Case Statement:
Your client is a laundry service provider based out in South Africa owning multiple stores across the country. They are witnessing stagnant growth for the last 3 years. Recently numerous local players are emerging in multiple cities. Help the client grow
C: To begin with the problem, I would like to understand our client’s business better. Do we have information on the stores' location and the region's competitive landscape? Also, what kind of services are available at the store?
I: Sure, the information I have on the client is that the stores are located across the country in multiple cities. The chain is the market leader in laundry services. Currently, they only provide clothes washing as a service; You can compare it to any laundromat you see in the US.
C: That comparison has helped me understand the business. I see that the client has been in the service for a long time. Has the client been providing the same service since the business’s inception?
I: Yes, they have been very good at providing washing service, and this service excellence has propelled them into the market leader position. However, many local players are recently coming up who are providing additional services.
C: So, as I see it, I should focus on ensuring that the client can maintain the market position and achieve growth while doing it.
I: Yes, that should be the way to go.
C: Thank you. There are two factors to consider here; first, growth opportunities can lie in the existing business. Secondly, the client can venture into new service segments and geographies through inorganic means.
I: Can you elaborate on each option?
C: Yes, sure, to begin with, opportunities in existing business opportunities, one option can be to increase the price of our service. We risk losing market share when it is executed.
I: Our client is not open to increasing the price as the customers hail from the price-sensitive middle-class segment.
C: Okay, now another option is increasing the customer base. To do so, we can augment our current services and service delivery channels. Currently, customers avail of the service by visiting the physical store. To provide convenience, pick-up & drop services can be provided. Promotion can also be
channeled using online mode.
I: Well put; can you walk me through the new products and geography part?
C: Yeah, this part will require investing and developing new competencies. New services like ironing, carpet cleaning, etc., can be introduced.
I: That one innovative way to go ahead, now when you suggest venturing into new geographies, what positives and negatives does the firm have?
C: First of all, laundry service should have a substantial audience in the region of operation to make it profitable. Hence, the moderately populated middle class is an ideal target segment class. Most importantly, the country’s economic condition should be similar to SA. Hence in Africa presently, the operations are limited. The nearest option can be Middle east countries.
I: Perfect, you called out apprehensions precisely. It was great talking to you! We will close the case now.
Background Information:
Client: Laundry service
Competitor: No major changes, few local players emerging. The potential threat of erosion of market share due to localized monopolies by the new players
Time Frame: Growth stagnant for the last 3 years.
Geography: Located in South Africa
Case recommendations:
The case here is an open-ended case, and structured application of organic and inorganic growth models will keep you on right track. Since it is open ended, maintaining the structure till the last moment is crucial as on can tend to just call out points which are on the top of mind
