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McKinsey Hard Comparison Capital Investment Operations

Beta Optics

#Healthcare (Ops) #Manufacturing #Optics #Eyewear
ProHub Comment

This is a comparison case requiring candidates to evaluate a capital investment decision by analyzing financial implications, strategic benefits, and operational risks. The case tests ability to structure complex investment analysis, identify key cost drivers in manufacturing, and quantify value creation through bottom-up calculations incorporating labor savings, waste elimination, and fixed cost reductions.

Estimated Time 15 minutes
Difficulty Hard
Source PeterK
50 / 100
Beta Optics is a U.S.-based mid-size prescription eyeglass lens manufacturer. Due to the pandemic their revenues dropped by 30% in 2020 as far fewer people got their eye exams for glass prescription and a lot of optical retailers were closed. In order to improve their economics Beta Optics is considering investing in a cutting-edge digitized production process. They reached out to you to get your advice on whether they should do it.

Clarifying Information

  1. Beta Optics is a B2B business and supplies for prescription glass manufacturers like Warby Parker
  2. Beta Optics is focused on the U.S.
  3. Beta Optics didn’t share any objectives for this investment
  4. 80M pairs of eyeglasses are sold annually in the U.S.
  5. Beta Optics sold 1M pair of eyeglass lenses in 2020 at an average price of $50 per pair
  6. The conventional lens manufacturing process has 10+ stages and is quite labor-intensive
  7. The new technology will shorten, automatize and digitize a lot of parts of lens production process