UC_CaseCompetition_R4

Eurobrand Challenge

Team Captain Crunch

Chen Hou / House Zhang / Rudy Tjong / Samuel Sutanto / Yvonne Baker

Background

100 years old company

Over $9 Billion of Sales Worldwide

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

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

Competitors

Kellogg’s (26%)

Cereal Partners (17%)

Weetabix (7%)

United Cereal (20%)

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?

What if we don’t launch the product?

Opportunity Cost

Sunk Cost

Discouraged Entrepreneurial Spirit

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

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

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

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

ManagerUK Division

South Europe

Division

North Europe

Division

CM France

CM Germany

CM Italy

Juice &

Dairy

Cereal

Snacks

Frozen

Foods

R&D R&D

Proposed Marketing Plan

Target Market:

Parents with Children

Health Conscious Adults

Positioning:

Healthy

Premium

Environmentally Friendly

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

Coolest Breakfast Ever!

Pro Forma Financial Statement

Europe FranceGrowth Rate

3.50%

France

Year 3Growth 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%

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

Recommendation

Launch the Healthy Berry Crunch

Cut the operations cost 10% - 15%

Improve Lateral Communication

Maintain the CM’s Authority

Lean Management

Thank You Berry Much!

Team Captain Crunch