【2023 MBB Casebook红宝书】之McKinsey Latest case合辑(附官方满分回答)
【2023 MBB Casebook红宝书】之McKinsey Latest case合辑(附官方满分回答)
【2023 MBB Casebook红宝书】之McKinsey Latest case合辑(附官方满分回答)
Client goal
The Gates Foundation is a private organization with vast ambitions; one of its goals is to
reduce extreme poverty worldwide. The foundation asked McKinsey to design a basic
financial-services offering for inhabitants of remote communities in Mexico.
Description of situation
The majority of Mexico’s rural inhabitants are relatively poor, relying in part on government
benefits for their livelihood. As they tend not to have bank accounts, they usually collect
government benefits in cash from a limited number of state-bank branches. These branches
are often a long way from where the recipients live, so it can take a lot of time and effort for
them to collect their benefits. In addition, traveling to the branches can sometimes expose
benefit recipients to crime along the way.
The Mexican government also owns and operates a chain of 22,000 stores, throughout
Mexico, called Diconsa, which provide basic food, clothes, and other essential goods to the
rural population. These stores are supplied via a network of central and regional warehouses
and several thousand delivery trucks.
McKinsey study
McKinsey has been asked to investigate and assess the possibility of using the Diconsa
network to provide a basic set of financial services to supplement the limited number of
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state-bank branches. The offer would start with dispensing government-benefit payments
and move progressively to include savings accounts, bill payment, insurance, credit, and
other financial products.
Helpful hints
Question 1:
What should the team investigate to determine whether the Diconsa network could and
population?
Helpful hints
Take time to organize your thoughts before answering. This will help show your
interviewer that you have a logical approach and can think in an organized way,
regardless of the “accuracy” of the outcome.
Develop an overall approach before diving into details.
Reveal Answer
Some of the factors you might discuss with your interviewer could include
Benefits for the Mexican rural population. How much time, effort, and expense would
the benefit recipient save through the Diconsa network (for example, through shorter travel
time)? Beyond what was stated in the summary, what would be the benefits to the rural
population of access to a broader range of financial services? (for example, better security for
their money)?
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Benefits for the government, state bank, and Diconsa network. Would there be
benefits for the government in terms of increased compliance/collection of benefits (for
example lower administration costs)? Would these financial services result in better financial
management among the rural population (for example, more business for Diconsa stores)?
Would this alternative model reduce pressure and increase efficiency for the bank branches
that are currently distributing benefit payments?
Risks that could occur from the venture. Does the Diconsa network have the capacity
or ability to deal with financial payments and products? Does the state bank have the
capacity to operate financial services across a much greater network of outlets? Is there a
greater risk of fraud of theft due to less centralized control of benefit payments?
Question 2:
The team has estimated that it currently costs a family 50 pesos per month in transportation
and food to make the journey to collect their benefit payments. The team also estimates that
if benefits were available for collection at local Diconsa stores, the cost would be reduced by
30 percent.
Twenty percent of Mexico’s population is rural, and of this number half currently receive
state benefits.
You can also assume that families in Mexico have four members, on average, and that this
does not differ by region.
If all families could receive state benefits at their local Diconsa stores, how much in total per
year would be saved across all Mexican rural families receiving state benefits?
Helpful hints
Remember that calculators are not allowed - you may wish to write out your calculations
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Talk your interviewer through your steps so that you can demonstrate an organized
approach; the more you talk the easier it will be for your interviewer to help you.
Reveal Answer
A possible approach to discuss with your interviewer could be
There are 5 million families in rural Mexico (20% x 100m ÷ 4 per family)
There are 2.5 million families receiving benefits (50% x 5 million families)
Each family currently spends 600 pesos per year to receive their benefits (50 pesos per
month x 12 months)
In total 1.5 billion pesos per year is spent by families in receiving their benefits (600
pesos x 2.5 million families)
Question 3:
The team conducted a survey on a sample of the rural population in three different regions of
Mexico. These populations were given a number of statements about the concept of collecting
their benefits at the nearest Diconsa store and asked how much they agreed with each
statement. The average response to some of the questions by region is shown below:
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What are your observations about this information, and how would you explain these trends?
Helpful hints
Take some time to look at the information and note down any observations you have.
Challenge yourself to identify trends that are not immediately obvious in the data.
Reveal Answer
Some of the observations you might discuss with your interviewer could include
There are significant differences by region on how interested people are in collecting
their benefits at their nearest Diconsa.
All people have a security concern about collecting their benefits at a Diconsa, but this is
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particularly the case in Region B.
People are not so concerned about whether they will receive their benefits, except in
Region B.
Not everyone is completely convinced that it will cost them less to collect benefits from
their nearest Diconsa, despite the fact that they all agree it will save them time.
Broadly speaking, security, trust and cost effectiveness all seem to influence whether
someone is interested in collecting their benefits at a Diconsa. People’s perception of
these seem to differ by region, with Region B being a particular issue. One potential
explanation for the results of Region B is that this region has significantly greater levels
of crime and corruption, which means that people are less convinced that they will
receive their benefits or that they can keep them secure once received.
Question 4:
In a meeting with representatives of the state bank, they express concern about how
challenging it will be to offer basic financial products to the rural population.
One of the representatives mentions that these are regions where people are poorly educated
and unfamiliar with banking products, and where there is a high degree of crime and fraud.
He asks for the team’s thoughts about how the bank could sell these services effectively to
this population given the challenges.
Helpful hint
Consider the issues raised in the question, and group your thoughts around them. This
will ensure that you are giving the most relevant answers.
Reveal Answer
Some of the thoughts you might discuss with your interviewer could include
Suggestions for how to overcome the lack of education and familiarity with banking products,
for example:
Pilot some products in certain regions where the population might be more receptive, so
that less receptive people can see that they are already being used by others in similar
situations.
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Arrange in-store talks and demonstrations, focusing on educating people on what the
products are and how they can be used, and dispelling common causes of distrust.
Partner with brands or organizations that are already well known and trusted by the rural
poor.
Advertise using individuals who have benefited from similar products, for example,
people who have made successful insurance claims, or who managed to save money for a
specific need.
Offer promotions to encourage initial take-up, for example, pay 50 pesos when the first
savings deposit is made.
Introduce technology such as chip cards to reduce fraudulent activity and to discourage
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Client goal
Our client is SuperSoda. SuperSoda is a top-three beverage producer in the United States and
has approached McKinsey for help in designing a product-launch strategy.
Description of situation
As an integrated beverage company, SuperSoda leads its own brand design, marketing, and
sales efforts. In addition, the company owns the entire beverage supply chain, including
production of concentrates, bottling and packaging, and distribution to retail
outlets. SuperSoda has a considerable number of brands across carbonated and
non-carbonated drinks, five large bottling plants throughout the country, and distribution
agreements with most major retailers.
McKinsey study
SuperSoda’s vice president of marketing has asked McKinsey to help analyze the major
factors surrounding the launch of Electro-Light and its own internal capabilities to support
the effort.
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Helpful hints
Write down important information.
Feel free to ask the interviewer for an explanation of any point that is not clear to you.
Question 1:
What key factors should SuperSoda consider in deciding whether or not to
launch Electro-Light?
Helpful hints
Take time to organize your thoughts before answering. This tells the interviewer that you
think about the problem in a logical way.
Develop overall approach before diving into details.
Reveal Answer
Some of the factors you might discuss with your interviewer could include
Consumers. Who drinks sports drinks? Are there specific market segments to
address?
Cost/price. Is the sports drinks market more profitable than those markets
for SuperSoda’s current products? Is it possible to profitably sell (at a price set by the
market and internal production costs) Electro-Light? Given the fixed costs involved, what
would be the break-even point for Electro-Light?
Capabilities and capacity. Are the required marketing and sales capabilities
available within SuperSoda? Does the product require specialized production, packaging,
or distribution? Is it possible to accommodate Electro-Light in the current production
and distribution facilities? What impact does geography have on the plant selection?
Channels. What is the ideal distribution channel for this product? Are current retail
outlets willing to add Electro-Light to their product catalog?
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Question 2:
After reviewing the key factors SuperSoda should consider in deciding whether to
launch Electro-Light, your team wants to understand the beverage market and consumer
preferences to gauge potential success of Electro-Light.
Your team has gathered the following information on the US sports-drink market. The
information shows an estimate for the share of electrolyte drinks, as well as the current share
for the two main electrolyte products: CoolSweat and RecoverPlus.
Based on the target price and up-front fixed costs, what share of the electrolyte drink market
would Electro-Light need to capture in order to break even? Here is some additional
information for you to consider as you form your response:
Helpful hints
Don’t feel rushed into performing calculations. Take your time.
Remember that calculators are not allowed - you may wish to write out your calculations
on paper during the interviews.
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Talk your interviewer through your steps so that you can demonstrate an organized
approach; the more you talk the easier it will be for your interviewer to help you.
Reveal Answer
A possible approach to discuss with your interviewer could be:
Electro-Light would need to capture a 12.5 percent market share of electrolyte drinks in order
to break even. Therefore, Electro-Light would need to be the number-two product in the
market:
1. Electro-Light would need to sell 400 million units in order to break even:
Variable profit per unit = $2.00 – $1.90 = $0.10
Break even units = Total fixed costs/Variable profit per unit = $40 million/$0.10 per unit =
400 million units
Question 3:
SuperSoda executives believe that the company's position as a top three beverage company
gives them strategic strengths toward achieving the desired market share. However, they ask
the team to outline what would be needed to achieve the target of 12.5 percent share of the
electrolyte-drinks market. What would SuperSoda need to do to gain the required market
share for Electro-Light following its launch?
Helpful hint
Consider the issues raised in the question, and group your thoughts around them. This
will ensure that you are giving the most relevant answers.
Reveal Answer
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Some of the ideas you might discuss with your interviewer could include
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Client goal
Loravia is a fictional country located in Eastern Europe with a population of 20 million. The
government of Loravia wants to achieve major improvements in both the quantity and
quality of education for its children. Because McKinsey has great deal of global knowledge
and expertise in the education sector, the Loravian Department of Education has asked
McKinsey to provide advice on how they can achieve this transformation in its school system.
Description of situation
Loravia’s free-market economy is still developing, having emerged from many decades under
communism. Recently, the government of Loravia put in place a new economic plan, with
aspirations to transform its economy and “turbocharge” its development so that it is well
positioned to compete with its European neighbors. The government of Loravia realizes that
the education of its children is a critical factor in meeting its economic-development goals. It
intends to transform its school system over the next 10 years so that it is able to support its
economic aspirations.
The first stage of this effort is to diagnose the current state of education in schools in Loravia
to determine how best to meet the government’s future aspirations.
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McKinsey study
McKinsey has been asked to support the Loravian Department of Education in diagnosing
the condition of its current school system, and in identifying the most important areas for
improvement.
Helpful hints
Write down important information.
Feel free to ask the interviewer for an explanation of any point that is not clear to you.
Question 1:
What are the issues you would want to investigate in diagnosing the condition of the current
school system in Loravia?
Helpful hints
Take time to organize your thoughts before answering. This tells the interviewer that you
think about the problem in a logical way.
Develop overall approach before diving into details.
Reveal Answer
Some of the factors you might discuss with your interviewer could include
Question 2:
The chart below shows some important education-related measures for Loravia, and also for
some comparison countries. Three sets of comparison countries have been used. In the first
set are some of Loravia’s neighboring countries in Eastern Europe. In the second set are
some of the most developed economies in Europe. Finally, in the third set are some countries
that have similar sized economies to Loravia on a per person basis (similar GDP per capita).
Helpful hints
Take some time to look at the information and note any observations you have.
Challenge yourself to identify trends that are not immediately obvious within the data.
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Reveal Answer
Some of the observations you might discuss with your interviewer could include
Loravia spends a higher amount on education and also has a lower student/teacher ratio
compared to the majority of its neighbors and its economic peers.
Despite both of the above, Loravia has one of the lowest international assessment scores.
Broadly, there seems to be no direct relationship between student to teacher ratio and
education outcome as measured by the international assessment.
Developed countries clearly spend more per student on education and have better
outcomes as measured by the international assessment. However, among Loravia’s peers
and neighbors there is no clear relationship between spending and education outcomes.
While student/teacher ratios and per student funding are levers that could be considered
important in improving education quality, the data here indicates that these may not in
themselves provide the necessary improvement. Issues such as teacher quality and
curriculum content should be investigated.
Question 3:
One of the clients at the Loravian Department of Education mentions the example of
neighbor country C, which outperforms all of Loravia's economic peers and neighbors in the
international assessment. She believes that the more concentrated school structure in this
country is a big reason for its better outcomes in the international assessment. She suggests
that having larger, less fragmented schools allows for more effective selection and training of
teachers, leading to improved education outcomes for the students. Finally, she shares that
15 percent of Loravia's population are currently attending school.
What would be the reduction in the total number of schools in Loravia if it were to reach the
same average school size as neighbor country C?
Helpful hints
Don't feel rushed into performing calculations. Take your time.
Talk your interviewer through your steps so that you can demonstrate an organized
approach.
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Reveal Answer
A possible approach to discuss with your interviewer could be:
There are currently 6,000 schools across Loravia (=3 million school children
Assuming the same school size as neighbor C would give 3,750 schools
across Loravia.
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Client goal
Our client is Talbot Trucks. Talbot Trucks has approached McKinsey for help in assessing the
feasibility of manufacturing electric trucks to reduce their fleets carbon footprint.
Description of situation
Talbot Trucks is a European-based private original truck equipment manufacturer. They
produce and sell trucks across the world. Talbot Trucks is considered a leader in quality
manufacturing. Its primary customer base includes large trucking companies, that own
thousands of trucks and owner-operators who are smaller customers owning fewer trucks.
Trucks are mainly powered by diesel engines today and require carbon-based petroleum fuel.
Talbot Trucks is interested in exploring ways to reduce the carbon footprint of their vehicles
and has specifically asked about electric trucks (eTrucks).
eTrucks and diesel trucks differ in their design (e-motor and batteries vs. combustion engine)
and also in the way they are fueled (comparably slow charging vs. quick refilling with diesel
fuel at gas stations). The introduction of this new technology is disruptive for the
manufacturers as well as their customers, both large and small.
McKinsey study
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The CEO of Talbot Trucks has approached McKinsey to help determine the attractiveness of
an investment in eTruck manufacturing for its European market.
Helpful hints
Feel free to ask the interviewer for an explanation of any point that is not clear to you.
Question 1:
What information would you want to collect in order to understand the attractiveness for
Talbot Trucks to produce and sell electric trucks in Europe?
Helpful hints
Take time to organize your thoughts before answering. This will help show your
interviewer that you have a logical approach and can think in an organized way,
regardless of the “accuracy” of the outcome.
Develop an overall approach before diving into details.
Reveal Answer
Some of the information you might discuss with your interviewer could include
Market. What are important differences between large and small truck customers (e.g.,
price, features, reliability, volume)? Which geographies in Europe are most receptive to
electric trucks (e.g., environmentally conscious population, or ones with an environmental
political agenda)? How will customers perceive Talbot Trucks' eTrucks vs. existing
competitors or new entrants? What are potential substitutes (e.g., rail)?
Financials. Are there different market segments (use cases) for e-trucks? How does
revenue potential expected in different segments?
Risks. How much experience has Talbot Trucks with eTrucks? Will they be able to
produce a reliable product in a cost efficient way? What will happen to sales of current Talbot
Trucks models? Will legislation force a move towards eTrucks? If so, what are the risks
associated with actively addressing the issue instead of waiting it out?
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Question 2:
The team set out to investigate the major cost drivers for buying and operating one diesel
truck, an analysis commonly called the Total Cost of Ownership (TCO). You were provided
with the following information comparing the TCO for a diesel truck and for an eTruck:
Driver: A driver costs ~3,000 EUR per month. There is a significant shortage of
drivers in the market.
Depreciation: Diesel trucks costs 100k EUR. The typical lifetime is four years.
Residual value (i.e., the value at which you can resell the truck) is assumed at 0 EUR.
Fuel: A heavy duty diesel truck consumes around 30 liter diesel/100 km. Diesel price
is 1 EUR/liter.
Maintenance: As a rule of thumb maintenance per truck are ~5,000 EUR/year for a
diesel truck.
Other (includes tolls, insurances, taxes): 10,000 EUR/year.
Using the data, what can you infer about the differences in the TCO for diesel vs.
etrucks?
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Helpful hints
Take some time to look at the information and note down any observations you have.
Challenge yourself to identify trends that are not immediately obvious in the data.
Reveal Answer
Some of the differences you might discuss with your interviewer could include
Fuel and depreciation account for ~80% of the costs of an eTruck (see bar on the left), and
therefore are the key drivers for buying an eTrucks
eTrucks have a significant advantage over diesel trucks in costs per km. Therefore,
eTrucks get more and more attractive the more distance they cover per year.
Depreciation may vary meaningfully for eTrucks as well, as presumably eTruck prices
will be more expensive given the newer technology.
Other costs are much lower for eTrucks, suggesting there may be tax breaks or other
financial incentives keeping these costs lower.
Question 3:
After conducting focus groups with Talbot Truck customers, the team concluded that the
total cost of an eTruck needs to be the same as a diesel truck to be considered attractive by
customers. Currently a Talbot Truck diesel truck cost 100k EUR.
Assuming the figures above do not change, what is the maximum price Talbot Trucks can
charge for their eTruck, so that the total cost of ownership is equal to that of diesel trucks?
Helpful hints
Don’t feel rushed into performing calculations. Take your time.
Remember that calculators are not allowed - you may wish to write out your calculations
on paper during the interviews.
Talk your interviewer through your steps so that you can demonstrate an organized
approach; the more you talk the easier it will be for your interviewer to help you.
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Reveal Answer
A possible approach to discuss with your interviewer could be
This sums up to 106,000 EUR total annual cost of ownership for a diesel Truck
4 of 5 components of an eTruck annual TCO are:
This sums up to 59,000 EUR with the depreciation component still missing
If the annual TCO for an eTruck is equal to the annual TCO of a diesel truck (106,000 EUR),
then annual depreciation for the eTruck is 47,000 EUR (106,000 EUR – 59,000 EUR)
Therefore, the full lifetime cost for a eTruck is 188,000 EUR (47,000 x 4 years); the
maximum price for an eTruck would be €188,000.
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Client goal
Our client is Shops Corporation. Shops Corporation approached McKinsey for help to
improve diversity, equity and inclusion within their company.
Description of situation
Shops Corporation, is a US-based retail company that is committed to ensuring that its own
employees—especially those at their corporate headquarters—represent its customers. The
majority of Shops Corporation’s customers are women, while only about a quarter of their
executive team is women. The CEO has shared the following with your team
Companies in the top-quartile for gender diversity on executive teams are more likely to
outperform on profitability.
Companies in the top-quartile for ethnic/cultural diversity on executive teams are more likely to
have industry-leading profitability.
For these and other reasons, Shops Corporation would like to improve diversity, equity, and
inclusion throughout their organization. In particular, they are dedicated to enhancing the
representation of women and other minority employees within senior leadership.
McKinsey study
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Shops Corporation has recently created full-time, director-level roles to lead a number of
inclusive affinity groups and has engaged McKinsey to help Shops Corporation with their
diversity and inclusion goals.
Helpful hints
Write down important information.
Feel free to ask the interviewer for an explanation of any point that is not clear to you.
Question 1:
What types of factors would you want to explore to understand how Shops Corporation might
improve its diversity within senior leadership?
Helpful hints
Take time to organize your thoughts before answering. This will help show your interviewer that you
have a logical approach and can think in an organized way, regardless of the “accuracy” of the
outcome.
Develop an overall approach before diving into details.
Reveal Answer
Some of the factors you might discuss with your interviewer could include
Hiring. Where does Shops Corporation hire from and how diverse are these candidates?
How is personnel selected? Are there processes in place to foster a fair view on diverse
profiles (e.g., unconscious bias trainings)?
Planning. What are target levels for diversity groups? Which area of an employee
journey is the biggest roadblock (e.g., if retention is very low, then hiring entry level
employees is much less likely to have an impact on senior leadership diversity)?
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Goal setting. How good is Shops Corporation in communicating their diversity goals
and uniting the employees behind a common goal. How do diversity goals align with other
company priorities, (e.g., if the company also undergoes great change in other areas,
employees capacity to address this challenge might be limited)?
Question 2:
One of the things the joint team of Shops Corporation and Mckinsey has been working on is
what they are calling a Talent Pipeline. The pipeline displays the career progression for
women and their representation across the following 4 levels. From most junior to most
senior, they are:
Professional: this includes entry level hires and support staff (e.g., executive assistants).
Manager: slightly more senior professionals (e.g., hires after business school) and select support
managers.
Director: vast majority are aligned to revenue generating functions; at this level, individuals
typically manage teams.
Executive: business unit leaders, executive team, etc. managing tens to hundreds of people.
The pipeline shows the proportions for hiring, attrition (proportion of people in that group
that left Shops Corporation), and promotion.
Exhibit
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What can be possible explanations for the challenges that Shop Corporation faces in
achieving and maintaining higher rates of women executives according to this data?
Helpful hints
Take some time to look at the information and note down any observations you have.
Challenge yourself to identify trends that are not immediately obvious in the data.
Reveal Answer
Some of the explanations you might discuss with your interviewer could include
Women are not prematurely leaving the workforce compared to men. Even at the
most senior levels women are motivated to stay, even slightly more than men. Perhaps there
is sufficient connectivity at each level to stay, but not between levels to create opportunities
for women
Hiring at junior levels is not really the problem; however, senior level hires are
predominantly men. Entry level and middle management hires are roughly even between
women and men. Yet, it might be more difficult to hire senior women, perhaps because other
organizations are facing similar challenges and the pool of senior women is small.
Question 3:
Shops Corporation is considering hiring more women as managers from external sources to
increase its proportion of women executives. They have a goal of reaching 40% women
executives in the next 10 years. To understand the impact, the team has gathered the
following information:
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The total number of executives today is 300, and is expected to stay the same over the next ten
years
Over the next five years, the team projects that two-thirds of these hired Managers will become
Directors; Over the subsequent five years, one-third of those Directors will become Executives
Over the next ten years, assume a total of 50 percent of these hired Managers will leave
Everything else stays the same (i.e., existing women employees move through the pipeline at the
same rates as they do today)
As a reminder, 25 percent of Executives are women today
How many additional female managers would need to be hired next year to reach Shops
Corporation’s goal of 40% executives in the following 10 years?
Helpful hints
Don’t feel rushed into performing calculations. Take your time.
Remember that calculators are not allowed, you may wish to write out your calculations on paper
during the interviews.
Talk your interviewer through your steps so that you can demonstrate an organized approach; the
more you talk the easier it will be for your interviewer to help you.
Reveal Answer
A possible approach to discuss with your interviewer could be:
(Target share - Current share) * total number of executives = (40% - 25%) * 300 = 15% * 300 = 45
additional women executives
Shop Corporation will need X new hires today. We assume these will transition along the talent
funnel:
X * (Manager to Director rate) * (Director to Executive rate) * (retention rate) will lead to 45
additional women executives
X * (1/3) * (2/3) * (1-50%) = 45
X = 405
Thus, shops corporation would need to hire 405 additional managers today to achieve its
target.
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Client goal
Description of situation
The degradation of nature is a major cause of the twin global climate and biodiversity crises.
That is why McKinsey & Company commits pro bono resources to nature conservation
worldwide.
Our client CF was formed in 2011, at the start of the United Nation’s Decade on Biodiversity.
CF aims to permanently conserve large areas of land and ocean over the next decade. The
land use planning in these natural areas will be conducted in such a way that it considers
biodiversity outcomes as a priority. This will require restoring natural habitats and
ecosystems.
Biodiversity, or the variety of life on Earth at the genetic, species, or ecosystem level, has
enormous intrinsic value, but is also essential for human well-being and our economies. It
provides essential ‘ecosystem services’ such as clean air, food security, and fresh water.
Investments in biodiversity can therefore contribute directly to poverty reduction and
sustainable development.
But biodiversity is in severe decline, putting both its intrinsic value and its ecosystem services
to Indigenous People, local communities, and economies worldwide at risk.
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Large conservation projects of the scale required to reverse this loss entail significant
up-front financing, complex legal frameworks, and extensive coordination among all parties
involved (civil society, government, NGOs, donors).
Due to the complexity and magnitude of these projects, conservation efforts must be selected
carefully early on. CF has shortlisted three candidate geographies: the coastal areas of Peru,
the steppe grasslands of Ukraine, and the mountain forests of Uganda.
McKinsey study
As part of a pro-bono study, McKinsey has offered to help CF prioritize the geographies and
activities where they should focus on.
Helts
Write down important information.
Feel free to ask the interviewer for an explanation of any point that is not clear to you.
Remember that calculators are not allowed - you may write out your calculations on
paper during the interviews.
Question 1:
What factors could the team consider when deciding which of the three specific
Helpful hints
Take time to organize your thoughts before answering. This will help show your
interviewer that you have a logical approach and can think in an organized way,
regardless of the “accuracy” of the outcome.
Develop an overall approach before diving into details.
Reveal Answer
Some of the information you might discuss with your interviewer could include:
Local economic development. What are the benefits to residents? What areas
have potential for self-sufficient community development and job creation, such as
ecotourism or small-scale sustainable fisheries?
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Biodiversity gains. Are there endangered species or ecosystems in the region?
Would protecting specific areas join other already-protected areas e.g., reduce
fragmentation to create a large-scale habitat for wildlife?
Climate impact. Which ecosystems could sequester and avoid releasing the most
amount of carbon?
Costs. What are the opportunity costs of alternative developments for the area? What
are initial one-time costs and ongoing operational costs for setting up and maintaining the
protected area (e.g., land acquisitions, infrastructure development).
Other risks. What are the risks associated with working in that area? How could
these reduce the feasibility and likelihood of success of a project? Potential sources of risk
could be political (e.g., war-torn area, high levels of corruption, government instability, low
political support for conservation), financial (e.g., low availability of public and private
funding sources for conservation) or operational (e.g., no local CF partners on the ground
for implementation, limited community support for existing conservation efforts).
Question 2:
The team of CF and McKinsey has preliminarily decided to focus their efforts on protecting
the coastal areas of Peru. The coastal vegetation serves as critical habitats for multiple species,
protects shorelines, and sequesters carbon at significant levels.
The coastline is also beautiful and relatively unspoiled, making ecotourism an interesting
opportunity. Ecotourism is different from other kinds of tourism in that it is designed to
attract visitors who want to experience a natural environment with the assurance that the
visit will not damage ecosystems or biodiversity.
There are currently five communities that have suitable tourism infrastructure and each one
welcomes 100,000 visitors each year. With the protection of the area and the set-up of
ecotourism infrastructure to welcome visitors, the team estimates the following:
Annual visitors to the main coastal villages will grow by 20% over the next five years
Average length of stay in the local communities will double from two to four days
The average amount visitors will spend in the communities is not expected to change and
will remain at $100 USD / day / person
How much additional revenue will come from ecotourism in these five communities five
years from now?
Helpful hints
Do not feel rushed into performing calculations. Take your time.
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Talk your interviewer through your steps so that you can demonstrate an organized
approach.
Reveal Answer
A possible approach to discuss with your interviewer could be
The annual revenue from these visitors is $100 M USD (500,000 visitors x 2 days x $100
dollars/person/day).
Visitors will grow to 600,000 in the next 5 years (500,000 visitors x 120%).
The new annual revenue from the increase in visitors and length of stay will be $240 M
USD (600,000 visitors x 4 days x $100 dollars/person/day).
The additional revenue from ecotourism is therefore $140 M USD ($240 M USD total
revenue – $100 M USD original revenue).
Question 3:
The director of CF likes the initial projections but is not convinced that the assumptions are
realistic. They tell the team, “According to your model, there are three levers to focus on to
generate revenue from ecotourism in Peru: number of visitors, length of stay, and amount of
spending. What are your best ideas for how to maximize each lever? And, how about some
ideas outside of the constraints of the model?”
Your team is meeting in 10 minutes to generate ideas in preparation for a workshop with
leaders from several coastal communities and you start jotting down some notes.
What ideas do you have to generate revenue linked to ecotourism?
Helpful hint
Consider the issues raised in the question, and group your thoughts around them. This
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will ensure that you are giving the most relevant answers.
Reveal Answer
Some of the ideas you might discuss with your interviewer could include:
Ideas to lengthen stays. Provide package deals to incentivize longer stays (e.g., 5 days,
4 night, meals included) organized between local communities and travel agencies to
encourage week-long stays, run promotions to visit all 5 villages.
Ideas to encourage visitors to spend more per visit. Focus on experience tourism
(e.g., local cooking classes using sustainably-harvested products, educational tours of the
coastal mangroves and the coral restoration projects), provide even more
memorable/exclusive experiences (e.g., interaction with wildlife/rare fauna, diving,
surfing), ask for donations.
Ideas to increase the number of visitors. Advertise in places where visitors can
easily travel from (e.g., nearby South American countries), run promotions during low
season.
Other ideas. Offer sponsorships for specific areas and provide regular updates for
sponsors on their development across the years, create different offerings that are
relevant year-round to avoid large seasonal variations in revenue (e.g., export of
value-added products such as crafts or local foods).
Question 4:
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Looking at this information, which communities in Peru should CF prioritize for the pilot and
why?
Helpful hints
Take some time to look at the information and note down any observations you have.
Challenge yourself to identify trends that are not immediately obvious in the data.
If you need to, ask your interviewer some clarifying questions.
Reveal Answer
Some of the ideas you might discuss with your interviewer could include:
Communities with the greatest expected increase in visitors (y axis) are likely to require
more urgent investments to support tourism demands and prevent collapse and
environmental degradation
Communities with the highest return on investment (x axis) are expected to capture more
value per dollar invested, making better use of CF resources
One way to prioritize communities is to look for those with both the expectation of more
visitors and healthy return-on-investment. Those are B and G. While their population is
slightly smaller than C, F and I, the returns seems to be anywhere from two to three times
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higher. For example, F is a large community whose number of visitors are expected to
double in size and the return is expected to be 6%. In contrast, visitors in B are growing
at 120% and the return is greater than 13%. Over time, B would be a better investment.
That said, investing in larger communities (such as C and F) will result in more people
being positively impacted
Finally, feasibility could play a role in the prioritization decision (e.g., communities in
proximity to other prioritized communities would allow for bundled interventions,
spreading out investment costs, impacting more people, and accelerating overall
implementation)
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