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How to structure the case: Should we close a location?

Anonym A fragte am 7. Nov 2018

Hi everyone,

I recently started to practice case studies and saw two cases with the question "should company XY open a new location in ...?"

So i thought about the opposite case but could not find any specific case study on this:

"Should company XY close a location in ...?"

I was wondering how to strucutre this kind of question? I would have done it like this, maybe you have some thoughts or insights regarding the structure:

After some initial questions I would start by telling the interviewer that I would do a quantitative analyisi first, followed by a quantitative analysis.

For the qualitiative analysis I would look at the current revenue and cost from the location to find our if we are still making profit or if we are loosing money in this location.

If we are still making profit I would ask why the location should be closed and if we are loosing money, I would look at what changed in the last years. Maybe a competitor entered and we had to drop our prices to compete with them or resources got more expensive and our variable costs increased.

After understading the hard facts, I would look at the more qualitiative part and show pros and cons of closing the location like: Con: Longer transportation to the customer.

Those are just some ideas I had how to strucutre such a case, but it feels like it could be improved a lot. Since I am at the beginning of my case study preparation I would be thankful for any help.

Thanks

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Vlad antwortete am 7. Nov 2018
McKinsey / Accenture / Got all BIG3 offers / More than 300 real MBB cases / Harvard Business School
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Hi!

I would start a bit more high-level here. Before I come to shut down the business location I would try to analyze the business:

1) Analyze the business and the options fix it:

  • Profits
  • Revenue / cost problem
  • Revenue -> Market / market share problem
  • Costs -> Fixed / variable

2) Analyze the additional opportunities if can't fix the problem:

  • Adjusting current product / improving the value proposition
  • Launching the new products
  • Entering the new segments (customer, etc)
  • Building new capabilities (Distribution, supply, assets, knowledge, etc)

3) How to shut down the location if needed?

  • Costs and benefits of shut down
  • Time to shut down
  • The exit value of the business / Fair value of assets
  • Key capabilities to maintain (Distribution, supply, assets, knowledge, etc)

Best!

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