Profitability case

Hi there,

It's all about context! You need to ask the critical high level questions first to then identify when to take the case. Base these questions off of what you already know (either provided in the prompt or based on your knowledge of the industry/market trends).

In general, you need to find out what is the biggest thing making the biggest move.

General Case/Framework Advice

How do I use frameworks in a case?

If there's anything to remember in this process, is that cases don't exist just because. They have come about because of a real need to simulate the world you will be in when you are hopefully hired. As such, remember that they are a simplified version of what we do, and they test you in those areas.

As such, remember that a framework is a guide, not a mandate. In the real-world, we do not go into a client and say "right, we have a framework that says we need to look at x, y, and z and that's exactly what we're going to do". Rather, we come in with a view, a hypothesis, a plan of attack. The moment this view is created, it's wrong! Same with your framework. The point is that it gives us and you a starting point. We can say "right, part 1 of framework is around this. Let's dig around and see if it helps us get to the answer". If it does, great, we go further (but specific elements of it will certainly be wrong). If it doesn't, we move on.

So, in summary, learn your frameworks, use the ones you like, add/remove to them if the specific case calls for it, and always be prepared to be wrong. Focus rather on having a view, refering back to the initial view to see what is still there and where you need to dive into next to solve the problem.

(edited)

Hi,

First of all - never say "My hypothesis is that the revenues have declined". You are not using the hypotheses correctly. More on that here: https://www.preplounge.com/en/consulting-forum/how-explicitly-do-you-need-to-state-your-hypothesis-in-mck-cases-1526

Secondly,

• When starting a case, you should ask the interviewer: "Do we know if our revenues have declined, costs have increased or both of these factors?"
• Then you drill down to the one that has changed
• If both of them change - you go one by one

In addition, the general rule is - once you found an insight - always drill deeper immediately. Absolutely never postpone solving an insight to go through the whole structure. The time for the case is limited and you will have no chance to get back

Best

Hi there,

It all depends on how you position your choice (both approaches could work)

That being said, what I would do is the following:

• Acknowledge that quantity might be the biggest issue but still decide to quickly understand the cost base just so I analyze the big picture before making a recommendation (the fixed/variable cost breakdown might offer insights)
• In case it is not a cost-driven case, the interviewer would politely say "good point, however, let's focus on the volume"
• In case cost is important, then you would have made the right choice.

It's a low-cost low-risk approach :)

Remember, an important element of the case (and the interviewer's evaluation) is to see how you react to tips and guidance. So it's okay if you make a mistake by being " too MECE", the interviewer will guide you to where the important elements are.

I hope this helps

Khaled

Dear Eric,

In the typical restructuring cases you first need to focus on the cost-side and identify levels on how to reduce the costs, afterwards you can switch the framework and analyse the quantity problem on the review side. So therefore I would rather recommend you to go for the second option.

Hope it helps you,

Good luck,

André

(edited)

Hello, I agree with what has been said.

A very important point emerges here, on a case study with a decline in profitability, you should not guess the driver of the decline, but you should take advantage of the clarification part to ask all the questions that allow you build a correct framework.

In the event that the interviewer's answers do not lead you not to explore costs or income, it is absolutely necessary to put the 2 dimensions in your framework.

Best