Industry primers

Industry primer

Industrials and Manufacturing: A Case Interview Primer

A factory is a large fixed cost that pays off only when it runs full and makes good parts.

What's new here: how industrials and manufacturing make money.

The business
Market
Not used in this case
Existing business: revenue
Not used in this case
Existing businessCost
Variable
Product 1
  • Materials or inputs per unit
  • Labor per unit
  • Delivery
  • Payment fees
Product 2
Service 1
Fixed
  • Rent
  • Salaried staff
  • Marketing and overhead
New business
Not used in this case
Operations and risks
  • Finance and legal
  • Marketing, sales and brand
  • People
  • Technology and capacity
  • Timeline
The business
  • 1MarketNot used
  • 2Existing business: revenueNot used
  • 4New businessNot used

A factory is a large fixed cost that pays off only when it runs full and makes good parts.

How the business makes money: who pays, for what, and the main costs.

Who pays

In industrials and manufacturing

  • Other businesses: builders, carmakers, farms, other factories
  • Often a few large customers, on contracts

For what

In industrials and manufacturing

  • Parts, materials or equipment
  • Then spare parts and service after the sale

How revenue is earned

In industrials and manufacturing

  • Units × contract price
  • Plus aftermarket parts and service

The main costs

In industrials and manufacturing

  • Materials, energy and hourly labor in each unit
  • The plant and machines: large and fixed

What decides profit

In industrials and manufacturing

  • How full the plant runs
  • How many units come out right the first time

Demand often rises and falls with the economy, while the plant's cost stays put.

Create a free account to read the rest.

It takes a minute, and reading is always free.

Create a free account I have an account: sign in

Reading helps. A live case shows you where you stand.

Try your first case free Start Learn free