SYNERGY EVALUATION FOR
LEADING BEVERAGE PLAN
CHALLENGE
Two leading alcoholic beverage brands in the UK had entered negotiations regarding the setup of a Joint Venture. This ‘NewCo’ would be formed from a merger of two business units within the parent companies focused on service provision.
The investment drivers for each party differed, with one focused on market access, and the other driven by cutting costs. Integration was hired to act as the Clean Team, evaluating the synergies and advising on the strength of the investment thesis for each business.
APPROACH
Working closely with the strategy leads across the two businesses, we were able to build a sophisticated financial model that highlighted the synergies which could be achieved across service delivery (through travel time and visit optimization), staffing, procurement, customer services, equipment, and 3rd party contracts.
Using this as a baseline, we were able to outline the respective impacts this would have on each business’ P&L individually, and whilst maintaining impartiality, indicate whether the investment thesis of each party could be realized.
A review of the competitive landscape, where the NewCo should operate and revenue projections provided a final commercial view of the merits of the potential deal.
RESULT
Across a very short timescale, we were able to deliver a completely customizable financial model, clearly indicating the assumptions and variables which affected the synergy output, allowing the clients to make clear decisions on the ROI they could expect under different scenarios.
We supported both parties to enter negotiations with clarity on the value levers and needs of the JV, going so far as to help them create the presentations which would go to both Boards.
DOUBLE DIGIT SG&A
REDUCTION IN A NATIONAL RETAILOR
CHALLENGE
After some years of inorganic acquisitions, general professionalization, and geographic expansion, our retail client had considerably grown with more than 1400 stores. However, this movement had come with an increase in the SG&A level, which was continuing to grow and was higher than competitors.
The P&L was facing pressure against a backdrop of new market trends, the board asked Integration to support with a new cycle of efficiency through an initial cost reduction project.
APPROACH
The project was split into 3 phases:
- WHAT: We brought a structured approach to identifying, mapping, and quantifying (in financial terms and headcount) potential opportunities to reduce the SG&A level (payroll & expenses) in the HQ, stores, and supply chain. The Board made GO / NO GO decisions for each opportunity.
- HOW: We detailed exactly how to capture the estimated saving, bringing a conceptual saving into detailed action plans, through the design of new internal processes, structure, Roles & Responsibilities, organizational models, etc. These were consolidated into an activity roadmap for implementation and a savings roadmap to plot the sequence of efficiency gains.
- CAPTURE: We set up a PMO with best-practice tools and processes to manage the projects and roadmaps to capture the efficiencies mapped in an appropriate timescale (client-led).
RESULT
- As a result, we identified 86 opportunities in the “WHAT” phase delivering approximately ~ USD 30M in efficiency savings (corresponding to ≈10% reduction of the SG&A base). The top 10 of which delivered USD 15M were selected and taken forward as a priority to the first wave of the ‘HOW’ stage.Working with the entire client team across several workshops, the team was empowered and owned all the recommendations. The board of directors presented the opportunities mapped per BU and the scenarios they most believed in for GO / NO GO decision whilst the managerial level presented the final ‘HOW’ and roadmaps to the board.
RAPID COST REDUCTION
IN FOOD DETAILS
CHALLENGE
Our client, one of the largest food retailers in Brazil, understood that a call for action to increase productivity and efficiency was necessary to sustain healthy profitability. They asked for our support in a process of restructuring its entire administrative team (more than 3,000 employees), intending to reduce headcount by more than 30%.
APPROACH
In collaboration with the Head Office and Administrative areas, we defined the opportunities which were mostly related to organizational structure and processes, building together with the leadership the “HOW” to implement and capture the opportunities while maintaining business continuity during this critical moment.
We scoped and delivered against 15 work fronts in all areas of the company, ensuring the correct headcount reduction in each area delivering against the strategic plan of the company.
RESULT
Within 6 months we realized 70% of the saving target – a significant milestone given the number of employees affected and the size of the organization. The remaining 30% of savings that required longer-term efforts with IT were planned and organized with the company executives, with a defined governance process that HR could utilize to control and execute all of the remaining opportunities.
GAINING EFFICIENCY THROUGH GOVERNANCE
CHALLENGE
Our client, one of the biggest and most traditional middle-market banks in Brazil, questioned the suitability of their strategy following changes in Brazil’s banking regulation, the rise of digital competitors, and the reduction of Brazil’s benchmark interest rate. Integration was asked to support in a full review of the organization’s strategy, and a redesign of the governance model, to optimize the decision-making process.
APPROACH
After conducting the strategic review, Integration supported the client by assessing the current governance, interviewing over 20 employees, and leveraging 14 benchmarks to identify pain points and needs. From here, we were able to design an entirely tailored governance model to drive simplicity, visibility, and optimized decision making, suited to the bank’s reality, and meeting the needs of its professionals.
RESULT
Much improved efficiency internally through a leaner, more targeted governance model, in which every activity and meeting instance had:
With the adjustments in governance, the board of directors was able to dedicate more time to strategic discussions, giving more autonomy to the team on certain topics, but with clearer approval levels, facilitating day-to-day decision making.
REVENUE TURNAROUND FOR
NATIONALWIDE WHOLESALER
CHALLENGE
One of the major wholesale groups in South America was experiencing challenges in its market positioning, competitiveness and profitability due to its pricing strategy and execution.
They were perceived by the market as ‘an expensive player’. To combat this, they would offer their customer network a wide range of promotions or discounts which had unintended consequences including loss-making transactions.
APPROACH
We developed and implemented a pricing policy that preserved profitability, maintained competitiveness, and guided the performance of commercial representatives spread throughout the Brazilian territory.
This was achieved through establishing a competitiveness index target by category, region, and channel, to identify the best way to add value to sales, without losing sight of the business strategy.
Discipline was brought to the operations through monitoring of this competitiveness index within a pre-established range.
To further enmesh the pricing strategy into the company operations, we helped to make it part of the organization’s budget process and align this with the business development approach for small Brazilian retailers.
RESULT
The result of this work was evident in the group’s financial results. Their gross margin jumped from 12% to 20%, sales grew 15%, (after expanding 11% and 12% in the previous two years.) and net income rose 2% by year. In the same three-year period, revenues went from R $ 3.4 billion to R $ 4.4 billion (a ~ USD 250Million increase).
