BCG Case Interview Example - CookieCo

hey Ed excited to walk through this case with you just for context this is a BCG style case and so I'm going to look for you to lead me through it if there are numbers or exhibits it'll be up to you

to put some information in your structure and then we will dive in from there great sound good sounds good okay awesome so let's get started our client

today is a national manufacturer and seller of packaged cookies in the United States called cookie Eco in the last 2 to 3 years they've seen a decline in profits whereas the rest of the industry

has experienced Healthy Growth they've come to us to identify the root cause of this issue and how they can reverse it

perfect so just to clarify our client today is Cookie Co they are a national manufacturer and seller of package cookies in the United States and over the past two to three years they they've

actually noticed a decline in profitability whereas all their competitors and the market in general seems to actually be stagnant if not growing exactly perfect okay so just a few questions before I jump into my

framework awesome um their their scope for this is is just the United States correct absolutely okay wonderful and can we assume that they maybe just provide cookies they don't sell any

other sort of packaged goods and if if they do we're just focusing on the cookies today so yes they do sell other products but are only Focus today is on their cookie segment wonderful sounds good do you mind I take a few minutes to

structure my thoughts go for it perfect awesome okay so I'm ready to walk you through my thoughts for this so when it comes to profitability obviously

there's there's two main things that can that can increase or decrease profitability the revenues and the costs so there're actually two of the things that I want to include in uh my thoughts here as well as the market itself so

we're thinking competitors consumer preferences um but let's dive into revenues a little bit more um when it comes to revenues two of the things that I think could really impact us are actually how many cookies they're selling or the price at which they're

selling them at um and I'm going to keep it a little bit surface level now maybe we can dive into them later if we have any information on that in terms of costs there's fixed and variable fixed

might include labor or the warehousing costs distribution things like that and a variable would be ingredients and raw materials in terms of the market itself

obviously we've noticed that the competitors are actually increasing so they they are eating up on market share so one thing that might be causing that is maybe some sort of innovation in the

cookie space maybe a new product or a new type of product and linked to that could be some sort of consumer preference maybe consumers are trying to go sugar-free now and we're not catering

to that um area of the market so with that let's maybe dive into revenues and costs do we have any information on on that so we do but first of all I just

have a question about your hypothesis yeah absolutely so talk to me about whether you think it is revenues or costs that the key issue here as we know they're declining in profitability the market has been growing what do you

think is going on yeah well my initial hypothesis with that would be if the market is growing itself we are probably incurring either more costs or making

less Revenue per cost I our margin is probably decreasing um again if the whole Market's improving and all our competitors improving we're probably selling just fine would be my initial guess obviously I'd want some more

information on that but I would imagine that the root of that would be some somewhere on the costs okay awesome well I actually do have a breakdown of costs can you walk me through the costs that you talked through before I know you mentioned some of them in your structure

and kind of do the same thing right just give me hey what do you think are the costs for this business and what do you think would be the first place you would look there yeah so let's almost going in a chronological journey of the cookie right so they making the cookie itself

that's where I think a lot of the variable costs are going to come in in terms of uh ingredients maybe um running the some of the factories in terms of the per unit cost there okay and then

once we've actually made them we need to do a few things for them we need to store them somewhere we need to package them uh and we need to distribute them okay and I would imagine that the um root costs here are probably going to be

somewhere in terms of the storing or the distribution of the cookies maybe um there's something uh actually I'm I might even steer more clear from the distribution just because that might be

something that would affect the whole Market instead of just our company um but I'd love to know if you have more information on yeah I think that's a good Insight um just talking back through some of the other things talk

about the macroeconomic environment that we've been in right 2020 2021 2022 you know walk through some of what you think the context is what costs would you

expect to increase and which ones would you not expect to increase you mentioned distribution I think that's really insightful can you just give us a little bit more layering on that yeah we're talking about distribution in particular obviously we've been through we've been

through a lot in the past few years whether it's been pandemics and and other sort of um econom in fact there's maybe some sort of uh recession that's coming along and I think that one of the

big things there is that um and and F so casually just recessions and pandemics earthquakes and tornadoes as you do yeah luckily I'm not the CEO of a

cookie company so I don't have to worry about it too much not yet not yet um I think one of the big things with that would be uh when it comes to distribution with a pandemic and with a

recession uh that's definitely a cost that could increase if the if the actual um supply of labor for distribution whether it's drivers whether it's uh some sort of freight operators that is

naturally going to be a little bit lower and so if that's the case obviously just with supply and demand that's going to be something that's uh going to come at a premium compared to what it might have

been three four five years ago yep okay good I'm just making a couple of nuts here yeah no worries fantastic okay so um so picking one what's your number one

area of cost that you'd want to look at here well I know we've driven into um the distribution channels if we had any information on raw materials or maybe a

portfolio of the the breakdown of costs that would be really interesting but if I had to go right now I think distribution is probably where I would be where I'd be focusing okay awesome well I do have one exhibit let me put

this over in front of you and um so if you want to just kind of walk me through what you think the exhibit says here um we've got you know a breakdown of some of the costes you've requested and so

tell me what you think this is exhibit is talking through yeah so this is great so it looks here um like we are talking about the previous three years in terms of a breakdown of costs and actually

what's happening over those three years and immediately my eyes are going into storage and warehousing that's the seems like the biggest increase I'll I'm going to work through them left to right as that seems a little bit easier okay so

in terms of raw materials that is incrementally increasing almost at a linear rate that's not actually um something I would be terrified about just because I would expect that to

happen with given what's happened with covid and with recessions and so that would be something that's expected why would you why would you expect the raw materials would increase I don't think you're wrong but explain explain how

that ties together again if um in a similar manner to the distribution channels if there is a decrease in labor or if there's an increase in demand um with those things I would imagine that

raw materials naturally might just be a little bit more expensive um and if if if the cookie industry is growing as well and more people are demanding those ingredients that's probably going to lead to an increase okay makes sense in

terms of storage and warehousing um that's actually increased the most it looks like in 2020 it was around maybe 12% and in 2022 we're looking at closer

to 22% um there's quite a large increase there over over two years and so that would be really interesting if we had a further breakdown of that um but we'll we'll dive into that a little bit later

um but I would imagine just just from looking at this probably now the biggest concern for me and I'm and I'm shifting a little bit more uh away from distribution just because given that's

the next one that actually was stagnant for a year and then has only increased marginally um and that's the same with marketing of promotions and so not only

could 2022 be some sort of anomaly with again macroeconomic factors um contributing to that but it doesn't seem like it's increasing that much and if they're noticing that they've had a

steady decline in profit it then it's probably not there sgna pretty stagnant um maybe maybe a a later thing to look into would be actually increasing those

costs in terms of trying to push more units but I imagine that the the root of the problem here lies within storage and warehousing uh and maybe a tiny bit in raw materials great is there anything in

here that confirms that we are probably growing Revenue like your hypothesis was there before yeah do you know that's that's a really good point that you bring that up uh if raw materials are increasing one possibility is that the

actual price of raw materials is increasing but it could also mean we're spending more um but I think the biggest thing would be distribution if we're spending more in distribution one of the options for that

and one of the reasons that could be is actually we are Distributing more products and if we're Distributing more products we're probably growing in Revenue love it okay great anything else you want to talk about here before we

move on no I'm happy to move on awesome so I'll leave that there in case it's helpful context for you okay what else do you want to talk about um do we have any more information on storage and warehousing that's again

where my concern is more focused now yeah well why don't you break it down what do you think are the components of storage and warehousing if we click down a layer yeah um imagine that we were kind of creating a an Excel spreadsheet

breaking that down into its subcomponents what are the subcomponents of storage and warehousing here well you have to forgive me I'm not an expert in the in the storage industry but I would

imagine uh the biggest let me I would imagine the biggest cost probably just the rent itself in terms of how much you're actually paying for this big storage and Warehouse uh if it's something like uh food I would imagine

there's probably also some sort of climate control in there you don't want it to be humid you don't want it to be too hot so maybe that's an element um another thing would be um maybe in terms

of actually inputting those and managing that storage facility so um my thought there immediately goes to Amazon when they have a obviously it's a much bigger scale there but they have millions of products coming in and out every every

day and so actually hiring the workers to go ahead and manage that and bring the products in and out could be another thing and then when it comes to cookie companies and and and food in general

there's probably some sort of um cost associated with the loss of goods so obviously if you're selling a sofa or a couch it's not going to expire whereas a cookie if we're not selling enough units

which may not actually be the issue here but if we're not selling enough units we might not actually be able to um ship out all our products before they expire so I don't know if that would be under storage and warehousing or if that would

be under um raw materials or distribution um but that that could be in in that it's interesting that you mentioned that the product is expiring piece um how is that a cost is that a

you know how how would we actually put that on the books for the business so naturally I would assume that if it's if you're losing it you're just not getting the revenue and so you're you're

paying 100% of the cost or maybe not 100% right you're not paying for distribution but you're paying for most of the cost and you're incurring no revenue from that so you are getting a negative re negative profit with that um

am I on the right that makes sense so let's poke into that a little bit more um we have noticed that inventory losses have spiked in the last two to three years uh can you suggest a couple of ways to potentially bring them under

control yeah do you mind me to take 20 30 seconds to organize my thoughts I'll let you do that just this once thank you okay so I came with a few ideas there um

and let me just walk you walk you throw those when it comes to those inventory losses um and I actually forgot to include one on there there's there's three main categories I'd look at okay

the actual storage facility itself so how are we how are we storing them is the storage are the storage conditions good enough okay um and the management of there are we are we tucking away a box of cookies in the back of the

storage facility and forgetting about them until it's too late great uh as well as not selling enough so just not having enough turnover maybe producing more than we can actually sell okay and

then the last thing would um would actually be in terms of the the cookies themselves are they if they're not fresh cookies like crumble or something else maybe they're maybe they're expiring too

fast and there's room for optimization there but I would really want to drill down on the first two awesome how'd you fix them yeah so we're talking about the bad storage itself the climate is one

thing we could fix making sure the storage facility isn't getting too humid making sure it's not getting too hot an important caveat there is that that is something that the packaging itself

should be doing in terms of the management systems maybe there are none in place maybe the management systems are suboptimal but I would make sure that we're really adopting a and and not

to get to accounting here but a fifo method in terms of okay first in first out so or sorry we should actually do lifo last in first out you sure uh let me just let me Define it and then we can

make sure that got the right one um whatever is going into the uh so it would be Fifer whatever's going into the warehouse first should be the first to come out we don't want um months where cookies are sitting in place where other

there's turnover of other cookies absolutely especially if we have one bad month of sales that could really pile up and and make the issue worse in terms of not selling enough I think that the biggest solution there would be some

sort of analytics just making sure we can predict more accurately how many units we're full casted to sell and then we just make that make a little bit more obviously than that and make sure that we're not making way too many when maybe

during a recession or during a Changing Times people aren't buying as many cookies again I don't think that's the issue it's probably one of the one of the first ones okay love it so uh great

you at this point I think we are getting pretty close to time in the case I'm going to ask you just to provide a final recommendation for the client I know that of course there are things that we could look at if we had more time but if we were just here you're in an elevator

and the CEO's there what would you say yeah well thank you for meeing me I think the the most important thing to to note here is that these storage and warehousing costs are are getting too

high too high and are actually creating an issue uh for the profitability of the company and I think to to fix this we really need to look into the root of that and and I think one of the biggest Roots could be the climate and also the

management systems in place so in terms of some next steps I think developing um if we don't already have it some sort of management system to make sure that uh all of our inventory is getting out in

the right time and is not getting clogged by other units I think that's going to be the best way to solve this problem now I will say that a risk with that is if we start incurring even more money on this and we can't find the

issue soon enough we could potentially be driving our profits even further down fantastic thank you all right so let me provide some feedback you ready for this yeah first of all just what were your thoughts how did you feel what did you

like what do you think you could have done better yeah as a pretty uh math focused person I always love it when there's more calculations involved and maybe less of the creativity side but I

really enjoyed this case I thought um the exhibit itself wasn't too difficult to read into um I definitely had to Pivot once or twice I think we noticed that throughout the case that you I almost felt like I was led into one

place and then it was like actually with this piece of information I need to just quickly PIV in so I think that's really good practice to be able to do that because that's what happens a lot of the time both in case interviews and in the real world

um but I think I maybe could have been a little bit more structured in terms of the once we knew it was storage and warehousing figuring out the potential Solutions I probably could have listed a few more there and maybe dug into those

love it so I'll just provide you with my feedback again overall really good job got the general sense that you knew it was happening that you were being insightful that you were layering on those insights of course I you know

every consultant can find something that they can improve on so I'm going to just go through I thought with your beginning I thought you did did a really good job um both the recap was clear concise

didn't this is a very short one doesn't need to be long um and you know the only thing that I might have enhanced there was just uh really making sure that you reflected on this question of whether

you thought if it was a macroeconomic issue where others were doing well um was it because they had been cost cutting or was it because they had been you know punching Revenue growth and if

and you know expecting that based on what we've seen in the last couple of years with inflation but also with the um Improvement in consumer goods purchasing like it's probably going to

be a cost issue I think you could have identified that earlier okay and um and you know you don't you don't even have to necessarily ask it as a clarifying question but just giving me that context as a heads up would have would have

really kind of improved that and and it would have um helped me make sure that you were focusing on profitability because actually when you went to your structure I wasn't 100% sure okay um I also just thought you could have maybe

provided me some of the context for your questions so really good questions but right here's why I'm asking if we need to look outside of the us obviously there will be a much broader scope of

this there's a lot of complexity in in the way that we think about our supply chain so I'm assuming we're going to focus on the US right so giving me just a little bit more of that background you had more time felt like you were rushing

to get into the structure and there's a difference between kind of command and rushing at the beginning so uh so I think you have a little bit more time to sit back into it like really kind of you

know marinate on the issues and also explain to me what those are um with your structure you know I think again really good kind of core questions I give you a three um on the structure and actually I gave you the ratings for

everything let me go back to that so um I that's not out of 10 right no out of four um so in the MC um case scoring right three and a half for the case recap and a three for the clarifying questions and then I give you a three

for the case structure um and and the guidance here is that it has at least three buckets you did um the buckets have three ideas that focus on data little bit light on that um but um the ideas are mey I felt like that was

pretty good um I would have liked to have seen two different things to make it a four one is I wanted you to present me costs first yeah right when I asked you the question you got there but you had a full extra minute in your

preparation time or you could have thought about it punched a little deeper on the costs and presented it even if you wrote down revenue's cost Market you could have presented the cost First gotcha I would have liked to have seen

that anytime we're doing a profitability case and you're able to do not walk me through here's what the profitability is and kind of more like here's what I think the issue is I'm going to appreciate that especially when I'm in

BCG um and then in addition you kind of said you know I'm going to keep it at a high level I don't want a high level I actually do really want a more comprehensive structure here so uh I would have wanted for your revenues to

highlight not just the unit sold and the prices sold but maybe product mix or something else kind of focused on the revenue side right are discounting

inflation right like impacts of of of those things um and so in fact I think that here you could have actually broken out revenues into prices and um and

quantities um or I think you could have broken out costs um but if you're if you're going to do the market piece just make sure that you don't include I think I think what was is challenging about

this specific structure is that you have to make sure it's mey so you can't go too detailed on the revenue side and include the market p as well so you might have just wanted to go a little bit more granular on a traditional

Market uh profit ability structure but just reorganize it a little bit so you could go a little bit more detailed um and so so good job but I think there was a great there that you could have attained um on the case math question

you know you you I could tell you were thrilled about the case um obviously with BCG you have to lead yourself into it which is why at the end of the structure I asked you the question about costs I asked you to delineate what the

costs were you could have done that independently a little bit better um also I I don't at one point you mentioned it I don't know if it was misspeaking but um you mentioned that the it was percentage increase and I

don't know if you were making a calculation or if you were reading this as percentage instead of millions of dollars so just make sure that as you're talking through it I would just give the context at the beginning right this is

in dollars so these are real increases right um and and then I will calculate the percentages just maybe for me the interviewer lay out for me um because a lot of those insights I thought were

pretty good and um and then I I also you mentioned that there might have been a decrease in labor on the um raw material side again I think it may have been misspeaking I think you were talking

about decrease in labor availability is that right like leading to a price increase of um of Labor and so but there were a few things that kind of didn't follow linear thinking there and so um

so again I gave you a a three under five minutes actually maybe too little time um but I would really wanted you to begin to um punch into those extra

things that I asked you about on the end when I asked you did a good job um for uh the case creative stuff when you started to uh break this down I got a

little nervous you have a pretty great mental recall but you didn't write down the brainstorming list of the different factors so in in a couple times you kept like putting the cap on the pen and

putting it down and and so I would just say maybe keep yourself poised at the ready especially in a BCG case because of the brainstorming and the leading um if you're in a Mackenzie case you're going to know when they're moving on in

a BCG case maybe not so so just uh just to think about that um when it comes to that I can't remember if I asked for more time than maybe like 30 seconds you did okay is that is that the right step then for someone to do in that you can

always do it I would just say if we're practicing there I you know I I was tempted because in BCG I generally would say no this is conversational uh and so

so contextually in McKenzie yes in BCG no in Bay maybe practice it both ways um and so I I was I was tempted to say no but I felt like giving you a break on

this one so um it could have gone either way for you always it's fine to ask just be ready to have say no and if they say no the first time never ask again that's a really good piece of advice yeah um

and then finally um on the case creative question so again I thought you did a good job of listing out the initial level but it was really just a brainstorming list and it didn't address what I asked you I think you could have

clarified what I asked what I asked specifically was can you suggest some ways to bring them under control and so uh you gave me what the problems could be but not the solutions and so we had

to go back to that and you also you didn't write down what the solutions were as you were talking through it so I feel like um that will lead me into my final piece so so kind of three three across the board there too and then on

the final recommendation I felt like that was like a 2.53 I think that at the beginning you could have just got given one sentence of context right we're looking at profitability that's out of line with market growth of other

competitors we found that the issue was right just a little bit more of a story format um and I felt like if you had had the the notes and the responses you might have been able to tick a few of those things off a little bit more

clearly I would also just recommend in your risks and next steps that you number them for me yeah um I was taking notes and I actually don't know if you had one two or three I I don't know if you were subheading or if you were

moving on and so just you know right at the very end right when I when you know I'm going to walk out and score you on whether you were structured or not give me the most structured final recommendation you can wonderful other

than that final questions um I guess in terms of the conclusion there um straight into it no no time to to formulate or anything um given it's a BC

and good that way I guess exactly and so should I keep the pen cap there and just give you it verbally with the structure I think that's fine I wouldn't I wouldn't normally have you write down anything during the final recommendation

it's really just during the brainstorming and so if I ask you a question and and you're thinking through things if you what what I what you risk if you don't write it down is that you talk through them you have great ideas

and you forget them yeah we move on to the next section so just in terms of organization and structure just trying to keep everything together wonderful awesome well thank you thank [Music]

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