CASE NO. 90
Growth strategies for emerging markets
INITIAL SITUATION
The Russian affiliate of an international IT corporation had been missing its growth and profit targets for several years. While the IT markets developed strongly, the growth of the company was below average. An aggressive growth strategy was to be set up not to fall further behind in competition, but to participate in the market growth.
CHALLENGE
The business development had been one-sided in favour of selling hardware and software, but to the disadvantage of the service business. It would not be possible in the future to increase hardware and software sales as much as they had been in the past. Significant and strategic growth could only come from the service business. The business relied heavily on the cooperation with local business partners. With regard to the expansion of the service business, however, interests were contrary. The growth strategy had to resolve this conflict of interest since the company could not do without the business partners.
SOLUTION
1 if by land interviewed 100 key accounts and potential customers to pick up their requirements first-hand. Based on this information business line, country and sales managers developed the elements of the growth strategy in a series of workshops. Hardware, software and services were to be sold in packages. It was planned to focus the business partners on the new strategic objectives and manage them more closely with a preferred-partner concept. Market presence and customer relationships were to be strengthened by the acquisition of a local IT service provider. A strategic outsourcing deal was to be completed to participate in this onsetting new trend.
RESULT
Adopting these measures the company managed to achieve a compounded annual growth rate of more than 50 % in revenues at about 30 % margin over several years, excluding acquisitions and outsourcing.
