Determining Whether a Venture is Worthwhile

break-even analysis
New answer on Mar 01, 2021
5 Answers
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Anonymous A asked on Feb 28, 2021

Outside break-even analysis, what else shoud I consider to determine whether a venture is worthwhile?

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Ian
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replied on Feb 28, 2021
#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate
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Clara
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replied on Mar 01, 2021
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

Breakeven is a bit simplistic, although in many cases the interviewer will directly indicate you in that direction.

However, the right way would be NPV:

  1. Calculate future cashflows, either year by year or at perpetuity
  2. Calculate NPV: bring to the present the value of the future money

Hope it helps!

Cheers,

Clara

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Luca
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replied on Feb 28, 2021
BCG |NASA | SDA Bocconi & Cattolica partner | GMAT expert 780/800 score | 200+ students coached

Hello,

The most common KPI used in business case is NPV. Another interesting index could be the ROI but it's not very common.

Anyway, interviewer will usually suggest you what to use in order to evaluate the investment when you will ask about the client's target.

Best,
Luca

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Adi
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replied on Feb 28, 2021
Accenture, Deloitte | Precision Case Prep | Experienced Interviewer & Career Coach | 15 years professional experience

Hey, can you define what you are referrring to as "venture" please..market entry? Acquisition? Investment decision?

Broadly speaking, there should be an uplift/improvement in the following areas:

  • Customer Experience
  • Channel mix
  • Revenue
  • Cost Reduction
  • Employee satisfaction
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Ken
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replied on Feb 28, 2021
Ex-McKinsey final round interviewer | Executive Coach

I would classify this as a market entry case. In addition to the economics/financial returns (e.g., break-even), I would look broadly at whether the market is attractive (e.g., market dynamics, competitive landscape, customer preferences, etc.) as well as feasibility/path to execution/risks.

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Ian gave the best answer

Ian

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