Case Interview Question #00553: Our client Colt’s Manufacturing Company (CMC, formerly Colt’s Patent Firearms Manufacturing Company) is a United States firearms manufacturer headquartered in Hartford, Connecticut. Colt is best known for the engineering, production, and marketing of firearms over the later half of the 19th and the 20th century. Colt’s earliest designs played a major role in the popularization of the revolver and the shift away from earlier single-shot pistols. The most famous Colt products include the Walker Colt, Single Action Army or Peacemaker, and the Colt Python.
Colt has been the national market leader of firearm manufacturing and sales for more than 150 years. Recently, however, they have seen a sharp decrease in sales. What are the reasons of their sales drop and what can we do to proliferate sales?
Additional Information: (to be given to candidate if asked)
- Colt’s market share in year 2011 was 45%; in 2009 was 55%.
- The firearms industry in the U.S. has grown by 3% annually in the last two years.
- The most popular “Colt M1911″ pistol constitutes 70% of Colt’s sales. Remaining sales are from specialty firearms suppliers.
- Costs of production, distribution and marketing have not changed over the last two years.
- Prices increased only with the rate of inflation.
- Brescia, Italy based Italian firearms manufacturer Beretta entered the U.S. market in 2007 and has since been growing rapidly. They outsource their production and thus offer a cheaper alternative: the “Beretta M9″.
- Besides a few small local companies, no new company has entered the U.S. firearms industry.