Schedule mock interviews on the Meeting Board, join the latest community discussions in our Consulting Q&A and find like-minded Interview Partners to connect and practice with!
Back to overview

How to Structure this case ?

Curious how you would structure that case taken from Case In Point. I am not fan of Cosentino structure on that one. 

Our client is a global automaker headquartered in Detroit. Its motor parts division, with 20% industry market share, carries almost 500,000 parts, options, and accessories for vehicle customisation. The client has not been profitable for several years and the CEO suspects that the company's high degree of ventical integration is hurting it. The client makes about 80% of its own parts, compared with 40% at its primary competitors. The CEO has asked for our help. How would you approach this issue ?

1
1.6k
10
Be the first to answer!
Nobody has responded to this question yet.
Top answer
Deleted
Coach
on Aug 08, 2020
BCG | INSEAD MBA | +70 coaching sessions at INSEAD

Hi Raf,

Even though I do like the way it was structured in Case in Point, I think it just assumes that the client hypothesis is correct from the beginning (assuming that it is a cost cutting case), while it might not be a cost issue, but rather a revenue one. Therefore, I would still structure it like any other profitability case: following the revenue and cost framework, but since the client already has a hypothesis on cost (because of vertical integration), I would investigate the cost branch first. Looking at the cost, I would look at fixed and variable and then I would look at trends (how did cost change over time) and I would compare this info to what our competitors are doing and why.

Once we do realize that it is a cost problem (i.e. our profits are down because the costs are higher than competitors), then the framework in Case in Point works quite well considering strategic value, alternatives, and potential exits if necessary.

I hope this helps.

Best, Abdelrahman

on Aug 08, 2020
Hi Abdelrahman, My confusion comes from the fact that it's a sub department within a bigger company. The mother company profits are suffering because of a potential non optimal vertical integration. How are you going to run a profitability framework on this one ? Would you do it on the mother company ? If yes, there would be a lot of factors that would not lead to solve the case. If you do it on the department, you'll miss the big picture.
Deleted
Coach
on Aug 11, 2020
BCG | INSEAD MBA | +70 coaching sessions at INSEAD
I think this is a fair point. I see two solutions to this: 1- that could probably be asked as a clarifying question to the interviewer at the beginning of the case in real life. 2- You run the framework on the big company, but you start with revenue first and analyze if there were any changes relative to competitors. That way you eliminate the possibility of the problem being revenue-driven. I hope this helps!
Similar Questions
Consulting
McKinsey Digital Assessment on BA intern - Ban & tips
on May 12, 2020
Global
5
2.9k
Top answer by
Clara
Coach
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut
12
5 Answers
2.9k Views
+2
Consulting
Just received an invite for a McKinsey Online Event. How should I prepare for it?
on Jun 17, 2020
Global
6
3.1k
Top answer by
Clara
Coach
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut
24
6 Answers
3.1k Views
+3
Consulting
McKinsey PEI: Duration of how long I speak
on Sep 08, 2020
Global
8
2.6k
Top answer by
#1 Rated McKinsey Coach | Top MBB Coach | Verifiable success rates
20
8 Answers
2.6k Views
+5