ross casebook 2010 for case interview practice | masterthecase

7/23/2019 Ross Casebook 2010 for Case Interview Practice | MasterTheCase

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VitaminCo (4 f 7)


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- 100 -

VitaminCo (4 of 7)Bain, Round 1

Exhibit 3: VitaminCos Operating Statements ($ millions)

Year 2005 2006 2007 2008 2009

Revenue $ 470 $ 470 $ 480 $ 490 $ 500

COGS $ 230 $ 239 $ 231 $ 226 $ 222

SG&A $ 70 $ 68 $ 72 $ 78 $ 75

Sales & Mkting $ 105 $ 100 $ 110 $ 145 $ 190

Net Income $ 65 $ 63 $ 67 $ 41 $ 14

Margin 13.8% 13.5% 13.9% 8.4% 2.7%

VitaminCo (5 f 7)


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- 101 -

Exhibit 1 This shows us that the healthfoods and beverages market is significantly larger than the vitamins market. Furthermore, growth is much healthier in the healthfoods and beverages market.

Exhibit 2 The healthfoods and beverages market is highly fragmented.

Largest player has 15% share of market Health Focus is only player in both industries. Sets a precedent for operating in both markets. Consider discussion on how Health Focus entered the markets. Which segment they entered first. How quickly they grew and

captured market share.

Exhibit 3 Sales and Marketing have increased without driving an increase in revenue. Vitamin Cos revenue growth has been less than industry -wide level of 5%.

Solution guide


VitaminCo (6 f 7)


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- 102 -

So should we enter?

And, how should VitaminCo Enter?

Who would you recommend they acquire?

Additional questions for candidate

VitaminCo should enter because: Stagnant revenue for VitaminCo Low growth in vitamin market Assumed profitability of Healthfoods segment Highly fragmented nature of health food industry

VitaminCo should enter by acquisition because: Fastest and easiest No synergies in current facilities

VitaminCo should acquire HealthFocus Small enough that they could potentially afford Will drive growth in Vitamins since that is area of stagnation Other options are small players in Other category

Solution guide


VitaminCo (7 f 7)


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- 103 -

A solid interview willaddress other

potential risks

In any acquisition there is a risk of overpaying. We could look at other players to try identify a low performerwith high potential.

May start a bidding war from other competitors in Vitamin industry looking to diversify into the health foodssegment.

And suggest nextsteps

Look into access to capital HealthFocuss total revenues are higher than VitaminCos total revenues and so maybe difficult to get capital

Consider line of products that are most profitable to finalize the acquisition target Look into Vitamin operations to see why VitaminCos growth is lower than industry standard and find methods

for growing the business.


SampleRecommendation

VitaminCo should enter the healthfoods and beverages market through an acquisition of HealthFocus. This will

drive growth in both Vitamin and health food segments.
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