Designing Disruption 1 - mbacasecomp.com · Designing Disruption Haerin Shin, Adam Schwarz, Jaewon...
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Designing DisruptionHaerin Shin, Adam Schwarz, Jaewon Lee, Jason Han
KAIST College of Business, KCB
1/10/2019
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Executive Summary
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Issue Recommendation Cost
How will digital transformation
affect our business?
Understand and optimize customer needs in
order to prepare for future of disruption £900 Million
How should our design
engineering business change it’s
business model?
Acquire digital platform to help fuel
disruption Embrace the change £470 Million
How do we fund digital
investments?
Sell shares and raise share capital. Create
preferred and common stocks £690 Million
What should we tell investors? Vision 2020 will have to be put on hold if the
company wishes to remain sustainable into
the future£420 Million
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Elevator Pitch
We designing the business
1) In business modelFocus on customer need& Platform
2) Getting money form investorsSelling stock& managing systems more in diverse field
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Disruption has come
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Firms
Cluster
Investment
Geo center
of gravity
1,000 2,000
3 sites Constellation
80% increased
N. America 75% 80%
From 2017 to 2018, Construction technology landscape
• Software
(Material management, Drawing)
• Human resource platform
• Technology transfer
• Drone and 3D printing
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What can we deliver?
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What Customer wants
• Safe and well-managed project
• No additional cost by bad design
• No additional cost by delay
• Certified and well experienced resources
• Transparent communication
Core value
• Safety
• Integrity
• Collaboration
• Innovation
Excellent service, Authorized technology, Productivity
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Business Portfolio
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Profitable
Volume
EDPM
InfrastructureOil and Gas
Mining
Nuclear
Clean Power
Infrastructure has long term contract
Profit (EBITDA margin) to be
improved
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Decision matrix
Goal Feasibility Cost Sustainability
Acquire more engineering
technology by acquisitionUnfav Unfav Unfav Fav
Go hard for restructuring Unfav Fav Fav Unfav
Invest more on R&D Fav Unfav Unfav Fav
Discard non-profitable business Unfav Fav Fav Unfav
Embrace disruption Fav Fav Fav Fav
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Financial Snapshot
• 2018 Projected Revenue for SNC-Lavalin = ~ ₤10 Billion
• 2018 Expected Earnings Per Share = ₤3.60-₤3.85
• Atkins Acquisitions = ₤2.1 Billion• Pension Deficit = ₤474 Million
• SNC-Lavalin took ₤870 Million loan to fund acquisition
• Company inefficiencies amongst overlap of roles and responsibilities after Atkins acquisition, i.e. fixed costs too high
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Costs
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Action Cost
Acquire digital start-ups to provide propel and command the
engineer-to-client disruption £900 Million
Start New Business Division within SNC-Lavalin focused
around pushing adoption of technology in low level industries
Repurpose Atkins Employees£470 Million
Continued support of start-ups and disrupters through 2021 £690 Million
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Increased EBIT Margins in EDPM
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2018 2019 2020 2021 2022
Legacy 11% 12% 14% 15% 18%
Our
Recommendations 12% 18% 21% 25% 28%
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Revenue Projections
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2% 1%
6%3%
9%
32%21%
26%
2018 Revenue MarketsCapital
Thermal Power
Mining and Metallurgy
Clean Power
Nuclear
EDPM
Oil & Gas
Infrastructure
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Revenue Projections
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9.1010
10.9
11.881
12.95029
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
2017 2018 2019 2020 2021
£ B
ILLIO
N
YEAR
Revenue Projections Through 2021
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Risks and Mitigations
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Risk Likelihood Damage Mitigation
Other Players and Disruptors High Medium
First to Market, Dominate IP
landscape, Embrace and
Support disruption: command!
Cyber and Data Security Medium Medium
Encryption, Firewalls, Digital
Twins, A.I.
Shareholder Revolt High Medium
Preferred Shares,
Comprehensive EPS campaign,
Board to SH communication
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Recommendation: Managed service platform
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Managed service platform
Embrace disruption
First to innovate
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Recommendation: Managed service platform
• Lower (transaction) costCustomer needs
• Freelance platforms
• Reusing their data
Current Alternative
• Cheap but unreliable
• No standardized platform
• Difficult to useDisadvantage
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Recommendation: Managed service platform
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Database
• Customer projects
• Customer behaviors
• Price
• Cost
• Skills needed
Network
• Customers
• Engineers
• Teams
• 3PP
• Suppliers
Brand
• Reliability
• Safety
• Security
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Recommendation: Managed service platform
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What it is
• SW Subscription model platform
• Connect customer & engineers
• Standardized project management system
• Risk/Transaction management
Benefits
• Balanced internal & external engineers
• Deeper pool of HR
• Less fixed cost
• New business model
• Target B2C
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Recommendation: Managed service platform
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Resource management
• Connect customer & engineers
• Certification process for engineers
• Procurement & etc
Project management
• Customers to manage their projects
• Project validation and modification
Risk management
• Transaction safety
• Capital to manage risk
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Recommendation: Managed service platform
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Technology
•Cloud
•Big data
•Machine Learning
Trend
•Aggressive M&A
•Less needs for internal engineers
•High fixed cost & debt
•Profitable growth
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Executive Summary
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Issue Recommendation Cost
How will digital transformation
affect our business?
Understand and optimize customer needs in
order to prepare for future of disruption £900 Million
How should our design
engineering business change it’s
business model?
Acquire digital platform to help fuel
disruption Embrace the change £470 Million
How do we fund digital
investments?
Sell shares and raise share capital. Create
preferred and common stocks £690 Million
What should we tell investors? Vision 2020 will have to be put on hold if the
company wishes to remain sustainable into
the future£420 Million