A well-established multinational player in the industrial sector was facing growth challenges in its Chinese operations. Since entering the China market in the 1980s, the company had grown through acquisitions and had presence across the country.
Whereas their end sectors were growing at close to double digits, organic growth for the client’s business in China had been flat. The acquisitions had not only masked underlying growth challenges but had also led to a series of silos: business units split by sector and province that did not collaborate. The company’s underperformance stemmed from a number of factors, including:
A team of Global Strategy Group (GSG) professionals was engaged to develop an implementable plan to achieve organic growth in line with the market. First, the key issues and their underlying drivers had to be identified. GSG’s primary research driven approach of internal interviews across different levels within the organization, coupled with external benchmarking and surveys with key customer groups, uncovered misalignment between the organization’s business and operating models.
Using a structured approach to identify the key shortfalls, both in terms of Chinese competition and globally, KPMG’s GSG professionals helped initiate a number of significant quick and longer-term wins.
Alignment of operating model levers played a key part in enabling the business model to flourish – for example, the supply chain and warehousing system that had evolved over time, with China-sourced parts going to a centralised warehouse in Europe, only to return for a customer order in China, had effectively removed any price competitiveness and bargaining power from the salesforce. Likewise, the salesforce training and incentive model underwent significant overhaul.
The client emerged with clear recommendations for operating model redesign that would enable the business model to be more customer centric, attaining double-digit organic growth. Within two years, the client had achieved its first better-than-market growth performance in almost two decades.
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