You have been appointed the manager of a rental car company. How do you measure its efficiency?
This case question is a good candidate for the Value Chain approach.
- What are your expenses (cars, insurance, rental of car office, advertising)?
- What is your average rental time period? (On average how long is a car checked out?)
- How fast is a vehicle turned around (from drop-off to back on the line)? What is the industry average for this turnaround?
- What percentage of your fleet is down for repairs on average? How does this compare to the industry?
- What percentage of your employees call out sick every day on average? How does this compare to the industry?
- Does the business exhibit any seasonality (for example, are you located near a ski resort that sees business boom in the winter)? How do you account for these effects?
Another way to look at this question is to use a real-life "out-of-the-box" approach. Why not simply look out on the lot and see how many cars are rented out at any given time, and what kind they are - and do this over a period of time in different locations? This kind of real-world approach will win points with consultants, who actually have to drive around and look at parking lots at 4 a.m. (and other such hijinx) more often than they would probably like.
2. Our client has engaged us to assist them in reorganizing their sales force. They want to cut $50 million in costs from this area over the next two years.
This is an organizational change question. What is especially important here is to balance the financial realities of the situation against the organization impact of head count reduction, the introduction of new technologies, etc. Questions that would help focus this situation include:
- What is the primary business for this client?
- What is the timeline for the reorganization process?
- What is the early estimate of how many people could be involved?
- What is the scope of change? Does it include downsizing, the introduction of technologies, closing/selling-off of locations, reengineering business processes?
- What is the early assessment of the organizational climate for change? Are they receptive or resistive? What are the reasons for resistance if any?
- Can you describe any dynamics unique to this client's business that put the success of the project at risk?
- What are the major risk factors surrounding this project?
- What are the measurements of success for this project?
3. Your client is trying to decide whether or not to invest in a helicopter company. You have been asked to assess the long-term attractiveness of the helicopter market.
Since this case is primarily asking for an industry analysis (is this an attractive industry?), Porter's Five Forces is one framework useful in formulating your recommendation.
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