Client Challenge
The client was a conglomerate having a presence in welding products and accessories, power plant solutions, production of cosmetics and personal care products. The client group had a strong investment backing and had cash reserves. It wished to invest in new business opportunities to accelerate its turnover and hence requested UC Strategy to identify blue-chip opportunities in the Indian market for this growth trajectory
Our Approach
In order to identify suitable business opportunities, UC Strategy used the following approach:
- As a part of the assignment conducted detailed primary research and in-person interviews with more than 150 industry respondents
- Understood the strategic intent, assessing the current internal capabilities and management outlook on new opportunities:
- Gained perspective on current business presence in each of the Group companies
- Industry verticals, segments and products/ services being offered
- Key customers
- Business model
- Historical performance
- Value proposition
- Differentiators
- Domestic Vs Exports
- Alliances/ tie-ups
- Future plans, etc.
- Conducted assessment of internal capabilities:
- Technology
- R&D Capability
- Manufacturing process capabilities
- Pricing and cost structure
- Distribution network
- Logistics Capabilities
- Alliances
- Brand Strength
- Group companies
- Relationships with key customers
- Create a long list of opportunities within the value chain of each space being evaluated through discussions with Top management
- Identify themes/ sub-segments based on:
- Internally defined criteria by the management. E.g. Extent of fragmentation in the industry
- Growth engines, business patterns and potential changes in industry structure
- Long list of opportunities was created through themes shaping each space across the value chain
- Defined preliminary screening criteria (e.g.)
- Investment
- Profitability
- Technology requirements/ complexity
- Value/ brand creating opportunities
- Nature and type of equipment as per management’s requirements. E.g. Assembly/ capital equipment in B2B space
- Conducted a quick profile of the long list of opportunities and prioritize opportunities for detailed evaluation
- Conducted in-depth domestic market analysis for the shortlisted opportunities, this included:
- Overall industry structure
- Market size and forecasts for the next 5 years
- Key demand rivers, substitution trends and growth inhibitors
- Key customer segments
- Competitive analysis
- Share of organized vs. unorganized, level of fragmentation (H-index), presence of MNC players
- Existing production and built up capacities
- Overall competitive intensity and market share of key players
- Overall demand-supply situation
- Profit pool
- Pricing trends and average realizations
- Relevant regulatory issues, etc.
- Technology play
- Duty structure. Trends in protection for domestic industry
- Analysed operating margins for the products
- Determined scale of investments required, return on investment and payback period
- Value chain analysis
- Customers Key Purchasing Criteria
- Defined business model for the selected opportunities:
- Product offerings
- Identify key customers
- Marketing strategy
- Pricing stance
- Capability requirements and ways to develop the capability
- Mode of entry
- Acquisition vs. Joint Venture vs. Greenfield
- If acquisition or joint venture type of company to partner with
- Distribution strategy
- Developed financials and an implementation plan to pressure test the strategy in light of the revenue and PBT (Profit before tax) objectives
Our Impact
Building on the megatrends, a total of 116 business opportunities were identified. Applying 4 levels of filtration criteria’s, a total of 13 opportunities were finalised and presented to the client top management. Out of the final list of opportunities, the client selected 3 opportunities for initial investment and engaged UC Strategy for starting on the filed implementation of those opportunities.