After calculating the future cost after transferring all BAs and DVs to Australia. Why the profit calculation considered the benefit 80M (80% of business) although collocation of everyone to Australia will make the benefit 100% of business (100M) ?
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Future profit calculation question
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Hello there,
You should consider that “benefit of colocation” as a 10% boost of the revenues of that specific office, if IT sources will be placed in the same country.
Since the business size of Australia is 800M$, you have to consider that as baseline to calculate your “benefit of colocation”.
Your choice is to put 100% of your IT sources in Australia, that does not mean that 100% of your business will come from australia too (in other words you will still have 200M$ from Indonesia).
I hope that now it's more clear, otherwise I think that Ian will be happy to help you further
Best,
Luca
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Hi there,
First of all, congratulations on reviewing your cases so thoroughly!
This is indeed an interesting question which is probably relevant for quite a lot of users, so I am happy to provide my perspective on it:
- I would advise you to consider that “benefit of colocation” as a 10% revenue increase of that specific office in case IT will be placed in the same country.
- Moreover, since the business size of Australia is $800m, I would advise you to consider this business size as the baseline to calculate your “benefit of colocation”.
- Lastly, I would advise you to think about that even if your choice is to put 100% of your IT sources in Australia, that does not mean that 100% will come from Australia either (i.e. you will still gain $200m from Indonesian business).
In case you want a more detailed discussion on how to best approach quantitative questions during case interviews, please feel free to contact me directly.
I hope this helps,
Hagen
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Well, it appears Luca knows my case well :P
He's exactly right. Customers don't change when we move support functions.
Especially in today's world, location of operations/business doesn't “matter” to top-line revenues. Here, we're purely focused on better serving the business from whichever location is optimal!
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COuldn´t have said it any better than Luca!
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Yes it’s clear now. Thank you