CASE-OPS

THE CASE STUDY ROUND

TEAM INCOGNITO
- ASAWARI JOSHI
- CHINTAN GALA
01 Lycozer
FACTORS TO B E TAKE N INTO AC C OUNT TO DE C IDE WHE THE R LYCOZE R
SHOUL D AT TAIN STAR C OR P

RATIONALE COMPANY ANALYSIS VALUE OF STARCORP

• Will star corp fit in the mission and the
vision of the company?
• Are there any other firms/alternatives
available in the market having R&D
capabilities superior to star corp
(STARCORP) • Value of existing drug pipeline
• Financials • No. of drugs are in development in the
• Core-competencies company and the quality of drug
• Intellectual property like patents • The market value and the perception/image
• Growth Trajectory of Star corp
• Assets of Star corp • Relations with key opinion leader

FINANCIAL ANALYSIS HUMAN RESOURCE MISCELLANEOUS

• The acquisition impact our financial
• Impact on revenue
• Impact on profitability
• Break-even point of the new portfolio of
the biological drug
• Scientific talent with star corp
• Culture of star corp
• The cultural difference that can cause
an issue in integration of two
organization
• Starcorps existing partnerships with
companies
• Alternatives to acquisition like a
partnership instead of acquisition
 EVAL UAT I NG T HE E XIST I NG DR UG PIPE L INE OF STARCORP
RISKS TO SUCCESS
• Probability of success
clinical trials
• The probability that the drug
will win regulatory approval
• Any potential side effects
• Risks of competitors getting
approval before us
• Potential legal exposure
because of lawsuits
ANALYZING THE COST TO COMPANY MARKET
LINE OF BUSINESS RESPONSE
• Future R&D cost till the drug
of has been approved or is ready
• The market size of the • Any side effects from the
to be sold
biologicals? drug after the drug is in the
• Future cost of clinical trials if
• The pricing of the drug and market
any
frequency of the buying/using • Market response to this
• Cost of approval from
for that drug drug
regulatory bodies or cost of
• The market share of Star corp • Doctors' response to this
patents or other intellectual
• Competitive landscape drug?
property in future
• Cost of manufacturing and • Competitor's response to
distribution our drug
• Cost of marketing and • The strength of our patent
promotion
P ROBABI LIT Y OF DR UG BEI NG S UC C ES S F ULLY
M ARKET ED AND S OLD

IF DRUG • Probability (Drug marketed and sold) = Probability (passing Phase

PA S S E S III) * Probability (Filling)
PHASE II • Hence, Probability (Drug marketed and sold) =60% x 90% = 54%

W O RT H O F
•A successful candidate drug being marketed and sold is
DRUG
worth $1.4 billion
PA S S I N G
THROUGH • Hence, a candidate drug that passes Phase II is worth
PHASE II 54% x $1.4 billion = $756 million

• To Break-even the $160 million investment, the

value of the drug that has passed phase II, should be
= $756+$160 = $916 million
BREAK-EVEN
OF • The probability has to be increased by (160/756) =
INVESTMENT 21.16% points
• The current probability of passing Phase I and Phase
II is (70% * 30*) = 21%
• By increasing the current probability by 21.16%, we
get the probability of passing phase I and II is
42.16%
• Hence, the probability for passing Phase II should
be= P (passing both phases I and Phase II)/ P
• (Phase I)= (42.16% / 70%)
• Hence, the probability of passing Phase II should
increase from 30% to 60%
 R i sk for i nt e gra t i on of Lyc oz e r a nd St a r corp

Scientist have different areas of expertise and interests and they do not have overlapping therapeutic area.
Hence, they might find it difficult to work together

The cultural difference between both the firms will be demotivating for most the employees

Key scientific talents might leave the Star corp because of the acquisition or because of the change in the
management. This will be a major loss to us and these scientist brings the competency of the Star corp

Communication barrier and difficulty in sharing important information’s

Lack of the trust among the employees. If there are layoffs after acquiring the Star crop, that will decrease
the morale of the employees and turn them against each other
02 Shoe- Stopper
NitroBoots
Solution Q1
Exhibit 1 will help us to find the formal shoes market size. As gives the average population for each of the three customer
segments and also what percentage of that population buys formal or casual shoes and average price paid. This
information along with some assumptions will help us derive the necessary market size for formal and casual shoes
category.

Assumptions

1) Prize of Shoes: 2) Number of shoes bought:

• As exact price of formal or casual shoes is not given, rather
average price that particular customer segment spends is given
which will include all the shoes categories
• Hence we will have to assume a price for formal shoes. Formal
shoes should cost more if we compare Group A vs Group B vs
Student category and hence they should cost more than Rs 12300.
The price we assume for Formal shoes is Rs 13000, Similarly for
Casual shoes we assume it to be Rs 9000
• As no explicit information regarding number of shoes bought is
given, hence using the info given in the case we will have to assume
average number of shoes bought of each category by each customer
segment
• Group A: These are many desk job workers who don’t have to do
much manual work, hence we assume that they buy 1 pair of
formal shoes and 1 pair of casual shoes in a year
• Group B: These are manual workers and according to the footnote
give, we assume that they buy 2 pairs of formal shoes in a year but
only 1 pair of casual shoes as they would wear them just on
holidays etc.
• Student: Same as Group A buys 1 pair of formal and 1 pair of casual
shoes.
 Formula: (% of the total population that buys formal or casual shoes ) * (Avg price of the shoes) * (Avg number of pair of shoes bought)

Formal Shoes market size Casual Shoes market size

Customer Total % buying Avg Price Avg Pair Market Custome Total % buying Avg Price Avg Pair Market
Segment Populatio formal of Shoes size ( in r Populatio casual of Shoes size ( in
n (in shoes Billion Rs) Segment n (in shoes Billion
million) million) Rs)
Group A 11 25% 13000 1 35.75
Group A 11 35% 9000 1 34.65
Group B 12 60% 13000 2 187.2
Group B 12 20% 9000 1 21.6
Students 7 15% 13000 1 13.65

Total 236.6 Students 7 55% 9000 1 34.65

Market
Size
Total 90.9
Market
Size

Nitroboots total Revenue from Formal and Casual shoes category

Formula: (Nitroboots market share)*(Total Market size)

Nitroboots Formal Shoes Revenue Nitroboots Casual Shoes Revenue

16% * 236.6 = Rs 37.856 Billion 40% * 90.9 = Rs 36.36 Billion

Solution Q1

₹ 236.6 ₹ 37.856 ₹ 36.36

Rs Billion Rs Billion Rs Billion

Nitroboots Formal Nitroboots Casual

Formal Shoes Market
Shoes Revenue Shoes Revenue

This is the total size Even though Nitroboots is market leader in casual shoes market,
of the Formal Shoes it earns slightly more revenue from its formal shoes segment.
market overall and Because of our assumptions taken we can also say that the
Casual shoes market revenues from both categories are relatively close for Nitroboots.
is worth Rs 90.9
Billion

*Please Note above numbers have been calculated using the assumptions and answer may vary if assumptions change
 Solution Q2
Exhibit 2.3 and 4 will help us to answer the question. From this exhibit we can say that Distribution, Buyer Purchase
Criteria, Pricing-cost-margins are the areas which we need to look at to derive the answer to as to why Sparcus leads
Nitroboots in the Formal shoes market and thus in the end we can then summarise our answer.
Distribution: Channel
Preference Buyer Purchase Criteria Price-cost-Margins

• From Exhibit 2 we can see the preferred the
channels through which brands sell their
shoes.
• Sparcus which is market leader in formal
shoes categories sells most of its shoes
through safety/work (39%) channel. As
Formal shoes are mostly worn by Group B
population and they are the one which are
involved in manual,safety work, this channel
automatically becomes important to serve the
formal shoes market
• Sneakes which is owns 2nd highest market
share of formal shoes, also sells in
safety/work (22%) channel.
• Nitroboots on the other hand doesn’t sell
anything through the safety/work channel
which feels like the preferred channel for
formal shoes.
• From Exhibit 3 we can see Sparcus
Quality/Durability (45%) and Comfort (39%)
are top two criteria similarly these are top
criteria for Sneakes brand as well
Quality/Durability (43%) and Comfort (52%)
just in reverse order
• Clearly Quality and Comfort is the most
sought criteria in Formal shoes as it is worn
by people who do manual work and will need
shoes which last longer and are comfortable
• Nitroboots has good quality but comfort is
distant 3rd with only 19%
• Sparcus also has loyal customer base with
past experience being 30% whereas
Nitroboots is missing this altogether
• Sparcus already prices its shoes aggressivley
• From exhibit 4 its clear Sparcus spends more
on materials and labour thus resulting in
superior quality shoes
• Spends less on sales&marketing as formal
shoes may not need high marketing as
compared to casual shoes
• Though margins for Sparcus are low but with
loyal customer base it can maintain those
margins
• Nitroboots has high margins but they are also
priced at a premium and it spends less on
materials and labour but more on marketing as
expected
• Nitroboots margins will take a hit if they
decrease price or spend more on materials,
though they cant increase prices as they are
already priced at a premium
 Summarization

Nitroboots is not targeting right Sparcus spends more on

channel for formal shoes. It is not materials and labour to show the
selling where formal shoes are quality and is aggressively priced
purchased more but lower margins

Sparcus meets the criteria of what Nitroboots cannot increase price

formal shoes customers want and nor decrease it as that may hint
also has a loyal customer base, decrease in quality. It can spend
whereas Nitroboots doesn’t meet more on materials and let
margins take a hit
 Solution Q3
Why Formal Shoes market is important?
• The Formal shoes market is much bigger than the casual shoes market
• The margins on Formal shoes are higher for Nitroboots as compared to casual shoes (22% and 15%)
• The newly gained formal shoes customers may also become new customers for the casual shoes lineup for Nitroboots
• It was once a market leader in Formal shoes market and thus there is still newer opportunities for Nitroboots to improve their position in the formal shoes
market
New Strategy

Channel Distribution Improving Quality Brand Image

Nitroboots should start selling in
the safety/work channel as that
is the preferred channel for
formal shoes
Nitroboots should spend more on
materials and labour, which will
result in far superior quality shoes
a must in formal shoes category
Nitroboots should work on improving its
brand image for Group B customers. The
new perception should be such that they are
made of quality materials, are comfortable
and are stylish too

Start a new sub-brand Promotions Casual Shoes market

Nitroboots can start a new sub- Heavy marketing and promotions to be While targeting formal shoes
brand. The formal shoes in these done in places where Group B workers market, they should not alienate
can be aggressively priced and are present. They can give casual shoes their strong casual shoes market
are comfortable and of quality on discounts along with formal shoes
THANK YOU