Hi Marie-Eve,

I agree with Vlad; in general you can proceed clarifying the goal, understanding where the problem is and identifying a solution for the issue. Adding a couple of more details to Vlad’s approach:

Step 1: Clarify the goal. Ask which is the absolute amount you should reach and which time frame you have to do so

Step 2: Identify the problem. You can proceed through the following steps:

1. Segment by profitability/revenue channels. Ask the interviewer how many business units they have – or any other segmentation that may be present. In your case, it may be done via the different healthcare products
2. Identify which channel is the priority. Ask for absolute amount in cost and/or any recent increase for each channel. Then start from the one with the biggest absolute amount in costs or that had the biggest increase in costs, according to what you found before.
3. Identify the cost components in the selected channel. You may brainstorm costs using fix or variable costs, or dividing via the value chain
4. Identify the component that is underperforming. You can do so comparing the client performance with its past performance, or benchmarking competitors on that area.
5. (Optional) Identify the reason for the cost increase. In case you are dealing with a cost increase case, you could analyse why cost went up. Here you may go through a partial business situation framework. Usual areas to consider are:

• Supplier issues (eg increasing prices)
• Competitors issues (eg lobbying strikes/ regulations against us)
• Client issues (eg wrong process development/budgeting)

Step 3: Propose a solution. In general, there are two main things you can do to cut costs for the specific cost component you have identified:

• Decrease the cost of each unit; typical strategies include
  • Decrease quality of units bought
  • Negotiate with suppliers
  • Find another supplier
• Decrease the number of units of cost; typical strategies include
  • Increase efficiency of units
  • Substitute input units with other units

For both the elements of step 3, as potential risks, you should also take into account possible negative effects on revenues and try to avoid them.

Hope this helps,
Francesco

(edited)

Hello do you have an example with a scheme that could help us to map it for the brain :))

This could be very usefull and simpler to visualise it