Future profit calculation question

Hello there,

You should consider that “benefit of colocation” as a 10% boost of the revenues of that specific office, if IT sources will be placed in the same country.

Since the business size of Australia is 800M$, you have to consider that as baseline to calculate your “benefit of colocation”. 

Your choice is to put 100% of your IT sources in Australia, that does not mean that 100% of your business will come from australia too (in other words you will still have 200M$ from Indonesia).

I hope that now it's  more clear, otherwise I think that Ian will be happy to help you further

Best,
Luca

Hi there,

First of all, congratulations on reviewing your cases so thoroughly!

This is indeed an interesting question which is probably relevant for quite a lot of users, so I am happy to provide my perspective on it:

• I would advise you to consider that “benefit of colocation” as a 10% revenue increase of that specific office in case IT will be placed in the same country.
• Moreover, since the business size of Australia is $800m, I would advise you to consider this business size as the baseline to calculate your “benefit of colocation”. 
• Lastly, I would advise you to think about that even if your choice is to put 100% of your IT sources in Australia, that does not mean that 100% will come from Australia either (i.e. you will still gain $200m from Indonesian business).

In case you want a more detailed discussion on how to best approach quantitative questions during case interviews, please feel free to contact me directly.

I hope this helps,

Hagen

Well, it appears Luca knows my case well :P

He's exactly right. Customers don't change when we move support functions. 

Especially in today's world, location of operations/business doesn't “matter” to top-line revenues. Here, we're purely focused on better serving the business from whichever location is optimal!

COuldn´t have said it any better than Luca!