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UC_CaseCompetition_R4
- 1. Eurobrand Challenge Team Captain Crunch Chen Hou / House Zhang / Rudy Tjong / Samuel Sutanto / Yvonne Baker
- 2. Background 100 years old company Over $9 Billion of Sales Worldwide
- 3. European Industry Structure Compound Annual Growth Rate (CAGR): 3.50% in the past 5 years Ready to eat segment is the most lucrative: 87% of total market overall
- 4. UC European Operations More than 50 years (since 1952) UC established national subsidiaries, led by Country Manager (CM) – ‘Mini UC’ Customer Oriented UC owns 20% of the European market: $1.8 Billion
- 5. Competitors Kellogg’s (26%) Cereal Partners (17%) Weetabix (7%) United Cereal (20%)
- 6. Key Issues Shall we launch Healthy Berry Crunch? Shall Healthy Berry Crunch become UC’s first Eurobrand? How to ensure Eurobrand is an effective implementation? How are we going to launch it?
- 7. What if we don’t launch the product? Opportunity Cost Sunk Cost Discouraged Entrepreneurial Spirit
- 8. What if we launch the product? Cons Corporate Culture Clash High risk in marketing High Initial Investment Pros Cost saving 10 – 15% in 3 years Economy of Scale Increase Barrier of entry for other products
- 9. Proposed Solutions Stage by Stage Launch as Eurobrand France as the First Stage Already tested in the France Market Yearly sale $388 M Net profit margin 13% Second stage: UK and Germany Third stage: Rest of Western Europe
- 10. Benefit of Eurobrand Staff reductions Cut product development time and marketing cost by 10% to 15% over three years 2009 European SG&A: 35.1% of sales
- 11. Proposed Reorganization European VP Admin & Finance Engineering Manager European Sales Manager R&D Manufa cturing Marketing Services Logistic & Purchasing Brand Manager Brand Manager Brand Manager Brand Manager Operations Manager UK Division South Europe Division North Europe Division CM France CM Germany CM Italy Juice & Dairy Cereal Snacks Frozen Foods R&D R&D
- 12. Proposed Marketing Plan Target Market: Parents with Children Health Conscious Adults Positioning: Healthy Premium Environmentally Friendly
- 13. Proposed 4P’s Price Premium Product Produced Locally Packaging: Post Consumer Recycled Material Serving Size: Regular & On-the-go Place Grocery Store (Supermarket & Hypermarket) E-Commerce Promotion Mobile Promotion Social Media Promotion
- 18. Pro Forma Financial Statement Europe France Growth Rate 3.50% France Year 3 Growth Rate 3.50% France Year 3 Sales $1,850,866.00 $388,682.00 $430,938.68 $430,938.68 COGS $889,134.30 $186,718.27 $207,017.88 $207,017.88 SG&A $573,768.46 $120,491.42 SG&A Saving -10% $108,442.28 SG&A Saving - 15% $102,417.71 Depreciation and Amortization $74,034.61 $15,547.27 $17,237.54 $17,237.54 Operating Income $313,928.63 $65,925.04 $98,240.98 $104,265.55 Interest Expense $9,254.20 $1,943.38 $2,154.66 $2,154.66 Other Income $3,701.60 $777.34 $861.85 $861.85 Income Before Taxes $300,972.83 $63,204.32 $95,224.47 $101,249.04 Income Taxes $84,000.01 $17,229.75 $19,102.93 $19,102.93 Net Income $216,972.82 $45,974.57 $76,121.54 $82,146.11 Total Assets $1,260,000.14 $264,600.12 $271,192.53 $271,192.53 Total Common Equity $350,280.04 $73,558.83 $81,555.99 $81,555.99 Net Income Ratio 11.72% 11.83% 17.66% 19.06% Basic Earning Power 24.91% 24.91% 33.49% 38.45% Return on Assets 17.22% 17.38% 25.95% 30.29%
- 19. Pro Forma Financial Statement $20 Million Initial Investment SG&A Savings: 10% - 15% by the third year Compound Annual Growth Rate: 3.50% Net Profit Increase 65.57% - 78.68% in the third year
- 20. Recommendation Launch the Healthy Berry Crunch Cut the operations cost 10% - 15% Improve Lateral Communication Maintain the CM’s Authority Lean Management
- 21. Thank You Berry Much! Team Captain Crunch