Elia Together Berlin

#eliatogether
The Business Side
Richard Brooks
K International Ltd
24 February 2017 9:25am
Berlin, Germany

Richard Brooks
uk.linkedin.com/in/richardbrooks
twitter.com/@RichardMBrooks
plus.google.com/+RichardBrooks_L10N
0044 1908 557900
Richard.Brooks@k-international.com
www.k-international.com
Hello/Hallo
#eliatogether

#EliaTogether16
“The best talk in Berlin
since JFK.
#IchbineinBerliner
#eliatogether”
#eliatogether
@RichardMBrooks
#L10n #i18n #CAT #MT #xl8 #t9n
#localisation #translation #language
#berlin #germany
“OMG. This is the best
presentation of all time
#eliatogether #awesome”
“#eliatogether please
invite
@RichardMBrooks
back next year”
“I think even some of his
jokes were new
#originalcontent
#eliatogether”

And you know when I'm down
to just my socks.
What time it is…
It's business time
https://www.youtube.com/watch?v=AqZcYPEszN8

#EliaTogether16
Come to the
Dark Side…
We have
cookies.

#EliaTogether16
The Business Side
• Brand
• Strategy
• Pricing
• Market Forces
• Value
• And many more…

Strengths
Opportunities
Weaknesses
Threats
Located
in UK
From
outside
the UK
Not be
located
in UK
Located
in UK
Brexit Brexit
Brexit
Brexit
More
nonsense
More
nonsense
More
nonsense
More
nonsense
Stupid
Waste
Of
Time

• PEST(LE) Analysis
• Porter’s Five Forces
• Resource Based View
• Business Model Canvas
• Strategy Canvas
Tools that Actually Work

If you know your enemies
and know yourself, you will
not be imperiled in a
hundred battles...
if you do not know your
enemies nor yourself, you
will be imperiled in every
single battle.
- The Art of War, Sun Tzu
http://classics.mit.edu/Tzu/artwar.html
customers
projects…
customers
project.

Use these tools to help
you and your customers
create higher sustainable
profits.

You
P&L, marketing, sales,
debts, development,
leadership, HR,
finance, technology…
and a load of other
stuff.
Industry Stuff
Wider Economic
Influences

Political
Economic
Social
Technology
Legislation
Environmental
P.E.S.T.E.L.
Political factors
• Stability of government
• Social policies: (e.g. social welfare
etc.)
• Trade regulations: (e.g. the EU,
TPP, NAFTA)
• Tax policies
• Entry mode regulations
Economic factors
• Disposable income of buyers
(B2C)
• Credit accessibility
• Unemployment rates
• Interest rates
• Inflation
Social Factors
• Population demographics: (e.g.
aging population)
• Distribution of Wealth
• Changes in lifestyles and trends
• Educational levels
Technological factors
• New innovations and discoveries
• Pace of technological innovations
and advances
• Pace of technological
obsolescence
• New technological platforms
Environmental factors
• Environmental protection laws
• Waste disposal laws
• Energy consumption regulation
• Popular attitude towards the
environment
Legal factors
• Employment regulations
• Competitive regulations
• Health and safety regulations
• Product regulations

Environmental Analysis
PESTLE Framework
Political Environmental Social Technology Legislation Economic
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nostrud.
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consequat.
iriure dolor in
hendrerit in
vulputate.
Share this as a google doc with your
team. Free template download here
>>>
https://docs.google.com/document/d/1t
8SQkw7xrjLrJaxtNZY5tJVD6AHgQymY
BRfAGMSv7e4/edit?usp=sharing

Industry Analysis
Porter's five forces of competitive position
Threat of New
Market Entrants
Threat of
Substitute
Products
Rivalry within
the Industry
Bargaining
Power of Buyers
Power of
Suppliers
Porter, M.E. (March–April 1979) How Competitive Forces Shape Strategy, Harvard Business Review.
How many customers are there?
What’s the size of each order?
Is there a difference between
competitors?
Is the market driven by price?
Can we substitute the
product/service?
What is the cost of changing
suppliers?
How many suppliers are there?
Do they talk to each other?
What is the size of suppliers?
Is the service unique?
Can we substitute this service?
What is the cost of changing?
What is the time and cost of
entry?
Do you need specialist
knowledge?
Are there economies of scale?
Is there patent or technology
protection?
What are the barriers to entry?

Bargaining Power of Suppliers
Suppliers are POWERFUL if...
• There is a credible forward
integration threat by suppliers.
• Suppliers are concentrated.
• There is a significant cost to switch
suppliers.
• The customers are powerful.
Suppliers are WEAK if...
• The product is standardized.
• There are many competitive suppliers.
• They are supplying commodity products.
• There is a credible backward integration
threat by purchasers.
• There are concentrated purchasers.
• The customers are weak.
What does the bargaining power of translators in our industry look like?

Bargaining Power of Customers
Customers are POWERFUL if...
• There are a few buyers with
significant market share.
• Buyers purchase a significant
proportion of the output.
• Buyers possess a credible
backward integration threat.
Customers are WEAK if...
• Producers can threaten forward
integration, taking over customers’
position.
• There are significant buyer switching
costs.
• There are many customers –
significant influence on a particular
product or price is small.
• Producers supply critical portions of
the customers’ input
What does the bargaining power of LSPs in our industry look like?

Resource Based View
• Looks internally at a firm’s Resources (and Capabilities and
Competences) and how these can be arranged to deliver
sustainable competitive advantage.
• Often used as a response to the Environment (PESTLE) and
Industry (5 Forces) Analysis.
• Resources that are simultaneously Valuable, Rare, Imperfectly
Imitable and Non-Substitutable deliver sustainable competitive
advantage.
• Look for these in your competitors businesses… Look for
resources you have that are rare and try and add value to them.
Barney, J.B. (1991). "Firm Resources and Sustained Competitive Advantage". Journal of Management.

Quick win.
Find something rare and
add value to it.

Customer Segments
Who is your customer?
What market segments are you providing a service/product for?

What value do we deliver to your clients? or To your client’s supply chain?
Is it based on > performance, brand, value, convenience, price…
Value Propositions

Channels to Market
How are you going to get your product/service to your clients?
Is it virtual? Or is it a physical product?
Are our channels integrated into our client’s supply chain?

Customer Relationships
For each segment… what is the relationship like?
Is it transactional, self-service, account/relationship managers, is there a
community?.

Revenue Streams
What value are our customers willing to pay for?
Per unit charge, hourly, subscription, licenses, leasing.
Price discrimination or fixed price.

Key Resources
What key resources do we need for the right hand side?
Are they human, intellectual, financial or physical.

Key Activities
The most important actions needed to make your business model work.
e.g. problem solving (for consultants).

Key Partnerships
Who do you need as your key partners.
Used to optimise your business model, reduce risk or acquire resources.

Cost Structure
Describes all costs involved in operating a business model.
Is this business… cost driven, value driven, % of fixed and variable costs
and are there economies of scale/scope?

A basic good used in commerce that is
interchangeable with other commodities of the
same type. Commodities are most often used as
inputs in the production of other goods or
services. The quality of a given commodity may
differ slightly, but it is essentially uniform across
producers.
Commodity Good?
from Investopedia.com

No it ******* isn’t.
But if you differentiate yourself on price what do you expect
to happen?
And… more importantly – it’s in the interests of those buying
this service to buy it as a commodity (see five forces).

Pretium = Price
Pretium = Value
The thinking in 10 B.C.
Price = Value
The problem in 2017 A.D.
Price ≠ Value
Pretium

… 4G is “the
communications
equivalent of the
change the jet
engine made over
steam”
>>> Inability to monetise value creation
Olaf Swantee, CEO EE
3G
1GB
£31
4G
1GB
£26
When Value > Price

Becky Williams M&S Apology
When Price > Value
>>> lack of understanding of an emotive
reaction to a small price change

• The last time you met an Accountant?
• The last time you met someone from
procurement (or vendor management)?
• The last time you met someone from the
pricing department?
Rich ponders…

Of all the 7 Ps Price has
the single most
immediate effect on the
bottom line.

Effect of Increasing Prices
5% 10% 15% 20% 25% 30% 35% 40% 50%
1% 17% 9% 6% 5% 4% 3% 3% 2% 2%
2% 29% 17% 12% 9% 7% 6% 5% 5% 4%
3% 38% 23% 17% 13% 11% 9% 8% 7% 6%
4% 44% 29% 21% 17% 14% 12% 10% 9% 7%
5% 50% 33% 25% 20% 17% 14% 13% 11% 9%
7.5% 60% 43% 33% 27% 23% 20% 18% 16% 13%
10% 67% 50% 40% 33% 29% 25% 22% 20% 17%
%priceincrease
Existing Gross Margin %
The sales volume decrease which will maintain
the existing Gross Margin.
EG
You can put prices
up by 5% and sell
20% less if your
Gross Margin is
20%.

Let’s Check the Maths
Unit Price €100
Number sold
50
Gross
Margin per
unit
€20
Total Gross
Margin €1000
Unit Price €105
Number sold
40
Gross
Margin per
unit
€25
Total Gross
Margin €1000
Price up 5%. Sales down 20%Existing Position

Effect of Discounting
5% 10% 15% 20% 25% 30% 35% 40% 50%
1% 25% 11% 7% 5% 4% 3% 3% 3% 2%
2% 67% 25% 15% 11% 9% 7% 6% 5% 4%
3% 150% 43% 25% 18% 14% 11% 9% 8% 6%
4% 400% 67% 36% 25% 19% 15% 13% 11% 9%
5% 100% 50% 33% 25% 20% 17% 14% 11%
7.5% 300% 100% 60% 43% 33% 27% 23% 18%
10% 200% 100% 67% 50% 40% 33% 25%
%discount
Existing Gross Margin %
The % amount sales need to increase to
maintain the existing Gross Margin.
EG
If you discount by
5% and your Gross
Margin is 20% you
need to sell 33%
more to make the
same amount of
Gross Margin.

Let’s Check the Maths
Unit Price €100
Number sold
50
Gross
Margin per
unit
€20
Total Gross
Margin €1000
Unit Price €95
Number sold
67
Gross
Margin per
unit
€15
Total Gross
Margin €1005
Discount 5%.
Then sell 34% more.Existing Position

Cost Plus.
Amounts to a mark-up on
costs… is widely used but
rarely the most profitable.
Competition driven.
Amounts to using price within a
game theoretic framework for
strategic advantage.
Customer Driven.
Amounts to using price to
achieve short-term sales
objectives rather than profits.
Value Based.
Amounts to understanding the
value created and then
maximising its capture.
Pricing Strategies

Cost Plus.
Amounts to a mark-up on
costs… is widely used but
rarely the most profitable.
Competition driven.
Amounts to using price within a
game theoretic framework for
strategic advantage.
Customer Driven.
Amounts to using price to
achieve short-term sales
objectives rather than profits.
Value Based.
Amounts to understanding the
value created and then
maximising its capture.
Pricing Strategies
More and
more
academic
research in
this area.

REMOVE COST OR ADD VALUE
Remove Cost
• Machine Translation
• Workflow
• Translation memories
• Volume
• Off shore PMs
• Portal
• Reverse auctions and other
horrors
Add Value
• Integrated services
• Increased complexity
• Key account management
• Value delivery
• Consultancy
• Innovate your pricing model
• DON’T commoditise your own
product
Limited by the
amount of
cents in the
Euro.
Limited by your
creativity.

Core
Cosset Supplier
Defend Vigorously
High Level of Service
High Responsiveness
Exploitable
Drive Lowest Price
Seek Short Term Adv.
Risk Losing Supplier
Nuisance
Give Low Attention
Lose Without Pain
Development
Nuture Supplier
Expand Business
Seek New Opportunities
Value of Business
Attractiveness
Strategic Purchasing
Based on Kraljic P HBR 1st Sept 1983.
Modified by M McDonald Cranfield SOM.
A version of this is
used by everyone I
know who works in
procurement.
High
High

P&G paid $57 Billion for Gillette (in 2005) but
they only acquired $6 Billion of tangible assets*.
*David Haigh, Brand Finance, Marketing Magazine, 1st April 2005

• Better price
• Higher sales
• Lower prices
• Better terms
• Higher Search Engine Results
• More partners
• Better retention
• Lower salary expectations
• Better qualified candidates
• Higher PE ratio
• Lower volatility
• Lower borrowing costs
What does a Brand give you?
Hint: It is way more than just your logo…

http://www.forbes.com/powerful-brands/list/#tab:rank
“It takes 20
years to build a
reputation and
five minutes to
ruin it. If you
think about that,
you'll do things
differently.”
-Warren Buffet

You can put
lipstick on a
gorilla but
you still have
to kiss it.

If you
improve the
sizzle you
have to
improve the
sausage.

July 1925
E.K. Strong
The Psychology of Selling
https://babel.hathitrust.org/cgi/pt?id=uc1.$b38792;view=1up;seq=7

Your ProductPotential Customer Awesome person who
can do amazing things.
+ =
This isn’t what you sell This is

Your ProductPotential Customer
+ =
This isn’t what you sell
For the millennials
Awesome person who
can do amazing things.
This is

People don't want to
buy a quarter-inch
drill, they want a
quarter-inch hole
Theodore Levitt
“
”

+ =
“I just start kissing them. It's
like a magnet. Just kiss. I
don't even wait.”
Quote Source: Adweek. October 8, 2016
What Tic Tac didn’t want

Suspect
Prospect
Customer
Client
Support
Advocate
Partner
5% increase in customer retention leads to a profit
improvement of at least 25% in NPV of future
earnings.
- From a study by Reichheld & Sasser. Harvard Business Review. September 1990
• 96% of dissatisfied customers never complain but
90% of them never return.
• ONE happy customer tells at least NINE others
• 13% of unhappy customers tell at least twenty
others
• It takes five times as much effort, time and money
to attract a new customer than it does to keep an
existing one.
- Source: USA White House Office of Consumer Affairs
Mutually rewarding relationship where
neither party intends on leaving.

http://hackthesystem.com/blog/why-i-hired-a-girl-on-craigslist-to-slap-me-in-the-face-and-why-it-quadrupled-my-productivity/

“everyday I walk in
here I still can’t
believe its my
place…
… it’s a
compulsion, purely
a compulsion”
Monetise your passion

“Take care of
your body. It’s
the only place
you have to
live.”
— Jim Rohn

#eliatogether
Time for some easy questions…
if we don’t get time we can extend the
conversation on twitter @RichardMBrooks

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