Presented by:

Tarin
Punda
Pantharee
Panthira
Today’s Agenda

Company Background
Situation Analysis

Issues and objectives

Recommendation

Financial Forecast

Key Success Factors

Conclusion
 Company Background

•Started off as a polling and market research company

•Financially healthy
- 15% revenue growth per year
- $200 million worldwide (2000)
•Revenue breakdown
- 55% market research
- 15% employee selection and development research
- 22% management/leadership development
- 7% consulting
- 1% Gallup Poll
•Focus on serving large clients
•Core Competencies
- research-based services
- management program tailor down to individual level
 Situation Analysis

•Recently entered two new markets

- HR management consulting
- training/development
•Competes in 4 markets
Growth: 5% Growth: 14%

Market HR
Measuring all internal Building engaging
and external factors Research Consulting cultures

• Research-based Pure MGT Training/ Tailor to individuals

Consulting Development To find strengths

Growth: 14% Growth: 107%

Trend: Replacement of Research with HR Consulting and Trainin

 Situation Analysis

Where We
At Present
want to be

$200 million in revenues

 Situation Analysis

Where We
At Present
want to be

Achieve $1 Billion Revenues

Within 5 years
 Situation Analysis

Where We
At Present
want to be

•Achieve 20% sales growth annually

•Build a sustainable business around Gallup’
core competencies
 Issues Identification

Where We
At Present
want to be

Issues At Hand

•Current core competencies fit with existing

business model
•Foundation supporting sustainable profitability
•New Opportunities for revenue enhancement
 Segment Analysis
Closer Look at Each Segment

Customer Looking for one-stop service

HR And value added service
Consulting
Research

HR Consulting& Training/Development
grew out of research modules

Leverage on existing product

Training/
Development

Core Competency ‘fit’

Complementary Portfolio
 Segment Analysis
Closer Look at Each Segment

Segments
HR Training/ Market
Consulting Development Research

Revenue Growth

Industry
Growth
20.49% NA 10.21%

Firm Growth 13.67% 107% 5.19%

HR Consulting-High Industry Growth & moderate firm growth

Training/Development-High firm growth

Promising Segments
 Strategic Unit Analysis
Mckinsey/GE Matrix
Market Attractiveness
High Medium Low
High

Training/ HR Market
Competitive Strength

Development Consulting Research

Medium

Pure Mgt
Low

Consulting
 Strategy Overview

Short-term I. Lean Organization

Intermedia
te-term II. Revenue Enhancement
 Strategy I: Lean Organization

Objective: Build strong foundation in order to achieve

sustainable growth
•Identify best and worst performers
(by net income % change)
•Liquidate worst performers and shift funding to best performe

America

Best Performer
Los Angeles
Worst Performers
Lincoln
Associate (Martin)
 Strategy I: Lean Organization

Objective: Build strong foundation in order to achieve

sustainable growth
•Identify best and worst performers
(by net income % change)
•Liquidate worst performers and shift funding to best performe

Latin America
Best Performer
Venezuella
Brazil
Worst Performers
Chille
Argentina
 Strategy I: Lean Organization

Objective: Build strong foundation in order to achieve

sustainable growth
•Identify best and worst performers
(by net income % change)
•Liquidate worst performers and shift funding to best performe

Europe
Best Performer
Hungary
Worst Performers
Lithunia
Poland
Czech
 Strategy I: Lean Organization

Objective: Build strong foundation in order to achieve

sustainable growth
•Identify best and worst performers
(by net income % change)
•Liquidate worst performers and shift funding to best performe

Asia
Best Performer
Japan
China
Total Singapore
8 best performers identified Thailand
9 worst performers identified Worst Performers
India
Israel

Result
More efficient allocation of fund and better focused on maximizing grow
 Strategy II: Revenue Enhancement
bjective: maximize revenue by taking advantage of the opportunities of interne
nd leveraging existing products

Increase
Increase
Revenue
Customer Base
/customer

Capitalize Internet Growth: Training Segment

Target Marketing
Rationale
Customers Communication

• High Growth Potential (50-100%)

• Minimal Costs
• Scaleable program  larger customer base
 Strategy II: Revenue Enhancement
bjective: maximize revenue by taking advantage of the opportunities of interne
nd leveraging existing products

Increase
Increase
Revenue
Customer Base
/customer

Capitalize Internet Growth

Target Marketing
Rationale
Customers Communication

• Product Specification: basic, initial development modules

• Suitable for preliminary development or if classroom training
not affordable
 Primary Target: Small-to-Medium Businesses
 Strategy II: Revenue Enhancement
bjective: maximize revenue by taking advantage of the opportunities of interne
nd leveraging existing products

Increase
Increase
Revenue
Customer Base
/customer

Capitalize Internet Growth

Target Marketing
Rationale
Customers Communication

•Mass Marketing Strategies:

- reach Small-to-Medium businesses
• New Product Communications:
- Trade/Business Publications
(along with existing marketing communication.)
 Strategy II: Revenue Enhancement
bjective: maximize revenue by taking advantage of the opportunities of interne
nd leveraging existing products

Increase
Increase
Revenue
Customer Base
/customer

Enter Market Consulting Segment

•Research done relates to understanding of customers

•Ability to consult based on research findings
•Leveraging existing product and core competency
•“Consumer Insights consulting”
 Time Line

Activities 2000 2001 2002 2003 2004 2005

I. Short-Term
Lean Organization

A. Liquidate Worst
Performers
B. Invest in Best
Performers
I. Intermediate-Term
A. Capitalize Internet Identify Target Group and Develop Marketing Strat
Growth

Marketing Communication

B. Enter Market
Consulting
 Financial Justification

ESTIMATED COST Figures in 1000$

Recommendation1 Capital Expenditure in high potential area 15,000
Lean Strategy
Recommedation 2 Marketing Expense
Revenue enhancement Trade Publication
(specific publishing for each industries) 7,500
Business Magazines 7,500
Internet Advertising 5,000
Total 35,000
How to finance our expenditure?

• Debt financing for CAPEX

– in total amount of $15 million
• Finance marketing
expenditure by internally
generated funds
 CAGR (Compounded Annual Growth Rate)
Sales 19.79%
Net Income 9%

Sales
Income

500,000
20,000
($ooo's)

400,000
($000's)

15,000
300,000
Sales
Income

10,000 Income
200,000
Net Sales

5,000
100,000

0 0
1998 1999
1998 19992000F
2000F2001F
2001F2002F
2002F2003F
2003F2004F
2004F
Year
Year
 CAGR (Compounded Annual Growth Rate)
Sales NPV = $156,212,000 19.79%
Net Income 9%

Income
Sales

20,000
500,000
Lean organization
($ooo's)

400,000
Lean organization
($000's)

15,000
300,000
Income

10,000 Sales
Income
200,000
Net Sales

5,000
100,000
RevenueEnhancement
Revenue Enhancement
00
1998 1999
1998 2000FMarketing
1999 2000F 2001F
Spending
2001F 2002F
2002F 2003F 2004F
2003F 2004F
Year
Year
 Key Success Factors

Core
Competency
Fit

Sustainable
Business
Capitalize Operational
Opportunities Efficiency
 Issues Are Solved
Issues At Hand Preliminary Analysis
Strategic Direction
•Core competencies fit -HR Consulting, Training/Development,
with business model Market Research

Proposed Strategies
•Foundation supporting Lean Organization
-Liquidate worst performers & invest
sustainable profitability in best performers

•New Opportunities for A. Capitalize Internet Growth

revenue enhancement -Increase customer base
B. Enter Market Consulting
-Increase sales per customer
-completes Gallup path

• Achieve 20% sales growth annually

Objective •Build a sustainable business around Gallup’s
core competencies
Q & A Session
 Back-up

SWOT Analysis
Strengths:
•Research-based
•Integrated Services
•Services Tailor to individual
•Gallup Poll brand reputation
Weaknesses:
Limited Area of Expertise
Threats:
Competition from pure management Consulting
Opportunities:
•Internet Growth
•Enter New Markets
•Small Client
 Why Enter Market Consulting?

Market Related
Current Service
- Research

Internal to Organization
Current Services
- Research Modules
- Consulting & Training

Market Consulting Will “Completes the Gallup Path”

Results: Increase Revenue Per Customer

Become more competitive on overall strategy consulting
 Segment Analysis
Segment Differentiation Competitors Disadvantages
Point

Market Research Measuring and •One measure at a None

making sense of time
both internal and •Less integrated
external market
variables
Pure MGT Research-based Rely on secondary, • No Operations
Consulting approach theory, conventional consulting
thinking, and
anecdotal evidence • Narrow Strategy
(people & market
based)
HR Consulting • Financial Mostly focused on None
Incentives not long- pay and benefits
term drivers consulting
• Focus on creating
engaging cultures
Training Focus on individual Training can Limited to framework
Strengths provide any of finding strengths
development reasonably talented
person to become
productive
 Lean Organization: Regional Analysis
Region Analysis

Region E1998 E1999 % change Worst performer E1998 E1999 % Change Highest performer E1998 E1999 % Change
USA 13577 16933 24.72% Lincoln 2209 812 -63.24% Los Angeles 549 2790 408.20%
Associate (Martin) 3913 70 -98.21% Citibank (Emond) 570 1308 129.47%
Education 345 978 183.48%

Latin America -161 147 191.30% Argentina -10 -30 -200.00% Venezuela -339 4 101.18%
Chile -156 -290 -85.90% Brazil -149 58 138.93%

Europe -2491 -1975 20.71% Lithunia 8 -10 -225.00% Hungary -163 260 259.51%
Poland -2 -45 -2150.00%
Czech -2 -25 -1150.00%

Asia 12 727 5958.33% India -7 -19 -171.43% Japan 181 347 91.71%
Israel 0 -327 #DIV/0! China 66 123 86.36%
Singapore 71 284 300.00%
Thailand -186 -101 45.70%
 Cost of Capital

Cost of Capital
Cost of debt (average) 7.98%
Cost of Equity 15.00%
Debt ratio 0.6824
Tax 35.99%
WACC 8.25%
 Revenue Proportion

2000 2004F
Training 22% 64.95%
Mgt consulting 22% 14.03%
Marketing research 55% 20.51%
Gallup Poll 1% 0.51%
 Industry Growth Assumption

Industry Competitors 1-Yr. Sales Growth Sales weighed

Market Research Taylor Nelson 8.50% 615.7 1.06%
total sales AC Nielsen 7.00% 1525.4 2.15%
4957.5 Market Facts 36.40% 136.5 1.00%
10.21% Maritz 1.40% 2200 0.62%
JD Power 2.40% 175 0.08%
NPD 127.30% 135 3.47%
Opinion Research Corporation 43.10% 118.6 1.03%
Harris 76.90% 51.3 0.80%

HRM Consulting Towers Perrin n/a 1125 n/a

1699.6 Hewitt 25.30% 1075 16.00%
20.49% Watson-Wyatt 12.20% 624.6 4.48%

Pure Management Consulting McKinsey 13.60% 2500 0.46%

73589.3 Booz Allen Hamilton 14.30% 1600 0.31%
12.73% Ranaissance -4.30% 742.6 -0.04%
Boston Consulting Group 11.50% 730 0.11%
Arthur D. Little 3.20% 608 0.03%
Bain 3.90% 498.7 0.03%
Anderson Consulting 17.30% 16300 3.83%
Price Waterhouse Coopers 2.00% 15300 0.42%
KPMG 15.10% 12200 2.50%
Ernst & Young 14.80% 12510 2.52%
Deloitte Touche Tohmatsu 17.80% 10600 2.56%

Training and Development n/a n/a

 Result of debt financing

Debt Ratio Before 68.14%

After 83.19%