Case Study: strategy redirection and growth strategy - Selection of slides 1
Objective of the collaboration Situation: The Client, strong regional player in the air conditioning market located in Southern Europe, would like to redefine the company strategy in order to increase profitability. In this sense, the overall aim of the collaboration would be: 1. To help The Client identify and evaluate the current and future market trends 2. To help The Client identify where most value is generated 3. To help The Client identify highest growth areas 4. Development of business 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 2
Proposed methodology BMC proposes the following methodology Understanding of market variables Assessment of Client s current position Prioritisation of market segments Business plan & business case Competitor 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 3
Example of output: market forecast The project is initiated with a deep understanding of key market forces and the development of scenario based forecast models of unequalled detail... 7,000 Forecast 2017 (USD million) 6,000 5,000 4,000 5,667 Industry Consensus (CAGR: 15%) 5,330 BMC aggressive (CAGR: 10%) 4,525 BMC Forecast (CAGR: 7%) 3,956 BMC conservative (CAGR: 4%) 3,271 3,000 2012 2013 2014 2015 2016 2017 Source: BMC estimates 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
Example of output : channel margins and other relevant variables such as channel margins Margins in % of purchase price for each player (without Installation) Margins in (without Installation) 35% 34% 3.500 30 27% 25% 25% 30% 3.000 2.650 20 2.000 2.118 1.604 1.582 1.275 10 8% 9% 9% Installers 1.000 Installers 0 Segment Segment Segment Segment Segment 1 2 3 4 5 Wholesalers 0 609 658 398 Segment Segment Segment Segment Segment 1 2 3 4 5 Wholesalers Source: industry interviews, 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 5
The project continues with the assessment of The Client s strengths and weaknesses Example of output: positioning The Client s Positioning and Competitive Advantage Product Manufacture and Suppliers Clients Brand Competitors After sale Service Efficient Reliable Price competitive Durable Footprint Design? Flexible, customized manufacture? Assembly Supplier development, or supplier search? Technology owner? Focus on few clients? Good relationships with them? Sales force analysis, strengths, risks Client perception Quality? Technology? Locally? Sales force transfer? Cost of replicating business model? Service analysis Expertise need? Training and Support? This analysis should be done to find The Client s main competitive strengths and weaknesses. 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
Example of output: strategic direction Once segments where The Client is performing better and worse than competition are identified, possibilities for operational improvement and/or growth opportunities via M&A are studied... Return on Sales 20% 10% Operational improvement Improved strategic position Value Achieved Improved Margin on Increased Business Profit Improvement Program Target on Current Business 0% 0.2x 1x 10x Relative Market Share 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 7
Example of output: prioritisation of markets Finally, the prioritisation is done taking into account the potential profitability of the market and the perceived difficulty of success for The Client... High Priority three Priority one Priority four Priority two Low Low High Ability to achieve success (Lever = Capabilities for margin maintenance/enhancement in the short term) 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
Example of output: business case necessary resources A budget is established listing and quantifying necessary resources and investment to grow or redefine the business direction Initial investment Concept 1000 (%) Productive Structure 1.000 16,0% Distribution and sales Structure 800 8,0% Service structure 300 4,0% Training and consulting 300 4,0% Initial Marketing Campaign 40 0,5% Trip expenses 120 1,6% Management salaries 1.144 15,2% Salaries 1.246 16,6% Others 550 7,3% Total Initial Investment 7.500 Chronological projection of necessary cash flow 162 52 60 189 101 2.181 2.851 951 951 Operation s start Jan 09 Feb 09 Mar 09 Apr 09 May 09 Jun 09 Jul 09 Aug 09 Sep 09 Oct 09 Nov 09 Dic 09 Source: interviews with local players, 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
Example of output: business case P&L and Cash flow and financial projections are offered with enough detail to make educated decisions 50 MM P&L detail Operational cash flow (1000 ) 43,4 60,524 40 30 20 10 0 % Sales 23,8-19,6 15,3-6,6-1,8 12,3-1,2-1,1-0,7 Sales Production Gross Personnel Logistic Logistic Direct Indirect Technical Commercial cost margin cost marginsales costsales cost assistance margin 46% 54% 16% 5% 33% 3% 3% 2% 26% 29,960 31,141 30,181 18,558 447 302-253 577-3,801-2,962-3,345-3,489-4,879-8,680-11,642-18,477-18,730-18,283-14,988-17,981 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 2011 2012 2013 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 10
Deliverables The outcome of the study included the following deliverables: Current and forecasted market picture, in terms of Market segment Technological trends Distribution channels End-users Competitor analysis, in terms of Products and services offered Business volume Profitability by segment Identification of commoditised and differentiating factors Assessment of the current competitive position of The Client on its own and compared to main competitors Identification and valuation of technological, manufacturing and commercial gaps The Client needs to cover for selected business segments Segment prioritisation based on the expected ROI and success probabilities of The Client Development of 3-5 year business plan and business case Action plans to achieve the agreed potential 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 11
Project outcome BMC helped The Client redefine their business strategy, having: Identified key technology trends, markets drivers and differentiating factors Obtained a benchmark of The Client s performance indicators compared to main competitors Prioritised market segments, accounting for required resources, expected ROI, potential risks and probability of success 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 12
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