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Required Revenue Increase of RetailBankingCo

[Updated] Retail Banking Profitability
Neue Antwort am 6. Juli 2023
3 Antworten
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Anonym A fragte am 3. Juli 2023

Required Revenue Increase of RetailBankingCo

Req. rev. increase RetailBankingCo = (5% ÷ 3) + 5% = 6.67%

What was the logic behind it? I did not get it

is it Trailing commission+% of close to op profit /N°of products?

But we have 4 products here

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Cristian
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Content Creator
antwortete am 6. Juli 2023
#1 rated MBB & McKinsey Coach

Hi there, 

You need to divide by 3 because the average lifetime of the products is 3 years, not 4. 

Best,
Cristian

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Ian
Experte
Content Creator
antwortete am 3. Juli 2023
#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate

Hi there,

Great question! Hagen has already answered, but make sure to read all sections of a case to better understand. Additionally, these are the types of “tricks” that are common in cases so the interviewer can check that you are thinking rationally about things (even if you have not “learned” that exact thing)

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Hagen
Experte
Content Creator
bearbeitete eine Antwort am 3. Juli 2023
#1 Bain coach | >95% success rate | interviewer for 8+ years | mentor and coach for 7+ years

Hi there,

Thank you very much for this question. I would be happy to share the solution to it:

  • In section “Background”, it is stated "The average lifetime of these four products is three years.”
  • As such, given that the closing commission is by definition paid only once, one needs to divide the closing commission by 3 (for the sake of simplicity, compound interest can obviously be ignored).
  • Lastly, since the commission model is the same for all four products, the required percentage revenue increase is independent of the number of products.

If you would like a more detailed discussion on how to best prepare for your upcoming interviews, please don't hesitate to contact me directly.

Best,

Hagen

(editiert)

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Cristian gab die beste Antwort

Cristian

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