developing your commercial awareness

BUSINESS WITH CONFIDENCE icaew.com

Angus Farr

Developing your commercial awareness


• Qualified with a medium

sized firm in London

• Has worked in various

training and HR roles post-

qualification

• Now Angus runs workshops

for professional staff in

commercial and

management skills

Angus Farr MA FCA MCIPD


What we’ll cover today

• Definitions and context

• Components

• A case study

• Five commercial models


Definitions and context

• What is commercial awareness?

• Six key questions!

• Why commercial awareness is so important


Components

• Knowledge:

– Business

– Finance

– Economics

– Models

– Language

• Experience

• Attitude


Five commercial models

• Five useful models

– SWOT

– Five ‘M’s of management

– ‘Five Forces’ of competition

– PEST analysis

– Growth matrix

• A case study


Introducing …


CFAB Air!

• One route: London to Beijing

• One plane

• Business class only

• Great reputation for entertainment and punctuality

• Ownership: 55% entrepreneur, 45% institutional

• Attracting talent and expertise from across the world


SWOT analysis

• Useful model to get an overview of an organisation

• Attributed to Albert Humphrey in 1960s

• SWOT:

– Strengths

– Weaknesses

– Opportunities

– Threats

• Usually depicted in a grid


SWOT analysis

Strengths

•

•

•

Weaknesses

•

•

•

Opportunities

•

•

•

Threats

•

•

•


SWOT analysis

Strengths

• Reputation

•

•

Weaknesses

• One plane

•

•

Opportunities

• Expand routes

•

•

Threats

• Competition

•

•


Five ‘M’s

• Useful model to understand the internal workings of an

organisation

• The five ‘M’s that need to be managed in any organisation

– Money

– Manpower

– Methods

– Machines

– Markets


Five ‘M’s

• Money – institutional investor plus entrepreneur

• Manpower – employed and contract staff

• Methods – booking through to flights through to maintenance

• Machines – aircraft themselves and other equipment

• Markets – UK and China


Five ‘M’s

• Money – institutional investor plus entrepreneur

• Manpower – employed and contract staff

• Methods – booking through to flights through to maintenance

• Machines – aircraft themselves and other equipment

• Markets – UK and China

• Marketing mix – 4 ‘P’s

– Product

– Price

– Place

– Promotion


Five Forces

• Useful model to understand the competitive position of an

organisation within its industry

• Developed by Michael Porter in the 1980s

1. Existing rivalry

2. Threat of new entrants

3. Power of buyers

4. Power of suppliers

5. Threat of substitutes


Five Forces

1. Existing rivalry: HIGH – existing airlines

2. Threat of new entrants: LOW – high costs

3. Power of buyers: MEDIUM – B2B v B2C

4. Power of suppliers: MEDIUM – some low, some high

5. Threat of substitutes: LOW – technology


PEST analysis

• Useful model to understand the ‘macro’ environment external

to an industry

• Political

• Economic

• Social

• Technological


PEST analysis

• Political – bilateral UK-China relations

• Economic – recession

• Social – inward Chinese tourism into UK

• Technological - obsolescence


PEST(LE) analysis




• Technological – obsolescence

• Legal

• Environmental


PEST(LE) analysis




• Technological – obsolescence

• Legal – airport negotiations

• Environmental - CO2 offset


Growth matrix

• Useful model to understand strategies for growth open to

organisations

• Developed by Igor Ansoff in the 1960s

Existing

markets

New

markets

Existing

Products

Market

Penetration

Market

Development

New

Products

Product

Development

Diversification


Growth matrix

Existing

markets

New

markets

Existing

Products

‘High end’

tourist trade

New routes

e.g. Delhi/NY

New

Products

Travel insurance

Hotels


So …

• Commercial awareness is important!

• It’s a blend of

– Knowledge

– Experience

– Attitude

• Models do provide a useful structure

• Keep on learning!


Questions?


Angus Farr

Developing your commercial awareness

Thank you for watching

developing your commercial awareness

Documents