Case Interview Questions #00072: Your team was asked by Consolidated Edison, Inc. (NYSE: ED), a diversified energy and manufacturing company to help turn around their steam boiler hose division. This boiler hose division provides boiler hoses for both external customers and the client’s boiler division. Additional background information on the client and the steam boiler hose industry includes:
- Boiler hoses are sold both with original equipment and as replacements.
- There has been increasing price pressure in the industry.
- The client is third of eight industry participants.
The following information is also available in response to questions asked by the candidate: Last year’s Profit and Loss (P&L) showed (as a percent of sales):
|SG&A (Selling, General & Administrative Expense)||15%|
The raw material is a commodity petrochemical. At least two of the other companies in the industry are making moderate profits.
How would you structure an analysis aimed at restoring profitability? Where do you expect to be able to save costs?
The candidate should avoid getting bogged down in the following areas: