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Flevy Management Insights Case Study
Global Market Penetration Strategy for SMB in Wholesale Electronic Markets

There are countless scenarios that require Business Process Re-engineering. Fortune 500 companies typically bring on global consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture, or boutique consulting firms specializing in Business Process Re-engineering to thoroughly analyze their unique business challenges and competitive situations. These firms provide strategic recommendations based on consulting frameworks, subject matter expertise, benchmark data, best practices, and other tools developed from past client work. Let us analyze the following scenario.

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Consider this scenario: The organization, a small to medium-sized business specializing in wholesale electronic markets, is at a pivotal juncture requiring Business Process Re-engineering to address its stagnating growth.

Faced with a 20% decline in customer acquisition rates and a 15% increase in operational costs over the past 18 months, the company is battling both internal inefficiencies and external market pressures. Externally, an influx of new competitors and rapid technological advancements threaten its market position. The primary strategic objective of the organization is to achieve global market penetration by streamlining operations and leveraging technological innovation to capture new international markets.

At the core of the organization's challenges is an outdated business model and a lack of agility in adapting to market demands and technological changes. These issues have led to operational inefficiencies and a diminished ability to compete on a global scale. To address these root causes, it is imperative for the company to undergo a strategic transformation, focusing on operational excellence and innovation.

Market Analysis

The wholesale electronic markets industry is characterized by rapid technological advancements and high competition. As digital transformation reshapes every sector, companies in this space must innovate continuously to stay relevant.

Examining the competitive landscape reveals:

  • Internal Rivalry: Competition is fierce with many players vying for market share, driven by price competition and technological innovation.
  • Supplier Power: Limited due to the high availability of electronic components globally, though strategic partnerships can offer competitive advantages.
  • Buyer Power: Increasingly high as buyers have more information and alternatives, pushing for lower prices and higher quality products.
  • Threat of New Entrants: Moderate, with barriers including the need for technological expertise and access to distribution channels.
  • Threat of Substitutes: High, as rapid innovation can render existing products obsolete quickly.

Emergent trends indicate a shift towards IoT and AI technologies, creating opportunities for businesses to differentiate their offerings. Major changes in industry dynamics include:

  • Increased demand for smart electronic components, presenting an opportunity for companies to innovate and offer advanced solutions. The risk lies in the significant investment required in R&D and technology adoption.
  • Expansion of online sales channels, offering opportunities to reach global markets more efficiently but also intensifying competition.
  • Growing importance of sustainability in electronics, presenting opportunities for differentiation but requiring investments in sustainable production practices.

Learn more about Digital Transformation Competitive Advantage Competitive Landscape Market Analysis

For a deeper analysis, take a look at these Market Analysis best practices:

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Internal Assessment

The organization possesses strong relationships with key suppliers and a deep understanding of market needs, yet struggles with operational inefficiencies and slow adoption of new technologies.

SWOT Analysis

Strengths include established supplier relationships and comprehensive market knowledge. Opportunities arise from expanding into emerging markets and adopting cutting-edge technologies. Weaknesses are evident in operational inefficiencies and lack of technological innovation, while threats include increasing competition and the rapid pace of technological change.

VRIO Analysis

Supplier relationships and market knowledge are valuable and rare but not fully leveraged due to operational inefficiencies, indicating a need for strategic realignment and process optimization.

Capability Analysis

Success in the wholesale electronic markets hinges on operational efficiency, technological innovation, and market agility. Currently, the company's capabilities in innovation and efficiency are lacking, necessitating focused efforts to enhance these areas to capitalize on market opportunities.

Strategic Initiatives

Based on the comprehensive analysis, the following strategic initiatives are proposed to be implemented over the next 24 months :

  • Digital Transformation Initiative: This strategy aims to overhaul the company's technological infrastructure, enhancing operational efficiency and enabling innovation. The value creation will stem from improved process efficiency and the capability to offer cutting-edge products, requiring investments in new technologies and skills development.
  • Global Market Expansion: Targeting new international markets for expansion to diversify revenue streams and reduce dependency on domestic markets. This initiative will leverage the company's core competencies in market knowledge and supplier relationships, necessitating investments in market research and local partnerships.
  • Sustainability Integration: Embedding sustainable practices into product development and operations to meet growing market demand for eco-friendly electronic products. This will create value through differentiation and potentially command premium pricing, requiring investments in sustainable technologies and practices.

Learn more about Core Competencies Market Research Value Creation

Business Process Re-engineering Implementation KPIs

KPIS are crucial throughout the implementation process. They provide quantifiable checkpoints to validate the alignment of operational activities with our strategic goals, ensuring that execution is not just activity-driven, but results-oriented. Further, these KPIs act as early indicators of progress or deviation, enabling agile decision-making and course correction if needed.

What gets measured gets done, what gets measured and fed back gets done well, what gets rewarded gets repeated.
     – John E. Jones

  • Operational Efficiency Metrics: Reduction in production costs and time-to-market for new products.
  • Market Share Growth: Increase in market share in targeted international markets.
  • Sustainability Index: Improvement in sustainability ratings through the adoption of eco-friendly practices and products.

These KPIs will provide insights into the effectiveness of the strategic initiatives, highlighting areas of success and identifying potential adjustments needed to ensure the strategic objectives are met.

For more KPIs, take a look at the Flevy KPI Library, one of the most comprehensive databases of KPIs available. Having a centralized library of KPIs saves you significant time and effort in researching and developing metrics, allowing you to focus more on analysis, implementation of strategies, and other more value-added activities.

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Business Process Re-engineering Best Practices

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Business Process Re-engineering Deliverables

These deliverables represent the outputs across all the strategic initiatives.
  • Digital Transformation Roadmap (PPT)
  • Global Expansion Strategy Plan (PPT)
  • Sustainability Integration Framework (PPT)
  • Operational Efficiency Improvement Model (Excel)

Explore more Business Process Re-engineering deliverables

Digital Transformation Initiative

The Digital Transformation Initiative was significantly bolstered by the application of the Balanced Scorecard and the Technology Acceptance Model (TAM). The Balanced Scorecard, a strategic planning and management system, was instrumental in aligning business activities to the vision and strategy of the digital transformation, enhancing internal and external communications, and monitoring organizational performance against strategic goals. It proved invaluable for maintaining a holistic view of the organization's digital transformation efforts and ensuring they were aligned with the overall business strategy. The Technology Acceptance Model (TAM) was utilized to gauge the likelihood of acceptance and use of new digital technologies by employees, which is critical for the successful implementation of digital transformation strategies.

  • Developed a Balanced Scorecard that included financial, customer, business process, and learning and growth perspectives to ensure a comprehensive approach to the digital transformation.
  • Conducted surveys and focus groups to assess the perceived usefulness and ease of use of new digital tools among employees, using the insights gained from TAM.
  • Implemented targeted training programs based on TAM findings to increase technology acceptance and usage rates among staff.

The implementation of these frameworks led to a more structured and strategic approach to digital transformation. The Balanced Scorecard provided a clear roadmap and measurable objectives for the initiative, while TAM ensured high levels of technology adoption among employees, contributing significantly to the initiative's success.

Learn more about Strategic Planning Balanced Scorecard

Global Market Expansion

For the Global Market Expansion initiative, the organization found great value in applying Ansoff’s Matrix and the Blue Ocean Strategy. Ansoff’s Matrix helped in identifying potential growth strategies by focusing on new markets and products, providing a clear direction for expansion. The Blue Ocean Strategy was pivotal in navigating through competitive international markets by encouraging the pursuit of differentiation and low cost to open up a new market space and create new demand. These frameworks were instrumental in guiding the strategic decision-making process for entering new international markets.

  • Used Ansoff’s Matrix to evaluate the risk associated with each potential market entry strategy, ultimately deciding to pursue market development and product development strategies in untapped markets.
  • Applied the Blue Ocean Strategy to identify underserved markets and develop unique value propositions that differentiated the company from competitors in these new markets.
  • Conducted comprehensive market research to validate the identified blue oceans and developed tailored marketing strategies to effectively reach these new customer segments.

The strategic application of Ansoff’s Matrix and the Blue Ocean Strategy facilitated a successful global expansion. By focusing on untapped markets and creating unique value propositions, the company was able to establish a strong presence in new international markets, resulting in increased market share and revenue growth.

Learn more about Value Proposition Market Entry Revenue Growth

Sustainability Integration

In the pursuit of integrating sustainability into its operations and product offerings, the organization leveraged the Triple Bottom Line (TBL) framework and the Natural Step Framework. The Triple Bottom Line framework encouraged the company to expand its focus beyond financial gains to also consider environmental and social performance, which played a crucial role in aligning the sustainability efforts with the company’s core values and objectives. The Natural Step Framework provided a structured approach to making sustainability-related decisions and actions, ensuring they were systematically advancing towards a more sustainable business model.

  • Adopted the Triple Bottom Line approach to evaluate the company’s performance in three areas: profit, people, and the planet, which guided the development of sustainability goals and initiatives.
  • Utilized the Natural Step Framework’s backcasting process to identify strategic actions that would move the company towards sustainability while avoiding actions that would move it away from that goal.
  • Engaged stakeholders in the sustainability journey by communicating the company’s commitment to TBL principles and how it intended to achieve its sustainability goals through the Natural Step’s strategic guidelines.

The adoption of the Triple Bottom Line and the Natural Step Frameworks significantly contributed to the successful integration of sustainability into the company’s operations. This strategic approach not only enhanced the company’s environmental and social performance but also led to improved brand reputation and customer loyalty, demonstrating the value of sustainability in today’s business landscape.

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Key Findings and Results

Here is a summary of the key results of this case study:

  • Operational efficiency improved by 15% through the adoption of new digital tools and processes.
  • Market share in targeted international markets increased by 20%, attributed to successful global expansion strategies.
  • Sustainability ratings improved by 25%, reflecting the effective integration of eco-friendly practices and products.
  • Technology acceptance among employees rose by 30%, due to targeted training programs based on TAM findings.
  • Customer acquisition rates in new markets grew by 18%, driven by differentiated offerings and tailored marketing strategies.
  • Production costs reduced by 12%, as a result of streamlined operations and efficiency gains from digital transformation.

The initiative's outcomes are commendable, showcasing significant improvements in operational efficiency, market share, sustainability, technology adoption, customer acquisition, and cost reduction. The strategic application of frameworks like the Balanced Scorecard, TAM, Ansoff’s Matrix, and the Blue Ocean Strategy facilitated these achievements by guiding the organization through its transformation. The increase in market share and customer acquisition rates in new international markets is particularly noteworthy, demonstrating the effectiveness of the global expansion strategy. However, the results also highlight areas for improvement. The expected reduction in production costs, while positive, was less than anticipated, suggesting that there might be untapped opportunities for further efficiency gains. Additionally, the high rate of technology adoption among employees, though successful, underscores the ongoing need for training and support to maintain these levels and adapt to future technological advancements. Alternative strategies, such as deeper investments in automation and AI, could potentially enhance operational efficiencies and cost savings further.

For next steps, the company should focus on consolidating the gains from its digital transformation and global expansion efforts. This includes continuous monitoring and optimization of new processes and technologies to ensure they deliver the expected benefits. Further investment in employee training and development will be crucial to sustain technology adoption rates and foster a culture of innovation. Exploring additional markets for expansion and continuously evaluating the product portfolio against market demands can drive further growth. Lastly, the company should consider more aggressive investments in automation and AI to unlock additional efficiencies and competitive advantages.

Source: Global Market Penetration Strategy for SMB in Wholesale Electronic Markets, Flevy Management Insights, 2024

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