CAP GEMINI ERNST & YOUNG LLC
Practice Case Interview: Consumer Products Company Growth Strategy
A large consumer products company has decided it is interested in substantially increasing the size of its operations and would like to introduce the technology of the Internet to assist them. Its goal is to double total sales and profits in less than three to five years. As a consultant brought in to assist, what would you do? What issues would you consider? What are some likely strategic alternatives for the company?
Possible Issues to Consider
; What is the current scope of operations? In what areas/segments of the consumer
products industry does the company deal? What is its current market share in these areas? ; What plans has the company already considered?
; What is the competitive nature of the industry? What would be the effect on sales and
profits of simply reducing prices and margins?
; What competitive Internet plays currently exist in the market (B2B, B2C, etc.)? How does
Internet technology play a role in the company, if at all?
; What potential is there for expansion by acquisition? Do they have the financial capability?
Do potential acquisitions exist?
An appropriate solution will depend on the answers to the above questions and as such, the facilitator will lead the interviewee in a certain direction. Below are some considerations and frameworks that may be used.
A business can increase profits three ways:
; Increasing sales
; Increasing prices
; Decreasing costs
However, if the company’s margins are found to be consistent with industry norms, it would seem unlikely that either increasing prices or cutting costs represent feasible methods by which to double sales and profits, particularly is the company is operating in a moderately competitive environment.
This leaves only sales increases, which may be achieved by:
; Selling more of the current products to current customers
; Selling new products to current customers
; Selling current products to new customers
; Selling new products to new customers
The 3 C’s Analysis may be used (Company, Customer, Competition) or Firm Analysis (internal factors: company strengths and weaknesses, external factors: company systems and resources)
The suitability of these options will depend on how the facilitator leads the interviewee. However, the recommended answer is to sell new products to new customers by means of acquisition and then sell these new products using the Internet.