Royal Honey

Case Prompt

Your client is Royal Honey (RH), a premium organic honey manufacturer that sources all of its raw honey from a single supplier in the Midwest United States. Despite record-high demand for organic honey nationwide, RH has seen its profitability decline steadily over the past four years, and its CEO has asked us to determine why the company's financial position has deteriorated and to build a turnaround strategy that returns the company to its former profitability. How would you approach this problem?

Additional info:

• Overall goal - RH wants to return to its FY22 profitability within two years
• Competition - revenue and profitability are declining for all major competitors, but not to the same extent as RH
• Product - RH sells only one product: organic golden honey
• Value chain - RH purchases raw honey from suppliers and manufactures the finished product
• Customers - RH sells to domestic high-end grocery stores (e.g., Whole Foods) nationwide

General response summary

Sample Framework

Raw honey supply

• Sourcing
  • Single Midwest farm, no second source
  • Bee population decline in the Midwest
• Input price
  • Supplier raises its price every year

Operations and channel

• Processing
  • Bottling and labeling cost per pound
• Route to market
  • High-end grocery only, no other channels

Revenue and market

• Price and volume
  • $10/lb held flat since FY22
  • Pounds sold vs. nationwide organic demand
• External forces
  • Competitors declining, but less than RH
  • FDA rules; demand shifting to consumer goods

Interviewer notes:

• Interviewer should wait to provide Exhibit 1 until after the candidate has presented a framework.
• A strong framework follows the honey value chain: procurement, processing, warehousing, distribution.
• Give credit for market factors: new entrants, honey demand shifting from food to consumer goods (e.g., chapstick), bee population decline, FDA considerations.