案例手冊2007小灶計劃

小灶是一個面向大學(xué)生的一站式職業(yè)發(fā)展教育平臺。小灶品牌旗下包括以［小灶計劃］、［上海名企實習(xí)］為代表的四個微信公眾號，以小灶學(xué)徒項目為代表的線下訓(xùn)練營系列，以及即將于20168月正式上線的職業(yè)發(fā)展課程網(wǎng)站(ww-wxiaozaoorg小灶由杜克大學(xué)創(chuàng)業(yè)團隊創(chuàng)建，以杜克大學(xué)－新加坡國立大學(xué)專利腦科學(xué)技術(shù)為教育體系建設(shè)核心，以北美頂尖MBA業(yè)教育理念為基礎(chǔ)，結(jié)合創(chuàng)始團隊超過40年的職場經(jīng)驗，打造國內(nèi)最高質(zhì)量的大學(xué)生職業(yè)發(fā)展教育平臺。小灶計劃（訂閱號）快速獲取求職干貨

小灶學(xué)徒顧問（服務(wù)號）求職問題有問必答CONSULTINGCASEINTERVIEWPREPARATIONGUIDE2006-2007RecruitingSeptember16, -0Editor’sEditor’sIntroductiontoAdministeringThecasesDearRSBConsultingClub

Editor’sIfyouarereadingthis,thenitislikelyyouareinterestedinaconsultingcareerupongraduationfrombusinessschool.Inordertoincreaseyourfamiliaritywiththeconsultinginterviewformat,theRSBConsultingClubhasestablishedamultilateraltrainingprogramfocusingonthedifferentpartsoftherecruitingandinterviewingprocess.Thisbookfocusesonthe‘case-interview’portionoftheconsultinginterviewandistobeusedinconjunctionwithothercase-orientedclubtrainingmaterials.Theelementstestedinacaseinterviewareoftencoretothefirms’hiringdecisions.Thesecases,ormini-businessproblems,areaglimpseintotheconsultant’s(andoftentheinterviewer’s)lifeastheyareveryoftentakenfromrealclientexperiences.Givenpracticeandexperience,casesbecomeanaturalwayofthinkingabouthowyouwouldstructureapproachesandsolutionstonearlyanytypeofproblem.Alongtheway,wehopeyouwillfindyouenjoysolvingproblemsinthismanner,andwouldenjoyperformingthistypeofworkforaliving.Inordertofacilitateyourpreparation,yourfellowclubmembershaverecordedtheirreal-lifecaseinterviewexperiencesandtheircustomizedframeworksandsolutionelements.Thesecasesactasastrongreferencepointforwhattoexpectduringaconsultinginterview,butareinnowayallencompassing.Sinceeachcasecomesdowntoaconversationbetweentheinterviewerandthecandidate,itisveryplausiblethatonecandidatecouldreceivethesamecasefromtwodifferentinterviewersandhavetwoverydifferentconversationsaboutthebusinessproblem.Infact,weencouragethis.Finally,youmayhavenoticedthatyouarereadingthiscompilationinlandscapeformat.Thisisintentional.ConsultantsthinkintermsofPowerPointslidesmuchmoreoftenthanessay-styledocuments,andareconstantlyworkingtodevisethemostsuccinctwaytoillustrateandframe-outaproblem,actionsteps,andasolution.Thissaid,thisyear’spreparationguidehasbrokenfromthetraditionofbook-basedcasesbyadoptingPowerPointdeck-basedcases.Youwillfindthisformatdovetailswellwithhowyouwriteyournotesincases,andhowyouwillconveyinformationasaconsultant.Goodluck,andrememberyourfellowclubmembersareheretoOliviaChenRSBConsultingEditor’sIntroductionIntroductionto?ReceivingAdministeringTheAdministeringGreatcaseexperiencesarenotonlydeterminedbystrongcandidatescrankingoutamazinganalysisofissuesandfinancials.Theinterviewer’sinteractionwiththecandidateandabilitytoconveyinformationwillveryeasilychangethestyleofacase.Giventheinterviewer’spositionofpowerinthediscussion,Readthecaseover2-3Familiarizeyourselfwiththeclientrepresentative?PrepareforhowyouwilladdressirrelevantquestionsorrequestsfordatayoudonothaveMakeupfakedataandletcandidategofishing,orletthemknowitisirrelevant?Tracktime(about25minutesisandlettingcandidatestruggleCandidatescanoftenthinkofverydifferentapproachestocases.Beforediscountingquestionsaswrong,askthecandidatefortheirthinking…ifitmakessense,gowithitFollowwhataconsultantwouldbelookingforinclientPresentation:canIputthispersoninfrontofaclient?Aptitude:Canthispersonaccuratelydothework?Interest:Doesthispersonlikewhattheyaredoing?ProvideThisispossiblythemostcriticalstepofthecaseinterviewprocessHonestlyletcandidateknowstrengths,butmoreimportantlyareasforimprovementWithouthonestfeedbackandconstructivecriticism,itisverydifficulttoimproveWiththesestepsinmind,youshouldbeabletoconductaconciseandrewardingcaseEditor’sIntroductionIntroductionto?AdministeringReceivingTheReceivingYouwillhavealotofinstructionaboutgeneralconductandhowtoreceivespecifictypesofcasesduringtheConsultingClub’strainingprogram,howeverthereareseveralthingstoalwayskeepinmindtomaximizethevalueofeachcaseyoureceive.BecausereceivingcasesisessentiallyArriveon-timeandGraphpaperorblankPenorpencil(bolderispresentationisnotunnoticedTracktime(about25minutesisaverage)-DonotlingeronsmalldetailsearlyonunlessaskedSetuppaperandthoughtsinafamiliarwayeachtime,addingconsistencytoanotherwiseunpredictablesituationAskforclarificationonissueswhenevernecessaryJotdownimportantcasefactsforTakeyourtimewithmath-aslowrightanswerisbetterthanafastwrongoneBepoliteanddonotlooseyourcool,evenwheninadifficultTheinterviewer,nomatterhowharsh,istryingtohelpyouGoovercaseonyourownlateron,replayingwhereyoucouldhaveimprovedyourapproachPreparationisnotinthequantityofcasesprepared,butinthequalityofeachcaseOffertogivetheintervieweraGoodluck,andremembertohaveEditor’sIntroductiontoAdministeringReceivingTheTheTheCaseNote:Donotreadallofthesecasesassoonasyoureceivethisguide.WhilereworkingNote:Donotreadallofthesecasesassoonasyoureceivethisguide.Whilereworking‘completed’casesbothaloneandwithingroupsishighlyencouraged,pre-readingcasesremovestheelementofsurprisewhichstemsfromaddressingacaseforthefirsttime,thissensationisverydifficulttoreplicate.BusinessSchool12.TobaccoLeaf2Bottle13.14.GermanLuxuryCar15.HotelDeposit16.PharmaceuticalCPG17.DiabetesTestingPetrochemicalSpin18.DrugStorePCB19.DirectMailHomeGarden20.CleaningGardeningPipelineYourclientisaEuropeanacademicinstitutionthatwantstoincreasethebrandYourclientisaEuropeanacademicinstitutionthatwantstoincreasethebrandprofileoftheirbusinessschool.Onestrategythattheyhaveidentifiediscreatingabusinessjournal.Theuniversityhasdoneitsownresearch,buthasalsoaskedyoutodoaprobonoassessmentofthisstrategy.Theywanttoknowifthestrategywillincreasetheirbrandimage,andalsoifitwillbeprofitable.Universityhastraditionalimage,BusinessschoolisverynewB-schoolratedintop10,buttheywantittoberatedintop3Otherstrategiesthattheyaredoing:conferencesandsymposiums,sponsorshipofstudentsfromcorporationsProfessorsverygood,butbusinessschoolnotwellknownforanyonething,asWhartonisknownforFinance,orKelloggforAlumniwellrespected,butschoolisnew,soalumnimuchsmallerthanothersHarvardBusinessSchoollargestjournalpublisherwith75%marketshare(HBShas75,000subscriptions);remaindersplitbetween6HBScharges$10/issueof$120/year(12issues),Lowestchargeofothersis$60/year(4issues)Otherrevenue:Advertisements,currentlyat$2000/page,average10pagesofadvertisementperissueAssubscriptionsgoup,canchargemoreforCosts:Writer-$500/article,10articles/issue;Printer(2options:outsourceorinternal):Outsourced-$15/journal,internal–initialcost$1millionforprintingmachine;Distribution:$0.50/journal;Managingeditor:$80,000/yearfullyloadedRMarg.$80K=$15.5*4=$0.5*4=contributionperOutsource:Atamarginallossof$2/customer,theuniversitywouldhavetorelysolelyonadvertisingrevenue.Thecurrent$80Kassumesacirculationupto4000,theaverageofthe6smallercompetitors.Outsource:Atamarginallossof$2/customer,theuniversitywouldhavetorelysolelyonadvertisingrevenue.Thecurrent$80Kassumesacirculationupto4000,theaverageofthe6smallercompetitors.Thiswouldnotbeenoughtocoverfixedcosts,muchlessthelossoneachcustomer(-$2*4000-$100K=-$108K;anadditional$28KinadvertisingrevenuewouldbeIn-house:Atamarginalcontributionof$58/customer,theuniversitywouldbeabletocoverfixedcostswithareadershipofapproximately345(V=($100K-$80K)/$58).However,recoupingtheadditional$1Mwilltake5yearsiftheuniversitycanreplicatedreachacirculationof4000/year,orlongerifitcannot.thetwooptionsmakesenseDriversforreadershipofbusinessjournal(smallalumnibasewillkeepexpectedcirculationnumberslow)Alignmentwithstrategy(willajournalpromoteanIvyLeague/traditionalbrandRisksassociatedwithimplementingajournal(highfailureratefornewAsolidinterviewfactorsbesidesClientshouldnotpursueabusinessschooljournal.Producingajournalwouldrequirealargeinitialupfrontinvestment,withafiveyearminimumpaybackperiod.Additionally,thejournaldoesnotservethecorrectaudiencetoadvancetheuniversity’sdesiredbrandimage,andcouldactuallyriskit,asthereisahighfailureratefornewpublications.Theuniversity’sresourcescouldbebetterdirectedtootherstrategies,suchas…OurclientOurclient–aPrivateEquityfirmhasacquiredthemasthereisahugemarket.Theyarelookingtoincreaseprofitability.Theyhavealreadyoptimizedthecoststructure.“BottleShifters”designanddistributebottles.Itscustomersaresmall/mediumsizedcompanies(inthefood/drinkssectore.g.startup/brewery).Itisthebiggest3rdpartymanufacturerintheindustry.Samplestructuretotacklethe-Understandthemarketandthecompany’smarketMarketsizeandValue-Exploretherevenueside(ignorethecostgiventheproblemstatement)Price(canwechargeQuantity(howcanwesellmorevolumeandsellmoreitemswithhighprofitmargins?)ProductStoreChannel-PotentialGuidanceforinterviewerand-Marketsize:handouttheMarketDataslideandaskcandidate-Marketsize:handouttheMarketDataslideandaskcandidatetocalculatethemarketsize-Competition:Bottleshiftersisthedominantplayer.Thereisonemoreplayerwithhalfoftherevenues.Therestofthemarketis-Customers:BottleShiftersservesfoodandDrinksectoronly.Competitorsserveothersectorsbesidesfoodanddrinks.-Products:Bottleshiftershasexpertiseindesign.Althoughmajorityoftheproductsarecustomized,theyhavestandardizedproductsaswell.Productsincludebottles,cans,etc.-ValueChain:handouttheValueChainslideandexplain.BottleShiftersisinvolvedin2stepsinthevaluechain:DesigningandDistribution(andnotmanufacturing).Theyalsocustomizetheirproductsfortheircustomers.-Price:Ifcandidateasksaboutpriceandwhetheritispossibletoincreaseit,interviewercouldsay:“Greatquestion.That’sexactlythefirstplacewelookedat.However,theirpricingisquitehigh,andit’salright.There’snotmuchscopethere.”-ProductMix:ifcandidateasksaboutproductmix,askwhyhe/shewantsthatinformation(agoodanswerwouldbe:sincedifferentproductsmighthavedifferentprofitabilitywewanttoseeifwecanoptimizetheproductmixandincreaseoverallprofitability.HandouttheProductMixslide.StoreMix/CustomerMix/ChannelMix:goodquestionsbutnodataavailable.MarketTotalTotalvolumeofliquorsoldintheUSannually:1.43BlitersAveragesizeofabottle:0.75litersStandardized:80%(price:0.30$)Customized:20%(price:0.70$)Value

(Supplychainmgt,

Case2:BottleShifters(VofBain,RoundBottleShiftersProduct

#of221.43Bliterswasroundedto1.5Bliters(aftercheckingwithinterviewer)Totalbottles:1.5Bliters/0.75liter=2BbottlesStandardized:1.6B(80%ofMarketsizeforStandardized:1.6B*.30$=Customized:0.4B(20%ofMarketsizeforCustomized:0.4B*.70$=ProductforcustomizedliquorhasthehighestprofitabilityyetBottleShifterssellsasmallvolumeofsuchproduct.Themarketsizeforthecustomizedbottlesdidnotlookmuchatfirstglance.However,ifcomparedtoBottleShifters’salesinthiscategory(0.7M),thereisahighgrowthpotentialinthisPossibleanswers:-Financial-Competitive(GIVECANDIDATE(GIVECANDIDATEHANDOUT,WHICHSTATESTHEBELOWFACTS)Theclientisalargeinternationalassetmanagementfirm,FinCo,lookingtheentertheusemarketforretirementplans.FinCotryingtodecidewhethertoprovideIRAsDefinedContributionTodaybothmarketsarethesamesize(~$3Trillion),andbothgeneratethesamefees.FinCoisinterestedinknowingthefiveyeargrowthoutlookforeachofthesemarketsIRAs:peopletypicallyrollovertheirretirementplansintoIRAswhentheyswitchjobsbecausetheyallowyoutodeferpayingincometaxonthebenefits.Sincebothmarketshavethesamefeestructure,assumerevenuesareonlyafunctionofmarketsizeHandout1:currentbreakdownofdifferentageHandout2:Growthtrendforagegroups2050-2010.Thischartshowstotalpercentgrowthoverthefiveyearperiod(notannualgrowthorCAGR).Handout3:Averagebalancesinretirementaccountsperperson.Hand4:ReasonforselectingretirementplanQuestiontocandidate:whatdoesthisslidetellGuidanceforinterviewerandCurrentPopulationofDifferentAgeGroupsinthePopulationPopulation0 AgePopulationPopulation

AgeGroupGrowth,U.S.2005- AgeCurrentPopulationofDifferentAgeGroupsinthe86420 AgeDefinedDefined ReasonsforChoosingIRAPercentofPercentof0

1800Candidate2005%-Pop.-2010calculategrowthforageThen$30Kx66.5M=$20Kx60M=$0x21M=MARKETSIZE=AccountBalanceof$34Kx65M=$26Kx60M=$0x21M=MARKETSIZE=themarketsizeeachtypeThereTherearedifferentplayerplanningtoentereachDiscountbrokersareDefinedContributionmarket,butmayentertheIRAmarket.Thesefirms,suchasFidelityInvestmentsandVanguard,arecharacterizedbylowprice/lowtouchmodelIRAstendtobeprovidedsuchasfullservicebrokers(e.g.,MerrillGiventhedataonHandout4,howwouldyouassessthethreatofadiscountbrokerageenteringtheIRAmarket?CaseIRAsrepresentthelargermarketandthuspresentagreaterrevenueopportunity.Entrancethreatsfromdiscountbrokerswillbeminimalbecausetheydonothavethecapabilitiestocompeteinthismarket.Nextstep:researchmarketshareoffull-servicefirmscurrentlyintheIRAmarketandmakesurewecanstealsharefromthem.Alsoexplorethecostsoflaunchingandoperatingtheseservices.SolutionTheclientrequiresa4-yearpaybackoninvestmentsandTheclientrequiresa4-yearpaybackoninvestmentsandwantstoknowiftheyshouldin-sourceoroutsourcethede-icing?Theclientisconsideringin-sourcingairplanede-icing,butcurrentlydoesnothaveenoughresourcesdothede-icingin-house.Duethecoldweather,theclient’splaceoftenhavetobede-iced,butbecausetheneedde-icingisveryunpredictable,theclientdecidedtooutsourcethede-icingtoIceColastyear.However,IceCo’sperformancehasnotbeenYourclientisAirCo,aU.S.airlinethathassignificantoperationsatontheofChicagoCostcomparisononin-sourcingvs.outsourcing–seeHandout1,butfirsthavecandidateoutlinewhatthemajorcostbucketare.Iftheclientin-sourcesthede-icing,theywillneedtohire150peopleforthewholeicyseason,buttheactualnumberofworkerspermonthfluctuatesandcangetashighas60.Wehavetopayworkersforthewholemonth,evenifweonlyneedthemforoneweekEachworkercosts$4,000/Thereare5monthsintheicyTheperformanceproblemsresultfromIceCotakingtoolongtode-icytheplanes,leadingtodelays.Wecannotquantifytheimpactofthis.GuidanceforinterviewerandComparisonComparisonofOutsourcedvs.InsourcedDe-IcingNumberofFeeper?CostperGallonof#ofGallonsofChemicalperCostper??Candidate:Candidate:Pleasecompleteandexplainthe2ndDe-IcingInvestment3210SavingsperSavingsper$140/eventx3000events/yr$3M/$420K=7years>than4yearpaybackrequirementOutsourced$300+$5x40=$200+$4x40=Savings=3000events/seasonx5150workers/season/5months/season=30workers/month30workers/month$4000/worker/month=Laborcost/event=$120K/600$200perCalculatein-sourcedlaborcostspereventCalculatein-sourcedlaborcostspereventcostspereventCalculatepaybackperiodfortheinvestmentReduceReduceinvestmentcosts–leaseequipmentinsteadofpurchasingit.Decreaselaborcoststoincreasesavingsperevent:re-negotiatelaborcontracts;exploremoreflexibleoptionsinsteadofhiringbymonth.Trytoquantifyimpactofperformanceproblemssothesebenefitscanbemonetizedandaddedtothepaybackcalculation.TodecreasepaybackImplementSLAsthatrequireIceCotomeetpre-determinedperformancemetrics.TieIceCofeestomeetingToimproveIceCo’sYourclientYourclientmanufacturesandsellsdepositslipstobanksatapriceof$1/slip.Theyaretheleadingfirminthis$100Mnindustrywith60%marketshare.ThereisonlyoneotherFederalregulationswilldecreasetheindustrysizeby10%nextyear.Ourclientwantstomaintainitsprofittofundotherprojects.WhatoptionsdoesithaveandareanyofthesePushintervieweetodeterminetheclient’scurrentprofitandwhetherornottheclientshouldlowerprice/engageinapricewarTotalCostforclientis$0.70perCompetitorout-sourcesmanufacturingforacostof$0.90perCandidateshoulddeterminewhowouldwinthepricewarandifthepricewarwouldmaintaincurrentprofitability.GuidanceforinterviewerandQQ=60%x100M=TR=Qx$1/slip=$60MTC=Qx$0.70/slip=Profit=TR–TC=calculatecurrentdeterminewhoClientcostof$.70/slipislowerthancompetitorcostof$0.90/slip,soclientwillwinthewar.Rationalcompetitorshouldnotpricebelowcost.wouldwinaThepricewarwillendatP=…andwhetherclientwillmaintaincurrentprofitsafterpriceQ=90M(clienthas100%ofmarketnow,butmarkethasshrunkby10%duetofederalTR=Qx$0.90/slip=81MTC=Qx$0.70/slip=Profit=$18MProfitsaremaintainedGoaheadwithpriceCapacityCapacityconstraints:Qisincreasingbysignificantamount(50%),soplantexpansionmaybenecessary.(Realitywasthatonlytwoshiftswererun,sosimplyneedtoaddaCompetitormayactFederalregulationmaybeasignoffuturetrendslowerindustryprofitabilityinfutureyears.Asolidinterviewwilladdressotherpotentialrisks…ThecompetitorThecompetitorhasanotherdivision.Doesthischangeanything?Providethefollowinginformationifspecifically-Thecompetitor’sotherdivisioncomprises75%ofitsrevenues.-Thisdivisionmanufacturesaspecialtychemicalthatissoldtobankstocheckforfraud.(e.g.inkpenthatchangescolorwhenusedoncounterfeit-Thisdivisionishighlydependentonbankrelationshipsbuiltthroughthedepositslip-Thecompetitorismorelikelytoselldepositslipsbelowcostbecauseitsotherdivisionissodependentonit.-PricewarmaynotbeagoodACPGcompanywithnationalpresencehasdecliningprofits.ThecompanyhashammeredontheACPGcompanywithnationalpresencehasdecliningprofits.Thecompanyhashammeredonthecostsideofitsoperations,yetprofitsarestilldeclining.ThecompanyhashiredBAHtoAgoodcandidatewillfocusonhowtoincreaserevenueandignorethecost.Revenuehasbeen Theclienthasonemanufacturingfacilitywith50%capacityutilization.CompetitorsarealsostrugglingTherearenonumbersinthisInformationtoprovideuponGuidanceforinterviewerandAsk:whatarethewaystoproducenewproducts.Oneoptionisacquisition.OncethecandidateAsk:whatarethewaystoproducenewproducts.Oneoptionisacquisition.Oncethecandidateidentifiesit,askwhataretheITissuesrelatedtoacquisition.Ask:giventhecurrentsituation,optionshouldtheclientlookinto-answercbecausethecurrentproductsarebecomingcommodityandhaveAsk:whataretheITissuesrelatedtoallAcquisitionITissuesandITcostscanbereducedbyITrationalization.However,theimplementedtechnologyshouldbecompatiblewithothersystemsinthePrioritizeITmigrationbycriticality,costsupport Knowledgetransferandchangemanagementissueforuserstoadoptnewsystems.--PossibleCompetitorsaretakingmarketsharefromourProductsarecommoditized,leadingtolowersellingpricesandthereforelowerprofitmargins.Substituteproductscameonthemarket,undercuttingsales.WhyRevenueHasBeenEncouragethecandidatetothinkofdifferentreasonsthatcouldcauserevenuedecrease,andacknowledgetheonesmentionedintheleftbox.Askthecandidatewhataretheoptionstoimproverevenue.WaystoWaystoIncreaseIncreaseprice(notSellingmoreexistingproductstoexistingcustomers;b)Sellingexistingproductstonewcustomers;c)Sellingnewproductstoexistingcustomers;d)SellingnewproductstonewCase7:PetrochemicalSpinOff(IofBoozAllen–ITG,RoundAcommoditypetrochemicaldivisionhasspunofffromamajoroilcompany.ThenewcompanycalledITGgroupofBAHtolookintoITissuesandsuggestwaystooptimizeITexpenses.InitialTheparentcompanyhas$300BinSaleswhereasthenewcompanyhas$30BinSales.Thereistremendouscostpressureonallareasofoperationsinthenewcompany.TheparentcompanyhasanERPsystem.ThemaintenanceoftheERPsystemisoutsourcedtoaUSbasedcompany.ThenewcompanywillalsoneedanERPProblemTothenewcompany,whataretheITissuestoseparatetheERPsystemfromtheparentcompany?Howwouldyouapproachthese

GuidanceforinterviewerandCandidateshouldidentifycoreissuesincludingthefollowing:VendorMigrationInformationgivenuponTheexistingvendorhasscaleadvantage.IthasmaintainedtheERPsystemforalongtimeandisthereforeSubjectMatterExpert(SME).Itisverycapableofhandlingthecomplexityofthesystem.TheITexpenditureofthenewcompany$10M.TheITexpenditureoftheparentcompanybeforespinoffis$65M.Case7:PetrochemicalSpinOff(IIofBoozAllen–ITG,RoundAskcandidateAskcandidatetointerprettheITexpenditure/Salesratio(awaytomeasuretheefficiencyofITTheparentcompanybeforespinoff:ITExpd./Sales=$65M/$300B=0.0216%;Thenewcompany:ITExpd./Sales=$10M/$30B=0.033%.TheindustryBenchmarkisaround0.02-0.025%.Therefore,theITexpenditureofthenewcompanyisnotAsk:whatarethewaystoincreasetheITexpenditureefficiency?GuidecandidatetowardsconsideringshorevendorstoreduceITThecostofoffshorevendoris50%lessthanthatofUSvendor.However,theproductivityofvendoris20%morethanthatofoffshoreTherefore,theoverallcostsavingsthroughoffshoringwouldbe37.5%(50/80=?/100)ThenewITexpenditure/Salesratio:$6.25M/$30B=20.83333%. issuesofmanagingoffshorevendors–learningcurve,culturalconflict,changemanagement,applicationsupport,etc.Thoughoffshoringmightnotbeanimmediateoption,theclientcanusethefactthatoffshorevendorswillsave37.5%tonegotiatebettertermswiththeexistingTheclientcoulduseamixofoffshoreandUSvendorsdependingonsystemcriticalityandcomfortlevelofusers.(thisiswhattheclientendedupdoing.)RisksandOurclientisafirmOurclientisafirmwhowantstoinvestinaPrintedCircuitBoard(PCB)manufacturer.Theclientwantstoknowwhetherit’sgoingtobeagoodPCBisusedinTVs,radios,mobilephonesTheindustryhasalotofcompetition.Companiesfacechallengessuchaspricepressure,consolidation,etc.ThePCBmanufacturerhasfiveplants-1inthePhilippines,3inChina,and1intheUS.TheplantinthePhilippinesisat100%capacityutilizationforthelasttwoyearsandstillcan’tmeetthedemandinthePhilippinemarketasitistheonlyTheclientwouldbegranteda20%ownershipstakeinthePCBmanufacturerforitsinvestment(Valuationiscurrently$160Mn–basedondcfwithnopredictedThePCBmanufacturerwouldusethe$40MninvestmenttoincreasecapacityatitsPhilippineplant.EachplantservesitslocalThecurrentcapacityofeachplantis1MnTheclientwantstobecomfortablethatthefirstyearROIwillbehigherthan10%.CandidateVariableCost(per(ignoretheFixedothercostsContributioncalculatecontributionInvestmentInvestmentwillincreasethecapacityofthePhilippineplantfrom1Mnto10MnInvestmentwillcutthelaborcostinhalf(duetosystemautomation);andwillothercostsbyCalculations:OriginalProfit=(6-2-3.5)*1Mn=$0.5MnNewprofit=(6-1-2.5)*10MM=$25MnReturnof$40Mexpenditure=$24.5MnReturn’svaluetoClient=$24.5*20%=4.9ROI=4.9/40=12.25%>10%Conclusion:ItisagoodinvestmentforthecalculatetheTheremightbeabetteralternativetoexpandingtheplantinthePhilippines.ItmaybecheapertomaketheproductinChinaandthenshiptothePhilippines.ThecompanyalsomightlookintoovercapacityissuesatChinaandUSplants.ItmightbeanoptiontoshutdowntheplantinUS,makethegoodsinChinaandthenshipthegoodstoUS.However,thecompanyshouldconsiderfactorssuchasshut-downandtransportationcosts.OtherCase9:HomeGardenChemicals(IofBoozAllen-Operations,RoundOurClientisahomeOurClientisahomegardenchemicalsmanufacturer.Itsproductlinesincludeherbicidesandmanure.Annualrevenueis$1Bn.Theclientprimarilytargetstheconsumermarket.Theyselltheirproductthrough‘big-box’retailerssuchasHomeDepotandLowe’s.Theyhaverecentlycomeacrossanewtechnologythatenablesthemtomanufactureanewtypeofgeneticallymodifiedgrass,andtheyareconsideringsellingthegrassdirectlytogolfcourses.IsthisagoodHerbicidesusedtokillweedsdamagetraditionalThenewmodifiedgrasswillnotbeaffectedbyherbicides=zerograssloss.Waterandherbicidescanbedeliveredtogetherthroughpipes/sprinklersystems.Assumethetotalgrassmarketis$100M,andthegolfcoursegrassmarketis10%ofthatwithflatgrowth.ReplantingthegrassonagolfcoursecostsCostofdevelopingthe$3Mnperyearforthefirstthreeyearswithnosales;50%profitmarginfromthe4thyearonwards.Revenueprojection:30%ofthegolfcoursemarketforthefirst3years(i.e.startingfrom4thyear);70%marketshareafterthateachyear.Case9:HomeGardenChemicals(IIofBoozAllen–Operations,RoundTheThepaybackperiodis8years.Theclient’spolicyrequires5yearpaybackandthereforeit’snotagoodinvestment.Cashfloweach(assumenoYear7Year4-Year1-calculatethepaybackperiodPossibleSpeedupR&Dandmaketheproductmarketreadyinlessthan3Gainmoremarketshare(moreadvertising,helpcustomerstofurtherreducetheircosts,ImproveprofitAsolidinterviewwilladdresswaystoimprovethepaybackperiodwillexplorethestrategicintentbehindthe

Whydoestheclientwanttoenteramarketwithsuchasmallsize($10Mnmarketcomparedtotheclient’s$1Bnannualrevenue)?Theclientwantstousethegolfcoursemarketasatestmarketforthenewproduct.Ifsuccessful,theclientplanstointroducethenewgrasstotheconsumerIsthegolfcoursemarketagoodtestmarketgiventheclient’sCandidatecouldcomparethecustomerneedsinthesetwodifferentmarkets:consumerslookforconvenience;golfcoursecustomerslookforbigcostsavingConclusion:Thegolfcoursemarketmightnotbeagoodtestmarketgiventhesmallsizeanddifferentcustomerneeds.TheclientshouldexploreothermarketstotestthisCase10:GardeningRetailer(1ofBoozAllen–HomeTeam,RoundTheyhaverecentlyacquireda$100Mretailchainsellingpatiofurniture,gardentools,clothing,décor,ornamentsetc.Theyhaverecentlyacquireda$100Mretailchainsellingpatiofurniture,gardentools,clothing,décor,ornamentsetc.Theretailchainhavebothretailstoresanddirectorderbusiness.Theretailchainhasagrossmarginof50%,butisstilllosingWhyaretheylosingWhatshouldtheyYouhavebeenapproachedbytheCOOofa$2BMidwestIndustrialCompanywhomakesfertilizers,pesticidesetc.forlawnandgarden.50retailstoresintheMostofthecustomersareinwarmlocations(CA,AZ,FL)40%CustomersinCaliforniaStoresareupscaleGuidanceforinterviewerandIncomeLabor+StoreRent

guidancefordon’treadShippedinlargeBeach,CA.ShippingcostsincludedinCOGStotheWarehouseinandredistributedtodifferentretailsalespeopleaccordingto40%CustomersareinCaliforniaandthecontainersareshippedfromChinatoCaliforniatoKentuckyand40%CustomersareinCaliforniaandthecontainersareshippedfromChinatoCaliforniatoKentuckyandbacktoCalifornia.UnnecessarycostsinvolvedinshippingtoKentuckyandbacktoCalifornia.SomovethewarehousetoCaliforniaAsolidinterviewwilllistoutoptions(the2X2matrix)forrevenuegrowth,andexpandingexistingproductsto