shareholders’ equity: 2000:$30.50 2001:$5.73, (81.2%).
Annual Meeting to be held on 02/20/02 at 09:00 A.M. Proposals: Evelyn Y. Davis: “Repeal Classified Board.” (Reelection of directors
annually vs. recent stagger system).
After thoughtful consideration…directors recommend a vote against proposal 2.
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Copyright  2002 Alex Coman
Schumpeter: Creative destruction
Disney corporate portfolio
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Movie
Entertainment
Live
Entertainment
Merchandising,
Music,
Publishing
Cruises
Holidays,
Communities
Resorts,
Disney
Real
estate
development
Institute
Animal KingdomAmusement
Broadcasting
Disney America
Resorts
Parks
Euro
Disney
Holidays, Resorts,
Hotels
Disney Studios
Real estate development
Disneyland MGM
Live
EPCOT Tokyo
Theater Hokey Baseball Entertainment
Disneyworld
Disney KCAL TV ABC
Broadcasting
Disneyland
Channel
TV
Miramax
Animated
Movie
Films Touchstone Hollywood
Programming
Acquisition
Home videos Pictures
Features
Entertainment
Amusement
Parks
Music
Book
Publishing Publishing
Merchandising
Animation
‘20
‘30
‘40
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‘50
‘60
‘70
Merchandising,
Disney Direct Hollywood Software
Music,
Stores Mail Records Visual effects
Publishing
‘80
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‘90
2000
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Active Portfolio Management Copyright  2002 Alex Coman
Value of $100 invested from 1/90 to 12/99
$519
$459
$442
$392
$353
Passive
2 Trans.
Active
Divestor
15 Trans.
Comparing 1985 to 1995, the
top 150 electronic-systemscompanies
worldwide ranked by revenue:
 75% of the firms in 1985
either slipped or
disappeared by 1995
 25% improved / 33%
eliminated / 42% new
Acquirer
Balanced
A business’s average total return to shareholders
15%
relative to its industry
10%
5%
0%
-5%
-10%
1
Source: Anderson Consulting (1997) “Exploiting
Uncertainty: Hi-Techs High Performers
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the Dynamics of Competition
5
10
15
20
Business age in years
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25
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Pareto
Distribution of US federal Income-tax revenue by income group
100%
100%
50%
25%
80%
Share of total revenue
80%
15%
60%
4
40%
20%
60%
5
40%
20%
1
4
5
15%
25%
50%
Income Group
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Paradigmatic Isomorphism: Deep Structure
Porter’s 5 forces:
Sustainable competitive advantage; Entry Barriers
Brandenburger and Nalebuff ‘95
Customers
New entrants
Substitutes
Suppliers
Competitors
Buyers
Company
Complementors
Suppliers
substitutes
Marketing:7Cs: Company,
competition, channel, customer,
Mintzberg ’88: Generic Strategies
A. Grove, ’96: Six forces Diagram x10 force
Extraction ProcessingFabrication Assembly Wholesale Retail
Primary
Industries
Upstream
Industries
Secondary
Industries
Midstream
Industries
Hamel and Prahalad, ’94
Existing Complementors Customers
Competitors
The Business
Tertiary
Suppliers A different way Potential
Industries
Competitors
Downstream
Industries
Ideology
Strategic
Apex
Creating coalitions
Core
competencies
Standards &
Regulation
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Market Learning
& Experimentation
Brand &
Distribution
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Middle
Line
Operating Core
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Spatial Paradigm: Vertical Flow
Upstream
Regulators
Supply Backward
Chain/ Integration
Channels
Vertical
Integration
(Jumping the
Value/ Back Office Connection)
Complementors Food
Horizontal
Firm
Competitors
Chain Value System Integration Substitutes
Clusters
Front Office
900
Market segments:
Externalities
Turn
Distribution
Chain/
Forward
Channels Integration
Downstream
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ARENA Canonical Form
Vocabulary
Entities:
Market
Drugs
Firm/Coalition
Monopoly/
Teva
Regulatory Agency
FDA
Relationships:
 Business
Control
Information
Web
Integration:
Vertical
Syntax
Value Chain: Low
Horizontal
Farmer
Dairy
Distributor
Retailer
High
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Consumer
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Structure
Concise:
Link Markets rather than instances.
Business implies information flow.
Titles on significant arrows.
Pertinent entities only.
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Integration
Digital
Alpha Processor
Compaq ‘83 Deskpro ‘86 Armada‘88 Proliant‘89 6000/8000’96 Palmtop’97 Tandem
“Portable PC”
PC
Laptop
Servers Workstation
PDA
Mainframes
Digital
Solutions & Services
Horizontal Integration
Linux
Operating Systems
MS
MS
Unix
WinNT WinXP
MS
WinCE
Vertical
Integration
Forward
Diversification
MS
Joystick
MS
Sun
Visual
Java
Compilers
Spinoff
900
Turn
IBM IBM
Rolm Aptiva
Vertical
Integration
Backward
Word Excel Access Outlook Explorer Navigator Sun
Application Programs
Work Stations
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Health-Care Corporate Arena
FDA
Vitamed
Ministry of Health
GSK
Teva
GMP
Teva
Ethical
NovoPharm
Generic
Drug Manufacturers
IMS
American
CTS Pharma Lemon
Hospital
Supplies Distributors Novolog
Glaxo IL
Product
Specialists
EDI
Disease
Management
Advertising
Clalit Shahal
Macabi
Health Management Org.
List Admin
Tele
medicine Physicians
Macabi
SuperPharm
Pharmacies
Prescription eMed
Prescription Drugs
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Public
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ShorTab
Web
Over the Counter
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Electronic Markets and Electronic Hierarchies
Malone et. Al., Modeling Coordination in Organizations and Markets
Decentralized Market
Supplier1
Supplier2
Supplier3
Customer1
Customer2
Customer3
Centralized Market
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Supplier1
Supplier2
Supplier3
Broker
Intermediary
InfoMediary
Customer1
Customer2
Customer3
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Rebuilding the value chain: Benchmark Capital
Microsoft’s Nathan Meirvold:
“Anyone standing between suppliers and customers will become road-kill on the information highway.”
Manufacturer/
publisher
Wholesaler/
distributor
E-retailer
Reintermediation
Portal/
aggregator Disintermediation
Consumer
The e-commerce
matrix
Business
Consumer
Business
B2B
GM/Ford
EDI networks
B2C
Amazon
Dell
Consumer
C2B
Priceline
Accompany
P2P
Ebay
Napster
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E-Hubs: The new B2B Marketplaces. Steve Kaplan.
The Forward Aggregator Model
Compaq
IBM
Cisco Microsoft
Large Suppliers
The Reverse Aggregator Model
Dupont Dow Ashland 3M
Large Suppliers
Ingram
E-hub: Fulfillment, call center, Distributor
Micro
financing, configurators
Distributors
Small resellers
E-hub: Fulfillment, Inspection,
Receivables, Financing FOB.com
Integrator
Buyers
Systematic
How
Sourcing
Businesses
Spot
Buy
Sourcing
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Direction
Direction
Of
Of
AggregationAggregation
Small Buyers
What Businesses Buy
Operating
Manufacturing
Inputs
Inputs
MRO Hubs
Catalog Hubs
Ariba, W.W.Grainger,
MRO.com, BizBuyer.com
Chamdex, SciQuest.com,
PlasticsNet.com
Yield Managers
Excanges
Employease, Adauction.com, E-steel, PaperExchange.com,
CapacityWeb.com
Altra Energy, IMX Exchange
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Telecom Market
Seabridge
Motorola
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Comverse Comtouch
Gilat Nice Radcom Amdox Aptonics Commatch ECI Vocaltec Orkit ADC
Component Providers
Nortel
Lucent
Alcatel
Cisco
Siemens
Equipment Providers/Integrators
CLEC
ILEC
Cable
Copper
Small
Large
Telco
Telco
Service Provider
Satellite
Fiber
BLEC DLEC
Cellular
Access Technologies
MTU SoHo Campus
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Customers
Rural
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Suburban
Business
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Time-To-Market: TTM
Standard
Zara
Focus
Cost
Speed
Manufacture
O/S
Vertical
Cash
Hand Held
Info. Tech.
Registers devices
Models/Yr
200-300
>11K
NW
H&M
GAP
Zara
Mfg. Eur.vs. Asia
50%
17%
80%
Design to Delivery 6-8Months 6Months 2-5 Weeks
25%
20-30% 15-20%
Inventory Unsold
12.4%
10.6%
14.9%
Profit margin
$3B
$13.7B
$2.6B
Sales $Bill
Inditex’79
HiTex
23 Robot
cut & Die #3
>40%
400 Small
Shops
>50%
Zara ‘75
Delta
Fabric
Far
East
Far
Tefron
Benetton
Solog Delta East
Garment Manufacturers
Benetton Victoria’s
Secret
Labels
TTM
6 Months
4-5W
Design+ design+1M
3M Manf.. 10-15Days
Delivery
1/Season 2/Week
Bad
Off in
?
products
Weeks
Inventory turnover
3*Gap
Adv. Camp.
None
Profits
+30%/year
St.Michael
CK
H&M
Inner
900
Secret GAP
suppliers
GAP
Benetton
Zara
H&M M&S
Walmart
Zara
Massimo Duti Pull&Bear
Stradivarius
Bershka
467Stores
Macy’s
Retailers
467Stores
25-35years
Anti Gap
207
238
114
127
Older& College Crowd
Late Teens
Girls 12+Up
Wealthier Trendy Urban Cost Conscious Cheap cool
Customers
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