Infrastructure
Identifying opportunities for geographical expansion of a steel product manufacturing company
22 May 2020
Context
- Client description: A leading EPC steel product manufacturing services player
- Opportunity: The client wanted to expand its business to different countries and as part of this wanted to understand the relative attractiveness of countries. The mandate was to have a broad look at the major countries of the world and shortlist a few countries based on different parameters, and conduct a detailed assessment of one country to assess its feasibility for the client.
Our Approach
We used a three-step approach to find the list of attractive countries.
1.1 Macro-level attractiveness:
- Identified the top 100 countries by GDP across the world and identified the fundamental attractiveness of the countries on parameters related to macroeconomic outlook, political stability etc.
- Additionally, mapped these countries according to the contribution of the construction sector to GVA
1.2 Sector attractiveness
- The countries shortlisted on the basis of their fundamental attractiveness were assessed for their steel production and consumption, and those scoring high on these parameters were finally shortlisted
- For the shortlisted countries, the relevant steel consumption (fabricated steel) was identified
1.3 Access attractiveness
- The countries were also marked on parameters of ‘Ease of winning’ and ‘Quality of market’
- Finally, the top 5 countries having the highest rank on the basis of these parameters were identified
2. Selected 1 of the shortlisted countries and conducted a deep dive in the sector by engaging with sector and country experts to develop the detailed value chain of fabricated steel and identifying the key pain points of stakeholders across the value chain
3. Assessed the unit economics of small-scale and large-scale steel fabricators to understand their profitability and assess support required by market players
4. Identified key players in the sector and assessed their current performance to identify potential partnership/acquisition targets
Key Insights / Outcomes
Mapped the overall attractiveness of the countries across relevant parameters
Provided the client a deep understanding of the complete steel value chain in one country
Praxis Value Delivered
- The market shortlisting plan enabled the client to shortlist the set of countries where it should focus on for expansion
- Enabled client to make a go-no go investment decision by providing a clear picture of the value chain and the key pain points across the value chain in the one shortlisted country
- Developed a framework and playbook for detailed assessment of fabricated steel market in a country and identify potential companies for partnership / acquisition
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