Identifying New Business Opportunities for a Leading Business Group

Building Materials Consulting

Client Challenge

The client was part of a leading Indian business group having business operations in IT software and hardware. The top management was considering unrelated diversification, with the following criteria:

  • Investment outlay of about 500 crores in the new ventures
  • Investment horizon of about 5 years
  • Returns on Investment (ROI) of about 15%

The top management, therefore, requested UC Strategy to identify attractive business opportunities in the shortlisted industry segment.

Our Approach

UC Strategy identified 197 Industry segments (Manufacturing, Services and Trading) as a starting point to begin the process of shortlisting. UC Strategy understood the clients’ needs for unrelated diversification and defined a five-level filtration criterion to arrive at the attractive segment:

  • Level I – Management Constraints
  • Level II – Future Outlook
  • Key parameters were Projected Industry Size, Projected Growth, Fragmentation, Operating Margins, Capacity Utilisation
  • Level III – Risk-Return Profile
  • Mapped 43 industry segments on a Risk (China Threat, Intensity in Innovation, Branding and Distribution) – Return (Global demand, India Advantage and ROCE) prioritisation matrix
  • Level IV – Attractiveness of Industry sub-segments and Ease of acquiring/ building capability
  • Mapped 18 sub-segments on portfolio selection matrix; sub-segment attractiveness (P/E, Size, Growth, Competitive intensity, competitive capacity and Acquisitive opportunity) and Ease of acquiring/ building capabilities (People, R&D, Sourcing, S&D and Technology)
  • Level V – Portfolio decision
  • Defined industry sub-segments as stars, pearls, oysters and elephants based on ease of building/acquiring capability and segment attractiveness

Our Impact

UC Strategy delivered the criteria by which the client can choose their business opportunities and made recommendations for eight opportunities in new lines of business.

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