Nyu Stern 2011 811191422
Nyu Stern 2011 811191422
Nyu Stern 2011 811191422
ESSENTIALS
CASE INTERVIEWING
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Interview Techniques
Most interviews for strategy positions evaluate a specific set of skills. While not written for
any specific firms or positions, this section aims to provide general insights into the interview
process as well as provide advice for success in that process. Most case based interviews
test some combination of four skills:
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Interviewers Dilemma
Before spending hours preparing casing questions for interviews, candidates should analyze the interview process
from the interviewers perspective. Interviewers face particular dilemmas in the interviewing environment that restrict
their choices in candidates. Understanding this environment will increase a candidates success rate.
Quantitative Rubrics
Especially in large organizations, interviewing guidelines are increasingly focused on quantitative metrics, where
rubrics dominate. If possible, research top-line categories from r e c r u i t e r s . Furthermore, the r u b r i c style reports
can extend to behavioral questions. Keeping this in mind will make the interviewing process more concrete.
Boredom
Many interviewers do dozens of interviews in a day. In this environment, it is particularly important to stand out. On
the casing side, interviewers will inevitably have to repeat cases over and over, and over, and over. This can lead to
boredom and at times interviewers may mix it up by making small changes to a case, with data, or contextual
information. While it is more challenging to generate a plausible hypothesis to explain off-the-cuff data, it is an
opportunity as well. Be creative with your explanations.
With behavioral interviews, boredom can be swept away with more emotional stories, especially stories that are
funny or have a dramatic climax. By adding concrete sensory details, you can increase how well interviewers remember
both your stories and you as an individual. If interviewers seem particularly bored with the overall process, asking
them unusual (but topical) questions will jolt back their attention.
Hiring Dynamics
At many large firms, hiring is not done directly by individual interviewers. Especially when each round consists of 3-4
interviews, actual hiring is likely done in committee. Top and bottom candidates are quickly identified, and groups
probably discuss the moderate candidates.
In such group discussions, interviewers (especially juniors within the firm) must be your agents, and concrete
memories will aid them during the horse picking that ensues. Furthermore, give your interviewers ammunition for
questions that you think may arise about you that the friendly interviewer may not bring up, including grades and
resume gaps. Being upfront with strengths and weaknesses will demonstrate a degree of self-awareness that your
interviewers can use to lobby for you in committees made of less friendly decision makers.
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Communication
Silence vs. Rambling
Almost all interviewers recognize how difficult casing questions are. When faced with difficult
questions, especially opening questions, feel free to request and take a moment to gather your
answer. Then, when you present you answer, you can add structure that leads to a clear end in
sight. This w i l l limit rambling and greatly increase the perception of composure and confidence.
When a candidate furiously takes n o t e s , i t can b e v e r y distracting for inte rviewe rs . Yet missing
critical information will derail y o u r problem solving. Try to balance out note ta k i n g b y listening and
taking l i g h t e r notes on generalities while the interviewer is giving you information. Then, double
check information when your interviewer is finished, and then confirms any numerical data that is
relevant.
Often, following up with questions to fill in information gaps will demonstrate your ability to identify
relevant versus irrelevant data. Some cases involve sections where your interviewer only provides data
that you ask for, so be willing to prod around.
Many case interviewers will interrupt you with clarifying questions while you answer a previous
question. Be aware that they know the answers, and after many interviews, can quickly determine
based on how you start your answer, if you understand whats going on. Take advantage of the
interviewer who is willing to give you full credit for only half answers by moving on! Dont be wed to
the actual giving of answers, and stay focused on the most recent question the interviewer has asked
(in context of the overall case). They can tell you understand a problem only a few words into your
answer; continuing serves little purpose if they are concerned with a new problem. Treat the
interviewer like a client--your time is their money!
Alternatively, there will be times a n interviewer wants t o interrupt you but is more r e s e r v e d . If you
see an interviewer physically holding an up-breath, this may indicate he or she has something to say.
While they are in this state, interviewers are not paying attention to what you are saying. Instead,
you need to take a moment and listen t o their feedback. Many interviewers will give comments as
the case progresses, and candidates should be willing to ask clarification questions along the way. At
times, interview questions may be structured to leave out critical information, and identifying that
missing information and inquiring for data is the right answer.
Interviewing is an exercise in being insightful. Every question you are asked, every answer
you give is an opportunity to be insightful; take them!
Be a precise, structured thinker. Avoid words which can have multiple meanings (e.g., the
market) and always be aware of potential vagueness in questions (e.g., size the market can
be in terms of units per day, units per year, dollars per year, etc.). When faced with vague
problems, state the vagueness you see, propose a path, and unless you meet resistance move
forward.
For example: you are asked Size the market for boots. An example of a confident response is
Im going to look at both men's and womens boots, and determine the annual revenue of the
retail industry for boots. For each kind (men's and women's), Ill examine winter boots, rain
boots, and other boots The clarification is subtle but signals awareness of vagueness, one of
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many potential insights.
Be transparent around your structure lead answers with any parts you foresee, and pause
between parts to remind the interviewer where you are in your higher level organization.
Using physical hand motions (left, center, right) for parts of stories or answers can enhance
this effect.
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Divide & Conquer
Starting Analysis
Most case interviews begin w i t h a description of a firms situation, followed by general opening
questions. Candidates are expected to re-frame the problem in a more concrete form, and then
generate a systematic approach that will help produce a solution. Business frameworks are
frequently used to break larger questions down into more ma na gea bl e chunks. A framework is
merely a mental outline of how you intend to solve a problem. It is easiest to start with a broad
framework and then break that framework down into component parts.
EXAMPLE: We are going to analyze Apple. Lets start by figuring out how to increase profitability for
iPod sales.
A very simple f r a m e w o r k is a profit analysis. Based on whether a firm has high fixed costs or high
variable costs, we can use one of two profit frameworks. For high fixed costs industries, we use total
revenue and total cost, which are in turn driven by discrete revenue and cost sources. For high
variable cost industries, we use volume and margin, which are in turn driven by channel variables.
This is a fantastic starting framework because of its broad applicability. Always explain your full
choice o f model (why its preferable to alternate models), in the process indicating your
understanding of cost structure relevance.
EXAMPLE RESPONSE: The mp3 player industry has very high variable costs, like most hardware
industries. While development may be somewhat costly, the majority of expense probably comes in
manufacturing because of the high quality parts that go into iPods. So here, total cost and total
revenue are tricky to separate. Instead, profitability is best understood in terms of volume and
margins. To increase iTunes profitability, Apple could increase total volumes or it could find ways to
raise its margins.
MECE Lists
Using MECE lists will help fracture problems. MECE stands for mutually exclusive and collectively
exhaustive. A list is mutually exclusive when none of the items on the list overlaps other items on
the list. The list [men, women, widowers] is not mutually exclusive because men and widowers overlap.
Alternatively the list [teenage boys, teenage girls, adults aged 18-65, retired] is mutually exclusive
because no group overlaps with any other group. A list is collectively exhaustive when all the items
on the list sum to a set containing all the items of relevance. The list [salaries, rent, and manufacturing
costs] would not be collectively exha ustive for a product company that had design costs. However,
that list might be collectively exha ustive for a firm with only those costs.
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Sticking with MECE lists allows us to quantify structured thought. Specifically, we want to deal with
metrics that can be mathematically operated on to produce numbers for our top-level question. It is
critical for lists to remain strictly MECE at the top-level, though as we select individual items to further
fracture, staying MECE becomes increasingly difficult. At lower levels, keeping categories context
s p e c i f i c i s critical. For e x a m p l e , a firm looking to cut costs might categorize the items in a retail store
differently than one focused on a purely aesthetic remodeling.
Actionable Recommendations
Synthesizing conclusions into actionable recommendations is the most challenging part of case based
interviews. While varying significantly based o n the case, synthesis must d emo n s t r a t e the link
between analysis and a c t i o n . In cases where analysis t h u s f a r is inconclusive, candidates should
recommend some f u r t h e r analysis. Along with the proposed analysis should come a number of
plausible conclusions (of the analysis), each which is tied to some prognostic action.
Quantitative sections are among the most intimidating parts of interviews. Interviewers are ultimately
trying to measure comfort with numbers. This translates into assessing three broad skill sets:
absorption, processing, and c o m m u n i c a t i o n . Absorption understands relationships between
business metrics and turning concrete business questions into discrete mathematical problems.
Processing are the tasks associatedwith solving discrete mathematical problems, optimizing for a mix of
speed and accuracy. Communication is about making arguments (mainly justifying your conclusions)
using numbers and non-trivial calculations, such that your audience can reproduce your argument.
These notes will identify the specific skills that constitute comfort with numbers, describe common
mistakes, and provide some advice on avoiding such mistakes. Distilling problems into rigid questions is
the core of demonstrating this comfort.
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Absorption
Structuring Answers
Know the form of an answer in the first step in any quantitative problem. Consider the question How
much electricity do you use? The most helpful answer form during a cost analysis might be in
[$/month] or [$/year], while in an environmental analysis m i gh t b e [KW-hours/month] or [BTU/month].
Regardless, an answer i n Watts or in Volts would be completely off.
Once we decide to use [$/month], we should structure our answer based on observable data. We can
gather the wattage of different appliances, and estimate the hours used per month, to compute [kW-
hours/month]. Finally, we use an equation that captures the relationship between our variables based
on our specific cost in [$/kW-hour].
Graphical Interpretation
Many casing interviews involve information presented in graphical forms. While there are no specific
rules for using this data most effectively, we present some guidelines.
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In the above example, the purple bubbles indicate the order in which you should read the chart. Reading around the chart is good
practice. In other words, start with the title, high-level description (if there is one), footnotes and sources prior to diving into the data in
the center of the chart.
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Processing
Arithmetic
In most casing interviews, the quantitative sections are designed primarily to evaluate your
ability to remain calm in face of complexity. Inquire about calculator use from recruiters, but if
using a calculator during interviews, do computations in chunks where its clear the calculator is
for only one step of the overall mathematical process.
Alternatively, practice math tricks, especially for dealing with huge numbers.
When all numbers are on non-thousand multiples, and use exponent notation
EXAMPLE: 0.03% of 170,000? WRONG: 3E-2 * 17E4 = 51E2 = 5100
CORRECT: 3E-4 * 17E4 = 51E0 = 51
Correct Rounding
Generally, keep two correctly computed numbers. EXAMPLE: 5.25 * 176 => 5.2 * 7 * 25 => 36 * 25
= 900
Round up and down alternatively to avoid over biasing answers. Be aware that adding is far more
robust to rounding than multiplying. With adding, the cumulative rounding up and rounding
down tends to cancel effectively. With multiplication, rounding on smaller numbers tends to
produce larger p e r c e n t a g e changes than rounding on big numbers, so always keep smaller
multipliers more precise even when rounding larger multipliers.
If you take care to mitigate the effects of rounding, you can demonstrate quantitative skill by
explaining error ranges. For example, if you are confident you use 1150 kW-hours of electricity
per month, but you are unsure if you pay $0.08 or $0.10 per kW-hour, you can estimate your
monthly cost to be $100-115 per month, with a small adjustment down of the $115 exact
computation.
Units
Candidates are commonly frustrated with their mistakes regarding units, and after interviews
consider these avoidable mistakes. Almost a l w a y s , forgetting units when m a k i n g
c a l c u l a t i o n s was the error, not mistakes with units. This is particularly true for time data
where we are more willing to bypass writing of units, such as with monthly versus weekly data. As
a remedy, always write out units, and trace cancellation as you compute. Keeping partial answers i n
unit form helps when future questions require going back to partial answers a s inputs.
Furthermore, always be sure to ask for units if they are not provided. Interviewers may make
different assumptions about the standard unit (for example, actual employees versus full time
equivalents, when measuring labor).
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Case Interview Toolkit
This section will provide you with some basic frameworks that will help you analyze case interview questions.
The purpose is not to regurgitate these lists and frameworks during practice and actual interviews, but rather to
help you identify the common genres of case questions and key pieces of information that may be relevant in
driving to the answer. Eventually with enough practice, you will be able to internalize these lists and
frameworks and draw out only the most relevant factors in a given case question.
First, we give you a few frameworks that may seem familiar to you you will have seen them in your core
economics, accounting, marketing, strategy, operations and finance classes. These concepts will provide the
foundation for the more involved ones ahead, and will aid your analysis of all case questions, simple and
complex.
The most common genre of case question involves the profitability of a firm. Therefore it is important to have an
understanding of the components that drive profitability. At its most basic level, the profit of a firm for a given
period of time equals its revenues minus its costs during that same period of time. The framework below
outlines the key components of a firms revenues and costs.
Profit
a. Total Revenue
i. Revenue for Stream A
1. Price * Volume sold
ii. (+) Revenue for Stream B
1. Price * Volume sold
iii. (+) Revenue for Stream C
1. Price * Volume sold
b. (-) Total Costs
i. Fixed - remains constant regardless of units produced
1. Plants, Property, and Equipment (PP&E)
2. Selling, General, and Administrative (SG&A)
3. Marketing
4. Rent
5. Interest
6. Insurance
7. Surcharges
8. Salaried Staff
ii. Variable increase proportionally to volume of units produced
1. Cost Of Goods Sold (COGS)
a. Raw Materials
b. Conversion (turning raw material to final product)
2. Packaging
3. Delivery
4. Commissions
5. Hourly staff salaries
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It is important to note that a firm may derive its total revenue from multiple sources or operations. The total
revenue for a firm is the sum of the revenues generated by each revenue stream. A revenue stream can
represent a unique line of products or services.
The total costs for a firm is usually split into two categories: fixed costs and variable costs. Fixed costs are those
that remain constant regardless of the number of units produced. Variable costs are those that fluctuate
proportionally to the number of units produced.
Break-even analysis
A common case question is to estimate the break-even point for a particular product or service offering. In
other words, the interviewer is asking how much of a product or service needs to be sold in order to pay off the
variable and fixed costs. By revisiting the basic profit equation:
Net profit = [number of units sold * (price per unit- variable cost per unit)] - total fixed costs
To find the break-even point, set Net Profit = 0, and solve for number of units sold. The equation will simplify to:
number of units sold * (price per unit - variable cost per unit) = total fixed costs
Common Frameworks
Before we get into specific frameworks for the various types of case questions you may see, it is worthwhile to
revisit some of the basic conceptual frameworks you may have encountered in your core courses. These
frameworks are particularly well-known, so beware of using them verbatim as interviewers will immediately
recognize them.
The 4 Ps of Marketing
1. Product
2. Price
3. Place
4. Promotions
1. Product What are the features of the product? Is it differentiated from competitive products available?
Does the product have the right positioning in the marketplace? What kind of brand equity does the
product possess?
2. Price What is the perceived value of the product to the customer? What are the prices of competitive
products or substitutes? What does it cost to make and deliver the product?
3. Place What channels of distributions are aligned with the companys strategy? Are there retailers or
wholesalers involved or does the company sell direct-to-consumer? What is the profitability of each
channel?
4. Promotion What is the desired message that needs to be communicated about the product? What
obstacles exist in communicating this message? How will the communication/marketing strategy be
differentiated from competitors? How much money can be spent on marketing?
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Industry Analysis Porters 5 Forces
1. Supplier Power
2. Buyer Power
3. Barriers to Entry
4. Rivalry
5. Threat of Substitutes
Supplier Power - Powerful suppliers capture more of the value for themselves by charging higher prices,
limiting quality or services, or shifting costs to industry participants. A supplier is powerful if:
i. It is more concentrated than the industry it sells to (Microsoft monopoly in OS vs. fragmented PC
makers)
ii. Supplier group does not depend heavily on the industry for its revenues
iii. Industry participants face switching costs in changing suppliers
iv. Suppliers offer products that are differentiated (unique and better)
v. There is no substitute for what the supplier group provides
vi. Supplier group can credibly threaten to integrate forward into the industry
Buyer Power - Powerful customers can capture more value by forcing down prices, demanding better
quality or more service, and generally playing industry participants off against one another at the expense of
industry profitability. Consumer group has negotiating leverage if:
i. There are few buyers, or each purchases in volumes large relative to the size of a single vendor
ii. Industrys products are standardized and undifferentiated
iii. Buyers face few switching costs in changing vendors
iv. Buyers can credibly threaten to integrate backward and produce the industrys product
themselves
Barriers to Entry Newcomers to an industry can expect to face retaliation by the incumbents. Barriers to
entry are advantages enjoyed by incumbents in an industry and which discourage potential new entrants
from entering the space. Incumbents enjoy an advantage when there are:
i. Supply-side economies of scale firms that produce at larger volumes enjoy lower costs per units,
employ more efficient technology, command better terms from suppliers
ii. Demand-side benefits of scale buyers may trust larger companies for a crucial product
iii. Customer switching costs costs associated with switching vendors (alter product specs, retrain
employees, modify processes/IT systems)
iv. Capital requirements Need of large financial resources to compete
v. Incumbency advantages independent of size e.g. proprietary technology, preferential access to
best raw materials, preemption of most favorable geographic location, etc
vi. Unequal access to distribution channels
vii. Restrictive government policy licensing requirements, restrictions on foreign investment
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Rivalry within the industry - depends on intensity and basis on which they compete
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Threat of Substitutes A substitute product is one that is not directly a competitive product within an
industry, but could nevertheless disrupt the industry. One example could be internet communications or
VoIP (i.e. skype, gtalk, etc.) disrupting cellular phones. Threat of a substitute is high if:
Game Theory
Industry Demand 1
Q1 Q2 QUANTITY
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Best of Game Theory
Game theory, in practice, is particularly useful in the context of forecasting or estimating the cash
flows of a project when costs and/or prices are impacted by competitive responses to the firms
participation in a particular project. Game theory may also produce new insights that affect the
timing, scale, scope, or other aspects of a project. Game theory is mainly relevant in the context of an
industry with a small number of participants (small number of rivals, small number of customers,
small number of suppliers, etc.). It is also relevant for understanding the bargaining relationships
across the industry chain between suppliers, distributors, and the final customers.
Challenges to Game Theory
By definition, game theoretic analysis is contrived. When distilling a complex situation into a
tractable problem, analysts r i s k shifting from key issues t o simplifiable issues. Furthermore, most
ga me theory models make strong rationality assumptions that are unlikely to fit the way an
organization behaves at every juncture. (Of course, subtle game theory models can incorporate
dynamics of group decision making with budgeting processes in particular.) Finally, predictions of
game theory models are very sensitive to the information and timing structure assumed, and small
changes can cause large prediction differences.
Pricing
Pricing is highly strategic when there are a small number of players. As shown in the Value Capture
section, with low elasticity of demand, players can strategically raise prices without risking share loss.
However, with high elasticity of demand, where players can strategically lower prices and steal share,
price wars are likely.
In a game theory framework, all players want higher prices overall, but each individually wants to be
the only lower priced producer (in order to maximize share of the big pie). Typically, when players are
able to price fix, or form cartels, they have found a way to ensure each player has an individual cost to
lowering price and destroying the profitable industry. Examples of this include OPEC, where oil
prices were kept fairly high because countries had reasonable information on each others production
levels. In other industries, time delays in pricing allow the market to follow the leader, so that a
dominant player emerges that raises price, and all others follow with price raises of their own. This is
most common in highly repetitive games (airline ticket pricing), where the consequences of short-
term gains are very severe longer-term losses.
Prices can be held high in black markets as well, typically through violence. In drug cartels, violence is
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used to limit supply overlap, reducing competitive forces on prices. Sellers will defend turf in order
to limit the profit dissipating effects of price competition. And the risks of starting turf wars to gain
share at the cost of life-and-limb prevent individual sellers from attempting geographic expansion.
Firms can also use industry cooperatives to help police each other into optimal group behavior. For
example, coffee shops in New York City may want to buy only from environmentally friendly growers,
but normally this is more expensive. By forming or encouraging an industry cooperative that
monitors environmental impacts, some firms can isolate others in the eyes of customers. This makes it
easier for customers to differentiate between firms, and firms within the collective can then
premium price.
Capital Investment
Strategic decisions regarding capital investment center on preemptive investments, which are
difficult to replicate. Generally, firms want to make capital investments when those investments limit
the returns on future investments that m i g h t c o m p e t e . An example of this is Southwest investing
in city-pair airline routes, and filling those routes to flight capacity. Additional airlines have a
difficult time competing because they would not generate sufficient capacity utilization to offset even
small capital investment amounts.
Unfortunately, dynamic behavior of capital investment often leads to over investment or under
investment because it's extremely difficult to gauge the level of investment sufficient to preempt
other firms from following.
Sometimes, the commitment signal to other firms of strategic investment may come in the form of
direct- to-customer marketing. By mass marketing an offer for $99 tickets between Ireland and
England, an airline could commit to the capital investment of airplane equipment perhaps with the
intention of forcing others to limit investment.
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What is a Framework?
Generally, the case portion of the interview will begin with the interviewer reading the case question and
related contextual details. You should dutifully write down the key pieces of data that are given to you in the
question. More importantly, however, you should listen carefully and comprehend everything the interviewer
has said. You should use the next few moments to ensure you have fully absorbed the information by
synthesizing the key objective(s) of the case as well as asking any clarifying questions you may have. The next
portion of the case will typically be your opportunity to show the interviewer how you would approach and
structure the problem given the limited amount of data you have. A framework is essentially the basic
structure underlying your problem solving approach. A good framework for a typical case interview will be:
1. Unique and tailored to each particular case Interviewers know that if you did any real preparation
for your interviews, you probably studied various frameworks from books like this one or Marc
Cosentinos Case In Point. As a general rule, it is not be a good idea to use any framework verbatim
because it shows little creativity on your part. The stand-out candidate will pick and choose elements of
several frameworks and create a customized one that best suits each case.
2. Mutually Exclusive and Collectively Exhaustive (MECE) A framework for a single problem can be
organized in a multitude of different ways. While creativity is encouraged in designing a framework for
your case, you need to ensure that
A.) There are no overlaps among the sub-branches of your framework, and
B.) The aggregated sub-branches do not leave anything out.
You should also quickly revisit your framework before synthesizing and delivering your final conclusion. It
will help you contextualize everything you have learned throughout the interview with regard to the original
question.
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Frameworks by Case Type
Market Sizing
Occasionally a market sizing question can be a case in and of itself, for example, What is the market for
personal computers likely to be in 15 years? However, this is somewhat rare. Market sizing more often
surfaces as part of addressing a broader case issue. If, for instance, you are evaluating whether a company
should enter a new market, you may want to begin your analysis by figuring out the size of the market to
determine if it is worthwhile to enter.
As part of a larger case, an interviewer may ask you to estimate something that she is certain you do not know
(for example, How many chopsticks are sold in Japan each year? or Estimate the number of gas stations in
the U.S.). As mentioned above, these oddball cases as a stand-alone entity are rare in MBA interviews, but it
is not out of the realm of possibility that you may encounter such a question as part of a more in-depth case.
The critical thing to bear in mind with regard to market sizing cases is that the end number that you come up
with is not what is most important. Recruiters want to see your thought process when they give these types of
cases. Consequently, develop a logical, sequential framework to arrive at an estimate, and make sure to
verbalize your methodology. Even if you are performing calculations on a piece of paper, tell the interviewer
what you are calculating, and why, as you work through the math. In the aforementioned chopsticks example,
you could articulate to the interviewer that you will estimate the number of chopsticks sold every year in
Japan as follows: The # of chopsticks sold annually in Japan = # of pairs sold to individuals + # of pairs sold to
restaurants. In turn, the # of pairs sold to individuals = [[Population of Japan * % who use chop sticks]/# of
years a pair lasts] * # of pairs each user owns]. And the # of pairs sold to restaurants = [# of Restaurant Meals
Consumed Per Year * % of Restaurant Meals That Require Chopsticks].
These types of questions almost always involve performing mathematical calculations, so do yourself a favor
and use round numbers to make it easier. For example, even if you know that the U.S. population is
approximately 290M, tell the interviewer you are going to round to 300M if it is okay. That should be fine
with the interviewer because (s)he really does not care what numbers you use so long as you use a reasonable
and logical process to arrive at an estimate.
It helps to know some basic demographic and statistical facts (e.g. the size of the population), especially about
the regions in which you are interested in working. However, even if you do not know a statistic that you wish
to use in your analysis (say, the number of U.S. households) dont freeze. Come up with something
reasonable and move on from there. For example, if you know the U.S. population is somewhere between 250
and 300 million people, and that it seems realistic that there are 2.5 to 3 persons per household, an estimate of
100 million households is sound.
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Entering a New Market
Basic Approach:
Find out why we are considering entering the market. What is our objective? Does it make sense for us
specifically?
Find out a bit more about the industry we are looking to enter to see if it makes sense for us to do so.
What should be our strategy?
How will we enter the market?
Potential Framework:
I. Why - Objectives/Goals
II. Market/Industry Attractiveness
a. Size
b. Growth Rate
c. Profitability (margins)
d. Customer Segmentation
e. Competition
i. Market Shares
ii. Strengths/Weaknesses
iii. Product Differentiation
f. Barriers to Entry/Exit
III. How?
g. Organic
i. Product/Service
ii. Pricing
iii. Competitive Response?
h. Joint-Venture
i. Acquisition
Industry Analysis
Basic Approach:
Examine the internal dynamics of the industry, including the competitors, customers, etc.
Examine the external forces that affect the attractiveness of this industry
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Potential Framework:
I. Internal to Industry/Segment
a. Life cycle/Performance trends
b. Profitability/Margins
c. Competition
i. Major players and share
ii. Differentiation
iii. Trends Rivals recently entering/exiting? Is the industry consolidating or
fragmenting?
d. Customers
i. What are the major segments and what are their preferences?
ii. Price sensitivity vs. differentiation
e. Drivers of value
i. Size, Brand, Technology
f. Barriers to entry/exit
II. External
a. Substitute products/disruptive technologies?
b. Suppliers (many or few? Power?)
c. Complementary industries
d. Government/regulation
Note: A highly fragmented market (i.e. multiple competitors with roughly equal market shares) with no clear
market leader usually suggests lower barriers to entry. However, industries with one or two large players
with the majority of the market share will likely be difficult to penetrate.
Industries where large competitors have top share positions across several segments suggests some degree of
cost and customer sharing across the segments.
M&A/Private Equity
Basic Approach:
Analyze how attractive the industry is: How big and how fast is the opportunity growing? What are the
industry benchmarks for profitability? Are there any short- or long-term threats on the horizon?
Analyze the attractiveness of the target within the industry
Examine the competitive environment
Consider the financial logistics of the acquisition: Does the price make it an NPV positive investment?
How will the acquisition be financed? What are the post-merger integration costs?
Consider the feasibility of a profitable exit:
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Potential Framework:
1) Market Attractiveness
a) Size
b) Growth
c) Market profitability
d) Threats:
i) Substitutes
ii) Imports
e) Key market trends
2) Company attractiveness
a) Profitability
b) Relative market share
c) Relative cost position
d) Key customer segments
e) Strength of customer relationships
f) Strength of key talent
3) Competitive Environment
a) Market fragmentation
b) Competitive threats
c) New market entrants
d) Barriers to entry
4) Acquisition Logistics
a) Fair Price? NPV Positive?
b) Financing
c) Integration/Post-merger costs
5) Feasibility & Profitable exit
a) Existence of strategic buyers
b) Existence of other financial buyers
c) Expected exit multiple with improved performance
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Developing a new product/Starting a new business
Basic Approach:
Examine the firm-level considerations of developing the new product: Do we have the management
talent to execute? How will the new product affect our existing products? How will we bring the
product to market?
Examine the external or industry-level considerations of developing the new product: What customer
base are we targeting and what are its preferences? How large is the opportunity and how fast is it
growing? What is the competitive environment?
Consider the logistics of how to execute:
1.) Organically consider suppliers, distribution, marketing, etc.
2.) Joint-venture: consider which strategic partnership to pursue?, o
3.) Acquisition: Consider which target firm.
I. Internal/Firm-level
a. Effects/fit with product mix enhance or cannibalize?
b. Costs/financing
c. Pricing
d. Management
II. Customers
a. Segments
b. Distribution Channels
c. Retention
III. Industry Analysis
a. Market Attractiveness
i. Size
ii. Growth
iii. Market profitability
iv. Threats:
1. Substitutes
2. Imports
v. Key market trends
25
Pricing
Basic approach:
- Get an understanding of the product and the industry dynamics in which it will operate: competing
products, industry benchmark margins
- Decide which pricing strategy best suits the situation: Monopolist pricing, commodity pricing, cost-
based pricing, price-based costing, competitive analysis
Framework:
I. Market/Industry
a. Size
b. Growth
c. Customers
i. Segments
ii. Channels
iii. Relative importance of price v. Benefits (elasticity)
d. Competition
i. Share
ii. Advantages/disadvantages of our product
e. Supply/Demand chart
II. Pricing Strategy
a. Competitive analysis
i. Costs/prices of competition
ii. Substitutes?
b. Cost-based pricing
i. Fixed
ii. Variable
iii. Costs of getting the customer
c. Price-based costing based on Consumers WTP
d. Monopolist pricing?
e. Effects on our product mix enhance or cannibalize?
26
Growth Strategy
Basic approach:
Understand clients objectives: Improve profitability? Increase revenues? Are there any concrete
numerical targets? What is the timeline to achieve the targets?
Perform an analysis on industry attractiveness
Consider various options for growth: Sell more of the same products to existing customers (pricing
decrease or bundling)? Sell same products to new customers (increase channels and marketing)? Sell
new products to existing customers (i.e. cross-sell)? Sell new products to new customers?
I. Verify objectives/goals
a. Top-line growth?
b. Profits?
c. Market share?
d. New product?
II. Industry analysis
a. Size?
b. Growth/potential?
c. Customers
i. Segments highest growth potential?
ii. Channels
d. Competition
i. Players
ii. Share
iii. Products differentiation & price
iv. Marketing
III. Strategies
a. Increase channels
i. Capacity constraints?
b. Increase marketing
c. Increase product mix
d. Acquire competitor
e. Vertical
i. Capture margins at different areas of value chain
ii. Cost savings
f. Diversification
9. Increase sales
27
Increase Sales
Framework
28
Reducing Costs
Basic approach:
Framework:
I. Costs
a. Internal
i. Fixed
1. SGA
2. Fixed periodic salaries
3. Plant, Property, & Equipment
a. Land
b. Buildings
4. PP&E Maintenance
ii. Variable
1. Raw Materials
2. Hourly employee salary
3. COGS
4. Variable manufacturing overhead
5. Consider minimum efficient scale are we operating efficiently?
b. External
i. Economy
ii. Interest Rates
iii. Foreign Exchange
iv. Taxes
v. Strikes
II. Benchmark Competitors
III. Strategies to reduce cost
29
Turnaround
Framework:
I. Industry analysis
a. Lifecycle
i. Growing, mature, declining?
b. Customers
i. Segments
ii. WTP/Preferences
c. Competition
i. Share, differentiation, trends
d. Substitutes?
II. Firm-level analysis
a. Revenue trends
b. Cost trends
c. Management/Employees
d. Financing
III. External
a. Economy
b. Government/Regulations
IV. Turnaround Strategy
a. Set objectives/goals
i. Prioritize short-term and long-term goals
b. Cost savings
i. Variable
ii. Fixed
1. Employees/Unions
iii. Tax
iv. Divestitures
c. Revenue growth
i. Expand channels/customers
ii. Marketing
iii. Expand product mix
iv. Acquisition/JV
d. Determine finance needs of business plan
e. Reassure customers, suppliers, and distributors
30
Case 1: Franks Fertilizer
Type of Case: Profitability, Market Sizing
Difficulty: Moderate
Opening
(to be said to the interviewee)
Our client, Franks Fertilizer, makes agricultural soil fertilizer. The clients research division has created a new fertilizer supplement for
grape production, and wants our advice on whether or not they should commercialize it. What are the key issues we need to examine?
Interviewer Guide
This case involves some market sizing, some analysis of pricing dynamics, and ultimately an investment decision. Candidates must be able
to organize and process a fair bit of quantitative data in addition to draw some high level insights. Judgment is particularly important
when determining how to present a summary of all the arithmetic.
31
Question What are the key issues we need to examine?
This is a profitability question, so we want to know:
How big is the market? (What revenues can we generate?)
How will customers value the product? What are the drivers of demand?
What can we charge for the product? What are industry dynamics?
What kind of volume can expect?
What are our margins? (What are our variable costs?)
What are our fixed costs?
32
Background Information
Additional Background
(to be said to the interviewee)
Franks Fertilizer would like to target the California grape market for sales of its new grape supplement. California grapes are exclusively
used for wine making, and firms in the industry specialize in growing either green grape for white wine, or purple grapes for red wine.
Firms in both markets average 250 acres, which they harvest once per year. The market is fairly stable, and is growing at pace with GDP.
33
Exhibit #1
(to be provided to the interviewee as background information for second question)
34
Question How big is the California grape market? What
conclusions can we draw from this? Is the California grape market
big enough to justify commercializing the fertilizer supplement?
Total Purple Grape Revenue** (Average purple grape revenue * # purple grape firms) $15M
Total Green Grape Revenue** (Average green grape revenue * # green grape firms) $20M
Market Size (annual)** Sum of revenues $35M
35
Question What is the potential value add of the supplements?
The total potential is the combined value from extra revenue (from improved yield) and reduced costs (from earlier harvests).
Cost Savings
(NOT to be shown to interviewee)
36
Question What is the savings produced to farmers from better
yields?
Additional Background
(to be said to the interviewee)
Furthermore, the increase in the size of grapes directly increases the amount of grape juice produced annually. The supplement can
increase purple grape yields by 10% and green grape yields by 15%.
Cost Savings
(NOT to be shown to interviewee)
A strong candidate will question whether California grapes are a substantial piece
of the overall grape market to determine whether this will reduce grape prices
37
Question What is the total value of the product per farmer?
overall?
Variables (** - calculation required) Source/Formula Calculations
Early harvest savings per farmer Found in previous pages $20K
Increased yield savings per purple grape farmer Found in previous pages $50K
Increased yield savings per green grape farmer Found in previous pages $15K
(Early harvest savings per farmer +
Total savings for purple grape farmers** $70K per farmer
Increased yield savings per purple grape farmer)
(Early harvest savings per farmer +
Total savings for green grape farmers** $35K per farmer
Increased yield savings per green grape Farmer)
(Savings per purple grape farmer * # of purple grape farmers +
Total savings** $9.1M
Savings per green grape farmer * # of green grape farmers)
38
Question What will be the costs of producing enough
supplements for the entire California market? Half the market?
What kind of penetration should we expect?
Additional Background Cost
(to be said to the interviewee) (to be provided upon request)
Commercializing the supplement will require annual capital leases Candidate may inquire about the timeframe of fixed costs and
costing $2.2M, with additional production costs of $4K per recovery. The fixed cost is one time; recovery should be based on
hectoliter. Purple grape fields require 5 hectoliters per 250 acres, reasonable assumptions.
while green grape fields require 2 hectoliters per 250 acres.
Total variable cost** (Total hectoliter demand * production cost per hectoliter) $2.2M
Total fixed cost As stated above $2.2M
Cost of supplying to entire market** (Fixed cost + Variable cost) $4.4M
Cost of supplying to half market** (Fixed cost + Variable cost/2) $3.3M
Break even for $10K price** (Fixed cost / Marginal profit) 365 hectoliters
Break even for $8K price** (Fixed cost / Marginal profit) 550 hectoliters
Break even for $15K price** (Fixed cost / Marginal profit) 200 hectoliters
40
Case Closing
It would not be a good move to commercialize the product based on the California grape
market alone
Comparing the break even quantities and the total size of the California grape market we
Recommendation see that Franks Fertilizer would have to capture substantial market share just in order to
break even
Before deciding to commercialize the supplement it would be wise to size additional
markets to see if there is potential for additional sales elsewhere
41
Case 2: Magic Media
Type of Case: Auction/Bidding Strategy, Profitability
Difficulty: High
Opening
(to be said to the interviewee)
Our client, UK based Magic Media, is participating in an auction for the rights to broadcast the 2016 Quiddich World Cup. Magic Media is
a mature company that derives the vast majority of its revenues from selling TV advertisements.
What should we bid on the broadcasting rights? What factors will affect our bid?
Interviewer Guide
This case starts very heavy on assumption-based number crunching. As assumptions are updated, the candidate must correctly adapt
his/her answer with arithmetic logic. Finally, the candidate must provide some high level insights on auction dynamics.
42
Question What are the key issues we need to examine?
Determine our marginal TV revenue
Know how long the World Cup runs, how many prime time and non-prime time advertisements can be shown, and what can be
charged for each
Take into consideration that receipts are far into the future, but securing the license will require payment now
Figure out how much our competitors will bid in the auction to determine if we should bid, and if so, how much
43
Background Information
(to be provided when requested by interviewee)
Revenues Cost
We can show ads for no more than 10 minutes per hour, and we Due to the complicated logistics of the event, we will need to
charge double our normal rates, so $50K/min for non-prime, spend an extra $10M to produce the broadcast over our normal
$200K/min for prime, and $500K/min for peak (normally we programming
charge $25K/min, $100K/min and $250K/min, respectively)
44
Revenue Analysis
(NOT to be shown to interviewee)
46
Case Closing
In this case, Magic Media should bid below but close to the projected $65.2M
But we will want to know more about past bidding behavior of the UK competitor, and
Recommendation whether they are likely to risk losing the auction by underbidding (to increase gains)
The smaller competitors add uncertainty to the overall mix, making underbidding even less
attractive
Candidates should recognize that a bid at value is entirely acceptable, because it would
produce profits that meet the cost of capital. However, the at value bid could be a
problem if the overall model is too optimistic (maybe by ignoring downside risks)
Risks Our projected revenues could be at risk if there is not sufficient demand to fill all the time
slots for advertisements at the given prices
Over- or under-bid because of insufficient understanding of competitors positions
47
Case 3: Wallys Wire Factory
Type of Case: Strategy (Increasing Profitability)
Difficulty: Moderate
Opening
(to be said to the interviewee)
It is 2009. Wallys Wire Factory makes electronics cables. Like most players in the industry, Wallys Wire Factory makes a large range of
cables, wires, connectors, converters, and basic electronics extras. It has a steady stream of business and has little desire to expand into
new products. Wallys Wire Factory has hired you to help increase profitability from its existing businesses
Interviewer Guide
This case tests a number of qualitative skills including reading charts and drawing conclusions from visual data. The case also tests a
candidates understanding of pricing dynamics and ability to form data- driven hypotheses. Though this case does not have a significant
quantitative component, candidates will run into difficulty presenting the discrete elements of their synthesis if they are unstructured
48
Background Information
(to be provided when requested by interviewee)
Market Competition
Wallys is the leader of an established mature industry that is There are significant barriers to entry, so there has been no
growing at the rate of GDP new competitors in the past 5 years, and Wallys projects it
Market share: provide exhibit #1 and #2 would take 2-3 years for a new competitor to enter
Competition varies significantly by region
Costumers Products
Costumers are mainly IT departments and retail businesses, There is a range of higher and lower end products, and
but there is a sizable number of technology minded margins vary considerably by product line
individuals who make direct purchases as well
49
Exhibit #1
(to be provided to the interviewee as background information when asked about industry structure)
50
Exhibit #2
(to be provided to the interviewee as background information when asked about industry structure)
What happened over the past three years? In which market are we best able to
increase profitability from existing businesses? How should we approach this?
51
Analysis
(NOT to be shown to the interviewee)
Question: what happened over the past three years?
Our position in North America has grown further, possibly due to weak buyer power since firms are unable to exert much control as
our product is a small component of their costs. It is probably the main buyer, with sales to retail firms being a smaller share
Competitor 1 has grown considerably in Europe, mainly at our expense. Given the size of their growth, it is likely that they have
reduced prices, which does not bode well for us since we may need to lower prices as well. We may be forced to innovate and cut our
own costs
Competition has become fierce in Asia. Competitor 1 has grown at the expense of competitor 3. Since all firms are splitting profits, late
stages of pricing parity are likely settling in. Retail is probably the biggest buyer. Since they shop based on price, as our product is an
expensive input, industry profits are eroded
Note we cannot say anything about market growth since we are only given market shares
Question: In which market are we best able to increase profits from existing businesses? How should we approach this?
It is unlikely that we can increase profitability in Europe and Asia since our product is being commoditized
There is scope to increase profitability in North America
Since margins vary by product line, we need to start there and understand causes of variations
52
Exhibit #3
(to be provided after market share questions are addressed)
Question: we want to look at the North American market and understand variations in margins across products. We plot gross margin
by product on the y-axis. What variable(s) might we want to plot on the x-axis?
Since we do not face extreme competition in North America, there may be room to increase profits by capturing value through pricing.
Therefore we should check how gross margins vary by product price elasticity.
There are other reasonable answers.
A strong answer should come with the possibility for some strategic recommendation based on data. For example in addition to
naming the axis, the candidate should explain at least one data pattern that comes with a recommended course of action.
53
Exhibit #4
(to be provided after market share questions are addressed)
Question: if we choose to chart price elasticity on the x-axis, what kind of pattern might we expect?
Products with high price elasticity normally have the lowest gross margins, because products across companies are close substitutes
and consumers use price when shopping.
Products with low price elasticity have relatively high gross margins because products do not substitute well, and consumers are
shopping based on different feature offers.
The scatter plot should therefore have a clear downward trend, if the above were to hold true.
What kind of pattern would indicate considerable room for increasing profitability?
Any scatter plot where we do not see a clear downward trend would indicate considerable room for increasing profitability through
54
price adjustments.
Exhibit #5
(to be provided after market share questions are addressed)
Question: after plotting price elasticity vs. gross margin by product, we produce the chart above. There appears to be little correlation
between price elasticity and gross margin. What do you conclude based on the chart?
Should raise prices on products in the lower left quadrant, since we can substantially increase margin without suffering share losses,
because products have inelastic demand with respect to price
We should be willing to cut prices on products in top right quadrant, since we can substantially increase our share with only slight
losses of gross margin because of high price elasticity
Revenue will increase in top left quadrant through price, and in top right quadrant through quantity
55
Case Closing
We are unlikely to increase profitability in Europe and Asia since our product is being
commoditized
We can increase profitability in North America, our strong hold
Since there isnt extreme competition in North America, we may be able to increase profits
Recommendation through price
After looking at price elasticity and gross margins by product, we determined that it is best
to increase prices in products with low price elasticity and gross margin, and lower prices
in products that have high price elasticity and high margins
56
Case 4: Marble Front Supplies
Type of Case: Operations
Difficulty: High
Opening
(to be said to the interviewee)
Marble Front Supplies is a producer of kitchen appliances and kitchen supplies. Marble Front is a strong brand, and historically the
company had significant advertising and marketing expenses to maintain their brand. In the past, growth has been steady, driven by a
combination of product line extensions and key acquisitions of specialty item producers. Sales go through a number of channels,
including superstores, which are increasingly critical. These superstores have gained considerable share in the past few years, and
constantly pressure us to lower our margins as they substitute generic products for traditional brand names like Marble Front. Recent
drops in sales and profits have made Marble Front an acquisition target.
Our client is a private equity firm considering purchasing Marble Front. The client wants us to do due diligence on Marble Fronts
production facilities, and wants us to size the opportunity for production efficiencies. They believe Marble Front needs to lower costs to
stay competitive in this market. What are the factors we should examine to determine whether Marble Front can lower production costs?
Interviewer Guide
This case tests the candidates ability to analyze related pieces of operations data pulled from charts and tables, and has a moderate
quantitative piece. Finally, candidates must be able to assess the qualitative drivers of an investment decision and synthesize a
recommendation
57
Background Information
(to be provided when requested by interviewee)
Manufacturing Profitability
The client currently produces SKUs (Stock Keeping Units) in 3 Revenues:
factories located in Michigan, Mexico, and New Jersey Current production generates $475 million in revenues
Costs:
Annual Production Annual Capacity Provide exhibit #2
Provide exhibit #1
58
Exhibit #1
(to be provided to the interviewee as background information)
59
Analysis
(NOT to be shown to the interviewee)
Some candidates may also raise the possibility of looking for new
production locations that give a better total cost structure
60
Exhibit #2
(to be provided to the interviewee as background information)
What conclusions can you draw about Marble Fronts fixed and variable costs?
61
Question - what is currently the total expense from running three
plants? How much would we save in each of our three scenarios?
(NOT to be shown to the interviewee)
Current total expenses:
63
Question - what is currently the total expense from running three
plants? How much would we save in each of our three scenarios?
(NOT to be shown to the interviewee)
Scenario #2a savings by combining Michigan into Mexico:
64
Question - what is currently the total expense from running three
plants? How much would we save in each of our three scenarios?
(NOT to be shown to the interviewee)
Scenario #2b savings by combining New Jersey into Mexico:
65
Question - what is currently the total expense from running three
plants? How much would we save in each of our three scenarios?
(NOT to be shown to the interviewee)
Scenario #3 savings by combining both Michigan and New Jersey into Mexico while
reducing the total SKUs produced from 12,500 to 12,000:
Variables (** - calculation required) Source/Formula Calculations
Annual fixed costs in Mexico Given $18M
Annual variable costs per SKUs in Mexico Given $4,000
New production in Mexico (Capacity in Mexico) 12,000
Total annual cost (Mexico): (Fixed + Production*Variable) $66M
How high would closing costs have to be (on a per plant basis) before Scenario #3 is not the best available opportunity? Are there any
other disadvantages of Scenario #3?
If per-plant closing costs exceeded $16.5M, Scenario #2a would become more profitable than Scenario #3, because the marginal costs
of #3 over #2 would be taken into consideration
Scenario #3 also runs the risk of making expansion impossible, while Scenario #2a leaves some excess capacity and therefore Marble
Front would be better positioned to take advantage of any unexpected demand growth
67
Case Closing
Combining Michigan and New Jersey into Mexico, while reducing the total SKUs produced
Recommendation from 12,500 to 12,000, the total capacity in Mexico, will result in the highest total savings
for Marble Front ($49M, after considering the appropriate decrease in revenues)
In using the full capacity of the factory in Mexico, any expansion plans in case of any
unexpected demand growth become impossible
Risks If the costs for closing the plant in New Jersey exceeded $14.5M, it would make more
sense for Marble Front to combine only Michigan into Mexico, which will result in
$34.5M cost savings
68
Additional Practice Cases
The NYU Stern Consulting Casebook
69
Case 1: The Fruit Cart Vendor
Type of Case: Profitability
Difficulty: High
Opening
(to be said to the interviewee)
You find out you have a long-lost uncle, and he is a fruit cart vendor at a street corner in downtown Boston. He sells his fruit only on
weekdays to morning and evening commuters, as well as downtowners going on lunch breaks. Your uncle realized that you are a
business school student, and he thinks you might be able to make his business more profitable. He wants to increase his profit during
this summer by 10%, which would be $1,000 over last years profits, and he will plow these profits back into the business. In order to do
this, your uncle wants to expand into selling vegetables. He is known for having high-quality fruits, which he gets from his buddy who is a
wholesaler. He plans to use similar high-quality suppliers for his vegetables. Your uncle operates in a really good location: a well-
trafficked spot in the business district near a busy train station.
He wants your help to determine if he can reach his goal of increasing profit by $1,000 next year.
Interviewer Guide
This case is a basic profitability analysis. The interviewee should spend most of their time exploring all the revenue sources and costs
associated with entering the vegetable market. The interviewee should calculate the expected profit and make a recommendation based
on their calculations. They should also include other considerations such as competitor response, changes in customer types, the uncles
knowledge of vegetables, etc.
70
Background Information
(to be provided when requested by interviewee)
Profitability Customers
Revenues: Your uncle generally serves 3 types of customers: morning
By talking to customers, he has estimated a potential demand commuters, evening commuters, and downtowners on lunch
of 20 vegetables per day breaks
He expects to sell each vegetable for $1 He sees more morning and lunch customers but evening
Cross-selling to certain customers is expected to generate an customers tend to buy for home so he sells roughly equal
additional 5% in revenues proportions of his fruits to each type of customer
Costs:
The annual cost of his permit to operate is $1000
If he sells vegetables, the permit costs will increase by 20%
The cost of each vegetable is 75 cents
Cannibalization will decrease fruit sales by 5%
Competition Competencies
There are no competing vegetable vendors nearby You uncle has been in the fruit business for 20 years and his
Fruit customers generally get their vegetables from customers appreciate that he knows the peak seasons for the
supermarkets near their home fruits that he sells
He is a master at picking out the best fruit for his customers
His knowledge in these respects is very limited for vegetables
71
Analysis
(NOT to be shown to the interviewee)
72
Analysis
(NOT to be shown to the interviewee)
73
Key Takeaway: Calculated profit $1,100 > Desired profit increase of $1,000
Case Closing
At current estimated demand levels, your uncle would be able to surpass his projected
profit target of $1,000 by $100 next year. He may want to do informal surveys of his
Recommendation customers to determine which vegetables would be more preferable, which could increase
daily demand.
Since he will just make his target by $100, he must be confident that his lack of expertise
with vegetables will not affect his relationships with his customers.
He must also be aware that his lack of expertise may lead to spoilage rates that could
Risks eat into his profits to a degree that he did not anticipate
It is also important that he is comfortable that he can find the additional cash (at least
$200 to finance the additional permit costs for carrying vegetables)
74
Case 2: Sports Bar
Type of Case: New Business/Profitability
Difficulty: High
Opening
(to be said to the interviewee)
Your client is an entrepreneur and looking to invest in new bar. He needs to determine how profitable the company will be, and convince
his primary investor, his father, that it will be a viable business. What are the areas you would consider and investigate?
Interviewer Guide
This case is math intensive so the interviewee will need to stay organized. A great caser will lay out a chart with all the data and
calculations. The case starts by asking for a framework and then gets into the details. By the end of the case, the interviewee should
make a clear recommendation as to how the primary investor can be convinced it is a viable business. He/she should approach it from an
investment perspective and analyze the profitability of the business, along with any risks that arent discussed.
75
Background Information
(to be provided when requested by interviewee)
Thursday Saturday
76
Analysis
(NOT to be shown to the interviewee)
Profitability calculation:
Variables
Source/Formula Sunday - Wednesday Thursday Saturday
(** - calculation required)
Food Drinks Food Drinks
Day orders per hour Given 10 4 15 5
Day time hours Given 8 (12pm-8pm) 8 (12pm-8pm) 8 (12pm-8pm) 8 (12pm-8pm)
Day time orders ** (Hours * orders per hour) 80 32 120 40
77
Analysis
(NOT to be shown to the interviewee)
Variables
Source/Formula Kitchen Bar Waitresses
(** - calculation required)
Salary per hour Given $10 $5 $5
# people 4 1 3
Sunday Wednesday hours (4 days * (12pm-12am)) 48 48 48
Thursday Saturday hours (3 days * (12pm-2am)) 42 42 42
Total labor cost ** (Salary * Total hours) $3,600 $450 $1,350
79
Case Closing
From a financial perspective, the sports bar makes a lot of sense but there are still many
unknowns that need to be figured out
Recommendation The recommendation should focus on convincing the primary investor (his father) that it
will be a viable business
There are many costs that have been excluded from this case that will need to be
properly calculated in more detail and include:
Utilities
Risks &
Equipment
Licenses
Considerations
Marketing and promotions
Location could also be an important factor in determining the success of the bar
compared to competitors
Other risks include sudden rise in COGS (food shortage) and increase in minimum wages
80
Case 3: Botox
Type of Case: Market Sizing & Business Expansion / New Product Launch
Difficulty: Low
Opening
(to be said to the interviewee)
The maker of Botox is considering expanding to the migraine market and has already begun clinical trials in this arena. The product is
scheduled to launch in 2010. What is your estimate for the size of the migraine market and the potential revenue?
Interviewer Guide
This case has 2 key components. 1.) A straight forward market sizing exercise for the migraine market, that will involve discussing the
potential size of a target segment (population type market sizing) 2.) Discussing the considerations of launching Botox as a different
product targeted at a new segment. The interviewee should quickly get to the mechanics of market size estimation and arrive at a $
market size. The interviewee should then be able to discuss the pros and cons of a product launch, address additional considerations
and make a solid recommendation as to how to proceed.
81
Background Information
(to be provided when requested by interviewee)
82
Discussion
(to be covered in discussing the interviewees framework)
83
Analysis
(NOT to be shown to the interviewee)
84
Case Closing
Given the projected $ size of the prescription migraine market this looks like a promising
market to enter for the Botox maker and would seem to offer very large revenue potential,
and more importantly, profit potential.
Recommendation Launching under another brand name would allow the client to more effectively
differentiate between the two uses when advertising the product to consumers and
physicians. It would also likely lessen the backlash from the differential pricing.
Launching under the same brand name could cause a public outcry over the discrepancy
in price between the migraine version and the plastic surgery version given they are the
Risks &
identical drug.
Also, it could cause some patients to use the migraine form instead of buying the plastic
Considerations
surgery version, thus cannibalizing some of the existing sales of Botox.
On the other hand, keeping the Botox brand name brings with it the strong reputation
Botox has already built through its current use.
85
Case 4: Cut Cut Cut
Type of Case: Cost Reduction
Difficulty: Low
Opening
(to be said to the interviewee)
Our client is the CFO of a large multi-billion dollar consumer goods company in North America. The recent economic crisis has generated
a need to drastically reduce costs in order to maintain the firms future competitiveness. The senior executive team has decided to take
cost cutting steps to achieve significant cost reduction by 2012. Since the company expects to grow its sales over the period, it has been
determined that core activities such as production plans, sales, and marketing should not be affected/touched by this initiative.
The CFO, who is responsible for the initiative, has approached our firm in order to develop a comprehensive understanding of cost
reduction alternatives, as well as a recommendation on what would be the appropriate approach/steps to execute this initiative. Finally,
he has asked for input on who should be involved in this initiative.
Interviewer Guide
This is a very high-level strategy case in which the interviewee is expected to provide ideas and alternatives to the companys problem.
Keep in mind that finding the alternatives is not the only issue, execution and participants must be addressed as well. Finally, calculations
are not required, but the recommendations should meet the $500 million goal.
86
Discussion
(ideas to be presented by the interviewee)
Potential Opportunities
Direct productivity improvement due to workload imbalances
Technology implementations that would reduce manual work
Move selected operations (accounting, finance, etc.) to low-cost locations
Outsource selected operations (call centers, transactional work)
Consolidate office locations to reduce/distribute fixed costs
Eliminate excessive organizational levels
Eliminate low added-value work
Implement a supplier consolidation process to achieve better COGS
Approach to Implementation
Form a team
Create incentives to promote results/ collaboration
Understand the opportunities (list them out, size them, get the data)
Benchmark with other companies and initiatives
Restore areas that are not performing as designed
Eliminate/change areas that are performing as designed, but still have opportunity areas
Implement, adjust and correct
Key Players
Functional experts
Support from upper management
Customers, both external (suppliers, consumers, etc.) and internal
Functional areas impacted by changes
87
Case Closing
Strong recommendation should include an exhaustive analysis of the three areas
requested by the client. Since this is a very high-level case, multiple answers are accepted
Recommendation After the possibilities have been laid out, the candidate should prioritize, and select one,
or a few that would allow the client to achieve its objective of $500 million cost cuts
Since the client is not willing to cut back on its projects, any cost reducing strategies are
Risks &
subject to these future investments that can generate additional expenditure
Since this is not a numbers oriented case, it would be important to recommend some
Considerations more qualitative analysis to evaluate the real impact of the cost saving initiatives
proposed
88
Case 5: Equipment Manufacturer
Type of Case: Supply Chain/Operations
Difficulty: Low
Opening
(to be said to the interviewee)
Your client is an industrial manufacturer of cranes. They are a French company and have recently acquired a U.S business in order to
expand their product offering and enter the U.S market. The two products they have after the acquisition are mobile cranes and tower
cranes. The combined company holds approximately 60% of the market. Currently, the tower business, used for skyscrapers, is located in
Europe, and the mobile business, used for building highways, is located in the U.S. Prior to the acquisition, the company did have a small
mobile manufacturer in Europe that they still retain.
The company has brought you and your team in to determine how to reduce redundancy and maintain a single face to the customer. The
client also wants to explore the possibility of expanding mobile cranes into Europe and tower cranes into the U.S. Should they build new
facilities or ship products?
Interviewer Guide
In this case, the interviewee will be required to investigate the different distribution channels of the manufacturers products and
compare between the different expansion plans in Europe as well as the U.S.
89
Background Information
(to be provided when requested by interviewee)
Dealers
Managing the dealer relationships is key
The dealers will now have larger costs, since they will have to
learn the sales pitch for the new catalog of products and be
prepared to service them as well
The dealers will need higher profit margins to offset costs
90
Discussion
(to be covered in discussing the interviewees framework)
Demand might decrease over time, so any capital expense might turn out to be
redundant
Risks & The hybrid product might not be accepted well by the buyers
Manage dealer relationship initiate training and consider increasing their profit
Considerations margins
Expend globally to other continents
92
Case 6: Bike Helmets
Type of Case: Private Equity and Market Sizing
Difficulty: Low
Opening
(to be said to the interviewee)
Your client is a Private Equity firm that mainly works in the manufacturing industry. When making a decision about whether or not to
purchase a company, they look at expected demand, projected profits and some additional factors. They are considering purchasing a
firm that makes bicycle helmets and accessories. You have been hired to determine whether or not they should purchase this firm.
Interviewer Guide
This case is really designed to see how the interviewee thinks. The candidate needs to make assumptions and justify them throughout.
The interviewer should push back on each assumption. In the end, the recommendation is flexible, but if the bike company is moving
more heavily into the higher margin, not as competitive, and still-growing low end of the market, this could be an attractive investment.
93
Background Information
(to be provided when requested by interviewee)
Risks &
The risks should be based around the assumptions made by the interviewee
Changes in various assumptions could have different impacts on the profitability and
Considerations investment potential for the private equity firm
96
Case 7: Kitchen Hardware
Type of Case: Profitability
Difficulty: Moderate
Opening
(to be said to the interviewee)
Your client is a manufacturer of food processing and preparation equipment that is sold to households and restaurants. Seventy percent
(70%) of the goods are imported from China and Italy while 30% are manufactured locally. The client has been in the industry for over 80
years and has a very strong brand name. The client has experienced a 1% decline in sales for each of the last 5 years and a comparable
drop in earnings over the same period. The client would like to understand why the sales and earnings have dropped and how to address
the issues.
Interviewer Guide
This case is focused on profitability, however before the interviewee begins their analysis the interviewee should investigate the product
lines for the client. However, because background information is limited it will be a qualitative discussion of costs and revenues with the
conclusion based on the discussion.
97
Background Information
(to be provided when requested by interviewee)
Market Company/Products
Market growth: This is a mature market, so market growth is 95% of clients revenue is to restaurants with the remainder
low going to households
They service the entire U.S., equal parts Northeast, This is the clients first experience with slumping sales
Northwest, and South They have best brand in the industry in terms of quality and
New competition has entered the market and copied their recognition. They price their products at a slight premium.
products Locally manufactured goods have slightly higher margins
Mix of products has changed slightly in the past few years.
Costs They sell their products to buying groups that represent a
collection of restaurants. Competitors have begun offering
COGS: There has been a slight increase in the price to the complete kitchen solutions that include items the client does
client of the imported goods, about a 2% rise every 3 years not currently produce
Production costs have not changed
Distribution costs have increased slightly because of increased
fuel costs from shipping the goods. The client contracts with
shippers such as UPS or FedEx to deliver their products
98
Discussion
(ideas to by presented by the interviewee)
Costs
Locally produced goods have higher margins
The candidate should explore building or renting
additional production facilities or expanding existing
ones to reduce reliance on lower margin imports. They
should mention current factory utilization rates
Or, try to squeeze foreign suppliers to reduce costs on imports
99
Case Closing
The client should explore raising the prices to reinforce their strong brand image and look
into the second-hand market
Promotions and product bundling could be another way to increase sales
Recommendation Reducing costs through locally producing products or pressuring foreign suppliers will
increase margins
Recommendations on the product line may vary based on the assumptions made by the
interviewee, but should follow a logical framework
100
Case 8: Starbucks and Ice Cream
Type of Case: Product Expansion
Difficulty: Moderate
Opening
(to be said to the interviewee)
Starbucks has had no growth and is facing competition from Dunkin Donuts, which has partnered with Baskin Robbins at many of its
locations. So lets pretend that Starbucks is our client. Do you think that they should add ice cream to retail stores?
Interviewer Guide
This is a very high-level strategy case in which the interviewee is expected to evaluate one idea for the client. It is important to access the
many impacts the introduction of this product will have in the companies strategy and operation. Additionally, the candidate should be
evaluated based on Creativity and Organization to propose new alternatives for the firm.
101
Discussion
(ideas to be presented by the interviewee)
102
Question what could Starbucks do to achieve that growth?
Introduction of New Products Expansion into New Areas
Introduce a non-specialty coffee (Starbucks has now done this Additional suburban areas, slightly further semi-rural areas
with Pike Place Roast) as a special offer during tough Selective cities internationally where Starbucks value
economic times to compete with Dunking Donuts proposition will find eco
Begin selling Starbucks ice cream in retail channels (The
company has also done this)
Key Takeaway: Starbucks has many additional alternatives to explore growth that will fit
its value proposition and leverage on the competencies it has developed over time
103
Case Closing
Given the conflicting target market, potential cannibalization and major operational
challenges between Starbucks business model and ice cream selling, it is not
recommended that it starts selling this product on its stores
Recommendation Analyze the other suggested growth opportunities, and pick one or two that would meet
Starbucks model
Devise how these new alternatives would solve Starbucks growth problem as well as help
the company fight the competitors strategic move
There is a risk the market migrates towards selling ice cream in cafes
The new alternatives may not be enough to set Starbucks back on the growth track (not
Risks
big enough, not profitable enough, or simply to not meet their expectations)
Starbucks growth issue is beyond new products and rest on more structural problems
(excess of stores, growing lines and increasing costs of customization)
104
Case 9: DrugStop Co.
Type of Case: Product Mix Analysis
Difficulty: Moderate
Opening
(to be said to the interviewee)
Our client is the CEO of DrugStop Co., a large pharmacy/drugstore operating stores across North America. When the current CEO came on
board 5 years ago he had a mandate to pursue growth. The retailer has been enjoying growing sales over the past 5 years and
significantly increasing its market share over the period. Recently, however, stockholders have been clamoring for his replacement the
CEO has become increasingly concerned about the health of the firm and the safety of his position. He has approached our firm in order
to help him determine the reasons for his fall from grace as well as recommendations on appropriate actions.
Interviewer Guide
This case is a largely qualitative discussion of the factors contributing to an overall profit decline. The interviewee will need to correctly
interpret the charts provided in order to gain insights into DrugStop Co.s situation. Some interviewees may be uncomfortable with the
ambiguity of the situation and lack of quantitative information. Push the interviewee to focus on what the root causes of the profit
decline might be and how DrugStops current strategy might need to change in order to reverse the trend.
105
Background Information
(to be provided when requested by the interviewee)
106
Exhibit #1
(to be provided to the interviewee as background information)
80% $250,000
$200,000
60%
$150,000
40%
$100,000
20% $50,000
0% $-
1 2 3 4 5 1 2 3 4 5
Prescription Sales Generic Sales Retail Sales Prescription Sales Generic Sales Retail Sales
107
Exhibit #2
(to be provided to the interviewee as background information)
$250,000
20%
$200,000
15% Profits ($)
$150,000
Total Sales ($)
10%
$100,000 Profit Margin (%)
5%
$50,000
$- 0%
1 2 3 4 5
What conclusions can you draw about the impact of DrugStop Co.s strategy?
108
Discussion
(to be covered in discussing the interviewees framework)
109
Case Closing
DrugStops product mix has shifted from being based on high-margin/price drugs to
generic drugs and convenience store items, both of which are lower-margin/price. This
explains its decline in profit while increasing market share
In order to increase profits, recommended solutions may include changes in product mix
Recommendation (balance high-margin drugs with generics), bundling of higher margin products with low
margin ones, introduction of complementary services, opening new stores in profitable
locations, introducing an online and delivery store, and even reducing costs to become
more profitable (closing down stores, reducing personnel, sourcing, etc.).
110
Case 10: Post-Patent Pharma Problem
Type of Case: Profitability / Product Mix
Difficulty: High
Opening
(to be said to the interviewee)
Your client is a manufacturer of over-the-counter drugs. They have two products: ADR and ZYK. Lately, trends in the industry and the
company are uninspiring - sales are flat and costs are creeping upward. How can the company do better?
Interviewer Guide
In this case the interviewee will be required to explore market share and size and revenue, gross margin and fixed cost of each product
and calculate margin and net profit of both of them. As a follow up, the interviewee will be asked what increase in revenues/increase in
gross margin will break-even one of the products (that currently has a negative net profit)
111
Discussion
(to be covered in discussing the interviewees framework)
112
Calculations of Revenues, Margin and Net Profit for Each Product
113
Question how much additional revenue would the
company need from ADR in order to justify keeping it?
Variables (** - calculation required) Source/Formula Calculations
114
Question Instead of increasing revenues, the company is looking
to reduce the variable costs and improve the gross margin on ADR
instead. What would the increase in gross margin for ADR have to
be in order for the company to justify keeping it?
Variables (** - calculation required) Source/Formula Calculations
115
Question in the case gross margin is increased but revenues stay
the same, by what percent should the variable costs decrease?
Variables (** - calculation required) Source/Formula Calculations
% decrease in variable costs ** (1 Target variable costs / Current variable costs) 8.33%
116
Case Closing
Since increasing gross margin for ADR by decreasing variable costs seem doable, the
company should start there
In case the company discovers that decreasing variable costs is not feasible without
Recommendation significantly increasing fixed costs or hurting revenues, and since 12.5% increase in
revenues seems very difficult to achieve, the company should consider shutting down ADR
completely
Considerations &
Investigate further the ways to increase revenues and decrease costs
Based on research, decide on a way of action shutting down ADR or trying to improve
Next Steps results
117
Case 11: A PE and a Soda
Type of Case: Profitability / Exit Strategy
Difficulty: High
Opening
(to be said to the interviewee)
Your client is a private equity firm that has recently purchased a plastic materials manufacturer that makes products such as plastic soda
bottles. The client is looking to cash out of their investment within 5 years and wants you to help improve the profitability of the
manufacturer.
Interviewer Guide
Your client is a private equity firm that has recently purchased a plastic materials manufacturer that makes products such as plastic soda
bottles. The client is looking to cash out of their investment within 5 years and wants you to help improve the profitability of the
manufacturer.
118
Discussion
(to be covered in discussing the interviewees framework)
119
Comparison of the Two Products
(NOT to be shown to the interviewee)
Variables Calculations
Source/Formula Calculations Bottling
(** - required calculation) Non-Bottling
Manufacturing capacity Given 1.5 B 0.5 B
Revenues Given 5 cents per bottle $20 M
Key Takeaway: Bottling products are more profitable and have higher profit margins
120
Question should the firm convert the non-bottling
production to bottling in its Canada plant? (cost - $3 M)
Cost of conversion - $3 M
Assumption - the firm has sufficient cash on hand to finance this project
Key Takeaway: The conversion could potentially add $5.5M in annual profit,
if the firm can sell the entire capacity Breakeven in the 1st year
121
Question how much additional market share should the firm
gain in the next 2 years in order to sell the extra bottles?
Variables (** - calculation required) Source/Formula Calculations
Variables
Source/Formula Year 0 (now) Year 1 Year 2
(** - calculation required
Firms sales Each year, multiply by the firms sales growth rate 1.5 B 1.72 B ** 1.98 B **
Bottling market size Each year, multiply by the bottling market growth rate 5B 5.5 B ** 6.05 B **
Required market share Firms sales / Bottling market size 30% 31.36% ** 32.72% **
122
Case Closing
The manufacturer should convert the non-bottling manufacturing in Canada to bottling, as
it offers better margins, assuming that the firm can maintain sales growth
The additional capacity is needed to match next years anticipated demand, although the
Recommendation firm wont need the entire capacity in the first year after expansion (only 0.22M)
If market and sales grow according to projections, the firm will run out of capacity at the
end of the second year
Consider adding another plant or expanding existing plants to keep pace with the sales
Considerations & growth. Expansion plans should fit within the PE firms goal of exiting within 5 years
Negotiate with suppliers / customers
Next Steps Increase prices due to higher quality products
123
Case 12: Hurricane Katrina
Type of Case: Non-traditional
Difficulty: High
Opening
(to be said to the interviewee)
In August of 2005, Hurricane Katrina hit the southern coast of the US, turning into the most economically damaging and fifth deadliest
hurricane in history. The most severe loss of life and property damage occurred in New Orleans, which flooded as the levee system
catastrophically failed. Eventually 80% of the city became flooded and also large tracts of neighboring parishes and the floodwaters
lingered for weeks. Preliminary damage estimates were well in excess of $100 billion.
As part of an effort to prevent similar disasters in the future, the Federal Emergency Management Agency (FEMA) has approached our
firm in order to develop a strategic plan to help prevent such impact the next time a nature phenomenon occurs. How might you
approach this problem?
Interviewer Guide
This is not a typical case where traditional profitability or new product frameworks can be used. It is important not to try to force-fit
the standard frameworks, but rather think about the problem in terms of the information you were given and the problem that needs to
be solved. Even more than other cases, this case does not have one right answer; however some approaches are discussed below.
The first phase of the case (before interviewee has been given focus on the mitigation piece) is an opportunity for the interviewee to
exhibit structured thinking and sound process approach, there is no right answer. More important is whether the interviewee proposes a
logical approach to the problem that covered a broad range of relevant considerations.
124
Background Information
(to be provided when requested by interviewee)
Natural Disasters
Economic assistance and funds are provided at the state and federal levels
FEMA usually structures their plans in four dimensions: Preparation, Response, Recovery and Mitigation
Our project should concentrate on mitigation; meaning how to mitigate the impact of future disasters
125
Discussion
(have the interviewee explore mitigation)
Example #1:
Once the interviewee has been told to focus on Mitigation, generally their approach should follow a sequence along the lines of: Identify,
Assess, Plan, Communicate, and Implement
Identify:
List out potential natural disasters (not only hurricanes) and risks associated with each
Inventory of current state of infrastructure: levies, potential refugee centers (i.e. Astrodome)
Assess:
Out of the potential disasters, consider which one is most likely and should be prioritized for planning purposes
Out of the risks associated with each disaster, prioritize those risks across all potential disasters that have maximum risk
Plan:
Raise necessary funds to invest in infrastructure, communication, etc.
Identify key suppliers and other resources that can be mobilized in the event of emergency
Create a structured plan to address and communicate the risks and solutions identified
Communicate:
Raise awareness within the general public; as well as institutions and partners: state, federal, NGOs, private companies, media, etc.
Use tools such as schools, media public announcements, celebrities, etc. in order to create awareness
Establish a conference to gather, align and integrate all parties
Potential of using Global Warming awareness as an issue to further leverage message
126
Discussion
(have the interviewee explore mitigation)
Example #2:
Determine the objectives and priorities of the client (FEMA)
Reduce casualties
Reduce damage to property
Understand the various types of disasters that must be considered
Earthquakes
Hurricanes
Casualties:
Identify the most common causes of death and the number of people at risk
Evaluate the possible mitigating actions (prevent risk, or mitigate once risk comes to pass)
Implement/communicate plans
Property damage/other losses
Identify causes
Prioritize and plan
Implement/ communicate
Other considerations
Flexibility of response with changing conditions
Reliability of suppliers
Effectiveness of communication
Chain of command
127
Case Closing
This case does not have a single right answer, but the conclusion reached by the
Recommendation interviewee should follow a logical thought process
There are many risks that could be considered with this case and the discussion will
Risks determine which risks the interviewee should mention in his/her conclusion
128
Case 13: A Sticky (Paper) Situation
Type of Case: Strategy/Reinvestment
Difficulty: High
Opening
(to be said to the interviewee)
Your client manufactures specialty papers sold to commercial printers in the US. The client produces self-adhesive sheeted papers that
are ultimately used in a variety of labeling applications often, eventually, to service CPG firms and for billboards.
Your clients operations are profitable, but the business has failed to grow over the past few years. The client would like to invest in the
business and you have been asked to identify opportunities for growth.
Interviewer Guide
This is a very direct profitability case. It touches upon the strategy the company may pursue, but the decisive factor is the profit from the
alternatives. The candidate will be required to consider revenues, costs and gain in market share to get to the bottom of the case.
129
Discussion
(to be covered in discussing the interviewees framework)
Financials Costs
The company has 30% market share in the small printers and Additional printing will increase its costs (operations,
10% on the medium and large printers additional manufacturing costs, and SG&A)
Margins are acceptable, but management is averse to price- An expansion in medium-sized (carton) packaging would cost
cutting because theyre afraid it will initiate a war with $675K/year
competitors leaving everyone worse off. Price and cost are Additional pallets (large-sized packaging) would cost
different for each carton type $2.3MM/year
Assume, further, that the client can capture up to an
additional 20% of the medium-sized or large-sized packaging
Industry customers in case of an expansion
Not growing likely mature and difficult to alter
No significant competitor in the market
Ignore taxes and depreciation
130
Financials for the three sectors
(To be provided upon interviewees request)
Variables
Source/Formula Small Medium Large
(** - calculation required)
Price Given $20 $18 $15
Key Takeaway: Profit per box is larger in the cartons (medium size) market
but total market is larger for the pallets (large size)
131
Question which market should the company expand?
Get the total available profit in the market (previous slide)
Consider the market share the company will be able to gain
Finally, account for the cost of getting the extra capacity to supply the additional clients:
Medium Size $675,000
Large Size $2,300,000
Key Takeaway: Both markets provide an attractive opportunity, but given the
high cost of the extra capacity on the pallets, the cartons present a better deal
132
Case Closing
The client is in a profitable market, that apparently provides some growth opportunity
Of the two available expansion opportunities, both the large size and the medium size
seem to be interesting (yielding around $2 million dollars per year of gross profit
Recommendation The medium size (carton) has a much lower cost of expansion and therefore, shows itself
as a better option regarding bottom line growth boost
Additionally, the smaller cost of expansion means a reduced financing need and a resulting
diminished risk from the investment
This segment of the specialty paper market seems to be fairly stable and mature, thus
Considerations & the assumption of no growth, hence it would probably be wise to look for opportunities
outside its core products
Next Steps Producing products downstream in the paper industry could reveal attractive
opportunities as well
133
Case 14: Free Wi-Fi
Type of Case: Strategy
Difficulty: High
Opening
(to be said to the interviewee)
As part of an effort to kick start the economic recovery in NYC Mayor Bloomberg has asked you to come to NYC and advise him on
whether Wi-Fi should be accessible to all of Manhattan free of charge. The Mayor has looked at several studies and has seen some
research on economic impact. What would you investigate to determine whether he should implement the plan?
Interviewer Guide
This case is focused on developing an approach to the question. No number calculations are necessary in this case, but proper market
sizing and ballparking of the impacts could yield insightful recommendations.
134
Background Information
(to be provided to the interviewee upon request)
Source- www.iab.net/economicvalue
135
Discussion
(to be covered in discussing the interviewees framework)
137