Brainstorming

Question 1

Revenue Growth

Answer 1

• Diversification (new products, new segments)
• Market penetration (increase market share)
• New development (existing product lines in new markets)
• Product innovation (new products to existing segments)

Question 2

Typical Fixed Cost and Variable Cost Items

Answer 2

Fixed

• Occupancy-related
• Equipment-related
• Overhead salaries
• Logistics/transportation
• Marketing
• R&D

Variable

• Raw materials
• Labor
• Commission
• Discounting

Question 3

Risks

Answer 3

• Market specific (competitive response, new entrants, substitute, changes in supply/demand, market consolidation)
• Financial (revenue-related, cost-related, Capex related)
• Operational (operational complexity - think of how do they get supplies, produce and deliver?; lack of expertise; scaling; quality control)

Question 4

Synergies: Revenue (4 categories)

Answer 4

(Distribution, value prop, pricing, sales and marketing)
Distribution
-Cross selling
-Accelerated geographical expansion
Pricing
(more bundling options for more price sensitive groups)
-Better pricing power given higher market share
Value proposition
-Better combined product innovation
-Better customer experience given adoption of best practices from each other
-More appealing value proposition given a wider range of products
marketing/sales
Higher marketing ROI
-More efficient sales given exchange of best practices
-More appealing loyalty programs given wider opportunity to collect and spend points

Question 5

Synergies: Cost (Think in terms of fixed vs. variable; about 4 each)

Answer 5

Fixed
lower overhead
lower rent
lower maintenance
lower marketing 

Variable
decrease in raw materials from volume discounts
decrease in labor due to consolidation in production and increase in labor efficiency
lower transportation
lower distribution and credit card fees

Question 6

Prongs for brainstorm on profit growth

Answer 6

increase sales, decrease costs, focus on high margins (products, segments, geographies, brands)

Question 7

Market attractiveness

Answer 7

Market
Market size, growth rate, competitive landscape, typical profitability, barriers to entry

Go to Market Strategy
Operational - time to enter, operational complexity, capability gaps
Financial - synergies, expected results

Risks (market, financial, operational)