The best decisions are made by the people who have the best knowledge about the customers' needs and processes. Since its start in 1978, Indutrade's philosophy has been to run a decentralised organisation in which the financial responsibility rests with the Group companies that generate business, earnings and cash flow.
Indutrade is agroup of some 160 companies that each have their own president, all with total responsibility for their respective companies. By virtue of the companies' size (a typical Indutrade company has annual sales of SEK 50-100 million), the respective presidents can maintain control over the entire operation and relatively quickly adapt the business to the customers' needs. The companies all have individual profitability and growth targets, which means that while some companies may be cutting back on costs, others may be investing in more employees.
Independence remains after acquisition
he latitude of independence that the subsidiaries keep leads to customer specialisation and flexibility, and creates a favourable environment for nurturing an entrepreneurial spirit in the organisation. Moreover, the subsidiary heads' self determination is a key factor in retaining key persons in acquired companies. With Indutrade's acquisition model, the companies keep their name, culture and management after becoming part of Indutrade's organisation. Acquired companies are not subsequently sold.
Concentration on specific niches
Decentralisation is also a natural consequence of the Group’s niche strategy. To build up the expertise that is required to create customer value – and thus profitability – it is necessary toconcentrate businesses on a number of niches. However, the conditions differ quite a bit among the various niches, which makes it necessary for each subsidiary to form its own strategy.
Enduring relationships
The companies vary in size, but typically have 15-40 employees, most of whom are sales engineers or technical consultants. Most of the companies have built up enduring, close relationships with their customers over several decades and have gradually become specialists in their respective technology areas. the business of the agency companies often revolves around a couple of strong, well established suppliers, backed up by a number of smaller agencies. Companies with own manufacturing are also characterised by enduring relationships with customers and subcontractors, with sharp focus on a limited number of product lines.
Focus on profit margin and growth
The Parent Company’s role is to support the subsidiaries with industrial know-how, financing, business development and management by objective. Management by objective is primarily focused on profit margins and growth. The subsidiaries can also benefit from internal benchmarking and the informal exchange of ideas between different companies in the Group. In 2006 an annual internal benchmarking system was established, consisting of a ranking list to lay out goals for the companies and to give the company presidents knowledge about best practice in other companies within the Group.