Hansson Private Label Inc. Harvard Case Solution & Analysis

Abstract

Hansson private limited Inc. deals in the private label sector, offering the personal care products, like shampoo, cream, bathing soaps, shaving creams and gel, Sunscreens and mouthwash. Over the period of time, the company has improved its position in the personal care market by selling through different channels. In the recent years, by analyzing the financial statement, it is examined that the position of the company in personal care market is well managed and highly performing.

Hansson Private Label Inc.

Hansson Private Limited (HPL) and its Position within the Private Label Personal Care Industry

From 2003-2007, the total assets have grown to 0.4 M. Also from 2003-2007 there is gradual increase in the profits of the company which shows the strong anchoring of the company in the market. It also depicts that the company is being able to capture the market opportunity by strong market penetration strategy.
Hansson Private Label Inc. Harvard Case Solution & Analysis

In addition, there is a 50% decrease in the debt from 2003-2007, that depicts the company’s ability to meet the cash requirement and to develop the cash flow cycle that is able to pay-off the debt liability timely. Moreover, since the company operates in personal care and private label market, which has gained significant acceptance and popularity in the US market, the impact of such increase in customer demand can be also depicted through the sales of the company which has increased by 28% in wholesale share as compared to its competitor.

Lastly, since the company started its operations in the personal care and private brand industry long ago, it has developed a strong market position and brand awareness, which has enabled the company to develop a strong market positioning and leadership strategy. Also. Due to this factor, the company has been able to develop strong pioneer brand image, leveraging it to increase the profit margins in the intense market competition.

 

Projected Free Cash Flows and Applicability of Projections

The cash flow of the company is a complex process particularly due to high-risein competition, from the firms operating in the industry. Given the availability of the substitute goods there is a high risk of market fluctuations which may affect adversely in the future. The assumptions made are reliable where there is stability in the industry. However, the competitive nature of the industry may jeopardize two assumptions in particular in the future. First is the production cost assumption which aggregates 7% rise per annum and the second is labor cost, which also aggregates 7% rise. This means that the cost has been highly estimated while the sales are expected to rise by only 2%.

Hence these estimates are reliable only to the extent where the risks have been minimized and the cost has been controlled while there is stability in the industry......................

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