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How much answer-first should the conclusion be?

Anonymous A

Hello, I have a question relating to profitability-issue type cases, e.g. why are client's profits declining and how to increase them?

This type of case has 2 different questions to answer: what's the root cause of the problem and how to solve it. Assuming we find out the issue is coming from a decline in division A and the solution would be to shut down this division, how would you best structure the conclusion:

1) I would recommend shutting down division A for the following reasons: a) it's the major driver of profit decline, b) xx, c) yy

or

2) the client's profits are declining due to a decline in division A, driven by the contracting market size. Thus, I would recommend to shut down division A and focus on expanding the business in division b/c

Or is there any other preferable way to conclude such a case?

Thank you in advance for sharing your views!

(edited)

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Vlad replied on 02/03/2018
McKinsey / Accenture / Got all BIG3 offers / More than 300 real MBB cases / Harvard Business School

Hi,

Purely based on my understanding of the root causes you've mentioned (I'm not sure what is the contracting market size and if it is the only root-cause) I would answer in the following way:

1) Our objectives were to understand why the profit is declining by X and how to bring the profit back within one year (Don't forget that your objective should be measurable in terms of money / other metric and time)

2) According to the analysis we've done so far, my recommendation is to shut down the division A and to concentrate on the divisions b/c if we want to increase the profit, and there is a number of reasons for that.. (Remember that your arguments should include numbers)

  • First of all, problems in Devision A are the major driver of the decline in profits - 90% of the decline in profits refer to Division a
  • Secondly, the decline is driven by the contracting market size that is shrinking at xx percent and is not expected to improve in the near future
  • Finally....

3) To be 100% sure in this recommendation, additionally, I would like to check the following... (In the last bullet, you simply provide a list of what else you need to check to be comfortable with the solution)

Best

Bruno replied on 02/05/2018
McKinsey Associate | London Business School consulting coach, with 300+ mock interviews | 100% recommendation rate!

Hey anonymous,

Overall I believe Vlad’s proposal is very good and helpful for clarifying your question.

That said, I personally believe that in your recommendation you also need to address the client first question (‘why are profits decreasing?’), otherwise you’re not fully answering his query. Thus, I would for instance add explanation to point b

best

Bruno

Francesco replied on 02/10/2018
Ex BCG | MBB Specialist | #1 Expert for meetings done (1100+) and recommendation rate (100%)

Hi Anonymous,

in general I agree with Vlad, although, as mentioned by Bruno, you should also explicitly answer why profits went down. Thus I would use something similar to your option 2, that is:

  1. Repeat the question. Our goal was to understand (i) why profits are declining and (ii) how we could increase profits
  2. Answer first solution. After our initial analysis, we found out that:
    1. As for your first question, profits are declining due a decrease in profits in division 1. More specifically…[SPECIFIC FINDINGS]
    2. As for your second question, in order to increase profits. We would recommend shutting down division 1. That’s for the following reasons…[SPECIFIC FINDINGS]
  3. Provide next steps. As additional elements to explore, we would like also to consider the following elements…[RISKS/NEXT STEPS]

Best,
Francesco