A large, global engineering firm had a small automotive division focused on providing CAE services to automotive OEMs and Tier 1 suppliers. This division had failed to show any substantial growth for a number of years.
Griffioen Consulting was hired to conduct a strategic assessment of the division’s strengths and weaknesses and competitive position in the North American market.
The assessment involved a comprehensive review of projects, competitor analysis, and internal interviews, as well as interviews of clients. The results from the assessment were to drive management’s decision-making about the future of the automotive division.
It became rather evident from the assessment that the automotive division’s CAE services lacked a clear competitive advantage and differentiation. Even though the quality of the work was good, the division did not stand out in any significant way from other engineering firms in a very competitive, fragmented market environment.
In addition, the division had a very small market share and lacked brand name recognition.
On a significant number of projects the automotive division served as a sub-contractor to other engineering services firms and sub-contractors. This severely reduced the firm’s visibility to the end-client and their target market.
An in-depth analysis of project revenues showed that the automotive division represented only about 1% of the global revenue of the engineering firm.
Given the extremely small market share, lack of name recognition, and that automotive CAE services was not their core business, our strategic advice was to wind down the automotive division and focus on the engineering firm’s core business. Management was not willing to accept this advice and tried to keep the automotive division going. However, a few years later, forced by the lack of growth and market conditions, the division closed.Back to Case Studies