Assessing different options for a growth strategy case

growth strategy
Recent activity on Jul 04, 2018
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Yibo asked on Jul 04, 2018

Hi guys,

I recently run into a case where an online retailer client wants to grow its revenue and they have a few options in mind. They come to us to weigh different options and help them decide what they should do. They were thinking if they should do a joint venture with a blogger in its field of business or if they should increase their marketing spendings. They are also open to other options.

When I approach this case, should I treat it as a growth strategy case, then come up with a recommendation and cross check with available options or should I start by looking at different options? what is a good way to approach such kind of case?

Thanks in advance for your help!!

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Vlad
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updated an answer on Jul 04, 2018
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

It's a case where you have to compare the two options. I would start with the clarifying questions:

  1. What is the specific objective in $ that we are trying to achieve - is it Revenues or ROI or something else? What is the time frame?
  2. What is the product / products that we are selling and which products are targeting these options?

Then I would come up with the following structure:

1) Current marketing spend

  • Out product
  • Target audience and our message
  • Current marketing mix and spend per channel
  • Current ROI

2) Benefits of the two options

  • Deal terms
  • Projected number of the new users to be acquired
  • Projected revenue per user
  • Customer lifetime increase (Potential to increase the loyalty of the existing / new users and decrease churn) - ideally you can calculate LTV with these numbers, but they rarely ask to do that in cases
  • Scalability and development potential. How we can increase the total pie of the dial? (very important for the blogger)

3) Costs of the two options

  • Customer Acquisition Costs
  • Upfront Investments
  • Equity split for JV
  • Allocated costs of the team

4) Risks and limitations

  • Reputational and brand risks (mostly in case of blogger)
  • Financial - related to Equity split
  • Operational - in case of blogger you can't change the contractor
  • Contingencies

Best!

(edited)

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Vlad

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