It was quite a tense atmosphere at the boardroom of Haiethy Private lLimited. They had launched new line of product in the form of aluminum bottles for the kids segment just 15 days back
It came to their attention… that their nearest rival had launched a similar product with 15% reduction in price and in the process was cannibalizing the entire market
Managing Director convened an emergency meeting to handle this situation. CFO, President- Sales, Operations head and other board members were part of the meeting
Managing director asked his CFO” Can we reduce the price to match the competitor’s price?”
To which CFO replied” Sir, our cost model does not allow for any further reduction in the price of the bottle, if we reduce, it will like digging graves for ourselves”
Managing director said in irritation” We can’t let our competitor’s get away with this; we have to do something about it, any suggestion please”
He was despaired when he uttered those words. There was pin drop silence in the room
Then after few minutes, CFO came forward. He said “I have a suggestion, it might work. We have to atleast try this”.
He proceeded “Look the bottles we are selling are for kids segment, then what else a child needs to carry that bottle, a school bag”.
He then went further “Why not collaborate with a bag manufacturer and then offer this bag as part of our product. We will convince the bag manufacturer that he is getting free publicity and advertising”
“This way we stand out from the competition”.
Managing director said “It’s a nice suggestion; let’s reconvene after two hours and discuss more options”
What do you make out of the above situation?
Situations like this often occur in the business. At that time you need people who can advise you based on the facts and numbers.
Ideally speaking if you have a good CEO and CFO, your company is in good hands
Most of the business owners know this, but still they do not have CFO position in the company
At Soatech we provide Virtual CFO services