Our client is a Canadian TV company, Universal TV. They recently entered the US market in the northeast to expand its market share and capture a large part of the 4 m consumers in a market that has little competition. However, in the past few years, Universal TV has been unable to realize a profit.
You are hired to figure out why this is the case and what their next move should be.
This is a profitability case where the candidate also has to explore the business situation to get to a conclusion.
This is a combination of an interviewer-led & a candidate-led case. The case consists of two parts and is mainly qualitative with an emphasis on understanding WHY the company isn't making a profit.
Suggested case structure:
Candidate should start with revenue & cost to see if they have changed and what type of pricing the client maintains.
It seems that the company hasn't been able to increase its revenues and costs have stayed the same. So the absence of profit is caused by a lack in revenue growth.
Now we need to understand why consumers aren't signing up.
Candidate should now get into the second part and ask more on consumer behavior and competition/substitutes.
It seems that the American consumer was alright with the free local tv and doesn't see the value of adding cable. Their lower income also means that they are more critical of spending more on watching TV.
Clearly, there is a lack of market fit with what the client is offering and what the American consumer wants.
Candidate should come up with recommendations. These can include the following, but any other recommendation that makes sense can work:
