Mock Business Case

Earnings improvements and strategy repositioning in the paper and

stationery industry
Bucharest, 2010
100121_Practice Business Case_2010.pptx
Contents Page

A Project context
B Initial situation

C Project tasks

© 2009 Roland Berger Strategy Consultants GmbH 100121_Practice Business Case_2010.pptx 2

 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.

100121_Practice Business Case_2010.pptx 3

 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 Moving
• Food retailers increasingly into Retailers have developed their
• Cash & carry stores the lucrative own product competence, and
non-food range built up effective logistics systems
Quasi-monopoly Selling points
US companies have been acquir-
Fast growth both at home ing small European producers to
and abroad enhance their product range and
• Full range of paper
gain market access
and stationery:
– School-books, Increased production & Low-cost Asian suppliers are
notepads, ring Sales up by logistics capacity (on sales moving into the European
binders etc. >10% p.a. of around EUR 4 bn) market, with dumping prices
in the recent
years
Product Production
portfolio capacity
• Competition is growing
• Past competitive advantages are
becoming meaningless
• The company sees a lasting fall
Recent development
in consumer demand

Source: Paper & Stationery Inc., Roland Berger analysis 100121_Practice Business Case_2010.pptx 4
 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 Marketing
• The company has acquired • The extent of its range has led the • The company now sells
specialist manufacturers1) company to group the business lines around 40,000 products
into four production companies
• It now owns 13 production sites • Products are differentiated for
and 3 warehouses in Germany • They market their own products and different customer groups
and CEE2): sell them to two sales companies for (app. 20,000 customers in all)
key accounts (KA) and export business
Paper & • Different brands are used for
Stationary Inc. different sales lines and
Production Production Production Production
different product groups
company 1 company 2 company 3 company 4
Warehouse
Production site • The company's main brand
KA sales Export sales (covering 70% of its products)
company company
is well known and has a
• As some products have to be relatively neutral image
available quickly, and their
demand is seasonal, Acquired manufacturers are only loosely The company is positioned mid-
production is for stock integrated in the individual divisions way 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 100121_Practice Business Case_2010.pptx 5
 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 x4 x7 x 10 x 12 x 13 x 13 Germany
Production
& CEE
footprint x1 x2 x3 x 3 x 3 x 3 x 3
Production sites
Warehouses
8,660 8,910
8,370
7,420 7,720

5,320 2,260 2,380 2,370

3,870 2,070
1,580 Employees
1,130 1,160 1,250 1,130
950 1,040
Sales
Financials 620
465 Gross margin
[EUR m] 240
90 84 80 40 50 Net income
-100 -25

2001 2005 2006 2007 2008 2009 2010 Q1

Operating 500 550
figures 210 240 250 370 350490 410 460 430 400 420 470
Receivables
[EUR m] Inventories
2001 2005 2006 2007 2008 2009 2010 Q1

Source: Paper & Stationery Inc., Roland Berger analysis 100121_Practice Business Case_2010.pptx 6
 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

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

Analyze the company's position from the information available to you. What do you think are
2 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
3 possible

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

1) Distinguish particularly between the market and cost sides

100121_Practice Business Case_2010.pptx 7
We deliver results

100121_Practice Business Case_2010.pptx 8