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In France, size differentiates VSEs (very small enterprises or businesses: less than 10 employees), SMEs (small or medium enterprises or businesses: less than 250 employees and a turnover of less than 50 million euros), and medium-sized enterprise (between 250 and 4,999 employees and a turnover not exceeding 1.5 billion euros). Beyond that, it is the domain of very large companies and multinationals.
A company’s headquarters has certain functions: Fayolism is still relevant! These functions are often shown by a company’s organizational structure. This generally includes some or all of the following entities:
– a headquarters that brings together the president, managing director, executive management, communication, human resources department (HRD), financial department (taxes, treasury), planning department (strategy), legal agreements, research department, industrial management, engineering management, sales management, marketing management, project director(s), safety and security management, branch managers, SBU1 manager(s), purchasing department, administration (accounting, payroll, IT), country delegate(s)2;
1 – one or more production facilities (plants, workshops);
2 – distribution (logistics, warehouses, etc.);
3 – research means (laboratories, test means);
4 – technical services, after-sales service, application laboratories;
5 – commercial services (sales reps, etc.);
6 – subsidiaries (national, foreign);
7 – JVs (joint ventures).
A small to medium-sized company that includes only one site (headquarters + plant) will have all these functions distributed between a few individuals donning multiple hats:
1 – so-called corporate functions are called on staff (legal agreements, safety, etc.) when they support so-called on line functions such as manufacturing. We can note the importance that communication has taken over the years;
2 – in general, an executive committee (board) of a few people, including the president and the general management, takes the essential decisions, the directions that will be implemented by the lower levels;
3 – the HRD is often the first contact for anyone looking to join a company;
4 – as we will see below, the digital revolution is creating new roles; Data Officer, Data Scientist. These roles may report to the president, to a board member or to the industrial management. It all depends on the importance that the company gives this new function at a given time.
Start-ups (short for start-up companies) work on something new; an innovative object, a new drug that leaves hope for big profits when research comes to an end. They look for funding to survive. Another term has appeared recently, mainly in the digital field: that of a “unicorn”, a company whose market capitalization reaches one billion dollars. The famous Silicon Valley saw the prodigious birth of these megacompanies, launched in a garage or a student room.
1.4. Industrial strategy: the business plan
Any business must have a long-term vision, to plan for the future. It must examine and review its strategy, which can simply be defined as an objective to be achieved, and determine the related means. In what follows, we will limit ourselves to the industrial strategy, which amounts to examining the adequacy between the products that the company has at a given time and the needs of the customers, which can be very variable from country to country.
A product is born, lives, and dies, as shown in Figure 1.2a. The turnover of a company, and therefore its profit, is composed, at a given moment, of products that are at different stages of their existence, as shown in Figure 1.2b. New products in the process of being launched sometimes cost money instead of bringing in money, because the related commercial costs (product managers, advertising, canvassing) are not covered by their contribution margin, as these products are manufactured in too small a volume. For the same reasons, end-of-life products are no longer competitive: they have found replacements, either in the company that created them, or in the competition; their selling prices tend to fall.
In general, a company has flagship products from which it hopes to “benefit” for a long time. Pharmaceutical companies dream of blockbusters whose turnover exceeds one billion dollars. The vitality of a company, the efficiency of its research, can be measured by the percentage of profit brought by products that are a few years old, and are therefore young products. Often, financial analysts try to assess the products that the company has in the “pipeline”.
Figure 1.2. a) Product life cycle; b) company turnover versus products
1.4.1. Industrial strategy of the company
The analysis of the company’s industrial strategy is based on two elements:
1 – business analysis of the product/market couple as described in Chapter 2;
2 – evaluation of the industrial facility.
Figure 1.3. Principle of strategic analysis of a company (technical aspects). Establishing the strategic plan
1.4.1.1. Business analysis
Business is king! France’s Trente Glorieuses (The Glorious Thirty, 1945-1975), when simply producing was enough, seems a long time ago; products were sure to sell, since there was a scarcity at the time. It was a period of a production economy. Today, consumers find everything they want. Competition has full hold: this is the market economy.
The commercial aspects of a product can be evaluated for each sector in all the countries where it is sold. A biopolymer like xanthan gum fits into several businesses: food, cosmetics, paints, or even drilling fluid, where it is used for its texture, thickening and gelling properties.
Business issues are numerous:
1 – market aspects:– is the product in the markets in sufficient quantities (penetration rate), does it cover the demand, are there other markets?– should it be taken to other countries?
2 – technical aspects:– does the product have the expected functionalities?– is it pure enough or too pure?– is it well formulated, well-conditioned, well packaged? What about its logistics?– does its cost price bring acceptable margins or can it not be sold because it is too expensive when it comes out of the factory?
1.4.1.2. Analysis of the industrial facility
The industry and manufacturing are at the service of the business; that is their raison d’être. In the chapters that follow, we will lay the groundwork for evaluating the processes and the plants that implement them. At this point, we will limit ourselves to substantive questions:
1 – is the plant a good one? In other words, how does it compare