Foundations
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Ways to reduce costs
Group ideas along the cost base so you cover it fully rather than listing at random.
- People: scheduling to demand, cross-training, productivity tools, incentive design.
- Purchasing: renegotiate, consolidate suppliers, buy jointly, find alternative sources.
- Operations: automation, less waste, leaner inventory, combining sites.
- Operating model: outsource non-core work, share services.
- Finance: collect cash sooner, refinance debt, sell non-core assets, hedge currency exposure.
Pitfall: Cuts that save money but damage what customers pay for.
Elements:
Outside forces to scan
A quick scan of outside forces helps you check whether a trend helps or hurts the client — and which customers it actually reaches.
- Policy and regulation: subsidies, taxes, tariffs, licensing.
- Economy: income, interest rates, inflation, currency, commodity prices.
- Society: demographics, tastes, habits.
- Technology: new products, new channels, security threats.
- Environment and shocks: climate, weather, pandemics, geopolitical events.
Elements:
Types of risk
Separate risks the client cannot control from those it can, then rank each by likelihood and impact.
- Outside the client's control: new entrants, price wars, regulation, tariffs, input and energy prices, currency, supply disruption, labour shortages, disasters and pandemics, technology shifts.
- Within the client's control: execution and integration, systems, inventory, quality, reputation, cannibalisation, key-people turnover.
Elements:
Types of synergy
Revenue synergies are attractive but uncertain; cost synergies are more reliable. Always ask what could get worse after the deal.
- Revenue: cross-selling, new channels, new markets, fuller offers for customers.
- Cost: shared back office, scale in purchasing, combined logistics and sites.
- Financial: selling surplus assets, cheaper funding, tax effects.
- Dis-synergies: lost customers or partners, brand damage, people leaving.
Elements: