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Market and competitor insights - business-to-business services
International construction and project management group seeking to learn from peers to reduce volatility of profits
Key question
- What can we learn from the superior financial performance of selected peers to minimise volatility of profits?
Approach
- IAMCO began by debriefing client management to understand the KPIs for each division, then analysed the financial performance of selected peers in depth. We subseqently gathered qualitative data and interviewed industry experts to gain insights to explain the financial performance.
Findings
- Non-cyclical revenue sources (e.g. operations and maintenance services) and / or revenue sources that are cyclical but not in sync with the private sector industrial economy (e.g. government, infrastructure and mining sectors) were found to be a key source of sustainable out-performance by peers.
- Business models requiring significant capital investment by a company tended to perform better over the longer term when the investment was in a non-cyclical sector.
- Better performing businesses had benefited from very strong domestic demand.
- Non-focused, rapid revenue expansion across several geographies and / or sectors had negatively impacted a number of companies.
- The ability to offer engineering services per se was not a source of out-performance.
- Best performers worked in non-cyclical sectors, generating sales from owned businesses; those in cyclical sectors did best with non-owned businesses.
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