Business Model Alignment

New Business Model for a Bulk Plastics Company

The client is the largest business of a bulk plastics company, with sales in Europe of several billion Euros. The new president of this business is facing continuing commoditization of the market, while the company is still organized as a specialty chemicals business and has an extensive decentralized country organization.

After acknowledging in what direction the competition was moving, a company-wide initiative was started to improve competitiveness. Three key elements of the project were an improved business model, an alignment of the Country Sales organization with the needs of the market, including the relocation of Sales offices, and reducing the G&A and R&D cost to an affordable level.

In the new business model, 3 customer needs-based business lines were created (instead of 8 technology driven business lines before), with aligned sales, marketing, innovation and asset planning functions. This would significantly reduce costs and improve speed of decision making and delivery times.

Implementum worked closely together with the client in the Project Management Office to ensure that the goals, defined in a top down fashion, were validated bottom up by all countries, by all businesses and all supporting functions. This resulted in many detailed implementation plans, which were all captured and coordinated using Implementum’s Benefits Tracker method. During implementation, the Benefits Tracker offered a leading indicator of implementation progress, allowing proactive management intervention when needed. 

“Bad Weather” Scenario for a Nutrition Business

A large chemicals company had recently acquired a nutrition business as part of their growth strategy. The company soon realized that several of the blockbuster products were under threat of commoditization, with Chinese players entering the markets at a growing pace.

A detailed study with a major consulting firm had resulted in a business plan heavily dependent on maintaining market share and innovation. Not fully convinced, the company then asked Implementum for a second opinion, and to develop a “bad weather” scenario to cope with the foreseen deterioration of the market.

A review of customer buying behavior revealed that in increasing parts of the business the basis of competition was price, and that competitors had simpler offerings, lower cost structures and less complexity and bureaucracy. Implementum helped design a new and simpler organization structure, a rationalized asset network and a rationalized product portfolio to significantly reduce costs. 

After 2 years of failing to meet the business plan targets, the company decided to implement most of the recommendations, including a significant restructuring and downsizing of the organization and the closure of several sites.