Get Active in Our Amazing Community of Over 452,000 Peers!

Schedule mock interviews on the Meeting Board, join the latest community discussions in our Consulting Q&A and find like-minded Case Partners to connect and practice with!

Where to build plant - structuring

business concepts
New answer on Sep 09, 2021
4 Answers
534 Views
Anonymous A asked on Sep 08, 2021

When looking at where to build a plant, are there any revenue considerations under the financial aspects? Or is it only costs when we look at the financial bucket (costs to procure labor, raw materials etc).

Overview of answers

Upvotes
  • Upvotes
  • Date ascending
  • Date descending
Best answer
Ian
Expert
Content Creator
updated an answer on Sep 08, 2021
#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate

Hi there,

This entirely depends on the case! Can you provide us some additional context?

In general, I would look at regional costs (inputs) (i.e. labor, raw material access, land, etc.), distribution costs (getting output to end buyer), stability of supply (social, political, economic, environmental factors), and finally “extra costs” such as tarrifs and taxes.

Technically, the 3rd item (stability of supply) is revenue (volumes)

(edited)

Was this answer helpful?
Calvin
Expert
replied on Sep 08, 2021
Experienced interviewer | Roland Berger Project Manager| Cambridge University | Super intuitive approach

I would consider revenue in addition to cost aspects. Depending on the market, industry and goods being transported, for example, close proximity to customers could be advantageous for your revenues. Simple example: if you build a plant in a country with large demand and high tariffs on imports

I can give more concrete comments if I know which industry we are talking about here. Feel free to message me directly to follow up 

Was this answer helpful?
16
Francesco
Expert
Content Creator
replied on Sep 09, 2021
#1 Coach for Sessions (4.500+) | 1.500+ 5-Star Reviews | Proven Success (➡ interviewoffers.com) | Ex BCG | 10Y+ Coaching

Hi there,

Yes, the location of a plant may impact revenues. Some possible implications on the revenue side are:

  1. Quality: different locations may offer different levels of quality for the final product
  2. Availability of supply: different locations may have different constraints. Some may not allow full production when needed
  3. Distribution: different locations may allow to reach customers more or less easily

You should still clarify if revenues are relevant at all for the client though (sometimes the cost could be just to minimize costs).

Best,

Francesco

Was this answer helpful?
Antonello
Expert
Content Creator
replied on Sep 08, 2021
McKinsey | NASA | top 10 FT MBA professor for consulting interviews | 6+ years of coaching

Hi!

Including a revenue bucket shows that you're looking at the big picture behind the initiative.

Of course, it depends on the specific case so it would be more relevant to include it in some situations rather than others (e.g. proximity to customers, etc.).

Hope this helps.

Best,

Anto

Was this answer helpful?
Ian gave the best answer

Ian

Content Creator
#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate
1,097
Meetings
77,751
Q&A Upvotes
232
Awards
5.0
151 Reviews