Practice makes perfect: Preparing to get into M&A arena - The Stock

80 Pages·2012·3.82 MB·English

by  Fancy Ali

Winning after the flood: Turning crisis into
opportunities to challenge the world
Management workshop
9 January 2012
Agenda
Time Content
13:00 – 13:15 Welcome and opening remarks

13:15 – 14:15 Rethinking supply chain after the flood

14:15 – 15:15 Companies on the rise: Example of SEA companies challenging the
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15:30 – 16:30 Practice makes perfect: How companies prepare to get into M&A arena C
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16:30 – 16:45 Key takeaways and closing remarks 1
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127340-04-SET Workshop_Presentation deck-SK-8Jan12-BGK-v2.pptx 1
Agenda
Time Content
13:00 – 13:15 Welcome and opening remarks

13:15 – 14:15 Rethinking supply chain after the flood

14:15 – 15:15 Companies on the rise: Example of SEA companies challenging the
.d
e
global champions vre
s
e
r s
th
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ir llA
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n
15:15 – 15:30 – Break – I ,p
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n
itlu
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o
15:30 – 16:30 Practice makes perfect: How companies prepare to get into M&A arena C
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16:30 – 16:45 Key takeaways and closing remarks 1
0
2
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127340-04-SET Workshop_Presentation deck-SK-8Jan12-BGK-v2.pptx 2
On the supplier side, companies are facing many types of risk
increasing manageability of risk
Quality issues
Political Riots in
in Boeing
Bangkok
supply chain
Operational Geopolitical
risks risks
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Olympics Finraisnkcsi al Suripspklsie r Catarisstkrosp he TTshuani a mi vreser s
supplier th
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risks risks gn
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global crisis ©2
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Source: BCG Automotive / Procurement Practice
127340-04-SET Workshop_Presentation deck-SK-8Jan12-BGK-v2.pptx 3
Numerous examples of companies being impacted negatively
Examples from Japanese tsunami and Thai floods

Stopped supply of color Stopped supply of low / mid Halted production due to
pigments "Xirallic" range SLR Camera shortage of parts
• Factory damaged by • Thai Factory flooded up to • Factory undamaged by
Japanese quake second storey floods
• Area close to Fukushima • Located in Ayutthaya, 70km • Located in Samutprakarn, .d
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nuclear incident from Bangkok 25km from Bangkok res
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• 8-12 weeks closure • Factory closed for ~6 • 120 of Nissan's suppliers r sth
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assumed months affected by floods ir llA
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Affected factory only supplier Directly affected range of • Production loss of 60,000 o
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of "Xirallic" globally! products available to vehicles resulting in two n
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• Immediate effect on color consumers during peak month delivery delays to n
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range availability for Ford, Christmas Season consumers no
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Direct customer impact from sudden disruption of supply 1
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127340-04-SET Workshop_Presentation deck-SK-8Jan12-BGK-v2.pptx 4
BCG approach to address key risk areas
Automotive OEM examples
5
Early warning
system and
1 2 3 4
monitoring tool
Commodity Module Prioritized Mitigation
risk map risk map supplier risk map strategies
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Identify relevant Associate parts Assess risks for Develop and implement Aggregate existing risk v
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commodities with modules selected suppliers mitigation strategies data into holistic e
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simple parts) risk dimensions • based on risk monitor ir llA
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• along defined key • based on identified assessment for commodities • define / monitor oC
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risk dimensions commodity risks • based on risk trigger scenarios / ots
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Source: BCG Automotive / Procurement Practice
127340-04-SET Workshop_Presentation deck-SK-8Jan12-BGK-v2.pptx 5
1
Different evaluation criteria to assess risks
Geopolitical Catastrophe Market Strategic Financial Operational
risks risks risks risks risks risks
□ □ □ □ □ □
Geographic Geographic Industry Industry Profitability of Operating
concentration concentration concentration concentration industry model of
□ □ □ □ □
LCC sensitivity Past incidents Price volatility # of alternative Financial industry
Selected KRIs □ □
Country risk of natural Supply/demand suppliers stability of
ratings disasters balance industry
□ □
Past incidents Payment terms
of violent acts of industry
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Regional events Regional events High demand for Few alternative Certain industries Certain operating e
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Rationale for KRIs can effect all can effect all certain commo- suppliers in case face higher models may be th
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major suppliers major suppliers dities may restrict of disruption financial risks than more vulnerable ir llA
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Qualitative g
assessment Risk score Risk score Risk score Risk score Risk score Risk score nitlu
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(1-5) (1-5) (1-5) (1-5) (1-5) (1-5) (1-5) noC
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Σ = 6-14 low risk yb
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risk score Σ = 23-30 high risk iry
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Note: Qualitative assessment: 1 = low risk; 5 = high risk oC
Source: BCG Automotive / Procurement Practice any single score = 5 high risk
127340-04-SET Workshop_Presentation deck-SK-8Jan12-BGK-v2.pptx 6
1
Perform a risk analysis for all commodities
Geopolitical Catastrophe Market Strategic Financial Operational Commo-
Raw material Σ
risks risks risks risks risks risks dity risk
1 Hot rolled steel 2 3 3 2 3 4 17
2 Cold rolled steel 4 1 1 4 4 3 17
3 Stainless steel 3 1 1 2 3 2 12
4 Aluminum 5 3 3 1 5 3 20
5 Wire rod 3 4 4 4 4 4 23
6 Cast iron 2 3 3 4 3 1 16 .d
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7 Copper 2 1 1 2 2 3 11 se
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8 PE 4 5 5 1 4 2 21 gir llA
9 PP 3 2 2 3 4 4 18 .c
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11 Rare earths 5 3 3 4 2 3 20 nitlu
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12 Lithium 2 2 2 3 4 1 14 oC
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13 Composite materials 1 1 1 1 1 1 6 tso
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14 Glass 1 1 1 1 4 4 12 T
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15 Other raw materials 2 1 2 1 4 3 13 1
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Note: Risk score: 1 = low risk; 5 = high risk oC
Source: BCG Automotive / Procurement Practice
high risk medium risk low risk
127340-04-SET Workshop_Presentation deck-SK-8Jan12-BGK-v2.pptx 7
2
Derive risk of Modules based on input parts
Risk
Value chain levels Example assessment Phase
Phase 2:
Aggregation of Identify commodities going
Tier 1
04-Doors commodity risk into modules and aggregate
"Modules"
assessment risk assessment for module
risk map
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Steel 11
"Raw materials" 02
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Source: BCG Automotive / Procurement Practice
127340-04-SET Workshop_Presentation deck-SK-8Jan12-BGK-v2.pptx 8
2
Link commodities with each module
Risk assessment based on material risk of commodities
Body Modules Electronics Modules
Equip.
Body Exterior Equip.
Doors upper Lids ...... Module n
Commodities structure body parts exterior
parts
1 Cast parts
2 Forged parts
Simple
3 Stamped parts
parts
4 Welded parts
5 Cold forming
1 Cold rolled steel
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2 Stainless steel ev
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Raw e
3 Aluminum r s
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4 Wire rod ir llA
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Overall Module risk1 nitlu
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high risk medium risk low risk 1
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1. Overall module score: Red: one single input part rated high risk ("red"); yellow: majority of parts rated medium risk ("yellow"); green: majority of parts rated low risk ("green") oC
Source: BCG Automotive / Procurement Practice
127340-04-SET Workshop_Presentation deck-SK-8Jan12-BGK-v2.pptx 9