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The client is an integrated oil company and controls the entire supply chain from oil wells to gas stations.
They have discovered a new automobile fuel that will increase mileage by 30%.
It will also cost 10% more to produce the fuel.
The fuel is similar to the old fuel in every other way. There are no special environment concerns or advantages from the new fuel.
There are 5 players in the industry (including our client). They all have equal market share. Under no circumstances can the client capture more than 50% of the market due to capacity constraints.
What should they do with the new fuel?
McKinsey Case Study Overview
This is a McKinsey case library case. Your client has discovered a new type of auto fuel that will increase mileage by at least 30% and is trying to decide next steps. You have been brought in to advise them. It’s your job to dig into the market, do your research and give your client solid advice and a plan for moving forward. Should they go into this new market?
Using the Market Study (market entry) Framework will prove helpful in solving this case, but it’s important not to limit yourself to just that framework. Use everything you know and your own unique experience to come up with a solution that is unique to this case.
There are no math exhibits in this case. This a beginner case interview you would see in a first round McKinsey interview. The case has a qualitative difficulty score of 1 out of 4.
McKinsey Interview Tips
What does McKinsey look for in its candidates? Someone with on point problem solving skills and the communication skills to match.
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