BCG - The Boston Consulting Group

Situation

A multinational durables company held a small, low-end market position in China and was unable to secure the global investment needed to shift into the premium segment where it traditionally enjoyed success. Headquarters’ limited trust in local management led to a reinforcing cycle of underinvestment and low expectations. BCG was brought in to help reset the strategy and assist the company’s China team in moving towards a position of market leadership.

Approach

The situation necessitated involvement of both the company’s local team in China and its global senior executives. Our approach was, first, to help the local team truly understand its market. We led them through a rigorous research and analysis process that included extensive customer research, detailed modeling of competitive economics, and an in-depth look into changing channel dynamics. We also helped them enhance their organizational strengths through critical senior hires. BCG worked alongside the reinforced local team to identify the strategic thrusts necessary to gain a successful position. Together with them, we created a plan that not only targeted how to turn the business around, but also provided an actionable and practical road map toward market leadership in China. Equally important, BCG helped the China team communicate the market situation and strategic imperatives to their global leadership in a way that built confidence and ultimately the willingness to support and invest. The global CEO—now confident that the company could make money in China—asked BCG to help the local team in the initial stages of implementation of the strategic plan.

Impact and value created

BCG helped establish complete alignment in the company over its China strategy, with local and global teams working together to achieve defined goals. Visible results were: increased margins, investments coming into China, improved employee morale, enhanced capabilities, and a shift of focus towards the high end of the market, where the company knows it can make money.

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