Full potential formula helps chemical company grow

Client Results Story

Opportunity
  • The financial performance of the South American division of a chemical conglomerate was highly unsatisfactory, since most of the Regional Business Units (RBUs) were struggling with:
         - decreased contribution margins
         - high fixed costs
         - negative EBIT
  • External factors also negatively affected the division's performance
         - devaluation of Brazilian Real
         - economic slowdown
         - increased competition from national low-price products
         - overcapacity in the industry
  • Since the external factors were unlikely to change, the company needed to adjust to the new environment and find ways to achieve profitability.
  • The company launched a company-wide effort, and required that all RBUs revise their current strategies and develop strategic plans to restore short-term profitability. The company asked Bain to support this endeavor. 

View Approach

Approach

Over a 12-15 month period, most RBUs were involved in a thorough full potential review of their:

  • business environment
  • current strategy
  • sales performance
  • variable and fixed costs
  • production assets
  • investment plan
  • supply chain management
  • financial performance

Each RBU was analyzed in a ten-week cycle, working closely with the Bain team. A proposed full potential strategy for one of the RBUs consisted of six strategic imperatives, as shown here. 


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View Recommendations

Recommendations
The six strategic imperatives encompassed 14 key initiatives, focused on both market side actions and operations improvements.

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View Results

Results

The full potential strategy that the company adopted paid off even faster than it expected: within six months, the business units had exceeded their 12-month goals.


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