Case Study - Manufacturing Market Strategy

Client Situation

Our client had excess capacity at their paper mill which was being exported and required higher returns than could be realised in the export market. The Australian cardboard box market appeared attractive with higher margins than the export market. The market is dominated by two large and aggressive incumbents.

Management was divided on how to best enter the box market (if at all) and this has resulted in inaction. Pacific Strategy was engaged to formulate an effective market entry strategy and to align management to deliver this strategy.

Approach

Pacific Strategy used the gaming approach to generate a consensus decision. A team of three Pacific Strategy consultants and two client team members developed the strategy over a 14 week period, including:

• Developed a comprehensive fact base to establish a common understanding amongst decision makers
• Identified strategic options available to client and each participant
• Developed a comprehensive model to simulate outcomes for all industry players for all combinations of strategic options
• Facilitated ‘Gaming' workshops with management teams representing each player. Played multiple rounds of game to give an understanding of competitive dynamics and outcomes of various strategies
• Conducted a debriefing session to capture learnings from the gaming workshop and additional detailed modelling work to agree the best way forward

Impact

The gaming approach was ideal to assist the client in reaching a consensus decision where traditional analytical techniques had failed. The project delivered:

• Deep understanding of the actions available, likely competitor responses and the risks faced by each player by allowing decision makers to "live through" multiple scenarios in a safe way
• Clear alignment of decision makers by allowing them to live through various scenarios and observe the impact of potential strategies first hand. Previous attempts had failed due to the strongly held, disparate management views
• A sense of urgency was created as the nature of the opportunity and the conditions for success / failure were clearly identified
• A clear strategy was developed based on understanding of likely competitor responses and the "tipping points" which could materially change the potential outcome

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