Practice exam 3

Vertigro grows lettuce and herbs in an old harbour warehouse in Rotterdam, in stacked layers under LED light. The company was founded in 2019 by Eva and Jorn, has 60 employees and supplies two supermarket chains. Growth has stalled: the electricity price is rising and the supermarkets negotiate ever harder.

Adviser Kim says: 'A good strategy starts with clear goals. Analyse the market, compare the options, choose the best one and carry it out according to plan. That is how it should be done.' Eva answers: 'For us it went differently. In 2021 restaurants called to ask whether they could buy our herbs. A second activity grew from that, without anyone having planned it.'

Three decisions are now on the table. The board is considering selling growing systems to restaurant chains as well as growing produce, as a separate business unit. The supermarket business unit has to choose how to set itself apart from cheap imported herbs: on freshness and local origin. And the operations department wants to replace the LED lighting with more efficient lamps, while HR wants to start a training programme for growing specialists.

The annual report says that Vertigro exists 'to bring healthy food close to the city, without pesticides and with 90 percent less water, and to make a healthy profit doing so'.

Voltbox from Eindhoven makes home batteries with which households store solar power. The company started in 2020 and sells through installers of solar panels. So far Voltbox has made 10,000 batteries, at a cost price of 2,000 euros per battery. From experience in the sector, management knows that the cost price falls by 20 percent with every doubling of the cumulative volume.

The market is changing fast. Growth has fallen from 60 percent to 25 percent a year. The number of suppliers has risen from 6 to 38 in three years, selling prices have fallen by 30 percent, and two small suppliers have gone bankrupt. Batteries of different brands look more and more alike and buyers compare mainly on price.

Voltbox depends on two groups of parties. The installers decide which brand the customer gets, and the app Wattly determines how smartly a battery deals with dynamic electricity prices. Wattly now works with Voltbox and two other brands and wants to support more, but then wants access to Voltbox's software. Households with Wattly can exchange surplus power with each other: the more households use the app, the more valuable the app is to every other household.

Board member Lars says: 'Installers and Wattly are simply our suppliers and customers. The concept of a business ecosystem adds nothing. We just have to sell faster.'

Kompas Advies is a consultancy with 120 employees that helps municipalities with their digital services. Many advisers have previously worked for a municipality and know the laws and regulations and the political decision-making from the inside. Over twelve years Kompas has built up a benchmark database with the performance of 200 municipalities. The database is updated every year by a dedicated data team and only Kompas has access to the underlying data, because municipalities share it voluntarily per project. Kompas also has a good name: municipalities call the firm reliable and independent.

There is now unrest. Large consultancies offer free AI tools that municipalities can use themselves to compare their services. Municipalities increasingly buy jointly through a central purchasing organisation, which selects mainly on price. A young competitor, Bytewerk, does the same as Kompas for half the price, but has no data of its own.

At Kompas a group of advisers discusses every quarter what is changing at municipalities and in the market. There is a separate budget for new services, and after every project the way of working is adjusted. Some members of the board therefore want to build the whole strategy on the benchmark database, because 'nobody can copy this'. Others wonder whether municipalities actually value that.

Rijnmond Holding is a family firm from Rotterdam with three subsidiaries and 450 employees. Van-Direct rents out vans to sole traders and small businesses. Autoservice Rijnmond maintains vehicles and is located on the same site as Van-Direct. Ovenvers is a regional bakery with forty shops. Ovenvers has part of its bread delivery driven with vans from Van-Direct, and the mechanics of Autoservice also maintain those vans. The three companies use the same financial administration and the same buyer for vehicles.

The holding is led by Anouk de Rooij, the third generation. She wants to buy a fourth subsidiary: Smash, a chain of five padel halls in the region, which is growing fast and makes a lot of profit. Smash is for sale for 18 million euros. The holding has 12 million euros of its own equity for this and wants to borrow the rest.

Anouk says: 'Padel is hot. The padel halls are doing well, and if the van and bakery markets disappoint, the halls will absorb that. Besides, I can put the profit of Autoservice, our cash cow, into Smash.'

A board member is sceptical: 'We have no experience with sport or hospitality. And our shareholders can invest in padel themselves if they want to.'

Polderpap is a Frisian producer of baby food with 800 employees, which makes milk powder and fruit purees in one factory in Leeuwarden. The company has a patent on a fat blend that resembles breast milk and a strong brand in the Netherlands and Belgium. Two thirds of revenue comes from the Netherlands.

Management wants to go to China. There the number of middle-class families in the big cities is growing fast, and many parents prefer to buy imported baby food from the Netherlands because they trust the origin. A large Chinese state-owned company is already active and is supported by the government. In addition, every recipe and every factory must be registered with the Chinese regulator, a process of at least two years. Packaging must contain Chinese text and baby food in China is mainly bought online through large platforms, where influencers have a lot of influence. The distance is large: a sea container takes six weeks.

With larger sales Polderpap can use its factory better and lower the cost per unit. The board wants to sell the same products in all countries, from one central organisation in Leeuwarden that decides everything. The marketing manager thinks this will not work in China.

Polderpap can sell in China itself through its own office, or grant a licence to a Chinese party. Management chooses its own office, because the patent and the quality control then do not leave the company.

Flitspost was founded in 2018 by Sam Aydin and delivers parcels via pick-up lockers at supermarkets and petrol stations, instead of at the door. As a result customers do not have to be at home, and the old post offices and parcel shops of the traditional company Postdirect are losing customers. Postdirect has already closed 40 counters.

Flitspost grew from 15 to 300 employees. The company is still organised by function: operations, sales, IT and finance. Sam decides almost everything himself, even small matters such as the purchase of a new locker type. Meanwhile Flitspost has three kinds of activities: parcels for consumers, express delivery for businesses, and renting out lockers to supermarkets. The departments get in each other's way, for example when sales promises an express delivery that operations cannot deliver. Decisions stay on Sam's desk for months and good managers leave.

Couriers usually accept without grumbling that their schedule is changed a day in advance, and that they work up to an hour longer when it is busy. Last month, however, team manager Ruud required that all couriers help in the sorting centre for three unpaid hours every week. A large part of the couriers refused, a number resigned and the rest threaten a strike.