Problem Definition
Our client is a start-up company that wants to mass-produce an electric vehicle for the US market.
So far it has developed a prototype all-electric vehicle.
They hired us to solve the problem of swapping to mass-production.
Our client is a start-up company that wants to mass-produce an electric vehicle for the US market.
So far it has developed a prototype all-electric vehicle.
They hired us to solve the problem of swapping to mass-production.
This case is made to be interviewer-led. Therefore the interviewer should guide the interviewee through the interview.
The questions in the big boxes should be read out and shared with the candidate.
Suggested case structure:
Information that should be shared with the interviewee (ONLY if asked):
Breakdown customer segments
Price
Demand depends to a large extent on the price (price elasticity).
Range
The higher the range of the car, the more people will want to buy it (range anxiety).
Physical characteristics
Availability
The higher the availability throughout the country the more people will want to buy it. This is due to lower efforts in acquiring the car and in a higher presence of the car in different parts of the country.
Own manufacture
Teslo could build its own manufacturing facility in the US or abroad.
+ Market car as American quality (higher perceived quality)
+ Low transport costs
+ Close proximity to suppliers
+ Possibility to get financial aid by American government
- Higher labour costs
- Actual quality may be lower (lack of skilled workers in US)
- Regulation of US government may be stricter
+ Lower labour costs
+ Actual quality may be higher (lack of skilled workers in US)
+ Less strict regulation
- Higher transport costs
- Less proximity to suppliers (if from the US)
- Possible political issues, uncertainty about political stability
(depending on the country)
- Public reaction might be negative (production moved abroad)
- Perceived quality might be low (“Made in China”)
Outsourced manufacturing
Teslo could outsource the production to another company.
Besides the already mentioned Pros and Cons above there are additional things to keep in mind.
+ Probably better/easier communication due to close proximity
+ Similar business culture
+ Easier on time delivery (just in time)
+ Possible already established business contacts
- More difficult to set up supply chain (spread over the country)
+ Better supply chain (big factory regions in China)
- More difficult to communicate (especially face-to-face)
- Possible different business culture
- More complicated to deliver on time (just in time)
+ High upfront costs (investment)
- Low variable costs (labour costs)
+ High labour costs
- Low upfront costs
Different labour costs, taxes, subsidies or transportation costs depending on the chosen location/state for the facility.
Reduce costs by reducing the number of steps needed in manufacturing or by limiting the possible vehicle customisation (easier to produce in higher amounts and reach economies of scale).
Reduce storage costs with just in time delivery (easier in the US).
Reduce overproduction and storage costs by producing only for explicit customer order.
Information that should be shared with the interviewee (ONLY if asked):
Expected number of employees:
The expected needed number of employees is 200 (in the manufacturing process).
Main conclusion:
Other possibilities:
Possible solutions:
There is uncertainty about the demand. The production of 100,000 units could be either too high or too low depending on the demand. This could lead to unnecessary high storage costs for the remaining cars if the demand is lower than expected.
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).