Global expansion success

Company

US-based food ingredient manufacturer seeking a way to satisfy customers and increase growth.

Need

Relocate a portion of their UK-based manufacturing operations to mainland Europe in order to be closer to customers and help control increasing costs.

Goal

Define an optimal path to:

• Protect European Union (EU) market share
• Grow new revenue
• Reduce costs by locating closer to suppliers and end markets in Central Europe

Challenge

Leaders spent close to three years working with a commercial real estate broker to determine whether investing in a blending facility in Eastern Central Europe would:

• Generate cost savings to the business
• Make the company more competitive in the mainland European market
• Permit growth into newer markets in Europe

However, the broker was unable to recommend any suitable locations. The company realized that their existing approach was failing to drive the process forward.

In addition to the challenge of where to locate, company leaders faced customer relationship issues due to market conditions:

• Supply chain uncertainty from Brexit and concerned European customers
• Higher UK operating cost base
• The perception of being a non-local supplier in mainland Europe

Working with the commercial real estate broker was limiting the focus on the broader challenges the company faced with its desired global expansion.

To address the problem holistically, company leaders would need to think bigger.

They asked themselves:

• What type of compromises do we need to make to achieve our goal?
• What type of partner is best suited to guide us going forward?

Creating a decision framework

The company decided to engage RSM Strategy Advisory Services to help them craft a better plan. The first step was to break the challenge into financial and non-financial goals. Then, RSM built a decision framework that helped the client systematically explore all available options and determine which expansion model best fit its requirements.

Meeting clients where they are

The client had already spent extensive time and money searching for manufacturing sites to meet its needs, so the RSM team leveraged this investment to speed up the process and ultimately reach a final decision in only 12 weeks.

The RSM team also conducted its own third-party research with recruitment and commercial real estate firms to understand characteristics of the labor markets in the target cities. The new manufacturing location would ultimately have a small headcount and require specific operational capabilities.

Refining targets through prioritization

The RSM team worked with the client on an iterative discovery process to refine the target markets. This enabled the team to zero in on the best target-market fit via a thorough understanding of the client’s goals, their largest near-term growth opportunities, and multiple points of validation.

The RSM team included 11 study cities in the project scope. Using the decision framework to narrow down the selection based on the client’s project requirements and goals, they ultimately chose two main targets in one Central European country.