WHARTON CONSULTING CLUB
CASEBOOK 2023-2024
KNOWLEDGE FOR ACTION
Editors’ Note
Dear Wharton Consulting Club Member
We are happy to present this year’s casebook to aid you in your preparation. This casebook will provide you with a brief
overview of consulting recruiting and interview preparation, as well as a number of practice cases.
Please note that this is meant to supplement the excellent work done by our and other schools in earlier casebooks, so we
encourage you to use diverse resources to prepare.
Additionally, we wish to thank Bain and EY Parthenon for providing some of their former interview cases to the casebook.
Finally, a few words of advice. Remember - recruiting is a marathon, not a sprint. While it may sometimes feel so, you’re not
alone in this process. Take care of your mental health and lean on your peers, and fellow 2Ys, for support. We are all
cheering for you!
We wish you a productive and successful recruiting experience.
Coty Wallach, Ram Sriram, Rishabh Israni and Soumya Dubey
WCC Resource Development Team (2023-24)
TABLE OF CONTENTS
Item
Page
Type
Difficulty
Format
Industry
Case Interview Introduction
7
Behavioral Interview Introduction
28
Case 1: Pulp Friction
33
Profitability
Easy
Interviewee-Led
Retail
Case 2: Bring Your Own Bus
43
Market Entry
Easy
Interviewee-Led
Manufacturing
Case 3: Sweat Equity
52
Revenue Growth
Easy
Interviewee-Led
Fitness
Case 4: Stick A Needle In My Eye
61
Market EntryN
Easy
Interviewee-Led
Healthcare
Case 5: (Not So) Quiet Quitting
70
HR
Medium
Interviewer-Led
Government
Case 6: SoapCo*
77
Revenue Growth
Medium
Interviewee-Led
Consumer Goods
Case 7: Must The Show Go On?
90
Profitability
Medium
Interviewee-Led
Entertainment
* Former Bain Interview Case
TABLE OF CONTENTS
Item
Page
Type
Difficulty
Format
Industry
Case 8: Beyond Borders
103
Market Entry
Medium
Interviewee-Led
Manufacturing
Case 9: Going Nuts
111
M&A
Medium
Interviewer-Led
Food
Case 10: Circling The Drain
120
Profitability
Medium
Interviewee-Led
Healthcare
Case 11: Highway To Hell
131
Market Entry
Medium
Interviewee-Led
Transportation
Case 12: Flickering Fortune
140
Profitability
Medium
Interviewer-Led
Consumer Goods
Case 13: The Claim Game
151
Market Entry
Medium
Interviewee-Led
Insurance
Case 14: CraftCo*
159
Profitability
Medium
Interviewer-Led
Consumer Goods
Case 15: Build, Baby, Build!
169
Profitability
Hard
Interviewee-Led
Sports
Case 16: Eye Can See Clearly Now
179
M&A
Hard
Interviewee-Led
Healthcare
* Former EY Parthenon Interview Case
TABLE OF CONTENTS
Item
Page
Type
Difficulty
Format
Industry
Case 17: To Bid, or Not To Bid
189
Market Entry
Hard
Interviewer-Led
Retail
Case 18: Cents and Sensibility
199
Profitability
Hard
Interviewee-Led
Government
Appendix
Case Math Drills
210
Chart Drills
217
Brainstorm Drills
226
Sample Behavioral Interview
Questions
231
Common Interview Formats*
•
MBB firms rely on power rounds (multiple interviews in one day)
•
Bain
○ 3 total interviews
○ 2 interviewee led case-interviews lasting 40 minutes each
○ 1 behavioral interview with 5-8 questions lasting 40 minutes
•
BCG
○ 2 total interviews
○ Each interview starts with 2-3 behavioral questions lasting 15 minutes in total
○ Followed by 40 minutes of an interviewee led case-interview
•
McKinsey**
○ 3 total interviews
○ Each interview starts with one behavioral question picked out of previously shared prompts
○ The interviewer does a deep dive on a single story that addresses the prompt (for 15 minutes), with
multiple questions and detailed interactions with the interviewee
○ Followed by 40 minutes for an interviewer led case-interview
* based on previous year experiences for US offices
** Some McKinsey offices may not hold power rounds, but two separate rounds with 2 interviews each
Introduction to the Case Interview
What is a case?
Business problem: The case interview is a method used by management
consulting firms to evaluate a candidate's ability to analyze complex business
issues, develop strategies, and communicate Answers effectively
Conversation driving to a recommendation: The best cases are a structured
dialogue between the candidate and the interviewer that help the candidate come
to a specific conclusion
Evaluation of analytical and communication skills: The case interview enables
the interviewer to evaluate a candidate's ability to analyze data and articulate
recommendations
Just one part of the recruiting process: While this may seem daunting, it is
helpful to remember that the case interview is just one part of the recruiting
process.
Types of cases
INTERVIEWER-LED
INTERVIEWEE-LED
Interviewer drives the case. The candidate
should suggest next steps, but follow the
interviewer on where to go next
Many times do not require a recommendation at
the end
The candidate drives the direction of the case
through their questions
Accenture
McKinsey
Oliver Wyman
Generalizations based on candidate experience
Recommendation is almost always required
Bain
EY Parthenon
BCG
LEK
Deloitte
Strategy&
Case Prompts
Profitability
Mergers and acquisitions
Market study
Revenue growth
Valuation
Market entry
Declining profits
Return on investment
Product launch
Cost optimization
Synergy analysis
Growth strategy
Not an exhaustive list
Case Industries
Consumer/Retail
Energy
Manufacturing
Financial Services
Media & Entertainment
Transportation
Telecommunications & IT
Healthcare & Life Sciences
Govt./Non-profit
Not an exhaustive list
Having familiarity with common industries may help you generate business insights leading to
“brownie points”. The following casebooks provide briefs on common industries - Kellogg (‘23),
Darden (‘22) and Ross (‘22)
Case Interview Components
2-3 minutes
4-5 minutes
3-5 minutes
8-10 minutes
2-3 minutes
Background, Setup,
and Recap
Framework
Development &
Explanation
Brainstorming
Math Exhibits
& Analysis
Synthesis &
Rec
●
●
●
●
●
●
●
●
Active
listening/taking
thorough notes
during prompt
Summarize the
problem
Ask clarifying Q’s
Anticipate
structure
●
●
●
Structure
thoughts in
organized
manner (<2 min)
Give interviewer
high level
overview of
buckets
Drill down into
each bucket
Develop
hypothesis &
prioritize
●
●
Probe for
information
Organize
brainstorming into
multiple buckets
Be MECE mutually
exclusive,
collectively
exhaustive - with
your ideas
●
●
●
Provide overview
of information
Point out
insightful details,
utilize data from
charts
Note conclusions
12
Walk through
math problem
steps BEFORE
you calc
●
●
●
●
Drive case to
conclusion
Be answer
FIRST, then
provide
supporting facts
from case
Take a definitive
stance
Utilize hard data
from case
Address risks &
next steps
Components of the Case Interview
Case Prompt
Clarifying questions
Asking 2-3 clarifying questions after hearing the prompt provides useful information that can feed
into your frameworks. We recommend choosing from the below buckets:
Business model: How does the business make money?
Geography: Where are we operating?
Objective: What is the goal/target that the client has set?
15
Case Opening and Framework
Timeline: By when do we need to meet the objective?
Case Type 1: Profitability
Problem: Client’s earnings / profits has declined or stopped growing
Objective: Recommend ways to increase profits / grow
Overview
Framework
1. Market
2. Revenue
Industry
● Growth trends
● Market size
● Specific regulations
Competition
● Market shares
● Competitive
advantage/weakness
● Entry barriers
Price
● Pricing trends
● Compare to market
Volume
● Demand v Capacity
● Sales trends
Product Mix
● Demand v Capacity
● Sales trends
3. Cost
Fixed Costs
● PPE
● Overhead
● SG&A
Variable Costs
● COGS
● Labour
● Utilities
Supplier Power
Market Benchmark
4. Customers
Customer Segment
● Demographics
● Characteristics
● Preferences
● Willingness-to-pay
Channels
● Sales mix
● Operational efficiency
● Customer reach
● New opportunities
Always order buckets based on perceived importance to the case
Case Type 2: Market Entry
Problem: Client is considering entering a new market
Objective: Recommend whether or not to enter (considerations: financial
attractiveness, implementation success, risk assessment)
Overview
Framework
1. Market
2. Financial
Industry
● Growth trends
● Market size
● Specific regulations
Competition
● Competition intensity
● Competitor response
● Entry barriers
Current State
● Current profitability
● Financial capitals
New Market
● Capital investment
● Potential revenues
● Potential costs
● ROI on investment
3. Capabilities
Business Competency
● Market knowledge
● Comp advantages
Technical Competency
● Scaling operations
● Expansion management
● Other technical
capabilities needed
4. Entry Strategy
Entry Methods
● Direct entry
● Acquisition
● Joint Venture
Considerations
● Market entry timing
● Piloting options
● Centralized vs
Decentralized control
● Risks
Always order buckets based on perceived importance to the case
Case Type 3: Merger & Acquisition
Problem: Client is considering acquiring another company
Objective: Evaluate the target company and recommend whether or not to
pursue the deal
Overview
Framework
1.Market
Market
2. Deal Evaluation
Are buyer and target in
the same market?
Industry
● Growth trends
● Market size
● Specific regulations
Competition
● Competition intensity
● Competitor response
Target’s Financials
● Current profitability
● Revenue growth
● Cost reduction
Target’s Competency
● Management culture
● Technical capabilities
● Business expertise
Deal ROI
● Price vs Breakeven
3. Strategic Fit
4. Risk Assessment
Acquisition Rationale
● Vertical integration
● Horizontal integration
● New market entry
Synergies
● Cost driven
● Revenue driven
● Technical acquisition
● Response to competitor
move
A. Buyer capability
● Prior acquisition
experience
● Capital expenditure
A. Post acquisition
● Company cultural fit
● Integration process
● Organizational structure
change
● SEC regulations
Always order buckets based on perceived importance to the case
Structuring
Structuring is about breaking down a complex question into more manageable parts; it is important
for both framework-building and brainstorming
There is no one right way to structure frameworks, but good structuring is always:
Mutually Exclusive, Collectively Exhaustive (MECE):
ME: Buckets do not contain overlapping or repeated information
CE: Buckets are comprehensive in addressing information needed to solve the problem
Answer-focused: The problem is clearly defined, and the framework focuses on answering that
specific problem
Case-specific: Buckets and points are tailored to the specifics of the client and problem
Structuring
Suggested mechanism:
After asking clarifying questions, take 1.5-2mins to draw your framework
Talk through your framework (<2min) with logical flow and transitions
Talk across your buckets (left to right), then down your data points (top to bottom); numerate your
points
Objectives:
Aim for a clear, logical structure that could be visually presented
Incorporate explanations of why you included certain points
Utilize case facts from the prompt and use case-specific nomenclature
Be conversational in your delivery
Incorporate interviewer feedback, if given
Case Math
It’s a conversation
Talk through thought process prior to starting calculations
Keep conversation going while doing the math - let the
interviewer know what you are doing
Demonstrate Case Leadership
Every number calculated should have an associated insight
What else do we need to know?
How does this help answer the question?
Keep your cool
All 2Ys have goofed up in math, even in their final round interviews
What is important, is spotting your mistake, and not letting it impact the rest
of the case
Charts
Charts test important skills in the consulting toolkit
●
●
●
Quickly skim through a wide range of data
Elicit key information
Derive top-down takeaways
Chart interpretation are commonly coupled with calculations
Best practices
Take a moment to digest the chart
Focus on key information
Communicate top-down:
answer first
supporting evidence
relation to overall goal
Common pitfalls
Immediately reading back the chart
Listing information without structure
Lack of second-level insights:
stopping at the numbers
failure to drive case forward
Common Chart Types
Familiarize yourself with the following common chart types, which are frequently encountered in
case interviews
Value comparison: stacked bar, clustered bar
Relationship identification: scatterplot, bubble
Composition analysis: pie, 100% bar, Marimekko (mosaic)
Change illustration: waterfall, line
Brainstorming
You might be asked open-ended questions mid-case, and asked to “brainstorm” Answers
●
●
What do you think drives profitability in this market?
What are some challenges or risks with introducing this new product?
You may have time to organize your thoughts (<60 seconds). Sometimes, you may not
Brainstorming
There are certain frameworks that might be useful during brainstorming:
●
Financial vs Non-financial considerations
○ Financial: Revenue Drop, Costs increase
○ Non financial: Dilution of brand equity, loss in employee morale
●
“3Cs” - Company, Customer, Competitors
○ Company: Chane the hiring strategy
○ Customer: Understand unmet customer needs
○ Competitor: Analyze product portfolio to check competitiveness
●
“4Ps” - Product, Price, Place, Promotion
○ Product - Retool product to address customer demand
○ Price - Change price according to customer elasticity
○ Place - Explore sales per distribution channel
○ Promotion - Find sales per marketing dollar
●
Internal vs External factors
○ Internal - Related to functioning of the company
○ External - Anything not related to the company’s functioning
Tips for Case Interviewers
Your peers have trusted you to case them, please ensure they have a fruitful and pleasant
experience!
●
●
●
●
Prepare: Spend time before the case interview reading through the case, making
sure you understand the flow and the calculations
Be patient: Give adequate time for the candidate to structure their thoughts. Provide
candidates with timing for key sections such as framework and brainstorming
Be Supportive: In case the candidate is stuck, guide them towards the answer,
providing adequate hints
Document: Jot down any observations, you’ll be surprised how much you forget at
the end of 30 minutes. Use the scoring criteria (next slide) to structure your feedback
Tips for Case Interviewers | “Scoring” a Case Interview
We recommend using a five-pronged framework to give feedback to candidates at the
end of the case interview
Case Structure
Quantitative / Analytical skills
Creativity
Case ownership / Leadership*
Collaboration / Coachability
*less relevant for interviewer led cases
Introduction to the Behavioral Interview
Behavioral Interviews
• Showcase EQ: Cases test your IQ - fit is your chance to show EQ
• Be Memorable: Answer all questions with a story/ example - show vs. tell. Stories are
compelling way to articulate and demonstrate fit for firm. And let personality shine!
• Delivery Matters: Be authentic, confident, structured and succinct. Demonstrate
presence in front of a client
• Firms really care: Consulting is a highly interpersonal business
• You’re always in control (unlike cases): Use fit questions as a source of confidence
Use fit prep to boost a strength or shore up a weakness
Framework for personal stories
The key is to be structured and try out different outlines to see what works for you
Headline: Tell the interviewer where the
story is going (~15%)
Situation: Set up the problem or conflict/
give background (~15%)
Action: What did you do? (~55%)
Result: Highlight the outcome, the impact
on the organization and what you learned
(~15%)
•
•
•
•
STAR
Situation
Task
Action
Result
•
•
•
•
•
SCARF
Situation
Complication
Action
Result
Future Lessons
The interviewer should understand the “so what?” before and after your story
Common questions during the behavioral interview
Most questions asked during the behavioral interview fall into one or more categories of the IMPACT
framework
I - Individual contribution
M - Managing teams
P - Persuading peers/managers
A - Analytical skills
C - Challenging situations
T - Teamwork and collaboration
Preparing 1-2 stories for each category is a helpful strategy. The Appendix fleshes out specific examples
of questions in each category
Additional Resources
The following resources will help you in preparation:
●
●
●
●
Peer school casebooks: 2Ys have used Kellogg, Ross, Columbia and Darden casebooks in
the past
Rocketblocks: For drills on charts, market sizing and math
Casecoach: For videos on each component of the case, frameworks, structuring drills
Behavioral interview question bank: For preparing for the behavioral component of the
casing process
Case 1: Pulp Friction
Type: Profitability
Difficulty: Easy
Format: Interviewee-Led
Industry: Retail
Pulp Friction - Prompt
Problem Statement
Your client, TissueCo, is a large facial tissue manufacturer that sells to retailers. While the US
facial tissue market suffered operational challenges due to Covid-19, the market is forecasted to
recover and grow in 2021. While TissueCo has seen some improved numbers as they adapt to
the pandemic, their profitability margin has fallen below their main competitors Kelly-Clark and
Proxy and Gumbo. The CEO has invited you to help them out.
Additional Information (Provide Upon Request)
●
●
●
●
●
The client is focused on US sales only
TissueCo’s profitability margin dropped below its competitors before the COVID-19 outbreak
but has further worsened after COVID-19
TissueCo produces tissues that are standard, extra soft, and tissues with lotion
There is no specific goal to improve profitability
The expected CAGR in 2021 is 5.8%
Pulp Friction - Structure
Framework
1. Facial Tissue Market
2. TissueCo
A. Industry
● Growth trends
● Market size
● Recent changes in
customer behavior /
trends
B. Competition
● # of competitors and
market share
● Profit margin / Cost
structure
C. Regulatory environment
A. Product differentiation
● Product characteristics
(e.g., soft, lotion,
anti-viral)
● Packaging options (e.g.,
horizontal or vertical box,
pocket)
B. Customer segment (e.g.,
at home, vs away from home)
C. Marketing strategy
D. Distribution strategy
(e.g., supermarkets,
convenience stores, online)
3. Financial Analysis
A. Revenue analysis
● Pricing strategy
● Volume dynamics
● Break-down by client
groups and locations
B. Cost structure
● Fixed (e.g. rent, SG&A)
● Variable (e.g. labor, raw
materials, utilities)
4. Growth
Opportunities
A. Sales growth
opportunities
● Lower prices
● New or improved
characteristics
● Different packaging
B. Margin improvements
● Reduced volume per
package
● Technology to reduce
production costs
Pulp Friction - Brainstorming
Question 1: What revenue growth ideas can you suggest?
Sample Revenue Growth Ideas
1. Upgrade marketing
strategy
2. Change pricing
(model)
3. Increase distribution
efficiency
A. Campaign
● Aggressive marketing
campaign and promotions
A. Pricing
● Maintain price, but slightly
slower volume per
package
● Bundle packages
together and/or offer
bundles together with
hand-sanitizer
A. Distribution
● Online channels (online
retailers and D2C)
● Volume dynamics
B. Channels
● Expand to new social
media channels to reach
and cultivate younger
audiences (a more
germ-aware generation)
B. Pricing model
● Subscription model (e.g.,
Amazon weekly)
B. Partnerships
● Build partnerships with
sectors affected by the
rising concern of sickness
(airlines, workspaces,
schools)
4. Expand value
proposition
A. New kinds of tissues
● Anti-viral
● More sustainable
B. New kinds of packaging
● The box could include a
coupon for the next
purchase
Interviewer notes:
- A strong candidate will remark that given low differentiation between facial tissues, high brand awareness and active
marketing are likely key drivers of sales
Pulp Friction - Math
Question 2: The rise in the number of bacterial and viral infectious diseases, COVID-19 being top
of mind, has led to the rise in demand for antiviral products. The client is considering launching a
new product line to meet this demand, anti-viral tissues. How big do you think the US market in $
dollars is for anti-viral facial tissues?
Sample approach on next slide; allow candidate flexibility with assumptions or provide inputs if
asked
Pulp Friction - Math
Sample approach
US Population
~320M people
% population that is very
germ-conscious
10%
# of colds / flu per year per
persons and duration
~2 colds per year that last 5 days
# tissues used per day while
sick
~20 tissues
# tissues used per year for
other reasons (e.g., allergies)
~50
tissues
# tissue used per year
320M * 10% * [(2*5*20)+50] ≈ 8B
# tissues per box
100
# of boxes
80M
$ Avg price per box
$5
$ Total market
$400M
Additional Information (Provide Upon
Request)
Market sizing
● US population is 320M
● ~10% of the population uses tissues, so
around 32M people
● Avg price for a box of tissues with 100
tissues is $5
Interviewer Notes:
● A strong candidate will highlight the higher
WTP of germ-conscious consumers which
could help improve profitability (in spite of
smaller market share)
● Alternate approaches are okay as long as
candidate splits the demographics into
multiple segments and considers multiple
use cases for tissues
Pulp Friction - Math
Question 3: [Present Exhibit A] The rise in the number of bacterial and viral infectious diseases,
COVID-19 being top of mind, has led to the rise in demand for antiviral product. The client is
considering launching a new product line, anti-viral tissues. Will this increase their profitability?
Additional Information (Provide Upon Request)
●
●
Total sales in 2020 were $3.1B (candidate can and should round to $3B to simplify
calculations). Show Exhibit A for revenue share and costs for other tissue segments. The
candidate should calculate profit margins of all categories
Anti-viral tissues are forecasted to generate $150M in sales and $30M in profit
Pulp Friction - Math
Calculations
Product
Calculations
Profits ($) / Profit Margin (%)
Standard
3B * 65% * 10%
$195M
Super soft
3B * 25% * 15%
$112.5M
Lotion
3B * 10% * 20%
$60M
Overall
195M + 112.5M + 60M = 367.5M / 3B
≈ 12%
Anti-viral
30M / 150M
20%
The antiviral product line is forecasted to have a 20% profit margin, thus increasing the
profitability of the company.
Pulp Friction - Recommendation
The TissueCo CEO has arranged a meeting to discuss your findings shortly. What is going to be
your final recommendation?
Answer
Recommendation: In order to improve profitability, our recommendation is that the client launch the new antiviral
tissues. 1) Demand for antiviral products has been increasing due to the recent pandemic; 2) Germ-conscious
consumers’ WTP is higher and we forecast a higher profitability margin of 20% compared to Standards 10% and
Super Softs 15%.
Risks:
While we forecast profitability, competitive
response could force us to lower prices.
The current rise in demand due to the increased
sensibility during the pandemic could subside over
the next few years.
Clogs in the supply chain for antiviral products
could limit production and increase COGS
Next steps:
1.
Evaluate the competitive landscape and build a
sensitivity analysis based on different competitive
responses
2.
Take a deep dive into the market model to identify
main growth drivers and determine which ones will be
more sustainable
3.
Map out TissueCo’s supply chain, identify possible
weak points, and offer potential workarounds.
Pulp Friction - Exhibit A
TissueCo financial metrics
Product line
Sales share, %
Profit margin, %
65%
Standard
25%
Super soft
Lotion
10%
10%
15%
20%
Case 2: Bring Your Own Bus
Case Type: Market Entry
Difficulty Level: Easy
Format: Interviewee-Led
Industry: Manufacturing
Bring Your Own Bus - Prompt
Problem Statement
Your client is a private equity fund considering the acquisition of the Big Yellow Bus Co, one of
the leading manufacturers of school buses in the US. The client has engaged your firm to help
determine whether or not to proceed with the investment.
Additional Information (Provide Upon Request)
●
●
●
●
●
BYB is the #2 player in the market by revenue, #3 by volume
There are only 3 competitors in the market with relatively equal share. However, BYB was the
clear leader 5 years ago
BYB’s price are 25-50% higher than its competitors
The market has a fairly steady long-term 3% growth rate driven by GDP / population growth
The customers are almost exclusively local cities and towns in the US
Bring Your Own Bus - Structure
Framework
1. School Bus Market
2. Big Yellow Bus
A. Industry
● Growth trends
● Market size
● Recent changes in
customer behavior /
trends
B. Competition
● # of competitors and
market share
● Profit margin / Cost
structure
C. Regulatory environment
A. Product differentiation
● Different kinds of buses
● Bus attributes vs
competitors
● Extra services (e.g.,
maintenance, warranties)
B. Customer (key
demographics)
C. Marketing strategy
● Salesforce effectiveness
and customer journey
3. Financial Analysis
A. Revenue analysis
● Pricing strategy
● Volume dynamics
● Break-down by client
groups and locations
B. Cost structure
● Fixed (e.g. rent, SG&A)
● Variable (e.g. labor, raw
materials, utilities)
4. PE Transaction
A. Deal Price
● Financing
● Expected ROI
● Opportunity cost
B. Growth opportunities
● Revenue synergies
● Cost synergies
● Cultural synergies
D. Management expertise
Sample business insights
- “In my experience, there isn’t a lot of differentiation between yellow school buses. As such, I would assume that the cost structure
would drive the key competitive advantage.”
- “I would assume that our main customers would be price-sensitive school districts. Therefore, the pricing strategy is going to be an
important factor in the growth or decline of market share.”
Bring Your Own Bus - Math
Question 1: How large is the market for school buses in the US?
Sample approach
US Population
~320M people
Life expectancy
~80 years
People per decade
~40M people
School age commuters (~15 years)
~60M children
% Taking buses
~33%
School-age children taking buses
~20M children
Children per bus
~50
Buses required
400K buses
Average life of buses
10 years
Buses sold per year
40k
Interviewer notes:
Strong candidates will recognize that this is a
good size market with consistent growth.
However, to get a fuller picture, they would
ask about competitors and market share
trends
Bring Your Own Bus - Exhibit
Question 2: [Present Exhibit A] Based on the available data, what does the competitive landscape
look like?
Answer
There are two major takeaways:
●
BYB’s share of revenue is higher than its share of volume
○
This is because its prices are higher than peers by 20%. This is important because its a commodity
product and customers are highly price-sensitive.
○
5 years ago, BYB’s market share was at 60%. The decline in share is precipitous.
●
BYB’s cost structure is high relative to peers
○
The gross margin is a big differentiation and BYB needs to focus on reducing its COGS
○
Some possible hypotheses:
■
Materials, equipment, and labors will probably be most significant cost drivers. Competitors
could be more successful in outsourcing or achieving economies of scale
■
Competitors A & B could be a part of larger industrial trucking firms where there are
synergies
Bring Your Own Bus - Exhibit
Question 3: [Present Exhibit B] Based on the available data, what do the customer perception
trends indicate?
Answer
●
●
●
●
Customer perception trends indicate an uphill battle for BYB to gain market share
The single most important metric for customer satisfaction is price, which is the one where
BYB’s perception is lowest compared to competitors
BYB has great perception among all other parameters, but those are not factors that are
driving customer purchase decisions
Perceptions for Competitor B are almost the mirror image of BYB - BYB can stand to
analyse Competitor B’s marketing and strategy to grow market share
Bring Your Own Bus - Recommendation
What is your final recommendation?
Recommendation
Recommendation: We recommend that the PE fund NOT acquire Big Yellow Bus Company.
Reason #1: Even if the transaction is at an attractive price, BYB is in a difficult competitive position. BYB is
losing share to two lower-cost competitors with significant built-in cost advantages given their ownership
structures.
Reason #2: Further, price is the biggest driver for purchase decisions as buses become increasingly
commoditized and local cities & towns become more price sensitive in the face of budget deficits.
Conclusion: Overall, not an attractive investment.The client can look into Competitor B for investment
Risks:
●
Public perception might swing towards
buses with higher safety, reliability and
quality, making BYB attractive
Next steps:
●
Conduct a detailed customer perception
survey to stress test current data
Bring Your Own Bus - Exhibit A
Competitive Landscape
Big Yellow Bus Co
Competitor A
Competitor B
Market share ($)
30%
29%
40%
2023 Market share (units)
25%
30%
50%
2018 Market share (units)
60%
18%
22%
Normalized bus price
150
120
100
Gross margin
25%
35%
36%
Operating margin
15%
25%
26%
Market share analysis
Margin analysis
Bring Your Own Bus - Exhibit B
Customer Preferences and Perceptions*
Importance to
Customer
Customer
Perception
Big Yellow Bus
Customer
Perception
Competitor A
Customer
Perception
Competitor B
Price
5
1
4
5
Brand awareness
1
5
3
2
After sales support
1
4
2
1
Quality
3
3
3
3
Safety
3
4
3
3
Reliability
2
4
2
2
Parameter
*Perceptions on a scale of 1-5
Case 3: Sweat Equity
Case Type: Revenue Growth & Market Entry
Difficulty Level: Easy
Format: Interviewee-Led
Industry: Consumer Goods
Sweat Equity - Prompt
Problem Statement
Your client is a gym franchisor. The client focuses on small gyms (average of 3000 square feet) with
standard fitness equipment, but no group fitness classes. The gyms are typically located in local
strip malls. They are open 24 hours per day and 7 days a week. Members enter the gym via an
access card and staffing at the gym is minimal. The business is growing rapidly. Our client has
asked for your help to understand where to grow their business and how to improve profitability in
this highly competitive market.
Additional Information (Provide Upon Request)
●
●
●
Our client’s primary goal is to grow their business and improve profitability
Gym membership is a flat monthly fee
Our client has franchisees across the U.S.
Sweat Equity - Structure
Framework
Problem Statement
1. Market Opportunity
2. Financial Analysis
3. Target Customers
Market size and growth
● Size of the market
● Growth expectations
● Current and upcoming trends in
the market
Revenue Streams
● Monthly membership fees
● Personal training
● Merchandise (if any)
● Vending machines/snacks
Customer segmentation
● Demographic segmentation
● Geographic segmentation
● Behavioral segmentation
● Socioeconomic segmentation
Competition in the market
● Market
concentration/fragmentation
● Ease of market entry/barriers
● Key differentiating factors
Cost Structure
● Fixed Costs: space rental, fitness
equipment, franchise fees, SG&A
● Variable Costs: utilities, labor,
maintenance
Customer preferences
● Willingness to pay
● Basic vs upscale gyms
● Additional services and product
offerings
Business insights
- Since client’s gym only offers standard fitness equipments, they are targeting customers who want lower price and basic fitness
products and services
- Client’s gym is only very minimal in terms of staffing and equipments that cutting cost could be more challenging here. The biggest
cost contribution here is probably rent
Sweat Equity - Exhibit
Question 1: Our client wants to determine which geographic location to focus their growth efforts.
Based on the customer segment analysis presented (provide Exhibit A), what advice do you have
for the client?
Answer
Key Takeaways:
● Rural segment is very attractive because of the
lower cost, high availability of gym space, and
low competition
● Even though convenience for members is low
in rural areas, the customers still have relatively
high fitness interest which is favorable for our
client
● Given our client’s current no-frills business
model, a low cost and low competition market is
the best option for growth
Sweat Equity - Math
Question 2: Our client is currently not making any profit. If our client wants to increase revenue by
10%, how many more members on average does a location need to acquire?
Additional Information (Provide Upon Request)
Cost
Revenue Per Member
Monthly Membership Dues
Rent
$2 / sq ft / month
Equipment
$144k initial cost
(3 year depreciation, $0 salvage value)
Labor
$20 / hour (2 people on staff at a time)
Utilities
$400 / month
Franchise Fees
$300 / month
Marketing
$100 / month
$40 / month
Vending Machine
$5 / month
Personal Training
$15 / month
Sweat Equity - Math
Calculations
Revenue Total: $60/month
Per Member
$60 / month
Cost Total: $37,680
Rent
2*3000 = $6,000 / month
Equipment
(144,000-0)/3/12= $4,000 / month
Labor
2*20*24*7*4 = $26,880 / month
Others Costs
400+300+100 = $800 / month
Current # of Members
37680 / 60 = 628 Members
New Revenue with 10% increase
$41,448 / month
New # of Members
41448/60 = ~ 690 Members
Additional Members Needed
62 Members
Key Takeaways:
● Additional 62 members is about 10% of current
number of members
● This numbers seem achievable, especially if
the client targets rural areas where there is still
relatively strong interest in fitness with low
competition
Sweat Equity - Brainstorming
Question 3: What are some potential revenue growth opportunities the client can pursue?
Answer
1. Price
2. Quantity
3. Product/Service
● Increase current membership
fees
● Utilize tiered membership based
on accessibility
● Consider multi-period discounted
pricing
● Add initiation fee for the first
month
● Increase # of gyms franchised
● Offer family plans to gain more
members
● Partner with corporate
companies to offer discounted
memberships
● Use referral bonuses to acquire
more members
● Juice and snack bar
● Selling merchandise (clothing,
weights, yoga mats, etc.)
● Adding group workout classes or
other training services
● Offer day pass options for short
term gym usage
Sweat Equity - Recommendation
Please provide a recommendation for our client
Recommendation
Recommendation
1. Based on our client’s current business model, it makes more sense to focus on
expanding franchising effort in rural markets where cost and competition are low
2. Our client could improve profitability by 10% if they can increase membership by 62
members per gym which seems to be feasible goal
3. Our client could explore attracting more members by adding new product/service
offerings such as new workout classes, or by offering more attractive pricing plans
Risks
● Adding new services/products might make client’s gym less distinct from competitors
● Target audience might not want the new services/product offerings
Next Steps
● Conduct a customer preference survey to understand what new services/products best
align with target customer interests
● Identify best rural market locations to add new franchise locations
Sweat Equity - Exhibit A
Customer Segment Analysis
Case 4: Stick A Needle In My Eye
Case Type: New Product Launch
Difficulty Level: Easy
Format: Interviewee-Led
Industry: Healthcare
Stick A Needle In My Eye - Prompt
Problem Statement
VaxCo, a leading vaccine manufacturer, has innovated a hybrid method of vaccine delivery, where
instead of using a vial for storing the vaccine and a syringe for injecting it, a vial with a needle would
be used to both store and inject the vaccine by a nurse. VaxCo has hired us to understand whether
a market exists for such a product, and how to price it.
Additional Information (Provide Upon Request)
●
●
●
●
VaxCo has spent $5M in R&D for this hybrid method. The method is ready, and is patented
VaxCo is yet to obtain regulatory approvals from medical agencies for this hybrid method
Currently, VaxCo only manufactures vaccines and the vial it goes in, and has no syringe
manufacturing experience, but with suitable investments, has the capability to manufacture
the needled vials in-house
Typically, vaccines are administered to the patients via syringes by nursing staff. Doctors take
up that responsibility in rare instances
Stick A Needle In My Eye - Structure
Framework
1. Market Potential
A. Market study
● Market sentiment analysis
● Understand whether there exists
dissatisfaction with status quo
B. Market size
● Direct sales pipeline to existing
customers
● Indirect sales pipeline to other
vaccine manufacturers
Problem Statement
2. Pricing strategy
3. Capabilities and Risks
A. Cost-based pricing
● Understand manufacturing cost
for status quo and hybrid method
● Price hybrid method cheaper than
status quo to undercut market
● Investments required for
manufacturing hybrid vials
● Probability and cost of regulatory
approvals
● Customer behavior shift
● Additional training required for
safe administrations
B. Value-based pricing
● Understand potential for premium
on ease of operation
● Charge premium over status quo
to reflect the ease of operation
Interview Notes:
-
An ideal candidate should be able to come up with a framework that covers both cost-based and value-based strategies for
product pricing
Astute candidates will point out that the true market potential lies with selling to current rivals to drive market shift towards hybrid
vials
Stick A Needle In My Eye - Math
Question 1: Before assessing market potential, we would like to understand how VaxCo should
price their new product. What do you believe is the most optimal price for the hybrid vials?
If not obvious, share that the traditional vaccine involves buying both the vaccine vial and the syringe
Answer
Candidate should ask for relevant data to make pricing calculation. Provide only requested data.
Traditional vaccine vial cost to customer = $14/vial
Traditional vaccine vial COGS*= $7/vial
Syringe cost to customer = $6/syringe
Hybrid vaccine vial COGS = $10/vial
* COGS = cost of goods sold
Stick A Needle In My Eye - Math
Question 1: Before assessing market potential, we would like to understand how VaxCo should
price their new product. What do you believe is the most optimal price for the hybrid vials?
Answer
Sample price calculations:
Option 1: Keep margin same
Current margin for traditional vaccine = (14-7) = $7 per vaccine
Keeping margin same, price for new hybrid vaccine = 10+7 = $17 per vaccine
Note that this price is less than what customers currently pay, ask why firm should not increase the price.
Option 2 : Keep end price to customer same
Current price = 14 + 6 = $20 per vaccine [Customer needs to buy both traditional vaccine vial and syringe
currently]
COGS for new hybrid vaccine = $10 per vaccine
Margin for new hybrid vaccine = 20-10 = $10 per vaccine
Note that since the price is same as currently paid, ask why customers should switch to the hybrid vaccine.
Stick A Needle In My Eye - Exhibit
Question 2: We conducted a stakeholder survey across a representatively large sample and three
of our four key stakeholders seem to favor the hybrid vaccine vial. Given such positive stakeholder
feedback, what should VaxCo keep in mind before deciding how to launch the product through the
right channels? (Provide Exhibit A)
Answer
Candidate should push back against assumption of positive stakeholder feedback since the primary
stakeholder (nursing staff) has been overwhelmingly negative.
If candidate has not uncovered yet that the nursing staff are the main stakeholders since they
administer the vaccines and the other stakeholders are only tangentially relevant, nudge them
towards that line of thinking, and provide that information if it proves to not be intuitive.
Strong candidates should push back and ask for deeper analysis for nursing staff’s disapproval. Ask
them to brainstorm potential reasons.
Stick A Needle In My Eye - Brainstorming
Question 3: What could be potential reasons for the nursing staff’s disapproval?
Answer
Strong candidates will structure their response:
1.
2.
Patient-related
a. Safety: They might think this method is not as safe as previous delivery
b. Drug delivery: This makes it difficult to use one vial to deliver partial doses to different people,
for fear of contamination
Nurse-related
a. Training: Nurses may not feel inclined to learn a new method of injecting vaccines, since they
are already overworked
b. Job security: Nurses may feel threatened by medical innovation and worry this may cause job
loss
Interviewer Notes:
If the candidate has not caught on to the challenges with partial dose delivery, mention this during the brainstorm.
Additionally, share that 30% of vials are actually used to deliver partial doses.
Stick A Needle In My Eye - Recommendation
The CEO of VaxCo is on their way to the meeting room, what recommendation do you have for
them?
Recommendation
Recommendation
Risks
Next Steps
No, VaxCo should not roll-out the hybrid vaccine vial without further stakeholder
analysis despite the potential to increase profit margins as the primary stakeholder
(nursing staff) seems to be extremely disapproving of the product.
● Nursing staff could hamper adoption
● Re-training of nursing staff challenging
● Even with all stakeholders on board, regulatory approvals could prove
challenging
● Understand stakeholder concerns and find out ways to work around them
● Discuss with R&D department whether there are workarounds possible to
address concerns or whether the money spent for R&D represents a sunk cost
Stick A Needle In My Eye - Exhibit A
Stakeholder survey across 3000 hospitals
“Making vaccine delivery process easier and reducing
complexity would be very helpful.” - Dr.Anonymous
“No reason why there should not be technological
developments in this space. Has there been any
improvement in vaccine delivery since the 1900s? This
seems to be it!” - Patient Anonymous (works in tech)
“This would require re-training for a lot of our nursing
staff and make partial doses, which are 30% of all
doses, harder to administer.” - Nurse Anonymous
“A hybrid vial seems to a good way to push hospital
costs down in addition to taking innovative steps in the
right direction! Huge fan of the proposal.” - Admin,
Anonymous Hospital
Case 5: (Not So) Quiet Quitting
Case Type: HR
Difficulty Level: Easy
Case Format : Interviewer-Led
Industry: Government
(Not So) Quiet Quitting - Prompt
Problem Statement
Our client is the US Department of the Interior, which is responsible for the National Park Service.
The NPS employs 4 types of rangers: Law Enforcement, Education, Maintenance, and
Administrative.
The client is concerned that job retention is low among the rangers.
They would like you to explore how big the problem is and think about ways to improve it.
Additional Information (Provide Upon Request)
●
●
The Park Service is responsible for maintaining all the national parks in the continental United
States
The Department of the Interior has no specific targets in mind, but would like to implement
Answers immediately
Interviewer Notes:
This is an example of an interviewer led case that does away with a traditional framework at the start, and the
recommendation at the end. Pose the first question to the candidate once they are done asking clarifying questions
(Not So) Quiet Quitting - Brainstorming
Question 1: What are some of the costs to the park service associated with Rangers leaving?
Sample Answer
● People Costs
○ Direct: Sunk costs of recruiting former rangers, severance payments, hiring and training costs
○ Indirect: Decline in morale, damage to the reputation of the parks industry
● Operational Costs
○ Direct: Higher maintenance costs due to inexperienced employees
○ Indirect: Loss of institutional knowledge of park operations
Interviewer Notes
-
“Great” response should have a structure and include 4-5 ideas about potential costs.
Push interviewee to consider more costs if provided with only 1-2
(Not So) Quiet Quitting - Exhibit
Question 2: (Share Exhibit A) What insights do you see from these numbers?
Answer
Interviewer Notes
Strong candidates will share the below insights before asking to calculate the total costs of rangers leaving.
Lowest overall number of rangers are leaving from Law Enforcement, but they cost the most
Maintenance and Administrative rangers had the most rangers leave, but they cost the least
Focus should thus be on retaining law enforcement rangers
Law
Enforcement
98 rangers leaving * $35,300/ranger leaving = $3.46M cost of leaving rangers
Education
175 rangers leaving * $6,200/ranger leaving = $1.09M cost of leaving rangers
Management
215 rangers leaving * $3,500/ranger leaving = $0.75M cost of leaving rangers
Maintenance
251 rangers leaving * $3,500/ranger leaving = $0.88M cost of leaving rangers
(Not So) Quiet Quitting - Brainstorming
Question 3: What should the NPS do to increase retention?
Potential Recommendations
Strong candidates will be structured in their brainstorm, and think about measures
that can be implemented immediately, as is NPS’ ask
● Short term financial incentives
○ Implement overtime
○
●
●
Improve benefits: salary, travel, health insurance, etc.
Long term career growth opportunities
○
New leadership tracks to escalate law enforcement rangers to leadership positions
○
Mentorship opportunities to link leaders and rangers
○
Better matching between rangers and assignments based on needs
Improve off-the-job quality of life
○
Source rangers from local areas rather than require them to move/travel
○
Employment opportunities for spouses of rangers
(Not So) Quiet Quitting - Math
Question 4: The NPS has planned to spend $200,000 on a mentorship program that connects
newly hired rangers with senior rangers, in order to ease their first weeks on the job and provide
guidance. NPS estimates it will lead to 2% less in overall attrition. Should it implement the program?
Answer
Overall attrition cost = 3.46 + 1.09 + 0.75 + 0.88 = $6.18M
2% reduction in attrition implies a reduction of $123,000 in costs
The cost of $200,000 is greater than the financial benefits of the program.
Implementing the program does not make financial sense.
Strong candidates will also include a discussion on non-financial considerations.
Candidates can argue that as a government organisation, the NPS is not driven only by financial
considerations. The intangible benefits of lesser attrition (morale, reputation, institutional knowledge)
could push the NPS to implement the mentorship program
(Not So) Quiet Quitting - Exhibit A
Ranger Type
Law Enforcement
Education
Maintenance
Administrative
# Quit in 2022
98
175
215
251
Total rangers in 2022
2100
3750
8615
9143
Cost per lost
ranger ($)
$35,300
$6,200
$3,500
$3,500
Case 6: SoapCo
Case Type: Revenue Growth
Difficulty Level: Medium
Format: Interviewee-Led
Industry: Retail
SoapCo* - Prompt
Problem Statement
Our client is SoapCo. Soap Co is a market leader in the Decorative Bar segment of the soap
market. SoapCo has grown profitably over the past several years. However, sales in the
‘Decorative Bar’ market have slowed over the last year. Their management aspires to be one of
the largest soap manufacturers in the U.S. over the next 5 years. Where should Soap Co focus to
achieve its growth goals?
Additional Information (Provide Upon Request)
●
●
●
Product Mix: SoapCo only plays in the Decorative Bar segment, where it has about 10%
market share
Geography: SoapCo sells only in the US
Goal: SoapCo’s current revenue is $5M per year, which it would like to triple in 5 years
*Former Bain interview case
SoapCo - Structure
Framework
1. Company Financials
2. Growth Vectors
3. Capabilities
4. Competitive
Landscape
A. Current revenue
● Market size and share
● Current distribution
segments (online, retail)
and customer base
(households, artisans)
● Recent changes in
customer behavior /
trends (shift to liquid
soap, environment
friendly products)
A. Market growth (Growth
outlook by segment, channel
and customers)
A. Manufacturing
● Increase or modify
production capacity to
meet customer
requirements
● Improved distribution to
retailers to increase stock
and fill rates
A. Key players
● Size (revenue, profits)
● Segments targeted (how
do these differ from ours)
● Product lineup (how is
that different from ours)
● M&A activity among
competitors
B. Products (can the client
manufacture new products in
line with customer trends)
C. Consumers (are there
profitable groups like boutique
retailers, artists, rich
individuals we don’t sell to)
D. Channels (opportunities
for increased retail presence
at key customer locations,
SEO for online sales)
E. Geography (outside US)
B. Marketing (targeted
towards specific customer
segments - online ads, social
media influencers)
C. Regulatory concerns to
enter new markets
SoapCo - Exhibit
Question 1: [Share Exhibit A] What insights does the exhibit provide on the segment SoapCo is in?
Answer
It is unlikely that Soap Co can gain significantly more share within the Decorative Bar segment
●
●
●
●
Soap Co is the leader in Decorative Bar with 10% market share
All the market segments are similarly fragmented
Other market leaders have 10-15% share in their respective segments
Even if Soap Co expands Decorative Bar share to 15%, revenue will only increase by $3M,
short of target goal
Hence, Soap Co should explore entering new segments
Once candidate has recognized this, move to the next question.
SoapCo - Exhibit
Question 2: [Share Exhibit B] What insights does the exhibits provide on SoapCo’s distribution
channels?
Answer
Soap Co is well-distributed in most segments except Discount
●
●
●
●
Increasing Discount distribution may help Soap Co reach goal
Discount market = 10% * $700M total market = $70M
$70M * 40% not customer = $28M of addressable market SoapCo not present in
Decorative bar customers may not be a match with the discount segment
Hence, increasing distribution alone will not achieve growth goal
Once candidate has realized that, move to the next question.
SoapCo - Exhibit
Question 3: [Share Exhibit C]. What insights does the exhibits provide on SoapCo’s capabilities?
Answer
Soap Co has strong capabilities in Bar and some capabilities in Liquid
●
Capabilities should be compared to segments in Exhibit A to figure out attractive segments
to enter
Strong case takers will suggest calculations to size opportunities of segments Soap Co can enter.
After case taker has identified segment expansion and possibly increased distribution as growth
levers, present Exhibit D
SoapCo - Exhibit
Question 4: [Share Exhibit D]. What are the expected revenues from expanding into other
segments? Which one segment do you recommend SoapCo to expand into?
Answer
See next slide for detailed Math
●
●
●
Body Bar, Liquid Hand and Liquid Body are all acceptable Answers depending on
justification
Strong candidates won’t calculate revenues for all segments, but will only perform
calculations for segments that SoapCo has current capabilities to manufacture
Additionally, strong candidates will not only evaluate the financial opportunities, but also
qualitative considerations: brand power, consumer profile, competitive response,
merchandising options,etc.
SoapCo - Math
Question 4: [Share Exhibit D]. What are the expected revenues from expanding into other
segments? Which one segment do you recommend SoapCo to expand into?
Answer
SoapCo - Recommendation
Question 4: The SoapCo CEO has arranged a meeting to discuss your findings shortly. What is
going to be your final recommendation?
Answer
Recommendation: SoapCo cannot triple revenue by remaining only in Decorative Bar. Even if SoapCo expands
Decorative Bar share to 15%, revenue will only increase by $3M. SoapCo must enter (Body Bar, Liquid Body,
Liquid Hand) segment and achieve ~10% market share, representing ($28, $15, $11M) in incremental revenue
Risks:
1.
Assumes Soap Co can attain sizeable shares in
new segments within 5 years. Competitive
response, customer accommodations, etc. can
challenge this goal
2.
Assumes consumers will continue current
purchasing behaviors of soap segments. Concerns
around environmental impact, brand preferences,
etc. could change SoapCo’s outlook in
select segment
-
Next steps:
1.
Assess competitive landscape in Body Bar, Liquid
Hand, and Liquid Body segments to understand likely
competitive response to Soap Co entry
2.
Conduct consumer research to understand how soap
purchase behaviors may change in future
SoapCo - Exhibit A
SoapCo - Exhibit B
SoapCo - Exhibit C
SoapCo - Exhibit D
Case 7: Must The Show Go On?
Case Type: Profitability
Difficulty Level: Medium
Format: Interviewee-Led
Industry: Entertainment
Must The Show Go On? - Prompt
Problem Statement
Our client is Brutus', one of the largest gaming and resort companies in the world. Tenn and
Peller have been the headlining show at the Janeiro Hotel since 2001, and they are currently the
longest-running headlining show in Vegas history. Brutus', who owns the Janeiro Hotel where the
duo performs in the 1,500 seat T&P Theater, is wondering if their act has become stale. Tenn &
Peller's annual contract is about to expire, and before Brutus' has a meeting with the duo, they
have asked our firm’s advice on whether or not to re-sign them for another year.
Additional Information (Provide Upon Request)
●
●
●
●
●
As one of the largest entertainment companies on the Strip and around the world, Brutus'
solely cares about the company’s bottom line profitability
As is the Vegas standard, all contracts are for a one-year time period
The show has plateaued with no change in bottom line profitability in the past five years
Brutus' biggest competitor is GMG Resorts, which also operates about 33% of the Strip
T&P competes against a whole bevy of nighttime entertainment, such as other shows,
nightclubs, and gaming
Must The Show Go On? - Structure
Framework
1. Revenue from T&P
show
A. Price
● Types of tickets
● Price of tickets
B. Volume
● Capacity of the theatre
● Sell through of said
capacity by ticket type
2. Costs
A. Variable
● Consumables (props,
handbills, etc.)
● Labor (cleaning,
ushers, stagehands,
etc.)
● Utilities (electricity, etc.)
B. Fixed
● Marketing
● SG&A
● Annual contracts
● Insurance
3. Knock-on effects on
revenue
● Increased room
occupancy
● Gambling footfall
increase
● Dining
● Souvenirs
● Concessions
4. Alternatives for
Brutus'
● Book another
performing act
● Alternate use of the
space (more casino
space, conference
rooms, etc.)
Interviewer notes
- Great candidates will go beyond just the direct P&L impact to Brutus', and try to understand what other benefits (knock
-on effects) the show provides
Must The Show Go On? - Brainstorming
Question 1: How much revenue does the Tenn and Peller Show generate?
Answer
Ask candidates to brainstorm key revenue drivers, and only share the below numbers when the
candidate mentions them. Share that other drivers of revenue (concessions etc) are insignificant
1. Seat Logistics
● The theatre has 1500 seats
● There are three seat categories,
A, B, and C
○
A - best seats, 300
○
B - 800 seats
○
C - back of theatre,
400 seats
● Fill Rate
○
A - 100%
○
B - 80%
○
C - 50%
●
●
●
2. Seat Pricing
3. Other Considerations
Category A Seats
○
Priced at $120
Category B Seats
○
Priced at $75
Category C Seats
○
Priced at $55
● Number of Shows
○
6 shows per week
○
40 weeks per year
● These figures have been static
for the past 5 years, which is
why Brutus' is worried about
stagnation
Must The Show Go On? - Math
Question 1: How much revenue does the Tenn and Peller Show generate?
Answer
Category A
Revenue
Revenue = 300 seats * 100% Sold * $120/show = $36,000 in revenue for Category A tickets
Category B
Revenue
Revenue = 800 seats * 80% Sold * $75/show = $48,000 in revenue for Category B tickets
Category C
Revenue
Revenue = 400 seats * 50% Sold * $55/show = $11,000 in revenue for Category C tickets
Total Revenue
Revenue = $36,000 + $48,000 + $11,000 = $95,000/show * 6 shows/wk * 40 wk/yr = $22.8M in
revenue
Must The Show Go On? - Brainstorming
Question 2: What are the costs of the Tenn and Peller show?
Answer
Ask candidates to brainstorm key cost drivers, and only share the below numbers when the
candidate mentions them
1. Salaries
● Tenn and Peller each make
$2,000,000 per year
● Their salaries have stayed the
same over the past 5 years
2. Other Fixed Costs
●
●
●
●
Utilities cost $52,000 per
year
SG&A cost $15,000 per
month
SG&A is paid year-round
Costs have stayed the same
over the past 5 years
3. Variable Costs
●
●
●
●
●
The crew (ushers etc.) cost
$2,000 per show
Housekeeping costs $1,000
per week
Props cost $200 per show
Housekeepers only needed
40 weeks/yr (same as show)
Costs have stayed the same
over the past 5 years
Must The Show Go On? - Math
Question 2: What are the costs of the Tenn and Peller show?
Answer
Tenn and
Peller
Fixed Costs
Variable Costs
Total Costs
Annual Salary = $2,000,000 p/actor/yr *2 actors = $4,000,000/year
=$52,000/yr (Utilities) + $15,000/m * 12 m/yr (SG&A) = $232,000/yr
=$2000/show * 6 shows/wk *40 wks/yr (Staff) + $1,000/wk * 40 wk/yr (housekeeping) +
$200/show * 6 show/wk *40wks/yr (Props) = 480,000 + 40,000 + 48,000 = $568,000/yr
TC = $4,000,000/yr + $232,000/yr + $568,000/yr = $4,800,000/yr
Must The Show Go On? - Math
Question 3: What is the profit for Brutus'? What is the profit margin?
Answer
Total Revenue
Total Costs
Total Profit
Margin
Total Revenue = $22.8M/year
Total Costs = $4.8M/year
Total Profit = Total Revenue - Total Costs = $22.8M/yr - $4.8M/yr = $18M/yr
Profit Margin = Profit/Total Revenue) = 18/22.8 = ~79% profit
Must The Show Go On? - Brainstorming
Question 4: What can Brutus' do to make the current show more profitable?
Answers
Candidate should brainstorm revenue drivers, cost drivers, and synergies
Revenue
●
●
●
Ticket Prices
○
Increase prices?
Quantity Sold
○
Switch some B seats into A’s, C’s into B’s (higher margin seats)
○
Offer bundle discounts
○
Put on more shows
Other sources of revenue
○
Retool concession stand
○
Add gift shop with better Souvenirs
○
Shorten the show so viewers gamble more (higher margin activity)
○
Bundle tickets with dinner or other activities (like an overnight stay)
Costs
●
●
Revisit contract with T&P
Check union vs non union labor
Must The Show Go On? - Brainstorming
Question 5: Brutus' has the opportunity to switch the T&P show for one featuring the recent winner
of America’s Got Talent. Should they?
Additional Information (Provide Upon Request)
How long is a contract for the new AgS show? As is the Vegas standard, all contracts are for a one
Candidate
should brainstorm revenue drivers, cost drivers, and synergies
year time period
Are there any costs to making the switch? Putting in a new show will require a reconfiguration of the
theater and a one time marketing blitz. This would cost $2.4M to do and would occur before the first
show
What are the revenues of the new show? The new show would bring in $90,000 in ticket sales per
show. All other sources of revenue (concessions, etc) are insignificant
What are the costs of the new show? The new show would cost a total of $3M per year
Must The Show Go On? - Math
Question 5: Brutus' has the opportunity to switch the T&P show for one featuring the recent winner
of America’s Got Skills. Should they?
Answer
Difference in
Revenue
= $90,000/show - $95,000/show = -$5,000/show * 6 shows/wk * 40wk/yr = -$1.2M/yr
Difference in
Costs
Difference in Yearly Costs = $3M - $4.8M = -$1.8M
Total Difference
in Profit
Profit Difference = $-1.2M - (-$1.8M) = +$600,000/yr by switching
Other
Considerations
Upfront Switching Costs = $2.4M = 4 years before net profit is achieved over staying with T&P
Must The Show Go On? - Math
Question 5: Brutus' has the opportunity to switch the T&P show for one featuring the recent winner
of America’s Got Skills. Should they?
Candidates can argue either ways, below are Recommendations.
Decision - Switching to AgS
Tenn and Peller is stale - Audiences might demand an interesting new show, like the winners of AgS
AgS is more profitable - By switching to AgS, Brutus' can make $600,000 more per year in profit
Decision - Keeping T&P
Switching is too slow - 4 additional years of ticket sales to become profitable is a very long time in such a
competitive market
T&P is already profitable - Tenn & Peller already bring in $18M of profit per year, with a margin of nearly 80%
Moving forward we can work on increasing revenue / decreasing costs for T&P
Must The Show Go On? - Recommendation
Please provide your recommendation to the client
Candidates can argue either way, below is the recommendation to stick to T&P
Recommendation
Recommendation
Risks
Next Steps
The client should re-sign T&P for another year. T&P is already profitable, bringing in $18M
of profit per year, with a margin of nearly 80%. Switching to an alternate show is too Slow 4 additional years of ticket sales to become profitable is a very long time in such a
competitive market
● T&P has been running for a while - audiences might get bored and revenues may drop
● The client will be leaving money on the table by not switching to a more profitable show
● Work with T&P to refresh the show with new bits
● Find auxiliary sources of revenue to complement ticket sales
Case 8: Beyond Borders
Case Type: Market Entry
Difficulty Level: Medium
Format: Interviewee-Led
Industry: Manufacturing
Beyond Borders - Prompt
Problem Statement
ShoeCo, a leading U.S. shoe manufacturer, is currently manufacturing its entire product line
domestically. Because of increased labor costs and competitive pressure, the manufacturer is now
interested in understanding whether they should offshore some or all of their production and, if so,
where should they offshore to. What factors should the client consider as it compares onshore to
offshore manufacturing?
Additional Information (Provide Upon Request)
●
●
●
●
Client scope: The client currently specializes in shoe manufacturing, but also
manufactures some apparel as well
Geography: The client currently sells its products in developed markets (North America,
Europe, and Australia) where speed of delivery is paramount
Competitive landscape: Most of the clients’ competitors currently do not offshore their
production due to manufacturing and managerial complexity
Product: The client earns $500M in revenue from 5 product lines, that sell at an average price
of $50 per product.
Beyond Borders - Structure
Framework
1. Demand
● Demand volatility
● Demand growth
● Demand diversity
(foreign vs. domestic)
● Competition (foreign
vs. domestic)
● Required service
level
2. Supply
● Supply volatility
● Supply lead time /
responsiveness
● Availability of suppliers
● Direct labor vs. total
costs
● Capital investments
and economies of
scale
3. Capability
4. Macro and
regulatory
● Access to human
● Tariffs, quotas, and
capital (knowledge
and skills)
● Manufacturing infra
● General infra (roads,
electricity, ports)
● Process innovation
other protectionism
● Trade and global
institutional
agreements
● Exchange rates
● Political stability
● Cultural affinity and
managerial alignment
Business insights
- An ideal candidate should be able to come up with a framework that is appropriate for assessing a shoe manufacturer, and be able
to ask relevant questions in each aspect to assess the situation properly
- It’s important to consider not just the operations aspects of shoe manufacturing but also factor in the macroeconomic and regulatory
aspects to present a MECE framework
Beyond Borders - Math
Question 1: Offshoring to either Vietnam or the Dominican Republic have emerged as lucrative
options. An important factor in considering offshoring decisions comes down to unit profitability.
Based on preliminary market studies, here are operating costs associated with those regions:
●
●
●
United States: COGS*: 35%, Labor: 35%, Logistics: 15%
Vietnam: COGS: 22%, Labor: 13%, Logistics: 35%
Dominican Republic: COGS: 30%, Labor: 23%, Logistics: 27%
Based on the operating financials, is the decision to offshore sensible? If so, which region makes
most sense?
Answer
Operating Margins: United States: 15%; Vietnam: 30%; Dominican Republic: 20%
Candidates should reflect that Vietnam offers best operating margins but before recommending offshoring,
they should redirect towards capital considerations (set-up costs and other CapEx) and non-financial
considerations (lead time, tariffs, quality)
*COGS = Cost of Goods Sold
Beyond Borders - Brainstorming
Question 2: Is operating margin a sufficient proxy to make the offshoring decision? What could be
some other considerations that should be weighed into this decision?
Answer
Below are possible factors to consider in addition to operating margins:
1. Lead time
2. Quality
Provide data if candidate
mentions lead time:
Provide data if candidate
mentions quality or yield:
● US: 2 weeks
● Vietnam: 8 weeks
● DR: 3 weeks
● US: 99% yield
● Vietnam: 96% yield
● DR: 97% yield
3. Other factors
● Many other answers
possible: supply chain
network, tariffs, CapEx, etc.
● Probe candidate to list
additional factors or provide
hints until they list lead time
Beyond Borders - Brainstorming
Question 3: (Share data on lead times, if the candidate hasn’t asked for it already) Does the lead
time data swing the offshoring decision in any way? Why/why not?
Answer
Candidates should reference to the initial clarification information that the customer base is in
developed countries and that makes quicker turnarounds important. Also, higher lead times lead
to higher working capital costs. Hence, DR should be the lead option to explore.
Beyond Borders - Math
Question 4: The client has estimated that it would take an investment of $50M to set up a plant in
DR. How much of the production needs to be offshored to DR to break even in 3 years?
Answer
Candidates first need to find the profit per product sourced from DR.
Selling price = $50, Operating margin = 20%
Profit per product = $10
Total investment required = $50M
Total product to be sold = $50/10 = 5 million units in 3 years = 1.67 million units annually
Total units sold per year currently = 500/50 = 10 million units
Hence, 16.7% of the production needs to be outsources yearly to DR.
Interviewer notes:
Candidates can disregard time value of money, and assume selling price does not change. Share data on
revenue and price per product, if that candidate did not ask for it in clarifying questions.
Beyond Borders - Recommendation
Please make a recommendation for our client.
Recommendation
Recommendation
Yes, the client should continue to explore offshoring
● Offshoring, especially to the Dominican Republic, provides an option to save operating
costs in a cost-competitive industry, maintaining similar lead-times despite a slight drop
in quality measures
● The client would need to offshore ~17% of its production annually to justify investment
in production capacities in DR
Risks
● Fashion is a fast-evolving space and the impact of lead-time increase on product
design-to-market timeline needs to be assessed
● Offshoring manufacturing comes with political pressure and potential backlash
● Manufacturing in developing markets opens up potential risk of IP theft
Next Steps
● Understand capital requirements to execute proposed offshoring plan
● Prepare offshoring phase-out to avoid disruption - which products to offshore first,
pressure test revised distribution network, and re-assess unit profitability actuals
● Understand ways to improve quality to six-sigma quality standards
Case 9: Going Nuts
Case Type: M&A
Difficulty Level: Medium
Case format : Interviewer-Led
Industry: Retail
Going Nuts - Prompt
Problem Statement
A US snack foods company specializing in snacking peanuts, PeanutCo is planning to acquire
another company specializing in snacking almonds, AlmondCo. PeanutCo is currently the market
leader in snacking peanuts and has annual revenues of $50 million, but the overall segment is
growing slowly compared to the broader market and they want to diversify. Your firm has been
engaged to assess the merits of the plan.
Additional Information (Provide Upon Request)
●
●
●
●
Are we only looking at the snacking almond market?
○ Yes – all other almonds (e.g., for cooking) are excluded
Since the snacking peanut market growth is slowing, is this trend affecting the entire snacking nut
industry?
○ No. The almond industry is not impacted because almonds are considered to be higher in
nutrients
1 snack almonds packet weighs 16 ounces, Price of 1 packet: $8
PeanutCo wants to diversify its revenue while not hampering current profitability
Going Nuts - Structure
Framework
1. Market
Industry
● Growth trends
● Market size
● Specific regulations
Competition
● Competition intensity
● Competitor response
2. Deal Evaluation
3. Strategic Fit
4. Risk Assessment
Target’s Financials
● Current profitability
● Revenue growth
● Cost reduction
Target’s Competency
● Management culture
● Technical capabilities
● Business expertise
Deal ROI
● Price vs Breakeven
Acquisition Rationale
● Vertical integration
● Horizontal integration
● New market entry
Synergies
● Cost driven
● Revenue driven
● Technology driven
● Competitor driven
Buyer capability
● Prior acquisition
experience
● Capital expenditure
Post acquisition
● Company cultural fit
● Integration process
● Organizational structure
change
Going Nuts - Math
Question 1: What is the market size for almonds in the United States?
Sample Approach
Customer Type
Do Not Consume
Casual Consumers
Regular Consumers
Avid Consumers
75%
10%
10%
5%
225M People
30M People
30M People
15M People
Number of Almond
Packs
Consumed/person/year
0
25/year
60/year
120/year
Total Consumption/year
0
750M
1800M
1800M
% of US Population
Population Size
Market Sizing
● Total packets ~ 4.5B
● Price per packet = $8
● Market size ~ 36B
●
●
If asked, share size of US population = 300M
Alternate approaches are fine as long as candidate cuts the US
demographics in multiple segments, and provides rationale for
consumption
Going Nuts - Math
Question 2: Peanut Co. plans to pay $2 billion to acquire Almond Co. Is this a reasonable amount?
Additional Information (Provide Upon Request)
● Guide the candidate to calculate ROI of this investment (If they do not know about ROI, share that it is
the ratio of initial investment to annual profits)
● For ROI, candidate needs to calculate the annual profit, for which the below information can be
provided on request
○ The almond market size is roughly 36B
○ Almond Co’s current market share = 10%
○ Almond Co’s profit margin = 20%
○ Revenue and Cost structures stay the same over the next few years
○ Disregard time value of money
Going Nuts - Math
Question 2: Peanut Co. plans to pay $2 billion to acquire Almond Co. Is this a reasonable amount?
Answer
Almond Co
Profits
Revenue = 10%*36 = $3.6B
Profit margin = 20%
Profit = Revenue*margin = $3.6B*20% = $720M
Payback
Period
Payback Period = Purchase Price/Yearly Profit = $2B/$0.72B ~ 3 years
3 years is a reasonable time period for payback.
The candidate should now ask to explore synergies on costs and revenue, which would further
make the acquisition attractive
Going Nuts - Brainstorm
Question 3: What are the arguments for and against acquiring AlmondCo?
Answer
Push the candidate until they mention cannibalization risk.
●
●
Acquire AlmondCo
○ Revenue Synergies
■ Cross sell almond products to existing peanut customers
■ Leverage current distribution network to expand reach of Almond Co. and drive sales
○ Cost synergies
■ Can extend innovation from peanuts to almonds (e.g., flavor, packaging, etc)
○ If competitor acquires Almond Co and succeeds, Peanut Co’s competitive position would
be weaker
Do not acquire AlmondCo
○ Potential for cannibalization of existing sales
○ Potential of brand dilution
○ Ties up free cash, which could be used to grow current business
Going Nuts - Math
Question 4: The client has estimated that acquiring AlmondCo will lead to a cannibalization of 5%
of its current sales. What is the impact to the business as a result?
Answer
PeanutCo’s current sales are 50M annually (included in the prompt).
Cannibalization will thus reduce sales by 2.5M annually.
To check impacts on profits, candidates will need the operating margin for PeanutCo. Once they
ask, share that it is 30%
Cannibalization will thus reduce profits by 750,000. What this means, is that all the gain in
profits on acquiring AlmondCo are wiped off by cannibalization of PeanutCo’s sales.
Going Nuts - Recommendation
Question 5: Please provide your recommendation to the client
Recommendation
Recommendation
Risks
Next Steps
The client should not acquire AlmondCo. The gains in profit post acquiring AlmondCo
($720,000) are wiped off by cannibalization of PeanutCo’s sales ($750,000).
● PeanutCo will continue to exist in a market growing slower than average without any
diversified source of revenue
● AlmondCo’s profitability might improve through synergies with PeanutCo’s business
● Evaluate other potential targets
● Explore potential synergies to reduce cost for AlmondCo
Case 10: Circling the Drain
Case Type: Profitability
Difficulty Level: Medium
Format: Interviewee-Led
Industry: Healthcare
Circling the Drain - Prompt
Problem Statement
Princeton-Plainsboro Hospital is a large single-site hospital in New Jersey serving a wide range of
patients. The hospital's board is concerned because they have noticed a decline in the hospital's
earnings from medical services even though the number of patients has remained static. The
hospital has hired you to help them figure out what the problem is and to come up with a strategy
for increasing earnings.
Additional Information (Provide Upon Request)
●
●
Patients have a variety of insurance - from private insurance, to public (government)
insurance (Medicare/Medicaid) to being uninsured
The hospital provides outpatient services, and inpatient surgeries which include hips and
joints replacement, cosmetic surgery and elective procedures for weight loss. Additionally, it
has a state of the art emergency room, ICU and Neonatal ICU (for babies)
Circling the Drain - Structure
Framework
1. Market
2. Financials
3. Growth opportunities
A. Market Size
● Market growth (global and
local)
● Demand (segmented by
services or patient type e.g.,
long-term vs short-term care,
check-ups vs operations)
B. Competitors
● Number and size
● Differing services offered
● Price per service, margin for
similar services
C. Trends
● Private and public insurance
● Pandemics, supply shortages,
etc.
A. Revenue
● Price (avg price per operation
or department)
● Volume (number of patients,
insurance vs cash mix, service
mix)
● Payment timelines (how long to
receive payment - private vs
public insurance, uninsured)
B. Cost
● Variable (consumables, drugs
etc.)
● Fixed (rent, equipment, utilities,
malpractice insurance)
A. Pricing strategy
● Increasing the price and/or offer
more flexible payment plans
● Bundle services
B. Volume dynamics
● Marketing towards patients who
need more expensive services
D. Cost reduction
● Improve efficiency and patient
turnover
● Move certain services online
D. Expansion
● Expand organically, or through
M&A
Circling the Drain - Math
Question 1:What was the operating margin for the hospital in 2017, and what is it in 2022?
[Provide Exhibit A]
Additional Information (Provide Upon Request)
●
○
○
Per patient costs:
2017: $4,000
2022: $4,800
●
○
Patient Mix by Insurance type was constant over time:
Private: 50% - Public: 40% - Uninsured: 10%
*Interviewer notes:
Make sure the candidate reads the correct numbers from the graph for revenues, since this may require a bit of
extrapolation.
Circling the Drain - Math
Answer
Product
Calculations
Operating Margin %
2017
Average per patient revenue for all patients = 6,800*(50%) +
5,300*(40%) + 3,300*(10%) = $5,850.
Margin = (Rev-Costs)/Rev = ($5,850-4,000)/$5,850 = 31.6%
31.6%
2022
Average per patient revenue for all patients = 6,300*(50%) +
3,700*(40%) + 3,300*(10%) = $4,960.
Margin = (Rev-Costs)/Rev = ($4,960-4,800)/$4,960 = 3.2%
3.2%
●
Takeaways: overall, revenues are dropping
○ Operating margin has dropped ten fold from 32% to 3.2%
○ Biggest problem is drop in public insurance (Medicare/Medicaid) reimbursement amounts.
○ Private reimbursement also fell
○ Costs are rising steadily over time
Circling the Drain - Brainstorming
Question 2: How can the hospital increase its profitability?
Answer
Increase Revenue
Decrease Costs
A.Price
● Charge more for services (could partner with other
hospitals in state when negotiating reimbursement
rates)
B. Marketing
● Attract more high margin private insurance patients via
advertising, etc.
C. Expansion
● Corporate development (M&A or joint venture) with local
speciality clinics serving private insurance patients with
high reimbursement rates
B. Lobbying
● Lobby the government to raise public reimbursement
rates
A. Suppliers
● Partner with other hospitals in the state when
negotiating prices
B. Customer targeting
● Target lower cost patients with selective advertising, etc.
(e.g. target young rather than old)
C. Synergies through M&A
● Find efficiencies / synergies somewhere with a
purchase of a clinic
● Outsource some services that can be handled more
efficiently elsewhere (urgent care clinics).
Interviewer Notes: Move to questions 3 and 4 when candidate mentions reducing costs and M&A, respectively.
Push the candidate if they don’t come up with these drivers
Circling the Drain - Math
Question 3: The hospital is considering partnering with CMS (Center for Medicare and Medicaid) to
become part of an Accountable Care Organization (ACO). ACOs are typically able to offer care for
patients enrolled with public insurance at lower costs (through care coordination), but need to pay
out of pocket if patient bills exceed a specified threshold. The hospital has run the numbers and
believes for 80% of its patients under public insurance, costs will go down by 30%. For the
remaining 20% of patients, costs will shoot up to $10,000 per patient. Should the hospital become a
part of the ACO?
Answer
The question (intentionally) has a ton of information, most of which is not relevant
Per patient cost in 2022 = $4800
Under an ACO, the average cost per patient would be (80%)*(70%)*(4800) + 20%*10,000 =
$4,688
Since this is lesser than the average cost without ACO, the hospital should enrol in the ACO.
Circling the Drain - Math
Question 4: The client is considering acquiring MedCo - a local specialty clinic that has desirable
(profitable) patients. What will be the impact to profitability if MedCo is demanding $40M, all in
cash?
Additional Information (Provide Upon Request)
●
Per patient cost for MedCo is $3000, since MedCo has a younger clientele:
●
MedCo’s Patient Mix by Insurance type:
○ Private: 80% - Public: 15% - Uninsured: 5%
●
MedCo serves 5,000 patients a year
Circling the Drain - Math
Calculations
Item
Calculations
Profit per patient
Average per patient revenue for all patients = 6,300*(80%) + 3,700*(15%) + 3,300*(5%) =
$5760.
Margin = (Rev-Costs)/Rev = ($5,760-3,000)/$5,760 = 47.9%
Total profits
Profit per patient = $2760
Profit per year = $13.8M
●
Takeaways:
○ Post acquisition, there is an increase in annual profits of 13.8M
○ The acquisition cost of $40M will be recouped in ~3 years
○ There is potential for further reduction of costs through synergies and economies of
scale
Circling the Drain - Recommendation
Please make a recommendation for our client.
Recommendation
Recommendation
Risks
Next Steps
Our analysis observed that the operating margin has dropped ten fold from 32% to 3.2%
and that the biggest problem is in the public insurance reimbursement amounts. In
response, we recommend
● Partnering with other hospitals to renegotiate reimbursement rates and
● Adjust the marketing strategy to attract more high margin private insurance patients
● Work with the government to become a part of the ACO
● Consider acquiring MedCo. that focuses on high margin operations, to improve annual
profit by 13.8M
● Lobbying efforts could incite public backlash and would need to make a convincing
case as to why the rates are to0 low
● Targeting higher margin activities could provoke a competitive response
● Develop a marketing campaign to educate consumers as to the costs and values of the
services in order to justify to the increase in reimbursement rates
● Initiate negotiations to acquire MedCo
Circling the Drain - Exhibit A
2017
2018
2019
2020
2021
2022
2023
Case 11: Highway To Hell
Case Type: Market Entry
Difficulty Level: Medium
Format: Interviewee-Led
Industry: Transportation
Highway To Hell - Prompt
Problem Statement
BuildCo, a leading Brazilian highway construction company is looking to expand internationally.
Economic growth in Brazil has stalled, and in order to continue to grow both top-line revenues and
bottom-line profitability, the client wants to diversify its portfolio and decrease its exposure to the
Brazilian economy. What factors should the client consider as it thinks through its international
expansion options?
Additional Information (Provide Upon Request)
●
●
●
●
●
BuildCo operates only in Brazil, and have scoped opportunities in South America. Their staff speaks
primarily Portuguese
The client currently only focuses on building and operating public roadways
BuildCo primarily wants to diversify its revenue. It has no specific goals on revenue or ROI
The clients’ customers are always municipal, state, or national governments. They bid, usually
through competitive RFPs
While BuildCo wants to consider all geographies, they have a bias towards opportunities in South
America
Highway To Hell - Structure
Framework
Culture and
management
complexity
● Language and
cultural barriers
● Countries fitting
organizational
culture
● Management
adaptability
● Geographical
distance from
home base
Pipeline and
economic prospects
Political
environment
Competitive
environment
● Project pipeline
● Size, complexity
and future value of
projects
● Target country’s
growth estimates
and trends
● Existing
infrastructure
● Existing
regulations
● Political volatility
and potential
hostility
● Ease of doing
business in target
country
● Existing market
landscape
● Industry
concentration
● Potential bidding
dynamics
Highway To Hell - Math
Question 1: (Share Exhibit A) After several conversations with the client and an initial analysis by
our team, we’ve decided that opportunities outside of South America are not worth pursuing
because of cultural differences and managerial complexity. The team has gathered the following
data in order to assess which countries in South America would be the most attractive. Based
on the graph, which markets should our client focus their efforts on? Which should it definitely
eliminate?
Answer
Correct answers for BuildCo to focus on here are Mexico, Colombia, Chile and Peru (upper right
quadrant).
All other countries are to be avoided.
Highway To Hell - Math
Question 2: Assuming the client chooses to enter one or more of these markets, how should it
approach market entry? What are the primary pros and cons of each market entry approach?
Answer
Greenfield expansion / Primary Investment:
●
●
Pros: Provides the most control, avoids reputation and legacy issues with existing firms
Cons: The client has limited knowledge about foreign markets, difficult to exit the market
once invested into assets
Merger / Acquisition:
●
●
Pros: Provides a way to get local market knowledge, faster way to enter the market
Cons: Provides less direct control, merger or acquisition might later be blocked by
regulations, disrupting business
Highway To Hell - Math
Question 3: (Share Exhibit B) How does this data help you decide what investment route to follow?
Answer
Input
Primary investment
M&A
Annual revenue
$30,000,000
(300*5*20,000)
$9,000,000
(30,000,000*30%)
$21,000,000
(30,000,000 - 9,000,000)
~7 years
(150,000,000/21,000,000)
14%
(21,000,000/150,000,000)
$50,000,000
Annual opex
Annual profit
Payback period
ROIC
$20,000,000
(50,000,000*40%)
$30,000,000
(50,000,000 - 20,000,000)
~8 years
(250,000,000/30,000,000)
12%
(30,000,000/250,000,000)
Candidate can either calculate the ROIC, or the payback period.
Once candidate has come up with the numbers, ask them for recommendation.
Highway To Hell - Recommendation
Please present our findings and recommendation to the client.
Recommendation
Recommendation
The client should enter a South American market (preferably Mexico, Chile, or Colombia)
through a primary investment:
●
Mexico, Chile, Peru, and Colombia all have large pipelines and attractive business
environments relative to other South American markets.
●
A primary investment in one of these markets will likely yield a higher ROIC and
shorter payback period relative to existing M&A opportunities
Risks
●
●
There might be significant wait before the client can start up in the new country
The govt. of the new country might block foreign investment to protect local firms
Next Steps
●
●
Evaluate if further negotiations may yield a lower price for an M&A opportunity
Assess likelihood of winning deals as a primary investor in the new country.
Highway To Hell - Exhibit A
Highway To Hell - Exhibit B
Forecasted Cash Flow
Parameter
Primary investment
M&A
Number of toll stops built on the highway
300
NA
Average toll collected per car per toll stop
$5
NA
Expected traffic (vehicles/year) on each toll
stop
20,000
NA
Annual revenue received from partner firm as
per contract*
Annual operating expenditure (% of revenue)
NA
$50,000,000
30%
40%
$150,000,000
$250,000,000
0%
0%
Initial Investment needed
Discount rate
* Under the terms of the M&A contract, BuildCo will receive a lump sum “revenue” payment each year. In
return, it will need to operate and maintain the existing highways and toll stops
Case 12: Flickering Fortune
Case Type: Profitability
Difficulty Level: Medium
Format: Interviewee-Led
Industry: Consumer Goods (supply chain)
Flickering Fortune - Prompt
Problem Statement
Your firm has been engaged by Vivid, a consumer electronics screen manufacturer, for a pricing
optimization project. Vivid’s main product is HDTV (high-definition TV) screens. Its main customers
are well-known TV manufacturers in Asia and the US, who buy other components, build the finished
TVs and sell them to retailers who use global distribution channels to reach end-users.
Additional Information (Provide Upon Request)
●
●
●
●
Objective: Client is looking at pricing in search of opportunities to grow revenue
Patents: Vivid technology is patent-protected, and for manufacturers to switch suppliers would
require costly plant reconfiguration
Revenue trends: While sales volumes have been increasing, revenue has remained flat
Competitive landscape: No insights available
Flickering Fortune - Structure
Framework
FInancials
Revenue
● Pricing structure
● Quantity
Cost
● COGS
● Discounts
● Sales incentives
Customers
● Segmentation
● Technology trends
● Willingness to pay
● Switching costs
Product
● Feature sets
● Quality
● Substitutes
Competition
● Relative performance
● Market share
● Benchmarking for
relative pricing
Flickering Fortune - Brainstorming
Question 1: We have gathered some information on the client’s costs. What do you infer from the
following data?
Production costs for HDTV screens:
2021: $400/screen
2022: $250/screen
2023: $200/screen
2024: $180/screen (forecasted)
The retail price (street price) each year has been $1,000/screen
Answer
●
The client has realized significant reduction of costs, but has also experienced decreasing
economies of scale (37.5%, 20%, 10% savings year on year).
●
Profit margins have increased every year across the value chain, but we still need the
wholesale price to understand client profitability (the client sells to manufacturers, not end
consumers)
Flickering Fortune - Exhibit
Question 2: [Provide Exhibit A] Your case team has collected data comparing contract prices at
which the screens were sold to manufacturers and the corresponding contract volumes. Additionally,
the client’s product marketing team has set a discount authority ceiling of 40% for the sales team.
What does the graph reveal about sales agent behaviour and marketing strategy?
Answer
Almost 40% of sales violate the 40% discount ceiling, and there’s a peak at the stated limit.
This implies that salespeople are discounting as much as they can get away with. This hints at a
potential volume-based incentive in place for the sales team, and Vivid should consider a
profit-based component to sales compensation.
Flickering Fortune - Math
Question 3: [Provide Exhibit B] The HDTV supply chain (SC) consists of a supplier for backlighting,
Vivid, our client who provides the screens, the TV manufacturer, and the retailer. Given the average
selling price of the Vivid screens is $228/screen, with the information gathered so far, what do you
infer regarding the distribution of surplus (profit) in the supply chain?
Answer
(A)
(B)
Sum of known SC components
Avg Price – Cost = Profit
$228 - $200 = $ 28
$200 + $20 =
$220
$200 + $28 =
$228
$300 + Profit =
$150 + $30 =
$300 +
Profit
$180
Subtotal:
$928
Retail price – subtotal =
Manuf. profit
$1,000 – 928 =
$72
Flickering Fortune - Brainstorming
Question 4: [Provide Exhibit C] What insights can you gather on Vivid’s value-add and
compensation strategy for the sales team?
Answer
Manufacturing customers exhibit both a high willingness-to-pay for Vivid’s quality and a high
switching cost to any other supplier. There’s a clear opportunity for Vivid to explore a price
increase.
Vivid’s salesforce is subject to a high-pressure sales quota with the aim of increasing market
share. As we’ve seen, this is likely creating a discount-heavy sales culture which leaves profit on
the table due to excessive price erosion.
Flickering Fortune - Recommendation
Please present our findings and recommendation to the client.
Recommendation
Recommendation
Risks
Next Steps
● Scope to increase selling prices while retaining customer base
● Sales alignments need re-visiting to incentivize profit-maximization and
disincentivize margin erosion via heavy discounting
● Switching costs might be overestimated
● Rivals or upstarts could undercut Vivid
● Validate switching costs
● Conduct price sensitivity analysis
● Implement new sales incentivization program
Flickering Fortune - Exhibit A
Sales volumes vs Discounts
Flickering Fortune - Exhibit B
HDTV value chain
Supplier
(backlighting)
Vivid
(screens)
TV Manufacturer
Retailer
Cost:
$200
$200
$300
$150
Profit:
$20
(A)
(B)
$30
Flickering Fortune - Exhibit C
Interview insights
Customer interviews (manufacturers)
“Although other screen technologies are
cheaper, this product gives the quality we
need to charge the prices we charge on the
street.”
Internal interviews (sales)
“Although we have discount floors in the TV
division, when we are getting closer to the end
of the quarter, I need to close the deals to
reach my sales quota. The competition is too
strong in this market and I need to give the
discounts.”
“We built a $1 billion plant to produce
HDTVs this year. The plan only works with
VIVID’s screens”
“If the management keeps asking us to grow
our market share, we need to lower our prices
to increase our sales, it’s the law of demand,
basic economics!”
“We can give higher discounts every year
because our costs go down every year too.”
Case 13: The Claim Game
Case Type: Market Entry
Difficulty Level: Medium
Format: Interviewer-Led
Industry: Insurance
The Claim Game - Prompt
Problem Statement
The Indian insurance market is heavily underpenetrated. The majority of insurable, adult population
either is not insured and this has serious consequences. The government of India is thinking of
using the Indian postal network as a creative way of reaching the underserved insurance population.
The infrastructure already exists and this can be leveraged for distributing much-needed insurance
products. The objective would be to provide a safety net to as many people as possible in the
underserved markets. What considerations should the government keep in mind?
Additional Information (Provide Upon Request)
●
●
Primary objective is not to monetize insurance offerings, but instead to improve quality of life
by providing insurance-based safety nets. However, profitability is seen as an important metric
Insurance, for the purpose of this case, covers both life and non-life insurance such as health,
crop insurance, etc.
The Claim Game - Structure
Framework
Market Sizing
● Total underserved
population by Age /
Income / Social classes
● Willingness to Pay
● Coverage
Indian Postal Penetration
Profitability
● Serviceable Post Offices
● # of agents
● Sales to different social
classes
● Costs - Commission,
Salary, Claim rates
● Revenue - Premium
collected
● Non-financial
considerations: financial
stress, moral hazard
The Claim Game - Math
Question 1: [Provide Exhibit A] In terms of social classes, the underserved population is defined as
the “aspirers” and the “strugglers”. If the Indian Government decides to sell insurance to so aspirers
and strugglers, what is the total income of the market interested in buying insurance (in USD)?
Answer
Allow candidates to assume uniform distribution of income within each social class, so that
midpoint is representative of the average income
Total market size = Market size for Aspirers + Market size for Strugglers
Market size = Average household income x Number of households x Expenditure percentage
Market size (Aspirers) = $15K x 80M x 1.5% = $18B
Market size (Strugglers) = $5K x 120M x 1% = $6B
Total Market Size = $24B [Note that market size refers to total premium amounts]
The Claim Game - Math
Question 2: The Indian government has a network of 150,000 post offices, two-thirds of which can
hire one insurance agent and thus be used to penetrate the underserved insurance market. The
Govt. believes that within the first three years of launch, they can capture 66% of the Strugglers
market and 33% of the Aspirers market. Assuming they pay out 80% of the total premium in claims,
is the program profitable?
Answer
Captured market = 66% x $6B + 33% x $18B ~ $4B + $6B = $10B
Probe candidate to brainstorm additional, non-claim costs that would be incurred while running the
program. Should the candidate accurately indicate insurance agent salaries, commissions, and other
operational costs as some of the potential costs, give them the below data:
- Insurance agent payroll = $15,000 per agent (15,000 x 100,000 = $1.5B)
- Agent commissions = 10% of total premium amount ($1B)
- Operational costs = $5,000 per post office ($5000 x 100,000 = $500M)
Total costs = Non claim costs (1.5 + 1 + 0.5 = $3B) + Claims ($8B) = $11B
Although the program appears unprofitable, strong candidates will refer to primary goal of
creating safety net for the underserved
The Claim Game - Brainstorming
Question 3: Given the program is unprofitable, what are some externalities that can be used to
justify the roll-out of this program? Are there ways the Govt. can make up for the deficit?
Answer
Potential positive externalities:
● Safety net removes possibility of medical bankruptcy
● Leads to lesser financial stress and higher productivity
● Indirectly boosts economy and GDP
● Improves national health outcomes
Potential ways to reduce deficit:
● Consolidate post-office coverage or insurance agent coverage to reduce costs
● Encourage private sector participation
The Claim Game - Recommendation
Please present our findings and recommendation to the client.
Recommendation
Recommendation
Risks
Next Steps
● Since the primary objective is to create safety net, the Govt. should go ahead with the
insurance program for the underserved social classes
● After the three-year rollout, the Govt. would capture $10B of the $24B market, at a cost
of $11B
● The additional cost could be considered an investment in public health leading to
positive externalities, or the deficit could potentially be reduced
● Might put excessive load on medical system
● Moral hazard concerns
● Understand ways to reduce deficits, potentially by capturing larger market share
● Explore potential pricing programs that increase access without increasing costs
● Lay out implementation strategy
The Claim Game - Exhibit A
Segment
Annual Household
Income
Number of
Households
(Millions)
Percentage of income willing
to spend on insurance
Globals
> $40K
12
2%
Consumers
$20K - 40K
38
1.5%
Aspirers
$10K - 20K
80
1.5%
Strugglers
< $10K
120
1%
Case 14: CraftCo
Case Type: Profitability
Difficulty Level: Medium
Format: Interviewer-Led
Industry: Retail
CraftCo* - Prompt
Problem Statement
Our client, Craft Co., is a subscription service that will send customers kits for adult crafting and DIY projects
(e.g., watercolor painting, woodworking). Customers pay a monthly fee based on the number of kits they would
like, Craft Co. sends them a box with craft supplies. Craft Co. had grown its customer base rapidly during the
COVID-19 pandemic, but has seen a dip in recent quarters as new competitors have entered the field. Our client
would like our help in answering two questions (i) how has Craft Co. performed recently? and (ii) what strategies
can it implement to grow profitability and increase share?
Additional Information (Provide Upon Request)
●
●
●
●
Craft Co’s products are typically marketed towards young adults ages 18-35
It was seen as the first major player in this market, but new competitors began to enter by the end of 2020
There is no specific ROI or objective that our client is aiming to achieve related to this analysis, but they are
most interested in short-term strategies in the next 1-3 years as opposed to longer-term opportunities
Craft Co. is currently focused solely on the U.S. market
*Former EY Parthenon Interview Case
CraftCo - Structure
Framework
1. Company Financials
2. Market Dynamics
A. Revenue
● Price (Monthly fee for the
kits, discounts for annual
subscription services)
● Quantity (Number of kits
sold for each product
type)
● Current distribution
segments (online, retail)
B. Costs
● Fixed (manufacturing
equipment, marketing,
rent costs)
● Variable (COGS,
shipping, utilities )
A. Market growth (Growth
outlook by segment, channel
and customers)
B. Products (can the client
manufacture new kits in line
with customer trends)
C. Consumers (are there
profitable groups like artists,
rich individuals we don’t sell
to)
3. Execution Strategies
A. Increase revenue
● Increase of price of
monthly subscriptions
● Increase of quantities
sold through launch of
new products and
marketing
B. Reduce costs
● Reduce fixed costs
(renegotiate rent
agreement, optimize
marketing spend)
● Reduce variable costs
(negotiate with suppliers,
bulk discounts)
CraftCo - Exhibit
Question 1: [Share Exhibit A] How would you estimate Craft Co.’s monthly profitability in Q3 2024?
Answer
Total number of subscribers are needed to calculate profitability. When candidate asks, share that it is $75M.
CraftCo thus incurred a loss of $8.2M in Q3 of 2023.
CraftCo - Brainstorm
Question 2: How can Craft Co. become more profitable?
„
Answer
Push the candidate to share at least 4-5 ideas to become profitable
Brainstorm ideas:
● Revenue growth
○ Increase revenue from existing customers by price increase, buying more kits per month
○ Enter new geographic markets outside the US
○ Expand into new channels (e.g., children's kits, cooking kits)
● Cost control
○ Analyze marketing mix and effectiveness to reduce spending without losing subscribers
○ Negotiate supplier agreements to get bulk discounts
CraftCo - Exhibit
Question 3: [Share Exhibit B]. How would you describe Craft Co.’s pattern of subscriber growth?
Answer
●
●
Subscriber levels have seen a steady decline in 2023, even though interest in crafts likely increased due to
the pandemic
Earlier growth could be due to strong investment in marketing and lack of initial competitors and/or
pandemic-related demand increase across the market
Question 4: [Share Exhibit C]. Based on Exhibit C, what do you notice about Craft Co.’s
performance?
Answer
●
●
Craft Co. outperforms competitors on price and quality, but underperforms on delivery and convenience
Exhibit C in context with profitability analysis suggests Craft Co. has likely lost customers to higher-priced
competitors positioned as “premium”, therefore there may be opportunity to increase price to restore
profitability since Craft Co. is perceived as high-quality
CraftCo - Brainstorming
Question 5: How might Craft Co. stabilize its subscriber decline?
Answer
Stabilization levers
●
●
Addressing reasons for dissatisfaction:
○
Improving on delivery speed (changing delivery partners, opening up more number of smaller
warehouses)
○
Improving on time required for craft (selecting simpler options, providing more detailed instructions)
Addressing new entrants:
○
Better differentiating its product relative to new entrants
○
Loyalty incentives for existing customers
○
Acquiring one of its competitors
CraftCo - Exhibit A
CraftCo - Exhibit B
CraftCo - Exhibit C
Case 15: Build, Baby, Build!
Case Type: Profitability
Difficulty Level: Hard
Format: Interviewee-Led
Industry: Government
Build, Baby, Build! - Prompt
Problem Statement
Philadelphia is among the host cities for the FIFA World Cup 2026 to be held in the US. Currently,
the MLS team Philadelphia Union plays at the Subaru Park in Chester, PA, and your client, the city
council, has turned to you, debating whether to build a new stadium within the city limits in time for
the World Cup and whether such a move would help boost a stagnating Philadelphia economy.
Additional Information (Provide Upon Request)
●
●
●
●
●
●
Primary goal of the Philadelphia city council is to help boost the economy
The city council will proceed with the stadium build if it pays for itself within a 10-year period
The council currently has three sites in mind – Center City (urban, commercial locality),
Chinatown (urban, less commercial), and the Philadelphia Sports Complex (city outskirts)
If a suitable site is approved, rezoning is not considered a challenge
Ticket proceeds will not go to the city council, but they will receive a stadium rental fee
Subaru Park was built 20 years ago, with no further information on stadium life available
Build, Baby, Build! - Structure
Framework*
1. Costs
A. Capital expenses
● Land costs (by location)
● Construction costs
● Permitting and re-zoning costs
B. Recurring expenses
● Stadium maintenance costs
● Utilities costs (electricity, WiFi,
water, etc.)
● Labor costs
Problem Statement
2. Revenues
A. Direct revenue
● Stadium rental
● Concessions licenses
● Club shop license
● Stadium tours
● Stadium naming rights
● Advertisement hoardings
B. Indirect revenue
● Neighborhood sales tax increase
● Public transit revenue increase
3. Other considerations
● Potential GDP boost with cash
influx into otherwise-stagnating
economy
● Sustainability of revenue flow (tied
to stability of Philadelphia Union
and other soccer teams in region)
● Potential price war with Subaru
Park and other stadiums for
stadium rental contracts
*Nudge candidate until they cover the cost and revenue buckets in red before proceeding, provide hints as needed
Business insights
-
An ideal candidate should be able to come up with a framework that covers both financial and non-financial considerations,
keeping in mind that the primary incentive for the city council is to boost the economy
It is crucial to consider both direct and indirect sources of revenue, from both a matchday and non-matchday perspective
Build, Baby, Build! - Math
Question 1: We conducted a study that showed that the neighborhood housing the stadium
experienced a 50% increase in local sales tax generation. Before we discuss sales tax estimates,
what would be the expected directional order of sales tax generations in the neighborhoods
surrounding the three locations.
Interviewer note: Once candidate guesses the directional order, ask them to calculate sales tax increases based
on our study and provide below data
City council’s estimates of sales tax generated in proposed stadium neighborhoods over
2025-2035:
●
●
●
Center City: $800M
Chinatown: $500M
Philadelphia Sports Complex: $300M
Answer
Sales tax increases:
●
●
●
Center City: $400M
Chinatown: $250M
Philadelphia Sports Complex: $150M
Build, Baby, Build! - Math
Question 2: Including the sales tax increases, what is the total revenue generated over the ten-year
period? (Provide Exhibit A)
Answer (Continued)
Revenues over ten-year period:
●
●
●
●
Stadium rental fee:
- Philadelphia Union: $30M/year * 10 = $300M
- FIFA World Cup 2026: $50M
- US Men’s and Women’s National Teams: $10M/year * 10 = $100M
Concessions licenses: $15M/year * 10 = $150M
Stadium naming rights: $300M
Tax increase (based on chosen location): $400M (Center City) or $250M (Chinatown) or $150M
(Philadelphia Sports Complex)
Total revenues = $1300M Center City; $1150M Chinatown; $1050M Philadelphia Sports Complex
Interviewer note: Ensure candidate uses only the sales tax increase instead of the total sales tax as the
increases alone could be attributed ot the stadium
Build, Baby, Build! - Math
Question 3: Based on the city council’s cost estimates, does building a stadium seem attractive over
a ten-year period? Which location makes the most sense? (Provide Exhibit B)
Interviewer Note: Ask candidate to calculate costs for all three locations and even in case of negative NPV,
provide preference
Answer
Costs over ten-year period for building new stadium:
●
●
●
Land costs: Center City: $450M, Chinatown: $300M, Philadelphia Sports Complex: $180M
Construction costs: $600M
Stadium maintenance costs: $45M/year * 10 = $450M
Total costs = $1500M Center City; $1350M Chinatown; $1230M Philadelphia Sports Complex
Building a stadium presents a negative NPV for each of the locations:
●
Center City: ($200M), Chinatown ($200M), Philadelphia Sports Complex: ($180M)
An excellent candidate will debate the non-financial merits by noting that though Philadelphia Sports
Complex offers a slightly less negative NPV, Center City offers the highest tax revenue increase and thus
might be preferred by city council.
Build, Baby, Build! - Brainstorming
Question 4: What are some ways in which the city council can boost the revenue flow or reduce
costs? Which line items among the current cash flow could be a potential cause for concern?
Answer
Nudge candidate to provide non-sporting events (concerts, business events and offsites, etc.) as potential
avenue for revenue generation during the off-season, and exploring alternate locations with cheaper land
and construction costs as ways to reduce costs.
Probe for additional creative answers for increasing revenues or decreasing costs, and reveal $15M/year as
the total amount from all those measures.
Strong candidates will note that NPV is still negative with this additional $150M over 10 years.
Current cash flow assumes the Philadelphia Union and the US National Teams will sign a 10-year contract
with the new stadium - potential for price war with Subaru Park and other stadiums threatens this
assumptions.
Build, Baby, Build! - Recommendation
Please present our findings and recommendation to the client.
Recommendation
No, the client should not proceed with the construction of a new stadium as it presents a
negative NPV in each of the three locations.
Recommendation
Risks
Next Steps
Alternative recommendation: Yes, the client should proceed with the construction of a new
stadium in Center City despite the negative $50M NPV as the stimulus provided to the
economy would act as a huge intangible benefit.
● Revenue flows uncertain
● Cost overruns not budgeted
● “Phantom stadium” potential boondoggle for city
● Understand proposed sites better to re-evaluate costs
● Investigate alternative options to constructing new stadium (repurpose/revamp existing
stadium)
Build, Baby, Build! - Exhibit A
City council’s estimates of key revenue line items (2025-2035)
Revenue line item
Frequency
Amount ($)
Stadium rental fee
-
Philadelphia Union*
Yearly
$30M
-
FIFA World Cup 2026
One-time
$50M
-
US Men’s and Women’s
National Teams*
Yearly
$10M
Concessions licenses
Yearly
$15M
Stadium naming rights
One-time
$300M
*The city council believe the Philadelphia Union and the US National teams will sign a 10-year contract
Build, Baby, Build! - Exhibit B
City council’s estimates of key cost items (2025-2035)
Cost line items
Amount
Land costs:
-
Center City
$450M
-
Chinatown
$300M
-
Philadelphia Sports Complex
$180M
Construction costs
$600M
Annual stadium maintenance costs
$45M
Case 16: Eye Can See Clearly Now
Case Type: M&A
Difficulty Level: Hard
Format: Interviewer-Led
Industry: Healthcare
Eye Can See Clearly Now - Prompt
Problem Statement
Your client, a PE firm, is considering an investment in Dr Kelso’s Ophthalmology Practice, located
outside Philadelphia. Dr. Kelso’s Practice is requesting $15M for a 50% stake in the business.
Should they make the investment?
Additional Information (Provide Upon Request)
●
●
●
●
What is ophthalmology? How does Dr. Kelso’s business make money?
○
An ophthalmologist is an eye doctor
○
Dr. Kelso’s practice provides a full range of ophthalmology services (exams, surgeries)
What is the ownership structure today?
○
Today, Dr. Kelso and 3 other doctor partners are equity owners in the business
○
They are only paid their share of the profits. They do not take a salary
What are the PE firm’s objectives?
○
To make a good ROI on the investment
Does the PE firm have similar investments?
○
The firm has invested in other hospitals, but they do not offer ophthalmology as a service
Eye Can See Clearly Now - Structure
Framework
1. Market
2. Financials
3. Synergies
A. Market Size
● Number of customers
(Insurance vs cash)
● Market growth
B. Competitors
● Number and size
● Focus - full suite of
services vs focused
● Affiliation with referrers
C. Trends
● Teleconsultation
● Growth of cosmetic
surgeries like LASIK
A. Revenue
● Price (avg service fee,
insurance vs cash
price)
● Volume (number of
patients, insurance vs
cash mix, service mix)
B. Cost
● Variable (drugs,
consumables etc)
● Fixed (rent, equipment,
utilities, labor etc.)
C. Deal terms
(ROI/payback period)
A. Revenue Synergies
● Increase rates via
greater market power
● Increase volume via
patients from other
portfolio investments
● Increase collection rate
via better business
management
B. Cost Synergies
● Decrease practice
management costs
through scale with
other assets in portfolio
Eye Can See Clearly Now - Math
Question 1: The PE firm prepared a financial projection (shown in the below table) for revenues
and costs for Dr. Kelso’s practice for next year before the deal takes place. As a first step, what is
the implied valuation of the company today?
Product
2022F
Revenue
$20M
Costs
$16M
Additional Information (Provide Upon Request)
●
●
●
●
WACC = 13%
Growth Rate= 3%
Taxe Rate = 20%
Assume 0 depreciation, debt, or investment in CapEx
Eye Can See Clearly Now - Math
Answer
Product
2022F
Revenue
$20M
Value = FCF / (WACC-g)
Costs
$16M
Valuation = 32M
Operating Profit
$4M
PE stake at 50% is worth $16M.
Taxes (20%)
$0.8M
Net Profit*
$3.2M
The firm is investing $15M to get $16M, which is a
return of (1/15) ~7%. This return is less than the
WACC, indicating a poor investment.
Calculations:
*Note that net profit is equivalent to FCF because we assume no depreciation or capital expenditure
Eye Can See Clearly Now - Brainstorming
Question 2: If the PE firm acquired a stake in Dr. Kelso’s practice, how could they increase the
value of the company?
Answer
Candidate should brainstorm at least 4-5 revenue drivers, cost drivers, and synergies
A. Revenue Synergies
● Increase reimbursement rates via greater market power
● Increase volume via combination with referrals
● Increase collection rate via better business management
B. Cost Synergies
● Decrease practice management costs through scale with other assets in portfolio
Eye Can See Clearly Now - Math
Question 3: After initial research the PE firm believes they can improve revenue by 5% via
improved pricing and collections. In addition, through cost synergies, they believe they can reduce
practice management costs by $1M. What would the PE client’s stake be worth with these
changes?
Answer
Revenue
Revenue = 1.05 * $20M = $21M; Costs = $16M - $1M = $15M
Operating
Profit
Operating Profit = $6M; Taxes = $1.2M
Net Profit
$4.8M; Valuation = $48M. PE stake = $24M
Takeaway
The return on investment is (9/15) =60%, greater than WACC, implying a good investment
Additional
Insights
An outstanding candidate would also perform a sensitivity analysis: say, if volume declines by
~10% from $21M in revenue to $19M in revenue (due to increase in prices), then the value of
the business declines to just $32M, the PE firm’s stake drops to $16M (equal to previous stake),
and the PE firm would earn a return less than WACC (bad investment)
Eye Can See Clearly Now - Brainstorming
Question 4: Today, Dr. Kelso and 3 other doctor partners are equity owners in the business. They
are only paid their share of the profits. They do not take a salary. How would compensation for Dr.
Kelso and his 3 partners change after the deal? How do you think this would impact patient
volume? Assume the firm can realize the synergies indicated in the previous question
Answer
Current Setup
Dr. Kelso and partners receive no salary; compensation today (pre-deal) = Net profits of the
business, $3.2M
New Setup
After the deal, with $4.8M net profit, the partners receive a $15M payout from the PE firm for
50% of their stake, and 50% of the profit stream, or $2.4M per year
How does this
affect
motivation?
As 50% equity owners, the doctors have less incentive to work hard. They only get 50% of
incremental profits from their efforts
How will this
affect volume?
Given this incentive change, we would expect patient volume to go down, and after receiving
a $15M payout, even less incentive to work hard (They’ll have new ski houses to enjoy!)
Takeaway
Given the reduced profit, doctors’ incentive decreases, which drives down patient volume, and
reduction of volume leads to the value of the business decreasing.
Eye Can See Clearly Now - Brainstorm
Question 5 (Time Permitting): How can the deal be changed to make sure we keep current
volume growth at 3%?
Answer
●
●
●
Incentive-based salaries / bonus tied to volume
Vest the payout over multiple years and make it conditional on patient volume
Hire new doctors/other staff to improve leverage per doctor
Question 6 (Time Permitting): The client determines that they need to pay $0.6M in
performance-based compensation to Dr. Kelso and his partners to keep them sufficiently
incentivized and continue to grow volume. With this change, what would the value of the PE
firm’s stake be?
Answer
Operating profit = $5.4M, or $0.6M lower
Taxes = $1.08M; Net Profit = $4.3M (ok to round);
Valuation = $43M; PE stake = 21.5M; ROI = 43% (still greater than WACC)
Eye Can See Clearly Now - Recommendation
Please make a recommendation for our client.
Recommendation
Candidate can make an argument either way, but provided below is a recommendation to invest
Sample
Arguments
● Strong ROI of 60% with synergies
● Good ways exist to de-risk effort dis-incentives
Sample Risks
● Synergies may not get realized
● Incentive programs a drag on bottom line
Sample Next
Steps
● Explore which incentive structures will be the most effective and is agreeable to the
doctors
Case 17: To Bid, Or Not To Bid
Case Type: Market Entry
Difficulty Level: Medium to Hard
Format: Interviewer-Led
Industry: Retail
To Bid, Or Not To Bid - Prompt
Problem Statement
A PE fund is thinking about acquiring a clothes retail specialist which is a leader in the French
market. The French clothing retail market is composed of 2 segments:
1. Urban: trendy, high quality, quite expensive
2. Suburban: mass market, lower quality, low prices
The PE fund has hired us to help them assess whether this opportunity is worth bidding for.
Additional Information (Provide Upon Request)
●
●
The Client has no specific financial target or timeline
The target has total annual sales of $800M across 800 stores. It consists of 4 brands on each
of the urban and suburban market segments
To Bid, Or Not To Bid - Structure
Framework
Problem Statement
1. Market
2. Target
3. The Deal
A. Industry
A. Quantitative
A. Synergies
●
●
●
●
● Revenue models
● Key financials/specific assets
● Cost structure
● Revenue synergies
● Cost synergies
● Operational synergies
B. Qualitative
● Competitive advantage
● Capabilities & resources
● Management structure/culture
● Expertise & knowledge
B. Risks
● Implementation
● Regulation-trust
● External factors
● Management culture clash
Market size & growth
French clothing retail trends
Market segment characteristics
Competitive landscape
B. Market Drivers
● Buyer & supplier powers
● New entrants & substitutes
● Distribution channels
Interviewer Notes:
- An ideal candidate should be able to come up with a framework that is appropriate for assessing a clothing retail company, and be
able to ask relevant questions in each aspect to evaluate the target properly
- It’s important to consider the synergies and risks of a deal even if the target is financially attractive. There could be potential
problems down the road if the deal does not fit well with the PE fund
To Bid, Or Not To Bid - Brainstorming
Question 1: The market is flat in value over the last 5 years (~$25B), but volumes have been
growing over the same period (~2% per year). What could explain this?
Answer
The only reason that can explain this situation is a decrease in price that offsets that increase in
volume. Below are possible drivers of price reduction.
1. Customers
2. Competition
3. Supply Chain
Customers are looking for lower
price and promotions
● New competitors in the
market are driving down the
price
● Competitors are achieving
price parity by pricing similar
products similarly
Decrease in landed cost
achieved through outsourcing to
lower cost base countries,
decrease in raw material costs
To Bid, Or Not To Bid - Math
Question 2: An important metric in retail is floor space, specifically “sales/sq feet”. For one given
brand, we have:
●
●
15 suburban stores - average size of 1600 sq ft and average profitability of $1,500 per sq ft
20 urban stores - average size of 800 sq ft and average profitability of $2,750 per sq ft
What is the total annual sales for this brand? Additionally, what is the average profitability (in terms
of sales/sq feet) for the brand?
Answer
Suburban segment: 1,600 * $1,500 * 15 = $36M
Urban segment: 800 * $2,750 * 20 = $44M
Total annual sale = $80M
Average profitability = Total sales / Total Size = $80M / (15*1600+20*800) sq ft = $2,000 / sq ft
To Bid, Or Not To Bid - Exhibit
Question 3: The PE fund looked into the target company’s investment plan over the last few years
(see exhibit A). Overall operating margin kept decreasing over the past years and the PE fund is
worried about that. Is the fund right to worry about it? Why or why not?
To Bid, Or Not To Bid - Exhibit
Additional
Information
(Provide Upon Request)
Additional Information
to be provided
upon request:
●
●
●
All stores are similar
No cannibalization or coordination diminishing returns
Opening new stores impact mainly fixed costs
Answer
●
There is little need to worry
●
●
●
There is a “ramp up” in the first few years, with increasing brand awareness and operating margin
Brand reached full potential at an average operating margin of 25%
Average margin will tend to decrease as the brand continues to expand, since the footprint will be a
mix of matured stores and new stores
Opening new stores is financially expensive and will impact average operating margin in the
beginning as the store goes through a ramp up period
The fund should also look at individual store operating margin to ensure mature stores are
maintaining healthy operating margins
●
●
To Bid, Or Not To Bid - Brainstorming
Question 4: If there were 3 additional stores in year 7 and 2 additional stores in year 8, what do you
expect to happen to the overall operating margin?
Answer
●
●
The total margin should increase as the expansion slows down and more existing stores would reach
their mature state. The overall impact of opening new stores on total operating margin should
decrease
An ideal candidate should be able to draw on this question to identify the conclusion and implication.
Candidate should state that if the target’s total operating margin increased after year 7 and 8, then the
fund should not worry as the decrease in total operating margin in previous years was due to rapid
expansion
To Bid, Or Not To Bid - Recommendation
Recommendation
Please make a recommendation for our client.
Recommendation
Yes, the client should continue to look into this deal
● Despite the total market being flat, the business volume is increasing. The decrease in
price may drive the less competitive players out
● During this time, the target seems to have maintained a healthy margin and the interim
drop in margin was due to the rapid expansion
● It looks like there is still room for further expansion until the market becomes saturated
Risks
● This is a competitive and rapidly changing market that the client still doesn’t know very
much about and does not have the requisite expertise in
● The target company’s margin while healthy, is still fairly low even when the new stores
reach full potential
Next Steps
● Conduct a market competitive analysis to understand how other competitors are playing
in the market
● Analyze target company’s organizational structure and culture to evaluate
management/portfolio fit
To Bid, Or Not To Bid - Exhibit A
Target’s Investment Plan
Case 18: Cents and Sensibility
Case Type: Profitability
Difficulty Level: Hard
Format: Interviewee-Led
Industry: Government
Cents and Sensibility - Prompt
Problem Statement
The city of Philadelphia is planning to sell the rights to all of its parking meters for 20 years to a
private company. The idea is that in exchange for a lump sum, the city of Philadelphia would turn
over the operation and revenue stream of its 40,000 parking spaces to a private operator. The deal
will bring in a big amount of cash for a cash-strapped city and relieve it of the responsibility of
maintaining meters – something it isn’t very good at. The city is planning to use a competitive
bidding process with the highest bidder winning the contract. Additionally, the contract also requires
a high-tech upgrade replacing the old coin-based meters with new machines that accept cash, cards
and digital NFC payments, which is a service enhancement that should be incorporated in the bid.
Your consulting firm has been hired by the company Parking GenNext to give a reasonable price to
win the competitive bid, and help estimate whether the ROI is attractive. How would you go about
estimating it?
Motivation for the case: In 2008, Chicago, trying to balance its budget, sold the rights to all of its parking meters for
75 years to Morgan Stanley for $1.15 billion. The bank has recouped its investment as of 2023, with 60 years left.
Cents and Sensibility - Structure
Additional Information (Provide Upon Request)
Proceeds from collections: Company keeps all proceeds from parking meter collections for 20
years after buying rights for the lump sum amount
Parking space tiers, pricing, number of spaces: Difference currently by regions, data to follow
Prior experience for Parking GenNext: No prior experience in PA, but run similar operations in
Chicago
Bidding rivals: Rivals expected, but not our primary concern
Expected ROI: Parking GenNext would like to make $2 B net profit from this deal over 20 years
Framework
1. Revenue
● Pricing by region
● # Parking spaces
● Occupancy rates
● Potential ways to
increase revenue flows
2. Expenses
3. Deal specifics
4. Risks and Capabilities
● Cost of new meters
● Bid price
● Execution bandwidth
● Meter maintenance cost
● Labor costs
● Potential ways to reduce
expense flows
● Non-financial
considerations for deal
● Potential competition
for auction
● Managerial capabilities
● Demand trend shifts to
more cabs or public
transportation
Cents and Sensibility - Math
Question 1: How much revenue would the parking spaces generate over the next 20 years?
(Provide Exhibit A)
Answer
Region
# Spaces
Usage (Hrs/day)
Price ($)
Annual Revenue* ($)
Rittenhouse Square
10,000
12
3
~130 M
Center City
14,000
5
2
~50 M
Rest of Philadelphia
16,000
7
1
~40 M
Annual Revenue from parking spaces
~220 M
Revenue over 20-years from parking spaces
~4,400 M
Allow reasonable approximations as long as candidate arrives close to $4.4B. While candidates can propose
discounting future cash flow to present value, inform them that discount rate is zero
* Annual Revenue = # Spaces * Daily usage * Price * 30 days * 12 months
Cents and Sensibility - Math
Question 2: How much would setting up and operating the parking spaces cost over the next 20
years?
Answer
Tell candidate to assume lifetime of new parking meter is 20 years. Provide hints and probe for inputs, eg: “what are
the costs involved with setting up and running parking meters”, “from what you’ve seen your city, what is the ratio of
number of parking spaces per parking meter”... Once candidate has identified correct levers, provide
information in bold to arrive at the right cost.
Fixed costs:
New parking meters with new payment features. 1 meter covers 8 spaces. Meters required = 40,000/8 = 5,000
Each meter costs $200K. Therefore, total fixed costs = 40,000/8 * 200,000 = $1 B
Variable costs:
-
Monthly maintenance cost per meter = $500 => Total maintenance cost = 500 * 5000 * 12 * 20 = $0.6 B
Labor costs = Number of employees (500, 1 per 10 meters) * Annual Wages (40,000) * 20 = $0.4 B
Total costs over 20 years = Fixed costs ($1 B) + Variable costs ($1 B) = $2 B
Cents and Sensibility - Brainstorming
Question 3: Parking GenNext’s government liaisons inform you that $1.5 B would be a winning bid
in the auction. At that purchase price, would the firm meet its ROI requirements?
If candidate answers affirmatively, probe the reasoning, otherwise ask for ways to increase revenue
or decrease costs to meet Net Profit requirements.
Answer
Revenues over 20 years = $4.4 B; Costs over 20 years = $2 B; Purchase price = $1.5 B
Net Profit = $0.9 B [Short of $2 B ROI requirement by $1.1B]
Probe candidate to brainstorm ways to bridge $1.1 B gap. Potential answers include price
adjustment, increasing meter coverage to require fewer meters, using meters as advertising spaces,
etc.
Once candidate mentions price adjustment, ask for potential impact of increasing price (answers
include public backlash, lower utilization, and more). Then provide Exhibit B.
Cents and Sensibility - Math
Question 4: Which pricing plans should each of the regions be assigned?
Optional question (if time is available): Once candidate answers question around pricing plans,
ask if there are any benefits to having lower utilization
Answer
The best pricing plan for each region would be the one yielding the highest multiple of Price and
Usage. Therefore, Rittenhouse Square - Plan B, Center City - Plan A or B, Rest of Philadelphia Plan A or B.
New annual revenue (ballpark numbers acceptable):
Rittenhouse Square: 10,000 * 6 * 7 * 30 * 12 = ~$151 M
Center City: 14,000 * 4 * 3 * 30 * 12 = ~$60 M
Rest of Philadelphia: 16,000 * 3 * 4 * 30 * 12 = ~$69 M
Revenue increase over 20 years = ($280 M - $220 M) * 20 = $1.2 B => ROI requirements are met!
(Optional): Lower utilization could allow cost reduction (eg: eliminating need for 5,000 parking
meters by consolidating regions where demand drop is expected or by increasing staff coverage)
Cents and Sensibility - Recommendation
Question 5: Please present our findings and recommendation to the client.
Recommendation
Yes, the client should purchase the rights to operate Philadelphia’s Parking Meters for the
next 20 years at the bid price of $1.5 B. Upon purchase, the client should incorporate
changes to new pricing plans in order to meet ROI requirements of $2 B over 20 years.
Recommendation
Risks
Next Steps
Alternative recommendation: No, the client should not purchase the rights to operate
Philadelphia’s Parking Meters for the next 20 years at the bid price of $1.5 B. The ROI
requirements would only be met by an aggressive price increase which might not play out
as expected.
● Public backlash
● Price sensitivity analysis not accurate
● Government intervention on pricing change
● Pressure test sensitivity analysis
● Explore alternate ways to increase revenues and decrease costs
Cents and Sensibility - Exhibit A
Number, daily usage, and price of parking spaces by region
Parking space region
Price ($ per hour)
Rittenhouse Square
3
Center City
2
Rest of Philadelphia
1
Note: Assume no growth in # meters or change in
pricing or usage over the 20-year period
Cents and Sensibility - Exhibit B
Price sensitivity analysis for parking spaces
Existing Pricing
Plan
Plan A
Plan B
Plan C
Region
Price
($)
Usage
(Hrs/Day)
Price
($)
Usage
(Hrs/Day)
Price
($)
Usage
(Hrs/Day)
Price
($)
Usage
(Hrs/Day)
Rittenhouse
Square
3
12
5
8
6
7
7
5
Center City
2
5
3
4
4
3
5
2
Rest of
Philadelphia
1
7
2
6
3
4
4
2
Note: Each parking space region will have its own pricing plan, ie - Region 1 could have Plan A, Region 2 could
have Plan B and Region 3 could have Plan C at the same time
Appendix
Case Math Drills
Problem Set 1
1.
You're considering a upfront $5 million investment to switch to an alternative product B that will
bring in additional $2 millions in revenue but cost $750K more than the current product A to
produce. What is the payback period for this investment?
2.
A competitor brand sells product for $8 with a $6 margin. Our product sell for $12 and our unit
cost is $4. By what dollar value do we need to cut costs to have the same percentage profit
margin as our competitors?
3.
A new hybrid can travel 50% more miles per gallon (MPG) in comparison to the original car
which travels 10 MPG. What is the annual cost saving if the owner on average drives 12,000
miles and fuel costs average $3.00/gallon
4.
A microwave costs $100 to produce. The producer made a total profit of $6 million by selling
microwaves. If the markup percentage is 20%, how many microwaves did the producer sell?
5.
A company with revenue of $99 million is operating at a loss that is equivalent to 10% of its
costs. By how much does cost need to decrease so that 10% of its costs are profits?
Problem Set 2
1.
2.
A Private Equity (PE) fund is considering a $100M investment in a company expected to generate
profits of $10M in the first year. The fund typically invests keeping a return of 12% in target. Is this a
feasible investment for the company?
A multiplex is planning to launch a line of casual clothing with a store in its complex. The expectation
is that the store footfall should increase by $200,000 annually. Based on the following data, should
the multiplex continue with their launch plan? To estimate the actual footfall increase, the multiplex
hired a market research company which generated the following results:
Possible increase in
attendance
Annual revenue ($)
Probability
3%
135,000
20%
5%
225,000
40%
7%
315,000
30%
9%
405,000
10%
Problem Set 2
3.
A burger company sells 30,000 burgers per year with price of each being $3. The company
makes a margin of 50% on burgers and is planning to also stock donuts in its stores now. It
expects to sell 50,000 donuts each at a price of $2 and a 60% margin. It is expected that 10%
fewer burgers will now be sold as customers might switch from consuming burgers to donuts.
Should the burger company go ahead with selling donuts?
4.
Our client is expecting to spent $300,000 on internet marketing for their new album in CD
format. The cost of manufacturing the CD is $2/CD, distribution is $3/CD and royalty to the
band are expected to be $3/CD. Each CD sells for $12. How many CDs do our client need to
sell to break even on its investment?
Answers - Problem Set 1
1.
Profit: $2M (Revenue) - $750K (Cost) = $1.25 M
Payback period: $5M/$1.25M = 4 years
2.
Competitor margin = $6/$8 = 0.75
Our new margin = 0.75*$12 = $9
Our new cost = $12 - $9 = $3
We need to cut cost by $1 to be competitive
3.
Original fuel cost = 12,000 miles/10 MPG*$3 = $3,600
New fuel cost = $3,600*(10/15) = $2,400
Annual fuel savings = $3,600 - $2,400 = $1,200
4.
Unit selling price price = 120% *$100 = $120
Unit sold = $6 million / $120 = 50,000
5.
We know that Operating cost - 99 = 10% * (Operating cost)
This means, Operating costs = 110M
New Profit: 99 - Operating costs = 10% * (Operating cost)
New Operating costs = 90M
Operating cost reduction =20M
Answers - Problem Set 2
1.
To make this decision, the fund needs to calculate ROIC - Return on Invested Capital
ROIC = Return / Invested Capital
In this example, ROIC = $10M/$100M = 10% which is less than the target 12%. Hence the fund
should not invest in this company basis ROIC
2.
To make this decision, we would need to calculate the expected value of the revenue increase. If
expected value > target ($200,000) investing in the new business line makes sense
Expected value = Sum of expected value of individual cases
Expected value = 20%*$135,000 + 40%*$225,000 + 30%*$315,000 + 10%*$405,000 = $252,000
which is greater than the target $200,000, hence investment can be considered
Answers - Problem Set 2
3.
One product eating into other product’s sales is called cannibalization, 10% in this example
To make this decision, we should calculate the net impact on burger company’s profitability
Current earnings by selling burgers = 30,000 * $3 * 50% = $45,000
Expected earnings by selling donuts = 50,000 * $2 * 60% = $60,000
Expected loss in burger sales due to cannibalization = 10% * $45,000 = $4,500
Since $60,000 > $4,500, the burger company can consider stocking donuts
4.
We need to calculate break-even volume here
Breakeven volume = Investment / (Profit per unit)
Profit per unit (also known as Contribution Margin) = $12 - ($2 + $3 + $3) = $4
Breakeven volume = $300,000 / $4 = 75,000 CDs
Chart Drills
Practice Problem 1
Prompt: Your client is a chemical company, ChemCo. Revenue for one of their segments has been
growing at 3-5% per annum for the last few years. The CEO is unhappy with this and wants to
achieve 10% growth in revenue in the next year. You have been hired to help bridge this gap and
achieve this target. What are some implications from this Exhibit?
Answer - Practice Problem 1
●
●
●
●
Total revenue per category has a strong correlation with R&D spend per category
ChemCo has the lowest R&D spend among competitors
Revenue growth can be achieved by increasing R&D spend
It is important not to just chase revenue growth, but grow profitably and sustainably. ChemCo
should also anaylse its operating margins to decide how much to increase R&D spend
Practice Problem 2
Prompt: The CEO of Fire Proof Inc. wants to find new ways to diversify her revenue. Currently, Fire
Proof only sells fire resistant jackets, gloves, hard-hats, and tools to government sponsored fire
departments nationwide. The CEO believes the company can expand their operations to make
equipment for other industries. Which type of equipment would you recommend they look into?
Source: Darden Casebook
Answer - Practice Problem 2
●
●
●
Riot shields is an attractive segment with significant overlap, high growth rates and not too
crowded a market
Bullet proof vests and weapon holsters are reasonable options too. The crowded market
landscape makes it difficult to gain significant market share and hence reduces attractiveness
Officer uniforms should be avoided as it is a declining market
Practice Problem 3
Prompt: Our client is a large national health care payer exploring the launch of a new disease
management program. The idea is to hire and train a team of “health coaches” to specialize in a
single disease area (heart disease, diabetes, etc.). Studies show that once a month contact with
each patient reduces health spending by 5%, on average. Using Exhibit 1, discuss which segments
and disease areas are most important to explore.
Answer - Practice Problem 3
●
●
●
The 65+ segment, while not a major part of the population, should be targeted as they
presumably use healthcare most frequently. Significant health care spending reduction can
happen in this segment
Diabetics is the key ailment in this group, which should be targeted, followed by chronic pain
The group segment is the largest part of the population. Further information is needed on how
much they spend on healthcare before deciding to target them.
Practice Problem 4
Prompt: Where should our client focus their efforts on in order to improve ROE moving forward?
Answer - Practice Problem 4
●
●
●
Operating inefficiencies are biggest drivers of low ROE and should be targeted first
These are closely followed by margin deterioration
ROE is higher in 2056 partly due to “Fines and other” group, which presumably is not linked to
core operations and may not recur in the future. Operational concerns are hence more dire
than they appear.
Brainstorm Drills
Brainstorm Exercises
1.
You are nearly finished with a case for a shaving company that sells its products
to younger men. Profits are down due to lower sales: all products are type of
men’s razors sold in retail stores nationally. How would you go about improving
sales?
2.
You are helping a movie theater solve their declining profitability problem. After
analyzing some financial data, you realize that the declining profitability is driven
mainly out of dwindling revenue. What are some ways your client can improve
revenue?
3.
You client is a PE firm looking to invest in an Airforce and Defense company that
manufactures military grade helicopters. Based on the analysis so far, this seems
like a good opportunity for your client, but the client wants to better understand
additional growth potential of this target company. What are other potential
avenues the Airforce and Defense company should consider to sell helicopters?
227
Answer Q1
1.
Marketing of Current Products
a. Social media (influencers)
b. Free samples
c. Billboards
2.
Launching New Products
a. Women’s razors
b. Products targeting older men
c. Different sizes products (travel pack)
d. Shaving cream, soap, other complements
3.
Exploring new channels for new and existing products
a. E-commerce (Amazon)
b. Hotels
c. Specialty stores/ Salons
Answer Q2
1.
Improving pricing of current products
a.
b.
c.
2.
Increasing volume of current products
a.
b.
c.
3.
Tier pricing for different movies and days
Tier pricing for different seat options in the theater
Offer monthly movie pass and loyalty program
Secure free marketing through movie production companies
Partner with online ticket vendors (ex: Fandango)
Partner with credit card companies (ex:opening early access)
Exploring other revenue streams (new products)
a.
b.
c.
d.
Offer more food and beverage options
Rent out movie theaters for events
Sell movie merchandise in the theater
Cultural and management alignment
Answer Q3
1.
Public Sector
a.
b.
c.
2.
Private Sector
a.
b.
c.
d.
3.
Other US federal departments: coastguards, homeland security
Other state governments: state police, fire department
Non-US avenues: armed forces of overseas governments
Oilfield Services
Leisure and Travel (private tours & transportation)
Media companies/News channels
Shipping packages (UPS, FedEx, Amazon deliveries)
Non-profit sector
a.
b.
Emergency medical services
Transport supplies for disaster relief
Sample Behavioral Interview Questions
Individual Contribution
1.
Tell me about your proudest accomplishment
2.
How would you describe your top 2 strengths and top 2 weaknesses?
3.
Tell me about a time you set an ambitious goal, and what did you do to achieve it?
4.
What is the biggest asset you can bring to your project team?
5.
What makes you a good fit for consulting?
Managing Teams / Leadership
1.
Tell me about a time when you made an unpopular decision
2.
Tell me about a time when you managed a difficult team member or client
3.
What is an example of a time when you led a team through a difficult situation?
4.
Tell me about a time when you had to provide someone negative feedback
5.
Tell me about a time when you lead a team where there were a lot of differing opinions
Persuasion / Influence
1.
Describe a time you had to convince someone who had an opposing viewpoint
2.
Tell me about a time you had a disagreement with your manager
3.
How do you convince others to change their viewpoint?
4.
Tell me about a time when you had to get buy-in from stakeholders
5.
Tell me about a time you had to influence someone over whom you did not have formal authority
Analytics / Problem Solving
1.
What is an example of a project that you worked on that was highly analytical?
2.
Tell me about a time when you used data and analytics to solve a problem
3.
Tell me about a time when you had to simplify technical data
4.
Tell me about a time when you used data to drive a conclusion.
5.
Describe an example of when you had to work on a technical project with someone who did not have
analytical skills. How did you manage the interactions?
Challenge / Failure
1.
Tell me about a time when you had to overcome an obstacle
2.
Tell me about a time when you were wrong and someone had to convince you
3.
Tell me about a time when you had to navigate a difficult situation under time pressure
4.
Tell me about a time you didn’t succeed as a leader
5.
Tell me about a time when you failed to meet a deadline or goal
Teamwork / Collaboration
1.
Tell me about a time when you had to work with people from different backgrounds
2.
Tell me about the usual role you play in a team
3.
How have you dealt with differences in a team?
4.
Tell me about a time when you had to work with a teammate whom you clashed with
5.
Tell me about a time when you were in a difficult teamwork situation. How did you respond?