Flare Fragrances
rP os t
4550
MAY 5, 2010
JOHN A. QUELCH
LISA D. DONOVAN
op yo Flare Fragrances Company, Inc.:
Analyzing Growth Opportunities
It was early December 2008, time for Flare Fragrances Co. to launch its final analysis of 2009 strategic initiatives, and the group of 10 sales and marketing employees in the main Flare conference room could see by the look on her face that CEO Joely Patterson was determined to make 2009 better than 2008 had been. The economic crisis had taken its toll on Flare’s businesses. Back in 2007, sales had risen 12%; now, less than a year later, the CFO’s estimated year-end numbers projected only 2% growth in 2008—a better recession story than some businesses had to tell, but not a trend that
Patterson or the company founders wanted to see repeated in the coming year.
No
tC
“I congratulate you for surviving in a tough economic climate, and I thank you for your hard work,” Patterson told the group. “Good as we were, now we have to be better. We are here to discuss the study that our consulting group, Arlmont Associates, submitted on Monday. As you have read, Arlmont suggested that several strategic options offer the greatest potential for growth.
At this point I favor the two that Arlmont viewed as most promising: one, increase our efforts in the drug store channel; two, introduce a new perfume brand. Today, we begin to analyze our options intensively. We can do one, both, or neither. But if we do neither, we have to identify some other idea that can deliver at least $7.5 million incremental revenue in 2009 and reverse our declining sales trend. If our strategy works, the founders can consider taking the company public. Before we dwell on the future, though, I want us to review who we are and how we got here, because that historical context is important for determining the direction in which we should head.”
Flare Company Background and Industry Position
From its origins in 1955 as a small manufacturer
4550
MAY 5, 2010
JOHN A. QUELCH
LISA D. DONOVAN
op yo Flare Fragrances Company, Inc.:
Analyzing Growth Opportunities
It was early December 2008, time for Flare Fragrances Co. to launch its final analysis of 2009 strategic initiatives, and the group of 10 sales and marketing employees in the main Flare conference room could see by the look on her face that CEO Joely Patterson was determined to make 2009 better than 2008 had been. The economic crisis had taken its toll on Flare’s businesses. Back in 2007, sales had risen 12%; now, less than a year later, the CFO’s estimated year-end numbers projected only 2% growth in 2008—a better recession story than some businesses had to tell, but not a trend that
Patterson or the company founders wanted to see repeated in the coming year.
No
tC
“I congratulate you for surviving in a tough economic climate, and I thank you for your hard work,” Patterson told the group. “Good as we were, now we have to be better. We are here to discuss the study that our consulting group, Arlmont Associates, submitted on Monday. As you have read, Arlmont suggested that several strategic options offer the greatest potential for growth.
At this point I favor the two that Arlmont viewed as most promising: one, increase our efforts in the drug store channel; two, introduce a new perfume brand. Today, we begin to analyze our options intensively. We can do one, both, or neither. But if we do neither, we have to identify some other idea that can deliver at least $7.5 million incremental revenue in 2009 and reverse our declining sales trend. If our strategy works, the founders can consider taking the company public. Before we dwell on the future, though, I want us to review who we are and how we got here, because that historical context is important for determining the direction in which we should head.”
Flare Company Background and Industry Position
From its origins in 1955 as a small manufacturer