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Creating value through business transformation

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In this evolving economic environment, it is always a good time to review your global business and ask the question, "How can you create value by pursuing new market share, developing new markets, and …

In this evolving economic environment, it is always a good time to review your global business and ask the question, "How can you create value by pursuing new market share, developing new markets, and gaining greater economies of scale?"

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  • 1. Business Model Optimization Creating value through business transformation
  • 2. Your opportunity In this evolving economic environment, it is always a good time to review your global business model and ask the question, “How can you create value by pursuing new market share, developing new markets, and gaining greater economies of scale?” Some of the ways to create value in an organization include: • Undertaking operational initiatives to pursue revenue and margin growth • Evaluating rationalization of the supply chain • Integrating acquisitions with existing structures • Centralizing management and the intellectual property (IP) • Centralizing management, regionally or globally As you evaluate these and other types of ideas to transform your business, it is important to assess if you are considering all the relevant factors that may help to build value within your organization, such as the opportunities and effect of tax on important business initiatives. Deloitte brings a fresh perspective. Our approach Business Model Optimization (BMO) is a suite of experience-based protocols for developing solutions to a wide range of tax issues and opportunities based on the Deloitte value pyramid. Consisting of proven methodologies and “SMART” technology, and based on the combined experience of Deloitte’s knowledgeable professionals, it enables Deloitte to provide optimal levels of assurance and transparency in addressing the full range of your global tax needs. Our BMO service offering focuses on helping multinational companies integrate their operational and tax planning in a scalable and sustainable way to help business leaders make more effective decisions on an after-tax basis. The Deloitte value pyramid The Deloitte value pyramid shows the key focus areas of our approach as well as the accompanying methodology. Realigning for business transformation—we help companies explore if they require total makeover or small refinements in their existing operating model, from sourcing of raw materials to sales of finished goods (and everything in between), and related changes to support the new operating model. Reconfiguring IT systems—we help you explore, design, and implement infrastructure and IT system changes to support the new business model. Readying human resources—a key to the sustainability of any business transformation is having the right people in the right place. The focus here is on helping you design and carry out personnel changes intended to support the new business model and develop a smooth transition to the new model. This workstream may also include developing new key performance indicators and reporting lines to support the new business model, as well as helping to navigate the change process through employee representatives. Reorganizing legal, finance, and tax structures—with BMO initiatives, there are often extensive legal entity and tax structural changes. Deloitte helps management teams focus on the pros and cons of various options and provide support in implementing the new structure. We provide consultation on income tax and transfer pricing matters for the new business model, as well as analyze the effect, if any, of indirect taxes on the new model. We also recognize that wholesale change is often disruptive to an organization, its suppliers, its customers, and other stakeholders. Accordingly, where appropriate, we subscribe to the philosophy of a more focused approach aimed at specific areas of improvement that a company has already identified or that our analysis may bring to light, including: • Globalization or regionalization of management function • Operational changes that enhance revenues and operating margins • Centralization of the management of value chain functions and risks • Mergers and acquisitions • Supply chain rationalization • Implementation of global or regional enterprise resource planning (ERP) system Using Deloitte´s proven BMO methodologies and tools, our team focuses on delivering the following elements, or workstreams, of opportunity: Creating Value Through Business Transformation Realign for Business Transformation Reconfigure IT Systems Readying Human Resources Reorganize Legal, Finance and Tax Structure Integrating the Operating Strategy and Global Tax Planning Identification and Quantification of Key Profit Drivers and Intellectual Property Ability to Centralize Key Functions, Assets and Risks 2
  • 3. Through these measured approach, we provide BMO services efficiently on a regional or global basis. Our BMO process is guided by our four-phased approach, explained in detail below, which allows a critical business transformation to be carried out in a diligent and cost-effective manner: Feasibility: This phase allows a company to first pursue savings through an opportunity analysis. To the extent the potential savings are substantial, feasibility for a new business model can be determined through a business model analysis by: • Reviewing alternative operating models and understanding the potential for impediments from a business perspective through interviews with key stakeholders • Identifying business process opportunities, analyzing location savings opportunities involving the centralization of management or valuable intangible property, and the location of the principal company or the IP company • Considering significant tax risks and opportunities • Developing a business case that takes account of the potential for IT changes, relocation of people, and the costs to design and implement the business model along the work streams discussed above Design: This phase involves creating a blueprint of the new operating model, considering the operational, tax, and financial implications of the new business model, and resolving any critical business and tax issues identified during the feasibility phase. Implementation: This phase involves converting the design blueprint into operating reality. We work side-by-side with the company and its legal counsel to implement the new operating model and legal structure on time, successfully. Maintenance and monitoring: This phase involves monitoring the performance of the new business model and identifying on-going enhancements that can be made to the business structure. A few of our previous engagements include: Phases Specialty chemical manufacturer—we helped scope the feasibility of converting the company’s European operations into the European Principal Company (EPC) model. As a result of the feasibility study, the client engaged Deloitte to consult on a new EPC business model, prepare the ERP blueprint for the new model, assist them in their people relocation efforts, and align tax with their legal perspective. Consumer products manufacturer—a client was struggling to implement a successful change program throughout its European, Middle Eastern, and African (EMEA) operations. Our BMO team reviewed various operating models with the client, emphasizing the need to look at the model from a holistic perspective, including business issues, systems, people, and tax. Based on the review, the company engaged Deloitte to implement the EPC model for its EMEA operations. Cleaning and Sanitation industry—the client is a leading provider of commercial cleaning, sanitation, and hygiene solutions, and wanted to harmonize its European business across 22 countries. We conducted a feasibility study for optimizing the operating model and then subsequently helped the client to design and implement the new operating model and procedures. A truly cross-functional team of tax, IT and HR professionals from the United States, the Netherlands and Germany worked on the project to implement new business procedures in all 22 countries, including the foundation of a new EPC model. This project also involved migration of non-U.S. IP rights from the United States to the EPC. Human resources outsourcing services company—we performed an opportunity analysis to help this company evaluate its global business strategy and identify tax planning opportunities, including the potential establishment of an offshore principal company structure for their services business. In addition to international tax and transfer pricing aspects, this project involved state tax, management consulting, and information systems considerations. The Deloitte difference We have more than 400 dedicated BMO specialists who are experienced with the complexities of implementing new business models and aligning the tax and operating strategy for multinational companies. Our integrated multidisciplinary team includes specialists in business transformation, information technology (IT), human resources, transfer pricing, direct and indirect tax, and project management. This dedicated cross-competency, cross-regional team has extensive “been there, done that” experience in terms of aligning business models, intellectual property practices, and global tax planning. Our team provides high quality, customized tax and business model transformation services in an efficient manner through the use of common tools and techniques. Feasibility Opportunity Analysis Business Model Analysis Design Implementation Maintenance & Monitoring Work Streams Realigning for Business Transformation Defining and designing the new operating model and IP strategy Reconfiguring IT Systems Adapting the IT infrastructure to support the new business processes Readying Human Resources Managing the employee representation process, the movement of people, facilities and overall change management Reorganizing Legal, Finance and Tax Structures Reorganizing the legal entity structure and contractual relationships to preserve the new operating model and related financial impacts Program Management Business Model Optimization 3
  • 4. Contacts Global Leaders EMEA Leaders Austria Belgium Andy Newman +1 312 486 9846 acnewman@deloitte.com Patrick Cauwenbergh (Tax) + 32 2 600 69 27 pcauwenbergh@deloitte.com Michael Weismann (Tax) +43 153 700 6700 mweismann@deloitte.at Patrick Cauwenbergh (Tax) + 32 2 600 69 27 pcauwenbergh@deloitte.com John Henshall +44 118 322 2341 jhenshall@deloitte.co.uk Andreas Süß (Consulting) +49 40 32080 4814 asuess@deloitte.de Central Europe Denmark France Germany Michal Klosinski (Tax) +48 22 5110716 mklosinski@deloittece.com Asger Mosegaard Kelstrup (Tax) +45 3610 3353 akelstrup@deloitte.dk Nathalie Ayme (Tax) +33 140 888352 nayme@taj.fr Stephan Rasch (Tax) +49 89 29036 8722 srasch@deloitte.de Bronislav Panek (Consulting) +420 246 042 264 bpanek@deloittece.com Peter Hiort-Lorenzen (Consulting) Nicolas Gaultier (Consulting) +45 3610 3241 +33 158 37 9607 phlorenzen@deloitte.dk ngaultier@deloitte.fr Andreas Süß (Consulting) +49 40 32080 4814 asuess@deloitte.de Italy Luxembourg Netherlands Spain Aldo Castoldi (Tax) +39 028 332 4036 acastoldi@sts.deloitte.it Henri Prijot (Tax) +352 45145 2878 hprijot@deloitte.lu Thijs Heijenrath (Tax) +31 882 881176 theijenrath@deloitte.nl Ramon Lopez de Haro (Tax) +34 915 820900 rlopezdeharo@deloitte.es Umberto Mazzucco (Consulting) +39 028 332 3053 umazzucco@deloitte.it Laurent Pierreu (Consulting) +352 45145 2648 lpierreu@deloitte.lu Kees de Jongh (Consulting) +31 882 882548 kdejongh@deloitte.nl Gabriel Cabezas (Consulting) +34 915 145000 gcabezas@deloitte.es Sweden Switzerland United Kingdom Elvira Allvin (Tax) +46 75 246 4370 eallvin@deloitte.se Jacqueline Hess (Tax) +41 44 421 6312 jahess@deloitte.ch Jukka Karjalainen (Tax) +44 20 73030349 jukarjalainen@deloitte.co.uk Joakim Torbjorn (Consulting) +46 75 246 4240 jtorbjorn@deloitte.se Ralf Schlaepfer (Consulting) +41 44 421 6686 rschlaepfer@deloitte.ch James Yearsley (Consulting) +44 20 7007 8131 jyearsley@deloitte.co.uk Stefan van Thienen (Consulting) + 32 2 749 5731 svanthienen@deloitte.com Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte has in the region of 200,000 professionals, all committed to becoming the standard of excellence. This publication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively, the “Deloitte Network”) is, by means of this publication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional. © 2012 Deloitte Global Services Limited

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