Dilemma whether to surrender or continue existing business?
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Business Challenge:
Potentially of closing down the operations if unable to match OEM pricing expectations.
A passenger auto-component manufacturer was confronted by OEM with additional 15% discount; while existing business was already registering losses at existing pricing structure. Our business model & viability assessment, operational excellence helped client turn profitable and also accept new business with re-negotiation with customer on M-o-Q.
Our Approach:
We studied the current business model to understand why existing business was making losses and whether the proposed price revision would make economic sense.
- Evaluate ideal business model Vs. current
- Used Proprietary Business Modelling Tool to arrive at minimum volumes for break even and profitability at proposed discounted price by OEM
Our Recommendation
Cost-Optimisation and strategic recommendation to stop child-part outsourcing which enabled high value contributions there by making existing business viable
Proposed discounting was accepted with MOQ.
Client Results
External perspective of re-evaluating business model and viability helped client to make money in existing business while accepting new opportunity confidently.
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- jinal@expandus.co.in
- +91-20-2952-5331
- Expandus Consulting Private Limited 17A Namostu, Amar Society, Off Law College Rd, Pune - 411004, Maharashtra, India
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