BainCaseStudy贝恩案例分析.docx

BainCaseStudy贝恩案例分析.docx

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BainCaseStudy贝恩案例分析

OfficeVendingServicesInc.

Situation

OfficeVendingServicesInc.isagloballeaderinvendingmachinesservicesforsmallandlargebusinesses.

Theyprovideafullservicetotheirclients.Thisincludesinstallingmachinesatclientsite,refillsandrepair.

Theycollectrevenuesonlyfromsnacksalesandchoosethevarietyofproductstheysellintheirvendingmachinesthemselves.

Complication

Overthepastfewyears,theirprofitshavedroppedsignificantlyandtheCEOisunabletofigureoutwhy.

TheCEOasksBaintoidentifytherootcausesoftheproblemandproposeactionablesolutions.

Question1of11

Youwouldstarttotacklethisproblembylookingatwhichfactors:

Industrytrends

5-yearmarketvalueevolution

Fixedandvariablecosts

Revenuesandcosts

Competitors'actions

4.Revenueandcosts:

Notabadplacetostart.Abasicrevenueandcostsframeworkenablesyoutocoverallfactorsimpactingprofitabilityandquicklyidentifythedriversthatmatterbutitishelpfultofirsttounderstandtheindustrytrendstodetermineiftheproblemisabroadermarketissue

Bain'sanswer

UsinganExternal/Internalframeworkwillhelpusdeterminewhetherourclient'sprofitabilityproblemisindustry-wideoruniquetothem.Ifitisinternal,wewilllookatourclient'srevenuesandcoststoisolatetheproblem.

Ifitisexternal,wewillneedtoinvestigatethecauseoftheindustrydecline（consumertrends,substitutes,etc.）.

Itismorestraight-forwardtolookintoexternalfactorsfirst（Isthemarketandoverallprofitpoolgrowing?

Havetherebeennewrecententrantstothemarket?

）.Therefore,lookingatindustrytrendswouldbeourlikelyfirststep.

Question2of11

Toidentifyifthedecliningprofitabilityisaninternalissueofourclientorifitisanindustrytrend,John,thepartneronyourcase,asksyoutocontactourinformationdepartment,calledBainIS（InformationServices）.

Theyproposeseveralreportsthatmightbeofhelp.Theclientdoesnotwanttospendmorethan$3000forthisanalysis.

Pleaseselectthereportyouwanttopurchase.

IndustryReport#1

IndustryReport#2

CustomerInsights

AnalystReport

Bain'sanswer

Yourobjectiveistoidentifythedriverthatreallymatters.Youneedtoknowaboutthemarket:

∙Havetotalmarketsalesandtheoverallprofitpoolgoneupordowninrecentyears?

∙Howhavedifferentcompetitors'profitabilityevolvedoverthepastdecade—iseveryonefacingpricingpressureand/orincreasedcosts?

Theanalystreportincludesallthisinformation.

Question3of11

BasedoninfopurchasedbyIS,let'slookatthemarketprofittrendforsnacksalesfromvendingmachines.

Whatwouldbeyourfirstconclusionsbasedonthisinformation?

Bain'sanswer

Theprofittrendofthevendingmachinessalesispositive（5%）fortheoverallmarket.Therefore,theproblemofOfficeVendingServices'profitabilityisinternal.

Question4of11

Whatwouldthenextstepbetofindtherootcauseofourclient'sinternalprofitabilityproblem?

Bain'sanswer

Basicrevenueandcostframeworkenablesustocoverallfactorsimpactingprofitabilityandquicklyidentifythedriversthatmatter.Weneedtolookbothatrevenuesandcostsandthecomponentpartsofeach.

Question5of11

Atthisstage,theBainteamwouldlikelystarttoformits"answer-first"hypothesistoguideitsanalysisandhelpdrivetoarecommendationinthemostefficientmannerpossible.

YouandyourcolleagueSarah,aconsultantontheteam,headtoateamroomtowriteyourideasonawhiteboardbasedonyourearlyinsightsthatyouwillthensharewiththeteammanager.

Howwouldyousuggestlayingoutahypothesisatthispoint?

Bain'sanswer

Apotentialhypothesisatthispointmightbe:

OfficeVendingServices'declineinprofitabilityhasbeencausedbyinternalfactorsduetostagnatedrevenuegrowththathasn'tstayedinlinewithrisingfixedandvariablecosts.

Remember,anearlyhypothesisissimplyatooltohelpguideouranalysis,notafinalanswer.Itwillberevisedandfine-tunedaswelearnmoreinformation.

Question6of11

Givenourprofitabilityframeworkandinitialhypothesis,whatwouldbeyournextstepstoinvestigatefurtherandwhatquestionswouldyoulikeanswered?

Aselectionofpossiblequestionsisgivenbelow.Whichofthesearemostrelevantatthisstage?

Hastheclientlaunchednewproductsrecently?

Howhavecompetitors'profitsevolved?

Haveourclient'sindividualsnackpriceschangedrecently?

Hasthevolumeofoursnacksalesdeclined?

Hasourclientinvestedheavilyinnewequipmentrecentlyorhadanincreaseinoverhead?

Didthecostofgoodssoldincrease?

Didourclientreducehismarketingspend?

Bain'sanswer

Askingtherightquestionsupfrontwillallowtheteamtoquicklydeterminewhichofthefourpotentialdriversisresponsibleforourclient'sdeclineinprofitability.

Wehavelaidoutwhatweconsidertobethemostcriticalquestionsatthisstageundereachofthefourdriversofprofitability.Theinterviewers’responsesarebelow.

Yourquestioninghasidentified"quantity"tobethekeydriverofdecliningprofitability.Wecannowupdateourhypothesistoshowthatareductioninsnacksalesvolumefromvendingmachinesisdrivingthedeclineinrevenues.

Theteamgetstogethertodiscussthisearlyinsight.Suzanne,theteammanager,states:

"Sincetheindustry'sprofitpoolisgrowingandgrossmarginsareconstant,wecanconcludethattheoverallvendingmachinemarketisgrowing.Thismeansthatourclientmustbelosingsharetotheircompetitors.Ournextstepistofigureoutwhy."

Question7of11

Withquantityidentifiedasthekeydriverofprofitdecline,theclientagreestopayfortemporarystafftoperformmarketresearch.Basedontheirfindings,Sarah,aconsultantonyourteam,createdtheattachedslide.Nowweneedtounderstandhowourclientcomparestothecompetitionondeliveringonthecustomers'mostvaluedneeds.

Giventhemarketresearchpresentedinthisslide,whydoyouthinkourclient'svolumesaredropping?

Client'svolumesaredroppingbecauseof（youcanselectmorethanone）:

Overallmarketdecline

Productsofferedarenotmeetingcustomers'needs

Clientisnotofferingsufficientsnackvariety

Customersfindingsubstitutesinothermarkets（café,conveniencestore,newsagent,etc.）

VendingServicesInc.pricesaretoohigh

Customersaretemptedbycompetitors'modernmachines

Bain'sanswer

Throughourstructuredinvestigation,wehavequicklyestablisheddriversoftheclient'sfallingprofitability（seeimage）.

Conclusionsfromthemarketresearchshow:

∙Productsofferedarenotmeetingcustomerneeds（i.e.,toofewlow-fatoptions）

∙Althoughtheirindividualandaveragepriceshavenotchangedovertimeinternally,ourclient'ssnackpricesareperceivedasmuchhigherthancompetitors

Question8of11

Inordertosolvetheproblemandmakeanactionablerecommendation,weneedtounderstandthedriversofeachidentifiedproblem.

Howwouldyouanswerthefollowing?

∙Whydoyouthinktheclientisunderperformingonprice?

∙Whataretheimmediatenextstepsoranalysisneededtoidentifythesourceofthepricingproblem?

Bain'sanswer

TwofactorsaremostlikelytobeforcingOfficeVendingServicestomaintaintheirhigherprices:

∙Greaterproductvariety（addscomplexitytotheiroperationsanddoesn'tallowthemtoreachfullpurchasingscalefromsuppliers）

∙Modernmachinesarelikelytohavehigherleasingcosts

Thesetwofactorsputourclientatacostdisadvantagetothecompetition.

Thenextstepistounderstandhowourcoststructurescomparetothoseofourcompetitorsinordertofullyassessourcompetitiveperformance.

Question9of11

Acomparisonofourcoststructuretothatofourcompetitionconfirmsthatourclientisunabletocompeteonpriceduetostructurallyhighercosts.

Althoughtheclient'scostshavenotincreasedrecently,thoseoftheircompetitorsarelower.SuzanneasksyoutoinvestigatehowtoreducecoststoallowOfficeVendingServicesInc.topricetheirsnacksmorecompetitively.

Ben,anassociateconsultantontheteam,putstogetheradatarequesttotheclienttogetmoreinternalinformation.Theclientreturnsthefollowingexhibits.

Readthemcarefullytoextractallofthenecessaryinformation.

OneofthewaystoreduceOfficeVendingServices'costsistoreduceitsproductcomplexity.

Basedontheexhibits,wouldyoustopdistributinganyproducts?

Ifso,whichones?

1

2

3

4

5

6

7

8

Iwouldrecommendnotdroppinganyexistingproducts

Bain'sanswer

BasedontheinformationinExhibit1,onewaytomaximizesalesforceefficiencywouldbeto:

Keepproductsthatcurrentlymakeup~80%ofourclient'stotalprofitmargin

Wealsowanttobesuretheremainingproductswillhaveenoughlow-fatoptions,asthisisvaluedbycustomers.

Followingtheseguidelines,products2,7,and8couldbeexcluded

Question10of11

Supposeyoustopsellingproducts2,7and8.

Youdecidetoreallocatethevolume（12,000units）toeithervendor1,orvendor4,oranewvendor9whohaveproposedthefollowing:

Vendor/Product1

20%discountonhistoricalvolumesand25%discountonincrementalvolumesoftheirproduct

Vendor/Product4

20%discountonallvolumesofproduct4andwillsubsidizepartoftheclient'sadminstaff（equivalentto1FTE）inchargeoftheproductordersprocessing

Vendor/Product9

Anewvendorhasafat-freeproductwithCOGSof$2.Whilethereisnoproductdiscount,theirmodernprocurementsystemwillallowourclienttoreduceitsadminstaffby2FTE.

RememberfromExhi