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Medium Profitability Operations Capital Investment

Maxicure

#Manufacturing #Industrials #Pharmaceuticals/OTC
ProHub Comment

This is a classic operations and capital allocation case that tests a candidate's ability to structure options (refurbish, rebuild on-site, rebuild elsewhere, or outsource), perform quantitative analysis (break-even at 110M units), and think strategically about implementation (tax incentives for relocation). The case progressively increases complexity from strategic options to financial modeling to stakeholder management.

Estimated Time 15 minutes
Difficulty Medium
Source Darden
50 / 100
Your client, Maxicure, manufactures and sells an over-the-counter cough and cold medicine. Their sole plant in Kentucky is aging, and its increasing maintenance costs are leading to low margins on their products. How would you advise Maxicure proceed to solve this problem?

Clarifying Information

  1. There are 2-3 larger players in this over-the-counter business who have distribution across the country. Maxicure is one of them.
  2. Maxicure sells all of its products in the US
  3. Objective is to reduce production costs while maintaining product quality (cost, quality and brand image all matter to customers).