Industry Flashcards
Please note that these are intended as guides and we recommend you still do your own research
These are meant to only be circulated within the Tuck community
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Solar Power Developer (SPD) Industry
E-Commerce Industry
Revenue Components: Electricity (kWh) , Tariff ($/kWh)
Revenue Components: Visit count (Visits), Conversion Rate
(Orders/Visits), AOV (Revenue/Order)
Value Chain
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Industry
nature
Utility-scale:
Consolidating
Small/Mid:
Fragmented
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Investor-owned Utilities, Municipalities, and
Commercial & Industrial (C&I) customers buy
solar energy from SPDs.
SPDs plan, often finance, and frequently own the
solar asset. Extended SPD ownership is managed
under a Power Purchase Agreement (PPA).
Contractors (“EPCs”) get funds from SPDs to buy
equipment and construct the power plant. Solar
panels are a highly commoditized product.
Annual Fixed
Upfront
Costs
for
SPDs
•Solar panels
•Electric equipment
•Land, site prep.
•Permitting
Key
Risks
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• Regulatory and
legal expenses
• Insurance
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Images on this and following slides are for representation purposes only
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Industry
nature
Large players:
Massmerchants
Small/Mid:
Fragmented
Annual Variable
•Operations and
Maintenance (O&M)
•Manpower
•Contract penalties
Competing solar power from new entrants at lower cost
Credit risk of power buyers (utility, corporate, municipal, etc.)
Change in government regulations and/or tax incentives
Competition from lower cost of capital / lower panel costs
Mathew O’Sullivan (T’19), Abhijeet Deshmukh (T’19) & James Giampietro (T’19)
Value Chain
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Companies acquire customers (or customer email
addresses) via marketing campaigns with the
hopes of monetizing them over time
Major marketing channels: display advertising,
social, Google search keywords
Product managers optimize website to increase
onsite conversion rate – funnel based flow
process
Balance between CAC and CLV for breakeven
Annual Fixed
Upfront
•
Costs
Key
Risks
Customer
acquisition costs
Wholesale costs
Marketing cost
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Ryan Milligan (T’19)
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Warehouse storage
Labor
Cloud storage
Site maintenance
Annual Variable
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Ongoing marketing
Promotions (margin)
Wholesale costs
Engineering/site
development
Mass-merchant players (Amazon, Wayfair, Walmart) dominate
Can acquire many customers that don’t monetize
Repeat purchase rate can be low – lack of stickiness
Transparent pricing/thin margins – race to the bottom
Mining Industry
Construction Industry
Revenue Components: Revenue per unit weight of commodity ($/T)
Revenue: Lump sum amount for works completed, schedule of rates.
Value Chain
Value Chain
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Concentrated
at the mid to
high end
(capital
intensive).
Industry
nature
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•
Upfront
Costs
Key
Risks
•Licensing / land
rights
•Exploration
•Site development
and infrastructure.
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Large multi-national or mid tier miner will own
rights to mine site.
Mining company will either operate the mine, or
contract to a large mining operations company.
Commodity product generally sold under long
term agreements and delivered by land/sea/rail.
Large industry around mining support;
maintenance, engineering, geology, specialized
plant and equipment etc.
Annual Fixed
• Regulatory and
legal expenses
• Insurance
• Corporate and
management
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Fragmented:
$Multi Bn
though to
<$1MM rev.
Industry
nature
Annual Variable
•Operations and
Maintenance (O&M)
•Contract penalties
•Government
royalties
Extremely sensitise to movements in commodity prices
Political risk
Regulatory risk
Nick Teo (T’19)
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Upfront
•
Plant and
Equipment
Costs
Key
Risks
Nick Teo (T’19)
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Customer appoints EPC contractor (for mutli-Bn
industrial projects, else customer will go directly
to head contractor) to manage the entire project
lifecycle.
EPC contractor will contract to a head contractor
to construct the project.
Head contractor will split the contract into pieces
and sub-contract to specialized contractors.
Sub-contractor will buy plant and materials from
suppliers.
Annual Fixed
• Management staff
• Corporate
expenses.
• Plant maintenance
Annual Variable
• Direct labour
• Materials
• Plant hire
Extremely volatile cashflows
Credit capacity of clients – construction companies fund large
portions of the works while carrying them out
Fixed Broadband / Cable Industry
Mobile Telecom Industry
Revenue Components: ARPU (avg revenue per user) x no of subscribers
ARPU – video, data, voice, value added services
Revenue Components: ARPU (avg revenue per user) x no of subscribers
ARPU – data, voice, value added services
Industry
nature
Oligopolistic to
monopolostic
by region
•
Costs
Key
Risks
•
Value Chain
Value Chain
Suppliers :
• Video - Media Companies (Disney, NBC etc)
produce content and sell channel licences to
cable company
• Network Infrastructure – Companies own the
physical assets
Suppliers:
• Tower
companies:
Host
the
physical
infrastructure. They are paid per installation per
month
• Fiber Companies: Physical fibers reaching all the
towers. They are paid on a utilization basis
Customer : Consumers and businesses
Upfront
Annual Fixed
Network
Infrastructure
Customer
acquisition
• Maintenance
• SG&A
• Fiber leases (if they
don’t own all of
network)
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Annual Variable
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Customers: Consumers and businsses
Upfront
•
Content
Expansion by wireless players with 5G rollout (5G can serve speeds
that compete with fixed broadband
Internet video streaming services (like Netflix)
Nikilesh Eswarapu T19
Industry
nature
Competitive
w/ limited no
of players (4 in
the US have
own network)
Costs
Network
Infrastructure
Customer
Acquisition
Spectrum licenses
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Key
Risks
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Nikilesh Eswarapu T’19
Annual Fixed
• Maintenance
• SG&A
• Tower and fiber
leases
Annual Variable
No major category
(though there are
step function network
infrastructure costs as
usage increases)
Encroachment on wireless by fixed players (e.g., a cable player
leveraging their heavy fiber network assets to deploy 5G)
Technological risk (competitors advancing faster on new
technologies)
Health Insurance Industry
Advertising Agency Industry
Revenue Components: Premium Payment ($PMPM), Members (#)
Revenue Components: Agency Fee; Commission (pct. Spend), Fixed
(flat rate), Labor (hourly billings), Value (pct. Sales, etc.)
Value Chain
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Utility-scale:
Consolidating
Small/Mid:
Consolidated
Industry
nature
•
Upfront
Costs
•Reserve Reqs. Fund
•Software Systems
Key
Risks
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Individuals, Small Businesses, Large Business (SelfInsured or Fully Insured), and Government
Agencies purchase insurance (or pay to use ops.)
Insurers usually take on risk (accepting premiums
and paying claims) of members and maintain
membership enrollment and claims payments
Insurers may take on activities (behavioural
health, disease management) to limit claims costs
from consumers
Annual Fixed
• Manpower
• Regulatory
Reporting
Value Chain
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Industry
nature
Dominated by
major holding
companies (WPP,
Omnicom,
Publicis)
Annual Fixed
Annual Variable
•Claims Payments
•Member Mgmt.
Frequent regulatory changes by new governments (ACA, AHCA)
Consolidation of downstream industries (health systems)
Consolidation within insurance (PBMs and Insurers)
Costs
• Space / Lease
• Technology platforms
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Key
Risks
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Tom Curran (T’19)
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Major global brands partner with Advertising
Agencies to outsource Advertising, Technology,
Analytics, etc. capabilities.
Advertising Agencies partner with clients, other
agencies, and third-parties (Ad Exchanges,
Networks, DSPs, Social Platforms, etc.) to
implement advertising campaigns
Campaigns generate brand recognition and brand
equity as well as sales for Global Brands
Annual Variable
•Ongoing facility operations
•Pitch work
•Conferences / Trade Shows
•Manpower (Salaries, training,
etc.)
Certain clients can make up a large share of revenue, turnover of key accounts can
have a significant impact on revenue
Increased scrutiny from major brands on transparency of fee structures and
advertising audiences
Data privacy issues (varying country-to-country)
Colin Cort (T’19), Sam Bristol (T’19) & Matt Baer (T’19)
Hospital Industry
Restaurants
Revenue Components: Medicare/Medicaid, Private Insurance, Self-Pay
Revenue Components: Number of Customers & Avg Check Size
Value Chain
Value Chain
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Industry
nature
Vertical
Integration,
System
Consolidation
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Hospitals employ or partner with providers at
fixed sites to spread administrative costs, share
equipment, and facilitate access to care
Patients receive a variety of primary and specialty
care services depending on the makeup of the
physician body
Insurers cover the cost of services at varying rates
through a variety of payment schemes including
capitated payments and fees for service
Upfront
Costs
•Hospital Building
•Surgery Center
•Basic Equipment
Key
Risks
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Annual Fixed
Annual Variable
Provider Salaries
Admin Salaries
Insurance
Legal Expenses
IT Systems
•O&M
•Electricity/Facility
Costs
•Drugs and Medical
Supplies
Declining reimbursement from government programs
Changes in government regulation and or programs
Aging population, increasing chronic and complex conditions
Competition from urgent care clinics
Lillian Powell (T’19)
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Industry
nature
Costs
Key
Risks
Matt Baer (T’19)
Highly
competitive,
fragmented (at
all levels).
•
Restaurants serve food and beverages to a customer base
typically within a specific geographic region. Customer
demographics are often determined by location and type of
restaurant.
Common restaurant categories: fine dining, family, fast casual,
quick service (QSR), café, etc.
Competitors are often considered other restaurants operating
in a similar category, geography, and appealing to a similar
demographic.
Restaurants typically buy food from major food distributors
but may manage their own individual grower/producer
relationships
Upfront
Annual Fixed
- Buildout
- Equipment
- Concept
development (menu,
marketing, etc)
- Rent/lease/utilities
- Salaried Managers
(sometimes)
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Annual Variable
- Food and beverage
- Paper (e.g. to-go
containers for QSR)
- Hourly Labor
Changing consumer trends and preferences
Food price volatility and fluctuation
Low margin business, so very dependent on high volume
Negative PR and press
Exploration and Production (E&P) Companies – Oil and Gas
Non-Profit Industry
Revenue Components: Oil (barrels) , Gas (cubic feet)
Revenue Components: Donations from foundations, governments, and
individuals, some from their own programs/services
Value Chain
Value Chain
•
Capital intensive,
volatile due to
uncertainty in oil
prices and
geological
knowledge
Industry
nature
Upfront
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Costs
•
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Licensing fees
Exploration, appraisal
expenditure
Drilling of wells
Surface facilities
(offshore platform,
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Resources owned by government and rights to produce oil
and gas auctioned by the government
E&P companies bring technology and investment capital to
develop resources in various countries
Customers for oil and gas include refineries and power
plants that sign long-term contracts. Oil and gas may also
be sold at spot markets (e.g. Henry Hub and WTI at
Cushing Oklahama)
Annual Fixed
• Royalties
• Maintenance
• SG&A
pipelines)
Key
Risks
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Industry
nature
Annual Variable
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Utilities (chemicals, power)
Well replenishment
Enhanced
oil
recovery
operations (water injection,
artificial lift)
Carbon tax (in future)
Oil prices majorly set by OPEC, a cartel, making the spot prices volatile
Geopolitical risks due to political nature of major capital investments
Technical uncertainty over quantity of recoverable oil and gas, boundaries of
reservoir and other geological characteristics
Safety concerns in handling large quantities of oil and gas in relatively pristine
environments
Regulatory concerns due to climate change concerns
Threats from renewable energy technologies
Vengatesh Muralidharan, Shawnda Duvigneaud, Alfred Mushonga (T’19s)
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Slowmoving,
riskaverse
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Main funding Sources
• Foundation grants are usually funded through a
foundation’s endowment
• Government and multilateral grants are usually funded
through tax revenue
• Individual funding comes from individual people or
families
Non-profits use the money they raise to run their programs on-theground and for their administrative/overhead costs
In rarer cases, non-profits also get revenue from parts of their own
programs/services (e.g. IP, certification services, etc.)
Non-profits are evaluated on their financial performance (through
an audit) and program performance measured with on-the-ground
surveys, interviews, and data collection
Upfront
Costs
•
Fundraising to
establish proof of
concept/get programs
running
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Key
Risks
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Annual Fixed
• Fundraising/grantwriting staff
• Administrative &
overhead costs
Annual Variable
• Programs/services
Donors play a large role setting program priorities (versus more strategic analysis)
as actually running a program depends on it being funded
Donor funding can be variable (e.g. a bad financial year for an individual or
changing government administration) can mean a program does not continue to
get funded even if performing
Risk-aversion/bureaucracy/slow moving nature of government and foundation
funding make innovation and cost-effectiveness difficult
Fundraising and donor management requires a lot of time/resources, taking away
from impact
Joemma Berberich (T’19), Allison Kavanaugh (T’19)