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Author:LairdReedReviewers:ScottWells,KarenHellmichbc3C’sMarch1998Copyright©1998Bain&Company,Inc.BOSCopyright©1998Bain&Company,Inc.2CU7112497ECA3C’s•The3C’sframework•Toolsandstrategicquestionsanswered•TakeawayslidesAgendaBOSCopyright©1998Bain&Company,Inc.3CU7112497ECA3C’sAgenda•The3C’sframework•Toolsandstrategicquestionsanswered•TakeawayslidesBOSCopyright©1998Bain&Company,Inc.4CU7112497ECA3C'sStrategicPurpose:•Todetermineacompany’sstrategiccostpositionrelativetocompetitors•Toidentifycostreductionopportunities•Toidentifyrevenueandprofitmaximizingstrategies•Toachievedifferentiationandpreemptcompetitormoves•Todeterminethestrategiesthatfitbestwithacompany’scorecompetenciesCostsCustomersCompetitorsCapabilitiesThe3C’sisoneofthecoretoolsusedtodeterminethemostleveragedstrategyforabusiness.Thefourth,oftenneglected,“C”FrameworkBOSCopyright©1998Bain&Company,Inc.5CU7112497ECA3C’sAgenda•The3C’sframework•Toolsandstrategicquestionsanswered•TakeawayslidesBOSCopyright©1998Bain&Company,Inc.6CU7112497ECA3C’sCostsCost-RelatedBainToolsStrategicQuestionsAnsweredCostsCustomersCompetitorsCapabilities1.RelativeCostPosition1.Howdoourcostscomparetocompetitors’costsbyproduct/service/business?Whatisourfullpotentialcostposition?2.ExperienceCurve2.Towhatextentisthecompanyusingitsaccumulatedexperiencetodrivedownunitcosts?3.CostSharingAnalysis3.Arethereanyopportunitiestosharecostswithinthecompany?Whatarethepotentialsavingsfromcostsharing?4.BestDemonstratedPractice4.Whatarethebestinternalandexternalpractices?Towhatextentaretheytransferable?Whatwillbetheimpactofimplementingthemmorebroadly?5.ValueChainAnalysis5.Howcanweoptimizeateachstepinthevaluechain?Whatarethecostdriversateachstep?6.ProfitHunt6.Whatarethequickhitoperatingimprovements?Whatisthesavingspotential?7.ProductLineProfitability/CostAllocation/ActivityBasedCosting7.Howdoweallocatecoststoeachbusiness/product/customersegment?8.OverheadAnalysis8.Isthecompany’soverheadanefficientuseofresources?9.Fixed/VariableAnalysis9.Whatisthefixed/variablesplitofthecompany’scosts?10.Direct/IndirectAnalysis10.Howmuchofthecompany’scostsaredirectly,vs.notdirectly,associatedwiththeproductionofaproduct?BOSCopyright©1998Bain&Company,Inc.7CU7112497ECA3C’sCustomersCustomer-RelatedBainToolsStrategicQuestionsAnswered1.CustomerSegmentation1.Whataretheappropriatecustomersegments?Howcaneachsegmentbedescribed?2.PurchaseCriteriaRating(ImportanceAnalysis)2.Whatisimportanttoeachsegmentwhentheypurchaseaproductorservice?3.CompanyPositioning(EffectivenessAnalysis)3.Howwellpositionedisthecompanywitheachsegment?4.AttractivenessAnalysis4.Whichsegmentsaremostattractivefrombothafinancialandanimplementationperspective?–revenueopportunity–costtoserve–strategicfit5.ValuePropositionDevelopment5.Whatproduct/service/channelofferingwillmeetthetargetsegment’sneeds?8.CustomerRetentionandLoyalty8.Howcanweincreaseourretentionofourbestcustomers?HowmuchofanimpactwillincreasingretentionbyX%haveonourbottomline?9.CustomerAcquisition9.Howcanweacquireprofitablecustomers?CostsCustomersCompetitorsCapabilities6.PricingStrategy6.Whatpricewillmaximizelongtermprofits?7.DistributionChannelAnalysis7.Whataretheappropriatechannelsforeachproduct/service?Whataretheeconomicsofeachchannel?BOSCopyright©1998Bain&Company,Inc.8CU7112497ECA3C’sCompetitorsCompetitor-RelatedBainToolsStrategicQuestionsAnswered1.MarketOverview1.Whatisthemarketsize?Growth?Profitability?Whatiseachcompetitor’smarketshare?Profitshare?2.CompanyOverview2.Whatisthecompany’srevenueandprofitbyproduct,channel,andgeography?Whatisitsfinancialperformance?3.SWOT3.Whatareeachcompetitor’sstrengths,weaknesses,opportunities,andthreats?5.Benchmarking5.Howiseachcompetitorperformingonkeymeasures?6.ScenarioAnalysis6.Howdoweexpecteachcompetitortoact/reactindifferentsituations?7.MergersandAcquisitions7.Whichcompaniesarepotentialtargets?Howcanwerealizevaluefrommergersandacquisitions?8.Growth/ShareMatrix8.Howcanwedescribeacompany’sportfolioofbusinessesintermsofmarketshareandgrowthpotential?4.Porter’s5ForcesAnalysis4.Howattractiveistheindustry?Whatarethecompetitivedynamicsoftheindustry?9.Growth/GrowthMatrix9.Howisthecompanygrowingrelativetotheindustry?Isthecompanygainingorlosingshare?10.ROS/RMS10.Whatisacompany’srelativemarketshareandwhatisitsreturnonsales?Whereistheindustry’snormativeband?CostsCustomersCompetitorsCapabilities11.CompanyOwnershipandManagement11.Whoarethemajorownersofthecompany?Howexperiencedisthemanagementteam?BOSCopyright©1998Bain&Company,Inc.9CU7112497ECA3C’sCapabilitiesCapabilities-RelatedBainToolsStrategicQuestionsAnswered2.Make/BuyAnalysis2.Whatshouldthecompanymakeitselfversusbuyfromanothercompany?1.CoreCompetencies1.Whatspecialskillsortechnologiesdoesthecompanyhavethatcreatedifferentiablecustomervalue?Howcanacompanyleverageitscorecompetencies?Whatinvestmentsintechnologyandpeoplewillhelpbuilduniquecapabilities?CostsCustomersCompetitorsCapabilities3.Whatorganizationalstructurewillenablethecompanytoimplementitsstrategyeffectively?3.OrganizationalStructureBOSCopyright©1998Bain&Company,Inc.10