Case Statement:
The client is a Diesel Engine Manufacturer who has been seeing steady growth for the past few years. Last year the growth stagnated. The client wants Bain to tell them how the industry would look like in the next few years to build their strategy accordingly.
C: What exactly is the aim/motive of the client? And what exactly is meant by the Industry overview?
I: The client wants to understand the industry outlook in the next 4-5 years. Specifically, what and how are the various factors going to affect it. We need to deep dive into what are all these factors.
C: I understand. We need to see how the client's business would look like, given various internal and external factors affecting the industry. So, I assume that the client's primary driver would be its downstream industry demand and how that demand would be affected by various factors. But before drilling down into that, I would like to look at the current trends that the client might have in terms of its supply-side operations and the external factors that might affect the client. Does that sound correct?
I: Yes, please go ahead.
C: Supply-side analysis - Following could be the trends that could affect the client. Raw materials – is there any new product being used more or a breakthrough in the product variants currently used? For example, a better-quality Metal casing for engines like better quality steel? Processing technology changes or enhancements that are upcoming; Industry 4.0 and its effects on the manufacturing industry; Automation/Digitization that is affecting the manufacturing industry; Distribution or sales channels – Since it is a B2B sales channel, there might not be lot of changes except the use of online B2B sales that might affect its salesperson; In terms of external factors, the primary reasons would be the regulations that are affecting the client. For example, are there any upcoming regulations, such as the recent BS-VI, that might affect the diesel engines' sales? And if the client is prepared to modify the current products to match those changes?
I: That sounds quite comprehensive. These are the factors that the client looked for. What next?
C: Since this covers the supply side scenario – let us now look at the Demand side drivers that could affect the industry. Can I get to know what the major revenue segments for the clients are? I understand that it is the auto sector but is there any specific sub-segment from which the client is generating most of its revenue?
I: Yes, the client generates almost 90% of its revenue from the three-wheeler segment.
C: Great, so I understand that the trends in this three-wheeler segment would be the ones that affect the client's strategy the most. Here in terms of 3-wheeler segment, I would like to break this down into various internal and external pieces. Under external, I would look at the industry regulations – for example, a push to use CNG instead of diesel. Under Internal, I would use the supply and demand side breakdown. On the supply side, we can look at the similar factors that we used for the Diesel engine supply side (for example, the raw materials to manufacture these three-wheelers might have seen an advancement – better quality polymers like ABS, Nylon, Polypropylene, etc.).
I: Yes, those are the points that we looked at mfg. the time. Go ahead!
C: Now I would look at the three-wheelers' demand side, which would be the most crucial information for the client to consider. On the demand side, can you please tell me the various customer segments for these three-wheelers?
I: Why don't you take an attempt at that?
C: Okay, so I think there would be two major segments: the public transport segment and another commercial transport segment. Do you think I am missing any other segment?
I: No, that is correct. These are the two major segments, and our client mainly caters to the commercial transport segment. How do we analyze that?
C: Got it. So, under the commercial segment, I understand that the major factors that could influence the demand could be consumer preference changes. I will first try to see what all areas are used in the commercial segment, and I assume that the majority usage is in the logistics segment. Is that correct?
I: Yes, that is fine!
C: So, things such as are there any other product types that are used now? For example, two-wheelers or four-wheelers? Are there any changes in the ordering style for the end-users of these logistics players?
For example, is the average volume ordered increased and the logistics player prefers a more spacious four-wheeler instead of 3-wheeler? There could be a change in the average distance that needs to be traveled per trip, or also the mileage offered by the substitutes could be better.
I: Yes, that is a good point to consider, there has been a shift towards the usage of 4 wheelers due to the reason mentioned above. Let us close the case here.
Background Information:
Client: Diesel Engine manufacturer; B2B sales system
Competitors: Monopoly
Customers: All automotive segments
Location: Pan India
Products: Engines, only one variant
Case recommendations:
The key here was to be calm as this was an unconventional case. There was no set framework to apply here and hence asking for time and coming up with a structure of your own in the interview would help.
