Consulting Case

Increase sale/revenue

Contents
Rovio to Maximize Revenues from Angry Birds...................................................................................1
Ryanair to Introduce 3 Ticket Fare Scheme..........................................................................................4
Coach to Grow Sales Through International Expansion.....................................................................8
Thomson Scientific to Change into License-based Pricing...............................................................12
Gillette to Double Sales in 2 Years Post Acquisition..........................................................................15
Cookware Maker All-Clad Sees Decline in Sales and Earnings......................................................18
Aeromar Airline Will Not Cut Its Mexico City-Brasilia Route.............................................................20
St. John Knits International to Double EBIT in Two Years................................................................21
NBC to Cut Costs by $750M and Grow $400M in Revenues...........................................................27
Washington Post to Incease Migration from Print to Online.............................................................28
Condé Nast to Move More Magazine Contents Online.....................................................................30
Growing Competitions Push Blue Sky Studios to Innovate..............................................................31
Jazz at Lincoln Center Cut Price to Boost Subscription Rates.........................................................34
Optical Fibre Solutions Revenues Drop 50% in One Year................................................................37
Bank Mandiri to Grow Share in Local Indonesian Market.................................................................40
OEM Continental to Increase Global Auto Parts Market Share.......................................................44
Men’s Sportswear Manufacturer Izod to Double Sales in 1 Year.....................................................46
Hyatt Hotels to Raise Daily Room Rate from $180 to $200..............................................................49
Wilmington Trust to Double Revenues and Profits in 5 Years..........................................................53
Circuit City Aims to Secure 20% Market Share in 5 Years...............................................................55
Massachusetts DCF Strives to Close Budget Shortfall.....................................................................57
Neuberger Berman Group Sees Flat Revenues and Profits.............................................................61
Jackson Hewitt Tax Service to Grow Same Store Sales...................................................................63
Hannaford to Improve Supermarket Shopping Experience..............................................................65
Ducati to Improve Sales Performance of Single Brand Stores.........................................................68
Italian Drinks Group Campari To Grow Its Whiskey Brand...............................................................71
Neutrogena to Double Global Sales in Sun Care Products..............................................................74
PepsiCo to Grow Market Share in Food Service Industry.................................................................79
Legg Mason to Adjust Asset Management Fee Structure.................................................................85
Blue Shield of California Targets Private Market for Growth............................................................89
BMO Bank of Montreal to Increase Overall Market Share................................................................92
Huntington Memorial Hospital to Cut Budget by $100 Million...........................................................97
Colt Responds to Beretta’s Entry to U.S. Market...............................................................................99
Durawear Boots Company to Increase Sales & Market Share.......................................................101
Home Improvement Chain Menards Increase Sales by $2 Billion.................................................104
LabCorp Concerned About Revenue Loss Due to Competitions...................................................107
First Gulf Bank Reverses Trend of Declining Market Share...........................................................109
Electrolux to Address Falling Profitability & Market Share..............................................................112
New Holland Adapts New Technology in Direct Combines............................................................114
Oakbrook Center Use Web to Drive Shoppers into Stores.............................................................117
Philadelphia Orchestra to Increase Revenues from Ticket Sales..................................................119
Fortune Magazine to Spur Growth As Ad Revenues Decline.........................................................121
Rite Aid Pharmacy Minimize Costs & Expand Client Base.............................................................125
Baby Stroller Maker Britax Changes Distribution Channel Mix......................................................126
BP to Increase Revenues for Textile Products Group.....................................................................130
Rex Plastics Aims to Increase Sales & Market Share.....................................................................132
UTC Control Systems Aims to Double Sales in 5 Years.................................................................134
Seagate Continues to Grow Its Market Leading Position................................................................135
Alstom to Add Overnight Delivery Service for Circuit Breakers......................................................137
PC Giant Compaq Losing Its Market Share to Dell..........................................................................139
K&N to Boost Air Filter Sales across Distribution Channels...........................................................141
Universal Orlando Resort Sees Record Number of Visitors...........................................................143
HP to Grab U.S. Printer Market Share from Competitors................................................................144
Australia’s Qantas Airways to Add Capacity for Call Centers.........................................................146
Optima Batteries Assess Recent Entry into Forklift Business........................................................150
GNC Aims to Increase Revenues by 40% in Two Years................................................................153
Macy’s Attempt to Increase Department Stores Sales....................................................................156
Tesco Experiences Sales & Market Share Decline in UK...............................................................157
Philadelphia Museum of Art Uses Web to Increase Revenues......................................................159
T-Mobile Streamlines Operations & Improves Customer Retention..............................................162
Swarovski Adjust Distribution Channel for Crystal Giftware...........................................................164
MGH Concerned by Falling Revenues & Rising Costs...................................................................165
Foot Locker Concerned About Its Flat Revenues............................................................................169
Malaysia’s BeautyAsia to Restore Falling Profitability.....................................................................170
Clorox to Double Sales & Profits in Less Than 5 Years..................................................................172
AirTran Airways to Add More Service at Mitchell Airport.................................................................173
Merck to Optimize Sales Force for Cardiovascular Drug................................................................174
Azul Airlines Aim to Add One More Passenger Per Flight..............................................................177
Winn-Dixie to Align Store Offering with Customer Demands..........................................................180
Map & Globe Maker Cram to Increase Market Share......................................................................181
Manpower Set to Double Job Placements in 5 Years.....................................................................182
Virgin Blue Airlines See Business Base & Profitability Eroding......................................................183
Hershey’s Sales Jump But Profit Margin Decreases.......................................................................185
Banana Republic to Diversify Its Distribution Channel....................................................................187
Anadarko Petroleum to Boost Oil & Gas Production in Asia...........................................................188
Unilever Should Not Lower Price for Its Dove Soap........................................................................191
Chicago White Sox Trying to Attract More Kids to Games.............................................................193
Goodyear Looks for Ways to Generate More Sales........................................................................194
Novartis Sales Slow Despite Heavy Advertising..............................................................................195
Nucor Corporation Losing Structural Beams Market Share............................................................196
SunTrust Launch Commission-based Incentive Program...............................................................197
Avon to Improve Sales and Operating Income.................................................................................200
Agilent See Declining Sales in GC-MS Instrument..........................................................................201
Sony Saw A Poor Sales Year for Audio Cassette............................................................................203
ProQuest Wants to Increase Market Share......................................................................................205
Johnson & Johnson Increases Size of Business Operations.........................................................207

Rovio to Maximize Revenues from Angry Birds

Case Type: increase revenues; new product.
Consulting Firm: McKinsey & Company first round full time job interview.
Industry Coverage: software, information technology (IT).
Case Interview Question #00784: Our client Rovio Entertainment Ltd., previously known as Relude and
Rovio Mobile, is a Finnish developer, publisher, distributor of video games and entertainment company
headquartered in Espoo, Finland. The company was founded in 2003 as a mobile game

development  studio named Relude, and was renamed to Rovio Mobile in 2005.
The year is 2009. Our client Rovio Entertainment has recently developed a simple, yet addictive puzzle
game for mobile devices called “Angry Birds”. In the game, players use a slingshot to launch birds at pigs
stationed in or around various structures with the goal of destroying all the pigs on the playing field. As
players advance through the game new types of birds become available, some with special abilities that
can be activated by the player. The Angry Birds game reached No. 1 spot in the Apple App Store paid
apps chart after six months, and remained charted for months after.
Angry Birds is the 52nd game released by the client Rovio. Rovio is considering how to maximize their
revenues from Angry Birds in the next few years. Mobile video games tend to have short life cycles. A
game receives the vast majority of its revenues within the first year of release. What would you
recommend to the client in order to maximize their revenues from Angry Birds?

Possible Answer:
Question 1: There are several types of business models for mobile games. Considering the brief
descriptions of each model below, can you list the pros and cons of adopting each model?
 Traditional: charge a one-time fee for players to download onto their mobile device.
 Free-to-Play: free for players to download, pay for micro-transactions (small payments) for extra
lives, special items, etc.
 Freemium /Advertising-Based: free for players to download, displays advertising in game.
 Subscription: free for players to download, pay monthly fee to continue to play (subscription
usually starts after first month)
Suggested Solution:
Model Pros Cons

 Upfront revenue does not

depend on how long players
continue to play after buying.
 More reliable sales forecasts.
 Possibility to change model if
Traditional
sales are lower than forecast.
 Free game leads to more
downloads and potentially micro-
transactions.
 Highest revenue potential if
Free-to-play game is a hit, as players get
addicted to buying content.
 Revenue tends come only at the
beginning of the product cycle.
 Less players will download due to
upfront cost.
 Players will look for ways around paying
for content even if they enjoy the game.
 Hard to get the balance between useful
in game items for sale and frustrating
players by forcing them to buy items.
  Players do not like advertising.
 Free game leads to more  Must focus on getting advertisers as well
downloads. as players.
 Advertising provides a steady  High need for retention means
stream of income if players are continuous teasers required to entice
Freemium
retained. players to remain (higher costs).
 Higher drop-off rates as players do
continue to pay if they are not playing
 Players like ad-free content regularly.
and lower upfront cost.  Need to have discounts/free trial periods
 Steady income stream from at the beginning which decreases revenues
Subscription
subscription. (revenue leakage).
Question 2: What metrics could be used to help estimate revenues for these models?
Suggested Solution:
Model Metrics

 Number of downloads;
All
 Player drop-off rate
Traditional Price of a download

Free-to-play  Average number of micro-transactions per player;

 Average price per mico-transaction
Freemium Revenue from advertisers (cost per view? Cost per click?)

 Cost of subscription – monthly? Discounts for longer

periods?
 Average length of subscription per player;
 Number of players that buy subscription after trying
Subscription
game.
Question 3: The client Rovio has estimates for downloads and pricing strategies for each business
model. Calculate the potential revenues for each option and suggest the most attractive option for the
client.
a. Traditional

 Downloads: 15 million.
 Price: $2.99
b. Free-to-play

 Downloads: 30 million within first month

 Price/Micro-transaction: $0.99
 The first month has the most downloads, then the number of players using the game drops
steadily and consistently over a year.
 Light Players (10% of players): Buy an average 1 item/month
 Heavy Players (1% of players): Buy an average 10 items/month
 If game is a hit, then revenue is tripled.
 Chance of a Hit: 20%
c. Freemium

 Downloads: 30 million within first month

 Revenue from Advertisers: 15 cents a month per user (number of users averaged over the
month)
 The first month has the most downloads, than the number of players using the game drops
steadily and consistently over a year.
d. Subscription

 Downloads: 30 million total

 Subscription Price: 0.99 cents per month
 Percentage of Players that start subscription: 15%
 Average Life of Subscription: 5 months
Suggested Solution:
Overall, the life cycle of a game, especially a mobile version, is very short compared to other products.
Therefore, except for a few huge hits (like Candy Crush Saga), the vast majority of revenue will be
captured within a year. Make your calculations with this in mind.

a. Traditional

Revenue: $2.99 * 15M = $45 million

b. Free-to-Play

 Average # of Players per month: (30m at start of year + 0 at end of year)/2 = 15 million
 Revenue from Light Players: 15m * 0.10 * $0.99 * 12 months/year = $17.8 million
 Revenue from Heavy Players: 15m * 0.01 * $0.99 * 10 * 12 months/year = $17.8 million
 Revenue: $17.8m + $17.8m = $35.6 million
 Total Weighted Revenue with potential for hit: $35.6m * (1 – 0.2) + ($35.6 * 3) * 0.2 = $50 million
c. Freemium/Ads

 Average # of players per month: (30m at start + 0 at end)/2 = 15 million

 Revenue: $0.15 * 12 * 15m = $27 million
d.Subscription

Revenue: 30m * 0.15 * 5 * $0.99 = $22 million

Conclusion: Judging by the calculated (expected) revenues, Free-to-Play is the most attractive option for
the client.
Note: Bonus points to the candidate if he or she uses the hit probability to determine the Free-to-play
revenue potential ($50 million vs. $35.6 million). An outstanding candidate will also need to point out that
choosing the Free-To-Play model depends on the client having a higher risk tolerance, as the revenues
are only greater if the game is a hit.

Ryanair to Introduce 3 Ticket Fare Scheme

Case Type: increase sales; math problem.
Consulting Firm: Arthur D. Little first round full time job interview.
Industry Coverage: airlines.
Case Interview Question #00776: The client Ryanair Ltd. (ISEQ: RYA, LSE: RYA, NASDAQ: RYAAY) is
an European airline headquartered in Swords, Dublin, Ireland, with its primary operational bases at Dublin
and London Stansted Airports. In 2013, Ryanair was both the largest European airline by

scheduled  passengers carried, and the busiest international airline by

passenger numbers. The airline has been characterised by its rapid expansion, a result of the
deregulation of the aviation industry in Europe in 1997 and the success of its “hybrid” business model.
Ryanair is a hybrid carrier, a combination of full service and low cost types. As a result of this, recently
customers and the aviation industry become confused of their true positioning and the company has been
garnering substantial losses. Their operations in Europe cater to the budget travel category and those
outside the continent are of the long haul type. They offer different fares: flexible and regular.
The flexible fare allows customers to avail themselves of additional features (changing dates, time of flight
etc.) by paying an additional fee.

The client Ryanair has engaged you to recommend different types of tickets and services in the economy
class to revamp their value proposition and generate additional revenue. How would you go about this
case?

Possible Answer:
Question 1: What factors would you consider to determine market positioning for the client?
Suggested Solution:
Factors to be considered are customers (target segments), competition, targeting the correct segment by
designing products and services which conform to the value proposition, effectiveness of communication
used for market positioning, customer satisfaction, customer values and opinions.

Cost structure is an important factor, too.

Question 2: The client Ryanair is focusing on the short-haul economy segment. The market trends are
increasingly in favor of budget travel and EasyJet (LSE: EZJ), a key competitor, is gaining strength. The
client Ryanair has decided to compete by launching 3 budget fare types: low-cost, medium and premium.
Please suggest airline offerings which could differentiate each of the 3 fare types.
Suggested Solution:
Buyers of the premium budget fare should be provided additional service such as pre-booking of seats,
additional cabin baggage, check-in at the airport counters, priority queues for boarding, food and
beverages in flight etc.

Buyers of the medium budget fare can be offered a sub-set of the above. Costs incurred in providing
these services should be the main consideration while determining the service package.

Low-cost budget travellers should be offered the above for a price.

Question 3: What are the internal challenges that the client Ryanair could experience if the client were to
introduce the 3 budget fare types? Note to interviewer: the purpose of this question is to judge the
candidate’s ability to structure his/her thought process.
Suggested Solution:
The ideal answer would be to consider each step in the entire journey: booking of tickets; preparation for
flight; at the airport; in-flight, and identify challenges associated with each.

Booking of tickets: On-line booking services would have to be revamped to include the 3 fare types. The
customers might get confused by three different options of fares and the provisions associated with each.

Preparation for flight: If the traveler needs to bring additional luggage after booking is complete he would
have to buy extra slots- this should be specified to avoid inconvenience to customers on the day of the
flight.

At the airport and in-flight: confusion arising out of 3 fare types as customer handling depends on the type
of fare selected. Re-training of airline personnel required. Change management would be crucial.

The candidate should cover at least all the above mentioned points. Points are to be deducted if change
management is neglected

Question 4: The client Ryanair currently offers only 1 fare type which is analogous to the medium budget
fare in the proposed pricing structure. With reference to revenue what is the main risk in implementing the
3 fare scheme?
Suggested Solution:
One of the main risks is to effectively promote and market each of the 3 fare types to attract the right
amount of customers to each far type to optimize the profitability of the whole scheme. As an example,
customers who were purchasing the higher priced medium budget tickets would shift towards the low-cost
budget type. It would be difficult to attract enough premium passengers to outweigh this, which would
result in a lower revenue level compared to before.
Question 5: What would be the most effective way to optimize revenue from the 3 fare scheme?
Suggested Solution:
The first step would be to analyses the spending patterns of the 2 different customer types: budget &
business. Business travelers are more likely to purchase the premium budget fare and leisure travelers
are more likely to purchase the medium and low-cost fare types.

Based on the flying patterns (routes, frequency and time of travel) of each customer type the most
relevant fare types should be made available while the availability of the others should be limited. For
instance: business travelers opt to travel early morning or late night usually between certain destinations.
On such flights the availability of medium and low cost budget fares should be limited.

Question 6: Please calculate the revenue that the client Ryanair can expect to generate per day with the
below pricing/customer information.
Additional Information: (To be shared with interviewee)

1. New Pricing

 Budget Fare Price: €100

 Medium Fare Price: €140
 Premium Fare Price: €180
2. Average Day: 10,000 passengers

3. Flight Patterns:

 40% passengers fly in early morning between 6:00 – 10:00

 27% passengers fly during day 10:00 – 18:00
 33% passengers fly in evening/late night 18:00 – 24:00
During
Early Morning Day Evening/Late Night Sum

Passengers 40% 27% 33% 100%

Business
Travelers 75% 20% 60%

Leisure 25% 80% 40%

4. Passenger segmentation: 50% of passengers of both customer groups (business and leisure) continue
to buy the medium fair ticket. For the sake of simplicity assume that business travelers purchase only
premium and medium fare types. Leisure travelers purchase only medium and budget fare types.

Possible Solution:
Early Morning During Day Evening/Late Sum
 Night

Passengers 4000 2700 3300 10000

Business Travelers 3000 540 1980

Leisure 1000 2160 1320

With 50% customers

switching

Business in Medium 1500 270 990

Business in Premium 1500 270 990

Leisure in Budget 500 1080 660

Leisure in Medium 500 1080 660

Daily Revenue (€)

Business in Medium 1500*140=210,000 270*140=37,800 990*140=138,600 386,400

Business in Premium 1500*180=270,000 270*180=48,600 990*180=178,200 496,800

Leisure in Budget 500*100=50,000 1080*100=108,00 660*100=66,000 224,000

Leisure in Medium 500*140=70,000 1080*140=151,200 660*140=92:400 313,600

Total 1,420,800

Insight/Conclusion:
Comparing new revenue €1,420,800 with old revenue €1,400,000 (€140 * 10000), the new 3-ticket fare
scheme makes sense in this case.

Coach to Grow Sales Through International Expansion

Case Type: increase sale/revenue.
Consulting Firm: Arthur D. Little first round full time job interview.
Industry Coverage: apparel, clothing, textiles.
Case Interview Question #00769: Our client Coach, Inc. (NYSE: COH) is a luxury fashion company
based in New York City, United States. The Coach company is well known for accessories and gifts for
women, including handbags, shoes, small leather goods, footwear, outerwear, ready-to-wear, watches,

travel accessories,  scarves, sunwear, fragrance, jewelry, and other accessories.

As one of the premium manufacturers and sellers of women’s leather handbags and shoes in the U.S.,
the client Coach is among the leaders in the segment in which they operate (mid to premium). Recently,
faced with increasing competition from other luxury brands, they wish to grow rapidly and have
approached you for possible options. What would you recommend to the client?
Additional Information: (Provide the following info if requested by interviewee)
 Growth Objective: the client Coach wants to increase revenues
 Company: every Coach store is selling both handbags (80 sq. meters) and shoes (120 sq.
meters), and in addition the store also has non-revenue generating areas (such as the cash register),
making the total size of each store slightly over 200 sq.meters.
 Position in market: market leader
 Market share: 40% of mid to high-end segment
 Competitors: small and medium sized players
 Differences in product portfolio: no significant difference
 Cash/capital position: the client Coach has huge cash reserves at its disposal
 Manufacturing strategy: Sourcing and manufacturing at low cost destinations. Designs are
created at the company’s design studios in the U.S.
Possible Answer:
Question #1: What possible options do you have to increase revenue for the client?
Suggested Solution:
The candidate’s framework should include but not necessarily be confined to the following options for
revenue growth:

 Expanding customer base by attempting to enter either the ultra-premium or low end segments
 Increase sales through marketing
 Acquisitions (acquisition of direct competitor in the relevant market segment vs. competitor in
another customer segment, to quickly reach scale vs. acquisition in another product segment)
 Launching new product categories
 International diversification
Cookies: Asking about the market share and cash position of the client company?

Traps: Missing the usual growth strategies, failing to focus on the fact that client is focused on growing the
top line.
The interviewee should then proceed to explore each of the following options and eliminate the ones
which are inadequate based on the data provided during the discussion.

Option 1: Expanding customer base by attempting to enter either the ultra-premium or low-end segments

Additional Information provided upon request:

The ultra-premium segment has strong players like LV, Gucci, Chanel, PradaR, YSL, etc, and the
customer loyalty to the current brands is a major barrier to entry.
The client Coach has considered penetrating the low end segment, but is concerned that its positioning
as a ‘premium luxury brand’ will be compromised and it would lose its existing customers.

Option 2: Increase sales through marketing

The candidate should conclude from the data provided above that as the client already has a market
share of 40%, marketing campaigns cannot lead to a major increase in sales.

Option 3: Acquisitions (acquisition of direct competitor in relevant product segment in order to quickly
reach scale vs. acquisition of competitor in another product segment)

The candidate should mention both advantages and disadvantages.

Additional Information provided upon request:

The client Coach had made a few acquisitions over the past few years but none of these have had the
desired impact on revenues.

Insight: Candidate should conclude that given historical precedents, acquisitions are not the best way to
increase revenues for this client.

Option 4: Launching new product categories

Additional Information provided upon request:

The client is considering launching 3 additional product categories: perfumes, sun glasses and wallets.
They are not looking to expand retail area (open new stores or expand current stores) in the U.S. due to
real-estate prices. If the new categories are introduced they would have to be adjusted within the display
areas of the existing stores.

Option 5: International diversification

Additional Information provided:

The client feels that they are highly dependent upon the U.S. market for revenue generation and would
like to reduce this risk.

Insight: The above information combined with the availability of huge cash reserves makes a strong case
for international diversification.

Question #2: Should they target existing customers i.e. women or should they also target men?
Suggested Solution:
Cross-selling to an existing customer base is simpler. However, the candidate should be able to provide
adequate supporting arguments for the option he or she recommends.

Question #3: Given the following information how would you analyse the impact of launching new
product categories? Please keep in mind the client company is not willing to expand its store size from the
current size (slightly over 200 sq. meters).
Tip to Interviewee

Consider that the sales to space ratio is 1:1, i.e. if handbags are to be sold, then the entire 80 sq. meter
bag display space is continuous and no other products can be placed within this space.

Additional Information to be provided:

Product Unit price

category Display space (sq. meter) ($) Unit sales/month Revenues/sq. meter

Bags 80 400 2500 400*2500/80 = 12500

Shoes 120 250 2400 250*2400/120 = 5000

Perfume 90 100 2700 100*2700/90 = 3000

Sun glasses 30 150 600 150*600/30 = 3000

Wallets 50 110 850 110*850/50 = 1870

Suggested Solution:
Based on the above data (the first 3 columns), the interviewee should proceed to calculate Revenues/sq.
meter (the last column) to derive the most optimal product mix for the current store size (approximately
200 sq. meters).

Insight:

Current product mix of bags (80 sq. meters) and shoes (120 sq. meters) generates the highest revenue
per square metre of retail space. As the client is not willing to expand retail space, launching the 3 new
categories (perfume, sun glasses, wallets) would decrease revenues.
Question #4: When considering possible geographical locations for new stores or expansion, what
factors would you consider?
Suggested Solution:
A Potter’s 5 Forces or PESTEL framework can be used.

The candidate should cover at least the following: market size, existing competition, customers (income
levels, buying patterns, level of awareness about luxury brands), legal and regulatory environment,
availability of suppliers and distributors.

Important point: Manufacturing strategy. Will it be possible to centralize design functions at the head-
quarters in the USA? An? sourcing and manufacturing viable in the target destinations?

Note to interviewer: The candidate should be able to identify majority of these points though he/she is not
expected to provide definite answers where sufficient background information is unavailable.

Question #5: What are the possible options for new market entry or expansion and what are the pros and
cons of each?
Suggested Solution:
The candidate should cover all or most of the below points:

Mode of market
entry Pros Cons

Less time consuming, leverage Revenue and margin sharing, reduced

Joint venture knowledge of local partner control

Synergies may be hard to find,

cumbersome process, no knowledge of
Acquisition Complete control existing market conditions

Low capital investment as licensee is Lack of control over licensee and high risk
Licensing of brand responsible for managing supply chain as inappropriate actions by licensee could
to third party and points of sale harm the brand

Price inflation due to excise and customs

Export Quick and easy duties

Huge capital investment, high break-even

Complete control, learnings from new point, availability of value chain partners,
Organic growth markets etc.
Thomson Scientific to Change into License-based Pricing
Case Type: increase sales/revenues; pricing.
Consulting Firm: McKinsey & Company final round full time job interview.
Industry Coverage: software, information technology (IT); mass media.
Case Interview Question #00765: Our client Thomson Reuters Corporation (NYSE: TRI, TSX: TRI) is a
major multinational mass media and information firm founded in Toronto and based in New York City. It
was created by the Thomson Corporation’s purchase of British-based Reuters Group in April 2008. The

company  has four divisions: Financial and Risk Operation, Legal, Tax &
Accounting, and Thomson Scientific. For this case, we will focus on the Thomson Scientific division only.
Thomson Scientific is a research content aggregator and distributer to academic institutions, local
libraries, government institutions. Their 2010 revenues are USD $1 billion dollars. However, the CEO of
Thomson Reuters thinks that the Thomson Scientific division has not tapped into potential opportunities
that are out there and wants your help in understanding how to go about these opportunities.
How would you approach the situation?

Additional Information: (to be provided to candidate upon request)

Industry: although the 2008 economic recession had a negative impact on some local libraries, the
industry is pretty stable.

Competition: low – medium in research content space.

Products: the Thomson Scientific division has three products – one for each segment. These products are
Academic Research (ACA_RES), Linrary Research (LIB_RES), Government Research (GOV_RES).
These products are web solutions that can operate independently or in integrated fashion with other
database tools clients typically have.

Individual revenue streams: ACA_RES, GOV_RES revenues went up, but LIB_RES revenues went down.

If asked, mention that the revenues of LIB_RES went down by 3% compared to previous year.

Possible Answer:
Question #1: Ask why the LIB_RES revenues may have gone down.
Possible Solution:
Economy: many local libraries depend on funds from local city government and state/federal grants. The
2008 recession had an impact on the people’s livelihoods because of which the tax dollars went down
constraining grants to local libraries.

Also due to poor economy, libraries were not able to raise funds from private institutions as they were
able to pre-recession period.

Note:
The candidate should go back to the original question of how to tap into some of the market opportunities.

The candidate should pick up that it is a revenue related question and put out his/her approach on how to
increase the revenues.

A good candidate will prioritize the issues related to revenues and would say he/she will take a look at the
LIB_RES product and its revenues and see what caused the decline besides economic issues and if
something can be done about that.

Question #2: Directly ask the candidate “What do you think about the LIB_RES product?” if candidate
does not point it out.
Possible Solution:
The candidate should ask about all the aspects of revenues and costs. Provide the following additional
information if asked.

 # of clients: 2,000 libraries in the U.S.

 Average sale price: $45,000 per annum
 Contract period: 1 year
 Sales channels: direct sales force
 Cost to sell and manage each contract: $20,000 including sales overhead and salaries
Candidate should get product and its pricing.

Candidate should identify that the number of clients may have changed due to economic pressures.

Candidate must calculate the profitability of this segment. He/she should identify that it is a profitable
segment (profit of $45,000 – $20,000 = $25,000 per client) and price could be the most likely reason for
declining revenues.

Additional questions the candidate may have:

 How is the product sold? — Sold as a package whether the client uses the features or not.
 Does the client have options from competitors? — Yes, but our product is best in the industry for
ease of use especially for children and elderly that frequent the public libraries.
At this point, the candidate should pick up on given information and point out that there are some features
that our clients do not want in our product. Maybe there is an opportunity to examine some of the key
feature offerings and unbundle and offer them as a configurable, customizable product for a lower price.
For example:

 Offer the product based on number of users – license based.

 Charge clients based on usage of our information.
Question #3: Our client Thomson Scientific wants to go with license-based pricing. Ask the candidate to
calculate the price per user license. Ask also for the breakeven volume of seats.
Possible Solution:
A good candidate will ask one or more of the following questions to gather information.

Table 1. Average number of users per public library (per month):

Segments within Public

Libraries Small, Medium, Large

# of users of these libraries small – 2000, medium – 5000, large – 8000

# of libraries small – 800, medium – 750, large – 450

# of users of our product 60% on average

Calculations of Average number of users per public library (per month)

 Small 2000 * 0.6 = 1200

 Medium 5000 * 0.6 = 3000
 Large 8000 * 0.6 = 4800
Candidate should mention that to keep up with our revenues and possibly increase them, we should price
each license at a minimum price of (Current Revenue for the product / Total users).

Total users per month: 1200 * 800 + 3000 * 750 + 4800 * 450 = 5,370,000 per month.
Current Revenue = $45,000 * 2,000 = $90,000,000.
Price = $90,000,000 / 5,370,000 = approximately $17 dollars. (If they rounded 5,370,000 to 5,000,000
they would get $18 dollars which can also work)

A good candidate will also look at profits for each segment within LIB_RES and calculate breakeven
licenses for all segments.

Break Even = Costs/Margin per seat = $20,000/$17 = 1180 licenses per library, assuming the variable
cost of each license is $0 because it is a software product.

4. Conclusion
A. Recommendation
 Given the license price we just arrived at, our client Thomson Scientific should sell each seat at a
minimum of $17.
 A good candidate will say that because of our product quality, larger clients may pay more for
each seat, e.g. $20 a seat. In that case, the revenues can be greater than the current revenues.
B. Next Steps

 Our client Thomson Scientific should conduct a survey to see if their clients are interested to pay
per seat/license including the price point per seat.
 This would also help our client understand other issues public libraries may face in terms of
customer visitation patterns and how that can impact the per license sale of our clients product.
 Other ways to increase revenue is to sell to consortiums (e.g. group of libraries in a State/City).
Gillette to Double Sales in 2 Years Post Acquisition
Case Type: increase sales; market entry; merger and acquisition (M&A).
Consulting Firm: Boston Consulting Group (BCG) first round full time job interview.
Industry Coverage: household goods & consumer products.
Case Interview Question #00746: You are the Vice President of market development for the Gillette
Company, an American consumer packaged goods (CPG) company headquartered in Boston,
Massachusetts. The Gillette Company was founded by King C. Gillette in 1901 as a safety razor

manufacturer. Nowadays the  Gillette Company sells four major product lines
generating $500 Million in annual revenues:
(1) shaving products
(2) skin care (with skin protective and sun-blocking properties)
(3) baby care bottles (impact resistant)
(4) tampons (very absorbent features)

The year is 2006. Your company Gillette has just been acquired by Procter & Gamble (NYSE: PG), a
global consumer goods company that makes a wide range of products including pet foods, cleaning
agents, personal care products, and shaving products. Most of Procter & Gamble’s brands are global
products available on several continents.
How would you recommend increasing the Gillette Company’s sales from $500 Million to $1 Billion in 2
years post acquisition?

Possible Answer:
Post acquisition there are potential synergies in distribution between Procter & Gamble and Gillette
related to shaving and skin care products. Gillette should look to grow geographically to new markets.
One criterion is to focus on areas that are greatly exposed to the sun.

Another focus is to look at the ability of Gillette to finance the expansion so it may want to divest another
product line if it is not performing as well as sun care such as either the tampon or baby care lines.

The following additional information is provided about the various international markets:

Region Market Size (billions) Growth Trend

U.S. $50 Billion 3%

Europe $30 Billion 6%

Asia $10 Billion 12%

Latin America $10 Billion 12%

The candidate may want to ask more about the perception of Gillette’s sun care brand in each market to
determine possible performance.

Region Brand Ranking Value Proposition

U.S. #2 or #3 Functional Care

Europe #2 Aspirational U.S. lifestyle

Asia #1 Beauty and fairness

Latin America #1 or #2 Functional Care

Interviewer: Based on this information, which two geographical markets would you want to focus on first
and second? Why? The candidate then is asked what are the ways he/she will expand in each market.

Possible Answer:
Phase 1: Enter the Asian market can be first for its high growth and market potential. The Gillette
Company can take advantage of its core functionality for sun protection and sun blocking since the Asian
market values maintaining fair skin to avoid suntans. Market entry includes establishing suppliers, retail
distribution, addressing the competitive reaction, marketing, any language or cultural issues and local
government regulations.

Phase 2: Enter the Latin American market based on the products’ skin care functionality.
Phase 3: Sell product to the distributors and acquire a supply chain.

Interviewer: If the retail price per case is $150, and the mark up margin by the distributor to the retailer is
50%, and the markup from your company Gillette (manufacturer) is 100%, what is the cost of each case?

Possible Answer:
Take $150 / (1 + 50%) = $100 price to distributor.
Take $100 / (1 + 100%) = $50 cost from manufacturer

Interviewer: What are some savings and costs associated with the use of a distributor?

Possible Answer:
Significant cost savings can be accomplished by

 Recognizing synergies from having Gillette use the same supplier and distribution networks
already in place by Procter & Gamble.
 Cost savings from further economies of scale.
However, the main costs of discontinuing with Gillette’s current supplier are:

 Contract costs of terminating the relationship short of the agreed upon expiration.
 Sunk costs of the inventory that the current supplier will no longer be motivated to support as the
relationship has ended.
 Fees to the new supplier.
Recommended Conclusion
Gillette should look to leverage the synergies from Procter & Gamble such as similar product lines in skin
care and access to the global market using Procter & Gamble’s international suppliers and networks.

The expansion into the global markets should be evaluated along the preferences of each geographical
region based on market growth potential first in Asia and then Latin America. Each region would require
different marketing strategies that match each area’s preferences from functional to lifestyle aspirations
benefit propositions.

The expansion has opportunities for significant cost savings from synergies in sharing suppliers and
distributors that would need to be above the costs of terminating Gillette’s existing relationships.

Cookware Maker All-Clad Sees Decline in Sales and Earnings

Case Type: increase sales; improve profitability.
Consulting Firm: KPMG Advisory first round full time job interview.
Industry Coverage: household goods & consumer products; manufacturing.
Case Interview Question #00733: Your client All-Clad Metalcrafters, LLC is a manufacturer of cookware,
food processing and preparation equipment that is sold to both households and restaurants.
Headquartered in Canonsburg, Pennsylvania, the company sells its cookware and kitchen utensils to all
50 states  in the U.S., along with All-Clad bonded ovenware, kitchen tools, and
kitchen accessories. 70% of the goods are produced and imported from China and Italy, while 30% are
manufactured locally in the U.S.
The client All-Clad has been in the industry for over 50 years and has a very strong brand name.
Historically, All-Clad has enjoyed remarkable growth for a long time. Recently, however, the client has
experienced a 1% decline in sales for each of the last 5 years and a comparable drop in earnings over the
same period. The client would like to understand why the sales and earnings have dropped and how to
address the issues. How would you go about this case?
Additional Information: (Provide the following information if requested by interviewee)
1. Market
 95% of the client’s revenue is to restaurants with the remainder going to households.
 Market growth: if the interviewee asks about market growth, push back and ask them what they
think. This is a mature market, so market growth is low.
 The client services the entire US, equal parts Northeast, Northwest, and South.
 New competition has entered the market and copied their products.
2. Company/Products

 This is the client’s first experience with slumping sales.

 They have best brand in the industry in terms of quality and recognition. They price their products
at a slight premium. Locally manufactured goods have slightly higher margins.
 Mix of products has changed slightly in the past few years. They sell their products to restaurant
buying groups that represent a collection of restaurants. Competitors have begun offering complete
kitchen solutions that include items the client does not currently produce.
3. Costs

 COGS: There has been a slight increase in the price to the client of the imported goods, about a
2% rise every 3 years.
 Production costs: have not changed.
 Distribution costs: have increased slightly because of increased fuel costs from shipping the
goods. The client contracts with shippers such as UPS or FedEx to deliver their products.
Possible Answer:
Normal profitability analysis (Profits = Revenues – Costs) should be performed at a high level in order to
arrive to the following recommendations.

1. Product lines
To address the competitive pressures, the client could form a joint venture with other manufacturers to
offer complete solutions or add new products to their existing lineup to compete more effectively.

The interviewee should ask about profitability of the household business. There is no specific information,
so ask the interviewee to brainstorm all of the things he/she would like to know about the consumer
business.

 Is it a growing market?
 Is it more profitable than the restaurant business? Ask the interviewee what to do if it is and if it
isn’t.
 If yes – try to grow the household side of the business, and ask the interviewee to
brainstorm ideas how.
 If no – Divest or spin off this side of the business and focus on the core restaurant
business.
2. Revenues

The client has strongest brand name in the industry; the interviewee should explore increasing price
premium to reinforce their brand image as the best in class.

Promotions/Marketing – promote on chef reality shows, trade shows, higher-end restaurant chains, e.g.
Morton’s The Steakhouse.

Explore margins and internal capabilities of selling direct to restaurants to bypass the buying groups and
capture more of the restaurants’ willingness to pay.

Second-hand market – since restaurant business is highly competitive with restaurants going out of
business frequently, the client could start a “certified pre-owned” business line for their products, similar to
car dealerships. If interviewee suggests this, ask them to brainstorm the benefits and risks. Obvious
benefit: high margin. Obvious risk: cannibalization.

Bundle products together to increase sales of companion items.

3. Costs

Locally produced goods have higher margins. The interviewee should explore building or renting
additional production facilities or expanding existing ones to reduce reliance on lower margin imports.
They should mention current factory utilization rates.

Or, try to squeeze foreign suppliers to reduce costs on imports.

Aeromar Airline Will Not Cut Its Mexico City-Brasilia Route
Case Type: increase revenues; math problem.
Consulting Firm: Kurt Salmon first round summer internship job interview.
Industry Coverage: airlines.
Case Interview Question #00720: Our client is the CEO of Transportes Aeromar, a mid-size passenger
airline based in the General Aviation Terminal at Mexico City International Airport in Venustiano Carranza,
Mexico City, Mexico. Aeromar operates scheduled domestic services in Mexico and international services

to the USA,  South America, and Central America. Its main base is Mexico City
International Airport.
The Transportes Aeromar airline operates on the Hub & Spoke model (a system of connections arranged
like a chariot wheel, in which all traffic moves along spokes connected to the hub at the center). and is
currently seeking to increase its revenue. It intends to do so by switching the only airplane currently
serving the flight from Mexico City to Brasilia, Brazil (the federal capital city of Brazil with a population of 2
million) to their existing Mexico City-New York City line service. Is this a good idea? Why or why not?
Additional Information: (Provide the following information if requested by interviewee.)
1. Mexico City-Brasilia Route
 The airplane serving the Brazil line is a Boeing B757 with 200 seats
 Only one airplane serves the Brazil line, making two round trips a day
 The occupancy rate of the Brazil line is 90%
 Each round trip ticket to Brazil costs $350
2. Mexico City-NYC Route

 The New York line is currently served by 4 planes similar to the Brazil line plane
 The New York planes each make 3 round trips a day
 The occupancy rate of the New York line is 80%
 The round trip ticket cost is the same, $350
 If an additional plane (and flight) is added to the NYC line, occupancy rate will drop to 70%
Possible Answer:
1. Areas of Discussion

 Are costs relevant for this case? (They are not)

 What is the revenue generated by each route?
 Is there enough demand for NYC flights to justify another airplane?
 Does eliminating the Brazil route have any repercussions on other flights to South America?
2. Analysis (Calculations to be completed by interviewee.)
Current revenue: $798,000 per day

 Brazil line = 200 seats * 90% * 2 round trips per day * $350 = $126k / day
 NYC line: 200 seats * 80% * 3 round trips per day * 4 planes * $350 = $672k / day
 Total revenue from the two lines: $126k + $672k = $798k / day
New revenue would be: $735,000 per day

 NYC line only = 200 seats * 70% * 3 round trips per day * 5 planes * $350 = $735k / day
3. Recommended Conclusion

The short answer is “no go”.

Calculations indicate that eliminating the Brasilia line would actually decrease overall revenues of the
airline. This is because the occupancy rates for the New York City route drops when an extra airplane is
added to that line.

In addition, removing the airplane that serves Brasilia completely eliminates a highly profitable flight, and
may cause service quality repercussions due to unsatisfied customers.

St. John Knits International to Double EBIT in Two Years

Case Type: increase sales/revenues; growth.
Consulting Firm: A.T. Kearney first round summer internship job interview.
Industry Coverage: apparel, clothing, textiles.
Case Interview Question #00716: Our client St. John Knits International Inc. is a family owned and
operated apparel manufacturer. It has been in business for over 50 years and manufactures branded
men’s and women’s knit clothing. Headquartered in Irvine, California, the company is best

known  for its classic styling and extensive use of primary colors. The knit
clothing market is typically highly fragmented. All production occurs overseas although St. John sells
primarily to U.S. based retailers.
St. John’s management has approached us with the following issue. It is year 2006 now and they want to
sell the business by 2008. They want to maximize the asking price by doubling the company’s EBIT
(earnings before interest and taxes) over the next two years. Our job is to determine if that goal is
feasible.
To get started, the senior management team has offered to give us 20 minutes of their time to answer any
pertinent questions before we begin. Please take a moment to determine what information you would
need from your client to begin your analysis. How would you go about this case?

Additional Information: Provide the following information if requested

Branded Clothing means St. John is hired to manufacture clothing for specialty retailers such as Fruit of
the Loom, Gap, Old Navy, Banana Republic, etc.

Knit clothing includes all tops and bottoms made of raw materials consisting of cotton, fleece or a
synthetic cotton blend, it does not include sweaters. (i.e. t-shirts, sweatpants, underwear etc)

The Apparel market being highly fragmented is from a manufacturer’s perspective. There is no one
manufacturer capturing more than 5% market share.

Possible Answer:
There are several correct answers here. One possibility is using the 3C’s as an initial framework with the
following pieces of information.

 Company: What is the client company’s existing profit margin and how does it compare to
industry averages?
 Customers: Who are its core customers: large retailers, small retailers, Big Box discount retailers
or specialty retailers? How many customers – is the majority of capacity filled by one client?
 Competitors: Who are the core competitors?
The interviewer should pick 2-3 pieces of information that the interviewee mentions and ask for an
explanation as to why he/she raises those points and why they are important.

An alternative challenge could be to ask the interviewee to rank the top 3 pieces of information necessary
and give a brief explanation as to why. A possible response given the above info could be:

 Profit Margins for both the company and the industry are important to understand if there are any
organic opportunities for the company to grow EBIT by improving existing operations (i.e. if the
company has a 5% profit margin and the industry average is 8% – there might be cost cutting or
economies of scale to be leveraged to gain an additional 3% in profit with minimal change).
 It is important to know what types of customers St. John serves to understand the bargaining
power it could be up against. Put another way, if St. John manufacturers clothing for Wal-Mart, it
could face pressure from the retailer to lower prices in order to maintain its business. Or, if 40% of St.
John’s quarterly capacity is occupied by Abercrombie – St. John could face issues with economies of
scale and maintain cost levels if Abercrombie were to not fill its orders. This could lead to eroding
profit margins.
 Comparable sales growth rates for both St. John and the overall industry will show if the business
is growing at the same rate as the market.
Part #2: After the candidate has successfully navigated through Part #1, the interviewer should give the
following information.
The Senior Management team at St. John has given us the following metrics that represent the average
for the total Knit Apparel Manufacturing Industry:

1. Retailers

 2005 Unit Sales were 35 million units.

 Unit sales grew 6% from 2004 to 2005.
 Average Unit Retail is $120.
 Retailers make a 50% gross margin per unit.
2. Manufacturers

 Cost of goods sold per unit is $33

 SG&A (Selling, General and Administrative Expenses) per unit is $12
Possible Answer:
The interviewer should prompt the interviewee to take a moment to examine the data to see what
possible conclusions he/she can draw. Calculations are necessary. The interviewee should use the retail
50% GM and costs per unit to arrive at a profit margin for the manufacturers.

The interviewee should have some knowledge of the income statement to determine the following:

 Sales – COGS = Gross Margin

 Gross Margin – SG&A Expense = EBIT Margin*
*The EBIT margin should be a main focus because the firm in question wants to double this measure.
Therefore from St. John’s perspective each unit sale would look like this:

 Revenue $60 = $120 x 50%

 COGS ($33) Given
 Gross Margin $27 = $60 – $33
 Gross Margin 45% = $27/$60
 SG&A ($12) Given
 EBIT $15 = GM – SG&A expense = $27 – $12
 EBIT 25% = $15/$60
Conclusion 1: The interviewee should get to an EBIT margin percentage (25%) and then want to know
more about St. John’s profit margin numbers to draw a comparison to the industry average.

Conclusion 2: The interviewee should note that the retail growth percentage is 6% and make the
connection that if the overall industry is growing at 6% – St. John’s business should also be growing at
6%.

Having arrived at both of these conclusions the interviewee should want to know more about the
performance metrics of St. John specifically.
The interviewee may use these numbers to calculate numerous other figures such as retail dollars (units x
average unit retail) or 2004 unit or retail dollar sales using the growth percentage. This is a good
demonstration of quantitative ability and knowledge of how the metrics fit together – although these are
not necessary to solve the case. If the interviewer would like to check the interviewee’s accuracy, here
are answers to the above mentioned calculations:

 2005 Retail dollars = 35 million units * $120 per unit = $4.2 Billion
The below assumes that 6% is true for both dollar and unit sales and that average unit retail does not
change between 2004 & 2005.

 2004 Retail dollars = $4.2 billion / (1 + 6%) =~ $3.96 Billion

 2004 Unit Sales = 35 million / (1 + 6%) =~ 33.0 million
Part #3: Once the interviewee has thoroughly examined the data set and has arrived at the above two
conclusions provide him/her with the following second set of numbers:
Now that we have an idea as to the performance levels of the overall industry, here are some metrics that
may help you:

Actual results for St. John:

2005 2004

Revenu
e $600m $565m

COGS $330m $310m

SG&A $120m $113m

What does this tell you?

Possible Answer:
The interviewee should perform the following calculations with this data set:

 Revenue growth % from 2004 to 2005 (and compare to industry)

 Gross margins and EBIT margins for both years (compare to industry)
 St. John’s market share of total manufacturing industry
2005 2004 Growth

Revenue $600m $565m ~6% (6.19%)

COGS $330m $310m

Gross Margin $ $270m $255m ~6% (6.45%)

Gross Margin % 45% 45% Flat growth

SG&A $120m $113m

EBIT $150m $142m ~6% (6.19%)

EBIT% 25% 25% Flat growth

Market Share = 600m / 2,100m =~ 30% (actual 28.6%) (note: 2,100m comes from first data set. If total
2005 retail dollars are $4.2 billion and they earn a 50% margin, that means that the total revenue for the
manufacturers would be half of that amount = $4,200 * 50% = $2.1 billion ($2,100 million)

The interviewee should recognize that this company is growing equal to or slightly above the industry and
profit margins are aligned, therefore organic growth is not possible and the feasibility of doubling EBIT in
two years is looking unattainable. Additionally, the interviewee should speak about St. John’s current
market share of 29% and briefly indicate what this could mean for the client.

Part #4: Now that we have determined that organic growth is not possible and because this company
appears to be totally aligned with the industry in terms of EBIT margins and revenue growth what are
some other opportunities for growth?
Possible Answer:
Possible suggestions: (a great answer would not only incorporate several ideas but also factor in the
feasibility of achieving them within the two year time frame)

 Acquire smaller competitors in this ‘highly fragmented market’

 Extend manufacturing into additional product categories either organically or through acquisitions
 Determine if facilities are running at 100% capacity and potential acquire new customers
Part #5: Senior Management of St. John has collected this data on possible product extensions to drive
growth. The following data is representative of the entire market within these categories.
Kids & Baby Knits Knit Accessories Sweaters

2005 Sales 30M 80M 20M

Average Unit Retail $100 $60 $120

Retail Revenue $3,000M $4,800M $2,400M

Average Retail Gross Margin 50% 45% 55%

Manufacturing Revenue $1,500M $2,640M $1,080M

Average Manufacturing Price $50 $33 $54

Average COGS / Unit $18 $10 $25

Average SG&A / Unit $8 $5 $10

Average Operating Income $24 $18 $19

Average Manufacturing Gross Margin 48% 55% 35%

Manufacturing EBIT $720M $1,440M $380M

’04 – ’05 growth rate 4% 5% 6%

Description of Product Categories:

1. Kids & Baby Knits = similar products to current production although for a different customer
2. Knit Accessories = scarves, belts, wraps, purses, hair accessories (all made from cotton or cotton
blends)
3. Sweaters = All sweaters for men and women

Possible Answer:
The interviewee should be most concerned with the EBIT and growth rate of each potential product
extension. He or she should recognize that current EBIT is $150 million therefore; each of these
segments is attractive because it could give St. John the potential for rapid growth (assuming they are
able to successfully capture a significant portion of market share). The interviewee should also draw
conclusions about how fast each of these markets is growing and potential market share necessary to
capture.

What will separate an average interviewee from a great one will be their ability to further probe into these
businesses and from a high level ask questions about synergies between the product lines. The
interviewee should want to know more about capacity restraints, raw material procurement, and
operational restrictions. For example: sweaters production would require different machinery than what is
already owned by the factory – would the expected profits warrant the expense for equipment and training
of employees?

Part #6: Conclusion

Once the interviewee has had some time to understand the data and draw conclusions – ask them to give
an elevator pitch covering a summery of their findings, what their immediate conclusions are and what
pieces of information have lead them to their answer.

Possible Answer:
Answers will vary among interviewees. One possible summary would be as follows:

After conducting interviews and analyzing both industry and company data, I would explain to our client
that doubling EBIT over the next two years will be challenging and most likely will not happen without the
acquisition of a smaller player. We did an assessment to identify organic growth opportunities but
because St. John’s growth and EBIT margins are in line with the industry as a whole there is no leverage
there. Additionally, we looked at total market share of which St. John controls ~30% showing little room
for growth. The only feasible option would be to acquire targets to incur rapid growth both in size and
profitability. (No such data was available for review, but this is where I would look next.)

Finally, 3 product line extensions were researched and reviewed. While accessories are a high volume,
high profit business, there could be potential manufacturing constraints and substantial capital
expenditure that would limit upside realized in a two year period. Also, this particular market is seeing only
5% growth which is slightly less than its core business. Sweaters would be passed up for the low margins
and capacity restraints. The kids and baby business would be the only feasible option because it would
be possible to expand into this market using available resources. The only potential risk would be how
fast the business is able to realize the upside potential and how easy it is to procure additional raw
materials and build customer relationships.

NBC to Cut Costs by $750M and Grow $400M in Revenues

Case Type: increase sales; reduce costs.
Consulting Firm: Simon Kucher & Partners (SKP) first round summer internship job interview.
Industry Coverage: Mass Media & Communications.
Case Interview Question #00715: NBC (National Broadcasting Company, is an American commercial
broadcast television and radio network. It is headquartered in the GE Building in New York City’s
Rockefeller Center, with additional major offices near Los Angeles and in Chicago. NBC has eleven

owned-and-operated  stations and nearly 200 affiliates in the United States.

The year is 2007. Jeff Zucker, the CEO of NBC has asked you for help. In fiscal year 2006, NBC had
profits of $3 billion on total revenue of $16.5 billion; these numbers have fallen 10% over the past three
quarters. There has also been an $8 million drop in ad revenue due to the proliferation of specialized
cable channels as well as changing viewer preferences in media consumption. For this case, NBC’s goals
include:
1. achieving double-digit growth,
2. reducing costs by $750M, and
3. spending $150M in digital initiatives in order to grow $400M in revenues (revenues from digital delivery)
to $1B.

How would you help NBC’s CEO to achieve these three goals?

Additional Information: (Provide the following information if requested by interviewee)

 Programming costs for television shows have risen as shows average 60 scenes (vs. 40 scenes
previously).
 NBC’s big-budget shows such as Heroes cost $2.5M/episode and charge $200K/spot (there are
20 spots/hour).
 In addition, on-demand media has cut into revenues although live entertainment is still a draw.
Possible Answer:
Areas of Discussion

1. What are your initial thoughts about NBC’s troubles? (ask the candidate immediately, do not allow for
questions or any time to gather thoughts)
2. If a low-budget show like “Deal or No Deal” costs $1M per episode, how much less revenue per spot
can NBC afford to charge and still retain the profitability of bigbudget shows?
3. Given this info, should CEO Jeff Zucker redirect resources towards low-budget shows? What else
should he consider?
4. Brainstorm a bit about how to best use the funds set aside ($150M) for digital initiatives.

Questions 1 and 4 are more behavioral and test whether the candidate has thought about digital media
and its impact on the entertainment industry. For question 3, the “right” answer is to explore the impact on
sources of revenue other than advertising, such as syndication or DVD sales.

For question 2: (Calculations to be completed by interviewee.)

 Big-budget show’s revenue = $200K/spot * 20 spots/hour = $4M per episode

 Big-budget show’s profit = $4M – $2.5M = $1.5M per episode
Therefore low-budget revenue must be $1M + $1.5M = $2.5M. Assuming there are still 20 spots/hour,
NBC can afford to charge $125K/spot for low-budget show.

For question 3: keep stonewalling if the interviewee pursues any avenues related to ad revenue. For
example, if they say that advertisers will be less attracted to the demographic for shows like “Deal or No
Deal”, say “that’s already reflected in the price”. Concede answers involving long-term strategy,
competition, etc. but make it clear that those are not satisfactory answers.

Washington Post to Incease Migration from Print to Online

Case Type: increase sales; operations strategy.
Consulting Firm: Simon Kucher & Partners (SKP) first round summer internship job interview.
Industry Coverage: Publishing, Mass Media & Communications; online business.
Case Interview Question #00714: Your client The Washington Post (WP) is an American daily
newspaper. It is the most widely circulated newspaper published in Washington, D.C., and was founded
in 1877, making it the area’s oldest extant newspaper. Daily editions are printed for the District of

Columbia,  Maryland and Virginia.

As a major metropolitan newspaper, Washington Post runs advertisements for employers seeking
employees (job ads/help wanted ads). Recently, the newspaper has realized that to compete it must offer
the ad space on its online version as well. Online, it doesn’t have traditional competitors – its competitors
are sites like Linkedin.com, Dice.com, Monster.com and Craigslist.com. It is looking to you to tell it how to
manage the migration from print to online. Specifically they would like to know:
1. How should they match the pace of the market as more employers go online?
2. Should they push employers to spend for online ads?
3. How can it maintain the revenue generated by printed advertising while still pushing for more
online revenue?
What would you recommend to Washington Post?

Additional Information: (Provide the following information if requested by interviewee)

Revenue from job advertising breaks down into 70 percent revenue from print ads and 30 percent
revenue from online ads.

Print ads are currently more profitable – $800 profit per print ad versus $400 profit per online job ad.

Of jobseekers who use this newspaper (and the newspaper’s website) for job seeking, 70 percent
currently use print, 30 percent use the website.

Different companies are adopting online advertising at different paces: the early adopters of the website
job ads are technology companies and professional service companies. The slower to adapt are
government agencies, health care organizations.

Possible Solution:
Keep both print and online advertising as package options, especially as print is twice as profitable as
online.

Target print advertising towards slower adaptors, while also developing a great site to serve clients that
only want to go online (can be creative here – what would you do with the site to distinguish it from a site
like monster.com?).

Train sales force to plug both opportunities, but to understand the client’s needs and build a package that
suit’s them best. Once the client is hooked to one option, it will be easier to sell the alternate option.
Use the print vs. online packages as an opportunity to bundle advertising print and online ads.

Condé Nast to Move More Magazine Contents Online

Case Type: increase sales; improve profitability.
Consulting Firm: Arthur D. Little first round summer internship job interview.
Industry Coverage: Publishing, Mass Media & Communications; online business.
Case Interview Question #00713: The client Condé Nast is a division of Advance Publications, a mass
media company headquartered in New York City, United States. As one of the major magazine publishers
in the U.S., the company owns 20 print and digital media brands, including Allure, Architectural Digest,

Ars Technica,  Bon Appétit, Brides, Glamour, Golf Digest, Golf World, GQ,
Lucky, The New Yorker, Self, Teen Vogue, Vanity Fair, Vogue, W and Wired.
In the last few years, Condé Nast has seen their circulation drop and their ad revenue drop. They
currently have $700M in revenue spread across three types of magazines: fashion and beauty for teens,
fashion and beauty for women ages 24-40, and specialty magazines with 10-20K in subscribers. Their
online presence generates $21M in advertising revenue (of the total $700M) and $9M in profit. They have
brought us in to try to solve their circulation problem and possibly boost their ad revenues. (For the
interviewer: the real question at hand is, how can we improve profitability for this client and adapt to the
current marketplace?) How would you go about this case?
Additional Information: (Provide the following information if requested by interviewee)
 Viewers and advertisers are both moving online. The client Condé Nast’s two major competitors
have both invested a lot of money in online initiatives.
 Current online operations: they use a partner that charges them a portion of the hosting costs.
They do not have complete control over what ads are being shown with their online contents.
Possible Solution:
1. Areas of Discussion

 Should the client be more aggressive online and what capabilities do they need?
 Brainstorm a bit about what else you could do other than simply moving your content to a web
server.
2. Recommended Conclusion

The interviewee should not immediately jump to the conclusion that the online portion of the business is
the cause of the problem (although this turns out to be the case, they should note that the proportion of
revenue from online activities is relatively small). Otherwise, the answer is fairly open-ended, but should
show an understanding of technology. Topics the interviewee should address include:
IT Organization – It is not enough to mention that they will need “IT people” – a better answer might be “a
designer that is well-versed in web-design software but will also be able to create an online presence with
a consistent look with the print magazine”.

Project Phasing – Recognize the difficulty of launching new IT projects by suggesting that since there are
so many magazines in the publishing company’s portfolio, moving these magazines online could be done
in a phased manner, perhaps by doing trial runs with the specialty magazines before moving on to their
more valuable brands.

Vendor Relationships – Evaluate other hosting options or solutions. If the client is dependent on a 3rd
party service provider, can they bring the hosting in-house? Or issue an RFP for a new provider with more
favorable contract terms?

Sources of Revenue – Is the client currently charging consumers for access to their online portal? How do
they track usage and unique visitors? The interviewee should explore whether the client leverage new
advertisers to reach the customers who are “really” using their online channel.

For the brainstorming component, the interviewee should mention the ability to cross-sell magazines
across demographics and the opportunities for mass customization.

Growing Competitions Push Blue Sky Studios to Innovate

Case Type: increase sales; business competition.
Consulting Firm: Alvarez & Marsal (A&M) first round summer internship job interview.
Industry Coverage: entertainment; mass media.
Case Interview Question #00706: Blue Sky Studios is an American computer animation film studio
based in Greenwich, Connecticut. Using its in-house rendering software, the studio had worked on visual
effects for commercials and films, before releasing in 2002 its first animated film, Ice Age, and completely

dedicated  to producing animated films.

You work for a major New York City consulting firm and have just met with Chris Wedge, CEO of Blue
Sky Studios. Mr. Wedge is concerned because DVD sales were much lower than had been projected for
the studio’s latest release – Epic. Further, he is also concerned that this decline in sales will repeat itself
with the studio’s next release, Ice Age 4: Continental Drift. You must decide, should he be worried about
the decline and if so, what actions should he take to counter this potential downturn?
Additional Information: Provide the following information if requested
1. Company
Blue Sky Studios has been highly successful in releasing family-friendly, animated movies that focus on
the exploits of talking animals and mythical beasts.

Blue Sky Studios releases only three movies a year (one during the winter holidays and two during the
summer).

Blue Sky Studios distributes their movies through 20th Century Fox, a much larger movie studio. The
distribution agreement between the two companies stipulates the following:

 20th Century Fox oversees the distribution and marketing of Blue Sky Studios’ films.
 For use of 20th Century Fox’s distribution network, Blue Sky Studios pays 20th Century Fox 20%
of their gross box-office receipts.
 Blue Sky Studios must also compensate 20th Century Fox for all marketing costs that 20th
Century Fox spends on Blue Sky Studios’s movies.
 20th Century Fox has exclusive rights to distribute the DVD releases of any material based on
previous Blue Sky Studios theatrical releases (such as direct-to-video sequels).
 20th Century Fox has the exclusive rights to produce and release television programs based on
the characters in any Blue Sky Studios theatrical release.
Large movie companies can survive a bad year by relying on the steady stream of income their film
libraries generate. Blue Sky Studios, having a catalog of only 15 movies, lacks that security.

2. Industry Trends

The DVD market for the entire industry is shrinking. Consumers have grown content with the personal
libraries they have amassed. The market for catalog titles is showing signs of saturation.

The home entertainment market is fragmenting as options such as the internet and on-demand cable
have captured a larger portion of consumers’ dollars and time.

Animated talking animal films, which had been a consistently successful genre at the box office, are now
beginning to underperform.

3. Competition

In the past, Blue Sky Studios had only considered two studios as direct competition.

 Walt Disney Pictures, another of the Hollywood majors, has a long history of producing animated
features for children.
 Warner Bros. Pictures, another major, has a specialized department Warner Bros. Animation that
was specifically created to produce animated releases.
Recently the cost of animation has dropped significantly. This has led to almost every studio, both major
and minor, producing animated fare.
Most of these recent animated features have focused on the hi-jinx of a group of talking animals.

4. Technology

Blue Sky Studios is a leader in the animation industry; however, decreases in animation costs have
significantly narrowed the gap between innovator and follower.

The emergence of high-definition DVD technology has signaled an eventual change to the format. This
will encourage consumers to reinvest in their DVD libraries. However, an industry standard has yet to be
established for the technology.

The fragmentation of the industry has also opened avenues for potential growth. For example:

 The Internet looks to become a viable source of movie distribution as sites such as Amazon.com
and Yahoo have begun broadcasting films.
 Mobile devices such as iPods, cellular phones, and the PSPs have also provided a window of
distribution that had not existed in years past.
5. Consumer Products

Blue Sky Studios controls the licenses on all of its characters; this constitutes the third largest stream of
income for the company after theatrical and DVD revenue.

Possible Answer:
The purpose of this case is to challenge the candidate to tackle problems that are specific to the demands
of a specialized industry. In this instance, Blue Sky Studios is facing growing competition due to
competing technology, the commoditization of its genre and diminishing marginal returns from a primary
revenue stream (DVDs).

Although there is no single “right” solution to Blue Sky Studios’s problems, there are some that seem
more sensible than others. These include:

 Steer production away from talking animal pictures to avoid the oncoming glut that looks to
saturate the market.
 Explore less expensive direct-to-video DVD releases based on new characters. Through direct-
to-video releases Blue Sky Studios can build their library, create new franchises and increase their
consumer products revenues.
 Exploring cash streams that new technology has made possible such as ringtones, ring backs,
and online games.
Additionally, Blue Sky Studios should also be weary about jumping too quickly into a new technology. It
must balance being on the forefront with moving to far ahead (for example, picking a high definition DVD
format before an industry standard is set).
Jazz at Lincoln Center Cut Price to Boost Subscription Rates
Case Type: increase sales; add capacity & growth.
Consulting Firm: Deloitte Consulting first round summer internship job interview.
Industry Coverage: entertainment & performing arts; non-profit organization.
Case Interview Question #00696: Lincoln Center for the Performing Arts is a 16.3-acre (6.6-hectare)
complex of buildings in the Lincoln Square neighborhood of Manhattan in New York City. The center has
29 indoor and outdoor performance facilities. Your client is the Jazz at Lincoln Center (JALC), a leading

not-for-profit  arts organization located in New York City. Under the artistic
direction of legendary jazz musician Wynton Marsalis, JALC is committed to providing top quality Jazz
performance and education to the world.
Founded in 1987, JALC has been in existence for more than 25 years. Until 2003, JALC had been
housed in the Lincoln Center Complex along side the Metropolitan Opera, New York City Ballet, and
Julliard School for the Performing Arts. In 2004, JALC moved to the Time Warner Center – a high end
commercial and corporate complex located on Columbus Circle. The move provided JALC with new,
state-of-theart facilities, greater capacity (from 3000 to 4000 seats), and performance venues with
expansive views of Central Park.
JALC receives three primary revenue streams: subscriptions, single ticket sales, and donations. JALC,
like all major performing arts organizations, relies on patron subscriptions to smooth demand and provide
up-front cash flows. The general rule of thumb is that 50% of tickets should be sold to subscribers and
50% to single ticket holders.

The move to Time Warner Center has been a mixed blessing for JALC. In response to significantly higher
fixed costs (rent, utilities, etc.), JALC had to increase ticket prices an average of 75%. However the move
has also generated significant press attention and general buzz across New York City. Although
attendance has been up since the move, subscription rates have declined in each of the first two years in
the new venue.

You have been hired by JALC’s Director of Marketing to assist in boosting subscription rates. On your
way to the initial client meeting, you take a second to compose your thoughts and brainstorm on the
problem at hand. How would you go about analyzing this case?

Possible Solution:
This case is meant to be a very open ended question, so the interviewer should push the interviewee to
be exhaustive in his/her analysis. The tendency will be to focus in on pricing. That’s fine, discuss pricing
but then get beyond it to identify all outlying issues. Many frameworks will work, here is one approach:
1. Internal

1.a Pricing

 Obviously the increased prices are beyond customers’ willingness to pay.

 How do margins compare with the old scheme?
 What would happen if we lowered prices? Less revenue, unpredictable cash flows, no upfront
cash, low attendance at non-marquee shows.
 Can we maintain elevated prices but boost willingness to pay? More perks for subscribers, look
for higher-end customers
1.b Product

 How has the product changed since the move?

 Does the new venue attract the same caliber of performer?
 Is the new venue as or more comfortable as the old venue?
 How does the location affect consumers’ willingness to pay?
 What else are we selling beyond a show? Drinks? Merchandise? Parking?
1.c Promotion

 Is the advertising plan consistent with new location?

 Are we leveraging PR as effectively as we can?
1.d Customers

 Marketing research to understand why old subscribers are leaving

 Why do people seem to prefer single tickets to subscriptions
1.e Company

 Do we have fixed costs as low as possible?

2. External

2.a Competition

 What new competitors/substitutes exist because of the move?

 How did old competitors respond to the move?
2.b Macroeconomic

 Do people still enjoy watching jazz? Going to performances?

 Is the general economic downturn affecting people discretionary spending?
 How is tourism doing? Are we over the 9/11 backlash?
 Was their a shift in regulations because of the move? New taxes/zoning reqs?
Part #2: At the client meeting, the Director of Marketing is convinced that JALC needs to significantly
reduce ticket prices. She is particularly worried about subscriber retention. From 1993 to 2003, JALC had
an average subscriber attrition rate of 10%. Over that same period, JALC had maintained subscription
rates at 50% of house capacity. Since 2003 this situation has changed. The Director of Marketing
presents you subscription data from 2003-2005 (see Figure 1) as proof that JALC needs to reduce prices.
She asks you to take a look at the numbers and see if you agree. She further asks you to project what
2006 rates will be if prevailing trends continue.
Figure 1: JALC Subscriber Data From 2003-2005

Possible Answer:
The first key is to recognize that this picture looked very different in the past. Typically, 90% were
returning subscribers and 10% were new subscriptions. In 2004, this ratio shifted to about 50/50. In 2005
it moved to 70/30. How does this insight change your view of the case?

Next, notice that the new subscribers in 2004 resubscribed in 2005 (with 10% attrition). This is a good
trend.

Now, let’s project 2006. (Note: On the surface this seems like a gross assumption to make based on the
limited data available. Lucky for us, consultants do this all the time. Press the interviewee to state his/her
assumptions and forge ahead.) Break the 2006 subscribers into four groups:
 2003 and prior subscribers: They left in droves over the past two years, but those that remain are
likely dedicated jazz fans and should stick around. Assume 10% attrition giving us 350 subscribers.
 2004 subscribers: 10% attrition from 2005 numbers gives ~550 subscribers
 2005 subscribers: Again 10% attrition from 2005 numbers gives ~380 subscribers
 2006 new subscribers: This is the most difficult to estimate. Looking at the last two years, in 2004
we had 650 new subscribers, 2005 we had 425. Based on this trend a reasonable estimate is 200
subscribers. Prior to 2003 we were regularly able to attract 150 new subscribers. The case mentions
buzz and free PR so maybe we will be closer to the 2005 number of 425 new subscriptions? All in all,
200 seems like a reasonable estimate.
Adding it all up, a conservative projection is 1,480.

Part #3: Thanks to your convincing logic and comprehensive thought process, the Director of Marketing is
convinced that your team can turn around JALC. As you shake hands and joke about the weather, a
pained look comes over her face. “Wait a second. If we can grow our subscriber base by 10% a year we
will soon have to move again,” she says. Calculate how long it will be until JALC is at capacity with
subscribers.
Possible Answer:
This is a “rule of 72″ (A rule stating that in order to find the number of years required to double your
investment at a given interest rate, you divide the compound return into 72) problem: at 10% compounded
annual growth a population will double every seven years.

JALC currently has 1,400 subscribers; capacity is 4,000 seats. In seven years there will be 2,800
subscribers and in 14 years there will be 5600 subscribers. Therefore the answer is around 10 years. You
would get an “exact” number as follows:

1,400 x (1 + 10%)^N = 1,400 x 1.1^N = 4,000

N = log(4,000/1,400) / log(1.1) = 11.0 years

Part #4: Conclusion. At the end of your first day on the case, you happen to run into Wynton Marsalis, the
Director of JALC, in the elevator. He asks how the study is going so far. What would you tell him?
Possible Answer:
The interviewee should give a concise and complete summary of the key insights from the case. Press
them to synthesize rather than summarize. A discussion of the next steps should also be included.

Optical Fibre Solutions Revenues Drop 50% in One Year

Case Type: increase sale/revenue.
Consulting Firm: Boston Consulting Group (BCG) first round full time job interview.
Industry Coverage: telecommunications & network.
Case Interview Question #00678: Our client Optical Fiber Solutions (OFS) manufactures and markets
leading-edge fusion splicers, optical fiber, optical cable, fiber to the home (FTTX), connectivity and optical
components. Headquartered in Norcross in the outskirts of Atlanta, Georgia, USA, Optical Fiber Solutions
is a wholly  owned subsidiary of Japanese telecom and electric company
Furukawa Electric Co.
An optical fiber is a flexible, transparent fiber made of glass (silica), slightly thicker than a human hair. It
can function as a waveguide, or “light pipe”, to transmit light between the two ends of the fiber. Optical
fibre has volume advantages to copper wire and is mainly used by the telecom, cable and mobile phone
industries. It’s made in glass strands and rolled onto 25 km spools.

Our client Optical Fiber Solutions’ customers (who are generally major Telecoms networks like AT&T,
Sprint, T-Mobile, Verizon) would buy a huge quantity, bundle it up, dig a trench and put the bundle of
optical fibres in the ground.
Recently, the client has seen a 50% decline in revenues, and has recently brought in a new CEO. The
new CEO of OFS would like you to help address three questions:

1. Why did revenues drop 50% in one year?

2. Can he expect an improvement, and if so in what timeframe?
3. How does our company compare to our competitors?
Additional Information: (to be provided after relevant questions)
 Optical fibre is similar to a commodity, so consumers do not purchase by brand.
 Our client OFS’s pricing is in line with competition.
 There has been no significant change in supply from the company’s perspective.
 There are no direct substitutes and no regulation changes during this period.
 The “usage” of the optical fibres, for voice, data and internet, has actually doubled each year
(meaning you would think you’d actually need twice as much each year).
 Our client’s customers (telecom companies) are asking for less.
 There has been no major change in customer (telecom companies)’s industry. Our client even
spread across industries for product sales.
 Current usage of optical fibre is 5 T/second, but capacity is 100 T/second.
Suggested Approach:
3C’s framework: Company, Competitors, Custoers.

The key to solving this case question is understanding what is actually going on in the industry. To get to
the heart of this issue you could ask:

Clearly our client OFS has lost a significant portion of their revenue. To understand why there are three
key things I would want to examine.
First, what has changed about our Client Company – we haven’t heard of any major reason why things
would be going wrong internally but some of the things that I would want to look at are: Have they lost key
sales personnel with good customer relationships? Have they lost their good reputation because of some
incident or accident etc? Have there been perceived quality problems? Etc
Second, I would want to look at our key Competitors – Are they offering a better product? (probably not if
the industry is commoditized) Are they selling at a lower price? Are they offering better service/delivery
times etc? Are there now more competitors? Are our competitors better placed geographically to meet the
needs of our customers? Are their some competitors that are doing better than us? If so how do they
differ from us? Are they bigger and leveraging their scale, etc?
Third, I would want to look at the needs of our Customers and whether these have changed. – If there is
nothing wrong with our product (Client) and our Competitors haven’t suddenly got better then the
downturn in sales must have something to do with the needs of our Customers. What is their current
usage? What is their current capacity? What is their anticipated usage? What are their purchasing
patterns relative to capacity? etc
This structure (3C’s) should drive you to identify the key issue. The way the facts are presented it looks
like most of the questions on Client and Competitors will yield little return and the richest part of the
discussion will focus around Customer needs. This should provide the opportunity to discover all of the
facts about the growth in demand and the capacity constraint currently in place. It could also lead to
understanding the “lumpy” nature of these capital purchases.

This discussion should also draw out enough information to answer the follow up question on how our
client compares to its competitors.

Possible Solution:
Question #1: Why did revenues drop 50% in one year?

I determined the problem was that because it is such an effort and expense to dig the trenches to put the
fibre bundles in, the customer does it as infrequently as possible which leads to overcapacity.

Question #2: Can the CEO expect an improvement? If so, when?

I found out that they buy a year in advance of needing it. Since usage doubled yearly, I worked out that
customers would reach capacity in 3.5 years, and therefore we would be impacted for 2.5 years.

Question #3: The CEO wants a benchmark slide with how we compare to our competitors: what would be
the main items you’d want to see on that slide?

I asked for Market Share (leader), Cost (lowest cost), People (no advantage), Customer Base (no
advantage), Product (no real advantage), and Balance Sheet (highest)

Question #4: The CEO asked if we could weather the storm or if we were in trouble.
I said if we had a pretty healthy financial situation, we could weather the storm for 2.5 years but that it
would be worthwhile looking for other ways to diversify since this would be a cyclic problem.

Bank Mandiri to Grow Share in Local Indonesian Market

Case Type: increase sales, increase market share; growth.
Consulting Firm: Towers Watson second round full time job interview.
Industry Coverage: banking.
Case Interview Question #00671: Our client is Bank Mandiri (IDX: BMRI), a large bank in the Southeast
Asian country of Indonesia. It is one of the largest banks in the country in term of total assets, loans and
deposits. Headquartered in Jakarta, Indonesia, the bank has more than 1,700 branches spread

across  three different time zones in the Indonesian archipelago and six
branches abroad, and about 11,000 Automatic Teller Machines (ATMs) as of September 2012.
As a large bank based in a developing country, Bank Mandiri has enjoyed tremendous growth for over
two decades. Recently, the CEO of Bank Mandiri has hired us to determine how it can further grow in the
local Indonesian market, specifically in retail banking. What are the factors you would look at to
assess the situation? What is your recommendation for our client?
Additional Information: (to be given to candidate if requested)
1. Competition/Competitive Landscape

Market Share by bank assets and products: The client Bank Mandiri is one of the top three market share
leaders (the other two: Bank Negara Indonesia, Bank Rakyat Indonesia). Show Exhibit 1 & 2: Market
share and growth rate from year 2002 to 2006.

Exhibit 1: Market share and CAGR (compound annual growth rate) from year 2002 to 2006
Products Deposits Market Share CAGR Credit Cards Market Share CAGR

10.6
Client 15% % 10% 2.4%

Competitor A 15% 8.0% 17% 9.8%

16.0
Competitor B 15% % 28% 10.2%

Other 55% 9.1% 46% 6.8%

 10.4
Total Market 100% % 100% 7.5%

Exhibit 2: Auto Loan, Housing Loan sales and market share

Note: Currency is in millions USD $

Observation: The client Bank Mandiri maintained market share in deposits but lost market share in credit
cards. The client Bank Mandiri lost market share in auto loans but is doing very well in home loans.

 Product and pricing competitiveness

 All products are priced competitively at market level
 Brand name and reputation or customer awareness
 The client Bank Mandiri has good brand name reputation and recognition
 Branch and ATM prevalence or distribution of branch network
 The client Bank Mandiri has wide distribution of branch and ATM network
2. Macroeconomic Trends

 Employment rate or population growth

 The number of people coming into employment age is at an all time high in the coming 5
years
 Foreign investments are projected for healthy growth with increase
 investments in Business Process Outsourcing
 Interest rate trend
 Interest rate has declined dramatically in the last 5 years from over 10% to the current
level of 4%
 Disposable income or GDP trend
  40% of the population lives at or below poverty line. Another 40% makes less than USD
$500 per month. Top 15% makes less than USD $2,000 per month. The remaining top 5% is the
richest population in the country whose lifestyle resembles those of upper-middle class in
developed countries.
 Disposable income and GDP is projected to continue growing at about 11% per annum
 Home/car ownership and real estate development growth
 Home/car ownership and real estate development is expected to increase in the coming
5 years
 Rural to urban migration
 Rural to urban migration rate is stable
3. Products

 Types of products
 Products include savings, checking, time deposit, credit cards and loans
 Profitability or revenue by product, including consideration of price and volume
 Most profitable products are credit cards and loans
 Product penetration in population
 30% of the population has deposit accounts.
 6% of the population has credit cards.
 1.5% of the population has bank loans.
4. Client Capabilities

 Sales and marketing

 Sales efforts are traditional and conservative. The client does not conduct direct
marketing activities to sell credit cards. Sales force is stretched and training is lacking.
 Information technology
 Information on customers is often out-dated
 Research and Development (R&D)/innovation
 R&D is competitive and client is a market leader in product innovation for a few products
5. Customers

Customer mix by number of bank products purchased/Customer mix by value of customer – measured in
terms of average daily balance of deposit account. Refer to Exhibit 3.

Exhibit 3: Customer segmentation, average number of products owned by customers, and average
deposit balance held by customers
Observation: Majority of customers only purchase one bank product. Large majority of customers also
have <100K in average daily balance in their deposit accounts
 Retention or attrition rate
 Attrition rate is in line with market average
Possible Answer:
The candidate should spend most of his/her time brainstorming all the factors that should be considered
to understand the situation. He/she will locate problems and potential solutions by probing the interviewer
for relevant information. After all, or most of the additional information is given, the candidate should make
his/her best guess on what the potential recommendations should be for the client. Any logical
recommendations supported by information given or any assumption he/she may make will be accepted.
A great candidate should be able to summarize his/her understanding and make a logical hypothesis on
potential recommendations.

A List of possible growth drivers includes:

1. Steal share from competition;

2. Increase retention of current customers;
3. Cross sell current products to current customers;
4. Up sell current products to current customers;
5. Develop new generation of customers

Sample Recommendation:
 Growth efforts should be concentrated in cross selling more profitable products to current
customers since average number of products held by customers is low.
 The client should adopt more aggressive sales and marketing techniques to gain more market
share in credit cards.
 The client should partner with or market to employers to capture a new generation of bank
customers fueled by employment growth, and partner with real estate developers, as well as car
dealers, to finance future home and car purchase.
OEM Continental to Increase Global Auto Parts Market Share
Case Type: increase sale, increase market share.
Consulting Firm: Seabury Group first round full time job interview.
Industry Coverage: automotive, motor vehicles; manufacturing.
Case Interview Question #00668: The client Continental AG (FWB: CON) is a leading German auto and
truck parts manufacturing company specializing in brake systems, vehicle stability control systems,
engine injection systems, and other parts for the automotive and transportation industries. Continental is

based in Hanover,  Lower Saxony, Germany. Continental was ranked fourth in

global OEM (original equipment manufacturer) automotive parts sales in 2009 according to a study
sponsored by Ernst & Young.
In Germany, Continental has a ~60% national market share and has a leadership position in Europe.
However, it only has a 5% international market share. The top 20 clients of Continental buy 80% of its
products. Recently, the management of Continental is increasingly concerned with their profit margins
and would like to exploit new sources of revenue. The CEO has asked you to gather data and brainstorm
potential ideas for increasing both profit margins and global market share. How would you go about this
case?
Additional Information: (to be given to candidate if requested)
1. Market

 The global as well as German domestic market for auto parts is growing at 5% a year
 There are no significant competitors in the region (Europe)
 Greatest threat comes from the U.S., Chinese, and Indian imports
 The client is able to charge premium pricing for their national customers
2. Company

 Continental’s manufacturing plants are operating at 100% capacity

 Plants can’t shift from producing one product to another
 Currently the company sells products directly to customers
3. Product mix

The interviewee should ask to understand the products and profitability of each. The interviewer should
remind them that the client company sells its products in both local and international markets. Present the
interviewee Exhibit 1 when asked this question (product mix and profitability of each product line).

Exhibit 1: Client’s product mix and profitability

Units
Product (thousand) Average Price ($) Profit Margin Unit Cost ($)

Product
A 400 900 50% 450

Product B 200 550 40% 330

Product C 100 400 30% 280

4. Market breakdown

The interviewee should ask about the breakdown of international and national markets. Give them Exhibit
2 when asked this question.

Exhibit 2: Breakdown of client’s sales, domestic and global sales

Product Units (thousand) National Price ($) Profit Margin

Product
A 200 1,000 ?

Product B 150 500 ?

Product C 75 400 ?

Units Export Price

Product (thousand) ($) Profit Margin

Product
A 200 800 ?

Product B 50 600 ?

Product C 25 400 ?

 Ask the interviewee to calculate profit margins (they should use the unit costs in Exhibit 1).
 Assume no freight costs, taxes, etc
Possible Answer:
The interviewee should understand the market dynamics, which products are more profitable than others
and where this happens, and should brainstorm to figure out how to exploit this information.

Product A is more profitable nationally while Product B is more profitable internationally (Please see
Exhibit 3).

Exhibit 3: (for use after case or to help interviewee if they get stuck on calculations)

Unit Costs
Product Units (thousand) National Price ($) ($) Profit Margin

Product
A 200 1,000 450 (1,000 – 450) / 1,000 = 55%

Product B 150 500 330 (500 – 330) / 500 = 34%

Product C 75 400 280 (400 – 280) / 400 = 30%

Units Unit Costs

Product (thousand) Export Price ($) ($) Profit Margin

Product
A 200 800 450 (800 – 450) / 800 = 44%

Product B 50 600 330 (600 – 330) / 600 = 45%

Product C 25 400 280 (400 – 280) / 400 = 30%

 Product A is more profitable nationally

 Product B is more profitable internationally
 Product C has the same margins for both markets
For national markets, the client Continental should consider reducing prices to gain market share from
India, China, and the U.S. to maintain their market leadership position. They should also consider
developing new products in partnership with local clients and establishing new distribution channels to
better serve smaller clients.

Internationally, the client Continental should seek support from the German government to aid in the
export of products. For example, create commercial partnerships at the government level. They should
also consider acquiring a company in the markets they would like to enter as well as setting up
distribution channels to reach these customers.
Men’s Sportswear Manufacturer Izod to Double Sales in 1 Year
Case Type: increase sales, increase revenue.
Consulting Firm: Alvarez & Marsal first round full time job interview.
Industry Coverage: Apparel, Clothing & Textiles.
Case Interview Question #00660: The client Izod is a UK clothing and apparel company that produces
dressy-casual clothing and sportswear for men. It is part of the Phillips-Van Heusen Company (NYSE:
PVH), headquartered in Manhattan, New York City, United States. The client purchased their high-end,

brand name sports  attire operation from French apparel company Lacoste 10
years ago. Since then, Izod has become one of the leading men’s sportswear manufacturers in the UK.
For the past 10 years Izod has managed respectable sales growth. However, they would now like to
double their sales within the next year. Our consulting firm has been hired by the CEO of Izod to explore
both internal and external opportunities for growth. Specifically, we have been asked to help with the
following two questions:
 Is doubling of sales possible in one year?
 If so, come up with a clear recommendation for achieving this goal.
How would you go about this case?

Additional Information: (to be given to candidate upon request)

The interviewer or case giver should aait to see if the candidates ask for this relevant information before
giving it to them.

1. Company
 Client Izod’s current sales = ~$20M a year
 Izod’s current market share in high-end sports wear = ~50%
 The client has been in the market for over 70 years
 Client Izod’s own designers design the clothes in China
 Clothes are manufactured in China and shipped directly to the UK stores
 Clothes are sold exclusively through the client’s own high end stores in select UK cities
2. Market

 The market relevant for the client is divided along 2 dimensions:

 1. Brand quality/image: Low end, Medium end, High end
 2. Type of men’s wear: Casual, Multi-Purpose, Sports
 Overall expected market growth: 5% per year
Table 1: Oeverall men’s wear market size in UK
Total Sports Sales: ~$150M

Total Multi-Purpose Sales: ~$500M

Total Casual Sales: ~$1.3B

Table 2: Percentage of Low, Medium, and High end for each type of men’s wear

Segment Casual Multi-Purpose Sports

High end 7% 19% 24% (client’s current market)

Medium
end 24% 29% 29%

Low end 69% 52% 47%

(Note to interviewer: have these two tables ready as Exhibits/Slides, and give them to the candidate if
requested)

3. Other Relevant Information:

 The client Izod would like to achieve this revenue growth within a year
 The client increased prices about 2 years ago by ~25% and found the sales volume actually went
up a little bit
 The client is very particular about the brand image and quality in the market and would only want
to sell its own products through its own stores (ask the candidate to explore the pros and cons of this)
Possible Answer:
Total revenue growth required is 100% (or ~$20M)

1. Overall market growth gives 5% of required revenue growth

2. Current market

The client could increase their price by 25% and assume volume does not drop (based on results from
previous price increase 2 years ago) – this gives another ~25% increase in revenue

3. Enter adjacent markets

First, estimate the size of the other high end markets.

 $500M * 19% = $95M for Multi-Purpose

 $1.3B * 7% = $91M for Casual
 Total: $95M + $91M = $186M
These are obvious adjacent markets they can explore (ask the candidate to brainstorm this argument –
synergies due to brand name, same customer base and retail outlets, etc).

Next, estimate the attainable market share from the other two high end markets: 2 approaches can be
used. (Let the candidate come up with these or other ways to estimate attainable market share)

 First, use the market share the client gained in their first year of entry into their current sportswear
market (~7%).
 Second, use the current market share of the players in each of other two high end markets (~8%).
Assume that the client Izod can get an average of ~7.5% share in the first year, since the client has a
very reputed name in the high-end circle and has the resources to launch effectively due to prior
experience in the sportswear market.
This translates to $186M * 7.5% = ~$14M for the other 2 high end markets.
This translates to $14M / $20M = 70% of current sales.

4. Conclusion

Adding all the three above growth opportunities comes to 5% + 25% + 70% = ~100% revenue growth.
Thus, it is possible for the client to double revenue in a year, with the following caveats or key issues
which have to be considered.

5. Key Issues to consider

 Whether the designers and manufacturers in China can ship on time with expanded product line:
No problems here
 What about supplier relationships: No problems here
 What about need for new designers: No problems here
 What about brand image and dilution: Will not be an issue as we only enter other two high end
markets
 What about selling through other retail outlets: Management is against this (get candidate’s
thoughts on this)
 What about entering the low-end casual market – Even though this is a big market, fighting with
the Wal-Mart’s of the clothing world may not be a good idea because of different customer base who
are less brand sensitive and more price sensitive (ask candidate to explain why)
 Merger and acquisition (M&A) is not possible as growth is needed in 1 year (integration will take
longer than a year)
Comments
 The right approach to this case should quickly focus on the revenue side and ignore cost
completely.
 Revenue should be broken down as price * volume. Then, opportunities to grow price (increase
price) or volume (market growth and adjacent market entry) should be explored systematically.
 Making sound assumptions for which adjacent markets to enter and what market share is
attainable is very important.
 Finally, bringing up all the key issues and discussing them in a confident, engaging manner that
draws the interviewer into the conversation is very important. This case is very much about good
business sense. Right answers don’t have to follow the path above if the candidate displays clear
industry knowledge and can lay out his/her arguments in a cogent and engaging manner.
Hyatt Hotels to Raise Daily Room Rate from $180 to $200
Case Type: increase revenue, increase price.
Consulting Firm: Simon-Kucher & Partners (SKP) first round summer internship job interview.
Industry Coverage: tourism, hospitality, lodging.
Case Interview Question #00655: Hyatt Hotels Corporation (NYSE: H) is a global hospitality company
and the operator of the Hyatt brand hotel chains. Headquartered in Chicago, Illinois, United States, the
company’s worldwide portfolio consisted of more than 400 properties under several brands as of June 30,

2012.
The client Hyatt Hotels Corporation operates several hotel chains. Among them, the Hyatt Regency brand
is the oldest brand in the company, with the Grand Hyatt, Hyatt Place and Park Hyatt brands being
introduced in 1980. Hyatt Regency hotels are aimed at convention and business travelers as well as
leisure travelers and are located in urban, suburban, airport, convention and resort destinations around
the world. Grand Hyatt hotels are large-scale hotels that provide upscale accommodations in major
cities. Hyatt Place hotels are mid-sized properties designed for families and business travelers; they are
located in urban, airport and suburban areas.
Recently, your consulting firm has been retained by the CEO of Hyatt Hotels to advise whether they
should raise their average daily room rate from $180 to $200. How would you go about the case? What
recommendations would you give to the CEO of Hyatt?

Additional Information:
 Industry Overview: the overall hotel and hospitality market in the US is stable, it grows with GDP
growth.
 Market Segmentation: the hotel and hospitality industry can broadly be divided into two segments
that serve different customer needs – one for business purposes and the other for vacation.
 Competition: The client Hyatt is the leader in the Business Hotel segment and an average player
in the Vacation Hotel segment.
Note to Interviewer:
Read the “Additional Information” section well before you give the case. There’s very limited information
to begin with the case, therefore the candidate is expected to ask questions, but in a structured way.
Allow 20-30 seconds for the candidate to layout his/her assumptions for each step of the analysis before
giving any clues. Certain level of stress should be created but the overall interview style is pleasant.
Possible Solution:
After a brief discussion of the hotel market segmentation, the interviewer should let the candidate
characterize each segment. For example:

 Business hotels are usually located in the center of metropolitan areas, usually are smaller in size
compared to the average vacation resorts, are better equipped with in-room business services like
telephone/internet/fax/printer, and are more flexible in booking.
 Vacation hotels have to be in a touristy or scenery area but not necessary in the center of it, have
a wider range of price and facilities, and with more fluctuations in demand.
A. Internal Company Analysis

Question #1: The client Hyatt has decided to focus on the Business Hotel unit. Why do you think they
made such decision?
Possible Answer:
1. Location advantage: since the client is already the leader in this segment, they must have already
blocked the best locations in most of the big cities. Competitors are hard to compete with this given the
fact that the supply of space in hot spots is very limited.

2. Steady revenue stream: once contracts with big corporations are signed, the demand of business
traveling is much easier to predict than vacation hotels which contributes to a higher occupancy rate. In
addition, a fixed price can be set more easily.

3. Lower maintenance cost: business hotels tend to be smaller in size and need less recreational
facilities.

Question #2: From an internal view of the client company, why do you think they wanted to increase the
price?
Possible Answer:
To increase profitability.

Question #3: Does it make sense from Hyatt Hotel’s internal view?

Possible Answer:
The usual Profits = Revenues – Costs = Price * Quantity – (Fixed Cost + Variable Cost) function should
appear here.

On the cost side, the interviewer may hint the candidate that there’s not much room for cost saving by
saying something like

 “they already outsourced the cleaning service”

 “they just went through a major layoff and cut the staff by half”
 “their in-hotel restaurants and bars are operating efficiently”, etc.
On the revenue side, both increasing quantity (occupancy rate) and price (room rate) can increase Hyatt
Hotel’s revenue.
B. External Consumer Analysis

Question #4: How is the proposed price increase from $180 to $200 going to impact consumers’
behavior?
Possible Answer:
The candidate should look into both the “end user” (the actual business travelers) and the “customer” (the
corporations that Hyatt Hotel has contracts with).

The impact on end users is limited since they don’t actually pay for the hotel. They won’t stop staying at
Hyatt Hotel as long as the service level, flexibility, location, and other conditions remain the same.

For the customers, most of them have long and stable relationship with the client Hyatt Hotel (that’s what
makes Hyatt Hotel the leader of Business Hotel). Therefore, the customers will leave only if

 the price is not competitive compare to Hyatt Hotel’s competitors (in this case it’s still competitive)
 the price exceeds the cap of its traveling expense (in this case the cap is $240)
 no extra benefits come with the price increase (in this case Hyatt Hotel provides better services,
more business friendly facilities, etc.)
Question #5: Assuming that Hyatt Hotel successfully increased the price from $180 to $200, what can
they do to the “end user” to increase demand?
Possible Answer:
The interviewer should encourage the candidate to be creative here, but make sure they hit the following
points.

Differentiation: On the product side, Hyatt Hotel can

 improve its convenience, e.g. provide transportation to/from the airports, get the hottest spot in
the emerging area of a city, etc.
 increase its business friendliness, e.g. offer in-room fax/printer
 upgrade its rooms, etc.
For the service, Hyatt Hotel can create a more personalized experience for consumers by keeping track
of each traveler’s special demand, set the room differently, etc.

One step further, Hyatt Hotel can also lock consumers in by offering traveler specific promotion (different
from the ones for the corporate), such as offering free gifts to the consumers (e.g. shopping coupons) or
cross promotion between Hyatt Hotel’s business hotels and vacation hotels (e.g. free stay at one of the
vacation hotels when the traveler takes his/her family on vacation next time).

C. Conclusion

Question #6: Ask for a final recommendation. A star candidate will see that his/her time is nearly up and
will present a “Go/No go” recommendation without prompting. If the interview is within 3 minutes of the
end, the interviewer should ask for the conclusion.
Possible Answer:
The short answer is “Yes”.

Hyatt Hotel has competitive advantage given its superior location, good service, and trust worthy
relationship with long term customers. Given such strong base, there’s room for Hyatt Hotel to increase its
price with further differentiated product and service.

Even after the $20 price increase, the price is still far below its customer’s ceiling ($240) and remains
competitive among its competitors. Furthermore, Hyatt Hotel can still grow its sales quantity by locking
travelers who have several business hotel choices in by adopting traveler specific promotions.

From an internal point of view, cost saving has reached a limit. Hyatt Hotel has to improve its profits by
top line growth. As long as price doesn’t effect quantity (in this case occupancy rate), total revenue will
grow.

Wilmington Trust to Double Revenues and Profits in 5 Years

Case Type: increase sales/revenues; improve profits.
Consulting Firm: Advisory Board Company second round full time job interview.
Industry Coverage: banking; financial services.
Case Interview Question #00654: Our client Wilmington Trust is a subsidiary of Buffalo, New York-
based retail banking and financial service company M&T Bank (NYSE: MTB). In addition to its core
business of standard banking services such as deposits and loans, Wilmington Trust also has

business  segments devoted to Corporate Client Services, primarily for private

businesses in the US, the Caribbean, and Europe; and to Wealth Advisory Services, which includes
personal trust, financial planning, fiduciary, asset management, and family office services. As of fiscal
year 2012, Wilmington Trust has about 100,000 clients, with $500 million in revenues, and $150 million in
net income.
For this case, our client Wilmington Trust’s goal is to double the revenues and profits of the business in 5
years. You have been asked by the CEO of Wilmington Trust to assess the feasibility of the goal. Also,
you will need to help the client prioritize the two or three most important steps that Wilmington Trust
should take in their action plan. How would you go about this case?
Additional Information: (to be given to candidate upon request)
The interviewer or case giver should read this information well before he/she gives the case. Share this
information in each bullet only if the candidate specifically asks for it in a clear and deliberate way.
1. Revenues: The client makes their revenues mostly from interest and fees
2. Costs: Transaction costs and employee salaries. The nature of the sale is one-on-one pitch between
the bank sales person and the customer. So the salary cost and the transaction costs tend to be high.

3. Geography: They have a large presence in the North East and a moderate presence in the South East.

4. Products: They have 4 product lines, with the following ranks in revenue and profit generation.

Revenues Profits

Private banking: deposits, loans 1 1

Investment management: brokerage, advisory, access 2 3

Trust: state planning and trust, transferred death 3 2

Insurance 4 2

5. Customers: 20%-25% of Wilmington Trust’s customers purchase more than one product. 75%-80% of
customers purchase only one product. The customers are segmented into 5 groups based on the sales
volume they generate.

Sales Volume Number of Customers

Ultra High: $10M+ 5%

High Net: $1M – $10M 10%

Affluent: $0.5M – $1M 20%

Mass Affluent: $100,000 – $500,000 25%

Mass: $0 – $100,000 40%

The Ultra High, High Net, and Affluent customer segments generate 60%-70% of the total revenues, while
the Mass Affluent and Mass segments generate 30%-40% of the revenues.

Possible Answer:
This is a typical “increase revenues” and “increase profits” type of case. Once the candidate has gathered
all the necessary information through relevant questions, he/she should start analyzing the numbers to
make fact based recommendations.

1. Buyer selection
Since the transaction costs tend to be the same for the different customer segments, it makes sense to
grow the number of the higher revenue generating customers and decrease the number of the lower
revenue generating customers. We can attract the top 3 customer segments by marketing more
selectively and doing promotions for higher income customer groups. We can discourage less affluent
customers by raising the prices on them, giving them the option to add more profits or switch to a
competitor.

2. Cross sell

Since 75%-80% of Wilmington Trust’s customers purchase only one product, there is an opportunity for
cross-sell between the different product lines. Assuming that we will only serve the top 3 customer
segments:

 Revenue generated by customers in top 3 customer segments (70%) = $500M * 70% = $350M
 Revenue generated by customers who only have one product (80%) = $350M * 80% = $280M
If we assume that the 4 types of products generate comparable revenues, then if we cross-sell each
customer 3 other products then the new revenue will be = $280 * 4 = $1,120M, which is more than double
the current revenue of $500M.

Conclusion
It is feasible to double revenues and profits if we can only cross-sell our current customers the other
products in our business. The next steps the client Wilmington Trust should take are:

 Give incentives to the bank’s sales force to cross sell different products to its existing customers.
 Do heavy promotions for the top 3 affluent market segments.
 Increase its prices in its bottom 2 mass market segments to “fire” its unprofitable market
segments.
Circuit City Aims to Secure 20% Market Share in 5 Years
Case Type: increase sales and market share; growth.
Consulting Firm: Corporate Executive Board (CEB) second round job interview.
Industry Coverage: consumer electronics; retail.
Case Interview Question #00644: Our client Circuit City Stores, Inc. (NYSE: CC) is an American retailer
of electronics headquartered in Richmond, Virginia. It sells all kinds of consumer electronics, personal
computers, entertainment software, and large home appliances. The company opened its first store in the
1970s,  pioneering the electronics superstore format in the 1990s. Currently
there are 375 Circuit City Superstores nationwide located in all major cities across the US.
Circuit City has a healthy profit margin and represents a major player in the electronics retail market. At
the time of its peak, Circuit City was the second largest US electronics retailer, after Best Buy (NYSE:
BBY). Recently, the CEO of Circuit City has hired Corporate Executive Board (CEB) to help them grow
even quicker.
Recently they opened a number of smaller conceptual stores. These stores are less profitable than the
regular Superstores, which range in size from 15,000 to 45,000 square feet (1,400 to 4,000 square
meters). We have the task to help them grow aggressively while maintaining the same profitability. How
would you go about this case?

Question #1: What are some of the key areas to investigate in order to determine why the new stores are
not profitable?
Possible Answer:
A good answer will identify the followings areas:
1. Revenues

 Type of products sold in these stores

 Product assortment
 Number of customers entering these stores
 Type of customers( income levels, family status, etc) and how the assortment in the stores meets
their needs
2. Costs

 Costs related to the volume sold (mainly fixed costs)

 Labor costs; maybe higher trained personnel
 Distribution costs( from suppliers to the store)
3. Competition

 What is the presence of competition in the area

 What kind of stores the competition has in the area
4. Other Factors

 Number of hours open

 Type of stores
 Location of the stores
 What are the customer’s needs and how our client manages to met them
Question #2: How many new stores do they need to open in order to secure a 20% market share in 5
years?
Additional Information to be provided upon request:
 Current consumer electronics retail Market Size = $300 billion
 Client’s current Market Share = 10%
 Electronics retail Market Size in 5 years = $400 billion
 Aggressive growth would mean achieving 20% market share in the next 5 years.
Possible Solution:
For simplicity of the calculation, the candidate should take into account that the current stores are all of
the same revenue size and the future ones will have the same average revenues; the candidate should
realize that this calculation would be different if that was not being considered.

Current state:

 Market Size = $300 billion

 Market Share = 10%
 Revenue = 10% * $300 = $30 billion
 Revenue per store = $30 billion / 375 = $80 million
In 5 years:

 Market Size = $400 billion

 Market Share = 20%
 Revenue = 20% * $400 = $80 billion
 Growth needed in revenues = $80 – $30 = $50 billion
 Number of new stores needed = $50 billion / $80 million = 625 (but new stores will be only
specialized that have lower revenue)
Question #3: Is their current growth strategy a successful one?
Possible Answer:
A good candidate will realize that their current growth strategy (to open 625 new stores in 5 years) is not
feasible (they opened their first store in the 1970s, and currently they only have 375 stores from 1970 to
present – 40 years).

Question #4: How can they do to achieve their growth/market share objectives?

Possible Solution:
 Increase sales of existing superstores.
 Open only the old type of superstores
 Choose locations with a specific type of inhabitants (based on income, family status, hobbies, etc)
 Introduce new products and use the customer database to sell them
 Implement marketing campaigns, loyalty cards, etc
 Make contracts with schools, institutions, hotels, companies, etc
 Become a distributor for small electronics stores
 Raise prices on non price-sensitive electronics products
 Acquire/merge with a competitor
 Get into other channels like online sales, E-commerce, door to door sales, etc
 Start selling services such as repairs, installations, etc
Massachusetts DCF Strives to Close Budget Shortfall
Case Type: increase revenue; reduce costs.
Consulting Firm: Bridgespan Group first round job interview.
Industry Coverage: government & public sector; non-profit organization.
Case Interview Question #00631: Your client The Massachusetts Department of Children and Families
(DCF), formerly known as the Massachusetts Department of Social Services, is the state agency that
receives and responds to reports of child abuse and neglect. DCF conducts its own interview

or  investigation into the allegations. DCF talks to caretakers of children

whenever there have been allegations of abuse or neglect. After its investigation, the agency decides
what, if any, services the family needs.
Recently, the Massachusetts state legislature passed a law that will change the DCF agency’s funding
structure. Previously, the agency had been funded at a fixed dollar amount every year. Now, under the
new law, the DCF agency will be paid according to performance, as measured by the number of
interviews or investigations they conduct with the caretakers of children in the state.
The DCF agency has hired your consulting firm to determine how the change of funding structure will
affect them and what they should do about it.

Possible Solution:
Interviewer: So, how would you go about this case?

Interviewee: Before we going into the problem of the case, I would like to understand how this
Department of Children and Families agency is functioning, what are the main activities that are
performed by the agency.
Interviewer: For the purpose of simplicity, let’s assume that the agency’s only activity is conducting
interviews.

Interviewee: I would start by looking at the funding process and here I would like to first understand how
the agency was previously funded, then I would like to look at the new funding procedure and how the
change between the two is going to affect them. After identifying the effect, we can look into ways to
improve the current status and other options to get funding.

Interviewer: Sounds like a plan, go ahead please.

Interviewee: How was the agency previously funded?

Interviewer: Previously, the agency received $50,000 per employee per year from the Massachusetts
state government.

Interviewee: How much of that money went to agency employee’s salary and how much to overhead and
other costs?

Interviewer: On average $30,000 went to salary and $20,000 went to overhead

Interviewee: How many employees does the agency have?

Interviewer: We don’t know. This case can be solved on a per-employee basis.

Interviewee: All right, how will now the agency be funded?

Interviewer: Now the agency will be paid $25 per interview.

Interviewee: How many interviews does each DCF social worker conduct per day?

Interviewer: Currently each social worker conducts an average of 5 interviews per day.

Interviewee: Assuming 50 work weeks per year, 5 word days per week, we will have 250 work days a
year.

250 work days per year * 5 interviews per day * $25 per interview = $31,250 per year

That is the agency continues to operate as it has been; in this case the agency will incur a $50,000 –
$31,250 = $18,750 per employee per year budget shortfall.

They should try to find ways to close this funding gap, either by boosting revenues (e.g. increase the
number of interviews, seek other funding sources) or by cutting existing costs.

Interviewer: Sounds good.

Interviewee: Can the agency increase the number of interviews it conducts per social worker per day?

Interviewer: Under the current system, the agency could boost the number of interviews from 5 to 6 per
day.

Interviewee: OK, if DCF can increase the number of interviews from 5 to 6 per day, they will have

250 work days per year * 6 interviews per day * $25 per interview = $37,500 per year
This will bring the shortfall in revenues to $50,000 – $37,500 = $12,500 per employee per year

How long does it currently take to conduct an interview?

Interviewer: It takes one hour; 40 minutes of which is the interview and 20 minutes is follow-up data entry
and report

Interviewee: It seems to me that it takes a lot of time to enter the data in the system. Is there any way to
reduce this 20 min, say using a better note-taking technology for example?

Interviewer: The agency has found a very inexpensive transcription software program that would allow
them to cut the 20 minutes to 10.

Interviewee: Great, 10 minutes saved per interview * 6 interviews per day = 60 minutes saved in a day.

This will provide an extra interview per day => 250 work days per year * 7 interviews per day * $25 per
interview = $43,750 per year

This will bring the gap to $50,000 – $43,750 = $6,250 per employee per year

Interviewer: There is no other way to squeeze more interviews in a day.

Interviewee: What about exploring a private charitable funding?

Interviewer: Well, the agency can garner $1,000 per employee per year from a private charitable trust.

Interviewee: In that case it still leaves us with a gap of $5,250 per employee per year. I would continue
now by looking into ways to reduce costs. And I would especially look into trying to reduce overhead cost.
Can the agency merge some of its facilities usage with other state agencies to reduce overhead costs?

Interviewer: Yes, the DCF agency can consolidate its offices into other state agency buildings at a
savings of $4,000 per employee per year.

Interviewee: OK, we are now at $1,250 gap per employee per year. Are all social workers paid evenly? If
not, maybe we can reduce the salaries of the higher paid employees.

Interviewer: No and Yes. Actually, 30% of the social workers are paid only $25,000 a year, 40% are paid
$30,000 per year, and 30% are paid $35,000 per year. We’ve determined that the agency can convert
half of the workers at the highest pay grade to the lowest pay grade.

Interviewee: OK, so the new salary structure will be:

 45% at $25K/year
 40% at $30K/year
 15% at $35K/year
Savings will be 15% *($35K – $25K) = $1,500 per employee per year

Interviewer: Good. Let’s wrap it up here. So, what is your conclusion?

Interviewee: (a good candidate will now summarize the case and will provide recommendations) The
funding change will result in a budget shortfall of $18,750 per employee per year if we continue to operate
as we have been.

Here are my recommendations for closing the budget gap:

Closing the gap by increasing revenue:

 Without any operational changes, we can boost the number of daily interviews from 5 to 6 per
employee.
 By instituting a simple transcription service we can increase that number to 7. This will increase
revenues by $12,500, closing the gap to $6,250.
 Additional charitable funding will give us $1,000 per employee per year, closing the gap to
$5,250.
Closing the gap by decreasing costs:

 Consolidating our offices, facilities and overhead with other state agencies will save us $4,000
per employee per year.
 Staffing restructuring will save us an additional $1,500 per employee per year.
This will actually bring $250 additional revenue per employee per year. Some of it will pay for the new IT
system.

Interviewer: Excellent!

Note:
The key to this case is figuring out how the funding change will affect the agency, then identifying the
issues resulting from the change. A strong candidate will first try to understand the agency’s previous
funding structure, then ask about the new funding structure, then recognize that the agency will
experience a budget shortfall, then make data-driven recommendations for closing the budget shortfall.

Neuberger Berman Group Sees Flat Revenues and Profits

Case Type: increase sales, revenues.
Consulting Firm: Cambridge Associates first round summer internship job interview.
Industry Coverage: financial services.
Case Interview Question #00630: Our client Neuberger Berman Group LLC, through its subsidiaries, is
an investment management firm headquartered in New York City, New York, United States. The company
provides asset management and financial services to high net worth individuals and institutional investors,

pension and profit sharing plans, banking and thrift institutions, investment
companies, pooled investment vehicles, charitable organizations, corporations, and state and municipal
government entities. With approximately $200 billion in asset under management (AUM), it is among the
largest private employee-controlled asset management firms in the world.
The CEO of Neuberger Berman Group is concerned with his firm’s flat revenues and profits during the
recent years. We have been asked to help them to remedy this condition. How would you think about this
problem?
Additional Information: (to be given to candidate upon request)
1. Revenue:

 $2 billion in annual revenue based on 1% management fee of $200 billion of assets under
management (AUM)
2. Costs:
 Overhead: $200 million
 Money management: $800 million, 50% based on assets
 Distribution / brokers: $800 million, 100% based on assets, i.e. 40% commission of total revenue.
All sales are made through independent brokers (they also sell funds from other asset management
companies).
3. Fund Strategy:

 Focused on US equities market only

Possible Solution:
A good brainstorm should include discussions on the following elements:

 Revenues
 Costs
 Regulatory environment, e.g. restrictions on management fees, etc.
 Competition: currently there is increased competition in funds and wealth management
 Distribution environment, e.g. the emergence of online brokerage
Question #2: At what level of assets will our client begin to lose money? (This is a question of fixed and
variable costs)
Possible Solution:
 Currently our client’s fund has a $200 million in general overhead; I assume that is not going to
change with AUM size.
 The brokers are paid purely on commission, so all of their costs are variable.
 The fund managers are paid 50% on commission, meaning $400 million are fixed.
 Total fixed costs = $200 million + $400 million = $600 million
Therefore, at a 1% management fee, we need a minimum of $60 billion in assets under management to
cover our total fixed costs.

Question #3: Based on what you have found, what would you recommend to the fund manager?
Possible Solution:
 We need to look at ways to drive revenue first. We could change the incentive structure for the
money managers, adjusted more to the fund’s performance.
 With the brokers, we could pay them a higher commission to try to encourage them to sell our
fund over another (we would have to tease out the quantity/price relationship to see if this makes
sense.
 There probably is not much to gain with overhead.
 Additionally, this is a US fund only. We should consider launching an additional fund, perhaps
focusing on international markets, to drive up revenues and leverage our brand.
 We are a $200 billion fund – we probably have a strong brand that we could use to sell more to
our existing customers (i.e. new fund) and possibly bring in new customers as well.
 Look into new distribution methods
 Look into asking brokers to do cold calls
 Have the brokers in house. This will increase fixed costs but might provide better productivity.
Jackson Hewitt Tax Service to Grow Same Store Sales
Case Type: growth; increase sales/revenues.
Consulting Firm: Diamond Management & Technology Consultants (now PwC Advisory) first round full-
time job interview.
Industry Coverage: business services.
Case Interview Question #00628: Our client Jackson Hewitt Tax Service Inc. is a tax preparation service
company operating in the United States. Headquartered in Parsippany, New Jersey, the company
currently operates more than 6,800 franchised and company-owned locations throughout the US,

including 2,800 located  in Wal-Mart stores nationwide, and more than 400 Sears
stores in the United States.
As a large tax preparer, the client makes the most part of their revenues between January and April tax
season. They have been growing rapidly through franchise model for the last 15 to 20 years. The CEO of
Jackson Hewitt Tax Service is concerned with the growth of the business in the recent years and wants
us to investigate ways to stimulate growth through distribution footprint and same store sales.
Question #1: What are the key areas to investigate?
Possible Answer:
A good answer will include the followings:

 Revenues: we need to investigate where the revenues are coming from; what type of products or
services the client is offering
 Costs: what are the main buckets of costs and the value of them
 Operation mode: how do they operate the stores
 Competition: operating model; market share
 Customers: segments of customers and their needs
Note: The interviewer or case giver should provide the following additional information to the interviewee.
There is no need to wait for the interviewee to ask for the data; this “growth” case is about testing the
candidate’s ability to handle a large amount of data.
1. Operation mode: Franchising practices

 The client works by franchising territories. Currently there are 5,000 territories in US and the client
Jackson Hewitt Tax Service is present in two thirds of them. The rest are considered not to be
important.
 They have on average 2 stores per territory.
 Their current contract do not allow them to impose a minimum number of stores per territory to
their franchisees.
2. Revenues

The client’s revenues in this case come from two parts:

 $25,000 per territory franchise fee

 15% of the store revenues
The client offers two types of products & services:

 Tax return preparation (state and federal tax)

 Refund anticipation loan (because government gives money back after 4-6 weeks)
Revenues come from two different services:

 Tax return preparation: two thirds

 Refund anticipation loan: one third
Revenues are 20% higher in the stores located in Wal-Mart supercenters

3. Market & Competition

 The tax preparation market is very fragmented

 Client’s market share: 4%, No. #3 player in the market
 The number one competitor H&R Block has a triple market share vs. our client Jackson Hewitt
 Major competition liket H&R Block is operating on a corporate model (they own their stores)
4. Customers
 The client’s number of current customers: 3.7 million
 40% of every year’s customers do not come back the next year
 The customer of our client is having an annual income of about $30K – $35K
 The main competitor H&R Block’s customer is making $40K – $45K
 60% of the US population (tax payers) is using tax preparation service, 40% do their own tax.
Question #2: How can they increase their distribution footprint?
Possible Solution:
 Change the franchising contracts as to impose a certain number of stores
 Implement a field sales force to cover part of the territories not in the vicinity of the current stores
 Start online operations
 Start opening stores in other mass merchandisers
 Open stores in the other territories where not present
 Buy some of the competitors’ stores
 Incentivize franchisees to open more stores in their territories
Question #3: How can they increase the same store sales?
Possible Solution:
 Start selling packages of both services (Tax preparation & Refund anticipation loan)
 Incentivize customers to recommend the services to their friends, co-workers, etc.
 Start selling the services remotely
 Try to attract the other customer segment not currently present in our client’s stores
 Train the franchisees on how to increase their business revenues
 Advertise the services
 Start offering new services, e.g. tax school, tax education, selling tax software products
 Investigate the causes of the lost customers every year and try to overcome the issue; offer an
incentive to come back the next year
 Implement a field sales force attached to each store
Hannaford to Improve Supermarket Shopping Experience
Case Type: business competition; increase sales.
Consulting Firm: McKinsey & Company first round summer internship job interview.
Industry Coverage: retail; general merchandisers.
Case Interview Question #00622: Our client Hannaford is a regional supermarket and grocery chain
based in Scarborough, Maine, United States. They have about 200 grocery stores as of 2012, and
operate in New England region (northeastern corner of the United States consisting of the six states of

Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and

Connecticut) and upstate New York only. In number of stores operated, Hannaford is now the second
largest supermarket chain headquartered in New England, behind only Quincy, Massachusetts-based
Stop & Shop Supermarket.
Hannaford was doing very well for the last several years. However, from the most recent 2 years
Hannaford’s market share growth is starting to slow down. Their margins have been falling. Their average
sales per store has been decreasing. To make things worse, Walmart recently has opened 4 super
centers which contain 75% of the same collection of items sold by Hannaford. And Walmart plans to open
even more stores in the region.
How do we reverse the decline in Hannaford’s average sales per store? How do we successfully compete
with Walmart?

Note to Interviewer:
Unlike other profitability cases, the interviewer or case giver should not give the candidate time to come
up with a framework. Instead pose the first question immediately.

Additional Information: (to be given to candidate if requested)

Hannaford’s supermarket stores are a full-range stores including groceries, pet food, clothing, pharmacy,
etc. Some stores include banks, dry cleaners, and post offices. A few others include child care, flower
shops and catering.

 15% have banks, dry cleaners and post offices

 5% have child care, flower shops, and catering
 The remaining are regular grocery stores.
Possible Solution:
Interviewer: What are the reasons for the decline of average sales per store?

Candidate: It could be several reasons:

 Targeting the wrong segment

 Incorrect Location (too many competitors nearby)
 Inadequate marketing
 Pricing
 Inadequate customer service
 Convenience
 Owned store vs. franchise – take a look at franchise contracts to ensure that they are motivated
to push sales.
 Economy
 We have just 5% of stores having all services. Maybe competitors have a 1 stop shop with flower,
child care, dry clean, banks, etc.
 Some stores may be more profitable than the others, but some others are less profitable, thus
bringing the average down.
Interviewer: We have undertaken a survey among consumers which has showed that the consumers
perceive our prices to be 20% greater than that of Wal-Mart. In addition, even though our prices are
similar to our nearest competitor Stop & Shop, the customers perceive our prices to be greater than them
as well.

What actions can the marketing manager take to change the customer’s perception of prices?

Candidate: Does each shop have the ability to change prices or is it centrally governed for all 200 stores?

Interviewer: Each store has the ability to set their own prices.

Candidate: Some actions could be

 Direct to consumer marketing

 Offer discounts
 Bring down prices of some products which are significantly higher than our competitor
 Increase customer services
 Launch a customer loyalty program
 Check prices of affiliated services like dry cleaning, child care, flower shops, and catering, etc.
Maybe high prices there has created the pricy image for the grocery store
 Franchise vs. owned stores, check for store managers’ incentives to incease price
Interviewer: The Hannaford store chain decides that they need to bring down the prices of the fastest
selling 6,000 items by 15%. How much would it cost the company given the following additional
information?

Average sales per store $20 million

Fastest 6000 items 24%

Next 15000 items 42%

Number of stores 200

Super stores 120

Stores over 15000 square

feet 108

Candidate: (do the calculations)

Average sales per

store $20 million

Fastest 6000 items 24%

Sales of fastest 6000 $20 million * 24% = $4.8 million

Impact on profit 15% * $4.8 million = $0.72 million

Total impact 200 stores * $0.72 million = $144 million

Interviewer: Good. We have the results of our recent market research: the percentage of customers who
are satisfied with shopping experience, convenience of store locations, healthy foods, organic meat, good
deals, store prices (see Figure 1). The client the CEO of Hannaford is eager to have us analyze the data.
Could you let us know the implications of this data for our strategy?

Candidate: This market research shows that we are doing well in convenience aspect and healthy foods
and organic meat, but we don’t have a good shopping experience and our store prices are perceived to
be high.

Interviewer: Great. Let’s assume that the CEO just walked in and would like you to give him the next
steps. What would you tell him?

Candidate: You came to us with a question of what we should do to successfully compete with Walmart
and reverse the decline in our revenues. We looked at the various factors that may affect the average
sales/store. We also conducted market research to show where we could improve. Based on the market
research, I would recommend the following:

 Improve the shopping experience

 Focus on marketing our competitive advantage – convenience of locations, healthy foods and
organic meat
 Work on improving consumers perception of our prices.
Interviewer: Thank you. You did a great job.
Ducati to Improve Sales Performance of Single Brand Stores
Case Type: increase sales/revenue.
Consulting Firm: Arthur D. Little first round job interview.
Industry Coverage: automotive, motor vehicles.
Case Interview Question #00612: Our client Ducati Motor Holding S.p.A. is a leading Italian company
that designs and manufactures motorcycles. Headquartered in Bologna, Italy, Ducati is owned by Audi
(FWB: NSU) through its Italian subsidiary Lamborghini. The company produces high end luxury

motorbikes which they sell globally. Ducati is best known for high performance
motorcycles characterized by large capacity four-stroke, V-twin engines, featuring a desmodromic valve
design.
Ducati Motor has 150 motorbike stores. 50 stores are single brand (they only sell Ducati brand
motorcycles) and the remaining 100 stores are multi-brand (they sell between 3 and 8 different brands of
motorbikes). Multi-brand stores have similar sales and income figures, while single brand stores are either
huge success or on the verge of bankruptcy. A single brand Ducati store in Italy did so badly that the
owner killed himself after bankruptcy.
The CEO of Ducati Motor hired Arthur D. Little because he wants to identify the major reasons of this
diversity among single brand stores and find a way to decrease the number of under-performing single
brand store. How would you go about helping him? What would you suggest to Ducati’s CEO?

Suggested Approach:
An outstanding candidate will list all the major possible differences between single-brand and multi-brand
store and then will ask questions in order to focus on the most important ones. After identifying the most
important differences the candidate should suggest any reasonable recommendation to identify
opportunities for single brand stores.

Additional Information: (to be given to candidate if requested)

The main factors are cross-selling and customer brand recognition.

Brand recognition

 Ducati has not yet established customer loyalties in most of the countries where it sells.
 In US for example, there is not yet customer captivity for Ducati bikers (Ducatisti). A customer
captivity is when a business has “captured” their customers. and the customers have high costs in
switching to an alternative product or service provider, or simply because the customers have
developed a strong “habit” in buying the product or service.
Cross-selling

 Ducati does not risk loosing a loyal customer when they shop at a multi-brand stores
 There are several loyal customers who discovered Ducati trough multi-brand store and then
remained loyal
 The best single brand store can be found near competitor stores or in region where multi-brand
stores are present, especially near multi-brand stores selling several brands (7 or 8 )
Possible Solution:
Interviewer: So, tell me how would you structure this problem?

Candidate: Our client asked us to identify the main reasons for such a disparity between their single
brand and multi-brand stores and give a suggestion once they found key issues. It is an interesting and
complex case. May I take a second to structure a proper analysis?

Interviewer: Sure.

Candidate: OK, these are the aspects I want to analyze:

 Geography: Are under-performing single brand stores located in particular areas

(urban/suburban) or particular countries (EU/USA/Asia)?
 Customers: Did Ducati target the right customers in each area they are positioning a new single
brand store?
 Managers: Is the Ducati relationship with single brand managers different from multi-brand store
managers?
 Stores: Is there any major difference between single brand and multi-brand stores in terms of
client mix?
Interviewer: The distribution of under-performing single brand stores is uniform among cities, suburban
areas and different countries.

Ducati has a clear value proposition and the customers’ analysis is well structured. Ducati treat multi-
brand and single brand store managers in the same way. Once a new store manager (either single brand
or multi-brand) decides to open a new store, he or she asks Ducati to supply its motorbikes; Ducati
decides to accept or not this new distributor considering strategic/location factors. No further
consideration is made based on the nature of the store (multi-brand versus single brand).

Your fourth point is the most important one. What do you think is the major difference between multi-
brand stores and single brand stores? How do you imagine these two kinds of stores?

Candidate: Let me think a little bit. I think that the major differences between multi-brand and single brand
stores are:

 Size: single brand stores are smaller than multi-brand stores

 Customers: single brand stores attract mostly Ducati enthusiast or curious customers, while multi-
brand stores attract every kind of customers who are thinking about buying a new motorbike
 Managers and Operations: a single brand manager is most likely an enthusiast Ducati user but
not necessary a good motorbike seller, while a multi-brand manager is most likely to be an
experienced manager and motorbike seller
 Traffic: obviously multi-brand stores attract way more customers than single brand stores. Most
likely, the more brands they sell the bigger is the traffic.
Interviewer: Very good. These are main differences. We initially thought from ice creams, high-end
motorbike sales are uncorrelated from store traffic. Evidence showed the opposite. Surprisingly, we have
noticed that single brand store with higher traffic are most likely to perform better. Do you think you can
analyze the possible reasons?

Candidate: Yes. I think is probably a problem of brand recognition. Most likely potential loyal customers in
some regions are not aware of the experience of riding a Ducati. Probably they have never seen one.

Interviewer: That is possible. How would you identify one or more indicators to analyze single brand
stores traffic without actually visit them?

Candidate: I would look to the single brand stores located in area where enthusiasm for motorbikes is
higher. I think that the best way is to look at competitors and multi-brand stores’ locations. May I ask
whether or not there is any geographic correlation between the distribution of performing single brand
stores and multi-brand stores? Are they in the same areas? Are top single brand stores located near
competitors’?

Interviewer: I think we are close to the solution of the problem. Yes, you are right. We have analyzed the
distribution of the best single brand stores and they are located close to competitors’ or multi-brand
stores. We have also noticed that the bigger the multi-brand store the higher is the performance of single
brand store. What can you infer from that?

Candidate: I think that cross-selling and traffic are the best way to increase brand recognition and
eventually single brand store’s performances.

Interviewer: That makes sense. So, what would you suggest to Ducati’s CEO?

Candidate: I would suggest Ducati locates all the areas in which there is a major distribution of multi-
brand stores and competitors stores. Ducati should invest in creating new single brand stores and
showrooms in these areas so to leverage the brand recognition created by the multi-brand stores and
increase sales.

Interviewer: Very good. We appreciate your analysis.

Italian Drinks Group Campari To Grow Its Whiskey Brand
Case Type: increase sales.
Consulting Firm: Capgemini Consulting second round summer internship interview.
Industry Coverage: tobacco & alcohol.
Case Interview Question #00610: Our client Campari Group (Gruppo Campari, BIT: CPR) is a
multinational producer of alcoholic and non-alcoholic beverages headquartered in Milan, Italy. As one of
the multi-billion dollar liquor distributors, the Campari Group holds a portfolio of over 40 brands marketed

and distributed in more than  190 countries. The group’s operations are split into
three segments: spirits, wines and soft drinks. Total revenues were approximately €1.2 billion in year
2010.
Campari Group is the sixth biggest player worldwide in the branded spirits category, operating principally
in the U.S., Italy, Brazil, and in continental Europe. Recently, the CEO of Campari Group has hired you as
a consultant to determine why its whiskey brand is not growing. How would you go about it? What
recommendations would you give to the CEO in order to grow whiskey sales?
Additional Information: (to be given to candidate if requested)
1. Competition and Market Share

Market Segment High end Medium Low end

Growth this year 14% -6% 8%

2 in total, including the

Competitors 10 in total, 5 new client 4 in total

Our client Campari Group is in the medium segment.

2. Customer segmentation and trends

Our client Campari Group’s customers are as follows (give all this information at once):

 70% are male 40-55 years old

 They like taste and brand
 Usually they enjoy a drink after work
 They are into the tradition and brand
 They drink whisky straight or on the rocks
 30% are younger male or female 21-35 years old
 They are bar and club crowd
  They enjoy mixed drinks
3. Product

 Our client the Campari Group has recently increased their whisky price from $22 to $24 a bottle.
 Other competitors in the medium range are priced at $22 a bottle on average.
 Distillers have changed the ingredients to save $0.50 per bottle on COGS (Cost of goods sold)
but have not changed the taste.
Possible Solution:
The key to this case is to understand the customer preferences are shifting away from the medium range
into either the high end or the low end. The high end provides the 70% male segment with the refined
taste and distinguished image and taste that they are attracted to. The low end provides the 30% “bar
crowd” a cheap whisky to imbibe. The rise in price has driven many of the client’s customers away and
the company needs to reconsider its pricing strategy and branding strategy.

Interviewer: So, how would you approach this case?

Candidate: Well, I’d start externally: What has happened with the competition and the customers? In
terms of the competition, I would look at changes in market share, any new competition, the market
segmentation, and market growth. Regarding segmentation, I would also look at the customers, what do
they want? Finally, I would look internally and look at our product, marketing, and pricing.

Interviewer: Great. Where do you want to start?

Candidate: Well, what do we know about the market? How is it broken up?

Interviewer: Well, there is a high end, medium range and low end of the market. The high end has 10
competitors, the medium end has 2 including the client Campari Group, and the low end has 4.

Candidate: Okay, and how is each market growing?

Interviewer: The high end market is growing at 14% a year, the low end is growing at 8%, and the
medium range is contracting at 6%.

Candidate: Well, I can see a problem already. We’re in a segment of the market that’s contracting. Has
market share changed or have there been any new products introduced?

Interviewer: No.

Candidate: Then, let’s look at customers. What do we know about our whiskey drinkers?

Interviewer: Our client basically has two types of whiskey drinkers:

 70% are male 40-55 years old

  They like taste and brand
 Usually they enjoy a drink after work
 They are into the tradition and brand
 They drink whiskey straight or on the rocks
 30% are younger male or female 21-35 years old
 They are bar and club crowd
 They enjoy mixed whiskey drinks
Candidate: That’s interesting. We must be rather traditional brand if we have such an older following.
Let’s turn internally. What do we know about our product? Have we changed price, marketing, or the
product recently?

Interviewer: Our marketing has been consistent. The distillers recently changed ingredients to save 0.50$
per bottle, but that hasn’t effected the taste. Also, we have recently raised the price from $22 to $24 a
bottle.

Candidate: That’s interesting. What is our competition priced at?

Interviewer: The competition at the mid-range part of the market is at $22 per bottle on average.

Candidate: Well, that’s interesting. Do we know if this price change affected the younger crowd?

Interviewer: What do you think?

Candidate: I would assume this would affect them because they drink our product mixed, and there’s
probably little discernible difference to them. They probably have less brand loyalty as well.

Interviewer: Good. Now what would you recommend to our client?

Candidate: Well, it seems that we’ve learned a few things:

 Younger, bar crowd customers are more price sensitive

 But 70% of our customers have great brand loyalty and would like migrate to the higher end
market
 The 30% bar crowd are moving to the lower end market because they drink whiskey mixed
Based on the analysis, I would give the following recommendations:

 The client should try to enter the higher end premium market to recapture their customers and
grow market share
 The client could also consider entering the low end market with a brand extension
Interviewer: Great! Thank you.
Neutrogena to Double Global Sales in Sun Care Products
Case Type: increase sales/revenue; market entry.
Consulting Firm: Booz Allen Hamilton (BAH) first round job interview.
Industry Coverage: household goods & consumer products; cosmetics & beauty products.
Case Interview Question #00606: Booz Allen Hamilton was recently retained to work with the newly
appointed Vice President of International Business at a Consumer Packaged Goods (CPG) company.
The CPG company, Neutrogena, is headquartered in Los Angeles, California and has 95% of its sales in

the US.
Neutrogena has 3 product lines: skin care, hair care and cosmetics. The majority of its sales and the
focus of this case are on its sun care products, like sunscreen or sun tan lotion. Sunscreen (a.k.a.
sunblock, sunburn cream or block out) is a lotion, spray, gel or other topical product that absorbs or
reflects some of the sun’s ultraviolet (UV) radiation on the skin exposed to sunlight and thus helps protect
against sunburn. The company’s total revenues from sun care products was about $1 billion for last year.
Neutrogena was recently acquired by a large multinational medical devices, pharmaceutical and
consumer packaged goods manufacturer Johnson & Johnson (NYSE: JNJ). As it has a very broad
international presence selling healthcare related consumer products, the new parent company Johnson &
Johnson wants to double its international sales in the sun care product division by 2013. Currently
Neutrogena’s international sales, only 5% of total annual sales, are seemingly random, with no real vision
or strategy behind it. Distribution is in diverse markets.

We were hired by the newly appointed VP of International Business at Neutrogena to help our client in
determining how best to approach this growth prospect.

Additional Information: (to be given to candidate if requested)

Below are the facts given by the interviewer on the international markets for sun care products.
1. Market sizes and growth rates

 US Market: $5 billion, 3% – 4% growth

 EU (Europe): $3 billion, 6% growth
 APAC (Asia/Pacific): $1 billion, 12% growth
 LATAM (Latin America and South America): $1 billion, 12% growth
2. Client’s market share and Competition

 Neutrogena has 2 sun care brands (60 SKU’s each) that are number 2 & 3 in the US market,
combining to be larger than the #1 player.
 Neutrogena has 1% market share in Europe.
 LATAM is Neutrogena’s largest international market, and Neutrogena has 30% share in Mexico,
Chile, and Argentina.
 APAC: Neutrogena is #1 in Australia, sporadic distribution otherwise.
 The top 5 players own 80% share in all markets
3. Customer preferences

 US: Customers generally buy distinct sun care brands, for example Coppertone from Merck is the
#1 brand
 EU: Loreal, Nivea are market leaders; customers prefer cosmetic brands for sun care
 APAC: Neutrogena currently sells in South Korea, China, India (minimally), customers are fair-
skinned and prefer it for beauty benefit
 LATAM: Similar to US customers using it more functionally
Suggested Approach:
The dialogue outlined below in the “Possible Answer” section mimics how the interview went, and
generally reflects the approach Booz Allen Hamilton took with the client. There are 4 key sections to the
case:

 Up front structure in approaching the problem (3C’s)

 New data on the market is given – structure a recommended strategy for pursuing specific market
opportunities.
 Discuss items pertaining to a go-to-market strategy (4P’s)
 Discuss benefits and challenges of using parent company resources to distribute.
Possible Answer:
Interviewer: If you were tasked with this project, how would you begin to approach solving the problem of
doubling Neutrogena’s international sales in the sun care products by 2010?

(Note: the candidate should answer with a structured response, like the 3C’s framework shown below)

Candidate: Well, I would want to structure the approach to look at the different customers and markets for
each international opportunities, the competitors in each market, and the relative strengths and
weaknesses of Neutrogena and its new parent company Johnson & Johnson in each market. Drilling
down further, I would want to look at:

 Markets and Customers:

 Overall market dynamics: size, growth, customer segments, geographies (maybe those
markets the parent company Johnson & Johnson operates in)
 Customer specifics: demographics, needs & preferences, current product usage / brands
 Competitors:
 Other companies in each market, respective market shares & growth, product
differentiation & branding
 Overlay competitor market share and products with each region
 Company:
  Think both along the lines of Neutrogena & what parent company Johnson & Johnson
can add given its broader scope
 What markets both operate in, existing distribution capabilities, capability & capital
available for Neutrogena’s international expansion
Interviewer: That’s good. Let me tell you that Johnson & Johnson wants any growth to be self funding so
no large capital expenditures. Next, let’s look at three different potential regions.

EU (Europe) is a $3 billion overall market with 6% annual growth. APAC (Asia/Pacific) is a $1 billion
market with 12% growth, and LATAM (Latin America and South America) is a $1 billion market with 12%
growth.

Neutrogena has 2 sun care brands (60 SKU’s each) that are number 2 & 3 in the US market, combining
to be larger than #1 player. Neutrogena has 1% market share in EU. LATAM is Neutrogena’s largest
international market, and Neutrogena has 30% share in Mexico, Chile, and Argentina. In Asia/Pacific
Neutrogena is #1 in Australia, but sporadic distribution otherwise.

Candidate: Well based on this information, it seems that from a growth perspective APAC & LATAM are
the most attractive, but EU is the larger market overall. I’d also like to understand whether our 30%
shares in Mexico, Chile & Argentina make up a large enough portion of the market such that 12% annual
growth with steady market share could make up the $50 million in international sales we want.

Interviewer: That’s a good observation. We have done that analysis and know that it will get us part of the
way but not fully. What else would you need to know?

Candidate: Can you tell me a bit more about the competition and the customer preferences in each of
these regions so that I can recommend a more targeted geographical preference?

Interviewer: Sure. First, note that in all regions the top 5 players have 80% market share so it’s very
concentrated competition.

 In the US, customers generally buy distinct sun care brands, for example Coppertone from Merck
is the #1 brand.
 In Europe, L’Oreal and Nivea are market leaders. European customers prefer cosmetic brands for
sun care.
 In Asia Pacific, Neutrogena currently sells minimally in South Korea, China, India, in places where
customers are fair-skinned and prefer sun care products for beauty benefits.
 Latin America/South American customers are similar to US customers using sun care more
functionally.
So, which region do you think we should target?

(The candidate should make a well-structured recommendation that discusses pros/cons of each region
and recommend one of the regions.)
Candidate: At this point it looks like Latin America and South America are the most attractive markets to
expand in given the customer preferences being similar to the US and the market growth. This of course
is assuming Mexico, Chile, and Argentina don’t make up most of the market.

Interviewer: Do you think there are other sizeable markets in that region that we haven’t mentioned?

Candidate: I assume Brazil is a sizeable market and perhaps Puerto Rico?

Interviewer: Very good. What about the other markets?

Candidate: Well, APAC might be good to target given the strong growth prospects, however given that we
have little share in most markets it may be tough to gain entry. We would also have to re-brand our
products to match consumer preferences. Additionally, Europe is not a good target either given our low
share and the mis-match with our brand/product and the customer preferences in the region.

Interviewer: Very good. We’ve now decided that Latin America would be the best region to target and
have identified some priority countries for launch including Brazil, Puerto Rico and Colombia. Thinking
about Brazil specifically, what would you want to think about in your go-to-market strategy?

Candidate: First I would want to think about pricing and how to price. We could do it similar to
competitors, via cost-plus, or use a willingness to pay pricing method. I assume here we’d be more likely
to price relative to competition.

Next I would want to think about product placement. What distribution centers (beach shops, grocery
stores, etc.) are currently used? Additionally, what kind of shelf placement and in-store displays are
available?

Thirdly, thinking about the product itself, do we want to launch with one or both brands, how many of the
120 SKU’s do we target, and will we need to change labels to local languages (Portuguese)?

Finally, promotion. How do we want to send out the marketing message about our product? I assume
since we don’t want to spend much, localized target marketing would be best, for example signs on a
beach or point-of-sale marketing.

Interviewer: Those are all very relevant points. There is however 1 point you may have missed relative to
launching in a new country.

Candidate: Perhaps there are country law and regulations we need to abide by, especially since we are
talking about a chemically based product, maybe we need government approval? Also what about tax
structure and tariffs, we need to make sure those don’t eat our margins.

Interviewer: Good. Last question, thinking about the economics of distribution let me tell you a bit about
how Neutrogena has been working in some countries, e.g. Mexico.
After manufacture, Neutrogena sells a case of product to distributors for $100. The distributor then owns
the rest of the value chain and takes on warehousing, selling with a proprietary sales force, and manages
billing and payments with retailers. They then mark-up the case to retailers by 45-50% to, say $150. What
would be the benefit of taking this distribution in-house?

Candidate: Well, first of all, I assume that parent company Johnson & Johnson has much of these
capabilities already in house so we can leverage those.

Interviewer: That’s correct. Actually Johnson & Johnson’s distribution is well established in these
international markets and they distribute to the most local levels such as corner grocery stores.

Candidate: Perfect. So I would assume that we can reduce overall warehousing costs by sharing space
with the existing products from Johnson & Johnson. Also, what about the sales force in J&J? Could they
take on the sun products or would we need to hire additional sales agents?

Interviewer: That’s a good observation, actually when J&J acquired another shaving product company two
years ago, the sales force learned to sell this very distinct product from medical device products, thus we
can assume they can take on sun care products to the same customer set with ease.

Candidate: Perfect, so then we can see synergies with all components we were outsourcing previously,
including billings and payments. We may even be able to cut the margin to retailers and mark-up only 30-
40% which in turn can spur more demand and keep our operating margins constant.

Interviewer: That’s a good observation. In fact retailers are smart and know we would be reducing costs
through this and demand lowered prices, though they may reap the benefit and not pass it on to the
customer. Excellent observations. Well done!

PepsiCo to Grow Market Share in Food Service Industry

Case Type: increase market share; business competition.
Consulting Firm: Capgemini Consulting final round job interview.
Industry Coverage: food and beverage; restaurant & food service.
Case Interview Question #00600: The client PepsiCo Inc. (NYSE: PEP) is a large multinational food and
beverage consumer packaged goods company (CPG) headquartered in Purchase, New York, United
States. Formed in 1965 with the merger of the Pepsi-Cola Company and Frito-Lay Inc., PepsiCo has

since expanded from its namesake  product Pepsi carbonated soft drink to a
broader range of foods, snacks and beverage brands, with interests in the manufacturing, marketing and
distribution of grain-based snack foods, non-carbonated beverages, and other consumer packaged
products.
PepsiCo has a 40% market share in traditional CPG channels, like large format grocery. However, they
only have a 17% market share in the food service channels. You have been hired to help them grow their
market share in the food service business. How would you structure this case?
Additional Information: (to be given to you if asked)
There’s a lot of additional information in this case. The candidate should probe for this information
because it’s essential for solving the case.

1. The client PepsiCo has one major competitor in beverage, the Coca-Cola Company, but no major
competitor in their foods portfolio.
 The beverage portfolio consists of sodas, bottled waters, juices, teas, health drinks, and new
specialty bottled drinks – no alcoholic beverages.
 Their food portfolio consists primarily of snack foods (for example, Frito-Lay and Quaker Oats
brands) for throughout the day, i.e., breakfast, lunch, and later.
 The client’s main competitor the Coca-Cola Company is a major beverage company, and the
Coca-Cola Company does not have any significant sort of food portfolio.
2. The client PepsiCo’s market share is 17% across the food service market. But within this market, the
market share for the client varies in the different segments and sub-segments. There are three primary
segments in the food service market:

 cafeteria and workplace food service,

 restaurants (which is comprised of fast food, slow fast food / alternative fast food, and other),
 entertainment / theme park venues, and
 misc.
Amongst these segments, restaurants is definitely the largest, with 70% share of the market.

3. Within restaurants segment, there are a few sub-segments:

 fast food (Wendy’s, Burger King, McDonald’s),

 slow fast food / alternative fast food (Chipotle, Au Bon Pain, California Pizza Kitchen Express,
Wolfgang Puck’s, Boston Market, Cosi, etc), and
 Misc. (corner deli, mom and pop, etc.)
The fast food segment is dominated by our major competitor the Coca-Cola Company, who has a 70%
market share in this segment. Slow fast food / alternative fast food is a smaller segment, but it is growing
at 30% a year, as a part of a trend of eating healthier.

Possible Solution:
This “growing market share” case is really a 3C’s case. If you use the 3C’s framework, develop questions
around them that are relevant to the specific question, and probe the interviewer for new and relevant
information, then you can crack the case. This is not a numbers case. Some knowledge of marketing and
consumer packaged goods would be helpful. Later in the case, using the 4P’s framework to help think
through the questions about how specifically to grow market share would be helpful in generating ideas.

Candidate: I’d like to make sure that I understand the case. So, our client PepsiCo is a traditional CPG
company, with a large beverage and foods portfolio. Can you tell me a bit more about that portfolio? I’m
assuming that PepsiCo has sodas and juices? Do they have other types of drinks?

Interviewer: Sure. PepsiCo’s beverage portfolio consists of carbonated soft drinks (sodas), bottled waters,
juices, teas, health drinks, and new specialty bottled drinks, but no alcoholic beverages.

Candidate: What about their food portfolio? What is that comprised of?

Interviewer: The food portfolio consists primarily of snack foods for throughout the day (ie, breakfast,
lunch, and later), for example, Frito-Lay potato chips, Quaker Oats cereals. That’s one thing that makes
us distinctive from our main competitor the Coca-Cola Company- we have both a food and beverage
portfolio. Competitor Coca-Cola Company only has beverages.

Candidate: Interesting. So, they have a pretty comprehensive portfolio. Can I have a minute to structure
my thoughts?

Interviewer: Sure. Take your time.

(Now the candidate should take a few minutes to structure the case. This will require more than just laying
out a framework but also identifying key questions that will help them drive to an answer.)

Candidate: I would like to know about three main things: (1) customers, (2) our company and capabilities,
and (3) the competition and how we can differentiate between them. In those three main categories of
information, there are a few key questions that I’d like to answer. This is how I might structure it:

 Customers
 Who are the potential customers in the food service market?
 Cafeteria / Workplace food service
 Restaurants: fast food, slow fast food, other?
 Entertainment venues: movie theaters, theme parks
 Other?
 Company
 What’s in our portfolio?
 Food portfolio
 Beverage portfolio
 Do we have any capabilities that are specific to us?
 Competitors
 Who are our major competitors?
 What do we have that differentiates us from our competition?
  Where are our competitors strong? Where are we stronger than them? (Market shares?)
Interviewer: That’s good. What would you like to start with first?

Candidate: Well, we already talked about our company and portfolio a bit; is there anything else that I
should know about our company. Like, do we have any capabilities that our competition doesn’t have?

Interviewer: Not really.

Candidate: Well, I’d like to know a little more about customers in the market. I don’t know much about the
food service market, but I imagine that there’s a lot of that falls into the group of customers.

Interviewer: You’re right. You’ve listed a few. Why don’t we discuss those.

Candidate: Sure. I imagine that food service industry includes things like cafeterias, both at schools and
universities. And, I know that the company I worked at before business school had a cafeteria, maybe that
as well?

Interviewer: Yep. What else do you have?

Candidate: Well, then, there’s movie theaters and theme parks, maybe places like bowling alleys?

Interviewer: Sure. What else?

Candidate: Yes, there’s also restaurants. And then, there might be customers that I’m forgetting. Is there
anything else?

Interviewer: Sure, there’s probably some sort of miscellaneous group, but you’ve covered the main ones.
So, of those main three, what do you think the sizes of the segments are?

(The Interviewer is testing the candidate’s business judgment and common sense in asking for the
candidate’s sense of the sizes of the segments.)

Candidate: I think that miscellaneous is pretty small. And then, the entertainment one is also pretty small
and stable. But the cafeteria and workplace one, I imagine that that’s a little bigger, and maybe it’s
growing. And then, the restaurant one, I bet that’s the largest. Though, I’m not sure how fast it’s growing.

Interviewer: You’re basically right. The restaurant segment is definitely the largest, it’s about 70% of the
food service market.

Candidate: If I think back to the original question of helping the client PepsiCo grow their market share in
the food service segment, I think that I would focus on the restaurant segment. Can you tell me a bit more
about that segment of the food service market?
Interviewer: Well, what do you think about that segment?

(Part of what the Interviewer is testing here is the candidate’s ability to use common sense to lead the
case and see what they can deduce on their own.)

Candidate: Well, I imagine that restaurants includes a few sub-segments. For a CPG company, high-end
restaurants are out. But in the low-end, there’s probably fast food, delis and mom and pop shops, and
miscellaneous.

Interviewer: That’s right. There’s one big, new one that you’re missing. It’s referred to as “slow fast food”.
It’s new chains with more made-to-order, healthier food. It’s restaurants like Chipotle, Au Bon Pain,
California Pizza Kitchen Express, Wolfgang Puck’s, Boston Market, Cosi, etc. It’s part of people’s need to
eat healthier.

Candidate: Interesting. I imagine that this new segment is growing a lot faster than the other segments.
But it’s small. If I think about the original question of the case, if I was going to try to grow market share, I
might try to grow it throughout the restaurant segments. However, before I make a recommendation, I’d
like to know a bit more about the competition, we haven’t talked much about that.

Interviewer: You’re right. Well, the competition is pretty fierce in the fast food subsegment. The client has
one main competitor the Coca-Cola Company. They only make beverages, and they have a 70% market
share in fast food.

Candidate: Wow. Well, given that, I would focus on the other two segments: this new “slow fast food”
segment and the mom and pop segment.

Interviewer: Great. What would you do to try to focus on them and grow your market share with them?

(The candidate might want to take a few seconds to think about the answer to this question. It’s kind of
the crux of the solution to the case. Since it’s a marketing question: how to grow market share, the 4 P’s
come in as a handy framework to use to think through the case.)

 Placement
 Are there customers in the restaurant segment that we’re not taking care of right now?
New sub-segments?
 Product
 Can we offer specialty products / tailor-made products to restaurants?
 Can we offer new product packaging that is specific to our restaurant customers?
 Price
 Should we compete on price? Do we want to compete on price? (Price competition could
grow our unit share, but hurt our dollar volume share and our profits overall)
 Promotion
 Can we cross-promote with our restaurant customers?
  Will cross-promotion help grow restaurant customers’ loyalty to us?
Candidate: Well, there are a few things that we could do to grow our share with these customers. In terms
of price, well, we could change our price, but I don’t think that we want to compete on price. That could
help us grow our unit volume share, but it might hurt our dollar volume share and definitely would hurt our
profits. In terms of placement / distribution, is there any way that we can grow our share by distributing to
new customers or new locations?

Interviewer: Maybe. But we already distribute to a majority of the market. What else could you do to grow
market share?

Candidate: In terms of promotion, maybe the client can create partnerships with certain customers or
customer chains and run cross promotion campaigns, like advertising campaigns, or coupons. And in
terms of product, maybe they can create customized products for their restaurant customers, like new
packaging, or specialty sizes, etc?

Interviewer: Yep. That’s great. That’s a good way to grow share. But can you just quickly give me some of
the pros and cons of specialty or custom products?

(Here, the Interviewer is testing the candidate’s ability to identify some business risks with new ideas –
testing business judgment and risk identification.)

Candidate: Well, on the pros side, it would build a special relationship with the customer; it might
differentiate us from our competition Coca-Cola. On the cons side, our profit margins would definitely
decrease on custom products. So, we might grow our share, but not our overall bottom line.

Interviewer: That’s right. So, is there anything else, other than custom products or any of the ideas that
you mentioned—that can help us grow our share in the restaurant segment?

(Here, the Interviewer is looking for a specific answer. If the candidate doesn’t get it, don’t worry about it.
You can still get the job without getting the answer to this one.)

Candidate: Well, when I think about the information that I got early in the case, the only thing that I have
that really differentiates us from our competition is the fact that we have both food and beverage portfolio.
Maybe we can leverage the fact that we can distribute food products and beverage products to restaurant
customers to grow our market share?

Interviewer: Yes, that’s right. So, how would you summarize your recommendation?

Candidate: The client wants to grow their market share in the food service segment. The best way to do
that would be to focus on the restaurant segment of the food service market, because that’s the largest
part of the market – nearly 70%. Within that, the client should focus on the non-fast food segments, as
those segments aren’t dominated by our major competitor and are still up for grabs. And they’re growing
faster than the traditional fast food segment. The best ways to grow market share within those sub-
segments, without hurting the bottom line, would be to leverage the breadth of our portfolio, having both
food and beverage products to offer which our competition does not, and perhaps by making custom
products, where it doesn’t hurt our profit margins.

Interviewer: Very good! You did a great job.

Legg Mason to Adjust Asset Management Fee Structure

Case Type: increase sales/revenues; organizational behavior.
Consulting Firm: Cambridge Associates first round job interview.
Industry Coverage: Financial Services.
Case Interview Question #00597: You have been retained by a large institutional asset manager client
Legg Mason, Inc. (NYSE: LM). Headquartered in Baltimore, Maryland, United States, Legg Mason is a
global investment management firm with a focus on asset management, serving institutional investors on

five continents.  They offer products in equities and fixed income, as well as
domestic and international liquidity management and alternative investments (via a funds-of-hedge-funds
manager). As of September, 2012, Legg Mason’s assets under management (AUM) aggregated to $651
billion, making it the 18th largest asset manager in the world.
The client Legg Mason is very profitable and doing very well. However, they know that they are leaving
money on the table: they know that they have a lower average percent fee of assets under management
than their competition – lower than the industry average. They’ve hired Cambridge Associates to tell them
why that is, and how to rectify this situation. How would you go about the case?
Additional Information: (to be given to candidate)
Institutional asset management firms’ revenues are based on fees from client (institutional investors).
Clients are charged a fee, which is structured by some percentage of assets under management. You can
assume 5% if it makes the discussion easier – though, the actual percent fee never comes up.
Institutional asset management companies like Legg Mason can serve any sort of large, investing clients:
pension funds, CalPers (California Public Employees’ Retirement System), TIA-CREF (Teachers
Insurance and Annuity Association – College Retirement Equities Fund), hospitals, private foundations,
university endowments, etc. They do have retail division that serve individuals investors with their 401Ks
and mutual funds, but this case focuses on the institutional investor side of the business only.

Possible Solution:
Interviewer: First of all, do you have any questions?
Candidate: Sure, I want to make sure that I understand how the client Legg Mason’s business works. I
don’t know too much about institutional investors or asset managers; so, I’d like to just make sure that I
understand the business model before we dive into the problem.

Interviewer: Sure, that makes sense. What can I tell you?

Candidate: I imagine that as an institutional asset manager, the client Legg Mason works just like Fidelity
Investments, or Capital Group Companies.

Interviewer: That’s right.

Candidate: And I bet that their clients can range from anyone – you and me investing our savings in a
mutual fund to large investors like pension funds.

Interviewer: Yep, that’s right. Pension funds like the TIA-CREF and CalPers, or foundations and
universities are some of the bigger clients. We’re going to focus on that part of the business only: the
institutional investor part of the business, not on you and me and our individual 401Ks.

Candidate: Great. And you said that they generate revenues from fees which are based on a percentage
of assets under management?

Interviewer: Right. What’s your sense of how that percentage might change?

Candidate: My guess is that larger clients, i.e. clients with larger amounts of assets under management,
might have a lower percent fee charged to them, because they still generate more revenues with a
smaller percent fee.

Interviewer: That’s right. In fact, I have an exhibit that shows you what that looks like.

Exhibit 1: Revenue Structure for Institutional Asset Management

It shows that the percentage fees charged on assets under management is a stepped function. What
would you image the cost structure of different size clients is like?

Candidate: Well, I don’t know the business very well, but I imagine that it costs about the same to service
a large client as it does a small one.

Interviewer: Yes, that’s correct. So, what does that tell you?

Candidate: That tells me that large clients – in terms of assets under management – are highly profitable
because they generate more in revenues – even with smaller percentage fees – at basically the same
cost as a small client.

Interviewer: Right. So, go back to the original question?

Candidate: Thinking back to the original question of the case: why does the client Legg Mason have a
lower average fee than the rest of the industry, I now want to know more about the fees that they’re
charging different customers.

Note to Interviewer: If the candidate did not get these points, it’s not a big deal. But it is important to
show them how the fees are structured and explain that larger clients generate more revenues and cost
the same as any other client, therefore they’re highly profitable clients.
Interviewer: That’s right on track. Let me show you some additional data that we collected on the percent
fees and discounts that Legg Mason is giving to their customers.
Exhibit 2: Percentage Discounts by Deal

So, what does this data tell you?

Candidate: Well, it’s not what I would expect. It looks like they’re giving some of the highest discounts on
their fees to their mid-sized clients, not to their largest ones. This may be keeping the profitability high on
their large clients, but it’s probably destroying margins on their mid sized clients, and bringing down their
overall fee average. I think this shows the answer to the client Legg Mason’s question.

Interviewer: Sure. Now here’s another question: if you were the client, what would you want to see here?

Note to Interviewer: Here, the candidate should generate a few ideas. A bunch are listed below — if the
candidate get one or two, that’s great, and you can move on. Also, it might help the candidate to give
them the Exhibit so that they can draw on it, if that makes them more comfortable or helps them at all.
Candidate: Well, if I were Legg Mason, I would want to see a few things.

First, I would want to be giving the biggest discounts, or the most discounts, to my larger clients. Here, it
looks like they’re giving the biggest discounts to the mid-sized clients.
Second, there doesn’t seem to be any sort of cap on the amount of discount that can be given. They’re
discounting up to 90% in some cases – I would think that kind of discount would destroy all profit margins.
I would expect for there to be a cap around 30% or something.

Last, it all seems pretty random where the discounts are given. I wonder whether the clusters of discounts
represent a certain salesman or account executive.

Interviewer: That’s right. So, what are the key steps that you need to take to fix the problem?

Candidate: Well, first, we will have to diagnose why the discounts are the way they are right now. So, look
up who discounted what, to see whether it’s salesperson driven, or if it’s driven by the type of client. Then,
we would need to monitor the discounting and keep track of it. Maybe the client Legg Mason can incent
the salespeople not to give discounts?

Interviewer: Yep. That’s right: monitoring and tracking, and then put in whatever systems are necessary to
get the company’s average fee up to at least the industry average. Great. That’s it.

Note:
This case dives right into data and question and answer. There’s a question that the client asked, but the
interviewer hinted up front in the case question that he/she wants the candidate to do more than just
answer the client’s question. This is a good case for practicing looking at data and taking the case
interview past answering the question and more towards “fixing” the business problem.

The interviewer should expect the candidate to drive the case, but should provide additional data (Exhibits
1 & 2) up-front pretty quickly and make sure that the candidate understands the asset management
industry and how the fee structure works very early on.

Blue Shield of California Targets Private Market for Growth

Case Type: increase sales/revenues.
Consulting Firm: Capgemini Consulting first round job interview.
Industry Coverage: life & health insurance.
Case Interview Question #00595: Our client Blue Shield of California is a major life & health insurance
company that sells insurance packages directly to corporations in the west Pacific Rim. The company
provides a variety of corporate insurance products and services including health, life, dental, vision, and
Medicare insurance  and health care service plans, and has one of the largest
provider networks in California.
Traditionally the client Blue Shield of California’s growth has been achieved in two ways:

 Adding new accounts, i.e. adding more companies as their clients

 A growth within the account, i.e. the companies adding more employees to the corporate
insurance program.
There are a couple of trends in the insurance market in the aftermath of the recent financial crisis. First, it
seems like companies are cutting back in offering their employees insurance program and there are many
employees that are left with the option of either to pay for insurance themselves or stay without it. The
second trend is that the largest growing segment in the insurance market is people over 65 (Note to
interviewer: this might have been a red herring).

In light of these trends, the CEO of Blue Shield of California wants to know how they can increase their
revenue growth. What would you recommend?

Possible Solution:
The candidate should do a good job brainstorming different options for growing revenues (qualitative
evaluations). This portion of the case is relatively open ended. Eventually, the interviewer presents a new
target market (privately insured market) and target financials, and the candidate should successfully
crunch the numbers (quantitative analyses). Finally, the candidate should conclude by giving a supported
opinion regarding whether the required market share is feasible.

Interviewer: So, what options can you think of to spur revenue growth?

Candidate: (brainstorms various qualitative options)

 Adding more accounts

 Cross selling different insurance products/services
 Offering new products/services
 Expanding geographically
 Entering the private and personal insurance market
 Merging, acquiring, etc
Interviewer: Those all seem like reasonable options to consider. Now let’s suppose we identified the
privately insured market as a good opportunity for our client, what issues should the client consider before
going in?
Candidate: Before entering the private insurance market, we should consider various factors such as
market trends and growth rate, competition, existing product offerings (and how they differ from the
client’s), different marketing methods (add telemarketers department), different distribution channels, etc.

Interviewer: We did some internal and external information gathering and came of with the following
figures. If our client wants to achieve incremental 10% profit growth over the next three years, what
growth rate does the target market (privately insured market) need to experience? When determining this,
it’s reasonable to assume that we will capture a market share comparable to what we have today in the
public/corporate market.

Additional Information: (if the candidate asks) profit growth rate from the client’s current market is
expected to be 25% over the next 3 years.

Interviewer presents Exhibit 1: California insurance market size.

Our Client:

 Number of people insured: 1 Million

 Premium revenues: $2 billion
 Net income: $200 million
Candidate: (Crunches the numbers)

 The market size of privately insured market: 3% of market = 20 million * 3% = 600,000 people
 Company insured market size: 20 million * 50% = 10 million people
 Our client’s current market share: 1 million / 10 million = 10%
 Client’s current profits: $200 million
 Incremental profits from privately insured market in 3 years: 10% of $200 million = $20 million
 Current premium revenues = $2 billion = 1 million people * average premium,
The average premium = $2 billion / 1 million = $2,000
 Client’s margins are: $200 million / $2 billion = 10%, i.e. client makes 10% * $2,000 = $200 in
profit from every insurance sold.
The client wants to achieve $20 million in incremental profits in the next 3 years, that is, they should get
an additional $20 million / $200 = 100,000 privately insured people.

If the client captures 10% of the privately insured market, then let 100,000 people = 10% of this market,
which means that in 3 years, the privately insured market size will need to be 100,000 / 10% = 1 million
people.

Interviewer: Good. Given the situation, how likely do you think it is that the market expands that much
over the next three years and our client captures 10% of the privately insured market.

Candidate: Given the trends in the market discussed earlier, I think it is reasonable that 400,000 people
would switch from public insurance to private insurance over the next three years, thus boosting the
private market to the target 1 million. Also, as our client already provides so much insurance coverage,
although indirectly through corporations, it seems likely that a 10% market share can be achieved.

Interviewer: Great! I think we can stop here for now. Any questions for me?

BMO Bank of Montreal to Increase Overall Market Share

Case Type: increase market share.
Consulting Firm: Simon Kucher & Partners (SKP) first round job interview.
Industry Coverage: banking.
Case Interview Question #00587: Our client The Bank of Montreal (BMO, TSX: BMO, NYSE: BMO), or
BMO Financial Group, is one of the Big Five banks in Canada. Headquartered in Montreal, Quebec, the
bank operates as BMO Bank of Montreal and has more than 900 branches in

Canada,  serving over seven million customers. As a major diversified financial

services firm, BMO Bank of Montreal has 4 lines of business: Checking Accounts, Savings Accounts,
Loans, and Mortgages.
The BMO bank is profitable, but the newly appointed CEO is on a mission to increase its overall market
share in the Canadian banking industry while still maintaining profitability. Recently, he is considering
increasing his sales force to accomplish this goal. There are 3 different categories of sales force he can
choose to change:
 Branch Managers
 Telemarketers
 Mortgage Agents
The CEO has come to us for advice on whether or not he should increase his sales staff. And if so, where
should he be adding heads. How would you go about addressing this question?

Additional Information: (to be given to you if asked)

1. The Canadian personal and commercial banking industry is made up of 5 major players: The Big Five
banks (Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia, Bank of Montreal,
Canadian Imperial Bank of Commerce). Theyare all very similar, offering diversified financial services and
playing in all 4 segments.
2. Market share is defined on a % of customers basis. The market shares are as follows:

 The #1 player Royal Bank of Canada has 20% market share.

 We are the #2 player and have an 18% market share.
 The rest of the industry is somewhere between 15% – 18%.
The market share within each of the 4 segments does not break down in this same fashion. Everyone is
profitable and established and no one is pricing their products irrationally.

3. The client company BMO’s market share by segment is as follows:

 Checking Accounts – 21%

 Saving Accounts – 20%
 Loans – 23%
 Mortgages – 10%
4. The client BMO’s profit per transaction is as follows:

 Checking Accounts – $5
 Saving Accounts – $20
 Loans – $100
 Mortgages – $1,000
Exhibit 1. Sales Force Profitability
Note: The chart above depicts the profitability of different types of sales agents with regard to the
mortgage business. “Profitability” of each individual sales agent is defined as the incremental $ profit
margin (in thousand $) each brings in. Telemarketers clearly bring in the most profit margin $s in
aggregate, but mortgage agents bring in the most from new business.
Suggested Approach:
A thoughtful and complete answer to this “increasing market share” case involves discussing the overall
market environment, with a look at the competition in the marketplace and the current market share
breakdown. The candidate should realize that there are 4 separate markets for distinct products that have
different profitability characteristics. It becomes apparent that investing in some lines of business will pay
off for the company more than investing in others. From there, a discussion of the economics of each of
the different sales channels will drive you towards a recommendation.

1. Determine the competitive position of the company

 What is the competitive position of the company in the overall market?

2. Assess the importance of the different lines of business

 Where does the bank play? What is its strategy? How does it make its money?
 What is our market share in each line?
 What is the importance of each line to the overall business? How do the different lines fit into the
overall strategy? Which lines are the most profitable? Are there any loss leaders?
 What can the company expect to achieve from investment in each line?
3. Understand the impact of the different categories of sales force

 Which lines of business will be affected by increased investment in each category?

 What is the expected ROI for each category?
4. Formulate an investment strategy for the bank to follow

Possible Answers:
Candidate: Before we start, I would like to clarify what a mortgage agent actually does. Can you walk me
through that?

Interviewer: Sure. The mortgage agents work by having relationships with real estate brokers. When a
broker makes a sale, he refers the buyer of the home to a mortgage agent. That agent works with the
home buyer to close the transaction and sell the mortgage.

Candidate: That makes sense. I’d like to figure out what the current market situation looks like. How many
players are there and what is the breakdown in terms of market share? Is everyone profitable? Are there
any new players? Any new trends like internet banking?

Interviewer: The market is made up of 5 major players: the five largest banks in Canada. They are all very
similar, offering diversified financial services and playing in all 4 segments. The market shares are as
follows: the #1 player Royal Bank of Canada has 20% market share. We are the #2 player and have an
18% market share. The rest of the industry is somewhere between 15%-18%. However, the market share
within each of the segments does not break down in this same fashion. Everyone is profitable and
established and no one is pricing their products irrationally. There are some new trends emerging such as
internet banking, but they are not a factor at this point, and the BMO CEO is not worried about that.

Candidate: I see. Do we know how our market share breaks down in each of the four different segments?

Interviewer: Yes, we do. Our breakdown by segment is as follows:

 Checking Accounts – 21%

 Saving Accounts – 20%
 Loans – 23%
 Mortgages – 10%
Candidate: That is interesting. Is there a different profitability level for each of the four different segments?

Interviewer: Yes, there is. As a matter of fact, profitability per transaction is as follows:

 Checking Accounts – $5
 Saving Accounts – $20
 Loans – $100
 Mortgages – $1,000
Candidate: I would like to explore a few more possibilities, but first, I want to just say that my gut instinct is
that we can increase our sales force, and I think that we should do it in the mortgage agent area.

Interviewer: That is a good insight. Why do you think that is?

Candidate: Based on the existing market shares, it seems like we have the most room to improve our
business in this area. Additionally, given the parity between the competitors in the industry overall, I think
it would be very difficult to dramatically increase share in any of the other areas. Therefore, we should
concentrate on the mortgage market. From there, we need to see what part of the sales force will have
the greatest impact on this market. Do we have any information on the profitability of each of the
salespeople and how much new business each arm brings in?

Interviewer: Yes, the CEO has given us this exhibit (See Exhibit 1: Sales Force Profitability).

Interviewer: What does this chart tell you?

Candidate: This chart shows that telemarketers are the most profitable place to put our money in terms of
increasing our sales force. How are they generating these profits? What are they actually doing?

Interviewer: They call up existing customers to get them to renew their old services.

Candidate: I see. In that case, it looks like my initial hunch was correct. Since the other 2 sales forces will
increase profits based on existing customers, the mortgage agent is where we can drive market share
growth by winning new customers. In terms of making an overall profit, the telemarketers would be the
right way to go. However, since the CEO has explicitly stated that he wants to increase market share,
mortgage agents are where he should be bulking up the sales force.

Interviewer: Thank you. Out of curiosity, can you give me an example of where adding branch managers
might be a good decision? What would you need to look at?

Candidate: We could do a study of each branch to see how many customers come through the door and
how many of them are existing customers versus potential new customers.

Interviewer: OK. Let’s say we did that and we found out that in each store, there are 4 branch managers
and they, on average, service 40 potential new customers that come through the door everyday. What
would you have to look at when deciding whether or not to add more branch managers?

Candidate: I think you would have to look at whether or not the existing 4 managers can handle 10 new
customers per day. If they can handle that amount of customers, then there is no need for more
managers. In that situation, if we were to add a 5th manager, each manager would then be responsible
for 8 new customers on average, but that would just create idle time and not generate any new
customers. If however, there are long waiting times and potential new customers are getting fed up and
leaving, then perhaps adding new managers would make sense.

Interviewer: What else could change that could cause the bank to want to add more branch managers?

Candidate: If you can drive additional potential customers through the door. Perhaps a changing trend in
the market will create a new opportunity, i.e. adding a new product that may draw in more non-customers
who are interested in becoming a customer or a new advertising campaign that is drawing in more
people. In any of those types of scenarios, it may make sense to add additional branch managers.
Interviewer: I think that makes a lot of sense. Time is running up. Let’s wrap up here. Can you make your
final recommendation to the CEO?

Huntington Memorial Hospital to Cut Budget by $100 Million

Case Type: reduce costs; increase revenues.
Consulting Firm: Deloitte Consulting (Strategy & Operations) first round job interview.
Industry Coverage: healthcare: hospital & medical; non-profit organization.
Case Interview Question #00572: Our client the Huntington Memorial Hospital is a 635-bed not-for-profit
hospital located in Pasadena, California. It is named after Southern California businessman and booster
Henry E. Huntington. Huntington Memorial Hospital is a community-based medical

center,  which provides acute medical care and community services to the San
Gabriel Valley and nearby communities. The hospital is a world class destination for the treatment of
epilepsy, prostate cancer, robotic minimally invasive surgery and bariatric surgery.
Historically, the Huntington Memorial Hospital has been doing very well. In the last few years, however,
the hospital has been hurting. The 635 bed institution has had consistently high patient volume growth,
but is seeing a rise in the number of uninsured patients. Recently, it has been under operating margin
pressure from the local government that is requiring the hospital to reduce its budget $100 million over the
next three years. As a stipulation, the hospital cannot forgo service in this budget cut – it must maintain
the same standard of service. At the same time, the management of Huntington Memorial Hospital are
also looking for various ways to grow revenue.
Your consulting firm has been retained to assist the hospital management. What do you recommend
about the budget cut, and how do you recommend growing revenue? Finally, what implementation
challenges to do you see in your recommendations?

Additional Information: (to be given to you if asked)

1. Product

 The Huntington Memorial Hospital is known for decent quality – relative to its competitors it is
middle-of-the-road
 The hospital provides a wide range of service, from simple medical examinations to high-end
surgery procedures (e.g. from ankle sprains to brain surgery)
 There is a growing demand for higher-margin services, like emergency room procedures
2. Capacity
 The hospital management have noticed unused capacity in their hospital – high quality doctors
are spending time doing routine medical examinations
 Also, they have noticed doctors are working outside of their profession in an effort to speed-up
the process
3. Costs

 Major variable costs: personnel and supplies

 Doctors have been forced to take care of administrative tasks
 Supply use has been high (ask the candidate how he/she would evaluate this, answer:
compare waste to comparable peer hospitals)
 Specifically, the volume of disposable waste has been growing
 Major fixed costs: utilities, SG&A (Selling, General and Administrative Expenses), sales and
marketing, and capital expenditures (e.g. equipment upgrades)
Note to Interviewer:
This case focuses on data collection and diagnosis. The problems with the hospital are not difficult to
diagnose, but it is more challenging to gather the data and understand exactly how to re-do the budget so
that $100 million can be saved over the next three years.

As the interviewee asks questions about the hospital, ask the interviewee how he or she would collect the
data to answer each question. Then, as problems surface, ask how the interviewee would compare those
data / results to other data available.

Possible Answer:
1. Addressing Capacity Issues

 The hospital management can hire additional talent in areas that are needed
 Re-align doctors: The hospital management should have their doctors stay within their own
practice to keep the organization efficient and ensure they are working on what they are best at
 Data
 The candidate would want to collect information about hospital beds usage rates, and
doctors’ hours worked
 Then the candidate can compare the data to internal metrics over time, and compare to
other peer hospitals
 Patient turnover
 The hospital can make their beds more compact
 The hospital should encourage home-care whenever possible to lower turnover
2. Addressing Profit Issues

 Personnel cost
 Instead of letting high quality (and expensive!) doctors do routine medical examinations,
the hospital could hire lower salaried generalists to deal with these kind of low margin procedures
 Supplies cost
 Volume: encourage lower use of disposables (be environmentally friendly)
 Price: re-negotiate cost of supplies with vendors, or even look for new, cheaper vendors
 Utilities cost: no problem
 SG&A cost: few problems
 Sales and marketing cost: no problem
 Equipment upgrade cost:
 Focus on equipment maintenance to reduce frequency of repair
 Lower the quality of luxury equipment – perhaps use lower quality beds
 Revenue growth:
 Focus on high-margin services, such as emergency room procedures
 Advertise in other communities and in national medical journals or national conferences
3. Recommendation

a. Improve efficiency:

 Change talent pool to reflect service needs: hire generalists, re-align doctors, re-shift work focus
 Capacity: put hospital beds closer together, encourage home care to reduce turnover
b. Cut Costs:

 Reduce volume (work with nurses & doctors) and price of supplies (work with suppliers)
 Cut unnecessary equipment costs, reduce quality if necessary
c. Increase Revenue:

 Change service offering

 Grow customer base in new geographies
Potential Risks with the recommendation:

 Economic risk: financial crisis, credit crunch, housing market problem, high unemployment rate
 Legal risk: ramifications with local government?
 Internal risk: unions / bureaucracy that make change difficult?
 Competitive response: how will other hospitals react?
 Community risk: PR issues with cutting quality in some areas
Colt Responds to Beretta’s Entry to U.S. Market
Case Type: business competition, competitive response; increase sales.
Consulting Firm: IBM Global Business Services (GBS) first round job interview.
Industry Coverage: aerospace & defense.
Case Interview Question #00553: Our client Colt’s Manufacturing Company (CMC, formerly Colt’s
Patent Firearms Manufacturing Company) is a United States firearms manufacturer headquartered in
Hartford, Connecticut. Colt is best known for the engineering, production, and marketing of firearms over
the later half of  the 19th and the 20th century. Colt’s earliest designs played a
major role in the popularization of the revolver and the shift away from earlier single-shot pistols. The
most famous Colt products include the Walker Colt, Single Action Army or Peacemaker, and the Colt
Python.
Colt has been the national market leader of firearm manufacturing and sales for more than 150 years.
Recently, however, they have seen a sharp decrease in sales. What are the reasons of their sales drop
and what can we do to proliferate sales?
Additional Information: (to be given to candidate if asked)
 Colt’s market share in year 2011 was 45%; in 2009 was 55%.
 The firearms industry in the U.S. has grown by 3% annually in the last two years.
 The most popular “Colt M1911″ pistol constitutes 70% of Colt’s sales. Remaining sales are from
specialty firearms suppliers.
 Costs of production, distribution and marketing have not changed over the last two years.
 Prices increased only with the rate of inflation.
 Brescia, Italy based Italian firearms manufacturer Beretta entered the U.S. market in 2007 and
has since been growing rapidly. They outsource their production and thus offer a cheaper alternative:
the “Beretta M9″.
 Besides a few small local companies, no new company has entered the U.S. firearms industry.
Possible Answer:

The decrease in the client’s sales are due to the new market entrant “Beretta”. This case presents a
typical problem of competitive reactions to a new market entrant and increasing sales. A good framework
early should help pinpoint the problem quickly. Then, a clear framework for driving sales, along with
creative solutions, wrap up the case well.
1. Realizing Issue

The decrease of the sales are due to the recent competitor “Beretta” entering the U.S. market.

2. Frame Solutions

We should find the competitive response to revamp our sales. For example, divide growth strategies into
four categories: sell existing products / launch new products to existing / new customers. Then brainstorm
within this 2 by 2 matrix.

3. Brainstorm and Present Solutions

 If Beretta is producing firearms cheaper, Colt can focus on their competitive advantage: quality
manufacturing and a premium market position: Market our quality, safety and superior security.
 Colt is a U.S. tradition and many of the target firearm users are patriotic: Market our history.
 Create a cheaper firearm product line to compete with the Beretta M9 (new brand name).
 Expand product lines outside firearms.
 Expand to new geographic markets.
 Evaluate and compare various solutions.
Durawear Boots Company to Increase Sales & Market Share
Case Type: increase sale & market share.
Consulting Firm: Monitor Group second round job interview.
Industry Coverage: Apparel, Clothing & Textiles.
Case Interview Question #00544: Your consulting firm has been hired by Durawear, a boots company
based in Madrid, Spain with annual men’s footwear sales of approximately 1.0 billion Euro. Historically
Durawear had very strong position in the work boots sector. However, since the early 2000s when the

company began selling  casual shoes and focusing on the growth opportunity in
casual boots, sales of the Durawear work boot product line have steadily declined. Also, around the same
time Durawear shifted its emphasis, one major competitor became much more assertive in the work boot
market, increasing its market share to 43% in just three years.
Your consulting firm has been retained by Durawear to help develop a growth strategy. The goal is to
increase both Durawear’s sales and market share. Your case leader wants you to crunch some numbers
and present some findings to him. Use the following data to complete the assignment from your case
leader.
Additional Information: to be provided along with the exhibits
Durawear manufactures both work boots and casual boots and supplies to three customer segments
namely Laborers (Blue collar workers), Executives (White collar workers) and Students.

Population in each of the three customer segments:

 Laborers: 11 million
 Executives: 12 million
 Students: 7 million
Laborers buy 2 pairs of work boots per year whereas all others purchase only one pair per year.

Durawear charges 150 Euros per pair of work boots and 100 Euros per pair of casual boots.

The work boot market is expected to grow at 5% per annum through 2012 and the casual boot market is
expected to grow at 12.5% per annum through 2012.

Questions for the candidate:

1. Calculate the market size for each of the work boot and casual boot segments
2. Calculate the total revenue and profit earned by Durawear in work boot and casual boot products
3. Which product segment is most important to Durawear and why? What strategy should they follow for
each of these segments?
Possible Answers:
1. Calculate the market size for each of the work boot and casual boot segments
a. Work Boot

Customer % buying # of pairs of boots Price per

Segment Population work boots bought/year pair in Euros Segment Size in Euros

11 million * 60% * 2 *
Laborers 11 MM 60% 2 150 150 = 1.98 billion

12 million * 25% * 1 *
Executives 12 MM 25% 1 150 150 = 450 million

7 million * 15% * 1 *
Students 7 MM 15% 1 150 150 = 157 million

b. Casual Boot

Customer % buying # of pairs of boots Price per

Segment Population work boots bought/year pair in Euros Segment Size in Euros

11 million * 20% * 1 *
Laborers 11 MM 20% 1 100 100 = 220 million

12 million * 35% * 1 *
Executives 12 MM 35% 1 100 100 = 420 million

7 million * 55% * 1 *
Students 7 MM 55% 1 100 100 = 385 million

2. Calculate the total revenue and profit earned by Durawear in work boot and casual boot products

Work boot Casual boot

Total market size (Euros million) 1980 + 450 + 157 = 2587 220 + 420 + 385 = 1025

Durawear market share 16% 40%

Durawear revenues 2587 * 16% = 414 1025 * 40% = 410

Durawear profit margin % 15% 22%

Durawear profits (Euros million) 414 * 15% = 62 410 * 22% = 90

Question #3: Which product segment is the most important to Durawear and why? What strategy should
they follow for each of these segments?
Possible Answer:
Casual boots segment is more important for the following reasons:

 Profits are higher (90 million Euros vs. 62 million Euros)

 Casual boots will grow at a higher rate in the future
The client Durawear should deploy a defensive strategy for work boots segment and aggressive strategy
for casual boots segment. Candidate should also consider other things like what competitors are doing in
each of these segments and what capabilities does Durawear possess.

Home Improvement Chain Menards Increase Sales by $2 Billion

Case Type: improve profitability; increase sales/revenues.
Consulting Firm: Mercer Management Consulting second round job interview.
Industry Coverage: retail.
Case Interview Question #00543: Your client Menards is a chain of home improvement retail stores in
the United States. The company is privately held and is headquartered in Eau Claire, Wisconsin. They
have a national presence, with more than 250 stores in 13 states. Currently Menards is the third largest

(by sales) home  improvement company in the U.S. after The Home Depot
(NYSE: HD) and Lowe’s (NYSE: LOW). Their annual revenue is estimated about $15 billion and current
operating margins are about 4%. They have been facing declining sales for the past two years.
You have been hired by the CEO of Menards to help them increase sales. Specifically your
recommendation should help them increase sales by at least $2 billion in the next two years and should
help them improve profit margins to 5%. How would you about it?
Possible Solution:
This case has to be dealt in a very cautious manner because “increasing sales” alone is not the goal. If
the sales are declining only in the last 2 years then some “External” or “Internal” changes should have
taken place. The challenge is to identify them.

Before that a few questions about the client’s declining sales will help focus on the right areas. For
example:

 Did the sales decline for all players in the industry or only for our client Menards? – Only for our
client
 Is sales declining across all stores or is it specific to any geography? – All stores and not
geography specific
 Is the same store sale declining or is it declining in the newly opened stores? – Same store sales
declining
 Did the sales decline in any particular quarter or month? – Decline has been more or less uniform
across quarters. However it is showing an increasing trend
 Is the decline specific to any particular set of products? – Across all products
 Is the decline uniform across all customer segments or is it specific to any particular segment? –
Provide the following data to the candidate. Guide candidate to this question if he/she doesn’t get
here within first 10 minutes.
Bulk buying Small Do-it-yourself Total
Customer Segment contractors professionals customers Sales

2009 revenues (in $

billion) 7.5 4 5 16.5

2010 revenues (in $

billion) 7.75 4.25 4 16

2011 revenues (in $

billion) 8 4.5 2.5 15

From the above data table, it is clear that the “Do-It-Yourself” (DIY) segment revenues have been
declining in the past 2 years. Ask the candidate for his/her hypothesis on why this could be happening.
Ask for at least 5 – 7 different hypotheses. More the number of important hypothesis, more points
candidate gets.

Additional Information: to be provided to the candidate

After exploring the possible causes tell the candidate that in a survey with the customers it is found that
the customer service levels at competitors stores has improved significantly for small customers and the
apparently this could be a major reason for customers moving to competitors. Probably the company is
focusing more on contractors who place bulk orders and on professionals who have been shopping at
Menards for several years and tend to be loyal and are mainly price conscious. DIY customers don’t mind
migrating to competitors and have a very diverse set of service expectations.

Question #2: How can you confirm this hypothesis? And what are the different areas of customer service
that the client can possibly look at?
Possible Answer:
The candidate should be able to give a list of things that the client should explore about customer service
levels for the DIY customers. For example:

 Return policies
 Improve product availability
 Online ordering or over the phone ordering
 Customer loyalty programs
 Training for DIY customers
 Extend the store hours
 Home delivery
 Installation support
 Order online and do quick pick up at shop
 Train the staff to be polite to all customers irrespective of the value of purchase they make
 Introduce technology ex: self-service counters
 Open food counters at the shop
Question #3: Before presenting your recommendations to Menards, you should prioritize the options and
ensure that they can help the client achieve its sales and profit margins goal. Present the following chart
(Figure 1) to the candidate and ask him/her to pick the top 4 actions.
Figure 1. Incremental revenue in $ million from possible new initiatives.

It is natural for candidate to jump the gun and add up numbers and select the initiatives based on revenue
alone. But the goal is also to increase overall profit margins to 5% after implementing these
recommendations. The following calculations explain it:

Current Revenue = $15 billion

Revenue in two years after implementing recommendations should be = $15 + $2 = $17 billion
Profits = 5% * $17 billion = $850 million
Current profits = 4% * $15 billion = $600 million

So, the candidate has to choose those initiatives that will sum up to $2 billion incremental revenue and at
least ($850 – $600) = $250 million dollar additional profits. So the candidate has to ask for profit margins
for each of these initiatives because the cost structure for each of these initiatives is different. Provide the
following profit margins % data only when asked.

Additional Information:
Incremental revenue ($ Profit Profits ($
Initiative million) margins million)
Extend Store Hours 350 12% 42

Introduce financing schemes for buyers 700 6% 42

Free Home Delivery 650 10% 65

Customer Loyalty Program 450 12% 54

Training Classes for customers on self

installation 800 10% 80

On call installation support 400 9% 36

Provide warranty support and insurance for

purchases 750 8% 60

From the above profit margins data, it is clear that the top 4 initiatives should be

1. Training classes for customers

2. Free home delivery
3. Provide warranty support and insurance services for purchases
4. Introduce customer loyalty program

In total, these 4 initiatives will bring approximately

$800 + $650 + $750 + $450 = $2,650 million in revenues
and $80 + $65 + $60 + $54 = $259 million in profits

Question #4: Ask the candidate to give a 30 second summary of his/her findings and recommendations.
LabCorp Concerned About Revenue Loss Due to Competitions
Case Type: increase sales/revenues.
Consulting Firm: IMS Health Consulting Group second round job interview.
Industry Coverage: healthcare: hospital & medical.
Case Interview Question #00521: Your client Laboratory Corporation of America Holdings (NYSE: LH),
more commonly known as LabCorp, is an S&P 500 company headquartered in Burlington, North
Carolina, United States. The company operates one of the largest clinical laboratory networks in the

world, with a United States  network of 36 primary medical laboratories.

LabCorp’s clinical laboratories cater to patients who need MRI, CT scans and other major tests to be
performed. The labs own several expensive testing equipments and the chain has currently about 200
such labs worldwide. Doctors usually refer the patients to these testing centers. Historically your client
LabCorp were very profitable. Recently, however, the company has been worried about the profits and
has hired you to evaluate the situation. What would you do?
Notes to Interviewer:
There are no specific profit targets. The idea of this case is to see if the candidate can generate as many
reasons for potential sales decline, cost increase and price reduction. This way you can test the
candidate’s “Clock-Speed”. Then later make the candidate go through a bunch of Math to test his/her
quantitative skills.

Suggested Structure:
As mentioned above the candidate should address the following points

Question #1: Why would the sales be flat or going down? The candidate should give at least 7 reasons.
If they don’t reach this limit, keep asking “what else?”. Once they reach, move to the next point.
Question #2: Why may costs be going up? The candidate should give at least 7 reasons. If they don’t
reach this limit, keep asking “what else?”. Once they reach, move to the next point.
Question #3: Why may price be going down or not increasing? The candidate should give at least 4
reasons. If they don’t reach this limit, keep asking “what else?”. Once they reach, move to the next
question.
Question #4: In your analysis you find that some of the doctors who refer the patients to the client’s chain
of test centers have started testing labs in their own clinics and this will impact the client’s revenues. Can
you look at the following table and chart (Figure 1) and find out the expected % impact on the client’s
revenue?

Possible Answer:
Only doctors who can make profits by owning labs will be willing to invest in expensive lab equipment.
Intuitively doctors who get more patients per day will be able to make profits. So the number of patients a
doctor needs per day to ensure payback for the investment he/she makes has to be calculated. The
candidate has to figure this out. Only after the candidates crack this idea, give the following additional
information.
Additional Information: (provide the following data only when asked)
Fixed Cost of Equipment to start a
lab $800,000

Average price charged per customer $500

Variable cost per customer $420

Life of the equipment in years 5

No. of days per year 50 weeks, 5 days per week

Calculations: The calculations are shown below for the interviewer’s reference

A Fixed Cost of Equipment to start a lab $800,000

B Average price charged per customer $500

C Variable cost per customer $420

D Breakeven quantity (No. of customers) A/(B – C) = 10,000

E Life of the equipment in years 5

F No. of customers per year D/E = 2000

G No. of days per year 50 * 5 = 250

H No. of customers required per day to break-even F/G = 8

Note: No discounting of cash flow is required when considering the revenues from customers over a 5
year period.
Thus, only doctors who get at least 8 patients per day will be able to get a pay back within 5 years. This
means only doctors who get more than 8 patients per day will start their own labs and steal revenue away
from our client. So out of the total revenue of $300 million (Add from Figure 1), revenues of about $12
million may be lost (6 + 6 = 12). This means about $12 million / $300 million = 4% loss of revenue.

Question #5: What can the client LabCorp do to remedy this situation or how should the client respond to
this situation? Creative ideas win points here.
First Gulf Bank Reverses Trend of Declining Market Share
Case Type: increase market share.
Consulting Firm: KPMG Advisory 2nd round job interview.
Industry Coverage: banking.
Case Interview Question #00512: The client First Gulf Bank (FGB, ADX: FGB) is a large retail bank
headquartered in Abu Dhabi, United Arab Emirates (UAE) in the Middle East. The bank provides financial
services across the UAE, with a wide distribution network of branches in different business & industrial

areas such  as Abu Dhabi, Dubai, Sharjah, Ajman, and Al Ain. Within the UAE, it
is also often known by its Arabic name Bank Al Khaleej Al Awal.
Even though banking and financial services industry has the fastest growing rate in the Middle East
region, the client First Gulf Bank is losing market share. Its technology and service levels are just as good
as any of its foreign competitors. The CEO of FGB wants to know why this is happening and what could
be done to reverse the trend of his bank’s declining market share. You have been hired as a consultant to
advise him. What would you do? What recommendations would you give to the CEO of FGB?
Possible Answer:
Candidate: Firstly, I would like to know what is the metric to define market share – is it in terms of number
of customers or in terms of the net deposits/loans?
Interviewer: Both, actually. The client FGB is losing market share on both these counts.

Candidate: Given this scenario, I’m assuming that customers are not choosing this bank and are opting
for the foreign banks instead. Is that a fair assumption to make?

Interviewer: Yes, you can proceed with that assumption.

Candidate: In my understanding, there are about 5 factors that can affect the customer’s choice of bank.
They are:

 Service: Is there any specific service which the customers are seeking but is not provided by this
bank? Is the client’s services basket offered any different from those of its foreign competitors?
 Cost: Is the cost of servicing for the client any different vs. its competitors?
 Quality: Is the service level, service quality, customer care, etc. provided by the client inferior in
any way to the competitors?
 Convenience: This could refer to difference in terms of location of branches, ATMs, bank working
hours, etc.
 Perception: Is there something about the bank’s image or brand which creates a negative
perception in the customer’s mindset?
We already know that the bank has good service levels, so let’s consider the other 4 parameters.

Interviewer: The services provided by FGB are the same as the other banks, no special product or
service. Its servicing charges are also more or less the same as other banks. In terms of convenience, it
is located in the same locations as other banks and is also equally convenient. What do you mean by
perception?
Candidate: By perception, I mean what customers think of this bank and the image they associate with its
name. For instance, foremost, banks need to be trustworthy, and do customers perceive the client bank
as such?

Interviewer: Let’s first talk about the customers. What kind of customers are we talking about?

Candidate: The bank could have both individuals and businesses as their customers. These customers
could be further segmented on age, income or services used.

Interviewer: Let’s stick to individual customer for the time being. Besides the parameters you just
mentioned, how else could we segment them? Try to think around the people mix you’d find in Dubai.

Candidate: Yes, considering that more than half the population in the Middle East is expats, these
customers can further be segmented on their country of origin. Is that right?

Interviewer: Yes.

Candidate: Considering this method of customer segmentation, is the client losing market share
specifically in one of these segments?

Interviewer: Indeed, the client is losing business mainly amongst the expat population. Why do you think it
is so?

Candidate: Can I take 30 seconds to review my thoughts?

Interviewer: Sure.

Candidate: (After the break) Are the expats mostly here for a short while? Or, did they grow up in the
Middle Ease itself?

Interviewer: They are here for a typical period of 5 – 10 years and most of the customers in this category
did not grow up in the Middle East.

Candidate: There are three things that could explain the low market share among expats:

 Perception: Expats may not know the local banking brands well and hence may not consider
them trustworthy. They may have a different perception than the locals.
 International Connectivity: Another major requirement of expats is the ease of sending money
back home. It’s possible that customers choose banks which facilitate this more easily.
 Home Banks: Many expats may already have existing accounts and relations with their respective
domestic country banks and thus would prefer to continue banking with the same bank and avoid
switching over to a local bank.
Interviewer: Let’s look at the “perception” parameter more closely. What are some of the primary factors
that influence perception?

Candidate: There would be three important factors affecting perception:

 Name/Logo/Color
 Advertisements, marketing messages
 Word of mouth
Interviewer: Great! That was a real-life case situation I was once involved in. The name of the bank used
to be in Arabic so expats could not associate with it well. Thus, we asked them to rebrand themselves as
First Gulf Bank. Besides rebranding, what else can the bank do?

Candidate: The client could tie-up with other organizations that hire expats. These organizations are
usually the first point of contact for the expats in a foreign country and thus could significantly influence
them. The client could also introduce easier ways for the expat customers to transfer money to their
domestic countries.

Interviewer: Excellent job. Now, can you summarize your findings for me?

Electrolux to Address Falling Profitability & Market Share

Case Type: improve profitability; increase market share.
Consulting Firm: IBM Global Business Services (GBS) second round job interview.
Industry Coverage: consumer electronics; household goods
Case Interview Question #00510: Our client is Electrolux USA, the North American subsidiary of
multinational home appliance manufacturer Electrolux (OMX: ELUX B, NASDAQ: ELUXF). With its global
headquarter located in Stockholm, Sweden, Electrolux is the world’s second-largest home appliance

maker by market share  after Whirlpool (NYSE: WHR) as of 2010. Its products
sell under a variety of brand names including its own Electrolux and are primarily major appliances such
as refrigerators, freezers, microwave ovens, washing machines, driers, dishwashers, vacuum cleaners,
air conditioners, etc. Forbes Magazine rates Electrolux as one of the top 5 companies in consumer
durable goods worldwide. Total revenue is estimated 106.33 billion Swedish krona (SEK) for fiscal year
2010.
Historically Electrolux USA has enjoyed high profitability established by its market leader position. Over
the past three years, however, Electrolux USA’s profit margins have fallen 20 percent. Its market share
has also tumbled from 25% three years ago to 15% at present. You have been hired by the CEO of
Electrolux USA to investigate the problem. How would you go about it? What is the source of the client’s
problems?
Possible Answer:
This is a classical example of the “declining profitability and market share” type of case question. The
interviewer has done you the favor of defining the problem – your client Electrolux is in something of a
slump! The dialogue below illustrates how you, the perspicacious candidate, might drill down into the core
of the woes besetting the client.

Candidate: First of all, how would you characterize the current marketplace for these home appliance
products? Emerging or mature?
Interviewer: The product line is considered mature.

Candidate: How would you characterize your manufacturing process relative to your competition? (The
candidate is looking to see if the client company has a strategic advantage.)

Interviewer: Can you be more specific?

Candidate: Do you benefit from an advantage in technology, economies of scale, exchange rates, or
other manufacturing element over your competition?

Interviewer: We have not updated our manufacturing process since the 1990s. We manufacture our
products exclusively in the United States. As one of the oldest manufacturers of these products, we have
a reliable customer base and a good reputation. As for price, we are one of the lower-priced in the
market, though not the lowest.

Candidate: Do any of your competitors manufacture overseas?

Interviewer: Our number one competitor Whirlpool produces most of its appliances in Indonesia. (Here’s
your clue – manufacturing outside the country significantly lowers costs.)

Candidate: I see. It probably suffices to say that some of your decline in profitability can be attributed to
the increased costs you are facing relative to older manufacturing techniques and higher costs associated
with manufacturing domestically. This is especially toxic in a mature market where consumers are mostly
aware of the product category and the product may be considered a commodity. (A commodity
marketplace is one in which customers make their purchasing decisions largely on price. For example,
toilet paper is largely a commodity market, where consumers buy whatever’s on sale.)

Interviewer: Good. Let’s talk about market share now.

Candidate: Can you tell me about any recent market research you have regarding the strength of the
client’s brand, price, their products’ position, and any promotional activity you have had?
Interviewer: Our market research department has told us that consumers are confused about the product
category, that they do not understand the differences between our brand and our competitors’ brands. We
sell to all major appliance retailers in the U.S. We promote aggressively twice a year, and have smaller
promotions once a quarter. (This is consistent with the description of a commodity product. The ways of
breaking out of commodity markets include promotions and making value-added differences in the brand
– like, in the case of toilet paper, introducing new designer colors and specially quilted cotton-blend
paper.)

Candidate: What form does your promotional activity take?

Interviewer: We offer a price discount to consumers twice a year. We regularly advertise in major
magazines targeted to our consumer, and we have an active outdoor campaign underway.

Candidate: It would appear you are competing in an undifferentiated marketplace and there may be an
opportunity to capture additional share through an aggressive brand differentiation effort. I believe it would
also be worth investigating the efficacy of your current promotional programs, relative to your competition.
The consumer may be responsive to other types of promotions that haven’t been utilized by the company
as of yet.

Interviewer: Good point! I think we run out of time. Let’s take a break.

New Holland Adapts New Technology in Direct Combines

Case Type: improve profitability; increase sales.
Consulting Firm: ZS Associates final round job interview.
Industry Coverage: industrial equipment; agriculture, farming.
Case Interview Question #00491: Our client New Holland is a full range manufacturer of agricultural
equipment. New Holland’s agricultural product lines include tractors, combine harvesters, balers, haying
tools, equipment used in lawn, grounds and turf care, grape harvesters, etc. The company was acquired

by Ford in 1986 and  by Fiat in 1991, becoming a full line producer of agricultural
equipment. Since 1999, New Holland is a brand of global agricultural and construction equipment
manufacturer CNH Global (NYSE: CNH) and part of Fiat Industrial (BIT: FI).
In recent few years, four of New Holland’s major agricultural product lines have been facing declining
sales. We have been brought in to examine the cause of the problem and to recommend initiatives to
improve their profitability. How would you go about analyzing the case? What recommendations would
you give to the client?
Possible Answer:
This is an “improving profitability” as well as “increasing sales” type of cases.

Candidate: Interesting case. I think there are two broad drivers contributing to declining sales for New
Holland – decreasing unit sales, decreasing unit price, or a combination of both of these drivers. To
proceed, I would like to examine both themacro and micro perspectives to understand the reasons for
declining sales.
Interviewer: Sounds like a good plan, go ahead.

Candidate: For the micro perspective, I would need to understand details of New Holland’s business. For
the macro perspective, I would want to study the changes in the agricultural equipment industry over the
last few years due to new competitors, emerging technology, changes in consumer demands, and other
factors.

First of all, I’d like to study New Holland and its sales trends across the 4 product lines.

Interviewer: The sales trends for New Holland across its four product lines are detailed in this exhibit.

Sales
Sales % Gross Margin

Product
Lines/Year 2008 2009 2010 2010 2010

$534
Direct Combines $578 M M $470 M 67% 43%

$142
Tractortronics $146 M M $130 M 19% 21%

Crossmaries $50 M $56 M $68 M 10% 17%

Hewittrangers $30 M $30 M $32 M 5% 19%

$762
Total $804 M M $700 M

Candidate: I see. How about the overall industry growth and our client’s market share?

Interviewer: New Holland has been facing declining market share in a mature, slow growth industry.
There are 3 major players in the agricultural equipment industry. Their market shares for the four product
lines are shown here in Exhibit 2.

Market Players/Year 2008 2009 2010

New Holland 49% 47% 45%

John Deere 36% 39% 42%

AGCO 3% 3% 4%

Others 12% 11% 9%

Candidate: The exhibits on sales trends and market shares over the last 3 years indicates that New
Holland has been losing sales steadily for the Direct Combines and Tractortronics product lines which are
significant contributors to New Holland’s top-line and bottom-line.

Interviewer: OK, so what do you think is causing sales of the Direct Combines product line to decline?

Candidate: Many reasons are possible. It could be new technology, new competitors, change in
consumer demands, change in distribution channels or any other cause.

Interviewer: Great. Actually the agricultural equipment industry has seen an emergence of a new
technology in Direct Combines with John Deere leading the initiative. This has been the primary driver for
change in consumer demands. What else can you think of?

Candidate: The client has also been losing sales for its Tractortronics product line. Do you have any
information about that?

Interviewer: We should not worry about Tractortronics since it is a declining marketplace and its products
are being replaced by Direct Combines.

Candidate: (The last statement above is a strong hint from the interviewer to ignore Tractortronics in our
further analysis, and focus the discussion on the Direct Combines product line) OK, so the emergence of
the new technology explains John Deere’s increased market presence – we can now see that this new
technology in Direct Combines may be a primary driver for the market share shift.

Interviewer: That’s correct. What would you do next?

Candidate: I think the next step is to study the impact of this new technology on the industry and on our
client New Holland. I’d like to know more details about this new technology:

 is the technology here to stay?

 how mature is this technology?
 how sustainable is the advantage due to this technology?
 what are its switching costs for New Holland?
Answers to these questions will help us establish if the technology is worth adapting for New Holland.
If it is worth adapting, we need to address how would we implement this technology change for New
Holland’s products – in terms of switching costs, new product development, marketing and promotion
initiatives, and other issues.

If the technology is not worth adapting or cannot be adopted (due to patent reasons, for example), then
we can examine discontinuing the Direct Combines product line over time.

Interviewer: Good point. I don’t have the answers to all your questions, but I can tell you that this
technology helps significantly reduce maintenance costs and maintenance related downtime of
agricultural equipment by enhancements to the engines and drivetrain. Given our interviews with New
Holland’s engineers and marketing managers, as well as industry analysts, we understand that this
technology is becoming a market standard and will be here to stay. Now what?

Candidate: In that case, I would recommend that New Holland introduce the new technology in its Direct
Combines range of products. Given that this product line is an important source of revenue and we see
existing sales from this product line, we should introduce products with this new technology and plan on a
new product introduction strategy. We would need to examine how New Holland would go about
implementing this recommendation.

Interviewer: Great. How would you go about implementing this recommendation?

Note: This question would lead the discussion towards product development, manufacturing switching
costs, product launch and marketing related issues.
Candidate: I think a number of issues would need to be covered.

Firstly, should this technology be included in existing product lines or should new products be introduced
with this technology? This decision would be driven by demand for existing product lines and costs
associated with either decision.

Secondly, in terms of obtaining this technology, we can examine either developing it in-house or acquiring
a smaller company that has this technology.

Finally, if we have adequate data, we can do some quick “back-of-the-envelope” calculations to work out
market-share trends and break-even analysis.

Interviewer: Excellent! I think we have covered all the points. Let’s take a break now.

Oakbrook Center Use Web to Drive Shoppers into Stores

Case Type: ; increase sales; new business, new technology.
Consulting Firm: Diamond Management & Technology Consultants (now PwC Advisory) 2nd round
summer associate interview.
Industry Coverage: Retail; E-commerce, Online Business.
Case Interview Question #00484: Your client General Growth Properties, Inc. (NYSE: GGP) is a publicly
traded real estate investment trust based in Chicago, Illinois, United States. The company owns

and  manages many shopping malls throughout the United States, for instance,
Oak Brook, Illinois based Oakbrook Center.
Oakbrook Center is an upscale super-regional shopping center located near Interstate 88 in Oak Brook,
an affluent suburban neighborhood of Chicago. Managed and co-owned by General Growth Properties, it
is the second largest shopping center in the Chicago area, by gross leasable area. Current anchor stores
include Bloomingdale’s Home, Lord & Taylor, Macy’s (formerly Marshall Field’s), Neiman Marcus,
Nordstrom and Sears.
Historically, the Oakbrook Center shopping mall has been highly successful. Recently, however, the CEO
of General Growth Properties has noticed a disturbing trend where teens are beginning to spend less and
less time in the shopping mall and more time online. Responding to this trend, your client hired an IT
consulting firm to build a website on the Internet. Unfortunately, the website is not generating the kind of
traffic he was expecting, or if it is, he can’t tell. How should he improve the website to drive more traffic to
the Oakbrook Center shopping mall? How will he measure the results?

Possible Answers:
This IT strategy case requires creativity as well as critical thinking. The client’s goal is to use their website
to drive customers to the physical stores in their shopping mall. Rather than use a traditional framework,
the candidate should explore a broad range of options and support them with logic and data provided.

Candidate: The first place I would like to start is the current design of the website. What features does it
already contain?

Interviewer: Good start. The website contains basic mall information, a chat function with occasional
celebrity guests, a bulletin board for special announcements and teen discoveries, and a wish list where
teens can list what they want, parents can download the list, take it into the appropriate store in the mall
to buy it for their kids.

Candidate: Does the site currently have an e-commerce section where people can buy directly online?

Interviewer: No. Because the site is maintained by the mall, the objective of the site is to specifically drive
traffic into the mall stores. The owner does not want to drive traffic to Macys.com or nordstrom.com.

Candidate: So the issue then is to figure out a way to drive customers into the store from the website.
Interviewer: Yes.

Candidate: OK, I would first start with the wish list function on the website. How does a retailer know that
a parent is purchasing something off the wish list downloaded from the website?

Interviewer: Currently, they don’t know.

Candidate: So, one option is going to be to connect the two up. You might offer a discount off items
purchased from a wish list. If the customer mentions a code or brings in a printed coupon, they receive
the discount.

Interviewer: Sounds good. What else could we try?

Candidate: They might also look at doing special promotions through their celebrity chat room events. By
doing “Internet Only” promotion, they might be able to measure shopping volume changes for specific
events.

Interviewer: Excellent. Are there any other options you might suggest?

Candidate: They might look more carefully at their current affiliation with retailers. Perhaps they could
earn a percentage of sales from directing customers to other retailers’ websites like macys.com or
nordstrom.com. In this way they can truly behave more like an online shopping mall.

Interviewer: Interesting idea. I think you have given some great options. The owner will look closely at
what you suggested.

Note: Depending on allocated time, the case can be expanded even longer. The idea behind this case is
to not stop at just one answer. There is truly no single “right” answer here. The interviewer should ask the
candidate to continue to develop innovative ideas that meet the client’s need (use website to drive
customers into stores).
Philadelphia Orchestra to Increase Revenues from Ticket Sales
Case Type: increase sales or revenues; finance & economics
Consulting Firm: NERA Economic Consulting first round job interview.
Industry Coverage: entertainment & performing arts.
Case Interview Question #00469: The client Philadelphia Orchestra is a symphony orchestra based in
Philadelphia, Pennsylvania, United States. Founded in 1900, the Philadelphia Orchestra is one of the “Big
Five” American orchestras (the other four: New York Philharmonic, Boston Symphony Orchestra, Chicago
Symphony  Orchestra, and Cleveland Orchestra). The orchestra’s home is the
Kimmel Center for the Performing Arts, where it performs its subscription concerts, numbering over 130,
in Verizon Hall.
The Philadelphia Orchestra is currently exploring the possibilities of increasing their ticket sales. So far,
they have relied heavily upon corporate donations and government grants for revenues, and they would
like to increase the proportion of revenues obtained from ticket sales. How would you help them to
accomplish that goal?
Possible Answer:
This is an “increasing revenues/sales” type of mini business cases, with the emphasis being on whether
the candidate is able to focus in quickly on the single main point of the case: supply demand curve. If the
candidate does not immediately jump to it, ask him or her to draw the supply-demand curve after some
quick discussion. The following conversation is one of the many possible discussions.

Candidate: I would like to start by looking at different sources of revenues. Since you have outlined the
problem as one of revenues alone, I am proposing not to get into the costs side of the profitability
equation until later.

Interviewer: Good. Explain what you will look at.

Candidate: Well, the way I look at it, revenues are a function of ticket price and the volume of the tickets
sold. We can look at either, or both of these in turn.

Interviewer: There is not much to be done with the volume. The tickets are always sold out.

Note to Candidate: At this point it was clear that the case giver wanted this to be a price driven case.
The interviewer did not want to discuss other ideas such as merchandising, CD’s, tours, etc. as a source
of revenue, as can be evidenced below.
Candidate: Well, in that case, let us focus on the prices then. How are the tickets priced now?

Interviewer: Yes, let’s examine the prices. Draw me a demand curve for the tickets.

Candidate: (Thinking aloud is OK at this point) Well, I think, without having done a careful study of the
customer segmentation, my first guess is that the customers for a symphony are not very price sensitive,
which means that there is probably plenty of room for price movement with little effect on quantity. Right?

Interviewer: Right. What does it mean for the demand curve itself?

Candidate: Kind of steep (see figure 1).

Interviewer: Good. Now, what about the supply curve?

Candidate: I don’t think the supply will vary at all. No matter what the price is, there are x number of seats
available at any given time.

Interviewer: Very good. Let’s look at the supply demand curve that you have drawn now. What if I tell you
that they are priced at P1 now?

Candidate: Well, since the equilibrium price seems to be at P, I see there is definitely some scope for
price increase.

Interviewer: Good. There were other aspects of this case, but let’s stop here for now. How do you think
you did?

Note to Interviewer:
Obviously, this is a simple case to test candidate’s understanding of basic economic theory, in particular
supply demand curve, and of course you can lengthen it if you wish. Once the candidate correctly
identifies the supply demand curve, you can stop the case.

Fortune Magazine to Spur Growth As Ad Revenues Decline

Case Type: increase sales/revenues; growth.
Consulting Firm: Marakon Associates first round full-time job interview.
Industry Coverage: publishing, mass media & communications.
Case Interview Question #00450: Our client Time Inc. is a subsidiary of the media conglomerate Time
Warner (NYSE: TWX, NASDAQ: TWX), the company formed by the merger of the original Time Inc. and
Warner Communications in 1990. Time Inc. publishes more than 100 magazines, most notably its
namesake, Time.  Other magazines include Sports Illustrated, Fortune, Money,
People, InStyle, Life, GOLF Magazine, Southern Living, Essence, This Old House, All You and
Entertainment Weekly.
For this case, we’re going to be focusing mostly on Time Inc.’s business news segment today. The
magazines in this segment include Fortune, Money, etc, and the business is broken down into two parts:
print and online media. There is a website but it basically just reproduces the news that’s in the
magazines. The business news segment has seen declining revenues over the past 5 years after
decades of very stable growth.
We’ve been hired to consider two things. First, we need to determine why revenues have been declining
and second, we need to recommend some alternatives to stimulate growth. How would you go about the
case?

Additional Information: (to be provided during questioning)

As the interviewer, you should recognize that most of the revenues from the magazine business come
from advertising as opposed to subscriptions. You also will know the results of some prior consumer
research showing that there is low brand awareness from target customers who don’t already subscribe
and former / current readers don’t feel the content is as insightful.

The average reader is now 10 years older than they were 5 years ago.

Of the top 5 magazines doing business news, Time Inc. has the lowest share of that demographic and the
highest price per ad per 1000 readers.

Possible Answers:
Interviewer: What would you look at in terms of addressing the first issue: why revenues decline?

Candidate: (Presenting framework, also brainstorming some ideas for growth, then following the lead of
the interviewer) On a high level, I would like to look into

 first, internal factors such as a change in the price structures or a change in the product;
 also, external factors like competition or market dynamics;
 and customer factors like segmentation or preferences.
Interviewer: That makes sense. I can tell you right away that there was no change in pricing structure or
the product itself, so that takes care of internal factors. Let’s talk about the customers. What would you
want to know about them?
Candidate: I’d like to know who the customers are, what the target is, what they think of the product.

Interviewer: Which customers are you talking about?

Candidate: I’m talking about the people who actually buy the magazine, but those aren’t the only
customers. There are also ad sales in any media business like this one.

Interviewer: Right. And off the top of your head, which would you say contributes more to the client’s total
revenue, subscription revenue or ad revenue?

Candidate: To be honest I’d have to say advertising revenue only because I know television relies on it so
heavily.

Interviewer: In fact it is advertising revenue, and it’s about a 3:1 ratio for ad vs. subscription. So does that
mean we should focus more heavily on advertisers than the subscribers?

Candidate: I’d actually think the opposite. I’d think that we’d want to focus on building a loyal, desirable
subscription base that advertisers want. My general feeling is that if we have the demographics that the
advertisers want to hit, they will not only come to us, but it fact may be willing to pay a premium in some
cases. I wouldn’t see focus on advertisers as being all that useful if we can’t deliver on promises we make
them.

Interviewer: OK, so back to the customers. We look at the numbers and find that subscription is waning.
How would you examine why this is happening?

Candidate: I’d try to look at syndicated reports first to get a sense of where people were turning for
business news, but I think I’d want to go out and speak to the target customers, both subscribers and
non-subscribers.

Interviewer: So you are able to conduct a market research study and you find that those who never
subscribed have very low brand awareness, and those who have lapsed and even some who still
subscribe feel that the magazine is not as insightful as it once was. You also find that the average reader
is now 10 years older than they were 5 years ago. What are your thoughts?

Candidate: Touching on the different things you told me, I’m less concerned about the low brand
awareness because if we have a differentiated, quality product we can advertise it and position it better in
the future. I’m more concerned that people feel the magazine is not as insightful. You said the product
hasn’t really changed, so does this have to do with competition?

Interviewer: What do you think?

Candidate: I’d think so, maybe even to do with the availability of news on the internet. So maybe simply
reporting the news doesn’t get it done anymore. And that could also explain some of the change in reader
demographics – younger people realize they can just go to the internet for basic news, and they get that
instantly.

Interviewer: So that was a key issue. What might Time Inc. do about it?

Candidate: Maybe change the content a bit, do more human interest stories that skew younger. I guess it
depends on what advertisers they want and how far they can go without angering their existing readers.
Maybe do stories about how execs were using technology to solve problems in their organizations.

Interviewer: So who is the demographic here?

Candidate: For a business news magazine, I’d say 35-65, mostly male but not entirely, and high income
bracket.

Interviewer: Right, and who would want to market to those people

Candidate: Business services, leisure, apparel, etc.

Interviewer: So let me give you 2 pieces of information. Of the top 5 magazines doing business news,
Time Inc. has the lowerst share of that demographic and the highest price per ad per 1000 readers. What
does that tell you?

Candidate: They’re overcharging – if they’re not hitting the target demographic (even if they’re hitting
other ones) why would an advertiser pay the most money to advertise with them?

Interviewer: So what do you recommend?

Candidate: Lowering ad prices to be competitive.

Interviewer: Do we want to lower them across the board? What should we be aware of?

Candidate: Well, not all advertisers are the same. Some do more volume and perhaps different industries
have different price elasticities. We should give our volume advertisers bigger discounts so we don’t lose
them unless they are not sensitive to price – we can probably look historically as well as currently to see
trends.

Interviewer: Great! And how about alternative strategies to grow the business to those who haven’t heard
of it?

Candidate: I’d think you can use the website, try to leverage other media within the organization, develop
proprietary content, launch a large ad campaign, etc.
Interviewer: Excellent! I think we are running of time here. Why don’t we just take a break right now, do
you have any questions for me?

Notes:
This case is straightforward if the candidate can talk about the relationship between the end reader and
the advertiser. If practicing with this case, the interviewer should try to get the interviewee to think outside
the box as there was a lot of “idea generation” through the course of the case. An understanding of the
publishing industry is helpful but not necessary, just ask a lot of questions if it’s new territory.

On a high level, the candidate should suggest a framework looking into internal factors such as a change
in the price structures or a change in the product, external factors like competition or market dynamics,
and customer factors like segmentation or preferences. The candidate should be given the opportunity to
brainstorm some ideas for growth, then follow the lead of the interviewer.

Rite Aid Pharmacy Minimize Costs & Expand Client Base

Case Type: reduce costs; increase sales/revenues.
Consulting Firm: A.T. Kearney first round job interview.
Industry Coverage: healthcare: hospital & medical.
Case Interview Question #00446: Our client Rite Aid (NYSE: RAD) is a large drugstore chain in the
United States and a Fortune 500 company headquartered in East Pennsboro Township, Pennsylvania.
Currently as of June 2011, Rite Aid is the largest drugstore chain on the East Coast and the third largest

drugstore chain  in the US with more than 4,500 drugstore locations.

Rite Aid’s prescription drugs distributing division serves primarily retirement homes in the US. In addition
to 15 large warehouses nationwide, the company operates a network of about 300 local dedicated
pharmacies. Doctors from the retirement homes fax prescriptions to the special pharmacy, which then
verifies the patient’s information with the insurance company and issues a prescription. Fulfilled
prescriptions are then loaded on a van and a delivery is made once a day to all of the retirement homes
within that area. You have been hired by the CEO of Rite Aid to help reduce operating costs and increase
revenues. Questions:
 How can our client minimize costs?
 What are some effective ways of inventory control?
 Where should the warehouses and the pharmacies be located?
 How can our client increase revenues by expanding their client base?
Additional Information: (to be given to you when asked)
 The client Rite Aid’s special pharmacies for retirement homes do not have retail opportunity.
 These dedicated pharmacies are small offices served by 1-2 people.
 The transit time from the warehouse to these pharmacies has to be no longer than 3 days.
 A key differentiator of Rite Aid’s service is error-free prescription filling.
 There are some costs involved in setting up each new patient and verifying his/her insurance
information.
Possible Answer:

This is a classic supply chain case. There are several parts to answering the first part of the case
question: Reduce Costs.
First of all, it is necessary to understand that the demand for prescription medicine from retirement homes
is pretty constant and can easily be forecasted. The predictability of demand simplifies ordering process
and decreases the inventory on hand at the pharmacies.

Most of the inventory is stored at the warehouses. This model simplifies drug sorting as larger areas can
be dedicated to the same drug.

The warehouses can be located anywhere where the real estate is cheap and labor costs are low (e.g.
Campbellsville, Kentucky). Pharmacies should be located in densely populated areas with high
concentration of retirement homes.

To Increase Revenues (think constant, predictable demand) and expand their customer base, the client
could expand business with other facilities similar to retirement homes, such as:
 Prisons
 Special care facilities
 Cancer centers
 Psychiatric institutions
 Rehab facilities
 Hospitals are also a possibility, but the demand predictability becomes difficult.
 People spend less time at the hospital, therefore client turnaround is quicker, which
increases set up costs.
Baby Stroller Maker Britax Changes Distribution Channel Mix
Case Type: increase sale or market share.
Consulting Firm: OC&C Strategy Consultants second round job interview.
Industry Coverage: manufacturing; consumer product.
Case Interview Question #00432: Our client is Britax, a London, UK-based manufacturer of automotive
safety equipment such as child car seats, baby strollers, etc. Britax has been a market leader in mobile
safety for more than 70 years, with a legacy of leadership in  developing
innovations that enhance the safety of child car seats and improve their ease of installation and use.
The company designs and manufactures a complete line of child seats and baby strollers, including infant
car seats, convertible child seats, belt-positioning booster seats, modular strollers, compact-fold strollers,
full-size strollers. Their products are sold through both independent and mass retailers all over the world.
For the sake of this case, we’re concerned only with Britax’s US operations.
Britax USA has been in the U.S. market for nearly 20 years and know the car seats and baby strollers
business better than anyone. The company describes the industry as mature and that it typically grows
with GDP. Recently, the CEO of Britax USA, doesn’t know why but he just feels something is not quite
right. As a strategy consultant, you have just been hired by the CEO to determine if there is something
wrong with the business. How would you go about the case?

Possible Answers:
Suggested Structure:
This is a very open ended case. It is essentially testing whether the candidate has good brainstorming
and creative problem solving skills: can the candidate find out what is wrong with the business with
basically no additional information? Thus, an internal and external analysis of the changes of the business
is appropriate to analyze the case. A value chain model (see Figure 1 below) would be very helpful for
this case. Interviewees should focus on the differences of what the client is doing and where the industry
or market is shifting towards.

The following are the key areas to explore.

1. Macroeconomic environment

The car seats and baby stroller business is mature. It generally grows with GDP. Thus that macro
environment is not a major issue here. Other factors contributing to demand that the candidate
could/should mention as part of brainstorming are natural birth rate and the average duration that a baby
utilizes a stroller. A good candidate would identify the fact that babies require different types of strollers as
they mature from infancy to toddlers. A good candidate will try to drill down into the type of strollers our
client provides.
2. Suppliers
The supplier is one important factor that affects client’s COGS (Cost of goods sold). It turns out in this
case the supplier terms and suppliers themselves haven’t changed much. The client has already entered
long-term contracts with its suppliers.

3. Substitute
The emergence of substitute product will affect both the price and sale volume of the client’s car seats
and baby strollers. It turns out no new substitute product has entered market.

4. New regulation
Not much has changed to the regulation regarding the safety, material, design of the product, etc which
might affect
the margin and revenue.

5. Competitor
The actions of competitors could affect margin and steal market share away from the client: incumbent
and new entrant – has not changed much.

6. Consumers
Consumers’ purchasing criteria and behavior has not changed much except that more and more
consumers are buying the product from discount stores.

7. Distributor
Increased power of distributor could squeeze your margin. Shift in distribution channels could cause the
client to lose sale volume and market share: This is where the problems are!

The candidate should ask the following questions:

 Where are our client’s products distributed? — specialty stores and discount stores.
 What is the manufacturing cost? — $80/stroller
 What are prices selling to retailers? — $100 to specialty store, $90 to discount stores.
The candidate should work out the profit margin of the client using different distribution channel:

 (100 – 80) / 80 = 25% at specialty store

 (90 – 80) / 80 = 12.5% at discount stores
At this point (after calculating the profit margin for the two distribution channels), the interviewee should
realize that a shift from specialty store to discount store could squeeze the client’s margin.

Then, the interviewee should realize the consolidation in retailers and the emergence of larger discount
retailers such as Wal-Mart is changing the landscape of distribution channels. Many specialty stores are
being and have been forced out of the business by these major discount stores.

The interviewee should then ask questions about the composition of sales. Specifically, the interviewee
should drive toward identifying the percentage of sales the client derives from specialty store sales vs.
discount stores. The answer is 80% and 20% respectively.

A good candidate will ask about historical averages or trends in the client composition. For example, the
industry average has moved to 40% sales from specialty stores and 60% from discount stores. Five years
ago the average was closer to our client’s mix, i.e. it was 40% and 60% for discount and specialty stores
respectively. It is true that our client has always had a reputation of selling product thorugh the specialty
channel. The problem is quite clear now. The industry model is moving away from our client’s specialty
channel and disproportionately to discount stores.

A good candidate will review the problem with the interviewer. The goal as a candidate at this point is to
engage the interviewer in a conversation. The candidate should have identified the problem as follows:

 Market is shifting towards discount stores (due to the increasing power of major discount stores).
 Specialty stores are in turn likely decreasing in number as they get squeezed out.
 However, our client is still selling 80% of its products in specialty stores. Our client is facing
significant risk of losing sales volume and market share if it doesn’t change its distribution channel
mix.
 A secondary problem an excellent candidate will point out is that our client’s margin will likely
decrease if/when it moves towards discount stores.
Recommendations to Client:
The emergence of major discount stores like Wal-Mart are squeezing out the specialty stores and
changing consumer purchasing behavior. Although, the discount stores offer a lower margin, our client
may have to shift distribution efforts to the discount stores from specialty stores.

What other options can the candidate brainstorm on? An outstanding candidate will throw out potential
ideas such as:

 Our client should explore other distribution channels – such as catalog sales and/or bundling and
joint ventures with other baby products and companies to cross sell.
 An out of the box thinking might suggest something like exploring opportunities of selling through
the doctors to new moms at the hospital.
Interviewer’s Note:
The key to cracking this case well is identifying the facts that define the problem. There is no set answer
to the problem. The only thing that is clear is that a structural shift has occurred and the client is going to
have to alter its previously static strategy to respond. An excellent candidate will find a way to subtly
communicate that management of this company has been slow to react to industry. That makes
responding now more difficult but no less important.

BP to Increase Revenues for Textile Products Group

Case Type: increase sale/revenues.
Consulting Firm: BearingPoint final round job interview.
Industry Coverage: Apparel, Clothing & Textiles.
Case Interview Question #00429: BP plc (LSE: BP, NYSE: BP) is a global diversified oil and gas
company headquartered in London, United Kingdom. It is the third-largest energy company and fourth-
largest company in the world measured by revenues and one of the six oil and gas “supermajors”. It is

vertically integrated and is  active in every area of the oil and gas industry. This
case concerns only BP’s Textile Products Group.
BP has retained your consulting firm because recently its Textile Products Group has been experiencing
sharp decline in both revenues and market share (down from 12% to 5%). You have been asked to
identify why you believe client’s textile products revenues are declining. How would you approach this
case? What recommendations would you make to increase BP’s revenues in its Textile Products Group?
Additional Information: (to be provided to you if asked)
1. Company/Product
The client company BP’s Textile Products Group produces finished textile products such as uniforms,
jackets, T-shirts, rucksacks, etc.

2. Customer Segments
 Client’s textile products are sold to a variety of customer segments.
 The true problem lies with the Government Sales Division and sales to the US government
specifically.
3. Competitive Environment
 The UK textile and clothing Industry is relatively fragmented with tight price competition. The
number of competitors decreased in early 1990’s as US government purchased fewer textile products
and less efficient producers were driven out of business. Client survived this consolidation with
relatively small difficulties.
 Excess capacity exists within American manufacturers and worldwide.
 Heavy lobbying by US textile manufacturers has led to increasing emphasis by US government to
buy goods made in America. The end result is a slight preference for US companies, but foreign
manufacturers are still allowed to compete.
4. Competitors
 There are roughly 10 players at any given time with market share almost equally fragmented. The
largest competitor has roughly 25% of market share, but most have less than 10%.
 The client formerly had 12% of market share, but now has less than 5% and continues to slide.
 The largest competitors are distinguished by having better manufacturing ability (in terms of
product variety and delivery time) than other American competitors, but roughly equal to client.
 Competitors cannot match the product quality of client, who is ISO 9000 certified for both
development and manufacturing. Currently no US manufacturers are ISO 9000 certified.
5. Client’s Strategic Starting Point
 In past, our client was able to succeed through being relatively strong in all areas: product variety,
price, delivery time, and especially product quality. Regulations are tilting the field against the client.
 The client has excess UK capacity; therefore it has preferred manufacturing only in UK.
 The client has recently partnered with a Malaysian textile and clothing manufacturer in order to
pursue bidding opportunities in Far East, where low prices are paramount. Client offered
manufacturing and quality expertise in exchange for equal split of production and profits.
6. Economics of Business Decision
 Labor is 70% of costs and therefore low labor rates are critical to overall price.
 Client’s cost structure differs slightly from that of American competitors. UK has lower labor rates
than US, but transportation costs are obviously higher to ship finished goods from overseas.
 Customer segments: US government segment is the only problem – all other segments are
achieving forecasted positions.
 Achieving ISO 9000 certification is a time-consuming and expensive process due to high learning
cost for management to develop proper procedures. Once procedures are developed for a specific
type of manufacturing process, they are easily transferred to other facilities.
Possible Answers:

1. Bad Answer:
 Exit the textile and clothing industry.
 Do nothing, continue competing on same basis.
2. Good Answer:
Start up an American manufacturing division from scratch. This will allow the client to compete, but
exacerbates problem of excess capacity in addition to market entry costs (which are relatively low).

Buy a current American manufacturer to circumvent regulations, while not adding to capacity. The client
could obtain funds for purchase but is not thrilled with the prospect.

Lobby US government to change “Buy American” regulations or encourage UK government to match US

regulations until policy is changed (time-consuming process).

3. Outstanding Answer:
Copy the client’s Malaysian strategy by having client partner with an American firm. Offer to bring
partner’s standards up to ISO 9000 level in return for share of production and profits. Client’s profits from
US market will decrease compared to historical level, but this is a given due to the current market
environment.

Rex Plastics Aims to Increase Sales & Market Share

Case Type: improve profitability; increase sale/market share.
Consulting Firm: Mercer Consulting first round job interview.
Industry Coverage: manufacturing.
Case Interview Question #00428: The client Rex Plastics, Inc. is a US plastic molding manufacturing
company. Located in the Vancouver, Washington, Portland, Oregon metropolitan area, the company
serves customers nationwide, providing both custom plastic molding and precision injection molding. The

company is family owned and operated for over 40 years.

Over the past several years, however, Rex Plastics has experienced declining profitability. You have been
hired by the CEO of Rex Plastics to help identify the cause of the problem. What would you tell the client
to do in order to return the company back to profitable?

Additional Information: (to be provided to you if asked)

1. Industry
The US plastic molding industry is fragmented and comprises many competitors. The products they
manufacture are relatively homogeneous. The client believes that many of its competitors are not
experiencing their own decline in profitability. As a whole, the industry is relatively mature, basically
growing along with GNP.

2. Company/Product
The client company Rex Plastics has two primary product lines: custom and non-custom. Revenue is
roughly split between the two product lines.

 The non-custom line makes plastic containers to hold food products such as salsa, etc. The
containers come in a few different varieties, but each variety is standard.
 The custom line creates plastic molds for products such as TV dinners (also called frozen dinner,
microwave meal, or ready meal, is a prepackaged frozen or chilled meal that usually comes as an
individual portion) for which the mold must be customized.
The products across competitors are fairly homogeneous.

3. Customers
Rex Plastics’ customer base is fragmented and consists primarily of food companies. There are no
apparent ways to segment the customer base. Some purchase only one product line while other buy from
both product segments.

4. Financial
 Client’s operating margins are positive for both product lines (approximately 5 and 6 percent for
custom and non-custom respectively).
 Overall margins are negative for both (approximately -2 and -1 percent for custom and non-
custom respectively).
 Over the past few years, profitability has been slowly changing, i.e., no sudden event has been
the cause.
 Fixed costs for the client company are primarily made up of sales, machinery, and administration.
 Variable costs are composed of raw material and labor. Raw materials are commodities. Labor is
primarily hourly and unionized (and typical for the area and skill being provided).
 The manufacturing process currently is predominantly manual and has no real potential to
become more automated.
 The client’s machinery is 10 years old and will last another 15 years.
 Sales and administrative costs will remain relatively unaffected (and are very difficult to reduce)
as volume increases (hence they are included among fixed costs).
Possible Answer:

A profitability framework works best here for this case. Focus on the profitability equation: Profit =
Revenues – Costs = Price * Quantity – (Variable Cost + Fixed Cost) = (Price – unit Variable Cost) *
Quantity – Fixed Cost. Some of the key points to emphasize include:
1. Price
The large number of competitors manufacturing the homogeneous product make it unlikely that any of
them could raise price without losing substantial volume.

2. Variable Cost
Since the raw materials are commodities, there is little or no opportunity to decrease cost. Labor shows
little opportunity for having its cost decreased.

3. Fixed Costs
There is not much opportunity to reduce fixed costs.

4. Quantity
Since operating margins are positive but overall margins are negative, the overall margins could become
positive if volume were to be increased. Such an increase would allow the company to cover fixed costs
more efficiently. The candidate should focus on ways to increase sales volume and market share:

 What is the overall market growth rate?

 What is the market share of the client and how can it capture more?
UTC Control Systems Aims to Double Sales in 5 Years
Case Type: growth; increase sales/revenues.
Consulting Firm: IBM Global Business Services (GBS) final round job interview.
Industry Coverage: electronics, high technology.
Case Interview Question #00422: United Technologies Corporation (UTC, NYSE: UTX) is a
multinational conglomerate headquartered in Hartford, Connecticut, United States. The company
researches, develops, and manufactures high-technology products in numerous areas, including aircraft
engines, HVAC (heating, ventilation, and air conditioning), fuel cells, elevators and

escalators,  fire and security, building systems, and industrial products, among
others.
UTC has a division that makes control systems. The client, the UTC control systems division makes
timers, both electrical and mechanical. These timers are used to turn electric circuits on and off (lights,
photosensors, temperature gauges, room control systems, etc). The division is profitable, but growth is
very flat during the last few years. What should they do in order to double sales (100% growth) in five
years?
Additional Information: (to be provided to candidate upon request)

1. Competitors & Market Share

 The client UTC has 25% market share
 Competitor A (Johnson Controls, NYSE: JCI) has 35% share
 Competitor B (Siemens, NYSE: SI) has 30% share
 Others have 10% market share
2. Product
The control systems are pretty much commodities, although there are minor differences in look, price, and
features.

Substitute products are basically any type of manual switch. For example, the lights in a parking lot could
either be mechanical, or turned on and off according to a pre-set pattern.

3. Distribution
There are 3000 domestic distributors for the control systems made by UTC. The distributors cover all
geographic regions in the U.S. This case is limited to the U.S. domestic market only.

Possible Answer:
This is a “growth” case. One key idea is understand who the company’s Customers really are. Who
makes the purchasing decisions? It turns out that:
 30% Electrical subcontractors: not price sensitive (Why?)
 30% Architects and design engineers: not too price sensitive (Why?)
 40% Building managers of existing buildings: more price sensitive (Why?)
Growth Options:

 Expand geographically (not a good solution – client UTC is already national)

 Expand the current market – see below for further discussion
 Explore new applications (segments) for the product
 Develop new products using the client’s strong expertise at control systems
Expanding the Current Market:

 Target owners of multiple buildings, i.e. hotels, restaurants, the U.S. federal government, states
government and municipalities, schools, etc.
Question: How do you reach them?

 Advertise in trade publications

 Use sales representatives to call on hotel operators
Seagate Continues to Grow Its Market Leading Position
Case Type: growth; increase sale or market share.
Consulting Firm: IBM Global Business Services (GBS) final round job interview.
Industry Coverage: computer hardware; electronics, semiconductors.
Case Interview Question #00421: Seagate Technology (NASDAQ: STX) is one of the world’s largest
manufacturers of hard drives and data storage devices. Headquartered in Scotts Valley, California, United
States, the company had revenues of approximately USD $ 11.4 billion in fiscal year 2010.

The client Seagate has enjoyed fast growing during the last several years. Sales grew at over 100% in
the past year. However, the top management of Seagate is worried about establishing and maintaining its
position in this highly competitive market. What should the client company do to continue to grow its
leading market position?

Additional Information: (to be provided to candidate if asked)

1. Company/Product
The Seagate company offers two primary products. The first is a new disk drive with capacities of 7,000%
of existing floppy disks. The other is an even larger drive with disk capacities of 70,000% of existing
floppy disks. The company owns patent on both the disk drive and the disks.

2. Customers
 Household use: There are three primary uses for the product in homes:
 data backup
 augmenting an existing hard drive
 enabling manipulation of large files (replacing floppy disks)
 Industrial and specialty use: Can be used by large offices and companies for storing images and
backing up large systems.
 OEM (original equipment manufacturer) suppliers: Computer manufacturers purchase the disk
drive to include as built-in options in their computer products.
The market is estimated to total USD $1 billion with a current penetration rate of 5 percent.

3. Competitors
The client company Seagate has two main competitors: Western Digital and Samsung. Market share,
price for the disk drives and disks, and product specifications are shown in the following table.

Company Market Share Price $/disk (size) Seek time (ms) Transfer speed

Low Capacity Product

Client: Seagate 60% $199 $14 (100 MB) 29 ms 1.4 Mb/sec

Competitor A: Samsung 10% $359 $10 (230 MB) 17 ms 2.4 Mb/sec

Competitor B: Western Digital 25% $243 $25 (230 MB) 13.5 ms 2.4 Mb/sec

High Capacity Product

Client: Seagate 50% $500 $100 (1 GB) 12 ms 5.4 Mb/sec

Competitor A: Samsung n/a n/a n/a n/a n/a

Competitor B: Western Digital 50% $500 $104 (1.5 GB) 12 ms 2.4 Mb/sec

4. Substitute Products
Product Price $/disk (size) Seek time (ms) Transfer speed

Floppy
Drive $80 $4 (1.44 MB) 150 ms slow

CD ROM $250 $50 (300 MB) 150 ms 2.4 Mb/sec

Hard Drive varies varies 10ms 10 Mb/sec

5. Suppliers

The client company Seagate single-sources almost all of its components.

6. Complements
Computers hardware and software are both considered complementary products.

7. Place/Distribution
The client company has effective distribution channels in the United States but lacks similar networks
abroad.

8. Promotion
The client company currently spends slightly more than the average on advertising and promoting the
products.

Possible Solution:
Use 3C/4P framework to analyze Company, Customers, Competitors, Products, Price, Promotion, Place,
etc.

The candidate should touch upon a few different topics. How easily copiable are the drive and disks (the
company has a patent, but how easy is it to sidestep)? He/she should also conclude that this is a
razor/razorblade situation; the company should focus on ways to increase market penetration.

Once a market leader is established, the high switching costs and network externalities will make this
leader position very harder to overcome. The hardware and software distribution channels will not support
two standards. This will be a winner-takes-all market eventually. The client company could try to increase
market penetration and market share by:

 Going after software distributors

 Going after hardware distributors
 Marketing aggressively to increase market share
 Pricing drives at or perhaps even below costs (think about razor/razorblade business model)
Alstom to Add Overnight Delivery Service for Circuit Breakers
Case Type: increase market share; business competition/competitive response.
Consulting Firm: Capgemini Consulting first round job interview.
Industry Coverage: industrial equipment; electronics & semiconductors.
Case Interview Question #00399: Alstom (Euronext: ALO) is a large multinational conglomerate which
holds interests in the power generation and transport markets. The company’s headquarters are located
in Levallois-Perret, near Paris, France. For this case, we’re only concerned with a particular small division

of Alstom’s USA operations  that manufactures electrical equipments.

Recently, the client has been losing market share in the U.S. for the past two years. The Director of the
division has hired your consulting team to help him find out the cause of declining market share. Also, he
would like you to come up with a quick solution to fix the problem. How would you approach thhis case?
What would you tell the client to do?

Additional Information: (to be given to you if asked)

1. Company/Product
This particular division of Alstom USA has only one product line: low-voltage Miniature Circuit Breaker
(MCB) for industrial use. The low-voltage miniature circuit breakers currently on the U.S. market are
undifferentiated from a quality standpoint, and are also completely interchangeable.

A circuit breaker is an automatically operated electrical switch designed to protect an electrical circuit from
damage caused by overload or short circuit. Its basic function is to detect a fault condition and, by
interrupting continuity, to immediately discontinue electrical flow.

2. Competition
There are three major players in the U.S. market of miniature circuit breakers: our client, General Electric
(GE), and Siemens. Their market share and price per unit are shown in the following table.

Competitor A: GE Competitor B: Siemens Client

Market share two years ago 25% 35% 40%

Market share today 38% 35% 27%

Price per breaker $9.00 $8.10 $9.50

There have been no price changes over the past two years. Market share was fairly constant prior to that
period. The market is mature. Competitor GE has stolen market share from the client.
(Do not give this point away too easily!) About two years ago, Competitor GE began delivering circuit
breakers via overnight air freight instead of regular U.S. mail. Competitor Siemens has always used
second-day air. The client relies on regular U.S. mail shipments.

3. Customers
The miniature circuit breakers are generally purchased in large quantities by large manufacturing plants.
Since the circuit breakers are used on large, very expensive machines, the price per unit is much less
important than reliability. There is a large downside risk if a circuit breaker proves faulty, and substantial
financial implications if a customer runs out of circuit breakers (machines cannot be operated).

The customer base is very fragmented, representing most manufacturing companies.

Possible Answer:
The key point in this market share case is to uncover the fact that Competitor GE has stolen some of the
client’s market share by increasing the level of delivery service. The criticality of the product to a
customer’s business makes price a secondary purchase criterion. GE has been targeting the client’s
customers and convincing them to switch to superior service (overnight delivery).

To remedy this problem, the client should consider adding overnight delivery service too. However, this
may not be sufficient since the client charges a higher price than GE ($9.50 vs. $9.00) and the enhanced
service will only match that of GE, customers will still have little incentive to switch back to the client.

PC Giant Compaq Losing Its Market Share to Dell

Case Type: increase sales/market share; business competition.
Consulting Firm: Capgemini Consulting first round job interview.
Industry Coverage: Computers, Office Equipment.
Case Interview Question #00396: This case is set in the late 1990s. Our client Compaq Computer
Corporation is a leading personal computer (PC) company headquartered in Texas, United States (later
acquired for USD $25 billion by Palo Alto, California-based PC maker Hewlett-Packard, NYSE: HPQ, in

year 2002).  It is currently (in late 1990s) the largest supplier of personal
computing systems in the world.
Even though Compaq is the industry leader among all personal computer manufacturers in the U.S., it is
losing market share dramatically. The company’s U.S. market share dropped from a 20% a year ago to
15% this year. Your consulting team has been brought in by the Chief Operating Officer (COO) of
Compaq to figure out why and how to resolve the issue. How would you go about analyzing the case?
What would you tell Compaq’s COO?
Additional Information: (to be revealed to you only if requested)
The client Compaq manufactures desktops, laptops and servers. Compaq manufactures both high-end
and lower priced computers and is technologically very competent.
Compaq is only losing market share in laptops and desktops, and is still the dominant player in the server
market.

Compaq sells almost exclusively through resellers. Compaq has an extensive distribution system through
retailers like Best Buy, Circuit City, Office Depot, Target, etc.

Compaq offers good servicing arrangements through the retailers’ service personnel. However, their
service personnel do not have in-depth knowledge of Compaq’s PC products since they service other
competitors’ products too.

In the late 1990s, personal computer industry is an evolving market with numerous players. One new
player Dell (NASDAQ: DELL) has been stealing market share and is growing rapidly. This year, Dell’s
share increased to 14% from 10% a year ago.

Competitor Dell sells directly to customers through its own salespeople and does not have a distribution
network. Dell offers service through its own sales-force, which is very knowledgeable about PC products.
It also has a help telephone line for computer problems which need immediate servicing.

PC consumers want customized equipment. They are leaning more and more towards PC vendors that
provide quality repair services, free installation, etc.

Possible Approach:

This case is designed to judge how well the job candidate buckets the problem into various segments
before he/she looks for clues. Structure is very important here and the interviewer must decide how to
reveal additional information properly.
Reducing the case into the following buckets and then drilling down could be one possible approach.

 Company/Products
 Distribution
 Competition
 Technology
 Customers
Essentially, the case involves identifying the advent of a new player Dell with a direct distribution system.
In addition, the interviewee should identify the change in consumer preferences.

Finally, the interviewer can lead the discussion towards a recommendation, i.e., the pros and cons of the
client Compaq changing to a direct distribution and how it would impact relationships with current retailers
and their sales.
K&N to Boost Air Filter Sales across Distribution Channels
Case Type: increase sales/market share.
Consulting Firm: Ernst & Young (EY) Advisory first round job interview.
Industry Coverage: automotive, motor vehicles.
Case Interview Question #00377: Your client K&N Engineering Inc. is a manufacturer of automotive air
filters and related products, headquartered in Riverside, California, United States. K&N’s car air filter is
constructed of cotton gauze material sandwiched between aluminum wire mesh. The company states that

car owners can drive  for 50,000 to 100,000 miles between cleaning or replacing,
offering a 1 million-mile warranty.
Car air filter is a relatively simple part to manufacture, yet it is essential for operating a car. The
combustion air filter prevents abrasive particulate matter from entering the engine’s cylinders, where it
would cause mechanical wear and oil contamination. The air filter goes under the hood of a car and
usually can be replaced either by car owners themselves (do-it-yourself) or by a mechanic.
Question: How can the client company boost their air filter sales growth across its distribution channels?
Additional Information: (to be given to you if asked)
Market
 Market growth rate is very slow, mirroring inflation rate.
 Other than the client, there are 3 other main competitors in this market.
 Client has 30% market share, the biggest competitor has 30% share, the other two players split
the rest.
 Client manufactures 30 Million units per year, annual market demand is 100 Million units.
Client’s Current Distribution Channels (after-market)
1. Small mechanics (70%)
2. Large fullservice mechanics (10%)
3. Auto Parts Chain Stores (10%)
4. Mass Merchandisers (10%)
Market Mix
1. Small mechanics (40%)
2. Large full-service mechanics (20%)
3. Auto Parts Chain Stores (20%)
4. Mass Merchandisers (20%)
Prices Client Charge
1. Small mechanics ($85)
2. Large full-service mechanics ($70)
3. Auto Parts Chain Stores ($60)
4. Mass Merchandisers ($50)
Client’s Costs
 Manufacturing Cost ($45/unit)
 Transportation Cost ($10/unit to small mechanics, $5/unit to others)
 All other costs are negligible.
Possible Approach:
Determine the most profitable distribution channels and the ones with the most potential. The key is to
make sure that you have asked for/received the most relevant information and then make the necessary
calculations. The following tables give way to a potential method for cracking this case.
Channels Small mechanics Large mechanics Auto parts chain Mass merchandisers

Client Product Mix 70% 10% 10% 10%

Market Mix 40% 20% 20% 20%

Client Price $85 $70 $60 $50

Manufacturing Costs $45 $45 $45 $45

Transportation Costs $10 $5 $5 $5

Margin $30 $20 $10 $0

Small Large Auto parts Mass

Channels mechanics mechanics chain merchandisers Total

Client Units 21 MM 3 MM 3 MM 3 MM 30 MM

100
Market Units 40 MM 20 MM 20 MM 20 MM MM

Opportunity
(units) 19 MM 17 MM 17 MM 17 MM

Channels Small mechanics Large mechanics Auto parts chain Mass merchandisers

Opportunity
(units) 19 MM 17 MM 17 MM 17 MM

Price $85 $70 $60 $50

Margin $30 $20 $10 $0

Conclusion:
Since the small mechanics distribution channel has the most potential as well as the greatest margin per
unit, it is clear that a good growth strategy would be to devote additional resources to growing this
segment which already represents 70% of client’s business.

Universal Orlando Resort Sees Record Number of Visitors

Case Type: increase sales/market share.
Consulting Firm: ZS Associates first round summer internship interview.
Industry Coverage: entertainment; leisure & recreation.
Case Interview Question #00375: Universal Orlando Resort is a theme park resort located in Orlando,
Florida. It is wholly owned by media and entertainment company NBC Universal and its affiliates. The
resort consists of two theme parks and three Loews Hotels. Universal Orlando Resort is the largest

property owned by Universal Studios Theme Parks; it is also the second-largest

resort in the Greater Orlando area, after the Walt Disney World Resort.
Recently, although the number of visitors and revenues have both increased, Universal Orlando’s market
share has been dropping. The president of Universal Orlando has hired you to look into this matter. He
has two questions for you: What is causing this disturbing trend and what can be done to reverse it. How
would you go about the case?
Additional Information: (to be given to you if asked)
 Universal Orlando operates two of the several theme parks located in Orlando, Florida: Universal
Studios Florida and Islands of Adventure.
 Most of the theme parks in Orlando (Universal Studios Florida, Islands of Adventure, Magic
Kingdom, Epcot, Disney’s Hollywood Studios, Disney’s Animal Kingdom, SeaWorld Orlando,
Gatorland, Wet & Wild Water Park, etc) are within a 1.5 hour drive of each other.
 About one-half of total revenues for each theme park come from admission fees.
 The rest of theme park revenues come from transportation, parking, food stands, restaurants,
bars, gift shops, and various themed merchandise.
Possible Answer:

A profit tree could be used both to isolate the problem of declining market share and to consider possible
solutions:
 Increase the number of people coming to Orlando, Florida.
 Increase the number of visitors to theme parks.
 Increase the percentage of people coming to your two theme parks that are already in Orlando,
Florida.
 Increase the number of days people visit Universal Studios Florida and Islands of Adventure.
 Increase the frequency of visiting client’s two theme parks.
 Increase the “length” (hours of business) of the two theme parks (to increase revenue from food,
gift shops, etc).
Universal Orlando’s underlying problem of declining market share stems from the fact that its major
competitor Disney World Resort has increased the “length” of an average visit to their four theme parks
from 1/2 day to 3/4 day, therefore reducing the time visitors spend at other attractions in Orlando, Florida.
Although Disney World’s new attractions have increased the size of the total market (that’s why client’s
revenues have increased), they have also increased Disney World’s share of that market.

HP to Grab U.S. Printer Market Share from Competitors

Case Type: increase sales/market share; business competition.
Consulting Firm: OC&C Strategy Consultants 2nd round job interview.
Industry Coverage: Computers & Office Equipment.
Case Interview Question #00374: Our client Hewlett Packard Company (HP, NYSE: HPQ) is a large
information technology (IT) corporation headquartered in Palo Alto, California, USA. HP provides
products, technologies, software, solutions and services to individual consumers, small and medium sized

business  (SMBs) as well as large enterprises.

HP is a world leader in computer printers – they manufacture different kind of printers: inkjet printers,
laser printers, impact (dot-matrix) printers, solid ink printers, LED/LCD printers, all-in-one multifunction
printers, etc. Traditionally HP has had a dominant market share in all categories of printers. However, the
Head of HP’s printer division is worried that they might be losing share to competitions. Is this true? If so,
how would you come up with a solution to rectify the situation?
Additional Information: (to be provided to candidate if asked)
 There are five categories of printers in the market: Category 1 being the slowest and Category 5
being the fastest.
 Faster printers are used by corporates and commercial users and slower one by home
consumers.
 There are three major players in the U.S. printer market. Market share data for client HP and its
two competitors (Lexmark, Dell) are as follows:
Printer HP
type Lexmark Sales Dell Sales Sales Industry average growth HP’s growth

Category 1 4MM 5MM 20% -5%

Category 2 1MM 2MM 10% 10%

 Category 3 2MM 4MM 5% 5%

Category 4 5MM 4MM 5% 5%

Category 5 20MM 50MM 4% 3%

 Category 1 printer’s customers are mostly home consumers and they care only about price.
 Category 5 (candidate should deduce from the above table) market is mature and does not offer
too much room for growth.
 Competitor Lexmark’s printer is far inferior to client HP’s printer.
 Price for Catetory 1 printers: HP: $89.00, Lexmark: $49.00.
 Client HP has 2% margin for Catetory 1 printers. Cost of Catetory 1 printers to Lexmark is $69.00.
 All printer manufacturers also supply cartridges – consumers buy $200.00 worth of cartridges
over the life of the printer.
 Consumers have to buy cartridges from the same manufacturer.
 Competitor Lexmark has a margin of $100.00 on the cartridges, while HP’s margin is $20.00 on
the cartridges.
 Client HP does not actually manufacture its Catetory 1 printers, it has entered a long-term, non-
negotiable agreement with a Japanese printer company Canon for their category 1 printers.
 Difference between category 1 and 2 printers is only in speed – category 2 is faster,
manufacturing cost is the same for the two types of printers.
 Agreement with Japanese player Canon is only for category 1 printers.
Possible Answers:

To structure his/her analysis for this case, the candidate must first understand a bit about the company,
the products (mix) and see if there has been any price/quantity drops.
Next, understand the customer segment the client serves, the benefits they seek and see if the
competition is gaining market share because of a better product or better price.

The 3C’s framework works best for this case, but one could also just look at it as a simple profitability
(REVENUE/COST) framework.

1. Client HP is growing at industry average in 3 of the 5 product segments and slower than industry
average in 2, so the candidate could conclude that the client must be losing market share.

2. Category 1 clearly has higher potential for client because of high growth rates industry-wide and the
fact that it also has only one competitor.

3. Competitor Lexmark is pricing lower than the client does and Category 1 customers are very price
sensitive – this is the cause of our client’s poor performance in Category 1 printers.

4. Printer margins:
 Competitor Lexmark = $49 – $69 = Loss of $20.00
 Client HP, with a 2% margin, makes ~$2.00 per printer.
5. However, Lexmark makes a profit of $80.00 on the printer + cartridges ($100 + $49 – $69), while HP
makes only $22.00 ($2 + $20). In fact, Lexmark can even give away their printer for free and still make
$31.00 in profits ($100 – $69) because of their significant cost advantage with cartridges.

6. The candidate should not be distracted by ‘loss-leader’ strategies or by harping on the quality issue –
these are possible answers but clearly it’s a price discrimination (razor-blade) issue here.

Recommendation for Client:

Client HP should start selling category 2 printers with a re-negotiated contract. If our price is in the same
range as competitor Lexmark, customers will prefer a better quality / faster printer and we can easily
dominate this high-growth market.

Australia’s Qantas Airways to Add Capacity for Call Centers

Case Type: increase sales/revenues; growth, add capacity.
Consulting Firm: IBM Global Business Services (GBS) second round job interview.
Industry Coverage: airlines.
Case Interview Question #00370: Our client Qantas Airways Limited (ASX: QAN) is one of the two
major airline companies (a duopoly, the other one is Virgin Australia Airlines, formerly Virgin Blue Airlines)
in Australia. The Qantas Airways is based in Sydney, New South Wales, with its main hub at Sydney

Airport.
Both our client Qantas Airways and its competitor Virgin Australia are identical in almost every aspect
(brand, price, service, etc.) and have a nearly 50%, 50% market share. For fiscal year 2010, Qantas
projected revenue of 10 billion Australian dollar. An audit of their projected revenue for the year (in
October) reveals that their revenue for fiscal year 2010 has actually dropped to 9 billion. A 1 billion
reduction! What happened in 2010? And how can we help the client to rectify the situation?
Additional Information: (to be given to candidate only if asked)
 No new competition or regulatory changes.
 No major changes in customer behavior or segments.
 No new substitute products/services being introduced into Australia.
 Same prices / promotions by both airlines.
 Same in-flight services by both airlines as last year.
 No new organizational changes or new investments.
 Client sells tickets through agents (20%) and through call centers (80%).
  Client recently decided to sell holiday packages in addition to tickets.
 Call time has increased to 3 minutes. Old time was 2 minutes.
 Each call center has 20 operators.
Possible Answers:
What follows is a dialog format of the case interview. Note how the interviewer gives the data in a logical
format as opposed to expecting the candidate to ask specific/exact questions.
Candidate: I’d like to look at why revenue is declining so much from two aspects: external factors and
internal factors.

External: I would like to understand changes in the customer or the Australian market that happened
during the year, including possible externalities. Then I’d like to also understand how our competition
(Virgin Australia) fared and any strategic changes that they had during the year.

Internal: I’d like to look at the company, specifically any new investments, organizational changes, price
drops, or marketing campaigns that the company undertook.

Interviewer: Sounds good (Note down the structure – see if the candidate is following through with this
structure as the case progresses.)

Candidate: Let me start with the external factors. Were there any changes in the Australian Airline Market
– new competition, regulation, or big consumer trends that I should be aware of.

Interviewer: Everything was just like last year.

Candidate: How about substitute products – cars, trains, buses, etc – Did gasoline become cheaper?

Interviewer: No.

Candidate: What about our competition, did they…?

Interviewer: Our sources indicate they have gained market share, ~ 1 billion.

Candidate: Hmmm, our loss has gone to Virgin Australia. You mentioned that we were identical in the
number of flights, brand, price, delays, etc. Has anything changed over the last year.

Interviewer: Everything is the same as last year. (Strong clue to candidate not to go down the path of the
3-C’s)

Candidate: So there were no strategic changes made by Virgin Australia.

Interviewer: None. (Candidate seems to want to find something at the macro level — should remember to
give her feedback to move along faster)
Candidate: Now, how about the in-flight service that we provide to our customers?

Interviewer: No change. (Pretty exhaustive and creative search of issues – positive!)

Candidate: Is it possible that we are attracting a new segment of customers that alienated our past
customers.

Interviewer: Our average customer segment has not changed. (The terse answers by the interviewer
must give a clue that the problem is not external. Candidates should be instructed to never assume that
the interviewer is rude if he is terse, but instead take that as a clue)

Candidate: Ok, let me shift to internal factors. Were there any organizational changes, operational
changes in our company?

Interviewer: No

Candidate: How about new investments.

Interviewer: Nothing that we don’t normally do in other years.

Candidate: No changes. Revenue has dropped. Number of tickets we sell is less – Well through what
outlets does the client sell tickets?

Interviewer: Through a call center and through travel agents. (The goal is to try and lead the candidate to
this point within 5-10 minutes. An outstanding candidate would get to this point in 5 minutes if she had
prioritized the issues based on the situation. It is unlikely that customer preferences/segments changed
drastically, so perhaps she could have gone through the above questions a little faster)

Candidate: Did we have any marketing campaigns/promotions to increase sales through any of these
outlets.

Interviewer: No changes with the travel agents. For the call centers, Qantas did include a new feature.
Qantas felt that air travel should be sold as a package deal – car, hotel, air travel. So they aligned with
some partners to provide the package to customers.

Candidate: Is it possible that customers are dissatisfied with say the car rental or the hotel and reflect the
dissatisfaction on us?
Interviewer: Our Client was extremely careful in selecting their partners. In fact customers are extremely
satisfied with out deal and our customer satisfaction rating has increased.

Candidate: Hmmm…how about the average call-time? I’d suspect that it has increased.

Interviewer: Call time has increased to 3 minutes.

Candidate: Did we increase the number of operators?

Interviewer: No

Candidate: So it’s possible that our clients are trying to reach us, but get queued and leave.

Interviewer: Possible. Unfortunately the call center managers are not very sophisticated and all that they
could provide is the following graph (Figure 1) showing the number of calls per hour for each hour of the
day, from 6:00am to 9:00pm. (Nice way to test analytical skills – rarely do interviewers give out facts in a
plain form as given in the “Additional Information” section)

Candidate: One thing I note is that the calls flatten around 10:00am at 400 calls. It’s unlikely that
consumers come in at the same rate from 10:00am – 5:00pm. So perhaps we have queuing during those
houses due to capacity constraints and some customers leave.

Interviewer: Good hypothesis – how will you verify that this is true?

Candidate: Is the call center reaching capacity, or alternatively how many operators they have?

Interviewer: Each call center has 20 operators.

Candidate: Each call takes 3 minutes, so in an hour each operator can take 20 calls. 20 operators means
400 calls per hour – so they are indeed at capacity.
Interviewer: Very good, but are you sure that this is the cause of a 1 billion drop in revenue – If it is indeed
a capacity problem it can be easily solved. But I don’t want to look like a fool before the board if I suggest
this solution and it does not work. (Push the candidate and see how comfortable he/she is with the
analysis)

Candidate: Well, 1 billion is a huge number, but it is 10% of the annual revenue. Consider a possible
scenario where we had infinite capacity and let us assume that the calls increase till around 1 ~ 2:00pm
and follows a normal distribution.

Interviewer: Fair enough, what are you getting at?

Candidate: If I complete the bar graph to peak between 1:00pm and 2:00pm, we can add another 900
calls.

Area of triangle = 1/2 * 6 (base = 6 hours) * 300 (height of triangle at peak is 700 calls, 700 – 400 = 300,
assuming linear rise and fall, i.e. 10-11: 400; 11-12: 500; 12-1: 600; 1-2: 700; 2-3: 600; 3-4: 500; 4-5:
400). This is more than 20% of the existing total calls (4,300). So I’m fairly confident that this capacity
constraint, if it exists in all centers, could account for 10% revenue reduction. But…

Interviewer: But, What? (Great Quantitative skills !!!)

Candidate: I’m assuming that customers who leave the phone go to our competition – they may go to
travel agents, so we may not be losing all of our customers.

Interviewer: Good point. It turned out that the yield with travel agents was far less – so we actually lost
customers in total. You have done a great job! Any questions about the firm? (Note the out-of-the-box
thinking and give him/her extra credit for the thought)

Interviewer’s Feedback:
 Pros: The candidate has demonstrated Good structure. Great analytical & quantitative skills.
Creative and probing.
 Cons: Must learn to listen to the question and answer pattern to pick up clues not to spend too
much time going down a different path. Must also learn to be a little quick with the questions –
prioritization can help.
Optima Batteries Assess Recent Entry into Forklift Business
Case Type: increase sales; new business.
Consulting Firm: ZS Associates 2nd round job interview.
Industry Coverage: automotive, motor vehicles.
Case Interview Question #00348: Our client Optima Batteries (acquired by Johnson Controls Inc. in
2000, NYSE: JCI) is a global manufacturer of high quality car batteries based in London, United Kingdom,
with sales in over 60 countries. The company has been a leading producer of car
batteries  in the UK domestic market for thirty years and is currently the quality
leader throughout the United Kingdom.
The client has retained our consulting firm to evaluate its recent diversification into a new business
market. A few years ago, the client’s product line was expanded to provide batteries for forklifts and other
motorized loading trucks. The initial entry into this market was quite successful, but since then, sales have
decreased steadily every year. What recommendations would you have for this company?
Additional Information: (to be given to you if asked)
Our consulting firm has been able to dig up the following background information:

 The client entered the forklift battery business to utilize the company’s excess capacity during
periods of inactivity.
 This industry is very mature and annual growth rates have been very small over the past few
years.
 Competitors in the industry include:
 4 domestic UK producers (experiencing decreasing market share)
 1 French producer (experiencing stagnant share)
 1 Spanish producer (experiencing increasing market share)
 The Spanish firm offers low priced but inferior quality batteries.
 The client’s forklift batteries are sold to industrial dealers by captive salesmen.
 Free maintenance service is a part of every sale.
 Purchases of automobile batteries in the consumer market are highly seasonal.
 Larger customers are sophisticated in their buying practices, focusing decisions on both quality
and price. Smaller customers are less sophisticated and make purchase decisions based solely on
price.
 The client’s management style could be defined as ‘old school’, with the original owner/founder
still in charge.
Possible Answer:
The Spanish batteries maker’s product is inferior in quality and may offer buyers a worse deal in the long
run, but is targeted to smaller dealers who buy only on the basis of price. Service is not a problem for
these smaller dealers who do not knowmuch about preventive maintenance, so the product appears a
better deal.
Issues Addressed:
 Market Segmentation: Differences between large vs. small customers – size, needs, buying
behavior
 Product/Service Bundling: How do different segments want to but our services according to their
needs (stand-alone or bundled?)? What is better for us?
 Customer Profitability: How can we best profit in each segment?
 Competitor Analysis: What do competitors offer? What segments do they serve? Do they have
flexibility with respect to cost, product functionality, and price?
Possible Recommendations:
Option A: Establish an Off-Brand for Forklift Battery
1. An off-brand would allow the firm to develop a product better positioned in the forklift battery business
(perhaps of lesser quality but more price competitive), while maintaining its product quality image in the
automobile industry.

2. Cost savings with an off-brand could come from:

 Redesign of product using cheaper materials or a different manufacturing process.

 Offer the free maintenance service as an option, not a guarantee quoted as part of price in the
low-end segment. Keep product and service bundled in high-end segment.
 Eliminate the sales force and sell factory-direct to industry dealers or use brokered distribution.
3. Sell the current product at a cheaper price with a strategy to promote market share instead of current
profits.

Option B: Focus Sales and Marketing Efforts to Educate the Consumer Market
1. Develop and promote product positioning. Offer warranties, long-run cost-savings estimates, etc. to
send quality signals that competitors cannot match. Communicate ‘true cost’ of buying low-priced
batteries and try to change consumer-buying behavior.

2. Leverage strength of quality leadership position in automotive markets.

3. Focus only on high-end of forklift battery market and target larger dealers. Set higher prices to signal
quality and extract highest level of consumer surplus. Refocusing of resources would need to be
evaluated in terms of dedicated assets and return on investment.

Option C: Exit the Forklift Battery Business

1. If competing in this industry means lowering quality standards may be putting core automotive business
at risk.

2. May be able to find other opportunities that better fit with company’s strengths and image.

 Forward integration into end products – industrial loaders and equipment, golf carts, etc.
 Backward integration into chemicals, plastics, etc.
Option D: Do Nothing
1. Wait to see how market reacts to product over a longer period of time or reacts to minor marketing
changes.

2. Difficult to sell this strategy to owner given investment in expensive consulting advice, although this
may in fact be the most logical approach.
GNC Aims to Increase Revenues by 40% in Two Years
Case Type: increase sales/revenues; growth, expand capacity.
Consulting Firm: Monitor Group 2nd round job interview.
Industry Coverage: manufacturing; retail.
Case Interview Question #00336: GNC (General Nutrition Centers, NYSE: GNC) is a natural products
manufacturer and supplier based in Pittsburgh, Pennsylvania. Up until 1986, it was a discount provider of
health and nutrition related natural products such as vitamins, herbal supplements, minerals, sports

nutrition, diet &  energy products.

Due to increasing price pressure from a variety of sources (grocery stores, drugstores, convenience
stores, general mass merchandisers, mail order houses, and independent suppliers), it decided in 1986 to
move out of the discount segment and to become a specialty provider charging premium prices. In 1987,
franchisers comprised 47% of outlets. Now, in year 1994, the company has plans to expand the number
of outlets by 25% in order to fuel growth. Today, the product line is as follows:
 Vitamin and mineral supplements (40% of sales)
 Sports, performance-enhancing food products (28%)
 Herbal supplements (10% of sales, but projected to grow 24% over the next three years)
In 1976, GNC was manufacturing none of its products, but by 1986, was manufacturing 65% of its product
line. They see manufacturing as a key component of their success and future growth, because they have
very cost-effective facilities. Notably, its manufacturing facility was at almost full capacity and the herbal
supplements facility was operating at full capacity by 1994. Production (for herbals) recently expanded to
24-hours per day, seven days per week, in order to meet demand for GNC’s supplements which used a
unique gel cap packaging. GNC also has a significant R&D/new product development capability, and
launched 113 new products in 1993.

You are an outside director on GNC’s board. At a recent board meeting, the CEO displayed a slide
containing only this information: “2-year plan: Increase revenues by 40% (20%/year).”

Questions #1: What additional information would you want to know, and what questions would you ask of
the CEO?
Possible Answers:
Rather than following a particular framework, I came up with the following list of questions to ask the
CEO, which the interviewer answered as if he were the CEO:

Candidate: Is this a sustainable growth level?

Interviewer: Only a two-year plan, so sustainability is not really an issue.
Candidate: What are implications for financing and capital structure over the next two years if this growth
level is greater than its earnings/cash flows can support?

Interviewer: Assume the following:

 all expansion will be paid for using cash from operations,

 there will be no change in capital structure, and
 growth will be realized via franchise expansions (e.g. growth of store sales is flat).
Candidate: From where does GNC plan to “get growth” – where does it plan to expand?

Interviewer: GNC is bi-coastal now, and store growth in sales is flat. So, GNC needs to increase growth
by increasing franchise openings. It will expand by penetrating the mid-west and southern markets.

Candidate: Can our manufacturing facility support more growth, given that we are already at almost full
capacity (and beyond full capacity for our fastest growing product)?

Interviewer: Assume GNC will be able to expand capacity by

1) adding more and better equipment to its current plant (e.g. no time lag for new construction to come on
line) and
2) increasing shifts at those facilities not yet operating 24-hours per day. So, manufacturing capacity is
not a binding constraint.

Candidate: Who would be our new competition in the Midwest and/or South?

Interviewer: Direct competition will be from mom-and-pop stores while indirect competition will come from
grocery and retail drug stores. Assume neither is a significant competitor for the next two years.

Candidate: How do market preferences in the mid-west and south differ from GNC’s traditional markets
on the coasts? How would the marketing mix be different?

Interviewer: Assume the demographics and preferences are close enough, and that no changes in
pricing, product, placement or promotion will be necessary.

Candidate: Where are GNC’s manufacturing facilities located and how will GNC’s transportation/shipping
costs change as they enter new markets?

Interviewer: Assume no major changes in costs.

After I suggested these questions, the interviewer asked me some additional questions:

Question #2: What are some of the pros and cons of company owned stores versus franchises?
Possible Answer:
1. Cons of Franchises:
 Managing agency problems in some franchise outlets.
 Identifying and recruiting franchise owners with the “right” attitude and values for selling your
product (e.g. Anita Roddick and the Body Shop).
Solutions: Benchmark ideal qualities and best practices among current franchisees; recruit against those
criteria and create formal training for new franchisers.

2. Pros of Franchises:

 Profit motivation of the franchisees creates alignment of goals in non-transient locations. That is,
desire for profits motivates franchisees to take good care of products, make appealing displays, and
keep the place clean, etc.
 Less costly way to expand than making capital investments in many new company-owned stores.
 Shared risk – GNC does not need to shoulder all of the risk in expanding because franchisee puts
up some money and assumes much responsibility for operations and success of new store.
Question #3: What are the issues to consider in having mom-and-pop stores as your key competitor?
Possible Answer:
In general, mom-and-pop stores

 have good access to local markets.

 have loyal customers.
 have deep knowledge about individual customer preferences.
 are small, fragmented, dispersed, and have less total capital backing than larger firms.
Question #4: How can GNC get more growth out of its existing stores?
Possible Answer:
 Identify high margin products; rearrange floor display to give best access to those products.
 Offer promos such as coupons for high margin products to grow demand for them.
 Change sales help/staffing mix to give more/less customer service (more help for better service
and thus more sales; less help to reduce labor costs. However, excluding company-owned stores,
labor costs are the franchisee’s problem, and don’t really impact GNC’s margin on products supplied
to the franchisee; so push for more sales help.
 Longer or different business hours to match customer-shopping schedules.
 Start a catalog. Distribute via stores, Internet and/or mailing; this won’t necessarily
increase per store margins, but will increase overall product sales, which benefits GNC.

Interviwee’s Comments:
This case was a 1.5 page written case that I had to read. The above case facts are just some of the notes
I scribbled while reading it. The key to this case is to ask the right questions rather than to come up with
an answer using a specific framework.
Macy’s Attempt to Increase Department Stores Sales
Case Type: increase sales.
Consulting Firm: Bain & Company first round job interview.
Industry Coverage: retail; apparel, clothing.
Case Interview Question #00332: The client Macy’s (subsidiary of Cincinnati, Ohio-based Macy’s Inc.,
NYSE: M) is a leading American chain of mid-to-high range department stores headquartered in New
York City, New York, United States. As of January 2010, the Macy’s chain operates more than 800 stores

in the  United States. Total revenue is estimated to be $24.89 billion in fiscal year
2009.
You just got a call from the President of Macy’s. Over the phone, he sounded pretty concerned as their
department stores sales have been declining in the last few months. The President wants to see quick
action and you have only a couple of weeks to come up with a hypothesis. How would you attack the
problem, i.e. what would you do to understand the root causes of Macy’s declining sales in a short period
of time?
Possible Solution:
Assuming that you have a limited period of time to assess the problem, you cannot start a comprehensive
market analysis, or benchmarking exercise. The way to approach the problem should be hands-on. Sales
can be defined as the number of customers per day * sales per customer. The next step is to analyze
what each of the factors depends on.
1. Number of customers per day (Stand in front of a Macy’s store and count the number of people getting
in)

At first glance, the number of customers per day depends on several factors:

 location of the stores and therefore number of people passing by,

 number of walk-ins, which is driven by attractiveness of the show window, reputation of the
store’s brand name, effectiveness of advertisement and promotion campaigns, hours of operation,
competition in the area,
 proportion of visitors who actually buy something.
Underlying factors that can affect the number of customers per day may also include the following:

 time it takes to make a purchase,

 marketing capabilities of sales people (how efficient they are in helping a customer to find what
she wants or convince her that this is exactly what she wants),
 breadth of available product mix,
 match between the available price range and purchasing power of the store’s dominant customer
base.
The next step is to compare present performance with the past and understand which factors could have
changed in the past few months and thus affect sales. Among those are, for example, change in
advertising and promotion policies, increased competition in the area, rotation in the sales personnel (new
employees with little experience), change in the product mix or price range.

2. Sales per customer

If this number has changed, then you should analyze in depth why each customer buys fewer items or
cheaper items. This can lead again to poor customer service or a wrong distribution of the goods inside
the stores. At the same time decline in sales per customer can also be driven by macroeconomic factors
such as a general economic downturn like the one we’re experiencing right now.

Recommendations for Client:

Perform the above analysis, and, once the root cause has been identified, move into a deeper analysis.

Tesco Experiences Sales & Market Share Decline in UK

Case Type: increase sales/market share; business competition.
Consulting Firm: Ernst & Young (EY) 2nd round job interview.
Industry Coverage: food & beverages; retail; general merchandisers.
Case Interview Question #00330: The client Tesco plc (LSE: TSCO) is a global food grocery and
general merchandise retailer headquartered in Cheshunt, United Kingdom. It has stores in 14 countries

across Asia, Europe and North America and is the grocery market  leader in the
UK. For this case, we’re going to focus on only Tesco’s UK business.
In the UK, Tesco is a $5B grocery chain with a network of 900 stores, 10,000 square feet each. It used to
be the number one player in the UK market. Recently, however, the client is starting to experience a
sharp decline in both sales and market share, which shrank from 45% a year ago to 32%. Your consulting
team has been retained to find out the cause behind this. Why are client’s sales declining and what can
we do about it?
Possible Answer:
To understand the cause of declining sales and market share, 3C’s framework (Company, Customer,
Competitors) seems useful here. I started my analysis of the case with the 1st “C”: Company (Products,
Costs).
Candidate: What are the product lines, their profitability, and changes over the last year? How do these
products compare tothe competitors’? What is the cost structure, how has it changed and how it
compares to the competitors’?
Interviewer: The client is a low-cost provider, selling simple food products, which are similar to the
competitors’. The profitability has not changed much across product lines, but sales across them dropped.
The cost structure is the same as competitors’.

Candidate: (It seems cost is not an issue here in this case, so I quickly switched to the 2nd
“C”: Customer). Who are the customers? What is the customer mix and how has it changed over the last
year?
Interviewer: The customers are largely price-sensitive people; 75% – low income, 25% – moderate
income. Over the last year we lost customers in both categories, but mostly in the low income category.

Candidate: (I then switched to the 3rd “C”: Competitors). How many competitors are in the market? What
has changed over the last year?
Interviewer: The client has two main competitors: Asda and Sainsbury’s. A year ago, however, a third
competitor Morrisons jumped into the market.

Candidate: Since the customers are price sensitive, I assume there is a difference in price of products
that this competitor is offering. Is that a fair assumption?

Interviewer: Yes. The third competitor offers private labels, which are cheaper than the brand name
products that the client sells.

Candidate: Has the client considered introducing the private labels?

Interviewer: No, that would make a good recommendation.

Candidate: Are there any other differences between the client and the competitor? Do the stores look the
same? Are they located in the same areas?

Interviewer: The stores looked differently. The client has warehouse style stores with the top shelves used
for inventory. The competitors’ stores look warmer and cozier with all shelves displaying different
products. The competitor has fewer stores, but they are located in the same areas as the client’s.

Candidate: Has the client considered redesigning the stores?

Interviewer: No, that would make another good recommendation.

Candidate: Are the client’s stores equally profitable?

Interviewer: No. Some stores are more profitable than others are.
Candidate: What are the reasons for the difference? Are there any common trends among stores with low
profitability and high profitability?

Interviewer: At this point the client does not know why there is a difference.

Candidate: I would recommend studying the reasons for the difference and if it’s not possible to turn
unprofitable stores around, close them and concentrate the resources on profitable ones. How does the
client promote the stores? What are the most effective marketing techniques?

Interviewer: Client uses all kinds of promotions, but does not track how effective they are.

Candidate: In that case I would recommend the client to conduct customer survey and to develop tracking
system to concentrate on promotions that are most effective and eliminate the ineffective ones.

Interviewer: Great! I think we have covered all the major points. Why don’t you summarize your
recommendations for the client?

Recommendations for Client:

1. Introduce private labels, which are cheaper than the brand name products.

2. Start with redesigning one store as pilot to assess increase in sales. Redesign others if the benefits
outweigh costs.

3. Conduct a study evaluating the reasons for low profitability and possibly closing unprofitable stores.
Study the costs to streamline business operations and pass savings to the customers.

4. Evaluate promotional activities, concentrate on the most effective, and eliminate ineffective.

Interviewee’s Comments:
To maintain the same kind of profitability for 900 stores is difficult. It’s not a coincidence that the
competitor has fewer stores.

Philadelphia Museum of Art Uses Web to Increase Revenues

Case Type: increase sales/revenues; new business.
Consulting Firm: ZS Associates 2nd round job interview.
Industry Coverage: leisure, recreation; entertainment, arts; online business.
Case Interview Question #00326: The Philadelphia Museum of Art is one of the largest art museums in
the United States. Established in 1876 and currently located at the west end of the Benjamin Franklin
Parkway in Philadelphia’s Fairmount Park, the Museum houses more than
225,000  objects highlighting the creative achievements of the Western world
since the first century A.D. and those of Asia since the third millennium B.C.
The Philadelphia Museum of Art has recently built a website (www.philamuseum.org) that is basically set
up just for users to look at. Your client, the head of the Museum, feels that there must be some way to
increase the museum’s revenues through use of the website. Therefore, he asks you to explore this issue
as part of your summer research project. What would you recommend to the head of the museum?
Possible Solution:
Given that the question asked how to increase revenues (as opposed to profits), I started out saying that I
would only focuson revenues, and therefore I would not address costs (but suggested that someone else
do this for their summer project).
I therefore used a framework based on existing forms of generating revenues and new forms of
generating revenue. The logic behind this is that there would be two ways to increase revenues:
(1) use the website to increase sales of existing products and services (i.e., an increase in existing
sources of revenue), and
(2) use the website to market and sell new products and services (i.e., a new source of revenue).

I started out by first asking the interviewer how the museum generates revenue currently: How does the
museum generate revenue currently?

Interviewer: Currently, the museum earns revenues from membership fees, entrance fees, catalog sales,
and corporate sponsorship of blockbuster shows. Blockbuster shows are major art exhibitions that are
sponsored by companies when the collections come to town. For example, a blockbuster show might be
called the “United Airlines” presentation of Monet’s Garden at Giverny.

I then suggested that the museum do the following to use the website to increase the Revenue
generated by these existing forms:
1. Offer online catalog ordering via the web site. Currently, they do these sales of museum memorabilia
and other gifts through the traditional gift shop at the museum and through mail-order catalogs. The web’s
easy access would allow customers who have never visited the museum to see and maybe order the gifts
online.

The museum could set it up such that a consumer could place an order, supply the credit card number,
and the item could be sent out right away to whatever address the consumer wanted. The museum could
negotiate a deal with USPS, FedEx or UPS to handle the deliveries. Of course we would have to actively
educate the consumer as to the security of ordering through the web site, because there may be
resistance in the market to giving out a credit card number online. The museum could guarantee security
and back any fraud that might negatively affect our customers. The museum could even advertise a little
on the website about what great gifts these souvenirs make.

The special benefits include:

 more cost effective, since less overhead costs involved and fewer mistakes during order
(because consumers enter the information directly).
 more convenient for customers, because they do not have to be in the store or have a catalog
handy.
 better service for customers, since gifts are ordered directly with faster turnaround.
2. Advertise the museum’s regular and special events. In general, use the website to advertise the
museum’s collections and services by providing photos and other information about art at the museum.
Utilize this powerful and interactive form of communication! Provide a complete description of what the
services include for current members. Use hotlinks from corporate sponsor company web pages (i.e., link
from United Airlines’ home page), local and national tourist web pages (i.e., visitphilly.com,
philadelphia.com), and other sources to bring new customers to the web pages. The goal here is to
increase membership and entrance fees simply by advertising through the web.

3. Provide an opportunity for customers to join the museum as members conveniently and directly on
web. This is to boost revenues from membership services through the convenience of the web, as
opposed to having to be in the museum, or to call during office hours to join.

I then suggested the following new ways for the museum to generate New Revenue:
1. Form chat groups about art and other interests of our members. Members pay an annual fee for
unlimited access to the museum and special events; we could add special services and features on our
web site for these dues-paying members as an attempt to increase membership.

2. Offer advertising spots on our website for relevant and appropriate products for art lovers. Naturally we
would screen advertisers so that we weren’t advertising Bud Light beer or Marlboros Cigarettes on our
website.

Recommendations for Client:

As stated above, use the web site to enhance revenues from existing forms, including catalog sales and
membership/entrance fees. Also, use the web and its powerful capabilities to offer new services, such as
chat groups, and online advertising spots for companies.

Interviewee’s Comments:
The key to this case was to come up with creative solutions for the museum to generate revenue. There
was not a lot of material or detail to probe for in the form of questions. It was important to have some type
of structure, rather than to list ideas, but it was even more essential to be creative.
T-Mobile Streamlines Operations & Improves Customer Retention
Case Type: increase sales/revenues; reduce costs; HR/organizational behavior.
Consulting Firm: Aon Hewitt 2nd round job interview.
Industry Coverage: telecommunications & network.
Case Interview Question #00323: You are a project manager at Aon Hewitt. The senior partner at your
firm wants you to manage a team of four other consultants to address the following client problem. Your
client is the VP of Customer Service at telecommunications company T-Mobile USA Inc. T-Mobile USA is

the Bellevue, Washington, United States-based subsidiary of T-Mobile

International AG based in Bonn, Germany. The company is currently the fourth largest wireless carrier in
the US with 33.73 million customers and annual revenue of USD $21.35 billion in 2010.
The VP of Customer Service at T-Mobile USA has retained your consulting team to streamline operations
at her division. Her specific objectives are to decrease costs, increase revenues, and improve customer
retention. How would you approach this problem and how would you organize your team of four
consultants?
Possible Answers:
1. Clarification Questions
Before I started my analysis of the case, I asked the following clarification questions:

Candidate: Do you want me to address team issues or problem approach first?

Interviewer: Either way is fine, it does not matter actually.

Candidate: Can you describe what types of telecommunications services or products the client offers?

Interviewer: Long-distance, local and wireless; it also plans to enter the Internet market.

Candidate: Can I select/recruit my team?

Interviewer: No. Your team has already been selected for you.

I first tackled the problem approach, and then turned to the team issues.

2. Problem Approach
First, I would meet with the VP at the client site to gain more information on the client’s:

 Profitability and revenues over the last few years.

 Key cost drivers of business.
 Customer retention rates over last few years.
 Key client contacts and content experts, with whom my team will be partnering.
Using this information, as well as industry or competitive analysis for profitability, revenues, costs and
customer retention, I would generate hypotheses as to how the company could reduce its costs, increase
revenues and improve customer retention.

Next, I would focus on the following more specific issues related to customer service:

 Determine why the client’s Customer Service Center is losing customers; for example, organize
focus groups and/or telephone surveys with those customers that have recently terminated their
business with the client, in order to identify key performance issues that caused them to leave.
 Determine what existing customers value most about customer service. Survey current
customers to identify the products and services they value highly, and determine the relative
importance of each. Then determine how the client’s Customer Service Center compares or performs
for each of these criteria (e.g. create a relative importance-performance matrix).
 Focus on improving key performance drivers in order to improve customer service. In particular,
focus on those performance criteria weighted as most important by customers, and then those criteria
where this firm ranks lowest (in other words, go for “quick hits”).
 Identify the main customer service problems and feedback loops with other parts of the firms
(e.g., sales representatives do not receive timely information on new product offerings, so need to
establish better communication links between sales and marketing departments).
 Integrate systems and IT to “enable” or streamline key business processes. Goal should be to
reduce costs and to enhance service.
3. Team Organization
I would organize my team around the key objectives outlined above:

 Divide the work based on the objectives outlined above.

 Identify the following:
 Skill sets/experience/backgrounds of team members.
 Individual preferences for specific projects/work streams.
 Best fit between skill sets, individual preferences and work to be done.
 Forge relationship between my consultant team and the client team members.
 Identify the following with the joint consultant-client team:
 cross linkages between work processes, (i.e., how teams will interact, what roles are);
 establish joint work plan;
 identify key deliverables and appropriate deadlines.
4. Recommendations for Client:
 Identify the high-impact drivers of revenues, costs and customer retention.
 Develop strategies for the client to improve these performance drivers.
 Dedicate significant effort to the team’s effectiveness through careful planning and execution of
client and consultant team tasks, processes and communications.
Interviewer’s Comments:
This case was testing not only job candidate’s problem-solving skills, but also his/her teamwork and
leadership abilities. It is important to think both strategically and organizationally/tactically.

Swarovski Adjust Distribution Channel for Crystal Giftware

Case Type: increase sales/market share.
Consulting Firm: Boston Consulting Group (BCG) 2nd round job interview.
Industry Coverage: fashion, cosmetics & beauty products.
Case Interview Question #00321: The client Swarovski is a high end jewelry company based in
Wattens, Austria that manufactures precisely-cut crystal giftware and related luxury products. The
company offers crystal gift items, collectibles, decorative objects, and jewelries. Its product crystal jewelry

stone is used in fashion, jewelry, lighting, interior design, and cosmetic products.
The global market for crystal giftware is growing at 3% a year, yet the client is experiencing steady
declining sales and shrinking market share worldwide. Therefore, the CEO of Swarovski has retained
your consulting firm to help him identify the cause for their declining sales and market share. He would
like you to figure out two specific problems: Why is Swarovski’s market share declining? What can they
do about it?
Possible Answer:
This is a typical “increasing market share” type of case. I started with the 3 C’s framework.

1. Company (Costs)
Candidate: What is the cost structure for Swarovski’s crystal giftware? Is it more expensive than
competitors’?
Interviewer: Yes. The client’s crystal giftware costs much more than competitors’ because it is handmade.
Each piece is unique. The competitors’ is all machine-made. A person who knows crystal can tell the
difference between hand-made and machine-made, but a layperson cannot. There are also dis-
economies of scale when the handmade crystal is mass-produced.

2. Customers
Candidate: Who buys handmade crystal giftware? What do the customers like about the client’s
products?

Interviewer: There are 3 types of customers for crystal giftware in general:

 Individualists – Our customers. They want a unique product.
 Aspirers – They buy crystal giftware for its brand name.
 Pragmatists – They shop for price and function.
I then wanted to see where the crystal giftware is sold, so I told the interviewer that I wanted to look more
deeply into how the crystal is sold. I then switched to 4 P’s: Place.

Candidate: Where is our client’s crystal giftware sold? Where do individualists shop?

Interviewer: The client sells the crystal in 3 major places:

 Department Stores – Growing in volume but decreasing in share.

 Own Stores – Stagnant sales.
 Mail-Order Catalog – Stagnant Sales.
My conclusion: Individualists do not shop for handmade crystal in Department Stores! They desire the
exclusivity of the brand and the art. This was a major insight. The client changed distribution strategy a
few years back: To increase sales volume they started selling in department stores. Problems with this
strategy were:

 The client’s crystal was much more expensive, yet was placed on store shelves next to cheaper
but not visibly different competitor crystal.
 Individualists usually don’t shop in department stores.
 Department store sales people were incapable of selling it to other two types of customers.
Recommendations for Client:
At the end of the case, I recommended that the client should:

1. Withdraw the crystal giftware products from department stores and concentrate on client’s own stores.

2. Since the Aspirers are a very small but specific demographic group, I suggested a database marketing
initiative to target them through mailings to either come to the store or order from the catalog.

Interviewee’s Note: This is exactly what the consultants who worked on the case recommended! The
key was to ask about the product and how it differed from competitors’ products, and ask how the
customers differed. This leads you to the Placement (distribution channel) problem!
MGH Concerned by Falling Revenues & Rising Costs
Case Type: improve profitability; increase sales/revenues; reduce costs.
Consulting Firm: Mitchell Madison Group 2nd round job interview.
Industry Coverage: healthcare: hospital & medical.
Case Interview Question #00318: You are a new management consultant working at consulting firm
Mitchell Madison Group and your managing partner has just given you the following task: Your client
Massachusetts General Hospital (MGH) is a teaching hospital and biomedical research facility in the West
End neighborhood of Boston, Massachusetts. It is the largest hospital in New
England with 1,057 beds. Recently, the CEO of MGH is concerned about: 1. declining profits, 2. falling
revenues, and 3. rising costs at her hospital.
The partner of your consulting firm wants you to prepare the proposal that will convince the CEO of
Massachusetts General Hospital to retain your firm’s consulting services. Your managing partner is the
resident expert on healthcare issues and you have ten minutes to query him for information before he
departs to London for another client engagement. How would you structure this problem and what
questions would you ask of him?
Possible Solution:
This is a profitability issue. So, the framework I would use is: Profits = Total Revenue – Total Costs =
Price * Quantity – Cost * Quantity. Detailed discussion of the case is shown below.
1. General:
Candidate: How long has the hospital been experiencing profitability problems?
Interviewer: Five years.

2. Volume/Quantity: (for revenues and costs)

Candidate: What defines volume or “quantity” for the hospital?
Interviewer: Patient days.

Candidate: What has been happening to patient days?

Interviewer: They have been constant for the past five years.

3. Costs:
Candidate: There are fixed and variable costs. What is the proportion of each for the hospital?
Interviewer: 30% Fixed Costs (FC) and 70% Variable Costs (VC).

Candidate: What are the key components of FC and how have FC changed over the past five years?
Interviewer: Buildings and Equipment are the main components of FC; FC have been constant over the
past five years.

Candidate: What are key components of VC and how have they been changing over the past five years?
Interviewer: Staff Salaries and Direct Patient VC’s are the key components; staff salaries represent 50%
of total costs (TC) while direct patient VC’s represent 20% of TC. Patient costs have been constant with
inflation for the past five years while staff costs have increased 10% during the same period.
Candidate: What do you mean by “Direct Patient VCs”?
Interviewer: Medications and supplies needed to provide patient care.

Candidate: Do you know what factors have been causing staff costs to rise?
Interviewer: Hiring has been increasing and new hires are more expensive. Due to the increased use of
technology in patient care, which requires more skills and specialized training, we have to pay new hires
higher salaries.

My conclusion: staffing cost per patient is rising.

Candidate: What happens to the old (less skilled) hires? Has the hospital laid them off?
Interviewer: No.

My conclusion: old hires just stay on doing less productive work and the hospital divides all of the work to
be done over the total workforce, so productivity per worker is lower. Also, the number of paid staff per
patient is increasing.

Candidate: Do salaries of the old hires increase with tenure, despite their lack of specialized training?
Interviewer: Yes.

My conclusion: staffing salaries (and hence costs) are rising for two reasons: one is for the genuine need
for more skilled labor, the second is because salary is being increased for tenured, unproductive
employees.

4. Revenues:
Candidate: What is happening to price?
Interviewer: It has been steady for the past five years.

Candidate: How can revenues be declining if patient days (volume) and price have been steady? Are
there other revenue components I have not considered?
Interviewer: No. The price billed has remained steady but the actual price we receive has been declining
every year.

Candidate: Why has price received been declining? Who is not paying, or specifically, what is the
customer mix?
Interviewer: Customer mix and the amount of price paid for each segment is as follows:

Customer Type Percent of Price Paid

Private Individuals 100%

Indigent Poor 0%
HMO * 70%

Government (Medicare, CHAMPUS**,

etc.) 60%

*HMO: Health maintenance organization, HMO is a type of managed care organization (MCO) that provides a form of health care coverage

in the United States that is fulfilled through hospitals, doctors, and other providers with which the HMO has a contract.

**CHAMPUS: The Civilian Health and Medical Program of the Uniformed Services (in the United States). CHAMPUS is a federally-funded

health program that provides beneficiaries with medical care supplemental to that available in military and Public Health Service (PHS)

facilities. All CHAMPUS beneficiaries move over to Medicare at age 65. CHAMPUS is like Medicare in that the government contracts with

private parties to administer the program. Recently revamped as a managed-care system and renamed TRICARE, but still widely known

under its old moniker.

Candidate: What is the proportion of each customer type and how has that proportion shifted over the
past five years?
Interviewer: Here are the shifts:

Percent of Proportion of customer base Proportion of customer

Customer Type Price Paid 5 years ago base today

Private Individuals 100% 20% 10%

Indigent Poor 0% 10% 10%

HMO’s 70% 35% 40%

Government (Medicare,
CHAMPUS, etc.) 60% 35% 40%

My conclusion: customer mix has been shifting away from full paying customers and toward HMOs and
Government programs, that pay a lower percentage of billed price. This is causing an effective decline in
price even though the hospital’s billed price has remained constant.

Candidate: Can we somehow modify this mix in our favor?

Interviewer: The hospital does deny care to patients under HMOs with the lowest reimbursement rates;
we send those patients to other hospitals. We also ask some patients to subsidize their own care, or we
double bill, to both their Medicare and HMO providers, for example. But HMOs are catching on and
finding ways around this strategy.

At this point I began making some recommendations about pricing or customer strategies to improve
revenues. The interviewer reminded me that point of the case was to develop a proposal, not to solve the
problem. So, I shifted to summarizing my key points:

 Assume that the trend toward more HMO patients and fewer full-paying patients is a given, and
beyond our control for now.
 Then, one goal is to make more rational revenue estimates based on actual price received rather
than price billed. This will let the hospital budget against expected rather than desired revenues.
These changes will help the hospital project more realistic profit margins.
 Another key issue is to adjust cost structure by: (1) laying off unproductive employees (using
separation and/or early retirement incentives) and (2) getting greater productivity out of our higher
skilled, more costly staff. This will help boost profit margins.

Interviewee’s Note:
Remember what developing a proposal entails; it is not cracking the case, but finding the major issues
and developing some preliminary hypotheses.

Foot Locker Concerned About Its Flat Revenues

Case Type: increase sales/market share.
Consulting Firm: Capital One 1st round job interview.
Industry Coverage: retail; clothing; sports.
Case Interview Question #00295: The client Foot Locker Inc. (NYSE: FL) is a major American
sportswear and footwear retailer. With its headquarters in Midtown Manhattan, New York City, Foot
Locker is a major competitor of Reebok International Limited in the upscale work/casual shoe market. It is

a 50-year old company.  It sells shoes in the US only. It sells through department
stores, shoe stores and through Foot Locker chain stores.
The President and CEO of Foot Locker is concerned about his company’s flat revenues in recent years
and wants you to put together a proposal on how to advise him. What issues would you like to investigate
and what analysis would you expect to perform?
Additional Information: (provided to you if asked for)
 Is the client company profitable? Yes.
 Are shoe retail industry revenues flat, or is it just your company? Industry revenues are flat too.
 Why are you concerned about revenues, if the company is profitable and the entire industry is
suffering? The footwear industry used to be 40% Foot Locker, 30% Reebok, and 30% other. Now it is
30% Foot Locker, 50% Reebok, and 20% other.
NOTE: The above questions are not critical to the case, but they do carry bonus points because they
show that the candidate distinguishes between revenues and profitability and because the candidate is
getting at the root of the problem, not just revenue for revenue’s sake.
Possible Answers:
Good structure:

Provide a comprehensive list of revenue-expansion ideas and the accompanying analysis for each:
Potential Revenue Expansion Idea Feasibility Analysis

Customer analysis;
Market sizing for new product;
Expand product line Competitor benchmarking

Customer analysis;
Market sizing in target geographies;
Competitor benchmarking;
Expand abroad Distribution implications

Confirm that current sales channels Where are these shoes mostly sold in general v.s. where Foot
are effective Locker sales come from

Expand distribution channels (e.g., Business plan for online venture;

online) Cannibalization implications

Gap analysis;
Acquisition/Form joint venture Deal analysis

Bad structure:
 Narrow focus on one idea (e.g., expand product line).
 No follow through on how to test feasibility. Candidate should be prepared to outline a
cost/benefit analysis for a broader product line, expansion abroad, or an online venture, etc.
Malaysia’s BeautyAsia to Restore Falling Profitability
Case Type: improve profitability; increase sales/market share.
Consulting Firm: Ernst & Young (EY) final round job interview.
Industry Coverage: cosmetics & beauty products; consumer products.
Case Interview Question #00281: Your client BeautyAsia (BA) is a health and beauty consumer
products company headquartered in Kuala Lumpur, the capital and the largest city in Malaysia.
BeautyAsia manufactures and sells a line of cosmetic products ideally suited for the Malaysian

marketplace.  Although it has been a successful company for over twenty years,
it has been losing money for the past two years and its market share has declined. The CEO of
BeautyAsia has asked you to assist in diagnosing the problem and coming up with a few possible
solutions to solve the problem. What should BeautyAsia do to restore its profitability?
Additional Information (to be given to you as the case progresses):
Company
 BA’s market share declined from 90% to 60% in the past two years.
 Manufacturing capacity is excellent.
 Inventory management systems are unsophisticated and ineffective, resulting in excess inventory
and order fulfillment problems.
 Brands are widely recognized throughout Malaysia.
 No new products have been launched in the past eight years.
 BeautyAsia sells its health and beauty products primarily through local mom and pop shops (i.e.,
convenience stores).
 Management considered selling its current products outside Malaysia, but has been distracted by
problems in its home country.
Competitors
 Several large multinational manufacturers have entered the market
 Competitors have flooded the market with new products
 Multinational competitors sell their products through supermarkets
Consumers
As a result of multinational competitors entering the market, consumers have been exposed to new types
of products and their health and beauty product tastes have become broadened and become more
sophisticated
Products
 BeautyAsia has multiple product lines ranging from lipstick to skin creams
 BeautyAsia’s products appeal to price-conscious consumers
 The health and beauty products industry is growing approximately 15% per year
Distribution Channels
 BeautyAsia’s products are currently sold through small proprietary shops
 Supermarkets are becoming increasingly popular in Malaysia
 Supermarkets have high order fulfillment and stocking requirements
Suggested Frameworks:
Given the client’s decline in market share, the 3Cs model (i.e., Competition, Company, Customers) is an
effective framework in this case.

Possible Answers:

1. Good Conclusions:
 Multinational competitors are creating a new distribution channel for health and beauty products.
The channel shift is causing BeautyAsia to lose market share. BeautyAsia needs to update its
inventory systems to compete in the new channel and reduce its costs.
 Competitors are driving changes in consumer tastes toward greater product variety and quality.
BeautyAsia has not kept pace with new product introductions. BeautyAsia needs to improve its
marketing/market research.
2. Excellent Conclusions:

 BeautyAsia’s manufacturing expertise gives it an opportunity to sell high quality private label
products at a discount to current prices in the supermarkets.
 There is danger in challenging multinational competitors by offering a wider assortment of
products in the supermarket channel. Alternatives for BeautyAsia include: strengthening its position in
the local shop channel; focusing on profitable customer niches (premium, low price, etc.); targeting
only certain product categories like lipstick and blush for distribution through supermarkets.
 The cost to BeautyAsia of regaining its lost market share is extremely high. BeautyAsia may be
better off preventing further loss in market share and focusing on improving its current profitability
instead.
Clorox to Double Sales & Profits in Less Than 5 Years
Case Type: increase sales/market share.
Consulting Firm: Capgemini final round job interview.
Industry Coverage: household goods & consumer products; e-commerce, online business.
Case Interview Question #00278: Your clent The Clorox Company (NYSE: CLX) is a large consumer
products company based in Oakland, California, United States. Clorox manufactures various food and
chemical products and is best known for its bleach product, Clorox. The company

currently  also owns a number of other well-known household and professional

brands across a wide variety of products, including Brita water filtration systems, Burt’s Bees natural
cosmetics and personal care products, Green Works natural cleaners, and Formula 409 hard surface
cleaners.
The management team of Clorox has decided it is interested in substantially increasing the size of
Clorox’s operations and would like to introduce the technology of the Internet to assist them. Its goal is to
double total sales and profits in less than three to five years. As a management consultant brought in to
advise, what would you do? What issues would you consider? What are some likely strategic alternatives
for the company?
Possible Issues to Consider:
The 3 C’s Analysis may be used (Company, Customer, Competition) or Firm Analysis (internal factors:
company strengths and weaknesses, external factors: company systems and resources).
 What is the current scope of operations? In what areas/segments of the consumer products
industry does the company deal? What is its current market share in these areas?
 What plans has the company already considered?
 What is the competitive nature of the industry? What would be the effect on sales and profits of
simply reducing prices and margins?
 What competitive Internet plays currently exist in the market (B2B, B2C, etc.)? How does Internet
technology play a role in the company, if at all?
 What potential is there for expansion by acquisition? Do they have the financial capability? Do
potential acquisitions exist?
Possible Answers:
An appropriate solution will depend on the answers to the above questions and as such, the facilitator will
lead the interviewee in a certain direction. Below are some considerations and frameworks that may be
used.

In general, a business can increase profits in three ways:

 Increasing sales
 Increasing prices
 Decreasing costs
However, if the company’s margins are found to be consistent with industry norms, it would seem unlikely
that either increasing prices or cutting costs represent feasible methods by which to double sales and
profits, particularly is the company is operating in a moderately competitive environment.

This leaves only sales increases, which may be achieved by:

 Selling more of the current products to current customers

 Selling new products to current customers
 Selling current products to new customers
 Selling new products to new customers
The suitability of these options will depend on how the facilitator leads the interviewee. However, the
recommended answer is to sell new products to new customers by means of acquisition and then sell
these new products using the Internet.

AirTran Airways to Add More Service at Mitchell Airport

Case Type: increase sales/market share; mergers & acquisitions.
Consulting Firm: Seabury Group first round job interview.
Industry Coverage: airlines.
Case Interview Question #00277: You are a brand manager for AirTran Airways, a low-cost airline
recently acquired by Dallas, Texas-based Southwest Airlines. AirTran operates over 1,000 daily flights,
primarily in the eastern and midwestern United States. Its principal hubs are Hartsfield-Jackson Atlanta
International Airport, where it operates over 200 daily departures, and General
Mitchell International Airport in Milwaukee, Wisconsin.
In September 2010, Southwest Airlines announced it would acquire Orlando-based AirTran Airways for a
total of $1.4 billion. The acquisition would give Southwest a significant presence at many of AirTran’s
hubs such as Atlanta, GA (the largest U.S. city without Southwest service), Milwaukee, WI, and expanded
service in Baltimore, MD and Orlando, FL. Since the official announcement of acquisition, you notice that
your brand’s market share at Milwaukee’s Mitchell International Airport is declining. What are the things
you will want to explore to assess the situation? What would you do to reverse AirTran’s falling market
share at Mitchell International Airport?
Possible Answer:

1. Determine where the share is going – to an existing competitor or to new entrant? What are they doing
to drive consumers to their brand?
 Product: Is a new consumer need (business traveller v.s. leisure traveller) being filled?
 Promotion: Are they doing something to promote their product/service (price reduction, value-add,
etc.)? Is there new effective advertising? Have they increased their overall marketing spending to
support the product/service?
 Pricing: Has there been a price decrease on competitive brands?
 Place/Distribution: Did they get new, incremental distribution? Did they improve their distribution
channels (Direct sales, Global Distribution Systems, corporate sales, airline’s website, travel agents)?
2. Did you do anything to your marketing mix during this time period?

 Product: did you change your flight frequency, service quality, etc that may impact consumer
acceptance?
 Promotion: Have you made any significant changes to your mix of promotional vehicles? Have
you decreased your overall marketing spending to support the product/service?
 Pricing: Has there been a price Increase on your airline’s flight?
 Place/Distribution: Did you lose distribution?
3. Determine strategy to reverse share decline (changes to one or more of the 4P’s)

Merck to Optimize Sales Force for Cardiovascular Drug

Case Type: increase sales/market share; HR/organizational behavior.
Consulting Firm: IMS Health Consulting Group first round job interview.
Industry Coverage: healthcare: pharmaceutical, biotech, life sciences.
Case Interview Question #00267: Your client, Merck & Co., Inc. (NYSE: MRK) is a large pharmaceutical
company in the United States, also known as Merck Sharp & Dohme or MSD outside the United States
and Canada. It has recently launches Vasotec (aka enalapril or Vaseretic), a

cardiovascular  drug that has proven to be the best of its class amongst its peers
in FDA testing.
Vasotec was launched a year ago and, despite its effectiveness, its sales have been considerably short of
target and it has a much lower market share than the competitors. In fact, the company as a whole has
been losing market share for other products as well but the focus is squarely on Vasotec, as the analysts
see it as a make-or-break product for the company’s dwindling stock. The client has approached you to
investigate the issue. The CEO of Merck feels if they can crack why Vasotec is not doing well, they may
be able to understand the issues facing the company as a whole.
Question to you: What would be the possible areas of investigation as far as the issue of Vasotec is
concerned?

Possible Answer:

Interviewee: Based on the situation you have described, my initial hypothesis would be that there could
be three problem areas:
 Awareness – consumers may not be aware of the product.
 Pricing – the product may be very expensive.
 Distribution – the product may not have adequate distribution in pharmacies.
Interviewer: Yes, that’s a good starting point. However, at this stage, it might be useful to understand how
the American pharmaceutical industry works. Most specialty drugs like cardiovascular drugs are
prescription drugs, i.e. they can only be purchased if a doctor prescribes them. Pharmaceutical
companies have large sales forces who visit doctors to market products. Also, for the sake of this case,
let’s assume that most consumers have medical insurance that covers the cost of specialty medicines.

Now, let’s go back to your hypothesis and see if you would like to change it.

Interviewee: Well, consumer awareness won’t be an issue as doctors are key to the purchase decision.
However, doctors’ awareness may be an issue. Also, pricing will not be an issue if consumers are
covered by insurance However, distribution could still be an issue. If doctors know that the product is not
widely available, they may be prescribing another drug that is I would like to add another hypothesis: the
company may not have a strong enough sales force so their marketing could be weak compared to their
peers
Interviewer: Well, all of your hypotheses sound very reasonable. I can give you some information that can
help you decide which one to investigate further. In an awareness test done by the company, the drug
had comparable awareness v.s. its peers. Similarly, for distribution, there is adequate penetration in
pharmacies relative to competitors. And, as far as sales force is concerned, this company has 2,000 sales
people v.s. 1500 for the competitor. Our sales force covers all the cardiovascular doctors in the country –
300,000 of them, but so do the competitor’s sales force.

Interviewee: Thanks for that information. It does help me revise my hypothesis: awareness and
distribution are probably not significant factors. Also, this company has more sales people than its next
largest competitor so number of sales force is not an issue either. The ratios would imply each
salesperson covers 15 cardio doctors for Merck but the ratio for the competitor is 1:20. So the quality of
interactions for Merck’s sales force should be higher than that of the competitor.

Interviewer: Yes, your logic seems correct. But what then could be a possible explanation for Vasotec’s
low market share. The hypotheses you presented were logical, but they don’t seem to apply to this
situation. Could there be something we are missing?

Interviewee: I would want to understand how the sales force is structured v.s. the competitor. You
mentioned that Vasotec has 2000 sales people v.s. 1500 for the competitor. Do these salespeople
exclusively target cardiovascular doctors or do they target doctors of other specialties as well?

Interviewer: Well, Merck is a company with 20 products and we use the same sales force for all of them
as we assign a salesperson to a hospital, where he or she covers all the doctors there. In fact, a better
metric might be sales force: all doctors instead of sales force: cardio doctors. So, for Merck this ratio is 1:
40 but for the competitor it is 1:20.

Interviewee: Right, that is a key difference and it suggests the quality of interactions between Merck’s
sales force and the doctors would be weaker than the competitor

Interviewer: That sounds plausible. In what ways would you say it is weaker? (Creativity check)

Interviewee:

 Frequency of visits.
 Length of each visit.
 Depth of information provided.
 Ability to answer doctor’s technical questions.
Interviewer: So what would you suggest we do now?

Interviewee: I would do a small scale test with a few doctors to explore whether my hypothesis of a poor
quality sales force interaction is a reason why they don’t prescribe Vasotec. Then I would conduct a cost-
benefit analysis for having a dedicated sales force for Vasotec.
Interviewer: That sounds like a good plan going forward. Thank you for your insights and this
conversation. Do you have any questions for me?

Azul Airlines Aim to Add One More Passenger Per Flight

Case Type: market sizing; increase sales.
Consulting Firm: Ernst & Young (EY) final round job interview.
Industry Coverage: airlines.
Case Interview Question #00243: Our client is Azul Brazilian Airlines, a major Brazilian domestic low-
cost airline company based in the Greater Sao Paulo metropolitan area. As of January 2011, Azul Airlines
had 7.74% of the Brazilian domestic market share in terms of passengers per kilometre

flown.  Azul also achieved the highest load factor in the Brazilian domestic
market with an average factor of over 85% since March 2009.
The airline’s CEO just contacted you (a senior consultant at Ernst & Young) and said that he wanted to
put one more passenger on each of his company’s flights. We will go to a meeting with him in an hour and
we need to prepare two things: 1. The financial return of one more passenger per flight. Is it worthwhile to
do so? 2. The marketing strategy to attract these new passengers. How would you approach the case?
Possible Solutions: 

1. The financial return.

To calculate the financial return, the candidate should look that the revenue and cost side of bringing one
more passenger per flight. One the revenue side, we need: Average cost of an air ticket; and Number of
new passengers (see 2 and 3 below).

The candidate should also briefly ask about if he/she can assume that there is enough capacity to put one
more passenger onboard.

2. The average cost of an air ticket.

The candidate should ask about the kind of routes, the market share, and then price of each of them.

In this case, we were talking about the Brazilian domestic market and the client Azul Airlines has only
domestic flights. The interviewer simplified the numbers a lot the make the calculations easier. You
should adapt the numbers to US domestic airline market or any other you would like. For Brazil, the
interviewer gave the following information:
 60% of the flights are between two biggest cities (Sao Paulo and Rio de Janeiro), which are 60
minutes apart and the ticket costs US$100.00.
 20% between other major cities which are 2 hours apart from each other and the ticket also costs
US$150.00.
 20% between other smaller cities which are 3 and a half hours apart and cost US$300.00.
So the average air ticket price = 60% * $100 + 20% * $150 + 20% * $300 = $150.00.

3. The number of new passengers.

There are several ways to come up with the number of new passengers. I proposed two approaches:

 Calculate the number of flights: estimate the number of airplanes that the company owns and
then estimate the number of flights each airplane does.
 Calculate the number of cities (average) in which the company makes flights and the average
number of flights per city.
The interviewer said that I should use the first approach since he had looked at the company’s website
and he found out that they have a fleet of 100 airplanes.

I asked if I could assume that approximately 60% of the planes were used for the 1-hour flights, 20% for
1.5-hour flights and 20% for 3-hour flights. He answered that this was not 100% true in practice because
depending
on the city, we could have more frequent flights than others, but he agreed that I could do this
approximation. The interviewee can come up with other reasonable assumptions.

The candidate should also notice that normally the company spends a lot of money and time performing
maintenance on its airplanes. If the candidate forgets to mention this and starts using all 100 airplanes,
you should ask what assumptions he made to use the all the planes at once. For this case, the
interviewer mentioned that this company had a little less than 10% of its airplane in maintenance and we
could just use 100 airplanes to simplify calculations.

So, assuming all 100 airplanes available, we have: 100 × 60% = 60 airplanes doing 1 hour flights; 100 ×
20% = 20 airplanes doing 2 hours flights; 100 × 20% = 20 airplanes doing 3.5 hours flights.

To estimate the number of flights per airplane per day, we need the range of hours of flights during a day
and the interval of time in which an airplane stays on the ground (see 4 and 5 below). What the
interviewer wants to hear is not the right number, but what are your assumptions to get to the numbers.

4. Flight time per day

 The first airplane departs at 6:00 am because the executives must arrive at its client’s at 8:00 am,
for example.
 There will be no flights after 10:00 pm, so we will assume that the last flight will arrive around
midnight.
So, there is no flight between midnight and 6:00 am, thus a total flight time of 18 hours per day.

5. On the ground time:

 Taxiing (arrival flight) – 10 minutes

 Passengers going out of planes – 15 minutes
 Cleaning and food/drink supply – 10 minutes
 Passenger boarding planes – 15 minutes
 Taxiing (departure flight) – 10 minutes
Total: 60 minutes = 1 hour.

Therefore, based on the above analysis we now have:

 18 h / (1 h + 1 h) = 9 short flights per plane per day, 60 × 9 short flights per day = 540 flights.
 18 h / (2 h + 1 h) = 6 middle flights per plane per day, 20 × 6 middle flights per day = 120 flights
 18 h / (3.5 h + 1 h) = 4 long flights per plane per day, 20 × 4 long flights per day = 80 flights.
Total = 740 flights per day. So, the extra revenue in one month = 740 flights/day * 30 days * $150 = $
3,330,000.

On the cost side, the candidate should realize that the cost of one extra passenger is only the marginal
cost, which can be ignored. Therefore, the extra profit is the extra revenue. The interviewer asked why
was it important to have this raw estimation about the extra profit before going to meet the client. I said
that it was important to have a sense of the size of the clients’ issue and the interviewer agreed.

Winn-Dixie to Align Store Offering with Customer Demands

Case Type: increase sales/revenues.
Consulting Firm: Bain & Company 1st round internship interview.
Industry Coverage: general merchandisers; retail.
Case Interview Question #00234: Your client Winn-Dixie Stores, Inc. (NASDAQ: WINN) is US-based
fortune 500 company. Headquartered in Jacksonville, Florida, it is one of the largest supermarket retail
chains in North America. The company currently operates 485 stores in Florida, Alabama, Louisiana,
Georgia, and Mississippi. Winn-Dixie was profitable and growing through the 1990’s. In 1999, its
revenues were $14.1 billion. Since then revenues have been declining and the net income has been

inconsistent year over year.

As an external consultant brought in by the senior management of Winn-Dixie, you’re tasked with two
jobs: to help understand the key drivers in declining revenues and to help resolve the situation. How
would you go about the case?

Possible Answers:
Candidate: I’d like to look at the problem from 3 prisms: the competitive landscape, the firm and the
economics.

Under competition, I’d be interested in finding out how the industry is doing, who and how many
competitors are there? Has there been a change in the competition’s numbers or strategy?
About the firm, I’d like to explore whether there have been changes in strategy in the later 90’s? Have
there been changes in pricing, or in distribution such as the number of stores or outlets?

Lastly, I’d like to understand the economics…what are the costs, how are they structures in terms of fixed
and variable costs? I’d like to start with the firm. Has the strategy changed in these past few years?

Interviewer: That’s a good question to start off with. Initially the client’s organization had positioned itself
on prices as the low cost player. However, in the late 90’s the Wal-Mart severely undercut them on prices.
So they shifted to a premium product strategy. However, it has not worked out as there is a lot of
competition.
Candidate: Are the stores located in areas with a high density of premium product competitors? Location
is very important in the retail business, and I want to understand how the stores of our client are located.

Interviewer: The client’s stores are located in 12 states and Bahamas, in semi-urban and rural areas.

Candidate: Is there a difference in profitability of stores located in these two types of locations?

Interviewer: There is. The semi-urban stores are less profitable than rural stores.

Candidate: Could there be a problem with the product-mix on offer? Is there a mismatch between the
product being demanded and that being promoted? Are the customers at the two kinds of locations
demanding different things? Are we offering the same things in both kinds of locations?

Interviewer Indeed. The product line-up is exactly the same in both places. While the rural stores are
selling more of electronic items, in semi-urban areas, grocery and clothes are the primary draw.

Candidate: In that case, it might be a good idea to align our offer with customer demands. In rural areas,
we should develop the image of a premium electronics store while in semi-urban areas we should carry
more grocery and clothes, and less electronics, and cultivate the image of a place with healthy food and
cheaper but stylish clothing. I am assuming that electronics items have higher prices and margins than
grocery and clothes that the client sells. At both kinds of locations, it is important to build a brand that
stands for some unique sort of benefit relevant for the consumer.

Interviewer: Quite right. Why do you think there is a difference in buying behavior of the rural and semi-
urban population?

Candidate: My guess is that in rural areas, electronics items are not really available at many other places.
In semi-urban areas, people can easily drive to large electronics stores to make any major electronics
purchases. However, they don’t want a long drive when all they want is some grocery or clothes. A more
conveniently located store where recommenders and advisors can go along, is more likely to attract these
people, which would probably mean that in semi-urban areas, the stores should make the people
accompanying the buyer feel equally welcome and comfortable.

Map & Globe Maker Cram to Increase Market Share

Case Type: increase sales/market share; improve profits.
Consulting Firm: IBM Global Business Services (GBS) 2st round job interview.
Industry Coverage: Education; Office Equipment.
Case Interview Question #00229: High-quality, large-format maps constitute about 3 percent of total
map market demand. The vast majority of maps are low-cost, foldable items used mostly by automobile
drivers. The globe market, however, is about 95 percent geared toward high-quality, educational oriented
products.  Almost all domestic globe manufactures also make educational quality
maps.
Your client Cram, a company owned by Herff Jones Education Division, is a mid-sized manufacturer of
high quality maps and globes for schools and other educational institutions. The CEO of Cram has hired
your because his company is losing market share and would like to increase its profits. How can it do so?
Additional Information:
 There are five major competitors in the educational maps and globes marketplace.
 The client Cram is the third largest among the big five.
 The largest player has a 30 percent market share.
Possible Approach

Use 3C/4P analyses to better understand the market.

 The sales model is to make as frequent contact with schools as is cost-effective.
 The items the client is selling are not a major consideration for school principals, so being in the
right place at the right time is critical.
 Schools are NOT price-sensitive to these items because they don’t replace many of them, and
the principals don’t want to spend any time or effort in shopping around.
A possible solution to the client’s problems is to raise prices and increase the number of sales visits to
schools. Provide the sales force with an incentive by making compensation more commission-based
(currently 95 percent from salary).

Manpower Set to Double Job Placements in 5 Years

Case Type: add capacity, growth; increase sales.
Consulting Firm: ZS Associates 1st round job interview.
Industry Coverage: HR, business services.
Case Interview Question #00228: Our client is a regional branch of Manpower Inc. (NYSE: MAN), an
international recruiting and employment agency headquartered in Milwaukee, Wisconsin. The client
recruits graduating college seniors for entry-level positions in locations around the world. It currently hires
and places 1,500  graduates per year but would like to double the size of annual
job placements over the next five years while maintaining the same high quality of recruits.
Your consulting team has been retained to advise the client on this matter. Specifically, the client wants to
know what steps it will need to take in order to meet its ambitious five-year growth targets, while at the
same time staying within its budget constraints. What options does the client have at its disposal to
achieve its growth goal?
Additional Information:
 Assume that the increase must all come from hiring graduating college seniors.
 The client’s current recruiting budget is $8 million annually.
 While the client is in a relatively strong financial position, it would like to spend as few additional
resources as possible on recruiting.
 The client’s goal is to double the number of recruits while maintaining their quality with minimal
increase in resources expended.
Possible Answers:

1. Attract more applicants at the same cost.

2. Review the list of campuses targeted (e.g., optimize resource allocation across schools). The review
may result in adding certain higher potential campuses and eliminating other ones that appear to have
more limited potential.

3. Review recruiting approach at each campus (e.g., optimize cost-effectiveness of messages and
approaches at each school).

4. Extend offers to a higher percentage of applicants while maintaining quality (e.g., reduce the number of
people who are turned down who would have performed equally well in the job).

5. Improve acceptance rates among offerees (e.g., better communicate the benefits of the job relative to
alternative competing offers or improve the attractiveness of the job relative to alternatives).

Virgin Blue Airlines See Business Base & Profitability Eroding

Case Type: improve profitability; increase sales/market share.
Consulting Firm: Simon-Kucher & Partners 2nd round job interview.
Industry Coverage: Freight Delivery, Shipping Services; Airlines.
Case Interview Question #00225: The client Virgin Blue Airlines is a large airline that serves 28 cities in
Australia, with Brisbane Airport as its hub. Virgin Blue operates two major business units: a commercial
passenger commuter service and a package delivery service within  Australia
using a fleet of 75 narrow-body Boeings and Embraers.
This case specifically focuses on the client’s package delivery service. The client Virgin Blue Airlines
currently has the largest market share of air freight, but its business base and profitability are both
eroding. You have been hired to identify and discuss relevant issues in determining why the client is
experiencing these problems, and develop a performance enhancement plan. If time permits explain the
plan in details.
Additional Information:
1. Air Freight Market:
 Growth: declining over last five years.
 Market share: 53 percent for client, down from 60 percent one year ago, 75 percent 5
years ago.
 No major competitor, small air freight delivery makes up rest of market.
2. Delivery Freight Market (only give if requested):
 Growth: increasing by 5-7 percent over last five years.
 Made up of air, ground, and rail segments.
 Client Virgin Blue has 17 percent of delivery market, down from 30 percent one year ago,
60 percent five years ago.
3. Customer Base:
 Australian market: five major cities (Sydney, Melbourne, Canberra, Brisbane, Adelaide)
within 500 miles of each other accounting for 80 percent of business.
 Two major customer segments: Professional business customers and personal – mostly
small packages (under 5 pounds).
 80/20 rule: 20 percent of customers account for 80 percent of business.
 Medium/large companies are major users of delivery services.
4. Competition:
 Trucking companies now dominate delivery market: 20 percent five years ago, 40 percent
two years ago, 60 percent today.
 Truck delivery companies service the five-city radius.
 Schedule: 5PM package drop-off (no pick-up); arrival within two or three business days.
 Prices comparable for similar service.
5. Company:
 Virgin Blue’s fleet of 75 commercial jets travel once or twice daily to each major city in
Australia.
 Packages placed in cargo holds of plane (negligible incremental costs additional loading
time).
  75 planes operate at 100 percent capacity.
 Three freight planes carry packages overnight (fully owned by client).
 Freight planes operate at 65 percent capacity.
6. Distribution:
 No efficient distribution system – packages organized by destination and sit on dock until
loaded on plane.
 Because of two or three day delivery schedule promised to customers, packages can sit
on dock overnight or for a few days before being shipped.
7. Cost/Price Analysis (only give as requested):
Client Truck (average competitor)
8.
Price $10 (under 5 lbs) $10 (under 5 lbs)

Service 2-3 day delivery 2-3 day delivery

Cargo space/day 10,000 sq. ft 4,000 sq. ft

Package Size 5 packages/sq. ft 5 packeges/sq. ft

Variable
Cost/day $250,000 $150,000

Possible Approach:
 All areas above should be examined for minimal answer. Candidate should recognize that the
major competitors are truck companies. Recommendations should concern enhancements in client’s
distribution system. Client could also lower prices as a result of higher capacity and lower costs.
 Very Good Answer: Client is an air freighter whose major competitive advantage is efficiency over
its competition (truck service). Client should promote fast delivery times and overnight or same-day
service.
 Another Good Suggestion: Partner with an international company and handle domestic
distribution in Australia.
 Bad Answer: Buy trucks and begin ground transport delivery service.
Hershey’s Sales Jump But Profit Margin Decreases
Case Type: improve profitability; increase sales; reduce costs.
Consulting Firm: Oliver Wyman 1st round internship interview.
Industry Coverage: food & beverages.
Case Interview Question #00224: The client The Hershey Company (NYSE: HSY), commonly called
Hershey’s, is the largest chocolate manufacturer in North America. Headquartered in Hershey,
Pennsylvania, which is also home to Hershey’s Chocolate World, Hershey’s chocolate, candies and other

products are sold worldwide.

Hershey’s chocolate products include both custom designed chocolates, as well as commodity baking
chocolates. They are known for their excellent service, which allows them to charge a price premium.
Recently, their total costs have decreased, and their unit sales have increased, but their profit margin has
decreased. The CEO of Hershey’s has hired you to help identify the cause of the decreased profitability.
Why has their profit margin decreased if their total costs have decreased and unit sales has increased?
Additional Information:
 Profit margin was 10% 3 years ago; now it is only 4% (2010).
 They have maintained their market share.
 95% of their sales volume is commodity chocolate, 5% is custom-designed chocolate.
 They have the same type of customers as always: large candy stores (i.e. sales to large
department stores), small candy stores (i.e. pharmacies or small candy stores), catalog sales (i.e.
sales directly to end-customer).
Note: The following points are the key to answering the case and should only be provided if the job
candidate specifically asks for this information.
 The proportion of their sales today is 15% to large candy stores, 80% to small candy stores, and
5% to catalogs.
 The proportion of their sales 3 years ago was 5% to large candy stores, 90% to small candy
stores, and 5% to catalogs.
 Profit margin for large candy stores is lower than that of small candy stores.
 Prices of their chocolate products have declined over the last 3 years.
 Fixed costs have basically been unchanged in the last 3 years and variable costs decreased.
Possible Approach:

The candidate should recognize this is a profitability question and should divide the case
into Revenues and Costs. An outstanding approach will include adding a third bucket which
is Customers: who are the client’s customers? is there any difference in revenues and costs depending
on customer segments?
Good questions concerning costs will involve dividing costs into fixed and variable costs. Questions on
costs should extract the following information:
 There has been no change with fixed costs.
 Variable costs decreased in the last 3 years.
 The candidate should then quickly realize that cost is not the issue in this case.
Questions on revenues should extract the following information:
 Average price for Hershey’s chocolate products has declined.
 The volume sales breakdown has changed with increased sales towards large candy stores and
decreased sales towards small candy stores.
With this information, the candidate’s answer should be that the reason for the declining profitability,
despite increased unit sales and decreased costs, is that the profit margin for large candy stores is less,
since large stores can extract more volume discounts, and with a higher proportion of the client’s sales
going to large candy stores, the client’s profit margin has thus decreased.

Banana Republic to Diversify Its Distribution Channel

Case Type: increase sales/market share.
Consulting Firm: NERA Economic Consulting 2nd round job interview.
Industry Coverage: retail; apparel, clothing & textiles.
Case Interview Question #00219: Your client Banana Republic is a premium brand clothing & apparel
retailer owned by The Gap, Inc. (NYSE: GPS). In recent years Banana Republic has noticed a consistent

decrease in market share and has hired you to help them identify the problem.  
How would you structure your analysis?
Additional Information (to be given if requested):
 Industry and Market Share:
 Market share has fallen from 15% to 7%.
 Competitors consist of premium retailers in the same business segment. There is
growing competition from substitutes and mid-range brands as well.
 The market size has been growing steadily.
 There have been no recent major consolidations in the industry.
 Marketing, Sales, and Distribution:
 There have been no substantial changes in the company’s marketing mix or distribution.
 Prices have remained constant.
 Competitor marketing / pricing / product mix has remained unchanged.
 Distribution is primarily through large retail outlets that stock multiple products (70%). The
rest 30% is distributed through self-owned outlets and smaller merchants.
 Distributors have recently launched their own premium product brands.
 Currently there is no online sales channel.
 Cost: No recent changes in cost structure or profit margins.
 Customers:
 Customers are not price sensitive.
 Customer recognition of the company’s brand is low.
Possible Answer:

The company is not diversified enough in terms of its distribution channels. The company’s principal
distribution channel has launched its own set of products in direct competition with our client’s products.
The distributor has control over shelf space and earns a higher margin on its own products than by selling
our clients’ products. Thus it has been pushing sales of its own products at the cost of our client’s
products. To counteract this, our client must consider diversifying its distribution channel. Possible options
include:
 More self-owned stores.
 Creation of an online store.
In each case, Banana Republic must consider the possible impacts of these new channels on the
company’s brand. In addition, the company must work to strengthen customer pull through a significant
branding program. This would encourage customers to demand client products through both old and new
distribution channels.

Anadarko Petroleum to Boost Oil & Gas Production in Asia

Case Type: increase sales/market share; add capacity, growth; market entry/new market.
Consulting Firm: Schlumberger Business Consulting (SBC) final round job interview.
Industry Coverage: Oil, Gas, Petroleum Industry; Energy.
Case Interview Question #00210: Our client is Anadarko Petroleum Corporation (NYSE: APC), a mid-
sized independent oil and gas exploration and production company. Headquartered in the Woodlands,
SPD Montgomery County, Texas, Anadarko has been relatively successful in developing small offshore
fields for the past 20 years.

With major areas of operation located in the United States, the deepwater of the Gulf of Mexico and
Algeria, Anadarko also has exploration and/or production in Alaska, China, Brazil, Ghana, Indonesia,
Mozambique and several other countries.
The Board of Anadarko has just set an ambitious goal for the next five years: To be the largest oil and gas
producers in Asia by the end of 2015. A quick industry scan reveals three major competitor companies
(see Table 1) that are larger than the client. To support its aspirations, our client decides to purchase
Minyak-5, a large deepwater oil field offshore Indonesia.
Anadarko Petroleum Corporation’s CEO has retained SBC to do a diagnostic of the company’s current
portfolio, operations and organization to help them understand what they need to do to achieve this goal.
Your first task is to quantify the size of the goal in relative terms. How big is the leap?

Additional Information: Table 1. Benchmark Results (million barrels of oil equivalent):

 Proven Reserves Annual Production

Competitor A: PetroChina (largest in Asia) 15,000 1,250

Competitor B: Petronas of Malaysia 9,000 750

Competitor C: Pertamina of Indonesia 6,000 500

Client: Producing Assets 6,000 300

Client: Minyak-5 (newly acquired deepwater

asset) 3,000 0

Possible Answer:

Key factors to consider:

 Production (the goal) is directly correlated to reserves.
 Existing production rates: the average production rate of Anadarko Petroleum Corp’s competitors
is much higher than our client.
 Reserves replacement rates: in this example, assume the reserves replacement rate is 100% (all
companies are replacing reserves at exactly the same rate as they are being depleted).
A successful candidate will realize that the challenge is threefold:

 Increase production from its existing assets to meet 8.33% extraction rate, the standard held by
competitors PetroChina, Petronas, and Pertamina.
 Start production from the newly acquired Minyak-5 to meet the 8.33% extraction rate.
 Further exploration to add reserves and production (even with Minyak-5, it will only be the second
largest).
Follow-up Questions
Question #1: How close is our client to achieving its goal of becoming the largest oil and gas producer in
Asia? How much will the client need to increase its reserves base by to become the largest producer in
Asia?
Possible Answer: At current production levels, client is by far the smallest competitor in its peer group.
The largest producer (Competitor A PetroChina) is operating at annual production rate of 1,250 million
barrels of oil equivalent (BOE).
It has the potential to become the second largest company thanks to its recently acquired Minyak-5 asset,
which increased its reserves base to 9,000 million BOE.

However even with Minyak-5, it does not have enough reserves to become the largest — and is short of
6,000 million BOE.

Question #2: How much will Anadarko Petroleum Corp need to increase production off its current
reserves base to match best practices?
Possible Answer: The reserves-to-production ratio for the three competitors is consistently 12:1 (e.g.,
6000:500 for Pertamina). For Anadarko Petroleum Corp it is much lower at 30:1 (9000:300). Off the
current asset, Anadarko Petroleum Corp extracts 3.33% (300 / 9000). Other companies extract 8.33%
(1/12)
To match best practices, Anadarko Petroleum Corp needs to improve extraction rates by (8.33-3.33)/3.33
= 150% to match the best practice.

Question 3: How much will Anadarko Petroleum Corp need to increase production off its current reserves
base become the largest producer in Asia?
Possible Answer: To become the largest producer in Asia, Anadarko Petroleum Corp will need to
produce >1,250 million BOE to exceed its largest competitor (PetroChina). With its current reserves base
(of 9,000 million BOE), that would mean an extraction rate of >13.89% (1,250/9000).
To become the largest producer, Anadarko Petroleum Corp will need to improve its current extraction rate
by (13.89-3.33)/3.33 = 317%.

At current extraction rates 3.33%, it needs to increase reserves to 1,250/3.33% = 37,500 million BOE.

If it can achieve best practice extraction rates 8.33%, then it only needs to increase its reserves base to
1,250/8.33% = 15,000 million BOE, or by increase current reserves base by (15,000-9,000)/9,000 =
66.67%.

Question 4: Sketch out a graph or chart to show at least one way of illustrating the size of the challenge.

Possible Answer: See
attached figure. X-axis: proven reserves in million BOE, Y-axis: production rate %, different colors show
different annual production volume in million BOE.
Question 5: What are some options the client has to becoming the largest producer? (What areas would
you investigate in order to make a recommendation?
Possible Answer:
1. Increase production
 Improve current extraction rates
 Are client’s reservoirs more complex than its competitors? If no, further diagnostic on
production process.
 Is the technology it uses appropriate? If no, benchmark competitor technology for similar
situations.
 Develop Minyak-5 as soon as possible
 Are there any external factors to slow time to development (e.g., rig shortage, lawsuits)?
If no, focus on core engineering.
 Are there any internal factors (e.g., insufficient capital, no experience base)? If no, focus
on capital management and capability development.
2. Increase reservies

 Organic (exploration)
 Is there sufficient capability to explore organically? If no, buy brownfields and develop
capability.
 Are there sufficient opportunities for the client’s risk appetite? If no, try exploring overseas
and examine risk management.
 Inorganic (acquisition)
 Is there sufficient capital to make acquisitions? If no, try to farm in (short-term) and focus
on capital/portfolio management (long-term).
 Does the client have a good track record of integrating acquisitions? If no, beef up A&D
(Acquisition & Development) organization.
Unilever Should Not Lower Price for Its Dove Soap
Case Type: increase sale/market share; business competition/competitive response.
Consulting Firm: Cognizant Business Consulting (CBC) first round job interview.
Industry Coverage: household goods & consumer products.
Case Interview Question #00204: Your consulting team has been hired by Unilever (NYSE: UN for
Unilever N.V. and NYSE: UL for Unilever PLC), a multinational corporation that owns many of the world’s
consumer product brands in foods, beverages, cleaning agents and personal care products.

Dove is a personal care brand owned by Unilever. Dove’s product lines include:
antiperspirants/deodorants, body washes, beauty bars, lotions/moisturizers, hair care, and facial care
products. Recently Unilever has noticed that it is losing market share in the soap product and suspects
that its pricing is to blame. The company currently charges $1.20/bar for the Dove soap as opposed to
$1.00/bar for the Safeguard soap charged by major competitor Procter & Gamble Co. (P&G, NYSE: PG).
Should Unilever lower its price to $1.00?
Additional Information:
Market
 Dove soaps are currently selling 15 million bars/year; were selling 20 million bars/year before the
brand started losing market share.
 The soap market is a mature industry (not growing rapidly).
 The marketing department of Unilever believes that lowering its price to $1.00/bar would boost
volume back to 20 million bars/year. (How would you test this? Consider a demand analysis using
demand instruments.)
Industry
 Unilever has a reputation of producing the highest-quality product on the market and Dove is a
highly recognized brand.
 The soap market is dominated by four main competitors. Currently the client’s market share is 12
percent. The four competitors (Procter & Gamble, Johnson & Johnson, Henkel, L’Oreal) have market
shares of 30, 20, 17 and 10 percent respectively.
 Currently, the client Unilever has the capacity to handle virtually any increase in demand.
Cost Structure
The company cannot specify the overall cost of a unit (except that it is less than $1.00 and greater than
$0.80), but it does know the cost structure to be the following:

 30 percent labor
 20 percent inputs
 20 percent general and administrative
 20 percent overhead
 10 percent other
The company is unsure if it has any cost advantage over other competitors, but it clearly enjoys a
reputation for the highest-quality soap products.

Possible Approach

In this case, a profitability framework would probably work best here. Focus on incremental revenue and
cost numbers since total revenue and total cost numbers are not available.
Competitive Response: Reducing price would probably lead to a price war. Since it is improbable that the
client has a cost advantage, it would lose a price war.

1. Incremental Revenue: Using the assumption that demand would go from 15 million units to 20 million
units with a $0.20 price decrease, the incremental revenue would be $1 x 20 million – $1.2 x 15 million =
$20 million – $18 million = $2 million.

2. Incremental Cost: Since the company has the additional capacity, assume that labor and inputs rise
linearly with volume (variable cost = 50%) and that everything else is fixed (the candidate ought to
suggest this assumption). Since cost per unit ranges from $1.00 to $0.80, possible incremental cost
numbers are:
 $1.00 leads to $0.50/unit incremental cost, giving rise to $2.5 million.
 $0.80 leads to 0.40/unit incremental cost, giving rise to $2.0 million.
3. Incremental Profit: The numbers above give an incremental profit ranging from -0.5 million to 0.

Conclusion: The incremental profit numbers, combined with the probability of a price war, make reducing
the price to $1.00 a bad idea. The client should focus instead on quality, brand image, or segmenting the
customer base.
Chicago White Sox Trying to Attract More Kids to Games
Case Type: increase sales.
Consulting Firm: A.T. Kearney final round job interview.
Industry Coverage: sports, leisure & recreation.
Case Interview Question #00199: The vice president of marketing of Chicago White Sox, a successful
Major League Baseball team based in Chicago, Illinois, would like to attract more kids to the team’s
games. He has proposed to the team’s general manager (GM) that kids’ tickets be discounted 50 percent

for all upcoming season games.  Your consulting firm has served the Chicago
White Sox team previously on an unrelated case, and now the GM is calling you as a trusted advisor to
get your point of view before he makes a decision on the kids’ marketing plan.
What are some of the critical issues that should drive his decision? Your discussion should be more
qualitative than quantitative; the GM has not yet had the opportunity to carefully review sales and
attendance figures from last season.

Additional Information:
Issues to consider include: 1. Opportunity cost; 2. Total fan profitability; 3. Future fan value.

The interviewer should try to encourage the candidate to make reasonable assumptions for the capacity
of the ballpark; number of games each season; ticket, food, and beverage prices; and attendance
distribution if a more quantitative discussion is desired.

1. Opportunity Cost
Questions that surface related to this issue:
 Attendance distribution over the season at games. (averages can be deceptive!)
 The percentage of games that are sold out, the percentage of games that are sold to 90 percent
of capacity, and so on.
 Number of kids who are already attending games.
 The lift in adult attendance as the kids are unlikely to pay for tickets themselves or to come to the
games unaccompanied by a parent.
At this point the interviewer can ask the interviewee to assume for a second that all of the games are sold
out to adult fans. Would that be enough information to tell that the discount promotion is a bad idea?
(Answer: not necessarily, if kids have a higher “total profitability”, see below)

2. Total Fan Profitability

 How does the revenue break out by product – ticket v.s. other items? Ballparks also generate
considerable revenue from food, beverage, and souvenir sales.
 Total profitability of a kid fan vs. other fans. Are kids more profitable because they purchase more
souvenirs and more snacks and beverages? Or, are adults in fact more profitable because they
purchase high-margin products like beer?
3. Future Fan Value:
 Is there any research the team has done that maps the lifetime attendance patterns of their fans?
 Is there a benefit to getting kids interested in the team early on?
 Will doing so make them more loyal fans as they become teenagers and adults?
Before finishing the interview, the interviewer should get interviewee’s ideas on alternative kids-oriented
promotions the team might offer if the GM opts against the 50 percent discount.

Possible Answers:
 If some games are sold out year after year while others are not, maybe the team could offer
discount kids’ tickets to the games that aren’t sold out.
 50 percent off may not be the magic number. Could 25% work? 75%?
 Maybe a discount isn’t necessary at all. For example, maybe the team could attract kids to the
games at full price through creative promotions like “all full-paying kids get to come onto the field
three hours before the game” or “all full-paying kids can meet three players before the game.”
 Kids could get a free (or discounted) Coke with any food purchase.
Goodyear Looks for Ways to Generate More Sales
Case Type: increase sales/market share; operations strategy.
Consulting Firm: GE Healthcare second round job interview.
Industry Coverage: manufacturing; chemical industry.
Case Interview Question #00137: Your consulting team has been hired by Goodyear Tire and Rubber
Company (NYSE: GT), one of the leading tire manufacturers in the world. Headquartered in Akron, Ohio,
United State, the company produces a wide range of tires for automobiles, commercial

trucks,  light trucks, SUVs, race cars, airplanes, and heavy earth-mover
machinery. Their products are not any different from competitors (Bridgestone, Michelin, Continental AG,
etc) and the company does not have strong competitive advantages. The Chief Marketing Officer of
Goodyear wants you to advise him on developing strategic plan for his company. Specially, how would
you help them market their tires and generate more sales?
Possible Answer:
The key of this marketing case seemed to be looking for customer segmentation: Price Sensitive and
Price Insensitive.

So how would you sell tire products to both consumer segments? Do you charge the price that the
sensitive customer will pay? But then you’re loosing out on the revenue the insensitive customer would
have provided.
Option: mail coupons out. the price sensitive customer will look in circulars and use it. The insensitive will
not sift through papers — they will go in and pay the full price.

Other ideas:

 Market hard to tire retailers as many consumers ask for recommendations.

 Educate consumers on the need to change their car tires every x miles or months.
 Could add additional services, i.e. someone come to house to change tires, free oil change (must
work with retailers to do this)
 Competing with Bridgestone who has strong brand equity. Do we do a blimp? Or, like Dunlop,
tennis balls?
 Customers will likely not understand any competitive advantage we have
 Pricing will have to be competitive with other tire companies
 Other customer segments: those who only buy Bridgestone tires, those who routinely change
tires, those who buy recycled tires
 Shall we sell to car dealers? Would likely have to have contract with one and that would give
them a lot of power over us and we would be dependant on their sales
Interviewee’s Note: The tire made by Goodyear was on par with competitors and my client was not a big
name in the market. They seemed to want me to focus on efficiency of spending advertising dollars,
especially on targeting the right customer segments by utilizing something like car purchasing and
demographic data to determine who might be buying replacement tires.
Novartis Sales Slow Despite Heavy Advertising
Case Type: increase sales/market share.
Consulting Firm: Trinity Partners second round job interview.
Industry Coverage: Healthcare, Pharmaceutical, Biotech & Life Sciences.
Case Interview Question #00123: The client Novartis (NYSE: NVS) is a multinational pharmaceutical
company based in Basel, Switzerland. It currently is the sixth largest pharmaceutical company in the
world in terms of revenue ($41.5 billion in 2009) with a profit margin of about 20%, which is about the
same as its major industry competitors  (Johnson & Johnson, Pfizer, Roche
Group, GlaxoSmithKline GSK, Sanofi-Aventis, Merck & Co, Bristol-Myers Squibb, Eli Lilly). However, their
2009 profits were down by 31% from 2007 levels, while industry leader Johnson & Johnson gained 22%.
Although Novartis has what it believes are superior products and good distribution channels, its rivals
consistently have a larger market share. For the past two years, the CEO of this company has spent three
times the industry average on advertising. There has been blanket coverage on major newspaper and
television. Market research reveals that consumers show name recognition for most of the advertised
products made by Novartis and the advertising campaign is more successful than hoped; yet sales
remain slow. You have been hired as an external consultant to rectify the situation. How would you
approach it?
Possible Answer:

The goal of this case is to rectify the misalignment between heavy advertising and slow sales, or to
increase sales. Essentially it is a marketing case. The interviewer should lead the job candidate through
analysis of the customer segments. Questions such as who are the primary and secondary customers of
your pharmaceutical client, what’s the percentage of sales from each customer segment should be
expected from the interviewee.
The problem is that most pharmaceutical products made by Novartis are purchased by doctors and not by
the general public. However, the client’s advertising focuses on newspaper, radio and TV, obviously
targeting the general population.

One possible way to solve the problem: the company would be better off spending its advertising
resources in medical journals and conferences that specifically target doctors and medical practitioners,
for example.

Nucor Corporation Losing Structural Beams Market Share

Case Type: increase sale/market share.
Consulting Firm: Towers Watson 2nd round job interview.
Industry Coverage: Mining & Metals Production.
Case Interview Questions #00102: Your client Nucor Corporation (NYSE: NUE), a Fortune 500
company headquartered in Charlotte, North Carolina, is one of the largest steel and iron producers in the
United States. The Company operates in three business segments: steel mills, steel products and raw

materials.
Recently, the president of Nucor Corporation has just noticed that one of their five product lines is losing
market share. What are the possible causes? What would you advise them to do in order to re-gain
market share?

Additional Information: (to be given to you if asked for)

1. All of Nucor Corporation’s five product lines are sold to car manufacturers. The products are:

 thin plate steel for body panels,

 beams used for structural supports in car doors,
 bumper attachments,
 steering column parts,
 engine attachments.
The decline in demand is for the structural beams.

2. Low cost mini-mills (those using electric arc furnaces to melt scrap steel, as opposed to large
companies operating integrated steel works with blast furnaces) are taking over market share.

3. It would be extremely difficult for our client to match the cost structure of the mini-mills.

4. Mini-mills are only able to manufacture lower-grade steel. They would be able to manufacture any of
the five products mentioned above with the exception of the thin plate body panels.

5. Car manufacturers are trying to reduce the number of part suppliers and forge closer ties with
suppliers.

6. In addition to price, quality as well as speed and reliability of delivery are important purchasing decision
factors.

Possible Answers:

No answer is provided yet. Feel free to share your own answer/solution or any thought to this case by
leaving a comment below.
SunTrust Launch Commission-based Incentive Program
Case Type: increase sales; HR/organizational behavior; math problem.
Consulting Firm: Accenture final round job interview.
Industry Coverage: Banking.
Case Interview Questions #00081: Your client SunTrust Bank (NYSE: STI) is one of the largest regional
banks in the United States. It had $172.7 Billion in assets as of 2009. Currently, it operates approximately
1,700 bank branches across Southern states, including Alabama, Arkansas, Florida, Georgia,

Maryland,  Mississippi, North Carolina, South Carolina, Tennessee, Virginia,

West Virginia, and Washington, DC.
The bank’s offerings include retail and commercial banking, as well as trust services, mortgage banking,
credit cards, mutual funds, insurance, equipment leasing, asset management, and securities underwriting
and dealing.

As an external consultant, your task is to make a recommendation to improve the profitability of the retail
segment of SunTrust’s business operations. Specifically you are asked to evaluate the merits of a
proposal made by the CFO – a commission-based incentive program targeted at the bank’s tellers with
the objective of increasing product sales. How much commission should the bank pay its tellers per unit of
product sold?
Possible Answers:
Prompt 1: Product mix – The job candidate should ask for more information about the products SunTrust
Bank is offering, without which we cannot ascertain the profitability of each product in the mix.
Additional Information: (to be given to you if asked)
Suntrust Bank has four products it wants to sell in this proposed “commission-based incentive program” –
CDs, Checking accounts, Mutual funds, and IRAs.

Prompt 2: Revenue stream – The interviewer should ask the candidate the specific sources of revenue
for the bank’s four major products.
Possible Answer:
Interest generated, commission earned, perhaps an overnight float option, synergies or economies of
scale from cross selling.

Prompt 3: Profit Margins – The candidate should ask for the bank’s profit margin on each of these four
products in order to estimate a commission structure.
Additional Information: (to be given to you if asked)
The bank’s profit margin is as follows:
 CD’s: 2% with an average $4,000 initial deposit
 Checking: 4% with an average $2,000 initial deposit
 Mutual Funds: 1% with an average $8,000 initial deposit
 IRA’s: 2% with an average $4,000 initial deposit.
Prompt 4: Incentive Program Options – The candidate should arrive at a profit margin of $80 per
product and constrain his incentive program within this range. Explore at least four different incentive
options.
Possible Answer:
1. A fixed fee per product.
2. a percentage of the profits.
3. a fixed fee for a certain number of products sold that would decline after a threshold.
4. a variable commission depending based on products and spreads.

Prompt 5: Criteria for selection of incentive program – The interviewer should ask the candidate what
information he/she would need to determine the best incentive program for SunTrust Bank.
Possible Answer:
 Profitability – The ease of sale, whether all tellers are equally effective sellers, profit per teller or
per customer, estimated commission as a percentage of current salary, cost of incentive program.
 Human Capital – The program that best motivates employees to sell products and increases
retention rate.
Make an assumption that his/her choices can be narrowed down to one. In this case, the assumption is
that all the tellers are equally effective and that all the products can be sold with roughly the same effort.
So what would you base the commission on then? Why?

Possible Answer:
Fixed fee option as it is a straightforward incentive and has a large upside for employees. Also
administration costs for fixed fee option are relatively less.

Prompt 6: Cost of incentive program – Steer the Interviewee toward discussing the cost structure of the
incentive program. The Interviewee should ask about the present salaries of the tellers and the expected
sales per teller.
Additional Information: (to be given to you if asked)
 Salary per year per teller: $44,000 – 56,000
 Note that there is no relationship between teller’s ability to sell and years of experience.
 Expected sales per teller: five products per week.
Possible Answer:
Average teller salary $50,000 per year. Annual sales per teller = 250 products (5 products per week * 50
weeks per year)

Concluding Recommendation:
Suggested incentive: Commission fee of $20 per product. (Interviewee assumes commission = 10%
annual salary, $50,000 * 10% = $5,000 for 250 products). New profit margin = $(80 – 20) = $60
Commentary/Notes – The job candidate may suggest necessary adjustments in internal processes for
the incentive program to work.
Suggested Answers:
 Tracking field in their accounting system to associate correct teller ID with sales made
 Changes in payroll systems
 Sales training program for tellers
 Effectiveness study to measure impact on employee retention and satisfaction
Notes to Interviewer: Read this information well before you administer the case. This case is open-
ended – make the candidate come up with his/her own assumptions and estimates at every step. One set
of reasonable assumptions is provided – use these to steer the candidate back on track if they seem to be
off the reservation.
Avon to Improve Sales and Operating Income
Case Type: increase sales/revenues/market share.
Consulting Firm: Charles River Associates (CRA) 2nd round job interview.
Industry Coverage: Retail; Consumer Products; Cosmetics & Beauty Products.
Case Interview Questions #00074: Your client Avon Products Inc. (NYSE: AVP) is a global direct selling
and manufacturing company that uses multi-level marketing to sell a variety of products, primarily in the
healthcare, beauty, and home care markets including cleaning agents, house and kitchenware, jewelry,

cosmetics, and lingerie. Avon Products has markets in over 140 countries across
the world. In 2007, the company’s global sales revenue amounted to US$ 9.9 billion. Sales revenue and
operating income decreased significantly in comparison to year 2006 (sales revenue: -12%, operating
income -10%).
The greatest part of the sales revenue (85%) was generated in four regional markets (Brazil, Great
Britain, France, and Germany). In particular, the highly active sales market of Great Britain suffered a
dramatic decline (sales revenue: -20%). At the same time, some competitors (Amway, Vorwerk, Mary Kay
Inc., etc.) had great success with new distribution channels and, accordingly, gained additional market
share.
Avon’s product range has not changed for years and is distributed through sales representatives who
organize home parties in their neighborhoods. Most of the sales representatives have been with the
company for a long time. Representatives get a fixed salary with a small commission; they are
complaining about steadily decreasing sales figures. The number of new customers remains constantly
low. In all countries, Avon has established small, but complete, business units. All business functions are
decentralized (Administration, IT, Finance/Accounting, etc.). As a consequence, the London headquarters
lacks understanding of the decentralized strategies followed by the individual country units.
About 80% of the products are produced in Avon’s own production plant, located in the center of France.
The degree of manufacturing penetration is very high, whereas the technological level is quite low. Ten
out of eleven production lines are not working at full capacity.

You were brought in by Avon to help them figure out two things:
1. Identify the problems and name the reasons for the drop in sales revenue and operating income.
2. What do you think should be done to improve the results?

Possible Approach:
1. Identify the Problems

Marketing/Sales
 drop in sales and sales revenue => pricing is too high
 product range is not competitive => no customer orientation (products are old fashioned)
 one distribution channel only => just home parties with neighbors / friends
 consistently low number of new customers => low profile of sales representatives and no
recruiting of new sales representatives
 no motivational effect of compensation => small commission component
Organization
 high costs (e.g., administration) => complete business units in every country
 headquarters lacks knowledge of local strategies/activities => extreme decentralization
 data exchange possible => no corporate strategy (e.g., for IT)
Production
 high ideal-capacity costs => production lines not working at full capacity
 high complexity costs => very high manufacturing penetration
2. Possible Solutions
Marketing & Sales
 realize selective price cuts, depending on price levels and contribution margins in segments.
 enlarge product range by introducing alliances or licensing for new innovative products.
 develop new successful distribution channels by using electronic media (e.g., television,
telephone), print media (e.g., catalogues) and internet social network media (e.g., Facebook, Twitter,
Linkedin, etc).
 recruit new sales representatives.
 motivate sales representatives by sales seminars and larger commissions.
Organization
 centralize functions (e.g., in administration or personnel department)
 develop and enforce communication lines between headquarters and business units
 create corporate standards (e.g., for IT)
Production
 ensure full capacity use for production lines by new products through alliances or licensing
 reduce manufacturing penetration significantly, even consider complete outsourcing
Agilent See Declining Sales in GC-MS Instrument
Case Type: increase sales/market share.
Consulting Firm: Gartner 2nd round full time job interview.
Industry Coverage: Healthcare: Pharmaceutical, Biotech & Life Sciences.
Case Interview Questions #00057: Your client is Agilent Technologies (NYSE: A). Agilent is a high-tech
company that designs and manufactures electronic and bio-analytical measurement instruments and
other equipment for measurement and evaluation. The company’s headquarters are in Santa Clara,

California, in the  Silicon Valley region.

Many of Agilent’s predecessor product lines were developed by the American computing company
Hewlett-Packard (HP). In 1999, the product lines not directly connected with computers, storage, and
imaging were grouped into a separate company (Agilent), the stock of which was offered to the public in
an initial public offering. The Agilent IPO may have been the largest in the history of Silicon Valley.
Agilent thus created in 1999 was an $8 billion company with about 47,000 employees, manufacturing
scientific instruments, semiconductors, optical networking devices, and electronic test equipment for
telecom and wireless R&D and production. Recently Agilent is experiencing declining sales in its major
product line. You are hired to help them find out why. What would you do?

Possible Solution:
Here are some questions which may help isolate the key issues:

1. Describe the instrument and what it does. (Goal: gather background information on the product).

Response: The instrument, call it Mass Spectrometer (MS), is able to perform elemental mapping; that is,
it is able to determine the specific composition of material placed in the chamber for observation. MS is an
accessory for larger and much more expensive instrument called Gas Chromatography-Mass
Spectrometry (GC-MS) that functions almost exactly like a “microscope”. Applications of GC-MS include
drug detection, fire investigation, environmental analysis, explosives investigation, and identification of
unknown samples. GC/MS can also be used in airport security to detect substances in luggage or on
human beings. Additionally, it can identify trace elements in materials that were previously thought to
have disintegrated beyond identification.
2. What other products does our client manufacture? (Goal: gather background information on the client).

Response: They recently began manufacturing MS, and also produce other unrelated products.
3. Can these instruments be used separately, and are they ever sold separately? (Goal: understand the
sales process and the potentially interactive role of the MS and GC-MS sales forces).

Response: MS can be used by itself, but GC-MS is essentially dependent on MS for its operation. As a
result, except for replacement sales, GC-MS is rarely sold individually. In fact, MS’s sales force will
frequently recommend that a buyer purchase a certain GC-MS while buying an MS. Two years ago, over
30% of our clients sales were generated by a manufacturer of MS.

4. What is the current %? (Goal: determine whether this could be a cause of the sales decline).

Response: It is currently around 5%.

5. Does our product MS compete with other manufacturers of MS, and particularly the manufacturer that
was selling our GC-MS? (Goal: understand reasons for our friendly MS manufacturer stopping promotion
of their product).

Response: Yes, it does compete directly with it, and our client introduced the product about one and a
half years ago. (You have discovered a significant portion of the sales decline).

6. How does our client’s product compare to others’ GC-MS? (Goal: determine whether others are
beating us on technological or other product features).

Response: Our client’s product is regarded as one of the best in the market.

7. Is the market for MS and GC-MS growing, shrinking or flat? (Goal: a shrinking market could be a good
explanation for declining company sales).

Response: Both markets are flat.

8. Who uses MS and GC-MS? (Goal: determine market segments).

Response: There are two basic user groups: industry, primarily pharmaceutical companies, and academia
(in research labs). What we’ve noticed lately is that the specific users in each of these groups, who also
happen to be the primary buyers, have become relatively less sophisticated; that is, they are hired just to
run the instruments and know less about their technical qualities. These buyers have become even more
dependent on the sales forces. What has happened is that our client alienated itself from other
manufacturers of MS at a time when a strong relationship was becoming even more important than it
used to be. The buyers are relying more and more on the MS sales force, who is typically called well in
advance of the GC-MS sales force. (The interviewer will not likely give you all of this information at once.
Questions about the buying process and changing decision makers would have brought it out)
This is the second part of the main reason for our clients declining sales: in addition to ruining our
relationship with a manufacturer of MS by producing our own, we happened to do so at a time when
relationships became even more important.

Sony Saw A Poor Sales Year for Audio Cassette

Case Type: increase sales/market share.
Consulting Firm: Monitor Group 2nd round job interview.
Industry Coverage: Electronics; Entertainment.
Case Interview Questions #00046: Your client is a division of Sony Corporation (NYSE: SNE) that
manufactures audio cassettes. Sony is a Japanese multinational conglomerate corporation
headquartered in Minato, Tokyo, Japan. Currently it is the world’s fifth largest media conglomerate with a

revenue of USD $86.64 billion in  fiscal year 2011.

Sony has hired you as an external consultant because they have been experiencing an alarmingly poor
sales year. They want you to help them figure out the root of the problem, and what to do about it. What
would you do?

Additional Information: (to be given to you if asked)

Audio cassette is a mature market. There are 5 or 6 major players. Your client Sony used to have a
steady 30% market share and was the second largest in industry. Now, the company 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 company has been losing sales representatives, yet loyal reps claim that sales are at record high
levels for them this year.

The company historically targeted two consumer groups: older, middle income enthusiasts, and high
school rock and roll stereophiles. Recently your client has been losing younger target market customers.

Your client has traditionally managed its relationship with retailers well. However, the firm has recently
lost several major accounts due to its inability to move your customer’s (the firm’s) products.

Possible Solution:
The combined market characteristics, recent symptoms and sales decline and increased market share
suggest that your client’s competitors are starting to abandon this market, likely due to a new and better
substitute technology (the compact laser disk or CDs, 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 that (1) your client wants to be a provider of this new technology and (2) client has the capacity
to manage a primary supplier position in its traditional line of business. For short term, target their older
customers as well as new segments less likely to switch over to CD’s; for the long term, consider
resource requirements, opportunities and constraints of developing or acquiring the new technology.

ProQuest Wants to Increase Market Share

Case Type: increase sales/market share.
Consulting Firm: Accenture 2nd round job interview.
Industry Coverage: Software, Information Technology (IT).
Case Interview Questions #00040: You are hired by ProQuest LLC, an electronic publisher and library
information services company based in Ann Arbor, Michigan. It provides archives of sources such as
newspapers, periodicals, dissertations, and aggregated databases of many types. Its content is estimated

at 125 billion digital pages.

ProQuest provides a computerized article search product on CD-ROM. The product allows users in a
library to locate articles by keyword search. ProQuest currently has a weak market share of only 10% of
all installed units. The CEO of ProQuest wants you to help address three questions specifically:

1. Why do they have so small a market share?

2. What could be done to improve the situation?
3. Where should it focus its resources?
Additional Information: (to be given to you if asked)
 Competition: There is a single major competitor which has 50% market share. The client and two
other competitors each have 10%; and the remainder is divided among many competitors.
 Market Segmentation: The following table outlines many of the details of the market segmentation
and client product data.
Type of Number of Client Market Major Competitor Competitive
Library Libraries Share Market Share Features

Academic 5000 20% 60%

 Search Quality,
# Research 500 80% 10% Content

Content, Ease of
# Other 4500 13% 66% Use

Content, Ease of
Public 10000 10% 40% Use

Secondary
Schools 20000 ~0% 10% Price, Ease of Use

 Product: The client sells a CD-ROM based product which is used on a dedicated PC in a library. 
The product has different versions that are upgraded each year.  Each version is marketed to a
specific library segment. Libraries are interested in matching the article search to hardboard volumes
available within the library. The client’s product is considered to have the highest quality of article
search.
 Pricing: The client sells its product at a 25% discount to the major competitor and has the lowest
prices in the industry. The pricing and profit schedule for each version are shown below.
Library Client Price Client Profit per Unit Major Competitor Price

Academic $2000 >$500 $2667

Public $1500 $500 $2000

Secondary School $1000 $100 $1333

 Competitive Features: Competition within the industry focuses on four dimensions: (1) Search
Quality, (2) Content, (3) Ease of Use, and (4) Price. The table above indicates the relative preference
for these features for each market segment. There is a trade-off between ease of use and search
quality.  A better search requires a more skilled approach to keyword usage and often makes the
search more difficult.  The client’s product is considered to have the highest quality search among the
competitors.
 Production: the product is created by programmers who seek to match the product to library
volumes. Since the principal input is labor, the type of CD-ROM created can be altered relatively
easily.
Possible Solution:
The client’s product does not match the needs of the large segments of the market (i.e. the client’s high
quality of search only appeals to a small segment of the total market) ==> weak market share.
The client should reallocate its resources to create products in the larger market segments — products
that emphasize content and ease of use over search quality.

The most profitable segment can be identified by using current client prices which should allow it to gain
market share (due to the 25% discount to the major competitor) and calculating the maximum market
profit:
Academic = 5000 x 500 = $2.5M
Public = 10000 x 500 = $5.0M
Secondary school = 20000 x 100 = $2.0M

Therefore, if the client re-align their product to emphasize ease of use and content, the potential profit is
4500 x 500 + 10000 x 500 = 7.25M (minimum since profit in academic segment is > $500 per unit)

Johnson & Johnson Increases Size of Business Operations

Case Type: improve profits/bottom line; increase sales.
Consulting Firm: Easton Associates 2nd round job interview.
Industry Coverage: Healthcare: Pharmaceutical, Biotech & Life Sciences.
Case Interview Questions #00029: Your client Johnson & Johnson (NYSE: JNJ) is a global health care
company manufacturing pharmaceutical, medical devices and consumer packaged goods. Its
headquarters is located in New Brunswick, New Jersey, United States. The corporation has some 250

subsidiary companies with operations in over 57 countries and products sold in

over 175 countries. Johnson & Johnson had worldwide pharmaceutical sales of $24.6 billion for the
calendar year of 2008.
Recently, Johnson & Johnson has decided it is interested in substantially increasing the size of its
operations. Its goal is to double both total sales and profits in less than two years. As a consultant brought
in to assist them, what would you do? What issues would you consider? What are some likely alternatives
for the client?
Possible Answers:
I. Possible Issues to consider:
1. What is the current scope of operations? In what areas of health care does the company deal? What is
its current market share in these areas?
2. What plans has the company already considered?

3. What is the competitive nature of the industry? What would be the effect on sales and profits of
reducing prices and margins?

4. What potential is there for expansion by acquisition? Do they have the financial capability? do potential
acquisition targets exist? Will the market for acquisitions be competitive?

II. Possible Solution:

Naturally, a suitable solution will depend upon the answers to the above questions. In general, a business
can increase profits by: Increasing sales. Increasing prices. Decreasing costs.

Here in this case, however, if the company’s margins are found to be consistent with industry norms, it
would seem unlikely that either increasing prices or cutting costs represent feasible methods by which to
double both sales & profits, particularly if the company is operating in a moderately competitive
environment.

This leaves only sales increases, which could be achieved by:

 Selling more of the current products to current customers

 Selling new products to current customers
 Selling current products to new customers
 Selling new products to new customers
Again, the suitability of these options will depend on the particular environment. In the particular example
of this case, it turned out that only selling new products to new customers via some form of diversification
could hope to achieve the company’s goals.

You should then consider the potential for increasing sales by means of diversification through acquisition
or joint venture. The relative benefits of each will depend on financial resources available as well as the
existence of, and the competition for suitable targets for acquisition or forming joint venture.