Strategic moves
Companies keep making the same few moves: buy a supplier, merge with a rival, go direct, raise prices, sell a division. Know what each move does to the numbers, when it creates value and when it destroys it, and you will always have something specific and correct to say.
Moves are answers, so start from the question
Business acumen is knowing what a move does to the numbers. Every page below shows why companies make the move, when it creates value and when it destroys it, the numbers to check, a worked example that adds up, real examples from Europe, the Middle East, India, Southeast Asia and the United States, and how to recommend it in a case. None of them is a checklist to recite.
- Pin the question first. A move is an answer, not a starting point: "should we buy our supplier?" is a decision with a number behind it.
- Write the maths of the goal for this move: what it adds to profit each year, what capital it ties up, and the return on that capital against what the money costs.
- Use the move page for what to check and what usually goes wrong, then find the two or three facts that decide it and say so what.
Grow
How do we get bigger: more customers, more places, more things to sell?
- Horizontal integration and consolidationBuying or merging with a rival that does the same thing as you.Works when: When fixed costs are big, the two firms overlap enough to cut real costs, and the price paid leaves room for the savings.
- Related and unrelated diversificationMoving into a new line of business, close to what you do or far from it.Works when: When the new business shares real assets with the old one: customers, technology, a brand, a network or know-how.
- Market entry modesChoosing how to enter a new market: on your own, with a partner, or by buying in.Works when: When the mode fits what you lack: buy for speed, partner for local knowledge or licences, build when your edge cannot be shared.
- Geographic expansionTaking a business that works at home into new cities, regions or countries.Works when: When the format is proven, the new market has the same customer need, and you can reach enough scale to spread the fixed costs.
- Platform or marketplace moveOpening your store, app or network to other sellers and taking a cut of each sale.Works when: When you already have lots of buyers (or sellers) to attract the other side, and you can keep quality and trust high.
- Capacity expansionAdding plants, aircraft, stores, data centres or other capacity to sell more.Works when: When demand is clearly ahead of supply, your plants are already full, and the industry is not adding the same capacity at the same time.
- Strategic partnerships and alliancesWorking with another company under a contract to reach customers, share costs or combine skills.Works when: When each side brings something the other lacks, gains are shared fairly, and the terms say how it ends.
Capture and defend margin
How do we keep more of each sale and hold on to our customers?
- Backward vertical integrationOwning or making an input you used to buy from a supplier.Works when: When the input is scarce or decides quality, the supplier earns a fat margin, and you will keep the plant full.
- Forward vertical integrationTaking over a step closer to the customer: distribution, retail, delivery or processing.Works when: When middlemen keep a fat margin, the customer experience decides who wins, and you have the volume to run the channel well.
- Channel shift and going direct to consumerSelling straight to customers (online or in your own stores) instead of through retailers.Works when: When customers seek out the brand, buy again, and the cost of winning each one stays below the margin you gain.
- Bundling and unbundlingSelling products together for one price, or splitting one price into separate charges.Works when: Bundle when parts cost little to add and customers stay longer; unbundle when customers differ a lot in what they want to pay for.
- Premiumisation and trading downShifting sales toward dearer, higher margin products, or offering cheaper ones when customers trade down.Works when: When customers will pay more for a real difference, and the premium line earns enough per unit to repay its marketing.
- Pricing movesChanging what you charge, how often, and on what basis.Works when: When customers value the product more than its price, rivals follow or cannot undercut, and you know how many customers will leave.
- Subscription and recurring revenue shiftMoving from one-off sales to customers paying regularly for access.Works when: When customers use the product often, the company keeps improving it, and churn stays low.
Cut cost
How do we deliver the same for less money and less capital?
- Make or buy, and outsourcingDeciding which activities to do yourself and which to pay a specialist for.Works when: When a specialist has real scale or skill you lack, the activity is not what customers choose you for, and the spec is easy to write down.
- Cost restructuringLowering the cost base for good by changing how and where the work is done.Works when: When costs are high against peers for clear reasons (too many sites, scattered buying, manual work) and the one-off cost pays back in two or three years.
- Asset-light shiftSelling or not buying the heavy assets, and earning fees for running or branding them instead.Works when: When the assets earn a low return, investors will pay a good price for them, and the brand or system is what customers really pay for.
Reshape the company
Which businesses should we own, and how do we change the way we work?
- Divestiture and spin-offSelling a business, or splitting it off as its own company.Works when: When the businesses share little, need different strategies or investors, and the parts are clearly worth more apart.
- AI and digital adoptionUsing software, data and AI to do work faster, cheaper or better.Works when: When the work is high volume and repeated, the data is good, and the company changes the process, not just adds a tool.
- Sustainability and decarbonisation investmentSpending to cut emissions or move into low-carbon products.Works when: When carbon prices, regulation or customers reward lower emissions, and subsidies or cheaper technology close the cost gap.