APAC

Chairman’s Series on Growth

The 10 Core Tools To Drive Growth

Presented by

Craig Baty Martin Gilliland

Global VP, IT Practice, VP, IT Go To Market Strategies

Sydney, Australia Singapore

Frost & Sullivan Frost & Sullivan

March 2009

Agenda

1. Recap of Poll Result from Previous webcast

2. Brief Overview: Where We Are in the Series

3. The 10 Growth Processes

4. Why Look at Growth Processes?

5. Growth Process Analysis

6. What is the Right Growth Strategy?

7. Geographic Expansion

8. Merger and Acquisition

9. Outsourcing to Drive Growth

10. New Product Launch

11. New Product Development

Wait

and see

strategy

12%Cutting

operationaal

costs

19%

M&A

strategy

0%

Market share

expansion

12%

Rebound

Strategy

19%$ in growth

strategy

0%

Product

Developmen

t:

19%

Distribution

Channel

Strategies

19%

Q3 2009

17%

Q4 2009

50%

Q4 2010

33%

Q4 2011

0%

Beyond

0%

Polling Questions from February APAC CSG (Chairman’s Series on Growth)

Have you cut back your 2009 business plans due to the fear of an economic downturn?

What strategies are your company utilising during this period of economic turmoil? Please select all that apply:

Which of the following Growth Processes is your company depending more heavily on to drive growth?

Which member(s) of your "Growth Team" are currently driving your company's growth strategy?

The Growth Acceleration System

The 10 Core Tools To Drive Growth

• Mergers & Acquisitions

• New Product Development

• Geographic Expansion

• Strategic Partnering

• New Product Launch

• Growth Sourcing…Outsourcing

• Distribution Channel Optimisations

• New Customer Application

• Competitive Strategy

• Marketing/Sales Strategy

Why Look at the 10 Core Tools?

1. Optimising Impact of Growth Pipeline

2. Comprehensive Review of All Opportunities

3. Avoids Over-Reliance on One Growth Process

4. Checklist System Identifies Undiscovered Opportunities

5. Supports Innovation and the Creative Process

6. Global Environment is Increasingly Competitive

Annual CEO Survey on Growth StrategyCore Tool Analysis: 4 Measurements

• Where is the Growth Coming From?

• The Current Utilisation of Growth Tools and Processes

• The Most Difficult Growth Tools to Utilise

• Evaluation of Organisations Skills per Growth Process

Sources of Growth…An Over-reliance on New Product Development

Top Successes Regarding Growth..

26%

16%

9%

12% 12%

5%

9% 10%

17%

20%

12%14%

7%

16%

8%6%

14%

10%

21%

14% 13%11% 11%

5%

0%

10%

20%

30%

Technology

Development

Product

Strategy

Marketing

Strategy

Competitive

Strategy

Customer

Orientation &

Support

Sales Strategy General

Growth

Strategy

Geographic

Expansion

#1 Success #2 Success #3 Success

What are the top three areas that you have had the most success in growth?

Total SampleSelecting… 57% 47% 42% 39% 31% 31% 28%

21%

Growth Tools & Techniques…Underutilized Management Tools

Most Underutilized Management Tools...

34%

26%

20% 20%18%

16%15%

14% 14% 14%

0%

10%

20%

30%

40%

Strategic

Partnering

Customer

Research

Strategic

Planning

Market

Analysis

Sales

Strategy

R&D Marketing

Strategy

New Product

Launch

What are the main three management tools utilized by your organization to drive growth?

By far, Strategic Partnering is the most underutilized management tool, as reported by 34% of CEOs.

And, while Customer Research is the second most underutilized, various other management tools appear

to be used more often.

TechnologyImplementation

Mergers & Acquisitions

Difficult Growth Processes to Implement

Most Difficult Management Tools to Implement...

39%

34%

22%20% 19%

16%15% 15%

13%12%

0%

10%

20%

30%

40%

Mergers &

Acquisitions

Strategic

Partnering

Strategic

Planning

New Product

Launch

Market

Analysis

Growth

Strategy

Sales

Strategy

Customer

Research

What are the main three management tools utilized by your organization to drive growth?

As previously reported, only 2% of CEOs report they strictly utilize Mergers & Acquisitions as a growth

strategy…and most likely the primary reason is that Mergers & Acquisitions are considered the most

difficult tool to implement (39%). Also notable, the same proportion (34%) citing that Strategic Partnering

is underutilized also report that it is difficult to implement…thus, this seems to explain the earlier results.

TechnologyImplementation

Competitive Benchmarking

Very Good/Good… 61% 58% 57% 54% 53% 53% 48% 46% 46% 41%

Growth Processes – The CEO’s Assessment of Skill

Organization's Skill/Techniques

12%21%

12% 13% 9% 9% 14%7% 9%

49%37%

43% 42% 40% 44% 39% 32%39% 32%

29%24% 31% 33% 37% 32% 38%

36% 41% 47%

9%

10%10% 10% 7% 12% 12% 14% 10% 8%

14%

8%

0%

20%

40%

60%

80%

100%

R&D Strategic

Planning

Growth

Strategy

Marketing

Strategy

Sales

Strategy

Customer

Research

Strategic

Partnering

Best

Practices

New Product

Launch

Very Good Good Fair Poor Very Poor Not Applicable

How would you rate your organization regarding the following growth skill/techniques?

Note: Proportions less than 5 percent are not shown.

TechnologyImplementation

Geographical Expansion Model - Indicators

Factors Description Indicators

Business Environment • Political stability

• Political Stability

• Degree of Openness

• Corruption

Economy• Economic stability • Purchasing power

• Economic Growth

• GDP Per Capita

• Exchange Rate

• Inflation

Labor• Labor force • Labor cost trends

• Employment

• Youth Unemployment

• Minimum Wages

• Labor Cost

Infrastructure • Cost of operation • Quality of Infrastructure

• Computers and Internet Users

• Real Estate Prices

• Telephone and Cellular Subscribers

• Telephone Charges and Broadband Subscribers

Education • Workforce availability• Number of Graduates

• Graduate Enrolment Ratio

• Language Skills - English and other languages

Market Indicators

• Revenue potential • Competition • Resources

• Revenues and Revenue Potential

• Revenues and Revenue Potential (Region)

• Availability of Qualified staff

• Number of Competitors

• Foreign Language skills

Geographical Expansion Model - Ranking

Rankings 2000 2005 2010 2015

1 UK UK UK UK

2 Argentina Argentina Argentina Poland

3 Czech Poland Poland Argentina

4 Poland Germany Czech Czech

5 Germany Czech Germany Germany

6 Hungary Hungary Hungary Hungary

7 Slovakia Slovakia Slovakia Slovakia

8 Slovenia Slovevia Slovenia Slovenia

9 Lithuania Lithuania Lithuania Lithuania

10 Estonia Estonia Estonia Estonia

11 Latvia Serbia Latvia Latvia

12 Croatia Croatia Croatia Croatia

13 Serbia Latvia Serbia Serbia

14 Macedonia Macedonia Bulgaria Bulgaria

15 Bulgaria Bulgaria Macedonia Romania

16 Albania Romania Romania Bosnia

17 Bosnia Albania Albania Macedonia

Sam

ple

What is the Right Growth Strategy?

Advantages

• Greater control

• Less capital structure risk

• Involves less uncertainty

• Allows focus on core competencies

• Greater investor transparency

Advantages

• Speed

• Diversification/access to new product/ service line, intellectual property, and capabilities

• Increase global reach and market share

• Acquire talent and human resources

• Game changing potential

• Accelerate revenue growth

ORGANIC

Disadvantages

• Takes time and long-term focus

• More reliant on own capabilities

M&A

Disadvantages

• Integration issues

• Increased potential to destroy shareholder value over long term

Key Challenges

Source: Frost & Sullivan

Key Challenges to an Organic Growth Strategy

Talent, 26.9%

Shareholder

demand for near-

term impact,

21.5%

Cost of Capital,

15.4%

Ideas, 10.4%

Material Costs,

5.8%

Political, 5.4%

Other, 14.6%

Key Barriers to a Successful M&A Strategy

Valuations, 36.1%

Lack of Targets, 16.2%Competition from

Financial Buyers

(Private Equity), 12.0%

Legal Issues, 9.1%

Shareholder Concerns,

7.5%

Market Reaction, 5.0%

Other, 14.1%

What is the right approach?

Organic Growth – Process Acquisition Growth - Issues

Successful firms have higher IRR hurdle

rates

Disciplined capital allocation process

Internal communication

Pipeline measurement and growth

budgets

Effective understanding of strengths and

weaknesses

Clear goals and objectives

Proactive approach and opportunistic

Ongoing process

Setting the right expectations

Clear goals and objectives

Systematic due diligence takes time and

creativity

Focus on pipeline creation as well as

execution

The right structure and process are important for both options

• M&A should be used as a tool for growth - not necessarily a strategy in itself

• A combination of organic and inorganic is best

• Explore and understand alternative ways of measuring success, risk, and

growth opportunities (cost of not doing a deal)

M&A Thought Leadership

We break the M&A process into four steps:

1. Sector or trend overview

2. Target specific analysis

3. Transaction specific due diligence

4. Post-deal integration and strategy

Leverage specific tools and processes that support each step

Sector and Trend Overview

Target SpecificAnalysis

Deal Origination

Transaction Due Diligence

Post-Deal Integration and Strategy

Frost & Sullivan

Outsourcing Model

Off-shoringGrowth

Objectives

Financial Benefit –ROI/EVA

External Internal

Internal

GROWTH ZONE &

STRATEGY

Our Approach to Growth-Sourcing

Our highly-skilled team of

consultants can help you meet your

growth objectives by:

• Assessing the external outsourcing

opportunities utilising Frost & Sullivan

Growth Sourcing Model

• Evaluating your internal growth

objectives and execution capabilities

• Partnering with your team to translate

these opportunities into measurable

growth

Review of Current Outsourcing Status

and Growth Objectives

Secondary/Primary

Research

Quantitative and Qualitative

Analysis

Financial Impact and

Economic Benefit

Client Briefing on Objectives and Current

Outsourcing Status

Frost & Sullivan Industry Database, Country economic forecasts,

primary research with successful companies in

industry or adjacent markets, case studies

Frost & Sullivan outsourcing model-

Destination of choice. Growth Thought Leader:

Growth Workshop, Operational Best Practices,

Outsource Strategy

Return On Investment, Economic Value Add. Outsourcing for growth on top-line and bottom-

line

STRATEGIC REVIEW COMMITTEE

Frost & Sullivan's Strategic Review Committee, composed of Senior Partners, reviews the research strategies, findings, and recommendations at key points throughout the project. This process is designed to ensure that 1) the project objectives are completely met, 2) the findings and recommendations provide the utmost strategic value to clients, and 3) the client’s research investment is fully maximized.

Growth Sourcing Methodology

Frost & Sullivan Growth-Sourcing Model

In d ic a to r M e a s u re m e n tF ro s t & S u lliv a n -

S u b W e ig h t

F ro s t & S u lliv a n -

T o ta l W e ig h t

U s e r - S u b

W e ig h t

U s e r - T o ta l

W e ig h t

F ro s t & S u lliv a n -

T h re s h o ld

U s e r -

T h re s h o ldP o litic a l S ta b ility 4 0 .0 0

B u s in e s s E n v iro n m e n t D e g re e o f O p e n n e s s 3 0 .0 0

C o rru p tio n 3 0 .0 0

1 0 0 .0 0 0 .0 0

F ive Y e a r G ro w th 1 0 .0 0

G D P P e r C a p ita 5 0 .0 0

E c o n o m y E x c h a n g e R a te 1 5 .0 0

In fla tio n 1 5 .0 0

F D I 1 0 .0 0

1 0 0 .0 0 0 .0 0

E m p lo ym e n t 1 2 .0 0

L a b o r Y o u th U n e m p lo ym e n t 2 4 .0 0

M in W a g e s 2 0 .0 0

L a b o r C o s t 4 4 .0 0

1 0 0 .0 0 0 .0 0

C o m p u te rs ( p e r 1 0 0 ) 1 3 .0 0

C o m p u te rs ( 1 0 0 0 0 0 0 ) 4 .0 0

In te rn e t U s e rs (p e r 1 0 0 ) 1 3 .0 0

In fra s tru c tu re In te rn e t U s e rs (p e r 1 0 0 0 ) 8 .0 0

R e a l e s ta te p r ic e s 1 4 .0 0

T e le p h o n e 6 .0 0

T e l C h a rg e s 1 7 .0 0

B ro a d b a n d S u b s c rib e rs 2 5 .0 0

1 0 0 .0 0 0 .0 0

G ra d u a te s 3 7 .0 0

E d u c a tio n G ra d u a te E n ro lm e n t 1 3 .0 0

S ize o f E n g lis h S p e a k in g P o p u la tio n 5 0 .0 0

1 0 0 .0 0 1 0 0 0 .0 0 0

7 .5

7 .5

5 0

2 0

1 5 1

1

0 .7 5

1

1

Business Environment

For doing business, stable political conditions, consistent policy, and regulatory environment are important and have a greater degree of influence

on the decisions relating to the choice of offshore locations.

Economy

Consistent economic growth helps in stable economic indicators such as inflation, exchange rate, and interest rate has significant impact on costs and

business and profits.

Labor

For outsourcing decisions, wage differential among the countries is the key. Employment and unemployment and labor cost trends are

Infrastructure

Measures use and penetration of ICT technologies and trends in telephone and internet charges

Education

Resource availability and quality of the workforce are important determinants of location choice decisions.

Frost & Sullivan Growth-Sourcing Model

Rankings 2000 2005 2010 2015

1 India India India India

2 The fYR of Macedonia Estonia Lithuania Lithuania

3 Serbia and Montenegro The fYR of Macedonia Estonia Estonia

4 Estonia Serbia and Montenegro Poland Poland

5 Bulgaria Poland Bulgaria Bulgaria

6 Latvia Lithuania Serbia and Montenegro Serbia and Montenegro

7 Poland Bulgaria The fYR of Macedonia Slovakia

8 Lithuania Slovakia Latvia Latvia

9 Croatia Croatia Slovakia The fYR of Macedonia

10 Slovakia Hungary Croatia Croatia

11 Czech Republic Latvia Czech Republic Czech Republic

12 Hungary Czech Republic Hungary Romania

13 Albania Romania Argentina Hungary

14 Romania Argentina Romania Argentina

15 Bosnia and Herzegovina Albania Malta Slovenia

16 Argentina Malta Slovenia Malta

17 Slovenia Slovenia Albania Bosnia and Herzegovina

18 Cyprus UK Bosnia and Herzegovina Albania

19 Malta Bosnia and Herzegovina USA USA

20 USA Cyprus UK UK

21 UK USA Cyprus Cyprus

22 Germany Germany Germany Germany

• Allows quantitative analysis of location (country and city) attractiveness

• Detailed investigation based on 22 critical indicators

• Allows users to assign weights

• Built-in flexibility to factor industry-specific or company-specific issues

• Frost & Sullivan consultants utilize model in context of company objective and industry dynamics to develop optimal strategy

• Provides ranking for Business Environment, Economy, Labor, Infrastructure and Education. Also provides overall rankings

Product Launch Process

The Growth Acceleration System

(FGP)

Vision: What We Do for You

What:

Frost & Sullivan helps

clients perform at industry

best-in-class levels for

growth, innovation and

leadership

Vision: How We Do IT

How:

Frost & Sullivan clients

leverage our Growth

Acceleration System

which provides disciplined

research and functional best

practices to generate,

evaluate and implement

powerful growth strategies

Vision: When Should We Start

Now:

Now is the time to partner

with Frost & Sullivan and

leverage our Growth

Partnership Service to

drive your career and

company

An Unrivaled Value Proposition to Drive Growth

External Challenges Internal Challenges

TEAM Research

Industry Insights

Best Practices

Career Insights

Growth

Acceleration

Single User-License

Annual Membership Program

The Growth Partnership Service: User LicenseIndustry-Focused Research: External Growth Environment

• Technical Insights Research & Alerts

• Country Industry Forecasts

• Decision Support Databases

• Economic Impact Articles

• Analyst Briefings

• Analyst Inquiry Hours

• Best Practices Research

• Financial Benchmarking & Analysis

Industry and market intelligence for critical growth decision making

• Growth Opportunity Newsletters

• Movers & Shakers Interviews

• Market Engineering Research

• Market Insights

• Client Value Enhancement

• Client Councils

• Client Portal

• Industry Tracker

The Growth Partnership Service User LicenseCareer-Focused Research and Services: Internal Growth Environment

• Ask the Thought Leader Webcast

• Growth Process Toolkits

• Best Practice Guidebooks

• Executive MindXchange

• Growth Innovation & Leadership Global Congress

• Executive Briefings

• Growth Strategy Dialogues

• Online Executive Forum

• Growth Excellence Matrix Diagnostic

• Client Councils

Supporting the CEO & the Growth

Team with Growth Strategy

www.frost.com/gilglobalGIL GLOBAL 2009A global community focused on Growth, Innovation and Leadership

October 2009

Kuala Lumpur

October 2009

Shanghai

December 2009

Sao Paulo

February 2010

Tel Aviv

May 2009

London

September 2009

San Francisco

October 2009

Middle East

October 2009

India

Next Steps

� Request a proposal for Growth Partnership Services to support you and your team to

accelerate the growth of your company.

� Attend Frost & Sullivan Executive MindXchange best practice networking events

(http://www.frost.com/cal) to share and address strategic challenges

� Consider Conducting a 360 Degree Growth Workshop to support your long-term growth

strategy

� Join us at a Growth, Innovation and Leadership 2009: A Frost & Sullivan Global Congress

on Corporate Growth (www.frost.com/gilglobal)

� Register for the next Chairman’s Series on Growth: (http://www.frost.com/growthapac)

� Schedule a Recession Strategy Session with a Frost & Sullivan Industry consultant (email

us: growthteam@frost.com)

� Schedule a One-on-One Growth Strategy Dialogue with a Frost & Sullivan Growth

Consultant (email us: growthteam@frost.com)

� Register for Frost & Sullivan’s Growth Opportunity Newsletter and Growth Team

Membership e Bulletin to keep abreast of growth opportunities in your industry and best

practices in your career track. (www.frost.com)

Contact Us

If you have questions or would like further information about anything we discussed, please send your query to the email provided below and we will get back to you shortly.

Alvin Chua

Account Manager

Automotive, Transportation & Logistics

DID: +65 6890 0997

Mob: +65 9199 4566

eMail: alvin.chua@frost.com