McKinsey & Co. Interviews, Summer Placements, November 7, 2017
|Abhishek Aloke Ghosh||McKinsey & Co.||B.E.(Hons.) Chemical Engineering||BITS Pilani, Pilani Campus|
|Work Experience||Resume Spikes|
Round I: Multiplex diversifying into consumer packaged business
Case: Market entry strategy
A multiplex, based in India, is in the process of diversifying into food and beverages (F&B) as a packaged food business. The CEO wants you to analyse the issue and advise what the multiplex should do.
Candidate: [The interviewer had a dossier containing my profile, and asked me about my CGPA at IIMB, the Aditya Birla Scholarship (ABG) interview] Hi. I would like to structure my analysis into the following three parts. I will start with a few preliminary questions, follow that up with my hypothesis and issue tree and end with recommendations.
To understand our business better, I’d like to know the following details-
- How many screens do we have in India and where?
- What are our existing capabilities in the F&B segment?
- What is the objective of our diversification- growing profits/sales or market share?
Interviewer: The multiplex has 500 screens across 50 cities. They sell popcorn, chips and soft drinks sourced from 3rd party vendors currently. The objective is to earn INR 1,000 Cr. in sales in 5 years.
Candidate: The sources of revenue for this business can be divided into the following segments- snacks such as traditional Indian samosas; popcorn, nachos, chips and corn; ready-to-eat meals; cookies and chocolates; baked goods and beverages such as colas, non-colas and dairy products.
Interviewer: OK, how would you determine the best segment to enter? [beginning of a market entry framework]
Candidate: I would draw up the following issue tree to test my hypothesis that entering a certain segment would meet our revenue targets. The factors that would confirm my hypothesis are if within our multiplex firm- we have had prior experience in F&B, and if we have the necessary resources in terms of production, distribution channels, sales and marketing capabilities or a strong brand. In terms of diversifying into the F&B segment, we could further explore whether we need to launch a greenfield campaign, get into a joint-venture or acquire an established player. Further, our hypothesis would be confirmed if the competition in the multiplex F&B segment is fragmented in terms of market share and if our current market segment of middle and upper middle class urban consumers’ tastes and preferences match with our product offerings.
Interviewer: Given the profile of moviegoers to our multipelx and conditions in the market, which segment would you consider entering? And how? I want you to shoot creative marketing ideas as you go along! [this was partly a stress-test as the interviewer may appear impatient at times-checking his mobile and asking you to hurry up, but remember this might just be a simulation of a difficult client. So, just stay calm and MECE!]
Candidate: Given that traditional Indian snacks are a INR 20,000 Cr. business with a 15-20% growth rate, it would seem like an attractive business to enter. However, given the increasing level of health consciousness among urban consumers, baked nachos and corn would be a good bet as well. Ways in which we can move to our sales target include- creating packaging that emphasises the healthy and nutritional aspect of our product [clearly indicating nutritional information]; increasing the points-of-sale through vending machines, as we may want to sell at school/college cafeterias or fests/concerts in addition to just movie theatres; creating an array of spicy Indian flavours/Jain options for dip [with/without egg], which might help us penetrate tier-2 markets in the future and integrating movie-cum-food combos in apps such as BookMyShow, and with Swiggy for home deliveries in non-multiplex use-cases.
Interviewer: Thanks, Abhishek. This was an actual case and I’m happy you thought about sales out of multiplexes as well. Thank you for your time.
Round II: Improve throughput at a health check-up centre
A manager at a health check-up centre has asked for ways to improve throughput. How would you advise him? [Hint: great starting points for the case are the Executive Shirt Company case in Operations Management at IIMB and the book, The Goal, by Eli Goldratt]
The interview began with HR questions such as introducing myself, mentioning that I was from Mumbai, and that I was a member of CulCom Spons and SMC. The interviewer asked me what I liked most about the McKinsey process and what contribution to the team I was particularly proud of at IIMB. He also asked me about a project on M&A in the pharmaceutical industry (between Sun Pharma and Ranbaxy) that I had conducted as an M&A(Tax) intern at KPMG in 2015. A plus was that the Partner worked in the pharmaceutical sector and could gauge my understanding of the sector, apart from the fact that the conversation was seen as an informal chat rather than a difficult interview)
Candidate: I’d first like to ask a few preliminary questions. Where is the health centre located? What does it do exactly? And what does the manager mean by throughput?
Interviewer: Patients visit the centre through referrals and get medical tests and reports as part of preventive diagnosis for diseases. Let’s say that since you’re from Mumbai, it is in Mumbai. What does throughput mean to you?
Candidate: Well, throughput might mean maximising output in terms of the number of tests we conduct or the number of patients we see per day.
Interviewer: Would you define It in monetary terms or in absolute numbers?
Candidate: I would look at the volumes, as that would be a driver of the revenues we make. Before proceeding, I would like to understand the entire process that a patient goes through to identify the bottleneck. Once we have identified the bottleneck, we must decide how we can exploit it to minimise idle time.
Interviewer: Good. Here’s the sequence of operations- registration, nurse check, blood test, urine test, ECG, X-ray and doctor check. Here is a list of the time/patient (in mins.) and the number of personnel required for each operation.
Candidate: OK, I will divide the time/patient by the number of personnel and the operation with the maximum ratio is the bottleneck. ECG, which takes 2.5 min per patient per personnel. We can further segment this into technical efficiency ((working hours of the machine) divided by (setup time plus processing time per ECG)) and human efficiency (working hours* % utilisation divided by time/ECG) to determine the number of ECG’s conducted per day.
Interviewer: The setup time is standardised at 1 min. However, the processing time can be reduced by 1 min.
Candidate: In that case, the number of ECG’s per hour would increase from 24/hr [(5 min./ECG) *(60 min./hr) *2 personnel] to 30/hr [(4 min./ECG) * (60 min./hr) *2 personnel], an increase of 25%. In that case, the bottleneck would shift and the X-ray and doctor check would also become bottlenecks.
Interviewer: Good. How would you improve throughput through all the 3 processes?
Candidate: To increase throughput, the burden must be taken off the bottleneck. We could check if the ECG test could be outsourced, if there could be parallel processing, if an assembly line method can be adopted for the doctor check (akin to the system at Aravind Eye Care) and the supply of doctors and machines could be increased, if we have enough cash or headroom to raise equity/debt financing. [After asking for further details on the ECG checks] We could also have the nurses follow a standard operating procedure where they prepare the patients in the queue for the ECG/X-ray so that the non-productive time before the start of the procedure is reduced.
Interviewer: All this is fine. But we could have also considered whether the ECG process can be done away with completely at the centre. Anyway, the other points were well covered. Thanks for your time.