Client Situation
Our client was the largest luggage manufacturer in India and the second largest manufacturer in the world. The luggage business had seen stagnant sales over the past couple of years due to competitive pressures from both international players and the domestic unorganized sector players. Also, given the low rate of growth of the luggage industry, the client was looking at aligning its strategy to opportunities providing areas of growth.
Cedar’s Approach
The client asked Cedar’s assistance in validating their strategy, creating a strategy deployment framework, developing an enterprise-wide performance management system using the Balanced Scorecard, and finally identifying key result areas (KRAs) for key positions in the organization for delivery of the strategy. Cedar’s approach was as follows:
- Review of all relevant internal documents related to the strategy and operations of the enterprises at the Group and individual company levels
- One-on-one interviews with 49 relevant members across the client’s teams to gain insight
- Joint interviews with 14 industry dealers in order to understand their perspectives
- Integration of the internal assessment and one-on-one interview inputs to develop a summarized analysis of the objectives of the group and the divisions
- Development of the first level strategy map and identification of measures that best track progress of the strategic objectives
- Review of the first level strategy map and measures, modification of strategy map in the workshop based on inputs from executive team
- Allocation of ownership for strategic objectives and reporting data on measures
- Finalization of measures and creation of measure templates
- Mapping of existing projects and identification of new projects required to drive strategy
- Collation of actuals and definition of best effort targets for measures
- Review of process owners, prioritization of projects and development of the Scorecard rollout plan
Outcome
Some of Cedar’s key recommendations after detailed analyses using the Balanced Scorecard framework were as follows:
- Need for growth in overall profitability through revenue growth and increasing cost efficiency by:
- Growing in the premium segment through product and brand positioning
- Improving working capital through a reduction in inventory and receivables
- Reducing essential costs through volume management and negotiation
- Aggressive growth in exports to select countries
- Exploring small but profitable investments, including manufacturing operations in other countries, as an avenue for future growth
- Need for perception enhancement, better consumer analytics and improved product development processes by:
- Addressing product quality issues in order to enhance quality perception
- Building a database on consumer expectations of design and functionality of luggage so that product innovations are not reactionary
- Developing a better understanding of the requirements of distribution partners
- Building a sub-brand for the economy segment and exploring a sub-brand for the premium segment