Just like the famous American quote attributed to the close adviser and, later director of the office of management and the budget of then US president Jimmy Carter, Thomas Bertram Lance.
“IF IT AIN’T BROKE, DON’T FIX IT”
If something works, leave it the way it is as changing it or attempting to change it, might be catastrophic. So also, we are all at some point in our lives faced with a dilemma of what to keep as it is or just do something to make it better.
Now, it is very important to emphasize that change (or ‘fix it’ in direct reference to Mr Betrams’ words) in this context does not mean a radical shift from the norm or a change towards negativity, it simply describes the change as an inevitable aspect of human evolution.
This background story applies itself to the case at Mountain Man Brewing Company (MMBC) of the Analysis of Business Problems (ABP) course. The case clearly emphasizes the need for change or evolution as used above, but the price – literally – and prize for such a change do not align. This case negates the “one size fits all” philosophy and reveals that what is good and beneficial might not always be the best.
The case describes a protagonist – OSCAR PRANGEL -, a recently graduated MBA student who stands to inherit a third-generation regional family brewing business (MMBC), that caters to the unique and strong needs of the region’s blue-collar workers. A brief background on MMBC from the case is below.
THE MMBC BACKGROUND
“Guntar Prangel founded the Mountain Man Beer Company (MMBC) in 1925. Mr Prangel had reformulated an old family brew recipe using a meticulous selection of rare, Bavarian hops and unusual strains of barley, resulting in a flavourful, bitter-tasting beer which the Prangel family launched as Mountain Man Lager. By the 1960s, Mountain Man Lager’s reputation as a quality beer was well entrenched throughout the East Central region of the United States.
Mountain Man Lager was a legacy brew in a mature business. By 2005 Mountain Man was generating revenues of just over $50 million and selling over 520,000 barrels of Mountain Man Lager beer primarily to distributors in Illinois, Indiana, Michigan, Ohio, and its native West Virginia. It had held the top market position among lagers in West
For almost 50 years, Virginia had a respectable market share for an old school, regional brewery in most of the states where the beer was distributed. It was packaged in a brown bottle to accentuate the beer’s dark colour, with its original 1925 design of a crew of coal miners printed on the front.
Mountain Man Lager was priced similarly to premium domestic brands such as Miller and Budweiser and below specialty brands such as Sam Adams. Its price was typical $2.25 for a 12-ounce serving of draft beer in a bar and $4.99 for a six-pack in a local convenience store.”
THE OSCAR CONCERN
As is obvious from the background, MMBC was more than just a beer, it was a beer of beers for its core drinkers (those who would not drink any other beer) and, a loyalty rate of 53%. This meant MMBC had nothing to worry about. However, as of 2005, MMBC sales had declined by 2% and that was expected to continue.
This was not good news for the company he stood to inherit when his father stepped aside and Oscar, being an MBA graduate put forward the option of launching a light version of the Mountain Man beer.
The decision should be relatively straightforward but Mountain Man beer being such a strong household name whose existence depended on creating only one unique lager was faced with a conundrum. Launch the light beer with the possibility of capturing a market growing at a rate of 4% per annum or sustain the status quo with the possibility of a 2% decline in turnover annually.
Oscar also had to contend with his father’s concerns of brand dilution and, cannibalization costs (which were very valid), he also had to deal with EXCOs internally who believed doing nothing was the best way forward.
All Oscar had to do put simply, was prove that MMBC was already in a ‘broke’ situation and if not fixed, the possibility of finding themselves in the doldrums awaited.
The big question is, how would prove to everyone that MMBC light was the future that MMBC needs?
