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Graduation date: Jul 2015 Dec 2015 Jul 2016 Dec 2016 Jul 2017
Dec 2017 Jul 2018 Dec 2018 Jul 2019
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Basic Instructions
1. Which of the following statements best summarizes why the CEO called
A.T. Kearney?
A) The CEO wants A.T. Kearney to investigate how recent acquisitions have led to a
decrease in profitability
B) The CEO wants A.T. Kearney to investigate why the distribution costs have
increased over the last years despite steady growth in revenues
C) The CEO wants A.T. Kearney to investigate the decline in profitability because he is
not sure on what might be causing it
D) The CEO wants A.T. Kearney to investigate the decline in profitability but would not
be surprised if it has something to do with the rise of distribution costs
E) The CEO wants A.T. Kearney to help him understand how can the company grow by
acquiring small companies while properly integrating target companys distribution
network
2. How much would the transportation costs need to decrease in the next year for the
company to breakeven (i.e. make a profit of zero), considering that all other costs
remain unchanged in EUR and sales increase by 5%?
A) 1%
B) 5%
C) 10%
D) 13%
E) 15%
4. If the Portuguese subsidiary wants to reach the average efficiency of Spain and
France, by what percentage would its current distribution cost to sales ratio have
to decrease?
A) 5%
B) 10%
C) 35%
D) 50%
E) 80%
The Head of Supply Chain of Paper Co. stated that the company is already taking some
actions to improve its distribution network bringing down transportation and facilities costs.
She noted that for the company to improve its profit in a sustainable way, distribution costs
would need to decrease 20% per year over the next two years and 10% on the two following
years, before reaching a steady-state point in year 5.
Exhibit 2 shows several scenarios for the evolution of Paper Co.s distribution costs in the
near future.
Exhibit 2 Scenarios for Paper Co's distribution costs over the next 6 years
A) Scenario A
B) Scenario B
C) Scenario C
D) Scenario D
E) Scenario E
7. If in year 6 sales and non-distribution costs were both 20% higher than in year 0,
and assuming scenario B of exhibit 2, which of the following values best
approximates Paper Co.s profit margin in year 6, as percentage?
A) 2%
B) 6%
C) 12%
D) 20%
E) 25%
Table 1
10 years ago 6 years ago 2 years ago Today
Revenues (million EUR) 80 160 320 480
Profits (million EUR) 12 24 48 49
The CEO of Call Corp. is concerned about this recent trend, and hired A.T. Kearney to help
him understand the reasons behind this situation. He is especially apprehensive given the fact
that Call Corp. competitors, mainly operating in Asia and North America, are not facing the
same problem.
8. Which of the following, if true, would BEST explain the stagnation in profits?
A) Market saturation led to lower revenue growth in the last couple of years when
compared with the historical trend
B) Variable costs as a proportion of total costs have significantly increased over the last
two years
C) Labor costs have increased due to recent European legislation
D) Call Corp. recent strategy involved the offshoring (changing location) of the call
centers to countries with more cultural background variety, in order to facilitate multi-
language recruiting
E) An economic recession in Europe led to expenditure constraints from most of Call
Corp. clients, negatively influencing profits
10. If revenues grow by 10% over the next year, by how much should the costs grow so
that the profit margin reaches similar levels to the ones presented 10 years ago?
A) 0%
B) 2%
C) 4%
D) 7%
E) 9%
When talking to the Head of Strategy, he expressed some concerns regarding the
discrepancy in the cost structures of the different countries in which Call Corp. operates.
In terms of geographical footprint, Call Corp. has call centers spread over 6 different
European countries, which are treated as independent Business Units with most of the
management decision taken at a local level. The costs incurred by Call Corp. can be divided
into three major items: Labor costs (i.e. wages paid to call center agents), Rents (i.e.
buildings rents and associated utilities including water, electricity and communications) and
General and Administrative costs (i.e. computers, phones, IT maintenance, office supplies,
training, marketing and other costs).
After looking into the Head of Strategys concerns, the team presented Exhibit 3 showing the
revenue breakdown for the different countries in which Call Corp. is present.
8%
4% 5%
Profit 12% 16% 10% 16%
16%
General and
15% 34%
Administrative 18%
32% 37%
Rents 28% 38%
36%
63%
54% 49%
Labor costs 45% 41%
30%
-5% -2%
12. Which of the following statements, if true, would BEST explain the discrepancies in
labor costs across countries, assuming employees handle the same number of
calls per hour?
13. Country A has 80 million EUR revenues and country B has 60 million EUR
revenues. If, on average, each employee of both countries handles the same
number of calls and are paid the same wage, how many more calls (in %) are
handled in country A than in B?
A) 50%
B) 80%
C) 100%
D) 110%
E) 200%
14. Which of the following strategic decision would BEST help tackling the concerns
identified by the Head of Strategy?
A) Report revenues and costs in a consolidated basis, in such a way that distinction
between countries is not possible anymore
B) Standardize as much as possible all kind of contracts and centralize sourcing
activities
C) Impose minimum profit margin targets across all countries
D) Adopt performance bonuses for employees, linked to the number of calls
successfully handled
E) Increase footprint in Eastern European countries
A) 5 employees
B) 10 employees
C) 15 employees
D) 20 employees
E) 25 employees
Virtual call centers, where employees work in a home-base regime, are a recent development
in the call center industry. This business model allows for considerable lower costs as rent
costs, one of the main expenditures of a call center, are almost zero. The CEO of Call Corp.
asks A.T. Kearney to further investigate the characteristics and trends of virtual call centers,
and its potential impacts for Call Corp.
16. Which of the following trends would be the LEAST important to address the CEOs
question?
A) Virtual call centers are estimated to be able to reduce costs by approximately 30%
B) Recent research shows that companies would be willing to hire virtual call centers,
despite being viewed as a less reliable service, as long as the price is low
C) In Europe, only a few call center service providers are starting to shift to a virtual
operation model
D) Although the costs to start a virtual call center are not higher than the ones for a
regular call center, the costs of changing from a regular to a virtual call center can
be significant
E) Developing countries will be the ones most harmed by the penetration of virtual call
centers
17. An islander on Truth & Untruth is either a Truth-tellers who always tell the truth or a
Lying-liars who always lie. You come across three islanders and ask them, "How
many Truth-tellers are there among the three of you?". The one lying down
responds first, but she talks softly and you don't understand what she says. The
one seated beside her says, "My friend just said that there is one truth-teller among
us." But then the standing one counters, "Don't believe that, he's lying!"
What can you determine about the seated and standing inhabitants?
A) 23
B) 21
C) 25
D) 26
E) 24
A) Whether the wood produced by the company is sold within the Strongbridge area
B) Whether the company has any outsourcing plans for any of its important divisions
C) Whether the new environmental regulations present any clear benefits to
Strongbridge residents
D) Whether the Hardwood Company will use a small portion of the financial assistance
to update its safety procedures
E) Whether other hardwood companies are facing similar challenges following the new
environmental regulations