Results

How to best protect your profitability in the face of an emerging threat?

Client
  • A large wood panel manufacturer with several facilities in Australia and NZ
  • Strong reputation for low cost, quality products, but ageing assets become a concern
  • Profitable industry with 4 players

Challenge
  • Client facing potential new competition with one of its high growth customers, who threatens to backward integrate the value chain and become itself a manufacturer of wood panels
  • Internal culture tends to react to market changes, as opposed to shape it
  • Management wonders which is the best course of action for the future: capacity expansion / refocus on core market, forward integration (buying out / direct investment in other player), alone or in alliance with a competitor

Approach
  • Cyrille performed an industry analysis of the market, interviewed the management team on potential options to respond to the perceived threat, modelled the financial impact of each of the options, and organised a 1-day strategy retreat with key stakeholders
  • The strategy retreat involved the management team playing a number of scenarios on industry conduct with a practical implementation of game theory concepts

Results
  • The management developed over the course of the project a clear vision of what the best course of action was. The strategy retreat and the game theory role-play proves to be critical in the understanding of how detrimental some industry moves could be to the profitability of the various players
  • After presentation to the board, the strategy was implemented by the client

Do you have the right strategy?

Client
  • A large wood panel manufacturer with several facilities in Australia and NZ
  • Large proportion of production is exported to South East Asia
  • Unprofitable industry with regional overcapacity

Challenge
  • Client wants to assess:
    • How much of the current losses are due to exchange rate
    • Whether the strategy followed so far is sound and sustainable in the long term
    • Which configuration of assets can deliver the best returns

Approach
  • Cyrille performed an industry analysis of the market:
    • Supply and demand forecast and pricing scenarios
    • Total delivered costs of competitors into various end-markets
  • Cyrille modelled the financial impact of each of the options (manufacturing reconfigurations, change of mix and markets served)

Results
  • The study essentially validated the current strategy and possibility to make profit provided that costs are reduced at one of its most challenging sites
  • The management team decided therefore that the best course of action was to keep reducing costs at that site or to close it should these efforts be unsuccessful

Is your labour force performing at its full potential?

Client
  • A large construction material group in Australia and NZ who owns a 3mt quarry
  • On-site IR climate somehow biased towards employees
  • Maintenance manpower is outsourced whereas production manpower is insourced

Challenge
  • Production volume is declining but costs do not as they are mostly fixed
  • Productivity of labour in production and maintenance activities is declining sharply
  • Management would like to identify ways to improve productivity

Approach
  • Cyrille performed a full analysis of maintenance activities on site: task identification, manning and frequency of occurrence. Cyrille recommended to monitor more closely maintenance contractors and change the pricing system from a rate per hour to a rate per task
  • Cyrille analysed the productivity of production labour on site and recommended to change the shift structure from an essentially 2-shift model to a one 12-hour shift with significant consolidation of activities performed by each employee

Results
  • The two initiatives resulted in a planned decrease in production costs of $2m over the next 2 years, from a base of $22m
  • The site is now implementing the change in shift structure and re-negotiating its contracts with the maintenance contractors

Customer segmentation, the first step towards a focused marketing

Client
  • A leading retailer of cultural products (CDs, books) and electronics (TVs, computers, HiFi) in France
  • 50 shops in France, expanding worldwide

Challenge
  • Client wants to develop its marketing activities with a better focus. In particular, client wants to understand the interest of various customer segments in new products and services
  • A customer segmentation is viewed as the best first step to give a new impulse to the marketing plan
  • Deadline is tight as management has to report to the Board within a month

Approach
  • Cyrille was responsible for the entire project of delivering the customer segmentation:
    • Design of survey questionnaire for the quantitative research
    • Sizing sample to interview a mix of customers, loyal customers and non-customers
    • Supervision of research company activities (1200 phone interviews of 20 min each)
    • Performing segmentation using advanced statistical tools (SPSS software)
    • Extracting practical implications of the exercise for the client

Results
  • A customer segmentation with 7 strategic segments was developed with full profiling of each segment (demographic data, purchasing habits, interest in current and future products / services) and action plan
  • The potential for new products (paper products, newspapers, art supplies, musical instruments) was identified for each customer segment
  • Findings were presented to the Board and implemented

Are you using pricing to improve your bottom line?

Client
  • A top 3 hotel group in UK
  • Two leading brands: one 3 star local chain and one 5 star worldwide chain

Challenge
  • Declining occupancy and profitability
  • Prices have been pushed forcefully upwards for the past 5 years and client wants to know what is the right price structure and price levels by market segment
  • There is some confusion in the pricing decision process between central sales and hotel sales teams

Approach
  • A full pricing review was undertaken over the course of 5 months
  • In particular, Cyrille derived price elasticity of market segments to assess potential for price moves.
  • The pricing process was clarified, giving back to each individual hotel the flexibility to price as per local competitive constraints, apart from large accounts who have business across hotels

Results
  • The project identified £30m in revenues improvements from:
    • Short term price move in transient, events, and group rates
    • Medium term renegotiation of corporate rates
    • Long term influence over the market