Ricardo Strategic Consulting (RSC) worked with a major tier-1 driveline supplier facing steadily declining revenue to develop a plan to help its off-highway division achieve a 3x increase in revenue within 5 years by identifying global growth opportunities and defining a strategic approach to diversification.
A major tier-1 driveline supplier’s historically strong off-highway products started to falter in revenue due to new industry pressures and a predatory pricing policy from a major competitor. An executive directive on diversification of revenue streams brought a renewed focus on off-highway product mix and division growth, but the company lacked a clear vision regarding how to address issues within existing markets and how to diversify to new markets. Additionally, the company’s expertise in the off-highway market was limited to a few sectors and lacked depth of knowledge of the entire market.
The supplier asked Ricardo Strategic Consulting to develop a plan to help its off-highway division achieve a 3x increase in revenue within 5 years by identifying global growth opportunities in the off-highway market and define a strategic approach to diversification. This included identifying growth opportunities for all major regions globally through sizing the market and understanding underlying trends, customer requirements and competitive challenges.
To achieve the objectives, RSC worked in tandem with the client’s leadership team to develop a tailored strategic growth plan using the following approach:
- Characterizing the market by defining the scope, region, applications and determining which sectors offer the best opportunities for growth
- Assessing the opportunity by analyzing the historic and projected growth rates by region and application
- Conducting Voice-of-Customer conversations with current customers to recognize pain points and develop solutions
- Understanding customer requirements to grow the off-highway business, and to enter new markets that have been underserved in the past
- Identifying the key competitors in the identified growth sectors and determining the differentiators, features and customer needs and wants critical for growth
Based on findings from a comprehensive evaluation of global off-highway markets, RSC proposed a set of 13 actionable recommendations to support future growth. Listed below is a condensed sub-set of the recommended initiatives:
- Modify existing products, with a minimal investment approach, to cater to customers in adjacent markets, enabling quick wins
- Expand to new regions for sustained growth and diversification to meet corporate financial objectives
- Build on successful On-highway strategy; share development costs across multiple platforms
- Leverage experience with current electrified drivetrains to enter new markets which are on the verge of electrification
- Highlighted that improved customer communication channels and supply issues were key to regaining lost market share in historically strong applications
- RSC’s analysis identified an addressable market of up to 18x greater than desired revenue growth
- Based on an off-highway market and applications assessment (including product competency, competition, region, etc.) achievable growth opportunities were identified and quantified with business cases to support the objective of 3x growth in 5 years
- RSC identified two new potential product lines with achievable revenues to meet the project goals
- RSC recommended the client institute a strengthened sales and marketing team to address customer issues in existing off-highway products