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Identifying Strategic Growth Alternatives

Situation

  • The client is a dealer’s center, part of a large auto-holding group
  • This specific center has been growing more over 8 years than the holding’s other centers, and has reached saturation point
  • The shareholders continued to set the center’s director general ambitious goals, but were also creating a systemic contradiction: programs to attract new customers were increasing the numbers but this was leading to a loss of revenue
  • The general director believed that the center had achieved its saturation point and that it would not be possible to increase it without widening parking and washing facilities
  • However, the infrastructure changes needed were comparable to the costs of constructing an entirely new center!

Goal

  • To identify the levels of efficiency within the center compared with the wider sector and other dealers in the holding
  • To identify option to increase money flows and return on the capital invested in to the center
  • To resolve the infrastructure issue: whether or not to expand the center’s infrastructure
  • To define the center’s positioning and to identify its most promising client groups
  • To identify the center’s competitive advantages and to implement them into the proposed business model
  • To identify opportunities to improve operational efficiency and to develop a plan to introduce these changes

Our approach

  • Analyzed the holding’s statistics, comparing them with international and Russian-market comparable
  • Identified the potential group of new services to be based at the center
  • Assessed alternative solutions to the infrastructure problem, evaluating them and choosing the most effective
  • Assessed the customer base and economic value added by each customer segment, choosing the most promising. Evaluated the gap between customer requirements and the center’s expectations, identifying gaps and testing hypotheses regarding how to improve the range and quality of services offered to improve the center’s financial performance
  • Calculated in financial terms the possibilities of increasing the operational efficiency of the center
  • Developed recommendations and an action plan to achieve the strategic initiatives

Results

  • Resolved disagreement between the general director of the center and senior management in the holding company
  • Created plan of action to continually enhance value
  • Prevented inefficient investments being made, instead selecting attractive opportunities for investment
  • Exposed inconsistencies in the center’s operational model, and provided recommendations on how to address them
  • Delivered clear and unambiguous targets for the center’s key management

 

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