Five C's
Summarized by Sam Mishra, MBA (MIT Sloan)
This is an elementary framework which can drive any strategic analysis. The five C's stand for Company, Customers, Competition, Costs, and Channels. If one thinks through the answers raised under each term, one can analyze a Company's business problems step by step as a means to proposing solutions which will improve the Company's business:
Company: What is the company size, i.e., is the company mid-sized (less than $500 M in revenue) or larger? Is it public or private? What are its products / product lines / services? What are its sustainable strengths / competitive advantages / core competencies? Does the company have any weaknesses? What are the opportunities / threats the company has in the markets it competes in? Does the company have a pipeline of future leaders? Who are its key executives? Who are its board members?
Customers: Are they consumers or businesses? What are their current / emerging problems / needs? Does the company listen to its customers and solve their problems? What is the bargaining power of these customers? Will they switch to the competition, if the company increases its price? What are their preferences for company's product quality / availability / reliability / performance? How can the company segment the customer base to target its products at specific segments? If the customers are business / industrial houses, is it appropriate to segment them as mid-market and Fortune 500; or does it make more sense to segment the market geographically? If these are individual consumers, what are their demographic and psychographic patterns; what do they crave that the company can't provide; what will they be buying over the next two years; and what will the next generation of customers need from the company?
Competition: Who are the biggest competitors and how much market share do they hold in each market segment the company plays in? What are their strengths and weaknesses? What are their core competencies and core rigidities? What are their strategic advantages? Is it tight appropriability of ther product lines to the market segment requirements, is it complementary assets like better sales and marketing channels, or is their speed of execution? Is any competitor gaining market share in any specific market / market segment? Is the competitor public or private? Who are the key executives of the competitor and what is their leadership / management style?
Costs: Which costs are fixed and which are variable? What is the basic split between fixed and variable costs; are they likely to vary with volume; are they likely to vary over time? How do the costs compare to the competitors' costs? How do these costs compare to the industry? Is there any advantage to offshoring / outsourcing to lower costs? Is there an opportunity to reduce costs through volume consolidation?
Channels: What are the company's distribution channels? Does it rely on a direct sales force to deliver its products / services to customers, or does it rely on indirect sales / channel partners? In the context of manufactured products, distributors / retailers can have significant bargaining power if they are the dominant players in their channel segment, e.g, Walmart. Internet is also emerging as a dominant distribution channel with the advent of e-commerce, and examples of successful companies include Amazon.com and Dell. Can sales and revenue grow, if the company crafts and executes an effective Internet strategy? Also see double marginalization in our advanced frameworks section.