McKinsey

1stRound:

1)

Wearebackinthe80s,andDaewoowantstoentertheItalianmarket.Theyapproachyouandsaythattheywanttosell100,000carsafteroneyear.Whatdoyoutellthem?ItsownproductivityandtheCapacityofthelocalmarket

2)

Asteelproducingcompanywantstocutcosts.Itcurrentlyoperates2largemillsat75%capacityandfoursmallonesat100%capacity.Itisexperiencingprofitabilityissues.Whatactionwouldyourecommendittakes?ComparetheCost/Profitindex---FixedCost---OperatingCost---

3)

Ourclientisaretailbrokerage.Wehaveseenourcustomerbasedeclineoverthepast18months.Whythishappeningisandwhatcanwedoaboutit?Why---MarketChange(NewSuppliers,NewPolicies,NewProductsimmerge)Competitors(NewOne/Oldonegrewfast)InsideOperation(Strategy/Process/structure/system/人員流失……)

4)

Theclientownsminesthatproducehighandlowgradeoreandprocessesitintoanalloythatisthensoldasanadditivetostrengthensteel(solddirectlytosteelmanufacturers).Anewforeigncompetitorhasshownupinthemarketandthecompanyislosingprofits.Ageneralmanagerofoneoftheprocessingplantsaskswhatheshoulddotomaintainprofits.Findourcharactersandposition

5)

ThepastfewyearsaHealthInsuranceCompanyhasbeengrowingatarateofabout15%ayear.Thispastyearitonlygrewby1%.Costsarerising12%eachyear.Whatistheproblemandwhatshouldthecompanydo?

6)

CompanyXisachemicalmanufacturer.

TheymakeaproductthatisverysimilartoCompanyY’sproduct.

CompanyXandYaredirectcompetitorsinmanygeographicmarkets,buteachalsohasuniqueareasinwhichthesalesforcesdonotfacedirectcompetition.

CompanyXbuysCompanyY.

Howdoyouintegratethesalesforces?

7)

YouareworkingforaBraziliansodamanufacturerthatisexperiencingdecliningprofitsoverthelasttwoyears.Whyisthisoccurring?[competitionfromgenerics]Whatisthesizeofthemarketforcannedcola?Whatarethecompany'soptionsforimprovingprofitability?Whatarethepossibleeffectsofachangeinthecola'sprice?

8)

Ourclientisamid-WesternHMO.Theyhave300doctorsand300,000subscribers.Theyhandlemostlycheckupsandroutinevisits.TheHMOoutsourcesspecificcasestolocalspecialists.OverthelasttwoyearstheHMOhasseentheirprofitsdecrease.They'vecalledusintofindoutwhy.

2ndRound

1)

AEuropeanironminingcompanyboughtapieceoflandinffice:smarttags"/>Australiawithahighcontentofiron.Shouldtheyproceedwithextractionoftheoreornot?/

2)

APCmanufacturerwantstoaddanewlineofpocketPCs.Shouldtheydoit?WhatdoyoutelltheCEO?

3)

Ahealthandfitnesscenter,achainofgyms,likeBally'sisconsideringbuildingmoretenniscourts.Thecostofthelanddevelopmentisghoccupancyratesaveraged80percent.-chartsgiven3)amusiccompanyisbringingoutacdforanewartist.howwouldyoumarketandprice,knowingthatyou''dliketochargeapremiumforthecd?finalround(nov.2023)1)youareconsultingtothemanufacturerofairplaneengines(2mainengines:forwidebodyplanesandnarrowbodyplanes——>regionalandlowcostairlines,whicharegrowing,usethenarrowbodyplanes).theclientisconsideringenteringtheairplaneleasingmarket,becauseoneofitscompetitors(ge)isalreadythere,andtheclienthypothesizesthatge''spresenceinleasinghelpsitsenginesales.whatdoyoutellhim?2)lastyear,lawsuitscostcorporations$200billioncomparedwith$70billionin1990.howwouldyouadvisearoundtableofceostoattacktortreform?3)theu.s.postofficelostmillionslastyear.howwouldyouadvisethenewceototurnthepostofficearound?4)wehavebeenhiredbyamexicancompanythathasadominantpositioninallofitsmarketsbutone:ketchup.althoughitsketchupsaleshavebeenincreasing,itsmarketshareisstagnant(10%)anditsprofitmarginremainsbelowthatofitscompetitors.whatdoyouthinkmightbehappening?whatwouldyousuggesttheclientdoinordertoincreasemarketshareandprofits?asmallpharmaceuticalresearchcompanyisabouttostartclinicaltrialsforanewandpromisingmolecule.thetrialprocesshasthreephases,withdifferentassociatedcostsandprobabilitiesofsuccess:costs(million)pr.success-phase1$10.40-phase2$5.2-phase3$80.105iftheprocessissuccessfulandthenewdrugisintroducedinthemarket,itwouldgeneratetotalincomeflowsof$300million.+drawagraphshowingtheincomestreamforthenexttenyears(assumethatfulladoptionisreachedinyear7)+thepharmaceuticalcompanyislookingforabuyer.howmuchshoulditaskfor?booz1stround1)ourclientisamagazinepublisher.theyareconsideringanewpricingprogramwherethepriceforsubscriptionswouldincreaseeveryyear.evaluatehowsuchadecisionwouldimpacttheirbusiness.wouldyouadvisetheydoit?bain1stround(nov.2023)1)ourclientisapplepublishing,thelargestpublisherofchildren’sfictionintheindustry.sevenyearsagotheceobecameconcernedthatchildhoodliteracyrateswerelowanddecidedtomakeadifference.heenteredthetelemetrytextbookmarket.hethinkstheyarethebestnow,buthasn’tbeenrewarded.sevenyearslaterhehas70milliondollarsinsalesand20milliondollarsinlosses.theyarelessthan5%ofthemarket,buttheceowantstostayinthemarket,howcanhedoit?2)ourclientproduces2-inchwrenches.theyselltohomedepotandalsotoauto-mechanicsdirectly.ifyouwereastoremanagerathomedepot,howmanyvarietiesofwrencheswouldyoudisplaytosellandatwhatpricepoints?howarethehomedepotwrenchbuyersdifferentfromtheautomechanics?ifyouwantedtoprovidediscountstotheautomechanics,whichofthemwouldyoutargetandwhy?whatinformationwouldyouwantfromthemfirst?3)universitytownhasapopulationof40,000students.currentlythereareninerestaurants.you''reclientisthinkingaboutopeningupthetenth.isthisagoodideaandshouldsheopenupafastfoodoraspecialtyrestaurant?4)amajorairlineisthinkingaboutgoingheadtoheadwiththediscountairlinesbyoffering"cheap"fares.doesthismakesense?estimatethesizeoftheeuropean"discount"airlinemarket.5)yourclientsellscoffeeonthefivejapanesebullettrains(highspeedtrains).estimatethesizeofthemarket.howwouldyouadvisethemtoincreasesales?6)ourclient,aprivateequityfirm,isconsideringaninvestmentinamanufacturerofdigitalinkjetprinters(printinglargebillboards).themanufacturerwantstoenterthescreenprintingmarket(printingsignsandpoint-ofpurchaseposters,e.g.forsupermarketsales).howbigisthescreenprintingmarket?whichparticularsegmentisthemostattractive?7)estimatethemarketsizeofprintersinhongkong.au.s.-basedpcmanufacturernowwantstogetintotheprintermarket.assesstheopportunity.8)wehavebeenhiredbyaglobalwealthmanagementcompanythathas2divisions:assetmanagementandprivatebanking.ourassetmanagementprofitshavebeendecreasing,andourprivatebankingprofitshavebeenincreasing.weneedtohelpourclientdeterminestrategytoincreaseallhisprofits.9)wehavebeenhiredbytheboardofacompanythatisloosingmoney.theboardhasaskedustodeterminewhetheranyofthislosscanbeattributedtotheleerjetthatthemanagementteamuses.10)wehavebeenhiredbyacompanythathasjustfinishedmakingthemillenniumeye,alargeferriswheelthatwillbeplacedinthemiddleoflondon.ourclientwantstoknowhowbigthemarketisandhowmuchweshouldchargeperticket.a.t.kearney1stround(oct.2023)1)thecfoofatop3retailerwantsyoutoevaluatetheviabilityofdevelopingexclusivecontractswithdistributors.thethreequestionsyoushouldaddressare:1.pro''sandcon''sofpursuingexclusivecontracts2.identifythecategoriesthatshouldbeexploredforexclusivecontracts3.howwouldyouoperationalizethesecontracts?2)casesetup(factsofferedbyinterviewer):yourclientisau.s.basedqoilrefinery.therefineryhasasinglelocationandisasmalltomedium-sizedrefinery.yourclient,althoughprofitable,believesitislaggingbehindthecompetitionandcouldimprove.youarebroughtinaspartofajointconsultant-clientteamthatwillreviewoveralloperationsandmakerecommendationsonwaystoimprovethebottomline.youhavebeenassignedtoworkwiththemaintenancedivision.themaintenancedepartment’sprimaryobjectiveistopreventequipmentfailureandtorepairequipmentwhenitdoesfail.understandingofitsorganizationisimportant.itconsistsofthreeprimaryareas:nineassetsareas,onecentralmaintenanceareaandonegroupofcontractors.thefirsttwoareasareemployeesoftheclient,thethirdanexternalsourceoflabor.anassetisaphysicalareaoftheplantthatcontainsvariouspiecesofequipment(pumps,heatexchangers,etc.).therearenineassets.eachassethasamaintenancesupervisorwhoisresponsibleforallmaintenancetobeperformedinhis/herasset.workingforthemaintenancesupervisorineachassetis,onaverage,eleven“craftsmen”.thecraftsmenaretheactualworkersthatperformthemaintenance.thecraftsmenareunionizedanddivideintotwelvedifferentcraftdesignations(e.g.electricians,pipefitters,welders,etc.).eachcraftdesignationhasadefinedsetofskillstheyarequalifiedtoperform.theyarenotallowedtoperformskillsoutsideoftheirdefinedcraft,orhelpintheperformanceofactivitiesinvolvingskillsbeyondtheircraft.collectivelythetwelvedifferentcraftscanperformanymaintenancejobthatmightariseattherefinery.themaintenancesupervisorandhis/herassignedcraftsmenare“hardwired”totheirasset.thatis,theyworkonlyonequipmentintheirgivenasset.centralmaintenanceisacentralizedpoolofmaintenancesupervisorsandcraftsmen,whoaredispatchedtosupportthedifferentassetsduringtimesofhighworkload.theyareemployeesofyourclientandfitthedescriptioncontainedintheaboveassetexplanation.theonlydifferenceisthattheymayworkinanyofthedifferentassetsasdeterminedbyworkload.thereareatotalof11maintenancesupervisorsand100craftsmenthatcomprisecentralmaintenancecontractorsareagroupofoutsidesupervisorsandcraftsmenwhosupportyourclientduringtimesofhighworkload.theyalsoarecapableofperforminganymaintenancejobthatmayarise,butdifferfromyourclient’scraftsmeninthattheydividethecollectiveskillsrequiredintofivedesignationsratherthantwelve.thus,thecraftsmenofthecontractorarecapableofperformingabroadersetofskills.they,likeyourclient’scraftsmen,don’tperformskillsoutsideoftheirdefinedcraftbutdoallowdifferentcraftdesignationstohelpeachother.thereareanaverageof7contractormaintenancesupervisorsand140contractorcraftsmenattherefineryonanygivenday.question:whatqopportunitiesexisttoincreaseprofits?whatrecommendationscanyoumaketocapturesavingsrelatedtotheidentifiedopportunities?whatisthecostsavingsassociatedwithyourrecommendations?suggestedsolutions:thefirstquestioninvolvesidentifyingopportunitiestoimproveprofits.thecandidatemuststartwitheitherrevenuesorcosts.althoughonecouldmaketheargumentthatmaintenancesupportsrevenuebymaximizingtheoperatingtimeoftherefineryequipment,maintenanceshouldbeseentobeasupportfunction.thus,itismoreappropriatetofocusoncostsandcostreduction.thefollowingquestionswillhelpthecandidategaininsightintocostreductionopportunities.howdoesthemaintenancedepartmenttrackitscosts?ifthecandidatephrasesthequestionaboutmaterialoroverheadcosts,theinterviewerwouldinformthecandidatethatdetailedreviewedshowednomajoropportunities.thecandidatewouldbesteeredtowardlaborcostsandgiventhefollowingtablesregardingmaintenancelaborcostsforthepastyear.tosupportunderstandingofthefollowingtables,turnaroundworkislongtermpreventivemaintenance(pleterebuildingofaboiler)thatmaybeperformedonceeveryfewyears.allotherwork(shorttermemergencyrepairs,smallscalepreventivemaintenance,otherroutinework,etc.)fitsintothecategoryofdailyworkcraftsmendailyworkturnaroundtotalclient$8mm$2mm$10mmcontractor$5mm$9mm$14mmtotal$13mm$11mm$24mmsupervisortotalclient$1mmcontractor$0.5mmtotal$1.5mmsincethecraftsmentablerepresentsalargerdollaramountthanthesupervisortable,itislogicaltopursuecostsavingsopportunitiesinthisareafirst.whatistheutilizationofcraftsmenintheassets?incentralmaintenance?andforcontractors?assumeeachareaisutilized100%ofthetime,50weeksperyear,40hoursperweek.howdoesthelaborcostofcraftsmen($24mm)onarefinery-sizedbasis(i.e.,$cost/perbarrelofcrudeoilprocessed)comparewithindustryaverages?consultingyourindustrydatabaseshowsthatcostsappeartobeabout20%abovetheaverageofpeerrefineries.thisisanimportantquestiontodetermineifthereisaproblemwithcosts(don’tassumethereis,theclientmaybeperformingbetterthanindustryaverage!)isthereanyparticularreasonwhyturnaroundworkissoheavilyskewedtowardcontractors?turnaroundworktendstobemorecyclical.anexternalworkforceisusedtoabsorbsomeofthisadditionalwork.keepinmindthatbothclientandcontractorcraftsmenarecapableofperforminganymaintenancejobattheplant.afterfurtheranalysisofthetablesthekeyfactthatshouldbecomeappearoddisthelargedifferenceinthecostperunitoflaborbetweenyourclient’scraftsmenandtheoutsidecontractor’scraftsmen.oftencandidateswillaskforthehourlywageratesofthesetwogroups.thereissufficientdatatocalculatethesenumbers.thecalculationis:annualcostofclientcraftsmen=$10mm/(11craftsmen/assetx9assets+100craftsmenincentralmaintenance)=$50,000/yearannualcostofcontractorcraftsmen=$14mm/140contractorcraftsmen=$100,000/yearagain,thisdifferenceshouldprovokeaseriesofquestionstounderstandthedifference.isthereanydifferenceintheworkperformedbytheclientandcontractorcraftsmen?no,otherthanthedifferentlevelsofturnaroundworkvs.dailyworkperformedasnotedintheprevioustable.bothgroupsarecapableofdoinganyjobwithroughlyequallevelsofquality.isthereanydifferenceinefficiencybetweenthetwogroupsofcraftsmen?thecandidatewouldatthispointbeaskedhowtheywouldmeasurethis.afterreachinganunderstandingofthedifficultyinvolvedinmeasuringtheefficiencyofaworkforce(especiallyaunionizedworkforce),thecandidatewouldbetoldthatthroughaseriesofinterviewswithmaintenancesupervisors,thereisaconsensusthatcontractorcraftsmenareroughlytwiceasproductiveasclientcraftsmen.thisisacriticalpointinthecase.thecandidatemustrecognizethatinthepresentenvironmenttheclientislargelyindifferentaboutunitsoflabor.youcanhaveaclientworkerwhoishalfasefficientoracontractorworkerwhoistwiceasexpensive.thekeynowistodetermineiftherearewaystocreateanopportunitywheretheclientwouldnolongerbeindifferent.whatiscausingtheinefficienciesassociatedwiththeclient’slabor?again,thecandidatewouldbeencouragedtooffertheirownideas.aftersomediscussionthecandidatewouldbetoldthatmanyofthemaintenancesupervisorscomplainendlesslyaboutrestrictionsplacedonthembytheexistingunionlaborcontractandthetightnessofcraftdesignations.theinterviewerwouldprobetoensurethecandidateunderstandswhythepresentcraftdesignationcreatestheinefficiencies.essentiallyworkistoofinelydivided.itmakesplanningandsupervisionextremelycumbersome.asanexample,ifoneofsixcraftsrequiredtoperformajobisabsentorlate,theentirejobmustshutdown,ascraftdesignationsarenotallowedtosupportothercraftdesignations.isitpossibletochangetheexistingunioncontract?thepresentlaborcontractisathreeyearcontractthatisduetoberenegotiated/renewedinsixmonths.willtheunionresistchangestotheexistingcontract?indeed!!atthispoint,thecandidateshouldrecognizeamajor(albeitdifficult)opportunitytoreducelaborcosts.theclientwouldessentiallyliketohaveitsownemployeeslookandfunctionlikeitscontractors,butcontinuetogetpaidatpresentrates.inreality,managementwillneedtomakewageconcessionsinordertochangepresentworkpractices.however,throughplannednegotiationsascenariocanbecreatedwhichpresentsafavorableopportunityforyourclienttobegintoreplaceoutsidecontractorswithitsowncraftsmen.thereareseveralwaystoaddressthethirdquestionofthecase,theactualsavingsthatmightbeachieved.onequickmethodistoassumethatthesechangeswouldbringmaintenancecostsbackinlinewithindustryaverage.utilizingthecostbenchmarkmentionedearlier,onecouldassumecostscouldbereducedto$24mm/1.20=$20mm,a$4mmsavings.asecond,andmoredetailed,methodwouldbetotaketheextremescenariowheretheclient’scraftsmenispaiditspresentrate,butismadeasefficientasthecontractor’s