- Service:Business model re-engineering
- Sector:Industrial products
Issue
AMR was approached by a leading global manufacturer and supplier to the metal processing industry, whose revenues had been declining recently. In order to plan strategic actions to address this revenue decline, the company wanted to find out whether the bad performance was due to a general decline of the market or a market share loss to competitors. If market share loss was the problem, the company wanted to identify what the reasons for this loss were.
Approach
AMR’s research partly built on findings from two other management consultancies which had provided some valuable information, but had failed to answer some key questions. In addition to analysing these findings, AMR conducted extensive desk research and embarked on an in-depth interview programme with the company’s customers, distributors, competitors, and market experts.
Recommendations
AMR quickly found that the client’s core market had suffered a decline in the past, but had since stabilised. The company’s recent revenue decline was thus not a result of a shrinking market, but a loss of market share to competitors. The reason for this market share loss was the client’s failure to develop innovative products to defend its position as undisputed technology and quality leader. As a result, an increasing number of customers chose competitors’ products which offered similar benefits at significantly lower prices.
Result
The client accepted AMR’s findings, which gave insight that other management consultancies had failed to provide, and which allowed management to plan strategic initiatives to tackle the issues raised by AMR.
Insight from AMR’s research
While many established European manufacturing companies have reacted to threats from aggressive, cheaper competitors, there is still a high level of complacency among other once market-leading companies which makes them vulnerable to market share losses.