Bain Online Test - Designing the most suitable solution to address Packaging Co.'s challenges.

Bain & Company Online Tests
New answer on May 25, 2020
4 Answers
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Anonymous A asked on May 24, 2020

Packaging Co. is a private equity owned global packaging company looking to maximize revenue and earnings growth before an exit from the business in the next 5 years. Packaging Co. has 5 business units out of which, its 2 North American business units (Plastic packaging and Paper packaging) were recently consolidated under a new leadership.

​Sales in the Paper packaging business unit have declined over the last few years as several key customers have transitioned their packaging to plastic. Last year, paper profit margins decreased sharply, despite the introduction of several new production asset. The paper market is consolidating, creating larger competitors (several of which are vertically integrated with paper mills giving them a theoretical cost advantage)

The company was facing the following challenges:

  • External market pressures:
    • Pricing pressure causing margin erosion and the loss of several major customers
    • Rising raw material costs compressing margins
    • Industry consolidation resulting in strong competitors
    • Rapidly changing customer preferences
  • Internal growth challenges:
    • Inconsistent pricing process & system
    • Aged assets creating high manufacturing cost
    • Customer targeting and prioritization process in early stages of development

The CEO of Packaging Co. engaged Bain to help the Plastic and Paper business units prepare for a sales growth.

Bain plans to help Packaging Co. increase its sales. Which of the following options will help in designing the MOST SUITABLE solution to address Packaging Co.'s challenges?

  1. Increase production capacity to generate high volumes
  2. Cost effective way to acquire new customers through new tendering process
  3. Optimising product pricing to boost margins
  4. Restructuring the budgeting mechanism to avoid unnecessary spending
  5. Optimizing the distribution network
  6. Procurement rationalization
  7. Modifying the product combinations

Choose One

A. 2,4,5,1
B. 3,2,7,4
C. 1,5,4,3
D. 3,5,1,2

(edited)

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Sidi
Expert
replied on May 24, 2020
McKinsey Senior EM & BCG Consultant | Interviewer at McK & BCG for 7 years | Coached 300+ candidates secure MBB offers

Hi!

this is impossible to comprehensively discuss without the corresponding contextual information, data, etc.

However, what you can tell for sure is that 4) and 6) do not make any sense, given the objective of boosting sales.

Cheers,

Sidi

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Ian
Expert
Content Creator
replied on May 25, 2020
BCG | 100% personal interview success rate (8/8) and 95% candidate success rate | Personalized interview prep

Hi Sarviin,

The answer is B.

This is a very challenging question - I spent quite a while figuring this one out!

In the end, you need to remember :

1) The objective (maximize revenue AND earnings...so topline and bottom line)

2) What is omitted (we can't make assumptions, such as with distribution)

3) What is explicit (i.e. where are we given clear hints)

Click here for a full explanation:

Bain Online Test Answer

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Anonymous replied on May 25, 2020

Agree with Sidi

Best,

André

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Clara
Expert
Content Creator
replied on May 25, 2020
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello! Interesting!

Where did you find it?

Key thing here is the target stated by the CEO: bosting new sales.

Hence, focus on the answers that focus on that (e.g., 4 and 6 are not relevant, 2 is super relevant, etc.)

Hope it helps!

Cheers,

Clara

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Sidi gave the best answer

Sidi

McKinsey Senior EM & BCG Consultant | Interviewer at McK & BCG for 7 years | Coached 300+ candidates secure MBB offers
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