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AlumnEye: Who We Are  We provide financial & consulting training for the most prestigious Schools in :  ESSEC – MS Techniques Financières – MS Financial Engineering in Asia – SMIB

 Dauphine University – Master 203/225/224/104

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How to use this AlumnEye test  This test is based on the BCG Potential Test but it has been designed by AlumnEye  It is therefore useful to prepare BCG interviews, as well as McK/Bain interviews and any strategy consulting firm interviews  The actuel BCG potential test: – – – –

Calculator is allowed (but not on this practice test) Timing: 45 minutes, 23 questions Score: +3 per good answer, 0 for no answer, -1 per wrong answer Screen: left-hand side are the questions, right-hand side are the documents

 AlumnEye test: – Timing: 12 minutes, 3 questions (you have more time as this one is tougher !) – All the other conditions are similar to BCG potential test – Documents & data of any slide can be used in every question

 Get yourself a pen, a notepad, a clock, and do not cheat – NO CALCULATORS ALLOWED ! AlumnEye© 2015– All rights reserved – Practice your Case Interview – 01.84.06.23.85 – www.alumneye.fr

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THE TEST

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AlumnEye Potential Test Question 1/3 How much represents the wine label market? a. 8,125 bn € b. 0,8125 bn € c. 16,250 bn € d. 1,625 bn €

Doc 1 of 3

WineLabelCo Our client

Wine label market

§ Our client is WineLabelCo, a wine label company § It produces labels for wine bottles exclusively § WineLabelCo wants to increase its profits and has asked for our help

§ The world wine production has been 260 MhL this year § 75% of the production is in glass bottle, of which 75% is bottled in 75cL bottles and the rest in half size bottles (37,5cL) § Half of the bottles have 2 labels (front and back), the other half having 3 labels (front, back, top) § All labels price roughly at 0,1€

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AlumnEye Potential Test Question 2/3 We are looking at the CAGR between 2002 and 2012 for the adhesive label market (abbr. A) and the dry label market (abbr. D). Which of the following is true ? a. A D d. Not enough data to answer.

Doc 2 of 3

WineLabelCo French wine label market (bn€) 1,8 1,6 19%

1,4 1,2 1

20% 18%

0,8

0,4

Dry label market share

81%

0,6

Adhesive label market share

80%

82%

0,2 0 2002

2004 AlumnEye© 2014 – All rights reserved.

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AlumnEye Potential Test Question 3/3 What is the answer to your PL’s last question? a. 2013 b. 2014 c. 2015 d. It will never be profitable

Doc 3 of 3

WineLabelCo Email from Project leader “We want to know if investing in new equipment for adhesive label printers is profitable. I asked the client about one particular piece of equipment, and here are the charts we received from the client. Both graphs are not fully aligned (the top one has been adjusted with a 10% yearly discount rate, whereas the bar graph has not been). Could you reformat those graphs and tell me if the investment is profitable for this piece of equipment assuming the 10% discount rate is the right one, and if yes, when ? See you this afternoon!”

Attached pieces

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Cumulated Equipment cost

M€

2 1

1,2

1,3

1,5

1,6

1,8

2,0

2,2

2,4

2,6

2,8

0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

0,5 0,4 0,3 0,2 0,1 0

M€

Yearly expected return

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

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ANSWERS

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Correct answers  Question 1: answer a.  Question 2: answer c.  Question 3: answer b.

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AlumnEye Potential Test Question 1/3 How much represents the wine label market? a. 8,125 bn € b. 0,8125 bn € c. 16,250 bn € d. 1,625 bn €

Solution

Calculation § 75% of production in bottle : 195 MhL § # full bottles = (Total volume in bottle) x (percentage in full bottle)/(Volume of full bottle) è# full bottles = (195x102x106)x0.75/0.75 = 195x108 § Similarly, # half bottles = (195x108)x(0.75/3)/(0.75/2) Noting that 65x3 = 195, then # half bottles = 130x108 § Then #bottles = 325x108, of which half have 2 labels and the other half 3 amounting to a total of 81.25 billion labels § For a total market of 8.125 bn€

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AlumnEye Potential Test Question 2/3 We are looking at the CAGR between 2002 and 2012 for the adhesive label market (abbr. A) and the dry label market (abbr. D). Which of the following is true ? a. A D d. Not enough data to answer.

Solution

Calculation Total label market Percentage adhesive Percentage dry Amount adhesive Amount dry

2002 1 18% 82% 0,18 0,82

2010 1,2 20% 80% 0,24 0,96

§ To compare the CAGR one must compare A=(0.24/0.18)1/8-1 and D=(0.96/0.82)1/8-1, which is the same as comparing 0.24/0.16 = 3/2 and 0.96/0.82 = 48/41 § Therefore, A>D

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AlumnEye Potential Test Question 3/3 What is the answer to your PL’s last question ? a. 2013 b. 2014 c. 2015 d. It will never be profitable

Solution

Calculation § The depreciation factor has to be computed for each year according to (1-factor)#years § Then each yearly return has to be adjusted with the depreciation, and only then can we calculate the cumulated yearly returns and compare it to the cumulated cost. Depreciation factor Yearly return not adjusted Yearly return adjusted Cumulated return adjusted Cumulated cost adjusted

2011 1,00 0,5 0,50 0,50 1,2

2012 0,90 0,5 0,45 0,95 1,3

2013 0,81 0,5 0,41 1,36 1,5

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2014 0,73 0,5 0,36 1,72 1,6

2015 0,66 0,5 0,33 2,05 1,8

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