PricewaterhouseCoopers
内浮顶
CASE DISCUSSION
BUSINESS CASE
Interview Case Studv #1
Roane & Hickey, Inc.
You have been lecentlv lined into the Strategic Change (SC) group, a business unit of PncwateiliouseCoopeis. SC is the strategy thought leader in PwC・ The engagement paitnei in Consumer Products lias come to SC to help develop a stiategy foi Roane & Hickey, Inc. (R&H). This engagement lias the potential of positioning PwC to R&H and its parent conglomeiate fbi the next five, possible ten years.
Companv Beckgioimd
psmplayR&H is a wholly-owned subsidiaiy of a multi-national conglomeiate. The conglomeiate owns ten compames opeiating in the U.S. R&H is the largest of the (eii. R&H is a consumei goods company dist
nbutmg well-known branded products tluough gioceiy, dmg. mass meichant and club channels・ With $4 billion m revenues m the U.S., R&H is one of the top tluee players in the consumer goods industiy・ The company has been maiguiallv profitable over the past ten veais. Last year the company made a profit due largely to an accounting change.
Although R&H only operates in the U.S., it owns several manufactunng and distnbution facilities around the world to suppoit its production and distnbution systems. R&H takes advantage of lower labor costs in Mexico, Canada and Southeast Asia to lower its manufactuimg costs. R&H still maintains tluee plants in the U.S. Because of the ovei-capacitv that R&H has expeiienced. R&H has negotiated deals with sister companies overseas to manufactuie and diiect-ship product.
R&H lias foui market segments that operate as piofit centers. The market segments are: Personal Hygiene, Consumer Tissue, Soaps and Detergents and Personal Care. Even though the levenues are rouglilv evenly divided among all four maiket segments, Personal Caie contributes 90% of the companVs profits. Iii Personal Care, R&H owns the two top branded products, m the other categories the company has the nuniber two brand, and in one segment, numbei tluee. R&H lias committed to buildmg a consumei fianchise tliiough aggressive adveitising and m-stoie meicliandising suppon.
变异系数
Industry Tends
In the U.S., brands are undei attack fiom private labels, who are now competmg on both price and quality・ Brands are looking to justify then piice pienuums. The value of being the nunibei one biand camiot be taken liglitly. The letiun on sales of the top brand is almost twice that of the numbei two brand. The retuin on sales foi the number two biand is twice that of the number tluee brand.
The power of the retail industiy in the U.S. has incieased diaiiiaticallv over the past five years ・ The letaileis aie driving additional costs upon nianufactuieis・ With established products, letaileis aie demandmg a liunuiial level of nuns per yeai . With new products, retailers are demanding slottmg fees and ever-mcreasnig promotional suppor匸Product managers aie forced to aclueve cunent product revenue and market share goals while stimulating demand foi new products. Many industiy experts feel that there will be consolidation of brands within many of the maiket segments in which R&H competes and, as a result of this brand consolidation, that R&H will lose critical sales mass and become a major casualty.
Ill the last two years the allocation of marketing dollars has changed dramatically; trade promotion lias risen to 40% of total marketing spendmg, consume! promotion lias climbed slightly and advertisi
ng has declined. Industry analysts have pointed to R&H's trade piomotion strategy as bemg the catalyst for the growth in trade promotion m the mdustiy as competitors have been forced to respond.
R&H is widely regarded as a letail-onented company・ With a sales force that is twice the size of anyone else's in the mdustiy, R&H has forged gieat retail lelationslups over the years. R&H tiaditionally had the best oidei fill rate in the business; however, recently some of the efforts to reduce mventoiy has caused shortages in key piomoted products.
R&H Oigamzation
There aie six Executive Vice Presidents (EVPs) in R&H responsible foi fxinctional areas. All the EVPs repon to the President, who is also CEO. The Executive Vice Presidents represent Maiketing, Sales. Finance, Manufacuuing, Engineenng and Human Resources. The EVP of Fmance has responsibility foi financial repoiting and analyses as well as managing Procuiement, Deployment, Scheduling and Logistics. All the maiket segment manageis report duectly to the Executive Vice President of Maiketmg.东四奥林匹克
社区公园 辐射量单位
Much of the blame foi the peiformance of the company over the last ten veais fell on the shoulders of
the fomiei president. It was whispered that he was lioni the "old school” and could not change his ways. The new president of R&H, an Aineiican, jomed the company six months ago. He was the Executive Vice President of an nnponant European division of a sistei company. The conglomeiate has always pnded itself on being able to leverage its multi-national lesources・
Ciinein Situation
Veim Teldren, the Executive Vice President of Finance, is considered to be a bnlliant man by many in the industiy・ Born and raised m Europe, Mi . Teldien rose quickly tlu ough the organization・ Howevei; because of Ins outspoken nature, lie angeied enough senior level executives ("showed up n as Mi. Teldien would say) that he has never received a position of president, even though his name is mentioned eveiy tune an opening appeals ・
Recently the vice chaupeison of the conglomeiate responsible foi the group in which R&H is a membei; sat down with the R&H President and EVPs. The vice cliaiipeison stated that the company needed to nnpiove peifbimaiice within one yeai ・ He offered a couple of scenanos of what the conglomeiate was considering m the event that the management failed to improve profitability.
Scenario 1: Drop unprofitable brands and reduce the size of the company
Scemuio 2: Meige the company with a sister company that has similar distnbution
requuements and have proven profitability
Recent Imtiahves
R&H lias lecentlv taken part in an industiy-wide study called Efficient Customer Response 01 ECR・ The study found that an industry-wide effort to develop more efficient trade practices and deliveiy systems could save an aggregated S30 billion dollars a yeai ・ PwC assisted
R&H m this study. All the EVPs agiee that there are huge dollar savmgs that can be aclueved with efficiency uiipiovenients.
Veim believes that the supply chain (i.e., Piocurement, Manufacturing, Deployment, Scheduling, Logistics, and Warehousing) can become a strategic advantage for the company if it can outpeifbrm its competitois・ PwC studies have shown that uiipiovenients caimot be made without the input 01 the suppoit of all the fxinctional areas of the company, especially Marketing and Sales・ The EVPs fiom Maiketmg and Sales do not always see the Supply Cham as key players; in fact, the EVPs of Maiketmg and Sales see the Supply Chain as only a vendor to them・
Veim knows that the results of the ECR mitiative may not be enough to rally support among the EVPs. Venn knows that whatever stiategy is accepted needs to define the roles of each of the EVPs and to provide an outlet for each EVP to demonstiate his and her skills. He is also aware that the other EVPs are veiy conscious of the growth of Venn's power・ Each EVP will lmtiate a project with the assumption that the aiclutect of the solution to R&H's cuiient situation will be in position for the next presidency.
The EVP of Human Resource lias championed the need to implement a whole new way of envisioning the company working together. She has envisioned a flatter organization and lias spent years developing studies with anothei leading consultancy to support her vision. She has a stiong suppoi tei in the EVP of Sales・ The piesent EVP of Sales was oiigmallv fiom
Human Resources・ Hei vision has always entailed an extensive ie-stnicnmng and le-tiaiiiuig effdn.
The EVP of Engmeeiing feels that the company needs to mvest in its new product capability ・ The strategy is to acquire smallei; regional companies that are pioducmg differentiated products. M We can absorb them mto us and stunulate oui new product pipeline/1 he stated.
n With these new, legionally proven products, we can fill capacity and leverage oui distribution and s
ales stiength・ I can also energize my area with flesh ideas・ IFs wm-wm. no doubt about it.M
The EVP of Manufactiuing is sick and tued of heaimg that manufactuimg is the problem. He pouits to the fact that they ie pioducmg and shippmg thiee tunes the product they were five years ago with the same nunibei of people they had eight years ago. If things don't change in other areas, then tlimgs woiVt change in Manufactunng. other than the mability to support the ordeis coming in.
The EVP of Marketing believes that a combmation of le-stmctunng and acquisition is needed. He wants to reduce the salesperson^ lole with the retailei and focus on consumei spending behmd a "high quality11 message giounded in tangible product benefits across all product segments. He wants to broaden the product mix with new pioducts fiom acquisition.
The Engagemeni
Veim lias mentioned to Gai v Foistman, the PwC engagement paitnei; that he is willing to devote the necessaiy resources in his fxinctional areas to prove out the light strategy to the other EVPs. Venn has also indicated that the company is willing to devote significant lesouices and capabilities to the light effort. H A11 the EVPs know,' he said. n tliat there will be whole-scale changes if the company doesiVt turn itself about.M
Mi. Foistman lias called Giadv Means, ISS SBU leader and paitnei, and said「This is PiicewaterhouseCoopersfirst major engagement with R&H after several years of smaller engagements where we were able to demonstiate oui ability to unplement solutions. Now we have an oppomuiity to really shine・ The company is le-evaluatmg its strategic position and lias asked seveial consulting films to talk to them.n Giady discussed the situation with ISS paitnei; Michael Hanley, and they agieed that you would be a gieat person to work on this project・ You receive a call fiom Grady. Hello. How are you doing? After exchanging pleasantnes, Giadv explains the situation to you. n We need some dvnanuc thinking on this one. I know Veim Teldren fiom years ago. Veim is going to be all over us if we don't get tlus light. Wliafs mipoitant is that we show Veim that we have a vision of where the company needs to go, how the pai ts fit together and how they are gomg to get there・ Wliat is mipoitant is that our analysis is fact-based. We need to be ready to say to Venn, "This is the situation, tlus is the problem, this is the solution and this is step one, step two, step tluee on what you need to do tomonow.M This is a big oppoitiinitv for us and Pm counting ou you. See what you can come up with by this tune next week. Feel free to call Michael or myself with any questions. Okay, talk to you soon.
Queshons
1.What is voui assessment of the present situation?
2.What aie the key areas for change? Why do you believe so?
3.What do you envision youi product to be m a week?
4.What type of additional liifbimation would you want?
5.What type of analysis do you believe needs to be peiionned?
6.Do you have an idea conceninig the analytical stnictuie?
7.What type of liamework might you envision for this stiategv?
8.What are the key elements you would include m desigiinig a strategy?
9.What are the key elements you would include m implementing a stiategv?
10.What is voui assessment conceining R&H's ability to implement a stiategv?
11.What are some key peifoimance mdicatois that you would suggest?
12.What are the key issues between the Supply Chain and otliei areas of the company
(such as Marketing and Sales) that must be addressed?
13.What are some ways that miprovements in the Supply Cliam will unpact the other
aieas of the company, especially Marketing and Sales?
vba宏语言
14.How does Supply Chain effect the value of the company's brands?
15.Wliat are the risks that the PwC team faces in this engagement?
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