Competitive Benchmarking

Competitive Benchmarking

Ricardo Strategic Consulting (RSC) examines the effectiveness of R&D investments in the off-highway market. RSC utilizes relevant metrics obtained from global companies' financial statements, Ricardo search tools, and industry expert interviews.

Challenge

A leading OEM in the off-highway sector sought an independent review of propulsion system R&D spend across the industry. The analysis identifies representative competitors and compared them, leveraging quantitative and qualitative assessments to identify tendencies and differences.

RSC utilizes its internal industry expert knowledge base as well as an external network of experts through the Ricardo TRNTY® network to obtain specialized and unbiased insight.

Approach

RSC benchmarks global competitors combined with client benchmarking and other adjacent industry segments (leaders in similar industries). Subsequently, RSC executes the following methodology:

  • Define R&D metrics: RSC develops a scorecard to objectively compare the client’s strengths and weaknesses against its competitors. Supporting data is sourced from the public domain, including financial statements, investor presentations, M&A announcements, Ricardo patent search, Ricardo
    technical search tools, and knowledge management database- RiCK™, conference presentations, and product launch announcements.
  • Perform internal and external expert interviews: RSC conducts interviews with off-highway experts encompassing client suggested benchmarks & industry
    leaders. Interviews are sourced through the Ricardo TRNTY™ network. Interviewees currently or previously held high R&D positions in global organizations. Interviews provide additional historical insights, aligned financial data, and provide competitors' perception of the client’s R&D capability.
  • Research value-add: RSC analyzes publicly available historical data such as R&D expense, revenue, profits, SG&A, capital expenditures, warranty liability/expenses, global engineering presence, product portfolio variants, and product market segments, etc. Subsequently, RSC compares target benchmarks on aligned metrics such as R&D spend as a percentage of revenue, product series diversification, R&D global presence, YoY growth rate in a native/non-native market, and other relevant indicators.

Recommendation

RSC data collection indicates the client OEM is very effective in allocating R&D resources. However, RSC identifies the client could improve its efficiency by reducing costs and evaluating alternative methods to achieve development targets. A selection of these strategies includes engineering globalization, product-driven development outsourcing, and partnerships for new technologies.

Results

  • Utilize publicly available information, RSC creates a scorecard to compare client R&D against relevant competitors. Supporting collected data of each category was structured and provided
  • RSC identifies the client as an industry leader in the segment, evidenced by sustained growth over the past ten years when compared against its competitors. Additionally, RSC provides competitor’s perception of the client’s competitive advantage
  • RSC recommends five initiatives to improve the cost optimization strategy for more efficient R&D investment while keeping the existing budget

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