Here are 6 simple steps to management strategy…
As Business Week describes the process, it has Six Simple Steps: SWAT Team, Liquidity Fix, Debug, Product Mix, Integrate and Prune.
They need some spelling out:
1. Take charge at once, putting your own tried, true and trusted people in command. Use ‘project management’ techniques to analyse the situation, break the requirements down into discrete sub-projects, and set objectives and deadlines.
2. To start with, the most important area for the SWAT team to hit is money. Get an accurate picture of debts and cash. If these situations have got out of hand (they almost certainly have), establish new relations with the creditors. Rather than lose their money, they will (as Mittal has found) agree to instalment plans to settle old debts, so long as new bills are paid promptly.
3. Get the ‘technics’ sorted out fast. Major technical problems are bound to be causing trouble. More than hardware will be involved.
Mittal’s people, for example, cut downtime by replanning the maintenance schedules. Go through the entire supply chain looking for similar easy and better options – the ‘low hanging fruit’.
4. Start winning higher prices, charging more for the existing product range if the traffic will bear it, but also moving to up-market products if possible. Mittal’s higher-value ploy involves cold-rolled steel, galvanised sheet, etc. And imitate Michael Dell, who founded his huge PC success on cutting out the middle-man to sell direct. Even as an undergraduate, Dell couldn’t see the sense in giving away so much of the added value to a mere go-between.
5. Integration, which is sometimes dignified as ‘synergy’, is among the prime justifications for mergers and acquisitions – and cause the biggest disappointments. Mittal doesn’t attempt to make two plus two equal five. He simply looks for easy opportunities to cut costs; that low-lying fruit again. Forming regional groups cuts purchasing costs: stopping plants from vying with each other to supply the same customer is another easy win.
6. The correct strategy towards the non-steel businesses that steelmakers tend to collect is obvious. Shut them down, or sell them off. You don’t want catering companies or hotels (two examples cited by BW) getting in the way. Nor do you want excess staff numbers – but handle the pruning carefully to avoid trouble on the shop floor.
- Introduction and Findings Chapter on Strategic Analysis: Dell Company (ivythesis.typepad.com)
- Looking Beyond Self ” Management Strategy” (shaibugift.wordpress.com)