Iguana Fix Case Solution
If I have to reject one segment; I would reject B2B at this point, because I think for B2B retailors; it is a side business for extra profit margins, but for us, it is our core business. Considering this, there is minimal competition in the industry, which can intensify in future, so to prepare the company for future business constraints; I would prefer to work on B2C business segment and invest in developing online applications and websites for customers, I would also work on developing business image and brand recognition. Brand recognition will help the company in the long run in comparison to B2B retail collaborations.
The most important link between B2B and B2C for Iguana is the services which it provides, as the company is greatly known for its services’ quality and on-time delivery of these services. So, the founders have three options available to choose from. These options are: the company should shift its focus from B2c to B2B opportunities, second option is that the company should accept the investment from a venture capitalist firm for its own investment, and the third option is the acquisition of Iguana by a large Latin American retailer. The absence of quality services and timely delivery of these services tend to pose a significant threat to the company’s business, in all the three available options. The company has aimed to maintain a positive brand image. The founder has these three options and service quality and business are combined as one main option for the founders to focus on. Regardless if B2B is performing well;the company would eventually need to develop a business that hasa positive brand image and to offer quality services at its own risk. By doing so, the company would make sure that itwill operate successfully in the long run.
a.The company should opt for a $25 million investment offer from VC, because it is a favorable option for the company. This option will allow the company to grow its business and to enhance its business capacity. Whereas, it’s post-money valuation is also $75 million. Focusing on B2C will allow the company to develop a brand name and positive brand image, and to acquire a huge market share in the industry.
b.Iguana should not aggressively go for a potential partnership with an insurance company, because although this option has opportunity, but this option also tends to decrease the brand development and it will not support the company in increasing its brand image. So this option is a bit distracting for the company and not feasible in the longrun.
c.The company should takeover the business of Casa Facil, because it is a potential market and it will help Iguana in growing and expanding its future activities.Casa Facil operates in Peru and Chile, and these markets will help Iguana in developing its business in future. The focus of Iguana should be on the development of long-term brand recognition and working on branding activities.
d.Based on the valuation and calculation in Appendix 1; I would suggest Iguana to go for the VC’s option,because in the long term; the company is most likely to have negative cash flows, which will restrict the company from supporting its business. In contrast to this, the VC’s option will increase Iguana’s operating capacity and will help it in supporting its future business operations. Further, refer to appendix 1 for the calculations……………………
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