Professional Documents
Culture Documents
Sushnata Chatterjee
sushnata_chatterjee2016@isb.edu
Current Scenario
Brandbury, a $20Bn company, has four business segments confectionary, beverages, dairy
and biscuits
Currently, major inputs in Cookie Monster are cocoa, sugar and peanuts which are sourced
from South America and West Africa and its market is limited to USA
While Cookie Monster is a quality product with good brand recall, its profitability is a concern
for the company.
This is mainly because sales have stagnated as the market has matured in in USA and also
because of the rising prices of its key inputs
The company has a plant in Ohio which operates at its maximum capacity, so any increase in
sales to boost profitability would require expansion in production facility.
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Problems
To increase profit from Cookie Monster, new markets are to be identified as US market has
been saturated. The possible options are South America or Asia Pacific region as suggested by
a marketing research firm due to the sustainable demand and growth prospect of these two
markets.
The capacity of only plant in Ohio has been exhausted. So to produce more Cookie Monster,
Brandbury must either Expand the Ohio plant or set up new plant.
The strategy is to combine inexpensive raw materials, proximity of production facility to input
sources and capture the maximum market.
The data requested would help in validating and verifying the following potential moves:
Potential cost savings if production facility, raw material sources and target market are
located close to each other
Alternative sourcing of Cocoa from Brazil or Mexico and even Wheat if feasible
Alternative sourcing of raw materials - wheat (India, China), sugar (India, China), cocoa
(Malaysia) and peanut (India, China)
Potential cost savings if production facility, raw material sources and target market are
located close to each other
Continued
Estimates of market demand and growth along with the set up cost of additional
production facility would determine the choice of next target market.
However, a trial launch could be considered before determining long term strategy.
Brandbury could explore if the production for trial launch could be managed from Ohio
facility to save initial capital expenditure before gauging the market potential.
Comparing the production costs in USA with that in the new target markets in South
America and Asia Pacific and factoring the additional transportation costs and gains from
economies of scale, Brandbury could explore centralizing its entire production in these
regions with relatively inexpensive labor force.
Brandbury could also review its existing operations and production process to rectify
current cost leakages and making it more cost effective.
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