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A garment maker weighs a safety and labour upgrade
You run the case. Read the prompt, answer questions from the notes below, and share data only when the candidate asks for it or gets stuck. Score at the end.
Case timer
00:00
1. Read the prompt aloud
Read it slowly, then pause. Let the candidate ask questions before they structure.
A fictional garment maker in Vietnam has revenue of USD 50 million a year. Its largest customer is a European brand covered by the CSDDD. It takes 40 percent of sales and earns the maker a 10 percent margin on them. The brand will keep buying only if the maker upgrades fire and building safety (USD 3 million once). The maker must also add audits, overtime limits and higher wages (USD 0.8 million a year). The maker also has a USD 30 million sustainability-linked loan. Its interest margin falls by 0.10 percentage points if it meets the same standards (illustrative numbers). Should it invest?
2. Answers to clarifying questions
This case has no scripted clarifying answers. Answer from the prompt, and say "assume what you think is reasonable" if the prompt does not cover it.
3. A model structure
Compare the candidate's structure with this one. A different split can be just as good if it is clean and fits the problem.
- Profit kept against cost of compliance, plus the financing benefit
- Revenue and profit at risk from the brand
- Net yearly gain after the running cost
- Key: Payback on the one-off upgrade
- Interest saved on the loan
4. The working, step by step
Each step shows how a strong candidate works it out. Share a new fact from it only when the candidate asks or is stuck, and let them do the math: the result in the dark box is what they should reach.
Step 1: Revenue at risk
What a strong candidate does: 40 percent of USD 50 million.
Revenue at risk (USD million): 50 × 0.4 = 20
Step 2: Profit at risk
What a strong candidate does: 10 percent margin on USD 20 million.
Profit at risk (USD million a year): 50 × 0.4 × 0.1 = 2
Step 3: Net yearly gain
What a strong candidate does: Profit kept minus the extra running cost.
Net yearly gain (USD million): 2 - 0.8 = 1.2
Step 4: Payback
What a strong candidate does: USD 3 million upgrade divided by USD 1.2 million a year.
Payback (years): 3 ÷ 1.2 = 2.5
Step 5: Loan saving
What a strong candidate does: 0.10 percentage points on USD 30 million.
Interest saved (USD a year): 30,000,000 × 0.001 = 30,000
The recommendation to listen for
At the end, say: "The CEO walks in. What is your recommendation?"
Invest. Keeping the brand protects USD 2 million of profit a year. After the USD 0.8 million running cost, the maker gains USD 1.2 million a year. It pays back the USD 3 million upgrade in 2.5 years. The cheaper loan adds only USD 30,000 a year, so the decision rests on the customer, not the financing. Safer factories also lower the risk of accidents, which no business case should treat as a small matter. They also make it easier to win other buyers with the same standards.
Risks a strong answer names: The brand may still move orders to cheaper countries; Upgrade costs often run over; get firm quotes.
Next steps: Ask other buyers whether the upgrade would win new orders; Check which standards the loan and the brand require, so one audit serves both.
Score the candidate
Score each criterion from 1 to 5. A 2 or a 4 sits between the descriptions.
This case has no exhibit. Score Exhibit reading on how the candidate used the data you gave them: did they pick out the number that matters and say what it means?
Total
0 out of 25
Score all five criteria to see the band and the feedback template.
Next: another case in Partner mode
Swap roles and run the next case, so you both practise answering and scoring.