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Hard Strategic Decision

Activist Action

#Consumer Goods

Practice this advanced strategic decision case interview question in the Consumer Goods sector. Includes detailed problem prompt, clarifying questions, structured framework, and expert recommendation. Part of ProHub's 835+ consulting case library.

ProHub Comment

This case tests the candidate's ability to balance activist investor demands (short-term value creation) with long-term operational sustainability. The case progresses through increasingly viable options—supply chain restructuring, outsourcing functions, and finally divestitures—requiring candidates to understand when each strategy is appropriate and its trade-offs.

Estimated Time 36 minutes
Difficulty Hard
Source Duke
20 / 100
Your client is a large CPG company with multiple business units including snacks, beauty, and home cleaning products. Your client is under pressure from a high-profile activist investor that has built a 7% stake in the company. The client has asked you to help predict the new investors likely demands that could increase stock price or company performance. What are your ideas to deliver short-term and long-term value back to the shareholder?

Clarifying Information

  1. Large business in North America. The client operates in ~70 countries.
  2. Revenue: Snacks $19B, Beauty $31B, Home $29B; EBITDA: $24B
  3. Target Savings: $10B
  4. This investor likely has influence on the board and cannot be ignored.
Mock Interview
Interviewer

Your client is a large CPG company with multiple business units including snacks, beauty, and home cleaning products. Your client is under pressure from a high-profile activist investor that has built a 7% stake in the company. The client has asked you to help predict the new investors likely demands that could increase stock price or company performance. What are your ideas to deliver short-term and long-term value back to the shareholder?

You

Thanks. Before analyzing, I'd like to clarify a few key questions...

Interviewer

Good question. Let me provide some background information...

You

Based on this, I suggest analyzing from these dimensions...

AI Score
Structure Analysis Communication Business Sense Quantitative
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Practice this case with AI Mock Interview

A large CPG company faces pressure from a 7% activist investor stakeholder. The candidate must recommend strategies to create $10B in shareholder value while maintaining long-term competitiveness across three business units (snacks, beauty, home). The optimal solution involves divesting the Silky Sweets brand while rejecting pure cost-cutting measures that would harm long-term operations.

Key Insights:

  1. Activist investors typically focus on 1-2 year time horizons, requiring immediate cash returns (stock buybacks, dividends, or proceeds from divestitures)
  2. Short-term cost reduction strategies like outsourcing manufacturing or moving R&D to low-cost countries can damage long-term brand value and operational efficiency
  3. Divesting non-core, low-growth businesses is often the optimal approach as it satisfies activist demands without compromising core operations
  4. Valuation multiples (EV/EBITDA) are critical for assessing divestiture values; Silky Sweets at 3.5x EBITDA multiple yields ~$10.8B, meeting activist targets
  5. Candidates must think from both investor AND company perspectives, recognizing inherent tensions between short-term returns and long-term strategy