P
ProHub
English 简体中文 繁體中文
Hard Market Entry

Madecasse (2011)

#Non-Profit
ProHub Comment

This case tests the critical distinction between profit maximization and impact maximization in non-profit business models. Candidates must resist the mathematical temptation to recommend Venezuela (highest profit at $331.5M) and instead recognize that Madagascar sourcing ($375M impact) best serves the mission of improving economic welfare, since all labor costs directly benefit the local population.

Estimated Time 15 minutes
Difficulty Hard
Source Columbia
50 / 100
Two entrepreneurs are launching a non-profit chocolate bar manufacturing company called Madecasse. The goal of Madecasse is to improve conditions for people in Madagascar by selling chocolate bars to consumers in the United States. Our firm is working with Madecasse on a pro-bono basis to determine two things: (1) where to source materials (Venezuela, Madagascar, Columbia) and (2) how to market the bars in the United States

Clarifying Information

General

  1. If asked to clarify the goal of Madecasse, the interviewer should emphasize that the mission of Madecasse is to improve the economic welfare of people in Madagascar
  2. Assume that Madecasse will be able to sell as many chocolate bars as it makes
  3. Manufacturing will take place in the same location as the cocoa

Madagascar

  1. Population of 22M; Literacy: 70%
  2. GDP/capita: $900; GDP is 30% agriculture; Population below poverty line: 50%
  3. Fairly stable government now, recent history of instability

Sourcing options

  1. Labor costs are highest in Venezuela and lowest in Madagascar
  2. Venezuela employs more technology and thus can harvest more rapidly
  3. Fields yield more crops per hectare in Venezuela and least in Madagascar
  4. Colombia has the most available land, Madagascar the least

US consumers

  1. Growing taste for dark chocolate
  2. Typically buy chocolate bars as impulse buys at grocery store of convenience stores
  3. Generally willing to pay $2/bar
  4. Top 25% of income earners willing to pay more for high-end bars
  5. Growing tendency to pay more for items associated with a cause

Other bars/Distribution

  1. 3 primary brands with multiple products
  2. Typically have ingredients outside of chocolate (e.g. nuts, caramel)
  3. Sold through grocery stores, convenience stores, and gas stations