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Easy M&A

Nautical Nonsense

#Food / Entertainment #Food #Entertainment
ProHub Comment

This case tests the candidate's ability to recognize that short-term aggressive growth targets require inorganic solutions (M&A) rather than organic strategies. The case reinforces quantitative analysis skills through multiple exhibits that require careful math and constraint analysis, combined with qualitative strategic thinking about synergy value creation.

Estimated Time 15 minutes
Difficulty Easy
Source Duke
50 / 100
Mr. Krabs, the owner of the restaurant “The Krunchy Krab”, has a predicament. The Krunchy Krab has reigned as king of the Martini Bottom casual restaurant market for quite some time, however, their primary competitor, “The Clam Bucket”, which is run by Mr. Krabs’ arch nemesis, Plankton, has been rapidly stealing market share from the Krunchy Krab for the last few years. Krabs has hired your consulting firm to figure out how to solidify its place as the dominant player in the market. Last year, the Krunchy Krab brought in $500K in revenue. What should Mr. Krabs do to improve sales this year?

Clarifying Information

Client/Company:

  • The Krunchy Krab currently sells only 1 product, the “Krunchy Patty”, which is a 100% lean beef burger
  • Last year, the Clam Bucket brought in $400K in revenue

Market:

  • The Krunchy Krab competes in the casual restaurant market in Martini Bottom which is a $1.5M market located just outside the U.S.
  • The casual restaurant market is fairly concentrated in Martini Bottom – in addition to the Clam Bucket and the Krunchy Krab, there are a few other smaller competitors
  • We don’t have any information as to why the Clam Bucket has been stealing market share at the moment

Goal:

  • Mr. Krabs is eager for retirement, so he wants quick results. The primary objective is for the Krunchy Krab to increase annual sales to $750K THIS year (a 50% share of last year’s total market size).