Entering any new market – especially such "specific" ones like for instance former Soviet Union states or Sub-Saharan Africa – usually requires adequate change in corporate organization, to effectively response new challenges.

We assist our clients in development of such corporate structure that best fits the requirements of doing business in various markets, as well as in identification of the required restructuring steps. Consulting during the restructuring process is also our business – with emphasis in keeping balance between the new requirements (due to work in emerging economies), easiness of the restructuring procedures, and compatibility with existing corporate culture and principles.

Case study

Challenge: A producer of hi-tech medical equipment made sales in the CEE through its Western European HQ and few local dealers. At some stage the sales in Russia became important source of the corporate revenues – driven with the large governmental funding (so-called "hi-tech healthcare" national project). A producer launched Russia’s office, that managed the local deals there, but at some point it became clear the corporate management system still works within its traditional framework (assuming the necessity to agree most of the decisions with the HQ). By that time the sales in few other FSU states also increased (in particular in Kazakhstan and Azerbaijan). ICG was hired to assist in the corporate restructuring in Russia and the Caspian region.

Approach: Decision-making procedures (that previously required to be agreed with the HQ) were classified by two independent criteria: a) importance of time factor for local competitiveness (in particular a sub-group of decisions that require very quick reaction was identified – assuming it’d be better to delegate such decisions in the local level); and b) possibility of the decision to negatively impact the corporate positions (in particular a sub-group of “critical” decision processes was identified, such as making corporate new debts; the HQ was interested in control over such decisions). By the results of the work the management processes were classified in: a) requiring local management and not negatively impacting the corporate positions – such processes were transferred to the local level (with post-reporting to HQ); b) not requiring local management and not negatively impacting the corporate positions – such processes also were transferred to the local level (with post-reporting to HQ); c) not requiring local management but negatively impacting the corporate positions – HQ still controls such processes; and the most problematic group d) requiring local management but negatively impacting the corporate positions (i.e. requiring HQ level of management). After a series of discussions the last group of management procedures was shrunk – by excluding few processes which’s status was revised (in few cases HQ agreed they were not so critical). For the rest of management processes in this group the new decision-making procedures were adopted – that assumed HQ involvement with decrease in time required for decision (to support the local competitiveness). Based on that input the management organization was re-designed. 

Value: The Russian subsidiary was launched – with offices in few key cities as well as in Kazakhstan and Azerbaijan. Management organization in HQ was changed – a) reducing the levels previously responsible for the Russian/Caspian sales; b) changes in internal processes to decrease decision-making time (for decisions related to the Russian market).