Post spin-off strategy: Specialty chemicals company
Prior to a significant spin-off of a business, a $2 billion specialty chemical company wanted to position itself with a strong growth message to the financial community. In order to do so, CRA was asked to:
- Review the company’s cost position at a high level relative to benchmarks
- Facilitate the crafting of a new corporate vision
- Help identify which businesses were attractive, had a logical fit within the company portfolio, and were consistent with their vision
- Develop a growth strategy for business units that were to remain in the portfolio
In order to characterize and assess the client’s business portfolio, CRA first profiled the industries where the client competes and assessed its competitive position in these industries. Using internal client data and interviews with company personnel, we identified the fit or overlap that existed between SBUs or between individual SBUs and the corporate center. CRA also conducted a high-level diagnostic to identify opportunities for overhead cost reduction by comparing cost structures by business unit against industry benchmarks. We then worked with the client’s senior management in workshops to develop the corporate vision.
In the next phase of the project, we utilized CRA’s ambition-driven strategy framework to develop three SBU strategies. These distinct processes were linked together via two corporate workshops where decisions were made on which strategic options to further evaluate. Analysis included external customer interviews to validate the bases of competition and an internal analysis to validate the client’s competitive position. The internal analysis included a profitability analysis (by product and by customer), a technology assessment, and a manufacturing assessment.
We then conducted scenario development workshops where we worked together with the client team to create a description of the future business environment and alternative scenarios for how the market might evolve. The descriptions of these future states were further detailed outside a workshop environment in small teams. The final strategic options, as agreed to in the corporate workshops, were analyzed financially, including detailed implementation plans.
CRA provided the client with a clear direction for becoming a more focused company, including well-defined SBU strategies. The individual SBU strategies were either growth and acquisition oriented or organic growth driven with an emphasis on operational improvements.