Cookie and Privacy Settings

This website uses cookies to enable essential functions like the user login and sessions. We also use cookies and third-party tools to improve your surfing experience on preplounge.com. You can choose to activate only essential cookies or all cookies. You can always change your preference in the cookie and privacy settings. This link can also be found in the footer of the site. If you need more information, please visit our privacy policy.

Data processing in the USA: By clicking on "I accept", you also consent, in accordance with article 49 paragraph 1 sentence 1 lit. GDPR, to your data being processed in the USA (by Google LLC, Facebook Inc., LinkedIn Inc., Stripe, Paypal).

Manage settings individually I accept
expert
Expert with best answer

Clara

100% Recommendation Rate

62 Meetings

16,625 Q&A Upvotes

USD 229 / Coaching

3

Move Production To Location X Case

MBB

Hello - 

Case Prompt:The CEO of a car manufacturer (OEM) in the US is considering moving their production to China. They have us on board to determine whether or not they should do so. what factors should they consider ? 

Which Structure is better ? 

  1. Demand:
    1. What is the size of the demand?
    2. Does the "Made in X" matters to the consumer?  Would it impact their purchasing power (to avoid compromising the consumer satisfaction)
    3. Demand volatility? brand perception?
  2. Supply:
    1. Cost of moving production into location X (investment cost and ongoing costs) vs Status Quo -> are there any cost synergies?
    2. Capacity and lead time (can we meet the demand in a timely manner?)
    3. Quality Control
    4. Supply chain impact: Raw material (Procurement, supplier relationships), manufacturing (availability of technology and labor), Inventory Management, Transportation (Shipping Cost, Transportation time)
  3. Barriers and Risks:
    1. Regulations: Approvals and permits in location X (X =China in this case)
    2. Geo-political Stability, Economy Stability
    3. Language Barriers
    4. Management (local management strategy might not be applicable to how business is done in new location)
    5. Import Penalties and Taxes imposed by local government
    6. etc...

OR 

1- Economics : analyze possible cost synergies 

2- Demand versus Supply : a- Demand Factors (as bucket 1 above) , b- supply factors (as bucket 2 above, ,minus the cost)

3- Barriers and Risks

Which is better?

Hello - 

Case Prompt:The CEO of a car manufacturer (OEM) in the US is considering moving their production to China. They have us on board to determine whether or not they should do so. what factors should they consider ? 

Which Structure is better ? 

  1. Demand:
    1. What is the size of the demand?
    2. Does the "Made in X" matters to the consumer?  Would it impact their purchasing power (to avoid compromising the consumer satisfaction)
    3. Demand volatility? brand perception?
  2. Supply:
    1. Cost of moving production into location X (investment cost and ongoing costs) vs Status Quo -> are there any cost synergies?
    2. Capacity and lead time (can we meet the demand in a timely manner?)
    3. Quality Control
    4. Supply chain impact: Raw material (Procurement, supplier relationships), manufacturing (availability of technology and labor), Inventory Management, Transportation (Shipping Cost, Transportation time)
  3. Barriers and Risks:
    1. Regulations: Approvals and permits in location X (X =China in this case)
    2. Geo-political Stability, Economy Stability
    3. Language Barriers
    4. Management (local management strategy might not be applicable to how business is done in new location)
    5. Import Penalties and Taxes imposed by local government
    6. etc...

OR 

1- Economics : analyze possible cost synergies 

2- Demand versus Supply : a- Demand Factors (as bucket 1 above) , b- supply factors (as bucket 2 above, ,minus the cost)

3- Barriers and Risks

Which is better?

(edited)

3 answers

  • Upvotes
  • Date ascending
  • Date descending
Best Answer
Book a coaching with Clara

100% Recommendation Rate

62 Meetings

16,625 Q&A Upvotes

USD 229 / Coaching

Hello!

Thanks for the very detailed post, like this is much easier to help out :)

I am glad you ask since I imagine many people wondering the same thing. 

My opinion is that, both structures are, at the end, very similar -praticularly taking into consideration that in the interview we wouldn´t have all this time to brainstorm them and compare them, but we would need to come up with this in 2-3 mins-. 

As long as it´s MECE enaugh, like in this case, and that you can articulate it correctly -since at the end they judge what you say, not what is in the paper-, you are good with both

Hope it helps!

Cheers, 

Clara

Hello!

Thanks for the very detailed post, like this is much easier to help out :)

I am glad you ask since I imagine many people wondering the same thing. 

My opinion is that, both structures are, at the end, very similar -praticularly taking into consideration that in the interview we wouldn´t have all this time to brainstorm them and compare them, but we would need to come up with this in 2-3 mins-. 

As long as it´s MECE enaugh, like in this case, and that you can articulate it correctly -since at the end they judge what you say, not what is in the paper-, you are good with both

Hope it helps!

Cheers, 

Clara

Book a coaching with Ian

100% Recommendation Rate

328 Meetings

29,156 Q&A Upvotes

USD 289 / Coaching

Hi there,

So on paper your framework looks great. In reality your framework is not good.

Why?

Your buckets don't answer the question/objective. You are not being objective-driven

Why do we care about Demand/Supply? if there's a lot of demand or there isn't, it literally doesn't affect our decision to move production to China.

You've overcomplicated this...

We have to figure out 1) What are the costs to moving to China (i.e. building new factory, hiring laborers, meeting regulation, setting up supply chains, etc.) and compare it to 2) The total benefits of moving to china i.e. Reduced Annual Costs (labor, land, etc.) + Increased Annual Revenues (more volumes, etc) MINUS Increased Annual Costs (higher distribution costs, tarrifs, etc.)

You could add a 3rd bucket if you like which would be comparing this decision to alternatives (producing elsewhere, investing capital to improve the existing production etc.) AND you could add a 4th bucket to consider the social, political, economic, and environmental stability of China vs the US.

Hi there,

So on paper your framework looks great. In reality your framework is not good.

Why?

Your buckets don't answer the question/objective. You are not being objective-driven

Why do we care about Demand/Supply? if there's a lot of demand or there isn't, it literally doesn't affect our decision to move production to China.

You've overcomplicated this...

We have to figure out 1) What are the costs to moving to China (i.e. building new factory, hiring laborers, meeting regulation, setting up supply chains, etc.) and compare it to 2) The total benefits of moving to china i.e. Reduced Annual Costs (labor, land, etc.) + Increased Annual Revenues (more volumes, etc) MINUS Increased Annual Costs (higher distribution costs, tarrifs, etc.)

You could add a 3rd bucket if you like which would be comparing this decision to alternatives (producing elsewhere, investing capital to improve the existing production etc.) AND you could add a 4th bucket to consider the social, political, economic, and environmental stability of China vs the US.

Book a coaching with Adi

100% Recommendation Rate

97 Meetings

9,185 Q&A Upvotes

USD 169 / Coaching

Good structure. First one is better. 

Good structure. First one is better. 

Related case(s)

MBB Final Round Case - Smart Education

Solved 19.2k times
MBB Final Round Case - Smart Education Our client is SmartBridge, a nonprofit educational institution offering face-to-face tutoring services. The client operates in the US. The mission of SmartBridge is to help as many students as possible to complete studies and prevent that they drop from the school system, in particular in disadvantaged areas. The client is considering starting operations for its services in the Chicago area. They hired us to understand if that makes sense. Due to the nonprofit regulation, SmartBridge should operate on its own in the market, without any partnership. How would you help our client?
4.6 5 649
| Rating: (4.6 / 5.0)

Our client is SmartBridge, a nonprofit educational institution offering face-to-face tutoring services. The client operates in the US. The mission of SmartBridge is to help as many students as possible to complete studies and prevent that they drop from the school system, in particular in disadvant ... Open whole case

Espresso, Whatelse?

Solved 11.8k times
Espresso, Whatelse? Espresso Whatelse is an Italian company that produces coffee and espresso machines since 1908. It is the Italian market leader and has a strong presence overall in Europe. In 2019, Espresso Whatelse has increased its revenues but it has seen declining profit margin. Your client wants to understand the root causes of this 2019 trend and how to increase its profit margin again.  
4.6 5 560
| Rating: (4.6 / 5.0)

Espresso Whatelse is an Italian company that produces coffee and espresso machines since 1908. It is the Italian market leader and has a strong presence overall in Europe. In 2019, Espresso Whatelse has increased its revenues but it has seen declining profit margin. Your client wants to understand ... Open whole case

MBB Case: COVID-19 Vaccine

Solved 7.4k times
MBB Case: COVID-19 Vaccine The COVID-19 pandemic has killed millions of people worldwide and led to devastating economic impact. A vaccine is one of the biggest hopes for stopping the pandemic.  The World Health Organization (WHO) is working with multiple stakeholders to ensure groups at higher risk of becoming infected and dying (e.g. elderly people and healthcare workers) receive a safe an effective COVID-19 vaccine in the next six months. The WHO’s Director-General asked your help to build a plan to achieve this goal. What should be included in this plan?
4.6 5 299
| Rating: (4.6 / 5.0)

The COVID-19 pandemic has killed millions of people worldwide and led to devastating economic impact. A vaccine is one of the biggest hopes for stopping the pandemic. The World Health Organization (WHO) is working with multiple stakeholders to ensure groups at higher risk of becoming infected and ... Open whole case

Hot Wheels

Solved 6.0k times
Hot Wheels Problem definition: Our client is Korean Car Parts (KCP), a multi-national original equipment manufacturer (OEM) of car parts based in Korea. They've recently seen a decline in profits and have brought us in to understand how to address this falling profitability.
4.6 5 305
| Rating: (4.6 / 5.0)

Problem definition: Our client is Korean Car Parts (KCP), a multi-national original equipment manufacturer (OEM) of car parts based in Korea. They've recently seen a decline in profits and have brought us in to understand how to address this falling profitability. Open whole case

Chinese Chess - Airline Business During COVID-19

Solved 4.4k times
Chinese Chess - Airline Business During COVID-19 Sky China, a government-backed Chinese airline, has recently seen profits plummet due to COVID-19. Profits are down 80% in the months of February and March, but are showing early signs of a rebound in April.  They've brought you in to first investigate what can be done immediatedly to prevent hemorrhaging cash and surive in the short-term. They are also looking to see how the current situation can be viewed as an opportunity, and what can be done to prepare for the future. 
4.3 5 121
| Rating: (4.3 / 5.0)

Sky China, a government-backed Chinese airline, has recently seen profits plummet due to COVID-19. Profits are down 80% in the months of February and March, but are showing early signs of a rebound in April. They've brought you in to first investigate what can be done immediatedly to prevent hemor ... Open whole case