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A manufacturing company can apply the Active Resource Reallocation approach by strategically shifting its resources across different areas of its operations. This could involve reallocating capital across different operating segments, business units, customer groups, and geographies. For instance, if a certain business unit is underperforming, the company might decide to cut its budget and reallocate those funds to a more profitable unit. Similarly, if the company identifies a new market opportunity in a different geography, it might decide to shift resources there. This approach requires careful planning and dynamic decision-making, with the aim of creating more value by making better use of the company's resources.
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Programmatic M&A: The most effective style is executing at least one M&A per year that amounts to 30% of market cap in ten years with no deal being more than 30% of market cap. M&A requires skills that are built over time and practice. Infrequent, large moves affect value creation. Active Resource Reallocation: This move requires reallocating capital across industries, operating segments, business units, customer groups, and geographies. Plan ahead by handing out cuts to create space in the budget for reallocation. Dynamic reallocation of shifting over 50% capital expenditure across business units over ten years can create 50% more value. Strong Capital Programs: Capital investment becomes a lever when an organization's capital expenditure to sales ratio crosses 1.7 times the industry median for ten years. Successful capital expenditure requires managing a pipeline of near term low-risk options, medium-risk medium term options and some high-risk long term options. This requires discip...
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McKinsey & Co. partners wrote this book. How do you effectively turn the promises of strategy meetings into reality? How can you manage social dynamic...
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