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Medium Profitability

Papyr Co.

#Manufacturing

Practice this intermediate profitability case interview question in the Manufacturing sector. Includes detailed problem prompt, clarifying questions, structured framework, and expert recommendation. Part of ProHub's 835+ consulting case library.

ProHub Comment

This is a structured profitability case that guides candidates through a logical cost reduction analysis. The case effectively uses exhibits to pressure test the candidate's ability to identify high-impact cost drivers (IT and Finance at 70% of G&A), apply benchmarking analysis, and quantify savings opportunities through outsourcing models.

Estimated Time 26 minutes
Difficulty Medium
Source Duke
19 / 100
Papyr is a paper distributor based in Ohio. Due to the declining demand for paper products, the company downsized the company headcount by 20% across all back-office functions. However, after comparing their actuals last year vs. the projected revenues, Papyr is interested in further improving their profitability. How would you advise them?

Clarifying Information

  1. Client/Company information: Papyr is a $5Bn paper-distributor based in Ohio.
  2. Industry/Competition information: Paper distributor but the demand for paper is declining rapidly
  3. Product information: Only distribute paper products to their customers (B2B business)
  4. Value Chain/Revenue information: $5Bn Distribution company
Mock Interview
Interviewer

Papyr is a paper distributor based in Ohio. Due to the declining demand for paper products, the company downsized the company headcount by 20% across all back-office functions. However, after comparing their actuals last year vs. the projected revenues, Papyr is interested in further improving their profitability. How would you advise them?

You

Thanks. Before analyzing, I'd like to clarify a few key questions...

Interviewer

Good question. Let me provide some background information...

You

Based on this, I suggest analyzing from these dimensions...

AI Score
Structure Analysis Communication Business Sense Quantitative
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Practice this case with AI Mock Interview

Papyr Co., a $5B paper distributor, seeks to improve profitability post-workforce reduction. The solution involves analyzing SG&A costs, identifying IT as the priority function using benchmarking, and quantifying $3.8M in savings through selective outsourcing of IT sub-towers based on labor arbitrage.

Key Insights:

  1. Focus cost reduction analysis on highest-spend functions (IT and Finance represented 70% of G&A OpEx at $105M of $150M total)
  2. Benchmarking is critical: IT spend at 1.6% of revenue ($80M/$5B) matched median benchmark but lagged top quartile (1.1%), revealing $20-30M optimization range
  3. Outsourcing ROI calculation: labor arbitrage ($60-90K savings per employee) applied across 70 total FTEs yielded $3.8M in savings while maintaining target service levels
  4. Complementary initiatives (ERP system saving $17M) must be coordinated to avoid duplication and ensure realistic total savings realization

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