How to structure this case?

Question

Hello,

I recently had a case during an interview and didn't knew how to structure it in a good MECE manner.
Here is the prompt: " Our client is a postal company operating in Europe. Their costs are increasing and they want us to focus on the costs of their headquarters (focus only on headquarters). Why are their cost increasing and how to decrease them?

Thank you for your help !

Answer 1

My approach would be:

1. Identify which costs are increasing

2. Understand why they are increasing

3. Define strategies to reduce costs

1. Which costs are increasing?

Let's consider major cost categories and understand how they have been evolving throughout time.

A. Fixed Costs (Structural, long-term costs)

Office Space & Rent: Are real estate prices increasing? Is the company leasing excess office space?
Utilities & Maintenance: Rising energy prices? Inefficiencies in heating/cooling?
IT Infrastructure & Software: Higher costs for tech infrastructure, licenses, cybersecurity?
Depreciation & Capital Expenditures: Large investments in HQ facilities or equipment?

B. Variable Costs (People, operations)

Salaries & Benefits: Is there an increase in hiring, salary adjustments, or benefits costs?
Consulting & Professional Services: More external consultants or outsourced projects?
Administrative Expenses: Travel, events, office supplies—are they being optimized?
Technology & Digital Transformation: Investment in digital initiatives that are not yet optimized?
Regulatory & Compliance Costs: New regulations leading to higher legal/compliance expenses?

[An alternative solution would ignore the fixed vs. variable breakdown and just consider major cost categories: Fixed Assets related costs (rent, maintenance, etc.), People (breaking down per function, for example): wages, benefits), Utilities and Administrative (energy, travel, communications, etc.), strategic initiatives (consultants, technology, ...) and other external acquisitions (vehicles, supplies, etc.)]

2. Why are costs increasing?

This will depend on the specific cost driver increasing, but at a high level this can work as a structure

Internal Factors: Internal factors (increased internal demand e.g. driven by higher sales; new investment; internal decision)
External factors: benchmark competition, benchmark companies in similar location, analyze industry supply costs per cost category

3. Define strategies to reduce costs!

This part will likely need to be reviewed once we know which cost is increasing and why.

Optimize identified cost driver: if possible, reverse an internal decision or find ways to mitigate cost increase
Identify alternative savings opportunities: if necessary find savings and optimization opportunities in other cost categories.

Answer 2

Hi there!

Giving you the answer won’t help you with future problems, so let’s think together about it! :)

Your goal here is to find the root cause of the problem and just after that, evaluate solutions to the cause.

The first thing to so is to define better the scope, for that, clarification questions come in hand:

1. What comprises HQ operations/costs? (You should give your own ideas of that they would be before the interviewer respond)

2. By how much have costs increased?

3. Since when?

4. Does the client has a target for costs?

5. Does the client has a deadline to achieve this target/ to improve costs?

Now that you have the scope more defined, think about the structure as if it was the organization of a team/sector, where each team would investigate a particular part of the problem, hence, no overlaps allowed. OR, think it as if each bucket of the structure is like a lab exam, that a doctor asked you in order to investigate a particular problem based on different illnesses’ hypothesis. Or, think about your own hypothesis and see if you can group them in a structure without overlaps (bottom up approach).

Tell me if the above instruction help you figuring it out and how you would structure the problem differently if using this approach. Fell free to DM me!

Best,

Mari

Answer 3

Hey there.

I would propose something like this.

1. Context on the industry

a. Overall growth (in volume and revenue)

b. Competitors and our market share evolution

c. Regulatory changes

2. Context on our company

a. Major developments, e.g. shifts in strategy / product offerings / new markets etc.

b. Evolution of revenue and volume (by product / market)

c. Financial objectives and cost objectives

d. Changes in cost allocation / organization

3. Headquarter cost - status-quo

a. Breakdown of cost (IT, HR, Finance, Accounting, Facilities, Procurement, Legal, etc.) and evolution over time

b. Key cost drivers for key cost elements (e.g. for IT: # of new products, volume, # of markets, R&D initiatives, ...)

4. Headquarter cost - action plan

a. Key drivers for large cost elements (e.g., regulatory changes driving legal fees)

b. Assessment of profitability of underlying decision

c. Action plan (what to change, what to stop, what to continue)

d. Risks & mitigation

Hope that helps.

Happy to chat.

Cheers,

Andreas

Answer 4

Hi Louis,

I would be happy to share my thoughts on your question:

First of all, can you please provide a proposal that I can review? There is no point in coaches presenting their approaches when it is you who is currently preparing for the interviews and wants to learn how to do it.
Moreover, generally speaking, I would advise you to structure your approach around the two questions asked.

You can find more on this topic here: How to succeed in the final interview round

If you would like a more detailed discussion on how to best prepare for your upcoming pre-interview assessments and/or interviews, please don't hesitate to contact me directly.

Best,

Hagen