Making a strategic business unit fit for growth
A leading oil major needed to map the creation of value for its global marine lubricant business unit – ensuring it was capable of taking advantage of growing market demands.
The complication lay in understanding the connected and complex value chain that existed in the operation and how this creates value for the end-customer and Group as a whole. The business unit had recently moved from profit deficit to surplus when management turned to Focus Solutions for assistance, as a prerequisite to finalising its growth investment plan.
Our approach was to use Focus Solutions’ value-creation model that analysed the operation using six variables: sales growth, relative price strength, product quality/ superiority, operating effectiveness and efficiency, cost of capital and capital allocation effectiveness, and non-tangibles like management. Qualitative interviews with knowledge-holders, intermediaries and end-customers coupled with an analysis of competitor positions and operating models enabled us to prepare a detail value creation map for management – identifying the primary value creation competencies in the operation; distinguishing between leading and lagging performance indicators; preparing a performance dashboard for senior management; and describe where opportunities existed to increase value and operating performance. The map also highlighted areas in the operation that were unnecessarily resource intensive or unnecessarily complex, with appropriate imrovement recommendations.
Management used our recommendations to prioritise their investment portfolio to maximise Return on Assets – profit increased by 12% within 24-months.