IIM BANGALORE
CASEBOOK 2019-20
Volume 10 (B)
ICON – Consulting Club,
IIM Bangalore
1
FOREWORD
INDEX
Description
Alvarez and Marsal
Page No
3-9
A. T. Kearney
10-27
Auctus Advisor
28-33
Bain & Company
34-48
Boston Consulting Group
49-58
Deloitte USI
59-63
L.E.K. Consulting
64-66
McKinsey & Company
67-99
Roland Berger
100-104
Strategy &
105-111
This casebook documents the interview experiences of students across consulting firms
to assist the students of IIM Bangalore in their preparation for case interviews during
placements. The aim of sharing these experiences is to inform students about the caseinterview experiences of past batches and to help them prepare for their placements
accordingly. The experiences listed below are not necessarily the best way to handle case
interviews. They only serve to give students an idea as to 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 placement process over the past five
years. The interview experiences have been sorted firm-wise.
Special thanks to all the contributors.
Team ICON wishes you all the very best for summer placements!
2
Alvarez & Marsal
3
Unconventional – TRANSPORTATION
Sector : Transportation
Type of Case : Unconventional
Interviewer
Why don’t you start with looking at the qualitative factors first. What
problems do you think are faced by the drivers and customers?
Candidate
Sure sir. To begin with, I would like to look at the potential problems being
faced by drivers. The daily revenue of a driver can be calculated by
multiplying the number of rides per day with the revenue earned per ride.
Hence, the problems a driver might face can be due to a lesser number of
rides being offered to the driver on the platform, or due to lesser revenue
earned per ride. Another source of problem can be the fact that
customers cancel their rides when the driver is about to reach the pickup
location, leading to lost time and fuel in travelling this distance.
Interviewer
Those are good points. What about the problems being faced by the
customers?
Problem Statement: Our client, a company in the transportation business, is facing
problems. Identify the problems and give recommendations.
The Interview
Interviewer
Good morning Candidate, how are you?
Candidate
Good morning sir, I am good.
Interviewer
Very well. So tell me something about yourself.
Progress
The Candidate gave the prepared answer. The interviewer then asked
questions about one of the Candidates’ internships and his value
addition to the firm as an intern.
Candidate
Okay, so let’s get into the case. Our client, a company in the
transportation business, is facing problems. The client wants us to
identify the problems and give recommendations.
I think customers face a number of issues. Sometimes drivers cancel rides
based on the destination. Many times it takes a long time for a customer
to be assigned a driver. Further, sometimes the driver is actually different
from the one shown on the platform. All this leads to a lack of trust in
using the firm’s platform.
Interviewer
What problem do you think all this creates for the firm as a whole?
Candidate
Before proceeding with solving the case, I’d like to ask a fewclarifying
questions about the client.
Candidate
(After thinking for a minute) I think the main problem that theclient
might have to deal with is the Customer-Driver Expectation Mismatch.
Interviewer
You can assume the client to be a cab aggregator like Uber/Ola and
proceed with the case.
Interviewer
Now that you have identified the main problem, what recommendations
would you like to give to the client?
Candidate
Okay, so we can look at the problems being faced by the client in
quantitative/financial terms, or qualitative terms, from the point of view
of the customers and drivers. Do you want me to look at it from both the
angles, or should I be focussing on one?
Candidate
I think a robust two-way rating system can be implemented by the firm, if
not already present. From the driver’s point of view, the client can hold
training sessions to improve customer handling by the drivers. The client
can also try to educate the customers to be more sensitive towards the
drivers. All this can help reduce the expectation mismatch.
Interviewer
4
Unconventional – TRANSPORTATION
Approach
Problems being faced by a firm in the transportation business
Qualitative
Factors
Quantitative
Factors
Drivers
Ridesper
day
Revenueper
ride
Ride
cancellations
Customers
Ride
Cancellations
Longwaiting
times
Different
driver
Problem :Customer-Driver Expectation Mismatch
5
Market Entry – WINDMILL MANUFACTURER
Sector : Energy
Type of Case : Market Entry
Problem Statement: AChinese windmill manufacturer has decided to expand to the
Indian Market, what factors should they consider for planning this expansion?
The Interview
Interviewer
Assume that the company is financially capable of setting up a plant. Also,
the existing manufacturing unit is operating at 50% of its total capacity.
Candidate
Then we can consider manufacturing at the Chinese plant for the initial
days in case transportation costs are lower than the fixed cost of setting
up plant. It would also help in estimating demand for windmills and
therefore making a decision on the feasibility of an Indian manufacturing
unit and its capacity.
Interviewer
Good Morning Candidate, how are you doing today?
Interviewer
Are there any other factors that you would consider?
Candidate
Good Morning Sir, I am doing good.
Candidate
Interviewer
Very well, let’s get started with the case right away.
Your client is A Chinese windmill manufacturerlooking to set up shop in
India. What factors would you take into account?
Yes. I will look at the legal and political aspects of setting up
manufacturing unit as well as for transportation. For example, are there
any additional subsidies for manufacturing and/or transportation of
windmills since that would affect the total cost. Also I would see if there
any legal constraints for both options.
Candidate
Okay, so a Chinese manufacturer of windmills is looking to enter the Indian
market. Have they made the decision or do you want me to analyse the
overall feasibility of expanding? Also, when are they planning to enter the
market?
Interviewer
Great. I think we can end here.
Interviewer
Yes, they have decided to expand to the Indian market as soon as possible,
but they have not decided the manner of expansion.
Candidate
Alright, so are they just going to export the windmills to India or are they
going to set up manufacturing facility here?
Interviewer
They are weighing both options, what factors would you consider while
making this decision?
Candidate
Firstly, I would consider the total cost of setting up a manufacturing facility,
along with the legal and political aspects of it. Is the company financially
capable of bearing the cost of set up. Next, I would examine the utilisation
of the existing Chinese manufacturing units.
6
Market Entry – WINDMILL MANUFACTURER
Approach
Options for
expansion
Existing unit
Capacity
Utilisation
Transportation
costs
Setting up
unit in India
Set Up costs
Political, Legal
concerns
7
Operational Optimization - GARAGE
Sector : Services
Type of Case : Unconventional
Candidate
I will start by making a flow of the entire garage (Starts drawing a flow
diagram while showing the interviewer). I will assume that the cars come
in and go to a washing area post which regular maintenance like oil checks
and tuning are carried out. If there is some major issue the cars move on
to specialized tasks. After these are over, tire pressure is checked and the
cars leave. Do you want me to build a more detailed flow?
Interviewer
No. This is sufficient. Tell me how you will calculate efficiency.
Candidate
Since process is manual, throughput will be varying within the day. I will
segregate processes and then calculate hourly, shift-wise and daily
throughput per unit of labour employed of each individual process.
Interviewer
Okay. How do you plan on improving efficiencies
Candidate
Since the client does not have enough vehicles to warrant the cost of an
automated system, I will focus on the trend of hourly throughput within a
shift. As the day progresses, it is likely that the efficiency of workers goes
down. To counter this we can strategically position breaks so that the
workers get time to recover a bit before resuming work. This will increase
the average efficiency of each shift. Also, we can consider decreasing the
duration of shifts in a day while increasing the number of shifts so that
new workers coming in the new shifts will perform more efficiently. This
needs to be weighed against the cost of employing additional labourers.
Interviewer
That’s a fair point. What are the costs that the garage incurs?
Candidate
The garage incurs fixed costs such as cost of equipment like water
compressor, generator etc., rent, electricity, other utilities and wages of
workers and variable costs like consumables such as brake fluid , oils and
grease and costs of spares.
Interviewer
Which of these costs constitute a major portion of the expenses for the
client?
Problem Statement: There is a garage operator who is looking to improve efficiencies
and reduce cost. How will you go about it?
The Interview
Interviewer
Good Morning Candidate, give me a short introduction of your self.
Progress
Answered. She was interested in the candidate’s work experience, typical
of most A&M interviews.
Interviewer
Great, let’s get started with the case. Your client is a small cab aggregator
owning about 100 cars. He operates a garage to maintain these cars. How
can we improve the efficiency and reduce costs in his garage?
Candidate
Okay. So do we want to look at improving costs and efficiencies for just the
garage or the overall business?
Interviewer
Lets focus on the garage for now.
Candidate
Alright. I would like to know a little more about the garage itself. Does the
client use the garage just for the cars he own or does he provide services to
others as well? Also, what types of services are covered in the garage? Is
there a flow to the process? How often are cars maintained? What is the
daily volume of cars that the car services on an average? Are operations
manual or automated?
Interviewer
The garage is meant for the vehicles that the client owns. Make
assumptions regarding the flow of the garage. Assume all cars that the
client owns undergo some for of service in the garage on a weekly basis.
Assume most operations to be manual.
8
Operational Optimization - GARAGE
Candidate
Fixed expenses like wages, rent and utility will constitute the major portion
of expense. Other fixed costs like machinery is depreciated over the life of
asset and hence should not be high. Variable costs for regular maintenance
should be fairly low as well
Interviewer
Ok, good. That will be all Candidate. Please wait outside for your next round.
Approach
9
A.T. Kearney
10
Mineral Ore Processing – Efficiency Improvement
Sector : NaturalResources
Type of Case : EfficiencyImprovement
Problem Statement: Your client is a typical mineral ore processing company based out
of India. Even though the company is profitable, it has seen that its margins are stable
whereas the margins of its competitors are steadily rising. It wants to know what NEW
can be done?
Interviewer
There are around 15 different kinds of minerals processed, even ores
themselves have several kinds. The client first procures the raw material
which is followed by the Mineral Breaking process, further broken minerals
are put in a furnace for the soaping process. Each kind of ore has a
different temperature to be set at for the separation of different kinds of
minerals to take place. This is followed by shape/ size processing.
Candidate
In the first step of procurement, the variability in procurement of minerals
of different kinds from different suppliers could be used find trends and
the efficiency could be increased by acting forward in a way which reduces
any holding costs/ ordering cost. In the metal breaking process, optimal
size of each mineral could be found out to make the remaining process
faster. In the soaping process, one can identify the various parameters such
as temperature, pressure, chemical mix, raw material mix, quantity etc
which is essential to the process. Basis that, we can prioritize on the most
significant one to find the best optimal parameter solution for an efficient
separation. For shape and size processing, the best optimal parameters in
the earlier process should take into account for reducing wastage in shape
and size processing.
The Interview
Interviewer
Good Morning, Let’s see what is there on your resume (Analyticsbased
experience)
Candidate
Good Morning, Sir. Sure, Sir.
Interviewer
Okay, let’s now move to the case. ~ Explains the problem
Candidate
Could you let me know in last how many years is the trend being witnessed
by the client? Is it for any particular business division or customer target
group or geography?
Interviewer
Trend was visible in the last one year, and it is for the entire business as a
whole, all customers in general , all over the country.
Interviewer
Okay, good. Is there any other thing one can do to improve process
efficiency?
Candidate
Do we have any information on what has the competitors done in the past
one year?
Candidate
Interviewer
They used data analytics. The client wants us to use analytics to find ways
to improve margins ultimately.
Candidate
Profit margin depends upon gross revenue, costs and product mix. How
many different types of minerals does the client process? To use analytics, I
would go ahead with the analysing the client’s value chain to find ways to
improve efficiency and thus margins? What is its value chain?
We try to find process gaps to work upon them through business process
re-engineering. We can identify processes which can be automated.
Optimal size of furnace could be identified to reduce costs and wastage.
Any redundant/ non – value adding process’s time could be reduce or
completely removed.
Interviewer
Good, thank you.
11
Mineral Ore Processing – Efficiency Improvement
Approach
Profit Margin
Revenue
Procurement
Reduce holding
and ordering
cost
Cost
Product Mix
Breaking
Soaping
Best optimal size
for each mineral
Prioritize the
parameters such
as temp,
chemical mix etc.
to find best
optimal solution
Separation
Make it faster/
Automate
Shape/Size
Processing
Reduce wastage
12
Telecom – Profitability Improvement
Sector : TelecomSector
Type of Case : Profitability Improvement
Problem Statement: Your client operates in the telecom sector and is in huge losses. It
wants you to figure out why and suggest some ways to improve the condition.
The Interview
Interviewer
Good Morning, how are you doing?
Candidate
Good Morning, Sir. I am doing good, thank you.
Interviewer
Okay, so our client is in the telecom sector and is in losses. What to do?
Candidate
Is this specific to our client or is the situation similar for other players in
the same space as well?
Interviewer
Our client was in losses since 2-3 years. However, now the losses have
increased significantly as compared to others. Also, our net losses are
much higher than other players in the market.
Candidate
What does the client do exactly?
Interviewer
They are into manufacturing, setting up and maintenance of cable towers
for telecom operators, end to end.
Candidate
Do we have any information on whether margins are much lesser for a
particular geography, any particular business customer?
Interviewer
No such trend is visible. It is uniform across geographies and customers.
Candidate
To evaluate the reason behind losses, I would divide it into Costs and
Revenue. Either our costs are much higher or revenue too low. Are we
getting paid much lesser than our competitors?
Interviewer
No. This approach may not be helpful. Look at the costs. It is higher. Can you
think of a more practical approach to look at it?
Candidate
Should I do competitor benchmarking looking at their margin trends and
identify which cost proportion is higher for us?
Interviewer
Good idea, but how will you do that?
Candidate
We can look at theclient’s and its competitors’ financial statements.
Interviewer
Okay, yes. What are the different components do you expect in the balance
sheet for the client?
Candidate
The balance sheet comprises of assets and liabilities. Its assets consists of
the cable tower, related infra and equipment, cash etc. The liabilities are the
debts. I assume, it is a asset heavy industry.
Interviewer
Yes, you may so. What can you infer from this? What do you expect to be
significant in income statement?
Candidate
For asset heavy industry, from accounting point of view, depreciation may
be a major cost. In case our client has borrowed more for its capital
investments, the interest it may be significant as well. We can look at the
EBIDTA and EBIT margins for our client and competitors.
Interviewer
Right, our EBIDTA margin is around 10%, a little higher than competition.
But our EBIT margin is negative 5%. Much lower than others. Any other
industry where this is seen? What do you suggest to the client?
Candidate
This means that our depreciation costs are very high. Hotel and airline
industry are asset heavy as well. From accounting perspective, we can
increase the machine lifetime by investing in better or technologically
advanced ones. We can try to increase the salvage value. We may also want
to see if some business model innovation or other sources of revenue is
possible. Thank you.
13
Telecom – Profitability Improvement
Approach
Liabilities
Loss
Interest
Revenue
Cost
Balance Sheet
Depreciation
Income Statement
Assets
14
Telecom – Customer Service Improvement
Sector : TelecomSector
Type of Case : Customer ServiceImprovement
Problem Statement: Your client operates in the telecom sector & has witnessed
unsatisfaction from customers. We need to figure out the reason & suggestsolutions.
The Interview
Interviewer
Good Morning, how are you ?
Candidate
Good Morning, Sir. I am fine, thank you.
Interviewer
Okay, so our client is in the telecom sector and has faced dissatisfaction
from customers. Can you help me in finding why ?
Candidate
Is this specific to our client or is the situation similar for other players in
the same space as well? Also, where does the client operate and what is its
value chain?
Interviewer
The client is based out of Kenya and is the market leader. Others are
dissatisfied with others as well. The client provides all kinds of services call,
data etc. It operates its own customer care centre.
Candidate
Does it seem that the reason behind customer dissatisfaction is same
across players?
Interviewer
It doesn’t seem so. The service is top-notch, that is why the client is risen
to the top. There seems to be an internal problem.
Candidate
Okay, if there is an internal problem I would try to find out the customer
pain point. I would break into three parts, first is the before getting the
product, second during the use of the product and third is customer
service. Since service is second option neglected.
Interviewer
Candidate
So, customers are not happy with the customer service. We can break the
entire customer journey. First they dial a number, fill in the start up menu
followed by a waiting time to connect with the personnel and finally
problem resolution.
Interviewer
Okay, what are the typical reasons for which customers dial in?
Candidate
Customers could call to get some information on offers, recharge,
complaints on service, to stop or renew a plan and other general queries.
Where does the problem lie?
Interviewer
Yes, customers wait too long before they speak to someone.
Candidate
If the wait time is long, two possible factors arise. Either interarrival rate is
high and variable or the service rate is low and variable. Are there any
shortage of manpower?
Interviewer
Hmm, not really.
Candidate
It seems the arrival rate is high and variable. Do we have the breakdown of
the proportion of calls we get for general queries and specific ones?
Interviewer
There is a significant proportion of calls for both, and our client did not
account for general queries calls while optimizing tele-callers. What should
the client do?
Candidate
Seems like this is the issue. The client can either increase its manpower or it
can try to reduce the calls for general queries. This can be achieved by two
ways, the process can be automated or information that is generally sought
in such queries can be tried to be conveyed to them through other
mediums.
Interviewer
Yes, right. Thanks.
Yes, there is no problem in first part also.
15
Telecom – Customer Service Improvement
Approach
Internal Problem
Customer
Service
Information to
get product
Service
StartUp
Menu
Call
Low Service
Rate
During product
usage
Process
Customer
waits
Connect with
Teller
Problem
Solving
High ArrivalRate
General Queries
Existing
Customers
Specific
Problems
New Customers
16
Unconventional – SPORTS
Sector : Sports
Type of Case : Unconventional
Candidate
Sir, there are 3 major steps to be looked at:
1. Players: We can collaborate with schools, colleges etc
2. Sponsorship
3. Stadium
4. Promotion
Interviewer
Okay, what are the indicators you’ll look into ? Can you Categorisethem?
Candidate
Basically there can be 3 main categories:1. Awareness:- We can go through online channels like YouTube,
Facebook, WhatsApp etc as well as offline channels.
2. Accessibility:- There are mainly 2 types of players who watch hockey.
A Those who possess keen interest
B Those who don’t possess keen interest we can try to position it in
such a manner that no other game is scheduled at that point in time
3.Acceptance:- We can try to make a documentary like Dangal so that this
game gets acceptance
Interviewer
Alright can you tell me why Pro Kabaddi league was so successful?
Candidate
They tried to associate the names of the team with the states. So if we
can use same model ho connecting with the states we can be successful.
Interviewer
Thank You.
Candidate
Thank You.
Problem Statement: Devise a strategy to collect funds for upliftment of hockey in India.
The Interview
Interviewer
Good Morning Sahil, let’s get started with thecase directly?
Candidate
Good Morning Sir. Yes, sure.
Interviewer
Great. : Devise a strategy to collect funds for upliftment of hockey in India.
Progress
Preliminary questions asked on:
1.Do I need to look at ground level or national level or increase the
participation on international level.
2.Another way could be increasing the revenue of Hockey Federation of
India.
Interviewer
Take it to be an increasing the revenue of Hockey Federation of India.
Candidate
Some of the ways could be
1. Increased budget spending by Government.
2. Ewe can go for corporate sponsors
3. We can target the NGO’s who are focusing on sports
Interviewer
Sounds right, what if we want to organise something like Kabaddi Pro
league in Hockey?
17
Unconventional – SPORTS
Approach
Cost
IncreasedBudget
Spending By
Government
Corporate
Sponsors
NGO’s
Organising A Hockey League
Accessibility
Awareness
Online
Acceptance
Offline
18
Estimate Sales– MART
Sector : Retail
Type of Case : RevenueEstimation
Candidate
Let's assume that the average number of people in a family are 5
members. So approximately 2700 families will be visiting the mart.
Interviewer
You are in right direction proceed further.
Candidate
Okay, Is there any data on the income of the families?
Interviewer
Nothing like that, assume whatever you like.
Candidate
Good Morning Candidate, let’s get started with the case unless you have any
preliminary questions for us?
20% of the families are high income and the average income would be Rs
1 Lacs per month and they would be spending 10% on our mart.
Interviewer
Go ahead.
Candidate
Good Morning Sir. Sure, we can start with the case.
Candidate
Interviewer
Well. Your need to predict sales of a newly opened Mart in Delhi. What are
different things they need to keep in mind to increase sales.
Candidate
What type of mart is it? Any specific goods?
30% are middle class and they would be spending 5% of their average
income of Rs 40,000
50% are middle class and they would be spending 2% of their average
income of Rs 15000
Interviewer
OK Thank you.
Interviewer
No , Nothing as such. It is a mart like big bazaar.
Candidate
Thank you
Candidate
Alright, Delhi’s Population is around 2 crores. The area ofDelhi is
1,484 km². So, 13531 is the population per km2. Is my approach correct?
Assuming that 10% of the people would be visiting the mart every month.
So 13500 people approx. will be visiting the mart.
Interviewer
Very well, how would you go about finding the sales?
Problem Statement: Topredict sales of a newly opened Mart in Delhi. Whatare
different things they need to keep in mind to increasesales.
The Interview
Interviewer
19
Estimate Sales– MART
Approach
Sales of a mart
13531 population
per km sq.
2 Crore
Population
5member
per family
10% of
people will
visit
Starting Pop:
2700 Families
High Income
20% of the families=540
1,00,000 income out of which
10% can be spent= 10,000
Total=5400000
Middle Income
30% of the families=810
40,000 income out of which5%
can be spent=2000
Total=16200000
Lower Income
50% of the families=1350
15,000 income out of which2%
can be spent=300
Total=405000
Rs22005000
20
Estimate Sales team– Whiskey Manufacturer
Sector : AlcoholicBev
Type of Case : RevenueEstimation
Problem Statement: Your client is a Whiskey manufacturer and wants to deploy a sales team
across Bangalore city. You must find the number of people required and design their pay-out
strategy.
Candidate
We’ll break the problem into 3 parts: Targeting, Segmentation and Field
force deployment. First, we’ll identify all the targets i.e. Wine shops in
Bangalore city. Then we’ll segregate these stores into various segments
based on their sales data.
Interviewer
How would you segment if you don’t have theirsales data?
Candidate
We can use a proxy parameter of “number of people visiting the stores”
which can be done by selecting some stores in the city - a representative
sample- and finding number of people visiting weekly and then
extrapolating it to yearly footfall. This is done by assuming that weekly
demand is constant throughout the year.
Interviewer
Ok. Go ahead.
Candidate
Then using Bangalore’s avg. consumption pattern, either through surveys
or market research data, we can find the percentage of people visiting to
purchase whiskey and their average spend. From this we can get sales of
whiskey in each of the stores. Then we can decile the stores based on this
data and club them into High (H), Medium (M) and Low (L) categories, e.g.
D10-D8 in H, D7-D5 in M and D4-D1 in L category.
Interviewer
What is use of deciling the stores?
Candidate
By deciling we can clearly identify different segments of stores, where H
represents high amount on sales, while L represents store with low
amount of sales. Since the number of salespeople required for each store
category will be different, thus deciling will help us in deploying 3 different
types of sales teams.
Interviewer
Okay that makes sense. How would you calculate the number of
salespeople?
The Interview
Interviewer
Good Morning Candidate. Can you briefly tell about your roles in
your previous work and the projects that you handled?
Candidate
Good morning sir. I have worked as an Associate with a consulting firm,
working mostly with U.S. based pharmaceutical clients, handling their sales
& marketing strategies focused on field-force design & Incentive
compensation.
Interviewer
Great, can you briefly explain more about the field force (sales-team)
design.
Candidate
Gave a well-prepared answer.
Interviewer
Ok, so let’s get started with the case. Your client is a Whiskey manufacturer
and wants to deploy a sales team across Bangalore city. You must find the
number of people required and design their pay-outstrategy.
Candidate
What all places are we targeting? Are we targeting just the Liquor outlets
or also the restaurants, pubs and clubs where liquor is served?
Interviewer
Let’s just focus on the liquor outlets (Wine shops).
21
Estimate Sales team– Whiskey Manufacturer
Candidate
Then either through some benchmark data or by deploying some
salespeople in 2-3 stores of each of 3 categories, we can find number of
salespeople required in each of the category to market our product to all
the whiskey buyers and find its conversion ratio. Then we can multiply this
number (for different categories) to total number of stores in each
category to get our total number of salespeople.
Interviewer
Okay. How would you design their incentive plan?
Candidate
In the initial years we can just focus on sales-based compensation. In this
for every bottle purchased by a buyer after being detailed by our sales
rep., he/she will get a fixed margin for every bottle sold. This extra income
will be separate from their fixed salaries.
In the later years, we can focus on target-based compensation, where
every rep. will have a fixed yearly (or quarterly) target to achieve and their
compensation will be based on as a percentage of target achieved.
Interviewer
Very Good, we’ll see you in the secondround.
Candidate
Tank you.
22
Estimate Sales team– Whiskey Manufacturer
Approach
Salesforce
Estimation
Field Force
Deployment
Segmentation
Targeting
Number of people
visiting the store
Estimating Bangalore’s
Consumption Pattern
High
D10-D8
Medium
Low
D7-D5
D4-D1
How Will You Design The
Incentive Plan?
sales-based
compensation
Target Based
Compensation
23
Media Cost Reduction- AUTOMOBILE
Sector : Digital Marketing
Type of Case : Media CostReduction
Problem Statement: Your client is an automobile company and wants to reduce its
media costs. How will you go about it?
Interviewer
Perfect. What are the factors that determine the cost of the
advertisements on radio, newspapers and TV?
Candidate
Sure Sir. For radios, the cost of the advertisement depends on the timing
(higher prices for evening and morning timings reflecting the pre and post
office hour listener traffic on the radio), duration of the advertisement,
the frequency of the advertisement (number of times a day and the
number of times in a week/month) and celebrity endorsement costs. In
the case of the newspaper, the cost depends on the location of the
advertisement in the newspaper (1st page, last page have higher prices),
the size of the advertisement, the day of the advertisement (Sundays have
higher prices), the colour of the advertisement (black and white
advertisements will have lower prices) and the celebrity endorsement
costs. In the case of the TV advertisements, duration of the
advertisement, the frequency of the advertisement (number of times a
day and the number of times in a week/month), celebrity endorsement
costs and the timing of the advertisement (advertisements between
popular TV shows will be priced higher and advertisements during the
breaks of key cricket matches in India will be priced higher).
The Interview
Interviewer
Good Morning Candidate, how are you doing today?
Candidate
Good Morning Sir, I am doing well.
Interviewer
Very well, let’s get started with the case right away. Your case for today is
related to digital marketing since you have done an internship in Havas
Media. Your client is an automobile company and wants to reduce its
media costs. How will you go about it?
Candidate
Thank you for the question. I will take a moment here to gather my
thoughts.
Interviewer
Sure.
Interviewer
Candidate
With respect to media costs, would you like me to delve into online or
offline media?
Perfect. Can you tell me the factors that determine the cost of the
advertisements on websites/apps and online media in general?
Candidate
Interviewer
Both, can you list down the different types of online and offline media.
Candidate
Definitely. Offline media consists of advertisements in the radio, newspaper
and TV. Online Media consists of advertisements on various sites such as
news websites, apps, Google and social networking sites. The primary
social networking sites are Facebook, Instagram, Youtube and Linkedin.
Sure. In terms of online media, the cost is dependent on the size of the
advertisement and the amount of space it occupies on the website. The
cost also depends on the frequency with which it is shown to the site
visitors (cost per impression). Advertising agencies also charge based on
the click through rate and the lead generation taking into account the
bounce rate.
Interviewer
Perfect. That will be all.
24
Media Cost Reduction- AUTOMOBILE
Media Costs
Offline Media
Radio
Online Media
Websites
Apps
Google
Social Networking
TV
Linkedin
Newspaper
Facebook
Youtube
Instagram
25
Manpower Utilization – AGRICULTURAL EQUIPMENT MANUFACTURER
Sector : Manufacturing
Type of Case : Unconventional
Problem Statement: The client is an Indian agricultural equipment manufacturer. The
client feels that there is some issues with manpower utilization at its plant. How can
you help the client?
The client has only 1 manufacturing plant in India. It sources raw material
and parts, assembles the agricultural equipment. These markets are
characterized by changing nature of product.
Candidate
I would like to start by identifying the bottleneck in the process – if there
is efficiency issue or some problem with capacity.
Interviewer
Okay. There is some issues with the paint process in the plant. The
process rate at the paint station was 4 units per hour, while all other
stations were running at 3 units per hour.
Candidate
Alright. I can see with the rate that one unit takes 15 min at paint station
while it takes 20 min at all other station. This means the paint process is
fastest of all and there could be accumulation of inventory between paint
and the next process.
The Interview
Interviewer
Good Morning Candidate, tell us something about point X and Y on
your resume?
Candidate
Good Morning Sir. Prepared a generic answer for this.
Interviewer
That’s good to hear. Let’s get started with the case.
Interviewer
Yes, That’s right. How would you handle this?
Interviewer
The client is an Indian agricultural equipment manufacturer. The client
feels that there is some issues with manpower utilization at its plant. How
can you help the client?
Candidate
Since, we have a case of overcapacity at paint station, either we can
increase the capacity of all other process or reduce the utilization of the
paint process.
Candidate
I would like to begin with a few clarifying questions on the client.
Interviewer
Interviewer
Yes, Go ahead.
Candidate
What kind of equipment does the client manufacture? Does it operate
across the value chain? Where are these automobiles produced? Since I do
not know about the farming equipment market, is there something
peculiar about these markets that I should keep in mind?
We don’t have that much demand to supply increased production. The
paint unit works in 2 shifts. What will you suggest the client to improve his
manpower utilization?
Candidate
Interviewer
The Client is engaged in the manufacturing of variety of farming
equipment, but in this case the issue is particular to one of theirproduct
lines – ambush harvester.
(the interviewer Googled the images of ambush harvester)
Firstly, I would see whether the current demand can be met by running
the paint process in 1 shift. If possible, then we can have painting in only 1
shift. Otherwise we can reduce the number of workers involved in both
the shifts.
Interviewer
The client went with running the paint station in only 1 shift.
That was an in-depth assessment. We’ll stophere.
26
Manpower Utilization – AGRICULTURAL EQUIPMENT MANUFACTURER
Approach
Man Power
Utilization Issue
Manpower
efficiency
Process
Utilization
Little’s Law can be used
Over Capacity
Increase capacity of
all other processes
to produce more
Under Capacity
Reduce utilization
of one process
Reduce Manpower
per shift
Reduce no. of
operating shifts
27
Auctus Advisors
28
Market Entry – DOMESTIC AIRLINE SERVICE PROVIDER
Sector : Airline
Type of Case : MarketEntry
Problem Statement: Aleading airline service provider considering to where could
they increase their frequency and where could they add new routes.
The Interview
Interviewer
Sure, it is a 180 – seater plane and the route timing is 10:30 am Kolkata to
01:00 pm Goa and return at 02:15 pm from Goa, once daily. The
frequency once in a day. The flight runs at 95% occupancy on average.
Candidate
Ok, Can I know about our client’s plane (how manyseaters?)
Interviewer
Yes why not, it is also a 180 seater plane.
Candidate
Can I have a few minutes to structure the case now??
Interviewer
Sure take your time.
Candidate
I would like to ask a few more questions. Why have the other operators
not started operating on this route?
Interviewer
Hi Candidate, let’s get to the casestraightaway.
Candidate
Good Morning Sir, absolutely!
Interviewer
Well, many operators are evaluating this route.
Interviewer
So, your client is a leading airline service provider. They have done a study
as to where could they increase their frequency and where could they add
new routes. The new policy got approved by their Board. You need to help
the client on starting on a particularly identified route which is Kolkata –
Goa – Kolkata.
Candidate
Ok. So with 95% average occupancy it seems to be a great route to run a
flight. So our concern should be to decide at what slot do we plan to run
the flight upon and what frequency do we plan to operate. I want to know
more about the cost structure of operating a flight on a route?
Candidate
Sure, so I have to help the client startup up with their new route in Kolkata
– Goa – Kolkata. Is that correct?
Interviewer
Ok, what about the cost structure?
Candidate
Interviewer
Yes.
Tarrif at the airports, parking charges (if they are cheaper at Goa then we
park the plane there or Kolkata). Is the same plane used for other routes
as well? Do I also need to size the market on this route?
Candidate
Ok, before I start structuring the case, can I know about the existing flights
on the route mentioned?
Interviewer
Interviewer
Sure, why not. So, we have an Indigo flight on this route which is a direct
flight.
Ok, ignore these factors for a moment. And there is sufficient demand on
the route so market sizing can be ignored as 95% occupancy on average is
an excellent occupancy.
Candidate
Ok, how are the slots decided at the airport for an operator?
Candidate
Ok great. Can I know more about this flight, as in how many seater planes,
what is the timing, occupancy of the plane?
Interviewer
Assume, that you will be given the slot that you desire for, how would you
suggest the client to operate on this route.
29
Market Entry – DOMESTIC AIRLINE SERVICE PROVIDER
Candidate
Ok, so the route is attractive. We have to decide on the slots at which we
operate. We also need to check what differentiating services can we offer
to poach customers from competitors who also operates on the route?
Candidate
It will also lower the price.
Interviewer
So is it a good idea?
Interviewer
Interesting, what differentiated services can you offer?
Candidate
Candidate
Well, achieve operational efficiency, allow faster check-in/check-out,
increased frequency for seasonal demand (as Goa has more tourists during
winters and Christmas) and perhaps use data for some personalized
services and even provide more luggage facilities.
No, hence we can operate at the same price as competitor. And since our
costs could be lower because of one-stop flight and higher occupancy we
can make higher profits.
Interviewer
Alright, thank you Candidate.
Interviewer
Interesting, don’t you think that the operators are already doing it? And on
your luggage point, what kind of travellers go to Goa?
Candidate
Mostly tourists.
Interviewer
Yes, and what kind of luggage requirement will they have?
Candidate
Less, light travelling is the norm, so it is not a feasible suggestion. Can we
operate indirect flights?
Interviewer
So, our operator has direct flights on this route, so the flight is costly.
Candidate
Interesting! Then we can include indirect flights on this route which will
reduce our tickets cost and increase occupancy. We can have one-stop
flights with halts at Mumbai, Bengaluru.
Interviewer
Ok, at what slot would you prefer the client to schedule the flight.
Candidate
As we have very high average occupancy it means there is demand on the
route. I would operate the flight at the same time or around the same time
as my competitor to take advantage of the demand. As our flight will be
with one-stop, we can lower our ticket prices as well.
Interviewer
If the client lowers the ticket price, how will the competitor react?
30
Market Entry – DOMESTIC AIRLINE SERVICE PROVIDER
Approach
New Route for
Airline
Direct Indigo flight
Occupancy
Existing
Flights
Slots
Costs
Frequency
Airport Tariff
Differentiated
Services
Airline Costs
Data based
Operational
Efficiency
Luggage Facility
Ticket Price
31
Market Entry in Indian banking sector– FOREIGN BANK
Sector : Banking
Type of Case : MarketEntry
Candidate
Other is acquire any existing bank and then turn it around using the
expertise that the global bank (client) has. Banks in India need a lot of
branches to operate in retail spaces and acquiring an existing bank might
give them that network. The bank could use its strengths (say tech and
digital) to make the services and operations more efficient and turn it
around and create stronger market leader. A case in point, Yes Bank can
be a good acquisition assuming our client being a global bank has thewarchest of money to acquire a big private sector player.
Problem Statement: Aforeign bank wants to enter India. How will you advise them on
strategy?
The Interview
Interviewer
Hi Candidate, let’s do a quick case
Interviewer
Nice, how would you value a bank like Yes Bank?
Candidate
Good Morning Sir, sure!
Candidate
On Market capitalization.
Interviewer
Suppose a foreign bank wants to enter India. How will you advise them on
strategy?
Interviewer
Ok, what particular digital strategy would you deploy?
Candidate
Well, it could be divided into two parts. Internally, data, AI could be used
to make services more efficient and routine processes faster and accurate.
Externally, chatbots and AI-based services could delight the new age
customers.
Interviewer
Ok, thanks Candidate!
Candidate
Ok, what is the objective of entering India?
Interviewer
They see growth opportunity in India with a large young population and
want to capture this market. Can you quickly come up with a certain
strategy with less number of questions?
Candidate
Ok, so is the bank interested in retail operations or they want to open up
multiple other services?
Interviewer
Assume retail and all other services that bank’s offer.
Candidate
Ok, so there could be two strategies. One, the bank could get a license
from RBI and start the bank grounds up and use its strengths of global
competitiveness to capture market. A case in point is DBS and its digital
banking strategy in India.
Interviewer
Ok, what else?
32
Market Entry in Indian banking sector– FOREIGN BANK
Approach
*Ask lessquestions
Retail Foreign
Bank
Example - DBS and its
digital banking strategy in
India.
Internal
Data
Analytics
Start fresh
Acquire
Indian Bank
Digital
Strategy
Market
Capitalization
AI based
services +
Chatbots
Example - Yes Bank can be a good
acquisition assuming our client
being a global bank has the warchest of money to acquire a big
private sector player.
External
33
Bain & Company
34
Profitability – APPLIANCE MANUFACTURERER
Sector : Manufacturing
Type of Case : Profitability
Problem Statement: There is an appliance manufacturer. He has been facing stagnating
profitability. Evaluate and make appropriate suggestions.
The Interview
Interviewer
Hi Siddharth, nice to meet you.
Candidate
Hello Sir, likewise!
Interviewer
Let’s start with a profitability case. Your client is into manufacturing. Heis
looking at stagnating profits. Can you find ways to improve the situation?
Candidate
Which industry is the client operating in?
Interviewer
He is into retail appliance manufacturing say like Reliance.
Candidate
When you say appliances, what all products does that cover?
Interviewer
Your basic appliances like mixers, radios, TVs, etc.
Candidate
So, I am assuming that the average customer is your everyday man looking
for home appliances for daily use.
Interviewer
Yes, you’re right. They focus on middle income to lowerincome brackets.
Candidate
So, about the company, I want to know how many outlets do they have?
Interviewer
They have 2 outlets – one in Delhi and the other in Mumbai.
Candidate
So, I would like to begin by breaking profits into revenue and costs.
Interviewer
Please start with revenue
Candidate
So, for revenue, I will divide the company activities into core and non-core.
Given this is retail, non-core activities won’t add much value. So, I will
focus on core activity based revenue which can be further broken into
price, product quality & quantity and variety.
Progress
At this point the Candidate eliminates all aspects except variety.
Interviewer
So, what do you think could be the issues the firm could be facing?
Candidate
There might be competition in the localities where the stores are. Ecommerce must be hurting the market share of the company. In a
nutshell, we can say that the both the number of customers and the ticket
size might be getting affected adversely.
Interviewer
Yes, correct. Evaluate the effect of each one going down for me.
Candidate
If the basket size is going down keeping the no of customers constant,
then this could be due to the poor arrangement of counters within the
store and poor management of queues. If the no of customers is
decreasing but the basket size is the same, then we can blame it on the
competition, the location – it might be in a residential area versus a
commercial one and thus, might be attracting less people.
Interviewer
Alright, good. What do you infer if I say both factors are going down?
Candidate
In this case, it could be due to stiff competition, it could be the impact of
external factors such as poor economy.
Interviewer
All external factors are constant. Nothing has changed. However,
competition has gone up. 2 new stores have come up and e-commerce is
also hurting the firm. What would you recommend in general?
Candidate
I’d say that the firm should try e-commerce out given the big force it is
and will be in the future. The firm could also look at acquiring its
competitors if it has the funds, given there are only 2 competitors.
Interviewer
Alright, makes sense. Great, thank you!
35
Profitability – APPLIANCE MANUFACTURERER
Approach
Profitability
Costs
Revenue
Core
Price
•
•
Competition
E-commerce
No of Customers
Variety
Non-Core
Quantity
Ticket Size
•
•
Poor store management
Long queues
36
Profitability/Unconventional – IT SERVICES
Sector : ITservices
Type of Case : Profitability/Unconventional
Problem Statement: There is an IT services firm. It has been facing declining market
share. Evaluate and make appropriate suggestions.
aspect. As far as how the services are delivered, not well. Think beyond
the regular issues.
Interviewer
Okay, please give me a moment.
Candidate
Sure, but hurry up.
Interviewer
So, I think one issue could be that given the firm is into IT services, it must
have a lot of technically sound employees but like typical IT firms it might
have compromised on the quality of the employees conducting other
activities including post sales.
The Interview
Interviewer
Hi Siddharth, this is the second round. We won’t waste time.
Progress
From the starting, the round was presented as a stress round.
Candidate
Go on.
Interviewer
Let’s start with the case. There is a typical IT services firm, so I want youto
make your basic assumptions about what the business might be, the
industry make up, etc. Don’t ask me. The thing to focus on is that the
market share is going down. Tell me what do you think is going on.
Interviewer
Candidate
I’ll straight away break it down into evaluating costs and revenue.
Interviewer
Okay. Costs have been the same. Focus on revenue.
So, IT services today are moving beyond just products but into more
relationship-based industries where it is not just about the product but
also about the packaging and delivery. More importantly, customers want
to be able to reach out to the companies without any hesitation even
after a year, saying “Hey, I don’t get this.” Further, if you’re not listening to
your customer, you might be making good products, no doubt, but you
might not be making the ones that the customer needs.
Candidate
Breaking revenue core and non-core again. Within IT both type ofactivities
add a lot of value.
Candidate
Interviewer
Before that, make the value chain for me or list the activities for me.
Right, so you’ve got the nerve of the issue. The firm has great people just
not great for building customer relationships. The employees don’t feel
motivated to make the right changes. Why do you think?
Candidate
Ok, so there will be development, IP licensing, product management, sales
and marketing, after sales customer services.
Interviewer
So, there could be tangible and intangible factors. Tangible remuneration, bonuses. Intangible - team make up, growth stagnation.
Interviewer
Okay, stop. Focus on the post sale services.
Candidate
Candidate
So, how does the firm conduct the post sales service and how satisfied are
the customers presently?
Tangibles are fine, within intangibles, the growth had hit a ceiling. What
else?
Interviewer
Clearly, there is an ability mismatch for the after sales services part.
Interviewer
The customers are not happy, that is why I have asked you to focus on this
Right, good enough. Thank you!
37
Profitability/Unconventional – IT SERVICES
Approach
Profitability
Costs
Revenue
Core
Value Chain Analysis →
Developers
IP Licensing
Product
Management
Non-Core
Sales &
Marketing
After Sales
Service
•
•
High on tech but low on
customer management
Poor Product-Customer
needs fit
38
Design loyalty program for e-commerce platform– FLIPKART
Sector : E-commerce
Type of Case : Unconventional
Problem Statement: Flipkart wants to launch a loyalty reward program. How will you go
about it?
The Interview
Interviewer
Good Morning Candidate, let’s do a quick and simplecase.
Candidate
Good Morning Sir, sure!
Interviewer
Flipkart is your client and it wants to launch a loyalty reward program. In
Tier 1 cities. How ill you go about it?
Candidate
So, for this, I will evaluate the company, its service, customers and the
after sales service aspect. Before I proceed, I would like to know if there
are any competitors in the market with such similar programs?
Interviewer
Yes, Amazon is in the market. Initially, Flipkart had a huge market share but
then it lost out to Amazon and its Prime program.
Candidate
So, I am assuming that Flipkart’s prime objective through this loyalty
program is to gain back the market share?
Interviewer
Yes.
Candidate
So, I would like to ask some more preliminary questions. What is the
market share that Flipkart wants to target? And are there any other
objectives?
Interviewer
You can skip all of this. Please move to the solution.
Candidate
Okay, so I will focus on the customers –current customers and potential,
their needs and Flipkart’s product offerings. On the basis of this, I would
then focus on the product types that we can push in our loyalty program.
Interviewer
Sure but I want you to focus on Amazon’s loyalty program and tell me
what do you think is the unique aspect about it?
Candidate
Can I take a minute to think about it?
Interviewer
Sure, go ahead.
Candidate
I think the key element is that Amazon’s whole program is common for
every subscriber. For example, all subscribers get access to all services
such as Prime, fast delivery, etc.
Interviewer
Right, so in light of this, how should Flipkart design its program?
Candidate
I would recommend a reward point based system versus a subscription
model wherein the more the customer buys, the more points accumulate
and that gets the customer hooked to the platform. We could also
integrate the Jet-privilege model wherein we could introduce certain
privileges for frequent users across various product types.
Interviewer
Sounds good. So, what factors would look at in this reward-point model?
Candidate
I would look at the basket size, the actual total price of a product, the
frequency of purchases. I would also see if there are higher points that I
can allocate on products that I want to push for.
Interviewer
Alibaba has this policy where if you make high amounts of purchases the
price for that particular account falls drastically. Can we do this in India?
Candidate
Of course, we can but this could lead to a situation where different people
pool in to buy from one account only. This could lead to abuse of the
program and avoidable loses.
Interviewer
Correct, that is actually an issue Alibaba faces. Alright, thank you Candidate!
39
Investment Decision– White goods
Sector : HomeElectronics
Type of Case : InvestmentDecision
Candidate
The Possible reasons for this could be:1. Bad decision making
2. Untapped opportunities
3. Lack of proper infrastructure like supply chain
4. Lack of proper Goals
Interviewer
Can you think of some other reason ?
Candidate
Yes, there could be a differentiation in product mix for example branded
products and private labels.
Our client might have a low proportion of private labels (which have higher
margins) when compared to competitors.
Interviewer
Is it a good idea for our client to expand share of private labels?
Candidate
The benefits are Increased revenue, exclusivity, increased loyalty but on
the other hand there is no direct control, it can be costly, high promotion
cost etc. So, the client can start from a narrow products and see what is
the response and then think weather to expand or not.
Problem Statement: PEfirm wants to buy a white goods electronics retailer- should
they?
The Interview
Interviewer
Good Morning Candidate, how are you doing today?
Candidate
Good Morning Sir, I am doing good.
Interviewer
Let’s get started with the case. : PE firm wants to buy a whitegoods
electronics retailer- should they?
Candidate
What are white goods?
Interviewer
White goods consists of large electrical goods such as washing machine,
refrigerators etc.
Interviewer
Thanks
Candidate
Ok, I would like to start by looking at the Industry Landscape. And then the
company’s landscape.
Candidate
Thank you sir.
Interviewer
Yes, Go ahead. The growth rate of the industry is 8% and the company is
also growing at this rate but the competitors are growing at 12%.
40
Investment Decision– White goods
Approach
Investment
Decision
Company
Analysis
Client does not haveprivate
labels
Pros and cons of it:-
Company
growing at 8%
Competitors
growing at 12%
Increased
Revenue
No direct
control
Exclusivity
High Promotion
Cost
Brand Loyalty
Costly
Industry analysis
Growing at
8%
Companyalso
grows at 8%
41
Estimate Demand for Medical device/ Growth strategy – Medical device company
Sector : Healthcare
Type of Case : Guesstimate + Growth strategy
Problem Statement: Company manufacturing medical device looking to grow its sales.
Demand for the device to be estimated along with recommendations for growth.
The Interview
Interviewer
Good Morning Candidate, how are you doing today?
Candidate
Good Morning Sir, I am doing good.
Interviewer
Very well, let’s get started with the case right away.
Your client is an Indian company manufacturing medical devices. It holds a
patent for a product named ‘Bearhugger’, useful in surgeries. It is a thin
layer of sheet with settings that provide warmth to the patients during
surgery. The price charged by the Company is INR 20,000 and is a onetime-use product. The company currently operates in Bangalore and
Chennai and wants to expand its sales. The substitute for this device is
warm blankets.
Candidate
Okay, so the company ‘s objective is to expand its sales for this device. Can
you explain the basis on which the Company is able to command such a
high price for a product, the substitute for which is warm blankets?
Interviewer
Sure. The device provides extra comfort to the patients during the strategy
and aids surgeons in conducting the surgery more smoothly.
Candidate
Alright. Is there a reason why the Company has limited its sales to
Bangalore and Chennai only? Is there any manufacturing constraint?
Interviewer
It was the owner’s decision to select cities close to his residence. However,
the Company is open to suggestions. And there are no manufacturing
constraints.
Candidate
The Company can expand its sales by improving the sales in the existing
market, entering a new geographical market or a combination of both.
Interviewer
Lets focus on India for now. Can you estimate the demand for this device
in India?
Candidate
Sure Sir. To begin with, can you tell me the types of surgeries for which
this device will be used? Also, the age limit, if any.
Interviewer
It will be used in surgeries requiring general anaesthesia. There is no age
limit.
Candidate
Okay, So the demand for this device will depend on the number of
surgeries, the affordability of the patients and the number of hospitals
willing to purchase the device.
Interviewer
For now, you can calculate the number of surgeries in India
Candidate
Okay, so I will divide the population into age buckets and apply a % for
surgeries.
Interviewer
I get where you’re getting at. How would you arrive at the demand now?
Candidate
I will calculate the affordability of this device based on income levels.
Based on the rural-urban divide, I will calculate the % of hospitals willing
to use this device.
Interviewer
Okay, go ahead
Candidate
Refer to the flowchart on the following page for calculation of the final no.
Interviewer
Very good, now that you have the annual demand, why don’t you tell me
various ways through which the Company can grow its sales.
42
Estimate Demand for Medical device/ Growth strategy – Medical device company
Sector : Healthcare
Type of Case : Guesstimate + Growth strategy
Yearly demand
for devices
Problem Statement: Company manufacturing medical device looking to grow its sales.
Demand for the device to be estimated along with recommendations for growth.
The Interview
Candidate
In order to expand its presence in Bangalore and Chennai, it can adopt
several market penetration activities. Tie-ups with super speciality
chains such as Apollo and Fortis would provide a provide a Pan-India
presence. Advertisements with focus on comfort during surgeries will
provide knowledge about the benefits of the device. To expand
geographically across borders, the company should look at other
countries. Does a similar product exist in the States or in Europe?
Interviewer
There exists a similar product in Europe and the States. Can you list
down other countries and any potential concerns.
Candidate
We could look at Asian countries such as Japan, South Korea. China,
being populous would serve as a lucrative market. There are
regulatory concerns when it comes to the medical sector. Establishing
a new brand can be difficult in the initial stages.
Interviewer
That’s all. Thank you.
0-15 years
(40 crores)
16-60 years (70
Crores)
>60 years (10
crores)
0.5%
1%
1.5%
Percentage of
population
undergoing surgeries
Total of the above*10%high
income segment
= 105 lacs*10%
~10 lacs
43
ERP vendor looking to enter Indian market – Market Entry
Sector : IT
Type of Case : Market Entry
Problem Statement: Your client is a software solution (ERP) provider and wants to
implement the same at gyms, salons and spas in India. Advice the client regarding the
same
The Interview
[Progress]
Interviewer first asked general questions about myself to put me at ease.
Interviewer
Your client is a software solution (ERP) provider and wants to implement
the same at gyms, salons and spas in India. Advice the client regarding the
same.
Candidate
So first and foremost I would like to understand what exactly does this
software provide
Interviewer
The software is an ERP software which performs various functions such as
appointment scheduling, client management etc for the gyms/salons/spas.
Candidate
Right, so where is the client located and any existing expertise?
Interviewer
The client is currently located outside India and wants to enter India
through the above mentioned sector
Candidate
Does the client have any specific geographic location in India in mind?
Interviewer
No, that is being left up to you.
Candidate
Okay, and are there other such software available in the market?
Interviewer
There is no other software customized specifically to the needs of the
gyms, spas and salons at the moment.
There are other general ERP software, however, the functions mentioned
are generally performed manually.
Candidate
Okay, does the client have any specific parameter to assess the success,
say profitability, market share etc.?
Interviewer
Nothing in particular.
Candidate
Right, so given that the client is entering a new market, I would like to
evaluate this decision on the basis of Market attractiveness assessed by
(a)market size, (b)competitors, (c) customers, (d)potential risks.
[Progress]
Asked the interviewer if he would like me to perform market sizing. He
replied in the affirmative. Took a minute to think through and decided to
pick one type of client of the client, i.e. gyms, and asked the interviewer if I
could perform market sizing on that segment out of the three first.
Interviewer gave his go ahead.
Candidate
Given that it is up to me which geography to choose in India, I would first
focus on Tier 1 cities, since these would have a greater number of gyms (as
well as salons and spas) with a higher spending capacity (contributed by
higher footfall and revenues).
In a city like Mumbai, I can take the size of the city (in sq km) as the base
and calculate the number of gyms in a particular radius. I would take a
greater number of gyms in localities like South Bombay and lesser in
certain other parts.
Interviewer
Can there be other ways of arriving at the number of gyms? Also, would
we focus on all gyms?
Candidate
We can first focus on brands which have a chain of gyms, such as Gold
Gym etc, as we can generate more revenue through selling to a chain than
individual gyms.
44
ERP vendor looking to enter Indian market – Market Entry
Sector : IT
Type of Case : Market Entry
Candidate
The client will look at the market sizing and estimate the proportion of
market that they can capture. Apart from that, (Going back to the initial
framework) since there are no ready substitutes and the tasks are
generally performed manually at present, there is no eminent competitor.
However, the client would have to demonstrate the benefits of the product
to the gyms, salons and spas. This will create a market for the product, but
along with it comes a threat of new entrants looking to exploit this
potential
[Progress]
Interviewer decided to end the interview here and did not delve further
into the other aspects of evaluation.
Problem Statement: Your client is a software solution (ERP) provider and wants to
implement the same at gyms, salons and spas in India. Advice the client regarding the
same
Interviewer
Okay, so how would you estimate their numbers?
Candidate
I can first make a list of all the prominent gym chains in Mumbai. Most of
these gyms have their websites which mention their locations. I could use
that to find the number of branches they have in Mumbai.
Interviewer
Okay, go ahead.
Candidate
So I assume there are 10-15 such branches of a certain brand like Gold
Gym and say 10 such chains. Now taking 8 metro cities, there would be
approximately 800 gyms. Moving to tier 2 cities, the number of gyms will
be much lesser, so I would have to reduce the above.
Interviewer
[Interupts] So how would you find the revenue from Tier 1 city gyms?
Candidate
The fees can be subscription-based model or a one-time upfront fee. But I
think a subscription model is more feasible.
Interviewer
So on what basis will you charge them?
Candidate
I can charge them a one-time fees for purchase of software and then on
the basis of the number of branches in which they implement the system. I
could also charge on the basis of the number of modules implemented for
the client.
Interviewer
Alright. So, what else will the client have to look at?
Approach
Market size
Share
Market
Attractiveness
Customers
Competitors
Risks
Threat of new
entrants
Growth
Margins
45
Profitability - PAPER MANUFACTURER
Sector : PaperManufacturer
Type of Case : Profitability
Problem Statement: Your client is a paper manufacturer who has been facing falling margins
for the last 6 months. You have been asked to probe the causes and recommend solutions
around the same.
Interviewer
The client manufactures A4 size sheets. It does not deal with the end
customers. It has only one manufacturing plant. It is a medium scale
player.
Candidate
Okay, thank you. You talked about client’s profit margins hCandidateng
fallen over the last 6 months. Is it a fall in absolute profits or profitability?
What is the magnitude of the fall? Is it an industry-wide phenomenon?
Interviewer
The profitability has fallen by 50%. No, it is not an industry-wide
phenomenon.
Candidate
Okay. I will start the case by analyzing the two components of profit and
then delve deeper to look for the exact causes and recommend solutions
for the problem.
The Interview
Interviewer
Hello, how has your day been?
Candidate
Oh, its been quite good.
Interviewer
Tell me something about your background
Interviewer
Go ahead.
Candidate
Answered (The interviewer had the same background in Economics from
University of Delhi. We connected over it.)
Candidate
Interviewer
Okay, that’s good. Let’s move over to the case. Your client is a paper
manufacturer who has been facing falling margins for the last 6 months.
(The interviewer emphasized on “margins”.) You have been asked to probe
the causes and recommend solutions around the same.
Profit is a function of costs and revenues. We know there has been a fall in
profitability. Do we know if there has been any other trends apart from
this?
Interviewer
Yes, profitability has fallen by 50% but the price of paper has increased by
20%. Can you solve for the change in costs?
Candidate
Okay. Profitability is margin over sales price. Let Sales price be 100, cost
price be 90, then profit is 10. The margin comes out to be 10%. Now if the
margins have fallen by 50%, then the new margin percentage would be 5%.
The sales price has increased by 20% to 120. The absolute gross margin
comes out to be 6. The cost would have shot to 114. That would be an
increase of around 25% in costs. (26.67% to be precise)
Interviewer
That’s right. Now can you look into the reasons as to why this could have
happened?
Candidate
Okay. Before I begin with the case. I would like to clarify the problem
statement. *Reiterates the problem*
I have some preliminary questions around the client and his business.
What are the final products that the firm deals in? Where does it lie inthe
value chain? What geographies does it operate in? What is its standing in
the industry?
46
Profitability - PAPER MANUFACTURER
Sector : PaperManufacturer
Type of Case : Profitability
Candidate
Problem Statement: Your client is a paper manufacturer who has been facing falling margins
for the last 6 months. You have been asked to probe the causes and recommend solutions
around the same.
Interviewer
The Interview
Candidate
Candidate
Sure. I will start by looking at the various nodes in the value chain. There would
be raw material sourcing, transportation, manufacturing, labour costs, sales and
distribution, administrative staff, and other utilities. Have we seen a change in
any of these?
Interviewer
Yes, the raw material cost have risen. Everything else has remained the same.
Candidate
Okay. Raw material costs are a function of price of raw material and volume of
raw material ordered. Also, there could be other changes such as changes in
vendor, contract details, change in raw material specifications, scarcity of raw
material, etc.
We have experienced an increase in raw material volumes ordered. Whydo you
think this could have happened?
This could be due to change in production policies such as product specifications.
Interviewer
Candidate
Interviewer
Interviewer
Candidate
Interviewer
Firstly, we need to probe the reason as to why the thickness of paper had
been increased. Since, paper is a standardized product, unless there is
sufficient demand for the thicker paper, the firm shouldn’t change the
product specifications because that might make its paper incompatible for
further uses such as printing by usual printers. Also, we can enter into long
term contracts and ask for bulk discounts from our current dealers or look
for other alternatives.
Good, anything else?
We also learnt that the firm has increased its prices. I understand this could
be partly due to the increased thickness of the paper. We need to compare
our prices with the competitors’ to see how good a decision that was.
That’s a good insight. Give me one reason why you won’t recommendthe
firm to decrease its prices now?
The firm can’t be sending mixed signals to the market. I believe it will be a
better idea to understand the pricing dynamics before recommending the
firm to decrease its prices. We shouldn’t decrease the prices unless we are
sure we would be able to sustain it. Do you want to me to look into that?
No, this will be alright. Thanks and have a good day.
Yes, we have increased the thickness of our paper. Could yourecommend
solutions for this?
47
Profitability - PAPER MANUFACTURER
Profitability
Revenues
Costs
Volume
Utilities
Price
Raw Materials
Labour Costs
Profitability fell by 50% but the price of paper has
increased by 20%
Let Sales price be 100, cost price be 90, then profit is 10.
The margin comes out to be 10%. Now if the margins
have fallen by 50%, then the new margin percentage
would be 5%. The sales price has increased by 20% to
120. The absolute gross margin comes out to be 6.
Manufacturing
Sales and
Distribution
The cost would have shot to 114. That would be an
increase of around 25% in costs. (26.67% )
Transportation
48
Boston Consulting Group
49
Profitability Analysis - FOOD TECH START-UP
Sector : Retail
Type of Case : Profitability
Interviewer
Your assumptions are in-line with the client’s, you may proceed. You can
skip analysing revenue heads as we don’t have any problem there.
Candidate
Sure. Coming to costs, I will start with fixed costs. Has there been any recent
change in salaries of the employees or any increase in utility expenses.
Interviewer
Since we are short of time, to speed up a bit, I can help you here, there are
no issues within any of the cost heads.
Candidate
Sir, apart from cost and revenue, profitability issues can also arise due to
capacity underutilisation. This results in a low profit to expense ratio.
Problem Statement: Our Client is a food tech start-up and is facing some profitability
issues. Identify the problem and make some recommendations.
The Interview
Interviewer
Good Morning Candidate, how are you doing today?
Candidate
Good Morning Sir, I am doing good.
Interviewer
Interviewer
Very well, let’s get started with the case right away. Your client is a food
tech start-up like Swiggy and they are facing profitability issues.
Well indeed, there is a capacity utilisation issue. Can you probably think
where could be the issue.
Candidate
Okay, so there is a food-tech start up and we are working on profitability. I
would like to use the standard profitability formula of revenue-cost.
Sure Sir. Before I proceed, can you please tell me if our demand-supply ratio
is fine and also what slots do we work in ? Are we delivering 24/7?
Interviewer
Our demand-supply ratio is good and we deliver in 2 slots. 6 to 3 and 4 to 2.
Interviewer
Sure, please go ahead.
Candidate
Candidate
I am assuming the only revenue source for our startup is via food delivery.
Since our client is a food delivery start-up, the capacity will depend a lot on
demand. The high demand slots are usually breakfast, lunch and dinner. But
looking at the time slots, we are operating in low to no demand time too.
Interviewer
Yes, that is correct.
Interviewer
Candidate
Before diving in to any specific option, I would like to list down all the
possible heads that we can explore. So, coming to cost. We can divide the
cost into fixed and variable. Under fixed, we would have utilities, salaries,
maintenance cost, rent and under variable costs, we have petrol expenses
and any promotional expenses. I am assuming here that the delivery boys
are paid monthly salaries and the two-wheelers used are owned by the
client and not rented. May I proceed with these assumptions?
Yes, exactly. You have identified the correct issue. Can you suggest some
recommendations?
Candidate
Sure Sir, I have 2 recommendations:
1. Revise the working slots, like we can start delivering from 8 or 9 and go
till 1.
2. We can keep the existing slots and start delivering other things as we
have a good network of delivery. Something on the lines of Dunzo, along
with food delivery.
Interviewer
Great, That would be all Candidate, Thanks !
Candidate
50
Profitability Analysis - FOOD TECH START-UP
Approach
Profitability of a
food-tech start
up
Revenue
Utilization
Costs
Fixed
Variable
Demand-Supply
Ratio
Operating in low to no
demand time zone
Delivery Slots
6 to 3
4 to 2
RECOMMENDATIONS
1. Revise the working slots. Example: start delivering from 8 or 9
and go till 1.
2. Keep the existing slots and start delivering other products
given the already established network of delivery. Something
on the lines of Dunzo, along with food delivery.
51
Unconventional – Understaffing and Revenue Decline
Sector : ITServices
Type of Case : Decline inRevenues
Candidate
So, if I understand correctly, the client is facing a decline in revenue. The
questions that we are attempting to address are firstly, whether the
decline in revenue is due to an inability to adequately staff the IT
programs that they offer and secondly, how can we go about solving the
staffing issue.
Interviewer
Yes, you have understood correctly.
Candidate
I would like to start with the first question. Before we go ahead with
assessing the inability to fulfill the programs, we should look at the
various factors that could affect the revenues of the firm so as to
eliminate other factors. These factors could include, for example, if the IT
programs are not competitively priced in comparison to other firms in the
market or if there have been any recent changes in the cost structure. We
should also look at the status of the industry and whether the competitors
in the market are also experiencing a decline in profitability.
Interviewer
There have not been any changes in the costs and the programs are
competitively priced. The industry leader is growing in profitability at the
rate of 19% (?) annually and our client is only growing at the rate of 5%.
What I would like you to focus on is how can we put a dollar amount to
the inability to fulfil the programs to see whether that is the cause of the
decline in profits.
Candidate
Okay, so we want to know how to calculate the potential loss due to the
inability of our client to staff the programs it is offering. I am assuming
that our client offers these programs to buyers who then choose whether
to award the contract to our client. Therefore, there are essentially two
streams of revenue that we should look at. Firstly, for the contracts /
agreements that our client is servicing, if there is a delay in staffing there
might be certain penalty clauses or termination clauses in the agreements
which could be invoked by the buyers. This would lead to losses that can
be easily calculated by looking at the books of accounts of our client.
52
Problem Statement: Client is facing an issue with fulfilling the new programs that it has been
offering which we suspect has been driving down the revenues. Diagnose and suggest.
The Interview
Interviewer
Good Morning Candidate !! Lets Start with a small case.
Interviewer
Our client is one of the largest IT services firm, similar to Wipro etc. The
client is facing an issue with fulfilling the new programs that it has been
offering which we suspect has been driving down the revenues. How
would you diagnose whether the problems in fulfilment of the programs
is the reason for the decline in revenue and how would you go about
solving the problem?
Candidate
Before proceeding, I would like to ask a few questions to better
understand the problem.
Interviewer
Sure !! Please Ask.
Candidate
Could you please explain what is the exact nature of the programs
offered by the firm?
Interviewer
Okay, so say the firm is hired to provide IT services to your company. The
firm is essentially facing an issue in fulfilling the program it offers to its
own clients.
Candidate
Could you elaborate what you mean by fulfillment of the program? For
example, does it mean that the firm is not able to provide certain
services to its clients?
Interviewer
No, essentially, they are unable to provide enough people to fulfil the
services they are offering to their clients.
Unconventional – Understaffing and Revenue Decline
Candidate
Secondly, our client is also incurring a potential loss from the contracts
that it is unable to conclude successfully due to the reason that it is
quoting a higher time to fulfil the programs that industry competitors.
This can be assessed by looking at the pitches made by our client and the
queries received which did not lead to the contract being awarded to the
client. We can compare the winning bidders to find whether the time
quoted by our client to be able to service the programs was the reason for
losing out on the contract.
Interviewer
Okay, we did look into the books of accounts but there were no penalties
as such. But we have been losing deals due to this issue. Now how would
you propose to solve it?
Candidate
Alright, so in order to solve this issue I would need some information
about why our client is unable to fulfil the programs. I have listed down
the possible reasons are:
1.Our client does not have enough number of staff to fulfill all the
programs – this can be further divided based on the hierarchy of staff and
employees required to service a program. I am unaware of the exact
structure here, but if there is a hierarchy in the team required to service a
particular program, our client may not have adequate numbers of people
in each level of hierarchy. Again, this could be due to a problem with the
employee hiring practices of our client (in the sense that our client is
simply not being able to hire adequate talent) or due to employee
retention issues (in the sense that attrition has increased among the
already hired talent)
2.Despite hCandidateng adequate number of people, our client is unable
to staff the programs on time – this could be due to the lack of employee
motivation to move to different programs, lack of training to take on new
programs, inadequate incentives to take on new programs and so on.
Interviewer
Great Job Candidate !! Please wait outside for the further proceedings.
53
Declining Profits – AUTOMOBILE MANUFACTURER
Sector : Automobile
Type of Case : Profitability
Problem Statement: The client is an Indian automobile manufacturer. Its profits are
declining constantly since last 1 year. It has approached you to identify the cause and
recommend measures to counter the fall.
Interviewer
The problem is faced across all the products and there has been no
change in the pricing lately. Major competition is also facing the decline in
their profits.
Candidate
With the data I can deduce that the issue is related to the industryand
profits are falling overall.
Now, we can break profits into revenue and cost. Since the information
shows that issue is on the revenue side due to shrinking sales, should I
touch the cost side?
Interviewer
The cost factors have remained stable more or less, you can focus on the
revenue side.
Candidate
Alright. I will further break revenue into price, product mix and volumes.
Since it is clear that pricing and product mix don’t have issue, I would dive
deeper into volumes. Am I missing anything?
Interviewer
Yes, That’s right. Please go ahead withvolumes.
Candidate
Volume can be split into market share and the market size. Is their any
data available which mentions any change in either of these.
Interviewer
As I said whole industry is facing the problem, assume that market share
of the company has remained almost unchanged, but the overall market is
shrinking.
Candidate
Now I would list the broad buckets which can impact the industry market
pie (given on the approach page). There could be new regulations that are
limiting the sales of Internal Combustion (IC) engine vehicles, one of the
complements has got impacted – steel, rubber, other raw material, fuel
prices, the financing conditions are not very favourable, new substitutes
have entered the market, or customer sentiments have changed towards
the IC vehicles. Which one should I focus on?
The Interview
Interviewer
Good Morning Candidate, how are you doing today?
Candidate
Good Morning, I am doing good.
Interviewer
Very well, let’s get started with the case right away.
Interviewer
Your client is an Indian automobile manufacturer. Its profits are declining
constantly since last 1 year. It has approached you to identify the cause
and recommend measures to counter the fall.
Candidate
I would like to begin with a few clarifying questions on the client.
Interviewer
Yes, Go ahead.
Candidate
What kind of automobiles does the client manufacture? Does it operate
across the value chain? Where are these automobiles produced?
Interviewer
The client is producing cars from small hatchbacks to large SUVs. It has
suppliers for some components while remaining it manufactures on its
own. It has 3 plants at major production hubs across India.
Candidate
Is the problem specific to part of the portfolio? Has there been any change
in pricing strategy by the company? Is the problem specific to the company
or the whole industry?
54
Declining Profits – AUTOMOBILE MANUFACTURER
Interviewer
As you correctly listed, the problem is with the financing. Customers are
finding it difficult to get cheaper credit and are hence refraining from
making investment in cars.
Now tell me how would you help the company define its next strategy?
Candidate
The company can follow one of the 4 strategy or their combination –
starting a leasing program for a fixed number of year, a guaranteed buyback offer after certain year, signing contracts with car-renting firms to
ensure alternate sales route, or offering extra benefits like buy-now paylater offer or lower maintenance other value added services.
Interviewer
Okay, so let’s assume the client accepts your first recommendation of
starting a leasing service. Now tell me what factors the client should keep
in mind before going ahead.
Candidate
If the client offers leasing services, the demand is expected to rise as
customers now would have to arrange lesser money. So the client has to
make sure it conducts a study to accurately forecast the new demand and
accordingly adjust the supply chain – increasing capacity in plant and
supplier end. Also, since now cash inflow per sales would reduce, which
would lead to lesser earnings from interest per sales, and lesser cash in
hand per sales, the client should do thorough cost-benefit analysis to
define the sales target so that the new strategy counters the current fall in
profits and not become another loss-making proposition.
Interviewer
I think this would be enough for our discussion. We should wrap it up
here.
Candidate
Thanks.
55
Declining Market Share – AUTOMOBILE MANUFACTURER
Approach
Profits
Fixed Cost
Revenue
Not discussed
in the case
Cost
Variable Cost
Price
Volume
Product Mix
Market
Share
Regulations
Recommendations
Leasing
Market Size
Complements
Financing
Buy-back
Substitutes
Contracts with
Car Renting Firms
Customers
Extra
Benefits
56
Entertainment Industry/Market Entry – FILMFARE MAGAZINE
Sector : Entertainment
Type of Case : Unconventional/Market Entry
Problem Statement: It is 1962. Your client is Filmfare magazine. Filmfare has been receiving fan
mails to introduce the best singer award, should they introduce this award?
The Interview
Interviewer
What do you think could be the reasons?
Candidate
Reasons could be: Less number of songs per movie, Few number of
singers, Biases towards singers, Poor process of evaluating singers
Interviewer
The reasons sound good. But none of these hold true in this case.
Candidate
Okay, then I would like to know how is a singer selected?
Interviewer
So, a music director sells a package of 3-4 songs to the producer who then
gives a fixed lump sum amount to the music director who pays to others.
Interviewer
Good Morning Candidate, how are you doing today?
Candidate
Good Morning Sir, I am doing good.
Candidate
Interviewer
I see you used to write movie reviews. So, let’s do a case related to the
entertainment industry. It is 1962. Your client is Filmfare magazine. They
sell magazines and hold an award function to build the magazine’s
credibility. There are 2 types of awards, technical (best director, best
cinematographer) and non-technical (best actor, best actress). In the
music field there is only one award - best song award, which is accepted
by the producer and the music director of the movie. Fans have asked
Filmfare to introduce the best singer award, should they?
Here lies the main issue. Music directors in order to keep a large portion of
money with themselves select singers on their personal preference.
Singers don’t have any power .The music producers also take credit for the
songs. Therefore, Filmfare never cared to reward singers either.
Interviewer
You have got the reason correctly. Now, what do you suggest further?
Candidate
I will look into the pros and cons of introducing the best singer award.
Pros
1. By giving the award, Filmfare will fulfill the audiences’ request.
Thereby, increasing the no of buyers.
2. Singers will get popularity. Filmfare can increase the price of magazines
as they could get interviews of these popular singers.
3. New concepts, like this award, willboost Filmfare’s popularity.
4.Acknowledging singers could help Filmfare gain positive attention.
Cons
1. Introducing separate awards for singers might hurt the sentiments of
music directors who were quite influential during ‘60s.
2. Giving awards to the limited number of singers could get biased.
All in all, I would say Filmfare has more to gain so it should start the award.
Interviewer
Great, that was a thorough analysis. Than you!
Candidate
First, I’d like to know if there are other such award functions being held. If
yes, did they give the best singer award? I will then look into the various
stake holders of the film industry who influence the singers.
Interviewer
Since, we are talking about 1962, let’s say there was only one magazine.
Please list the various stakeholders for me.
Candidate
Actors, directors, producers, movie directors, singers, writers, technicians.
Interviewer
Sounds good. Please go ahead.
Candidate
I would like to know why singers are not given awards.
57
Entertainment Industry/Market Entry – FILMFARE MAGAZINE
Approach
Film industry
Actors
Director
Producer
Music
director
Singers
Other
technicians
Less no. of songs
per movie
Few no. of singers
Best singer
Award
Cons
1. Introducing separate awards for singers might
hurt the sentiments of music directors who
were quite influentialduring ‘60s.
2. Giving awards to the limited number of
singers could get biased.
Biases towards
singers
Selection procedure
of singers
Pros
1. By giving the award, Filmfare will fulfill the audiences’ request. Thereby,
increasing the no of buyers.
2. Singers will get popularity. Filmfare can increase the price of magazines as they
could get interviews of these popular singers.
3. New concepts, like this award, will boostFilmfare’s popularity.
4. Acknowledging singers could help Filmfare gain positive attention.
58
Deloitte USI
59
Miscellaneous/Market Entry– IIT+IIM IN LEH
Sector : Education
Type of Case : Miscellaneous
Candidate
1) Acquiring land will be crucial
2) Feasibility in light of the fact that Leh stays shut for 6 mths of the year.
3) Leh is not a very developed city so attracting the right academic talent
will be difficult. Same for students and recruiters. This makes for a
cycle given recruiters attract good students and vice-versa.
Problem Statement: The Government wants to setup an IIT & IIM at Leh. Evaluate and
give recommendations.
The Interview
Interviewer
Hi Candidate, how are you doing today?
Candidate
Good Morning Sir, I am doing good.
Interviewer
Great, Let’s start with a short case.
Your client is the Government of India. It wants to setup and IIT and IIM at
Leh. They want you to evaluate this move and make recommendations.
The factors that will come into play could be
Interviewer
Which of these do you think is a major issue?
Candidate
Assuming that the Govt. has the land and we ignore the weather issues, it
would be getting the recruiters and professors.
Interviewer
So what can you do to solve that issue?
Candidate
The IIT/IIM can be under a nearby and older IIM/IIT which can act as a
parent. For example, IIM L or IIT D. Professors can also be outsourced
from these institutes.
Candidate
What is the Government’s objective for setting up theseinstitutions?
Interviewer
What do you think can be the reasons?
Interviewer
Are there any solutions that you can give to deal with the weather?
Candidate
The reasons could be –
1) There is a dearth of institutions, so the Government wants to build
more
2) The Government wants to develop Leh.
Candidate
We can look at hCandidateng insulated classrooms.
Interviewer
Alright, that works. Thank you, Candidate!
Interviewer
Let’s assume that development of Leh is the goal for theGovt.
Candidate
What is the timeline?
Interviewer
You don’t have to look at the timeline now. Assume 3-4 years. Just
evaluate the factors that will come into play and give recommendations.
60
Miscellaneous/Market Entry– IIT+IIM IN LEH
Approach
IIT + IIM in Leh
Issues
Weather
Land
Recruiters
Professors
Students
Recommendations
1) The IIT/IIM can be under a nearby and older IIM/IIT which can act as a parent. For
example, IIM L or IIT D. Professors can also be outsourced from these institutes.
2) We can look at hCandidateng insulated classrooms.
61
Value Chain Analysis/Miscellaneous– CUP MANUFACTURER
Sector : Manufacturing
Type of Case : Miscellaneous + CostReduction
Candidate
Okay. I am assuming that the typical after sales service process comprises
of sales people conducting walk-ins, reaching out to new and old
customers, getting the orders, transferring this information to
manufacturing team, getting the final product delivered within time and
then addressing any further concerns.
Interviewer
Alright. So, here is a sheet with details about the service channels, order
type and customers. Use these to comment on what could be the source
of dissatisfaction.
Problem Statement: You are a plastic cup/container manufacturer. Your sales have been
increasing but your customers are unhappy. Evaluate and make recommendations.
The Interview
Interviewer
Hi Candidate, let’s jump into a case right away.
Candidate
Good Morning Sir, yes please!
Interviewer
You are a plastic cup/container manufacturer. Your customers are the
middle men. Your sales have been increasing over the past few years, there
is growing discontent among your customers. Evaluate and make
recommendations.
Candidate
Okay, so I would like to start with the value chain.
Interviewer
Go ahead.
Candidate
The typical value chain for a cup manufacturer would go as follows
Raw Material Supplier>Manufacturer > Transportation>Warehouse>Middle
men>Transportation>Retail Stores>End Consumer.
Further, there will also be the component of After sale service.
SNo
Type of Customer
Order
Frequency
Order
Channel
Service
Request
Frequency
Service Request
Channel
1
Food Manufacturer
Daily
Fax, Email
Weekly
Email
2
Food Manufacturer
Weekly
Self Service
Monthly
Self-service
3
Wholesaler –
Supermarket Supplier
Bi weekly
Email
Bi-weekly
Phone
4
Restaurant Chain
Weekly
Phone
Daily
Email, Phone
5
Restaurant Chain
Monthly
Email, Fax
Daily
Self-service, web
chat, phone
Order Type
Interviewer
So, which among these do you think could be causing dissatisfaction?
Customer
Standard
Progress
At this point, the Candidate starts evaluating all the value chain heads.
Food Manufacturers
100%
Interviewer
Alright, can you look into the after sales aspect?
Wholesaler
50%
Restaurant
Customized
50%
100%
62
Value Chain Analysis/Miscellaneous– CUP MANUFACTURER
Candidate
Interviewer
So, I will start with customer type and order frequency. By observation, I
can say that if the order frequency was daily or weekly, planning for
inventory, raw material and delivery would have been difficult, especially,
in light of the 100% or 50% customization demands. This could have
resulted in compromised delivery standards and quality, and could have
been a reason for dissatisfaction.
Coming to order channels, there are way to many of them and they need
to be streamlined. Apart from ensuring better customer service, this will
also help in reducing costs and operational complexity. Example, channels
like FAX are not used as much any more, so we can do away with them. We
can also use self-service web client to take in the orders and deal with
after sales service through email and phone, similar to what Amazon and
Flipkart do.
Looking at the frequency of service requests, I see some clients request
daily servicing. This can also be an issue since too many requests can lead
to compromised quality as labour is fixed. This can also lead to expectation
mismatch and cause dissatisfaction.
That is a thorough analysis.
Now, due to some government regulations, the manufacturer has to shift
to biodegradable material to make containers. What will be the costs
involved and how should they go about it?
Candidate
To manufacture using the new material, I believe we will be using new
machinery. This can be a major cost that can be involved.
Rent, electricity will stay the same. Marketing costs will come into the
picture here.
Interviewer
Can you elaborate on the marketing costs?
Candidate
We will now have to focus on marketing to a completely new clientele
since our existing clientele might not be willing to pay higher for
biodegradable cups. So, we will be looking at more environment friendly,
premium clients. So, reaching out to them and on boarding them will be a
cost in itself.
Interviewer
Alright, can you summarize the case now?
Candidate
So, we’re a cup manufacturer and we’re facing rising customer
dissatisfaction. After evaluating the value chain, we encounter an issue
with the after sales service. We explored the after sales service process
and based on the information provided we came up with faults in the
existing system. Next, we saw a shift in government policy which affected
our costs. We then evaluated which costs would make the most impact, in
this case, equipment and marketing.
Interviewer
Okay, can you make some recommendations now?
Candidate
Costs can be classified into fixed and variable. Fixed costs will include –
land, factory, equipments, marketing. Variable costs will include – labour,
rent, electricity. Can we use the same land?
Candidate
To deal with the changed government policy, we will have to look at
revamping our sales force by training them on how to deal with the new
type of clients. We will also have to train the labour on the new machines.
Interviewer
Yes, you can.
Interviewer
Alright, great work Candidate. Thank you.
Candidate
Can we use the same factory as well?
Interviewer
Yes, the same factory can be used as well.
63
L.E.K. Consulting
64
Investment advisory to a PE firm – Private Equity
Company : LEKConsulting
Sector : PrivateEquity
Type of Case : InvestmentAdvisory
Interviewer
Ok. Please go on.
Candidate
<I assumed some per annum fees for a pre-kg school. Then I assumed that
families spend x% on rent, y% on housing needs, z% on leisure etc. Using
the per annum fees assumption and the percentage of income spent on
education, I was able to calculate the cutoff for families who could afford to
enroll their kids in the pre-kg school based on their income>
Ok. How will you use this information?
Problem Statement: There is a PEfirm which wants to invest in a pre-kindergarten
school chain like Kidzee which operates in Mumbai. What advice would you give them?
Interviewer
Candidate
The Interview
Interviewer
Candidate
There is a PE firm which wants to invest in a pre-kindergarten school chain
like Kidzee which operates in Mumbai. What advice would you give them?
Can I ask some clarifying questions?
Interviewer
Yes of course
Interviewer
Candidate
Is it the first time that the PE Firm is venturing into the education industry
Candidate
Interviewer
Yes, this is the first time
Candidate
What is the horizon of investment that the PE firm is looking at?
Interviewer
Interviewer
5-10 years. Can you tell me what all elements would you consider while
analyzing the case?
First of all, I would like to estimate the size of the pre-kg industry, look at
the market share of the pre-kg chain that our client is looking to invest in
and then look at the growth rate of the industry and the target’s market
share.
Good. Please proceed
Candidate
Interviewer
Candidate
Interviewer
Candidate
To estimate the market, I would divide Mumbai into 5 zones. For each zone,
I would estimate the number of married couples in the age group of 27 to
35. Before, I proceed, I want to do a side analysis about who can afford to
enroll their kids in pre kg schools
Candidate
Interviewer
Candidate
Interviewer
Candidate
Now we can further segment the married couples between 27-35 into
those who can afford and those who cannot
Ok, the market size is fine. What else will you advise the client?
We should also look at the financials of the pre-kg chain. By looking at their
assets, liabilities, income and expenses we would be able to determine
what percent of their revenues come from operating activities.
What kind of expenses do you think are applicable for a pre-kg chain?
As they are operating in Mumbai, rent and lease would form a major part of
their expenses. Apart from rent, they would incur expenses for salaries,
maintenance and advertising.
Ok. What else? Do you foresee any risks for the client?
One risk could be that the client is not able to find suitable teachers for
engaging with pre-kg children.
Wait, who is our client?
I’m sorry. It is the PEfirm. <Since this was a PEclient who was lookingto
invest in another company, I got confused about the perspective from
which the question is asked>
No worries
The risks for our client are that the pre-kg industry could become irrelevant
in the future. The government could come up with a law where children
below x years are not allowed to study. The schools could start opening
their own pre-kg chains.
Investment advisory to a PE firm – Private Equity
Interviewer
Interesting. Anything else?
Candidate
The technology is evolving so fast. In future, robots could be developed to
take care of and educate children when their parents are not at home.
Hahaha. That is still 15-20 years away.
Interviewer
Candidate
Do you see any alternate revenue streams for the pre-kg chain, if the need
arises for them?
I can think of partnerships with some educational toy companies. In this
model, the toy manufacturers would pay the pre-kg chain to stock their
toys.
Ok. Anything else?
Interviewer
Similarly, with children’sclothes.
Candidate
Yeah. Ok. Thank you for the ‘interesting’ discussion
Candidate
Interviewer
Approach
Invest in Kidzee?
Market
Size
Financials
Risks
• Assets
• Liabilities
• Income
• Expenses (rent,
• Relevance
• Technology
salaries,
maintenance,
advertising)
McKinsey & Company
67
Pricing – COAL MINE IN CHINA
Sector : Coal
Type of Case : Pricing
Problem Statement: Someone has an opportunity to invest in a coal mine in China.
What would you recommend? Ho would you price the coal in the mine?
The Interview
Interviewer
Good Morning Candidate, how are you doing today?
Candidate
Good Morning Sir, I am doing good.
Interviewer
I see you have a strong technical profile, but I need to see whether you
have good business judgement as well, so that I am comfortable sending
you to clients right from day 1. You have been taught Corporate Finance,
right? So tell me, how would you evaluate a company?
Candidate
Sir, we can look at the EBITDA value of a company & multiply it to the
EV/EBITDA ratio of the industry.
Interviewer
How you would you decide whether to invest in a firm or not?
Candidate
I would look at profits & growth and see the PE ratio.
Interviewer
You could also look ay NPV. Moving on, lets do a case. But, it’ll be more like
a conversation.
Candidate
Okay, I am ready.
Interviewer
So, a friend of mine has an opportunity to invest in a coal mine in China.
What would you tell him?
Candidate
I would first like to know what are the objectives to buy this coal mine?
Interviewer
Just wealth creation. We would like to maximize wealth. There are no
other objectives.
Candidate
So, what is the price which is being asked for the coal mine?
Progress
At this point the interview takes turn to become a pricing case rather than
a due diligence case.
Interviewer
We need to give them a price. What should be the price we offer them?
Candidate
So, we can value the project by calculating the returns we get from the
project by discounting the cash flows we receive from the project. In
order to do that we need to calculate the revenues we are able to earn
from the mine each year. So, could you tell me whether the mine is
operational, else we will need to approach the problem differently.
Interviewer
The mine is operational already. We don’t need to worry about the
operational aspects.
Candidate
So, we can calculate the revenue of coal in a year as the volume of coal
mined in a year multiplied by the price. So, do we have any data about
how much coal we produce in a year?
Interviewer
We produce 600 tonnes of coal per year. How would you figure out the
price per tonne?
Candidate
The price of coal depends on a number of factors which affect its quality
like moisture content, carbon content & so on. First, we need to figure out
the quality of our coal. Then for a specific quality of coal, we can set
prices similar to our competitors. Also, there is publicly available data
which indicates at what price a specific quality of coal sells at. We can set
our price in that way.
Interviewer
Public data is not always available. Assume the price to 7000 Rs. per ton.
Can you calculate the returns?
68
Pricing – COAL MINE IN CHINA
Progress
The Candidate calculates the return after assuming opportunity cost of
capital.
Interviewer
What are your observations?
Candidate
The returns seem less for a coal mine. As far as I know, a lot more volume
is generally produced. Is there any reason why we are producing just 600
tonnes?
Interviewer
It is because the technology is very old & inefficient. Also, in the NPV
calculation, it seems you have considered infinite time of operation. Is that
correct?
Candidate
Sorry, I forgot to consider the fact that the coal reserves may get
exhausted. So, to calculate the number of years the operations can
continue, we need to divide the total tonnes of coal by our annual
production.
Interviewer
We know that the mine is 300m x 180m x 20m in dimensions & you can
assume the density of coal to be 700kg per cubic metre.
Candidate
The total amount of coal comes out to be 756,000 tonnes. So, it should
last well over 1000 years at current levels of production.
Interviewer
Suppose we increase our current levels of production to 4 times by
investing in new machinery, how will the NPV change?
Candidate
The increase in annual production volumes by 4 times will lead to 4 times
revenue each year. But, our operations will last for one fourth the previous
timespan, which is still over 250 years.
Interviewer
You forgot to include the machinery cost in the formula. But, the rest is
correct. That’ll beall.
69
Pricing – COAL MINE IN CHINA
Approach
NPVCalculation
Initial
Investment
Annual
Profit
Revenue
Coal is priced per tonne.
Volume
Discounted Cash Flow Formula
Operational
Cost
Price per
Tonne
Weight
Was to be consideredfixed.
Depends on coalquality.
Value: Rs. 7000 per Tonne
Density
Calculated by taking product
of length, breadthdepth.
70
Feasibility and pricing of a medicine/ Pricing Strategy - PHARMA
Sector : Pharma
Type of Case : ProductPricing
Problem Statement: Pharma Company with typically low presence in India wants to
launch a new product for Lung Cancer.Assessthe feasibility and consequent pricing.
Interviewer
Lets say it seeks both the things.
Candidate
Sure Sir. Can you tell me more about the product. In terms of the nature,
pros and cons which would help me place it against the other competitive
items in the market.
Interviewer
Yes. Why not. So the client’s product is an injection which is a substitute
to chemotherapy medicines. Typically dosage say once a day. Compared
to the competitors we have seen low side-effects in this product.
Candidate
Makes sense. I will take a moment to lay down my thoughts. (Pricing not
being one of my strengths, I take more time than usual just to make sure I
don’t miss points)
Interviewer
Yeah sure.
Candidate
Right, so I have broken down the assessment process based on 4
parameters.
1. Market Attractiveness where the growth and market share that we
look to capture will be assessed.
2. Risks: in terms of competitors, substitutes, product acceptance, macro
economic conditions, etc.
3. Feasibility/Profitability in terms of NPV and payback period that we
expect
4. Existing synergies in terms of knowledge and expertise, international
brand value, customer base from other products that can be leveraged
Is there a specific field that you want me to look in depth?
Interviewer
So the risks you have mentioned looks mostly external?You don’t
perceive internal risks?
Candidate
Umh. Yes, I have mostly laid down external risks, but I guess you are right.
I should think of other internal risks as well like machinery breakdown,
supply issues, etc. (nervousness kicks in)
71
The Interview
Interviewer
Good Morning Candidate, how are you doing today?
Candidate
Good Morning Sir, I am doing well.
Interviewer
Very well, let’s get started with the case right away.
Your client is a Pharma Company with typically low presence in India wants
to launch a new product for Lung Cancer. Assess the feasibility and
consequent pricing.
Candidate
Thank you for the question. I will take a moment here to gather my
thoughts.
Interviewer
Sure.
Candidate
Alright, so does the client operate internationally as well? (to assess if the
client is established else where and has a strong brand there)
Interviewer
Yes, it does exist internationally but is new in India. Given that, how do you
think it should move ahead?
Candidate
Definitely. Before moving ahead, few more questions. What exactly does
the client seek with the launch. Is it market share or revenue or both?
Feasibility and pricing of a medicine/ Pricing Strategy - PHARMA
Candidate : Candidate
Saraiwala Sector : Pharma
Type of Case : ProductPricing
Problem Statement: Pharma Company with typically small presence in India wants to
launch a new product for Lung Cancer.Assessthe feasibility and consequent pricing.
Candidate
Just to understand the customers that we are looking at, do we intend to
target the premium segment?
Interviewer
Not really.
Candidate
Makes sense. There are typically 3 ways to go about pricing, value- based,
cost based and competitor based. I would actually focus more on value
based pricing given the strong functional value. Cost and competition are
factors that we would account for in pricing but the company I feel should
focus on driving the product home using the value offered. So given that
we seek to leverage the functional value of our product to capture the
required market share, I would say we should price it somewhere 12-13K.
Mainly for two reasons:
The Interview
Interviewer
So interesting that you mentioned substitutes. What substitutes can you
think of for a lung cancer medicine?
Candidate
Given that ours is a one of a kind product (injection), I would look at
various substitutes based on the medium of ingestion. So say, pills, inhaler,
Liquids, etc. These can be further characterized based on the frequency of
ingestion, price, availability, side-effects, degree of effectiveness, etc.
Interviewer
Very well. Do you want to think of any other forms of medicinal
substitutes?
Candidate
(Thinks hard. Cannot think of any). Sorry Sir, I cannot seem to think of any.
Interviewer
It is fine. I was thinking more in terms of say Ayurveda, Homeopathy,
Allopathy, etc.
Candidate
Oh Yeah. Even for less intensive treatments say hair, skin allergy, we do
look at these alternatives.
So Sir, given this can you give me more information on how the
competitors have priced their products, which will help us benchmark
further.
Interviewer
Yes. So injections typically are priced within 10-15K. Where should we
place our product in the range?
1. It should not be priced at the lower end of the spectrum given low
price is generally associated with low quality and medicine is
something people do not wish to compromise on.
2. We should not also place it on the extreme end given we have low
presence in the country so we would want to increase the rate of
adoption among doctors and hospitals sooner.
A narrow margin should suffice in the start and then once the credibility is
established, we can seek a higher margin from our sales.
Interviewer
Makes Sense. Thank you so much Candidate. It was wonderful
interacting with you.
Candidate
Thank you so much Sir. Have a great day.
72
Feasibility and pricing of a medicine/ Pricing Strategy - PHARMA
Feasibility
Assessment
Market
Attractiveness
Risks
Profitability
Existing Synergies
Growth
Competition
NPV
Knowledge &
Expertise
Market Share
Substitutes
Payback Period
Existing Customer
Base
Macro conditions
International brand
value
Product Acceptance
73
Cost optimization for an IT company – Cost Optimisation
Sector : IT
Type of Case : CostOptimisation
Interviewer
Client is a market leader in the IT industry. Client feels they can cut down
on certain costs. Cost of operations means cost of running the company.
Candidate
Got it. Segmented the costs for the company (see approach section). Since
IT is a service industry, I feel we should focus on cutting down the
employees cost. Is my assumption correct.
Interviewer
Good. That’s correct. How do you plan to do it?
Candidate
Sure. Again broken down employees cost into hiring cost, training cost,
salaries paid and firing cost. Do you want want me to focus on any
particular item?
Interviewer
That seems fine. But you haven’t accounted for operational efficiency in
your structure. How would you incorporate that?
[Progress]
Bit confused here. Didn’t quite understand what he wanted to say.
Candidate
Umm.. Not sure if I understand correctly. Do you mean to optimise the
money spent on employees. In other words, reducing the money spent per
employee?
Interviewer
Exactly.
Let’s go to the case right now. Your client is an Indian IT company. They
have majority of their clients in the US and they regularly send their
employees onsite. They want to reduce their cost of operations. How will
you help them?
Candidate
Alright, so we can segment employees cost as # of employees and cost
incurred per employee.
Interviewer
Correct. Now how would you go about reducing each one of them.
[Progress]
I started with basic set of clarifying questions to clearly understand the
problem statement.
[Progress]
Candidate
I have a few preliminary questions to help me better understand the
problem our client is facing. Why does our client feel they should optimize
on cost? Are their cost of operations higher vis a vis industry average? How
big is our client in terms of market share? What exactly do you mean by
cost of operations?
Gave few recommendations like reducing incentives and fixed pay, giving
out stock options, hCandidateng less people sent to onsite work,
reducing the number of contract employees, giving option of early
retirement to people, cutting the workforce by letting underperformers
go. However interviewer was not convinced. He was looking for
something else.
Problem Statement: Your client is an IT company who wants to reduce their cost of
operations. Recommend some strategies for the same.
The Interview
Interviewer
Candidate
Good Morning, Candidate. Why don’t you start by telling me something
about
yourself.
Gave the prepared answer.
Interviewer
How’s life going in IIM Bangalore?
Candidate
Told him about academic performance in Term 1 and other extracurricular
activities and interests that I pursue.
Interviewer
74
Cost optimization for an IT company – Cost Optimisation
Type of Case : Cost Optimisation
Sector : IT
Problem Statement: Your client is an IT company who wants to reduce their cost of
operations. Recommend some strategies for the same.
Candidate
We can use the typical IT company’s PEratio which is around 20. This
would mean McKinsey would have added 20*200M = $4B market value for
the client
Interviewer
Aren’t you forgettingsomething?
Candidate
Taxes! Assuming corporate tax rate in India to be 30%, McKinsey would
have added $4B*0.7 ~$3B post tax.
Interviewer
Good. You’ve done well. Any questions for me?
Candidate
Since you’ve worked formore than 10 years in consulting, what keeps you
going?
Interviewer
That’s all fine. How do you think a typical team in an IT company would be
structured?
[Progress]
Now I understood what he is hinting at.
Candidate
Right. So a typical team would be of 10 members with 1-2 senior level
employees, 3-4 mid level employees and rest all junior level employees. As
per my understanding, most of the cost would be driven by senior level
employees. So we can reduce the number of senior level employees and
delegate their work to the mid and junior level after proper training.
Interviewer
Good. That’s what we recommended to the client. As a result,McKinsey
saved $200M for the client. I see you have cleared CFA L3.
Candidate
Yes sir.
Interviewer
How much value do you think we added to the client’s business?
No. of employees
Candidate
Since McKinsey saved $200M annually, the cost sCandidatengs would hit
the PnL statement, and thus the annual pre-tax profits would go up my
$200M. If we know the firm’s cost of equity, we can find out the value
added by discounting the additional $200M cash flow generated
annually.
I don’t have cost of equity with me. What do you think is the right ratio to
use here?
Cost incurred per
employee
Interviewer
Approach
Cost of Operations
Employee cost
Building lease cost
Maintenance cost
75
Estimate Cash flow and risks of an expressway project – Profitability
Sector : Infrastructure
Type of Case : Profitability
Problem Statement: You are working with a private equity client who is exploring an
investment opportunity in an infrastructure firm which has undertaken MumbaiHyderabad expressway project. You have been called upon to examine the estimated
cash flow statement of the project and enumerate the possible risks associated with
these cash flows.
Candidate
Right! So, the approach that I was thinking of is that we can delve into the
profitability of the expressway venture and see the sources of revenue and
costs involved which will correspond to the cash inflows and outflows.
However, this method would cover cash flows over the lifetime of the
project, is that fine or are we looking at a specific timeframe?
Interviewer
No that should be fine. Let’s drill down the revenue and cost heads.
Candidate
The major revenue sources associated with expressways according to me
are toll tax: both commercial vehicles and private vehicles as there will be
rate differential, interstate duties (though these might be simplified given
the GST regime), food mall or restaurant rents in case the sideroads
utilized by these places are on lease, advertisement revenue from
billboards on highways. Costs would include construction, road
maintenance, running the toll collection systems, electricity expense on
lights and billboards and additional service expense (like telephone booths
or emergency ambulances). Am I missing out on any other major head?
Interviewer
Well that pretty much covers all the heads. In fact, most of the cost comes
from construction which can be treated as a sunk cost in this case and the
others are constant costs with very less variability. So let’s look at the
revenue side, what do you think would be the biggest chunk?
Candidate
It’s a heavy traffic route between two major commercial citiesand so the
toll collections should be significant.
Interviewer
Well absolutely! It is the biggest concern in this project. How will you
assess the potential risks associated with it?
Candidate
For that I would need to understand the current structure of toll
collections in terms of toll charged and distribution across commercial and
private vehicles in terms of number of vehicles.
The Interview
Interviewer
Candidate
Good Morning Candidate, since we have a limited time frame, let’s just
start with the case. You are working with a private equity client who is
exploring an investment opportunity in an infrastructure company that
works in the area of roads, metros, sea ports etc. You are specifically
looking at one project being undertaken by the infrastructure firm which is
the Mumbai- Hyderabad expressway. You have been called upon to
examine the estimated cash flow statement of the project and enumerate
the possible risks associated with these cash flows.
Alright, before I start thinking of a possible way to enumerate the risks, I’d
like to clarify a few things if that’s fine?
Interviewer
Sure! Go ahead.
Candidate
I wanted an idea as to the typical projects that the PE firm deals in and is
there any specific reason why they have chosen to go ahead with this
infrastructure firm and this particular Mumbai Hyd expressway project
only?
Interviewer
Because I need to interview you to offer you an internship and we have got
only 15 min so let’s just cover this one project for now.
76
Estimate Cash flow and risks of an expressway project – Profitability
Sector : Infrastructure
Type of Case : Profitability
Problem Statement: You are working with a private equity client who is exploring an
investment opportunity in an infrastructure firm which has undertaken MumbaiHyderabad expressway project. You have been called upon to examine the estimated
cash flow statement of the project and enumerate the possible risks associated with
these cash flows.
Interviewer
Candidate
Gave the following data:
Total number of vehicles on a daily basis = 100,000
Type
Price
Quantity
Private Cars
100
40%
Comercial
200
40%
Buses
150
20%
Alright! I’d like to calculate the respective revenue contributions of each
category to see who can create the maximum impact on overall earnings.
Should that be fine?
Interviewer
Absolutely!
Candidate
The major traffic of commercial vehicles on this route would likely be due
to trade given that both the cities are major industrial or commercial
centers in the West and South respectively. Hence, any change in volume
of trade can impact the traffic. Additionally, any alternate route availability
or possibility of alternate modes of transport can impact traffic also. Do
any of these causes seem pertinent as of the current circumstances?
Interviewer
Well, trade certainly seems to be the area of interest. Which industries do
you think account for greatest trade in general across land routes?
Candidate
Typically, raw materials (steel etc), automobile industry and agriculture.
Interviewer
Well that pretty much covers all the heads. In fact, most of the cost comes
from construction which can be treated as a sunk cost in this case and the
others are constant costs with very less variability. So let’s look at the
revenue side, what do you think would be the biggest chunk?
Candidate
Typically, raw materials (steel etc), automobile industry and agriculture.
Interviewer
Correct, so agriculture and automobile are the major contributors in this
case, each contributing 50% to the total commercial vehicle traffic. And
declining trade in both the industries is a cause of concern, what do you
think is driving the decline in trade?
Candidate
Let’s look at agriculture first: it’s a heCandidately monsoon dependent
industry and therefore the most likely reason for the dip in trade would
be a bad season. However, this is a seasonal variation that must have
been accounted for in the estimation of cash flows.
Interviewer
Yes, so let’s focus on just the automobile industry.
Candidate
So typical factors affecting trade vehicles are competition, demand for
goods, alternate routes o modes of transport. Any specific head that I
should look at?
Interviewer
Well Pune-Solapur belt is an automobile hub which has been supplying the
major chunk of automobiles to the South but recently Chennai has
emerged as a dynamically growing auto hub in the South.
Candidate
So, it seems like it’s become easier for Hyderabad retailers and stock
holders to source automobiles from Chennai than Pune belt and hence
traffic on Mum-Hyd expressway might be taking a hit. Do we have an idea
as to what extent can the demand be fulfilled by the Chennai hu7b7?
Estimate Cash flow and risks of an expressway project – Profitability
Sector : Infrastructure
Type of Case : Profitability
Problem Statement: You are working with a private equity client who is exploring an
investment opportunity in an infrastructure firm which has undertaken MumbaiHyderabad expressway project. You have been called upon to examine the estimated
cash flow statement of the project and enumerate the possible risks associated with
these cash flows.
Interviewer
So, we expect a 50% fall in traffic and hence revenue.
Interviewer
Also, you talked about an alternate route. So, there is a new highway
coming up that can help cut down the time of this route travel by 25%.
That will reduce the remaining traffic by another 50%. So, can you
calculate the expected number of commercial vehicles.
Interviewer
Candidate
Revenue
Interstate duties
50% of the current demand. Also assume that the entire demandcurrently
is being met by transporting vehicles via the expressway.
Candidate
Candidate
Approach
Advertisement
revenue
Commercial
Vehicle
Private vehicle
Initially we had 40,000. Due to Chennai hub the traffic dropped to20,000
and now, due to this alternate route it’ll now go down to 10,000. So, we
will have only 10000 commercial vehicles which will be charged a toll of
200. This drop should be the major risk to estimated cash flows then. Do
you want me to calculate the new estimated revenue?
Not really, I’m sure you can multiply 10000 and 200. So, you have pretty
much proceeded in a way that we did for this case when we were working
with this client. Do you have any questions for me?
Food mall &
restaurant
leases
Toll Tax
Seasonal nature of
agricultural trade
Reduction in trade
Chennai hub
competition
Fall in traffic
Alternate routes
I wanted to know about the work that McK does in the field of retail and
brands, so we discussed that for a while and the interview ended.
78
Increase growth for car rental service provider – Growth
Sector : Auto
Type of Case : Growth
Problem Statement: Your client is a self-drive car rental service provider. It provides
various car options on rent for trips or vacations wherein you can rent a car for a
certain number of days to drive and return. They have recently witnessed a dip in
their growth numbers. You have been asked to diagnose the problem and offer
potential solutions.
The Interview
Interviewer
Candidate
Your client is a self-drive car rental service provider. It provides various car
options on rent for trips or vacations wherein you can rent a car for a
certain number of days to drive and return. They have recently witnessed a
dip in their growth numbers. You have been asked to diagnose the
problem and offer potential solutions.
I would like to ask a few clarifying questions to better understand the
problem. First, could you elaborate on what the meaning of growth is?
Does it refer to profitability or revenue or market share?
Interviewer
I would like to ask a few clarifying questions to better understand the
problem. First, could you elaborate on what the meaning of growth is?
Does it refer to profitability or revenue or market share?
Candidate
Okay, and to understand the organization a little better, what geography
does it operate in and what sort of customers does it cater to?
Interviewer
Good question. It operates in all states of US and caters to customers
across income segments. It offers everything from a hatchback to a luxury
vehicle.
Candidate
Okay and lastly, could you throw a bit of light on the competitive landscape
and the industry in which the company operates?
Interviewer
The industry is growing but is extremely fragmented with a lot of budget
players in this sector.
Candidate
So I would like to break down revenue into a function of Price X Quantity X
Product Mix. Here, Price would be a function of various factors such as
mode of pricing (per km. rate, with or without fuel, etc.), competitor's
price, car quality, demand for service, convenience and any value added
customisations such as chauffeurs, insurance, customized seats, etc. Is a
recent change in the Price a reason for the dip in revenues?
Interviewer
You seem to have covered the Price aspect well. We offer competitive
prices and quality. Overall, there is no issue in the price which could have
impacted the revenue. You can move on to the other two aspects.
Candidate
Sure. So Quantity could be broken down into quantity contributed by new
customers and by existing customers. For new customers, we would focus
on marketing aspects such as promotion of the product, placement of the
product, introductory offers, etc. The existing customer base will depend
on loyalty offers, competitive quality and recall brand value of the service.
Interviewer
You can assume that customer base is not a challenge because we are not
losing our existing base and we have an increase in our new case as well.
Candidate
Okay, so finally product mix can be the main issue leading to a dip in
revenues. The dip in revenues may be prevalent in one type of product
line. What kind of product mix exists in the organization?
Interviewer
Yes, the issue is related to product mix. Here is some data on the product
mix and daily rental charges: Hatchback - Rs. 6, Sedan - Rs. 8, Luxury - Rs.
10 and Ultra-Luxury - Rs. 15. The company has seen a dip in the revenue
from luxury and ultra luxury vehicles. Could you think of reasons why?
Candidate
A few reasons could be the sheer charges being much higher and not ideal
for the middle income customers for whom this service is typically ideal or
79
Increase growth for car rental service provider – Growth
Rastogi Sector : Auto
Type of Case : Growth
Problem Statement: Your client is a self-drive car rental service provider. It provides
various car options on rent for trips or vacations wherein you can rent a car for a
certain number of days to drive and return. They have recently witnessed a dip in
their growth numbers. You have been asked to diagnose the problem and offer
potential solutions.
Candidate
The product / service could either be differentiated in terms of features
and customisation or in terms of product quality. The pricing of the
economy and luxury segment products could be further reduced to
increase the demand. And the service should be made available with ease
in all locations to ensure convenience.
Interviewer
Those recommendations are good. You have solved the case, thank you.
[Progress]
(The candidate then asked to be allowed to summarize the case which was
well received by the interviewer.)
The
Interview a lesser number of luxury and ultra-luxury vehicles in stock leading to
Candidate
limited availability on demand.
Interviewer
Candidate
Interviewer
Candidate
That is correct, there was poor demand estimation of customer needs
which did not allow the company to identify a target segment. That is why
it started operating on such a large scale and tried to cater to all customer
segments, including the luxury segment. But the demand for this business
has dipped significantly due to prices and lack of availability forlast-minute
bookings. Can you suggest recommendations to tackle this problem?
Some recommendations would be to limit product categories for more
efficient handling, to mandate early bookings to cater to all customers, to
limit scale of operations to a few focus states in the US, to identify and
focus on high-demand target customers such as middle income groups
Those are some useful long-term suggestions, and in the long run the
client did limit its operations to a few states and dropped the luxury
vehicles altogether. However, could you also suggest some short term
recommendations in the interim?
Yes, some short term recommendations would include a renewed focus on
marketing in terms of product, pricing and placement of the luxury cars.
Approach
Revenue
Price
Quantity
Product
Mix
Existing
cusotmers
Hatchback
New
customers
Sedan
Luxury
Ultra
Luxury
80
New Product Entry - PHARMACEUTICALS
Sector : Pharmaceuticals
Type of Case : New Product Entry
Problem Statement: Your client is a pharmaceutical company based in the United States. They
have developed a new product for diabetes, and would like to enter the Indian market with
the same. They would like us to do a comprehensive assessment of the same, and
recommend whether they should go ahead with launching the product in India or not.
The Interview
The interview was conducted over video conference, through a laptop placed in a cubicle.
Duration: About 20 minutes.
Interviewer
Good morning, Candidate! How are you doing?
Candidate
Good morning, sir. I am doing fine.
Interviewer
Great. [Introduces himself briefly here.]
Interviewer
So, let us now discuss a case over the next 15-20 minutes. Your client is a
pharmaceutical company based in the United States. They have developed
a new product for diabetes, and would like to enter the Indian market with
the same. They would like us to do a comprehensive assessment of the
same, and recommend whether they should go ahead with launching the
product in India or not.
Candidate
Okay. Just to repeat the problem statement, our client is a pharma
company in the US who have launched a new product for diabetes, and
would like us to recommend whether they should launch it in India or not.
Interviewer
That’s right.
Candidate
Alright, I would like to ask a few preliminary questions to better
understand the case. Could you please tell me what exactly are the
features of this new product? Does the client have any specific objectives
that they wish to meet through this launch?
Interviewer
The product is a tablet, that has been designed to be as effective as an
insulin injection. The client wishes to break even with this product within
two years.
Candidate
Okay. May I know if the product will be taken on a doctor’s prescription or
over the counter, and the frequency at which it would need to be
consumed?
Interviewer
The product will be on a doctor’s prescription, and needs to be taken once
a day.
Candidate
Okay. May I take a couple of minutes to collect my thoughts?
Interviewer
Sure.
Candidate
I would like to consider three major factors along which we could
evaluate this problem. The first would be the financial aspects, since we
have an objective to break even within a two-year time period. For this, I
would like to understand the initial investments that would have gone in
towards R&D for this product, and the price at which we intend to sell the
product. The second would be from the market perspective – the current
market size for diabetes drugs, the growth rate of the market, and the
presence of existing competitors and any substitute products. The third
would be with respect to any legal and regulatory challenges we might
face, while selling our product in India.
Interviewer
Hmm, okay. Can you think of any further factors which could be relevant?
81
New Product Entry - PHARMACEUTICALS
Sector : Pharmaceuticals
Type of Case : New Product Entry
Candidate
Alright. There are two primary means through which the product could be
priced – either through a cost plus margin approach, or through a value
based approach that depends on what value we are able to offer to the
consumer. For the cost plus model, we could look at data on the typical
industry margins for diabetes drugs in India, and price the product
accordingly. However, since we would be competing directly against insulin
injections and have a superior product offering (since it is a tablet, and
consuming the drug would be more convenient and painless), a value
based pricing approach seems more appropriate. For this, we could try
and gauge the customer’s willingness to pay for such a product through
market surveys. We could also potentially factor in any subsidies that may
be available from the government for such a product.
Interviewer
Okay. Could you tell me how you would estimate the potential market size
for this product?
Candidate
Yes. We would first consider the number of diabetic patients in India.
Within this, we could consider the fraction of patients who are on insulin
injections, since these would be our main target market. This could be
estimated through the sales of insulin injections already available in the
market currently.
Interviewer
Okay. Suppose that an insulin injection in India currently costs Rs 100 per
day, and that we plan to launch our product at Rs 80 per day. Can you tell
me how much market share we are likely to gain at these prices?
Candidate
Since our product is superior in features in terms of easier administration
of the drug and hence more convenient for patients, and is also at a lower
price, I would say that we are likely to capture a very large portion of the
market very quickly, possibly as high as 80-90%.
Interviewer
That is okay. But can you tell me how we could estimate the exact
number? Will it be 50% of the market share? Or 80%?
82
Problem Statement: Your client is a pharmaceutical company based in the United States. They
have developed a new product for diabetes, and would like to enter the Indian market with
the same. They would like us to do a comprehensive assessment of the same, and
recommend whether they should go ahead with launching the product in India or not
The Interview
Candidate
[Thinks for a while.] Yes, we could also consider the distribution channels
through which we would like the product to reach the customer, and how
we would go about setting up and building our distribution networks.
Interviewer
Okay. You have missed out one more key aspect, relating to the
manufacturing of the product – whether we would produce the product in
US or India, and how we would go about sourcing the ingredients for the
product in each case.
Candidate
Right, that makes sense. [Note: I had become nervous by this point, since I
had missed out on a major aspect of the case early on. This could have
been avoided had I considered how to set up the entire value chain for the
new product, which would have been a more comprehensive approach.]
Interviewer
Okay, let us now discuss the product pricing. Could you think of different
ways how the client could go about this?
New Product Entry - PHARMACEUTICALS
Sector : Pharmaceuticals
Type of Case : New Product Entry
Problem Statement: Your client is a pharmaceutical company based in the United States. They
have developed a new product for diabetes, and would like to enter the Indian market with
the same. They would like us to do a comprehensive assessment of the same, and
recommend whether they should go ahead with launching the product in India or not
Candidate
Right.
Interviewer
Let’s close the case here. I also hear you have received the Aditya Birla
Scholarship?
Candidate
Yes, sir.
Interviewer
Could you tell me what was your one key takeaway from this experience?
Candidate
[I talk about how I had an opportunity to discuss some of my ideas for the
education sector with some extremely senior leaders of corporate India at
the interview.]
Interviewer
Great! Do you have any questions for me?
Candidate
[Asks about his experience at McKinsey, and how he had chosen to focus
on his current sector of work.]
Interviewer
[Answers the question.] Thank you, Candidate, and wish you all the best!
Candidate
Thank you, sir.
The Interview
Candidate
[Very confused by this point.] Could you please give me a minute to think
about this?
Interviewer
Sure.
Candidate
We could consider the frequency at which doctors re-prescribe diabetic
drugs to their patients. Such patients typically only visit their doctor once
in every 3 months or so, during which period they would continue to take
their medicines as per their earlier prescriptions. So the shorter this
frequency, the faster we would be able to penetrate the market. Another
factor would be the availability of out product in stores – while we may be
able to reach customers in Tier 1 cities very soon, building distribution
networks to ensure our products are sold in smaller towns and villages
would take time, which would also impact our market share. However,
while these factors only determine the rate at which our market share
grows, I am not sure how we could estimate the exact final market share.
Interviewer
[Notes: Though I had realized I could have done better at the case midway, the key was to
maintain my confidence and keep the interviewer constantly engaged. It is also perfectly
okay to seek assistance from the interviewer if you find yourself stuck.]
That’s okay. We could also simply look at the history of the last 10 diabetic
drug launches in India, and see how much market share they have been
able to achieve since their launch.
83
New Product Entry - PHARMACEUTICALS
Market Entry
Financial Aspect
Market Perspective
Other challenges to
entry
Research and
Investment
Market Size
Regulatory Challenges
Pricing
Growth rate
Legal Challenges
Break Even in 2 years
Threats of susbtitutes
84
Profitability - INFORMATION TECHNOLOGY
Sector : InformationTechnology
Type of Case : Profitability
Problem Statement: Our client is a small IT company based out of Bannerghatta Road, that
has made the placement portal for IIM Bangalore to manage information on students and
companies. They wish to improve their profitability. Can you suggest how they should go
about this?
Interviewer
Good morning, Candidate! How are you doing?
Candidate
Good morning sir, I am fine.
Interviewer
Take a seat. Don’t be nervous, loosen yourself up a bit. We’ll just havea
chat.
Candidate
Okay, sir.
[We discuss my background and the cities I had lived in. The discussion even briefly lapses
into my mother tongue, but we quickly switch back into English.]
Interviewer
Okay, so let us discuss a case. Are you familiar with the IT industry?
Candidate
Yes sir, but not in great detail.
Interviewer
Okay. Our client is a small IT company based out of Bannerghatta Road,
that has made the placement portal for IIM Bangalore to manage
information on students and companies. They wish to improve their
profitability. Can you suggest how they should go about this?
Candidate
Sure. [Starts writing the case facts on a sheet of paper.]
Interviewer
No, don’t use pen and paper. I want you to just discuss whatever comes to
your mind.
Candidate
[Slightly taken aback.] Okay, sir. I would like to clarify, does our client have
any other products and customers?
Interviewer
No, this is our only product and IIM Bangalore is our only customer.
Candidate
Okay. Profitability could be improved by either reducing our costs or by
increasing our revenues. Shall I start with the cost side first?
Interviewer
Okay, go ahead.
Candidate
Since we are a small IT business, the major cost heads for our client would
include the rent and power expenses for the office premises, and salaries
for the employees. This in turn would depend on the average salary we
pay each employee, and the number of employees we have.
Interviewer
Right. How can we achieve cost sCandidatengs here?
Candidate
Since the rent and power expenses would largely be fixed based on our
current location, I would like to start with the employee salaries. Would it
be safe to assume that our employees are paid on par with the typical
standard in the industry?
Interviewer
Yes.
85
Profitability - INFORMATION TECHNOLOGY
Sector : InformationTechnology
Type of Case : Profitability
Interviewer
Okay. Can you now think of ideas to increase our revenues?
Candidate
Sure. Since we know that IIM Bangalore is currently our only customer, it
shouldn’t be hard for us to quickly expand our existing offering to other
educational institutes across the country, which would also need
placement portals. This can be done easily since our product is software
and we do not need to expand our physical presence geographically. In
fact, we could improve our product based on feedback from these
institutions and then expand our product to international institutions such
as Harvard as well, based on the fact that we would have already
established a reputed customer base by then.
Interviewer
Good. Can you think of more ideas?
Candidate
Yes sir. [Thinks for a while.] We could also look at what our core
competencies are and specialize into those. For instance, if we know we
are great at making user interfaces, we could start designing user
interfaces for other software companies across other applications, or
venture into developing interfaces for websites, which would expand our
potential customers to virtually any organization with a website.
Interviewer
Go on. Suggest some more ideas.
Problem Statement: Our client is a small IT company based out of Bannerghatta Road, that
has made the placement portal for IIM Bangalore to manage information on students and
companies. They wish to improve their profitability. Can you suggest how they should go
about this?
Candidate
Okay, that means we should evaluate whether we have the appropriate
number of employees for our operations, and whether there is any scope
to reduce the same. For this, I would like to understand the workflow of
designing and producing the software. For instance, one team of engineers
would be working on handling the data at the back end, while another
team would be working on the front end of the portal and designing of the
user interface. If the company operates in a serial manner, i.e. working on
the back end first and then working on the front end after that is
completed, then it would take them much longer to complete the final
product, during which the front end team would be idle. In such a case, the
workflow could be reorganized to carry out these tasks in parallel, so that
no employee is idle and has to wait for the output of another team. We
could also identify which step in the process of developing the software is
the bottleneck, and divert more resources for that operation so that the
overall time to produce the software comes down. Additionally, multiskilling the employees across different functions would also help, such that
a back end developer could also work on the front end when required, thus
reducing the need to maintain buffer employees within each team.
Interviewer
Good. I can see that you have experience in working in operations.
Candidate
Yes, sir. I had worked on increasing the capacity of my manufacturing line
at my last job by 10% by increasing the capacity of its bottleneck.
[At first, I end up repeating the previous suggestions in a roundabout fashion, then
eventually admitted that that was all I could think of at that moment.]
Interviewer
Good, thank you! We’d most probably be making you an offer.
Candidate
Thank you so much, sir.
[Notes: HCandidateng never practiced solving cases without pen and paper except for a
couple of guesstimates, the interview initially felt somewhat daunting. But as the
interview progressed, discussing ideas aloud without paper seemed to have made the
process easier and the conversation more free-flowing.]
86
Profitability - INFORMATION TECHNOLOGY
Profitability
Revenue side
Cost side
More customers
Rent
Add more services
Utilities
Salaries
87
Profitability - CONSUMER GOODS INDUSTRY
Sector : Consumer GoodsIndustry
Type of Case : Profitability
Problem Statement: Your client is a big FMCG player. They have been growing phenomenally
since past so many years. However, in the previous year they have seen a big dip in their
profits. You need to figure
The Interview
Interviewer
Pan-India. It is a usual FMCG player, operates in almost all major
segments.
Candidate
Alright. Also, I assume that the player exists throughout in the supply
chain, right from the manufacturing to sales and distribution. Am I
correct?
Interviewer
Yes, of course.
Candidate
So, profits are a function of Revenues-Costs. Are the profits declining
because of falling revenues or increasing costs or both happening
simultaneously?
Interviewer
Why don’t you introduceyourself?
Candidate
Gave a standard reply.
Interviewer
Let’s look at both.
Interviewer
Okay Candidate, it seems you have a decent experience in the consumer
goods industry. Let’s do a case on that industry only.
Candidate
Sure, so should I look at the costs or revenues side first?
Your client is a big FMCG player. They have been growing phenomenally
since past so many years. However, in the previous year they have seen a
big dip in their profits. You need to figure out why.
Interviewer
Let’s look at revenues first.
Candidate
Okay, so I would like to see the revenues side from two angles- Demand
and Supply. Should I focus on Demand or Supply?
Interviewer
Please take me through the entire framework you have in your mind. We
will try to MECE it on the way.
Candidate
Sure. So, I would like to look at the supply side first. There are two aspects
I would look at- Production and Distribution. Production essentially
involves two aspects- Capacity and Efficiency. By capacity I mean, no. of
plants*no. of machines. By efficiency I mean, utilization rate of machines.
Any issue with supply side?
Candidate
Sure, so let me just clarify the problem statement once. My client is a large
FMCG player, who is facing declining profits this year. Otherwise, his
business has been growing well. I need to identify the reasons for the
declining profits. Is there any other objective of this case?
Interviewer
No, go ahead.
Candidate
I need to ask a few questions that will help me deep dive into the case.
Interviewer
Sure
Candidate
Where does my client operate? What all products does it sell?
(Someone from outside comes and tell the partner that they are running out of time. I
panicked but did not this come on my face. The partner asked the person to allow me
more time as my interview began late).
Interviewer
What probable issues could be there?
88
Profitability - CONSUMER GOODS INDUSTRY
Sector : Consumer GoodsIndustry
Type of Case : Profitability
Problem Statement: Your client is a big FMCG player. They have been growing phenomenally
since past so many years. However, in the previous year they have seen a big dip in their
profits. You need to figure
Interviewer
No, none of the factors have changed.
Candidate
Could it be because of change in operational efficiency/marketing
tactics/product quality/after sales services of competitors?
Interviewer
No, I like how you are trying to deep delve into the situation. But
unfortunately, none of the factors you mentioned are into play. Okay, so let
me tell you- it is an industry wide issue. Since past one year, FMCG industry
is marred by slowdown. But please quickly run me through the Costs side
also. I want to see what do you understand there.
The Interview
Candidate
So, either the company does not have enough manufacturing plants or the
number of machines installed in the plants is less. This will lead to low
production and therefore, low sales. However, since the fall in profits is
very recent, I assume this is highly unlikely.
Quite possible that efficiency has fallen. This could be due to several
reasons.
Interviewer
No, problem is not in the supply side. Let’s move to the demand side.
Candidate
The demand will be influenced by two broad aspects- Consumer related
factors and exogenous factors. So, there could be several consumer related
factors such as change in tastes & preferences of the customers, change in
price, decline in quality, dip in marketing activity by the company, poor
after sales service reduction in distribution margins leading to distributors
reluctant to push company’s products.
Interviewer
No, it is not because of any of the factors you mentioned.
Candidate
Okay, I would like to look at exogenous factors. It could be because of
change in government regulations, or some change in supply and demand
of complementary or substitute goods.
(I made the entire value chain)
Interviewer
I know this. Please take me through every bucket.
Candidate
R&D costs include Cost of equipment, human capital, finance costs. Other
costs could be costs associated with clinical trials etc.
Raw Material Costs depend on quantity * rate per unit. Also, we need to
look at the vendor (if he is charging higher prices)
Inbound logistics costs depend on distance and cost per km. Other areas
where focus can be given on are- route optimization, underutilization of
truck space. The company should try to reduce wastage and pilferage too.
Storage costs include holding costs, ordering costs and cost of stockouts.
Holding costs include rent, labour, wastage costs etc. Ordering costs
depend upon no. of orders*rate. Moreover, storage costs also depend
upon type of inventory and no. of inventory parts stored.
Operations costs include rent, fuel, utilities, depreciation, packaging,
depreciation, overheads and labour costs.
Outbound logistics costs’ breakup will be similar to inboundlogistics costs.
Promotion Costs can be divided into two parts- sales costs and marketing
costs. Sales costs include sales force costs, sales force training costs.
89
Profitability - CONSUMER GOODS INDUSTRY
Sector : Consumer GoodsIndustry
Type of Case : Profitability
Problem Statement: Your client is a big FMCG player. They have been growing phenomenally
since past so many years. However, in the previous year they have seen a big dip in their
profits. You need to figure
The Interview
Candidate
Marketing costs depend upon channel mix*channel costs*no.of
repetitions (essentially advertisement costs since FMCG companies of TV
ads). Also, celebrity endorsement costs and other ATL and BTL activities
costs.
After sales service costs will also be there. Moreover, one very important
thing that the company needs to control is trade spends.
Okay, any particular cost head you want me to focus on?
Interviewer
Yes, lets discuss labour costs.
Candidate
Okay, sure. Labour costs will be a function of absolute no. of
employees*compensation structure. Compensation structure will further
be fixed and variable. Variable component will depend on either no. of
units produced or no. of hours worked. Also, no. of permanent and
temporary workers will also have an impact on labour costs.
Interviewer
Superb! Perfect! I was just checking your secondary level of thinking. It was
really good. Thankyou Candidate.
90
Profitability - CONSUMER GOODS INDUSTRY
Profitability
Revenues
Supply
Costs
Demand
Production
Customer
Related
Distribution
Exogenous
Factors
Raw
materials
Research and
Development
Storage
Outbound
and Inbound
Operations
Marketing
After Sales
Labour costs
91
Consolidation- AIRLINE INDUSTRY
Sector : Airline Industry
Type of Case : Consolidation
Candidate
So, if I’ve understood correctly, our client is a Finnish airline with
practically complete coverage of the domestic market. They now want to
enhance their bottom line through an alliance with a global airline.
Interviewer
That is correct.
Candidate
Before I proceed, I’d like to ask a few clarifying questions, if that’s okay
with you.
Interviewer
Sure, please go ahead.
Candidate
General conversation for a couple of minutes about how my college experience has been
so far, whether I like the IIMB campus, the interviewer’s work and travel etc.
Simultaneously, the interviewer is skimming a copy of my resume.
Is our client a full service carrier (FSC), or a low cost carrier (LCC)? Have
profits declined, or has profitability taken a hit?
Interviewer
You may assume it is an FSC. The issue is with profitability. Margins have
shrunk due to increasing competition.
Interviewer
Yeah, I do end up traveling a lot, and just recently we were working on this
assignment in the airlines industry. It was really interesting! I believe you
are familiar with the industry, yes?
Candidate
Candidate
Yes Sir, I am.
Sure. Airlines do tend to be an industry characterized by increasing
consolidation with maturity, due to low profitability accruing to individual
players. What does the competitive landscape look like, for our client –
particularly within Finland, on both domestic and global routes?
Interviewer
Oh, good. So, our client was this airline in Scandin – it is a Finnish airline
with the largest market share and route coverage in Finland. However, it is
struggling to cope with intense global competition due to which its
profitability is taking a hit. The airline is considering an alliance with a
global airline. It has approached us to decide whether to make this
strategic choice. What is your opinion? How would you think about it?
Interviewer
The airline is the largest in Finland. So, it covers practically most of the
Finnish market. It does operate on international routes, but does not have
the same scale that global giants do.
Candidate
Am I right in assuming that improving profitability is the only objective
here? Is there anything else I should be aware of?
Interviewer
You may go ahead with that assumption.
Candidate
I’d like to use pen and paper here, to broadly structure the drivers of
profitability. Is that alright?
Interviewer
Sure, please proceed.
Problem Statement: Our client is an airline in ScandinCandidatea and is struggling to cope
with intense global competition due to which its profitability is taking a hit. The airline is
considering an alliance with a global airline. It has approached us to decide whether to make
this strategic choice. What is your opinion? How would you think about it?
The Interview
The candidate came with 2 years of work experience in M&A Investment Banking, with
commercial Candidateation as one of her key sectors. This case combined both domains,
and in such a scenario the candidate is expected to bring incremental value to the table,
as opposed to another candidate with no prior exposure to a similar situation.
92
Consolidation- AIRLINE INDUSTRY
Sector : Airline Industry
Type of Case : Consolidation
Interviewer
Okay, and what about Costs?
Candidate
On the Costs side, I think primarily the client should look to collaborate
with an airline that has a similar fleet to its own. One of the keys to the
success of LCCs globally has been their focus on single model fleets. If we
apply a similar thought process, I think it makes sense to partner with an
airline with a similar fleet because this can help rationalize costs of
maintenance, as well as procurement and carry of stores and spares.
Interviewer
Are you sure you aren’t missing anything?
Candidate
(After thinking for a few moments) Not that I can think of, I’m afraid. Is
there any particular direction that I should be thinking in?
Interviewer
Don’t you think that scale achieved through the alliance will give the
Finnish airline more bargaining power in negotiating aircraft leases?
Candidate
Right, I should have taken that into account. That makes a lot of sense!
Interviewer
Don’t worry, I think you broadly covered all the important points. Well
done, thank you very much!
Problem Statement: Our client is an airline in ScandinCandidatea and is struggling to cope
with intense global competition due to which its profitability is taking a hit. The airline is
considering an alliance with a global airline. It has approached us to decide whether to make
this strategic choice. What is your opinion? How would you think about it?
The Interview
Candidate
So, the way I’m thinking about it, profitability is essentially driven by
Revenue & Costs. Improvement in margins can be achieved through
optimization of costs more than proportionately to increase in revenue.
When we look at Revenue, there are several streams, broadly they are –
Passenger Fare, Freight and Value Added Services (VAS). Under Costs, an
airline typically has Aircraft Leases, Airport & Hangar Charges,
Maintenance, Stores & Spares, GDS & Commissions, Candidateation Turbine
Fuel (ATF), and other Operating & Admin Expenses, including salaries.
Interviewer
Okay, so what are the strategic criteria that should be kept in mind when
evaluating such a potential alliance?
Candidate
On the Revenue side, an alliance with a global giant would positively drive
codeshare arrangements which would enable scale. For instance, Finnish
passengers flying in and out of Finland would prefer flying through this
airline, rather than rely on a global competitor. It would also enable the
Finnish airline to achieve a global brand and international presence. So, in
that sense, the Finnish airline should look to collaborate with an airline that
has a complementary network coverage, and is present in those
geographies that our client is looking to target.
93
Media Cost Reduction- AUTOMOBILE
Profits
Revenue
Passenger
Fare
Freight
Value Added
Services
Costs
Aircraft Leases
Airport & Hangar
Charges
Maintenance
Stores & Spares
GDS & Commissions
Candidateation
Turbine Fuel
(ATF)
Other Operating and
Admin Expenses
94
Monetizing Footfall at Bangalore Airport
Sector : Airport
Type of Case : IncreaseRevenue
Interviewer
Absolutely not! Why would I want that? I don’t care how you arrive at the
answer, as long as you give me the correct one. Explain your workings to
me later. First do the math.
Problem Statement: Our client is GVK, the operator of Bangalore Airport. It wants to make
money from all the people who enter and exit Bangalore airport every single day. Do you
think it’s possible?
(After 10 mins of calculations)
Interviewer
That’s enough. We’re running out of time. Why don’t you walk me
through your calculation?
The Interview
Candidate
Sure, Sir. So, broadly there are two categories of people who enter and exit
Bangalore airport – Passengers & Family/Friends who are there just to
drop or pick up. Primarily, people either come by public transport like cabs
or buses, or have their personal vehicles. Rather than charge individual
entry, it makes more sense to charge on a per vehicle basis.
Interviewer
Let’s get started. Do you know who operates Bangalore airport?
Candidate
I’m not sure, Sir.
Interviewer
GVK does. Assume I’m GVK, you’re a McKinsey Partner. I’m your client. I
have come to you saying that lakhs of people enter and leave Bangalore
airport’s premises each day. Yet, I make nothing out of them. I want to
make money from all the people who enter and exit Bangalore airport
every single day. Do you think it’s possible?
Candidate
It’s definitely possible, Sir. Whether or not it’s economically viable is
something that will have to be worked out.
Interviewer
Work it out, then. Give me your final recommendation.
Candidate
So, the way I’m thinking about this is…
Interviewer
I don’t want to know your thought process. Just give me the final answer,
with a strategy for execution.
Candidate
(a little confused) So, do you not want to walk with me through the
working?
To estimate the number of people travelling from Bangalore airport
everyday, I will take a demand side approach. Assuming one runway each
for takeoffs and landings, I want to divide a 24-day into three bands of high
intensity, medium intensity and low intensity. I’m assuming that the
airport operates for 20 hours a day, all days being equal. For the sake of
simplicity, I’m not building in seasonality associated with weekends or
peak seasons.
Of the 20 operational hours, I am assuming 6 hours to be high intensity, 8
hours to be medium intensity and 6 hours to be low intensity. During high
intensity, one flight takes off every 2 mins. During medium intensity, one
flight takes off every 5 mins, and during low intensity one flight takes off
every 10 mins. Assuming each flight has a capacity of 300 seats with 100%
occupancy (since we have adjusted for demand variability through flight
frequency), #passengers per day –
95
Monetizing Footfall at Bangalore Airport
Sector : Airport
Type of Case : Unconventional
Candidate
The only costs involved are those of constructing parking space, organized
bays for pick-up/drop-off, peripheral infrastructure and recurring costs of
operating the system. Considering this, the opportunity definitely seems
monetizable and lucrative. However, this computation is based on a
number of assumptions. We should definitely benchmark the numbers –
both footfall (from historical data) and toll taxes and charges that can be
levied (from rate charts in force at other airports e.g. Mumbai Airport) to
validate the quantum of the opportunity at hand.
Problem Statement: Our client is GVK, the operator of Bangalore Airport. It wants to make
money from all the people who enter and exit Bangalore airport every single day. Do you
think it’s possible?
The Interview
Candidate
High Intensity – 6*30*300 = 54,000
Medium Intensity – 8*15*300 = 36,000
Conservatively assuming similar estimates for arrivals, total revenue/day ~
3,50,00,000
Interviewer
Understood, thank you.
Low Intensity – 6*6*300 = 10,800
Therefore, total # passengers per day (departures) = ~1,00,000
Assuming a similar pattern for other airports, total # passengers per day
(arrivals) – ~ 1,00,000
Let us assume that 50% come by cabs and buses, whereas 50% come by
personal vehicles. For the 50% who come by personal vehicles, a toll tax
can be charged basis the type of vehicle, and duration of wait in a slab
structure format. Of those commuting by bus/cab, the operators can be
charged an entry fee which may be passed on to consumers. For arrivals,
personal vehicles are likely to come earlier and incur waiting/parking time,
therefore the revenue is generally likely to be higher.
For departures: 50,000*300 (toll per car assuming 0mins wait time) +
50,000*50 (avg charge per person) = ~ 1,50,00,000 + 25,00,000 =
~1,75,00,000
96
Media Cost Reduction- AUTOMOBILE
Total # of passengers per day (arrivals) – ~
1,00,000
20 Operational
Hours/Day
High Intensity
Medium Intensity
Low Intensity
6 Hours
8 Hours
6 Hours
One Flight Takes Off
/ 2 mins
One Flight Takes Off
/ 5 mins
One Flight Takes Off
/ 10 mins
Each flight has a
capacity of 300 seats
with 100%
occupancy
Each flight has a
capacity of 300 seats
with 100%
occupancy
Each flight has a
capacity of 300 seats
with 100%
occupancy
6*30*300 = 54,000
8*15*300 = 36,000
6*6*300 = 10,800
Let us assume that 50% come by cabs and
buses, whereas 50% come by personal vehicles.
For departures: 50,000*300 (toll per car
assuming 0mins wait time) + 50,000*50 (avg
charge per person) = ~ 1,50,00,000 + 25,00,000
= ~1,75,00,000
Conservatively assuming similar estimates for
arrivals, total revenue/day ~ 3,50,00,000
97
Valuation of a Coal Mine
Sector : CoalMine
Type of Case : Valuation
Candidate
I’d first start out by commissioning a pre-feasibility/geological study of the
mine site if it hasn’t been done already. This will give us a sense of the
nature of reserves we’re looking at – in terms of quality of coal, total
available reserves etc.
Interviewer
Okay, that’s done. What after that?
Candidate
Then basis the quantity of reserves that we can extract on an annual basis,
we can determine the life of the mine and project its cash flows over its
life. The price per tonne can be built in using the market rate. Further, we
can use coal futures to determine the growth rate.
Interviewer
Sorry, I don’t understand. What exactly do you mean use futures?
Candidate
Assume that your client wants to purchase a coal mine, and you have to
advice on the decision on whether to go ahead with the investment. How
would you value the mine?
I mean, coal being a commodity, we can easily procure the values at which
its futures are quoted and use them as proxy for prices of coal in the
valuation model.
Interviewer
Fair enough. What about costs?
Candidate
I’d like to begin by understanding where the mine is located and the
objective behind buying it? If the client is looking to mine coal and trade it
in the open market, proximity to the ports is key and will command a
valuation premium. On the other hand, if the mine is going to be used
captively, say for steel making, we will have to build in the cost of logistics
into valuation.
So, there will be two kinds of costs. Fixed costs for site development,
machinery, infrastructure etc. These will be sunk in nature, so we should
build them in right at the start.
Interviewer
And what about the project manager’s salary?
Candidate
There will be some costs which will tend to be recurring in nature, they
will have to be adjusted on an annual basis.
Interviewer
How will you adjust them?
Candidate
Basis the costs now, I will index them to inflation and then adjust against
the corresponding year’s cash flow in the future. I will then discount the
net adjusted cash flow using the expected IRR of the project, to arrive at a
valuation number.
98
Problem Statement: Your client wants to purchase a coal mine, and you have to advice on
the decision on whether to go ahead with the investment. How would you value the mine?
The Interview
Interviewer
Hi Candidate, shall we quickly do a case before we wrap up?
Candidate
Sure!
The candidate is seated in the center of the room. The interviewer is walking around the
room and pacing around the candidate’s seat. This creates a more stressful environment.
Interviewer
Candidate
Interviewer
There is no particular objective other than wealth maximization. The client
wants to make money. How would you value the mine?
Valuation of a Coal Mine
Candidate : Candidate
Bhide Sector : CoalMine
Type of Case : Valuation
Problem Statement: Your client wants to purchase a coal mine, and you have to advice on
the decision on whether to go ahead with the investment. How would you value the mine?
Valuation
The Interview
Interviewer
Let’s say that there is about 69 MT (million tonnes) of soil in the mine, and
the density of coal is 0.86 MT. How much reserve of coal are we looking
at?
Candidate
Am I correct in understanding that every MT of soil has 0.86 MT of
extractable coal in it?
Interviewer
That’s correct.
The interviewer has been pacing around the room since the beginning of the interview. In
order to maintain a conversation, it is impossible to use the notepad up to this point.
Candidate
May I use pen and paper?
Interviewer
Absolutely! Please go ahead.
Candidate quickly does a rough calculation. 69 x 0.86 = 59.34 MT, however we just need a
ballpark figure. Therefore, no need to proceed with the entire calculation.
Candidate
We’re looking at about 60MT of coal.
Interviewer
Fantastic! Welcome to McKinsey, Candidate!
PreFeasibility/Ge
ological Study
Quality of
Coal
Total
Available
Reserves
Life of Mine
Project Cash
Flows over its
Life
Price per
tonne using
the market
rate
Coal Futures
to determine
the growth
rate
Costs
Fixed
Site
Development
Reoccurring
Project
Manager's
Salary
Machinery
Infrastructure
99
Roland Berger
100
Manufacture or Outsource – ELECTRIC VEHICLE MANUFACTURER
Sector : Automobile
Type of Case : Unconventional
Problem Statement: The client is an EVmanufacturer and wants to decide how to fulfill
their requirement of batteries, help your client out.
The Interview
Interviewer
Okay Candidate. What all decision factors would be you consider for
helping the company decide a route?
Candidate
Do you want me to consider any one of them or both?
Interviewer
You can consider both; start with in-house manufacturing.
Candidate
Alright. For deciding on whether to go ahead with in-house
manufacturing, the client can investigate 4 factors (given on next page).
Interviewer
You covered it well Candidate. I will add that the economies of scale is not
forecasted at this point, and company is running on thin margins already.
Also, the company has no prior experience in batteries, and EV cells are
also not their core competency. Do you think battery manufacturing could
become their core competency?
Interviewer
Good Morning Candidate, tell us something about yourself?
Candidate
Good Morning Sir. Prepared a generic answer for this.
Interviewer
Very well, let’s get started with the case right away.
Interviewer
Your client is an EV manufacturer and wants to decide whether they
should manufacture or source batteries, help them out.
Candidate
Based on the value it adds, its degree of inimitability, rarity, and nonsubstitutability, battery manufacturing could not be a core competency.
Candidate
I would like to begin with a few clarifying questions on the client.
Interviewer
Interviewer
Yes, Go ahead.
Okay, now why don’t you take us through the other approach you
mentioned.
Candidate
What kind of products or services does the client offer/manufacture? Does
it operate across the value chain? How does the competition landscape
look like for the client?
Candidate
In the external approach, the client can either outsource only the cell and
perform assembly in-house or source the complete assembly.
Interviewer
The client manufactures EV scooters and provides emergency power
solutions for home. It is an established player in the industry but not the
market leader. Also, industry has 4-5 players and market consists of budget
buyers.
Take me through both alternatives. What factors could be important to
know?
Candidate
With the available information, I can approach the problem by considering
internal and external approach.
The client can either manufacture the batteries in-house or out-source
them.
To explore the first alternative of sourcing cell and performing the final
assembly in-house, the client should consider 3 factors (given on next
page).
While for complete assembly sourcing, 5 factors should be taken care of.
Interviewer
You have covered the factors nicely. We can stop the discussion here.
Thanks.
Interviewer
Candidate
101
Manufacture or Outsource – ELECTRIC VEHICLE MANUFACTURER
Approach
Fulfilling Battery
Requirements
Internal
Approach
In-house
Manufacturing
Decision Criteria:
External
Approach
Out-source
only Cells
Out-source
CompleteAssembly
Prior Experience
In-house assembly
line
Cost Criteria
Availability of Tech
with client
Availability of Tech
with client
Technical capability
of vendor
Forecasted
Economies of Scale
Forecasted
Economies of Scale
Quality Assurance
Responsivenessand
Location
Capacity
102
Guesstimate – LUXURY PEN
Sector : ConsumerGoods
Type of Case : Guesstimate
Problem Statement: Our client wants to enter India with its luxury pens priced at
around $50. Our client has had experience of China where their product has been
successful. Can you help our client with an estimate on market size for luxury pens in
India?
The Interview
Interviewer
Good Morning Candidate, let’s get started withthe case directly?
Candidate
Good Morning Sir. Yes, sure.
Interviewer
Our client wants to enter India with its luxury pens priced at around $50.
Our client has had experience of China where their product has been
successful. Can you help our client with an estimate on market size for
luxury pens in India?
Candidate
I would like to begin with a few clarifying questions on the client.
Interviewer
Yes, Go ahead.
Candidate
What is the life of the pen? And should we also consider the dynamics of
refilling option which could impact the total sales during the life?
Interviewer
For this case, assume that a pen last for 10 years and the customer buys a
new one after that. Basically tell me the size for the life of the pen.
Candidate
Alright. Since I have to limit the sizing for the 10 years life of the pen, I can
safely ignore the fact of refilling option.
Interviewer
Yes, you can.
Candidate
I will split the population of India in 30-70 and only consider the urban
population for further calculations.
Interviewer
Sounds okay. Go ahead.
Candidate
Then I will split the urban population into income segments (20-60-20)
and given the luxury product type, I would continue with only the highincome group.
Interviewer
Yes, That’ssensible.
Candidate
The last step would divide the income group age-wise and ignore the less
than 25 years group as they are more interested in functional use of a
pen.
Then I would introduce a factor 0f 0.5 to filter out from the final
population which would not be interested in buying the product.
Finally, given the 10 years life of the product we can say that on an
average the company has a market of 3.4 M per year.
Interviewer
Candidate, you did a thorough analysis. I think we are done with the case.
103
Guesstimate – LUXURY PEN
Approach
India Population
(1300 M)
30% Urban
(390 M)
20% High Income
(78 M)
60% Middle
Income
70% Rural
20% Low Income
50%Age<25
15% Age 25-34
(12 M)
15% Age 35-44
(12 M)
Further Calculations (as per the interview):
• Market size = 0.5*12+12+8+8 = 34 million
• Considering life of pen as 10 years = 34/10 = 3.4 million over a span of 10 years
10% Age 45-54
(8 M)
10% Age 55+
(8 M)
104
Strategy&
105
Guesstimate– AIRPORT REVENUE
Sector : Airline
Type of Case : Guesstimate
Problem Statement: Find the revenue from passengers at the airport that theyare
building in NCandidate Mumbai.
The Interview
Interviewer
Hi Candidate!
Candidate
Hello sir!
Interviewer
Do you like guesstimates?
Candidate
Sure sir.
Interviewer
Alright then, lets do one. A new airport is being built in NCandidate
Mumbai. I want you to come up with a number that represents the
passenger
revenue at the airport. Also, don’t consider revenue from the tickets.
Alright, why are they opening this airport? Also, is this a prime location?
What sort of footfall are they expecting? Will there be both domestic and
international flights?
Candidate
Interviewer
Assume all of this as the same as for Shivaji Chhatrapati Shivaji Airport.
Also, say 40% of the customers from the previous airport will get diverted
to this new airport. Both types of flights will be flying from this airport. Just
list out the main revenue streams for the airport.
Candidate
Alright, rentals from eateries, joints and restaurants, parking charges,
lounge expenses, advertising, currency exchange counters.
Interviewer
Start with Food and Beverages.
Candidate
So, the footfall at Chhatrapati Shivaji Airport is approximately 50 million a
year. 40% of that makes it 20 million for the new airport. Assuming that
only 20% of the passengers consume the food(~4million). This is because
only hungry people or rich people eat at the airport.
Interviewer
Okay, go ahead.
Candidate
Meals can also be divided into proper full course (Rs 500) or basic snacks
like tea, samosa, etc. (Rs 150). Since most people snack, I am assuming
that 60% of the eating crowd goes for small time snacks (Rs 150).
Interviewer
Alright, give me the final number.
Candidate
Rs 1160 million overall. The calculations are:
60%*4*150 + 40%*4*500 = Rs 1160 million
Interviewer
But the actual number is around Rs3300 million. Do you thinkyou’re
forgetting something?
Candidate
Oh right. I forgot the drinks. I have only accounted for food.
Interviewer
That is correct. Drinks are typically expensive and make up for almost 60%
of the F&B revenue.
Thank you,
Candidate.
106
Guesstimate– AIRPORT REVENUE
Approach
Airport
Passenger
Revenue
Currency
Exchange
Tickets
Rentals
F&B
Food
Assumed 40% of
Population
Big Meals
Parking
Advertising
Beverages
Snacks
Rs500
Rs150
40% * 4 million * 500
= Rs800 million
60% * 4 milion * 150
= Rs360 million
Assumed 60% of
Population
Eating population = 20% of 20 million = 4 million
107
Analysing delay in project implementation – GOVERNMENT
Sector : Governmentproject
Type of Case : Unconventional
(1) Availability: Dealers for providing RFID tags may be limited. Or banks
may not be available near by , so it may require visiting banks which is
difficult given busy work life.
(2) Usability: People are not trained properly (how to link bank account).
(3) Habit: People accustomed to cash payment lack incentive to switch, as
benefits not communicated by govt. properly.
Problem Statement: Government of India wants to implement fast tag. But thereis
delay in implementation. Analyse why.
The Interview
Interviewer
Dealers are easily available, bank work can be done online. Process is easy
and videos available. People are incentivised as it saves time at toll booth.
Anything else that you can think of? Also who will be the major customer?
Interviewer
Good Morning Candidate, how are you doing today?
Candidate
Good Morning Sir, I am doing good.
Candidate
Interviewer
Very well. Your client is the Indian government. It wants to implement fast
tag, but it has noticed a delay in implementation. Analyse why this is the
case.
Major customer will be highway traffic. Mainly truck and heavy vehicles,
cab and then normal people who travel by their own vehicles.
Interviewer
Think about the truck drivers.
Candidate
Trucks are owned by transport companies. There might be a problem for
a transportation company to link single account with a lot of trucks.
Interviewer
No, that is allowed and is manageable. Anything for other stakeholders?
Candidate
Banks would have to deploy some staff and train them for this. Do we
have any lack of staff issues or has govt. partnered with limited banks?
Interviewer
No staff is not an issue and there are sufficient number of partner banks.
Candidate
Okay consider toll both companies. In this new system they won't be
hCandidateng cash in hand. Money will be transferred through bank –
with possible transaction charges leading to reduction in cash in hand.
Also every transaction will be recorded. So no tax evasion is possible. All
these reasons may discourage tool booth operators to co-operate.
Interviewer
Very good. That is one of the main reasons why the tags aren’t being
implemented. We’ll endhere.
Candidate
Okay, before I structure my analysis, I’d like to begin with some preliminary
questions. Firstly, could you elaborate on fast tag?
Interviewer
Sure. It is like an RFID tag on the windshield which will make toll collection
automatically. Your bank account will be linked to the ID and the amount
will get deducted from account.
Candidate
Fair enough. Would I be right in assuming that the key stakeholders are the
government, toll booth company, people using the highway, and banks?
Interviewer
Yes.
Candidate
Okay, I’m going to analyse the customer side (people) to start with. Would
that be fair priority-wise?
Interviewer
Sure.
Candidate
Possible reasons why people won’t be willing to adopt:
108
Analysing delay in project implementation – GOVERNMENT
Approach
Stakeholders
Government
Availability
People
Usability
Banks
Habit
Problems with
training staff?
Limited
partnerships?
Major
customers
Trucks + Heavy
vehicles
Cabs
Tollbooth
company
Limited cash in
hand + no tax
evasionpossible
Ordinary
commuters
Problems with
linking single
account to
multiple
trucks?
109
Estimate Demand for Soft Drink – FOREIGN RETAILER
Sector : Retail
Type of Case : Guesstimate
Problem Statement: Size the market for a new soft drink brand set up by established
cola producer.
Interviewer
Okay
Candidate
I will now split this figure into urban and rural. In a developing countrylike
India, the split should be approx. 30% urban and 70% rural. Is thatfair?
Interviewer
Yes that is fair.
Candidate
Based on my experience, urban was the major market. So I will focus on
that. That amounts to approx. 300 million. Is it fine to ignore rural
demand for the time being?
The Interview
Interviewer
Good Morning Candidate, how are you doing today?
Interviewer
Yes.
Candidate
Good Morning Sir, I am well.
Candidate
Interviewer
Tell me a bit about yourself. Your work history, etc.
Candidate
Okay. I have worked with company XYZ for the past 3 years. They are an
established cola manufacturer. I led the first production run for ‘Sting’ – a
carbonated energy drink.
Right, now I will divide the figure based on demographics. Based on our
research, our main focus was on students and working professionals of
both sexes aged 18-45 (because of deadlines forcing them to pull allnighters). This amounted to 95% of our demand. Since India is a young
country age-wise, I would estimate about 60% of our population fitting
into this demographic.
Interviewer
That’s very interesting. How about you estimate the market size for ‘Sting’
for me today?
Interviewer
That’s a fair assumption.
Candidate
Sure, I can do that. Current market size, or some years down the line?
Candidate
Interviewer
Let’s say, market size 1 year from now.
Candidate
Okay, for this case I believe a top down approach would be most efficient.
For simplicity’s sake I am taking India’s current population level as 1billion.
Further, due to health concerns, around 40% of this number will not
indulge in sugary drinks. So our final demand estimate comes to approx.
33 million. Assuming on average each person drinks one 250 ml bottle per
day, that’s a demand of 33 million perday.
Interviewer
That sounds alright. Why have you not considered income?
Interviewer
Yesthat’s fair.
Candidate
Candidate
I know based on my reading that the population growth rate of no country
exceeds 1% annually. Since India is one of the fastest growing, I’ll take
India’s growth rate as 1%. This means in 1 year, population will be1.01
billion.
I have not considered it because 250 ml is for Rs. 30. This is a reasonable
amount for any income level.
Interviewer
Okay that’s fair enough. Alright we’redone.
Candidate
Alright. Thank you for your time.
110
Estimate Demand for Soft drink– FOREIGN RETAILER
Approach
Population – 1.1
billion
Rural (70%)
Urban (30%)
Students +
Working
professionals
(60%)
Health
conscious (40%)
Others
(40%)
Non-health
conscious (60%)
33 million bottles
per day
Assuming average
customer drinks one
bottle per day
111