Strategy development for STRATEGY PARTNERS GROUP
Final report 12 December 2011
Cup Moscow 2011Final Case
Russian Intellectual Tradition
Titova ElenaKorkmazov AlexeyMnatsakan’yan AlexanderRodnyy Alexander
HIGHER SCHOOL OF ECONOMICSN A T I O N A L R E S E A R C H U N I V E R S I T Y
Team ENDSPIEL
Team ENDSPIEL
Participants:
3
Elena Alexey Alexander Alexander
NRU HSE NRU HSE NRU HSE NRU HSEManagement
4 yearManagement
4 yearManagement
4 yearManagement
4 year
Team ENDSPIEL
The Long-term goal
Leader in Russian market of strategy consulting
4
Source: Case data, Endspiel analysis
Level of sales channels
development
Diversity of business
Consultant staff
increase BrandQuality
Price Quantity
Revenue per consultant
Profit marginRevenues Value
Improve position
2011Business Value ~20,0 *Revenue 100% 19,0 COGS 19% 3,6 Direct costs 22% 4,2 Consulters 26% 4,9 Administrative 6% 1,1 Other 8% 1,5 EBITDA 19% 3,6
2016Business Value ~100,0 Revenue 100% 100,0 COGS 19% 19,0 Direct costs 17% 16,7 Consulters 23% 23,4 Administrative 5% 4,6 Other 17% 12,0 Ebitda 19% 19,4
Team ENDSPIEL
The ProblemsSPG strategy will be able to respond to internal and external challenges it faces
5
External
> Growing demand and stable supply of consulting talent
> Increasing importance of brand awareness
> Increasing likelihood of crisis
Internal
> Lack of integration with SBERBANK Group
> Low revenue per consultant
> Low recurrent clients rate
Team ENDSPIEL
The Scenarios
2-way approach allows to meet changing conditions
6
Increase reccurence rate
Large commercial customers
Brand awareness development
> Large companies
> Public sector
> IT consulting
> No Staffing
problems
> Medium & small companies
> PE Fund
> International expantion
to Ukraine & Kazakhstan
OptimisticPessi
mistic
- the target
Team ENDSPIEL
The Optimistic Scenario
Business value increase by 2016
7
Value
New projects
Agriculture
Oil&Gas + Energy
Manufacturing
FMCG
Insurance
+$14m
+$8m
+$7m
+$4m
+$2m
+$35m
PE Fund+$45m
We will increase the SPG value to $100m by 2016
+$80m
Team ENDSPIEL
The Optimistic Scenario
Implementation plan
8
2012 2013 2014 2015 2016
MARKETING
KAZAKHSTAN
UKRAINE
PE FUND
HIRE STAFF
REGIONAL DEVELOPMENT (SPb)
ACQUIRING NEW CLIENTS through SBERBANK GROUP
Team ENDSPIEL
The Optimistic Scenario
Marketing plan
9
Public projects
Ads in magazines Conferences & Trainings
Vestnik Srategy
Team ENDSPIEL
The Optimistic Scenario
New clients acquiring plan
10
ConsultingClients
Consulting
Consulting ClientsPRIVATE EQUITY
IPOM&A
Team ENDSPIEL
The Optimistic Scenario
Industries
11
Source: Case data, ExpertRA
0%14%28%
-4%21%
45%
FMCG
Manufacturing
Metallurgy
TransportTMT
Government
Finance institutions
Oil&Gas
Competitors’ Power
Growth Rate
Size represents market shareSelected industries
Team ENDSPIEL
The Optimistic Scenario
Practices in industries
12
Source: Case data, ExpertRA
Manufacturing Transport Energy Government Finance institutions Oil&Gas0%
20%
40%
60%
80%
100%
13% 15%11% 8%
20%
10%
14%18%
14%12%
15%
11%
30%
36%
40% 50%
HR
Tax & Legal
Organization
IT integration
IT management
Operations
Strategy
Financial consulting
Team ENDSPIEL
The Optimistic Scenario
CIS
13
Kazakhstan> Government (sustain)
> Oil&Gas
> Energy
> Mining
> Agriculture
> Finance (Troika Dialog)
Ukraine> Finance (Troika Dialog)
> Agriculture
Agriculture7.8
Mining6.2
Reprocessing22.4
Energy & gas3.6
Development4
Retail15.7
Transport10.5
Education5.7
Healthcare3.5
Other25GDP (Ukraine), %
Team ENDSPIEL
The Optimistic Scenario
Private Equity Fund will bring in an income of $45m* by 2016
14
5-10 Firms
$200 m
$90m$2000
m
2016
Consulting
$100m
$145m
~10% share
$1000 m
$ 145m will be returned to Sberbank, $ 10m – to the partners
Investment: 10-20% in small- and medium-sized companies (value $50-100 M) in FMCG, manufacturing, insurance
growth
Team ENDSPIEL
The Optimistic Scenario
Staffing. Salary. Structure.
15
Salary + Bonus($1000 Per month)
30 + 11
15 + 8
11 + 5,7
9 + 3,5
6 + 2,5
5 + 1,7
2,5
30Analyst
22Consultant
11Manager
4Director
5Jun. partner
25Administrative staff
90Analyst
33Consultant
15Senior consultant
33Manager
15Director
12Jun. partner
75Administrative staff
2011
2016
7Partner
10Partner
+MBA16
Partner
Junior Partner
Director
Manager
Senior consultant
Consultant
Analyst
Team ENDSPIEL
The Optimistic Scenario
Staffing sources
15
Hire 394 employees by 5 yearsTotal Hiring expenses $20,6 m for 5 years ($52400 per 1)
20%20%60%
Partners and Junior partners
IndustryIGOwn 31%
28%42%
Directors & Managers
IndustryIGOwn
29%18%
54%
Managers
IndustryIGOwn
27%7%
67%
Analysts
IndustryIGGraduates
Team ENDSPIEL
The Optimistic Scenario
Saint-Petersburg office
17
Source: Case data, ExpertRA
>Staff ~100
>Rental price of office is up to 2 times lower
18%
Total Consulting Revenue Breakdown in Russia, %
MoscowSaint PetersburgSiberiaPrivolzskyi FDCentralOther
Team ENDSPIEL
The Pessimistic Scenario
Business value increase by 2016
18
Value
New projects
Oil&Gas + Energy
Government
Finance
+$15m
+$10m
+$10m
+$35m
M&A+$15m
We will increase the SPG value to $70m by 2016
+$50m
Team ENDSPIEL
The Pessimistic Scenario
Implementation plan
19
2012 2013 2014 2015 2016
MARKETING
KAZAKHSTAN
CONCENTRATE on GOVERNMENT, FINANCE and OIL&GAS
BUY an IT-CONSULTANT
ACQUIRING NEW CLIENTS through SBERBANK GROUP
Team ENDSPIEL
The Pessimistic Scenario
Industries
20
Source: Case data, ExpertRA
3%15%27%
-34%3%
40%
FMCG
Manufacturing
Metallurgy
TransportTMT
Government
Finance institutions
Oil&Gas
Competitors’ power
Growth Rate
Size represents market shareSelected industries
Team ENDSPIEL
The Pessimistic Scenario
Practices in industries
21
Source: Case data, ExpertRA
Manufacturing Transport Energy Government Finance institutions Oil&Gas0%
20%
40%
60%
80%
100%
13% 15%11% 8%
20%
10%
14%18%
14%12%
15%
11%
30%
36%
40% 50%
11%
7%9%
27%
18%
7%
HR
Tax & Legal
Organization
IT integration
IT management
Operations
Strategy
Financial consulting
Team ENDSPIEL
The Pessimistic Scenario
M&A
22
~$10mStaff 180
IT - management IT - integration
60% revenue 40% staff 40% revenue 60% staff
Sell to
Fire50%
Stay50%
Staff (72)
Accenture72%
Own28%
New staff (18)
or
Team ENDSPIEL
The Pessimistic Scenario
Check list
23
Achieve for quadruple growth
Optimistic
PE F
und
Oil&
Gas
Man
ufac
turin
g
FMCG
UA &
KZ
Diversified Growth
Pessimistic
IT-m
anag
em.
prac
tice
Oil&
Gas
Gove
rnm
ent
Fina
nce
M &
A
Artificial Growth
Team ENDSPIEL 24
That’s it.Questions, please.
Team ENDSPIEL 25
Appendix
Team ENDSPIEL 26
1) Possible organizational culture barriers2) Problems with finding:
a) projectb) qualified personalc) money
3) Political situation
4) Uncertainty with crisis 20125) Absence of forecasted money return6) Troika’s reluctance of cooperation7) Absence of adjusted PEF – system8) Evaluation of benefits from selling IT - integrator
Probability
Effectslow
low
medium high
medium
high
8 5
3 4
7
2b6
2a2c
1
The Risks