However, this option will have a disruption as the organization changes to an autonomous entity that may be counter-productive.
The fourth alternative of no entry has the benefit of not subjecting TAG to the risk of a new industry entry. However, without this risk, it has the downside of not offering any potential reward. It also does not allow for further diversification of TAG, which has served it well during leaner economic times.
Recommendation:
It is recommended that TAG pursue the first strategy of forming a healthcare industry division under the auspices of the original TAG manufacturing consultancy body. In this way, TAG can maximize the benefits to be had with this growth opportunity. By creating a separate division within the organization, it should allow for both the manufacturing and the healthcare sides to focus on their core competencies and continue to meet the needs of their clients. It is possible to minimize the risk of losing key TAG culture, by focusing on mission statements, vision, continued correspondence from Hagood and Brown supporting this culture, and policies and procedures.
While Charles recognized that there was money to be made in consulting, he decided that he wanted to create a firm that offered clients more hands-on "practical application" consulting balanced with engineering services. He began writing a business plan that reflected his approach to engineering consulting.
TAG focused on bottom line solutions to manufacturing costs and engineering services. While compiling the industry research for their business plan, Charles and Mike had established that there were few if any consulting firms that specialized in the type of manufacturing consulting that they intended to provide, which included engineering and manufacturing consulting with a "hands on" focus.
So they began to refocus their marketing efforts to grow their cost-cutting services, in which they helped companies institute lean enterprise "related services that target an operations value stream by maximizing throughput, reducing lead times, improving quality, improving customer response time, and reducing inventory levels." They also moved more heavily into plant relocation consulting given the number of companies relocating or consolidating.
In an effort to continue to diversify their services and rebound from 2001, Charles and Mike formed TAG Maintenance and Facility Services (TMFS) along with Paul Casto, a former executive with Floor Daniel Corporation. Casto is a degreed Engineer with an MBA and an MS in Maintenance Engineering and brought 20+ years of experience with him.
In June 2004, Charles Hagood and Ken Lasley, a licensed architect in 40 states, became the major shareholders in a new company to provide architectural and design services. "TAG Design Services, LLC (TAG DS), a multi-state licensed a/E firm, provides a full range of Project Management and Architectural/Engineering Services in most all industries.
Previously, TAG had referred this type of work to outside firms. Mike Brown only owns 5% of this new entity, as he is starting to look toward retirement sometime within the next few years. Charles owns 45% given he is younger and has numerous contacts in industries that could use such services. Lasley is regarded as one of the best in designing manufacturing and distribution facilities, and his reputation brings his business with him. Past clients of Lasley included Wal-mart, Boeing, and numerous Japanese auto suppliers. TAG DS also compliments the relocation segment of TAG, since most companies are relocating from an existing facility to a new one, by providing a true "turn-key" approach.
Jabezco Industrial Group, Inc. is an affiliated company in Jackson, Tennessee that can provide construction, contractor, and installation services for TAG clients.
It had taken three years after 9/11 for the capital intensive part of their business to come back. It is projected that 2004 will be the first year when their original capital intensive engineering consulting projects, plant relocation services, and their consulting in "lean enterprise solutions" will concurrently be making profits for TAG. The company employs six full-time project managers at TAG, plus one in TMFS and TAG, with either Mike or Charles assigned to every project to oversee the project managers plus consultants all over the U.S.
TAG's customer base is made up of primarily mid-sized manufacturing facilities or smaller divisions of Fortune 500 companies. TAG's competitive advantage is that they leverage their relationships and subcontract with other firms to become one single source for the manufacturing industry's needs. TAG has the ability to manage a client's total project with one point person instead of many.
As Charles said, "most clients want one neck to choke, but hopefully that will never happen." Approximately...
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