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Strategy and Management

Firms will need to become more flexible in their management style and more strategic in their

thinking. They will need to develop a greater focus on what is happening in the market around

them, whilst also looking at the larger picture in order to stay ahead of the curve or become market

leaders in their locality. The cumbersome partnership decision-making process will need to change

to move with the times, and in many cases it already has. Management by committee is both time

consuming and labour intensive, and this is an issue that requires serious consideration.

Respondents tended to agree that, for most firms, there is a choice to be made about the size of the

firm, its strategic direction and approach to management.

In order to compete with new, low-cost entrants, economies of scale will be crucial. In lower-margin

areas, volume is the key to securing sufficient profits. Buying groups, consolidated back offices and

joint branding may well be one answer for smaller incumbents. The larger pre-existing firms will

most likely be able to operate at sufficient scale to take on the new factory-style operations, but

should ask themselves if this is the most profitable avenue for them.

Even in the middle tier of the market, critical mass could be an important factor. Many firms are

looking to expand by merger or acquisition, or even as the target of a takeover, in order to secure a

greater degree of financial security. Some participants highlighted the availability of bank credit as a

potential limiting factor. Our experience is that banks are prepared to support strong lending

propositions backed by solid business cases, but this has not been the experience of all respondents.

The other danger, of course, is of taking on too great a level of debt to fund expansion and, as Barry

Wilkinson asserts, “any firm seeking growth, whether organic or by merger, should ensure that its

balance sheet remains strong. Debt and equity must not become misbalanced”

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