Financial analysis | Operations Management homework help

The story, all names, characters, and incidents portrayed in this case are fictitious. No identification with actual persons, robots, products and businesses is intended or should be inferred.

Maggie McLaren (CEO) had significant experience launching consumer brands and experiences and, having graduated from Redtree Graduate School of Business in 1999, she was excited to launch her own business. Right before graduation, she partnered with Craig MacCallion (CTO), a mechanical engineering student from a nearby state school with passion for robotics, to launch a unique venture.

Launched in 1999 and emerging from stealth mode a year later, Maggie’s Mechanical Magic Spa (“M3 Spa”) raised several million Dollars with the promise of bringing tech and automation to the spa business. The risks were many and obvious, but the promise of scalability and efficient operations was too hard for top Silicon Valley investors to ignore.

M3 Spa’s launch strategy relied on rapid national expansion with traditional massage venues to build their brand while, at the same time, developing their first generation of robotic massage therapists (Craig insisted on naming them ‘Therabots’) which would be introduced to their many locations later on.

Despite a rocky first few years, the two founders were able to ramp up growth and reach over 1,500 locations nationwide and Billions in revenue a decade after launching. Initially, the company offered three traditional services – the Full Body Massage, the Eye and Scalp Treatment, and the more niche Prenatal Massage, all delivered solely by human massage professionals.

Development of the Therabots was also slower than initially anticipated and only in 2019 was the company finally able to roll them out. To do so, M3 Spa launched another new product – the Foot Scrub which, for the first time, was delivered exclusively by the company’s Therabots

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Business Operations Manager – Skills Assessment Case

with no human touch. After an initial roll out period to all the branches and with the Covid-19 pandemic hitting in early 2020, the mechanical massage was an immediate hit and the Foot Scrub became one of M3 Spa’s most popular offerings.

Encouraged by the success, the board pushed Maggie to deploy the Therabots to the company’s other offerings. However, as Craig’s team explained, it’ll take at least a few more years to adjust the robots to properly deliver other types of treatments and to acquire the required regulatory approvals. Other ideas for generating growth were needed.

In a recent executive informal chat, Maggie suggested that hot stones sessions could be a success in this pandemic era. She added that this would be an easy offering to launch and could be out in the market by January 2022. Craig suggested to not launch anything new since growth has been healthy, and invest all resources in accelerating the Therabots development. Katja Wolff, the company’s Executive Vice President of Strategy, listened quietly to the debate thinking that there has to be a better, data-driven approach to answering this question.

The following day, Katja asked you, her team’s top performer, to take a quick stab at an analysis for an upcoming strategy team meeting where you’ll discuss the options ahead. If your analysis is solid, she said, you’ll be invited to present your work to Maggie and Craig and potentially the board later.

She asks that you take a look at some data (download here) and create a short deck to walk everyone through your findings. Consider the following questions:

● We’ve grown nicely between 2020 and 2021. What has been the primary driver (or drivers) of growth in this period?

● What are some areas of concern you can identify, if any?
● Based on historical growth and assuming we don’t launch any new offerings – what can

we expect growth to look like through 2024? Please clearly state your assumptions. ● Using all the data at your disposal and your answers to the questions above – would

you recommend we launch the new hot stones offering? How if at all would your recommendation change at different potential price points?

Please send us your deck (PowerPoint or Google Slides, no more than 5-6 slides) and any underlying and relevant analysis (Excel or Google Sheets).