Case

Power Pills

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Problemdefinition

Our client is Multifit, a producer of vitamin pills.

Their primary customers are health stores and pharmacies. Right now they are considering entering the health foods and beverages market.

Your task is to give them a recommendation on what they should do.


Kommentare

A good way/structure to solve this problem would include:

  • Industry analysis (growth, profitability, competition)
  • Entry alternatives (joint venture, acquisition, etc.)
  • Other (synergies, initial investment, etc.)

Kurzlösung

Multifit should enter the market (via acquisition of a competitor).


Detaillierte Lösung

Paragraphs highlighted in green indicate diagrams or tables that can be shared in the “Case exhibits” section.

Paragraphs highlighted in blue can be verbally communicated to the interviewee.

The following topics can be discussed:

I. Background

Suggestion: You should share the structure with the interviewee after the introduction of the case (after the discussion of the problem definition and a quick brainstorming of the candidate).

Information that can be shared on the interviewee’s inquiry:

  • Health foods and beverages include granola/protein bars, Gatorade etc.
  • Client operates in the US.
  • The health foods and beverage industry is highly profitable.

II. Market

Information that can be shared on the interviewee’s inquiry:

  • Multifit has 16% share of vitamin market.

Share Diagram 1 with information about the market growth if inquired by the interviewee.

Main conclusions

  • The health foods and beverages market is significantly larger than the vitamins market.
  • Growth is healthier in the health foods and beverages market.

III. Competitors

Information that can be shared on the interviewee’s inquiry:

  • Total revenues in the vitamins market are $3.3 billion.
  • Total revenues in the health foods and beverages market are $20 billion.

Share Diagram 2 & 3 with information about the market shares if inquired by the interviewee

Main conclusions

  • The health foods and beverages market is very fragmented.
  • The largest player in this market has 15% market share.
  • VitaCo is the only company operating in both markets. (could be used as a benchmark for entering the food market)

IV. Operation

Information that can be shared on the interviewee’s inquiry:

  • There are no possibilities for synergies. (current facilities have no equipment to produce drinks/food)
  • Multifit has enough capital to invest.

Share Table 1 with a detailed overview of the operating statement if inquired by the interviewee.

Main conclusions

  • Costs for sales and marketing have increased without resulting in an increase in revenue.
  • Multifit’s revenue growth is below the average industry wide level of 6%.

V. Conclusion

The final recommendation should include:

  • Multifit should enter the market due to:
    • Stagnant revenue and declining profit margin in the vitamin market
    • Low growth in the vitamin market
    • Assumed high profitability in the food market
    • Fragmented market in the health foods and beverages sector
  • Risks could be:
  • Risk of overpaying: Look at all the players and try to find a low performer with high potential.
    • Risk of a bidding war: Other competitors from the vitamin sector could try to enter the food segment.
  • Next steps:
    • Access of capital to finance expansion
    • Find the line of products that are most profitable.
    • Analyse the vitamin segment of Multifit to find out why the growth
      is lower than the market average.
    • Try to find methods for expanding/growing the business.

Schwierige Fragen

How should Multifit enter the market?

Possible answers:

  • Multifit should acquire a competitor as this is the fastest and easiest way to enter the market and there would be no synergies in the company.
  • The best suitable competitor would be VitaCo:
    • They are small enough for Multifit to potentially afford them.
      (10% market share in vitamin and 5% in health foods segment)
    • The acquisition will drive growth in the vitamins segment, which
      is stagnating at the moment.
  • Other options would be a small player in the “Others” category.

More questions to be added by you, interviewer!

At the end of the case, you will have the opportunity to suggest challenging questions about this case (to be asked for instance if the next interviewees solve the case very fast).

Verwandte Consulting-Fragen

As you describe it, this is the longest version of this case format; normally too long for an oral interview, so it's super important to listen whether the question is about if (the client should ente... (mehr)

Hi there, I would start by asking some general questions to have a better feeling on the case: 1) Does our client provides this new service elsewhere? If not, does our client already has the cap... (mehr)

Bisher beste Antwort von 2 Antworten:

If I understand your questions correctly, you are trying to figure out the difference between analyzing the overall market (or an industry), vs. the subsections of the market that a particular company... (mehr)

Bisher beste Antwort von 3 Antworten:
Hugo
Experte
Current BCG Active Project Leader |Former A.T. Kearney |+8Y of consulting experience | Received 8 consulting offers in the past 2Y

Dear Anonymous, Congratulations on your final assessment step!. The structure of your presentation should be similar to the structure you would present in a case interview(remember, there is no cor... (mehr)

Bisher beste Antwort von 2 Antworten:
Ex BCG | MBB Specialist | #1 Expert for meetings done (1000+) and recommendation rate (100%)

Hi Anonymous, this is how I would structure a market entry analysis: 1) Goal clarification. It is always good to start with the end in mind – thus what is the specific reason why you want to ent... (mehr)

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Case-Exhibits

Market growth rates


Market share vitamins


Market share health foods and beverages


Detailed overview of operating statements