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McKinsey Medium Growth Strategy

Smart Cards

#Technology #Electronics Manufacturing #Electronics
ProHub Comment

This case tests the candidate's ability to build a structured framework analyzing market dynamics, competitive positioning, and profitability—ultimately leading to a counterintuitive recommendation to exit rather than invest. The case emphasizes that the best business decision is not always growth-oriented; recognizing when to divest is a critical strategic insight.

Estimated Time 15 minutes
Difficulty Medium
Source Chicago Booth
50 / 100

Our client, Electronics Inc., is a large diversified Electronics Component manufacturer. One of their businesses is the manufacture of Smart Cards used by transport authorities (passenger cards). They entered this business 3 years ago.

The CEO is unhappy with the performance of this business and has asked McKinsey for help. What areas will you explore?

Clarifying Information

  1. The focus is on the US market.
  2. The client manufactures both Smart Cards and Card Readers. Customers for these are primarily transport authorities (e.g.: CTA).
  3. The client also manufactures chips and custom electronic components.
  4. The client’s Smart Card business has experienced low revenue growth and recent customer complaints.
  5. The CEO is considering whether to spin off or to sell the Smart Card business.