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Bain Medium Profitability Operations Make vs Buy Decision

Instant coffee pod producer

#Comparison #Consumer Goods #Food & Beverage #Sustainability
ProHub Comment

This is a structured comparison case requiring candidates to evaluate whether Brew Co should accept a large hotel chain contract contingent on producing biodegradable pods. The case tests financial analysis (profitability calculations), strategic evaluation (market opportunity vs. operational complexity), risk assessment, and a critical make-versus-buy decision. Candidates must work through contract economics, volume assumptions, and implementation trade-offs.

Estimated Time 15 minutes
Difficulty Medium
Source PeterK
50 / 100
Brew Co produces instant coffee makers and coffee pods. A large hotel chain wants to have their machines in the rooms but would like to have biodegradable pods as a condition to the contract. Currently coffee pods of Brew Co aren’t biodegradable. Should Brew Co change their production process and accept the deal?

Clarifying Information

  1. Brew Co would want to have $1M in weekly profit from the deal
  2. A hotel chain is one of the top chains in the U.S. with 1,200 hotels in its network
  3. No information on other coffee pod makers bidding for this deal
  4. Brew Co is exploring both options: in-house and outsourced production for biodegradable pods