Why do we need info on labor & Operating expenses of cat lavatories when it is already clearly making a loss?

Roland Berger Case: Onlinestar
New answer on Sep 04, 2019
1 Answer
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Navid asked on Sep 02, 2019
Actively preparing for candidate-led interviews - intermediate level

The exhibits shared and some of the info provided on the profitability of business cat lavatories already make it a 100% loss making concern. I could solve the case without the additional info provided below that states the costs asssociated with the business. Do we really need the below info and if so why?

"Labor expenses in the production of cat lavatories and other operating expenses for the production of cat lavatories amount to EUR 5 million per year in the past financial year. Because of appropriate contracts, costs correlate with sales of cat lavatories with a coefficient of 1. (Consequently: Reduction of turnover by 50% reduces costs by 50%, reduction of turnover by 100% reduces costs by 100%, etc.)."

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John
Expert
replied on Sep 04, 2019
Ex Bain Case Team Leader I Focus on Private Equity I +80 interviews conducted at Bain I All cases based on real life cases

Hi Navid,

I agree. Even if you could not reduce labor expenses and other operating expenses, you would still close the business as the price just covers the cost of raw materials...

Not the smartest of cases ;)

Best,

John

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John

Ex Bain Case Team Leader I Focus on Private Equity I +80 interviews conducted at Bain I All cases based on real life ca
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