A specialty chemicals company had several businesses within a division with products that were rapidly turning into commodities, resulting in margin erosion. At the same time, some key products were experiencing serious regulatory threats. While several products were established and possessed well recognized brands, premium pricing was still a challenge. Additionally, the businesses were disparate with no meaningful linkages. The client asked CRA to help identify synergies between the businesses and to develop a group growth strategy.
- Phase 1: Conducted a detailed assessment of the existing product portfolio and identifying the highest value products. CRA also conducted an assessment of the external environment to assess repositioning options for the businesses.
- Phase 2: Formulated product acquisition/divestiture recommendations that could shift the portfolio toward higher-margin, higher-growth products.
- Phase 3: Performed a detailed financial modeling of the recommended strategic path that included development of a growth platform and several business repositioning initiatives.
CRA also identified opportunities for product mix shifts that would improve margins and reduce the impact of regulatory changes. We recommended that the client consolidate the higher performance businesses into a single group in order to target identified growth opportunities more aggressively and allocate funds for the “growth” portion of the portfolio.
After implementing CRA’s recommendations, the company’s stock price improved 25%. The client consolidated the growth businesses across the corporation into one group, and personal care ingredients have been identified as a new growth platform that is being developed under a five-year program. In addition, all products facing regulatory threats are being phased out while branded products are being repositioned to balance brand value and brand support expenses.