Starting situation – how to combat ballooning complexity costs?
These days, all food producers know that they have to take into account regional differences in taste. Our customer, an international food producer, had also put this principle into practice, and was operating with several different product portfolios adapted to different micromarkets. Because of the wide range of production modifications this entailed, the strategy resulted in ballooning complexity costs. Consequently, the company was faced with the question of which products and markets it ought to focus on, and which areas lent themselves to the option of disinvestment.
Project approach – implementation ability a key factor for portfolio strategy
Taking into account the future core markets, the company’s product portfolio needed to be assessed in terms of not only its external market attractiveness, but also the company’s own ability to exploit the target markets. Working together with management, the areas were identified that proved, under this analysis, to have the greatest potential. However, where implementation ability was lacking, it was necessary to be selective; in some markets, it was possible to improve the company’s own competencies. In other cases, selling was identified as a worthwhile option – despite, or in some cases because of, the high level of market attractiveness, since competitors were willing to pay a premium for these segments.
Finding – integrating the company’s own competencies into the portfolio assessment
When evaluating segments, sufficient consideration needs to be given to internal factors as well as to the external assessment parameters. A portfolio analysis can provide a well-founded basis for deciding on alternative courses of action only if it includes an assessment of the company’s implementation capabilities.
- Value maximized, thanks to a selective product and country portfolio
- Products/markets assessed according to market attractiveness and implementation capability
- Alternative courses of action developed for products/markets