2014.08.11 bcg-potential-test-v7

2014.08.11 bcg-potential-test-v7

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  BCG Potential Test MCP Practice Test – Version 6.0 www.mconsultingprep.com
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  Candidate briefing 1 The Online Case: During a BCG recruiting process, you will go through a BCG Potential Test (or BCG Online Test, BCG Reasoning Test). Like case interviews, it is an opportunity to better grasp the kind of issues a BCG team addresses with our clients in reality and test a number of key skills like logic, analysis and business sense. Enclosed, you will find some sample questions which will allow you to prepare for the test and be familiar with the navigation. The Practice Package: Enclosed, you will find a hard copy sample that consists of 05 questions and should last no more than 10 minutes. The purpose is to help you prepare for the actual exercise. Because BCG is still in the process of piloting the test, so the exact test format, number of questions, and time allotted can be different across different offices. Some people had ~50 questions in 50 minutes while others had ~25 in 40 minutes. The screen is divided into two parts: •On the left, you will find the questions and the multiple choice answers. •On the right, you will find the documents to which you have access during the case To answer the questions: The questions ask you to find the most appropriate answer to the problem as described using only the information presented. You should select one and only one answer to every question. Evaluation: Your score is calculated by +3 points for every right answer, 0 points for no answer and -1 point for a wrong answer Good luck and have fun!
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  2 Question 1/5*:Doc 1 Basketball League Case Elapsed time: 2:00 / 10:00 Doc 2 Doc 3 Revenues among sports leagues Our client is a professional basketball league in Germany. The league operates on a sporting business franchising model. Each team in the league has to pay an annual fee to the league and will manage itself by hiring players, selling tickets, managing administration costs… Some direct and indirect competitors of the Client League are: • US professional basketball league (NBA) • Euro Basketball league (EBL) • Country 's Soccer league (CSL) The chart below measures revenue and its components on the average-per-team basis. If the Client League can manage its Other Costs as well as the NBA can, given that Players’ Salary stays constant (measured by the per-dollar-of- revenue-generated basis), what would their Profit be? o $3 million o $5 million o $7 million o $9 million Doc 4 Case overview Market study 5 12 0 20 40 60 80 NBA 50 EBL CSL Client ($ million) 2 19 10 10 25 13 4 40 15 Profit Other Cost Players’ Salary
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  3 Question 2/5***: Doc 1 Basketball League Case Elapsed time: 4:00 / 10:00 Doc 2 Doc 3 Suppose that there are 5 College Teams in the league. How many teams are there in the Major City Teams group? o2 teams o3 teams o4 teams o5 teams Based on its revenue (on the average-per- team basis) in the previous chart, we then go on to search for problems within the Client League. The client then prepares a segment breakdown of all 18 teams. There are three main representing groups: •College Teams •Small City Teams •Major City Teams The segmentation along with some basic information is summarized in the table to the right. Historical Winning Percentage Revenue ($US) Profit ($US) College Teams 35 (%) 20 mil 2.2 mil Small City Teams 50 (%) 25 mil 0.5 mil Major City Teams 75 (%) 70 mil 6.5 mil Doc 4 Segmentation of Client League Team segmentation Data
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  4 Question 3/5**: Doc 1 SG Taxi Case Elapsed time: 6:00 / 10:00 Doc 2 Doc 3 The owners of SG Taxi are putting pressure on management to generate over $185 thousand in daily revenue. Which of the following, if being implemented along, will help SG Taxi achieve that? oAcquire Taxi 54 oRaise the average fare price to $2.5/ km oAdd 50 new vehicles to the team oIncrease Vehicle usage (km driven) by 25% Our client, the SG Taxi Group, is a medium sized taxi company operating in Singapore. Like all other taxi companies in the area, SG Taxi operates on the "taxi franchise" model. The company manages vehicles, call centers, pricing, and other administration processes. Drivers are responsible for gas, their own work schedules, and their own strategy to get the most income. Currently, SG Taxi Group’s profitability is below the market average and needs help from us. The team is provided with this basic initial information. Taxies owned Daily Km driven total Daily Revenue ($US) Daily EBITDA ($US) CP Taxi 1,000 270,000 484,000 382,360 Airport Taxi 500 131,900 237,500 201,875 SG Taxi 550 88,200 150,000 105,000 Taxi 54 50 7,500 13,500 11,000 Doc 4 Maximize daily EBITDA Case overview Industry research
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  5 Question 4/5*: Doc 1 Imagine Learning Case Elapsed time: 8:00 / 10:00 Doc 2 Doc 3 What is the maximum amount of time that translators have to finish translating to make it worth it to switch to our idea? o3650 hours o3500 hours o4000 hours o3000 hours Imagine Learning is an English learning software provider for children. All the instructions, texts, and audio are translated into many different languages and inserted into the software. A market study compared the cost of the Spanish product line versus that of Korean. We propose an idea to self-translate Korean products by hiring new Korean translators, replacing both the Translation Company and the programmers. Assume that the average wage for programmers and translators are $25 and $15 per hour, respectively. Total Cost ($US) Cost from Translation Company ($US) No of defect found Cost of fixing Defect* ($US) Korean Line 60,000 10,000 230 45,000 Spanish Line 25,000 15,000 17 2,000 Doc 4 Lower cost of translation Market study Case overview *by programmers
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  6 Question 5/5***: Doc 1 Property Tax Service, Inc. Case Elapsed time: 10:00 / 10:00 Doc 2 Doc 3 What is the best estimation of Cash Inflow of PTS in 2013? o$2.5 million o$21 million o$25 million o$50 million The state of Texas has a unique taxation system where most of its revenue comes from property tax instead of income tax like many other states in the US. The property tax rate in Texas is 2.5%. Property Tax Service (PTS) is one of the biggest property tax consulting firms in Texas, United States. In 2013, PTS’s total calls received are 135,000 and the average value of properties signed up is 110,000. Doc 4 The operation flow of PTS is as follows: •Clients call to ask about the services, S% of those sign up their properties. •Of those who sign up, PTS will represent clients to bring their cases to the appraisal district. •Of those represented, PTS gets A% of them agreed and approved by the districts. •Of those agreed and approved, V% of their value is reduced. •Of those successfully reduced, F% of owners pay their fee. •At the end, all tax savings is split by half between the client and the company. The historical S, A, V and F percentage in 2013 are: S% = 72%, A% = 89%, V% = 19%, F% = 92% Cash inflow Case overview Current situation
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  Correct answers 7 Note: Don’t always try to be a calculating machine. In addition to calculating hard, calculate smart! With this question, a few simple tricks can help you get through it very fast. Here is how we would do it. By looking at the graph, notice how the Client League and the NBA have about the same value for Other Costs. Also notice the fact that the NBA has twice the revenue of the Client League. So if the Client League is as good as the NBA, they will cut Other Costs in half, which is a $5 million cut. That additional $5 million along with the current $2 million will make profit worth $7 million. Question 1 – C ($7 mil)
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  Correct answers 8 General strategy: Do a weighted average problem reversed. You have the overall weighted average in the previous chart. You have the value of each group. You need to find the size of each group. Shortcut: It is possible to use revenue and profit to solve this problem. However, using the historical winning percentage is a much quicker way. We all know that basketball is a zero-sum game, meaning that if there are wins, there are losses. The Historical Winning Percentage of all 18 teams in the Client League has to be 50%. You already have the Small City Teams’ winning percentage equaling 50%. Therefore, the number of teams in the Major City Teams group (X) must satisfy the following equation: 5∗0.35+푋∗0.755+푋 =0.5 X = 3 teams Question 2 – B (3 teams)
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  Correct answers 9 A: Acquiring Taxi 54 will increase SG Taxi’s daily revenue by $13,500 (current Taxi 54’s daily revenue), which is not enough. B: Raising the price will create unpredictable results in revenue. Of course we get more for each km driven. But there will be less km driven, especially in a market where everybody charges the same price. C: 50 vehicles are too few to create any economy of scale. 50 new vehicles will generate about the same revenue-per-vehicle. Specifically, those 50 vehicles will generate $150,000 / 550 * 50 = about $13,600. This is not enough. D: An increase of Vehicle usage by 25% brings a 25% increase in revenue as well. This will bring SG Taxi’s revenue to a little over $185 thousand. Question 3 – D (Increase Vehicle usage by 25%)
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  Correct answers 10 Note: you should ignore the $25 programmers wage in this question. If the self-translating process is used, no Cost to Translation Company and Cost of fixing defects will be needed. Instead, the only cost is to pay for the translators. To break even, the maximum number of hours would be: (All current costs) / translator hourly wage = ($10,000 + $45,000) / $15 = roughly 3650 hours Question 4 – A (3650 hours)
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  Correct answers 11 Cash inflow will be: (Number of Calls * Sign up % * Agree % * Value % * Fee % * Average Property Value * 2.5%) / 2 This equals about $21 million Question 5 – B ($21 million)
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  More practice 12 The BCG Potential Test is just a different version of the McKinsey Problem Solving Test 62% people tried this BCG practice test improved themselves more with McKinsey PST practice! Get yours here: http://mconsultingprep.com/problem-solving-test/free-pst-practice-by- types/