This case tests the candidate's ability to diagnose a profitability issue using a profit tree, recognize that revenue stagnation (not cost increases) is the core problem, and then evaluate a strategic partnership opportunity using both breakeven and NPV analysis. The case progresses logically from diagnosis to deal structuring to financial evaluation, requiring both analytical rigor and strategic judgment.
Our client is Oriental Media (OM) Corporation, an entertainment media group in Mainland China. In its most recent financial year, OM has a stable revenue of RMB 50 billion, however it has experienced a 20% drop in profits. The client is concerned that this trend would continue into the current year and has engaged our firm to help chart a path back to future growth.
Goal (to be asked by candidate): The client would like to diagnose the root cause of the drop in profits and identify ways to remedy the problem.