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INSLAD Consulting Book 2007

January 2007
























Sponsored by:





Note: 1he INSLAD Consulting Book 200 is strictly or the use o current INSLAD students. No part o
this document may be reproduced or transmitted in any orm or by any means - electronic, mechanical,
photocopying, recording, or otherwise - without the permission o the ICC - INSLAD Consulting Club
1able of Contents


1. Introduction.......................................................................................................................................... 3
2. Consulting job search at INSLAD ................................................................................................... 4
3. Consulting industry: history, structure and global trends .............................................................. 6
3.1 listory ............................................................................................................................................ 6
3.2 Structure .........................................................................................................................................
3.3 Global trends ................................................................................................................................. 9
4. Proiles o Consulting irms.............................................................................................................11
4.1 Accenture .....................................................................................................................................11
4.2 Arthur D. Little ...........................................................................................................................11
4.3 Bain & Company.........................................................................................................................12
4.4 Booz Allen lamilton .................................................................................................................12
4.5 1he Boston Consulting Group ,BCG, ....................................................................................13
4.6 L.L.K Consulting........................................................................................................................14
4. Marakon Associates ....................................................................................................................15
4.8 McKinsey & Company...............................................................................................................16
4.9 Mercer Management Consulting...............................................................................................1
4.10 Roland Berger Strategy Consultants.......................................................................................18
4.11 Others.........................................................................................................................................19
5. 1he Consulting job............................................................................................................................20
5.1 Career deelopment paths .........................................................................................................20
5.2 Processes: staing, promotions, opportunities.......................................................................20
5.3 1he eeryday work - key tasks .................................................................................................22
6. Networking with Consulting irms - \hy and how ...................................................................23
6.1 1ips or inormational interiews .............................................................................................23
. Coer letter and CV preparation.....................................................................................................25
.1 Goal o your coer letter and CV.............................................................................................25
.2 1ips or coer letters and CVs ..................................................................................................26
.3 Sample coer letters....................................................................................................................28
8. Interiews............................................................................................................................................31
8.1 \hy case interiews ..................................................................................................................31
8.2 Case interiew tips ......................................................................................................................31
8.3 1he interiew process.................................................................................................................33
8.4 Prepare yoursel or the interiews!..........................................................................................34
9. Case examples ....................................................................................................................................36
9.1 Discount retailer case ,BCG, ....................................................................................................36
9.2 Medical sotware industry case ,BCG,.....................................................................................41
9.3 Jet ighter manuacturing case ,BCG,......................................................................................4
9.4 Gas retail case ,BCG, .................................................................................................................51
9.5 Consumer ADSL serices cases ,BCG,...................................................................................55
9.6 Call center case ,BCG, ...............................................................................................................58
9. Supermarket deli turnaround case ,BCG, ...............................................................................63
9.8 China outsourcing case ,BCG,..................................................................................................66
9.9 Specialty paper sales case ,BCG, ..............................................................................................0
9.10 Oil tanker case ,Booz Allen lamilton, .................................................................................2
1
9.11 Video game case ,Booz Allen lamilton, ..............................................................................4
9.12 1oy manuacturer case.............................................................................................................6
10. Other resources................................................................................................................................8


2
J. Introduction

1he ICC ,INSLAD Consulting Club, is pleased to present the INSLAD Consulting Book
200, ollowing up on the tradition created by the 2005 class. 1his book is created with the aim
o assisting INSLAD students to prepare or a career in consulting and be successul in their
job search and recruiting process.

1he book consists o distinct sections, starting with an oeriew o the management
consulting industry and opportunities oered to MBA graduates. 1his would sere as part o
your background knowledge as you begin conducting inormational interiews. 1he
inormational interiews sere two main goals: inding out whether there is a it between you
and the company, and acquiring more inormation on the company to be used in your coer
letter or interiew. Next, we hae included samples o coer letters to sere as guidance to the
irst stage o the recruiting process.

linally, we present some useul tips rom INSLAD students and alumni who were successul
in their consulting job search and a selection o case examples. 1hey are intended to assist you
in the case interiews preparation, the cornerstone o the whole process. \hy do management
consulting irms gie cases during their interiews Simply because they are in act an excellent
indicator o how good you will be as a consultant, both in terms o your problem-soling skills
and your personality. \e ind that cases are the best way or you to think on how to approach
and "crack" the cases. Make sure you are relaxed and hae un during your case interiews, but
remember: success aors the well-prepared!

\e would like to acknowledge the support we receied rom the Boston Consulting Group,
who sponsored the production o the 3
rd
edition o this book and gae us ull access to their
resources. \e would also like to express our gratitude towards BCG and Booz Allen lamilton
or proiding us with the 11 case exercises which are the bulk o this book.

Our most sincere thanks also go to the current students, ex-consultants and alumni who hae
contributed signiicantly both to this book and to the ICC`s ongoing actiities, in the orm o
CV reiews, mock interiews, inormal chats and general but ery insightul eedback and
input.

linally, we would like to thank the 2005 and 2006 ICC members or initiating the production
and circulation o the INSLAD Consulting Book. \e hope this tradition will continue urther
on with the next INSLAD classes.




ICC Board, 200





3
2. Consulting job search at INSLAD

Consulting remains a popular choice or INSLAD graduates, with stable recruitment leels
oer the past three years. 1here has been a steady increase in the number o graduates who
ind consulting jobs through INSLAD career actiities and networking.

\estern Lurope is still the main destination or consulting jobs, but an increasing number o
graduates are moing to Southern Lurope, particularly Spain and Italy. Consulting recruitment
in Asia Paciic is stable, 15 o total both in 2004 and 2005, with the majority o oers
coming rom global irms based in Singapore.

1able 1 presents the top 10 INSLAD employers in the last three years or positions in the
Consulting industry.

1op INSLAD employers for Consulting positions
2003 classes 2004 classes 200S classes
McKinsey & Company 91 ,49, McKinsey & Company 90 ,3, McKinsey & Company 4 ,30,
Bain & Company 25 ,14, 1he Boston Consulting
Group
60 ,23, 1he Boston Consulting
Group
40 ,16,
1he Boston Consulting
Group
22 ,13, Bain & Company 29 ,1, Bain & Company 30 ,8,
Booz Allen lamilton 1 ,5, A.1. Kearney 9 ,2, Booz Allen lamilton 13 ,5,
Cap Gemini Lrnst &
\oung
6 ,3, Booz Allen lamilton 9 ,3, Roland Berger Strategy
Consultants
12 ,4,
Accenture 5 ,3, Accenture ,3, L.L.K. Consulting 9
A.1. Kearney 5 ,5, Marakon Associates ,1, Accenture ,1,
L.L.K. Consulting 4 Deloitte 3 ,2, Arthur D. Little 5
Marakon Associates 4 ,1, Monitor Company 3 PricewaterhouseCoopers 4 ,3,
PricewaterhouseCoopers 4 ,2, Roland Berger 3 ,2, Value Partners 4

1able 1: 1op INSLAD employers in Consulting, numbers in brackets are ormer employees
Source: INSLAD Career Serices reports


1he main dierence between the timelines o the consulting job search process or the January
and the September INSLAD promotions is the possibility o doing an internship during the
summer break or the January graduates. Oerall, igure out what you want to do during P1
and P2, network during P3 and go or it in P4 and P5.

Make sure you initiate your job search beore the P4 and P5 periods, when you will hae little
time and will be more stressed out. 1hink about your goals, do your research on the sector and
network through inormational interiews or other actiities. 1his will help you to be more
ocused on your applications and more conident in your interiews.


4
TIMELINE OF CONSULTING JOB SEARCH PROCESS
Self Assessment
& Internship hunt
P1-P2
Self Assessment
Attend Mock-Interview sessions
Prepare CV & Motivation letters
Do Informational interviews
Interview preparation with Peers
Apply for Summer Jobs
More Sector Research
P3
Networking
More Research
Just CHILL!
More Informational interviews
(especially with the firms not
coming on campus)
Summer Break
INTERNSHIP
More Informational Interviews (at
the location of the summer
project)
Networking
Go For It!
P4-P5
Attend company presentations
Company Case-interview
sessions (e.g., the BCG Case
workshop and/or the Bain "Crack
The Case" workshop)
Interview preparation with Peers
Consult job postings
On-campus recruitment
January promotion
Self Assessment
P1
Career Orientation
Self Assessment
Counseling/Advising sessions
CHILL!
Prepare CV & Network
P2
Prepare CV and Motivation letters
Networking
Informational Interviews
Networking
P3
Research Consulting Sectors &
Companies
Networking
Interview Preparation
More Informational interviews
Go For It!
P4-P5
Attend company presentations
Company Case-interview
sessions (e.g., the BCG Case
workshop and/or the Bain "Crack
The Case" workshop)
Interview preparation with Peers
Consult job postings
On-campus recruitment
September promotion


ligure 1: 1imeline o the Consulting Job search process
Source: INSLAD Career Serices











5
3. Consulting industry: history, structure and global trends
3.J History

Management consulting ,sometimes also called strategy consulting, reers both to the practice
o helping companies to improe perormance through analysis o existing business problems
and deelopment o uture plans, and to the irms that specialize in this sort o consulting.
Management consulting may inole the identiication and cross-ertilization o best practices,
analytical techniques, change management and coaching skills, technology implementations,
strategy deelopment or een the simple adantage o an outsider's perspectie. Management
consultants generally bring ormal rameworks or methodologies to identiy problems or
suggest more eectie or eicient ways o perorming business tasks.

Management consulting grew with the rise o management as a unique ield o study. 1he irst
management consulting irm was Arthur D. Little, ounded in the late 1890s by the MI1
proessor o the same name. 1hough Arthur D. Little later became a general management
consultancy, it originally specialized in technical research. Booz Allen lamilton was ounded
as a management consultancy by Ldwin G. Booz, a graduate o the Kellogg School o
Management at Northwestern Uniersity, in 1914, and was the irst to sere both industry and
goernment clients. 1he irst pure management consulting company was McKinsey &
Company. McKinsey was ounded in Chicago during 1926 by James O. McKinsey, but the
modern McKinsey was shaped by Marin Bower, who belieed that management consultancies
should adhere to the same high proessional standards as lawyers and doctors. McKinsey is
credited with being the irst to hire newly minted MBAs rom top schools to sta its projects
s. hiring older industry personnel. Andrew 1. Kearney, an original McKinsey partner, broke
o and started A.1. Kearney in 193.

Ater \orld \ar II, a number o new management consulting irms ormed, most notably the
Boston Consulting Group ,BCG,, ounded in 1963, which brought a rigorous analytical
approach to the study o management and strategy. \ork done at BCG, Booz Allen lamilton,
McKinsey and the larard Business School during the 1960s and 0s deeloped the tools and
approaches that would deine the new ield o strategic management, setting the groundwork
or many consulting irms to ollow. Another major player o more recent ame is Bain &
Company, whose innoatie ocus on shareholder wealth ,including its successul priate
equity business, set it apart rom its older brethren. Also signiicant was the deelopment o
consulting arms by both accounting irms ,such as Accenture o the now deunct Arthur
Andersen, and global I1 serices companies ,such as IBM,. 1hough not as ocused on strategy
or the executie agenda, these consulting businesses were well-unded and oten arried on
client sites in orce.

1he current trend in the market is a clear segmentation o management consulting irms. Bain,
BCG and McKinsey retain their strong strategy ocus, with pure strategy houses such as
L.L.K., Marakon and OC&C competing eectiely in this high-end market. Many other
generalist management consultancies such as Accenture are broadening their oering to
include high olume, lower margin work such as system integration. 1here is a relatiely
6
unclear line between management consulting and other consulting practices, such as
Inormation 1echnology consulting.

Management Consulting is becoming more prealent in non-business related ields as well. As
the need or proessional and specialized adice grows, other institutions such as goernments,
quasi-goernments and not-or-proit agencies are turning to the same managerial principles
that hae helped the priate sector or years.


EVOLUTION OF THE MANAGEMENT CONSULTING INDUSTRY
McKinsey
1926
Monitor
1983
AT Kearney
1937
Cresap
1946
BCG
1963
Bain
1973
LEK
1983
Braxton
1976
Booz Allen
Hamilton
1914
Arthur D. Little
1886
Quantum
1989
Alliance
1986
One major parent
Parented by 2 or
more forms


ligure 2: Lolution o the Management Consulting industry
Source: www.wikipedia.com, McKinsey, BCG

3.2 Structure

Consulting irms are segmented according to their ocus and their size, as illustrated in the
matrix rom igure 3. Although neither exhaustie nor ully accurate, this matrix representation
shows the best known companies in each category and approximate alues o size and earnings
per consultant ,as in 2003,.

Most MBA graduates are hired by the so-called Global Strategy irms. 1he bulk o these irms'
work consists o proiding strategic and operational adice to executies in the top companies.

7
So-called Global Operations,I1 irms typically take on larger projects and design, implement
and manage their clients' needs ery closely. 1hese consulting projects require larger teams,
working closely with the clients. People who gie alue to the implementation phase and the
operational process could preer this kind o enironment.

lurthermore, there are irms that specialize along industries and,or unctional lines. Although
oten smaller, these irms may hae impressie reputations, compete equally with the most
well-known irms, and make similar leels o earnings per consultants. 1hey are usually
mentioned as consulting boutiques.


SEGMENTATION OF THE CONSULTING INDUSTRY
$500k
$100k
Earnings per
consultant
100,000 10
Size of Firm
(number of
consultants)
$250k
1,000
Operations
Boutiques
Global operations/
IT Firms
Strategy Boutiques
Global Strategy
Firms
Marakon
OC&C Monitor
LEK
McKinsey
BCG
Bain
Berger
Booz
Allen
WCI
Oakleigh
Stroud
DTT
IBM
CapGemini
Accenture


ligure 3: Structure , segmentation o the consulting industry
Source: www.ADD-Resources.com


lere below are some dierences between a generalist consulting irm and a specialized
boutique:

Generalist firms:
Proide the whole range o management consulting serices ,strategy, operations,
marketing, inance, organizational redesign, etc., to all industries, across a wide
geographical range
1ypically larger irms, with long track record and substantial accumulated knowledge
base
8
Usually multi-regional oice array, coering both deeloped and high-growth emerging
markets
Oten structured around industry and,or unction practices, to better leerage personal
experience

Specialized firms and boutiques
1ypically smaller irms, usually ounded by ex-partners rom larger generalist
consultancies
Structured around in-depth expertise in and knowledge o either speciic unctions
,strategy, marketing, inance, etc., or industry
Smaller, both in terms o number o employees and geographical spread
Usually more ocused on deeloped markets, where such in-depth niche serices are in
demand

3.3 Global trends

In the late 1990s, aggressie penetration o emerging markets, globalization, priatization and
the new Inormation 1echnology industry droe growth in the consulting industry, with
established irms growing as ast as 20 p.a. and with new players emerging in the
marketplace. 1here was a huge demand or serices and consulting irms were hiring MBAs
aggressiely on campus.

Ater this boom period, the growth stalled or a couple o years in the early 2000s. Larlier, the
consulting industry was expected to do as well in good economic conditions, as in bad ones.
As the ultimate serice industry, Consulting depends heaily on the prospects o large
corporations. In good economic conditions, consultants can adise their clients on growth
strategies, inestment projects and due diligences. In bad economic conditions, clients need
adice on down-sizing, cost cutting and disinestments. loweer, the rough economy o 2001
and 2002 introduced a lot o uncertainty or the consulting irms' clients, who reacted to the
economical downturn by postponing major decisions. 1his resulted in a sharp decline or the
industry: many younger and smaller irms had to withdraw and major players had to downscale
their recruiting eorts.

lrom 2004 onwards, the consulting industry recoered growth and irms are now recruiting
again and aggressiely. At present, most oices are working at ull capacity and the outlook or
the sector as a whole is ery positie. lirms are competing more among each other and with
the Inestment Banks or the best candidates.

1he consulting industry has a ery interesting alue proposition or a recent MBA graduate:
the outlook or the industry is good and looks stable, salaries and bonuses are highly
competitie, there is almost no beach time in most irms, and the work is interesting, dierse
and enriching.

9
As we are entering an eer increasingly complex and global world, some clear trends are
emerging or the management consulting irms:
Specialization. Clients are more demanding and ask or consultants specialized in the
industry or topic. 1he major global strategy irms do not want to lose their generalist
scope and the ability o their consultants to work across industries. loweer, they hae
now more structured organizations across industries and unctional lines in order to
deal with the increased sophistication o their clients and to successully compete with
specialized irms.
Implementation. Clients ask or a greater ocus on implementation rather than only
theoretical recommendations or strategic plans. 1his causes increasing competition
among irms in dierent segments o the consulting industry, but is also an
opportunity or consulting irms to deelop long-term relationships with their clients.
Pay for performance and Measurable Business Results (MBRs). Lspecially during
the dot-com boom, some irms agreed on partial,ull equity payment. Clients demand
more tangible results and pay according to a perormance measure ,e.g. cost saings in
procurement optimization projects,.
New geographies. 1he market or Consulting is growing extremely rapidly in China,
Russia and Middle Last ,Abu Dhabi, Dubai,. Markets such as Latin America and India
are also growing ery ast. Major irms are heaily inesting in these geographies,
opening or expanding oices. 1hey compete aggressiely to recruit the candidates who
hae a connection with these regions or possess the right language skills ,Mandarin,
Russian, Arabic, etc.,.
Iragmented markets. In some markets, a large number o ormer employees start
their own small consulting irms. lor example, in China, this trend has led to a ery
ragmented market, with hundreds o small and medium-sized irms.



















10
4. Profiles of Consulting firms

1he objectie o this chapter is to share general inormation on some o the Consulting irms
that recruit INSLAD graduates on a regular basis. It is mostly based on public inormation and
on the eedback rom ex-consultants currently studying at INSLAD. \e had direct input rom
BCG, McKinsey and Roland Berger regarding their company's proiles.

1his exercise is imperect by nature, since it is diicult to describe the cultures o so many
companies and analyze all the opportunities they can oer. loweer, we do hope it will help
INSLAD students to increase their knowledge o the dierent Consulting irms on the market.

4.J Accenture

Accenture became public in April 2001, listed on the New \ork Stock Lxchange. It has more
than 146,000 employees in 49 countries, including approximately 4,500 senior executies.

Initially called Andersen Consulting, Accenture was ormally established in 1989 when a group
o partners rom the Consulting diision o the arious Arthur Andersen irms around the
world ormed a new organization ocused on consulting and technology serices related to
managing large-scale systems integration and enhancing business processes.

Accenture is a global management consulting, technology serices and outsourcing company,
identiying new business and technology trends and deeloping solutions to help clients
around the world enter new markets, increase reenues in existing markets, improe
operational perormance, and delier products and serices more eectiely and eiciently.

Accenture has been an important INSLAD employer oer past years and is a regular presence
in the on-campus recruiting eents, both in Lurope and Asia.

Source: www.accenture.com

4.2 Arthur D. Little

Arthur D. Little is a global management consulting irm, with oer 1,000 sta members and
oices in 30 countries worldwide. It was ounded in 1886 and is the world's irst management
consulting irm. It combines industry knowledge, unctional experience and technology skills
to help clients grow and create alue.

In its assignments, Arthur D. Little combines experience in a range o industries and expertise
in arious unctional areas to help organizations reach their goals. 1he company's approach is
collaboratie and respectul o clients' insight and experience. 1he inolement o clients'
employees is considered a strong prerequisite or durable improements.

11
Arthur D. Little was an important INSLAD employer last year and is a regular presence in the
on-campus recruiting eents.

Source: www.adlittle.com

4.3 Bain & Company

Bain is a global management consulting irm with oer 2,400 consultants worldwide, across 33
oices in 21 countries.

Bain was ounded in 193 by an ex-consultant o the Boston Consulting Group. Since its
oundation, one aspect that sets the company apart rom other leading consulting irms is its
innoatie approach to shareholder wealth. As a consequence, Bain deeloped a strong
practice in proiding consulting serices or Priate Lquity clients.

Part o the projects in the Priate Lquity sector also comes rom the spun-o company Bain
Capital. Bain Capital is a priate inestment irm with oer >25 billion in assets under
management. Bain Capital's amily o unds includes priate equity, enture capital, public
equity and leeraged debt assets. Bain Capital is independent o Bain, but consultants can be
temporarily transerred rom Bain to Bain Capital.

Bain's consultants are generalists and work in dierent industries and unctions. In most
regions, they work on one assignment at a time. \et, in the North American oices,
consultants hae usually two projects to ocus on.

Alumni reer to the work-hard, play-hard culture and the tight bonding among colleagues, in
and out o oice. 1hey point out that the company business culture is ery result-oriented and
non-academic. As or other major consulting irms, allocation o consultants takes usually
place on a country wide basis. 1here are opportunities to ask or a temporarily transer to
another oice ,usually or a six-month period, or to work on projects outside the home
country.

Bain is one o the most important INSLAD employers and has an actie presence in on-
campus eents, both in Lurope and Asia.

Source: www.bain.com, INSLAD alumni

4.4 Booz Allen Hamilton

Booz Allen lamilton is a leading global consulting irm integrating the ull range o consulting
capabilities. It was ounded in 1914 and employs more than 1,000 people. 1he irm is
priately held by approximately 250 partners and had annual reenues o US> 3.3 billion in
2005. Booz Allen lamilton positions itsel as oering a deep understanding o both strategy
and technology. Its motto relects its pragmatism: work with clients to delier results that
endure`.
12
Booz Allen lamilton helps leading corporations, goernment and other public agencies,
emerging growth companies, and institutions. It oers and integrates the ull range o
consulting capabilities: strategy, operations, organization and change, and inormation
technology.

1he company splits its operations into \orldwide Commercial Business and \orldwide
1echnology Business:
\orldwide Commercial Business: \orks with the world`s leading corporations on
their global and local strategies. Major areas o expertise include Strategy, Organization,
Operations, Systems and 1echnology. Booz Allen lamilton seres 0 o the world`s
largest companies, oer 400 o the lortune 500 companies.
\orldwide 1echnology Business: \orks with most \estern goernmental agencies,
and with institutions and goernmental organizations worldwide, proiding a broad
range o management consulting, engineering, inormation technology, and systems
deelopment,integration serices. Main clients are US goernmental agencies ,US
Army, Air lorce and Ministry o Deense and 1ransportation agencies,

INSLAD Alumni are ery enthusiastic about the company's culture. 1hey describe it as un to
work in, ery dierse and intellectually challenging. 1hey are ery keen on social actiities
organized by the oices, as well as on the lexible work models emerging ,e.g. part-time
working or men and women,.

1he company operates with a single proit and loss account and its worldwide practices are
organized at the worldwide leel, in order to create incenties to orm project teams with the
best expertise rom dierent oices. In practice, it results on more international exposure and
experience or the consultants, with as downside more trael days.

In Lurope and the Middle Last, INSLAD has a strong reputation within Booz Allen
lamilton. 1here are almost 100 alumni registered on our alumni directory currently working
or the irm. 1hey hae indicated that Booz Allen lamilton has a strong ocus on INSLAD as
a recruiting target.

Source: www.boozallen.com, INSLAD alumni

4.S 1he Boston Consulting Group (BCG)

BCG was ounded in 1963 by Bruce D. lenderson. Since its inception, BCG has grown rom
Boston to a total o 61 oices in 36 countries ,with 13 oices opened since 1999, and
approximately 2,900 consulting sta. 1he core o BCG`s work has been summarized as the
irtuous circle o insight, impact, and trust`. It ocuses on helping clients achiee sustainable
competitie adantage.
In BCG`s iew, best practices, benchmarks and o-the-shel tools are rarely suicient to create
lasting alue. Instead, each assignment consists in working with the client towards a tailored
solution, accounting or the unique set o opportunities and constraints o the speciic
situation,background. lor a newly hired MBA holder, this in practice means haing the
satisaction and excitement o helping a client break new ground: "I use BCG to see the
13
unseen` as says one o its clients' CLO. 1he low consultants-to-partners ratio and continuous
training programs stimulate the out-o the-box thinking. \orking closely with the client is a
key actor to bring impact into projects, learn how to lead, and not just analyze.

As a result o its direct casework done with clients and intensie analyses within competence
practices, BCG has been piotal in establishing that the sources o competitie adantage can
be systematically explored and applied. Beyond classics such as the Lxperience Cure,
Growth-Share Matrix or the 1ime-based Competition theories, 24 books published since 2000
by BCG urther contribute to changing how business is done.

BCG alumni beliee that one o BCG's key dierentiating actors is its people. Clients' sureys
characterize BCGers as inspired by rereshing consultant humility... the irst to collaborate
and delier real change`. 90 o BCG clients would choose to work with BCG again.

Ultimately, "the BCG-way" is something that applicants will judge or themseles. Job
interiews are, like many things at BCG, ery indiidualistic. 1he interiewer will describe a
situation he , she personally encountered at work in the orm o a small case study. Cases are
not drawn rom central databases.

BCG generally encourages young MBA graduates to start as generalists. Many o them start
their consulting lie - i they wish so - with projects in the industry o their pre-MBA job and
hae thereore the satisaction to leerage their preious experience, while learning a brand
new job. 1ypically 20 o BCG consultants sere on social projects across community, urban
deelopment, health,social serices, nature and arts.

Consultants hae opportunities to gain urther international exposure, either by choosing to
work on projects outside the home oice, or by asking or a temporary 1-year, or deinitie,
transer to another oice. Generally, knowledge o the local language o the chosen BCG
oice is required.

INSLAD ranks as one o the aorite MBAs at BCG. 1he dedicated INSLAD recruiting team
is composed almost exclusiely o INSLAD alumni who simply enjoy keeping strong links
with the INSLAD community. BCG is actiely seeking to recruit or all regions. 1he long list
o INSLAD alumni includes numerous senior oicers, especially in Lurope. Career prospects
are wide open and range rom rising within the irm, to joining client businesses while joining a
strong and successul alumni network.

Source: BCG, INSLAD alumni

4.6 L.L.K Consulting

L.L.K has 450 consultants across 16 oices worldwide and competes or projects with the
top-tier players o the consulting industry. L.L.K. is the second largest strategy consultancy
practice in Britain, ater McKinsey. Most o its current business is in Lurope and the U.S. 1he
irm has recently opened new oices in Asia and is currently concentrating on growing
business there as well as expanding in Lurope and the U.S.
14
L.L.K engages in rigorous act based analyses, plain speak, and a resh perspectie ,they always
start rom scratch while other irms can use set templates,. A high degree o Partners' time
commitment and thorough analysis o arious aailable options are some o the reasons why
clients choose L.L.K oer other irms.

L.L.K works on a 50-50 model in the London oice ,which means that each consultant splits
his or her time equally between two projects,, while in the U.S. it ollows a 100 staing
model. 1he typical engagement can last rom anywhere between 2 weeks ,or a due diligence
type o assignment, to a ew months.

L.L.K does a lot o work related to M&A and Priate Lquity transactions. As a result, many
L.L.K consultants end up working with Priate Lquity companies and Inestment Banks ater
leaing the irm. Other consultants leae the irm to join other Consulting irms, strategy
groups within large business houses, and general management assignments - all in senior leel
management positions.

According to an INSLAD alumnus, the people, the size o the irm, and a culture o client
serice and deliery is what distinguishes L.L.K rom other consulting irms.

At the last count, 6 out o 20 partners in the London oice are INSLAD alumni. 1o top that
there are a number o people at the Managerial and Consultant leel who hae studied at
INSLAD.

Source: www.lek.com, INSLAD alumni

4.7 Marakon Associates

lounded in 198, Marakon is a big small` irm in the Consulting industry. It has around 300
consultants globally across six oices: New \ork, London, Zurich, Singapore, Chicago and
San lrancisco. Clients across Asia and Australia are sered rom the Singapore oice and
clients rom both Britain and Continental Lurope rom the London oice. 1he new Zurich
oice works with clients in continental Lurope. Marakon is clearly ocused on Value Creation
by working closely with the CLOs, other corporate executies and business unit leaders across
lortune 500 companies.

Marakon started its actiities helping business leaders to identiy where alue was being created
and destroyed within their business portolios. It pioneered perormance measures such as
economic proit and warranted equity alue, which incorporate a charge or the capital
employed in the businesses. 1his new approach, called "Value-Based Portolio Management",
was ery innoatie in the late 0s. It became a great platorm or Marakon to deelop its U.S.
business through the early 1980s. As Marakon grew rom a specialist boutique to a leading
strategy adisor, it built a network o oices in the U.S., Lurope and Asia that enables to sere
the needs o global companies.
Marakon deelops expertise in what it takes to create exceptional alue oer time. It is
organized along the ollowing Practice Areas: Strategy, Lxecution, Organic Growth, Growth
through Acquisition, Productiity, Leadership & Organization and Managing or Value.
15
Marakon`s small size and unique methodology o collaborating with clients means that it is able
to deelop richer client relationships at the highest leels, and to engage on issues that drie
their perormance and long term alue. Due to the methodology and nature o projects,
consultants typically work on one project at a time. 1his collaboratie methodology also means
that project durations tend to be longer compared to the rest o the industry ,up to 4 - 6
months in some cases,.

A smaller global organization like Marakon has some implication. lirst, it allows to hae higher
chances o getting international assignments, i the consultant so desires. 1hen, a smaller team
at the oice leel results in consultants getting to know their colleagues on a personal leel.
1here is a strong emphasis on people deelopment: a structured deelopment plan is done or
each consultant and supplemented by regular training sessions.

Source: www.marakon.com, INSLAD alumni

4.8 McKinsey & Company

lounded in 1926 by James O. McKinsey, McKinsey has grown into a global partnership with
oer 6,000 consultants in more than 80 oices in more than 40 countries around the world.
McKinsey seres more than 0 o lortune magazine`s most admired companies. It seres
goernments in more than 35 countries and conducts 150 pro bono engagements each year.
Clients come to McKinsey or adice on their most critical issues - when they hae major
strategic, operational or organizational challenges.

1he irm is comprised o a global network o oices and practices led by a partnership group.
1hereore, it is not tied to earnings pressures or to increasing returns to shareholders. A strict
proessional code o ethics includes putting clients` interests ahead o McKinsey`s, upholding
absolute integrity, keeping client inormation conidential, telling the truth as they see it, and
deliering the best to the client in a cost-eectie manner.

McKinsey is ery eectie in concentrating the global knowledge and expertise on the topics
o interest to their clients. It has also a loyal and important alumni community. As an example,
150 McKinsey alumni hae become CLOs o companies with more than one billion dollars in
annual reenues.

McKinsey is a non-hierarchical organization, where knowledge, insight and the quality o ideas
trump seniority. It is a merit-based organization, where adancement and recognition is based
on the merit o the indiidual`s contribution. 1here is arious training programs aailable and
an ongoing, requent reiew process tied to a strict "up or out" policy.

McKinsey has long been INSLAD`s largest recruiter and more than 0 partners and 400
consultants are INSLAD alumni. 1here is a dedicated recruiting team or INSLAD students,
which centralizes all INSLAD recruiting actiities on behal o the global oices & practices.
1here is also a dedicated website or INSLAD students, which proides detail on eents,
actiities and application process.

16
McKinsey typically recruits or generalist Associate positions, but also Associates or speciic
unctional practices namely Business 1echnology, Marketing & Sales, Operations and
Corporate linance. In most oices, consultants are required to speak the local language. \hile
the majority o Associates do work as "generalists", with growing seniority - ater consultants
hae been gien the chance to explore multiple industries and unctions - specialization is a
natural progression. Oerall, the irm has a culture o enabling consultants to determine their
own career path, and maintains that with its broad reach across industries, unctions and
geographies. McKinsey also runs a relatiely small summer internship program at INSLAD.

\hen hiring, McKinsey seek indiiduals with leadership potential, integrity, a sharp analytical
mind, creatiity and the ability to work with people at all leels in an organization.

Source: www.mckinsey.com, recruiting materials and INSLAD alumni

4.9 Mercer Management Consulting

Mercer Management Consulting is one o the consulting arms o Mercer Inc., a subsidiary o
Marsh & McLennan Companies. It employs approximately 1,100 consultants in 26 oices
across the Americas, Lurope, Asia, and the Middle Last. Mercer is able to enhance the alue it
deliers to clients by leeraging the resources o its parent, Marsh & McLennan Companies
,MMC,, and its sister companies such as Marsh Inc., the world`s leading risk and insurance
serices irm, and Putnam Inestments, a recognized leader in inestment management

Mercer was born in 1992 when the parent company Marsh & McLennan merged two o its
consulting subsidiaries, 1emple Barker & Sloane and Strategic Planning Associates. Recently,
Mercer acquired DiamondCluster International's operations in Continental Lurope, Middle
Last and South America.

Mercer Management Consulting positions itsel as a premier corporate strategy and operations
irm, and helps leading enterprises deelop, build, and operate strong businesses that delier
sustained shareholder alue growth. Key areas in the Mercer's approach to creating alue are
Business Design Innoation, Customer and Brand Strategy, Operational Lxcellence,
Organizational 1ransormation and Portolio Strategy.

Consultants describe the enironment at Mercer as ery relaxed, non hierarchical, and un.
Lach consultant works on one project at a time. In the U.S., as or many consulting irms,
consultants tend to trael our days a week and work in the oice on lridays. Mercer's U.S.
oices are the largest, but Mercer has also oices in Lurope and some presence in Asia.

INSLAD has a strong reputation within Mercer, despite the limited number o graduates in
the U.S. oices. In the past ew years, the INSLAD US alumni association has done a great
job in creating brand awareness in the U.S. \ith the \harton alliance, INSLAD`s name
becomes better known.
Mercer does hae o-cycle hiring. It usually brings in people by recommendation and by
initiatie. It seems that Mercer preers candidates who hae some consulting background.
Source: www.mercermc.com, INSLAD alumni
17

4.J0 Roland Berger Strategy Consultants

lounded in 196, Roland Berger Strategy Consultants has grown to become one o the world's
leading strategy consultancy irms. \ith 32 oices in 23 countries, Roland Berger operates
successully in the global market. In 2005, the 100 consultants generated approximately LUR
530 million in sales. 1he strategy consultancy is an independent partnership, owned solely by
its currently 120 Partners.

Roland Berger supports leading international corporations, non-proit organizations and public
institutions in all management issues - ranging rom strategic alignment and introducing new
business models and processes, to organizational structures and I1 strategy.

Roland Berger is based on global Competence Centers that are organized along unctional and
industry lines. 1his allows oering tailor-made solutions deised by interdisciplinary teams o
experts drawn rom dierent Competence Centers. Roland Berger's consulting adice boosts
the alue o their clients' companies - with creatie strategies that work.

1he company's culture can be characterized by both its team and entrepreneurial spirit.
\orking at Roland Berger will allow you to meet and work with smart but pragmatic and not
arrogant people. \our adancement at Roland Berger will be based on a meritocracy basis,
een i the company does not apply an up-or-out policy and allows its employees to deelop at
their own pace. 1his experience will rapidly allow you to take responsibility in projects and be
exposed to senior managers.

Roland Berger is currently recruiting or all its oices. Please note that the local language is
mandatory or the application to a speciic oice but German is not a requirement outside o
Germany,Switzerland,Austria. 1he recruitment process will start on-campus with a irst
round o 2 interiews ollowed by 1 or 2 round,s, at your chosen oice.

INSLAD has a ery strong reputation within Roland Berger as the company sponsors the
INSLAD chair o Business and 1echnology and Roland Berger himsel is a member o the
Board o INSLAD.

Source: Roland Berger, INSLAD alumni





18
4.JJ Others

Other consulting irms recruiting at INSLAD in 2005 are:

A. 1. Kearney
Copenhagen Consulting Company
Corporate Value Associates
Diamond Management & 1echnology Consultants, Inc. ,ormerly DiamondCluster
International,
Gradus Management Consultants
KPMG
Monitor Company
OC&C Strategy Consultants
PA Consulting
PricewaterhouseCoopers
PR1M
RSM Robson Rhodes Consulting
Spectrum Strategy Consultants
Strategic Decisions Group
1heron Consulting
Value Partners
XP Consulting

19
S. 1he Consulting job
S.J Career development paths

Career paths in the consulting irms are ery ast and allow proessionals to hae quick access
to Partner positions or to access senior positions in the industry when leaing the irm.
1ypically, or the major consulting irms, time length between Associate,Consultant and
Partner positions is 6 to years.


Partner/Principal/ Partner/Principal/
Director Director
Associate Partner/ Associate Partner/
Manager/ Project Manager/ Project
Director/ VP Director/ VP
Project Leader/ Project Leader/
Engagement Manager Engagement Manager
Associate/
Consultant
TYPICAL CAREER PATH IN THE CONSULTING INDUSTRY
Pre-MBA entry level
position
Typical
responsibilities
include: data
gathering, data
analysis, document
creation, modeling,
admin &
coordination,
interviewing,
problem solving
within team
Generalist role
Post-MBA entry level
position
Typical
responsibilities: if
no prior consulting
background, initially
very similar to
Analyst/Associate
responsibilities; with
time and experience,
growing focus on
leading Analysts,
oversight, work
stream management,
greater client
interface
Mainly generalist
Main middle
management
function in
consulting
Typical
responsibilities:
work stream
planning and
execution, team
leadership,
scheduling and time
management, key
client interface for
project, relationship
management and
some client
development
Expertise building
Pre-partner position
Typical
responsibilities:
professional support
and oversight on
projects, client
relationship
management and
development, sales
and marketing,
function and/or
industry expertise
building
Recognized
expertise
Leadership position
Typical
responsibilities:
core-client
relationship
management,
business
development, sales
& marketing, office
/practice/firm/
thought leadership,
internal initiatives,
firm policy and
development
Office/practice
leadership
Pre-MBA entry level
position
Typical
responsibilities
include: data
gathering, data
analysis, document
creation, modeling,
admin &
coordination,
interviewing,
problem solving
within team
Generalist role
2-3 years 2 years 2 years 2-3 years --
Business Analyst/ Business Analyst/
Associate Associate


ligure 4: 1ypical career path in the Consulting industry

S.2 Processes: staffing, promotions, opportunities

Generally, project staing is preerence-based, but with some external constraints. 1he irm
will sta you where possible in a gien moment and minimize your "on the beach" time.
1hereore, pure luck ,i.e. haing the right opportunities at the right time, plays a major role,
beore you acquire expertise and generate demand rom the managers,project leaders' side.

1hereore, especially initially, you must manage your luck:
Network - up, down and sideways
Identiy what interests you
20
Consider your willingness or in-town , out-o-town engagements.

At the beginning o your career as a consultant:
1ry to identiy and get to know good "teachers" and mentors. 1hey will acilitate your
integration in the irm
Get exposure to a ariety o engagements: industries you are interested in or you want
to know better. In many management consulting irms, assignments' diersity is highly
alued and important or the deelopment o a consultant. I you are specialized in
one gien sector, make sure you don't ocus too early in a single industry and explore
dierent sectors

Ater a irst ew projects, choose a sector,unction and deelop your personal interest,
knowledge and network in this area:
locus on true personal interests
lormulate mid to long-term plans
Identiy and connect with mentors, they are important in your career eolution and on
staing choices or the long-run
1hink about long-term networking with clients
Keep in mind exit opportunities i you do not wish to stay in consulting all your career
long

Regarding geography, staing in major consulting irms takes usually place on a country-wide
basis. In this case, the amount o traeling depends to a large extent on the country's size and
the concentration o industries and serices in a gien city. In Germany, or example,
consultants tend to trael more than in other Luropean countries, as the industries and the
inancial serices players are spread out across the country. lor some irms, staing takes place
on an international leel, to leerage competences on a gien industry or unctional practice.

In many cases, the major consulting irms gie consultants the possibility to hae additional
international exposure i they wish so, either by promoting temporary transers across oices
or by supporting the participation in international projects.

1he management consulting career has a ery ast career track, as showed in igure 4. Aerage
compensations in top consulting irms are aboe Industry, particularly ater the irst years, and
comparable to Inestment Banking positions. 1he Consulting industry career is also quite
stable, much less olatile than linance positions. As a inal point, bonuses recoered ater the
2001-2002 economical downturn and are signiicant, especially ater reaching Project Leader,
Manager positions and onwards.

lurthermore, you can ind seeral exit opportunities ater some years as a management
consultant. Clients commonly make ery good oers or consultants to join their irms, this
being one o the main reasons o the high turnoer rate in the management consulting
industry. Starting a career in a management consulting irm opens many possibilities.
Consultants are ery well perceied in the market and adapt easily to dierent positions.


21
S.3 1he everyday work key tasks

In their eeryday work, consultants are expected to gather inormation using eiciently all
resources aailable, generate hypotheses to sole the releant issues, perorm quantitatie
analyses, manage team processes, communicate results and recommendations in an eectie
way and build good client relationships at all leels. 1here is no typical project but rather a ery
dierse set o tasks. Consultants "do what needs to be done" or the success o the project and
the success o the team, both internally and externally with the client's team. As an illustration,
a set o key tasks are listed here below:

Inormation gathering
Perorm interiews ,clients , internal , external,
Synthesize research reports, market research, preious work done by irm in this area,
public sources, etc.

Problem-soling
Understand client's oerall problem and identiy the issues releant to the problem
Plan analytical steps to sole issues
Generate hypothesis, prioritizes analysis and test arguments

Quantitatie analyses
Perorm inancial and operational modeling, business plan scenarios, statistical analyses
,e.g. market segmentation,
Synthesize quantitatie results and build recommendations

1eam management
Design, organize, prepare and sta clients' meetings
Present indings and expose arguments
lacilitate discussions, incorporate inputs and alidate recommendations,hypotheses

Process management
Design the work stream process: working calendar, milestones, resources needed
Validate and acilitate the work stream process, both internally within the project team
and externally with client's team

Client presentation
Prepare written documents ,slides and reports,
Communicate indings and recommendations to clients ,e.g. ormal presentations,

Client relationship management
Manage day-to-day relationship throughout project at all leels and build long-term
relationship ater the project
Assist in subsequent drating o proposals

Source: INSLAD Alumni


22
6. Networking with Consulting firms - Why and how?

A good start to the job search is to conduct seeral inormational interiews with employees o
companies that you are interested in. 1he goal o these interiews is to increase your
understanding o this company, to make a better decision as whether to apply and will sere as
a good preparation or the application process.

Inormational interiews are useul to
Learn what the company alues in its employees
Gain insight in the process o recruiting
Laluate how your skills and interests it with a particular career or business.
Learn about the working enironment and oice speciic culture

Remember, the sooner you can get contact with the irms you are interested in, the better. It is
a great opportunity to clariy your thoughts, understand which irms you would consider
working or and get used to the contact with potential interiewers.

Don't hesitate to get back to the INSLAD Consulting Club should you need any help to set up
inormational interiews.

6.J 1ips for informational interviews

Contacting people to interiew
1ry to set up inormational interiews with INSLAD alumni ,1-5 years out o
INSLAD, as they can relate to you more easily than an INSLAD student and are
usually more willing to gie you a hand. 1he INSLAD Alumni database is easy to use
and can be exploited to contact alumni
Clearly indicate where you got the person`s name
Make it clear rom irst contact that you are not contacting or a job, but rather to gain
urther insight into the company as part o your research on the industry

Preparing or the interiew
1o make best use o your interiew time, know in adance what questions you are
going to ask. Lxamples o questions:
- \hat is a week on this job really like
- \hat do you like about your job \hat do you dislike about it
- Is your job typical o others in this ield , or this company
- \hat is the corporate culture like at the company, and at the particular oice
- \hich irms do you think are your toughest competitors in your local market, and
how do they dier rom your company
- low do you stay current in your knowledge
- \hat kind o experience or training is required
- \hat are employers looking or ,in terms o skills, education and experience,
- \hat is the potential or adancement
- \hat are current job prospects like

23
Conducting the interiew
1he person with whom you are meeting might be a aluable contact. So, een though
this is not a job interiew, you want to make a good impression. Some pieces o adice:
- Dress proessionally
- 1ake notes
- Stick to the time limit that you agreed on when you set up the interiew
- Ask or a business card or your records
- 1hank the person or taking the time to meet with you

lollowing up
Don't orget to send a thank-you note. A business card will contain the inormation
you need to be sure the note is deliered to the recipient































24
7. Cover letter and CV preparation
7.J Goal of your cover letter and CV

Beore starting your coer letter and CV, remember the our ollowing basic questions:
1. \hat is the purpose o this letter
2. \hy should the company in question consider you
3. \hy does this company interest you
4. \hat action do you want the reader to take next

1he answer or the last answer is straight orward: the goal o your coer letter and CV is to
get an interiew. \ou are not going to proe your qualities as a consultant yet, this is tested in
the interiews. 1he target o your coer letter and CV is to attract the attention o the people
working in the recruiting process.

Regarding the coer letter, recruiters will look or two aspects. lirst, they will try to assess the
candidates' motiation, either by their knowledge about the company or by the description o
their experience while they attend companies' presentations. 1he coer letter has to be short in
order to be read: it is useless to re-copy extensiely your main achieements or qualities, which
are better described in the CV. Secondly, the recruiters will look or the oices you are
applying or, not only to coordinate the interiewing process but also to match your
preerences with the system's needs. Generally, the knowledge o the local language o the
oice o choice is required. \ou must contact the Recruiting Coordinators to check or
exceptions.

In the CV, you communicate your achieements and the skills that you hae and are useul and
transerable to the consulting business ,especially i you were not working in the consulting
industry beore,.

Key skills to ocus on are:
Leadership and impact: proen track record o making things happen`, leading people
in complex challenges and achieing substantial results
Quantitatie skills: comort with numbers and ability to meet numerical challenges
Analytics and problem soling: logic-based problem structuring, analysis and synthesis
capabilities
Communication: ability to eectiely coney messages both orally and in writing,
especially in high-stress situations
1eamwork: Ability to unction well in a team setting, both as a team-member and as a
team-leader

lor each one o the skills mentioned aboe, your CV should demonstrate the use o these
skills.

Leadership and impact
1rack record, adancement path, deelopment cure
Increasing responsibilities oer time, number o people managed
Unusual,outstanding responsibilities and challenges
25
Results and achieements - preerably concrete quantiiable impact ,>>>, time etc.,

Quantitatie skills
Quantitatie background, past accomplishments ,academics, awards,, GMA1
Number-related unctions,actiities,responsibilities perormed

Analytics and problem soling
Analysis-ocused or related actiities, unctions and responsibilities
Problem-soling track record, e.g. speciic problem-soling tasks you were in charge o
or inoled in - including the result ,preerably successul.,
Speciic problem-soling initiaties you hae sel-started and concluded successully
,impact,

Communication
Preious communication roles, responsibilities and achieements
Accumulated communication-related experience, e.g. preparing, writing, editing and,or
presenting written and oral communications

1eamwork
1eamwork history: number o people you`e worked with and how that grew oer time
lunctioning in arious team-oriented structures ,team-member, leader etc.,,
deelopment cure ,time and number o people,
Successully coordinating cross-unctional,organizational eorts

7.2 1ips for cover letters and CVs

Cover letter

Do not copy letters or pieces o letters rom sample sources. Recruiters do recognize
them easily
Do not exceed one page or the coer letter
Most coer letters ollow a simple structure, with ideally one paragraph or each o the
questions mentioned in the point .1
Do not use any luy or generic statements about yoursel or your experiences ,e.g.
excellent interpersonal skills, team player, unless you can back them up with tangible
examples
Do not use generic statements about the company you are applying to ,e.g. leading
irm, excellent reputation, blue-chip Company, etc.,. lor one, this also applies to most
o their competitors. lor another, this shows that you hae not done your homework
to identiy why you really want to join the company
Get your coer letter read by at least two other people to check or spelling mistakes,
grammatical errors and ease o reading
Use inormational interiews rather than company presentations and websites to ind
out what is really dierent about each irm, and why you would be a good it


26

CV

Leerage MBA Career Serices CV sessions to get eedback both rom Career Serices
and rom your peers
Use the MBA Career Serices one-on-one CV sessions to polish up your rsum.
1hink careully about which o the three typical CV ormats ,Chronological, Skill-
Based or lybrid, you should use - there is no one right answer` or eeryone
Look at a ew dozen other rsums- what can make you stand out
Ask your peers ,especially those with prior consulting background, to reiew your CV
beore submission

27
7.3 Sample cover letters

Sample cover letter J

INSLAD
Bouleard Constance
305 lontainebleau
lrance

^.D Recrvitivg Mavager
Covav, ^ave
Dear ^ave,

I am writing in order to express my interest and enthusiasm in applying or an ...ociate
position at Recrvitivg Covav, ^ave. As I inormed you last week, I was unable to attend either
the presentation or the dinner on date. loweer, my brie chat with last week was both
inormatie and inspiring.

I came to INSLAD ater spending six years in a ast-paced, highly entrepreneurial metal
trading and processing company, Covav, ^ave. 1he experience was extraordinarily rewarding,
aording me the opportunity to establish, build, and manage two companies in the challenging
enironment o the lormer Soiet Union. \ith ull managerial, commercial, and inancial
responsibility or these two subsidiaries, I aced a remarkable range o challenges and rapidly
deeloped my personal and proessional skills. I decided to apply to INSLAD in order to
continue this process while receiing the theoretical ramework or all that I had been doing
during my time at Covav, ^ave.

1he ideal enironment or me to pursue this deelopment urther is in management
consulting. Recrvitivg Covav, ^ave`s prestige and reputation are unparalleled. loweer, what
was decisie in conincing me to apply or a position is the many people I hae met rom the
company, extreme intelligence, strong ambition, intellectual integrity, and insatiable curiosity
are common to all.

I beliee that both my strong academic background and my proessional accomplishments
attest the act that I possess the analytical abilities, interpersonal skills, motiation, and
business acumen to make a strong contribution to Recrvitivg Covav, ^ave.

I would greatly appreciate the opportunity to interiew later this month or a position in Office
1, Office 2, or Office .

I I can be o any assistance in the meantime, please do not hesitate to contact me.

Sincerely \ours,
^ave


28
Sample cover letter 2

Dear ir or Maaav,

I am currently enrolled in INSLAD`s MBA Programme, and will complete my degree in
December o this year. As a result o my prior education and work experience in research, I am
interested in pursuing a career in Consulting, and particularly with the Recrvitivg Covav,`. Ptace
Office.

Ater nearly our years at Covav, ^ave, I eel I am extremely well-suited or a demanding
career soling key business issues or global managers. I hae combined inancial acumen,
leadership, and project management skills and reached a leel o success rare or someone
entering the irm at a junior leel. In the spring o 2003, I became one o only two people in
my Associate class o 25 to be asked to stay on at the irm, and was promoted to an Analyst
position.

Larly on, as I demonstrated my skills and tenacity to my team, I was entrusted with numerous
important responsibilities and requently interacted with senior executies at the irm to
present my research and conclusions. My strong reputation has ollowed me een outside o
the bounds o employment, and I continue to be consulted by Covav, ^ave`s senior
management regarding current issues at the irm een while I am pursuing my MBA studies.

My superior undergraduate education at the cboot ^ave gies me an adantage gien its ormal
and rigorous business and inancial training. \hile at INSLAD, I am building on my prior
inancial experience and increasing my management skill set.

Although my experience has been in Inestment Management, my current ocus is Consulting.
I hae enjoyed and learned a great deal through my research work, but I am much more
interested at this point in my career to deelop my strategy and management skills. I beliee
that my preious work experience coupled with my general management MBA gie me an
important skill-base that can be successully applied in this enironment.

I would speciically like to be considered or the Office 1, with a backup choice in the Office 2.

I hae included my rsum or your reiew, and please do not hesitate to contact me i you
require urther inormation rom me.

Sincerely \ours,
^ave


29
Sample cover letter 3

Dear ^ave,

Currently in the process o completing my MBA degree at INSLAD, I had the pleasure to
meet your team at your on-campus presentation. laing ollowed your company and been
inluenced by your diligent, collaboratie, and practical style to proide sustainable and non-
conentional solutions or the customers, I am coninced that Recrvitivg Covav, ^ave will be
the ideal workplace or my background, competencies, and alues, both proessionally and
personally.

1he meeting with the partners and other Recrvitivg Covav, ^ave`s consultants at the dinner
reinorced my belie that your company commits to proide its members an international and
stimulating enironment, diersiied business contexts, unique learning and skill deelopment
opportunities, and a progressie career track. I thereore decided to apply or the evior
Cov.vttavt position at Recrvitivg Covav, ^ave.

My personal, academic and proessional pursuits hae allowed me to deelop a solid band o
analytical, strategic, problem-soling and people skills, which make me a good candidate or
your company. I am Chinese, liing in Lurope ,LC citizen,, and hae been responsible or the
strategic planning and business deelopment or Covav, ^ave in Lurope, one o the biggest
Japanese multinational companies. Such a complex enironment has helped me to be a
dedicated, open, sel-aware, interesting and interested person. It also ostered my ability to
thrie in high-pressure situations, to embrace new challenges, and to assimilate quickly and
lexibly dierent cultural and business contexts.

Ater INSLAD MBA, it is my aim to go on to a successul Consulting career by combining
and extending my skills and learning into a management position with more explicit project
management and business deelopment requirements. It is my determination to work with a
committed team to achiee the goal o creating alue.

1hanks to the aboe-mentioned attributes and my personal determination and motiation, I
am coninced that I would proe a aluable contribution to Recrvitivg Covav, ^ave. I look
orward to your response to the aboe and the attached CV, and sincerely hope to meet with
your recruitment team in the near uture to explore potential mutual interest.

\ours truly,
^ave








30
8. Interviews
8.J Why case interviews?

Case interiews are in act an excellent indicator o how good you will be as a consultant, both
in terms o your problem-soling skills and your personality. 1hat's why management
consulting irms use them!

Case interiews are the cornerstone o the recruiting process in the consulting industry.
Because it is an exercise in problem soling, the case is not about inding the right or wrong
answer, but rather about the method you use to derie your answer. It is about the questions
you raise, the assumptions you make, the issues you identiy, the areas o exploration you
prioritize, the rameworks you use, the creatiity inoled, the logical solution you recommend,
and the conidence and poise you present.

Many times, tough problem-soling questions are asked ace-to-ace by consulting clients,
under pressure, with the expectations o receiing some answers. 1he case is usually a business
situation that replicates this situation, where your client is acing a diicult problem with the
company,product,competitors or is thinking o a new opportunity to explore and asks you
or help to address the issue.

8.2 Case interview tips

lirst adice: practice! And start practicing early. Most students don`t ace their case naturally.
\ou don't hae to do all the cases you can ind but the process is much easier i you do a
couple o them beore interiews are scheduled. 1his takes practice.

Preparation tips

Do some research on the irm ,Internet, database resources in library,
Prepare with the help o case simulations or mock interiews
Read the inancial newspapers, know what`s going on. Search or some new ideas:
McKinsey Quarterly, lBR
Remind your ligh School Maths. \ou are expected to make quick calculations on the
paper. Consultants loe back-o-the-enelope analyses
Make some market sizing exercises. \hat is the size o the UK DVD rental market
low many gear boxes are there in lrance low many gol balls in Japan

General interview tips

Be prepared
Demonstrate that you did your homework
Mention one o the articles you read, or compare sales igures o the company with
your preious employer
Know the business stories and incorporate them in your interiew
lae a point o iew
31
Clearly oice your opinion and be prepared to deend your point o iew
Practice answering behaioral questions

Case interview tips

Stay calm, take time to think
Ask questions, especially intelligent ones
Show sincere enthusiasm - answers drien by intellectual curiosity and energy, not by a
rigid ocus on impressing the interiewer
Deine issues and hypotheses
Be creatie - do not rely on just "bookish rameworks" or industry jargon. Use Porter
only i it really helps you. Use the entrepreneur,dad's business approach
Accept guidance and clues
Be causal in your analyses
1ry to quantiy - demonstrate your analytical skills
1ake notes, sketch and draw
1hink aloud
Drie to potential actions or the client
Do not "Boil the Ocean"
Be prepared to ask something intelligent at the end


HOW TO SUCCESSFULLY APPROACH A CASE
Follow a logical structure - follow these five steps to generate a hypothesis and supporting
arguments
Listen carefully to the situation and the question
Firmly establish your understanding of the case
Create an approach that focuses on critical issues and guides your analysis
- Structure/Framework
- Prioritize issues you want to address
- Identify key information you need
Analyze the problem
- Ask focused questions
- Evaluate situation
- Draw conclusions
Clearly summarize your final analysis and conclusions
- Think out loud so that the interviewer understands the direction of your
thinking. You may also want to write down your findings and assumptions
- Remember, there is no "right" way of doing a case; nor is there a single answer
If you have demonstrated the way you think, you have done all you can to
"crack the case"
Attitude
Interact with the interviewer. The case should be a dialogue, not a monologue
Pace yourself. It's important to not rush to conclusions
And perhaps most important, relax and have fun
1 1 1
2 2 2
3 3 3
4 4 4
5 5 5


ligure 6: lie steps or a successul approach to a case
Source: BCG
32
8.3 1he interview process

1he interiew process depends on the consulting irm but usually has two or three phases,
with two to three interiews in each. In some cases or or some irms, inal interiews with
Partners o the recruiting oice can be set up.

\hat do the interiewers tend to ealuate


WHAT ARE CONSULTING FIRMS LOOKING FOR DURING
AN INTERVIEW: 5 KEY DIMENSIONS
Leadership & Impact Leadership & Impact Teamwork Teamwork Communication Communication
Problem solving Problem solving Quantitative skills Quantitative skills
Ability to lead teams (of
consultants
and of clients)
Make it happen
Personal initiative
Entrepreneurship
Can do attitude
Build on other peoples
ideas
Manage information flows
Willingness to follow
when appropriate
Ability to convince
Understanding
Comfort with ambiguity
Empathy
Presence
Business sense
Ability to structure
complex business issues
Analysis and synthesis
capabilities
Creative thinking
Comfort with numbers
Ability to simplify complex
calculations
Confronting numbers with
reality/business sense
All Firms have their own evaluation grid, more or less in line with these 5 dimensions All Firms have their own evaluation grid, more or less in line w All Firms have their own evaluation grid, more or less in line with these 5 dimensions ith these 5 dimensions


ligure 5: lie key dimensions or ealuating consulting interiews
Source: BCG

Structure:
Does the candidate hae,ollow a structure while tackling the problem
Is the structure releant to the case being analyzed
Does the candidate hae a structure that is both concise and lexible

Quantitative/analytical ability:
Is the candidate comortable with numbers
Does she break down ambiguous problems systematically

Issues/Prioritizations:
Does the candidate quickly identiy a list o issues that are most releant to the
business problem
33
Can she prioritize,organize the issues or is it more like a laundry list

Lnergy/Presence:
Is she comortable with the case or is there a sense o oh no, not this kind o
problem`
I the candidate gets stuck on a particular issue, does she recoer graceully

Iit:
1his depends on the irm


\e list below what is considered to be potential characteristics that some popular management
consulting irms look or, according to a surey made in the US ,Source: Chicago GSB,. 1his
is not intended to be complete but is rather the inormal eedback o ormer MBAs.

Bain & Company:
lypothesis drien - the candidate should quickly analyze acts and make a hypothesis. She
should then drill down to see i the hypothesis is true or should be modiied. linally it is ery
important that she gies actionable recommendation.

Booz Allen Hamilton:
Booz Allen lamilton is big on microeconomic concepts MR ~ MC, supply,demand etc. It
tends to ealuate the candidates on their micro skills. Candidates should also deinitely ask
questions to understand industry,business trends ,this is true or all irms, but with Booz Allen
lamilton you get dinged i you orget this part,.

Boston Consulting Group:
Intellectual curiosity and prioritization o issues - while the candidates should be structured,
they should demonstrate out-o-the-box thinking.

McKinsey & Company:
Big picture, Big picture, Big picture. It ealuates the candidates on numbers, but it is ital that
they lay out all the issues systematically. 1he issues should be mutually exclusie and
collectiely exhaustie ,MLCL,. Candidates should neer rush into a hypothesis or probe
details ,quite dierent rom Bain or BCG, or example,

8.4 Prepare yourself for the interviews!

1he interiew is not only about the case. Usually, there is an open discussion beorehand when
the candidates can discuss their motiations and talk about their prior experiences. 1his can
take around 10 minutes. So, a last piece o adice. Come with your story! \hat you were
doing, why you went to INSLAD, what you want to do now, etc.

lor example, i a candidate has a preious experience in an industry and wants to moe to
Consulting, the interiewer will probably ask i the candidate wants to work as a consultant in
34
that industry or i he,she wants to try dierent industries. Usually, any consistent answer is
good but proiding no answer indicates that you are not sure o your motiations and goals.

In conclusion, prepare a plan or your career and be able to present it to your interiewer. \ou
do not necessarily need to say that you dream o being a partner, but you should be able to
coney your motiation, explain why Consulting makes sense or you and show you hae
thought out how you can leerage your skills and experience or this new position.

At the end o the case, you will also hae the occasion to ask some questions. 1ake this
opportunity to know more about the irm and about your interiewer. Some o the questions
rom chapter 6.1 can help you.

Regarding the case exercise itsel, we hope that the cases presented in this book will gie you a
laor o how cases can and should be tackled. \e beliee that the proposed solutions are ery
useul to get into the consultant's way o soling business problems.

Consulting companies are aailable to organize mock interiews, with employees or alumni
currently studying on campus or with consultants o the oice you want to join. Don't hesitate
to ask your peers with consulting experience or help. Consulting irms also organize "Crack
the Case" sessions. Attend the interiew sessions which are organized, prepare them well and
ask and gie actionable eedback to your peers.

I you need to be adised on how to practice or the interiews o a gien consulting irm,
contact the irm's Recruiting Coordinator. 1hey will gie you more speciic inormation and
guide you on how to best prepare. In case you need urther help, contact us!









35
9. Case examples
9.J Discount retailer case (BCG)

Step J: Actively listen to the case

\our client is the largest discount retailer in Canada, with 500 stores spread throughout the
country. Let's call it CanadaCo. lor seeral years running, CanadaCo has surpassed the second-
largest Canadian retailer ,300 stores, in both relatie market share and proitability. loweer,
the largest discount retailer in the United States, USCo, has just bought out CanadaCo's
competition and is planning to conert all 300 stores to USCo stores. 1he CLO o CanadaCo
is quite perturbed by this turn o eents, and asks you the ollowing questions: Should I be
worried low should I react low would you adise the CLO

Step 2: Lstablish understanding of the case

o, tbe ctievt, CavaaaCo, i. facivg covetitiov iv Cavaaa frov a |.. covetitor. Ovr ta./ i. to eratvate tbe
etevt of tbe tbreat ava aari.e tbe ctievt ov a .trateg,. efore cav aari.e tbe CO veea .ove vore
ivforvatiov abovt tbe .itvatiov. ir.t of att, v vot .vre vvaer.tava rbat a ai.covvt retaiter i.!

A discount retailer sells a large ariety o consumer goods at discounted prices, generally
carrying eerything rom housewares and appliances to clothing. Kmart, \oolworth, and \al-
Mart are prime examples in the U.S.

Step 3: Set up the framework

Ob, .ee. 1bev tbiv/ it va/e. .ev.e to .trvctvre tbe robtev tbi. ra,: ir.t, tet. vvaer.tava tbe covetitiov
iv tbe Cavaaiav var/et ava bor CavaaaCo ba. becove tbe var/et teaaer. 1bev tet. too/ at tbe |.. to
vvaer.tava bor |Co ba. acbierea it. o.itiov. .t tbe eva, re cav verge tbe tro ai.cv..iov. to vvaer.tava
rbetber |Co. .trevgtb iv tbe |.. i. trav.ferabte to tbe Cavaaiav var/et.

1hat sounds ine. Let's start, then, with the Canadian discount retail market. \hat would you
like to know

Step 4: Lvaluate the case using the framework

.re CavaaaCo. :00 .tore. cto.e to tbe covetitiov. 00 .tore., or ao tbe, .erre aifferevt geograbic area..

1he stores are located in similar geographic regions. In act, you might een see a CanadaCo
store on one corner, and the competition on the ery next corner.

Do CavaaaCo ava tbe covetitiov .ett a .ivitar roavct vi.

\es. CanadaCo's stores tend to hae a wider ariety o brand names, but by and large, the
product mix is similar.

36
.re CavaaaCo. rice. .igvificavtt, torer tbav tbe covetitiov..

No. lor certain items CanadaCo is less expensie, and or others the competition is less
expensie, but the aerage price leel is similar.

. CavaaaCo vore rofitabte ;v.t becav.e it ba. vore .tore., or aoe. it bare bigber rofit. er .tore.

It actually has higher proits than the competition on a per-store basis.

!ett, bigber rofit. covta be tbe re.vtt of torer co.t. or bigber rerevve.. .re tbe bigber er.tore rofit. ave to
torer co.t. tbav tbe covetitiov. or tbe re.vtt of bigber er.tore .ate..

CanadaCo's cost structure isn't any lower than the competition's. Its higher per-store proits
are due to higher per-store sales.

. tbat becav.e it ba. bigger .tore..

No. CanadaCo's aerage store size is approximately the same as that o the competition.

f tbe,re .ettivg .ivitar roavct. at .ivitar rice. iv .ivitart,.iea .tore. iv .ivitar tocatiov., rb, are
CavaaaCo. er.tore .ate. bigber tbav tbe covetitiov..

It's your job to igure that out!

. CavaaaCo better vavagea tbav tbe covetitiov.

I don't know that CanadaCo as a company is necessarily better managed, but I can tell you that
its management model or indiidual stores is signiicantly dierent.

or .o.

1he competitor's stores are centrally owned by the company, while CanadaCo uses a ranchise
model in which each indiidual store is owned and managed by a ranchisee that has inested
in the store and retains part o the proit.

v tbat ca.e, rovta gve.. tbat tbe CavaaaCo .tore. are robabt, better vavagea, .ivce tbe ivairiavat
.toreorver. bare a greater ivcevtire to vaivie rofit.

\ou are exactly right. It turns out that CanadaCo's higher sales are due primarily to a
signiicantly higher leel o customer serice. 1he stores are cleaner, more attractie, better
stocked, and so on. 1he company discoered this through a series o customer sureys last
year. I think you'e suiciently coered the Canadian market-let's moe now to a discussion o
the U.S. market.

or vav, .tore. aoe. |Co orv iv tbe |.., ava bor vav, aoe. tbe .ecovatarge.t ai.covvt retaiter orv.

USCo owns 4,000 stores and the second-largest competitor owns approximately 1,000 stores.

37
.re |Co .tore. bigger tbav tbo.e of tbe t,icat ai.covvt retaiter iv tbe |...

\es. USCo stores aerage 200,000 square eet, whereas the typical discount retail store is
approximately 100,000 square eet.

1bo.e vvvber. .vgge.t tbat |Co .bovta be .ettivg rovgbt, eigbt tive. tbe rotvve of tbe veare.t |..
covetitor!

Close. USCo's sales are approximately >5 billion, whereas the nearest competitor sells about
>1 billion worth o merchandise.

rovta tbiv/ tbat .ate. of tbat .ie gire |Co .igvificavt ctovt ritb .vtier.. Doe. it bare a torer co.t of
gooa. tbav tbe covetitiov.

In act, its cost o goods is approximately 15 percent less than that o the competition.

o it robabt, ba. torer rice..

Right again. Its prices are on aerage about ten percent lower than those o the competition.

o it .eev. tbat |Co ba. beev .o .vcce..fvt rivarit, becav.e it ba. torer rice. tbav it. covetitor..

1hat's partly right. Its success probably also has something to do with a larger selection o
products, gien the larger aerage store size.

or aia |Co get .o vvcb bigger tbav tbe covetitiov.

It started by building superstores in rural markets sered mainly by mom-and-pop stores and
small discount retailers. USCo bet that people would be willing to buy rom it, and it was right.
As it grew and deeloped more clout with suppliers, it began to buy out other discount
retailers and conert their stores to the USCo ormat.

o rbeverer |Co bv,. ovt a covetivg .tore, it at.o b,.icatt, eava. it.

Not necessarily. Sometimes it does, but when I said it conerts it to the USCo ormat, I meant
that it carries the same brands at prices that are on aerage ten percent lower than the
competition's.

!bat criteria aoe. |Co v.e iv aeciaivg rbetber it .bovta b,.icatt, eava a .tore it. ;v.t bovgbt ovt.

It depends on a lot o actors, such as the size o the existing store, local market competition,
local real estate costs, and so on, but I don't think we need to go into that here.

!ett, tbovgbt it vigbt be reteravt iv terv. of reaictivg rbat it ritt ao ritb tbe 00 .tore. tbat it bovgbt iv
Cavaaa.

Let's just assume that it doesn't plan to expand the Canadian stores beyond their current size.
38
OK. tbiv/ re tearvea evovgb abovt |Co. a ti/e to a./ a fer qve.tiov. abovt |Co. abitit, to .vcceea
iv tbe Cavaaiav var/et. Doe. |Co bare a .trovg brava vave iv Cavaaa.

No. Although members o the Canadian business community are certainly amiliar with the
company because o its U.S. success, the Canadian consumer is basically unaware o USCo's
existence.

Doe. CavaaaCo carr, roavct. .ivitar to |Co., or aoe. tbe Cavaaiav cov.vver eect aifferevt roavct.
ava brava. tbav tbe |.. ai.covvt retait cov.vver.

1he two companies carry similar products, although the CanadaCo stores lean more heaily
toward Canadian suppliers.

or vvcb rotvve aoe. CavaaaCo actvatt, .ett.

About >50 million worth o goods annually.

. tbere av, rea.ov to tbiv/ tbat tbe co.t. of aoivg bv.ive.. for |Co ritt be bigber iv tbe Cavaaiav var/et.

Can you be more speciic

veav, for eavte, are tabor or tea.ivg co.t. bigber iv Cavaaa tbav iv tbe |...

Canada does hae signiicantly higher labor costs, and I'm not sure about the costs o leasing
space. \hat are you driing at

ra. tbiv/ivg tbat if tbere rere a bigber co.t of aoivg bv.ive.. iv Cavaaa, erba. |Co rovta bare to
cbarge bigber rice. tbav it aoe. iv tbe |.. to corer it. co.t..

1hat's probably true, but remember, CanadaCo must also cope with the same high labor costs.
Can you think o additional costs incurred by USCo's Canadian operations that would not be
incurred by CanadaCo

|Co vigbt ivcvr bigber ai.tribvtiov co.t. tbav CavaaaCo becav.e it ritt bare to .bi roavct frov it. |..
rarebov.e. v to Cavaaa.

\ou are partially right. CanadaCo has the adantage in distribution costs, since its network
spans less geographic area and it gets more products rom Canadian suppliers. loweer, since
CanadaCo continues to get a good deal o products rom the U.S., the actual adantage to
CanadaCo is not great-only about two percent o oerall costs.

.tt tbi. .vgge.t. tbat |Co ritt be abte to retaiv a .igvificavt rice aaravtage orer CavaaaCo. .tore.: if vot
tev ercevt, tbev at tea.t .erev to eigbt ercevt.

I would agree with that conclusion.



39
Step S: Summarize and make recommendations

rovta tett tbe CO tbe fottorivg: v tbe vear terv, ,ov vigbt be .afe. Yovr .tore. bare a vvcb .trovger
brava vave iv Cavaaa tbav |Co., ava tbe, .eev to be rett vavagea. orerer, a. cov.vver. get v.ea to
.eeivg rice. tbat are cov.i.tevtt, .erev to eigbt ercevt te.. at |Co, tbe, ritt reatie tbat .boivg at |Co
veav. .igvificavt .arivg. orer tbe covr.e of tbe ,ear. .ttbovgb .ove cov.vver. ritt revaiv to,at ovt of babit or
becav.e of ,ovr bigb teret of .errice, it i. rea.ovabte to eect tbe ai.covvt .boer to .bo rbere rice. are
tore.t. Moreorer, orer tive ,ovr bravavave aaravtage ritt eroae a. |Co becove. vore favitiar to
Cavaaiav cov.vver.. Yov certaivt, bare to rorr, abovt to.ivg .igvificavt .bare to |Co .tore. iv tbe tovg
terv. Yov .bovta robabt, ao .ovetbivg abovt it vor, before it. too tate.

Can you suggest possible strategies or CanadaCo

Ma,be it cav fiva ra,. to cvt co.t. ava va/e tbe orgaviatiov vore efficievt, .o it cav /ee rice. tor erev if it.
co.t of gooa. i. bigber.

Anything else

t vigbt cov.iaer iv.titvtivg .ovetbivg ti/e a freqvevt .boer rograv, rbere cov.vver. accvvvtate oivt. tbat
evtitte tbev to fvtvre ai.covvt. ov vercbavai.e.

\hat might be a potential problem with that

!ett, it vigbt vot be tbat co.teffectire, .ivce it rovta be reraraivg a .igvificavt vvvber of .boer. rbo rovta
bare covtivvea to .bo tbere av,ra,.

Any other suggestions

CavaaaCo vigbt ravt to reare a var/etivg or aarerti.ivg cavaigv tbat bigbtigbt. it. bigb teret of .errice. t
vigbt erev iv.titvte a CavaaaCo errice Cvaravtee tbat .vra..e. av, gvaravtee. offerea b, |Co.

Assuming the only way to keep customers is through competitie pricing, is there anything
CanadaCo can do to appear competitie to the consumer

t vigbt ravt to cov.iaer offerivg ferer roavct tive., .o tbat it cav cov.otiaate it. bv,ivg orer ava vegotiate
rice. ritb .vtier. tbat are covetitire ritb |Co.. t vigbt to.e .ove cv.tover. rbo ravt tbe rariet, of
roavct. tbat |Co ba., bvt it va, be abte to retaiv tbe cv.tover rbo i. bv,ivg a tivitea arra, of itev. ava i.
;v.t too/ivg for tbe be.t rice.

All o your suggestions are interesting, and you would want to analyze the adantages and
disadantages o each in more detail beore making any recommendations to the CLO.

Additional Case Questions

By the time you'e gone through the case interiew example and the interactie case you
probably will hae deeloped a good idea o what a case interiew is all about. 1he best way to
prepare or a case interiew is to practice a ew. Ask a riend or career counselor to gie you a
case using the sample business problems below.
40
1. A German luxury car manuacturer is interested in entering the sport-utility ehicle market
,or example, Jeep Cherokee, ater noticing that the market has grown dramatically worldwide
in the past two years. low would you adise the manuacturer \hat does it need to know
beore making an entry decision I it chooses to enter, what might a iable strategy be

2. A North American manuacturer,retailer o high-end glassware experienced a dramatic
decline in same-store sales at its retail outlets last year. low would you begin to assess the
reasons or the decline Using your analysis as a basis, what strategy would you recommend or
the manuacturer

3. A large public utility ormerly had a monopoly in the British electricity market. Now that the
market has been deregulated, small power-generation companies hae already captured a ie
percent share rom the utility by oering to proide large businesses in the U.K. with their
own in-house power-generation capabilities. 1he CLO o the utility wants to understand
whether this trend will continue and how she can preent urther loss o share. low would
you answer her question

4. A U.S.-based pharmaceutical company that ocuses on discoering, deeloping, and selling
drugs or the treatment o cancer has been experiencing lat growth and is interested in
expanding into new businesses. In iew o the growth and proitability o stand-alone cancer
treatment centers in the U.S., the company is considering establishing and operating similar
centers in China. 1his would be the company's irst oray into the cancer treatment center
business. low would you ealuate the attractieness o the opportunity

5. 1he Swiss Ski Association has been petitioned by an international snowboarding club to
permit snowboarding on the ski slopes within its jurisdiction. ,Assume that the association
currently orbids snowboarding on all Swiss ski slopes., I the association is interested in
maximizing proits, how should it respond to the petition \hat actors would the answer
depend upon

9.2 Medical software industry case (BCG)

Step J: Actively listen to the case

\our client is GenCo, a large, international, diersiied company with a health care diision
that produces a wide ariety o medical instruments and related serices. lie years ago, it
expanded into the health care sotware industry by purchasing MedCount, which markets
administratie systems to large U.S. hospitals. 1hese systems are designed primarily or back-
oice unctions, they are not designed or managing patients or proiding other physician and
technical support. Since it was purchased, the sotware diision has ailed to delier the growth
needed to justiy the multiple GenCo paid or it. GenCo eels it has already squeezed margins
as much as possible, and now is looking or new sales opportunities. MedCount turned to
BCG to help identiy potential ways to increase reenues. low would you approach this
problem


41
Step 2: Lstablish your understanding of the case

ir.t, tet ve va/e .vre vvaer.tava tbe robtev. 1be arevt covav, roavce. veaicat aerice. ava .errice.,
bvt before tbe acqvi.itiov ra. vot ivrotrea iv beattb care .oftrare. 1be covav, it vrcba.ea, MeaCovvt, .ett.
ovt, aavivi.tratire .,.tev. .oftrare to targe bo.itat.. t i. vor too/ivg for oortvvitie. to ivcrea.e rerevve..

1hat is correct.

Covta ta/e a vovevt to ;ot aorv a fer tbovgbt..

Sure, that would be ine.

Step 3: Set up the framework

rovta .vgge.t v.ivg tbe fottorivg fraveror/: ir.t, a ravt to vvaer.tava tbe var/et .ie ava grortb rate.
for MeaCovvt. var/et ava retatea .oftrare var/et.. ^et, rovta ti/e to etore tbe covetitiov ava tbeir
var/et .bare.. 1bira, rovta ti/e to eavive cv.tover reqvirevevt. ava tbev, girev tbo.e etervat covaitiov.,
too/ at tbe airi.iov. caabititie. to vvaer.tava bor rett rearea it i. to veet tbe veea. of tbe var/ettace.

1hat sounds ine. So what do you want to know about the market

Step 4: Lvaluate the case using the framework

!ett, tbe fir.t bvrate rovta be to iaevtif, tbe var/et. tbe covav, rovta be ivtere.tea iv. e.iae.
aavivi.tratiov .,.tev., rbat otber t,e. of veaicat .oftrare .,.tev. ao targe bo.itat. vrcba.e.

1here are many sotware systems, but or the sake o time, the team ocused on three primary
markets: administration systems, patient administration, and physician support systems.

!bat ao tbo.e .,.tev. ao.

Patient administration includes systems like admissions and tracking. Physician support
systems are more specialized, or indiidual physician procedures.

rovta ti/e to /vor bor targe eacb var/et i. ava bor fa.t eacb i. grorivg. rovta v.e .ecovaar, .ovrce. .vcb
a. re.. retea.e., avat,.t reort., ava vbti.bea var/et .tvaie., to obtaiv tbi. ivforvatiov.

Great! 1hat is what we did during the market study. Our inormation reealed the ollowing
market sizes and growth rates.

Administration Patient administration Physician support
Market size ,>M, 1,500 1,000 1,200
Growth rate 5 5 12

42
rov a .ie ava grortb er.ectire, b,.iciav .vort .,.tev. too/ ti/e a rer, attractire var/et. a ti/e to
/vor a tittte abovt tbe cv.tover. tbev.etre.. 1be ctievt i. cvrrevtt, targetivg targe bo.itat.. .roivatet,
rbat ercevtage of tbe var/et ao tbe, rere.evt.
\e were unable to get an exact breakdown, but we know that these hospitals make up the ast
majority o the total medical sotware market.
1bat rovta va/e .ev.e, .ivce tbe vore .obi.ticatea roceavre. at a bo.itat vigbt vece..itate vore aaravcea
.oftrare .otvtiov.. /vor tbat tbere bare beev a tot of cbavge. iv tbe ivav.tr, a. a re.vtt of vavagea care.
aovt /vor vvcb abovt tbe ivav.tr,, .o rovta ravt to too/ at var/et .tvaie. ava re.. ctiivg. to get a
better .ev.e of tbe bo.itat var/et iv geverat ava av, tecbvotog, or .oftrare treva. vore .ecificatt,.

Okay. Let's say that you did that and were presented with this summary o market trends:
Consolidation in the industry, with three to our large hospital networks dominating 45
percent o the market
Cost controls instituted, particularly as these large hospital networks acquire smaller
hospitals ,centralization o unctions being a key cost issue,
Many hospitals seeking to consolidate their endor base
\ith regard to technology, many hospitals upgrading their older systems

f bo.itat. are cov.otiaativg revaor., erba. ovr ctievt ba. av aaravtage iv beivg art of a targer veaicat
covav,. Ma,be tbe ctievt covta at.o gaiv .ove aaravtage. b, eavaivg ivto otber .oftrare .egvevt.. .re tbe
eote re.ov.ibte for vrcba.ivg .oftrare at tbe bo.itat tbe .ave for att tbree .egvevt..

Like all things, it diers by hospital, but the larger hospital networks hae tried to consolidate
their purchasing not only within but also across hospitals.

. tbe aeci.iov va/er for veaicat .oftrare tbe .ave a. for veaicat iv.trvvevtatiov ava aerice..

In some cases, the head o purchasing inluences both decisions, but the person who makes
the inal choice is dierent. Sotware decisions are usually made by the hospital I1 unction,
and those or instrumentation by the medical sta.

tbiv/ bare a rett, gooa vvaer.tavaivg of tbe var/et for vor. et. too/ at covetitiov vet. !e covta
iaevtif, att tbe covetitor. ava bvita v tbe var/et .bare. v.ivg a covbivatiov of vbtic aata ava e.tivate..

\ell, let's assume that you don't hae an ininite amount o time to look at all the competitors.
\ou can only look at the top ie competitors in each market. \ou are gien the ollowing
data:

Administration Systems Sales ,>M, Growth ,,

MedCount 00 4
lCS Sotware Systems 100
Morningside Sotware 80 3
Admin Systems Solutions 0 2
l1I Sotware 50 15
43
Patient Administration Sales ,>M, Growth ,,

l1I 300 5
Registration Sotware Solutions 240 4
Signup Sotware 60 3
lCS Sotware Systems 30 16
Patient Sotware 20 -1

Physician Support Sales ,>M, Growth ,,

lCS Sotware Systems 150 16
Physician Support Systems 100 11
Medical 1echnology Inc 25 18
l1I 20 32
MedSys 5 15


1er, ivtere.tivg. 1be fir.t tbivg rovta vote frov tbe aata i. tbat tbe var/et covcevtratiov. are rer, aifferevt.
v aavivi.tratire .,.tev., tbe to fire covetitor. covtrot ercevt of tbe var/et ava iv atievt
aavivi.tratiov, tbe, covtrot : ercevt. vt iv tbe b,.iciav .vort var/et, tbe, covtrot ovt, 2: ercevt.

rovta ravt to /vor rbat gro.. vargiv. too/ ti/e iv eacb of tbe.e var/et. a. rett. vigbt tvrv to avat,.t
reort. ava too/ at covetitor. fivavciat .tatevevt. to aeavce rbetber tbe, are va/ivg vove, iv eacb var/et.

Gross margins ary, o course, but the analyst reports hae margins o 25 to 30 percent or
administratie systems and or patient administration. lor physician support, the margins tend
to be higher, more like 45 to 50 percent.

.ee tbat tro covetitor., 1 ava C oftrare ,.tev., bare rer, targe rerevve grortb iv att tbree .ector.,
attbovgb tbe, eacb aovivate ove. rovta ravt to too/ at tbeir fivavciat., avvvat reort., ava re.. retea.e. to
fiva ovt a bit vore abovt tbeir .trateg, iv eacb of tbe.e area..

\ou'd ind that they recently entered these non-core markets. \hy might they hae done that

Perba., ti/e ovr ctievt, eacb baa a .trovg o.itiov iv it. orv .egvevt, 1 iv atievt aavivi.tratiov ava
C oftrare ,.tev. iv b,.iciav .vort. Ma,be tbe, too aeciaea to bravcb ovt ivto tbe otber .egvevt. to
fiva aaaitiovat grortb.

1hat is a ery good hypothesis. Let's say there is eidence in the sources you consult that
supports your assertion.

!ett, if tbat rere trve, tbe.e tro covavie. covta be a tbreat vot ovt, iv tbe otber tro .egvevt., bvt at.o iv ovr
ctievt. .egvevt, aavivi.tratire .,.tev.. t too/. a. if tbe ctievt i. .tort, to.ivg var/et .bare iv it. .egvevt,
.ivce it i. grorivg vore .tort, tbav it. var/et.

44
Good obseration.

1be var/et ava covetitor treva. covta at.o .vgge.t tbat tbe ctievt va, ravt to evter tbe.e otber var/et.. v
articvtar, tbe b,.iciav .vort var/et too/. attractire; girev it ba. bigb grortb ava tac/ of a aovivavt
covetitor. 1be bigber gro.. vargiv. va, roriae attractire retvrv. ov tbe vece..ar, ivre.tvevt iv .oftrare
aeretovevt. orerer, tbe atievt aavivi.tratiov var/et va, at.o be attractire. .ttbovgb it i. vore
covcevtratea ava offer. torer vargiv. tbav b,.iciav .vort, tbe ctievt va, be abte to evter tbi. .egvevt ritb a
.vatter vfrovt ivre.tvevt. Cirev tbe treva torara vgraaivg ei.tivg covvter .,.tev., it va, be ivortavt
for MeaCovvt to bare a roavct offerivg iv eacb of tbe tbree var/et .egvevt.. 1bat .bovta vot be too aifficvtt,
.ivce tbe covav, i. atreaa, iv tbe .oftrare ivav.tr,.

Perhaps, but you should think a little more closely about these types o sotware. Are all
sotware systems alike

!ett, tet ve tbiv/ abovt tbat for a vovevt. .v.ect atievt aavivi.tratiov rovta bare retatiret, tor evtr,
barrier.. rov ,ovr eartier ae.critiov, tbe.e .,.tev. aear to be rett, ba.ic, aeativg rivarit, ritb
aavi..iov. ava atievt trac/ivg. orerer, tbe evtr, barrier. iv b,.iciav .vort vigbt be bigber, .ivce tbe.e
.,.tev. are vore covte ava tbere are robabt, vvttite .,.tev. for tbe rariov. b,.iciav roceavre.. gve.. it
rovta be baraer to get ivto tbo.e t,e. of .,.tev..

1hat would make sense.

ivce tbe covav, vigbt ravt to go ivto ovt, .ove of tbe .egvevt., rovta ravt to /vor bor ivortavt it i.
to bare roavct. iv att tbree .egvevt.. Do re /vor if tbe covetitor. are var/etivg tbeir roavct. a. a bvvate.

low might you ind that out

ivce it rovta be aifficvtt to tat/ to a covetitor airectt,, rovta robabt, target a covetitor. cv.tover,
articvtart, ove tbat ;v.t covrertea frov ovr ctievt. .oftrare.

Let's say you get an interiew with a customer that recently switched to l1I. \ou discoer
that the competitor was oering it a better pricing deal and serice or sotware products in all
three segments.

or rere MeaCovvt. .oftrare ava .errice erceirea iv retatiov to tbo.e of covetitor..

1he customer thought that its administratie systems were adequate, "the old standby," but not
stellar.

!ere tbere av, otber /e, rea.ov. it .ritcbea frov MeaCovvt. .,.tev.

\hen it decided to upgrade its systems, it tried to contact MedCount, but could neer get a
representatie to describe its options.

vtere.tivg. or aia 1 erforv.

1he l1I representatie had heard that the company was considering switching sotware
endors and proided a sales representatie to pitch l1I's administratie product the next day.
45
t aefivitet, .ovva. a. if tbere ra. a robtev ritb tbe .ate. fvvctiov ava tbat cv.tover retatiov. veea to be
ivrorea, articvtart, for tbe targer bo.itat cbaiv.. 1bere at.o .eev. to be av aaravtage frov botb a var/etivg
ava .ate. er.ectire iv barivg vvttite .oftrare roavct.. rovta ravt to covfirv tbo.e rier. b, aoivg fvrtber
ivterrier..

Let's say urther interiews support those assumptions.

ivce re bare atreaa, too/ea at tbe etervat covaitiov., rovta ti/e to vore ov to tbe ctievt it.etf. a ti/e to
/vor vore abovt it. var/etivg ava .ettivg orgaviatiov a. rett a. it. .oftrare aeretovevt ./itt..

o far, re /vor tbat ovr ctievt offer. aavivi.tratire .oftrare ava tbat tbere va, be a robtev ritb .ate. ava
var/etivg. Covta ,ov tett ve a tittte abovt tbe var/etivg aeartvevt.

1he marketing department is organized regionally. 1eams are assigned to hospitals within each
state or geographic region, such as New Lngland.

1bat covta etaiv .ove of tbe robtev. ritb MeaCovvt. var/etivg ava .ate.. f bo.itat vrcba.ivg i.
cevtratiea, tbe var/etivg orgaviatiov va, be ovtaatea. Doe. tbe covav, bare av, teav. aeaicatea to tbe
fovr or fire bigge.t bo.itat vetror/..

No, there are no dedicated teams. 1hey talked about doing that or a while, but it conlicted
with the regional structure it had in place.

!itb regara to .oftrare, aoe. tbe covav, feet it ba. av, .trevgtb. or rea/ve..e..

It eels that their administratie product is ery strong ,"best o breed", and is the dominant
technology. Also, the product is modular in design, which allows or easier upgrades. Although
the company has neer branched out into other market segments, the sotware deelopers
beliee that certain modules could be used to build the oundation or other administratie
sotware programs. 1he company eels customer support is also an area in which it excels.

Step S: Summarize and make recommendations

et. .tart ritb ovr ctievt. var/et. 1be ctievt aovivate. tbe aavivi.tratire .oftrare var/et, rbicb i. fairt,
targe bvt grorivg .tort,, ava tbe covav, aear. to be .tort, to.ivg var/et .bare. Patievt aavivi.tratiov i.
at.o grorivg retatiret, .tort,. otb var/et. are retatiret, covcevtratea ava aear to offer torer vargiv. tbav
b,.iciav .vort. 1be b,.iciav .vort var/et i. targe ava te.. covcevtratea, ava covta otevtiatt, roriae
bigber vargiv., bvt rovta reqvire a targer ivre.tvevt. 1be bo.itat var/et it.etf i. becovivg vore covcevtratea
ava i. v.bivg to cov.otiaate revaor.. 1be vrcba.ivg agevt i. oftev tbe .ave for tbe tbree t,e. of .oftrare.

oo/ivg at ovr ctievt. covetitor., tro, 1 ava C oftrare ,.tev., aear to be articvtart,
tbreatevivg. acb ba. a aovivavt o.itiov iv ove .egvevt ava i. bravcbivg ovt ivto otber area.. 1be, aear to
be var/etivg tbeir roavct. ava .errice. a. a bvvate ava are v.ivg .errice a. a /e, oivt of aifferevtiatiov.

1be ctievt offer. ovt, ove t,e of .,.tev ava aear. to bare .ove rea/ve..e. iv it. var/etivg orgaviatiov,
articvtart, iv var/etivg to tbe targer bo.itat vetror/., rbicb offer tbe vo.t rovi.ivg var/et oortvvitie..

low would you recommend proceeding
46
1be fir.t riorit, .bovta be to fi tbe var/etivg orgaviatiov, articvtart, for tbe targe bo.itat vetror/..
MeaCovvt ritt bare trovbte eavaivg ivto ver var/et. if it cavt aefeva it. cvrrevt o.itiov ava .bore v it.
ei.tivg cv.tover retatiov.bi.. 1bere .bovta be a teav aeaicatea to eacb of tbe va;or cbaiv.. 1be ctievt .bovta
at.o too/ at ivrorivg cv.tover trac/ivg .o tbat it i. ctear rbev it. cv.tover. are goivg to vgraae. 1bere
.bovta at.o be ctear covtact. .o tbat tbe cv.tover cav ea.it, /ee iv tovcb ritb MeaCovvt.

^et, rovta recovveva tbat tbe ctievt etore evterivg tbe otber var/et .egvevt. b, tereragivg it. aovivavt
o.itiov iv aavivi.tratire .,.tev.. .t fir.t gtavce, atievt aavivi.tratiov aoe. vot aear to be rer, attractire,
ritb .tor grortb, tor vargiv., ava targe, aovivavt covetitor.. 1bere aear. to be .ove aaravtage, borerer,
iv barivg roavct. acro.. tbe roavct ravge. rovta recovveva tbat re ivterrier .ove of MeaCovvt. ei.tivg
cv.tover. to better vvaer.tava tbeir veea. ava fvtvre 1 reqvirevevt.. f tbe cv.tover ba.e i. ivtere.tea iv ove
.oftrare roriaer for botb bac/office aavivi.tratiov ava atievt aavivi.tratiov fvvctiov., tbi. .egvevt too/.
rovi.ivg.

f tbe ctievt aoe. aeciae to evter tbi. var/et, it .bovta too/ at tbe tore.tco.t vetboa of evtr,, eitber aeretoivg a
roavct ivtervatt, or acqvirivg a covetitor. 1be voavtar ae.igv of it. ei.tivg aavivi.tratire .oftrare .vgge.t.
ivtervat aeretovevt of tbe atievt aavivi.tratiov roavct va, be tbe ra, to go, bvt re rovta veea a vore
tborovgb covari.ov of tbe ivtervat aeretovevt ava acqvi.itiov otiov., ivctvaivg botb co.t ava tive to
var/et. tbiv/ tbat b,.iciav .vort offer. ovr ctievt av ecitivg grortb oortvvit,, girev it. bigb vargiv.,
bigb grortb, ava fragvevtea covetitiov. rovta aefivitet, tbiv/ abovt av acqvi.itiov .trateg,, .ivce tbe ctievt
va, tac/ tbe tecbvicat caabititie. to evter tbi. .eciatiea var/et. rovta recovveva goivg for ove of tbe
targer covavie., a. tbat rovta gire tbe ctievt a .trovger o.itiov. vatter covavie. rovta robabt, vot offer
av ivortavt evovgb o.itiov iv tbe var/et. More re.earcb rovta be veeaea, borerer, for v. to better
vvaer.tava tbe ivtricacie. of tbe var/et ava eacb otevtiat acqvi.itiov.

1hose are ery interesting conclusions. 1hank you.

9.3 Jet fighter manufacturing case (BCG)

Step J: Actively listen to the case

\our client is a U.S. deense contractor that manuactures the Mohawk Light lighter Jet or
the British Royal Air lorce. 1he company has produced the >20 million ighter jet or the past
12 years. 1he British goernment has decided to put the contract out to bid, howeer, and to
win the program, the client's purchasing agents hae estimated, the company will need to cut
its costs by 5 percent. It has asked BCG to help it reduce costs.

Step J: Lstablish understanding of the case

et ve fir.t ctarif, tbe qve.tiov. 1be ctievt vavvfactvre. a 20 vittiov ;et ava, becav.e of covetitire force.,
ba. to reavce it. co.t b, : ercevt. . CC. rote at.o to rerif, tbe vrcba.ivg aeartvevt. e.tivate.

No, you can assume that the purchasing estimate is correct. BCG's role is to ind the cost
saings to meet that estimate.

Covta ta/e a fer vivvte. to tbiv/ abovt tbe ca.e.
47
Sure, please do so.

Step 2: Set up the framework

ir.t, rovta ti/e to vvaer.tava tbe co.t .trvctvre of tbe ;et to .ee rbat re .bovta too/ at fir.t. ^et, rovta
ti/e to too/ at va;or factor. aririvg tbe co.t. re are targetivg. ivatt,, rovta ti/e to etore otevtiat iaea. to
reavce co.t.

1hat sounds like a ery logical approach. Let's proceed.

Step 3: Lvaluate the case using the framework

ecav.e tbe tive for tbe ivterrier i. tivitea, tbiv/ re .bovta tr, to iaevtif, tbo.e area. vo.t re.ov.ibte for tbe
co.t of tbe ;et.

1ime is limited on real projects as well, so I think that would be a good idea! \ou hae the
ollowing cost inormation or the jet. low would you interpret it



1be va;or co.t arirer for tbe ;et aear. to be vrcba.ea vateriat.. !itbiv vavvfactvrivg, airect tabor i. a
fairt, targe covovevt of co.t, a. are rograv vavagevevt ava cororate orerbeaa ritbiv orerbeaa. tbiv/ re
rovta ravt to covcevtrate vo.t ov vateriat., borerer, .ivce tbat. rbere vo.t of tbe co.t. cav be fovva.

1hat sounds like a good place to start. \here would you look within materials

48
.ee tbat vateriat. are bro/ev aorv ivto vrcba.ea .vba..evbtie., covovevt., ava rar vateriat..
vvaer.tava rbat rar vateriat. rovta be, bvt rbat rovta be tbe aifferevce betreev covovevt. ava
.vba..evbtie..

A subassembly unctions on its own. An example is the pilot night ision system. A
component is a smaller part, such as a part o the engine.

/vor tbat gorervvevtat agevcie. oftev bare rer, .trict gviaetive. abovt vrcba.ivg tbat covta affect tbe co.t of
vateriat..

lor the sake o this case, you can assume that the British Ministry o Deense, MOD, allows
"commercial o-the-shel" purchases, which means that the client is ree to purchase rom
whomeer it wants, as long as it can ensure that the parts meet MOD quality guidelines.

.ee tbat vrcba.ea .vba..evbtie. covri.e vore tbav 0 ercevt of vateriat.. or vav, .vtier. are tbere
for tbe.e .vba..evbtie..

1here are seen suppliers o major subassemblies that go into the ighter jet.

1bat .eev. ti/e a retatiret, .vatt vvvber. .re tbere vore .vtier. tbat are qvatifiea to ao tbi. t,e of ror/.

1he manuacture o these parts requires a substantial inestment in R&D, engineering, and
inrastructure. It would be ery costly or new suppliers to make the required inestment,
particularly i the client is trying to reduce the price it pays to the subassembly manuacturers.

ivce tbere are ovt, a fer .vba..evbt, .vtier., ava tbe ivre.tvevt bvrate rovta rectvae brivgivg iv
covetivg vavvfactvrer., it rovta be aifficvtt to reavce tbe rice aia. Perba. re .bovta too/ et.erbere for
.arivg..

But remember, i your client loses the contract, it will lose its customer unless it is teamed with
the competing bidder. Len then, i the competitor is underbidding your client, there will be
een less room or it to proit.

Perba. it rovta bare av ivcevtire to reavce it. co.t. iv oraer to vaivtaiv tbe covtract. .re tbe va;orit, of it.
co.t. iv vateriat. a. rett.

low could you ind that out

rovta ravt to ivterrier tbe vrcba.ivg ava evgiveerivg er.ovvet of tbe aifferevt .vbcovtractor. iv oraer to
vvaer.tava tbeir co.t .trvctvre.. f re baa a better vvaer.tavaivg of tbeir ecovovic., ovr ctievt vigbt be abte to
reavce co.t acro.. tbe boara, attorivg it to covete vore effectiret, for tbe covtract ritbovt /ittivg erer,ove.
vargiv..

Let's say that purchased materials aerage approximately 0 percent o the price paid to most
o the manuacturers.

f tbe co.t of .vba..evbtie. rere.evt. 10 ercevt of tbe ;et co.t ava 0 ercevt of tbat i. vrcba.ea vateriat.,
totat vrcba.ea vateriat. rovta be aroivatet, 2 ercevt of tbe co.t for .vba..evbtie.. Pvrcba.e. of rar
49
vateriat. ava covovevt. rere.evt avotber 1: ercevt, for a totat of arovva 1 ercevt of tbe co.t of tbe ;et. f
ovr ctievt covta reavce tbe co.t of rar vateriat. b, 20 ercevt, it covta reavce tbe co.t of tbe ;et b, vore tbav
ercevt, vore tbav evovgb to off.et tbe : ercevt reavctiov it rovta veea to riv tbe covtract.

1hat sounds reasonable, but 20 percent is a ery loty goal. low would you go about doing
that

ir.t, rovta too/ at tbe vvvber of .vtier.. .re tbere a targe vvvber of .vtier. to tbe .vba..evbt,
vavvfactvrer..

1he client estimates that there are approximately 125 suppliers o raw materials and
components among the manuacturers o the subassemblies and itsel.

!ett, tbat .ovva. ti/e a targe vvvber of .vtier.. Of covr.e, tbe, covta be roriaivg rer, .eciatiea vateriat.
to tbe .vba..evbt, vavvfactvrer.. .re tbe.e .vtier. roriaivg cv.toviea or vore covvoait, roavct..

About 80 percent o these products are commodities, such as sheet metal and wire harnesses.
Len some o the electronics, such as printed wire boards and circuitry, are airly generic.

1bat .ovva. rovi.ivg, bvt rovta veea to /vor rbetber tbe.e covvoaitie. are ivtercbavgeabte, .o tbat ovr
ctievt covta covcevtrate .evaivg ritb ferer .vtier.. .re tbere vav, covvovatitie. avovg tbe art. v.ea b,
tbe aifferevt .vba..evbt, vavvfactvrer.. !e covta tat/ to tbeir evgiveer. ava too/ at tbe ae.igv. ava bitt. of
vateriat to aetervive bor vvcb orerta tbere i..

Let's say that you did this and discoered that approximately 30 percent o the cost o raw
materials is rom similar materials used across the subassembly manuacturers.

t .eev. .afe to a..vve tbat tbe ctievt rovta veea vore covvovatit, to be .vcce..fvt iv covcevtrativg it.
vrcba.ivg ava reavcivg co.t.. Do tbe evgiveer. betiere tbat tbe ercevtage of orerta covta be ivcrea.ea if tbe
ae.igv. rere voaifiea.

1hey beliee they could increase that percentage substantially, particularly with basic materials
such as screws and sheet metal, but also in other more customized areas.

1bat. great ver., bvt re rovta .titt veea to /vor rbetber tbe .vbcovtractor. are v.ivg tbe .ave .vtier.. !e
covta avat,e tbe vvvber of .vtier. for eacb of tbe area. of orerta.
Good suggestion. Although there are some common suppliers, the analysis indicates that the
subassembly manuacturers tend to use dierent suppliers.

Step S: Summarize and make recommendations

Ovr ctievt veea. to reavce co.t. b, : ercevt. 1be targe.t area of oortvvit, aear. to be iv vrcba.ea
vateriat., tbe va;orit, of rbicb covri.e .vba..evbtie. vavvfactvrea b, .erev .vbcovtractor.. , too/ivg at it.
vrcba.e. iv totat, tbe ctievt cav target aroivatet, 10 ercevt of co.t.. 1o acbiere tbe : ercevt co.t
reavctiov, it rovta veea to reavce co.t. b, 1: to 20 ercevt. t covta tr, to ao tbat b, ivcrea.ivg covvovatit, iv
tbe ae.igv of tbe .vba..evbtie. ava covovevt. ava b, .biftivg rotvve to a .vatter vvvber of .vtier..

50
Considering that the majority o the raw materials and components are purchased
commodities, do you think the 15-20 percent cost reduction is achieable

!ett, /vor tbat covvoaitie. t,icatt, bare torer vargiv. tbav vore cv.toviea roavct.. .v.ect it va, be
cbattevgivg to bit tbe ctievt. .arivg. target b, focv.ivg ovt, ov tbe.e vrcba.e.. vt .ivce rar vateriat. ava
covovevt. rere.evt abovt 10 ercevt of co.t. ava tbere i. av oortvvit, to covcevtrate vrcba.ivg, tbiv/ re
.bovta .tart bere.

\here else could you look or saings

f too/ bac/ at tbe co.t aata ov tbe ;et, airect tabor i. avotber targe co.t covovevt. .. a covtivgevc,, re
covta too/ ivto tbat area a. rett. re reaa tbat otber covavie. v.e ovt.ovrcivg to torer tbeir vavvfactvrivg
co.t.erba. ovr ctievt covta ao tbe .ave. or eavte, it vigbt ravt to ivcrea.e it. v.e of vrcba.ea
.vba..evbtie. ava reavce tbe avovvt of airect vavvfactvrivg it aoe.. Of covr.e tbi. rovta ror/ ovt, if it covta
arire airect tabor co.t. betor tbe off.ettivg co.t of tbe.e .vba..evbtie.. 1be ctievt ritt be ror/ivg cto.et, ritb tbe
.vba..evbt, .vtier. to ivtevevt it. vrcba.ivg ivitiatire. 1bi. va, gire it av oortvvit, to etore tbe
.vtier. caabititie. at tbe .ave tive.

1hat's an interesting suggestion. low would you recommend the company pursue both o the
initiaties you hae discussed

rovta too/ fir.t to covbive vrcba.e. acro.. tbe .vba..evbt, .vtier. ritb ovr ctievt. vrcba.e.. .v.ect
tbat tbe ctievt ava tbe .vba..evbt, .vtier. ritt veea to .bare a great aeat of ivforvatiov, ivctvaivg evgiveerivg
ararivg. ava .ecificatiov., ritb otevtiat .vtier. of tbe rar vateriat. ava covovevt.. 1be vtervet covta
rore to be a rer, effectire veaivv for forvivg a .ivgte rirtvat vrcba.ivg aeartvevt to cov.otiaate botb tbe
ftor of ivforvatiov ava vrcba.e oraer. acro.. tbe covavie.. Ovr ctievt vigbt at.o ravt to v.e a biaaivg
.,.tev for tbo.e vateriat. tbat are trve covvoaitie..

^et, rovta tvrv to tbe evgiveerivg aeartvevt. ava forv cro..covav, teav. to too/ for area. iv rbicb to
ivcrea.e covvovatit, of ae.igv. .t tbe .ave tive, tbo.e teav. covta etore oortvvitie. to v.e vore vrcba.ea
.vba..evbtie. ava aecrea.e tbe ctievt. airect tabor co.t..

1hat sounds great, and is ery similar to a project we did. I would caution you, howeer, to
examine the upront costs inoled in your recommendations, both or the redesign and or
the implementation o the purchasing system, beore going ahead.

9.4 Gas retail case (BCG)

Client

\our client is the major operator ,monopolist, in one o the largest Luropean gas market. lis
business includes two major actiities:
Gas sales to households and irms ,gas bought rom large producers in Russia,
Norway, Algeria.,
51
Gas transportation rom the national border, where it is deliered by the producer, to
the end consumers. 1his implies the existence o a large ensemble o inrastructures:
transportation network, distribution network, storage equipment, methane terminals.

Let's discuss the challenges on the natural gas market ater market liberalization in Lurope.

Situation

Concretely, the market's deregulation means
1he end o the monopoly or the gas sales, the arrial o new competitors
1he preseration o the monopoly on transportation, but under the sureillance o an
independent authority that guarantees equal access to all competitors

\our client is at the head o the purchases,sales department. le is in the ollowing situation:
1oday, company market share is 100
At a certain point in the next years the market will at once be opened to competition
,which is a simpliied way o putting it since in reality there will be stages,

Client's question

About the gas sale actiity that will be opened to competition
\hat will be the leel o competitie intensity at opening
\hat actors are likely to become my competitors

Lvaluate the case

According to you, how many and what types o competitors are likely to enter the market
,Structure,

betiere rovta veea to eratvate tbe var/et attractireve.. ;var/et grortb, rofitabitit,,vargiv, ri./.) ava tbe
evtr, barrier. ;ga. araitabitit,, brava). rovta veea to a./ tbe fottorivg qve.tiov.:
!bat are tbe rvte. of tbe gave,/e, .vcce.. factor. ;acce.. to .vtier., cv.tover ivtivac,, co.t
aaravtage., bravaivg .).
or are otber ta,er. o.itiovea to evter tbe var/et.
!bat are tbeir covetitire aaravtage. tbav/. to .,vergie. ritb otber actiritie. ;etectricit,, .errice. .).

Let us ocus on the gas retail sale actiity's attractieness. 1here are three dimensions you
should consider: the natural gas market's growth potential, the proitability o this actiity and
the risks associated with it.

Let us start with the market's growth potential. \hat are the market's growth leers
,Structure,

rovta aifferevtiate betreev firv. ava bov.ebota.. 1be /e, terer. b, ctievt t,e rovta be:
ov.ebota.: vetror/ evetratiov, .bare of ga. r.. otber evergie.; cov.vvtiov of ga.,bov.ebota
;ctivate, i.otatiov .)
irv.: .ave a. bov.ebota., tv. ivav.tr, grortb, roavctirit,, covetitireve.. ritb otber everg, forv.
52
Gien the market's main growth leers or the irms' segment and or the households'
segment, do you think that the market will strongly grow, stagnate, or decrease ,Judgment,

or tbe bov.ebota., rovta foreca.t.... tbe ri.e of evetratiov ;vetror/ etev.iov) bvt, oreratt, tbiv/ tbe
cov.vvtiov ritt aecrea.e ave to gtobat rarvivg ava to better bvitt bov.e.. or tbe firv., tbiv/ it ritt
aecrea.e, e.eciatt, iv ivav.trie. tbat cov.vve a tot of ga. ;geverat rice ava ri./ i..ve.).

So what is your conclusion ,Synthesis, So what,

tbiv/ tbere ritt be rea/ or ivei.tevt grortb. . ver evtravt ritt bare to ta/e ctievt. frov tbe va;or ta,er.

Can you imagine what a gas retailer's cost structure is ,turnoer ~ 100, ,Synthesis, Structure,

betiere it rovta ivctvae tbe everg, it.etf ;co.t of gooa. - ga.), tbe ivfra.trvctvre co.t ava .ate. ava var/etivg
co.t. ;covverciat).

lere is a simpliied cost structure: gas - 50, inrastructures - 40, commercial costs -
and the margin is around 3. \hat cost adantage can a new entrant expect to build or each
one o these costs ,Judgment,

Mo.t robabt,, tbere i. a .vatt oortvvit, of aifferevtiatiov tbrovgb co.t.:
Ca. i. .ovrcea at covarabte rice.
vfra.trvctvre rice. are iaevticat for att covetitor.
^er evtravt. bare to ivre.t ratber vore iv var/etivg
^er evtravt. are vot eectea to bare a roavctirit, terer ava ovt, bare a .vatt ricivg terer.

rovta bare to cbec/ tbe.e a..vvtiov..

Let us put ourseles in the shoes o a household client whose yearly gas inoice amounts to t
500. \hat is the price reduction potential or a new entrant Can you gie a rough estimate
,Judgment, Rigor,

f a..vve cav reavce covverciat,var/etivg co.t. b, ;:00 ~ 11.::) ava attor a
:0 torer vargiv ;:00 :0 ~ .:), tbev a ver covetitor cav reavce tbe ga. rice arovva t 1:-
20,,ear ;11.::-.:~1). 1bi. vigbt attor it to covete ritb tbe e.tabti.bea ctievt. Mar/etivg co.t. cav be
reavcea if tbe ver evtravt i. atreaa, e.tabti.bea iv otber everg, var/et. ava bevefit. frov .cate ava /vorv
brava vave.

\hat can we conclude on a new entrant's margin leel ,Synthesis,

Margiv ritt vece..arit, bare to be rea/ or ivei.tevt to attract ctievt. ava arar ara, frov e.tabti.bea ta,er.

Let us now consider the risks borne by our retailer. In order to simpliy, let us ocus on what is
called the climatic risk. 1he sales olumes will ary a lot depending on the year, whether the
winter is cold or not. During a "warm" year, let's suppose that the heating olumes decrease by
10, that the cost o supply,gas are totally ariable, that the commercial costs are totally ixed,
that the inrastructure costs are partly lexible, at 0. \hat will be our gas retailer's margin
,Structure, Rigor,
53
av ba.ivg v, avat,.i. ov tbe .ate. ava co.t .trvctvre of a vorvat ,ear ;tvrvorer ~ 100). 1bev catcvtate tbe
ratve of eacb co.t btoc/ for a rarv ,ear, at.o tbe vargiv ava covare ritb tbe vargiv iv a vorvat ,ear.

Cota r.. rarv
ate.: 100 r.. 0 ;10)
_____________________
Ca.: :0 r.. 1: ;10)
vfra.trvctvre: 10 r.. . ;0 of 10 i. rariabte, va/e. 12, 10 reavctiov va/e. 1.2)
Covverciat: .ta,

1otat co.t: r.. 0.

Margiv: r.. 0.

v a rarv ,ear, it i. vore eev.ire to .ett ga., .o it i. a bigb ri./ bv.ive...

\hat can we deduce rom this risk calculation ,Judgment,

1be ctivatic ri./ i. too bigb to ;v.tif, tbe .vatt vargiv iv a vorvat ,ear.

\our irst meeting with your client is tomorrow morning. \hat can you tell him,her to answer
his,her question based on the analyses that we hae just done together ,Synthesis,

!ett, tbe var/et i. vot tbat attractire ava ver evtravt. are a rea/ tbreat.

linally, it looks like our major player does not hae to worry, the gas retailer actiity's
attractieness is so weak that one would hae to be stupid to enture in it at its opening! But
why would it be a big mistake to tell our client not to worry ,Creatiity,

!e are vot ror/ivg ov tbe rigbt .trategic .egvevt: tbe ga. retait .ate .egvevt iv vot ivaeevaevt of tbe etectricit,
.ate ava .errice., a. .oov a. tbe vovoot, ai.aear.. !e bare beev ivftvevcea b, tbe ctievt. bi.toricat rier.

In act there is a bias in our reasoning rom the start. \hat is it ,Creatiity,

!e bare too/ea at tbe ga. var/et ov a .tavaatove ba.i.. vt re veea to ta/e ivto accovvt tbat tbe rvte. of tbe
gave vigbt cbavge ava tbat otber everg, roriaer. vigbt evter tbe var/et. 1bo.e roriaer. vigbt offer
aaaitiovat roavct. to tbe ga. ctievt: etectricit,, oit, .errice. or otber roavct..

Are there other leers that would enable a player to enter the gas market in a proitable way
,Creatiity,

, offerivg otber everg, roavct. or .errice. ava roavct., tbere cav be .,vergie. ritb tbe ga. .vt,:
Cbavvet aiffv.iov,aetirer, co.t.
Margiv. frov otber .errice. cav corer roavctiov ri./

Ov tbe otber bava, tbere covta be co.t .,vergie. ov tbe covverciatiatiov:
Ctievt bac/office. covta covbive ga. ava etectricit, .ate.
rava ava ctievt acqvi.itiov
54
\ho could the other new players in the gas market be ,Judgment,

Potevtiat ver ta,er. tbat brivg aaaitiovat ratve to tbe ctievt covta be va;or etectricit, firv., va;or oit
roavcer. ava,or va;or retaiter.. or tbe etectricit, firv., .,vergie. rovta be vaivt, ba.ea ov tbe
covverciatiatiov co.t .,vergie., at.o for retaiter.. or tbe oit roavcer., tbere are .,vergie. ov tbe .vt, .iae.

\hat can we inally say to our client ,Judgment,

1be tbreat i. reat; tbe firv. traaitiovat .trategic ri.iov vv.t be qve.tiovea ave to tbe evergevce of tbe ver
var/et covaitiov. ava rvte. of tbe gave. avte. of aavgerov. ta,er. are targe orer firv., oit roavcer. if
tbe, aovt bare vore rofitabte ivre.tvevt. to va/e ava a artver.bi betreev a targe vroeav everg, ta,er
ava a targe retaiter.

9.S Consumer ADSL services cases (BCG)

1he situation is as follows:

ADSL is a technology that enables the implementation o broadband Internet serices ia the
existing telephony inrastructure. 1his telephony inrastructure is owned by the incumbent
telecom operator in Norway. As in most Luropean countries, the regulator has ruled that new
entrants may oer ADSL serices, using the existing incumbent-owned telephony
inrastructure ia MDl access. 1his means, the new entrant can hire the copper wire rom the
incumbent operator but has to purchase its own ADSL equipment.

1he technical set-up that a new entrant would need in order to establish an ADSL connection
basically consists o three elements: MDl access ,copper wire,, ADSL equipment, Internet
uplink capacity ,iber access connecting the ADSL equipment to the Internet,.

1he costs inoled in establishing the technical set-up are gien ,amounts hae been conerted
to euros,:
MDl access tari is LUR 12 per line per month, set by the regulator
Required inestments or the ADSL equipment is LUR 120,000 per location,
depreciation period o 5 years. lor simplicity reasons we assume linear depreciation
with no interest costs. In total, there are 250 locations where ADSL equipment could
be installed, coering all households in Norway
Internet uplink capacity is commercially aailable. Depending on the required end-user
speed, costs are on aerage LUR 2 per end-user per month
lor simplicity reasons, we assume that the consumer ADSL modem is client-owned.

1he case interiew starts with an open question to test the candidate`s ability to apply structure
to a problem while a lot o inormation is still unknown.

Interiewer: Suppose you wanted to assess i a new entrant can run a proitable business in
oering consumer ADSL serices, how would you approach this

55
Cavaiaate: et`. .ee, .ivce re are cov.iaerivg a ver evtravt, rbo ba. ivitiatt, vo cv.tover., tbe covav, ritt at
fir.t geverate to.., ava graavatt, ritt becove vore rofitabte a. tbe vvvber of cv.tover. ivcrea.e.. covta va/e
.ove a..vvtiov. ov tbe ace at rbicb tbe cv.tover ba.e ritt gror, bvt ratber tbav va/ivg tbi. too covte at
tbe begivvivg, rovta .tart b, catcvtativg .ove .ort of brea/erev oivt. veav, if re verer reacb brea/erev,
tbi. iaea ritt certaivt, vot ft,.

1he structure is the basis or the entire case. A good structure should enable the candidate to
systematically sole the case, to set up some easy calculations to eriy initial hypotheses, and
naigate back and orth through the case. Now, the interiewer asks the candidate to do some
easy calculations to see i he,she can apply the structure. 1his way the interiewer tests i the
candidate can combine the elements to a useul outcome ,Synthesis,, how comortable the
candidate is in doing some basic calculations and i he,she applies sanity checks to the
outcome ,Rigor,.

I: Sounds good, how would you calculate the break-een point

C: vvv, re /vor att tbe co.t., bvt re aov`t /vor tbe rerevve, rbicb rovta be rice tive. vvvber of
cv.tover.. o covta a..vve a rice ava tbev catcvtate tbe vvvber of cv.tover. re veea. vb.eqvevtt,, rovta
veea to cbec/ if tbe reqvirea vvvber of cv.tover. rovta be a rea.ovabte vvvber. Do re /vor av,tbivg abovt
tbe rice.

I: \e know that the incumbent charges on aerage LUR 20 per month.

C: OK, tet`. a..vve re covta at.o a./ |R 20 to .tart ritb. ater re va, veea to recov.iaer tbi. ava .ee if
re veea to torer tbe rice iv oraer to becove vore covetitire. o tet`. .ee if re cav catcvtate tbi.. bvvv,
rait, .ee re bare a tot of ivforvatiov ov tecbvicat co.t., bvt aov`t .ee av,tbivg ov er.ovvet co.t., i. tbi.
correct.

I: \ell spotted, we also need an organization and a small marketing budget. 1he new entrant
has done some pre-work and has calculated that an annual budget o LUR 4.8 million would
be suicient to coer the entire country.

C: OK, tbev cav catcvtate tbe brea/erev oivt. Per cv.tover, tbe ver evtravt earv. |R 20, of rbicb it
v.e. |R 11 to corer tbe eev.e. for MD acce.. ava tbe vtervet vtiv/. 1bat veav. be ba. |R er
cv.tover er vovtb to corer att otber co.t.. !e rrite off tbe .D eqvivevt iv : ,ear., .o tbat`. |R
2,000 er vovtb er tocatiov. or 2:0 tocatiov. tbat`. |R :00,000 er vovtb. v aaaitiov, re bare to
corer tbe orgaviatiovat co.t., rbicb i. |R 100,000 er vovtb. o for brea/erev re veea |R
00,000,|R ~1:0,000 cv.tover..

Ater the basic set-up o the case, the interiewer assesses the candidate's ability to make some
basic assumptions in order to get to the next leel ,Judgment, and play around a little bit with
that to see i the candidate can really see through the driers o the case ,Synthesis,.

I: OK, so what do you think, is that a realistic number to achiee Let me add that we hae
roughly 2 million households in Norway.

56
C: vvv, tet. .ee...at fir.t .igbt, 1:0,000 ovt of 2 vittiov aoe. vot .eev ivo..ibte, bvt rovta ti/e to
/vor a bit vore abovt tbe var/et. or iv.tavce: i. tbere a tot of grortb iv tbe var/et. or vav, covetitor.
are tbere. Cav ,ov tett ve a bit vore abovt tbat.

I: \es, at the time o this situation, the incumbent operator was still the only proider o
ADSL serices in Norway, but others hae considered entering the market, just as we are
doing now. 1he distribution was as ollows: 20 o the households had ADSL serices, 20
used Broadband ia cable, 50 still used dial-up and 10 had no Internet. \e know that
these percentages were established in 5 years time. 1hat is: 5 years beore no broadband
Internet existed. \e hae no data rom in-between years.

C: OK. .o tbat`. a fa.t grorivg var/et. rovta .a, re .tart focv.ivg ov acqvirivg ver cv.tover. frov tbe
grov tbat i. cvrrevtt, v.ivg aiatv, .ivce tbi. i. tbe targe.t grov ava .ivce it i. robabt, ea.ier to acqvire ver
cv.tover. tbav to er.vaae cv.tover. frov ovr covetitor. to .ritcb. ^or, if re rovta ta/e a .itvatiov for
iv.tavce : ,ear. tater ava if re a..vve tbat b, tbev tbe var/et ba. grorv agaiv ritb rovgbt, tbe .ave avovvt,
tbe .D var/et ivcrea.e. frov 20 to 10, rbicb veav. 100,000 ver bov.ebota. ritt .vb.cribe to
.D. !e rovta be covetivg for tbe.e ctievt., agaiv.t tbe ivcvvbevt oerator, ava va,be .ove otber ver
evtravt. a. ,ov vevtiovea. o. tet`. .a, tbe ivcvvbevt oerator get. at tea.t a :0 .bare of tbat, .ivce it ba.
a .trovg re.evce iv tbe var/et atreaa,. et`. a..vve re rovta be covetivg agaiv.t 1 or 2 otber covetitor.,
tbat veav. re covta get 1-2: .bare of tbe ver cv.tover., or ~0,000-100,000 iv totat. o it .eev. tbat
it rovt be o..ibte to reacb brea/erev frov ver cv.tover. ovt,. !e covta at.o bare a too/ at tbe ei.tivg
cv.tover., botb .D ava cabte cv.tover.. vt tbev rovta veea to /vor bor ti/et, it i. tbat tbe, rovta
.ritcb.

I: OK, that is something you may want to inestigate. But what would be your upront
judgment on this`

C: cav ivagive tbat cv.tover. rovta ravt to .ritcb if tbe, are rer, vv.ati.fiea ritb tbe cvrrevt .errice, or if
tbe ver evtravt rovta offer a vvcb torer rice. Do re /vor av,tbivg abovt cv.tover .ati.factiov.

I: Most customers are ery satisied, the serice is ery reliable.

C: OK, .o tet`. too/ at torerivg tbe rice. or iv.tavce a 10 ai.covvt.. vv. bvt tbat rovta veav re
at.o rovta veea vore cv.tover. to reacb brea/erev. . 10 ai.covvt veav. re aro frov |R 20 to |R
1 covtribvtivg |R 1 er cv.tover iv.teaa of |R to tbe fiea co.t.. o re rovta veea 22:,000
cv.tover. iv tbi. ca.e. rev if re covta get a greater .bare frov ver cv.tover., .titt tbiv/ it rovta be
vvreati.tic to a..vve re covta er.vaae a targe vvvber of cv.tover. to .ritcb for a |R 2 ai.covvt,
articvtart, if tbe, are .ati.fiea ritb tbe cvrrevt .errice. v aaaitiov, tbere`. tbe ri./ tbat ovr covetitor. rovta
torer tbeir rice. too. Covctvaivg, rovta .a, tbi. i. a ri./, bv.ive.. to .te ivto.

\hen the basics o the case hae been cracked, the interiewer would inally test i the
candidate is able to assess the problem rom dierent angles and i he,she can come up with
alternatie solutions ,Creatiity,. I the case runs smoothly and there`s time let, the candidate
can een quantiy part o these alternatie solutions.

I: I agree. 1he way we hae been looking at it, the business case looks ery challenging indeed.
But let`s spend a minute to see i we can come up with some creatie ideas here. Could you
think o some ideas that would make this business case more attractie
57
C: ra. .trvc/ b, tbe vegatire effect a .tigbt rice aecrea.e ba.. o, ra. tbiv/ivg: covta re .ovebor ivcrea.e
tbe rice. Of covr.e, tbi. cav ovt, be ;v.tifiea b, offerivg better .errice. !ovta it be o..ibte to ivcrea.e tbe .eea,
for iv.tavce.

I: \es, technically this would be possible. \ou would need to make sure that you buy enough
capacity on the Internet uplink. Let`s assume the speed you can oer is directly proportional to
the capacity you buy and the costs associated with it.

C: OK, .o aovbtivg tbe .eea rovta ivcrea.e tbe co.t er .vb.criber b, |R 2 er vovtb, rbite re covta
robabt, cbarge a vvcb bigber tariff, va,be |R 0 or .o. f re covta airer.if, ovr offerivg, ava if art of tbe
cv.tover. .vb.cribe to tbe revivv ac/age., tbi. rovta certaivt, ivrore tbe ca.e. vrtbervore, av
cov.iaerivg offerivg aaaitiovat .errice., ti/e tetebov, or erev riaeo .errice. if tbat`. o..ibte. Of covr.e re rovta
veea to va/e a .earate bv.ive.. ca.e for tbat, bvt .ivce |R 12 ovt of tbe 20 re cbarge i. .evt ov MD
acce.., av, otber .errice re cav offer, rbicb rev.e. tbi. a..et, rovta greatt, ivrore tbe ca.e. veav, re rovta
.reaa ovr targe.t co.t covovevt acro.. vvttite .errice..

I: OK, sounds like these ideas are worth inestigating. Anything else you can think o

C: !bat abovt .tartivg iv a tivitea vvvber of regiov., iv.teaa of corerivg tbe evtire covvtr, frov tbe .tart. .
tbe vvvber of cv.tover. er tocatiov eqvat acro.. tbe covvtr,.

I: Good point! 1he area o each region is more or less the same, which means.

C: Yov bare a bvge rariatiov iv tbe vvvber of bov.ebota. er tocatiov. f re ic/ tbe bigb aev.it, area., for
iv.tavce tbe O.to area, tv. .ove otber targer citie., re cav erba. reacb :0 of tbe bov.ebota. tbrovgb,
aov`t /vor, va,be ovt, 20 of tbe tocatiov. ava tbv. ovt, 20 of tbe .D eqvivevt co.t. 1bat rovta
va/e a aifferevce.

I: \ou`re absolutely right, and you know, looking back this is exactly what new entrants hae
done when entering the ADSL market: start in high density areas, oer higher speeds at
premium prices, in particular to small and medium-sized enterprises, and - at a later stage -
expand the serice by oering additional serices.

9.6 Call center case (BCG)

1he case interview

1here is a company, let's say a trael agency, that sets up a centralized call center where all
incoming phone calls rom all branches are dierted to. Shortly ater setting up the call center,
the trael agency is irtually unreachable because o the large amount o phone calls receied.

Beore answering any questions, the candidate should check i he,she completely understands
the problem stated. 1he candidate can ask additional questions i the problem is not
completely clear.

58
1he irst question tests the candidate's creatiity and ability to come up with more than one
idea, at the same time it tests the use o a structure, which helps coming up with more ideas.
lirst, the candidate should think o main causes, and then speciy these main causes in more
detailed possibilities.

Interiewer: \hat could cause the oerload o the call center

Cavaiaate: betiere tbere covta be aifferevt t,e. of rea.ov.:

Cav.ea b, .vt,
ac/ of catt cevter agevt. ;b, .ic/ve.., b, oor tavvivg)
Poor orgaviatiov of tbe catt cevter ;vv.trvctvrea cattairertivg)

Cav.ea b, tecbvicat aifficvttie.
Catt. are vot trav.ferrea to tbe cevtratiea catt cevter

Cav.ea b, aevava
Pea/ iv ctievt aevava ;vore catt. tbav eectea ave to ivtervatiovat affair., bigb.ea.ov, baa
reatber.)

I: Let us assume that the oerload in the call center is not caused by technical problems or by
peaks in demand, but is solely caused by the act that the amount o required agents does not
match the number o agents in the center. low would you calculate the required number o
call center agents needed to ix the problem

lor this question, it is important to set up a good structure to tackle it. Not a general structure,
but one tailored to this speciic situation. 1his is one o the main things the interiewer tests
with this question: can the candidate set up a good structure, tailored to the problem.
lurthermore, the interiewer tests i the candidate understands the problem and has some
,business, judgment ,e.g. in this case: a call center agent is not productie 8 hours per day,.

A possible answer could be as shown in the next igure:
















59





















1his answer irst diides the required number o agents in olume o calls, aerage time spent
on a call and capacity per agent. 1he next step would be to diide these three main parts into
smaller parts. lor the olume o calls, the irst important drier is the amount o dierted
customers. lurthermore, customers can call up more than once, this is called the aerage
number o calls per customer. 1he third drier o the olume o calls is the seasonal pattern.
1he aerage time spent on a call is simply the duration o the call and the time needed by the
agent to wrap up the call ,e.g. enter inormation in a computer,.

1he capacity per agent starts o course with the working hours per agent, but an agent is not
100 productie. 1here are seeral ways to deine the productiity, in this example the
productiity is split up in two parts. 1he irst is gross ersus net working hours due to lunch
breaks etc. 1he second is "working time duration", this is the percentage o the time the agent
actually is busy with a phone call. An agent can be busier during prime time and less during
other hours o the day.

1here is now a clear structure to show what dries the amount o agents needed, and therewith
a way to calculate the required amount o agents.

I: low many agents are required in week 20

Most case interiews hae some computation in them. 1o sole it, the candidate will hae to
igure out the numbers or all parts o the "drier-tree" to compute the required number o
agents. 1here are seeral ways to igure out the numbers. lirst o all, an interiewer might gie
the candidate some data to start with, and he,she will hae to pick out the numbers to use in
the calculation. Secondly, the candidate can ask the interiewer or data, and thirdly the
candidate can make assumptions using common sense. 1he candidate should always clearly
state when he,she is making an assumption and how he,she comes up with it.
Number of diverted
customers
Required number of
agents
x
Call volume
Number of calls per
customer
Capacity per agent
Average settlement time
Seasonal pattern (%)
x
x
Call time (sec)
Wrap-up time (sec)
+
Working hours per agent
(sec)
:
x
Gross/net ratio (%)
x
Working Time Duration
(%)
60
In this case interiew, the ollowing data is gien by the interiewer:



0
200.000
400.000
600.000
800.000
1.000.000
1.200.000
0 10 20 30 40 50 60
Cumulative number of customers who are
diverted to the centralized call center
Number of
customers
Week
0
200.000
400.000
600.000
800.000
1.000.000
1.200.000
0 10 20 30 40 50 60
Cumulative number of customers who are
diverted to the centralized call center
Number of
customers
Week

Note: At the moment o set-up o the call center, the graph starts with 0.

lrom this graph, the candidate can deduct the cumulatie number o dierted customers in
week 20: approximately 140.000 customers. So in week 20, there are 140.000 clients "in the
database o the call center". 1o calculate the required number o agents, other data in the
drier-tree is needed, and the candidate will hae to igure it out. le,she can start o with
asking the interiewer or data, but it's always best to make assumptions and test these with the
interiewer. lor example: "I assume that on aerage, a client has contact with an agent o the
call center twice per year, so the aerage number o calls per customer is 2". And: "I wonder i
there are many more calls in week 20 ersus the other weeks o the year, or now I assume the
seasonal pattern to be 0". 1he candidate then calculates the calls' olume: 140.000 , 52 2 -
0 ~ approximately 5.400 calls in week 20.

1o determine the aerage settlement time, the candidate can ask the interiewer or
inormation. 1he interiewer may either tell the candidate to make an assumption, or gie the
numbers. In this case, these are gien: "Monitoring talk- and wrap-up-time gae an aerage call
time o 240 seconds and an aerage wrap-up-time o 60 seconds per call". 1his inormation
gies the candidate the aerage settlement time: 240 - 60 seconds ~ 5 minutes ~ 1,12 hour.

1he last drier is the capacity per agent. 1he candidate can assume that the number o hours
an agent works is 40 per week. 1o determine the gross,net ratio, the candidate could ask the
interiewer, though he,she could also easily make an assumption on own experience: "I
assume that o the 8 hours worked in a day, approximately 1.5 hour is lost to lunch and other
breaks. 1his makes the gross,net ratio ~80 ,,8-1.5,,8 ~ 81,. 1he last number to igure out
is the working time duration, this is a hard number to guess without knowledge o call centers,
but the candidate could still gie it a try. 1he candidate should then ask the interiewer i the
61
assumption is more or less right. lrom experience, the number is ~50. 1his gies the
capacity o an agent per week: 40 80 50 ~ 16 hours per week.

Now, the candidate has all numbers to calculate the amount o agents needed in week 20. 1he
candidate should not orget to use the same units or all parts o the equation ,all in seconds,
hours, or weeks, and not make any unnecessary mistakes. In this case, the number o agents
needed in week 20 is: 5.400 calls 1,12 hours per call , 16 hours per week ~ 28.1, so either 28
or 29 agents are needed.

I: 1here are no additional trained call center agents aailable. \hat other ways can you think o
to help the trael agency with its telephone problem

It is stated that the amount o required agents does not match the number o agents in the
center. loweer, since there are no additional trained call center agents aailable, the candidate
has to ind ways to decrease the amount o agents needed.

1his question will test i the candidate really grasps the problem and i he,she uses his,her
structure in the right way. Looking again at the structure, the answer is clear: 1here are three
leers to decrease the amount o agents needed:

1. Reduce the call olume
2. Reduce the aerage settlement time
3. Increase the capacity per agent

1o determine speciic solutions, the candidate needs creatiity and understanding o the
problem.

On the irst leer:
Stop dierting the calls rom branches to call center ,and diert back,
Insert a computer-based menu which answers the most requently asked questions

A possible solution to the second leer is:
Reduce the wrap-up time by monitoring it, determine the most common wrap-up
actions and shorten these actions where possible. lor example introduction o a
computer application that helps the agents with the standard wrap-up actions such as
"sending a brochure"

lor the third leer, a possible solution would be:
Align planning o agents with actual demand or agents by mobilizing more agents
during peaks in client demand and less during a low. 1his solution can be or example
achieed by stimulating the agents to work part-time.




62
9.7 Supermarket deli turnaround case (BCG)

Questions and Iacts

1. Client`s deli inancials

See Lxhibit 1

2. Oerall industry, customers

Deli meat category has been lat to slightly declining recently. Prepared oods category has
been growing at roughly 10 per year as people hae less time to cook at home.

3. Competitors

Increasing competition rom deli departments o other supermarkets, discounters, etc. - e.g.,
expanding product lines, increasing adertising. Also competes with ast ood restaurants in
prepared oods category.

4. Client`s product mix and recent eents

Mix has remained constant, with the exception o two products introduced a couple o years
ago - BBQ chicken wings and made to order` sandwiches. Both products hae been a major
boost to prepared oods reenue.

5. Ino on new products

BBQ wings are similar to the chicken wings the company already sells, although they take a
little longer to ry and are tossed in BBQ sauce ater rying. Made to order` sandwiches is
client`s response to Subway, etc. - or two hours during lunchtime and two hours during
dinnertime, one employee`s sole task is to make sandwiches to order or customers.

6. linancials o new products

Reenues or each product are >40M annually. Costs are not broken down at the product leel.
See Lxhibit 2.





63
SUPERMARKET DELI TURNAROUND
Exhibit 1
Deli meats
Prepared foods
Overall
Revenues
COGS
Revenues
COGS
Revenues
COGS
Gross margin
2002
260
160
360
190
620
350
270
2003
255
155
400
230
655
385
270
2004
260
160
440
270
700
430
270
$M




SUPERMARKET DELI TURNAROUND
Exhibit 2
BBQ wings
Price
Total material cost
Prep time
Employee cost
Total COGS
Margin
$5 for 20 pieces
$0.10 per piece
15 minutes per
batch of 200
$20 per hour
(fully loaded)
$2.50 per 20 pieces
$2.50 per 20 pieces
Made-to-order sandwiches
Price
Avg. sales/store
Total material cost
Employee cost
Dedicated hours
Revenue
Total COGS
Margin
$4 per sandwich
20 sandwiches
per day
$2 per sandwich
$20 per hour
(fully loaded)
4 hours per day
$80 per store per day
$120 per store per day
$(40) per store per day
Note: Boxes indicate figures that should be calculated by the interviewee





64
SUPERMARKET DELI TURNAROUND
Sample Approach
Main question
What should supermarket do to turn around deli?
Key areas to
explore
Revenue and profit breakdown within deli External factors influencing the overall deli
market
Analysis
Deli meat revenue and profits flat - consistent
with overall category
Prepared foods showing revenue growth (10%
consistent with category) but no profit growth
therefore declining margins why?
- made-to-order (MTO) sandwiches losses
offsetting profit growth from BBQ wings
People have less time to cook at home
prepared foods category growing, deli meats
category flat
Increasing competition from other deli
departments starting to expand product lines,
increase advertising, etc.
Recommend-
ation
Eliminate made-to-order sandwiches (at least in low-traffic stores or during non-peak hours)
Raise or lower prices on MTO sandwiches (depending on demand elasticity)
Boost demand for MTO sandwiches (e.g., advertising, promotions, merchandising)
Other factors
Eliminating MTO sandwiches or boosting demand can impact overall traffic in store and deli



Iramework and Analysis

1here are three main questions asked to the candidate:
\hich part o the business is responsible or the lack o proit growth - deli meats,
prepared oods, or both
Is the lack o proit growth caused by lat reenues, increasing costs, or both
\hat is causing the lat reenues or increasing costs ,and what should the client do,

Based on Lxhibit 1, the candidate will see that gross margins or both business lines are lat.
lurthermore, deli meat sales hae been basically lat while prepared oods sales hae been
growing at 10.

1he candidate should recognize that the client`s deli meat and prepared ood sales hae been
growing at about the category aerages, thereore, reenues are not the main issue here. Deli
meat COGS hae been more or less lat, mirroring sales. loweer, despite robust growth in
prepared ood sales, prepared ood proits hae been lat, implying deteriorating margins.

At this point, the candidate is asked or some potential reasons or deteriorating margins ,e.g.,
change in product,sales mix, rising material costs, rising labor costs,.

I the candidate asks about changes in product mix, the interiewer inorms him,her about the
BBQ chicken wings and the made to order` sandwiches. 1he candidate should be suspicious
at this point and ask to learn more about these products.

65
By doing a back-o-the-enelope analysis o product proitability ,based on data in Lxhibit 2,,
the candidate can ind that BBQ wings hae a 50 margin, indicating that they are not a
problem. On the other hand, he,she will ind that the client is losing a lot o money on the
made to order` sandwich concept.

1he candidate is then asked or recommendations, which could include:

1, Lliminating the made to order` sandwich
2, Restricting the made to order` sandwich to busier stores or during busier times o the day
,e.g., lunch hours only,
3, Raising or lowering prices ,to either increase proit per sale or units sold - will depend on
demand elasticity,
4, Boost demand ,through increased adertising, promotions, better merchandising, etc.,.

1he candidate can also consider the second-order eects o eliminating the product or
boosting sales ,the eect on traic in the deli and the oerall store,.

9.8 China outsourcing case (BCG)

Problem set-up

1he client is a national manuacturer o plastic consumer products that are sold in a ariety o
retail ormats, including supermarkets, discounters, club stores, and dollar stores. 1he company
has three main product lines: 1, reezer bags, 2, plastic plates and utensils, and 3, specialty
plates and utensils.

1he CLO has been reading or some time about American companies outsourcing their
production oerseas to low-cost countries such as China. She wonders whether this makes
sense or her company as well. It worries her that none o her main competitors hae
established oreign production capabilities, on the other hand, this could be a tremendous
opportunity to gain a competitie adantage.

\e hae been asked to help the client understand the beneits and risks o moing its
production capabilities to China and to proide a recommendation.

Question and Iacts

All three product lines hae similar cost structures and saings ,see Lxhibit 1,

1. lreezer bags

Plastic bags are used mainly to store ood items in reezers. According to customers, top
purchase criterion is quality, since low quality bags will result in ood spoilage. Client is 43 in
category, with 200 million lbs. sold. 1he category leader has a strong brand and strong
innoation.

66
2. Plastic plates and utensils

Disposable plates and utensils, intended or single,limited use. According to customers, top
purchase criterion is price. Client is 42 in category, with 300 million lbs. sold. Client is at cost
parity with category leader but has a weaker brand.

3. Specialty plates and utensils

Plastic plates and utensils produced or speciic retailers, customized to their design specs.
According to customers, top purchase criterion is style,design. Because many products are
new and untested, demand is highly ariable. Client is 41 in category, with 100 million lbs.
sold. No strong competitors.

4. Current client production capabilities

All products are made in a single actory in Ohio. 1he actory is at capacity and the company is
considering building or acquiring a nearby acility.

5. Chinese production options

Client has no preious experience in building and managing a actory oerseas. Client has met
with seeral Chinese manuacturing partners and has done initial product testing.

All three product lines hae similar cost structures and saings ,Lxhibit 1,.

Quality: lower quality on reezer bags, equal quality on plastic plates and utensils ,both regular
and specialty,.

Lead time: need 3-4 weeks o additional lead time or each product line or transportation
rom China to U.S. distribution center.

6. Chinese market, current client presence

All three categories are relatiely underdeeloped but growing, dominated by local
manuacturers. Client does not currently hae any sales in China, although a ew o their U.S.
customers ,e.g., \al-Mart, do hae presence there.












67
CHINA OUTSOURCING OPPORTUNITY
Exhibit 1
Costs in
U.S. ($/lb.)
0.30
0.30
0.20
0.05
0.10
N/A
0.05
1.00
Costs in China
relative to U.S.
8% of wage rate
80% of productivity
80%
75%
140%
60%
$6K to ship 40K lbs.
Same
Costs in
China ($/lb.) Costs
Labor
Material
Plastic resin
Other material (incl. packaging)
Variable overhead
Fixed overhead
Transportation
China to U.S. distribution center
U.S. distribution center to customer
Total




CHINA OUTSOURCING OPPORTUNITY
Sample Approach
Main question
Should plastics manufacturer move production to China?
Key areas to
explore
Cost savings Effect on current
production capabilities
Analysis
Would save $0.25/lb. (25% of
current costs)
At current production levels,
would save:
- $50M in freezer bags
- $75M in plastic plates and
utensils
- $25M in specialty plates and
utensils
Current plant is at capacity
- outsourcing would
eliminate need to build
additional capacity
Plastic plates and utensils are
50% of total production
- outsourcing may create too
much extra capacity
Recommend-
ation
Outsource plastic plates and utensils to China
Do not outsource specialty plates and utensils
Do not outsource freezer bags (although further analysis may be warranted)
Other factors
To compensate for extra capacity that would be created in current plant, could produce new product
line, rent out spare capacity, or move to smaller facility
Consumer behavior and
purchase criterion
Quality is top purchase
criterion for freezer bags
- lower quality from China
Price is top criterion for plastic
plates and utensils
Style is top criterion for
specialty plates and utensils
- highly variable demand
requires short lead times





68
Iramework and Analysis

1he candidate should start with a brie oeriew o the potential beneits and risks o
outsourcing to China. 1he main beneit is lower costs, mostly drien by inexpensie labor. A
secondary beneit is a possible springboard into the emerging Chinese ,and other Asian,
market. Risks include lower labor productiity, possible quality issues, longer lead times,
additional transportation costs, and potential communication,coordination issues. 1he
candidate can be asked about the ramiications o longer lead times - they include greater
carrying costs, higher cycle and saety stock, greater orecast error, and less responsieness to
demand.

1here are three main questions asked to the candidate:
low much cheaper is producing in China
\hat do consumers alue and how would outsourcing aect those criteria
\hat are the client`s current production capabilities and how would outsourcing
part,all o their production aect the remainder

lirst, the candidate should size the opportunity - is this a >5 million or a >500 million
opportunity By soling or the last column in Lxhibit 1, the candidate will ind that the client
would sae >0.25,lb. ,25 o current costs, by outsourcing to China. Gien current
production leels, the client would sae >50 million by outsourcing reezer bags, >5 million by
outsourcing plastic plates and utensils, and >25 million by outsourcing specialty plates and
utensils. 1wo notes: 1, costs may increase i the Chinese \uan rises ersus the dollar and 2,
these estimates do not include a proit margin or the Chinese outsourcing partner.

1he candidate should also recognize that cost saings alone are not suicient to make a
decision. It is important to understand how an outsourced product will aect sales. 1he
candidate should suggest market research to understand consumer behaior.

lreezer bags: since customers` top purchase criterion is quality and outsourcing would produce
lower quality bags, the candidate should raise a red lag here. A more sophisticated
recommendation would be to conduct market research to see the impact on sales o the lower
quality bag at lower prices - een though quality is more important than price, the magnitude
o a price change may oerride the drop in product quality.

Plastic plates and utensils: the top purchase criterion here is price, which makes this product
line an attractie outsourcing opportunity. 1he candidate can be asked what the client should
do with the cost saings - potential recommendations include dropping price to steal share,
inesting to deend its position in case competitors begin outsourcing ,e.g., brand, innoation,
customer serice,, and milking the product line as a cash cow.

Specialty plates and utensils: the highly ariable and unpredictable demand or these products
means that shorter lead times are critical in order to adjust production quickly. Longer lead
times will result in greater orecast errors, higher saety,cycle stock, and more unsold
inentory and,or out-o-stocks. 1hereore, specialty plates and utensils should not be
outsourced.

69
An analysis o customer purchase behaior indicates that plastic plates and utensils should be
outsourced, specialty plates and utensils should not be, and reezer bags probably should not
be. 1he inal step is to understand the impact o outsourcing on the client`s current production
capabilities. lor example, will it lead to plant closings ,resulting in closing costs and possible
negatie publicity, \ill it lead to underutilization o current acilities

Since the current plant is already near capacity, moing plastic plates and utensils oshore
would actually sae the client rom inesting in new acilities. loweer, since that product line
makes up 50 o total production ,in terms o lbs.,, remoing it may create too much extra
capacity in the current plant or the two remaining lines. 1o compensate, the client could
produce a new product line, rent out the extra capacity, or moe to a smaller plant.

9.9 Specialty paper sales case (BCG)

Problem set-up

\our client is a leading manuacturer o specialty papers sold to commercial printers. 1he
client produces sel-adhesie sheeted papers that are ultimately used in a ariety o labeling
applications - including the labeling o consumer goods and the printing o sel-adhesie signs.

\our client`s operations are proitable, but the business has ailed to grow oer the past ew
years. 1he client would like to inest in the business and you hae been asked to identiy
opportunities or growth.


GROWING SPECIALTY PAPER SALES
Questions and Facts (I)
Supply chain
Customers
Market share
Client financials
Topic Information
The client is not capacity constrained in its manufacturing processes
The clients manufacturing and packaging operations are currently configured to package
specialty papers in boxes
There are approximately 24,000 commercial printers in the United States
Printers are roughly categorized into three groups: small, medium, and large
Differences among the groups are driven by the type of printing technology employed and the
size of print jobs that the printers are able to serve
Printers prefer to receive product from the specialty paper manufacturers in different forms,
primarily driven by the type of printing technology employed
- Small printers prefer to receive their specialty paper in boxes
- Medium printers prefer cartons of specialty paper
- Large printers prefer to receive palletized shipments of specialty paper
The client has approximately 30% market share with small printers and only 10% share with
medium and large printers
Margins are currently acceptable but management is against cutting price to gain market share,
knowing that competitors can match price cuts
Price and cost to serve per equivalent box are different for each customer type
Raw mats Layering Sheeting Packaging Distrib.
Rolls of paper
Adhesive
Non-stick liner
Adhesive and
liner applied
to rolls
Rolls of layered
paper cut into
sheets


70
GROWING SPECIALTY PAPER SALES
Questions and Facts (II)
Price to printer
Materials
Coating
Sheeting
Packaging (direct costs)
Gross profit/($ per equivalent box)
Number of printers
Annual usage (number of equivalent
boxes)
Total potential profit pool ($)
Small (boxes)
20.00
5.50
1.00
0.50
3.00
10.00
20,000
100
20,000,000
Medium (carton)
18.00
5.50
1.00
0.50
2.00
9.00
3,000
500
13,500,000
Large (pallets)
15.00
5.50
1.00
0.50
1.00
7.00
1,000
3,000
21,000,000
All figures are per equivalent box



Iramework and Analysis

1he problem set-up indicates that the client wants to inest in this business. Inestment can
take many orms including expansion o manuacturing operations and capacity, expansion o
customer-acing actiities, and acquisition o competitors. It is interesting to note that this is
currently a proitable, no-growth business or the client. Inestment decisions cannot be made
unless the management team ,and the candidate, understands the market conditions as well as
the client`s internal capabilities

1his case does not lend itsel well to traditional case solution structures`. A strong initial
response is to list a set o internal and external actors that must be understood and ealuated.
Ultimately, the candidate should decide whether inestment is warranted, and i so, where.

Strong hypotheses might include:
Assuming the client is not capacity constrained, there are likely groups o customers
that represent opportunities or proitable growth
Depending upon the current go-to-market strategy, the client may need to re-ealuate
the way that it is conigured to sere existing and potential customers

1he client can expand its packaging operations to better sere medium or large customers, but
not both. Client economics and cost to sere each customer group are shown on Lxhibit 1.
lor simplicity, taxes and depreciation are ignored and SG&A is assumed to be ixed.

71
1he candidate should recognize that a comprehensie solution ealuates the required
inestment to sere a particular market segment ,packaging line, manuacturing operations,
additional SG&A, against the expected return.

1he candidate should ealuate the proit pool rom sering medium and large customers. 1his
should be based upon an assumption about the size o the market that the client can capture.
Assuming the client can match its small printer market share, the client could capture an
additional 20 o the medium or the large printer customer segment

1he ollowing is gien to the candidate:
Inestment and operation o carton packaging line would cost >65,000 per year
Inestment and operation o the palletizing line would cost >2,300,000 per year

A logical conclusion would be that an inestment in a carton packaging line would be a
superior inestment compared to the palletizing line

Potential conclusions:
1he carton packaging line is a less-risky inestment ,requires less up-ront capital,
1he solution assumes a static enironment. I large printers are growing in number and
or usage o specialty paper, this may change the answer
1he inestment in a new carton packaging line would need to be ealuated against
other potential inestments to understand i it is the optimal use o the client`s capital

9.J0 Oil tanker case (Booz Allen Hamilton)

Step J: Background and question

My grandather has just died and let me an oil tanker. I need a aluation or tax purposes, and
I hae hired you to tell me what it is worth. lor your inormation, there are 3 types o tankers
in the world: small, medium, and large. \ithin these three classes, each tanker is identical to
eery other. I hae just inherited a medium tanker

Step 2: 1o be given as a response to student inquiries:

Supply-side inormation

Small Medium Large
Number 100 100 100
Capacity 1 unit 2 units 4 units
Number o trips per year 1 1 1
Operating cost >50,000,trip >5,000,trip >100,000,trip

Demand-side inormation

Scenario I: ixed demand or 500 units o capacity per year ,transport costs are a negligible part
o total oil-cost structure, and demand is completely inelastic or purposes o this analysis,.
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Scenario II: ixed demand or 650 units o capacity per year ,note: change demand-side
scenario to this only i student correctly determines alue o tanker under irst scenario and i
time permits,.

1he market is highly ragmented and thereore competitie. 1he discount rate is 10.

Step 3: Solution

Because the market is competitie, the market price will be the lowest price suicient to cause
enough capacity to enter the industry to sere the ixed demand, and the marginal unit will
earn reenue just suicient to coer its costs.

Clearly, the large tankers hae the lowest cost structure, ollowed by the medium tankers and
inally the small tankers. 1he large tankers can supply 400 units o oil transportation serices,
the medium tankers 200 units, and the small tankers 100 units.

I demand is ixed at 500 units, then medium tankers will be the marginal capacity, and we can
say directly that the market-clearing price will be just suicient to coer the costs o operating
such tankers. So my tanker has no alue ,or, alternatiely, scrap alue only,.

lor completeness, the market-clearing price will be >3,500 per unit. Large tankers, all o
which will be employed, will earn proits o >50,000 per year and be worth >500,000. lal o
medium tankers will be employed at rates that just coer their costs, while the other hal sit
idle. linally, small tankers will not hae costs low enough to enter the market and will also be
worth zero or scrap alue only.

I demand is instead ixed at 650 units, the small tankers will be the marginal capacity and
medium tankers will earn proits and hae positie alue. 1he equilibrium price will now rise to
>50,000 per unit. Medium tankers will earn >25,000 per year and be worth >250,000, large
tankers will earn >100,000 per year and be worth >1,000,000.

Step 4: Discussion

1his case is a business problem that at its core is a relatiely simple problem in
microeconomics.

Students need not get all the way to a numerical answer or the alue o the tanker, and ew
should be expected to gie both answers depending on demand assumptions. Neertheless,
students should irst demonstrate a good conceptual ramework or determining the tanker's
alue, and be reasonably creatie about asking or the right kind o data to get at least part way
to the solution.

Note that both the reenue and cost side o the problem need to be understood in order to
reach a aluation.

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9.JJ Video game case (Booz Allen Hamilton)

Step J: Background

1he CLO o a large, diersiied entertainment corporation has asked a team to examine the
operations o a subsidiary o his corporation that manuactures ideo games. Speciically, he
needs to know i he should approe a >200 million capital request or tripling the diision's
capacity.

Step 2: Question

\ou are a member o the team assigned to this project. Assume you and I are at the irst team
meeting. \hat are the critical issues we should plan to examine to determine i the industry is
an attractie one or the CLO to continue to inest and why

Step 3: 1o be given as a response to student inquiries

1he ollowing inormation may be gien i requested by the candidates, though the candidate
should ocus on identiying issues, not on obtaining more inormation.

Market share
Diision is 3rd largest manuacturer o hardware in industry ,10 percent market share,
1op two producers hae 40 and 35 percent market share
Remainder is diided by small producers
Diision sell to broad range o consumers

Sales
Diision sales hae increased rapidly oer last year rom a relatiely small base
Current estimate is annual sales o 500,000 units
Current estimate o industry hardware sales is 5,000,000 units annually
Industry growth has been strong though oer last ew months
Sales growth has slowed
Diisions current sales price or the basic unit is >45 per unit
Diision remains less than 20 percent company sales
1op two competitors also deelop, manuacture and sell sotware,games though
diision sells only licensed sotware
Industry growth o sotware continues to increase

Cost
Diision estimates current cost is >30 ully loaded. Requested expansion should reduce
the cost by 5 to percent and triple production o the hardware unit
1op two competitors are estimated to hae a 10 to 15 percent cost adantage currently
Main costs are assembly components and labor

Current
Diision estimates much o initial target market ,young amilies, has now purchased
the ideo game hardware
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No large new user segments hae been identiied

Distribution
Primarily outlets o distribution are top and electronics stores

Proitability
Diision currently exceeds corporate return requirements, howeer, margins hae
recently been alling

Product
lardware standards hae been established by the industry leaders
Product eatures are constantly deeloped ,e.g., new type o remote joy stick,, to appeal
to segments o the market

Step 4: Solution

Minimum Requirements: the ollowing issues would need to be coered or candidate to hae
done an acceptable job:

1, \hat is uture market potential
1he candidate needs to question the continuation o oerall industry growth. She,he might ask
about the saturation o markets, competitie products ,home computers,, and declining "per
capita" usage.

2, \hat is the competitie outlook
1he candidate should at least recognize the need to examine competitie dynamics. Issue areas
might include: concentration o market shares, control o retail channels, and R&D capabilities
,rate o new product introductions, etc.,.

3, \hat will be the price,olume relationships in the uture
Issues o prices need to be considered.

Better,Outstanding Answers: no bounds on creatiity, but better answers would address:

Market Potential
Recognize that there is a relationship between market penetration and growth in new
users which, when combined, yields an industry olume estimate
Address the shiting mix o product purchases, in this case rom hardware ,player unit,
to sotware
Seek to look at buyer behaior in key buyer segments, i.e., "ad" potential o product

Sotware
Recognize technology standards are set by industry leaders. In this situation, the
diision as a secondary player will hae to ollow these standards
Recognize that dierent distribution needs may exist or dierent products ,in this
case, hardware ersus sotware,


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Price,Volume Relationships
Discuss the eect capacity additions can hae on oerall industry price,olume
relationships and on industry price leels

Company Ability to Compete
Should ask what the capacity expansion is designed to do
Lxplore the cost position o the client diision relatie to that o other competitors
Seek to understand reasons or poor proit perormance o diision

Step S: Discussion

1he primary issue o the case is to determine i the industry is attractie and, especially, i our
client's position in that industry is sustainable. 1he candidate should identiy issues which are
necessary or assessing both the industry and our client's position, but should not be expected
to sole the problem.

I the candidate begins to discuss too deeply a speciic issue, beore haing coered the key
issues oerall, he,she will probably be brought back to discuss the industry more broadly by
questions such as "what other issues must be examined"

I the candidate is discussing issues which seem irreleant to the attractieness o the industry,
he,she may be asked "how will that analysis help to assess the attractieness o the industry or
our client's position"

9.J2 1oy manufacturer case

\our client is the third largest toy manuacturer in Lurope and has come to you because their
sales hae been stagnant or een declining during the last ew years. Sales had been rising
beore. \hy are sales like this low can the client improe the situation \hich elements
would you like to analyze

Information to be given as a response to student inquiries:
- Company is selling traditional toys
- Company segments their market into: pre-school ,0-6 years, girls' toys and boys' toys,
- lighest olume products are: plastic toys, dolls and ehicles - action igures
- Industry growth has been lat
- Proit margin is ten to iteen percent
- Production takes place in Asia
- Company has subsidiaries in main Luropean markets, responsible or sales in these markets.
1he sales orce isits the distributors o the toys, which are mainly supermarkets and
department stores on the one hand and dedicated toy shops on the other hand
- Brand image o client is good

Question asked:
Suppose you are in a meeting with this client and the question arises as to how large the toy
market really is in Belgium low would you determine this
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Suggested answer:
Let`s say that we consider mainly ,or this client, the market o 0-14 year old children. 1here
are 10 million people in Belgium, which translates into about 3 million households i you take
an aerage o 3 people per household. Not all households hae children, and some hae more
than one, and so I guessed that there would be about 0.5 children on aerage in this age
category per household, so 1.5 million children.

1hen I looked at the gits they receie and started to enumerate important occasions children
at that age get presents rom their parents: birthday, Christmas, beginning and end o school,
and maybe one more occasion, which gies 5 in total. 1hen I said that each time the parents
would spend 50 euros on aerage. So this means that each child receies toys or an amount o
about 250 euros per year. I then multiplied the 250 euros with the 1.5 million children to ind
my estimate or the toy market in Belgium o about 35 million euros.

What would you think could be a reason of the stagnant sales of the client?

Suggested answer:
1he irst one that comes to mind is that the client is not strong in the electronic game business,
which has been the astest growing segment oer the last decade in the toy industry. 1he client
should consider one o three options: either grow their electronics business themseles, or buy
a company that already is specialized in electronic games, or else orm a partnership with such
a irm.
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J0. Other resources

Appendixes to this document:
Basic BCG rameworks to approach cases: cost analysis, market analysis, demand
analysis, market sizing, analysis o competitie position, make-or-buy analysis ,aailable
in the ICC older,

ICC resources:
Collection o cases
Presentations o consulting irms on campus
Other consulting books

Vault resources ,on the Career website,:
Vault Guide to the top 50 consulting irms
Vault guide to the case interiew
Vault guide to consulting
\etleet.com Industry and Company Guides

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