Cookie and Privacy Settings

This website uses cookies to enable essential functions like the user login and sessions. We also use cookies and third-party tools to improve your surfing experience on You can choose to activate only essential cookies or all cookies. You can always change your preference in the cookie and privacy settings. This link can also be found in the footer of the site. If you need more information, please visit our privacy policy.

Data processing in the USA: By clicking on "I accept", you also consent, in accordance with article 49 paragraph 1 sentence 1 lit. GDPR, to your data being processed in the USA (by Google LLC, Facebook Inc., LinkedIn Inc., Stripe, Paypal).

Manage settings individually I accept

Incos Pens

Solved 30.4k times
Incos Pens Incos is a global manufacturer of writing products with divisions in North America, Europe and South-East Asia. Their global sales are $60 m and their profits amounted to around $30 m. Their European division who manufactures and sells disposable pens is experiencing flattening sales and a decreasing profit.  The client hired you to help him come up with suggestions to get profits back on track.   
4.6 5 2609

Problem Definition

Incos is a global manufacturer of writing products with divisions in North America, Europe and South-East Asia. Their global sales are $60 m and their profits amounted to around $30 m. Their European division who manufactures and sells disposable pens is experiencing flattening sales and a decreasing profit.

The client hired you to help him come up with suggestions to get profits back on track.


This case is made to be interviewer-led. Therefore the interviewer should guide the interviewee through the interview.

The information given allows the interviewer to challenge the candidate with other questions that are not mentioned here.

Short Solution (Expand)

Detailed Solution

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 framework/structure provides an overview of the case:

I. Increasing revenue

1. Since sales are flattening, what type of suggestions would you make to help increase revenue?

Possible answers:

  • Increase sales to existing customers by adding accessories or bundling products.
  • Initiate sales to new customers by entering new distribution channels or investing more in marketing.
  • Increase prices.
  • Launch new products for existing segments or new segments.
  • Shut down unprofitable product segments.

2. The client has actually thought of entering the segment for premium pens since margins are higher there. How would you go about estimating the market size for premium pens in Europe?

Give candidate some time and challenge him to elaborate on the data he might need and ask candidate to estimate the size based on his own assumptions. Once complete, interviewer can share information below to estimate the size for our case.

Share Table 1 with candidate to estimate market size.


  • (350 m*80%*0.2)/4 years=14 m pens.

3. Given that the premium pen segment is a new segment for Incos, can you think of any barriers to entry?

Possible answers:

  • Access to distribution channels: Incos sells its pens through different channels than the premium segment uses. Incos will have to invest in gaining access to these channels.
  • Market consolidation: The premium segment might be dominated by existing brands such as Cartier & Mont Blanc who have a strong brand position and a long history in the segment.
  • Brand position/reputation: Incos might find it difficult to get consumers to perceive their brand as a premium brand. Heavy investments into Marketing will be required to build up a brand position.

4. The team has also run some scenarios on economics & profitability. We have some data on one of the scenarios. Calculate profitability and then make a recommendation on whether the client should enter the segment or not.

Share information below with candidate:
  • Mainstream brands have about 85% of the market.
  • Incos is expected to gain 3% market share.
  • Average selling price for premium pens is $20.
  • Gross profit margins are on average 30%.
  • Margins after marketing expenses are on average 10%.

Possible answer:

  • With 3% of the market of 14 m pens and a selling price of $20, Incos would earn (3%*14 m*$20)=$8.4 m.
  • With 10% margins, Incos would generate $840.000 in profits.
  • This is fairly small in comparison with the company's global margin of 50% and $30 m in profits.
  • Along with the difficult entry barriers, it would be unwise for Incos to enter the segment.

II. Decreasing costs

5. Let's move over to costs and see if we can increase profits by reducing costs. We have some data for you on the cost breakdown. What are some ways to reduce costs for Incos?

Share Table 2 with the candidate.

Possible answers:

  • Reducing material cost.
    • Sourcing of materials in low-wage country like China.
    • Use economies of scale.
    • Simplify the product.
  • Reduce wages.
    • Move production to low-wage country.
    • Hire more temporary staff.
    • Automate more processes.

6. Let's look more into the outsourcing option to China. What cost reduction can we realize if we move production to China, assuming that wages are only 15% of wages in Europe? What other factors should you take into account?

Share Table 3 with the candidate.

Possible answer:

  • Wages will decrease by (25%*0.85)=21% to about 4% of total costs when moving production to China.
  • We would have to look at the additional distribution/transportation costs when shipping from China to customers.

III. Recommendation

7. We're out of time. You run into the Incos CEO and he asks you for a summary. What would you communicate to him?

Possible answers:

  • So far, we have analyzed the impact of increasing sales by entering the premium segment. It's not a good fit due to limited profitability and high barriers of entry.
  • We have also analyzed the option of moving production to China to decrease costs. This is a viable option that reduces wages from 25% to 4%, but we still have to analyze effects of possible increase in distribution costs.
  • Additional options to increase include bundling & intensifying marketing, but these still have to be quantified.

Difficult Questions

  • Assume that we can't save the division and the company wants to sell it to another player, how would you ensure our client receives the highest possible price?
Questions on this case
2 Question 6
Book a coaching with Stephanie

0 Meetings

12 Q&A Upvotes

USD 149 / Coaching

Hello Anonymous, The key here is to understand that both the 21% and 4% are relative to total cost. Here it goes: Current wages are 25% of total costs. In China, wages are only 15%... (read entire answer)

Hi there, thank you for your feedback on this case and for helping us to improve our content! We will definitely have a look at this. If you have any further feedback or questions, feel free to con... (read entire answer)

3 Do we need to understand the root cause first in the framework?
Book a coaching with Luca

100% Recommendation Rate

25 Meetings

1,962 Q&A Upvotes

USD 179 / Coaching

Hello Ashley, At the beginning you should always take 30 seconds in order to write down a framework that can help you to identify the root causes and potential solutions (they are anyway linked in... (read entire answer)

Related BootCamp article(s)

2x2 Matrices and the BCG matrix

A two-by-two matrix is a simple but effective method of presenting information. It is very popular within consulting as it provides the big picture of a certain option space.

2 Q&As

Profitability Case

Learn to crack Profitability Framework Consulting Cases, which are the number 1 reason for real consulting projects and hence are an important case type.

1 Q&A Quiz

Important Facts

It's essential to know some key figures regarding geographies, population, economies for your case interviews. We summarized them for you here.

1 Q&A

The Value Chain

The Value Chain - as e.g. by Porter - is a classic framework to structure the activities of a business and add value to products by transforming resources.

Market Sizing

Market Sizing Questions are used to test your quantitative & reasoning skills. Learn more on how interviewers evaluate your given answer!

2 Q&As
4.6 (2.6k ratings)
4.6 5 2609
Show all questions on this case (5)
Case exhibits