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ARM FD Solutions - strategic growth

  1. Strategic Growth SUMMARY OVERVIEW
  2. Overview • Growth profile • How /Where has growth been achieved so far? • Is this repeatable / scalable? • Is growth linear or does it require investment drivers? • Can existing premises and personnel deliver / support the targeted growth • What general market growth is expected – inflationary pressures / economic performance • Relationship between economic growth and market • What impact will growth have on existing operations • Distribution / Inventory / Cashflow • Increase in cost base • Margin erosion / impact of product Mix • Danger of becoming “busy fools” chasing growth • If Sales of X are achieved at EBIT of 10% - why grow X2 to achieve EBIT of 5%? • Existing efficiency of operations and performance • Growth will exacerbate any inefficiencies in current operations • People drive operations -> which drives performance • Underperformance highlight areas of performance risk requiring mitigation / action ARM FD Solutions Ltd – Information for guidance only 2
  3. Strategic Growth • Strategic growth • Organic growth • Geographic expansion – replicate existing operations in new location • New products / services – identify profitable opportunities to existing customers • Existing products to new customers – target competitors customers -> salesforce? • New customers in new business sectors – enter related sector / value chain • Acquisition • Identify companies that can deliver the targeted growth • Location / customers / products / sector • Vertical integration – move up / down value chain • If target is underperforming, can acquisition drive synergies in profits and cost reduction? • Impact of qualitative rather than quantitative – e.g. company ethos, behavior, standards • Which option provides a quicker (and better) return on investment – or is less risky? • Bear in mind 60%+ of M&A fail to deliver increased shareholder returns • Specific “Buy & Build” strategy to aggregate acquisitions to flip in medium time frame ARM FD Solutions Ltd – Information for guidance only 3
  4. Strategic process Strategy Initiatives InvestmentROI ARM FD Solutions Ltd – Information for guidance only 4 • Business Case • Personnel development • Capital investment appraisal • Marketing • Customer attraction • R&D • Innovative products / services • Expanded operations • New Products • Customer pipeline • Technology • Supply / value Chain • Acquisition • Measure current ROI / performance targets and measure initiatives and investments to ensure that they achieve target • Identify cost and source of funding -WACC • Measure cashflow over project life to deliver IRR (breakeven) Identify strategic target activities that will drive improvements in: • Turnover • Margin • EBIT • positive ROI • Market Share., etc
  5. Analysis of current position • Core Competencies • Customer relationship, products, services etc., • Identify and measure the competitive advantage of the existing business • Porters 5 forces • Competitors – measure and identify performance / market share • Buyer power – new customers / growth markets • Supplier Power – product cost variables, volume, rebates, dominant players • Substitution – alternative products, upselling, own brand • New entrants – sufficient profit to attract new entrants – replication of business model • By reviewing the competitive advantage of the business • Identify growth initiatives • Customer and product led – service offering • Target competitors & markets • Acceptance of margin erosion in acquiring of market share? • Identify defensive strategies • Customer retention – reduce customer “churn” – easier to keep account “live” than attract new account • Barriers to entry – difficulty in replicating customer offer – high service level / distribution agreements ARM FD Solutions Ltd – Information for guidance only 5
  6. Example - Sales led growth • Knowing who your customer is • Solve their problems -> provide innovative solutions • Develop a competitive advantage • Customer satisfaction surveys • Measure performance – identify improvements • Can existing salesforce deliver new customers? • Target competitors salesforce – personal network relationships – “people work with people” • Bonus / incentivize to deliver positive sales and margin impact on recruitment of new resource • Can be part of strategic plan to enhance customer base – attract new customers • CRM – support salesforce and customer retention • Which cost base has the biggest impact, and can be flexed: • Labour costs – short term • Product costs – medium term • Property – long term • Consider mix of fixed and variable costs • Distribution costs as proportion of gross margin – recovery / margin drop through ARM FD Solutions Ltd – Information for guidance only 6
  7. Template - High Level Strategic Action Plan ARM FD Solutions Ltd – Information for guidance only 7
  8. Template -monthly follow up – risk matrix ARM FD Solutions Ltd – Information for guidance only 8
  9. Proposal – next steps ARM FD Solutions Ltd – Information for guidance only 9 • 1. As-is review – understand the business • Review existing organisation / structure • Confirm existing strategy and current commitments over timeframe • Develop baseline – if nothing changes, 3 year strategic plan • 2. Investigate Market & Segmentation – understand the market • Identify competitors / market share – external report providers • SWOT analysis • Economic fundamentals over timeframe (current ->3 years) • Market segmentation – identify core / non-core areas • e.g. Commercial / non-commercial • 3. Define strategic goals – identify opportunities • Work with SMT on defining initiatives and action plans to achieve targets • Identify and prioritize action plans • Identify and allocate resources • Outcome: Delivery of a strategic framework and initiatives to achieve strategic goals
  10. Recommendations / References: • Tom Carpenter, Managing Director, PPC UK (Interim FD – April 2016-July 2017) “Tony commenced with PPC as Interim FD during a period of change following the companies acquisition. He provided his expertise and knowledge in both the successful implementation of SAP, and integration of the companies reporting into the new US parent. The most positive effect from his management of the finance team was in developing a transparent culture for the financial reporting and controlling - providing confidence in the company finances to both myself and the parent company. Tony was a pleasure to work with and was able to merge into the organisation immediately upon his arrival.” • Brian Smithers, Business Development Director, Rexel UK (RES Finance Director – Jan 2012 – April 2016) “In his role as Finance Director,Tony supported me as Business Development Director of the Rexel Energy Solutions business during a period of rapid expansion, managing the finances and cash flow to ensure targets were achieved. His experience and knowledge provided guidance, appropriate challenge and solutions to the team which ensured that risks were minimised whilst maintaining a commercial and customer focused view to secure the customer and sales growth required. I would recommend him to any business looking to secure a talented and focused finance director to deliver in challenging circumstances.” • Contact • E-mail: • LinkedIn: ARM FD Solutions Ltd – Information for guidance only 10