Big Green Fuel Systems, a large provider of fuel additives required for the production of gasoline, has recently developed a substantially improved form of ethanol that adds 20% efficiency (measured as miles driven on a single gallon of ethanol). This version of fuel is costly to produce but the market is large and growing more rapidly as increased amounts of ethanol are being used in fuel blends. The company is working in the US only.
The current infrastructure is compatible with other infrastructure in the external value chain, but Big Green does not yet have the capacity to mass produce it. Concerning the value chain for this product from Big Green to the consumer: ethanol is delivered from manufacturers to fuel blenders, who then sell and deliver in bulk to filling stations, who in turn sell it to consumers.
Big Green has a patent on this technology.
The company has engaged your team to help determine the viability of this new product, and, if it is viable, how to go about the process of launching it.
Develop your own criteria to use to determine the viability of the project.
McKinsey Case Study Overview
This is a McKinsey Market Study case. Your client is looking to expand it’s market share by adding a new product. The new product is costly to produce but they have a patent and the market is growing. Your job is to dive into market profitability to determine the viability of the product and a strategy for launching.
While we recommend using the Market Study (market entry) Framework to solve this business problem, it’s important not to limit yourself to that framework. Use your knowledge of the frameworks and your business acumen to develop your own criteria and structure for this case.
There are no math exhibits in this case. This a more difficult case interview you would see in a second round McKinsey interview. The case has a qualitative difficulty score of 3 out of 4.
McKinsey Interview Tips
What does McKinsey look for in its candidates? Problem solving and the ability to clearly communicate your thought process.
As you go through the case, make sure you verbalize your structure and recommendation clearly!
To get the most out of this case study, make sure you:
- Find 1 or 2 key takeaways or areas you can improve.
- Time yourself (2min for structure, 2min for brainstorming, 2min for conclusion)
- Focus on your communication and polish as you present.
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