Case study – to decide whether to bid or no-bid
write a report of my recommendation to the management, whether to bid or not to bid, using investment evaluation techniques and business reasoning.
Prepare to present to your senior management the key decisions to be made, as to whether or not to bid for the opportunity described below. You should bring hard copies of any presentation with you and prepare to talk for around 10 minutes before taking questions on your presentation.
The Customer – AB Managed Services (ABMS)
ABMS is a global managed services company with locations in over 50 countries worldwide. According to its latest company report it has net revenues of €19.7 Billion for Fiscal 2013 (12 months ending 31st March 2013) which is a reduction of 10% on the previous year’s revenue figures. It currently has over 170,000 employees (4400 of them at senior executive grade) based in over 150 cities worldwide (35,000 in India alone). Recent press reports have indicated major changes in the companies focus with over 20,000 jobs being lost in Europe and the USA but expansion taking place in APAC of over 10,000 new jobs.
The CEO, Desmond White, has reiterated the company’s focus of working to control costs wherever possible whilst at the same time seizing new opportunities for growing revenues in the new emerging markets.
The customer currently has over 27,000 connections, 10,489 with Vodafone OpCos, 5,354 with Vodafone Partners and Affiliates (A&Ps) with the remaining 11,000+ connections currently lying with our competitors. They are unsure of the competitor figures because of poor management information in this area. Current revenue generation is €7.8 million with OpCos, €3.4 million with A&Ps and approximately €6 million with the competition.
At present Vodafone spends over €150 million with ABMS for services provided by them. The current opportunity is for a two country bid UK and Germany which are the two countries likely to face the majority of job losses in the next year. (Reducing from 14,560 down to 11,620).
The current base and revenues in the two countries are as follows
Country Number of
connections Total Revenue Monthly ARPU Connections with
the Competition Competition
UK 4589 €2,900,000 €53 1238 €742,000
Germany 2345 €1,600,000 €57 654 €392,400
We have been asked to bid for our existing connection base with a reduction of 20%, however, ABMS have informed the Global Account Manager that the expect a reduction in spend of over 40% in the next two years, however, the P&L produced by your commercial team is showing a negative EBITDA of -5% if we achieve their targets.
In recent months there has been a growth in Data connections BlackBerry and Mobile Connect Cards (MCC) both of which generate higher revenues per user than voice connections. The customer believes this trend will continue as they rationalise their current portfolio of properties across the globe with a move to more flexible working practices, remote working, hot-desking etc. However, the customer in the present climate will not commit to any growth