Roland Berger Practice Business Case 20100201

100121_Practice Business Case_2010.pptx

Bucharest, 2010

Mock Business Case

Earnings improvements and strategy repositioning in the paper and stationery industry

© 2009 Roland Berger Strategy Consultants GmbH

Contents Page


Project context

Initial situation

Project tasks

A

B

C


Paper & Stationery Inc. has hired Roland Berger to support the restructuring of its core business

CONTEXTA

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 re cently , 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.


Once a fast-growing player, Paper & Stationery Inc. is currently experiencing a consistent fall in dema nd

The company's track record Current situation

Retailers have developed their own product competence, and built up effective logistics systems

US companies have been acquir-ing small European producers to enhance their product range and gain market access

Low-cost Asian suppliers are moving into the European market, with dumping prices

Fast growth both at home and abroad

Selling points

Production capacity

Product portfolio

• Full range of paper and stationery:– School-books,

notepads, ring binders etc.

Moving increasingly into the lucrative non-food range

Increased production & logistics capacity (on sales of around EUR 4 bn)

Recent development

• Hypermarkets• Food retailers • Cash & carry stores

Quasi-monopoly

Sales up by >10% p.a.

in the recent years

• Competition is growing• Past competitive advantages are

becoming meaningless• The company sees a lasting fall

in consumer demand

Source: Paper & Stationery Inc., Roland Berger analysis

INITIAL SITUATIONB


As the market grew tougher, Paper & Stationery Inc. responded by broadening its product range

Marketing

• 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 mid-way in the European market

Organization

• The extent of its range has led the company to group the business lines into four production companies

• They market their own products and sell them to two sales companies for key accounts (KA) and export business

Paper & Stationary Inc.

KA sales company

Export sales company

Acquired manufacturers are only loosely integrated in the individual divisions

1) As they wanted to have manufacturing competence in as many products as possible 2) Central and Eastern Europe

Production

• The company has acquired specialist manufacturers1)

• It now owns 13 production sites and 3 warehouses in Germany and CEE2):

• As some products have to be available quickly, and their demand is seasonal, production is for stock

WarehouseProduction site

INITIAL SITUATION


B

Company's reaction to the changing business climate

Production company 1





Net income

Gross margin

Sales465

2,3702,3802,2602,070

1,580

1,130

240

1,1301,2501,1601,040950620

-25-100

5040808490

2007200620052001 2010 Q120092008

8,3708,9108,660

7,7207,420

5,3203,870

Employees

Production sites

Warehouses

Production footprint

Financials [EUR m]

x 4x 2

x 7x 3

x 10x 3

x 12x 3

x 13x 3

x 13x 3

Germany & CEE

500420430410350250210550470400460490370240

2007200620052001 2010 Q120092008

Inventories

Receivables

Operating figures [EUR m]

x 2x 1


INITIAL SITUATIONB

Paper & Stationery Inc. in figures

In 2009 the company reported sales drop and negative results, after eight years of stable growt h


As a member of the Roland Berger team, you are requested to find answers to several issues

1) Distinguish particularly between the market and cost sides

What will your analysis focus on?1) What additional information will you need in the course of the restructuring project?

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?

Draw up ideas for operative actions to improve the earnings and liquidity situation as soon as possible

Sketch an approach to the strategic repositioning of Paper & Stationery Inc. (not the strategy itself)

PROJECT TASKSC

1

2

3

4

Issues to be addressed during the project


We deliver results

Documents

Roland Berger Practice Business Case 20100201