1253396962DardenCasebook2001 PDF

RECRUITING GUIDE
2001-2002
Harvard Exchange Version

TABLE OF CONTENTS
S ECTION PAGE NUMBER
Consulting Firm Profiles
Darden On-Grounds ...................................................................................................................................... 1
Off-Grounds Firms ......................................................................................................................................... 15
Related Firms .................................................................................................................................................. 18
International Student Recruiting.................................................................................................................. 19
Recruiting Statistics........................................................................................................................................................ 20
Briefings Tips.................................................................................................................................................................. 22
Sample Cover Letters ..................................................................................................................................................... 23
Behavioral Interviews .................................................................................................................................................... 29
Frameworks ..................................................................................................................................................................... 33
Case Interviews
Case Suggestions, by Type............................................................................................................................ 48
Profit Improvement......................................................................................................................................... 54
Industry Analysis............................................................................................................................................. 87
Market Expansion........................................................................................................................................... 107
Pricing.............................................................................................................................................................. 129
Investments....................................................................................................................................................... 136
Wild Card ......................................................................................................................................................... 146
Miscellaneous.................................................................................................................................................. 153
The Consulting Club at The Darden School of Business
i
To Recruiting Guide Readers:
This book is designed to aid in your preparation for the consulting recruiting process. It discusses the
initial phases of the recruitment cycle, including briefings and letters to companies. The book also
reviews the key points of behavioral interviews. The primary focus of this book, however, remains
preparation for case interviews, primarily because this element is so unfamiliar to the majority of
readers and is a critical step in the path to a consulting career. Nevertheless, we recommend that you
view the entire recruiting process as an integrated whole – in other words, recognize the importance of
each component in the final outcome.
We recommend that you have a mock interview with a 2nd year before getting together with several
different partners and take turns giving each other mock interviews. This is extremely important
because you need to know exactly what a case interview is like before going away to practice you’re
your classmates. The more practice you put into mock interviews, the better you will perform in the
real situation. Remember that this book is only one of many resources available to you during your job
search. We have moved the profiles of all the top consulting firms to our website at
http://student.darden.virginia.edu/consulting/index.htm . Please use this knowledgeable sources,
reference material available in the career library, other case interview guides, and the Internet to find
additional important information.
This is the fourth edition of the Recruiting Guide that was initially created by the Darden Classes of
1998 and 1999. The 2001-2002 edition has incorporated changes including additional cases , a new
section for international cases and a section on how to articulate ideas when explaining complex
concepts during the interview. These changes were recommended by members of the class of 2002. I
hope these enhancements make a positive difference in your recruiting process, and wish you all the
best in your career pursuits whatever they might be.
These additions would not be possible without contributions from several members of the class of 2001.
Please join me in thanking these people for their case write-ups and descriptions of the firms.
Good luck!
Christopher Quek
Contributors:
Class of 2002
Joanna Sopher Mike Jamison Todd Riggs
Jin Leong Mathew Kaness Rahl Aranha
Salvador Galindo Jimmy Wei
ii
CONSULTING FIRM DESCRIPTIONS Arthur Andersen
ARTHUR ANDERSEN – BUSINESS CONSULTING
Interview Process
LIST: The interview list has 5 on the closed list and 2 bid slots.
INTERVIEWS: First Round consisted of one 45-minute behavioral interview. Second Round consisted of
three back-to-back 45-minute case & fit interviews with partners and senior managers.
First Round interviews were held on campus; second round were held in a hotel.
The Organization
Arthur Andersen is organized on both an industry and capability basis.
Industry practices include: Automotive & Industrial Equipment

Chemicals
Communications
Electronics & High Tech.
Energy
Financial Services (Banking, Health Services and Insurance)
Food and Consumer Packaged Goods
Government
Media & Entertainment
Natural Resources (Forest Products, Metals and Mining)
Pharmaceuticals & Medical Products
Retail
Transportation & Travel Services
Utilities
Capabilities include: Business Process Management

Change Management
Customer Relationship Management
e-Commerce
Enterprise Business Solutions
Finance & Performance Management
Process
Strategy (includes both Formulations and Logistics)
Technology
Arthur Andersen recruits for their Vienna, Virginia office. The Vienna, Virginia office primarily focuses on
telecommunications and e-commerce work. Additionally, 95% of the clients for this office are located in
Metro D.C.; therefore very little travel is required. Several of the partners and directors in this office are
Darden graduates and there are currently 6 consultants who are Darden graduates.
Page 1
CONSULTING FIRM DESCRIPTIONS A.T. Kearney
A.T. KEARNEY
Interview Process
LIST: The intern interview list will be a mix of 16 open slots and 16 closed invitations.
INTERVIEWS: First Round consisted of two 45-minute interviews that were a combination of behavioral
and case interviews.
Second Round consisted of three 45-minute case and behavioral interviews. These were
conducted at an A.T. Kearney office.
The Organization
A.T. Kearney recruits Darden students for their General Practice division, Strategic Information
Technology Division (SITP), and Financial Institutions Group (FIG). The recruiting process for SITP and
FIG is different than for General Practice. Interviews are held separately and may or may not be held here
at Darden. Likewise, recruiting for International Offices is a separate process.
The General Practice is the largest practice within Kearney, and services primarily Fortune 100 clients in
all industries. As a generalist, individuals can expect to be working for clients in any industry on an
engagement in any functional area (Strategy, Operations, etc.). Kearney does not require that an individual
ever become a specialist in any one industry or functional area. As a member of the General Practice
division, you are also put into a Geographic division based on the location of your home office.
A.T. Kearney prides itself on providing value to clients in both the strategy and operations arenas.
Engagement teams typically include both industry specialist, and “generalists”. Team size varies
significantly based on the client needs.
Available Locations and/or Practice Groups
Generally, the practice groups are in every Kearney location. Therefore, as a generalist or SITP individual,
you are not limited to particular offices. The Web site and A.T. Kearney literature list all office locations.
Kearney has, historically, been very flexible in placing students in their desired location and on projects in
a target industry or functional area. San Francisco will be the most difficult place to be stationed due to
high demand and limited space.
Miscellaneous
A.T. Kearney has made a conscious decision to stay away from systems implementation work - the SITP
Group is more information strategy-oriented versus systems implementation. Considered by many students
to be an “strategy & operations consulting firm,” A.T. Kearney consults in numerous spheres, providing
ample opportunities for students not interested in operations. Significant opportunity exists in the e-
business arena, helping “traditional” businesses enter and compete in the new economy.
Page 2
CONSULTING FIRM DESCRIPTIONS Bain & Company
BAIN & COMPANY
Interview Process
LIST: The intern interview list is a mix of 12 closed invitations and 4 bid slots.
INTERVIEWS: First Round consists of two 30-minute case interviews.

Second Round consisted of three to four interviews in the office.
The Organization
Bain recruits for a generalist track in any of their 26 offices worldwide. New MBA hires enter the business
at the Consultant level.
Bain positions itself as a results -driven strategy consulting firm. They state that their differentiating factor
regarding client approach is “a bias for action… clear strategies that are true blueprints for performance…
the transition from theory to practical reality is our bottom line.”
While Bain consultants do not join any one practice, Bain consults to a variety of industries. They include:
§ Media and Communications
§ Consumer Products and Services
§ High-Tech (Hardware, Software, Services)
§ BainLab
§ Financial Services
§ Transportation, Aerospace, and Defense
§ Utilities and Environmental
§ Health and Medical
§ Industrial Products and Construction
§ Private Equity /LBO
§ Other (Agriculture, Food / Beverages, Packaging)
To maintain a leadership role in the provision of complete Internet business solutions, Bain has joined
forces with industry leadership to form BainNet. BainNet is a unique global alliance of premier Internet-
related solutions providers created to address evolving client needs in a rapidly changing, technology-based
business environment.
Available Locations
Bain recruits for all 26 worldwide offices in 18 countries. Bain’s headquarters and largest office is located
in Boston. Other offices in North America include Atlanta, Chicago, Dallas, Los Angeles, Mexico City,
New York, San Francisco, and Toronto.
Page 3
CONSULTING FIRM DESCRIPTIONS Booz•Allen & Hamilton
BOOZ• ALLEN & HAMILTON
Interview Process
INTERVIEWS: First Round consists of two 45-minute interviews. They are focused on a case, but will
usually include a few behavioral questions.
Second Round also consists of two 45-minute interviews. These are conducted by
partners and held off-grounds. They include a short case, and will be more focused on
behavioral questions, mainly to assess fit.
The Organization
Booz-Allen’s Worldwide Commercial Business focuses on strategy-based transformation projects, and is
organized into a number of practices, both within and across industries:
Industry:
Aerospace, Automotive, & Industrial Services

Communication, Media, & Technology Group
Energy
Consumer & Health Services
Financial Services
Cross-industry:
Information Technology Services

Operations Management Services
Organization and Strategic Leadership Services
Home offices in hundreds of cities worldwide, house members from various practices, as well as
“generalist” consultants and associates.
Virtually all projects are staffed on a hybrid basis. For example, a typical engagement might include
members from Operations Management Group for specific knowledge of supply chain and members from
Consumer & Health Services for their industry expertise, as well as associates from the general pool
(various home offices).
Booz also has a very large government and technology focused business, the Worldwide Technology
Business, but recruiting for MBA’s is solely for the Commercial practice.

Booz recruits at Darden for all offices, which includes over 100 offices worldwide. The partners that come
down to interview candidates, however, are usually from D.C., and are partners in the Information
Technologies Group, Operations Management Group, and Communications, Media, and Technology
Group.
Miscellaneous
The Web site (www.bah.com) offers information on office locations, as well as useful information about
the firm.
Page 4
CONSULTING FIRM DESCRIPTIONS The Boston Consulting Group
THE BOSTON CONSULTING GROUP
Interview Process
INTERVIEWS: First round consists of two 45-minute case interviews.

Second round involves three 45-minute case/behavioral interviews conducted at the
office in which you expressed interest.
OTHER: BCG typically requests a copy of interviewee’s GMAT scores, university transcripts and
any other relevant background material (usually nothing extra) at your first round
interview. They also ask that you rank your office preferences at your first round, so have
an answer ready.
The Organization
BCG is not organized into specific divisions or rigid groups aligned around target industries. Rather, BCG
uses Knowledge Areas – internal networks that research emerging issues worldwide. Knowledge Areas are
based around industrial and functional areas, as well as core consulting issues:
Knowledge Areas: Branding

Consumer and retail
Corporate development
Energy and utility
Financial services
Health care
High tech
Industrial goods
Information technology
Media convergence
Operational effectiveness
Organizational change

Second round interviews usually take place at the office of interest for the individual candidate. BCG has
over 40 offices all over the world. A listing can be found on the BCG web site.
Miscellaneous
An interactive case is available on the Internet on BCG’s web site at http://www.bcg.com/case.
Page 5
CONSULTING FIRM DESCRIPTIONS Cap Gemini Ernst & Young
CAP GEMINI ERNST & YOUNG
Interview Process
LIST: The intern interview list is a mix of 36 closed invitations and 12 bid slots. The firm will
be interviewing for both Consulting Services and Connected Strategy & Transformation
(formerly SAS).
INTERVIEWS: For Connected Strategy & Transformation, First Round consisted of two 30-minute
interviews; a combination of behavioral and case. Second Round consisted of one
behavioral and two case interviews.
For Consulting Services there was only one First Round behavioral interview. Second
Round consists of one behavioral and possibly a case.
The Organization
Cap Gemini Ernst & Young’s consulting-related services include:
Connected Strategy & Transformation

Consulting Services
Focus industries include:

Telecom & Entertainment
Consumer Products
Financial Services
Life Sciences
Manufacturing & related services
The firm recruits at Darden for their Consulting Services group, as well as the Connected Strategy &
Transformation group.
Available Locations
Cap Gemini Ernst & Young has offices worldwide including over 90 cities in the United States.
Page 7
CONSULTING FIRM DESCRIPTIONS Deloitte Consulting
DELOITTE CONSULTING
Interview Process
LIST: The interview list is 100% invitation. In addition to the usual mix of resume, background,
and interest level, participation in the Deloitte Case Challenge is an important
consideration in receiving an invitation.
INTERVIEWS: First Round consisted of two 45-minute behavioral and case interviews.
Second Round consisted of one 45-minute case interview with partners and senior
managers.
OTHER: All interviews were conducted off-site.
The Organization
Deloitte Consulting is organized on both an industry and capability basis.
Industry practices: Consumer Business

Energy
Financial Services
Health Care (Life Sciences)
Manufacturing (Aerospace/Defense, Autos, High-Tech, Life
Sciences and Process Industries)
Public Sector
Telecommunications & Media
Service line capabilities: Strategy Transformation

Process Transformation
Technology Transformation
People Transformation
Practice Groups: Deloitte Consulting

Braxton Associates (Strategy arm of Deloitte)
Locations: Because Darden is a national school for Deloitte, the firm recruits here for all 26 U.S.
offices. In addition, Deloitte has offices in 26 other countries.
Page 7
CONSULTING FIRM DESCRIPTIONS DiamondCluster International
DIAMONDCLUSTER INTERNATIONAL, INC.
Interview Process
LIST: The intern interview list is a mix of four open slots and ten closed invitations.
INTERVIEWS: First Round consisted of one 45-minute interview (behavioral). Second Round consisted
of four 45-minute case and behavioral interviews that were conducted in Chicago.
The Organization
DiamondCluster International, Inc. is an e-business services firm that helps clients develop and implement
Digital Strategy SM - business strategies for the digital age. These digital strategies typically transform
client business models and create dramatically different e-businesses that deliver sustained market
leadership. The company serves clients worldwide across a range of industries including financial services,
consumer and industrial products and services, telecommunications and energy, healthcare and insurance.
Diamond Marketspace Solutions (DMS), the digital strategy delivery practice, supports the process by
providing technical expertise, resources and creative professionals to design, build and position ground-
breaking e-business ventures.
Diamond hires MBAs to enter the firm as Associates. Diamond project teams are a mix of clients and
consultants and teams work directly with clients at the client site. A typical engagement has consultants
working at the client site for four days and from the place of your choice on the fifth day.
Diamond looks for individuals who believe that the future of business is inextricably intertwined with
technology. Diamond desires dedicated employees who believe that learning is an ongoing process, are
highly adaptable, and have both the desire and aptitude to work in a collaborative environment. Ideal
candidates have 2-5 years of professional experience in consulting, operations, re-engineering, strategy,
systems integration or technology. Successful consultants possess the following characteristics: conceptual
and analytical thinking; problem solving skills; resourcefulness; and written and verbal communication
skills.
Diamo nd Associates may live wherever they wish. To reduce travel time, Diamond is creating regional
practices in the East, Midwest and West. Associates still live in a city or town of their choice but may work
with clients within their regions. Since Diamond has no central office where consultants can establish
mentoring relationships and personal networks, Diamond makes a special effort to provide events where
you can pursue these important activities. Such events include company wide 3-day events, regional events
and proactive facilitation of internal company discussions.
Available Locations
DiamondCluster is headquartered in Chicago but allows for associates to be based anywhere regardless of
whether there is an office nearby. The firm also is aggressively expanding into Europe with the recent
merger with Cluster Consulting.
Miscellaneous
In September, 2000 Diamond Technology Partners, Inc. merged with a pan-European Consulting Firm,
Cluster Consulting, which specializes in wireless technology, Internet and digital strategies. The combined
firm was renamed DiamondCluster International, Inc.
Recruiting for international offices is a separate process.
Page 8
CONSULTING FIRM DESCRIPTIONS Mainspring
MAINSPRING
Interview Process
The fulltime associate interview list will be closed and invitation only.
INTERVIEWS: First Round consists of one 45-minute interview using both case and behavioral
questions.
Final Round last year consisted of two 45-minute case interviews conducted in
Mainspring’s Cambridge office.
The Organization
Mainspring recruits Darden students for all three of their service offerings: Strategy Consulting, Strategy
Direct, and the eStrategy Executive Council as well as their Solutions group.
Mainspring is an eStrategy consulting firm helping Fortune 1000 executives rapidly develop critical
Internet strategies. eStrategies are strategies that enable Fortune 1000 companies to protect, evolve, and
transform their business for sustained competitive advantage in an economy driven by emerging Internet
and digital technologies. Their client list is significantly weighted to financial services firms, although they
have aggressively added technology, entertainment, and retail clients.
Mainspring employs a proprietary eStrategy Development Process across all three of its integrated service
offerings: eStrategy Consulting, eStrategy Direct, and the eStrategy Executive Council. It provides these
services to clients in the financial services; retail and consumer goods; technology, communications and
media; and manufacturing industries.
Mainspring uniquely occupies the pure internet strategy consulting space – they do internet strategy, and do
not do any systems implementation.
Most of the consultants’ work is done in their offices, so travel is limited, based on project/client needs.
Available Locations
Mainspring is headquartered in Cambridge, MA and also has offices in New York City, and Chicago.
Mainspring has, historically, been very flexible in placing students in their desired locations.
Page 9
CONSULTING FIRM DESCRIPTIONS marchFIRST
marchFIRST BUSINESS STRATEGY GROUP (formerly Mitchell Madison Group)
Interview Process
LIST: For First Years: 15 closed, 5 bid slots. marchFIRST states that they “encourage
multilingual candidates and students having non-traditional academic or professional
credentials” in their recruiting process.
INTERVIEWS: First Round interviews (February 7, 2001) will likely consist of two 30-minute interviews
with at least one partner; last year interviews were generally 15-minutes behavioral,
followed by a 15-minute case.
Second Round: For first years, there is no Second Round. The two interviewers make
their decisions based on the on-grounds interviews, and usually get back to all candidates
within about 72 hours.
The Organization
“The world’s largest, most comprehensive Internet professional services company,” marchFIRST is 9,400
employees in 14 countries teamed to deliver strategy, brand building, and technology solutions. Former
Mitchell Madison Group consultants comp rise most of the business strategy team and work hand-in-hand
with the brand building and web design professionals from legacy US Web and the technology
professionals from legacy Whittman-Hart. Many of the legacy Mitchell Madison Group partners remain
with the firm and their industry expertise includes:
* Securities (Retail and Wholesale Banking, Insurance, Credit Cards)

Telecommunications
* Media / Entertainment
Transportation (Airlines, Auto, Rail)
Chemicals
Consumer Electronics
Energy
Engineering
* Health Care
Pharmaceuticals
Mining / Oil
* - marchFIRST business strategy practice areas
Available Locations
New York Boston Paris
Chicago San Francisco Zurich
Los Angeles Montreal Frankfurt
Toronto Johannesburg Munich
Madrid Sydney London
Melbourne
Miscellaneous
Mitchell Madison Group was founded in 1994 by former McKinsey and Co. staff. The firm was acquired
by US Web/CKS in 1999. Shortly thereafter, both firms were acquired by Whittman-Hart and the
combined companies were renamed “marchFIRST” in recognition of the date the merger was finalized
(March 1, 2000) and the firm’s commitment to promoting leadership and innovation.
Page 10
CONSULTING FIRM DESCRIPTIONS McKinsey & Company
McKINSEY & COMPANY. INC.
Interview Process
LIST: McKinsey’s interview list is split between 21 invitees and 21 bidders. Bidding is highly
encouraged as even McKinsey admits that the firm has not been very successful at
picking first-year resumes.
INTERVIEWS: First round consists of two 45-minute interviews. They include behavioral questions and
either a case or mini-case. Case questions are generally tailored to perceived potential
weaknesses (e.g., quantitative questions if you have a journalism background,
communication questions if you have an engineering background). Prior to the interview
you are asked to fill out a data card listing your GMAT score, first semester grades, and
preferred location.
Second round also consists of two 45-minute interviews. These interviews take place off-
grounds and are conducted by either associate principals or principals. These interviews
consisted of both behavioral and case questions, with a strong bias towards cases.
Third Round is frequently office specific. Some office’s Third Rounds consisted of 6-7
45-minute interviews while others only had 3 45-minute interviews. These interviews
take place at the office for which you are being recruited. About two-thirds of the
interviews will be case interviews and the rest will be behavioral.
OTHER: McKinsey’s case interviews can cover any type of discipline (operations, organization,
marketing, and strategy). They may focus not just on solving a problem, but also on
communicating the solution to a client. Like all other consulting firms, McKinsey is
looking for people who can structure their thoughts and demonstrate a logical progression
through their analysis. One difference, however, is that McKinsey interviewers like to see
you “porpoise” between hypothesis and analysis. Finally, as in any case interview, a
little enthusiasm around solving the problem goes a long way.
Many students noted that McKinsey does ask for grades prior to walking into the First
Round interview.
The Organization
MBAs are hired into McKinsey’s various offices as generalist consultants. McKinsey’s offices are not built
around specific practice groups. The local client base drives the degree to which an office focuses on a
particular industry.
McKinsey’s practice groups are virtual organizations, identified by a focus on one of seventeen industries
or nine functional areas. Each group consists of a number of partner-leaders and a large number of
associates. Members of the groups are people who have an interest in developing industry or functional
expertise and have participated in relevant studies. In addition to working as consultants, members of these
groups can pursue research opportunities to develop new firm knowledge.

Because of the generalist model at McKinsey, the firm rarely hires MBAs with a specific practice group in
mind. The firm has 83 offices throughout the world and nearly all offices are hiring. Atlanta, Charlotte,
Stamford, and Chicago each have a relatively strong Darden presence.
Page 9
CONSULTING FIRM DESCRIPTIONS PricewaterhouseCoopers
PRICEWATERHOUSECOOPERS
Interview Process
Although PricewaterhouseCoopers normally recruits on-grounds, this year they have cancelled their
interviewing schedule. Contact the Washington, DC office for information regarding off-grounds
interviewing.
INTERVIEWS (Format for 1999 interviews):

First Round consisted of one 45-min. behavioral interview.
Second Round consisted of three 45-min. interviews at an office.
The Organization
The Consulting practice is organized into three Service Markets, which are Process Improvement, Strategic
Change and Technology Solutions. Within each Service Market, there are several service areas (an
organizational chart is available at Career Services). Consultants frequently work across these service areas
on client engagements.
Industry markets include: Defense

State & Local Government
Federal Civilian (including Socia l Services Justice/Intelligence,
Banking/Financial & International)
Higher Education
Transportation
Engineering & Construction
Health Care
Cross-Industry
Available Locations
PWC states that they recruit at Darden primarily for the Washington-area offices, although several students
last year were placed in other locations. The Washington Consulting Practice of PWC specializes in
systems, financial, and operational consulting services to worldwide government agencies, internationally
funded organizations, and the private sector.
Page 10
CONSULTING FIRM DESCRIPTIONS PRTM
PRTM CONSULTING GROUP
Interview Process
LIST: The intern interview list is a mix of 20 closed invitations and 20 bid slots. They tend to
invite students with very technical educational backgrounds or work experience.
INTERVIEWS: Unlike most other consulting firms, PRTM does not utilize a pure case interview method,
although questions may be tailored in the form of “what would you do” scenarios.
Emphasize your technical knowledge and any experience you have in developing new
products. The Second Round interview was conducted by principals and directors in a
specific practice group. The interviews focused on your background in the industry and
your ability to think through “what if” or “how would you” questions.
OTHER: Most consultants have technical undergraduate degrees, several with advanced degrees,
and have significant operational experience in various technological industries.
International hires are very common.
***Students interested in working in the Pacific Region can bypass on-grounds recruiting
by submitting cover letters and resumes to Jjacobson@prtm.com in Mountain View, CA.
The Organization
PRTM views itself as a big fish in a little pond. They are a niche player in management solutions for
technology based industries; consulting for a who’s who of clients from global giants to Internet start-ups.
Although growing at 35% a year, PRTM maintains a 4:1 ratio of directors to consultants. The tight ratio
constrains the firm from growing too rapidly while at the same time allowing for faster promotions; typical
time from consultant to director is 6-7 years.
Practice Groups
Industry Practices: Aerospace, Automotive & Industrial Technologies

Chemicals, Materials & Packaged Goods
Communications Services and Software
Computers, Network Systems & Storage
E-Business Engineering
Electronic Equipment & Enabling Technologies
Life Sciences (Medical Devices & Pharmaceuticals)
Business Practices: Operational Excellence (Supply Chain Management)

Product and Cycle Time Excellence (PACE)
Customer Service and Support
Marketing and Sales
Integrated Strategy
Available Locations
Atlantic Region: Waltham, MA Rosemont, IL Southfield, MI

Stamford, CT Washington, DC Oxford, UK
Frankfurt, Germany Glasgow, Scotland Paris, France
Pacific Region: Mountain View, CA Costa Mesa, CA Addison, TX
Tokyo, Japan Causeway Bay, Hong Kong
Page 13
CONSULTING FIRM DESCRIPTIONS ZS Associates
ZS ASSOCIATES
Interview Process
LIST: Consultant (second year): List is 100% closed; interviews off-Grounds
Summer Associate (first year): List is 15 closed slots, 5 open slots; first-round interviews
are On-Grounds and callbacks occur the same day for final round the next day.
INTERVIEWS:
Summer Associate:
First Round consists of one 30-minute interview with one case and some behavioral
questions. Final Round takes place the day after, off-grounds, and consists of two 40-
minute interviews, one behavioral and one case-based, and a presentation.
Consultant: First Round consists of two 45-minute interviews, one behavioral, one case-based.
Final Round consists of four 40-minute interviews, two behavioral and two case-based,
and a presentation in the candidate’s desired office.
The Organization
About 80% of clients are in the pharmaceutical and health care industries, and ZS also works with clients in
the consumer products, durable goods, financial services and publishing industries. The company is
privately held by a group of Managing Directors and Principals.
ZS has carved an attractive niche in the consulting industry based on a unique combination of
competencies: implementation-oriented methodologies, quantitative analysis skills, focus on marketing and
sales issues, and expertise in selected industries. Client projects range from long-term strategy studies for
senior management to the development of customized micro-marketing systems that enable front line sales
personnel to achieve a lasting competitive advantage.
Unlike many consulting firms, much of the project work is done in-office rather than at the client site. On
average, new consultants travel approximately three to five days per month, which contributes to the team
environment within the firm.

ZS Associates has six corporate offices: Evanston, IL; Princeton, NJ; Menlo Park, CA; London, UK; Paris,
FRA; Frankfurt, GER.
ZS focuses on sales force and marketing decisions, but Consultants are not placed in defined practice
groups. ZS prefers to provide broad exposure to a range of projects; practice areas include: sales force
sizing, team structure, geographic deployment, resource allocation, selling process design, compensation,
sales force automation and DSS, performance evaluation, micro-marketing, business unit design, customer
segmentation and valuation, forecasting and market research.
Miscellaneous
Further information about ZS Associates, its work and the recruiting process can be found at the firm’s
Web site: www.zsassociates.com.
Page 10
CONSULTING FIRM DESCRIPTIONS Off-Grounds Firms
Off-Grounds Consulting Firms
Not all consulting firms recruit at Darden, but many who don’t may nevertheless consider Darden students
for intern and full-time positions. The section below is an introduction to several firms who do not recruit at
Darden but which may fit your post-MBA goals. Please note that this is not by any means an exhaustive
list, and that further research via career guides and the Internet is warranted if you’re interested in finding
an off-grounds firm that suits your talents.
Arthur D. Little
Background: A.D. Little is a $630 million strategy and information technology consulting firm, with
headquarters in Cambridge, MA. The company currently has 2400 professionals
worldwide.
Approach: A.D. Little is an across-the-board consulting firm – they do strategy work, operations
redesign, information and technology management, organizational change, and risk
assessment, to name a few areas. Primary industry groups include automotive, chemicals,
consumer goods, financial services, health care, public sector, energy, media and
information, telecommunications, and utilities.
Locations: Arthur D. Little has 50 offices worldwide, including 12 in North America. Please visit
www.adlittle.comfor details.
Recruiting: The first step in the recruiting process is a phone screening interview, followed by a face-
to-face meeting in the respective office. Although no deadline is currently given, submit
resumes as early as possible. Contact Susan G. McDonald, Arthur D. Little, Acorn Park,
Cambridge, MA 02140-2390. Email careers@adlittle.com.
Marakon Associates
Background: Marakon is a $100 million CEO strategy consulting firm, with headquarters in Stamford,
CT. It currently has 250 consultants worldwide.
Approach: Marakon is a high-level strategy firm that specializes in working with client CEO’s and
upper management to create shareholder value, via use of Marakon’s proprietary value
creation model. Their integrated approach emphasizes strategy, finance, organization, and
change management. Because of their exc lusive focus, Marakon ranks in the top five in
the industry in revenue per consultant.
Locations: Stamford, CT; Chicago, San Francisco, London, New York.
Recruiting: Marakon has 9 target schools but also interviews Consultant and Summer Associate
candidates from other schools. The firm plans to hire about 30 Summer Associates in
2001. The interview process is a combination of case and behavioral sessions with a
Partner and a Manager. Contact Melissa Conte at (203) 978-6881.

Page 15
Mercer Management Consulting
Background: Mercer is a $350 million strategy consulting firm, with headquarters in Washington, D.C.
It currently has 1200 professionals worldwide.
Approach: Mercer summarizes its approach to strategy consulting as an “outside-in” model; i.e. they
start by examining the shifts in customers’ priorities rather than with an analysis of their
clients’ current capabilities. Their most recent intellectual capital is detailed in separate
web sites, including www.profitpatterns.com and www.valuenets.com. These sites offer
30 strategic patterns that Mercer believes drive value-added growth for clients and
Mercer’s viewpoint on the future of digital business design, respectively
Locations: Mercer has 20 offices worldwide. Please visit www.mercermc.comfor details.
Recruiting: Mercer plans to hire roughly 50-60 MBA Summer Associates in 2000-2001. The resume
submission deadline for MBA second-year students is October 1, and the submission
deadline for summer internship positions is December 1. For information on the Summer
Associate program, visit http://recruiting.mercermc.com/ or contact Dana Grube, MBA
Recruiting, Mercer Management Consulting, 2300 N Street NW, Washington, DC 20037.
Monitor Group
Background: The founders of Monitor trace their roots to Harvard Business School, where the majority
studied and taught in the 1980’s. Fro m its beginning, Monitor has offered a portfolio of
services to clients. Monitor’s foundation in corporate and competitive strategy has since
expanded to include marketing strategy, operations analysis, systems dynamics and
corporate finance, among others. These concentrations have led to the group company
approach of Monitor Group. There are approximately 1,000 professionals worldwide and
the private firm is headquartered in Cambridge, Massachusetts.
Approach: Monitor emphasizes its academic roots, a meritocratic and customized approach to
professional development, a unique atmosphere and close-knit, long-term relationships
with clients.
Locations: Monitor has 26 offices worldwide. Please visit www.monitor.comfor details.
Recruiting: Monitor will hire approximately fifteen MBA Summer Consultants in 2001 and
approximately fifty full-time consultants world-wide. There is no fixed resume deadline
for summer MBA internships or second year MBA full-time positions. For information
on Monitor’s Summer Consultant program or full-time employment, contact Kate Martin,
Monitor Group, Two Canal Park, Cambridge, Massachusetts, 02141.

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Towers Perrin
Background: Towers Perrin is a $1.2 billion strategy, human resources and organizational consulting
firm, with headquarters in New York. It currently has 6200 professionals worldwide.
Approach: The Strategy & Organization (S&O) group is the main management consulting arm of
Towers Perrin. S&O is focused on four functional areas: strategy, organizational
performance, sales management, and HR transformation. Nine industry groups are
currently served, with plans to expand to 15-20.
Locations: Towers Perrin has 78 offices worldwide, including 25 in the U.S. Please visit
www.towers.com for details.
Recruiting: The S&O Group recruits summer MBA consultants on a regional basis within the U.S.;
therefore, Darden students would usually be reviewed by the New York office listed
below. For information on interviewing with other regions or countries, please visit the
Web site. Contact Stacey Tinsley, Eastern Region Recruiting Coordinator, Towers Perrin
General Management Services, 335 Madison Avenue, New York, NY 10017. Email
tinsles@towers.com.

Page 17
CONSULTING FIRM DESCRIPTIONS Related Firms
Related Firms
It’s a simple case of supply and demand – not everyone who wants a consulting internship or full-time
position will be able to get one. There is a higher level of interest in consulting among MBA’s than ever
before, so it’s wise to consider some other alternatives in case consulting does not work out immediately.
Fortunately, there are non-consulting companies which offer a prospective consultant the “next -best thing”,
as well as the strong background to perhaps transition into consulting in the near future.
This section introduces some companies that we believe may prepare you well for a potential future in
consulting, and/or who will offer consulting-type work. In addition to contacting and practicing for
consulting firms, we advis e you to examine this list and develop your own group of target companies. Not
only will you be developing a contingency plan for recruiting, but you may also gain a better idea of where
exactly your interests lie.
Capital One
Background: Capital One is an information-based strategy firm, sometimes referred to as a

“non-consulting consulting firm” because of their analytic approach to strategic
and operational business problems. Their strategy is to enter any business that
allows them to capitalize on their core strengths: tremendous databases of
consumer information, an unmatched ability to use that data towards customized
information products, and strong direct mail capabilities. The two key resulting
products have been credit cards (their core business) and cellular phone service.
Capital One’s recruiting material states that “Business Analysts… are needed to
apply their experience in consulting and financial, operational, strategic and
statistical analysis to lead decision-making within their business units.”
Offices: Vienna, VA (headquarters); Richmond, VA; nine regional centers throughout

the U.S. and U.K.
Recruit On-Grounds? Yes.
The Corporate Executive Board
Background: Best described as a for-profit corporate think tank, the Corporate Executive
Board serves over 1,300 multinational corporations on management and
economic issues. Specifically, the CEB gathers data across their member
organizations, analyzes management best practices and cutting-edge ideas, and
publishes major studies and customized research briefs. Unlike other
consultants, it specializes in assessing broad trends in an entire industry’s
structure and direction. MBA positions at the CEB primarily fall into marketing,
management research, and business development.
Offices: Washington, DC (headquarters); London
Recruit On-Grounds? No. Contact Corporate Executive Board, 2000 Pennsylvania Avenue NW,
Washington, DC 20006.

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CONSULTING FIRM DESCRIPTIONS International Recruiting
International Student Recruiting
International Students Wanting to Work in the U.S.

• Apply through regular on-campus recruiting schedules and procedures. It is advisable to check with the
company recruiter whether they will take international summer interns, or sponsor international
students for full time employment. In our experience, the larger multi-national consulting firms are
usually happy to take international students providing they can show some commitment to a medium-
term stay in the U.S. This is often also the case with summer internships. Companies generally like to
employ interns in an office where they would like to work full-time.
International Students Wanting to Work in their Home Countries

• Check on a company-by-company basis BUT the usual procedure for the larger companies is that you
will not interview on campus. The consulting companies all come over to the East Coast in November
(for full time) and January (for summer interns) to recruit for their regions/countries.
• You will need to contact the correct recruiter for the region you are interested in. DO NOT apply
through on grounds recruiting unless the company specifically requests it.
• It is not always the case, but you should expect to need language skills and work authorization for the
country that you would like to work in. This is particularly true for summer internships (although there
are exceptions).
• Tip: If we have alumni in the country office of your choice – contact them! On the whole you will find
that this will help your resume ‘stand out’ or leap to the top of the pile. Alumni are particularly gung-
ho about recruiting Darden students for International Offices. Note – even if we don’t – contact one
here in the US and see if they know anyone in that particular office that you can talk to.
• This summer we had international summer interns work in international offices of Booz Allen and
BCG respectively. We also had US students work in international offices. Chat with them about their
experiences.

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RECRUITING STATISTICS
This section includes the statistics from the class of 2001’s first year recruiting experience. Please note that
these results represent one year’s experiences and that the statistics for the class of 2002 will invariably be
different.
Career Services supplied the First Round interview information and the actual number of interns that
worked at a given firm.
Overall, 24% of the Class of 2001 went into consulting for the summer. Of this group there are some
noticeable trends. First of all, the number of interns at the Big 5 professional services firms (PwC,
Andersen, Deloitte, E&Y, KPMG) dropped significantly fro m the previous year. This trend does not look
to be reversed this year with PwC dropping their plans for interviewing on grounds.
Fortunately, where the Big 5 internships declined several boutiques and global strategy consulting firms
substantially increased their recruitment of Darden interns. Bain hired 8 interns last year compared with 2
the previous year. BCG hired 10 interns (5 internationally) from the class of 2001, up from 2 the previous
year. Additionally, Mainspring, Monitor, and Mercer all hired interns from Darden.
Finally, it is important to note that while not always the case there is usually a greater demand for
internships in consulting than there is supply of internship opportunities. This imbalance shifts when
applying for full-time jobs, but one way to really improve the likelihood of receiving a consulting
internship offer is thorough practice of case interviewing.
Obviously, there is no guarantee that these firms will hire the same amount of students as last year. The
offers given are a function of the firms’ needs as well as the qualifications and preparedness of the students.

Page 20
Summer 2000 First Round Interviews

Interns in Interns in
Firms Closed Open Total 2000 1999
Alliance Consulting 7 3 10 0 0
Group
Arthur Andersen 10 4 14 1 1
A.T. Kearney 20 20 40 7 3
Bain 8 2 10 6 2
Booz Allen & Hamilton 20 20 40 8 7
Boston Consulting Group 12 36 48 10 2
Cambridge Associates 5 5 10 0 0
Deloitte Consulting 40 0 40 1 13
Diamo nd Technology 9 3 12 2 2
Ernst & Young 15 5 20 4 6
McKinsey 30 10 40 4 3
marchFIRST 21 9 30 2 1
PricewaterhouseCoopers 32 10 42 1 9
PRTM 10 10 20 3 1
ZS Associates 16 5 21 2 2
Off-grounds consulting interns: Mainspring (1), Mercer (1), Monitor (1), Value Partners (2).

Page 21
CONSULTING BRIEFINGS
Briefings Tips
Corporate briefings seem to start earlier each year, and concurrently they gain greater importance each year. Why?
As more companies recruit on grounds, briefings become one of the few ways to easily compare companies and, of
course, to get answers to those considerations which are most pertinent to you. In many cases, it is also the best
pre-interview opportunity to network with senior managers from the firm.
Clearly, a briefing is more than just a free lunch. So how do you make the most of the briefing experience? Here
are a few tips.
1. Do your homework.
Although briefings are intended to provide you information, a bit of research beforehand will go a long way.
Information about company strategy, office locations, new trends, etc. is easy to find and gives you leverage in
both briefings and interviews. It affirms your interest in a firm and helps you differentiate yourself as a qualified
applicant. Plus, it eliminates the chance of asking stupid questions in front of firm managers and 120 of your peers.
2. Pay attention.
Sounds obvious? Not quite. Pay attention to the subtle differences in the perspectives of various people in the
company – this may give you insights into differences between organizational levels, or the culture at different
offices. Most importantly, try to get a sense of organizational culture and fit: do the people in the firm have
personalities and working styles that fit well with your own? This is the most overlooked part of finding the right
job, and a briefing is often your best chance to gauge this. Take advantage of the opportunity.
3. Use the power of business cards.
Identify a person or two from the firm who best match your interests or who can best answer your question. After
the briefing, talk to them and ask for a business card, and if applicable give them your card as well. After you talk
to them, write down some succinct notes on the back of their card about the person and your conversation. It’s a
simple, portable way to solidify issues and answers that you’ll otherwise soon forget. And the next time you run
into the person (and you inevitably will), you’ll be better able to hammer home your interest in and knowledge of
the firm.
4. Be able to answer a few key questions.

By the end of the briefing, you should know: Where does this firm believe the industry is heading? What is this
firm’s strategic position in the market? What sort of position can I expect to enter with this firm? What are the
skills this firm most values? If these issues aren’t addressed by your research, the briefing or written materials,
make sure to ask.
5. Act in a professional manner.

A briefing often brings out the worst in MBA behavior: angling for position, being loud, and surfing the Net, to
name a few. Firms notice your behavior and attitude. A firm last year asked a student the name of the guy in the
third row who was paying more attention to his laptop than their presentation. Incidentally, the offender didn’t
make the closed list. Be polite, respectful, and positive.
6. Diversify, but don’t overload.

As a first-year, even if you’re sure you want to do consulting, go to a few briefings for financial services, general
management, and brand management firms. This helps in making an informed decision about your fit with
consulting, and whether other types of work may interest you as well. And knowledge about industry leaders is a
valuable asset for management consultants. However, bear in mind that your time in the First Year is extremely
limited, so don’t try to make every briefing. If you can’t attend a briefing because of other commitments, there’s
sure to be someone else attending who can take notes for you.

Page 22
SAMPLE LETTERS Cover Letter
RAY S MITH
241 Ivy Road #8 • Charlottesville, VA 22903 • Tel/Fax (804) 965-2318 • SmithR@darden.gbus.virginia.edu
October 19, 1999
Mr. Tom Jones

Managing Consultant
Old Ivy Consulting
123 Hampton Road
New York, NY 10017
Dear Mr. Jones:
Thank you for meeting with me during your recruiting visit at The Darden School on behalf of Old Ivy
Consulting.
Old Ivy’s core products offered in the areas of Strategic Services and Performance Improvement align well with
my immediate career goals. I am interested in a consulting firm that will capitalize on my entrepreneurial spirit
and skill set as well as my extensive background in the utility industry. I am also looking for a firm that prides
itself on maintaining a highly energized and diverse professional staff. Organizations that value diversity provide
a platform from which employees can propose and implement creative business solutions.
Please accept this letter as a formal expression of my interest in Old Ivy Consulting. I look forward to hearing
from you soon.
Sincerely,
Ray Smith
Darden ‘98
Page 23
JOE STUDENT
21 Arlington Blvd. #8 • Charlottesville, VA 22903 • Tel (804) 965-2318 • js9p@virginia.edu
122 Tintern Court

Charlottesville, VA 22901
November 29, 1999
Big Consulting Company

Ms. Corporate Recruiter
Fourth Union Capital,
Suite 1800
P.O. Box 2778
Raleigh, NC 27602-2778
Dear Ms. Recruiter,
As a first year student at The Darden School, I participated in the Consulting Club event sponsored by Big
Consulting Company on January 23 and 24. I enjoyed myself immensely and would like to express my interest in a
summer internship with your company.
I enjoy working on innovative solutions to business problems. Most recently, I served as Project Manager for XYZ
Corporation, where my responsibilities included setting corporate strategy for electronic commerce and managing
projects related to customer returns, pricing administration, customer requirements compliance and Electronic Data
Interchange. A large part of my job involved targeting new electronic trading opportunities, making
recommendations to executive management and managing the implementation of selected projects. I believe that
the analytical and project management skills I have acquired during my career would enable me to provide value to
your company as an intern.
I have enclosed my resume for your review. I understand that Big Consulting Company will be recruiting here at
Darden on February 25, 1997 and would appreciate the opportunity to be on your closed interview list. I look
forward to discussing potential opportunities with Big Consulting Company.
Sincerely,
Joe Student
enclosure
Page 24
122 Tintern Court

September 20, 1997
Ms. HR Specialist
ABC Consulting
225 Peachtree Street, Suite 1000
Atlanta, GA 30303
Ms. Specialist,
I enjoyed seeing you again at dinner and during the ABC Consulting briefing at Darden. It was great to meet
some more people and get a broader picture of the organization. After my summer experience with Big
Consulting Company, I remain strongly interested in ABC Consulting Strategic Services and in particular the
Operations Strategy group.
I have enclosed my resume for your review. Please include me on the interview invitation list for your
November 11, 1997 Darden recruiting schedule.
I appreciate you taking the time to recruit at Darden, and look forward to discussing potential opportunities
with ABC Consulting.
Sincerely,
Joe Student
enclosure
Page 25
SAMPLE LETTERS Thank You Letter
122 Tintern Court

February 17, 1997
Mr. Darden Alumni

ABC Consulting
Suite 1000
225 Peachtree Street, N.E.
Atlanta, GA 30303
Dear Mr. Alumni,
Thank you for taking the time to recruit at Darden. I enjoyed meeting with you and learning more about ABC
Consulting. I was disappointed to learn that I was not selected for a summer internship, but remain strongly
interested in your company from a long-term perspective. I’ll be interested to hear what type of solution you work
out with the utility company we discussed during the case interview.
Thank you again for the opportunity to interview and for choosing to recruit at Darden. I look forward to discussing
permanent opportunities next fall.
Sincerely,
Joe Student
Page 26
SAMPLE LETTERS Thank You Letter
122 Tintern Court

February 6, 1997
Mr. Professional Recruiter

PO Drawer 1734
Atlanta, GA 30301
Mr. Recruiter,
Thank you for taking the time to recruit at Darden. I enjoyed meeting with you and learning more about summer
opportunities with Big Consulting Company. At this time I’d like to re-state my interest in your company both for
the summer and in the long term. I am looking for an opportunity to contribute and learn and believe that the
analytical skills I have acquired during my career would enable me to provide value to the Operations practice as a
summer intern. The technology projects you mentioned sounded quite interesting and would be a natural extension
of the work I enjoyed prior to Darden.
Thank you again for the opportunity to interview and for choosing to recruit at Darden. I look forward to hearing
from you regarding potential opportunities with Big Consulting Company.
Sincerely,
Joe Student
Page 27
SAMPLE LETTERS Acceptance Letter
122 Tintern Court

March 16, 1997

Mr. Recruiting Partner
Suite 1800, First Union Capital Center
150 Fayetteville Street Mall
P.O. Box 2778
Raleigh, NC 27602-2778
Dear Mr. Partner,
After careful consideration, I am delighted to accept the offer of summer employment extended by you on behalf of
Big Consulting Comp any at the terms stated in the offer letter.
I will be available to start work on May 19, 1997 and will follow up on related details with the HR department
during or prior to my Atlanta office visit on March 21.
I look forward to a challenging and rewarding relationship with Big Consulting Company. Thank you for the great
opportunity!
Sincerely,
Joe Student
cc: HR Department, Atlanta
Page 28
BEHAVIORAL INTERVIEW Questions
Behavioral Interviews
Anxiety over the case interview can cause you to overlook the behavioral interview, which is often the first gateway
into a firm. The following information may help you prepare for the behavioral interview. In addition to a list of
possible behavioral questions, we have included suggestions gleaned from consulting interview workshops:
Suggestions
• There are three general types of questions that are usually asked in a non-case consulting interview: Fit,
Resume, and Behavioral/Situational.
• Most interviewers will use your resume as a script for the interview – know your resume inside and out.
• The interviewer wants to discern your typical behavior patterns and find repeated evidence of behavior traits
considered important for the position. They will use this evidence as a proxy for future behavior.
• You must know yourself and what you want.
• Thoroughly understand both what is said and what is unsaid on your resume.
• You must be knowledgeable about the firm as well as the requirements of the position.
• You must be able to organize your thoughts and answer questions in a concise and thorough manner.
• Find out why people like the firm by talking to their Darden alumni and the second years who worked there
as summer interns.
• Be concise and don’t ramble.
• Stress your role in any achievements.
• Develop an interview agenda that includes your most important relevant traits and accomplishments.
• Try to cover the agenda items not covered during the interview in a brief closing statement.
• Prepare for the interviews as you would for an MC presentation.
• Keep the interviewer interested with concise 2-3 minute answers to most questions.
• Always give specific examples in the answer to very broad questions
• Ask good questions at the end of the interview but don’t ask questions that you should already know the
answer to.
Behavioral Questions
Fit With Consulting:
1. Why are you interested in our firm?

2. Why do you want to be a management consultant?
3. What would you like most about being a consultant?
4. Name 3 reasons you stand out from all of your talented classmates who also want to work in consulting.
5. How does a job with our consulting firm fit into your long-term career plans?
6. What would be the biggest challenge to you about consulting? The biggest reward?
7. How would you feel about being a small fish in a big pond?
8. What do you think about spending a lot of time on the road?
9. Can you work under pressure and how do you handle tension?
10. You have been given a project that requires you to interact with different levels within the company. How do
you do this? What levels are you most comfortable with?
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11. With your background and your interest in consulting, why don’t you have more academic honors?
12. Have you had any contact with people working as consultants with our firm?
13. What do you forecast for our firm/industry in the future?
Job before B-School:
1. What’s the most interesting business problem you’ve faced in a previous job?
2. What did you like/dislike most about your last job?
3. Tell me about the last time you felt anger on the job.
4. What are some of the things about which you and your supervisor disagreed?
5. How did your boss get the best out of you?
6. What have your other jobs taught you?
7. Tell me how you moved up through your last employer’s ranks.
8. What type of decisions did you make on your last job?
9. In your last job what were some of the things you spent most of your time on, and why?
10. In what ways has your job prepared you to take on greater responsibility?
11. How did you make a difference in your last job (or in college)?
12. Why did you choose your previous field?
13. What did you like or dislike about that field? (especially if you’re changing fields after B-school)
14. What did you learn from your previous job(s) that you could apply to this position?
15. What did you think of your last boss?
16. You had a great job. Why did you quit? Are you sure you will not go back?
17. In what ways did your previous job (or summer internship) challenge you?
18. Tell me why you changed jobs before B-school. (If applicable)
Choice of Schools:
1. Why did you decide to attend Darden?

2. Why did you decide to attend a case school for graduate study?
3. We tried to hire people from your school before and they never seem to work out. What makes you different?
4. I’d be interested to hear about some things you learned in school that could be used on the job.
Summer Job:
1. Tell me about your summer.

2. Were the recommendations you made to your summer employer adopted?
3. You had a great job. Why did you quit? Are you sure you will not go back?
4. If you come work for us this summer, what will be your greatest challenge?
Miscellaneous:
1. What are your top 3 strengths and weaknesses?

2. What is the most difficult thing you have ever had to do?
3. Why should I invite you to a party?
Page 30
4. Discuss the most important event in your life.

5. Have you done the best work you are capable of doing?
6. How long would you stay with the company?
7. How long would it take you to make a contribution to our company?
8. What are your biggest accomplishments?
9. How do you organize and plan for major projects?
10. What would your references say?
11. How do you take direction?
12. Tell me about yourself.
13. What kinds of things do you worry about?
14. How have you benefited from disappointments?
15. With hindsight, how could you have improved your performance?
16. What kinds of decisions are most difficult for you?
17. Are you willing to take calculated risks when necessary?
18. See this pen I’m holding? Sell it to me.
19. What is the worst thing you have heard about our company?
20. I’m not sure you’re suitable for the job.
21. Wouldn’t you feel better off in another firm?
22. What would you say if I told you your presentation this afternoon was lousy?
23. What do you think are the most important skills a manager must posses?
24. Why was your internship successful?
25. Tell me about something in college or a previous job that you didn’t like and what you did about it.
26. Where would you rank yourself…top 10%, 20%, or where?
27. Based on what you know about our firm’s opportunities, does Darden prepare you well? How well?
28. Why should we hire you when there are so many people at Darden with better grades and more experience?
29. What was your biggest disappointment personally or professionally?
30. Who are your role models? Why?
31. Why should I hire you?
32. Who else has made you offers? Who else are you interviewing with?
33. What is your job search strategy?
34. Are you aggressive? Can you take a tough stand? When have you been either tough or aggressive?
35. Why did you major in ______ in undergraduate school?
36. What questions of yours can I answer?
Example/Situation
1. Tell us about a time when you failed and what you learned from the experience.
2. Describe a situation where your work or an idea was criticized.
3. Have you ever encountered a situation in which you were wrong? What did you do to correct your answer?
4. Give me an example of when you led a team to achieve a major goal.
5. Give me an example of when you had to sell one of your ideas.
6. Give me an example of when you had to make a major presentation.
7. Give me example of when you had to confront a co-worker/teammate about performance.
8. Give me example of when you received negative feedback and how you handled it.
9. Give me example of when you applied your technical knowledge to solve a problem.
10. Give me an example of when you came up with an original idea.
11. Give me an example of when you learned something new and applied it to solve a problem.
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12. Give me an example of how you have worked with a difficult person.
13. Give me an example of when you had to lead without authority.
14. Give me an example of when you took a risk.
15. Give me an example when you showed initiative.
16. Give me an example of when you demonstrated creativity.
17. Give me an example of when you worked effectively with upper management.
18. Give me an example of when you had to sift through a large amount of data to perform an analysis and make
a recommendation.
19. Give me an example of when you were involved with a team project that didn’t go in the direction you
wanted it to go in and tell me what you did to correct the situation.
20. Describe a difficult problem you’ve had to deal with.
21. What would you do when you have a decision to make and no procedure exists?
22. Tell me about a difficult situation where you had to rely on your communication skills.
Leadership/Teamwork
1. What things have you done to demonstrate your leadership abilities?

2. Describe a team project you’ve worked on recently.
3. What role do you usually play on teams?
4. What role do you play in your learning team?
5. How would your learning team describe you?
6. What kinds of people do you like to work with?
7. What kinds of people do you find it difficult to work with?
8. How have you successfully worked with this difficult type of person?
9. What is an example of an experience in which you took on a leadership role?
10. How have you demonstrated initiative?
11. How would you define your leadership style?
12. What are some key lessons you have learned about motivating people?
13. How do you get along with different kinds of people?
14. How do you motivate people to do things they don’t want to do?
15. Do you prefer working with others or alone?
16. How would your peers describe the way you interact with other people?
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CASE FRAMEWORKS Summary
The Case Interview
The case interview is an opportunity for the Firm to see how you think through a problem and make
recommendations. The case part of the interview usually lasts around 30 minutes, although firms vary. The best way
to find out exactly what to expect from each firm’s process is to attend any case workshops they may be conducting
on grounds and/or ask their recruiting coordinator. Failing that, find a second year who interviewed with that firm
last year and ask them to outline for you the interview process.
The AT Kearney workshop slides are available on the website and are a very good summary of how to approach a
case interview, although be wary of firm specific differences. Our top three tips for case interviews are:
• Practice
• Practice
• Practice
But beware, the next few pages will cover “frameworks.” These are crucial tools for the case interview, but above
all the interviewer wants to have a conversation with you which is an intelligent discussion of a business problem
and recommendations for how to solve it. The interviewer does not want you to regertitate the profit formula (or
any other framework.) Use the frameworks as a mental checklist that you have covered all the areas of the problem,
and a way to organize your thinking.
The interviewer will give you a business problem scenario, often one that they are currently working on. They will
take about three minutes to set the scene:
e.g. “I am working with a client at the moment who is an auto dealership consolidator. They own about 40
dealerships across seven states, mainly in the South. We have already undertaken a segmentation analysis of their
existing customer base and found that the average profit on both a new and used car purchase is $1,000. We have
also found that the top 30% of their customers contribute 70% of all profits. The client is seeing its profits eroded.
What recommendations would you make to the client to boost profitability?”
The interviewer will expect you to paraphrase the question to check your understanding of what they are asking, and
clarify any points you are still unsure of. Then feel free to take a couple of minutes to gather your thoughts, they will
expect you to be using pen and paper and writing notes. This is not just a brainstorming session, organize your
thoughts and the areas you want to cover into headings. These headings are often the framework components, but
NEVER force fit a framework. Then start the conversation.
Why do I need a framework?

A framework can help you "structure" your thoughts during a case interview so you don't confuse yourself and miss
something basic to the problem. It's much better to cover all the basics and get the solution wrong than to miss a
simple but important part of a problem and get the solution right, even if the part you missed isn't the biggest factor
in the solution. Interviewers want to see that you can structure your thinking, explain it to them, and be able to draw
a defensible solution from your reasoning.
A framework can also help you avoid the "20 Questions" mistake. You will lose points by asking a series of
seemingly unrelated questions and then popping your answer out at the end. If you're brilliant (or you knew the
Page 33
answer from prior experience), you might impress your interviewer with your intelligence, but you will lose points
on the "structured thinking" scale.
What is a framework?
Each frame work includes some kind of model of the business issues at hand and an implied logic leading to a set of
business conclusions. The model is, in turn, composed of a list of things to think about and a set of relationships
between those things. For example, one of the most often used, basic, and useful models is the profit framework, a
simplified form of the income statement. If your interviewer asks, "Our client would like you to help him figure out
why profits are down," you can reply by building the profit model and applying the logic.
The profit framework includes the following parts:
The (Simplified) Profit Model
Elements
Profit, Revenue, Price, Volume, Cost, Fixed Cost, Variable Cost, Raw Materials, Direct Labor, Shipping & Selling,
Overhead
Relationships
Profit = Revenue - Cost
Revenue = Price x Volume
Cost = Fixed Cost + Variable Cost
Variable Cost = Raw Materials + Shipping & Selling
Fixed Cost = Overhead + Direct Labor (sometimes this is variable or semi -fixed)
The Implied Logic of the Profit Model

Businesses want to maximize their profit. To do so, they must maximize revenue while minimizing cost.
Maximizing revenue requires maximizing price and volume. Minimizing cost requires minimizing Fixed Cost and
minimizing Variable Cost, etc.
If a business has seen a change in profit, find out which of the parts changed, starting at the top level of Revenue &
Cost and working down from there.
When do I use a framework?

McKinsey outlines 5 steps in their advice on handling consulting interviews see slides on the website:
Step 1. State the problem (usually done by the interviewer).
Step 2. Disaggregate the issues.
Step 3. Eliminate all non-key issues.
Step 4. Conduct critical analysis, alternating between data and hypotheses.
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Step 5. Synthesize findings and build argument.

Frameworks are particularly useful in step 2, and show up again in step 5. It usually takes more than one framework
to attack a complex case.
How do I use a framework?

First, list on your pad of paper the parts of the model (or just the major ones if you like). This becomes a sort of
checklist to make sure you don't miss something important.
Second, use the logic to work backwards from the question being asked to the relationships and parts of the model
that could affect that issue in the question.
For example, here is a possible use of the profit framework.
Step 1. Interviewer: "Our client is a small manufacturer of plastic cups. He called us in because his
profits are 50% less than last year and he is very worried about the future of his business. How
would you look at this problem?"
Step 2. You: [Applying the Internal-External framework] "First I'd want to know if the problem is with the
company or the industry. Have profits dropped across the plastic cup making industry?"
Interviewer: "No, his competitors seem to be doing fine."
Step 1 again. You: "Then the problem is internal to the company. We need to look for the drivers of profit that
changed in his company."
Step 2 again. You: "I'd like to look at the various revenues and costs to see where the problem might be. How
have revenues and costs changed over the last year?"
Interviewer: "Revenues are flat or slightly up, but costs have risen."
You: "Have fixed or variable cost increased?"
Interviewer: "He's not sure which of his costs are fixed and which are variable."
[Here you push down a level and adapt the framework to the problem at hand.]
You: "I would imagine that the major cost components in this business would be labor, raw
materials like plastic and coloring, shipping, utility bills, depreciation on the machinery,
marketing, rent, and managers' salaries. In this situation, raw materials and shipping are probably
the only variable costs. How have these costs changed?"
Interviewer: "Shipping has gone up 100%. Everything else is pretty close to last year's figures."
How do I use a framework? (continued)
Step 3. You: "Then it seems we can rule out revenue and fixed cost, and we should focus on the shipping
part of the variable cost."
Step 4. [The conversation continues as you analyze the drivers for shipping cost and find that shipment
sizes dropped as customers try to hold less inventory.]
Interviewer: "Great job. We only have a couple minutes left. Can you summarize what we have
discussed and what we should do as a case team going forward?"
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Step 5. You: "Sure. We looked at the various components of his profit and found that the most significant
change was a large increase in shipping cost due to smaller and more frequent orders. It seems
that he will have to either pass on these costs to his customers by increasing prices with a volume
discount, changing the way he bills for shipping, or finding a cheaper way to ship the product in
small volumes. We should look deeper into the shipping patterns to see which of these options
looks best in the short and long term."
You might apply a second framework to the results of your analysis with the first one, thus chaining them together.
In the example above, you might have discovered that the loss in profits was due to reduced sales volume. If you
were to determine that the company needed a better marketing plan, you could apply some of the frameworks from
marketing to figure out what to do. Remember that the question asked is often not the answer needed (i.e. sought by
the interviewer).
Warning
Don’t use a framework that you don’t understand well enough to explain to someone with an example. You’re likely
to make a mistake and/or show your ignorance.
First Years will have studied some but not all of the frameworks presented here by the time they interview, though
most of them are covered by the end of the year. If you don't understand a framework, get a Second Year to explain.
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FRAMEWORKS Overview
Overview of Frameworks
Framework Questions Answered1 Type of Case
Profit • Source of financial difficulty • Profits are down
• What would happen if I did X in
my existing business
Costs vs. Benefits 2 • Why should client do/not do X? • Any decision involving existing
choices
Internal Factors - • Why should client do/not do X? • Almost any case
External Factors • What would you expect the result of action X
to be?
Value Chain • Where is the most value being added? • Compare two providers of a
• What are the economics built into a service: e.g. existing firm vs.
product/service? start-up
• Where should we focus our cost reduction
efforts?
Five C's • What options are available to me and my • Strategy, Marketing
competitors in a given market?
STP& the 4P's • How do we introduce a new product? • Marketing
Porter's Five Forces • Is this an attractive industry/market to be in? • Industry Analysis
• Do I have a sustainable competitive
advantage?
• What are the major forces trying to reduce
my profits?
Industry Attractiveness • Why should(n't) we be in a market? • Business Expansion
- Competitive Position • Which divisions in our company should we • Cash Management in a
Matrix invest in? Divest? Harvest for cash? Diversified Corporation
(generalization of the
Growth-Share Matrix)
Porter's Diamond • Is country X attractive as a base of • Country Analysis
operations?
Manufacturing • What should we focus our manufacturing on • Manufacturing/Marketing
to competitively satisfy the market? problems
The brief framework write ups that follow do not include EOQ, Supply-Demand, NPV, or any of the other dozens of
tools you might use in class because these are not frameworks in that they don't help you break down the problem.
We have included only a few of the most generally applicable frameworks here, though you may encounter others
that you find useful.
Recommendation: If you have time, read The 10 Day MBA, which was written by a Darden grad. It covers a lot of
tools, frameworks, and basic ideas from a generalist perspective - and isn't that what Darden is about, anyway?
1
Note that every framework attempts to answer the question, "What are the major factors to consider in this case?"
2
Not much to say about this one - you've been doing it since high school. It has no write up here.
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FRAMEWORKS Types
The Profit Model Framework
Profit Model
Profit
(Maximize)
Revenue Cost
(Maximize) (Minimize)
Price Quantity Mix Producing Cost Overhead
Fixed Variable SG&A Interest
Labor Raw Materials
Depreciation Shipping
Energy
Note: Usually the point of a business is not just to generate profit, but return on invested capital. I may think making
$1,000,000 a year is great until I consider that I invested $50,000,000 to get it (2% return).
Expanded Profit Model
Return on Invested Capital

(Maximize)
Profit Invested Capital

(Maximize) (Minimize)
Net Assets
Net Working Capital Fixed Capital

Cash + A/R + Inventory - A/P PP&E
Cash
Accounts Receivable
Accounts Payable
Inventory
More info: See 10 Day MBA or a corporate income statement.
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FRAMEWORKS Types
Internal Factors - External Factors

This framework may be the starting point for many cases, and it may quickly lead you to another framework.
Internal Factors
Model A: Core Business vs. Overhead

4 Core Business: Marketing & Selling
• OPS: are you efficiently making the thing desired by customers?
• MKTG: are you effectively reaching the customers you need to sell to?
4 Overhead
• ACC/OB: Is your internal accounting system creating inappropriate behavior?
• STR/MC: Is your strategy appropriate? For example, if the market wants low price, are you trying to
compete on quality? (3 generic strategies: price, differentiation, niche) Do the right people understand
what the strategy is?
• FIN: Is your debt/equity mix making your capital expensive? (e.g. interest payments)
• OB: Is there some major trust or corporate culture issue holding you back? (e.g. union & management
fights)
Model B: 7S
The ideal company has a mutually supportive set of 7S characteristics. Structure should support strategy, systems
should support improvement of skills, etc. More info: See 10 Day MBA.
4 The Hard Triangle

• Structure: Organization chart. Divisional boundaries. Vertical vs. flat. Geographic vs. product line.
Functional vs. matrix.
• Strategy: whatever longer term plans the company is trying to execute. This drives operational
decisions. Basis of competition: cost, differentiation, niche.
• Systems: Formal and informal procedures for:
§ Information: gathering, storing, processing, and moving information inside the enterprise and with
the outside world.
§ Materials: moving stuff around
§ Financial: financial controls (e.g. cost accounting system)
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FRAMEWORKS Types
Internal Factors - External Factors (continued)
4 The Soft Square

• Superordinate Goals (usually placed in the middle): What the organization says it is about, usually in a
mission statement. 1) Profit/shareholder value 2) Customers 3) People are usually important elements.
• Style (Culture): "The way we do things around here". Conservative or risk taking? Numbers or gut?
Goal-oriented or process-oriented?
• Staff: HR systems - appraisals, training, wages, motivation, morale, attitude
• Skills: 3M's research ability. GE's ability to grow management talent. P&G's consumer marketing
prowess.
External Factors
4 Industry/Market
• Industry capacity (over/under)
• New products
• Substitutes
• New technologies
• Changes in customers desires
4 Outside the Industry

• Regulation (Government or other body)
• Economy: upturn, downturn (BPE)
• Related industries (e.g. steel price –> car price)
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FRAMEWORKS Types
Value Chain
You must first figure out exactly which part of the chain you are looking at. If we are an automotive supply
company, we own the chain from the bulk purchase of upholstery material, plastic and steel to the delivery of a
finished car seat to GM. We (probably) do not own the chain from raw chemicals through plastic to nylon
upholstery, nor do we own the chain from car seat through car assembly to car sale.
If you want to reduce costs, start by looking at the biggest cost item in the value chain. Below, we should think
about raw materials, assembly of parts, and the three material adaptations. The value chain implies these would be
better targets for cost cutting than packaging the finished goods because they are larger (no one ever said
frameworks had to be complicated - packaging up common sense is largely what consultants get paid to do).
If you want to compare two competitors, think about how the elements of the value chain would be different for
each. For example, a small start-up player in an industry will probably have a higher raw materials cost because
bigger competitors can negotiate lower prices based on volume. The start-up may have lower labor costs, however,
because the workforce hasn't had time to unionize. A company in the same state as the buyers should have lower
transportation cost than a foreign supplier.
Here is a fictional example for a car seat maker:
Price: % of Value Chain for Pallet of Car Seat

$200 price Supplier
40 20% Profit Margin
10 5% Ship to auto factory 1

10 5% Package finished seat for shipment
40 20% Assembly of parts
Adapting Materials :
50 25% Cutting & Sewing Fabric: $20
Welding Steel Frame: $20
Forming Plastic: $10
Raw Materials :
50 25% Upholstery, Steel tubing,
Plastic pellets
You can drawn a value chain for a whole business chain as well (this is the compact form of the value chain, without
the $ amounts): raw iron ore –> basic steel –>steel tubing –>seat frame –>seat –>car. You might say that the most
value is being added in the seat –> car step, so you would expect the most money difference to be there, so we
should expect whoever owns this step (the auto maker) has the most control over this whole chain (which they do).
More info: See 10 Day MBA.
1
Some people might not consider shipping and other logistics costs as part of a value chain because it doesn't add
value that the customer cares about.
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FRAMEWORKS Types
Porter's Diamond
The four sides of Porter’s Diamond all tend to increased a country's ability to compete globally in a given industry
because they all drive innovation. They are usually drawn as a diamond with arrows between each point showing
that they reinforce each other.
1. Factor Conditions
These are the classic factors (land, labor, capital) seen through a new lens:
4 Human resources: how educated & skilled are your people? (Hard to get)
4 Physical resources: gold mines, harbors, farm land ... what kind of investment is needed to yield profit?
4 Climatic conditions: hard to make a buck farming wheat if monsoons come every year
4 Knowledge resources: what do people here know that others don’t (e.g. scientific research at universities)?
These resources are hard to acquire and therefore can be a sustainable competitive advantage.
4 Location: being next to a big consumer or critical mass of consumers, reduced shipping/distribution costs.
4 Capital resources: how much do people save? Is your capital market efficient?
4 Infrastructure: telecommunication networks, highways, ports – can facilitate growth of other industries.
NOTE: Weaknesses in one or two of these can spur the country to work harder. E.g. Japan had limited capital after
WW II, so it worked harder to be efficient with this capital.
2. Firm Strategy, Structure, Rivalry
If firms compete heavily (i.e. reduce profits to compete for market share) they will tend to innovate on cost to try to
capture greater profits. Or if firms are focused on long-term growth rather than short-term profitability, their
competition will have to react to this.
3. Demand Conditions
Sophisticated customers who anticipate global trends are the most demanding. They drive domestic producers to
make the best products, which positions them well to defeat other country's players in non-domestic markets.
4. Related and Supporting Industries
Focus on the industries of suppliers, companies with similar inputs or customers, and buyers.
4 Having the highest-quality, lowest-cost steel producers would tend to make your cars cheaper.
4 Having a world-class fax-making industry will tend to put demands on the electronics parts industry, making
it more efficient.
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FRAMEWORKS Types
Industry Attractiveness – Competitive Position Matrix

This is a generalization of the BCG Growth-Share Matrix.
This is a two-dimensional way to analyze a business, mapping to the following two questions:
1. How attractive is the industry?

4 How fast is it growing? Faster is better.
4 How profitable is it (return on invested capital)? Higher is better.
4 How big is it? Bigger is better (other factors being equal).
2. How competitive are we in this industry?

4 What is our market share?
4 Do we have the leading product technology?
4 Do we have the best operations to provide what the market wants (price, quality, performance, innovation,
etc.)?
4 How do our customers perceive us?
The BCG model used market share as the primary measure for industry attractiveness, based on a strong correlation
they had found between market position and profitability.
McKinsey altered this model by adding a number of other factors for the client to weigh, from legal risk to
technology leadership.
Competitive Strength
High Low
High Star ??
Industry CF:+ or - CF: -
Attractiveness Low Cash Cow Dog
CF: + CF: + or -
Dog: Divest by selling the business or raising prices to reduce market share. Use any cash generated for Stars or
Question Marks.
Cash Cow: Hold by investing to maintain market share. Use net cash generated for Stars or question marks.
Star: Invest cash to expand the business, if needed.
Question Mark: Consider the future of the business: Can we invest to gain a better position in the industry? If so,
invest cash from Dog Balance cash needed going forward to make this a star with cash available. Consider risk that
this business may slip to Dog status if the industry becomes less attractive.
This analysis is normally done on a divisional level but can just as easily be done on a product level by changing
"industry attractiveness" to "market attractiveness".
Note: 2x2 diagrams usually put the most positive or interesting thing in the upper right quadrant. This matrix is
peculiar in that respect (stars in the upper left) because it puts the focus on the question marks.
More info: See 10 Day MBA.
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FRAMEWORKS Types
Manufacturing Order-Winning Criteria

This is from Ed Davis' Operations Strategy class. It can be used for manufacturing or service operations.
There are 6 primary order-winning criteria that a production system can focus on. It cannot focus on them all (as
marketing would have you believe it must). Usually one or two is the maximum. Figure out what your market (or
targeted segment) wants, then focus your production system to get it.
1. Delivery: either being fast at turning around orders or simply delivering on time. The less inventory the
customer holds, the more important this is.
2. Quality: Not Rolls Royce, but Toyota - everything sent to customers is within specifications. Very few or zero
defects in shipped goods. If there is something wrong with your Rolls, they will be happy to come fix it for
you, but Toyota can't afford that so they standardize and tune the production process to the point that it puts out
only acceptable products.
3. Price (i.e. low cost): To the price sensitive customer, everything looks the same so why pay more for any
feature? Commodities have price as their only order-winning criteria. In the past many people assumed that
quality (in this sense) was a trade off with price, but the Japanese car manufacturers proved them wrong.
Delivery, quality and price often go together.
4. Performance: BMW. Any product that does something better than the competition and which customers are
willing to pay for.
5. Flexibility: There are many kinds of flexibility, but this refers to the ability of a production system to adjust to
changing product mix and volume quickly, easily, and cheaply. Cranking out 51 million copies of Elton John's
"Candle in the Wind" for Princess Di in a few weeks required some serious flexibility.
6. Innovation: Mountain bikes, computer hardware, clothes. Production systems that can quickly bring in new
ideas and get them to market faster will win. Note that this is not a measure of how creative the firm is.
Whether the idea came from the outside (competitor, government lab...) or inside (your own R&D, your plant
floor, Marketing...) doesn't matter. A fast follower that copies the leader's innovations and quickly gets them to
market ranks high on innovation.
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FRAMEWORKS Types
Adapted from the Harvard College Guide to Consulting Questions
The 5C’s Method

Another way to solve business problems is with the 5C’s method. The “Cs” stand for company, cost, competition,
consumer, and channels. This is the most elementary method or framework for answering case questions. The
advantage of this methodology is that it allows you to touch on all the key areas. Even if you don’t know a lot about
a particular company, you should be able to seem reasonably intelligent and well organized. However, the 5C’s have
been around for a while and recruiters aren’t particularly impressed with someone who just steps through them. If
you use this framework, punctuate your answer with questions that initiate a conversation, so that your answer
doesn’t seem like a laundry list. (i.e. “A couple of factors I’d like to examine further are the cost structure for this
firm, and the ways in which the company’s products get to market…”)
The 5C’s are:
1. Company
What do you know about the company? What industry are they in? What kind of products or services does
the company offer? What size market share does the company have?
2. Costs
What are their major costs? How can the company reduce them? How do their costs compare with the rest of
the industry?
3. Competition
Who is the competition? How do their products compare to your clients? What advantages or disadvantages
does your client have compared to the competition? What kind of market share do they own?
4. Consumer or Customer
Who are their customers? How well do they know their needs? How well do they handle customer service?
How do they retain their best customers? How do they attract new ones? Who are their competitors’
customers?
5. Channels
How does the company get its product to market? What kind of distribution channels do they use? How can
they increase the number of distribution channels? How much are they costing the client? Is there a better
way to reach their customers/vendors?
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FRAMEWORKS Types
Taken from the Harvard College Guide to Consulting Questions
The 4P’s or The Elements of Strategy

The 4P’s, like the 5C’s, is an elementary framework. It consists of useful points that can inspire thought and
generate conversation. However, as with the 5C’s, if you sound like you are listing off the 4Ps, your answer may be
decent, but you’ll lose points for creative thinking and communication skills - and that’s what consulting is all about.
1. Product
What is the company’s product? What features should it have in order to satisfy the needs of the target
customer? What is the company’s niche? Should the product be high quality or is a basic model called for?
How much will the product cost to design and manufacture? Who will make it?
2. Price
What price are the customers willing to pay? How does the company determine price? How does their price
compare to other similar products?
3. Place
How do they physically get the product to the customer? What distribution channels do they use? Who has
the power in these channels? What distribution channels do their competitors use? How much will
distribution cost through these channels?
4. Promotion
How do they plan to promote and market their product? How do the competitors market their products? What
are the costs of getting this message out and how will the company pay for it?
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FRAMEWORKS Types
Michael Porter’s “Five Forces” or

The Structural Analysis of Industries
Porter’s “Five Forces” are brilliantly expla ined in his bestseller, Competitive Strategy. Please refer to the book for a
more detailed account. Figure B shows a diagram of the five forces driving industry competition.
The state of competition in an industry depends on five basic competitive forces:
1. The threat of new or potential entrants: This includes new companies or acquisitions of established
companies by a new player. If barriers are high or if newcomers can expect entrenchment or retalia tory
measures from existing competitors, such as a price war, then the threat of entry is low.
According to Porter, barriers to entry include:
• economies of scale
• product differentiation
• capital requirements
• switching costs
• access to distribution channels
• proprietary product technology
• government policy
2. Intensity of rivalry among existing competitors
3. Pressure from substitute products, i.e., sugar versus high-fructose corn syrup and artificial sweeteners.
4. Bargaining power of buyers: “Buyers compete with the industry by forcing down prices, bargaining for
higher quality or more services, and playing competitors against each other - all at the expense of industry
profitability.”
5. Bargaining power of suppliers: Forces 4 and 5 have to do with supply and demand. When there are many
suppliers but few buyers, the buyers have the upper hand. When there are many buyers but few suppliers, the
suppliers have the advantage.
Page 47
FRAMEWORKS Types
Michael Porter’s “Five Forces” (continued)
FIGURE B
MICHAEL PORTER'S " 5 FORCES"

Forces Driving Industry Competition
Page 48
FRAMEWORKS By Case Type
1. PROFIT IMPROVEMENT CASES
Purpose:
To determine whether the candidate is capable of and comfortable with constructing a logical framework which will
expose opportunities for profit improvement
Profit improvement cases can cover a wide range of topics in strategic analysis. Rather than simply repeating
Porter’s and Ohmae’s models, this outline will give you some general ideas to consider in solving profit
improvement cases. You will be able to zero in on the main issues by using the 3 C’s. The three C’s are costs,
customers, and competition. The relationship between these three factors is summed up in the equation
Profits = (Price - Cost) X Volume.
Costs can be broken down into fixed and variable costs. An analysis of costs will vary greatly with the type of
industry being examined. Possible areas to investigate will be suppliers, materials, plant utilization/investment,
quality control, economies of scale, and distribution. Changes in production methods can create substantial cost
savings, but factors such as the negative effects of the learning curve will need to be considered if you’re advocating
large changes in operation procedures. Labor and marketing costs are also frequently relevant in profit cases.
Price increases offer another way for companies to increase their profits. Three methods of pricing are: 1) Cost
plus basis, 2) Matching competition, and 3) Charging what the market will bear.
Charging what the market will bear is the most lucrative of the three choices. In order to be able to engage in this
type of pricing, it helps to differentiate yourself from the competition. Segmentation by market, product, geography,
quality, and other factors can help distance a company from its competitors.
In depth analysis of current market conditions and future industry expectations can help a firm establish a position in
a less competitive industry niche. Less competition translates into higher prices. The introduction of a new product
or type of service can help a company price its goods at a high premium. The relative power of buyers and the
competition from substitute goods are other issues that can surface in cases.
Volume is the third component of profit. Growth in current market share or expansion into new areas can help a
firm increase its volume. Changes in the product, sales network, marketing, and price can all impact volume.
Intangibles such as quality of service can also be improved or marketed to help increase volume.
Price, cost, and volume are all interrelated. Companies need to find the best mix of the three items and realize that
improving one aspect can negatively impact the other two items, thus lowering firm profit. If a firm increases
volume by cutting prices, what happens to profit? If increased volume necessitates higher costs through plant
expansion, how is profit affected? These examples show that the analyst needs to balance the three components to
find the best strategy for the company as a whole.
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2. INDUSTRY ANALYSIS CASES
Issues To Address:
What are the relevant markets, and what has been the nature of growth of these markets?
What does demand look like? What is the future market potential?
What are the relative cost positions of competitors?
How severe is competition? Is there competition for the product? What would the likely competitive reaction to a
new entrant be?
What is the price competition like? Is pricing rational? Discuss the effects that an increase in supply can have on
industry price levels.
Are there barriers to entry/exit? How often do companies enter/exit the industry? Are there economies of scale? Is
there a learning curve? Are there any government regulations? What will the salvage value be if the firm does
enter?
What is the real nature of the product and what are the potential substitute products?
If an exp ansion is being considered, why? What is the expansion designed to do? Why does the company need it?
Is there a market niche to exploit? Is this relevant? (Be creative here – thinking outside the box to identify and talk
about potentially untapped opportunities will impress the interviewer, as long as those possibilities are well thought
out and defensible.)
Additional Information You May Want to Ask For:
What does the market share look like? Is the relevant firm an industry leader? (Technological and product quality
standards are usually set by industry leaders. If the firm is a secondary player, they will have to follow these
standards.)
Who are the customers/consumers?
What is the sales history? What are sales like now? Is there a trend? What do Company X’s sales look like compared
to Company Y’s?
How do costs compare across competitors? Are their economies of scale? What are the main costs?
What is the mode of distribution? If there is more than one relevant product, recognize that different distribution
needs may exist for different products.
How profitable has the industry been? How is it currently? Are there any trends?
What is the true nature of the product? Static? Constant revisions? Does success in the industry require a lot of
research and development?
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3. MARKET EXPANSION CASES
Example: A telecom company that is switching or expanding from the defense industry to the private sector.
4 Market Analysis
Can they compete? Use Porter’s Five Forces analysis as a starting point.
Use the basic supply/demand microeconomic analysis.
Determine any future trends that may affect demand.
How well do the company’s strengths match the new market?
Be able to define the market and its size.
What is the current competitive situation in the market?
What value-added technology or process can the Company provide?
Can the Company capture a niche in the market?
Focus on customers’ preferences and current behavior .
Can the current sales force be effective?
4 Financial Analysis
What is the timing of the capital flows ?
Focus on the company’s payback, Net Present Value (NPV).
Can the company gain enough market share to be profitable?
How fast can the company capture revenues?
What is the current capacity situation in the market?
Is the market characterized by high fixed costs?
How do margins compare in the two markets?
What price can the company expect the market to bear?
What possible pricing retaliation can be expected from the markets current participants?
Page 51
4. PRICING CASES
Identify the type of market:
4 Monopoly - You have significant control over prices. Set prices to maximize profits, but be careful that the
market doesn’t become too attractive to the competition. Consider the characteristics of the monopoly and the
barriers to entry.
4 Oligopoly - You have marginal control over prices. Resist the urge to cut prices; your competition will likely
match your price cut and then you’ll both lose.
4 Perfect Competition - Without any product differentiation, you will be a price taker.
Issues To Address:
What will the market bear?
Think about the long-term effects of pricing decisions.
Think how the competition will respond to changes in pricing.
What is the elasticity of demand? Consider the consumers’ sensitivity to price changes.
Consider methods to create price discrimination.
Consider using strategic tactics such as creating ‘loss leaders’ or ‘traffic builders.’
Be careful not to price too low, doing so could compromise the reputation of the brand.
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5. INVESTMENT CASES
General Example: Cases involving the decision of whether to invest in a particular product or market segment.
Issues to Examine
Sustainability of profits in segment.
Market size and dynamics.
Competitive position.
Product differentiation and standards.
Price dynamics.
Distribution of costs.
Key Analytical Tools
Profit-Tree analysis is probably the most useful.
Porter’s analysis: Identify company’s comparative advantage.
Page 53
6. WILDCARD CASES
Example: How many golf balls are sold in the U.S. every year?
Because of their unpredictable nature, there is no way to fully prepare for Wild Card cases. Recruiters just want to
see your thought process when they give these types of cases.
4 Remember to stay calm. The wackiness of these questions often throws people off-guard. Just like with any
other case, take a moment to think and structure your attack before you start discussing details.
4 Always focus on the number / answer you’re being asked for. It’s easy in these cases to get wrapped up in
your calculations and lose sight of the end goal.
4 Use round numbers whenever possible – the case is not about knowing exactly how many golf balls are sold
each year, but about your thought process and your use of reasonable assumptions.
4 Another piece of advice for preparing for Wild Card cases is just to know basic demographic facts about the
U.S. (e.g. U.S. population is 250 million, approximate size of U.S. is 3000 mi * 1600 mi = 5,000,000 sq. mi.).
Page 54
EXAMPLES CASES BY TYPE Profit Improvement
OFFICE SUPPLY CHAIN MANAGEMENT
Question:
An office supply company has asked you to determine why they are not as profitable as their primary competitor
(i.e. OfficeMax vs. Office Depot).
Approach:
Think of an Income Statement. Begin with Revenues and work your way down item by item (revenues, volume,
price, costs, fixed, variable, etc.). Identify any area that is not consistent with industry standards (as a % of sales).
Once you have identified a problem area, then you can begin to determine the specific cause and then make
recommendations for corrective action.
Solution:
In this particular case you would have discovered costs to be high. Further analysis would have identified variable
costs and specifically the cost of the products they are purchasing from their supplies. With even further analysis,
you would identify that shipping from the supplier is included in the price of these products. Furthermore, these
shipping costs are extremely high, because the suppliers are billing you for the shipping and thus have no incentive
for them to manage them.
Sample Conversation:
Interviewee – I would begin by analyzing the company’s Income Statement to identify an area to further
investigate. Therefore, are the company’s revenues in line with the industry standards?
Interviewer – Yes.
Interviewee – How about their costs?
Interviewer – They seem to be a bit high.
Interviewee – Knowing that the company’s costs are high, I would then analyze in detail their cost structure by first
determining if it is fixed or variable costs that need attention.
Interviewer – In this case, their fixed costs seem to be fairly consistent; however, their variable costs seem to be
high.
Interviewee – I would then analyze their individual variable costs beginning with the cost of their primary variable
cost, their products.
Interviewer – It does seem that they are paying slightly more than their competitors for the products they purchase.
Interviewee – I would then analyze the components of that price. What does it include in addition to the actual price
of he product? Taxes? Freight? And are these costs competitive?
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SUPPLY CHAIN MANAGEMENT (continued)
Interviewer – The price includes both taxes and freight. The taxes are obviously the same for all buyers, but the
shipping costs do seem to be a bit high.
Interviewee – I would then note this as a problem area to be addressed in my recommendations and then look for
other problem areas.
Interviewer – It turns out that this is the only area in which we appear not to be competitive. What would you
recommend we do about it?
Interviewee – I would recommend that we separate the freight charges from the price of the products and pay the
freight ourselves (i.e. FOB). This would allow us to utilize the most competitive means of shipping the
products. Currently, the suppliers have no incentive to lower the shipping costs.
Page 56
LAUNDROMAT
Question:
You are the owner of a laundromat in New York City. What are some ways you can increase profits?
Possible approach:
When this case was asked, the interviewee was told specifically that the interviewer simply wanted brainstorming: a
number of good ideas. The point is to demonstrate creativity and ability to think on one’s feet. However, it is
important to demonstrate structured thinking as well.
Break profits down into revenues and costs. Work through each separately.
Revenues:
• Use of machines
- Coins
- Other? (scan cards, etc. could promote loyalty and repeat business)
• Sell ancillary supplies, such as detergent, softener, bleach.
• Other goods and services.
Costs:
• Machines (upkeep and replacement)
• Marketing?
• Rent and utilities
Some possible ideas for increasing revenues include innovative marketing, such as having free live music or an
event which attracts the media, and the sale of other good and services such as snacks.
Possible ideas for decreasing costs include allowing a charity to use some unused space in an attempt to convert the
business to non-profit status. Creativity pays off in answering this question.
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FOLDING CARTONS
Question:
A folding carton manufacturer has hired your consulting firm because it’s facing declining profitability in its North
American operations. What can you do to help?
Approach:
• Start with the components of profitability.
à Consulting firm has two teams working for this client. One team is working on revenue sources, pricing, and
customer relationships. Our team is focusing on operations. At issue are the client’s 10 plants in North America,
and what the client can do to cut costs.
• Where are client’s costs coming from? Cost categories include:

• Fixed costs – overhead, plant space and related factory costs
• Variable costs – raw materials, labor
• What is biggest cost driver for the client?
• Plant capacity. Is client using plants as well as it could? Does it measure capacity usage now, and does it
benchmark against other similar companies?
• Factory operations. Is this a labor-intensive or automated business? What kind of batch sizes and setup time
are involved in the manufacturing process? How does this compare with what the competition is doing?
• Distribution and supply chain costs. What are these and how do they compare with the competition?
• Inventory levels. How much is company spending compared with competition?
• How might the business’s structure make our costs higher than competitors’?
• Are plants cost centers or profit centers? What are advantages and disadvantages?
• Why 10 plants? Is client saving on costs by having plants close to its customers or suppliers, or do the
costs of operating a plant outweigh these benefits?
• Is the competition doing anything differently than it has in the past?
Additional Data:
• Client is division of a bigger company. The division purchases its raw materials (paper) from another division
and pays a transfer price that is greater than the market price.
• Raw materials are the biggest percentage of carton cost. Labor is a relatively small percentage of
manufacturing cost.
• The client’s manufacturing process is almost completely automated. It spends a lot of time on equipment setups
now. The client isn’t sure how its capacity utilization compares with competition.
• Competitors haven’t made any recent significant changes in operations.
Possible Approach:
Interviewer has steered you toward operations and cost concerns, so focus on those instead of on revenue and
product mix. (You may have time to come back to these at the end of the case.) As you ask questions and make
recommendations, think about what the client does internally and in relation to competitors.
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FOLDING CARTONS (continued)
Identify biggest drivers of cost and tackle those first. Raw materials (paper) are the biggest cost driver for the client.
The transfer pricing policy makes paper more expensive for our client than for the competition. Though transfer
pricing probably allows another division in the company to ma ke money, the policy should be reexamined.
Discuss costs that happen all along the chain – from raw materials coming into the plant, to factory operations, to
distribution and sales costs. This division doesn’t really know how well it is using its plant capacity, so you can
recommend benchmarking against similar companies, so client can see whether its factory operations are more
expensive than the competition’s. Distribution and sales are not really an issue here, but you should raise the
question of why the company runs 10 plants (instead of 5 or 20). Is this an optimal number? What are the tradeoffs
of shutting plants or opening new ones?
Identify consequences of the way business is structured. Discuss advantages and disadvantages of operating each
plant as a profit center. Consequences may be that all plants try to sell high-margin products and steer away from
low-margin ones – which might not fit with the client’s marketing and product mix strategy as a whole. It’s better to
optimize all plants operations instead of run each as a profit center.
Page 59
MAJOR CITY
Situation:
The City of Chicago has a $40 million shortfall in its annual budget for this year. They have hired you to fix the
problem.
Approach:
First you must identify the primary source of spending for the city (i.e. education, sanitation, police, etc…).
Then you must analyze each to see if there are any areas where costs could be trimmed. To do this, you will need to
determine the components of cost for each of these areas (i.e. labor, supplies, overhead, etc…) and compare them to
previous years and other cities (as a % of total budget).
Solution:
In this particular case you would have discovered police costs to be high.
Further analysis would have identified the primary component of cost for the police force to be labor.
Furthermore, you would find that a large portion of this labor cost is overtime. Further analysis would determine that
staffing has not increased over time with the demands on the police force as a result of budget constraints.
Ironically, the failure to increase staffing had actually increased labor costs dramatically as overtime is paid at 1.5
times an officers base salary.
Therefore, a good solution is to hire more police officers to eliminate the overtime and thus lower total labor costs.
Page 60
SPECIALITY CHEMICALS PROFITABILITY
Background:
Client organization serves paper industry with specialty chemicals and seeks to increase profitability:
4 Currently just above breakeven

4 Serves 250 accounts with sales force of 150 “sales and service engineers” throughout Asia
4 Industry growth is moderate; 3-6% depending on paper industry utilization rates
4 Client company is weak #5 player; 6 players dominate market with some (limited fragmentation)
4 Top 6 players compete on service, product technology, and tailored “solutions”
How would you approach this problem?
Approach:
4 High switching barriers at account level, largely driven by “papermaking” chemistry

4 Account profitability varies wildly by size, type, and penetration
4 Product margins high and highly variable (i.e., 20-60)
4 Industry leaders enjoy 15-18% ROS
4 Very low fixed cost and capital required; barriers to entry are account-level share/relationships and product
technology
Solution:
Minimum - You should be able to determine that account-level profitability drives overall profitability
1. Construct simple P&L that reveals high cost of held force (i.e., 60+ of total costs)
2. Grasp the very local nature of business (i.e., single mill site)
3. Identify that accounts are the scarce resource to be optimized (i.e., profit per account)
Better approaches probe account-level economics and assess what separates a ‘good’ account from a ‘poor’ one.
1. Account size matters, provided the revenue is of ‘high quality’ (i.e., mix toward top of margin scale) and cost-
to-serve (i.e., number of on-site staff) is managed.
2. Account share is crucial – it takes at least one full-time person to serve most accounts, even if share is low;
semi -fixed nature of business is key driver of profitability
Outstanding approaches will grapple with issues of how to improve, rather than simply shred, unprofitable
accounts.
1. Identify that ownership of critical applications leads to trust and follow-on sales (high account share)
2. Recognize that individual skills and performance make a huge difference for relationships, service, solution
tailoring and local marketing/selling
3. Realize that a low cost-to-serve, low margin/revenue model could be created to improve profitability of small
accounts.
Page 61
STEAM BOILER HOSES
Background:
The consultant was asked by a diversified manufacturing client to help turn around the steam boiler hose division.
This boiler hose division provides boiler hoses for both external customers and the client’s boiler division.
Background information on the client and industry includes:
4 Boiler hoses are sold both with original equipment and as replacements.
4 There has been increasing price pressure in the industry.
4 The client is third of eight industry participants.
The following information is also available in response to questions asked by the candidate:
4 Last year P&L showed (as a percent of sales):
Raw material 70%

Labor 20%
Distributed overhead 10%
SG&A 15%
Profit (15%)
4 Raw material is a commodity petrochemical

4 At least two of the other companies in the industry are making moderate profits
Question:
How would you structure an analysis aimed at restoring profitability? Where do you expect to save costs?
Approach:
Could start with the following:

1. Drop the product line (apparently not possible because hoses are necessary for boiler sales).
2. Raw material prices (they are the same as everyone else’s).
3. Allocation of overhead (no savings and provides little potential).
4. Examine SG&A costs (standard industry fee paid for independent installers).
Solution:
Better answers will move beyond the previous answers to consider:

1. Scale economies (client is big enough to achieve scale production).
2. Production technology (client has modern plant).
3. Labor costs (wage rate and productivity are average for industry).
4. Raw material purchasing practices (materials are purchased through long term contracts based
minus a discount).
Page 62
The best answers, following a logical progression, should stumble upon the actual answer: the product has been
over-designed, requiring excess raw material. The answer should consider the following organizational
implications:
1. How is our product engineering operation wired into the marketplace? (There is little contact between the
engineering and marketing/sales organizations.)
2. What kind of feedback are we receiving from our sales force? (Customers are delighted with our hoses, but
don’t require all the product features.)
3. Are there other areas in the company where similar problems exist?
Page 63
EXAMPLE CASES BY TYPE Profit Improvement
FREQUENT FLYER
Question:
A large commercial airline is in the process of evaluating the merits of its frequent flyer program. How would you
determine the value of this program?
Approach:
4 The value of this program is essentially the benefits less the costs. While the benefits can be determined by
finding out a) how many customers switch to the client’s flights due to the frequent flyer incentive and b)
how much do these customers pay for a ticket when they do so.
4 The rest of the case centers around determining the cost. To do this, you must identify the cost drivers from
both, the demand side as well as the supply side.
The demand (or customer) side drivers include:

• Most traveled seasons
• Most traveled destinations
• Demographic characteristics of those that redeem miles
• The split between business and leisure redeemers
The supply (or airline) side drivers include:

• The number of frequent flyer miles given away (these constitute a kind of liability)
• The number of frequent flyer miles redeemed
• Incremental administrative, logistical, in-flight, advertising, and promotion costs of the program
4 A good way to express the cost of the program would be $ per frequent flyer passenger mile or $ per frequent
flyer mile redeemer
4 You may finally suggest ways to reduce or limit these costs, e.g. improve the operations for this program or
limit windows during which passengers can redeem miles.
Page 64
HEALTH REFORMS
Question:
Bill Clinton has just fired Hillary Clinton as Chief of Health Reforms and has appointed you to fill the position.
While in his office, you discover that kidney dialysis is a major portion of public health care expenditures. What
analytical techniques do you use to determine if this cost can be reduced?
Approach:
4 Essentially, you want to see if costs are high due to incidence, cost of procedure, or both. You also want to
see if any unscrupulous practices are being used.
4 Analyze the proportion of public versus private health expenditures that are applied to kidney treatment to
determine if this expensive treatment is being pushed onto the public health budget by unscrupulous
practitioners.
4 Compare the incidence of kidney disorder in this country with other countries. Is ours higher? If so, public
policy or efforts to increase awareness help reduce it?
4 If incidence is indeed higher for the US, build a model (regression perhaps) that will somehow determine the
factors that are most related to kidney treatment. Perhaps those who are typically covered by public funds
(the poor, the elderly) have a higher incidence of kidney problems. Is there room for any type of preventative
program for these groups?
4 If the cost of the procedure seems high in comparison with similar medical procedures, it could be due to
professional fees, consumables, or capital equipment costs. Professional fees could be cut by limiting the
amount of government compensation. Consumables and equipment costs could be cut by employing new
technologies.
Page 65
NEWSPAPER COMPANY
Question:
A newspaper publisher has been experiencing declining readership and as a result, declining profitability. What
should it do?
Approach:
4 It is important to recognize that advertisements are the major source of revenue for newspapers. But this
revenue is totally dependent on readership.
4 It turns out that all newspaper publishers share the same plight and TV is the main culprit. To fight this, the
client can, at best, study other markets where TV is prevalent but newspaper readership is high (like Japan)
and use any knowledge they gain to promote readership in the U.S. They could share costs via newspaper
publisher associations.
4 To compete with other newspapers and periodicals, the client can determine customer preferences and tailor
contents to them. But any differentiation created will quickly neutralized by the competition.
4 The best course of action is to build mechanisms to continually adapt to changing reader tastes. This could be
accomplished by market studies, flexible and versatile staff, etc.
4 Also, the client should focus on cost rationalization to increase profitability. This would mean consolidating
operations and reengineering them. Consolidation would help in deriving economies of scale whereas re-
entering would increase operational efficiencies.
Page 66
MYSTERIOUS AUDIO CASS ETTE MARKET
Question:
Your client is the manufacturer of audio cassettes. They have hired you to figure out why they’ve been experiencing
an alarming poor sales year. They want you to figure out the root of the problem, and what to do about it.
Additional Information to be divulged gradually:
Mature market: 5-6 major players; client used to have a steady 30% market share, (second largest in industry,) now
firm has a 44% share. Your client offers a full range of audio cassettes - from low bias to high bias/metal. Your
client is also using the most sophisticated and quality driven cassette manufacturing techniques.
The firm has been losing sales reps, yet loyal reps claim that sales are at record high levels for them this year.
Firm historically targeted two consumer groups - older, middle-income enthusiasts and high school rock ‘n roll
stereophiles. Recently, your client has been losing younger target market customers.
Firm has traditionally managed its relationship with retailers as well. However, the firm has recently lost several
major accounts due to its inability to move products. The combined market characteristics, recent symptoms and
sales decline and increased market share suggest that your competitors are abandoning this market - likely due to a
new and better substitute technology (CD’s, for example.)
Still, your client’s historically flat market share suggests brand-loyal customers. Moreover, your older target market
is loyal - perhaps less likely to switch to the new technology in the short run. Assuming (1) that your client wants to
be a provider of this new technology and (2) has the capacity to manage a primary supplier position in its traditional
line of business: in the short-term, target your older customers as well as new segments less likely to switch over to
CDs. For the long-term, consider resource requirements, opportunities and constraints of developing or acquiring the
new technology.
Page 67
CANDY COMPANY
Question:
Your company is a rather successful producer of candy. It originally started as a single product company and has
diversified its product line over the last few years. The production process consists of two basic activities:
manufacturing and packaging. The firm has also expanded its sales through product line extensions. Management
is concerned that sales are growing, but profits are not increasing at the same rate. What can your company do?
Approach:
This is a revenue vs. cost exercise. Margins are shrinking.
Find out about the critical components of cost: raw material, labor and fixed cost. Raw materials are commodities
with cyclical prices which have fallen in recent years but are expected to swing up again (this, as you have guessed,
makes the problem worse.) Labor and fixed capital has increased per unit over-proportionally compared with ten
years ago. Find out that the company’s controlling system is still focusing on the manufacturing part of the
production and the cost explosion occurs in packaging (candy is candy, the product line extension is primarily an
issue of different packaging.) Controlling schedules manufacturing which is rather efficient already, but not
packaging, thus causing slack in labor and fixed capital (small batch sizes, high setup times.)
Solution:
Possible solutions: reduce product line, introduce controlling/scheduling measures for packaging. Qualifier: are the
company’s customers (i.e. retailers) willing to accept the reduced product line?
Find out about revenue killers: concentration of retailers, trade brands, retailers demand large introductory discounts
for new products, high failure rate of new products.
Other good solutions: streamline product line, reduce low margin trade brand production, emphasize pull
marketing, and reduce introduction rate for new products.
Page 68
COSMETIC COMPANY IN EUROPE
Question:
Eurocos, Inc. produces and sells various cosmetics products in several European countries. The company’s different
brands are well established in the markets. The various products are quite similar in terms of raw materials and
production.
The company has been doing very well in the past, however profits have been shrinking in recent years. The CEO is
thinking of changing his strategy in the industry. He asks you if this is a good idea and what he should do?
Additional Information:
4 Market - many small to medium size companies, with many small to medium size brands.
4 Few big companies owning several brands.
4 Eurocos produces all products in all countries.
4 Transportation costs are small (see operational part).
Possible approach:
What is the structure of the industry? Fragmented industry.
Why?
4 low entry barriers (small setup costs, . . .)
4 high product differentiation (many ways of differentiation)
4 divers markets, customer needs (language, complexions)
4 barriers: tariffs, customs
How can fragmentation be overcome? Feasible for Eurocos?
4 Create EOS and learning curves Yes

4 Standardize market needs No
4 Separate the product’s commodity aspect from fragmenting aspectYes
4 Changing environment: reduce tariffs Possible (explore)
Possible solution:
Consolidate production while keeping the marketing and branding nationally decentralized.
Pros:
4 EOS in production (better sourcing, longer runs, quality) optimize location (interest rates, wages, labor)
4 Learning curve of running a more complex plant and logistics (see also Cons)
4 Keep “fragmented” marketing required in the market
4 Total inventory decreases (safety stock at original plant locations can be pooled centrally)
Page 69
COSMETIC COMPANY IN EUROPE (continued)
Cons:
4 More complex central operation
4 Increased logistic complexity
4 Transportation costs increase
(Operational aspect: optimal plant location with respect to transporting goods to warehouses. Possible assumptions:
Plant location at (x, y), national WHs at (xi, yi), demand per country, cost linear with distance, shortest travel
distance.)
Solution:
Should the company seek dominance now?

Have the driving forces for fragmentation disappeared? No, the fragmenting factors from the market are still in
place. The company has not changed is strategy in the fragmented industry (dominance makes no sense), but has
gained an advantage by operational changes.
Page 70
SKI RESORT (
Question:
Net Income of $500,000 needs to be increased to $1,000,000. Assess our options.
Approach:
Current Slope Mix

Skiers mostly (no snowboard park, etc.)
60% - day skiers (single day)/ 40% - resort skiers (multiple days, 3-5)
Impacts on Revenue
Volume: # of skiers (have to back into)
Product Mix/Price: Day skiing only ($35/ticket)
Impacts on Costs
Fixed Costs: $1,000,000/yr
Variable Costs: $10/skier
Others
Outsource concessions (income negligible)
Small slope with little advertising
Many surrounding slopes that are far better known
Solution:
1. Determine the type of slope

• Who are the “typical” visitors
• What are the sources of revenue
• What are the sources of costs
2. Determine how many visitors per year currently
3. Determine how many visitor per year needed to reach one million in profit à is it feasible
4. Suggest ways for reaching goal
• Give a suggestion (i.e., night skiing, increased advertising, snowboard park, new lift, raising prices, etc.)
à think about what affects mix, volume, or price
• Does it fit with current customer?
• What costs would be associated with the idea
• Approximately what revenue would be gained by the idea (Is there any cannibalization or trade-offs)
• Is it a good idea?
• Repeat the process
5. Summarize with explicit recommendations
Note: Think of the hourglass. Address the issue. Get to the premise of the problem quickly. Is the problem fixable?
If so, brainstorm ways to improve the issue. But be aware of trade-offs, increased costs, etc.
Page 71
SCHOOL CAFETERIA
Question:
When the school cafeteria workers went on strike a few years ago, the school union experienced a significant
increase in sales. However, when the financials for the quarter were reported, the union discovered the profits
actually decreased. What happened?
Possible Approach:
4 Did they lower prices? No

4 Did their costs go up – paying staff overtime or extra to obtain ra w materials at the last minute? No
4 Did overhead costs increase significantly? No
4 Did they introduce new items? No
4 So prices did not change and costs did not change... did the overall mix of what they were selling change? Yes,
the union sold more sandwiches and drinks than before.
4 Upon further investigation, we discover that they were actually losing money on each sandwich they sold
(selling them below cost).
4 The interviewer then asks me how - assuming no pre-generated data - I would have gone about discovering
that they were losing money on sandwiches. On a practical basis, you’d have to look at the cost in aggregate.
Perhaps how much they spend in a week on sandwich ingredients, the hours spent making sandwiches, and the
number of sandwiches sold and scrapped. Then you’d calculate a cost per sandwich and compare it to the
selling price. Ideally, you’d also want some overhead allocation, but this is a good start.
Page 72
FAST FOOD CHAIN
Question:
Your client just bought a 30-unit regional fast-food chain. Profits of the chain are negative. What could be wrong?
Possible Approach
1. Revenues – Costs = Profit

2. Revenue = Price x Quantity
What could be wrong?
4 The regional economy is in a recession.

4 The units are below minimum efficient scale.
4 Competition has increased (more Taco Bells) – now our price is too high, so customers go to competitors who
offer better value for the money (i.e. our quantity is low).
4 NB - Each store has its own story - you will probably have to move to the store level to understand what is
going wrong, and follow the same investigative process.
Page 73
GOING UP
Question:
An elevator maker is experiencing profitability erosion. How would you begin to analyze the company’s situation?
Possible Approach:
Initial Approach
4 Sales trend? Declining over recent years

4 Market share / positions? Still second largest domestic player
4 Cost structures? Product costing to date indicates that large portion of costs are fixed
Narrowing
4 Given that a large part of costs are fixed, economies of scale may be a factor.
4 Demand revenue side - costs are truly fixed, and increased sales with low marginal costs will drive
profitability.
4 Cost supply-side - company’s process is fundamentally uncompetitive and benchmarking / re -engineering
work will be of more impact.
Note: It is often better to establish two paths and let the interviewer choose; however, if the interviewer is not
obviously more excited about your pursuit of one or the other, pick the one you feel is more robust, justify your
choice, and pursue it. Return to the other path if there is time or for unanswered questions at the end.
Demand side
4 What drives demand? New construction obviously.

4 Who are the customers? Contractors.
4 Have the underlying economic trends changed? No, commercial construction remains flat in the company’s
geographic areas.
Micro level
4 What are the decision factors for customers? [through customer interviews] Turns out that along with
price/performance, reputation and availability of service are key factors.
4 How is the product priced? How much does this influence the purchase decision [price quotes, surveys]?
Product is competitively priced, and actually represents relatively small share of average project cost for
contractor.
4 How is the product perceived in the market? [market research] Service reputation is low in many markets
relative to competitors.
Attack this point and present possible recommendations to address this problem.
Page 74
CAFETERIA SERVICES
Question:
An institutional food service company has a contract to provide catering and cafeteria services to an office building
in Denver, Colorado. This business unit is losing money. Why?
Possible Approach:
4 The most important information was what services were being provided, and what were the economics
driving each part of the business.
4 In fact, there were four separate food service functions provided for under the contract:
- Employee cafeteria
- Open-to-the-public restaurant
- Catering service for in-house functions
- Coffee wagon set up in the lobby
4 Upon further questioning, we find that we can assess the profitability of each part of the business and make
decisions about what to do with each.
Consider cost and revenue dynamics of each business separately:

• Fixed and variable costs.
• Minimum turnover required to break even.
• The extent to which the businesses result in cross sales (to justify cross subsidization).
• Are the same skill sets required to run each of these businesses?
• Can joint purchasing mean that food costs are lowered by eligibility for greater bulk discounts?
• What are the exit costs for each business.
• Would terms of the contract permit providing some but not all of the business?
Key Insight
The business was not a monolith and each of the four parts had different economic profiles. Despite bad overall
management, there were some highly attractive businesses mixed in with some awful money losers. The only insight
was to make the appropriate breakdowns and determine the attractiveness of each sub-unit on a desegregated basis.
Page 75
YELLOW PAGES
Question:
The client is a printing company (books, magazines, etc.) It wants to make more money from a phone customer for
which it prints yellow pages. The client is in the 2nd year of a 10-year contract. How do we increase the
profitability of the customer?
Possible Approach:
To increase profitability we can look at decreasing costs and increasing revenue.
Costs
After exploring a number of possible ways to reduce cost, it was clear that only a minor adjustment was possible on
the cost side.
Revenue
Revenue is based on the number of pages printed. The client can’t legally increase the price because of the contract.
Therefore an increase in the volume of pages printed is needed.
Conclusion
To increase the volume of pages printed, the client can encourage the phone company to sell more phone books by
including smaller geographical areas in each phone book.
Other answers were also acceptable. For example, increasing the amount of advertising in the book could increase
the volume of pages printed. Ideas include bundled ads for smaller retailers, discounts on purchases of multiple ads
in multiple books, etc.
Page 76
MAIL ORDER
Question:
You have just been assigned as a consultant advising the manager of the customer service department for a mail-
order company. Along with the assignment, you got a black book of data about the customer department. As you
flip through the book you notice that the costs have skyrocketed over the past three months.
What will you discuss with your client when you meet with her for the first time this afternoon?
Possible Approach:
4 You know costs have been skyrocketing. There are two major components of costs: people and the phone
lines they use.
4 Ask about revenues. You’ll find out they’ve been skyrocketing, too. In fact, revenues have increased faster
than costs. This means that profits have increased. So there is no problem.
4 The case is DECEPTIVELY simple. Don’t worry if you missed this. You won’t make the same mistake
twice! Just remember that Revenue – Costs = Profits.
4 What not to do – Ask immediately how the components of costs have been changing over time. How fast?
Has the company changed its accounting or information systems? Ask about costs relative to competitors.
4 Note – This case is about client management as much as analysis. It’s your first client meeting, so you don’t
want to dive into a discussion about data right away. If revenues haven’t been rising along with costs, for
example, this could be a very difficult discussion. You have to introduce yourself, explain your purpose, etc.
Page 77
HOSPITAL PAYMENT SYS TEM
Question:
A non-profit hospital wants help to reduce the $10 million loss that the organization has been experiencing in the
last 3 years. If the hospital continues this level of loss for more than 2 years, then the hospital endowment would be
completely gone and the hospital would need to close its doors.
Problem: It is realized that the hospital’s loss was due to a new law which basically fixed hospital prices because of
the new DRG (diagnosis related groups) hospital payment system in New York State (i.e. price per unit could not be
changed) What profitability improvement levers should the team focus on first if the team wants to quickly reduce
the hospital s loss? What would you expect to find?
Possible Approach:
A good approach to this issue might be to discuss the different costs associated with performing the hospital’s
services and the current capacity vs. demand for the hospital. The correct conclusion is that it is quicker and easier
to change the cost structure and capacity of an organization than to change the demand for the hospital’s service
(remember the price per unit is fixed so the revenue lever remaining is increasing the units of service) Reducing the
capacity and shifting some costs from fixed to variable would help restore the hospital’s profit.
Conclusion:
A more complete answer would discuss some of the revenue levers even though they may take longer to work. The
team could explore some of the marketing issues such as:
4 What draws physicians and patients to a hospital and where do the patients come from? (It turns out that most
patients come from local communities surrounding the hospital and that focusing efforts on the local
neighborhoods that are under represented by the hospital can increase patient volume.)
4 How does the client hospital compare to the competitors along service dimensions that are important to
patients and admitting physicians? (The hospital was outstanding at patient care but lacked convenience.)
What are the trends in patient care and how should the hospital change to exploit the opportunities? (Recent trends
are towards outpatient services and away from admitting patients for long periods of time. For example, cataract
surgery used to be an in-patient procedure requiring a hospital stay of three days or more. In the last few years, most
of the cataract procedures performed require no hospital stay, there seems to an opportunity providing a very
convenient outpatient facility to the community).
Page 78
CAR BATTERIES
Problem:
A company that manufactures auto batteries has hired you. The company is concerned that it is steadily losing
market share because its profitability has been steadily decreasing in recent years. How do you approach the
problem?
Approach:
Begin with a profitability analysis - pinpoint exactly what is driving the reduced profitability. In this case, it is a
steadily decreasing price. Volume and costs have been relatively constant.
Why the decreasing price?

The answer is in the distribution channels. More battery sales have been going through "big box" stores with more
power in the value chain.
Now think about the 5 C’s more carefully. Competitors have avoided our problem by focusing on the smaller,
neighborhood auto supply stores without the same amount of power in the channel. In addition, the industry has high
exit barriers (due to environmental damage to the land on which the factories are built) which results in even greater
buyer power - forcing the manufacturer to cut prices to maintain cash flow.
Page 79
BICYCLES LTD
Question:
Your client designs, manufactures and markets a full line of bicycles. The company had been growing in sales and
profits when its profitability flattened, then began declining 3 years ago.
Approach:
4 1st analysis - Assess whether revenues, expenses, or both are the source of decreasing profits.
• Revenues growing at roughly the same rate as before the down-turn

• Expenses increasing disproportionately
• (Would use financial statements to assess this data)
4 2nd level analysis - Analyze source of increasing expenses:
• Operating/Administrative? Administrative costs growing, but operating costs appear to account for
bulk of increased expenses.
• Components of Operating Cost – Fixed/Variable: Fixed costs growing but variable costs appear to
account for the bulk of increased expenses.
• Components of variable cost – direct/indirect: Both have been growing. Bicycles have become more
sophisticated, with better materials and components (However, the increasing cost/bike has been
comparable to the growing price/revenue per bike). Indirect costs are increasing disproportionately.
• Components of Indirect Variable Cost - Materials, Labor: allocations of indirect material about the
same (Loss of bikes about the same). However, allocation of indirect labor appears to be the big
problem.
• Why is indirect labor increasing? Examine WIP: increasing. Look at the factory floor, many bikes
waiting around. What are the bottlenecks? Not capacity related - plenty of throughput available.
Much time appears to be spent nowadays in set-up - resetting paint booths, welding jigs, dies and
presses, etc.
• Why has set-up time increased - either by increasing the number of set-ups of bikes or increasing the
set-up time.
⇒ Increased set-up time? No. It has actually decreased as the workforce has improved set-up
tools/jigs etc. Workforce turnover, labor relations, etc. are all fine.
⇒ Increased set-ups? Yes.
Page 80
BICYCLES LTD (continued)
Conclusion:
At the time of the profit decline, the industry had been trending towards increased specialization in bicycles:
touring/mountain/racing/hybrid/etc. This company had responded with rapidly proliferating product lines, leading
to increased number of set-ups and lower volumes per assembly run.
Solution: Rationalize product lines, and try to increase shared components across model lines.
The key to this case is to methodically dissect the cost structure for the company, and knowing what the components
of cost are (i.e. cost accounting).
Page 81
PLUGS
Question:
We were doing work for a consumer electronics firm (e.g. Federated, Silo Circuit City) who had experienced losses
for the previous several years and was in a difficult financial position. How would you have approached this case?
Possible Approach:
Economies of Scale
4 The client had a number of stores that were simply not large enough to reap the economies of scale necessary
for this business.
4 This was not reflected in the cost information provided as this was in a format which gave averages per store.
4 The economics of scale were important because of numerous large fixed costs, including advertising and rent.
4 They needed to rationalize their retail outlets.
4 NB the company as a whole, did achieve economies of scale in purchasing; their product margins were
similar to competitors.
Competitive Scale
4 The company wanted to be a high service company, but their payroll averages were below that of competing
firms (some of which were competing on the same basis).
4 Advertising expenses were well below industry average - not a good idea in this line of business (often
impulse buys at seasonal sales).
Providing with income statements for the average store for the client and some competitors (expressed as a
percentage of sales).
Page 82
HUNT & FISH MAGAZINE
Question:
Our client is a media conglomerate that owns a hunting and fishing magazine. Profitability has fallen. What can they
do to improve profitability?
Possible Approach:
4 Explore both the cost and revenue portions of the profitability equation.
4 Find out what has changed to cause profitability to fall and then see what might be done to improve
profitability.
Costs
• These have not risen dramatically.
• There is no opportunity to reduce costs further.
Revenues
What components make up revenue?
• Circulation (subscriber) revenue - circulation has increased and the goal is just to break even with
subscription revenue.
• Advertising revenue - this has fallen dramatically.
• With the increase in number of subscribers, there has been a change in the composition of the
subscriber base.
• The audience is now more general, but the advertisers were targeting the hunting and fishing market
specifically. They have stopped advertising as they no longer reach the same audience.
Solution:
4 Cut back circulation and focus on a specialized group.

4 Understand what’s important to the advertisers.
Page 83
SMALL BANK
Question:
Our client: A small national bank.

Its competitors: Regional banks and big national banks
Problem: Profits are smaller than those of their competitors. Why? What can the company do?
Possible Approach:
Why do their competitors earn higher profits?
4 Big Banks:
• Enjoy economies of scale (same centralized services, more offices to allocate their costs to).
• Size allows them to profitably use processes and technologies that smaller banks cannot implement.
• Large amounts of available capital allow them to accept/attract bigger clients.
4 Regional Banks:
• Size and geographic concentration: lower overheads (less hierarchy, less paper shuffling, smaller
distances to be traveled).
• Brand name: customers may feel represented by ‘their’ local bank, preferring it to the rest.
• Better knowledge of the client base: ability to choose the best clients.
Conclusion:
What can the company do?
4 Grow: mergers/acquisitions.
4 Rationalize: sell some offices and acquire new ones in a profitable region (probably a bad idea).
4 Specialize: offer some services that the big banks don’t want to offer and that the regional banks cannot
afford to offer (if there are any services like these).
Page 84
EUROPHONE
Question:
Our client is a European pay telephone manufacturer. They are experiencing sharp decreases in profitability after a
history of strong, consistent earnings. Their competitors are facing similar problems. What should they do?
Possible Approach:
Develop questions using an approach driven by Five Forces and the 3 C’s. This elicits the following information:
4 The buyers of the equipment are either large private telephone companies or state-owned agencies.
4 Not all equipment is interchangeable, depending upon switching devices, etc. however, most companies can
produce variant systems to comply with large market requirements (accepting different coins, ability to
connect to different switching equipment, etc).
4 The adoption cycle for underdeveloped countries is odd. The typical network economics operate - if you’re
the only one with a phone, who do you call? After the first movers buy, the installed base increases until the
initial saturation level is achieved. At the same time, private phone purchases increase, somewhat offsetting
the need for further purchases of pay phones. Once phones become ubiquitous, the final saturation point is
achieved. From this point forward, a replacement cycle begins in periods of about five years.
4 At the time of the case, credit card public phones were vastly increasing in demand. Most markets had
experienced aggressive programs to replace the old coin phones with this new product.
Conclusion:
The recent wave of large credit card phone installations meant that the old phones were being replaced before
physical obsolescence. The entire industry will experience a downturn until the newly installed base in the large
markets needs replacement. They have no choice but to wait for this next wave of replacement purchases.
Page 85
PROFIT IMPROVEMENT - EXAMPLES
1. How can a mid -size domestic airline regain profitability?
2. How would you evaluate the profitability of a big 5 accounting firm? What are the best measures?
3. You are contracted by a CEO of a supermarket chain. Their profit margin is going down. Why? Assess the
situation.
4. Your client is the national beef board. The board wants to know if its advertising campaign has been
successful. How would you evaluate the campaign’s performance?
5. Over the past few years, our client a retail bank has gone from one bank in one state to eight banks in eight
states. All of the banks are operated autonomously and the company as a whole is losing money.
Specifically, four individual banks are losing money. The bank has tried to mandate cost reductions and by
forming committees with representatives from each bank to address these problems.
6. You are working for a firm where the bottom line is declining and senior management thinks it is because
of transportation problems. What would you do?
7. Your client is a manufacturer of large jet engines in the U.S. with 40% of the market. There is one major
U.S. comp etitor and one potential Japanese competitor, who will not be able to enter the industry for 10
years. The U.S. competitor’s prices are below your clients, and the major purchasers of jet engines are the
commercial airlines. What strategy would you advise for your client?
8. Profits are declining in a firm in the trucking industry. Why? How would you fix it?
9. A national retailer has low profits. Its competitors are small, regional, specialty stores. What would you
review to improve the situation?
10. A company is in the oil tanker transportation business. The company owns 15 tankers and transports oil for
third parties. The company has 15 competitors. The market is expected to decline by 10% over the next
five years. The company is currently making profits, but wants to know: a) what the future profit potential
is, and b) whether it should stay in the business.
11. A company makes hard plastic liners for the backs of pick-up trucks. This company invented the product
10 years ago and now has 40% of the market. There are two other large producers and 6-7 regional
players. (Note: plastic liners increase the life of the body and are therefore cost efficient.) How attractive is
this business and what should its strategy be to increase profits.
12. A manufacturer makes “flooring” for sports courts; i.e. basketball courts, gyms, etc. The floors are made of
maple wood. The company has four national competitors. The company has 15% market share, but is
profitable with 16-18% ROE, after taxes. How can the company increase profits?
13. An association of ski resorts wants to increase profits. How should they go about doing it?
Page 86
PROFIT IMPROVEMENT (continued.)
14. A company is in the railroad freight business; e.g. they own the railroads. Profits are declining. What are
the key areas you would examine to understand why?
15. A company makes rubber grips for golf clubs and has stagnant sales. The company is profitable, but wants
to know how profits can be increased.
16. A company makes wall maps, globes, etc. to sell to schools. How can profits be increased?
17. A company makes 300 different types of industrial products. Profits are declining. Why?
18. A manufacturer of communications equipment is losing share and its profitability is declining. We have
examined the cost side of the business and there are no cost savings, look at the revenue side.
Important Note:
Nine times out of ten, when asked to probe the revenue side of the business (a broad question), a key piece of data to
get is market segmentation. Always ask how the market is segmented. For example, it may turn out the market is
broken out as follows: 25% federal government, 25% commercial customers, and 50% city and state governments.
Only one segment is losing share, the city and state government segment. Always, always segment your market!
Page 87
EXAMPLE CASES BY TYPE Industry Analysis
“VIDEO GAMES”
Question:
The CEO of a large, diversified entertainment corporation has asked you to examine the operations of a subsidiary
of his corporation that manufactures video games. Specifically, he needs to know if he should approve a $200
million capital request for tripling the division’s capacity. What are the critical issues you should plan to examine to
determine if the industry is an attractive one for the CEO to continue to invest and why?
Approach:
Market share
4 Division is third largest manufacturer of hardware in the industry with 10 percent market share.
4 Top two producers have 40 and 35 percent market share. Remainder is divided by small producers.
4 Division sells to broad range of consumers.
Sales
4 Division sales have increased rapidly over last year from a relatively small base. Current estimate is annual
sales of 500,000 units.
4 Current estimate of industry hardware sales is 5,000,000 units annually. Industry growth has been strong
though over last few months, sales growth has slowed.
4 Division’s current sales price for the basic unit is $45 per unit.
4 Division remains less than 20 percent of parent company sales.
4 Top two competitors also develop, manufacture and sell software/games though division sells only licensed
software.
4 Industry growth of software continues to increase.
Costs
4 Division estimates current cost is $30 fully loaded. Requested expansion should reduce the cost by 5 to 7
percent and triple production of the hardware units.
4 Top two competitors are estimated to have a 10 to 15 percent cost advantage currently.
4 Main costs are assembly components and labor.
Customers
4 Division estimates much of initial target market (young families) has now purchased the video game
hardware.
4 No large new user segments have been identified.
Distribution
4 Primarily outlets of distribution are toy and electronics stores.
Page 88
“VIDEO GAMES” (continued)
Profitability
4 Division currently exceeds corporate return requirements, however, margins have recently been falling.
Product
4 Hardware standards have been established by the industry leaders.

4 Product features are constantly developed (e.g., new type of joystick) to appeal to segments of the market.
Note to the Interviewer
The primary issue of the case is to determine if the industry is attractive and, especially, if our client’s position in
that industry is sustainable. The candidate should identify issues which are necessary for assessing both the industry
and our client’s position, but should not be expected to solve the problem.
If the candidate begins to discuss too deeply a specific issue, before having covered the key issues overall, bring
them back to discuss the industry more broadly by asking “what other issues must be examined?”
If the candidate is discussing issues which seem irrelevant to the attractiveness of the industry, ask, “how will that
analysis help to assess the attractiveness of the industry or our client’s position?” Then, ask the candidate to identify
other issues which must be examined.
Solution:
Acceptable approaches would determine:
1. What is future market potential? Ask about overall industry growth, the saturation of markets, competitive
products (home computers), and declining “per capita” usage.
2. What is the competitive outlook? Should at least recognize the need to examine competitive dynamics, such
as concentration of market shares; control of retail channels; and R&D capabilities (rate of new product
introductions, etc.).
3. What will be the price/volume relationships in the future? Issues of prices need to be considered.
Better answers would address:
Market Potential
4 Recognize that there is a relationship between market penetration and growth in new users which, when
combined, yields an industry volume estimate.
4 Address the shifting mix of product purchases, in this case from hardware (player unit) to software (video
cassettes).
4 Seek to look at buyer behavior in key segments, i.e., “fad” potential of product.
Page 89
“VIDEO GAMES” (c ontinued)
Software
4 Recognize technology standards are set by industry leaders. In this situation, the division as a secondary
player will have to follow these standards.
4 Recognize that different distribution needs may exist for different products (in this case hardware versus
software).
Price/Volume Relationships
4 Discuss the effect capacity additions can have on overall industry price/volume relationships and on industry
price levels.
Company Ability to Compete
4 Should ask what the capacity expansion is designed to do.

4 Explore the cost position of the client division relative to that of other competitors.
4 Seek to understand reasons for poor profit performance of division.
Page 90
FURNITURE MANUFACTURER
Question:
You are having lunch with the CEO of a major furniture manufacturer (couches, loveseats, and tables). He shows
you this income statement for their furniture company and gives you some industry averages. He is trying to figure
out what is going on and any recommendations that would you have?
Income Statement
Gross Revenue 600 105% of Net Revenue
Net Revenue 570
COGS 496 87% of Net Revenue
Gross Profit 74
SGA 57 10% of Net Revenue
Operating Profit 17
Interest 0
Taxes 6
Net Profit 11 2% of Net Revenue
Industry Average
Returns & Allowances = 2%
COGS = 80%
Net Profit = 10% of Net Sales
Starting Points:
4 What are our client’s goals? Client is primarily interested in maximizing profit.
4 Why do furniture manufacturers have returns and allowances? If the retail furniture seller sees visible marks or
tears on the furniture.
4 Does our client have more expensive raw materials? No, they have similar RM costs to the industry.
4 Does our client have more expensive labor costs? No, they have similar labor costs to the industry.
4 Does the client’s competitors have economies of scale advantage? No, we actually have the largest sales in the
industry.
4 Does our client have more expensive transportation costs? No, they have similar transportation costs.
4 What is the market? Describe the customer segment(s) that they sell to? Our market and so is our competitors
is the medium priced furniture, as such this does not include the extremely expensive furniture so both groups
are selling the similar type furniture.
Page 91
FURNITURE MANUFACTURER (continued)
4 Who does our client typically sell furniture to (segment) ?

à End customer – Apartment dwellers and first-time home buyers
à Immediate customer – 40% to furniture stores and 60% through department stores where client has exclusive
arrangements to sell only their furniture – One dept. store accounts for 10% of all sales.
4 Who does our client competitors typically sell furniture to (segment) ?

à End customer – Apartment dwellers and first-time home buyers
à Immediate customer – 90% to furniture stores and 10% through department stores where client has exclusive
arrangements to sell only their furniture.
4 Are there price differences in what we charge the two different customer segments?
à Yes, our salespeople tell us that the department stores typically demand a price break for the exclusive
arrangement or else they switch to a competitor. They have also been pushing for larger price breaks in
recent years.
4 How do we sell to these different segments? We hire independent furniture salespeople to contract with each
store.
4 How do we compensate the furniture salespeople? We pay them a 5% commission based of Net Revenue.
4 Do the salespeople have the ability to adjust the price? Yes they do.
Possible Approach:
Consider the problem fro m both a cost and revenue perspectives. The Five Forces framework, if used properly,
allows you to realize that the main problem is not a cost issue, but a revenue issue due to the major buyer market,
department stores, that this furniture manufacture is using. They are using their buyer power to demand price
discounts or else they will switch to a competitor. That is why the rest of the industry does not rely on department
stores for much of their revenue. As such, this company is getting more revenue at the expense of poor profitability.
Identifying that this is a revenue issue is a B answer.
Solution:
The A answer also includes insight into the poor incentive plan for the independent furniture salespeople since it is
based on net revenue and not on gross margin. One suggestion may be to internalize the salespeople positions for
the department stores, especially since your largest customer, 10% of sales 60MM, the sales rep earns $3MM per
year for that account.
The A+ answer also recognizes that the 2% Net Profit includes no interest so that this company has no debt and is
under-performing which means two things. First, with loan interest, this company could be losing money, and
second, being all equity-based and under-performing may make this an attractive takeover target.
Page 92
“MERGER CANDIDATE IN THE CHEMICAL INDUSTRY”
Question:
A major chemical producer has asked us to evaluate another major participant in the industry. Both companies are
bulk commodity chemical producers. We have been asked to begin our work by analyzing the future prospects of
the target company’s main product line, a bulk chemical used in the production of plastics. Essential facts include:
4 Production of this chemical has slowly declined over the last five years.
4 Prices have declined rapidly.
4 There are 7 to 8 major producers; the largest producer has a 30 percent share; number two has 20 percent our
target company has 15 percent; the rest is divided among other competitors.
4 The two largest competitors earn a small return; target company is probably at break-even; rest are operating
at break-even or loss.
4 The largest competitor has just announced construction plans for a major new plant.
How would you structure an analysis of the target company’s future prospects in this product line?
Approach:
An acceptable approach should, at a minimum, address the following issues:
1. What markets use this chemical, and what has been the nature of growth in these markets? (End-use markets
are largely automotive-related.)
2. How much overall capacity exists now? (Far too much.)
3. What has been relative capacity utilization of competitors in the industry? (60 to 70 percent for last 3 years.)
4. What are relative cost positions of competitors? (Related to size/efficiency/age of plant; target company has
reasonably “good” position.)
Better answers will move beyond the previous answers to consider:
1. How rational is pricing? (Prone to self-destructive cuts to gain temporary share points.)
2. Are there niche or value-added uses for chemical? (Not really.)
3. Does the chemical have a major by-product or is it a by-product? (Not of significance.)
4. How often have companies entered/exited, and how expensive is entry/exit? (Entry expensive; exit cheap for
most because older plants are fully depreciated.)
5. How important is this product line to each of the competitors? (Most producers are diversified.)
The best answers could address:
1. Reasons for announced capacity expansion. (It is a bluff to try and get smaller competitors to shut own.)
2. Is regulation important? (Yes: all competitors have installed pollution control equipment.)
3. What is nature of operational improvements that target company could make? (Lots.)
4. How is product sold and distributed? (Economies of scale in marketing and transport are critical.)
5. Is there synergy between our client and target? (Not really.)
Page 93
AIRPLANE MANUFACTURER
Question:
You are consulting to a CEO of an airplane manufacturer. In the last couple of years you have gone from being
number one in market share to number two. In addition, another company has announced that it will be entering the
business and is presently tooling up its plant. As a consultant, what are the concerns your client might face, what
additional information might you want to find out, and what recommendations would you have?
Approach:
The airplane industry’s demand is a function of travel amongst two classes: business and leisure. Business travel
increases as a result of globalization. Leisure travel increases with growth of middle and upper classes. Business
travelers are primarily insensitive to price, leisure travelers are very price-sensitive.
The current competitor; a comparison:
Price, service, technology, heritage, safety. It turns out that the competitor’s plane is cheaper to operate because it is
more fuel-efficient. The consultant should ask strategically whether the firm is interested in the manufacture of more
fuel-efficient planes. The answer would depend on the future of oil prices. Instead, it may be better to try to
compete on the basis of price, safety and service.
Prevention of a new competitor gaining market share:
Solution:
Key: creation of barriers to entry.
4 Long-term contracts are pre-emptive.

4 High concern, on the part of purchases, for a proven safety track record.
Page 94
AGRICULTURAL EQUIPMENT MANUFACTURER
Question:
Your client is a large agricultural equipment manufacturer. Their primary product line, farming tractors, is losing
money. What questions would you ask of your client to help them solve their profitability problem?
Approach:
You might want to start off by asking how many competitors there are. Suppose there are two direct competitors.
4 Your clients 40% of the market, competitor #1: 30%, competitor #2: 15% with the remaining 15% belonging to
many small manufacturers.
4 Five years ago, your client had 60% of the market, competitor #1: 15% and competitor #2: 10%. Obviously,
your client has lost significant market share to its two competitors over the last few years.
4 Do all three competitors sell to the same customers?
4 Your client’s product is priced higher than the others. Has this always been the case? (Yes)
4 Are the products the same?
- Essentially yes, they all have the same basic features. Of course, tractors are not commodity items and a
few differences do exist.
4 What are the differences that allow you to charge a premium for your product?
- Your client has a strong reputation/image of quality in the market and the market has always been willing
to pay a premium for that reputation because it meant they would last longer and need less maintenance.
This can be critical for some farmers who can’t afford to have equipment break down at a critical time.
4 Are sales revenues down? Are sales quantities down? (Yes)
4 Is the price down? All costs the same? (No. In fact both the price and costs are up.)
4 Have fixed costs increased? (No. Material costs (variable costs) have gone up out of sight, and the client has no
answer as to why material prices have gone up so much.)
4 Do you manufacture your tractor or just assemble it? (Primarily an assembly operation.) Finished part prices
have gone up? (Yes)
4 Raw material prices for your suppliers? (I don’t believe so)
4 Have labor costs increased for your supplier? (No)
4 Have you changed suppliers? (No)
4 Why are your suppliers charging you higher prices for the same product? (Well, they’re not, the prices have
increased as a result of our product improvement efforts. We’ve tightened tolerances and improved the
durability of our component parts.)
4 Why do you make these improvements? (Because we strive to continue to sell the best tractors in the world.)
4 Are your customers willing to pay for these products improvements? (What do you mean.)
4 Are your customers willing to pay a marginal price which will cover your cost of implementing these
improvements? (I don’t know. I guess we assume that they will. . .)
Page 95
AGRICULTURAL EQUIPMENT MANUFACTURER (continued.)
Solution:
It turns out that the prices have been raised to cover the costs of these improvements, but the customers do not value
these improvements unless they are essentially free, so sales are down. The client needs to incorporate a cost/benefit
analysis procedure into its product improvement process. Don’t forget though, that you must consider the long-term
effects of these decisions.
Page 96
SALES OUTLETS
Question:
Below is a graph showing sales per outlet versus return on sales (ROS). (Each x represents one store.) What
hypothesis can you come up with for why some points are below the break-even line?
ROS
X
X X
Breakeven
X
X
X X X
100k 200k 300k Sales / outlet
Possible Approach:
Hypotheses
• These are new stores.

• They are below minimum efficient scale.
• They are in bad locations.
Explore each of these options.
Page 97
PIZZA MARKET
Question:
The client, a small pizza chain, is concerned that Pizza Hut’s market share is increasing, and that Pizza Hut
also has bigger margins. How do you find out if this is true?
Possible Approach:
There are two different dimensions to this question. You should approach each separately:
1. Market Share
I used the three C’s to analyze costs (effecting margins), customers (effecting revenues) and competitor analysis.
• Oven manufacturers can give information on the number of ovens Pizza Hut is purchasing, indicating any
new/larger stores and therefore reflecting market share. Also check the phone book for new Stores.
• Customer surveys can give an indication of restaurant preferences, (note you’re looking for changes in taste).
The questionnaire should be divided by time periods (e.g.: have you visited Pizza Hut in last 6 months? last
12 months?) This will give you a historical database as well, from which to analyze trends. Also, competitors
are burger chains, chicken shops, etc. Customer survey should include these to determine who is loosing out
to Pizza Hut.
• Have a meal in Pizza Hut to see what’s different. E.g.: prices, customer turnover speed, size of restaurant,
what’s on the pizzas, new products (e.g. salad bar), etc.
2. Bigger Margins
This will be based upon a cost and revenue analysis:
Revenue - consider whether prices on Pizza Hut menus have gone up.
Cost - talk to staff who may have worked there. Have Pizza Hut recently changed suppliers, improved technology,
improved worker efficiency, etc.?
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AIRLINE V. BABY FOOD
Question:
Compare the airline industry vs. the baby food industry. In which would you invest your own money?
4 Industries should be compared by going through a simple Porter’s five force analysis.
4 It turns out that competition in the airline industry is intense. Fixed costs are high and competitors keep
cutting prices till they shave margins to the very bone. Customers are price sensitive. Brand equity is
virtually nonexistent.
4 Using a microeconomics argument, you see that airlines will keep cutting prices as long as they are covering
variable costs. Since fixed costs are high, and doubtlessly financed with debt, these companies can end up
defaulting on interest payments.
4 On the other hand, the baby food industry is less competitive. There are two or three large players who do
not indulge in cutthroat pricing. Products are well differentiated. Customers we quality conscious: they will
pay a premium for quality.
4 To invest your own money, baby food is better than airlines due to higher profit potential.
Page 99
TAIWAN
Question:
You are a consultant advising the government of Taiwan. Government officials want to move from low value-added
products, like textiles, to high value-added products, like aerospace.
Possible Approach:
4 What are Taiwan’s resources?

• Labor? Skilled workforce.
• Capital? Inflows from Europe and America?
• Infrastructure?
• Components? Supplier industries?
4 What does the industry look like on a global basis?

• Is it profitable? Is it growing?
• Who are the players / competitors? What are their competencies?
• Can we find a niche?
4 Who would the buyers be?

• Can we serve them?
4 Also, what will the country lose by moving away from low value-added products, like textiles?
• Dislocation of workers
What not to do –
4 Forget about profitability and competitors.

4 Ask about Taiwan’s history and culture without addressing the issues in the case.
Page 100
BOOK PUBLISHER
Question:
Develop a strategy to help a major book publisher explore new strategic opportunities and risks.
Possible Approach
Key factors
4 Buyer power has been increasing due to the movement away from the corner bookstore towards the large
chains that give discounts to readers off the publisher’s price.
4 Internet book sales give more power to the buyer.
4 Increasing substitutes caused by video games, books on tape and video on demand.
4 Increasing competition between publishers causing reduced margins (buyer power) and saturated market
(increasing substitutes) and proliferation of titles. Also no real branding among publishers that published the
last book that you read?)
4 Increasing competition leading to higher advances to well known authors (millions of dollars in many cases).
Conclusion:
4 Become in a market leader by announcing new terms and conditions for the large book retailers. If the other
major players in the industry follow the lead, the industry may become more profitable as a whole. If not, the
client may need to move back to the old terms in the industry.
4 Focus on the books or types of books that have an expected positive NPV. The proliferation of books
probably has caused unprofitable titles.
4 Forward integrate into bookstores.
4 Develop online strategy that capitalizes on existing distribution relationships and pricing strengths.
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INTRA-OCULAR LENSES
Question:
The client produces intra-ocular lenses. It is known for premium quality and used to be the market leader, but the
overall market and the client’s share have declined. What should be the strategy to become the market leader again?
Possible Approach:
What has changed since the time of market leadership?:
Company
4 Product, prices, sales/marketing changes? Nothing significant.
Customer
4 Have customer wants / needs changed?

4 Have buying / usage behavior changed?
4 Are there new buyers?

4 Customers have become more price sensitive and the type of buyer has changed. The new buyers are
institutional buyers rather than doctors.
Competitors
4 New entrants, new products, different positioning, new substitutes? The product has become more
standardized, more of a commodity product.
Solution:
4 A new distribution system to target institutional buyers rather than doctors and a low cost product are key to
selling to new buyers in this commodity market.
4 Cost leadership is important because of the commodity nature of the product.
Note: You can change the frameworks to be more useful to you and to be less obvious to the interviewer. Here the 3
C’s framework was used, but many of the Porter concepts were also adopted in the questioning.
Page 102
SPARK PLUGS
Question:
We have a client who is interested in opening a manufacturing plant for spark plugs in Spain. How would you
advise them?
Approach:
The interviewer begins by pushing for your snapshot of the size of the Spanish spark plug market. Think through all
the uses for spark plugs in an economy (cars, trucks, diesel engines, lawnmowers, etc). How many sparkplugs per
cylinder in an engine? What is the market segmentation of the car market (4-cylinder vs. 8-cylinder cars for
instance)? How many cars per year are manufactured in Spain (new market each year)? Ignore corporate fleet
demand and truck market - only look at consumer market. What is the economic life of spark plugs?
One possible figure.
Assume:
Mention other uses of spark plugs but focus on passenger car market for simplicity.
Population of 36 million.
Assume number of new cars bought each yr. per family
Assume economic life of new cars
Number of spark plug changes over economic life, etc.
After achieving an annual demand number for spark plugs, analyze the market conditions. Use Five Forces.
Suppliers/ Buyers strength, barriers to entry, threat of substitutes, firm rivalry conditions. Probe interviewer for raw
materials needed for spark plugs. Is Spain well situated because of market isolation? Low wages? Proximity to
supporting industries, manufacturing consumers, etc. What are the different cost components to spark plugs (raw
materials, labor content, transportation, margin, etc)? What are technology needs in the manufacturing process?
Understand order-winning criteria for auto manufacturing contracts. The firm wants to capture how the candidate
will attack, frame and dissect a very complicated process in both a country and with a product that they are
unfamiliar.
Note: This case incorporates a tour de force of Porter’s Five Forces analysis, a country Diamond overview, your
ability to conduct "guesstimations "in foreign markets and a basic understanding of supply chain interaction.
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PETROL STATIONS
Question:
A large oil company with nation-wide retail petrol stations wishes to evaluate the competitiveness of its outlets.
What would you want to look at, how would you look, what would you hope to find out?
Approach:
4 What drives customer preferences? (subjectively and empirically)
4 If the client has enough stations, consider the different stations in similar customer situations (traffic flows,
population, competition) and understand how differences in format, pricing and services affect volumes. -
This is a convenient point at which to apply the 4 Ps framework.
4 Where good peer groups are not available, it is possible to, pilot changes in certain aspects of the store’s
situation to understand what effect these changes have. This may then generate follow up questions about
how to design and ensure the reliability of such tests.
4 Market research to understand subjective customer preferences. A survey combined with demographic
profiles. (This is a good point to cover things you think might be important about gas stations such as price,
convenience store, service, paying at the pump, easy entrance and exit, well lit, design aspects, ease of credit
card payment, etc.) It would also be appropriate to compare with industry averages.
4 Brand loyalty - if the good locations in a market are foreclosed to me, does it matter how competitive my
stores are? Will customers switch stations - what switching costs are involved and what type of benefits do I
have to impart to win volume?
4 Consider both content issues (such as using the 4 P’s framework) and the process issues (i.e. how to get the
required information - as covered in the points above).
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RETAIL CHAIN
Question:
Our client: A big Canadian Retail chain

Problem: Wal-Mart has just brought a retail chain in Canada. Should we be worried? Why? What can we do?
Approach:
4 Data: We own 20 stores, Wal-Mart just bought 50. We sell more or less the same as them, and their stores
are close to ours. Therefore, they can be a threat to our operations.
4 Are they a threat? Check the financial data:
Us Wal-Mart
Revenue 100% 100%
COGS 50% 53%
Store Operations 20% 22%
Corp. Overheads 20% 20%
Operating Profit 10% 5%
4 This data doesn’t tell us much: our higher profits could come from higher prices, which we wouldn’t be able
to maintain once we had to compete face-to-face with Wal-Mart. Therefore, the next thing to do is to
compare their prices to ours. How? Easiest way (what they actually did): go through a Wal-Mart store, and
take notes. Compare a set of their products with ours.
4 Once they did this, they found that Wal-Mart was 10% cheaper. What does this means?
4 It means that if we are forced to match their prices, we will have an operating profit of around 0%.
Solution:
What can the company do?
4 Lower costs. Problem Wal-Mart is exceptionally good in this area, and we will probably be unable to match
their costs.
4 Sell them our chain, give in. Not a viable solution, so move on…
4 Try to differentiate us: appeal to the Canadian’s sensor of patriotism (buy Canadian). Will probably not
work in the long run, because eventually people will get tired of this and just buy where it is cheaper.
4 Use our better knowledge of the Canadian customer to optimize our product line, targeting Canadian tastes
and preferences.
4 Change our product line: Sell some products that Wal-Mart does not offer, products that can be sold at high
margins.
Page 105
INDUSTRY ANALYSIS - EXAMPLES
1. An insurance company, which used to be profitable, has been loosing money for the last couple of years.
Assess the situation. What could be the cause?
2. What are the potential problems you should consider if a Japanese millionaire asks you the viability of
franchising a NFL football team in Japan?
3. A company had 1200 sales representatives throughout the U.S. and although their merchandise is
technically superior, their sales are falling. What can you do to recover sales?
4. Your client is a motorboat engine manufacturer. A competing engine manufacturer has just purchased a
pleasure boat maker to begin selling a complete product. What should our client do?
5. Your client is a cash register maker. It is the U.S. subsidiary of a Japanese firm. The registers are made in
Japan. U.S. profits are plummeting. Why?
6. Your client is a cellular phone network company. The industry is a regulated duopoly. There is high churn
in the market; 2-3% per month. The market is projected to have a net growth of 40%. The client wants to
better understand the dynamics of its customers and the market. What would you examine to address these
questions?
7. I am a manufacturer of railroad cars in a declining market. The firm is losing market share and money, but
thinks that the industry may rebound in the near future. What should I do?
8. Client is a regional Bell company looking at the phone book publishing business. Growth had been 15%
for five years following the divestiture and deregulation, but it has stalled. The clients want to know how
you would evaluate the situation.
9. Your client is manufacturer/distributor of disposable hospital gowns. Industry sales grew quickly until two
years ago, then leveled off. Half of the hospitals say that cloth gowns are more economical, while the other
half believe that disposable gowns are the better choice. What should the client do? Part II: Given that the
cost advantage for cloth is 3.75 to 1 in favor of cloth for non-customers, what are the strategic alternatives
available to the firm?
10. What are the concerns of the Dean of the Business School?
11. Do you believe that there are economies of scale in the airline industry? (There are 3 or 4 big domestic
airlines: American, United, Delta, & various smaller players)
12. A client has a theme park in Florida. Recently, although revenues have grown, the company has lost
market share. The company is trying to understand why this has happened, and what it can do to improve
its position.
13. Your client is Domino’s Pizza. You’ve just heard that Pizza Hut is entering the home delivery business.
How big a threat is this for Domino’s?
Page 106
INDUSTRY ANALYSIS (continued)
14. A steel company is losing volumes and profits. Why? What should they do?
15. What are the differences between distributors of beer and groceries?
17. A beer company has asked our firm to review the beer industry; considering all the changes in drinking
habits & new products. Assess the future market and discuss what strategy the company should pursue.
18. A publishing company has four factories, they want to award the factory managers for their performance in
managing overhead. You are given the following graph. Which plants are more efficient?
1 3
2 4
Note: Whenever given a graph in a case interview, the idea is to ask yourself, “What is this graph telling me?”
and based on how the axes are labeled, “What would I expect this graph to look like?” Then look at what is
actually drawn on the graph and see if it makes sense in comparison to what you would expect. The answer
to this case is that plants 1 and 2 are more efficient than plants 3 and 4 respectively. Plants 1 and 2 have
lower total overhead costs than plants 3 and 4 respectively. The downward sloping line drawn-in is
expected. If overhead were assumed to be a fixed cost, then overhead per page would drop as total pages
increase. Therefore, there are economics of scale in publishing. As far as low-cost production is
concerned, if capacity at plant 1 cannot be expanded, plant 2 is the best plant you’ve got. There is lower
total overhead than plant 4 and lower overhead per page than plant 1.
Page 107
EXAMPLE CASES BY TYPE Market Expansion
CO-BRANDED CREDIT CARDS
Question:
An oil company has its own credit card that many of its customers use when they fill up their car with gas.
Recently, other companies have begun entering into agreements for co-branded cards (i.e. Amoco + Visa). This
company wants to know if it should do the same. Either way, should it continue to offer its own credit card?
Possible Approach:
CUSTOMER
• Do current customers value the card - do they use it? About 20% use it and like it.
• Would a co-branded card draw new customers or increase loyalty? Yes, people indicated they’d be more
likely to visit our stations if we had the co-branded cards. However convenience is the main consideration
when selecting a location.
COMPANY
• Is the company currently performing the processing in-house - is it profitable? Yes, they’re doing it in-
house but are not making much money on it.
• Would the co-branded card processing be out-sourced - does it offer attractive margins? That’s an option;
the margins appear to be better if processing is out-sourced.
COMPETITORS
• How many competitors have co-branded cards? Only two, but others are looking.
• If they don’t move now, would their choice of partners be limited? Probably.
RECOMMENDATION
• Offer the co-branded card, but out-source it. Given that existing customers use and like the company card,
they should continue offering it, but attempt to shift customers to use the co-branded card.
• The data processing operations for it should also be out-sourced. They should research marketing (co-
marketing) tactics that could improve the attractiveness of the card to the company’s customers - with the
intent of increasing the number of customers.
• Considered the marketing research that had been conducted.

• Explored the focus of the company (they had no business trying to run credit card processing).
Page 108
TIRE MANUFACTURER.COM
Question:
You are having lunch with a former client, the CEO of a major automotive tire producer. S/He explains that they
have been toying with the concept of the company making a foray into e-commerce. S/He hasn’t devoted much
thought to the strategy involved and would like your input regarding the attractiveness of such a move.
• Client is currently largest player in the industry but facing traditional domestic competition in addition to
increased foreign competition
• Client’s competitive advantages have traditionally been brand, customer relationships and technological
innovation.
• Client’s main business is supply to original equipment manufacturers (OEMs)
• Secondary existing channel includes franchised service and retail outlets
• Third channel is direct sales to industrial clients (fleet services)
Approach:
Key Issues:
• What are the capabilities of e-commerce?
• Direct sales
• Service complement via customer service, product information, etc.
• Sourcing data/order management system
• Channel data/order management system
• Other intranet capabilities
à Client is primarily interested in direct sales opportunities (other uses of electronic data interfaces are in use or
under development)
• What is the market?

• Segment description and size
• Who would buy tires over the internet (installation?)
• Break the market down
• Draw a pie chart! How big of a slice can you get?
• What are the advantages to the consumer for buying tires online?
• Does that overlap with segments served by existing channels?
• What are competitors doing? How will they respond? How quickly?
• What are the alternatives to e-commerce? (Phone orders, direct mail, etc.)
• What are the advantages of this channel? Disadvantages?

• Cost reductions? Margin comparison to other channels?
• Underserved segments?
• What investment is required? What is the relative ROE compared to other channels?
Page 109
• What will be the impact of an e-commerce strategy on existing channels? What will that do to channel
relationships?
• How is the product delivered? Installed?
• Is there an advantage to forming a strategic alliance with an e-commerce merchant prior to developing our own
capability?
Notes:
Consider the problem from both marketing and operational perspectives. Framework starts from “where’s the
market going?” and goes to operating tactics to enable necessary innovation, “how do we get to there?”
Identify what segments might want to buy online (“bargain hunters”, “web surfers”, etc.). Why do they want to buy
online? (Price, convenience) How big are these segments? (pie chart to get percent of total market then size total
market). Which segments are most profitable to serve? Why? Which are growing the fastest? Why?
How do you deliver the “order winning criteria” (OWC) that the segments demand? (do not use the term OWC,
they’ve heard it 20 times so far that day). One concept is to use the existing service and retail outlet channel in
combination with just in time (JIT). Customers would purchase tires and schedule an appointment for installation
online. Installation would occur at a local service and retail outlet of the client’s. If convenience is the OWC then
perhaps the vehicle is picked up at the consumer’s home or business and returned later that day.
The online order might initiate the delivery of the merchandise to the outlet via company shipping or expedited
shipping (UPS?) and be connected to the company’s inventory and manufacturing management systems
(manufacturing resource planning -- MRP, enterprise resource planning -- ERP). This saves money for the company
while allowing channels to maintain a margin. It also reduces costs for the service and retail outlets through lower
inventory levels and smaller stores while increasing customer satisfaction through guaranteed stocking and
improved service (appointments).
Same concept could be used with alternative channels (Sam’s Club, Kmart) in areas without service and retail
outlets to allow expansion without incurring the administrative costs related to outlets (which may no longer be the
most efficient/profitable means of selling tires to consumers).
Does the company have the capabilities required to enable this strategy? If not, how do they develop or acquire
them? How will competitors react? Is the company better off regardless of what competitors do? How does the
company sustain an advantage in the electronic marketplace? Does it make sense? Should the company do this
itself or seek a partner?
Page 110
MEDICAL PRODUCTS MANUFACTURER
Questions:
The client is a producer of medical products selling primarily to hospitals and doctors. The client wants to
expand/enter the home health-care market. The initial investment will be $70 million. How would you evaluate
whether or not the expansion/investment is a good idea? What are the key issues and key success factors you would
evaluate? What information would you need to make the decision?
Approach:
New Market Analysis:
A 5 forces type framework would be useful in analyzing the new market.

Need to gather as much information as possible about the new market.
Questions you’d want to consider:
What is the size of the home health care market?
What does the competition currently look like?
Who are the players?
What is their relative market share?
How long have they been in the market?
What do they compete on?
Is the market growing?
Are there any barriers to entry that I would need to consider?
Operational/Current Capacity Analysis:
Does the client have excess capacity?

Will there be any additional equipment needed?
Are the manufacturing processes similar? Is the new market a complementary market?
Will we need a new supply chain?
Financial Analysis:
Quick NPV analysis – discuss how you would determine if the expansion will add value to the company (i.e. will
the annual cash flows discounted back at the WACC provide a positive NPV?)
Strategic Analysis:
Does the expansion fit with the companies’ vision?

Does it fit with the company’s image?
Is the new market complementary to their current lines of business? Is it a logical fit?
Is their current market mature (i.e. do they need to diversify in order to maintain sales/earnings growth?)?
Page 111
ACQUIRING EXISTING AIRLINE ROUTE
Question:
A major airline is considering acquiring an existing route from Tokyo to NY. How can it determine if the route is a
good idea?
Approach:
• The airline could carry out a simple cost benefit analysis. It should forecast revenues and operating costs.
• Revenues will be determined by occupancy rates and expected prices. Both of these will be determined by
expected demand, the competitive environment, and the extent to which our client could win over passengers
from competitor routes.
• Operating costs will depend on expected fuel costs, incremental costs for landing rights, etc. It is also very
important to estimate the cost of cannibalization of existing Tokyo-LA, LA -NY routes. And last but not
least, it is important to note that losing passengers to cannibalization is better than losing them to competitors.
Page 112
ACQUIRING NEW AIRLINE ROUTE
Question:
A major American airline is considering establishing new routes from Tokyo to several sites in the United States.
Would you recommend that they take this action?
Approach:
• This is different from the above case as we are dealing with establishing new routes as opposed to
acquiring existing ones.
• This case requires a complete examination of the customers and competition.
• Customers consist of both business and leisure travelers. While business travel from Japan to the U.S. has
been declining at about 25% over the last year, leisure travel has increased at a faster rate. It is expected
that leisure travelers will continue to grow at a faster rate than business travelers. Currently, about 50% of
all Japanese travelers to the U.S. are leisure travelers.
• It is extremely expensive to buy gates at Tokyo’s crowded airport.
• As it turns out, competition will come not only from other airlines at Tokyo, but also from a new airport
that’s being built in Osaka.
• Furthermore, Osaka is expected to attract a very high percentage of the leisure travelers. It is very
inconvenient for leisure travelers to fly out of Tokyo, where there’s heavy congestion and where prices tend
to be higher due to high gate prices. It is estimated that the leisure travelers at Tokyo airport could decrease
by 25-30%.
• If our client continues with their plans for buying gates in Tokyo, they will find it difficult to attract the
growing percentage of leisure travelers needed for their new routes to the U.S. It probably makes much
more economic sense to buy gates in Osaka instead.
• Another insight is the recognition that Osaka will increase the total number of airport gates in Japan. The
intense demand for gates at Tokyo will decrease considerably with the greater supply of gates at Os aka.
This fact most likely doesn’t change the benefits of buying gates in Osaka. However, there may also be a
new opportunity for our client to buy gates cheaply in Tokyo to establish new business traveler routes to
the U.S.
Page 113
BABY BELL DIVERSIFYING
Question:
A Baby Bell company is interested in diversifying into other areas besides telecommunications. They are
considering entering the market for electronic home security systems. Would you recommend that they do so?
• The company is a holding company. They have previously made unsuccessful forays into software and
into real estate.
• The home security industry is highly fragmented. The top five players in the industry generate less than
4% of the total industry revenues. This implies that the industry largely consists of small, regional
companies.
• 10% of all residences currently own an electronic security system.
Approach:
• This is in some sense a razor and razor blade sort of business. The economics are:
Item Retail price Cost/Margin
Equipment & Installation $500-$1500 0-10% margin

Monthly service $20/month $5/inonth
• What strengths/competencies of the Baby Bell company are useful in this market?
Installation expertise
Operator services
Transmission system (phone lines)
• It turns out that the “expensive home” segment of this market is saturated. Growth has been slow in recent
years.
• Price sensitivity is unknown in “moderate-priced home” segment.
Conclusion:
The conclusion is that this business is a reasonably good fit for the company, and that more market research needs to
be done to assess the growth and profit potential of each segment of the market.
Page 114
PAYROLL PROCESSING
Question:
A company is very successful in the payroll processing business, allowing employers to out-source their payroll
function. The client is considering an expansion into the processing of pension checks for financial institutions.
Does this product extension make sense for a low-cost producer, and how can they best penetrate this market?
Possible Approach:
• The crucial question is how the checks are currently being processed (in-house by fund managers and banks
or out-sourced to other providers) and why?
• It turns out that virtually all financial institutions which disburse checks on a regular basis process them in-
house and are relatively cost inefficient in doing so. This however, does not necessarily present a market
opportunity on the basis of cost reduction. The check processing fees are an attractive profit center for all but
the smallest financial institutions because they can pass the costs (plus a huge margin) on to their clients.
Since the check processing fees are a relatively small part of the total fund management expense, the margins
can be very large without customer complaints. This makes the sub-business of in-house check processing
very attractive to many of the potential customers of the outsourcing business.
• Another factor which makes this product extension unattractive is the importance of accuracy and timelines in
check disbursement. The financial institutions would lose a great deal of goodwill if their “out-sourced
check” processor screwed up, and they had to explain to thousands of upset pensioners that it was another
company’s fault. Spending a little more to have it done in-house was considered prudent by many fund
management institutions.
• Note - the check processing business is not always cost driven (i.e., low cost might be critical to small
employers but quality may be more important to fiduciary service providers) and that a cost center for some
potential clients (businesses) might be a profit center for others (financial institutions).
Page 115
CHOLESTEROL METER
Question:
A client company has patented a cholesterol meter which can be used in the home. It is designed for patients who
have a history of high cholesterol and are controlling their cholesterol levels through medication. How should they
introduce this new product?
Possible Approach:
• There was no blinding insight necessary, only the acknowledgement that marketing consumer medical
devices was unusual because neither the decision makers (doctors) nor the end (patients) were actually
paying for the product.
• Ideally insurance companies would be paying for the meter under general health coverage.
• This divergence between decision, use and payment is critical to developing a marketing plan and gaining
acceptance.
Solution:
The desired answer included acknowledging the unusual structure of the purchasing decisions, delineating the
various key steps (insurance company acceptance, doctor acceptance, regulatory acceptance, patient training and
support) and determining if the economics of the product were attractive.
Additional Information you should ask for:
• Strength of patenting and possibility of competition.
• Costs of production.
• Size of potential market.
• Client’s existing distribution channels for home use medical devices.
• The efficacy and ease of use of the product.
• The client’s existing reputation.
• Whether insurance companies would pay for the product.
Page 116
LONG LIFE BULBS
Question:
A light bulb manufacturer currently sells light bulbs for $1 that last one year and cost $.50 to produce. There are
three other competitors, and each of the four (4) producers has 25% market share. They develop a new light bulb
what lasts 10 years and costs $1 to produce. You can produce either the old or the new bulb. Which one do you
decide to sell?
Possible Approach:
4 Company must have low variable costs and high fixed costs, so you want volume.
4 While the bulb could be sold at a price where consumers are indifferent between two types, a lower price
could lead to increased market share.
4 Just because it lasts for 10 years, it will not run the industry. The higher price should compensate producers
for reduced overall volumes.
4 A potential problem with increased production is that if your competitors develop the new bulb and regain
their market share, you will be left with excess capacity.
Produce the new light bulb.
Page 117
UTILITIES
Question:
With the deregulation of the electric utilities industry, there is increasing competition in the U.S. A client competing
in this industry in the U.S. (American company) is considering expanding overseas. They have been slowly
investing throughout the world and have the opportunity to potentially enter into a joint venture with a Malaysian
electric utility company. They deal will encompass two U.S. power plants and 2 Malaysian power plants and the
two companies will split the profits 50/50.
Should the client enter the joint venture?
Approach:
Clarify the alternatives:
4 Why would the client do this?
4 What do they get out of it?
4 Think about doing a COUNTRY ANALYSIS – is the country a stable place to do business? What is the
economic outlook? Are there growth opportunities? What does the electric utilities industry look like in
Malaysia? Competition, size, growth, etc.?
4 Are there barriers to entry for a foreign firm? If so…the JV would be an easy way for the American
company to enter the market without all of the difficulties/restrictions that they would face if they attempted
to enter on their own.
Broad strategic analysis
4 Try to think of the benefits for the U.S. Firm:

Lower barriers to entry if they go with the JV
Diversifying their interests – beneficial since the U.S. market is highly competitive
Adopting a presence in the foreign market
Diversifying their risks – don’t put all eggs in one basket
4 What is the downside?

Country risks – economic & political stability
Currency risks
Financial Analysis
NPV analysis – will the cash flows provide value?
Page 118
50-YEAR LIGHT BULB
Question:
You are an inventor. You have invented a light bulb that lasts 50 years. You want to market it and, in order to secure
the finance, you need to prepare a 10-year plan for the bank.
Possible Approach:
Start out by:
4 Gauging, market size, comparative costs (cost of light bulb x no. of times you have to replace it), and
distribution channels.
4 Assess at what level you can sell it for - and thus estimate revenues.
4 Use of 3 Cs - Customers (who are they), Competition (what do they have), Capacity (what is it and could you
be undercut or undercut them?).
4 Explore opportunities for light bulbs of differing lengths less than 50 years as you may end-up cannibalizing
your own market.
Conclusion:
4 If your light bulb lasts for 50 years you pose a real threat to the current manufacturers. Assess their level of
profitability and, assuming they are not likely to quickly discover this technology, offer to sell them the
patent for the light bulb as you could otherwise destroy their market (replacements would only then be
needed every 50 years - good business for a few years only, for 10 years - unlikely you’ll have a market for
that length of time!). If they refuse to buy it, or offer too low a price then start production and earn your
money that way.
NOTE to establish a business plan, you need to cover:
• initial capital investment required
• fixed and variable cost elements of running costs
• capacity and expected level of utilization
• level of working capital required for day to day operation
• expected sales - initially, and the expected growth over the 10 years
• Given the issue of cannibalization you should address the question of whether the machinery can be used for
other purposes, once sales reduce.
Page 119
NEW CAN
Question:
Drink cans were traditionally made from three separate pieces of metal (top, bottom, and side). A new technology
known as the two-piece tin is now in use at many canning facilities in the U.S. Imagine that you are in the executive
conference room of a large U.S. canning facility that is considering transferring to the two-piece technology. Take
on the role of each of the vice-presidents of the facility and present to me what you think each of them would have
to say about the decision to stay with the three piece or move to the two piece.
Possible Approach:
An impressive way to start this answer would be to ask if the factory was organized by function or process. Since
factories are typically functionally organized. I would start by saying something like:
“Why don’t we go along the value-chain and explore the benefits and advantages for a manager responsible for each
segment of the chain?
This is not an exhaustive list, but it serves to give you some ideas.
PROCUREMENT
• Lower metal content reduces raw materials inventory, freeing up space and cash.
• Identify new suppliers for high tech materials or work with existing to change material specs.
HUMAN RESOURCES
• Downsizing from increased automation.

• Retraining lead-times.
INFORMATION TECHNOLOGY
• Probably plug and play with legacy systems.
INFRASTRUCTURE (Finance, accounting, quality. . .)
• Where is the money coming from?

• We should be able to sell the three piece line to a subsidiary or company operating in a developing country.
OPERATIONS
• Change-over options (pilot or parallel run unnecessary unless we are an early adopter, more likely a shut
down start-up implementation utilizing around the clock vendor technicians and our engineers.
• Large positives with new machinery: lower maintenance, better control interfaces, high volumes and
tolerances, less staff but more highly trained.
Page 120
NEW CAN (continued.)
DISTRIBUTION
• Infrastructure compatibility (pallet sizes, stacking height, handling- ease. . .)
SALES AND MARKETING
• Customer reaction - are we an early adopter - if not - no issues, if yes, some education required e.g. cost
and environment - less waste, ring pull stays with the can, so less litter.
SERVICE
• Non-issue? Explore.
One problem with this case and many in general is that it parallels a HBS case - Crown Cork & Seal. If the
interview knows that it is taught in your core strategy class he / she may expect:
1. A much richer answer.
2. You to reveal that you are familiar with the case - I wouldn’t tell them before starting since this will raise
expectations.
However, it may be that the interviewer can tell that you have done the case before, because you answer too quickly
and in too much detail for it to be spontaneous. If this is the case, it is better to be open about your familiarity with
the case.
Page 121
REPLACING ALUMINIUM
Question:
The client is in aluminum production. The market for aluminum is declining slightly. The client has a new
technology to use plastic in place of aluminum in some products. The completion is six (6) months behind in
developing plastics. Should the client pursue plastics or stay with aluminum?
Approach:
ENVIRONMENT
4 Explore the reason for the decline in aluminum market: is plastic replacing aluminum?
4 What about cannibalization of exis ting products?
COMPETITION
4 Expected actions of competitors - not a co-operative oligopoly - high rivalry in declining aluminum industry
will lead to price wars and declining profits.
PLASTICS MARKET
4 Profitability in relation to aluminum.

4 Customer needs / desires satisfied by plastic - does plastic offer significant benefits? Is it inevitable that the
aluminum producer will shift towards plastics?
4 New competitors in the plastic market?
4 Costs of entry - minimum efficient scale for plastic is 10% of the volume of the aluminum market.
4 Fit with current production (use excess capacity or must build new plants?) and distribution
4 Are there other substitutes for aluminum and plastic?
KEY ISSUES
4 Potential cannibalization.
4 High rivalry in a declining industry (aluminum) will lead to price wars and declining profits.
Page 122
NYC BANKING DEMAND
Question:
How would you determine whether a location in NYC holds enough banking demand to warrant opening a branch?
Approach:
4 The demographics of the area surrounding the prospective branch should be examined. Population, business
concentration, income levels, etc. should be compared with those of historically successful branches.
4 Competitor reactions could easily make this venture unprofitable, so it is essential to anticipate them.
4 These will depend on the importance of the area to competitors (in terms of profits, share, etc.).
4 The client will have to match competitors’ incentives to customers – we should estimate the cost of these.
4 The client must examine if the new branch would complement their existing competence and strategy (retail
or commercial; high growth or profitability, etc.) and what purpose it would serve. If the need focuses on
deposits and withdrawals only, maybe a cash machine would suffice!
Page 123
ISRAELI TRAVEL AGENCY
Question:
An Israeli travel agent has been extremely successful. His primary source of revenue is customers who fly to and
from the US. He manages to fill up over two plane loads on a daily basis. Given his success, he is considering
buying an aircraft and flying the US-Tel Aviv route himself. What advice would you give him?
4 The client is attracting customers due to his own promotion and reputation. He will probably continue to do
so if he were to buy his own aircraft. Also, access to hubs, etc. would not be a problem.
4 If the route is extremely busy, it is probably very lucrative for other airlines too. The dominant operator on
this route is El Al (a large airline with deep pockets) that finds this route extremely attractive.
4 If our client were to enter the industry, he would doubtlessly trigger a price war initiated by El Al since, if he
were to do so, other small operators would want to follow our client’s lead and soon El Al would pretty much
lose this important source of profits.
Approach:
4 The only way our client could fight this price war is by differentiating itself from El Al and other airlines and
charging a price higher than El Al’s. But any such move towards differentiation will be matched by El Al,
and our client will be forced to go out of business. It is therefore best to maintain status quo.
Page 124
GROCERY STORE BANKING
Question:
One of our clients, a supermarket chain, is considering opening an in-store bank. No other competitors in their area
are currently doing this. How should we help them think about this?
4 Floor space required is equivalent to a florist department, etc. There are currently no other better uses for this
floor space.
4 There are three options for the project:
- Start own bank.
- Joint venture with an existing bank.
- Lease the space to an existing bank.
Approach:
4 There is little opportunity cost in launching this project.

4 Revenues will come both from bank transactions and effect on consumer habits.
4 Bank revenues depend on nature of agreement.
4 If JV or own bank it will be driven by types of transaction (savings, checking, other low margin transactions)
and number of transactions per day. Estimates can be gotten from:
- JV partner
- Industry information
4 If leasing, flat fee (can explore what it’s worth to a bank).
4 Consumer habits may be changed by increased traffic and increased sales per person.
4 Traffic may increase due to bank “draw”- need to estimate.
4 Access to cash may allow for larger purchases (ATM and credit card sales do the same thing).
4 Discuss the risk/reward tradeoff of strategic choice of how to approach project.
Page 125
CONSULTING FIRM (1)
Question:
You are the managing director in a large international consulting firm. Traditional strengths of your firm have been
solving strategy and organizational issues. Recently, you have noticed an increasing number of your firm’s
proposals are being rejected because of a lack of information technology expertise in your firm. So far, your firm’s
growth has been strong enough that proposals lost have not hurt annual earnings. Nonetheless, you are becoming
increasingly concerned about the need to develop the firm’s capabilities in information technology.
1: Assuming your concern is valid, what reasons will you provide to other partners about the need to acquire
information technology skills?
2: Assuming you are able to convince other partners of the importance of IT expertise, what steps would you
take to rapidly build IT capacity in this area?
3: What are the major risks in executing an IT capacity-expansion?
Approach:
1: Good answers focus on the value of IT to clients: discussion topics include the increasing importance of
information in business, strategic value of information and information flows, importance of information
systems for implementing new organizational structures and management control systems.
Better answers focus on the costs of losing clients to competitors: discussions included the encroachment
costs of having clients talking with competitors about IT problems, risk of losing credibility with clients by
not being able to solve a problem.
2: Good answers will focus on various methods to build expertise: buying expertise by acquiring another firm,
by raiding IT practices of other firms for a few key consultants, building capacity through recruitment of IT
experts and training them to be consultants, building capacity by training current consultants in IT practice
skills, establishing a strategic alliance with a IT boutique firm.
Candidates should discuss the pros and cons of each method proposed: impact on firm’s current culture, cost
to the firm, time needed to build expertise, etc.
Better answers will realize the importance of stimulating client demand as capacity builds through seminars,
articles strategic studies in IT areas…
3: Good answers depend on the expansion methods discussed, but an important issue is the loss of the firm’s
focus away from just strategy and organization.
Better answers will focus on the difficulty of implementation in IT, rapid technology changes in the IT
industry require significant ongoing training and development costs; new practice cultures may be
significantly different from current culture, especially if “external experts” are brought into the organization.
Page 126
SELECTIVE BINDING CAS E
Question:
Your client is a major fashion magazine that has been offered by its printer a proprietary new process called
selective binding, which enables publishers to customize the pages included in magazines based on demographic
data known about the reader. For example, an ad in Better Homes & Gardens for lawn chemical services could be
placed only in those issues going to subscribers who live in houses and not to those living in condominiums or
apartments. In this way, advertisers can focus their communications on the demographic segment they are targeting.
Would you advise your client to take advantage of this new process and offer selective binding to its advertisers?
Approach:
This is a pretty straightforward cost/benefit analysis. The magazine would want to consider offering the service to
its advertisers if it would be able to enhance its earnings by being able to charge its advertisers a premium for being
able to more exactly and efficiently target the demographic segment they want to reach. Of course the increased
revenue from the any premium must be able to offset any revenue lost as advertisers stopped having to pay for
advertising for the segment they are not targeting. The interviewee could start the analysis by obtaining the
following information from the interviewer:
The only breakdown possible on your database is between subscribers who make under $50,000 and those who
make over $50,000.
There are 1 million readers, 80% of who are subscribers. Twenty-five percent of subscribers make under $50,000.
The same mix applies to the newsstand buyers according to readership audits.
Most advertisers are selling high-end fashion products, so 75% of them are targeting the high-income group.
The service is being offered to your client free for 3 years since the printer wants to promote the client’s use by
getting a major magazine to start using it. The client charges $50 per thousand per full-page and (selective binding
can be offered on full-page ads). Therefore revenue associated with a single inserted page (front and back) in an
issue is $100 per thousand.
The client’s closest direct competitor has 500,000 readers, 100% of who are subscribers. Effectively, all of their
readers make over $50,000. They charge $70,000 for their full one-page ads.
Since the printing cost to the client of selective binding is zero, the client simply needs to evaluate cost on the basis
of revenue per thousand gained or lost as their advertiser base uses the service to better target their ads to their
desired segment. Presumably, instead of 100% of advertisers paying the full $50/thousand per page, the 25% of
advertisers targeting the lower income segment will choose to advertise only to the 25% of subscribers falling into
that segment and the 75% of the advertisers targeting the high-income segment will advertise only to the high-
income subscribers (75% of subscribers). Assume that all advertisers continue to advertise in 100% of the
newsstand copies. The revenue effect of this change can be calculated by looking at the impact the change would
have on average ad rate per thousand on subscription readership:
New ad revenue per page = Old ad revenue per page X [(% low income subscribers X % low income target
advertisers) + (% high income subscribers X % high income advertisers)]
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SELECTIVE BINDING CASE (continued)
Thus,
New ad revenue per page at old rate = $50 X [(25% X 25%) + (75% X 75%)]
= $31.25 < $50
Now the question is, can ad rates per thousand on the selective binding portion of ads sold be increased sufficiently
to increase average revenue per thousand over what it is today? To answer this question, your client’s ad rates must
be looked at from the perspective of their advertisers. If you consider the advertisers targeting the high-income
group, their alternative to advertising in your client’s magazine is to put their ad dollars toward the 100% high-
income readership competitor. The cost per thousand high-income readers with the competitor magazine is:
(Page rate X total readership) / (portion of readers who are high income) = ($70 X 500,000) / 500,000 = $70
Thus $70 is the maximum price per thousand the client can charge its advertisers for selectively bound ads before
the advertisers would switch to their competitor. Note that currently, the client is cheaper buy for these high-income
advertisers even though they are paying to reach readers they do not want:
($50 X 1 million) / 750,000 = $66.67
If the client charged $70/thousand for selectively bound ads, average revenue per thousand to the client would be:
$70 X [($25 X $25) + ($75 X $75)] = $43.75
Since $43.75 is less than the $50 that advertisers are currently paying, the magazine should not be offering
advertisers the selective binding service.
Of course, there are other issues which interviewees might want to mention such as the possibility of price
discriminating between high- and low-income advertisers, the potential for and cost of expanding the advertising
base using selective binding as a selling tool, etc. However, it is important by the end of the interview to have
reached a recommendation regarding the initial regarding the initial question posed by the interviewer. To mention
these other possibilities and areas for further investigation is certainly worthwhile, but it is also important not to get
too far off track or to complicate the issue so much that a final recommendation is never reached.
Page 128
MARKET EXPANSION
1. What is your understanding of the organizational structure of the consulting industry?
2. A large glove manufacturer with one major competitor sells to department stores and wholesalers. How
would you assess competitors’ revenues and costs?
3. A medical manufacturer is thinking about introducing a new product; prepackaged, custom-made, sterile
procedure kits. These kits would contain sterilized apparatus used in operating theaters; e.g. gloves, knives,
etc. A kit will cost 10% more than if a consumer bought individual components. The manufacturer wants
to know two things: a) How big is the opportunity?, b) what are the economics of the business?
4. Your client is an investment company that provides various services (e.g. CDs, IRAs, and Mutual Funds) to
individuals. The company is thinking of expanding to Europe. A) Should they undertake this expansion?
B) If yes, and given that transaction processing is very computer intensive & the US office currently has
excess capacity, the company wants to know if it would be a good idea to do the “back-room processing of
paperwork” the USA?
5. You are a car manufacturer and are planning to out-source piston production. What variables would you
consider?
Page 129
EXAMPLE CASES BY TYPE Pricing
PHARMACY OUTLETS
Question:
Major discount retailer with over 1300 pharmacies. Pharmacy operations have had flat sales in a growing industry.
Profitability is very poor relative to industry. Chain has history of decentralized pricing and promotion for
pharmaceuticals, leading to strong autonomy in field operations, as well as widely inconsistent pricing. Customer
pricing complaints and customer attrition is chronic. New head of pharmacy operations has engaged us to “solve”
the pricing issue. How should we proceed?
Possible Approach:
CUSTOMERS
4 Customers are generally older, repeat, discount-sensitive shoppers (as opposed to convenience-oriented
shoppers).
4 Customers may initially select a pharmacy on referral location or price.
4 Tend to build strong loyalty to pharmacy due to personal relation with pharmacist and high switching costs
(transfer of records etc).
4 Price tends to be a major factor, particularly given nature of customer (usually pay in cash from fixed
income) and trust relationship (i.e. price fluctuations are very damaging).
4 Inconsistent pricing on a given item may lead to price shopping, exposing all purchases to scrutiny, and
losing the customer.
PRICE
4 The client recommends a standard mark up from cost, with price matching to be determined by the
pharmacist at the store. As mentioned before, this leads to wildly different pricing from store to store, as
different pharmacists are vigilant to different degrees, regarding optimal pricing strategies.
COMPETITORS
4 Three main groups - chain drug stores, independent pharmacies, and discount chains with pharmacy
operations (Wal-Mart, Kmart). Client is in the “discount” group but competition is fierce between groups.
No pricing studies have been done.
NARROWING
4 Do a pricing study – How?

4 Select a market basket of items in commonly dispensed quantities, and call for prices from a selection of
competitors and our stores from across the country. Fine – it turns out that prices on high-volume items are
very erratic: from our prices at higher end to well below cost at some discounters. Less common items
display more consistent pricing across chains, with our pricing more or less in line.
4 Which items displayed the most aggressive pricing? Heart, diabetes, cholesterol and the like - basically
higher cost, “maintenance” medications - those that someone has to take for the rest of their lives. Turns out,
customers are very sensitive to pricing on these items, as they represent a significant, unavoidable expense.
These are the items industry experts say are price shopped most commonly by customers.
Page 130
PHARMACY OUTLETS (continued)
4 Note - here the interviewer might suggest you design a pilot program to improve pricing, or you might be
prompted to give your insight on the information gathered to this point
Solution:
4 Test a pricing program where prices are set centrally for a number of stores in different markets. In this test,
set prices very aggressively for items identified as key items, and try to make up margins on non-key items.
Monitor results and adapt, and roll out if volume, profit warrant.
4 This is how most (good) retailers price. The hot items serve as loss leader, drawing traffic into the store for
general purchases, where money is made. In pharmacy in particular, it is important to be priced aggressively
in situations when many of your customers use case (vs. insurance) and where the item is used by the
customer with other health care needs. Hence, heart and diabetes medications tend to be sold at or below
cost in many cases.
Case made up by someone who gave consulting interviews. Given the amount of information missing from the
initial set-up and discussion, there is a premium place on logical leaps and some intuition about customer behavior.
Page 131
EYESIGHT DRUG
Question:
A marketing vice-president of a major pharmaceutical firm is working on a business plan for a new revolutionary
product. The researchers have developed eye drops which completely eliminate near sightedness in 60% of the cases
(the cases caused by eye strain rather than irregularly shaped eye lenses) if the drops are used twice a day.
Part I
Problem: The client has been working on a business plan but is having a difficult time with one piece of information.
The client needs a directional estimate of the retail price they should set for the drops so that he can complete the
business plan. How would you help the client structure his thinking on the price and what is your back-of-the-
envelope estimate on the price that he should use in the business plan?
Part II
Problem: After talking through the pricing issue, the price of drops of $200 per year approx. is agreed with the
client. The client now wants to discuss another issue. The client needs to complete his baseline business plan within
an hour and share it with the management committee later in the afternoon. He wants to produce a ballpark estimate
of the market of the product. Specifically, what dollar level of sales might he be able to expect per year in the long
run in the U.S. market?
Possible Approach:
Part I
4 One rough cut pricing analysis would determine the market price for the product that is being replaced. . . in
this case eyeglasses or contact lenses. For example, if eyeglasses cost $120 and last on average 2 years, then
a two-year supply of drops could be sold for $120.
4 A more advanced analysis might determine that eye drops are simple to use and completely trouble-free so
that they should replace the most expensive option including all the costs associated with that option. For
example, this may include $100 per year in optometrists’ fees, $180 in contact lenses ($120 per pair, plus on
average, each user loses one lens in a year) and $25 in contact lens cleaning solution and other supplies, for a
grand total of $305. Using this example, the retail price of the one year supply of drops should sell for $305.
4 The most advanced issue will include the fact that this new product is actually much better than the
alternatives, issues such as dynamics of pricing strategies (e.g. start high and reduce over time to best
understand elasticities), and pricing so that marginal revenue equals marginal cost.
Part II
Because you have already estimated a reasonable price, you must now estimate the number of yearly supplies that
the client can reasonably expect to sell in the U.S. One possible organizing structure (with estimates) is:
1. Estimate the number of people in the U.S. 250 million

2 Estimate the percentage of (1) using corrective eyewear 20%
3. Estimate the percentage of (2) that are nearsighted 70%
4. Use the client’s figures for the percentage of (3) that will be helped 60%
Page 132
EYE SIGHT DRUG (continued)
5. Estimate the percentage of people that will adopt the new product 40-60%
6. Put it all together (250*(.7)(.2)(.6)(.5) = 10.5 million
Multiply by price per (10.5) ($200 per unit) = 2.1 billion
Page 133
ELECTRICITY POOL
Question:
Our client is a major British electricity utility. Currently, rates and returns are regulated, but a new proposal would
change the system to a more market-based pool system. The mechanics (simplified for case use) are as follows:
• Rather than each utility producing electricity for the use of its customers only (with excess or shortage
made up for in short-term contracts with other utilities or independent power producers), all utilities and
power producers will bid into a pool for power supply.
• Bidding for the purpose of this case can be assumed to (somehow) occur continuously - that is, if a supplier
decides to produce an amount of electricity (kilowatt-hours) at a certain, time, he bids that amount into the
pool.
• Bids will he arranged according to price, that is, the producer who bids in a the lowest price will have his
power used first, then the next highest price power will be used, etc.
• Demand will determine how much power gets taken from the pool at any time.
• The last unit of power purchased will be bought at the price it was bid into the pool at. All power sold at
that time will be sold at the price by the last unit. This can be thought of as a market clearing price.
How would you evaluate this situation? At what price will /should people bid into the pool? What non-competitive
aspects might you expect from this system?
Possible Approach:
As with all economics questions, draw a graph first!

A supply / demand graph works quite nicely.
The demand side reflects the instant nature of demand - remember, the case said so. Keep in mind, power can be
thought of as pretty inelastic at any given point in time. The supply curve should be thought of as chunks of power
being bid into the pool at different quantities and prices.
Page 134
ELECTRICITY POOL (continued)
The market clears at P*, as you might think, but keeping the mechanism of the pool in mind, the last guy only sells
part of what he bid in, and the next guy sells nothing. Note the large producer surplus for the guys who bid in low.
This is basically the only model you need to get all of the following points:
4 First, as in theory, the high-cost producer sets the market price. This would obviously raise concerns of price
fixing and collusion among few competitors. Lets put that aside for now and think about some other key
points.
4 People will bid in at their marginal cost of production. If you end up being the last guy in the pool who sells
power, you at least break even on a short run basis. If you turn out lower than anyone else, then you make
some money. I would propose that this equilibrium isn’t sustainable over the long haul, unless demand shifts
up and down enough to bring high-cost producers into the pool so I can get more than LRMC on average
(else I will shut down in the long run).
4 Also, this system places a huge premium on owning both high- and low-cost resources. Likewise, you must
understand patterns of demand. If you know a demand is coming up, bid both your high cost resource (to set
the price) and your low-cost resources (to make profit) into the pool. This brings in obvious collusion issues.
4 The extent to which the market disciplines gamesmanship and collusion depends to a large extent on those
strategic management issues we all forgot or didn’t have as first years - number and size of competitors, trade
associations, degree of communications, signaling mechanisms, and the like.
4 One might propose that the airline industry provides a good, similar model of deregulated industry (with
consumers getting all the benefits of an industry that bids SRMC for prices and loses money of the long haul
on huge fixed costs). On the other hand, telecommunications deregulation has produced high profits.
4 Overall, tire pool favors those with low cost resources. The wrinkle in electricity production is that the
lowest cost resources do not tend to be dispatchable, that is you have to run them all day long, if you run
them at all. (Hydroelectric and Nuclear plants are like this.) Implications? Many, including the fact that all
bidders know that you have to run your resource, and will assume you bid into the pool at zero. Also, if
everyone has these resources, during periods of slack demand, there will be no one to sell to at any price, and
the pool will clear at or near. That is why understanding (and modifying, if possible) demand is so critical…
Page 135
PRICING
1. The 14th century inventor of the telescope wants to know: 1) What the market is for his product, and 2) how
to price it. (Hint: Identify uses for good and corresponding user segments.)
2. How would you price and sell services in the consulting industry?
3. Your client is a symphony hall. Revenues at performances are declining. Given that the symphony hall’s
goal is to maximize exposure while covering costs, what should be done?
4. Why are airline prices so volatile?
5. The production of phone books is essentially a monopoly. There is unlimited production & have bounced
prices around in the past. The client wants to know a base price, lowest acceptable, and prices it could charge
various customers. How would you go about pricing an ad for the yellow pages?
Page 136
EXAMPLE CASES BY TYPE Investments
NEW GLASS PLANT
Question:
A company has an existing glass plant and the scrap rate is 70% (yield is 30%). They are planning to build a new
plant. Should they use the exis ting technology from the old plant or should they implement non-implemented
technology in the new plant?
• If you work on the process in the old plant, you can get the yield in that plant up to 50%. This modification
will still not meet anticipated demand (i.e., you will still have to build a new plant)
• If you build a new plant based on the old technology (now up to 50% yield), the two plants will meet current
demand. If demand increases, you will have to build a third plant.
• Cost of the new facility is the same - regardless of the technology - but the plant cannot be retooled from one
technology to another without a significant investment.
• No significant difference in the fixed or overhead costs associated with the two technologies.
• The new technology was being run on a small-scale basis. Although the company is running this process
successfully on a small scale, they are worried about the fact that it has been untested in a full-scale
production environment.
• Customers prefer the product manufactured with the new technology and will pay a price premium for this
product. Since no other companies have this technology, our company would be able to increase market
share if the new technology is chosen.
Possible Solution:
• Establish that a new plant is really necessary: demand vs. capacity, improvements to current facilities,
possible alternatives such as outsourcing, etc. (in this case, they had determined that it was necessary to build
a new plant.)
• Frame the decision by considering the two alternatives' cash flows and NPV. (Ask interviewer for specific
information needed.)
• Benefits to the new technology include: increased market share, increased capacity, no need for 3rd plant,
ability to charge a price premium for new product.
• Risks of new technology include: untested in a full production environment
Page 137
ENVIRONMENTAL SOLUTIONS FOR PAPER
Question:
JPC Chemicals has been approached to buy a start-up company with a new environmental technology (Enviroclean).
4 Technology is machinery-based, but uses some chemistry (similarly to JPC’s); installations cost from $2.5
million depending on paper machine size.
4 System “closes the mill,” removing ~100% of effluents:

• Some is reclaimed and made into paper.
• Remainder can be disposed as solid waste or burned.
4 System requires either an on-site engineer or extensive customer training.

4 Price for Enviroclean is $100 million (firm).
4 Marketing concept is monthly fee based on size of installation and utilization.
Solution:
An acceptable answer should determine that revenue potential (i.e. demand, price structure) is critical to making an
acquisition case.
1. Recognize the need to size the market potential (how many mills, how big) and estimate likely demand
(customer benefits – regulatory needs, value of reclaimed material, etc., and alternatives)
2. Set up basic NPV analysis to underpin business case
3. Identify risk of buying new-to-the-world technology
A better response will recognize the synergies available from the paper chemical provider and potential advantages
of ownership:
1. Access to accounts already served reduces marketing costs and, possibly, cost-to-serve.
2. Potential chemical sales “lock-ins” creating razor-and-blade marketing of environmental chemistry
3. Competitive advantages of winning way into new mills where JPC does not sell chemicals currently (and
vice-versa for a competitor acquisition of Enviroclean)
An outstanding response recognizes the potential to overcome the high acquisition price and to create value
creatively:
1. Create a price structure which offsets capital outlay for new installations (e.g., up-front payment of ½ capital
plus annual management fee).
2. Option to sell equipment or technology to other companies outside JPC competitive arena (e.g., Europe,
North American) or buy jointly with non-complete agreements.
3. Opportunity to form marketing alliance with Enviroclean (e.g., account introduction/marketing for JPC
chemical specification).
Page 138
CHINA CO.
Question:
The CEO of a large diversified building products company has asked us to help him examine the operations of his
china products division. China products include tubs, toilets, and urinals. Specifically, he wants to know if he should
approve a $200 million capital expenditure for new manufacturing facilities. The company is:
4 One of seven producers in the United States: largest producer has 20%, our client is number three with 15%.
4 Prices for the client’s products have been flat.
4 The two largest competitors appear to earn a small return, our client is to break even.
4 The largest competitor has just announced plans for a major modern plan.
What issues must be considered?
Possible Approach:
MARKETING
4 How rational has pricing been in the industry?

4 Have competitors ever announced capacity expansions before and then not implemented them?
4 Are there opportunities to rationalize the product line?
4 Does the new finish that will result from the investment “pay for itself” with higher prices?
COMPETITIVE POSITION
4 How important is the product line to each competitor?

4 Are the products sold in combination (with each other or with other products such as fittings)?
4 Would exiting this business affect the sales, profits or cost of the other business units?
4 Are there advantages to plants being located in specific places due to high transportation cost?
4 If the competitor’s new plant is built, will other competitors exit?
EXTERNAL ENVIRONMENT
4 Is regulation important?
4 Are there changing demographics that will affect demands?
CUSTOMER
4 Do customers demand a full line supplier? (for example if other building products are required)?
4 Is any significant portion of sales to single customers (e.g. Sears)?
BARRIERS TO ENTRY OR EXIT
4 What is the minimum efficient size for the new plant?

4 How expensive is entry or exit? Has there been a history of change in the industry players?
Page 139
CHINA CO. (continued)
MANUFACTURING
4 Do the plants produce other products or contribute to overhead?

4 Are there ways in which costs can be substantially lowered?
CLARIFY
4 Is the planned investment expected to lower costs? (Yes, but not substantially, because the new process will
result in a better finish.)
4 Does the company rely on a limited source of raw materials? (No, as the materials are easy to get.)
4 Has the market been growing? (Market is linked to new housing.)
4 Is there overcapacity in this market?
4 What are the competitors’ relative cost positions?
4 Market segmentation - residential vs. industrial vs. commercial.
4 Price points - cheap vs. expensive / quality.
Page 140
ALUMINIUM INGOTS
Question:
Your client makes aluminum ingots. Your client’s major competitor has recently introduced and patented a new
process technology that reduces its costs by 50%. What are your client’s options?
Possible Approach:
Your first question should be: “Are aluminum ingots a commodity product?” The answer is yes.
Remember that the lowest cost producer wins in a commodity industry. (The producer with the lowest costs can
charge the lowest price.)
Your client’s options are:
1. Invent around the patent.

2. Exit the industry.
3. Try to differentiate itself. For example, offer better service (e.g. faster shipments). (Remember your client
cannot differentiate its product because the product is a commodity).
Page 141
LUMBER COMPANY
Question:
A turnaround specialist has retained your services to help him evaluate a medium-sized lumber company as a
potential acquisition. How would you determine whether the acquisition is worthwhile?
4 Because most of the company’s products are sold to the construction industry, it faces cyclical demand.
4 Most of the company’s production facilities are fully depreciated and somewhat antiquated.
4 Some reduction in workforce will be necessary to achieve levels of efficiency on par with the best in the
industry.
4 The company has extensive holdings of forests. The historical ROI for these assets has been 16%. This is
actually less than the company’s cost of capital of 18%. If the company were acquired, some of the acreage
of forests could be sold. This would 1) provide cash to fund capital improvements, and 2) improve ROA.
4 The potential exists to placate environmentalists and improve operating efficiency by 1) increasing selectivity
in tree cutting, and 2) upgrading process machinery to peel trees more efficiently.
4 Ultimately, the decision of whether to acquire the company should be based on a conservative assessment of
1) market potential, 2) the potential to improve the company’s operations, and 3) predicted competitive
reaction. Because of the cyclicality of the industry, it is particularly important to look at downside and
upside scenarios. Sales below projections will be a problem, but sales growth higher than expected may also
be a problem if the company ends up starved for working capital.
Page 142
GLASS CONTAINERS
Question:
A producer of glass containers is considering making a $1 million investment to upgrade some process equipment.
Would you recommend that they do so?
4 This company has only one, albeit large, facility. There are quite a fe w other glass producers.
4 Margins and profits of the entire industry have been eroding for several years.
4 There has been and continues to be some cannibalization by plastic and metals. However, glass remains the
material of choice for many applications, especially food products.
4 The main input material, sand, is inexpensive and plentiful.
4 Some of this company’s competitors have already made a similar upgrade to their own process equipment.
4 The key insight in this case is to recognize the high competitive intensity in this industry. The profit
potential, at least in the short term, appears poor.
4 Given the fact that there are too many players and too little profit, some consolidation and/or exit of some
companies from the industry appears inevitable. This company must decide whether it is worth it to try to
ride out this shakeout.
4 At least in the short term, the return on the $1 million investment will likely not be adequate to justify.
However, one interesting possible justification for making the investment might be to “dress up” the
company in order to sell it.
Page 143
MANUFACTURING PLANT
Question:
A corn feed company has eight manufacturing plants located in the Midwest. These plants service the entire United
States. Their plant in Ohio is in need of refurbishing. The company has four possible options:
1. Refurbish the existing plant

2. Build a larger plant at the current location
3. Build a similar size plant at a new location
4. Build a larger plant at a new location
Which is the best option for this plant?
Approach:
There are two issues to this decision. The plant size and the plant location should be considered separately.
Size of Plant:
4 The first consideration is the demand for the product.

4 Corn feed is a commodity product. Pricing on the product is dependent on current corn prices as opposed to
the manufacturing process.
4 There are four main competitors – our company is the second largest. All four competitors have similar
manufacturing processes and similar cost structure.
4 The purposed larger plant will not give economies of scales not currently present at the existing plant.
4 The capacity utilization is 65% which is industry standard.
4 The current customers buy from all four manufacturers in order to guarantee supply.
4 Currently demand is being met and there are no alternative uses for corn feed.
Conclusion: The only way to increase demand for corn feed and support a larger plant is through the reduction of
the price per ton. This price reduction will be matched by all competitors and reduce the profitability of the industry.
Best option is to maintain the current size of the manufacturing plant.
Location of Plant:
Transportation cost and perishability are the main issues with location. The transportation cost for the corn stock
(raw material) is much higher than the cost of transporting the actual feed. The corn is gown in the Ohio area and the
feed is sold to the East Coast. The raw material is perishable where as the corn feed can be stored for any length of
time and easier to transport. Cost analysis of the transportation cost of feed versus raw materials should be
completed. Included in this analysis would be the % of spoilage for longer transportation of corn stock.
Conclusion: The current plant is located close to the cornfields and this is the best location for the plant from the
cost/benefit analysis.
Page 144
COMPANY ACQUISITION
Question:
A client approaches you with a very open-ended question. He owns a large branched bank in Texas and wants to
reduce his exposure to the banking business. With $100 million in losses, he hopes to find a new business to acquire,
against which he can offset these losses. If the transaction is executed properly, you can carry forward losses from
the banking business, over the next 15 years, reducing/eliminating the taxes you’d pay on the profitable business that
you have acquired.
Possible Approach:
• Does he have any particular area of interest or expertise? No, except in banking which he specifically wants
to avoid.
• Given the substantial size of the losses, he needs to find a company that will generate almost immediate
profits on a rather grand scale. This pretty much rules out any start-ups.
• From the IRS perspective, can the new business be a foreign one? Good question, I haven’t explored that
route yet.
• It would he great if he could use the bank as an advantage - leverage it. What about hooking up with some
multi-media company - the whole banking at home concept? Interesting. . .
Microsoft would be great - I doubt Bill Gates would sell. But that company offers him what he needs: profits on a
big scale, future growth, something new and different. He could also look at mortgage-backed securities - a firm like
Freddie Mac with profits in the tens of millions.
Page 145
INVESTMENT CASES - EXAMPLES
1. Your client is a German manufacturer of metal alloys. The firm has been approached by a specialty alloy
firm which wishes to merge. The specialty alloy maker sells to steel makers. The firm has the smallest
market share of four players, and has lost money in each of the last seven years, except for last year. Their
costs have been constant over the time period, as has their market share. Should your client go ahead with
the merger?
2. Your client is a large manufacturer of tractors for agricultural and industrial use. The client is considering
sourcing some of its tractors from a competitor. What would you do? What impact would this move have
on your manufacturing and dealer network?
3. Your client is a sawmill that logs and processes timber into construction wood. Currently, it is making a lot
of money and wants to know how to determine whether it should buy more mills, sell parts of its
operations, or do nothing?
4. A waffle factory is at 100% capacity. How can it increase its capacity?
5. A company is a beef producer. It is thinking of integrating forward and selling branded beef. Should they?
6. A company makes and sells chocolates. The company is thinking of acquiring a chewing gum producer.
Do you think there are synergies in the distribution of the two products?
7. A chemical company is trying to decide whether to acquire/expand capacity? How would you advise
them? Why? Related Question: How would you structure compensation for an individual plant manager
of the chemical company?
Page 146
EXAMPLE CASES BY TYPE Wild Card
AUSTRALIAN SKI SALES
Question:
A ski manufacturer (snow-skis) has developed a revolutionary new ski technology. You, knowing very
little about skis, have stumbled across them, and have seen a chance to become the Australian distributor
for the product. You are meeting them in 30 minutes and have to come up then with an estimate of the
number of skis sold in Australia annually.
Possible Approach
• Since there are roughly five (5) major Australian ski resort areas, estimated capacity at about 5000
skiers each, season is about 12 weeks, most ski for one week, total is about 250,000 skiers.
• Estimated ski life is 5 years, therefore 50,000 skis/year sold in Australia.
• Hiring vs. owning makes little difference.
Page 147
FRIDGE LIGHT
Question:
Tell me all the ways, practical or not, which you could use to determine whether the light goes off in a
refrigerator, when you close the door.
Possible Approach
A random list of answers that ended working:
• With the door open, press the button that makes the light go on and off.
• Drill a hole in the door so that you can see inside when the door is closed.
• Find out the mean time to failure for these bulbs, close the door and open it after the expiration
time to see if the light is burned out.
• Go to the production line, and perform a statistically valid test (appropriate number of samples) to
determine whether the light always goes off (by pressing the button, etc.)
• Hook wires to the socket and perform a similar test when the door is closed.
• Place a sensitive thermometer (chilled to the refrigerator’s temperature before testing) near the
light bulb and close the door.
• Place some light sensitive material in the refrigerator to see if it is activated.
• After I came up with about 5 responses, the interviewer actually said that my performance was
adequate (of course implying that he’d recommend me for the next round) however, he wanted to
continue searching for answers “just for fun.”
• When we were done, I asked him if anyone else came up with interesting answers that I didn’t
mention he gave two.
• Pick up the phone, dial the manufacturer and ask if the light goes off when you close the door.
• If no one is in there to see the light go off, does it matter? (for those of you unfamiliar with
this philosophical angle, it was originally stated as “if a tree falls in the forest and no one
hears it, does it make any noise?) I acknowledged that I wouldn’t have thought of that one in a
million years, but it definitely shows some tremendous creativity. He agreed.
• This is also a great test of how well one responds under pressure. There were definitely a number
of silent pauses while I racked my brain.
Page 148
MOUNT FUJI
Question:
The government of Japan has employed us to find out how to move Mt. Fuji 100Km North. How would you
approach this?
Approach:
The key here is to not dive right into answering the question. Stop and think before progressing - Why does the
government want to move Mt. Fuji?
It turns out that that tourism to the mountain is down. The government wants to increase tourism and thought that if
the mountain were closer to Tokyo, more people would come.
Think about alternatives:
• Offer cheap package tours to Mt. Fuji from Tokyo and Osaka.
• Lower road tolls if people are going to Mt. Fuji via car.
• Increase local and international advertising about the national treasure.
• Increase the frequency of trains to the mountain.
• Offer new attractions (more hotels, amusement parks, games, rides, super traditional restaurants, etc.)
The interviewer then says, "OK, that's great information; but let's just suppose that moving the mountain is the best
thing to do in this scenario. What would you do then?"
Approach:
The question now becomes a straight operations / optimization, guestimation case.
Estimate the volume of a cone and then start estimating the labor and machines needed to move the mountain.
Additionally, bring in labor (the more labor employed will help the national unemployment statistics).
Page 149
RECYCLED ALUMINIUM
Question:
You are in a meeting with a client who mentions that she is considering building a new plant. The new
plant will require 100 million tons per year of recycled aluminum as an input. Your client turns to you and
asks you if there is 100 million tons of recycled aluminum available in the U.S. on a yearly basis. You do
not have that information at the top of your head. How can you answer the question on the spot?
Possible Approach
• I know that soda cans are made of aluminum. Let’s assume that soda cans are the major source of
recycled aluminum. Also, let’s assume that people drink 5 cans of soda per day.
• 350 days / year x 5 cans / day / person = 1,750 cans per year per person.
• Let’s assume there are 17.5 cans in a pound of aluminum.
• That means there are 100 pounds of aluminum per year per person.
• There are 250 million people in the United States.
• That means that there are 25,000 million pounds per year.
• Since 2,000 pounds = 1 ton, there are only 12.5 million tons of recycled aluminum available per
year.
Thus there is not enough recycled aluminum available per year in the United States.
• Don’t make the math too difficult for yourself. It is acceptable and very wise to round off. For
example, I used 17.5 cans in a pound and 350 days in a year as they are close enough and they
make the calculations easier.
• Don’t forget to state your assumptions - there are several assumptions you’ll have to make to
come to an answer. Make sure you state what they are. It is better to make an assumption that
you are not sure of than to stop and not to get an answer. Once you have an answer, it is perfectly
acceptable, and advisable to say “I’ve made several assumptions to come to this answer. One I am
not sure of is my assumption about how many cans make up a pound. I said 17.4 cans are in a
pound. If there were really twice that many, I would have to adjust my numbers accordingly. Of
course that would not change my bottom line answer. There would still not be enough recycled
aluminum.
Page 150
U.S. GAS STATIONS
Question:
How many gas stations are there in the U.S.?
Possible Approach
There are two ways I thought of to approach this question:
• Population theory - In say, Menlo Park / Atherton, there are about 15 gas stations for about 40,000
people. In urban areas, there are many more people per gas station (say 150 in San Francisco for
700,000 people), while in rural areas, there are fewer people per station (in my hometown, there
were three (3) gas stations for about 5,000 people). Add in a Fudge factor for truck stops in the
middle of nowhere, and let’s guesstimate that the average nation-wide (I know one isn’t supposed
to average averages, but this is consulting) is about as populated with stations as Menlo Park This
is a ratio of one station per 2,667 people. There are 250 million people in the U.S. so that’s
around 90,000 stations.
• Note - one could just have used Menlo Park from the start, but the idea is not to get the answer but
to think transparently. I threw in things like urban areas, people without cars, commercial
transport etc to show that I was casting a net to test the reasonableness of my assumptions,
regardless of the fact that I finished where I started.
• Two (2) - Patterns of demand and a little knowledge - My idea of the average gas station has 8
pumps. I have observed that, on average, four (4) pumps are in use during the 14 hours a day the
station (average station) is open. Let’s guess that the average station sells (14 hours x 6 fills / hr x
4 pumps x 10 gallons of gas) i.e., 3,360 gallons of gas / day. That’s around 1.2 million gallons per
year. Now, I know that all of the U.S. could fit into the front seats of all of the cars in the U.S., so
lets assume there are 125 million cars on the road. If each car is driven for 12,000 miles at 20
miles per gallon, that implies (125 million x 12,000 miles/20mpg) i.e. 75 billion gallons of gas are
consumed each year. Therefore 75 billion gallons / 1.2 million gallons / station / year - 62,500
stations.
• Note - I know that this is convoluted but more elegant solutions are available.
• Last I heard 80,000 or so. Remember the idea is not to get the right answer but to think logically,
in a linear fashion, and net to a reasonable answer. That is 1 million stations is obviously too
many where 1,000 is probably the number you personally have been to in your life.
Given the interview conditions, it is worthwhile picking relatively easy numbers to work with rather than
getting caught up in some highly complex mental arithmetic.
Page 151
HEATHROW PASSENGERS
Question:
How many passengers go through Heathrow each year?
Possible Approach:
Interviewer not looking for the real number, but the process through which you arrive at it! Therefore you make
assumptions.
I assumed:
• People going through Heathrow = Arrivals and Departures.
• Assume one plane lands and one plane leaves every 30 seconds.
• Assume airport is operational 365 days a year, and for 21 hours a day.
• Ask the interviewer what is the average passenger capacity of the planes (both arrivals and departures), e.g.
200.
• Ask if for example, 75% load rate is a fair assumption.
• You can then calculate the number.
Check that we ignored the double-counting issue of transient passengers (i.e. the same passengers both arrive and
leave the airport - the interviewer hadn’t considered this).
Keep the numbers simple when doing this - the actual number does not matter as much as the process.
Page 152
WILD CARD - EXAMPLES
1. Estimate the amount of tea in China.

2. Estimate the number of airline passenger miles flown in one year.
3. Estimate the number of skis sold in one year.
4. How many light bulbs are sold in the US each year?
Assume every bulb is replaced once a year. Determine # of households, say 250000000/4. Assume 20
bulbs in average household. Triple for industry usage. 250000000*20*3/4 = ?.
5. Value the US as an option of the world and give a numerical answer.

6. Estimate the number of gas stations in the United States.
If you figure there are 250 million people in the U.S. and one car per four people and maybe 500 cars
for each gas station, the answer is 125,000.
7. Why are manhole covers round?

8. If you were to put artificial turf on all Major League ball-fields, how many square yards would you need?
9. Why do many vending machines and jukeboxes have both letters and numbers?
Possible Answer: There would be too many buttons otherwise.
10. If you were a product, how would you position yourself?

11. Estimate the monthly American Express bill for the average consumer.
12. How many sparkplugs are made each year in Spain? (Don’t forget, it’s not only cars. What about buses?
Trucks? Motorbikes, lawnmowers, etc.)
13. You are on an airplane next to the president of a shaving cream company. He is trying to decide whether or
not to diversify into the razor market. He asks you to estimate the potential market for hand-held razors
(for men). How would you think through this?
Estimate number of men in U.S. (i.e. population = 250mm of which 50% are men), then proportion of
men who use hand-held razors (vs. electric or are too young or old to shave), # of times purchase per
year, selling price of razor.
14. You are thinking of starting your own company which would manufacturer vacuum cleaners. You are
trying to estimate the size of the vacuum cleaner market. How would you think through this?
Estimate number of households in U.S. (i.e. 90m), then % of households who have vacuum cleaner,
then divide by how often purchase i.e. once every 5 years, etc.
15. What is the size of the cell phone market in India?
16. You are interested in starting your own hamburger restaurant and are trying to decide whether to build your
own from scratch or buy a franchise from McDonald’s. What are the pros and cons of the franchise option?
Pro: get expertise, loyal customer base, recipes, advertising economies of scale, limit risk; Con: lose
control, costs a lot for franchise.
17. How many baseball fields are there in America?
18. How many quarters are there right now at Barracks Road Shopping Center?
19. Estimate the market for eye surgery to correct near-sightedness in New York City.
Page 153
EXAMPLE CASES BY TYPE Miscellaneous
CRUISE SHIP LOGISTICS
Question:
A major pleasure cruise line has hired you to help them improve the loading and unloading of their ships while in
port (i.e. Carnival). As the amount of supplies required has increased with the size of the ships and the number of
passengers, they have found that there is no longer enough time to load and unload all of the necessary supplies
without delaying the departure of the ship. What should they do?
Approach:
This problem requires a detailed analysis of the cruise ships logistics. Specifically, an analysis of the loading and
unloading of the ship is required. Begin by gaining an understanding of the problem.
4 How long are they in port? What is the layout of the port? Of the ship? What problems are they currently
having?
Then analyze the specifics of the loading and unloading process (i.e. the supply chain).
4 What are they loading and unloading from the ship? Where are they getting the supplies? Exactly how do
the supplies get on the ship? Who is doing the loading and unloading?
4 You should be trying to determine any bottlenecks in the system!!!
Once you’ve identified the bottlenecks, make recommendations for addressing them. Look for creative solutions or
alternative processes!
Solution:
In this particular case you would have discovered a number of bottlenecks. Specifically, you would have
determined that the loading and unloading of the ship is limited by time (8 hours); port layout (only room for one
truck at a time); number of suppliers (purchase directly from individual producers vs. from one wholesaler); and
ship layout (most used supplies are not easily accessible).
Recommendations might have included using a wholesaler to minimize the number of trucks entering the port;
redesigning the storage of supplies on the ship to put the most used supplies near the loading door; increasing the
number of fork trucks; and using other ports of call of the ship for loading and unloading of some of the materials.
Page 154
EXAMPLE CASES BY TYPE Miscellaneous
MISCELLANEOUS
1. The client is an accounting firm, whose growth has recently stagnated. How would you think about
productivity? What would be the optimal size of the firm? How centralized should its operations be
organized? How should it motivate its professionals?
2. Give me your marketing plan to become a partner, including a timetable.
3. A commercial bank has inefficiencies in its loan operations. Think of the process as three steps: 1)
Application and approval. 2) Loan money 3) Close loan. What would you look at?
4. A pharmaceutical company in the United Kingdom has an established sales force with a few proprietary
products that it sells. However, new products in the R&D pipeline have failed. Therefore, the company’s sales
force is under-utilized. The company has advertised to sell products for other companies. The company is
now flooded with products to sell for third parties. Of the 10 to 15 products, how should the company select
the 2 to 3 to actually sell?
5. Why are the trade deficit and the budget deficit issues in the US? What are the implications of both?
6. A major airline with a reservation system is thinking about working with a software developer to add a
feature to its system which can track fraud by travel agents. The primary fraud perpetrated by travel agents is
backdating tickets. (i.e. issuing 14-day advance purchase ticket 10 days before the actual flight.) How would
you suggest the airline evaluate whether they should add this feature?
7. A consumer goods company, manufacturing shampoo, is having problems with meeting demand at the
customer locations with demand that is very cyclical. Marketing, manufacturing, production and sales are not
communicating effectively. Furthermore, a bottle supplier is not meeting demand on time, shipping bottles to
us a few weeks off schedule. How would you approach the situation to produce the right brand and size on
time while keeping inventory low and smoothing out the demand cycle?
8. A catalog producer for an L.L. Bean-type company has a mailing list of about 12 million past customers.
Currently, they ship 4 million catalogues but are not reaching the right people. Sales per catalogue are
decreasing, though sales overall has increased. How do we decide how many catalogues to ship and to which
customers in the database?
9. Merck is going into an unrelated field. Define the steps they need to take to get there.
10. A medical supplies company is looking at launching a new product that will allow doctors to do tests on
blood in their own practices, rather than sending the blood away for testing. What do they need to consider?
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RECRUITING GUIDE

Harvard Exchange Version

S ECTION PAGE NUMBER

Consulting Firm Profiles

Darden On-Grounds ...................................................................................................................................... 1

Off-Grounds Firms ......................................................................................................................................... 15

Related Firms .................................................................................................................................................. 18

International Student Recruiting.................................................................................................................. 19

Sample Cover Letters ..................................................................................................................................................... 23

Behavioral Interviews .................................................................................................................................................... 29

Case Suggestions, by Type............................................................................................................................ 48

Market Expansion........................................................................................................................................... 107

Wild Card ......................................................................................................................................................... 146

The Consulting Club at The Darden School of Business

The Consulting Club at The Darden School of Business

ARTHUR ANDERSEN – BUSINESS CONSULTING

Industry practices include: Automotive & Industrial Equipment

Capabilities include: Business Process Management

The Consulting Club at The Darden School of Business

Available Locations and/or Practice Groups

The Consulting Club at The Darden School of Business

BAIN & COMPANY

INTERVIEWS: First Round consists of two 30-minute case interviews.

The Consulting Club at The Darden School of Business

BOOZ• ALLEN & HAMILTON

Aerospace, Automotive, & Industrial Services

Information Technology Services

Available Locations and/or Practice Groups

The Consulting Club at The Darden School of Business

THE BOSTON CONSULTING GROUP

INTERVIEWS: First round consists of two 45-minute case interviews.

Knowledge Areas: Branding

Available Locations and/or Practice Groups

The Consulting Club at The Darden School of Business

CAP GEMINI ERNST & YOUNG

Connected Strategy & Transformation

Focus industries include:

The Consulting Club at The Darden School of Business

OTHER: All interviews were conducted off-site.

Industry practices: Consumer Business

Service line capabilities: Strategy Transformation

Available Locations and/or Practice Groups

Practice Groups: Deloitte Consulting

The Consulting Club at The Darden School of Business

DIAMONDCLUSTER INTERNATIONAL, INC.

Recruiting for international offices is a separate process.

The Consulting Club at The Darden School of Business

The Consulting Club at The Darden School of Business

marchFIRST BUSINESS STRATEGY GROUP (formerly Mitchell Madison Group)

* Securities (Retail and Wholesale Banking, Insurance, Credit Cards)

The Consulting Club at The Darden School of Business

McKINSEY & COMPANY. INC.

Available Locations and/or Practice Groups

The Consulting Club at The Darden School of Business

INTERVIEWS (Format for 1999 interviews):

Industry markets include: Defense

The Consulting Club at The Darden School of Business

PRTM CONSULTING GROUP

Industry Practices: Aerospace, Automotive & Industrial Technologies

Business Practices: Operational Excellence (Supply Chain Management)

Atlantic Region: Waltham, MA Rosemont, IL Southfield, MI

The Consulting Club at The Darden School of Business

Available Locations and/or Practice Groups