Reorientation of the Business Strategy
Manager:
Mr.P. B.
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Customer:
Confidential
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Role:
Managing Director of the company
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Location:
Malaysia
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Turnover:
Euro 6 mil
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Time frame:
12 months
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No. of employees:
approx. 15.
About the Customer
The company is a 100% subsidiary of a renowned German group. Its primary task was to carry on business of all kinds for construction, implementation, sourcing and supply of machinery, components and spare parts of cement, mining and other industries. The Malaysian conditions (availability of qualified staff, infrastructure of country, etc.) allowed producing and sourcing of all goods, which had to fulfil the high German Standards at very competitive rates. The companies target was to cover all costs and not to generate any profits (Non Profit Centre) . All products and services were sold in Euro or USD to the HQ and sister companies all over the world, who in turn made their profit with their end customers (Profit Centres).
Testimonial from Сustomer
The BoD was highly satisfied about Mr. P.B. successful transformation of the Malaysian operations, which also started to create added value in terms of additional order intake for the Sales Office in Singapore generated by the service engineers operating in the field.
Situation (Challenge)
In 2010 the Malayan Ringgit experienced a sharp appreciation against the Euro and USD of more than +20% causing the products being manufactured in Malaysia to become too expensive for the German group.
The company was threaten to go bankrupt within one year, as the order intake shrunk to almost nil in no time.
The company needed a new strategy or it was going to be liquidated, putting some 15 employees out of work and loosing its entire product and country related know-how.
Mr. P. B. as acting Managing Director of the company recognized soon the need and challenges of saving the company and its employees.
Solution (Achievement)
The existing know-how, the willpower and capabilities of its employees, formed the basis to redirect the Business Model into Service Activities and get it approved by the Board of Directors at HQ in Germany. For this purpose, a detailed Business Plan was developed and presented to the BoD at HQ. The BoD approved it unanimously by the year 2011. A very capable new Technical Manager from the German HQ was hired in the same year. This was the foundation for a successful recovery of the company, which would take about 2 years time, due to the need of lengthy and heavy training of highly specialized service engineers (existing and newly hired engineers).
Favourable was also the fact that the German group had a running Sales Office in Singapore, also managed by Mr. P. B., which took over the sales and billing activities of the Malaysian service activities.
The staff in the administration was originally set up and utilised for the original Business Model. The new Business Model created some idling capacity. To minimise that unwanted effect, it was agreed with other sister companies in Malaysia that certain jobs were going to be executed and remunerated for by the “idling staff”. Naturally, this helped also to improve the financial result of the company.
Finally, it has to be clearly pointed out, that in any Turn Around project, key is the two-way communication with the employees and this very often, sometimes almost continuously.