Areas the candidate should explore:
Market Growth:
Growth through maintaining market share in a growing market
When the candidate asks, reveal that market growth alone will bring sales to $1.5 billion by 2025. Specifically, the company is growing overall at 10% and expects to maintain a constant market share.(10% compounded over four years is roughly $500 million incremental) In the interest of keeping this case shorter, the candidate does not have to calculate this. If the candidate asks about categories, tell him or her that growth is about the same in all three.
Organic Growth:
Actions taken within the organization to drive revenue.
Ex.
- Price adjustments to drive volume
- Increased advertising
- Vertical integration
- Promotions and deals
- New products
Interviewer should steer candidate to explore new products
The candidate must cite new products; it is the only organic growth strategy that is viable for our client in this case. The interviewer should provide logical reasons to why the other options are not available at this time.
Our client has a new toilet cleaning product in development that analysts believe will do well.
The following details should be provided by request:
- Product is near launch
- Price will be $5 unit, but requires 20% trade spend per product to reach volume target
- Expected to sell 40 million units on average per year
No other investment is required — sunk cost. (See slide 3 for calculations)
Inorganic growth:
Growth through acquisition or joint venture
The candidate must identify growth through acquisition: our client’s Corporate Development department has identified two high-priority acquisition targets —Organoclean and Home Defense Inc. (See slide 4 for detailed information)