Good questions to ask about value creation plan?

Hi guys:

If you were given a value creation plan, what are some smart /good questions to ask to assess if they are realistic? Let's say if someone says $xxx mm can be saved from logistics, what questions would you ask to see if it's realistic? Thanks!

 
Most Helpful

Here's how I would think about it from a consultant standpoint:

1) What exactly are you doing differently to achieve those savings? 2) Are others in the market doing something similar? Have they experiences similar savings? 3) What are the downsides of this? Will it impact topline revenue? 4) What would prevent you from actually achieving those savings?

 

I would also add:

1) Within what time frame do you expect these savings to happen? 2) Have competitors achieved similar savings in a similar projected time frame? 3) Will the savings be constant over time or do they need to hit critical mass slowly before kicking in? 4) Can these savings be sustained with any significant changes to the market (competitor mix, process change, regulatory changes etc.?)

 
VP in IB-M&A:
1. Why haven't you done this last year? 2. Can you explain this to me with a practical example (e.g. 1 truck or 1 shipping). How does this in practice work? Often these measures (esp logistics) only work in Excel. 3. Do you know anyone else in your industry who is doing the same?

2 is really the key one that most people don't ask for fear of sounding stupid, and that most senior partners will ask because they couldn't care less about "sounding stupid". It will most likely highlight who has a proper plan and who put it there just on excel, forced by some consultants/bankers.

1 is also very important and should always follow #2, as the answer to #2 will often sound like an obvious choice. The classic answer is "we changed the resource in charge" but try to dig deeper.

 

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