Profit Improvement: Case Study

Client Situation

A leading environmental services company, which had grown through acquisition, was struggling to realize synergies across its various divisions and was under growing pressure from shareholders to significantly improve profitability. The Company’s various divisions provided separate, but complementary, product and service offerings such as wastewater management, facility maintenance and environmental consulting.

Senior management asked Alliance to assist it in evaluating strategic options to improve profitability ranging from organizational restructuring and downsizing to sale of non-core assets.

Alliance Approach

The strategy team’s membership included subject matter experts from each of the three main divisions as well as executive leadership. The team’s composition was designed to incorporate the best minds in the organization as well as lay the groundwork for rapid implementation of the eventual strategy recommendations. Alliance structured the team’s work around the following areas:

Through this process, the team was able to quantify and validate the following insights:

  • Each division’s attempt to maximize its own financial performance was damaging the ability of the overall company to maximize its profit potential (e.g., inconsistent pricing, multiple sales contact points)
  • Significant redundancy of select overhead functions existed (e.g., finance, IT, contract administration)
  • Certain non-core and low margin businesses were consuming a disproportionate amount of corporate resources and were a management distraction

These insights led the team to recommend the following:

  • Complete focus on core water and wastewater sectors and divest remaining product lines
  • Establish full-service provider solution model and target highly profitable “mega-contract” customer segment
  • Consolidate the three divisions into one operating structure and eliminate overlapping functions
  • Actively acquire, develop or partner to add new services in growing sectors

Results and Impact

Alliance guided the client through implementation of the team’s recommendation over the next several months. As a result of the business refocus and organizational restructuring, the Company was successful at winning several large contracts from municipalities and significantly growing market share and improving overall profitability.