Full potential formula helps chemical company grow

Regional business units (RBUs) of a chemical conglomerate were underperforming and needed help finding ways to become profitable within the industry's new environment. Bain worked closely with all RBUs to reduce variable and fixed costs, innovate product offerings and develop loyalty programs. After just 6 months, results exceeded 12-month goals.

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

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.

View Recommendations

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

View 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.