Military helicopters

Solved 9.9k times
4.4 5 394

Problem Definition

Your client is BS Systems, a defence contractor situated in the US.

They have contacted our company to advise them in the selection of the location for a new plant, producing Apache helicopters. Three sites are in consideration: Canada, UK and US.

The profits for each plant location over the next 5 years should be calculated.


This case is made to be interviewer-led. Therefore the interviewer should guide the interviewee through the interview.

The case is split into two parts.

The first part describes more qualitative problems and has more open questions that should make the interviewee think about the problem and its solution.

The second part is more about quantitative problems and calculations. Here the interviewee should try to make his own calculations and solve the questions.

The questions in the big boxes should be read out and shared with the candidate.

Short Solution (Expand)

Detailed Solution

Paragraphs highlighted in green indicate diagrams or tables that can be shared in the “Information to share” section.

Paragraphs highlighted in blue can be verbally communicated to the interviewee.

Suggested case structure:

I. Background

1. Which parameters would you consider for the decision?

Possible answers

  • Export restrictions (between US, UK and Canada):
    Are there are restrictions to export or import machines from/to the countries?
  • Financial analysis of plant operation:
    (VC, FC) / Revenues / Profits
  • Customers:
  • Suppliers:
    Spare parts / Raw materials
  • Logistics:
    How to get the product to the customer?
  • Labour:
    Availability of skilled labour

II. Market

2. Where would you build the plant?

Information that can be shared if inquired by the interviewee:

  • One of the plants in the US has space for an additional assembly line, for the costs of $500 m.
  • The assembly line could produce up to 250 helicopters annually.
  • The plants abroad can produce up to 350 helicopters per year.
  • The helicopters are sold for $100 m a piece.
  • If a new plant is built abroad, the local Departement of Defense (DoD) is willing to spend 50% of its annual budget on the helicopters.
  • The UK and CA do NOT import from other countries
  • If they are imported to the US they have to be certified for an additional cost of $10 m per helicopter.

Share Table 1 with an overview of the cost and Table 2 with the market size of each location on the interviewee’s request.

Total revenues for 5 years:

Total revenue (US) = 5 * 25% * $100 B = $125 B

Revenue only UK = 5 * 50% * $20 B = $50 B

Total revenue (UK) = $125 B + $50 B = $175 B

Revenue only CA = 5 * 50% * $15 = $37.5 B

TR (CA) = $125 B + $37.5 B = $162.5 B

Total costs for 5 years:

Total number of helicopters sold in 5 years:



Costs are composed of:

  • Initial setup costs
  • Fixed costs
  • Variable costs
  • Certification costs for imports to US



Compared to the UK, in Canada costs are higher and revenues are lower. Consequently, the plant should either be situated in the US or UK.
To check the attractiveness of these two countries the profit for each has to be calculated.

Total profit for 5 years

Plant in US:

Profit = TR - TC = $125 B - $13.5 B = $111.5 B

Plant in UK:

Profit = TR - TC = $175 B - $40.75 B = $134.25 B

Key Insights

Building the plant in the UK will give us profits that are $22.75 B higher than in the case of having it in the US.

III. Conclusion

3. What is your recommendation to BS Systems regarding their choice of location?

Main conclusion

  • Based on the financial outcome, the UK seems to be the more attractive location due to:
    • Profits over 5 years will be $22.75 B higher
    • Our client will not completely depend on a single customer
    • The plant in the UK would be fully utilized (350 of 350)
  • There are other points that should be taken into consideration:
    • Potential of selling helicopters to other countries worldwide
    • Labour reaction in US plants if a new plant is built in the UK
    • Stability of political relations between US and UK

Difficult Questions

What issues could arise by moving some production from the US to another country?

Possible answers:

  • Labour protest due to the loss of jobs in the US.
  • Governmental intervention in order to keep industry in the US (e.g. losing subsidies).
  • Loss of customers in the US as a result of taste (want only American quality), etc.
  • Loss of brand reputation (depending on the country moved to).

More questions to be added by you, interviewer!

At the end of the case, you will have the opportunity to suggest challenging questions about this case (to be asked for instance if the next interviewees solve the case very fast).

Related consulting question(s)
Vlad gave the best answer on Jul 21, 2017 - 1 answer
McKinsey / Accenture / Got all BIG3 offers / More than 300 real MBB cases / Harvard Business School

Hi, The general framework for pricing is: Cost base - Value based - Competitor based - pricing strategy 1. Cost based - you actually check what are the costs and apply standard industry / target... (more)

Francesco updated the best answer on Mar 27, 2018 - 1 answer
#1 Expert for coaching sessions (2.000+) | Ex BCG | 1.000+ reviews with 100% recommendation rate

Hi Elisey, I would personally not recommend to use a single framework for all the so-called business situations (M&A, Entry, New product, Operations etc). Although this would help to more easil... (more)

Vlad gave the best answer on Apr 03, 2017 - 2 answers
McKinsey / Accenture / Got all BIG3 offers / More than 300 real MBB cases / Harvard Business School

Hi, 1) You proactively ask in the beginning, even before drawing the structure (something like "What kind of products / revenue sources do we have) and then split the structure into price, qty,... (more)

Sidi gave the best answer on Aug 13, 2018 - 1 answer
McKinsey Engagement Manager & BCG Consultant | Interviewer at McK & BCG for 7 years | Coached 60+ candidates secure MBB offers

Hi Kay, this is indeed one of the fundamental things that you need to learn in order to rigorously disaggregate the value drivers of a business. The driver tree allows you to identify the numerical d... (more)

Vlad gave the best answer on Feb 26, 2018 - 4 answers
McKinsey / Accenture / Got all BIG3 offers / More than 300 real MBB cases / Harvard Business School

Hi, I would start with either market sizing or with profitability cases since they are much easier: 1) In market sizing cases I would try to understand the basic approach: How to structure... (more)

Related BootCamp article(s)

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.

8 Comment(s)

The Value Chain

The Value Chain - as e.g. by Porter - is a classic framework to structure the activities of a business and add value to products by transforming resources.

3 Comment(s)
4.4 (394 ratings)
4.4 5 394
Case exhibits

Diagram 1


Table 2