Question Business Case

Bain & Company Online Assessment
Edited on Aug 28, 2020
1 Answer
633 Views
Brenda asked on Aug 28, 2020

Assuming no household owns more than one refrigerator, range or washer, which of the following conclusions is true based on data provided in Exhibit#1?

(a) Average unit price in ranges is decreasing since 2002

(b) Washer prices should increase by over 40% until 2009

(c) Total market for the three categories will be of at least $8.8B by 2010

(d) Penetration of washers will be growing at above 5% annual rate until 2009

Answer is B, how can I get the price for every one of them or why I should assume that?

Thank you very much! Business Case question

(edited)

Overview of answers

Upvotes
  • Upvotes
  • Date ascending
  • Date descending
Best answer
Udayan
Expert
Content Creator
updated an answer on Aug 28, 2020
Top rated McKinsey Case & PEI coach/Multiple real offers/McKinsey EM in New York /6 years McKinsey recruiting experience

Hi,

The key to this answer lies in the penetration numbers

  1. Ranges penetration basically does not change, but the growth in revenue is approximately 15% so a is false
  2. We do not know growth rate for 2010 so cannot assume the number (cannot just apply CAGR) so c is false
  3. For washers - penetration grows from 52% to 62% over 4 years. If it grows at 5% a year then in year 5 it will grow by AT LEAST 20% (but much more because of compounding) so d is out

Hence you are left with B. B also makes sense as washers are doubling in sales so 40% increase in prices given 10% increase in penetration does not sound off

Best,

Udayan

(edited)

Was this answer helpful?
Brenda on Aug 28, 2020

Thank you very much!!

Udayan gave the best answer

Udayan

Content Creator
Top rated McKinsey Case & PEI coach/Multiple real offers/McKinsey EM in New York /6 years McKinsey recruiting experience
169
Meetings
6,849
Q&A Upvotes
40
Awards
5.0
86 Reviews