100121-Practice Business Case Solution_2010_AF.

pptx
Bucharest, 2010
Mock Business Case Solution
Earnings improvements and strategy repositioning in the paper and
stationery industry
2009 Roland Berger Strategy Consultants GmbH
Contents
2 100121-Practice Business Case Solution_2010_AF.pptx
Analysis focus and additional information needed
Current status of the company
Operative actions to improve liquidity and profits
Approach to strategic repositioning
1
2
3
4
3 100121-Practice Business Case Solution_2010_AF.pptx
Your analysis should focus on a range of elements,
pertaining both to the market and to the cost side
Overall market size
Market segments by customer group
and product
Changes in pricing levels
Retail and wholesale market analysis
Factors influencing the market (such as
net household income, numbers of
children starting school, etc.)
Competitor analysis
The company's market position:
Strengths/weaknesses
Success factors
Product range analysis
MARKET SIDE
Profit and loss:
By company (production/sales
companies)
By location
Cost structure and changes over time:
By company
By location
Productivity benchmarks
Product profitability
Customer profitability
COST SIDE
ANALYSIS
FOCUS
1
Additional information needed possible answers
4 100121-Practice Business Case Solution_2010_AF.pptx
Starting 2009, the company has seen its financial
indicators deteriorating
2001 2005 2006 2007 2008 2009 2010 Q1
Sales per employee
[EUR '000]
292.0 297.0 279.0 292.7 274.8 266.0 222.2
1)
Gross margin per
employee [EUR '000]
160.2 178.6 140.2 150.3 144.3 126.8 114.7
1)
Return on sales [%] 8.0 5.3 3.9 1.8 2.1 -4.2 -5.4
Source: Paper & Stationery Inc.; Roland Berger analysis
66.9 57.0 60.9 65.3 65.0 63.8 90.0
2)
Collection period
[days]
Inventory Turnover
[days]
76.5 84.3 85.2 73.3 60.5 71.4 99.0
2)
Problematic
1) Annualized based on the Q1 sales figure 2) Annualized based on LTM (last twelve month) sales of EUR 2,000 m
Status Key financial indicators
1
5 100121-Practice Business Case Solution_2010_AF.pptx
The reasons behind the financial problems are
linked with both the market and the company
Pressure on retailers to conform
Specialist retailers losing out
Reverse integration in retail
Concentration in food retail
Discounters and mega-markets growing
New players on the scene:
Putting pressure on prices
Diversity of product range
Decreasing negotiation power in dealings
with suppliers
Sales focused on medium range quality and
image position/no differentiation
Increasing competition
MARKET SIDE
Complexity costs, due to diversity and
structure of the product range
Depth and width of the product range
Productivity falling (gross margin per
employee down)
Structural costs too high
Large number of locations and depots
Overcapacity (production, logistics)
Disproportionate overheads/administrative
costs, due to lack of integration
Cost structure has not been modified in
response to falling prices
High proportion of in-house commodity
production
COST SIDE
Status Main problems faced by the company
2
6 100121-Practice Business Case Solution_2010_AF.pptx
The financial situation of the company can be
improved through quick hits on liquidity
> EUR 398 m
cash
generated
Cut stocks (internal best practice:
60.5 days): save EUR 214 m,
through:
Merging warehouses
Downsizing logistics
scheduling parameters
Indirect effects of reducing
complexity
Reduce days receivable (internal
best practice: 57 days): save EUR
184 million, through:
Successful debtor
management
Increasing the number of
reminders
PROPOSED ACTIONS
PROPOSED TARGETS [EUR m]
> EUR 184 m
cash
generated
> EUR 214 m
cash
generated
Quick operative actions to improve liquidity
3
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Profits can be enhanced by optimizing purchasing,
production, product portfolio and administration
Increase productivity through
process improvement and job cuts
Adjust purchasing costs to selling
prices (stable gross margins)
Reduce complexity and staff
through:
Reducing the number of
customers
Slimming down the product
range
Centralize locations:
Saving on infrastructure costs
Making administration more
efficient
Make-or-buy decisions for all
products and support functions
Review all cost types thoroughly
45 20
25
Centraliz-
ing
locations
-40
Reduction
of
headcount
by 700
35
Negotia-
tion of
material
costs,
changes
of
supplier
35
Restruc-
turing
costs
10
2009
result
-100
Savings
on infra-
structure
costs
General
cost
savings/
budget
reductions
Expected
result
2010
PROPOSED ACTIONS PROPOSED TARGETS [EUR m]
Operative actions to improve profitability
3
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Long term success can only be ensured through a
proper strategic repositioning of the company
1 2 3
Market
segments
Market
share
Strategy
STEP 1
Define market
segments based on:
Production/sales
companies
Services offered
Analyze and assess
segments in terms of
market and competition
STEP 2
Work out what market
share the company
could achieve:
With its existing core
competences
By meeting the
relevant market
requirements
STEP 3
Identify possible
strategies
Formulate the optimum
strategy based on the
results of the analysis
4
Action plan
STEP 4
Draw up an action plan
to implement the
defined strategies
Define a clear
timeframe for the action
plan
Basic approach to strategic repositioning
4
9 100121-Practice Business Case Solution_2010_AF.pptx
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