BCG Potential Test - MConsultingPrep

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BCG Potential Testhttp://mconsultingprep.com/Management Consulting Prep

IntroductionThe BCG Potential Test Sample: During a BCG recruiting process, you will go through a BCGPotential Test (or BCG Online Test, BCG Reasoning Test). The first part of this documentconsists of some sample questions provided by BCG.The MCP Practice Package: In order to supplement the limited Potential Test samples offeredby BCG, our team at MConsultingPrep has designed another set of questions that closely reflectthe official format as well as content – complete with keys and explanations for every question.You will find this practice test in the second part of this document.The screen is divided into two parts: On the left, you will find the questions and the multiple choice answers On the right, you will find the documents to which you have access during the caseTo answer the questions: The questions ask you to find the most appropriate answer to theproblem as described using only the information presented. You should select one and only oneanswer to every question.Evaluation: Your score is calculated by 3 points for every right answer, 0 points for no answerand -1 point for a wrong answer.Good luck and have fun!Management Consulting Prep1

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Congratulations on completing theBCG Potential Test!To try out another sample developed by MConsultingPrep with theadded benefit of keys and detailed explanation for each question,please turn to the next page.Good luck!Management Consulting Prep9

BCG Potential TestMCP Practice Testhttp://mconsultingprep.com/Management Consulting Prep

Candidate briefingThe Online Case: During a BCG recruiting process, you will go through a BCG Potential Test(or BCG Online Test, BCG Reasoning Test). Like case interviews, it is an opportunity to bettergrasp the kind of issues a BCG team addresses with our clients in reality and test a number ofkey skills like logic, analysis and business sense. Enclosed, you will find some samplequestions which will allow you to prepare for the test and be familiar with the navigation.The Practice Package: Enclosed, you will find a hard copy sample that consists of 05questions and should last no more than 10 minutes. The purpose is to help you prepare forthe actual exercise. Because BCG is still in the process of piloting the test, so the exact testformat, number of questions, and time allotted can be different across different offices. Somepeople had 50 questions in 50 minutes while others had 25 in 40 minutes.The screen is divided into two parts: On the left, you will find the questions and the multiple choice answers. On the right, you will find the documents to which you have access during the caseTo answer the questions: The questions ask you to find the most appropriate answer to theproblem as described using only the information presented. You should select one and only oneanswer to every question.Evaluation: Your score is calculated by 3 points for every right answer, 0 points for no answerand -1 point for a wrong answerGood luck and have fun!Management Consulting Prep11

Basketball League CaseQuestion 1/5*:Doc 1Elapsed time: 2:00 / 10:00Doc 2Doc 3Doc 4If the Client League can manage itsOther Costs as well as the NBA can,given that Players’ Salary staysconstant (measured by the per-dollar-Revenues among sports leaguesof-revenue-generated basis), whatwould their Profit be?o 3 milliono 5 milliono 7 milliono 9 millionMarket studyCase overviewOur client is a professional basketball leaguein Germany. The league operates on asporting business franchising model. Eachteam in the league has to pay an annual fee tothe league and will manage itself by hiringplayers, selling tickets, managingadministration costs Some direct and indirect competitors of theClient League are: US professional basketball league (NBA) Euro Basketball league (EBL) Country 's Soccer league (CSL)( million)ProfitOther Cost80Players’ Salary6051210154041350204025The chart below measures revenue and itscomponents on the average-per-team basis.210190NBAManagement Consulting PrepEBLCSLClient12

Basketball League CaseQuestion 2/5***:Suppose that there are 5 CollegeTeams in the league. How manyteams are there in the Major CityTeams group?oooo2 teams3 teams4 teams5 teamsDoc 1Elapsed time: 4:00 / 10:00Doc 2Doc 3Doc 4Segmentation of Client LeagueTeam segmentationDataBased on its revenue (on the average-perteam basis) in the previous chart, we thengo on to search for problems within theClient League.The client then prepares a segmentbreakdown of all 18 teams. There are threemain representing groups: College Teams Small City Teams Major City TeamsCollegeTeamsSmall CityTeamsMajor CityTeamsHistoricalWinningPercentageRevenue( US)Profit( US)35 (%)20 mil2.2 mil50 (%)25 mil0.5 mil75 (%)70 mil6.5 milThe segmentation along with some basicinformation is summarized in the table tothe right.Management Consulting Prep13

SG Taxi CaseQuestion 3/5**:The owners of SG Taxi are puttingpressure on management to generateover 185 thousand in daily revenue.Which of the following, if beingimplemented along, will help SG Taxiachieve that?o Acquire Taxi 54o Raise the average fare price to 2.5/ kmo Add 50 new vehicles to the teamo Increase Vehicle usage (kmdriven) by 25%Elapsed time: 6:00 / 10:00Doc 1Doc 2Doc 3Doc 4Maximize daily EBITDACase overviewIndustry researchOur client, the SG Taxi Group, is a mediumsized taxi company operating in Singapore.Like all other taxi companies in the area, SGTaxi operates on the "taxi franchise" model.The company manages vehicles, callcenters, pricing, and other administrationprocesses. Drivers are responsible for gas,their own work schedules, and their ownstrategy to get the most income.Currently, SG Taxi Group’s profitability isbelow the market average and needs helpfrom us. The team is provided with this basicinitial information.Management Consulting PrepTaxiesownedDailyKmdriventotalDailyRevenue( US)DailyEBITDA( US)CP Taxi1,000 270,000484,000382,360AirportTaxi500 131,900237,500201,875SG Taxi55088,200150,000105,000Taxi 54507,50013,50011,00014

Imagine Learning CaseQuestion 4/5*:What is the maximum amount of timethat translators have to finishtranslating to make it worth it toswitch to our idea?oooo3650 hours3500 hours4000 hours3000 hoursDoc 1Elapsed time: 8:00 / 10:00Doc 2Doc 3Doc 4Lower cost of translationCase overviewMarket studyImagine Learning is an English learningsoftware provider for children. All theinstructions, texts, and audio are translatedinto many different languages and insertedinto the software.TotalCost( US)Cost fromTranslationCompany( US)No ofdefectfoundCost offixingDefect*( US)A market study compared the cost of theSpanish product line versus that of Korean.KoreanLine60,00010,00023045,000We propose an idea to self-translateKorean products by hiring new Koreantranslators, replacing both theTranslation Company and theprogrammers. Assume that the averagewage for programmers and translators are 25 and 15 per hour, ent Consulting Prep*by programmers15

Property Tax Service, Inc. CaseQuestion 5/5***:Doc 1Doc 2Elapsed time: 10:00 / 10:00Doc 3Doc 4What is the best estimation of CashInflow of PTS in 2013?oooo 2.5 million 21 million 25 million 50 millionCash inflowCase overviewCurrent situationThe state of Texas has a unique taxationsystem where most of its revenue comesfrom property tax instead of income taxlike many other states in the US. Theproperty tax rate in Texas is 2.5%.The operation flow of PTS is as follows: Clients call to ask about the services, S% ofthose sign up their properties. Of those who sign up, PTS will represent clientsto bring their cases to the appraisal district.Property Tax Service (PTS) is one of thebiggest property tax consulting firms inTexas, United States. Of those represented, PTS gets A% of themagreed and approved by the districts. Of those agreed and approved, V% of theirvalue is reduced.In 2013, PTS’s total calls received are135,000 and the average value ofproperties signed up is 110,000. Of those successfully reduced, F% of ownerspay their fee. At the end, all tax savings is split by half betweenthe client and the company.The historical S, A, V and F percentage in 2013 are:S% 72%, A% 89%, V% 19%, F% 92%Management Consulting Prep16

Correct answersQuestion 1 – C ( 7 mil)Note: Don’t always try to be a calculating machine. In addition to calculating hard,calculate smart!With this question, a few simple tricks can help you get through it very fast. Here is howwe would do it.By looking at the graph, notice how the Client League and the NBA have about the samevalue for Other Costs.Also notice the fact that the NBA has twice the revenue of the Client League.So if the Client League is as good as the NBA, they will cut Other Costs in half, which isa 5 million cut.That additional 5 million along with the current 2 million will make profit worth 7million.Management Consulting Prep17

Correct answersQuestion 2 – B (3 teams)General strategy: Do a weighted average problem reversed. You have the overallweighted average in the previous chart. You have the value of each group. You need tofind the size of each group.Shortcut: It is possible to use revenue and profit to solve this problem. However, usingthe historical winning percentage is a much quicker way. We all know that basketball is azero-sum game, meaning that if there are wins, there are losses. The Historical WinningPercentage of all 18 teams in the Client League has to be 50%.You already have the Small City Teams’ winning percentage equaling 50%. Therefore,the number of teams in the Major City Teams group (X) must satisfy the followingequation: X 3 teams5 0.35 𝑋 0.75 0.55 𝑋Management Consulting Prep18

Correct answersQuestion 3 – D (Increase Vehicle usage by 25%)A:Acquiring Taxi 54 will increase SG Taxi’s daily revenue by 13,500(current Taxi 54’s daily revenue), which is not enough.B:Raising the price will create unpredictable results in revenue. Of course weget more for each km driven. But there will be less km driven, especially in a marketwhere everybody charges the same price.C:50 vehicles are too few to create any economy of scale. 50 new vehicles willgenerate about the same revenue-per-vehicle. Specifically, those 50 vehicles willgenerate 150,000 / 550 * 50 about 13,600. This is not enough.D:An increase of Vehicle usage by 25% brings a 25% increase in revenue aswell. This will bring SG Taxi’s revenue to a little over 185 thousand.Management Consulting Prep19

Correct answersQuestion 4 – A (3650 hours)Note: you should ignore the 25 programmers wage in this question.If the self-translating process is used, no Cost to Translation Company and Cost of fixingdefects will be needed. Instead, the only cost is to pay for the translators. To break even,the maximum number of hours would be:(All current costs) / translator hourly wage ( 10,000 45,000) / 15 roughly 3650 hoursManagement Consulting Prep20

Correct answersQuestion 5 – B ( 21 million)Cash inflow will be:(Number of Calls * Sign up % * Agree % * Value % * Fee % *Average Property Value * 2.5%) / 2This equals about 21 millionManagement Consulting Prep21

More practiceThe BCG Potential Test is just a different version of theMcKinsey Problem Solving Test72% people tried this BCG practice test improved themselvesmore with McKinsey PST practice!Get yours st-product/Management Consulting Prep22

Basketball League Case Elapsed time: 2:00 / 10:00 Doc 2 Doc 3 Revenues among sports leagues Our client is a professional basketball league in Germany. The league operates on a sporting business franchising model. Each team in the league has to pay an annual fee to the league and will manage itself by hiring players, selling tickets, managing