This client manufactures products used in the home building industry. The company was operating in Japan with the same distributor for several years until the distributor began to manufacture a competing product. At that point the company opened their own office in Tokyo, starting with two sales people recruited from the distributor.
The company was the leading supplier in its product group worldwide, but sales in Japan were very small relative to the size of the market (which is in fact the largest housing market in the world). Although management spent considerable time working with their Japanese office over a three-year period, they were frustrated with low sales and high expenses compared to agreed-upon budgets.
During those three years the company's international auditing firm reported business practices that were not in compliance with Japanese business code, but alternatives were not presented and changes were not made. The monthly financial statements did not provide enough detail to uncover problem areas and no variance reports were provided. Two to three visits each year to Tokyo from the home office management surfaced some issues, but the lack of a comprehensive view prevented meaningful change and losses continued.
At this time, HTM took over the management of this company. Within the first two months, HTM's experienced staff and modern, computer-based business tools provided the company’s home office with a detailed analysis of sales activity, including pricing and margins by product and customer. A detailed, cash-based accounting system was started that provided enhanced visibility and complete control over finances.
In the fourth month, a comprehensive monthly report was initiated that measured performance in the problem areas delineated by HTM’s research. The report also covered such critical areas as market conditions and competitive issues. Ultimately, it gave the home office the visibility that allowed corrective actions to be taken. In nine months the company was profitable.
Once the company was rationalized and made profitable, a marketing program was started to build market share and to increase margins.
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