The Situation
- 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.
Our 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.
![](/contentassets/51876c98d7eb4b36ad233d67533f3579/id_441_2.gif)
Our Recommendations
The six strategic imperatives encompassed 14 key initiatives, focused on both market side actions and operations improvements.
![](/contentassets/51876c98d7eb4b36ad233d67533f3579/id_441_3.gif)
The 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.
![](/contentassets/51876c98d7eb4b36ad233d67533f3579/id_441_4.gif)
* We take our clients' confidentiality seriously. While we've changed their names, the results are real.