Expert with best answer


100% Recommendation Rate

5 Meetings

42 Q&A Upvotes

USD 159 / Coaching

profitability case structure product /customer /distribution channel mix

Alice asked on Jul 04, 2017 - 3 answers
Thank you prep lounge I got McKinsey offer

Hi everyone,

I've practiced a few profitability cases recently and I've noticed that how they all end up with different product mix/customer mix/distribution channel mix etc. As a result, I was wondering whether I should incorporate the mix into the framework. The standard profitability framework seems too simple and I would want to break down the cost further by customer/product/channel etc. Any advice & thoughts are appreciated!

3 answers

  • Upvotes
  • Date ascending
  • Date descending
Best Answer
replied on Jul 04, 2017
Strategy& / INSEAD MBA / ex-McKinsey / Here to guide you from your very first steps
Book a coaching with Sara

100% Recommendation Rate

5 Meetings

42 Q&A Upvotes

USD 159 / Coaching

Dear Alice,

the most important points in laying out your structure are: be MECE, be quick, be sensible. The breakdown that you are suggesting is a deeper layer that might not even be evident at the beginning of the case. Therefore I would suggest, as a rule valid on average, to bring it up only ahead in the case.

When the time to dig more into each element of your profitability tree comes, it is then a good idea to suggest that there are a number of dimensions you might use and then to pic the one that makes more sense in the specific situation.

However, each rule as exceptions and it might happen that the segmentation is easily understandable from the beginning. In this case, you can mention it with no disruption in the MECEness or speed of your structure. For example, if the case states from the beginning that there are two products originating income, you can already segment the revenues in 2 sub-branches correspondent to the products. Later on in the case, it might be necessary to create sub-brunches, splitting for example each product into different customer-categories. In this case, drawing a matrix might be a good idea to impress your interviewer.

Vlad updated his answer on Jul 05, 2017
McKinsey / Accenture / Got all BIG3 offers / More than 300 real MBB cases / Harvard Business School
Book a coaching with Vlad

98% Recommendation Rate

350 Meetings

4,945 Q&A Upvotes

USD 319 / Coaching

Hi Alice,

I suggest to do 2 things while solving these types of cases:

1) In the beginning of the case, you should ask the clarifying question: "Could you pls tell me more about the business model and what are the revenue streams?". I suggest to ask this question with any case, even if it is not a profitability type.

Why do you need to know the revenue streams? Because it's one of the most critical pieces in understanding the business model. An example is Oil&Gas with up-, mid- and down- streams that are completely different businesses.

2) While you do your structure and split revenues into price and quantity - add proactively the 3rd box with the "Mix". Thus you show your business sense and demonstrate that you know the most common case traps.

Pls note that the "mix" can be anything - geography, customer, product, etc.

Good luck!


great approach! :) Thanks for sharing. — Alice on Jul 05, 2017

Danny replied on Jul 04, 2017

if it is a interviewee-led case, it may better not be incorporated. if it is interviewer-led, multi-layer framwork may show your deep thinking of the problem. And be cautious, profitability may not always end in that way. Best!

Hi Danny. It's a myth - it doesn't really matter who leads a case — Vlad on Jul 05, 2017

Related BootCamp article(s)

Focusing on The Core: Mock Interviews

It is to practice as many cases as possible - both as interviewee and as interviewee. Here are a couple of guidelines to help you get started

Profitability Case

Learn to crack Profitability Framework Consulting Cases, which are the number 1 reason for real consulting projects and hence are an important case type.

Case Studies

The case study is the most important element of the case interview, which you'll have to nail in order to get into strategic consulting. Here you can learn the specific skills and concepts necessary to solve them.

Related case(s)

DHL Consulting case: Bike Shop

Solved 40.5k times
4.3 5 10845
| Rating: (4.3 / 5.0)

You have been hired to support the owner of a bike-shop as a business consultant. The bike-shop has suffered a significant revenue decline during the last year, and now the owner would like you to assess the situation and options for the way forward. They want to know last year’s profit, i.e. how i ... Open whole case

Oliver Wyman case: Setting up a Wine Cellar

Solved 33.8k times
4.3 5 3281
| Rating: (4.3 / 5.0)

I’m thinking about setting up a wine cellar in my basement. The way I see it, shelf space would be divided into two sections: (1) a “drinking” section where I store bottles for my own consumption and (2) an “investment” section where I store bottles that I intend to sell at a profit after they appre ... Open whole case

zeb case: Private Bank Anytown

Solved 19.7k times
3.9 5 4984
| Rating: (3.9 / 5.0)

Private Bank Anytown disposes total assets of approx. EUR 3 bn on December 31, 2014. The growth strategy of the institution determined at the end of 2010, however, has a higher impact on the cost side than on the income side. Aggregated to the return on equity as defined central parameter of the ba ... Open whole case

Bank envelope

Solved 45.6k times
4.4 5 1806
| Rating: (4.4 / 5.0) |

Your client, Customlope, is the leader in the US secure envelope manufacturing industry. Banks buy these envelopes for operations such as money deposits and high value transactions. Next year, a new digital technology will reduce the overall number of units sold in the industry by 25%. In the shor ... Open whole case

Chewing gum

Solved 43.3k times
4.4 5 1471
| Rating: (4.4 / 5.0) |

Your client is a chewing gum manufacturer. The CEO of the manufacturing company wants you to find out why his company is experiencing a declining profit margin. He then wants you to suggest ways to improve his company’s profit margin. Open whole case