CASEBOOK
CONSULT CLUB
IIM AHMEDABAD
SEPTEMBER 2016
Issue Details and Copyrights
Casebook, Consult Club, 3/e
©2014 by Consult Club
All rights reserved.
Notice
No part of this publication may be reproduced or transmitted in any form or by any means – electronic or mechanical,
including photocopy, recording or any information storage and retrieval system – without permission in writing from the
Consult Club, IIM Ahmedabad.
First edition: July 2014
Second edition: August 2015
Third edition: September 2016
What is this year’s IIMA Casebook all about?
Foreword
Building on the 1st and 2nd editions of this publication, the Consult Club of IIM Ahmedabad is proud to present the 3rd edition of the IIMA
Case Book. This edition leverages the 1st and 2nd editions and feedback from alumni and the student community. The objective of the Case
Book is to give the reader a comprehensive view of the basic frameworks covering multiple industry horizontals and solution verticals. The
broad framework is then followed by specific interview experiences through both a transcript and a crisp format. Throughout the Case Book,
we have tried to ensure enhanced readability while retaining the comprehensiveness of the cases.
Structure of the Case Book
This Case Book covers an extensive range of Conventional cases to build the basics of frameworks and their usage. However, since real life
problem solving may not involve deploying specific frameworks, we have incorporated a host of Unconventional cases which may involve
deploying multiple frameworks or no framework at all.
•Each of the 8 conventional frameworks has one page explaining the basic framework followed by cases based on those frameworks
•Conventional Cases: For each conventional case there are 2 pages: an interview transcript page to show how the case interview could go,
and an outline of the solution process including interviewee notes, case facts and recommendations, which provide the reader a detailed
step-by-step process for case solving. The direction taken by the interviewee in the interview has been highlighted in the basic decision tree
here.
•Unconventional Cases: The unconventional cases have the solution process page only; the emphasis is on solving these cases in a logical
and structured way.
•Annexures: Resources (datasheets, framework glossaries, solved case-sheets and evaluation metrics) have been appended at the end of the
casebook for easy reference.
How to make the most of it?
While reading this Case Book, we would suggest the reader should use the interview transcripts to set up a case between 2 people(or
groups), and after solving the case, the solution process sheet should be looked into to gain a broader understanding of the approach and
areas of improvement.
The frameworks are there to give a direction initially to new case-solvers and should not be treated as a fixed boundary, but could be utilized
by the reader to cover any case which comes up their way according to their own logical structure. Also, the reader should leverage the
Recommendations, Tips, and Suggestions to apply learnings from one case to another.
Remember, the journey is as important as the destination. Case preparation is a combination of group exercise and individual selfpreparation.
Enjoy the process of preparation and let’s crack the case!
(C) Consult Club, IIM Ahmedabad
Acknowledgements
We would like to thank Ankur Garg, Shrey Agrawal & Samarth Yadav (PGP 2015-17, Consult Club) for leading the Case Book
initiative, and putting together this third edition of the IIMA Case Book. They have ensured breadth, and depth in the cases to
give the reader a comprehensive view of the kind of cases they may be administered.
We would also like to thank members of the PGP 2015-17 batch of the Consult Club who have contributed through cases,
thoughts, comments and feedback. We would also like to acknowledge the efforts of Aayush Agarwal, Ravikumar Swaminathan
and Soumyo Madhab Mitra (PGP 2016-18, Consult Club) for volunteering to help the Club put together this case book.
We are also grateful to the alumni of the Consult Club, IIM Ahmedabad for their feedback on the cases which has helped us
further enhance the overall quality of the book. We would like to extend a special acknowledgement to the contributors of the
previous editions of the IIMA Case Book on which we have built the Third Edition.
Copyright © 2016
Consult Club, IIM Ahmedabad
Vastrapur, Ahmedabad 380015
(C) Consult Club, IIM Ahmedabad
Table of Contents
CONVENTIONAL CASES
SERIAL NO.
FRAMEWORK/CASE
1. COST REDUCTION – Overview
Telecom Billing Process
Biscuit Manufacturer
Retail Store
Otis Elevators
Steel Manufacturer
2. INDUSTRY ANALYSIS – Overview
Insurance
Consumer Appliances
E-Commerce
3. NEW MARKET ENTRY – Overview
Lock Manufacturer
Retail Banking
Diagnostic Chain
Household Furniture
4. GROWTH STRATEGY - Overview
Telecom Market
Boiler Company
5. NEW PRODUCT ENTRY – Overview
Anti-Smoking Pills
Automobile Service Station
Application Software and Bundling
6. SALES GROWTH – Overview
B2B Telecommunications Provider
Software Product Company
Retail Apparel Chain
7. PRICING – Overview
Proprietary Light Bulb
World Spacelines
Diagnostic Laboratory Chain
Healthcare Space
(C) Consult Club, IIM Ahmedabad
PAGE NO.
8
9
11
13
15
17
19
20
22
24
26
27
29
31
33
35
36
38
40
41
43
45
47
48
50
52
54
55
57
59
61
SERIAL NO.
FRAMEWORK/CASE
8. DIVERSIFICATION – Overview
Pharmaceutical Company
Oil Marketing Company
Mobster
PAGE NO.
63
64
66
68
Table of Contents (Continued)
UNCONVENTIONAL CASES, GUESSTIMATES, APPENDICES
SERIAL NO.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
CASE
Help a Painter
Customers for an F.S. Product
US Airline Entry into China
Market Sizing for a Notebooks Co.
Declining Response in a Competition
Pricing Strategy for Portkey
Call Operator
Vernier Calliper Manufacturer
School’s Deteriorating Performance
Partner Late to Office
Dip in Profitability of C.T.
Higher Costs faced by S.E. Asian Bank
Turn around a Copper Mining Company
Toffee Manufacturer
Restaurant
Open Plot of Land
Football Team – Diagnostics
Elementary, Dr. Watson
Merger and Acquisition
Pencil Manufacturer in India
Airline
Petrol Pump losing Business
Local Hospital
Hotel Mini Fridge
Robbery Planning
Consult a Consulting Company
Paint Manufacturer in India
Restaurant in Paris
PPP for Metro in Bangalore
Shahrukh Khan’s Net Worth
Inventory Management in a Milk Company
English Music Magazine
Entry of Home Furniture Maker
Surviving the Ad-Blockers
(C) Consult Club, IIM Ahmedabad
PAGE NO.
71
72
73
74
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
SERIAL NO.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
CASE
Testing a New Feature
Understanding the Customer
Hats in London
Books in IIM Ahmedabad
Case Interview Assessment Sheet
Full Case: Business Expansion – Telecom Video
Project
Mini Case: Strategic Fit/ Merger Feasibility
Dilemma
Appendix 1: Framework Glossary
Appendix 2: Datasheets
Appendix 3: Sample Worksheets
Appendix 4: Sample Evaluation Metrics
PAGE NO.
106
107
108
109
110
112
115
116
119
121
124
Conventional Cases
Overview
Interview Transcripts
Solutions to Cases
(C) Consult Club, IIM Ahmedabad
Cost Reduction - Overview
In a cost reduction case, a company is likely to aim for becoming more profitable by reducing their bottom line. An interviewee is expected to first
identify various cost component, followed by validating them, identify major cost drivers along with levers affecting their values, and finally
recommend how the company can change it’s ways to become more cost efficient.
Approach/ Framework (High Level) for the Case Type
R&D
Equipment
Human Capital
Cost of finance
Raw Material
Processing
Cost of raw
material
Contract & bulk
deals
Machinery
Quantity used
Labor hours
Factory rent
Storage &
Transportation
Transport to
warehouse
Storage (Rent,
Labor, Inventory)
Transport to
customers
DistributionSale force
Customer
Service
Marketing
Sales Channel
Marketing
channels
Repairs
Sales Force
Strategy
Spare parts
Training
Returns
Technology
Capacity utilization
Packaging
Framework Summary
A company can reduce cost and become more efficient across its components. The best way is the look at the journey of a product/service right from the time its raw materials are bought to the
time it is delivered to the customer and he is happy after the post sale support etc. This is called a value chain analysis as each step of the process adds some value to the initial raw material and
accelerates its journey towards the final product. At each of these stages, we expect to find some levers which can be tweaked to make the process more efficient.
Tips
•
•
Clarify objective, especially the cost buckets the interviewer wants you to delve into
Cost cases are generally very streamlined till the time you are identifying places where cost can be reduced. Creativity comes into play when recommendations are asked by the interviewer.
Key Questions
•
•
•
•
•
Is this particular company facing the problem of high costs or is it something that the industry is facing as a whole?
Chalk the value chain and then ask if it is the correct way to do it? Or should it be done by splitting fixed and variable costs?
What are the last 3 year trends in growth for the organization?
Any major shifts in cost over time?
Does any of these cost seem out of line?
(C) Consult Club, IIM Ahmedabad
2016-17
8
Cost Reduction - Telecom Billing Process– Interview Transcript
You have been approached by the CEO of a telecommunications provider company. He is worried
about the high expenditure in their billing process and wants your help in identifying areas where
you can reduce costs.
What are the different ways in which the client’s company send out bills to the customers?
There are three ways in which the bill can be sent to the customer. Through post, internet and by
sms. For this interview just concentrate on post and internet.
Since sending bills thrugh internet would involve minimalistic cost, focusing first on snail mail and
looking at different cost component involved in the value chain.
Sure. Go ahead and list down various cost components.
There will be cost involved in buying raw material, printing bills, sending bills to customers. And
fixed cost involved will be the infrastructure renting cost and the employee cost.
Assume both rental cost and the employee cost to be optimal.
OK. So, let’s begin by evaluating the first component of the value chain. Raw material for printing
are paper and ink.
Let’s take paper first and try to reduce paper cost followed by ways to reduce the cost of ink.
Sounds reasonable. Go ahead.
That’s interesting. How else can you reduce the cost of sending the bill to the customer?
Apart from this we can reduce the frequency of sending out the bills to the customers. Here, the
tradeoff is between the cost saved in mailing the bills and interest forgone from the money recieived
a month earlier.
Let’s reduce the frequency of sending bills from one per month to one per two months. When do
you think this will become feasible?
Okay. To analyse this I would want to understand the approximate cost in sending out one bill by
mail/courier.
Sure. You can assume that one time cost of sending the bill by mail is around Rs. 20. And for all
practical purposes, take the interest rate to be 10% annually.
By not sending the bills every month, The client will save Rs.20/bill. Assuming the rate of interest to
be approximately 1% per month, the bill amount should be above Rs.2000 for the client to be
making losses by reducing frequency of sending bills.
i.e. if the bill amount is more than Rs.2000 then the bill should be sent every month, But the majority
of bill value in India would be much less than even Rs.500. So, in that case, reducing the frequency
becomes a cost saving option.
Can you think of a way in which you can reduce the costs overall?
We can bring down the paper cost by using thinner paper, by using smaller size of paper, by
printing on both sides of the bill, by leaving lesser margin, may also use a recyclable paper.
To reduce the cost of ink used, reduce the number of words on the bill by eliminating unnecessary
details. Reduce the font size and only print a black and white bill to save on the coloured ink.
Should I move ahead and explore ways in which the client can save cost in sending the bills to the
customer?
I think sending the bills through internet or sms would lead to massive reduction in overall cost.
How much does it currently cost to send a bill through internet?
Yes. Why don’t you help the client in reducing their expenditure in sending the bills by snail mail.
Interesting. How do you plan to do that?
OK. So, the total annual cost in sending bills by courir will be equal to = No. of bills sent/month*
Frequency of sending bills* (Base price for mail+ (Price/km)*No. of kms)
Let’s start with Price/km first. To reduce this, switch to a cheaper mail/courier service. This can be
achieved by using regional courier services as well.
Next, I would want to understand the base price for mail. How many hubs does the client have to
send out the bills to the customers?
In the intitial phase we can target those customers who use internet to pay their bills. We ce shuld
incentivize them by telling them about the benefits of sending bills online. A few of them are1.Prompt delivery of bills
2.No losses- no fudging of content, it wouldn’t get lost during transit, lesser chance of a bill going to
the wrong address
3.Convenience of having a bill online. You can check it whenever you want and there’s no hassle of
storing them carefully.
4. Incentivize people to use internet to pay bills by giving some discounts in the initial phase.
As of now, the client has one facility in Mumbai and the bills are mailed all across India from the
Mumbai hub itself.
Around 5 paise.
Okay, so our aim should be to encourage the customers to start using internet as a medium to pay
bills/ view bills.
Ok. Another way in which we can optimize this is have smaller facilities in cities like Delhi, chennai,
Kolkata and send the bills to customer sin that region from there.
It would serve the purpose of lower base price as well as quicker and timely delivery of bills with
lower bill loss rates.
(C) Consult Club, IIM Ahmedabad
2016-17
9
Cost Reduction – Telecom Billing Process
You have been approached by the CEO of a telecommunications provider company. He is worried about the high expenditure in their billing
process and wants your help in identifying areas where you can reduce costs.
Interviewee Notes
Case Facts
• Reduce cost of bills
• A cost benefit analysis for
each mode of sending bill
• Reducing the cost of
preparing bill itself
• 3 ways of sending bills- SMS,
internet & Snail mail
• Internet and SMS are
optimized, possibility only in
snail mail
• Rental and employee cost are
optimal
• Only one billing hub in India- in
Mumbai and bills are sent all
over india from Mumbai
• Cost of sending a bill by snail
mail=Rs. 20
• Cost of sending a bill though
internet= 5 paise
• Rate of return annually= 10%
Approach/ Framework
Raw
Material
R&D
Processing
Storage &
Transportation
DistributionSale force
Marketing
Customer
Service
Equipment
Cost of raw
material
Machinery
Transport to
warehouse
Sales Channel
Marketing
channels
Repairs
Human Capital
Contract & bulk
deals
Factory rent
Storage (Rent,
Labor)
Sales Force
Strategy
Spare parts
Cost of finance
Quantity used
Labor hours
Transport to
customers
Training
Returns
Technology
Capacity
utilization
Quantity of
ink
Fewer
words
Black only
Small font
size
Packaging
Move to
cheaper option
Quantity of
paper
No. of bills
Size of
paper
Transport to
customer
Reduce
frequency
Increase
ticket size
Hubs at shorter
distance
Utilization
Recommendations
•
•
•
Reduce the unnecessary expenditure on paper and ink. This being an inelastic good, customers won’t be bothered by smaller size or lesser words until relevant info is present
Explore the alternate route of sending the bill to the customer. Keep in mind the new evolving technology and try to push customers towards using it
Highest cost component of snail mail can be brought down by reducing the frequency of sending bills to one bill per two months. Only when bill amount is less than Rs.2000
Interview Summary
This is a cost reduction case where the interviewee should quickly establish the major cost buckets after discussing with the interviewer. Also, instead of probing into each bucket, ask the
interviewer if he has a particular cost bucket in mind.
Observations/Tips/Suggestions
•
•
•
Each cost component should be broken down into multiple cost levers to ensure that nothing is being missed out
Breaking down cost of snail mail into components helped the interviewee to analyze each one carefully
Further having to shift the customers to the low cost option is also relevant and important to bring down cost drastically and for having convenience in the future
(C) Consult Club, IIM Ahmedabad
2016-17
10
Cost Reduction - Biscuit Manufacturer - Interview Transcript
Your client is a biscuit manufacturer. Over the past couple of months it has seen a decline in
profits. Diagnose and recommend solutions.
The inventry losses in our case are high because of the presence of high percentage of expired
biscuits.
I would like to ask a few clarifying questions before I begin to analyse the case. I would want to
understand the client’s business. What kind of biscuits does the company make?
The client’s warehouse has a lot of expired goods which keep sitting in the warehouse for longer
duration and hence lead to higher storage costs. Reasons for this might be poor demand prediction,
delay in supply of goods to the warehouse or incorrect process for inventory management. Does
the client have a system in place to predict the demand of biscuits?
The company makes only 1 kind of biscuits.
Which country is the client based out of and how many factories do they have? I want to
understand the scale of business and extent of coverage.
Yes, the client owns a software which takes into account the demand in the previous intervals and
then predicts the demand for the next interval.
The biscuit company is based in one state of India with three factories spread uniformly across
the state.
Since the problem of expiry is uniform across the warehouses, delay in supply to the far off
warehouses can be ruled out. Therefore, the biscuits might be getting expired due to inefficient
inventory management system.
Ok. So the company manufacturers biscuits in a particular state of India. To understand about the
distribution process, to whom does the company sell the biscuits and are they based pan India?
What are the different ways in which an inventory can be turned over and what might be going
wrong here?
The supply of the biscuits is done to the wholesellers who can be from any state in India.
An inventory management system can be First in First out or it can be Last in First out. The problem
of expiry might arise if the inventory management system is of LIFO type.
That’s very helpful. Now since they supply the biscuits to these wholesellers across the country,
are their warehouses also located pan India?
Yes.You are correct. The warehouses are also spread uniformly across the country. I would urge
you to focus only on the cost side of their business.
I would want to analyse this problem by looking at various components of the value chain in
biscuit manufacturing. According to me, this can be broken down into raw material procurement,
processing costs, storage & transportation, marketing & promotions. Do you think I have missed
out on any cost bucket?
Yes. You are correct. At present the biscuit cartons which enter the warehouse last are the ones
which are sent to the retailers first. The company has employed two different transportation
agaencies to take care of moving biscuits from factory to warehouse and then from warehouse to
the retailers. Due to the lack in coordinaiton between these two entities, a lot of biscuits were
getting spoilt. Now that we have zeroed in on the problem area, how do you propose to solve this?
As per my understanding, the cartons of biscuits which come in last are placed near the gate of the
warehouse and the transportation company which takes them to the retailers just picks it up from
there for the sake of convenience. Is that correct?
No. I would like you to focus on stoarge and transportation cost for the purpose of this problem.
Yes. Please go on.
Ok. Looking into the storage costs first. Is the storage cost/packet of biscuit higher for the client
as compared to the avergae market? And is this trend uniform across all the warehouses
belonging to the client?
To ensure that FIFO is followed, either give the job to the same transportation company. Second
solution could be to place the cartons that come in later behind those which have been lying in the
warehouse for some time. Everytime, some of the boxes are taken away to retailers, the boxes kept
at the back should be moved in the front. This will ensure that lesser biscuits get expired.
Yes, the overall cost of storage/unit is higher for the client as comparred to the competitors.
Storgae cost is one area where we can reduce costs for the client. Storage cost can be broken
down into rental cost, labor wages and inventory losses. Do you want me to look into a particular
component or should I go ahead and explore all of them?
Focus only on inventory losses for now.
Okay. So, inventory can be damaged because of three factors. First one is due to spoilage
(Breakage, pest infestation, warehouse conditions like moisture). Second one is due to
inefficiency in turning over the inventory due to which it might get expired. Third might be
because of pilferage.
(C) Consult Club, IIM Ahmedabad
2016-17
11
Cost Reduction - Biscuit Manufacturer
Your client is a biscuit manufacturer. Over the past couple of months it has seen a decline in profits. Diagnose and recommend solutions.
Interviewee
Notes
• High storage & warehouse
costs
• Makes 1 type of biscuits
• Warehouses spread
uniformly across the
country whereas factories
only in one state
• Supplies biscuits to
wholesellers
Case Facts
• 3 factories concentrated in one
state
• Higher storage cost/unit in all
warehouses as compared to
the competitors
• Different transport company
used for bringing biscuits form
factrory to warehouse and
from warehouse to the retailer
Approach/ Framework
R&D
Raw Material
Processing
Storage &
Transportation
DistributionSale force
Customer
Service
Marketing
Equipment
Cost of raw
material
Machinery
Transport to
warehouse
Sales Channel
Marketing
channels
Repairs
Human Capital
Contract & bulk
deal
Factory rent
Storage (Rent,
Labor)
Sales Force
Strategy
Spare parts
Cost of finance
Quantity used
Labor hours
Transport to
customers
Training
Returns
Technology
Storage
Capacity
utilization
Rental
Labor
Inventory
Losses
Expiry
Spoilage
Packaging
Pilferage
Poor demand
prediction
Poor inventory
management
Late supply
Recommendations
•
•
•
Use the same transport company to move the biscuit from the factory to the retailer
Placement of the biscuits which come later should be done so that the ones which have come earlier remain visible and in the front
Move the biscuits at the back to the front as soon as the biscuits kept in the front are being taken away for delivery
Interview Summary
This is a cost reduction case where the interviewee should quickly establish the major cost buckets after discussing with the interviewer. Also, instead of probing into each bucket, ask the
interviewer if he has a particular cost bucket in mind.
Observations/Tips/Suggestions
•
•
Each cost component should be broken down into multiple cost levers to ensure that nothing is being missed out
Always list down few possible options and then clarify with the interviewer if you’ve missed out on anything. Also, Ask him to whether he wants you to delve into a particular bucket
(C) Consult Club, IIM Ahmedabad
2016-17
12
Cost Reduction - Retail Store - Interview Transcript
The CEO of a retail company has approached you with the problem that his company is burning
cash. He wants you to provide suggestions to improve his business.
Sounds good. The store is rented. The cost of leasing is fixed. Can you think of something to
reduce that?
Sir, I would like to understand the question better. By burning cash you mean to say that the
store is incurring losses.
Sir, we can go in with the arrangement wherein the cost of leasing can be made a direct function of
the variable component of sales
Yes
Ok.
Sir, before I analyse the reasons for this loss, I would like to understand the business better.
What kind of retailing are they into?.
Sir, I can make the salaries of the employees also variable and link them to the sales
generated. That would spur sales. Also are the cloth procurement costs stable and comparable to
competition?
They are in apparel retailing.
I would like to know the region of operation of these stores and the number of stores that
they have.
Yes they are similar. Can you think of something else that could affect this cost?
So they have 12 stores across India. Out of these 2 are profitable and 10 others are in loss..
Sir, there might be damages related to the clothes. The clothes that are on display get
damaged generally. Is there a cost related to them?
As I understand the market conditions in different parts of India would be different and
hence it would take different analyses for them. I would have to group the stores region wise and
understand what causes them to be in profit or loss.
Yes we do have to sell such clothes at a 20% discount. Also, the number of customer returns the store
has been experiencing has been increasing at a steady rate
Sounds good. Let us concentrate on the Bombay city region..
Sir, within the Bombay region I would like to know the number of stores and the kind of
segment they are targeting. Also I would like to know the kind of competition we have.
So, they have 1 store in Bombay which is situated in a suburban mall. We are a value for
money store. There are 2 similar stores in the mall which target the same segment.
Sir, the decline of profit may depend on external or internal factors. If the profit of all the
stores in the region is dropping then it may be due to a drop in demand or some regulatory
issues.
Internal issues will consider the operation side of the business.
We can ensure that such clothes are sold off quickly. AT the same time, we might want to add
resources in the preliminary inspection & training front to reduce the number of returns incidents.
Well, that’s fine. The store has also been experiencing greater costs on account of loss of
merchandise. Can you think any which way this might be happening?
This could either be on account of either stealing by external or internal customers(pilferage). This
could easily be prevented by having better security measures in place such as CCTV recordings,
employee frisking etc.
There have been no external factors as you say. In fact the business of the competitors has
been growing steadily
In order to understand the loss I would like to consider the revenue and costs aspects of the
business. So, have the costs of our business been increasing?
Yes they have been. Let us focus only on the cost end.
Fine. The costs can be divided into fixed and variable costs. The fixed costs components would
include the rent of the store if it is not owned, maintenance, lighting etc. The variable costs would
include the procurement cost of clothes and the salaries of the employees.
(C) Consult Club, IIM Ahmedabad
2016-17
13
Cost Reduction - Retail Store
The CEO of a retail company has approached you with the problem that his company is burning cash. He wants you to provide suggestions to
improve his business.
Interviewee
Notes
• Limited to apparel
retailing business
• Value for money store
• Focus only on reduction
of costs (may have
revenue stream problems
too)
• Rented Store with a fixed
cost of leasing
• Stable costs of cloth
procurement
Case Facts
• They have 12 stores across
India. Out of these 2 are
profitable and 10 others are in
loss
• Higher storage cost/unit in all
warehouses as compared to
the competitors
Approach/ Framework
R&D
Raw Material
Processing
Storage &
Transportation
DistributionSale force
Marketing
Equipment
Cost of raw
material
Machinery
Transport to
warehouse
Sales Channel
Marketing
channels
Human Capital
Contract & bulk
deal
Factory rent
Storage (Rent,
Labor)
Sales Force
Strategy
Cost of finance
Quantity used
Labor hours
Transport to
customers
Training
Customer
Service
Repairs
Returns
Spare Parts
Technology
Storage
Capacity
utilization
Packaging
Pilferage
Inventory
Losses
Rental
Costs
Damages
Spoilage
Labor
(Wages)
External
Customers
Employees
Recommendations
•
•
•
Exploring the possibility of linking the rental costs and the employee wages as variable components of sale rather than as fixed components
Countering Pilferage by investing in security measures
Customer returns issue should be traced back to the procurement end of the chain with better monitoring & inspection systems in place.
Interview Summary
This is a cost reduction case where the interviewee should quickly establish the major cost buckets after discussing with the interviewer. Also, instead of probing into each bucket, ask the
interviewer if he has a particular cost bucket in mind.
Observations/Tips/Suggestions
•
•
•
Each cost component should be broken down into multiple cost levers to ensure that nothing is being missed out
In case of chains, for problem simplification always look for possible clustering /segmentation. This also suggests clarity of thought
Issues may link across the value chain. For example a Customer returns issue in this case may have been primarily triggered at the procurement stage itself.
(C) Consult Club, IIM Ahmedabad
2016-17
14
Cost Reduction/Problem Identification – Otis Elevators – Interview Transcript
Otis, the elevator maker, was facing losses/drop in profits as compared to Mitsubishi, even though the
price points of both were in the ratio of 100 to 80. An average elevator cost about $100 and there was
a service AMC involved for about $20 per year for 10 years, with corresponding figures for Mitsubishi
in the ratio above. Help them figure this out.
Otis is responsible for all repairs, whatever they may cost. The owner just pays for the AMC.
Was there a marked difference in the cost structures of the two lifts? Or has there been any recent
changes in the same for either of the two companies? For instance, changes in the way the elevator is
manufactured, where the raw material is sourced from, etc.
Exactly. Otis elevators break down more often than Mitsubishi ones. And the revenue cost mismatch
means that they actually spend more than they earn, leading to the drop in profits.
No, the average cost is the same for both. There have been no recent changes.
Okay, let us look at segments. I am assuming that there will be different classes of elevators –
premium, high speed ones for business buildings; normal ones for residential buildings, and maybe
supersized ones for hospitals, etc. The margins for all them would be different, and it could be that the
company is selling more of low margin lifts as compared to the high margin ones.
While you are right about the kind of lifts, there hasn’t been significant change in the sales numbers
across product lines as such.
Any changes in sales across geographies? Since there is a flood of infrastructure development in India
and China, it could be that low priced elevators in these areas are dragging overall margins down.
Good line of thought, but not what the problem is here. Okay, tell me what the requirements for an
elevator would be, according to you.
So since the amount that Otis gets as revenue is fixed, I surmise that they have to spend more on every
elevator for the same AMC amount. That is, Otis elevators cost more to fix than Mitsubishi elevators, or
they simply break down more.
Whoa, hard to believe that Otis elevators have a quality issue!
<Chuckling> Agreed. Nonetheless, it did happen. Okay, now that you have got to the root of the
problem, what do you suggest Otis should do?
Since they have a proper AMC in place, I assume they keep proper records of breakdowns and fixes.
They should profile the key problems in their elevators and institute a fix to be implemented in all new
elevators manufactured. Of course, they should see if the problem is across all models, manufactured
batches, etc., so that if there is a particular problem in a plant or model it can be looked at closely.
For elevators already sold, there should be a retrospective fix that they should immediately apply, in
order to prevent further costs. Even if it costs more than actually waiting for a complaint before fixing
it, they should go ahead and do pre-emptive maintenance to prevent further damage to the Otis brand.
Good. Thank you for your time.
Well, an elevator must have certain qualities – speed, reliability, an elevator is something that should
last as long as the building…
Precisely. What would that entail?
It would mean that the lift should last long. There should be minimal breakdowns. Okay, so now we
shift to the service part of the contract. Could you tell me how the servicing is done? Say, the lift owner
calls up Otis to have a look at the problem, a repairman comes and has a look.
Right.
So once the problem is identified, I assume some of the elevators must be fixed with just minor
adjustments, while some might need more extensive repairs, like replacements of parts.
Very true.
Okay, could you tell me who pays for the replaced components? Does the owner pay for all
replacements or are they covered under the service contract, to be paid for by Otis?
(C) Consult Club, IIM Ahmedabad
2016-17
15
Cost Reduction/Problem Identification – Otis Elevators
Otis, the elevator maker, was facing losses/drop in profits as compared to Mitsubishi, even though the price points of both were in the ratio of
100 to 80. An average elevator cost about $100 and there was a service AMC involved for about $20 per year for 10 years, with corresponding
figures for Mitsubishi in the ratio above. Help them figure this out.
Interviewee Notes
Case Facts
• Two product offerings:
elevators and AMC
• A cost vs revenue analysis of
both the products needed
• Costs – value chain analysis
• Revenues – across segments
• Products
• Geographies
•
•
•
•
Elevator costs $100
AMC costs $200 over 10 yrs
Mandatory AMC, for full period
Mitsubishi is priced lower, but
still similar costs (lower
margins)
Approach/ Framework
R&D
Equipment
Human
Capital
Cost of
Finance
Raw
material
Processing
Cost of raw
Materials
Machinery
Factory Rent
Manufacturing
Distribution,
etc.
Labor Hours
Technology
Storage &
Transportation
Transport to
Warehouse
Storage
Transport to
Customers
Distribution
Sales Force
Customer
Service
Marketing
Sales Channel
Marketing
Channels
Sales Force
Strategy
Service Contracts
Repairs
Training
Spare Parts
Returns
Capacity
Utilization
Packaging
Recommendations
•
Focus on improving quality of elevators – zero in on where the failure actually happens, both in terms of use, and also whether it is a manufacturing problem in a certain model or
batch/factory.
Interview Summary
This was more of a problem identification case, where it was important to zero in on the problem. Once it was identified that costs were in general not the issue for elevators, move to the revenue
side of things. Similarly, establish that revenues for the AMC are constant, while costs go up drastically.
Observations/Tips/Suggestions
•
•
Focus on quickly running through each of the cost and revenue levers for both kind of offerings
It is crucial to note that the AMC actually cost more ($200 vs $100), so should have been the first line of attack as such. Time was essentially wasted by approaching the elevator side first.
(C) Consult Club, IIM Ahmedabad
2016-17
16
Cost Reduction– Steel manufacturer– Interview Transcript
You have been approached by the CEO of a steel manufacturer. He feels that the costs last year
were of transportation of steel in last year was too high. He needs your help to figure out whether
hypothesis is correct.
Sir, before I analyse the reasons for this loss, I would like to understand the business better. Where
is the manufacturing plant located?
There are two units, one in Jamshedpur and one in Orissa, although we are worried about the
logistics cost for Jamshedpur plant.
What all products are transported by the Jamshedpur plant?
The plant produces and transports two varieties of steel rods and one variety of nails. For
transportation, packs of rods of a particular type are bound together. The nails with cumulative
weight of 5 Kg are kept in a box and transported. The size of the box is relatively small.
What are the destinations?
The client primarily serves wholesalers in four major markets: Pune, Chennai, Delhi and Kolkata.
Is the client worried about the costs for any particular market?
No. The client feels that transportation costs are high for all the four markets.
Oh ok. So the problem is with transportation. Is the cost problem only with transportation or should
I delve into the entire value chain?
The problem is only in transportation.
Ok. Is the transportation outsourced?
Good one! Yes, the transportation is outsourced to a local contractor who takes care of
transportation to all the four destinations. He uses trucks for transportation and charges in per Km
basis, taking to and fro distance.
Are different varieties of trucks used?
Let’s assume all the trucks are similar.
Got it. We can divide the total cost for transportation of steel in a year into two parts: cost per truck,
multiplied with number of trucks plying in a year. Where should I delve into first?
(C) Consult Club, IIM Ahmedabad
Let’s start with number of trucks plying in a year.
Ok. The number of trucks plying in a year can be broken down into: total volume in the year divided by
full volume per truck; and the resultant multiplied with capacity utilization.
The problem is with capacity utilization. Currently they are using only single variety in a truck, which can
be rectified by combining the products in a single truck when necessary. Ok. Good. The client also
believes that the cost per truck is high. How can you prove his hypothesis?
There are two ways: either benchmark with rest of the contractors in the same local area or understand
the logistics provider’s costing structure and general margins.
The client feels that all the contractors are colluding.
Ok. I will then understand the costing and margins. The various costing heads are: depreciation of
trucks, depreciation of tyres, diesel, maintenance and toll cost. Maintenance can further be broken into
daily washing and regular services.
Let’s take the example of Delhi. The distance between the two, for the sake of calculation, is 1,000 Km.
Let’s delve into the calculations now. In a year, one truck makes 30 trips to Delhi.
Ok. Assuming a Rs 30 Lac truck has a life of 10 years, the depreciation per year is Rs 3 Lac, and per trip is
Rs 10K. In a round trip 2K Km are covered. Therefore, the depreciation is Rs 5 per Km.
Assuming 10 tyres and each tyre costs Rs 10K, with a lifetime of 20K Km. Therefore, tyre depreciation is
Rs 5 per Km.
Assuming diesel price is Rs 50 per L and mileage is 5 Km per L. Diesel cost is Rs 10 per Km.
Assuming maintenance charges of Rs 10K per trip. Therefore maintenance charges are Rs 5 per Km.
Lastly, assuming toll booth for every 100 Km. So there would 20 toll booths. Say Rs 100 is charged per
toll both. So, toll charge is Re 1 per Km.
So, in total, the cost would be Rs 26 per Km.
Good. But the problem is, the contractor is charging Rs 25/Km. What could be the reason?
Wow. The contractor might be serving another customer in Delhi to transport his material to or on the
way to Jamshedpur, so essentially, is unnecessarily charging me for the return trip.
Another reason, which calls for a change in calculations, is that the biggest cost element is diesel cost,
which is not the same for to and fro journey. When Going to Delhi, the diesel cost would be more since
the truck is heavy with steel while coming back, the diesel cost would be less. Therefore, the total cost
would go down.
Nice! Thank you, that will be all.
2016-17
17
Cost Reduction– Steel Manufacturer
You have been approached by the CEO of a steel manufacturer. He feels that the costs last year were too high. Diagnose.
Interviewee
Notes
• High cost of storage and
transportation
• Transportation/logistics
outsourced
Case Facts
• 2 production plants – problem
in Jamshedpur plant
• 2 varieties of steel rods and
1variety of nails
• 4 markets – Pune, Chennai,
Delhi, Kolkata
Approach/ Framework
R&D
Raw Material
Processing
Storage &
Transportation
DistributionSale force
Marketing
Customer
Service
Equipment
Cost of raw
material
Machinery
Transport to
warehouse
Sales Channel
Marketing
channels
Repairs
Human Capital
Contract & bulk
deal
Factory rent
Storage (Rent,
Labor)
Sales Force
Strategy
Spare parts
Cost of finance
Quantity used
Labor hours
Transport to
customers
Training
Transportation cost per Km
Technology
Truck depreciation
Capacity
utilization
Tire depreciation
Packaging
Returns
Transportation to
customers
Cost per
truck
Number of trucks
plying in a year
Diesel
Steel
volume
Maintenance
Truck
capacity
Toll charges
Capacity
utilization
Recommendations
•
•
Low capacity utilization can be increased by using same truck for multiple types of steels and nails
Proof of over-charging by the outsourcing partner
Interview Summary
This is a cost diagnosis case where the interviewee should utilize the help of the interviewer to quickly boil down to the transportation bucket, instead of probing into each bucket. Thereafter
delve into the reasons for the CEO’s hypothesis of high cost charged by the contractor by calculating its costs.
Observations/Tips/Suggestions
•
•
Transportation cost element should be mathematically broken down into components to arrive at the problem of low utilization
Calculation of costs through numerous assumptions and then hypothesis for mismatch
(C) Consult Club, IIM Ahmedabad
2016-17
18
Industry Analysis - Overview
A company is looking to enter/expand into an industry and wants to know about the industry. The candidate is expected to elucidate the relevant
characteristics of the industry and decide whether the industry is attractive for the client or not.
Approach/ Framework (Broad) for the Case Type
Analyse a given
industry
Entry into the
market
Verdict on
attractiveness
Opportunity
identification
Objective of
analysis
Decision on
expansion/ growth
Synergies with
existing business
Need-gap
Identify risks
Industry
fundamentals
Regulatory
Substitutes
Entry/Exit barriers
Current Macroeconomics
Framework Summary
Industry analysis is usually required in most types of cases, where the candidate usually begins by analyzing the industry. Depending on the exact problem statement, parts of the framework
may be used to analyze the industry.
Tips
The interviewer will expect the candidate to know about certain aspects of particular industries. For e.g. the value chain for an industry might be very obvious and the candidate should avoid
asking about it and make their own assumptions. On the other hand, it might be detrimental to make assumptions about the market situation and the candidate should extract as much
information on that as possible from the interviewer.
Key Questions
•
•
•
•
Is this industry synergetic to our current business?
Are there barriers to entry?
Are substitutions available?
How will we price our products and services?
(C) Consult Club, IIM Ahmedabad
2016-17
19
Industry Analysis - Insurance - Interview Transcript
A financial services provider wants to understand the insurance industry. Can you analyse the
industry for them?
Sure Sir. So I have to analyse the insurance industry from a market-entry point-of –view. Is that
correct?
Yes.
So can I begin by asking some clarifying questions? Are we looking at the insurance industry as a
whole or certain specific verticals under it like life insurance, home insurance or health
insurance?
I would like you to analyse the broader industry first, we can narrow it down later.
Do we know the current status of the industry? About its recent performance as a whole?
What do you think? On what factors will the industry performance depend?
On a broader level, I think the top-line of this industry will be defined by the number of policy
holders. People will buy insurance policies only if they have some disposable income. This means
that the number of policies will be in some ways proportional to the economic status of the
country. Thus I am assuming, as more and more countries are becoming economically advanced,
more policies must have been bought over the years.
Coming to the bottom-line, we need to look at how insurance companies make profits. As per my
understanding, insurance companies make money by investing the premiums collected into
government securities and other investments. Hence, their profits will be determined by the
interest rates prevailing in the market. Do we know how the rates are in the market, currently?
That will depend on which market we are looking at. Let us focus on the Indian market for now.
So interest rates in India have been historically on the higher side.
This would mean that the industry is structurally attractive in India at first glance. But we will have
to look at several other factors before arriving on a verdict. And I think these factors will differ
significantly on which sector within insurance we are focusing at. Do we know which sector is the
client looking at?
You need to advise on that. Which sector makes more sense for our client
For this I would first like to know a little bit more about the client. What all financial services does
our client provide currently?
The client has been in business for past 10 years and has grown to capture 10% of the market share
in the asset management space, which is significant considering there are 50+ competitors. But
recently, the share has stagnated and the company is finding it difficult to acquire new customers.
India, due to its large population, will be offering a large market to tap into for financial services
providers. But considering that there is only a limited population will have disposable income, I
believe the client is looking to sell other products to the same customers rather than trying to
acquire new customers. I think this makes sense in the long run. Also, since there are so many
competitors and it might be difficult to make the customers switch their service providers, the client
should definitely look at other avenues.
Yes that is correct.
Also, since our client is having 10% share, this means it will have already have a large customer base.
Coming to the sectors within insurance, I believe there are 3 major sectors- Life, health and property
insurance. Is that correct?
Partially. Property insurance is a part of the larger liability insurance area . This can also include
insurance for automobiles, business mishaps and other miscellaneous insurance apart from property
insurance.
So, among these the client should venture into property insurance first. There are two major reasons
for this- first, our client already has the knowledge of asset management and hence will be able to
locate lucrative investment opportunities. Second, since the customers for life and health insurance
will be individuals while those for liability insurance will be both individuals and corporates. Our
client has a customer base of large conglomerates which will like to insure their property and the
like.
That is a good way to look at it. Any other thing you think the client should know about the insurance
industry?
I feel in the insurance industry, as is the case with the larger financial services sector, the role of
regulations is very large. The client should carefully study all the regulations in place and analyse
how they will affect their current business as well as their future in the insurance industry before
entering into this industry. Also, I believe this industry should continue to grow in India as more and
more people are entering into the medium-income groups.
Okay. Thank you for your time.
The client has major interest in asset management and corporate treasury management for some
large conglomerates in India.
Okay. So our client has experience in handling the assets of large companies, which indicates they
already have the knowhow of investment and liquidity management. This means it will not be
that difficult for the client to enter into insurance. But may I know how the client has been doing
in their business currently?
(C) Consult Club, IIM Ahmedabad
2016-17
20
Industry Analysis - Insurance
To analyze the insurance industry for a financial services provider
Interviewee Notes
Case Facts
• Market entry into insurance
industry
• Client currently in financial
services
• Top-line- no. of policies,
bottom-line- interest rates
• Look at broader industry
first, then narrow down on
area. Tell about industry
fundamentals, depending on
synergies choose the area.
• Ask about the current status
of the industry
• Which area within
insurance?
• Risks
• Interest rates high in India
• Client in the market for 10 years;
holds 10% share in current market
• Client in asset management and
corporate treasury
• Customers are large
conglomerates
• 3 areas- Life, health and liability
Approach/ Framework
Analyse insurance
industry
Entry into
the market
Verdict on
attractiveness
Opportunity
identification
Objective of
analysis
Decision on
expansion/
growth
Synergies with
existing
business
Need-gap
Area within the
industry
Identify
risks
Industry
fundamentals
Regulatory
Substitutes
Entry/Exit
barriers
Current
Macroeconomics
Top-line,
bottom line
determinants
Recommendations
•
•
•
Should focus on liability insurance
Should leverage the current user base
Should be mindful of the regulations
Interview Summary
The candidate did a good job in figuring out the fundamentals in terms of the factors on which the top-line and bottom-line of the industry depend. Identifying liability insurance as the target
area was the easiest part. She seemed to know the basics of the finance industry and it could have been difficult for someone oblivious to those basics. Overall a good performance.
Observations/Tips/Suggestions
Since the client was already present in an allied industry, the question was designed to judge the candidate’s knowledge about the industry fundamentals. The interviewer must have been
impressed by her knowledge of the industry and the overall logical consistency.
(C) Consult Club, IIM Ahmedabad
2016-17
21
Industry Analysis - Consumer Appliances - Interview Transcript
Our client is looking at investing in the solar energy business, and would like us to advise him
regarding the attractiveness of the industry
So, our client would like to advise him about the attractiveness of investing in the solar energy
business. Is that correct?
Considering that our client is a consumer electronics manufacturer, it could focus on the
commercial side of the industry, as there could be synergies with its existing products. Also, its
existing infrastructure, such as manufacturing and distribution network, may facilitate that. It
could expand its current portfolio to include solar-based products such as solar cookers, lamps
and water heaters.
Yes
And how could it do that?
So, I would like to begin by asking a few preliminary questions about our client. What business is it
currently engaged in? What geography does it operate in? What are the products that it sells?
It could do that in three ways. First, it could invest in technology to build new products. Second, it
could acquire a company which manufactures such products. Third, it could enter into a joint
venture with a solar company to manufacture solar-based products.
The client is a consumer appliances manufacturer, with a strong presence in most of the top Indian
cities, and some sales in Sri Lanka, Bangladesh and Malaysia. It manufactures various household
products such as ovens, food processors, vacuum cleaners, air coolers etc
Why is it looking at investing in solar energy? Also, is it looking at investing in India, or abroad?
Our client has significant cash reserves, and is looking at investing in emerging industries. It has
been told that solar energy is an industry with a lot of growth prospects, and it would like to get a
piece of the action. It wishes to focus on India
Alright. Could you tell me a little about the solar energy industry in India? What is the current
installed capacity? What are the growth prospects?
Well, India is well-positioned to exploit solar as a potential energy source, due to the abundant
sunshine that it receives. It has a current installed capacity of 34000MW, and solar energy accounts
for 1% of India’s total energy mix. The government recently unveiled a plan to boost capacity to
100,000 MW by 2022.
What are the different components of the industry?
And what are some of the factors it will have to keep in mind before investing?
Should it go for in-house development of solar-based products, it will have to develop
technological capability, which may require developing R&D facilities and hiring capable
engineers. It will also have to consider the rate of return on investment and the time taken to
recover its investment. It may need to look at new markets, such as the rural market, and may
need to invest resources in developing distribution channels, if they do not currently exist. It may
also need to look at the regulatory scenario around investing in the sector
Alright. Could you please summarize our discussion?
Our client, a consumer appliances manufacturer, would like to invest in the solar energy industry.
We looked at the different applications of solar energy and thought that, keeping in mind
synergies with the existing business, it could focus on the commercial side, such as solar cookers,
water heaters etc. Regarding mode of entry, it could go for in-house development, acquisition of
a smaller company or a joint venture. However, it would need to consider R&D capabilities, rate
of return on investment and regulatory aspects before taking any decision.
That’s good. Thank you for your time.
Can you hazard a guess at the different applications of solar energy?
Sure. We can classify the applications of solar energy into two main components- industrial and
commercial. Under industrial, we can have solar energy used for generating electricity to replace
thermal power plants, or for agricultural purposes, such as water pumps for irrigation. Under
commercial, you could have different applications such as lighting, solar water heaters, cookers etc
That sounds like a good classification of the applications. What could our client focus on?
(C) Consult Club, IIM Ahmedabad
2016-17
22
Industry Analysis - Consumer Appliances
To analyze the solar energy industry for a consumer appliances manufacturer
Interviewee Notes
Case Facts
• Similar to market entry case
• Queries about client; later
used to identify synergy
areas
• Structured approach to
laying out applications of
solar energy
• Market entry framework- inhouse
development/acquisition/JV
for mode of entry
• Client among top 5 consumer
appliances manufacturers in Indiamakes ovens, food processors,
vacuum cleaners, air coolers etc
• Presence in top Indian cities, Sri
Lanka, Bangladesh, Malaysia
• Solar energy- installed capacity of
34000MW, govt plan to boost
capacity to 100,000MW by 2022
Approach/ Framework
Analyse insurance
industry
Entry into
the market
Verdict on
attractiveness
Opportunity
identification
Objective of
analysis
Decision on
expansion/
growth
Synergies with
existing
business
Need-gap
Mode of entry
Identify
risks
Industry
fundamentals
Regulatory
Substitutes
Entry/Exit
barriers
Current
Macroeconomics
Applications
Recommendations
•
•
•
Test structuring approach of candidate (Eg: describing applications of solar energy)
Test ability of candidate ideate (Eg: factors to keep in mind before investing)
Direct toward synergistic link between current business and target area
Interview Summary
The candidate did a good job in laying out the framework. Through her preliminary questions about the client, she was able to later establish a connection which helped in narrowing down
focus area of investment. She laid out the approach to market entry quite well, and was able to identify certain key issues to be kept in mind for the investment
(C) Consult Club, IIM Ahmedabad
2016-17
23
Industry Analysis - e-Commerce - Interview Transcript
Our client is a watch brand, who wants to move into the online space. However, he has no
understanding or experience of the e-commerce space, and wants us to conduct an industry
analysis. Can you help him with that?
Sure sir. So, just to clarify the question, our client is a watch brand which wants to move into the
online space, and wants us to analyse the e-commerce space. Is that correct?
Yes.
To start off, I’d like to ask a few clarifying questions about our client. What sort of watches does
he sell, and in what proportion? Does he sell both men’s and women’s watches, and if so, what is
the percentage of each?
Our client sells wrist-watches in two main segments- luxury and midrange. He sells both men’s
and women’s watches, in a 40:60 ratio
What is the proportion of sales and profits of each of the segments? What is our market share in
each segment?
Well, the luxury watches account for 20% of sales and 30% of profits. We have 26% market share
in the mid-range segment and 24% market share in the luxury segment
That’s great. I’d also like to understand a little bit about our competitors. How many competitors
do we have in each space? What are their market shares?
In mid-range, segment, we have two main competitors, Arya and Sansa, with 30% and 18%
market share respectively. In the luxury segment, there are three other major players, Riordan,
Vance and Le Guin, with 29%, 26% and 18% market share each.
Sure. Let me take a couple of moments to gather my thoughts.
Our client could build its online presence in two ways- standalone website or e-commerce portal. If it
goes for a standalone website, it will need to drive traffic to it, by means of advertisements and SEO
activities. If it goes the e-commerce portal way, it can do one of three things- put its entire product
portfolio online, have only the bestselling products sold online, or have initiatives like flash sales such
as those conducted by Xiaomi, to generate publicity, especially for new watch variants.
That’s good. Say our client goes in for the e-commerce portal option. Which of his segments would
you suggest he focus on?
The mid-range segment accounts for most of the sales and profits. Also, online shoppers are quite
price-conscious and are always looking out for the best deals. It may be easier to offer discounts on
the mid-range segment, as doing so for the luxury segment may dilute brand equity. So I would
recommend that it sell some or all of his mid-range watches online.
That’s good. Anything else?
Well, our client can use its offline stores to develop its online presence, maybe through promotion
activities in the stores which direct customers to the online store. Apart from the major e-commerce
portals, it may also choose to look at the niche websites, which cater to a particular category of
products, where it may be able to get better traction. However, it will have to look at differentiating
with respect to its competitors on aspects other than price, and communicating the value of its
products to customers
Great. Thank you for your time.
And do any of these players have a presence in the online space?
Arya and Sansa have their own online retail stores, and sell a few of their watches on major ecommerce websites such as Flipkart and Amazon. Of the luxury watch makers, only Riordan has
its own online store. So, do you have any ideas as to how the client can develop an online
presence?
(C) Consult Club, IIM Ahmedabad
2016-17
24
Industry Analysis - e-Commerce
To analyze the e-commerce industry for a watch brand
Interviewee Notes
Case Facts
• Understand client and
current market situation
properly
• Use general knowledge
about e-commerce to make
recommendations
• Client sells two types of wrist
watches- luxury (24% market
share) and mid-range (26% market
share)
• Mid-range competitors- Arya (30%
market share) and Sansa (18%
market share)
• Luxury competitors- Riordan (29%
market share), Vance(26% market
share) and Le Guin(28% market
share)
• 17 stores across 10 cities in India
Approach/ Framework
Analyse insurance
industry
Entry into
the market
Verdict on
attractiveness
Opportunity
identification
Objective of
analysis
Decision on
expansion/
growth
Industry
fundamentals
Need-gap
Synergies with
existing
business
Competitor
assessment
Recommendations
•
•
•
Category to focus on for e-commerce option
Explore niche websites for greater traction
Could have explored more sales growth options
Interview Summary
This is a strategy case where some knowledge about the existing e-commerce environment would be helpful in making targeted recommendations.
Observations/Tips/Suggestions
•
•
Do Keep a tab on industry happenings
Further brainstorming to come up with challenges if the interviewer asks, “Anything else”?
(C) Consult Club, IIM Ahmedabad
2016-17
25
New Market Entry - Overview
Market Entry, Analyze and recommend entry strategy
Approach/ Framework (Broad) for the Case Type
New Market
Entry
Vision
Customer –
New Market
Product
Company
Segments
Customer
Expectation
Product
Offerings
Needs
Available
Products
Resources –
Capital,
Technology
& Labour
Profiling
Identify Gaps
of above 2
Goals
Size &
Growth
Objectives
Client’s
Target
market share
Our
Strengths &
Strategic
Assets
Market Share
Entering
Strategy?
Industry
Competitors
& Share
SWOT
Analysis
If Yes,
How?
Barrier to
Entry/Exit
Start from
Scratch
Our Estimate
of Market
Share
Acquisition
No
Joint Venture
Framework Summary
Understand what the company ‘s objectives and expectations are. Does it make business sense for them/ Does it align with the overall firm strategy. Analyze the feasibility of market entry by
considering 4 different buckets. Then recommend whether they should enter or not. If yes, how should they do it.
Tips
Not every aspect of the framework mentioned will be applicable to all cases. But try to cover as much as you can, so that you get a good idea of the industry and the client current status. It is
very important to identify where the client would stand in the industry compared to the existing competitors and what measures should be taken to mitigate competitive edge of incumbent.
Observations
Most of the times interviewer will be satisfied if you analyze and suggest, whether to enter or not. But it is always good to take an extra mile by giving a high level plan on how to enter and
capture the market.
(C) Consult Club, IIM Ahmedabad
2016-17
26
New Market Entry - Lock Manufacturer – Interview Transcript
Our client is a leading lock manufacturer in India. He wants to enter the Nigerian market. Nigerian
market has a lot of oil refineries. He has approached us to know how he should go about entering
the market.
Reiterating my understanding of the question. Can you tell me a bit more about the Nigerian
market? I am unable to get the connection between the oil refineries and the lock manufacturers.
Basically, locks are used for both the residential purposes and industrial purposes.
What kind of locks are we in? Do we manufacture some hi-tech number locks or simple vanilla
locks?
We basically manufacture simple door locks. We also provide industrial purpose locks to
safeguard oil and other industrial products. These are similar to door locks.
One final question: Has our client already decided to enter the Nigerian market. Or does he want
us to analyse this as well?
No he is yet to decide whether to enter this market or not. He wants our advice regarding whether
to enter or not? And if entry, how to go about entering this market?
Now the candidate comes up with a framework which captures industry parameters, client’s
competencies, financials and mode of entry
Let’s just focus on the industry part. This is the data
available on the parameters you mentioned..
I would like to focus on how we sell our products. I assume we would be selling residential
products through a distribution channel comprising of distributors and retailers while the
industrial products would be sold directly to the clients.
(C) Consult Club, IIM Ahmedabad
Yeah that’s true. Focus on residential aspect as of now
Next, I would like to focus on our customers. Do we know the buying behaviour of our customers?
Ok good, now you are coming to the point. Nigeria is a land where you see a lot of thefts happening in
broad day light. As a result, customers purchase locks not to protect their goods but to delay the theft.
They lock their houses with some 10-20 locks in order to delay the theft.
Ok, that is interesting. Now I assume if this is the case, then primarily 2 things would drive the
purchase – a) Price b) Availability
I assume quality of the product won’t drive the customers.
Yes, the customers are not at all quality conscious. They buy local China locks.
How different are we on the price point?
Our locks are 40% expensive than the local China locks.
Is there any specific reason why our locks are so expensive?
Yes, we provide premium quality locks that last for 15 years compared to Chinese locks.
But, I assume customers don’t bother much about the quality.
Yes, that is true. So, now what you recommend?
The 2 most important factors for customers are price and availability. On the price point, we are
expensive compared to the competition but superior in quality. But, the customers don’t bother much
about our quality. On the availability front, it would take us huge time and investment to build up a
distribution network. Based on this, I am a bit apprehensive of going forward in the residential space
in this market.
2016-17
27
New Market Entry - Lock Manufacturer
Client wants to enter into Nigerian market. The objective is to analyze the market and recommend the client an entry strategy
Interviewee Notes
• Noted down client industry
and the target market
• Clarifying questions on
client industry and target
market
• Trying to understand client
product portfolio
• Questions on purchase
pattern to understand
customer behaviour
Broad-approach
• Considered 4 different
buckets to understand
market dynamics,
competition, entry strategy
and financial strength
• Identified purchase drivers –
Price and availability
Case Facts
• Client manufacture both simple
Approach/ Framework
locks and industrial purpose locks
for oil refineries etc.,
R
I
Size
400m
100m
Growth
12%
6%
Lifecycle
Growing
Growing
low
high
3 major
players
8 major
players
Profitability
Competiti
on
•Lot of thefts happen in Nigeria,
hence customers buy 10-20 locks
to delay theft
•Customers are not quality
conscious
•Client locks are 40% expensive
than china locks
•Client lock are premium quality
which last for 15 years
New
Market
Entry
Customer –
New
Market
Product
Segments
Customer
Expectation
Needs
Available
Products
Profiling
Identify
Gaps of
above 2
Company
Product
Offerings
Industry
Competitors
& Share
If Yes,
How?
Vision
Goals
Size &
Growth
Objectives
Client’s
Target
market
share
Entering
Strategy?
Resources
– Capital,
Technology
& Labour
SWOT
Analysis
Our
Strengths &
Strategic
Assets
Barrier to
Entry/Exit
Market
Share
Our
Estimate
of
Market
Share
No
Start
from
Scratch
Acquisition
Joint
Venture
Recommendations
•
Client’s product did not match the customer requirements in the market. The client also had to invest heavily on new distribution channel. Hence going ahead with the client’s product in
this market is not attractive
Interview Summary
The interviewer was happy with the overall analysis. But the candidate could have consider all possible solutions.
Observations/Tips/Suggestions
•
•
•
Interviewee did not consider other possibilities such as customizing the product based on customer needs. Customers tend to buy locks in bulk, this market could be a great way of getting
into a new product portfolio
Always come up with all possible solutions and eliminate based on feasibility
Try to back up the entry strategy with cost benefit analysis
(C) Consult Club, IIM Ahmedabad
2016-17
28
New Market Entry - Retail Banking - Interview Transcript
A UK based banking giant wants to enter the Indian market. They have hired you as a consultant to
guide them with this decision and advise them on various aspects of this move.
Foremost, I’d like to know more about the client to evaluate their entry into the Indian market. Is
the client an investment bank or a retail bank?
The client is into Universal banking i.e. they have both investment and retail banking arms.
Can you tell me more about the core strong business areas of the client?
The client has a strong presence in the retail banking business. It is the market leader in retail
banking in UK, Belgium, Netherlands, Luxembourg, Germany and Austria. Personal loans and
business loans for small and medium enterprises has been a big driver of its growth globally.
Alright, in that case, I believe that the client should probably enter the Indian market with an initial
focus on retail banking. The client clearly has a lot of expertise in this segment and can efficiently
leverage on its strengths to make an impact in the Indian market. However, I’d also like to look at
the Indian market before making this recommendation and first gauge whether entering the Indian
market in itself makes good business sense.
The industry is characterized by significant competition from numerous public sector banks, domestic
private banks and other international banks like the client; besides the numerous smaller scheduled
and co-operative banks throughout India.
That’s not very encouraging for the client as it might significant barriers in penetrating the market.
However, this does not necessarily mean that the competition is fierce in all services. As I understand,
most of the business in the retail banking industry is currently generated out of
corporate and consumer loans where banks primarily cater to the larger corporate and the upper
classes of the society. Would you agree with me?
That’s right but I am not quite sure where this is leading. Please make your point.
Sure. I was trying to explore was the presence of untapped opportunities for the client in the market.
As you had mentioned earlier, the client has a strong presence in the personal and business loans
business for small and medium enterprises. However, the other banks in the Indian
banking industry focus primarily on the larger enterprises. This means that the client can strongly
leverage its core expertise in the Indian market and tap into the huge market of SME enterprises
Okay, that sounds reasonable. How would you ascertain the attractiveness of the market?
Okay, I follow your arguments now. Do you see any other roadblocks besides competition for the
client’s growth prospects?
Foremost, the market should have attractive growth prospects in the near future. Can you help with
an estimate of the growth projections in the Indian retail banking industry?
I believe the existing regulations in the banking sector significantly restrict the number of branches
foreign banks can operate and it is very difficult for them to get the authorization for every new
branch. This would pose a serious bottleneck to the client’s growth
The retail banking industry is booming ever since the liberalization of the economy was initiated.
The industry is expected to grow at a CAGR of 28% to touch a figure of INR 9,700 billion by 2010.
So would you recommend the client to enter India?
The industry shows quite promising growth prospects and definitely looks attractive for the client to
enter. Can you tell me something about the degree of competition in the industry?
(C) Consult Club, IIM Ahmedabad
Yes, I believe the Indian retail banking business holds immense potential and based on this discussion
about the market, the competition and the clients existing core businesses and strengths, I’d make a
favourable recommendation. The regulatory restrictions exist but the presence
of numerous other international banks like HSBC, Standard Chartered Bank, Citibank; I believe the
opportunities surpass the threats. Also, I might sound too pragmatic but given the pace of India’s
liberalization and development, I would definitely expect the regulatory restrictions to get relaxed in
the near future.
2016-17
29
New Market Entry - Retail Banking
UK based banking giant wants to enter Indian market. Objective is to asses the market and to advise an entry strategy
Interviewee Notes
• Clarifying questions on
client industry and core
competencies
• Questions on market trends
to understand future
prospects of the industry
• Assessed the competition by
seeking information on
existing players in the
market
• Touched upon regulatory
issues in the market
Broad Approach:
• Covered four major
aspects such as target
industry segments and
growth prospects,
competition, client core
competencies, Entry barriers
Case Facts
•Client into universal banking i.e.
both investment and retail banking
•Market leader in retail banking
business in UK, Belgium,
Netherland, Luxembourg, Germany
and Austria
•Client has core competencies in
personal and business loan for
small and medium enterprises
•CAGR of retail industry is 28%
•Highly competitive industry with
presence of public, private and
foreign banks
Approach/ Framework
New
Market
Entry
Customer –
New
Market
Product
Segments
Customer
Expectation
Needs
Available
Products
Profiling
Identify
Gaps of
above 2
Company
Product
Offerings
Industry
Competit
ors &
Share
If Yes,
How?
Vision
Goals
Size &
Growth
Objectives
Client’s
Target
market
share
Entering
Strategy?
Resources
– Capital,
Technology
& Labour
SWOT
Analysis
Our
Strengths &
Strategic
Assets
Barrier to
Entry/Exit
Market
Share
Our
Estimate
of
Market
Share
No
Start
from
Scratch
Acquisition
Joint
Venture
Recommendations
•
•
•
As the core competency of client is retail banking, they should first focus on leveraging that in Indian market
Competitors largely focus on loans to large scale enterprises, Client can leverage their core competency by providing loans to small and medium scale enterprises
Enter the market focusing on retail banking and leverage expertise on personal and business loans for small and medium enterprises
Interview Summary
Identified opportunities in the target market, mapped it to the core competencies of client. Assessed competition and suggested focusing on services which does not majorly overlap with
competitors.
Observations/Tips/Suggestions
After making a recommendation to enter to the market always suggest a full blown strategy on how to establish in the market, how the client should attract the customers, additional services to
mitigate competition etc., This will further strengthen your recommendation.
(C) Consult Club, IIM Ahmedabad
2016-17
30
New Market Entry - Diagnostic Chain - Interview Transcript
Interviewer: A diagnostic laboratory chain based in America wishes to enter the Indian market.
What are the factors which you would look into in order to advise them?
Interviewer: That sounds interesting. Tell me something more about the fixed costs and other details
the company should consider before launching services in India.
Candidate: Before I start, I would like to know more about the kind of operations this lab
undertakes. For instance, is it a general-purpose health laboratory or does it specialize in certain
areas of health?
Candidate: Well, the sourcing of the technology will have to be thought of, as also the regulatory
regime regarding investment in health infrastructure in India. Tie-ups with big hospitals will need to
be explored as the first step toward gaining a foothold in the diagnostic laboratory industry, since
trust would be of paramount importance when it comes to health-related matters. Subsequent to that
of course, the client may want to extend operations to capture higher volumes.
Interviewer: Well, it basically tests patients’ blood and urine samples for diseases as wide-ranging
as cancer, AIDS, diabetes, hepatitis etc. So you can refer to it as being fairly general in its
operations.
Candidate: And what is the nature of technology used in the labs?
Interviewer: They use the latest technology, the very cutting-edge.
Candidate: Okay. And lastly, what is the modus operandi of these labs by way of getting clientele.
Do they advertise or are they prescribed to patients by doctors in hospitals when the former need
tests to be performed?
Interviewer: These labs are fairly high-end and use the latest technology. So the main source of
revenues from us is the hospitals which recommend patients to us.
Candidate: Okay. To start my analysis, I would try and look at the nature of health services
industry in India and compare it what exists in the United States. In the course of so doing, I would
need to examine and compare the demographics, purchasing power and health infrastructure of
the 2 countries, amid other factors. Does that sound okay to you?
Interviewer: That sounds right. All I want from you is an enumeration of the various factors you
would want to consider, just that.
Interviewer: What about rural areas?
Candidate: In rural areas, there is huge scope for such labs because of two reasons. One- the large
number of people residing in rural areas. Two, the huge investments that rural health-care has seen in
the last few years. However, there are certainly problematic issues as regards operating a diagnostic
laboratory in the rural areas. Firstly, for such labs to be successful, strong backward and forward
linkages with key infrastructural elements covering health as well as other fields are required. For
instance, if there are no functioning hospitals, the labs will be of no use to patients.
Similarly, the sourcing of technical equipment, medical supplies etc. to labs requires well-functioning
roads, communication networks etc. Secondly, and perhaps most importantly, the nature of health
services which would be in demand may be very different from that of the services demanded in
America.
Interviewer: Different in what way?
Candidate: Typically, the nature of health ailments people in rural India will face will be very
different from that of those faced by Americans because of the vast difference in lifestyles. So, the
client will need to gauge if it is capable of catering to these widely different needs in a cost-effective
manner.
Interviewer: Good. That will be all.
Candidate: Okay. In keeping with what I said just now, I would like at the following. First, I would
look at the kind of market India possesses as far as diagnostic laboratories are concerned. In
relation to this, I would divide the market into urban and rural markets. In urban areas, I would
examine the kind of labs which currently exist and the nature of clientele they cater to. I would try
and explore how the patients are recommended to these labs viz. is it by the hospitals/doctors or
is word-of mouth ‘publicity’ important.
Interviewer: Okay. What other things?
Candidate: I would also look at prevailing competition from the point of view of the nature of
services that they offer. Such analysis will help in figuring out the competitive advantage our client
enjoys by way of tests not performed by other labs. Also, it would be important to find out about
the range of incomes we would cater to. For instance, we could depend on high volumes based on
low margins or on high margin low volume based services. While in the former, specialized
services would not be required and the client’s core competencies would not be the revenuegenerators, the high fixed costs of opening labs makes me believe that a high volume model may
in fact be feasible. On the other hand, the lab could service high-end clientele and use its
expertise in health matters relating to ‘rich’ and upwardly mobile lifestyles.
(C) Consult Club, IIM Ahmedabad
2016-17
31
New Market Entry - Diagnostic Chain
Client wants to enter into Indian Diagnostics space. The objective is to analyze market in terms of cultural, regulatory and customer preparedness
Interviewee Notes
• Identify current client
location and market
• Clarifying questions on
client industry and target
market
• Understand technology,
operations, market
positioning
• Questions on purchase
behaviour to understand
customer behaviour
Broad-approach
• Considered 4 different
buckets to understand
market dynamics,
competition, entry strategy
and financial strength
• Identified purchase drivers –
Price and availability
• Analysed competition and
demography of customers
• Understand cost structure
• Study mass market vs niche
playing position
• ID cost structures & BEV
Case Facts
• Client is cutting edge latest
technology in the US
• Tests blood and urine samples for
diseases – Cancer to Aids, hepatitis
etc.
•Mass player in blood test, no
niche as such
•Rely on hospitals to promote
testing and acquire customers
Approach/ Framework
New
Market
Entry
Customer –
New
Market
Product
Segments
Customer
Expectation
Needs
Available
Products
Profiling
Identify
Gaps of
above 2
Company
Product
Offerings
Industry
Competitors
& Share
If Yes,
How?
Vision
Goals
Size &
Growth
Objectives
Client’s
Target
market
share
Entering
Strategy?
Resources
– Capital,
Technology
& Labour
SWOT
Analysis
Our
Strengths &
Strategic
Assets
Barrier to
Entry/Exit
Market
Share
Our
Estimate
of
Market
Share
No
Start
from
Scratch
Acquisition
Joint
Venture
Recommendations
•
This case did not have a definite solution, more of capturing factors to be considered before entry. Candidate did a good job to capture most factors in terms of influencers, purchase
frequency, market segments willingness to pay.
Interview Summary
The interviewer was happy with the overall analysis. But the candidate could have consider all possible solutions.
Observations/Tips/Suggestions
•
•
•
•
Niche positioning or acting as technology partner with existing players or hospitals could have been considered as an entry point
Always come up with all possible solutions and eliminate based on feasibility
Try to back up the entry strategy with cost benefit analysis
The candidate could have given an high level entry strategy and idea of implementation which would have added more value to his arguments
(C) Consult Club, IIM Ahmedabad
2016-17
32
New Market Entry - Household Furniture - Interview Transcript
Our client is a manufacturer of furniture sold to corporate offices – he wants to move into the
household space. Guide him as to whether this is the right move or not.
Suffices to say that the household market is pretty large and is growing rapidly. There is not a lot of
difference in the actual products sold to the 2 markets. However, household customers like to view
the furniture exhibited in a retail store before buying.
Reiterated my understanding of the question.
First up, I would like to understand the objective of entering the household market
Since our present model is door delivery, I shall assume that we do not have a retail presence.
However, these retail stores can be set up by making investments. Is the client capable of making such
an investment?
The objective is to increase revenues
Yes, the client’s financials are in good shape. What else do you think can impact entry?
I’d also like to know more about the client – business model, scale of operation and geography.
The client is a mid-level regional manufacturer – majority of clients are in Mumbai. Business model
consists of both manufacturing and door delivery.
I think that the client’s core competencies will not be of much use in the household market – there is
not much scope for usage of relationships built. Prevalent of high competition in metropolitan cities
such as Mumbai can also be a factor.
Is there any core competency that the client has developed in his operations?
That’s right. In light of the points you mentioned, what would you recommend?
Yes. Core competency is reliability – has built trust and reputation through good working
relationships
I would recommend against entering the market mainly because of 3 reasons – non-usability of
competencies, significant investment needed to set up retail stores and presence of high competition.
I would like to structure this problem as follows: identifying new market’s customer segments,
need gaps, presence of client capabilities to plug this need gap and impact of competition
Good. That will be all.
Let’s focus on the first two buckets that you mentioned.
Right. How big is the household market and how is it growing? How different are the products sold
to corporate customers and households? Is there a difference in service delivery?
(C) Consult Club, IIM Ahmedabad
2016-17
33
New Market Entry - Household Furniture
India based corporate furniture manufacturer looking to enter the household furniture market. Objective is to evaluate entry.
Interviewee Notes
• Clarifying questions on
client objective, client
industry and core
competencies
• Questions on market trends
to understand future
prospects of the industry
• Assessed the competition by
seeking information on
existing players in the
market
Broad Approach:
• Structured the problem
into evaluating presence of
demand gap and supply
capabilities on the part of
the client; integrated
competitor presence into
framework
Case Facts
•Furniture manufacturer in
Mumbai – sold to corporate clients
•Objective is to increase revenues
•Current business model is based
on low cost manufacturing and
door delivery (no retail presence)
•Core competency is reliability –
has built trust and reputation
through good working relationships
New
Market
Entry
Customer –
New
Market
Product
Segments
Customer
Expectation
Needs
Available
Products
Profiling
Identify
Gaps of
above 2
Company
Product
Offerings
Industry
Competit
ors &
Share
If Yes,
How?
Vision
Goals
Size &
Growth
Objectiv
es
Resources
– Capital,
Technology
& Labour
SWOT
Analysis
Our
Strengths &
Strategic
Assets
Barrier to
Entry/Exit
Market
Share
Our
Estimate
of
Market
Share
Client’s
Target
market
share
Entering
Strategy?
No
Start
from
Scratch
Acquisiti
on
Joint
Venture
Recommendations
•
•
•
Moving into household furniture would require setting up of retail stores – which involves significant restructuring of business model
Working relationships (core competency) do not count for much in the household space as repeat business has a longer time cycle
Therefore, recommended not to enter the market
Interview Summary
Identified the differences in customer preferences between the 2 markets, required changes in business model and the relevance of core competency in the new market
.
Observations/Tips/Suggestions
The major question here was that of core competency – once that was asked and applied to the new context, the case was half solved.
(C) Consult Club, IIM Ahmedabad
2016-17
34
Growth Strategy - Overview
Growth strategy cases are generally open ended and have enough room to test the candidate for both creativity and comprehensiveness of
approach.
Approach/ Framework (Broad) for the Case Type
Cross-selling
Increase volume per
customer
Increase revenue per
customer
Loyalty programs
Bulk Discounts
Increase price
New geographies
Revenue Growth
New markets
New customer segments
New product launches
Increase number of
customers
Improve marketing
Existing markets
Improve access / distribution
channels
Framework summary
Key Questions
The growth in revenues is broken down into growth in revenue/customer and
number of customers and then further methods like increase of prices, new
products, new geographies etc are utilized to achieve the desired growth
•
Tips
•
•
Always ask probing questions immediately around time-frame, and
quantification of impact. E.g. If the case interviewer states “XYZ wants to
increase it revenues quickly.”
The first questions should be “What magnitude of increase is being
envisaged?” and “What is time-frame to achieve this impact?”
(C) Consult Club, IIM Ahmedabad
•
•
•
What are the major revenue streams, and what percentage of the total revenue does
each stream represent?
Does anything seem unusual in the balance of the percentages for this firm compared
to the industry?
Have the percentages changed lately?
What are the companies trends in terms of revenue over the last 3 years?
2016-17
35
Growth Strategy - Telecom Market - Interview Transcript
The client is a telecom service provider and wants to grow in a saturated telecom market. How
would you go about this?
I would like to start by understanding the telecom market in India, looking at the revenue drivers
and advise the client on which ones he could use. I understand that the telecom sector works by
hiring its services from tower operators and then use their own brand name and services to
generate revenues.
Interviewer: True. Our client too hires such service at market rates.
Okay. Then I shall explore the meaning of saturated market. Has the client explored all
geographies? Like the whole of rural market? I recently read that we have about 680 million
telecom connections. So, I believe there is still some untapped market to explore.
Right. There is an untapped market. Let us go on and say the rural market has been penetrated
to the extent possible and they have probably done what they could in that respect.
Okay. So assuming a saturated market, we should look at increasing revenue from existing
consumers. We could analyse the existing calls being done and could think of schemes like STD
call rate packages, local call packages, local and STD SMS packages that suit to the area to
increase per user usage. The idea would be to have lower rates more than compensated by
higher usage.
Good, what else?
We could look at various value-added services like revenues through internet services on
mobiles. Having different plans and offering better speeds, we can get more consumers to use
internet on their mobiles. Also, with 3G technology, mobile internet will surely be a huge source
of revenues.
Good. Anything else?
Also from games and applications. There are many businesses coming up in the area of mobile
gaming and product development of applications. We could buy them and use them as sources
of additional revenue.
Okay, thanks for the inputs. We will now move to the next interview. Thanks for your time.
(C) Consult Club, IIM Ahmedabad
2016-17
36
Growth Strategy - Telecom Market
The client is a telecom operator in India and wants to increase his revenues and grow in this saturated market. What would your
recommendations be?
Interviewee Notes
Case Facts
• How does the telecom
market in India is
performing? Is it growing?
• What are the possible
revenue drivers for the
client?
• What is meant by saturated
market? Maximum
penetration or saturation in
economy or any other
factor?
• Rural market has been
penetrated to the maximum
extent
• Client operates by hiring services
from tower operators and
provides various services to earn
revenues
• Rural market has been penetrated
to the maximum extent possible
Approach/ Framework
Increase
revenue/ user
Increase
Revenue
Cross-selling
Tying up with mobile
manufacturers and so on
Increase
usage/user
Loyalty
programs
Loyalty benefits, free talk-time,
discounts etc
Increase
price
Bulk and other
Discounts
Discounts on high usage, benefits
on referrals etc
New
geographies
Rural/urban India, lowlypenetrated states, outside India
etc
New customer
segments-
Age based(Youth, old), Usage
based: Loyal vs first timers etc
New product
launches
Value added services, games and
applications, internet etc
Improve
marketing
Celebrity endorsements,
innovative ad campaign etc
Improve
channels
Strategically located stores, better
availability in existing stores
New
markets
Increase # of
customers
Existing
markets
Recommendations
•
•
•
Client needs to increase revenue from existing customers which can be done through analyzing services like STD calls & SMS packages to increase usage/customer
Offering value added services like high-speed internet services, 3G could be a huge source of revenue
Generate additional revenue sources by buying businesses concerning mobile gaming and application development
Interview Summary
This is a revenue growth case where interviewee should eliminate the option of increasing market penetration by asking directed question about the meaning of a saturated market in the
beginning itself. This tests candidate’s ability to quickly come up with new methods of revenue growth in a saturated market.
Observations/tips/Suggestions
•
•
•
Candidate should have clarified upfront the potential targets and time period for revenue growth
Increasing revenue by expanding in new geographies could have been discussed by asking the client’s objective of growth in the beginning as pertaining to just India or other geographies
Multiple options for increasing usage/customer s could have been mentioned in addition to just mentioning analysis of STD calls and SMS packages
(C) Consult Club, IIM Ahmedabad
2016-17
37
Growth Strategy - Boiler Company - Interview Transcript
You’ve been approached by a boiler company and they want your help in devising a growth
strategy.
I’d like to confirm that the company wants to increase its sales drastically and preferably its
profits too.
Now that we have eliminated some of the options, I would like to focus on current market and
consolidation of the existing product line. Specifically, I would like to know the individual products on
offer, margins to be made on each of them and their individual growth potential.
I think you have figured it out. What would you like to suggest to the company?
That’s right.
Before we take a look at the company specific information, I would like to know more about the
industry – current trends, any new technological advances, nature of competition etc.
Boiler companies typically have a line of products based on capacity and fuel used. There are no
new advances in recent times. 80% of the market is organized and main customers are the
thermal power plants.
In my opinion, company should focus on the products which promise growth and also offer higher
margins. Possibly, they are currently providing a standard capacity type or a fuel type to most of the
customers. They should rather look at the individual customer needs and design their offer
accordingly. This benefit to customer would also enable them to command a greater margin on each
product sold. Sales force incentives could also be aligned with customer-centricity in terms of correct
product requirement assessment and supply. In short, focusing on the right product is the key for
growth for our client.
I think the analysis is sufficiently thorough. We can stop here. Thank you.
A company can grow either by expanding market share in its existing market, entering new
geographical markets, coming out with new products or by acquiring another company. I would
like to know more about this company. What this company’s products are? Who are its customers
are? Where does it operate? Its access to cash/financing resources? Its competitors?
It’s a medium size firm – about $100 MN in sales, operates primarily in India. It’s the biggest player
in the organized segment which is approx. 80% of total market. Its main customers are thermal
power plants, etc. Products can be classified on the basis of capacity and fuel for the boilers. It
doesn’t have much cash or technology. It’s a midget compared to global players in the same
industry
Well, not being cash-rich restricts the firm from exploring various growth options. For instance,
new product development seems to be out of question given no access to technology advances.
Similarly, exploring new geographical markets, even overseas markets, would be out of reach
presently as there is dearth of capital. Acquiring another company is a possibility if synergies exist
that can to offer significant benefits out of the merged entity. But, we also must keep in mind the
results realization lag in case of a merger. Again, M&A activity presently does not seem feasible.
Sounds reasonable
(C) Consult Club, IIM Ahmedabad
2016-17
38
Growth Strategy - Boiler Company
You’ve been approached by a boiler company and they want your help in devising a growth strategy.
Interviewee Notes
Case Facts
• Industry analysis – current
trends, any new
technological advances,
nature of competition etc.
• Understand client business
• Low on cash – restricts new
product development, M&A
not possible
• 80% of the market is organized and
main customers are the thermal
power plants.
• Medium size firm – about $100
MN in sales, operates primarily in
India. It’s the
• biggest player in the organized
segment which is approx. 80% of
total market. Its main customers
are thermal power plants, etc.
Products can be classified on the
basis of capacity and fuel for the
boilers. It doesn’t have much cash
or technology. It’s a midget
compared to global players in the
same industry
Approach/ Framework
Increase
revenue/ user
Increase
Revenue
Cross-selling
Machines/devices across value
chain
Increase
usage/user
Loyalty
programs
Discounts for repeat purchase for
new plants
Increase
price
Bulk and other
Discounts
N/A
New
geographies
New markets beyond India
New customer
segments-
Diversify into unorganized
segments
New product
launches
Customized and tailored solutions
Improve
marketing
Highlight USP in markets
Improve
channels
Build relationships with purchase
managers
New
markets
Increase # of
customers
Existing
markets
Recommendations
•
•
•
Company should focus on the products which promise growth and also offer higher margins
look at the individual customer needs and design their offer accordingly
Sales force incentives could also be aligned with customer-centricity in terms of correct product requirement assessment and supply
Interview Summary
This is a revenue growth case where interviewee should give a broad framework with different options before filtering down to the recommended option.
Observations/Tips/Suggestions
•
•
Candidate should have clarified upfront the potential targets and time period for revenue growth
Candidate should have broadly tested each option with the interviewer instead of simply mentioned them all.
(C) Consult Club, IIM Ahmedabad
2016-17
39
New Product Entry - Overview
In a new product entry case, a company is likely to aim for introducing a completely new product in a market or expand its existing product’s
reach in a new geography. A interviewee is expected to first align on the product’s viability to succeed in the market followed by identifying the
correct price point and target market and finally recommend levers that can drive product success in the market.
Approach/ Framework (Broad) for the Case Type
New Product
Introduction
Establish Value
chain
Initial Investment
Self Financed
Debt
Financed
Equity
Financed
Production
challenges
Profit and Break
even point
# Units sold
Distribution
Challenges
Price per unit
Variable cost per
unit
Marketing
challenges
Framework Summary
Key Questions
Establish Value Chain
A company can either introduce a product in a market
where it has no presence or can extend product line in its
current market. Launching a product in a market with no
presence pose not only operational challenges but
viability of product’s success in the market also needs to
be explored. Extending the product line in current market
may require looking into cannibalization while doing a
feasibility check of product in the market and how the
current value chain can be leveraged in making the
product available to its customers.
•
•
•
•
Tips
•
•
•
•
•
Clarify objective, especially focus area of a new
product entry case
New product entry cases might involved multiple
issues linked to it and hence both depth and the
breadth needs to be covered for exhaustiveness
(C) Consult Club, IIM Ahmedabad
•
•
•
Fixed cost
What is the purpose of the new product
introduction – capture increased market
share, entry into a new business line, profits,
build brand?
How big is the market for the product?
Segments in the target population?
What is the price at which the product has
been introduced?
Are there any barriers to entry into the new areas?
Number and type of competition? Market share?
For distribution etc. do you do it in-house or contract it
out?
Profit or Break Even Point
•
Expected time before break even? Should not be too long
a time
Initial Investment
What is rate of interest?
Do sales cover the interest expense?
Expected period of payback?
2016-17
40
New Product Entry - Anti Smoking Pills - Interview Transcript
The client is in the business of making anti smoking pills - the way we have those patches and
lozenges in the market to curb the urge to smoke. The client wants to sell it at a premium price. You
have been hired to find out if the product can be introduced in a country like India - and if so - what
is the expected target market, market share and a feasible price at which the drug should be sold.
I would like to confirm if I have understood all the critical aspects of the client’s situation. Our client
is in the business of making anti-smoking pills that reduce the urge to smoke for smokers. We need
to do see if the product is feasible to be launched in India and evaluate the market characteristics
such as size and client’s share based on the price.
That’s right. Now that you’ve understood the situation well, how do you propose going about the
solution?
Since this is a new product launch, I would like to structure my discussion around the product
characteristics (development and customization) for the Indian market and then move on to the
launch (competition, distribution and promotion) part of the case.
This sounds fine to me. Also, please note that this product is not entirely new; it has been
introduced in other countries already.
Ok, that experience should definitely help us. To start with, can you tell me something more about
the product? How is it different?
Unlike the lozenges or patches, this product is completely nicotine free - it is 5 times more effective
as proved by lab results and 50% of the test results responded to the pill (which in this industry is an
extremely high number thus indicating success). Moreover, it is a drug that cannot be sold over the
counter – it requires a prescribed dosage given by the doctor. It is to be taken for 3 months daily, 3
times a day.
That is good. It gives us the advantage to position our product as superior due to the higher efficacy
of treatment. I would like to know take up the competitive scenario next so that we can decide the
price before determining the overall market size.
That’s a fair point. So, there is no similar product in the market. Cheaper products like lozenges exist
but they contain nicotine and sell for Re. 1 per unit.
Hmm… that is good. In our case, let us assume we did this and came up with Rs. 8 per unit. You
think that sounds reasonable?
I think a price of Rs. 8 per pill is feasible because of the lab results - people will be convinced that it
is a medically prescribed drug and since it is a pre-scheduled dosage for 3 months, results are
guaranteed. We can also stress on the on nicotine bit and indirectly position this as a life saving
drug.
Ok, let’s estimate the market size assuming we decide to price it at Rs. 5 per unit.
Let’s take Delhi as a base case. Population: 150 lakh. Target segment: 40% of them smoke * 20% of
them would want to quit smoking * 75% can afford (Rs. 8 * 3 * 90 = Rs. 2160 drug to quit) = 9 lakh
people or INR 9 * 2160 ~ INR 200 crores. We can now assume that this drug will reach out to 25% of
the population across India (urban + rural since its effective and one-time payment to quit
smoking), which means the total market is 200/150 * 0.25 * 10,000 lakh = INR 3,333 crores.
Very interesting. What will drive the market growth our market share?
Candidate: The market growth rate will be affected by the sales and distribution coverage,
willingness of people to quit smoking and addition of new smokers who would want to quit after
sometime. We can look to capture about 80% of this market eventually, assuming no major
competitor enters the market, which can be prevented by IPR support. Since this is a prescription
drug, the bulk of the promotion costs in this industry are in targeting the doctors and chemists via
direct sales agents or Medical Representative to convey the pros and cons for them to a) prescribe
the drug and b) keep it in their pharmacies. This will drive our market share from the potential
market size.
Good. What about the other 20%?
Candidate: I am assuming that the remaining 20% will comprise of smokers who are unwilling to
quit smoking (10%), perceive the price to be high (5%) or are not aware of the product (5%). This
percentage can decrease as we move further in the product life cycle and the product becomes well
established through marketing and promotion efforts.
Good. Any other costs/concerns that you would like to address?
What are the other countries where the product has been introduced? How receptive have the
customers been in those countries?
The other countries have smokers who are quite similar to the Indian consumers. The product has
been quite a success.
Ok, this means that the target audience will be receptive to the product and we can assume that
there is a strong market for the same. I will now proceed with the estimation of the price and
market size. There are two ways that we can price a new product in a non-competitive market: Cost
based and ‘willingness-to-pay’ based. In the first, I would calculate the cost to company and charge
a margin on the same while in the second case; I would calculate the propensity of the consumer to
pay for this drug. This would vary with my target segment chosen. Ideally, we should be able to
calculate the optimal profit case by considering the trade-off in sales volume vs. price for various
price points. The solution will also be influenced to an extent by the growth rates of the different
target segments overall, say movement of people to upper-class from lower-middle class.
(C) Consult Club, IIM Ahmedabad
The training costs for the direct sales agents will also be critical as this is a new product and local
agents would need an in-depth understanding of the product. No. of sales people can be calculated
by total workload method: Assuming Doctor/Population ratio and say 3 doctors per day and repeat
visits every 2 months; and Chemist/Population ratio and 3 chemists per day and repeat visits every
15 days. The supply chain will have to be considered - the warehousing, distribution network, retail
chains etc. We can perform the cost benefit analysis for using middle distributors v/s direct
distribution.
Good, I think we have covered the different aspects of the case. Thank You.
2016-17
41
New Product Entry – Anti Smoking Pills
The client is in the business of making anti smoking pills - the way we have those patches and lozenges in the market to curb the urge to smoke.
The client wants to sell it at a premium price. You have been hired to find out if the product can be introduced in a country like India - and if so what is the expected target market, market share and a feasible price at which the drug should be sold.
Interviewee Notes
Case Facts
• New product launch – Anti
smoking pills
• Country - India
• Premium product- requires
premium price
• Product characteristics
(suitability for Indian
market) & Product launch
(competition, distribution
and promotion)
• How is the product different
from existing? products
• What is the competitive
scenario in the market
• Product has already been
introduced in some
countries
• Client is in the business of making
anti-smoking pills
• Client wants premium price for its
product
• Client wants to find product’s
potential in India – target market,
market share and feasible price
Approach/ Framework
Introduce Antismoking pills in
India
Initial
Investment
Profit and
Break even
points
Establish value
chain
Distribution
challenges
The drug cannot be sold as OTC and would
require prescription. Medical
representative and direct sales agents need
to be hired who can push the product to the
doctors who in turn will prescribe it to the
patients.
Client needs to invest in training of its sales
reps so that they can convince doctors with
product’s value proposition
Product
marketing
Potential
Revenue
Target market
size
Cost
Price
Filters
Number projections
Population base (Delhi)
150 lakhs
% population who smoke
% smokers who want to quit
% quitters who can afford the product
40%
20%
75%
Potential customer base
Potential revenue
150*.4*.5*.75 = 9 lakhs
9*2160 = 200 Cr
Revenue projection across India (25%
penetration)
200/150*0.25*10000 =
3333 Cr
Recommendations
•
•
•
Price point should consider both customer’s willingness to pay and product’s incremental value proposition over existing products in the market
IPR/ Patenting the drug can prevent competitors to enter market and facilitate capture of market share
Spend more on training the medical representatives and direct sales agents to push the product to the doctors who in turn will prescribe it to the patients
Interview Summary
This is new product entry case where the interviewee should not only check products success viability in market but also touch upon operational issues
Observations/Tips/Suggestions
•
•
•
Marketing of the product can be briefly discussed since the product charges a premium price to its customers
Long term product goals and ways to improve product penetration across its lifecycle could have been discussed
Candidate should have clarified upfront if the product has already been launched in other countries
(C) Consult Club, IIM Ahmedabad
2016-17
42
New Product Entry - Automobile Service Station - Interview Transcript
You are having tea with Mr. Ratan Tata. He has just returned from Germany where he saw third
party car service stations which were doing very well. So, he is thinking of opening a chain of such
stations in India. You need to give him your thoughts and make a pitch from our side for helping
him with the project.
Ok. Now I want you to make a grid of the dimensions that you’ve mentioned and figure out where our
competitors lie and where we should go.
(Starts drawing a 2X2 matrix)
I’m not very sure of what you mean by third party service stations. Can you explain a little?
Let us club convenience with quality.
To service a car there are service stations. They can be authorized stations like the chain that
Maruti has or they can be local garages. The third type, which is currently missing in India, is an
independent chain of service stations which will service any brand. These are third party service
stations
Ok. This is a new business that Tata would want to enter. I’d like to look at a few things while
considering the new venture :
•Tata’s final aim - do they have a target profit /market share/return on assets as their target from
the venture
•Market scenario – growth & size, competition
•Tata’s capabilities – financial capability, expertise in area, synergies with other businesses
Tata is a big & profitable company, they want as high profits as possible from the venture. Also,
they have no constraints with regards to finances. They build automobiles as you know and have
authorized service stations for their automobiles.
So, the aim of Tata is high profits and they have sufficient finances and expertise in the
automobile area. I’ll go on to look at the automobile maintenance market. Currently in India there
are 2 kinds of garages – the local ones and authorized service stations. So, when we enter the
market, would we be servicing all kinds of brands and providing a full range of services?
Yes. All brands and full range of services.
We would need to differentiate ourselves from the 2 kinds of competitors that we have in order
to get customers.
Ok. How would you do that?
I’ll look at why a customer goes to a service station and why he chooses a particular station to go
to. A car would be taken to a service station for regular check-ups/services, in case of an accident
and maintenance when it breaks down.
Ok
Now when an owner chooses a service station he would want :
•Quality – In terms of genuine parts if replacements are done, trained mechanics, the car being
treated properly, delivery on time
•Cost – He would want the service to be as cheap as possible
•Convenience – The service station should be close or should have a pick & drop service.
There would be a segment of customers who would lay a lot of emphasis on cost while another
segment would lay emphasis on quality. In case of an accident or break-down convenience would
play a big role. Local garages will have low quality and low cost while authorized service stations
will have high quality and high cost. Also, local garages are generally more in number so would be
more convenient to reach in most cases.
(C) Consult Club, IIM Ahmedabad
We’ll just analyze the situation based on 2 parameters. Now, Tata wants to start a third party chain of
service stations which will serve all brands. If Tata targets low quality, local garages will beat them
since these garages can service all brands and charge very low unbeatable prices. Also, they would be
built at strategic locations which Tata may not be able to acquire, coming late into the market. On
comparing Tata stations with authorized service stations, Tata could stand a chance. They could
ensure quality by sourcing parts from manufacturing companies and employing well trained
mechanics. Since such a service station will service all brands it will be a convenient place to come to
for high quality services. However, the price charged will be high.
Do you think anyone will come to such a service station when they can go to a Maruti or Hyundai
authorized service station?
In India a majority of cars are Maruti and Maruti has a very good chain of service stations which are
convenient to reach and high quality. Hence, Maruti cars will definitely not come to Tata’s stations.
Other brands like Hyundai would come since their service stations are few and far apart. If Tata offers
the same quality at the same price; it might be cheaper and more convenient for consumers if Tata’s
chain has numerous stations at strategic locations.
Maruti has almost 50% of India’s car market share. Now do you think it is beneficial to set up Tata’s
third party service chain?
Owners of other brands will prefer to go to their authorized service stations as they would be more
trusted. And given such a lopsided market in favor of Maruti, it will be difficult for us to compete with
Maruti directly. So, the number of cars coming to Tata’s stations might be too low for the venture to
be viable. But, if there are expectations that many new brands will enter India as some already have,
then Tata’s venture could be viable given that these firms would not want to open a service chain of
their own due to small numbers and newer vehicles could mean that the local garages might not be
well-equipped to deal with all kinds of problems with the vehicle.
What would your final recommendation be?
My final recommendation would be to not start such a venture currently since Tata would not be able
to beat competitors on any dimension - cost or quality. However, in the near future this could turn
sustainable so an eye should be kept on this market.
Ok. Thanks.
2016-17
43
New Product Entry - Automobile Service Station
You are having tea with Mr. Ratan Tata. He has just returned from Germany where he saw third party car service stations which were doing very
well. So, he is thinking of opening a chain of such stations in India. You need to give him your thoughts and make a pitch from our side for helping
him with the project.
Approach/ Framework
Open chain of third
party service
stations
Initial
Investment
Profit and
Break even
points
Establish value
chain
Distribution
challenges
Product
marketing
Potential
Revenue
Target market
size
Customers
Cost
Price
Competition
Quality
High
Low
Authorized Service
Station
TATA would need
to be somewhere
here to compete
Local garages
High
• Client wants to open third party car
service stations in India
• Service similar to one existing in
Germany
• Independent service station which
can service any brand
Low
Case Facts
• New product launch – third
party car service station
• Country - India
• Independent service stationbrand agnostic
• Service needs – Regular
check-ups, accidents,
maintenance
• What is the client’s long
term and short term goal
• What is the competitive
scenario in the market
• 50% car market held by
Maruti whose service
stations have extensive
coverage
Cost
Interviewee Notes
Maruti has 50% share of the car
market and has extensive reach with
service stations.
If there are expectations for new car
brands to enter into the Indian
market, Client can tap into the market
with high service quality
Recommendations
•
•
Current market is too consolidated for a new player to establish itself by beating competitors on cost or quality dimensions
Opportunity available for the client in near future with entry of more number of brands and thus making the market fragmented
Interview Summary
This is new product entry case where the interviewee should clarify long term and short term objectives of the client
Observations/Tips/Suggestions
•
•
•
Service level differentiations could have been discussed to explore opportunities for the client in the current market scenario
Success factors in Germany could have been talked about before arriving at the recommendation for the client
Candidate should have clarified upfront the long-term and short-term objectives of the client
(C) Consult Club, IIM Ahmedabad
2016-17
44
New Product Entry - Application Software & Bundling – Interview Transcript
The client is a software manufacturer that offers shrink-wrapped software application products
and has grown over the last few years – mainly through multiple acquisitions. In the recent times,
their stock price has declined significantly. The sales have declined but their customer service
department has shown impressive growth in revenues over the last few months. The CEO has an
offer from OEMs (Original Equipment Manufacturers) to bundle his product with their products
and he’s unable to decide what to do. You have been hired to help him analyze the situation and
charter the path ahead.
Before I begin analyzing the case, I would like to clarify a few aspects of the case.
I see. One of the objectives of software design is to keep it simple and intuitive with in-built easy-touse help. It appears to me that the company’s products could improve on this dimension. I suspect
that some of this is the result of integrating technology from aggressive acquisitions that we have
made in recent years. I see broadly three ways to integrate acquisitions. First, the company can
simply add an acquired product as a new standalone offering in its product portfolio. Second, the
new technology from acquired companies could be utilized to add new features to the existing
products of the company. Third, the existing products of the company could be replaced by superior
acquired products. Can you help me understand what approach out of these has the company taken
for integration?
Sure, go ahead.
That’s a good way to think about it. In this case, the company has primarily followed the first two
approaches. There has been both a portfolio expansion as well as product enhancements.
You mentioned that the sales have declined recently but the customer service revenues have
shown significant growth. How significant has the decline in sales been? Also, does the company
have other sources of revenues besides product sales and customer service?
I suspect that the rising customer service revenues actually point to poor integration of the
acquisitions. There are two separate aspects to a successful integration. First, the product portfolio
has to be rationalized at a technical level. If the company offers multiple offers to accomplish the
same goal, it tends to be confusing for the customer. Similarly, products need to have a consistent
look and feel so that it is easy for customers to navigate and configure various features. Second, the
sales and marketing team needs to be well trained about the company’s evolving product portfolio.
They should be able to help customers make good choices for their needs. Based on the type of
customer service incidents, it appears that there is scope for improvement on both fronts.
Customers are finding it difficult to configure and navigate the company’s software products. Also,
acquisitions should have led to an increase in sales. But stagnant sales point to deficient sales and
marketing function. I think without addressing these integration issues, it would not be meaningful
to pursue the OEMs offer. It might lead to further dissatisfied customers.
The sales have not declined by much but they have been stagnant amidst a growing sector. The
customer service revenues have been increasing steadily over the last year or so, though. These
are the only two sources of revenue for the company.
Thank you for the clarification. I would also like to understand the type of offer that OEMs have
made. What is the revenue sharing model going to be, will there be a fixed payment or will it be
based on profit sharing on per unit basis?
The OEMs are desktop and laptop computer manufacturers who are offering a pre-installation of
trial versions of the company’s software on some of their product lines. In return, the company
will have to pay a fixed fee to the OEM for every new pre-installed computer sold and a 20%
commission for every user who moves from the trial version and purchases a full version of the
software.
I understand. This implies that the OEMs’ proposal can help us expand our sales volume, though
at lower margins. To be sure that this helps address the core issue that we are facing, I’d like to
analyze the current profitability situation of the company. As you mentioned, the customer
service revenues have been rising. Do we have any data on the types of customer service incidents
that are commonly seen here?
So what would your advice to the CEO be?
I would recommend that the sales force be effectively trained. There needs to be a strong
mandatory training program for the sales staff to make them fully conversant with the company’s
products. I’d also recommend that the redundancy in the product portfolio be reduced so as to
alleviate customers’ confusion. A technical push should be launched to make the software look and
feel consistent across products. This should improve customer satisfaction, drive repeat business
and improve sales. As for the OEMs offer, I would advice to hold off until these core issues are
addressed.
That seems fair. I think you have identified the main issues in the case and provided crisp
recommendations. We’ll close here. Thank you.
I do not have specific numbers on customer service requests. However, I can tell you that a major
category of service requests is for software configuration issues. Sometimes, the company’s
software applications provide multiple ways to accomplish the same goals. A significant number
of callers seek help on how to navigate different softwares.
(C) Consult Club, IIM Ahmedabad
2016-17
45
New Product Entry - Application Software & Bundling
The client is a software manufacturer that offers shrink-wrapped software application products and has grown over the last few years – mainly
through multiple acquisitions. In the recent times, their stock price has declined significantly. The sales have declined but their customer service
department has shown impressive growth in revenues over the last few months. The CEO has an offer from OEMs (Original Equipment
Manufacturers) to bundle his product with their products and he’s unable to decide what to do. You have been hired to help him analyze the
situation and charter the path ahead.
Interviewee Notes
Case Facts
• New product launch –
Bundled product (hardware
and application software)
• Why is the new product
being developed?
• Will be the current problem
of declining share price be
resolved by introducing the
new product?
• What are the other potential
solutions for resolving the
current problem?
Software simplification and
efficiency in service delivery
• Client is in the business of offering
software application products
• Client wants to prevent its share
price from declining
• Client wants to explore the
potential in offering a bundled
product, along with the OEMs
Approach/ Framework
Introduce bundled
product
Initial
Investment
Profit and
Break even
points
Establish value
chain
Potential
Revenue
The bundled product may result in
additional sales for the client but it will also
lead to increased costs. The resulting lower
profits will not resolve the problem of
declining share prices.
Fixed fee per
installation
Cost
20% commission
per conversion
The client needs to re-align its acquisition
process to create simpler software solutions
and invest in salesforce training.
Recommendations
•
•
Product improvement: The various software solutions need to be integrated to offer a simplified and easy-to-use software to the customers
Service improvement: The sales force needs to be trained through mandatory programs to further improve customer service levels and drive repeat purchases
Interview Summary
This is a new product entry case where the interviewee should test the need and feasibility of launching the new bundled product
Observations/Tips/Suggestions
•
•
•
There is scope for greater analytics for unit economics e.g., expected additional sales from bundled product, additional costs, contribution margin relative to unbundled product and the
resulting impact on profitability
The link between share price and profits should have been mentioned up-front
The objective (improve profits to increase share price) should have been clarified
(C) Consult Club, IIM Ahmedabad
2016-17
46
Sales Growth - Overview
In a Growth scenario, a company is likely to aim for XX% YoY growth. An interviewee is expected to first align the growth targets, followed by
validating them, identify pillars that can support the growth targets, and finally recommend how the company can leverage/show go about these
pillars.
Approach/ Framework (High Level) for the Case Type
Grow Sales by
20% in 1 year
Explore Existing
Business
Increase Volume
Increase
Customers
Increase Prices
(contingent on
elasticity)
Explore New
Business
New Geography/
Market
Increase Product
Line
Diversify into New
Products/Services
Acquisitions/
Mergers
Increase
Basket Size
Framework Summary
A company can grow either in its existing business (provided there is scope), else explore new business. Growing in existing business may be due to market growth and/or increased market
share, hence both situations need to be explored. If the company is venturing into a new business, a feasibility check from an operational, financial, admin etc. needs to be performed in the
end.
Tips
•
•
Clarify objective, especially growth % and time period
Growth cases involve have a larger creativity component, keep options open while checking operational feasibility
Key Questions:
•
What is the expected growth of the industry. Are we targeting growth more/less/on par with that?
Existing Business
•
•
Do we have existing capacity in the plants/services to meet the increased volume or would investments need to be made?
What is the price elasticity in the market? (what is the relevance of this?) – to see whether an increase in prices in an option or not
New Business
•
•
•
•
Are there any barriers to entry into the new areas?
Number and type of competition? Market share?
Effect of substitutes and complements
Products of scope with the existing product line we have?
(C) Consult Club, IIM Ahmedabad
2016-17
47
Sales Growth - B2B Telecommunications Provider - Interview Transcript
You have been approached by the CEO of a telecommunications provider company. She is looking
to grow the sales revenue. You are hired as a Consultant to identify opportunities and
recommend a plan of action for the same
Your understanding is correct.
Our wires extend to certain hubs from where they reach select buildings. Each building may have
more than one customer.
In order to quantify the objective, does the client have any growth targets and time horizon in
mind?
Have we sold to all such customers?
Yes, they want to grow sales by 4x in one year
Ok, so prior to looking at the company specific information I would like to know more about this
industry, customers, and competitors.
Sure. In this industry B2B telecommunication provide 2 kinds of products/services. Data centre
options and wired lines. Data centre options include providing real estate space, power, HVAC
systems, connectivity, monitoring systems etc. to a customer’s data /web/application servers.
Through wired lines, customers are provided with services such as internet, ethernet, AV services
etc.
Great. Thank you for that information. So typically a company can grow through either its existing
business and/or new business. In existing business, we can look at increase number of customers,
basket size and pricing, while in new business I am thinking of options such as geographical
expansion, increasing product line, diversifying into new business, or by acquiring/merging with a
new company. To identify the best option I would like to know more about the company –
specifically its products/services, customers, current geographies, financial health, and
competitors.
It is a medium size provider - about INR 300Cr. in sales, and operates primarily in Indian metros.
It sells the products mentioned earlier to businesses which may include banks, insurance firms,
and any company that may have a server requirement and/or wired line requirements. The
client is cash strapped. It is the market leader in wired line services and 3rd in market share in data
centre services.
OK. So being cash strapped limits some of the growth options such as geographical expansion and
mergers/acquisitions. Also, in an competitive environment, price increase may not be a good
idea.
Sounds reasonable.
Actually no. We have sold only to a few customers.
OK, so as I see it. There is a potential market in the buildings that we currently cater to. Also, since
these are business customers, they may have more than one branch in a city or across cities. Have to
sold our services to all their business centers?
No, these can be good potential growth opportunities though. We can do a market sizing if time
permits. I would like you to also explore the new business options.
Sure. For this I would like to understand what kind of products/services our competitors are
providing?
So a customer can either have their own real estate for their servers (captive) or they can rent a space
(colocation) and purchase the necessary hardware & software. One of our major competitors
provides these services.
Ok. So one of the ideas that comes to my mind is providing the customer with the option of
completely outsourcing their IT requirements to us (i.e. hardware, software, management etc.). This
way not only can we sell this as a pioneer product where customers can focus on their core business,
but we also get a clear competitive advantage which can help us churn out some customers from our
competitors.
That seems to be a good idea, especially given that we already have the necessary real estate space
and hardware/software purchases would not cost us much. But do you see any concerns with
launching a new service?
Yes, I can foresee that since this is a technical product, it may be difficult to capture customers who
already have purchased the hardware/software. Also, our current sales force may not be fully
equipped to sell this kinds of a service.
Yes, absolutely. Good. Your analysis has been thorough and recommendations are innovative. Thank
you.
Thank you
After eliminating some options. I would like to focus on the remaining options of growth. I would
like to know the growth potential of individual products in terms of # of customers, basket size.
Sure. There is potential for growth in wired line services which I would like you to think about.
However, there is very limited growth potential in data centre services with our current portfolio.
OK. So let us start with wired line services. As I understand, the client has laid down physical wires
in the cities that it operates in. It leverages these wires for providing wired line services. Is my
understanding correct? Also, could you help me with understanding the coverage of customers
through these lines.
(C) Consult Club, IIM Ahmedabad
2016-17
48
Sales Growth - B2B Telecommunications Provider
You have been approached by the CEO of a telecommunications provider company. She is looking to grow the sales revenue. You are hired as a
Consultant to identify opportunities and recommend a plan of action for the same
Interviewee Notes
Case Facts
• 4x growth in 1 year
• Understand existing product
and service offerings clearly
• Clarify client’s value
proposition (needed for
churn strategy)
• Current revenue = INR 300 Cr.,
Geographical sales force
distribution
• Client provides real estate,
power, AC, racks etc. to store
customers’ data servers in
Mumbai, Delhi
• Additionally client provides
telecommunication services
(internet, AV products etc.)
through wired lines
• Leader in telecom (80%), 2
major competitors in data
centre business – reduced
potential for growth
• Basket size for telecomm. is
not a short term solution.
Why?
• Geographical expansion is not
feasible due to limited
management bandwidth
Approach/ Framework
Grow Sales by 4x in
1 year
Explore Existing
Business
Explore New
Business
Telecomm
unication
Increase
Customer
s
Wired Lines Laid &
customer has 1 PoP
Wired Lines Laid &
customer has >1 PoP
Data
Center
New
Geography/
Market
Increase
Basket
Size
Client’s Existing
Customers
New Customers
Lowest Priority
Highest Priority
(scope for sizing)
2nd
Priority
Client’s Wired Lines
Not Laid
3rd
Priority
Not an option
Broaden
Product Line
Diversify
into New
Services
Client can install its own servers and sell
that space to customers (same space can be
sold to multiple customers over a given
period of time)
Client can also sell software security
services for safeguarding data
Implementation Plan
Recommendations
•
•
•
Sell wired services to new customers located in proximity of existing wired lines; also sell to existing customers’ all PoPs
Offer hosting services to customers with data center requirements – client takes care of real estate, hardware, software etc, and charges management fees for these services
Churn strategy can be formulated to churn out customers from competitors and lock them with client
Interview Summary
This is a strategy case where interviewee should quickly eliminate options with limited growth opportunities and use creativity to come up with atleast one new product offering idea
Observations/Tips/Suggestions
•
•
•
A market sizing exercise can be done for new customers and conversation can be lead in that direction
Diversification was ultimately the preferred option as it contributed almost 70% to the revenue growth
Further brainstorming on implementation of new services (e.g. sales force training, incentive structure etc.) can be touched upon briefly
(C) Consult Club, IIM Ahmedabad
2016-17
49
Sales Growth - Software Product Company - Interview Transcript
Your client is an online software provider. And this company had grown fairly well on the past, but
this particular year they’ve really flattened out, unable to grow beyond the particular barrier. And
the company’s CEO has asked you for help to grow this business beyond the $110,000 in revenue
per month.
So let me recap, so this is an online software as a service company with about $110,000 a month
in sales, and its sales have been flat. It is looking for ways to increase sales, is that right?
Yes, that is correct.
Ok. I’d like to know where do the sales come from today – whether that’s different products,
different customers – what are the components that comprise $110,000 in sales?
Sure. Let’s start with the product – the company provides a software as a service, and their
software does website analysis for companies that are doing business online. And their tools help
them figure out what their customers are doing online, ultimately with a purpose of figuring out
how to improve the websites. So these companies doing business online can either make more
money or accomplish whatever goals they’re trying to accomplish.
Got it. Who are the company’s customers?
The company currently gets sales from two different types of customers: small business
customers, as well as Fortune 500 customers.
Do we know what amount of sales came from each particular kind of customers?
Yes, it turns out that small companies, small businesses contribute or generate $100,000 a month
in sales from the company and Fortune 500 companies drive $10,000 a month in sales
It sounds like sales have been flat overall versus prior years. I’m curious, have sales – for the
company overall – have sales for the competitors changed? So I’m trying to figure out if this an
industry problem or if this is a company specific problem. Do we have any information on that?
Well, it turns out this company is the only company in the market.
So this is not a competitive issue but an issue more with either the company itself or with
customers. Do we have any data for each customer segment – the small businesses or the Fortune
500 –how have the sales changed for each of those customers over time?
Sales for Fortune 500 have increased while for the small business segment it has decreased.
Ok. Now the sales are driven by average price per customer or price times the quantity or number
of customers. And so do we have any breakdown as to how many customers there are and what’s
the pricing of that? The hypothesis I’m trying to test is, has the pricing change driven down
revenues or are we actually having fewer customers, but each customer we do have is paying the
same price.
Sure, the data is provided in the table . The prices have remained constant for both the customer
segments. The prices are like subscription fees paid per month.
So your revenue is the price times new customers you bring in this month subtracting out how
many leave. What I’d like to do is actually break that down and look at the number of customers
that are added each month versus subtracted each month. Do we have any data on that for – let’s
start with the small business segment.
Sure. The data is provided in the table (refer to the tree in the previous slide).
Yes.
I’d like to repeat the same analysis for the Fortune 500 segment, to see if a similar pattern is
happening on that side. Do we have – of the ten clients we have this month – do we have any data
that indicates how many clients we had in the prior month, how many of them were new and how
many did we lose?
Sure, similar data is provided in the table (refer to the tree in the previous slide).
So we have a huge attrition problem in the small business segment and at the same time, we don’t
seem to lose any customers on the Fortune 500 side. I would like to investigate more on why this
might be happening. I would like to find out if we are selling the right product to the right segment.
For this I would like to know what customers in the two segments are looking for and how our product
is helping them.
Sure, so the first segment is small mom and pop businesses that are trying to dabble in e-commerce,
and they’re looking to make more money online. However, they want to maximize the number of
visitors to their website.
Ok, and how is our product helping them do that?
So it shows which users are visiting which parts of this website and are they shifting from the free
content portions of the website to the e-commerce portions of the site where you can actually
transact and generate a sale. This product is very good at just tracking those behaviours and figuring
out where people go, and has a number of tools to really help the company – the small business in this
case –optimize the layout of the website, change how information is presented to the end user to
really improve the ratio of visitors to buyers on the website
Okay, it sounds like this is a kind of a process improvement type tool to get more people who visit the
website to buy more often or to make them more likely to buy. It also seems like what we offer as a
company, as a current product, is not really designed to solve what the customer really wants, and
they certainly want to make more money. But first I guess it sounds like they need more visitors to the
website in order for this particular product to be of value to them. Does that seem reasonable?
Yes, actually it does.
Ok, now we can do a similar analysis for Fortune 500 customers. Do we know what they are looking
for ?
These customers want to measure their RoI so that they can show their CEOs that the e-commerce
division is achieving its objectives. These directors are worried that if they can’t prove or rely on return
on investment that their division might actually get shut down, and it seems that this product seems
to be useful in measuring return on investment.
Great. So I can draw two conclusions here – one, small business segments –what they want and what
we offer – this shows a complete mismatch, and two - I think that the Fortune 500 is a better fit is
because the problems they have are exactly the problems we solve.
Ok. So what is your recommendation?
To answer the question of how to grow sales for this particular client, I would recommend that the
company exit the small business market and focus all its resources on serving Fortune 500 clients.
Very good. Thank you.
So it means that we’re losing 1,800 clients a month and then adding 1,800 clients, so our net
change is always zero. Is my understanding correct? Did I do that right?
(C) Consult Club, IIM Ahmedabad
2016-17
50
Sales Growth - Software Product Company
The client is a provider of an online software product and is witnessing flattening sales. You are asked to help grow the sales beyond its current
$110,000 per month (pm) figure.
Approach/ Framework
Interviewee Notes
Case Facts
•
•
•
•
•
• Product – online software that
does website analysis for the
client’s customers i.e. which users
visiting which website, are they
shifting from free content portion
to e-commerce portions
• Sales grew earlier but plateaued
recently; not an industry trend
• Revenue model – recurring
monthly sales
• Assume no competitors
Online software provider
Flattening sales
Customer segments
# and $ of each segment
Understanding product
features
• Segment profile and product
proposition
Customer
Data
Small Business
Fortune 500
Price pm
$50
$1,000
# cust. pm
2,000
10
Sales pm
$100,000
$10,000
# cust. trend
Decreasing
Increasing
Profile
mom-pop stores; want to
maximize # visitors
e-commerce of large company;
want to show RoI
Product
Suitability
Helps improve user
experience
Helps track and improve sales;
gives RoI
Grow Sales >$110K
pm
Explore
Existing
Business
SMB
Sales
Explore New
Business
New
Geogra
phy
Fortune
500 Sales
#
customer
s
Price
New =
1800
Renewal
= 200
Price
#
customer
s
Churn =
1800
New = 1
Value
Prop
Doesn’t
Match (X)
Value
Prop
Matches
Renewal
=9
Expand
Product
Line
Diversify
M&A
Churn =
1
Market and Sell to Fortune 500
Explore Sales Force & Marketing
Resources
Recommendations
•
•
The client should exit the small business segment
It should focus all its resources on the Fortune 500 customers
Interview Summary
This case was focused on identifying the root causes of flattening sales through a customer segmentation approach. Growth opportunities are sought in 4 ways (# customers and prices in each
segment). Deeper investigation reveals under-allocation of resources to the target customer segment.
Observations/Tips/Suggestions
•
•
In a single product case, understanding customer segments, their needs and the products’ value proposition is critical.
Comparison of any sales data wrt. either time or industry/competitors is essential to understand where the problem lies
(C) Consult Club, IIM Ahmedabad
2016-17
51
Sales Growth - Retail Apparel Chain - Interview Transcript
Your client(La Moda) is a retail apparel company that designs, manufactures and sells (through its
own retail chains) high-end men’s fashion clothing. The client’s primary objective is to grow retail
sales. In order to do this the client is considering expanding its distribution by partnering with a
high-end department store(Tendenza). What do you think would be the major factors to consider
in evaluating this partnership?
Sure, in order to get the objective right, I would like to know what do you mean by retail sales.
Retail sales being defined as the total amount the consumers spend on their products, which is
different from what they may bring in as a client.
Thank you. Let me recap and make sure I am getting the objective correctly. As you mentioned,
the client right now designs and manufactures men’s clothing sold. There is a high-end chain of
outlets and it has reached out to our client to try and carry our product. That is the overall theme.
The big question is: what are the big things we want to look at, given the objective of growing
retail sales? Is that right?
Yes.
Okay, do you mind if I take a minute to jot down some ideas?
Not at all.
Okay, I think there are three broad areas that I would want to look at to try and figure out if it
makes sense. The first one is the overall ability of Tendenza to sell client’s items, and there are a
couple of things I believe will determine whether Tendenza will be able to do that.
1. One would be very simply the location of Tendenza outlets. Where are they in relation to
La Moda?
2. Second is the type of items and type of customers that Tendenza services – how do
those fit or not fit, versus what La Moda is currently servicing?
3. Another thing that would determine Tendenza’s fit as someone to carry La Moda items, I
think, is what is Tendenza generally known for? As in, what is its image in the mind of the
general public, compared to what La Moda is.
Apart from fit, the other thing I would look at is the economics of such a deal. You mentioned the
big objective of this distribution expansion is to grow retail sales, and I would interpret that as La
Moda would be willing to accept any deal where they are at least not losing money on the deal,
basically. And the big thing that I would want to look at, therefore, from an economic standpoint,
is: what would the economics of a deal with Tendenza involve, in terms of the costs and benefits
to us financially? I would also look at potential cannibalization in back of such a deal to our own
sales. So that is all economics.
Great, that sounds quite reasonable. Let’s take your point around the economics of
the deal, and cannibalization in particular, what specifically would you be looking
for and why? How would that be important?
I see. Very simply, I think there are a couple of things I would want to look at, to identify whether
cannibalization becomes a problem. So four broad areas I would look at under cannibalization – one
is location. I understand we talked about location earlier, and I feel location also drives
cannibalization in this context, primarily because if you have two stores beside each other, and one
of them starts carrying La Moda – if both stores carry La Moda, that obviously impacts the sales
across both stores.
Sure.
The second is similarity of offering between the two. I’m not— depending on how the deal is
structured, if they are selling the exact same clothes, then that obviously has an impact on the sales
of your current La Moda outlets.
I would also look at relative price points. For example, if the deal is structured where Tendenza sells
the clothes at a 20% premium versus what it is sold at La Moda right now, that paints a very
different picture than say if they are both selling at the same price points, or Tendenzawas
underselling, under cutting prices versus La Moda.
The fourth thing I would look at is marketing, and in terms of how much effort does Tendenza put
into pushing these items, and how are they positioning these items versus how La Moda is
positioning these items?
That seems to make sense. One point you mentioned – I think it was your third point – was
comparing the price point that the products will be sold at through Tendenza versus La Moda’s own
stores, and you mentioned one scenario where if Tendenza were to sell at a 20% premium, that has
different implications than if the price were the same. I’m curious, what would the potential
implications be if the price were higher, lower or the same as the price point in the La Moda stores?
The cannibalization impact would be different. The relative pricing I think creates an image in
consumers’ minds – a perception as to how to interpret it. Broadly, what I feel is that the
cannibalization impact to La Moda would be higher, the lower Tendenza’s price point is.
For example, if Tendenza prices at 80% versus La Moda– so if Ftendenza sells its clothing at $80, and
La Moda sells at $100 – that creates a much larger cannibalization impact. As opposed to if
Tendenza were to sell at $120, and La Moda were to sell at $100. That would be my hypothesis.
This is a thorough analysis. I would have liked to discuss the economics of the deal in detail.
However, we can end the case here due to time constraints. Thank you.
Good so far. Anything else that you would like to consider?
The third thing I would look at is risks associated with— any potential risks associated with such a
deal. I think there are three big ones that come to my mind. One is the risk associated with
implementation. Say, for example, Tendenza might not stock our items as effectively as they
should, and that ends up hurting our brand image, would be one.
Another one I would see is management, and the impact to management and sales force time for
La Moda. How much time is management going to divert away from its current operations to
focus on this expansion? I think the third thing would be some form of a dilution, which may
occur due to a possible difference in the scale of operations of these companies.
(C) Consult Club, IIM Ahmedabad
2016-17
52
Sales Growth - Retail Apparel Chain
The client is a retail apparel chain looking to grow retail sales by expanding its distribution network via a partnership with a department store.
She wants you to enumerate the factors you would consider to evaluate the partnership
Interviewee Notes
• Clarification of retail sales
• What are we selling v/s
partner is selling?
• Where are we v/s partner
located?
• Does partner have sufficient
resources?
• Will the partner cooperate
fully?
• What do the economics of
the deal look like?
Approach/ Framework
Case Facts
Evaluation of
Partnership
• Product – high end men’s
apparel
• High-priority cities identified
Ability to
Sell
# High Priority Cities
140
# La Moda Retail Stores
30
# La Moda Retail Stores in
High Priority Cities
30
# Tendenza Stores
90
# Tendenza Stores in High
Priority Cities
60
Location
Product
Fit
Economics
Custo
mer Fit
Image
Fit
Benefits
Risks
Costs
Implementation
Mgmt
Bandwidth
Dilution
Cannibalization
Location
Similarity of
Offering
# Tendenza Stores in Same 20
Cities as La Moda Stores
Relative
Prices
Relative
Marketing
Price
Elasticity
Recommendations
•
•
Ability of partner to sell client’s products, economics of the deal and potential risks of partnership have to be evaluated
Risk of cannibalization is applicable on similar offerings, and may not be a risk if there is geographical exclusivity of stores
Interview Summary
This interview is focused on a deep-dive into factors to consider while locking down an option for sales growth. This interview witnessed a good opening, good structure and numbered
presentation of ideas. Economics of the deal (though not talked about in detail) can be worked out based on the case facts provided.
Observations/Tips/Suggestions
•
•
•
A sales growth case can be open to a deep dive into one option.
Keep concepts such as price elasticity, cannibalization, pricing and distribution network always handy in sales growth case
Numbered presentation of thought is well received by the interviewer. So think through, number your ideas and then present to the interviewer.
(C) Consult Club, IIM Ahmedabad
2016-17
53
Pricing - Overview
In a pricing case the objective is to determine a methodology for pricing of any product. The product could be a new invention, it could have other
competitor products in the market etc. The student should determine the objective of the company, understand the product features and market
environment and then apply a relevant methodology to price the product.
Framework
Value-based Pricing / Price
Skimming
Pricing a Product
Radical
Invention
Modification to
existing product
Competition
Exists
- Willingness to pay of buyers
- Opportunity cost of no product
- Supply vs. demand tradeoff
Similar to
existing product
Pricing w.r.t.
another product
Cost-plus pricing
(Penetration Pricing)
- R&D costs
- Manufacturing/Servicing costs
- Break-even costs, WACC
Competition
doesn’t exist
Comparable / Parity Pricing
- Existing product with similar features
- No similar product  NPV of substitute
- Supply/Demand trade-off
Framework Summary
It is imperative to consider the objective of the company, since it directly affects the pricing strategy to be followed. Then the student should understand the product characteristics and the
market environment to apply a prudent pricing methodology. In case the pricing needs to be done for an old product (rare scenario), the utility of the product w.r.t a new product and the
depreciation/salvage value need to be taken into consideration.
Tips
A supply vs. demand tradeoff approximation is always helpful in such cases (best when demonstrated graphically)
Key Questions
• Which industry are we talking about?
• What is the objective of the company?
• What are the product features?
• How big is the market? What is the target segment?
• Who is the customer in the supply chain (margin to stakeholders)
(C) Consult Club, IIM Ahmedabad
2016-17
54
Pricing Strategy - Proprietary Light Bulb - Interview Transcript
Surya electrical company has invented a new bulb that never burns out. It could burn for more
than 500 years and would never blink. The director of marketing calls you into her office and asks
“How do you price this.” What would you tell her?
Alright. So before we figure out the appropriate price for this new light bulb, I would like to ask a
few questions about our company, this product, the potential customers and the competition.
Go ahead
What is the objective of the company regarding this product?
To gain as much as possible.
Ok. I would like to know more about the product now. Is this a completely new product or has
our company/ any other company introduced something similar in the past?
No this is a completely new product that we have developed. ( the product is new: follow that
branch)
In that case, is the product patented?
We have a patent pending, and no one else is trying anything similar.
Ok go on.
So how much have we spent on R&D for this?
₹120 Cr. for this light bulb.
For a conventional bulb it costs us 4 rupees to manufacture, we sell it to the distributor for 10
rupees, the distributor sells to the store owner for 14 rupees and he sells it to the customer for 18
rupees.
This light bulb costs ₹400 to manufacture.
Ok so if the manufacturing cost is 100 times, then accordingly the customer will have to pay ₹1,800
for one light bulb. On the up side this is a bulb that will never burn out, so say the people will buy it
once for the next fifty years and are essentially paying for 100 bulbs that they would have used in
the next 50 years. (considering a bulb change twice in a year)
So? Will the customers agree?
I do not think so. However we have spent ₹120 Cr. on the project and it is a very useful invention.
Let us broaden the scope for the product a little and think more about the customers. I think various
city councils are our customers too as they need to provide lighting for the streets and public places.
There may be around 3000 street lamps and another 1000 bulbs at various stations, hospitals etc.
Ok, what are you proposing?
Can you tell me if the product has any disadvantages? Does it use more energy? Or is it harmful
to the customers in any way?
No it is safe product ready for the market. It also doesn’t use more energy
I see. I was thinking we could either price the product at a price comparable with the competition
or base it on the costs that we have incurred we can also look at the price the consumers might
be willing to pay. Since you have mentioned there is no competition I shall rule that out and focus
on what costs we have incurred for this.
These customers incur an additional expense of maintenance and changing of the light bulbs and
maintaining staff for it etc. If we can sell this product to them, they will save on these additional
costs and will not have to worry about maintenance at all. Estimating that these bulbs are available
for ₹500 to the city, upon which they need to pay labour charges of ₹200 each to two workers
needed to change the bulb, it still costs them ₹900 per bulb, twice a year. We can have a mark-up
over this and sell each bulb at ₹4,000 each. They would recover the amount in two years and we can
use this price based costing to get a very good profit. It is important that we make a good profit on
this product because for every sale of a new technology based bulb, we are losing the sales for 100
conventional bulbs.
Good point , thank you.
(C) Consult Club, IIM Ahmedabad
2016-17
55
Pricing Strategy - Proprietary Light Bulb
Surya electrical company, has invented a new bulb that never burns out. It could burn for more than 500 years and would never blink. The
director of marketing calls you into her office and asks “How do you price this.” What would you tell her?
Interviewee Notes
Case Facts
• New product in the market
with a distinct longevity
feature
• Other utilities are similar to
a common bulb
• This is a modification to an
existing product yet comes
with an advantage that no
bulb in the market has.
• The objective is to gain as
much as possible
• The invented light bulb lasts for 500 years
• No threat of competition in the near
future
• R&D cost is ₹120 Cr.
• Conventional bulb costs ₹4 to manufacture
• The new bulb costs ₹400 to manufacture
Approach/ Framework
Pricing a Product
Radical
Invention
Modification to
existing product
Competition
Exists
Similar to
existing product
Pricing w.r.t.
another product
Competition
doesn’t exist
Recommendations
•
•
Since the manufacturing cost is 100 times that of conventional bulb, customers would ideally have to pay ₹400 for us to recoup costs. This is improbable since customers would not shell out
a huge amount for a bulb and the longevity benefits are difficult to be perceived by the average customer.
However, this innovation can be useful for public places such as streets, stations, hospitals etc. where additional staff is required for maintenance. A long-life bulb in such areas would be
extremely useful as maintenance costs would be largely reduced. Hence, such customers should be targeted for this product.
Interview Summary
This case is for pricing of radical invention. The student should be able to approximately determine the price based on manufacturing and R&D costs. In this case, the price estimate leads us to
carefully consider the customer segments, their willingness to pay for the product and carefully tailor the segment to achieve the company objective.
(C) Consult Club, IIM Ahmedabad
2016-17
56
Pricing Strategy - World Spacelines - Interview Transcript
ISRO has developed a rocket-boosted shuttle that can take passengers on a tour of Space while
the take-off and landing are like a conventional airplane. ISRO wants to take passengers on a sixhour tour of Mars. They have built a prototype which cost them ₹3000 Cr. Determine what price
they should charge for a ticket considering only the Indian market.
I’m assuming we want to build a successful business. Any other objectives that I should be aware
of?
No
Are there any competitors and do we have a patent on our technology?
There are currently no competitors and we have a patent which should safeguard us for around
3 years.
How many passengers does the plane hold and how many trips per day are we planning?
Ok, so how much would you charge per trip?
In this case I could follow a cost-based pricing and hence ₹1 lakh would probably be a good
margin, however, this is a special invention offering customers a travel close to fantasy. Hence, I
think value-based pricing would be a more prudent approach.
So, how much would you charge?
I would like to figure out the market for ₹4 lakhs a ticket. Let’s assume that ~0.2% of 1200 milllion
Indians make over a hundred lakhs a year and hence can afford a ₹4 lakh vacation. So that is 20
million people. Out of them let’s assume ~20% would want to do it. So that is ~4 million customers.
Also, we can carry around 72,000 customers a year. Hence for 3 years, before competitors set in
we can make ~₹2880 Cr. million with a cost of ~₹400 Cr. which is a great profit margin for such an
invention. Post that we will need to drop our prices depending on the market scenario.
Good, thank you very much.
100 passengers and 2 trips
I will first try to estimate the market size which would majorly depends on the price. If we charge
₹100 the market size will be almost the whole of India, but if we charge ₹6 Cr. the market will be
much smaller.
Before I figure out the price, I will also try to estimate how much it will cost us per passenger.
How long is the life of the plane?
The life of the shuttle is 20 years and the costs can be allocated uniformly. What do you think the
major costs are?
I think the major costs would be cost of shuttle (including on-board and administrative costs),
maintenance, fuel airport fees, insurance and marketing.
Good, the total costs incurred per year would be ~₹200 Cr, excluding the fuel costs, which I
would like you to estimate.
The moon is around 300 km from the surface of the earth, so I’ll take a rough estimate of 600 km
as the total length of the trip. So 10 litre per km times 600 km equals 6000 litres, times ₹50 per
litre is ₹0.3 Mn. per trip. Also there would be 2 trips per day and hence ~₹200 Cr in yearly fuel
costs.
So total costs are ₹400 Cr. Assuming 720 flights per year with 100 passengers per flight, the cost
per passenger would be ~₹50,000.
(C) Consult Club, IIM Ahmedabad
2016-17
57
Pricing Strategy - World Spacelines
ISRO has developed a rocket-boosted spaceplane that can take off and land like a conventional airplane, but can also fly through the
atmosphere and orbit earth. ISRO wants to take passengers on a three-hour tour of space. They have built a prototype which cost them ₹3000
Cr. Determine what price they should charge for a ticket considering only the Indian market.
Interviewee Notes
Case Facts
• This is a radical invention
with no present competition
• The objective is to run a
successful business
• Market-size in India needs
to be estimated
•
•
•
•
The prototype cost is ₹3,000 Cr.
Per trip time is 3 hours
The patent will last for ~3 years
The space-plane can carry 100
passengers per trip and 2 trips can be
planned per day
• Life of the plane is 20 years
• Total costs other than fuel is ~₹200 Cr.
(annual)
Approach/ Framework
Pricing a Product
Radical
Invention
Modification to
existing product
Competition
Exists
Similar to
existing product
Pricing w.r.t.
another product
Competition
doesn’t exist
Recommendations
•
•
The cost-based approach indicates that charging ~2000 per trip will give us a profit margin of ~100%
However, this is a radical innovation and hence the perceived value for the customer can be much higher than what the cost suggests. Hence a value-based approach with a price of
~$10,000 can help us gain a good potential of this innovation until competitors arrive and there needs to a reduction in prices.
Interview Summary
Since this is a radical invention, estimating the costs are critical to arrive at a lowest price threshold. However, the nature of the benefits offered to the customer also need to be taken into
consideration and in this case it allows us to gain a tremendously high profit margin. Of course, the passenger carrying capacity and timing of competition arrival are critical to keep in mind.
(C) Consult Club, IIM Ahmedabad
2016-17
58
Pricing Strategy - Diagnostic Laboratory Chain - Interview Transcript
A diagnostic laboratory chain based in America has decided to enter the Indian market. They
want your help in deciding how they should price their products.
Ok, so before we move on to deciding the price for the products I would like to know more
about what kind of products the laboratory chain has to offer, the potential geographies in India
that they are looking at and the competition.
I see. I was thinking we could either price the product at a price comparable with the competition or
base it on the costs that we have incurred. We can also look at value based pricing, and price
according to the willingness of the customers to pay. Since you have mentioned the technology is
the same as that of the two biggest competitors and they have a huge share of 85% , I shall focus on
pricing it in such a way that the price is lesser than the competition so that it helps us gain a
presence in the saturated market, that is, penetration pricing.
Go ahead
Alright, go on.
So is this a general purpose health laboratory or do they specialise in some tests for specific
diseases?
It tests blood and urine samples- simple blood tests to various disease specific tests ranging
from tests for diabetes, cancer, hyperthyroidism, hepatitis etc.
We can go for cost plus pricing and have much smaller margins than the competitors. As the sales
are made through doctors, I think we can build a good client base by offering prices which are much
lower than the competition. Over time we will increase our prices when we have a loyal customer
base of doctors. Can you tell me on an average what is the price of one test offered by the
competitors?
On an average the tests are priced at Rs 2000 per test.
Ok. I would like to know more about these tests. Is the technology the same as that the
competitors are using in India of is it very new?
They use the latest technology, but the closest competitors are also using the same technology.
So the tests that the lab offers are the same as that of the competitors. Can you tell me more
about the competition. How many competitors are there, what geographies do they operate in
and what are their margins.
So there are two main competitors that use the same technology as we do. They mainly operate
in the Tier 1 and Tier 2 cities. The chains have minimal presence in rural areas. The two
competitors have 85 % of the market share between them in these geographies and the
remaining is stand alone pathology labs. The margins for the two competitor chains are as high
as 60 to 70 %.
Alright. Can you tell me who our customers are; do the doctors recommend our tests or do we
incur additional costs in advertising to all the patients?
Ok. So for the labs, I believe the fixed cost for the machines and the set up would be high. There
will also be significant overheads for rent, salary of the personnel in the laboratory and the
promotion and advertising costs. We have to keep in mind to cover these costs and the variable
costs. Accordingly, we will have a price which is lower than the competitors but with which we are
able reach the break even point in a reasonable period of time, say 2 to 3 years. So with Rs 2000 as
the average price and taking 70% as the margin, the costs are Rs 600 per test. If we decide to price it
at half of that of competition, then at Rs 1000, we have margins of 40%. Also, if promotion is good
enough, we will have more sales at the price that we are deciding and hence the break even point
will be reached even faster.
Alright, this is about the urban market. What about the rural areas.
I think once we decide on a price that is lower than the competition in urban areas, we should
follow the same in the rural areas. As of now, I think for the kind of latest technology that we offer,
customers from the rural areas would come to the cities. So it will not be wise to have a higher price
in the rural areas just because the closest competitors do not operate there. However, just like in
the cities, the prices should be increased incrementally once a loyal customer base is formed.
Ok, that will be all.
We sell the lab tests to the doctors. They in turn prescribe the tests.
(C) Consult Club, IIM Ahmedabad
2016-17
59
Pricing Strategy - Diagnostic Laboratory Chain - Solution Process
A diagnostic laboratory chain based in America has decided to enter the Indian market. They want your help in deciding how they should price
their products.
Interviewee Notes
Case Facts
• US based company into
Indian market- technology is
latest, but tests similar to
competition’s tests
• General tests, not
specialised, not much
difference between them
and existing competition
• Sold through doctors
• The company is a labs chain
• Has two big competitors, they have 85%
market share
• Costs for machines, advertising and
promotion are high
• Competitors on an average have 60 70 %
margins
Approach/ Framework
Pricing a Product
Radical
Invention
Modification to
existing product
Competition
Exists
Similar to
existing product
Pricing w.r.t.
another product
Competition
doesn’t exist
Recommendations
•
•
Since the product is similar to what the competition is offering, and we do not really have a strong POD in a saturated market, Penetration pricing is the best way .
We have to keep in mind that the fixed costs will be high and they will be recovered over a longer period of time if we price our products lesser than the competition. But This strategy will
help us gain a foothold in a new country and new market.
Interview Summary
This case is for pricing of a product similar to existing products. The student should be able to identify fixed and variable costs. In this case, the price estimate will be based on the competitors’
prices and we will see how much lower a price can we offer to the customers. Once the company is an established name, the margins will be increased.
(C) Consult Club, IIM Ahmedabad
2016-17
60
Pricing Strategy- Healthcare space
Your client is the CEO of a large multinational corporation in the healthcare space. He has produced a
wonder drug that would make a patient free of risk from cardiac arrests.
And how do you plan to do that?
Alright, I would first like to know more about the client’s company. Does the company have any core
competency that it is famous for?
Let’s say it costs around $10,000
The company is known for it’s R&D capabilities and the large scale of investments
For that I’d like to know the average market price for a pacemaker today.
What is the life of the pacemaker?
What is the objective of the client in pricing the drug?
Let’s say it has to be replaced once every ten years.
The client wants to maximize lifetime revenues from the drug, with a minimum of 50% profit margins
from market sale of the drug
Great. Assuming that an average heart patient starts using a pacemaker by the time he turns 50, and
his/her average life span to be 80 years, that amounts to three cycles of pacemaker usage.
Alright. Let me now move on to the drug itself. Could you tell me more about the form of the drug, its
consumption mode, frequency and duration?
Where are you getting at?
The drug is a tablet that has to be had thrice a month, for 5 years in order to fully mitigate the risk of
cardiac arrests
The total cost of alleviating a risk with the next best alternative is $30,000
Are there any side effects to consuming the drug?
Why is this relevant?
Good that you asked for it, but no. There aren’t any observable side effects.
What are the associated R&D costs towards making the drug?
With the pill, thrice a month amounts to 36 times a year. For five years, this amounts to 180 pills. With
$150 for each drug, that amounts to $27,000.
Do you think these costs are relevant?
Therefore?
Actually, I’d like to treat them as sunk costs, since they shouldn’t influence my client’s future decisions.
Good. Move on.
What is the cost associated with making the drug?
For a customer to value the pills as much as a pacemaker, the ceiling theoretically sums up to
$30,000/180 = $166
Is that the final number?
Each tablet cost $100 to make, inclusive of commission paid to intermediate channel partners
Before arriving at a final number, I want to know if the drug is patented and if there are any market
regulations on the price.
Alright. Given my client’s objectives, I should price the drug from $150 dollars upwards to my
immediate channel partner.
The market regulations prohibit pricing of the drug above $180. And no, the drug is not patented. Why is
that relevant?
Is that it?
It is relevant if the drug is easy to replicate by competitors
The ceiling of the price would depend on key factors: my competitors, substitutes, regulators and most
importantly, customers
Good. Proceed.
Are there other competitors who currently sell equivalents of the drug?
No, they don’t.
Are there any substitutes for the drug today?
Can you think of any?
I can think of pacemakers as a distant substitute, although I’m not too sure it’s apt.
Let’s say it is. What now?
I’d like to look at the value that a customer/patient ascribes to a life free of cardiac risks.
(C) Consult Club, IIM Ahmedabad
It isn’t. As I mentioned earlier, the core competency of our client is their technical superiority, which
would ensure that the formula can’t be replicated from the drug.
Then, I believe the client could command a premium on two counts.
And they are?
•
•
The pill is a non-invasive procedure and therefore a more desirable cure
Our drug is hard-to-copy and therefore unique.
So what would you recommend to our client, finally?
Taking into consideration the client’s objective and the market scenario, the client should
• price the drug on the higher end of the $150-180
• patent the drug to prevent competition and duplicates in the market
• push the drug deeper and wider into distribution channels and end-market based on testimonials
and endorsements from popular first-adopters of the drug
That is reasonably comprehensive. That would be all.
2016-17
61
Pricing Strategy- Healthcare space
Your client is the CEO of a large multinational corporation in the healthcare space. He has produced a wonder drug that would make a patient
free of risk from cardiac arrests. He wants you to help him decide the price for this product.
Interviewee Notes
Case Facts
• R&D capabilities and the
large scale of investments
• minimum of 50% profit
margins
• Drug is a tablet; frequency 3
times/month for 5 years
• No side effects
• Cost of each tablet- $100
• No direct substitute
• Cost of pacemaker- $10,000;
lifetime 10 years
• Market regulations prohibit
max. price at $180
• Drug is not patented
Approach/ Framework
Pricing a
product
Value Based/
Skimming
Radical
Invention
Similar to
existing
product
Modification
to Existing
Product
Pricing w.r.t.
another
product
Cost Plus/
Competition
does not
exist
Competition
Exists
Penetration
Comparable/
Parity
•Willingness to pay of
buyers
•Opportunity cost of no
product
•Supply vs. demand
tradeoff
•R&D costs
•Manufacturing/Servicing
costs
•Break-even costs, WACC
•Existing products with
similar features
•No similar product->NPV
of substitute
•Supply/Demand tradeoff
Recommendations
•
•
•
Price the drug on the higher end of the $150-180
Patent the drug to prevent competition and duplicates in the market
Push the drug deeper and wider into distribution channels and end-market based on testimonials and endorsements from popular first-adopters of the drug
Interview Summary
The key to solving the case was understanding the context through sharp preliminary questions, which, in this case were bucketed under the heads of Company, Product, Customer, and Industry.
Post gaining context, the candidate arrived at a price band, decided by the client's objectives, mark-up potential due to differentiation over competitors/substitutes, market regulations and cost
concerns.
Observations/Tips/Suggestions
•
•
•
•
•
Sunk cost is considered irrelevant while pricing a product
The downside to filing a patent would be full disclosure of technology, which could lead to similar variants in the market
More often, the key is to identify the mark-up potential in product pricing (for example: guesstimating the mark up for the non-invasive pill, etc.)
Take some time off at the start to mentally jot down sharp preliminary questions. Take some time off in the middle of the case while deep diving/coming up with creative solutions.
When asked to summarize, aim to do so in 4-5 sentences with just the key details.
(C) Consult Club, IIM Ahmedabad
2016-17
62
Diversification - Overview
In a diversification case, the key is to understand the need to diversify. Only after that is it possible to ascertain the soundness of the strategy
proposed. The case may often require out of the box thinking, and due to the large number of varied factors that could affect or be affected by a
particular form of diversification, breadth is considered to be more important than depth.
Approach/ Framework (Broad) for the Case Type
Current Business
Reason/Need for
diversification
Core Competencies
Market Structure
Competition
Regulation
Synergy Analysis
Sizing
Trends
Diversification
Strategy
Cost Benefit
Tips
Remain MECE and be ready to think on your feet
Candidates often make mistakes in cases where there are multiple reasons for diversification. It makes sense to understand the client’s priorities and proceed accordingly
Key Questions:
•
•
•
•
•
What are our current capabilities?
What are the future capabilities we want to have? Does diversification to the new company help us achieve the objective?
What are the expected revenues? Revenue Streams?
Expected cost of diversification?
Any barriers to entry during diversification?
(C) Consult Club, IIM Ahmedabad
2016-17
63
Diversification - Pharmaceutical Co - Interview Transcript
A pharmaceutical company has discovered a by product of its manufacturing process which
can be used in the FMCG food industry. What should it do with this discovery?
I would like to know who the current suppliers of this agent are., what price they are selling it at and
how much it costs them to make it.
Sir, the first thing that I would want to understand is the current business, next I would want to
understand the by-product, and lastly explore opportunities for potential use.
Currently this is produced by specialised companies the market is highly fragmented. The total
estimated demand is 500 tons and the product sells at $50/ton in the market. Growth is forecast to
grow at 20% year on year. It costs them $20/ton to manufacture.
That sounds great. Currently the pharma company is into generic drug manufacturing and
manufactures 10 different types of salts. What else would you like to know?
Ok so that makes a margin of 150%. Also, if we can offload all of our production in the market, it will
meet 20% of the demand of the product. I would now like to explore the various options in front of
us. Currently I see 3 avenues – disposal, selling to existing FMCG players and diversifying out
business to the food FMCG segment.
I would want to understand the size of the business, the year-on-year growth and which area
they operate in.
Fair enough. So they have a $100mn business with an 8% CAGR and operate out of Baroda.
Thanks. I would not like to understand the by-product, what exactly it is and what we currently
do with it.
Ok, it’s a non-calorific sweetening agent and currently it is a total waste which costs $10/ton to
incinerate because of environmental regulations. Last year we produced 100 tons and estimate
production to increase with a CAGR of 8%
Ok sir, I think I have a good understanding of the product and would like to understand the
potential opportunities other than disposal. The first one you mentioned is FMCG and the other
is any other potential uses. Is there any you would like to start with?
Yes, let’s start with FMCG and ignore the other potential uses for now. It can be used in the
production of sugar-free biscuits, mints and gums.
Who are the players in this industry who use this agent?
Currently there are 5 major players in the FMCG market who contribute to 60% of the market
and the rest is fragmented
(C) Consult Club, IIM Ahmedabad
We want to avoid disposal in anticipation of government sanctions. Also, we cannot sell to existing
players because they have long term off take agreements with their current suppliers. Which leaves
us with diversification as the only option. What are the various things you will look at?
Firstly, I would like to understand the value chain required. The basic components I see are the raw
materials and inbound logistics, technology, equipment and production, and finally the marketing
and sales aspect. Also I would like to know about the capital and regulatory clearances.
The raw materials are commodities, the technology is fairly standard and the capital requirements
can be met fairly easily. Regulatory hurdles exist but are not insurmountable. What do you think
about the marketing and distribution requirements?
Though both businesses are B2C in nature, I believe that the distribution channels would vary
significantly and I would like to know our competency in dealing with operators in relevant
channels.
Excellent, you’ve hit the nail on the head. When we researched, we realised that the channels are
completely different and it would be unwise for our client to foray into this business. Any other
thing you would have liked to look at?
Sir, as our competencies fail at the marketing stage, perhaps we could act as private-label
manufacturers for one of the major FMCG players.
Excellent! Welcome to the company!
2016-17
64
Diversification - Pharmaceutical Company
A pharmaceutical company has discovered a by product of its manufacturing process can be used in the FMCG food industry. What should it do
with this discovery?
Interviewee
Notes
•
Relatively tough
case.
Stay calm and solve
it.
Also a friendly
interviewer is
recommended for
practice
•
•
Case Facts
•
•
•
•
•
•
•
•
10 different salts currently
manufactured
$100m turnover, 8% CAGR
By product is focus
FMCG potential as sweetener
60% FMCG dominated by 5
players
Product demand: 500 tonnes
@20% CAGR, $50/tonne
Current manufactured at
@20/tonne by fragmented players
with long term agreements
Distribution does not gel well with
our competencies
Approach/ Framework
Current
Business
Reason/Need
for
diversification
Core
Competencies
Market
Structure
Competition
Regulation
Synergy
Analysis
Sizing
Trends
Diversification
Strategy
Cost Benefit
Recommendations
•
Not to diversify in true sense, but move into “limited” diversification
Interview Summary
•
•
Good interview. The interviewer enjoyed it. Covered all verticals nicely.
Got brownie points with the final recommendation
Observations/Tips/Suggestions
•
Most diversification cases entail width rather than depth. Make sure you are MECE and cover relevant points
(C) Consult Club, IIM Ahmedabad
2016-17
65
Diversification - Oil Marketing Company - Interview Transcript
Hi! Our client is a downstream oil marketing company who wants to foray into renewable energy
generation. Please evaluate whether this idea holds merit.
First. I’d like to understand what our client does currently.
Also, as you mentioned 10% of 450 is 45 GW, and given that India currently generates close to 5 GW
in solar, there is huge potential. I believe the world is moving towards stricter environmental norms
there will be a good demand for renewable energy by 2025.
I would like to analyse whether this is a viable option using a cost benefit analysis.
Okay, lets start with wind. What are the factors you will consider?
Our client operates in India and is the third largest player with a market share of 20%. It has two
refineries, in Mumbai and Vizag. It buys crude oil and finished petroleum based products and sells
them through its extensive distribution network.
First I would like to look at the availability and suitability of land for setting up the wind farm. Then I
would like to look at the technology involved. After that, I would like to figure out capex, opex and
revenue generation potential and do an NPV analysis.
I’d also like to understand what type of renewable energy does our client have in mind, and are
they any preconceived hypothesis for doing the same?
Great! However, lets look at solar energy. Can you do a payback period analysis for me?
Lets restrict ourselves to wind and solar energy. Also, the market for renewable energy generation
will have a high demand because of a government mandate which requires 10% of all energy
production to be renewable by 2025.
Next I’ll like to understand the energy market in India. What is the current size and expected
trends?
Why don’t you estimate the market size?
Sure. For that I’ll require some basic things. First I’d like to understand the fixed costs involved with
setting up – the land, solar panels and connections to the grid. Next, I’d like to understand the
operating expenses and tariff. But first I would need to understand the capacity in mind and the
availability of land required for the same.
The basic idea is that we have excess land around our refineries which means that there would be
no additional cost to acquiring the land. Also, our technical experts tell us that we will be able to
generate solar energy for 10 hours a day, for 300 days a year.
Generally, it costs about 25cr per MW to set up, but as we have the land, it will only cost us 15cr per
MW. You can ignore operating expenses and the government has announced a 10 year tax holiday
for large solar energy plants. The tariff that we will propose in the tender will be Rs. 10 per KWh
<does maths> So would I be right in saying the payback period is close to 5 years?
Okay. This seems like an interesting problem.
<Does maths>
So we come to approximately 150 GW.
Yes, but this is the energy generation. India has a 20% energy deficit which leads to an approximate
market demand of 180 GW.
Oh! Yes that is correct. We should factor that in. So if we assume a reasonable growth rate of about
10% p.a. we get a market of about 450 GW in 2025.
Yes, I think that is satisfactory. Is there anything else that you would consider?
As a part of our implementation strategy, I would like to assess our technical knowledge, ability to
attract personnel, availability of capital and grid accessibility. Is there anything else I should
consider?
No, I think this is pretty exhaustive. Please have a toffee.
Great that sounds like a very good number. Let’s proceed.
(C) Consult Club, IIM Ahmedabad
2016-17
66
Diversification - Oil Marketing Company
A downstream oil marketing company is considering foraying into renewable energy generation. Evaluate whether the company should.
Interviewee Notes
Case Facts
• Involves estimation of
India’s energy demand and a
back-of-the-envelope
financial analysis
• Sectoral knowledge not
necessary
• Moderately difficult case
• Friendly interviewer not
necessary
• Broad-approach is to
understand options, narrow
down on the basis of
interviewer’s requirements
and perform cost-benefit
analysis
• India has a 20% energy deficit
• Client is 3rd largest oil marketer in
India, located in Mumbai and Vizag
• Government aims to have 10% of
all energy production from
renewable sources by 2025. 10
year tax holiday.
• Client has sufficient surplus land
• 300 days * 10h a day of solar
energy can be produced per year
• Assume solar plant set up cost =
25Cr/MW with land being 10
CR/MW.
• Tariff fixed at Rs.10 per Kwh for 10
years
Approach/ Framework
Current
Business
Reason/Need
for
diversification
Core
Competencies
Market
Structure
Competition
Regulation
Synergy
Analysis
Sizing
Trends
Diversification
Strategy
Cost Benefit
Recommendations
•
Solar energy project feasible financially. Must explore other dimensions before final recommendation
Observations/Tips/Suggestions
•
•
Financial leverage and government incentives have a huge role to play in final outcome
Make sure your options are MECE and be calm when doing the guesstimates, financial analyses
(C) Consult Club, IIM Ahmedabad
2016-17
67
Diversification - Mobster - Interview Transcript
You have been approached by a mobster who wants to enter politics. How would you advise
him?
So, firstly I would like to understand what exactly he does now and why he wants to enter the
political arena. Also, does he want to stand for elections, or earn a nomination, or just be a part
of a political organization?
His business currently comprises the ‘hafta’ system and gold smuggling from UAE. He is based in
a suburb in North East Mumbai and his total turnover is ~200cr with a 40% margin. The reason he
wants to diversify is that he believes he can earn money and fame through standing for elections
either with a party, or as an independent.
What exactly is he looking for – money, or fame?
While he would like to earn money as well, fame is his primary motive. He has a healthy bank
balance.
Great. So assuming that fame is our primary motive, we will proceed, however we will also look
at the monetary aspect. Also, I believe that looking at the current lines of business, our client’s
core competencies would be human resource management, persuasive negotiation skills, and be
a shrewd businessman.
Also, having a hafta system would give him a strong local presence and he would be well known
in his localities.
Most importantly though, we need to make sure he satisfies the eligibility criteria in terms of past
criminal records, age, etc.
Perfect, sounds like you have some experience in this matter.
While he has some cases registered against him, they are unlikely to have a conclusion any time
soon. He satisfies all criteria.
Haha, thanks. Next, I would like to look at his ambitions and the timeline he has in mind.
As you can imagine, our client is extremely ambitious. However, he is open to suggestions.
I believe that politics can be entered at any of three levels – the national, state and local
municipal levels. Since he wants to stand for elections, I would want to factor in when these
elections will take place.
The national elections actually just concluded last month so you can exclude them from
consideration. The state elections are due sometime early next year and the local elections a
month after that.
So I will focus only on state and local elections. Given that he operates in a particular area, would
he like to stand from that area or another area in the state or municipality? Personally I feel he
may have a better chance if he stands from the area in which he operates.
That’s a fair assumption. Please proceed.
(C) Consult Club, IIM Ahmedabad
Next I would like to understand who the current MLA and municipal representatives are and what
their ambitions are.
Great question. The territory under consideration has 1 MLA and 2 municipal corporators. The
current MLA is a party veteran who has occupied the seat for nearly 30 years. However, there are
rumors that he may not stand for elections this year. The municipal corporators are young, dynamic,
popular and have announced their candidacy for their seats once again. All three are from the same
political party and one of the MLAs currently has business ties with our client.
Also, I would like to do a quick financial analysis to see if any one option can be preferable in terms
of potential earnings. Would I be right in assuming that if he stands for elections, he would be
unable to devote as much time to his current businesses and would lose some fraction of revenue
from them?
Good observations. You can assume that if he becomes an MLA, he will have to get a partner in to
run his business and therefore will get only 50% of the proceeds. However, the business turnover is
estimated to jump 1.5x within his tenure due to enhanced reach.
If he becomes a municipal corporator, he can continue as head of the business but revemues could
drop by 20%.
While the government salaries would be negligible, could you devise a formula to help him estimate
his earnings per annum in each of the roles? Make assumptions that you think fair.
Okay sir. So I believe that the earns will be highest at the start of the tenure and linearly decrease as
the number of years remaining reduce. Also, should he be elected to a subsequent term, his
influence and thus his earnings will exponentially increase.
If I am to assume that he would earn 5cr in his term as MLA, and every term would double this
figure, the formula this boils down to is : (5-n+1)x 2^(n-1)
And I think we can safely assume would not earn more than one-fifth as a municipal corporator.
That sounds great.
Something else I would like you to consider is that the recent polls indicate that the party in
question will win with an overwhelming majority.
What else would you look at?
Sir, other aspects important according to me are a synergy analysis and a strategy for entry.
I feel the fact that his lack of experience in politics, coupled with his henchmen and provides
services to this party which is expected to do well are concrete reasons for him joining it. This
coupled with financial muscle, good negotiation skills and human resource management are key for
doing well in politics.
As for entering the arena, our client can look at either joining the party he has ties with. This is
because I believe he can make a strong case for replacement of the existing MLA who may not stand
for elections this year.
In case he does decide to stand I would like to either see if any other MLA seat can be taken or look
at the constituency not currently being ruled by this party in the BMC. Of course I would need a lot
more data for this analysis.
Don’t worry, that should be enough. Let’s hope our client becomes a MLA and then Chief Minister a
few years down the line!
2016-17
68
Diversification - Mobster
A mobster has decided that he would like to enter politics and has hired you as a consultant.
Interviewee
Notes
• No sectoral knowledge
required, just some
common sense
• Ensure you remain
professional, no matter
the case
• Out of the box cases are
designed to test your
ability to think on your
feet
• The reason for
diversification is the
driving factor here.
Important to understand
the primary and
secondary objectives
• ‘Hafta’ system is
protection money
Case Facts
• Current turnover is
200cr with 40%
margin
• Area of influence
corresponds to 2
Municipal
Corporator and 1
MLA seat
• Revenues will
increase 1.5x if
client becomes an
MLA and drop 20%
if he becomes a
municipal
corporator
Approach/ Framework
Current
Business
Reason/Need
for
diversification
Core
Competencies
Market
Structure
Competition
Regulation
Synergy
Analysis
Sizing
Trends
Diversification
Strategy
Cost Benefit
Observations/Tips/Suggestions
•
•
•
•
In case of multiple objectives of the proposed diversification don’t forget to ask the primary objective
At the same time don’t forget to consider the secondary objective(s)
Reasonable assumptions are expected
A child tells his dad he wants a career in organized crime. The father nods and asks, “Public or private sector?”
(C) Consult Club, IIM Ahmedabad
2016-17
69
Unconventional Cases
Technology Cases
Guesstimates
(C) Consult Club, IIM Ahmedabad
Unconventional Case (Pricing case)- Help a Painter
A painter wants your help to sell off a painting. Help him get the best price.
Interviewee Notes
Case Facts
• Focus is on prospective
buyers first
• Somebody who would
appreciate a war painting
and would pay a high price
• HNWs, museums and
commercial owners can pay
and have space to display it
• Few museums in Europe
have a dedicated war
section and Kalinga war
painting could find a space
there
• Painter is famous in India- Along
the stature of M.F. Hussain
• He is famous amongst the painter,
dealer and collector community
• He generally makes oil based
paintings
• Last painting that he sold was for
50 lakhs
• This painting is an oil based
painting
• It depicts Kalinga war and is
encased within a beautiful frame
Approach/ Framework
Help the Painter
Price
determination
Prospective
Customers
Individuals
High net
worth
Others
Local
Institutions
Profit on
top of cost
Museums
(domestic,
International)
Offices (small,
med, large)
Market
research
Methods to
sell
Painter’s
network
Past painting’s
value
Competitor’s
value
Dealer
network
Institution
Bidding
Online
International
Commercial
(Hotel/Airport)
Recommendations
•
A museum in Europe which can pay good price (no dearth of money)
Interview Summary
The candidate did a good job in laying out the framework. Through her preliminary questions about the painter, the painting, he was able to correctly gauge the value of the painting and
aspirations of the painter. It is very important to be MECE while laying out the structure. Even if the interviewer doesn’t implore you to dig deeper into all branches, it’s always a good practice to
lay down two levels of the structure especially in cases like these.
(C) Consult Club, IIM Ahmedabad
2016-17
71
Unconventional Case(Strategy) - Customers for an FS Product
A financial asset management fund (AMF) wants to launch a new offsetting product for forex trades. You are asked to find the potential customers
and suggest pricing models for the product.
Interviewee Notes
Case Facts
• Offsetting product – nets
the daily level currency pair
txns
• Value proposition of product
• Current pricing structure on
a per $ basis
• AMFs charge their customers on
each currency txn on a % basis e.g.
a $1 fee on a selling $100 and
buying equivalent INRs
• Offsetting product combines all
the transactions and nets them
e.g. buying $100 in the morning
and selling $105 in the evening
leads to net position of $5 sell.
• The new product will net the txns
and charge on the netted value.
• Customers with largely one-sided
txns will not benefit as their gross
position and net position is the
same; speculative traders will lose
profits if they adopt the product
• Key inference – if customers profit,
the fund loses money. How can
they create a win-win situation?
• A win-win is created when
customers bring in txns done by
fund’s competitors to the fund
itself.
Approach/ Framework
Offsetting Product
– Customer
Segments
Customers with buy-sell
txns
Customers with
largely 1-sided txns
3
Customers largely
transacting with the fund
2
Customers
transacting with
both the fund and
competitors
Speculative Traders
1
Customers
transacting only
with competitors
Pricing
Strategies
Fixed Annual
Fee
Based on number of
txns
Variable Fee
Based on $ value of
netted txns
Based on $ value of
gross txns (annual)
Based on % of profits
the product
generates
Recommendations
•
•
High value customers are those who do large number of buy-sell transactions with competitor funds, next pitch to customers whose fund portfolio includes our client
Pricing scenarios can be generated, and final model should be chosen based on value to customer – value to fund analysis for the target customers
Interview Summary
This is a strategy case where the candidate should understand the offsetting product very clearly. This leads to a clear value proposition. This case requires a bit of trading knowledge to identify
the three customer segments. Once this is done, the candidate should crack the point that if the customers benefit then the fund will lose money since the product is against their revenue
model. The win-win situation of bringing in competitors’ transactions then follows easily.
Pricing model generation can be tricky if the candidate misses out the first case fact. If she remembers that fact and the fact that it is a netting product, the models would then flow smoothly.
(C) Consult Club, IIM Ahmedabad
2016-17
72
Unconventional Case - US Airline Entry Into China
An international airline carrier is contemplating entering the Chinese market. You have to help the client evaluate the various factors to be
considered while deciding. In case of green, should the client use the same aircrafts?
Interviewee Notes
Case Facts
• Market entry case
• Market sizing & breakeven
analysis may be required;
Growth prospects?
• Competitor scenario?
• Regulatory factor?
• Financial and operational
feasibility?
• Entry options (JV, Acqui.,
Captive)
• For market sizing – demand
estimation, customer
segments? Conversion?
Utilisation?
• Airline current operates on US-UK
route
• Has two aircraft models in the fleet
– 150 seater and a 600 seater
• Competitor scenario is favourable
• China customer segment mix –
expected to 70% business, 30%
leisure
• Some of the airports in China do
not allow large aircrafts to land
due to runway constraints
Approach/ Framework
Enter China?
Market Size
Competitor
Scenario
Operational
Feasibility
Regulatory
Factors
Financial
Feasibility
Entry
Options
Business
Customers
Route
Foreign
Airlines
Partnership
with Chinese
Leisure
Customers
Airport
constraints
Airport
Regulations
Acquisition
of Smaller
Player
Fleet Size
Set-up Own
Brand
Ground
Force
A fleet size/shape modification may be
desirable to increase seating capacity.
This makes sense since Chinese flyers
may differ from US-UK flyers in physique
The split of business-economy seats can
be chosen to reflect to proportionate
demand and utilisation.
Recommendations
•
•
•
Based on market sizing, growth analysis and break even analysis, the first go ahead should be given
We should select the most attractive route followed by an operational feasibility check
Immediate decisions would include entry options, route selection, fleet modification and procurement
Interview Summary
This is a classic market entry case with a flavor of airline industry. The interviewee should keep in mind the specific concepts such as customer segments, long-medium-short haul flights,
operational challenges, capital investment, and entry options.
Cracking the demographic difference and aircraft modification point would definitely be appreciated by the interviewer.
(C) Consult Club, IIM Ahmedabad
2016-17
73
Market Sizing – Notebooks Co.– Interview Transcript
Can you help me size the notebooks market in India?
Sir, first I would like to clarify what is the scope of the market we are considering. While I shall be
looking at the notebooks used by school-going kids and college students, do I also look at the market
for diaries and journals used by professionals?
No, for now, only look at the market for simple notebooks similar to those used by school going
children
Great! I would first like to segment the market based on use –academic and non-academic. I would
like to start with trying to estimate the size of the market of notebooks used for academic purposes.
Ok, go ahead, but before you start thinking of numbers, can you lay down a structure for me?.
Sure. So this is how I am thinking of the problem. I will look at the Indian population and segment it
according to the class in which the students are likely to study. Then I will estimate the number of
books used by these segments and an average price point for them based on the rural urban divide.
Lastly, I will top up the estimate to account for people studying in adult literacy programs. Does this
sound ok?
Yeah, this sounds fair and comprehensive. Please go ahead with the same
Right, so the population of India is 1.2 billion. I am going to assume a 70-30 Rural urban divide. I
think I need to split it as urban rural first because the enrolment rates, and usage patterns will be
starkly different in these two segments. Also, I am assuming that the population is uniformly
distributed by age from 0 to 60 years.
I would like to divide the young population into two age groups. First are children from
kindergarten to Class X or 3-15 years. The next are the young adults in Higher Secondary
school and college, from 16-22 years of age.
Ok, this sounds reasonable. Go ahead.
The Next step would be to estimate the number of students among this population, which can
be done through the assumption of enrolment rates.
Knowing that the urban population has higher enrolment rates, I will take them to be 80% for
school upto Secondary (Class X) and 60% for Higher Secondary and college.
Similarly for the rural population, I will assume enrolment rates of 50% and 20% respectively.
Okay, that sounds ok. How will you use these estimates?
The overall Market size may be seen as the Number of Users x Quantity consumed per year x
Cost of Units. Hence, the next step is to assume reasonable numbers of notebooks used every
year. For a school student, I would take 10 notebooks including those for class work and
homework for an average of 5 subjects. However, in rural areas, we can expect the numbers to
drop to 5, on account of a less rigorous curriculum and teaching methods.
College-goers tend to use fewer notebooks due to fewer requirements, say 6 in a year in urban
areas. On account of fewer classes and absenteeism in lower-tier colleges, I would estimate an
average of 3 notebooks for students from rural areas.
There are many gross assumptions there, especially considering how many students move from
rural to urban areas for higher studies. However, lets sacrifice these considerations for simplicity
of calculation. Let’s go to the next step.
The next step is to estimate average price paid by a student per notebook. Urban students, are
generally able to afford more expensive, higher quality notebooks. Also, college students buy
larger notebooks tend to spend more per unit. Hence, we can assume Rs30 and 20 for school
students in urban and rural areas. Similarly, Rs. 50 and 35 for college students.
Why would you say 60 years? Also, is the uniform distribution assumption fair?
Ok. Go ahead.
Sir, I think the average life expectancy in India is around 65 years, I took 60, to simplify calculations.
Also, you are right, India has a higher proportion of younger people than older people. Would it be
fine if I go ahead with a uniform distribution assumption and then increase the segment size by a say
10%?
Multiplying The number of students, consumption per student and price of each notebook for
each of the 4 segments… we get Rs. 3700cr. This looks like a reasonable number. We may add
another 5% for Non-academic notebooks, taking it to a total of Rs. 3885 crore.
Yeah, I think that can be a workable approximation. Go ahead
Ok, I agree that the number is in the right ballpark. That will be all, thank you.
(C) Consult Club, IIM Ahmedabad
2016-17
74
Market Sizing – Notebooks Co.
Interviewee Notes
Case Facts
•
• No information!
Need to focus only on
Notebooks used by
school and college
children. Not
professional journals
Approach/ Framework
Academic Notebook Market
India Population: 1.2bn
Urban:30%
Segmentation:
1. Rural-Urban
2. Age: Assuming 60yrs
Life Expectancy, Children
3-15yrs
Young Adults: 16-22 yrs
Children:
78mn
Young Adults:
42mn
Children:
182mn
Young Adults:
98mn
Enrolment ratio in
Schools/Colleges
80%: 62.4mn
(Urban School)
60%: 25.2mn
(Urban College)
50%: 91mn
(Rural School)
20%: 19.6mn
(Rural College)
Notebook used annually
10
6
5
3
Avg Price of Notebook
Rs 30
Rs 50
Rs 20
Rs 35
Notebook Mkt Size (Rs)
1872cr
756cr
910cr
206cr
Total
Academic: 3700cr
Rural: 70%
Non-Academic: 5% extra
Total: 3885cr
Recommendations
•
•
Since the product is similar to what the competition is offering, and we do not really have a strong POD in a saturated market, Penetration pricing is the best way .
We have to keep in mind that the fixed costs will be high and they will be recovered over a longer period of time if we price our products lesser than the competition. But This strategy will
help us gain a foothold in a new country and new market.
Interview Summary
This case is for pricing of a product similar to existing products. The student should be able to identify fixed and variable costs. In this case, the price estimate will be based on the competitors’
prices and we will see how much lower a price can we offer to the customers. Once the company is an established name, the margins will be increased.
(C) Consult Club, IIM Ahmedabad
2016-17
75
Unconventional Case - Declining Response in a Competition
You are the executive advisor to the Campus Branding team at ABC Ltd. ABC has launched its case study competition at premier b-schools.
However, despite the overall increase in the number of students, the response from the students is lukewarm. ABC has asked for possible reasons
and ways to increase the response rate amongst students.
Interviewee Notes
Case Facts
• Defining ‘response’ –
registrations? Submissions?
Response on social media?
• Likes have decreased in the
first week itself (this is a
major problem)
• Competitor scenario?
• Last year 1300 students enrolled,
out of which about 600 registered,
and 200 submitted
• ABC has a FB presence which saw
500 new likes last year (spread
over 2 weeks after launch of
competition). This year it is 100
likes in the first week.
• ABC is an old recruiter at these
schools and has been having this
competition for about 4 years
now.
• A major competitor has also
launched a case study competition
at the same time with a prize
money double that of ABC
• ABC’s prize money has not
increased
• Marketing efforts are the same as
last year
• The number of likes on the social
network has not grown in
proportion to the number of
students (scope for number work
here)
Recommendations
•
•
•
Approach/ Framework
Awareness
Student
Response
Stages
Incidence
Channels
Covered
How is it
measured?
Activities on
Each
Channel
Sites have
sufficient
visibility?
Registrations
Marketing
Budget
Submissions
Team Size
Constraints
Format
Competition
Timeline
Problems
Timeline
Prize
Money
Queries
Portal Usability,
Uptime
Competitor
Events
A fleet size/shape modification may be
desirable to increase seating capacity.
This makes sense since Chinese flyers
may differ from US-UK flyers in physique
The split of business-economy seats can
be chosen to reflect to proportionate
demand and utilisation.
Incentive Strategy(this year): Since the prizes for this year have already been communicated through the marketing efforts, additional rewards in terms of goodies and PPIs can be
communicated as a branding strategy for this year.
Incentive Strategy (future): ABC should focus on not only the quality of the competition (difficulty, scheduling, etc.) but also on rewards being more competitive
Marketing Strategy: ABC should aggressively market the case study competition on social networks to catch the students early. It should also schedule its competitions well ahead of its
competitors to lock in participation. Further, students’ schedules of exchange programs in certain b-schools should be considered. Providing support systems in the form of buddies,
interaction forums, etc. can go a long ahead in giving a competitive edge to ABC.
Summary & Observations
This question involved seeking clarification on certain definitions such as ‘response’ and ‘lukewarm growth’. It is essential to narrow down these broad terms to specific pointers using which the
‘lifecycle – approach’ can be deployed and the significant links can be identified. If a question revolves around conversion, one can think of the ‘lifecycle – approach wherein, various stages of an
agent’s or activities lifecycle are enlisted. For e.g., in a purchase lifecycle, customer goes through a decision making stage, followed by purchase which is then followed by servicing and customer
satisfaction, and finally repeat purchase. In this approach, different stages of conversion are listed and a weak/broken link is identified. A lifecycle approach also ensures MECE steps.
(C) Consult Club, IIM Ahmedabad
2016-17
76
Unconventional Case - Pricing Strategy for Portkey
Your client has one of a kind (in the entire world) transportation machine which can take you anywhere on the globe within 5 seconds. Develop a
pricing strategy for the client.
Interviewee Notes
Case Facts
• Important to figure out
multiple ways in which the
machine can be milked not
limited to running the
machine.
• No such machine is prognosticated
to be produced for the next 40
years
• The Machine can carry 50
individuals at 1 time
• The machine needs at-least one
hour of maintenance works
• Works on electricity, though
extremely high power
consumption
• Assumption of a fixed price and
continuous demand when running
the machine independently.
• Since it is an unconventional
product, full knowledge
about all facets of the
product is essential
• Start analysis from running a
machine to have a
preliminary cost benefit
analysis. This analysis could
be used to determine
pricing in selling and renting
scenarios
Approach/ Framework
Pricing
Sell the
Machine
Customers
Rent the
Machine
Run the
Machine
Revenue Model
Governments
Initial LumpSum
Scientific
Community
Profit / Benefit
Sharing
Costs
Operational
Costs
Fuel Costs
Revenue
NonOperational
Costs
No. of tickets
sold in 40 years
Rent centers
Price/Ticket
Operator Costs
Annual
Maintenance
Recommendations
The client could look at all 3 possibilities for deriving the maximum out of the transportation machine. The rough costs, based on client data has been formulated and assuming the required
profit percentage pricing has been determined.
Interview Summary
The candidate did a good job in laying out the framework. Despite the fact that the problem was somewhat unorthodox, the candidate put in a good effort to structure the problem. Though the
pricing strategy could have directly implied running the machine, the interviewee sought other possibilities for the client. Also, the rough Cost-benefit analysis done helped come up with a
reliable figure to base arguments on.
(C) Consult Club, IIM Ahmedabad
2016-17
77
Unconventional Case - Call Operator
Our client runs a multi-cuisine delivery only restaurant chain across the country. They had hired a call operator company for taking delivery orders
since the past 3 years. However for the past 4 months the revenue from the home delivery have suddenly taken a plunge. Help the client
Interviewee Notes
Case Facts
• Focus is on first clarifying
• There have been no changes from
and deriving information
the company’s end in terms of
from the problem statement
marketing, operating standards,
to understand the roles and
prices etc.
sequence of step followed
during telephone ordering
• The consumer target group has
roughly remained the same with
• Factors for Reduction in
no other major outlets or “trends
Customer Inflow derived
in consumption” emerging
from the basic branches of
management namely
Operations, Marketing,
Consumer Psychology
Approach/ Framework
Revenue Decline
Average Revenue / Customer
No. of Consumers
Reduction in
Customer Inflow
Reduced Quality
Food
Delivery
Services
Reduced
Marketing
Other Competitors
Reduced
Marketing
Expenses
Customer
Relations
Reduced Customer
Conversion
Changing
Consumer
Attitude
Input
Operator
Processing
Communication
Medium
Inefficiency
Change in Telecom
Connection
Lack of training to
handle customer/
Software
Faulty PhoneLines
Software for
info. Relay to
restaurant
Restaurant’s
Info Reading
Systems
Recommendations
The problem lay in the reduction in Customer Conversion which was due to the problems in the new operating software that had been installed by the call operator company 4 months back. It is
essential that there is a quick rectification of the software problem to get back the revenues to previous levels
Interview Summary
The candidate firstly did a good job clarifying the role of all the parties involved. She then followed a simple yet exhaustive structure eventually leading in the Processing branch of the Customer
Conversion Problem. Could’ve looked at existing and new customers in isolation for better clarity.
(C) Consult Club, IIM Ahmedabad
2016-17
78
Unconventional Case - Vernier Calipers Manufacturer
A Vernier calipers manufacturer has for the past 2 months been seeing 100/1000 Calipers being produced are defective. Help him.
Interviewee Notes
Case Facts
• Focus is on first clarifying
and deriving information
from the problem statement
namely kind of defect, single
lot/continuous problem
• The problem is in the etching /
marking process with uneven
marking for 100 calipers
• Understanding of the
production process in as
much detail as possible to
realise areas where the
process may be faltering
Approach/ Framework
Manufacturer
• The factory is operational for 10
hours everyday
• The defective pieces are produced
in one continuous process which is
everyday from 3-4 PM
Supplier
Change
Raw Material
Intra-Factory
Logistics
Material
Change
Quality
Inspection
Change
Production
Process
Internal
External
Process Change
Labour (Shifts /
Breaks)
Electricity
Variation
People Change
Machines
External
Construction
(Vibrations)
Recommendations
The defects are happening due to construction of a bridge that happens in the vicinity everyday about 3-4 PM. One simple way is to provide rubber pads beneath the machines to damp the
vibration effects
Interview Summary
The candidate did a good job in laying out the framework. The initial set of questions on Vernier Calipers, kind of defect and defect frequency throughout the day helped in eliminating the need
for going in depths of possible problems. Consideration of external factors to the production process was the key to solving the case which was extremely well thought out.
(C) Consult Club, IIM Ahmedabad
2016-17
79
Unconventional Case - School’s Deteriorating Performance
A school principal has consulted you because the school has not been doing good. Find the reason and suggest solutions?
Interviewee Notes
Case Facts
• What is the meaning of not
doing good?
Profit/performance/Image
employee satisfaction?
• Which kind of school?
Location? Classes?
• Time period of bad
performance
•
•
•
•
•
•
This is a private school
Located in Patna, Bihar
Nursery-12th
Recent dip
Middle-class students mostly
Situated in a densely populated
region
• Close enough to residences
• No. of students enrolling has
decreased and students are also
leaving
Approach/ Framework
School not
doing well
Internal
Profit
decreasing
Perf.
Academic
Extra and
cocurricular
Revenue
decrease
student?
Enrollment
?
Students
leaving
Image
affected?
Cost
increase
Fees/
# students
decreased
External
Mgmt.
employees
Stakeholder
satisfied?
Teachers
Competition
increase
Customer
preference
Students,
parents
Infra+ transportation
Teaching
expertise/attention
Ext. Infra.
Changes
Illegal noisy
factory
Polluted
Environment
Severed
Access
Fees
Recommendations
The solutions proposed to the problem created by the recently cropped up illegal factory could be short term and long term. Long term solution could be taking them to the court but it would
have some negative impacts of cost too. Some short term solutions could be talking to factory administration, trying to negotiate. Diversification to other locations or using some sought of
sound-proofing technology are a few far-fetched solutions as well.
Interview Summary
This was a very broad case with the very question having the possibility of being interpreted in multiple ways. A good idea is to lay down all the possible meanings of not doing good and ask for
the interviewer’s direction to move forward. A process driven or stakeholder driven approach is a MECE way to look at things here. Recommendations could be as creative as one can think of.
(C) Consult Club, IIM Ahmedabad
2016-17
80
Unconventional Case - Partner Late to Office
A consulting firm partner has been coming late to office since the past 2 weeks. Figure out what is the reason for the same?
Interviewee Notes
Case Facts
• Partner late to office: How
late? Is that consistent since
the past two weeks?
• Where? What is the setting
location?
• 2 weeks only- eliminate long
term events from the
analysis to follow
• Internal factors- Habits,
personal life, vehicle?
• External factors- home,
route, destination?
• The partner lives in South Delhi
and his office is in Gurgaon
• Mode of transportation is his car
and this has not changed since the
past two weeks
• Personal life and habits have
remained the same
• No change in home or office
location
Approach/ Framework
Delay
Internal
factors
Habits
Family
External
factors
Home
Route
Location
change?
Traffic
Car related
issues
Obstructions
Constructi
on etc
Speed
breakers
Office
Traffic
signals
Toll booths
Location
change?
Infra(new
lane)
New
hires/tech.
PricingYES
Recommendations
There was a on the recently built highway. The prices of the toll have been recently changed from Rs. 20 to Rs. 21 and now, owing to the extra time which it takes for the drivers to search for
change, the line moves slowly as compared to what it was earlier. Hence, the partner has been reaching the office 15 minutes late everyday since the past 2 weeks.
Interview Summary
The key to this case was to ensure that you start structured, instead of asking random questions which pop in your head the very first time. Since, the solution was very unconventional, the
interviewers would be more impressed by the approach to the problem, rather than the actual answer.
Also, a MECE framework from the beginning, makes sure you cover all the aspects and are able to reach the final answer.
(C) Consult Club, IIM Ahmedabad
2016-17
81
Unconventional Case - Dip in Profitability of CT
The owner of CT has mentioned that they have witnessed a dip in profitability since the last 2 months. He needs your help in figuring out why.
Interviewee Notes
Case Facts
• Profitability changes can be
due to revenue and costs
• Since revenue and costs
have both increased, costs
have certainly increased
more than revenues
• A product portfolio change
indicates either additions or
deletions or both to the
menu
• As maggi has been added
while the number of
customers have gone
slightly up, it indicates that
the profitability of maggi is
lesser than the average
profitability of other
products
• Both revenues and costs have
increased in the last 2 months
• Environmental factors and
competition has not changed
• # of customers has slightly
increased
• Operational costs have not
changed
• Product portfolio has changed
• Maggi has been introduced 2
months earlier
Approach/ Framework
Profitability
Costs
Revenues
Environmental
factors
Competition’s
costs
Firm
Economy
Raw material
prices
Operational
Costs
Product
Portfolio
Recommendations
•
•
As the decrease in profitability is due to maggi, we might want to benchmark its prices with other competitive outlets selling maggi
Since, CT is confined within the IIMA campus there might be collusion opportunities on the price of maggi, with another 1 or 2 outlets selling maggi within the campus
Interview Summary
This is a classic case of profitability and should be solved from first principles. A general oversight is that when we realize that costs have gone up, we tend to focus on aspects such as R.M. prices
and other operational costs rather than considering the product portfolio as well.
(C) Consult Club, IIM Ahmedabad
2016-17
82
Unconventional Case - Higher Costs Faced by SE Asian Bank
A south-east Asian retail bank, which is present in multiple geographies, is facing costs 20-25% higher than the competitors. What needs to be
improved?
Interviewee Notes
Case Facts
• Since operational costs are
the main issue
• Salaries are a function of
number of employees x avg.
salary
• The number of employees
for cash/cheque
transactions are higher
• This can be due to paucity of
ATMs or lack of ATM cards
• All employees are not
getting cards on account
enrolment
• Employees specifically need
to opt-in for an ATM card
• The default option for this
bank is opt-out while for
other banks it is opt-in
• We are discussing a retail bank
• Costs are 20-25% higher than
competitors
• Operational costs are an issue
• The cost problem is further
confined to clerks who are in
charge of cash/cheque
transactions
• Number of ATMs is not an issue
• Average number of customers
having an ATM card is lower than
that of customers in other banks
Approach/ Framework
Retail bank costs
Interest rates
Borrowed
money
Transaction
costs
Deposit costs
Operational cost
Overheads
SG&A
Salaries
Management
Advertising
Foreign
exchange
Equipment
Admin
Clerks
Recommendations
•
•
The default feature should be changed from opt-out to opt-in for card allotment.
Also, emailers for opt-in/ in-house recommendation during customer visit for card enrolment should be given to current customers
Interview Summary
This case tests the idea of cost heads for a retail bank. Deep-dive into the clerk salaries is a slightly challenging aspect which needs the student to think about what kind of missing alternatives
can lead to more customers gathering for cash/cheque transactions. Further it is important to think not just about ATMs but also the availability of ATM cards with customers.
(C) Consult Club, IIM Ahmedabad
2016-17
83
Unconventional Case - Turnaround a Copper Mining Company
An Indian copper mining and smelting company is incurring losses for 5 years. Prepare a turnaround plan for the firm
Interviewee Notes
Case Facts
• For a plant and machinery
company, it is good to look
into fixed and variable costs
separately
• Coal extraction (operational)
costs dependant on quality
of extract and the difficulty
of extraction
• Labour and machine
utilization are important
parameters in the
operational costs
• Technology used should also
be benchmarked
• Interest rates/taxes should
be checked upon in case
debt of the company is an
issue
• The client has been in the industry
for 15-20 years
• Coal prices are regulated and
hence revenues cannot be
modified
• The mining and smelting plants are
near the coal resource site
• Mining sites are determined as per
the coal block allocation
Approach/ Framework
Value Chain
Mining
Smelting
Outbound
Company Profits
Costs
Revenues
Fixed
Variable
Rent
Direct mat.
Machinery
Direct labor
Electricity
Operational
Plant maint.
SG&A
Indirect
mat.
Recommendations
•
•
The plant distribution currently is that we have 2-3 small plants across a narrow geography. Consolidating these into one large plant can help in leveraging economies of scale, especially in a
capital intensive company
Labor and machine utilization can be optimized as they form a large chunk of the operational costs
Interview Summary
This is a very open-ended case which tries to gauge the spectrum of thinking that an individual has. Following a good structure along with covering most of the cost heads is the most important
part of the exercise. Moreover, progressing via a value chain can help in understanding the various processes and cost heads involved.
(C) Consult Club, IIM Ahmedabad
2016-17
84
Unconventional Case – Toffee Manufacturer
A toffee manufacturer is seeing its revenues reducing suddenly since past 2 months. Why?
Interviewee Notes
Case Facts
• Focus on eliminating
components of profit margin
one by one
• Leading manufacturer
• Most of the revenues through 1
product, e.g. Chlormint
• Decline has been sudden and
significant
Approach/ Framework
Revenues
Price
Rise of competition
Quantity
Substitutes
Change in quality
Customer preferences
Buying behaviour
Recommendations
The toffee was usually purchased as substitute for loose change along with purchase of cigarettes. However, with the price of cigarettes now being rounding off to a round number, toffees were
no longer purchased in lieu of loose change.
Interview Summary
The key to this case was to ensure less-frequently encountered options (such as customer preferences) are also covered. Arriving at the final solution requires lateral thinking and ability to
connect real life experiences to the case.
(C) Consult Club, IIM Ahmedabad
2016-17
85
Unconventional Case - Restaurant
A restaurant is witnessing a dip in its revenue since last 2 months. What is the possible reason?
Interviewee Notes
Case Facts
• When analysing the
offering, go beyond the
obvious – in this case the
offering is not only the food
but the service, ambience
and layout
• The decline in revenue has been
sharp and persistent
• Restaurant plays in the premium
price segment – ambience one of
they highlights
• External environment in terms of
competitive intensity, catchment
area characteristics, cuisine
preference trends etc.
Approach/ Framework
Revenues
Price
Quantity
Rise of
competition
Substitutes
Personnel changes
Change in product
Cuisine Change
Layout change
Customer
preferences
Changed from multiple 2 seater
tables to 4 seater tables resulting in
decline in couples
Recommendations
The restaurant had couples as a key segment of their customer base. However by changing the layout and increasing the number of 4 seater tables, they were unable to cater to this customer
segment.
Interview Summary
It can be easy to miss certain unconventional options, hence having a MECE mindset at every level of the tree is imperative.
(C) Consult Club, IIM Ahmedabad
2016-17
86
Unconventional Case - Open Plot of Land
Your client has a large plot of land in Mumbai. He wants you help him figure out what he should do with it
Interviewee Notes
Case Facts
• Selling the land will not
achieve objective 2 and 3
• Regulation prevent
industries
• Residential land rate =
50,000/sq-ft
• Commercial lease rate =
1000/sq-ft/year
• NPV = Annual lease rate *
30 yrs
• Entering any commercial
activity on its own is
feasible due to
competitive advantage
• Client could also develop
and lease a combination
of commercial and
residential space type
projects
• Client has 3 major objectives in
order of preference - Maximize
profits, brand recognition,
Philanthropy
• 1000 acre land surrounded by
homes, offices, schools and
restaurant etc.; Prime location
• Textile mill present in the land
which could not run profitably
and hence was shut down
• Client’s procurement manager,
operations manager and sales
manager have decided to follow
the client in its future venture
Approach/ Framework
Overall Objective
Residential
Apartments, homes,
bungalows
NPV =
50000/sq-ft
Commercial
purpose
Iconic buildings,
Niche attractions,
luxury
apartments,
corporate offices,
celebrity homes
Profits
Brand
Philanthropy
industries
and factories
Sell the land
NPV =
30,000/ sq-ft
Enter a
commercial
activity
Develop
and lease
Develop
brand
1.
2.
3.
Philanthropy
Marker
Size
Free schooling,
hospitals, free
space to NGOs
Market
Share
Trusted
managers
Competitive
advantage
Prime
location
Recommendations
•
•
•
Opportunity exists for the client to either develop and lease a combination of residential and commercial space or enter into a commercial activity on its own
To develop brand client can consider building iconic building with niche attractions. It can have dedicated space for corporate offices and celebrity homes
Client can either partner with an NGO or open up free schools and hospital to realize its philanthropic objectives
Interview Summary
This is a open ended unconventional case where it is important for the candidate to clarify objectives before getting started
Observations/Tips/Suggestions
•
•
Candidate asked the right background questions at the start to understand the case better and move in the right direction
Candidate was very prompt in clarifying the discrepancy in the lease amount of residential versus commercial space
(C) Consult Club, IIM Ahmedabad
2016-17
87
Unconventional Case - Football Team - Diagnostics
The owner of a professional football team has approached you because it has been underperforming on the field. Help them diagnose the issue.
Interviewee Notes
Case Facts
• Focus is the team. Strengths
weaknesses and factors that
could affect performance.
• Should cover all aspects of
performance including
internal and external factors
• Renowned team, supporters have
high expectations
• Squad size of 25 with 10 world
class players and 15 very good
ones
• Team dynamics good
• No particularly weak position
• Conservative transfer policy
• Several injuries in the last few
years to key players
• Players and staff properly
incentivized
• World class ancillary services and
facilities
• Scouting team excellent. Onfield
tactics satisfactory
• Diagnostics indicate team lagging
competitors on Key Metric of
“World Class players per game”
not due to lack of such players but
due to fatigue related injuries
• Intelligence indicates other teams
give more recovery time in
between training and practice
sessions
Recommendations
•
Approach/ Framework
Football
Diagnostics
Ancillary
services
Team
Strengths and
weaknesses
Coaches
Physios
Tactics
Scouts
Facilities
Competition
Environmental
On field
Strengths and
weaknesses
Externalities
Transfer
market
Past
performance
Supporters
Dynamics
Methods
Methods
Methods
Training
Incentive
structure
Experience
Experience
Experience
Practice
Rivalries
Corruption
Transfers and
Attrition
Incentives
Incentives
Incentives
Analytics
Tactics
Distractions
Recovery
Incentives
Fitness Levels
Fitness
Sufficient recovery periods recommended in between training sessions
Interview Summary
The candidate did a good job in laying out the framework. The focus was rightly on the team, but any business is incomplete with the plethora of ancillary and support staff it relies on to
perform to its potential. It is very important to be MECE while laying out the structure. Even if the interviewer doesn’t implore you to dig deeper into all branches, it’s always a good practice to
lay down two levels of the structure especially in cases like these.
(C) Consult Club, IIM Ahmedabad
2016-17
88
Unconventional Case - Elementary, Dr. Watson
You stay in 222B Baker Street. Your friend Mr. Holmes is on holiday, and in his absence Dr. Watson is attempting to solve a case. He’d love your
help
Case facts
• Mr. Brown was found dead in his apartment
by his neighbour at 10am
• His wife has been on holiday for a month
• Watson has narrowed down to 3 suspects –
neighbour, old friend and business partner
• One guard was on duty, not a suspect
• Brown was found dead in his bedroom
• In his study, two glasses were found, only one
of which had a few drops of alcohol in it
• Traces of a rare poison were found in that
glass (and in the wine bottle), which causes
the victim’s heart to stop beating 3 hours
after ingestion
• The cause of death was heart attack
• The poison molecule is produced as a byproduct of a pharmaceutical process
• Friend is recovering alcoholic who came to
Brown to borrow money to pay off gambling
debts. He was visiting Brown for the third
time in a week, before that hadn’t met him in
years
• The neighbour was in love with and having an
affair with Mrs. Brown
More case facts
Approach/ Framework
• Brown and his business partner run a
pharmaceutical company which has seen a
decline in profitability of late. However, they
have recently developed a product which can
cure a type of cancer. The catch is that there
can be adverse side effects. Mr. Brown didn’t
want to launch this product but the partner did
and they argued over this, often aggressively.
The partner was known in the industry as an
unethical and overly dominating man
• When the neighbour found Mr. Brown dead,
he had come to confess
• Mr. Brown, the Old Friend and the Biz partner
were in college together. The old friend and
business partner were still in touch
• The guard tells us that the old friend visited
Mr. Brown the night before from about 8pm10pm with a bottle of wine as a peace offering
• The coroner puts the time of death at about
midnight
• Biz partner has not visited Brown’s home in
months
• Old friend’s gambling debt had suddenly been
paid off
Man found dead in
apartment
Death
Suspects
Cause of death
Relationships
Timeline
Motives
Crime scene
Alibis
Witnesses
Recommendations
•
Business partner has committed crime in collusion with old friend. Business partner had paid the old friend’s debts, and given him the poison. The friend had come to meet Mr. Brown with
the poisoned wine. As he was a recovering alcoholic, he had an excuse not to drink it himself.
Interview Summary
Even in unconventional cases, structured thought is very important. There must be a logical flow to ensure no detail, however minor, is missed out. It is good practice to summarize the facts
occasionally in such cases, as they can lead you closer to the final answer
(C) Consult Club, IIM Ahmedabad
2016-17
89
Unconventional Case - Merger & Acquisition
After a hard day’s night as a second year student in a well known institute of management in western India, you have decided to open your own
consultancy firm. It’s a long and winding road ahead, and you’ll have to work seven days a week. For now, you have to help your first client - a
first year student from your dormitory, who wants a girlfriend. Will he get a little help from his friends, or should he just let it be?
Interviewee Notes
Case Facts
• First thing first, what is he
REALLY looking for? WHY
does he want a girlfriend?
Can whatever he really
wants be obtained by any
other means? If yes, analyse
each alternative. This case
structure laid out assuming
he insists on getting a
girlfriend.
• Follow M&A structure for
the rest of the case. Not as
unconventional as it sounds.
• NA
Approach/ Framework
Client
All you need is
love
Due diligence
Competition
Price of
girlfriend
acquisition
Action Plan
Objectives
Porter’s 5
forces
Presence of
competitors
Cost – benefit
analysis
Method of
approach
Needs
Market Size
Competitive
response
Resource
availability
Norms
Competencies
Market
Segments
SWOT analysis
Past
experience
Shortlisting
parameters
Milestones and
timelines
Interests
Actual shortlist
Exit strategy (if
required)
Competitive
strategies
Legalities and
Moralities
Possible
synergies
Interview Summary
Determine the objectives of the client. Start from the basic - Try to address what the client needs, which may be slightly different from what he has described the problem to be.
Next, understand the market and the alternatives. Shortlist the ones worth pursuing, and understand what unique synergies and benefits v/s costs each would offer. Opportunity cost must be
considered. Next, an action plan must be decided along with milestones, goals, and if required, exit strategies
(C) Consult Club, IIM Ahmedabad
2016-17
90
Unconventional Case - Pencil Manufacturer in India
The profits of pencil manufacturer in India is going down. Find out the reason and give recommendations to overcome the decline
Interviewee Notes
• Is this a industry wide
trends?
• How any new competitor
has entered the market?
• What are the products
we are currently selling?
• Who are our customers?
• Has there been a price
change recently?
• Is there a reduction in
quantity sold?
Broad-approach
• Get a idea of industry and
the client before probing
into the reason behind
decline in revenue
• Breakdown revenue into
price and quantity
• Drill down into each
aspect individually
Case Facts
• Not a industry trend
• No new competitors
•Two kinds of products, one
costly pencil and other cheap
pencil
•No change in price
•After going though all the
possible reasons behind
reduction in quantity, it was
mentioned there is no change
in quantity sold
•Both the products are
targeted at school children
•No increase in any of the cost
involved
Approach/ Framework
Industry/
Company
Profit
Current
Trends
Revenue
Cost
Competitors
Market Share
Product
Offerings
Revenue/
Unit
(price)
Quantity
sold
Quality
Service
Customer
Segments
Convenience
R&D
Equipment
Human
Capital
Cost of
finance
Perception
Raw
Material
Cost of
raw
material
Processing
Machinery
Storage &
Transporta
tion
Distribution
- Sale force
Transport to
warehouse
Sales
Channel
Marketing
channels
Sales
Force
Strategy
Factory rent
Contract
& bulk
deals
Labor hours
Technology
Storage
(Rent, Labor,
Inventory)
Marketing
Customer
Service
Repairs
Spare
parts
Returns
Training
Quantity
used
Capacity
utilization
Transport to
customers
Cost
Packaging
New Entrants
Substitutes
Recommendations
There was no change in price of the product and the quantities sold. But the client was getting more profit margin in costly product and low profit margin in cheap product.
The client sold more of the product with low profit margin. Even though the demand was good for their costly product and not much difference in production cost between
the two products. It was advised that the client should focus on manufacturing more of their costly product and sell it to increase their profits.
Interview Summary
In this case the problem was neither in revenue side nor in cost, But it was related to current product mix of the client
Observations/Tips/Suggestions
The traditional way of solving the case would not have assisted the interviewee in identifying the solution
(C) Consult Club, IIM Ahmedabad
2016-17
91
Unconventional Case - Airline
An airline company has started witnessing margins lower than that of the industry. Diagnose why?
Interviewee Notes
Case Facts
• Focus on eliminating
components of profit margin
one by one
• Keep asking questions, to
quickly eliminate options
before drilling into a specific
option
• Pricing of tickets is at par with the
industry so revenue side can be
eliminated
• Cost structure can be decomposed
as running costs, maintenance and
parking costs
• Wages and other SG&A
components are within industry
averages
Approach/ Framework
Profit margin
Revenue
Cost
Flying Costs – Fuel
Maintenance Costs
Parking Costs
Sourcing at higher
prices
Not hedging prices
– while
competitors do
Recommendations
The airline is not hedging its fuel purchases unlike its competitors thereby unable to reflect an improvement in margins despite a fall in fuel prices
Interview Summary
The key to this case was to quickly go through the standard profitability elements to hit at the right component and think a little unconventionally to reach the answer.
(C) Consult Club, IIM Ahmedabad
2016-17
92
Unconventional Case - Petrol Pump Losing Business
Your client is a petrol pump owner. He has recently seen losses in his businesses. What might be going wrong? What are your recommendations?
Interviewee Notes
Case Facts
• Decline in profit of an
isolated petrol pump in
DL-CN highway
• Decline primarily due to
decreased transactions
• Industry wide issue
• Decline primary due to
lower traffic
• Dip in petrol business
more than diesel business
– implies car traffic has
reduced considerably
• Decline in car traffic
primarily due to alternate
route or alternate
transport
• Traffic shift to an
alternate air route
• A new freeway route
going to open soon
• Client owns 50 petrol pump out
of which one has a problem. It is
located in Delhi-Chandigarh
highway
• All petrol pumps in the area
have reduced profits
• The issue is recent – past few
years
• The petrol pump sells petrol
and diesel- both businesses
have suffered
Approach/ Framework
Decline in profits by
20%
Decline in
Revenue
Decline in
Revenue per
transaction
Decrease in #
of transactions
# of vehicle
using
highway
Cars
Total
cars in
DL/CN
Increase in
Cost
% filling the
pump
Trucks
Buses
% travelling
between 2
cities
% taking
the
highway
Alternate route available
% market
share
# Transactions = (Vehicles in area
OR passing through the area) x (%
filling petrol) x(% Market share)
Alternate mode of
transport available
Recommendations
•
•
•
Since alternate route (freeway) is going to open soon, a further decline in traffic is expected
The client should close down the petrol pump and either sell or look to set up alternate business in the area
The client should explore opportunity to open up a petrol pump in the new freeway
Interview Summary
This is decline in profitability case where a structured approach is used to pin point the reason in decline and further opportunities for client is explored
Observations/Tips/Suggestions
•
•
Candidate followed a very structured approach- breaking down each block into its components to drill down to the real problem
Candidate was very prompt in catching up an important fact of new freeway coming up and suggesting business expansion plan
(C) Consult Club, IIM Ahmedabad
2016-17
93
Unconventional Case - Local Hospital
A hospital’s profitability is decreasing since the past few years. The hospital is a local medical unit and has a single branch. Most of the patients
come from near by areas. The hospital primarily caters to elderly citizens and offers treatment for bone diseases. Most of the doctors are experts in
curing diseases related to old age.
Interviewee Notes
Case Facts
• Focus is on elderly patients
• In particular, old-age
patients with bone diseases
• The average number of stay
per patient is variable i.e. it
can be decided by the
doctor
• The profitablity (rate of
increase in profits) is
decreasing
• The revenue model of the
hospital – fixed registration
fee per patient and amount
per day for hospital stay
• The hospital caters primarliy to
elderly citizens
• Most of the doctors are experts in
treating bone diseases
• Most of the patients come from
nearby areas
• The hospital is a local medical unit
and not a major brand
• The treatment duration is at the
descretion of the doctor i.e. it can
range from 2 weeks to a month
Approach/ Framework
Reduce decline in
profitability
Revenues
Price/Fees
Costs
# of patients
Rent, Utilities
Equipment
Salaries
Registration fees
Elderly patients
Doctors
Per night spend
per patient
Other patients
Admin
Recommendations
•
•
The number of days spent per patient needs to be reduced
The resulting increase in new patients will result in higher collections from registration fees thereby preventing the decline in profitability
Interview Summary
The candidate did a good job in laying out the framework. It is also important to highlight that the candidate understands the difference between profits and profitability. The current framework
would enable the candidate to realize that the issue is the high number of days spent (per patient) in the hospital and the resulting loss in registration fees from prospective patients. There are
other areas also that need to be mentioned viz. marketing, catering to other target segments, alternate revenue sources, cost optimization, etc.
(C) Consult Club, IIM Ahmedabad
2016-17
94
Unconventional Case - Hotel Mini Fridge
A hotel wants to increase the profits from consumption of mini-fridge items in rooms. You are required to analyze the costs and revenues and
suggest optimal solutions
Interviewee Notes
Case Facts
• Focus is on consumption of
mini fridge items and not
any other revenue source
• There are three categories
of customers- families,
friends and corporates
• The same mini fridge is
installed in all rooms
• The items in all mini fridges
are the same
• There is scope for stocking
different items in mini
fridges in different rooms
• The past consumption data
for different customer
categories is available
• The hotel is a 5 star hotel with
properties in key metro cities
• There are various revenue sources
but the focus is on mini fridge
items’ consumption
• The customers include families out
on vacations, friends out on
vacations and traveling corporates
• The consumption of mini fridge
items varies according to type of
customers
Approach/ Framework
Mini fridge items’
consumption
Revenues
Alcoholic
beverages
Avg. price per
item
Costs
Non alcoholic
beverages
Avg. price per item
# of items
consumed per
room
# of items
consumed per
room
# of rooms
# of rooms
Installation
Items’ cost
Staff
Recommendations
•
The hotel needs to customize the items in the mini fridges depending on the customer category – for families, the mini fridge should stock more cold drinks; for friends and corporates, the
mini fridge should stock more alcoholic beverages. This is based on the past consumption data available with the hotel.
Interview Summary
The candidate did a good job in laying out the framework. The revenues from mini fridge items is driven by consumption of alcoholic beverages, implying that the two revenue streams
(alcoholic consumption and non-alcoholic consumption) need to be analyzed separately. This distinction is clearly shown in the framework drawn out by the candidate. Next, the items in the
mini fridge should be as per the preferences of the customers. This is achieved by having different items in the mini fridges in different rooms based on the past consumption patterns of the
customers.
(C) Consult Club, IIM Ahmedabad
2016-17
95
Unconventional Case - Robbery Planning
A thief in WIMWI Land is planning on his next robbery. He has shortlisted his options to 3 possible prospects- Chaipoint tea house, Archies gallery
and Supreme furniture shop. Help me choose where to rob, why and how?
Interviewee Notes
Case Facts
• Any legal restrictions?
• Is the thief alone or with a
team?
• When is the robbery
planned? How much time he
has to plan?
• What resources he has?
• How much skillful he is?
• Assume normal police risk which
he wants to avoid as any thief
• He has been in this business for
long
• He does the robbery alone
• He has a car which he can use if he
has to
Chaipoint
Approach/ Framework
Which place to
rob?
Benefit
Archies Galley
8am-9pm
Supreme
Luxury
furniture shop
Time of
operation
6am-8pm
Customers
20/hour
16/day
2/day
Avg.
purchase
/customer
Rs.60
Rs.900-1500
Rs.30K
Payment
method
All cash
40% credit,
60% cash
Only card, no
cash
transaction
Money
Risks
Accessibility
Security
Exit options
Additional cost
req.
8am-9pm
Chaipoint
Archies
Supreme
16800
cash
Roadside
2 attendants
Direct by the
side of road
Not really
<=14400
Open
shopping
No guard, 2
people in
shop
Near a road
Not really; open
to candidate’s
creativity
0 (60k by
card
Situated in a
shopping mall
No camera,
security guard
present
In a mall
Not really; open
to candidate’s
creativity
Recommendations
The recommendation would be between the tea shop or the gallery depending on the risk assessment and creativity of the candidate to suggest robbery tactics.
Interview Summary
This is quite unconventional , open-ended and creative case. The trick here is to ask the payment method since otherwise, the candidate misses the entire objective of the thief to maximize his
monetary returns. This case can take quiet unexpected and creative routes to robbery plans depending on the candidate’s creativity, out of the box thinking and the interest level of the
interviewer
(C) Consult Club, IIM Ahmedabad
2016-17
96
Unconventional Case - Consult a Consulting Company
Your client is ABC consulting company. Recently, they have been faced with declining profits issue. The client is very concerned and has hired you
to diagnose the problem and recommend corrective measures.
Interviewee Notes
Case Fact
• Is revenue declining? Or is
cost going up? Or is it the
both?
• Is this an industry wide issue
or is it specific to this
consulting company?
• Are we getting less business
or have we started to charge
less?
• Are we losing out on repeat
business or the new one?
• Is this loss across all sectors?
• Cost has remained the same.
Declining profits is an issue for this
consulting company only
• We are getting less business
• We are losing both repeat as well
as new business
• No, only Pharma and IT have been
losing business
• Partners in Pharma & IT have left
ABC resulting in lower reputation
and network with these clients
Approach/ Framework
Deliverables on time, quality
recommendaition, relations
New clients
Network
(Place)
Reputation of ABC, relationship
with partners, principals, reach
Repeat Clients
Negotiation
(Promotion)
Skillful pitch in response to RFP,
showcasing the brand ABC
Amount
Higher than industry
Structure
100% is fixed fee, clients go to
competitor
Clauses
The clause to get 100% variable
fee isn’t performance dependent
Implementation
Clashes b/w client and company
for deciding the % compensation
No. of clients
Revenues
Curtailing
Attrition
Cause for
attrition
Service Quality
(Product)
Fixed Fee
Make them stay
Workplace
culture
Increase profit
sharing
Low
compensation
Better division
of work
Look to Hire
Fees/Client
Variable Fee
Relaxed
deadline
Recommendations
•
•
•
Client needs to find out the reasons for attrition of partners
A plan to retain the partners should be prepared quickly
Plugging the hole of vacancy is utmost important. Reaching out to clients in Pharma and IT and ensuring them of the same skill set team and leader to maintain their confidence in ABC
Interview Summary
This case tests how well can the candidate adapt to a completely different business model. This is based on Human resource based service provision to customers. The product that sells here is
the intelligence/effectiveness of the human brain.
Observations/tips/Suggestions
•
•
It is very important in a services industry to not forget about the repeat businesses. 60% of consulting clients are repeat clients
Ask the interviewer about the nuances of the industry instead of making random assumptions about it. For e.g. here, the fee is typically broken down into a fixed fee and a variable fee paid
when certain pre-decided and promised deliverables are completed and implemented successfully.
(C) Consult Club, IIM Ahmedabad
2016-17
97
Unconventional Case - Paint Manufacturer in India
A paint manufacturer in India is facing a decline in revenue and profit margin. You need to identify the reason for the same.
Interviewee Notes
• Is this an industry wide
trend or our client is
facing the issue?
• Who are our current
competitors and how is
the market share
distributed among them?
• What is our current
customer base?
• Is there any change in
price?
• Makes a list if possible
cost drivers that could
affect the margin
Broad-approach
• Get a idea of industry and
the client before probing
into the reason behind
decline in revenue
• Profit margin depends on
price and cost
• Drill down into each
aspect individually
Case Facts
• Decline in margin is an
industry wide trend , but rate
of decline is more for the client
• There are lots of players in
the market. Four major players
accounts for 90% of the
industry market share
• Client has the second highest
market share
• Client used to be a market
leader, now dropped to second
•Three customer segment
1) PRO – Professional
Industry (construction)
2) Trade – Targeted at large
tier 1 cities (Retailers –
Customers)
3) Bharat – Targeted at tier 3
cities (Large
retailers/wholesalers –
Retailers – Customers
There is a decline in revenue
generated in the professional
industry segment
Approach/ Framework
Industry/
Company
Profit
Current
Trends
Revenue
Cost
Competitors
Market
Share
Product
Offerings
Customer
Segments
Revenue
/Unit
(price)
Quantity
sold
Quality
Service
Convenience
Perception
R&D
Equipment
Human
Capital
Cost of
finance
Raw
Material
Cost of
raw
material
Processing
Machinery
Storage &
Transportation
Distribution
- Sale force
Transport to
warehouse
Sales
Channel
Marketing
channels
Sales
Force
Strategy
Factory rent
Contract
& bulk
deals
Labor hours
Technology
Storage
(Rent, Labor,
Inventory)
Marketing
Customer
Service
Repairs
Spare
parts
Returns
Training
Quantity
used
Capacity
utilization
Transport to
customers
Cost
Packaging
New Entrants
Substitutes
Recommendations
The decrease in profit margin is due to the increase in transportation cost. The decrease in revenue in the professional industry segment is due to decrease in quantity sold. The customers in
PRO segment perceive the client product as low quality compared to the competitors. But our client product is on par with the competitors product in terms of price and quality.
Interview Summary
The interviewer wanted the candidate to identify the major reason for the decline in revenue and profit margin. The candidate identified the reason but probing into each branch of the above
mentioned framework. Overall interviewer was happy with the analysis of the candidate. Due to lack of time constraint , there was no recommendation given. The reason behind the recent
change in the perception of the client product was not discussed in detail. It would be a real value add if the candidate could come up with various reason for the same.
Observations/Tips/Suggestions
All the aspects of the framework of covered. If the candidate could have provided few quick decisions/ recommendations to overcome the issue. It would have been a real value add.
(C) Consult Club, IIM Ahmedabad
2016-17
98
Unconventional Case - Restaurant in Paris
The revenue of restaurant in Paris is going down. Figure out the reason behind the fall in revenue.
Interviewee Notes
• Is there any change in
price?
• Is there any change in
quantity sold?
• What is the current
industry trend?
• Any new entrant in the
market?
• Is there any change in
quality or service?
Broad-approach
• Get a idea of industry and
the client before probing
into the reason behind
decline in revenue
• Breakdown revenue into
price and quantity
• Drill down into each
aspect individually
Case Facts
• No change in price
• No new competitors
• Industry is not going through
a decline in revenue
• Familiar/ Regular customers
are missing
• Ambience of the restaurant
has been changed recently
• The restaurant layout was
changed from 2 per table to 4
per table
• As the number of people
sitting in a table has increase, it
affected the ambience of the
restaurant and the customers
felt the place is less romantic
now especially for couples
• Number of couples visiting
the restaurant decreased
Approach/ Framework
Industry/
Company
Profit
Current
Trends
Revenue
Cost
Competitors
Market Share
Product
Offerings
Revenue/
Unit
(price)
Quantity
sold
Quality
Service
Customer
Segments
Convenience
Perception
R&D
Equipment
Human
Capital
Cost of
finance
Raw
Material
Cost of
raw
material
Processing
Machinery
Storage &
Transporta
tion
Distributio
n- Sale
force
Transport to
warehouse
Sales
Channel
Marketing
channels
Sales
Force
Strategy
Factory rent
Contract
& bulk
deals
Labor hours
Technology
Storage
(Rent, Labor,
Inventory)
Marketing
Customer
Service
Repairs
Spare
parts
Returns
Training
Quantity
used
Capacity
utilization
Transport to
customers
Cost
Packaging
New Entrants
Substitutes
Recommendations
The intention behind having more number of seats is to maximize revenue without expanding the size of the restaurant. As the result of this bad decision client lost their
regular customers. Hence it is advisable to have two different types of dining facilities with separate demarcations. Candle light dinners on one side and family dinner facilities
on the other. The client can also host corporate dinners, birthday parties etc.,
Interview Summary
The interviewer wanted the candidate to identify the major reason for the decline in revenue. The candidate went ahead and suggested few recommendations to overcome
current situation.
Observations/Tips/Suggestions
Interviewee did not ask questions on current customer base of the client which might have helped him to arrive at the solution much earlier. In most of the case interviews of
this nature, interviewer would be satisfied if the candidate can identify the reason behind the decline in revenue. But it is advisable to come up with few recommendations to
overcome the issue. This could act as a differentiating factor.
2016-17
99
(C) Consult Club, IIM Ahmedabad
Unconventional Case - PPP for Metro in Bangalore
The client has entered into PPP with the government of India to build a metro system in Bangalore. To make it lucrative for the client,
Government of India has allocated land around the metro stations. Help the client make the best use of the land.
Interviewee Notes
Approach/ Framework
• Is maximization of Revenue
the objective? “Yes”
• How can the given land be
used so as to get the
maximum price?
• What are the possible
revenue drivers for the
client?
• What are the pros and cons
of various options
Sell/Rent the
land
Interview transcript
(After diagnosis)
Offline search
Advertisement in newspaper,
hoardings
Buyer/Renter
Online search
Put on online portal like 99 acres,
housing, magicbricks
Price/ Rent
Determination
Land Value
Nearby property prices, NPV of
total rental
Residential
Willinness to stay next to metro
will be low
Office/Public
(Schools)
Noise, commotion, safety etc. will
lead to low willingness
Commercial
Malls- High inflow/outflow of
people during the day
Parks
Jogging track,
children/amusement park, OAT for
movie/play
Parking
Charge for parking (continuous
income source)
Revenue
Sources
Buildings
Develop the
Land
Open Spaces
After identifying malls as the best
revenue source, how will you ensure
that people spend a lot in the mall?
• Advertise about the latest offers in
the metro
• Passage to go out is through a
winding route inside the mall
• Enable shoppers to use the same
card to make purchases & metro
ticket booking
• Offer schemes of free travel on
purchase of certain amount
Recommendations
•
•
Client should develop the land by making commercial shopping complexes/ malls
Push & pull strategy can be applied simultaneously to increase the expenditure per customer
Interview Summary
This case tests whether the candidate can come up with very basic uses of a product. Land could not just be developed, but also sold or rented. It’s important to evaluate all options rather than
just saying we can build houses on it. Once, developing the land has been identified, breaking it down again helps in further evaluation.
Observations/tips/Suggestions
•
•
•
Clarify the regulatory constraints of a land parcel near metro
Understand the clients capabilities and expertise. If he is a developer, then he can build the mall and then rent out the shops.
Once the possible option has been identified, further drilling down into how to make the best use of it is recommended- So, try and provide how to extract maximum out of a mall
(C) Consult Club, IIM Ahmedabad
2016-17
100
Unconventional Case - Shahrukh Khan’s Net Worth
SRK feels that his acting career is nearly over. He has a net worth of $100 million and thinks that it may not be enough for his kids. Suggest ways for
him to increase his net worth
Interviewee Notes
Case Facts
• Opportunity for blue-sky
type brainstorming
• Follow-up question: Choose
one idea worth investing
and develop a 30-second
elevator pitch to convince
SRK to invest in it
• None
Approach/ Framework
Increase SRK’s net
worth
Non-film
Film/TV
Produce
more
movies
Launch
music
record label
Acting
school
Host more TV
shows
Invest in
sports team
Real estate
investment
Branded
products
Clothing
Accessories
Others
Personal
grooming
Recommendations
•
•
•
Even during brainstorming, try to bring some sort of structure; will be appreciated
Be prepared for the case to go in any direction
If asked to prepare a pitch, take some time to think, form a structure putting together all the main points
Interview Summary
The candidate came up with a number of options based on existing knowledge, and then structured them as best as possible. In the follow-up question, demonstrated her ability to put together
all the facts and come up with a coherent pitch
Observations/Tips/Suggestions
The candidate came up with a lot of ideas based on existing investments done by movie actors. She could have explored further to come up with unconventional ideas such as angel investing
etc.
(C) Consult Club, IIM Ahmedabad
2016-17
101
Unconventional Case - Inventory Management in a Milk Company
A milk company is considering a proposal for improving its operations management. As of now, the company has a three day inventory cycle i.e. it
places an order once in three days. It is planning to shift to a one day inventory cycle. You are required to analyze the implications of this proposal
on the business’ profits and operations management.
Interviewee Notes
Case Facts
• The product is a perishable
commodity implying that
the storage period needs to
be optimal
• The reduction in inventory
clyce days will have an
impact on the business’
costs (inventory
management)
• The operations need to be
optimized – balance stock
outs and spoilage
• The company is in the business of
selling milk
• It currently follows a 3 day
inventory cycle
• It is planning to reduce that to 1
day
• The objective is to improve
operational efficiency, while
analyzing impact on profits
Approach/ Framework
Changing the inventory cycle
The
ordering
costs will increase
due to increase in
# of trips
Handling costs
Ordering costs
Transport
Utilities e.g.
telephone
Cost per truck trip
# of truck trips
The
variable
handling costs
may decrease
Procurement costs
Utilities e.g.
electricity
Price per packet
Space (rent)
# of packets
Staff
The
volume
discounts
may
reduce, impacting
price per packet
Recommendations
•
The milk company should consider switching to a one-day inventory cycle if the pros in terms of reduction in spoilage and inventory storage outweigh the cons of reduction in volume
discounts and stock-outs.
Interview Summary
The candidate did a good job in laying out the framework. It covers all vital aspects of inventory management – ordering costs, handling costs and actual costs of procuring the product. The
impact of changing the inventory cycle will can be analyzed by focusing on the mentioned three types of costs, thereby ensuring that the framework is mutually exclusive and collectively
exhaustive. The candidate will analyze whether the various costs would increase, decrease or remain unchanged as a result of the new proposal.
(C) Consult Club, IIM Ahmedabad
2016-17
102
Unconventional Case - English Music Magazine
An English Music channel wants to launch an English Music magazine in India. Analyze the viability of this venture.
Interviewee Notes
Case Facts
• Guesstimate- can use the
current user base as a
benchmark
• Population- Metro and Tier
II- Age Groups- Interested
Population
• Target area is niche, no
major competitors
• Good content is very
important for this product
• Initial pricing can be high to
add premium feel
• Initially outsource
manufacturing to test the
waters
• Client not looking for immediate
profits
• The Music Channel well
established
• The audience is niche but loyal
Approach/ Framework
New
Market
Entry
Customer –
New
Market
Product
Segments
Customer
Expectation
Needs
Available
Products
Profiling
Identify
Gaps of
above 2
Company
Product
Offerings
Industry
Competitors
& Share
If Yes,
How?
Vision
Goals
Size &
Growth
Objectives
Client’s
Target
market
share
Entering
Strategy?
Resources
– Capital,
Technology
& Labour
SWOT
Analysis
Our
Strengths &
Strategic
Assets
Barrier to
Entry/Exit
Market
Share
Our
Estimate
of
Market
Share
No
Start
from
Scratch
Acquisition
Joint
Venture
Recommendations
The product should be launched considering the synergies with the existing services. But a full fledged launch should be avoided as the acceptance of such a product is not known beforehand
Interview Summary
While the candidate covered all the relevant points related to the launch, they sought very little information from the interviewer. They could have asked about the current user base to get an
idea about the popularity of the channel. They also did not follow a very structured approach to the solution.
The focus of the interview was more on the Launch Strategy portion. The interviewer wanted to know the aspects the client should keep in mind while designing the content, the marketing,
pricing and distribution strategies
(C) Consult Club, IIM Ahmedabad
2016-17
103
Unconventional Case - Entry of Home Furniture Maker
A traditional home furniture maker wants to enter into office space. Should they enter or not?
Interviewee Notes
Case Facts
• Can use Porter’s for
analysing the industry
• Are the two markets too
different?
• Target customers different
in the markets
• The value proposition will
have to be different
• Need to conduct extensive
market research before
attempting to launch the
new products
• Currently offering dinner tables,
sofas and beds
• Client catering to low-end of the
market
• Good hold in the low-end segment
• Manufacturing processes not
automated, carpenters produce
the furniture in workshops
• Market leader in the low-end
segment
• Office furniture a $500 mn
industry in India
Approach/ Framework
New
Market
Entry
Customer –
New
Market
Product
Segments
Customer
Expectation
Needs
Available
Products
Profiling
Identify
Gaps of
above 2
Company
Product
Offerings
Industry
Competitors
& Share
If Yes,
How?
Vision
Goals
Size &
Growth
Objectives
Client’s
Target
market
share
Entering
Strategy?
Resources
– Capital,
Technology
& Labour
SWOT
Analysis
Our
Strengths &
Strategic
Assets
Barrier to
Entry/Exit
Market
Share
Our
Estimate
of
Market
Share
No
Start
from
Scratch
Acquisition
Joint
Venture
Recommendations
In the current market, the client is offering low cost products, which might not be of very high quality. To enter into office space, quality will be the biggest concern. Therefore, they should first
expand in their current market by targeting other segments and then look towards other markets.
Interview Summary
The candidate was quite exhaustive in covering all the aspects relevant to the case.
(C) Consult Club, IIM Ahmedabad
2016-17
104
Unconventional Case - Surviving the Ad-blockers
An advertising company wants to avoid evident threat from ad-blockers. Help them out!
Interviewee Notes
Case Facts
• Figure out why users use ad
blockers. Why didn’t they
use them earlier?
• Focus on the core
competencies of the
company.
• Identify other areas where
the company can foray into,
using its core competencies.
• The company has search as a core
offering and advertising is its
major source of income.
• The company has lost a significant
amount of money due to the rise
in the use of ad-blockers.
• It had to pay billions to the ad
blocking companies to get the ads
whitelisted.
• But this has resulted in more ad
blocking companies coming into
the picture.
• The company can foray into new
businesses while the ad blockers
slowly eat away the revenues – so
that it can still be alive.
• The company’s core competency is
advertising, huge IT infrastructure
and tech-savvy employees are the
asset to the company.
• It has the history of setting up
standards in the industry – both
performance-wise and technologywise.
Approach/ Framework
Surviving the Ad-blockers
Reasons for Using
Ads Started
Annoying People
New Businesses
Build Platforms
using Core
Competencies
They get into the
way in the User
Experience
Waiting Times
Spam
Build the go-to Adblocker and
Dominate AdBlocker Market
This may look
conflicting, but
promises the
user that only
irrelevant ads
are blocked.
Setting Up New Ad
Standards
Create Ads that
Don’t interfere
with the UX
Create Ads that the
Users don’t mind
seeing
Recommendations
•
Create ads that don’t interfere with the UX, and at the same time build platforms using the core competencies to have a backup.
Interview Summary
The candidate did a good job in laying out the framework. Through her preliminary questions about the company, its core competencies, revenues and latest happenings she was able to
correctly understand the company’s problem. After thoroughly understanding what the company can, and how its actions may be perceived, the candidate recommended an ideal
recommendation.
(C) Consult Club, IIM Ahmedabad
2016-17
105
Unconventional Case - Testing a New Feature
Your client is a tech company that wants to launch a new feature into market. It wants to get it right the first time. Please help!
Interviewee Notes
Case Facts
• Focus on the traffic of the
website.
• Also note that the company
has tried introducing a
feature earlier and lost 40%
of its visitors.
• It is really important for the
company to get this feature
right, the first time.
• So it makes sense to test out
the feature on a
representative set of visitors
to minimize the risk, and if
successful can be rolled out
to everyone.
• The company has a recipe search
engine.
• It wants to launch a new feature of
buying ingredients directly from
the search result.
• It has previously done such a
feature addition attempt and lost
40% of the visitors.
• The current feature is really
important to the company as it
would open the avenue for
revenues to the company.
• The company estimates that this
feature, if worked the first time
would get 20% more visitors, and if
failed, 50% of the visitors might
leave the site.
• The company’s search engine
currently has a traffic of million
users per day.
• The company has another version
of the same feature as a backup if
the first one fails.
Approach/ Framework
Testing a New Feature
Usability Testing
Feedback
Analytics
A/B Testing
Very Tedious
Customers Won’t Like
Writing a Lot
In-page Analytics to
Figure out Behaviour
Testing Two Versions
on Two different
Representative
Populations
Might Vary with
Individual
Skewed or Non-Serious
Feedback is Possible
But No In-depth
Analysis Possible in
Case of Failures
Can be Used if
Sufficient Customers
are Available
Recommendations
•
Do a series of A/B tests to figure out what the customers like and what they don’t. Over time, a strong feature could be developed minimizing the risk of losing out visitors.
Interview Summary
The candidate did a good job in laying out the framework. Through her preliminary questions about the company, its previous attempts, the feature details & the stakes at place, the candidate
understood the company’s position and figured out that given the huge traffic and ready availability of two versions, A/B testing is the way to go since it is a very powerful tool that throws in
ample insights.
(C) Consult Club, IIM Ahmedabad
2016-17
106
Unconventional Case - Understanding the Customer
An e-tailing company wants to understand the customer & recommend products, like Amazon does.
Interviewee Notes
• Recommender Systems:
Collaborative, ContentBased & Hybrid.
• Collaborative systems are
based on what similar users
do. Not scalable & have long
Cold start periods.
• Cold start is a phenomena in
recommender systems,
when the system behaves
abnormally due to skewness
in the data. Over time, this
ideally subsides.
• Content-based systems are
based on what the user did.
• Hybrid is both contentbased & collaborative.
• Many companies use Hybrid
• If the company is already
established, figure out a way
to use the existing collected
data to avoid cold start.
• Understanding = contextaware
Case Facts
• The company is an e-retailer.
• The company has started its
operations back in 2010.
• It didn’t realize the importance of
recommender systems back then,
so didn’t collect any data, except
order data and the user profile
data.
• The website is content-rich, with
almost a million product listings.
• There are million users using the
site.
• A user hardly reviews / rates 10-20
product listings
Approach/ Framework
Understanding the
Customer
Recommender System
type
Collaborative
Filtering
Collect Data
and Analyze
User Behaviour
Content-based
Filtering
Issues
Cold
Start
Explicit
Implicit
Not
Scalable
Match with
User’s Past
Behavior
Ideal for
Content Rich
Platforms
Device a Data Collection Plan
Started
Operations
Hybrid
More
effective
Collected Data
Earlier
Pre-process Data
to Align with the
New Collection
Plan
Yet to Start
Operations
No Data
Collected
Deal with the
Cold Start
Extract Usable
Data from Server
Logs
Recommendations
•
Build a context-aware hybrid recommendation system with the data extracted from server logs for better accuracy & to avoid cold start.
Interview Summary
The candidate did a good job in laying out the framework. Through her preliminary questions about the company and it’s existing data collection plan, she was able to correctly identify the
company’s requirement. To address the issue here, the candidate came up with a framework where she has to decide on the recommender system type first, and then recommend a data
collection plan accordingly. Also, to make the system relevant at the earliest, various possibilities of data extraction have been examined.
(C) Consult Club, IIM Ahmedabad
2016-17
107
Guesstimate
To estimate the number of wizard hats in London
Interviewee Notes
Case Facts
• This question stemmed from
a discussion of the
candidate’s hobbies (reading
fantasy fiction)
• Asked questions about
situation (real
world/fantasy); was told to
assume whatever she
wanted
• None
Approach/ Framework
Number of wizard hats
in London
Institutions
Individuals
Adults
Children
Schools
Readers
Fantasy fiction
lovers
Drama
institutions
Nonreaders
Nonfantasy
lovers
Recommendations
•
•
Take some time to create the structure; take interviewer through it, then possibly put numbers
Know some facts; make reasonable assumptions
Interview Summary
The candidate brought structure to an out-of-the-box question. By categorizing the hats into individuals and institutions, she showed ability to think beyond the obvious.
Observations/Tips/Suggestions
Candidates should not get flustered when faced with unconventional questions. It is ok to take some time to work through the question. Take the interviewer through your thought process at
every stage
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Guesstimate
To find the number of books in IIM Ahmedabad
Interviewee Notes
Case Facts
• Clarify type of books (here,
notebooks, casemats,
magazines excluded)
• Number of books with
professors (10 areas, 10
profs each, average 5 years
experience, 5 books added
per year)
• Library: 3 floors, 10 racks per
floor, 5 shelves per rack, 30
books per shelf)
• None
Approach/ Framework
Number of books
Individual’s
textbooks
Library
Professors
Students
PGP-1
Novels
PGP-2
FPM
Others
Recommendations
•
•
•
Should first create structure, then put numbers to it
Make reasonable assumptions, clarify with interviewers at each stage
Be prepared to justify your assumptions at each stage
Interview Summary
The candidate clarified the scope of the case; did not make assumptions. Where she did not know, she made reasonable assumptions which she could justify.
Observations/Tips/Suggestions
Should be careful with numbers; silly calculation mistakes could be harmful. Case could have more layers, by including casemats etc
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Case Interview Assessment Sheet
Some tips for your interviews. You can also use this sheet for feedback and as a checklist during your case
preparation interviews:
· Did you repeat the question? (It is important to solve the right question, that’s the first step).Did you clarify the
client’s objective(s)(there could be more than one) ?
· Are you writing down the important details legibly?
· Are you asking the right clarifying questions (about the client, company, industry, product etc.) at the right time?
· Are you being creative and conversing while taking hints at the right time? (Remember, it should not be a
monologue)
· Are you being MECE and structured in your approach?
· Are you getting bogged down by numbers/details or using them to your advantage?
· Are you thinking out aloud without being too verbose?
· Are you ready to go back and correct a mistake you did?
· Are you summarizing it all in the end?
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FULL CASE
Business Expansion – Telecom Video
Project
(C) Consult Club, IIM Ahmedabad
Business Expansion – Telecom Video Project
You have been approached by the Chief strategy officer (CSO) of a telecommunications service provider for advice on options to improve the
economics and performance of it’s recently introduced video strategy
Interviewee Notes
Case Facts
• Focus in on client’s options
to quickly gain scale in video
services
• Analyze the benefits and
deficiencies associated with
each option
• Appropriate the value of a
video subscriber, along with
the incremental value of a
triple play subscriber
• What is the value of scale in
video to the client?
• Business Situation
• Our client is an integrated wireline and wireless
telecommunications services provider that recently began
offering wireline video services in a portion of its geographic
footprint in response to competitive pressure from cable
operators offering triple-play bundles with video, broadband and
voice services.
• Thus far, complexity, technology and cost issues have limited the
rollout and adoption of this service and reduced our clients
ability to effectively counter the competitive threat. Some terms
key to understanding the client are as follows:
• Video offerings: Our client currently offers video services across
its wireline footprint in partnership with a national satellite
operator (DBS); the satellite operator is the largest source of new
subscribers to our client’s wireline geography.
• Buildout costs: Cost of putting in place the delivery infrastructure
that must be incurred before service is delivered to that
neighborhood.
• Programming costs: Cost of procuring and packaging content.
• Installation costs: The cost to connect a subscriber to the delivery
infrastructure.
• ARPU: Average Revenue Per Unit
• Churn: Loss of customers as they switch to other service
providers
Miscellaneous Information
Client’s subscribers
50 Million
Buildout costs
$1500/household
Programming cost
25% above competition
Installation cost
$500/new subscriber
Video ARPU
$75/month
Triple play ARPU
$120/month
% of new video subscribers who take triple play
90%
% of triple play customers who churn relative to voice only
50% less
Market Information
US TV Market
Total US Households
Total US TV Households
Total US MVPD Subscribers1 (HH)
MVPD Penetration in TV HHs
Total Triple play Subscribers
116.2 M
111.2 M
98.0 M
88%
9.7 M
Client Video Services
Client video buildout households passed
Client total video subscriber monthly churn rate2
Client Consumer access lines
Annual % change in client Consumer access lines
31.3 M
2.75%
36.4 M
-4%
Competitor programming cost per subscriber/month = $20.63
1. MVPD = Multichannel video programming distributors; MVPD subscribers pay a monthly fee to a MVPD provider (e.g., cable company, satellite company)
2. Video subscriber monthly churn = Total disconnects for the month / average subscribers for the month
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Business Expansion – Telecom Video Project : Interview Transcripts
What are your client’s options to quickly gain scale in video services?
Sounds good. Can you please walk us through your calculations?
The client can look out for both organic or inorganic growth options, with preference to inorganic
due to the desire to acquire scale rapidly

•
•
•

•
•

•
•
•
Can you please elaborate on both these options?
Sure. By Inorganic, I meant to acquire current satellite distribution partner, cable operator (e.g.
Comcast), or disruptive competitor (e.g., Vudu, Veoh, etc.). While the organic strategy can involve
Increasing the speed of video build out/rollout schedule for client video offering and/or offer
significantly lower promotional pricing for video services to increase penetration in available
markets
What are the benefits and deficiencies associated with each option? Please detail them out.
 Acquire current satellite distribution partner:
• Benefits: provides a large number subscribers quickly, national footprint, expanded footprint to
new geographies and savings on cost of installation
• Deficiencies: price, potential loss of distribution from other telcos, integration challenges (not
wireline)
 Acquire cable operator:
• Benefits: expands footprint to new geographies, wireline video offer
• Deficiencies: price, potential mismatch in geographic coverage, savings on cost of installation
 Acquire disruptive competitor:
• Benefits: lower price, national coverage, rapid roll-out
• Deficiencies: may not be considered a true substitute to traditional video services, may require
higher speed connections
 Rollout owned service faster:
• Benefits: lower operating costs due to one network / optimal network design
• Deficiencies: time to market, proof of success at scale
 Lower pricing:
• Benefits: increase penetration in target markets, rapid implementation (only in areas where
service currently offered)
• Deficiencies: margin implications, devaluing service in customer perception, risk of churn when
prices rise, competitive response
•
Contribution per Month
Monthly Revenue = $75
Monthly Service programming cost = $20*1.25 = $25 (Pull 25% from Misc. Info table)
Contribution per subscriber/month = $75-$25=$50
Expected Lifetime
Annual Churn Rate=2.75%*12=33%
Expected life in years=1/33%=3 years
Lifetime Value
Installation Cost = $500
Contribution/year = $50*12
Cost of Capital: NOT PROVIDED – Should make an assumption e.g. may choose 10% for easier
calculations
DCF = -$500 + $600 + $600/1.1 + ($600/1.1*1.1) = -$500 + $600 + $545 + $495 = $1,140
Makes sense, on another note additional assumptions could have been made regarding other costs
not provided (e.g., cost of sales, cost of care, etc.) that would alter the lifetime value calculation. But,
we are good with your explanation.
So, moving on can you try figuring out the incremental value of a triple play subscriber?

•
•
•

•
•
Incremental life of triple play customers
Annual churn rate of triple play customers = 2.75%*.5*12=16.5%
Expected life in years = 1/16.5% = 6 years
Incremental life of triple play customers = 6 years – 3 years = 3 years
Incremental value due to triple play
Incremental lifetime value = (600/1.1^3)+(600/1.1^4)+(600/1.1^5) = $450 + $410 + $373 = $1,233
Adjust for 90% triple play = 90% * 1,233 = $1,110
Any thing else, that you may considered as incremental value?
The value drivers related to scale can be summarized as :
• Increased bargaining power with video programmers
• Retention benefits from triple play subscriptions leading to fewer access line losses
• Faster realization of video revenue streams
Any thing else, that you may considered as incremental value?
As a part of our implementation strategy, I would like to assess our technical knowledge, ability to
attract personnel, availability of capital and grid accessibility. Is there anything else I should
consider?
On another note, getting people to sign up for triple play if they currently have nothing might be
even more expensive than converting the households currently with MVPD.
Please try quantifying some of these drivers.
That was a good take. Moving on, how would you estimate the value of a video subscriber?
Value of scale can be estimated as follows:
• Programming cost benefit: $5 * 12 months = $60 per subscriber per year [$5 is difference
between estimated $25 programming cost and $20 cost for competition]
• Retention benefits from fewer access line/broadband losses: $45*12 = $540/retained
subscriber/year [$45 is the difference between the $120 and $75/month ARPU]
We can do it by lifetime value analysis. I’ll start it by calculating contribution per month per
subscriber and the corresponding expected lifetime
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MINI CASE
Unconventional Case – Strategic
fit/Merger feasibility dilemma
(C) Consult Club, IIM Ahmedabad
Unconventional Case – Strategic fit/Merger feasibility dilemma
Our client owns one of the largest global card payments networks. As of 2007, the consumer card payments business had reached maturity in the
US and Europe, with stagnation in annual revenue growth. The client has identified a small start-up, currently a provider of payment service in the
e-commerce industry, as a potential acquisition target. You have been called in to evaluate the potential acquisition, and provide guidance on the
integration of these two companies, should the merger occur.
Interviewee Notes
Case Facts
• How should a large
organization such as our
client evaluate this
acquisition opportunity?
• What data would you
need and what analyses
would you conduct to
develop a
recommendation?
• The client does not have
a track record of
acquiring and successfully
integrating small,
innovative companies.
• What cultural differences
will the client have to
overcome? How would
you advise the client to
overcome them?
• E-Commerce has been identified as a key
growth driver, as the industry has grown at 20%
and is expected to grow at a 15% CAGR over
next 5 years.
•PayPal, Amazon 1-Click and Google Checkout
dominate the industry, controlling over 50% of
the market share. Our client’s Senior Executives
feel that they need a capability in E-Commerce,
an area where they have historically lagged.
•The small start-up identified as the potential
acquisition target has an innovative business
model and has grown rapidly. It is a provider of
micro payments for social networks, which is
used to pay small amounts to publishers of
online content and for downloadable media.
•Industry leaders such as PayPal find it inefficient
to manage these small transactions and charge
disproportionately high fees, making traditional
online payments unfeasible.
Approach/Framework
•Data Requirements
•Some data that can be used to structure analyses includes:
•information about the size and history of the target; growth rate for the target
•information about the leadership and culture of the target
•financials about the level of commitment and level of gain, and whether this could
even "move the needle" from a growth perspective
Assess Strategic Fit
Business
Elements
Revenue &
Costs
Market Size
& Growth
Synergies
Qualitative
aspects
(strategic fit)
External
Growth Options in
core payments
business
Customers
Analysis
Same/
Similar
Competitive
Reaction
Different/
New
Recommended Thought Process
Fit with existing business: Can a company focused on security and reliability successfully integrate with a start-up focused on peer-to-peer payments, which are
notorious for fraud? How similar are the business models (i.e. both generate revenues as a percentage of transaction amounts)?
• Overall business case: Growth in target revenues, possible synergies in external settlements, options for cross-selling with existing business, obtaining deep
consumer behavior insights in a segment of current “non-users,” organizational synergies.
• Qualitative aspects: Can the entrepreneurial spirit of a start-up be combined with the client’s behemoth organizational bureaucracy? What will be the keys
to success? (May include holding the company as a separate unit, or giving it complete autonomy for a finite period)
• Customer analysis: Will the combined company serve more customers, or the same customers in different ways? The target’s customers are typically
younger, but may be in households with the client’s existing customers.
• Technology considerations: Is the new technology for micro-payment clearing compatible with the Client’s payment systems, and can they be settled
profitably on the Client’s network given the small size of the transactions (and, hence, small per-transaction revenues)?
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Appendix 1 – Framework Glossary
A glossary of the most popular frameworks used in case interviews
Business Situation Framework (3C’s or 3C & P)
Used for assessing the firm’s current position, or for evaluating the market for a new product, market entry, growth etc.
Customers
What are the market segments, what is the consumer’s behaviour, their values, demographics etc. Identifying target customers.
Competition
What is the size of the market, market share, how are competitors performing, their likely behaviour in the future etc.
Company
What are the firm’s goals, and what strategy has it employed to achieve them? What are its competencies?
Product
What is the nature of the firm’s product or service? Does it meet the customers’ requirements? Substitutes and complements?
Marketing Mix Framework (4P’s & 7P’s)
Used for identifying the value stemming from a product’s offering in the market by combining various factors.
Product
What value does the product offer the client? What are its attributes? How does it measure up when compared with competitors?
Place
What is the distribution channel for the product (retail, wholesale, online etc)? Are the locations of the client’s outlets appropriate?
Promotion
What marketing message should the client deliver? Are discounts, coupons, special offers etc. relevant for the product or service?
Price
How much is the client charging? How price sensitive are the customers, and how are competitors pricing similar products?
For analysing a service instead of a product, the mix can be expanded to include the following 3P’s.
Physical Evi.
Is the service intangible? What cues does the customer have to understand the benefit of the service?
People
Who are the people delivering the service (ex. waiters, cooks, receptionists for a restaurant)? What are their capabilities?
Process
What are the protocols in place to ensure quality in the service? Processes convey the image of dependability for a service.
Profitability Framework (Profit Equation)
The good old “Profits = Revenues – Costs” framework, used for identifying factors influencing profits and profitability.
Revenues
Average Price × No. of Units Sold | Capacity × Occupancy % × Average Price| No. of Customers × Frequency × Ticket Size etc.
Costs
Can be classified into fixed and variable, and then analysed further. (Some long-term variable costs can be fixed in the short term)
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Appendix 1 – Framework Glossary Ctd.
A glossary of the most popular frameworks used in case interviews
Value Chain Analysis
This framework lays down the series of activities that the firm employs to deliver a good or service
Inbound Logistics
The process of sourcing and warehousing raw materials, and transporting them to where they are needed.
Operations
The core function of the company where the bulk of value addition happens (varies from manufacturing to data processing).
Outbound Logistics
The delivery of the product or service to the customer. Used to analyse distribution channels (retail/wholesale/agents etc.).
Marketing and Sales
Activities used to promote the product. Can include advertisement, promotional offers and also market research.
Servicing
Any of the ancillary services that assist in the main value chain, including customer care, and after sales services.
Mergers & Acquisitions Framework
This framework can be used to analyse the viability of a merger with a target firm
Stand-alone Value
Value of target firm independent of client’s firm. Consider tangible and intangible factors (ex. revenues and brand value).
Synergy
How do the capabilities of both target and client’s firm synergise together?
Other Factors
Literally, just a bucket for other factors. (Read: regulatory hurdles, culture clashes etc.)
Smaller Frameworks
These frameworks work well within larger structures, useful for when you’re drilling down into a specific bucket of analysis
Internal/External
What factors affect the scenario within the company, and from the environment (market conditions, competition etc.)
Qualitative/Quantitative
What factors can you quantify (revenues, costs), and what factors do you need to describe (marketing strategies)?
Costs/Benefits
What are the advantages and disadvantages; pros and cons that must be evaluated before making a recommendation?
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Appendix 1 – Framework Glossary Ctd.
A glossary of the most popular frameworks used in case interviews
McKinsey’s 7S Framework
The 7S Framework is useful for analysing the alignment of a firm to the achievement of its goals. These are the “3 Hard S’s”
Strategy
How does the firm intend to achieve its goals? What is its unique selling proposition? How does the firm create value?
Structure
Organisation of departments within the firm (functional/divisional), structure of teams, and hierarchy. How do they coordinate?
Systems
What are the protocols in place? (Similar to ‘process’ for the 7P framework). How does the firm evaluate progress?
And the “4 Soft S’s”
Shared Values
What are the firm’s values and culture? How strong are they, do they influence the employees, do they need to be reinforced?
Skills
What are the skills of the firm’s employees? Are there any gaps in the skills required? How are skills assessed and developed?
Style
What style of management or leadership has the firm adopted? Is it appropriate in the context? Do teams cooperate or compete?
Staff
What are the positions within the firm? What positions need to be filled?
Porter’s Five Forces
BCG’s Growth Share Matrix
Bargaining Power
of Suppliers
Level of Rivalry
within Industry
Market Growth
Threat of
New Entrants
Bargaining Power
of Consumers
Threat of
Substitutes
Question
Marks
Star
Performers
Dogs
Cash Cows
Market Share
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Appendix 2 – Datasheets
A compilation of data that will be useful for solving guesstimates. Most of these numbers are approximations, but they should be good enough for
a guesstimate scenario.
Table 1: Population Distribution in India
(Gender and Urban-Rural)
Total Population
Table 2: Life Expectancy and Population
Growth Statistics
1200
Overall Expectancy
69 Years
Males
620
Male Expectancy
67 Years
Females
580
Female Expectancy
73 Years
Sex Ratio
0.95*
Birth Rate
22*
7.5*
Urban Population
350 (30%)
Death Rate
Rural Population
850 (70%)
Pop. Growth Rate
Figures are in millions
* 950 females for 1000 males
Urban
Rural
5
5
5
75,000
1,00,000
50,000
-
30%
20%
Expenses (Food)
50%
45%
55%
Expenses (Travel)
10%
10%
10%
Expenses (Others)
40%
45%
35%
Annual Household Income
% Savings
Poverty: Approx. 25% of the population lives below the poverty
line ($1.25 or ₹75 )
(C) Consult Club, IIM Ahmedabad
1.25%
Population (%)
0-14 Years
350 (30%)
15-24 Years
250 (20%)
25-34 Years
200 (15%)
35-44 Years
150 (10%)
45-54 Years
150 (10%)
55+ Years
150 (10%)
Figures are in millions
Note: Median age for India is 25 (50% of
Indians are below 25, 65% are below 35)
Table 5: Class Distribution by Annual Household Income
India
Size of Household
Age Spread
* Figures are for every 1000 individuals
Table 4: Income and Expenditure
Data Head
Table 3: Age-Wise Break-up of Population
Annual Income of Household
Percentage
Low Income (Household Income < 45,000)
20%
Middle Income (45,000 to 1,80,000)
60%
High Income (Household Income> 1,80,000)
20%
Table 6: Demographics by Religion
Religion
Hindu
Muslim
Christian
Others
80%
15%
2%
3%
Population
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Appendix 2 – Datasheets Ctd.
A compilation of data that will be useful for solving guesstimates. Most of these numbers are approximations, but they should be good enough for
a guesstimate scenario.
Table 7: Population Spread of Metros
City
Population
1. Mumbai
12.5
City
Table 8: Sector-wise Employment Distribution
Population
Sector
India (%)
Urban (%)
Rural (%)
6. Ahmedabad
6
Agriculture
40%
5%
60%
5
Industries
10%
20%
5%
Services
50%
75%
35%
2. Delhi
11
7. Kolkata
3. Bangalore
8.5
8. Surat
4.5
4. Hyderabad
7
9. Pune
3
5. Chennai
7
10. Jaipur
3
Figures are in millions
 Population of top 10 Cities: 66 Million
 Population of next 50 Cities: 66 Million
 Population of next 100 Cities: 45 Million
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Appendix 3 – Sample Worksheets (Case 1: Radio Taxi)
Client is a big congl. trying to start a radio taxi business. Identify # of vehicles to start with.
Location: Mumbai
No. rides/year
1.8
0.85
0.1
2.75 crore rides
No. rides/taxi/year
9 × 360 = 3240
2 crore ppl
50 lac households
8k or less
30% (not targets)
8k – 16k
40% - 20 lac – 20 lac people
16k +
30% - 15 lac households
Office – goers – 1.80 crore rides
Misc. travellers – 85 lac rides
Night traveller (5%) – 2.5 lac (households)
80,000 x 12 ≈ 10 lac
No. taxis needed
2.75 crores / 3240 ≈ 8500 taxis
10 hours of operation
30% idle time
70% active time =>7 hours/day
45 mins/ride => 9 rides/taxi/day
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Appendix 3 – Sample Worksheets (Case 2: Watch Maker)
Client is a watch brand wishing to move into the online space. Help him with an industry analysis.
•Selling watches online
luxury
•2 segments
24%
mid-segment
26%
•17 stores across 10 cities
•Little sales from Amazon
and Flipkart
Luxury – 20% of revenues – 30% bottom-line
Mid-Range – 20% of revenues – 30% bottom-line
E-Commerce Market
Arya
Sansa
Mid-Range (75% of mkt)
30%
18%
Both have online stores
X
Y
Z
29% 26% 18%
X has an online store
Customer
Exp.
Luxury (25% of mkt)
Reach
Domain
name
Google
SEO
Look &
Feel
Products
Sold
(C) Consult Club, IIM Ahmedabad
Tie-up with
Flipkart
Tie-up with store
for delivery
2016-17
Fed Ex special
delivery
122
Appendix 3 – Sample Worksheets (Case 3: Agri. Equipment)
Large agri. equip. manufacturer: line of tractors is losing money. Identify the reason.
Profits
Revenues
Price
Costs
No. of Tractors
Supply
Distribution
R&D
Labour
Utilities
Capital
Raw Materials
Sourcing
×
×
×
×
Demand
Competitor (substitutes)
Quality
Price
Service
Operating costs
The client is supplying tractors of such high quality as is not required by his customers.
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Appendix 4 – Sample Evaluation Metrics
A breakup of what firms look for when they evaluate a case interview. To be taken with a pinch of salt.
Sample 5 point grading scale
Preliminary questions and recap:
1. Candidate does not clarify problem statement (no recap of initial information)
2. Candidate clarifies with problem statement with too much detail (no prioritizing of important information
3. Candidate recaps the problem statement but without sufficient structure; candidate asks for detailed information too early
4. Candidate recaps the problem statement and covers key points but does not display comprehensive understanding of client
5. Candidate provides a concise and structured recap of the problem statement, and asks a couple of relevant clarifying questions
Breakup of the Interview
• Preliminary questions and recap
• Laying out an appropriate framework for structuring the analysis
• Aptitude for quantitative analysis
• Aptitude for creativity (in analysis and recommending solutions)
• Summarizing the case
• Extent of overall structured response
• Aptitude for problem solving
• Communication skills
Each of these metrics may be evaluated on a five point scale as above. Among other things, the candidate will also be
evaluated on the solutions/recommendations for the problem.
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