IIMB Casebook and Industry Reports 2021-22 – Volume 11 (B)
Contents - I
S.No
Particulars
Difficulty
Company
Page
S.No
Particulars
I.
Introduction
7
17.
US Tyre Manufacturer
II.
Profitability Framework
10
IV.
Market Entry Strategy Framework
1.
Packaging Products Manufacturer
2.
Difficulty
Company
Page
Difficult
BCG
51
54
Easy
Bain
12
18.
Global OEM
Easy
Accenture
55
Hypermarket Operations
Moderate
McKinsey
14
19.
OTT Service Launch
Easy
Strategy&
57
3.
Candy Manufacturing Company
Moderate
McKinsey
17
20.
New Pilot Program Launch
Easy
Byju’s
60
4.
Mall Food Court
Moderate
Strategy&
19
21.
Semi Luxury Car Manufacturer
Easy
BCG
62
5.
Japanese Calligraphy Brush Maker
Difficult
Kearney
22
22.
Sugarcane Yield Enhancer
Difficult
BCG
64
6.
Quick Service Restaurant
Moderate
Kearney
25
23.
Third Party Garages
Easy
Bain
67
7.
Cosmetics Industry
Difficult
Kearney
27
24.
US Food Manufacturer
Moderate
Bain
69
8.
Insurance Company
Moderate
Kearney
29
25.
Medical Manufacturing Company
Moderate
Bain
71
9.
Footwear Manufacturer
Moderate
BCG
31
26.
Coffin Manufacturer
Difficult
EYP
73
10.
Electronics Company
Difficult
BCG
34
V.
Pricing Strategy Framework
11.
Multi-Speciality Hospital Chain
Moderate
E&Y
36
27.
Toll Collection
III.
Growth Strategy Framework
38
28.
12.
Online Food Delivery Platform
Moderate
Bain
41
13.
Pharmaceutical Giant
Moderate
Bain
14.
McDonalds India Growth
Moderate
15.
Medical Equipment – Bear Hugger
16.
Metro Expansion
76
Easy
BCG
77
Sleep Reduction Pill
Moderate
BCG
79
29.
Medical Drug
Moderate
BCG
82
43
30.
Airline Tickets
Moderate
Kearney
84
Bain
45
31.
Factory Owner
Easy
Bain
86
Moderate
Bain
47
32.
New Medicine Launch
Moderate
McKinsey
88
Moderate
BCG
49
33.
Autism Digital Therapy Product
Moderate
McKinsey
90
ICON, IIM Bangalore
2
Contents - II
S.No
Company
Page
Industry Reports
Difficulty
VI.
Particulars
Unconventional
34.
IIMB Hostel Expansion
Moderate
EY
94
35.
Adventure Park
Moderate
Bain
96
1. Airlines Industry
129
36.
Last Mile Delivery
Moderate
Bain
98
2. Automobile Industry
130
37.
Home Services: Fall in NPS
Moderate
Bain
100
3. Cement Industry
131
38.
Plastic Packaging Company
Moderate
Bain
102
4. E-Commerce and E-Retail Industry
132
39.
Mohalla Clinics Delhi
Moderate
BCG
104
5. Electronics Manufacturing Industry
133
40.
Customer Service: Private Bank
Moderate
BCG
106
6. Energy, Oil & Gas Industry
134
41.
Uber Driver
Moderate
BCG
108
7. Financial Services – Asset Management
135
42.
Glass Bottle Manufacturer
Difficult
BCG
110
8. Financial Services – Banking
136
43.
Government Healthcare
Difficult
BCG
112
9. Financial Services – Digital Payments
137
VII.
Guesstimates
44.
Petrol Pumps in Mumbai
Easy
45.
Visitors to Metro Station
46.
93
S.No
Industry
Page
115
10. Financial Services – Insurance
138
Bain
116
11. FMCG Industry
139
Easy
Auctus
118
12. Food Processing Industry
140
TV Viewers in India
Easy
PwC
120
13. Healthcare Services Industry
141
47.
Sugar Consumption
Easy
Strategy&
122
14. Hospitality Industry
142
48.
Snow Melting Liquid
Moderate
McKinsey
124
15. Iron & Steel Industry
143
49.
Solar Lanterns - India
Moderate
McKinsey
126
16. IT and ITeS Industry
144
50.
COVID Tests
Difficult
GEP
127
17. Logistics Industry
145
ICON, IIM Bangalore
3
Contents - III
S.No
Industry
Page
18. Pharmaceutical Industry
146
19. Retail Industry
147
20. Telecom Industry
148
ICON, IIM Bangalore
4
Copyright
© 2022, ICON – Consulting Club, IIM Bangalore. All rights reserved.
This book or parts thereof may not be reproduced in any form, stored in any retrieval system, or transmitted in any form by any
means – electronic, mechanical, photocopy, recording, or otherwise – without prior written permission of ICON – Consulting Club,
IIM Bangalore. For permission requests, write to ICON at icon@iimb.ac.in.
ICON, IIM Bangalore
5
Foreword
This casebook documents the interview experiences of the students of IIM Bangalore. The aim of sharing these experiences is to
inform students about the case interview experiences of past batch and to help them prepare for their placements accordingly. The
experiences listed below are not necessarily the best or the only way to handle case interviews. They only serve to give students an
idea of what to expect when they walk into a case interview. Every individual could have his/her unique way of tackling consulting
interviews, each of which could be correct.
This document has contributions from students who appeared for campus interviews conducted by consulting firms during the
summer and the final placement process over the last year (2021-22). The interview experiences have been sorted based on the type
of case, consulting firm, difficulty and the round in the selection process. Special thanks to all the contributors!
In this edition, to provide a holistic preparation for the case interviews, we have included comprehensive, well tested frameworks and
industry reports. These frameworks have been devised by students over innumerable iterations in finding a good fit that would crack
or narrow down even the toughest cases. The aim of these reports is to provide a basic understanding of the industry's value chain,
key performance metrics, current market trends and major drivers for cost, revenue and growth. Even though having industry-specific
knowledge is not mandatory for case solving, having a basic industry understanding helps tackle case interviews better.
Team ICON wishes you the very best for your final placements!
ICON, IIM Bangalore
6
Introduction – Case Interviews
Case Interviews
❖ Personality based ques. (5 min); Case discussion (20-30 min); Closing ques. for interviewer (2
min)
❖ Know your CV well→ personality ques are based on CV to break ice and getting to know you
❖ Case discussions don’t have a predetermined answer. Evaluation is based on approach, exercising
judgements and steering through the problem statement
Business Case
❖ Real life consulting project, that the interviewer was involved in → basis of case discussion
❖ Consult projects can vary from 2-3 months to even a year → condensed into minutes for
interviews
❖ Provided as a 3-5 statement caselet introducing the client and problem faced by them
❖ Can be number based or strategy driven; guesstimates can be a part as well
Why Case Interview?
❖ Test the ability to perform on the job in a similar setup as the case-interview (consult-fit)
❖ Understand thought process of the candidate and capability to make decisions/ prioritize
❖ Put you under same pressure, like any consult project, to assess your poise, self confidence and
communication skills (interpersonal skills)
❖ Drawing on personal experiences, if any, can come very handy – appreciated by interviewer
ICON, IIM Bangalore
7
Introduction – Case Interview Process
Interview Stage
What to expect?
Skills Tested
Case Interview
Question
❖ Interviewer tells about the business problem and objective
❖ Ask clarifying questions; ensure you heard the question correctly
❖ Ability to listen
and synthesize
Developing the
structure
❖ Ask for time to structure the problem at hand
❖ Come-up with a structured MECE approach quickly
❖ Structured
thinking
❖ Communication
Case Analysis
❖ Use a hypothesis driven approach for case solving
❖ Ask relevant questions, use 80-20 rule appropriately
❖ Case can get number intensive
❖ Problem solving
❖ Analytical skills
❖ Communication
❖ Summarize the case with recommendations backed up by insights
discovered in the case
❖ Creativity
❖ Concision
❖ Communication
❖ Opportunity to show enthusiasm towards consulting
❖ Ask relevant, non-generic question
❖ Consulting fit
Summary/
Recommendation
Questions for
Interviewer
ICON, IIM Bangalore
8
IIMB Profitability Cases
2021-22
ICON, IIM Bangalore
9
Profitability Framework - Revenue
Preliminary Questions
•
•
•
Clarify objective, quantum of
change in profit and timeline
Geography - Location of the firm, its
branches
Selling Price
per Unit
Business Model – Where does the
firm lie in the value chain? What
are its revenue streams and
distribution channels?
•
Understand customer segments
•
What is the product mix? Any new
differentiation/ change in products?
•
Profit
Cost
Number of
Units
Product Mix
Supply
(What product in the
portfolio; apply 80/20)
Demand
Number of
Customers
Value Chain
Primary
Activities
Revenue = Core & Non-core sources like
Advertisement, Parking, VAS, Reinvestment
Revenue
Support
Activities
Pre Service
During
Service
Avg Order
Amount
Post-Service
If relevant, use industry value chain
Order
Frequency
For a manufacturing firm,
use Need, Awareness, Accessibility,
Affordability, Customer Experience
What is the competitive landscape?
Procurement
SG&A
Manufacturing
Infrastructure & IT
Distribution
Human Capital
Firm Level
Industry
Level
Macro
(PESTEL)
Post Sales Service
ICON, IIM Bangalore
10
Profitability Framework - Cost
Support Activities
Research and Development
Financing costs
Branding and Advertising
Human Capital (Capacity x Efficiency x Utilization)
Selling, General & Administrative
Procuring Raw
Materials
Primary Activities
Cost
Manufacturing
● Cost of raw materials
● Plant maintenance
● Transportation &
Packaging costs
● Idle capacity
opportunity costs
● # Suppliers x Contract
amount; Duration
Distribution and
Storage
Post Sales Service
● Number of distributors
x avg order amount x
frequency of orders
● Number of customers x
Frequency of service x
cost incurred
● Transport & Packaging
● Spare parts, returns,
replacements, waste
● Wastage, wear and tear
● Intermediate Storage
● Setup time, cost
●Distributors x Avg
Distance from hub x Cost
per km
ICON, IIM Bangalore
11
Packaging Products Manufacturer
Profitability | Easy | Bain (Buddy)
Your client is an Indian manufacturing company, facing a decline in profits. The CEO of the company
has asked us to identify problems and suggest possible solutions.
I would like to analyse costs across the value chain: R&D expenses, inbound logistics, processing costs,
outbound logistics and marketing and distribution expenses. Does that sound comprehensive and do
we know whether the increase in cost is specific to any component of value chain?
Thank you for the case. Before I proceed with structuring and solving the problem, I would like to ask a
few preliminary questions.
Yes, you can focus on the processing costs part.
Okay. Now, I would like to break the processing costs into fixed and variable costs. Fixed cost would
generally include expenses such as electricity costs, depreciation expense and salaries of the
supervisors. Variable costs would include cost of materials consumed, labour charges and other variable
overheads such as stores and spares. Do we know whether any of these costs have gone up?
Sure, go ahead.
What does our client manufacture?
Our client is into packaged products manufacturing for FMCG, e-commerce, and consumer durable
products. It essentially operates in the B2B segment.
Okay. And what’s the timeframe and quantification of this decline in profits?
So, you are correct. There has been an increase in the variable overhead cost. The cost of oil and
lubricants used to run the machinery have gone up.
The profits have declined in the range of 2-5% over the last 3 quarters.
Got it. So I would like to break down this cost as a product of per unit cost and volume. Do we know as
to which component of the cost has risen?
So, is this problem specific to our client or is it an industry-wide problem?
Yes. There has been an increase in volume of consumption.
The issue is specific to our client.
Okay. So I can further attribute the increase in volume to either machinery related issues or labour
related issues. Machinery related issues would include a case of either the machinery being too old,
thereby leading to more wear and tear and requiring higher consumption of oil and lubricants or a case
where a new machinery has been purchased, which itself consumes more oil. On the other hand, labour
related issues could include a case of mishandling of oil and lubricants by the labour, leading to an
increase in wastage and spoilage cost. Is the increase attributable to any of these issues?
Okay. Does the client operate across the entire value chain, or does it only manufacture these products
and outsource the distribution?
The client’s presence is across the value chain.
Okay. How many manufacturing plants does the client have in India assuming its operations are India
specific? And is the decline in profits specific to any plant?
That is a good question. So, the client has 5 manufacturing plants in India and the they are facing a
decline in 2 of these plants.
Just to re-iterate the problem, our client is an Indian packaged goods manufacturing company, having a
presence across the value chain, and is facing a decline in profits for the past 3 quarters in 2 out of its 5
manufacturing plants. The issue is specific to our client.
Yes, you have correctly pointed out the issues. 2 of the manufacturing plans have recently replaced old
machinery with new ones and this machinery relatively consumes more oil to run. At the same time,
since the machine is new, the labor is ill equipped to handle it thereby leading to more spoilage. What
can you recommend to reduce the cost?
Great. So, I would like to break down profit as a function of revenue and cost. Do we have any data to
understand if the decline in profits is due to reducing revenues or increasing costs?
Sure. I would like to divide my recommendations into short-term and long-term.
• On an immediate basis, the client should ensure that adequate training is being provided to the
labour to handle the machine. This could be done internally through a supervisor or through external
assistance whereby the machine vendor can send across some personnel to train the labourers. The
client can also stick pictures on the machine depicting correct usage.
• In the long–term, the client can consider negotiating the price with the oil/lubricant supplier by
purchasing bulk quantities, since the new machinery anyway needs more oil.
Revenues have been steady, but the costs have gone up.
Great. We can close the case here. Thank you!
Sounds about right.
ICON, IIM Bangalore
12
Packaging Products Manufacturer
Case statement
Interviewee Notes
Profitability | Easy | Bain (Buddy)
•
Decline in profitability of packaged products manufacturer
•
Analyze reasons for decline and provide recommendations to improve profits
Structure/Framework
• Improve profitability with
a focus on costs
• Establish value chain for
a manufacturing
company and identify
individual components
• Increase in oil and
lubricant cost can be
driven by increase in per
unit cost or increase in
volume
Profit
Costs
Value Chain
R&D Expenses
Inbound Logistics
Revenue
Processing
Fixed Costs
Outbound Logistics
Marketing and
Distribution
Variable Costs
Material
• Recommendations likely
to be implemented for
planned machinery
purchase in the
remaining 3 plants
Labour
Overheads
Key Takeaways
• Efficient understanding of value chain and possible cost drivers in each element is essential for identification of issue
• Focus on elimination of factors as early as possible to drill down to the root cause
• Mix of practical short-term and long-term recommendations with internal of external assistance by way of a 4*4 matrix can be used
ICON, IIM Bangalore
13
Hypermarket Operations
Profitability | Moderate | McKinsey (Partner)
Your client is a grocery retailer having multiple stores across the country. They are facing low profits in
individual stores as compared to the competition. Find the issue and recommend solutions.
I would like to know all the possible cost parameters within these segments.
Thank you for the problem statement! I want to start by asking a few questions. What are the target
consumers of the client? What are their core competencies?
Sure. Employee costs include salary, commission, training & hiring expenses. Store cost comprises
utilities, repairs, payment processing, and supplies. Lastly, product/service costs include packaging,
discounts, advertisement, and shrinkage/wastage cost. Have I missed stating any other costs?
The client is a neighborhood store where you can find fresh foods. It has positioned itself as discounted
store and is the first choice for medium-income group families.
You did consider all the significant cost parameters. Our client is facing an issue with high employee
costs. Can you derive an equation for this cost?
Okay. So, we can say it is something like a Big Bazaar. What is the product mix?
Sure. Employee Cost = Number of employees X Hours Worked X Salary/hour + Additional benefits
(Overtime, Allowances, etc.)
You can consider it to be like a Big Bazaar. Its focus is on groceries, skincare and home care products. It
does not offer electronics and fashion.
Great. Can you also please tell me about the client’s competition? How much profit do they earn in
comparison to us?
The industry-wide profit margin ranges between 3-11%, with an average of 6-7%. In comparison, profits
of our client’s stores are close to 0%.
Thank you for the information. I would now like to approach the problem statement. As we know that
profits are a function of revenue and cost. Is there any segment you would like me to focus on?
Please go ahead with the approach. Kindly analyze the cost factor for me.
Cost can be further divided into Procurement & Material Handling costs, In-Store Costs, and After Sales
costs (Returns, services).
Can you further explain the in-store costs of our client?
That’s correct. Our client has employed a greater number of employees in the store. Currently, the
store runs from 8 AM – 8 PM with 13 employees per shift including 10 shop floor salespeople, 1
cashier, 1 manager and 1 security guard. Let's say the non-peak hours are 11 AM-6 PM when we need
8 employees. Rest 10 employees are required in peak hours. A full-time employee’s salary working for
6 hours/day is ₹10,000 per month, and for a part-time employee working for 4 hours/day is ₹5,000
per month. Can you compare the monthly salaries of the current employee structure with having 20%
part-time employees?
Current Scenario: 2 shifts – 8AM-2PM and 2PM-8PM with 10 full time employees each. Salary
expenditure – 2*10*10,000 = ₹2,00,000 per month.
20% Part-Time Scenario: 2 shifts – 8AM-2PM and 2PM-8PM with 8 full time employees each. 2 part
time employees each covering peak hours from 8AM-12 noon and 4PM-8PM. Salary = 2*8*10,000 +
2*2*5,000 = ₹1,80,000 p.m.
In-store costs can be divided further into fixed and variable costs. Is there any specific segment I should
analyze?
Your numbers seem correct. Do you suggest any further improvement to the client over the 20% Parttime scenario?
What do you mean by fixed costs? Can you further bifurcate it?
Yes. Since having part-time employees decreases the salary expense as their per hour cost is
comparatively lower. Mathematically speaking, all part-time employees can minimize salary expenses
to ₹1,40,000 per month
Full Part-Time scenario: 3 shifts – 8AM-12noon, 12noon-4PM and 4PM-8PM. Peak shifts with 10
employees each and non-peak shift with 8 employees. Salary expenditure = 2*10*5000 + 1*8*5000 =
₹1,40,000 per month
Fixed cost includes rent/lease, insurance, interest, maintenance, tax, infrastructure, and equipment.
Great! But our client is following industry standards in all these costs. We can further move to variable
cost parameters.
Variable costs for a hypermarket can be further divided into costs related to employees, store, and
products/services. Which segment should I focus on?
ICON, IIM Bangalore
14
Hypermarket Operations
Profitability | Moderate | McKinsey (Partner)
Okay. So, you suggest the client to employ all the part-time employees?
I would rather not. Though the calculations show that we will be saving 30% of salary expense
compared to the current scenario, all part-time employees come with other qualitative costs that the
formula does not include. Hence a combination of full-time and part-time employees after the costbenefit analysis will be the best option.
What are the qualitative aspects you would suggest to be looked upon by our client?
1.
2.
3.
Part-time employees have high-income elasticity and low switching costs; hence their retention
becomes difficult.
Retention cost is further coupled with hiring and training cost of recruits that increases cost to
the company.
It is difficult to imbibe company values and culture in part-time employees. This will impact
customer’s acquisition and retention for our client in the long-term affecting its revenues and
market share.
These are great insights. This was a real-time case, and we also ended up suggesting a mix of full-time
and part-time employees to our client. It was nice interacting with you. Thank you!
It was great interacting with you too. Thank you!
ICON, IIM Bangalore
15
Hypermarket Operations
Case statement
Interviewee Notes
Profitability | Moderate | McKinsey (Partner)
• Your client is a grocery retailer having multiple stores in pan India.
• Low profits in individual stores as compared to the competition.
Structure/Framework
Profit
• The client is positioned
as a neighborhood
discounted store
targeted to MIG families.
• Hypermarket chains like
Big Bazaar, dealing in
groceries, skin, and home
care. Not into electronics
& fashion.
• The client’s profit margin
is 0%. The industry
average is 6-7%, with a
range of 3-11%.
Costs
Procurement & Material Handling
Revenue
In-Store Costs
Fixed
After Sales
Variable
Rent/Lease
Employee
Store
Product/Service
Insurance
Salary
Utilities
Packaging
Maintenance
Commission
Payment
Shrinkage
Infrastructure
Hiring/Training
Repairs
Advertisements
Key Takeaways
• The interviewer wanted me to list all the cost parameters before delving into the quantitative aspect of employee salary cost.
• Looking at the salary expenditure scenario beyond the quantitative aspects was well appreciated by the interviewer.
ICON, IIM Bangalore
16
Candy Manufacturing Company
Profitability | Moderate | McKinsey (Buddy)
Your client is a leading candy manufacturing company. Recently, they have seen a decline in their
profits. They have hired you to diagnose the problem and give recommendations.
Yes, the volume of candies sold have fallen drastically in the past few months.
Thank you for the problem statement. I would like to start by asking a few clarifying questions to get a
better idea about the client as well as the context of the problem. Is that fine?
The demand for the product has declined.
Yes, please go ahead
Demand could go down either due to factors internal to the client or external factors. Since it is an
industry wide issue, I would like to assume the latter.
Firstly, I would like to know the geography the client operates in and where does our client lie in the
value chain? Also, is the decline specific to any geography?
The client has manufacturing plants in 5 locations in India. However, their customers lie pan-India.
They manufacture candies and sell it to retailers like paanvalas and kirana shops who in turn sell it to
the end user. The decline has been observed throughout India.
I would also like to know what kind of products is the client selling, and since when it has been seeing
a decline in profits? I would also like to know what is the amount of decline?
The clients manufactures and sells Rs. 1 – 2 candies like Centre Fresh and other mouth freshners. For
simplicity, assume this is the only product. They have seen the decline since last 5-6 months. The
decline has been about 30%.
What is the competitive landscape in this industry and is the decline in profit particular to the client or
is it an industry-wide phenomenon?
Volume could fall either due to supply side issue or demand side issue. Do we know which one is it?
Yes, you are correct.
External factors could either be industry structure or contextual factors like political, economic,
social etc. Would you like me to focus on any one the above two.
You can think about industry structure.
Industry structure would include the bargaining power of buyers and suppliers. Since the costs and
prices have remained same, these factors can’t be the issue. Other factors could be introduction of
substitutes like sugar free candies etc., a new entrant disrupting the market or a change in the basis
of competition – maybe some price wars (but this is highly unlikely).
All these things have remained the same. I want you think a bit more about the industry structure .
Since profit is a function of revenue and costs, do we have any data on whether the revenues have
gone down, or costs have gone up or is the decline a combination of both?
It could be because of a change in price of it’s complements. The clients products are very often
brought with things like cigarettes at paanvaalas or with other commodities to substitute for loose
change. It could have happened that prices of them might have increased or decreased and reached
to a convenient amount like Rs.10-20.
This is indeed the issue. The government increased taxes on cigarettes, due to which their prices
increased from Rs. 17-18 to Rs. 20 which has drastically affected the sales. Can you give a couple of
recommendations,
In the short term, the client should look at partnerships with cigarette companies in terms of
bundling their products. They can also look at selling 10 unit packings of their products. In the long
term, they need to diversify their portfolio and move into chocolate products.
You can focus on the revenues
Thank you, we can close the case here
There are 2-3 big players in the industry & all of them have seen a similar decline in profits.
So, our client is a candy manufacturer facing a steep decline in profits for the past 5-6 months. They
sell candies similar to Centre Fresh. Further, this has been an industry wide phenomenon. Is my
understanding correct?
Yes, you can go ahead and tell me your approach.
Revenues are a function of Price, the volumes and the product mix. Since, the client manufactures
only one type of candies, product mix is not of much relevance here. Also, since, it is just a Rs. 1
product, I am assuming fall in price is also not the reason for profit decline, which means the volume
has declined. Am I correct?
ICON, IIM Bangalore
17
Candy Manufacturing Company
Case statement
Interviewee Notes
Profitability | Moderate | McKinsey (Buddy)
•
Declining profits for a candy manufacturer
•
Identify reasons and give recommendations
Structure/Framework
Profit
• Decline in Volumes
• Single product like Centre
Fresh
• Industry wide decline
• Sold at Paanvaalas and
Kiraana shops
Price
Revenue
Costs
Volume
Product Mix
Supply
Demand
Internal
External
Industry Structure
Industry Context
Porter’s 5 Forces Analysis +
Compliments
PESTEL Analysis
Key Takeaways
• Structuring around PORTER and PESTEL factors is beneficial when demand has declined due to external factors
• Remember to include the role of ‘compliments’ when assessing the industry using Porter’s 5 forces
ICON, IIM Bangalore
18
Mall Food Court
Profitability | Moderate | Strategy& (Partner)
Let me tell you right away that this is kind of an unconventional case. I hope you are ready for it. You
are the promoter and owner of a mall, and you want to increase the profitability of the mall’s food
courts.
Let us just look at the restaurants. I want you to think of a typical mall.
Thanks for this interesting case. Before I get into the case, may I please ask some questions to
understand the scenario better.
Yes, highest share as well as highest percentage of commission.
Ok, do the fine dining restaurants also contribute the highest share of our revenues?
May I know where exactly is this food court located. Most mall food courts are located on the top floor
because I would want the visitors to explore the shops below and then come to the food court after
they are famished. Also, since we are talking about the mall being close to a waterpark, we could have
visitors specifically coming for the food since parks usually charge a premium when it comes to food.
Sure! Go ahead.
May I know a bit more about the mall and the food court.
The mall is in an upcoming locality outside a major city. Since you have worked in Gurgaon, lets think
of the mall being in Greater Noida. There is a waterpark near the mall, and it is frequented by visitors
of all age groups. The food court houses 3 types of restaurants.
1) The High-End Fine Dining Restaurants
2) The Regular Fast-Food Chains
3) Kitchens preparing meals for Swiggy, Zomato, etc.
What is the revenue structure we are looking at. Mostly the malls charge a monthly rent to the
restaurants and take a cut from the profits.
Yes, you are correct. The food court is on the top floor, and we have a lot of visitors coming in from the
waterpark.
Ok, since we are running on a commission model here we will benefit directly if the restaurants
generate more profits. For that we can look at how much is being spent that which will be function of
(how many visitors visit on a day * average cost per order).
Ok, Go On
You are correct. But for the case, lets us say that you are getting paid only through a cut from the
profits. The Fine Dining Restaurants gives the highest percentage, then the fast-food chains and pickup
kitchens have the least percentage.
May I please take a few minutes to structure my thoughts.
I would like to first look at the number of visitors. To increase the footfall to the restaurants, we can
think of advertising the restaurants in the waterpark and run promotions so that more people come.
I don’t think that you as an owner can do much about advertisements. It is up to the restaurants to
decide how much and how often they want to advertise. I would like you to think beyond all this.
Ok, do you want me to look at the mall itself?
Sure, please take your time.
Ok, so, since we are looking at increasing the profitability. We can look at two buckets. One is the
Expenses that we are currently incurring and second the Revenues that we are generating from the
restaurants.
Our Expenses are quite optimized and there is not much scope there. If need be, we can look at it later.
Let us focus on the Revenues.
Oh perfect, I understand that there are three revenue streams for any mall food court.
1) The revenue we get from the 3 kind of restaurants that we have with Fine Dining giving the highest
share of profits
2) Through advertisements that we put in the food court
Yes, you are getting there. Think about the mall and tell me how will u make more people eat at your
food court.
Ok, Since we discussed that this mall is in a place like Greater Noida. I am aware that there is mall there
which has some indoor water canals mimicking Venice and people travel just to see that. Does our mall
have any USPs like that or can we come up with something like this?
Interesting observation .... But no, ours is a typical vanilla mall.
May I take a minute to think of alternatives?
ICON, IIM Bangalore
19
Mall Food Court
Profitability | Moderate | Strategy& (Partner)
Yes, definitely. I want you to think of the structure of the mall itself. This is my hint for you.
Ok, thanks a lot for the hint, since we gain the maximum from the fine dining restaurants. We could
give them spaces in easily accessible areas. The families who reach our food court should first see the
fine dining restaurant. Also, since we are talking about families who are coming to the waterpark, they
would be coming with their children. We can think of having some eye-catching displays in front of the
restaurants so that the children get captivated by them and ask their parents to take them there.
Ok, fair enough. Think more. Maybe something to do with how they reach the food court.
Oh! Yes. Usually, visitors take the escalators to reach the food courts. We can strategically place the
elevators such that the guests must traverse the entire floor when the come.
Can you elaborate?
Sure. The escalator which brings the visitors up to the food court can be placed on one end and the
fine dining restaurants will be closest to it. The escalator to go down must be on the other end so that
families who have had a meal will still have to reach it and, in this process, they might spend a little
more on things like maybe a quick dessert to take away, candies, etc.
Nice that is what I was looking for! Do you have any questions for me?
Yeah! This was such an interesting case. I am just curious on whether this was a live case that Strategy&
received and how did it tackle it.
Yes, this indeed was something we took up for a popular mall chain and we suggested them to make
some changes to escalators among other things.
Thanks for sharing this with me
It was nice talking to you. All the best!
ICON, IIM Bangalore
20
Mall Food Court
Case statement
Interviewee Notes
Profitability | Moderate | Strategy& (Partner)
• You are the promoter and owner of a mall, and you want to increase the profitability of the mall’s food courts.
Structure/Framework
• The client is positioned
as a neighborhood
discounted store
targeted to MIG families.
Profit
• Hypermarket chains like
Big Bazaar, dealing in
groceries, skin, and home
care. Not into electronics
& fashion.
Revenue
• The client’s profit margin
is 0%. The industry
average is 6-7%, with a
range of 3-11%.
Footfall
USP
Marketing
Expenses
Spending Per
Meal
Positioning of
Restaurants
Positioning of
Elevators & Escalators
Key Takeaways
•
•
•
•
Derive examples and experiences from your own life
No conventional framework used even though tried to apply a profitability framework
The final recommendation is the key
Keep a look out for any hints that the interviewer may give to lead you to the desired answer
ICON, IIM Bangalore
21
Japanese Calligraphy Brush Maker
Profitability | Difficult | Kearney (Buddy)
Your client is a Japanese calligraphy brush maker whose profits have been dropping for the past 2
years. Can you determine the reasons?
Sure. Before I analyse the possible causes of the issue, could I ask a few questions to get a better
understanding of the client and the industry?
Fair enough, what would you like to know?
Japanese calligraphy is a niche and small scale industry where the brush makers are specialised
craftsmen. Am I right in making this assumption?
Alright, it seems that the decreasing revenue is the main issue that the client is facing. I’d like to look at
revenue number of brushes or units sold * price per brush. Do we have any data to suggest either one
of them has reduced over this time?
Price per brush has remained the same. But the total number of brushes sold has dropped by 30%. You
can take a look at that.
Ok, we know that volume has been reducing. This could be because of either a reduction in demand or
supply or both.
Yes that’s right. The client is a single workshop operator and is a grandmaster of making these brushes.
He runs a sole proprietorship which has been in his family for 4 generations.
That’s correct, we know from our client that both demand and supply have gone down leading to a fall
in volume. Why don’t you look at supply first?
Ok. I would also like to know what kind of customers the client caters to and if our brush maker only
makes the brushes or engages in other parts of the value chain as well. Does he source the raw
materials himself or does he operate the retail selling to his customers?
Sure, we know that client operates across the value chain on his own. This would include procuring raw
materials, logistics associated with transport, manufacturing or crafting the brushes in this case, sales
and marketing and after sales service and maintenance. Do we know if one or multiple steps in this
process are facing difficulty right now?
The customers are mostly renowned calligraphy artists who create traditional Japanese character
calligraphy for exhibitions and social ceremonies. They expect only the best quality of brushes and
therefore, each order is bespoke and customized according to the needs of the individual clients. And
yes, our client does nearly everything in the value chain, from raw materials to crafting the brushes
and delivers the orders to his customers at the workshop
Thank you, I’d also like to know if this fall in profitability is affecting only our client or other brush
makers in the industry.
It’s been affecting all the brush makers of this ilk. But there are only 3 to 4 of these master brush
makers across Japan. So let’s just focus on our client for now.
That helps a lot. I think I have all the necessary details to proceed with the case. Could I just take a
couple of minutes to structure my thought?
That’s perfectly alright. Go ahead.
(After a short pause for structuring the case) Decreasing profits can either be due to falling revenues or
rising costs or both. Do we have any info on what might be the case with our client?
I can tell you that the client is facing a problem in sourcing the raw materials used for the brushes. Do
you have any clue as to why this might be case?
For high quality demanded by artisanal calligraphers, I’d assume that only the best natural raw materials
would do for the brushes. This might mean that the wood used for the handles is rarely sourced timbre
or that the bristles used for the brush might be a particular kind of animal hair. Could a scarcity of either
of these be the reason getting the raw materials is a problem?
Yes, that’s on point! As you mentioned, only the best quality of materials is acceptable to calligraphers
and brush maker. Specifically the brush maker will not compromise on the hair of the white goats
from the Yangtse river delta. As habit destruction is taking its toll, the goat population has decreased.
This also means that our brush maker can’t procure the valuable goat hairs like he could before. Let’s
also figure what’s happening with demand.
Certainly. As far as I can tell, demand would be = number of total customers * fraction of customers
approaching our client * frequency of purchase * average purchase quantity. Do we have any data to
identify which of these might have reduced for leading to the fall in demand?
We know that the clients revenues have seen the dip. Costs have gone down to a small extent as well.
ICON, IIM Bangalore
22
Japanese Calligraphy Brush Maker
Profitability | Difficult | Kearney (Buddy)
Based on how you have approached it, I can tell you that the total number of customers and their
frequency of purchase has reduced.
Interesting. That leads me to hypothesize that perhaps the artists aren’t getting the kind of business
they are looking for causing some artists to leave the practise and for the remaining ones to get fewer
commissioned works. Am I on the right track?
That could very well be a possible reason. But recently, the Japanese government has made a big push
to promote this form of traditional calligraphy and has organised many exhibitions and given support
to the artists for the same. Can you think of other possibilities?
(After a brief pause to organise thoughts) Ok. So for the customers, the requirement for brushes would
depend on their need, awareness, accessibility, affordability, acceptability and purchase experience. If
the total number of customers or calligraphers has reduced, I would suspect it might be because they
are not opting for this line of work as it might not be what they might want to pursue long time. Could
that be the reason?
Correct. Calligraphy like any traditional art in Japan is a generational in that the sons take up the craft
from their fathers. But the latest generation is not as fond of the art because of the years of dedication
it takes to become proficient at it. Any idea why frequency of purchase might be reducing?
For frequency of the purchases of the brushes to drop, I’d again like to look at need. We know that the
number of commissioned calligraphies is not dropping due to the government’s push for the art form.
But perhaps there are other reasons for the artists to not need brushes as often. One needs not only the
brushes to practise the art, but also other equipment such as the canvas or calligraphy paper and the ink
by which they make the characters. If there is a challenge in getting these compliments, the
calligraphers wouldn’t want to purchase brushes as often.
Well done! The master calligraphers who are the primary customers for our client use special
ingredients for the ink. One of them is squid ink which gives a jet black colour to the ink they use. As
with the case of goats, it is becoming harder to obtain the quantity of the ink due to habitat disruption
of the squids. That means the calligraphers don’t require to purchase brushes as often due to this
constraint. You have effectively identified all the reasons for our client’s decrease in profits. We can
end the case here.
Thank you. It was a pleasure interacting with you.
Likewise. It was great talking to you.
ICON, IIM Bangalore
23
Japanese Calligraphy Brush Maker
Case statement
Interviewee Notes
•
Profitability | Difficult | Kearney (Buddy)
Your client is a Japanese calligraphy brush maker whose profits have been dropping for the past 2 years. Can you find the reasons?
Structure/Framework
• Client makes custommade products for
specific customers
Profit
Revenue
• Raw materials on supply
side
Price/Unit
• Customer profile and
complements on demand
side
• Multiple branches of
profitability
Costs
Volume
Supply
Raw
Material
Logistics
Manufacturing
Demand
Sales
Post Sales
Need
Sourcing Brush Hairs
Awareness
Accessibility
Customer Profile – Newer
Generation
Acceptability
Affordability
Complements – Squid Ink
Key Takeaways
• Understanding geographical, industry and customer context is key to arriving at the solution involving multiple branches
• Products are also influenced by compliments such as the ink which determines customer demand
ICON, IIM Bangalore
24
Quick Service Restaurant
Profitability | Moderate | Kearney (Partner)
Your client is a quick service restaurant in India and has been facing fall in profitability. Identify the
root cause and give the recommendations to solve the problem.
Thanks for the problem statement. Before structuring my thoughts and jumping into the solution I
would like to ask few preliminary questions. Our client is a single restaurant or a chain of restaurants?
In which geographies we are currently operating in?
Our client is a restaurant chain and currently operating in Tier 1 and Metro cities.
Thank you! Can I please know more about the product and customer mix of our client? Also, what is our
client’s operating business model? Is it dine-in, take away, delivery or all three?
The client has 3-4 main dishes like Italian pizza, pasta, etc. Regarding the customers the client
currently serves the high-end customers. The client has all the three type of operations.
Okay! Do we have any data that this profitability fall is specific to our client or is it an industry wide
phenomenon? Also are we seeing this profitability fall across all the outlets of the chain or is it specific
to a particular outlet?
So, profitability fall is partially specific to our client and partially due to an industry wide phenomenon.
Moreover, the client is seeing profitability fall across all the outlets.
Got it! So, I believe I have sufficient information to go ahead and structure the problem. Now, I would
like to break down profits into 2 parts – Revenue and costs. Profit = Revenue – Cost. The decline in
profits can be either due to fall in revenue or rise in costs or may be both are happening
simultaneously. Do we have some data where I should investigate?
For the scope of this case, revenue of our client has remained the same, but costs have increased.
Ok. Firstly, let’s look at costs increase which is specific to our client. For dine in and take away, I would
like to spilt the costs into 2 components – Fixed costs and Variable costs. Fixed costs will include rent of
the space, fixed component of employee salaries, license and insurance costs, maintenance and
marketing expenses. Variable costs would include raw material costs, employee hourly/variable salary,
inventories/utilities cost, etc. For delivery fixed costs will include upfront investment in purchasing
delivery vehicles, app infrastructure costs, etc. and variable costs will include delivery person salary,
fuel cost, losses due to return/not acceptance of the order, compensation coupons/refund for bad
quality experience to customers, etc. Do we have any data that costs have increased in which service –
dine in/take away/delivery and under which cost head?
Yes, so costs have increased in delivery segment where delivery person salary has gone up. Can you drill
down why this is the case?
Oh right! So, delivery person’s salary can have 2 components – fixed part and variable part based on the
number of deliveries. Do we have data that fixed part of their salary has increased or variable part?
Fair enough. So variable part of their salary has seen a rise.
Okay. So that can be mainly due to 2 factors. Either the number of deliveries has increased because of a
greater number of small size orders or per delivery payment has seen a rise. Do we have information about
this? Also, can we have the data about the per delivery payment to delivery person?
Yes, number of deliveries has increased because of more small size orders for which we are charging
same to customers based on distance only irrespective of order size. Regarding per delivery payment
recently policy has changed and upto 20 delivery per day, delivery person is paid 15 rupees per delivery
and after that to incentivize them to do more deliveries 20 rupees per delivery is paid. Can you give
recommendations in this condition what our client should do?
Yes, so I would like to break my recommendations into 2 parts - Short term and long-term
recommendations. For short term, to solve the small order size issue we can introduce combo offers to
increase order size and start charging the customers for delivery based on multiple params like order size,
distance, customer credibility score, income level (first degree price discrimination), etc. Also, in short term
instead of giving more charge to delivery personnel after 20 deliveries, we can offer them other benefits
like insurance and keep the delivery charge same after 20 deliveries or we can increase this threshold of 20
deliveries only to get more charge. In long term, we can develop an algorithm which can even out the
distribution of deliveries over delivery personnel so very few delivery personnel will cross 20 delivery mark
and at the same time each delivery personnel will have roughly equal number of deliveries per day which
ensures fairness to all too. Also, we can hire a greater number of delivery personnel in long term which can
ensure very few people will cross 20 delivery. mark.
I must say those are great recommendations. Now let’s move to rise of delivery personnel costs industry
wide. What factors do you think of which can cause this?
Right. A new union could have been formed of delivery personnel and it has pushed the industry to
increase the fixed component of delivery personal salary or minimum wage that is decided by the
government could have seen an increase. Is this exhaustive or should I look more into this?
Great. I guess that is exhaustive enough. Let’s close our case here. Thank you!
ICON, IIM Bangalore
25
Quick Service Restaurant
Profitability | Moderate | Kearney (Partner)
Case statement
• Quick service restaurant in India has been facing fall in profitability
• Identify the reasons for decline and give recommendations.
Interviewee Notes
Structure/Framework
Declining Profitability
• Needed to ask about
different kind of services
of client.
Costs
Dine-In/Takeaway Costs
Delivery Costs
• Cost rising problem was
partially specific to client
and partially industry
wide phenomenon.
Fixed Costs
Rent
Raw Material
• Break-down of costs into
fixed and variable cost
was essential.
Salaries
Variable Pay
Licensing Fee
Inventory
Insurance
Utilities
• Needed to exhaustively
look at why delivery
costs have increased
Revenue
Variable Costs
Industry Wide
Union Pressure
Increase of Minimum
Wage by Government
Client Specific
Fixed
Variable
Delivery Vehicle
Fuel
App Infrastructure
Delivery Agent
Salaries
Losses due to
returns
Maintenance
Marketing
Key Takeaways
• Preliminary questions were utmost important in this case to scope down the problem.
• When dividing the costs in different buckets it was essential to be as exhaustive as possible as we might miss some head and problem can be in that head only.
• Recommendations in this case were very important and it fetched brownie points for the candidate. Always try to give recommendations in short-long term format.
ICON, IIM Bangalore
26
Cosmetics Industry
Profitability | Difficult | Kearney (Partner)
Your client is ‘Beauty Décor’, Cosmetics Manufacturer. The company is worried about the declining
sales. They want you to analyse the issue and come up with a strategy for the same.
You are right. We can see that our competitors perfumes are preferred by our customers. Why do you
think is this happening?
I would like to begin with the case by first understanding the company better. What all product lines the
company is involved in? Also, where does the company sell its products and what are its distribution
channels?
I would further like to break down my problem into five heads of demand. Need, Awareness,
Accessibility, Affordability and Customer Experience. Do we know where can be the issue?
The company has three product lines, perfumes, skin care and hair care. They sell their products pan
India and use their as well as third party distributors.
Do we have any data that whether the decline in sales is specific to a particular product line, geography
or distribution channels?
Yes, there has been a decline in revenue in the perfumes segment. Also, the decline has been uniform
across geographies and distribution channels.
Alright. I would like to know since when the company has been facing this decline and by how much?
Also, is the entire industry facing the same issue?
The perfume sales have experienced a decline of 15% over last 1.5 years. Other companies in the
industry seem to be doing fine.
This is quite a significant fall. Is there any further segmentation in this segment?
The company sells perfumes under two segments - regular and premium. Under regular segment
perfumes are priced below Rs 500 and constitute 35% of the perfume sales. Under premium segment
the perfumes are priced above Rs 500 and constitute remaining.
We know Revenue = No. of units of perfume bottles sold * Price bottle. Has Beauty Décor changed the
prices of the perfume bottles in last 1.5 years?
The prices have not changed. I would like you to analyse the decline in the number of bottles sold.
Sure, I would like to structure my thoughts into three aspects, production, distribution and customer
demand. Do we have any data available or information on any of these three areas?
Can you help the client understand what all aspects would you consider in each of the three heads?
It can be possible that we are facing decline in our Production due to any problem with our raw
materials, labor, machinery etc. Under Distribution it would be crucial to understand whether the
distributors are pushing competitors’ perfumes over ours. Lastly, I would like to understand if demand
for our perfumes has seen a decline due to change in preferences of our customers or due to negative
publicity or else our competitors are offering better offers and prices in the market.
Before that can you explain what will you consider under each of them?
Under need, we should be concerned with any changes in customers preferences or requirements.
Under awareness, it is important to look at our advertisement and promotion strategies. Under
accessibility, we should analyze whether our products are easily accessible to our end consumers.
Affordability should be checked by benchmarking our prices with that of our competitors. Lastly, it is
very crucial to study customer satisfaction and experience. Do we know where are we facing the issue?
Yes, the customers are not satisfied with Beauty Decor’s perfumes. It would be great if you could
analyse customer experience.
Definitely, I would like to do my analysis by using customer journey to find out at what stage are we
losing our customers. I would like to divide it into pre- purchase, during purchase and post purchase or
the usage stage. Do we know where the customer is facing issue?
Excellent. Quite a comprehensive approach. You can limit your analysis to usage stage and think about
the aspects after the customer has purchased our perfume.
In this stage I would like to take into consideration four aspects. Packaging, fragrance, life of perfume,
and customer feedbacks.
You have identified the possible reasons correctly. In order to cut the costs Beauty Décor, decided to
replace their glass bottles with plastic bottles. Customers have the feeling that they are no longer using
premium product. What would you recommend?
Since Beauty Décor branded these perfumes as premium, the packaging will have to reflect the same.
Few recommendations that I would like to give are:
1.
Refining plastic bottles to a better quality, to mimic glass and give a premium feel.
2.
Exploring other options such as metallic bottles.
3.
The company can do advertising such that they are using environment friendly plastic bottles.
4.
Beauty Décor can also increase the volume of perfume sold in a bottle, if feasible so that it does
not lose its customers because of changes in packaging.
These are quite interesting solutions. It was great interacting with you. Thank you!
ICON, IIM Bangalore
27
Cosmetics Industry
Case statement
Profitability | Difficult | Kearney (Partner)
• Your client is a cosmetics manufacturer selling products pan India.
• Decline in sales as compared to the competitors.
Interviewee Notes
Structure/Framework
Profit
• Three product lines:
Perfumes, skin care and
hair care. Pan India
distribution by self and
third-party distributors
Hair Care
• Decline in revenue of
15% in last 1.5 years in
perfume segment
Revenue
Cost
Perfumes
Skin Care
Regular
Segment
• Two perfume segments:
Regular: < Rs 500, 35%
sales
Premium: > Rs 500, 65%
sales
Need
Premium
Segment
Number of
Bottles
Price/ Bottle
Production
Distribution
Demand
Awareness
Accessibility
Affordability
Experience
Key Takeaways
• The interviewer wanted me to solve the case comprehensively by listing all the factors under an identified header
• The use of Need, Awareness, Accessibility, Affordability and Customer Experience framework, and customer journey was appreciated by the interviewer
ICON, IIM Bangalore
28
Insurance Company
Profitability | Moderate | Kearney (Buddy)
Your client is an insurance firm based in India. Their profits have been declining recently. Diagnose the
reasons and suggest suitable recommendations.
Yes! The costs can be broken down into fixed costs and variable costs. The fixed costs include
administrative expenses, licenses and employee salaries. The variable costs include the insurance
claims, commissions, and any other customer service costs. Have I missed anything here?
Thank you for the problem statement! I would start by asking a few questions to be clear on the
problem statement. Which type of insurance does the firm deal with? How long has the firm been
facing this issue?
You did consider the major costs. The company has been facing increased insurance claim costs. What
do you think could be the reason?
The firm deals with general insurance and medical insurance. The profit decline has been observed in
the medical insurance arm of the firm for the past 6 months. I would like you to focus on the medical
insurance part. You can ignore reinsurance for now.
We can identify the reason for the increase in costs if we have any breakup of the types of insurance
claims that have been increasing recently. They can be anything such as increase in refunds for a
particular type of treatment or medicine or increase in doctor consultations etc,
Oh yes ! This can also result from the recent change in medical insurance coverage policy.
In my understanding, medical insurance is what one avails to get the entire medical costs reimbursed or
at a discount. It can range from getting treatments for minor health ailments to major surgeries
depending on the coverage policy and premiums paid. Am I right in assuming so? Also, who are their
customers? Are there any other services of the client that I should be aware of?
That’s right. The insurance firm extended its coverage policy to include eye treatment and as a result
their costs have been rising.
Our client’s health insurance policy can be availed by paying an annual premium that gives certain
medical coverage benefits. The client’s customers include corporate clients who provide medical
insurance cover to their employees through our client. For simplicity, let’s assume there is only one type
of medical insurance policy that the client offers.
Right. Now that we have a fair idea about the business of our client, I would like to know our client’s
relative position in the market and how our competitors are performing currently.
Our client is the market leader in the medical insurance segment. Our client’s revenues have increased
over the past six months. Also, our competitors’ profits have remained the same.
Interesting! Our client’s revenues have increased. That can mean we have more customers than before
or we could have increased our annual premiums. But at the same time our profits have reduced. So,
I’m assuming there has been a change in the cost structure of the firm which resulted in the decrease in
profits. Do you think this is a fair approach?
Yes. The client’s costs have increased due to a recent medical coverage policy change to increase
market share. Can you list down the various costs involved with an insurance company?
Since it is eye insurance cover, there could have been an increase in claims for non-essential treatments
and services availed such as eye wear and an increase in doctor consultations. These could have led to
an overall increase in cost for the firm compared to the revenue increase from additional signups due to
the extended policy cover.
You’re right. That is what happened exactly. Now could you provide a few recommendations for our
client to reduce the overall costs?
Sure. First, we can place a maximum cap on the number of non-essential refunds and doctor visits
allowed per year for eye treatment. This can be augmented by setting up an online authorization
mechanism to approve only refunds for essential treatments subject to the opinion of the doctor.
In the long run, we can bundle the current policy cover with other ailments (that may entail less
frequent doctor visits and treatments) and increase the annual premium to offset out increase in costs.
Else, we can also charge a fixed fee from the policy holder every time the medical insurance is availed
for the eye treatment.
Alright. Thank you for those recommendations. We can end the case here. It was nice interacting with
you, All the best!
ICON, IIM Bangalore
29
Insurance Company
Profitability | Moderate | Kearney (Buddy)
Case statement
• Your client is an insurance firm based in India.
• Their profits have been decreasing for the past 6 months
Interviewee Notes
Structure/Framework
• Medical insurance arm
to be the point of focus
Profit
• Customers pay an annual
premium to avail medical
insurance services
Revenue
Cost
• Increase in Revenues but
decrease in Profits->
Increase in cost
• Increase in costs due to a
recent policy change that
involved extending
medical cover to eye
treatments
Fixed Cost
Admin overhead
Employee Salaries
Variable Cost
Licenses
Claims
Commissions
Customer Service
Key Takeaways
• Buy in every assumption with the interviewer.
• Be mindful of increase in costs accompanying actions intended to increase revenues
ICON, IIM Bangalore
30
Footwear Manufacturer
Profitability | Moderate | BCG (Partner)
Your client is a footwear manufacturer, and it has always been the market leader in India. From the
last one year the client is suddenly witnessing a significant decline in return on shareholder’s equity
and has slipped to number 2 in terms of market share. You have been hired to identify the reasons
and recommend solution to the client.
The revenues can be further split into 3 V’s i.e., volumes, value and variety. So, either the volumes
might be going down, or the price or there could be a problem with the product mix. Do you want me
to focus on any of these first?
Just to get a high-level sense of the business landscape, can I ask a few preliminary questions before
we delve deeper into the problem.
Sir, as you mentioned earlier that we manufacture all types of products i.e., business, casual etc. and
now we have been witnessing sudden decline in revenues from the past one year. One of the potential
reasons relating to product mix could be change in customer preferences towards casual footwear
over business wear especially during the covid times. As most of the working population has been
working from home recently, and while working from home one would prefer casual wear like slippers,
sliders etc. there would be lesser demand for business shoes and sandals.
Sure, please go ahead.
Could you please help me understand a.) what are the geographies that we operate in, b.) what are the
type of footwear that we manufacture i.e., casual wear, business wear, party wear, c.) who are our
primary customers, i.e., male/female, kids/adults etc. and d.) what is the competitive landscape?
Alright, that’s quite comprehensive set of questions. So, the client has an even presence across the
country, you can assume that the client manufacturers all types of footwear for all types, age
groups, gender etc. And the competition is intense amongst top 5 footwear players while rest of the
market is fragmented.
Trust I have a fair understanding of the business operations. To dissect the problem statement, since
there has been a sharp decline return of shareholder’s equity and ROE is a function of profits and equity.
Has the client seen a decline in returns or an increase in equity base or both.
The client has been witnessing sudden and significant decline in returns.
Since when has the client been seeing decline in return ? And is it only specific to our client which has
seen the decline or the other footwear manufacturers in the industry have also seen a decline?
The client has been seeing the decline in profits from the past one year. Other competitors have also
seen a marginal decline, but our client has been significantly impacted due to which the other
competitor has become the market leader pushing our client to number 2 in terms of market share.
Return is a function of revenue and cost. Either the revenues could be declining, or the cost could be
going up or both relative to the competitor. Considering our client is losing market share, will it be fair
to hypothesize that the revenues are declining first and then maybe later, we can have a look at the
cost side of the client.
Yes, it seems like a fair assumption. Let's start with the revenues and then look at the costs.
That’s a fair split of revenues. What can you think of product mix specific to this case?
Spot on. There has been sudden spike in the demand for casual wear. While the competitors have
been readjusting their product portfolio to match the demand, our client has been missing out on
that readjustment. But that is only 50% of the problem. Can we look at the other component of
revenue that we mentioned earlier i.e., volumes.
Sure, the decline in volumes specific to the client can be either due to fall in demand or a supply side
constraint i.e., either the client is not getting enough demand for its products, or the client is not able
to match the demand with its supply.
It is primarily a supply side issue. How would you look at a supply constraint problem?
Considering there is a bottleneck in the supply side, I would like to lay down the value chain for a
footwear manufacturer to assess if there is a problem in any of the individual components.
Okay, so how would the client’s value chain look like ?
For a footwear manufacturer, the value chain would begin with sourcing of raw materials, in-bound
logistics, manufacturing, packaging, warehousing, distribution, sales & after-sales support.
Alright, lets look at distribution.
So, the distribution channels for a footwear manufacturer could be either physical or online or an
omni-channel distribution. Under physical it could be either through own stores, or a franchise or both.
And under online it could either be directly through own website or through an online aggregator like
amazon, Flipkart etc. or both. I would like to understand which of these model does the client follow.
The client sells its products through its own physical stores.
ICON, IIM Bangalore
31
Footwear Manufacturer
Profitability | Moderate | BCG (Partner)
And to benchmark it with the competitor’s distribution channel, does the client also operate only
through its own physical stores?
No, the competitors have been using an omni-channel distribution strategy.
Trust, I have narrowed down to where the problem is. Due to the pandemic restrictions, the customers
were not be able to visit places physically and might have resorted to online shopping. Since the
competitors had an omni-channel strategy, they were able to capitalize on the online demand, while our
client couldn’t re-adjust rapidly. This might also explain relative increase in costs, as the client owns its
physical store, there would have been fixed cost being incurred in the form of space, people and
overhead costs relating to the stores irrespective of the quantum of revenues.
That’s correct. Interesting that you could relate it with the cost aspect of the problem as well. What
would be your recommendations for the client now? You need not summarize the case.
I would like to make the following recommendations to the client:
- Given the shift in the consumer preferences, the client should rebalance its product portfolio more
frequently to match the demand i.e., more towards casual wear in the short term and use customer
analytics to readjust in the long term.
- The client should adopt to an omni-channel strategy wherein the customer should have the flexibility
to either buy the products online or offline or check online and buy offline or vice versa.
- The client should also look at the ways to control costs to increase the return on shareholder’s equity
via renegotiating leases for spaces, rostering sales staff to work, embracing technology to expand the
geographical reach with relatively lesser costs etc.
Thank you so much for your time and insights. We can close the case now.
ICON, IIM Bangalore
32
Footwear Manufacturer
Case statement
Profitability | Moderate | BCG (Partner)
• Your client is one of the leading footwear manufacturers in India who caters to all types of footwears and customer segments in the country.
• The client is facing sudden decline in return on shareholder’s equity from past one year and has recently slipped from market leader position to #2 in terms of market share.
Interviewee Notes
Structure/Framework
Return on
Shareholder’s Equity
• Interviewer was
assessing if the candidate
could seamlessly breakdown the typical
profitability problem,
even though the problem
statement was disguised
in the form of a technical
metric
• Multiple issues in the
problem relating to
product-mix, distribution
channels and related
costs
• Past one year was the
pandemic year, quickly
relating the business
situation with real life
context was the key.
Return/Profits
External/
Industry specific
Internal/
Company specific
Revenue
Cost
Value
Product Mix
Volume
Supply Side
Sourcing of
Raw Material
•
•
•
Demand Side
In—bound
logistics
Manufacturing
Shareholder’s
Equity
Business-wear
Casual-wear
Party-wear
Packaging
Warehousing
Distribution
Sales & After
Sales Support
- Physical - Online - Omni-channel
Key Takeaways
• Structuring and dissecting the problem into pieces was the key to identify multiple issues, following a MECE approach
• Utilizing the business acumen and relating it to real world scenario to delve deeper into the problem is required in a case like this
• In a case with multiple issues, it’s important to inter-connect the issues and keep thinking on the feet while analyzing as well as synthesizing the case
ICON, IIM Bangalore
33
Electronics Company
Profitability | Difficult | BCG (Buddy)
Your client is an Electronics Company in India, and its Profit has been declining. Analyze the problem and
suggestrecommendations.
Thanks for the case. Before I dive deeper into the analysis, I want to understand a bit more about the
context. Can I ask a few clarifyingquestions?
Sure, go ahead.
In which part of the geography does the client operate? What is the product portfolio of the client? Since
when has the client been facing this issue? What is the quantum of the decline of profits?
The client has its presence in India, and it sells its product across the country. They manufacture the items near
Haryana and ship them to all parts of the country. The product comprises home and kitchen appliances. The
client has been facing this issue for the last two years and the Profit has been going down by10-12%.
Thanks for the info. In India, is there any particular region/state facing declining profits? Do they
manufacture the products themselves, or they have sourced them to any third party. Do we have major
competitors in the market, and how are they doing?
Great questions. Only the East and North region are facing the issue. They have an in-house production facility.
The client has 5-6 major competitors. All of them have equal market share more or less. They are not facing
anyproblem.
So, Profit can go down because of declining revenues, or increasing costs or a relative change of revenue
and cost is happening in such a way that overall Profit is going down. Which of these is causing the issue in
our case?
No, you have covered everything comprehensively. Let's focus on outbound logistics. How do you think
outbound happens in thisindustry?
Once the Finished Goods are manufactured, it should be shipped to a Central Warehouse. Then from the
Central Warehouse, the items must reach the regional Warehouses. Finally, upon the arrival of orders
from the retailers, the items must be shipped from the regional Warehouse to the retailers.
Excellent. Now focus on why the East & North Region are facing highercosts.
Thanks for the direction. I would further like to divide the costs into transportation and storage &
warehousing costs.
Great, in the client's case, both the transportation and the Warehouse costs are increasing. There is
ineffective route planning which is leading to higher run kms by truck, additionally, trucks are
underutilized. The client has regional Warehouses in Kolkata and Guwahati in the East region and Lucknow
and Sonipat in the North region. Rental cost is very high in Kolkata and Lucknow, and warehouses in
Guwahati and Sonipat are sitting idle due to less demand. Suggest some recommendations.
In the short term, we can try to shift our Warehouse location, for example we can shift Kolkata
Warehouse to Patna, and similarly Lucknow Warehouse to some nearby town. Additionally, we can shut
down the Guwahati and Sonipat Warehouses or lease the place to someone. In the long term, we can
form a strategic partnership with a 3rd party logistics firm as they have expertise in the field.
Great recommendations. We can close the casehere.
Revenue has been increasing at a steady rate, but the costs have risen at a much faster acceleration, due to
which the overall Profit is goingdown.
Sounds interesting. Let me look into the value chain of the electronics industry.
Go ahead.
First of all, raw materials must be procured from the suppliers, transported to the production facility in
Haryana and stored in the Warehouse. Then the production happens, post which the finished goods
inventory must be kept for dispatch in the Finished Goods Warehouse. Then the outbound logistics of the
finished goods happen when the order arrives. These are the primary core activities. There must be
supporting areas as well, for example R&D, Rental cost, Sales & Marketing, Digital Infrastructure etc. Do you
think I have missed anything?
ICON, IIM Bangalore
34
Electronics Company
Case statement
Profitability | Difficult | BCG (Buddy)
• Client is an electronics company, facing declining profits. Revenue has increased, cost have risen at a higher rate.
• Find the problem and suggest recommendations
Interviewee Notes
Structure/Framework
Profits
• Pan India presence
• Profit is down by 10-12%
since 2 years
Revenue
Costs
• Issue in North & East
region
Transportation
Costs
• Client specific issue
Low Truck
Utilization
Ineffective
Route Planning
Warehousing
Costs
High Rental
Cost
Idle
Warehouses
Value Chain
Raw materials
Inbound & RM
storage
Production
Transportation
& Storage
Distribution and
Marketing
Key Takeaways
• Take interviewer’s buy-in at every step. Be exhaustive and pin-point the geography where the problem lies.
• Interviewer was impressed by the industry specific knowledge. Break down the recommendations into short term and long term
ICON, IIM Bangalore
35
Multi-Speciality Hospital Chain
Profitability | Moderate | E&Y (Partner)
The client is the ownerof a chain of hospitals in tier 1 cities in India. Business has been going
well.Recently, they havebeenfacing profitabilityissues. They wantyoutoadvise them onImprovingtheir profitability
Before we go deeper into the case, I would like to ask some questions – What kind of services do they provide to their
patients? What classofcustomers dothey cater to?
The clientis a chain of multi-speciality hospitalswith speciality areas – cardiology, & orthopaedics. Theygenerally cater to
the upper middle class and upwardly mobilecustomers.
Okay. Let’s talk about the profitability issues they have been facing. I have a few questions – To what extent has
profitability dipped? Since whenhas itshowna downward trend? Hasthis trend been observedindustry-wide? Or isit
specifictoyourfirm?
Profitability hasconsiderablydippedinthelast1.5years.Thishasbeenobservedindustry-wide.
Okay, so profitability can be affected due to 3 reasons – rise in costs, dip in revenues or both. So, how has the
firm been performingon costs andrevenue?
Our costs havebeenrising.Revenue hasremainedconstant.
Okay, so let us look at costs first. Since this is a multi-speciality hospital focusing on ortho and cardio, I am assuming
ourmajoroperatingcostheadsare–
1. Manpowercosts(nursesandothersupportstaff)
2. DoctorFees
3. Costofdrugsandconsumables
4. Costofequipment anditsmaintenance
5. Other tail-expenditure items such as electricity, office stationery, other consumable and cleanliness
items
HaveI missedoutonanypoints? Also, which ofthesearemajorcostheads? Andwhich ofthese
haveshowna steepclimb inthelastyear?
Actually,we have observedthatdifferentdoctorsand different centersprescribedifferentdrugs/brands for the same
procedure. Also, the vendors who sell these drugs have hiked our prices in the last one year. We have already run a
diagnostic on the usage of drugsand consumableson normalcases and have found variation in usage across doctors.
Also, we have had to make a lot of expenditure on expensive equipment as many of them did not last very long.
Whatwill youprescribetobringthecosts down?
Iwouldsuggestthefollowingmeasurestobringconsumptionundercontrol –
1.
Standardization of usage norms (in line with the norms set by the Govt) for drugs and consumables for
normal-riskcaseswouldreducetheconsumptionandensurestandardizationin qualityofserviceaswell.
2.
Standardizationofbrandsanddrugsfornormalcaseswouldhelpusreducetheinventorywe holdandhelpus
plan the procurement of drugs better. It would also help us negotiate for lower prices in exchange for larger
quantities.
3.
Investing in sterilization, maintenance and re-use of certain equipment and consumables could prolong
their life, thus reducing their cost over its lifespan (cost per year). Training the hospital staff in proper
maintenanceoftheseequipmentcouldhelpincreasetheirlifespan.
4.
Longtermcontractswithourvendorsandincreasein quantityof purchasecan be usedas leverstoreduce
theunitpricesofitems.
Doyouwantmetolookattherevenueside?
Good.Thatisprettymuchit.Thankyou!
Thislistisexhaustive.Doctorfeesaccount for around25%ofthecostsandhavestayedconstant.Cost ofsurgery accounts
for55% ofthecost&itincludescostofdrugsandconsumables,costofequipment andmaintenance.Thesehaveshowna
20% increaseinthelastyear.Howcanyou reduce thesecosts?
Cost = Quantity consumed x Unit Price of the drug/consumable across all drugs and consumables. Have there been any
changesinpricesfortheseitemsinthelast1 year?Also,wewillneedtoruna diagnostictoobserve the trendinconsumptionof
these drugs.
ICON, IIM Bangalore
36
Multi-Speciality Hospital Chain
Case statement
Profitability | Moderate | E&Y (Partner)
The client is the owner of a chain of hospitals in tier 1 cities in India. Recently, theyhave beenfacing profitabilityissues.
Structure/Framework
Interviewee Notes
• Profitability has dipped in
the last 1.5 years
Profitability
• Doctor fees account for
25% of costs
• Cost of
increased
surgery
has
Revenue
• Vendors have hiked the
prices of drugs in the last 1
year
Cost
#Units consumed
Unit Price
Standardization
Standardization
Increasing
of Usage Norms
of Brand
Reuse
Long Term
Contracts
Centralized
Procurement
Standardization
of Brand
Key Takeaways
• Taking buy in is essential at each step
• Interviewer was impressed with the breakdown of the cost heads
ICON, IIM Bangalore
37
IIMB Growth Cases
2021-22
ICON, IIM Bangalore
38
Growth Strategy Framework
Preliminary Questions
•
•
Growth
Clarify objective and
quantum of growth,
timeline
Business Model – Where
does the firm lie in the value
chain? What are its revenue
streams and distribution
channels?
Product
Mix
#Units sold
Market Size
•
•
Market Share
What is the product mix?
Any differentiating/ new
features in products?
What is the competitive
landscape?
M&A
Organic
- Lease space,
capacity for
advertising,
rentals
Profit/ Unit
Understand customer
segments
Inorganic
•
Non-Core
Activities
Core Activities
(Profit metric)
Organic
Inorganic
- Improvise Customer
journey
- Omnichannel, O2O
- Acquire
emerging
competitors,
substitutes
- Improve Customer
Retention
- Develop E2E
skills
- Increased branding
ICON, IIM Bangalore
Revenue/Unit
- Can price be
increased? Inelastic
demand, monopoly
- Bundling
- Price Discrimination
- Cross Selling
Cost/ Unit
- Value Added
Services
- Value Chain
Analysis, Process
Innovation
- Strategic vertical
integration
- Upselling
39
Growth Strategy Framework – Contd.
PRODUCTS
Existing
•
•
•
•
•
•
Market growth rate in line
with management’s growth
expectations
Low market share w.r.t. market
leader
Growth rate w.r.t competitor
A derived profitability case!!
New
•
•
1. Market
Development
Strategy
4. Diversification
Strategy
•
•
•
Four
Growth
Strategies
Existing
•
Market growth rate lower
than management’s growth
expectations
High market share w.r.t.
closest competitor
Concentrated in a small
market
Demand in other markets
Typical Market Entry Case!!
MARKETS
•
New
2. Market
Penetration/
Entry Strategy
•
3. Product
Development
Strategy
ICON, IIM Bangalore
•
•
Product - Market growth rate
lower than management’s
growth expectations
Management’s objective
High concentration in a single
product/ category
Diversification strategy case!!
Market growth rate lower
than management’s
growth expectations
Product in maturation or
decline phase
Product Launch Case!!
40
Online Food Delivery Platform
Growth | Moderate | Bain (Partner)
Your client is an online food delivery platform. They are looking to enhance both their top line and gross
margins. How would you do this? Just give me an overall approach
Would the second suggestion increase avg amount or no. of orders. Also, how about some strategies
which do not involve investments from our end
I would like to understand the business better. Is this something like Swiggy, which operates through
an app or a website? Where exactly are we located and carrying out our business operations from?
Also, do we have any targets on the magnitude or the time frame over which we want to achieve the
growth?
You’re right, preferred restaurants would increase number of orders.
Yes, you can assume it to be app based like Swiggy. The client is operational in top 8 metro cities in
India and a few tier 2 cities. We would like to see what measures can we deploy to see the growth over
the next 3-6 months
Sure. I’d like to take a minute to come up with n approach to solve this problem.
So I’d like to start with increasing revenues first for the top line and gross margins and then later
look at costs for the margins. For an overall approach, I’ve divided monthly revenues into avg.
amount per order multiplied by no. of orders per month. The avg. amount is a function of avg. item
price and no. of items per order. The monthly order frequency would depend on no. of customers
and avg. ordering frequency of customers. Here, we could look at i) increasing number of
customers through increasing the total pie of customers who use online food delivery platforms
and ii) becoming the preferred platform and increase our market share against our competitors.
We could also look at a new offering like a loyalty program similar to Zomato gold or Swiggy Super
as a new revenue stream. For increasing order frequency we could look at incentivisation schemes
through deals and cashbacks for repeat orders.
For strategies without investment, we could focus on increasing the price. Here we would need to
evaluate price sensitivity of our customers to increase service charges or delivery fees such that net
revenues increase without losing out on sales.
Also, if we earn some commission from restaurants from each sale on the total amount, we could
look at having more high-end restaurants on our platform and incentivising our customers to order
from these by putting them at the forefront on our app.
Those are good suggestions. Are their any other insights that you can draw especially from your
experience in consumer data analytics that we could use?
We could leverage our insights into consumer spending patterns in different geographies to see which
restaurants and cuisines are more popular. Also, we would be able to see customer behaviour around
different festivals, holidays and offers that get rolled out. We could use these to develop an analytics
insight product which we sell to our partner restaurants as a service giving insights on market trends
and benchmarking their performance. This would enable them to strategize their marketing strategies
around holidays and also other promotional activities.
Very interesting. Thank you very much. It was great discussing this case with you today
Is there anything else you’d like me to look at or anything that we should explore further in more
detail?
Let us explore increasing avg. amount per order
We could increase no. of items per order through cross-selling and bundling items into attractive
combos. We could also offer cashback on a minimum order that would incentivise them to order
more. We could look at which cuisines do our customer order more of, and ensure we onboard
restaurants offering more of such cuisines on our app.
ICON, IIM Bangalore
41
Online Food Delivery Platform
Case statement
Interviewee Notes
Growth | Moderate | Bain (Partner)
• Online food delivery platform looking to enhance top line and margins
Structure/Framework
Revenues per
month
• App based like Swiggy
• Located in 8 metro cities,
few tier-2 cities
Avg. amt per
order
No. of orders
per month
• Growth in 3-6 months
No. of items
per order
Avg. price
Cross sell
Elasticity
Bundle
High end
restaurants on
platform
Cashback on
min. order
No. of
customers
Same offering
New offering:
Loyalty
programs
Avg. frequency of
orders per
customer
More offers &
deals
Market size:
new users, new
cities
Cashback in
app wallet for
re-order
Market share:
Competitive
advantage
Onboard
restaurants of
preference
Key Takeaways
• While structuring seek more validation at each step to get buy-in and engage interviewer.
• Usage of pointed jargons can be useful in niche industries/businesses.
• Short 1 line explanation before moving to next bucket can be useful in structuring phase.
ICON, IIM Bangalore
42
Pharmaceutical Giant
Growth | Moderate | Bain (Buddy)
Your client is the wholly owned Indian subsidiary of a global pharmaceutical giant. They have a wellestablished business in India across 2 products: insulin and medication for hemophilia. They have hired
you as a consultant to help them devise a strategy to grow their top line over the next few years.
What is the client’s objective? Is there a target and timeline that client has in mind? Does the client
have any other land holding? How has the client developed/used it?
Insulin is massively profitable, and our client is a market leader in that segment with close to 55%
market share. Medication for hemophilia is regulated and price capped, so its not very profitable. Our
client has one third market share in it.
Yes, so the incidence rate of diabetes is 10% and the diagnosis rate is 50%. 40% of all people diagnosed
need insulin.
Thank you for the data. Since we cannot really change the incidence rate of diabetes, we can look at
increasing the diagnosis rate. Since our client is a market leader, they can invest in improving the
diagnostics infrastructure in India to increase the diagnosis rate.
Good, that is what we recommended to our client.
Thank you. I think since insulin has better profitability it makes sense to focus on that product for
growth. Can I go ahead with that assumption?
Yes, proceed.
Thank you. So, the client’s revenue can be calculated as the Market Size x Market Share x Price. The
client can use any of these levers to increase revenue. Is there a specific one that I should focus on?
Price is not something they want to change. They also don’t really care about market share since rest of
the players are very small and fragmented.
Okay, so I will focus on market size. The client can either enter new geographies or they can introduce
new products.
They don’t want to go for either of those options. Can you think of another way to think about this?
Yes, I can break down the existing market size and then look at factors that can be changed.
Go ahead.
Before I begin, can you tell me how insulin is consumed? What is the dosage?
It is dosed in the form of units per kg per day of a person’s bodyweight.
So, the annual market size is essentially all the people who have been diagnosed with diabetes and
need insulin. We can break it down as Population x Incidence rate of Diabetes x Diagnosis rate of
diabetes x Percentage of diagnosed people that need insulin x Average weight x Units per kg per day x
365.
Do we have any data on these factors?
ICON, IIM Bangalore
43
Pharmaceutical Giant
Case statement
Interviewee Notes
•
Insulin has high
profitability and 55%
market share
•
Hemophilia medication
is price capped
•
Client does not want to
change price
•
Incidence rate of
diabetes is 10% and
diagnosis rate is 50%
•
•
•
Growth | Moderate | Bain (Buddy)
Your client is the Indian subsidiary of a pharma giant.
Well established business for insulin and hemophilia medication.
Need to devise growth strategy.
Structure/Framework
Revenue
Market Size
Incidence Rate
Population
% needing
insulin
Diagnosis Rate
Units per kg
per day
Avg. weight
Market Share
Price
365
Key Takeaways
•
•
•
Unconventional way to think about market growth. Ansoff’s matrix won’t work here.
Industry knowledge on pharmaceuticals is beneficial in breaking down market size.
Interviewer can easily include a guesstimate within this structure as well.
ICON, IIM Bangalore
44
McDonalds India Growth
Growth | Moderate | Bain (Partner)
Help McDonalds’ India solve for the problem of under penetration of QSR culture in India and within
QSRs grow faster than its competitors
So, we have two problems in front of us: a. QSR penetration in India is low b. Within QSRs McDonalds’
competitors are doing better. Did I get that right?
Yes, just give me a long-term growth plan for McDonalds in India
My sense is that they are thriving and growing at faster rates. I would like to attribute it to
Glocalization & adaptive supply chains. Benchmarking with local competitors also reveals menus
adapted to local tastes alongside including healthy options on Menus. Lastly, McDonalds' experience
in nations such as Mexico reveals their openness to adapting local cuisines such as rice bowls which
have become a hit in their universal menus also. So who’s to say that a Rajma Chawal Bowl cannot be
the next hit menu item.
Sure, sounds good. What would you like to look at next?
Got it. I have some follow up questions: What is the timeline they are looking at & are there any
quantifiable objectives I should know?
Yes: Increasing market cap by 3-4x in 4-5 years
Thanks. I would like to approach the problem by targeting the two main factors affecting Market
Capitalization: Returns followed by capital investments. Does that approach seem ok? good?
Sure, go ahead.
Within returns I want to start by looking at improving revenues and reducing costs.
Improving revenues: Problem (a) of under penetration can be solved at best by favorable favorable
macroeconomic tailwinds such as demographics, changing tastes and preferences. For competition
within the QSR segment, I would like to benchmark McDonalds’ India’s performance with a.
Competition in Indian from other Multinational QSRs: Immediate(Burger King) vs Distant (Dominos',
Taco Bell) b. McDonald's strategy of success in other developing nations(say Mexico) c. New age
Indian owned QSRs (Chhayos, Wow Momos etc). I would then like to move on to customer
satisfaction followed by improving costs. Does this approach seem fair to you?
Yes, go ahead.
Thanks. Starting with revenue benchmarking to close competitors.
My assumption here is that McDonalds seems to be doing better than its immediate competitor
Burger King currently (quickly get a buy in) If that’s a fair assumption to make then it is because of
longer legacy and more stores. A closer analysis of revenue per sq ft. of both restaurants may help
assess performance better. But for now, I would conclude that there isn’t much they can learn from
Burger King (quickly get a buy in). Next, I would like to benchmark with International QSRs with
different offerings such as Dominos' and Taco bell.
Customer Satisfaction develops when their tastes and preferences are adapted alongside better
value for money, efficient service.
Lastly, I want to analyze costs: Fixed Costs (would incorporate the capital side of improving ROI),
followed by variable costs. (quickly get a buy in)
Fixed Costs: Involve costs of New outlets, Salaries, Investments and Cash Management. Can all be
optimized
Variable Costs: Dynamic supply chains will read faster delivery and execution. Proper training and
benchmarking to best practices will ensure reduced costs
Sure, sounds good.
Okay. Would you like me to summarize the case for you?
Yes, go ahead.
McDonalds' India was looking to solve the dual problem of low QSR penetration and growing faster
than competitors. We benchmarked its performance to other chains as well as McDonalds in other
countries. The key themes for revenue growth were: Glocalization & focus on health. Next, we looked
at cost side which would need to be adapted to incorporate these new trends. The key themes there
were – agile supply chain and optimized capital investments.
Thanks. Let’s wrap up here
ICON, IIM Bangalore
45
McDonalds India Growth
Case statement
Interviewee Notes
Growth | Moderate | Bain (Partner)
• McDonalds India
• Facing Low QSR penetration and competitive pressure
• Find a way to grow market cap by 3-4x in 5 years
Structure/Framework
ROI
• ROI: Returns + Capital
Investment
Capital Investment
Profits
• Return: Revenue-Cost
• Costs: Fixed + Variable
Costs
Revenues
• Revenue: Growth +
Retention
Benchmarking
International
QSR
Immediate
Competitors
(Performing better)
Local
Competitors
(Healthy, local
flavours)
Own: Other
Countries
(Eg Rice Bowls in
Mexico)
Customer
Satisfaction
Fixed Costs
(Optimized
spending on new
locations,
equipment etc)
Variable Costs
(Adaptive supply
chains, proper
networks)
Other QSRs
(Glocalization,
adaptive supply
chains)
Growth
Retention
Key Takeaways
• In growth cases it’s very important to take regular buy ins from the interviewer
• Its okay to not follow the set framework in a case as open-ended as this, just ensure that you structure your thoughts well
• Don’t be afraid to be creative and speak your time
ICON, IIM Bangalore
46
Medical Equipment – Bear Hugger
Growth| Moderate | Bain (Partner)
Your client is a medical equipment manufacturer and they have approached you to recommend a
growth strategy.
I would like to ask a few preliminary questions before getting into the case. I would like to understand
where is this company located and what kind of products does it offer?
The client is located in India. They have recently started manufacturing a product called “Bear Hugger”
which they are manufacturing in a facility near Bangalore. Also, this is the only product that they are
currently offering.
Thanks for the information. I would now like to know more about the product, who can use this
product and what benefits does it offer?
The product is designed for use as a warmer/comforter to patients after critical surgeries. It is a onetime use product and is priced at 20k. As far as benefits are concerned, the product aids in healing
process, reducing the average healing time from 3 months to 14 days.
Okay. So, a company can grow either organically or inorganically. Inorganically, it can enter
into Joint ventures or acquire other firms. Organically, they can either grow their number of
customers or revenue per customer. Revenue per customer in this case can only be
increased by increasing the prices since it is a one-time use product and there is no
question of customer retention. In order to increase the customer base, the client can
explore 2 dimensions – geography expansion and/or introducing new product.
The company does not wish to change its pricing strategy or introduce new product.
Okay, so let’s investigate geographical expansion. The client can either expand in the
existing geography i.e., Bangalore and Chennai, or it can expand to new geographies.
Great, so how would you go about the same.
The equipment is used by very specific patients undergoing cardiac surgeries, transplants, and
other life-saving surgeries. The product does not have significant competition as such, but you
can assume a normal blanket to be substitute for our product.
In the existing geography, the client can focus on two aspects – Improving marketing and
improving channels. Since we are talking about a very specific and expensive medical
device, our customers would most likely be either super specialty hospitals or the
government. As per my understanding of the medical industry, marketing efforts are made
through Medical representatives. Hence, the client should focus on reaching out to doctors’
and influence them on recommending the product to their patients. This can be done via
door-to-door pitching by medical representatives or conducting webinars for doctors’
unions. Should I now go ahead with new geographies?
Okay. Just to get some more understanding of how the company is doing business, may I know where
in the supply chain is our client operating.
Yes, sounds good. How about you tell me what factors will you consider while looking for a new
geography to expand?
The company owns the entire supply chain from procuring the raw materials to selling it to the end
customers. It is currently selling its product in Bangalore and Chennai.
Expanding into new geography can be either within India or outside India. Within India, the
primary considerations would be the market size & income levels. I believe, it is the metro
cities where such super specialty hospitals are present and critical surgeries are performed.
Also, the income levels are attractively high in metros and hence the client should think of
expanding there first. For expanding outside of India, we need to consider additional factors
like regulatory barriers, business and product licensing costs, import/export duties,
competition, cost of setting up manufacturing, etc.
Interesting. May I know what kind of critical surgeries we are taking about here? Also, is there any
competition for our product in the market?
Thank you! I think I now have the information I needed. I would like to summarize what we know here.
We understand that our client is a medical equipment manufacturer who sells only 1 product which is
specifically used by patients undergoing critical surgeries. The product is relatively expensive and
priced at 20k. The company is currently selling its products only in Bangalore and Chennai and is
looking for growth opportunities. Is that correct?
Good Job! I think you have covered the analysis thoroughly. We can stop here.
Yes, please go ahead.
ICON, IIM Bangalore
47
Medical Equipment – Bear Hugger
Case statement
Interviewee Notes
•
•
•
•
Growth| Moderate | Bain (Partner)
Client is a medical equipment manufacturer who wants to grow
It manufactures and sells only one product in Bangalore and Chennai
Structure/Framework
Revenue Increase
The one-time medical
equipment reduces
healing time from 3
months to 14 days
Organically
The only substitute is a
blanket.
•
The product is quite
expensive (20k)
•
The product is only
used by patients
undergoing critical
surgeries
Inorganically
Increase # of
customers
New
geography
Existing
Product
Increase revenue per
user
Existing
geography
New product
Improve
marketing
Existing
Product
Increase usage
per user
Increase price
New product
Improve
channels
Key Takeaways
•
•
•
Marketing efforts in medical industry are done through medical representatives. If doctors are not recommending the product to the patients, the product won’t sell.
Identifying the customers as super specialty hospitals is critical to providing reasoning and recommendations.
Expanding into existing geographies can be done more effectively by pitching to large hospital chains like Max, fortis, etc. instead of individual doctors. Be creative here.
ICON, IIM Bangalore
48
Metro Expansion
Growth | Moderate | BCG (Buddy)
Your client is Hyderabad Metro (private partner such as L&T). They have recently added a new route.
At one of the station on this route, the client owns a 10 acres of land. Suggest best ways to utilise/
monetize the land.
Thank you, I would like to begin by asking a few questions to get to know the case statement in detail.
Sure, please go ahead.
What is the client’s objective? Is there a target and timeline that client has in mind? Does the client
have any other land holding? How has the client developed/used it?
The client only wants to maximise returns from the land. There is no target/timeline. You can assume
this is the first time client has acquired an additional landholding.
Okay. Could you describe the area where the land is located? It is it a commercial area or residential?
What is the typical traffic or footfall in the area?
Assume that there is no requirement for any office related expansion. List what all factors are to be
considered for the two options of Mall and Residential complex
I would look at Financial and Operational factors. Financial factors such as budget outlay for both
options, expected return based, payback period and synergy benefits. In case of Mall, the daily crowd
inflow to malls can provide revenue to metro line whereas in case of residential complex, the
residents can increase metro line revenue.
Operational factors such as license to operate, project duration, competition, partnering with
construction companies, promotion of venture etc are to be considered. Further in case of
residential complex additional factors such as nature of residence (luxury/economical), whether to
take up a society model, availability of resources for residential purpose such as water, power etc. In
case of Mall, the kind of outlets to include, growth prospects of footfall in the area, model of
operation etc. are to be considered.
Alright. Can you list different revenue sources for a mall?
It is a developing area in the city with some level of commercialisation and residential buildings. The
land is located immediately next to metro station and is on route to highly commercial areas of the city.
Revenue can be divided into core and non-core. Core sources shall include Rentals from outlets in mall,
Charges for facilities such as parking. Non core revenues such as advertisements and revenue from any
events held at malls
I would like to know what are the commercial buildings already in the nearby region.
It has been evaluated that Mall is a better option. The client has limited capital to invest. Can you
suggest different ways to set up & operate the mall?
There are a few restaurants and multiple retail shops
Okay. I would structure the problem by first coming up with various options for monetizing the
landholding, evaluate the financial and operational feasibility of each option and finally evaluate any
risks. Shall I proceed with this structure?
The client can invest in setting up the mail entirely on its own. This may not be feasible considering
financial constraints. Other options to consider would be through JV with a mall chain such as GVK or
models such as Build-Operate- Transfer.
Alright. That was good. We can close the case here.
Please go ahead.
The various options can be bucketed under four categories- 1. Using for current business such as
Client’s office building, employee quarters, training centre etc. This will depend on requirement of
client. Option 2- Commercial buildings such as Metro malls for shopping/movie/ entertainment,
Gaming zones, Hotel, Parking facility etc. Option 3- Residential complex. Option 4- Lease out or sell
the land. Is there any specific option to proceed with?
ICON, IIM Bangalore
49
Metro Expansion
Case statement
Interviewee Notes
•
•
Semi developed area
including residential
houses and
commercialization
•
•
Growth | Moderate | BCG (Buddy)
Your client is Hyderabad Metro private partner (similar to L&T)
Owns a piece of Land 10 acres and looking for methods to monetize the land
Structure/Framework
Landholding
commercialisation
Options
Certain restaurants and
retail shops located
nearby
Financial
Feasibility
Office expansionoffice, quarters,
training centre
Commercial
building- Malls,
parking facility
Residential
Complex
Operational
feasibility
Mode of
entry
Budget
Set up time
JV
Payback
period
License
Ownership
Returns and
synergy
benefits
Construction
BuildOperateTransfer
Others
Lease out
Key Takeaways
•
•
•
Use market entry framework
Take buy in from interviewer on which option to consider for further evaluation
Could have asked about financial constraints in preliminary questions
ICON, IIM Bangalore
50
US Tyre Manufacturer
Growth Strategy | Difficult | BCG (Partner)
Your client is a tyre manufacturer based in the United States. The problem they face is they are
operating at full production capacity. The CEO is worried that if the demand for their product
increases, they will not be able to serve it. The board evaluates three options for expansion –
increasing capacity in the US itself, expanding production in Mexico, or assessing a production
facility in China. They have hired us as a consultant. What would you advise them?
Apart from production costs, I would also consider other transaction costs like freight, logistics, import, and customs
duty.
I would also look at the inflation rates and future projections of these costs. Mapping the production units with the
demand locations will help us to find out which location (US, China, and Mexico) gives us the lowest cost.
Okay. What next?
This is an interesting problem at hand. So, before we deep dive into the case, I would like to ask a few
preliminary questions to know more about the client.
The second bucket we have is operational feasibility – where I would like to see the entire value chain. So, I
would see whether there is an uninterrupted supply of raw material, adequate labor resources are available,
capital is available, the latest technical equipment and machines are available.
Sure, go-ahead.
I would like to know more about the client – what part of the value chain do we operate in, the product
lines (different types of tyres) we have, and the competitive landscape.
So, for simplicity, let us assume that we have only one type of tyre that we manufacture. The
client is the market leader in the US market, and we have a couple of competitors who have
around 15-20% market share each.
Thank you. Also, I would like to know the objective or evaluation metric that the client is looking at –
whether it is lower cost, a certain quality of production, or an uninterrupted supply of raw material.
So, if you look at the problem holistically, you will realize that all of these are very important while
making a decision. There isn't a single criterion that the client has.
True. Also, are there any demand forecasts that we have in the US markets. How fast is the market growing?
So, we expect moderate growth in demand in the domestic US market.
Fair enough.
Coming to strategic fit – wherein I will see what the future plan for the company is. From where will the next
leg of demand come. Example, is the company intending to expand in Asia – if that is the case, it makes sense
to have a factory in China. Also, other qualitative factors like bad economic foreign relations between the US
and China are important.
And the last bucket is the mode of expansion. Apart from a greenfield factory expansion, I would also explore
other options like acquiring local manufacture, a brownfield expansion where a factory is bought, or
outsourcing of production, or finally setting up a joint venture.
Good, that was a comprehensive analysis. Say if Mexico is L1, what would you do?
I would not jump into a decision based solely on the lowest costs. I will also see the operational feasibility, the
strategic fit, and other qualitative factors. If Mexico ticks all the boxes, I would finally decide on the expansion
mode – a greenfield factory or outsourcing of production, an acquisition, or a joint venture.
Good. Can you summarise the case for me now?
Sure. Now, I would like to approach the problems looking at four buckets – the first bucket being financial
feasibility, second being operational feasibility, third part would be strategic fit and future plans, and the last
would be the mode of entry.
Interesting, carry on.
So, for financial feasibility, I would look at the cost-benefit analysis considering the demand projections and the
projected cost of production in all the 3 locations - – the US, Mexico, and China.
Sure, sir. So, our client is a US tyre manufacturer facing a shortage of production capacity and evaluating three
options whether to produce in the US, Mexico, and China. We solved this problem by looking at financial
factors – costs and other qualitative factors – like strategic fit, operational feasibility, future projections and
finally explored the various options available in the form of greenfield factory, outsourcing, or joint venture.
Good job.
ICON, IIM Bangalore
51
US Tyre Manufacturer
Case statement
Interviewee Notes
• Only 1 type of tyre
• Market Leader
• Couple of competitors –
15-20% M.S.
• Moderate growth in
domestic demand
Growth Strategy | Difficult | BCG (Partner)
• Leading US Tyre Manufacturer
• Operating at full capacity
• Exploring expansion options
Structure/Framework
Expanding production
capacity for US Tyre Mfg
Financial
Feasibility
Cost Benefit
analysis
Operational
Feasibility
Demand mapping with
location
Strategic Fit &
Future Plan
Raw material
availability
Future global demand and
expansion plan
Mode of Entry
Greenfield
expansion
Demand
Projections
Labor
resources
Production
costs
Capital
Outsourcing
Transaction
costs
Technology &
equipment
Joint Venture
Geo-political factors
Acquisition
Inflation & future
projections
Key Takeaways
• Case was an open-ended growth strategy case to evaluate the candidates structured approach
• Interviewer gave non-verbal cues in the beginning to guide the candidate – important to take note of this during interviews
ICON, IIM Bangalore
52
IIMB Market Entry
2021-22
ICON, IIM Bangalore
53
Markey Entry Framework
Risks
Preliminary Questions
•
•
Clarify objective, growth quantum
and targeted timeline
Geography – Why are we looking
into this geography? Have they
launched this product in another
market?
•
Business Model – Where does the
firm lie in the value chain?
•
What are the existing products/
services, capabilities and expertise
of the firm?
•
•
•
Internal
External
- Constraints
- Resources
1. Risks
Involved
Market
Attractiveness
Who are the target customers?
Market size and price sensitivity
3. Modes of
Entry
Competitors
Price,
Product,
Place,
Promotion
Barriers to Entry
-
Financial constraints
Capabilities/Resources
Suppliers
Govt. Regulations
Patents, IP
PESTEL
Regulations
Currency
Fluctuations
Economic Feasibility: Mkt Size x Mkt Share x (Price – Variable cost) – Fixed Cost
Solve the guesstimate to calculate market size, qualitatively find achievable market share
Organic
Joint Venture
Acquisition
Advantages
- Retain business control
- Build Experience Curve
- Boosts Brand Image
- Less investment
- Local Expertise
- High Scale and Scope
- Extend market scope
- Utilise local expertise
- Produce synergy
Disadvantages
- High Capex
- High Commitment
- Limited Control
- Brand Dilution Risk
- Significant Investment
- Threat to Brand Value
Any side-effects of product?
Pricing – given or required, ask for
targeted margin
Customers
- Addressable market
- Market
- Growth rate
structure
- Profit Margin
- Reaction to
entry
- Segments
2. Market Size
and Share
Macro
Factors
Industry level
ICON, IIM Bangalore
54
Global OEM
Market Entry | Easy | Accenture (Manager)
Case Statement: It is the year 2016. Your client is the OEM major Kia Motors. It can be
considered a sister enterprise of Hyundai Motors. It currently has presence across North
America, South-East Asia, Europe etc. As part of its global expansion program, it wants to
enter India. How would you evaluate this opportunity?
I would determine the number of households, and then divide it into low, medium and high income. I
would assume a certain number of cars per household for medium and high-income households. I
would also try to divide urban regions into metros, which already have good public transport and
non-metros and look at the numbers for those.
Thanks, I would like to start by asking if there is any specific objective that Kia is looking to achieve in
India, and what is the time-frame they’re aiming at for the same?
You can consider the goal as attaining market share first and then attaining profitability in 34 years
Since I know it’s an OEM, I am assuming that they produce all the components required and assemble
it. The sales would happen through dealership networks. I will focus on this part of the value chain for
this case. Is that okay?
You can stop there, that’s good enough. What else would you look for?
There’s one thing I missed out on earlier, that is, are the market shares of competitors mentioned
earlier for the economy or premiums segment? Also, does Kia have a competence in either
economy or premium?
The market share mentioned earlier was for the entire market, however a major part of it is the
economy segment – which is basically your entry level hatchback, economy sedan etc. The premium
segment would consist of luxury sedans and SUVs. Kia is open to both segments. What would you
recommend – economy or premium?
Yes, you can go ahead with it.
You mentioned that Kia is a sister enterprise of Hyundai. Can you give me an idea of what the existing
market is like in India in terms of competition market share, including for that of Hyundai?
Currently, Maruti is the market leader with 50% share, followed by Hyundai with 20% and Tata with 8%
Alright, so now for analyzing the opportunity, I will start with the economic feasibility and the
operational feasibility. Is that okay?
Yes, you can start with the market sizing. I don’t want the numbers; I just want a rough idea of how you
would go about it
Firstly, I would look at the entire population of India. I would divide it into rural and urban areas. Since
a significant part of the road infrastructure and regular commute patterns are concentrated to urban, I
will focus on this segment. Also, 4W can be used for both commercial, that is taxi & for personal use. I
would like to focus on the private usage. Are these two assumptions, okay?
Considering that the economy market seems to be quite concentrated, it might be difficult for Kia to
make an impact quickly. Also, Considering the growth of disposable income in India and the trend
towards preference towards luxury vehicles, Kia can look at the premium segment. Moreover, it
already has a reputation as a trusted brand, which is important in this segment
Fair enough. How would you proceed at this point? What recommendations would you have for Kia?
In my opinion, Kia can leverage the favorable policies of the Government towards domestic
manufacturing and the cheap labor available in India to set up their manufacturing plant in India. It can
leverage the existing synergies it has with Hyundai for manufacturing as well as the distributor
network it has. On the marketing side, it can focus on the premium customers and position it as an
international luxury brand
Good, we can close the case now. Thank you.
Yes, go ahead
ICON, IIM Bangalore
55
Global OEM
Case statement
Interviewee Notes
Market Entry | Easy | Accenture (Manager)
• Kia Motors wants to enter India
• It wants to attain reasonable market share and achieve profitability within 3-4 years
• Is a sister enterprise of Hyundai, which is already present in India
Structure/Framework
• Multiple segments for
entry
Market Entry
• Have a partner
enterprise already
present
Economic
Attractiveness
Operational
Feasibility
Cost Structure
Total Addressable
Market
Willingness to pay
Total Population
Rural-Urban Split
Income Split
• Concentrated market
overall
Key Takeaways
• Multiple segments for entry
• Have a partner enterprise already present
• Concentrated market overall
ICON, IIM Bangalore
56
OTT Service Launch
Market Entry | Easy | Strategy& (Manager)
Our client is a regional production house and produces content in Gujarati language. Given the
increasing popularity of OTT format, they are looking to launch an OTT platform of their own. I want
you to analyze whether they should go ahead with the launch?
To make sure I have understood the case statement clearly, our client is a regional production house
which produces Gujarati movies and TV shows. They are considering launching their own OTT
platform and have, and I need to analyse whether this is a viable option.
No, this is reasonable. Please tell me how you would estimate the market size.
I would break down the market size into two – number of users and average subscription charges per
user. To calculate the number the users, I would further break it down into two – potential market
size and percentage conversion. Market size is the total Gujarati speaking population in India, which
is around 5% of the total population. That gives us the total market size of 6.5 crores. Given that
there would be just one subscription per family and average family size at 4, we get approximately
1.6 crores families. Now, I would like to break them further down basis the income level.
That’s right!
Before I proceed with structuring my analysis, I would like to ask a few preliminary questions. Would
that be fine?
Sure, go ahead.
What kind of content does our client produce? Is it movies, TV shows or both?
Great question. They produce both movies and TV shows, but their focus is on TV shows.
Okay, and does the client have a particular customer segment such as youth or elderly that they
target?
Okay, that sounds fine.
I shall divide it further into three income levels – low, medium and high with 40% falling in low and
medium and 20% in high-income level bracket. This gives us 0.64 crore families in low and mediumincome levels and 0.32 crore families in high-income level. Assuming that subscription to the OTT
platform as a luxury service, the affordability would vary across the different income levels. I would
like to assume that 100% for high, 50% for medium and 0% for low-income groups. Does this seem
fair to you?
Yes, go ahead!
This gives us the total market size of 0.64 cr families. To calculate the percentage conversion, I would
like to look at two factors – awareness and adoption. Assume that, given the medium and higher
income level groups, 75% awareness level and approximately 50% would actually adopt. This would
give us the total number of users as 0.24 crore. Does this seem reasonable to you?
No, they don’t have any such specific customer target.
Alright and what is the primary objective of launching their own OTT service?
Client is looking at the OTT service as an alternate source of revenue.
What factors led you to consider 50% adoption levels?
Thanks for making the objective clear! Can I have a few seconds to structure my analysis?
I assumed that given the specific level of technical expertise required for using OTT platforms, a certain
population level even though they can afford it would not be that tech-savvy to use it. Further, some
customers may not see value in subscribing to an OTT platform just for Gujarati TV shows and movies.
Sure!
I would like to approach this problem by evaluating the market attractiveness, financial viability and
operational feasibility. Market attractiveness aspect is to assess the market size, growth potential,
existing competition and the trends prevailing in the market. The financial viability aspect is to assess
the profitability of the venture. Operational feasibility would include factors like regulatory approvals,
resource availability and technological capabilities. Does this seem reasonable to you, or should I
consider any other aspect?
Okay, not that we have the total number of users tell me how would you price the services?
ICON, IIM Bangalore
57
OTT Service Launch
Market Entry | Easy | Strategy& (Manager)
Firstly, I would like to look at the pricing of other OTT players in the market – Netflix charges Rs.
499/month for its basic plan and fall in the premium segment, Disney-Hotstar charges around Rs.
399/year which is around Rs. 30/month. Given the extensive range of content they provide to user
we can consider this as the ceiling price. Further, I know that DTH services, on an average, charge
around Rs. 10 to Rs. 20 per channel per month. Given that the OTT platform would be providing
more timing flexibility with no disruption due to advertisements hence it would provide more value
to the user. To increase adoption initially, we can price the service at Rs. 15 per month. Does this
seem fair to you?
That does seem fair and what be the annual revenue that the client would generate if it were to launch
the OTT platform?
Our total number of users would be 0.24 crore and charging Rs. 15/month, the client can have a
potential revenue of Rs. 43 crores.
Alright. That makes sense. Let us wrap it up here. All the best!
ICON, IIM Bangalore
58
OTT Service Launch
Case statement
Interviewee Notes
Market Entry | Easy | Strategy& (Manager)
• Regional production house looking to launch OTT platform
• Aim – increase profits and create additional sources of revenue
Structure/Framework
OTT service
launch
• Total Gujarati speaking
population can be
assumed as 5% of the
total population
• Population can be
further broken-down
basis income – low
(40%), medium (40%)
and high (20%)
• Identify the
characteristics for OTT
platform users and use it
to further segment
Market size
Number of users
Potential market
size
Market
attractiveness
Financial viability
Growth potential
Existing
competition
Operational
feasibility
Average revenue
per user
% conversion
Key Takeaways
• Ensure that the you lay out the structure for your analysis at the start
• Assume that are easy for calculation and take buy-in from the interviewer on the assumed numbers
ICON, IIM Bangalore
59
New Pilot Program Launch
Market Entry & Unconventional | Easy | Byju’s
Byju's have launched a pilot program in 4 cities: Bangalore, Mumbai, Delhi, Kolkata. Revenue in this 4
cities are in the ratio 3:2:1.5:1. Now, Byju's want to launch this program to a new city. Which city
would you recommend?
Okay, before starting with the analysis, I would like to ask a few clarifying questions to get a better
understanding. Is that okay?
Sure, go ahead.
Byju’s offers contents in different packages as in for junior and high school grades, Higher secondary
and JEE level, other entrance exam preparations like CAT etc. Does this pilot program caters to any of
these specific areas?
The pilot program is for coaching of JEE and NEET for higher secondary students.
Are the coaching centres located in similar areas? I want to understand the ease of accessibility of
coaching centres in each of the 4 cities?
Let us stick to the case figures. You may give your recommendation based on the geographic location
of the cities..
Okay, I can consider the cities Bangalore, Mumbai, Delhi and Kolkata to be positioned in South, West,
North and East part of India respectively. Now, Based on the revenue figures, we figured out Kolkata
to be most profitable city amongst the four. This implies a higher potential for revenue generation in
East part of India. So, the probable options for launching new pilot program can be Ranchi,
Bhubaneshwar, Siliguri or Guwahati.
Fair enough. Let’s consider Bhubaneshwar. Now, where exactly in Bhubaneshwar would you pick to
be the ideal location for the centre?
Since our pilot program is designed for JEE and NEET aspirants, we can pick a location in vicinity of
schools or institutions that the higher secondary students are enrolled in.
How would you determine based only on the data available with Byju’s?
So, from our app user database, we can identify the students residing at or near Bhubaneshwar, who
are enrolled for JEE or NEET online course. We can trace their location and based on that we can pick a
location, where majority of the users live nearby.
Coaching centres in all the cities have similar accessibility.
Do we have any information on the number of coaching centres in each of these cities?
Yes, so the number of coaching centres in Bangalore, Mumbai, Delhi and Kolkata are in the ratio
10:3:5:1.
Okay. Shall I assume same capacity for all the coaching centres in terms of number of students that
can be accommodated?
Yes, all the centres have the same capacity.
Okay, so I would like to calculate revenue per centre in each of the cities, which I believe would be a
better metric here to understand our revenue share.
Okay. How would you ensure student enrolment for the new pilot program?
Firstly, we can promote our new pilot program to our already existing student base, who use our app.
Through them we can expand our network by encouraging them to bring along their friends. We can
talk and onboard reputed tutors in that area. As students will see their familiar tutors teaching at our
coaching centres, they will feel more motivated to join us. We can also promote the new offline
program in our app in Bhubaneshwar region.
Sounds good. We can wrap up the case here.
Okay. Go ahead.
So, I am getting revenue per centre in Bangalore, Mumbai, Delhi and Kolkata to be in the ratio
0.3:0.67:0.3:1. This implies Kolkata is the most profitable city in terms of revenue per coaching centre.
Okay. So, now which city Byju’s should target for launching another pilot program?
Shall I consider the fact that the pilot program is particularly designed for JEE and NEET aspirants
and figure out the cities attracting these student base?
ICON, IIM Bangalore
60
New Pilot Program Launch
Case Statement
•
•
•
New pilot program launched in 4 cities.
Revenue from Bangalore, Mumbai, Delhi, Kolkata are in the ratio 3:2:1.5:1
Client looking to expand the same pilot program to a new city.
Interviewee Notes
•
•
•
Market Entry & Unconventional | Easy | Byju’s
Structure/Framework
Pilot program designed for JEE and NEET
aspirants.
New Pilot Launch
Program
Number of coaching centres in Bangalore,
Mumbai, Delhi, Kolkata are in the ratio
10:3:5:1.
Market Analysis
Expansion
Think of launching in geographically
profitable new city based on case figures.
Accessibility
Capacity
Revenue per
Coaching Center
Geography
Location
Student
Enrolment
Key Takeaways
•
•
•
Understanding key factors for pilot program in existing cities.
Conventional framework not followed.
Buying in from interviewer regularly for any assumptions and methodology followed.
ICON, IIM Bangalore
61
Semi Luxury Car Manufacturer
Market Entry | Easy | BCG (Buddy)
Your client is a budget hatchback car manufacturer wanting to enter the sedan segment. Suggest
whether they should enter the market and if yes, suggest a strategy to do so.
Before delving into the case, I would like to know a little bit about the business context of the client.
Which geographies do the client primary operate in. What is the motivation for entering into the
budget sedan segment.
The client has major presence in India, and they want to launch their product in the Indian market
competing with the likes of cars like Honda City. The motivation is to increase profits.
Ok so I will look at the problem bucketing into 3 categories- Financial feasibility, Operational
feasibility, and the risks. Does the approach look fine.
Yes, please proceed.
Ok let me look at the market size and market share that we could achieve. For Market sizing do we
have any information or should I proceed with a guestimate.
Let’s not get into the market sizing part and let’s say there are 4 major players in the market and
there is enough consumers in the market to cater to a new player. Let’s try to look at the potential
risks for our client.
Yes, Sure. I can think of a couple of ways to do it. Firstly, we could upsell the product to our existing
customers by providing attractive discounts/offers on their existing hatchbacks and sell them the
sedan. Another way is that since we have the information on when our customers have bought their
cars, we could do targeted promotions to existing customers if their cars are old enough and can be
potential new car buyers.
Excellent. Can you tell me how we should price the product.
Ok so I believe that we should price the product by benchmarking it with competitors and should price
the product slightly lower than the competitor until our product gains enough market share.
Ok fair enough. Is there any other way we could price the product.
There are two more ways that I can think of about how to price it. Cost based and value-based
approach.
Ok great. Can you tell me how we could do value-based pricing for our product.
Here we should try to sell the product on the basis of its perceived value and the willingness to pay of
the customer.
Ok great. I think we can stop here. You have done the case well.
Since they have been operating in the budget segment so far, when we upgrade to a semi luxury
brand under the same name consumers might be apprehensive about buying the product as
compared to the competitors’ product.
Ok fair enough. You have identified a major concern here. What do you think the client can do to
mitigate the threat of the sedan being stereotyped and not doing well in the market compared to the
competitors .
First of all, they can try to position the product slightly differently from the competitors as an
everyday sedan. They could price it slightly lower than the competitors at least initially until the
product gains traction among the consumers. Also, they could leverage on the existing customer base
to increase sales.
Good. So can you elaborate on how you will use the existing customer base to improve your sales.
ICON, IIM Bangalore
62
Semi Luxury Car Manufacturer
Case Statement
•
•
Entry into upstream segment of the same product segment
Aim: Increase revenue and generate alternate sources of revenue
Interviewee Notes
•
Market Entry | Easy | BCG (Buddy)
Structure/Framework
Success Metric is increased profits
•
Focus on potential risks to market entry
•
Competitive pricing strategy to attract
customers
Entry into
Upstream
Segment
Market
Attractiveness
Market Size
Operational
Feasibility
Market Share
Pricing
Risks
Inward Looking
Cost-based
Onward Looking
Benchmarking
Value Based
Key Takeaways
•
•
•
Understanding key factors for people buying a middle-segment product
Analysis covered entry as well as pricing. Focus on potential risks for given strategy
Traditional framework was not followed.
ICON, IIM Bangalore
63
Sugarcane Yield Enhancer
Market Entry & Pricing | Difficult | BCG (Principal)
Our client is a multinational pharmaceutical company. It’s area of business involves manufacturing
agrochemical, seeds and biotechnology products. They have recently developed a chemical to
enhance sugarcane production and are thinking to launch it in Indian market. You have been hired to
help the client figure out whether to launch the chemical product or not ?
I would like to restate the case statement to make sure I got the it correct. Our client is an MNC
operating into pharmaceutical business and manufactures agrochemical, seeds and biotechnology
products. Recently the client has developed a chemical which enhances sugarcane production and now
needs our help to figure out its launch. Is that right?
Yes that’s correct.
I would like to start by understanding the client’s objective behind launching this chemical product and
the time frame for achieving it? Why has our client chosen Indian market to launch its new chemical?
Sure. The client wants to maximise its profit. There is no timeframe in mind, but the client wants to
achieve this objective as ASAP. India is a potential market with almost 17% of world’s total sugarcane
production, which makes it one of the largest producer worldwide. Moreover, R&D of the newly
developed chemical suggests that it is more compatible with Indian soil texture.
Thanks for this insight. Does our client currently operate in India? And what part of the value chain the
client currently operates in ?
No, client doesn’t operate in India. But in other geographies, our client owns the entire value from R&D
till distribution to retailers.
Yes there are 3 existing competitors in the Indian market, but our client’s new chemical is more
effective as it uses completely new technology than any others in the market. Yes, the client owns this
new technology and has the patent over it.
Thanks for your time. I will start with analyzing the market barriers, then I will check the financial
viability and thereafter I’ll look at the operational feasibility and at last I will look upon the ways to
enter. Does this sound like a good approach?
Yes valid approach. You can continue.
For analyzing market barriers, I would like to break it down into internal and external barriers. Under
internal barriers, I would like to look for any financial or capability constraint while launching? Is it fair to
assume that there is no capability constraints as the client already operates in same business in several
countries.
Yes. You are right there is no capability constraint. Also, The client has deep pockets and has no
financial constraints.
Do we have any external barrier, which are not under the direct control of the client like barriers in
procurement of raw materials, tax, government regulations, license, distribution network, legal,
technology, reaction of existing competitors and customers.
Comprehensively covered, but we don’t have any external constraints as well.
Now, as its clear that there are no barriers to entry. I would like to move forward and evaluate the
financial viability. To evaluate this, I would like to look at profit and split it as a function of Market size
(Kg) * Market share (%)* (Price-Cost) INR/Kg - Fixed cost (INR/Kg) and see the profit potential.
Next, can you tell me more about the new chemical, what are its benefits and side effects? How is it
used? And also who are its potential customers.
You are on right track, how would you calculate the market size. Give me a qualitative approach.
Sure. The chemical increases the yield of sugarcane by 20%. It also speed up the growth time by 5%.
There are no side effects as such and it is used similar to how a fertiliser is used. The customers are
sugarcane farmers.
Well, to estimate it, I will first consider India’s total land area, then multiply it with % of cultivable land,
then with % of actively harvested land out of available cultivable land and thereafter with % of
sugarcane harvest land out of total actively harvested land. This will give us total land on which
sugarcane is harvested, so I will further multiply it % of sugarcane farmers who uses chemical enhancer
and finally with chemical required (Kg per m^3) of land.
Are there any competitors present in the Indian market? If yes, how effective is our chemical product
with respect to their products? Does our client have patent for this new technology?
ICON, IIM Bangalore
64
Sugarcane Yield Enhancer
Market Entry & Pricing | Difficult | BCG (Principal)
That’s exactly what I was looking. You can take the total market size to be 2 lakh tonne.
Sounds fair. Just look at the monetary benefits created for the farmers.
Do we have any information on the % of market share our client is expecting to capture? Considering
that our chemical product is more effective than other 3 competitors and have no side effects, is it safe
to assume that the client can capture a market share of greater than 1/4th of total market share.
Sure. Monetary benefits for farmers will be through two ways. First because of increased yield and
second because of labor cost saved owing to fast growth time.
That’s a fair argument. Assume that the client will be able to capture around 30% market share. Now
why don’t you help the client figure out the pricing.
Sure. Can I take few seconds to analyze me thoughts.
Sure. Take your time.
We can price our chemical product by looking at 3 ways. First, we can look at the chemical’s variable
cost to figure out minimum price ceiling for making profit per unit, then we can look at the competitors’
prices and can price out product at a premium as our product is superior. Finally, we can look at the
farmers willingness to pay by evaluating the value created to get a price ceiling.
Good. You have covered both the benefits. We have some data, without chemical, a farmer earns 500
INR per m^3 and it takes 60 days for the sugarcane to grow. Labour cost per day is 10 INR /m^3. and 1
kg of chemical is required per m^3
Okay, by using our chemical product, farmer will earn extra 100 INR per m^3 because of 20% increase in
yield. And since the growth time is fasten by 5%, it will now take just 57 days to harvest and save 3 days
of labour cost, which is equal to 30 INR per m^3 . Total benefit will be 130 INR per m^3. Since, 1 Kg of
chemical is required per m^3, the total benefit for farmers will be 130 INR per Kg. Hence, the our
chemical product should be priced below 130 INR per Kg
That’s Right. Lets price the product at 100 INR per Kg.
Next, I would like to know the fixed cost incurred to produce the chemical- like R&D etc.
Sounds comprehensive. Go ahead
Do we have any information about the total variable costs per unit ?
Sure, consider the fixed cost incurred to 100 INR crore.
Yes the client incur a variable cost of 30 INR per Kg. Can you help me understand what all costs will be
variable in nature.
Thanks for this information, We can now calculate the profit as 2* 10^8 Kg * 30% * (100-70) INR/Kg –
10^9 INR. Therefore, client’s overall profit will be 320 INR crore. Our client will be earning more than 3
times of the investment made. Now should I move into figuring out operational feasibility.
Sure. The variable costs will be incurred across the value chain and it could be production cost,
packaging cost, distribution cost etc. The client has to charge a price of more than 30 INR per Kg to
make profits.
Your figures are correct. No need, I think we had a good discussion and we did a quite detailed analysis
. Let’s stop the case here. All the best !
Good.
Next, do we have any information regarding the price charged by the competitors?
The competitors charge a price of 50 INR per Kg.
Okay. Since our product is more effective, we can price our product at a premium over 50 INR per kg.
That’s correct.
Next, I would like to evaluate the value created for farmers. We can split it into monetary and nonmonetary values.
ICON, IIM Bangalore
65
Sugarcane Yield Enhancer
Case Statement
Statement
•
•
Client has developed a new sugarcane yield enhancer chemical
Client need our help to figure out whether to launch it or not
Interviewee Notes
•
•
•
Structure/Framework
Internal
Barriers
Client is an MNC into pharmaceutical
business. Newly developed chemical
increases yield by 20% and speed up
growth period by 5%. India produces 17%
of world’s sugarcane.
Three existing competitors in India. The
new technology is patent protected. There
are no barriers while launching
Market Size is 2 Lakh tonnes. Expected
Market Share is 30%. Variable cost is 30
INR/Kg. Competitors charge a price of 50
INR/Kg
Without chemical, farmers yield is 500
INR/m^3, growth period is 60 days. Labour
cost is 10 INR per m^3 per day. 1 Kg of
chemical is required to be used per m^3
External
Market Size
Market Entry
•
Market Entry & Pricing | Difficult | BCG (Principal)
Financial Viability
Market Share
Cost Based
Price/Unit
Competitor Based
Increased yield
Cost/Unit
Value Based
Labour cost saved
Fixed Cost
Operational
Feasibility
Value chain setup
Resources/Capabilit
ies
Organisational
Structure
Entry mode
Key Takeaways
•
•
•
•
Ask short and crisp clarifying question and look out for cues by the interviewer.
Its important to take the buy-in of the interviewer and explain what you are doing during the analysis.
Chalk out the Market Entry framework just after the clarifying questions and try to MECE at every step.
Carefully note down any figure which the interviewer provides and keep it at the back of your mind as to where it could be used
ICON, IIM Bangalore
66
Third Party Garages
Market Entry | Easy | Bain (Buddy)
Ratan Tata visits Germany and is amazed by the third-party garages there. He wants to replicate the
business model in India and has asked for your help to understand if it is feasible. If yes, how to
approach this?
I would like to understand the problem a bit more. Why do customers opt for third party garages than
company service centres? What is their revenue model? Which segments in auto does it cater to?
These are independent garages focusing on vehicles from all segments. The revenue model is
both pay per service and subscription based. Customers opt for this for better quality in lower
prices. Auto dealers are okay with it as the servicing sector doesn’t contribute much to their
revenue and increases costs
In order to understand the reason for their existence, how do they source the original spare parts as it
must be a concern? Also are we planning to implement the exact same model in India, and what’s the
current competitive scenario in India? And what is the objective behind replicating this?
The parts used are original sourced from the tier 1/2 suppliers. For Indian scenario focus on cars only.
There are no organised players present in India. The objective is to increase revenues maintaining
decent profitability.
Ok, I have good information to proceed with my analysis. Since this is a new industry, I will begin by
analysing the market attractiveness, and then move on to analyse the operation aspect as in setting up
of the value chain and potential barriers if any.
That sounds right. Let’s start with market sizing and target segment. I want to see your approach,
don’t focus on numbers.
Sure, I will begin with the population approach. Apply filters of urban and rural. We proceed with
urban and apply filter of income (high, medium & low). Divide, this by 4 to get number of families, we
can ignore the low-income segment. Multiply medium and high income by number of cars per family. 1
and 3 respectively
MI segment looks for value for their money whereas HI looks for brand and convenience. Even though
the MI segment seems lucrative, the unorganized Indian repair industry is full fledged and attracts the
MI with much cheaper prices with duplicate parts. Hence, I think our favorable segment would be high
income.
That’s a good observation Indian unorganised sector is quite popular among the medium income
segment. Our offering of convenience and quality will sit better with high end segment
Right. Also, we can earn better margins from this segment. Do you want me move to pricing also?
No, let's focus on the setting up of the value chain. How do you suggest we go about it ?
Understood, Since we are focusing on high income clients, we will be dealing with high end luxury
cars. We will need strong supplier relationship with both domestic as well as overseas suppliers. That
shouldn’t be a problem with the brand name Tata. Next, we will need to setup stores, preferably in
tier one and two cities. For marketing we can tie up with dealers for servicing programmes and
advertise directly in store. Lastly finding skilled workers might be a challenge for which we can setup a
training facility for the same.
Those are great suggestions. Can you elaborate on the location of the stores? Which locality to target in
the city?
Let me gather my thoughts. I think ideally, we should be in the vicinity of our clients. But those areas
must have very high rental cost, instead we can locate ourselves outside the city on major highways,
with large stores
Wouldn’t that be inconvenient to our clients?
For convenience we can have pickup facility for our clients. This will help us exploit low rent cost, high
economies of scale and deliver convenience to our clients too.
That is what I was looking for. We can close the case here. Thank you.
That’s about right, which segment do you suggest we should target?
ICON, IIM Bangalore
67
Third Party Garages
Case statement
Interviewee Notes
Market Entry | Easy | Bain (Buddy)
Ratan Tata visits Germany and is amazed by the third-party garages culture there. He wants to replicate them to India and has asked for your help to understand
how to approach this?
Structure/Framework
• Understand the business
model of these garages
and why are they better
compared to brand
owned stores.
Market Entry
• Identifying the issues
related to unorganized
sector in India while
assessing target segment
was of key importance
here.
• Remember to tie up
each decision to the
objective of increasing
revenues and
convenience
Market
Attractiveness
Market Sizing
Income
segment
Family Size
Market Share
No of
cars/family
Value Chain
Revenue
Margin
Suppliers
Brick-Mortar
Shops
Logistics
Skilled
Workers
Target
Segment
Key Takeaways
• Before jumping into the market entry framework, understand the business model. Try applying your own experiences to bring in insights.
• The Market attractiveness was more about identifying the attractive segment. Adapt your approach by taking feedback from interviewer before moving onto the next steps.
ICON, IIM Bangalore
68
US Food Manufacturer
Market Entry | Moderate | Bain (OCR)
Your client is a US manufacturer of bread mixes with a $40M of yearly sales. It is planning on expanding
its product line to pizza mixes and is asking for your advice.
Before we go forward, I have a few questions about the client and the product. When we say mixes,
are we talking about frozen dough or powdered mixes? Also, what parts of the value chain do we
operate in?
We deal with both frozen doughs and powdered mixes. Right now, we want to launch powder
mixes in the pizza category with an organic powder as a selling point in the US market. The client
has the complete manufacturing capability and does all distribution through grocery stores.
Is there an existing product in the market?
While there are no organic pizza mixes, regular pizza mixes do exist
Sure. Assuming pizzas are bought for a family, I will calculate the number of Pizzas sold yearly and will
take a discount factor of 12.5% (10% share + 25% growth) which could be used to calculate the
proportion of pizza mixes out of the pizzas consumed. Number of pizzas sold will depend on the US
Population, urban rural split, average family size, income class wise split, average frequency of
monthly purchases and a discount factor for organic pizza bases used
This looks like a good strategy. Why don’t you take a minute to feed in the numbers and come with a
value?
Sure. Based on the calculations, we are looking at about 26 Mn yearly purchases.
(Calculation done below in the chart) While this looks like an attractive number, we should look at
the operational feasibility and financial viability. Given we already manufacture bread mixes, would
it be a fair assumption that we have all the processing capabilities for the pizza mix and that the
only challenge would be in terms of sourcing raw materials and capacity utilization?
Alright. How is the industry growing and what are the market shares for our client?
The food industry is growing at 25% YOY and the mixes make up about 10% of this industry. The client
is not the market leader but has a considerable market share
I understand. What are the timelines along with any specific objectives, if any, that the client is looking
at? Also, is there any budget constraint for the same?
While there are no specific objectives, the client wants to be a dominant player within 2 years of entry.
There are no budget constraints.
I think I have a fair understanding of the problem at hand. I would break down my analysis in 3 major
buckets: Market Attractiveness, Operational Viability and Financial Feasibility. In market
attractiveness, I would look at the market size and market features such as the competitive response
and capturable market share. In operational viability I would look at pre-entry considerations and how
to enter the market. Finally, in financial feasibility, I would look at what are the various cost and
revenue streams to understand can we successfully break even
Sounds like a comprehensive approach. The competitive response is outside the purview of the case.
Let’s look at the market size for the pizza mixes. Can you give me a factor to calculate the market size?
Spot on. There are no operational challenges in sourcing the raw materials and the client has the
adequate capacity to deal with the launch of a new product category. Let’s look at the financial
viability. Each packet is priced at $3.5, the per unit costs are $1.2 for raw materials, $0.3 for the fuel
for the machines and $1.5 to for all distribution and storage. Along with this we would incur a fixed
cost of $120,000. Do you think the product is financially viable?
I’ll identify the breakeven quantities required and benchmark it with the potential yearly sales to
figure whether the product is viable. To break even, the firms profit contribution should at least be
equal to the fixed cost. With a profit per unit of $0.5 (3.5 – 1.2 -1.5 -0.3), the client needs to sell
240,000 units to breakeven. This number is attainable as we are looking at yearly sales of 26 Mn and
hence the product launch is financially feasible too
Great. Can you summarize the case and give your final recommendation?
Sure. Our client wanted advice on a new product launch for organic pizza mixes in the US market. We
looked at it from the lens of Market Attractiveness, Operational Viability and Financial Feasibility. We
concluded that the market was attractive with 30 Mn annual sales. With no significant operational
challenges, we came up with yearly sales of 240,000 to break even, and hence financially feasible.
Hence the client should go forward with the product launch with the existing capacity.
Okay sure. Sounds good. In the interest of time, we can close the case here.
ICON, IIM Bangalore
69
US Food Manufacturer
Case statement
Interviewee Notes
Market Entry | Moderate | Bain (OCR)
• Your client is a US manufacturer of bread mixes with a $40M of yearly sales. It is planning on expanding its product line to pizza mixes and is asking for your
advice.
Structure/Framework
Market Entry
• Food industry is growing
at 25%. Organic mixes is
10% of the food market.
Share in estimations can
be taken as 12.5%
accommodating 25%
growth in current 10%
(Brownie Points)
Market
Attractiveness
Market
Share
Market
Size
Competition
Pre-Entry
Conditions
Mode of
Entry
US Pop:
320 Mn
• Client wants to launch
only organic pizza mix
• Guesstimate for market
size required (Marked in
Orange)
Operational
Viability
Avg family size = 4 | 80
Mn families
Financial
Feasibility
Price/Unit =
$3.5
Variable Cost =
$3/unit
High Income (20%)
16Mn
Middle Income
(30%) 24Mn
Low Income (50%)
40Mn
Fixed Cost =
$120000
Monthly Purchase
Freq=8
Monthly Purchase
Freq=6
Monthly Purchase
Freq=4
Breakeven
Quantity =
240000 units
Yearly freq =
1536Mn
Yearly freq =
1728Mn
Yearly freq =
1920Mn
Key Takeaways
• Ensure that the you lay out the structure for your analysis at the start
• Ask the interviewer for relevant data instead of getting stuck in your analysis
ICON, IIM Bangalore
70
Medical Manufacturing Company
Market Entry | Moderate | Bain (Partner)
Your client is a manufacturer of a new age medical device called Teddy which
hugs patients in critical condition. They currently operate in Bangalore and Chennai and are
looking for ways to enter into other markets.
Since there are no logistical and warehousing constraints involved in the transport and storage of the
product, we can first target all the metro cities and tier 1 cities were the customers have higher
buying power and also have sufficient education to understand the value of higher recovery rate. This
is crucial since the cost of the product is high. We should educate the doctors by having seminars and
workshops on the effectiveness of the project. We should try to tie up with insurance agencies to try
and ask them to cover the cost as part of their plan, this would further incentivize the patients to use
this product.
Could you please tell me the reason why the company is looking to enter other markets?
The company wants to increase their sales, so they are looking to enter other markets
Great. I wanted to know more about the product, what does the product offer? Who are its users? Are
there any substitutes or alternatives to this product currently?
The product is used by patients in critical condition to help speed up the recovery. The
product is one of a kind and its closest substitute is a blanket and compared to the blanket this
blanket cuts down recovery rate by 50%.
Ok, since the product is used only by critical patients, is this product something that can be bought of
the counter, or does it require a prescription to be bought?
The product cannot be bought of the shelf and needs to be prescribed by a doctor.
Do we know where the company manufactures this and if there are any constraints involved in the
transport and storage of the product?
The company manufactures out of Bangalore and has no restrictions for transport and storage
How is our product priced and does insurance cover this cost?
The product costs 15,000 and can be used only once and insurance doesn’t cover it currently.
I am going to investigate expanding into domestic and international markets. Evaluate each market
based on the market attractiveness, financial and operational viability of operating there and compare
the various alternatives. Is there a particular market you want me to concentrate on first? And do you
want me to estimate the market size?
Ok, how would you expand into the international market and what countries would you consider for
the expansion?
For international markets I think we would need certification and clearance from the respective
medical agencies for approval of usage since these are prescribed medical product. A significant
factor that would be considered would be the ease of getting approval and the support provided for
sales and adoption of the product. We should also consider the peoples buying power and the
education level. Based on all this I would consider some Southeast Asian countries since the medical
system here is similar to that of India thereby getting approval would be easy. I would consider
countries like Vietnam, Philippines and Indonesia
Why not consider countries like Singapore where the buying power is higher and where people are
more likely to buy the product?
Singapore is a good market to consider for the long term but not for the short term since the approval
process and regulations are stricter. Therefore, the entry into this market would be time consuming
and we might have to alter our product to suite the needs of this market. These are things that would
not be feasible in the short term.
Great, we are done. Thank you.
You can start with domestic market first. You can ignore market size calculation for now.
ICON, IIM Bangalore
71
Medical Manufacturing Company
Case statement
Interviewee Notes
Market Entry | Moderate | Bain (Partner)
• Your client is a manufacturer of a new age medical device called Teddy which hugs patients in critical condition. They currently operate in Bangalore and
Chennai and are looking for ways to expand into other markets.
Structure/Framework
• The product being
available only on
prescription and not
being covered by
insurance
New Product launch
• Compliance required for
international markets.
Domestic
Market
Customer
buying
Power
Customer
Education &
Awareness
International
Market
Market
Attractiveness
Approval
Customer
Buying
Power
Customer
Education &
Awareness
Market
Attractiveness
Key Takeaways
• Use the Product Launch framework
• Understand the various players and requirements in the industry
• Evaluate markets based on short-term and long term desirability
ICON, IIM Bangalore
72
Coffin Manufacturer
Market Entry | Difficult | EYP (Buddy)
Your client is a high-end coffin manufacturer in Singapore. There is a new technology that helps make
coffins of the same quality but at a lower cost. They have come to you for advice on how to proceed.
I would like to ask a few preliminary questions about the client. Would it be fair to assume that the
customer segment they deal with is premium as they are a high-end manufacturer?
Sure, you can do that.
What do we know about the competitors in the space?
The market is stagnant growth-wise. We have a 10% market share of all the coffins. We have another
competitor with ~same market share, and the rest of the market is fragmented.
Can you also tell me about the geography of operations?
The client only operates in Singapore.
Can you tell me a bit more about the new technology? And whether it is proprietary.
The new technology comes from the US and is not proprietary. Anyone can buy it and use it. Can you
list out the options in front of the client?
At the first level, the client can choose to stay in the business or exit it. If they decide to stay in the
business, they can either invest in the new technology or continue current operations. If they exit the
business, they can either liquidate or sell to a third party.
That sounds fair. Can you evaluate the value from each step?
Okay! I will start with stay in business with no investment in new technology. I would like to estimate
the profitability from this option. To estimate the revenue, I will start by sizing the market. Market size
= Population / Avg life span * (Coffin bearers) . Our market size would be 10% of the above.
Okay you can take the population as 50L, average life is 80 years and 70% are coffin bearers.
This gives me a total market size of 43.7K coffins and our market size as ~4.4K coffins. To estimate
the profits, can you tell me the revenue and cost structure of the business – what is the selling
price of coffins, and what fixed & variable costs are involved in the business.
The coffins sell at $5K and there is a variable cost of $4.8K in manufacturing. Other than that, we have
a fixed cost of $700K/year to run the business. Can you assume a perpetual business and let me know
the NPV of business assuming a 10% discount rate?
The annual profits come out to around $180K. Assuming a 10% discount rate and perpetuity of
business, I get a valuation of $1.8M for the business.
That sounds fair. Can you now look at the option where the client invests in the new technology?
Assume that the new technology reduces the variable costs by 50% and requires an upfront investment
of $150K,
Sure. The reduction in variable costs will increase our profits. However, since the technology is not
proprietary, our competitors will also invest in the technology. This will lead to a price war and
ultimately reduce each coffin's price to its variable cost. Hence, this does not seem to be a wise move
for us to take. However, if the competitor buys this technology, we can either investigate entering this
price war or exiting the business.
That sounds like a good assessment. Let’s explore the next option of selling to a third party.
In this case we should expect to get the same amount as the NPV of our business, i.e. $1.8M.
Correct! Let’s move into liquidation now.
I would like to know about the client’s assets and liabilities for this.
The major asset they have is land which they purchased 50 years ago at $150K. Assuming a 6% inflation
rate can you estimate the current value
6% inflation rate means that it will ~double every 12 years. Hence, in 50 years it will approximately be
16 times the original value that is $2.4M
That’s correct. So ,what will be your recommendation to the client.
The value of the assets is more than the valuation of the business. However, this value is going to keep
on increasing with time. I would recommend continuing the business till the time competitors
introduce the new technology and at that time exit & liquidate the business
That sounds good. Thank you for your time.
ICON, IIM Bangalore
73
Coffin Manufacturer
Case statement
Interviewee Notes
Market Entry | Difficult | EYP (Buddy)
• High-end coffin manufacturer in Singapore
• New technology expected to bring the costs down
Structure/Framework
• Premium customers
• 10% market share with
one similar competitor
Business Options
• Market growth has
been stagnant
• Operates only in
Singapore which has
population of 50L,
average life 80 years
and 70% as coffin
bearers
Stay in Business
No investment in
new technology
Invest in new
technology
Exit Business
Sell business to 3rd
party
Liquidate
Key Takeaways
• Take buy-ins from the interviewer regularly.
• Make the framework before jumping into the the case. Remember to navigate the framework well
ICON, IIM Bangalore
74
IIMB Pricing
2021-22
ICON, IIM Bangalore
75
Pricing Framework
GAP
Market Price
Value to consumer
Profit to seller
• Brand
• Quality
• Innovation
• New-found utility
Pricing
Inward
Looking
Cost
External
Looking
Cost Based
Costs
Benchmarking
Returns
Industry
Value Based
Features
- Markup
- Structure
- Additional Features
- Production costs –
- Margins
- Feature of Others
Substitutes,
Complements or
other proxies
- Differenciating
sbenefits
- Other specific costs
- Breakeven Period
- Payback Period
ICON, IIM Bangalore
- Opportunity Costs
- Extrapolate Benefits
- R&D, one time costs
Fixed & Variable
- Willingness to Pay
- Others’ Price range
76
Toll Collection
Pricing | Easy | BCG (Partner)
Case Statement: Your client is an infrastructure company which has just built a new road. You need to
help them find the right amount of toll to charge for each vehicle which uses the road.
Well, there are a couple of creative ways. We could look at the amount customers are willing to pay to
skip queues for services which allow skipping them for a premium. Apart from this, we can look at the
extra charge that customers play on delivery apps to get a guaranteed delivery time.
That sounds interesting. I would like to know a bit more about the road which the company has built.
Where is it located? Is it an alternative route or it the repaired version of an older route?
Okay, those are some interesting options. It was nice interacting with you. Let’s close the case here.
You can assume that the road connects two Indian cities, which were previously only connected by a
single bridge. The road is an alternative to the old bridge.
I have a couple of questions about the differences between the two routes for potential users before I
begin my analysis. Does the new road reduce the travel time between the two cities? Is the build
quality of the two roads different?
Yes, the new road reduces travel time by 30 minutes, even though it is a longer distance to travel. The
build quality is the same as the old road.
Alright, great. There are three possible ways to choose a toll to charge. The first is by choosing a time
period in which we want to earn back our initial investment. For this, we will divide our costs by the
projected demand in the given time period to get the minimum required toll price. The second
method is to look at the toll prices charged by other builders. We can record the prices at toll plazas
connecting the same cities to other places, and then given our advantages/disadvantages over them,
add a premium or a discount. The third method is to look at the value which we provide to our
customers and charge an equivalent amount.
Okay, that sounds comprehensive. I am interested in the the third method. How would you price the
value which we provide to our customers?
We can provide for value for travellers on three parameters: distance, time, and convenience. We are
at a disadvantage in the first parameter. We can use the extra fuel charge as a proxy.
Sounds fair. How will you value the time savings?
So, we know that the time savings are 30 minutes. Different segments of consumers value their time
differently. For example, lower income classes are perhaps not that affected by time savings when
compared to upper income classes. We should consider implementing a price discrimination
mechanism, such as charging different tolls to different vehicle categories after doing surveys.
Okay, can you arrive at the rupee amount any consumer ascribes to their time without doing surveys?
ICON, IIM Bangalore
77
Toll Collection
Case statement
Interviewee Notes
Pricing | Easy | BCG (Partner)
• An infrastructure company is trying to set a poll charge for its new road, which has a time saving of 30 minutes.
• The road requires travelers to cover a longer distance
Structure/Framework
• The interviewer
mentioned that he was
looking for creativity.
• It was also explained
that there would be no
numbers in the round.
Pricing
Cost-based
Competitorbased
Advantages
Disadvantages
Value-based
Distance
Time
Convenience
Key Takeaways
• The case was supposed to be done without a pen and paper. The interviewer had mentioned that he was looking for a conversation. Thus, it was important to be quick on my feet and not
ask for a couple of minutes to think.
ICON, IIM Bangalore
78
Sleep Reduction Pill
Pricing | Moderate | BCG (Manager)
Case Statement : Your client is a pharmaceutical company that sells both OTC and prescription-based
drugs. They have developed an innovative product which enables people to sleep for just 4 hours
compared to the usual 8 hours. You are required to provide suggestions on how to price it.
• Value based pricing: This is the maximum price that the customer would be willing to pay based on
the value that our product offers to them.
Do you want me to look at any of them specifically, or should I proceed with cost-based pricing?
I would like to ask a few preliminary questions before getting into the case to know more about our
client. What is the objective for rolling out this product and what are the products that our client
currently sells?
You can proceed with cost-based pricing first.
Alright. Can you tell me how much it costs our client to make the product? And what is the margin that
they are expecting on the product.
The client is topline-focused and wants to increase their revenue from the sale of the drug. The client
sells a wide range of drugs. You can consider this to be an independent product.
The cost of producing one pill is INR 10. the client is expecting a margin of 10%.
Thank you. I would also like to know more about this product. What is the frequency of consumption of
the drug, and for how much duration should it be taken? Are there any side- effects associated with
the drug?
Okay. So we can consider 10*1.1 = INR 11 as our base price. For the value-based pricing, we would
need to determine the value created by our product. This would depend on the value that the pill is
creating by reducing the sleep time by 4 hours. This product could also create value to patients who
are unable to sleep for longer durations.
It is a long-term pill, and 1 pill needs to be taken every day. There are no-side effects.
Why don’t you start by listing the types of customer who would like to use our product?
Alright. And what geographies does the client currently operate in? Where are we intending to launch
this product?
The customer base can be divided into two major segments: Working professionals seeking time value
for the 4 hours saved, and patients seeking reduced sleep due to health reasons. For working
professionals, the value would be created in the form of extra income that they could earn in the
saved time. For patients, the value could be estimated by the savings in medical expenses. Do we have
any information regarding these factors?
The client is an Indian company which has operations all over the globe. However, we can consider that
the rollout will take place pan-India initially, and exports can be considered later.
Okay. Are we the first company to develop this kind of product? Do we have any competitors? And are
there any regulations which could affect the sale of this drug in India?
We are the first ones to develop this product. We do not have any competitors. We can ignore the
regulations for now and focus on pricing.
Sure. Let’s assume the following:
• 10% of the working population would use this pill. This population earns INR 5000/hour.
• 20% of the total population consists of patients who would like to use this pill. They will save INR
12000 per month in medical expenses as a result of using this pill.
Okay. Since 1 pill is required every day, the value derived per pill would be:
Working professionals: INR 20000 per pill (INR 5000 * 4 hours)
Patients: INR 400 per pill (INR12000 / 30 days per month)
Thank you for the information. Can I take a minute to organize my thoughts?
Sure.
So, we can consider three types of pricing for the drug.
• Cost-based pricing: This would be the minimum price that the client must charge the client based
on the costs incurred for developing the pill and the expected margin.
• Competitor–based pricing: Since we do not have any competitor, this type of pricing would not be
relevant in this case. We can just look at value-based pricing.
Right. So which segment would you choose amongst these?
To decide that I would calculate the revenue earned per day from each segment. Assume the total
population to be 1.3 billion and the percentage of working population as 60%. For this case, I am
assuming that working professionals would be willing to pay anything below INR 20000 since that is
the additional income that they get. Can I proceed with this approach?
ICON, IIM Bangalore
79
Sleep Reduction Pill
Pricing | Moderate | BCG (Manager)
Sure. Go ahead.
Okay. So, the value to working professionals would be 20000 * 0.6 * 0.1 * 1.3 = INR 1560 billion For
patients, the value would be 400 * 0.2 * 1.3 = INR 104 billion.
Hence, I would choose to target the working professionals and drop the patients segment as I would
be able to maximize the revenue in that case.
Great. We can end the case here.
ICON, IIM Bangalore
80
Sleep Reduction Pill
Case statement
Interviewee Notes
• Drug does not have any
competitors. It needs to
be consumed once per
day and has no sideeffects. Drug costs INR
10 and 10% margin is
expected
• Two major segments
can be targeted:
Working professionals,
and patients with health
concerns
• Patient segment should
be dropped, and focus
should be on
maximizing revenue
through working
professionals
Pricing | Moderate | BCG (Manager)
• Client has developed a new drug which helps in reducing sleep
• Pricing of the drug needs to be decided
• Objective is to maximize revenue and have at least 10% margin on the costs
Structure/Framework
Pricing
Cost Based
Cost associated with
producing the drug is INR
10. The minimum price
charged should be INR 11
since the expected margin
is 10%.
Competitor/ Substitute
Based
Irrelevant in this case as
there are no competitors
Value Based
Working professionals
Value derived is INR 20000
per pill per day
Patients Value derived is INR
400 per pill per day
This segment is dropped
Key Takeaways
• The interviewer appreciated the approach to quantify the benefits associated with the usage of the drug.
• Not all customer segments need to be considered while pricing. Some segments can be dropped to maximize the benefits.
ICON, IIM Bangalore
81
Medical Drug
Pricing | Moderate | BCG (Buddy)
Case Statement : Your client is a CEO of a large multinational company in the health care space. He has
a drug which can make patient risk free from cardiac arrests. How do you price it?
I would like to ask a few preliminary questions before getting into the case. I wanted to know the
objective for pricing and the core competency of the client.
The client wants to maximize lifetime revenue from the drug with a minimum of 50% profit margins
from the sale. The client core competency lies in R&D and large-scale investments.
Thanks for the information. I also wanted to know more about the drug. What is the consumption
mode, frequency and duration. Are there any side effects involved and how much was the R&D costs
associated with making the drug?
Drug needs to be consumed thrice a month for 5 years. There are no observable side effects. Do you
think R&D costs are relevant to price the drug?
Sorry, R&D costs would be sunk cost and thus should have no influence on the pricing. What is the cost
involved in this drug?
Good. Each tablet costs 100 USD to make. This includes all commission paid to intermediate channels
Okay. If we consider cost based pricing and required 50% margin, then we should price it at minimum
150 USD. This would be the lower limit for the pricing. I want to know more about the competitors,
substitutes for the drug and the customers to decide on the upper ceiling.
Okay considering that people aged between 50 and 80 use pacemaker, these people on average use 3
pacemakers. Thus, cost of alleviating cardiac arrest is USD 30000. Since we have to use pill thrice a
month for 5 years, it translates to 180 (3*12*5) pills. To be on a comparable scale, price needs to be
USD 167 (30000/180)
Good. What else would you consider?
I wanted to know if there exists any regulations on the maximum pricing as this pill is unique compared
to pacemaker and provides greater value to customers considering easy usage. I also wanted to know if
the drug is patented and possibility of replication.
Yes, the market regulations prohibit pricing above 180 USD. The drug is not patented, however as I
mentioned client core competency is in R&D and thus drug is not easily replicated
Based on this, I think the drug can be priced at premium as the drug is noninvasive and unique (cannot
be replicated)
Good. Can you summarize your final recommendation to the client?
Considering the client objective and the market scenario,
• Pricing of the drug needs to be on the higher side of USD 150-180.
• Promote the drug deep into the market and endorse it heavily through first adopters.
• Though replicating is not easy, the drug needs to be patented to avoid any duplicates in future.
Good. Currently the client doesn’t have any competitors who sell equivalent drugs. Can you think of any
substitutes for the drug?
Pacemakers would be an ideal substitute considering they are used to avoid cardiac arrests. Can I
consider the same?
Yes. You can consider it. How would you approach now?
I would consider the prevailing market price of pacemaker and it’s life. Do we have this data ?
Consider the cost to be USD 10000 and life of 10 years.
ICON, IIM Bangalore
82
Medical Drug
Case statement
Interviewee Notes
Pricing | Moderate | BCG (Buddy)
• Client has a new drug that helps in avoiding cardiac arrests
• Pricing of the drug needs to be decided
• Objective is to have minimum 50% margin on the costs
Structure/Framework
• Drug needs to be
consumed thrice a
month for 5 years and
costs 100 USD
• Pacemaker is suitable
substitute. Price can be
compared
Pricing
Competitor/ Substitute Based
Cost Based
• Drug can demand
premium as it is
noninvasive and cannot
be replicated easily.
• Maximum price is
restricted to USD 180 by
regulations.
50% margin on 100 USD cost
leads to lower limit price of 150
USD
Considering pacemaker cost of
10000 USD and avg 3
pacemaker usage per person,
comparable price of pill is 167
USD (30000/180)
Value Based
Drug can command premium;
but regulations limit the price
to USD 180
Key Takeaways
• Sunk cost is irrelevant while pricing.
• It would have been better telling that you will be considering 3 approaches for pricing rather than directly indicating approach one by one.
• Often, the key in pricing is to guess the mark up potential for pricing.
ICON, IIM Bangalore
83
Airline Tickets
Pricing | Moderate | Kearney (Buddy)
Your client is in airline industry and have bought a fleet of new airlines to travel from New Delhi to New
York in 1 hour. They have approached you to set appropriate price for the same.
Sure, the value-based strategy sounds interesting. But before that, let’s discuss who will be our
customer?
Sure, I’d like to ask some preliminary questions to understand more about the client and the product.
Sure, we can target our customer into two categories, one will be the travellers and others will be
cargo services. Travelers can further be classified as tourists, people travelling for business as well as
jobs, and people providing emergency services like doctors, etc. Cargo would include premium courier
services, as well as emergency services which might be used in cases of critical time crunch.
Sure, go ahead.
What is the current time period for the flight and how many flights have we purchased?
Alright, that sounds good. Now, how will you understand the value that we will provide to our
customer?
It takes appx 24 hrs currently and we have purchased 4-5 flights.
Do we have any information about our competitor and if they also have a similar product?
We are among the leading airlines and only we have acquired such a product, no other competitor has
this ability as of now.
And can you tell me a little more about our client? Where do they operate and how long they have
been in the business?
So, they are based out of India and have been in the industry for 20+ years and operate both Domestic
as well as International flights.
What is the current price of the ticket for this?
The current ticket costs around 30k.
Sure, thanks for the information, so just to make sure I have understood correctly, our client is a
leading airline operator based out of India and they have acquired a new fleet to fly from New Delhi to
New York that saves a huge amount of time and wants our help to set the pricing strategy. Is that
correct or am I missing something? If yes, can I take some time to think through my thoughts.
We will calculate the willingness to pay that our customer has based on the value he associates to the
saved time. It will be different for different people. A businessman might be able to earn lakhs more
due to the extra 23 hours he is saving while a tourist might be able to get one extra day for which the
value can be determined by the opportunity cost of spending those extra 23 hours in the flight.
Suppose that our customer is a consulting firm, and they want to evaluate whether they should
purchase our tickets for their consultants? How should they go about it?
I’d like to do a cost benefit analysis on behalf of that firm. The costs would primarily include the
additional cost of the ticket and the benefits associated would be external ones like increase in the
billable hours, more employee utilization as less salary to be paid for the non-billable hours. Another
aspect would be the internal benefits increase in the employee satisfaction due to less travelling.
Sure, that makes sense. Thanks a lot for your time.
That’s correct, you can go ahead with your analysis.
So to set the price, we can follow three different strategies, first is cost based, second would be
competitor based and the last would be value based. In cost based, we would calculate the overall set
up charges based on the different costs incurred and set a mark up to that. Competition based wont
be applicable here as we have the first mover advantage, and in the value based, we will set up the
price based on the kind of value we produce for our customers. Do you want me to explore any one
particular strategy?
ICON, IIM Bangalore
84
Airline Tickets
Case statement
Interviewee Notes
Pricing | Moderate | Kearney (Buddy)
• Client has bought a fleet of new airlines to travel from New Delhi to New York in 1 hour
• Pricing for the tickets need to be decided
Structure/Framework
• Savings by 23 hours.
Pricing
• Premium customer
segments
Competitor Based
Cost Based
Value Based
• Value Based Pricing
based on savings in
customer’s timing
Benefits
External
Increase in billable
hours
Costs
Internal
Increase in employee
utilization
Savings in non-billable
salary
Increased cost of
tickets
Increased employee
satisfaction
Key Takeaways
• Interviewer was interested only in qualitative discussion, so did not ask for any cost components.
• Interviewer tried to stress out the candidate while discussing about customer, need to keep calm in such situations
ICON, IIM Bangalore
85
Factory owner
Pricing | Easy | Bain (Partner)
Case Statement : Your client owns factories which they lease out to a manufacturing firm. They are
currently exploring whether to automate the factory or not and, if so, the new pricing. Could you advise
them on this?
I would like to ask a few preliminary questions about the client. Could you let me know a bit about their
factories and current pricing system? Also, why are they looking into automation?
The client owns three factories in Coimbatore and leases them to textile manufacturing firms. Their
current pricing is an annual lease and is competitive with the market. The client wishes to see if they
can increase their profits with automation. Can you think about where all there will be cost reductions
through automation?
That’s correct. Can you think of some options?
I can think of 3 options:
• Look in the past to see how price increases were negotiated and what might be the appetite of the
textile firm
• Try getting industry data on what are the percentage increase in lease prices when new efficiencies
are introduced
• Initially propose an increase of INR 1Cr with gradual increase of INR 50L each year
That sounds good. Thank you for your time.
I would like to map this on the value chain. So, the factory process for the textile firms can be broken
down into raw material procurement, manufacturing, packing and distribution. Through automation,
they can probably reduce raw material and manufacturing expenses (utilities and labour). However,
they will find the increased fixed cost of investment and maintenance as well.
That sounds correct. Can you now tell how they should go about pricing it?
So, I would start with floor pricing based on the increased cost. Do we have any information on the cost
of investment and maintenance of machines? There can also be increased labour costs for operating
new machinery.
Assume that the new machinery costs INR 2.5 Cr, with an annual maintenance cost of INR 50L. The net
labor cost remains unchanged.
The client can look at spreading the cap-ex over 5 years. Hence the initial annual cost can go up by INR
1 Cr. This would be the floor pricing. To get a ceiling, we need to know the additional value generated
by automation. Do we have any information on that?
Assume that the current margin of the firm is INR 50 Cr & automation would expand it by 10%.
This means additional annual savings of INR 5 Cr. Hence, the client can price the automated factory
lease at an additional INR 1-5 Cr. You told me that we are already competitive in the pricing; hence we
will need to find a benchmark we can take to price between INR 1-5 Cr.
ICON, IIM Bangalore
86
Factory owner
Case statement
Interviewee Notes
Pricing | Easy | Bain (Partner)
• Factory owner, leased out factories to textile firms
• Wants to know the change in pricing for automation
Structure/Framework
• Wants to increase
revenues from lease
Raw material
• New machinery costs
INR 2.5 Cr, with an
annual maintenance
cost of INR 50L
Value chain
analysis for cost
saving
• Reduction in raw
material for new
automated
machines
Manufacturing
• Utilities
• Labor
Price floor
Packing
• Utilities
• Labor
Actual price
Distribution
• Unaffected
Price ceiling
Pricing
Cost based pricing
Benchmark to set actual price
Value based pricing
Key Takeaways
• Break down problems in structured way.
• Take regular interviewer buy-ins for all the assumptions which you make
ICON, IIM Bangalore
87
New Medicine Launch
Pricing | Moderate | McKinsey (Partner)
Case Statement : A Pharma company has developed a new product to control diabetes for patients in India
and need your help in pricing it.
Yes, the new product is superior to insulin
Sure, go ahead.
In that case, we should certainly price our product more than Insulin as we are providing more value
than insulin. Again, how much should be the markup depends upon the perceived benefits of our
product amongst the consumers
What is the objective of pricing? Is it to maximize the profit or something else
Yes, that’s correct, anything else you want to consider here?
Yes, it is to maximize the profit
Yes, we can also consider substitutes in the form of Ayurveda, Homeopathy which might eat up on
our Market share if we price too high.
That’s an interesting problem. Do you mind if I ask some questions to better understand the client?
Can I have more details about the product? Basically, how it is different from normal insulin injection
& information on how restricted its availability be i.e.. Will it be available over the counter or requires
a prescription? And how is the competitive landscape in the market
It's an oral tablet instead of an injection and has lesser side effects. It'll be available over the counter
and the market is highly competitive
I want to breakdown the Pricing of the tablet into three broad strategies - 1) cost based 2)
Competitor based 3) Value based pricing
The final price will be dependent on all the three factors
That’s a fair assessment. Let's move on.
Okay, now I want to consider how much value we are providing to the customer and how much we
can capture it. For that we can do price elasticity analysis of the product to arrive at a price which
maximizes the profit and can also investigate Supply v/s Demand gap of the existing market to
determine the best price of the product.
Yes, that’s a detailed enough analysis. Let’s stop the case here.
Yes, that sounds fine. Why don’t you list down all the factors. I don’t want you to go into details. Just
tell me all the factors
Okay, let me start with Cost based approach. Over here Total cost is composed of one-time R&D
costs + Cost of production which again can be divided into Fixed cost and Variable cost. This along
with our production volumes will give the minimum price for the tablet. We need to now find profit
margin in top of that. Profit margin can either be something company is targeting, or we can use
some proxy to find it
Yes, that’s sound fair. Let’s explore other factors you have listed now
So now we can look into competition and substitutes for our product and figure out a price based on
our product's position with respect to them. For that, I already have the information on lesser side
effects and the fact that medicine is in oral form which makes it superior to the injection-based
insulin. Is that fair to assume?
ICON, IIM Bangalore
88
New Medicine Launch
Case facts
Interviewee Notes
Pricing | Moderate | McKinsey (Partner)
• Oral tablet for diabetes patients
• Lesser side affects
• High competition in the market
Structure/Framework
• Follow a qualitive
approach rather than a
quantitative one
Cost
Variable
Cost
Fixed Cost
RnD
Salaries
Pricing
Depreciation
Rent
Sourcing
Manufacturing
Distribution
Cost
1.
2.
Cost of production - fixed cost and variable cost
R&D expenses
Competitor
1.
2.
3.
Competition: Insulin injection
Substitutes: Ayurveda, homeopathy
Value Addition:
•
Lesser Side affects
•
oral tablets instead of injection
1.
2.
Willingness to Pay: Elasticity analysis
Supply and Demand tradeoff
Value based
Sales and
Marketing
Key Takeaways
• As interviewer hinted for qualitative discussion, the candidate made sure that all the factors were listed out before going in detail to anyone.
• The interviewer was trying to speed up the case. Make sure that you are not taken aback by it
• My case ended abruptly when interviewer started asking me about one of my resume points, make sure that you are confident in such situations, and be thorough with your resume. Don’t
lose the structured approach even if you are asked a question from your resume.
ICON, IIM Bangalore
89
Autism Digital Therapy Product
Pricing | Moderate | McKinsey (Partner)
Case Statement: Your client has developed a new digital therapy product for autistic children. The
product imitates the therapy that is provided by a doctor in person through use of interactive videos,
audiobots, games etc. How would you go about pricing the product?
Sure, I would like to ask a few preliminary questions about the product. Can the product be considered
a replacement of therapy through doctors, or how is it different from it? Also, what is the competitive
landscape like?
The product reduces the need for doctor therapy as children can use it at home. Plus it can also reach
people who currently don’t have access to doctor therapy. Although doctors can also use it to expand
their reach through the digital solution, but here you can assume it reduces the need for doctor’s
therapy by 50%. The product is available in English language and is used on a tablet. In terms of
competition, you can assume there are 2-3 other similar new products in the market
That is informative, thanks. I can think of three broad ways of pricing the product – 1) cost based 2)
competitor based and 3) value based. I can start off with value based as the value of this product is
directly equivalent to therapy. Is there info on the costs of normal doctor therapy?
So doctor therapy is very expensive and costs ~INR 3L per year, and doctors are very scarcely available,
which is why this product can reach out to those who cannot afford or avail such services
Great, thanks. So if the product can reduce the need for doctor therapy by 50%, it implies it can be
priced at INR 1.5L per year. But this is the upper limit as it would not solve the problem of affordability
and scarcity of doctors and this will not be competitive with other digital therapy players. Next, we can
look at competitor based pricing. Is there any info on their prices?
No not really, it is a novel product and there is no info on other competitors' business plans. Maybe you
can focus on cost based instead.
Sure. I would like to proceed by dividing costs into fixed and variable costs. The fixed costs would be
amortized over multiple periods and divided with the user base to arrive at fixed cost per user per
year. Then we will add variable costs and a desired profit margin on top of these. Is there any data
available on these figures?
So it is estimated that there are 5 million autistic children in India. How would you proceed?
I would like to compute the addressable market from this. I would like to apply filters of 1) income
levels and 2) internet / tablet penetration and English speaking population on this total market size.
Based on this we will reach at the following number for the total addressable market Internet/Tablet
Penetration/English
speaking
Income Levels
No. of
children
No. of
children
Low Income (50%)
2.5 mn
10%
0.25 mn
Medium Income (40%)
2 mn
70%
1.4 mn
High Income (10%)
0.5 mn
100%
0.5 mn
Total
2.15 mn
Great, do you think this is the addressable market or would there be additional filters on this 2.15
million figure you have arrived at?
Yes! We have to now account for competitors and doctors also. Since this product competes with
doctors also, they might create negative publicity for such a product. Given that this market would be
split amongst 2-3 competitors and also competing with the doctors, we can aim to capture 25% of this,
approximately 0.5 million
That’s very good. We are running out time. Are there any more filters you can think of which would
reduce our addressable market?
Yes, other factors could be 1) people not willing to get treatment / social taboos 2) people opting for
alternative treatments apart from conventional therapy and 3) undiagnosed cases within our entire
estimated population
Thanks. We can close the case here. It was a pleasure interacting with you.
That’s good. The total fixed cost is known, but how would you go about arriving at the expected user
base?
We can look at the total market size and multiply with expected market share
ICON, IIM Bangalore
90
Autism Digital Therapy Product
Case statement
Interviewee Notes
• Pricing problem for a digital therapy solution for autism
• The product imitates the therapy that is provided by a doctor in person through use of interactive videos, audiobots, games etc. It is available in English
language and needs a tablet to be used
Structure/Framework
• Learn about the product
first, how is it different
from normal doctor
therapy. The value
provided is similar to
conventional therapy,
use that for value-based
pricing
• For user base
calculations, use factors
of internet and tablet
availability, and Englishspeaking population
• Maintain balance
between qualitative and
quantitative approach.
Pricing | Moderate | McKinsey (Partner)
Pricing
Cost Based
Fixed costs per year per
user
Total fixed costs per year
Variable costs
Competitor/ Substitute
Based
Value Based
Novel product, no mature
competition
50% of conventional
therapy costs – INR 1.25L
No of users
Key Takeaways
•
•
•
•
Use the data provided by interviewer thoughtfully, factors of English language product and tablet were used later in interview
When interviewer is asking to list down factors, focus on qualitative aspects instead of quantitative numbers
The pricing case ended with a mix of guesstimate and market sizing, do not rigidly stick to frameworks and focus on problem stated by
interviewer
ICON, IIM Bangalore
91
IIMB Unconventional Cases
2021-22
ICON, IIM Bangalore
92
Approaching Unconventional Cases - Repository of MECE Layers
▪ Machinery, Labour : Capacity / Efficiency / Utilization
▪ Demand : Domestic / International
▪ Housing : Retail / Corporate
▪ Goods : Unbranded / Branded / Private Labels / White Labels
▪ Business Model : On-shore/ Off-shore
▪ Visitors : First-time/ Occasional / Frequent ; Local/ Foreign
▪ Usage Frequency : Light/ Medium / Heavy
▪ Employee Concern : Financial / Physical / Emotional
▪ Compensation : Fixed / Variable / Kind
▪ Employee Cost : Employee mix x # Employees x Avg. Salary
▪ Issue : Core/ Non-core
▪ Online/ Offline
▪ Monetary / Non-monetary
▪ Qualitative / Quantitative
▪ Firm/Company Analysis : Internal/External or by business units
ICON, IIM Bangalore
93
IIMB Hostel Expansion
Unconventional | Moderate | EY (Partner)
Case Statement : Your client is IIM Bangalore, and they want to expand the hostel capacity for the
incoming students. How should they go about it?​
Before I delve into the case, I would like get more context about our client. Can I ask a few questions on
the same?​
Sure, please go ahead.
What are the courses which the college is offering and number of students across these courses? What
is the current hostel capacity? What is the primary objective behind this expansion? Are the hostels
single or double occupancy?
Currently, the college offers 8 courses with approximate batch size of 800 students, the hostels are 90%
full, IIMB is planning to add 3 UG courses, the hostels are based on single occupancy.
Thank you for the information, the course duration would vary in following ways:
1. 1 year program – Executive MBA
2. 2 years program – Flagship MBA courses
3. 2+ years program – PhD and other courses
Assuming the batch size of 800 students is for 1 year, there would be approx. 800*2 =1,600 students
across 2 years, adding ~400 students for 2+ years’ courses, 1,600 +400=2,000 students in the campus at
a given time. The hostels are 90% utilized, we still have capacity for ~200 students. Do we have
information for the batch size of the additional courses?
Good analysis, the approx. batch size is 50 students across each UG course, but size may expand
eventually as the course progresses over the years.
I see with the available rooms, we would be able cater the first year students. A UG course usually lasts
for 3 or 4 years, approx. requirement would be for 150*4 = 600 students during the 4th year. Is that a
fair assumption?
Sounds good, let’s analyze both the options.
In the current campus, we can go for following options
• Increase the number of floors of the existing hostels
• Develop a new infrastructure from scratch
• Go for double or more occupancy to reduce the infrastructure costs
I would like to analyze the feasibility of these options.
Sure, this seems exhaustive.
I believe there would be internal and external factors associate with these options
Internal Factors:
• IIMB has world-class architecture, adding floors would change the structure
• Availability of space inside the campus for new building
• Students not willing to stay in shared accommodation
External Factors:
• IIMB campus is located in the city and the boundaries can’t be extended further
• HAL airport close to the campus, increasing number of floors would be a challenge
• Seismic considerations while increasing the floors beyond a certain limit
That’s a comprehensive analysis. Yes, you are right, client is facing both internal and external problem
with the existing campus. What would you recommend?
This leaves us with expansion through a remote campus, given Bangalore is already packed we can go
for a location in the outskirts of Bangalore. This campus would cater the overall needs of a UG program
and can act as a separate entity. The authorities should look into the quality aspect and co-ordinate
with old campus to provide the quality education across both the campuses.
Your recommendations are achievable. Let's close the case here. It was a good discussion.
Yes, that’s a fair assumption, you can go ahead with further analysis.
I would now like take a minute to plan my approach about the expansion.
Sure, please go ahead
Hostel room expansion would require additional infrastructure, that can be done in following ways:
• Build-up additional hostel rooms in the existing campus
• Go for a remote campus, close to the current campus in Bangalore
I would like to look into both the aspects one by one.
ICON, IIM Bangalore
94
IIMB Hostel Expansion
Case statement
Interviewee Notes
Unconventional | Moderate | EY (Partner)
• Client is a premier management institute, looking for expanding hostel capacity for incoming students
• Identify various avenues for the expansion
Structure/Framework
IIMB Hostel Capacity
Expansion
• Currently, the institute
offers 8 professional
courses and planning to
add 3 UG courses
• Current hostels are
based on single
occupancy
Expansion in existing
campus
Increase no. of floors
Develop a new
infrastructure
Expansion through a
remote campus
Double or more
occupancy
Location
Quality
• 800 students residing
across all the courses for
a year
• Initial batch size : 50
students for each course,
batch size to increase
over the years
Internal
Factors
Architectural
Availability of
Space
Students’
Unwillingness
External
Factors
Government
Local
Authorities
Seismic
Consideration
Key Takeaways
• No conventional framework used
• Basic idea of infrastructure development and geography are required
• Ask interviewer for relevant data whenever required and take buy-in from the interviewer on any assumptions made
ICON, IIM Bangalore
95
Adventure Park
Unconventional | Moderate | Bain (Buddy)
Case Statement: Your client is an adventure park owner and is concerned about the increased waiting
times for visitors. He is asking for your help on this.
Why don’t you focus on time per ride?
I will look at the customer’s journey here and see where can we save some time. There are four major
steps – boarding, riding, deboarding and any idle time. Do you want me to look at any of these steps in
more detail first or should I go ahead and look at each one of them one by one?
Thank you for the case. I have a few questions before we start the case
Go ahead.
Can you help me understand where is this park located, what types of rides does it offer, what are
some of the attractions of the park?
The park is located in Mumbai. There are water rides as well as land rides. Additionally, there are food
stalls located around the park.
Understood. Can you also tell me since when is the client facing this issue, and have other adventure
parks also seen an increase in wait times, and are we facing this issue in both water and land rides or
just any one of them?
Sure, the client has been facing this issue for the past 6 months and majority of the complaints has
been for our signature ride which is India’s biggest drop tower. We do not really know whether other
parks have been facing the same issue.
So what I have gathered till now is that our client is facing an issue with long wait times in their
adventure park particularly for their signature drop tower ride for the past 6 months. Does our client
have any specific objective in mind apart from reducing the wait time of the ride?
That’s correct. You may proceed with just this objective in mind.
So, we can break down the waiting time into 3 components: (1) Number of people in the queue (2)
Time per ride (3) Number of people who can take the ride at once. I would like to look at each of these
three aspects individually and see where can we make some improvements.
Sounds good.
Let’s look at each one of them quickly and give me suggestions as to how can we make improvements
Boarding: This includes the time people take to board the ride and put in place all safety measures. We
can decrease this time by doing the following
• Quicker briefing; as well as simultaneous briefing of the next batch by use of dummy seats
• Automated ticket checking instead of manual checking
Ride Time
• Reducing the number of rounds (ups & downs) a ride does
De-boarding
• Automatic de-fastening of seatbelts
• Assistance by support staff to deboard faster
• Proper management of ques to ensure deboarding people do no clash with people boarding
Idle time: This refers to the time where the ride is idle because of reasons such as maintenance breaks,
staff breaks, etc.
• Proper rotation of staff will limit idle time
• The routine check should happen in an organized manner. It should be automated as much as
possible and a check-list will help the staff do this quicker
Great, now let’s look at the last component you mentioned.
Okay let us look at the number of people who can take the ride at once. Can you tell me if there is only
one ride in place right now or multiple rides? Also, any data on our current utilization levels?
Currently we just have one ride. Our utilization levels are at about 80% as some seats are broken.
Let us start with number of people in the queue. We can do the following three things: (1) Managing
and estimating the demand better (2) Pushing people towards other attractions after considering
impact on profitability (3) Increasing capacity of the park
To manage the demand better –
• we can increase our prices or start selling a priority option, which will get preference
• Introducing or changing the age/height requirements so that lesser people are eligible
• Opening-up new attractions near the ride to divert people there
• Introduce a token system, with preallotted ride timings and also enable online booking
In that case we can look at • Increasing the capacity of the ride: Adding a greater number of seats to the ride and changing the
machinery to meet the new requirements
• Increasing the occupancy of the ride: Fix the broken seats on the ride on a priority basis
• Building a greater number of rides in case there are no financial constraints
That’s great. We can close the case here. Have a nice day!
ICON, IIM Bangalore
96
Adventure Park
Case statement
Interviewee Notes
Unconventional | Moderate | Bain (Buddy)
• Client is an adventure park owner and is concerned about the increased wait times
• Park consists of water and land slides, and food stalls
• Problem seen in last 6 months, major issue with signature ride – drop tower
Structure/Framework
Waiting Time
• Objective: Reduce wait
time
• No quantitative target or
data
• Need to break down wait
times into further
components and analyze
# of people in
the queue
Time per ride
Number of
people taking
the ride at once
Managing
demand
Boarding time
Capacity of ride
Alternate
attractions
Ride time
Capacity
utilization
Increase park
capacity
De-boarding
time
Idle time
Key Takeaways
• Breaking waiting time into the three components provide a structure to the case
• Further breaking down time per ride into various components provided good ideas for recommendations instead of thinking of ride time as one unit only
• Could have also considered making the wait time more enjoyable as another option to reduce complaints, instead of focusing only on reducing it
ICON, IIM Bangalore
97
E-commerce: Last Mile Delivery
Unconventional | Moderate | Bain (Buddy)
Case statement : Your client is an e-commerce business which is setting up its delivery network for
parcels. They want to determine the optimum number of employees to hire and resources to purchase
Sure, thank you! Before jumping to the analysis, I would like to ask a couple of clarifying questions
about the client and the problem at hand. Could you please help me out with more details about the
client's business, their products, since delivery system will depend on parcel size and brittleness?
Sure, your client is like any e-business which wants to setup their own delivery network. And the
products they will be delivering will be small parcels, you can imagine things like books, phone etc.
Thank you. For clarification, since we are looking at number of employees and resources to engage, we
are only looking at last mile delivery? Also, since we have small parcels only, I would assume a 2wheeler delivery system?
Yes to both questions. Also, my team and I have been working on this project for some time but now
we need to determine how many parcels can one guy deliver in a day?
Good point. How will you estimate that further along with other headers you mentioned?
Since we are concentrating on smaller parcels, one 2-wheeler can carry about 20 pieces at once hence
the pickup section will have about 10 minutes of scanning and 20 minutes of loading time. the travel
time will be approximately 30 minutes since maximum distance is 15km
Great, how would you estimate delivery time if say demand is coming from 4 big apartments primarily?
Now, for the delivery time I would like to look at parking time, walking time and finally waiting time
since not all parcels might be accepted in the first attempt. Hence, taking a 5-minute duration per
parcel we get a total of 160 minutes excluding the time the delivery partner will take when he reaches
back at the drop-off centers to mark his job as finished or forward payments. This will give us around
80 parcels per person assuming 10 hours of working
Great, it was nice talking to you!
Great, so just to get a final understanding, which cities will we be targeting, is it only tier 1?
Yes, we are looking at the top cities of the country
Alright, so I shall be estimating the number of parcels that one guy can deliver in a day by:
# of parcels = # of trips * parcels/trip
where further # of trips = total working time/average trip duration
Does that seem like a fair approach?
Sure, please go ahead
Now, for estimating the average trip duration, I would like to understand which model is the company
looking at:
1) Direct from warehouse: Delivery partners do to-and-fro directly from the main warehouse
2) Having secondary collect and drop-off points
We shall have secondary drop off points such that every delivery partner travels a maximum of 10 to 15
kilometers
So now, I would like to divide the total time required per trip by the delivery partner's journey while
delivering a parcel. It shall have 5 major segments: pickup, travel, stops, delivery and reconciliation
time. Starting from pickup, it can be further divided into scan time and loading parcels in an
orderly manner such that LIFO is followed.
ICON, IIM Bangalore
98
E-commerce: Last Mile Delivery
Case statement
Interviewee Notes
Unconventional | Moderate | Bain (Buddy)
• E-commerce business needs to setup last mile delivery network for small parcels using 2 wheelers
• Calculate number of parcels one delivery partner can deliver in a day
Structure/Framework
• Delivery partner’s
journey
Number of
parcels per day
• Time breakdown to get
to the final estimate
Number of trips
Working hours
Pickup time
Parcels carried
per trip
Time taken per
trip
Travel time
Delivery time
Reconciliation
Key Takeaways
• Ensuring that MECE is being followed at every step is most crucial
• Breakdown each and every step and whenever stuck or confused, follow the user / stakeholder journey approach
ICON, IIM Bangalore
99
Home services: Fall in NPS
Unconventional | Moderate | Bain (OCR)
Case Statement : Your client is a home services solutions company whose Net promoter score (NPS) has
been falling. Determine how should the client solve for it.
Thanks! I have a few questions to understand the problem statement better – Is this home solutions
company similar to an Urban Clap? What kind of services do they provide and where are they providing
the service?
Yes, similar to Urban Clap – they provide cleaning, beauty and repair services through an App. The
client is currently providing services only in Bangalore
Alright. Can I also know for which service category the NPS has been falling? Also, is the NPS falling for a
particular customer segment? And since when has it been falling?
The NPS is falling for the beauty services for 6 months now. What do you mean by customer segment?
Customers can be segmented based on gender, location, age and so on. Do we know if the fall in NPS is
concentrated in a specific segment?
The NPS is falling evenly across gender and age. However, the fall is more prevalent from Tier-2 areas in
Bangalore than the more urban set up
Alright, so this narrows down where the problem exactly lies. At this stage, I also want to know how the
client calculates the NPS and which constituents are impacting it ?
Yes, so there would be around 8 steps in the process. 1) Professional arrives at the destination 2)
Alignment on the nature of service 3) Service professional sets up the equipment 4) Service given 5)
Changes suggested by customer 6) Changes incorporated 7) Equipment packed 8) Professional leaves.
Do we know at which stage the issue exists?
The issue exists in Step 3 and 4 – the actual service delivery
Okay, so there can be four categories of sub-issues : Quality of equipment, Technical quality of service,
Time required to do the service and softer issues such as communication, behavior etc. Do we know
where the issue is?
The problem is in the quality of equipment as well as technical quality of the service
Okay, for the first issue, probable causes – 1) low quality equipment purchased 2) Professional not able
to take care of the equipment 3) The equipment are not serviced regularly/ replaced
For the second issue, probable causes - 1) Lack of skill training given to service professionals 2) Lack of
confidence/other skills to conduct the service. Do we know the reason among these?
Great, so for the first one – it is the professional who is not able to take care of the equipment and the
second one – they lack expert skills to deliver the service.
NPS = % of customers who give positive rating - % of customers who give negative rating. Right now,
the former is falling, and latter is increasing – so it’s a very bad situation
Okay, and with the given information we known that these issues persist in only the Tier II areas of
Bangalore. That could be because of two reasons – 1) Uneven development strategy by client 2) Lack of
expert professionals based in the area.
Thanks for the information. I would like to approach this problem from the customer journey angle. We
can explore the various steps in the entire process and see in which step there is an issue. What do you
think?
Great, the reason is uneven development – the client first focused on only the Tier I areas and then
while expanding to Tier II area, focused on speed rather than quality. Any solutions you can think of – I
want to specially now what can the client do right now?
Sounds good. Why don’t you take some time to build the steps?
Right now, taking a high-level cut – Preservice (booking, waiting etc.), during service (delivery) and post
service (payment, rating etc.). Do we know which stage has the issue?
In the short term, the client can create an SOP for professionals to follow, appoint expert professionals
from Tier I to Tier II areas. In the long term, specialized training can be conducted.
Thank you
The issue exists in the delivery stage
ICON, IIM Bangalore
100
Home services: Fall in NPS
Case statement
Interviewee Notes
• Understand that problem
lies only in one service
vertical
Unconventional | Moderate | Bain (OCR)
• NPS score of home services firm has been falling for beauty services in Bangalore
Structure/Framework
Service
delivery
Pre-service
During service
Post service
• Understanding of NPS
was not required to solve
the case
Arrival
Alignment
Equipment
setup
Service
delivery
Feedback
Rework
Equipment
packed
Departure
People
Equipment
Key Takeaways
• Be MECE in defining consumer journey
• Use People, Process, Technology framework to understand why service quality may not be up to mark
ICON, IIM Bangalore
101
Plastic Packaging Company
Unconventional | Moderate | Bain (Manager)
Case Statement: Your client is a PE fund which is looking to make a strategic investment in a plastic
packaging company with an investment horizon of 5-7 years. It produces bottles and jars and counts
FMCG and pharma companies as their major customers. The company is the market leader with a
market share of 10%. The company has solid financials and an EBITDA margin of 25%. I don’t want you
to look at the financials and valuation. How would you evaluate this business?
I have a few questions about our client, may I go ahead?
Let’s start with industry drivers. How would you look at them?
I would break down industry drivers into 3 parts: input drivers, product-specific drivers and
customer drivers. Input drivers would include factors such as availability and cost of raw materials,
etc., product-specific drivers would include change in design, production process, costs, etc. and
customer drivers would include change in customer behaviour, adoption of alternate packaging
materials, etc.
I think these are pretty comprehensive set of drivers. Let’s look at the size of the opportunity. How
would you determine that?
Sure.
Could you just walk me through the value chain? Which part of the value chain does the company
operate in?
Resins is the major raw material for our product. It is a petroleum-based product. The resins are
converted to plastic jars and bottles and then sold directly to businesses.
Since our major competitors are FMCG companies, I would look at annual reports and investor
presentations of major FMCG players and look at the production/sales quantity. I would then estimate
the requirement of plastic packaging per unit produced/sold and arrive at the total volume.
Multiplying that with the average price, I can arrive at industry size.
Okay. Just to clarify we are only in the B2B segment, right?
This is a fair approach. But is there any other approach that you can think of?
Yes. We supply primarily to businesses. 90% of our revenues come from FMCG companies.
Sure. I would take the population of the country, segment it based on income, determine the
penetration of FMCG products in each segment and accordingly arrive at the size of the industry.
What geography do we operate in? And what is the competitive landscape?
Great. Now if I were to tell you that the current industry size is $100bn and you had to forecast the
growth rate over the next 5 years. How would you do that?
In this industry, proximity to raw material is very important. Accordingly, companies are regional in
nature. We operate in the North and West regions and like I mentioned, we are market leaders with
10% share.
Thank you. I believe I have got a fair understanding of the context of the case. I will now go broadly
outline my approach. Is that okay?
Since our product is closely related to the FMCG industry, I would look at the growth rate of the FMCG
industry. Usually, FMCG cos grow at 7%-10%. However, since we are one step behind in the value
chain and our product is more commoditized, we would grow at a slight lag of 1%-2%, so at approx 5%7% over the next 5 years.
This was a great insight that you brought. Okay, last question. Can you just list the top 3 risks that you
can foresee in the investment?
Yes.
Sure. So my analysis of the investment can be divided in 4 main areas: (1) Fund (2) Industry (3)
Company (4) Risks. Is there any one area you want me to start with?
Let’s look at the industry. How would you analyse the industry?
I would look at 4 major factors: (1) the size of opportunity and growth potential (2) the competitive
structure (3) competitive strategies and dynamics (4) industry drivers.
Sure. Top 3 risks that I can think of are:
• Environmental regulations becoming stricter leading to less use of plastic
• Change in customer (FMCG cos) and consumer (end consumer) preferences and rise of alternate
packaging materials
• Increase in petrol prices making our products more expensive than substitutes.
Great. Well done.
ICON, IIM Bangalore
102
Plastic Packaging Company
Case statement
Interviewee Notes
• While the 2 approaches to
market sizing were
correct, an alternate
approach could have been
to look at packaging
expenses as a % of
revenues of FMCG
companies and then find
plastic packaging as a % of
packaging expenses. Then
apply the % to the size of
the FMCG industry.
• Ask about the value chain
in case there is any doubt,
or you are not familiar
with the industry
Unconventional | Moderate | Bain (Manager)
Evaluate a strategic investment in a plastic packaging company with an investment horizon of 5-7 years.
Structure/Framework
Evaluation criteria
Fund
Size of industry and
growth potential
Industry
Competitive
structure
Company
Risks
Competitive
strategies
Industry drivers
Input drivers
Product-specific
drivers
Customer drivers
Key Takeaways
• Including the nature of fund as one of 4 analysis points was very important and frequently gets overlooked
• Insights such as the industry growing slightly slower than FMCG because of commoditized nature of the business are appreciated as it shows a deeper level of understanding
• Do not forget to ask preliminary questions, especially when the case seems open-ended (name of major clients, customer wallet share, product portfolio, etc.)
ICON, IIM Bangalore
103
Mohalla Clinics, Delhi
Unconventional | Moderate | BCG (Partner)
Case Statement: Your client is Health Ministry of Delhi government which started a new initiative called
"Mohalla Clinics" in 2015. But it hasn't been as successful as they expected it to be. Diagnose the
problem and suggest possible solutions
To begin with I would like to understand what we mean when we say the initiative hasn't been
successful. Also, could you tell me the objective of the initiative.
By unsuccessful, we mean that the number of patients we have been serving is lower than expected.
The objective is to provide free and accessible healthcare to the population of Delhi
What is the customer segment? Since these clinics are free, would it be safe to assume that the
patients mainly belong to the lower income group?
The Mohalla clinics are meant to serve the community, there is no specific target segment
Alright. What services are included in the clinics and how many clinics do we have?
There are more than 200 clinics across Delhi. In a typical clinic, there are a couple of doctors who are
well qualified and are paid reasonably well. All kinds of first-degree healthcare services are provided in
the clinic. The clinic also has a diagnostic lab which is used for tests. Note that diagnostic tests are
recommended post the medical consultation in almost half the cases.
affordable clinic nearby, and either makes an appointment to see the doctor or directly visits the clinic.
The clinic needs to be accessible, available and affordable. But since Mohalla clinics provide these
services for free, affordability should not be a concern. Also, I want to understand whether the
customers are aware about these Mohalla clinics.
Accessibility is not an issue since they have been established at strategic locations across the city.
Awareness is also not an issue; extensive marketing campaigns are held to make the community aware.
Let's move to the next phase of the journey.
To understand potential problems during the clinic visit, let us evaluate the quality of medical
consultation, staff hospitality, availability of services and equipment, infrastructure, and hygiene.
Sure, this sounds good. Our doctors are highly qualified and well paid, and hence provide reliable
consultations. The infrastructure and hygiene are adequate and at par with private clinics. Our services
are easily available as we do not have any waiting period for patients. We also have all the necessary
medical equipment. Let's move to the next phase.
Alright. After the medical consultation, the patient might have to wait for the results from the
diagnostic lab, buy medications, or visit the clinic for a follow-up.
Sure, this seems exhaustive.
Are other public and private hospitals/clinics also receiving fewer patients? Also, are all the clinics
facing this issue or is it specific to a particular clinic?
No, the problem is specific to these Mohalla Clinics. The issue is for all the clinics.
Great. Let's start by analyzing the diagnostic lab results in terms of three parameters: waiting duration,
result collection, and accuracy. Do we know if we are lagging in our methods across these three
parameters when compared to industry standards?
Since the problem seems to be client-specific, I would like to understand why are there fewer patients
visiting these clinics with the help of a patient's journey. Should I go ahead with this?
While our results are accurate and waiting durations are at par with private labs, patients have to
collect results manually in 6-8 hours. Unlike other labs, we don't provide results digitally
Sure.
Okay. Clearly, this seems to be an issue as our patients would either have to wait in the clinic for 6-8
hours or revisit the clinic to get their reports. This would especially be problematic for the lower income
group as they may be incurring significant costs in public transport. In addition, they often rely on daily
wage work. Hence, this could be a major deterrent to utilizing Mohalla Clinic services.
I would like to divide the journey into three parts - before visiting, during the visit, and after the visit.
The first part will start with the decision of where to go for a check-up and factors affecting this
decision. The second part will include the in-clinic experience and the services provided. The third part
will include the journey after visiting the clinic which might include buying medicines or follow-ups.
Should I go ahead and analyze the first part of the journey?
Sure, please go ahead
The patient falls sick and feels the need to consult a doctor or visit a clinic, considers a good and
That is spot on. This does seem to be a major issue.
Sure, would you like me to suggest recommendations?
No, that would not be necessary. Let's close the case here. Thank you for your time.
ICON, IIM Bangalore
104
Mohalla Clinics, Delhi
Case statement
Interviewee Notes
• Objective: Free and
accessible health care;
First-degree healthcare
services
• Mohalla Clinics receiving fewer patients
• A clinic consists of well qualified doctors, first degree healthcare services and a diagnostic lab
• There are 200 such clinics spread across the city
Structure/Framework
Patient
Journey
Before the
visit
• Diagnostic lab – used for
half of the patients
• 200 clinics spread across
the city
• Qualified doctors; wellpaid
Unconventional | Moderate | BCG (Partner)
Awareness
During the
visit
Medical
Consultation
Affordability
Qualification
(Doctors)
Availability
Compensation
Staff
hospitality
Medical
equipment
After the visit
Infrastructure
and hygiene
Test results
Follow-up calls
Waiting
duration
Result
collection
Accuracy
Medicines
Physical
Accessibility
Digital
Key Takeaways
• The preliminary questions were well thought out and gave crucial leads towards the final solution (diagnostic labs). Ensure preliminary questions help in understanding the entire context
before diving into a structure
• The user journey method should be adopted whenever there seems to be a quality related or customer preferences related problem, which fit well in this specific problem
ICON, IIM Bangalore
105
Customer Service: Private Bank
Unconventional | Moderate | BCG (Partner)
Your client is a Sri Lankan private bank, and you have to improve their customer service.
Could you tell me when you say customer service what are we referring to, is it the offline service, call
center service, etc.?
We can focus on the call center service only for this case.
Call center services include services like grievance redressal and sale of products, should I consider any
other services as well?
Yes, you can consider both, give me the major areas and metrics you would be looking at.
I would first look at the grievance redressal part and lay down the process any customer undergoes.
Firstly, the customer would call up a toll-free number, then he would wait to dial in number
according to the type of problem he has, language preference, etc. depending on which operator is
idle, the call will be directed to the call center operator. If the operator solves the problem, the
process ends there, else the operator might transfer the call to a higher authority or a specific
division expert to handle the situation. Given the outlay of the process, I would like to look at metrics
like average waiting time per call, number of customer grievances successfully addressed, etc. Would
you like me to look at other factors or could I go ahead with suggesting improvements at each stage
of the process, and then discuss about the sales service?
The approach looks pretty good, you may tell me what suggestions you have. Also, could you tell me
what aspect is most important for a bank running a call center, and its drivers?
To improve service, the two main aspects we need to focus on is waiting time and customer
satisfaction. We could establish an application which would be easier to lodge complaints, and a chat
bot would solve menial problems and only the serious and unsolvable problems are directed towards
call centre. We could also have an algorithm to make sure that certain kind of grievances are handled
by people having expertise in that area so that double transfers of calls are avoided and waiting
period can be reduced. We could also engage the already existing employees in training and
simulation to improve performance. The main aspect the bank should look at is the cost of running
the call centers. Its major drivers would include the call centre premises cost, employee cost, SAG
and telecom costs.
Yes, I would like you to tell me what metrics you would use to evaluate performance and do a costbenefit analysis.
For the metrics to evaluate performance I would be looking at the total products sold per operator,
total successful conversions per call, total revenue generated per call, etc. For the cost benefit analysis,
I would consider the revenue generated per operator and the cost incurred in employing the operator
plus fixed/variable cost associated with running the call centre.
I have some data, the average calls per operator is hundred per hour and the conversion rate is 2%.
Every conversion generates a revenue of Rs. 200. The employee salary is Rs.40,000/- per month. Do
you need any other did it to do the cost benefit analysis, let’s say you do this for individual operator
only?
I would require the number of hours the operator works and the number of working days in the month
as well. Are we ignoring the other costs associated with premise, general charges?
Yes, let’s assume the operator works for eight hours a day with a break of 1 hour and let’s assume that
he operates at 50% efficiency for another hour, that is he attends half the calls during that time.
Assume 25 working days in a month and ignore all other costs. Tell me the running if call centre for
sales is beneficial to the bank.
So, the revenue generated in a day when he works at full efficiency for 6 hours = 6 hrs/day * 100
calls/hour * 0.02 * Rs. 200/call = Rs. 2400. For another hour of 50% efficiency, revenue generated = 50
calls * 0.02 * Rs. 200/call = Rs. 200. It amounts to Rs. 2600*25 days/month = Rs. 65,000 per operator.
As employee salary is only Rs. 40,000 per month, it is good to run the call centre for sales of products.
Alright, thanks for the analysis. That would be all.
Good, this is a fair analysis. I would like you to look at the sale of product services now.
Sale of products would include things like Debit/Credit cards, loans, do you want me to consider
anything else?
ICON, IIM Bangalore
106
Customer Service: Private Bank
Case statement
Interviewee Notes
• Call centre services
• Data available for costbenefit analysis
Unconventional | Moderate | BCG (Partner)
• Sri Lankan Private Bank
• Improve their customer services
Structure/Framework
Grievance Redressal
solved
Call toll free
number
Wait and dial
in
Operator 1
Metrics: Average waiting
time, #Successful
grievances addressed
unsolved
Expert
Operator
solved
Premise cost
Benefit per
operator
Employee cost
=
Revenue
per day
*
Working
days/month
Cost Drivers
SAG
Rs. 65,000
/month
Telecom bills
Rs. 26,000
/day
25 days per
month
Key Takeaways
• The case can be number heavy so be prepared for that. Without getting intimidated, try to for data relevant to the case.
• Try to engage the interviewer while you are doing the calculations, this helps in avoiding calculation errors.
ICON, IIM Bangalore
107
Uber Driver
Unconventional | Moderate | BCG (Partner)
Case Statement : The client’s personal driver is being poached by Uber. The client wants you to analyze
what the driver should do?
That’s an interesting problem statement, I would start by asking a few preliminary questions. Where is
the driver currently based? Also, what are his income & working conditions?
The driver is based out of Mumbai. He makes around 20k/ month. He works for me 6 days a week from
8am to 8pm.
Thank you. Could you also let me know if he gets any additional benefits apart from the
salary? Also, what are his family obligations?
He gets a yearly bonus of 1 month’s salary at Diwali. Other than this no additional benefits are given. He
is the sole bread earner supporting a family of 3.
Alright, thanks for the information. I would also like to understand the working conditions offered by
Uber to better analyze both the options. My understanding is Uber offers flexible working hours and
charges a certain fee per ride. The rest of the fare is drivers share.
Yes, you are correct in your understanding. Uber charges around 20% of the revenue as platform
charge & the rest 80% is earned by driver. Moreover, Uber requires driver to operate 12 hours/ day.
However, these 12 hours can be completed anytime during the day.
So, Uber provides more flexibility in timing. Otherwise, the working conditions except pay are same.
Are there any additional benefits offered by Uber in terms of bonuses, insurance coverage?
Sounds good. So, what would be the final figure?
To estimate that, I would like to break the rides per day in two types of rides: short duration ride &
long duration ride. Usually rides during the office hours (8-10am & 5-8pm) are shorter in
duration. Whereas other rides during the day (10-5pm) for leisure activities can be considered
relatively longer in duration. If a short rides takes 20 min ride time + 10 min buffer to get a booking &
pick up & drop, implying 30 mins on average. For longer rides assuming 40 mins ride time + 20 mins
buffer to get booking, implying 60 mins on average. Also, assuming 1 hour of lunch time. Hence, total
rides per day = 16 rides (10 short rides + 6 long rides). Obviously, this is a higher estimate and usually
the buffer time can be more.
Now, as per my current experience short rides usually cost around Rs150~200 (taking Rs 200 for
simplicity). Similarly, long rides range between Rs350~500 (taking Rs 400 as average). This gives total
revenue per day as Rs. 44,000 or Rs. 1,14,400/month. Since his share will be 80%, this gives around
~Rs. 92000/month. These are his monthly revenue; I would now like to estimate his
monthly expenditure to get final income.
The monthly revenue looks reasonable. Why don’t you just list down the key cost components?
Sure, following cost components will be involved: In fixed cost- EMI of car (assuming he does not own
a car currently and might need to buy), smart phone cost etc. Also, variable components like fuel, data
pack, repair & maintenance etc.​
That sounds fair. Let’s end the case here. Thanks.
No such benefits are being provided by Uber.
I would like to begin my analysis by comparing 3 factors between the 2 options: 1. Income 2. Working
conditions 3. Other benefits. Since we already discussed the differences in working conditions & other
benefits, I would now like to focus on the income from Uber. For income, I would like to analyze the
potential revenue & cost involved.
Sure, let’s go ahead with revenue first.
Sure. To estimate the revenue, I would like to break it as the no of rides/ day* revenue/ ride*
commission. This will give us the total revenue per day. Then multiply it by 26 to get monthly revenue
(assuming 4 Sundays off).
ICON, IIM Bangalore
108
Uber Driver
Case statement
Interviewee Notes
Unconventional | Moderate | BCG (Partner)
• Personal Driver being poached by Uber
• What should he do?
Structure/Framework
Options
• Based out of Mumbai
• Currently makes 20K in a
month
• Works for 6 days in a
week – 8 am to 8 pm
• Uber provides flexibility
Personal
Driver
Income
Working
Conditions
Uber
Other
benefits
Working
Conditions
Income
Revenue
Cost
#Rides
Fixed
Revenue
/ride
Variable
Other
benefits
Flexibility
Share of
revenue
Key Takeaways
• Think from the perspective of a driver
ICON, IIM Bangalore
109
Glass Bottle Manufacturer
Unconventional | Difficult | BCG (Partner)
Case Statement : Your client is a glass bottle manufacturer who is witnessing a spike in demand for
bottles. Suggest steps to proceed.
3) Within operational feasibility, I would evaluate ease of setting up/expanding business, labor laws,
tax/export laws, reliability, quality control and service levels.
Understood. This seems like an interesting case. Could I begin by asking a couple of preliminary
questions to understand my client and business context better?
4) And finally in capabilities and prospects, I would want to look at inertia to go global, process
challenges, cultural challenges, and future market growth, potential/business development across
regions.
Sure, go ahead.
Thank you. So where is the client based out of and what are the product offerings? In my experience,
glass bottle manufacturers have contracts with beverage bottlers, so for which bottlers is there a spike
in demand for? Where are the customers located?
The client has a plant in Germany. The client has contracts with alcohol and juice bottlers in Europe and
is seeing a rise in demand for both. For simplicity, assume just 1 glass bottle product.
Got it. Coming to the case at hand, what is the quantum of the spike in demand? Do we have any
utilization numbers for the plant? Is there any indication from the clients on what are the options that
they are willing to consider and potential timelines for implementation?
That’s a good set of questions. The spike in demand is over 100% and current plant is running at 95%
utilization, so there is no scope for process improvement. Client wants you to explore 3 options: 1)
increasing capacity in Germany; 2) sourcing from India; and 3) sourcing from Viet Nam.
Implementation must be done as soon as possible. The more the delays, the more the money is lost.
Thank you for the information. To evaluate these 3 options, I would consider the following: First, I
would like to look at the barriers to enter, move on to evaluate economics, and then look at
operational feasibility and finally consider the capabilities and prospects of the client. Does this seem
like a good approach?
Great! So let me give you some real data: considering all costs such as setup, variable costs, transport,
etc. the per unit cost estimations for the three options are: 1) Germany: $3 /bottle, 2) India: $2.5
/bottle, and 3) Viet Nam: $2.2 /bottle. And as per our recommendation, client has implemented option
2, i.e., sourcing from India. Why do you think so?
That’s quite interesting, but not too surprising to know given how India is emerging as a lucrative
country to set up operations. Looking at pure cost, manufacturing in India/Viet Nam is cheaper,
despite additional transportation and export costs. Possible reasons could be due to the labor, utility
cost differential and cheaper raw material procurement. Combined with acceptable quality control,
this eliminates Germany.
Knowing that India was picked over Viet Nam despite a 30 cents additional per unit cost could
perhaps be due to better and reliable ocean routes to Europe, future growing Asian markets, FDI
norms and political stability.
Brilliant! These were precisely some of the reasons why client went ahead with India. We can close the
case here. Thanks!
Yes, this seems comprehensive. Can you tell me 6-7 more pointed factors you would consider?
Sure, I could follow this outline:
1) Within barriers to entry, I would look at internal factors such as financial muscle, and external
factors such as regulations.
2) I would then break apart economics to look at fixed and variable cost heads and evaluate expected
costs to set up required capacities, transportation/export costs.
ICON, IIM Bangalore
110
Glass Bottle Manufacturer
Case statement
Interviewee Notes
• Glass bottle manufacturer is seeing a spike in demand. Suggest steps
• Evaluate 3 options for expansion: 1) Germany, 2) India, 3) Viet Nam [Later discovered through preliminary questions]
Structure/Framework – Adapted Market Entry Framework
• Customers currently in
EU market, contractbased demand, 1
product
• No scope for process
improvement
Barriers to Entry
•
• Evaluate 3 options
• Time sensitive
• Per unit costs: Germany:
$3; India: $2.5; Viet
Nam: $2.2; went ahead
with India
Unconventional | Difficult | BCG (Partner)
•
Internal – Financial
muscle, inertia to
expand
geographically
External –
Government
regulations
Economics
•
•
Fixed costs: Plant
setup, fixed labor,
shipment container
contracts, storage
Variable costs:
contract labor,
utilities, raw material
sourcing, quality
check losses, transit
losses, export and
other taxes
Capabilities and
Future Prospects
Operational Feasibility
•
Ease of setting up
business
•
•
•
•
Process challenges –
technology, machinery,
expertise transfer
Laws: labor, tax,
export
•
Previous experience in
diversifying geography
Reliability and quality
control
•
Cultural challenges
•
Business development –
beyond EU
Service levels and
lead times
Key Takeaways
• Coming up with a framework is crucial. Though the partner asked for factors, structuring ensures comprehensiveness and can earn brownie points
• Reacting to the information and providing real experiences/opinions is the best way to engage the interviewer
• Being comfortable in conversing with numbers is very important. Circling back to given information is an easy way to show all information is accounted.
ICON, IIM Bangalore
111
Government Healthcare
Unconventional | Difficult | BCG (Partner)
Case Statement : You have been approached by the Minister of Health in one of the African countries
to advise him to control the spread of a contagious disease, Rubida (made up name) which is affecting
various parts of the world & has entered Africa also. You will be meeting him tomorrow, what points
will you discuss with him?​
It will be a great opportunity to assist Minister of Health of a nation in controlling the spread of a
disease. But before meeting him, I would like to make a proper plan and for that I need to ask you
some clarificatory questions. Shall I go ahead and ask?​
Sure.
Can you tell me a little bit more about Rubida? What kind of disease is it and how does it spread? Does
it affect everybody equally?​
Rubida is a water-borne disease which spreads through pathogens that originates from ill-treated
stagnant water, waste-sewer water, etc. Vectors like Mosquitoes also spread this disease from one
person to other while transfusing blood when they bite. The effects of this disease are considerably
adverse in case of children below the age of 5 years. Others are also affected but they have the
required immunity to fight this disease.
What is the current spread of Rubida in the African nation? And what about the world? Also, is there
any cure to the disease?
Currently, Rubida has affected most part of the world, but in case of this African nation, it is still in its
beginning phase and that’s why the Minister of Health wants to curb it at this stage only and prevent
from spreading further. As for the cure, the disease can be cured by administering a vaccine – Rubikill.
About this vaccine, how many times does this vaccine needs to be administered, and what should be
the frequency of dosing. Also, what is the mode of administering this vaccine – oral or thru injecting? Is
there any temperature or any other such requirement for storing this vaccine?​
Good question. The vaccine must be administered 5 times within 2 months. It can be administered
orally. As for storing this vaccine, it shall be stored below 5℃ and once opened should be administered
with 4 hours.
Yes, you got it right. Now, how will you proceed? Just give me the basic structure that you will be
following. (The interviewer was more focused on the structure formulation part.)​
Since the disease most adversely affects children below the age of 5, I will begin by approximating
the no. of children below this age. Next, I will try to find out what fraction of these children have
already been administered with the doses, to calculate how many more doses are required. Then, I
will focus on production/ import of these vaccines and the means & logistics required to distribute
these vaccines to the target population segment. Simultaneously, I will try to devise ways to enhance
the hygiene & sanitation conditions since this disease is water-borne.
That’s an impressive and well-structured approach. So, just to save time, let’s assume that there are 5
million children under the age of 5 years, and 10% of them have been administered with 1 dose, 20%
with 2 doses, 30% with 3 doses and rest have not been dosed yet. Tell me the number of vaccines that
you require, assuming each child must be administered with 5 doses.
Sure, as per my calculation, we’ll be needing a total of 18 million doses, i.e., 18 million/5 = 3.6 million
vaccines.
That is correct. What more information do you need at this stage?​
We have the number of vaccines required. Now I want to know about two things: 1st - does this
African country has the required capabilities to produce these vaccines or there is a need to import.
And if import, is this country financially stable enough to pay for the cost since most of the African
countries are poor and rely on aids from other nations. 2nd – what are the available means & logistics
facilities (given the vaccines need to be stored below 5℃ ) for distributing these vaccines?​
These are some valid questions. Assume that this nation is financially strong enough to import
the required number of vaccines. And there are 1000 distribution centers for carrying out the
vaccination of children. What do you think, is it feasible?​
Okay, from financial side we are good. Now looking at the distribution side, we have 1000 centers
and must administer 18 million doses in 2 months, that means = (18000000/1000/2*30) = 300 doses
per distribution center per day for the next 2 months. It looks quite feasible if these centers are
equipped with sufficient and able manpower.
Okay, so if I were to summarize this case, I have to advise Minister of Health of an African nation to
curb the spread of Rubida, which primarily affect children below the age of 5 years and can be
prevented by administering a vaccine Rubikill, 5 times within 2 months.
ICON, IIM Bangalore
112
Government Healthcare
Unconventional | Difficult | BCG (Partner)
Good. What problems can you think of in executing this vaccination drive?​
The various problems that I can think of right now are: 1) Unawareness of vaccination among
public, especially parents of these children below 5 years of age. 2) These 1000 distribution centers
unable to cater to those living in the remote areas. 3) Wastage of vaccines – since once opened the
shelf life is only 4 hours, and if not utilized within those 4 hours, the remaining doses are wasted. 4)
Children not getting vaccinated with all 5 doses within 2 months, thereby making the doses less
effective .5) Stigma among the population about vaccines (vaccines will do more harm, are ineffective
and may even result in death) that will prevent them from getting the doses.
Thank you for listing down these problems. We can end the case here.
ICON, IIM Bangalore
113
Government Healthcare
Case statement
Interviewee Notes
Unconventional | Difficult | BCG (Partner)
• Minister of Health – African Country
• Control the spread of Rubida – contagious disease
Structure/Framework
About Rubida
• Children under 5 yrs of
age are affected
• 5 Million Children
• 5 doses required per
child
Affected
Population
Below 5 years
of age
Control
Measures
Logistics
Production
Process
Oral Vaccine
Distribution
Centres
Within Country
Rubikill
Financial
Stability
#Doses
required
=
5M * 10% *
4 doses
+
5M * 20% *
3 doses
+
5M * 20% *
3 doses
+
5M * 40% *
5 doses
=
18M doses
Stable to
Import
Stored at <5
degree Celsius
5 doses in 2
months
Key Takeaways
• The case can be number heavy so be prepared for that. Without getting intimidated, try to for data relevant to the case
• Remain calm even if the interviewer is irritated.
ICON, IIM Bangalore
114
IIMB Guesstimates
2021-22
ICON, IIM Bangalore
115
Petrol Pumps in Mumbai
Guesstimate | Easy | Bain (Partner)
Estimate the number of petrol pumps in India
Yes, that would be an interesting approach, Thank you
Before I proceed I would like to ask a few questions, is that ok?
Go ahead.
Do I consider pumps of a certain company or all in general?
Consider any petrol pump.
Thank you, I would like to take a few moments to structure my approach and get back to you.
Sure. Go ahead.
I am going to divide the area of Mumbai into High, Medium and Low consumption Area. In the high
consumption areas we can consider the concentration of pumps is at a distance of 2 km for High, 3
km for Medium and 5 km for Low. For simplicity I will assume it’s a square patch of x*x being catered
by each pump and the total area of Mumbai is split as High, Medium and Low consumption in the
ratio of 3:5:2. Does this approach seem fair enough. Additionally I would require area of Mumbai as I
am not very sure about it. I do know area of Delhi is around 1500 km2 and Mumbai is around half
that so about 750 km2.
You could go ahead with this approach. As for area of Mumbai you could consider it to be 600 km2
Thank you for the number. So I will now calculate the petrol pump in each consumption zone and
then get the total. A high consumption zone pump shall cater to 4 km2, Medium to 9km2 and Low to
25km2. Also with Mumbai’s Area being 600 km2, 180 km2 would be High consumption, 300 km2 is
Medium consumption, and 120km2 is Low Consumption Area. Hence in High Consumption zone we
have 180/4=45 pumps similarly in the medium and low consumption areas will have around 34 and 5
pumps. That will account to around 84 pumps in Mumbai.
That is quite comprehensive, Do you think there could be any other approach?
I think we could look at total consumption of petrol by vehicles in Mumbai, average supply of petrol by
a pump station.
ICON, IIM Bangalore
116
Petrol Pumps in Mumbai
Case Statement
Interviewee Notes
•
Different approaches
exist, don’t be myopic
at any point
•
Area of Mumbai = 600
km2
Guesstimate | Easy | Bain (Partner)
Guesstimate the number of petrol pumps in India
Structure/Framework
Number of Petrol
Pumps
Area of Mumbai
600km2
Consumption
Area catered to by each
pump(km 2)
Number of pumps=
(Area)/(Area catered by
each pump)
High
4
180/4=45
Medium
9
300/90=34
Low
25
120/25=5
Level of
Consumption
High (30%)
180km2
Total
84
Medium (50%)
300km2
Low (20%)
120km2
Key Takeaways
•
Interviewer looks out more at the approach than the actual end result
ICON, IIM Bangalore
117
Visitors to Metro Station
Guesstimate | Easy | Auctus Advisors (Partner)
I think the time of security check would not hold the same as always, if some discrepancy is detected
then it might take long, also I am assuming a general male/female who would not have any difficulty
so that would not include specially abled and old people who might take longer time.
Guesstimate the number of people visiting the nearest metro station.
I have a few preliminary questions before I get to the guesstimate, may I ask the same?
That is fair enough, Thank you
Sure.
When we talk about visitors, is it only the passengers or the additional staff also?
Only Passengers
Could I also assume this is a normal metro station working 18 hours a day?
Sure. Go ahead.
Thank You, could I have few minutes to put down my approach and calculate the same?
Yes.
I am going to divide the operations of the metro station into 4 hrs of high, 10hrs of medium and 4 hrs
low traffic hours according to the number of visitors per hour. Assuming the early morning and
evenings are high traffic with 100 % capacity, medium is around 60% and low is 30%. Also I am going
to assume the metro station’s main bottle neck is the security check at the entrance. Metro station
usually has two entrance and each has two guards. I am going to assume the time taken at each
guard is around 30 seconds along with bag check and frisking. I am also assuming men and women
take same times. Is it fine if I go ahead and do the calculations now?, Do I have to take into
consideration anything else?
Go Ahead. This sounds reasonable enough
Let the security check process in total take 30 seconds, That translates to 2 people in a minute per
guard, 8 people for all guards, 480 people in an hour, Now we have 4hrs at 100%, 10 Hrs at 60%, and
4hrs at 30%. Then the total visitors becomes 5376. So we can say around 5400 people on average
would visit a metro station.
That is quite comprehensive, Could you tell me some assumptions which might not hold true all the
time?
ICON, IIM Bangalore
118
Visitors to Metro Station
Case Statement
Interviewee Notes
•
Guesstimate | Easy | Auctus Advisors (Partner)
Guesstimate the number of people visiting the nearest metro station.
Structure/Framework
No. of Visitors
Consider only
passengers
Identifying the
bottleneck in the
process
•
5376
people
High Traffic Hours
= 4 hrs
Medium Traffic
Hours = 10 hrs
+
+
480*4* .3 = 576
people
480*10* .6 =2880
people
480*4*1= 1920
people
Visitors per Guard =
120 per hour
X
No of Guards = 2
per Gate
High Traffic Hours
= 4 hrs
X
No. of Gates =2
30 s per check, 2
people per
minute, 120
people per hour
480
people
Key Takeaways
•
Ask for level of detail and make assumptions to simplify approach
ICON, IIM Bangalore
119
TV viewers in India
Guesstimate | Easy | PwC (Manager)
The assumption that all family sizes or composition might not be uniform and the tastes may vary
which could impact the estimate.
Guesstimate the number of people watching TV at this moment in India
I have a few preliminary questions before I get to the guesstimate, may I ask the same?
That is fair enough, Thank you
Sure.
When we talk about viewers, are we taking both urban and rural areas into consideration??
Yes.
Could I also assume that there are 4 major time slots into consideration?
Sure. Go ahead.
Thank You, could I have few minutes to put down my approach and calculate the same?
Yes.
I am going to divide the population into urban and rural regions and then go ahead with the
percentage of people owning a TV in these 2 regions. Further, I will divide on the basis of their age,
income group, occupation (formal and informal) and possibly gender. Going ahead, the same filters
can be applied to each of the 4 slots to come to an estimate of the number of people watching TV at
this moment. Is this approach fine?
The approach is fine, could you explain the rationale behind the 4 time slots.
Sure! The times I chose were: 6 AM to 12 noon, 12 noon to 6 pm, 6 pm to midnight and 12 midnight
to 6 am. The rationale behind this was patterns shown by people. The first slot is primarily for
morning news and light consumption. The second slot should have a majority of children and stay at
home people. The third slot is light entertainment and includes all age groups and the last slot
primarily consists of night owls and can be attributed to teenagers and young adults.
That is quite comprehensive, Could you tell me some assumptions which might not hold true all the
time?
ICON, IIM Bangalore
120
TV viewers in India
Case Statement
Interviewee Notes
•
Peak time intervals
•
Consider both domestic
and rural markets.
•
Approach is important
Guesstimate | Easy | PwC (Manager)
Guesstimate the number of TV viewers at the moment
Structure/Framework
Population
Rural
Urban
Possession of a TV
Age Filter
Income Filter
Occupation filter
Key Takeaways
•
•
•
Interview was very candidate driven and open ended
Customer journey approach was a good call for service oriented cases
Take buy in wherever necessary.
ICON, IIM Bangalore
121
Sugar Consumption
Guesstimate | Easy | Strategy& (Partner)
We want to reduce sugar consumption of our employees. Can you help us, do it?​
Dividing 200 cups/day based on sugar sachet we get 260 sachets of sugar per day.​
Sure. Can you please clarify in which office you want to reduce sugar consumption?​
This looks fine. Now since you have an idea about sugar consumption on a floor, can you recommend
some solution.​
In Gurgaon Office​
Is there any specific reason for doing so?​
We have conducted a survey and found out that a lot of our employees are struggling with chronic
illness such as diabetes and we have taken a wellness and health initiative to tackle this. Reducing
sugar consumption is the starting point.​
(After taking 1 minute) I want to start by estimating the consumption of sugar in Gurgaon Office. Are
we concerned only about sugar in beverages, or do I need to consider other sugary foods such as
confectionary items as well?​
In short term, company can reduce the availability of sugar sachets. Company can introduce lockbox
to keep sachets. It can be opened only through employee id to keep count of no. of sachets an
employee consumed and will be incentivized for reducing the monthly intake. Further, healthier
alternatives for sugar can be provided to employees.
In the long term, the culture can be changed by conducting regular sessions on health by experts.​
Thanks, we can conclude the case here.
Consider only tea and coffee​.
Sugar consumption = # of employees * % of beverage drinkers * # of cups/person/day * # of sugar
sachets/cup
Do we have any data on any of these?
We have 3 floor in our Gurgaon office. For now, let us consider only one floor. No. of employees are on
this floor are 360 and 60% drink tea and 30% drink coffee.​
So that means there are 32 coffee, 43 tea drinkers and 36 drink neither. Do we have any data on the
distribution of no. of cups of coffee that these people drink per day.​
40% drink 1 cup/day,30% 2 cups/day and 30% 3 cups/day.​
43 people drink 1 cup /day, 32 2 cups/day and 32 3 cups/day, therefore total no. of cups of coffee/day
is 203. I am taking this as 200 cups/day. Generally, sugar is added separately in offices, especially in
coffee. Do we have any data on no. of sachets of coffee each person intakes?​
Yes, we have info on that. 50% 1 sachet/cup, 40% 2 sachet/cup and 10% 0 sachet/cup.​
ICON, IIM Bangalore
122
Sugar Consumption
Case statement
Interviewee Notes
Guesstimate | Easy | Strategy& (Partner)
• Client wants to reduce the sugar consumption of employees
• Identify the sources of sugar intake and suggest possible ways to reduce it
Structure/Framework
• Sugar consumption = # of
employees * % of
beverage drinkers * # of
cups/person/day * # of
sugar sachets/cup
• Suggest both long term
and short-term options
to reduce the sugar
consumption of the
employees
# Employees
= 360
Tea (60%)
= 216
# Coffee cups/day
Coffee (30%)
= 108
None (10%)
= 36
1cup/day (40%)
= 43 cups
1 sachet/cup(50%)
= 100 sachets
2 sachets/cup(40%)
= 160 sachets
2cups/day (30%)
= 64 cups
3cups/day (30%)
= 96 cups
0 sachet/cup(10%)
= 0 sachets
Key Takeaways
• Breakdown the problem into subparts at the starting of the solution to make the calculations easier
• Ask for relevant data points from the interviewer when needed
ICON, IIM Bangalore
123
Snow Melting Liquid
Guesstimate | Moderate | McKinsey (Buddy)
Case Statement: Our client has invented a new Snow Melting Liquid Chemical and we need to estimate
the amount of annual consumption to get a total addressable market.
50cm which is about 40 days in the year.
I have a few preliminary questions before I jump into the guesstimate, where exactly is the liquid used
and which geography are we talking about?
Sure. So, this gives us about 1400 billion litres of chemical as the total addressable market for the
chemical on an annual basis. (Calculations in chart on next page). Is there anything else you’d like me to
consider.
The chemical is used to melt accumulated snow. We would like to look at US.
That sounds comprehensive. We can close the case now.
Sure, I’ll take a minute to come up with an overall approach.
Sure.
Thank you.
So the way I’d like to estimate this is based on 1st the amount of snow that needs to be melted multiplied
by amount of chemical needed per unit snow. For amount of snow, I believe this chemical will not be used
for smaller amounts of snowfall, but only when we see a certain significant amount of snowfall happen. So,
we would see how many days on an average in winter months experience such heavy snowfall, and the
inches of snow that need to be melted multiplied by the share of area
in US experiencing heavy snowfall. There would also be the factor of percentage of area where snow
needs to be melted as a lot of area will be buildings or uninhabited and would not require melting snow.
Does that sound ok?
That sounds like a good approach. Let’s calculate this.
Sure. I am not aware of the area of US. I would guess it is about three times the area of India. For
estimating the area of India, I say we have an approximate kite or rhombus shape with N-S and E-W
lines as diagonals. For N-S distance, I’ve flown from Delhi to Mumbai in ~2hours and with a speed of
500km/hr for an airplane, that is approximately 1000Km. This should be about one-third the N-S
distance between top of J&K and Kanyakumari in the south. The flight from Mumbai to Kolkata was
about 3 hours. The E-W distance would be 1.5 times this. Hence, we have diagonals of approximately
3000Km and 2200Km. This gives area of India as (1/2)*3000*2200 = 3.3Mn sq. Km. Area of US = 10Mn
sq. Km. I’d say about 2-3rd of US experiences heavy snowfall, is that correct? Also, I’m not sure what
amount of snow warrants the use of chemical and how often that much snowfall would happen.
Let me help you with some data here. You could assume 60% of the area of US where chemical will be
used, this includes your area by climatic conditions and inhabited area. 10mL of chemical is used to
melt 1 cubic meter of snow and its typically used for days experiencing snowfall over
ICON, IIM Bangalore
124
Snow Melting Liquid
Case statement
Interviewee Notes
• Estimate the amount of Snow Melting Liquid Chemical used annually
Structure/Framework
• US area ~ 3x India
% area where
chemical
required
60%
Area of US
• Snow melting chemical
used 40 days in an year
when snowfall > 50 cm
• % area where chemical
required x %area
experiencing snowfall x
%area where snow
needs to be melted
Guesstimate | Moderate | McKinsey (Buddy)
10Mn sq Km
Area of India
3.3 Mn sq Km
1/2
Snowfall
50 cm
Product per unit
Snow
10mL per m3 of
snow
# Days in yr
when chemical
is reqd.
40
Required
Answer
1200 Bn Litres
3
N-S distance
E-W distance
(3000 km)
(2200 km)
6Mn * (Sq. km = 106 sq.m) x 0.5 m = (3 x106) Mn m3
Key Takeaways
• Use proxy and ask for more information when not aware of geographic or any other specifics.
ICON, IIM Bangalore
125
Solar Lanterns - India
Case statement
Interviewee Notes
• In urban areas, demand
in slums probably, but a
lot of those would also
have electricity hence
would ignore this
segment for estimation.
• Electrification
percentage is low + areas
supposedly ‘electrified’
do not necessarily have
electricity all day/it is
only available in some
household, but not all.
Approx. 2-3rd rural area
will have a demand for
the lanterns.
• Unaffordable for BPL &
alternatives (battery
powered/personal
generators) available for
High income
Guesstimate | Moderate | McKinsey (Buddy)
• Estimate the market size for Solar Lanterns in India
Structure/Framework
Total Indian Population (140 Cr)
Rural (70%)
Urban (30%)
~100 Cr
~40 Cr
Households (Family size of 6)
~17 Cr
Demand based on Electrification
– 70% of rural area~12 Cr
Below Poverty Line
(30%)
Lower- and Middle-Income
Groups (60%)
~7 Cr Solar Lanterns
High Income Groups
(10%)
Key Takeaways
• Give an overall approach of all the cuts you plan to take before getting into calculations., regular check in at each step for assumptions
• Narrowing down before splitting instead of taking penetration percentages for each segment can ease calculations if you can justify equitable penetrations across segments.
ICON, IIM Bangalore
126
COVID Tests
Case statement
Interviewee Notes
• Focusing on people
coming into the city only
• Gwalior City – 12.5 Lacs
population
• 0.4% incoming travelers
(validated by
interviewer)
• 50% symptomatic –
needs testing
• Considering 2 level chain
of contacts
• Every person has 4
direct/ primary contacts
• Every primary contact
has 4 secondary contacts
Guestimate | Difficult | GEP consulting (Buddy)
Calculate the number of COVID tests to be conducted in a city daily
Structure/Framework
No. of COVID tests
People coming in city
(0.4% of 12.5 Lakh)
People who want to travel
out of city
Airways (20%)
Roadways
(50%)
Railways (30%)
1000
2500
1500
Symptomatic – 50%
500
1250
750
Asymptomatic –
50%
0
0
0
Primary Contact
(4* symptomatic)
Secondary Contact
(4* primary)
2000
5000
3000
8000
20000
12000
People within the city with
no travel plan
52,500
Key Takeaways
• Candidate could have considered some fraction of voluntary tests by Asymptomatic travelers
• All the broad numbers in the case were basis assumptions validated by the interviewer
ICON, IIM Bangalore
127
IIMB Industry Reports
2021-22
ICON, IIM Bangalore
128
Airlines Industry
•
•
•
•
•
•
Outbound Logistics
Operations
Inbound Logistics
•
•
•
•
•
Route Selection
Yield Management
Fuel
Flight/Crew Scheduling
Aircraft Acquisition
Aircraft Lease
Ticket Counter/ Kiosk
Gate & Aircraft Operations
Onboard Services
Baggage Handling
Ticket Offices
• Seat Load Factor
• Arrival Punctuality
• Misconnex Quota
•
•
•
•
•
Baggage System
Flight Connections
Rental Car & Hotel
Reservation System
Sector Composition
Key Performance Indicators
• Departure Punctuality
• Regularity
• Delay Reasons
•
•
•
•
100%
50%
• Rivalry Among Existing Competitors (High): There is
limited product differentiation and economies of scale
and significant exit barriers
• Bargaining Power of Suppliers (High): Powerful labor
unions control operations. Aircraft and engine producers
are concentrated oligopolies
• Bargaining Power of Buyers (High): Air travel seen as
standardized product with low switching costs for most
customers
• Threat of Substitutes (Medium): Fast trains offer
competition. Business travelers are increasingly opting
for web-conferencing
• Threat of New Entrants (High): There are limited
incumbency advantages and low switching costs
0%
Aircraft
Movement
Freight Traffic
Domestic
Passenger
Traffic
International
Cost Drivers
•
•
•
•
•
•
•
Fuel: ~40%
Rental of Flight Equipment, hangar cost ~15%
Flight Equipment, Maintenance and Overhaul: ~10%
User Charges: ~10%
General and Administrative Expenses: ~7%
Flight Crew Salary and Expenses: ~5%
Depreciation and Amortization: ~3%
ICON, IIM Bangalore
Service
Promotion/ Advertising
Frequent Flyer
Travel Agent Programs
Group Sales
Electronic Tickets
• Lost Baggage
Service
• Complaint Follow-up
• Support Centre
Key Market Trends
Activity in AAI Airports – FY20
Porter’s Five Forces
Marketing & Sales
• Robust Demand: Rising working group and widening
middle class demography is expected to boost demand
• Opportunities in MRO: Expenditure in Maintenance,
Repair & Overhaul (MRO) accounts for 12-15% of the total
revenues – it is the second-highest expense after fuel cost.
By 2028, the MRO industry is likely to grow over $2.4
billion from $800 million in 2018
• Policy Support: Foreign investment up to 49% is allowed
under the automatic route. Under Union Budget 2021-22,
the government lowered the custom duty from 2.5% to 0%
on components or parts, including engines, for
manufacturing of aircrafts by the MoD.
• Increasing Investments: Investment to the tune of INR
420-450 billion is expected in India’s airport infrastructure
between FY18-23
• UDAN: Under this regional connectivity scheme, airfare for
a one-hour journey of 500 km has been capped at INR
2500
• Public-Private Partnerships: $3 billion investment in
greenfield airports in Navi Mumbai and Goa
129
Automobile Industry
R&D and Product
Design
Raw Material
Management
• Raw materials:
Aluminium, Iron,
glass, plastic,
rubber
• Warehousing
• Skilled Labour
• Process
/Product Innovation
Key Drivers
Logistics &
Transportation
• Warehousing
• Distribution
• Dealership
Management
Marketing and Service
•
•
•
•
•
Advertising
Finance, Insurance
Used Cars, Rentals
Service, Spares
Auto Expo
Key Market Trends
Revenue
Cost
Growth
Automobile
Sales
Raw Material
Increasing Exports
After Sales
Service
Labour
Policy Support
Financing
services
Advertising
Robust R&D Centres
Porter’s Five Forces
Barriers to entry (High): capital costs, distribution network,
and availability of automobile components.
Bargaining power of suppliers (Low): stiff competition
Bargaining power of customers (Very high): due to
availability of options.
Threat of Substitutes (Medium): Increasing shared mobility
options and improving public transport
Rivalry (High): Competition from established international
and domestic brands
• Body/Chassis
• Casting, machining
and welding
• Quality Testing
• Engine/Battery
• Suspension and
braking
• Electronics
Segments
3%
Product
Assembly
Auto Components
Industry Facts
• 7% Share in India’s GDP & 4.3% in India’s Exports
• $118 bn industry expected to reach $300 bn by 2026
Segment
Global
Scenario
India Market Leader
Two Wheelers
#1 Largest
Hero Motocorp
Passenger Vehicles
#4 Largest
Maruti Suzuki
Commercial Vehicles
#7 Largest
Tata Motors
ICON, IIM Bangalore
• Transitioning towards electric vehicles: Market size valued
at USD 5 billion in 2020, and it is expected to witness a
CAGR of 44% by 2026
• Bharat Stage (BS) - VI norms: India aims to reduce its
carbon footprint by 33-35% by 2030
• Positive GST impact: Reduction in the overall cost
structure of Indian Automobile industry
• Policy Support: Atmanirbhar Bharat Abhiyaan, Automotive
Mission Plan 2026 to promote manufacturing, exportlinked fiscal incentives, Voluntary Vehicle Fleet
Modernization Programme, FAME II policy for EV adoption
• Market Developments: Organized pre-owned car market,
shared mobility ecosystem
• Covid Impact:
o shortage of raw material and semi conductors
o shifting of production to other countries,
o liquidity crunch
o preference for private ownership of vehicles
o shrinkage in consumer demand due to WFH
130
Cement Industry
Procurement
• Long term lease of lime
quarries
• Plant located close to
quarries
• Long term supplier contracts
for other RM
Manufacturing
• Major freight cost (higher in
rainy seasons)
• Rail-road mix used
• Warehouse network
• Large orders directly
to dealers/customer
• Process: Limestone →
Clinker→ (grinding and
additives) → Cement
• High Automated setups
• Imp: Economies of Scale
• High start-up costs
Key Drivers
Key Performance Indicators
1. Capacity utilization
2. Cement factor - qty of cement contained in a unit
volume of concrete or mortar (in kgs.)
3. Clinker factor - percentage of clinker in cement
4. EBIDTA/ton
Porter’s Five Forces
• Supplier Power (Low): Companies opt for backward
integration, weakening supplier power
• Barriers to entry (High): High capex, fixed costs and need
for economies of scale
• Threat of substitutes (Low): No product exists to date
that can substitute effectively for cement. Only qty can be
varied.
• Buyer Power (Low): Low substitutability, oligopolistic
market
• Rivalry (Moderate): Concentrated market.
Capex
Plant &
Machinery (40%)
Revenue
Sale of cement
(98%)
Land (20%)
Captive power
plant (10%)
Sales & Marketing
Distribution
Interest Income
(2%)
• Strong relationships
with contractors and
developers
• Distributor-dealer
network for sales
• Bulk orders are cheaper
Covid Impact
Cost
Transportation
costs (30%)
Power & Fuel
costs (20%)
Material cost
(20%)
• Lockdown measures and economic uncertainty weakened
construction activity. This had a knock-on effect on the
demand for construction materials including cement.
• Higher selling prices were observed due to the tighter
supply of raw materials following production disruptions
in the mining industry.
• Lower energy prices, particularly during the first half of
2020, have mitigated that, improving profit margins for
construction material manufacturers.
Growth Drivers
•
•
•
•
Increasing foreign investment -> New construction
Record-low interest rates -> New Housing+renovation
Rapid urbanization -> New urban construction
Government spending on infrastructure
Growth in this industry is positively correlated to
construction and housing market. India is 2nd largest
producer of cement in the world.
ICON, IIM Bangalore
Leading Players in India
1. LafargeHolcim Ltd – largest player – based in Switzerland
– supplier of cement and aggregates
2. Ultra Tech Cement Ltd– 2nd largest player in the market
3. Ambuja Cements Ltd Ltd – 3rd largest player – Indian
Company
131
E-Commerce and E-Retail Industry
Inbound Logistics
•
•
•
•
Sourcing
Vendor contracts
Quality testing
Mass customization
Inventory
•
•
•
•
Demand forecasting
Warehousing
Assortment planning
Working capital
management
Key Performance Indicators
• Order to Deliver – How soon customer gets the
product after clicking purchase.
• Glance View – No of times the product description
page is visited
• Out of Stock – Percentage stock out for a product
• CLV – Cust Lifetime Value, measures total spend of
customer on the platform
E-commerce Types
• E-Retailing: Online sale of products such as clothing,
mobile handsets, electronics and home products.
Buying food and movie tickets also belongs to this.
• Online Travel: Customers buy tickets, book hotels and
purchase tour packages online.
• Classifieds: Portals connecting buyers and sellers by
providing classifieds can advertise their products
• Digital Media: Paid music, videos and games download
• Financial: Mobile Wallets, Online sale of insurance,
loans and mutual funds
• Owned logistics
handling
• Technology platform
fees and maintenance
• Order management
E-commerce Segments Market Share
7%4%2%
7%
40%
40%
Consumer Electronics
Apparels
Food and Grocery
Jewelry
Furniture
Others
Revenue and Cost Drivers
Revenue
• Seller commissions
• Product availability and pricing
• Private labels strategy
• Customer retention
Cost
• Production/Factory cost
• Warehousing/Inventory costs
• Technology platform fees
• Marketing
• Shipping and Returns
ICON, IIM Bangalore
Service
Marketing and Sales
Operations
•
•
•
•
•
Discounting
Advertising, promotion
Exclusive strategy
Customer retention
Market research
•
•
•
•
•
Delivery planning
Third Party Logistics
Omnichannel fulfillment
Return Management
Redressal and
customer support
Market Trends
Key Facts –
• Industry value - $30bn in 2020, expected $100bn in
2024 and $200bn in 2027.
• CAGR 27% growth rate
• Active internet users – 624mn
• Annual online shoppers – 190mn (11% of pop)
• Key Players – Amazon, Flipkart, Snapdeal, Myntra
• Growth Drivers- Growing internet users, shift to digital
payments, hyper local logistics, analytics driven
customer engagement and advertisements
Growth Opportunities –
• Tier 2&3 consists 90% YoY incremental growth
• Apparels growth leading – serviced to 97% pin codes.
40-50% new u
’ first purchase item.
• Policy Support – 100% FDI allowed in B2B E-com
• Global Investment - FB, Google($4.5bn) invested in Jio
• Future Trends – Omni- channel presence, inclusion of
regional language in interface, mass customization
• Covid impact – Consumer behaviour shift due to
lockdowns, grocery and pharmacy gain momentum
132
Electronics Manufacturing Industry
•
•
•
•
•
Manufacturing & Assembly
R&D & Product Dev.
Raw Materials & Components
Research
Product design
Conceptualization
Software development
Product engineering
• RM: Metal, silicon,
polycarbonates, glass
• Active (e.g. batteries, diodes)
and passive (e.g.
transformer) components
•
•
•
•
Warehousing
Refining and smelting
Assembly of components
Mass production
Distribution & Retail
• Retailers
• Wholesalers
• Distribution planning
and forecasting
•
•
•
•
Reverse Logistics
Reverse logistics
E-waste collection
Processing
Recycling
Types of Players
Market Segments
Key Market Trends
• OEM (Original Equipment Manufacturer) - design
products based on the buyer’s specification and own the
rights; outsource manufacturing
• ODM (Original Design Manufacturer) - designs and
manufactures products on their own
• EMS (Electronic Manufacturing Services) - design,
assemble, produce, and test electronic components for
original equipment manufacturers (OEMs)
• Consumer electronics & home appliances (TVs, video
gaming systems, mobile phones)
• Industrial electronics (industrial robots, automation and
control systems, electronic testing)
• Networking and Communications equipment (Routers,
LANS, Wans, switchboards)
• Medical devices (X-ray machines, ultrasound devices)
• Computer/ office equipment (servers, mainframes)
Porter’s Five Forces
Growth Drivers
Current market trends
• Electronics manufacturing is one of the fastest growing
industries globally. India is on its way to becoming a hub
with 3% market share
• Heavy stimulus by the Indian government to endorse ease
of doing business.
• Potential challenges include recovery from the economic
contraction during the pandemic, rise in e-waste and
disruptive innovations
• Policy- Production Linked Incentive Schemes for
manufacturing ACC Battery ( 50 GWh ) in 5 years
•
•
•
•
•
Bargaining power of suppliers (Low): Low product
differentiation, low switching costs
Bargaining power of buyers (High): High availability of
information for comparison
Competitive rivalry (High): Small points of
differentiation and innovation increases rivalry
Threat of new entrants (High): Capital intensive and
presence of economies of scale.
Threat of substitutes (Medium): Frequent innovations
pose a threat
Driver
Examples
Technology Transitions
5G, IoT
Government initiatives and
policies
Export incentives, product
linked schemes
Liberalisation
FDI inflow
Consumer demand
Easy credit, urbanisation
ICON, IIM Bangalore
Covid Impact
• Underutilized plants, unavailability of labor has impacted
the core manufacturing of electronics in India
• Temporary closure of technology-oriented firms in the US
and Europe disrupted production due to the high
dependance on foreign R&D
• Sharp increase in raw material prices due to the
disruption in global transportation and logistics
133
Energy, Oil & Gas Industry
Exploration
• Surveys to assess
potential
• Identification of suitable
site
• Field Development
Planning
•
•
•
•
Production
Transportation
Sanctioning of the project
Infrastructure creation
Strike Oil
Extract and split oil, water
and gas
• Crude is transported by
tankers, pipelines, trucks
and rail roads.
• Natural Gas is shifted by
pipelines and LPG tankers
Key Performance Indicators
• Exploration and production output
• Lease operating expenditure
• Capital Project efficiency
Porter’s Five forces
•
•
•
•
•
Bargaining power of suppliers (Medium): Despite few
players, there are certain delays by govt in payments
Bargaining power of buyers (Low): Customers are price
takers. Accept the prevalent prices.
Competitive rivalry (Low): One – two players operate
in each of upstream, downstream segments.
Threat of new entrants (Low): Capital intensive and
presence of economies of scale.
Threat of substitutes (Low): Renewable energy sources
are yet to gain more traction.
•
•
•
•
Storage
• Ground tanks is used for
crude and finished oil
products.
• Underground spaces
(reservoirs) is used for
natural gas
Refining and Marketing
• Transform crude into
petroleum products
• 3 stages – separation,
conversion & treatment
• Marketed via B2C and
B2B channels
Growth Drivers
Key Market Trends
Overall economic growth
Rapid technological advancements
Increased exploration of unconventional gas resources
Increased usage of petrochemical products
• Growing Demand: India is the world’s third largest energy
consumer. Diesel demand is expected to double by 202930. Refining capacity is also expected to double by 2030.
• Rapid Expansion: GOI plans to invest ~ INR 7.5 Trillion in
oil and gas infrastructure in next 5 years. ~ USD 25 Billion
investment is expected in exploration and production by
2022
• Policy Support: GOI has allocated funds worth INR 12480
Cr for direct benefit transfer of LPG. OALP has provided
opportunities to increase investments.
• Supportive FDI guidelines: 100% Foreign Direct
Investment is allowed in upstream and private sector
refining projects. FDI limit for public sector refining
projects has been raised to 49% without any dilution/
disinvestment of equity in the existing PSUs
• Natural Gas Boom: There have been significant gas
hydrates discoveries in the KG Basin. Feasible extraction
may lead to a boom in natural gas production
Market Segments
• Transportation (Major segment; Consumes ~55-60%)
• Industrial uses (Heating, Chemicals, plastics, Fertilizers
are few of the major industries. Consumes ~30-35% )
• Residential and other usage(Consumes ~5-10%)
Revenue & Cost Drivers
Revenue drivers
Crude Oil (~75%); Natural Gas (~20%); Others (~5%)
Cost drivers
RM consumed, Transportation costs, Employee expense
Capex drivers
Plant & Machinery, Buildings, Lands
ICON, IIM Bangalore
134
Financial Services – Asset Management
Middle Office
Front Office
Drive revenue generation
• Sales
• Marketing
• Customer Service
• Trading
•
•
•
•
•
Risk Management
IT
Corporate Finance
Portfolio Management
Research
Administration & Support
• Accounting
• Human Resources
• Payroll
• Operation
• Portfolio: Set of investments owned and managed as a
collective whole with specific investment goals.
• AUM: Asset Under Management - total market value of
the financial assets which a financial institution controls
• Net Asset Value (NAV): Value of mutual fund share (fund's
total assets-fund's liabilities)/outstanding shares.
• Asset class: Securities with similar features e.g., stocks,
bonds, cash equivalents, etc.
• Capital gain/loss: The difference between a security's
purchase price and its selling price
• Growth investing: Investment strategy that focuses on
stocks of companies and stock funds with rapid growth
• Value investing: Purchasing equity securities that you
believe are selling below estimated true value
Buy-Side Firms
Offer investment products
• Investment Banks
• Brokers
• Dealers
Manage portfolios
• Pension Funds
• Endowment Funds
• Sovereign Wealth Funds
Revenue & Cost Drivers
Key Performance Indicators
Asset management refers to the management on others’
behalf. It is built on the notion that future is somewhat
predictable, although it is not.
Sell-Side Firms
Back Office
Revenue drivers:
• Management charges: Charged on each Portfolio
Management Services (PMS) quarterly or annually
• Profit sharing: Fixed percentage on any profit made by
asset management company
• Entry load: One time fee of ~3% at the time of
purchasing PMS
• Others: Custodian fee, commission & transaction fee,
Demat account charges, etc.
Cost drivers:
•
•
•
•
•
Branch operation
Maintenance of communication and IT infrastructure
Market schemes implementation
Partnership management
Salary and employee benefits cost of staff
ICON, IIM Bangalore
Key Market Trends
Current market trends:
• ESG (Environmental, Social and Governance) investing is
making asset managers offer new products and modify
their operations to deliver them.
• Global asset manager are investing heavily in data strategy,
artificial intelligence and digitization.
Future market trends/growth prospects:
• Consolidation through M&A: By 2030 the industry will
have a small club of giant asset managers and a bigger one
of niche managers.
• Competition will revolve around products for particular
needs e.g., products for retired vs. those for millennials
• Fed instructed banks to stop writing LIBOR contracts by
2021 end. SOFR (Secured Overnight Financing Rate) will
replace LIBOR by June 2023.
Covid Impact:
• Increased focus on cost optimization specifically location
strategy to downsize office space
135
Financial Services – Banking
Marketing
You can simply
Advertising,
sales impress
support
your
audience
and
add a
is becoming increasingly
unique zing
appeal to
relevant
due and
to high
your
Presentations.
competition from NBFCs
Sales
You can acquisition
simply impress
Customer
is
your
audience
and
add
a
done through multiunique zing
and
appeal
channel,
focus
heavily
onto
your
Presentations.
relationship management
Products & Services
You can simply
impress
your
audience and
add a unique
zing and
Funding
products
- loans,
securitization
of assets,
mortgages
appeal
to your Presentations.
Investment services
in securities
through capital markets
Other advisory services like asset & portfolio management
Key Performance Indicators
• Net interest margin (NIM): The difference between the
interest income earned and the interest paid by a bank
relative to its interest-earning assets like cash
• Current Account Savings Accounts (CASA): Type of nonterm deposit account. Has lower interest rate than term
deposits & is a cheaper source of funds for banks
• Gross non-performing assets (GNPA): The total value of
non-performing assets in a particular time period.
• CRR/SLR: Percentage of cash reserves/liquid assets that
the bank must maintain which guarantees solvency
Revenue & Cost Drivers
Key Market Trends
Cost
Drivers
Variable
Cost
Fixed Cost
Physical
Infrastructure
Digital
Infrastructure
Operational
Costs
Employee
Salaries
Employee
Efficiency
Interest on
Deposits
Provisioning
Cost (NPAs)
Revenue
drivers
Interest from
loans
Transactions
fees
Value Added
Services
ICON, IIM Bangalore
• Digitization: Banking-As-A-Service platforms and open
banking, increasing need to protect data, strengthen IT
• Consolidation: Huge consolidation in public sector banks
to improve capital efficiency & remain profitable
• NPAs & credit extension: Increase in ratio of stressed
assets and bad loans leading to slow down in lending.
• Covid Impact: Difficult and slow recoveries, increased
adoption of digital channels, greater cyber frauds
Segments & Key Players
Porter’s Five Forces
• Supplier's power (Low): Money supply controlled by RBI
• Buyer's power/Demand (Medium): Increases with
income, credit worthiness. Financial inclusions scheme
for rural citizen
• Barriers to Entry (High): due to regulations and licensing
mandates, investment in physical, digital infrastructure
• Competition (High): High competition from NBFCs
Transactions
You
can
impress
Processingsimply
high volume
your audience
and speed
add a
transactions
at high
unique
zing and
appeal
to
for
payments,
trading,
and
your
Presentations.
clearing & settlement
Investment
(bank's own)
• Public Sector Banks: SBI – largest market share (23%)
3rd largest bank in India by market cap (383,312 Cr)
• Other PSBs: PNB, Bank of Baroda
• Privately Owned Banks (Indian): HDFC – largest bank in
India market cap (822,326 Cr), ICICI – 2nd largest by
market cap. Others: Axis, IndusInd
• Foreign Banks: Citibank, Standard Chartered, HSBC
• Rural Cooperative Banks: Saraswat Co-op Bank – largest
136
Financial Services – Digital Payments
Merchant Bank
Merchant
• Offline retailers like
Kirana stores, Dept
stores etc.
• Online merchants like
Amazon etc.
• Called acquirer
• Not involved in wallet
txn (such as Paytm)
• Earns margin from
merchant on $ value
Payment Network
Customer Bank
• Paytm, Visa, Mastercard
etc.
• Margin from both issuer
and acquirer
• Called issuer
• Approves transaction on
behalf of customer
• May only be involved in
wallet loading
Market Segments
Key Performance Indicators
•
•
•
•
•
•
•
Number and % of active customers
Average spend per customer
Average transaction per customer
Authorization rate
Fraud rate
Merchant discount rate (% of $ value paid by merchant to acquirer)
Interchange rate (% of $ value paid by acquirer to issuer)
Payment network
(Visa, Mastercard)
Revenue
drivers
•
Cost
drivers
•
•
Transaction fee
(% of $ value + fee/txn;
charged to bank for use of
network)
Technology cost
Workforce cost
Payment wallets
(Paytm)
2024-25E
Card payments
~50%
~15%
Prepaid Instruments (Wallets)
~25%
~10%
UPI
17%
~60%
Others
7%
~15%
•
•
Merchant discount rate
Value added services
(insurance, loans etc)
•
•
•
Technology cost
Workforce cost
Discounts/Campaigns
COVID Impact – V Shaped Recovery
Credit cards
54 Cr
31%
29 Cr
27%
69%
73%
Mar-20
Apr-20
Debit cards
46 Cr
29%
29%
73%
71%
71%
May-20
Jun-20
Jul-20
27%
ICON, IIM Bangalore
• Digital payments: Past 4 years the sector has grown at
23% in volume and 21% in value
• Card payments: Have grown at a CAGR of ~20% over the
last 4 years. Transaction value growing at ~25%
• UPI: Constitutes 40% of P2M transaction. Has grown at
414% since inception in 2016. 7X growth expected in next
5 years
Growth Drivers
43 Cr
38 Cr
• Initiates transaction
• Authenticates using
PIN/OTP
Key Market Trends
2018-19
Revenue & Cost Drivers
Customer
• Improved mobile & internet penetration
• Government initiatives (MDR rationalization, payment
acceptance, Jan Dhan Yojana, e-tolling)
• Tech-savvy population (use of wearables, need for
convenient payment)
• Innovations (investments by mobile wallets, nontraditional players)
137
Financial Services – Insurance
Product Development
Policy Administration
Marketing & Sales
• Market research
• New product developm.
• Risk assessment &
pricing
• Product optimization
•
•
•
•
•
New customer acquisition
Customer segment
Cross-selling
Churn prevention
Campaign management
• Request/ transaction
processing
• Payment administration
Industry
Insurance Segments
8%
17%
75%
% of total premiums
Life
Health
General
33%
52%
3%
• Claims prevention &
mitigation
• Claims investigation &
settlement
• Disbursement
12%
Motor
Fire
Marine
Others
% of total premiums
• LIC, the only public player in the Life Insurance segment,
commands 50% market share, with 23 private players
controlling the rest
• Motor Insurance has 37% share of General Insurance
• LIC
• SBI Life
• ICICI Prudential
• Max Bupa
• Star Health
• HDFC Ergo
• Bharti AXA
• IFFCO Tokio
• Bajaj Allianz
Revenue Drivers
• Insurance premiums
• Interest on investments (re-investing of premiums)
Cost
Cost drivers
Drivers
Key Information
• Regulator: Insurance Regulatory and Development
Authority of India (IRDAI)
• Reinsurance: Insurance cos transfer risk (max 30% of sum
assured) to reinsurance companies.
• FDI: FDI limit in insurance sector increased to 74% from
49% in 2021
Admin. Expenses
Licenses
Employee
salaries
Customer
service costs
Claim costs
Commissions
ICON, IIM Bangalore
Strategic allocation
Asset-liability mgmt.
Portfolio management
Risk modelling
• Life & Health Insurance: Fear of COVID has increased
purchase of life & health insurance policies, which now
cover COVID if the patient is affected after the policy is
signed.
• General Insurance: Challenges in automobile, travel, hotel
& infrastructure sector impacted general insurance
premiums. Post-COVID recovery in these sectors has
spurred an uptick in premiums.
InsurTech
Variable
Cost
Fixed Cost
•
•
•
•
Covid Impact
Key Players
Within General Insurance
Asset Management
Claims/Benefit Mgmt.
• Globally, insurtechs attracted a 180% YoY increase in
funding in Q1 2021. Funding of insurtechs in India
increased from $11mn in 2016 to $287mn in 2020.
• Reasons for growth: increasing digitization, COVID, niche
requirements, cheaper access, value-added services,
collaborations with incumbents, product innovations
catering to changing customer preferences
• Key segments: General insurance and B2C
• Key players: Digit, Acko, Policybazaar
138
FMCG Industry
Inbound Logistics
• Sourcing raw materials
• Quality testing
• Warehouse storage
Operations
• Manufacturing
• Production, Quality
Control
• Packaging
• Warehouse storage
• Distribution center,
channel
• Order Handling
• Dispatch
• Delivery invoicing
Porter’s Five Forces
•
•
•
•
•
Bargaining power of suppliers (Low) - Huge companies
control pricing, fragmented commodity supplier
Bargaining power of buyers (High) - Low switching costs
Competitive rivalry (High) - Highly fragmented, strong
brands at a discount
Threat of new entrants (Medium) - Investment in
distribution network, promotions, advertising
Threat of substitutes (High) – Narrow product
differentiation, price war
•
•
•
•
•
•
•
•
Out of stock rate: ability to meet customer demand
Delivered On-time & in-full: delivery performance
Average time to sell: time needed to sell products
Cash-to-cash cycle time: Analyse cash cycle time
Supply chain costs: supply chain costs by category
Carrying cost of inventory: costs your inventory holds
On-shelf availability: Measure impact on your sales
Margin by product category: find profitable products
•
•
•
•
•
Branding
Advertising, promotion
Customer, order mgmt.
Sales analysis
Market research
Industry Specific Strategies Adopted
•
•
•
•
•
•
•
Strengthen rural network – introduce bottom of the
pyramid products in portfolio
Direct to Consumer channels
E-commerce
Green Initiatives – sustainability fund, set up energy
efficient plants
Analytics – ML for market trends, Oracle/SAP for ERP
International partnership
Social Media Collaboration
Revenue & Cost Drivers
Key Terms
Sales & Marketing
Outbound Logistics
Revenue Drivers
• Pricing
• Promotion
• Distribution
Cost Drivers
• Raw material & processing costs
• Distribution
• Promotion
ICON, IIM Bangalore
Servicing
• Warranty
• Maintenance
• Education, training
upgrade
Key Market Trends
Key Facts –
• 4th Largest sector of Indian Economy.
• Valuation - $110bn (2020), $220bn (expected 2025)
• Household & Personal Care (50%), Healthcare (31%),
Food & Beverages (19%); Urban(55%), Rural(45%)
• 100% FDI allowed in food processing, single brand retail,
and 51% FDI allowed in multi-brand retail
• New GST in India would simplify tax structure (USD 15bn
gain per year expected)
Growth Opportunities –
• Sourcing Base (India - strategic sourcing hub for cost
competitive products)
• Penetration (invest in food parks and labs)
• Online FMCG (E-commerce to contribute 5% to FMCG
sales by 2022)
• Rural Market (strong distribution, aspiration level)
• Innovative Products (new, adaptable products)
• Premium Products (increase in disposable income,
purchase trend from essential to premium)
139
Food Processing Industry
Raw Material
• Producers( Farmers,
Breeders, Fishermen)
• Inputs: Agri Produce,
Fruit & Vegetables, Meat
&Poultry, Marine, Milk
Processing
Warehousing
•
•
•
•
•
•
•
•
•
•
Cold Storage
Collection Agents
Cooperatives, FPOs
Direct Sourcing
Logistics
Market Segments
•
•
•
•
•
Cleaning, Sorting
Mixing, Griding
Pulping, Juicing
Pasteurization
Dehydration, Powdering
Grading
Quality Control
Packaging
Cold Storage
Food & Dairy Corp.
Cost Drivers
5.0%
20.0%
40.0%
100%
Grain Mill
80%
Beverages
60%
Dairy Products
40%
11.0%
53%
18%
7%
12%
1…
20%
0%
Farm Gate
Importance of Food Processing
• The market size of Indian food processing industry is
estimated to be US$ 543 billion, accounts for 10% share in
India’s exports,
• At present, India processes less than 10% of its agriculture
output and only about 2% of fruits and vegetables, 6% of
poultry, 21% of meat, 23% of marine and 35% of milk
• India majorly does Primary processing, i.e., milling of grains,
sugar and edible oils.
Transit
•
•
•
•
•
Carry & Forward Agent
Depots & Stockists
Wholesalers
Retail Stores & E-commerce
International Export
Key Market Trends
Cost drivers
Meat, Fish, Fruits
Distribution and Retail
Packaging & Transport
Processing Distribution Margins
Major Players
Player
Segment
Turnover. (INR cr)
KRBL
Rice Indusrty
3992
Britania
Fruits & Veg
1010
Amul
Dairy
52000
Parle Agro
Beverages
2,200
ICON, IIM Bangalore
Key Challenges:
•
Supply Chain Infra and Institutional gaps
•
Procurement dependence on APMC Markets
•
Season-ability of operations and Low Capacity
Utilisation
•
Lack of Product Development and Innovation
•
Inadequate link between production and processing,
lack of processable varieties of crops, meat and milk
•
Disruption due to Covid, Farm Law Protests
Key Growth Drivers
•
India is an Agri-commodity hub, one of the leading
producer of multiple grains, fruits, milk and fish
•
India’s huge customer base of 1.3 Bn offers large market
•
PLI schemes worth INR 10,900 crores introduced under
Atmanirbhar Bharat, separate govt ministry
•
Increasing spend on packaged foods with urbanisation
•.
Growth of organised retails and private labels in India and
expansion of e-commerce with digitization
140
Healthcare Services Industry
Hospital Visit
Appointment Booking
• Walk-in
• Traditional Scheduling
• Scheduling via
appointment booking
apps like Practo
Diagnosis
• Primary / Secondary /
Tertiary Hospital
• IPD (In-patient care)
• OPD (Out-patient care)
• Emergency Section
• Medical History
• Screening based on
patient symptoms
• Diagnostic Testing
ARPOB – Average Revenue Per Occupied Bed
ALOS – Average Length of Stay
Occupancy Ratio - % Bed utilization
GP – General Physician
CP – Consulting Physician
OOP – Out of pocket expenditure
IP – In-patient
OP – Out-patient
•
•
•
•
Revenue & Cost Drivers
Key Terms
•
•
•
•
•
•
•
•
Treatment
OP Revenue
Diagnostics
Pharmacy
IP Revenue
Procedure
Room & medical
supplies charges
Diagnostics
Growth Drivers
•
•
•
•
•
•
Increasing awareness
Adoption of digital healthcare / telemedicine
Ayushman Bharat (Universal healthcare program)
Growing penetration of healthcare insurance
Increasing penetration in towns beyond metros
Higher prevalence of acute and chronic diseases
Cost drivers
Variable
Fixed
Rent
Medicines
Salary
Doctor – Revenue sharing
Maintenance
Diagnostics & medical supplies
ICON, IIM Bangalore
Medical procedure
Clinical & ops support
Doctor (GP, CP, Specialist)
Equipment & Supplies
•
•
•
•
Monitoring and discharge
Bill Payment
Post discharge care
Follow-up visit
Key Market Trends
Revenue drivers
Consultation
Post-Treatment
Current market trends
• Healthcare sector expected to reach $372bn in 2022
growing at a CAGR of 22% since 2016
• Rising instances of lifestyle diseases in urban areas
boosting demand for specialized care
• Growing medical tourism market due to availability of
quality services at relatively low cost
Future market trends/ growth prospects
• Public private partnership models for establishing
hospitals
• Digitization of healthcare records via higher adoption of
eHRs
Covid Impact
• Change in attitude towards personal health and hygiene,
health insurance and medical check-ups
• Adoption of digital technologies including telemedicine
• Increase in healthcare budget allocation by 137% in 2021.
141
Hospitality Industry
Operations
Procurement
•
•
•
•
Food & Beverages (F&B)
Cleaning supplies
Room supplies
Contractual services like
internet, cable, security,
etc.
•
•
•
•
•
•
Guest Services
•
•
•
•
•
Front-desk operations
Housekeeping operations
Kitchen operations
Laundry operations
Revenue management
Staff training
Growth Drivers
• Emerging trend of staycation and workation (post-COVID)
• Rising dispensable income of the population
• Government push towards tourism circuits: religious
circuits, heritage circuits, etc.
• UDAN scheme leading to better accessibility
• Growing demand for medical tourism in India
Check-In/Check-Out
F&B services
Laundry services
Transportation services
Other on-demand services
•
•
•
•
Revenue & Cost Drivers
Key Terms
• Occupancy %: Total rooms occupied/ rooms available
Determines the efficiency of the promotional activities
pursued and business in general
• Average Room Rent (ARR): Room Revenue/Total rooms
nights occupied.
• Revenue Per Available Room (RevPAR): Room revenue/
Total room nights available. Indicates revenue generated
against total room inventory
• Online Ratings: Indicator of customer satisfaction.
Considerable influences customers’ decision.
Sales & Marketing
Revenue drivers
Room Revenue
#Rooms
Occupancy
Average Room Rate
Non-Room Revenue
F&B
Laundry & other
services
Events & parties
Cost drivers
Variable
Fixed
Rent
Distribution commissions
Employee Salaries
Consumables
Maintenance
Power & fuel
ICON, IIM Bangalore
Advertisements
Promotions & discounts
Loyalty programs
Tour packages
Distribution
• Online Travel Aggregators
(OTAs)
• Direct (Website/ app/
telephone)
• Walk-ins
• Tour-&-Travel Agents
Key Market Trends
Current market trends
• India is the world’s 7th largest tourism economy in terms
of contribution to GDP
• Industry has seen increase in ARRs by 8-10% y-o-y basis
low demand post covid
• Cyclicality and seasonality: This sector is highly influenced
by positive cycles and peak seasons which observe higher
revenue and occupancy rate
Emerging Themes/Trends
• Health safety concerns lead to adoption of contactless
hospitality like mobile check-in services, etc.
• Focus on sustainability led by high customer awareness
from smart bulbs to sustainable materials
Covid Impact
• Pick-up in demand post first-wave was based on leisure
travel, staycations, weddings & higher F&B revenues
• Occupancy in Q1 FY2022 were at ~26-28% levels, higher
than ~10-12% of Q1 FY2021, basis demand from hotels
entering into contracts with hospital chains
142
Iron & Steel Industry
Raw Material
Iron Production
• Extraction of iron ore
from rocks
• Creating coke from coal
to fuel furnaces
• Alternative: Buying
• Blast Furnace: Pellets of
iron ore, carbon fuel &
limestone with
superheated air form
iron in molten state
• Oxygen Furnace (LD
Shops) : Molten
• Iron, Steel scrap & high
purity oxygen are used
in formation of steel
Porter’s Five Forces
Capex
Capacity
(in MnTPA)
Revenue
Market Capitalization
(INR Cr.)
Cost
Steel for construction
& automotive parts
Raw Material Cost
(45%)
Land including
roads (20%)
Steel for Railway Parts
Power & Fuel costs
(10%)
Building (10%)
Sale of Semis & Byproducts
Salaries & Wages
(5%)
33
1,71,158
JSW Steel
18
1,81,061
4.37
55,328
Segment
KPIs
Growth Drivers
Infrastructure
EBITDA/ton
Growing demand in
all sectors
Construction
Capacity Utilization
Policy Support
Automotive
Crude Steel
Production/ROE/OEE
Increasing
Investments
ICON, IIM Bangalore
•
•
•
•
•
Pricing of all products
Sales team efficacy
Key a/c management
Customer Service
Support Tools
Market Trends
Industry Dynamics
Tata Steel
SAIL
Demand Planning
Service & Delivery
Performance
Outbound Logistics
Plant & Machinery
(70%)
Top Players
Name
•
•
•
•
Key Drivers
• Supplier Power (High): Due to limited iron ore reserves.
Companies opt for backward integration, weakening
supplier power
• Barriers to entry (High): High capex, fixed costs and need
for economies of scale
• Threat of substitute (High): Growing demand and use of
aluminum in automotive
• Buyer Power (Low): Low substitutability, only few major
player
• Rivalry (High): Entry of exporters can further escalate it
Sales
SCM/ Logistics
Steel Production
• Industry Growth: Expected expansion of 250% over the
next 11 years (Expected CAGR: 8.69%) as per National
Steel Policy, 2017
• Growth in Per Capita Steel Consumption: Low per capita
steel consumption with a strong expected rise fueling
growth
• Increasing Investment: Ongoing consolidation of
companies & increased FDI is an opportunity for both
global & domestic players
• Innovation: Government directive to increase R&D
projects by spending at least 1% of the sales turnover to
facilitate innovation
• Import: Steel Scrap Recycling Policy to reduce import. GOI
increased import duties by 5% & imposed anti-dumping
policies.
• Export: 30% duty imposed on export of iron ore to
promote supply to domestic companies
• The industry is witnessing consolidation of players (Tata
Steel acquired Bhushan Steel, opportunity for global
player to entry the market
143
IT and ITeS Industry
India is primarily an
outsourcing hub. A
combination of IT, KPO and
BPM services are tailored
to industry specific value
chains
IT
▪
▪
▪
▪
Knowledge Processing
▪
▪
▪
▪
Software R&D
IT Consulting
Development Services
Infrastructure Mgmt.
Porter’s Five Forces
Potential Entrants (Low): Projects are quite large for
commoditized services, and learning effects make a
considerable difference in service quality and cost
Buyers (High): Services are now increasingly modular, and
buyers can assemble a suite of services from different
vendors and can switch out too
Substitutes (High): Philippines emerging as viable
alternative to India for outsourcing. Automation is also
rendering support services redundant
Suppliers (High): Specific suppliers of licenses and other
public cloud providers hold very high bargaining power.
Infrastructure is also commoditized
Rivalry (High): This industry is categorized by rivalry
between large firms, and the differentiation is very minimal,
pushing them to compete on costs
Business Consulting
Legal Services
Data Analytics
Market Intelligence
Revenue & Cost Drivers
Revenue Drivers
▪ Volume or the total number of person hours worked. This
is the unit economics in the IT services industry
▪ Pricing determines the rate at which each hour is charged
to the client
▪ Utilization is the ratio of the total billed hours divided by
the total billable hours available across the company
▪ Since most revenue is from exports, a favorable exchange
rate also results in better financial performance
Cost Drivers
▪ Cost of Revenue: These are expenses incurred by the
company in delivering core revenue. An example of this
are the salaries and travel cost.
▪ Selling, General & Administrative: These are costs over
and above the CoR. An example could be company
marketing costs and costs of facilities.
ICON, IIM Bangalore
BPO/BPM
▪ ERP
▪ HRP
▪ CRM
Key Market Trends
Global Delivery Model
Indian IT companies such as TCS are now opening service
hubs closer to larger onshore customers in UK and USA to
expand their global footprint.
SMAC
Companies are increasingly looking to derive more value
from their IT investments and are now seeing their next big
opportunities in digital transformation in the Social,
Mobility, Analytics and Cloud verticals
Cyber Security
Governmental policy to combat cyber threats from foreign
entities is being structured, with IT companies playing a
large role in collaborations for their expertise
PE-VC, FDI Investments
This sector continues to be very attractive for investors,
attracting $70B in FDI over the last 10 years, $12.4B in PE
investments in addition to offshore hub development by
Google, Microsoft et. al.
144
Logistics Industry
Inbound Logistics
Operations
• Damage-proof
packaging
• Material handling &
movement
• Product labelling
Shipment received at
customer service
centers / picked up
from customer
location
Market Share
Road transport
59%
Railways
35%
Waterways
6%
Air transport
1%
Servicing
• Multiple Transport
modes: Road, Rail,
Water, Air, Pipelines
• Clustering of packages
• Allocation for delivery
• Salesforce management
• Delivery time intimation
• Last-mile delivery
• Feedback
Revenue & Cost Drivers
Sector Composition
Segments
Sales & Marketing
Outbound Logistics
KPIs
• Delivery time
• Cost to order
• Warehouse
capacity
• Avg. inventory
Top Players
Player
Segment
Market Cap. (INR cr)
CONCOR
Multi-modal
39,893
Blue-Dart
Courier delivery
15,980
Transport
Corp. of India
Multi-modal
6,145
VRL Logistics
Parcel & priority
delivery
2,686
Revenue drivers
• Domestic transportation
• Import and Export
• Value Added Services (same-day delivery)
Cost drivers
• Transportation costs such as fuel
• Warehousing and packaging
• Shrinkage
• Labor, order processing and administrative
• Inventory
Growth drivers
• Simplified freight policy
• Improving road connectivity network
• Improving railway and air connectivity network
• Cold supply chain and other technology interventions
ICON, IIM Bangalore
Key Market Trends
Current market trends
• Industry size: Indian logistics sector is valued at 215 Bn
USD; forecasted to grow at CAGR 10.5% (2019-25)
• Rank: India’s rank has gone up from 54 in 2014 to 44 in
2018 in the World Bank’s LP Index (overall logistics
performance)
• Improved connectivity: Sagarmala, Bharatmala, & UDAN
projects aimed at improving connectivity and reach,
greater opportunities
• Warehouse Automation: Market valued at Rs 20,200
crores; evolution of technologies like AI, IoT, AGV and
Blockchain
• Emphasis on cold supply chain: Set to grow at CAGR 16%
expected to reach $ 36 Bn by 2024, primarily driven by
pharma sector
• Growth in 3PL & 4PL providers as manufacturing grows:
to provide agility, speed and mobility
• Green logistics: Implementation of sustainable practices
due to technological evolution
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Pharmaceutical Industry
Testing and Approval
Research & Development
• Collaborative research
• Drug Discovery and
formulation
• Formula adjustment
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•
•
•
•
Testing on animals
Pre-clinical, clinical trials
Focus group testing
Approval and patents
Drug and facility
compliance
Key Performance Indicators
• Return on Research Capital Ratio: R&D is the major cost
for all pharma companies and not all drug trials result in
success
• Profitability Ratio: Operating & net margin determine
investment into future research projects and also account
for the high marketing expenditures in the
competitive pharmaceutical industry
• Liquidity and Debt Coverage Ratio: R&D expenditures are
mostly financed by debt. Hence, monitoring these ratios
will help analyze the health of the company
Porter’s Five Forces
•
•
•
•
•
Threat of New Entrants (Low): high barriers to entry,
high R&D costs, govt regulations and distribution network
need)
Bargaining power of buyers (Low-Moderate)
Internal Competition (High): large no of small
fragmented players and large no of drugs going off-patent
Substitutes (Low): although Ayurveda, homeopathy
provide some options but are not widely accepted
Bargaining Power of Suppliers (Moderate): difficulty
in procuring raw materials like APIs
Manufacturing/Formulation
• Batch production
• Process Inspection
quality assurance
• Packaging
• Waste Management
and
Logistics
• Storage, transportation
• Wholesalers and
distributors
• Pharmacies, hospitals
• Online platforms
Cost Drivers
• Manufacturer Selling Price: Acquisition cost after mfg.
• Cost, insurance, freight charges (CIF), import tariffs
and charges: Cost of importing an Active Pharmaceutical
Ingredient (API) or finished product into the country
• Importer margin: Applied by importer who procures and
receives the delivering of imported drugs
• Distributor margin: Applied by wholesalers and subwholesalers for transportation and logistics of storage
• Retailer margin: Applied by retailers while selling the drugs
to the patients (last step of distribution chain)
• Taxes: At both national and regional levels
Opportunities
• Technology plays a critical role in enhancing the outreach
of medical facilities (e.g., telemedicine)
• Increasing Insurance coverage (Schemes like Ayushman
Bharat, Obamacare, etc.)
• Advanced Analytics across the value chain
• Strategic M&As to enhance company portfolio
• Improving operational efficiency to enhance bottom-line
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Marketing and sales
• Promotion through medical
representatives
• Free samples: physicians
• Doctor referrals
• Medical conferences
Key Players in India
•
•
•
•
•
•
•
•
•
Sun Pharmaceutical Limited : INR 273.28 Billion
Aurobindo Pharma Limited : INR 164.99 Billion
Lupin Limited : INR 159.55 Billion
Cipla Limited : INR 155.77 Billion
Dr. Reddy’s Laboratories : INR 144.36 Billion
Cadila Healthcare Limited : INR 120.50 Billion
Intas Pharmaceuticals Limited : INR 108.86 Billion
Glenmark Pharma Limited : INR 91.86 Billion
Torrent Pharmaceuticals Limited : INR 63.01 Billion
Covid-19 Impact
China is the biggest raw material provider for APIs across the
globe and India (70-75%). The slowdown in supply chain due
to Covid-19 will directly impact innovative drug development
and may cause short-term shortage for generic drug
producers like India as procurement of APIs will become
difficult in the current environment of uncertainty and fears
of further shortages.
146
Retail Industry
Inbound Logistics
Operations
• Sourcing (demand
forecast, vendor ops)
• Network optimization
• Material handling
• Warehousing
Outbound Logistics
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•
•
•
•
• Transforming inputs into
the final products
• Allotment and
scheduling to stores
Sales per square foot
Gross margins return on investment (GMROI)
Average transaction value
Customer retention
Conversion rate
Foot traffic and digital traffic
Inventory turnover
Shrinkage (loss of inventory)
6% 1%
28%
11%
20%
26%
Apparel & Footwear
Consumer Durables & IT
Jewelry & Accessories
Health & Entertainment
Home Décor & Furnishings
Beauty & Personal Care
Others
Communication
Discounts
Pricing and promotions
Store operations
Salesforce management
Fixed
Rent
Advertising
Variable
Depreciation
Direct material
D
tL b u
Revenue
Growth
Sales Margin
Rising income level
Advertising & marketing
Digital innovations
Loyalty & rewards
programmes
Increasing foreign
participation & investments
ICON, IIM Bangalore
Service
• Delivery
• Installation
• After-sales
Key Market Trends
Cost
Industry Segments
8%
•
•
•
•
•
Order processing
Inventory management
Warehousing
Distribution
Transportation
Revenue & Cost Drivers
Key Performance Indicators
•
•
•
•
•
•
•
•
Marketing and sales
Market Size - India's retail sector was estimated at USD 883
bn in 2020 and is projected to reach ~USD 1.5 tn by 2030. It
contributed ~40% to India’s consumption and close to 10%
of India’s GDP as of early 2020.
Market Trends
• Robust Demand – The retail industry achieved 96% of preCOVID sales in Sept’21 with consumer durables and QSR
increasing by 15% and 18% respectively.
• Increasing investments – Cumulative FDI inflows in the
retail sector stood at USD 3.61 bn between April 2000 and
June 2021. India’s retail sector attracted USD 6.2 bn from
various PE and VC funds in 2020.
• Policy – 100% FDI is now allowed in single-brand retail
trading and 51% in multi-brand retailing
Covid Impact
Covid-related disruptions have dealt a major blow to the
retail sector which is estimated to have lost more than USD 1
bn (INR 75 bn) of sales due to the lockdown.
147
Telecom Industry
Tower Infrastructure
Network Equipment
• Forms framework of
telecom operations
• GIL Infrastructure, Indus
Towers
• Manufactures hardware,
routers, modem, fiber
optical
• Ericsson, Nokia, Siemens
Consumer journey
Network Operators
Technology Provider
Product/service
Offering Design
• Recharge Plans
• Customer Care Centre
• LTE Services to end
customers
• Other services such as voice,
messaging and internet.
• Software Technology
(4G, 5G)
• Sterlite Technology,
Mahindra, Qualcomm
Pre-sales
Support
Consumers
Purchase
Support
Account
Management
Delivery and
Activation
Key Trends in Indian Telecom
•
•
•
•
Growth in Rural Demand: Tele-density of rural subscribers reached 59.33% in September 2021, from 58.96% in September 2020
State Investment: In 2021-22, the Department of Telecommunications has been allocated $ 8Bn and the union budget allocated US$ 1.9 for telecom infrastructure
Government Initiatives: 100% FDI, satellite based Narrow band IoT, and the Phased Manufacturing Programme
Development opportunities: India's 5G subscriptions to have 350 million by 2026. accounting for 27% of all mobile subscriptions
Growth Drivers
Revenue & Cost Drivers
Revenue Drivers:
• Internet and voice services
• Cross provider calls
• Affiliations (data monetization, device tech.)
Cost Drivers:
• Spectrum costs
• Network infrastructure and equipment
• Operating costs
•
•
•
•
Growing mobile penetration
Increasing rural penetration and internet access
Relaxed FDI norms
Reduced license fee
Major Indian Service Providers (Market Share)
•
•
•
Reliance Jio – 36.98%
Bharti Airtel – 29.82%
Vodafone Idea – 23.15%
ICON, IIM Bangalore
KPIs
•
•
•
•
•
•
•
•
Call Completion Ratio
Average Revenue per User
Average Call Duration
Idle Time on Network
Tele-density
Churn
Network Operating Cost
Subscriber Acquisition Cost
148
For any queries, reach out to us
ICON – Consulting Club
IIM Bangalore