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1、BaoSteelBaoSteelBaoSteel GroupGroupGroup . A Case Study of KPMG Consultings Enterprise Value Creation Framework By: Marcy Jill Strauss High Tech Lead, Enterprise Value Creation KPMG Consulting ContentsContentsContents . Executive Summary3 Introduction4 Methodology and Analysis5 Findings.7 Results.10
2、 E x e c u t i v e S u m m a r y Yichang, a subsidiary of the $8 billion Chinese steel behemoth BaoSteel Group, came to KPMG Consulting to understand the changes required to be globally competitive, now that China has been admitted into the World Trade Organization (WTO). The client selected KPMG Co
3、nsultings Enterprise Value Creation framework that has been known to create value for companies, and has earned favorable acclaim from external analysts at Goldman Sachs, Aberdeen Group and AMR, among others. Through the Enterprise Value Creation (EVC) framework, the team was able to understand Yich
4、angs primary problems, and to develop solutions to address these issues. From the beginning, a high level of executive participation helped the team to hone in on the process areas of focus. They included: 1.New Product Development 2.Marketing, Market Analysis, Product Pricing 3.Sales, Customer Serv
5、ice, Channel Management, Customer Solution Development 4.Financial and Managerial Accounting, Cost Controls 5.Performance Management The team relied on interviews, management reports, quantitative analysis, benchmarking, competitive intelligence and best practice information to ascertain and documen
6、t the current state of Yichangs processes and operational efficiency. A Scorecard and Value Impact Analysis were used to create medium and long-term target metrics. After two client offsite meetings to gather feedback and to develop consensus within the management team, a roadmap was developed that
7、prioritized and laid out future initiatives. The scorecard metrics were directly linked to the fulfillment of the roadmap projects so ongoing measurement could be applied to gauge progress. The impact of process changes were also linked to BaoSteels financial statements. In ten weeks KPMG Consulting
8、s work positioned the client to: Achieve consensus on the current state issues Distinguish the areas of greatest opportunity Agree on remedies to current problems Mobilize efforts to become more efficient and competitive Systematically measure and achieve the desired results KPMG Consultings primary
9、 sponsor, the CFO, believes the EVC project was pivotal in the companys ability to be successful as the implications of Chinas acceptance into the World Trade Organization are realized. I n t r o d u c t i o n Chinas economy has been expanding at an annual rate of seven percent over the past three y
10、ears. The GDP growth of Shanghai has approached ten percent during that same period. This has been fueled by Chinas entry into the World Trade Organization, as well as the increased globalization of trade and the development of an educated, tech-savvy workforce. While Chinas steel market has become
11、the worlds largest, with annual demand estimated to grow by 50 million tons to more than 182 million tons by 2005, industry expansion plans fall far short of these numbers. Only 27 million additional tons of capacity are forecast to be built, forcing the existing plants to either become more efficie
12、nt quickly, or to leave a lot of demand on the table. Demand for steel in the US, Europe and Japan has been sluggish while China has seen growth of over 400% since 1980. Consuming over 130 million toms in 2000, China is now the biggest steel market in the world. China consumed more than 130 million
13、tons1 of steel in 2000, surpassing the United States to become the biggest steel market in the world. Three percent of the nations $1Trillion gross domestic product comes from steel and over three million people are employed in the industry. Jonathan Woetzel, a director in McKinsey & Cos Shanghai of
14、fice believes that the “countrys steel producers are in poor shape to take advantage of their homelands boom. Fragmented, uncompetitive, unprofitable, heavily in debt, and geared to the wrong products, they are losing out to imports.” BaoSteel Yichang, like most of Chinas steel industry, has focused
15、 primarily on producing steel rather than on satisfying customers. The company tries to keep the mill running at optimal capacity to maximize their Return On Assets instead of focusing on increasing profit and customer satisfaction. Many operational improvements and mind-set changes, such as managin
16、g processes instead of managing siloed functions, are required for real efficiency gains to be felt. Yichang, a subsidiary of the $8 billion steel behemoth BaoSteel Group, came to KPMG Consulting to understand the many changes it would have to make to compete in the global market effectively. The client wanted an actionable roadmap they could embed in their immediate operating plans. They viewed the
