MercerManagementConsultingHK1/Casework/ADM984N01/LegendHoldingLtd./19990902.ppt1InternetOpportunitiesforLCSMercerunderstandsthatLCSislookingatallthreeoftheseinternetopportunityareas.•UsingtheInternettotransformhowyourunyourbusiness(“bitsnotatoms”)–CreatingBusinessDesignadvantagethrough:-Digitalcustomersegmentation-Digitalchannelstocustomers-Digitalsupplychain-Digitalfinancing-Digitalrecruiting/development–OperationalchangestoimplementDigitalBusinessDesign•Examples:–DellandCiscoDigitalBusinessDesigns•Providingcustomerswithoffersthathelpthemtransformtheirbusinesses/lives–Products–Solutions–Consulting(e-commerce)•Examples:–IBM’se-businessinternetstrategytohelpbusinesscustomerstransformthemselves•EmergingProfitZonesandopportunities–Newbusinesses–Jointventures–Otherinvestments•Examples:–Intel’sinvestmentin“serverfarms”,jointventurewithPacificCentury–MicrosoftWeb-TVandcableoperatorpurchases,Expedia,Auto-by-TelExistingBusinessNewBusinessOpportunitiesFutureBusinessYourCustomerInternet“Offer”andStrategyxxxDigitalBusinessDesignMercerManagementConsultingHK1/Casework/ADM984N01/LegendHoldingLtd./19990902.ppt2DigitalBusinessDesignTheinternet,supplementedbydirectselling(salesforce,telesales),offersopportunitiestotransformtheeconomicsofthecomputingbusiness(asDellhasshown).•Lowercostsellingchannels–5-10%salescost,versus20-30%forsomevendors–Highermarginsapplyacrosstheboard--notjusthardware(e.g.,service,software,etc)•Directconnectwithcustomers–Increasedadd-onsales–Increasedrepeatsales•Significantreductioninsupplychaincosts–Abilitytoshifttobuild-to-ordermodel–Reductionininventoryatallstagesofchain–And,correspondingreductionincomponentcosts(e.g.abilitytobuymicroprocessors30-60dayslateratmuchlowercost)–But,requireschangingbasicoperatingprocesses•Shifttowardslowtonegativeworkingcapital–Lowinventories–Significantreductioninaccountsreceivableifmovetopre-payprocessMercerManagementConsultingHK1/Casework/ADM984N01/LegendHoldingLtd./19990902.ppt3CustomerInternetOfferBothtraditionalhardwareandsystemsconsultingfirmsaregeneratingsignificantglobalrevenuesbyhelpingclientstransformtheirbusinessesusinginternettechnology.•NoapparentdominantvendoryetinChina•PresentsanopportunityforLegendtostakeoutaposition•But,therearemanyregionalcontenders:Legendcan’twaitlongtodevelopastrategy•And,failuretohaveastrategywillpenalizeLegend’sstockprice(asHPwitnessed,priortoannouncementofitsdelayedcustomerinternetstrategy)WorldwideTop10InternetServicesFirms,1998(Source:InternationalDataCorporation,1999)RankName1998InternetServicesRevenue($M)1AndersenConsulting4252IBMGlobalServices3853PricewaterhouseCoopers2504Ernst&Young1505EDS1506USWeb/CKS148*7KPMG1258CSC1159CapGemini9010CambridgeTechnologyPartners90*Includesonlyrevenuesrelatedtointeractive/onlinework.Note:Revenuenumbersfor1998areIDCestimates.MercerManagementConsultingHK1/Casework/ADM984N01/LegendHoldingLtd./19990902.ppt4InternetNewBusinessOpportunitiesWhilethepreviousopportunitiesareimportant,determiningwhichnewbusinessopportunitiestopursueisurgent.WesuggestthatMercersupportshouldstarthere.Whyurgent?1.Land-grabnatureofinternetbusiness–Asshowninothermarkets,gettingthemostsharequicklyoftherightspaceisessentialforsuccess–Rightnowcompetitorshavethemoneyforland-grabstrategies(e.g.,China.comhasUS$125millionincash)–Legendlagscompetit...
