Waterlogic
Practice this advanced profitability case interview question from BCG in the Technology sector. Includes detailed problem prompt, clarifying questions, structured framework, and expert recommendation. Part of ProHub's 835+ consulting case library.
This profitability case combines revenue and cost analysis, requiring candidates to diagnose a market saturation issue while identifying hidden cost structure problems. The key insight is recognizing that sales team compensation remains largely fixed despite 30% volume decline, creating misaligned incentives and masking the true operational challenge.
Our client is LAVA, a licensed distributor of Waterlogic water purifiers in Southeast Asia. They obtained exclusive rights to distribute water purifiers within the region 4 years ago.
While they enjoyed huge growth in the past 3 years when they first entered the market, sales have slowed, and they are now in a loss-making position. Management has called us in to diagnose the key issues as well as turn the business around. How would you advise them to proceed?
Clarifying Information
- Geography: Thailand, Malaysia, Indonesia, and Vietnam
- Business model: B2C, involves the local sales team travelling door to door to sell the products and services. Products come with 1 year warranty. We sell yearly service packages as well. The HQ team sits in Singapore and does everything out of a 10 pax office.
- Product: Our products are top of the line in quality and are manufactured in US. We have not changed our product lineup in the past 4 years. Product life is about 5 years.
- Competitors: LAVA’s closest competitor is Cuckoo water purifiers. Their technology is less advanced than LAVA’s, and they serve different markets.
- Goal: To maximise profit, no generic time nor target amount