Competitive Repositioning

This is an increase in competitive position that results in increased intrinsic value. Competitive repositioning increases value through:

• Increasing or maintaining market share

• Improving competitive intelligence

• Differentiating the company from its competition

Increasing or Maintaining Market Share

The underlying assumption is that there is a direct relationship between market share and cash flow similar to RIM and cash flow. This assumption requires rigorous testing through the SWAV. There have been many mergers that were justified on increased market share that have destroyed value. Integration expenses reeled out of control and resulted in a future cash drain as opposed to an increase.

Improving Competitive Intelligence

Competitive intelligence is knowledge and/or information that gives a business a competitive advantage over its rivals. A competitive advantage is obtained by acquiring information about customers, suppliers, markets, and channels. (For instance, a point of sale capability that collects information on customer buying behaviors.) This type of information gives a company the ability to stock shelves with products that customers want. This type of intelligence gives a company an advantage over its competition because it has a better idea about what will sell. The key to this value proposition is that having the information does not necessarily mean that a company can use it to improve future cash flow.

Differentiating the Company from Its Competition

This aspect of repositioning assumes that cash flow will be improved by doing things differently. An example of differentiation is a company who makes an acquisition to obtain a proprietary business process that will improve cash flow.

The major issues that will be vetted in the SWAV for repositioning value propositions are their longterm orientation and difficulty of measurement. The time frame to realize benefits from realization is generally long-term. This means that the adjustment for time and risk discussed above will dramatically mitigate the intrinsic value of the cash flow stream created. In addition, the benefit stream from differentiation is hard to measure. It takes a great deal more effort to analyze and measure the increase in value from an SA than through an increase in revenue, or the next value proposition category efficiency.