All ACI programs teach students how to overcome the most challenging competitive intelligence issues. The following are sample lessons taught in:

Problem Sets

Industry Profit Pool

In the late 1990's competitors in the consumer truck leasing industry were earning ~3% profit margin. U-Haul, with an older fleet, higher maintenance costs and lower prices, was earning 10% profit margin. How were they able to earn more from a (seemingly) weaker value chain?

U-Haul's definition of its industry did not end with activities surrounding the provision of truck rental. It extended its industry profit pool map to include its consumer's needs. Here they identified the opportunity to sell packaging, insurance and other associated items needed to facilitate the moving experience. Apparently, consumers were less scrutinizing of accessory expenses than they were for the cost of the truck itself. Packaging material margins provided U-haul with a substantial boost to the bottom line.

1. How much detail is needed in defining an industry profit pool map?
2. How do you identify untapped or hidden sources of profit?
3. Is it possible to create a choke point to fortify a new pool?

Discovering where Value is created in an Industry

The automotive industry is a multi-trillion dollar industry with a growing upstream supply chain and nearly 60% of revenues attributable to manufacturing companies and dealers. The industry profit pool map tells a different leadership story. The deepest pools belong to the financial products segment of the industry- financing, insurance and lease programs. "Pre-owned" vehicle dealerships are also more profitable than the stalwart firms creating the products they sell.

Questions

1. What is the size and depth of each profit pool?
2. What is the life cycle stage of each pool and are they sustainable?
3. Why have profits formed where they have?

Activating an Industry Profit Pool Map in Strategic Thinking

Industry profit pool maps can be positioned to provide insight to strategic questions. Profit pool maps can help identify: where new or untapped pools of profit exist, help chart possible merger, acquisition or partnership strategies, identify customers and channels and even guide more tactical decisions about the 4 P's.

Questions

1. Considering profit margins and choke points, where should the firm consider investing free cash flow- upstream, downstream or 'newstream'?
2. What forces are likely to change the current map? Will new models emerge as a result?
3. Are new entrants, or the evolution of strategic groupings likely to weaken the current boundaries of the current configuration?
4. Which pools should the firm consider swimming in to advantage or to manage shifts in the industry map?