Cookie- und Privatsphäre-Einstellungen

Diese Webseite nutzt Cookies, um essenzielle Funktionen wie den User-Login und Sessions zur Verfügung zu stellen. Wir nutzen zudem Cookies und Software von Dritten, um Dein Surf-Erlebnis auf preplounge.com zu verbessern. Du kannst entweder nur essenzielle Cookies oder alle Cookies akzeptieren. Du kannst Deine Einstellungen jederzeit in unseren Cookie- und Privatsphäre-Einstellungen ändern. Dieser Link ist im Footer unserer Seit zu finden. Wenn Du mehr Informationen benötigst, besuche bitte unsere Datenschutz-Erklärung.

Datenverarbeitung in den USA: Indem Du auf "Ich akzeptiere" klickst, willigst Du zugleich gem. Art. 49 Abs. 1 S. 1 lit. a DSGVO ein, dass Deine Daten in den USA verarbeitet werden (von Google LLC, Facebook Inc., LinkedIn Inc., Stripe, Paypal).

Individuell einstellen Ich akzeptiere
expert
Experte mit der besten Antwort

Adi

100% Empfehlungsrate

70 Meetings

6.500 Q&A Upvotes

159 USD / Coaching

3

What framework or approach to use for an IT services company strategy?

Hi. Let's suppose you are in Spain, and you are an IT services consultancy that offers services related to digital transformation, Java/Python/PHP/etc application development, web development, ecommerce, DevOps, implementation of tools, big data, artificial intelligence .... etc. The characteristics of the market are as follows:

Buyers

  • Potential buyers are companies, as the IT services firm is aimed at the business-to-business customer.
  • The characteristics of the buyer market is that in Spain there are many companies, it is a country dominated by SMEs, whose purchasing power in IT is small, except for large companies.
  • The ratio of IT budget to total revenue of large companies is between 2% and 10%, depending on the sector.
  • The market is growing in adoption. For example, sectors that had an IT budget of 4% have a 4.5% IT budget the following year, and it continues to grow.
  • The volume of potential large enterprise buyers is not growing every year, it is simply growing in the economy as a whole at the rate of GDP.

Competitors

  • The industry has a potential market of 30.000 millions euros in the whole of Spain. The market share of the company to be analysed is small, only 100 million€ per year.
  • There are many competing companies, the market is highly fragmented. The first 20 companies have a turnover of 6000 million euros.
  • The portfolio of services is very broad, it is not a niche company, its focus is to cover a wide range of services.

The company's objective is to grow in turnover.

In order to clarify the objectives, the questions to response with that framework are:

  • What framework or strategic approach can I use to guide a possible strategy for the company?
  • What drivers should I use to define the strategy?
  • What is in the best interest of a company of this size, a narrow and focused portfolio of services or a broader portfolio?
  • Is it interesting to establish offices outside Spain?
  • As it is a very dynamic market with many new companies being created every year, how to analyse the risks in the competitive environment?
  • What is the most suitable business model for growth?

I propose the following response to this hypothetical case.

Key points

  • Given that the IT services market is highly fragmented and has no characteristics that can be associated with a mature market (it has high growth, low or no entry barriers, huge fragmentation...), the competitive dynamics are very large. This means that companies will continuously be created that will take a piece of the market share, and with which we can compete for the same project in a potential customer.
  • The main customers are large companies, which usually have significant entry barriers to working with new suppliers. This is because there is a knowledge that regular suppliers have of the customer's IT systems, and of the internal organisation of the company, which gives them an advantage over other new competitors. Therefore, for a company with an annual turnover of €100M in such a fragmented market, the main strategy would be to grow within the customers in which it is already positioned, prioritising this strategy over the alternative of looking for new customers. This does not mean that new customers should not be sought, but rather that the investment of time and the objectives of the sales team should be oriented towards prioritising the growth of existing customers.
  • The competitive dynamics and the fragmentation of the market in terms of competitors paint a long tail picture, where there are many competitors with the capacity to absorb a small piece of the market. Such small competitors will maximise their probability of growth only if they focus on specific services, i.e. if they specialise. Small competitors with a very broad portfolio of services will not grow as fast because they will not have a large track record, as the lack of focus will give them less traction, and their credibility with large buyers will be very small, which will give our company an advantage over them. Therefore, the bulk of the competitors that can really be a problem are companies of a similar size to ours, which are in a similar annual turnover bracket to ours. These companies will have a broader portfolio of services than we do. Therefore the strategy of maintaining a broad portfolio of services has a higher probability of success for our company.
  • As the IT market is a knowledge-based market, and the demand for services is growing faster than the number of people with the knowledge to carry out the projects, the company should have four key personnel policies. On the one hand, internal training, to fill the GAP between what it can hire and what the market demands. Secondly, a talent loyalty policy, which is based on employee care, a career plan and a strong brand that makes them see the company as an important asset in their professional career. Thirdly, a competitive salary, so that the incentive to change company is less than the incentive to stay with the current one. These three policies require a significant investment both in an internal area that manages all three and in salaries that are competitive with the competition. The fourth policy is knowledge management, which is achieved by establishing internal dynamics that allow lessons learned in one service to be used to advantage in the next.

Key drivers

  1. Branding: brand strength and reputation are key factors that facilitate commercial activity and differentiate the company in a competitive market. Investment in marketing is something that the company must do to stand out from its competitors (organising events, webinars, content marketing, etc). This will allow the company to be seen in the market as a reference in knowledge. As an objective, it would seek to achieve two things: attract talent, by being an attractive company to work for, and position itself at the top of mind of potential clients. In turn, this allows it to enter new clients, and helps to build loyalty among current ones, allowing it to charge higher rates for its projects as it perceives a higher value in the market compared to its competitors.
  2. Productivity: being a business whose main cost is wages, an important part of the profits are obtained from the company's ability to ensure that its workforce is producing at high productivity rates, eliminating dead gaps between projects. This implies an important focus on productivity KPIs.
  3. Attrition: given that the main asset is people, it is important to monitor attrition as it is extremely difficult to attract talent, candidates have many alternatives to work with, and therefore personnel policies must pay attention to the factors that determine the growth of turnover, establishing effective action plans to mitigate them.

Summary of the strategy:

  1. Focus on large customers, prioritising growth within the customer rather than new customers.
  2. Watch competitors of similar size with a broad portfolio of services, and smaller competitors that are specialists in services that the company has in its portfolio, have a track record and good growth.
  3. Maintain a broad and diverse portfolio of services, to offer customers a range of services that allows for internal growth through cross-selling.
  4. The company can try to open offices outside Spain, but without great urgency as the Spanish IT market is still large and growing.
  5. The M&A strategy would be reserved for acquiring smaller companies that are specialists in a particular service and that complement the service portfolio in those services for which there is not a high return internally. In other words, to reinforce low-profitability services through the acquisition of niche companies.
  6. Monitoring of brand, productivity and turnover as key mechanisms to maintain profitability.

Hi. Let's suppose you are in Spain, and you are an IT services consultancy that offers services related to digital transformation, Java/Python/PHP/etc application development, web development, ecommerce, DevOps, implementation of tools, big data, artificial intelligence .... etc. The characteristics of the market are as follows:

Buyers

  • Potential buyers are companies, as the IT services firm is aimed at the business-to-business customer.
  • The characteristics of the buyer market is that in Spain there are many companies, it is a country dominated by SMEs, whose purchasing power in IT is small, except for large companies.
  • The ratio of IT budget to total revenue of large companies is between 2% and 10%, depending on the sector.
  • The market is growing in adoption. For example, sectors that had an IT budget of 4% have a 4.5% IT budget the following year, and it continues to grow.
  • The volume of potential large enterprise buyers is not growing every year, it is simply growing in the economy as a whole at the rate of GDP.

Competitors

  • The industry has a potential market of 30.000 millions euros in the whole of Spain. The market share of the company to be analysed is small, only 100 million€ per year.
  • There are many competing companies, the market is highly fragmented. The first 20 companies have a turnover of 6000 million euros.
  • The portfolio of services is very broad, it is not a niche company, its focus is to cover a wide range of services.

The company's objective is to grow in turnover.

In order to clarify the objectives, the questions to response with that framework are:

  • What framework or strategic approach can I use to guide a possible strategy for the company?
  • What drivers should I use to define the strategy?
  • What is in the best interest of a company of this size, a narrow and focused portfolio of services or a broader portfolio?
  • Is it interesting to establish offices outside Spain?
  • As it is a very dynamic market with many new companies being created every year, how to analyse the risks in the competitive environment?
  • What is the most suitable business model for growth?

I propose the following response to this hypothetical case.

Key points

  • Given that the IT services market is highly fragmented and has no characteristics that can be associated with a mature market (it has high growth, low or no entry barriers, huge fragmentation...), the competitive dynamics are very large. This means that companies will continuously be created that will take a piece of the market share, and with which we can compete for the same project in a potential customer.
  • The main customers are large companies, which usually have significant entry barriers to working with new suppliers. This is because there is a knowledge that regular suppliers have of the customer's IT systems, and of the internal organisation of the company, which gives them an advantage over other new competitors. Therefore, for a company with an annual turnover of €100M in such a fragmented market, the main strategy would be to grow within the customers in which it is already positioned, prioritising this strategy over the alternative of looking for new customers. This does not mean that new customers should not be sought, but rather that the investment of time and the objectives of the sales team should be oriented towards prioritising the growth of existing customers.
  • The competitive dynamics and the fragmentation of the market in terms of competitors paint a long tail picture, where there are many competitors with the capacity to absorb a small piece of the market. Such small competitors will maximise their probability of growth only if they focus on specific services, i.e. if they specialise. Small competitors with a very broad portfolio of services will not grow as fast because they will not have a large track record, as the lack of focus will give them less traction, and their credibility with large buyers will be very small, which will give our company an advantage over them. Therefore, the bulk of the competitors that can really be a problem are companies of a similar size to ours, which are in a similar annual turnover bracket to ours. These companies will have a broader portfolio of services than we do. Therefore the strategy of maintaining a broad portfolio of services has a higher probability of success for our company.
  • As the IT market is a knowledge-based market, and the demand for services is growing faster than the number of people with the knowledge to carry out the projects, the company should have four key personnel policies. On the one hand, internal training, to fill the GAP between what it can hire and what the market demands. Secondly, a talent loyalty policy, which is based on employee care, a career plan and a strong brand that makes them see the company as an important asset in their professional career. Thirdly, a competitive salary, so that the incentive to change company is less than the incentive to stay with the current one. These three policies require a significant investment both in an internal area that manages all three and in salaries that are competitive with the competition. The fourth policy is knowledge management, which is achieved by establishing internal dynamics that allow lessons learned in one service to be used to advantage in the next.

Key drivers

  1. Branding: brand strength and reputation are key factors that facilitate commercial activity and differentiate the company in a competitive market. Investment in marketing is something that the company must do to stand out from its competitors (organising events, webinars, content marketing, etc). This will allow the company to be seen in the market as a reference in knowledge. As an objective, it would seek to achieve two things: attract talent, by being an attractive company to work for, and position itself at the top of mind of potential clients. In turn, this allows it to enter new clients, and helps to build loyalty among current ones, allowing it to charge higher rates for its projects as it perceives a higher value in the market compared to its competitors.
  2. Productivity: being a business whose main cost is wages, an important part of the profits are obtained from the company's ability to ensure that its workforce is producing at high productivity rates, eliminating dead gaps between projects. This implies an important focus on productivity KPIs.
  3. Attrition: given that the main asset is people, it is important to monitor attrition as it is extremely difficult to attract talent, candidates have many alternatives to work with, and therefore personnel policies must pay attention to the factors that determine the growth of turnover, establishing effective action plans to mitigate them.

Summary of the strategy:

  1. Focus on large customers, prioritising growth within the customer rather than new customers.
  2. Watch competitors of similar size with a broad portfolio of services, and smaller competitors that are specialists in services that the company has in its portfolio, have a track record and good growth.
  3. Maintain a broad and diverse portfolio of services, to offer customers a range of services that allows for internal growth through cross-selling.
  4. The company can try to open offices outside Spain, but without great urgency as the Spanish IT market is still large and growing.
  5. The M&A strategy would be reserved for acquiring smaller companies that are specialists in a particular service and that complement the service portfolio in those services for which there is not a high return internally. In other words, to reinforce low-profitability services through the acquisition of niche companies.
  6. Monitoring of brand, productivity and turnover as key mechanisms to maintain profitability.

(editiert)

3 Antworten

  • Upvotes
  • Datum aufsteigend
  • Datum absteigend
Beste Antwort
Coaching mit Adi vereinbaren

100% Empfehlungsrate

70 Meetings

6.500 Q&A Upvotes

159 USD / Coaching

Hello, I have edited the case to add my possible solution. — Roberto am 9. Apr 2021

Coaching mit Clara vereinbaren

100% Empfehlungsrate

57 Meetings

15.452 Q&A Upvotes

229 USD / Coaching

Hello!

I don´t fully understand the target of the exercise and the part that you want the community´s help and feedback, can your clarify?

Is it a case, or for your own startup, etc?

Cheers,

Clara

Hello!

I don´t fully understand the target of the exercise and the part that you want the community´s help and feedback, can your clarify?

Is it a case, or for your own startup, etc?

Cheers,

Clara

I have set up an exercise as realistic as possible in order to find a first approach, an approximation, a framework, which will allow me to build a mental map to focus the analysis. The question is, what framework could I use/build to help me decide on a growth strategy? — Roberto am 9. Apr 2021

Coaching mit Ian vereinbaren

100% Empfehlungsrate

260 Meetings

22.521 Q&A Upvotes

289 USD / Coaching

Hi there,

I'm sorry but this goes beyond the abilities of the Q&A community....you're asking for a review on a thesis! Any answer here would take a good 30 minutes to process + craft properly.

This is where coaching is needed!

Hi there,

I'm sorry but this goes beyond the abilities of the Q&A community....you're asking for a review on a thesis! Any answer here would take a good 30 minutes to process + craft properly.

This is where coaching is needed!

Verwandte Cases

Bain Case: Asiatische Schmierstoffe

160,8 Tsd. mal gelöst
Bain Case: Asiatische Schmierstoffe Der in seiner Heimatregion äußerst erfolgreiche asiatische Premiumhersteller von Schmierstoffen, LubricantsCo, möchte seinen Umsatz und Gewinn weiter steigern. Die Produktpalette erstreckt sich von Schmierstoffen im automobilen Umfeld (z. B. Motor- und Getriebeöl) bis zu Industrieanwendungen (z. B. Fette, Hochleistungsöle). Da nach ersten Untersuchungen weitere Wachstumspotenziale im asiatischen Kernmarkt eher limitiert sind, will LubricantsCo Optionen zur Internationalisierung im Pkw-Geschäft untersuchen – auch außerhalb des aktuell vorrangig bedienten Premiumsegments. Ihre Beratung wurde daher beauftragt, eine Markteintrittsstrategie für den europäischen Markt auszuarbeiten.
4.6 5 29586
| Bewertung: (4.6 / 5.0)

Der in seiner Heimatregion äußerst erfolgreiche asiatische Premiumhersteller von Schmierstoffen, LubricantsCo, möchte seinen Umsatz und Gewinn weiter steigern. Die Produktpalette erstreckt sich von Schmierstoffen im automobilen Umfeld (z. B. Motor- und Getriebeöl) bis zu Industrieanwendungen (z. B. ... Ganzen Case öffnen

Oliver Wyman case: Full Electrons Ahead

101,1 Tsd. mal gelöst
Oliver Wyman case: Full Electrons Ahead Your client, large automotive OEM WyCar, has developed its first fully electric vehicle (EV) and introduced it as a pilot on the Austrian market last year. However, sales have been far below the expected numbers. The management has engaged you to support them in understanding the reasons and advise them on how to adjust the product offering.
4.6 5 6521
| Bewertung: (4.6 / 5.0)

Your client, large automotive OEM WyCar, has developed its first fully electric vehicle (EV) and introduced it as a pilot on the Austrian market last year. However, sales have been far below the expected numbers. The management has engaged you to support them in understanding the reasons and advise ... Ganzen Case öffnen

Roland Berger Case: Licht an!

77,0 Tsd. mal gelöst
Roland Berger Case: Licht an! LumCO, ein Hersteller von Spritzgussteilen für Beleuchtungskörper, ist auf seinem europäischen Heimatmarkt mit großem Erfolg tätig. Das Unternehmen plant die Errichtung zweier Produktionsanlagen in China und den USA sowie den Aufbau eines eigenen Vertriebsnetzes in den beiden Ländern, das als zentraler Knotenpunkt für die gesamte Region dienen soll. Das LumCO Sortiment umfasst neben Spezialprodukten, die nach Kundenspezifikationen entworfen und im Unternehmen selbst hergestellt werden (z.B. Scheinwerfergehäuse und -linsen für Fahrzeuge, Leuchten für Design-Lichtanwendungen), auch Standardprodukte, zu denen Komponenten für verschiedene Anwendungsbereiche und Branchen gehören (Beleuchtungsarmaturen, Linsen, Leuchten). Angesichts einer zwar moderaten, aber stabilen Wachstumsprognose für Europa möchte LumCO den Aufbau der beiden Produktionsstandorte in China und den USA möglichst bald in Angriff nehmen und darüber hinaus mit dem Direktvertrieb seiner Produkte beginnen. Im Auftrag des LumCO Vorstands sollen Sie als Berater dieses Vorhaben bewerten und dabei Ihre Kenntnisse der regionalen Gegebenheiten und des Beleuchtungsmarkts im Allgemeinen zugrunde legen.
4.6 5 14600
| Bewertung: (4.6 / 5.0)

LumCO, ein Hersteller von Spritzgussteilen für Beleuchtungskörper, ist auf seinem europäischen Heimatmarkt mit großem Erfolg tätig. Das Unternehmen plant die Errichtung zweier Produktionsanlagen in China und den USA sowie den Aufbau eines eigenen Vertriebsnetzes in den beiden Ländern, das als zentra ... Ganzen Case öffnen

Deloitte Consulting Case: Footloose

71,9 Tsd. mal gelöst
Deloitte Consulting Case: Footloose Duraflex ist ein deutscher Schuhhersteller mit einem jährlichen Umsatz von ca. €1 Mrd. Ihr größter Absatzmarkt war immer der Stiefelmarkt. In diesem Markt konkurrieren sie mit drei anderen Hauptkonkurrenten. Im Herbst 2019 startete Badger – einer der Konkurrenten – eine neue Arbeitsstiefellinie, deren Preis sehr aggressiv angesetzt ist. Der starke Erfolg dieser Linie hat das Management von Duraflex veranlasst, ihre Position im Arbeitsstiefelmarkt neu zu bewerten. Mit geringen zusätzlichen Mitteln muss das Management nun entscheiden, ob sie ihre Anstrengungen auf den Wettbewerb mit Badger im Arbeitsstiefelmarkt konzentrieren, oder ihre Ressourcen auf eine Stärkung ihrer Position im Freizeitstiefelmarkt fokussieren. Das Management fragt dich um Rat. Um eine Strategie geben zu können, bereite bitte zunächst einen ersten Überblick in Bezug auf Marktgröße und Wettbewerbsumfeld vor.
4.5 5 13221
| Bewertung: (4.5 / 5.0)

Duraflex ist ein deutscher Schuhhersteller mit einem jährlichen Umsatz von ca. €1 Mrd. Ihr größter Absatzmarkt war immer der Stiefelmarkt. In diesem Markt konkurrieren sie mit drei anderen Hauptkonkurrenten. Im Herbst 2019 startete Badger – einer der Konkurrenten – eine neue Arbeitsstiefellinie, d ... Ganzen Case öffnen

Nutripremium

70,1 Tsd. mal gelöst
Nutripremium Nutripremium ist ein sehr bekanntes Unternehmen für hochwertige Nahrungsergänzungsmittel in Europa (1 Milliarde Euro Umsatz letztes Jahr). Es stammt aus Spanien und hat nicht nur dort einen sehr hohen Marktanteil, sondern auch in Portugal, Frankreich, Italien und Deutschland. Nutripremium hat zwei Hauptproduktlinien: einmal Vitamin-Supplements für schwangere Frauen und die andere Linie konzentriert sich auf Nahrungsmittel zur Entwässerung und Vitaminpillen für kranke Patienten (mit Diabetes oder Krebs). Der CEO von Nutripremium denkt, dass der Markt in Europa langsam gesättigt ist und möchte von dir, dass du den chinesischen Markt analysierst. Welches sind die Hauptbereiche, die du untersuchen würdest, um festzustellen, ob es eine gute Idee ist?
4.5 5 2251
| Bewertung: (4.5 / 5.0) |

Nutripremium ist ein sehr bekanntes Unternehmen für hochwertige Nahrungsergänzungsmittel in Europa (1 Milliarde Euro Umsatz letztes Jahr). Es stammt aus Spanien und hat nicht nur dort einen sehr hohen Marktanteil, sondern auch in Portugal, Frankreich, Italien und Deutschland. Nutripremium hat zwei ... Ganzen Case öffnen