IIM A Casebook

IIM A
Case Book
2019-20
1
Issue details and copyright
Casebook, Consult Club, 6/e
©2014 by Consult Club

All rights reserved.
Notice
No part of this publication may be reproduced or transmitted in any form or by any means – electronic or mechanical,
including photocopy, recording or any information storage and retrieval system – without permission in writing from the
Consult Club, IIM Ahmedabad.
First edition: July 2014

Second edition: August 2015
Third edition: September 2016
Fourth edition: September 2017
Fifth edition: September 2018
Sixth edition: August 2019
2
What is this year’s IIMA Casebook all about?
Foreword
Building on the first 5 editions of IIMA Case Book, the Consult Club of IIM Ahmedabad is proud to present the 6th edition of
the IIMA Case Book. Leveraging feedback from alumni and the student community the Case Book aims to give the reader a
comprehensive view of the type of cases that form a major part of consulting interviews. This Case Book brings an extensive
range of completely new cases and guestimates, along with a wide range of previous discussed and explored cases. Throughout
the Case Book, we have tried to ensure enhanced readability while retaining the comprehensiveness of the cases.
This document is organically built over many years through efforts of students engaging with global content.While utmost care
has been taken to keep the content unique, a lot of problems look similar to each other. Similarly, the frameworks look
essentially similar for most people. Any resemblance of a case here to any problem elsewhere is pure coincidental and
regretted. Kindly let Consult Club, IIMA know (message us on LinkedIn) in such a situation.
Therefore, we have a heartfelt gratitude for stalwarts of the field like Victor Cheng and all casebook writers and compilers
before us everywhere in the world. We are putting this Casebook in public domain hoping that this fuels creativity and brings
the reader one step closer to their goals.
How to make the most of it?

While reading this Case Book, we would suggest the reader should use the interview transcripts to set up a case between 2
people (or groups), and after solving the case, the solution process sheet should be looked into to gain a broader understanding
of the approach and areas of improvement.
The frameworks are there to give a direction initially to new case-solvers and should not be treated as a fixed boundary, but
could be utilized by the reader to cover any case which comes up their way according to their own logical structure. Also, the
reader should leverage the recommendations, tips, and suggestions to apply learnings from one case to another.
Remember, journey is as important as the destination. Case preparation is a group exercise with individual self-preparation as
well.
Enjoy the process of preparation and let’s crack the case!
-Aaditya Agarwal (Coordinator, Consult Club, 2019-20)
(C) Consult Club, IIM Ahmedabad 2019-20 Page 3

Acknowledgements
We are grateful to all the people that have helped by sharing their cases and interview experiences, that has enable us to put
together a comprehensive preparation resource for the future batches.
We would like to thank Aditya Daga, Arpit Lahoty, Chhavi Gupta and Sankalp Agarwal (PGP 2018-20) for leading the Case Book
initiative and putting together this edition of the IIMA Case Book. We would also like to acknowledge the efforts of Kannan
Adlakha, Kshitij Jain, Shubham Agrawal, Vineet Mall and Yash Goyal (PGP 2019-21) for helping the Club put together this case
book. They have ensured breadth and depth in the cases to give the reader a comprehensive view of the kind of cases they may
be administered.
We are also grateful to the alumni of the Consult Club, IIM Ahmedabad for their feedback on the cases which has helped us
further enhance the overall quality of the book. We would also like to extend a special acknowledgement to the contributors of
the previous editions of the IIMA Case Book.
Copyright © 2014
Consult Club, IIM Ahmedabad
Vastrapur, Ahmedabad 380015

Table of contents (1/2)
Particulars Difficulty Page Particulars Difficulty Page
level level
Structure of case interview, approach 7 C. Market entry 56
Cases 10 Overview / Framework 57
A. Profitability 11 21. Retail bank portfolio management Easy 59
Overview / Framework 12 22. HBS Satellite campus Easy 61
1. Beer manufacturer (Cost reduction) Easy 14 23. Magazine publisher Easy 63
2. Retail bank (Cost reduction) Moderate 16 24. Insurance company Moderate 65
3. Lease fee (Cost reduction) Moderate 18 25. Electric buses Moderate 67
4. Cement company (Cost reduction) Moderate 20 26. Kids entertainment channel Moderate 69
5. Auto insurance (Cost reduction) Moderate 22 27. Retirement benefits policy Challenging 71
6. Banking (Cost reduction) Challenging 24 28. Anti-smoking pills Challenging 73
7. Telecom billing process (Cost reduction) Challenging 26 D. Growth strategy 75
8. Oncology firm (Revenue decline) Easy 28 Overview / Framework 76
9. Urea manufacturer (Revenue decline) Easy 30 29. Ice cream vendor Easy 78
10. Oil distributor (Revenue decline) Moderate 32 30. Pharma company Easy 80
11. Washing machine firm (Revenue decline) Moderate 34 31. Chemicals manufacturer Easy 82
12. Tractor company (Revenue decline) Moderate 36 32. B2B communications provider Moderate 84
13. Fishing company (Revenue decline) Moderate 38 33. Apparel manufacturer Moderate 86
14. Banking (Revenue decline) Moderate 40 34. E-commerce Challenging 88
15. Alcohol company (Revenue decline) Challenging 42 35. Software product company Challenging 90
16. Airline operator Moderate 44 37. Midstream oil & gas company Challenging 92
17. Spicejet vs Indigo Challenging 46 E. Due diligence 94
B. Pricing 48 38. Chain of colleges Moderate 95
Overview / Framework 49 39. Movie theatre Challenging 97
18. Helicopter service Moderate 50 F. Data-intensive cases 100
19. Light bulb Moderate 52 40. Business expansion (Telecom video project) Challenging 101
20. Residential complex Moderate 54 41. Profitability (Telecom) Challenging 103

Table of contents (2/2)
Particulars Difficulty Page Particulars Difficulty Page
level level
42. M&A: Strategic target assessment Challenging 105 11. Barbed wire 143
G. Unconventional cases 107 12. Bank branch revenue 144
43. Loss in a football match Easy 108 13. Post office revenue 145
44. Increased processing time Moderate 110 14. Golf balls in the air 146
45. ‘Go Green’ strategy Moderate 112 15. X-ray machines in India 147
46. Operations strategy Moderate 114 Appendices 148
47. Declining website traffic Moderate 116 1. Framework glossary 149
48. Reducing turnaround time Moderate 118 2. Datasheets 152
49. Risks of oil transportation company Moderate 120 3. Sample evaluation metrics 154
50. Variable pay structure Moderate 122
51. Horizontal integration in e-commerce Challenging 124
52. Threat of new entrant Challenging 126
53. Drug pricing Challenging 128
54. Declining response in a competition Challenging 130
55. Strategic fit / Merger feasibility Challenging 131
Guesstimates 132
1. Gold Flakes cigarettes 133
2. Crows in Ahmedabad 134
3. Revenue of a multiplex 135
4. Revenue of a coffin maker 136
5. Electricity consumption 137
6. Gujarat tourism 138
7. Mobile data 139
8. Revenue of airport 140
9. IPL team 141
10. Mails at IIMA 142

Structure of a consulting interview
Interviews usually test the candidates on both or any of the following criteria:
• Personality/behavioural questions (through HRQ)
• Problem solving (through cases and/or guesstimates)
Personality / behavioural (through HRQs)

Candidates are strongly advised to be prepared for any kind of question that may pop-up from the information mentioned in their CVs,
particularly past work experience, internships or projects, besides the most famous questions like what are your strengths and weaknesses, why
consulting, why this particular firm.
Problem solving (Case interviews)

• Expectations
Case interviews are used as a means to measure candidates’ ability to assess an unfamiliar situation, uncover relevant and minute details while
applying their thought process to come up with one or more possible solutions to the problem, and finally communicating their
recommendations in a structured manner.
• Approach
The basic approach to solving a case interview is: First, understanding the problem and requirements, then identifying a structure that would
help one solve the problem, then analysing the information available and finally, reaching a conclusion & giving recommendations
Clarify Structure Analyse Conclude

How to approach a case interview
Understand & clarify the problem statement
• Candidates must be absolutely sure that they have clearly understood the problem statement, a mistake committed here has the biggest potential to ruin the
entire interview.
• Ask clarifying questions in the beginning; someone who asks the right questions is better able to understand the complete problem and has a higher chance to
come up with an accurate solution.
• It is not unusual for the interviewer to not divulge all the relevant information at once because they also try to test the candidates on their ability to extract
information; the obvious purpose is to see how well the candidate may be able to do the same while interacting with clients.
• Do not make any assumptions unless necessary; if a candidate wishes to do, then its always better to communicate with the interviewer to get them validated
Structure the problem

• This involves putting all the data received together and making a sense out of it. The A4 sheet technique is very helpful for this, however, candidates may use
their own methods according to comfort level.
• Candidates should try to keep their structure as simple as possible because in some cases, the interviewer may ask for the working sheet, and accordingly should
be able to understand the approach followed by just glancing at the sheet at once.
• Frameworks can be used for in structuring of data; however, do not try to force fit any framework just for the sake of using it. Also, whenever a framework is
used, the candidates should communicate their approach of reaching the solution to the interviewer rather than saying that “I’m using market entry framework”.
Analyse the case

• This is the main stage of the problem-solving process wherein the candidates are required to draw inferences from the gathered information. The process is
aided by the structure they decide to follow using the chosen framework, if any.
• Candidates should ask two questions to themselves: a) How did this data point look like earlier for us?, and b) How does this data point look like for the
competitors?
• It is suggested that candidates develop a hypothesis consisting of various possible solutions, ask leading questions to validate their hypothesis, and keep on
narrowing their set based on the discussion. The candidate should continuously communicate with the interviewer to let them know of one’s thought process.
More often than not, the interviewers will help the candidate get back on track if they see that the person is thinking in the wrong direction.
• In case the candidate realizes that some data is still missing, do not hesitate to ask questions to extract it from the interviewer. No one will provide the
information on their own but will surely help if well-directed questions are asked.
Arrive at a conclusion
• This is the last stage of problem-solving and perhaps the determinant of a candidate’s success in getting through the interview. All efforts put in thus far are of
little use if the candidate is unable to come up with a proper conclusion backed by a logical implementation plan.
• Try to ensure that the recommendations are close to reality since it increases their chances of being implementable in real life scenarios. Remember, concrete
solutions fetch more marks than broad vague answers.
• Before finally communicating the solution, do a quick “sanity check”, that is, evaluate if the proposed solution, particularly if its quantitative in nature, makes
sense or not. This can be done by using bottom-up strategy if the original answer was derived following top-down approach or vice-a-versa.

Some Do’s & Don’ts for the interviews
Do’s
• Build rapport: It plays a crucial role in how the interview pans out eventually. The opening interaction, continuous communication and patient-listening skills
contribute in building rapport and thus, strengthening the candidature from the communication aspect of the interview.
• Be Confident: Remain confident throughout the interview even if there’s a feeling that things aren’t going as expected. This exhibits an important trait of being
able to maintain composure and handle critical situations, which are part and parcel of a consultant’s life. Also, it has been seen that the interviewers more likely
than not drop hints to help the candidate get back on track, hence, watch out for those in case there’s a feeling of getting stuck
• Drive the interview towards your strong zone: The candidates can try to drive the interview towards the areas they are comfortable talking on. This can be
done by using examples related to their domain area while answering the questions put forward by the interviewers. However, be mindful of not making it an
irrelevant reference or overdoing it if the interviewer isn’t interested in talking about that.
• Positive body-language: Try to be positive and cheerful throughout the interaction as it may help to cover a small mistake, if any, the candidate might have
committed while solving the case. Further, candidates are evaluated on their overall presentation, that includes body language and communication skills apart
from the most sought-after problem-solving skills.
• Closing note: The candidate should end the interview with a smile even if it wasn’t the best of the interviews; sometimes even the candidate’s positive approach
may work in the favour and overshadow a mediocre interview.
Don’ts
• Interrupt the interviewer: This should never be done since there is a risk of missing out on some important information which the interviewer would have
otherwise divulged. Further, it gives an impression that the candidate is impatient, and might not be a good team player.
• Assume any information unless explicitly given by the interviewer: Usually on getting a case from a familiar background or applying association rule, candidates
tend to presume certain information. This should strictly not be done unless the interviewer gives the information explicitly. However, if a candidate has some
prior information, either clarify that through questions from the interviewer or suggest that as a possible solution to the given problem.
• Get bogged down by frameworks: Frameworks are useful in structuring one’s thoughts but should not become an impediment to “out of the box” thinking. For
instance, an acquisition may be used to improve profitability; however that would not fall under any of the conventional frameworks.
• Be Mechanical: Candidates are advised not to be mechanical while answering questions related to their personal experience as it gives an impression that the
answer has been well rehearsed. Try to read the cues of the interviewers and involve them in the discussions.
• Panic: Mistakes do happen, either in calculations or while speaking on a topic. It is important not to freak out in such moments; rather as soon as a mistake has
been committed, be ready to own up and admit it.

Cases
Overviews & Transcripts
2019-20 10
Profitability
2019-20 11
Profitability – Overview
A profitability case could deal with revenue-side issues, cost-side issues or both. The candidate is expected to identify the key revenue and cost
heads, and isolate the ‘problem areas’
Approach / Framework Overview

Market size
(Qty)
Price per unit
Revenue
Market share %
No. of units sold
Profits Fixed component
Cost per unit

Variable
Costs component
No. of units sold
Framework Summary
A profitability problem requires proper scoping and isolation to be solved effectively. Starting from the basic Profits = Revenue – Costs equation, each segment is to be drilled down to identify
the ‘problem areas’. Factors responsible could be internal or external
Tips
• Be cognizant about whether the issue being dealt with is ‘profits’ or ‘profitability’. Profits are merely a difference of Revenues and Cost, while Profitability refers to profit as a proportion of
sales (could be gross margin, operating margin or net margin)
• Use Value Chain Analysis to cover all costs
Key questions
• What is the quantum of profits / losses? How has the trend been like?
• Is it a company-specific phenomenon or is it being seen industry-wide?
• Is there a time period within which the issue is to be solved?
• How does the product-mix look like?
• Has there been any change in the competitive scenario?

Cost Reduction – Overview (subset of profitability cases)
In a cost reduction case, a company is likely to aim for becoming more profitable by reducing their bottom line. An interviewee is expected to
first identify various cost component, followed by validating them, identify major cost drivers along with levers affecting their values, and finally
recommend how the company can change it’s ways to become more cost efficient.
Framework Summary
A company can reduce cost and become more efficient across its components. The best way is the look at the journey of a product/service right from the time its raw materials are bought to
the time it is delivered to the customer and he is happy after the post sale support etc. This is called a value chain analysis as each step of the process adds some value to the initial raw material
and accelerates its journey towards the final product. At each of these stages, we expect to find some levers which can be tweaked to make the process more efficient.
Tips
• Clarify objective, especially the cost buckets the interviewer wants you to delve into
• Cost cases are generally very streamlined till the time you are identifying places where cost can be reduced. Creativity comes into play when recommendations are asked by the interviewer.
Key Questions
• Is this particular company facing the problem of high costs or is it something that the industry is facing as a whole?
• Chalk the value chain and then ask if it is the correct way to do it? Or should it be done by splitting fixed and variable costs?
• What are the last 3 year trends in growth for the organization?
• Any major shifts in cost over time?
• Does any of these cost seem out of line?

Profitability | Cost reduction | Easy
Beer manufacturer – Interview Transcript

Your client is a beer manufacturing company that operates in India. The cost structure for the Okay. So now I would want to figure out the reason for not buying high capacity machines
company is poor compared to the international benchmarks, and you have been asked by the
Sure, Go ahead.
client to find out why.
I could think of the following reasons :
Is the problem only on the cost side, or should I also analyse the revenues of the company to look
1. The client can’t invest an amount of 1.5 crores at this point of time
for a problem there?
2. There are some logistics issues associated with installing the machine
No, the problem is only on the cost side.
The client can invest 1.5 crores so lets explore the second option
Alright. Is the problem with only one specific beer product, or is the problem spread out across
It can be because of the size of machine or different raw material requirements
different products? Additionally, is this an industry wide problem, or specific to our client?
The problem is not limited to one product. In fact, the client is facing the problem across many Okay, so the advance high capacity machine requires larger ground area which is not possible in the
beer products. There is no relevance to the problem being limited to our client or the industry. current plant size. What would you recommend in such a case?
Okay. I think it would make sense to break the costs down into the value chain to see where the So I have a few questions before I give the recommendations. How many shifts are we operating in
cost issue lies. Should I go ahead with the same? and what is the duration of each shift?
Sure, you can do that. We are currently operating in 2 shifts of 8 hours each.
I would start by looking at the raw material costs. Are they larger than the industry average? So, In the short term, we can increase the shifts from 2 to 3 to increase the capacity of the plant.
No, our raw material costs are in line with the industry. And in the longer run we can aim to buy plants which are larger as compared to the existing plant to
accommodate high capacity machines.
Okay. Next, I would look at the processing costs. Have there been any issues out there?
Yes, as a matter of fact, our processing costs are higher than the benchmarks.
Okay, in that case, I would like to delve deeper into processing costs. However, before I proceed
with the same, I would like to see if this is the only cost head that has an issue.
You may proceed with processing costs. There are no other cost heads where the client is facing
a problem.
Okay. Is the client facing labour or rent issues, or is having underutilisation of capacity?
Yes. The client is indeed facing a problem in the utilization of capacity
How many plants/machines does the client own? What is the capacity of each plant/machine? Are
we utilizing 100% of the production capacity?
The client owns 3 plants with 3 machines each. The capacity of each plant is 30,000 bottles. Yes,
we are able to utilize 100% of the capacity.
Okay. So this would mean 10,000 bottles per machine. Are the competitors also producing 30,000
bottles per plant .
No, the competitors are able to produce 50,000 – 80,000 bottles per plant.
Is it because of better machines or more number of machines?
Competitors are using advanced machines which are able to produce more number of bottles per
machine
How expensive are advanced machines? Would the labour need special training to operate the
same?
These machines cost 1.5 times(1.5 crores) the normal machine and produces twice the amount
produced by normal machine. There are no special training requirements to operate the machine

Profitability | Cost reduction | Easy
Beer manufacturer
Your client is a beer manufacturing company that operates in India. The cost structure for the company is poor compared to the international
benchmarks, and you have been asked by the client to find out why.
Interviewee Notes Case Facts Approach/ Framework

• Qualitative case, no • Client is a beer
numbers provided manufacturing company Storage & Distribution-
• A single cost head case with multiple products R&D Raw Material Processing Marketing
Transportation Sale force
where one issue needs • It is facing cost issues with
to be identified more than one beer Transport to
Cost of raw Marketing
• The cost problem is product Equipment Machinery warehouse Sales Channel
material channels
identified to be in Storage (Rent,
Human Capital Contract & bulk Factory rent Sales Force Strategy
packaging deals Labor)
Cost of finance Labor hours Transport to Training
Quantity used customers
Technology
Capacity
utilization
Packaging Capacity Utilization
Increasing count of
Advanced machines
machines
Recommendations
• Reduce the excessive expenditure on new bottles by labelling the bottle to hide the scruffiness
• Increase the use of cans over bottles as cans can be recycled even if they get scruffy
Observations / Suggestions
• This is a cost reduction case where the interviewee should quickly establish the major cost buckets after discussing with the interviewer. The candidate can either probe each bucket along the value chain, or ask
the interview which buckets to look into
• Each cost component should be broken down into multiple cost levers to ensure that nothing is being missed out
• Breaking down cost of the buckets ensures that the problem identification is more specific in nature

Profitability | Cost reduction | Moderate
Retail bank – Interview Transcript

Our client is a major retail bank facing declining profits and is unable to compete. You have been The branch is similar to competing branches in all of the above terms. The number of customers
approached to find the problem and suggest changes. served by the branch is also roughly the same.
Alright, so prima facie, the issue seems to be that of overstaffing. Alternatively, given that
Sure, sir. So the key problem I need to focus on is finding the issue with declining profits of our
increased employee expense has not resulted in a proportional increase in revenue for the
client which is a major retail bank. Is there any other objective I need to keep in mind?
branch, the issue can also be seen as that of inefficiency.
No, please go ahead. Can you elaborate on how you’ll define employee efficiency?
I’ll start with a few clarifying questions. Is the problem plaguing most of the client’s branches or is Employee efficiency will comprise number of customers served per employee which will depend
specific to a particular category (metro, urban, rural) of branches? on the time taken by the employee per customer and the total non-working hours.
The problem is being faced by a specific branch located in a metropolitan region. Yes correct. So it has been observed that the time taken by the employee per customer is high.
Can you think of possible reasons for the same?
Given the problem is specific to a particular branch, it is fair to assume that the problem is not
faced by the banking industry in general? Are the competitors located in that region also facing 1. The employees may be lacking competency or training, thereby being unable to resolve the
similar issues? issue of the customers in their first visit.
2. Due to improper segmentation, the customer may have to visit multiple counters for
No, the problem is only being faced by our client.
performing a a single task.
How much have the profits declined by? And for how long has the client been experiencing this So, how do you suggest we overcome this?
decline?
There has been a decline of 20% in profits. The issue has been around for 3 Quarters now. I can think of the following few steps:
1. Encouraging the branch customers to use bank’s mobile app and website for availing basic
Alright. Since the issue is that of profitability, could you help me with the trend in revenue and cost services such as transferring money and balance inquiry. Demonstrate the services if required.
of that particular branch over the last three quarters? 2. Set up a self-operating kiosk inside or outside the bank for deposit of cash and updating of
Revenue has grown at a steady rate, but the costs have increased at a much higher rate. passbook.
3. Train the employees so as to enable them better understand the needs of the customer and
Alright. In that case, I’d like to delve into the cost structure of a typical retail bank branch. All the
thereby assist them efficiently.
costs of a retail bank can be mostly divided into three heads: Interest, Provisioning and Operating
4. Have single window clearance for as many services as possible.
expense. Do we have knowledge as to which of above were not in line with the expectations of
the client? Thank you. These are reasonable recommendations.
The interest expense is similar to comparable branches and the bad debt levels are also at par with
the region.
Okay, so the issue is with the operating costs of the branch. The major operating expenses of the
branch would include employee/agents salary, rent, utilities, stationery & postage, maintenance and
depreciation expense. So, do we have any information of where the costs have been increasing
specifically vis-à-vis our competitors or in comparison to prior periods?
The rent per square foot is similar to other banks in the area and has remained unchanged for the
past year, maintenance, depreciation and utility expenses have also roughly been the same.
Okay, so that leaves us with employee and sales agents salary (i.e. customer acquisition and
customer handling costs), stationery & postage expense. Addressing the issue of employee and
sales agents salaries first, are salaries of branch employees and sales agents higher than industry
standards?
The salary structure of employees for various positions is similar to that of comparable branches.
Alright. Can you give me some insight on the customer base of the branch? As in was the
demographic similar to that of other competing branches? Also, if you can help me with a few
metrics such as no. of customers served, ratio of low-value to high-value customers etc.

Retail bank
Our client is a major retail bank facing declining profits and is unable to compete. You have been approached to find the problem and suggest
changes.
Interviewee notes Case Facts Approach/ Framework

• Issue with costs • Increasing costs
• Fixed cost of employee • Problem specific to a particular Profits of Retail Bank
salary higher than branch
competitors • No new competition
• Low efficiency of • Employee salaries increasing
employees
• Multiple visits by customer
for any service
Revenue Cost
Variable
Fixed Costs
Costs
Maintenan Employee Customer

Rent Bad Debts Handling
ce costs Salaries
Costs
Recommendations
• Improve the systems in place to ensure customer service is improved and time devoted by an employee decreased
• Give proper trainings to employees to help them better assist the customers
• Aggressive use and promotion of technology to avoid redundant tasks performed by the employees
• Declining costs are majorly due to higher employee salaries. This can also be figured through higher customer handling charges
• Once the problem is identified, it is important to figure out the reasons for the same.

Lease fee – Interview Transcript

Your client is a private company in the United states that leases a jet. The lease contract is soon
That is true, the companies would hence have to establish stringent contracts regarding the
expiring and the company want to renew the contract. The client now contacted you and asked
usage of the plane.
you to find ways to reduce the lease amount. The current amount is $1 million, how can the
company lower it? Good point.
That is an interesting case.. As I understand, client needs to find ways to reduce current amount of Now I would like to analyze the lessor and the contract. I would like to look into different
leasing the jet. Do I need to look into other options of buying the jet or booking of private jet lessors available to our client and how the length of leasing contract will affect the cost. What is
during the time of use? Or should I just focus on lease contract the our current relationship with the lessor and are there other lessor who have better pricing
So, client needs to lease the jet as per his requirement. You should look into how to lower the with similar services?
cost of leasing Client has been leasing the jet from the same lessor for past 7 years and trust him with quality.
He doesn’t want to look for other lessors
I would like to know whether the jet should be exactly the same as the jet leased under the past
Ok. So, as the current leasing contract is just for 1 year, the company could hence opt for a
lease contract? Also, what is the duration of the lease contract?
contract with a longer period. This should provide the firm with a discount.
Excellent question. The jet leased under the new contract does not necessarily have to be the
same. The current contract was for 1 year Good suggestion. As you can see in the graph the leasing price per year in the initial contract is 1
million per year. The total price for a contract with a duration of 5 years is 4.2 million. What
I would like to look at 2 factors affecting the leasing cost. First would be our client’s requirement would be the cost savings for the firm if they switch to a contract with a longer leasing period?
for the jet and second would be the lessor and its leasing contract The cost savings would be $160000.
Ok. Go ahead Excellent suggestions. It was nice interacting with you.
I would like to deep dive into requirements of our client. I would like to analyse the seating
capacity required by the client as well as the # of times jet is used. What is the general occupancy
of the plane over the last few years and what is the seating capacity of the leased plane?
The seating capacity of the plane is 40 and the occupancy has ranged between 8 to 10
Great, so one way the firm could reduce its cost is by leasing a plane with a lower seating capacity.
Considering that the occupancy rate was around 10, I believe that a plane with 15 seats should be
sufficient. Assuming that the occupancy rate follows a normal distribution it is very unlikely that
there will be more than 15 people in the plane at the same time. However, if this is the case it is
always possible for the plane to fly multiple trips.
I agree, that is a great suggestion.
Now I would like to analyze the usage of jet. I would like to know how often the leased plane is
used per year?
The company uses the plane 3-4 times per year.
Ok, as we know that company uses jet only 3-4 times a year, do we know which months
specifically the company uses the jet? I am coming from the point that if we know the specific
months, we can lease the jet for those months only
Fair suggestion, but generally industry has minimum of 1 year of leasing contracts and client doesn’t
have fixed months when jet is required
Ok, another suggestion because of low usage can be that the company could possibly share the
plane with another firm. The sharing of cost would then result in substantial cost savings.
This might result in complications in case both companies require the plane at the same time.

Lease fee
Your client is a private company in the United states that leases a jet. The lease contract is soon expiring and the company want to renew the
contract. The client now contacted you and asked you to find ways to reduce the lease amount.

• Assume occupancy follows a • The current lease fee is 1 million Dollar
normal distribution and will • The contract duration is 1 year
Lower Leasing fee
rarely exceed 15 passengers • Seating capacity of the plane is 40
• The company uses the leased jet 3-4
times per month
• The contract has been renewed for the Lessor and leasing
Client Requirements
last 7 years contract
• Short leasing period (1 year): 1
Million
Long leasing period (5 years): 4.2
Million
New lessor with Increasing contract
Seating Requirement Frequency of use
lower rate duration
Type of contract Short (1year) Long (5 years)
Total cost 1 million 4.2 million

Cost per year 1 million 0.84 million
Cost savings per year 160000
Recommendations
• Lease plane with lower seating capacity. Since the plane hardly ever is used at max capacity, a smaller plane can be leased.
• Share the lease contract with another party. Stringent contracts need to be established regarding usage
• Increase contract duration. A longer contract duration should result in discounts
• Conduct a feasibility analysis of the options recommended, wherever possiblec

Cement company – Interview Transcript

You’ve been hired by the CEO of a cement company to reduce their logistics cost. What are the Moving to outbound logistics, what is the mode mix? What is the proportion of orders that go directly
key areas you will assess? to the dealer?
I would like to clarify the objectives before we begin. Our objective is to reduce their logistics cost We ship 70% of our orders through road. Rail is cheaper in most cases, but rake availability is an issue.
in order to improve their margins right? We ship all orders above 30 MT directly to the dealer and smaller orders go to warehouses. The split
between direct-depot is 50-50
Yes
Can we look at increasing direct % as it will be cheaper and we will avoid handling costs? We could
I would first like to understand the cement value chain. My specific queries on logistics are :
club a few orders and use a single truck
1. What are the key raw materials I need? Where do I buy from? How is it transported to my
plants? How many plants do I have? Increasing direct % is a priority area for the firm, but we have strict customer service level guidelines
2. What do I transport from the plant? Who are my customers? How do I sell to them? and order delivery times can’t be overshot. Hence clubbing orders is tough
So our key raw material are limestone, petcoke, flyash and gypsum. Limestone is extracted from Noted. Moreover, for our network, how do we assess if the right plant is serving the right market? Is
mines, which are located within the plant complex. The others are bought from refineries, thermal there any network optimization opportunity given the client has 40 plants and they may not have
power plants and gypsum mines respectively. A mix of road and rail is used to transport raw updated their systems for newer plants
materials to the plant. The client has 40 plants in the country
Correct. The client has a network optimization tool, but it has not been updated to reflect newer
Cement plants manufacture & transport cement and clinker. Clinker is an intermediate good and is
plants, updated freight rates and new warehouses. It also has constraints built into it that are not
used to manufacture cement at grinding units (which are closer to market) while cement is sold to
relevant anymore
dealers and transported via road or rail to customers directly or to company owned warehouses
Thank you. I have a clear idea about the cement value chain now. I would like to start with raw What is our vendor mix on our current routes? Similar to inbound, can we reduce rates by offering
materials (inbound logistics). Which mode is cheaper? Rail or road? How many vendors do I have? individual vendors more business? Can we reduce TAT for plants and warehouses?
Can I leverage higher volumes for lower rates?
All that is feasible. However, reducing TAT at plants and warehouses entails additional investment in
Road is cheaper than rail. But trucks carry upto 30 tons while a rake can carry upto 4200 tons. This
capacity. We will have to assess the returns to take the decision
allows me to keep adequate inventory at the plant and minimizes risk.
I have high vendor concentration across key routes. I can look at reducing the number of vendors Finally, I wanted to ask if we have any inventory norms at our warehouses? Are we losing sales
and offering them more volumes, but that would lead to monopolization of routes. I would need to because of empty warehouses while other warehouses are flooded with material? Can we balance
maintain a balance inventory better across all geographies
Duly noted. I would now like to focus on the operational aspects. What is the turnaround time at
the plant for a truck? Can I reduce that and allow trucks to do more trips every month? I can ask Stock-outs have been 3-4% of our sales while they are 1.5% for our competitors. The firm has been
them to pass on part of the cost benefit to the company trying to adhere to their inventory norm of maintain 4-5 days of inventory at our system by beefing up
capacity at warehouses
Our average in-plant turnaround time is 12 hours, which is high and can be reduced. But plant TAT Can you quickly sum up the key areas you will address for the CEO?
is 20% of the overall trip turnaround time. Travelling time is hard to reduce as distances are long
I will look at vendor concentration across routes and rationalize rates by giving more business to key
vendors. I will look at improving turnaround time at plants and depots. Additionally, I will review the
firm’s service network (plant-to-market) and define inventory norms
That will be all. Thank you

Cement company
Logistics cost reduction for a leading Indian cement manufacturer
Interviewee Notes
• Understand and use value chain to identify different
cost heads
• Break down logistics cost into rate* distance. Think
of simple levers to reduce rates (negotiation with Logistics Cost value
vendor, TAT, direct %) and distance (network) levers
without losing volume (by setting inventory norms)
Inbound logistics Outbound logistics
Mode Vendor
Vendor concentration Plant TAT Direct %
Mix concentration
Network Inventory norms

Optimization
Recommendations
• To touch on all the possible cost heads and identify potential sources of value
• The interview is technical in nature. As a result, the candidate may feel intimidated. However the candidate should just listen to the interviewer’s explanation very carefully and take notes diligently to keep pace
with the problem. The candidate is not expected to have background knowledge of the sector

Auto Insurance – Interview Transcript

Your client (IA) is an auto insurance company operating in India and has been facing reducing No, you can focus on claim costs
profitability in the last 2 years. They have come to you for help to identify the reasons and explore
Okay. So with claim costs, it is possible that the difference may be arising out of the difference in
possible solutions. You can ignore reinsurance for the purpose of the analysis.
the customer portfolios of the company as compared to competition?
Can you tell me a little bit more about the industry, and the position of IA? The kind of
Okay, that may be a possible reason. But how will you analyse the portfolio?
competition, the growth?
We can segment customers into buckets based on
Sure. IA is one of the 5-6 major players who dominate the industry and hold around 95% of the
a. Age group
market. The market has been growing steadily at around 10% p.a.
b. Income bracket
Okay. And how is the company growing? Is it in line with the industry? c. Geography and terrain
The market is growing at around 10% p.a, and the company's market share is growing in almost the d. Traffic in the area.
same proportion. That would give us an idea of the risk, based on the general profile of the customers. So do we
have any data regarding this?
Alright, is this reduction in profitability only being faced by the company or by competitors as well?
Yes, so although there is a fair mix in all the buckets, the portfolio is generally dominated by
We do not have very accurate data of competitors, however, reliable estimates indicate that most
people of relatively younger age groups (less than 25 years). In terms of income, IA has a large
of them have maintained profitability levels and some have even increased profitability. What do
base of lower and middle level income groups. It has its operations in all major cities –Delhi,
you think are the possible causes for this?
Bangalore, Mumbai, etc.
It can either be due to higher revenues, or due to lower costs.
That explains a lot. You mentioned that the company has more number of customers who are
The industry is fairly competitive, and none of the players can get away with charging higher prices young. They can be considered more risky, as they tend to be more rash while driving, increasing
without losing out on market share. And as for number of customers, there has not been any major risk of accidents, when compared with middle aged people having families. Further, you
change as such. So you can move on from revenue. mentioned that they do not have too many customers in the higher income brackets. Higher
Okay. Then I will move on to the costs side. There will be fixed costs, and variable costs. Fixed income groups can be considered less risky as they use expensive cars, usually have professional
costs in such a company would generally include salaries, administrative expenses, etc., and the main chauffeurs who are generally more careful. Also, it has a lot of clients in cities with extremely
variable costs would be the claim costs. Am I missing anything here? high and aggressive traffic like Delhi, which have higher incidents of accidents
No, go on. Thus, the company should either focus on improving the portfolio mix, or should adjust
premiums more appropriately to factor in the risks.
Do we have any data about these costs? Any increase in a particular cost head?
That sounds good to me. Thank you.
Umm, fixed costs have been growing as per normal trends.
And what about claim costs?
IA has been seeing a rise in the claim costs over the past few years, faster than revenue growth.
Right, so would it be fair to say that it may be a major reason for the decline in profitability.
Probably yes.
Okay, then I would like to understand the possible causes of the rising costs, and why competitors
are not incurring this cost. But before I go into a deeper analysis, I would just like to ask, is it
possible that competitors have implemented stringent policies for claim approvals, or somehow
provide lesser cover using fine print in the policies due to which the costs are lower for them?
I do not think that is the case. This would result in unnecessary loss of goodwill for the company.
Further, the industry is highly regulated and all players have similar policy terms and claim
processes. Hence, this is not practical.
Alright, then I would like to look at the claim costs in greater detail. Before I do that, is there
anything other significant cost item I am missing?

Auto Insurance
To increase profitability of an auto insurance provider

• Profitability changes can be due to • Client is a top 6 player
Profitability
both revenue and costs in a concentrated auto
• Since revenues have been growing insurance industry in
in line with industry, declining India
Revenues Costs
profitability must be due to rising • Client has experienced
costs falling profitability but
• Problem is also specific to the competitors haven’t
Competition's Environmental
client (not an industry-issue) • Revenues have been Firm
Costs Factors
• Analyse variable and fixed costs of growing in line with
the client industry
Variable Fixed Economy
Customer Service
Salaries
Costs
Administrative
Claim Costs
Expenses
Licenses
Recommendations
• The problem arises due to high claim costs. High claim costs arise due to an unfavorable customer profile mix. Thus, the company should either focus on improving the portfolio mix, or should adjust premiums
more appropriately to factor in the risks.
• Have a clear approach. In this interview, the candidate took many questions before being able to pin down claim costs as the root cause. Nonetheless, it is clear that the candidate had a very clear framework in
mind (Profitability > Revenues/Costs > Industry-Wide/Firm-Wide Issue > Fixed/Variable > Claim Costs). Furthermore, the candidate also asked if there were cost components he was missing. This shows that the
candidate tried to have a MECE approach, which is what interviewers are looking for.

Profitability | Cost reduction | Challenging
Banking – Interview Transcript

Your client is a Leading Public Sector Bank(PSB) in India. Recently it has been experiencing a In that case the bank should push for digital transactions. In the short term moving to digital
decline in its profitability. It wants you to analyse why? transactions would incur high costs – training the rural customers, setting up camps. However,
Is our objective to reverse the decline in profitability, or is the bank only looking towards the customer would also start associating brand loyalty with the bank which on-boarded them.
assessing the reason for the decline? In the long term, the bank would have to invest in its digital network to support the large
The bank wants us to analyse the reasons and suggest avenues for growth. customer base. However, it’s the transaction costs would decrease, and also free the employees
Is it safe to assume that the bank is National – Pan India, and that domestic business is the major to be reassigned to more productive assignments.
arm of the business. For promoting a digital drive we could tie up with NGOs – it would also be an initiative in CSR.
That is a fair observation The NGOs in conjunction with schools, and help from the local Panchayats could help reach out.
I am trying to understand the bank’s customer base. Am I right in assuming that the bank draws a Good. Could you also examine the leakages?
majority of its business from rural banking, but also has a competitive position in Urban areas? The leakages could be examined from the point of view of increasing recovery and correcting
Yes, a majority of the bank’s business is from rural areas, and in urban areas it has a more muted future occurances. The leakages due to NPA could be due to externalities, such as a downturn in
presence. Something it aims to work on the economy. However, since other banks have done well during this period, it cannot be a
Since when has the bank been facing a decline in profitability? Also, have the other banks also economy wide phenomenon. Thus, the problem could either be due to the downturn in the
been facing similar issues? particular sector in which the bank is employed or internal parameters. In the internal
The bank has been witnessing falling profitability for the past 5-6 quarters. Some banks have seen parameters, the cause could either stem from policies, or from shoddy implementation. The
declining profits, but others have seen periods of steady growth. policies of the bank could be a cause, say, by not capping the industry exposure, or not setting
Interesting. That’s a decline for almost a year and a half, while the industry seems to be doing fine. proper disbursal guidelines. Similarly, in implementation, the cause could be improper follow-up
This leads me to hypothesize that is some systemic issue with the bank, that probably stems procedures, or customer verification.
from faulty loan policies, in turn escalating costs A final clarification, what is the timeline that we Alright, anything in particular that the bank can do to increase recovery?
are looking at to reverse the decline in profitability? Do we have a break-up of the NPAs?
The bank wants to reverse the trends in the next 1-2 years. A large percentage of the NPA is contributed to by the large conglomerates, but measured by the
Given the short timeline, I would like to take a two pronged approach. To increase profitability, number of NPA accounts, it is high in the agriculture sector.
we have two possibilities - increase revenues - increasing the customer base and income from For recovery by corporates, the bank could look at re-structuring or file a case under the
advances. Second, we could look at the cost aspect, maybe target recoveries to decrease the bankruptcy code, if the bank feels that restructuring would not help.
NPAs, reducing the written off assets. Is there something specific you want me to look at?
Alright, for corporate loan recovery the bank has already taken appropriate steps.
Has there been a substantial decrease in the revenues, or an increase in the costs?
Yes, the costs have increased, but revenues have remained more or less constant. Why don’t you I assume that the agricultural revenues are mostly cyclical. In this case the recovery should be
start by analysing the costs? done in campaign mode in the month of harvest. As most of the farm income is concentrated in a
The costs for the bank can be broadly be segmented into Fixed and variable. The fixed costs few months. This could be tailored as per the regions. For instance, in Uttarakhand, where most
comprise of Infrastructure costs and labour, since a PSB has permanent staff. On the of the produce is Sugarcane, the bank needs to directly tie-up with sugar mills, to have all the
infrastructure side, two major areas are real estate and IT infrastructure. The variable costs, can proceeds routed through the account.
also be segmented into operational costs and capital costs. Would the bank have enough resources for these activities.
Is there any particular bucket you want me to analyse? The bank would need to create special recovery officers to target these NPAs. Reallocating the
Yes. Lets explore the variable costs. staff to specialised roles such as these, could improve productivity. Another important area that
Sure. The capital costs can be calculated by looking into the reserve funds and investable funds. can be addressed in agriculture is crop insurance. This should be made mandatory, with the bank
The cost associated with investable funds are a function of the rate and the leakage, where the bearing a part of the cost. Insurance would protect the interest of the farmers, and the bank, and
rate is determined externally. On the operational dimension the cost relate to customer also be a channel of cross-selling for the latter.
acquisition costs and transaction costs. That’s great. Anything else?
Good, that’s a fair analysis of the costs. The bank has found that it has a higher than average Since the cause of the decline in profits was an increase in costs, the bank could look towards the
leakage and transactional costs. What measures can you suggest? utilisation of Banking Correspondents to provide the last mile connectivity thus reducing fixed
The transactions either happen through physical brick and mortar structures or digital channels. costs by obviating the need to set-up brick and mortar structures.
As I understand it the costs are substantially lesser in digital transactions compared to those done That’s a good idea. Since you mentioned that digital capabilities should be developed for reducing
through brick and mortar structures. the costs. How would you do that?
Yes. the cost for an on-site transaction is Rs.50, which gets reduced to an average of Rs.12 for Bank may look at acquiring an existing digital payment bank to develop digital capabilities quickly.
digital transactions This would also be beneficial to the bank as the existing team in the Target would have
experience and knowledge in this segment which would create synergies
Thanks, that would be all.

Banking
Your client is a public sector bank who is facing a decline in profits. It wants you to figure out the reason for the same

• It is important to • Decline is because of Profits
understand whether the higher customer
cause of decline is due to acquisition as bank still
cost or revenue follows traditional
Revenue Costs
• Here the interviewer asks banking model.
the interviewee to focus • Costs are also on
on costs account of high NPAs
• Banking sector specific Fixed Variable
costs such as customer Costs Costs
acquisition and transaction
costs along with NPAs
Infrastruc
should be focused on. Labour Capital Operational
ture
Investable Reserve Customer

funds funds acquisition
Transactio
Interest Leakages n costs
Recommendations
• Use digital technology to acquire customers and handle transactions as the cost is less than traditional methods
• Consider acquiring an existing payment bank to build digital capability
• Create special recovery officers position that targets recovery agricultural loans to ensure minimum NPAs
• It is important to use nuances of banking industry to analyse sector specific costs such as NPAs. Also, certain costs such as Interest rates are decided on external factors
such as decisions by RBI and therefore are not within the control of Bank.

Telecom billing process – Interview Transcript

You have been approached by the CEO of a telecommunications provider company. He is worried That’s interesting. How else can you reduce the cost of sending the bill to the
about the high expenditure in their billing process and wants your help in identifying areas where customer?
you can reduce costs. Apart from this we can reduce the frequency of sending out the bills to the customers. Here, the
What are the different ways in which the client’s company send out bills to the customers? tradeoff is between the cost saved in mailing the bills and interest forgone from the money
recieived a month earlier.
There are three ways in which the bill can be sent to the customer. Through post, internet and by Let’s reduce the frequency of sending bills from one per month to one per two months. When do
sms. For this interview just concentrate on post and internet. you think this will become feasible?
Since sending bills thrugh internet would involve minimalistic cost, focusing first on snail mail and Okay. To analyse this I would want to understand the approximate cost in sending out one bill by
looking at different cost component involved in the value chain. mail/courier.
Sure. Go ahead and list down various cost components. Sure. You can assume that one time cost of sending the bill by mail is around Rs. 20. And for all
practical purposes, take the interest rate to be 10% annually.
There will be cost involved in buying raw material, printing bills, sending bills to customers. And fixed By not sending the bills every month, The client will save Rs.20/bill. Assuming the rate of interest
cost involved will be the infrastructure renting cost and the employee cost. to be approximately 1% per month, the bill amount should be above Rs.2000 for the client to be
Assume both rental cost and the employee cost to be optimal. making losses by reducing frequency of sending bills.
OK. So, let’s begin by evaluating the first component of the value chain. Raw material for printing are i.e. if the bill amount is more than Rs.2000 then the bill should be sent every month, But the
paper and ink. majority of bill value in India would be much less than even Rs.500. So, in that case, reducing the
Let’s take paper first and try to reduce paper cost followed by ways to reduce the cost of ink. frequency becomes a cost saving option.
Sounds reasonable. Go ahead. Can you think of a way in which you can reduce the costs overall?
I think sending the bills through internet or sms would lead to massive reduction in overall
We can bring down the paper cost by using thinner paper, by using smaller size of paper, by printing cost. How much does it currently cost to send a bill through internet?
on both sides of the bill, by leaving lesser margin, may also use a recyclable paper. Around 5 paise.
To reduce the cost of ink used, reduce the number of words on the bill by eliminating unnecessary
Okay, so our aim should be to encourage the customers to start using internet as a medium to
details. Reduce the font size and only print a black and white bill to save on the coloured ink.
pay bills/ view bills.
Should I move ahead and explore ways in which the client can save cost in sending the bills to the
customer? Interesting. How do you plan to do that?
Yes. Why don’t you help the client in reducing their expenditure in sending the bills by post. In the intitial phase we can target those customers who use internet to pay their bills. We ce shuld
OK. So, the total annual cost in sending bills by courir will be equal to = No. of bills sent/month* incentivize them by telling them about the benefits of sending bills online. A few of them are-
Frequency of sending bills* (Base price for mail+ (Price/km)*No. of kms) 1.Prompt delivery of bills
Let’s start with Price/km first. To reduce this, switch to a cheaper mail/courier service. This can be 2.No losses- no fudging of content, it wouldn’t get lost during transit, lesser chance of a bill going
achieved by using regional courier services as well. to the wrong address
Next, I would want to understand the base price for mail. How many hubs does the client have to 3.Convenience of having a bill online. You can check it whenever you want and there’s no hassle
send out the bills to the customers? of storing them carefully.
4. Incentivize people to use internet to pay bills by giving some discounts in the initial phase.
As of now, the client has one facility in Mumbai and the bills are mailed all across India from the
Mumbai hub itself.
Ok. Another way in which we can optimize this is have smaller facilities in cities like Delhi, chennai,
Kolkata and send the bills to customer sin that region from there.
It would serve the purpose of lower base price as well as quicker and timely delivery of bills with
lower bill loss rates.

Telecom billing process
You have been approached by the CEO of a telecommunications provider company. He is worried about the high expenditure in their billing
process and wants your help in identifying areas where you can reduce costs.

• Reduce cost of bills • 3 ways of sending bills-
Raw Storage & Distribution- Customer
• A cost benefit analysis for each SMS, internet & Snail R &D Processing Marketing
Material Transportation Sale force Service
mode of sending bill mail
• Reducing the cost of preparing • Internet and SMS are Cost of raw
Equipment Machinery Transportto Sales Channel Marketing Repairs
bill itself • optimized, possibility material warehouse channels
only in snail mail Contract & bulk
Human Capital Factory rent Storage (Rent, Sales Force Strategy Spare parts
• Rental and employee deals Labor)
cost are optimal Cost of finance Transportto
Quantity used Labor hours Training Returns
• Only one billing hub in customers
India- in Mumbai and
Technology
bills are sent all over
india from Mumbai Quantity of Capacity
• Cost of sending a bill by ink utilization
snail mail=Rs. 20 Fewer Small font Packaging
Black only Transport to
• Cost of sending a bill words size customer
though internet= 5
paise Move to Reduce Increase Hubs at shorter
• Rate of return Quantity of cheaper option frequency ticket size distance
paper
annually= 10%
Size of
No. of bills Utilization
paper
Recommendations
• Reduce the unnecessary expenditure on paper and ink. This being an inelastic good, customers won’t be bothered by smaller size or lesser words until relevant info is present
• Explore the alternate route of sending the bill to the customer. Keep in mind the new evolving technology and try to push customers towards using it
• Highest cost component of snail mail can be brought down by reducing the frequency of sending bills to one bill per two months. Only when bill amount is less than Rs.2000
• Breaking down cost of snail mail into components helped the interviewee to analyze each one carefully
• Further having to shift the customers to the low cost option is also relevant and important to bring down cost drastically and for having convenience in the future

Profitability | Revenue decline | Easy
Oncology firm – Interview Transcript

Your client is an oncology firm. It has recently seen a decline in profits. Diagnose and recommend There has been a fall in volumes.
solutions. Ok. So if there has been a fall volumes it is a demand issue. It is important to understand if the
I would like to begin with a few clarifying questions on our client. As per my understanding our demand has fallen across the industry or is it just our product. Have our competitors also seen a
client manufactures specialised cancer treatment drugs. Is that correct? Is there any other business similar declining demand?
that our client is engaged in? The fall in demand is specific to our firm, not an industry wide phenomenon.
That is correct. Manufacturing oncology drugs is the client’s only business. Alright then. This fall in demand can then be attributed to a number of factors- branding of the
product, emergence of substitutes, sales & marketing, after sales services and competitor
Does the client operate globally or in any specific geographies? Is the client a leading player in the performance. Is there any segment you would like me to focus on specifically?
industry?
Focus on sales & marketing
The client operates globally and is one of the biggest firms in the industry.
Since the client only manufactures prescription drugs, we can ignore the marketing effort in
Since the client specialises in oncology drugs, I would assume they are all prescription drugs (not
advertising through mass media channels. Most of the marketing effort in this firm can be divided
over the counter). Is that fair?
into 2 channels. The first would be door-to-door selling to medical units and doctors and the second
Fair. would be through publicity in professional magazines and medical journals.
In that case, what is the product portfolio of the client i.e. what are the different kinds of drugs That’s correct. Let’s focus on the first channel for now.
that the client manufactures?
The door-to-door marketing channel would involve the following- efficiency of sales personnel,
The client manufactures two types of drugs (A & B)
referral schemes, long-term contracts, targeting the right medical centres. Is there any specific
What is the percentage share in manufacturing of each of the drugs and have both of them seen a channel that is causing the decline in revenues?
decline in profits? Yes, it has been found out that our competitors have started offering referral schemes to doctors.
Type A is about 80% of total manufacturing and B the remaining 20%. Both are being hit in terms Our client has a strong anti-referral policy due to ethical reasons. What would you recommend?
of profitability. Alright. The decline in revenues is largely coming from referrals and that is an option our client is
Does the client operate across the value chain or in a specific part? reluctant to explore. So we can explore other marketing options. A few of them are-
Operates across the entire value chain. 1. Improving the efficiency of sales personnel –increase the time spent per doctor, training
2. Loyalty programs- The client could explore loyalty schemes with doctors. Such loyalty schemes
Alright. So, profit can be broken down into revenue and cost. I would like to understand if the would act as a substitute to the competitor’s referrals and not compromise ethics either
declining profits is due to declining revenues or increasing costs? 3. Explore new geographies- The client could target more geographies (increase outreach)
4. Explore new market segments- The client could also explore newer segments where their
Let’s focus on revenues for now.
product could be useful (secondary healthcare centres, specialised clinics of doctors)
There are two products with individual revenue streams. I will begin with Type A since it has 80%
share and then move over to Type B. So, revenue from the product can be written as Price X
Ticket Size X Frequency of demand. I will look at each of these components individually to
understand the problem area. Has there been a decline in the volume of our product sold or have
there been some pricing changes?

Oncology firm
You have been approached by an oncology firm that is facing declining profitability. Diagnose the problem and recommend appropriate solutions.

• Declining profits due to • Leading global firm Profits of oncology firm
revenue fall • 2 products- A (80%), B (20%)
• Client manufactures • Operates across the entire value
specialised cancer treatment chain
drugs (only business)
• Ask if revenue fall is across
the industry or firm specific
• Understand client product Price
Revenue Cost
portfolio and check if decline
is across both
Product A
• Identify components of
(same as Product B Ticket Size
revenue and the problem B)
component subsequently
• Identify drivers of the
problem component Frequency
(Fall)
Alternate/ Comple- Sales & Decline in

Branding Competitor
Substitute ment Marketing need
Recommendations
• Loyalty programs
• Long-term contracts
• Explore new geographies and market segments
• The candidate did a good job in understanding the product portfolio (prescription drugs) and diagnosing appropriately. The candidate was able to create a MECE framework for revenue first and then fall in
frequency. The key to the case was identifying referrals by competitors as the major reason behind frequency fall.
• The interview was designed to judge how quickly could the candidate move through layers of revenue and identify referrals given by competitors as the major problem component. The candidate should have been
able to apply knowledge of prescription drugs marketing to the case in order to identify referrals as the largest component.

Urea Manufacturer – Interview Transcript

Your client is a manufacturer of urea. They have recently seen a decline in their revenues. Identify Competitor action is the driving cause.
the potential reasons and recommend a solution. Alright. So, our client is seeing a decline in revenues due to competitive action. A decline in demand
I would like to begin with a few clarifying questions on our client. As per my understanding urea is due to competitive action could be broken down into improvement in product quality, operational
used as a fertilizer in agriculture. Is there any other usage of urea that the client is manufacturing improvements (procurement, processing and distribution), change in marketing strategy or an
for? improvement in after sales services . Which of the 4 would you say is more important?
That is correct. Manufacturing urea for use in fertilizers is the client’s only business. So we know that our competitors have colluded and launched a new promotional campaign, called
the Krishi mela which has gained popularity. The client has seen declining revenues ever since
Does the client operate globally or is it located in some specific regions? Is the client a leading competitors launched this new campaign.
player in the market? Okay, so it is a marketing campaign then. In terms of the mela, our competitors could be doing a
The client is located in India, manufactures primarily for 4 states in North India. It is a leading number of things- they could be running creative advertisement schemes, offering discounts or
player in the market. subscriptions, giving away the product for free or rebranding existing product. Which of the above is
Is our client the only one seeing a decline in revenues or is it an industry wide trend? the competitor doing?
Which of them do you think would make an actual difference to our revenues?
Our client is the only one.
Alright. I would like to then begin the analysis. For starters we know revenue is comprised of You said that there is little product differentiation in the industry which rules out the advantage of a
price and quantity. Has there been any significant price change recently in the industry or by the creative advertisement, which would be more useful when we are working with a unique product.
client? Our target population is the agriculture sector, where farmers would be reluctant to subscribe to
anything in the fear of long term commitment and ease of availability of products of competitors.
No. It is a competitive set-up with little scope for product differentiation. Prices across the This leaves us with discount on the product or free distribution. Considering the competitor has
industry including our client are roughly the same and have not changed recently. launched this campaign with a probable to make its brand more familiar, the latter seems likely.
Okay. That is very helpful. I would then assume it is a quantity issue. Quantity decline could be That is absolutely correct. The competitor has been giving out products for free at the mela to
attributed to 3 reasons. The client could have seen a fall in the number of customers, or in the improve the recall value of their product. What would be your recommendations for our client
frequency of visit of a customer or in the number demanded by each customer. Is there any other now?
reason that I am missing? Was the decline specific to one of the factors mentioned above?
I would make the following recommendations to our client-
No, there was a decline across all the segments. 1. Given the standardised industry, mimicking the competitor by distributing freebies would help
Alright. A decline across all the buckets would mean an overall fall in demand. This could have 2. Explore other promotional schemes such as discounts on product, innovative tie-ups with
happened due to multiple reasons. They would include the emergence of an alternate, competitor complementary product manufacturers, rebranding the product
action, change in branding, change in production of a complement, mismatch in product targeting, 3. Explore other advertisement campaigns such as painting on walls, digital media if currently
decline in the quality of product, cannibalisation, distribution fallacies and decline in overall need absent
for the product. Considering the decline is specific to the client (in a minimised product 4. Since customers are largely indifferent between brands, it would help to tie-up with retailers
differentiation setting) we can safely rule the last cause out. Among the others, is there a and forge long term contracts with them
particular cause that is more relevant? 5. Explore new markets and geographies

Urea Manufacturer
Your client is a urea manufacturer. They have recently seen a decline in their revenues. Identify the potential reasons and recommend a solution.

• Declining revenue fall due to • Leading Indian firm with presence in Revenue
fall in quantity demanded 4 North Indian states Competitor
• Ask if revenue fall is across • Minimal product differentiation in
the industry or firm specific the industry, similar to a perfect Operational Marketing
Product After sales
• Identify if there have been competition set-up
quality service
price shifts or demand shifts • Client manufactures only one Procurement
• Identify drivers of a fall in product used in fertilizers by
demand or change in price farmers Price Quantity
Processing Demanded
• Study the drivers and make
appropriate recommendations
Distribution
Number of Ticket Size

Frequency
Customers
Improved
Alternate/ Comple- Sales & Decline in
Branding Competitor product
Substitute ment Marketing need
quality
Cannibalisa Targeting Distribution

tion mismatch fallacies
Recommendations
• Imitate competitor
• Innovative advertisement and promotional campaigns
• Long term contracts with retailers
• Explore new markets
• The interview was designed to judge how quickly could the candidate move through layers of revenue and identify recall value improvement by competitors as the major problem component. The candidate should
have been able to apply knowledge of fertilizer industry to make appropriate recommendations.

Profitability | Revenue decline | Moderate
Oil Distributor – Interview Transcript

Your client is an oil distributor. It owns 4 petrol pumps. Its profits have been constant for the past We are located in metro city like Mumbai and location is not an issue. Our services are also top-
few years in one of the petrol pumps. Diagnose and recommend solutions. notch
I would like to begin with a few clarifying questions on our client. As per my understanding our Ok. So we need to look at the possibility of either increasing the prices or decreasing them and see
client owns these petrol pumps and the problem is specific to one of them. Is that correct? their effect on the number of customers vising the petrol pump. Do we have any projection
regarding the same?
That is correct.
Based on the market research, we have found that on every 10% increase in price, the number of
Is the client a national distributor or a regional distributor? Also is the problem being faced by customers decrease by 20% and for every 10% decrease in price, the number of customers increase
other petrol pumps in that region? by 5%
Being national or regional distributor is not relevant here. The problem is specific to the client’s This implies changing price will lead to overall reduction in revenues. Can we look at other ways of
petrol pump increasing the number of customers, like advertising?
Since the petrol pump is facing profitability problem, I’ll like to study the profit structure of the Petrol is a commoditized product and advertising won’t be helpful.
petrol pump and break it down into revenues and costs which are the two components of profit
Okay. Then we don’t see any way of increasing the revenues from fuel sources in isolation. Can we
Fair. You can assume that costs are not of concern right now and start by analysing the revenues. look at non-fuel sources and see if that is related to the number of customers visiting the petrol
In that case, I’ll like to list break down the revenue sources between fuel sources and non-fuel pump.
sources. Among the fuel sources, do well sell only petrol or have other products as well? That’s correct. 30% of people visiting petrol pump end up visiting the convenience store as well. The
Only petrol is sold currently. other non-fuel revenue sources can be neglected for this analysis.
So this means we can look at the possibility of increasing the number of customers and see the net
Among the non fuel sources, the possible revenue streams would be convenience store, value
effect on revenue based on decreased prices and increased revenue from convenience store. Do we
added services (paid air filling station, garage). Are there any other revenue stream I should be
have any numbers related to revenue per person from the convenience store?
looking at?
Yes. Currently the revenue per person from convenience store is Rs100. Your analysis is correct.
No you can go ahead.
Assume that the prices are decreased by x% and the revenue per person from the convenience
I’ll like to start by analysing the revenue from fuel sources first. I’ll break it down into no of store changes to y. Can you get the condition that must be satisfied for increasing net profit.
customers visiting per day, ticket size per customer and the price of petrol. Do we have any data
(Writes the equation) This means that decreasing the prices is not the sole criteria. We also need to
of these based on current operations.
look at ways of increasing the revenue per person or the percentage of people visiting the store.
Currently the average no of customers per day is 100, ticket size per customer is 1 lt and the What are the products being sold at convenience store?
price of petrol is Rs100/lt.
We currently sell general consumption items like chips, biscuits and other FMCG products. We
Alright. So to increase the profits, we need to look at increasing any one of them at least. How do don’t have a big range of products. Can you give recommendations on ways to increase the revenue
these numbers look for our competitors? from conveniences store.
You can assume that the prices are competitive and ticket size is almost the same. The no of 1. We can stock more items both in terms of variety and volume so that any customer visiting
customers depends on a combination of multiple factors. usually gets the product of his/her choice.
2. We can stock more items related to vehicles.
Okay. So the number of customers will depend on three major factors :Location, Price and
3. We can look at the possibility of advertising the store
Service. How are we in terms of location and service as compared to our competitors?
4. We can also explore the option of introducing a new process where the payment for petrol
will be done the store counter. This will essentially lead to all customers visiting the store and
many people may turn up finally buying something. (Trade off needs to be done based on
inconvenience caused for people who don’t want to go to the store)
This will be fine. Thank You.

Oil Distributor
You have been approached by an oil distributor facing with profitability problem in one of the 4 petrol pumps owned by them. Diagnose the
problem and recommend appropriate solutions.

• Profits have been constant over • Only petrol being sold at petrol pump
Profits of Petrol Pump
past few years due to problem • No problem on the cost side
in revenue generation • No new competition
• Client owes 4 petrol pump and • Petrol pump facing issue situated in
the problem is in only one of metro city, no issue with the location
the pumps
• Identify the revenue sources for
petrol pump and identify
possible areas of improvement Revenue Cost
• Understand the
interdependence of revenue Value
Petrol
Added
sources on each other revenue
Services
Price Ticket Size Customers Price Ticket Size Customers
Accessibilit Sales &

Branding Variety Location
y Marketing
Revenue per
Recommendations % of customers customer
• Reduce price of petrol No of
Price of petrol visiting from
• Increase the convenience store revenue customers
convenience store convenience
store
Observations / Suggestions Original price (Rs 100) 100 30 100
• It is essential to figure out the key revenue streams for the petrol pump and their interdependence
Customers
• Calculate the net effect of reduction in prices on profit and the possible ways of increasing revenue from convenience store
Price increased by x% decreased 30 z
• Develop equation between x and y and find the desired relationship for ensuring overall profits by 2x%
Customers
Price decreased by x% increased by 30 y
(x/2)%

Washing Machine firm – Interview Transcript

Your client is a washing machine manufacturer who is facing a decline in profits. He wants you to Yes. We offer 4% margin whereas competitors offer 7% margins. How will you solve this
figure out the reason for the same problem
Profits is a function of revenue and cost. I would like to understand which part of the function is Can we consider increasing the margin for distributors and absorbing the increased expense in
causing a problem. our income statement?
We have seen decline in revenues whereas costs is not a problem Consider the following data and then decide:
Before proceeding further, it would be good to know about the Company, its position in the
Particulars FY2017 FY2019
market, product mix and the customer segment it targets. Do we have data on this?
Yes. Company is a market leader in the washing machine segment. It targets middle class Units Sold 100,000 90,000
consumer and does not manufacture high end products
Great. I would like to understand the trend for revenues and profits of the Company for the past Price to dealer 18,000 18,000
2 years
Revenue and profits have seen an overall decline of 10% Expense per unit 14,000 14,000
I would like to break the revenue into volume and price to understand the decline in revenues
Assume that the number of units sold will be back to original levels if margin is made comparable
That seems fair. The decline in revenues is due to fall in volumes. What will you do next?
to competitors
Having known this, I would like to know the geographical segments, the company is operating in.
Based on the numbers, Company made a profit of INR 40 Crs in FY 2017 and INR 36 Crs in FY
Also, is the issue of decline in volumes company specific or industry wide
2019. In case, the price is reduced by offering margin of 7%, the revised price shall be
The company operates primarily in Western India. The issue is specific only to the company approximately INR 17,400. The resultant profit shall be INR 34 Crs. That would mean we would
Okay. Is our product differentiable from the products offered by the competitors in terms of be worse-off than current situation if margins are increased.
features and price? Yes
The company’s product is superior in terms of quality as compared to competitors, but the price Do we have data on the number of distributors and their geographical spread along with the
is almost comparable to them. approximate number of retailers and their geographical spread?
If the product is superior in terms of quality and yet comparable in price and when there is no Currently, Company has 5 distributors. 2 distributors handle Gujarat region while remaining 3
industry wide issue, the product should be in demand amongst the consumers. Can I therefore handle Maharashtra region. There are 200 retailers in the Western region, with 50 in Gujarat and
assume that product is not available in sufficient quantity when demanded by customers? 150 in Maharashtra. All the retailers are widely spread across the two states
Yes. That’s correct. Also, is the Company exploring any other distribution channels such as e-commerce?
In that case, company’s distribution channel needs to be analysed. Do we have data on the Company itself has minimal presence on e-commerce portals. The products are often sold by
distribution channel of the company? distributors on such portals
Company sells its products through distributors, who then sell them to retailers and is thereby In this case, I would like to give two recommendations.
made available to consumers. One, Company can start transacting with retailers directly. In this situation, company can decide
I would like to assume that company is facing some problems with its distributors. Is my to hire a factoring agent who can take up the task of collections from retailers and invoicing them
assumption correct? regularly. Company would also have to re-look at its distribution channel and look at the most
Correct. Distributors feel that the margins offered by the Company is less as compared to optimized logistics strategy.
competitors. Hence, they distributors have gradually reduced the stock offered to retailers. What Secondly, company start selling its products directly on e-commerce portals and thereby move
would you do next? lost sales from distributors on such portals.
Do we have details on the margins offered by us and by the competitors? Good job!

Washing Machine firm
Your client is a washing machine manufacturer who is facing a decline in profits. He wants you to figure out the reason for the same
• It is important to understand • Decline is because of

whether the cause of decline lesser demand from Internal
distributors on account of Factors
is due to volume or price or
both. lower margins Profits
• There are multiple ways in • Profits will decline further
Distribution Consumer
if comparable margins are Production
which revenue can be (Push) (Pull)
increased, i.e. by entering into offered to distributors
• Retailers are widespread
Revenues Costs
new distribution channels,
new markets, marketing, new across the western region Distribution Marketing
R&D Manufacturing
• The problem is in the channels efforts
products, etc.
lower availability of the Price per unit Fixed Costs
product
Number of
Labour Issues Product
distributors
Quantity Variable Costs
Machinery Change in
Margins
Issues preference
Packaging
Recommendations
• Start direct transactions with retailers by on-boarding a factoring agent to handle invoicing and collection
• Start selling on e-commerce portals directly from company
• It is important to think about distribution channels which often goes unnoticed in profitability framework
• It is important to understand how long the problem has been going on . In this case the problem started around 2 years ago which means that something must have changed during this period which has led to a
decline in profits

Tractor Company – Interview Transcript
Our client is a major tractor manufacturer with nationwide presence. It is facing declining sales What promotional activities can you think of?
and is unable to compete. You have been approached to find the problem.
The promotional activities in this industry can be discounts, financing or increase in channel based
OK, so I would like to understand that when we say decline in sales, does it mean decline in promotions. Is the competitor offering heavy discounts in the market?
overall revenues or # of units sold? No , it is the same. What can you think can be the issue with financing?
They are facing overall revenue decline As we know that the tractors are mainly financed by different financing companies. Due to the
The key problem I need to focus on is finding the issue with declining revenues from tractor sales. recent slowdown in financial sector including both banks and NBFCs, it may be possible that we are
Is there any other objective I need to keep in mind? not able to provide good financing deals to our customers as our competitor
No. Please go ahead Excellent point. But the current issue is related to increase in channel based promotion
Is this a nation-wide issue or should I focus on a particular market? Okay. Other channels for promotion can be the print media, bill boards, TV, radio and digital (SMS,
Focus on the West, where there is a major decline internet, etc) and the word of mouth publicity
What are the key product offerings and target market of the company? Is the company involved That is correct – the major issue was that our word of mouth publicity was less. Can you guess why?
in direct retailing?
Is there a negative branding about our company in the market?
There is only one type of tractor in the market. Please focus only on that for the rural market.
No nothing of that sort. Think about what the competition could do to enable word of mouth?
The company does indirect retailing through various distributors.
They can organize trade fairs to directly connect with the consumers – telling them about the
I would now like to deep dive into the problem. I would like to breakup revenue into 2
product and branding themselves.
components i.e. # of units sold and price per unit. Do we have any information if any of these 2
has declined. Correct. They did organize a trade fair in multiple villages, called people to get free test drives and
Our prices have remained constant but we have faced decline in the number of units sold. gave away prizes at the event. This was a part of the focused strategy to gain market in the West.
Thank you.
# of units can be affected by 2 components. Overall market size of the tractor and our captured
market share. Has whole tractor industry faced decline or our market share has declined.
Overall industry is not facing any decline. Our competitors have gained the market share.
Decline in our market share can be due to manufacturing issue leading to lower production,
distribution issue or customer demand issue. Do we know because of which reason we are facing
decline
We can manufacture even for a 50% increase in demand. Capacity is idle. Also, there has been no
change in ours or competitor’s distribution. We are facing shortage of demand from customers.
Ok. So we know that decline of the revenue is linked with decline of demand of our tractors by
the customers. To further deep dive the reason of decline in demand, I would like to explore 4
factors i.e. our product, places we are reaching out, price of our product and our promotion
strategy, all with respect to competitors. Also, I would like to know a bit about our competitors.
This looks good. There are 3 main competitors. Sales of one player have increased alarmingly
while other have seen only a modest increase. The key issue is with the promotional activities.
Why would that be?
Has the competitor increased the promotional activity more than us?

Tractor Company
Our client, a tractor manufacturer, has been facing a decline in sales. You have been approached to find a solution to the problem.
Interviewee notes Case Facts Approach / Framework

• Issue with promotion • Declining sales
Sales Declining
activity • Major tractor manufacturer,
• Same discounts as with only one major product
competition • Only an issue in the West
# of Units Price/Unit
• Same promotion spending • No new competition
across print and other • No supply issue
media
Market Size Market Share
• Low word of mouth
publicity
• Increased competition Manufacturing Distribution Customer
activities
Issue Issue Demand Issue
Product Promotion Place Price
Financing Advertising
Discounts
Provisions and publicity
Banners and Word of

Print Media Digital Media
hoardings mouth
Competition
Quality issue
activities
Recommendations
• Increase penetration with counter offers and schemes
• Give away indirect distributor inputs to increase retailing
• Declining sales problems can also be separated into internal and external issues
• Once the problem is identified to be in the publicity and advertising part, including word of mouth publicity is especially critical

Fishing company – Interview transcript

A fishing company has faced a decline in profits of 15% over the last year. The CEO has hired you
The problem of product mix could either be a demand side issue or supply side issue. Demand
to find out why this has happened.
side issue affect the whole industry and since that is not the case, it is my hypotheses that the
I would like to ask some preliminary questions to understand the situation better. What exactly problem is one of the two: we are unable to catch small fish or are unable to sell them. Do we
does the company do and what geography does it operate in? know which of these it could be?
It employs fishermen, who use the company’s boats to go to sea and catch fish. They sell the Our catch of small fish has indeed fallen last year. What could be the possible reasons for it?
catch directly to customers in the town. The company is also in the business of leasing fishing
boats. The company is based out of Goa. So the problem could be either external or internal. Has there been any change in the
Alright. I’d also like to know whether the drop in profits is an industry wide phenomenon or is it composition in the water body where our fishermen fish? Is it possible that there are fewer small
just limited to our company. fish available?
The decline in profits is unique to our client. No there’s been no change in the composition of the sea. The proportion of small fish available is
still the same.
Does our client have multiple product lines within sea food or do they sell just fish?
Okay then it seems to me that there is some issue with our process of catching and transporting
They only sell two types of fish – large and small. fish. Has there been any significant change in the process over the last year? This could be any of
Do these products differ based on price, cost per unit and margins? the following: any change in logistical arrangements, change in fishermen, trawlers or fishing nets
or even change in our area of fishing For e.g.. distance from the shore
Small fish are considered premium and sell at 1.25x of the price of big fish. However, it costs the
Actually yes there has been. Last year we went on a cost cutting drive. We wanted to reduce our
same to catch those fish.
expenditure on fishing nets so we tied up with a company providing cheap recycled nets.
Okay, that’s interesting. So let me know try and identify the cause for drop in profitability. Since However, these nets came with a square mesh instead of the diamond mesh that fishermen
profitability is a function of revenue and cost, I’d like to analyse the two. Starting with the cost traditionally use. It was found that while the gaps in the diamond shape nets compressed when it
component, what has been the trend over the last year? came in contact with water, the square shaped mesh retained its shape under water and allowed
Our costs have actually gone down by 5% a lot of small fish to escape through the gap in the nets.
That is some really interesting information!
Okay, that’s interesting. What about your revenue?
Thank you for your analysis. You did a good job.
Our revenue for the last FY was down 12% YoY.
Alright, so the Revenue component is driving profitability down.
I guess so. So what do you suggest?
Okay so in a typical fishing company, the major heads of revenue would be fish sales and lease of
fishing vessels and equipments. Do we have any data with respect to these?
Yes, we do. Our lease income has indeed fallen from the the previous year on account of loss of
a few customers. But leasing only contributes to about 15% of our total revenue. So there’s must
be something else too.
So a fall in revenue from fish sales must be driven by one of these three factors: fall in average
selling price, dip in volume or a change in product mix. Do we have any indication about which of
these it could be?
Yes that’s indeed correct. So, there has been a change in the product mix that we offer. We have
found out that we are selling more large fish and fewer small fish than we used to last year. Can
you help the company understand why this could be the case?

Fishing company
Drop in profits of a fishing company

• Company owned boats – • Profits down by 15% over 1 year
employ fishermen • Costs down by 5%
• Revenues down by 12% Profits
• Directly sell to customers –
• 2 product lines: big and small fish
no distributors
• Not an industry wide
problem Revenues Costs
• Big fish: low revenue, low
margin
• Small fish: high revenue, high Price Volume Product Mix
margin
• No change in consumer
preferences Supply
Demand side
side
• No change in sea
composition
Internal
External
Observations & Suggestions

• It is important to ask preliminary questions to understand the company and the industry. A key insight (different product lines and different margins for each) was derived from the
preliminary questions.
• It was important to note that change in sales of one product was not linked with change in consumer preferences. The problem can be on the supply side as well so it is useful to analyse
the entire value chain to understand where the problem lies.

Banking – Interview Transcript

Your client is a Leading Public Sector Bank(PSB) in India. Recently it has been experiencing a Alright, now let’s concentrate on retail growth, as you rightly pointed out, it has the lowest NPA.
decline in its profitability. It wants you to analyse why? In growing the number of customers the bank could look at our existing market presence, or
This seems like an interesting problem. To better understand the proposition, I would want to look to expand to newer areas. In the existing markets they could need to analyse whether our
ask a few clarifying questions. products have market visibility. In case that is there the bank needs to analyse if the channels are
Is our objective to reverse the decline in profitability, or is the bank only looking towards accessible, and finally, the bank need to look at desirability vis-à-vis other providers.
assessing the reason for the decline? Briefly analyse all
The bank wants us to analyse the reasons and suggest avenues for growth. Awareness could be increased with promotion. In Channels, there are two broad categories –
Is it safe to assume that the bank is National – Pan India, and that domestic business is the major Physical and Digital. In both, the approachability and the hygiene factors are important. The
arm of the business. approachability looks at aspects such as location of physical branches, or accessibility of the site.
That is a fair observation The hygiene factors explore the ease of doing business. In the desirability, the bank needs to look
I am trying to understand the bank’s customer base. So, am I right in assuming that the bank at the products and services offered by our competition, the tie-ups and the preferences of
draws a majority of its business from rural banking, but also has a competitive position in Urban customers.
areas?
Yes, a majority of the bank’s business is from rural areas, and in urban areas it has a more muted In tie-ups, the bank could explore areas such as EMI loans for online shopping; tie up with real
presence. Something it aims to work on estate agents, educational institutes, car agencies, travel agencies, and businesses (for personal
Since when has the bank been facing a decline in profitability? Also, have the other banks also loan for employees).
been facing similar issues?
The bank has been witnessing falling profitability for the past 5-6 quarters. Some banks have seen Is there something I should analyse in greater detail, or should I move to analysing new markets?
declining profits, but others have seen periods of steady growth. No this is a good analysis. Let’s move onto value per customer.
Interesting. That’s a decline for almost a year and a half, while the industry seems to be doing fine. In value per customer, since, the interest rate is not a variable we can adjust to a large extent, we
This leads me to hypothesize that is some systemic issue with the bank, that probably stems could look at increasing the loan amount per customer, or cross-selling associated products.
from faulty loan policies, in turn escalating costs A final clarification, what is the timeline that we Ok
are looking at to reverse the decline in profitability? For increasing the loan amount the bank could sell them other loans. For instance, for someone
The bank wants to reverse the trends in the next 1-2 years. who has a home loan, the bank could sell them a car loan, etc. In selling associated products, the
Given the short timeline, I would like to take a two pronged approach. To increase profitability, bank could market insurances and wealth management products of its partners.
we have two possibilities - increase revenues - increasing the customer base and income from Good. Thanks, that would be all.
advances. Second, we could look at the cost aspect, maybe target recoveries to decrease the
NPAs, reducing the written off assets. Is there something specific you want me to look at?
Has there been a substantial decrease in the revenues, or an increase in the costs?
Yes, the costs have increased, but revenues have remained more or less constant. Why don’t you
start by analysing the revenues?
As a Public sector bank, since in-organic growth is not a feasible option, we could explore
increasing the number of customers or the value per customer. Since the agriculture and
commercial loans have been high on NPAs, the bank could focus on retail assets to grow.
However, I do realise that the social dimensions, and priority sector lending targets are also to be
considered.
That’s a fairly good analysis. Could there be a way to utilise the latter, since we enjoy a large rural
presence?
Using its pervasive network, if the bank could can tap into the last mile customer and provide a
basket of services to these customers, whom they have almost exclusive access to. This would
help them substantially grow their revenue, and also build our brand image.

Banking
Your client is a public sector bank who is facing a decline in profits. It wants you to figure out the reason for the same

• It is important to • Decline is because of Profits
understand whether the higher customer
cause of decline is due to acquisition as bank still
cost or revenue follows traditional
Inc. Revenue Costs
• Here the interviewer asks banking model.
the interviewee to focus • Costs are also on
on costs account of high NPAs
No. of Value per
• Banking sector specific customers customer
costs such as customer
acquisition and transaction
Existing Interest No of
costs along with NPAs New Market
Market Rate Products
should be focused on.
Increase loan Sell associated

Corporate Retail Agricultural
products products
Recommendations
• Target retail assets to grow revenues which have minimum NPAs, use existing network as leverage to grow
• Increase the number of products as well as value per customer to drive this growth
• Sector specific knowledge such as increasing farm loan waivers in agricultural sector or rising NPAs in corporate sector can hint where the bank could look for its growth, i.e. retail

Profitability | Revenue decline | Challenging
Alcohol Company – Interview Transcript

The Client is an experienced alcohol manufacturer in India. They have been facing a gradual Focus on the consumer demand and change in demographics. Why do you think that is a
decline in profits and have also experienced a sudden dip in profits recently. The client wants reason?
you to identify the reasons for the decline in profits and give recommendations for improvement
I would like to know more about our whiskey brand- what are its core competencies and how
I would like to begin by understanding more about the company and its products. What is it different from its competitors.
geography does the company cater to? Could you please tell me about its product portfolio? The Company has a premium chain of whiskey brands. It seeks to offer customers better taste
The alcohol manufacturer makes several types of alcohol. It caters Pan India and some foreign and superior packaging. This comes by charging customers a premium price.
markets. You may want to focus only on India. Thank you for the information. I hypothesize that due to a younger generation entering the
Is the decline related to all products? Is this an industry wide problem or a company specific market, they do not identify themselves with a Premium brand of Whiskey, and they may be
phenomenon? more willing to spend on inexpensive brands. Further, I suspect that a change in demographics
The decline in profits is faced by their Whiskey Brand. It is limited to our company has also led to an increase in small bars and pubs where Premium Whiskey may not be sold.
Great! I would now like to dive into the case and structure it to get to the bottom of the Also people in this Price sensitivity could be another added factor for the lack of demand.
problem. I would first examine the gradual decline in profits and then move to the sudden dip Yes, you are right. The problem lies in the changing ideology of consumer and their preference
recently. I will begin by breaking down profits into its component parts: Revenue and Cost. in Whiskey. The current market does not value a premium Whiskey in the same way, and the
Next, I will identify which of these are a problem and further look into Internal and External shift towards pubs is making it difficults for people to enjoy Whiskey for the taste. Why do you
Factors that may have changed to alter the revenue or the cost structure. Would you like me to think there was a steeper drop in profits recently?
proceed in this way?
I would now like to analyse the external factors: the introduction of new whiskey by a
Yes, that sounds like a good start. Why don’t you go ahead?
competitor, negative publicity of our whiskey brand, and other government policy reforms.
Since profits are a function of revenues and cost, I would like to know if the cost has increased
That’s a good list. I would like you to think about possible government policies that could have
or the revenues have decreased or both.
impacted our sales.
We have seen a decline in revenues whereas the costs have remained the same.
Sure. The government policy changes could be – reform in the drinking age in the country, the
Okay. I would like to break revenues down into quantity sold times price per unit. Have we
shutdown of several bars, wine shops and pubs due to legal or political reasons, renewal of
seen a decline in quantity sold or a decrease in price per unit or both?
licensing for all alcohol manufacturers.
The price of units has remained the same. However, the units sold has decreased.
Great! You are close to the answer. The government recently passed a law where all bars at a
Great. So far, I know that the decline in profits is due to a decrease in quantity sold. Now, I
distance of 500 meters of a national highway were no longer allowed to sell alcohol causing
would like to analyse why the quantity sold has been declining over the years. I would like to
further damage to our sales figures. What recommendations do you have for the company?
look at Internal and External factors.
Sure. Go ahead. I would divide my recommendations into short term and long term measures. In the short term,
the company can indulge extensively in marketing the premium whiskey product. The product
I will start with problems that could have reduced quantities sold due to internal factors. I would
should be placed in upscale locations such as sports bars, hotel lounges, and high-end
like to divide the factors into production, distribution push and consumers pull. Would you like
restaurants. This way its perception as a premium brand remains and the value is not diluted.
me to explore all options or look into any one of them specifically?
My second recommendation deals with the change in law – the company can look into lobbying
Why don’t you walk me through your framework and I will be able to tell you more as we go with the government since all companies would be faced with the problem and there is no
along? scope to find a way around the law. In the long run, in order to address the changing
Okay. There may be a problem with production wherein we are not producing enough. This preferences due to demographic change, I would recommend that the company invests in
could be because of lack of investment in R&D, decrease in manufacturing – labour issues or product innovation to launch a non-premium label of Whiskey.
machinery issues, packaging issues. Apart from this, there could be a change in distribution Those are good recommendations. Can you quickly summarize the case for us
strategies wherein the push of products towards the market has reduced. This could be because The company is an experienced Indian alcohol manufacturer facing a decline in profits over time
of two reasons – either a change in distribution channels or a change in the number of and more so recently. The gradual decline in profits can be attributed to a slow down in the no.
distributors or change in the margins given to distributors. Lastly, there is a decrease in of units sold for its premium whiskey brand. The reason behind this is the change in taste of the
consumer demand due to – decrease in marketing or change in taste, demographics, age or consumer. The sudden dip in profits recently is because of a government law passed to regulate
location preference. the sale of alcohol. To improve profits, the company can market its product more extensively
and lobby with the government to change the recently passed low. Over time, the company can
launch a non-premium label of whiskey

Profitability | Revenue decline | Challenging
Alcohol Company
The client is an experienced alcohol manufacturer in India. They have been facing a gradual decline in profits and have also experienced a sudden
dip in profits recently. The client wants you to identify the reasons for the decline in profits and give recommendations for improvement
Interviewee notes Approach/ Framework

• Enquire about product
variety and geography.
Whiskey sold is a premium Internal Factors External Factors
product and appeals to a
certain section of society
• Keywords – ‘gradual’ and Distribution
Production Consumer (Pull)
then ‘sudden’ drop in (Push) Government Policy
Competition Negative Publicity
profitability. The sudden Change
drop may have factors that
are independent of gradual Distribution
R&D Manufacturing Marketing efforts
channels
drop
• Alcohol industry is New product Licensing
governed by several Number of
Labour Issues Product Quality
external factors like laws, distributors
licensing etc.
New entrant Drinking Age
Machinery Issues Margins Change in tastes
Packaging Shutdown
Recommendations
• Long term: For change in consumer invest in product innovation to launch a non-premium brand to cater to the changing demographics who prefer cheaper alcohol and are not keen on the brew and taste.
• Short term: Firm can indulge extensively in marketing the premium whiskey product; lobby with the government to negotiate with rules.
• The case was simple and straightforward
• Received help from interviewer due to good structure and appropriate questions leading to necessary answers
• Interviewer liked the framework, and it could be tweaked for other similar profitability cases
• List could have been more exhaustive in some cases for example, with factors affecting distribution

Profitability | Moderate
Airline operator – Interview Transcript

Your client is a low cost airline operator in Europe. Over the past 2 to 3 years, it has been Please go ahead.
burning cash. Diagnose and recommend solutions. So, I would break the entire value chain into the components. Those are procedure for flight
I would like to ask a few clarifying questions before I begin to analyse the case. I would want to booking, Reaching airport, Procedure at the airport, taking the flight, taking the luggage at
understand the client’s business. What kind of flights does the company run? destination airport. I would now further like to understand each of the mentioned processes.
The company operates short flights across Europe. We have direct as well as connecting flights. Okay. Lets focus on reaching the airport segment. I would further like to tell you that though the
airport is in the outskirts, the time cost of reaching the airport is same.
How many competitors do we have and are they facing similar problems?
I would break down the cost into time cost and effort cost. Now, since the time cost is same, I
We do have 2 major competitors but unfortunately none of them are facing this kind of a assume that the effort cost has gone up. Is that a fair assumption?
problem. You can go ahead and work out the revenue streams for our client.
Quite right. I have few numbers. Can you work with them and let me know your suggestions. At
Ok. So I believe that the major revenue streams would be hospitality, revenue generated from earlier airports mode of transport was: Public 30%, Own 20% and Taxis 50%. Now in this airport it
tickets and cargo. I wanted to confirm once that have the revenues gone down and has there is Public 50%, Own 40% and taxis 10%.
been any significant changes in cost?
That’s interesting. So, the availability of taxis in this airport location has gone down. This is primarily
Yes the revenues have gone down and the costs have increased. Let us focus now on the because the airport is situated in the outskirts. So the taxis do not get any passengers while
revenue generated from sale of tickets. returning. Hence the number of taxis in this area have gone down. Now the taxis being less in
That’s very helpful. I would want to analyse this problem by looking at various components of the number, it has become difficult for passengers to reach the airport. Hence that explains the reason
revenue. I would break them down into price per ticket, occupancy rate, number of seats/flight why the occupancy rate has gone down.
and number of flights? Do we have any information on any of these parameters? Yes. You are correct. Can you summarise the case and suggest a few recommendations?
Yes. So, the number of direct flights have gone up and the occupancy rate in both direct and As per my understanding, the company has burned cash because of huge investments in building
indirect flights have gone down. airports. Now the airport, being located in the outskirts has very less availability of taxis which are
Okay. So I understand that the drop in revenue is mainly due to the drop in occupancy rate. Do the most preferred mode of transport to an airport. Hence the passengers preferring this airlines
we have any data regarding the same? Also to further understand why we are burning cashes, I have gone down leading to decrease in occupancy rate. I would now state my recommendations.
would like to look into the costs side. Yes. Please go on.
Sure. Go ahead and tell me what are the major cost components? So I would suggest that the client should start its own shuttle service or collaborate with taxis
Ok. I would break down my costs into fixed Costs and variable Costs. The fixed costs would providing them added incentives. Further, the client can also include transportation cost from
comprise of lease, hangar costs, salaries and marketing. The variable costs would be fuel, airport to desired location as part of the ticket price.
maintenance and operations etc. Do we know how these cost heads have changed over the last 3
years?
Yes, the hangar costs have gone up.
I am trying to understand why the costs have gone up and whether this has gone up for the
entire industry or only specifically for us.
It has been such that the hangar costs have gone up only for us. This is because we have started
owning airports. The speciality is that people need to reach our airport only half an hour prior to
flight.
Okay. That helps a lot. So what I understand is that we have started owning airports and this has
led to large investment cost hence leading to burning of cashes. Further I would like to
understand why the occupancy rate has gone down.

Profitability | Moderate
Airline operator
Your client is a low cost airline operator in Europe. Over the past 2 to 3 years, it has been burning cash. Diagnose and recommend solutions.

• Revenue –cost analysis • Client operating both direct and
• Client currently in airlines connecting flights across Europe
industry • Problem exists only for client Profit
• Ask about the current status • Revenues have gone down and the
of the industry and costs have increased
competitive scenario • Hangar costs have gone up
• Which are the revenue • The client have started owning own
streams? airports – arrival only 30 mins prior
to departure
• Airports located in outskirts, but Costs
Revenue
time cost of reaching airport remains
same
Occupancy No of No of
Price/ticket flights seats/flight Variable
Rate Fixed costs
Costs
Hangar
Marketing Salary Lease
Costs
Recommendations
• Should start its own shuttle service
• Should collaborate with cab aggregators by providing added incentives and ensure taxis stay outside the airport
• Can bundle two services together – Air ticket price and transportation price and ensure passengers are picked up /dropped from respective locations
• The candidate did a good job in figuring out the fundamentals in why the revenue has gone down. Also after the cost analysis, the candidate was able to further elaborate on the reasons why the revenue has gone
down

Profitability | Challenging
SpiceJet vs Indigo – Interview Transcript

Your client is SpiceJet which has recently seen a decline in profitability compared to Indigo. That makes sense. Let us now come to the cost aspect of the problem.
Analyze the problem and provide solutions For the cost aspect of the problem, I would like to draw the cost value chain for SpceJet which
I would like to ask a few clarifying questions before I begin to analyse the case. Firstly, I would consists of the following- Cost of materials i.e. expenditure on fleet, processing costs which would
like to confirm that we are focussing only on SpiceJet’s airline business and domestic travel at that include airport rent, employee salaries, IT services and fuel costs, storage costs which is maintaining
since we are comparing with Indigo? inventories of spare parts, distribution and marketing and customer services (on-board services).
Yes, that is correct. Which part of the value chain would you say is suffering?
Alright. I would like to then understand the recent industry trends over the last 5 years. Is the SpiceJet is experiencing high storage costs which have recently risen further.
decline in profitability specific to Spiceet or is it an industry wide phenomenon?
Is Indigo also facing similar costs or is it just SpiceJet?
SpiceJet specifically has been facing the issue of decline in profitability.
Only SpiceJet.
Since this is the airline industry, has the decline been on some specific routes? Inventory costs can be split into types of inventory held, number of inventory parts and cost of
Across the nation. carry which would include pilferage, warehouse rent, poor demand prediction, poor inventory
Is there a specific reason we are comparing our profitability to Indigo’s since our scale and target management & late supply costs. Is the cost higher than Indigo across all these components?
population of premium customers (if I can assume that) is different? The cost is high specifically due to the types of inventory held. SpiceJet operates with different kinds
No specific reason. Indigo is doing well in the domestic market, they are not seeing the same of fleet whereas Indigo has one standardised fleet. Due to this, SpiceJet needs to hold more
decline that SpiceJet is. inventory. What implications would this have?
Alright then. Since this is a profit problem, I would begin by splitting it into revenue and cost. Are Due to different kinds of planes, there is a greater number of spare parts that SpiceJet is having to
we observing rising costs or declining revenues? hold which is the reason behind higher costs. The costs have risen now more than before, could
probably be driven by the new fleet purchased by SpiceJet for the niche routes. If the new fleet is of
Both. Let’s start with revenues and move over to costs. a different type, then cost of inventory due to the new purchase has increased overall costs and led
Okay. Revenue for SpiceJet’s airline business can be written as Price X Occupancy X Capacity. to a fall in profitability.
Have we observed a change in any of these components or across all ? That is correct. The new fleet purchased by SpiceJet is smaller and requires an inventory of
Price has remained the same. Occupancy has declined and capacity has increased. different parts. What would your recommendations be?
Again, have these changes occurred across the country or only on some specific routes? Okay. So there are a few things that SpiceJet could do vis-à-vis the inventory costs-
1. Standardise the fleet going forward. Make sure new purchases in the future are standardised.
SpiceJet recently started its business across some niche routes. Occupancy in those routes has 2. Renting agreements with suppliers of inventory – alternative to purchasing expensive
been suffering. inventory
That makes sense. Just to clarify, since this is a new business for SpiceJet I would like to 3. Hub & spoke model- Have a centralised location where inventory is stored and supply to all
understand what kind of investments have been made? Has SpiceJet purchased a new fleet or has airports instead of maintaining inventory at every airport
it simply re-routed its existing fleet? 4. Need basis- Order inventory on a need basis instead of maintaining excess
New fleet has been purchased.
Since it is an occupancy issue (low demand for SpiceJet), I would like to understand the customer
profile in these niche routes. Do these routes have low airline travel demand or is this occupancy
issue specific to SpiceJet? Is this demand likely to grow in the future?
Currently these routes have low travel demand but likely to grow in the future, and therefore
the investment. The demand for premium SpiceJet travel has also been projected to rise.
That’s very helpful. Since we have already made substantial investment we may not want to
withdraw fleets from these niche routes entirely for now. A few short term measures which we
can undertake are as follows:
1. We can expedite our marketing activities in these regions
2. We can analyse price sensitivity of the customer pool and accordingly price for now. We need
to keep in mind that this is a price sensitive industry with very little pricing power
3. Instead of having flights catering to these niche routes specifically, we can have our new flights
on the conventional routes and have re-routing via these routes.

Profitability | Challenging
SpiceJet vs Indigo
Your client is SpiceJet. It has observed a decline in profitability vis-à-vis Indigo.Analyze the problem and provide solutions.
Interviewee Notes Case Facts Approach/ Framework Price

• Revenues have fallen and • SpiceJet airways facing declining
costs have risen profitability. Not an industry Customer
Revenues Occupancy
• Identify revenue wide trend segmentation
components, problem area • Focus on airline business, Profits
and subsequent domestic travel Costs Capacity
recommendation • Problem across India and not
• Draw the cost value chain, restricted to a particular route
identify the problematic • New fleet purchased for niche Storage & Distribution- Customer
R&D Raw Material Processing Marketing
Transportation Sale force Service
segment routes
• Segment the specific cost
further to identify cause Cost of raw Transport to Sales Channel Marketing Repairs
Equipment Machinery
material warehouse channels
and make
recommendations Human Capital Contract & Sales Force Strategy Spare parts
Factory rent Inventory costs
bulk deal
Cost of finance Quantity used Transport to Training Returns
Labor hours
customers
Technology
Capacity
utilization
Packaging
Recommendations
• Revenues- rerouting, bundling, expediting marketing, re-analyzing customer segment
• Costs- Standardize fleet, hub & spoke, renting agreements, need based inventory procurement
• Revenue should also be appropriately split into its components given the airline travel industry

Pricing
2019-20 48
Pricing – Overview
In a pricing case the objective is to determine a methodology for pricing of any product. The product could be a new invention, it could have
other competitor products in the market etc. The student should determine the objective of the company, understand the product features and
market environment and then apply a relevant methodology to price the product.
Framework Summary
It is imperative to consider the objective of the company, since it directly affects the pricing strategy to be followed. Then the student should understand the product characteristics and the
market environment to apply a prudent pricing methodology. In case the pricing needs to be done for an old product (rare scenario), the utility of the product w.r.t a new product and the
depreciation/salvage value need to be taken into consideration.
Tips
• A supply vs. demand tradeoff approximation is always helpful in such cases (best when demonstrated graphically)
Key Questions
• Which industry are we talking about?
• What is the objective of the company?
• What are the product features?
• How big is the market? What is the target segment?
• Who is the customer in the supply chain (margin to stakeholders)

Pricing | Moderate
Helicopter service – Interview Transcript

Your client is a Heli air service provider. How would you price this service? Is it a viable business? We plan to rent it and start with one helicopter.
Alright. First of all, I would like to understand what exactly is a Heli air service and where is the Ok. Other fixed costs would be the airport charges, maintenance charges, salaries of the employees,
client planning to operate it? insurance cost etc. The main variable cost would be the fuel cost. Do we have data about the costs?
Heli air service is a helicopter service for inter-city transport. The client is planning to operate it in The cost of renting the helicopter is Rs 16 Lakhs per month. Airport charges us Rs 2 Lakh per
Delhi. The service would be from the airport to two different ports at the two ends of the city month while the salaries of the employees come out to be Rs 4 Lakhs per month. The other
overheads are around Rs 1 Lakh per month. The helicopter uses 60 Litres per hour. The cost of the
Are they operating anywhere else? fuel is Rs 75/litre.
Yes, the client has operations in London, Paris and New York I would like to estimate the minimum amount that our client would need to charge in order to break
even. Our fixed costs come out to be Rs 23 Lakhs per month. The cost of the fuel would depend on
Is there any specific reason for choosing India?
the number of trips that we would take in a day. Is there a fixed number of trips that we are
They are excited about the growth opportunities in India and feel that it is the right time to enter planning?
No, why don’t you calculate the optimum amount
the market
You mentioned that our heliair service would go to the two ends of the city. On taking a cab it
Are there any existing players in the market?
would take around 2 hours to reach. The helicopter would cover the distance in 1 hour. Since we
No only have 1 helicopter we would need to alternate between the two ports. After completing 1 trip
we would need to have a break both for the pilot and the helicopter. Thus, I would like to assume
Then our main competition is with existing services like cab or metro. How are we placed in that we can complete the whole trip in 2.5 hours and be ready for the next one.
comparison to these services?
Go Ahead
What according to you are the advantages of the proposed service?
We can complete 4 round trips per day. The helicopter would be in use for 8 hours. Thus, the cost
The major advantage would be in terms of time saved and the luxury and convenience comes out to be Rs 36,000 per day. How many days in a month are we planning to operate it?
That’s right. The travel time would reduce to half. 25 days
OK. Now coming to the pricing part there are 3 possible pricing strategies that we can look into Then the total cost would be Rs 9 Lakhs per month. Thus, in order to break even we would need at
least Rs 32 Lakhs per month from the passengers. We have a total of 100 trips in a month. Can I
1) Cost based pricing assume the helicopter would accommodate around 4 people?
2) Competitor based pricing Yes
3) Value based pricing Even if we get 100% occupancy for all our flights we would need to charge the people Rs 8000 per
trip just to break even which is a pretty high cost. I would like to do a sanity check in order to make
Since we do not have a direct competitor I would like to focus on cost based and value-based
sure that the number is in the right range. The only heli air service I know is for Vaishno Devi which
pricing. Is there a particular strategy that you would like me to start with?
costs around Rs 1100 for a 5 minute ride. Thus it would be around Rs 13,200 for 60 minutes
Why don’t we start with the costs? What are the major costs involved? however since the fixed costs don’t change with increase in length of trip Rs 8000 seems to be a
good estimate. This is in contrast to taking a cab would cost around Rs 800 thus they are paying 10
The cost can be divided into fixed and variable. One of the major fixed cost would be for the times the amount. In order for this to be a viable option their time should be worth at least Rs 7200
helicopter. Are we planning to buy a new helicopter, lease it or get it from another market where per hour. This is true only for the very rich people who can actually buy their own helicopter and
we currently operate? How many helicopters are we planning to get? would thus have no need for our service. Thus, I don’t think that it is a viable business.
Well done

Pricing | Moderate
Helicopter service
Your client is a Heli air service provider. How would you price this service? Is it a viable business?

• First service of such • The cost of renting the
kind thus there are helicopter is Rs 16 Lakhs per
Pricing
no competitors month.
• Operating in Delhi • Airport charges us Rs 2
• 2 ports will be Lakh per month
operated to the two • Salaries of the employees
Cost based Competitor based Value based
different ends of the are Rs 4 Lakhs per month
city • The other overheads are
• Time would reduce around Rs 1 Lakh per month
to half • The helicopter uses 60
Litres per hour. The cost of Fixed Costs
the fuel is Rs 75/litre
Variable Costs
Recommendations
• Understand the client’s business and his expectations through clarifying questions before going on with the structure
• It is important to analyze all the possible pricing strategies. Here the service has a value-based price but the cost is so high that it becomes unviable
• Do sanity checks wherever possible

Pricing | Moderate
Light bulb – Interview Transcript

Surya electrical company has invented a new bulb that never burns out. It could burn for more So? Will the customers agree?
than 500 years and would never blink. The director of marketing calls you into her office and asks I do not think so. However we have spent ₹120 Cr. on the project and it is a very useful
“How do you price this.” What would you tell her? invention. Let us broaden the scope for the product a little and think more about the
Alright. So before we figure out the appropriate price for this new light bulb, I would like to ask a customers. I think various city councils are our customers too as they need to provide
few questions about our company, this product, the potential customers and the competition. lighting for the streets and public places. There may be around 3000 street lamps and
another 1000 bulbs at various stations, hospitals etc.
Go ahead Ok, what are you proposing?
These customers incur an additional expense of maintenance and changing of the light
What is the objective of the company regarding this product? bulbs and maintaining staff for it etc. If we can sell this product to them, they will save on
To gain as much profits as possible. these additional costs and will not have to worry about maintenance at all. Estimating
that these bulbs are available for ₹500 to the city, upon which they need to pay labour
Ok. I would like to know more about the product now. Is this a completely new product or has our charges of ₹200 each to two workers needed to change the bulb, it still costs them ₹900
company/ any other company introduced something similar in the past? per bulb, twice a year. We can have a mark-up over this and sell each bulb at ₹4,000
each. They would recover the amount in two years and we can use this price based
No this is a completely new product that we have developed. ( the product is new: follow that costing to get a very good profit. It is important that we make a good profit on this
branch) product because for every sale of a new technology based bulb, we are losing the sales for
In that case, is the product patented? 100 conventional bulbs.
We have a patent pending, and no one else is trying anything similar. Good point , thank you.
Can you tell me if the product has any disadvantages? Does it use more energy? Or is it harmful
to the customers in any way?
No it is safe product ready for the market. It also doesn’t use more energy
I see. I was thinking we could either price the product at a price comparable with the competition
or base it on the costs that we have incurred we can also look at the price the consumers might be
willing to pay. Since you have mentioned there is no competition I shall rule that out and focus on
what costs we have incurred for this.
Ok go on.
So how much have we spent on R&D for this?
₹120 Cr. for this light bulb.
For a conventional bulb it costs us 4 rupees to manufacture, we sell it to the distributor for 10
rupees, the distributor sells to the store owner for 14 rupees and he sells it to the customer for 18
rupees.
This light bulb costs ₹400 to manufacture.
Ok so if the manufacturing cost is 100 times, then accordingly the customer will have to pay ₹1,800
for one light bulb. On the up side this is a bulb that will never burn out, so say the people will buy it
once for the next fifty years and are essentially paying for 100 bulbs that they would have used in
the next 50 years. (considering a bulb change twice in a year)

Pricing | Moderate
Light bulb
Surya electrical company, has invented a new bulb that never burns out. It could burn for more than 500 years and would never blink. The
director of marketing calls you into her office and asks “How do you price this.” What would you tell her?

• New product in the • The invented light bulb lasts
market with a for 500 years
distinct longevity • No threat of competition in Pricing a Product
feature the near future
• Other utilities are • R&D cost is ₹120 Cr.
similar to a common • Conventional bulb costs ₹4
bulb to manufacture Radical Modification to Similar to Pricing w.r.t.
• This is a modification • The new bulb costs ₹400 to Invention existing product existing product another product
to an existing manufacture
product yet comes
with an advantage
that no bulb in the Competitio Competition
market has. n Exists doesn’t exist
• The objective is to
gain as much as
possible
Recommendations
• Since the manufacturing cost is 100 times that of conventional bulb, customers would ideally have to pay ₹400 for us to recoup costs. This is improbable since customers would
not shell out a huge amount for a bulb and the longevity benefits are difficult to be perceived by the average customer.
• However, this innovation can be useful for public places such as streets, stations, hospitals etc. where additional staff is required for maintenance. A long-life bulb in such areas
would be extremely useful as maintenance costs would be largely reduced. Hence, such customers should be targeted for this product.

Pricing | Moderate
Residential complex – Interview Transcript

Your client is an upcoming builder in Kolkata. He has recently built a housing complex and wants Okay, and what would be the questions you would consider with regard to the
to figure out how to price the apartments. Help him decide a price. competitors?
I would find the competitors’ prices and costs in the economy category to gauge their
I would like to ask a few clarifying questions before I begin. I want to understand a few things margins. Moreover, I would compare their offerings with ours to see if they offer more or
about the complex. What kind of a locality is it located in and how crowded is the market in that less for unit price. I will then price the apartment basing competitor as the benchmark.
region?
One to go now. What about value based costing?
The complex is on the outskirts of the city. It is an upcoming region which the client has managed
to make headway into before any other builder.
Well proximity to Metro and office spaces certainly be a reason to add a premium to the
Is there any specific reason for choosing this location? competitor - based pricing I had discussed earlier, assuming the competitors don’t offer
this advantage. We can also look at proxies in other parts of the city to analyze the
There are a few offices coming up near by along with a metro project announced by the State
prizing strategy followed by builders. Therefore, I would price the apartments at a
Government connecting the area to the main city
premium above the competitors’ prices, with an overall constraint of keeping prices
This would be able to attract people working in these offices and people who are willing to travel above or equal to the cost-based rate that was computed.
in search of cheaper apartments. What are the number of apartments and buildings in the
complex? That’s fair, What would you recommend in this case?
There are 10 buildings with 100 apartments each. Since it is upcoming region and metro services are not being offered right now, so
competition and value based pricing would not help us much and we should go with cost
So 1000 apartments. Okay, Are these segmented into different categories? And if yes, what are the based pricing till the area is sufficiently developed.
kind of amenities offered by each of the categories?
Assume all the apartments fall into the economy category and that the amenities are at par with
the industry standard.
How much has the builder invested in this project and what is the gestation period he is
comfortable with?
The builder has invested 250 crores and expects a 10-12 year gestation period
Okay, lastly what is the average size of a single apartment?
A single apartment is on average 2000 square feet.
All right. I will like to look at three kinds of pricing and then take a decision on which pricing
method to go ahead with. I will look at cost based, competitor based and value based pricing.
That sounds reasonable, let’s look at cost-based first in that case
Okay, So I have a few questions before I begin. I want to know about the expected profit margins
and maintenance charges per flat, expected sale schedule and pricing strategy to be followed for
different flats
Consider profit margins to be 10% of the cost incurred and maintenance charges to be payable
annually and thus not included in the pricing of the apartment . The client is expecting to sell 20%
of the flats every year in the next 5 years. Assume floor 1-5 to be priced 10% higher than 6-10.
Our price should be such that it should include the cost incurred by the client and the profit
expected out of the project. Considering the profit to be 10% of the investment made in the
project. The total expected revenue would be 280 crores. Expected Revenue = number of
flats*price/square feet*square feet. Since some flats are to be priced higher than others, price/
square feet for floor 1-5 would be 1467 and price/square feet for floor 6-10 would be 1333 INR.
Since all the apartments would not be occupied in the first year, we can increase the price of the
apartment in future years to account for growth, improvement in surroundings and inflation.

Pricing | Moderate
Residential complex
A builder has approached you to know the price at which he should sell the apartments in his newly developed housing complex in Kolkata
Interviewee Notes Case Facts

• No product • 10 buildings x 100
differentiation as apartments/ building = 1000 Pricing of
apartments
such apartments
• First mover • Located on the outskirts of
advantage Kolkata
• Cost, competitor, • 10-12 year gestation period
Cost Competition Value based
value • Capex 250 crores
Pricing based pricing pricing
• Regulatory concerns
Investm Maintena Profit Proximity

ent Cost nce Cost percentage to a metro
Industry Industry
Margins Offerings
Recommendations
• Understand the client’s business and his expectations through clarifying questions before going on with the structure
• Figure out a way to collate or coalesce the three prices found through the three methods

Market entry
2019-20 56
New Market Entry – Overview
A market entry case (whether new product launch or entry into new geography or both) is hinged on two basic questions: Is it worthwhile
entering the market (economically and strategically) and if yes, what would be the best way to enter the market.
Framework Summary
Understand what the company ‘s objectives and expectations are. Does it make business sense for them/ Does it align with the overall firm strategy. Analyze the feasibility of market entry by
considering 4 different buckets. Then recommend whether they should enter or not. If yes, how should they do it.
Tips
• Not every aspect of the framework mentioned will be applicable to all cases. But try to cover as much as you can, so that you get a good idea of the industry and the client current status. It is
very important to identify where the client would stand in the industry compared to the existing competitors and what measures should be taken to mitigate competitive edge of incumbent.
Observations
• Most of the times interviewer will be satisfied if you analyze and suggest, whether to enter or not. But it is always good totake an extra mile by giving a high level plan on how to enter and
capture the market

New Product Launch – Overview (subset of market entry)
In a new product entry case, a company is likely to aim for introducing a completely new product in a market or expand its existing product’s
reach in a new geography. A interviewee is expected to first align on the product’s viability to succeed in the market followed by identifying the
correct price point and target market and finally recommend levers that can drive product success in the market
Framework Summary
A company can either introduce a product in a market where it has no presence or can extend product line in its current market. Launching a product in a market with no presence pose not
only operational challenges but viability of product’s success in the market also needs to be explored. Extending the product line in current market may require looking into cannibalization while
doing a feasibility check of product in the market and how the current value chain can be leveraged in making the product available to its customers.
Tips
• Clarify objective, especially focus area of a new product entry case
• New product entry cases might involved multiple issues linked to it and hence both depth and the breadth needs to be covered for exhaustiveness
Key Questions
• What is the purpose of the new product introduction –capture increased market share, entry into a new business line, profits, build brand?
• How big is the market for the product? Any barriers to entry? How does the competitive landscape look like?
• Segments in the target population?
• Initial investment? Expected payback period?
• What is the price at which the product can be introduced?

Market Entry | Easy
Retail bank portfolio management – Interview Transcript

Your client is a retail bank looking into entering high net worth individual’s portfolio management. Alright. So given that the client wants to lose no time in entering this market, is the client interested
You have been approached by the client to understand how to go about it. in doing so through acquisition of some kind of boutique firm already operating in the space? This
Could you give me some additional information regarding the case. What are the primary would substantially reduce the time required for building the capabilities.
objectives for entering in this segment?
Umm, no. Our client would like to build the division by itself.
The client believes that profitability in retail banking is stagnant and it might see a decline in the
Alright, perfect. So let me now analyze how HNI Portfolio Management differs vis-à-vis Retail &
years to come. The current nascent market of HNI portfolio management is expected to grow
Corporate Banking.
substantially in the coming years.
Sure. Go ahead.
Okay, so am I right if I say that the client wishes to reduce its dependency on retail banking by
foraying into different services and HNI happens to be your service of choice? Unlike retail customers, HNIs have a huge investible surplus, usually >1 cr. on which they seek
greater-than-market returns. This requires active trading and fund management from specialized
Yes, you are correct. Currently, we just need recommendations on how to go about venturing
professionals. HNIs also demand for dedicated personalized service such as Tax advisory,
into this particular segment i.e. HNI portfolio management
Inheritance planning etc. The key differentiator in this segment would be the quality of service and
Okay, so first coming to the nature of the client, I’d like to understand the segment and geography the uniqueness in offerings.
our client operates in. For example, what kind of customer base does our client cater to and the
Okay, that’s correct. So how do you suggest we tap this segment?
geography in which it operates? Also, something regarding the bank’s position in the market
would be helpful. The most logical thing to do would be to approach individuals we already provide services to,
directly or indirectly. These would primarily be the Owners, Promoters, Directors and Top
Our client primarily deals with the middle and high income group segment. It has a fairly large
Management of companies which our Corporate Banking division deals with. They would further
Corporate banking division in place too. It is a pan-India bank but has a large concentration in
give us access to the accounts of Trusts and Associations they are part of.
Tier-1 and Tier-2 cities.
Also, since HNIs are a close-knit community, we could ask them to inform others of our services.
The bank has a firm position in the market and is one of the most preferred banks among the
customers. Okay, that sounds like a good idea. What other inter department synergies do you see?
Alright, so now that I have a fair idea about the client’s operations, I would like to know a little Like the Corporate Banking division could prove useful in acquisition of clients, the Retail Banking
about HNI Portfolio Management. So, what does it exactly mean and how is it different from division could help in provision of services like stock broking, trading etc.
Retail or Corporate Banking?
Good. So what resources do you think we’d primarily need to get going?
Retail banking is typical mass-market banking and offered by most banks that we see around us.
Eg. SBI, HDFC Bank. Local branches of large commercial banks deal directly with retail consumers. A few legal and regulatory experts would be required in the initial phase.
The Corporate banking division deals with corporate customers. HNI portfolio management is a We’d need professionals (fund managers, traders etc.) with a good track record and recruits from
wider category that involves dealing with high net worth individuals and helping them manage their top institutes for getting HNIs to place trust in our services. Unlike retail banking, employee salaries
wealth through unique and customized offerings. would form a large portion of our costs.
Alright, understood. But before I delve further into this case, I’d like to know the time duration I think we can stop here. Thanks a lot for your time.
that our client is targeting to move into this segment?
The client wishes to enter the segment as soon as possible.

Market Entry | Easy
Retail bank portfolio management
Your client is a retail bank looking into entering high net individual’s portfolio management. You have been approached by the client to
understand how to go about it.

• Understand the • Client is a major retail bank
vision/objective of entering having a firm position in the New
Factors of
the new market banking sector Market Industry Competitors Customers Company
Consideration
Entry
• Determine the possible • The industry has been found
differences in processes attractive
and systems required in Size & Competitors Customer Product Expertise
Visions
Growth & Share Expectation Offerings
the two functions.
• Analyse how to use
current strengths Resources – Regulatory
Goals
(industry Technology, requirements
presence)/resources (sales Capital &
Labor
people) to expand into the
Cash flows
new market Objectives and liquidity
• Identify potential Our
problems/barriers that Strengths
&
company may face while Strategic Investment
changes
entry Assets
•
Market
Share
Recommendations
• The client should bring in legal and regulatory experts and experienced professionals who has managed HNI portfolios before.
• The client should leverage the current position of bank and try to take benefit of the possible synergies among its various divisions. It should take help of existing
customers and target potential customers.
• Banking being a highly regulated sector, the client should ensure that all the regulatory requirements have been adhered to.
• The candidate could’ve dwelled a bit more into the implementation which would have added more value to his arguments.
Market Entry | Easy
HBS Satellite campus – Interview Transcript

HBS wants to set up a new satellite campus in India. They want to your advice about the proposal. The regulations in India prevent any institution that is not AICTE approved from giving a degree.
Compliance with AICTE guidelines would dilute the HBS curriculum.
What is the primary objective of the school in setting up the new campus?
In that case HBS would not go for the AICTE approval. It wouldn’t be able to offer a degree. But I don’t
The mission of HBS is to educate leaders who make a difference in the world. They want to increase think that will be a constraint. ISB has a similar model and is successful. The other factor would be the
their impact. ability to set up the value chain. The key facets would be the teachers & land for the campus. Initially,
So is it safe to assume that the target audience would be young Indians? teachers might need to travel from parent campus. The rent for the campus would be a challenge and
would increase costs.
Actually that is a bad assumption. It so happens that HBS wants this campus to be International like
Good. What else do you want to look at?
the one in Boston. Having said that, the college does expect the proportion of Indians in the batch to
increase. I would next look at viability. In terms of financial viability, I am assuming pricing will remain same as the
parent campus to maintain parity. However, the additional cost due to the land and teacher travel
The motivation would be to expand their current capacity of the program in that case? And also
would drive up the costs. Additionally, there would be risks due to the lack of acceptance of India as a
what is the timeline they are aiming to set up the campus?
study destination among International students. Hence, I will suggest against the proposal.
That is correct and they want to set it up in 5 years. Thanks. That would be all.
To evaluate the market entry, I would want to look at aspects under the three major heads:
opportunity analysis, feasibility and viability. In Opportunity analysis, I would look at the market size Thank you. It was a pleasure interacting with you.
and the market share that we can capture. In the feasibility, I would analyse the barriers to entry and
analyse the feasibility of setting up the value chain. In viability, I would analyse if it would make
economic sense in the long run and also see for any risks.
To do this, I would look at the current demand for the HBS course and would use that to estimate
the demand for the new campus. As far as I know, I believe top US schools like HBS receive around
10k applications every year for their MBA program. Those would automatically be our target market.
However, I believe a proportion of them would not be interested in studying at the Indian campus
due to preference for the US market. Do we have some data about their preferences?
That is a good approach. Let us assume that 50% of the applicants are interested in studying at the
Indian campus as well. Can you estimate the rough size? Ignore affordability as a concern for now.
I just want to add that I would also want to look at the additional Indian students that we can
capture because of the lower cost of this program vis-à-vis the Boston one.
I will use the CAT enrollments as a proxy for estimating the demand. So around 2 lakh students
apply for CAT to do their MBA. Let us assume 1% would meet the HBS criteria, i.e. 2000 students.
This means that the market is significant. However, the competition is another factor that I would
want to look at. Can you give me some information about the competitive scenario?
The satellite campus would face competition from primarily two sources: one would be the global
schools setting up campus in India. Currently, that is not a potent threat. The other is from IIMs and
ISB.
I believe HBS would have an edge over Indian schools as the global exposure and the brand value
that it would offer would give it a clear competitive advantage.
However, I would like to look at feasibility. The factors that I would look are the regulatory barriers
and the feasibility of establishing the value chain. For that, I would want to know if there are any
regulatory restrictions in India?

Market Entry | Easy
HBS Satellite campus
HBS wants to set up a new satellite campus in India.They want to your advice about the proposal.

Existing- 5000
• Objective: Expand capacity • 50% interested in studying in
of MBA program (400) India Market Size
Additional-
• Timeline: 5 years • AICTE approval
2000
• 10k applications Opportunity
• CAT benchmark
Global schools
Market Share
Indian schools
Regulatory
Barriers
External Feasibility
Value chain
Pricing
Financial
viability
Viability
Costs
Other risks
Recommendations
• Should not go ahead with the satellite campus.
• Serious concerns about the viability of the operations considering the high costs and also uncertainty of regulations.
• The interview was designed to judge how quickly could the candidate move through layers of this case and structure the problem. The case required taking some
assumptions and quick thinking. It is best to not lose sight of the structure in quest for creativity and that is what the candidate achieved in this case.

Market Entry | Easy
Magazine Publisher – Interview Transcript

Your client is a major magazine publisher based in the US. It is considering the idea of That sounds good to me. Do you have any other things you would want the publisher to keep
launching a new lifestyle magazine targeted to wealthy males. Diagnose and recommend if he in mind?
should go ahead with this idea. There are three major issues that need to be kept in mind:
I would like to ask a few clarifying questions before I begin. I want to understand a few things 1) Given this revenues and our costs, we should check if our profits are touching the $10
about the publisher. What is his current product portfolio and how successful are they in the Million target.
market? 2) There’s a chance that this magazine might cannibalise the sales of our personal finance
The publisher has two other magazines- one on personal finance and the other on women magazine. If that is the case, this launch may not be a very good idea since we wouldn’t
empowerment. Both the products are the leaders in their categories. want to dilute an existing high performer.
3) It would be important to identify if any synergies can be utilised while producing this
In that case, what is the objective of launching a new product from scratch? Why doesn’t the magazine with the existing portfolio. These economies of scope can go on to reduce
publisher simple want to work on growing the existing portfolio itself? costs significantly
The market for those two products has saturated by now. There isn’t much scope for further
expansion. Thank you, that would be all.
Okay. And what are the target figures for this magazine in terms of volume and profit?
The publisher hopes to increase his bottom line by $10 Million through this new launch over a
reasonable period.
I would like to know a little about the competition as well to gauge how difficult it would be to
capture the market.
Through a survey we found out that we would be able to capture 5% of the target population,
if we launch the magazine at this time.
Okay. I think I have enough information. Can I go on and do a market sizing for this launch?
Sure.
For the market sizing, can I know the price at which this magazine is going to be sold? And if
there are different channels or models that the company employs?
The company offers a subscription model for $3 per copy for a year and sells copies for $5
through retail shops. You can assume a 50-50 split between these two.
Okay. I would first divide the total male population of the US into different age groups and
look at the likely percentage of people who would be willing and able to buy our magazine,
within each age group. I would further multiply this by 5%, since through our survey we know
this is what we’ll be able to capture. Lastly, I would multiply this figure with the frequency of
purchase to get the total number of copies sold. 50% of these would be sold at $3 and the
rest at $4. Multiplying these prices in 50-50 weights will give me the final revenue figure.

Market Entry | Easy
Magazine Publisher
A magazine publisher wants to know if he should launch a new lifestyle magazine targeted to wealthy males in the U.S.

• Will capture 5% of the Total Population (300M)
• Assume a population
of 300 Million market
• Assume 50% males in • Wants $10 Million profit
the population • 50% sold at $3 per copy,
Male Population (150K)
• Assume equal spread 50% at $5 per copy
across different age
categories
0-21 (37.5M) 21-40 (37.5M)) 41-60 (37.5M) 61-80 (37.5M)
0% 10% (3.75M) 10% ( 3.75M) 5% (1.875M)
9.375M 5% 12 issues/customer
• It is very important to understand the goals and motivations of a client in doing something or in this case, launching a new product.
• The strength of your solution lies to a large part to the insights you can show through your recommendations.

Market Entry | Moderate
Insurance company – Interview Transcript

A foreign insurance company has observed very low penetration of home insurance in the Indian (The interviewer questioned the assumptions for each segment)
market. It already has its presence in the health insurance and life insurance segment in the Indian Moving on, assume that the client has decided to enter this market. How would you roll-out the
market. It is planning to enter the home insurance category. You have to build a go to market products to their intended customers?
strategy for the client.
As the client is already present in the life and health insurance segment, it would have insurance
Could you give me some additional information regarding the case. What are the primary objectives agents on the ground. So, my first move would be to educate the agents about our products through
for entering the home insurance segment? training programs in main cities in the first couple of months. Initially, we can go ahead with the
existing agents then over the period we would look to hire specialized agents.
The client believes that there’s a real-estate boom happening across India, and hence a potential
market which is expected to grow substantially in the coming years. Training the sales people is good, but how would that ensure that customers buy these products if
they aren’t interested in them in the first place?
Okay, so they’re concentrating on the growth of the housing market. What products are they
planning to sell in this segment? If the penetration of home insurance is low then either the people don’t know or trust these
products. So, we need to educate them about the importance of getting their home insured. We will
Their home insurance products would not only be limited to new houses but would also be reach out to these customers through home builders and contractors. We can also tie-up with banks,
relevant for renovation of existing houses. who can inform clients about home insurance while giving out home loans.
So ideally we’ll be looking at not only people who own houses, but also people who are planning to Okay. Do you see any other roadblocks or pitfalls of your roll-out plan?
buy new homes. Can you tell me a bit more about the current competition in this segment?
The roll-out would be slow and gradual. Since our current sales force is trained to sell health & life
There is low penetration; not many companies have ventured into this segment. insurance products, they would need training regarding the home insurance products. Also since we
are educating the masses, then we are also educating them for the competitors. So even if the
That’s great. So we don’t have to fight competitors to grow our share. We can build our customer
competitors have marginally better prices, then people would go for them as people in this segment
base from scratch. Can you tell me what kind of clients are we planning to sell our products to? would be price sensitive.
The company hasn’t decided this yet and would like to know your thoughts on this. What analysis can you do, that would help the CEO to take much more decisive action.
We can do the “customer lifetime value analysis” by taking into account their acquisition cost and the
I would start by segmenting the Indian population in terms of their income groups in the rural and
revenue earned per customer over their lifetime. This will give an indication to CEO if this is segment
urban market. Since the company wants to enter the home-insurance market, initially, it can ignore
is worth entering.
the rural population since home ownership among this population is low. In terms of the urban
population, I would segment this market according to income groups.
We could have also explored the option of acquiring any existing player.
That’s right. What segment should the clients target?
I think we can stop here. Thanks a lot for your time. I liked the way you approached the case.
Very few people in the low-income segment would would own a house, whereas for a middle-class
person, buying a house is a dream. So there would be a large portion of the population in this
segment who would be thinking about purchasing a house. Also, the individuals in this segment are
more risk-averse, and would want to protect their house with insurance. People in the high-income
segment would also be interested in our products. Therefore, the client should target the middle-
income and high-income groups.

Insurance company
A foreign insurance company has observed very low penetration of home insurance in the Indian market. It already has its presence in the health
insurance and life insurance segment in the Indian market. It is planning to enter the home insurance category. You have to build a go to market
strategy for the client.
• Understand the • Client is a foreign insurance
vision/objective of entering company, and is already New
Customer – Entering
the new market present in the health and life Market
New Market
Product Company Industry
Strategy
Entry
• Determine Target insurance segment in the Indian
Segment; based on this try market
• Low penetration in the home Customer Product Competitors If yes,
to determine how to plan Visions Segments No
Expectation Offerings & Share how?
for a successful product insurance segment
offering using the 4 P's of
marketing: Price, Product, Available SWOT Start from
Goals Needs Resources –
Promotion, and Place Products
Technology,
Analysis Scratch
• Analyse how to use Capital &
current strengths Labor
Identify
Barriers to Joint
(industry Objectives Profiling gaps of
Entry/Exit
above 2 Venture
presence)/resources (sales
Our
people) to expand into the Strengths
new market Size & & Our
Growth Strategic Estimate Acquisition
• Identify potential
Assets of
problems/barriers that Market
company may face while Share
Target
entry Market
Markets
Share
Share
Recommendations
• The client should enter the home-insurance segment
• They are already present in the health and life insurance segments, and can leverage their existing salesforce to introduce home insurance products to their clients
• Real-estate industry projected to grow; home products cover both new and existing houses, making the Urban Middle and High-income group preferred target segment
• Training their sales people & customers, developing a specialized sales team & collaborating with builders & banks is essential to the successful rollout of home-insurance
• The candidate could’ve dwelled a bit more into the implementation which would have added more value to his arguments.

Electric buses – Interview Transcript

The client is an international manufacturer of Electric Buses and has a substantial presence in the That’s a fair point. Assume that the government is providing a 5-year tax holiday to companies
European market. The client is impressed by the initiatives taken by the Government of India (GoI) investing in the electric vehicle industry and would give special tax breaks to private operators who
to promote the usage of Electric Vehicles (EVs). You have been hired to find out if the client should promote environmentally-friendly buses.
introduce these buses in India.
Ok, this means that our major target customers – both in the public and private sector - are receptive
I would like to confirm if I have understood all the critical aspects of the client’s situation. Our to the product. Can you also tell me if there are existing EV bus operators in India?
client is an electric bus manufacturer who has a substantial presence in other markets, so I am
assuming that their buses are beyond the technical feasibility stage and are complaint with the No, the client would be the first-company to introduce such buses.
stringent European environment laws. We need to see if this product can be feasibly launched in
India and evaluate the market characteristics to analyze if this would be a good move. That does play for and against us. Its good for us since we would have the first mover advantage and
will be able to capture more market, but it might play against us because the infrastructure required to
That’s correct. The client does not face any regulatory barriers to entry in India. You’ve understood support these buses may not be present and awareness of the EV buses might be low. Can you also
the situation well, how do you propose going about the solution? tell me what is their target region or cities in India?
Since this is a new product in a new market, I would like to structure my discussion around the Assume that the company will initially operate only within Ahmedabad, and has the capital and
product characteristics (development and customization) for the Indian market. If the introduction resources for this. Given this information, can you suggest some company and market specific
of the product is feasible, I’ll move on to the launch (competition, challenges, distribution and strengths and possible problems that the company might face.
promotion) part of the case.
(draws and discusses SWOT table) To summarize, the company has the requisite experience to
This sounds fine to me. manufacture and customize these buses, and the environment-friendly policies of the government, and
the associated financial incentives, are a good reason to expand into India. The growing urbanization in
India, and the large population that uses public transport, also justify the need for a product that can
To start with, can you tell me something more about these electric buses? How are they different meet demand without compromising the environment. However, there are certain major
from traditional fuel-based buses? problems/barriers as well – oil is currently at its lowest price in over a decade, which may make it
difficult to convince operators to switch to these electric buses. Also, the high-price of these buses,
There are quite a lot of differences between these buses, but to help you out, I’ll point out a few
the lack of charging infrastructure and operability for a short distance (before being put to charge
major ones – the major difference is that these buses produce less than 90% greenhouse gases as
again) are some other problems that the company might face. One other major problem that I foresee
compared to traditional buses. These buses also run on electric batteries, which means that these
is that tenders in the public sector are often offered to lowest-bidders, and if the client can’t match
buses can run 150-200kms on one charge.
the prices of its competitors, then it won’t get business from the public sector companies operating in
That is good. It gives us the advantage to position our product as an environmentally-friendly the transport sector.
alternative that can be used for an extended period of time. I would also like to understand how
Ok, that sounds like a detailed analysis. Based on this, what is your recommendation?
has our client priced these buses in their existing markets.
My final recommendation would be not to introduce these buses in India since current industry
They are selling these buses at approx. 1.6 times the price of fuel-based buses; however due to the
landscape and market conditions are not favorable for such a move. However, in the near future, once
presence of heavy environment taxes, many companies prefer to buy these buses in the long-run.
the government policies become more supportive and the market conditions change to favour EVs,
That might be a problem for us. Since these are short-to-medium distance buses, they would be the company may reconsider its position on entering the market
used mostly for intra-city travel, and private/public bus-operators won’t accept a more costly option
Very good. Thank you.
until they don’t have a similar incentive.

Electric buses
The client is an international manufacturer of Electric Buses and has a substantial presence in the European market. The client is impressed by
the initiatives taken by the Government of India (GoI) to promote the usage of Electric Vehicles (EVs). You have been hired to find out if the
client should introduce these buses in India.
• Customers – Target • Client is a manufacturer of
New
customers may be Electric Buses and has a Market
Customer –
Product Company Industry
Entering
New Market Strategy
receptive of the Electric substantial presence in Europe Entry
buses due to financial – product is beyond technical Competit
Product If yes,
incentives promised by feasibility stage Visions Segments Customer ors & No
Offerings how?
Expectation Share
government • These buses produce less than
• Competitors – There are 90% greenhouse gases as Resources –
Goals Needs SWOT Start from
no other direct compared to traditional buses Available Technology, Analysis Scratch
• Buses run 150-200km on one Products Capital &
competitors – first mover
Labor
advantage but that means charge Barriers to
Objectives Profiling Entry/Exit Joint
proper infrastructure to • Client is currently selling buses Venture
Identify Our
support these buses is also at approx. 1.6 times the price Strengths
gaps of
missing of fuel-based buses Size & above 2 & Our
Growth Strategic Estimate Acquisition
• Industry – Lowest prices of
Assets
of oil in over a decade; Market
Target Share
tenders often offered to Markets
Market
lowest-bidders in Share
Share
public/transport industry
Recommendations Strengths Weaknesses Opportunities Threats

• The client should not enter the Electric Bus market
• While the government has introduced various incentives to promote these vehicles, the current
Technical Large
Lack of Other Foreign/
business environment and market conditions don’t support entering into India Expertise /
charging
population
Domestic
First mover using public
infrastructure Players
• In the near future, once the government policies become more supportive and the market advantage transport
conditions change to favour EVs, the company may reconsider its position on entering the market Saving on
Increased
Growth of
Urbanization
Fossil Fuel High Price of other Public
and
costs / Electric Buses Transport
Acceptance of
pollution solutions
EV/Buses
Short-Medium Global Crude

Government BRTS
distance use Prices – all
Policies Infrastructure
only time low

Kids entertainment channel – Interview Transcript

Your client is a US based media company. It is planning to launch a new channel for the Indian Do not bother about resources at this stage. What kind of content do you think we can come up
market. You have been approached by the client to help understand how to go about it. with?
I would like to ask a few clarifying questions to understand a few things about the company. What is We can produce something on the lines of Indian mythological stories and Indian fables that have long
its current product portfolio and how successful is it in the US market? been passed from generation to generation through bedtime stories. Other than Ramayana,
Mahabharata none of these stories have been converted to visual content. We can consider exploring
The company has five very successful channels in US - one each in sports, movies and three in kids’ this opportunity and couple it with select popular shows from our US based channel.
entertainment segment. All are ranked in the top 3 in their respective category.
This sounds good. Can you now help me understand whether this is doable and how would you go
Could you help me understand the primary objectives for entering the Indian market? about it?
We want to enter with an English kids’ entertainment channel as we see immense potential in the Sure. Coming to the feasibility analysis, pre-entry we need to look at the barriers. Do we have any
Indian market. We want to quickly grab market share in this segment within a few years. That’s legal or any other barriers or resource constraints?
enough information. I would like you to proceed with the case.
No there aren’t any barriers to our entry and we are willing to invest sufficient capital. Let us discuss
I would first like to look at the opportunity in the Indian market by analyzing the market size and the entry strategy
the existing players to see if we can design a competitive product offering to capture some share in
the kids’ entertainment segment. I would then look at the feasibility of our designed channel Entering by acquiring one of the large players is not an option since there is content design mismatch.
package and incorporate any changes if need be after analyzing its viability. Also, since they are well established and doing well, chances of them wanting to sell out are less.
Starting from scratch would require a significant amount of time to set up since we are entering an
Sure, that sounds good. You may begin the opportunity analysis by quickly identifying whether we unexplored genre. This can be made easier if we can collaborate with one of the Indian theatre groups
should target rural or urban children. that specialize in mythological scripts. We can then use our own production expertise and rely on
them for content creation. This can either be a joint venture or simply outsourcing of content
I believe it would be better to initially focus on urban children for two reasons. Firstly, to capture
generation.
significant market share quickly in a new market, we would need to engage in heavy promotions and
urban children are more exposed to promotions and advertisements than rural children, making Okay, what else do you need to look at?
them easier to capture. Secondly, since we plan to launch the channel in English language, urban
children is a better segment since penetration of English language as well as of English medium Post entry we need to look at distribution and sales and marketing efforts. We can either be a part of
schools in rural India is not very high. Do you want me to carry a market size estimation for the the basic package offered by DTH operators or as stand-alone subscription. Being a part of the basic
same? package is preferable at the initial stage to increase penetration.
No. You can skip that for now. Focus on the channel package design. But there’s a problem. The basic package of all DTH operators already have the 3 major kids
entertainment channels on offer. Why would any operator want an additional channel to share
Who are the major players in this segment in the Indian market and what are their offerings? revenue with?
There are three major players who have been around for almost a decade. All three are from US This is where the uniqueness of our content can be marketed. Since our shows will be very different
production houses and telecast the same shows that they produce for their US market which are from existing players, I am sure we have an appealing offering for the operators. Besides if we invest
quite similar to our US based channel’s shows. heavily in our marketing efforts, by collaborating with Mc Donald’s, stationary manufacturers etc. to
reach the kids, then the demand generated itself will incentivize the operators to include our channel.
We need to come up with something different and unique if we want to capture market share
rapidly from these established players. We can come up with India specific content if we have the I think we can stop here. Well done.
resources

Kids entertainment channel
Your client is a US based media company. It is planning to launch a new channel for the Indian market. You have been approached by the client
to help understand how to go about it.

• Understand the objective • Client is US based media
Opportunity Feasibility Viability
– Targeted share company.
• Obtain details about • Plans to enter Indian market
Current Market Pre-Entry considerations
existing/planned product with a kids’ entertainment • Market Size Economic Sense
• Legal/Political barriers
offerings channel. • Target market share • Funds/Resources/Revenue
• Technological barriers
• Estimate the target market • Currently has 5 channels, of /position • Timeframe
• Capital constraints
size and identify the which 3 are kids’ • Customer Segment • Environmental barriers
specific customer segment entertainment. • Strategic barriers
Competitors • Prior experience
• Identify potential barriers • Competitors – 3 major US • Major players
or constraints and see based channels – Standard • Market share/position
• Resources Entry Strategies Post Entry Risks
how they can be tackled content
• Strengths and weaknesses • Acquisition • Cannibalization
• Design the value chain • New competitor threat
• Response to entry • Joint Venture
taking into consideration • Changing regulation
Product • Start from scratch
the entry strategy chosen threat
and barriers identified. • Existing product
• Acceptance threat
• USP Value chain setup
• Check to see if the
• Advantages-disadvantages • Production/set-up
business is economically • Substitutes
• Distribution
viable • Pricing
• Sales and Marketing
• Evaluate the risks involved
Recommendations
• Target segment : Focus on children from urban areas
• Content design : Design Indian specific content, it can revolve around Indian mythological stories/ bedtimes fables
• Entry strategy : A collaboration or outsourcing partnership with some Indian theatre group specializing in mythological scripts can be set up for content generation
• Distribution : The channel can be included as part of the basic package of DTH operators in initial years to increase penetration
• Marketing : Collaboration can be established with Mc donalds, Chips and biscuit companies and stationary manufacturers to print/ distribute free merchandise related to characters on
the channels shows to increase visibility

Market Entry | Challenging
Retirement benefits policy – Interview Transcript

A new retirements benefits policy has been introduced whereby every employee makes a Great. So the increase to the investable assets would be 150 million times ₹10000, or ₹1.5 trillion.
contribution ranging from ₹5000 to ₹20000. The savings grow tax free till the employee retires. That sounds like a substantial increase, given that last year the new addition to assets under
We have been approached by a client that runs a large mutual fund to help answer the following management was ₹5 trillion. Are there any other regulatory issues or exogenous factors that would
questions: Is this a big opportunity? What are the various possibilities and challenges they would govern or restrict how these assets can be invested?
face? There are some stipulations, but let’s not worry too much about them for now.
I’d like to explore three broad areas to answer the first question – the dynamics of the mutual fund Excellent. In that case, our response to the first question would surely be that this is a substantial
industry, the additional earnings that we will make in leveraging this opportunity and any regulatory opportunity for our client in aggregate.
or exogenous factors affecting the mutual fund industry due to the change to existing policy.
I’d probably agree that this is a substantial opportunity in aggregate. But how would you go about
First, can you tell me more about the size and dynamics of the mutual fund industry?
determining if is this a profitable opportunity?
Sure. As you may be familiar, mutual fund companies solicit investments from individuals, I think I see where you are going. You mentioned our client charges some sort of management fee
retirement accounts of various firms, etc. They then invest these monies to create and manage a for services rendered. How much is this fee and what types of expenses does the client incur?
well-diversified portfolio for a management fee. From the investors’ perspective, the creation of Good question. The client charges a 1% management fee on assets under management.
such a portfolio minimizes the risk. Simplistically, let’s assume that administrative expenses on these assets like mailing statements, etc.
Got it. How big is this industry? is about ₹100 annually, while other operating expenses add up to about 10 basis points.
There are a large number of players in the industry, and the total assets under management would Interesting. So then on every ₹10000 invested, we make ₹100 in revenues per customer but have
be running into trillions. ₹100 plus ₹10 or ₹110 in expenses per customer. That doesn’t seem like it is profitable.
Do we know approximately how much new money enters the industry each year? This might help
me gauge whether or not the new policy will be a big opportunity for the industry. No, it does not, does it? Would you still think that this still a substantial opportunity?
We can look at future earnings as well. If I assume a 20% growth rate based on the return earned
Based on our internal studied and analysis, last year approximately ₹5 trillion was new money or from the additional AUM, then the ₹ 10000 grows to ₹12000, our revenue grows to ₹120, but our
addition to assets under management in the mutual fund industry. expenses grow only to ₹112. We begin to make a profit. If we know the average length of the
Okay. Is it safe to assume that only the people working in the organised sector shall be benefitting customer’s investment, we can use the present value of cash flows to estimate a lifetime customer
from this policy? value to the client. So it does appear to be profitable, though I’m not sure how it compares to
Yes, the policy shall be valid only for employees in the organised sector. profits currently.
Okay, let me now move to gauging the incremental savings that is likely to enter the investment You are correct. It is a profitable business. Right now, the size of each customer’s account is pretty
pool. I shall make some assumptions, please stop me if any of them are unrealistic. My goal is to substantial. The profit margin is much more attractive. We seem to be running out of time. Can
size the number of people working in the organised sector in India, as they shall be paying the you quickly summarise for me the opportunities and challenges the client faces, given our analysis
premium amount for this policy. so far?
I shall assume that individuals between the ages 18 and 60 are eligible to be employed. I shall Sure. There are a number of opportunities and along with it. Among the opportunities, the first is
assume the life expectancy in India to be 70 years, with the population distributed uniformly by age. cross selling the mutual fund opportunity to customers of the brokerage and other services. This
Okay, that sounds fine for now. would result in enhancing customer loyalty and also increase switching costs, leading to higher
customer retention. Second, emphasizing convenience, sort of the one-stop shop for financial-
I shall break the population of 1.2 billion people into rural and urban with a 70/30 split. That gives
services idea, can enhance the client’s value proposition to their customers. On the challenges
me 360 million people working in the urban areas. I shall assume that the rural employment sector
front, the most critical is probably competition. If indeed ₹1.5 trillion additional funds are likely to
is not the organised sector. Additionally, people in the ages 18-60 comprise 60% of the urban
be invested, every financial services firm is going to want a slice of the pie, which only underscores
population, and approximately 70% of these people are employable in the organised sector. This
the need to cross sell and increase customer loyalty. This is something the client is going to have
helps me exclude individuals like homemakers, students etc. who would be in the 18 to 60 age
deal with.
bracket. So that brings the labour force to 150 million. Figuring a 10% unemployment rate, the
population in 135 million. Great. Thank you.
Why don’t we ignore the unemployment rate for now and assume a round number of 150 million?
That would be easier for the calculations. You indicated a range of ₹5000 to ₹20000 for retirement
account contributions. Would these be recurring contributions?
No. Also, you may assume that the contribution will be ₹10,000 on average.

Market Entry | Challenging
Retirement benefits policy
Estimate the additional earnings and profitability scope of a new retirement benefits policy on the mutual fund industry.

Financial Projections
• Have a decent • Last year approximately
knowledge of the Rs. 10 trillion was addition
Filters Number projections
Indian population to AUM Total population
breakdown, in terms of • Average investment per 1200m
rural/urban, age person is Rs. 10000 Potential AUM 10000*350 = 3.5 trillion
demographics, income annually Revenue projection for client (Y1) 10000*0.01 = 100/cus
levels etc. • Total number of people Cost projection for client (Y1) 100+10000*0.001 = 110/cus
• Don’t stop the covered under scheme is Rural population Urban population Revenue projection for client (Y2) 12000*0.01 = 120/cus
profitability analysis at approximately 600 million 70% = 840m 30% = 360m
Cost projection for client (Y2) 100+12000*0.001 = 112/cus
the first year. Look for • Revenue per consumer is
future years to see if 1% of AUM
the opportunity • Cost per consumer is Not considered
becomes profitable. fixed (Rs. 100 per Employable age Not Employable age
consumer) and variable 60% = 216m 40% = 144m
(0.1% of AUM)
Employable
70% = 150m
Recommendations
• Cross sell the mutual fund opportunity to customers of the brokerage and other services
• Emphasizing convenience, sort of the one-stop shop for financial- services idea, can enhance the client’s value proposition to their customers
• Run through the population split step by step, calculating the number of people at each step and not just in the end
• In case you reach a scenario where the company is initially making losses, make sure you analyse future prospects to see if there is a turnaround in the additional year

Market Entry | Product launch | Challenging
Anti-smoking pills – Interview Transcript

The client is in the business of making anti smoking pills - the way we have those patches and
Hmm… that is good. In our case, let us assume we did this and came up with Rs. 8 per unit.
lozenges in the market to curb the urge to smoke. The client wants to sell it at a premium price.
You think that sounds reasonable?
You have been hired to find out if the product can be introduced in a country like India - and if so
I think a price of Rs. 8 per pill is feasible because of the lab results - people will be convinced that it
- what is the expected target market, market share and a feasible price at which the drug should be
is a medically prescribed drug and since it is a pre-scheduled dosage for 3 months, results are
sold.
guaranteed. We can also stress on the on nicotine bit and indirectly position this as a life saving
I would like to confirm if I have understood all the critical aspects of the client’s situation. Our
drug.
client is in the business of making anti-smoking pills that reduce the urge to smoke for smokers.
Ok, let’s estimate the market size assuming we decide to price it at Rs. 5 per unit.
We need to do see if the product is feasible to be launched in India and evaluate the market
characteristics such as size and client’s share based on the price. Let’s take Delhi as a base case. Population: 150 lakh. Target segment: 40% of them smoke * 20% of
them would want to quit smoking * 75% can afford (Rs. 8 * 3 * 90 = Rs. 2160 drug to quit) = 9 lakh
That’s right. Now that you’ve understood the situation well, how do you propose going about the people or INR 9 * 2160 ~ INR 200 crores. We can now assume that this drug will reach out to
solution? 25% of the population across India (urban + rural since its effective and one-time payment to quit
smoking), which means the total market is 200/150 * 0.25 * 10,000 lakh = INR 3,333 crores.
Since this is a new product launch, I would like to structure my discussion around the product Very interesting. What will drive the market growth our market share?
characteristics (development and customization) for the Indian market and then move on to the
The market growth rate will be affected by the sales and distribution coverage, willingness of
launch (competition, distribution and promotion) part of the case.
people to quit smoking and addition of new smokers who would want to quit after sometime. We
This sounds fine to me. Also, please note that this product is not entirely new; it has been can look to capture about 80% of this market eventually, assuming no major competitor enters the
introduced in other countries already. market, which can be prevented by IPR support. Since this is a prescription drug, the bulk of the
Ok, that experience should definitely help us. To start with, can you tell me something more about promotion costs in this industry are in targeting the doctors and chemists via direct sales agents or
the product? How is it different? Medical Representative to convey the pros and cons for them to a) prescribe the drug and b) keep
it in their pharmacies. This will drive our market share from the potential market size.
Unlike the lozenges or patches, this product is completely nicotine free - it is 5 times more effective
Good. What about the other 20%?
as proved by lab results and 50% of the test results responded to the pill (which in this industry is
an extremely high number thus indicating success). Moreover, it is a drug that cannot be sold over I am assuming that the remaining 20% will comprise of smokers who are unwilling to quit smoking
the counter – it requires a prescribed dosage given by the doctor. It is to be taken for 3 months (10%), perceive the price to be high (5%) or are not aware of the product (5%). This percentage
daily, 3 times a day. can decrease as we move further in the product life cycle and the product becomes well
established through marketing and promotion efforts.
That is good. It gives us the advantage to position our product as superior due to the higher
efficacy of treatment. I would like to know take up the competitive scenario next so that we can Good. Any other costs/concerns that you would like to address?
decide the price before determining the overall market size.
That’s a fair point. So, there is no similar product in the market. Cheaper products like lozenges The training costs for the direct sales agents will also be critical as this is a new product and local
exist but they contain nicotine and sell for Re. 1 per unit. agents would need an in-depth understanding of the product. No. of sales people can be calculated
What are the other countries where the product has been introduced? How receptive have the by total workload method: Assuming Doctor/Population ratio and say 3 doctors per day and repeat
customers been in those countries? visits every 2 months; and Chemist/Population ratio and 3 chemists per day and repeat visits every
15 days. The supply chain will have to be considered - the warehousing, distribution network, retail
The other countries have smokers who are quite similar to the Indian consumers. The product has chains etc. We can perform the cost benefit analysis for using middle distributors v/s direct
been quite a success. distribution.
Ok, this means that the target audience will be receptive to the product and we can assume that
there is a strong market for the same. I will now proceed with the estimation of the price and Good, I think we have covered the different aspects of the case. Thank You.
market size. There are two ways that we can price a new product in a non-competitive market:
Cost based and ‘willingness-to-pay’ based. In the first, I would calculate the cost to company and
charge a margin on the same while in the second case; I would calculate the propensity of the
consumer to pay for this drug. This would vary with my target segment chosen. Ideally, we should
be able to calculate the optimal profit case by considering the trade-off in sales volume vs. price for
various price points. The solution will also be influenced to an extent by the growth rates of the
different target segments overall, say movement of people to upper-class from lower-middle class.

Market Entry | Product launch | Challenging
Anti-smoking pills
The client is in the business of making anti smoking pills - the way we have those patches and lozenges in the market to curb the urge to smoke.
The client wants to sell it at a premium price.You have been hired to find out if the product can be introduced in a country like India - and if so -
what is the expected target market, market share and a feasible price at which the drug should be sold.
• New product launch – • Client is in the business of Introduce Anti-
Anti smoking pills making anti-smoking pills smoking pills in
India
• Country - India • Client wants premium
• Premium product- price for its product Profit and
Initial Establish value
Break even
requires premium • Client wants to find Investment chain
points
price product’s potential in
• Product characteristics India – target market,
Distribution Product Potential
(suitability for Indian market share and feasible challenges Cost
marketing Revenue
market) & Product price
launch (competition,
Targetmarket
distribution and The drug cannot be sold as OTC and would Price
size
promotion) require prescription. Medical representative
• How is the product and direct sales agents need to be hired Filters Number projections
who can push the product to the doctors
different from existing?
who in turn will prescribe it to the patients. Population base (Delhi) 150 lakhs
products
• What is the Client needs to invest in training of its sales % population who smoke 40%
competitive scenario reps so that they can convince doctors with % smokers who want to quit 20%
product’s value proposition % quitters who can afford the product 75%
in the market
• Product has already Potential customer base 150*.4*.5*.75 = 9lakhs
been introduced in Potential revenue 9*2160 = 200Cr
some countries Revenue projection across India (25% 200/150*0.25*10000=
penetration) 3333 Cr
Recommendations
• Price point should consider both customer’s willingness to pay and product’s incremental value proposition over existing products in the market
• IPR/ Patenting the drug can prevent competitors to enter market and facilitate capture of market share
• Spend more on training the medical representatives and direct sales agents to push the product to the doctors who in turn will prescribe it to the patients
• Marketing of the product can be briefly discussed since the product charges a premium price to its customers
• Long term product goals and ways to improve product penetration across its lifecycle could have been discussed
• Candidate should have clarified upfront if the product has already been launched in other countries

Growth strategy
2019-20 75
Growth strategy – Overview
In a Growth scenario, a company is likely to aim for XX% YoY growth. An interviewee is expected to first align the growth targets, followed by
validating them, identify pillars that can support the growth targets, and finally recommend how the company can leverage/show go about these
pillars.
Framework Summary
A company can grow either in its existing business (provided there is scope), else explore new business. Growing in existing business may be due to market growth and/or increased market
share, hence both situations need to be explored. If the company is venturing into a new business, a feasibility check from an operational, financial, admin etc. needs to be performed in the end.
Tips
• Clarify objective, especially growth % and time period
• Growth cases involve have a larger creativity component, keep options open while checking operational feasibilityThe initial few questions should be “What magnitude of increase is being
envisaged?” and “What is time-frame to achieve this impact?
Key questions
• What is the expected growth of the industry. Are we targeting growth more/less/on par with that?
• Do we have existing capacity in the plants/services to meet the increased volume or would investments need to be made?
• What is the price elasticity in the market? (what is the relevance of this?) –to see whether an increase in prices in an option or not
• Are there any barriers to entry into the new areas?
• Number and type of competition? Market share?
• Effect of substitutes and complements
• Products of scope with the existing product line we have?

Diversification – Overview (subset of growth strategy)
In a diversification case, the key is to understand the need to diversify. Only after that is it possible to ascertain the soundness of the strategy
proposed. The case may often require out of the box thinking, and due to the large number of varied factors that could affect or be affected by a
particular form of diversification, breadth of coverage is generally considered to be more important than depth.
Tips
• Candidates often make mistakes in cases where there are multiple reasons for diversification. It makes sense to understand the client’s priorities and proceed accordingly
Key questions
• What are our current capabilities?
• What are the future capabilities we want to have? Does diversification to the new company help us achieve the objective?
• What are the expected revenues? Revenue Streams?
• Expected cost of diversification?
• Any barriers to entry during diversification?

Growth strategy | Easy
Ice cream vendor – Interview Transcript
The client is an ice-cream pushcart vendor in Ahmedabad. He believes that, due to due to the Sounds reasonable. How do you suggest the client expand his business to other regions?
scorching summers, there is tremendous potential in the ice-cream market. He now wants to
expand his business. Suggest a growth strategy for him. There are two ways in which the client can expand to other regions – either by introducing more
pushcarts or by opening a chain of ice-cream parlors across different areas.
I would like to confirm if I have understood all the critical aspects of the client’s situation. I am
assuming that our client, the pushcart vendor, can only cover a small area at present but would like Ok, what option do you think is more feasible?
to cover a larger area and attract more customers.
Since the client is a small vendor who has experience with pushcarts, I think he should go with the
Your assumption is correct. former option of introducing more pushcarts in other areas – this option would instantly give him
access to a huge new customer base. This option is also less-capital intensive as compared to the
Okay, I would like to understand how does his expansion affect his inventory. Could you confirm if other option of opening ice-cream parlors, and requires considerable less investment into fixed-assets.
he manufactures his own ice-cream or is it sourced from a distributor.
Introducing new pushcarts into different regions sounds like a reasonable option. Can you quickly help
The client sells Vadilal ice-cream, and sources it from a distributor. me understand how would you determine how many new pushcarts would need to be introduced?
(becomes a mini-guesstimate now)
That helps. The availability of ice-cream wont be an important factor for the expansion. Next, I
would like to understand the competitive landscape in this industry. (Interviewee calculates table similar to one on next page) I would segment the entire area of
Ahmedabad based on a rough estimation of income. Depending on this, I would introduce pushcarts in
There aren’t many ice-cream vendors in Ahmedabad. However, there are quite a few corner shops different areas/sectors/colonies. More pushcarts would be introduced in effluent areas, or areas with a
and supermarkets that sell ice-cream. targeted customer base – such as near schools. (After discussing the numbers) The client can
introduce 850 pushcarts in total across Ahmedabad.
That helps. One of the major strengths of our client, against its competitors, is his ability to move
around and distribute the product. However, I believe that due to the nature of the inventory (ice-
After deciding on the possible number of pushcarts that can be introduced, I would additionally
creams), combined with hot weather may lead to more pilferage.
analyze the expenses involved in running one pushcart and match this against the total capital that the
You can assume that the pilferage due to pushcarts is not significant as compared to total sales. client is willing to invest after discounting for working capital requirements.
In that case, the client can increase his sales in two ways – either by increasing the revenue per user I think the analysis is sufficiently thorough. We can stop here. Thank you.
or increasing the number of customers. I think the first option can be achieved by adding additional
costs/charges to the original price, however for an inelastic commodity like ice-cream, this may not
be feasible as people would just go to corner stores if they believe that they can get a better price.
Also, ice-creams are an undifferentiated product and the price is set by the manufacturer (Vadilal in
this case) and thus high-margins may not be possible. Therefore, the first option of increasing the
revenue per user has quite limited scope.
Moving to the second option of increasing the number of customers – this can be done either by
entering different regions of Ahmedabad, or by increasing sales in the current area. May I ask how
much growth is the client aiming for? Does he have the capital to expand into other areas?
You may assume that client has limited capital which allows him to expand to other areas.
In that case, expanding to other regions is a better idea since it provides access to more customers.

Ice cream vendor
The client is an ice-cream pushcart vendor in Ahmedabad. He believes that, due to due to the scorching summers, there is tremendous potential
in the ice-cream market. He now wants to expand his business. Suggest a growth strategy for him.

• Expand in Ahmedabad • Client is an ice-cream pushcart
• Differentiating factor: vendor in Ahmedabad, and want
client can move around to expand his business
and sell ice-cream as • Client doesn’t manufacture his
opposed to competitors own ice-cream; sources Vadilal
• Pilferage due to ice-cream ice-cream from a distributor
spoilage can be ignored • There are quite a few corner
• Client can expand either shops and supermarkets that sell
by increasing the revenue ice-cream
per user or increasing the
number of customers –
choose latter
• Client can expand to
other regions – either by
introducing more
pushcarts or by opening a
chain of ice-cream
parlours across different
areas. Starting Assumption: Ahmedabad
Area : 500 (25x20) sq. km
Recommendations Medium High

• The client should expand by introducing more pushcarts in different areas of Ahmedabad Income Low Income
Income Income
• The client can budget for the expansion by analyzing number of pushcarts required in different areas
Percentage Area 60% 30% 10%
• Different areas can be segregated according to their average income/household and pushcart allocation may be
decided accordingly. Pushcarts / required
1 2 5
(1 x 1 sq. km)
Observations / suggestions Number of Pushcarts
300 300 250
• The candidate could’ve guesstimated numbers differently; some assumptions can be challenged logically – high income (region-wise)
earners may not buy from pushcarts – no point of introducing more pushcarts The candidate could’ve dwelled a bit
Total Pushcarts 850
more into the implementation which would have added more value to his arguments.

Pharma company – Interview Transcript
Your client is a pharmaceutical company in India. How would you increase their sales? Now let’s move on to the options related to exploring new business
Could you please tell me what the business model and product portfolio of our client are? So within new business we can either acquire another pharma company, we could enter a new market
or we could introduce a new product. To analyse the first option, I would like to know whether the
What can be the type of products? company has the financial resources to acquire another firm?
They can be producing either generic medicines, medicinal products under their brand name or Those are fair suggestion. Coming to your question, the company does not have the capital to acquire
medicinal concentrate for other companies another firm and M&A is hence not an option
Let’s say the client manufactures both generic and branded cardiovascular and diabetes medicines. Ok, let me explore the other options. One thing the company can do is introducing new medicines for
How would you proceed with the case?. other diseases. To determine whether this is an attractive option, I need to know whether the firm is
currently considering to introduce a certain new medicine, and if they are how the competitive
Ok, so I would split the options to increase sales into exploring existing business or exploring new
landscape looks like, whether the industry is growing and whether it concerns a profitable segment?
business. Within existing business I will look at options to increase volume or price and within new
business I will consider M&A, entering a new geographical market or introducing a new product. The only information I have is that competition is fierce for other pharmaceutical products in India.
Ok, that sounds like a good structure. Let’s start with the options related to the existing business.
This leaves us with the option to enter a new geographical market. Is the company currently
To evaluate whether a price increase is possible I would need information about the price sensitivity considering certain markets and how is the size of the market, the growth, the level op the
of the firm’s customers. Do you have information regarding this? competition and the enforcement of IP laws in the respective countries?
The company is analyzing 3 options, Brazil, Russia and Poland. Brazil is the largest markets with 28bln
Yes, since the firm operates in India, a developing country, the customer are price sensitive. and also is a fast growing market. Additionally the level of competition is low and there is medium
protection of IP laws. Russia, is the second largest market with 15 bn, but experiences slow growth.
Based on this I conclude that a price increase is not feasible. Let me discuss the options to increase
Moreover, the Russian market is relatively fragment and there is good enforcement of IP laws. The last
volume. To analyse the options thoroughly I would require information about the customers or
option is Poland, which is a market of 7bln but with high growth. The competition is fierce in this
products.
market and there is good IP protection
Sure, the pharma company serves two types of customers which are large and small customers. The
That information is very helpful. Taking this into account I would suggest the Pharma company to
large customers are hospitals and pharmacy chains while the small customers are small pharmacies
expand to Brazil, due to the large market, the high growth and the low level of competition.
Thank you for the information. Do we also have info about the profitability, growth and competitive
Great suggestion. Overall what would you suggest the company to do?
landscape for the 2 type of products?
I don’t have information about the competitive landscape, but I can tell you that the large customers The case highlights that there are 2 viable options to boost sales. On the one hand the company could
have a higher profitability and higher growth than the smaller customers expand globally by entering the Brazilian market with existing product. On the other hand the
company can increase volume sold to large clients. To increase sales I propose to create a dedicated
Ok, the focus of our growth strategy should thus be on the large customers, as they represent a sales force for large players. The customer oriented sales structure should result in an improved
more attractive segment. To increase sales I propose to create a dedicated sales force for large customer relations and tailored offerings for customer needs. Moreover, the firm should invest in
players. The customer oriented sales structure should result in an improved customer relations and training of the sales force
tailored offerings for customer needs. Moreover, the firm should invest in training of the sales force
Thank you for your time. It was nice interacting with you

Pharma company
You have been approached by the CEO of a pharmaceutical company in India. He is looking to grow the sales of the company. How would you go
about increasing the firm’s topline?

• Pharmaceutical player • Customers are price sensitive
operating in India • The company has insufficient Grow sales
• The client serves different capital for M&A transactions
customer segments • Competition is fierce for other
• Client manufacturers both pharmaceutical products in India Explore existing Explore new
generic and branded • There are 3 possible foreign business business
cardiovascular and markets the company considers
diabetes medicines
• The firms global presence
Brazil: size 28 Increase Volume Increase price
Enter new Introduce new
M&A
market product
is limited to India bn, high
growth, low
competition Client Type of customer Facts
and medium Large • Hospital • High margins

Customer • Pharmacy chain • High growth rate
protection of
Small • Low margins
IP laws customer
• Small pharmacies
• Highly competitive
Russia: Size 15
Recommendations bn, slow
• The case highlights that there are 2 viable options to boost sales
1. Expanding global footprint by enteringgrowth, good
the Brazil market with existing products
2. Improve sales by expanding volume sold to large clients. To increase sales I propose to create a dedicated sales force for large players. The customer oriented sales structure
should result in an improved customer enforcement
relations and tailored offerings for customer needs. Moreover, the firm should invest in training of the sales force
Observations / suggestions of IP laws,

• Use the 4C framework to obtain information that will support the analysis of the different revenue options
relatively
• Segment current volume into type of customers to derive different options to enhance sales
fragmented
(C) Consult Club, IIM Ahmedabad
Poland: Size 7 2019-20 Page 81
Chemicals manufacturer – Interview Transcript

Your client is a commodity chemicals manufacturer. It is facing declining market share. Figure out The client is working at 100% capacity. The product mix is not an issue.
why, So, I would now move on to the demand side and figure out the issues there.
I would like to ask a few clarifying questions before I begin to analyse the case. I would want to Okay. Based on the analysis as of now, why don’t you comprehend the case and recommend
understand the client’s business. Where does it lie in the value chain? Is the industry facing solutions?
similar problems?
So the client has faced declining market share because the firm has grown less as compared to the
The client manufactures and sells commodity chemicals. The industry as a whole is not facing industry. The growth has not been that great because of certain key factors. Those are:
similar issues. 1. Production capacity being fully utilised
So, it is a company specific problem where our client is losing market share. I will now list down 2. Factories and warehouses being located far away from customer base
the reasons for decline in market share. Now go ahead with the recommendations
Sure. List down the reasons why you think there would be decline in market share.
The decline in market share is due to two reasons – (i) Drop in actual sales (ii) Less growth rate The client could shift the warehouses to locations which are close to the customer base. This
of company as compared to industry. Has the actual sales dropped? would lead to less damages of products as it would not be required to ship them over large
distances.
No, the actual sales have not dropped. However the company is not growing at the same rate as
Additionally, the client could go into long term contracts with the customers which would lock in
that of industry.
the sales volume. Also, the client should look into increasing production capacity.
So, I understand that the company is growing less as compared to the industry which had led to
decline in market share. So let us focus on the reasons why there can be less growth of company
as compared to industry.
Yes, sure. Go ahead.
Okay. So, I will now further segment low growth rate of company into two major heads: (i)
Supply and (ii) Demand.
On the supply side, I would look into parameters like production capacity, accessibility and
Product Mix. On the demand side, I would look into price, competitors and product quality. I
would first analyse the supply side and then go to the demand side.
What do you think can be issues on the accessibility scenario?
In terms of availability, the products may not be reaching the customers or may not be accessible
due to certain constraints. Is the client facing any issues like that?
Yes, so the factories are located quite far off from the client’s major customer locations. What
problems can this lead to?
Since the factories are located far off, then there would be a large transportation cost associated
with the transfer of goods. Apart from that, the products while shipping may get damaged, which
would lead to bad reputation of the client among the customers.
It is exactly so. The products are being damaged while shipping.
Okay. Now, I will move on to the production capacity aspect. At how much capacity is the client
working as of now? What about the product mix?

Chemicals manufacturer
Your client is a commodity chemicals manufacturer. It is facing declining market share. Figure out why,

• Client currently dealing in • Market share declining;
commodity chemicals • Company specific problem Decline in market
• Focus on production • Company growing at a rate share
capacity which is less than the market
• Focus on accessibility • Production facilities are running
at 100% capacity
Growth less Drop in actual

as compared sales
to industry
Supply side Demand Side
Production
capacity Accessibility Product Mix
Recommendations
• Shift warehouses to locations which are close to the customer base
• Go into long term contracts with clients to lock in the sales volume
• Increase production capacity in the factories or look for alternatives to produce more

Growth strategy | Moderate
B2B communications provider – Interview Transcript

You have been approached by the CEO of a telecommunications provider company. She is looking Your understanding is correct.
to grow the sales revenue. You are hired as a Consultant to identify opportunities and Our wires extend to certain hubs from where they reach select buildings. Each building may have more
recommend a plan of action for the same than one customer.
In order to quantify the objective, does the client have any growth targets and time horizon in Have we sold to all such customers?
mind?
Actually no. We have sold only to a few customers.
Yes, they want to grow sales by 4x in one year
OK, so as I see it. There is a potential market in the buildings that we currently cater to. Also, since
Ok, so prior to looking at the company specific information I would like to know more about this these are business customers, they may have more than one branch in a city or across cities. Have to
industry, customers, and competitors. sold our services to all their business centers?
Sure. In this industry B2B telecommunication provide 2 kinds of products/services. Data centre No, these can be good potential growth opportunities though. We can do a market sizing if time
options and wired lines. Data centre options include providing real estate space, power, HVAC permits. I would like you to also explore the new business options.
systems, connectivity, monitoring systems etc. to a customer’s data /web/application servers.
Through wired lines, customers are provided with services such as internet, ethernet, AV services Sure. For this I would like to understand what kind of products/services our competitors are providing?
etc. So a customer can either have their own real estate for their servers (captive) or they can rent a space
Great. Thank you for that information. So typically a company can grow through either its existing (colocation) and purchase the necessary hardware & software. One of our major competitors provides
business and/or new business. In existing business, we can look at increase number of customers, these services.
basket size and pricing, while in new business I am thinking of options such as geographical
expansion, increasing product line, diversifying into new business, or by acquiring/merging with a Ok. So one of the ideas that comes to my mind is providing the customer with the option of completely
new company. To identify the best option I would like to know more about the company – outsourcing their IT requirements to us (i.e. hardware, software, management etc.). This way not only
specifically its products/services, customers, current geographies, financial health, and competitors. can we sell this as a pioneer product where customers can focus on their core business, but we also get
a clear competitive advantage which can help us churn out some customers from our competitors.
It is a medium size provider - about INR 300Cr. in sales, and operates primarily in Indian metros. It
That seems to be a good idea, especially given that we already have the necessary real estate space
sells the products mentioned earlier to businesses which may include banks, insurance firms, and
and hardware/software purchases would not cost us much. But do you see any concerns with
any company that may have a server requirement and/or wired line requirements. The client is
launching a new service?
cash strapped. It is the market leader in wired line services and 3rd in market share in data centre
services. Yes, I can foresee that since this is a technical product, it may be difficult to capture customers who
OK. So being cash strapped limits some of the growth options such as geographical expansion and already have purchased the hardware/software. Also, our current sales force may not be fully
mergers/acquisitions. Also, in an competitive environment, price increase may not be a good idea. equipped to sell this kinds of a service.
Sounds reasonable. Yes, absolutely. Good. Your analysis has been thorough and recommendations are innovative. Thank
you.
After eliminating some options. I would like to focus on the remaining options of growth. I would Thank you
like to know the growth potential of individual products in terms of # of customers, basket size.
Sure. There is potential for growth in wired line services which I would like you to think about.
However, there is very limited growth potential in data centre services with our current portfolio.
OK. So let us start with wired line services. As I understand, the client has laid down physical
wires in the cities that it operates in. It leverages these wires for providing wired line services. Is
my understanding correct? Also, could you help me with understanding the coverage of customers
through these lines.

B2B communications provider
You have been approached by the CEO of a telecommunications provider company. She is looking to grow the sales revenue. You are hired as a
Consultant to identify opportunities and recommend a plan of action for the same

• 4x growth in 1 year • Current revenue = INR 300 Cr.,
• Understand existing Geographical sales force
product and service distribution
offerings clearly • Client provides real estate,
• Clarify client’s value power, AC, racks etc. to store
proposition (needed for customers’ data servers in
churn strategy) Mumbai, Delhi
• Additionally client provides
telecommunication services
(internet, AV products etc.)
through wired lines
• Leader in telecom (80%), 2
major competitors in data
• centre business – reduced
potential for growth
• Basket size for telecomm. is not
a short term solution. Why?
• Geographical expansion is not
feasible due to limited
management bandwidth
Recommendations
• Sell wired services to new customers located in proximity of existing wired lines; also sell to existing customers’ all PoPs
• Offer hosting services to customers with data center requirements – client takes care of real estate, hardware, software etc, and charges management fees for these services
• Churn strategy can be formulated to churn out customers from competitors and lock them with client
Observations / suggestions
• A market sizing exercise can be done for new customers and conversation can be lead in that direction
• Diversification was ultimately the preferred option as it contributed almost 70% to the revenue growth
• Further brainstorming on implementation of new services (e.g. sales force training, incentive structure etc.) can be touched upon briefly

Apparel Manufacturer – Interview Transcript
The client is in the apparel business in the US and wants to expand their top line. They need your How do we go forward with capturing new customer segments?
suggestions on how to achieve the growth.
Since we are an medium priced product company, it will be difficult to increase average revenue per
I would like to confirm the objective before I proceed. The client is seeking suggestions to increase customer under the same brand name as it would not have the desired perception of brand value
revenues. Is there any other objective? And do we have a number on the increase envisioned? which is often taken into account by customers with higher paying capacity as they require a premium
feel. So we can launch a new product line under a different brand name which will have a higher price
Yes, 25% and that is the only objective. point and will be sold in limited stores only. This brand will be showcased as a premium and high
Okay, I would like to understand the client a little more. Specifically I want to understand three quality brand and will cater to higher paying segments with new products. This brand will be under
things- the product segments they operate in, the price point to get a sense of the segment they the same parent company but will be distanced from the original brand to not confuse the customer.
deal in and the position of the industry- fragmented or consolidated?
Sounds reasonable. How do you suggest the client expand his business to other regions?
Alright. So to answer your first and second question- we are mid priced jeans manufacturer known
for our quality at affordable price. We operate in a fragmented market with push from both low and So we will have to explore different target markets on the following 4 factors-
high end manufacturers along with same segment competitors. However, in this fragmented space, 1) Size of the market in terms of demand for jeans and favourable attitude to jeans
we are one of the top 5 players. 2) Paying capacity
3) Ease of setting up manufacturing/distribution operations
That helps. So given it is a fragmented market, the growth within the market can come by either 4) Competition
acquisition or without. In the first case, we will have to do a due diligence to acquire a company or
in the latter case, we will more strategies. We can look at increasing number of customers or Ok. So on the basis of this, we have decided to pick China as our new market. What possible
revenue per customer. bottlenecks do you foresee?
Sounds good. Can you quickly run me through how you can increase revenue per customer for a I will build on the same analysis I just did. Some of the possible bottlenecks are:
product like jeans? 1) Getting licenses might be difficult
2) Presence of low cost competitors.
Sure. So we can either change the price depending of price elasticity or increase buying frequency of 3) Price point under question because mid priced jeans might be expensive in China. We can go for
the customer. The latter can be done by reducing shelf life of our jeans. However, given that we are a low margin model in which we offer discounts on the selling price but still keep it profitable so
known for the quality, this is a bad idea possibly. What other things we can look at are discounts, as to increase the number of sold jeans. This will of course be done after analyzing the price
loyalty programs and seeing if there is a possibility of cross selling across products. elasticity of the market and how much of a revenue can we expect compared to selling at the
current price point.
Alright. Let us look at the other idea of increasing number of customers. How do you think we can
I’d also like to know whether we can shift production to China or open a new factory there to cater
do that?
to the new market?
We will have to study the segment we have targeted and strengthen our positioning to acquire
What purpose would that solve?
more customers. This could be through channel improvement or advertising. Here I am assuming,
we are not trying to redesign the product. So can you give me some data around which is our Since the cost of production in China is lower compared to majority markets, we can go for a cheaper
target segment and how do we reach them, both product wise and through advertisements? product while keeping the margins the same. This will help undercutting competitors and will result in
Our target segment is low-mid income adults, both male and female. Instead of advertisements, I higher sales and higher revenues depending on the price elasticity again. Additionally if we move our
would like you to explore what else can you do to augment revenues? production here, it will also help with cutting prices in the current market as well and cater to a larger
market.
In this case, we can look expanding into new geographies, new product lines or new customer
segments.
Alright. That makes sense. Let us wrap it up here. Thank you.
Thank you. It would a pleasure interacting with you.

Apparel Manufacturer
The client is in the apparel business in the US and wants to expand their top line.They need your suggestions on how to achieve the growth.

Cross-selling
• Expand by 25% • Jeans manufacturer in US
• Look at elasticity • Mid priced
Increase
• Acquisition • Quality Loyalty
frequency of
Programs
• No go- China • Fragmented market but top 5 Increase purchase
• TG- Male and female adults revenue/user
Bulk and other
Increase price
With discounts
acquisition
Increase New
revenue geographies
Without
acquisition
New
New markets customer
segments
New product
Increase # of launches
customers
Improve
marketing
Existing
markets
Improve
channel
Recommendations
• The client should not expand In China and look at alternative location based on parameters developed.
• Proactively could have done market sizing and market share calculations for China to back up the recommendation.

Growth strategy | Challenging
E-commerce – Interview Transcript

Your client is Flipkart. They have requested your advice on medium-term strategy, for the next 3- Interesting ideas. Let’s move on the next aspect.
5 years. Sure, now we need to figure out a way to retain customers. Before we do that, do we have any
Are there any particular objectives that I need to keep in mind? information on whether we are comparable to our competitor in terms of product selection,
delivery and overall experience?
We have a dual objective of growth and also improving our profitability.
For the purpose of this exercise, you can assume that we are similar to them in almost all aspects.
Understood. Do we have any information on the competitive scenario? We are currently competing primarily on pricing.
You can assume that we have only one competitor – Amazon India. We have a 55% market share Okay, but that would not align well with our profitability objective. Can we create a customer
in terms of Gross Merchandise Value. retention program on the lines of Amazon Prime?
Okay. I would like to break down the problem into the following four parts: Okay. What else?
1. Increasing customer acquisition Can we increase the breadth of products/services available on Flipkart? Try to make it a one-stop
2. Increasing customer retention shop. For example, can we sell subscription services? – like Apple news? We can also look at selling
3. Increasing number of transactions/basket size tickets and hotel bookings. Can we sell financial products like PolicyBazaar or LendingKart? We
4. Increasing per transaction profitability and overall profitability already have PhonePe as our payments vertical, maybe we can expand into ancillary areas. If
The first three will take care of our growth objective and will have some bearing on the required, we can acquire players in these areas, rather than trying to build the capabilities ourselves
profitability objective as well. Does this approach work for you? which might take some time.
Yes, this works. These steps, to some extent, will also take care of our third objective of increasing the number of
transactions per customer and the value per transactions
In that case, I’ll start with figuring out ways to increase our customer base. Do we have any
information on our existing customer base? Good points. Lets move on to profitability now. How will you reduce costs?
80% of our customers are in urban areas, and account for 95% of our sales. Within urban areas, What are our biggest cost heads? I would assume marketing (including discounts) and logistics?
60% of our customers are from metro areas.
Yes. They form around 70% of our total operating costs.
Interesting. Our customer base is highly concentrated. Any particular reason why we have not
expanded much in rural areas? Okay. The measures we discussed should hopefully reduce our reliance on discounts. So that should
bring down the marketing costs over time. We can also look at better targeting of ads, I am sure we
The Company has been trying but has been unsuccessful. Can you figure out the reasons?
are already doing that. But as we gather more data, maybe our targeting will improve bringing down
Some possible reasons that I can think of: our marketing costs.
1. Access: Do people in rural areas have access to internet? And do they know about Flipkart? For logistics, we will actually have to spend more in improving our warehouse and transportation
2. Serviceability: Can Flipkart service all those locations, in terms of logistical capabilities? network as we expand, which will result in benefits over time. Our suggestion on kirana stores can
3. Trust/Inclination: Are rural consumers comfortable transacting online? Or, are they hopefully improve our logistics efficiency and bring down costs.
comfortable only with the physical kirana stores? Anything else you wish to add?
Good. So the issues we have been facing are lack of trust and very high last mile delivery costs. Walmart has recently acquired Flipkart. Walmart is known for its supply chain efficiency, maybe we
Any suggestions around the same? can draw some lessons from them and figure out collaboration areas
For trust issues, can we appoint a person in every reasonably-sized village who will help in placing That’s for another time. Thank you.
and delivering the orders and more importantly, will be the face of the organization. For reducing
last mile delivery costs, can we partner with some logistics companies specializing in that area? Or
maybe India Post? They have the widest reach.
In fact, we can actually onboard kirana stores and adopt an omni-channel strategy. These kirana
stores can be equipped with a mobile/tablet and can take orders on behalf of the customers. They
can earn a commission on each sale. Plus, they can serve as a mini-warehouse for us, helping in
last mile delivery as well. Customers can come there and pick up their goods rather than us
delivering to their doorstep.

E-commerce
Your client is Flipkart.They have requested your advice on medium-term growth strategy, for the next 3-5 years.
Interviewee Notes Case Facts Approach / Framework

• There are two objectives: • 55% market share
growth and profitability • Amazon is the only
(which can be conflicting, competitor
especially in platform • 80% of our customers
Increasing
businesses in growth are in urban areas, and Customer acquisition Customer retention transaction basket Increasing profitability
stage) account for 95% of our size
• The value chain of the e- sales. Within urban areas,
commerce business (or 60% of our customers
Focus on rural areas Loyalty program Logistics cost
any digital business) would are from metro areas.
involve customer
Aggregator model
acquisition, customer Co-opt kirana stores Marketing cost
retention, increasing
One-stop shop
basket size and increasing
transaction profitability
• This is more of a ‘conversational’ type of case rather than one which is following a particular structure. (generally observed in final rounds)
• In case the company involved is a well-known one, be sure to use your knowledge of the company during the interview. For example, here, the interviewee mentioned about Walmart
(ideally, should have mentioned much earlier as could have provided an interesting direction to the case)
• In case you have work/ internship experience, do think about the common issues faced by that industry – the interviewer might give you a case on that particular industry

Software product company – Interview Transcript

Your client is an online software provider. And this company had grown fairly well on the past, but
this particular year they’ve really flattened out, unable to grow beyond the particular barrier. And Yes.
the company’s CEO has asked you for help to grow this business beyond the $110,000 in revenue
I’d like to repeat the same analysis for the Fortune 500 segment, to see if a similar pattern is happening
per month.
on that side. Do we have – of the ten clients we have this month – do we have any data that indicates
So let me recap, so this is an online software as a service company with about $110,000 a month in how many clients we had in the prior month, how many of them were new and how many did we lose?
sales, and its sales have been flat. It is looking for ways to increase sales, is that right?
Sure, similar data is provided in the table (refer to the tree in the previous slide).
Yes, that is correct.
Ok. I’d like to know where do the sales come from today – whether that’s different products, So we have a huge attrition problem in the small business segment and at the same time, we don’t
different customers – what are the components that comprise $110,000 in sales? seem to lose any customers on the Fortune 500 side. I would like to investigate more on why this
might be happening. I would like to find out if we are selling the right product to the right segment. For
Sure. Let’s start with the product – the company provides a software as a service, and their software this I would like to know what customers in the two segments are looking for and how our product is
does website analysis for companies that are doing business online. And their tools help them figure helping them.
out what their customers are doing online, ultimately with a purpose of figuring out how to improve Sure, so the first segment is small mom and pop businesses that are trying to dabble in e-commerce,
the websites. So these companies doing business online can either make more money or accomplish and they’re looking to make more money online. However, they want to maximize the number of
whatever goals they’re trying to accomplish. visitors to their website.
Got it. Who are the company’s customers? Ok, and how is our product helping them do that?
The company currently gets sales from two different types of customers: small business customers, So it shows which users are visiting which parts of this website and are they shifting from the free
as well as Fortune 500 customers. content portions of the website to the e-commerce portions of the site where you can actually
transact and generate a sale. This product is very good at just tracking those behaviours and figuring
Do we know what amount of sales came from each particular kind of customers?
out where people go, and has a number of tools to really help the company – the small business in this
Yes, it turns out that small companies, small businesses contribute or generate $100,000 a month in case –optimize the layout of the website, change how information is presented to the end user to really
sales from the company and Fortune 500 companies drive $10,000 a month in sales improve the ratio of visitors to buyers on the website
It sounds like sales have been flat overall versus prior years. I’m curious, have sales – for the Okay, it sounds like this is a kind of a process improvement type tool to get more people who visit the
company overall – have sales for the competitors changed? So I’m trying to figure out if this an website to buy more often or to make them more likely to buy. It also seems like what we offer as a
industry problem or if this is a company specific problem. Do we have any information on that? company, as a current product, is not really designed to solve what the customer really wants, and they
Well, it turns out this company is the only company in the market. certainly want to make more money. But first I guess it sounds like they need more visitors to the
So this is not a competitive issue but an issue more with either the company itself or with website in order for this particular product to be of value to them. Does that seem reasonable?
customers. Do we have any data for each customer segment – the small businesses or the Fortune Yes, actually it does.
500 –how have the sales changed for each of those customers over time?
Ok, now we can do a similar analysis for Fortune 500 customers. Do we know what they are looking
Sales for Fortune 500 have increased while for the small business segment it has decreased.
for ?
These customers want to measure their RoI so that they can show their CEOs that the e-commerce
Ok. Now the sales are driven by average price per customer or price times the quantity or number
division is achieving its objectives. These directors are worried that if they can’t prove or rely on return
of customers. And so do we have any breakdown as to how many customers there are and what’s
on investment that their division might actually get shut down, and it seems that this product seems to
the pricing of that? The hypothesis I’m trying to test is, has the pricing change driven down revenues
be useful in measuring return on investment.
or are we actually having fewer customers, but each customer we do have is paying the same price.
Great. So I can draw two conclusions here – one, small business segments –what they want and what
Sure, the data is provided in the table . The prices have remained constant for both the customer
we offer – this shows a complete mismatch, and two - I think that the Fortune 500 is a better fit is
segments. The prices are like subscription fees paid per month.
because the problems they have are exactly the problems we solve.
So your revenue is the price times new customers you bring in this month subtracting out how many
Ok. So what is your recommendation?
leave. What I’d like to do is actually break that down and look at the number of customers that are
added each month versus subtracted each month. Do we have any data on that for – let’s start with To answer the question of how to grow sales for this particular client, I would recommend that the
the small business segment. company exit the small business market and focus all its resources on serving Fortune 500 clients.
Sure. The data is provided in the table (refer to the tree in the previous slide). Very good. Thank you.
So it means that we’re losing 1,800 clients a month and then adding 1,800 clients, so our net
change is always zero. Is my understanding correct? Did I get that right?

Software product company
The client is a provider of an online software product and is witnessing flattening sales.You are asked to help grow the sales beyond its current
$110,000 per month (pm) figure.

Grow Sales >$110K
• Online software provider • Product – online software that pm
• Flattening sales does website analysis for the Explore
Explore New
• Customer segments client’s customers i.e. which Existing
Business
Business
• # and $ of each segment users
• Understanding product • visiting which website, are they SMB Fortune New Expand
Sales 500Sales Geogra Product Diversify M&A
features shifting from free content phy Line
• Segment profile and portion to e-commerce # #
product proposition portions customer Price Price customer
s s
• Sales grew earlier but plateaued
recently; not an industry trend
New = Renewal Churn = Renewal Churn =
• Revenue model – recurring New = 1
1800 = 200 1800 =9 1
monthly sales
• Assume no competitors Value
Prop Value
Doesn’t Prop
Match (X) Matches
Market and Sell to Fortune 500
Explore Sales Force & Marketing

Resources
Recommendations Small Business Fortune 500

• The client should exit the small business segment Price pm $50 $1,000
• It should focus all its resources on the Fortune 500 customers # cust. pm 2,000 10
Sales pm $100,000 $10,000

# cust. trend Decreasing Increasing
• In a single product case, understanding customer segments, their needs and the products’ value proposition is
Profile mom-pop stores; want to e-commerce of large company;
critical. maximize #visitors want to show RoI
• Comparison of any sales data wrt. either time or industry/competitors is essential to understand where the
Product Helps improve user Helps track and improve sales;
problem lies Suitability experience gives RoI

Midstream oil & gas company – Interview Transcript
Your client is an Indian oil and gas company looking to increase their revenues. Suggest a growth Assuming only 50% population would have municipal water supply, my daily water demand comes out
strategy for them. to be 2.5 million kL / day. This translates into a revenue of Rs. 25 million / day.
This market size seems attractive even if we can control a 60-70% share once the other sources dry
I would like to start with a few preliminary questions. What business exactly is our client into and up.
in what geographies ? Is there a growth target in their mind ?
Sounds reasonable. Once the water dries up, what alternative sources can be possible ?
The client operates in the midstream sector i.e. transmission and marketing of oil & gas. They
operate pan-India and are looking to grow by 4x over next 10 years We can look at rain water harvesting, souring water from locations nearby Bangalore, harvesting
ground water from the nearby forests and supplying to Bangalore or we can look at sourcing sea
Ok, so I would split the options to increase sales into exploring existing business or exploring new water from a coastal town, purifying it and supplying to Bangalore
business. Within existing business I will look at options to increase volume or price and within new
business I will consider M&A, entering a new geographical market or introducing a new product. Great. Our client is looking to source sea water from Chennai, transporting it to Bangalore by setting
up a new distribution network, purifying it in plants near Bangalore and selling to Municipal corp. Can
Great. Lets focus on new businesses you list down the costs which will be incurred by us ?
We can analyze the new businesses using a 2x2 matrix of products vs business. With existing I can divide the costs as Fixed and Variable costs. Fixed costs would involve the infrastructure costs i.e
product, customer can look to penetrate more in the existing business or expand into new setting up of pipelines, purification plants, licensing costs, insurance costs, salaries. The variable costs
business. With New product, customer can remain in the existing business by modifying the will be the cost of buying sea water, operations costs, maintenance costs, wastage and theft costs.
product or enter new business. The new business can be related (integration) or unrelated with the
current business. Do we have any data around what the client is looking for ? What costs would you include under the operation cost and what would they depend upon ?
Yes, so as you correctly identified client wants to enter a completely new business of drinking The operations cost would include the utilities costs like costs of running the pumps and power
water distribution. They want to setup water purification plants to supply water to municipal corps. houses to source water and supply it to Bangalore. Another cost would be the cost of running
purification plants and cost of running powerhouses to supply water to municipal corporation.
Interesting. So if I understand correctly, client will source water from the water bodies, purify it in The operation costs would depend upon:
its own plants and sell it to municipal corporations. Are we looking only at drinking water supply? 1. The distance over which water is supplied (We should look at minimizing this distance from
Chennai to Bangalore by setting up underground pipelines).
That’s right. How would you identify a good geographical location to start this business ?
2. The gradient of the on-surface pipelines (Given that Bangalore is surrounded by many mountains
I would analyze the different locations and choose the ones where there is no distribution network and we cannot have underground pipelines throughout)
currently, has scarcity of water but has a large population. I would also look at the purchasing 3. Specification of Pumps such as their Quality, efficiency.
power of these people, regulations, possible synergies with my current distribution network.
I think the analysis is sufficiently thorough. We can stop here. Thank you.
Hmm, what else ? Since you would be selling water to municipal corp., does it make sense to setup
plant in a place with no municipal corp. supply ? Also, in the places where municipal corp. exists,
they already have the water sourcing and purification network. Why don’t you think from the
perspective of demand in the future ?
Okay understood. From the future perspective, I would benefit by setting up the plants and
sourcing network in a location where water sources are expected to dry up. Hence, I can use my
current pipeline network to source water from far away places and purify in my own plants.
Perfect. Our team carried out a similar analysis and they have identified Bangalore as one such
location. Can you help us size the Bangalore domestic potable water market ?
Should I look at sizing by value ? Also I will look at only the household daily potable water demand.
Yes, by value. Assume Municipal corp. buys water from the client at Rs. 10 / kL.
(Interviewee calculates similar to the table on the next page). I would segment the entire
households of Bangalore based on a rough estimation of income. My assumption would be that
higher income people would live in bigger houses and would have a higher water demand.

Midstream oil & gas company
Your client is an Indian oil and gas company looking to increase their revenues. Suggest a growth strategy for them.

• Expand in India only • O&G co. operating in midstream
• Differentiating factor: sector i.e. transmission and
Grow sales
client has a wide marketing and has pipeline
distribution network network throughout India.
• Can expand by expanding • They are targeting a revenue Explore new
Explore existing
existing business or growth of 4x over next 10 years business
business
exploring new business (Another hint that client will
• For water business, focus look for new businesses)
on areas with scarcity of • Current operations are pan-India Increase Enter new Introduce new
Increase price M&A
water supply. • Client wants to enter a Volume market product
• Benefit by setting up the completely new business of
plants and sourcing drinking water distribution. They
network in a location want to setup water purification
Diversification
Existing
where water sources are plants to supply water to
New market entry matrix Modification Penetration
Businesses
expected to dry. municipal corps
• Focus only on the potable • Water sold to municipal
waster supplied to corporation at Rs. 10 / kL.
New
Diversification Expansion
households of Bangalore. • Client want to source sea water Related Unrelated
• Cost of pumping water from Chennai and supply it to

Starting Assumption: Bangalore New Existing
will be a major cost Bangalore using its network Population: 12 million ( 3million households) Products
Recommendations Medium
Income Low Income High Income
• Expand by entering the new business of setting up water purification plants and selling water to municipal body Income
• The market size of Bangalore for potable drinking water looks attractive and given the expectation of future scarcity, % households 60% 30% 10%
it looks like a good place to set up the operations
Municipal water supply 20% 50% 100%
• Major costs would be incurred in establishing the network of pipes and operations (purification and supply)
Water consumption (kL) 1 2 4
Observations / Suggestions 2,500,000
Total water demand (Kl)
• The case was quite lengthy and involved growth strategy, market sizing as well as some qualitative analysis /day
• The MECE growth framework at the start helped to quickly identify client’s growth srtategy Revenue = 2,500,000 x Rs. 10 = Rs. 25,000,000/ day
• It was a good mix of quantitative and qualitative analysis

Due diligence
2019-20 94
Due Diligence | Moderate
Chain of colleges – Interview Transcript

Your client is a PE Firm. It wants to take up a stake in a chain of undergraduate colleges. Diagnose Okay, that’s good. Identify the key risks associated with this investment.
and recommend whether it should go ahead with the acquisition. The biggest risk is the competition from existing B schools. Further, the B School needs to procure
I would like to ask a few clarifying questions before I begin. I want to understand the client’s the necessary license from UGC. It also has to adhere to the guidelines issued by the UGC and
business. What is the average portfolio, the expected growth rate and exit time? government. Failure to do so will be detrimental to the operations
The company has a mixed portfolio of different sized investments and is looking for a 30% growth That’s fair. I think we have a sufficient list of factors to look into before making this investment.
rate on this investment. It wants to make a quick exit in about 4-5 years. Anything else we need to consider?
Why is the firm considering a chain of colleges for investment? The one last thing that is left is comparing the estimated growth rate of the NPV with our estimated
growth rate. The former would basically be our estimates of the company’s organic growth and how
Although the firm does not have any investments in the education sector, it has been looking to much we can add to it through inorganic growth. If the sum of these two is not less than 30%, and
enter this market. However, it has a sizeable investment in a leading recruitment agency in India. the NPV of the recurring profits seem adequate, the firm should go ahead with the purchase.
Okay. This means that there are possible synergies which can be worked upon between these 2 Well done. One last thing, can you enumerate the possible exit options which the firm can look in
investments. Can I know some details about the colleges? I am assuming they are privately the future.
owned? Exactly how many colleges are being run as of now and where?
The firm can consider a strategic sale to a firm engaged in the education sector or to another
The colleges are privately owned. There are 4 colleges as of now, located in Delhi, Bangalore, private equity firm (secondary buyout). It can also exit via an IPO, however, for that the chain would
Mumbai and Chennai. have to attain a substantial scale of operations. Lastly, management or the promoters of college
Okay. Moving on, why does the college needs this investment- is it for a secondary purchase from chain can buy back the equity stake from us.
an exiting stakeholder or to meet some operational/growth strategies?
The college is looking to leverage its brand and open a B school in Mumbai. It needs this
investment for the same.
Interesting. So in order to analyse whether this is a sound investment, I would analyse the
viability of opening this B school. I would understand the market size, recent growth trends,
major sources of revenue and costs, factors by which the college chain can differentiate itself
from competitors and the operational feasibility. Is this a sound approach?
That sounds reasonable, though slow down a little bit. How would you value the investment?
I can find the NPV of the profits by guesstimating the revenue and cost figures. Further I can try
to come up with an annual growth rate and compare it to our expected growth rate to check
feasibility.
Assume the cost to be X. How will you compute the revenue?
Can I know if the school has any other revenue streams apart from the education fees it must be
charging the students? Hostel charges maybe?
Assume that the education fees is the only source of revenue.
Revenues will be equal to the total seats x occupancy rate x the fees/ student. The total fees
charged would depend on the segment the B school wants to position itself in. Considering it
already has an undergraduate brand, it can easily charge 15-20L. Being a new entrant, maximum
occupancy would depend upon its marketing efforts.
There are a lot of private and public players in this market. How do you think can the B school
differentiate itself from its competitors?
The B school has to leverage its undergraduate brand. It can bring in a competent teaching
faculty using its already established connections. Further, we can expect synergies with the
fund’s investment in the recruitment agency. Placements are considered as a significant metric to
showcase the success of a school and the recruitment agency can help bring in potential
recruiters. These 2 factors would be crucial in differentiating itself in this market.

Due Diligence | Moderate
Chain of colleges
The client is an investment fund looking to invest in a chain of colleges, explore the viability for the same.

• Check the valuation • Wants >=30% growth
and feasibility rate Due diligence
• Explore viability by • Will exit in 4-5 years
estimating revenues
(demand side, supply
side), risks associated
with the investment & Product
Revenue Key Risks
Differentiation
exit strategies
Total No Occupancy
of Seats Fees/ Student
Rate
Exit opportunities
Recommendations
• If the computed growth rate is more than or equal to 30% take up the investment.
• The purchase price should be less or equal to the computed NPV

Due Diligence | Challenging
Movie theatre – Interview Transcript (1/2)

Your client is an investment fund, they want to invest in PVR. Is this a good investment? What Going by the data, my preliminary analysis is as follows:
factors would you consider?
Before starting the case, I would like to know whether the existing portfolio of the investment PVR Industry
fund includes any companies in the mass entertainment segment?
The Fund does not have any investment in mass entertainment segment in India. The Fund does 16-17 to 17- 17-18 to 16-17 to 17-18 to
have investment in Regal Entertainment Group, a leading movie theatre chain in USA 18 18-19 17-18 18-19
That means there might be potential synergies going forward if the investment is supposed to be
made which could be factored in while making decision. Also, is the investment in form of cash Revenue from ticket 9% 25% 10% 18%
infusion in PVR or secondary purchase from the market/promoters? If in form of cash, what is sales
PVR planning to do with this capital?
Revenue from sale of 20% 25% 20% 8%
Investment shall be in form of secondary purchase from the Promoters who are looking to sell a
F&B
portion of the stake to the Fund
This is good to know. Moving to the case, in order to analyse whether PVR is a good investment Advertisement 11% 7% 10% 18%
or not, I wish to analyse the company’s revenues along with margins and compare it with revenue
industry’s revenues and margins. Also, I would like to understand the sustainability of Company’s
revenues and the growth forecast vis-à-vis the industry. Finally, it would be good to explore key PVR has maintained growth across segments comparable to industry in 2017-18. Whereas it has
risks which might affect the decision outperformed the industry in ticket sales and sales from F&B in 2018-19 which is a good
Sounds alright. Go ahead with your analysis indicator. My hypothesis for this growth is the benefits accruing to PVR in terms of its brand
Sure. Do we have data on Company’s revenues – segment wise for past three years along with positioning and changing demographics coupled with increase in per capita income in hands of
margins? It would be good to have similar data for industry as well. consumers. Further, PVR is primarily situated in Tier-I and II cities where it can command
Following table provides the information. Analyse this: (INR Mn) premium over competitors owing to the overall better experience offered to customers.
Company has also outperformed industry in terms of EBIDTA margins which depicts the better
PVR 2016-17 2017-18 2018-19
cost management by company.
Revenue from ticket sales 11,000 12,000 15,000 That is correct. What next?
I would wish to understand the percentage of recurring customers to analyse the sustainable
Revenue from sale of F&B 5,000 6,000 7,500 revenues for the company
Tickets are booked over the counter and through third party applications. So Company does not
Advertisement revenue 2,700 3,000 3,200
have data for it.
EBIDTA Margins 20% 20.5% 22% Do we have data on geographical distribution of number of screens of PVR?
Yes, Company has following number of screens:
Industry 2016-17 2017-18 2018-19 Region No. Rank

Revenue from ticket sales 50,000 55,000 65,000 North 216 1
Revenue from sale of F&B 10,000 12,000 13,000 South 253 1
Advertisement revenue 10,000 11,000 13,000 West 257 1
EBIDTA Margins 15% 16% 17% East 22 2
Overall 748 1

Movie theatre – Interview Transcript (2/2)

This data shows that except for east, company has uniform distribution of screens across
geographies. This also provides PVR with huge opportunity of exhibiting regional content which is
picking pace. Although company only has 22 screens in East, it is still 2 nd in the industry in terms
of screens, which implies that cinema market is not so active in East.
Good. What is your take on industry life cycle?
I believe that Indian cinema industry is in growth phase with new content and increasing number
of movies crossing INR 1Bn mark. Also, Indian audience is increasingly opening up to Hollywood
segment which has great potential in terms of growth. Taking PVR as case in point, PVR offers
good content mix in terms of Bollywood and Hollywood. Further, its presence across pan India
helps offer regional content to the audience as well.
Okay. Identify the key risks associated with this investment
In my opinion, the biggest risk comes from online movie streaming services such as Hotstar,
Netflix and Amazon Prime. Since this gives the customers the easy of watching movies anywhere.
Therefore, there is a strong competition between the movies in the theatre and the one available
online. Additionally a Netflix subscription for 4 screens costs about 1000 rupees a month i.e. 200
per screen with the choice of watching unlimited movies or TV shows as compared to a movie in
the theatre that costs 200 rupees per ticket. An added risk for theatres is that the demand they
faced is derived demand since it a factor of the movies that are currently in the theatre which
could be very cyclical. Moreover, with the increasing penetration of streaming services the
bargaining power for theatre is also reducing as a distributor could soon go to one of these
services and sell the rights of the movie to them instead of going to a theatre
What is your final recommendation?

Considering that PVR has outperformed the industry in terms of revenues and margins shows the
competitive advantage in terms of brand positioning and ability to charge premium over
competitors. Company has geographic advantages and is part of a growth industry.
An important point to note is that the Fund already has investment in a major USA cinema player
which could lead to creation of synergies on account of potential joint venture/ acquisition.
Finally, although there are major risks posed by streaming service providers, PVR can play on
providing cinematic experience which can be enjoyed only in a theatre. I would conclude by saying
that it is a good investment opportunity, assuming available at a reasonable valuation
That would be all. Thank you.

Movie theatre
Your client is an investment fund, they want to invest in PVR. Is this a good investment? What factors would you consider?
Interviewee Notes Approach/ Framework

• Investment fund – investing in PVR
• Explore viability by estimating
revenues (demand side, supply side), Business analysis
risks associated with the investment
& exit strategies
EBIDTA
Revenue No of Theatres
Margins
Industry Geographical Industry

PVR Trends PVR Trends
Trends distribution Trends
Key risks
• The risks can be mitigated by providing services that uplift the whole experience of watching movies in the theatre; increasing the value provided by visiting a theatre
• Different areas can be segregated according to their average income and theatres in that area can charge prices and provide service in line with the propensity to spend

Data-intensive
2019-20 100
Data-intensive | Challenging
Business Expansion (Telecom Video Project) - Data
You have been approached by the Chief strategy officer (CSO) of a telecommunications service provider for advice on options to improve the
economics and performance of it’s recently introduced video strategy
Interviewee Notes Case Facts Miscellaneous information

• Focus in on client’s • Our client is an integrated wireline and wireless telecommunications Client’s subscribers 50 Million
options services provider that recently began offering wireline video services in a
Buildout costs $1500/household
• to quickly gain scale portion of its geographic footprint in response to competitive pressure
Programming cost 25% above
in video services from cable operators offering triple-play bundles with video, broadband and
competition
• Analyze the benefits voice services.
and deficiencies • Thus far, complexity, technology and cost issues have limited the rollout Installation cost $500/new subscriber
associated with and adoption of this service and reduced our clients ability to effectively Video ARPU $75/month
each option counter the competitive threat. Some key terms are as follows: Triple play ARPU $120/month
• Appropriate the – Video offerings: Our client currently offers video services across its % of new video subscribers who take
value of a wireline footprint in partnership with a national satellite operator triple play 90%
• video subscriber, (DBS); the satellite operator is the largest source of new subscribers to
% of triple play customers who churn relative to
along with the our client’s wireline geography. voice only 50% less
incremental value of – Buildout costs: Cost of putting in place the delivery infrastructure that
a triple play must be incurred before service is delivered to that neighborhood.
subscriber – Programming costs: Cost of procuring and packaging content.
• What is the value of – Installation costs: The cost to connect a subscriber to the delivery
scale in video to the infrastructure.
client? – ARPU: Average Revenue Per Unit; Churn: Loss of customers as they
switch to other service providers
Market information US TVMarket Client Video Services

Total USHouseholds 116.2M Client video buildout households passed 31.3 M
Total USTV Households 111.2M Client total video subscriber monthly churn rate2 2.75%
Total US MVPDSubscribers1 (HH) 98.0M Client Consumer access lines 36.4 M
MVPD Penetration in TV HHs 88% Annual change in client Consumer access lines -4%
Total Triple play Subscribers 9.7M
Competitor programming cost per subscriber/month = $20.63

1.MVPD = Multichannel video programming distributors; MVPD subscribers pay a monthly fee to a MVPD provider (e.g., cable company, satellite company)
2.Video subscriber monthly churn = Total disconnects for the month / average subscribers for the month

Business Expansion (Telecom Video Project) - Interview transcript
What are your client’s options to quickly gain scale in video services? ➢ Contribution per Month
The client can look out for both organic or inorganic growth options, with preference to • Monthly Revenue = $75
inorganic due to the desire to acquire scalerapidly • Monthly Service programming cost = $20*1.25 = $25 (Pull 25% from Misc. Info table)
• Contribution per subscriber/month = $75-$25=$50
Can you please elaborate on both these options? ➢ Expected Lifetime
Sure. By Inorganic, I meant to acquire current satellite distribution partner, cable operator (e.g. • Annual Churn Rate=2.75%*12=33%
Comcast), or disruptive competitor (e.g., Vudu, Veoh, etc.). While the organic strategy can involve • Expected life in years=1/33%=3years
Increasing the speed of video build out/rollout schedule for client video offering and/or offer ➢ Lifetime Value
significantly lower promotional pricing for video services to increase penetration in available • Installation Cost = $500
markets • Contribution/year = $50*12
What are the benefits and deficiencies associated with each option? Please detail them out. • Cost of Capital: NOT PROVIDED – Should make an assumption e.g. may choose 10% for easier
calculations
➢ Acquire current satellite distribution partner:
• DCF= -$500 + $600 + $600/1.1 + ($600/1.1*1.1) = -$500 + $600 + $545 + $495 = $1,140
• Benefits: provides a large number subscribers quickly, national footprint, expanded footprint
to new geographies and savings on cost of installation Makes sense, on another note additional assumptions could have been made regarding other costs
• Deficiencies: price, potential loss of distribution from other telcos, integration challenges (not not provided (e.g., cost of sales, cost of care, etc.) that would alter the lifetime value calculation.
wireline) But, we are good with your explanation.
➢ Acquire cable operator: So, moving on can you try figuring out the incremental value of a tripleplay subscriber?
• Benefits: expands footprint to new geographies, wireline video offer ➢ Incremental life of triple play customers
• Deficiencies: price, potential mismatch in geographic coverage, savings on cost of installation • Annual churn rate of triple play customers =2.75%*.5*12=16.5%
➢ Acquire disruptive competitor: • Expected life in years = 1/16.5% = 6 years
• Benefits: lower price, national coverage, rapid roll-out • Incremental life of triple play customers = 6 years – 3 years = 3years
• Deficiencies: may not be considered a true substitute to traditional video services, may require ➢ Incremental value due to triple play
higher speed connections • Incremental lifetime value = (600/1.1^3)+(600/1.1^4)+(600/1.1^5) = $450 + $410 + $373 =$1,233
➢ Rollout owned service faster: • Adjust for 90% triple play = 90% * 1,233 = $1,110
• Benefits: lower operating costs due to one network / optimal network design
• Deficiencies: time to market, proof of success at scale Any thing else, that you may considered as incremental value?
➢ Lower pricing: The value drivers related to scale can be summarized as :
• Benefits: increase penetration in target markets, rapid implementation (only in areas where • Increased bargaining power with video programmers
service currently offered) • Retention benefits from triple play subscriptions leading to fewer access line losses
• Deficiencies: margin implications, devaluing service in customer perception, risk of churn when • Faster realization of video revenue streams
prices rise, competitive response Go ahead.
• On another note, getting people to sign up for triple play if they currently have nothing might
be even more expensive than converting the households currently with MVPD As a part of our implementation strategy, I would like to assess our technical knowledge, ability to
attract personnel, availability of capital and grid accessibility. Is there anything else I should consider?
That was a good take. Moving on, how would you estimate the value of a video subscriber?
Please try quantifying some of these drivers.
We can do it by lifetime value analysis. I’ll start it by calculating contribution per month per
subscriber and the corresponding expected lifetime Value of scale can be estimated as follows:
• Programming cost benefit: $5 * 12 months = $60 per subscriber per year [$5 is difference
Sounds good. Can you please walk us through your calculations?
between estimated $25 programming cost and $20 cost for competition]
• Retention benefits from fewer access line/broadband losses: $45*12 = $540/retained
subscriber/year [$45 is the difference between the $120 and $75/month ARPU]
That’s good, thank you

Profitability (Telecom) - Data
You have been approached by a Regional Wireless Service Provider who is facing declining profitability over the last few years due to strong
competition from larger companies to identify an approach to reach improved profitability across their footprint

• Focus on various market segments and their profitability • The client’s past efforts to improve performance focused on national-level initiatives in marketing
• Analyze the factors associated with profitability for each market and customer experience, but saw no meaningful improvement in their financial metrics
• Look at various options to boost revenue while reducing costs to be able to • Client operates in 8 US metropolitan areas. Market metrics of these 8 areas have been provided
increase profitability in the tables below in Exhibits - 1 and 2.
• Various Costs incurred by the company are provided in Exhibits – 3 and 4.
EXHIBIT – 1: Summary Metrics by Market
% of All Subscribers
Avg. Revenue per Network Quality Smart phone Level of Competition
Market Market Population Market Share # of Stores that Buy New Device
Subscriber per Month (1 Low – 10 High) % in Market
During Year
1 3.3M 14% $55 125 5 25% 60% Strong
2 0.35M 5% $35 20 3 20% 35% Moderate
3 2.9M 32% $45 170 9 15% 45% Low
4 1.9M 7% $50 50 7 30% 50% Low
5 4.0M 10% $55 100 2 35% 65% Strong
6 1.2M 18% $40 50 4 25% 50% Moderate
7 1.3M 12% $45 50 5 25% 55% Moderate
8 4.9M 24% $45 170 9 20% 40% Low
EXHIBIT – 4: Marketing and G&A Spend
EXHIBIT – 2: Subscribers by Market over Time EXHIBIT – 3: Summary Costs by Market
Breakdown by Market
New Avg. Annual Cost to client Annual
Subscribers Subscribers Mark Personnel per New network
Market subscribers Market Marketing Cost G&A Cost
in 2010 in 2013 et Costs per Store Subscriber cost
in 2013
1 450K 400K 150K 1 $500k $300 $25M

Total Cost $250M $1B
2 20K 20K 5K 2 $500k $200 $10M 1 5% 12%
3 800K 1000K 150K 3 $400k $250 $75M 2 0% 3%
4 75K 150K 50K 4 $450k $250 $75M 3 25% 25%
4 15% 5%
5 600K 400K 75K 5 $550k $300 $50M
5 5% 10%
6 400K 200K 40K 6 $500k $250 $25M
6 5% 5%
7 250K 150K 30K 7 $450k $250 $25M 7 10% 5%
8 1,100K 1,200K 250K 8 $450k $200 $75M 8 35% 35%

Profitability (Telecom) – Interview transcript
How would you approach identifying the source of our client’s lagging financial performance? ➢ Market 8
• Revenue from ARPU = 1,200,000 X $45 X 12 = $648M
I would break down the various sources of Revenues and Costs to identify the factors that are • Device Revenue = (1,200,000 X 20%) X $100 = $24M
causing decreasing profitability. I will analyze at individual market level rather than at national • Total Revenue = $648M + $24M = $672M
level, given the lack of success of national level initiatives in the past
That’s Great. Now please have a look at Exhibits – 4 & 5 and calculate the costs for those same
Can you please elaborate on both these options? markets? What are the profits by market?
Sure. Total Cost has three cost components; Customer Acquisition cost, Operations cost and Store
1. Revenue - I shall break it into components using multiple criteria like Recurring vs One-Time cost
revenues and those revenues arising from existing customers vs those coming in from new • Customer Acquisition cost = Cost per New Subscription X No. of New Subscriptions
customers. • Operations cost = Annual network maintenance + (Marketing spend X % for market) +
2. Costs – Break Costs into its components, Fixed Costs and Variable costs and further break (G&A spend X % for market)
it down into Cost to acquire and Cost to serve. • Store Cost = No. of stores X (Personnel cost + Rent). Is there data available on rent for
We could also leverage competitor benchmarks to identify areas in which client is the store?
underperforming in the marketplace for different markets and thereby suggest methods to Consider Rent per store at $70K per store. Please calculate the total costs and profits for each
increase revenue or decrease costs or both. market for year 2013?
Our client decided to conduct a market-level performance analysis, and has provided you with the ➢ Market 4
data (Look at Exhibits – 1,2). What trends do you observe? • Customer Acquisition Cost = $250 X 50K = $12.5M
• Markets 3 and 8 have a large population and the client has a higher share with a low level of • Operations Cost = $75M + ($250M X 15%) + ($1B X 5%) = $162.5M
competition. They seem to be driving a lot of revenue. Indicates they are good to focus on • Store Cost = 50 X ($450K + $70K) = $26M
and to drive more from those markets. • Total Cost = $12.5M + $162.5M + $26M = $201M,
• Market 2 is fairly insignificant, can ignore • Profit = $94.5M - $201M = -106.5M
• Market 4 has high growth potential – Relatively higher number of new subscribers, strong ➢ Market 5
market growth from 2010 and low competition level • Customer Acquisition Cost = $300 X 75K = $22.5M
• Market 5 is big, has smartphones and high Revenue per Subscriber, but is competitive and the • Operations Cost = $50M + ($250M X 5%) + ($1B X 10%) = $162.5M
client’s network isn’t great. It may be an opportunity • Store Cost = 100 X ($550K + $70K) = $62M
• Smartphone tends to be tied to higher ARPU. Better network where competition is low. • Total Cost = $22.5M + $162.5M + $62M = $247M,
Based on your analysis, the client has identified three key markets to focus on. Please calculate the • Profit = $278M - $247M = 31M
annual revenue for markets 4, 5, and 8. ➢ Market 8
• Total Revenue = Revenue from ARPU + Device Revenue • Customer Acquisition Cost = $200 X 250K = $50M
• Revenue from ARPU = Subscribers X (ARPU X 12 months) • Operations Cost = $75M + ($250M X 35%) + ($1B X 35%) = $512.5M
• Revenue from Devices = (Subscribers X % buying devices X Average Device Price) • Store Cost = 170 X ($450K + $70K) = $88.4M
• Is there data on Average Device Price? • Total Cost = $50M + $512.5M + $88.4M = $650.9M,
Average Device price across the markets is $100. Please calculate the total revenues for year 2013 • Profit = $672M - $650.9M = 21.1M
➢ Market 4 After the market segmentation, client determined that they have 2 markets that are profitable
• Revenue from ARPU = 150,000 X $50 X 12 = $90M but have a declining subscriber base. What would you recommend the client in order to make
• Device Revenue = (150,000 X 30%) X $100 = $4.5M sure profitability is maintained and/or grown?
• Total Revenue = $90M + $4.5M = $94.5M • Recognize that revenue needs to be prioritized to improve profitability given declining
➢ Market 5 subscriber base
• Revenue from ARPU = 400,000 X $55 X 12 = $264M • Suggest expansion of subscriber base through targeted marketing
• Device Revenue = (400,000 X 35%) X $100 = $14M • Identify opportunities to grow sales through upsell (e.g., try to get everyone on
• Total Revenue = $264M + $14M = $278M smartphones and the highest available data plans) and cross-sell (e.g., other non-mobile
products (cable from parent company, content partnerships) and adding other family
members or devices to the contract

M&A: Strategic Target Assessment - Data

BevCo, a leading international producer and marketer of wine and spirits, has been facing declining revenue and profitability due to shifts in
consumer tastes to other categories such as beer. Due to their limited experience in beer industry, you have been asked to determine if they
should acquire BeerCo and identify integration considerations that need to be addressed.
Interviewee Notes Beer Co:
• During acquisition, profitability & • BeerCo’s operating margin is greater than BevCo’s as well as
investment required are the most that of the industry average Recent M&A Activity in the Market
important factors, followed by the • BeerCo’s portfolio includes six of the top 20 craft beer brands EBIT Transac. Transac.
market competition and the growth Acq. Rev.
in the US and a coveted portfolio of premium brands Target Segment DA Rev EBITDA
Price ($M)
rate • Lager product line demonstrates the largest top line growth but ($M) Multiple Multiple
• BevCo should keep in mind lowest operating margin On the Rocks 1,000 Margarita 641 103 1.6x 9.8x
operational considerations when • Its lower margin is potentially due to the use of Cans vs. Glass Craftbev Co 990 Craft beer 510 80 1.9x 12.3x
integrating BeerCo – i.e., how to and the associated COGS difference Park Ave. 112 Beer 17 4 6.5x 25.9x
optimize the integration of people, • To improve profitability of the Lager line, reducing variable cost Mark North 1,380 Beer 836 159 1.7x 8.7x
process, and technology. could be considered as a key lever Epic MJ 270 Craft beer 156 26 1.7x 10.4x
• To improve profitability of the Lager Won Winery 130 Wine 96 13 1.4x 10.1x
line, reducing variable cost could be Market Situation: Jane Co. 280 Spirits 175 34 1.6x 8.1x
considered as a key lever
• Wide range of wine, beer and distilled spirits by brand and by
type.
General pointers: • Demand is relatively inelastic & Premium alcoholic beverages
Supply Base Data
• BevCo should keep in mind are growing in popularity like the flavored offerings. Build Own Facility Status quo
operational considerations when • Craft beers are popular, priced higher and are profitable, as long • Number of cans in 2014 is 500M, increasing by • Number of cans in
integrating BeerCo – i.e., how to as the cost of their rich ingredients is covered. 200M annually 2014 is 500M,
optimize the integration of people, • Producers invest large amounts of cash in marketing and • Variable costs will be $.05 per can increasing by 200M
advertising. Debt burdens have been growing in recent years as • Initial CapEx of $100M, with additional $25M annually
process and technology
CapEx for each 125M volume milestone over the • BeerCo pays $0.15
• Making cans from its new facility is companies aggressively expand through acquisitions. initial 500M (i.e. $25M at 625M and an additional per can to its
more economical than purchasing • Gradual consolidation (70% market concentration) from last $25M at 750M) existing supplier
cans from existing supplier starting decade. • Assume no: fixed costs, taxes, depreciation &
from 2015 • Large domestic brands, while still holding the majority of US amortization, or cost of capital calculations
• Profitability & investment required are beer sales, are declining as consumer tastes shift to craft brews
the most important factors, followed and imports. Unit Information – Ale (in 2014)
by the market competition and the • Growth trends in the overall US beer market don’t look very Number of units 1000
growth rate good whereas growth trends in the US craft beer market are
Price/unit $0.91
• Based on our analysis, we can achieve very good, relative to other beer segments as well as to the
5% revenue growth and 10% total cost alcoholic beverage market overall. COGS/unit $0.50
reduction through this acquisition • Other market characteristics (margins, growth rate, SGA/unit $0.12
(based on 2014 financials)”. competition, investment needed) also look attractive for craft
beer
• Average operating margin is 20% in the craft beer segment

M&A: Strategic Target Assessment – Interview transcript

What is the most suitable approach for assessing BeerCo’s value? What operational considerations should BevCo keep in mind when standing up this new business unit?
• People: BevCo should understand what people will come over with the acquisition (in this case, all
• Market based approach: specifically M&A valuation using multiples is the most suitable approach brewery operations personnel, no corporate management). BevCo will then need to develop the
for assessing BeerCo’s value. Two or more approaches are necessary to arrive at fair value range organization chart, reporting relationships, and roles and responsibilities for the organization.
• Process: BevCo will need to establish management processes for coordinating amongst
What purchase price would you estimate based on current financial projections? (using M&A operations, finance, procurement, and logistics personnel as well as related functions such as sales
information provided by the client’s bankers, and considering BeerCo’s revenues to be $1100M and and legal. Processes need to address key inputs, deliverables & metrics to drive compliance &
EBITDA at $240M improvement.
• Technology: BevCo should conduct an assessment of technology and the migration plan with
• Transaction multiples from the historical M&A comps chart can be used for valuation, and we can
existing systems. BevCo should then identify gaps, determine critical requirements, and develop a
use the appropriate comps from the chart ( #2-#5 are for appropriate since they are in beer market
strategy for investing in new technology systems that will enable them to achieve expected
& Park Ave is too small to be included )
benefits.
• Need to calculate both revenue and EBITDA multiples, and use them with BeerCo Rev/EBITDA
Additionally BevCo can also
to get a valuation range .
• Conduct a Gap Assessment of people, processes, and tools to leverage from BevCo to the new
• We should also recognize that these are transaction comparables, so they already include the
BeerCo
impact of synergies.
• Address Org Structure and required staff skill and leadership for running the business
• However these are very rough valuation estimates, and are highly sensitive to the way EBITDA is
• Training: Identify skill requirements and expected capabilities, and develop desired competencies
calculated
• Developing Metrics aligned to driving and managing across both business units
Transac. • Address Tax implications and Alignment to strategy of deploying key functions (e.g., procurement)
Acq. Target's Target EBITDA Transac. Rev
Price Segment
Target Rev. ($M)
($M) Multiple
EBITDA • Pilot new processes and scorecards within the organization to promote adoption and
Multiple improvement
Beer Market Average 688 Beer 380 67 3.0x 14.3x
As a part of optimizing operations, BevCo would like to better understand BeerCo’s supply base. In
Beer with
Beer Market Average
880 appropriate 501 88 1.78x 10.5x particular, should BevCo continue to purchase cans from the existing supplier or open a new
(Excluding Park Ave) production facility?
size
Answer Key 2014 2015 2016 Total
Only Craft Beer Average 630 Craft beer 333 53 1.80x 11.4x
Number of Cans 500M 700M 900M 2,100M
Transaction Rev Multiple Transaction EBITDA Multiple Build Scenario Costs: $125M ($100M +
$85M($50M + $35M) $95M($50M+$45M) $305M
Valuation Range (Overall beer) -$M $3300M $3432M CapEx+Variable Cost $25M)
Valuation Range (Beer with appropriate size) - Buy Scenario Costs:

$1958M $2520M $75M $105M $135M $315M
$M Cost per cans
Valuation Range (Craft beer only) -$M $1980M $2736M At what point, if any, would building a new facility be more economical?
• When we look at the cumulative costs, year on year, we can clearly see that the cumulative
Beyond synergies, what considerations could impact the purchase price?
cost for Build scenario falls below that of Buy scenario in year 2016
• Access to newer customers and/or suppliers Cumulative Answer Key ($M) 2014 2015 2016
• Access to the vast distribution network and sales routes
Build Scenario Costs: $125M $210M $305M
• Established craft beer brands
• Access to quality talent Buy Scenario Costs $75M $180M $315M
• Regulatory/political reasons etc.
• Additionally we can look at financial implications with debt financing for an initial investment, how Op
costs may effect the bottom line, depreciation/amortization tax implications & overall risk tolerance
Additionally reasons can be explored that would increase and decrease the price or that is specific to
BevCo or BeerCo to draw conclusions • A step further we should also think about physical constraints, including local infrastructure, available
• Overall we can also consider a possibility of a JV instead of acquisition for benefits like: Reducing initial
investments, sharing risk with 3rd party and potential synergies

Unconventional
2019-20 107
Unconventional | Easy
Loss in a football match – Interview Transcript

A football team recently suffered a surprise loss. You have been approached to find out why this Sure. Go ahead.
happened. I can think of three broad areas regarding where the problem could lie: Player level Issue, team level
First I would like to understand a bit more about the context. What kind of match was this (was it issue or an external environment issue.
in a league/knockout tournament/friendly) and what kind of team was this? Can you explain each and think of which one is most likely?
This was in a league tournament like the EPL and the team is one of the top 5 teams.
External environment problems could be a change in the playing conditions, field, weather, crowd
Why was it a surprise loss for the team? etc causing a sudden drop in performance. This is less likely to be the case if we are looking at a
It was surprising because our team lost to one of the bottom ranked teams. professional league like the EPL.
Team level issues could be changes in the playing XI, support staff, management or strategy that
could have caused the poor performance. These are more likely than external environment
How has our team’s performance been in the past. Has our performance been steadily declining
problems.
or was this a sudden drop?
Player level issues can be further broken down into physical and emotional issues. Physical issues
We’ve been performing quite well in the tournament. That’s why we are in the top 5. This was a could be fatigue or unavailability of players due to injury. Emotional issues could be stress or any
sudden loss. other emotional problems that one/some of the players could be facing, which was affecting their
I would like to break down the problem into two parts. We could have lost the match either performance. In my opinion player level issues seem to be the most likely as I would expect a
because we did not score enough goals or we conceded too many goals (i.e. it could be a problem professional management to mitigate some of the team level issues.
of either attack or defence). What score line did we lose by? Yes, we have found out that two of our forwards had picked up an injury but had continued playing
We lost 2-0. and this affected their performance. Thank you.
What has been the average number of goals we have scored and conceded in the matches prior
to this?
On average we score 4 goals and concede 2 goals in a match.
It looks like the problem in this match lies in our attack and not defence. Our defence usually
concedes 2 goals and even in this match they conceded two goals. Our attack usually covers up
for this by scoring four goals but in this match we weren’t able to score. I would like to further
explore why this was the case.

Unconventional | Easy
Loss in a football match
A football team recently suffered a surprise loss.You have been approached to find out why this happened.

• Top 5 EPL team. Lost to • Team scores 4 and
bottom team concedes 2 goals on
• Defence was always weak. average Cause of loss
Strikers covered up for this • This match: conceded
• Attackers did not perform 2 but did not score
this match
Poor defense Poor attack (scored
(conceded too many) too few)
Player level issue Team level issue External issue
Observations /suggestions
• Understanding the context is important. Need to understand what kind of match/tournament was being played and past performance of the team to identify whether this was a one-off
situation.
• It is important to adopt a structured approach and cover all the possible reasons rather than just listing several reasons.

Unconventional | Moderate
Increased processing time – Interview transcript

Your client is a packaging manufacturer who has been facing a higher completion time of delivering Yes actually that is correct. The small jobs being received in the recent past have become more
a job. Diagnose and recommend solutions. complex and the operators have found quality issues while running it at higher speed. This has
forced them to run at less speed.
I would like to begin with a few clarifying questions on our client. I’ll like to know what exactly
constitutes the completion time for a job. Ok. So this explains the increase in manufacturing time for these jobs. Now I would like to analyse
the reason behind the increase in idle time for these jobs. The idle time would consist of idle time
The completion time is the time taken from receiving the raw material to completion of the per machine and idle time between machines. The idle time per machine would consist of the make
entire manufacturing process. ready time, any breakdown time. The idle time between machines would be due to unavailability of
Alright. I am not very familiar with the packaging industry. Could you please elaborate on the the subsequent machine or prioritization of some other jobs.
process followed by them and whether this problem is only being faced by our client. That’s correct. We have seen that there has been an increase in the make ready time for these jobs
You can consider it to be similar to any other manufacturing industry. It basically manufactures as well as increase in idle time between machines. Can you identify the possible reasons for the
carton boxes used in packaging of various products. There are different processes to be followed same?
sequentially involving different machines based on the nature of job. Also the problem is being As you mentioned earlier that the jobs being received in the recent past have become more
faced only by our client. complex, this could be the reason for increase in the make ready time as operators are not able to
Okay. I would also like to know how many manufacturing facilities we have and whether the do it quickly. For the idle time between machines, it could be a lack of planning and scheduling that
problem is limited to any particular plant/facility leads to unavailability of the subsequent machine or clash of priority at the plan level.
Good question. The client has three manufacturing locations across India. However the problem is Yes that is correct. What we have observed is that there is no clash of priority in from demand side
only being faced at one of the locations. but the line managers are seen to be prioritizing the large jobs. Why do you think the line manger
would be interested in prioritizing large jobs over the small jobs?
Just a final question, you mentioned that different processes are followed for different jobs. Could
you tell me what are the different type of jobs being processed and whether this problem is I think the main KPI for line manager would be the daily output in terms of no of cartons produced
specific to any particular type of job and the efficiency. As you mentioned that these small jobs run at a lower speed, the line manager
maybe prioritizing the large jobs to meet his/her target and delay the small job intentionally.
We usually classify the jobs based on the no of cartons to be produced in a job. It is classified as
small or large based on whether the cartons exceed 5000 or not. Also we have the following data Great. So can you suggest some recommendations to prevent this problem in the future.
on the target vs actual completion time : (Small Target: 36 hrs, Actual: 72 hrs; Large Target: 48
hrs, Actual 54 hrs) I’ll like to give the following recommendations:
1. For increased manufacturing time: The operators should be given adequate training so that
Looking from the data, it seems that the problem is primarily in the small jobs and I would like to they are able to run these jobs at specified speed without any quality defect. The plant can also
analyse this in more detail. Would that be okay? take the help of other plants and see if similar type of jobs are run there and what process
Yes you can go ahead. have been followed by them.
I’ll like to start by identifying the different components of completion time and looking where the 2. For increased idle time: The make ready time can be reduced by improving the sill level of
problem lies. The completion time would consist of actual manufacturing time and the idle time. employees as mentioned earlier. An increased supervision can also help in bringing down the
So do we have any information if the difference between actual and target is specifically in any one make ready time. For the planning and prioritization problem, the incentive and targets for line
of them? manager can be based on the number of jobs completed (for each category) instead of the
output in terms of cartons. The planning can be improved by forecasting the time taken at each
No, we have actually exceeded the target time in both of them. of the machines and planning accordingly.
Alright, in that case, I would like to start with the manufacturing time. This would be dependent Do you want me to analyse anything else?
on the number of processes involved, run speed of different machines involved and the average This will be fine. Thank You.
order quantity for the job. Have we seen increase in any of these?
You can assume that the average order quantity is same and the number of processes involved is
also the same. However we have observed that the run speed of machines have reduced and this
has happened across machines
Okay. So this could be because the machine has some problem because of it the operators are
not able to run it at the desired speed. However this would affect the large jobs as well and
considering the increase is not the same in both, there must be other factors also contributing to
this increase. Operators’ skill level can be issue but that would again affect the large jobs as well.

Increased processing time
Your client is a packaging manufacturer who has been facing a higher completion time of delivering a job. Diagnose and recommend solutions.

• Understand the • Problem only in one of the Completion Time
components of the manufacturing plants
completion time • Problem not being faced by
• Identify the time taken in other competitors in the same
each of these components area
against the target time • Completion time defined as time
• Identify the underlying taken from receiving the raw Manufacturing
Idle Time
reasons for these material to completion of the Time
increased time entire manufacturing process.
Idle time Inter
per machine
machine idle time
Average
No of
Break- Make- Run speed order
processes
down time ready time quantity
Unavailability of
Priority Job Machine
subsequent Labor issue
issues Complexity Issue
machine
Recommendations
Target Time
• Provide training to operators Type of job Actual Time (hrs)
(hrs)
• Change the incentive scheme/daily target for line managers
• Proper forecasting of the time taken at a particular machine to improve planning accuracy Large
48 54
(more than 5000 cartons)
Small
36 72
(less than 5000 cartons)

‘Go Green’ strategy – Interview Transcript

Your client is the CEO of an Indian Airlines Company. He has approached you, a consultant at a I apologise. We would require the buy in of the CISF which I feel might be difficult.
top notch firm to help him make his firm go green. How do you go about it? Correct! Please continue with your analysis.
So, if I understand correctly, the client wants to make his firm go green. By go green, do we mean Next, I would look at in-flight operations. We could look at avoiding the use of plastic on board. We
in adopting and excelling in sustainable practices or is there some other interpretation? could look at bio-toilets, food sourcing contracts where reusable packaging material is used.
Yes, you are right. It means adopting sustainable practices. Fair enough. What else?
Okay, could I know why the client wants to adopt this? What is his ultimate objective? After this, we would come to outbound logistics. I’m trying to think of areas were we could come
up with something but cannot come up with anything else under this.
Well, he had visited a conference and had been impressed by the sustainable practices being taken
Do you think you have missed out any major factor in your overall analysis? What do you think a
over the world. He wants to set a benchmark by establishing practices in his own company.
major airline operator will need to have to sustain its operations?
Sure, I would want to understand a bit more about the company at this point. What is the size,
I apologise, I had missed its corporate offices. An airline would have offices all over the country. We
scale of operations, does it operate in international markets?
could look at sustainable practices there. Use of solar energy, going paperless etc to reduce our
It is a well established player in the domestic market. You can consider a typical low cost player in overall carbon footprint.
the domestic market.
Okay, Sounds good. Could you summarize the case for us?
Could I understand a bit more about the current context? Have other players started with these
practices? Do we have any benchmark? The problem we had in front of us was to help our client go green. After analysing the relevant
functions in the value chain, we came up with areas where the client could implement different
No, we would be the first in the industry. There is no benchmark techniques. It starts with green sourcing, better planning of flight operations to reduce
Okay, so I feel that I have some idea about the problem. I would like to proceed analysing it by fuel/passenger, reducing use of paper and tags in the pre-flight operations, reducing use of plastic in
first drawing out the value chain (Draws out). Do you want me to focus on any one? Or should I in-flight operations and also incorporating sustainable practices in the corporate offices of the firm.
start from sourcing? This would help our client go a long way in achieving his goal.
Start wherever you want. You are the consultant. Okay. Thank you.
Okay, in that case, I would like to start with sourcing. Could I know what is the current process
being followed?
It is pretty normal sourcing. Please list down all the factors you feel are relevant.
Okay, so I feel that sourcing would be that of fuel and aircrafts. While I know that the suppliers
are well established, I feel that the company should follow green sourcing policies prevalent, which
means conducting green audits to analyse the entire supply chain. We could also look at a mix of
biodiesel and normal fuel something which was tried by Spice Jet.
Okay, what else?
That would cover sourcing. Next, I would like to come to planning operations. This would include
flight & crew scheduling, route selection etc (refer value chain). The flights need to be planned
such that it minimizes the fuel use. This would involve better scheduling, not flying flights at less
than capacity and reducing idle waiting time at the runway.
Okay. Could you think of a metric in this respect which would be useful?
Fuel/passenger. I think we should focus on reducing this.
Okay. Please continue with your initial analysis.
So, after planning, I would like to look at the pre-flight operations. This would involve ticket
counter operations, gate operations, baggage handling, pre-flight bus service. We could look at
going paperless, removing paper tags and using e- boarding passes. We could also look to use
aerobridges to reduce fuel use in operating buses.
Don’t you think there is an inherent flaw here? Do you think e-boarding passes would work?
I think it would require a buy in from the other flight operators.
Is that all? Don’t you think you would need a buy in from anybody else?

‘Go Green’ strategy
Your client is the CEO of an Indian Airlines Company. He has approached you, a consultant at a top notch firm to help him make his firm go
green. How do you go about it?

• Try to use the 4C • Client is an Indian
structure (Company, Airlines Company Planning Pre-Flight In -Flight Outbound Marketing &
Sourcing Service
competition, context • It wants to “go green” Operations operations operations Logistics Sales
and cost) to gain
Ticket Counter Baggage Handling
more information. Aircraft Route Selection Food/Offering Baggage Advertising complaints
operations Collection
• Gauge the
Fuel Baggage Bio-Toilets Complaint follow
motivation, Flight scheduling Connecting Promotions
Operations Flight ups
reasoning of the Green Audits
operations
Gate Flight Crew
CEO for going Reduce fuel per
Operations
Loyalty Feedback
passenger Hotel Programs
green.
Reservations Travel Agent
• Try to use a value Passenger yield
Bus & Airbridge Customer
Connections Engagement
chain to break up management
the entire problem Administration Car Rentals Bulk Discounts
into parts.
• The interviewee should first clarify what “go green” means. Then he/she should understand more about the company and operations. Finally the problem should be broken up into a value
chain to simplify it.
• Give recommendations under each bucket in the value chain. Be exhaustive.

Operations strategy (FMCG) – Interview Transcript

The Director, Sales of a FMCG firm wants to improve their channel management strategy. He Sure. So I will do a potential-possibility analysis here. The first go-to channel will be one high on
wants you to provide suggestions. potential for savings and improvements and one where it is the easiest to effect such improvement.
These are in turn a function of the channel characteristics, our engagement strategy, our revenues from
Before analyzing the problem statement, I would like to understand our client better and familiarize them, etc.`
myself with the context a little more. Where are we based and how big is our client vis-à-vis the
market? Sounds good. How will proceed?
Sure. I would like to take a minute here to gather my thoughts.
The company has global operations but for this case, we are dealing with India only. Our presence (After a pause)
is across India and we are one of the top 3 FMCG firms in the country in terms of market share. So focusing on General Trade, I would like to analyze this through the lens of benefits-engagement
Understood. I want to better understand the motivation of the Director. Is the improvement possibilities. We should typically strive to be in a high engagement and high benefit category for the
sought due to some recent issues in the channel management internal to the firm or is it a distributor.
response to the external environment? Also, when we say improvement, how are we measuring it? Benefits can be broken down into monetary benefits like margins offered and non-monetary benefits
could be further broken down into operational benefits or non-operational benefits. The former is the
So measurement is by channel partner satisfaction. Can you clarify what you mean by the external level of help that we can offer our distributor in their own operations like sharing of best practices in
environment? terms of MIS, Inventory management, fire safety etc. The latter are things like loyalty points or other
incentive schemes.
Sure. So what I meant was that there might have been either a recently introduced change by a Engagement would look at quality and quantity of engagement. Quantity depends on number of visits an
competitor that we also want to imitate or there could be non-competitor environments which Area Sales Manager might make and the amount of time spent on per engagement. The quality aspect
affects every player like channel characteristics changes in terms of their size, preferences and would refer to the channel of engagement and behavior of the sales manager. We can look at more
demands factors if need be.
Got it. So basically, nothing much has changed internally or externally. The Director wants to just This looks good. How will you prioritize between these possibilities?
check the possibility of improvement.
There could be a couple of things. The best would you to simply ask the distributors what their pain
Thanks for the information. I would now like to look at the channels and ask you more questions points are and try to match that gulf. Second could be looking at best practices globally and see what
along the need if need be. we can deliver given our resources.
I want to divide the channels into General Trade (your small kirana shops), Modern Trade (the Sounds practical. If you had to quickly recommend one thing, what will it be?
marts) and e-commerce. Is there a particular channel that you want me to look at first?
Focus on the non-monetary operation benefits as they create a clear win-win situation.
Yes. Look at General Trade. Before that though, can you tell me factors you will consider to pick a
channel for improvement? That is what the Director is also keen on. It was great interacting with you. Best of luck.
Thank you. It was great interacting with you as well.

Operations strategy (FMCG)
The Director, Sales of a FMCG firm wants to improve their channel management strategy. He wants you to provide suggestions.

• Channel partner • India based FMCG
Channel Channel
satisfaction • Leading player (1/3) Potential Engagement
selection Improvement
• Types of channels
• General Trade focus (H,H)- (H,H)-
• Making matrix (H,L) Benefit Desired (H,L)
Desired state
Possibility delivered state
(L,H) (L,L) (L,H) (L,L)
Competitor Operations
based
External Non-monetary
Non-Competitor Non operations
Benefits based
(environment
factors) Monetary
Recommendations
• Understand and deliver the unmet needs of the distributors.
• Understand and implement global best practices.
• In absence of data, focus on non-monetary operations benefits.
• The case was well structured and the preliminary questions clarified the key issues in the case. It is usually important (and useful) to ask about the context of the problem and the company..
• The interviewee requested for time to structure the problem and then delivered an exhaustive structure. That was well done.
• Towards the end, the interviewee tied his answer (of asking the distributor directly) to the initial given data that metric was distributor satisfaction.

Declining website traffic – Interview transcript

The client is a web based media news aggregator platform. The website has been seeing a drop in No significant changes
traffic off late. Diagnose and recommend solutions Just a follow up, has the competitive scenario changed in the last few months? Has there been a new
I would like to confirm the objective before I proceed. The client’s website has seen a drop in entrant that provides what consumers perceive to be better content? Have our current competitors
traffic, and they want to figure out why this is happening and fix it. Is there another objective? invested in better content?
No other objective No, no significant change in the competitive landscape either

Alright. Do we know if the pricing of the website has changed in the last six months, with something
Okay, I have a couple of questions. What exactly do you mean by traffic? Would you count the like a free trial for first time users? Has a significant competitor reduced their prices or changed
same user accessing through different mediums such as phone, laptop, etc., as separate traffic? their pricing structure recently?
Good question, we consider every hit on our website as traffic, regardless of which user it is. So No, none of us have made any changes to the pricing structure in the relevant timeframe.
to answer your question specifically, yes, we would recognise that as separate traffic.
Alright, I think the issue stems from the delivery of content. I shall break this down in to two
Thank you. Going further, I would like to check if there is any data regarding the change in traffic components: operational and aesthetic, and then drill down. Has the website speed slowed down in
over the last two-three timeframes. What is “off late”? How was the trend before that? the last few months? Have their been any recent changes in architecture that has changed the access
We’ve been seeing a steady decline in number of users since about 6-7 months now. Before that, speed for users?
we were witnessing healthy traffic growth rates, ~ 20% every year since inception in 2016. Good guess, but no. No infrastructural changes as such. Load speeds are intact.
Alright, by decline you mean an absolute decline in the total number of users and just not a
decline in the growth rate, right? Also, is this an industry-wide issue? Alright, so I believe that the website’s aesthetics have changed in some sense. Do we have any data
regarding a major design overhaul of any sort?
Yes for both.
No, nothing of that sort
Alright, thank you. So just to summarise everything so far, the website has been seeing a decline in
hits on the website over the past few months, which goes against the general trends observed So the website’s appearance and experience has not changed in any observable way?
over two years. Good question. While we have not performed any design overhaul, EU’s new Global Data
Sounds good. Protection & Regulation Act (GDPR) was enforced around the time we started seeing the decline.
To comply with the act, we have to show a bright red visible banner that informs the user that the
I believe that traffic can be broken down into traffic from first time users and traffic from repeat
website is using cookies to track activity, and takes consent from him/her for the same.
users. Do we have any data regarding which of these two segments have taken a hit?
Ah, so I believe that repeated visits to the website are becoming cumbersome owing to have to click
Yes, we have data saying that the number of new users are still growing at a steady rate, while the
on the large banner each time they visit the website, thus leading to an overall decline the in quality
number of repeat users have been declining at a pretty quick pace.
of the customer experience.
Thank you. I shall look into the possible reasons for a decline in traffic from repeat users now. I
That is correct. Any recommendations for the same?
believe that a user looks for three things when using a website, especially a content site like a
media aggregator. The first would be the quality of the content, the second would be the cost of Without having a detailed sense about GDPR, I propose the following:
the content, and the third would be the delivery of the content. I shall delve into these to figure a. Make the banner less flashy and intrusive, but visible. So any changes to the color scheme and
out where the issue is stemming from. the font type to make it less in-the-face can help reduce the impact on the customer
b. Focus on developing quality content: While the website now is only a media aggregator, the
Okay, go ahead
company can take steps to develop exclusive content with top writers so that users are forced to
Firstly, has the quality of the content we are delivering to consumers changed in any way in the put up with the banner in order to consume quality content.
last six months? Has the editorial team changed? Have the journalists changed? c. Move away from a user tracking model, and consolidate content delivery as the only feature.
Remove features that require user data. This would also help allay fears that the website can be used
to influence public opinion based on popular sentiment.
That will be all, thank you.

Declining website traffic
The client is a web based media news aggregator platform. The website has been seeing a drop in traffic off late. Diagnose and recommend
solutions

• Steady growth rates • Industry wide issue
previously • No problem with new users
• Problem is with retention • No new competition
of users • No changes in pricing by any of
• Identify drivers of repeat the companies
users • No change in content quality
• Understand the factors
that could lead to attrition
Recommendations:
The issue is with the new, obtrusive, legally-mandated GDPR cookies banner, which is ruining user experience. Thus,
a. Make the banner less flashy and intrusive, but visible. So any changes to the color scheme and the font type to make it less in-the-face can help reduce the impact on the customer
b. Focus on developing quality content: While the website now is only a media aggregator, the company can take steps to develop exclusive content with top writers so that users are forced
to put up with the banner in order to consume quality content.
c. Move away from a user tracking model, and consolidate content delivery as the only feature. Remove features that require user data. This would also help allay fears that the website can be
used to influence public opinion based on popular sentiment.

Reducing turnaround time – Interview transcript

This case focusses on the optimization of the logistics of an Indian company. Just imagine a truck So now let me focus on the extra travel time caused by breaks. For the waiting time when
delivering goods from Delhi to Mumbai. This currently takes up a substantial amount of time. The passing states, I propose a monthly/yearly pass. Drivers could show this pass, and would be
goal of the company is thus to reduce the turnaround time. Basically the firm wants to reduce the allowed to immediately pass the security. For the other breaks, I believe that sleeping is the
amount of time the truck spends on the road. How would you go about solving this case? primary driver of the additional traffic time. To solve this problem, the company could rotate
Ok, let me start off by estimating how much time it would take from Delhi to Bombay on the drivers. This can be done in 2 forms. Either, the company could use 2 drivers per truck or
road. To do this I will first estimate the distance between the 2 cities. I know that the flight time is establish certain locations where drivers would switch. Additionally, the firm could give its
around 2.5 hours and that a plain has an average speed of 800 kilometers per hour. The distance is drivers prepacked-food to reduce the need for breaks.
therefore approximately 2000 kilometers. Excellent suggestions. It was nice interacting with you. Thank you for your time.
Now that you know the distance, how would you proceed with the case?
So what I would do is, I would split the travel time into 2 components. On the one hand the travel
time consist of the time on the road and on the other hand it consists of breaks. When it moves it
operates with an average speed of 35 km/hour. However, the average speed depends on the type
of road, the route and on traffic. The breaks are caused by numerous factors. We can split this
into primary needs and other issues. Primary needs concern bathroom breaks, as well as breaks
for eating and sleeping. With the other issues, I refer to the waiting time caused by the need to fill
out paper work when passing states.
Ok, so you now understand what variables affect the travel time. What kind of measures would
you propose to reduce the turnaround time?
Let me start off with the measures with which I can improve the average speed while driving. One
option is to set-up a new traffic schedule, where we take into account the rush hours and avoid
them. Do you maybe have information on when the drivers usually depart and arrive on their
destination?
They usually leave around 7.30 and will be on the road throughout the day.
Ok, so we could adjust the drivers schedule to ensure that the driver passes the major cities
during night time or during non-peak hours. This would result in a higher average speed and thus a
faster turnaround time.
That is fair suggestion. What else?
One other issue could be the fact that the truck drivers might not be aware of traffic and
construction works. To overcome this problem, I suggest to provide all truck drivers a mobile
phone with Google Maps. Google maps would always indicate the fastest route and drivers are
hence expected to deliver the goods in a faster time
I agree, what about the breaks. Are there things the company could do to limit the time spent for
breaks

Reducing turnaround time
You have been approached by the CEO of a company in India. The client asks you to come up with ways to lower the turnaround time of its
trucks between Delhi and Mumbai

• Contingencies are ignored in the case
Reduce
• Truck drivers have to fill in paper work turnaround time
when passing states
• Assume that there are 2 types of road:
Highway and city-roads Time driving Breaks
Controls when
Traffic Type of road Route Primary needs
passing state
Toilet
Food Sleep
Non peak hour breaks
scheduling
Pre-packed Driver Monthly

Implement Google
food rotation plan subscription to
Maps: Fastest route
pass security
Recommendation
• To reduce the turnaround time, the firm can implement measures that affect either the time of driving or the length of breaks. Possible measures include the adoption of a new
transportation schedule where peak hours are avoided, a driver rotation plan to minimize the amount of breaks, and the use of pre-packed food to make food-breaks unnecessary. The
company can provide drivers with mobile phones with maps to ensure that drivers follow the fastest route

Risks of oil transportation company – Interview transcript

Your client is a transport company, which has been offered a contract to transport oil for an oil There might be an increase in the transportation costs for our client, or the oil prices might
rig company. We need to decide if it should take the contract or not. decrease. If our contract has a variable component that is impacted by the prices, then we might be
Okay. Is our client specifically into oil transport, or are the transportation areas diverse? facing reduced revenues because of this. Also, in case we are purchasing the ships, we might face
cost problems if the client backs out.
No, our client is not into oil transport right now. It is diversified in terms of what it transports.
What’s your solution to this problem?
Okay. How long is the contract for?
We can try to sign futures contracts, and fix the charges within a certain range, in order to ensure
The contract is a long term one, and will last for approximately 15-20 years that we are not adversely impacted by a price fall, that is, our downside is minimised. Similarly, we
Okay. Where is the oil rig company located, and where is the customer located? can pass on prices to the customer to an extent in case of transportation cost increase. To handle
The oil rig company is located in the Middle East, and the customer is located in the USA. the purchasing of ships, we can choose to lease the ships till we get confirmed contracts from other
clients as well. Short term leases would be the best option. Additionally, we should include
Alright. Does the client own any ships that might be suitable for this purpose? provisions for compensation in case of cancellation of the contract.
No, the client doesn’t currently own any suitable ships. They will have to purchase new ships to Okay. What are the labour related risks that we might face? Additionally, please provide solutions
do the job. with the problems.
Okay, so that is a large initial capital expense. Can these ships be used elsewhere? Okay. We have to employ highly skilled labours, as any issues with handling might lead to oil spills,
No, these ships can be used only for this purpose that will lead to economic losses as well as a hampering of our client’s reputation, besides causing
In that case, the large capital expense would be justified only if the long term returns are good environmental destruction. This might be a high cost factor, and hence the client could have training
enough to cover the costs. Are we expecting any other contracts of this nature? programs in case they land more oil contracts.
Yes, we expect that we shall get more contracts in the future, as the demand for energy in these Alright. Are there any other risks that you’d like to look at?
areas is increasing. Yes. There are a few general risks that the client might face. First, we should look at the ship’s
Okay. Now I would want to look at the long-term profits for the company. Do we have any data occupancy, and see if they’re being optimally utilised in transportation. Additionally, in the contract
for expected profitability? structure, we should ensure that there is no exclusivity clause, and that the requirement of
deliverables is within our reach. Finally, we might also want to look at the entry/exit barriers in the
No, we don’t have the numbers for the profitability. We would like you to assess the risks market, since if it is a lucrative market with a low entry barrier, we might face competition in future
associated with the contract. contracts.
I’d like to segment the risks down bucket wise. According to me, the company faces geopolitical Okay, that seems comprehensive enough. Thank you.
risks, economic risks, labour related risks and general risks. Does that cover the risk areas of the
client? Additionally, is there any specific bucket that you’d like me to focus on?
Yes, you may proceed further with these risk buckets. We don’t want you to focus on a particular
risk bucket, just give a general analysis of the risks faced by the company.
Okay. In the geopolitical risks, the company may face trade embargoes in case there is an unrest in
the region, as the Middle East is a very sensitive region. Additionally, the change in the tax laws in
either of the countries might lead to extra costs.
How do you plan to solve this problem?
In case of trade embargoes, we might look to source the oil moving to the USA from another
country, and use land routes to cover the deficit in that region. For tax laws, we can include
provisions in the contract to ensure that the additional cost is passed on to the customer.
Okay, please proceed further with the economic risks.

Risks of oil transportation company
Your client is a transport company, which has been offered a contract to transport oil for an oil rig company. We need to decide if it should take
the contract or not.

• Qualitative case, no • Client is a
numbers provided transportation
• Instead of focussing company with no prior Geopolitical Risks Economic Risks Labour Related Risks General Risks
on one specific issue oil experience
in depth, candidate • It is facing cost issues
was required to with more than one Increase in Need to employ
Trade embargoes Low ship occupancy
transportation costs highly skilled labour
cover a breadth of beer product
issues Sol: Develop a
Sol: Re-routing via Variable component Exclusivity clause in
on oil prices training program to contract
Asian countries reduce hiring costs
Sol: Sign futures High requirement of

Tax law change contracts to fix price deliverables
Sol: Contract High capital Sol: Structure

structured to charge investment contract accordingly
customer accordingly
Sol: Lease ships for Low Market
short periods entry/exit barriers
Sol: Secure long term

contract to avoid
competition
Recommendations
• Ensure that most of the risks are mitigated in the contract signed with the client’s customer
• Minimise capital risks by using short term leases on ships instead of purchasing them
• It is important in cases like this to be comprehensive, and hence bucketing the problems into different sections helps in structured thinking
• Most of the risks faced by the client should be problems which have solutions available and can be thought of within the interview

Variable pay structure – Interview transcript

Our client – an Indian company dealing in precious stones had appointed a Head – Sales on the Well, indeed yes. The rupee depreciated by 15% during the previous year and the increase in
agreement for a fixed monthly pay and a variable pay at the end of the year. You have been asked revenue has been commensurate to that.
to suggest the variable pay. Then the profits of the other players in the industry would also have increased by the same amount
OK, so first I would like to understand about the company in terms of its Products, Customers and hence the Head – Sales might have negligible role to play in the revenue increase.
and Operations? That’s right
The company is a trader in precious stones of the likes of diamonds, pearls, etc. The turnover is In such a case, it is proposed to give him a 10% hike which he would expect as a change in job
close to Rs. 200 cr+. Majority of the revenues come from the United States, France and Belgium. profile and make his CTC to Rs. 90 lakhs. I believe that 1 year is too little a time to judge the mettle
Just like to know a little about the previous head for sales – why was he fired, what was his pay of a Manager as senior as him. And hence, he should be give little more time to show results.
and what is the fixed pay being given to the current resource? Okay, agree with your contention
He was fired because of dip in revenues. His CTC was Rs. 1.2 crores and we have been paying a
fixed amount of Rs. 7 lakhs per month. Is there anything else you would like me to analyse for this case ?
Now, I would like to analyse the various factors that could help us in determining the salary for a No, that will be all.
Head – Sales. I can think of the following – Strategic Changes implemented, Increase in Revenues,
Retention and motivation of Sales Force, Industry Benchmark for compensation, Previous salary. Is Thank you.
there anything you think I have missed out on ?
No, I think this is comprehensive. Go ahead.
OK, so the would like to first ask the industry benchmark and how much was the Head paid in his
previous job?
For the sake of simplicity, let us assume that the salary we paid to our previous resource is the
benchmark and his CTC in his previous company was Rs. 80 lakhs.
Okay. Also, I am making an hypothesis that the strategic changes and motivation of workforce are
usually long term in nature and their impacts would be visible more in the longer term. Is it fair to
go ahead with this assumption ? Although we may consider the initiatives taken.
Yes, that’s a fair assumption. You can let them be for now.
Okay, so has our revenue increased in the previous year?
Yes, it has.
I would then like to analyze the revenues into : No. of customers, Revenue per customer, Product
Mix
Okay. Number of customers and product mix has remained the same.
So, is it fair to assume that the prices charged to customers have increased.
No, the prices are as per contractual terms which are quoted in US Dollars have remained the
same.
Then it must be the depreciation of the Rupee because of which the Revenues have increased.

Variable pay structure
Our client – an Indian company dealing in precious stones had appointed a Head – Sales on the agreement for a fixed monthly pay and a variable
pay at the end of the year. You have been asked to suggest the variable pay.

• Devising the variable • Company dealing in
pay structure. precious stones – Variable Pay of
• Previous Head diamonds, pearls Head - Sales
removed for lower • Major customers – US,
sales. Europe Motivation & Industry
Strategic Increase in
Retention of Benchmark &
• Pay to previous • Fixed monthly pay – changes Revenue
salesforce Previous Head
Head was Rs. 7L pm
benchmarked to • Pay to previous Head – No. of Revenue per
customer Product Mix
Industry Rs. 1.2 Cr. customers
• Contractual terms • Pay to current head in
have remained the previous company – Contractual Exchange
same for all Rs. 80 L prices Rates
customers
• Increased revenue
for entire industry
Recommendations
• Give a 10% hike over and above salary in previous company.
• 1 year is too little time – give the Head – Sales more time to prove his/her mettle.
• Do not forget about exchange rates.
• A simple increase in revenue case, may be camouflaged into an unconventional case.

Unconventional | Challenging
Horizontal integration in E-commerce – Interview Transcript

The CEO of Flipkart has reached out to you to evaluate the business opportunity of merging
True. For website, we can think about having an easy to load homepage, which would gradually open
Flipkart Fashion, Myntra and Jabong to realize economies of scale. Could you advise the clients on
to subsequent pages to better manage download. For app, we must divide the entire download into
the same?
two parts, first the default app which should be small. Subsequently, on every usage, we should
Before analyzing the problem statement, I would like to understand our client better. What are
download live data of the page from the server, to better manage the size. The major concern for
the three businesses and how are the three different?
me is that a platform like Flipkart would not be able to provide the specific, personalized filters
You may assume them to three different subsidiaries of Flipkart catering to Apparel and Fashion
available on Jabong/Myntra related to apparels. However, due to large amount of data, would be able
Accesories. Myntra basically caters to middle age women, providing modern Indianware. Jabong
to gather a lot of customer data to better curate recommendations
on the other hand, is more youth oriented and emphasizes strongly on latest fashion and
Absolutely. Anything else you would like to add?
westernware. Flipkart Fashion is more generic, catering to all three of them
Great. Is there any specific, tangible objective the client has behind this merger? We can also look towards providing a uniform loyalty program with which every customer is able to
The client feels that he can increase revenue while decreasing cost through this. However, other benefit for every purchase on the platform, be it for himself or for his family. With recommendation
executives have cited concern over this. He wants to maximize profits for Flipkart both in the system, cross-selling would also improve, thereby leading to better loyalty.
short and in the long run. We can also leverage the loyalty program to create discount programs and product bundles. Can I
Alright. Could you help me understand which set of operation are we looking to merge? Both move to the advertisement revenue now?
frontend and backend? Yes, how do you think that would be affected?
Yes, we are open to all sorts of integration. The client wants to integrate atleast some portion, if Advertisement revenue could further be split into no of advertisers that we would enroll, the
not all, of both frontend and backend frequency of ads they demand, the impressions per ad and the price per impression. I feel that since
Great. I would like to take a minute to structure my thoughts around the same. I would like to the space would be limited along with a generic platform, apparel brands who used to target specific
divide the analysis into three aspects: a) Financial Feasibility, where I would like to focus on customers might feel their brand get diluted on a generic platform like Flipkart. However, we would
Revenues and Costs; b) Operational Feasibility, where I would analyze the creation of synergies in be a able to target a lot of non-apparel brands as Flipkart hosts a wide variety of products. Since the
the value chain; c) Risks involved where I would focus on Internal and External Risks that could number of visitors would increase as all of them would arrive on one platform over three, the
affect us in the long run. impressions would increase. We can further improve impressions by creating targeted
That seems to be fine. Let’s begin the analysis. advertisements based on rich data we would be getting, further enhancing the per impression price.
There are two revenue streams of Flipkart: From transactions and from advertisers. The Great. That looks comprehensive. Could you also look into the operational aspects, their synergies
transactional revenue is depended on the no of visitors on platform, % of them who get and the impact on costs.
converted, transactions per customer and the sales value per transaction. Starting with the no of Sure. For this, I would be creating the entire value chain. We would first need developers to
visitors, it depends upon the brand of the platform and the awareness among the users. We maintain the app, which would be just one as compared to three. Suppliers and sellers would be
should decide what should be the name of the single platform. Since Flipkart is the most popular apprehensive as now the competitions would increase manifolds for them. However, in the long run,
of them all, we should keep Flipkart. There might be Myntra customers who shop for other due to network effect and high switching costs, the customer turnout would increase, reducing the
products on Flipkart. However, as seen in the world of social network, people today prefer bargaining power of sellers. We would also be able to capitalize heavily on logistics and warehousing
specific portals over generic, particularly in an highly involved purchase like apparel. Hence, there expenses with the increase in scale. For after-sales service, a uniform employee force would lead to
is a risk we might lose out on customers in the short run. cost saving along with optimization of marketing expenditure.
True. However, there would be Jabong customers who would be moving out of the target What are the possible risks associated with this merger? Which all stakeholders we should be most
customer base. While they would drop off the platform in the shortfun, the integration would concerned off?
ensure they still find the platform useful. The first is the legal aspect to it. CCI might be against creating a firm with such a large market
Absolutely. However, we must also consider the positioning of the brand eventually. Myntra is power. We should also be consider if the integration would be culturally unfit. Myntra and Jabong
famous for modern Indianware, which would play a large role in attracting its customers. are different in terms of organization, goals and positioning. This would otherwise deter the
Switching the positioning to a generic platform might entail losing out on a long-standing goodwill. synergies we aim to capture through the combined platform.
We might have to consider promoting across all platforms equally, as our customer base would Fine. Could you summarize your recommendations as to what steps should the client take on the
be highly heterogenous. Even if the customer is aware, the next step is downloading the app or same?
hitting the website. It is there we would be realizing huge benefits of scale. Due to low phone The client should look to immediately consider the integration as far as the backend is concerned, as
memories, particularly in rural India, people generally would prefer keeping only 1 app in the it would help in reducing cost without hampering customer purchase. However, the client should
mobile instead of 3. Integrating the platforms would help us cater to the entire family of users duly consider slow progress as the foundations of the resulting large organization should be strong.
through the single app. In the front-end, the client should run a pilot about the positioning and the brand name to
True. However, the client is concerned that the integration would make both the website as well understand customer response. If the response is positive, it should go ahead with integration on
as the app very heavy for download. that end as well. If not, the three platforms should be maintained separate with a common loyalty
program. This would improve visibility of the three platforms, allowing for an integration 2-3 years
later.

Horizontal integration in E-commerce
The CEO of Flipkart has approached you to evaluate the opportunity of integrating the Flipkart- Fashion division of Flipkart, Myntra and Jabong
together into a single entity.What components of the three businesses should he integrate and what he should not?

About the business
Three different subsidiaries
Myntra:
Target age - (>35) years
Fashion - Indianware
Jabong:
Target age - 14-35 years
Fashion - Westernware
Flipkart:
Target age – 14-60 years
Fashion – All
Objective of integration
To maximize revenue potential
in the long run
Scope of integration
Open to all avenues: complete
integration under 1 label to
integration of some part of
businesses
Recommendations
• The client should submit a proposal for backend integration of the operations of the three companies to realize economies of scale
• It should conduct a pilot with regards to front end integration, to gauge customer response
• Even if it is not satisfactory, the client should consider incorporating a common loyalty program to improve customer loyalty, drive traffic across the three platforms, and create a rich database for targeted
advertising, thereby improving advertisement revenue.

Threat of new entrant – Interview Transcript

Your client, C-Mart is the largest discount grocery retailer in West India with 300 stores. For Close. N-Mart's sales are approximately 5 times that of the nearest competitor.
several years, C-Mart has surpassed the second-largest retailer (200 stores) in both relative market
share and profitability. However, the largest discount grocery retailer in North India, N-Mart, has I would think that sales of that size give N-Mart significant clout with suppliers. Does it have a lower
just bought out C-Mart’s competitor and is planning to convert all 200 stores to N-Mart stores. The cost of goods and hence lower prices than the competition?
CEO of C-Mart is perturbed by this turn of events, and asks you the following questions: Should I
be worried? How should I react? How would you advise the CEO? In fact, its cost of goods is approximately 15 percent less than that of the competition and its prices
are on average about ten percent lower than those of the competition.
This is how I would like to approach the problem: First, I’d like to understand the market in West
India to understand how C-Mart has become the market leader. Then I’d like to look at the market I think I've learned enough about N-Mart. I'd like to ask a few questions about N-Mart's ability to
in North India to understand how N-Mart has achieved its position. Finally we can merge the two succeed in the West. I’d first like to understand whether N-Mart has a strong brand name in our
discussions to understand whether N-Mart's strength in North is transferable to the our market. market and does it carry products similar to C-Mart’s?
That sounds fine. Let’s start with our market. N-Mart has no brand recognition in the West. The two companies carry similar products, although
the C-Mart stores lean more heavily toward local suppliers.
I’d like to understand what is causing C-Mart’s higher profitability. Is C-Mart more profitable
because it has more stores, or does it have higher profits per store? Is there any reason to think that the costs of doing business for N-Mart will be higher than they are
for C-Mart in the West? Specifically, is N-Mart likely to have higher labour costs, leasing costs or
It has higher profits per store.
higher raw material or distribution costs? N-Mart might incur higher distribution costs than C-Mart
Higher profits could be the result of lower costs or higher revenues. Do we have any indication on because it will have to ship products from its Northern warehouses to the West.
which of the two is causing the higher profits per store?
You are partially right. C-Mart must also cope with the same labor costs. C-Mart has the advantage in
C-Mart's cost structure is similar to that of competitor’s but it has higher per-store sales. distribution costs, since it gets more products from Western suppliers. However, since C-Mart
continues to get a good deal of product from the North, the actual advantage to C-Mart is only about
Higher per store sales could be because the prices are higher or quantity sold per store is higher. two percent of overall costs.
Since we are a discount retailer, our prices need to be competitive. Quantity sold per store is All this suggests that N-Mart will be able to retain a significant price advantage over C-Mart's stores: if
higher. Can you think of why this could be the case? not ten percent, then at least seven to eight percent.
This could be because our stores are larger, C-Mart has greater product variety or because the I would agree with that conclusion. Can you please summarize your findings?
stores are better managed.
In the near term, C-Mart might be safe. Its stores have a much stronger brand name in the local
Our store size is similar and we sell similar products to competitors. C-Mart’s stores are managed market than N-Mart's, and they seem to be well managed. However, as consumers get used to seeing
differently from those of competitors. C-Mart uses a franchise model in which each individual store prices that are consistently seven to eight percent lower at N-Mart, they are likely to shift to N-Mart.
is owned and managed by a franchisee who has invested in the store and retains part of the profit. The CEO certainly has to worry about losing significant share to N-Mart stores in the long term.
In that case, I would guess that the C-Mart stores are probably better managed, since the individual Can you suggest possible strategies for C-Mart?
storeowners have a greater incentive to maximize profit.
Given that in discount retailing competitive prices are a key way to retain customers, C-Mart can look
You are right. C-Mart's higher sales are primarily due to a higher level of customer service. The at the value chain from procurement to distribution to retailing and see where it can cut costs and
stores are cleaner, more attractive, better stocked, and so on. I think you've sufficiently covered the hence offer more competitive pricing. In procurement, it can try negotiating competitive prices with
Western market-let's move now to a discussion of the North Indian market. suppliers. It might want to consider offering fewer product lines, so that it can consolidate buying
power and negotiate prices with suppliers that are more competitive. In distribution it could try
How many stores does N-Mart own in the North, and how many does its closest competitor own? cutting down on transportation costs. With retailing, it can look to negotiate lower margins for
retailers if possible. Finally, they might want to consider instituting something like a frequent shopper
N-Mart owns 2,000 stores and its largest competitor owns approximately 500 stores.
program, where consumers accumulate points that entitle them to future discounts on merchandise.
Are N-Mart stores bigger than those of its competitors?
Thank you. All your suggestions are interesting and worth analysing further.
Yes. N-Mart stores average 20,000 square feet, whereas competitor stores are 10,000 square feet.
This suggests that N-Mart should be selling almost 8 times the volume of the nearest competitor.

Threat of new entrant
The Leading discount grocery retailer in West India is facing the threat of a new entrant
The Leading discount grocery retailer in West India is facing the threat of a new entrant

• Understand C-Mart’s • C-Mart: market leader in West
competitive advantage (in • N-Mart: market leader in
terms of profitability) North C-Mart's
advantage N-Mart's
• Understand N-Mart’s • C-Mart: no cost advantage advantage
competitive advantage • C-Mart: franchise model –
• Can N-Mart’s competitive better managed – higher sales More profit per
More stores
advantage be transferred • N-Mart: large bargaining power store
to West? with supplier More stores More profit per store
• C-Mart has 300 stores
Higher revenue Lower cost per
compared to nearest per store store
competitor’s 200 stores
• N-Mart has 2,000 stores Higher revenue Lower cost per store
because of lower raw
compared to its nearest More variety Higher prices Better Managed per store material prices
competitors 500 stores
• N-Mart sales are 5x that
of nearest competitor
•
Strategies for
Procurement Distribution Retail
cost reduction
Recommendations
• It is important to cut costs to compete with N-Mart
• Costs can be cut in
- Procurement: Negotiate lower prices with suppliers
- Distribution: Cut transportation costs
- Retail: lower retailer margins and introduce loyalty programme

Drug pricing – Interview transcript

Your client is WHO and they are concerned with the cyclicity in the prices of Malaria medicine and Oh alright, thanks! Before I look at farm aspects, I want to highlight that lower outputs would
want your help to figure out why this is happening. increase cost at downstream steps also as fixed cost per unit will be higher when units are less.
Ignoring that I would like to break down the total farm output as follows (Exhibit 2). I will
Before I begin solving for the root cause, I would like to understand the facts of the case better. (1) consciously not be including external factors such as government policy and environmental factor
What exactly is the cyclicity pattern-annual or something else and for how long have we observed changes as these are unlikely to have annual impacts. Before I proceed further, I would like to
this? (2) What is the magnitude of amplitude of cyclicity? (3) Are we considering global changes or understand the spatial distribution of farmers and the type of farmers.
restricting to a geography?
I agree with your assumption and the process map is good. To answer your question, the
Fair enough. (1) The cyclicity is annual with similar annual variations of highs and lows for about a peculiar aspect here is that 95% averaged farm output comes from 4 eastern Chinese provinces
decade (2) Let us assume that it only a few percentage points but enough. I want you to focus on from small and marginal farmers.
the qualitative aspects here. (3) Global.
That is interesting! I would like to focus on these farmers then. Productivity and other factors are
Thanks. So, from the annual cyclicity, we can make two assumptions- (1) There is no structural unlikely to be this cyclical. Thus, I would like to first focus on the macro aspects of number of
industry level shift presently, though there might have been 10 years ago which we can explore farmers and area sowed per farmer. Do we have any data to suggest cyclicity in farmers sowing
later & (2) From a supply-demand perspective, it is unlikely that for a disease, the demand will have the crop each year?
similar annual variations. So, I will assume that it is a supply side issue. Is it alright to go ahead with Yes. All the other factors are fairly constant over the years but the farmer count is cyclical. Can
that? you think of a reason why? Take a moment.
You are quite right. I think it can be because of two factors, either the farmers (1) CANNOT grow every year or for
Oh alright. Can we assume that the supply cyclicity is the main reason and that it is opposite of the some reason (2) DO NOT want to grow every year. The first could largely be because of
price cyclicity? In which case, I will like to understand the medicine a little more. Are we cyclicity in inputs to grow the crop, like seeds or specialized fertilizers and the second would
considering multiple variants? Also, what is the API (active pharmaceutical ingredient)? largely be dependent on price realized last year. Given the case facts that the farmers are small
and marginal and that there is price cyclicity, I am inclined towards the latter. There are more
farmers growing in year N, which leads to more supply with a constant demand and thus prices
Yes and you can assume that there is only one standardized product with one API which is
fall. Next year there are less farmers, thus less supply and higher prices, leading to a cyclical
chemically derived from a plant source grown through individual farming.
behavior.
Oh alright. So, my strategy here would be 2 step- (1) Understand the model of flow of the product You are right. This is what we diagnosed the problem to be as well. Can you tell me the
from farm to client to identify the location of supply bottleneck in a lean supply year. (2) Once that assumptions you are making here?
is identified, I would like to understand the factors contributing to that lean supply. To understand
the first, am I correct in assuming the following process? (Exhibit 1) Sure. There are 3 fundamental assumptions- (1) The crop also has an annual growing cycle (2)
The farmers arrive at the market at a similar time and thus do not have bargaining power and
The strategy seems good. You can assume that the problem is the total farm output cyclicity. All there are no losses and no storage infrastructure at the farm level (3) The introduction of the
the other downstream steps are standardized. plant as a raw material must have happened 10 years ago replacing something else.
Great. This was well done. Best of luck for the subsequent rounds.
Thank you. It was a pleasure interacting with you.

Drug pricing
Your client is WHO and they are concerned with the cyclicity in the prices of Malaria medicine and want your help to figure out why this is
happening.

• Be qualitative. Global • Malaria, WHO, cyclicity in
impact. prices. Farm (includes Number of farmers
• SUPPLY side issue. • Facts-Annual phenomenon. sourcing inputs)
• API is unique and one 10 years ago.
variant. Derived from • 95% from small marginal Field area under
Processing of cultivation/farmer
PLANTS! Chinese (east) farmers Exhibit 1: Process map Exhibit 2- Process
raw material
• Issue- farm level. of the product map of the annual
production steps (Please output drivers % Field area under
• Ignore Government and
note that transportation (upstream to cultivation for this crop
weather. Medicine downstream). Every
costs/processes
• Focus on macro issues manufacturing point is multiplied in
discussion between any No. of cropping
• No of farmers- cyclical the total; change in
2 processes will be cycles/year
any of the 6 factors
discussed along with
Supply to will lead to change in
these if needed)
wholesaler output. Units of crops/unit field
area (Cropping density)
Supply to
retailer Productivity factor
Recommendations
• Increase penetration with counter offers and schemes
• Give away indirect distributor inputs to increase retailing
• Declining sales problems can also be separated into internal and external issues
• Once the problem is identified to be in the publicity and advertising part, including word of mouth publicity is especially critical

Declining response in a competition

You are the executive advisor to the Campus Branding team at ABC Ltd. ABC has launched its case study competition at premier b-schools.
However, despite the overall increase in the number of students, the response from the students is lukewarm. ABC has asked for possible
reasons and ways to increase the response rate amongst students.
Interviewee notes Case Facts Approach/ Framework Student
• Defining ‘response’ – • Last year 1300 students enrolled, out Response
Stages
registrations? of which about 600 registered, and
200 submitted
Submissions? Response Awareness Incidence Registrations Submissions Queries
• ABC has a FB presence which saw
on social media? • 500 new likes last year (spread over
• Likes have decreased in 2 weeks after launch of competition). Channels How is it Team Size Format
the first week itself This year, 100 likes in the first week. Covered measured? Constraints
(this is a major • ABC is an old recruiter at these
schools and has been having this Activities on Sites have
problem) Competition Timeline
competition for about 4 years now. Each sufficient Timeline
• Competitor scenario • A major competitor has also Channel visibility? Problems
launched a case study competition at Portal Usability,
Marketing
the same time with a prize money Prize Uptime
Budget
double that of ABC Money
• No increase in ABC’s prize money
• Marketing efforts are the same as Competitor
last year Events
• The number of likes on the social
network has not grown in A fleet size/shape modification may be
proportion to the number of The split of business-economy seats can be
desirable to increase seating capacity. This
students (scope for number work chosen to reflect to proportionate demand
makes sense since Chinese flyers may differ
and utilisation.
from US-UK flyers in physique
Recommendations
• Incentive Strategy(this year): Since the prizes for this year have already been communicated through the marketing efforts, additional rewards in terms of goodies and PPIs can be
communicated as a branding strategy for this year.
• Incentive Strategy (future): ABC should focus on not only the quality of the competition (difficulty, scheduling, etc.) but also on rewards being more competitive
• Marketing Strategy: ABC should aggressively market the case study competition on social networks to catch the students early. It should also schedule its competitions well ahead of its
competitors to lock in participation. Further, students’ schedules of exchange programs in certain b-schools should be considered. Providing support systems in the form of buddies,
interaction forums, etc. can go a long ahead in giving a competitive edge to ABC.
This question involved seeking clarification on certain definitions such as ‘response’ and ‘lukewarm growth’. It is essential to narrow down these broad terms to specific pointers using which the
‘lifecycle – approach’ can be deployed and the significant links can be identified. If a question revolves around conversion, one can think of the ‘lifecycle – approach wherein, various stages of an
agent’s or activities lifecycle are enlisted. For e.g., in a purchase lifecycle, customer goes through a decision making stage, followed by purchase which is then followed by servicing and customer
satisfaction, and finally repeat purchase. In this approach, different stages of conversion are listed and a weak/broken link is identified. A lifecycle approach also ensures MECE steps.

Strategic fit / Merger feasibility

Our client owns one of the largest global card payments networks. As of 2007, the consumer card payments business had reached maturity in
the US and Europe, with stagnation in annual revenue growth. The client has identified a small start-up, currently a provider of payment service
in the e-commerce industry, as a potential acquisition target. You have been called in to evaluate the potential acquisition, and provide guidance
on the integration of these two companies, should the merger occur.
• How should a large • E-Commerce has been identified as a key • Data Requirements
• growth driver, as the industry has grown at • Some data that can be used to structure analyses includes:
• organization such as our
20% and is expected to grow at a 15% CAGR • information about the size and history of the target; growth rate for the target
client evaluate this • information about the leadership and culture of the target
over next 5 years.
acquisition opportunity? • financials about the level of commitment and level of gain, and whether this could even
• PayPal, Amazon 1-Click and Google
• What data would you Checkout dominate the industry, controlling "move the needle" from a growth perspective
need and what analyses over 50% of the market share. Our client’s
would you conduct to Senior Executives feel that they need a
develop a capability in E-Commerce, an area where Assess Strategic Fit
they have historically lagged.
recommendation?
• The small start-up identified as the potential Business
• The client does not have a acquisition target has an innovative business Synergies External
Elements
track record of acquiring model and has grown rapidly. It is a provider
and successfully integrating of micro payments for social networks, Qualitative Growth Optionsin
Revenue & Market Size Customers Competitive
small, innovative which is used to pay small amounts to aspects corepayments
Costs & Growth Analysis Reaction
publishers of online content and for (strategic fit) business
companies.
downloadable media.
• What cultural differences • Industry leaders such as PayPal find it Same/ Different/
will the client have to inefficient to manage these small transactions Similar New
overcome? How would and charge disproportionately high fees,
you advise the client to making traditional online payments
overcome them? unfeasible.
Recommended thought process

Fit with existing business: Can a company focused on security and reliability successfully integrate with a start-up focused on peer-to-peer payments, which are notorious for fraud? How
similar are the business models (i.e. both generate revenues as a percentage of transaction amounts)?
• Overall business case: Growth in target revenues, possible synergies in external settlements, options for cross-selling with existing business, obtaining deep
• consumer behavior insights in a segment of current “non-users,” organizational synergies.
• Qualitative aspects: Can the entrepreneurial spirit of a start-up be combined with the client’s behemoth organizational bureaucracy? What will be the keys to success? (May include holding
the company as a separate unit, or giving it complete autonomy for a finite period)
• Customer analysis: Will the combined company serve more customers, or the same customers in different ways? The target’s customers are typically
• younger, but may be in households with the client’s existing customers.
• Technology considerations: Is the new technology for micro-payment clearing compatible with the Client’s payment systems, and can they be settled
• profitably on the Client’s network given the small size of the transactions (and, hence, small per-transaction revenues)?

Guesstimates
2019-20 132
Guesstimate 1
Estimate the demand for Gold flake cigarettes in Mumbai

• Begin by understanding total • Market share
Population of
market for cigarettes in for Gold flake
Mumbai
Mumbai in Delhi is
• Market share for gold flake 20%, 20 Mn
would be similar to other Bangalore is
metropolitan cities such as 22% Not of smoking age
Of smoking age
Delhi and Bangalore (75%) (25%)
15 Mn
Smokers (50%) Non Smokers (50%)
7.5 Mn
400 days 20 Cigs per

1 pack a day
(Year approx.) pack
7.5Mn * 400 * 20 = 60,000 Million Cigarettes a year

Approx. market share of Gold flake = 20%
Demand for Gold flake = 20* 60,000 Million = 12,000 Million Cigarettes a year

Guesstimate 2
Estimate the number of crows in Ahmedabad

• Since crows will be flying
over different areas during Ahmedabad
the day, it would be Starting Assumption: Ahmedabad Area : 500 (25x20) sq. km
(500 sq. km)
difficult to determine total
number of crows.
• Assume no crow leaves or Low Forest Cover Medium Forest High Forest
enters the city (or assume Cover (30%) Cover (10%)
(60%)
number of crows during
Number of Crows in Ahmedabad
the day to be the same as
during the night) Low Forest Medium Forest High Forest
Area Type
• At night, crows rest on Trees / area Cover Cover Cover
trees. Try to find out the Percentage Area 60% 30% 10%
trees in different regions
of Ahmedabad, and using Trees / (100x100 sq. m) 10 20 50
this data, guesstimate the Nests / tree Nests / Tree 0.2 0.1 0.1
number of crows.
Crows / Nest 4 4 4
Number of Crows
240,000 120,000 100,000
Crows / nest (region-wise)
Total Crows 460,000

Guesstimate 3
Estimate the annual revenue of a multiplex
Interviewee Notes Case Facts and calculations

• Only cover the substantial Average daily revenue/screen
revenue streams 1. Ticket Sales Revenue per day= Revenue streams
• The footfall will depend on (Average footfall per day)*(Average price
whether it is a weekday or per show)*(No of shows/day)
weekend =200*250*4=Rs 2,00,000 Ticket sales Parking Food & Beverage Advertising
• Price can also be 2. Revenue from parking per week:
considered different for (Average footfall per show)*(% people Digital
Average Average Billboards
weekday and weekend, using parking)*No of shows/day)* price per No of Ads
footfall per
show show shows/day
here although average (Average ticket size)
price has been taken 200*0.5*4*50=Rs 20,000
• Assume that the revenue 3. Advertising Revenue= Assuming it is Weekdays
Weekend
(Mon-
from advertising primarily 10% of the total revenue (Fri-Sun)
Thur)
comes from billboards and 4. Food & Beverage= (Average footfall
digital ads between per show)*(% people buying)*No of Weekdays Weekends
movies. shows/day)*
Seating Capacity 300 300
• This is average revenue (Average ticket size) Average
60% 75%
per screen, can be 200*0.5*4*150=Rs 60,000 occupancy rate
multiplied by number of Average daily revenue/screen =Rs 4.2lac Average footfall 180 225
screens to obtain revenue Total Revenue = Average daily
Average footfall per day = (180*4+225*3)/7~200
of multiplex revenue/screen*No of screens*No of
days
=4.2*4*300 = 5040 lacs =50.4 Cr
(Taking into account some days when
the footfall will be extremely low)

Guesstimate 4
Estimate the value of a coffin maker’s business in Ahmedabad
Interviewee Notes Approach / Framework

• NPV analysis Profits
• 1% of Ahmedabad Estimating quantity
assumed to be Christian
• Life expectancy assumed
Population
to be 70 and population (60,00,000) Revenues Costs
growth rate of Christians
assumed to be 0%
• Only 3 coffin makers in % Christian (1%) = Price Fixed costs
Ahmedabad (info received 60,000
(Rs. 10,000) (Rs. 4,00,000)
from interviewer) so
market share assumed to No. of deaths per year
be 1/3 = (1/70)*60,000 = Quantity
~900 Variable Costs
• FC and VC provided by (300) (60% of price)
interviewer when asked
• Discount rate assumed to
Market Share = 1/3
be 10% (chosen for ease
of calculation and NPV = (10,000*300 – 4,00,000 -
reasonable since risk free .6*10,000*300)/0.1 = Rs. 80,00,000
rate is ~7%) Quantity = 300
• Profits assumed to stay
constant into perpetuity
• This guesstimates tests the basics of finance (NPV, PV of perpetuity)
• Common mistakes include not account for the % of population that is Christian (assuming everyone that dies needs a coffin) and errors in calculating no. of deaths

Guesstimate 5
Estimate the monthly electricity consumption (residential) in India
Interviewee Notes Approach / Framework

Electricity
• Clarify end-markets to be included
(residential / commercial) because
consumption rates are very different in
these segments. In this case, focus only Residential Commercial
on residential.
• Within rural segment, interviewee
should consider adjusting for (1) Urban Population Rural Population =
= 300m 700m
homeless people and (2) areas which
are not electrified
• Weighing monthly consumption by % of
Households = Households =
households in the income type and 300m/4 = 75m 700m/6 = 120m
multiplying this by # of households will
give monthly units consumption
Low Income 60% Mid Income 30% High Income 10% Low Income 70% Mid Income 25% High Income 5%
Monthly Monthly Monthly

Consumption Monthly Monthly Consumption Consumption Monthly
Consumption 1200 Consumption 3000 Consumption 1000
300 units 100 units 300
75m x (60% x 300 + 30% x 1200 + 10% x 3000) = 63,000 units 120m x (70% x 100 + 25% x 300 + 5% x 1000) = 23,400 units

Guesstimate 6
To estimate the revenue of tourism in Gujarat in peak months

• Was required to estimate Cost per trip = Market for tourism per
cost per person per Lodging + Travel peak month
bucket and number of + Food +
people in each bucket Sightseeing
• Usually it’s easier to Total Revenue =
analyse group costs over (Population x
Couple Groups Family International
individual costs Can afford x No.
• Was required to take in India x No. in
Filters Couple Groups Family International
several assumptions Gujarat x No. in
• Quantitatively intensive peak month/ No. Population 20mn 110mn 200mn 2mn
case, required a significant of people per Can afford 20% 10% 10% N/A
amount of breaking down group) x cost per Number in India 80% 100% 80% N/A
into trip Number in Gujarat 5% 10% 5% 10%
Number in peak month 25% 8.33% 16.67% 25%
• Number of marriages Number of people per group 2 5 5 2
taken to be 10mn
Cost per trip/group 11,500 6,000 12,000 20,000
• Calculation done for Lodging 4,000 2,000 5,000 5,500
tourists only from urban Travel 2,000 1,500 2,000 4,000
India and abroad Food 3,000 1,500 3,000 3,000
Sightseeing 2,500 1,000 2,000 7,500
Total revenue 230mn 110mn 320mn 500mn

Guesstimate 7
Estimate the monthly mobile data usage (GB) in 2020
Interviewee Notes Approach/ Framework Monthly Data Usage (in GB) by different age groups & income levels
• Divide current population
into Urban and Rural. Current Population Income Low Medium High
Calculate data for only (1 billion)
Urban population, and Age 60% 30% 10%
extrapolate for Rural
0-15 25% 0 0 0.5
population using a similar
logic
15-30 35% 0.1 5 6
• In Urban areas, data usage Urban (30%) Rural (70%)
is dependent on factors
30-50 25% 0.1 2 4
like age group (older
generation may not be >50 15% 0 0 2
tech savvy) and income
(lower income groups Age Group Weighted Average (WA) 0.036 0.675 0.353
might not have access to
smartphones)
• Estimate usage for 2017, Total Data Usage (GB) / Annual Data Usage (GB)
Population
and assuming an annual (Sum of WA) month (2017) Growth / month (2020)
growth, predict usage for 1.064 300 m 320 m 10% 425 m
Income
2020

Guesstimate 8
Estimate the daily revenue of an airport
Interviewee Notes Case Facts and calculations

• Only cover the most
substantial revenue streams Revenue airline fee: 5% of the total ticket Revenue streams
• Assume shops pay a fixed fare
and a variable fee to the
Revenue from shops:
airport Airline fees Shops
Parking + lounge Advertising
• The number of flights per (Fixed fee per shop + % of revenue *
hour depends on whether it Volume) * Number of shops
fixed fee: Fixed fee Variable fee Billboards
is a rush hour Variable
Advertising Revenue= Meters of check-in
• Assume that the revenue fee for slot
billboards * price/meter spaces
from advertising primarily Small Med Large
comes from billboards
Domestic International
• Assume that parking +
Type Small Medium Large
lounge are only a minor
revenue stream for airports Size 1x1 2x2 3x5
Rush [hour] Number 500 200 50
and can be skipped.
Total Area 500 800 750
• Assume that the airline fees Low(7) High(11)
Med(6)
primarily come from the
variable fee for slots Rush hour Low Medium High
Hours 7 6 11
Flights/h 2 6 12
Flights/day 14 36 132
Observations/Tips/Suggestions
• Should first create structure, then put numbers to it
• Make reasonable assumptions, clarify with interviewers at each stage
• Be prepared to justify your assumptions at each stage

Guesstimate 9
Estimate the yearly revenue of an IPL team
Interviewee Notes Case Facts and Calculations Approach/ Framework

Only cover the most
Revenue advertising:
substantial revenue streams Revenue streams
(Price per m of billboard * length)*
IPL revenue only receives a
Matches
small fraction of the revenue
5000*400*7= 1.4 Crore
(35% for home games, 5% for
(Small shirt ads*Price +shirt sponsor)*
away), the rest is paid to the Price
matches Ads TV ads Stadium Merchandise
league Money
(10*5 Lakh +20 Lakh)*14= 10 Crore
The circumference of a
cricket pitch is approximately
Revenue tickets:
400 meters Shops Tickets
No. of home matches*Tickets*Ticket
The probability of winning the Billboards Uniform
price*% of revenue (same for away
league is the same for each
matches)
team (1/8)
7*50k*500*0.35+7*50k*500*0.05≈7CR
A league season consist of 14
matches
Prize Money
Merchandise is only a minor Inter-over Special breaks
Probability of winning * price money
revenue stream for an IPL breaks
(1/8) * 5 Cr ≈ 60 Lakh
team, and hence, can be
skipped
TV ads (See Framework) Type of Advertisement
Inter-over
Special Breaks
Breaks
No. Of slots 40 3
Price per slot 20 Lakh 5 Crore
Total 8 Cr 15 Cr

Guesstimate 10
Estimate the number of emails flowing though IIMA mail server

• Was asked to exclude
PGPX and other programs Mails
for simplicity.
Academic Administrative SIF Peer-to-peer
PGP 1 : GNB: 10/week * 4 Joos + 6 5 mails per community

=# courses * # students * # Community size SPFS/JPNS/day=10/day member =5*2k
mails/course (2k) * 7 * 1000( No of =10k/week
= 6* 450* 3 = 8.1 k/week = students)
20k/week =70k/week
PGP2:
=# courses* # students *
#mails/week Framework Summary
= 30*80*3 • Structured the case into 4 parameters – Academic, Administrative, SIF and Peer to peer.
=7.2 k/week • #mails/course: 2 from Instructor on average and 1 for the quiz notification
• Community size: 1000 students + 1000 faculty, academic and other staff.
• There will be some other additional external mails which are sent from outside.
• Also PGPX and other programs are not taken into consideration.

Guesstimate 11
Estimate the total length of barbed wire used in India

• Assume square farmlands
Total used, land area
• Find the average perimeter of each size of farmland
of India
• Barbed wire needed = perimeter * number of
times the wire is wound
• Adjacent farmlands would be sharing a common
side of barbed wiring. Farmland Residential Industrial
(70%) (20%) (10%)
• Multiply the total number with a factor to account
for how barbed wire is usually used: circled
through the perimeter Small Sized Medium Sized Large Sized
(30mx30m) (50mx50m) (100mx100m)
50% 30% 20%
Perimeter Number of Discount for

Times shared sides
Wound (2)

Guesstimate 12
To estimate profit made by SBI branch in IIMA Campus.
Calculations Approach/ Framework

Loans per year ~100; Lifetime – 5 yrs.
500 active loans at any point
Principal Rs.10 lakh (for 20 lakh fee –
averaged over repayment of 5 years)
Net interest margin – 3%
Interest income = 500*10*3% = INR 1.5 Cr
Bank Profit
Exchange students – 100 trips/ year

Faculty – 200 trips / year
Insurance Premium per person – 2000 Interest Insurance Forex Fees Less: NPA
~ 40% commission for per policy
Fees – 300*2000*0.4 = INR 2.4 lakh
Forex – INR 6000 per person (assume Number of loans
Net interest Exchange Students Average FOREX Defaulters
margin Loan life and value Premium
everyone carries INR 1 lakh worth FOREX) and Faculty (300 carried (1 lakh (very low, 1 in
(500 active) (5 years, 10 lakh) (2000*40%)
(3%) trips / year) @6% income) 500)
Forex income = 300*6000 = INR 18 lakh
NPA – Total Loss of Principal and Interest

– 1 per year
~INR 25 lakh

Guesstimate 13
Estimate the revenue of a typical post office in India.

Major portion of revenue – logistics and Post office revenue
parcels. Others ignored
Typical circle of coverage for a metro

post office ~ 2 km radius or 12 km2 Logistics and
Account deposit Sale of Forms etc. Co-branding
parcels
Typical metro area = 500 km2
Thus, 40 post offices in the metro
Assume, high volume – 20 and medium,
low - 10 Demand side Supply side
analysis analysis
Two approaches – demand side (number

of transactions) and supply side (number Number of Post Transactions per Counters
Transaction Traffic /
Hours per day
Hours per day capacity / hour Efficiency
of counters, utilisation in a day) offices hour
Revenue per parcel ~ 50, neglect any

charges for extra weights etc Traffic High Medium Low Traffic High Medium Low
# PO 20 10 10 # PO 20 10 10
Total parcels ~20000
Transaction/hour 80 30 15 Counters 10 5 3
Total revenue ~ INR 10 lakh
Hours / day 10 10 10 Hourly capacity / transaction 10 10 10
Total 16000 3000 1500 Hours / day * Utilisation 10 * 30% 10* 20% 10* 50%
Total 18000 3500 1500

Guesstimate 14
Golf balls in the air in an average second in India

• #golf players : assume only people earning ₹15 lakh and
above will play golf as it is an expensive hobby to pursue. The
#people above that income threshold is around 5 million.
Out of these 50 lakh, assume 70% live in urban areas and Income eligible players 5 million
have access to a golf course
❖ Out of remaining 3.5 million,1.5 million will be
children and senior citizens. Hence 2 million Facility eligible players (urban) 3.5 million
people eligible
❖ Out of these 2 million, assume 50% play any sport
(assumption on basic fitness) Age eligible population 2 million
❖ The remaining 1 million can play one out of upto
20 sports (cricket, badminton, tennis, swimming
etc). Thus 5% on average will end up playing golf Population that plays sports 1 million
i.e there are 50,000 players
• Frequency of play
❖ We assume that the average player plays once a Population that plays golf 50,000
month (expensive and time consuming sport)
• Number of hits
❖ We assume that the average game is one round, Avg # of players/week ~1666
18 hole
❖ The average number of hits per game is 108 (18
holes, par score is 4 and everyone hits 2 above par
Avg number of hits/game Number of hits/day # of balls in the air/second
as players are not professionals)
❖ We assume that he average ball spends about 1
second in the air 108 (18 holes, 4 par, 2 above) 1,80,000 2.08 per second
❖ Thus the number of ball seconds in the air is
~1,80,000 per day =108*1666 =180000/86400
❖ The average number of balls/second is 2.08
Recommendations
• This case can also be approached from the supply side. The supply side in this case is the number of golf courses, their average utilization etc
Tips / Suggestions
• It is essential to reverse ladder the population to arrive at the number of golf players. You can clarify your assumptions with the interviewer at all points of time
• Lay out your approach upfront for the interviewer so that if a different approach is to adopted, course correction can happen at the earliest

Guesstimate 15
Calculate the annual market for medical X-ray machines in India
Replacement demand
• Calculate the stock of X-Ray machines in India
• Break India into rural and urban areas
Demand Sources
• Estimate bed per thousand people in urban and rural areas
separately and make assumptions about average hospital size
and #X-Ray machines per hospital (2.5 for urban and 1 for
rural)
Replacement sources New sources
• This will give you the stock of X-Ray machines at hospitals
• Do similar exercise for clinics by calculating the stock of
orthopaedicians in private practice
• Demand: Divide the stock by life cycle to get the 1 year
demand for X-Ray machines
New demand
• Estimate the growth in healthcare expenditure and use that
as a growth rate for hospital bed availability. Then calculate Hospitals Small clinics Hospitals Small clinics
the number of hospitals and the number of X-Ray
machines/hospital Beds/Thousand #Hospitals #Xray Machines Growth (#Number of Total annual market
• Differentiate this rate for urban and rural areas and calculate Machines) (hospitals only)
the new demand for X-Ray machines coming from hospitals
• Calculate the new demand coming from clinics by : (Doctors 0.5 4000 (100 4000 (Stock)
Rural +10% per year (400) 800
graduating - #Doctors joining public sector)*Proportion of (800m) beds avg) Replacement Demand : 400
Orthopaedicians
2 4000 (200 10000 (Stock)
• This will give the number of new orthopaedicians who will Urban +15% per year (600) 1600
(400m) bed avg) Replacement demand : 1000
join private services every year and buy an X-ray for their
clinic
Recommendations
• Can be approached from the patient demand side in this case. The demand case in this guesstimate is the number of injuries and use cases
Tips / Suggestions
• It is essential to structure the demand into different brackets first.
• Interviewer will automatically guide you to focus on the most important bracket

Appendices
2019-20 148
Appendix 1 – Framework glossary (1/3)
A glossary of some of the most popular frameworks helpful in structuring solutions in case interviews.



Appendix 2 – Datasheets (1/2)
A compilation of data that will be useful for solving guesstimates. Most of these numbers are approximations, but they should be good enough
for a guesstimate scenario.

Appendix 2 – Datasheets (2/2)
A compilation of data that will be useful for solving guesstimates. Most of these numbers are approximations, but they should be good enough
for a guesstimate scenario.

Appendix 3 – Sample evaluation metrics
A breakup of what firms generally look for when they evaluate a case interview. Just an indicative list.
Each / most of these metrics would be evaluated during the case interview
Preliminary questions & recap
Sample 5-point scale for ‘Preliminary questions & recap’ (to give a broad understanding of evaluation
parameters)
MECE structuring 1. Candidate does not clarify problem statement (no recap of initial information)
2. Candidate clarifies with problem statement with too much detail (no prioritizing of important
information
Problem solving approach 3. Candidate recaps the problem statement but without sufficient structure; candidate asks for
detailed information too early
4. Candidate recaps the problem statement and covers key points but does not display
Synthesis / Recommendations comprehensive understanding of client
5. Candidate provides a concise and structured recap of the problem statement, and asks a couple
of relevant clarifying questions
Business insights
Creativity
Communication skills

IIM A Casebook

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What is the purpose and scope of the document?

What is the purpose and scope of the document?

What frameworks are discussed in the appendices?

What frameworks are discussed in the appendices?

IIM A

Casebook, Consult Club, 6/e

©2014 by Consult Club

First edition: July 2014

How to make the most of it?

Enjoy the process of preparation and let’s crack the case!

-Aaditya Agarwal (Coordinator, Consult Club, 2019-20)

(C) Consult Club, IIM Ahmedabad 2019-20 Page 3

(C) Consult Club, IIM Ahmedabad 2019-20 Page 4

Structure of case interview, approach 7 C. Market entry 56

Cases 10 Overview / Framework 57

A. Profitability 11 21. Retail bank portfolio management Easy 59

Overview / Framework 12 22. HBS Satellite campus Easy 61

1. Beer manufacturer (Cost reduction) Easy 14 23. Magazine publisher Easy 63

2. Retail bank (Cost reduction) Moderate 16 24. Insurance company Moderate 65

3. Lease fee (Cost reduction) Moderate 18 25. Electric buses Moderate 67

6. Banking (Cost reduction) Challenging 24 28. Anti-smoking pills Challenging 73

7. Telecom billing process (Cost reduction) Challenging 26 D. Growth strategy 75

8. Oncology firm (Revenue decline) Easy 28 Overview / Framework 76

14. Banking (Revenue decline) Moderate 40 34. E-commerce Challenging 88

17. Spicejet vs Indigo Challenging 46 E. Due diligence 94

B. Pricing 48 38. Chain of colleges Moderate 95

Overview / Framework 49 39. Movie theatre Challenging 97

18. Helicopter service Moderate 50 F. Data-intensive cases 100

20. Residential complex Moderate 54 41. Profitability (Telecom) Challenging 103

(C) Consult Club, IIM Ahmedabad 2019-20 Page 5

G. Unconventional cases 107 12. Bank branch revenue 144

46. Operations strategy Moderate 114 Appendices 148

47. Declining website traffic Moderate 116 1. Framework glossary 149

48. Reducing turnaround time Moderate 118 2. Datasheets 152

50. Variable pay structure Moderate 122

51. Horizontal integration in e-commerce Challenging 124

52. Threat of new entrant Challenging 126

53. Drug pricing Challenging 128

54. Declining response in a competition Challenging 130

55. Strategic fit / Merger feasibility Challenging 131

1. Gold Flakes cigarettes 133

2. Crows in Ahmedabad 134

3. Revenue of a multiplex 135

4. Revenue of a coffin maker 136

5. Electricity consumption 137

6. Gujarat tourism 138

7. Mobile data 139

8. Revenue of airport 140

9. IPL team 141

10. Mails at IIMA 142

(C) Consult Club, IIM Ahmedabad 2019-20 Page 6

Personality / behavioural (through HRQs)

Problem solving (Case interviews)

Clarify Structure Analyse Conclude

(C) Consult Club, IIM Ahmedabad 2019-20 Page 7

Structure the problem

Analyse the case

(C) Consult Club, IIM Ahmedabad 2019-20 Page 8

(C) Consult Club, IIM Ahmedabad 2019-20 Page 9

Approach / Framework Overview