Strategy development - industrial products

Automotive and industrial component manufacturer seeking to add value by selling assemblies rather than components, and considering potential acquisition

• Is the ‘integrated solutions’ strategy valid? Should we proceed with the acquisition?

• IAMCO debriefed the client about the proposed strategy and potential benefits to customers. We then assessed technology trends and the market penetration of specific applications, researched in detail the technologies, capabilities and customers of the target company and conducted interviews with component purchasing decision makers. In light of these insights, we assessed market opportunities by application, and reviewed and revised the client’s and target’s sales projections.

• Customers were positive about the proposed new strategy, although this was tempered by some criticism of high costs, weakness in Europe and the need to enhance development resources.



• To succeed, the client needed to differentiate itself by developing motor assembly expertise that exceeded the sum of its components capabilities, and to cut costs.



• The greatest sales potential was in automotive, with limited opportunities in consumer applications, where focus was on component cost reduction.

• The planned acquisition should be made as a first step in securing the necessary capabilities.



• Management should cut costs throughout the business by reducing manufacturing costs and increasing scale.



• To build strong customer relationships, management should seek to ensure geographical proximity to customers, as well as increasing levels of responsiveness and proactivity.