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From Start-up to Operational Efficiency

From Start-up to Operational Efficiency The combination of Fiat, Chrysler and Peugeot group is creating a new holding company which is looking to merge the assets all these M&A bankers and M&A strategy consultants talk about—efficiency, synergies, etc. By default, most mergers fail. But this merger is interesting because given the size of the asset base—the millions of cars made, the number of factories around the world—this is going to come down to operational efficiency, which is very hard to achieve. Here’s the insight, which SLIDES members can see in the operation strategy study. Going from 0% to a 90% increase in operational efficiency is obviously something to celebrate, but you need to ask yourself: Given your competition, given where you want to compete, given the price point you want to compete at, what is the operational efficiency you have to achieve? [bctt tweet="Given your competition, given where you want to compete, given the price point you want to compete at, what is the operational efficiency you have to achieve?" username=""] It's not difficult to know this. Remember the cost-volume-profit curve. The bigger your fixed cost base relative to your variable cost base, you need much more volume, but your price typically goes down…

From Start-up to Operational Efficiency The combination of Fiat, Chrysler and Peugeot group is creating a new holding company which is looking to merge the assets all these M&A bankers and M&A strategy consultants talk about—efficiency, synergies, etc. By default, most mergers fail. But this merger is interesting because given the size of the asset base—the millions of cars made, the number of factories around the world—this is going to come down to operational efficiency, which is very hard to achieve. Here’s the insight, which SLIDES members can see in the operation strategy study. Going from 0% to a 90%…

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