Risk and Next Step

Bain Bain-style cases BCG BCG online case MBB McKinsey
New answer on May 18, 2021
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Anonymous A asked on May 17, 2021

I am still bit confused for constructing my risks and next step.

For example:

If the case is bank synergy and we identify cutting employee number would be the slution. But during the case we have not talked about the risk associated with it.

Recommendation: synergy can be achieved so they should go ahead with merger

reasons: 1)Cutting employee number will save US$XX/ year

2)etc

RISK: Should I mention firing people risk (union protest, government intervention etc) as my risks on recommendation ?

NEXT STEP: For the next step,

1. Should I mention create roadmap on choosing which employee should we fire ?

2.Should we choose deal negotiation ?

3 ?

Basically I am not sure how detail the next step should be ? if it's too general it will be so simillar with the recommendation that we make. Thanks for your answers

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Best answer

Hello!

Yes indeed!

Some other risks associated to an M&A -which is the situation many times resulting in people cutting-.

  • All most merger integration risks: culture, mission, TOM, etc.
  • PR plan for layoffs
  • Impact this has on the brand and customer perspective
  • Antitrust

Hope it helps!

Cheers,

Clara

Was this answer helpful? 9

Hi there,

Yes, you have this right.

Risks need to be clear things that could go wrong if we implement our proposed solution. Of course, if we're cutting employees there are real risks to consider here.

In terms of next steps, I don't love yours. They don't quite mitigate your risks. Rather, your next steps need to do an assessment of labor force/legal reactions to the move by comparing similar moves made by the company or peers in the past.

Was this answer helpful? 6

Hi there,

I would define the two concepts as follows - this should help to understand topics and depth of presentation.

  • Risks: anything that could go wrong in terms of reaching the objective of the case, given the recommendation
    • Negative PR for firing people and issues with trade unions may definitely be a risk (the company may possibly not be able to implement the plan due to that)
  • Next steps: anything that you could do to reach the objective (if not yet met) or to alleviate risks. In this case
    • If you have not reached the level of synergies required ⮕ Look for additional synergies (plus possibly also risks mitigation)
    • If you have met the level of synergies required ⮕ Look for ways to mitigate risks (investigate reallocation of employees / stop hiring / start discussions with trade unions, etc)

Hope this helps,

Francesco

Was this answer helpful? 6

This depends on what you feel the interviewer expects. It will never hurt you to not only throw out solutions, but provide a risk & mitigation assessment too. Why? Some solutions may have inherent risks that cannot be mitigated - i.e. some residual risk that decreases the overall attractiveness of the solution. If necessary - make sure to price that risk in in your quantitive solution of the case (i.e. a reduction in the potential identified earlier in the case, i.e. less synergies).

Before deep-diving into any details, make sure the interviewer unterstands high-level why you are propsing next steps and what the rough subjects / topics are. Do your next steps refer to implementation? Mitigation of risks? Unlocking further potential? Only if the high-level next steps are clear, offer to go into detail.

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Clara gave the best answer

Clara

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