Turnaround strategy for underperforming service line
The Problem: Underperforming service line within a European Diagnostics Services Provider
Our client, a market-leading Diagnostics Services provider, had suffered a sharp performance decline of one of its service lines within the UK. It asked Credo to identify the key cause of the performance decline, and provide strategic recommendations as to the actions required in light of this decline.
Our Approach: Internal profitability analysis matched to key market developments
The work concentrated on two key areas; breaking down performance to a contract and asset level, and analysing key market dynamics to project future volume and pricing movements within the market.
The profitability analysis required close working with Senior Finance personnel to gather the required data. Credo then used this data to build a highly detailed financial model that allowed revenues and costs, both direct and indirect, to be allocated down to a contract by contract level. This required a deep understanding of the operational processes of the business. This created a strong understanding of where the service line was suffering from financial performance.
We also undertook market testing, to identify key current dynamics, and allowed us to model future scenarios around demand and pricing of the service.
Combining these workstreams, Credo made bold strategic recommendations on the shape and positioning of the service line, which required a substantial re-organisation within the client, and the cessation of some contract activity that had been identified as loss-making.
The Result: Successful reorganisation which reversed the performance decline
Off the back of Credo’s recommendations, the client undertook a significant rationalisation of its service line to bring the shape of the organisation in-line with the market conditions it was facing.
As well as reducing the cost base, this also allowed the business to be more strategic around its business development activities, and, as a result, benefiting from improved pricing across, causing increased contract profitability.