Mock Business Case Earnings improvements and strategy repositioning in the paper and stationery industry Bucharest, 2010 100121_Practice Business Case_2010.pptx
Contents A
Project context
B
Initial situation
C
Project tasks
© 2009 Roland Berger Strategy Consultants GmbH
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A
CONTEXT
Paper & Stationery Inc. has hired Roland Berger to support the restructuring of its core business Context overview • Paper & Stationery Inc. is a German company acting on the European paper and stationery market • After a long period of strong growth, sales have been stagnating or slightly declining recently, and earnings are now falling • A recent diversification process led to heavy losses and tied up considerable amounts of capital • Moreover, its core business of paper and stationery has also gone into the red • From the errors of half-hearted restructuring efforts in the past, they have learned that they need to call in the experts this time, and have thus hired Roland Berger Strategy Consultants to assist with restructuring the core business
You are a member of the project team.
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B
INITIAL SITUATION
Once a fast-growing player, Paper & Stationery Inc. is currently experiencing a consistent fall in demand The company's track record
Current situation
• Hypermarkets • Food retailers • Cash & carry stores Quasi-monopoly
• Full range of paper and stationery: – School-books, notepads, ring binders etc. Product portfolio
Moving increasingly into the lucrative non-food range
Selling points
Sales up by >10% p.a. in the recent years
Fast growth both at home and abroad
US companies have been acquiring small European producers to enhance their product range and gain market access
Increased production & logistics capacity (on sales of around EUR 4 bn)
Low-cost Asian suppliers are moving into the European market, with dumping prices
Recent development Source: Paper & Stationery Inc., Roland Berger analysis
Retailers have developed their own product competence, and built up effective logistics systems
Production capacity
• Competition is growing • Past competitive advantages are becoming meaningless • The company sees a lasting fall in consumer demand 100121_Practice Business Case_2010.pptx
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B
INITIAL SITUATION
As the market grew tougher, Paper & Stationery Inc. responded by broadening its product range Company's reaction to the changing business climate Production
Organization
• The company has acquired specialist manufacturers1)
• The extent of its range has led the company to group the business lines into four production companies
• It now owns 13 production sites and 3 warehouses in Germany and CEE2):
Marketing
• They market their own products and sell them to two sales companies for key accounts (KA) and export business Paper & Stationary Inc. Production Production Production Production company 1 company 2 company 3 company 4
Warehouse Production site
KA sales company
• As some products have to be available quickly, and their demand is seasonal, production is for stock
Export sales company
Acquired manufacturers are only loosely integrated in the individual divisions
• The company now sells around 40,000 products • Products are differentiated for different customer groups (app. 20,000 customers in all) • Different brands are used for different sales lines and different product groups • The company's main brand (covering 70% of its products) is well known and has a relatively neutral image The company is positioned midway in the European market
1) As they wanted to have manufacturing competence in as many products as possible 2) Central and Eastern Europe Source: Paper & Stationery Inc., Roland Berger analysis
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B
INITIAL SITUATION
In 2009 the company reported sales drop and negative results, after eight years of stable growth Paper & Stationery Inc. in figures x2 x1
Production footprint
x4 x2
x7 x3
7,420
3,870
5,320
x 10 x 3
x 13 x 3
8,660
8,910
x 13 x 3
Warehouses
8,370
2,380
2,370 Employees
1,580 1,130 Financials [EUR m]
1,040
950
1,160
1,250
1,130 Sales
620 90
84
80
40
465 240
50
Operating figures [EUR m]
210 240
2005
250 370
2006
350490
Gross margin Net income
-25
-100 2001
Germany & CEE Production sites
7,720
2,260
2,070
x 12 x 3
2007
2008
2009
410 460
430 400
420 470
2010 Q1
500 550 Receivables Inventories
2001
2005
Source: Paper & Stationery Inc., Roland Berger analysis
2006
2007
2008
2009
2010 Q1 100121_Practice Business Case_2010.pptx
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C
PROJECT TASKS
As a member of the Roland Berger team, you are requested to find answers to several issues Issues to be addressed during the project
1
What will your analysis focus on?1) What additional information will you need in the course of the restructuring project?
2
Analyze the company's position from the information available to you. What do you think are the main reasons for the company's current problems?
3
Draw up ideas for operative actions to improve the earnings and liquidity situation as soon as possible
4
Sketch an approach to the strategic repositioning of Paper & Stationery Inc. (not the strategy itself)
1) Distinguish particularly between the market and cost sides 100121_Practice Business Case_2010.pptx
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We deliver results
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