All the calculation she made was based on the US market (bec she was presented with US market data). However, BevCo have global operation with 10 bottling plants around the word too. Maybe that should have been discussed in the recommendations too?
@@Managementconsulted absolutely it is! I sincerely appreciate how non-staged it was, and how the interviewee did things that, upon reflection, would do differently. I think that having a model of what a great case looks like is necessary to help us benchmark our perceived progress. If this is the standard, it gives us something to work toward. Thanks again for setting this up for us
In the beginning of the interview, @2:01, interviewer said "4bn$ in year 2 not by the end but actually in." and @17:40 the topic discussed again and interviewer said when you think breakeven point will happen and the candidate said "at the end of year 2 so I can cover fixed cost at the end of year 2." So here is the question; if it is end of year two, 60 m fixed cost should be calculated twice or not? If breakeven happen in the year not end of year, then should we calculate only first year's fixed income? which basically means Revenue - 60m-Variable cost= Profit what actually she did.. Please reply back, I'm waiting for your answer. @management consulted
Why is that you are NOT (roughly) halving the required 40mill PowerUp gallons to achieve a $4mill profit in the first two years? You are arriving at a 12.5% required market share for PowerUp by implicitly assuming that all 40mill gallons need to be sold in Year1 when your problem statement requires that you reach $4mill within Year2. Ergo, sell ~20mill in Year1 and another ~20mill in Year2, or however you want to split PowerUp's sales volume to achieve $4mill profit before the end of Year2.
Does anyone think that she went into too much detail at the beginning while she was planning her strategy? Because there are too many unknowns and you can come up with million different strategies. I would focus on understanding market dynamics and competitors and ask for extra information about these two. Once I established a base, I would move on to a more detailed analysis such as where to place the product and if we could. What do you think?
The interviewer is being so "nice" - usually that means the candidate won't be selected, because why twist the screws on someone you won't even hire, right? Hiring managers tend to test the candidates they might hire harder than the ones they won't hire.
Isn't the question "how should BevCo design their product launch strategy?" - calculating the market gap opportunity is only one component of the answer?
Enjoyed the video, just got a couple of questions. When you are trying to capture 12.5% of the market and plan to be profitable by 4 million USD by 2 years that sounds like a pretty aggressive growth strategy. Should not there be a question on inorganic growth or acquisitions given R&D will anyways result in time and a sunk cost and you will get a established player and a footprint in the market? Another question is the case started with market sizing and distribution channels and capabilities. When we are discussing about customer, competitors, product, company, market and value chain should not customer segmentation or demand come first? Just trying to understand if there is an order to the things for analysis. Also, factors like margin paid to distributors w.r.t competitors for product push or pull, cannibalization, geography overlap, effort spent in marketing and sales, self visibility, product life cycle can be considered for retailers/distributors to host the product?
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I think she made a mistake with the considering the fixed costs. The fixed costs had to be doubled because the objective was to make profit in 2nd year and the fixed costs were 60 mil per year. Barring that, this was a very interactive and insightful case study
I think she assumes that it's $4m of "annual profit" in year 2. So she does not need to double the fixed cost, considering that she's only calculating the volume they need to hit in year 2.
The beginning of the case said client is looking to make 4 M profits at BEGINNING of year 2 (in year 2), so the breakeven should be beginning of year 2, not the end of year 2.
I think you did fell into the 100% bar graph trap. While you find that healthy drinks has no clear leader, you may have possibly ignored the customer preference between the three categories of packaged ice coffee. It's possible that health Iced coffee is itself not a preferred option.
I clearly lack the knowledge necessary to understand why an outside consultant would be needed to perform this type of analysis. I don’t understand how orgs provide generic “business consulting”. Seems like a bygone remnant of the 70s… Read how McKinsey destroyed the middle class.
As a management consultant, the human resource being interviewed should have grasped quicker that with such a low profit margin, before deducting fixed costs, there is no way you can execute the launching of the new project. Even more, there are statistics of that market regarding minimum profit margins.
Curious. If they can't do it (full vertical integration) then nobody can AND others have done it which means that it can be done. Seriously, there are no new investments required beyond legalities/paperwork and some testing.
I was always curious why clients should engage with McKinsey to figure out their Market entry or attractiveness of a market. Most startups do their own primary and secondary research by talking to a potential customer and finding a niche/beachhead market. You can also do a Porters five forces analysis for your industry and focus on the 4P's (marketing mix) - Price, place, promotion, and product
@@Managementconsulted but that's the point I'm making. startups who are in masses can't afford. Enterprises who can afford should hire a team internally to develop marketing strategy. I would assume all top companies like Google and FB would have rockstar management consultants advising their CEOs or execs. Why do companies still use McKinsey to mitigate risk?
@@gankala8 Because large enterprises aren't as flexible as startups and most face different challenges than digital companies such as Facebook or Google. A company like McKinsey maximizes the efficiency of its employees and provides a more robust and cost-efficient analysis compared to what could be produced if each company had their own "management consulting" department.
Where does the company get the target of 4 million from? I feel like IRL companies would more likely have a market share target instead of a random profit/revenue number?
It is always about profitability. What would be the point to get a huge market share if your new product generates massive losses to the company? So each time you have such challenge to address, it is always related to ROI, payback, break-even and profitability more than market share.
@@sloyism I get that, but the 4 million is just a random number, why not 8 or 1 million? To come up with a realistic target you will need to look at how much market share you can get for example, alongside with other metrics ofcourse
@@Dylan-iq1de There is no specific reason for 4 M. It is just a case. It could have 1M or 12M, it would have changed nothing. What is key here is how there candidate is driving his analytical thinking. The figures are just here to support the case.
What‘s the point of selling ice cafe?? Where’s the social benefit??? Could you first explain that before you do all these calculations? Cafe is an unethical product, every beginner knows that. Could you explain how they manage fairly the cafe production???? Where do they get it from, if they pay the workers properly it will be much more expensive, your calculations are totally wrong, sorry!
@@saptarshidas488 Yes, firstly cafe is a very expensive product, if you want to source it fairly. It is still a very corrupt and unfair business, going back to imperialism and abusing cheap labour. Secondly, selling a drink in small coups gives a lot of packaging waste, what products do they want to use? Do they calculate the costs of biodigradable packaging? It is unecological to sell drinks in small portions. They should sell 2 litre bottles, but with cafe that is not working, bad business idea. Thirdly, drinks with caffein are unhealthy, it's not a responsible product to sell. Fourthly, can they source it locally, with minimum transport and CO2 Emissions? Hardly. bad business choice. The person who analized this missed out on everything essential. There was no common sense in it at all.
1st question to discuss would be their packaging. What materials do they use? Biodegradable plastic? 2 can they source fairly produced cafe beans,? Can it be locally produced. If not, it‘s a stupid idea ecologically. 3. is cafe with caffein healthy? Are their other fizzy drinks healthy or should they stop selling them? 4. are there any locally produced, healthy options? 5. growth and profit has no value for the sake of it, it‘s nonsense. They need to think about something ethically socially valuable.
