Case Study: market entry strategy. - Selection of slides

Transcription

1 Case Study: market entry strategy - Selection of slides 1

2 Objective of the collaboration Situation: The Client, global HVAC manufacturer would like to evaluate the market potential for their products in Brazil. In this sense, the overall aim of the collaboration would be: 1. To help The Client identify and evaluate the main opportunities for its products in terms of positioning, revenue sources, geography and channels 2. To help The Client identify the best entry strategy 3. Develop entry strategy and business case This presentation has been elaborated by BSRIA Management Consultancy (BMC) exclusively for the use of its client, and will not be used without written consent of BMC 2

3 Proposed methodology BMC proposes a five step methodology Analysis of the Brazilian market Product portfolio definition for Brazil Definition channel, manufacturing and after sale strategy Definition of Business model and Action Plan This presentation has been elaborated by BSRIA Management Consultancy (BMC) exclusively for the use of its client, and will not be used without written consent of BMC 3

4 Positioning Example of output: analysis of competitive landscape Positioning, market share and strategy of each competitor is different in the Brazilian market Positioning and share by brand High ROS: 8-12% ROS: 1-15% Compet1 Compet6 Compet7 Compet3 Compet4 Compet8 Compet5 Compet2 ROS: -6% ROS: 6-1% Low Low Relative share High Source: Emerging markets information services, BMC estimates. Note: ROS=EBIT/Sales This presentation has been elaborated by BSRIA Management Consultancy (BMC) exclusively for the use of its client, and will not be used without written consent of BMC 4

5 Positioning To achieve the desired long-term positioning, the Client has 2 entry options: Example of output: positioning alternatives The Client entry strategy: Positioning High ROS: 8-12% ROS: 1-15% Entry1 Haier Entry2 Low ROS: -6% ROS: 6-1% Low Relative share High Source: BMC. Note: ROS=EBIT/Sales This presentation has been elaborated by BSRIA Management Consultancy (BMC) exclusively for the use of its client, and will not be used without written consent of BMC 5

6 Example of output: manufacturing options gross margin entry 2 Gross margin for manufacturing options 1 and 2, following entry strategy 2 are negative for almost the entire product range Product series A Product series B Product series C 1. Import finished product 8.3% 3.7% -22.2% -25.3% -26.3% -17.1% -27.% -1.9% -12.1% -1.9% -1.1% -8.1% -1.1% -4.6% 2. Assemble in AAA -36.4% -38.1% -37.5% 3. Assemble in BBB -24.1% -32.5% -26.2% -26.6% -23.6% -9.1% -14.4% -18.6% -11.8% 3.7% -.2% 11.% 1.3% 1.3% 17.7% 12.1% 17.1% 17.% 18.3% 27.7% 24.4% 23.% 27.3% 36.9% 33.7% This presentation has been elaborated by BSRIA Management Consultancy (BMC) exclusively for the use of its client, and will not be used without written consent of BMC 6

7 Example of output: entry options geographical approach When it comes to the geographical approach, a three phased entry strategy is recommended Phase 1 Phase 2 Phase3 North (X) North (X) North (a) North East (X) North East (a) North East (a) Mid West (X) Mid West (X) Mid West (a) South East (a) South East (a) South East (a) South (a) Market covered: 72-78% South (a) Market covered: 85-9% South (a) Market covered: 1% This presentation has been elaborated by BSRIA Management Consultancy (BMC) exclusively for the use of its client, and will not be used without written consent of BMC 7

8 Example of output: business case P&L P&L (, P&L (, USD) USD) Units Units Sold Sold (, (, units) units) Sales Sales 3,322 3,322 17,765 17,76548,45148,451 71,846 71,846 71,846 71,846 Cost of Cost Goods of Goods Sold Sold -2,68-2,68-14,323-14,323-38,988-38,988-57,72-57,72-57,72-57,72 COGS Brazil COGS Brazil -2,68-2,68-14,323-14,323-38,988-38,988-57,72-57,72-57,72-57,72 Gross Gross Margin Margin ,442 3,442 9,462 9,46214,126 14,126 14,126 14,126 Gross Gross Margin Margin (%) (%) 19.3% 19.3% 19.4% 19.4% 19.5% 19.5% 19.7% 19.7% 19.7% 19.7% SG&A SG&A ,297-5,297-5,759-5,759-7,35-7,35-7,523-7,523-7,523-7,523 Operations Operations Selling expenses Selling expenses ,948-3,948-3,262-3,262-4,398-4,737-4,398-4,737 Administration and overhead Administration and overhead ,663-1,663-1,795-1,936-1, ,936-6 EBITDA ,655-2,317 2,427 6,63 6,63 EBITDA ,655-2,317 2,427 6,63 6,63 EBITDA (%).% -14.1% -13.% 5.% 9.2% 9.2% EBITDA (%).% -14.1% -13.% 5.% 9.2% 9.2% Depreciation Depreciation EBIT ,655-2,617 2,127 6,33 6,33 EBIT ,655-2,617 2,127 6,33 6,33 Corporate tax ,576 Corporate tax ,576 NOPAT ,655-2,617 2,127 6,147 4,727 NOPAT ,655-2,617 2,127 6,147 4,727 Source: BMC analysis This presentation has been elaborated by BSRIA Management Consultancy (BMC) exclusively for the use of its client, and will not be used without written consent of BMC 8

9 Example of output: business case balance sheet BS (, P&L USD) (, USD) Assets Units Sold (, units) 85,56 411, , , ,817 Fixed Sales Assets 3,322 3, 17,765 2,7 48,4512,471,846 2,1 71,846 1,8 Facility & machinery 3, 3, 3, 3, 3, Cost of Goods Sold -2,68-14,323-38,988-57,72-57,72 Depreciation COGS Brazil -2,68-14, , , ,72-1,2 Current Gross Assets Margin 642 2,56 3,442 8,342 9,4622,63 14,126 24,17 14,126 24,17 Inventory 1,952 6,369 15,22 18,3 18,3 Gross Margin (%) 19.3% 19.4% 19.5% 19.7% 19.7% Raw material 965 2,628 5,836 5,836 5,836 SG&A ,297-5,759-7,35-7,523-7,523 Work in progress 585 1,592 3,535 3,535 3,535 Operations Finished products 42 2,148 5,848 8,658 8,658 Selling expenses Debtors , ,262 1,974-4,398-4,737 5,383 5,987 5,987 Cash Administration and overhead ,663-1,795-1,936-6 EBITDA ,655-2,317 2,427 6,63 6,63 EBITDA (%).% -14.1% -13.% 5.% 9.2% 9.2% Liabilities and Equity 5,56 11,42 23,3 26,117 25,817 Equity Depreciation , , , ,194 CapitalEBIT ,655-2,617 2,127 6,33 6,33 Retained earnings ,191-7,88-5, Corporate tax ,576 Current year earnings ,655-2,617 2,127 6,147 4,727 NOPAT ,655-2,617 2,127 6,147 4,727 Financial liabilities 537 1,697 18,85 28,684 25,65 2,623 Group Loans 537 1,697 18,85 28,684 25,65 2,623 Creditors Working Capital needs 2,56 8,342 2,63 24,17 24,17 Source: BMC analysis This presentation has been elaborated by BSRIA Management Consultancy (BMC) exclusively for the use of its client, and will not be used without written consent of BMC 9

10 Deliverables The outcome of the study included the following deliverables: Detailed analysis of the Brazilian market for HVAC Analysis of the Client s main competitors, in terms of: Product range, commercial network, services, pricing strategy Definition of product portfolio and pricing strategy for different market entry positionings Evaluation of importing option compared to locally assembling or manufacturing options, in terms of: Inital investment, tax regulation, profitability, timing Set up of potential scenario based target sales in 3-5 years Development of business plan, detailing resources needed, cash flow projections and ROI projections Recommendation of best approach to enter the Brazilian market Development of action plans necessary to achieve the targets This presentation has been elaborated by BSRIA Management Consultancy (BMC) exclusively for the use of its client, and will not be used without written consent of BMC 1

11 Project outcome BMC helped The Client decide whether or not to proceed with the market entry operation in Brazil and the best approach for it: Proving The Client the operation would be bring value to their Corporation Presenting alternative brand positionings, with recommendations regarding commercial strategy and manufacturing strategy Building up a business case valuating several scenarios and concrete action plans for the targets set This presentation has been elaborated by BSRIA Management Consultancy (BMC) exclusively for the use of its client, and will not be used without written consent of BMC 11

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