This is a comprehensive profitability case requiring candidates to diagnose declining profits through product mix analysis, financial modeling, and strategic capital allocation decisions. The case progressively reveals that despite being market leaders, Rubber Bumper is declining in rubber bands while underperforming in the growing condom market, necessitating a manufacturing reallocation decision with significant operational and financial trade-offs.
Rubber Bumper Co is a small family owned producer of rubber products. It prides itself on producing a limited range of products but producing the highest quality on the market. In general, new products are introduced after much deliberation and careful market study. The company has recently appointed a new President who noticed decreasing profits over the last couple of years.
Rubber Bumper Co has hired our firm to fix the decline in profits. What are all of the areas that need to be examined in order to identify any major issues that should be a priority?