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September 2007
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A4 Sample Slides.ppt 2
Five types of slides
Text and columns
Graphs
Tables
Diagrams
Maps and timelines
Text and columns
We recommend entering this market segment
High growth and synergy with existing business make this an attractive opportunity
Attractive, high growth market Need to determine entry strategy

Moderately sized market, but growing fast Prioritize portfolio of growth opportunities
• $5B in revenue in 2006 • Compare options to other growth areas
• 25% growth projected through 2010 • Evaluate impact of entry into this market on
financial flexibility
Fragmented market that is ripe for
consolidation Determine market entry strategy—organic
• Top-15 players only account for 20% versus acquisition
of the market • Can leverage existing capabilities
• Well priced acquisition would be faster
Marketing experience and owning the channel
will be key to success in future Begin to identify acquisition targets and
• Existing players have limited marketing conduct strategic due diligence
capabilities • Evaluate investment requirements and
• Currently, no clear market leader optimal structuring
• Explore synergies with current business
Speed is critical in this fast moving market segment
Portfolio review at €5B industrial conglomerate
resulting in split of company
Context and challenges Results and impact
Company consisted of multiple business units in such diverse fields Based on our analysis, the company decided to divest the highly
as automotive supply, engineering and specialty chemicals profitable specialty chemicals division
• High expected exit value given strong cash-flows from
Capital markets had placed a conglomerate discount on the company businesses
that had also accumulated a significant amount of debt through • Limited organic growth opportunities
acquisitions • Limited inherent portfolio logic of different businesses
Enormous pressure from analysts, investors and supervisory board New core allows for release of significant value potential (share price
members to overhaul the overall strategy and structure improvement over the course of the project of 50%)
• Abolishment of current holding structure
Aim: reduction of value-reducing factors and significant improvement • Reduction of net debt to almost zero
of capital structure • Significant growth potential (organic and by M&A)
BCG approach: what we did Why the client choose BCG
Rigorous, fact-based portfolio analysis based on BCG's proven traffic- BCG had performed another portfolio analysis for the client two years
light portfolio approach earlier that was highly acclaimed by the then CEO for its rigorosity,
• Analysis of strategic quality of portfolio: market attractiveness clarity, and independence
and competitive position of BUs
• Analysis of growth and value-creation opportunities by BU In this crucial moment of change, the new CEO relied on
• Our proven methodology
Development of potential future portfolios of the company based on • Our ability to integrate different industry experts in our team
different options for the core—including equity stories and M&A • Our knowledge of the company, and
buying lists for each option • Our ability to seamlessly cooperate with an investment bank
hired to support the upcoming exit of one of the main divisions
Evaluation of portfolio options based on wide set of criteria, including
strategic, financial and capital-market related aspects
Project examples in corporate strategy
Region/
Date count Topic Project description
2005 Europe Strategy Defined a global strategy for the ice cream business of a major
global consumer goods company
2005 Asia Portfolio Conducted an portfolio diversification project for a major

international airline
2005 Americas Portfolio/ Developed a portfolio and growth strategy for a conglomerate in
Growth beverage and snack-food manufacturing
2005 Europe Growth Developed growth strategy for subsidiary of a major European
airline
2004 Europe Growth Global growth strategy for the wireless internet services of a major
mobile telecommunication company
2004 Americas Transformation Developed transformation growth and financial strategy
2004 Asia Transformation Transformation strategy for an automotive player in India
2004 Americ Portfolio Portfolio shareholder value strategy for a global oil corporation
Source: BCG case database 2005

Increased demand has stressed Artemisinin supply chain
Expanded cultivation but High prices provide incentive

issues persist for counterfeiting
Increased demand led to expansion Study found average of 38% of artesunate
• Acreage more than doubled over past years bought in SE Asia shops did not contain
• Expanding from China and Vietnam to other active drug
continents, including Africa
Vietnam 64%
Despite expansion, still supply-demand Myanmar 40%

mismatch Laos 38%
• Difficult to obtain reliable demand forecasts Cambodia 25%
• Manufacturing capacity needs to be
Thailand 11%
committed early due to long production cycle
Counterfeiters getting increasingly
Supply-demand mismatch has had negative sophisticated, e.g., holograms
consequences Genuine Counterfeit
• Price hikes for Artemisinin and its derivatives,
limiting access to ACTs
• Prices of ACTs (co-blister or fixed dose
combination) well above monotherapies
Source: WHO factsheet on counterfeit medicines, May 2005; “Fake artesunate in southeast Asia”, The Lancet, June 16, 2001
Different organizational models may be
appropriate for different retailers
Coordinated Functional
Merchant as muscle Merchant as GM specialists assembly line
Merchant
Merchant Design Marketing Merchant Proto Fore-

QA
Design planner Design dev casting
Inventory Pre-pro- PD Planning Merch

Sourcing Quality Merchant Planning
mgt duction process analyst
Mktg Fabric Fin serv Sour-
Textiles dev unit cing
Order
Fabric Pro- Distri- planner
Creative Design
spec. duction bution
Proc. Inv
planning planner
Merchant acts as supply Merchant accountable for Co-located cross- Highly autonomous
chain 'quarterback' delivering numbers and functional team managed functions work
• High decision authority coordinating across by rigid timeline and independently
across chain supply chain well-defined meetings • Focused, defined
• High P&L • Seen as 'mini-GM' responsibilities
accountability Highly specialized
Functional specialties functional activities and Handoffs made along
Merchant and inventory make decisions in deep areas of expertise very regimented process
manager do most supply respective areas with clear accounta-
chain activities • Look to merchant to No clear functional bilities
make tradeoffs and 'leader'; rigorous
set priorities process orchestrates No real merchant role
supply chain
Additional requirements to sell through
catalogue sellers have to be met
Requirements Importance Importance to

of catalogue sellers to sellers catalogue sellers
Delivery on time Catalogue reseller cannot afford to 'say no'
Catalogue reseller cannot afford mistakes

Excellent packaging
(costly and may lose the customer)
Provide catalogue-ready
Requires different kind of sales material
sales material
Deliver larger quantities

Catalogues often have a wide circulation
(several 100's)
Price Must be competitive
Deliver internationally To service international catalogue resellers
Is client capable of meeting these requirements?
Source: Interviews with catalogue sellers

Graphs
We win where we invest
Revenue growth driven by Korea, This corresponds with

Taiwan, HK, and Singapore our investment
Revenue (B$) We have invested in Korea, Taiwan, HK, and

150 Singapore
141
• Allocated ~ 80% of additional BME and SG&A
spend
• Reached #1 market position
100 97 • Korea • Contributed over 100% of our revenue growth
• Taiwan
• Hong Kong
• Singapore
We believe that we have a competitive
advantage that is extendable
50
• SG&A investment is a key driver of results
• Crucial to put in place a strong team
• Rest of AP Our company has window of opportunity to

build a sustainable market leadership position
0
2003 2005
+317%
50 48,4
45
10,0 电力
40
35 5,6 道路运输
30 6,0 化工
25 24,2
6,8 钢铁
5,0
20
+109% 2,8
6,8 水泥
15 3,0
11,6
3,4
10 2,0 6,0 煤炭开发
1,4 3,4
1,5
5 1,7 3,0
1,7 7,2 其他
1,5 3,6
0 1,8
2008 年 2010 年 2020 年
Health care spending increases with economic growth
Total expenditure on health vs. GDP—comparison across countries 1 (2003)

Expenditure per capita (K$)
6
United States
Switzerland
Norway
United Kingdom
4
Belgium
France Denmark
Germany
Sweden
Canada Netherlands
Indonesia Australia Japan
China Ireland
Colombia Italy
2 New
Finland
Thailand Zealand Spain
Brazil Portugal
Argentina Greece
South Africa Taiwan Hong Kong
Chile Singapore
Mexico South Korea
Turkey
Malaysia
0
0 10,000 20,000 30,000 40,000 50,000 60,000
GDP per capita ($)
1. Argentina, Australia, Belgium, Brazil, Canada, Chile, China, Colombia, Denmark, Finland, France, Germany, Greece, Hong Kong, India, Indonesia, Ireland, Italy, Japan, Malaysia, Mexico,
Netherlands, New Zealand, Norway, Philippines, Portugal, Singapore, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan, Thailand, Turkey, United Kingdom, United States
Source: EIU; BCG analysis
+317%
50 48,4
45
10,0 电力
40
35 5,6 道路运输
30 6,0 化工
25 24,2
6,8 钢铁
5,0
20
+109% 2,8
6,8 水泥
15 3,0
11,6
3,4
10 2,0 6,0 煤炭开发
1,4 3,4
1,5
5 1,7 3,0
1,7 7,2 其他
1,5 3,6
0 1,8
2008 年 2010 年 2020 年
Model predicts ~ $35M upfront payment for compound X
Biotech licensing payments: Correlation between upfront payments and peak sales
Upfront payment (M$)

80
Compound X
$500M peak sales =
60
$35M upfront
40
20
Licensing
deals
0
0 100 200 300 400 500 600
Projected peak sales (M$)

Regression Upfront Peak Sales
= - $4.2M R = 0.76
2
Equation payment 12.1
Note: Regression omits Cephalon-Alkermes deal

Source: BCG deal database; BCG analysis
Early phases of development are getting longer
Phase 1 (median) Phase 2 (median) Phase 3 (median)
Duration (Months) Duration (Months) Duration (Months)

25 40 60
30% 28% 9%
20
30
40
15
20
18.4 months 29.9 months
10
(’01–’06 (’01–’06 38.9 months
14.2 months 23.3 months 20 36.5 months
median) median) (’01–’06
(’94–’00 (’94–’00 (’94–’00
10 median)
median) median) median)
5
0 0 0
1994 1997 2000 2003 2006 1994 1997 2000 2003 2006 1994 1997 2000 2003 2006
Year of end of phase
Note: Data for top 20 Pharma only. Phase duration is defined as time from starting one phase to the beginning the next phase
Source: Pharmaprojects R&D database; BCG analysis
Phase II trials are getting bigger
Mean patient enrollment Growing number of large

increasing faster than median Phase II studies
Expected patient enrollment Number of Phase II trials with > 500 patients
250 15
Mean
12
200
10 10
10
150
Median
100
5
3
50
2
1 1
0 0
2002 2003 2004 2005 2006 2000 2001 2002 2003 2004 2005 2006
Note: Data from top 20 pharma companies and top 10 biotechs

Source: www.clinicaltrials.gov; BCG analysis
Emerging markets: a potential source of inexpensive labor
Low cost labor markets are showing rapid industrial growth
Growth of industrial production in % (2001–05)

9 Low cost, fast growth
industrial GDP:
$1.1 trillion
China Korea
Medium cost, solid growth High cost & low growth
Malaysia industrial GDP: current industrial GDP:
6 Indonesia $0.5 trillion $6.2 trillion
India
Thailand
Canada
Russia Taiwan
France
Germany
3 Spain Japan
Italy
UK
US
0
0 10 20 30
Industrial Manufacturing compensation 2002 ($/hour)

GDP $500B
Source: Desk research; BCG analysis

Comparable product typically spend ~ $70M pre-launch
Top-down estimate
Pre-launch spend (M$)

40
 $70M
32
29
30
Adjusted pre-launch
spend (central + US)
for primary care
product with 20
• $1B peak sales
• New MoA
• New TA
10 7
0
Ph I Ph II Ph III Filing
Average: $2M $7M $29M $32M
For comparison: Celebrex estimated to have incurred

~ $160M1 pre-launch spend
1. $2B+ launch, competitive with Vioxx, significant investment in un-branded promotion pre-launch to establish new MoA
Note: Comparable defined as $1B peak sales, in new TA for company with new MoA
Source: BCG benchmark study, 2002; best practice, LLP benchmark report, 2004; Cutting Edge Information, Inc. benchmarking report, 2003; BCG analysis
Agricultural input only small part
of food value chain's value-added
Global sales and value added of key steps in food and agro 2015
B$
3,000 715 2,870
1,218
2,000
1,000 645 36
172
60 24
0
Agricultural input Primary processing Secondary Retail

Gene-modified Food
proc./ dis- 
Agchem Farming manufact. tribution
seed ingredients
Source: Deutsche Banc Alex. Brown research 1999; FAO statistical database 1997; CRB commodity yearbook 1997; BCG estimate
No clear champion can yet be identified across segments
Loan portfolio by bank in 2004 (%)

100
11 11 12 12 9
15 14
33 30 Consumer loans
75
33
38 36
40
50
49
57 21
50 40 SME loans
56
25 51 52
48 46
41
37
28 30 Corporate loans
0
BBL SCIB KTB BAY KBANK TMB BT SCB BOA
Corporate-focus SME-focus Consumer-focus
Banks increasingly focused but none can be considered

overall or segment champion
1. UOBR has made a move to merge with BOA
Source: DB/Tisco estimates; company data; BCG analysis
Opportunities exist in rapidly growing motorcycle market
Rapid growth in total registered motorcycles … and room for further penetration compared
and penetration … to more developed markets
Registered motorcycles Motorcycle pene- Bikes per 100 pax in selected SE Asia countries (2005) 2
(M vehicles) tration rate1 (%)
16 30 Malaysia 28
14.5
CAGR 12.8
22%
12 Thailand 23
10.9
9.5 20
8.0 Vietnam 17
8 17%
16%
5.4
13%
12% 10 Indonesia 8
4 10%
7%
Philippines 3
0 0
2000 2001 2002 2003 2004 2005 0 10 20 30
1. Motorcycle registration divided by country population 2. Number of motorcycles in use

Source: Motorcycle registration in Country A compiled by Honda; EIU
Innovative production will increase uptake of
Artemisinin based malaria therapy
Innovative production will lower Leading to uptake in demand for ACT therapy
cost of most therapy to under $1.00 for malaria in public sector
New cost Treatments (thousands)

Coartem 0.77 1.70 200
Artequin 0.69 1.46
Mono Ar 1.19
CQ + PQ
150
Panda 0.69 1.13 Other
Q
Mono As 1.09 SP
DB289/AQ13
Generic Coartem 0.77 1.04 Oz
100
CQ
Arsucam 0.69 0.94 Non-MMV ACT
CDA 0.69 0.85
50 Euartekin
CoArinate 0.69 0.79
Coartem
Arsucam FDC 0.69 0.51
EuArtekin 0.32 0.45

0
0.0
0,0 0.5
0,5 1.0
1,0 1.5
1,5 2.0
2,0 2.5
2,5 2006 2008 2010 2012 2014 2016 2018 2020
Total cost per treatment ($)
Overhead allocation Fill & finish Combination Artemisinin
Savings due to biosynthetic
Note: Product mix preliminary; worldwide demand view. Assumes blister packaging unless noted, 10% overhead allocation based on ex factory costs. Assumes biosynthetic Artemisinin launched in
2009 at cost of $100/kg and high-yield plants launch in 2010 at a cost of $100/kg. Scenario assumes biosynthetic Artemisinin available to all ACT manufacturers
Source: BCG analysis
Wide variability in shareholder returns
Relative stock prices of packaged food companies

Indexed (%)1 PE2 TSR3
(ttm) (00–04)
175
Hershey 26.8 20.9%

125
Clear winners
75 Wrigley 29.0 12.6%
Kellogg 19.2 11.2%
Next Tier
Gen. Mills 14.6 9.7%
25
Nestle 18.0 9.5%
Index1 17.0 8.9%

-25 Heinz 17.3 5.3%
Kraft 20.1 n/a
Sara Lee 20.4 5.0%
-75 Campbell 18.1 (2.3%)

Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05
What are the key differentiators of performance?

1. S&P 400 packaged food and meat index 2. Yahoo! 22 Nov 2005, based on trailing twelve months; Nestle’s P/E estimate for 2005 by SG Cross Research 3. Total shareholder return (compounded
annually 2000–2004) based on BCG Value Science Center research
Source: Yahoo!, company 10k’s; BCG analysis
Tool illustration 2: ready-willing-able audit
1 Merger rationale
1
2
Strongly disagree
Disagree somewhat is understood
Ready At project launch
At redesign launch
3 Uncertain At implementation kick off
4 Agree somewhat 25 Quick and good
5 Strongly agree decision making 2 Need for strategic
alignment is high
24 Appropriate long Term/ 5
short term actions 3 The objectives and threats
are clear
23 Right support services 4 4 Competitors will
to facilitate merger outperform us otherwise
22 Sufficient measu-
3 5 Need to merge and align
organizations is high
rement systems
21 Everybody knows how 2 6 Merger will help to increase

he can improve efficiency and effectiveness
1
20 Right organization 7 NewCo organization and
culture to succeed strategic objectives are clear
0
19 Management has
skills needed 8 Shared view on urgency
to realize integration
18 Appropriate resources to
9 Willing to redefine my
implement the merger
own role
10 Willing to make
Able 17 Right HR systems and significant commitment
competencies
11 We will build a
16 Organization is open common culture
and willing to change
12 No sacred cows
15 Feel projects are
well structured 14 Full and 13 Difficulties and
active support constraints are Willing
from mgmt. clearly addressed
Customer perspective compared to relative performance
Example of customer scorecard
Scores
Customer importance: Highly important Neutral Not important

Performance: Very good Medium Worst
5 4 3 2 1
Criteria
Reliability
Quality
Technical know-how
Performance
Knowledge sales
Entrepreneurial culture
Price
After sales service
Product innovation
Consulting Importance
Lead times to customer
Sample time
Image
Regional presence
Program width
Offer time
Program depth
Brand recognition
Marketing
Regional production
With lower variability cycle time can be decreased
Long lead times caused by well-padded supply chain
Example: knit garment manufactured in Hong Kong

Value added time
Non-value added time
Transit time
Fabric made Dye Transit
Raw materials Fabric Sew and

inspection Cut Transit audit Iron Pack
Audit
Cut and sew Ship to U.S.

Customs
Transport
Significant time wasted in

P.O Issued
non-value added steps Date marked
in-stock
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Weeks
Opportunity to reduce cycle time by ~ 50%
Source: Interviews; BCG analysis

Position-strengthening strategies vary
Examples of successful expansions
Commerce strengthened Philadelphia

position with aggressive de novo branch Flagstar used de novo stand-alones to
strategy supplement established in-store position
% share % share
Bank Commerce Bank Flagstar
Total $38B +37 +$6B Total $15B +37 +$5B

assets branches deposits assets branches deposits
MSA Philadelphia 11% MSA Detroit

8% 8%
7%
5% 5%
Position #3 Position in #4 2% 2%
in market market
Branches Deposits Branches Deposits

Strategy Build out position with de novo branches, Strategy Enhance retail presence by tripling
aggressive outreach to potential number of branches and focusing on
government clients, and extended hours urban stand-alones (to boost name
across all city branches recognition) to supplement traditional in-
store format (mostly in suburban Wal-Marts)
Result/ Surpassed in-state rival PNC (#4) to gain top Result/ Surpassed Fifth Third, Nat'l City, and
impact 3 position by deposits; nearly 2× deposit impact Charter One (RBS) with above fair share of
share of #5 BAC despite roughly same deposits, solidifying top 5 position
number of branches
2002 2005
Note: Market position is rank (by deposit) in MSA
Source: SNL; company websites; banking lit search; BCG analysis
Large breadth and depth of coverage
Number of visited accounts
Thousands Number of reps

80
57.5 300 270
Visited accounts/max. 60
coverage 40.5 37.5
42.5
35
40 33.5
200
143 150 150
1.00 0.93 0.96 20 90 91
0.78 0.79 100
0.71
0
0.59
A B C D E F
0.50 0
A B C D E F
Max. coverage
Thousands
0.00 120 Visits/day
A B C D E F 97.2
30
80
57.2 54
48 20 20 20
20 18 18
36 36.4 16
40
10
0
A B C D E F
0
A B C D E F
Source: Client
Are the best-performing employees being rewarded?
Performance versus total compensation
Sales reps region XXX

Adequately reward
Total compensation (K$) high-performers to
60 ensure motivation:
x% increase = y%
Normalize low-performers' increase in employee
compensation: x% satisfaction index
decrease in personnel
45 cost
= y% margin improvement
30
15
0
0 100 200 300
Sales p.a.
Breakdown of channel partner financial incentives
Total payment £200–300

per postpaid Marketing • Marketing kickback provided to Specialist retailers for selling mobile
8%
gross add kickback services
Revenue • Dealers receive a share of individual customers ARPU

24% share/ • The percent share received increases with amount of time customer
volume stays with operator
• Others only pay a volume bonus based on what was sold
17% Rate plan • Depending on the rate plan sold, a different upfront commission is
commission paid
• Commission tied to the value of the underlying rate plan
17% Connection • Dealers receive a straight connection commission for activating new
Prepaid margin commission post-paid plans
comes primarily
from sale of
handsets (straight • Dealers generate a margin on the handsets they sell
commission of only Handset • Handsets are purchased from the operator at a subsidized cost
34%
max. 10% of margin • If prices are lowered after the fact, dealer bears the risk and takes a
handset margin) loss on the individual handset being sold
Dealer Commission
Structure financial incentives to promote key offerings

(i.e., advanced mobile services) through channel partners
Source: Dealer interviews; BCG estimates
Discovery teams plan to triple revenue by 2006
Only 25% of revenue in 2006 (two years after case) from "new" products/services
Projected revenue across four Pilot customers Observations/considerations
All four Pilot teams projected revenue

Annual CLIENT revenue (M$) increases of 2–3X by end of 2006
• Despite the "baseline" budget calling for
120
flat growth over that period
New/future • Plans balanced increasing share of
26
Product existing services and introducing new
service targeted at unmet needs
80
14
The teams each believed there was even
45 "Mission critical" more potential upside ...
• Deeper penetration of basic services
31 • Broader potential of new applications
40
beyond the core Discovery customers
13 "Commodity"
16 – E.g., wireless/wireline integration,
42
28 converged voice/data, wireless
19 24
management services, etc
0
2003 2004e 2005e 2006e
Share of
X% 3X%
wallet
Results of Pilot validated initial hypotheses

about discovery value creation potential
Tables
Addressable biomedical R&D market ~ $17B
Based on CMC, overhead, FTE, and Capex assumptions
Public Private Academic Academic Fed

Pharma Biotech Biotech (Fed funds) (non-Fed funds) Institutes Research
Total $33.5B $15.7B $4.1B $14B $8B $6B $4B
Adjustments
Assumptions
- Clinical/CMC (%) 70% 60% 50% 25% 25% 25% 25%

- Overhead (%) 15% 15% 15% 50% 40% 40% 40%
- FTEs $5.4B 2.5 0.7 2.2 1.3 1.0 0.6
+ Cap Ex $0.9B 0.4 0.1
Addressable $4.0B 3.2 1.2 3.0 2.3 1.7 1.2
Public Private Academic Academic Fed

Pharma Biotech Biotech (Fed funds) (non-Fed funds) Institutes Research Total
Total $34.4B $16.1B $4.2B $14.0B $8.0B $6.0B $4.0B
Adjustments
Calculations
- Clinical/CMC (%) $23.5B 9.4 2.1 3.5 2.0 1.5 1.0

- Overhead (%) $1.5B 0.9 0.3 5.3 2.4 1.8 1.2
- FTEs $5.4B 2.5 0.7 2.2 1.3 1.0 0.6
+ Cap Ex $0.9B 0.4 0.1 0.0 0.0 0.0 0.0
Addressable $4.0B 3.2 1.2 3.0 2.3 1.7 1.2 $16.7B
Source: PhRMA; SEC filings; BIO; Burrill; NIH; NSF; BCG analysis
Recent Fisher acquisitions drive increase
in private label and high-end SKUs
Acquired Transaction Fisher

Date company size (M$) distributed? Key products Notes/Impact
Nov 2001 205  • Specialty laboratory instruments • Consumables re-branded to Fisher
• Related supplies
Nov 2002 55  • Specialty organic compounds • Expansion into drug discovery

• Combinatorial drug discovery libraries chemicals
June 2003 684  • Reagent kits for: protein & DNA • Increase proprietary products
(Pierce), cell culture (HyClone),
immunoassays (Endogen)
Feb 2004 80 • RNAi and siRNA products • Increase proprietary offerings
• High quality RNA oligonucleotides
Mar 2004 330 • Microbiology culture media • Increase EU presence

• Clinical diagnostics, immunoassays
Aug 2004 2,600 • Laboratory robotics (e.g., liquid • Former competitor

handlers) • Increased private label from 50% to
• Related consumables (private label) 60%
Oct 2005 49 • Cellular imaging tools • Complements technology from previous
• Image analysis tools and software acquisitions
Distribution relationships, presence in labs

facilitate educated acquisitions
Source: SEC filings; Company websites; Analyst reports
Several recent examples of banks benefiting from s-curve
effect, both through acquisition and de-novo
Recent examples of banks earning more than fair share of deposits when expanding in a geographic area
Deposit share gain Deposit increase
Bank MSA Branch share gain (%)
(%) coefficient
13 → 15 16 → 26 4.1
SunTrust Atlanta, GA
(58 de novo/74) ($14B deposits)
13 → 15 14 → 21 3.2
RBS Boston, MA
18 → 17 16 → 21 N/A1
Wachovia Miami, FL
10 → 11 9 → 12 2.6
RBS Philadelphia, PA
7 → 10 8 → 12 1.2
US Bank Sacramento, CA
5→7 8 → 11 1.0
Commerce Philadelphia, PA
6→7 6 → 12 6.3
Bank of Choice Greeley, CO
(2 de novo/2) ($200M deposits)
4→9 3 → 10 1.9
Citi San Francisco, CA
2→5 2→8 2.0
Flagstar Bank Detroit, MI
Average 2.8
1. Wachovia actually decreased branch share from 18 to 17%, by strategically closing several First Union branches
Note: Analysis of deposit share winners limited to select examples of successful deposit share takers: not comprehensive of all banks undertaking aggressive branch expansion efforts
Source: BCG analysis
Overview of vignettes
Customer Description Contact

1 Wireless carrier Client goals to n/a
– Increase sales performance and market share
– Reduce variability across regions, industries and reps
Reduced complexity of sales process, lead times for decision-
making, and management time requirements
2 Telecom • Need to identify, evaluate, and prioritize key initiatives to Derek Locke
company drive 2–3 year impact J. Puckett
• Improved sales force retention and key account relationships
3 Medical device • Sales strategy required in the face of lost market share and n/a
manufacturer lower-cost competition
• Differentiated sales approach and account prioritization
increased installed base by 35%
4 Online service • Goal to reverse drop in sales rep productivity after previous Nikhil Bhojwani
change effort had failed
• Optimized sales model, resource allocation and focus to
achieve expected sales increase of 25%
Initiatives identified, evaluated, and prioritized
Significant increase to gross margin achievable
Target 2006 gross

Initiative Seg A Seg B Seg C margin impact
Dramatically improve sales force ~ $XM ~ $YM ~ $ZM ~ $AM

retention
Reinvent large customer – TBD ~ $ZM ~ $BM

relationships
Increase cross-selling TBD ~ $YM – ~ $CM
Turn "time sinks" into ~ $XM ~ $YM ~ $ZM ~ $DM

"selling time"
2006 gross margin impact ~ $XM ~ $YM ~ $XM ~ $EM
Agreed opportunity size; initial focus areas
Value of initiatives ~ 10% of current gross margin
Note: Total potential of all initiatives is greater—values here estimate what could be captured by 2006
Create in-depth profiles of the shopping behavior and
attitudes of key segments
Reluctant Enthusiastic Busy online Rational Impulsive

shoppers shoppers moms technophiles professionals
Attitude Profoundly dislike Shopping addicts, but Need to be efficient Rational shoppers and Impulsive buyers, and
towards shopping (online and too inexperienced with shoppers, and very experienced Internet savvy, for
browsing/ offline); sincerely hope the Internet to know manage to leverage Internet users who fully whom the Internet is a
purchasing, the Internet is going to what to expect and their limited Internet leverage their new, exciting shopping
and expec- help make it easier; no what it can bring; like experience to achieve expertise to shop channel; love to shop;
tations from social motivation; plan social aspect; enjoy this; love to shop; online; price sensitive; like new products,
e-commerce their purchases; loyal browsing; don't think enjoy browsing; very prefer well known loyal to brands; not
to preferred store and much about prices; price sensitive; not companies; plan their price sensitive; not
willing to pay more to buy on impulse loyal to shops and purchases; do not love information oriented
save time and hassle brands; product to shop and don't like
oriented (availability social aspect; do not
and selection) impulse purchase
Younger singles or
Demo- Older male, married, More females, older Housewife, larger Mostly younger couples, high
graphics higher education and than average, with household with kids, singles, education education and income
income kids, average income income below average above average
Experienced, heavy
Webo- Limited experience, Less experienced, light Less experienced, Very experienced, very users; all around
graphics light users; users; communicators medium users; heavy users; all users
information seekers browsers/shoppers around users
Source: BCG proprietary database; Online panel 2001, n = 9,273; BCG analysis
Overview of vignettes
Customer Description Contact
Vignette 1: Telecom company • Customer discovery to transform large customer relationships Derek Locke
customer discovery
Vignette 2: Wireless provider • Major wireless provider required segmentation of telematics Sebastian
telematics segmentation opportunity DiGrande
Vignette 3: Enterprise networking • Customer discovery for an enterprise networking business N/A
customer discovery
Vignette 4: Software market • Prioritizing vertical markets for a software company N/A
segmentation
Vignette 5: Software market • Segment market to develop a winning growth strategy N/A
segmentation (II)
Vignette 6: Handset manufacturer • Internet game provider planning to launch a new web business N/A
customer discovery targeting teenager segment
Vignette 7: Integrated telco cohort • Analysis of mobile customer cohort behavior led to identification N/A
behavior of ~ 5% revenue lift initiatives for mobile telco
Vignette 8: Integrated telco • Assist major partner program design with outside-in partner N/A
segmentation segmentation and value propositions
Vignette 9: IT services provider • IT services provider deepens customer relationships via N/A
customer discovery customized solutions
Vignette 10: Handset manufacturer • Successful customer segmentation based market development N/A
segmentation for a handset manufacturer
Analysis of strategic alternatives led to recommendation
to pursue #2 market position
Strategic alternative Description Projected NPV1 Risk2 Service rev. ('08)
Maintain current strategy $xxxM Low $xxxM

1 • Semi-independent entity xx%
• Internally funded R&D
Status quo • Small acquisitions only
Continue alliance
• Quota credit to sales force
Manage each initiative independently
Create arm's length activity $xxxM Medium $xxxM

2
• Maintain alliance xx%
Independent • Create new preferred partner
networking • Range of decisions to be addressed
• Equity vs. non-equity participation
– Divestiture, majority stake in buyer,
JV
$xxxM High $xxxM

3 Establish "Networking Solutions" xx%
• Significant acquisition(s)
Complete
• JVs
commitment Promote and sell as a core offering
• Corporate endorsement
• Branded as part of company
• Prepare for diminished alliance activity
1. Considering total cash flows from 2003–2008 and a 10-year terminal period 2. Based on quantitative analysis of possible outcomes
Note: All numbers are sanitized for client confidentiality
Source: Financial analyst reports; Dell'Oro; IDC; Gartner; BCG analysis
Diagrams
Overview of variable interrelationships
within demand leakage framework
Key questions answered by model
Ability Willingness # of
Need Product Access
to pay to use doses
How many
doses of
vaccine in a
given year
does this
translate into?
What is the What What portion How much of What portion of the
total population of the the vaccine will population will
theoretical group can population has be either choose to buy it?
market for the benefit from access to the funded or • Countries,
vaccine? existing vaccine? affordable? institutions,
product? • Programs • Wealth individual
• Financing attitude
• Product value
proposition
Two reasons for pharmaceutical spin-offs
Monetize a low priority project or provide a structure to fund a project externally
Internal funding
Y Fund internally
• Can we optimally fund this?
Product value
N Fund externally
• Is this a strategic priority?
• Does it align our TA focus
now? Spin-off
• Is there value for this in the
future? Capabilities
Y Monetize
• Are this product's assets
separable from our other
N programs?
N Shelve
How have other companies spun-off or divested

its non-core assets?
We analyzed four main levers of biotech deal value
1. Up front payments
R&D costs
2. Cost sharing/ Sale and Typically split

reimbursement marketing costs by geography
Manufacturing cost
Development related
3. Milestone payments
Sales related
+ 4. Royalty
Total deal value
Project consists of two modules
Steering committee Roles and responsibilities

CSM • Overall project management
Jaap Kerstjens
BCG experts
Wouter-Jan Schouten • Food industry knowledge
Emile Gostelie • Process re-engineering
knowledge
Project management
• Coordinate effort
CSM (T.B.C) 100% • Synthesize findings
1 BCG 50% • Challenge/refine findings
Complexity management Process reengineering

CSM CSM operations 200% • Conduct interviews
• Control 100% • Purchasing • Conduct analyses
• Sales/Marketing 100% • Manufacturing • Gather information
• Manufacturing 100% • Finance
1 BCG consultant 100% 1 BCG consultant1 100%
1. For phases 1 and 2

Sales reps are deemed to be able to estimate
key segmentation indicator
Mapping of segmentation indicator

6 4
High
11 2
5
10
Estimation 9
capability of
1
sales reps
8
3
Low
Low High
Relevance
Source: BCG client experience

Better systems needed to optimize new customers hookup
Significant rework and coordination problems would be avoided
Hookup,
Receipt Service Documen-
Planning meter Invoicing
of order coordination tation
installation
Customer Invoice
Initial Notification
Finalize Schedule
customer of
contract appointments No link
interest completion to SAP
Technician Coordination
Rework problems
Data capture, Technical Paper Billing of

Grid Material
creation of planning, planning documentation services,
operator offer writing
project file invoicing
Paper Meter
Sub- Hook-
documentation instal- Survey
contractor up Redundant
lation
data storage
Screened opportunities across four dimensions
What are the

opportunities? What will drive the winner?
1 2 3 Contenders' 4 Client's
Demand Segment
assets and assets and
characteristics characteristics
capabilities capabilities
What are customer What are the sources of Which contenders have What are the
needs, how do they advantage in segment? leveragable assets? leveragable assets?
vary within segment?
Is segment fragmented How well do assets
How many potential today but likely to match sources of How well do assets
customers, how much consolidate? advantage in segment? match sources of
value is created? advantage in segment?
• Potential plays • Generic attractiveness • Specific competitive • Client specific hurdles

• Size, growth of sub- • Key sources of challenges • Probability of success
segments advantage
Approach in seven steps
First five steps are in scope of BCG's involvement
1 week 4–6 weeks 2–4 weeks 2–4 weeks
1 2 3 4 Determine 6
Detail specs
responsibilities/
and build
functional specs of
applications
Determine systems/apps
Refining Analysis of
business solution
business issues business issues 5 7
to issues Pilots of
solutions per Roll out
business issue (phased)
Interviews sales, Analytical work Discussions with Select example(s)

business, pricing, sales/business/ per issue
costing management Sales interviews pricing management
• Refine business • Model Model solution
issues economics Check with
• Review current based on business strategy In parallel, develop
ABC structure and examples and organizational
pricing policies selected solution and high
• Understand countries/routes level functional
business strategy spec for ABC
• Collect examples improvements
Workshops with sales, GM, pricing, and ABC experts
Sales force best practice along key dimensions
• Clear goals by region, product group for sales,

Strategy profits, penetration, distribution
• Convincing value proposition by product
• Setting and measurement of
concrete goals by • Clear definition of coverage of
salesperson Performance prioritized channels (by whom,
• Taking of corrective action Organization how)
evaluation
as necessary • Explicit role definition with well
defined goals supported by
clear planning (e.g., visit
routes by territory)
• Incentive compensation
clearly linked to strategy Motivation • Attraction and development of
and motivating Recruitment, people with strong skills, e.g.,
and
• Right span of supervisor Training – Personal relations
supervision
control (6–8) with delegated (customer, internal)
responsibility – Time management
• Coaching as a priority – Planning, preparation
Support – Selling
systems – Knowledge (product,
company, competitors,
• Focus on maximization of selling time and processes, etc.)
minimization of administration, travel, etc.
• Effective (central) sales force support
• Extensive use of computer support by front line
Source: Scholm; BCG analysis
Best practice indicates that feedback and development
should be integrated and embedded within organization (I)
Ongoing feedback
process
Performance Performance
summary planning
Definition of
targets
Ongoing
development
Customer discovery further refines offerings by uncovering
overlap between customer needs, supplier capabilities
CLIENT competitive
advantage
New opportunity
Your assets
CLIENT's Customer
Profit drivers
• Physical capabilities needs
• Processes
• People
Competitor Competitor Competitor advantage

assets capabilities
• Physical
• Processes
• People
Ultimate deliverable: plan for improving customer

satisfaction, loyalty, and share
Prioritize segments through assessment of market
attractiveness and relative competitive position
Key criteria for

assessing market "Develop" "Accelerate"
attractiveness
• Market size
• Market growth
• Industry margins
• Price trends
• Entry barriers
"Keep
"Divest?"
opportunistic"
Key criteria for evaluating competitive position

• Relative market share • Access to future
• Relative margin growth
• Technological position • Command of key
success factors
Approach toward channel orchestration focused on
optimizing trade-off between cost and effectiveness
Cost relation more favorable with Key principles to elaborate

channel orchestration channels orchestration
Channel Focus on most attractive clients
cost
• Eliminate low potential clients from portfolio
• Define clear rules of allocation and migration
+
Sales rep
Current across channels according to potential and
model actual revenues
Optimize utilization of resources

• Adequate capability and cost of resources
according to task
• Re-evaluate channel mix according to
segment potential
Channel Optimization of interaction between channels

Call
orchestration • Clear rules and processes
center
–
• Elimination of duplicities
• Re-evaluate compensation metrics, aligning
– + them with operational goals
Clients potential
Channel effectiveness
Source: BCG casework

Portfolio strategy
Five steps to superior portfolio management
1 Set baseline—understand corporate context Execution
2 Strategic fit 3 Value fit 4 Ownership fit Turnaround
Growth
Market attractiveness
Logic fit
Acquisition
Divestiture
Competitive position Parenting fit
Innovation
5 Develop strategy—reshape portfolio
Source: BCG CD Marketing Suite

BCG alliance builder—six steps to create successful
alliances
1 Alliance strategy Four types of strategic alliances with

Define alliance Define ideal different success factors
Assess needs
strategy deal structure
2 Partner search
Non-competitors
Screen based on Select based on alliance
financial and strategic fit experience and cultural fit
Expertise New business

3 Negotiation providing development
Enter with strategic Define governance and Close deal or
deal plan in place exit strategy stop negotiating Partnership
direction
4 Alliance management
Cooperation
Design alliance Monitor based on M&A-like for
organization business criteria critical mass
5 Continuous evaluation
Competitors
Identify gaps
Continue, Scope of alliance
between goals Learn from experience
re-launch, or exit
and results Total Partial
6 Alliance portfolio management

Establish Define alliance Continuously
alliance office segments reshape portfolio

High-resolution valuation
BCG HRV methodology provides an integrated view

on all relevant value components
Strategic logic behind a possible acquisition clearly carved out
Driver-based stand- Strategic value Systematic

alone-value calculation quantification of
with an underlying Risk potential synergies
specific market model and dissynergies
Synergies
Value components
Stand-
alone
value
Comprehensive
Systematic
identification of key
consideration of
risk drivers for the
additional strategic-
transaction and for the
value components
combined entity
Impact and feasibility of the transaction: implied multiples and TSR impact, internal feasibility (financing,
management restriction), and external feasibility (regulatory approval)
Typical PMI process: Integration in four steps
Integration office
Phase 1 Phase 2 Phase 3
Phase 0
(2–3 months) (4–6 months) (12–24 months)
Preparation
and integration
setup
Integration planning
• Readiness
• Strategy/organization
• Baseline/targets
• Comm./change mgmt.
• Integration concept
Integration detailing/
implementation initiation
• Implementation start
• Measure definition and
Finalization controlling
M&A process
Implementation
• Measure implementation
and tracking
Signing Start Authorization/ New

integration closing organization

Maps and timelines
Broad resistance to traditional anti-malarial drugs
Malaria transmission occurs

Chloroquine resistance
S/P resistance
Mefloquine resistance
Source: World Malaria Report, 2005

A loose federation of 27 'members'
united by a common mission and brand
Norway: $67M
Sweden: $55M
Iceland: $1M
Finland: $15M
Canada: $13M
UK: $247M Denmark: $21M
Netherlands: $5M Lithuania: $1M
US: $251M Romania: $2M

Spain: $5M
Japan: $2M
Italy: $8M
Mexico: $3M Dom. Rep.: $1M Hong Kong: $1M

Guatemala: $2M Honduras: $2M
Swaziland: $1M Australia: $17M
New Zealand: $7M
... but divided by different donor markets and requirements,

different views about food aid, sponsorship and advocacy
Source: Preliminary Save the Children Data (2004)—requires verification/update
German market largest, Netherlands market most stable
Total market for office furniture in 2002, index 1998 = 100
Netherlands
100 100 111 109
90
UK
100 104
93 91 81
1998 1999 2000 2001 2002
1,073
507 Belgium
1998 1999 2000 2001 2002 109 112
100 104 99
238
1,827
France
1998 1999 2000 2001 2002
115 117 116
100 99
Germany
1,026 100
108 110 107
78
1998 1999 2000 2001 2002
1998 1999 2000 2001 2002
Source: Interconnection
Project timing
Three phased approach
Fact basis and setup Customer discovery Refine & synthesize

Work stream 11/28 12/5 12/12 12/19 12/26 1/2 1/9 1/16
Addressable market
• Quantification of addressable market
size
• Segmentation of spend (products,
services, capital, etc.)
• High level competitive assessment
Research trend assessment

• Identification and evaluation of key
trends in research
• Quantification of implications on
market size/growth and potential
McKesson entry
Customer Discovery
• Schedule and develop discussion
guide
• Conduct interviews, document
results
Synthesis and recommendations
Client read-outs
12/16 1/15
Internal CTM
Key deliverables • 10–15 scheduled • Segmentation and quantification of spend in relevant • Detailed profile of
interviews markets "customer"
• Discussion guide • High level competitive assessment • Synthesized assessment
• Addressable market • Projections of future research lab landscape based upon of market attractiveness
definition and size key industry trends
• Initial results from Customer Discovery
Sales force effectiveness
Overview
Module objectives Key contacts
Align recruitment, promotion and attrition policies with Bob Victor (Officer, Washington D.C.)
strategy and goals Andrew Clark (Officer, Singapore)
Ken Keverian (Officer, Boston)
Develop a consistent hierarchy of metrics and Debbie Lovich (Officer, Boston)
management practices to enable best practice sharing Vaishali Rastogi (Officer, Singapore)
and to identify issues Nikhil Bhojwani (Manager, Boston)
Matt Diver (Project Leader, Boston)
Develop robust targeting approaches to enable more
focused selling
Provide reps and managers with key information and

tools to enhance effectiveness
Included materials
Topic Key Key Sample Key

Tools Workplans Impact Vignettes
Primer Questions Analyses Learnings
Introductory Central Typical Automated Sample Integrated Impact ranges Highlights from
materials that questions which analyses mgmt support workplans, learnings on expected along previous case
provide basic define scope of performed for tools that can timelines, team key success EBIT margin work along this
definitions, key module and this module be imple- structure factors from and sales module
frame-works, areas for based on mented at client previous BCG growth based
and back- further analysis previous BCG to support case on previous
ground context casework execution experience BCG
experience

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Text and columns

Maps and timelines

Attractive, high growth market Need to determine entry strategy

Speed is critical in this fast moving market segment

Context and challenges Results and impact

BCG approach: what we did Why the client choose BCG

2005 Asia Portfolio Conducted an portfolio diversification project for a major

2004 Americas Transformation Developed transformation growth and financial strategy

2004 Asia Transformation Transformation strategy for an automotive player in India

Source: BCG case database 2005

Expanded cultivation but High prices provide incentive

Despite expansion, still supply-demand Myanmar 40%

Merchant Design Marketing Merchant Proto Fore-

Inventory Pre-pro- PD Planning Merch

Requirements Importance Importance to

Delivery on time Catalogue reseller cannot afford to 'say no'

Catalogue reseller cannot afford mistakes

Deliver larger quantities

Price Must be competitive

Deliver internationally To service international catalogue resellers

Is client capable of meeting these requirements?

Source: Interviews with catalogue sellers

Revenue growth driven by Korea, This corresponds with

Revenue (B$) We have invested in Korea, Taiwan, HK, and

• Rest of AP Our company has window of opportunity to

Total expenditure on health vs. GDP—comparison across countries 1 (2003)

Upfront payment (M$)

Projected peak sales (M$)

Note: Regression omits Cephalon-Alkermes deal

Phase 1 (median) Phase 2 (median) Phase 3 (median)

Duration (Months) Duration (Months) Duration (Months)

Year of end of phase

Mean patient enrollment Growing number of large

Note: Data from top 20 pharma companies and top 10 biotechs

Low cost labor markets are showing rapid industrial growth

Growth of industrial production in % (2001–05)

Industrial Manufacturing compensation 2002 ($/hour)

Source: Desk research; BCG analysis

Pre-launch spend (M$)

Average: $2M $7M $29M $32M

For comparison: Celebrex estimated to have incurred

Agricultural input Primary processing Secondary Retail

Loan portfolio by bank in 2004 (%)

Corporate-focus SME-focus Consumer-focus

Banks increasingly focused but none can be considered

1. Motorcycle registration divided by country population 2. Number of motorcycles in use

New cost Treatments (thousands)

EuArtekin 0.32 0.45

Relative stock prices of packaged food companies

Hershey 26.8 20.9%

Kellogg 19.2 11.2%

Index1 17.0 8.9%

-75 Campbell 18.1 (2.3%)

What are the key differentiators of performance?

21 Everybody knows how 2 6 Merger will help to increase

Customer importance: Highly important Neutral Not important

Example: knit garment manufactured in Hong Kong

Fabric made Dye Transit

Raw materials Fabric Sew and

Cut and sew Ship to U.S.

Significant time wasted in

Opportunity to reduce cycle time by ~ 50%