The third alternative offers the initial benefits of the first alternative. It also allows for focusing on core competencies and maintaining a smaller organization to promote personal corporate culture of the second alternative. 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.
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 85% of TAG's business is from repeat clients, which matches their business philosophy of developing long-term relationships with clients.
Charles and Mike both personally make a point to stay in touch with their clients.
Regular contact is also maintained through quarterly newsletters mailed out to over 5,000 people. While these newsletters provide the standard type of information on the services they offer and other articles of interest to their clients, Charles has added his own touch to reflect the TAG culture and to help them stand out in the minds of their clients.
In addition to the print newsletters, TAG sends out a monthly e-magazine that provides lessons learned or articles of interest to clients. TAG also keeps in touch with clients through its distribution of regular project updates and case studies.
Charles has also invested time and money on TAG's website design. Few, if any, engineering companies get business off their websites. However, TAG's website generates approximately 25% of their new clients.
TAG's clients include some large manufacturing companies, such as Cessna, GE, United Technologies and Ford. Many of TAG's larger clients are based on the relationships that Hagood and Brown built with them while they were with their former employer. Most of TAG's newest clients are moderate sized manufacturers with 200-1000 employees and $40-$500 million in revenues. Some of these clients are owned by Fortune 500 corporate parents, but the operating units they work with are smaller and relatively autonomous
Hagood and Brown have intentionally built TAG to reflect their religious convictions and values. The most important aspect of this is a strong emphasis on integrity in all that they offer to their clients. To Charles and Mike, one of the main advantages to being a private firm is that they "only have themselves to please" in terms of the financial performance of their firm. They have committed to each other that they will not sacrifice their values for profits.
Clients have recognized this aspect of TAG and have commented on how much they appreciate their integrity
Church sponsored mission trips are a regular occurrence for TAG employees and their families. TAG pays for the expenses related to these church sponsored mission projects for all employees and in some cases their family members. TAG employees and family members have participated in three to four mission trips a year around the world, including Asia, Africa, and the Appalachian region of the U.S. Charles and Mike have committed from the very beginning of TAG to contribute approximately 8-10% of net income to charity. However, even during years when the business has had losses, they still gave significant gifts to charity.
In addition to mission projects, other donations go to local churches, sponsoring children who cannot afford to join youth sports programs, a scholarship fund to support working adults pursuing college degrees, the local YMCA, and other community organizations.
From their very beginnings in Mike's basement, Mike and Charles have consciously avoided anything that they considered to be extravagant spending. Even as TAG became more successful, they chose to operate out of a moderately priced office space and to keep travel costs down by flying the discount airline Southwest and staying in hotels such as Hampton Inns for Charles and Microtel for the more conservative Mike.
Currently, TAG has no outstanding debt beyond normal trade credit. The company was forced to draw on their line of credit during the period immediately after 9/11, but this was paid off in full as soon as cash flow improved.
Although excited by the opportunity this new market offers to TAG, the partners recognize that there are many issues that will need to be addressed. Charles and other existing TAG consultants are currently doing most of the work by themselves for the first few clients to learn how their consulting services can best be applied to this new client base, which is requiring a substantial investment of his time.
Author. "Title of Article." Publication Name Volume Number (if necessary) 25 Dec. 2003: page number-page number. Database name. Service name. Library Name, City, State. Date of access .