Guide to a future in consulting
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Lots of Parking LotsCompany: McKinsey Case Description A revenue analysis case Question Our client manages 260 parking lots in UK; these parking lots located in shopping malls, airports, railway stations and hospitals. The management team estimated revenue in 2006 would be 350M pounds. Now the questions are: 1) How to justify whether the estimated revenue is reasonable? 2) How to increase revenue? What are the risk factors? Initial data to be given The case facts Additional data to be provided when asked In big cities, the utilization rate is high. For example, in London, the utilization rate is around 90%. Frameworks that might be used 1. Revenue = Price * Volume 2. Demand/Supply 3. Price elasticity Solution 1. Identify the source of revenue: Price and Volume. 2. What does the increased revenue come from? We need to consider new locations or higher utilization? 3. If the increased revenue is attributable to higher price, we should consider the elasticity of demand. When the demand is elastic, lower price will effectively boost demand. However, this promotion has limited help in cities because of high utilization rates. 4. Possible revenue enhancement ideas (test creativity): lower price, incentive program (e.g. monthly pass), company contracts, marketing campaign or rent out some space for community activities. Indonesian BankingCompany: McKinsey Case Description Our client is an Indonesian bank, which was privatized three years ago. The bank focuses on retail banking and its clientele is the lower/middle class. The management team is planning regional expansion. Currently their target market is Singapore. They asked our advice regarding how to enter the market. Question What kind of customers they should pursue? What kind of service they should provide? Market Sizing How to go after the target customers? Initial data to be given There are 3 local banks serving the general population and 6 foreign banks targeting affluent people. 80-90% of the Singapore population has a checking account. Additional data to be provided when asked People generally aren't interested in switching their deposit and checking account. They aren't interested in asset/wealth management. Because of high taxes, the demand for car purchase is low. (Asked for a number of possible services and narrowed the possibilities down to limited choices.) The lower income class of Singapore is about 30% of population. Frameworks that might be used Market Potential: market segmentation and service differentiation Service Standardization Solution Customer: they should continue focusing on their expertise--service lower/middle income customers. Use market research to identify "short-term loan" as the differentiating product. (A series of conversations with the interviewer) Market sizing: total population* 30% (lower income class)*estimated credit line (average monthly income* X)* 18% (average APR for signature loans). Similar to what has been done by Fannie Mae to the mortgage market. The bank can standardize the short-term loan products. The standard procedure can speed up the approval process and requires fewer employees and branches. Potential risk: credit risk. Dead WoodFirm: Bain & Co. Round: First Interviewee: Tom Hoover KFBS ‘97 Location: KFBS Date: November 3, 1996 Set Up: Your client is a large family-run furniture business in North Carolina. While the company has a strong brand name and good distribution they suffer from the cyclical nature of the furniture industry and are looking to stabilize earnings. One of the family determines caskets might be a good option for the family. Mission: Determine if the company should enter the casket market. Goal of Framework: The line of questioning should investigate if they can stabilize and increase earnings without disrupting their current furniture making business. Questioning: The interviewee can use the 3 C’s or the following pseudo framework. First off in most strategy cases is to ask why we’re analyzing a certain case. While this case is and will be about the casket market, the interviewee needs to ask if there is another way to stabilize and increase revenues/profits. Maybe they can invest and hedge against the cyclicality of the industry. Another question is whether this family-run company wants to expand/complicate their operation? i.e., if Grandpa is about to die and the son/daughter wants to do social work instead. But on with the questioning. Production: Does the company have the skills to make caskets? Yes. They’re relatively simple to manufacture. Does the company have the access to more raw materials? Yes. Can the company hire more skilled workers if necessary? Yes. Tougher than one would think though. Would the workers have a problem making caskets i.e. rob them of their pride of production? Yes, but if the casket were made with the same quality as their other products, it would be less of a problem. Using the profits to provide health insurance would be a nice gesture. Distribution: How can the company sell the caskets? Obviously they can’t leverage their furniture business. But there is a network of casket dealers throughout the country they could use. Can the company get access to this network? Sure, if they provide a good product and high margins. What about other distribution modes i.e. direct sells, Internet, etc.… Good question but a different case. How are transportation costs? Caskets are big and heavy and thus expensive to ship- limits the operation to the Southeast. Finance: Does the company need to invest in new machinery? Yes. Amount about $3MM. They can get a loan and the debt burden wouldn’t be too heavy. What ratios/numbers would you look at to determine this? Marketing: What brand name to use? Discuss pros and cons of a brand name linking a furniture and casket maker. Name recognition, that creepy eerie feeling when you lie in your new bed, the cache of an Ethan Allen casket. What price? Assume $1000 But… Marketing survey, demand curves, etc.. How many caskets can we expect to sell? This is the question you have to ask and dreaded - let the calculations start. Assume only a domestic industry at first 250,000,000 people in America Assume a 1% death rate (2% would also be reasonable) 2,500,000 dead people in the US. 50% use caskets (other options cremation, cryogenics, etc…) 1,250,000 casket users Assume were selling middle to upper class caskets use 50% 625,000 middle to upper class casket users in the US Assume that transportation costs are high- limits distribution to Southeast about 25% Somewhere around 160,000 possible caskets to sell per year. So the question remains how many can we sell. What market share can we achieve? 30% or about 50,000 caskets a year. What is our capacity? Hey 200 caskets a day. Thanks buddy- 200/day * 250 work days/yr = 50,000 /yr. So we may not get 50K the first year, but within 3 years sure. So can we make money at this once we get going? Price per casket $1,000 Cost per casket $900 Contribution Margin $100 50,000 caskets * $100 per casket $5,000,000. How does this compare to the core furniture business? Revenues $80MM Profits $10MM Based on numbers looks good, but… Will it affect the core business? Does it achieve the goals it wanted? Are there other ways to achieve this goal? Does the mgmt really want to own a casket company? At the end of the case you are asked to vote for or against the idea. Do not waver. State your reasons and state a position. This is in line with the Bain culture Golf CourseFirm: Bain & Co. Round: Second Interviewee: Andy Podolowsky KFBS ‘96 as remembered and interpreted by Tom Hoover KFBS ‘97 Location: Boston?? Date: 1995 A friend of yours has a money making opportunity and confers with you as to what to do. He wants to clean the golf balls out of the lake at the local golf course’s infamous “13th hole”. He has done a bit of research on the program and wants to know whether he should pursue this opportunity. Please advise. Questions that could/should be asked and information to be given.
Gas GuzzlerFirm: Corporate Decisions Inc. Round: Second Interviewee: Tom Hoover KFBS ‘97 Location: Boston Date: December 1996 There’s a lot of talk about fuel efficient cars being a good consumer purchase. A company is thinking of specializing in fuel efficient cars. They’re trying to determine what price to use. Utility aside how much value are they giving their customers. Assume a car can be sold for $20,000 that gets 20mpg. How much can the exact same car be sold for that gets 25 mpg? Answer: The interviewee needs to ask three questions- How many miles per year? 10,000 miles How many years will the car last? 10 How much per gallon of gas? $1.00 These numbers are given to make the math simple. If the interviewee wants to use other numbers… So the normal car uses 500 gallons/yr. and the fuel efficient car uses 400 gallons/yr. So, 5000 gallons over the lifetime vs. 4000 gallons, so its $1000 ignoring the time value of money (nice to mention it though). So the car can be sold for $21,000 ignoring utility concerns. Directory: 2012 2012 -> The Case Against the nypd’s Quota-Driven ‘Broken Windows’ Policing What Is It? 2012 -> Annual InStructional unit plan 2012 -> University of Hawai‘i Maui College dental assisting program review october 21, 2013 2012 -> Committee on the rights of the child the rights of all children in the context of international migration 2012 -> Background on the Haitian Earthquake 2012 -> The Collected Wisdom of Science Olympiad Coaches 2012 -> Federal Communications Commission fcc 12-81 Before the Federal Communications Commission 2012 -> Aa and na members Dying from Tobacco 2012 -> [Baby Crying] 01: 04 [Ching Download 0.9 Mb. Share with your friends:
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