Using this in a case
What to ask, what to calculate and what to say when a case involves buying, making or moving goods, with a full mini case on whether a furniture maker in Malaysia should open a plant in Mexico.
Firm processes and online tests change from year to year and differ by office. Use this to prepare, and confirm the exact current steps on the firm's own careers page.
Key takeaways
- When a case is about where to buy or make something, the answer usually sits in three numbers: landed cost per unit, the one-off cost of changing, and how the answer moves if tariffs, exchange rates or a supplier change.
- The strong close gives the decision, the two numbers behind it, the condition that would change it and a next step.
- Which product and tariff line, and where does the customer sit? The tariff and the customs value rule depend on both.
- Will the goods meet the rules of origin from the new location, or do key inputs still come from elsewhere?
- How long are lead times today, and how much stock is held because of them?
Key idea
When a case is about where to buy or make something, the answer usually sits in three numbers: landed cost per unit, the one-off cost of changing, and how the answer moves if tariffs, exchange rates or a supplier change. Build the structure from those, not from a list.
- Value of changing where we buy or make
- Yearly saving in landed cost
- Factory price or should-cost
- Freight and insurance
- Duties and tariffs (rate x customs value, origin rules met?)
- Inventory: days in transit and safety stock x holding cost
- Currency
- One-off cost: tooling, qualification, ramp-up
- Key: Change in risk: chance x impact, before and after
This comes from the goal: profit per unit sold, plus a one-off cost and a risk.
Questions that change the answer
- Which product and tariff line, and where does the customer sit? The tariff and the customs value rule depend on both.
- Will the goods meet the rules of origin from the new location, or do key inputs still come from elsewhere?
- How long are lead times today, and how much stock is held because of them?
- What does it cost to qualify a new supplier or plant, and how long does it take?
- What disruptions has the client actually had, and what did they cost?
Worked case
Should a Malaysian furniture maker build a plant in Mexico?
The prompt
A fictional furniture maker in Malaysia sells 200,000 sets a year to US retailers. Per set: factory cost USD 100 in Malaysia against USD 112 for a new plant in Mexico; freight USD 9 against USD 4; stock in transit and in safety stock 50 days against 10, at USD 0.05 per set per day. Goods from Malaysia face the 10 percent US Section 301 tariff; assume the normal duty is zero and that Mexican sets would qualify under the USMCA. The Mexican plant costs USD 8 million. The board wants a payback under three years. Should it build?
The structure
- Build if payback = plant cost / yearly saving is under 3 years, and it survives a tariff test
- Landed cost per set: Malaysia and Mexico
- Yearly saving and payback
- Key: Tariff needed to justify the plant
Working it through
1. Malaysia landed cost
Factory, freight, 10 percent tariff, 50 days of stock.
Malaysia landed cost per set (USD):100 + 9 + 100 × 0.1 + 50 × 0.05 = 1222. Mexico landed cost
Factory, freight, no tariff, 10 days of stock.
Mexico landed cost per set (USD):112 + 4 + 0 + 10 × 0.05 = 1173. Yearly saving
USD 5 a set on 200,000 sets.
Yearly saving (USD):(121.5 - 116.5) × 200,000 = 1,000,0004. Payback
Plant cost divided by yearly saving.
Payback (years):8,000,000 ÷ 1,000,000 = 85. Saving needed for a three-year payback
USD 8 million over three years, per set.
Saving per set needed (USD):8,000,000 ÷ 3 ÷ 200,000 = 13.336. Tariff that would justify the plant
The tariff on Malaysian sets that makes the gap USD 13.33, as a percent of the USD 100 factory cost.
Break-even tariff on Malaysian sets (percent):(116.5 + 8,000,000 ÷ 3 ÷ 200,000 - 100 - 9 - 2.5) ÷ 100 × 100 = 18.33
The recommendation
The furniture maker should not build the Mexican plant now, because it saves only about USD 1 million a year and pays back in about 8 years against a 3-year target. First, the 10 percent tariff adds USD 10 a set, but Mexico's higher factory cost takes back USD 12 of it. Second, the plant would only meet the target if the tariff on Malaysian goods rose to about 18 percent. The risk is that tariffs rise or the USMCA changes; both could swing the answer. As a next step, test a Mexican contract manufacturer for a small share of volume, which keeps the option open without the USD 8 million commitment.
Close the furniture case in thirty seconds.
Lists factors, decides nothing
There are many factors, including tariffs, costs, logistics and risk, so the company should study each of them carefully before making any decision about Mexico.
Answer first
Do not build the Mexican plant yet. It saves about USD 5 a set, USD 1 million a year, so the USD 8 million plant pays back in 8 years against a 3-year target. It would only pass if the US tariff on Malaysian furniture rose to about 18 percent. I would test a Mexican contract manufacturer on a small share of volume to keep the option open.
Why the stronger answer wins: The strong close gives the decision, the two numbers behind it, the condition that would change it and a next step. The weak close repeats the structure and gives no answer.
What to say, in this order
- The decision: stay, move, split or add a second source.
- Landed cost per unit before and after, and the yearly saving.
- The one-off cost and the payback.
- The test: the tariff, exchange rate or disruption that would flip the answer.
- The next step: usually a small, reversible move before a big one.
Shipping costs, lead times and port hubs are covered in the logistics and shipping brief. Car makers live with rules of origin and the USMCA; the automotive brief shows how. Chips are the extreme case of supplier concentration; see the semiconductors brief.
Read the logistics and shipping briefThe automotive and electric vehicle brief shows how regional content rules, battery supply and tariffs shape where cars are built.
Read the automotive and EV briefMake or buy, backward integration into a critical input and capacity expansion all rest on the landed cost, payback and risk maths from this module. The strategic moves pages show when each creates value.
Browse the strategic movesIn a sourcing case, the interviewer says the new country's factory price is 10 percent higher. What do you do?
Your recommendation saves money only if today's tariffs stay in place. What should you add?
Sources for this lesson (3)
- Recognized public explanations of case-interview concepts and terms
- US Customs and Border Protection, CSMS 69326983: guidance on Section 301 forced labor import duties, effective 12:01 a.m. on 24 July 2026 (rates by country; USMCA exemption)
- USTR: statement on the USMCA joint review (1 July 2026)
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