The Duke MBA
Consulting ClubCasebook
2022 – 2023
October 2022
Edition 1
DMCC 2022-2023 Sponsors
The Duke MBA Consulting Club is grateful for the support of our sponsors:
2
Welcome Message
Welcome students,
The Duke MBA Consulting Club (DMCC) is proud to present the 2022-2023 DMCC Casebook. This year we have included
12 brand new cases. The objective of this book is to help you prepare for your upcoming consulting case interviews. Case
interviews are an integral part of the hiring process for consulting firms. These interviews give you the opportunity to
showcase your communication, client, creative, and analytical skills to your interviewer. This book was developed to
complement the Duke MBA Consulting Roadmap curriculum. We hope that using both will help lead you to success during
the upcoming recruiting season.
This casebook could not have been completed without all of the wonderful cases submitted by your classmates. We would
also like to thank our friends at other MBA programs for sharing with us their old casebooks to supplement the cases herein.
Note that casing is a journey and a process. While many cases herein follow a prescriptive nature, actual interviews may
vary with respect to time, organization, and detail. It’s important to be adaptable, stay creative, and respond to mistakes
with a confident and professional demeanor.
We wish you luck with your preparation and would like you to remember that your fellow DMCC members are here to help!
Please reach out to anyone on the cabinet if you feel that you are not “cracking the case”. Lastly, to the students from other
top MBA programs who are using this casebook during their preparation, we warmly welcome you to “Team Fuqua.”
Good luck!
Kastur Bhattacharjee
The DMCC 2022 Casebook Chair
Acknowledgements
This casebook would not have been possible without the case contributions from the following second
year students:
Abidemi Owokoya, Alejandro Castro, Alfonso Barajas, Ali Lightbourne, Ali Stelletello, Chithraa
Veldurairaj, Clay Brezinski, Cory Dowd, Courtney Kaplan, Devika Mathur, Ernesto Almonacin, Gitika
Lakhotia, Huong Bui, Jin Zhang, Kevin Liscovitz, Maureen Ojukuwu, Nishanth Bharadwaj, Sherman
Wilhelm, and Thiago Silva
Please email fuquadmcc@duke.edu with any case-specific feedback, questions or improvements.
Thank you!
Overview, Changes, and Notes
• Industry primers were added back to help candidates familiarize themselves with the
fundamentals of a particular industry. However, given the ever-changing market
landscape, candidates should always stay up-to-date with recent events and market
trends
• Quantitative and qualitative difficulty were combined into a single case difficulty metric.
Experience showed that candidates would overemphasize particular rankings whereas real
interviews coalesce both components.
• Ask the behavioral questions EVERY TIME you give a case! Do not neglect this portion of the
interview
• All cases are adaptable. Sample frameworks and brainstorms should be used as baselines to
guide thinking. Be creative and leverage personal experience in every case
• For the 2022 academic year, send Kastur Bhattacharjee (kb487@duke.edu) any comments,
corrections or errors found in this casebook
• HAVE FUN! Casing is very representative of the day-to-day life as a consultant. Enjoy the
casing process, and you’ll enjoy your future career!
Industry Overviews
Oil & Gas
Products/ Services
Products are categorized along the value chain as upstream, midstream, or downstream
Upstream: Identify, extract, or produce raw materials. Also called exploration and production
Midstream: Link upstream and downstream through storage and transportation services
Downstream: Anything related to the post-production of crude oil and natural gas
*The closer an oil and gas company is to supplying consumers, the further downstream it is
Revenue
Volume of goods sold; Price is generally determined by global indices; Products can include diesel, natural
gas, gasoline, heating oil, propane, etc.
Costs
It is important to note that this is a high fixed cost industry, resulting in a significant barrier to entry. Other
costs may include extraction costs, COGS (i.e., oil), labor, technology, transportation, and licensing
Competitive Landscape
(Competitors,
Substitutes, New
Entrants)
Upstream: BP, Shell, Aramco, Exxon Mobil, and China National Offshore Oil Corporation
Oilfield services: Schlumberger, Halliburton, Baker Hughes
Downstream: MPC, PSX, COP, BASF, Dow, SABIC; Any oil refinery, natural gas distributor, or retail outlets
Customers
Governments, CPG producers, Utilities companies
Distribution Channel(s)
Wholesale to customers: in large quantities
Traders: in smaller quantities
Suppliers/ Supply
Chain
Products are mostly transported in large quantities by vessels and require long lead times.
Recent Trends & Key
Concepts
Oil prices have been volatile over the past few years. The recent American shale oil boom, & slowdown
have been the result of high oil variance.
COVID-19: There was a surplus of oil causing many refineries to halt operations. The oil price went negative
as a result of a lack of storage for oil. It is important to understand the current state of OPEC, and if there
have been any recent agreements to cut production.
Key trends
8
Consumer Packaged Goods (CPG)
Products/ Services
CPG companies provide consumers with items used daily by average consumers that require routine
replacement or replenishment. These items include cleaning agents, beauty products, food, beverages, pet
food, clothes, tobacco, makeup etc.
Revenue
Volume of goods sold; Price premium on branded goods
Costs
Sales and Marketing (branding, discounting, trade spend); COGS (raw materials, packaging, and
processing), shipping/distribution, product development, product testing
Costs can vary depending on how horizontally integrated the CPG company is within the supply chain
Competitive Landscape
(Competitors,
Substitutes, New
Entrants)
Procter & Gamble (P&G), Unilever, Clorox, Mondelez, PepsiCo, Frito Lay, Chobani, Casper, Philip Morris
USA, Coca-Cola, etc.
Private label products, home remedies, small mission-driven niche brands
Customers
Walmart, Sam’s Club, Costco, Target, Grocery stores, Convenience stores, Consumers
Distribution Channel(s)
Wholesale to customers (Walmart, etc.)
Direct-to-consumer (limited web distribution through Amazon and others)
There has been a wave of CPG companies attempting to go D2C to avoid the middleman
Suppliers/ Supply
Chain
Supply chain varies widely by product and region; plants are owned/operated or contract manufactured
Recent Trends & Key
Concepts
Activist investors push cost cutting and selling non-core brands; emphasis on sustainability; direct-toconsumer movement; CPG subscription kits (i.e., Dollar Shave Club, Blue Apron); CPG product
personalization; private label products and small niche brands stealing market share from the larger CPG
companies
COVID-19: Many CPG companies have benefitted from COVID-19 as consumers have stocked up on CPG
products. This has especially benefitted traditional CPG companies as consumers have a greater ‘trust’ in
their products. During COVID consumers have been less conscious of the environmental impacts of the
products they buy, and more focused on the value the product delivers
Key trends
9
Manufacturing
Products/ Services
Includes companies in the business of mechanical, physical, or chemical transformation of
materials/substances/components into new products
Revenue
Volume of goods sold; Price premium on branded goods; Revenue is generated by selling the finished
goods. These may be sold to other manufacturers to produce more complex products, or to wholesalers,
who then sell them to retailers.
Costs
Process efficiency, supply chain management, labor, raw materials; commodities, channel management,
marketing, capital investment
Competitive Landscape
(Competitors,
Substitutes, New
Entrants)
General Motors, Chrysler, Ford, Toyota, Honda, Boeing, Airbus, GE, Phillips, Siemens, Caterpillar,
Honeywell, Dow, Corning, HP, Intel
Customers
Varies by industry and position in supply chain, can be consumers or raw goods to businesses
Distribution Channel(s)
Direct Distribution: The manufacturer sells straight to the customer and uses no intermediary
(Manufacturers selling their products through their own retail chains)
Indirect Distribution: Utilizing intermediaries to get the product to the end user (a product manufacturer
utilizes Costco to reach and sell to their target market)
Suppliers/ Supply
Chain
Supply chain varies widely by product and region; plants are owned/operated or contract manufactured;
Supply chains are typically comprised of geographically dispersed facilities and capabilities, including
sources of raw materials, product design and engineering organizations, manufacturing plants, distribution
centers, retail outlets, and customers, as well as the transportation and communications links between them.
Recent Trends & Key
Concepts
Increased automation; Trump has been pushing to re-shore manufacturing supply chains
COVID-19: COVID has forced some companies to re-evaluate “just-in-time” manufacturing processes; some
companies are looking to diversify the steps of their manufacturing processes, and build up ‘emergency’
inventory; Many manufacturing companies shifted production to support the shortage of masks
Key trends
1
Financial Services
Products/ Services
Retail banking, commercial banking, investment banking, deposit-based services, credit cards, consumer
loans (personal and commercial/business), payments, insurance, mortgages, securities, private wealth
management, underwriting for IPOs, retirement accounts, real estate loans
Revenue
Net revenue is the spread between bank’s borrowing cost and the interest rates charged to borrowers;
underwriting fees; commissions; insurance companies generate revenues from premiums received;
Costs
Overhead (branches, administration, compliance), salaries, bad debt expense, marketing
Competitive Landscape
(Competitors,
Substitutes, New
Entrants)
Large national players (Wells Fargo, Bank of America, Citi) compete with regional banks. The largest
players’ services extend well beyond commercial banking to investment banking, securitization, proprietary
trading, etc. with services that are increasingly opaque
Fintech is increasingly becoming a player within financial services
Customers
Individual consumers (with the emergence of FinTech these services are now more accessible to the
underbanked community)
High net worth consumers (priority segment as result in higher profits)
Small/medium businesses without sufficient size for larger investment banking financing services; private
companies going public looking for underwriting
Distribution Channel(s)
Face-to-face presence with bank branches, tellers, etc.
ATM services, online, mobile, robo-advisors (COVID-19 is increasing the use of these services)
Banks increasingly offer credit cards, home loans, etc. as means to increase asset base
Suppliers/ Supply
Chain
Deposits from individuals and corporations
Fees from services conducted
Recent Trends & Key
Concepts
Consolidated, mature industry with primary growth through acquisitions
Demographic shift (baby boomer aging) creating large market for retirement products
Offshoring of various functions to reduce expenses (e.g. call centers, back office functions)
Customer intelligence and the ability to act in real-time to customer needs
Digitization of services (fewer customers visiting bank branches); zero-commission trading
COVID-19: Since COVID many consumers have reduced visits to the bank and further relied on digital
services; Many banks underwrote PPP loans to businesses seeking government support
Key trends
11
Healthcare (Provider)
Products/ Services
Care provided to patients in doctor’s offices/clinics, urgent care facilities, emergency departments, acute
care facilities, etc. Providers may be for-profit or non-profit.
Patients typically are billed for the facility fees (ex. hospital beds, medication, etc.) as well as for physician
services received
Revenue
Net Patient Service Revenue: revenue for care provided minus expenses for providing services
Academic institutions and other health systems often receive philanthropy
Most providers receive the actual money from insurance companies and tend to generate greater margins
on elective surgeries
Costs
Corporate shared services (admin, IT, finance, legal, billing, etc.), salaries (physician groups often
contracted), pharmaceuticals, research, capital expenditures for large facilities, equipment, etc.
Competitive Landscape
(Competitors,
Substitutes, New
Entrants)
Consolidation among smaller regional health systems or by acquisition of larger health systems; Increased
emergence of urgent care facilities (ex. CVS Minute Clinic) and Telemedicine service providers; Decreased
power from smaller organizations to negotiate favorable rates with payers
Customers
Any one in need of health care services (growing as the US population continues to trend older)
Inpatient (stay in hospital) vs. outpatient (DO NOT stay in hospital)
Distribution Channel(s)
Hospitals (acute care), clinics, doctor’s offices, emergency departments, urgent care, telemedicine providers,
large health systems, IDNS (Investor-owned), regional health systems, academic institutions urgent care
facilities, specialized pediatric facilities, rehabilitation facilities, hospice care, etc.
Suppliers/ Supply
Chain
Suppliers to healthcare providers: pharmaceutical companies, technology providers (ex. radiology
equipment, healthcare IT)
Recent Trends & Key
Concepts
Pay for performance; expanding and aging populations; increasing numbers of people with chronic, longterm conditions; potential changes to healthcare coverage depending on the November election (i.e.,
healthcare for all); increase in technology (telemedicine, electronic medical records and protection of data,
wearables, predictive technologies, etc.); focus on preventative care
COVID-19: CARES Act; Since COVID more providers have relied on delivering their services virtually.
Voluntary procedures have halted at hospitals (these tend to generate the highest margins for providers).
Key trends
12
Private Equity Investments
Products/ Services
Equity that is not publicly traded
Common forms include Leveraged Buyouts (LBOs), Venture Capital (VC), Mezzanine Capital,
Distressed Investments, and Growth Capital
Revenue
Return on investments (carried interest) and management fees
Levers pulled to increase revenue (value-creation): timeframe, identifying efficiencies, new management,
acquisitions
Costs
Investment expenses, legal, technical assistance to firms, administrative expenses, travel, labor is very
costly (few and highly paid employees), taxes
Competitive Landscape
(Competitors,
Substitutes, New
Entrants)
Supply of capital in the market is greater than demand. This has resulted in PE firms having a lot of ‘dry
powder’
Large (e.g. KKR, Carlyle, Blackstone, TPG), Mid ($250M to $5B), and Small Market PE shops
Customers
New customers of PE deals may be corporations
Institutional investors
Customers can range from small family-owned companies to large corporations
Distribution Channel(s)
Leveraged Buyouts: controlling interest (of equity) is acquired through borrowing a lot of money
Venture Capital: investors give cash in exchange for shares/control; typical with start-ups
Mezzanine Capital: financing that contains equity-based options and subordinated debt
Growth capital: financing to expand, restructure, or enter new markets with little change in management
Distressed Investments: investing in financially stressed companies
Suppliers/ Supply
Chain
Private investors, large corporations, foundations
Recent Trends & Key
Concepts
Larger amounts of equity required for each deal; Startup financial performance not always meeting high
valuations; Healthcare and tech are seeing most of the activity; Increased focus on value-creation rather than
financial engineering to generate investment targets
COVID-19: PE firm exits have halted and there has been a focus on supporting existing portfolio companies
Key trends
13
Pharmaceuticals
Products/ Services
Brand name drug manufacturers produce original, patent-protected (for a certain period) drugs for human
and animal diseases. Generic drug producers produce ‘copy-cat’ drugs (with the same medical result) at a
lower development cost when the originator drug’s patent expires.
Revenue
Determined by: size of specific treatment area/level of competition; buy-in from doctors that will prescribe;
speed to market (1st to market is important); dosage and frequency
Revenue can come directly from patients, but most is received from third party insurers
Costs
VC: sales and marketing (doctor visits, sponsored studies)
FC: R&D (drug discovery, formulation, clinical trials; a lot of this is now outsourced; generic companies only
need to perform clinical trials and are therefore fast to come to market once a patent expires)
Competitive Landscape
(Competitors,
Substitutes, New
Entrants)
Success is contingent on drug effectiveness, adoption/buy-in from doctors, coverage approval from private
and public insurers, patient adherence and ease of use.
US, Europe and Japan are the largest markets although emerging markets are growing (e.g., China, India,
Brazil)
In the US, the Food & Drug Authority (FDA) needs to approve all drugs before sale. Generic drugs are
treated as substitutes and usually receive more favorable reimbursements and coverage by insurers.
Customers
Doctors who prescribe these medicines
Insurance companies (i.e. private insurers, Medicare (over 65), Medicaid (low-income/disabled))
Patients/consumers who need these drugs/medicines
In some emerging markets officials (provincial and central government) may control channel access
Distribution Channel(s)
Over the counter (“OTC”, can be sold without prescription); Retail outlets – CVS, Walgreens; Mail order/online;
hospitals; pharmacies; doctor’s offices; Emergence of prescription delivery; B2B: Distributors/intermediaries
Suppliers/ Supply
Chain
Drug manufacturer –> Drug wholesaler/distributor –> retailer/pharmacy/doctor’s office/hospital –> patient
Recent Trends & Key
Concepts
Price competition from generic drug manufacturers. Increasing pressure from health insurance companies
and hospitals to reduce prices. R&D challenge of finding high revenue drugs (‘Blockbusters’ have annual
sales > $1B). Weaker investments in R&D in recent years. Loss of patent on key drugs for many large
pharma companies, especially for specialty biologic drugs in the next 5 years;
COVID-19: COVID has disrupted pharma supply chains (especially involving China)
Key trends
14
Airlines
Products/ Services
Air transportation for passengers and cargo
Revenue
Ticket sales, baggage fees, food and beverage sales, freight fees, new classes (Economy Plus as well
as Economy “Basic”), seat allocation, in-flight entertainment, in-flight WIFI, frequent flyer programs, consumer
credit cards
Costs
Fuel, food and beverage, ground crew, air crew, aircraft lease/payments, airport fees, IT/admin
fees, frequent flier program fees, marketing and sales, offices, hangars, insurance
Competitive Landscape
(Competitors,
Substitutes, New
Entrants)
Legacy carriers (Delta, United, American, Lufthansa, Air India, British Airways) compete with each other and
are also competing with low cost carriers (Southwest, Allegiant Air, Frontier Airlines, Eurowings, Gogo Air).
New entrants are more common in the low-cost model. Barriers to entry include available gate space / airport
leasing agreements and extremely high startup costs
Customers
Individual passengers, corporate travelers, travel agents/websites, freight/cargo shipping companies
Distribution Channel(s)
Direct from the airline (website, at the airport, over the phone), travel agents (website, in person, over the
phone), through other providers as a bundle (cruise and flight bundle, hotel and flight bundle etc.),
increasing number of tickets sold through trip aggregators (Kayak, Priceline, etc)
Suppliers/ Supply
Chain
Aircraft manufacturers, avionics manufacturers, aircraft leasing companies, fuel providers, airport
operators, flight training providers, catering providers, aircraft maintenance providers
Recent Trends & Key
Concepts
Metrics: Available Seat Miles (Total # seats available for transporting) * (# miles flown in a period), Revenue
Passenger Mile (RPM) = (#Revenue-paying passengers)*(#miles flown in a period), Revenue per Available
Seat Mile = (Revenue) / (# seats available), Load Factor = % of available seating capacity which is actually
filled with passengers
737 MAX: Due to multiple crashes from a malfunctioning flight control, this plane has been grounded since
March 2019, and is still in the process of getting reapproval for passenger flights (negatively affected Boeing)
COVID-19: Significant reduction in passengers resulting in fewer flights; many airlines have laid off employees
and/or declared bankruptcy; airlines have offered vouchers for cancelled flights; as passenger flights were
cancelled, the cost of sending cargo by air increased; industry experts anticipate it will take many years for
demand to reach pre-COVID levels.
Key trends
15
Media
Products/ Services
Media sector includes print, audio, and video content generation & distribution
Revenue
Advertising is a key revenue driver. Additional revenue sources are subscriptions, one-time purchases (video
on demand, DVD purchase), and licensing fees. For online portals (Netflix, Hulu, etc.) the key value driver is
content.
Costs
Production costs (salary, technology, location fees etc.), distribution costs, marketing and advertising,
promotions, capital costs (studios, equipment etc.)
Competitive Landscape
(Competitors,
Substitutes, New
Entrants)
Highly competitive with a few major players owning most of the market.
The fight over content exclusivity is a big issue among legacy players (Netflix, Hulu) and content providers
(Disney, etc.). Content providers have begun to launch their own media platforms.
Traditional cable companies are facing issues resulting from web-based solutions providers and cord
cutting.
Customers
Two main customers: End customer (i.e., the viewer) and advertising companies (i.e., to whom the media
provider sells ad space). The more end customers the platform has, the more they can charge advertising
companies.
Distribution Channel(s)
Online streaming is the fastest growing channel, but traditional distribution still exists. Additional distribution
channels include theaters and ‘live’ events.
Suppliers/ Supply
Chain
Technology providers (internet service providers are becoming particularly important in allowing high-speed
streaming), actors, artists, and musicians
Recent Trends & Key
Concepts
Online streaming and cord cutting is changing the industry. There is a large focus on creating and
controlling content. Companies such as Netflix and Yahoo are creating original content to remain
competitive. Ad-supported video is increasingly becoming the dominant model of delivering streaming
video to consumers.
COVID-19: Since COVID many companies have suspended movie and television production, causing
delays in release dates. Social distancing has generated a boost in digital media including video and music
streaming and downloads, as well as online publications.
Key trends
16
Technology
Products/ Services
Broad industry consists of PCs, servers, semiconductors, internet service providers, communications providers,
IT services, software and application development, and internet companies. Technology plays a role in every
other industry, and there has been a push for companies to become more ‘digitized’.
Revenue
Revenues vary by type of product. PC revenue: primarily from sales of PCs and subsequent support; internet
mobile applications revenue: driven by ad clicks; IT services revenue: tied to staff utilization per employee
Costs
Costs vary by type of product. For software, the initial R&D costs are high but the marginal cost for production
is negligible. For PCs and servers input costs include component costs, labor costs, distribution and support
For semiconductors it is important to note these companies have high fixed costs, but are constantly
improving their products (i.e., Moore’s Law).
Competitive Landscape
(Competitors,
Substitutes, New
Entrants)
There are a few large competitors in the PC and server space, but many competitors in the software and
application development space.
Internet companies have low barriers to entry, resulting in a highly competitive industry. It is common for
smaller players to be acquired by the internet giants.
Customers
Varies by type of product: ranges from individual customers and corporations for things like PCs or software;
Also could be companies looking for advertising channels.
Internet companies tend to be B2C, while companies such as IBM, Oracle, Cisco focus on B2B.
Distribution Channel(s)
Distribution through retail outlets and B2B channels for hardware, online distribution through app stores/
websites for software. Limited distribution of software through physical media.
Suppliers/ Supply
Chain
Hardware: various suppliers include raw material providers, semiconductor manufacturers, machine and
technology providers
Software: supply chain includes software testing houses, and distribution channels such as App Stores
Recent Trends & Key
Concepts
Acquisition of talent and technology by established industry players. ”Freemium” and ad-driven revenue
models for software. New technologies entering the business segment: Internet of Things, cloud computing,
big data (predictive) analytics, mobile (computing everywhere), 3D printing, machine learning.
COVID-19: Remote work, online education, and social distancing has generated demand for products and
services delivered by the tech industry. Tech companies have achieved historic valuations and are driving
historic stock market prices; Tech continues to get scrutinized regarding their data security processes
(especially with upcoming election)
Key trends
17
2022 New Case List
Case Name
Industry
Type
Difficulty
1
Ikoyi Co in America
CPG
Market Entry
Easy
2
Home Improvement Co
Retail
Profitability
Easy
3
Bring the Angels back
Healthcare
Human Capital
Easy
4
Skooters
Hospitality
Profitability/Growth
Medium
5
Erween Mills
Manufacturing
Profitability
Medium
6
Orange Music
Growth
Medium
7
Athletic Athleisure
Growth/M&A
Medium
8
I want my Em-TV
Telecom
Pricing
Hard
9
Audio Inc
Consumer/
Health Tech
Market Entry
Hard
McKinsey Style
10
State of Blue Devils
Public Sector
Strategy
Hard
McKinsey Style
11
Muni Golf Opportunity
Real Estate/
Private Equity
Growth/M&A
Hard
12
Rush Hour
Transportation
Market Entry
Hard
Media &
Entertainment
Consumer &
Retail
Notes
McKinsey Style
Note: Cases are ordered in relative difficulty. Comfort with medium and hard cases are representative of interview proficienc y
6
Other Classic Cases
Case Name
Learning Goal
Difficulty
Casebook
Sardine Airlines
Good starter case for starting casing
Entry
Fuqua 18-19
Lactose King
Starter/refresher case with profitability twist
Entry
Fuqua 17-18
Winter Olympics
Entry
Kellogg 18-19
Duck Island
Organizing math structure
Clearing exhibits and international
market entry
Medium
Fuqua 18-19
Fireproof
Out-of-box thinking for growth strategy
Medium
Darden 18-19
Rubber Bumper
Non-traditional topic with good math
Medium
Darden 18-19
Mapflix
Market sizing & NPV
Medium
Fuqua 18-19
Met with Problems
Human organization case
Medium
Darden 20-21
Leo vs Space Inv.
Media and Entertainment
Medium
Fuqua 21-22
Fuquan Land
Agro Strategy
Medium
Fuqua 21-22
Stale Chips
Medium
Fuqua 21-22
Health Coaches
Market Entry for CPG
Difficult topic requiring math
structuring and difficult exhibits
Hard
Kellogg 18-19
Zoo Co
Non-traditional case with emphasis on quant
Hard
Kellogg 18-19
Great Burger
McKinsey style case with difficult quant
Hard
Stern 16-17
7
Case Logs
We recommend keeping a case log to track progress, notes and takeaways to refer back to. It is
recommended to use an Excel or Google Sheet that can be easily shared with others. Here’s a
breakdown of the basic sections of a case log:
•
Name: Name of the case (ex: Queen Bae)
•
Location: Casebook or firm that gave the case (ex: Fuqua 20-21)
•
Interviewer: Name of the person interviewing (ex: Soham Bose)
•
Case Date: Date case was done (ex: 11/1/2021)
•
Industry: Market the case focused on (ex: CPG)
•
Type: The type of case or problem solved (ex: Growth)
•
Notes: Major feedback from the case
•
Takeaways (optional): Major learnings or hints from the case to be able to refer back to
8
Case Dynamics
The makings of a good caser can be summarized in two buckets
Quantitative Capability
Qualitative Capability
Quantitative achievement comes from
mastering mental math quickly and
accurately. Mistakes will happen,
remain calm and talk through your
approach. Find a methodology to
quickly structure and document
numbers. At a minimum, candidates
must learn:
Qualitative means creativity. Cases
have been repeated tens to hundreds
of times. Stay up-to-date on news,
markets and trends. Draw on
personal experiences as a consumer.
Create a persona within the case and
imagine how to react. Read the news,
listen to podcasts and talk with others.
Resources include:
•
Big number multiplication
•
Big number division
•
Fractions 1/n until n=15
•
Quickly calculate and manipulate
1%, 5%, 10%, 20%, and 50%
•
Wall Street Journal
•
New York Times (and newsletters)
•
Morning Brew
•
Robinhood Snacks
9
Case Checklist
Case Type
❑ Profitability
Case Industries
❑ Retail
❑ Growth Strategy
❑ Consumer
❑ Market Entry
❑ Financial Services
❑ Human Capital
❑ Healthcare
❑ General Strategy
❑ Manufacturing
❑ Mergers & Acquisition
❑ Airlines
❑ Oil & Gas
❑ Non-Profit
❑ Education
❑ Public Sector/Government
10
Ikoyi Co in America
Industry:
Case Type:
Led by:
Case Level:
CPG
Market entry
Interviewee
Easy
11
Behavioral Questions
Question 1:
• Tell me about a time you worked with someone with a different perspective/point of
view
Question 2:
• Tell me about a time you had to convince someone to change their mind
12
Ikoyi Co in America
Prompt #1:
• Your client, Ikoyi Co is a UK-based company selling skincare products. They have
been successful in the UK and are considering entry into the US. They have asked
us to help identify if this is a viable strategy and which key US markets to enter.
Case Background:
• Background information to be divided into these categories
– Client/Company information: client is looking for $500M Net Sales Value in 3 years, after
retailers take their cut (40%). The imagined split is 50% DTC (no margin cut, 100%) and 50%
retail
– Industry/Competition information: currently one of the biggest players in the UK market.
Industry is very fragmented
– Product information: general skincare products (e.g. moisturizers, vitamin C serum,
exfoliators)
– Value Chain/Revenue information: earns revenue from selling directly to final consumer on
their website and through retail
– Any constraints on the case: the company is considering US only
13
Ikoyi Co in America
Framework Buckets:
• MECE Framework for the prompt (high level buckets can be mentioned – details
under each bucket are optional)
Economics
•
•
•
Profit
✓ Potential rev in US •
✓ Cost of operating in
•
US
Market
✓ Competitive
•
environment
✓ Consumer
preferences
✓ Industry trends
✓ Market growth
Investment
✓ Upfront cost
required​
✓ Payback period
Other
considerations
Company
Competencies
Power of brand to
attract customers
Expertise to succeed
✓ Staff skill
✓ Supply chain
Channel access
✓ Access to retail
shelves
✓ Digital marketing
capabilities for
DTC
•
•
•
•
•
Regulations
Macro-economic
risks
Taxation
Political risk
Currency risk
14
Exhibit #1
US Skincare market by region ($M)
500
100%
750
300
250
Others
90%
21%
Skin Pro
Never Age Inc.
80%
53%
70%
Glow Inc.
13%
60%
68%
60%
16%
50%
2%
40%
30%
6%
27%
14%
0%
8%
20%
10%
25%
10%
4%
10%
12%
13%
14%
Midwest
South
24%
0%
East
West
Yo Yo Skin
Interviewer guidance on Exhibit 1
Exhibit #1 Guidance:
Analysis:
• Market size is given by the total at the top,
with competitor share in each region\
• Candidate should deduce that the West is
heavily consolidated and will be difficult to
enter
• Assume Other accounts for sum of all
other competitors with negligible share
• The other three regions are smaller but
less consolidated and should be explored
• Push candidate to eliminate West as it is
highly concentrated
• Drive towards calculating revenues for
other regions
16
Exhibit #2
Total market size
(Year 1)
Potential market
share Year 1
Potential
market share
Year 2
Potential market
share Year 3
East
500
10%
12%
20%
West
750
1.33%
5%
7%
Midwest
300
16%
20%
33%
South
250
12%
18%
20%
Region
All numbers given in Millions USD
17
Interviewer guidance on Exhibit 2
Exhibit #2 Guidance:
• Assume market size will grow at 10% annually
for each region
• Candidate should recognize that even though
the West is the largest region it will produce the
least revenue and has the most consolidated
competitive landscape, making it the least
attractive
• Candidate should conclude that the revenue
target is unattainable after entering the 3 most
promising markets; LEAD INTO BRAINSTORM
Analysis:
• Need to work backwards to get gross revenue
goal
• (.5)(.6)X+ (.5)X= 500M
• .8X=500M
• X= Gross revenue= 625M
18
Brainstorming
Prompt:
Analysis:
• What are other ways client could reach their
revenue target?
• Price:
–
Increase price of skincare products sold
–
Have tiered pricing for skincare products based on customer
loyalty
Renegotiate percentage/price with retailers
–
• Quantity:
–
–
–
Increase quantity of products sold by gaining more final
consumers/retailers
Increase quantity sold by exploring B2B business model; e.g.
partnering with hospitals/dermatologists
Explore other channels of servicing customer; e.g. company
owned physical stores
• Create new product/service offering
• Increase marketing efforts; e.g. social media,
educational outreaches
19
Ikoyi Co in America
Recommendation
• Yes, the US market should be entered (3 regions or 4). Ikoyi is a powerful brand
abroad which may translate well to an American audience. They can leverage
existing capabilities
• No, the US market should not be entered. You would need to enter all 4 regions
to reach your revenue goal and there are challenges to a nationwide launch
(logistics, supply chain, upfront marketing costs). However, there are benefits to
getting your brand in a new geography and access to new customers
• Candidate should choose one choice of action or the other
Risks and Next Steps:
• Yes: Risks include establishing new international supply chains, FDA regulation
compliance, competitor response
• No: Loosing potential revenue streams and access to new customers, diminishing
brand presence should a US competitor enters the US market
• Next steps are to perform feasibility studies, stress test assumptions, perform
due diligence on new suppliers, establish shipping contracts, and expand production
capacity to the extent necessary.
20
Home Improvement Co.
Industry:
Case Type:
Led by:
Case Level:
Retail
Profitability
Interviewee
Easy
21
Behavioral Questions
Question 1:
• Describe a time you had to deliver bad news to a client, manager, or superior. How
did you approach it?
Question 2:
• Tell me about a time where you had to work in an ambiguous environment? How did
you approach it?
22
Home Improvement Co.
Prompt #1:
• Home Improvement Co. is a major home improvement retailer in the U.S. that sells tools,
construction products, appliances, and services. Since 2020, the company has struggled to hit
their profitability targets and are looking for possible solutions.
• Our client, the CFO of the company, has hired us to come up with a plan reverse this trajectory
and return the company to its profitability level from 3 years ago.
Case Background:
• Background information to be divided into these categories–
– Client/Company: $50B in Revenue in 2021. 3 distribution channels: In-store, buy online pickup in-store, deliver to home.
– Industry/Competition: The improvement retail industry has been experiencing growth the
last few years as consumers are spending more time at home with the pandemic and
focusing a bigger share of their budget on home projects.
– Value Chain: Home Improvement Co. has dozens of suppliers for each category they sell in.
Due to world supply chain constraints and increased demand, the lead time for lower turnover
products has increased dramatically.
– Goal: Reach the same level of profitability of 3 years ago (2019)
– Market: Only the U.S.
23
Home Improvement Co.
Framework Buckets:
• See below for an example of MECE buckets, interviewee may have different buckets.
Financial
Considerations
Revenue
• Δ # of units sold
• Δ Average price of units
sold
Costs
• Fixed costs: Rent,
Overhead, Insurance,
Vehicle Leases, SG&A
• Variable costs:
Materials, Labor, other
COGS
Market and
Global Trends
Customer Needs
•
Number of major
competitors and their
recent performance
•
Changes in customer
preferences during the
pandemic
•
New technology in the
market and its impact on
overall market trends
•
Changes in overall
number of customers
•
Customer share-ofwallet over the last 3
years
•
Global supply chain
considerations
•
Look at how general
inflation is playing a part
24
Brainstorm #1
Prompt:
• Before we deep dive into our analysis,
what could be drivers for decreasing
profitability?
Analysis:
• Brainstorming should be structured and
contain some of the following:
– Decreasing Revenue
• Decreasing quantity of units sold
–
Due to decreasing purchase power of
customers or customers being more cautious
about expenditures
• Decreasing average price of units sold
–
To stay competitive, Home Improvement Co.
decreased prices (price war against
competitors)
• Decreasing number of customers
–
Due to sell-outs, long wait times for orders,
etc.
– Increasing Costs
• Variable costs
–
–
Increase in materials supply costs due to
worldwide supply shortage
Increase in wages due to worker shorter and
decreased worker safety during the pandemic
• Fixed costs
–
Increase in overhead costs to stay competitive
against competitors
25
Exhibit #1
Revenue and Costs (2019-21)
50
45
Costs
Revenue
42
35
36
28
2019
2020
2021
*in billions of US dollars
26
Interviewer guidance on Exhibit #1
Exhibit #1 Guidance:
• If candidates do not explore revenue and
costs on Brainstorming, push them to do
so.
• After that, hand them exhibit #1 and ask
them which conclusions can be drawn.
• If candidates, after calculating year
profits, do not mention shrinking profit
margins, push them to analyze it. They
should calculate profit margins for 2021
and 2019 (since this is our benchmarking
year).
Analysis:
• Analysis for the exhibit to have 2 parts –
– Basic
•
•
Candidate should immediately notice that both
revenue and costs went up in the last two
years.
Despite that, costs increased more than
revenue, reducing profits from $7B in 2019 to
$5B in 2021.
– Second order insights
•
A strong candidate will notice that besides
decreasing profits ($2B decline in 2 years),
profit margins shrunk aggressively:
2019 profit margin: 20.0%
2020 profit margin: 14.28% (as 6/42 is 1/7)
2021 profit margin: 10.0%
Candidates can estimate 2020 profit margin as
needed
Profit Margin: (Revenue-costs)/Revenue
27
Exhibit #2
Cost Breakdown (2019-21)
45
36
21
28
16
12
COGS
Rent
Marketing
Salaries
8
6
5
6
8
6
8
8
2019
2020
2021
5
*in billions of US dollars
28
Interviewer guidance on Exhibit #2
Exhibit #1 Guidance:
• After understanding that increasing costs
is the driver of decreasing profitability,
candidates should ask for more
information on costs.
• Show them this exhibit only when
prompted.
Analysis:
• Analysis for the exhibit to have 2 parts –
– Basic
•
•
Candidate should notice that exhibit #2 is a
breakdown of costs.
Even though costs increased across the
board, the main driver of cost increase is
COGS.
– Second order insights
•
• Candidates should calculate absolute and
percentual change of costs in 2021 vs
2019.
COGS
Rent
Ma rketing
Sa l aries
Total
COGS is the cost that increased the most
($9B, or 75%). Besides that, COGS alone
represent an increment of 53% of costs in the
past two years (=9/17)
2019
12
5
5
6
28
2021
21
8
8
8
45
Abs olute change Percentual change
9
75%
3
60%
3
60%
2
33%
17
61%
29
Brainstorm #2
Prompt:
• What are the reasons for increased
COGS in the last few years and how can
Home Improvement Co. work to decrease
them?
Analysis:
• Reason for increased COGS
– External Factors
•
•
– Internal Factors
•
•
• Some things the interviewee should
mention:
– As supply is running short and demand is
increasing with the recent growth of home
improvement retailers, raw material may be
overvalued
– If Home Improvement Co. is losing market share to
its competitors or its competitors are outpacing its’
growth, suppliers may be raising prices
Global Supply Chain shortage
Loss of bargaining power
As Home Improvement Co. quickly grows, it
may be facing difficulties to find qualified labor
To suppress this need, Home Improvement
Co. might have invested in more expensive
production methods
• How to Decrease COGS
– Dealing with External factors:
•
•
Renegotiate agreements with suppliers with
minimum SLA and long-term fixed price
adjustments
Invest on verticalization and produce own raw
materials
– Dealing with Internal factors:
•
•
Invest on a Training and retaining talent
program
Negotiate new technologies to decrease
production costs
30
Exhibit #3
2019
2020
2021
2022
Revenue
35
42
50
(+20%)
COGS
12
16
21
?
Rent
5
6
8
(+25%)
Marketing
5
6
8
(+25%)
Salaries
6
8
8
(+25%)
*in billions of US dollars
31
Interviewer guidance on Exhibit #3
Prompt/Guidance:
• The CFO agrees that increased COGS are driving profit margins down. After the second
quarter business plan review, the board of Home Improvement Co. can say with confidence
that revenue will keep growing strongly, as will fixed costs.
• Considering that Revenue will increase 20% vs 2021 and Rent, Marketing and Salaries
will increase 25% vs 2021, what is the maximum value that the company can spend on
COGS?
• Note: The solution will be to dramatically change the relationship with suppliers if Home
Improvement Co. wants to reach 20% of profit margin.
Analysis:
• The maximum value that Home Improvement Co. can spend on COGS in the year of 2022 to
reach profit margin of 20% is $18B.
• Profit Margin:
(Revenue-costs)/Revenue
Revenue
COGS
Rent
Marketing
Salaries
Profit margin
2019
35
12
5
5
6
20%
2020
42
16
6
6
8
14.3%
2021
50
21
8
8
8
10.0%
2022
60
18
10
10
10
20.0%
32
Home Improvement Co.
Prompt:
• The CFO met you in the Hall of Flags
chatting with your fellow associate
consultants and told you she is more
excited than ever to hear your
recommendations.
Analysis:
• In order to bring back profit margin to 2019
levels, Home Improvement Co. has to decrease
COGS to $18B.
• To do so, we recommend that the company
renegotiate agreements with defined SLAs and
price adjustments and invest in new technology
to reduce production costs.
• Some risks associated with this strategy is
suppliers not being able to change SLAs due to
an aggravation of the world supply chain crisis
and that our fixed cost investment in new
technology is ineffective.
• To mitigate this risk, it is important that we map
potential suppliers to meet our needs and that
we draw a verticalization plan in case we need
to integrate part of the production process into
our supply chain.
33
Bring the Angels back
Industry:
Case Type:
Led by:
Case Level:
Healthcare
Human Capital
Interviewee
Easy
34
Behavioral Questions
Question 1:
• Most significant achievement in life
Question 2:
• Why consulting?
35
Bring the Angels back
Prompt #1:
Your client is a multi - specialty hospital in the United States offering emergency care,
scheduled surgeries, labor and delivery services, diagnostic testing, lab work, and
patient education. The hospital is experiencing a high turnover of nurses in the past 12
months. The client needs your advice on how to better retain nurses and reduce
turnover.
Case Background:
• Background information –
– Client’s main goal is to bring back retention numbers to pre-12 months level of
85% with a strategic initiative(s) budget of $1M
– The competition is facing high turnover as well. However, the turnover rate for our
client is higher than the industry average
– The hospital has a revenue of ~$10M with 2% YoY growth for the last 5 years
– Turnover rate for doctors, technicians, and other administrative staff is lower than
industry average and is not concerning
36
Bring the Angels back
Framework Buckets:
• MECE Framework for the prompt (high level buckets can be mentioned – details
under each bucket are optional)
Company
•
•
•
•
•
•
Current Pay and Benefits
structure
Schedule flexibility for
nurses and other staff
Patient volume MoM
Patient mix – dictating
involvement of nurses
Financial health –
dictating bonuses,
rewards
Relationship with
insurance firms, partners
Employees
•
•
•
•
•
•
Work-Life balance and
sustainability
Growth and learning
opportunities
Career path, promotion
cycles
Intrinsic motivation
Feedback on
management and
leadership
Turnover numbers MoM
External Factors
•
•
Competitive landscape –
better pay and benefits
Other lucrative
professions – reducing
nursing aspirants
37
Exhibit #1 - Wage Chart
40
35
40
40
4,050
3,520
4,500
4,000
4,160
30
30
30
3,360
3,000
25
20
15
3,500
20
2,500
2,400
2,000
1,500
10
1,000
5
500
0
0
Client
Hos A
Monthly Pay ($)
Hos B
Hos C
Hos D
Hrs / Week
* 4 weeks in a month
38
Guidance on Exhibit #1
Exhibit #1 Guidance:
• Ask candidate about what they think the
reason(s) might be for ahigh turnover and
push them towards Exhibit #1
• Once the candidate identifies that the
wages / hr for client is the lowest and
suggests increasing wages, tell them that
increasing wages is not an option
• Push candidate to think about what other
information can be helpful to solutionize
Analysis:
• Analysis for the exhibit – Basic
•
•
•
Hours / week is highest for client (40 hrs)
$ / hour is lowest for client
Focus on increasing wages and reducing
working hours
Client Hos A Hos B Hos C Hos D
Monthly Pay ($)
3,520
4,160
3,360
2,400
4,050
Hrs / Week
40
40
30
20
30
$ / hr
22
26
28
30
33.75
• If candidate asks for nurses’ preferences
(very similar to customer preferences),
show them Exhibit #2
39
Exhibit #2 - Nurse Pulse Survey
Nurses’
Preference
Client
Hos A
Hos B
Hos C
Hos D
Pay
Benefits
Career
Advancement
Good
Management
Schedule
Flexibility
Continuing
Education
40
Guidance on Exhibit #2
Exhibit #2 Guidance:
• In Exhibit #2, ask candidate to choose top
2 nurse preferences which, if addressed,
can have maximum impact
• If candidate talks about wages, tell them
that wage increase is not a possibility, as
mentioned earlier
Analysis:
• Analysis for the exhibit to have 2 parts –
– Basic
•
– Second order insights
•
• Push candidate towards Career
Advancement and Schedule Flexibility
Career advancement and Schedule flexibility
are very important to nurses and our client
lags behind by 75% is each. Hence, these are
the two most critical areas to deep dive
•
Continued education is also a factor where
our client lags, but its an industry wide issue
that can be addressed in the long term
All other hospitals are doing really well on
schedule flexibility and are lagging by just
25%
• Push candidate towards a brainstorm on
ideas to improve these two preferences
for our client
41
Brainstorming
Prompt:
• Please provide the client with some ideas
on how to improve career advancement
and create schedules with better flexibility
Analysis:
• Career advancement –
– A standard promotion schedule, with raises and
bonuses for good performance
– Path to management of other nurses or
administrative/leadership roles
– Mentorship program
– Sponsorship for higher education
– Cross department rotation program
• Flexibility –
–
–
–
–
Control over # of hours worked
Allow more agency for nurses to pick hours
Online scheduling tool
Better structure/lead time for management to
communicate shift assignments
– Make it easier to change/drop shifts
42
Exhibit #3 - Strategic Initiatives
Initiative
TTM Attrition Drop TTM Attrition Drop
(>=80% adoption) (<80% adoption)
Implementation
Cost
Cross Department rotation
program
10%
5%
350K
Eliminating mandatory overtime
6%
2%
250K
Digital tool for dynamic
scheduling
16%
8%
700K
Mentorship Program
12%
4%
800K
- TTM – Trailing Twelve Months
- Example of 80% adoption – For Mentorship Program, if the program is adopted by 80% or more nurses, the
retention increase will be 12%, else its 4%
- There is a certain probability of >80% adoption for each initiative
43
Guidance on Exhibit #3
Analysis:
Exhibit #3 Guidance:
• Post brainstorming, provide the candidate with Exhibit
#3 and ask them to choose the most impactful and
feasible initiative(s)
• If candidate asks about current TTM retention - 70%;
the delta to reach the 85% target is 15%
• To calculate weighted avg. adoption rates, provide the
candidate with the probabilities only when asked (table
below)
• Nudge candidate to consider the $1M budget constraint
• Analysis for the exhibit to have 2 parts –
– Basic
• Calculate weighted avg. attrition drop by
multiplying the TTM attrition drops with the
probabilities of adoption
• Avg. = P*(Drop >=80%) + (1-P)*(Drop <80%)
• Check which set of initiatives are crossing the
15% retention inc. target and are within the
$1M budget
– Second order insights
• We can increase retention further with
additional $100k - $200k capital infusion
Initiative
Probability of
>=80% adoption
TTM Attrition Drop
(>=80% adoption)
TTM Attrition Drop
(<80% adoption)
Weighted Avg
Implementation Cost
Cross Department rotation
program
50%
10%
5%
7.5%
350K
Eliminating mandatory
overtime
75%
6%
2%
5.0%
250K
Digital tool for dynamic
scheduling
37.5%
16%
8%
11.0%
700K
Mentorship Program for
career growth
75%
12%
4%
10.0%
800K
44
Brind the Angels back
Recommendation
• We recommend that you invest in eliminating mandatory overtime and launching a
digital scheduling tool – Retention target of 85% achieved with $50K less budget
Risks and Next Steps:
• Risks –
– Nurses’ preference is dynamic and might change in the near future
– Adoption probabilities are not concrete
• Next Steps –
– Launch pulse check survey on the suggested initiatives
– Allocate additional capital for the other 2 initiatives
– Explore changing pay structure to match competitors’ hourly pay average
– Pilot the digital tool
45
Skooters
Industry:
Case Type:
Led by:
Case Level:
Hospitality
Profitability/Growth
Interviewee
Medium
46
Skooters
Prompt #1:
• Skooters is a popular nightclub in Durham, NC. The establishment attracts students
and young professionals year-round and is especially favored by Duke students. It
boasts a well-established in-house DJ and a wide variety of snacks and beverages.
However, since 2020, Skooters has been facing declining profits. Their management
has approached you to analyze the reasons for Skooters declining profits and
develop suggestions to reverse this trend.
Case Background:
– Skooters has two primary sources of revenue: 1. Entry fees of $10 per person 2.
Beverages and Food
– Their goal is to reverse the trend of declining profitability and restore profit
levels to those of 2019
– There is one other large competitor in Durham as of now: Froot. We have limited
information on their profitability as of now.
– Skooters is open all days of the week from 7pm to 2am. However, it is busiest on
Fridays and Saturdays.
– The menu consists of popular bar foods such as fries and nachos. Other popular
attractions include upstairs seating and pool tables.
47
Interviewer Notes for framework
Framework Buckets:
• MECE Framework for the prompt (high level buckets can be mentioned – details
under each bucket are optional)
Revenue
Number of visitors
•
•
•
Peak vs. Non-peak times
Weekday vs weekend
Age-groups and professions
Number of visits / year
•
Repeat customers, frequency
Average spend / visit
•
•
•
•
•
Share of revenue
Entry fee
Food
Beverages
Other activities
(gaming, photographs etc.)
Market
Cost
Fixed costs:
•
•
•
•
•
•
•
Rent
Marketing
Staff salaries
maintenance
Equipment (sound systems, etc.)
Liquor license
Utilities
Variable costs:
• Food and beverages
Industry trends
• nightlife market in Durham
• Competitors (strategies, are they
experiencing similar decline?)
• Substitutes (karaoke, house parties etc.)
• Legal restrictions
Consumer
•
•
changing preferences (of music,
nightlife etc.)
price sensitivity
*bonus marks for bringing in nuances
like group discounts, special events
etc.
Interviewee should lead discussion towards revenue and cost analysis
48
Exhibit #1
Skooters operating revenue and costs unaudited (in millions)
2021
2020
2019
2018
Ticket revenue
1.5
2
2.5
2.4
Non-ticket revenue
2.3
2.9
3.8
3.5
SG&A
1.8
1.7
1.8
1.6
COGs (food &
beverages)
1.6
2
2.7
2.5
Operating Revenue
Operating Costs
49
Interviewer guidance on Exhibit #1
Analysis:
Exhibit #1 Guidance:
First-order insights:
2021
2020
2019
Operating Revenue
Ticket revenue
1.5
2
2.5
Non-ticket revenue
2.3
2.9
3.8
Total Revenue
3.8
4.9
6.3
Operating Costs
SG&A
1.8
1.7
1.8
COGs (food &
1.6
2
2.7
beverages)
Total costs
3.4
3.7
4.5
Net income
0.4
1.2
1.8
Profitability
11%
24%
29%
Candidate should use available information to calculate
net income and profitability. They should identify from the
prompt that the goal is to return to 2019 profitability of
29% from current 11%.
There is no need to calculate 2018 given that the goal is
2019, and the prompt specifies that profitability has been
dropping since 2020. Candidates should identify this and
can clarify with the interviewer.
2018
2.4
3.5
5.9
1.6
2.5
4.1
1.8
31%
• Declining profitability is a revenue issue and not a cost issue
• Both ticket and non-ticket revenues are declining (at similar
rates)
• Profitability needs to improve from 11% currently to 29%
(same level as that of 2019)
• SGA remains relatively constant while cost is declining due to
COGs
Second order insights
• Non-ticket revenue is roughly 1.5x that of ticket revenue
indicating that 60% of Skooters'revenues come from food,
beverages and/or other activities
• COGS for food and beverages remain proportionate to nonticket revenue over the years.
• Given that revenue has been decreasing at a similar rate
across ticketed and non-ticketed revenue, it may be
that number of visits are declining
Non ticket revenue = revenue from food and beverages
50
Exhibit #2
Revenue Breakdown per customer (2021)
10%
50%
40%
Skooters
10%
Food
Beverages
Entry Fee
61%
29%
Fruit
Froot is Skooter’s primary competitor in Durham and opened in early 2020. It has a similar business model with primary
revenue streams coming from entry fees, alcohol and food. Fruit had a total revenue of $4.9Mn in 2021.
51
Interviewer guidance on Exhibit #2
Exhibit #2 Guidance:
• Interviewee should quickly identify missing information
required to calculate where the fall in revenue is coming
from, as compared to the Froot
• When they request the interviewer for this
information, let them know that the information at hand
is only that there were 126k total visitors at Skooters in
2021, and 196k at the Froot (these are total visitors and
not unique visitors; if one person visits twice, the visitors
count is 2)
Analysis:
Based on the per person revenue, candidates can
calculate that beverage and food expenditure per person
remain similar across both establishments, but total
number of visitors are falling (as they are going to the Froot
where tickets are cheaper)
• With this information and total revenue from exhibit 1
(for Skooters) and the footnote in exhibit 2 (for Froot),
they should be able to calculate:
– Skooters revenue per person: $30
– Froot’s revenue per person: $25
• encourage candidates to round to $30 and $25
52
Exhibit #3
Having identified that a higher entry fee is reducing number of visits (and
consequently revenue), Skooters has decided to reduce its entry fee for one of its
target segments. The reduction will be such that the entry fee for that segment will
be equivalent to that of the Froot. Which segment would you recommend it gives
this discount to?
Segment
Size of
segment
Visits per
person
Current Market
share
Post-discount
market share
Duke
14,000
9
50%
60%
UNC
30,240
5
25%
50%
Young Professionals
63,000
12
2%
11%
We can assume operating costs will be $3.8 million for the year, irrespective of which segment the discount is given to
53
Interviewer guidance on Exhibit #3
Exhibit #3 Guidance:
Analysis:
• When interviewee asks, clarify that the discount to entry fees
(new entry fee = $7 per person from exhibit 2) will only impact
the market share. It will not increase number of visits per
person or expenditure on beverages and food
Revenue lost is calculated by multiplying the reduction in ticket prices
($5) by number of current visits (Total size of segment *current market
share* number of visits per person)
• Push the interviewee to calculate revenue lost and then
revenue gained for each segment
• Interviewee should remember to take ticket prices from
previous exhibit
• A common mistake while calculating is to disregard food and
beverage expenditure when calculating incremental revenue
gains
Revenue earned is calculated by multiplying incremental market
share* Total size of segment *number of visits per person * $25
revenue per person (new ticket prices of $7 + original beverage and
food prices from exhibit 2 of $18)
Then, subtract revenue lost from revenue gained to identify which
incremental revenue from each segment
Young professionals should be given discount
With this in mind, we can add the incremental revenue to the revenue
from exhibit 1 ($3.8Mn) such that we have a total revenue of $5.4Mn
and operating costs (from footnote) of $3.8mn such that new
profitability is 29% (which is the 2019 level)
Segment
Duke
UNC
Young
Professionals
14,000
30,240
9
5
PostIncremental
discount
visits
market share
50%
60%
12,600
25%
50%
37,800
63,000
12
2%
Total size of
segment
Visits per
person
Current
Market share
11%
68,040
Revenue
earned
Revenue lost
Incremental
revenue
315,000
945,000
315,000
189,000
0
756,000
1,70,1000
126,000
1,57,5000
54
Brainstorming
Prompt:
• In addition to offering a 50% discount to
working professionals, what are some
potential ideas to increase revenues from
this establishment
Analysis:
Spend per visitor:
• Offers on 2+ beverages
• Wider menu
• Parking fees
• Discounted weeknight entry
• Loyalty programs for frequent visitors
• Arcade games / photo booths
Number of visitors:
• Marketing
• Tie-ups for school events
• Wider variety of music / activities (eg:
potentially hosting concerts etc.)
• Open during afternoons
55
Skooters
Recommendation
• Recommend reducing ticket price to $7 for young professionals – helping us achieve
profitability target of 29%
Risks and Next Steps:
• Risks –
– Fruit lowering prices further
– Additional establishments opening in nearby areas
– Reduction in young professional population in nearby areas due to remote working flexibility
• Next Steps –
– Check effectiveness of discount by piloting the discount once every two weeks
– Chalk out execution plan for other avenues (as in brainstorm) to increase traffic
56
Erween Mills
Industry:
Case Type:
Led by:
Case Level:
Manufacturing
Operations / Profitability
Interviewee
Medium
57
Behavioral Questions
Question 1:
What drives you?
Question 2:
What are your core values and why?
58
Erween Mills
Prompt #1:
• Your client, Erween Mills, is a palm oil mill based out of Guatemala. The mill is
facing profitability problems for the past couple of years. Erween Mills needs your
help in identifying the root cause(s) and improving the mill’s profitability.
Case Background:
• Background information to be divided into these categories (Please mark N/A if information is not provided)–
– What is a palm oil mill? A palm oil mill extracts crude oil from fresh palm fruit and then sells it in the
commodity market.
– Industry/Competition information: the client competes with a nearby mill for palm fruit. The producer sells the
fruit to the highest bidder.
– The mill has steady revenue, but capacity utilization has been decreasing YoY
– Product information: Palm Oil is edible vegetable oil. It trades as a commodity. Palm oil is the only product
currently sold by the mill
– Value Chain/Revenue information: The mill buys fresh palm fruit from producers around the area, extracts
the oil, and sells it in the commodity market.
– The mill is struggling financially and needs a solution ASAP.
59
Erween Mills
Framework Buckets:
• MECE Framework for the prompt (high level buckets can be mentioned – details
under each bucket are optional)
Revenues
•
•
•
Delta in Units Sold
Delta in price
Change in product
mix – grades of palm
oil sold
Market &
Regulations
Costs
•
•
•
•
•
Change in COGS
Change in costs
across the value
chain
Change in machinery
efficiency /
maintenance costs
Change in fixed costs
– rent, SG&A
Change in tax
rates, additional
duties paid
•
•
•
•
Regulatory changes
making quality
checks more
stringent
Political volatility
leading to shifts and
demand and supply
Palm oil substitutes
being scaled and
commercialized
Small mills popping
up and creating local
monopolies
60
Exhibit #1
Operating Expenses ($M)
60
Machinery Operations
55
10
12
Raw Materials
50
Labor
45
SG&A
40
9
35
35
30
25
5
20
15
22
13
10
5
36
7
6
5
4
4
5
6
5
2019
2020
2021
0
2018
61
Interviewer guidance on Exhibit #1
Exhibit #1 Guidance:
Analysis:
• Post framework discussion, push
candidate towards Costs / Operating
Expenses
• Raw material costs have increased to ~3x
the 2018 levels – maybe due to poor
supplier mix, increase in supplier power,
etc.
• Good candidate – Will observe that raw
material cost is increasing rapidly
• Excellent candidate – Will also like to
investigate PP&E post solving for raw
material cost increase
• PP&E expenses have increased to ~2x
the 2018 levels – Reduced throughput,
increase in maintenance costs, etc.
• Labor and SG&A are relatively steady
• Ask candidate what might lead to high
raw material cost – push candidate
towards supplier selection
Exhibit #2 - Which Supplier should EM select?
62
Exhibit #2
Palm Fruit Supplier Map
Supplier A
- Material Cost - $175 per ton
50 miles
Mills
Supplier C
- Material Cost - $112 per ton
- Import Duty – 5%
Supplier D
- Material Cost - $124 per ton
75 miles
220 miles
105 miles
Supplier B
- Material Cost - $140 per ton
Interviewer guidance on Exhibit #2
Exhibit #2 Guidance:
• Prompt candidate that Erween Mills wants to choose a new supplier for crude palm oil –
how should they proceed?
• Candidate should approach this problem by calculating total cost of raw material per ton
(supplier + transportation + taxes/duties)
• Give the following info (only when candidate asks, or is stuck)
–
–
–
–
Last year's supply was 1,500 tons
Shiping cost is $1.6 per ton per mile
VAT is 12.5% for each location, to be added to raw material cost only
Import duty for Supplier C is 5%; to be added to overall cost
Analysis:
64
Exhibit #3
Prompt #3:
To reduce machinery operations cost, the firm is considering two options:
– 1) Purchasing a new equipment ($500K investment)
– 2) Overhauling the old equipment ($300K investment)
How would you make a choice, what will be your choice, and why?
Current
New
Overhaul
50,000
50,000
50,000
Raw Material Cost per ton ($)
35
35
35
Raw Material savings (% per
ton)
-
20%
15%
10,000
5,000
6,000
3
3
4
Production Volume (tons)
Maintenance Cost ($)
Maintenance Frequency (times
per year)
For the current machine, assume raw material to finished product ratio to be 1:1
66
Interviewer guidance on Exhibit #3
Exhibit #1 Guidance:
• How – Candidate should point towards ROI
• What – After calculating the cost savings for
each scenario and the corresponding
investments, candidate should calculate ROI (if
asked, tell them to calculate ROI for 3 years)
• Overhaul has a higher ROI and should be the
primary choice
Analysis:
• Throughput for all three scenarios will be the
same at 50,000 tons
• The savings is in the amount of raw material
needed for producing 50,000 tons of palm oil
• Calculate total cost (raw material +
maintenance) for each scenario
– Multiply maintenance cost * frequency
– Multiple $35*(Raw material needed)
• Current – $35*50k
• New Equipment - $35*80%*50k
• Overhaul - $35*85%*50k
• Calculate ROI for Scenario 2 and 3
– ROI = (Cost Savings – Investment)/Investment
Production Volume (tons)
Raw Material Cost per ton ($)
Raw Material savings (% per ton)
Total Raw Material Cost ($)
Maintenance Cost ($)
Maintenance Frequency (times per year)
Total Maintenance Cost ($)
Total Cost ($)
Cost Savings ($)
Investment($)
ROI (3 years)
Current
50,000
35
1,750,000
10,000
3
30,000
1,780,000
-
-
New
50,000
35
20%
1,400,000
5,000
3
15,000
1,415,000
365,000
500,000
119%
Overhaul
50,000
35
15%
1,487,500
6,000
4
24,000
1,511,500
268,500
300,000
169%
67
Erween Mills
Recommendation
• Recommendation is to go ahead and start contract with Supplier D to reduce raw
material costs
• Also, overhauling machinery will reduce machinery operations cost with a 3-year ROI
of ~170%
Risks and Next Steps:
• Risks
– Quality, reliability issues in Supplier D
– Overhaul implementation risks, delays, leading to lower throughput
– Demand volatility of palm oil
• Next Steps
• Move 10%-15% of sourcing to Suppler D and test quality and reliability
• Build robust execution plan for fast overhaul of mill machinery
68
Orange Music
Industry:
Case Type:
Led by:
Case Level:
Media and Entertainment
Growth/Cost
Interviewee
Medium
69
Behavioral Questions
Question 1:
• Most significant achievement in life
Question 2:
• Why consulting?
70
Orange Music
Prompt #1:
Orange Music, a music streaming app, is losing market share to its primary competitor
Soundhaven, for the past 3 years. Additionally, Orange Music’s Ad Spend as a % of
revenue has been increasing and has become higher than Soundhaven’s. Orange
Music needs your help to turn things around.
Case Background:
• Background information –
– OM’s main goal is to increase market share and reduce Ad Spend (% of revenue)
– OM operates in NA (North America), LAD (Latin America Division), and EMEA
(Europe, Middle East, and Africa)
– OM has 4 main competitors; all have a higher YoY growth than OM
– OM earns revenue through in app ads, user subscriptions, and partnerships
71
Orange Music
Framework Buckets:
• MECE Framework for the prompt (high level buckets can be mentioned – details
under each bucket are optional)
Ad Spend
Reduction
Growth Levers
•
•
Organic
•
UX/ UI changes
•
Exclusive content
•
Bundling options
with cell phone
carriers
•
Partnerships with
hardware
companies
Inorganic
•
Acquisitions
•
•
•
•
Changing marketing
channel mix
Moving from Google Ads
to Google SEO
Improve CTR (Click
through rate) and
conversions of digital ads
Explore influencer
marketing
Implementation
Strategy
•
•
•
•
Use pilot – scale
approach for organic
growth strategies
If inorganic, conduct
commercial due diligence
for potential acquisition
targets
Change marketing
channel mix for certain
target segments and
check success rate
Launch-Learn-IterateLaunch model
Push candidate towards competitive landscape
72
Exhibit #1
Music streaming market landscape 2022
Market Share
YoY Growth
Ad spend
(% of revenue)
Geographies
Orange Music
22%
2%
20%
NA, LAD, EMEA
Play 360
5%
15%
40%
LAD, APAC
Audio Auteur
12%
10%
15%
NA, APAC
Soundhaven
30%
5%
18%
Global
Boss Music
17%
5%
25%
Global
NA – North America, LAD – Latin America Division, EMEA – Europe, Middle East, and Africa, APAC – Asia Pacific
73
Guidance for Exhibit #1
Exhibit #1 Guidance:
• Candidate should see the market
landscape and realize that there is a
potential for inorganic growth through
acquisitions
Analysis:
• Objective is to increase market share
rapidly – inorganic growth is a good
strategy
• Play 360
• Candidate should finalize Audio Auteur as
the primary acquisition target
– Market share of 5% is good; growth of 15% is
good; but ad spend is very high (our second goal is
to reduce CAC)
• Boss Music
• Post clearing this exhibit, nudge candidate
towards the second problem – Ad spend
– Almost as big as Orange Music – difficult to
acquire, may lead to a merger; Growth rate not as
good as Audio Auteur or Play 360; ad spend is very
high at 25%
• Audio Auteur
– Good market share, double digit growth, low ad
spend – better acquisition target than the rest
– Second order – Will unlock Orange Music’s
presence in APAC
74
Exhibit #2
Orange Music’s Cost per Click ($ per click)
Orange Music’s Ad Spend Breakdown
(% of total Ad Spend)
1,00
35%
40%
1,00
1,00
0,75
0,75
0,60
0,60
0,60
0,55
0,50
0,50
2019
2020
20%
0,80
25%
25%
25%
50%
25%
35%
10%
5%
5%
2020
2021
2022
Social Media
Google Ads
Display Ads
BTL Ads
2021
Social Media
Google Ads
Display Ads
BTL Ads
1. Ad Spend = (#Clicks)*($ per click)
2. BTL – Below the Line, Offline ads
75
Guidance for Exhibit #2
Exhibit #2 Guidance:
• In Exhibit #2, no math is needed
• Candidate should highlight the following
critical insights –
– Candidate should remember from the prompt that
the increase in ad spend is as a % of total revenue
– Display Ads spend as a % of total Ad spend is
increasing and that might lead to the increase in
total ad spend (as % of revenue)
– Display Ads spend can increase due to either
increase in $ per click or increase in #clicks
– The line chart suggests that its not a $ per click
issue
– Increase in #clicks is increasing ad spend (% of
revenue) as OM is not getting the same revenue
for the same #clicks (low conversion rate)
• Once the candidate gives this insight, ask
the for the final recommendation
Analysis:
• Bar chart
– We know that ad spend is increasing YoY for OM.
From 2019 to 2021, we see that there has been a
significant share shift from Social Media Ads to
Display Ads. Google Ads and BTL (Below the Line)
ads have largely stayed the same
– This share shift might be due to
• Increase in cost per click for Display Ads
• Increase in #clicks for Display Ads
• Increase in both
• Line Chart
– We see that cost per click for Display Ads have
gone down. This suggests that the share shift
happened due to an increase in the #clicks in
Display Ads
– This increase in number of clicks led to an increase
in Ads spend (as % of Revenue). This is because
the conversion rate for these clicks is lower than
other channels. Hence, for the same ad spend, OM
is getting lower revenues
76
Orange Music
Recommendation
• To gain market share, OM should consider the acquisition of Audio Auteur given the
company has good market share, growth, and lower Ad spend. It will also unlock
OM’s presence in APAC
• To reduce Ad spend, OM should focus its marketing efforts away from Display Ads
as conversion rates are low
Risks and Next Steps:
• Risks –
– Acquisition gone wrong due to poor synergies
– Soundhaven acquiring Play 360
– Volatility in conversion rates and $ per click for current digital marketing channels in use
• Next Steps –
– Launch Perform commercial due diligence of Audio Auteur
– Change marketing channel mix for certain target segments and check success rate
77
Athletic Athleisure
Industry:
Case Type:
Led by:
Case Level:
Consumer & Retail
M&A
Interviewee
Medium
78
Behavioral Questions
Question 1:
• Tell me about a time you made a decision with incomplete information.
– What information did you have?
– What was the result?
Question 2:
• Tell me about a time you overcame a challenge to build an important relationship.
– What were the challenges to the relationship?
– How did you establish/improve the relationship through the challenge?
– What did you do to overcome the challenge?
79
Athletic Athleisure
Prompt #1:
• Athletic Athleisure (AA) is a boutique, high-end athletic apparel brand that is
considering acquiring Vinyasapp, an app-based yoga and Pilates platform. The app
has been performing very well over the past two years, so the management team at
Vinyasapp is willing to sell for $50M. Should Athletic Athleisure purchase this
company?
Case Background:
– Client/Company information: AA has strong brand recognition and enjoys a positive reputation in its industry.
– Industry/Competition information: The wellness industry has grown exponentially in recent years, as
individuals have become more concerned about their health and are exploring more convenient ways to
exercise.
– Product information: AA’s customers are very loyal to its brand and its main customers are individuals who
practice yoga and Pilates regularly. Their products include compression and moisture-wicking workout attire
and accessories. Their customers are generally technologically savvy and would be interested in taking
virtual workout classes.
– Value Chain/Revenue information: In recent quarters, AA has experienced a decline in profitability due to
supply chain constraints and an increase in fixed operating costs from keeping large stores open. They are
considering closing down some of their brick-and-mortar locations in favor of selling more of their products
online.
– Any constraints on the case: AA’s CEO wants to reverse the trend in profitability and hopes to add $8M in
annual EBITDA over the next 3 years
80
Athletic Athleisure
Framework Buckets:
a
Market
Synergies
Target Market
• Target company
• Projected
revenue
• Projected
profit
• Product
• Customers
• Competitive
landscape
Synergies
• Branding
• Revenue growth
• Cost reduction
Capabilities
& Risks
Capabilities &
Risks
• Labor attrition r/t
store closures
• Management
• Technical
expertise
• Marketing
Financing
Financing/Deal
Economics
• Cash, debt or
equity financing
• Impact on
EBITDA target
Push candidate towards Market size, Competitor landscape
81
Exhibit #1
Yoga App Market Size, $M
278
+11%
253
234
209
182
2018
2019
2020
2021
2022
Yoga App Market Share in 2022, %
17
18
Pigeon Pose Pros
Vinyasapp
18
16
16
15
Cat Cow Coach
Downward Dog
for Dummies
Warrior II Guru
Other Apps
82
Exhibit #2
Vinyasapp 2022 Operating Expenses, $M
Marketing & Sales
11
General & Administrative
6
App Development
18
Cost of Revenue
9
0
5
10
15
20
83
Interviewer guidance on Exhibits
Exhibit #1 Guidance:
Exhibit #2 Guidance:
• Interviewee should notice that the market
is growing and that Vinyasapp is the
largest player in the market
• Interviewee should identify that App
Development costs are the largest
expense (represent over 40% of
operating costs – there is potential to cut
costs here in order to improve EBITDA;
however, it might be unwise to cut given
the competitive nature of the yoga app
market)
• Interviewee should be able to calculate
revenue from the information given:
– 18% x $278M = $50M
• After calculating revenues, candidate
should transition towards identifying costs
and calculating the EBITDA
• Interviewee should calculate total
operating expenses:
– $11 + $6 + $18 + $9 = $44M
• Interviewee should then use revenue from
Exhibit 1 to calculate EBITDA:
– $50M - $44M = $6M
Post EBITDA calculations, the candidate should start estimating the enterprise value of Vinyasapp. If
candidate asks for DCF info, nudge towards multiples method of valuation and show Exhibit #3
84
Exhibit #3
Recent Sports & Recreation App Acquisitions
Company Name
Description
EBITDA
Selling Price
ABC Athlete
Personalized fitness app to connect people new to
fitness with activities (HIIT, Powerlifting, endurance
sports, etc.) that fits their interests, goals, and
schedule.
$31M
$217M
PostPros Fitness
An app that connects newly retired athletes with
trainers that can take revamp their training plans to
focus on long-term health and longevity.
$15M
$135M
Expansion
Equipment
Marketplace for parents to exchange used youth
sports gear as their children grow.
$23M
$253M
Flawless Form
Advanced fitness app that uses a smartphone’s
camera and AI to provide real-time feedback on an
athlete’s form through complex movements
(Olympic lifts, plyometrics, etc.).
$20M
$160M
Slim Down
Countdown
Guided diet and exercise app for people trimming
down for a big event (weddings, vacations, blind
dates, etc.). Set a target improvement area (gain
muscle, lose fat, etc.) and date. The app will
develop a customized diet and exercise plan for
users to meet their goals.
$18M
$144M
85
Interviewer guidance on Exhibits
Exhibit #3 Guidance:
• Interviewee should use comparable deals to calculate EBITDA multiples (EBITDA
divided by Selling Price):
– ABC Athlete – 7x
– PostPros Fitness – 9x
– Expansion Equipment – 11x
– Flawless Form – 8x
– Slim Down Countdown – 8x
• Interviewee should realize that Expansion Equipment is not comparable and should
exclude this from the comparable set. They should average the rest (8x) to arrive at their
target multiple.
• Interviewee should arrive at valuation: $6 x 8 = $48M
Analysis:
• Vinyasapp’s $50M sticker price is comparable to recent acquisitions, but the additional
EBITDA does not entirely satisfy the CEO’s goal in year 1. AA should identify cost
cutting initiatives and synergies to increase EBITDA to $8M in the next 2 years
86
Brainstorming
Prompt:
Analysis:
• What should the client consider about
expanding into the wellness app space?
What are some possible advantages or
disadvantages of this expansion strategy?
Frame the brainstorm as follows:
• Opportunities
– This acquisition could represent an entry point into
a lucrative and growing wellness app industry
– Vinyasapp would diversify AA’s business and help
kickstart a move away from traditional brick and
mortar retail
– AA’s current customers would make natural
additions to Vinyasapp’s user base
• Challenges/risks
– AA does not have expertise in app development
– It will likely take significant marketing spend to
grow Vinyasapp’s user base, which could
jeopardize AA’s EBITDA targets
87
Athletic Athleisure
Recommendation
As you’re getting a coffee, you run into the CEO of Athletic Athleisure who asks you for
an update on the acquisition due diligence.
Risks and Next Steps:
The candidate should recommend that AA move forward with the acquisition of Vinyassapp and highlight the
following points:
- Vinyasapp represents an entry point into the growing online wellness industry
- Vinyasapp generates ~$6M in EBITDA, which represents an 8.3x multiple
- Acquiring Vinyasapp helps AA build towards its goal of adding $8M in annual EBITDA over the next 3 years;
however, synergies or cost-cutting opportunities should be identified in order to offset financing costs and reach
the company’s EBITDA target
The candidate should also highlight the following risks:
- AA’s lack of expertise in app development
- There is little overlap between the two operating profiles, which could make achieving synergies more difficult
- While AA’s customers are willing to take virtual yoga classes, they may already be loyal to other platforms, which
could increase customer acquisition costs and hurt AA’s EBITDA goals
88
I Want My Em-TV
Industry:
Case Type:
Led by:
Case Level:
Telecommunications/Media
Market Entry/Pricing
Interviewer
Hard
89
Behavioral Questions
Question 1:
• Tell me about a cause you care about.
Question 2:
• What is something you’ve learned about yourself recently?
90
I Want My Em-TV
Prompt #1:
Emerson is a $10b company that offers landline phone and broadband internet services
to an area with 20 million households and businesses. To diversify their revenue,
Emerson has decided to enter the television market. They have invested in cable boxes
that can be used by homes and businesses to watch tv. Emerson has sought our help
to determine their pricing strategy, independent of their existing phone and internet
plans, to maximize profit and whether they will be able to successfully beat competitors.
Case Background:
– Emerson has 50% market share in their region.
– 80% of their customers are households and 20% are businesses.
– Pay television networks (e.g. HBO, Showtime) have set rates that should not be considered
in the pricing strategy.
– There are two other companies that provide cable boxes in the area and both are smaller
than Emerson. They also compete with DirectTV (satellite tv provider).
– The infrastructure is already in place so startup costs are minimal and can be excluded for the
purposes of this case.
– Emerson believes they need to be 15% below market prices in order to attract customers.
– Emerson wants at least a 25% margin on their services.
91
I Want My Em-TV
Framework Buckets:
• MECE Framework for the prompt (high level buckets can be mentioned – details
under each bucket are optional)
Financial Analysis
•
•
•
•
Revenue projections
Investment costs
Variable costs
Financial feasibility
• NPV
• ROI
• Payback
Company
Market/Competition
•
•
•
•
Market Size
CAGR – Growing,
mature, declining
Fragmentation
Customer
preferences, WTP
•
•
•
•
Current financial
health – leverage,
revenues, etc.
Execution capabilities
Synergies with other
LOBs
Supply chain /
supplier relations
92
Exhibit #1
Market Research: Average Prices for Cable Packages of Competitors
Number of Channels in
Package
Number of Cable Boxes
1
2
3
4
5+
10
$35
$45
$55
$60
$70
35
$45
$60
$65
$75
$80
80
$60
$70
$80
$85
$95
150
$85
$90
$95
$105
$115
400
$140
$160
$170
$185
$190
% Customers
40%
20%
15%
15%
10%
93
Exhibit #2
List of Variable Costs for Cheetah Cable Television Services
Expense Type
Cost
Each Cable Box
$5
Channel / Account
$0.25
Installation / Account
$5
Support / Account
$10
94
Interviewer guidance on Exhibit #1
Guidance:
Analysis:
• The point of the exhibit is for the interviewee to
think through what is driving the price from our
competitors.
• Heavy math on the exhibit is not required
Basic:
• The price increases more for larger packages
than for an extra cable box.
Additional Information • The packages are standard within the industry
and are the only options for customers (e.g. they
can’t mix and match channels).
• Emerson plans to use this same package
structure.
– The price for the largest tv package is between 3.5 and
5 times higher than the price for the smallest package
– The price for 5 cable boxes is never more than double
the price for 1 cable box within the same tv package
• Customers tend to purchase 1 or 2 boxes
Advanced
• There are higher costs associated with package
increases than with cable box increases.
When the interview has finished their
analysis, they should ask for or be given
cost estimates for Emerson’s cable tv
operations (Exhibit 2).
95
Interviewer guidance on Exhibit #2
Guidance:
Supply if not asked by the interviewee:
• Emerson believes they need to be 15% below
the market in order to attract customers.
• Emerson wants at least a 25% margin on their
services.
The goal is for the interviewee to create a basic framework
for pricing the cable boxes and tv service based on the
costs. If their prices include the required 25% margin and
are still 15% below average market price, they should
expect their launch to be successful.
A good strategy is to have a base price that accounts for
installation and support, then add set rates for each cable
box and channel package based on a per channel rate.
Margins (25%) and Competitive Pricing (15%) should also
be considered (during or after itemized computation)
The interviewee does not need to price every combination
of package and boxes. Once they have determined a
strategy and set rates, the interviewer can ask them to spot
check combinations to verify strategy.
Analysis:
• Account Costs = $15 (Installation + Support).
Add 40% for margin and competitive pricing
requirements ($6). The minimum base price =
$21.
• Cable boxes cost Emerson $5. Plus 40% ($2) =
$7 minimum per box.
• Channels cost Emerson $0.25. Add 40% ($0.10)
= $0.35 minimum per channel.
Therefore, Emerson can price an account with 1 box and a
10-channel package for no less than: $21 + $7 +
(10*$0.35) = $31.50. This is below the average market
price of $35, so they should expect to be successful with
this strategy. Candidate should compute the pricing for all
packages in the "1 box" category and see if this pricing
strategy holds true.
Advanced: An astute interviewee will notice that they
cannot include their 25% margin and be 15% cheaper than
the market for the 400-channel package. They may offer a
hypothesis as to why and/or make suggestions about what
to do about it.
96
Brainstorming
Prompt:
• What other factors should Emerson
consider when planning to enter the cable
tv market?
Analysis:
• Pricing-related
–
–
–
–
Bundling with Phone/Broadband
Promotions/Discounts
Marketing/Advertising
Customer Segmentation (e.g. Households and
businesses)
– Raising prices over time once they gain market
share
• Additional Product Features
– Streaming service partnerships
– Revenue and cost synergies with phone and
internet
– Value of data from customers on viewing habits
• Risks
– Poor service could negatively impact their existing
client relationships
– Declining TV viewership
– New technology could disrupt market
97
I Want My Em-TV
Recommendation
• We recommend that Emerson enters the market in the 1 box category for the 10, 35,
80, and 150 channels packages given they have a margin target of 25% and pricing
competitiveness target of 15%
Risks and Next Steps:
• Risks
– Competitors lowering their prices leading to price wars
– Internet substituting cable TV
– Implementation risks
• Next Steps
– Pilot in selected geographies to test pricing strategy and sales
– Ideate bundling strategies with current phone and broadband services
98
Audio Inc.
Industry:
Case Type:
Led by:
Case Level:
Consumer/Health Tech
Market Entry
Interviewer
Hard
99
Behavioral Questions
Question 1:
• What career achievement are you most proud of?
Question 2:
• Tell me about a time you failed at something, and then how you responded to this
experience.
100
Audio Inc.
Prompt #1:
• Audio Inc is a consumer tech company specializing in headphones, speakers, and audio
equipment. Lately, they have been losing market share to competitors in the domestic
headphones market, and they have been exploring ways to increase revenue. They are
considering entering the health tech space by developing a direct-to-consumer hearing aid.
Currently, hearing aids require assistance from an audiologist to set up, and the process takes
weeks before the patient has the hearing aid in hand. Audio Inc.’s product would ship in 2 days
and allow patients to set it up at home without the help of a doctor. Audio Inc wants your help to
understand if this product launch is a good idea.
Case Background:
• Client/Company information: Audio Inc primarily sells headphones, speakers, and other
premium audio equipment (think Bose)
• Objective: Assess product viability; reach $1B annual revenue by 2026 (4 years from now) and
$100M of total, cumulative net profit for the project by 2026
• Industry/Competition information: Audio Inc. has been losing market share in core products
(headphones) to larger competitors with stronger brand appeal
• Value Chain/Revenue information: Audio Inc. develops, manufactures, and distributes audio
equipment. They sell through retail channels, amazon, and a small percentage as direct to
consumer through their website
• Geography: US only
• Product information: To be shared in the case
101
Audio Inc.
Prompt #1:
What factors should Audio Inc. consider when making this strategic decision?
Framework Buckets:
• A suitable framework should investigate the typical factors involved in a new product offering:
Market
• Hearing aid total
market size & growth
rate
• Winnable share of
market
• Major
competitors/market
fragmentation (+
potential competitor
response)
Financials
Capabilities
• Investment needed
(internal R&D or
M&A/partnership)
• Technological overlap
between headphones
and hearing aids
• Build (internal R&D)
• Product margins (and
resulting project
profitability/ROI)
• Fit of current brand,
customer base, and/or
distribution to hearing
aid market
• Borrow (partner)
• Product pricing strategy
(and basis, e.g. costplus)
Entry Strategy
• Buy (M&A)
• Manufacturing strategy
(in-house or contract)
• Potential regulatory
risks and pushback
from audiologists
• Given the client’s disruptive plan and nature of US healthcare, Risks could be compiled under a
separate category
• Entry strategy is important to consider but not evaluated in this case
102
Audio Inc.
Prompt #2:
What is the total addressable market for
hearing aids in the US on an annual basis?
And how much of that can Audio Inc.
realistically capture?
Guidelines for the interviewer: This is a guided market
sizing exercise.
Only if the candidate asks, provide following information
–
• 5% of US population uses hearing aids
• Average lifespan of a hearing aid is 5 years
• Average price of a hearing aid is $ 900
When the candidate asks for information on
competitors/market share provide Exhibit #1. If they
ask for this immediately, push them to size the
overall market first, and then supply it.
Solution:
• A good candidate will create a structure for market sizing
before moving to calculations
• A good candidate will follow up with the interviewer from
time to time to get their input
• The approach used for market sizing is more important
than the final answer
Example of an approach that can be used –
Total population of USA. = 300M
% of population that uses hearing aid = 5%
% of population buying hear aid each year = 5% / 5 = 1%
Total hearing aids sold in a year = 300M x 1 % = 3M
Average price of hearing aid = $900
Total market for hearing aid in a year = $900 x 3M = $2.7B
103
Exhibit #1
104
Audio Inc.
Analysis for Exhibit #1:
• Good candidates will be able to understand and clearly explain the key
information in the exhibit:
– Enough market fragmentation to enter and take share, but unlikely to dominate
– Hearing aids are a smaller market than their two existing core markets shown – perhaps there are
better alternatives to enter (i.e. opportunity cost)
• Strong candidates should realize that the market leader in hearing aids holds
20% share. Hence, Audio Inc. could achieve at most 20% of $3B market =
600M/year
• Strong candidates will remember the target is to achieve $1B is revenue by
2026 which is 1/3rd of the total hearing aid market and would be extremely
difficult
If candidate asks, market growth outlook for hearing aids is flat YoY
105
Audio Inc.
Prompt #3:
Analysis:
Audio Inc. has determined that the hearing
aid market is an attractive market and
presents a strong revenue opportunity,
provided they can gain market share. Aside
from competition, what are some other risk
areas to consider before launching this new
product?
Risk factors to propose could include:
Guideline for the Interviewer:
Let the candidate continue to brainstorm till
they arrive as financials/cost as an important
factor.
Distribution: What is the ideal distribution channel for this
product? Will patients know to look for DTC hearing aids online?
Will retailers be willing to stock medical equipment? Will doctor’s
offices recommend this product?
Potential mini-structures are:
• Financial/Non-financial
• Short Term/Long Term
• Internal/External
After brainstorm, provide Prompt #4
Financial: What is the R&D cost? Would additional
employees/engineers need to be hired to develop this product?
What is the payback period?
Regulatory: How involved is the FDA approval process? Would
insurance providers cover this product?
Consumers: How is hearing-aid purchasing behavior different
from headphones? Will older, commonly fixed-income hearing aid
customer be price sensitive/limited? Will there be insurance
coverage implications that reduce the total addressable market?
Brand: What are the branding implications for this new product?
How should we brand and advertise this product differently from
existing products?
106
Audio Inc.
Prompt #4:
Audio Inc. is strongly considering developing this hearing aid product in-house. What
would be the project’s total revenue and profits over the next four years?
(Provide exhibit #2)
107
Exhibit #2
Revenue and Costs (2023-26)
Sales Figures
2023
2024
2025
2026
Projected
Customers
90,000
250,000
400,000
700,000
MSRPⁱ
$900
$900
$810
$810
Expenses
2023
2024
2025
2026
R&D
$265M
$35M
-
-
COGSⁱⁱ
$300
$300
$270
$270
ⁱ MSRP for a packaged set of tw o hearing aids
ⁱⁱ COGS of a single hearing aid
108
Audio Inc.
Analysis for Exhibit #2:
Main insight (1): Annual revenue for 2026 is $567M (<$1B)
Main insight (2): Gross revenues total ~$1.2B, Costs total ~$1.1B, ➔ $100M in total net profit
Good candidates will:
• Calculate (1) Gross revenue = Σ [ MSRPs * volumes ] & (2) Total net profit = [ Σ gross revenue - Σ costs ]
• Determine that Audio Inc. will not meet its target of achieving $1B in annual revenue by 2026, but will reach the $100M
cumulative net profit target
Strong candidates will:
• Realize that gross margin is 33% all four years; gross profit is therefore gross revenue * (1/3)
Calculation Instructions:
𝐺𝑟𝑜𝑠𝑠 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 = 𝛴 𝑀𝑆𝑅𝑃 × 𝑣𝑜𝑙𝑢𝑚𝑒 𝑓𝑜𝑟 𝑎𝑙𝑙 𝑦𝑒𝑎𝑟𝑠 = $1,197M = $𝟏. 𝟐𝐁
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝑙𝑜𝑛𝑔 𝑚𝑒𝑡ℎ𝑜𝑑 = 𝐺𝑟𝑜𝑠𝑠 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 − [𝑅&𝐷 + 𝛴 𝐶𝑂𝐺𝑆 × 𝑣𝑜𝑙𝑢𝑚𝑒 ] = $1.2B − [$0.3B + $0.8B] = $𝟎. 𝟏𝐁
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝑠ℎ𝑜𝑟𝑐𝑢𝑡 = 𝐺𝑟𝑜𝑠𝑠 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 ×
1
1
− 𝑅&𝐷 = $1.2B ×
− $0.3B = $𝟎. 𝟏𝐁
3
3
*Candidate can ignore all other expenses (SG&A, etc.) to arrive at net profit
109
Audio Inc.
Prompt #5 (can skip if candidate is progressing slowly):
For Audio Inc.’s to achieve their $1B annual revenue goal, they are considering
increasing prices. Based on the following product performance information, do you
think Audio Inc.’s product is fit for the market, and they could increase their MSRP
over average market price?
(Provide Exhibit #3)
110
Exhibit #3
Product Performance for Hearing Aids
10
5
9
4
Importance
7
6
3
5
4
2
Performance Rating
8
3
2
1
1
0
0
Audio Quality
Comfort
Customer Importance
Reliability
Audio Inc.*
Ease of Use
Be Sound
Auraflex
Battery Life
HearAll
*Audio Inc. product performance data approximated from prototype trial
111
Audio Inc.
Analysis for Exhibit #3:
• Main Insight: Audio Inc. likely cannot increase price above MSRP; it trails Be Sound and Hearall in 2 of
the 3 most important product performance characteristics
• Interviewee should identify which performance characteristics are most important and then assess Audio
Inc. position against key competitors
Recommendation
• No separate recommendation is required of the interviewee in this case
• Overall, there is no clear answer. The logical recommendation is likely not to invest in this project due to
combined low ROI of 9%, lagging customer performance ratings, and numerous entry risks. However, wellsupported argument to mitigate those risks and proceed with project are acceptable.
Risks and Next Steps:
• No separate risks and next steps are required of the interviewee in this case
• Risks and next steps should be covered during brainstorm portions
112
State of Blue Devils
Industry:
Case Type:
Led by:
Case Level:
Public Sector (Construction/Infrastructure)
Growth/Strategy
Interviewer
Hard
113
Behavioral Questions
Question 1:
• Tell me about a time you influenced a senior stakeholder
Question 2:
• Tell me about a time you used data to solve an ambiguous problem
114
State of Blue Devils
Prompt #1:
• Your client, state of “Blue Devils” is looking to grow their capital project footprint postCovid-19 now that construction restrictions have been lifted. They are particularly
interested in infrastructure and construction projects and have come to you asking for
help setting a strategic growth plan. How would you advise your client?
Case Background:
• Background information to be divided into these categories (Please mark N/A if
information is not provided)–
– Client/Company information – Public sector, state government
– Industry/Competition information – US market
– Any constraints on the case – Labour force is currently constrained
– Specific goal – The current construction investment is $200M. We aim to reach
$1B of construction in 3 years
115
State of Blue Devils
Framework Buckets:
• MECE Framework for the prompt (high level buckets can be mentioned – details
under each bucket are optional) (Organic vs Inorganic not possible here)
Financials
•
•
•
•
•
Where is the money
coming from/Financing
Spending plan
Budget plan
Investment and bonds
Budget ceilings (per
year)
Market
Implementation
•
•
•
•
•
•
•
Jobs
Public scrutiny
Tax department
Government
Local population
Regulations
Sustainability
•
•
•
•
Labour – source and
type, availability
Contractors –
negotiations of contracts,
availability of large
contractors in the area
State economy and
capability
How to compete against
private industry
116
Brainstorming
Prompt:
• The client has identified that labor
availability after COVID-19 is challenging
in their state. How would you suggest
easing this issue?
Analysis:
– Financial
•
•
•
• Interviewer Guidance:
– Internal/External also works as long it covers these
points
Financial Incentives to work in the state
Attractive contract terms and bonuses for
meeting goals/deadlines
Profit sharing when applicable
– Operational
•
•
Moving machinery and labor around the state
Supply chain robustness to ensure labor is not
affected by lack of supplies or poor inventory in
the area
– Marketing
•
•
•
Advertising work and scale to contractors and
the attractive wages for labor
Benefits to labor for working on project and for
their families
Advertising the cause for improving people’s
lives through infrastructure
117
Exhibit #1 – Your client is concerned recent budget forecasts are affecting their
project completion timelines, and the overall bottom line, what do you observe in
this exhibit?
Accumulated budget forecast
vs actual spend, $M
260
240
Cumulative Project
Spend/Investment ($M)
220
Original Forecast
Finance Forecast
Actual project spend
200
180
160
140
120
100
80
60
40
20
0
Jul-17
Jan-18
Jul-18
Jan-19
Jul-19
Jan-20
Jul-20
Jan-21
Jul-21
Jan-22
Jul-22
Year
118
Interviewer guidance on Exhibits
Exhibit #1 Guidance:
Analysis:
• The chart is for interpretation. This exhibit
has 3 lines, the original forecast of the
project budget, the budget finance uses,
(which has been delayed) and the actual
final budget and timeline from
construction
• Takeaways:
– Project delay at the start
– Difference in forecast to actual
– Actual always lower
– 5-year timeline, $200M actual project
spend
– Optimistic original forecast
– Opportunity cost due to budget lock –
Excellent candidates
• The finance team is locked to a budget
forecast 6 months prior to actual costs
due to liquidity issues.
• This budget lock is leading to an
opportunity cost i.e. the company is not
being able to invest the money elsewhere
to earn interest (securities, stocks, bonds,
etc.) - Push candidate towards this insight
and move to the next prompt
119
Prompt #2 – How much money is foregone in interest earned due to improper
budgetary planning and how would this translate to a $1B portfolio
Prompt #3 Guidance:
Analysis:
• To calculate FOREGONE REVENUE, the
candidate needs to ask for the right
information regarding difference in
forecasts.
• The calculation includes 2 parts:
– Calculating net investment income lost
– Optional - for excellent candidate:
Calculating effect of this loss on a $1B
portfolio of projects (based on prompt)
• Provide if asked:
– The average annual difference in actual vs
forecast income over this time frame is
$15M
– Interest rate is 8% per annum.
– Excellent candidate will ask for inflation
rate. But we assume that it will be 0%.
• For good candidate, the total foregone interest
expense: 15M*8%*5=6M
• Excellent candidates can show second-level
thinking – what if this gap is applied to a 2B
project? 6M*1B/200M (the $200M is from
the upper bound of the graph for the
actual project spend line)
120
Brainstorming
Prompt:
• The client is interested in making more
accurate forecasts moving forward as this
is instrumental for appropriate capital
management and setting realistic
timelines. How would you recommend
your client approach this?
Analysis:
– Internal
•
•
•
•
•
•
Clear expectations and communication
internally between teams
Using historical benchmarks and iterating
Improved forecasting and tracking
Quantification of processes to better
understand factors that cause discrepancies
and disruptions
Optimizing investments to minimize loss due
to budgets
Estimation algorithms
– External
•
•
•
•
Working with contractors that complete work
on time historically
Better communication with contractors and
managers to understand evolution of project
timelines and delays
Favorable payment terms with vendors for
better capital management
Payment plans
121
State of Blue Devils
Recommendation
• The Governor of Blue Devils would like a final recommendation on implementing a
strong infrastructure growth plan. What would you recommend?
• Recommendation should target adding improvements to budgetary and planning
processes to ensure viable long-term growth
Risks and Next Steps:
• Risks
– Labor market – can the government effectively attract talent
– Financial strain, Can the government find the money per year
– Operational training and implementation of improvements
• Next Steps
– How to implement changes
– Working with marketing team to attract talent
122
Muni Golf Opportunity
Industry:
Case Type:
Led by:
Case Level:
Real Estate/Private Equity
M&A, Market Sizing
Interviewee
Hard
123
Behavioral Questions
Question 1:
• Tell me about a time you had to make a decision with limited information.
Candidate should respond with a relevant CAR (Challenge, Action, Result) story.
Action portion of the response should delineate how candidate structured the decisionmaking process to reach action in a reasoned manner absent necessary
data/information. Strong answers will use #s throughout. Time constraint in Challenge,
impact of Results, etc.
Question 2:
• What do you consider your greatest strength?
Candidate should express their personal view of their greatest strength and then relate
a CAR story validating how that strength led to personal and professional success.
124
Muni Golf Opportunity
Prompt:
Our client, FSB Capital Holdings LLP is a real estate focused private equity firm, with
experience in developing and operating properties over medium to long term time horizons.
Recently, the FSB Capital deal origination team has been made aware that the City of San
Diego in California is considering divesting one of its municipal golf properties, the Balboa Park
Golf Course located near downtown San Diego. FSB Capital has engaged us to value the
potential asset, evaluate potential growth strategies for the property if acquired, and provide a
final recommendation regarding whether to pursue a deal with the City of San Diego.
Case Background:
• Client/Company information: FSB Capital has experience operating golf resorts, hotels, and developing
commercial and limited residential real estate.
• Industry/Competition information: Nearby privately-held Riverwalk GC (27-hole course) is being redeveloped into a
master-planned community of housing, offices, shops, and an 80-acre riverside park.
• Product information: Course consists of an 18-hole championship course, 9-hole executive course, driving range,
pro-shop, and clubhouse bar/restaurant.
– Property is situated on the Southeast corner of the larger Balboa Park complex which contains the famed
City Zoo, museums, and the Naval Medical Center. (think a corner of Central Park)
– Course is 5 minutes from downtown, Convention Center, hotels, historic nightlife district (Gaslamp)
– Residential communities border the course to the east and south.
• Value Chain/Revenue information: Golf revenue comes from golfers paying a greens fee for a round of golf.
Typical round consists of 4 golfers. Patrons often buy food & alcohol on the course or after a round
• Any constraints on the case: N/A
125
Muni Golf Opportunity
Framework Buckets:
Valuation
I.
II.
III.
Free Cash Flow
Method:
a. Net Income from
Operations
b. Appropriate
Discount Rate
Multiples Method:
a. Comparable
deals
b. Raw acreage $/ft
on property
c. Sales or earning
multiple
IRR
a. Acquisition cost
b. Cash flows
I.
II.
Growth Levers
Long-Term Strategy
Growth on Existing
Assets:
a. Pricing play on
golf course
b. Grow restaurant
revenues
Redevelopment:
a. Hotel
b. Residential
I.
II.
a.
b.
Roll forward to a
secondary fund if
asset is generating
cash and growth
continues
Sell to subsequent
investor
Entire portfolio asset
Crack the asset and
sell off pieces to cover
the initial investment,
retain a cash
generating piece.
126
Muni Golf Opportunity
Alternate Framework:
Free Cash Flow
Method
Valuation
1
Multiples
Method
Golf Facilities
Bar/Restaurant
Existing
Infrastructure
Residential
Growth Levers
2
New
Development
Commercial
127
Exhibit #1
128
Interviewer guidance on Exhibit #1
Exhibit #1 Guidance:
Analysis:
Candidate should quickly recognize that the existing rate
card is too complex to model the Discounted Cash Flow
valuation and make key assumptions to simplify the
calculations: Prompt candidate if struggling with how to
proceed, should approach like market sizing
• Separate rates for resident/non-residents superfluous
as the course would no longer be city owned.
Candidate should pick a round number to simplify
math. Can roll up to ~avg spend per golfer including
food & drink
• Separate weekday/weekend rates should remain
• Ignore Sr./Junior rates
• Tee times can be staggered either every 12 minutes (5
groups of 4 golfers/hr) or every 15 minutes (4 groups
of 4 golfers/hr)
• Cart fees can either be rolled up into higher golf rates
(charge everyone, even walkers) or can be applied as
a fraction of golfers. *only on the 18 hole course
• Optional: Current rate card has 5 different Twilight
times: simplify into 2 seasons, Peak: 8 months (Mar –
Oct) of 12 hr operating days, Off-Peak: 4 months (Nov
– Feb) of 10 hr operating days, twilight rates apply to
last 4 hours of operations of 18-hole course. If they
choose to ignore/simplify they should state that
• Candidates will not generate the exact revenue
numbers in the example math – That is OK
• Focus should be on remaining structured and
logical as they conduct a bottoms-up market sizing
of the revenue
1. Assume a fee per golfer
2. # golfers per round
3. Rounds per hour
4. Hours per day
5. Days a week
6. Weeks per year
7. Annual Revenue!
• Strong candidates will recognize product dynamics
(twilight rates, cart fees, etc.) and incorporate them
into their analysis
129
Exhibit #1: Off Peak Revenue
Data
Greens Fee w/cart
x golfers per tee time
Revenue per tee time
x tee times/hr (10, 12, or 15
min)
Revenue per hour
Calculations
Weekday Weekend
$60
$80
4
4
$240
$320
5
$1,200
5
$1,600
Peak
Off-Peak
Weekend Hourly Revenue
x Off Peak Hours
OP Weekend Daily Revenue
x Days per Weekend
OP Weekend Revenue
x Off Peak Weeks
Hours of Operation
12
10
Weeks in Each Season
30
20
Total Off Peak Weekend Revenue
Weekday Hourly Revenue
x Off Peak Hours
OP Weekday Daily Revenue
x Days per Week
OP Weekday Revenue
x Off Peak Weeks
Total Off Peak Weekday Revenue
$1,600
10
$16,000
2
$32,000
20
$640,000
$1,200
10
$12,000
5
$60,000
20
$1,200,000
130
Exhibit #1: Off Peak Revenue (Discount)
Data
Off Peak Twilight Hours 4/10
Twilight Discount
Calculations
40%
~25%
Total Off Peak Weekend Revenue
% Revenue Twilight hrs
Undiscounted WE Twilight Revenue
x (1 - Discount)
Total OP Weekend Twilight Revenue
+ OP Non-Twilight Revenue (640K-250K)
Total OP Weekend Revenue After
Discount
$640,000
40%
Round to
$256,000 $250K
0.75
Round to
$187,500 $190K
$390,000
Rounded
$580,000 #s
Total Off Peak Weekday Revenue
% Revenue Twilight hrs
Undiscounted WD Twilight Revenue
x (1 - Discount)
Total OP Weekday Twilight Revenue
+ OP Non-Twilight Revenue (1.2M-480K)
$1,200,000
40%
$480,000
0.75
$360,000
$720,000
Total OP Weekday Revenue After Discount
$1,080,000
Total OP Weekday Revenue After Discount
$ 1,080,000
Total OP Weekend Revenue After Discount
Total OP Revenue
$ 580,000
$ 1,660,000
131
Exhibit #1: Peak Revenue
Data
Calculations
Weekend Hourly Revenue
Weekday Weekend
x Peak Hours
Greens Fee w/cart
$60
$80
x golfers per tee time
4
4
Revenue per tee time
$240
$320
x Days per Weekend
Peak Weekend Revenue
x tee times/hr (10, 12, or 15
min)
Revenue per hour
Peak Weekend Daily Revenue
5
5
$1,200
$1,600
Peak
x Peak Weeks
Total Peak Weekend Revenue
Weekday Hourly Revenue
Off-Peak
x Peak Hours
Hours of Operation
12
30
12
$19,200
2
$38,400
20
x Days per Week
Peak Weekday Revenue
x Peak Weeks
Total Peak Weekday Revenue
Round to
$40K
30
$1,200,000
$1,200
12
10
Peak Weekday Daily Revenue
Weeks in Each Season
$1,600
$14,400
Round to
$15K
5
$75,000
30
$2,250,000
132
Exhibit #1: Peak Revenue (Discount)
Data
Total Peak Weekday Revenue
Calculations
$2,250,000
% Revenue Twilight hrs
33%
Undiscounted WD Twilight Revenue
$750,000
x (1 - Discount)
0.75
Total P Weekday Twilight Revenue
Total Peak Weekend Revenue
% Revenue Twighlight hrs
Undiscounted WE Twilight Revenue
x (1 - Discount)
$1,200,000
33%
$400,000
0.75
$562,500
Total OP Weekend Twighlight Revenue
$300,000
$1,500,000
+ OP Non-twilight Revenue (1.2M-400K)
$800,000
$2,062,500
Total OP Weekend Revenue After Discount
$1,100,000
Off Peak Twilight Hours 4/12
33% or (1/3)
Total P Weekday Revenue After Discount
$2,062,500
Twilight Discount
~25%
Total P Weekend Revenue After Discount
$1,100,000
Total Peak Revenue
$3,162,500
+ Total Off-Peak Revenue
$1,660,000
Annual Revenue
$4,822,500
+ P Non-twilight Revenue (2.25M-750K)
Total Peak Weekday Revenue After
Discount
133
Exhibit #1 Discounting Cash Flows
Exhibit #1 Discounting
• If not asked prompt candidate with following
information:
“FSB Capital demands strict financial discipline within
its portfolio companies. Typically, FSB Cap portfolio
companies have an average FCF to Sales ratio of
0.85”
• Candidate should ask for an appropriate growth and
discount rate, r – g in PV calculation denominator
should equal 10%, so (15-5, 12-2, etc.)
• Candidate may ask how many years to discount.
Prompt them to consider if they expect the FCF to vary
year to year. To value the asset on a set # of years
they would need to know the cash outflow at Year 0 for
the acquisition (what they are supposed to determine:
price or valuation). Valuing the asset as a perpetuity is
sufficient.
• Strong candidates should point out that this valuation
is solely based on operational revenues. The land
value is not included and could potentially be
substantially higher.
Analysis:
$4.8𝑀 × 0.85 ≈ $4𝑀 𝐹𝐶𝐹
Ask candidate what they think is the best way to triangulate if $40M is attractive. Push
them towards comparable, similar business valuations. Hand exhibit 2.1 and 2.2
together and ask for their insights.
134
Exhibit #2.1
Golf Course Satellite Imagery
Interviewer guidance on Exhibit #2.1
Exhibit #2 Guidance:
Analysis:
• Lower right hand is the Executive 9hole course. Approximately 1M ft 2
• Eyeballing the map, that 1M ft 2 could
fit into the rest of the course ~3
times. Total area roughly 4M ft 2
Key Takeaways:
• Sizable land in the middle of urban
core
• Proximity to other attractions
• Rough land area of ~4M ft 2
• Do there need to be 2 courses? No!
If asked:
• The 18-hole course is extremely hilly
with a canyon running through it
(dark green area)
• Off map to the East (right side) and
South (bottom) are residential
neighborhoods. Mostly SingleFamily Homes, some low-rise
apartments and condos.
136
Exhibit #2.2
Average San Diego Real Estate Valuations
Type of Land
$/ft2
Residential
$700
Commercial
$600
Industrial
$300
Undeveloped
$350
137
Interviewer guidance on Exhibit #2.2
Exhibit #3 Guidance:
• Candidate should recognize that they can
conduct a very general multiples valuation
using ~4M ft2 from Exhibit 2
– This provides a check on the DCF
valuation conducted earlier
– Strong candidates will bracket the
multiples approach at the two extreme
comparisons to get a sense of
boundaries on the valuation. Not just
calculate all 4 .
If asked for clarification:
• Commercial refers to office space, hotels,
large apartment buildings
• Industrial is factories, auto repair garages,
etc.
• Residential is single family homes,
townhomes, and small-unit apartments and
condos
Analysis:
Type
$/ft2
X Approx.
ft2
Valuation
Residential
$700
X 4,000,000
$2.8B
Commercial
$600
X 4,000,000
$2.4B
Industrial
$300
X 4,000,000
$1.2B
Undeveloped
$350
X 4,000,000
$1.4B
138
Brainstorming
Prompt:
Analysis:
Should FSB acquire the asset, what are
some growth strategies they could
pursue?
Organic:
• Raise prices
• Rebrand (more
hip)
– Golf facilities
– Restaurant
– Marketing
• Memberships
Inorganic:
• Bolt-on
acquisitions
– Nearby hotels
– Nearby
restaurants
• Partner with
other party
– Top golf or similar
Redevelopment:
• Use land for other purposes:
– Hotel
– Residential housing
– Commercial office space
139
Muni Golf Opportunity
Recommendation: Pursue Deal
FSB Capital should pursue the acquisition of the Balboa Park Golf Course. It is a cash
generating asset that we project to generate $4.8M in annual sales from golf operations
alone. Discounting the cash flows at the average FSB port-co rate we’ve estimated a
value of the golf operations business as approximately $40M. Further, the property
value of the land in the land-constrained urban core justifies the acquisition.
Risks and Next Steps:
• Risks:
– California is water constrained, drought could affect ability to maintain quality or regulatory
risk. Mitigation: invest in water reclamation infrastructure
– Progressive state with housing shortage. City could pull out of deal to pursue housing.
Mitigation: seek to partner with city subsidies for redevelopment of housing on portion of land
– Local icon, privatization and redevelopment could face local backlash. Mitigation: community
outreach, understand the culture and ensure stewardship
• Next Steps:
– Follow on engagement to assess growth lever viability, review property value trends
140
Muni Golf Opportunity
Recommendation: Do not pursue deal
FSB Capital should not pursue the acquisition of the Balboa Park Golf Course at this
time. The land value (billions) and cost of acquiring far exceeds the cash returns the
golf business generates. Unlikely that the golf course operations would be able to
service the debt burden from the acquisition. Without information on the zoning and
feasibility of redevelopment on the property FSB should not move forward.
Risks and Next Steps:
• Risks:
– Substantial property in expensive urban core of an expensive growing city. Not pursuing a
deal means another developer or PE firm could gain advantage. LPs and investors could pull
capital. Mitigation: review LP lockup.
• Next Steps:
– Evaluate other potential acquisition targets.
141
Rush Hour
Industry:
Case Type:
Led by:
Case Level:
Transportation
Market entry
Interviewer
Hard
142
Behavioral Questions
Question 1:
• Tell me about a time you worked with someone with a different perspective/point of
view
Question 2:
• Tell me about a time you managed conflict at work
143
Rush Hour
Prompt #1:
• The authorities of the Lagos Nigeria airport have decided to issue 2,500 new taxi
permits for $1,000 each. These permits authorize a taxi to service arriving
passengers. Your client has taxi fleets in different US cities but does not have a
presence in Nigeria nor has serviced an airport in the past. She has asked you to
determine if she should buy those new permits. If so, how many should she buy?
Case Background: (to be given to interviewee)
– Company information: Company is a big player in the US market but doesn’t have
footprint outside the US
– Industry/competition information: Lagos Airport services is very competitive.
Nigeria is densely populated with and the airport is the major airport in Nigeria
due to high traffic
– Business model – makes revenue off transport services. Company takes a 70%
cut on revenue from riders
144
Rush Hour
Framework Buckets:
• MECE Framework for the prompt (high level buckets can be mentioned – details
under each bucket are optional)
Strategic logic
• Does it match our goals
- Growth rate of airport services in
Lagos
• Do we have resources and
capabilities to win in this market?
■ Do we have the brand power to
float airport services in Nigeria?
■ Do we have expertise in
geographic expansion?
■ Does our drivers have a good
knowledge of airport transport
rules or do we have capacity to
train drivers?
■ Do we have required expertise
or partners in airport operations
Economics of the
decision
• Potential profit
- Potential revenues (R)
- Potential cost
• Market
- Competitive landscape
- Consumer preference
- Demand availability
- Trends
• Investment
- Investment required
- Payback period?
- Cost of capital
Other
considerations
• Execution/entrybarriers?
- Regulatory barriers outside
permit?
- Implementation risk
- Political risks?
- Currency risk?
- Macroeconomic risk?
- Tax considerations
145
Question #1
• Estimate the daily demand for taxis. Is this demand being met? If not, how many
more taxis are needed? (Information below should be provided to candidates)
– Airport handles 42 million passengers yearly. There are 5,500 taxis operating in the
airport.
– On average a taxi takes 60 minutes to drive passenger and return to airport for next
pick up.
– On average 40% of domestic flights passengers and 80% of international flights
passengers use taxis.
– 30% of daily demand occurs between 6:00 a.m. and 10:00 a.m., 40% occurs between
6:00 p.m. and 10:00 p.m.
– Assume each passenger uses one cab and drivers keep 30% of the fare
– On average each taxi requires $8,000 yearly on maintenance.
146
Interviewer guidance on Question #1
Guidance:
Analysis:
• Assume that passenger
volume is equally
distributed through the
year/week/day.
• Assume that 50% of
passengers are from
domestic flights and 50%
international flights.
• Assume that the client has
capacity (meaning he has
cars and drivers available
in Lagos Nigeria at $0
investment cost).
• Assume all taxis can run
during peak hours and that
maintenance is a minimal
time commitment.
• Estimate number of passengers arriving each day:
✓ 42million/12 months = 3.5 million passengers monthly
✓ 3.5 million passengers / 4 weeks = 875,000 passengers weekly
✓ 875,000 passengers / 7 days = 125,000 passengers daily
• Estimate passengers that will require taxis:
✓ 62,500 domestic passengers x 40% of domestic use taxis = 25,000
✓ 62,500 international passengers x 80% of international use taxis = 50,000
✓ Total passengers demanding taxis daily = 75,000
✓ 6am – 10am = 22,500 passengers need a taxi (= 75,000 x 30%)
✓ 6pm – 10pm = 30,000 passengers need a taxi (=75,000 x 40%)
✓ Non-peak hours = 22,500 passengers need a taxi (=75,000 x 30%)
• Is the demand being met?
✓ From 6 to 10am, each taxi makes 4 trips (average trip takes 60min). If we have
5,500 taxis operating, then capacity serves 22,000 passengers. Excess
demand=500 passengers. 250 domestic x 40% = 100 passengers + 250
international x 80% = 200 passengers for a total of 300 passengers needing a
taxi / 4 rides per hour = 125 taxis needed to meet excess demand.
✓ From 6 to 10pm, using the same logic capacity meets 22,000 passengers: 5,500
taxis operating thus excess demand = 8,000 passengers (need 2,000 taxis).
✓ During non-peak hours (16 hours) 22,500 passengers will need a taxi. With
5,500 taxis in operation there is capacity to serve 88,000 passengers during
that time. In that time period there is excess capacity.
• To service demand not being met in the morning and night periods 2,000 taxis
are required.
• This is a very complex
exercise; please work with
the candidate through the
math
147
Question #2
•
Estimate possible revenue. An average passenger pays $200 cab fare via regulated
rates
– Demand not being met daily: 500 passengers in the morning
– + 8,000 passengers in the evening
– = 8,500 passengers needing service x $200 = $1,700,000 daily revenue
– Yearly Revenue = $571,200,000
•
Now that you have the revenue, what do you think are some cost considerations that
our client needs to take for taxi operations?
– Sample answer:
• Fixed cost: Back-end staff cost; General overheads, Permits, Insurance, tech cost
• Variable cost: Drivers' salary, Gas, Car repairs, Car maintenance etc.
148
Interviewer guidance on Exhibit #1
Prompt:
• Candidates should be encouraged to list cost stream for
running the taxi operations
• After initial brainstorming, show candidate the exhibit #1
on the next page to compute profit calculation
Analysis:
• Cost can be calculated by taking XX% of revenue and
plugging absolute values. For Gas Prices, ask candidate to
divide revenue uniformly across $ quarters to get to period
revenue. Calculate: Profit = Revenue – Cost
• Outstanding candidates should recognize that cost
is needed to estimate profit. The candidate should list
the different cost component associated with
transport services. Interviewer should prompt if
candidate doesn’t list this
149
Exhibit #1
Fixed cost
Back-end staff cost
0.5% of revenue
Insurance
0.5% of revenue
General O/H
1% of revenue
Driver salary
30% of revenue
Permit
$1000 per taxi
Variable cost
Maintenance
$8000 per car per year
Gas prices
Q1
As below
10% of period revenue
Q2
15% of period revenue
Q3
20% of period revenue
Q4
25% of period revenue
Assume revenue is earned linearly over the year
150
Rush Hour
Recommendation
• Client should buy 2,000 permits based on the potential yearly profit of $270,456,000
from excess demand at the airport.
Risks and Next Steps:
• Risk: There is no guarantee that the airport will not allow additional permits in the
future which could increase the number of taxis at the airport
• Risk: Consumers in the Lagos airport may favor local brands hence, boycotting client
services
• Next steps: deeper environmental / market analysis to check consumer behavior,
stress testing assumptions used in valuation (data may not be accurate)
151
Final Remarks
Enjoy the casing process. This is very representative of the day-to-day life as a consultant!
It’s important to mock case as if it were the real interview. The “day of” often brings
additional stress and anxiety. Below are excerpts from students who previously interviewed
at firms sharing their experiences and advice for future applicants.
•
If something “unexpected“ happens (interviewer skips framework, preemptively asks for
brainstorm, etc.), don’t panic. Adapt and respond accordingly
•
Practice market sizing
•
Identify and remember math shortcuts. Margin shortcuts, weighted average, price
elasticity are all fair game
•
Get clarity and background information. Easier said than done, but do not be afraid to
repetitively ask for clarification if it is a novel or niche industry or company
152
Recommended Classes
This list comes from 2 nd year students who interned in consulting
Class Type
Class Name
Professor
Rationale
Accounting
Financial Statement
Analysis
R. Vashishtha
Teaches financial health and
building pro forma
Accounting
Valuation &
Fundamental Analysis
S. Nallareddy
Multiple valuation techniques
used in practice to value a firm
Operations
Operations Strategy
R. Swinney
Great case studies that links how
operations relates to strategy
Strategy
Strategy for Driving
Corporate Growth
G. Davis
Explores build, buy, borrow
frameworks
Strategy
Strategy Implementation
J. Figueiredo
Former consultant – Works
through multiple frameworks
153