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Billcutterz Case Study

MGT 490 - Written Case Analysis Guidelines

Part 1

For every write up use the following outline.

1.     Industry Analysis – Five Forces

a.     Facts – assessment of the impact or leverage for all firms in the industry with regard to each competitive force

b.     Conclusions – describe the overall attractiveness or potential to compete and make a profit for any firm in this industry

2.     SWOT Analysis

a.     Facts / evidence

b.     Conclusions – discuss the firm’sposition / ability to compete

3.     Strategy

a.     Identify the firm’s general strategy.

b.     Identify strategies (strategic initiatives and practices) the firm appears to be engaging in.

c.      Conclusions – explain whether the firm’s strategic actions are suitable for their competitive situation, whether they appear to be successful, and justify your conclusion with evidence.

4.     Financial Analysis

a.     Facts – present relevant revenue, cost, asset, and liability numbers and trends. Provide relevant financial and operating ratios.

                                                    i.     To assess trends over four or more periods use CAGR for appropriate measures like revenues, costs, profits, EPS, etc. Use the original raw values, not percentages.

                                                  ii.     Also evaluate year-to-year differences – CAGR and year-to-year values tell different parts of the financial story.

b.     Conclusions – discuss the firm’s financial strength and potential based on the evidence presented in 4a.

5.     Issue Evaluation

a.     Facts / evidence – identify priority issues / concerns going forward.

b.     Conclusions – provide evidence to justify your selections in 5a.

6.     Recommendations

a.     Actions recommended.

b.     Projected benefits for each action recommended – identify the problem / issue it resolves.

c.      Projected costs / limitations / drawbacks for each action recommended.

Part 2

Additional Questions / Issues to Consider for Each Case – make notes but do not include them in the written analysis. You should always provide evidence to explain / justify your conclusions.

Costco:

1.     What is Costco’s business model and is it appealing? Use evidence to explain.

2.     What grade would you give CEO Jim Sinegal and his recent successor, Craig Jelinek, in crafting and executing Costco’s strategies? Explain.

Part 3

Here is a brief partial example of case analysis by way of stating facts presented in the case and drawing relevant conclusions from the facts.

From the Billcutterz.com case

Facts regarding Billcutterz.com’s business model:

Value proposition

·       Billcuttterz.com negotiates lower bill payments for customers for things like mortgages, auto payments, cable and cell phone bills, health club memberships, any subscription-based service, etc.

·       Fee structure is 50% of first-year savings, payable up front for discount or in installments – no savings, no fee.

·       Bill payment renegotiated annually.

·       Easy web sign up and uploading of current bills.

·       Service available for individuals and businesses alike.

Profit proposition

·       Revenues consist of 50% of every dollar savings negotiated for a client.

·       Costs include minimal fixed costs but significant variable costs since obtaining more clients means more negotiators are required.

·       Cost savings occur when many customers’ bills can be negotiated at one time - for example negotiating with Time warner for a class of cable customers.

Conclusions (stemming from the facts above) regarding he attractiveness of Billcutterz.com’s business model currently and for the future:

·       The model provides a value in the form of cost savings that just about anyone would be able to appreciate. Moreover, there is no risk for the client since one only pays when one sees a savings. Also, being able to set up an account online and upload bills without having to go anywhere makes the process extremely convenient.Taken together these factors suggest this business model offers an attractive value for its clients.

·       Can delivery of the value be sustained by Billcutterz.com?Successful growth depends on obtaining many more clients every year.Given that virtually every person over 18 years of age incurs multiple monthly bills throughout their lives, the demand should continue to grow as word about the potential savings spreads. However, currently very little is publicly covered in media about this service. Therefore, developing methods for promoting the service, beyond word-of-mouth, will be key to sustaining growth.

·       Profitability depends on finding, employing and training more skilled negotiators every year.Therefore, employee turnover must be avoided. Effective strategies must be developed for identifying and hiring potentially successful negotiators. And finally, training these negotiators will be critical for continued profitability.

·       Business strategies for Billcutterz.com going forward must focus on these issues of a) promoting the value to the masses, and b) hiring, training, and retaining skilled negotiators.

The founder and president of BillCutterz.com is Barry Gross who founded this company in 2009.This idea invented because of his negotiating skill and he started this company.BillCutterz.com negotiates on behalf of its customers to reduce the amount of their bills such asinternet, cable service, mobile phone and other service provider bills by as much as 50%. Thecompany offers a great saving to their customers and they don’t charge anything in advance. Thecompany negotiate with the service provider on behalf of the customer and when the negotiationis successful, the customers have to pay 50% amount of total annual savings. So, basicallycustomers have to pay to BillCutterz.com once they save money by using services.The company’s growth was boosted in 1stquarter of 2014 after the media exposure of ABCWorld News and Fox Business News. Due to this two news segments, 30,000 new customerswere enrolled by February 2014.The founder believes in helping their customers to save their money and for that he is using hisextraordinary sales, marketing and negotiations skill. In the beginning, the company wasperforming very well which we can say through the case study. In the case study, it shows thatcompany’s net profit was almost 65% of the total revenue but later on in the first quarter of 2014,the net profit was only $37. It happened because of huge amount of employee wages which wasaround 70%.

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