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The Fortune 500 subsidiary
Issues Covered Evaluation of Strategy versus Capabilities
Our approach: To understand the internal and external drivers, look for fit with strategy, review operations, the Supply Chain and competitive dynamics.
Probing questions and a structured analysis led to the conclusion that a continuing focus on product was damaging. The firm’s destiny was being shaped externally, and it needed to strengthen its competitive position and develop greater flexibility. The internal and external environments were in conflict, and certain elements of the firm were frustrating management’s attempts to turn the company around. The US parent had stipulated that 15% of all production had to be outsourced… but to whom and how? A practical solution was needed. Through strategic leveraging the company was encouraged to break away from its focus on product, to look instead at its capabilities, which opened up new markets. We undertook this identification and tied it in to a constructive outsourcing rationale. This process reduced costs AND offered new revenue streams whilst tackling the negative elements in the firm. The approach has since been adopted across the US Group’s other Divisions and forms the basis for a practical guide, Exploring Capabilities & the Make or Buy Decision.
Lesson: Industry can often get blinkered within its own boundaries. The parental drive to cut costs and to outsource had no clear strategy. It was merely a short-term fix to appease investors. By offering the company a clear rationale for taking a specific course of action and opening up a new frontier, we have provided a long-term strategy that also addresses short-term needs. Linking strategy to operations has also avoided inadvertently cutting off the hand that feeds. It affords a real and sustainable competitive advantage.
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Case Study Fortune 500 |
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“Cost-cutting should be the consequence of Strategy, not the driver” |
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Companywise Limited |
