Business Strategy: Home Delivery Solution for Retailer Chain

This case is purposefully heavy on exhibits but light on numbers with no need for extensive calculations. The objective is to push candidates on their strategic thinking and their ability to structure their thoughts and arguments. Candidates should be given enough time to digest the exhibits. However, they should not try to turn this into a valuation case or dig deep into profitability. Time value of money can be ignored.

The candidate can decide to buy or not buy DDT for USD 100 m.  A few considerations that a candidate should factor into their recommendation:

1. Deal financials:

• The information show that Kadara can afford DDT and that the price is broadly reasonable. Candidates can argue for a lower acquisition price but in broad strokes the deal would be acceptable from a financial standpoint

2. Strategic:

• The candidate should acknowledge that Kadara needs to develop a plan to handle home delivery
• The candidate should also acknowledge that drones are one means to one part of an overall home delivery picture (and probably one that does not need to be answered first)
• The candidate should discuss trade-offs between acquisition, partnership, JV, organically developing, and of required strategic capabilities

3. Operational:

• The candidate should speak to the operational challenges of home delivery and how, if at all, drones help
• The candidate is given information to show that Kadara only delivers from distribution centers and has a poor e-commerce/customer website and mobile presence 
• The candidate can see that all current home deliveries are handled by car, truck or bike by both owned, traditional (e.g., FedEx) and shared economy (e.g., Instacart) means

It has to be acknowledged that there is a need to adapt to changing demands of grocery customers. The do-nothing strategy is not really appropriate (and should be obvious with the changes in how customers see grocery stores). 

A few aspects for Kadara to address are, e.g.:

• fix customer pain point of poor website and mobile app user experience to increase sales conversion through e-commerce channel
• map out the full process flow of customer attraction → customer order → order pick and pack → order delivery → customer service and payment that is required for last-mile delivery to address where and how that is different than the very traditional distribution center to retail store flow Kadara uses today
• holistically investigate viable home delivery options (customers did not perceive Kadara's current delivery options and delivery lead times of next day or longer for online sales as unfavorable) and conduct select pilot programs → gradually ramp-up offering across regions based on cost-benefit analysis