Case Interview Question #00251: The client Flint Group is a European maker of printing inks and supplier to the printing and packaging industry. Well known for high quality and good technical support, the company currently sells only in the European market with 2/3 of sales in Germany.
The company has noticed that prices for high quality printing inks are higher in North America and is considering expanding into this market. Their questions to you, an external consultant hired by the CEO to advise him on this matter are: Why are prices so high in North America ? Will this trend continue so that the company can earn a profitable margin in the new market? If the company decides to enter the N.A. market, how should it go about doing so?
Additional Information: (provided to you if asked)
1. Customers: The client Flint Group currently sells to 10,000+ printing shops; larger shops are more demanding in terms of technical service, etc.
2. Competitors (in North America): Two national competitors Xerox and HP provide more limited service; many regional competitors provide better service; all are U.S. based. Note: the use of a 2×2 matrix with Customers and Competitors is effective here.
- Labor: 10% (higher in U.S.).
- Transportation: 5% (10% if shipping to N.A.).
- Raw materials (mostly commodities): 45% (higher in U.S. due to exchange rates, but all companies in N.A. get their materials from the U.S.).
4. Product: There are several quality levels of printing ink. The client sells high quality ink in four base colors that are used by magazines, etc. There is no difference in product quality requirements between Europe and N.A. The client provides technical support for 1-2 days to new users of its products and ongoing support for specific needs.
5. Promotion: Direct sales and relationships are key, the candidate may suggest potential partnerships or target add-on acquisitions.
6. Placement: Distribution is done through a logistics company in Europe.