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Managing GrowthGrowth Strategies in Niche MarketsUwe BingelManaging DirectorRiedel Communications GmbH & Co. KG
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Table of Content
1. Riedel - The Story
2. About Niche Markets
3. Growth Strategies
4. Building Competitive Advantage
5. Organizational Impacts of Growth
6. Conclusion
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Personal Profile
Professional Experience:
Riedel Communications GmbH & Co. KG: Managing Director and CFO
Blue Order AG: CFO
Zentek GmbH: CFO
endemol Deutschland GmbH: CFO
Bertelsmann AG: Director Finance and New Business Development of bol.de GmH and various senior finance positions in the Bertelsmann Group
Accenture GmbH: Senior Management Consultant
Education: Master degree in economics and industrial engineering
Others: Married, 2 children
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Doing the right things…
“I can‘t change the direction of the wind, but I can adjust my sails to always reach my destination.”
Aristotle (384 BC – 322 BC) Greek philosopher)
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Riedel Communications at a Glance
● Founded in 1987 in Wuppertal, Germany
● Eight international locations
● Represented in over 30 countries
● 250 employees
● Average growth per year over the last 7 years CAGR* 18,7%
● ISO 9001 certified
*CAGR – Compound Average Growth Rate
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Riedel History
Business Development Corporate Development
1987
19981999
20012002
2005
20062007
2008
2009 Merger Riedel Funk- und Intercomtechnik and Riedel Communications GmbH & Co. KG
Formation of Riedel Funk- und Intercomtechnik, Thomas Riedel
Acquisition of IBT Nachrichtentechnik (Riedel Engineering GmbH)
Acquisition of ELPRO Ges. mbH (Riedel Communications Austria GmbH)
Formation of Riedel Communications GmbH, Germany
Formation of Riedel Communications Inc., USA
Formation of Riedel Communications Ltd., UK
Formation of Representative Office in Singapore
Formation of Riedel Communications Ltd. Pty, Australia and Representative Office in Beijing, China
1994Olympic Winter Games in Lillehammer
Nordic Ski World Championship
EXPO 2000, Germany 2000
EXPO 2002, SwitzerlandF1 and DTM Intercom Solutions
Olympic Summer Games, Athens 2004
Olympic Winter Games, Turin
FIFA World Championship 2006, Germany
EURO 2008, Austria and Switzerland
Olympic Summer Games, Beijing, China
Product Launch MediorNet & RockNetOlympic Winter Games, Vancouver, Canada
Acquisition of Media Numerics
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About Riedel (1)
Riedel serves customers worldwide in three business fields:
● Rental Services: Complete intercom and radio solutions, data services (WAN, LAN, MPLS, NOC) audio & video (SD/HD) transmission systems, extensive services including project planning, set-up and operation.
Specialized departments for Motorsports and International Events
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About Riedel (2)
● Radio Distribution: Riedel is one of the biggest authorized Motorola business partners in Europe (partnership since 1991).
● Manufacturer: Riedel designs, manufactures and distributes the most sophisticated radio, intercom and fiber technology for customers worldwide in the broadcast, pro-audio, event, sports and theater industry.
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International Event Experience
● Olympic Winter and Summer Games since 1994 incl. 2004 Athens, 2006 Turin, 2008 Beijing, 2010 Vancouver
● Football World Championship 2006, 2010 (FIFA)
● Euro 2008, European Football Championship (UEFA)
● Rugby World Cup 2007 France
● …
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Motorsport Experience
● Formula 1 since 1993 (FIA, FOM, Brawn GP, Ferrari, McLaren, BMW Sauber, Red Bull Racing, Scuderia Toro Rosso, …)
● German Touring Car Masters – DTM
● Rally WRC
● 24h Le Mans / Nürburgring
● International Truck GP
● Red Bull Air Race World Championship
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Riedel Offices and Global Distributor Network
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Riedel References in Broadcast
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ProductManufacturer
Riedel‘s Business Model
Synergies
Rental Services
Radio Distribution
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Riedel‘s Competitive Assessment● Product Business
- Advantage in innovation by focusing on developments for specific market segments (e.g. broadcast, entertainment)
- Advantage in meeting customer’s unique needs in technology by leveraging the long experience from the rental business with product portfolio
- Synergetic advantage through implementation of decentralized architecture for the applied technologies
● Rental Business
- Niche-dominance in building communication infrastructure and organizing international events after 20 yrs experience
- Advantage through building and organizing an international community of technical experts for events
- Advantage by ensuring the most comprehensive and modern rental equipment (digital and analogue)
- Advantage by utilizing Riedel technological components in the context of customer specific solutions
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Riedel’s Critical Success Factors
● Maintaining a unique solution oriented mind set and corporate culture
● Binding talent and build sustainable know how advantage
● Introduction of performance oriented compensation schemes and profit participation
● Aiming for best practices to the customers in the product and rental business
● Functional organization with flat hierarchies ensuring prompt decision making processes
● Integrated risk management, cash flow management and financial engineering
● Dedicated planning cycles and reporting lines along the scope ofcontrol
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Table of Content
1. Riedel - The Story
2. About Niche Markets
3. Growth Strategies
4. Building Competitive Advantage
5. Organizational Impacts of Growth
6. Conclusion
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Definitions: Niche Markets and Benefit Segmentation
Niche markets are defined as small but profitable segments of a market suitable for focused attention by a marketer. Market nichesdo not exist by themselves, but are created by identifying needs or wants that are not being addressed by competitors, and by offeringproducts that satisfy them.
Benefit segmentation is a methodology to segment markets based on differences in specific benefits different groups of consumers look-for in a product or service. One of the five commonsegmentation strategies, its objective is to define specific nichesthat require custom tailored promotion.
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Characteristics of a Niche Market
"An ideal market niche would have the following characteristics:
� The niche is of sufficient size and purchasing power to be profitable
� The niche has growth potential
� The niche is of negligible interest to major competitors
� The firm has the required skills and resources to serve the niche effectively
� The firm can defend itself against an attacking major competitorthrough the customer goodwill it has built up"
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Table of Content
1. Riedel - The Story
2. About Niche Markets
3. Growth Strategies
4. Building Competitive Advantage
5. Organizational Impacts of Growth
6. Conclusion
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Importance of a Corporate Strategy
● Strategy defines long term goals and objectives. All courses of action and all allocation of resources are targeted to achieve predefined goals (structure follow strategy).
● Innovation is the prerequisite for sustainable and profitable growth.
● Globalization of markets forces companies to strengthen their local presence.
● Subcontracting services with low added value to achieve cost optimization along the value chain without loosing focus on corebusiness functions and values.
● Professional leadership by continuous strategic planning, implementation of financial and risk management, introduction ofperformance oriented compensation schemes.
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Growth Opportunity Matrix
Existing Products
Product Development
New Products
Market Development
Diversification
Exi
stin
g M
arke
tsN
ew M
arke
ts
• New innovative products• Product improvements• Product line extensions• Product differentiation• Moderate risk
• Selling same product to different customers
• Gaining new customers in new segments, areas
• Moderate risk
• New products for new customers
• Related diversification builds on current assets and activities
• High risk
Market Penetration
• Attract customers away from rivals
• Increase usage by existing customers
• Little risk
Ansoff’s matrix offers four strategic choices for growth
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Growth Pyramid
New Competitive Arenas
New Industry Structure
New Geographies
New Delivery Approaches
New Products and Services
Exist. Products to new Customers
Exist. Products to exist Customers
How?
Acquisitions
Joint Ventures
Minority Stakes
Strategic Alliances
Marketing Partnerships
Organic Investment Incr
easi
ng R
isk
Generic options and investment structures for a growth strategy
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Competitive Advantage
Resources
Capabilities
DistinctiveCompetencies
Differentiation Advantage or Cost
Advantage
Value Creation
Corporate success derives from a competitive advantage which is based on distinct capabilities and competencies.
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Understanding Organizational Capabilities
Key Success Factors
OrganizationalCapabilities
Strategy
•Financial•Physical
Competitive Advantage
• Innovation•Technology•Reputation•Culture
•Specialized skills and knowledge•Communication and interactive abilities
•Motivation
Tangible Intangible Human
Resources are not productive in themselves – they need to be converted into capabilities by being managed and coordinated.It is these resultant capabilities that, if hard to imitate, are the main source of competitive advantage.
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Four steps to build Competitive Advantage
1. Disrupt the status quo: a company should identify new opportunities to meet customer needs, thereby shifting or changing the basis of competition.
2. Create a temporary advantage:the temporary advantage should be based on improved knowledge ofcustomers' needs, innovative application of technology, and an attempt to define the future basis of customer satisfaction.
3. Seize the initiative:move aggressively and rapidly, forcing competitors to play catch up; taking a proactive approach while leaving competitors to be reactive.
4. Sustain the momentum: continue to develop new sources of advantage; don't wait for competitors to catch up; stay one step ahead.
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Organizational Development and Growth Implications
Phase 1“Growth through
Creativity”
Org
aniz
atio
n S
ize
Organizational Age / Time
Phase 2“Growth through
Direction”
Phase 3“Growth through
Delegation”
Phase 4“Growth
through Co-ordination”
Phase 5“Growth through
Collaboration
Phase 6“Growth through
Alliances”
LeadershipCrisis
AutonomyCrisis
Control Crisis
Red Tape Crisis
Growth Crisis
While growth is fun when things are going well, when things go wrong, this chaos can be intensely stressful. Therefore organizations have to proactively manage the transitions when growing.
Revolutionary phase
Evolutionary phase
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Conclusion
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Abschlussfolie
Further Questions?
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