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Creation of a Development Strategy

Situation

  • The client has a production area in Moscow, and also land plots external to the production area
  • The client’s production includes ground rubber, low-tech defence products, automatic parking and ski lifts, as well as bus-assembly facilities
  • The company is not making a profit and cannot service its debts, which are owed to a bank. The enterprise is under the threat of bankruptcy
  • The client needs to have a development strategy that will allow it in the short and medium terms to service and pay off its debts, while at the same time laying a base for long-term growth

Goal

  • To identify products which have the potential to enable the firm to service its debt
  • To choose development projects that will in the medium-term all for debts to be repaid to the bank
  • To prepare, based on the chosen development strategy, a presentation on how to grow the enterprise, agreeing this with Moscow’s authorities

Our approach

In choosing the products to develop:

  • Analyzed production assets and the firm’s competencies, identifying the products that can be developed further in the factory
  • Assessed the potential market for each group of products, the possibilities of producing them in the required volumes, the necessary investment and the key financial results and risks
  • Selected a limited range of products that allow, in the short term, for cash to begin flowing in order to service the debt to the bank

In choosing development projects:

  • Analyzed the client’s property, highlighting the potential possibilities for construction on various land plots
  • Matching the characteristics of the highlighted development areas, the potential options for construction were assessed
  • Conducted market analysis for each type of property. Built a financial model, and selected the most attractive projects for going forward

Results

  • Consultations and negotiations with potential experts and investors highlighted new possibilities that previously had not been examined. Analysis also showed that developing a number of products would not be profitable
  • Detailed valuations allowed for the best development project to be selected, allowing for the correct volumes of money to be identified in order to pay off the debts. In these plans, only the minimum number of land plots were used, maintaining the integrity of the production area
  • The development strategy for the firm was presented to Moscow’s authorities. Further work was planned to develop inventory and create an industrial park, as well as selecting activities based on preexisting production functions

 

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