IIMB Casebook and
Industry Reports
2021-22
Volume 11
ICON – Consulting Club
IIM Bangalore
ICON, IIM Bangalore
1
Copyright
© 2021, ICON – Consulting Club, IIM Bangalore. All rights reserved.
This book or parts thereof may not be reproduced in any form, stored in any retrieval system, or
transmitted in any form by any means – electronic, mechanical, photocopy, recording, or otherwise –
without prior written permission of ICON – Consulting Club, IIM Bangalore. For permission requests, write
to ICON at icon@iimb.ac.in.
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2
Foreword
This casebook documents the interview experiences of the students of IIM Bangalore. The aim of sharing
these experiences is to inform students about the case interview experiences of past batch and to help
them prepare for their placements accordingly. The experiences listed below are not necessarily the best or
the only way to handle case interviews. They only serve to give students an idea of what to expect when
they walk into a case interview. Every individual could have his/her unique way of tackling consulting
interviews, each of which could be correct.
This document has contributions from students who appeared for campus interviews conducted by
consulting firms during the summer and the final placement process over the last year (2020-21). The
interview experiences have been sorted based on the type of case, consulting firm, difficulty and the round
in the selection process. Special thanks to all the contributors!
In this edition, to provide holistic preparation for the case interviews, we have included 20 industry reports
as well. The aim of these reports is to provide a basic understanding of the industry's value chain, key
performance metrics, current market trends and major drivers for cost, revenue and growth. Even though
having industry-specific knowledge is not mandatory for case solving, having a basic industry understanding
helps tackle case interviews better.
Team ICON wishes you the very best for your summer placements!
ICON, IIM Bangalore
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Contents - I
S.No
Particulars
I.
Introduction
II.
Profitability Framework
Difficulty
Company
Page
S.No
Particulars
Difficulty
Company
Page
7
18.
Cybersecurity Software Provider
Moderate
Bain
49
10
19.
Pharma Company
Moderate
Bain
51
1.
Two-Wheeler Manufacturer
Easy
Bain
11
20.
Metro Line - I
Moderate
BCG
53
2.
Retail Supermarket Chain
Easy
Bain
13
21.
LCD Screen Manufacturer
Moderate
KPMG
55
3.
Energy Major Firm
Easy
McKinsey
15
22.
Car Manufacturer
Moderate
McKinsey
57
4.
IT Services Firm
Easy
McKinsey
18
23.
Asset Management Firm
Difficult
Bain
59
5.
Beverage Bottler
Easy
EYP
20
24.
Metro Line – II
Difficult
BCG
61
6.
Global Tools Manufacturer
Moderate
BCG
22
25.
Automation Solution
Difficult
Bain
63
7.
Telco Company
Moderate
EYP
25
8.
Pharmacy
Moderate
A&M
27
26.
Toll Collection
Easy
BCG
66
9.
Skiing Resort
Moderate
BCG
29
27.
Factory Owner
Easy
Bain
68
10.
Quick Service Chain Restaurant
Moderate
Kearney
31
28.
New Medicine Launch
Moderate
McKinsey
70
11.
Electricity Company
Moderate
McKinsey
33
29.
Medical Drug
Moderate
BCG
72
12.
Steel Plant
Moderate
EYP
35
13.
Steel Industry EBIDTA Projections
Moderate
BCG
38
30.
Coffee Production
Easy
Kearney
75
14.
E-Commerce Firm
Difficult
Bain
40
31.
OTT Service Launch
Easy
Strategy&
77
42
32.
Convenience Store at Gas Station
Moderate
Kearney
80
III.
Market Entry Framework
IV.
V.
Pricing Framework
65
Growth Strategy Framework
74
15.
Apple Farming Supplement
Easy
Kearney
43
33.
Boiler Company
Moderate
OliverWyman
83
16.
Covid19 Drug in India
Easy
McKinsey
45
34.
Coca Cola
Moderate
EYP
85
17.
Air Purifier – COVID disinfectant
Moderate
Bain
47
35.
Tyre MNC
Moderate
McKinsey
87
ICON, IIM Bangalore
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Contents - II
S.No
Particulars
Difficulty
Company
Page
36.
McDonald’s India Growth
Moderate
Bain
89
54.
37.
US Tyre Manufacturer
Difficult
BCG
91
38.
Coffin Manufacturer
Difficult
EYP
VI.
Unconventional
39.
Bread Toaster Usage
40.
S.No
Particulars
Difficulty
Company
Page
Food Delivery Customer Service
Moderate
Deloitte
126
55.
Food Delivery App
Moderate
Bain
128
93
56.
Four-Wheeler Tyres
Moderate
GEP
131
94
57.
Automatic Vacuum Cleaner
Moderate
McKinsey
132
58.
COVID Tests
Difficult
GEP
134
Easy
Kearney
95
Time to Market
Moderate
Accenture
97
41.
Customer Experience Improvement
Moderate
Bain
99
42.
Home Services – Fall in NPS
Moderate
Bain
101
S.No
43.
Movie Release – Theatre or OTT
Moderate
Bain
103
1.
Airlines Industry
136
44.
Business Process Outsourcing
Moderate
BCG
105
2.
Automobile Industry
137
45.
Pharmaceutical Firm
Moderate
Kearney
107
3.
Cement Industry
138
46.
Unhappy Friend
Moderate
Kearney
109
4.
E-commerce & E-retail Industry
139
47.
Plastic Packaging Company
Moderate
Bain
111
5.
Electronics Manufacturing Industry
140
48.
Movie Launch
Difficult
Bain
113
6.
Energy, Oil & Gas Industry
141
49.
Wood Manufacturer
Difficult
BCG
116
7.
Financial Services – Asset Management
142
118
8.
Financial Services – Banking
143
Financial Services – Digital Payments
144
VII.
Guesstimates
Industry Reports
Industry
Page
50.
Automobile – Electric 2-wheeler
Easy
Accenture
119
9.
51.
Bangalore Airport
Easy
Accenture
120
10.
Financial Services – Insurance
145
52.
Food Tech Platforms
Easy
EYP
122
11.
FMCG Industry
146
53.
Sugar Consumption
Easy
Strategy&
124
12.
Food Processing Industry
147
ICON, IIM Bangalore
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Contents - III
S.No
Industry
Page
13.
Healthcare Industry
148
14.
Hospitality Industry
149
15.
Iron & Steel Industry
150
16.
IT & ITeS Industry
151
17.
Logistics Industry
152
18.
Pharmaceutical Industry
153
19.
Retail
154
20.
Telecom Industry
155
ICON, IIM Bangalore
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Introduction – Case Interviews
Case Interviews
v Personality based ques. (5 min); Case discussion (20-30 min); Closing ques. for interviewer
(2 min)
v Know your CV well→ personality ques are based on CV to break ice and getting to know
you
v Case discussions don’t have a predetermined answer. Evaluation is based on approach,
exercising judgements and steering through the problem statement
Business Case
v Real life consulting project, that the interviewer was involved in → basis of case discussion
v Consult projects can vary from 2-3 months to even a year → condensed into minutes for
interviews
v Provided as a 3-5 statement caselet introducing the client and problem faced by them
v Can be number based or strategy driven; guesstimates can be a part as well
Why Case Interview?
v Test the ability to perform on the job in a similar setup as the case-interview (consult-fit)
v Understand thought process of the candidate and capability to make decisions/ prioritize
v Put you under same pressure, like any consult project, to assess your poise, self confidence
and communication skills (interpersonal skills)
v Drawing on personal experiences, if any, can come very handy – appreciated by interviewer
ICON, IIM Bangalore
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Introduction – Case Interview Process
Interview Stage
What to expect?
Skills Tested
Case Interview
Question
v Interviewer tells about the business problem and objective
v Ask clarifying questions; ensure you heard the question correctly
v Ability to listen
and synthesize
Developing the
structure
v Ask for time to structure the problem at hand
v Come-up with a structured MECE approach quickly
v Structured
thinking
v Communication
v Use a hypothesis driven approach for case solving
v Ask relevant questions, use 80-20 rule appropriately
v Case can get number intensive
v Problem solving
v Analytical skills
v Communication
v Summarize the case with recommendations backed up by insights
discovered in the case
v Creativity
v Concision
v Communication
Case Analysis
Summary/
Recommendation
Questions for
Interviewer
v Opportunity to show enthusiasm towards consulting
v Ask relevant, non-generic question
ICON, IIM Bangalore
v Consulting fit
8
IIMB Casebook
2021-22
ICON, IIM Bangalore
9
Profitability Framework
Profits
Revenue
Price
Production
Cost
Volume
Distribution
Product Mix
Customer
(What product in the
portfolio; apply 80/20)
(Can use customer
journey for services)
Fixed
Variable
(Can use value chain analysis
for cost reduction too)
Value Chain
Volume per
customer
# of customers
Loyalty program
Place
Cross selling
Product
Bulk discounts
Promotion
Think about journey of product/ service
(Covering the 4Ps)
ICON, IIM Bangalore
R&D
In-bound
Manuf/
Service
After
sales
Sales &
Mktg
Outbound
10
Two-Wheeler Manufacturer
Profitability | Easy | Bain (Buddy)
Case Statement : Your client is a 2-wheeler manufacturer, and the company has seen a significant
drop in the market share in the last 2 quarters. Find the issue and recommend solutions.
Before we delve deeper into the case, I would like to get some context about our client. Can I ask
a few questions on the same?
Sure, please go ahead.
Focus on the post-sales services.
Where is our client located? Which geography do they operate in? What are their products?
Our client’s R&D centre is in Bangalore and they have 8 manufacturing plants across India and
also have pan-India distribution. They have products in 3 segments: sports, scooty and motorbikes
where they have 5 models in the 100-200cc segment.
I would like to know if the dip in market share is in a specific segment or throughout segments? I
would also like to know if this dip is across India or concentrated to a specific geography?
The dip in market share is in the 100-200cc motorcycle segment and is concentrated in the
Punjab and Haryana location.
I think I have enough information to start the case. Since it is an issue with the market share, is it
fair to assume that the revenue has fallen down for our client and that we can neglect the cost
aspect?
It is a fair assumption to make. You can proceed now.
I would like to break the revenue into two major factors: No. of bikes sold x Average price per
bike. Did any of these go down or is it a combination of both?
The number of bikes sold has gone down in the geographies mentioned above.
Since volume of bikes being sold has gone down, is it a demand side issue or a supply side issue?
It is actually a combination of both. But for now, focus on the supply side.
I would like to break down the value chain of our client and investigate each element of the value
chain. Does it sound like a reasonable approach?
Yes, you may do that.
Since it is an OEM, the value chain starts from the procurement of raw materials from the
suppliers. We have inbound logistics and the manufacturing happens at the plant. We have
warehouses to store the finished models and these models reach the dealers / distributors
through outbound logistics. We have post-sales services as the final element in the value chain.
Which element of the value chain do I need to focus on?
There can be multiple reasons with respect to Post-sales services:
1.
Lesser number of service centres, lesser opening hours.
2.
Lesser number of free services.
3.
More service time (Turnaround Time)
4.
Service assistants behaviour
Do I need to look for more reasons?
No you don’t need to. Apparently, a few service centres in Punjab & Haryana were shut down due
to non-conformance with the government waste disposal regulations. Because of this, the vehicle
owners had to travel longer distances to get their services done. Moreover, this created dent in
the reputation of our client.
So I am assuming that the combination of both these factors pushed the end consumers to switch
to other OEMs because of which our client’s demand has gone down. Is this the reason for the
demand problem that you mentioned at the beginning of the case?
You are correct. Now what can our client do to salvage the market share?
I would like to give a few recommendations.
1.
Incentivise the service centres to follow the rules and reopen the centres as soon as
possible.
2.
If the service centres are company-led, try to move to franchise model and increase the
number of service centres in the short run.
3.
Our client can also get into a revenue sharing agreement with other OEM service centres.
4.
Lobby the government to approve the reopening of the centres.
5.
Rebuild the brand reputation by providing additional free services for the vehicle owners.
That is pretty much it. Thank you!
ICON, IIM Bangalore
11
Two-Wheeler Manufacturer
Case statement
Interviewee Notes
Profitability | Easy | Bain (Buddy)
• Market share of 2-Wheeler manufacturer has reduced over the last two quarters
• Analyse the reason for the drop and recommend solutions to capture the market share again
Structure/Framework
• 8 manufacturing plants,
Pan-India distribution
• 3 segments, dip in
100-200cc segment in
Punjab and Haryana
• Focus on supply side
issue
• Post-sales services
deteriorated
• Few service centers
shutdown
Revenue
No. of bikes
sold
Demand
Suppliers
Inbound
logistics
Average
price / bike
Supply
Plant
Post-sales
services
Warehouse
Dealers
Outbound
logistics
Reduced no. of
service centres
Key Takeaways
• Used the profitability framework – Supply side issue
• Understanding of value chain is required to list down the possible reasons
• Think of recommendations to open service centers at the earliest, comply with regulations and lobby with the Government
ICON, IIM Bangalore
12
Retail Supermarket Chain
Profitability | Easy | Bain (Partner)
Case Statement : Your client is a retail supermarket chain based out of Mumbai. It owns about 50
stores. The EBITDA has been negative for the past few months.
Yes! The inhouse operations costs can be divided into five major heads. Rent, employee salaries,
utilities, technical infrastructure and security costs. Have I missed anything else?
Thank you for the problem statement! I would start by asking a few questions. What are the target
consumers of the client? Is it high end supermarket like Godrej’s or something like a Big Bazaar?
You did consider the major costs. Wastage/Shrinkage costs is also a major component for the
company and has been increasing for the past few months. Let us analyse core revenue now.
You can consider to be it like a Big Bazaar chain, but focusing solely on groceries.
Oh yes, Wastage costs will form a major part since the client has significant proportion of
perishable items in the total sales. The core revenue can be a function of no of customers and
Average basket size per customer. Do you have issue with any of this?
Thank you! Could you let me know the product mix of client, whether the company sells private
label goods or large FMCG labelled goods?
The footfall at the stores has been decreasing. How would you analyse this?
The client has both type of products. Additionally, it also deals in fresh products like milk, fruits,
vegetables etc.
Okay. Do we have any area specific issue or is it across all stores?
Great question. So, we have been facing lower profitability than the industry standards. The issue
has cropped up over the last year and is across all the stores
I would like to further break down profit as a function of revenue and costs. Is it a fair approach?
Please go ahead with the approach. Kindly analyse both the factors for me.
Thank you! Revenue can be broken down into core and non-core revenues. Core revenue will
mainly include the revenue generated from sales at the stores. Non-core revenue would be
advertisement expenses, parking charges, value added service charges etc.
That is a good way to structure the Revenue components. Let us also analyse the costs involved.
I would like to analyse costs across the value chain: Sourcing and procurement costs, logistics &
warehousing costs, inhouse operations costs, and after sales costs if any.
Sure. We can go through the entire consumer journey of purchasing goods via retail chain, and
understand the pain points.
Can you think of dividing the customers on some parameter, given we have equal number of
consumers from all income segment.
Customers can be divided into frequency of visit: first time visitors, occasional visitors and
frequent visitors
Yes you have correctly identified. Due to lack of time, I would tell you that we face issues with
both New and Old customers (varies according to region). Please think of recommendations that
you can give to your client.
Sure, I would like to divide my recommendations on a 4x4 matrix of short term/long term on x
axis and frequent/new visitors on y axis. for new visitors, area specific marketing campaigns and
discount schemes can be launched in short term. In the long term, company can look to employ
practices like ELDP. For frequent customers, in the short term it can focus on better in house
experience and in the long term, the client can focus on introducing attractive loyalty scheme.
Thank you, it was nice interacting with you, All the best!
What are the possible inhouse operations costs that you can think of?
ICON, IIM Bangalore
13
Retail Supermarket Chain
Case statement
Interviewee Notes
Profitability | Easy | Bain (Partner)
• Your client is a retail supermarket chain based out of Mumbai.
• It owns about 50 stores.
• The EBITDA has been negative for the past few months.
Structure/Framework
Profits
• The supermarket chain
is like that of Big
Bazaar, dealing in
groceries.
• It also holds large
amounts of perishable
goods.
• Stores in different area
have different sets of
problems.
Revenue
Core
Costs
Non-Core
Security Costs
Number of customers* Avg. Basket Size
Infrastructure
Demand (Number of customers)
Salaries
Rental
Frequent
New
Utilities
Shrinkage
Key Takeaways
• Interviewer was impressed by spilt of core and non-core revenue. It is not necessary, but surely fetches brownie points
• Incorporate the given context while coming up with the cost heads, and do not blindly follow set patterns
• Interviewer appreciated the structuring of recommendations section
ICON, IIM Bangalore
14
Energy Major Firm
Profitability | Easy | McKinsey (Partner)
Case Statement : Client is an energy major based in the USA, facing declining profitability for past
couple of years and wants our help in diagnosis. So, let’s do a case. We will discuss about a
power and energy client. Do you have any idea about power industry?
Sure, the power sector is quite vast, electricity can be generated from various sources like coal,
nuclear, hydro and wind. Then, it is distributed to through the grid.
That’s right, a typical power value chain has 4 parts: Generation, transmission and distribution,
wholesale and retail. So, our client is a major US based energy sector player. They have been
experiencing declining profits from their coal-based power business for past couple of years.
Okay. So, I’ll like to ask a few questions to understand the problem better.
Supply is not an issue. What factors can drive the demand down?
Demand = No. of customers (HH connections)* No. of units/HH
So, we can look at either of these. Further, the decline in either can be driven by internal like their
client specific issues affecting the consumption or external macro factors like competition,
economy etc.
Fair enough. Let’s look at costs.
For costs, we will look at the value chain: Raw material (coal), thermal power production,
transmission and sale to the whole-seller and further distribution to the end consumer.
Sure, go ahead.
What part of the value chain does the client operate in?
Client owns the entire value chain till the distribution.
Okay, electricity consumers can be divided into 3 segments: Individual, commercial and industrial
right? Is the problem prevalent across all?
Let us focus on household customers.
We should check whether the decline in units sold is due to declining demand or our client’s
incapability to fulfil the demand.
Okay. Let us look at some data. The player has 10 coal power plants, with average output of 4.5
million Megwatt-hrs/year per plant. The wholesale price is $40/ MWhr and the costs is $10 /
MWhr. Now the current utilization is 80 % and client is looking to increase to 90%. How much
extra income will this generate? Assume price & costs remain same.
Okay, sure. Can I take a moment to do the calculations?
Output
Revenue
Costs
Income
Current
=4.5*10 million MWhr =
45 million MWhr
$1800 M
$450 M
$1350 M
New
= 45*(90/80) million
MWhr ~50 million MWhr
$2000 M
$500 M
$1500 M
Is this trend common to any other players in the industry?
We do not have any information on that presently.
Okay, sure I’d like to approach this problem solving by expressing profits as a function of
revenues less costs. We can look at whether the declining profitability is due to decreased
revenues or increased costs or both.
Okay, what factors can drive down revenues?
Extra income = $150 M on the venture
Firstly, revenue = no. of units sold * unit price. We can check for any decrease in unit price.
Very well. Walk me through your calculations.
Okay, what else?
Explains the calculation
ICON, IIM Bangalore
15
Energy Major Firm
Profitability | Easy | McKinsey (Partner)
Fine, so it seems like a good opportunity, what can be the bottlenecks in increasing the output to
90%?
Can I take some time to think?
Sure, go ahead.
The bottlenecks can be:
Supply issues
1. Regulatory licenses/ requirements
2. Safety/Advised %utilization
3. Increased wear and tear of equipment
4. Quality issues – coal efficiency, etc
Demand issues – demand may be highly variable, hence extra capacity buffer is required, mean
cannot be increased
Good. I think that is all.
ICON, IIM Bangalore
16
Energy Major Firm
Case statement
Interviewee Notes
Profitability | Easy | McKinsey (Partner)
• Power sector client facing declining profits
Structure/Framework
Profits
• Coal based plants
• Full VC
• HH customers only
Costs
Revenue
Calculations:
#units
Raw material
Price/unit
10 plants- all coal based
4.5 mil MWhr/yr/plant –
current output
Wholesale price –
$40/MWhr
Cost –
$10/MWhr
#connections
Internal
Need
Awareness
Accessibility
Affordability
Customer
experience
Generation
Avg no of
units/HH
Transmission
External
Wholesale distribution
Competition/
Substitution
Regulatory
Retail
Calculations:
Social
Technological
Environmental
Output
Revenue
Costs
Income
Current
= 4.5*10 million MWhr = 45
million MWhr
$1800 M
$450 M
$1350 M
New
= 45*(90/80) million MWhr
~50 million MWhr
$2000 M
$500 M
$1500 M
Key Takeaways
• The interviewer mostly wanted me to list as many factors as possible in each scenario without going in too much depth.
ICON, IIM Bangalore
17
IT Services Firm
Profitability | Easy | McKinsey (Partner)
Case Statement : Your client is an IT services company based out of Bangalore and has been
facing declining profitability. Diagnose the problem and suggest possible solutions.
Thanks a lot, Sir, for the problem statement. I would like to confirm that our client is an IT services
company facing declining profitability. We must find the problem and suggest possible ways to
mitigate it.
Correct.
So, before starting with the analysis, I would like to ask a few clarifying questions to get a better
understanding about the problem and our client. Is that okay?
Revenues have been steady. Let’s focus on the costs.
Sure, Sir. Since our client is an IT services company, their main costs would be HR costs,
infrastructure costs and any miscellaneous costs.
What do you mean by infrastructure costs?
Infrastructure costs would be the costs associated with maintaining hardware like servers, and
computers/laptops or costs associated with licensing software. Are there any other costs I need to
consider?
Sure, go ahead.
Let’s start with the HR costs and then come back to others. What all factors do you think
contributes to the HR cost?
As I understand that we are facing declining profitability. I wanted to understand if the problem is
specific to our client or whether it is an industry-wide problem. Also, for how long have we been
facing this problem?
I believe HR costs can be a component of the number of employees in the organization, the salary
paid to each employee and the employee mix, or the number of employees at different roles. Are
any of these the issue?
The problem is specific to our client. The issue has been around for a while.
Let’s analyze the employee mix. Why do you think this could contribute towards increasing costs?
Can I know where the customers of the client are based?
The HR costs will depend heavily on the number of employees at different roles. For example, in
any project team, there might be a manager and developers at 2-3 roles, each commanding
different salary. So even with relatively lesser number of employees, if there are a greater number
of employees at senior roles, the costs will be higher.
The clients' customers are mainly based in the US.
Thanks for the information. One last clarifying question. I wanted to understand the competitive
landscape of the industry.
For the sake of simplicity, you can assume that our client is the market leader in the industry.
I would like to take a minute to gather my thoughts and come up with a structure for the analysis.
Would that be, okay?
Is there any other way in which different employees could receive different salaries?
If the company has different onshore and offshore teams, there could also be a problem with the
onshore-offshore mix, resulting in higher costs.
Yes, that was one of the major issues our client was facing.
Thanks. We are out of time. Let us wind up here.
Sure, go ahead.
Thanks. Since we are facing issue of decreasing profitability, I would like to start the analysis basis
revenue and cost. Could you help me with the trends in revenue and cost?
ICON, IIM Bangalore
18
IT Services Firm
Case statement
Interviewee Notes
Profitability | Easy | McKinsey (Partner)
• IT service client facing declining profitability
Structure/Framework
• The problem has been
going on for a while
• Client is a market
leader in IT services
Profitability
Revenue
Costs
HR Costs
Infrastructure
Costs
Number of
employees
Hardware
costs
Employee
Salary
Software
costs
Misc.
Employee
mix
Key Takeaways
• Segmenting people cost by number of employees, salary and mix was important
• Think on various aspects around how employee mix can affect HR costs
ICON, IIM Bangalore
19
Beverage Bottler
Profitability | Easy | EYP (Buddy)
Your client is an RTD beverage bottler who is facing declining revenues, can you determine why?
Could you tell me what RTD is?
Ready-to-drink
In what parts of the value chain does the client function? What is the business model and what are
the products the client sells?
The client gets the concentrate from companies like Coca Cola, makes a liquid, puts it in a bottle
and distributes it to supermarkets, stockists, HUREKA.
The client has 3 products:
• Recycled glass bottles that stockists have to return back to our client
• One-way glass bottles that don’t need to be returned
• Plastic bottles
Is the revenue decline client specific? Do we have a quantification and a timeframe for the
decline?
Yes, the decline is client specific but there is no quantification or timeframe.
Finally, where is the client located, to which countries does it sell and how many plants does it
have in the country?
To understand where the issue lies, I will draw out the value chain of the RTD Beverage bottler.
The value chain consists of raw material, wherein the glass bottles are sourced from suppliers and
concentrate is sourced from a company like HCCB, then processing wherein bottles are filled with
the concentrate then storage and finally transportation to the customers (HUREKA, stockists).
Would you like me to delve into one particular section of the value chain?
Yes, the issue is with the procurement of raw materials, specifically the glass bottles. Can you list
down a series of problems that our client could face with respect to that?
There can be 4 key issues with the supply of glass bottles. Firstly, there could be issues if we
have few suppliers and suddenly one of them is not able to supply to us or has drastically
increased the prices due to having higher bargaining power. Secondly, there could be issues
with the contract with the suppliers (the contract is over). Thirdly, there could be an issue of
forecasting demand, e.g. we don’t have certainty about the number of recycled glass bottles we
will receive back thus we don’t know how much to order. Lastly, there could be issues with the
delivery of the glass bottles wherein the delivery is delayed, or the glass bottles are damaged
when they reach the client’s factory.
Perfect, so the issue is with the demand forecasting. The client is not able to accurately forecast
the number of glass bottles that it needs per year. Currently, only 70% of the demand is met with
2, 50, 000 bottles per year. Can you give me some recommendations on how it could improve its
forecasting.
The client is in Thailand, has 3 factories there and sells in Thailand only.
Revenues = price * quantity * product mix. The revenues could be declining due to declining
quantity and/or prices for one of the specific types of bottles. Is there a specific type of bottle
whose revenue is declining? Also, is it the price or quantity that has recently been affected?
Yes, it’s the recycled glass bottles whose revenues have been declining. The volumes have been
declining.
Sure. In the short-term, they could install an ERP system or any other system for improved
demand forecasting. In the long-term they could remove the uncertainty of the recycled glass
bottles that will be returned by stockists by making it a rule that all stockists need to return a
certain number of bottles per month. Furthermore, they could decrease their dependence on the
recycled glass bottles and focus on the other type of bottles for revenues.
We can further delve into volumes by looking into the production, distribution and the demand
pull. Would you like me to look into one of these first?
Let us look into production.
ICON, IIM Bangalore
20
Beverage Bottler
Case statement
Interviewee Notes
Profitability | Easy | EYP (Buddy)
Your client is an RTD beverage bottler who is facing declining revenues, can you determine why?
Structure/Framework
• Candidate was
comfortable narrowing
down the problem
based on inputs from
the interviewer
Revenues
Price
Volume
Production
Production
Raw Material
Procurement
Distribution
Processing
Product Mix
Demand pull
Storage
Key Takeaways
• When considering supply issues, take internal issues also into consideration e.g. inaccurate demand forecasting
ICON, IIM Bangalore
21
Global tools manufacturer
Profitability | Moderate | BCG (Partner)
Your Client is a Global Tools Manufacturer and is one of the top players in the market. However,
India division, which was started a few years ago, have not been profitable. They have asked you
to identify the problem and suggest solutions.
Before presenting my approach, I would like to clarify few things
Yes
So, Profit is a function of Revenue and Cost. Is there any data available on how are our revenue
and cost structures are as compared to our competitors?
Sure! Go ahead.
You can focus on revenue part alone. Though we import our cost is at par with our competitors as
we can leverage economies of scale by manufacturing at high volumes.
Can you tell how big is our Player and I assume we have not been able to be profitable since our
beginning?
So, revenue is volume sold * price per piece. How do your price and quality of your product fare
with that of the competitors?
He is a $30 billion (Topline) dollar company with India share than 5% currently. Yes! You are
correct. India is unprofitable since inception.
Our prices are almost on par with competitors and quality a little higher, but as you know, these
are just tools there is not much to differentiate.
Can you tell me more about the product offering, our product mix and who are our Target
Customers. ?
I then think it is safe to say we are not able to sell as many quantities as expected and the
problem lies there.
We manufacture tools like chisel, hammer. Our target customers are carpenters, repair shops and
direct to household for home use.
Yes, of course
Can you tell me more about where is the company located, its manufacturing?
We currently import from our global plants and have manufacturing at few locations throughout
India.
Understood! Can you tell me how do we reach our customers? Is it through local distributors or
any other way?
It is through our distribution channel, and we have presence across the whole country
So, I would like to look into the value chain to identify the problem. The first part is the
manufacturing, then are the distribution push and the customer pull.
Focus on the customer part. There are no issues concerning production and with the distribution.
The problem can be on any of the following parameters. The product itself, price, place and
promotion. But looking at that is not much to differentiate. I would focus on promotional aspects.
Yes, Yes! (Pushing to finish fast)
Can you tell me on our different promotion channels and how it fares to competition. I can think of
marketing to the local tools man with TV ads, some local Trade shows, and similar activities.
Can you tell me more about the competition? Are they also facing similar issues or is it firm
specific?
There are three major players in the market, and they have no such issues. You can assume it is
firm specific
These are some channels, and there is no difference in any of them. We are doing to as much and
in all channels as our competition.
Can I assume that problem is not specific to one product and present my approach?
ICON, IIM Bangalore
22
Global tools manufacturer
Profitability | Moderate | BCG (Partner)
Okay. So, the only reason I think this could as we par on all would be on Brand Perception. Being
a non-differentiable item, people are way comfortable with current working tools and stick with
them.
Yes, you are correct. They just are too comfortable, and we are not able to increase our market
share at all. Can you suggest ways to rectify it?
Sure, give me a moment let me consolidate my thoughts.
Sure!
I could think of two ways to do so • Decrease price or provide discounts but this would not so feasible and might not work in the
long run
• Acquire/partner/build relationship with strong intermediatory distributor with local distributor
and push our products to customers on trial basis, so they prefer our product
Thank you! That was good. We can Wrap up the interview here.
ICON, IIM Bangalore
23
Global tools manufacturer
Case statement
Interviewee Notes
Profitability | Moderate | BCG (Partner)
• Client is global tools manufacturer and has not been profitable since inception
• Identify the reason for not been profitable and suggest possible ways to improve it
Structure/Framework
• Consider all possible
scenarios
• There are three major
players in the market
and none of them is
facing profitability
issues
• Value chain analysis
needed followed by 4P
analysis approach
Profit
Revenue
Quantity
Value Chain
Factors for
analyzing
Manufacturing
Product
Cost
Price per unit
Distribution Push
Prices
Customer Pull
Place
Promotions
Key Takeaways
• The candidate could have reached faster to the conclusion that the client did not have enough equity
• Since the client is has not been profitable since inception, we need to analyse whether the client should have entered the Indian market in the first place or would it have made
sense to acquire existing players.
ICON, IIM Bangalore
24
Telco company
Profitability | Moderate | EYP (Manager)
Case Statement: Our client is a top telco company in the US. It has products such as enterprise
products, mobile, landline, retail, etc. This is the early 2000s. The client is facing issues with
profitability, customer churn and margins. In particular there has been a rapid increase in call
center costs. There are around 1000 agents living in the US who receive incoming queries and
make outgoing calls. Our goal is to reduce the call center costs by 40%-50%.
I will divide the call centre costs into fixed and variable costs. In fixed costs, you will have rent,
utilities, computer/equipment, general and administrative costs. In variable costs you will have
agent costs = no. of agents * salary per month. The number of agents is a function of
productivity and efficiency and the capacity requirement in terms of outgoing and incoming calls.
The salary/month is a function of the geography in terms of minimum wage, etc. How many
call centres are there across the US?
10 call centres. Let me give you some pieces of information about incoming calls. Incoming calls
are usually for complaints. We have 50 million customers who call once a year. Each agent is paid
40000 USD per year. What other pieces of information would you need to create a formula to
calculate the number of agents that are there for incoming calls?
All the numbers remain the same, however since outgoing calls are marketing calls that last for
about 10 minutes. Also, we call 25 million new customers once every year.
Ok, so 25 million * 10 minutes = 250 million minutes of outgoing calls. 250 million minutes /
100 000 = 2500 employees for outgoing calls as well. Thus, in total there are 5000 employees.
5000 employees * USD 40000/ employee/ year = USD 200 million/annum.
What all can you recommend to reduce this cost?
So for incoming calls, we can have standardized procedures to address complaints so as to reduce
the number of minutes per call. We could also work on quality management and find alternative
methods to address complaints such as chat bots so as to reduce the number of incoming calls
itself. In terms of outgoing calls, the client could consider investing in other forms of marketing or
reduce the marketing content so as to reduce the number of minutes per call.
How many days a year are the agents working? What are the working hours per day? What is the
utilization rate? How many minutes does one incoming call last?
We could also increase the utilisation of the current employees so as to reduce the number of call
center employees needed. We could also make the client’s current employees work for longer
shifts, work on the weekends, and for more days in a year. All of this would decrease the number
of call center employees needed. Finally, in order to reduce the cost/employee/year we could look
into outsourcing to countries where labour is cheaper.
The agents are working 5 days a week for 50 weeks in a year. They have 8 hour shifts and the
utilization is 80%. The incoming calls last 5 minutes.
This sounds comprehensive. Can you describe what factors would you consider to decide whether
to outsource or not?
Ok so the total capacity in terms of minutes that is available and utilised = 50 weeks * 5 working
days * 8 hours/day * 60 minutes/hour *0.80 (utilization) = 96000 minutes which can be
rounded up to 100 000 minutes. The total number of minutes for all incoming calls = 50 million
* 5 = 250 million Telcon minutes. 250 million minutes / 100 000 minutes = 2500
employees. Thus, 2500 employees cater to the incoming calls across the US.
There are two main factors. Firstly, the cost savings. Secondly, possible risks including the
language barriers, the cultural fit of our client in the outsourced location, the legal and regulatory
barriers and the political stability of the country.
Sounds good. That will be all.
What else would you like to know?
I would like to make a similar calculation for outgoing calls to be able to calculate the total
number of agents and eventually the total cost for agents.
ICON, IIM Bangalore
25
Telco company
Case statement
Interviewee Notes
Profitability | Moderate | EYP (Manager)
• Your client is one of the top 3 telco company in the US who has products such as enterprise products, mobile, landline, retail, etc.
• The client is facing issues with profitability, customer churn and margins. In particular there has been a rapid increase in call center costs. Our goal is
to reduce the call center costs by 40%-50%.
Structure/Framework
• Interviewer was keen
on getting a number for
total costs
• Data points were given
and the framework had
to be built based on
the variables given by
the interviewer
Costs
Variable costs
VC = Salary per agent * no. of agents
No. of agents = Total minutes of calls/
Employee capacity for calls
Total mins of call =
Incoming calls * avg mins per call
+ outgoing calls * avg. mins per call
Employee capacity for calls =
Working hours/ employee * 60
* utilization
Fixed costs
Rent & utilities
Administrative costs
Computers &
equipment
Key Takeaways
• Remember to consider utilization of employees when calculating employee capacity/ output
ICON, IIM Bangalore
26
Pharmacy
Profitability | Moderate | A&M (Partner)
Case Statement : A pharmacy present inside a multi-specialty hospital has been facing declining
profits since past one year. You have been hired to identify the root cause of the issue.
Interesting. I would like to begin with a few clarifying questions on our client. Is it the only
pharmacy store our client is operating? And do they sell only prescription drugs or OTC
drugs as well?
Yes, the client just had one pharmacy inside the hospital, and they sell both prescription and
OTC drugs.
Since it’s a multispecialty hospital, I would like to understand what kind of drugs are being
sold by the client. As in do they specialize in some particular drugs or they sell all kinds of
drugs?
They sell all kinds of drugs.
Alright, so, profit can be broken down into revenue and cost. I would like to understand if the
declining profits is due to declining revenues or increasing costs?
Great, go on to analyze supply side now.
So, coming to the supply side – availability of prescribed medicines, stockout of medicines,
salesforce availability and its efficiency are some of the key factors.
Yes. The stocks are enough, although the store doesn’t keep the prescribed medicines.
I see. Since you already mentioned that they keep different types of medicines already since it’s a
multispecialty hospital. So is it because the doctors are not sticking to few brands and are
prescribing different brands to different patients?
Yes indeed. Can you think of a reason why this might be happening?
Sure. So, one reason that I can think of is maybe in the last few months the sales
representative visits from different brands have increased and doctors are just switching from
one brand to another more fluidly.
Great, you have identified the root cause of the issue. Now, can you identify major cost heads for
the store?
Revenues have declined and costs have also gone up. Let’s focus on revenues for now.
So, revenue from the product can be thought of as Price X Ticket Size X Frequency of buying. I
will look at each of these components individually to understand the problem area. Has there
been a decline in the volume of our product sold or have there been some pricing changes?
There has been a fall in volumes.
Okay, so if there has been a fall in volumes it is a demand issue. It is important to understand if it
is due to the falling demand or there are supply related constraints at the store.
The demand is doing okay, but there are supply side constraints which is leading to a fall in
volumes sold. But just list down the factors which might affect the demand before moving on to
the supply side.
Alright, so looking at the customer journey, some of the key factors affecting the demand at the
pharmacy are shop awareness, visibility of the shop, payment options, staff quality, service time,
opening up of new pharmacies nearby or in the hospital and promotional discounts.
Yes. So, we can break costs into the fixed costs and variable costs.
Fixed costs would comprise of rental space, employee wages, marketing costs and other
administrative costs. Variable costs will comprise of MDR on payments, inventory holding costs
(pilferages and product expiration), and cost of products.
Correct.
I would now analyze the issue with the increasing costs. It can be either due to increasing
fixed costs or the increase in variable costs.
My initial hypothesis would be that our client needs to keep various multiple brands of the
same medicines, this might be leading to increased costs due to loss of negotiation power
basis volumes with one brand.
But I would still like to check each cost head.
That’s fine. Your hypothesis seems correct. Let's close the case here.
ICON, IIM Bangalore
27
Pharmacy
Case statement
Interviewee Notes
Profitability | Moderate | A&M (Partner)
• Declining Profitability of Pharmacy inside a multi-specialty hospital
• Identify the reasons for decline
Structure/Framework
Declining Profitability
• Declining Revenues and
Increasing costs
• Demand is fine
• Supply side issues
Revenue
Price
Frequency
Supply
issues
Medicines
Costs
Ticket Size
Fixed Costs
Demand
issues
Sales Staff
Availability
Availability
Stockout
Efficiency
Awareness
Visibility
Service
experience
Discounts
Variable
Costs
Rental costs
MDR on
payments
Salaries and
wages
Inventory
holding costs
Marketing
Costs
COGS
Administrative
costs
Key Takeaways
• Structuring of the problem by the candidate was strong to identify possible factors impacting the problem
• Utilization of real world understanding to identify practical problems in a case like this
ICON, IIM Bangalore
28
Skiing Resort
Profitability | Moderate | BCG (Manager)
Case Statement : A Skiing resort in Switzerland a decline in sales since a year. You have been
hired to find what is wrong and solve the problem.
You decide.
I have a few questions about our client, may I do ahead?
Okay, I will go ahead with supply first. I want to look at supplies for skiing business and then nonskiing business. Is that fine?
Sure
You can focus on the skiing business.
When we are talking about Sales, do you mean revenues or volume?
Sure. For skiing business, the major players in the supply chain are – Training personal/guides
and skiing equipment. Is there a dearth of training personal or the equipment quality and
quantity?
Volume.
Is the client facing declining volumes in all resorts or a particular resort?
No, no issues in these. You can move to the demand side.
The client has a single resort.
What kind of customers does the client have – local/foreigners? And in which type has there been
a decline?
The decline has been in external customers.
Okay, as the number of foreigners visiting the resort are decreasing, I would like to look at the
customer’s journey. The customer journey will first involve booking the resort which includes
search and payment, then travelling from the respective locations to Switzerland, moving from
train/air/sea-port to the resort, resort services(stay/food), enjoying skiing and then checking out to
the resort and the reverse journey. Do you want me to look at any particular head?
Are the competitors in the region also facing a similar issue?
There has been a decline in the people travelling by air
Yes.
Okay. I will analyze this based on availability of flights to Switzerland and affordability. Are enough
number of flights available? Have the prices of flights increased in the past year?
I have enough information. May I take a few seconds to structure my thoughts?
Yes sure.
Yes, price is the issue. People are not preferring to go to Switzerland because prices of flights
have increased. Can you suggest what can be done to mitigate this problem?
As the competitors are also facing, I would like to look at the factors external to the client
affecting the company as a whole? Does this approach seem fair to you?
Yes, go ahead.
Have there been any changes in the government regulations, environmental laws/factors(like there
is not enough snow or any restrictions imposed) or licensing in the last year?
No, no changes.
For this I would look at the reasons why the prices increased in the first place. It can be because
of the fuel charges or a general price increase among all the airlines. For solving the price issue,
our client or the tourism department/union can lobby the airlines to decrease the prices or the
resorts can introduce more tour packages decreasing the prices on their end so that the whole
experience is within the budget of the customer.
Great! It was a good discussion.
I will look from supply and demand side. Which side do you want me to look at first?
ICON, IIM Bangalore
29
Skiing Resort
Case statement
Interviewee Notes
Profitability | Moderate | BCG (Manager)
• Skiing Resort in Switzerland
• Decline in sales since a year
• Find cause and suggest recommendation to mitigate it
Structure/Framework
Volume Decrease
• Sales = Volumes
• Single Resort
• Decline in external
customers
Foreigners
External Factors
PESTEL
Customer
Journey
Booking
Resort
Internal Factors
Demand
Supply
Training
Personnel
Travel to
Switzerland
Local customers
Customer
Journey
Equipment
Move to
resort
Resort
Services
Skiing
Experience
Reverse
Journey
Key Takeaways
• If the client as well as the competition is affected, then it is not necessary that PESTEL or Porter analysis works.
• Always check customer journey when volume decreasing and be comprehensive in that
ICON, IIM Bangalore
30
Quick Service Chain Restaurant
Profitability | Moderate | Kearney (Buddy)
Case Statement : Let's get into the case. . Your client is a QSR chain restaurant. Their manpower
costs have increased tremendously. You need to analyse and give recommendations
Okay. So, I should focus only on manpower costs or is there any other specific costs/revenue
issues that I need to consider? I wanted to know more about the company and industry before
going ahead. In which geographies does our client operate? What are the products being
produced? In a sense, is it like burgers and pizzas? How long has this cost increase situation
been, and what is its quantum?
So, our client operates in India. You can consider it as similar to Dominos kind of thing w.r.t
products. So, they are facing this cost increase b/w 2017 to 2019 and current increase is at 50%
compared to 2017 costs.
Is the cost increase specific to our chain of restaurants or is it across all restaurants in the
industry?
Other similar restaurants have also experienced these kind of increases. Not to 50% , but to
certain extent yes though we don’t have the exact data
Okay, thank you. Manpower costs increase can be either due to increase in salary per employee or
due to increase in number of employees. Do we have any data which says which of these
parameters have increased over last 2 years?
Both of them have increased. Before you go this path, when you refer salary per employee which
salary are you considering?
The overall average salary considering salaries of all employees.
This would not help you to find the root cause. Could you think of dividing it further?
So, the other 25% increase is due to increase in number of number of employees. Possible
reasons for both could be a) These contract workers will have certain minimum wages as per govt
regulations. That might have increased in these 2 years increasing in avg salary. b) The customer
intake might have increased leading to more revenue and also hiring more employees. That might
have contributed to increase in number of employees.
Both of them are correct. They explain only partial increase though. The minimum wages did
increase as 2019 was election year and it contributed roughly 10%; the revenue growth directly
contributing to increase in number of employees could be another 10%; there is still 30% we are
yet to explain.
Let me take one minute. Was there some sort of incentives required to keep employees from
leaving as we were having higher revenue and we didn’t want trained workers to leave ?
Yes. As you can see 2019, lot of other competitors had turned up in online delivery channels like
Swiggy, Zomato. So, client had to give more incentives which contributed to 15% increase.
Got it. I think I missed asking a basic question in starting. How much of our business is from
delivery chains and how much is from inhouse and takeaway at restaurants? Have they changed in
these 2 years?
Yes. I was wondering when you would ask this or tell your assumptions on this. So, online delivery
business has picked up in these 2 years.
I guess that explains remaining 15% increase contributed by increase in number of employees.
Number of employees working in one delivery order are generally more than that of inhouse or
takeaway system.
Good. Can you quickly list out 1 or 2 recommendations?
In general, these restaurants will have 3 types of employees. Mainly Blue colllars who are
temporary workers or contract workers, white collars at restaurants like cashiers and admin
employees who are part of central administration. I guess salary of the admin people contributes
the highest percentage of overall salary, but we must check data to confirm which salaries have
increased over these 2 years
Yes. The blue collars / contract workers avg salary has increased by 25%. So what do you think
the reasons are?
On short term, a) Consider reducing the employees in the take-away/ inhouse business as those
business haven't grown that much. b) Think of other non-monetary incentives like free food from
restaurant instead of direct monetary incentives. On long term, a) Since all chains are facing this
minimum wage problem, they can club together and lobby with the government. But that would
be seen in the bad light by consumers. Instead of this, they all collectively can increase prices of
their food. b) They can also think of having strategic tie ups with Swiggy or Zomato and let them
take care of delivery business.
ICON, IIM Bangalore
31
Quick Service Chain Restaurant
Case statement
Interviewee Notes
Profitability | Moderate | Kearney (Buddy)
• Manpower costs increased by 50% from 2017 to 2019
• Both average salary and number of employees have increased by 25%
• Online delivery portion of revenue has increased more and more online competitors have popped up.
Structure/Framework
• Qualitative analysis
• Contract workers had
increase costs
• 2019 – election year,
increase in online
deliveries, incentives
and revenue growth
contributed to the
increase
Manpower costs
(increase by 50% over
2 yrs)
Contract workers
(roughly 50%
increase)
Avg Salary per
employee
(25%)
Minimum wages
(10%)
White collars at restos
White collars at
Admin
Number of
employees
(25%)
Variable incentives
(15%)
Revenue growth
(10%)
Increase in online
deliveries
(15%)
Key Takeaways
• The candidate directly went to the split between avg salary and number of employees without considering different categories of employees. It is better to state assumptions
upfront regarding the way you are approaching rather than interviewer asking you to explain.
• Few preliminary questions were asked in later stage and they were related to the final answer. It would have been easy if this was asked in the beginning which would have given
right hypothesis to test during the approach.
ICON, IIM Bangalore
32
Electricity Company
Profitability | Moderate | McKinsey (Partner)
Case Statement : Your client is an electricity generation company based in US. They are
experiencing declining profits. Analyse how would you approach the solution. Before you go
ahead, I want you to tell me what do you think is the value chain for such companies?
I am assuming they work for 16 hours per day and approx. 300 days in a year. Electricity
generated would be 10 * X * 10 * 0.3 * 16 * 300 = 144000X units
The three major value chain activities in such a company would be Generation, Transmission and
Distribution. These will be supported by other activities like sourcing fuels etc. I wanted to know if
revenues were decreasing, or costs were increasing or both for the client
Revenues have remained constant whereas the costs have increased.
The first obvious thing would be the efficiency. As indicated earlier, we could think of buying new
machines which have better efficiency which will improved the units generated.
And also, based on my previous experience, we can have heat recovery system installed at every
turbine. These will help in efficient usage of output gases which are at high temperature and can
be used to heat steam. This will add additional revenue stream.
Okay. I will try to analyse the costs across the value chain activities. Should I focus on generation
first? And also, what kind of turbine do they use?
Interesting. How about we focus on transmission now. What do you think is the trade off that
exists here?
Sure. They are currently using Gas Turbine generators. Tell me the various cost drivers which you
think are in generation.
The major costs in generation would be input fuel costs, machine operating costs, manpower
costs, conversion costs, repair and maintenance costs.
Transmission losses occur more as there are long distances between generating and consuming
units. To reduce losses, we need to have more hubs. But having hubs requires huge capital
expenses. So we need to find appropriate location for hubs with given capital budget which will
minimise transmission losses.
Among these various costs, which of them do you think is more controllable from the client’s
perspective?
We have covered most aspects of the case. It was nice interacting with you. We are delighted to
have you on board with us.
Good. What do you think can be improved here?
a) The input fuels used are mostly Naptha or Liquified Natural Gas in Gas Turbines. These fuels
have lot of uses in other streams and their prices fluctuate based on crude oil prices. Client will
have little control over these prices
b) All other costs like Manpower costs based on operation, supervision and maintenance
personnel; Machine operating costs; Repair and Maintenance costs, Conversion costs and
Efficiency of machines based on type of machine used are controllable in nature.
There are machines with efficiency ranging from 30% to 60%. A more capital investment would
lead to better efficient machines which reduces costs of running. They will also require less
maintenance.
We should focus more on these controllable costs to analyse which of them have increased.
Ok. Our client has 10 turbines with each turbine requiring throughput of X units of naptha per
hour. 1 unit of naptha gives approx. 10 units of electricity. Calculate electricity generated in a year
if efficiency is 30%
ICON, IIM Bangalore
33
Electricity Company
Case statement
Interviewee Notes
Profitability | Moderate | McKinsey (Partner)
• Client is facing declining profits. Revenues have stayed same. Costs have increased
• Analyse the value chain and indicate the costs associated with it
Structure/Framework
Declining Profits
• Generation,
Transmission and
Distribution is the value
chain. Client operates
only in G and T
• Costs that are
controllable in nature
need to be analysed
further to find root
cause
• Trade off between
number of hubs and
transmission losses.
Constant Revenue
Increasing costs
Generation
Controllable costs
Controllable
costs
Machine
Operating costs
Uncontrollable costs
Manpower
costs
Transmission
Number of hubs
Conversion
costs
Efficiency
Transmission losses
Repair and
Maintenance costs
Key Takeaways
• The candidate has previous experience working at power generation industry. Hence this case was asked to check work exp knowledge as well as the approach in analysing
• Efficient understanding of value chain and various cost drivers is critical in qualitatively analysing such problems.
ICON, IIM Bangalore
34
Steel Plant
Profitability | Moderate | EYP (Manager)
Case Statement : Your client is a major Steel manufacturer in India. Lately they have noticed that
their energy cost is significantly compared to its rivals. Help them out in identifying the cause and
reducing the cost. (Also, feel free to use the calculator for the purpose of this case)
No, but we know that they don’t procure it from the govt. as the govt. rates are uniform and nonnegotiable. Also, govt rates do vary across the day i.e., Highest during the day and reduces as the
day progresses, averaging around Rs 6.2.
I have a few questions about our client. Since how long have we been facing this issue and how
much more is our cost quantitatively?
Alright, so first, I will look to improve the cost structure of generator induced electricity than
investigate what options do we have as replacement for govt. sourced electricity.
This is something that has been there since the inception of the firm, which is more than a
decade. In terms of nos., we are using 1900 MwH/yr at a blended cost of Rs 7.3/unit vs 1350/yr
MwH at 5.3 Rs/unit for our competitor.
Sounds reasonable to me, what information do you need for me.
Alright. Are these nos. for a single plant that we own/operate, or we have multiple plants across
the country?
These are specifically for a plant that we own, and the case will be limited to this specific plant
only.
Thanks for the information, Sir. Give me a few mins to structure my thoughts.
Sure.
So, There are two potential areas for cost reduction i.e., 1) Reduction in Blended fuel cost and 2)
Reduction in energy utilization. Since % reduction w.r.t competitors in both branches is same
(approx. ~30%), I would like to start off with 1st branch. Is that a reasonable approach?
Sure, lets look at Blended fuel cost first.
Sure. Can you please tell me what are the current sources of energy at plant and costs associated
with each source ?
Sure. Currently we procure 84% of our requirement from govt. at Rs 6.2 and 16% from our own
generators at Rs 13.1.
Alright, so both our sources have a much higher cost than average cost our competitors spend on
electricity. Do we know how are they procuring the electricity?
First off, why are we using our own generator at such a high cost? Is it a short supply constraint
from the government, or is it to ensure uninterrupted supply? Also, is there any possibility to
reduce it below 16%?
Good question. It is to ensure uninterrupted supply and no we cannot reduce it below 16%
Alright, that’s insightful. So only way to reduce the cost is to increase its efficiency. When I say
efficiency, I will looking into three factors 1) Machine efficiency: If it possible to upgrade the
machine, this might be capital intensive in short run but reap rewards in terms of lower cost. 2)
Manpower efficiency: Since it’s a generator, I presume that manpower required would be
minimal, but we can still see if there is any scope of improvement. 3) Material Efficiency: We
might have to look for a better fuel that might boost energy production and reduce costs.
Good hypothesis, although there is no scope of improvement in 1 and 2, we have a better
alternative fuel i.e. light diesel oil which can be used to bring down the costs to Rs 12.
Alright, having done this analysis, now I will move on to next part of the case which the govt.
procured electricity. Since we have already established that this rate is non-negotiable, we have
two options we can explore, 1) Look for power plants in the nearby region that are offering
energy at lower cost and 2) Explore ways through which we can generate our own electricity.
Sounds reasonable. Yes, we do have a solar plant nearby which is offering electricity at Rs 4.1 but
they have a binding constraint, we will have to specify the energy consumption for the year
beforehand and we will charged for this specified amount and not the amount we consume.
ICON, IIM Bangalore
35
Steel Plant
Profitability | Moderate | EYP (Manager)
Alright. In terms of cost this new solar plant sounds like a reasonable option. To probe further, I
would need 2 information, 1) Do they have the capacity to meet the 84% of our energy
requirement? 2) Do we have trends available for variation in electricity consumption we have had
in the recent years?
Good questions. 1) Yes, they do have the capacity. 2) Due to covid induced recession, we have
only used 60% of the capacity and this trend is going to continue in next few years as well.
Alright, so it won't be wise to procure 84% of the electricity as we might end up paying more. So,
I think we should look to procure only 60% from this source and move on two see if we can
produce the rest of the 14% electricity ourselves.
The nos. seem correct to me. We don’t have time do a thorough analysis; any other
recommendations do you have based on the information already provided.
Sure. As it was already mentioned that govt. rates progressively increase through the day, till the
time we have not completely switched from the govt. procured electricity, we can look to
schedule the energy intensive processes at the end of the day. We might have to perform a cost
benefit analysis keeping in mind other factors to chart out a plan for the same.
Sounds reasonable. Let's close the case.
Sure, how do you think we can produce our own electricity.
We can look at two options here 1) Look for renewable source i.e Wind/Solar energy in our
premises and 2) Setup cogeneration units for production
Sounds reasonable. Let's look at the first option i.e., Solar energy, what information would you
need from me?
Alright, there will be two constraints for which I would need information 1) Financial constraint to
setup the system 2) Space constraint
Financing won't be an issue here but yes; we do have space constraint and we will only be able to
produce 4% of our consumption through this mode at Rs 3.9.
Alright. So, we are still in need for 20% of the electricity. Do we have any scope to setup
cogeneration unit/own power plant inside the company premises?
Yes, the client is already working on this, and we are hopeful to generate electricity at Rs 3.3
That’s insightful, now that I have the cost associated with each source, I can calculate the overall
blended cost which comes out to be Rs 5.2 which is the same as the competitor. Next, we can
look at reducing the consumption to the industry level.
ICON, IIM Bangalore
36
Steel Plant
Case statement
Interviewee Notes
Profitability | Moderate | EYP (Manager)
• Steel plant with high energy cost structure
• Competitors have low-cost structure
• Find the cause and look for solution
Structure/Framework
High Energy Cost
• Single plant in India
• Competitor’s have both
less energy
consumption as well
less per unit cost.
Per Unit Cost
@ ₹ 7.3 vs ₹ 5.2 (C)
Consumption
Govt. Procured
(84%) @ ₹ 6.2
Cost Reduction
Opportunities with
same source
Own Generator
(16%) @ ₹ 13.1
New Opportunities
Existing nearby power
plants (60%) @ ₹ 4.1
Drive down to 0%
Improve Efficiency
Manpower
Self generation
(14%)
Machine
Renewable/Solar
(4%) @ ₹ 3.9
Conventional
(10%) @ ₹ 3.3
Material @ ₹12
Key Takeaways
• Take buy-ins from the interviewer regularly.
• Make the framework before jumping into the nitty-gritty of the case.
• Do remember to go back and check all the branches of framework are exhausted before concluding the case
ICON, IIM Bangalore
37
Steel Industry EBITDA projections
Profitability & Unconventional | Moderate | BCG (Partner)
Case Statement : Your client has operations in South-East Asia and has an upcoming Board
Meeting. The client is losing money, and secondly, the Board doesn't trust the quarterly/yearly
projections/forecast made by the management. The client has approached you to help him out.
So basically, in the case of commodities, since the product is homogenous and cannot be
differentiated, the price at which one sells his output is mainly the price determined by the
market. Whereas in the case of differentiated products, basis difference in product features, one
can charge a premium for his/her product.
I will take a couple of seconds to structure my preliminary questions. All right, first, I would like to
know more about the client and its operations.
But then this must be the case with our raw materials as well, right? As our materials will also be
sourced at market-determined prices.
The client is in the business of manufacturing steel cages. So, it makes steel cages using TMT bars
and sells those cages. Just assume that is the only product the client has, and the process is
simply making cages from TMT bars.
Yes sir, even the raw material sourcing will be at market-determined prices only.
Then why is there a problem with the EBITDA margins and its projections while others are doing
fine?
Can I know a bit about the client's geography & customer base?
Also, what do we mean when we say that client is losing money? And is this problem clientspecific or industry-wide?
Sir, the problem can also be of steel prices fluctuations in the market due to demand-supply
dynamics and at the time of buying raw materials, prices were high, and at the time of selling the
output, the steel prices were low. This may hurt our EBITDA margins and make our projections
unreliable due to fluctuating prices.
Yes, EBITDA has dropped significantly over the last two years. And it is a client-specific issue.
But the fluctuations in the prices must impact the industry as a whole?
Finally, I would like to know more about projections. Is it Revenue or Cost projections which Board
is not comfortable with, or is there anything else on the budgeting & forecasting side?
Sir, but there can be a difference in the operating cycles as well. There is a possibility that our
production cycles take a little longer than our competitors. Hence, we are vulnerable to
fluctuations in the steel prices more than our competitors. The time between sourcing the raw
material and selling the final output is long for us. As a result, there are higher chances of bigger
price fluctuations.
So it operates only in South East Asia, and typical customers are Real Estate players.
Yes, so EBITDA projections are an issue.
Since EBITDA is a profitability metric, I see this as a profitability issue. Specifically, in the steel
industry, we look at EBITDA/Ton (preparation on industry KPIs helps here). Hence would like to
focus on both costs as well as revenue. Is it ok, if I start with the revenue side?.
Sure, go ahead.
Good. That's the problem with our client. Its production cycle is a little longer than its peers, and
hence the price fluctuation impacts us more both positively and negatively. As a result, our
projections are not reliable. Would you like to give some recommendations to the client?
Revenue can be broken into Price*Volumes*Product Mix. But since we have only one kind of
product, the product mix is irrelevant here. Further, we may not have much control over the price
because steel is a commodity product, and the client must be a price taker in most cases. So the
price may not be much of an issue here. Is that a fair assumption?
Sure. I can think of two recommendations upfront - in the short-term hedging the market risk by
taking a position in steel F&O. In the long-term making the production process more efficient to
match our competitors. Also, we should incorporate scenario or sensitivity analysis in our
projections to make the Board aware of the range of possible outcomes under different pricing
conditions.
Yes, that's a fair assumption. But what exactly do you mean by commodity product?
Good. Let us wind up the case here.
ICON, IIM Bangalore
38
Steel Industry EBITDA projections
Case statement
Interviewee Notes
Profitability & Unconventional | Moderate | BCG (Partner)
• Steel company is losing money and doesn’t trust EBITDA projections
• Operates in South-east Asia
Structure/Framework
• Significant drop in
EBITDA
• Client-specific issue
• Issue with EBITDA
projections
• Price not an issue,
assume single product
EBITDA
loss
Revenue
Product
mix
Volume
Cost
Price
Raw
materials
Labour
Fixed
costs
SG&S,
Others
Steel price fluctuation
(decrease in revenue,
increase in RM cost)
Long operating cycle
Key Takeaways
• Since the issue is client-specific, need to eliminate factors like prices and raw material cost if it is standard for the industry.
• Recommendations focused on reducing operating cycle and range of outcomes in price sensitivity analysis.
ICON, IIM Bangalore
39
E-Commerce Firm
Profitability | Difficult | Bain (Partner)
Case Statement : Your client is an E-Commerce player like an AJio/ Myntra which is facing a
problem of very high returns. For every 100 Rs order, they are facing returns worth Rs 30. Along
with the revenue loss there are additional return costs involved which need to be brought down.
You have been hired to help them with the same
Okay. I had few questions to understand the problem more clearly. Is the problem specific to
particular geography/ product type/ customer segment? Also, are our competitors facing the
same issue or is it only specific to the client?
The problem is specific to our client but not specific to any geography/ product type/ customer
segment. For this case, you can assume whatever you can think of can go wrong, is going wrong.
I would want to listen to what all recommendations you have for every problem you can think of
I will begin by addressing the problem of higher returns first and then move on to analyzing ways
of reducing costs. Does that sound good?
Why don’t you start with the costs first and then we shall come to the returns.
If I look at the steps involved in the process and try to think of cost heads which would be
involved in it, first would be a delivery agent coming and collecting the parcel from me (Labour
cost). Second that parcel travels back to the fulfilment centre (Transportation cost). Third the
parcel is stored as inventory in the warehouse (Inventory Costs). Should I go ahead with these
three cost heads or have I missed out on any?
These are pretty comprehensive and you came up with these following a good structured return
journey approach, please go ahead.
To begin with transportation costs. I would want to divide them into # of trips * Avg distance per
trip * Freight rate. I would further divide the # of trips into (# of return parcels / Avg # of parcels
/ trip).
While for reducing the # of trips, the major driver would be to reduce the # of returns itself but
apart from this, the client could look at efficient return pickups to probably pickup return parcels
in the same area/locality together to club multiple parcels in a single trip.
Moving onto Avg distance per trip, this can be done in two ways, On a short term basis the client
could employ network optimization software to ensure the orders get fulfilled from the nearest
fulfilment centre and a long term recommendation would be to increase the # of fulfilment
centres in India which would reduce the average lead distance and time per order.
On a short term basis for freight rate, the client should negotiate with their delivery partners to
bargain for a better rate. On a long term basis, the client could award the contract for the next
term on an L1-T1 basis to a new delivery partner which provides better rate. Third option could be
to acquire an existing player which is in the last mile delivery business or to have a long term
strategic partnership with some Courier company.
Excellent. Why don’t you move onto Inventory costs now.
In the inventory management process, there would be three steps involved Unloading –Storage –
Loading (during order dispatching). Considering these three stages, I would again divide the
recommendations basis their ease of implementation and investment required to be either on a
Short-term basis or Long-term basis.
Under Short term recommendations –
1. Provide training for upskilling of material handlers to ensure minimum damage
2. For reducing material related damages, the client should ensure the place is properly sealed
and maintained to avoid problems like rodents etc. damaging the stored products. Frequent
clean-ups of the fulfilment centre to be done using rodent repellents etc.
3. To reduce instances of pilferage, increase vigilance both in and around the fulfilment centres
and deploy a detailed SOP for security guards to check all the employees while they go out.
Under Long term recommendations –
1. Upgrade the inventory management system to deploy a more automated technique (like a
RFID based management system which reduces human intervention)
2. Deploy CCTV cameras across all the fulfilment centres and have a tracking team to keep 24x7
eye on the same. This will ensure lower instances of pilferage.
3. Change the inventory management practice to follow a FIFO basis to reduce the damages.
4. For disposal of damaged products, the client should recycle to the maximum extent possible
or could even partner with a firm to whom we can sell the scrap and recover some salvage
value from the disposed products.
Perfect, your recommendations for controlling costs are pretty comprehensive and we have
covered most of it. Why don’t you just tell me the approach you will follow for looking at ways to
reduce the # of returns.
Sure. I would want to look at 6 major factors (Product, Price, Promotions, Place, Process, People)
and give my recommendations under each of these heads for reducing the # of returns
Sounds good, thank you!
ICON, IIM Bangalore
40
E-Commerce Firm
Case statement
Interviewee Notes
• Consider all possible
scenarios
• Transport costs
recommendations to
reduce number of trips,
avg distance and freight
rate
• Inventory costs
recommendations to
reduce storage costs
and loading/unloading
costs. Loading costs
also include damage
costs due to
mishandling
• 6P analysis approach to
analyse high returns
Profitability | Difficult | Bain (Partner)
• Client is facing high returns and as a result, facing huge costs associated with the same.
• List all possible costs associated and recommendations to control the same. Think of all possibilities.
Structure/Framework
Costs associated
with returns
Transportation
costs
Avg distance per
trip
# of trips
# of return
parcels
Factors for
analysing
Freight rate
Unloading costs
Inventory costs
Labour costs
Storage costs
Loading costs
Avg # of
parcels/trip
Product
Prices
People
Promotions
Place
Process
Key Takeaways
• The candidate divided every cost into appropriate MECE categories on every aspect. This structured the approach also helped in recommending solutions as there was no overlap
between solutions.
• Short term and Long-term recommendations were given in most cases which is very important as it considers both the budget and implementation effort constraints.
ICON, IIM Bangalore
41
Market Entry Framework
Good to know frameworks
Basic structure
Market Entry
Strategic
Objective
- Why to enter?
- Target Metric
Industrial
Conditions
How to
Enter?
Market
Attractiveness
Customers
Competition
Barriers to
Entry
- Addressable
market
- Growth rate
- Profit Margin
Organic
Inorganic
Using 2 by 2s for final decision like degree of
1 control vs investments; competition vs own
capabilities or your own set of parameters
2
Porter’s 5 forces: Good to get the context of
industry as a whole
3
5Cs: Company, Competitors, Customers, Context,
Collaborators → very useful in scoping
4
Value Chains for various industries to understand
nuances of market entry and objective metrics
- Joint venture
- Market structure
- Reaction to entry
- Segments
- Acquisition
- Price, Product,
Place, Promotion
-
Financial constraints
Capabilities/Resources
Suppliers
Govt. Regulations
Patents, IP
ICON, IIM Bangalore
42
Apple Farming Supplement
Market Entry | Easy | Kearney (Buddy)
Your client is an Indian conglomerate who has acquired a US-based Biotech firm. The US firm has
developed a chemical which improves the ripening of apple in agriculture. It allows apple to be
harvested earlier and gives it a better quality. The client wants to commercialize this product for
the Indian market. They have hired you to figure out if they should do so.
Sir, before moving forward, I would like to prepare a list of some preliminary questions to get a
deeper insight into the case, may I?
Sure, go ahead.
Sure. Is there any existing competition in the Indian market?
No, we would be the first ones to launch such a product.
So, we would have the first mover advantage. I think I have all the data needed to proceed
further. I would like to divide my analysis into three buckets. First, I would assess Industry
attractiveness, then I’ll check the financial viability of launching the product and finally I’ll look at
its operational feasibility.
Sure, go Ahead. What are the factors you’ll look upon to check the attractiveness of the industry?
So, I would like to start with the client. What kind of business they are operating in and in what
geography?
The client is a conglomerate which operates in multiple businesses with a diversified
portfolio, and they are spread across India.
I would check the presence of any regulatory barriers and look at the customer buying
behaviour to see if both of these favour the product launch. Also, I will estimate the market
size.
So, how will you estimate the market size. And before that, who do you think is our customer?
So, is it fair to assume that they acquired this firm to diversify their portfolio further?
Yes, you can go ahead with it.
Now, I would ask some questions about the US-based firm. How credible this firm is and have they
had any experience in the Indian market?
It is a very credible firm in the US and has a good understanding of the market there. They have
not had any experience in India yet.
Sure. About the product, what kind of a product is it and how is it used?
It is a powder-like product which is sprinkled on the field during the sowing season.
What are the exact benefits of the product? I understand that it improves the quality but do we
have a metric to assess it? Are there any side effects?
Yes. It makes the crop to get harvested 10 days earlier, improves the yield by 10% and
sweetness by 5%. There are no side effects
Our customer would be the farmers and their cooperatives. To calculate the market size of the
Indian market, I’d take the population of the states of Himachal Pradesh, J&K, Punjab, Uttar
Pradesh and Haryana since apple needs a cold climate, so I believe that our major customer
segment would be in North India. Then, I’d divide the population according to expected
percentage of people involved in agriculture. I’ll take an estimate of proportion for farmers
involved in apple farming in each state and finally multiply it by an average acre of land owned
by each farmer.
That sounds good. So, we have some data regarding that. We are currently focussing on a sample
of 200 orchards. Each orchard has 100 acres of land and each acre generates $30000 per
harvest. Assume there is only one harvest per year and estimate the annual farm revenue we are
focussing upon.
So, we have $3 million per orchard per harvest, which means $600mn per year for the whole
sample.
Do you think this is a good enough size to launch a new product?
Since this product has been developed in the US, do we have any information if it would have the
same results in the Indian farming?
Yes, on the face of it, it looks like a good figure. However, it would be relative upon what the
client’s goal with this product is and what is the investment required.
Yes, you can assume similar benefits here.
Okay sure. Sounds good. In the interest of time, we can close the case here.
ICON, IIM Bangalore
43
Apple Farming Supplement
Case statement
Interviewee Notes
• Multiple businesses,
diversified portfolio
• No experience in India
• Powder like product
• Crop harvests 10 days
earlier
• Improves the yield by
10%, sweetness by 5%
• No side effects
Market Entry | Easy | Kearney (Buddy)
• Acquire US based bio-tech firm
• Developed a chemical which improves the ripening of apple in agriculture.
• Better quality and early harvest
Structure/Framework
New Product
launch
Industry Attractiveness
Market Size
Regulatory Barriers
Estimation
Operational Feasibility
Customer Buying
Behaviour
Calculation
Total population
Number of orchards
% of people in agriculture
% of farmers growing apple
Avg acres of land per farmer
Avg revenue per acre
Financial Viability
Acres per orchard
Revenue per acre per
harvest
Harvest seasons per
year
Key Takeaways
• Understand the client well by asking preliminary questions – there can be related business which may help start the new business
• Try to MECE at every step
• Draw on personal experience and knowledge about the client/industry/situation but do get a buy-in from interviewer
ICON, IIM Bangalore
44
COVID19 Drug in India
Market Entry | Easy | McKinsey (Partner)
Since we have been discussing COVID for some time, let’s try a case around that. There is a new
drug in the market for the treatment of COVID-19 and it is already available in US and Europe.
The company is now thinking about entering India. How should they do this?
Could you please tell me what the objective is? Also, should I assume the current market scenario, given
that vaccines are being developed and we need to move quickly to introduce the drug?
Yes, that’s correct. You can proceed with this assumption
Sure. I will start with analyzing the macro factors that should be taken into consideration, post
which I will look at the financial feasibility followed by the operational viability of establishing a
supply chain. After this, I will look at a mode of entry and the risks involved. Can I proceed with
this?
Yes. Please go ahead.
The political-legal aspects of this scenario present the biggest challenges, given the regulations
that exist in the pharmaceutical industry today. However, I believe that the regulatory bodies will
be in favour of introducing such a drug because all countries want to put COVID behind and
move forward with rebuilding their economies. From a technological perspective, India is a
leading manufacturer of pharmaceuticals and is known for supplying vaccines across the globe.
Ramping up production to produce drugs should not be an issue, the IP is what is to be
procured.
Got it! To estimate the financial viability of this product in India, I want to examine what the market
share and a subsequent cost would look like.
Ignore the numbers, give me an approach to this
I would estimate the total number of people that could be affected throughout the lifetime of the
disease from now, which could be about 5% of the population. After this, I would take a
percentage of people who would require the drug, which depends on the severity of the case,
and then their affordability, since we would likely price it around the cost of a Remdisivir injection.
Sounds good. What are your considerations around the operational feasibility?
I’m looking at it through the 4Ps perspective, amongst which we need to explore the place and
promotion aspects. Place would relate to how the consumers can access this drug and how it
would be available, and promotions would relate to the branding and marketing of this drug,
such as newspaper articles or opinion pieces. We could also have a government tie up as well,
given the nature of this product
Let’s talk about the regulation aspect
I’m looking at the following 4 broad buckets of actors. Government, Quasi-Government, Private
Sector and NGOs. Quasi-Government is primarily regulatory bodies such as DGCI, IMA and the
likes. NGOs would help in reaching the lower strata of society in terms of access and awareness.
What would your conclusion be based on what we discussed so far
Valid arguments. You can continue.
Before I continue with the financial feasibility, I’d like to understand the nature of the product. Is
this a prescription drug? Is it administered orally or through an injection? Could you also tell me if
this is patented? Where is the current supply chain based?
Yes, this is a prescription drug and is administered via an injection. A patent is pending, but we
don’t see any risk of it being copied. The current supply chain is in the US, we’d like to
manufacture in India.
I would believe that it should be introduced in India, mostly because the government would be
eager to have a cure in place as soon as possible
Sure. We can conclude the case here, but your final hypothesis is the opposite of what happened.
Pfizer had its vaccine ready, but it faced a lot of resistance in India for its introduction, so it might
not be as straightforward as it seems.
ICON, IIM Bangalore
45
COVID19 Drug in India
Case statement
Interviewee Notes
• Emphasize on the
regulatory aspect of
the case. Candidates
usually assume that the
government would be
enthusiastic about
introducing a drug in
the market.
• The case does not have
to be quantitative, but
you can ask the
interviewee to proceed
with a guesstimate of
revenue.
Market Entry | Easy | McKinsey (Partner)
• COVID19 drug developed in the US, needs to be introduced in India
• What aspects are to be considered before proceeding with an introduction?
Structure/Framework
Macro Factors
Product
§
Mode of
consumption
Current
Supply Chain
Patent
Protection
§
Politico-Legal
(Regulatory)
Technological
Financial Feasibility
§
§
Cost of the drug
Market share that
can be captured
Operational Viability
§
§
Product, Price,
Place, Promotion
Risks, hindrances
to establishing
value chain
Key Takeaways
• Regulation in India is very stringent and is largely influenced by the government and private lobbies.
• India is a pharmaceutical powerhouse, and can quickly ramp up on production, and hence is a great choice for establishing a value chain.
• The nearest competitor for such a product is Remdisivir, and the price should be estimated accordingly.
ICON, IIM Bangalore
46
Air Purifier – COVID disinfectant
Market Entry | Moderate | Bain
Case Statement : Your client is an international player and wants to enter the Indian market with
an air purifier which kills Coronavirus. The client wants your input on 2 keys:
Whether they should the enter the market?
If yes, what would be the price range of entry?
Okay, before I structure my analysis, I’d like to begin with some preliminary questions. Firstly, what is the
exact products characteristic that the client wants to enter with? What part of the value chain would the
client own/outsource?
Sure. The client will enter with one type of air purifier that would kill the Coronavirus in the room.
They will produce the air purifier and then sell it to customers.
Do we have any information if the client owns this technology & has patent over it?
Also, what are the major segments the client is targeting? Is their any similar product in the
market or is our client’s product the first of its kind product?
Good questions, The client has to bid for the technology from a 3rd party company. Also, there
are no similar products in the market.
Coming to the target segment, why don’t you tell me which segment will be most attractive to the
client?
I would like to break it into 2 parts, B2B and B2C. In B2B the customers will be various corporate
offices, Airport, Railway stations which might require such disinfection. In B2C, it would be general
retail customer like you and me.
That’s a good analysis. Can you give me an approach to decide the price of the purifier keeping
into mind all the facts that we have discussed so far? Don’t go into numbers, give me an
approach you will follow.
Sure, I would basically like to look at various costs that the client would incur, e.g., licensing cost
of technology, manufacturing cost, distribution cost.
Then I would calculate the breakeven point of sale to get the better understanding of cost per
unit. Then if we can source the tender of said number of units, then it makes sense to launch the
product. We can also include binding future contracts so that we have a buffer against vaccine
announcement in the future.
That’s great. Given that you have decided the price and are ready to launch. What should you do
next?
Sir, I would then analyze for any entry barrier in legality given that it comes under the realm of
healthcare. If there are no such restrictions, then I would focus on marketing the product to
ensure that people are aware of the product.
Great, I think we can close the case here. It was nice discussing this case with you.
Thank you, sir. It was indeed an interesting case.
Good, Now let’s say the client wants to target B2B, what all risks he must consider before
launching?
He must consider the following risks:
1. Return on Investment, given that the vaccine might be announced anytime rendering the
purifier useless.
2. Legal issues as the claim is that the purifier kills the virus.
ICON, IIM Bangalore
47
Air Purifier – COVID disinfectant
Case statement
Interviewee Notes
• Consider all factors
under the ambit of a
product launch
• Additional factors such
as mode of entry could
also be explored
• The case should test
the soundness of your
framework and your
ability to apply that to
this context
Market Entry | Moderate | Bain
• Air purifier that claims to kill the Coronavirus
• Looking to enter the Indian market
• Want clarity on whether to enter and explore factors related to this
Structure/Framework
Factors under
consideration
Market Size
B2B
B2C
Financials
Revenue
Risks
Cost
# of customers
Licensing
Price per unit
Manufacturing
Financial
Legal
Distribution
Key Takeaways
• The customers of the product could be business customers and end consumers
• The life of the product is limited, and this factor must be taken into consideration while evaluating financials
• One of the most important risks is the legality of such a claim and the availability of a patent
ICON, IIM Bangalore
48
Cybersecurity Software Provider
Market Entry | Moderate | Bain (Partner)
Case Statement : Your client is a cybersecurity software provider that manufactures software for
end point protection for corporates. They've recently developed a new product and are deciding
whether to launch it. Help the firm to go about this problem.
Before we begin with discussing the case, I would like to have a slight understanding of the
product. Our firm manufactures software for end point protection, that means the antivirus that
you and I use on our laptops, right? Can you confirm if my understanding is correct, else please
help me understand what end point protection means?
Sure, you're thinking along the right track. It's an antivirus, only it can be used beyond your laptop
as well. Can you think where else corporates might have use for it?
Sure. They may be extending its usage to the employees' phones, tablets and/or Video
Conferencing equipment as well.
That's correct. Why do you think they might be doing that?
Now we've arrived at the addressable market. But we discussed about the various devices earlier.
Where do you think that comes in?
Divided white collar population as owning just laptop, laptop + phone, or laptop + phone + tablet
and estimated the number of devices that software would be used in.
Excellent. Now, can you think of our main competition?
I'm not very familiar with the industry but I do know that other players exist with the same end
point protection model. Additionally, my own laptop, for example, came with a free one-year trial
for a pre- installed antivirus. Similar models may exist for corporates as well.
Perfect. Now what? Should we launch our product or not?
There are three things I would like to consider. We have already done the market sizing. Do we
expect the market share for this product in line with our overall market share?
I can think of two reasons:
1. Heightened awareness around data protection in today's business environment (gave an
example of US firms' paranoia about Chinese apps and software)
2. Nature of the work may be also playing a role – for example, more and more financial
services and consulting firms are mandating security nowadays
Yes, if the product is successful, we will get a good market share.
Interesting. You might be onto something here. So now we've got this product. Tell me if we
should launch it or not.
Yes, that’s a fair assumption. The product is also financially feasible in terms of margins.
Next, I will consider Operational viability. Since the product is already ready and our firm deals in
similar products, I think it would be fair to assume operations are viable. Is that right? Also, is the
product financially feasible?
Well, how does it measure against the competition?
Sure, can you help me understand the nature of the product better? Is it more
sophisticated/effective than our current offerings? If not, is it differentiated in any other manner?
It's definitely more effective.
It's more effective than our current products. But we're not sure if that might be needed.
Basis this, the drivers mentioned above and the market sizing, I would say we should go ahead
and launch the product (gave a quick summary of all the points till now)
Well, I can identify some drivers for the business, if any, that would spur this new product launch.
Am I right in assuming that more drivers exist besides the two that I mentioned above?
Good, we are done. Thank you.
Sure, but why don't you do a quick market sizing for me first? Start with the US market.
Did an extremely quick calculation to estimate the number of corporates and white-collar
population. Got stuck in the middle so the interviewer gave a number as an estimate. (Calculations
in appendix)
ICON, IIM Bangalore
49
Cybersecurity Software Provider
Case statement
Interviewee Notes
Market Entry | Moderate | Bain (Partner)
• Your client is a cybersecurity software provider that manufactures software for end point protection for corporates. They've recently developed a new
product and are deciding whether to launch it. Help the firm to go about this problem.
Structure/Framework
• End point protection antivirus software used
in laptops, mobile and
tablets
• The new product is
more effective than
current products
offerings of the client
Market
drivers
Heightened
awareness
Mandatory
in certain
sectors
New product
launch
Market size /
share
Operational
viability
Financial feasibility
Market Size
Product ready
and viable
Projected
Margin under
control
Market Share
• US pop: 300 M
• Working % = 50%
• # of employees /
corporate = 5000
Expected to
capture market
share
• # of corporates = 30K
Key Takeaways
• Used the product launch framework
• Understanding of market drivers is required
• Think of market size, drivers for launch and product comparison w.r.t. competitors.
ICON, IIM Bangalore
50
Pharma company
Market Entry | Moderate | Bain (Manager)
Case Statement : Our client is a global pharma company. It is a long-term client of the company
and is seeking your advice to grow the topline of its Indian subsidiary.
I have a few questions about our client before we start. What is the exact product that we sell?
We primarily sell drugs for two diseases: diabetes and hemophilia. There are 2 types of drugs to
treat diabetes: oral pills which are dominated by generic unbranded drugs and insulin. Our client
sells insulin.
Could you please walk me through the value chain?
A typical value chain is as follows: R&D is done, followed by manufacturing followed by
distribution. Since hemophilia is an extremely rare disease, distribution of our hemophilia drug is
managed by the government and distribution of diabetes is through pharmacies.
Okay. What is the nature of competition and what is the geography we operate in?
We are market leaders in both segments In hemophilia drugs, we have a market share of 30%40% and in the insulin segment we have a 60% market share.
Okay. And finally, by how much does the client want to increase their topline and in how much
time?
By 3x in 5 years.
Sure. I would focus on the diabetes segment. This is because hemophilia is a rare medical
condition, and the distribution is government-led because of which we have no pricing power.
Diabetes is a faster growing segment, and we can look to increasing our share further. We can
either look at increasing our price or increasing the volume sold. Since it is difficult to increase
price for medicines, we can increase volume. Volume is a function of population, % affected by
diabetes and % captured by the company. Since the first 2 is not in our hands, we should look
at increasing the third one. This can be done by tapping people who have diabetes, but it has
not yet been diagnosed or by converting people who are using oral pills to our product.
Can you give me a formula to determine the existing market size of the industry?
Sure. (Population) * (% having diabetes & diagnosed with diabetes) * (Requirement of insulin per
person) * (Average price per dose).
Okay. I will give you some numbers. Calculate the market size for me.
Average price: 8 per dose; Population: 1.3bn; 54% in the 20-78 age range; 11% diagnosed with
diabetes; 7% using insulin. Each person has to take a dosage of 0.15 per kilo per day. Average
weight 70kg.
Approximately Rs.160 bn (1300mn * 0.54 * 0.11 * 0.07 * 70 * 0.15 * 365 * Rs.8).
Cool, I think we have covered most of what I wanted to cover. Thank you.
Client can achieve their growth targets through organic means or inorganic means.
Ignore inorganic means. Let’s look at how it can grow organically.
Sure. The client can grow through the following four ways. First it can increase its presence in
existing markets. Secondly, it can launch new products in existing markets. Maybe sell drugs for
other diseases. Thirdly, it can launch existing products in new markets. It can use India as lowcost production hub and export to other countries. Finally, it can diversify altogether. Maybe sell
diabetes diagnostic machines or enter into pharmacy retail business etc.
The client wants to continue its existing business itself so diversifying its business or launching
new products is out of the question. Your idea for exporting drugs from India is very interesting.
But let us focus on the first strategy for the purpose of this case. Also, which segment would you
concentrate in and why?
ICON, IIM Bangalore
51
Pharma company
Case statement
Interviewee Notes
Market Entry | Moderate | Bain (Manager)
• Client seeking your advice to grow the topline of the Indian subsidiary of its pharma company.
Structure/Framework
• Numbers were given by
the interviewer
• Avoid calculation
mistakes
Market entry
Market penetration
(increase sales of insulin)
Product Development
(sell drugs for other
diseases)
Market development
(export to other
countries)
Diversification
Market size
Population
*
Age (20-78) (%)
*
Diagnosed with
diabetes (%)
*
Using insulin to
treat diabetes (%)
*
365
*
Price per dose
*
Avg. dose per kilo
*
Avg. weight
Key Takeaways
• Explain what exactly the company can do within the four buckets of the Ansoff matrix – e.g., mentioning the option of exports within market development was appreciated by the
interviewer.
ICON, IIM Bangalore
52
Metro Line - I
Market Entry | Moderate | BCG (Partner)
Case Statement : Your client is an infrastructure company tasked with setting up a metro line. They
would like you to look at sources of revenue and operation plan.
Also, the client wants to know that after investing whether the payback period would be attractive
or not. How would you proceed with the situation?
Sure, sir! (Summarized the case for clarity). Can I assume this to be a Tier 1 city ?
What is the PBP threshold decided by the company?
Sure, let’s take New Delhi so that you can get some reference.
The client would go ahead with the project if the PBP is below 7 years
Perfect sir, I am actually from New Delhi. When I think of the Delhi metro, the major sources of
revenue I can think of are: 1) The tickets 2) Value added services –food outlets on the stations 3)
Parking at the stations (minor)? Is there anything else you would like me to consider?
I think that’s good. Let’s look at the core revenue from tickets in a bit more detail.
Sure, sir! I believe the revenue that can be generated from ticket revenue could be calculated as :
No of tickets sold* Average Price of each ticket. (As price of ticket usually depends on the distance
travelled, we take average)
Sounds good, what could be the average price of the ticket you would assume?
So, I believe for the Delhi metro, we have 20 Rs as the minimum fare for 3 stations, and then it
increases to 40 Rs for 4+ stations and so on to 60 Rs and finally 80 Rs is probably the maximum
fare. Given this distribution and considering people use metro for inter-city travel, shall I assume
50 Rs to be the average price?
To start with, I would use the formula of Payback period to determine what all factors need to be
considered. It is equal to the number of years in which the initial investment in project is
recovered using the cash flows from the project. Hence, I’ll divide the analysis into the initial
investment and future cash flows. In initial investments, we can have elements like the
license/bidding related costs, costs associated with building infrastructure like tracks, stations,
metro sheds, etc. We can divide the future cash flows into revenue and costs which can be
further sub-divided into recurring and non-recurring costs, fixed and variable costs, and also soft
costs like interest during construction. Does this seem exhaustive or am I missing out on some
aspect?
Are you sure you have covered the initial investments completely? You may be missing out on a
major component.
Oh yes, I forgot about the actual metro trains.
Thanks. Please wait for further instructions.
That sounds reasonable. Can you now go and estimate number of tickets sold?
Sir, I would like to approach this from the supply side as I have seen the Delhi metro to be over
capacity most of the times. So, I assume that end to end a metro takes 1 hour and we would like
a frequency of 10 mins for the trains? Is that good?
Yes, let’s go ahead with that!
In which case we have about 6 trains leaving point A on the line every hour and reaching point
B. And 2 hours till our first train comes back, so that would be 12 trains in circulation at the
very least. If we assume 10 coaches per train and a capacity of 50 per coach (assuming no over
capacity), we will have total seats = 12*10*50 = 6000. We double this to consider B to A
journey and then consider 14-hour day ( 7 * 2-hour window ) which gives us total capacity as
6000*2*7 and total revenue = 6000*2*7*50 = 4200000 Rs per day.
ICON, IIM Bangalore
53
Metro Line
Case statement
Interviewee Notes
Market Entry | Moderate | BCG (Partner)
• Infrastructure company setting up metro line
• Sources of revenue and operation
Structure/Framework
• No notes as such
because the case was
driven by personal
experience
Metro Line
Revenue Sources
Core Revenue
(tickets)
Number of tickets
Number of trains
Hours of Operation
Value Added
Services
Parking
Average price of
ticket
Number of
Coaches in train
Seats in a train
Key Takeaways
• Try to determine revenues and costs using formula which can be easily broken down and analyse the sub parts well
• Draw on personal experiences during analysis
• Use OPR – Occupany, peak time, replacement in guesstimates
ICON, IIM Bangalore
54
LCD Screen Manufacturer
Market entry | Moderate | KPMG (Partner)
Case Statement : Your client is an LCD screen manufacturer from Sweden. They are a market
leader in Europe and now they are evaluating options to enter an emerging market like India,
China, Indonesia or South Africa to expand operations. Which country would you prefer to enter
and why?
Thanks a lot, Sir, for the problem statement. I would like to confirm that our client is a LCD
manufacturer and they are evaluating options to enter into either India, China, Indonesia or SA.
The client must decide on one country, is that right?
Correct.
So, before starting with the analysis, I would like to ask a few clarifying questions to get a better
understanding about the problem and our client. Is that okay?
Sure, go ahead.
Is the client only into LCD manufacturing or do they are into ancillaries of the same as well?
No. they have a broader portfolio but for expansion purposes, they are looking at LCD only
Sir, for identifying opportunity, we will look at : 1. Major businesses producing LCDs say, TVs,
Phones, Machines and equipment etc. and their scale of operations plus order size. 2. The
market for products using LCDs in India market and YoY growth of the same. 3. The life-time of
the LCD screens within. For evaluating the feasibility we’ll look at: 1. Regulations of land and
labor 2. Fixed costs associated with point 1 and 3. the ease of doing business or similar
rankings. And finally, in the viability aspect, since we are already a market leader in this LCD
technology, client has the required operations capabilities and I assume that they have efficiently
leveraged the economies of scale by keeping variable costs low. However, the cross-pollinating
would be required to transfer best practices to the native engineers.
Good. So, what would be your final ordering of attractiveness and why?
Sir, my order would be: 1. India 2. China 3. Indonesia 4. South Africa. It was a tough call between
India and China, but given the current political and pandemic circumstances, the business
environment would be slightly more volatile than India and it poses a risk for export to major
OEMs. Although India doesn’t rank well in Ease of Doing business ranking, but the situation
seems to be improving and many manufacturers, who use LCDs in their products are setting up
their operations in the country because of increased adoption of technology and allied devices.
Ok. That’s all. Thankyou.
Interesting. Any reasons why only LCD and not ancillaries or other components?
They are one of the pioneers in this technology and that’s why they want to set the first foot right.
Alright. Sir, first I’ll look into market size, then look at feasibility of setting up operations and
finally the viability of the same in these emerging markets. We will conduct this exercise for all the
countries individually and then make a final comparison matrix
This looks good. Please go ahead and explain each. I do not need calculations. Just mention the 23 essential factors that you would consider.
I would like to take a minute to gather my thoughts and come up with a structure for the analysis.
Would that be okay?
Sure, go ahead.
ICON, IIM Bangalore
55
LCD Screen Manufacturer
Case statement
Interviewee Notes
Market entry | Moderate | KPMG (Partner)
• Swedish LCD manufacturer evaluating expansion into emerging markets
Structure/Framework
• Client is pioneer in
technology
• Market leader in Europe
Expansion
Opportunity
Qualitative
Market sizing
Feasibility
PESTEL and
PORTER
Viability
Capability
analysis (VRIN)
Capability
development
Country
Opportunity
Feasibility
Viability
Overall
India
7
6.5
8
7.17
China
7
5
9
7
Indonesia
6
5
7
6
South
Africa
6
6
7
6.33
Note: Scores are out of 10
*Score on personal discretion
Key Takeaways
• Used market entry framework
• PESTEL application in GTM
• Current affairs knowledge was required and establishing connection with the case
ICON, IIM Bangalore
56
Car Manufacturer
Market Entry | Moderate | McKinsey (Partner)
Case Statement : Your client is a car manufacturer and wants to the enter the Indian market in the
early 90s, what are the factors you would consider and if you decide to enter how would you
establish a distribution network.
Before I delve further into the case can I ask a few preliminary questions to understand the client
and the market scenario better
Sure, go ahead
Can I know a little about the client, as in where is the client located, what is the prime reason for
entering the Indian market, what segment does the client operate in and in what all parts of the
supply chain is the client operating in?
Sure, the client is located in the United States, and a premier car manufacturer, think of something
like Audi or BMW, and the client operates in whole of the supply chain. About why Indian market,
what do you think could be the reason from the given data
Thank you for the information, from the given context since it is the early 90s, I am thinking of
the following 2 reasons: 1. due to the liberalization in India the client believes it would be
profitable to venture into the new and growing market, 2. The US market has reached a level of
saturation for the existing car brands and Indian market has seen an increase in disposable
income.
That's right, anything else you would like to know?
No sir, that would be all for now, I'll get back in case I need anything. I would like to take a min to
structure my analysis, is that alright?
Yes, please take your time.
Great, please proceed with the analysis.
As established earlier the growth seems to be good and is it ok to assume that the profit margins
for the premier car segment are higher, would you like me to do a guesstimate to look at the
potential market size?
Yes, the first assumption is fine. You don't have to get into the numbers but just walk me through
how would you approach the guesstimate
Sure, So I would take a demand side approach and follow a top-down analysis, I would consider
the total population in the 90s, split the population into urban and rural and then split it into
families, I would further split the families based on the income range. Since our client is a premier
car manufacturer, I would focus only on the high-income bracket and further I would look at the
frequency of purchase and based on that further calculate the number of cars demanded in
annually.
Great Job, I think you've mostly covered what I was looking for, let us now look at the distribution
channel.
Sure, before we proceed with that, I would like to look at the possibility of opening manufacturing
plant in India or if we should import the cars from their existing plants in the US.
That's a good observation, what do you think is feasible and profitable?
I think in the shorter run there would be low profits or even losses of setting up the plant in India
but in the longer run it would be profitable to operate wholly from the location of operation than
to importing the cars, also importing the cars would be directly impacted by the volatile
government policies around the import/export duties.
Ok, let us get back to the distribution channels.
So, I would like to proceed with my analysis in the following way, I would like to look at the
Market Attractiveness and the Core Competencies on a high level, under Market Attractiveness I
would like to look at the Market potential and the Industry attractiveness and under Core
competencies I would like to look at the Tangible, Intangible and Human resources the company
has which can be leveraged to get competitive advantage in the industry. Under Market Potential
I would like to further look at the Market Growth in the new market, Profitability, Market Size and
Barriers if any. Under the industry attractiveness, I would like to look at the PESTEL analysis and
the Porter’s five forces.
Sure, so in the Indian context the customers need the touch and feel of the product they buy and
are also very particular about the aesthetics. It would be ideal to have showrooms and
dealerships in major cities where there is a higher population of the target segment. The target
customers as identified earlier would be the high-income households, hence the dealerships
should be located accordingly.
Great, Thank you. You may please wait in the breakout room.
ICON, IIM Bangalore
57
Car Manufacturer
Case statement
Interviewee Notes
• Located in the US
• Premium car
manufacturer
• Covers whole supply
chain
Market Entry | Moderate | McKinsey (Partner)
• Wants to enter Indian market
• Establish distribution network
Structure/Framework
Market Entry
Market
Attractiveness
Market
Potential
Core
competency
Industry
attractiveness
Tangibles
Growth
PESTEL
Intangibles
Profitability
Porter’s 5
Forces
Human
Resources
Market Size
Barriers
Key Takeaways
• Do not mention the names – Porter’s 5 forces as a term
• Whenever starting anything new (like the distribution channel), think in long term and short term
ICON, IIM Bangalore
58
Asset Management Firm
Market Entry | Difficult | Bain (Partner)
Case Statement: Your client is an investment firm, like Blackrock, and is focused on wealth
management for HNIs and institutional clients. They manage portfolio worth trillions of dollars.
They have approached you in the height of COVID pandemic. They want to make some
investments which will deliver in 5-7 years. Can you recommend some countries for them to
explore?
I would like to ask some preliminary questions to get a better understanding of the case. I would
like to start by understanding the investment strategy of our client – do they have expertise in
any particular sector or type of investment? Also, do they have any preference between public
market or private equity?
That sounds like a good approach. You can ignore the third point in your framework for now.
Based on your knowledge can you tell me top 2 countries where our client should invest? Exclude
India from your analysis
Sure, let’s look at this continent by continent. Going by my previous logic I would ignore North
America and Europe as they are developed. Does that sound okay?
Yes, let’s proceed.
No, they are open for all kinds of investments
This leaves us with Africa, South America and Asia. Africa is attractive in terms of natural
resources and population growth, but based on my approach I would rule it out for political
instability. Does that make sense?
Do they have any particular exit strategies in mind between IPO, secondary buyout or trade sale?
Okay, sure.
That’s a good point but let’s ignore it for the case.
That leaves South America and Asia. I do not have a lot of idea about South American countries
except Brazil, and their response to COVID was not great which shows government inefficiencies.
Hence, I would like to focus on South-east Asia now. Does that sound good?
Okay, let me take some time to think of an approach for the case. Firstly, I would like to focus on
developing or underdeveloped nations for this exercise. They look like an exciting option to
deliver in next 5-7 years. The developed counties would mostly be saturated, and our client
would probably not make a good return. Does that sound okay?
Yes, that sounds reasonable.
I would like to break the analysis in three phases:
1. The over-arching attractiveness can be defined in terms of political and legal environment of
a country
2. Then I would look at the organically favorable factors such as natural resources, government
attitude to FDI and any announced investments and the country’s response to COVID. The
COVID response can give us a good idea about how quickly the country can make changes
in their infrastructure
3. Thirdly, I would like to look at what our client can bring to the table to foster inorganic
growth through synergies with other portfolio companies or any technological investments
Yes, please proceed.
I will start off by listing countries in Southeast Asia – Singapore, Japan, Australia, New Zealand,
Malaysia, Vietnam, Thailand, Koreas come to mind. Out of these I will again exclude Singapore,
Japan and ANZ because they are developed.
Further, I have past experience working in Malaysia during COVID and know they had a very
rapid response. I also know that they are very welcoming towards foreign investments and are
growing rapidly. Hence that would be one of my priority countries. The other country, for similar
reasons, would be Vietnam
Great, thank you. We can end the interview here.
ICON, IIM Bangalore
59
Asset Management Firm
Case statement
Interviewee Notes
• Firm is open to all
kinds of investments
across sectors and
markets
• No particular exit
strategy in mind
Market Entry | Difficult | Bain (Partner)
• Investment firm looking to expand across geographies during COVID
Structure/Framework
Defining country attractiveness
1 Political and Legal environment
2 Organic favorable factors
Natural resources
•
•
Macroeconomic factors
(GDP/capital, population
growth etc)
Synergies with other
portfolio investments
•
Technological innovation
Government initiatives for
any infrastructure projects
•
COVID response
N. America &
Europe
Rejected as developed countries
will be saturated
Middle East
and Africa
Rejected for political instability
South America
Considered Brazil, rejected basis of
COVID response
Asia
Listed down countries, selected
Malaysia and Vietnam
3 Inorganic favorable factors
•
•
Evaluating countries
Key Takeaways
• Interviewer was more interested in approach to case solving than the final answer
• Very important to form an initial framework and keep going back to it
• Some general information about global happenings in COVID were important
ICON, IIM Bangalore
60
Metro Line - II
Market Entry | Difficult | BCG (Partner)
Case Statement: Your client is an Indian infrastructure development firm. They are contemplating
whether to accept an offer to develop a metro line from point A to point B in an Indian city. They
want you to find out the number of years in which they will be able to get back their initial
investment. We will test your comfort with numbers in this round. For the case, I want you to
assume that the operating costs for the metro are zero. I would like you to begin your analysis by
looking at the revenue.
Okay, Sir. I would start by looking at the annual revenue from the passengers. For this, I would
consider the price/ km, the average distance travelled per trip, and the number of trips made per
year.
The price/km is Rs 5. You can assume that the average trip is from A to B, which are 5 kilometers
apart. I would like to know how you would approach the calculation of the number of trips.
Starting with the population of the city, I would look at the number of residents commuting from
A to B and vice versa daily. For this I would look at the percentage of residents near A and B. I
would then apply filters of gender and age, summing across the two routes to get the market size.
Would this give us the number of trips?
No, Sir. We would estimate the number of commuters who would use the metro. For this, we
would divide the market into income segments, and rate the metro on the parameters that each
segment values. The sum of market shares from each segment would give us the daily demand.
We could then multiply this with the number of working days to get the number of trips in a year.
That sounds comprehensive. We do have the numbers for this: the number of unique trips will be
2,00,000 a day.
Alright. I want to look at the total capacity of each coach. I will divide the daily demand by the
capacity to get the minimum number of coaches required. How long is one trip? How many hours
in a day does the metro run for?
One trip takes 30 minutes. The operating hours are 7 AM to 10 PM.
In 15 hours, each coach can make 30 trips. It can seat a maximum of 360 people, which
gives us a capacity of 10,800. Dividing the daily demand by this capacity, we get a
minimum of 19 coaches.
What are the assumptions that you made in arriving at this number?
I assumed that there would be no down time between each trip. I also assumed that the
demand is uniformly distributed. These assumptions are unlikely to hold to a complete
extent in real life. So, the true number of coaches should be higher. I would recommend a
number 50% higher. So, 30 coaches. This would add 600 crores, resulting in a total
investment of 750 crores.
That sounds good. Going back to the objective, what would be the payback period
for the client?
With an annual revenue of 180 crores, we would need a little more than 4 years to recover
the investment.
With this payback period, would you recommend that the client invest in this project?
Alright. Assuming that a year has 360 working days, we get revenue from operations to be Rs
180 crores. We could also look at other sources of revenue such as advertising.
Sir, that would depend on whether the client have a cutoff period for investment decisions.
If the cutoff period is more than 4 years, then they should invest in this project. They could
also look at other judgement criteria for investment.
No, that will not be necessary. Please look at costs now.
Alright, that sounds fair. Let us close the case here.
Okay. Given that the operating costs are zero, we will look only at the fixed costs. There would be
two major investments: laying the track and buying the coaches. Do we have any numbers for
how much these will cost?
Yes. Laying the track will need an investment of 150 crores. Each coach costs 20 crores and can
seat 360 people. You also have to determine the number of coaches to buy.
ICON, IIM Bangalore
61
Metro Line - II
Case statement
Interviewee Notes
• The interviewer was
very clear about the
purpose of the case:
calculation skills. So, it
was important for me
to be accurate in each
calculation.
• The interviewer was
pleased with the
recommendation,
although it was not
very concrete.
Market Entry | Difficult | BCG (Partner)
• An infrastructure development firm is trying to calculate the payback period for a project.
• The company faced high fixed costs in terms of laying the track and buying coaches.
• The number of unique trips is 200,000 each day.
Structure/Framework
Profit
Revenue
Revenue from
Operations
Revenue from Other
Activities
Costs
Fixed
Price/km
Tracks
Average
Distance
Coaches
Variable
Number of
Trips
Key Takeaways
• While the percentage values for demographic have been removed for ease of presentation, engaging the interviewer with your rationale might further prove your clarity of thought.
• It is important to lay down the logic of your calculation and getting the interviewer’s buy-in before actually starting the calculation.
ICON, IIM Bangalore
62
Automation solution
Market Entry | Difficult | Bain (Partner)
Case Statement: Your client is a manufacturer of industrial products (such as spindle machines,
machine tools, etc.). It is a B2B player and is looking to automate its shopfloor. After automating
the shopfloor, it is looking to take the automation solution and commercialize it. It is asking you
for advice.
I have a few questions about our client before we start. What is the exact product that we sell and
the value chain of the industry?
We are an industrial goods manufacturer. Production of spindle machines used in textile industry
forms majority of our revenue.
How would you calculate discounted payback period?
It comprises of 3 parts: Initial investments, cash flows and discount rate. Cash flows can further be
divided into revenue, expenses and investments in capex and working capital.
How will you calculate revenue?
Revenue will be No. of clients onboarded x Average revenue per client
How will you determine the revenue that you charge to the client.
How many plants do we have and are we planning to automate them all?
Pricing can be done in the following methods: (1) Cost-based pricing (2) Competition-based
pricing and (3) Value-based pricing.
We have 2-3 plants in Coimbatore and yes, we plan to automate them all.
Which of these methods do you think is used in the industry?
Okay. And why do we plan to sell our automation solution? What is the objective there?
Client wants to earn more profits.
Okay. So, I would do my analysis in 2 parts. (1) I would look at whether our shopfloor can be
automated and (2) The strategy I would follow to commercialize it.
Competition-based pricing can not be used as each problem is different. So, one can use either
the Time & Materials model wherein the number of hours utilized is multiplied by cost rate and a
markup is added or it could be a fixed price contract, or the price charged to client would be a %
of the results.
We can obviously automate it. Let’s not waste time there. Let’s look at how you would help the
client get into the automation business.
In this environment, no client will expect the first two methods. You are going to be able to
charge based on what you can save only. Tell me how will you be able to determine the results of
the project?
I would break down my analysis in 3 major heads: (1) Opportunity (2) Feasibility and (3) Viability.
In opportunity, I would look at market share, market size and competition. In feasibility I would
look at pre-entry considerations and how to enter the market. In viability, I would look at financial
viability and post-entry considerations such as cannibalization, etc.
The results of the project can either be through cost savings or increased efficiencies or better
information flows.
Let’s look at financial viability.
Sure. We can determine financial viability through 5 methods: (1) Accounting rate of return (2) IRR
(3) NPV (4) Payback period and (5) Discounted payback period.
Between payback period and discounted payback period, which would you choose and why?
That’s fine. But how will you bring about changes in these aspects
Cost savings can either be through reduction in labour requirements, lower overheads and lower
material and capital costs. Efficiency can be through better queueing and inventory management.
Measuring information flows would be slightly tricky and I am not sure how we can do it.
No issues. I think our time is up. Thank you.
I would choose discounted payback period because it also takes into consideration the time value
of money.
ICON, IIM Bangalore
63
Automation solution
Case statement
Interviewee Notes
• Interviewer expected to
see a deeper
understanding of the
business and use of
business judgment
Market Entry | Difficult | Bain (Partner)
• Your client is a manufacturer of industrial products (such as spindle machines, machine tools, etc.). It is a B2B player and is looking to automate its
shopfloor.
• After automating the shopfloor, it is looking to take the automation solution and commercialize it. It is asking you for advice.
Structure/Framework
Opportunity
Market entry
Feasibility
Market share
Pre-entry
considerations
Market size
Mode of entry
Viability
Financial
viability
Accounting
rate of return
IRR
NPV
Post entry
considerations
Payback
period
Discounted
payback period
Initial
investments
Competition
Cash flows
Discount
rate
Key Takeaways
• Be exhaustive in the factors to be considered for market entry at every step and look out for cues by the interviewer on where he/ she wants to to deep dive.
ICON, IIM Bangalore
64
Pricing Framework
GAP
Market Price
Pricing
Value to consumer
Profit to seller
• Brand
• Quality
• Innovation
• New-found utility
Cost
Inward looking
1
External looking
2
Cost based
Comparable/
benchmark
Competition based
Costs
R&D, one-time costs
Industry
Production costs
Customer based
Willingness to pay
Features of others
Opportunity cost
Substitutes
Variable portion
Complements
% markup, margins
Value based
Structure
Fixed portion
Extrapolate benefits
Or proxy based
Other specific costs
Returns
3
Features
Additional features
Breakeven period
Differentiating benefits
Payback period
Price range of existing
ICON, IIM Bangalore
65
Toll Collection
Pricing | Easy | BCG (Partner)
Case Statement: Your client is an infrastructure company which has just built a new road. You
need to help them find the right amount of toll to charge for each vehicle which uses the road.
Okay, can you arrive at the rupee amount any consumer ascribes to their time without doing
surveys?
That sounds interesting. I would like to know a bit more about the road which the company has
built. Where is it located? Is it an alternative route or it the repaired version of an older route?
Well, there are a couple of creative ways. We could look at the amount customers are willing to
pay to skip queues for services which allow skipping them for a premium. Apart from this, we can
look at the extra charge that customers play on delivery apps to get a guaranteed delivery time.
You can assume that the road connects two Indian cities, which were previously only connected by
a single bridge. The road is an alternative to the old bridge.
I have a couple of questions about the differences between the two routes for potential users
before I begin my analysis. Does the new road reduce the travel time between the two cities? Is
the build quality of the two roads different?
Okay, those are definitely some interesting options. It was nice interacting with you. Let’s close the
case here.
Yes, the new road reduces travel time by 30 minutes, even though it is a longer distance to travel.
The build quality is the same as the old road.
Alright, great. There are three possible ways to choose a toll to charge. The first is by choosing a
time period in which we want to earn back our initial investment. For this, we will divide our
costs by the projected demand in the given time period to get the minimum required toll price.
The second method is to look at the toll prices charged by other builders. We can record the
prices at toll plazas connecting the same cities to other places, and then given our
advantages/disadvantages over them, add a premium or a discount. The third method is to look
at the value which we provide to our customers and charge an equivalent amount.
Okay, that sounds comprehensive. I am interested in the the third method. How would you price
the value which we provide to our customers?
We can provide for value for travellers on three parameters: distance, time, and convenience. We
are at a disadvantage in the first parameter. We can use the extra fuel charge as a proxy.
Sounds fair. How will you value the time savings?
So, we know that the time savings are 30 minutes. Different segments of consumers value their
time differently. For example, lower income classes are perhaps not that affected by time savings
when compared to upper income classes. We should consider implementing a price discrimination
mechanism, such as charging different tolls to different vehicle categories after doing surveys.
ICON, IIM Bangalore
66
Toll Collection
Case statement
Interviewee Notes
• The interviewer
mentioned that he was
looking for creativity.
• It was also explained
that there would be no
numbers in the round.
Pricing | Easy | BCG (Partner)
• An infrastructure company is trying to set a poll charge for its new road, which has a time saving of 30 minutes.
• The road requires travelers to cover a longer distance
Structure/Framework
Pricing
Cost-based
Competitorbased
Value-based
Advantages
Distance
Disadvantages
Time
Convenience
Key Takeaways
• The case was supposed to be done without a pen and paper. The interviewer had mentioned that he was looking for a conversation. Thus, it was important to be quick on my feet
and not ask for a couple of minutes to think.
ICON, IIM Bangalore
67
Factory owner
Pricing | Easy | Bain (Partner)
Case Statement : Your client owns factories which they lease out to a manufacturing firm. They are
currently exploring whether to automate the factory or not and, if so, the new pricing. Could you
advise them on this?
I would like to ask a few preliminary questions about the client. Could you let me know a bit about
their factories and current pricing system? Also, why are they looking into automation?
The client owns three factories in Coimbatore and leases them to textile manufacturing firms.
Their current pricing is an annual lease and is competitive with the market. The client wishes to
see if they can increase their profits with automation. Can you think about where all there will be
cost reductions through automation?
That’s correct. Can you think of some options?
I can think of 3 options:
• Look in the past to see how price increases were negotiated and what might be the appetite
of the textile firm
• Try getting industry data on what are the percentage increase in lease prices when new
efficiencies are introduced
• Initially propose an increase of INR 1Cr with gradual increase of INR 50L each year
That sounds good. Thank you for your time.
I would like to map this on the value chain. So, the factory process for the textile firms can be
broken down into raw material procurement, manufacturing, packing and distribution. Through
automation, they can probably reduce raw material and manufacturing expenses (utilities and
labour). However, they will find the increased fixed cost of investment and maintenance as well.
That sounds correct. Can you now tell how they should go about pricing it?
So, I would start with floor pricing based on the increased cost. Do we have any information on
the cost of investment and maintenance of machines? There can also be increased labour costs
for operating new machinery.
Assume that the new machinery costs INR 2.5 Cr, with an annual maintenance cost of INR 50L.
The net labor cost remains unchanged.
The client can look at spreading the cap-ex over 5 years. Hence the initial annual cost can go up
by INR 1 Cr. This would be the floor pricing. To get a ceiling, we need to know the additional
value generated by automation. Do we have any information on that?
Assume that the current margin of the firm is INR 50 Cr & automation would expand it by 10%.
This means additional annual savings of INR 5 Cr. Hence, the client can price the automated
factory lease at an additional INR 1-5 Cr. You told me that we are already competitive in the
pricing; hence we will need to find a benchmark we can take to price between INR 1-5 Cr.
ICON, IIM Bangalore
68
Factory owner
Case statement
Interviewee Notes
• Wants to increase
revenues from lease
• New machinery costs
INR 2.5 Cr, with an
annual maintenance
cost of INR 50L
Pricing | Easy | Bain (Partner)
• Factory owner, leased out factories to textile firms
• Wants to know the change in pricing for automation
Structure/Framework
Value chain
analysis for cost
saving
Raw material
• Reduction in raw
material for new
automated
machines
Manufacturing
• Utilities
• Labor
Price floor
Packing
• Utilities
• Labor
Actual price
Distribution
• Unaffected
Price ceiling
Pricing
Cost based pricing
Benchmark to set actual price
Value based
pricing
Key Takeaways
• Break down problems in structured way.
• Take regular interviewer buy-ins for all the assumptions which you make
ICON, IIM Bangalore
69
New Medicine Launch
Pricing | Moderate | McKinsey (Partner)
Case Statement : A Pharma company has developed a new product to control diabetes for patients in
India and need your help in pricing it
Yes, the new product is superior to insulin
Sure, go ahead.
In that case, we should certainly price our product more than Insulin as we are providing more
value than insulin. Again, how much should be the markup depends upon the perceived benefits
of our product amongst the consumers
What is the objective of pricing? Is it to maximize the profit or something else
Yes, that’s correct, anything else you want to consider here?
Yes, it is to maximize the profit
Yes, we can also consider substitutes in the form of Ayurveda, Homeopathy which might eat up
on our Market share if we price too high.
That’s an interesting problem. Do you mind if I ask some questions to better understand the client?
Can I have more details about the product? Basically, how it is different from normal insulin
injection & information on how restricted its availability be i.e.. Will it be available over the
counter or requires a prescription? And how is the competitive landscape in the market
It's an oral tablet instead of an injection and has lesser side effects. It'll be available over the
counter and the market is highly competitive
I want to breakdown the Pricing of the tablet into three broad strategies - 1) cost based 2)
Competitor based 3) Value based pricing
The final price will be dependent on all the three factors
That’s a fair assessment. Let's move on.
Okay, now I want to consider how much value we are providing to the customer and how much
we can capture it. For that we can do price elasticity analysis of the product to arrive at a price
which maximizes the profit and can also investigate Supply v/s Demand gap of the existing
market to determine the best price of the product.
Yes, that’s a detailed enough analysis. Let’s stop the case here.
Yes, that sounds fine. Why don’t you list down all the factors. I don’t want you to go into
details. Just tell me all the factors
Okay, let me start with Cost based approach. Over here Total cost is composed of one-time
R&D costs + Cost of production which again can be divided into Fixed cost and Variable cost.
This along with our production volumes will give the minimum price for the tablet. We need to
now find profit margin in top of that. Profit margin can either be something company is
targeting, or we can use some proxy to find it
Yes, that’s sound fair. Let’s explore other factors you have listed now
So now we can look into competition and substitutes for our product and figure out a price
based on our product's position with respect to them. For that, I already have the information
on lesser side effects and the fact that medicine is in oral form which makes it superior to the
injection-based insulin. Is that fair to assume?
ICON, IIM Bangalore
70
New Medicine Launch
Case facts
Interviewee Notes
Pricing | Moderate | McKinsey (Partner)
• Oral tablet for diabetes patients
• Lesser side affects
• High competition in the market
Structure/Framework
• Follow a qualitive
approach rather than a
quantitative one
Cost
Variable
Cost
Fixed Cost
RnD
Salaries
Depreciation
Rent
Sourcing
1.
Cost
Pricing
Competitor
Value based
2.
Manufacturing
Distribution
Sales and
Marketing
Cost of production - fixed cost and variable
cost
R&D expenses
1.
2.
3.
Competition: Insulin injection
Substitutes: Ayurveda, homeopathy
Value Addition:
•
Lesser Side affects
•
oral tablets instead of injection
1.
2.
Willingness to Pay: Elasticity analysis
Supply and Demand tradeoff
Key Takeaways
• As interviewer hinted for qualitative discussion, the candidate made sure that all the factors were listed out before going in detail to anyone.
• The interviewer was trying to speed up the case. Make sure that you are not taken aback by it
• My case ended abruptly when interviewer started asking me about one of my resume points, make sure that you are confident in such situations, and be thorough with your
resume. Don’t lose the structured approach even if you are asked a question from your resume.
ICON, IIM Bangalore
71
Medical Drug
Pricing| Moderate | BCG (Buddy)
Case Statement : Your client is a CEO of a large multinational company in the health care space.
He has a drug which can make patient risk free from cardiac arrests. How do you price it?
I would like to ask a few preliminary questions before getting into the case. I wanted to know the
objective for pricing and the core competency of the client.
Okay considering that people aged between 50 and 80 use pacemaker, these people on average
use 3 pacemakers. Thus, cost of alleviating cardiac arrest is USD 30000. Since we have to use pill
thrice a month for 5 years, it translates to 180 (3*12*5) pills. To be on a comparable scale, price
needs to be USD 167 (30000/180)
Good. What else would you consider?
The client wants to maximize lifetime revenue from the drug with a minimum of 50% profit
margins from the sale. The client core competency lies in R&D and large-scale investments.
Thanks for the information. I also wanted to know more about the drug. What is the consumption
mode, frequency and duration. Are there any side effects involved and how much was the R&D
costs associated with making the drug?
Drug needs to be consumed thrice a month for 5 years. There are no observable side effects. Do
you think R&D costs are relevant to price the drug?
Sorry, R&D costs would be sunk cost and thus should have no influence on the pricing. What is
the cost involved in this drug?
Good. Each tablet costs 100 USD to make. This includes all commission paid to intermediate
channels
Okay. If we consider cost based pricing and required 50% margin, then we should price it at
minimum 150 USD. This would be the lower limit for the pricing. I want to know more about the
competitors, substitutes for the drug and the customers to decide on the upper ceiling.
I wanted to know if there exists any regulations on the maximum pricing as this pill is unique
compared to pacemaker and provides greater value to customers considering easy usage. I also
wanted to know if the drug is patented and possibility of replication.
Yes, the market regulations prohibit pricing above 180 USD. The drug is not patented, however as
I mentioned client core competency is in R&D and thus drug is not easily replicated
Based on this, I think the drug can be priced at premium as the drug is noninvasive and unique
(cannot be replicated)
Good. Can you summarize your final recommendation to the client?
Considering the client objective and the market scenario,
• Pricing of the drug needs to be on the higher side of USD 150-180.
• Promote the drug deep into the market and endorse it heavily through first adopters.
• Though replicating is not easy, the drug needs to be patented to avoid any duplicates in
future.
Good. Currently the client doesn’t have any competitors who sell equivalent drugs. Can you think
of any substitutes for the drug?
Pacemakers would be an ideal substitute considering they are used to avoid cardiac arrests. Can I
consider the same?
Yes. You can consider it. How would you approach now?
I would consider the prevailing market price of pacemaker and it’s life. Do we have this data ?
Consider the cost to be USD 10000 and life of 10 years.
ICON, IIM Bangalore
72
Medical Drug
Case statement
Interviewee Notes
• Drug needs to be
consumed thrice a
month for 5 years and
costs 100 USD
• Pacemaker is suitable
substitute. Price can be
compared
• Drug can demand
premium as it is
noninvasive and
cannot be replicated
easily.
• Maximum price is
restricted to USD 180
by regulations.
Pricing| Moderate | BCG (Buddy)
• Client has a new drug that helps in avoiding cardiac arrests
• Pricing of the drug needs to be decided
• Objective is to have minimum 50% margin on the costs
Structure/Framework
Pricing
Competitor/ Substitute
Based
Cost Based
50% margin on 100 USD
cost leads to lower limit
price of 150 USD
Considering pacemaker cost
of 10000 USD and avg 3
pacemaker usage per
person, comparable price of
pill is 167 USD (30000/180)
Value Based
Drug can command
premium; but regulations
limit the price to USD 180
Key Takeaways
• Sunk cost is irrelevant while pricing.
• It would have been better telling that you will be considering 3 approaches for pricing rather than directly indicating approach one by one.
• Often, the key in pricing is to guess the mark up potential for pricing.
ICON, IIM Bangalore
73
Growth Strategy Framework
PRODUCTS
Existing
•
•
•
•
•
•
Market growth rate in line
with management’s growth
expectations
Low market share w.r.t.
market leader
Growth rate w.r.t competitor
A derived profitability case!!
New
•
•
1. Market
Development
Strategy
4. Diversification
Strategy
•
•
•
Four
Growth
Strategies
Existing
•
Market growth rate lower
than management’s growth
expectations
High market share w.r.t.
closest competitor
Concentrated in a small
market
Demand in other markets
Typical Market Entry Case!!
MARKETS
•
New
2. Market
Penetration/
Entry Strategy
•
3. Product
Development
Strategy
ICON, IIM Bangalore
•
•
Product - Market growth rate
lower than management’s
growth expectations
Management’s objective
High concentration in a
single product/ category
Diversification strategy case!!
Market growth rate lower
than management’s
growth expectations
Product in maturation or
decline phase
Product Launch Case!!
74
Coffee Production
Growth | Easy | Kearney (Partner)
Case Statement : Let's get into the case. I want to understand your approach. You can ask me any
questions. Your client is in global coffee production industry. They want to increase their revenues
from 1000 Cr to 2000 Cr in 5 years
Okay. Makes sense. I would like to take a minute to gather my thoughts and come up with a
structure for the analysis. Would that be Okay?
Sure, go ahead.
Okay. So is growth the only concern or are they looking for cost aspects also? Also, I wanted to
know more about the company and industry before going ahead. So I know of coffee producers
who own plantations and some who are just involved in processing the coffee beans. Where
does our client operate in? What are the products being produced?
Ignore the costs for now. Our client kind of operates both. We have two business units. One-unit
deals with owning plantations, producing green beans and processing them to Roasted ground
coffee. The other unit buys high quality green beans from others and then process them to
Instant Coffee. Our current share of revenue is composed of 60% from Roasted ground (RG)
coffee and the other 40% from Instant coffee (IC)
Ok. Do we have any growth data available regarding the industry? And should I focus on RG
coffee first since it is 60% of our revenue. I also wanted to understand the bottleneck area in
value chain where we are lagging. Is it in plantation or processing or customer side?
RG is growing at 4% p.a. and IC is growing at 6% p.a.. But yes, the client is attracted to RG
industry and wants to find out what can be done. We have very high demand, and our processing
capabilities are also good. You can focus on plantation.
So when I think of plantation, I think of land area * yield of area. We can think of increasing the
land area or the yield in current area to improve our revenue. But to double our revenue, I don’t
think yield can be improved to that extent. It might be dependent on climate conditions also.
I am thinking we can do below things
1. We don’t need to own land. We need the low-quality beans so that we can produce RG
coffee. We can have tie ups with other farmers and ensure we get this
2. We can also think of growing other crops compatible with coffee in our available land. In
this way, we can increase the revenue
Should we start focusing on IC now we know that it is growing by 6%? We can use current land
to produce high quality beans
I like your first two options. Nice way to think about the problem. But we are still focusing on RG
and not to IC. I think you missed one important part in the entire statement. Can you relook?
I am sorry. I am not able to find it exactly
Don't you think you are constraining yourself? The land is costlier in India.
Ohh, yes. We are thinking of increasing our global revenue. We can think of buying land at other
areas like Brazil where the land costs might be cheaper. Sorry. I missed this
Yes. This is what we had suggested to the client and it was a success. I really liked your approach
to the problem, though you missed one key aspect. Well done
Correct analysis. We have only 5% land with us in the coffee area which is cultivable in India. Can
you think of strategies on what do we do from here?
Why are we not buying more land ?
The client has done complete analysis and has found out that it is very costly to buy land in India
compared to the revenue gain expected.
ICON, IIM Bangalore
75
Coffee Production
Case statement
Interviewee Notes
Growth | Easy | Kearney (Partner)
• Client wants to double the revenue from 1000 Cr to 2000 Cr in 5 years
• Client has two products RG and IC. RG involves plantation
• Client cannot buy more land in India as it is costly compared to revenue gain
Structure/Framework
• Qualitative analysis,
though numbers were
provided
• Client is interested in
growth of RG products
• Problem is with
Plantation and root
cause is with limited
land availability with
clients
Current Revenue
(1000 Cr)
RG coffee
(600 Cr) growing at 4%
Plantation
Land Acres
Processing
*
Distribution
IC
(400 Cr) growing at 6%
Customers
Yield per acre
Key Takeaways
• The preliminary questions and the value chain set up before analysing the problem worked in favour of the candidate as he could directly go into the root cause based on this.
• The candidate missed a key aspect of problem statement. “Global” revenue. It could have gone horribly wrong as you are expected to note down on all case relevant facts. But
approach and other recommendations helped him.
ICON, IIM Bangalore
76
OTT service launch
Growth| Easy | Strategy& (Manager)
Case Statement : Our client is a regional production house and produces content in Gujarati
language. Given the increasing popularity of OTT format, they are looking to launch an OTT
platform of their own. I want you to analyse whether they should go ahead with the launch?
To make sure I have understood the case statement clearly, our client is a regional production
house which produces Gujarati movies and TV shows. They are considering launching their own
OTT platform and have, and I need to analyse whether this is a viable option.
That’s right!
Before I proceed with structuring my analysis, I would like to ask a few preliminary questions.
Would that be fine?
No, this is reasonable. Please tell me how you would estimate the market size.
I would break down the market size into two – number of users and average subscription
charges per user. To calculate the number the users, I would further break it down into two –
potential market size and percentage conversion. Market size is the total Gujarati speaking
population in India, which is around 5% of the total population. That gives us the total market
size of 6.5 crores. Given that there would be just one subscription per family and average family
size at 4, we get approximately 1.6 crores families. Now, I would like to break them further
down basis the income level.
Okay, that sounds fine.
I shall divide it further into three income levels – low, medium and high with 40% falling in low
and medium and 20% in high-income level bracket. This gives us 0.64 crore families in low and
medium-income levels and 0.32 crore families in high-income level. Assuming that subscription
to the OTT platform as a luxury service, the affordability would vary across the different income
levels. I would like to assume that 100% for high, 50% for medium and 0% for low-income
groups. Does this seem fair to you?
Sure, go ahead.
What kind of content does our client produce? Is it movies, TV shows or both?
Great question. They produce both movies and TV shows, but their focus is on TV shows.
Okay, and does the client have a particular customer segment such as youth or elderly that they
target?
No, they don’t have any such specific customer target.
Yes, go ahead!
This gives us the total market size of 0.64 cr families. To calculate the percentage conversion, I
would like to look at two factors – awareness and adoption. Assume that, given the medium and
higher income level groups, 75% awareness level and approximately 50% would actually adopt.
This would give us the total number of users as 0.24 crore. Does this seem reasonable to you?
Alright and what is the primary objective of launching their own OTT service?
Client is looking at the OTT service as an alternate source of revenue.
What factors led you to consider 50% adoption levels?
Thanks for making the objective clear! Can I have a few seconds to structure my analysis?
Sure!
I would like to approach this problem by evaluating the market attractiveness, financial viability
and operational feasibility. Market attractiveness aspect is to assess the market size, growth
potential, existing competition and the trends prevailing in the market. The financial viability
aspect is to assess the profitability of the venture. Operational feasibility would include factors
like regulatory approvals, resource availability and technological capabilities. Does this seem
reasonable to you, or should I consider any other aspect?
I assumed that given the specific level of technical expertise required for using OTT platforms, a
certain population level even though they can afford it would not be that tech-savvy to use it.
Further, some customers may not see value in subscribing to an OTT platform just for Gujarati TV
shows and movies.
Okay, not that we have the total number of users tell me how would you price the services?
ICON, IIM Bangalore
77
OTT service launch
Growth| Easy | Strategy& (Manager)
Firstly, I would like to look at the pricing of other OTT players in the market – Netflix charges
Rs. 499/month for its basic plan and fall in the premium segment, Disney-Hotstar charges
around Rs. 399/year which is around Rs. 30/month. Given the extensive range of content they
provide to user we can consider this as the ceiling price. Further, I know that DTH services, on
an average, charge around Rs. 10 to Rs. 20 per channel per month. Given that the OTT
platform would be providing more timing flexibility with no disruption due to advertisements
hence it would provide more value to the user. To increase adoption initially, we can price the
service at Rs. 15 per month. Does this seem fair to you?
That does seem fair and what be the annual revenue that the client would generate if it were to
launch the OTT platform?
Our total number of users would be 0.24 crore and charging Rs. 15/month, the client can have a
potential revenue of Rs. 43 crores.
Alright. That makes sense. Let us wrap it up here. All the best!
ICON, IIM Bangalore
78
OTT service launch
Case statement
Interviewee Notes
• Total Gujarati speaking
population can be
assumed as 5% of the
total population
• Population can be
further broken-down
basis income – low
(40%), medium (40%)
and high (20%)
• Identify the
characteristics for OTT
platform users and use
it to further segment
Growth| Easy | Strategy& (Manager)
• Regional production house looking to launch OTT platform
• Aim – increase profits and create additional sources of revenue
Structure/Framework
OTT service
launch
Market size
Number of
users
Potential market
size
Market
attractiveness
Financial
viability
Growth
potential
Existing
competition
Operational
feasibility
Average
revenue per
user
% conversion
Key Takeaways
• Ensure that the you lay out the structure for your analysis at the start
• Assume that are easy for calculation and take buy-in from the interviewer on the assumed numbers
ICON, IIM Bangalore
79
Convenience Store at Gas Station
Growth| Moderate | Kearney (Manager)
Case Statement : Our client is the owner of a gas station between towns A and B –10 miles to
each town. He is wondering if it would make sense to add a convenience store to the gas station.
I have a few questions about our client, may I do ahead?
Sure
Are there any other gas stations in town A or B? Who are the typical customers of the gas station
like?
There are no other gas stations in town A or B. The gas stations current customers are residents
of town A and B; there are no other customers
So, just to visualize the problem a bit more, I am assuming it to be a typical gas station with
revenue coming from sale of petroleum and maybe some other service?
Yes, that’s a valid interpretation. Gas is 75% of revenue with 10% profit margin and the gas
station also offers car washes with 25% of revenue and a 20% profit margin
Finally, I would like to ask what would be a valid criterion for the decision to make sense? Is the
client targeting certain revenue numbers or profitability?
That’s an excellent question! So, the Criteria for “making sense” – 1) making profit, 2) having a
better chance to hold off new competitors enter the market, 3) diversifying income
I have come up with a structure for my analysis; Firstly, I’ll analyze the decision based on
financial factors, whether the convenience store provides incremental profits.
Then I’ll jump into the nonfinancial factors like holding off competitors, realizing synergies and
diversifying risks.
Alright, your structure seems exhaustive, go on, let’s analyze the project from financial
perspective.
Sure, Assume that there are 1000 people in each town, 80% of the population owns a car. Also
let’s assume that 50% of the people buy gas from our client.
Alright so that gives us:
Per town: 1000 * 80% = 800; 800 * 50% = 400
Total: 400 * 2 = 800-person customer base
This seems large enough; do we also have frequency of purchase, and dollar value per purchase
data?
The market size calculation seems correct. I also have the other information you needCustomers get gas on average 1x/week; Assume 50 weeks/yr and a customer spends $50 each
time. Also, Customers make 40% of all gas purchases at the client’s station
Sure, I’ll just quickly calculate the profits :
800 customers * $50 * 50 weeks/year = 2M on gas per year
2M * 40% of purchases made at client = $800K client revenue
75% of revenue is gas: $800K * 75% = $600K * 10% profit margin = $60K profit from gas
25% of revenue is other: $800K * 25% = $200K * 20% profit margin = $40K profit from car
washes
$60K + $40K = $100K profit per year
Do we have information on the expected revenues from the new convenience store? Do we
expect it to attract more customers, apart from the existing gas customers?
Good question! Gasoline customers will spend an additional $20 at the convenience store per
purchase but will not increase frequency of purchases. Also, 50% of town population who
currently are not customers (the remaining 1200 non-customers, not just the 80% car owners)
will spend $5 per week at the convenience store
Firstly, I would analyze the current revenue of the gas station. For this, I would need the
population of each town, and the percentage of people that own a vehicle.
ICON, IIM Bangalore
80
Convenience Store at Gas Station
Growth | Moderate | Kearney (Manager)
Alright, so that gives us:
Revenue – existing customers:
800 customers * 50 weeks * 1 purchase/week * 40% purchases made at our gas station =
16K total purchases
16K purchases * $20 = $320K additional revenue
Revenue – new customers:
1200 non-customers * 50% * $5 per week * 50 weeks = $150K Total revenue: $320 +
$150 = $470K
Do we also have cost information?
So, in terms of current customers, the convenience store provides higher revenue, may
increase visit frequency and better experience. However, it may increase the wait times. In
terms of new customers, It provides conversion opportunities into gasoline customers. It
also has the potential to attract customers from other cities.
From a competitive aspect, it becomes important to look at other similar offerings and
differentiate the service and experience
In terms of other factors, We can consider the outside regulations. We can also consider
logistic factors like whether there is any space to add another store or not.
Shall I also think of it from the macro perspective?
Recurring costs for convenience store are: Labor: $75K/year
Utilities: $5K/month
COGS: 50% of revenue
Ignore fixed costs
No, I think you have done a thorough analysis. Let’s end this case. Thank you!
Okay, so that gives us
Costs:
COGS: $470K revenue * 50% = $235K
Labor: $75K
Utilities: 12 months * $5K = $60K
Profit:
$470K - $235K - $75K - $60K = $100K/year
I can see that the convenience store generates profits equivalent to our existing business.
This makes it seem attractive.
Alright, it seems profitable, let’s move on to the nonfinancial factors. What can you think of?
For nonfinancial factors, I’ll split my analysis into the following factors:
Current and new customers, Competition and others
Alright, go on...
ICON, IIM Bangalore
81
Convenience Store at Gas Station
Case statement
Interviewee Notes
• Population of each
town is 1000 and 80%
of them own car and
out of these 50% fill
gas at the client’s gas
station
• Customers get gas on
average 1x/week;
Assume 50 weeks/year
and a customer spends
$50 each time
• The new convenience
store will attract new
customers as well. 50%
of town population
who currently are not
customers will spend
$5 per week at the
convenience store
Growth | Moderate | Kearney (Manager)
• Aim – increase profits, competitive advantage and diversifying income
• Gas is 75% of revenue with 10% profit margin; car washes with 25% of revenue and a 20% profit margin
• Labor: $75K/year; Utilities: $5K/month; COGS: 50% of revenue
Structure/Framework
Profitability
Revenue
Gas
Costs
Car Wash
Fixed costs
Variable costs
Labour
Utilities
COGS
Key Takeaways
• Ensure that the you lay out the structure for your analysis at the start
• Ask the interviewer for relevant data instead of getting stuck in your analysis
ICON, IIM Bangalore
82
Boiler Company
Growth| Moderate | Oliver Wyman (Manager)
Case Statement : Your client is a boiler company and they have approached you to devise a
growth strategy
Yes. M&A activity takes lot of time and there is lag in results observed. What is the time period
which client is seeking for this revenue growth?
I would like to ask a few preliminary questions before getting into the case. I wanted to confirm
that the company wants to increase its sales and preferably its profits. Also, I would like to know
more about the industry, current trends, competition rivalry.
The client doesn’t want to wait too long to achieve this growth.
Boiler companies have different products based on capacity and fuel used. There are no
technological advancements in recent times and also 80% of the market is organized.
Okay. That means M&A activity is not feasible. The company must focus on the current market and
consolidation of the existing product line.
Great, So what will be your recommendations ?
Thanks for the information. I also wanted to know more about the company. What are the
products offered? Who are its customers and competitors? What is its operating model?
The client is a medium size firm. It has about $100 Million in sales operating primarily in India. It
is the biggest player in organized segment. Main customers are the thermal power plants. It
doesn’t have much cash or technology. It’s a small player compared to global players in the same
industry.
Okay. A company can grow in 4 different ways. A) Either by expanding its market share in
existing market B) entering new geographical markets C) entering new markets with new
products D) Acquiring another company. I will evaluate each one based on our client capabilities
Client should focus on the products which promise growth and higher margins. I am assuming
each thermal power plant have their own desirable capacity and fuel type. We might be offering
standard capacity and fuel to all our customers. We can look at individual customer needs and
design offerings accordingly. This might benefit customers too to gain more margin and in turn,
we can also charge accordingly. Thus, I feel client should focus on the right product to grow in
existing markets.
Good job! I think you have covered the analysis thoroughly. We can stop here.
Yes, please go ahead.
Since the company is not exactly cash-rich, I am assuming the company has limitations in
adopting different growth options. For example, it cannot enter new geographical markets or
new markets with new product development as those are cash intensive process.
Sounds reasonable.
M&A seems feasible provided there are synergies which can provide significant benefits. Are
there any company which we can consider for this?
Is there any drawback which you can foresee in M&A?
ICON, IIM Bangalore
83
Boiler Company
Case statement
Interviewee Notes
• Main customers are
thermal power plants
• Cash scarcity –
restricts foray into new
geography, new
product development
• M&A not feasible due
to results lag.
• Customize the existing
products to suit
customer needs.
Growth| Moderate | Oliver Wyman (Manager)
• Boiler company wants to devise a growth strategy
• Biggest player in the organized market which is 80% of total market
• Operates in India
Structure/Framework
Revenue
Increase
With M&A
Without
M&A
Increase # of
customers
New
Markets
Increase revenue/
user
Existing
markets
New geography
New customer
segments
New Products
Increase
usage/ user
Improve
marketing
Cross-selling
Improve
channels
Loyalty
programs
Customized
offerings
Discounts
Increase
price
Key Takeaways
• Potential target and time period should have been clarified at the start itself
• Increasing revenue per user was not discussed in case. This was also one of the ways by which overall growth could have been achieved.
ICON, IIM Bangalore
84
Coca-Cola
Growth | Moderate | EYP (Manager)
Hi! Let’s start with a case straight away. Your client is Coca Cola in Thailand and for the last 1 year
it has been facing declining sales in its fountain business. Can you detect why and provide
recommendations?
Sure, can I take a minute to think of a few clarifying questions.
Sure
Ok, so firstly what parts of the value chain does Coca Cola function in?
Coca Cola manufactures and distributes. Since you have lived abroad, do you know what is the
fountain business?
Yes, the fountain business includes the soda machine drinks in fast food chains.
Can you tell me where all can such soft drink fountains be found in a city?
demand from the customers for Coca Cola could have declined. The demand could be affected by
the need, awareness, accessibility, affordability and customer experience. The need for soft drinks
could have declined due to increasing health consciousness and in general a change in tastes and
preferences. In this particular situation, the awareness of Coca Cola fountains declining is unlikely.
The accessibility of Coca Cola fountains could have declined in relative terms, for example if
people find it easier to purchase bottles/cans through small stores or supermarkets. The
affordability of Coca Cola drinks from fountains could have changed if the price of those drinks
increased or if macro-economic circumstances changed leading to a decline in income making
outings to restaurants, etc less affordable. An adverse change in customer experience of taking
drinks from fountains could also cause a decline in revenue. For example, if in a restaurant the
system changes from employees pouring the drinks and giving it to the customers to a selfservice system where the customers have to pour the drinks themselves, they might then prefer to
purchase a bottle instead because it might be less of a hassle for them, and they can carry it
around more easily as well in case they don’t finish the drink immediately.
This is comprehensive, but can you think of what else can product mix consist of?
They can be found in fast food restaurants, vending machines in metro stations, corporates,
HURECA and small stores like 7/11.
I can mainly think of type of drink and size of cups.
Ok perfect. Please proceed.
What about the ecosystem of the fountains?
So now, I would like to dive into the reasons for the decline in revenue.
Revenue = price * quantity * product mix. Here the product mix could be the type of drink
(coke/sprite, etc) that is sold.
Yes, Coca Cola will also have to source the machines for the fountains.
Can you elaborate on each factor that affects the revenue and give me possible problems that
could cause a decline in each factor.
Yes, so from Coca Cola’s perspective the issue could arise from two aspects, purchasing the
machine and then its repair and maintenance. In terms of purchasing the machine, there could be
issues in terms of contracts with suppliers expiring, the bargaining power of suppliers increasing
thereby increasing the prices, a new competitor entering the market and creating exclusive
contracts with our suppliers, an issue with the capacity of our existing suppliers, etc. In terms of
maintenance and repair, we could have an issue with sourcing the spare parts, repeated issues
with the machines requiring frequent maintenance which is costly, etc.
Can you describe any potential issues that could come up with the machines?
Sure, Firstly, the prices could go down thereby causing a decline in the revenue. Secondly, the
volumes could have declined due to an issue in production, distribution or customer pull. Finally,
both the price and volume could have declined for a particular type of soft drink (product mix). In
terms of production, we can look at the value chain. Coca Cola will produce the concentrate which
it will then transport to the bottling plant which will then distribute it to the various retail
channels. In terms of the production and specifically the factory where the concentrate is
produced and the bottling plant, the issues could revolve around capacity utilization, efficiency of
labor, contracts with the suppliers, etc. In terms of customer pull, the
Perfect. That would be all. Thank you.
ICON, IIM Bangalore
85
Coca-Cola
Case statement
Interviewee Notes
Growth | Moderate | EYP (Manager)
• Coca-Cola in Thailand is facing declining sales in its fountain business
• Identify the reasons for decline and suggest possible ways to improve it
Structure/Framework
• Analyze across the
entire value chain of
fountain business –
manufacturing,
distribution and
customer pull
• Coca-Cola would need
to provide fountain
machine in addition to
the concentrates
Revenue
Price
Value Chain
Quantity
Manufacturing
• capacity utilization
• efficiency of labor
• contracts with the
suppliers
Product Mix
Distribution
• Procurement issues
• Repair and maintenance
• New competitor
Customer Pull
•
•
•
•
Awareness
Accessibility
Affordability
Customer experience
Key Takeaways
• Fountain business is different from bottled business of Coca-Cola. The fountain machines need to be provided by Coca-Cola and require repair and maintenance at regular intervals
• Be comprehensive while analyzing the value chain of the fountain business
ICON, IIM Bangalore
86
Tyre MNC
Growth | Moderate | McKinsey (Partner)
Case Statement : Your client is a large dominating global hand tools manufacturing firm. They
entered India 3 years back, but they were not able to establish themselves in India. Please help.
I want to ask some preliminary question to understand the situation better, may I?
Sure
What do we mean when we say that client was not able to establish themselves in India, is it in
terms of market share or profitability?
Market Share
Can you let me know their current market share and their targeted market share?
Currently, they stand at 1.5% and would like to grow to 20-25% market share in the next 18
months. If the management is not able to do this, then the global management has ordered to
wind up operations in India.
That’s pretty huge target. Nevertheless, can you explain me little bit about the hand tools industry,
in terms of, players operating in the industry, what drives their local dominance, what kind of
operating structure is followed in the industry?
Sure. Hand tools industry is largely dominated by 2 players in India with 30% market share each.
Apart from that, there are other players with smaller market share. Interestingly, we found that the
distribution and price are the key factors to rule the industry.
You said distribution is key to the industry. I assume that these hand tools will be given to OEMs
including their authorized service centers and the unorganized sector which includes carpenters,
plumbers and other roadside service shops. Am I correct?
Correct. However, the size of unorganized sector is about 70-75% of the total revenue volume.
Understood. Coming to the price, Can you explain me the price points at which industry sells and
the price points at which we are selling?
Good question. Our client’s product is very premium. The life of our hand tools is 1.5x the life of
any other hand tools in the industry. However, the price of our product is 25-30% higher than
any other product in the market.
Can you explain me the production and distribution of our client. What kind of clientele is
currently there in their portfolio?
Our client mostly imports the entire range of products and sells them in India. We sell mostly to
OEMs through our dedicated sales personnel.
Okay, so here seems a problem to me. We are selling to OEMs which constitute mere 25-30% of
total market volume. Due to high price, we are not able to sell to the unorganized sector who
seem to value price over quality.
Yes, you are correct. However, even in the OEM space we are not able to perform well. This is
driven by the fact that the price of hand tools eventually impacts the cost of services by the
authorized service stations of the OEMs. Given that authorized service stations has to compete
fiercely with the roadside vendors, they also prefer low-quality tools since this does not impact
the quality of their service much. Since, we have reached the problem, what you suggest as the
way forward to the client?
Understood. We can look at two possibilities. One scenario would be where we can decrease the
price and provide better value proposition in terms of price & quality. Second scenario would be
where we go ahead with current price and focus on marketing and distribution.
Do you think we can reduce the price?
Since we are importing the entire product, there is not much scope to decrease the prices.
Correct. We are running out of time. Please quickly give your recommendations for the client.
Ok. I recommend that client should focus on marketing and distribution. Particularly,
1. Marketing Campaign: Come up with a marketing campaign which explains the importance of
quality and how the life of tools actually reduces the cost of tools.
2. Separate Sales Force: Divide the sales force team into two parts. One focused on OEMs and
one specifically for unorganized sector with regional targets.
3. Deferred payment: Instead of taking the entire price of hand tools upfront, provide an option
to pay the price in two instalments. This would particularly attract more unorganized sector
who often faces cash crunch.
4. Replacement Option: Provide the option whereby customers can replace their existing tools
with the new ones from the company.
Good. In the interest of time, lets end the case here. It was nice talking to you.
ICON, IIM Bangalore
87
Tyre MNC
Case statement
Interviewee Notes
Growth| Moderate | McKinsey (Partner)
• Tyre MNC entered India 3 years back
• Not able to capture the market share
Structure/Framework
Low Market
Share
• 1.5% market share
• Target to reach 2025% market share in
next 18 months
• 2 large players with
30% market share each
• Customer consists of
OEMs (30%) and
unorganized sector
(70%)
Customer
Internal
Factors
Distribution
Production
External
Factors
Value
Proposition
Price
Quality
Recommendations 1. Marketing Campaign
2. Separate Sales Force:
3. Deferred payment
4. Replacement Option
Key Takeaways
• Understand the industry well. Keep a track of what competition is doing. Because of good understanding of the industry and the client, candidate was able to pin-point the issue
rather than simply asking for each and every bucket.
• When there is a problem with market share, look for the value proposition and whether it reconciles with the customers.
• There is a scope for improving on the recommendations. Candidate should have given better and more structured recommendations.
ICON, IIM Bangalore
88
McDonalds India Growth
Growth| Moderate | Bain (Partner)
Case Statement : Help McDonalds’ India solve for the problem of under penetration of QSR culture
in India and within QSRs grow faster than its competitors
So, we have two problems in front of us: a. QSR penetration in India is low b. Within QSRs
McDonalds’ competitors are doing better. Did I get that right?
Yes, just give me a long-term growth plan for McDonalds in India
Got it. I have some follow up questions: What is the timeline they are looking at & are there any
quantifiable objectives I should know?
Yes: Increasing market cap by 3-4x in 4-5 years
Thanks. I would like to approach the problem by targeting the two main factors affecting Market
Capitalization: Returns followed by capital investments. Does that approach seem ok? good?
Sure, go ahead.
Within returns I want to start by looking at improving revenues and reducing costs.
Improving revenues: Problem (a) of under penetration can be solved at best by favorable
favorable macroeconomic tailwinds such as demographics, changing tastes and preferences. For
competition within the QSR segment, I would like to benchmark McDonalds’ India’s performance
with a. Competition in Indian from other Multinational QSRs: Immediate(Burger King) vs Distant
(Dominos', Taco Bell) b. McDonald's strategy of success in other developing nations(say Mexico)
c. New age Indian owned QSRs (Chhayos, Wow Momos etc). I would then like to move on to
customer satisfaction followed by improving costs. Does this approach seem fair to you?
Yes, go ahead.
Thanks. Starting with revenue benchmarking to close competitors.
My assumption here is that McDonalds seems to be doing better than its immediate competitor
Burger King currently (quickly get a buy in) If that’s a fair assumption to make then it is because
of longer legacy and more stores. A closer analysis of revenue per sq ft. of both restaurants may
help assess performance better. But for now, I would conclude that there isn’t much they can
learn from Burger King (quickly get a buy in). Next, I would like to benchmark with International
QSRs with different offerings such as Dominos' and Taco bell.
My sense is that they are thriving and growing at faster rates. I would like to attribute it to
Glocalization & adaptive supply chains. Benchmarking with local competitors also reveals menus
adapted to local tastes alongside including healthy options on Menus. Lastly, McDonalds'
experience in nations such as Mexico reveals their openness to adapting local cuisines such as
rice bowls which have become a hit in their universal menus also. So who’s to say that a Rajma
Chawal Bowl cannot be the next hit menu item.
Sure, sounds good. What would you like to look at next?
Customer Satisfaction develops when their tastes and preferences are adapted alongside better
value for money, efficient service.
Lastly, I want to analyze costs: Fixed Costs (would incorporate the capital side of improving ROI),
followed by variable costs. (quickly get a buy in)
Fixed Costs: Involve costs of New outlets, Salaries, Investments and Cash Management. Can all
be optimized
Variable Costs: Dynamic supply chains will read faster delivery and execution. Proper training
and benchmarking to best practices will ensure reduced costs
Sure, sounds good.
Okay. Would you like me to summarize the case for you?
Yes, go ahead.
McDonalds' India was looking to solve the dual problem of low QSR penetration and growing
faster than competitors. We benchmarked its performance to other chains as well as McDonalds
in other countries. The key themes for revenue growth were: Glocalization & focus on health.
Next, we looked at cost side which would need to be adapted to incorporate these new trends.
The key themes there were – agile supply chain and optimized capital investments.
Thanks. Let’s wrap up here
ICON, IIM Bangalore
89
McDonalds India Growth
Case statement
Interviewee Notes
Growth| Moderate | Bain (Partner)
• McDonalds India
• Facing Low QSR penetration and competitive pressure
• Find a way to grow market cap by 3-4x in 5 years
Structure/Framework
ROI
• ROI: Returns + Capital
Investment
• Return: Revenue-Cost
• Revenue: Growth +
Retention
• Costs: Fixed + Variable
Profits
Capital
Investment
Revenues
Benchmarking
International
QSR
Immediate
Competitors
(Performing better)
Local
Competitors
(Healthy, local
flavours)
Costs
Own: Other
Countries
(Eg Rice Bowls
in Mexico)
Customer
Satisfaction
Fixed Costs
(Optimized
spending on new
locations,
equipment etc)
Variable Costs
(Adaptive supply
chains, proper
networks)
Other QSRs
(Glocalization,
adaptive supply
chains)
Growth
Retention
Key Takeaways
• In growth cases it’s very important to take regular buy ins from the interviewer
• Its okay to not follow the set framework in a case as open-ended as this, just ensure that you structure your thoughts well
• Don’t be afraid to be creative and speak your time
ICON, IIM Bangalore
90
US Tyre Manufacturer
Growth Strategy | Difficult | BCG
Case Statement : Your client is a tyre manufacturer based in the United States. The problem they
face is they are operating at full production capacity. The CEO is worried that if the demand for
their product increases, they will not be able to serve it. The board evaluates three options for
expansion – increasing capacity in the US itself, expanding production in Mexico, or assessing a
production facility in China. They have hired us as a consultant. What would you advise them?
This is an interesting problem at hand. So, before we deep dive into the case, I would like to ask a few
preliminary questions to know more about the client.
Sure, go-ahead.
I would like to know more about the client – what part of the value chain do we operate in, the
product lines (different types of tyres) we have, and the competitive landscape.
Apart from production costs, I would also consider other transaction costs like freight, logistics, import, and
customs duty.
I would also look at the inflation rates and future projections of these costs. Mapping the production units with
the demand locations will help us to find out which location (US, China, and Mexico) gives us the lowest cost.
Okay. What next?
The second bucket we have is operational feasibility – where I would like to see the entire value chain. So,
I would see whether there is an uninterrupted supply of raw material, adequate labor resources are
available, capital is available, the latest technical equipment and machines are available.
Fair enough.
So, for simplicity, let us assume that we have only one type of tyre that we manufacture. The
client is the market leader in the US market, and we have a couple of competitors who have
around 15-20% market share each.
Thank you. Also, I would like to know the objective or evaluation metric that the client is looking at –
whether it is lower cost, a certain quality of production, or an uninterrupted supply of raw material.
So, if you look at the problem holistically, you will realize that all of these are very important
while making a decision. There isn't a single criterion that the client has.
True. Also, are there any demand forecasts that we have in the US markets. How fast is the market
growing?
Coming to strategic fit – wherein I will see what the future plan for the company is. From where will the
next leg of demand come. Example, is the company intending to expand in Asia – if that is the case, it
makes sense to have a factory in China. Also, other qualitative factors like bad economic foreign relations
between the US and China are important.
And the last bucket is the mode of expansion. Apart from a greenfield factory expansion, I would also
explore other options like acquiring local manufacture, a brownfield expansion where a factory is bought,
or outsourcing of production, or finally setting up a joint venture.
Good, that was a comprehensive analysis. Say if Mexico is L1, what would you do?
I would not jump into a decision based solely on the lowest costs. I will also see the operational feasibility,
the strategic fit, and other qualitative factors. If Mexico ticks all the boxes, I would finally decide on the
expansion mode – a greenfield factory or outsourcing of production, an acquisition, or a joint venture.
Good. Can you summarise the case for me now?
So, we expect moderate growth in demand in the domestic US market.
Sure. Now, I would like to approach the problems looking at four buckets – the first bucket being
financial feasibility, second being operational feasibility, third part would be strategic fit and future
plans, and the last would be the mode of entry.
Interesting, carry on.
So, for financial feasibility, I would look at the cost-benefit analysis considering the demand projections
and the projected cost of production in all the 3 locations - – the US, Mexico, and China.
Sure, sir. So, our client is a US tyre manufacturer facing a shortage of production capacity and evaluating
three options whether to produce in the US, Mexico, and China. We solved this problem by looking at
financial factors – costs and other qualitative factors – like strategic fit, operational feasibility, future
projections and finally explored the various options available in the form of greenfield factory,
outsourcing, or joint venture.
Good job.
ICON, IIM Bangalore
91
US Tyre Manufacturer
Case statement
Interviewee Notes
• Only 1 type of tyre
• Market Leader
• Couple of competitors
– 15-20% M.S.
• Moderate growth in
domestic demand
Growth Strategy | Difficult | BCG
• Leading US Tyre Manufacturer
• Operating at full capacity
• Exploring expansion options
Structure/Framework
Expanding production
capacity for US Tyre Mfg
Financial
Feasibility
Cost Benefit
analysis
Operational
Feasibility
Demand mapping
with location
Raw material
availability
Strategic Fit &
Future Plan
Mode of Entry
Future global demand and
expansion plan
Greenfield
expansion
Geo-political factors
Acquisition
Demand
Projections
Labor
resources
Production
costs
Capital
Outsourcing
Transaction
costs
Technology &
equipment
Joint Venture
Inflation & future
projections
Key Takeaways
• Case was an open-ended growth strategy case to evaluate the candidates structured approach
• Interviewer gave non-verbal cues in the beginning to guide the candidate – important to take note of this during interviews
ICON, IIM Bangalore
92
Coffin manufacturer
Growth | Difficult | EYP (Buddy)
Case Statement: Your client is a high-end coffin manufacturer in Singapore. There is a new
technology that helps make coffins of the same quality but at a lower cost. They have come to you
for advice on how to proceed.
The coffins sell at $5K and there is a variable cost of $4.8K in manufacturing. Other than that, we
have a fixed cost of $700K/year to run the business. Can you assume a perpetual business and let
me know the NPV of business assuming a 10% discount rate?
I would like to ask a few preliminary questions about the client. Would it be fair to assume that
the customer segment they deal with is premium as they are a high-end manufacturer?
The annual profits come out to around $180K. Assuming a 10% discount rate and perpetuity of
business, I get a valuation of $1.8M for the business.
Sure, you can do that.
That sounds fair. Can you now look at the option where the client invests in the new technology?
Assume that the new technology reduces the variable costs by 50% and requires an upfront
investment of $150K,
What do we know about the competitors in the space?
The market is stagnant growth-wise. We have a 10% market share of all the coffins. We have
another competitor with ~same market share, and the rest of the market is fragmented.
Sure. The reduction in variable costs will increase our profits. However, since the technology is
not proprietary, our competitors will also invest in the technology. This will lead to a price war
and ultimately reduce each coffin's price to its variable cost. Hence, this does not seem to be a
wise move for us to take. However, if the competitor buys this technology, we can either
investigate entering this price war or exiting the business.
Can you also tell me about the geography of operations?
The client only operates in Singapore.
Can you tell me a bit more about the new technology? And whether it is proprietary.
The new technology comes from the US and is not proprietary. Anyone can buy it and use it. Can
you list out the options in front of the client?
At the first level, the client can choose to stay in the business or exit it. If they decide to stay in
the business, they can either invest in the new technology or continue current operations. If they
exit the business, they can either liquidate or sell to a third party.
That sounds fair. Can you evaluate the value from each step?
Okay! I will start with stay in business with no investment in new technology. I would like to
estimate the profitability from this option. To estimate the revenue, I will start by sizing the
market. Market size = Population / Avg life span * (Coffin bearers) . Our market size would be
10% of the above.
Okay you can take the population as 50L, average life is 80 years and 70% are coffin bearers.
This gives me a total market size of 43.7K coffins and our market size as ~4.4K coffins. To
estimate the profits, can you tell me the revenue and cost structure of the business – what is
the selling price of coffins, and what fixed & variable costs are involved in the business.
That sounds like a good assessment. Let’s explore the next option of selling to a third party.
In this case we should expect to get the same amount as the NPV of our business, i.e. $1.8M.
Correct! Let’s move into liquidation now.
I would like to know about the client’s assets and liabilities for this.
The major asset they have is land which they purchased 50 years ago at $150K. Assuming a 6%
inflation rate can you estimate the current value
6% inflation rate means that it will ~double every 12 years. Hence, in 50 years it will
approximately be 16 times the original value that is $2.4M
That’s correct. So ,what will be your recommendation to the client.
The value of the assets is more than the valuation of the business. However, this value is going
to keep on increasing with time. I would recommend continuing the business till the time
competitors introduce the new technology and at that time exit & liquidate the business
That sounds good. Thank you for your time.
ICON, IIM Bangalore
93
Coffin manufacturer
Case statement
Interviewee Notes
• Premium customers
• 10% market share
with one similar
competitor
• Market growth has
been stagnant
• Operates only in
Singapore which has
population of 50L,
average life 80 years
and 70% as coffin
bearers
Growth | Difficult | EYP (Buddy)
• High-end coffin manufacturer in Singapore
• New technology expected to bring the costs down
Structure/Framework
Business options
Stay in business
No investment in
new technology
Exit business
Invest in new
technology
Sell business to
3rd party
Liquidate
Key Takeaways
• Take buy-ins from the interviewer regularly.
• Make the framework before jumping into the the case. Remember to navigate the framework well
ICON, IIM Bangalore
94
Bread Toaster Usage
Unconventional | Easy | Kearney (Partner)
Case Statement : A company has launched a new bread toaster in the market which toasts 4
breads at a time unlike the existing toasters which toast only 2 at a time. Recommend whether
your friend should purchase this new product or not ?
I would like to ask a few preliminary questions before getting into the case. When do we use this
toaster? Is it while preparing the breakfast ? How many breads does our friend consume in the
morning? How many family members/flat mates do our friend have ? What about their
consumption?
Yeah, the friend uses this toaster while preparing breakfast. He consumes 4 breads everyday and
he is the only member living in the house.
Thanks for the information. So currently our friend toasts bread in 2 rounds on the old toaster.
Also, does he have any need to save time in the morning by avoiding 2 rounds of bread toasting?
Okay. Then I need data on how much electricity is consumed in 1 round of the toaster and unit
price of the electricity
Fair enough. Assume 1 unit of electricity is consumed in each round and each unit costs Rs.10
Okay So this means that we have electricity savings of Rs.10 per day or Rs 300 per month. What
is the average lifetime of a toaster?
You can assume it to be 1 year. So what is your recommendation ?
The purchase would be break even in (1000-500)/300 = approx. 2 months. (was asked to ignore
discounting). Therefore, I would recommend my friend to buy this new product as it is financially
viable if the usage exceeds 2 months. Besides, it helps to reduce the time and effort of our friend.
Good job! Now how will your decision change if you are told that you have purchased the old type
toaster for Rs. 1100 and you are salvaging it at just Rs.500?
Yes, friend toasts in 2 rounds and he has no time constraint in the morning..
Okay. What is the price of the new toaster and what salvage value can we extract from the old
one? Does this new toaster differ in any other aspects i.e. quality of toasting etc.
Assume the new one costs Rs.1000 and old one be sold at Rs 500. The toaster is same in all
other aspects. It just toasts 4 breads in 1 round VS 2 breads in the old toaster.
It wont change the decision since this Rs.1100 is sunk cost and it will not be considered to make
any decisions.
Great, we can close the case now.
Thanks ! I would proceed further by doing cost-benefit analysis of purchasing the new toaster.
Sounds reasonable. Please go ahead.
Costs: Costs would include expense on new toaster Rs.1000; Cost of financing this expense.
Benefits: Salvage Value of the toaster Rs.500/; Save in Electricity ( as now only 1 round is
needed VS 2 in the old toaster); Save in time and efforts
Okay good. Assume your friend has sufficient funds and cost of financing is negligible.
ICON, IIM Bangalore
95
Bread Toaster Usage
Case statement
Interviewee Notes
Unconventional | Easy | Kearney (Partner)
• There is a new bread toaster available in the market
• It can toast 4 breads at a time compared to two breads at a time in existing toasters.
• Recommend if it is worthy to buy the new toaster
Structure/Framework
• Living alone and
consumes 4 breads
per day at breakfast
time
• New toaster costs
1000 and old one can
be sold at 500.
• 1 unit of electricity is
consumed in each
round and each unit
costs Rs.10
Profitability
Benefits
Salvage Value at
500
Savings in
electricity @ 300
per month
Cost
Time and
efforts
(negligible)
Cost of new
toaster @ 1000
Cost of financing
(negligible)
• Payback period = (1000/ (500+300)) ~ 2 months
Key Takeaways
• Though the statement doesn’t appear as case, it is important to always structure and approach it as a case
• Think of all possible outcomes for each step. Cost of financing and time constraint was assumed to be negligible only after interviewer agreed. Do not assume any facts without
getting it cleared from the interviewer.
ICON, IIM Bangalore
96
Time to Market
Unconventional | Moderate | Accenture
Case Statement : Your client is an FMCG firm that is looking for recommendations on improving
the time to market for their product.
What do you think is an important point to consider while having multiple suppliers?
That’s an interesting problem. Do you mind if I ask some questions to better understand the client?
Managing multiple suppliers and ensuring timely delivery of raw materials would be essential for
achieving a lower time to market,
Go ahead.
What do you suggest for the same?
Can I know the product(s) that our client has and what is their current time to market? Also,
do we have any target timeline for a particular product? Time to market may vary a lot among
different product families.
All suppliers can be brought on a common platform to achieve greater transparency for resource
planning which will further impact the production planning process. We could also use tools like
product lifecycle management software and onboard the suppliers and vendors on it.
The firm deals in food products like pickle, ketchup, and sauces. They plan on launching a
new variant in their ketchup line and would like to reduce the time to market from 12 to
9 months.
Thank you, that will be all.
Alright that is a considerable time reduction. We should analyze the value chain of their business to
find out points of improvement.
Sure. What do you think comes under the value chain of an FMCG firm?
I would analyze activities like research and development, insourcing logistics, production,
storage and distribution, marketing. Is there anything else you would like me to consider here?
This seems fine. Tell me how you plan to improve each of these to reduce the time to market.
Sure. I would like to begin with research and development as it is an important and timeconsuming process especially for an FMCG firm. We can leverage technology to speed up
R&D. Next. I would look at the marketing arm. Gathering consumer insights and preferences
can also be a bottleneck. Using more of digital marketing practices may help in faster data
collection and analytics. Training the marketing personnel and ensuring smooth
communication between the R&D and marketing arms will also reduce the time for new
product development.
Sure, lets focus on new product development.
Under insourcing logistics, the two most important factors to consider for new product
development would be resource planning and supplier onboarding and negotiations.
ICON, IIM Bangalore
97
Time to Market
Case statement
Interviewee Notes
• Time to market varies
among product families
– focus on one product
• Look at each step in
the value chain to
understand points of
improvement.
• New product
development –
gathering customer
insights and
onboarding suppliers
Unconventional | Moderate | Accenture
• Reduce time to market from 12 to 9 months for a new ketchup variant produced by an FMCG firm
Structure/Framework
FMCG Value
chain
Inbound
logistics
R&D
Processing
Storage
Distribution
S&M
Inbound logistics
Raw materials –
resource planning
Supplier
management
Key Takeaways
• Focus was on R&D and marketing for FMCG, with attention to activities for new product development like consumer research and supplier onboarding.
• Managing multiple suppliers through product lifecycle management software.
ICON, IIM Bangalore
98
Customer Experience Improvement - Banking
Case Statement : Your client, a private sector bank, is witnessing a decrease in NPS. You need to
find out the reason and give recommendations.
That’s interesting. May I take a few moments to gather my thoughts before we can proceed?
Sure, please go ahead.
I would like to understand a bit about the client. What are the segments that the bank operates
into, and is there a particular segment facing this issue? Is it a global or domestic bank?
It offers corporate banking and retail banking. Only retail banking customers seem to be
dissatisfied. It operates only in India.
What are the kinds of services offered by the bank? Is there a particular service where customers
are facing issue?
It offers regular banking services including debit/credit cards, net banking, loans. Issue is across
all these services.
Are the customers unhappy with the products offered, or the customer services in the branch, or
customer support through call centres?
It is the call centre that is driving down the NPS.
Does the bank have in-house customer support, or does it outsource? If it outsources, are there
multiple partners? Is the issue specific to a call centre?
It operates its own centralized call centre.
Unconventional | Moderate | Bain
Good, the issue is with the third category. Now that you have identified the root cause, could you
make 2-3 recommendations on how to tackle this issue, considering that you can’t increase the
number of agents.
The first suggestion would be for more channels of customer support like BOT and human-based
WhatsApp chat, and enhanced IVR system to address the most common and trivial concerns not
requiring a support executive.
That’s a great suggestion given that the bank currently doesn’t have these. Can you also suggest
how to improve the existing process?
Sure. Since we have identified that the issue is with the time taken by the executive to understand
and resolve the issue, I would like to recommend improvement of the existing decision tree to
resolve the complaints. The complaints can be first classified into comprehensive categories so
that the L1 support teams can be trained on how to identify the type and give first-level support
before escalating to L2. Historical records of the frequency of each type of query and required
escalations can be used to decide the number of L2/L3 executives required for a category.
Executives should be able to instantly fetch recent customer logs to identify possible issues to
reduce problem identification time.
Also, the average call duration per support executive should be analyzed to identify if there are
specific ones who are taking longer time to resolve, and they should be trained to use the
decision tree more efficiently.
Great, those are some really good recommendations and in fact the actual ones were on similar
lines. Thank you, we are done.
Thank you, sir.
Okay, so since it operates through a centralized call centre, we can rule out a partner or a
location-specific issue. Is the call volume increasing beyond the estimations or is the waiting time
and call duration very high?
Yes, number of agents are keeping up pace with the estimated call volume. But it the higher call
duration is leading to waiting times.
Waiting time can be of three types – Connecting to the line, getting to the service executive, and
getting the final resolution. Do we have the data to indicate either or all of them is causing higher
waiting times?
ICON, IIM Bangalore
99
Customer Experience Improvement - Banking
Case statement
Interviewee Notes
Unconventional | Moderate | Bain
• Private sector bank is witnessing a decrease in NPS. Need to find out the reason and give recommendations.
Structure/Framework
• Domestic bank
• Issue in the retail
segment
• Long wait time to get
resolution at the call
center
Decreasing NPS
Corporate
Banking
Retail Banking
Customer
support
Product
Call centre
Call Volume
Connecting to line
Branch
Duration per call
Identification and
resolution
Reaching support
executive
Key Takeaways
• No conventional framework used
• Basic knowledge of banking and call center processes required
• Drilldown of wait time and recommendations was the key
ICON, IIM Bangalore
100
Home services: Fall in NPS
Unconventional | Moderate | Bain (OCR)
Case Statement : Your client is a home services solutions company whose Net promoter score
(NPS) has been falling. Determine how should the client solve for it.
Thanks! I have a few questions to understand the problem statement better – Is this home
solutions company similar to an Urban Clap? What kind of services do they provide and where are
they providing the service?
Yes, similar to Urban Clap – they provide cleaning, beauty and repair services through an App. The
client is currently providing services only in Bangalore
Alright. Can I also know for which service category the NPS has been falling? Also, is the NPS
falling for a particular customer segment? And since when has it been falling?
The NPS is falling for the beauty services since 6 months now. What do you mean by customer
segment?
Customers can be segmented on the basis of gender, location, age and so on. Do we know if the
fall in NPS is concentrated in a specific segment?
The NPS is falling evenly across gender and age. However, the fall is more prevalent from Tier-2
areas in Bangalore than the more urban set up
Alright, so this narrows down where the problem exactly lies. At this stage, I also want to know
how the client calculates the NPS and which constituents are impacting it ?
NPS = % of customers who give positive rating - % of customers who give negative rating. Right
now, the former is falling and latter is increasing – so it’s a very bad situation
Thanks for the information. I would like to approach this problem from the customer journey
angle. We can explore the various steps in the entire process and see in which step there is an
issue. What do you think?
Sounds good. Why don’t you take some time to build the steps?
Right now, taking a high level cut – Pre service (booking, waiting etc), during service (delivery) and
post service (payment, rating etc). Do we know which stage has the issue?
The issue exists in the delivery stage
Yes, so there would be around 8 steps in the process. 1) Professional arrives at the destination 2)
Alignment on the nature of service 3) Service professional sets up the equipment 4) Service given
5) Changes suggested by customer 6) Changes incorporated 7) Equipment packed 8)
Professional leaves.
Do we know at which stage the issue exists?
The issue exists in Step 3 and 4 – the actual service delivery
Okay, so there can be four categories of sub-issues : Quality of equipment, Technical quality of
service, Time required to do the service and softer issues such as communication, behavior etc.
Do we know where the issue is?
The problem is in the quality of equipment as well as technical quality of the service
Okay, for the first issue, probable causes – 1) low quality equipment purchased 2) Professional
not able to take care of the equipment 3) The equipment are not serviced regularly/ replaced
For the second issue, probable causes - 1) Lack of skill training given to service professionals 2)
Lack of confidence/other skills to conduct the service. Do we know the reason among these?
Great, so for the first one – it is the professional who is not able to take care of the equipment and
the second one – they lack expert skills to deliver the service.
Okay, and with the given information we known that these issues persist in only the Tier II areas
of Bangalore. That could be because of two reasons – 1) Uneven development strategy by client
2) Lack of expert professionals based in the area.
Great, the reason is uneven development – the client first focused on only the Tier I areas and
then while expanding to Tier II area, focused on speed rather than quality. Any solutions you can
think of – I want to specially now what can the client do right now?
In the short term, the client can create an SOP for professionals to follow, appoint expert
professionals from Tier I to Tier II areas. In the long term, specialized training can be conducted.
Thank you
ICON, IIM Bangalore
101
Home services: Fall in NPS
Case statement
Interviewee Notes
• Understand that
problem lies only in one
service vertical
• Understanding of NPS
was not required to
solve the case
Unconventional | Moderate | Bain (OCR))
• NPS score of home services firm has been falling for beauty services in Bangalore
Structure/Framework
Service
delivery
Arrival
Pre-service
Alignment
During service
Equipment
setup
Service
delivery
Feedback
Post service
Rework
Equipment
packed
Departure
People
Equipment
Key Takeaways
• Be MECE in defining consumer journey
• Use People, Process, Technology framework to understand why service quality may not be up to mark
ICON, IIM Bangalore
102
Movie Release: Theatre or OTT
Unconventional | Moderate | Bain (Partner)
Case Statement: Your client is a film production house. They want to launch their next movie
which is ready to release. They would like your opinion on whether to release it now on an OTT or
to release it in the theatre after 6 months.
I would like to understand the client and the movie a little better before analyzing it further.
Where is the movie set to release, what is the objective, and do we have any details about the
movie itself?
Assume the movie is releasing in India with the usual aim of profit maximization. The movie in
question is Houseful 5.
Alright. I would like to compare the profits of both the options before taking a decision. To do the
same, I would like to dive into the revenues and costs involved in each option. Is this approach,
okay?
Yes, go ahead.
Starting with Theatre release, we can look at the various revenue streams. The primary revenue
comes from the box office collections, with additional revenues from Sponsorships, Merchandise
sale, DVD and Music rights. To estimate the revenue through box office, we can guesstimate
through distribution and theatre networks. But an easier way would be to look at past data. Do
we have numbers of Houseful 4 or any similar movie?
Yes. The fixed component is 80cr. There is also a variable component after 150 cr of revenue.
10% of incremental revenue adds to the cost.
Alright. Since revenue is at 150cr in this case, we do not have any incremental cost. Accounting
for the 80cr spend, projected profit lies at 70cr. Now assessing our other alternative, we can look
at the revenue from OTTs like Netflix, Prime Video, and Hotstar.
On what basis would this amount be decided by an OTT assuming your client is an OTT like
Netflix?
We would take into consideration factors that affect the reach of the platform. We would
look at preferences of the existing audience as well as how many new users can be
onboarded with the help of new content. We could go and guestimate this number starting
with the total population and taking into account various filters of age, income and
number of users per household.
Right. You are going in the right direction so we can close the case here.
Congratulations!
Yes, that’s a good approach. Houseful 4 earned 200cr in the box office.
Adding 10%, we can estimate the number of Houseful 5 to be 220 cr. Of this, a percentage
would go to the production house as revenue. Do we have any data on the set percentage and
on the additional revenue through sponsorships, merch, DVD and music rights
23% goes to the production house. They have sponsorships worth 100cr and assume the rest to
be negligible.
Alright. So we have 23% of 220 cr, approximately 50 cr and 100 cr from sponsorships. Total
revenue from theatre release is 150cr. Let’s go into the costs now. Since the movie is already
ready, do we have any data on their budget?
ICON, IIM Bangalore
103
Movie Release: Theatre or OTT
Case statement
Interviewee Notes
Unconventional | Moderate | Bain (Partner)
• The movie is Houseful 5, a sequel to Houseful 4 which earned INR 200 cr at the box office.
• 23% of box office earnings go to production houses. Other sources of revenue include sponsorships
• Theatre releases see a fixed cost of INR 80 cr.
Structure/Framework
Theatre
• The interviewer did not
want a guesstimate
figure under the OTT
profits head. It was
more important to have
a clear flow of thought.
OTT
Profits
Revenue
Profits
Costs
Costs
Reach
Box Office
Fixed
Existing Users
Sponsorships
New Users
Variable
Income
DVDs
Age
Merchandise
Key Takeaways
• It is important to be MECE in recognizing all sources of revenue. The industry was not very familiar, hence buy-in from the interviewer was even more crucial.
• Talking about the logic to be followed and bringing in numbers later is also helpful in case the interviewers is only testing clarity of thought.
ICON, IIM Bangalore
104
Business Process Outsourcing
Unconventional | Moderate | BCG
Case Statement: Your client is a BPO who just entered India. How many employees should they
hire? We’ll not go into numbers, let’s just discuss the approach.
Before proceeding, I would like to ask a few preliminary questions. What exactly does our client do
as a BPO? Does it serve as a call center?
Yes, it’s a typical call center.
Okay, and what would be the implication of choosing a particular percentile value?
So, it would involve a trade-off of costs vs service level. As we increase this percentile value, we
are planning for high arrival rates, and we would need more employees to meet our service level
by maintaining our desired call waiting time. However, more employees would mean higher
employee costs.
That’s correct. We’ll close the case here.
Okay. Does the client already operate outside India? If yes, what clients is it looking to serve from
India – new clients or already existing ones? And will this call center have exclusive clients, or is it
just capacity expansion to meet growing needs of existing clients?
The client operates outside India as well. However, in India, the call center will be used exclusively
for serving an Indian Telecom operator, which our client recently partnered with.
Okay, the number of employees will equal the estimated number of calls multiplied by the number
of shifts per day. The estimated number of calls at any given moment would further depend upon
the arrival rate of calls, duration of answering each call, rate of call drop-off during waiting, and
desired waiting time for each caller.
That sounds good. Let’s say we want to estimate the arrival rate of calls. We have historical data
about customer service from the telecom operator. How do we go about it?
So, we would have access to the call logs. We can look at the number of calls in a particular time
frame and divide it by the duration of the timeframe to get the arrival rate. This rate would also
have variability during different hours in a day, so we will have to take that into account.
That’s all fine, but how will you actually use the data? Will you consider the mean, median, or
something else?
Right. So, I would be using a certain percentile value which is higher than the mean. For example,
the 90th percentile value, such that 90% of the arrival rates in the data fall below this selected
value.
ICON, IIM Bangalore
105
Business Process Outsourcing
Case statement
Interviewee Notes
Unconventional | Moderate | BCG
• Client would operate for 250 weekdays in a year
• Client will serve only one company – an Indian Telecom operator
Structure/Framework
• Qualitative analysis
• Client has historical
caller data
Number of
employees
Number of calls to be attended
at a given moment
Number of shifts
per day
Call Arrival Rate
Call duration
Drop-off rate
Waiting time
Key Takeaways
• Listing down all factors affecting number of employees ensuring MECE was a good start to the case
• The candidate initially didn’t comprehend the interviewer’s question about the usage of data, where clarification could have been sought
ICON, IIM Bangalore
106
Pharmaceutical Firm
Unconventional | Moderate | Kearney
Case Statement : Your client is a pharmaceutical company that is seeing a lot of its shipments
being rejected. Find out why and provide recommendations
Before analyzing the case, I’d like to know a bit more about the client and their problem. Where
does the client operate and what is the rejection rate of shipments?
The client operates in India and ships the drugs to firms in the US. There are two streams of
sending shipments: waterways and airways. Airways constitute 80% of the load and has been
seeing a 54% rejection rate. Waterways on the other hand has observed only a 3% rejection rate.
Shipment through airways seem to be the major issue so I would first like to tackle that. I would
like to compare with waterways and find out the cause of such high contrast.
Yes sure.
In order to understand where exactly in the supply chain are the shipments being rejected, I
would break down the supply chain into 3 parts: 1. Rejected before onboarding 2. Rejected post
transit 3. Rejected on reaching the customer.
The shipments are being rejected post transit during the customs screening.
In order to figure out why the shipments are being rejected, I would like to analyze the package
based on package contents – is the content being shipped allowed/legal; packaging conditions –
shape, weight, size, material used for packaging and are they according to the customs
regulations; physical conditions of the package post arriving – is it damaged or rendered
ineffective in anyway?
That’s right, the packages are rejected because they are being rendered ineffective. The drug
shipments need to be maintained within a temperature range of 15 – 25 degrees Celsius and
there are thermal sensors on the shipments that track if they have been exposed to temperatures
beyond this limit. Even a single exposure can severely degrade the drug efficacy. Hence customs
officials strictly monitor the thermal exposure of each package on arrival.
That’s interesting. I will now look at various parts during the airways transit where the shipments
could be potentially exposed to temperatures beyond the permissible range.
Consider shipment happens throughout the year and all air routes go through the Dubai.
I’d break the transit down as: Before loading into the flight, during flight, transit through Dubai,
offloading in the US. How is the temperature being regulated at each of these places?
Before loading into the flight, the shipments are transported in temperature-controlled vehicles.
Inside the flight as well the temperatures are controlled. At Dubai, these containers are kept in
warehouses that are temperature controlled. Once offloaded, they are again packed in the
controlled containers.
There seem to be lapses during the shifting of containers from vehicles to flight, in transfer to
the warehouses in Dubai, and while offloading. Dubai experiences severe diurnal whether
changes so the timing in which the shipments are being sent out should also be looked into.
Also, the landing location in the US can experience seasonality in weather with temperatures
likely to drop below the lower limit. However, onloading/offloading exposures could also be
there in waterways mode. I would like to know why the rejection rate is so low in that case
Great point! When the shipments are sent through ships, they are packed in temperaturecontrolled containers and hence do not face any external exposure. You’ve identified the problems
correctly now. Why don’t you come up with recommendations for the client.
Before I move on to the recommendations, I would like to know what the client is already doing to
tackle these issues. Also, why is the client sending only 20% shipment through waterways, is
there a possibility to increase that percentage?
Since, waterways are a slower mode of transport, for sending shipments through this mode the
client needs to plan shipments in advance which is currently not being done by the client.
All right, so I will provide recommendations for what can be improved in the air transport and
how the client can send more shipments through waterways: For short term, client can send
packages through similar temperature-controlled containers in airways. However, there could be
space and weight issue which need to be checked with the regulations. They can also look at
alternate routes or direct routes that avoid passage through Dubai. Over the long term, the client
must shift their operations to waterways. Better demand forecasting and shipment planning
should be undertaken.
Thanks, we can close the case here.
ICON, IIM Bangalore
107
Pharmaceutical Firm
Case statement
Interviewee Notes
• Focusing on airways
first – 80/20 rule
• Analyze package
journey while loading
to reaching the end
customers
• Rejected at customs –
internal factors of
package like shape,
size, weight, damages.
External factors like
legal, regulations
Unconventional | Moderate | Kearney
• Shipments of pharmaceutical drugs being sent from India to US.
• Two distribution routes – airways and waterways. Airways consist of 80% of the total distribution load and sees 54% rejection rate
• Packages sent through waterways have only 3% rejection rate.
Structure/Framework
Routes
Airways
Rejected while loading
Rejected post transit
Waterways
Rejected by end customer
Internal Factors
External Factors
Key Takeaways
• Packages getting rejected after landing at the customs screening, because of overshooting the permissible temperature range.
• Rejection rate is low for waterways as they operate with temperature-controlled containers.
• Important to ask the interviewer, why only 20% of the shipment is being carried out through waterways. This will uncover the fact that for waterways, distribution planning needs
to be done well in advance, which further brings out that the client needs to focus on improving demand forecasting.
ICON, IIM Bangalore
108
Unhappy Friend
Unconventional | Moderate | Kearney (Buddy)
Case Statement : Your client is a friend of yours who is unhappy since some time. You have to
figure out why he is unhappy and give some recommendations to change the situation.
That’s an interesting problem. Do you mind if I ask some questions to better understand the client?
Sure, go ahead.
What I’m looking for can be related to fans.
Reasons for the client to be unhappy that relate to fans could be reduced or unsatisfactory
album sales, concert attendance, nominations and awards, and some other factors such as
merchandise sales or social media engagement.
Great, so the client is unhappy because the band is not winning a particular award since the last 4
years despite being nominated everytime, and the other factors you mentioned are exceeding
expectations.
Can I know the profession the friend is in, where does he live, since when is he feeling
unhappy, and his interests outside work?
So he is a musician based in Ireland, he is feeling unhappy since about 2 years and he has
no other interests.
Can I know if he’s an independent musician or he plays with a band, if if the latter is true do
we have any more details about the band?
Sure. He is the lead singer of a jazz band which has been around for 7-8 years now.
I’d now analyze the possible reasons for our client being unhappy. To begin with, I will look at
them from two lenses – personal and professional. Personal reasons for being unhappy can
be broken down into interpersonal and intrapersonal. Interpersonal can include reasons
relating to family or friends and intrapersonal reasons could be physical, mental, or emotional.
Before I look at the possible professional reasons do you think I have covered everything on
the personal reasons front? Please let me know if I have missed something.
The personal reasons seem fine. Tell me how you plan to look at the professional reasons?
Can I know a little about the award? What is the criterion for receiving it and how are bands
judged?
There are two components of evaluation for this award. Public voting and the jury’s
decision. The band does really well in the public voting but fails to get through in the jury
round. Can you think why?
The reasons could be that the band actually fails to meet the jury’s criterion and
expectations or there is some personal bias involved. To investigate this further can I know
the composition of the jury if relevant, is it the same or has it changed over these 4 years,
and how any votes does the band get from the jury.
Great questions. So the jury is the same and out of 3 members, one always votes against the
band due to a personal bias against the Irish.
Oh okay. So, is this the root cause of the client being unhappy or do I look at some other
aspects as well?
Sure. I’d break the professional reasons as monetary and non-monetary.
Perfect. Let’s look at the non-monetary reasons.
The non-monetary reasons could be internal or external. Internal reasons could include motivation
and whether he is still interested in music or the genre he is into. The external factors could be
related to the band members, the fans, or other partners such as record labels or sponsors.
That’s a good breakdown. Could you think of some more external factors?
Sure. Do you want me to look at factors different from what I have mentioned or related to
something covered.
This is the reason why the client is unhappy. Can you quickly give some
recommendations?
Sure. In the short-term, the band can apply to other similar awards, and if they are really keen on
the award we discussed, in the long-run they can look at exploring another genre of music so that
they could get nominated in another category and be evaluated by a different jury.
Thanks. That will be all.
ICON, IIM Bangalore
109
Unhappy Friend
Case statement
Interviewee Notes
Unconventional | Moderate | Kearney (Buddy)
• Client is unhappy
• Recommendations to make the client happy
Structure/Framework
Friend being unhappy
reasons
• Musician based out of
Ireland – lead singer of
jazz band – 7-8 years
• Unhappy for 2 years
• No other interests
Personal
Interpersonal
Professional
Intrapersonal
Friends
Mental
Family
Physical
Monetary
Non-Monetary
External
Team
Emotional
Labels and
Partners
Internal
Fans
Album Sales
Motivation
Interest
Concert
Attendance
Awards
Key Takeaways
• Internal and external is always a good MECE option if nothing is working
• Try to use MECE in day-to-day situations to practice. Cases can be as random as this one
ICON, IIM Bangalore
110
Plastic packaging company
Unconventional | Moderate | Bain (Manager)
Case Statement: Your client is a PE fund which is looking to make a strategic investment in a
plastic packaging company with an investment horizon of 5-7 years. It produces bottles and jars
and counts FMCG and pharma companies as their major customers. The company is the market
leader with a market share of 10%. The company has solid financials and an EBITDA margin of
25%. I don’t want you to look at the financials and valuation. How would you evaluate this
business?
I have a few questions about our client, may I go ahead?
Let’s start with industry drivers. How would you look at them?
I would break down industry drivers into 3 parts: input drivers, product-specific drivers and
customer drivers. Input drivers would include factors such as availability and cost of raw
materials, etc., product-specific drivers would include change in design, production process,
costs, etc. and customer drivers would include change in customer behaviour, adoption of
alternate packaging materials, etc.
I think these are pretty comprehensive set of drivers. Let’s look at the size of the opportunity. How
would you determine that?
Sure.
Could you just walk me through the value chain? Which part of the value chain does the company
operate in?
Resins is the major raw material for our product. It is a petroleum-based product. The resins are
converted to plastic jars and bottles and then sold directly to businesses.
Since our major competitors are FMCG companies, I would look at annual reports and investor
presentations of major FMCG players and look at the production/sales quantity. I would then
estimate the requirement of plastic packaging per unit produced/sold and arrive at the total
volume. Multiplying that with the average price, I can arrive at industry size.
Okay. Just to clarify we are only in the B2B segment, right?
This is a fair approach. But is there any other approach that you can think of?
Yes. We supply primarily to businesses. 90% of our revenues come from FMCG companies.
Sure. I would take the population of the country, segment it based on income, determine the
penetration of FMCG products in each segment and accordingly arrive at the size of the industry.
What geography do we operate in? And what is the competitive landscape?
In this industry, proximity to raw material is very important. Accordingly, companies are regional in
nature. We operate in the North and West regions and like I mentioned, we are market leaders
with 10% share.
Thank you. I believe I have got a fair understanding of the context of the case. I will now go
broadly outline my approach. Is that okay?
Yes.
Sure. So my analysis of the investment can be divided in 4 main areas: (1) Fund (2) Industry (3)
Company (4) Risks. Is there any one area you want me to start with?
Let’s look at the industry. How would you analyse the industry?
I would look at 4 major factors: (1) the size of opportunity and growth potential (2) the
competitive structure (3) competitive strategies and dynamics (4) industry drivers.
Great. Now if I were to tell you that the current industry size is $100bn and you had to forecast
the growth rate over the next 5 years. How would you do that?
Since our product is closely related to the FMCG industry, I would look at the growth rate of the
FMCG industry. Usually, FMCG cos grow at 7%-10%. However, since we are one step behind in
the value chain and our product is more commoditized, we would grow at a slight lag of 1%-2%,
so at approx 5%-7% over the next 5 years.
This was a great insight that you brought. Okay, last question. Can you just list the top 3 risks that
you can foresee in the investment?
Sure. Top 3 risks that I can think of are:
• Environmental regulations becoming stricter leading to less use of plastic
• Change in customer (FMCG cos) and consumer (end consumer) preferences and rise of
alternate packaging materials
• Increase in petrol prices making our products more expensive than substitutes.
Great. Well done.
ICON, IIM Bangalore
111
Plastic packaging company
Case statement
Interviewee Notes
• While the 2 approaches
to market sizing were
correct, an alternate
approach could have
been to look at
packaging expenses as a
% of revenues of FMCG
companies and then find
plastic packaging as a %
of packaging expenses.
Then apply the % to the
size of the FMCG
industry.
• Ask about the value
chain in case there is any
doubt, or you are not
familiar with the industry
Unconventional | Moderate | Bain (Manager)
Evaluate a strategic investment in a plastic packaging company with an investment horizon of 5-7 years.
Structure/Framework
Evaluation criteria
Fund
Size of industry and
growth potential
Industry
Competitive
structure
Company
Competitive
strategies
Industry drivers
Input drivers
Product-specific
drivers
Risks
Customer drivers
Key Takeaways
• Including the nature of fund as one of 4 analysis points was very important and frequently gets overlooked
• Insights such as the industry growing slightly slower than FMCG because of commoditized nature of the business are appreciated as it shows a deeper level of understanding
• Do not forget to ask preliminary questions, especially when the case seems open-ended (name of major clients, customer wallet share, product portfolio, etc.)
ICON, IIM Bangalore
112
Movie launch
Unconventional | Difficult | Bain (Partner)
Case Statement : Your client is a movie producer and is contemplating to launch a movie either on
OTT platform now or on theatre (six months later). Help the client take this decision.
I would want to start with identifying key revenue streams under both the options and then
consider any non-monetary factors which are critical.
Sure, go ahead.
Thank you. I would want to reiterate the problem statement once to confirm my understanding Our client (film producer) is deciding whether launch a movie on OTT platform immediately or on
theatre (six months later) because of Covid-19 restrictions right now. Is that correct?
For OTT platforms, I understand there is generally a fixed sum contract for obtaining rights of the
movie. However, for blockbuster movie like Housefull 4, other contract mechanism like fixed sum
+ per view fee can also be explored.
Correct.
How would you go about agreeing the contract price with OTT platform
Before heading towards the core problem, I would want to understand few basic aspects about
the client and case.
Different methods can be considered for quoting the contract price to the OTT platform:
1. Cost plus margin: Here client may simply add its targeted margin to the total cost (say 2030% or more; I am not well versed with profitability in movie industry)
2. Benchmarking with collection from Housefull 1/2/3 and adjusting for time period, Covid-19,
OTT growth, saving of distribution cost and other factors.
3. Benchmarking with recent OTT launch: Analysing performance of recent movies launched on
OTT and adjusting for Housefull and Akshay Kumar fanbase, target audience, etc. However, I
am skeptical whether contract value of other movies can be easily sourced.
Am I missing any other important aspect here?
Sure, go ahead.
What is the genre of movie under consideration and demographics of the key target audience?
Also, does it have blockbuster cast?
Why do you think genre will impact the launch decision?
An action movie with high end visual effects, VFX or a 3D movie can do justice to the audience in
theatres with big screen, Dolby sound only. However, a comedy or largely non-action movie can
be launched on OTT as well.
Fair enough. The movie is Housefull 4; a comedy movie targeted to all age groups and profession.
It has a known cast line up including Akshay Kumar.
Housefull is an interesting movie and has a positive track record of its earlier versions. As the
client is in the phase to decide its launch, is it safe to assume all production costs are already
incurred? If yes, at what cost? Also, is revenue the only metric to decide between two platforms?
Yes, movie production is done and only marketing and launch is pending. The total budget is
₹100 crores.
No, you covered different methods properly. Next, tell me briefly, which factors you would
consider to decide the OTT platform to partner with?
Key factors to be considered shall be userbase of the OTT platform (free and paid both) and its
growth rate, demographics (age group), recent Bollywood movie launched, etc.
Fair enough. Let us shift to theatres now.
For theatres, the key revenue stream would be box office collection. Out of which a portion
needs to be shared with the appointed distribution company. In the current scenario, certain
aspects would need to be considered:
1. Reduction in theatre footfall due to Covid-19 risk. However, there is also a probability of
vaccine being launched and reduction in active cases. Thus, by the time of launch after 6 months,
spring effect may also spike the movie viewership. Situational analysis shall be done with
different probability.
ICON, IIM Bangalore
113
Movie launch
Unconventional | Difficult | Bain (Partner)
2. Financial cost due to delayed launch by 6 months.
3. Additional revenue stream by selling rights to OTT platforms for publishing post theatre
launch.
4. Marketing costs (launch events, etc.)
Did I miss any key aspect or revenue stream?
Yes, one additional revenue stream is missing. The fee collected from sponsors/partners of
different categories
Yes. Partnering with different brands (media, beverage, fashion, etc.) is also a key revenue source.
Ok. You analysed it well. We can stop the case here.
ICON, IIM Bangalore
114
Movie launch
Case statement
Interviewee Notes
• Think about contract
terms with OTT
• OTT selection
parameters through
customer base and
content similarity
• Be MECE in thinking
about various revenue
streams
Unconventional | Difficult | Bain (Partner)
• Movie producer trying to decide launch timeline because of COVID
• Comedy movie targeted across all customer segments
• Total budget of INR 100 Cr
Structure/Framework
Pricing OTT contract
Cost Plus method
Box office collection
COVID-19 considerations
Margin on top of cost of production
Situational analysis for launch of vaccine, spring effect etc
Internal benchmarking
Returns on previous Housefull movies
General considerations
• Financial cost of delay of launch
Competitor
benchmarking
Results from other movies on OTTs
• Marketing cost
• Sponsorship / partnership revenue
Key Takeaways
• Interviewer was more interested in approach to case solving than the final answer
• Very important to form an initial framework and keep going back to it
• Some general information about global happenings in COVID were important
ICON, IIM Bangalore
115
Wood Manufacturer
Unconventional | Difficult | BCG(Partner)
Case Statement : Your client is a wood board manufacturer. They manufacture two kinds of
boards – 1. Particle Board 2. TSM. A particle board is a commodity product and is very rough. It
cannot be used for furniture. TSM is a more enhanced board with better appearance and
quality. It has a larger range of use cases and has multiple variants. The industry is moving
towards TSM. The partial board is one of the raw materials used in the TSM board. The company
has recently bought a plant & has added a TSM line. However, the plant has not been profitable.
I have a few clarifying questions before we go ahead. May I ask them?
May I please take a minute to understand the data?
Sure. But hurry up please.
Okay, so the plant is making a profit of Rs. 25 per unit of particle board and Rs. 40 per unit of
TSM. However, due to the fixed costs, the plant is making a net profit of Rs. 1 Million in case of
the particle board and Rs. 2 Million (Loss) in case of TSM. That’s odd, considering TSM has a
higher gross profit per unit. We may need to analyze the fixed cost further here
That is fine, we can investigate that. What else?
Sure.
Could you please share a bit more about the client – where is the client located? Where is
the plant located? What part of the value chain does the client cover? Is this a client specific
issue? Do we have a timeframe for the decline in profitability and magnitude of the same.
The client is a global company with worldwide operations. It has entered the Indian market
using the plant mentioned earlier. The company sources wood externally and then supplies the
finished products to other businesses (B2B) and direct to customers (B2C). 90% of its business
is B2B. Yes, this is a client specific issue. Other competitors are not facing this. The plant has
not been profitable since acquisition.
Okay, so I would like to approach this from the plant’s profitability perspective (Absolute
profit). I will arrive at profit using revenue and cost from the plant. Do we have any data
available with us?
(Shares his screen on zoom) Yes, we do have some data. Here is an exhibit for you:
Particulars
Particle Board
TSM
# of Units Sold
200K
100K
Price per unit
220
380
Cost per unit: Resin
85
40
Paper
30
100
Material Y
80
190
Particle Board
Fixed Cost Attribution
Available Capacity in Units
10
Rs. 4 Million
Rs. 6 Million
250K
300K
Also, the capacity utilization of the plant from the TSM line perspective is lower. It is just 33%
utilized. Is there any specific reason for this?
Yes, let’s take a look at possible reasons on why the utilization is low.
We can look at this from the perspective of supply and demand.
(Interrupts) The demand for TSM produced by the client is about 200K units.
Oh, so even if we were able to meet the demand, the capacity utilization would still remain at
66%.
Yes, so – Is that a problem? (Seemed very impatient at this point)
It could mean that there just enough demand for TSM for the plant to be profitable. If the plant
manufactures 200K units of TSM, then the profit of the plant would be about Rs. 3 million. Okay,
so meeting the demand would make the plant profitable.
Yes, in fact, the plant does not even need to meet the full 2L demand to be
profitable. Anyways, lets move on.
In that case, we can look at the supply side. I would want to break this down into a value chain
to identify any bottleneck in the process. I would want to limit my analysis until manufacturing
since we know the capacity utilization of the plant itself is low.
Of course. Let’s focus on the manufacturing process itself. There are no bottlenecks in the
sourcing and inward logistics of raw materials.
ICON, IIM Bangalore
116
Wood Manufacturer
Unconventional | Difficult | BCG (Partner)
Okay sure. I am not really sure how the manufacturing process of TSM works. Would it be
possible for you to explain this a bit?
Yes. The RM enters the factory line (including the particle board). All the materials are
cut as per the required length. There are 3 variants – 3M, 5M and 6M. Then the painting
process is conducted depending on the type of color required (brown, blue, black, white,
etc.). Finally, a varnish coating is applied – again depends on the application of the TSM
– for furniture, outdoor wall, indoor wall, etc. Lastly, the products are packaged
depending on the variant and the destination.
Okay, so in order to identify why the capacity utilization is low, we would have to look at
each part of the process and see which part is utilized the most. Do we have any data on
this?
We know that the utilization is low across all parts of the process.
Okay, I would want to look at the two departments. TSM and particle board. Are there any
differences in policies between the two departments? The reason I am asking for this is
because the particle board department has a fairly strong utilization ratio despite being in the
same plant (thereby eliminating any external factors).
There are two key differences. 1. There are about 25 different variants of TSM which have
been specified by the marketing team after months of market research. Particle board is a
commodity product. 2. The order to delivery time for TSM is 2 weeks while that of
particle boards is 4 weeks.
In that case, I would want to delve into the delivery timelines we have selected. We have picked 2
weeks for TSM even though there are more variants. While we have picked 4 weeks in case of
Particle board even though there is just 1 variant. Is that causing the bottleneck?
But I want to know why this is happening.
We know that more variants would evidently mean smaller batches. Smaller batches would in
turn mean that the machines in the process would have to be changed in terms of configuration
repeatedly. Is this happening in our case?
Yes, that is exactly what I was looking for! The higher number of variants lead to smaller batch
sizes. That impacts production planning in case of TSM. It also leads to more unproductive hours
which are spent on machine set up. Do you have any recommendations in mind?
I have 3 recommendations in mind – Considering the greater number of variants, the client
should try to negotiate longer lead times (Increase 2 weeks). We can identify which of the 25
variants form the tail of the demand curve. Those variants should be scheduled for bulk
production during off peak seasons and stored in a warehouse. This will reduce the number of
variants in production during BAU. The client can outsource some parts of the process to
distributors assuming quality control is feasible – follow a model like the paints
industry. E.g. Move the varnish process to distributors.
This sounds okay. Please wait here. (Leaves the zoom call)
Okay, so we have a greater number of variants which increases complexity, and we have a lower
order to fulfillment time
Yes, why do you think this led to lower utilization of the plant in case of TSM?
I am not sure as of now. I need to think over this. Do we have any date on what kind of
fulfillment mechanism we follow? Do we follow FIFO, LIFO or best fulfilment estimate
They follow the best estimate method. How does that even matter for capacity utilization?
ICON, IIM Bangalore
117
Wood Manufacturer
Case statement
Interviewee Notes
Unconventional | Difficult | BCG (Partner)
• Wood Manufacturer
• 2 kinds of boards – one preferred over other
• Plant not profitable
Structure/Framework
• Data already presented
in case
Low-capacity
Utilization
Profits
Supply
Revenues
Demand
Costs
Raw
materials
Inward
logistics
Manufacturing
Outward
logistics
Distribution
Key Takeaways
• The case can be number heavy so be prepared for that. Without getting intimidated, try to for data relevant to the case
• Remain calm even if the interviewer is irritated.
ICON, IIM Bangalore
118
Automobile – Electric 2-wheeler
Case statement
Interviewee Notes
• To estimate 2-wheeler EV
market, find population
who would buy 2-wheeler
and multiply by avg. price
• Consider only urban
because of EV
infrastructure facility
readiness in 5 years
• Age group b/w 18-50 is
considered as people
above this age generally
don’t buy 2 wheelers
• Income affordability,
preference towards cars
and petrol vehicles is
considered and 1% was
approved by the
interviewer
• Avg. price of 2-wheeler
assumed 1L INR
Guesstimate | Easy | Accenture (Partner)
Estimate the market size for electric 2-wheeler in India after next 5 years, say 2025.
Structure/Framework
Population of India in 2025
140 Cr
Urban – 30%
42 Cr
Age group 18 to 50 – 50%
20 Cr
People who can afford and
enjoy – 1%
20 L
Rural – 70%
Other age group – 50%
Students, low income who can’t afford, rich people who prefer cars
and people who continue with ICE vehicles -99%
Assuming avg. price of 2-wheeler is 1 Lakh INR,
Market size = 20L *1L = 20000 Cr
Key Takeaways
• Buy-in from interviewer for all assumptions and percentages is important.
• One does not need exact split of various categories and percentages based on stats or data. The candidate groups various categories and indicates a percentage based on those
clubbing with appropriate reasoning which was approved by interviewer. This saves a lot of calculation hassle.
ICON, IIM Bangalore
119
Bangalore Airport
Guesstimate | Easy | Accenture
Case Statement : Estimate number of people crossing Bangalore Airport in a month.
Yes sure. Is there anything else you feel is missing?
I have a few preliminary questions before I jump into the guesstimate, may I go ahead?
Yes, to ensure comprehensiveness, I will also take into consideration the different hours in the
day: peak, regular and off timings. This will cover the difference in utilization % between flights.
Sure.
When we are talking about people, should I include even the airport staff and airline workers, or
are we only talking about passengers?
Only passengers.
That sounds very comprehensive. We can close the case now.
Thank you.
Sure, and generally, there are 2 types of flights: cargo and passenger. Should I only focus on
passenger flights for the purpose of this case?
Yes, focus on passenger flights.
Thank you for the clarifications. Could I take a minute or so to structure out my approach before
diving into the calculations?
Sure, but given the limited time that we have, I only want you to run me through your approach,
no need to get into the numbers.
Sure. I believe that we can arrive at the answer using two approaches: demand-side and supplyside. However, the demand-side calculations would require several assumptions while breaking
down the population using factors such as need, access and affordability. On the other hand, a
supply-side approach would be constrained by the maximum capacity of the flights taking off
from the Bangalore airport, thus requiring far less assumptions. So, is it fine if I approach this
problem from the supply-side?
Yes sure, that sounds reasonable.
Thank you. The broad approach that I would like to follow is: No. of flights x flight capacity x
utilization %. I will further break down the no. of flights into domestic and international given the
difference in frequency. Next, I will break down the no. of flights in domestic and international
into weekdays and weekends, given the difference in frequency. Does this approach sound okay?
ICON, IIM Bangalore
120
Bangalore Airport
Case statement
Interviewee Notes
Guesstimate | Easy | Accenture
• Estimate number of people crossing Bangalore Airport in a month
Structure/Framework
• Consider both Domestic
& International flights
• Approach is important,
numbers & calculation
are not required
Flight
Capacity
No. of flights
Domestic
International
Flights landed
per hour
Flights landed per
hour (lower than
domestic)
Weekday
Weekend
Weekday
Utilization %
Required
Answer
Weekend
Key Takeaways
• Ask for the level of detail that is expected when defining approach for the guesstimates. Exhaust all possible details you can think and discuss with the interviewer
ICON, IIM Bangalore
121
Food Tech Platforms
Guesstimate| Easy | EYP (Finals)
Case Statement : Let’s do a quick guesstimate. I am not looking for numbers but only approach.
Can you estimate the market size of food tech in Bangalore? What approach would you use?
To begin with, can I just clarify what all does food tech consist of?
You tell me.
Ok so food tech platforms like Swiggy and Zomato are two-sided platforms wherein there are 4
key buckets of revenues:
1. Fees from restaurants to register on the app + delivery fees from customers / Commission on
each order
2. App subscription charges
3. Advertisements
4. Transaction fees
It consists of delivery, take-away and dine-in?
Yes, and reservations.
Ok, so we can look into tech platforms and take a demand-side approach to understand how
many subscribers are there on tech platforms. Ideally, we can look at the number of subscribers in
one tech platform and then multiply by an approximate number of tech platforms that exist.
However, do you think that this approach is accurate? Do you think all platforms have the
same number of subscriptions or even approximately the same number of subscriptions?
Additionally, how will you estimate the number of tech platforms? Can you alternatively think
more on the lines of the classic approach of determining the number of people who would
possibly utilize tech platforms from the population of Bangalore and apply filters?
There are two main forms of fees that an app could charge, they could charge some form of
commission to the restaurants on the orders placed by customers. Alternatively, they could charge
fees from restaurants to register on the app and delivery fees from customers for each order.
Some apps, although this is rare, might charge a certain amount to register on the app such as
monthly subscription fees. Additionally, advertisements on the app will serve as an additional
revenue source. Finally, the app can tie up with particular credit card companies and UPI apps and
charge them to allow customers to make payments through them on the app. The app could
alternatively charge commissions to the credit card companies/UPI apps on each transaction.
Perfect that would be all.
Sure. So, we can take the total population of Bangalore and apply the following filters in the
respective order:
1. Age filter (18-45 are most likely to be on food tech apps)
2. Income Filter (Middle class and upwards are most likely to use such apps).
3. Tech Savviness + Internet usage (Those who have internet on their phones and are more
tech savvy are more likely to use food tech platforms).
Ok good. Can you tell me what are the revenue sources for food tech platforms?
ICON, IIM Bangalore
122
Food Tech Platforms
Case statement
Interviewee Notes
Guesstimate| Easy | EYP (Finals)
• Market size of food tech in Bangalore
• Only approach is required
Structure/Framework
• Food tech – delivery,
takeaway, dine-in,
reservation
• Identify the population
segments
• Identify the sources of
revenue
Population
Age filter
Income filter
Tech
savviness
18-45 years
Middle class
and upwards
Smartphone
users
Revenue
Fee from restaurants,
delivery fees,
commission
App subscription
charges
Advertisements
Transaction fees
Key Takeaways
• Market size estimation is not straight-forward. The initial approach of calculating number of platforms and subscribers per platform is not appropriate.
• Focus on identifying target population segments
ICON, IIM Bangalore
123
Sugar Consumption
Guesstimate | Easy | Strategy&
We want to reduce sugar consumption of our employees. Can you help us, do it?
Dividing 200 cups/day based on sugar sachet we get 260 sachets of sugar per day.
Sure. Can you please clarify in which office you want to reduce sugar consumption?
This looks fine. Now since you have an idea about sugar consumption on a floor, can you
recommend some solution.
In Gurgaon Office
Is there any specific reason for doing so?
We have conducted a survey and found out that a lot of our employees are struggling with
chronic illness such as diabetes and we have taken a wellness and health initiative to tackle this.
Reducing sugar consumption is the starting point.
(After taking 1 minute) I want to start by estimating the consumption of sugar in Gurgaon Office.
Are we concerned only about sugar in beverages, or do I need to consider other sugary foods
such as confectionary items as well?
In short term, company can reduce the availability of sugar sachets. Company can introduce
lockbox to keep sachets. It can be opened only through employee id to keep count of no. of
sachets an employee consumed and will be incentivized for reducing the monthly intake. Further,
healthier alternatives for sugar can be provided to employees.
In the long term, the culture can be changed by conducting regular sessions on health
by experts.
Thanks, we can conclude the case here.
Consider only tea and coffee.
Sugar consumption = # of employees * % of beverage drinkers * # of cups/person/day * # of
sugar sachets/cup
Do we have any data on any of these?
We have 3 floor in our Gurgaon office. For now, let us consider only one floor. No. of employees
are on this floor are 360 and 60% drink tea and 30% drink coffee.
So that means there are 32 coffee, 43 tea drinkers and 36 drink neither. Do we have any data on
the distribution of no. of cups of coffee that these people drink per day.
40% drink 1 cup/day,30% 2 cups/day and 30% 3 cups/day.
43 people drink 1 cup /day, 32 2 cups/day and 32 3 cups/day, therefore total no. of cups of
coffee/day is 203. I am taking this as 200 cups/day. Generally, sugar is added separately
in offices, especially in coffee. Do we have any data on no. of sachets of coffee each person
intakes?
Yes, we have info on that. 50% 1 sachet/cup, 40% 2 sachet/cup and 10% 0 sachet/cup.
ICON, IIM Bangalore
124
Sugar Consumption
Case statement
Interviewee Notes
• Sugar consumption = #
of employees * % of
beverage drinkers * #
of cups/person/day * #
of sugar sachets/cup
• Suggest both long term
and short-term options
to reduce the sugar
consumption of the
employees
Guesstimate | Easy | Strategy&
• Client wants to reduce the sugar consumption of employees
• Identify the sources of sugar intake and suggest possible ways to reduce it
Structure/Framework
# Employees
# Coffee cups/day
= 360
Tea (60%)
Coffee (30%)
None (10%)
= 216
= 108
= 36
1 sachet/cup(50%)
= 100 sachets
1cup/day (40%)
= 43 cups
2 sachets/cup(40%)
2cups/day (30%)
= 160 sachets
= 64 cups
3cups/day (30%)
= 96 cups
0 sachet/cup(10%)
= 0 sachets
Key Takeaways
• Breakdown the problem into subparts at the starting of the solution to make the calculations easier
• Ask for relevant data points from the interviewer when needed
ICON, IIM Bangalore
125
Food Delivery Customer Care
Guestimate | Moderate | Deloitte
Case Statement : We have a food delivery platform like Swiggy in NCR. We are getting a lot of
customer care requests and queries and the manpower is not enough right now due to the
COVID situation to handle all the queries. What should we do to reduce the load on the current
customer care executives? I want to understand your approach. Make your own assumptions for
any other information you require.
Okay. Since, we are looking at resolving the queries and requests, we can divide the requests
into two parts:
1. Requests for information about the order status, location of delivery person, and other
similar information
2. Personalized and specific requests and complaints
The responses to requests in bucket 1 can be automated through a service or a bot, thereby
reducing significant load on the customer care executives. And the customer care executives
can just respond to requests in bucket 2.
only 10% order every day, that is 7200. I would then divide the day into 4 parts, based on traffic:
8 AM – 2 PM, 2 PM – 7 PM, 7 PM – 12 AM, 12 AM – 8 AM.
All times of the day don’t get the same traffic. We can divide daily traffic into these slots.
Sounds good. How would you do that?
I would assume high traffic in the first slot, medium traffic during the second slot, traffic again
peaking in the third slot due to dinner and minimum traffic in the last slot. So, we can assume
the distribution of traffic as follows;
8 AM – 2 PM : 35%, 2 PM – 7 PM : 20%, 7 PM – 12 AM : 40%, 12 AM – 8 AM : 5%
Of all the traffic, not everyone will create a query about their orders. That should be around
10% maximum. So, by slot it would be
8 AM – 2 PM : 252, 2 PM – 7 PM : 144, 7 PM – 12 AM : 288, 12 AM – 8 AM : 36
How will those request in Bucket 1 be automated?
We can categorize the different type of requests that are received into separate classes
depending upon their type. For example: status of order, location of delivery person, time for
the order to be delivered, cancel the order, modify the order, etc. For each class, we will
calculate the volume of such requests and their frequency of occurrence. Requests with high
frequency and volume can be directly integrated as options for requests while a person raises a
request and can be automated completely.
In case, the customer doesn’t feel satisfied with the automated response, he can still request for
a customer care executive to talk to.
Okay. Let's say if the system is not automated, can you provide a rough estimate how many
customer care executives will we need for Delhi NCR? Please make your own assumptions.
Alright. So, I would like to begin with the assumption that Delhi’s population is 12 million. And
there is 60% internet penetration. Of all the people have internet, I am assuming only 1% people
are using our services. That makes it 72,000. Let's say of all the registered users
Right, so if we have two shifts of 12 hours, how many people do we need?
We have maximum of (288/5) 58 requests per hour. Assuming a request takes 5 min on average
to resolve, we need 5 customer care executives simultaneously in case of the 7 PM - 12 AM slot.
Similarly, in case of the 1st slot, we would have 252/6 = 42 requests per hour. This would
require 4 employees. So, we can have 4 employees from 7 AM – 7PM , and 5 employees during
7PM to 7AM slot.
Great. So, what will be your recommendations?
Automate the simple requests that can be directly answered by the bot without human help.
These requests can be decided based on the frequency and volume.
Refer to the customer care executive only in cases of complex requests
ICON, IIM Bangalore
126
Food Delivery Customer Care
Case statement
Interviewee Notes
Guestimate | Moderate | Deloitte
• Client is food delivery platform
• Lot of customer care requests; manpower is not enough due to COVID
• How to reduce the load on the current customer care executives?
Structure/Framework
• Delhi Population:
12 mn
• Users:
12 mn*0.6*0.01 = 72,000
Current Users (7200/day)
• Users/day:
72000 * 0.1 = 7,200
8 AM – 2 PM
0.35*0.1*7200
= 252
2 PM – 7PM
7 PM – 12 AM
12 AM – 8 AM
0.2*0.1*7200
0.4*0.1*7200
0.05*0.1*7200
= 144
= 288
= 36
Key Takeaways
• The interviewer was looking for the approach and problem-solving skills rather than the numerical data and assumptions.
ICON, IIM Bangalore
127
Food Delivery App
Guesstimate | Moderate | Bain
Your client is an online food delivery app who has approached you to estimate the market size of
such a service and the changes that can be expected by 2025.
Before proceeding, I would like to clarify a few aspects of the case. When you say a food delivery
app, can I assume the product to be like Swiggy? Also, for the market size, should I estimate the
number of users or the dollar-value of the market?
Yes, you can assume the product to be similar to Swiggy and for the market size please estimate
the dollar value. Also, I would like to see how you would go about estimating the market size and
the assumptions that go along with it. We can calculate the exact numbers later if time permits.
Thanks. Based on the information, I would like to structure by analysis based on the demographics of
India. I will first split India into rural and urban. Considering that this is a food delivery app which requires
access to smart phones and internet as well as places that deliver food, we can remove the rural market
from our analysis. For the urban market, I would look at the age and income segments to get to the
market size. Does this seem like a fair approach to you?
Yes. Please go ahead.
Yes. That seems more accurate. Please continue.
Again, since this would require the ability to use smart phones and order food of the internet, we can rule
out the 60+ age segment. Is that OK?
Sure. Continue
Each age group can now be divided further into income segments and then average frequency of
ordering and purchase value for each group can be determined. Since, we are talking about the urban
group, we can assume the following split: 1) Less than 5LPA: 30%, 2) 5LPA-15LPA: 60%, 3) More than
15LPA- 10%. Given the income ranges, we can remove the low-income category from our estimates. Is
this alright?
Yes. That’s OK. Carry on.
Now within the 0-20 age groups, we can cover kids from 0-18 as they would mostly be living with their
parents who will be ordering for them. College students from 18-20 will be the ones ordering directly.
Based on this we can assume the following numbers for each age group.
Age Group
Alright. Based on the latest census data 70% of the country’s population reside in rural areas and 30%
in urban. Even within the urban population, the market for such a product would predominantly be
present in Tier-1 and Tier-2 cities which would be around 50% of the overall urban population. After
that, I would divide the population in to 4 age segments- 0-20, 20-40, 40-60 and 60+ and assume an
equal split of population among them.
0-20
Does an equal split among age segments feel like a fair assumption to you?
40-60
Actually, no. Considering that India is a young country, population would be skewed towards the younger
age groups. So, 0-20 would be 30%, 20-40 would be 40%, 40-60 would be 20% and 60+ would be
10%.
21-40
Income Segment
Order Frequency
Average Order Value
5-15 LPA
1 time per week
INR 150
>15LPA
1.5 times per week
INR 200
5-15 LPA
2 times per week
INR 300
>15LPA
3 times per week
INR 400
5-15 LPA
1 time per week
INR 600 (family order)
>15LPA
1.5 times per week
INR 800 (family order)
Should I now calculate the exact numbers or discuss on trends by 2025?
ICON, IIM Bangalore
128
Food Delivery App
Guesstimate | Moderate | Bain
No. That’s OK. No need for exact numbers. Let’s talk about changes by 2025.
Great. So based on my understanding, I expect the following changes by 2025:
As internet penetration increases, Some of the Tier-3 cities and rural markets might also become a viable
market
Income levels in India have been rising and middle class is becoming larger. So, we can expect that both
the order frequency and average value per order to go up.
This is more or less in line with our findings except the rise in average order value which we
estimated to be more or less constant. But this was a good analysis. We can close the case now.
Thank you.
ICON, IIM Bangalore
129
Food Delivery App
Case statement
Interviewee Notes
• Focus on the
intersection of the
population and income
demographics
• Population is skewed,
more number in the
younger age brackets
• Spending is dependent
on the income level,
only those with
dispensable income
should be considered
Guesstimate | Moderate | Bain
• Food delivery app which wants to determine the market size today
• Also want to see how the market is expected to change by 2025
Structure/Framework
Income Segment
Population
Rural: 70%
Urban: 30%
<5 LPA: 30%
5 – 15 LPA: 60%
>15 LPA: 10%
1 time per week,
Rs. 150
1.5 times per week,
Rs. 200
20-40: 40%
2 times per week,
Rs. 300
3 times per week,
Rs. 400
40-60: 20%
1 time per week,
Rs. 600
1.5 times per week,
Rs. 800
0-20: 30%
60+: 10%
Key Takeaways
• Estimate consumer spending habits focusing primarily on a younger population with higher incomes
• Value of the market will trend upwards given the increased internet penetration and spending by consumers
• Mobile phone usage is an important factor to take into consideration
ICON, IIM Bangalore
130
Four-wheeler Tyres
Case statement
Interviewee Notes
• Total population – 130
Cr
• 4 members per family
• 32.5 Cr Households
• 1 car per MI house
• 2 cars per HI house
• 350 people/ sq. km
• 1 taxi/10 people in
metro
• 35 cars/ sq. km
• Avg tyre usage – 50K
kms
• Annual car usage – 10K
kms
• Avg tyre age – 5 years
• 5 tyres per car user
• Avg tyre purchase = 5
tyres/5 years
= 1 tyre/ year
Guestimate | Moderate | GEP consulting (Manager)
• Calculate the number of 4-wheeler tyres sold in a year
Structure/Framework
No. of 4-Wheeler tyres
Commercial
Taxis
Personal Cars
Metro area:
4250 sq. km
32.5 Cr households
Low Income
(50%)
Middle Income
(40%)
13 Cr Cars
High Income
(10%)
1.5 lac Taxi cars
6.5 Cr cars
Total personal: 19.5
Cr
Total Cars: 19.515 Cr
Total Tyres: 19.515 Cr/ year
Key Takeaways
• Candidate used 2 different approaches for 2 sub parts of the same problem – demand side for personal cars and supply side for commercial cars.
ICON, IIM Bangalore
131
Automatic Vacuum Cleaner
Guesstimate | Moderate | McKinsey (Partner)
Case Statement : Guesstimate the annual demand for automated vacuum cleaners in India.
It sounds interesting. Can you please explain what an automatic vacuum cleaner means? Is it
something like a vacuum cleaner, which moves around and cleans automatically.
Correct. Assume that it is a new sensor-based vacuum cleaner which cleans the floor
automatically. This is the first time it is being launched in India.
Amongst the 10 Cr urban households, we can assume that upper, middle and lower class are in
the ratio of 1:5:4. This gives us 1 Cr upper class, 5 Cr middle class and 4 Cr lower class urban
households. I would now like to assume a conversion factor to get the demand for the vacuum
cleaners. We can say that something around 50 % of urban upper class and around 20% of
urban middle class will be looking forward to buy this product. Given the price point lower class
people would not be interested. Are the assumptions fine with you or do we have any specific
data on this?
So, before starting with the analysis, I would like to ask a few clarifying questions to get a better
understanding about the product and our client. Is that okay?
Yes, that’s perfect. Give a final number and some comments.
Sure, go ahead.
So, this gives us a demand of 1.5 Cr automatic vacuum cleaners. However, this is just an estimate
for first year. For any other average year, we need to divide it with the life of the product. And the
sales would also depend on the marketing of the product.
Do we have any information about the company which is launching the product and the price
point?
You can assume it to be around INR 10 – 20K and its being launched by a foreign major.
That’s perfect. Can you just tell an approach for finding the institutional demand.
For institutional demand, we can estimate the working population, multiply it with the office
surface area required per person and then calculate the vacuum cleaners required for cleaning the
surface.
Which geography is being targeted and what are the channels of sales?
The company is targeting pan India and the sales channel is online for first few years.
Can you think of any other approach for institutional demand ?
So just to summarize, I need to estimate the annual demand of a new automated vacuum cleaner
in India which is to be sold online. So, the approach I want to go ahead with is to split the
demand into two: domestic and institutional sales.
That sounds great, let’s move into domestic sales first.
So, in domestic, I would like to calculate the number of households in India. Taking 1.3 billion as
the population of India and the average household size to around 4, we get around 30 Cr
households in India. And dividing it in rural and urban in 2:1 proportion, we get 10 Cr urban
households and 20 Cr rural households. Within urban I would like to subdivide in income classes,
and an assumption can be made that the rural demand will be zero as it is an expensive new
automatic product from a foreign player.
Yeah, we can start with Fortune 500 or any other dignified list of companies and see how many
offices do they have in India and then find the demand. These companies will probably be the
early adopters for this expensive new technology.
Thanks. It was nice speaking to you. We can end the case over here.
Yes, you can ignore the rural segment.
ICON, IIM Bangalore
132
Automatic Vacuum Cleaner
Case statement
Interviewee Notes
• Divided into Domestic
Demand and Institutional
Demand
• For domestic demand,
India household: 30 Cr
(130 Cr population/ 4
people in household)
• Ignore rural segment.
Guesstimate | Moderate | McKinsey (Partner)
• Client is looking to launch automated vacuum cleaners pan-India
• Price point is around INR 10-20K
• Client is a foreign MNC.
Structure/Framework
Domestic Demand
Indian households
(30 Cr)
Rural (20 Cr)
Ignore
Institutional
Demand
Urban (10 Cr)
Upper class urban
(1 Cr)
50% penetration
(0.5 Cr)
Middle class urban
(5 Cr)
Lower class urban
20% penetration
Ignore
(4 Cr)
Key Takeaways
• Clarify the problem statement clearly, especially for novel products.
• Keep validating your assumptions with the interviewer as you proceed.
• Since the domestic demand approach was explained clearly with numbers, institutional demand was explained qualitatively.
ICON, IIM Bangalore
133
COVID Tests
Case statement
Interviewee Notes
• Focusing on people
coming into the city
only
• Gwalior City – 12.5
Lacs population
• 0.4% incoming
travelers (validated by
interviewer)
• 50% symptomatic –
needs testing
• Considering 2 level
chain of contacts
• Every person has 4
direct/ primary contacts
• Every primary contact
has 4 secondary
contacts
Guestimate | Difficult | GEP consulting (Buddy)
• Calculate the number of COVID tests to be conducted in a city daily
Structure/Framework
No. of COVID tests
People coming in city
(0.4% of 12.5 Lakh)
Airways (20%)
Roadways
(50%)
People who want to
travel out of city
People within the city
with no travel plan
Railways
(30%)
1000
2500
1500
Symptomatic –
50%
Asymptomatic –
50%
500
1250
750
0
0
0
Primary Contact
(4* symptomatic)
Secondary Contact
(4* primary)
2000
5000
3000
8000
20000
12000
52,500
Key Takeaways
• Candidate could have considered some fraction of voluntary tests by Asymptomatic travelers
• All the broad numbers in the case were basis assumptions validated by the interviewer
ICON, IIM Bangalore
134
IIMB Industry Reports
2021-22
ICON, IIM Bangalore
135
Airlines Industry
Operations
Inbound Logistics
•
•
•
•
•
Route Selection
Yield Management
Fuel
Flight/Crew Scheduling
Aircraft Acquisition
•
•
•
•
•
Ticket Counter
Gate & Aircraft Operations
Onboard Services
Baggage Handling
Ticket Offices
• Seat Load Factor
• Arrival Punctuality
• Misconnex Quota
Baggage System
Flight Connections
Rental Car & Hotel
Reservation System
•
•
•
•
•
Sector Composition
Key Performance Indicators
• Departure Punctuality
• Regularity
• Delay Reasons
•
•
•
•
100%
50%
• Rivalry Among Existing Competitors (High): There is
limited product differentiation and economies of scale
and significant exit barriers
• Bargaining Power of Suppliers (High): Powerful labor
unions control operations. Aircraft and engine
producers are concentrated oligopolies
• Bargaining Power of Buyers (High): Air travel seen as
standardized product with low switching costs for
most customers
• Threat of Substitutes (Medium): Fast trains offer
competition. Business travelers are increasingly opting
for web-conferencing
• Threat of New Entrants (High): There are limited
incumbency advantages and low switching costs
0%
Aircraft
Movement
Freight Traffic
Domestic
Passenger
Traffic
International
Cost Drivers
•
•
•
•
•
•
•
Fuel: ~40%
Rental of Flight Equipment: ~15%
Flight Equipment, Maintenance and Overhaul: ~10%
User Charges: ~10%
General and Administrative Expenses: ~7%
Flight Crew Salary and Expenses: ~5%
Depreciation and Amortization: ~3%
ICON, IIM Bangalore
Promotion/ Advertising
Frequent Flyer
Travel Agent Programs
Group Sales
Electronic Tickets
• Lost Baggage
Service
• Complaint
Follow-up
Key Market Trends
Activity in AAI Airports – FY20
Porter’s Five Forces
Service
Marketing & Sales
Outbound Logistics
• Robust Demand: Rising working group and widening
middle class demography is expected to boost demand
• Opportunities in MRO: Expenditure in Maintenance,
Repair & Overhaul (MRO) accounts for 12-15% of the
total revenues – it is the second-highest expense after
fuel cost. By 2028, the MRO industry is likely to grow
over $2.4 billion from $800 million in 2018
• Policy Support: Foreign investment up to 49% is
allowed under the automatic route. Under Union Budget
2021-22, the government lowered the custom duty
from 2.5% to 0% on components or parts, including
engines, for manufacturing of aircrafts by the MoD.
• Increasing Investments: Investment to the tune of INR
420-450 billion is expected in India’s airport
infrastructure between FY18-23
• UDAN: Under this regional connectivity scheme, airfare
for a one-hour journey of 500 km has been capped at
INR 2500
• Public-Private Partnerships: $3 billion investment in
greenfield airports in Navi Mumbai and Goa
136
Automobile Industry
R&D and Product
Design
Raw Material Supply
• Aluminium, Iron
and Steel
• Glass, Plastic and
Rubber
• Skilled Labour
• Process
/Product
Innovation
• Engine/Battery
• Suspension and
braking
• Electronics
3%
Three-Wheeler
• Body/Chassis
• Casting, machining
and welding
• Quality Testing
Key Drivers
Segments
Two-Wheeler
Product
Assembly
Auto Components
Revenue
Cost
Growth
13%
Automobile
Sales
Raw Material
Increasing Exports
After Sales
Service
Labour
Policy Support
Financing
services
Advertising
Robust R&D Centres
81%
Commercial Vehicles
Industry Facts
Porter’s Five Forces
• 7% Share in India’s GDP & 4.3% in India’s Exports
• $118 bn industry expected to reach $300 bn by 2026
Barriers to entry (High): capital costs, distribution
network, and availability of automobile components.
Bargaining power of suppliers (Low): stiff competition
Bargaining power of customers (Very high): due to
availability of options.
Threat of Substitutes (Medium): Increasing shared
mobility options and improving public transport
Rivalry
(High):
Competition
from
established
international and domestic brands
Segment
Global
Scenario
India Market Leader
Two Wheelers
#1 Largest
Hero Motocorp
Passenger Vehicles
#4 Largest
Maruti Suzuki
Commercial Vehicles
#7 Largest
Tata Motors
• Warehousing
• Distribution
• Dealership
Management
•
•
•
•
Advertising
Finance, Insurance
Used Cars, Rentals
Service, Spares
Key Market Trends
3%
Passenger Vehicles
Marketing and
Service
Logistics &
Transportation
ICON, IIM Bangalore
• Transitioning towards electric vehicles: Market size
valued at USD 5 billion in 2020, and it is expected to
witness a CAGR of 44% by 2026
• Bharat Stage (BS) - VI norms: India aims to reduce its
carbon footprint by 33-35% by 2030
• Positive GST impact: Reduction in the overall cost
structure of Indian Automobile industry
• Policy Support: Atmanirbhar Bharat Abhiyaan,
Automotive Mission Plan 2026 to promote
manufacturing, export-linked fiscal incentives, Voluntary
Vehicle Fleet Modernization Programme
• Market Developments: Organized pre-owned car
market, shared mobility ecosystem
• Covid Impact:
o shortage of raw material
o shifting of production to other countries,
o liquidity crunch
o delays in availability of models
o preference for private ownership of vehicles
o shrinkage in consumer demand due to WFH
137
Cement Industry
Procurement
• Long term lease of lime
quarries
• Plant located close to
quarries
• Long term supplier
contracts for other RM
Manufacturing
• Major freight cost (higher in
rainy seasons)
• Rail-road mix used
• Warehouse network
• Large orders directly
to dealers/customer
• Process: Limestone →
Clinker→ (grinding and
additives) → Cement
• High Automated setups
• Imp: Economies of Scale
• High start-up costs
Industry Forces
Key Drivers
• Supplier Power: Low. Companies opt for backward
integration, weakening supplier power
• Barriers to entry: High. High capex, fixed costs and
need for economies of scale
• Threat of substitutes: Low. No product exists to date
that can substitute effectively for cement. Only qty can
be varied.
• Buyer Power: Low. Low substitutability, oligopolistic
market
• Rivalry: Moderate. Concentrated market.
Capex
Revenue
Plant &
Machinery (40%)
Sale of cement
(98%)
Land (20%)
Captive power
plant (10%)
Sales & Marketing
Distribution
Interest Income
(2%)
• Strong relationships
with contractors and
developers
• Distributor-dealer
network for sales
• Bulk orders are cheaper
Covid Impact
Cost
Transportation
costs (30%)
Power & Fuel
costs (20%)
Material cost
(20%)
• Lockdown measures and economic uncertainty
weakened construction activity. This had a knock-on
effect on the demand for construction materials
including cement.
• Higher selling prices were observed due to the tighter
supply of raw materials following production
disruptions in the mining industry.
• Lower energy prices, particularly during the first half
of 2020, have mitigated that, improving profit margins
for construction material manufacturers.
Growth Drivers
Key Performance Indicators
1. Capacity utilization
2. Cement factor - qty of cement contained in a unit
volume of concrete or mortar (in kgs.)
3. Clinker factor - percentage of clinker in cement
4. EBIDTA/ton
•
•
•
•
Increasing foreign investment -> New construction
Record-low interest rates -> New Housing+renovation
Rapid urbanization -> New urban construction
Government spending on infrastructure
Growth in this industry is positively correlated to
construction and housing market. India is 2nd largest
producer of cement in the world.
ICON, IIM Bangalore
Leading Players in India
1. LafargeHolcim Ltd – largest player – based in
Switzerland – supplier of cement and aggregates
2. UltraTech Cement Ltd – 2nd largest player – Indian
Company
3. India Cements Ltd – 3rd largest player – Indian
Company
138
E-Commerce and E-Retail Industry
Inbound Logistics
•
•
•
•
Sourcing
Vendor contracts
Quality testing
Mass customization
Inventory
•
•
•
•
Demand forecasting
Warehousing
Assortment planning
Working capital
management
E-commerce Segments Market Share
E-commerce Types
• E-Retailing: Online sale of products such as clothing,
mobile handsets, electronics and home products.
Buying food and movie tickets also belongs to this.
• Online Travel: Customers buy tickets, book hotels and
purchase tour packages online.
• Classifieds: Portals connecting buyers and sellers by
providing classifieds can advertise their products
• Digital Media: Paid music, videos and games download
• Financial: Mobile Wallets, Online sale of insurance,
loans and mutual funds
Key Performance Indicators
• Order to Deliver – How soon customer gets the
product after clicking purchase.
• Glance View – No of times the product description
page is visited
• Out of Stock – Percentage stock out for a product
• CLV – Cust Lifetime Value, measures total spend of
customer on the platform
• Owned logistics
handling
• Technology platform
fees and maintenance
• Order management
•
•
•
•
•
•
Consumer Electronics – 40%
Apparels – 40%
Food and Grocery – 7%
Jewelry – 7%
Furniture – 4%
Others – 2%
Revenue and Cost Drivers
Revenue
• Seller commissions
• Product availability and pricing
• Private labels strategy
• Customer retention
Cost
• Production/Factory cost
• Warehousing/Inventory costs
• Technology platform fees
• Marketing
• Shipping and Returns
ICON, IIM Bangalore
Service
Marketing and Sales
Operations
•
•
•
•
•
Discounting
Advertising, promotion
Exclusive strategy
Customer retention
Market research
•
•
•
•
Delivery planning
Third Party Logistics
Omnichannel fulfillment
Return Management
Market Trends
Key Facts –
• Industry value - $30bn in 2020, expected $100bn in
2024 and $200bn in 2027.
• CAGR 27% growth rate
• Active internet users – 624mn
• Annual online shoppers – 190mn (11% of pop)
• Key Players – Amazon, Flipkart, Snapdeal, Myntra
Growth Opportunities –
• Tier 2&3 consists 90% YoY incremental growth
• Apparels growth leading – serviced to 97% pin codes.
40-50% new users’ first purchase item.
• Policy Support – 100% FDI allowed in B2B E-com
• Global Investment - FB, Google($4.5bn) invested in Jio
• Covid impact – Consumer behaviour shift due to
lockdowns, grocery and pharmacy gain momentum
News
Amazon and Flipkart are facing anti-trust investigations
ordered against them in India for allegedly promoting
select sellers on their e-commerce platforms
139
Electronics Manufacturing Industry
•
•
•
•
•
R&D & Product Dev.
Raw Materials & Components
Manufacturing & Assembly
Research
Product design
Conceptualization
Software development
Product engineering
• RM: Metal, silicon,
polycarbonates, glass
• Active (e.g. batteries,
diodes) and passive (e.g.
transformer) components
• Warehousing
• Refining and smelting
• Assembly of
components
• Mass production
•
•
•
•
•
Market Segments
• Consumer electronics & home appliances (TVs, video
gaming systems, mobile phones)
• Industrial electronics (industrial robots, automation and
control systems, electronic testing)
• Networking and Communications equipment (Routers,
LANS, Wans, switchboards)
• Medical devices (X-ray machines, ultrasound devices)
• Computer/ office equipment (servers, mainframes)
• Retailers
• Wholesalers
• Distribution planning
and forecasting
Porter’s Five Forces
Types of Players
• OEM (Original Equipment Manufacturer) - design
products based on the buyer’s specification and own
the rights; outsource manufacturing
• ODM (Original Design Manufacturer) - designs and
manufactures products on their own
• EMS (Electronic Manufacturing Services) - design,
assemble, produce, and test electronic components for
original equipment manufacturers (OEMs)
Distribution & Retail
•
•
•
•
Reverse logistics
E-waste collection
Processing
Recycling
Key Market Mrends
Bargaining power of suppliers (Low) – Low product
differentiation, low switching costs
Bargaining power of buyers (High) – High
availability of information for comparison
Competitive rivalry (High) – Small points of
differentiation and innovation increases rivalry
Threat of new entrants (High) – Capital intensive
and presence of economies of scale.
Threat of substitutes (Medium) – Frequent
innovations pose a threat
Growth Drivers
Driver
Examples
Technology Transitions
5G, IoT
Government initiatives and
policies
Export incentives, product
linked schemes
Liberalisation
FDI inflow
Consumer demand
Easy credit, urbanisation
ICON, IIM Bangalore
Reverse Logistics
Current market trends
• Electronics manufacturing is one of the fastest growing
industries globally. India is on its way to becoming a
hub with 3% market share
• Heavy stimulus by the Indian government to endorse
ease of doing business for the electronic system design
and manufacturing
• Potential challenges include recovery from the economic
contraction during the pandemic, rise in e-waste and
disruptive innovations impacting the established supply
chains
Covid Impact
• Underutilized plants, unavailability of labor has
impacted the core manufacturing of electronics in India
• Temporary closure of technology-oriented firms in the
US and Europe disrupted production due to the high
dependance on foreign R&D
• Sharp increase in raw material prices due to the
disruption in global transportation and logistics
140
Energy, Oil & Gas Industry
Exploration
• Surveys to assess
potential
• Identification of
suitable site
• Field Development
Planning
Production
•
•
•
•
Sanctioning of the project
Infrastructure creation
Strike Oil
Extract and split oil, water
and gas
Growth Drivers
•
•
•
•
Overall economic growth
Rapid technological advancements
Increased exploration of unconventional gas resources
Increased usage of petrochemical products
Storage
• Ground tanks is used
for crude and finished
oil products.
• Underground spaces
(reservoirs) is used for
natural gas
Porter’s Five forces
Key Performance Indicators
• Exploration and production output
• Lease operating expenditure
• Capital Project efficiency
Transportation
• Crude is transported by
tankers, pipelines, trucks
and rail roads.
• Natural Gas is shifted by
pipelines and LPG
tankers
•
•
•
•
•
Bargaining power of suppliers (ó) – Despite few
players, there are certain delays by govt in payments
Bargaining power of buyers (â) – Customers are
price takers. Accept the prevalent prices.
Competitive rivalry (â) – One – two players operate
in each of upstream, downstream segments.
Threat of new entrants (â) – Capital intensive and
presence of economies of scale.
Threat of substitutes (â) – Renewable energy
sources are yet to gain more traction.
Market Segments
Revenue & Cost Drivers
• Transportation (Major segment; Consumes approx
~55-60%)
• Industrial uses (Heating, Chemicals, plastics, Fertilizers
are few of the major industries. Consumes approx.
~30-35% )
• Residential and other usage(Consumes approx. 5-10%)
Revenue drivers
Crude Oil (~75%); Natural Gas (~20%); Others (~5%)
Cost drivers
RM consumed, Transportation costs, Employee expense
Capex drivers
Plant & Machinery, Buildings, Lands
Refining and Marketing
• Transform crude into
petroleum products
• 3 stages – separation,
conversion & treatment
• Marketed Via B2C and
B2B channels
Key Market Trends
• Growing Demand: India is the world’s third largest
energy consumer. Diesel demand is expected to double
by 2029-30. Refining capacity is also expected to
double by 2030.
• Rapid Expansion: GOI plans to invest ~ INR 7.5 Trillion
in oil and gas infrastructure in next 5 years. ~ USD 25
Billion investment is expected in exploration and
production by 2022
• Policy Support: GOI has allocated funds worth INR
12480 Cr for direct benefit transfer of LPG. OALP has
provided opportunities to increase investments.
• Supportive FDI guidelines: 100% Foreign Direct
Investment is allowed in upstream and private sector
refining projects. FDI limit for public sector refining
projects has been raised to 49% without any dilution/
disinvestment of equity in the existing PSUs
• Natural Gas Boom: There have been significant gas
hydrates discoveries in the KG Basin. Feasible
extraction may lead to a boom in natural gas
production
Source: Netscribers Industry report and IBEF report
ICON, IIM Bangalore
141
Financial Services – Asset Management
Middle Office
Front Office
Drive revenue generation
• Sales
• Marketing
• Customer Service
• Trading
•
•
•
•
•
Risk Management
IT
Corporate Finance
Portfolio Management
Research
Administration & Support
• Accounting
• Human Resources
• Payroll
• Operation
• Portfolio: Set of investments owned and managed as a
collective whole with specific investment goals.
• AUM: Asset Under Management - total market value of
the financial assets which a financial institution controls
• Net Asset Value (NAV): Value of mutual fund share
(fund's total assets-fund's liabilities)/outstanding shares.
• Asset class: Securities with similar features e.g., stocks,
bonds, cash equivalents, etc.
• Capital gain/loss: The difference between a security's
purchase price and its selling price
• Growth investing: Investment strategy that focuses on
stocks of companies and stock funds with rapid growth
• Value investing: Purchasing equity securities that you
believe are selling below estimated true value
Offer investment
products
• Investment Banks
• Brokers
• Dealers
Revenue & Cost Drivers
Key Performance Indicators
Asset management refers to the management of
investments on others’ behalf. It is built on the notion
that future is somewhat predictable, although it is not.
Sell-Side Firms
Back Office
Revenue drivers:
• Management charges: Charged on each Portfolio
Management Services (PMS) quarterly or annually
• Profit sharing: Fixed percentage on any profit made
by asset management company
• Entry load: One time fee of ~3% at the time of
purchasing PMS
• Others: Custodian fee, commission & transaction fee,
Demat account charges, etc.
Cost drivers:
•
•
•
•
•
Branch operation
Maintenance of communication and IT infrastructure
Market schemes implementation
Partnership management
Salary and employee benefits cost of staff
ICON, IIM Bangalore
Buy-Side Firms
Manage portfolios
• Pension Funds
• Endowment Funds
• Sovereign Wealth Funds
Key Market Trends
Current market trends:
• ESG (Environmental, Social and Governance) investing is
making asset managers offer new products and modify
their operations to deliver them.
• Global asset manager are investing heavily in data
strategy, artificial intelligence and digitization.
Future market trends/growth prospects:
• Consolidation through M&A: By 2030 the industry will
have a small club of giant asset managers and a bigger
one of niche managers.
• Competition will revolve around products for particular
needs e.g., products for retired vs. those for millennials
• Fed instructed banks to stop writing LIBOR contracts by
2021 end. SOFR (Secured Overnight Financing Rate)
will replace LIBOR by June 2023.
Covid Impact:
• Increased focus on cost optimization specifically
location strategy to downsize office space
142
Financial Services – Banking
Marketing
You
can
simply
Advertising,
salesimpress
support
your
audience
and
add a
is becoming increasingly
unique due
zingto
and
appeal
relevant
high
to
your
Presentations.
competition from NBFCs
Sales
You
can
simply
impress
Customer acquisition
is
your
audience
and
add
a
done through multiunique zing
appeal
channel,
focusand
heavily
on
to
your
Presentations.
relationship management
Products & Services
You can simply impress your audience and add a unique zing
Funding products - loans, securitization of assets, mortgages
and appeal to your Presentations.
Investment services in securities through capital markets
Other advisory services like asset & portfolio management
Revenue & Cost Drivers
Key Performance Indicators
Net interest margin (NIM): The difference between the
interest income earned and the interest paid by a bank
relative to its interest-earning assets like cash.
Current Account Savings Accounts (CASA): Type of
non-term deposit account. Has lower interest rate than
term deposits & is a cheaper source of funds for banks.
Gross non-performing assets (GNPA): The total value of
non-performing assets in a particular time period.
CRR/SLR: Percentage of cash reserves/liquid assets
that the bank must maintain which guarantees solvency
Key Market Trends
Cost
Drivers
Variable
Cost
Fixed Cost
Physical
Infrastructure
Digital
Infrastructure
Operational
Costs
Employee
Salaries
Employee
Efficiency
Interest on
Deposits
Revenue
drivers
Interest from
loans
Transactions
fees
Value Added
Services
ICON, IIM Bangalore
Digitization: Banking-As-A-Service platforms and open
banking, increasing need to protect data, strengthen IT.
Consolidation: Huge consolidation in public sector
banks to improve capital efficiency & remain profitable.
NPAs & credit extension: Increase in ratio of stressed
assets and bad loans leading to slow down in lending.
Covid Impact: Difficult and slow recoveries, increased
adoption of digital channels, greater cyber frauds.
Segments & Key Players
Provisioning
Cost (NPAs)
Industry Analysis
Supplier's power: Money supply controlled by RBI
Buyer's power/Demand: Increases with income, credit
worthiness. Financial inclusions scheme for rural citizen
Barriers to Entry: High due to regulations and licensing
mandates, investment in physical, digital infrastructure
Competition: High competition from NBFCs
Transactions
You can simply
impress
Processing
high volume
your audience
and add
a
transactions
at high
speed
unique
zing and
appeal
for
payments,
trading,
and
to
your
Presentations.
clearing & settlement
Investment
(bank's own)
Public Sector Banks: SBI – largest market share (23%)
3rd largest bank in India by market cap (383,312 Cr).
Other PSBs: PNB, Bank of Baroda
Privately Owned Banks (Indian): HDFC – largest bank in
India market cap (822,326 Cr), ICICI – 2nd largest by
market cap. Others: Axis, IndusInd
Foreign Banks: Citibank, Standard Chartered, HSBC
Rural Cooperative Banks: Saraswat Co-op Bank – largest
143
Financial Services – Digital Payments
Merchant Bank
Merchant
• Offline retailers like
Kirana stores, Dept
stores etc.
• Online merchants like
Amazon etc.
• Called acquirer
• Not involved in wallet
txn (such as Paytm)
• Earns margin from
merchant on $ value
Number and % of active customers
Average spend per customer
Average transaction per customer
Authorization rate
Fraud rate
Merchant discount rate (% of $ value paid by merchant to acquirer)
Interchange rate (% of $ value paid by acquirer to issuer)
Market Segments1
2024-25E
Card payments
~50%
~15%
Prepaid Instruments (Wallets)
~25%
~10%
17%
~60%
7%
~15%
UPI
Others
Revenue
drivers
•
Cost
drivers
•
•
1.
Transaction fee
(% of $ value + fee/txn;
charged to bank for use of
network)
Technology cost
Workforce cost
PwC, Indian Payments handbook (link)
Payment wallets
(Paytm)
•
•
Merchant discount rate
Value added services
(insurance, loans etc)
•
•
•
Technology cost
Workforce cost
Discounts/Campaigns
COVID Impact – V Shaped Recovery
Credit cards
54 Cr
31%
69%
29 Cr
27%
73%
Mar-20
Apr-20
Debit cards
46 Cr
29%
29%
73%
71%
71%
May-20
Jun-20
Jul-20
27%
ICON, IIM Bangalore
• Initiates transaction
• Authenticates using
PIN/OTP
• Digital payments: Past 4 years the sector has grown at
23% in volume and 21% in value
• Card payments: Have grown at a CAGR of ~20% over
the last 4 years. Transaction value growing at ~25%
• UPI: Constitutes 40% of P2M transaction. Has grown
at 414% since inception in 2016. 7X growth expected
in next 5 years
Growth Drivers
43 Cr
38 Cr
Customer
Key Market Trends
2018-19
Revenue & Cost Drivers
Payment network
(Visa, Mastercard)
• Called issuer
• Approves transaction
on behalf of customer
• May only be involved
in wallet loading
• Paytm, Visa,
Mastercard etc.
• Margin from both
issuer and acquirer
Key Performance Indicators
1.
2.
3.
4.
5.
6.
7.
Customer Bank
Payment Network
• Improved mobile & internet penetration
• Government initiatives (MDR rationalization, payment
acceptance, Jan Dhan Yojana, e-tolling)
• Tech-savvy population (use of wearables, need for
convenient payment)
• Innovations (investments by mobile wallets, nontraditional players)
144
Financial Services – Insurance
Product Development
Policy Administration
Marketing & Sales
•
•
•
•
•
• Market research
• New product developm.
• Risk assessment &
pricing
• Product optimization
New customer acquisition
Customer segment
Cross-selling
Churn prevention
Campaign management
• Request/ transaction
processing
• Payment administration
Industry1
Insurance Segments
8%
17%
75%
Life
Health
General
% of total premiums
33%
52%
3%
• Claims prevention &
mitigation
• Claims investigation &
settlement
• Disbursement
12%
Motor
Fire
Marine
Others
% of total premiums
• LIC, the only public player in the Life Insurance
segment, commands 50% market share, with 23
private players controlling the rest
• Motor Insurance has 37% share of General Insurance
• LIC
• SBI Life
• ICICI Prudential
• Max Bupa
• Star Health
• HDFC Ergo
• Bharti AXA
• IFFCO Tokio
• Bajaj Allianz
Revenue Drivers
• Insurance premiums
• Interest on investments (re-investing of premiums)
Cost
Cost drivers
Drivers
Key Information
• Regulator: Insurance Regulatory and Development
Authority of India (IRDAI)
• Reinsurance: Insurance cos transfer risk (max 30% of
sum assured) to reinsurance companies.
• FDI: FDI limit in insurance sector increased to 74%
from 49% in 2021
1.
IRDAI Annual Report 2019-20
Admin. Expenses
Licenses
Employee
salaries
Customer
service costs
Claim costs
Commissions
ICON, IIM Bangalore
Strategic allocation
Asset-liability mgmt.
Portfolio management
Risk modelling
• Life & Health Insurance: Fear of COVID has increased
purchase of life & health insurance policies, which now
cover COVID if the patient is affected after the policy is
signed.
• General Insurance: Challenges in automobile, travel,
hotel & infrastructure sector impacted general
insurance premiums. Post-COVID recovery in these
sectors has spurred an uptick in premiums.
InsurTech
Variable
Cost
Fixed Cost
•
•
•
•
Covid Impact
Key Players
Within General Insurance
Asset Management
Claims/Benefit Mgmt.
• Globally, insurtechs attracted a 180% YoY increase in
funding in Q1 2021. Funding of insurtechs in India
increased from $11mn in 2016 to $287mn in 2020.
• Reasons for growth: increasing digitization, COVID,
niche requirements, cheaper access, value-added
services, collaborations with incumbents, product
innovations catering to changing customer preferences
• Key segments: General insurance and B2C
• Key players: Digit, Acko, Policybazaar
145
FMCG Industry
Inbound Logistics
• Sourcing raw materials
• Quality testing
• Warehouse storage
Operations
Sales & Marketing
Outbound Logistics
• Manufacturing
• Production, Quality
Control
• Packaging
• Warehouse storage
• Distribution centre,
channel
• Order Handling
• Dispatch
• Delivery invoicing
•
•
•
•
•
Branding
Advertising, promotion
Customer, order mgmt.
Sales analysis
Market research
Servicing
• Warranty
• Maintenance
• Education, training
upgrade
Porter’s Five Forces
Industry Specific Strategies Adopted
Key Market Trends
1. Bargaining power of suppliers (â) - Huge companies
control pricing, fragmented commodity supplier
2. Bargaining power of buyers (á) - Low switching costs
3. Competitive rivalry (á) - Highly fragmented, strong
brands at a discount
4. Threat of new entrants (ó) - Investment in
distribution network, promotions, advertising
5. Threat of substitutes (á) – Narrow product
differentiation, price war
1. Strengthen rural network – introduce bottom of the
pyramid products in portfolio
2. Direct to Consumer channels
3. E-commerce
4. Green Initiatives – sustainability fund, set up energy
efficient plants
5. Analytics – ML for market trends, Oracle/SAP for ERP
6. International partnership
7. Social Media Collaboration
Key Facts –
1. 4th Largest sector of Indian Economy.
2. Valuation - $110bn (2020), $220bn (expected 2025)
3. Household & Personal Care (50%), Healthcare (31%),
Food & Beverages (19%); Urban(55%), Rural(45%)
4. 100% FDI allowed in food processing, single brand
retail, and 51% FDI allowed in multi-brand retail
5. New GST in India would simplify tax structure (USD
15bn gain per year expected)
Key Terms
Revenue & Cost Drivers
Growth Opportunities –
1. Sourcing Base (India - strategic sourcing hub for cost
competitive products)
2. Penetration (invest in food parks and labs)
3. Online FMCG (E-commerce to contribute 5% to FMCG
sales by 2022)
4. Rural Market (strong distribution, aspiration level)
5. Innovative Products (new, adaptable products)
6. Premium Products (increase in disposable income,
purchase trend from essential to premium)
1.
2.
3.
4.
5.
6.
7.
8.
Out of stock rate: ability to meet customer demand
Delivered On-time & in-full: delivery performance
Average time to sell: time needed to sell products
Cash-to-cash cycle time: Analyze cash cycle time
Supply chain costs: supply chain costs by category
Carrying cost of inventory: costs your inventory holds
On-shelf availability: Measure impact on your sales
Margin by product category: find profitable products
Revenue Drivers
1. Pricing
2. Promotion
3. Distribution
Cost Drivers
1. Raw material & processing costs
2. Distribution
3. Promotion
ICON, IIM Bangalore
146
Food Processing Industry
Raw Material
• Producers( Farmers,
Breeders, Fishermen)
• Inputs: Agri Produce,
Fruit & Vegetables, Meat
&Poultry, Marine, Milk
Processing
Warehousing
•
•
•
•
•
Cold Storage
Collection Agents
Cooperatives, FPOs
Direct Sourcing
Logistics
•
•
•
•
•
Market Segments
•
•
•
•
•
Cleaning, Sorting
Mixing, Griding
Pulping, Juicing
Pasteurization
Dehydration, Powdering
Grading
Quality Control
Packaging
Cold Storage
Food & Dairy Corp.
Cost Drivers
5.0%
20.0%
40.0%
100%
Grain Mill
80%
Beverages
60%
Dairy Products
40%
11.0%
53%
7%
12%
1…
18%
20%
0%
Importance of Food Processing
• The market size of Indian food processing industry is
estimated to be US$ 543 billion, accounts for 10%
share in India’s exports,
• At present, India processes less than 10% of its
agriculture output and only about 2% of fruits and
vegetables, 6% of poultry, 21% of meat, 23% of
marine and 35% of milk
• India majorly does Primary processing, i.e., milling of
grains, sugar and edible oils.
Key
•
•
•
•
•
Farm Gate
Transit
•
•
•
•
•
Carry & Forward Agent
Depots & Stockists
Wholesalers
Retail Stores & E-commerce
International Export
Key Market Trends
Cost drivers
Meat, Fish, Fruits
Distribution and Retail
Packaging & Transport
Processing Distribution Margins
Major Players
Player
Segment
Turnover. (INR cr)
KRBL
Rice Indusrty
3992
Britania
Fruits & Veg
1010
Amul
Dairy
52000
Parle Agro
Beverages
2,200
Food Processing_V13 (investindia.gov.in)
ICON, IIM Bangalore
•
Challenges:
Supply Chain Infra and Institutional gaps
Procurement dependence on APMC Markets
Season-ability of operations and Low Capacity
Utilisation
Lack of Product Development and Innovation
Inadequate link between production and processing,
lack of processable varieties of crops, meat and milk
Disruption due to Covid, Farm Law Protests
Key Growth Drivers
•
India is an agri-commodity hub, one of the leading
producer of multiple grains, fruits, milk and fish
•
India’s huge customer base of 1.3 Bn offers large
market
•
PLI schemes worth INR 10,900 crores introduced
under Atmanirbhar Bharat, separate govt ministry
•.
Increasing spend on packaged foods with urbanisation
•
Growth of organised retails and private labels in India
and expansion of e-commerce with digitization
Source: SustainabilityOutlook
Annual Report_mofpi.pdf (investindia.gov.in)
147
Healthcare Services Industry
Appointment Booking
• Walk-in
• Traditional Scheduling
• Scheduling via
appointment booking
apps like Practo
Hospital Visit
Diagnosis
• Primary / Secondary /
Tertiary Hospital
• IPD (In-patient care)
• OPD (Out-patient care)
• Emergency Section
• Medical History
• Screening based on
patient symptoms
• Diagnostic Testing
ARPOB – Average Revenue Per Occupied Bed
ALOS – Average Length of Stay
Occupancy Ratio - % Bed utilization
GP – General Physician
CP – Consulting Physician
OOP – Out of pocket expenditure
IP – In-patient
OP – Out-patient
• Medical procedure
• Clinical & ops support
• Doctor (GP, CP,
Specialist)
• Equipment & Supplies
Revenue & Cost Drivers
Key Terms
•
•
•
•
•
•
•
•
Treatment
OP Revenue
Diagnostics
Pharmacy
IP Revenue
Procedure
Room & medical
supplies charges
Diagnostics
Growth Drivers
•
•
•
•
•
•
Increasing awareness
Adoption of digital healthcare / telemedicine
Ayushman Bharat (Universal healthcare program)
Growing penetration of healthcare insurance
Increasing penetration in towns beyond metros
Higher prevalence of acute and chronic diseases
Cost drivers
Variable
Fixed
Rent
Medicines
Salary
Doctor – Revenue sharing
Maintenance
Diagnostics & medical supplies
ICON, IIM Bangalore
• Monitoring and
discharge
• Bill Payment
• Post discharge care
• Follow-up visit
Key Market Trends
Revenue drivers
Consultation
Post-Treatment
Current market trends
• Healthcare sector expected to reach $372bn in 2022
growing at a CAGR of 22% since 2016
• Rising instances of lifestyle diseases in urban areas
boosting demand for specialized care
• Growing medical tourism market due to availability of
quality services at relatively low cost
Future market trends/ growth prospects
• Public private partnership models for establishing
hospitals
• Digitization of healthcare records via higher adoption
of eHRs
Covid Impact
• Change in attitude towards personal health and
hygiene, health insurance and medical check-ups
• Adoption
of
digital
technologies
including
telemedicine
148
Hospitality Industry
Operations
Procurement
•
•
•
•
Food & Beverages (F&B)
Cleaning supplies
Room supplies
Contractual services like
internet, cable, security,
etc.
•
•
•
•
•
•
Guest Services
•
•
•
•
•
Front-desk operations
Housekeeping operations
Kitchen operations
Laundry operations
Revenue management
Staff training
Revenue & Cost Drivers
Key Terms
• Occupancy %: Total rooms occupied/ rooms available
Determines the efficiency of the promotional activities
pursued and business in general
• Average Room Rent (ARR): Room Revenue/Total rooms
nights occupied.
• Revenue Per Available Room (RevPAR): Room revenue/
Total room nights available. Indicates revenue
generated against total room inventory
• Online Ratings: Indicator of customer satisfaction.
Considerable influences customers’ decision.
Growth Drivers
• Emerging trend of staycation and workation (postCOVID)
• Rising dispensable income of the population
• Government push towards tourism circuits: religious
circuits, heritage circuits, etc.
• UDAN scheme leading to better accessibility
• Growing demand for medical tourism in India
•
•
•
•
Check-In/Check-Out
F&B services
Laundry services
Transportation services
Other on-demand
services
Revenue drivers
Room Revenue
#Rooms
Occupancy
Average Room Rate
Non-Room
Revenue
F&B
Laundry & other
services
Events & parties
Cost drivers
Variable
Fixed
Rent
Distribution commissions
Employee Salaries
Consumables
Maintenance
Power & fuel
ICON, IIM Bangalore
Sales & Marketing
Distribution
Advertisements
Promotions & discounts
Loyalty programs
Tour packages
• Online Travel Aggregators
(OTAs)
• Direct (Website/ app/
telephone)
• Walk-ins
• Tour-&-Travel Agents
Key Market Trends
Current market trends
• India is the world’s 7th largest tourism economy in
terms of contribution to GDP
• Industry has seen increase in ARRs by 8-10% y-o-y
basis low demand post covid
• RevPAR stood at ~65% discount w.r.t. pre-covid levels
due to low occupancy levels
Emerging Themes/Trends
• Health safety concerns lead to adoption of contactless
hospitality like mobile check-in services, etc.
• Focus on sustainability led by high customer
awareness from smart bulbs to sustainable materials
Covid Impact
• Pick-up in demand post first-wave was based on leisure
travel, staycations, weddings & higher F&B revenues
• Occupancy in Q1 FY2022 were at ~26-28% levels,
higher than ~10-12% of Q1 FY2021, basis demand
from hotels entering into contracts with hospital chains
149
Iron & Steel Industry
Raw Material
• Extraction of iron ore
from rocks
• Creating coke from
coal to fuel furnaces
• Alternative: Buying
Iron Production
Steel Production
• Blast Furnace: Pellets
of iron ore, carbon fuel
& limestone with
superheated air form
iron in molten state
• Oxygen Furnace (LD
Shops) : Molten
• Iron, Steel scrap & high
purity oxygen are used
in formation of steel
Industry Forces
Capacity
(in MnTPA)
Market Capitalization
(INR Cr.)
Revenue
Cost
Plant & Machinery
(70%)
Steel for construction
& automotive parts
Raw Material Cost
(45%)
Land including
roads (20%)
Steel for Railway
Parts
Power & Fuel costs
(10%)
Building (10%)
Sale of Semis & Byproducts
Salaries & Wages
(5%)
33
1,71,158
JSW Steel
18
1,81,061
4.37
55,328
Segment
KPIs
Growth Drivers
Infrastructure
EBITDA/ton
Growing demand
in all sectors
Construction
Capacity Utilization
Policy Support
Automotive
Crude Steel
Production/ROE/OEE
Increasing
Investments
ICON, IIM Bangalore
•
•
•
•
•
Pricing of all products
Sales team efficacy
Key a/c management
Customer Service
Support Tools
Market Trends
Industry Dynamics
Tata Steel
SAIL
Demand Planning
Service & Delivery
Performance
Outbound Logistics
Capex
Top Players
Name
•
•
•
•
Key Drivers
• Supplier Power: High. Due to limited iron ore reserves.
Companies opt for backward integration, weakening
supplier power
• Barriers to entry: High. High capex, fixed costs and
need for economies of scale
• Threat of substitute: High. Growing demand and use
of aluminum in automotive
• Buyer Power: Low. Low substitutability, only few major
player
• Rivalry: High. Entry of Exporters can further escalate it
Sales
SCM/ Logistics
• Industry Growth: Expected expansion of 250% over
the next 11 years (Expected CAGR: 8.69%) as per
National Steel Policy, 2017
• Growth in Per Capita Steel Consumption: Low per
capita steel consumption with a strong expected rise
fueling growth
• Increasing Investment: Ongoing consolidation of
companies & increased FDI is an opportunity for both
global & domestic players
• Innovation: Government directive to increase R&D
projects by spending at least 1% of the sales turnover
to facilitate innovation
• Import: Steel Scrap Recycling Policy to reduce import.
GOI increased import duties by 5% & imposed antidumping policies.
• Export: 30% duty imposed on export of iron ore to
promote supply to domestic companies
• The industry is witnessing consolidation of players
(Tata Steel acquired Bhushan Steel, opportunity for
global player to entry the market
150
IT and ITeS Industry
India is primarily an
outsourcing hub. A
combination of IT, KPO
and BPM services are
tailored to industry
specific value chains
IT
§
§
§
§
BPO/BPM
Knowledge Processing
§
§
§
§
Software R&D
IT Consulting
Development Services
Infrastructure Mgmt
Business Consulting
Legal Services
Data Analytics
Market Intelligence
§ ERP
§ HRP
§ CRM
Porter’s Five Forces
Revenue & Cost Drivers
Key Market Trends
Potential Entrants (Low): Projects are quite large for
commoditized services, and learning effects make a
considerable difference in service quality and cost
Revenue Drivers
§ Volume or the total number of person hours worked.
This is the unit economics in the IT services industry
§ Pricing determines the rate at which each hour is
charged to the client
§ Utilization is the ratio of the total billed hours divided
by the total billable hours available across the
company
§ Since most revenue is from exports, a favorable
exchange rate also results in better financial
performance
Global Delivery Model
Indian IT companies such as TCS are now opening service
hubs closer to larger onshore customers in UK and USA
to expand their global footprint.
Buyers (High): Services are now increasingly modular, and
buyers can assemble a suite of services from different
vendors and can switch out too
Substitutes (High): Philippines emerging as viable
alternative to India for outsourcing. Automation is also
rendering support services redundant
Suppliers (High): Specific suppliers of licenses and other
public cloud providers hold very high bargaining power.
Infrastructure is also commoditized
Rivalry (High): This industry is categorized by rivalry
between large firms, and the differentiation is very
minimal, pushing them to compete on costs
Cost Drivers
§ Cost of Revenue: These are expenses incurred by the
company in delivering core revenue. An example of
this are the salaries and travel cost.
§ Selling, General & Administrative: These are costs over
and above the CoR. An example could be company
marketing costs and costs of facilities.
ICON, IIM Bangalore
SMAC
Companies are increasingly looking to derive more value
from their IT investments and are now seeing their next
big opportunities in digital transformation in the Social,
Mobility, Analytics and Cloud verticals
Cyber Security
Governmental policy to combat cyber threats from
foreign entities is being structured, with IT companies
playing a large role in collaborations for their expertise
PE-VC, FDI Investments
This sector continues to be very attractive for investors,
attracting $70B in FDI over the last 10 years, $12.4B in
PE investments in addition to offshore hub development
by Google, Microsoft et. al.
151
Logistics Industry
Inbound Logistics
Operations
Shipment received at
customer service
centres / picked up
from customer
location
Outbound Logistics
• Damage-proof
packaging
• Material handling &
movement
• Product labelling
Revenue & Cost Drivers
Sector Composition
Segments
Market Share
Road transport
59%
Railways
35%
Waterways
6%
Air transport
1%
• Multiple Transport
modes: Road, Rail,
Water, Air, Pipelines
KPIs
• Delivery time
• Cost to order
• Warehouse
capacity
• Avg. inventory
Top Players
Player
Segment
Market Cap. (INR cr)
CONCOR
Multi-modal
39,893
Blue-Dart
Courier delivery
12,903
Transport
Corp. of India
Multi-modal
3,277
VRL Logistics
Parcel & priority
delivery
2,686
Revenue drivers
1. Domestic transportation
2. Import and Export
3. Value Added Services (same-day delivery)
Cost drivers
1. Transportation costs such as fuel
2. Warehousing and packaging
3. Shrinkage
4. Labor, order processing and administrative
5. Inventory
Growth drivers
1. Simplified freight policy
2. Improving road connectivity network
3. Improving railway and air connectivity network
4. Cold supply chain and other technology
interventions
ICON, IIM Bangalore
Sales & Marketing
• Clustering of packages
• Allocation for delivery
• Salesforce management
Servicing
• Delivery time
intimation
• Last-mile delivery
• Feedback
Key Market Trends
Current market trends
• Industry size: Indian logistics sector is valued at 215
Bn USD; forecasted to grow at CAGR 10.5% (201925)
• Rank: India’s rank has gone up from 54 in 2014 to 44
in 2018 in the World Bank’s LP Index (overall logistics
performance)
• Improved connectivity: Sagarmala, Bharatmala, & UDAN
projects aimed at improving connectivity and reach,
greater opportunities
• Warehouse Automation: Market valued at Rs 20,200
crores; evolution of technologies like AI, IoT, AGV and
Blockchain
• Emphasis on cold supply chain: Set to grow at CAGR
17-18% till 2022, primarily driven by pharma sector
• Growth in 3PL & 4PL providers as manufacturing
grows: to provide agility, speed and mobility
• Green logistics: Implementation of sustainable
practices due to technological evolution
152
Pharmaceutical Industry
Research & Development
Sourcing/API/Bulk Drug
Manufacturing/Formulation
Logistics
Exports
Issues: Long wait before
the drug reaches the
commercialization stage,
rising costs of developing
new drugs
Issues: Erratic supply chain,
disruption due to Covid-19,
high
dependence
on
supplies from China for raw
materials
Issues: Shift in demand for
formulations,
companies
keep shifting mfg. activities,
unpredictability and sudden
rises in demand for drugs
Issue: Lane routing affects
the freight costs and
domestic input costs,
restrictions on commute
and movement of goods
Issues: Declining raw
material supply impacts
production and export of
essential drugs, fears of
internal supply shortage
Key Players in India
•
•
•
•
•
•
•
•
•
Sun Pharmaceutical Limited : INR 273.28 Billion
Aurobindo Pharma Limited : INR 164.99 Billion
Lupin Limited : INR 159.55 Billion
Cipla Limited : INR 155.77 Billion
Dr. Reddy’s Laboratories : INR 144.36 Billion
Cadila Healthcare Limited : INR 120.50 Billion
Intas Pharmaceuticals Limited : INR 108.86 Billion
Glenmark Pharma Limited : INR 91.86 Billion
Torrent Pharmaceuticals Limited : INR 63.01 Billion
Key Performance Indicators
• Return on Research Capital Ratio: R&D is the major
cost for all pharma companies and not all drug trials
result in success
• Profitability Ratio: Operating & net margin determine
investment into future research projects and
also account for the high marketing expenditures in
the competitive pharmaceutical industry
• Liquidity and Debt Coverage Ratio: R&D expenditures
are mostly financed by debt. Hence, monitoring these
ratios will help analyze the health of the company
Cost Drivers
• Manufacturer Selling Price: Acquisition cost after mfg.
• Cost, insurance, freight charges (CIF), import tariffs
and
charges: Cost of importing an Active
Pharmaceutical Ingredient (API) or finished product into
the country
• Importer margin: Applied by importer who procures and
receives the delivering of imported drugs
• Distributor margin: Applied by wholesalers and subwholesalers for transportation and logistics of storage
• Retailer margin: Applied by retailers while selling the
drugs to the patients (last step of distribution chain)
• Taxes: At both national and regional levels
Opportunities
• Technology plays a critical role in enhancing the
outreach of medical facilities (e.g., telemedicine)
• Increasing Insurance coverage (Schemes like Ayushman
Bharat, Obamacare, etc.)
• Advanced Analytics across the value chain
• Strategic M&As to enhance company portfolio
• Improving operational efficiency to enhance bottom-line
ICON, IIM Bangalore
Porter’s Five Forces
•
•
•
•
•
Threat of New Entrants– Low (high barriers to entry,
high R&D costs, govt regulations and distribution
network need)
Bargaining power of buyers- Low-Moderate
Internal Competition–High (large no of small
fragmented players and large no of drugs going offpatent
Substitutes- Low (although Ayurveda, homeopathy
provide some options but are not widely accepted)
Bargaining Power of Suppliers- Moderate (difficulty
in procuring raw materials like APIs)
Covid-19 Impact
China is the biggest raw material provider for APIs across
the globe and India (70-75%). The slowdown in supply
chain due to Covid-19 will directly impact innovative drug
development and may cause short-term shortage for
generic drug producers like India as procurement of APIs
will become difficult in the current environment of
uncertainty and fears of further shortages.
153
Retail
Inbound Logistics
Operations
• Sourcing (demand
forecast, vendor ops)
• Network optimization
• Material handling
• Warehousing
Outbound Logistics
•
•
•
•
•
• Transforming inputs
into the final products
• Allotment and
scheduling to stores
Sales per square foot
Gross margins return on investment (GMROI)
Average transaction value
Customer retention
Conversion rate
Foot traffic and digital traffic
Inventory turnover
Shrinkage (loss of inventory)
6% 1%
28%
11%
20%
26%
Apparel & Footwear
Consumer Durables
& IT
Jewelry &
Accessories
Health &
Entertainment
Communication
Pricing and promotions
Store operations
Salesforce management
Fixed
Rent
Advertising
Variable
Depreciation
Direct material
Direct Labour
Revenue
Growth
Sales Margin
Rising income level
Advertising & marketing
Digital innovations
Loyalty & rewards
programmes
Increasing foreign
participation &
investments
ICON, IIM Bangalore
Service
• Delivery
• Installation
• After-sales
Key Market Trends
Cost
Industry Segments
8%
•
•
•
•
Order processing
inventory management
Warehousing
Distribution
Transportation
Revenue & Cost Drivers
Key Performance Indicators
•
•
•
•
•
•
•
•
Marketing and sales
Market Size - India's retail sector was estimated at USD
883 bn in 2020 and is projected to reach ~USD 1.3 tn
by 2024. It contributed ~40% to India’s consumption
and close to 10% of India’s GDP as of early 2020.
Current Market Trends
• Robust Demand – The retail industry achieved 93% of
pre-COVID sales in Feb’21 with consumer durables and
QSR increasing by 15% and 18% respectively.
• Increasing investments – Cumulative FDI inflows in the
retail sector stood at USD 3.44 bn between April 2000
and December 2020. India’s retail sector attracted USD
6.2 bn from various PE and VC funds in 2020.
• Policy – 100% FDI is now allowed in single-brand retail
trading and 51% in multi-brand retailing
Covid Impact
Covid-related disruptions have dealt a major blow to the
retail sector which is estimated to have lost more than
USD 1 bn (INR 75 bn) of sales due to the lockdown.
154
Telecom Industry
Tower
Infrastructure
Network Equipment and
Device Manufacturers
Consumer journey
Pre-sales
Support
Product/service
Offering Design
Call Completion Ratio
Average Revenue per User
Average Call Duration
Idle Time on Network
Tele-density
Churn
Network Operating Cost
Subscriber Acquisition Cost
Revenue & Cost Drivers
Revenue Drivers:
1. Internet and voice services
2. Cross provider calls
3. Affiliations (data monetization, device tech.)
Cost Drivers:
1. Spectrum costs
2. Network infrastructure and equipment
3. Operating costs
1.
IBEF; 2. TRAI
Purchase
Support
Market Segments
100.0%
98.3%
1.7%
Sector Composition
50.0%
0.0%
29.8%
70.2%
0.0%
Wireless Wireline
Urban
Rural
Indian Service Providers’ Market Share2
Wireless Subscriber Share
100.00%
24.26%
10.72%
35.06%
0.00%
Reliance Jio
Bh arti Airtel Vodafon e Id ea
ICON, IIM Bangalore
BSNL
• Growth in Rural Demand: Tele-density of rural
subscribers reached 59.48% in February 2021, from
58.61% in February 2020
• State Investment: In 2021-22, the Department of
Telecommunications has been allocated $ 8Bn and the
union budget allocated US$ 1.9 for telecom
infrastructure
• Government Initiatives: 100% FDI, satellite based
Narrow band IoT, and the Phased Manufacturing
Programme
• Development opportunities: India's 5G subscriptions to
have 350 million by 2026. accounting for 27% of all
mobile subscriptions
0.72%
29.24%
50.00%
Account
Management
Key Trends in Indian Telecom
100.0%
50.0%
Consumers
Delivery and
Activation
Market Segments1
KPIs
1.
2.
3.
4.
5.
6.
7.
8.
Content
Providers
Network / Service
Operators
Application
Providers
Others
Growth Drivers
1.
2.
3.
4.
5.
Growing mobile penetration
Increasing rural penetration
Relaxed FDI norms
Reduced license fee
Increasing internet access
155
For any queries, reach out to us
ICON – Consulting Club
IIM Bangalore