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MAVERICKS Case Winners

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  • The Maverick 2013

    Submitted by: Team Iguanas, IIM Ranchi

    Pulkit Bohra M106/12 [email protected] 8986733521

    Pulkit Mathur M107/12 [email protected] 8051173946

    Tarun Gupta M044/12 [email protected] 9000015915

    Team Members

  • Recommen-

    dation

    Go-To-Market

    Framework Regional Analysis

    Opportunity

    Assessment

    Value

    Proposition

    To assess global markets and

    gauge market attractiveness

    Analysed the global gas power

    generation market

    North America, Middle East &

    Asia are the most attractive

    regions

    Compared E10 grade filters

    with E9 and E12

    Performed a Cost-Benefit

    analysis for different types of

    filters using case data and

    team estimates

    E10 has cost savings of

    ~1% & 10% over E9 & E12

    due to lower downtime

    GTM strategy is focused on

    product life cycle and

    target market

    Competitor response may

    vary from maintaining status

    quo to JVs and hostile

    takeover depending upon

    their own competencies

    To analyse the health of

    individual regions and their

    business prospects

    Strategic

    objectives

    Analysis

    Insights

    It is an appropriate time for ABC to enter into gas-turbine air filter market. However, all regions do not provide equal

    opportunities. It should target replacement market in North America; Growth market in Middle East and Rest of Asia in the

    same order of priority; Restrain from entering into rest of the markets for now.

    To determine the Value

    Proposition for Client

    Offerings

    To determine the Go-To-

    Market strategy

    Used equivalents to estimate

    global filter market size by

    value and volume

    Performed macro-economic

    analysis and used market size

    to identify most attractive

    markets

    Developed a GTM

    framework based on

    existing GTM frameworks

    and case specifications

    Analysed each of the

    shortlisted region in detail

    to identify favourable and

    unfavourable factors

    Applied GTM: Analysed

    prospects for JVs/

    acquisitions

    Identified entry and exit

    barriers

    Analysed the potential

    response from existing

    competitors

    Middle East & Rest of Asia

    reaches US$122m and US$75

    m by 2022

    North America is the biggest

    annual replacement market of

    ~ US$333 m

    Cartridge (synth) filters are

    more cost efficient than

    cartridge (cell) filters

    NA has the biggest

    replacement market, hence

    ABC should focus on

    customer centric

    marketing

    Middle east & Rest of Asia

    has the highest growth

    numbers, hence GTM should

    be channel focused

    ABC has expertise in air

    filter servicing

    Executive Summary: ABC should target N America, Middle East & Asia

  • Opportunity Assessment

    Value Proposition Go-To-Market Competitors

    Response Regional Analysis Recommendation

    $0

    $50

    $100

    $150

    $200

    $250

    $300

    $350

    Synth-Catridge

    Cell-Catridge

    Europe Middle East

    Rest Of Asia

    Africa North America

    Latin America

    Europe Middle East

    Rest Of Asia

    Africa North America

    Latin America

    Europe Middle East

    Rest Of Asia

    Africa North America

    Latin America 2012 2017 2022

    North America

    Rest Of Asia

    Value :

    Volume:

    0

    200

    400

    600

    800

    1,000

    1,200

    Cell-Catridge

    Synth-Catridge

    Vo

    lum

    e(in '0

    00

    un

    its) V

    alu

    e(in

    mill

    ion

    $)

    There is a tremendous growth in air filter market by volume and value in Middle East and Rest of Asia regions. North America has the largest market in the initial years, but has almost stagnant growth.

    Europe, Africa & Latin America have either very small markets or have shown negligible growth in market.

    Inlet Air Filter For Gas Turbines-Market Sizing (>= 150 MW)

    Source: Team analysis based on data accessed from Global Gas Observatory and case data

  • Gas Turbine Industry Drivers

    Increasing global power demand Environmental concerns & regulations

    opposing coal and oil fired power plants Mature technology Nature of Gas Turbines: Efficient and

    Flexible Availability & Price

    North America, Middle East & Rest of Asia seem to be most attractive regions

    Gas Turbine Industry Constraints

    Global economic slowdown Fluctuation and availability of natural gas

    supplies Volatile fuel prices Emphasis on renewable energy

    Trends & Issues in Global Gas

    Turbine Industry

    Biggest gas-fired power market

    Shale gas boom Slow growth

    Growing, but still a small market for gas power

    Growing on a very small base

    Leveraging its hydro-electric sources

    Moderate base Low growth Decommission-

    ing of old plants

    Large natural gas reserve

    Rise in power demand

    Limited regional pipeline cooperation

    High growth markets Rising power demand Increased government

    spending Stalled pipeline

    projects

    Gas Turbine Industry: Regional & Global Trends

    Opportunity Assessment

    Value Proposition Go-To-Market Competitors

    Response Regional Analysis Recommendation

    Source: Frost & Sullivan; International Energy Agency; MarketWire company website; TurbineTech company website; US Energy Information Administration

  • E9 E10 E12 E12

    Market status Available Testing Available Available

    Probable Type Cart/Synth Cart/Synth Cart/Cell Panel/Synth

    No. of filters per

    MW of power

    generated 10 10 12 15

    Filter price $300 $330 $100 $100

    Filter replace-

    ment rate

    (months) 24 24 12 12

    Filter Cost/yr $1,500 $1,650 $1,200 $1,500

    Turbine wash time

    (hrs/yr) 90 120 180 180

    Downtime for

    filter cleaning

    (hrs/yr) 60 20 300 300

    Avg turbine

    Capacity (MW) 160-180 150-190 160-180 160-180

    Avg Turbine

    Uptime 98% 99% 96% 96%

    Net Turbine

    Operation 8610 8620 8280 8280

    Net Uptime

    (hours) 8437.8 8533.8 7948.8 7948.8

    Potential Elec

    Production (MW) 8437.8 8533.8 7948.8 7948.8

    Arid (Middle East)

    Avg Power Gen

    Losses 2% 2% 4% 5%

    Net Production 8269 8363 7631 7551

    Price of Elec (per

    MWh) $60

    Revenue $496,143 $501,787 $457,851 $453,082

    Revnue Net Filter $494,643 $500,137 $456,651 $451,582

    Cost Savings $5,495 $43,487 $48,556

    Mixed (Asia, North America)

    Avg Power Gen

    Losses 3.7% 3.7% 6.0% 3.7%

    Net Production 8128 8221 7472 7657

    Price of Elec (per

    MWh) $60

    Revenue $487,705 $493,254 $448,312 $459,441

    Revnue Net Filter $479,267 $484,720 $440,364 $451,492

    Cost Savings $5,453 $44,356 $33,228

    High efficiency filter consideration set (Calculation per MW/12 months)

    ABC: Providing unmatched value to the customers

    Huge Cost

    Savings

    Lower

    Turbine

    Downtimes

    Filter

    Servicing

    Expertise

    ABC E10 Filters

    To provide the best customer experience in filter industry

    with the technologically most advanced filters and expert

    after sales services

    Opportunity Assessment

    Value Proposition Go-To-Market Competitors

    Response Regional Analysis Recommendation

    Source: Team analysis based on data accessed from Global Gas Observatory and case data

  • Marketing

    Channel Product

    Customer

    Based on the product life cycle and the target market in a specific geography , one or more of the three pillars has been chosen as focus to meet our clients business needs.

    Customer

    Product Channel

    New Product Entry

    Customer

    Product Channel

    Entry of Competition Mature Markets

    Customer

    Product Channel

    Primary focus Secondary focus

    Post analyzing the primary and secondary focus for E10 in a region, we have studied the market entry strategy from various perspectives and suggested the most preferred route.

    From Product

    To customers

    JVs/ Acquisitions

    Distributors/ Agents

    Channel Partners

    Marketing Strategies

    Maintenance & Service Providers

    Source: From-To Approach, BCG; Redefining GTM, AT Kearney

    GTM Framework

    Competitors Potential Response

    Opportunity Assessment

    Value Proposition Go-To-Market Competitors

    Response Regional Analysis Recommendation

  • North America

    Among all regions, North America currently has the highest air filters penetration and about 75 % of which are either Panel filters or Cartridge (cell) filters.

    Considering the advantages of Cartridge (Synthetic) filters over other filters , all of which have a filter lifetime value of

  • Middle east shows the highest growth among all the regions, making it an attractive market for new product sales.

    The replacement market is also growing at a steady rate , which can be harnessed by using customer centric marketing.

    22 % of the market in middle east for air filters is captured by Cartridge (cellulose) filters. Given our value proposition, this is a prime market to target replacements.

    The majority of energy requirements of Middle east is fulfilled by gas powered power plants, further the dependence on oil fired power plants is set to reduce.

    Opportunity Assessment

    Market Sizing

    Go-To-Market Strategy

    Significant Annual Replacement market can be targeted by targeting the Customer pillar of the GTM model. Tie ups with Turbine operators, Maintenance providers, OEMs . Focus Agents, sales representatives in matured markets like UAE, Egypt , Qatar etc.

    Opportunities in New Growth market can be harnessed by focusing on building the Channel pillar Collaboration with Distributors in the region to enhance the reach. Tie-up with other companies operating in this region, on share of margin basis.

    Risks/Concerns

    Burgeoning gas demand in the region combined with concern over security of long term gas supply

    Increased domestic gas demand, delayed supply response, limited regional pipeline cooperation, and below-market pricing pose long term threats

    Growing investments by countries over alternative sources of energy (Solar & Nuclear).

    Non-Homogenous distribution of gas reserves.

    Middle East

    Customer

    Product Channel

    Tapping the New Growth market

    0

    200

    400

    600

    800

    1,000

    1,200

    1,400

    1,600

    2012 2017 2022

    Volume ('000 units)

    Existing Total No.of Filters

    AnnualReplacementMarketNew growthMarket

    Opportunity Assessment

    Value Proposition Go-To-Market Competitors

    Response Regional Analysis Recommendation

    Source: Team analysis based on data accessed from Global Gas Observatory and case data; Frost & Sullivan; Redefining GTM, AT Kearney; International Energy Agency

  • Rest of Asia

    ASEAN countries along with Japan, South Korea, Australia and New Zealand have more than 35% of their energy requirements met by Gas Power plants.

    The share of gas in the overall fuel mix is expected to rise strongly in the above countries in the current decade.

    ASEAN is promoting the development of a trans-ASEAN gas pipeline system (TAGP) by 2020, aimed at improved cross-national links.

    The Fukushima nuclear accident has marked a fundamental shift in Japanese energy policy, turning away from nuclear energy towards other sources. This implies strong growth for gas-fired power generation as a substitute.

    Opportunity Assessment

    Customer

    Product Channel

    Tapping the New Growth market

    Go-To-Market Strategy

    To tap the opportunity in the Replacement and New Growth Market India & China (Growing Market)

    Salesmen to take brochures to new plant owners, explaining the cost benefits of their air filter.

    Joint venture with similar companies operating & maintenance providers in the region. ASEAN Countries & OPAC (Mature Market)

    Tie ups with Turbine operators, Maintenance providers, OEMs . Existing filter distributors should be approached. Tie-up with other companies operating in this region, on margin share basis.

    Market Sizing

    Risks/Concerns

    India and China have a high dependence on coal making the role of natural gas in fuel mix extremely limited.

    Unstable regulatory environment in some of the Asian countries. Lack of gas resources, Japan and South Korea are highly dependent on foreign

    supplies. Capacity expansion has been significant till now, however, countries like China and

    India are also investing heavily in Solar & Wind Energy 0

    200

    400

    600

    800

    1,000

    1,200

    1,400

    2012 2017 2022

    Volume ('000 Units)

    Existing TotalNo. of Filters

    AnnualReplacementMarket

    New growthMarket

    Opportunity Assessment

    Value Proposition Go-To-Market Competitors

    Response Regional Analysis Recommendation

    Source: Team analysis based on data accessed from Global Gas Observatory and case data; Frost & Sullivan; Redefining GTM, AT Kearney; International Energy Agency

  • Appendix

  • North America Latin America

    MW No of Powerplants

    Total Installed Capacity (MW) MW

    No of Powerplants

    Total Installed Capacity (MW)

    180 65 37833.8

    Africa Middle East

    MW No of Powerplants

    Total Installed Capacity (MW) MW

    No of Power Plants

    Total Installed Capacity (MW)

    180 148 123515.5

    Rest of Asia Europe

    MW No of Power Plants

    Total Installed Capacity (MW) MW

    No of Power Plants

    Total Installed Capacity (MW)

    180 225 154671.5

    Gas Turbines Installation Over The World Breakup by Plant Capacity

  • capacity in '000 MW

    Year

    5year CAGR 10 year CAGR

    0 1 2 3 4 5 6 7 8 9 10

    Europe 2.40% 1.10% 71.52 73.24 75.00 76.80 78.64 80.53 76.37 77.21 78.06 78.92 79.79

    Middle East 8.10% 4.70% 83.55 90.32 97.64 105.54 114.09 123.33 110.06 115.23 120.65 126.32 132.26

    Rest Of Asia 5.20% 4.50% 73.15 76.95 80.96 85.16 89.59 94.25 95.26 99.55 104.03 108.71 113.60

    Africa 7.30% 5.00% 0.42 0.45 0.49 0.52 0.56 0.60 0.57 0.60 0.63 0.66 0.69

    North America 0.40% 0.40% 369.36 370.84 372.32 373.81 375.31 376.81 378.31 379.83 381.35 382.87 384.40

    Latin America 4.30% 3.80% 41.84 43.63 45.51 47.47 49.51 51.64 52.33 54.32 56.38 58.52 60.75

    Europe, 79.79

    Middle East, 132.26

    Rest Of Asia, 113.60

    Africa, 0.69

    North America, 384.40

    Latin America, 60.75

    Europe, 80.53

    Middle East, 123.33

    Rest Of Asia, 94.25

    Africa, 0.60

    North America, 376.81

    Latin America, 51.64

    71.52

    83.55

    73.15 0.42

    369.36

    41.84

    Year 10

    Year 5

    Year 0

    Gas Turbine Market With capacity >150 MW

    North American Market Biggest by Volume but Stagnant in Growth

    Middle East Strong Growth & Market presence by 2022

    Rest Of Asia Strong Growth till 2022

    Global Gas-powered Electricity Generation, by Region

  • Year 4 Year 5

    Panel Cartridge Panel Cartridge

    Cell Synth Cell Synth Cell Synth Cell Synth

    Europe 78.64 235.92 471.84 94.37 157.28 80.53 241.58 483.16 96.63 161.05

    Middle East 114.09 114.09 171.14 273.82 684.55 123.33 123.33 185.00 296.00 740.00

    Rest Of Asia 89.59 268.78 268.78 215.02 268.78 94.25 282.76 282.76 226.21 282.76

    Africa 0.56 1.40 2.10 1.35 1.68 0.60 1.50 2.26 1.44 1.81

    North America 375.31 562.96 1,407.39 450.37 1,876.53 376.81 565.21 1,413.02 452.17 1,884.03

    Latin America 49.51 123.77 185.66 178.23 99.02 51.64 129.09 193.64 185.89 103.27

    Year 9 Year 10

    Panel Cartridge Panel Cartridge

    Cell Synth Cell Synth Cell Synth Cell Synth

    Europe 78.92 236.77 473.54 94.71 157.85 79.79 239.37 478.75 95.75 159.58

    Middle East 126.32 126.32 189.48 303.17 757.92 132.26 132.26 198.39 317.42 793.55

    Rest Of Asia 108.71 326.12 326.12 260.90 326.12 113.60 340.80 340.80 272.64 340.80

    Africa 0.66 1.64 2.46 1.58 1.97 0.69 1.72 2.58 1.65 2.07

    North America 382.87 574.31 1,435.77 459.45 1,914.36 384.40 576.60 1,441.51 461.28 1,922.02

    Latin America 58.52 146.30 219.46 210.68 117.04 60.75 151.86 227.80 218.68 121.49

    Inlet Air Filter Market for capacity >150MW Gas Turbines

    Year 0

    Panel Cartridge

    Cell Synth Cell Synth

    Europe 71.52 214.57 429.14 85.83 143.05

    Middle East 83.55 83.55 125.33 200.52 501.31

    Rest Of Asia 73.15 219.45 219.45 175.56 219.45

    Africa 0.42 1.06 1.59 1.02 1.27

    North America 369.36 554.04 1,385.10 443.23 1,846.80

    Latin America 41.84 104.59 156.88 150.61 83.67

  • annual replacement market

    Panel Cartridge

    Cell Synth Cell Synth

    321.85 429.14 85.83 71.52

    125.33 125.33 200.52 250.65

    329.17 219.45 175.56 109.72

    1.59 1.59 1.02 0.63

    831.06 1,385.10 443.23 923.40

    156.88 156.88 150.61 41.84

    annual replacement market market growth

    Panel Cartridge Panel Cartridge

    Cell Synth Cell Synth Cell Synth Cell Synth

    353.88 471.84 94.37 78.64 5.66 11.32 2.26 3.77

    171.14 171.14 273.82 342.28 9.24 13.86 22.18 55.45

    403.17 268.78 215.02 134.39 13.98 13.98 11.18 13.98

    2.10 2.10 1.35 0.84 0.10 0.15 0.10 0.12

    844.44 1,407.39 450.37 938.26 2.25 5.63 1.80 7.51

    185.66 185.66 178.23 49.51 5.32 7.98 7.66 4.26

    annual replacement market market growth

    Panel Cartridge Panel Cartridge

    Cell Synth Cell Synth Cell Synth Cell Synth

    355.15 473.54 94.71 78.92 2.60 5.21 1.04 1.74

    189.48 189.48 303.17 378.96 5.94 8.91 14.25 35.62

    489.18 326.12 260.90 163.06 14.68 14.68 11.74 14.68

    2.46 2.46 1.58 0.98 0.08 0.12 0.08 0.10

    861.46 1,435.77 459.45 957.18 2.30 5.74 1.84 7.66

    219.46 219.46 210.68 58.52 5.56 8.34 8.01 4.45

    2012

    2017

    2022

    Inlet Air Filter Market: Annual Replacement Market Market Growth

  • Panel Cartridge

    Cell Synth Cell Synth

    No. of filters per MW of power generated 30 30 24 10

    Filter lifetime (months) 24 24 24 24

    Avg. Price $80 $100 $100 $300

    Total Price 2400 3000 2400 3000

    Average retention in power generation (%) post subtracting losses.

    Marine 0.92 0.98 0.92 0.95

    Arid 0.94 0.95 0.96 0.98

    Humid sub-tropical 0.96 0.96 0.94 0.96

    Price of Usable Generation (60$ /MW)

    Marine 55.2 58.8 55.2 57

    Arid 56.4 57 57.6 58.8

    Humid sub-tropical 57.6 57.6 56.4 57.6

    Revenue advantage of Cartridge (Syn) filters

    Marine 1.8 -1.8 1.8 0

    Arid 2.4 1.8 1.2 0

    Humid sub-tropical 0 0 1.2 0

    Cartridge (Syn) filters become cost effective for plant capacities greater than below mentioned

    Marine 333 0 333

    Arid 250 333 500

    Humid sub-tropical 0 0 500

    Cost effectiveness of Cartridge (synth) filters