UCLA Case Book 2019 - 2020: © Anderson Management Consulting Association

UCLA Case Book 2019 - 2020
© anderson management consulting

association
List of Industry Overviews
This section includes brief overviews of 12 industries that are likely to come up in interviews
• Airline
• Automotive
• Commercial Banking
• Health Care
• Media and Entertainment
• Oil & Gas
• Pharmaceutical
• Private Equity
• Restaurant
• Retail
• Telecom
• Utilities
Airline
Key Ideas Revenue Streams Cost Drivers
• Consolidation in industry • Ticket sales to economy and business • Fuel

• Low cost carriers and fare competition passengers • Labor
on competitive routes • Charges for baggage and on-board • Marketing
• Online booking and check in services (up selling)
• Terminal fees
• Expansion of domestic and • Cargo transportation
• Insurance/legal fees
international routes • Credit cards
• Capacity optimization (Load Factor) • Value Added Services (food & drinks,
WiFi, etc.)
Customer Segments Channels Risks Key Economics Drivers
• Leisure travelers – • Internet online travel sites, • Changes in fuel prices have • World Price of Crude Oil
(generally price sensitive) airline websites a major impact on • Trips by US residents
• Business travelers – (very • Airline sales team: call profitability
• Optimization of capacity
important to airlines due to centers, online, or kiosk • Macro economic conditions
• Per capita disposable
margins and services • Travel management greatly impact amount of
income
purchased) companies (TMCs) serving leisure travelers
• Freight/Cargo corporate clients, travel • An intensely competitive
Transportation agents market with many foreign
airlines partly government
subsidized
Automotive
• Automakers, Original Equipment • New car sales • Labor

Manufacturers (OEMs), Replacement • Auto part sales • Materials
Parts Production, Rubber Fabrication
• Services offered with vehicle purchase • Advertising
• Highly capital and labor intensive
• Extensive competition due to foreign • Financing • Financing costs
automakers • Extended warranties • Recall costs
• Unions • Leasing
• Technology innovations such as electric
vehicle and autonomous driving
• Personal car buyers • Automobile dealers • Globalization of the • GPD growth

• Rental car companies • Secondary automobile industry enables more ease • Income growth/disposable
market of foreign competition income
• Commercial purchasers
• Automotive parts/services • Extensive competition • Price of crude
• Government purchasers
outlets impact on already low
• Steel prices
margins
• Consumer confidence index
• Changes in consumer trends
and tastes • Yield on Treasury note
Commercial Banking
• Consolidation/acquisitions • Loan interest (Loan types: Real estate, • Wages

• Increased mobile banking Auto, Personal, Education) • Bad debt expense
• Channel innovation in digital and • Service Fees • Interest rates on deposits
physical channels
• Spread between interest rate charged • Branch and compliance costs
• Customer attrition rate
and Fed rates
• Offshoring of call centers, back office • Overhead costs: paper fee, error rate
functions • Credit cards costs for manual processing
• Digitization of processes
• Cross selling
• Wealth: deposit balances, • Savings and loan • Change in savings behavior • Consumer confidence
income • Credit union • Loan default, interest rates • Household debt
• By lifestyle: buying • Traditional checking and federal funds rates • Employment statistics
behavior
• Online banking • Urbanization
• Size: small businesses and
• Microfinance • Home and car buys
consumers
• Disposable income
• Age: under 35 adapt to
technology better • Interest rate
• Government Regulation
Health Care
• Affordable Care Act • Hospital care • Dependent on segment

• Highly fragmented: Top 50 • Physician and clinical services • Significant costs related to new
organizations account for 15% revenues • Prescription drugs technology implementation
• Employers pushing health care costs • Nursing • Often inefficient organizational
onto employees structures
• Dental services
• Aging Baby Boomer population driving
• Research, Equipment, Investment
increased revenues
• Patients/consumers • Hospitals • New legislation (Impact of • Regulation for health

• All generations and • Doctors offices Affordable Care Act still medical insurance
segments of the population uncertain) • Federal funding for
• Nursing homes
require different • Funding availability Medicare and Medicaid
• Outpatient surgery centers
products/services • Aging population
• Pharmacies
• Advances in medical care
• Medical equipment
and technology
Media and Entertainment
• Create, license and / or distribute • Content sale/subscription • Labor

content (TV shows, movies, music, • Advertising • Marketing
news, video games, books, magazines,
• Licensing/distribution • Investment in digital technologies
radio shows, advertising, etc.)
• Developing and acquiring multiple
brands and multiple distribution
channels
• Digitalization
• Individual customers • Cinema • The business model is • The growth of streaming

segmented by: • Traditional TV and home evolving and mobile video
o Demographic video • Tech companies pose • Piracy and copyright
o Age • Internet advertising competition for online enforcement
advertising • Royalties and
o Genre preferences • Video games and e-sports
• Competition for best monetization
• Book/magazine publishing
content
• Music & radio
Oil & Gas
• Upstream, midstream, downstream • Crude oil • Exploration: seismic studies, drilling

• PV-10 • Gasoline rigs and labor
• Cost per gallon • Natural gas • Production: refining
• OPEC • Refining products such as lubricants • Pipelines
• GDP growth • Gas stations: gasoline, food market, car • Gas station: oil, labor, insurance,
wash licenses
• Renewable energy
• Fracking
• Petroleum refiners • Retail • Access to reserves • Government regulation

• Electricity generators • Wholesale • Energy policies • International oil production
• Domestic and commercial • Commercial • OPEC decisions and demand
users • Political pressures
• Other industries • Substitutes/renewable
energy
Pharmaceutical
• Affordable Care Act • Insurance payments • Research & Development

• Aging population • The federal government provides • Manufacturing cost
• Patents and generics certain grants to subsidize R&D • Marketing costs
• Research & Development
• Due to significant R&D lead times • Wages
• Insurance
revenue is highly volatile
• FDA • Liability insurance and legal fees
• Market penetration • Seasonality is high on certain products
• Contract vs in-house salesforce (vaccines and cold medicine) and low
on other products (pain medicines)
• Medical patients • Over the counter • Generic manufacturers pose • Median age of population
• Prescribing doctors • Prescription drugs: a major competitive threat • Research and development
Hospitals, pharmacies following patent expiration expenditure
• Government insurance
programs • Mail order pharmacy: • Tariff barriers are no longer • Insurance and regulatory
Express Scripts, Walgreens a relevant form of landscape
• Health insurance companies
protection
• Patent protection
• Unfavorable government
healthcare regulations and
CMS rates
Private Equity
• Value creation: selling underperforming • Components of the revenue charge • Wages and profit sharing
assets, pricing optimization, diversifying
customer base, operations efficiency
o Invested capital • Administrative costs (regulatory filings,
• Exit: strategic or IPO o Transaction and advisory fees record keeping, accounting and travel)
• Synergies o Carried interest • Outsourcing of capital-intensive IT
• Stability of cash flows (IRR, NPV) functions for algorithmic trading
• Strong management team • Divestures
• Targeted returns ~ 40%+
• Un-invested capital vs. invested
Investors Averages in Industry Risks Key Economics Drivers
• Pension funds (largest • Large firms focus on deals • New regulation → • Investor
share) ~$1B; middle market firms compliance costs, Rising uncertainty/Pension demand
cover deals between $15M - competition → decreasing
• Private investors (e.g. High $1B • Access to credit/interest
net worth individuals) industry fees rates
• Average holding period before
• Banks, sovereign funds and sale has increased from 3 years • Competition also exists • Regulations
life insurance companies to 6 years in the past 15 years with sovereign wealth funds
• Exit opportunities
• Borrowing can typically range
and corporate buyers
• GDP/Investment returns
from 65% to 85% of the • Changes in tax structure
purchase price of the firm
Restaurant
• Newer “ fast casual” restaurants like • Food and beverages (usually the higher • Labor
threaten to steal market share from both margin products) • Raw Material
QSR and full-service restaurants • Merchandise • Real Estate
• Implementation of technology to • Catering • Marketing
increase profitability
• Franchising fees
• Licensing
• Preferred/loyal customer • Dine-in • Maintaining a safe • GDP growth

• By location or • In-house Delivery environment for employees, • Consumer Confidence
neighborhood contractors, and other index
• Outsource Delivery
visitors
• Purchase decision • Pick up • Per capita disposable
• Wage and hour lawsuits income
• Liquor liability
• Food allergies
• Food-borne
illness/contamination
Retail
• Same store sales • Product sales (brick & mortar, online) • Cost of Goods Sold (74% of costs)
• Sales per square foot • Slotting fee • Transportation
• Advertising
• Inventory turn-over • Wages
• Affiliate marketing
• Seasonality/recessions • Cross-selling additional products and • Rent and utilities
• Trends services • Marketing
• Loyalty and rewards programs
• The industry consumer • Department Stores/Big box • Changes in disposable • Consumer Confidence index
oriented and, due to the retailers income • Per capita disposable income
spectrum of products, its • Discount retailers • Demand and supply issues • International Export/Import
markets are generally • Gross Domestic
• Demographic retailers • Overstock
segmented into different product/inflation
income, demographics and • Shopping malls • Easy entry invites
competition • Commodity prices (e.g. gold
age price for jewelry)
Telecommunications
• Deregulation led to spur of new • Voice calls • Infrastructure

companies • Additional lines/family plans • Frequency licenses
• Bottlenecks: High capital, scarce • Text and image communication • Wages
operating skills and management
• Data subscriptions • Marketing and advertising
experience
• Bundling with video, music & games
• Shift from telephones to internet-based
content
services for mobile
• Value Added Services
• Bundling of services
• Retail/individual customers • Retail stores - carriers and • Rapid development of • Investment in rising
• Residential and Small mass retailers technology technology services
Business (Price sensitive) • Direct sales force • High exit barriers • Number of subscriptions to
• Large multinationals (Price • Online • Systems not reusable across additional services
insensitive) industries • Number of broadband and
• Commoditized services mobile internet connections
Utilities
• Increase in energy consumption • Transmitted electricity: base load and • Purchased power accounts (nearly half
• High investment costs and regulations intermittent electricity of total cost)
• Industry structure is disintegrating into • Base load (95% of industry) • Infrastructure
smaller supplier segments
• Coal, natural gas, nuclear, other • Wages
• Seasonality
• Gov. incentives for sustainable • Intermittent: renewable energy • Marketing
initiatives • Maintenance contracts
• Bundling services with renewable
• Commercial and Industrial • Transmission • Clean energy threatens the • Economies of scale
• Residential lines/pipelines future of traditional power • Industrial production index
• Upstream electricity generation methods
• Climate/seasonality
generators • Seasonal demand leads to
uncertain estimates
• Energy efficient appliances
decrease consumption
Cases
# Week Cohort Title Type Industry

1 1 1 PHD China Snacks Profit/Market Eval CPG, International
2 1 2 Drug Store Profitability Profitability Product Mix/Retail
3 1 3 Airplane De-Icing Operations, Break Even Aviation
4 1 4 American Beauty Marketing/Brainstorming Retail
5 2 1 Zoo Co NPV/Profit analysis Investment/Other
6 2 2 Town Mayor Strategy/MacroEconomics Other
7 2 3 UPS in Italy Structure/Math Shipping/Logistics
8 2 4 Car Leasing Center Market Sizing/So What? Other
9 3 1 Alpha Capital PE/Investment Eval Retail
10 3 2 Shermer Pharma Market Entry Pharma
11 3 3 Thompson Healthcare Cost Reduction Healthcare
12 3 4 Brazil Mining Strategy/Valuation Mining
13 4 1 Engineering Co M&A Industrial Goods
14 4 2 After School Programming Growth Strategy Other
15 4 3 Brazilian Road Concessions Investment Valuation Govt
16 4 4 Rock Energy Profitability Energy
17 5 1 Diabetes Testing Meter Market Entry Pharma
18 5 2 Stews Connection New Product/Market Size Aviation
19 5 3 Upscale Restaurant Profitability Restaurant
20 5 4 High Q Plastics Profitability/Competitive Landscape Industrial
1
1 / PLD Snacks
• Our client is PLD, a global manufacturer of snack foods and beverages. PLD has been a market leader in China’s potato chips (PC)
market for over two decades now but is facing increasing local competition.
• Most notably this year, the company’s volume share in the South China region declined from 60% to 20%, and the company
hired us to find out why and how to react.
Overview for Interviewer Notes
Industry: CPG/International
This is a conversational case that focuses on competitive strategy.
Please note that there are critical pieces of information necessary for the
Case Format: Competitive Strategy applicant to complete the case successfully. If the interviewee does not
immediately ask for information on competitors, products, and customers,
drive them toward those items before proceeding.
Concepts Tested:
• Market Evaluation
• New Competitor
• Competitive Response
PLD Snacks – Interviewer Guidance
Clarifying Answers to Provide if Interviewer Guide to Case and

Asked Handouts
Products Case Structure

• Consumers see current potato chips
products as commodities, so average
price is similar across competition The first question will focus on diagnosing the root cause of share loss by
• Currently all potato chips are fried but understanding changes in both market size and the client’s volume in South
PLD is considering introducing baked China region.
products which use minimal or no oil
in production.
The second part of the case the interviewee should guide creative thoughts on
Consumer – there are two primary
innovation, supply chain management and sales/marketing strategies to react
consumer groups in the PC market, the
to the situation. This is the fun part and the interviewee can recommend
Totally Fried Guys (TFGs) and the
several strategic choices in both short and long term.
Completely Baked Dudes (CBDs) group
• Totally Fried Guys prefer the
crispness of current fried products
• Completely Baked Dudes prefer Answer
baked products with less or no oil
• TFGs comprise 80% of total market
consumption but more people are Candidate should identify that PLD’s growth has been in line with existing
switching to the CBD group. Assume competitors. The loss in market share is due to the entrant of prominent new
no seasonality in consumption. competitors.
Additional Information for Interviewee
Understand Market Size and

Share
The following information will be necessary to determine shift in South China volume share (60% – > 20%)
Notes to Interviewer
Interviewer to Provide
• Last year, PLD recorded 800,000 tons of sales in the national PC market with 40% market share, followed by WWT (10%)
and DLT (5%)
• The South China Region accounts for 10% of overall national PC market
• Last year PLD sold 120,000 tons of PC in South China with 60% market share; the rest of the market goes to WWT (20%)
and DLT (20%)
Table for Reference – To be calculated by Candidate

National South China
Sales Volume (tons) Market Share Sales Volume (tons) Market Share
PLD 800,000 40% 120,000 60%
WWT 200,000 10% 40,000 20%
DLT 100,000 5% 40,000 20%
Other 900,00 45% - -
Total 2,000,000 200,000
PLD Snacks – Analyzing Market Share Change
1 & 2 / Diagnose the change in volume share (60% -> 20% ) in South China
1 / PLD’s volume is 132,000 at the close of this year. How 2 / WWT and DLT volumes grew by 10%, what does this
does that compare to last year? mean for the overall market?
Notes to Interviewer Notes to Interviewer
• Interviewee should realize this is 10% volume growth, • Interviewee should realize WWT and DLT are growing at
as last year’s 120,000 tons the same rate as PLD and therefore were not driving
market growth; it must be that new competitor(s) entered
Interviewee should use calculation and previously shared the market
information (that PLD’s South China market share dropped
to 20%) to realize: • Most importantly, the new competitor(s) now command a
majority market share
• The market size grew dramatically (132,000 / 20% =
660,000 tons, versus 200,000 tons full year last year). • Vol. of PLD+WWT+DLT = 200,000*(1+10%) = 220,000
• Interviewee should then understand that the market tons, a third of the current market size of 660,000
share loss was not caused by volume decline, but by a
jump in market size
PLD Snacks – New Competitor Analysis
3 & 4 / Interviewee should probe on the following topics
Interviewee should identify the critical role the new competitor(s)

What do we know about CBDs in South China?
play in the market and identify their market share individually and
why they are excelling
New Competitor Information The CBD group was only 20% of the market
• There was only one new competitor, XCD which entered the market in volume, but now more than half. ( XCD’s 90K
the middle of this year. This competitor has done exceptionally well. monthly vs Rest of Market’s 55K = 62%)
Provide the following if asked about XCD’s market share/sales: Frequency of eating potato chips has not changed for
• XCD has been in the market for only 3 months (now is Sept.), but either of the two groups.
generated 280,000 tons of sales! Interviewee should start thinking where the new
• An excellent candidate would quantify XCD’s performance by CBDs consumers came from:
looking at its monthly sales – That means XCD’s monthly volume was • Most of them were NOT “switchers” coming
more than 8 times PLD’s (280,000/3 = 93,000 tons/mo. vs. PLD’s from the TFG group.
132,000/ 12 = 11,000 tons/mo.) • An excellent candidate would reason that the
majority of CBD consumers this year were
Why is this competitor doing so well? previous non-consumers of potato chips
• Explore 4P: Product, Price, Place and Promotion (in a less rigid way) • Reasons could be that these people concerned
Once explored 4Ps are explored, provide the following: about oil in the fried product. They are now
• The key is product – XCD introduced a baked product coming into the category to buy XCD’s baked
• Interviewee should realize it was the CBD group who was buying the product which is not oily
newly launched baked product
PLD Snacks – Closing Thoughts
5 / Wrap it Up
Please provide an overview of the issue at hand, and a concise recommendation as to how we should proceed.
Candidate should provide a crisp recommendation in under one minute.
A good recommendation will address the following:
Is this a real threat?

• A good candidate should consider both short term and long-term
• In the short term, XCD seems to be growing on its own without stealing users from PLD, and they are only selling in a small
regional market (South China only 10% of national volume).
• But in the long term, given the CBD trend and XCD’s huge success in South China, XCD is likely to go nationally. South
China may be only a test market for them.
How should PLD react?

• Short term: focus on protecting business in South China and other regions by increasing marketing investment, promotions,
or introducing new flavors to excite the TFG group
• Long term: create own baked product or consider buying the new competitor
PLD Snacks – Potential Structure
Snack PLD’s
Competition Snacker Market
Business
• Flavor trends • Total market growth • Discontinued chip flavors
• Health trends • Segment growth • New pricing strategy
• Pricing changes • Changes in taste • Supply chain changes
• Distribution channel changes • Changes in chip type • Lawsuits
• Public relations scandals

2
2 / Drug Store Profitability
• Our client is a drug store chain, similar to CVS, they have been losing profits for the last few years. Can you help us identify the
reasons and means to improve the profits?
Industry: Pharma • This case is done as a discussion, with the interviewer pushing the
interviewee toward revelations without necessarily asking direct
questions.
Case Format: Profitability
• Is the loss of profitability due to product mix, store mix, increasing

Concepts Tested: costs or decreasing revenue? Or a combination of all the above?
• Product Mix
• Retail • What can the company do to improve profits – focused discussion
• Business Operations around one area of improvement from above list
• This is a great case to begin incorporating some brainstorming given

that most candidates are familiar with the industry. Push for
candidates to draw insights out of their real world experience.
Drug Store – Interviewer Guidance
Clarifying Answers to Provide if Asked Interviewer Guide to Case and Handouts
Stores are typical to CVS, located in Case Structure

several areas.
Stores have three key business areas: The interviewee should develop a MECE framework that covers a wealth of
reasons why profitability is an issue.
1. Pharmacy
2. Health + Beauty
3. General Merchandise
As information on product mix, store mix and location is shared with the
interviewee, the candidate should brainstorm risks and opportunities of
making changes based on the information provided.
Answers
The firm is losing profits due to several reasons

• Product mix
• Store mix
• Location Details
The company should look at

• Changing product mix
• Closing bad stores
Drug Store – Product Mix
1 / Product mix
After structure, push candidate to identify that there could be different profitability by product.
Verbally provide the information in the table above to the candidate.
Product Type Sales/Sq Ft Profit Margin

Pharmacy $20,000 5%
Health and Beauty $10,000 20%
General Merchandise $5,000 10%
Candidate should identify the profit per Sq Ft:

• Pharmacy ($1K)
• Health and Beauty ($2K)
• General Merchandise ($0.5K)
Push the candidate to identify opportunities and challenges of changing product mix:
• General Merchandise could be to gain foot traffic; Ensure it brings in those who shop Health and Beauty products
• Optimize store layout to give more shelf time to high margin products
• Backlash from suppliers on reducing size and SKUs of orders
Drug Store – Cost Management
2 / Cost improvements
Push candidate to identify ways to improve the cost side of the margins of general merchandise; in particular milk
Candidate should attempt to brainstorm ways to improve the cost structure of general merchandise in a structured manner.
Acquisition Distribution Retail
• Find cheaper suppliers • Cost of refrigeration • Cost of refrigeration

• Renegotiate contracts • Reduce Mileage • Cost of spoiled materials
• Find local suppliers • Outsourcing vs insourcing • Improved forecasting of
• Get volume discount delivery demand to reduce inventory
• Grouping of delivery with
other merchandise
Drug Store – Store and Location Mix
3 / Profitability by store
Push candidate to recognize that profitability by store and location may be different
Information to provide to candidate on store mix:
• 60% of the stores are located near hospitals, in areas with heavy competition and in high crime infested areas – these stores
make 10% loss
• Remaining stores make 25% profits
Candidate should identify the following:
• Stores making a loss should be closed.

• Risks of closing: Product shift could change 10% loss, Loss of key customers who are focused on health and beauty, backlash
of closing stores
• Leverage lessons of profitable stores: identify common traits of profitable stores, opportunity for growth and how competition
and market size in those store locations looks
Drug Store – Closing Thoughts
4 / In conclusion…
The recommendation should provide clear and succinct guidance on why the company has been losing profits for the last few
years, as well as next steps to proceed. The recommendation should also be delivered as it would be to a client, with a positive
and hypothesis driven spin on the conclusion.
The firm is losing profits due to several reasons

• Product mix
• Store mix
• Location Details
The company should look at

• Changing product mix
• Closing bad stores
• Improving on location
Drug Store – Potential Structure
Revenu Costs Competition

e
• Product mix trends • New stores • New locations nearby
• Customer segment trends • Renovations • Competitive pricing
• Pricing / discount trends • Labor / overtime / turnover / • Product variety

training
• Location mix • Integration of suppliers

• New supplier contracts
• Online shopping
• Logistics costs
3
3 / Airplane De-Icing
Your client is Air Co, a U.S. airline that has significant operations at one the of Chicago airports. Due to cold weather, the client’s
planes often have to be de-iced, but because the airline’s de-icing need is very unpredictable, the client decided to outsource de-icing
to Ice Co last year. However, Ice Co’s performance has not been satisfactory.
The client is considering in-sourcing airplane de-icing, but currently does not have enough resources perform the de-icing in-house.
The client requires a 4-year payback on investments and wants to know if they should in-source or outsource the de-icing.
Industry: Airlines • This case is interviewer guided/lead.
Case Format: Break-even • This case is about calculating the break-even on an investment
opportunity. The interviewee should demonstrate clear structure in
their calculation.
Concepts Tested:
• Operations
• Break-even • The interviewee should bring the break-even calculation into a
broader context once the calculation is complete
• Although there is not a page given for this, the interviewer should
first ask the interviewee outline the major cost buckets.
Airplane De-Icing – Break Even
1 / Present Exhibit 1 to Interviewee and ask them to fill out, providing following information as asked
If the client in-sources the de-icing: they will need to hire 150 people (30 people multiplied by 5 months) for the whole icy
season.
• Workers must be paid for the whole month, even if they only work for one week
• Each worker costs $4,000 / month
• There are 5 months in the icy season
The performance problems result from Ice Co taking too long to de-ice the planes, leading to delays; we cannot quantify the impact
of this
Calculate in-sourced labor costs per event

• 3,000 events/season x 1/5 season/months = 600 events/month
• 150 workers/season x 1/5 season/months= 30 workers/month
• 30 workers/month x $4,000/worker/month = $120K/month
• Labor cost/event = $120K/600 = $200 per event
Calculate labor savings per event

• Outsourced cost: $300 + chemicals ($5 x 40) = $500/event
• In-sourced cost: $200 + chemicals ($4 x 40) = $360/event
• Savings = $140/event
Calculate payback period for the investment

• Savings per year: $140/event x 3,000 events/year = $420K
• Payback period: investment/savings per year = $3M/$420K = 7 years > than 4 year payback requirement
Airplane De-Icing – Analysis
2 / Achieving Payback Period 3 / In Conclusion…
How could we decrease the payback period? Please provide an overview of the issue at hand, and a
concise recommendation as to how we should proceed.
Notes to
Interviewer
List of possible options: The recommendation should provide clear and succinct
• Fewer employees guidance on why the company should or shouldn’t enter the
• Restructure labor contracts so employees are paid actual market, as well as next steps to proceed.
time worked
• Reduce cost of gallon of chemicals
• Reduce amount of chemicals used per event To decrease payback period:
• Reduce investment costs –lease equipment instead of
purchasing it.
• Decrease labor costs to increase savings per event: re-
negotiate labor contracts; explore more flexible options
instead of hiring by month.
To improve Ice Co’s performance:

• Implement contract terms that require IceCo to meet
pre-determined performance metrics.
• Tie Ice Co fees to meeting contract terms
Airplane De-Icing – Potential Structure
Outsourcing In-sourcing Revenue

Costs Costs Comparison
• Fixed contract fee • De-icing equipment • Fewer “customers”
• Per-plane or time-based billing • De-icing chemicals • Better-trained staff
• Procurement / governance • Labor • Better incentivized staff

costs
• Airport fees • Faster de-icing times
• Procurement / governance
costs
Airplane De-Icing – Exhibit 1
Ice Co Client
Number of Events 3,000 3,000
Fee per Event $300 N/A
Labor Costs N/A ?
Cost/gallon of Chemicals $5 $4
Gallons of chemicals per event 40 40
Cost Per event ? ?
De-Icing Investment Costs

3.5
3
Investment Cost ($M)
Note for BW printing,

2.5
2
Top = Training
1.5 Middle = Supplies
1 Bottom = Equipment
0.5
0
Training Supplies Equipment
4
4 / American Beauty Company
American Beauty Company (ABC) is, as the name suggests, a high quality beauty products company. They have done very well both
in the US and globally and enjoy great brand recognition. One of their major products is hair color. ABC manufactures high quality
‘use at home’ hair color products. They sell through retail and drugstores, with all manufacturing in-house. They have an 800 number
for customer support. Recently they have been experiencing declining revenues and market shares. The retailers have complained
about their products as the competition Bell International takes over. The firm has been called in to advise ABC on what to do.
How would you start thinking about this problem?
Industry: Consumer products • Interviewer led/guided
Case Format: Revenue decline • Jump into framework after reading the prompt
Concepts Tested: • Emphasis on using data and insights throughout the case in the
• Market share final conclusion. Pointing out brand awareness and perception of
• Segmentation quality and low market share of men’s as sources of the potential
• Market sizing problems.
• Focus on structure and logic for brainstorming questions.

Framework example
Its an open ended question. There can be number of ways to approach this problem. Crucial here is to look at the big picture and come
up with three or four major areas that you would like to explore given this specific product, industry and the situation. Do not get
caught in the profitability trap due to mention of declining revenues. A good answer would include following
Distribution
Product Customer
Channel
• Attributes • Target market (segments) • Distribution network
• Ease of use • Brand loyalty • Shelf space and positioning
• Value prop • Price sensitivity • Share of distribution network

compared to competitors
• Price • Important attributes
• Benchmark against comps • Typical cust. behavior
• Market share and trends • Purchasing habits

Core Case Question 1
1/ Brainstorm Question
One of their biggest market segments is 18 – 55 year old women. But their share has been declining recently. Why do you
think this might be happening? How would you approach this issue?
Notes to Interviewer Exceptional Candidates Will Mention…
• Break down the problem in this kind of structure

There might be a number of issues here. But structure is the
and use language such as “in order to test these
most important. Candidates should break down the
issues, I would…”
problem into two:
1. Why this may happening?

• Lack of brand awareness
• Low Trial % of products in this segment
• Low Re-trial/re-purchases % 🡪 quality issues
• Issues with access/distribution
2. How you would go about testing these hypothesis?

• Marketing research to see which one of these ABC is
lacking in
• Compare against industry/competitor benchmarks
Break Even & Market Potential
Using the data below, what sales are required for ABC to have 50% of the women’s market in 2 years?
Candidate should conduct market share calculation • Interviewee should point out that based on this data
using the data table below which you can provide looks like their biggest segment, women, is maturing
verbally fast.
Market Share
Calculation
What is the dollar market share for ABC currently? What will the mkt share be in 2 yrs?
Notes to Interviewer Exceptional Candidates Will

Mention…
They will need to ask for the current and future mkt share data. Current market share • Explain all calculations before
is as below. Assume they keep the same market share in 2 years. diving into them.
• Interviewee should notice that
ABC has quite low penetration
rates in men’s segment
ABC’s current $ mkt share = 0.5 * 800 + 0.1 * 200 + 0.3 * 100 = 400 + 20 + 30 =
450M
Bonus: Mkt share % = 450M / 1.1B = ~41%
ABCs Market share in 2 years = ABC share in $/total market in $

Total market in 2 years = 800 * (1.05^2) + 200 * (1.2^2) + 100 *(1.1^2 )= 882 + 288
+ 121 = 1291M
ABC’s market share in 2 years = 882*0.5+ 288*0.1+121*0.3 = 506.1
Mkt share % = 506.1 / 1291= 39.2%

Market Share
Calculation
The team also did a customer brand awareness and perception survey in the 18 – 55 yrs women segment for ABC
benchmarking its products against the competitor Bell. The results of the survey are in the table below. What do you
notice and what do you suggest ABC can do about it? (Hand exhibit 1 to interviewee)
Exceptional Candidates Will

Mention…
Survey results in exhibit 1 and below You can see from the results of both the surveys that
despite its high quality and brand recognition, the
competitor Bell fares better amongst customers in
both dimensions whether users or non users.
ABC should focus on improving its brand awareness

and perception of quality. For brand awareness, they
have to focus on advertising. To improve its
perception of quality, they should invest in
promotions, joint marketing efforts with retailers to
push their product and trials.
Conclusio
n
Can you please summarize your findings and give a recommendation to the ABC CEO?
Exceptional Candidates Will

Mention…
• Conclusion should be structured with A good recommendation will include the following major points: Based on
summary of all calculations/findings the analysis so far, it seems like the main reason for declining revenues and
market shares is that the competitor Bell has achieved better brand
• Next, conclusion should go into a awareness and perception of quality in the market compared to ABC.
couple of recommendations to improve
revenue Hence ABC should focus on improving these through advertising and
aggressive promotions and marketing. Going forward, it seems like ABC
has very low penetration in the men’s segment. They should target these
segments for future growth opportunities since the women’s segment seems
to be maturing. Also, the total market size of teens seems really low. There
might be opportunities there to expand the total market size through
innovative products, increased usage and acceptance of hair color products.
Exhibit 1
5
5 / Zoo Co.
• Our client is a zoo that is thinking about acquiring a famous zebra from an African preserve.
• It’s a huge investment, but they believe the new zebra would be a great contribution to their animal community. You have been
engaged to help decide whether this is a good idea. What would you consider when trying to help your client make this decision?
Industry: The interviewee should lead the case, but interviewer should use
Zoo & Aquarium structured question prompts.
Even though the client is a Zoo, we're undertaking a similar process to what
is done when underwriting an insurance policy. The case evaluates basic
Case Format: concepts, but involves many calculations and use of financial and
M&A assessment techniques. (This is also very similar to an acquisition case.)
Key case objectives:
Concepts Tested: 1. Investment Valuation –Walk through the valuation process for an asset
• Investments 2. Breakeven Analysis –Determine the revenue increase needed for a
• Break-even Analysis positive NPV
• Basic NPV 3. Risk Assessment –Should the zoo should use an insurance contract to
hedge downside risk?
Rounding numbers is generally okay but should not be done to the extreme
as it will alter the results
Zoo Co. – Interviewer Guidance
Data to provide when asked (nudge The interviewee should think about performing a break-even and a sensitivity
toward revenue/cost if needed) analysis.
• 300K people visit the zoo annually
• Admission is $15 per person They should start by asking about the benefits and costs associated with zebra
• Benefits from zebra acquisition acquisition (Left)–Share with interviewee after probing questions are received
could lead to increased attendance.
Another zoo that acquired a similar Using the data on the left to calculate benefit to zoo from acquisition
zebra had an 8% increase • Determine whether or not this zebra purchase makes financial sense for the
zoo, using the NPV value
Costs from zebra acquisition
Using the cost and benefit data provided, the interviewee should calculate the
• Food, health costs and additional simple NPV of the acquisition
trainers are part of annual
maintenance costs Assume that attendance benefits are realized immediately and maintained
• Acquisition cost: $235K thereafter
• New facilities: $850K • Annual benefits = (300K)*($15)*(0.08) = $360K
• Transportation: $110K • Upfront costs = $235K + $850K + $110K = $1.195M
• Annual maintenance: $90K • Annual costs = $90K
• Discount rate = 20% Assume that • NPV = -$1,195K+(($360K -$90K)/0.20) = $155K
immediate cost are paid today, and
annual costs and benefits are realized Continue by asking questions in next page
beginning next year and sustained
into perpetuity (assume that the
Zebra would live forever to simplify
the calculation)
Zoo Co. – Key elements to analyze
1 / Break-even 2 / Risk
Analysis Assessment
Zoo Co. is concerned about using the other zoo’s attendance Since the zoo is very risk-averse, they’re interested in hedging
benefits as a proxy. They think that attendance could some of their downside risk. An insurance company has offered
increase by less than 8%. What analysis could you perform to provide the Zoo with a constant revenue to increase revenue to
to address their concerns? What is the breakeven attendance $250,000 per year if attendance increases are less than or equal to
increase required? 5% (if additional revenue for a particular year is only $135K, the
insurance will give the Zoo, $115K).
In exchange, the insurance company wants the zoo to pay 1% of

the zoo’s total expected annual revenues as a premium. What
might you do to determine if this was a good deal?
The interviewee should determine that a sensitivity / The interviewee should recognize that additional information
breakeven analysis of the NPV calculation with lower is needed, and that a market research study could aid in this
attendance increases will help confirm that the project still process.
makes sense
Hand out Exhibit 1 after the interviewee identifies this notion
See calculations page The interviewee should use the market research to determine
the probable attendance increase
Zoo Co. – Calculations
3 / Mathematics Questions
1. What is the breakeven attendance increase required?
1. Do you think the insurance company is providing a good deal to the zoo? (Present Exhibit 1for this question)
1. Break-even:
• -$1,195,000 + ((revenue-$90,000)/0.20) = 0
• ($1,195,000) x .20 = revenue - $90,000
• revenue = $239,000 + $90,000 = $329,000 (*required additional revenue to break even)
• $329,000 = (300,000) x (15) x (% increase)
• % increase = ($329,000 / $4.5M) = 7.3%
After handing over exhibit 1

2. Annual cost to zoo: 1% of total zoo revenues = (0.001)*($4,752,000) = $47,520
Annual expected benefit to zoo = ($250,000 -$225,000)*(0.40) + ($250,000 –135,000)*(0.20) = $33,000

Costs > Benefits, so this is not a good deal
Zoo Co. – BONUS (if time permits) Calculation
4 / The GWF enters the picture
The Global Wildlife Federation will pay any zoo $500K after a zoo host its endangered insect exhibit for one year. The
increased traffic from the new exhibit will generate an additional $280K in revenue.
Zoo Co. is expected to incur $655K in costs to set-up the exhibit. Is the new exhibit worthwhile setting-up
Assume the 20% discount rate and all revenues occur after year 1
NPV Calculation:
= -$655,000 + (($500,000 + $280,000) / 1.2)
= -$655,000 + (($780,000) / 1.2)
= -$655,000 + ($650,000)
= -$5,000
Zoo Co. – Solution & Recommendations
4 / Final recommendation, solutions, and thoughts
• It is unlikely that the zebra acquisition is a good idea for the zoo to undertake given the information provided. At other zoos,
attendance has gone up substantially due to a new zebra; however, based upon our market research, it seems less likely that
we can breakeven on the investment through increased attendance. We have received an insurance contract to help mitigate
some of the downside risk; however, it is too expensive to create value.
• In order to make the investment more palatable, we may consider negotiating with the insurance company to either increase
the revenue benefits provided or decrease the premium cost.
Excellent Cases
Will:
• Identify that we can use another zoo's attendance increases as a proxy for estimating our own attendance increases
• Notice in Exhibit 1 that it is unlikely that attendance will increase sufficiently enough for the zoo to break even
• Notice that the insurance company's premiums and benefits are both impacted by attendance increases; so if attendance
increases are always greater than 5%, the zoo will be paying even more but getting no benefit
• Notice that the insurance company's contract is essentially an option; so a different structure to the contract may be more
suitable for the zoo
Zoo Co. – Exhibit 1 Market Research
$450,000 45%
$400,000 40%
$350,000 35%
$300,000 30%
$250,000 25%
$200,000 20%
$150,000 15%
$100,000 10%
$50,000 5%
$- 0%
3% 5% 7% 9%
Possible Attendance Increase
Annual Revenue Probability
Possible Attendance Increases Annual Revenue Probability

3% Increase $135,000 20%
5% Increase $225,000 40%
7% Increase $315,000 30%
9% Increase $405,000 10%
Expected Additional Annual Revenue $252,000
Plus: Current Annual Revenue $4,500,000
Expected Total Annual Revenue $4,752,000
6
6 / Town Mayor
The client has just been elected to be the mayor of a town of 500,000 people in the United States. The town has experienced some hard
economic times recently and there has been a slight decline in population. The mayor’s election platform was centered on a message
of economic revival with a plan to be launched in the first 100-days of office. The mayor has hired you to help develop the plan. What
information would you like to know about the city and what is your plan?
Industry: Government This is an interviewer-led case with the following objectives:
• To see if the candidate can come up with a comprehensive

Case Format: Growth framework to get to a solution
• To see if the candidate can complete some quantitative analysis
Concepts Tested:
• To see if the candidate can demonstrate creativity
• Conceptual problem solving
• Structure
• Ask the question in the prompt and see the framework example on
• Creativity
the next page
Framework Example
Candidate should start by providing a framework to analyze the town…
Revenue Cost trends Population trends

trends
• Income taxes (by income • Education • Population segment

bracket)
• Subsidized health care • Employment / employers

• Sales tax
• Public transportation • Lifestyle

• Property tax
• Public services (e.g. police &

• Corporate tax fire)
• Other taxes (e.g. vehicle • Other (e.g. public assistance)

license)
1 / Brainstorming
Question 1: What could’ve caused the population and economic decline?
Possible answers could include… More structured responses by breaking down the problem
into levers.
• Poor macro conditions
• Tax increases
• Aging population Population decline
• Deteriorating infrastructure - Leaving the area
• Surrounding cities are in economic decline - Mortality rates
• Increasing crime rates - Aging population
• Major airlines cut numerous flights to and from the city
Economic downturn
- Lower spending – because of decreasing population or
higher taxes
- Over-reliance on one industry etc
2 / Unemployment Overview
Question 2: Unemployment is currently 8%. The mayor would like to increase the population by 5% and decrease
unemployment to 5%. How many new companies does the town need?
To be provided to interviewer upon request:
• 60% of the population can work
• The average company size is 500 employees
• Original prompt said population is 500K
Solution:
1. Identify current working and employed population
Population that can work = total population X % who can work = 500K * 60% = 300K
Current total employed workers = working population * (1 – unemployment rate) = 300K * (1 - 8%) = 276K
2. Calculate net additional employed workers needed in mayor’s desired future state
Mayor would like to decrease unemployment to 5% (i.e 95% employed) and increase the population by 5%
Future population that can work = 300K*1.05 = 315K
Future total employed workers (95%) = 315K*95% = 299.25K
Increase in workers = Future – current = 299.25K – 276K = 23.25K
3. Total companies needed

Total companies needed= increase in workers / # employees hired per company = 23.25K/0.5K = 46.5 companies ~ 47 companies
3 / Other Options (Present Exhibit 1 + 2 )
According the graphs, which companies should be pursued by the mayor?
There is really no right answer to this question, but the candidate should recognize the following things:
• Highest age distribution is 40-50
• 18-30 age distribution is relatively low
• The right mix of companies is a combination of potential growth, risk and which age distribution to go into. It is OK to
choose the high growth high risk company as long as it is paired with other lower risk options. A reasonable portfolio
would be pursued possibly.
• Example answer: 8,3,4,1 – took the high risk/high potential due to the upcoming generation from 10-18 while mitigating
the greater risk by choosing 1.
4 / Other Options
The state is considering putting a university in the town – what concerns do you have with this proposal?
Possible concerns:
• The town is older (retirement community) and not ready for this
• No central location geographically to put a large university
• How will the university be funded? What will the cities role be?
• What is the time frame?
• Will progress be able to be made before the next elections come up?
• What taxes would the university pay?
• Would students and/or staff live in the city?

Conclusion
4 / In conclusion…
Space left open for overall notes

Exhibit 1 Exhibit 2
Average employee age in industry by growth

70 potential and risk
Age group distribution
100% Bubble size: risk of industry growth
90%
80% 9
Company Avg. Age

70%
1
(years)
3
60%
6
50% 4
2
40%
7
30%
20%
10% 8
5
0%
Age Groups 18
0-18 18-30 30-45 45-60 60-75 Low Potential for growth Industry High
7
7 / UPS in Italy
Your client is a startup in a small village in Italy that provides the local delivery of packages sent to this village through UPS’s next-
day-delivery service. The CEO of this firm has hired you to help them decide how many trucks to lease. There are different models
available, but our client has been told that they will need to have a consistent fleet (they can only lease one model type) and so we will
also need to identify what model they should lease.
Let me provide a quick overview of how the company operates: (i) They receive every package at 5pm from UPS, (ii) a bunch of
people then sort the packages and (iii) load them on a truck where they are stored overnight, and (iv) then deliver them starting at 9am
for 10 hours. How would you suggest approaching the client’s problem?
Industry: Logistics
• This case is interviewer guided/lead.
Case Format: Operations • This case tests a candidate's ability to analyze how many packages must be delivered and to
see if the bottleneck is the time or the truck size.
• Not all information is provided up front to the candidate; he/she should be aware of this and
Concepts Tested: Bottlenecks
must identify additional data that will allow him/her to solve the case.
1 / Framework
How would you go about analyzing this problem? (This is the spot for the framework – a potential answer is below)
Ideal
responses
Interviewee: I’d like to understand a few things to evaluate this decision. First, I would like to start by analyzing the
demand. I would like to know how many packages we have to deliver and how long, on average, it would take us to
deliver a single package. Then, I would like to analyze the numbers in the context of the three truck models our client can
lease.
2 / Overview
Given the following information, which truck option should the client select and how many trucks will you need to satisfy the
demand?
Solutio
n
Information to be given: Least amount of trucks needed (based on 8 min delivery constraint) needed =
• Packages delivered per day: 1,000
Time to delivery all packages / time in the day
• Dimension of package (envelope) is 1x1x1.
(8mins * 1000 packages) / (10 hours * 60 mins) = 13.3 trucks
• Operates five days a week.
• It takes 8 minutes, on average, to deliver a single
When assessing each truck, we multiply 1,000 (total packages for all trucks)
package and to be ready for the next one (“assume by 1*1*1 (average package size) and divide by the truck capacity to
they deliver one every 8 minutes”). determine how many trucks we will need. Given the constraint on minimum
• Drivers, fuel, etc. are not considered and do not
number of trucks calculated above, calculate the cost per day based on the
make a material difference to the analysis (for sake number of trucks required and cost per truck per day.
of simplicity).
Cost Demand Capacity Trucks/day Trucks Total cost
Truck Dimensions
per day per day / Truck (rounded) (min) per day
Truck Cost per Dimensions
day A $150 3*4*5 1,000 60 17 17 $2,550
A $150 3*4*5 B $40 9*2*1 1,000 18 56 56 $2,240
B $40 9*2*1 C $130 6*8*10 1,000 480 3 14 $1,820
C $130 6*8*10
Question
3
Ok, it seems a good idea. Let’s move on. Now imagine 6 months have passed and your recommendation was pretty successful.
Now the CEO want us to investigate any potential risks that he/she should be assessing/considering.
Potential structure for analyzing risks
Internal External
• Only one supplier (UPS) – we are captive to UPS

• Need for extra drivers (e.g. people get sick) – do we
have enough employees • Adoption of new technology (e-mail) might reduce the
need for sending packages
• Unionized drivers may shift labor cost up in the future
• Government regulation
• Need to lease more trucks because trucks can break
down causing late delivery • New competition in the city – there are no real barriers
to entry, since UPS would likely partner with any
• Insurance costs carrier who can deliver on customer service metrics at
a cheaper cost
• More fine tickets than forecasted because drivers want
to deliver on time • No association with our brand, this our supplier can
switch to our competitors or start its own operation
4 / Another Scenario
Let’s think of another scenario. Now we have to investigate sources for profit growth for this company with one restriction, we
can neither add new truck leases nor change the existing ones. ( Push for out of the box solutions – no formal wrap up here)
Revenue Costs
• Extend hours: the trucks are already paid for the day, if we • Evaluate the route of each truck to reduce time or usage of fuel
extend the delivery time after 7pm we can deliver more of UPS • Improve technology usage in the sorting and loading packages;
or from other companies, even local companies. may reduce number of people at the factory
• Different packages: we may recommend to UPS to sell different • Re-negotiate leasing terms for trucks
(more robust) packages to some clients and get part of it. • Move warehouse to a cheaper place
• Pick packages: every time we leave a package we make space to
pick a package and deliver it to another part of the village or to
give it back to UPS to send it to another place
• Get contract with a new operator: see whether we can deliver
stuff to other company who is in the delivery business but does
not compete directly with UPS. Thought we can not add new
trucks we can think about utilization of current trucks
• Advertisement: are the trucks painted with UPS logos? We can
sell advertisement to them or to other companies. Those trucks
are all day in the street.
• Insurance: offer insurance of packages to clients.
8
8 / Car Leasing
Our client is a large car manufacturer that has been facing financial stress for the past few years. To overcome this crisis, they bought
a small bank and started offering a lease at a lower rate than the other car manufacturers. This move has positioned our client
strategically in the market and has helped them regain market share. However, the problem they are facing now is that the costumers
are complaining of poor customer service in the banking division. The client reached us to help them improve their banking division
customer service. In particular, they want to create a call center to provide support to all lease customers, but they don’t know how big
this call center should be. How many employees do they need to hire for this call center?
Industry: Labor planning • The goal of this case is to calculate how many employees the call center
must have. To do so, the candidate will have to calculate:
Case Format: Interviewee Led • # of cars sold in the US
• the client’s market share
Concepts Tested:
• The % of customers who sign lease
• Sizing
• Calculations
• Average length of lease
• Service demanded of and provided by call center
• First ask for a general framework to attach the problem then go into
calculations
Calculation part 1
Information to Share if Asked Calculation
• Company: the bank offers the lease only for cars from its parent
company.
• Call center: the call center is focused only on clients that have
Calculation: Number of cars sold in US: (Population x People in the
already signed the lease contract. It does not attend to
Age Range x People that buy new cars) / Lifetime of a car
prospective customers.
• Drive the candidate to calculate the number of cars the client
Number of cars sold in US = (300 M x 50% x 50%) / 5 = 15 M cars per
sells per year and how many customers uses the lease. The other
year Client’s Market Share: 10%
points of his/her framework will be touched upon later.
Cars sold by the client = 15 M x 10% = 1.5 M cars per year

• Population in USA: 300 Million
Customers who sign lease = 1.5 M x 40% = 0.6 M customers per year
• Age range that buys new cars: from 20 to 60 years
• The life expectancy in US is 80 years and the population is
uniformly distributed among all ages.
• With the current crisis, only 50% of the population is willing to
buy new cars. The remainder prefers to buy used cars
• Average lifetime of a car: 5 years
• The client has 10% of Market Share
• 40% of the clients customers uses the lease to acquire the car.
• Length of the lease: 3 years.
Calculation part 2
Information to Share if Asked Calculation
• The client expects that the customers will call • Calls per year = Customers per Year x Length of the Contract = 0.6 M x
the call center only once a year until the end of 3 = 1.8 M calls
the lease contract
• Calls per day = 1.8 M calls / 360 days/year = 5,000 calls/day
• The candidate can assume that all calls will be
uniformly distributed throughout the year and • Demand per day (in minutes) = 5,000 calls x 5 minutes = 25,000
during the day (there will be no peak of calls) minutes
• Union contract states that employees can only • # of employees to answer all calls on a day = demand per day / minutes
work 6 hours per day, 6 days per week worked per day per employee = (25,000 / (6 hours * 60 min/hr)) ≈ 70
employees (exactly 69.44 employees)
• The call center will receive calls only from 8am
to 8pm, Monday to Sunday • Remember that the employees work only 6 days per week, but the call
center is open for 7 days and that adjusting the number of employees: 70
• On average, each call will be 5 minutes long + 70 x 1/6 ≈ 82 employees
• Days in a year = 360 days • Since the employees can work only for 6 days per week, the client will
need to hire an additional 1/6 to compensate the day-offs
• Holidays can be ignored
Brainstorming Question
1 / Analysis
The client does not have enough money in their budget to hire all the 82 employees. What would you suggest to reduce the
number of employees?
This is a regular brainstorming question. To reduce the number of employees, the client will have to reduce the number of
calls they receive and/or decrease the average length of each call. Some ideas:
Reducing the number of calls:

• Develop a customer website that easily provides information directly
• Map the most common questions and provide a FAQ on the customer’s website
• Offer another communication channel (e.g. chat)
Reducing the length of the calls:

• Invest in technology such as voice recognition to faster identify the customer’s problem before he/she is directed to an
operator
• Train the employees to faster solve the customer’s problem
Push the candidate beyond their comfort zone to come up with another novel idea, even if they have already been thorough.
Framework Example
Candidate should start by providing a framework to analyze the town…
Call Center Car Leases

Reps
• Efficiency (e.g. call/hr) • Client share of car market
• Utilization • Fraction that lease vs buy
• Average hours worked • Length of lease
• Hours of operations • Type and frequency of call

9
9 / Alpha Capital
Alpha Capital is a private equity firm that is looking to buy a high-end male fashion retail chain named BNG. This is a private retail
chain that was started in California 20 years ago. Alpha Capital is looking to see a 25% ROI in 3 years. They want us to help them
decide whether to buy BNG and assess BNG’s economic growth in 3 years.
Interviewer
Overview for Interviewer
Guidance
• This case is interviewer guided/lead.
Industry: Retail
• The candidate should consider the following points during the course of the
case discussion:
• Macroeconomic conditions
Case Format: P/E Investment
• Competitive Landscape
• Comparisons between locations of a multi-site retail business
Concepts Tested:
• ROI
The exhibits indicate that demand is linear for shirts and pants but for belts
• Supply/Demand
and shoes there is a sharp drop in demand at a particular price. This makes
• Market Evaluation
this price notable and the candidate should point this out.
Interviewer Guidance & Question 1
Clarifying Answers to Provide if Asked Question 1:
Demand Estimation What factors would you look at to assess BNG’s prospects for growth?
• BNG has 10 retail outlets, all in
California
Context
• Annual revenue is $60 million
• Macroeconomic factors
• BNG sells men’s jeans, shirts, and • Industry size/growth rate
shoes, all of which are sold only in • Competitive landscape
their own boutiques to control the
high-end image Positioning
• Consumer perceptions (what is the size and growth rate of the current
• All clothing is manufactured in the
target demographic? Can the brand be leveraged to appeal to an
US additional/wider target market?)
• The owner will sell the chain for a • Pricing (is there a potential for price optimization?)
one-time payment • Sales channels (is there potential to expand into new points of sale?)
• Product Mix (Expansion of product line? Accessories, lower end?)
• Brand awareness (especially outside California for new market growth
opportunities)
Operations/Organization
• Strengths and incentives of management team (are they well-defined, or
can they be optimized?)
• Efficiency of operations (potential to outsource?)
Core Case Question 2 & 3
2 / Sale Factors 3 / Calculations

The owner of BNG is willing to sell the chain for a one-time
What is the maximum amount Alpha Capital would be willing
payment. The chain currently experiences 20% profit, and will
to pay for BNG?
earn $60 million next year. What factors should Alpha Capital
look at to determine the maximum price to pay for BNG?
• Assume no cost of capital (candidate should ask)

Factors:
• Expected growth rate • To receive 25% ROI (given in prompt), Alpha Capital
would be willing to pay $31.7 million (39.7M/1.25)
• Other industry comps
• Macroeconomic considerations
Year 1 Year 2 Year 3 Total
Profit $12.0 $13.2 $14.5 $39.7

Information to be provided if asked by interviewee: million million million million
• Growth will be 10% for the next 3 years
4 / Causes 5 / Drivers
BNG’s 10 stores have been experiencing dramatically different What are some drivers of growth for BNG?
revenue. What do you think are the causes for this variability?
Potential Framework Potential Answers
Store location
External drivers
• Consumer population/location demographics (is it consistent
• Macroeconomic conditions
with BNG’s target consumer?)
• Competitive pressures
• Amount of foot traffic (location type-mall vs. stand alone)
• Fashion trends
• Proximity to competitors
• Local marketing efforts (local campaigns: advertisements,
Internal drivers
promotions)
• Products sold (variety, quality, etc.)
• Proximity to supply chain (if far away, is there a high
• Sales channel selection (locations of the stores, etc.)
frequency of stock outs)
• Marketing effectiveness
Human capital
• Operational effectiveness (production costs, distribution
• Quality and experience of store management and salespeople
methods, etc.)
• Incentive practices for store staff (is this consistent across store
locations?)
The below factors could be mentioned by the interviewee. These

should be dismissed by the interviewer as they are consistent
across all 10 store locations:
• Store size
• Product selection
• In-store promotions and signage
6 / Hand over exhibit 1 7 + 8 / Wrap it up
• What is your immediate reaction? What can they do to improve

These are quick questions to close out the conversation
profits
Potential Responses
BNG is in the inelastic portion of a double kinked demand curve

What do you think is the meaning of the two “kinks” in
for belts/shoes, and they are in the elastic portion of the demand the belts/shoes demand curve?
curve for shirts/pants These kinks are competitors price points. Perhaps BNG’s
competitors have a high-end line of belts/shoes as well as a
Increase price of belts/shoes to extract more profits low-end line of belts/shoes.
• Instead of the current revenue of price*volume=1*1=1, BNG
could increase the price to $1.20 and volume would only lower BNG is considering opening 14 new stores. The CEO
to .9, increasing revenue to $1.20*.9=$1.08. wants you to tell him what factors are the most important
• This would increase profits by at least 8% because it would for him to consider as he opens these stores.
boost revenue by 8% while decreasing variable costs (less Answer is open-ended for the interviewee; a good answer will
volume sold). draw from relevant information discussed throughout the case
and include supporting evidence.
Decrease the price of shirts/pants to increase traffic into stores

• BNG could decrease the price of shirts/pants to $0.80 and
increase volume to 1.8. This would result in revenue of
$0.80*1.8=$1.44. However, the interviewee is unable to
determine whether or not this would increase total profitability
unless we know more about BNG’s cost structure (variable
cost of product, etc.)
Potential Structure
High-end Male Fashion

Market BNG’s Profitability Alpha Capital
• Total Addressable Market • By product mix • Retail Experience
• Market Share of Competitors • By customer sub-segment • Potential portfolio synergies
• Expected 3-year Growth • By channel • Operational improvements

o Online
o Retail
• Competitive Dynamics
• Relative to competitors
• Brand/customer awareness
Exhibits
10
10 / Shermer Pharma
Our client, Shermer Pharma, is a venture-backed start-up Pharmaceutical company. Over the past 15 years, Shermer has been
developing a molecule that has been approved by the FDA to cure Alzheimer’s with 90% efficacy. We have to determine:
• How should we sell our product?
• Is our product going to be profitable?

This case focuses on 2 questions: can the interviewee determine what it
Industry: Pharmaceuticals takes to launch a new product profitably through a cost-benefit analysis,
and can the interviewee think through the implications of starting a sales &
marketing organization from scratch?
Case Format: Market Entry The case is driven by the interviewee.
There are two primary options for the sales & marketing question:
• Start your own sales force
Concepts Tested: • Contract sales
• Market Entry
• Market Sizing Another high-quality option is to sell Shermer to a larger firm.
• Breakeven Profitability opportunity will center on the interviewee’s ability to read
tables and data on the market and Shermer’s market share.
• Risk Evaluation
Case structure:
Interviewee should focus on the questions separately. First, they should
brainstorm how they would sell the product and ask questions to get after
the costs of a sales force (Exhibit 1). An optional middle step is a brain
teaser to determine the size of the Alzheimer’s market (provide answer of 5
million at the end of the exercise.) They then need to ask about the costs
and revenues from the new product (Exhibit 2).
Interviewer Guidance
Guidance on
Clarifying Answers to Provide if Asked
Exhibits
Industry definitions: • After the interviewee walks through their structure, they should ask questions about
• Our product is a pill that cures the costs of sales and then ultimately the profit equation.
Alzheimer’s, an illness that • Let the interviewee drive the case. When you feel that they have asked enough
currently has no treatment that information about the following topics, give them the exhibit that shoes this
cures or stops the progress of information:
this disease
• Alzheimer’s is a degenerative,
o Sales force options 🡪 Exhibit 1
terminal disease that causes
senility and dementia.
o Revenues vs. costs 🡪 Exhibit 2
• 30 million people suffer
worldwide • If the interviewee isn’t getting to the question on the three sales force options, guide
• Sales would be focused on them back toward this and provide Exhibit 1.
Neurologists and Psychiatrists
(not the consumer or product) • Have a conversation with the interviewee to force them to talk through the essential
Client Characteristics components of the profit equation that are needed to answer the question.
• Shermer doesn’t have a Sales or
Marketing organization, the • The numbers reveal that the product will be profitable. However a critical question
company has purely been a will be the sales channel, which is why they need to determine to use contract sales in
research firm to this point. FDA order to be profitable. It is also correct to state that Shermer should sell the product to
approval, etc. has been granted a larger firm, but the second half of the case should be under the assumption that the
Competitive Dynamics owners decide to do contract sales.
• We will not focus on
competitive response during this
case as we are the only firm that
has a cure for this illness and
will be for the next 5 years due
to the barriers to entry of
competition.
Exhibit Guidance-Interviewer’s Eyes Only
Guidance on
This page possesses
Clarifying all the to Provide if Asked
Answers
Exhibits
“missing pieces” for the case – it
is your discretion to provide the
right answers/plugs when needed
for the candidate
2
Key Elements to Analyze
Market
Profitability
Entry
Using Exhibit 1, the interviewee should be able to Using exhibit 2, the interviewee should determine that our
determine that contract sales is the best financial
product will be profitable utilizing either type of sales force
option.
Notes to the Notes to the

interviewer interviewer
• The question boils down to realizing that the client’s
competencies are rooted in developing a product, not sales and • You should let them try to size the market as a first step,
marketing. The correct approach is therefore to contract sales but then provide the actual number of 5 million.
or sell the company. • The firm requires that R&D costs be recovered by Year 5
• The qualitative approach to the answer is appropriate, but once of the product (a window before which there will be no
the interviewee has discussed enough of the inputs, share competitive response)
exhibit 1. o We can ignore NPV for this question and just assume
o There is missing data in the chart that should be calculated. a straight line amortization. The interviewee
• A third option with no attached data would be to sell the should come to this conclusion on their own but correcting
company to a larger firm, this is a good discussion to have and is okay if they get stuck.
if prompted the interviewee should discuss the tradeoffs • Critical information on the exhibit should be provided as
qualitatively. the interviewee asks, though should only be volunteered if
• A contract sales organization is typically less effective than they are stuck
internal sales, though most interviewers won’t pick up on this • We can ignore tax, however a good interviewee will ask
and simply giving the financial answer is appropriate. about it, and doing so would realize we will still hit profit
targets by year 5
• Manufacturing and packaging costs are included in the
gross margin
Solutions and Recommendations
Wrap it Up
• Shermer Pharma’s core competency is their research focus. The plausible argument can be made that they should sell the
company to a larger firm that has the appropriate capabilities that it takes to market and sell a product. Though this might be
the right answer, the client isn’t always going to take the optimal approach, particularly when it comes to ownership of the
firm. We need to be flexible to account management’s wishes.
• Assuming the owners decide not to sell the company, contract sales is the next best option, that gives us the best scenario
when determining overall profitability of our product.
• The latter half of the case is simple math, determining a P&L for our product and coming up with the correct answer that
Shermer can be profitable.
• Ask for high level analysis at the end of the case. What else?
• There is an option to sell the company even though there is no data provided to support this.
• Challenging the interviewer on the effectiveness of a contract sales organization is a bonus. A qualitative argument can be
made that for an additional 5 Million per year, we can realize the benefit of a more effective sales force.
• $1,000 per year for a life-saving cure for a currently incurable ailment may be under priced.
Exhibit 1-Sales Force Options
Present Exhibit 1
Exhibit 2-Annual Net Income
Present Exhibit 1
Potential Structure
Market Size Go to Market Product
• Competition • Pricing/Revenue Model • Barriers to Entry

o Number of players
o Market share
• Launch Strategy • FDA & Regulatory
• Alzheimer’s prevalence
• Funding • Capital Investment
• Growth & Trends

• Economic Risk
• Price Sensitivity/Elasticity
11
11 / Thompson Healthcare
• Our client is Thompson Healthcare, a health insurance firm located in the Midwest.
• Customers pay Thompson a fixed monthly premium per person covered under the plan. In exchange, Thompson pays for all health
services that each member requires (e.g. physician care, prescription medications, hospitalization).
• In recent years, Thompson’s financial and competitive position has begun to erode, and the CEO has retained our firm to help them
determine what is causing the problem and how to fix it.
Industry: • This is a McKinsey style case. The interviewer should drive the case
Healthcare and converse with the interviewee
Case Format: • Say the following:

Cost reduction
• “Before asking you questions about the case, I will give you the
Concepts Tested: background you will need. There are a number of issues that I would like
• Cost management to cover with you today; do not be surprised if I change topics abruptly.”
• Sales channel strategy
• Economic value analysis
Information to Share (not just if Interviewer

asked) Guide
Client Characteristics:
• Thompson Healthcare is a mutual insurance company,
meaning all of its profits are returned to members in the form State the information to the left after reading the initial prompt.
of lower premiums the following year. As such, Thompson The interviewee should develop a variant of the following
does not seek to maximize profit – it seeks to minimize cost. question:
• Thompson’s prices reflect underwriting of risk and the How can Thompson Healthcare reduce its total cost to
underlying cost to serve a customer. serve its policy holders?
Competitive Dynamics: Ideally, the interviewee should be able to break down the question
• Market share is steady, despite presence of major national into two parts:
health insurance company in the market (United Healthcare – 1. Managing medical costs
UHC). 2. Managing administrative costs
• UHC has 30% market share
• UHC typically expects to earn a 5% profit margin.
Ask the interviewee the questions on the following pages and move
on when they have answered the question sufficiently.
Local industry characteristics/economics:
• The national average rate of medical cost inflation is 10%
over the past five years.
• Thompson has seen medical cost inflation of 12% over the
past five years.
• UHC has seen medical cost inflation of 10% over the past
five years.
Questions 1 & 2
Problem Initial
Structure Hypothesis
Medical costs are the largest component of Thompson’s costs. Thompson’s medical
What factors would you consider in order to
costs are increasing faster than the national average. What are some potential
understand Thompson’s eroding financial position?
reasons why this is taking place. What opportunities would you explore to reverse
this?
Notes to the Notes to the

interviewer interviewer
• The interviewee should lay out a structure for
analyzing the case. • Medical cost = (number of claims) * (cost per claim)
• Potential answers include:
• They could have determined that revenue is not o Deductibles are low, leading members to see doctors for
relevant based on the information given in the initial minor medical issues🡪 increasing deductibles will
prompt on page 1 and 2, so the interviewee should make members more conscious of costs
focus on cost. o Thompson pays more for procedures than average🡪 conduct
benchmarking study to determine what competitors
• Costs in the case break into fixed costs and variable charge for various procedures
costs. o Thompson insures an older population than average🡪
o Variable Costs (medical costs – claims made increase marketing efforts toward younger consumers
by policyholders) o Thompson insures a sicker population than average🡪
o Fixed Costs (administrative costs (e.g. marketing enhance wellness programs
and sales, underwriting, finance)
• Specifically, we will need to understand how these

costs have changed over recent years.
Question 3
Second
Hypothesis
In addition to medical costs, administrative costs for Thompson are also higher than average. The biggest driver of this phenomenon is a high cost of sales.
Thompson’s policies are sold through independent agents. All independent agents work with a ”General Agency” which acts as a sales support organization.
How much does Thompson pay in commissions each year? What are some potential approaches Thompson could take to reduce its cost of sales? What
strategic issues exist with these approaches?
Additional information to provide after interviewee explains how they would calculate commission expense:
• Commission (10% of annual premiums) is paid to the General Agency, which passes a share to the independent agent. Total
commission paid is, on average, $25 per agent, per month
• Interviewee should identify the need for # of agents. Give the number 500,000 if asked
• Total commission expense = $25 * 500,000 * 12 = $150,000,000
• Potential approaches to reduce cost of sales:
o Reduce commission percentage

o Cap commission to a certain level per year
o Change commissions structure from percent of premium to flat fee (percent of premium increases at the rate of medical
cost of inflation every year)
• Potential risks with these approaches:
o Agents could shift business from Thompson to another carrier that pays higher commission
o Agents would lose incentive to sell if commission is capped
Question 4
Next level of
analysis
The team has decided to pay a flat commission directly to agents, and to pay the General Agencies a separate fee for the support services they provide
to agents. If the total commission paid to both parties is set at $20 per member per month, what share should be given to the General Agencies?
(If interviewee is unsure of “what share” means, explain they should find the maximum amount that should be allocated to the General Agencies)
Additional information
• General Agencies performs three activities: training, application processing, and performance management.
• If Thompson were to perform these activities internally, they would cost:
o Training: $6,000,000
o Application processing: $9,000,000
o Performance management: $15,000,000
• Potential approach
• The total cost of the activities that General Agencies perform is $6,000,000 + $9,000,000 + $15,000,000 = $30,000,000
• There are 500,000 members and 12 months in a year
• The maximum amount of money Thompson should be willing to pay the GA for the activities performed is the per
member, per month cost of these activities ($30,000,000/(500,000 * 12) = $5
Conclusion
Final
recommendations
Taking into account what you’ve learned so far as well as your own hypothesis, what would you recommend to the CEO
at this point?
Our client should take action to reduce both medical costs and administrative costs
• At this point, the interviewee should synthesize the findings from the interview into several clear initiatives. For example:
o Enhance marketing efforts to attract more young customers and bring down the average claims per member
o Conduct a benchmarking study to determine opportunities for reductions in payments for medical services.
o Change the commission structure to flat fee per member per month. This achieves the goal of reducing commission
expense, while at the same time keeping an agent’s incentive to sell more business.
Strong interviewees will demonstrate the ability to analyze issues using a clear structure and will draw out implications of their
analysis. The quantitative calculations in this case are elementary, but the process to get to them is somewhat more complicated.
12
12 / Brazil Mining
Our client is a US industrial conglomerate, with major investments in South America, India, and China. One of these investments is a
mining operation in Brazil. At this mining operation, our client produces only one metal, which is considered to be an international
commodity product. This metal has hundreds of applications. In Brazil there are only two other producers.
The CEO has hired us to help identify new opportunities for this business as well as understand the market dynamics. He wants to
know whether he should divest the mining business or invest in an additional facility. This afternoon, the team is going to meet with
the CEO to discuss our initial hypothesis.
Industry: • This is a BCG style case. The interviewer should drive the case and
Mining converse with the interviewee.
• Start by showing exhibit 1
• We have been provided the following information:
Case Format:
Strategy/Valuation
Concepts Tested:
• Revenue and profit drivers
• Pricing
• Competitive Dynamics
Information to Share (not just if asked) Example dialogue
• The interviewee should provide a This is an example. Key points have been bolded, which the interviewee should
structure/framework that would look at the touch on.
big picture then start hypothesizing. The
framework should include:
o Discuss market dynamics (local and Interviewee: (summarize the case and work on a framework) In this case it is important
international supply and demand) to look at the competition (specifically, understand the different cost structure of the
o Discuss the expected competitive three producers), estimate the market demand and discuss the international trade
response to any action (price war) environment. We should all discuss the specifics of the metal commercialization
o Summarize all findings in a industry.
presentation format
Interviewer: Where would you like to start?

• An efficient plant should have 1,000,000
ton capacity (but not all plants are
operating efficiently). From this Interviewee: Clearly, the client is running on full capacity, but the competitors seem
information the interviewee should be able to have idle capacity. From the data provided, it looks like the competitors’ cost
to assume that competitors are operating structure allow them to sell in the international market while our client does not
more than one plant each. currently export any of its products. Our client would experience zero margin if it
• The market grows with GDP did export as the international price is $450 which is equal to our cost of production.
• There is a strong demand for the product The local price is considerably higher than the international price, so the producers
internationally would rather sell as much as possible in the local market. I hypothesize that there is not
• The competitors are probably located away enough demand in the local market. Main takeaways:
from the coast, adding transportation costs o Competitors would prefer to sell in the local market ($600/ton) instead of export
o Competitors are running with idle capacity but we know demand exceeds
Conversation, Continued
Interviewer: What about the international market?
Interviewee: You did mention that there is a strong demand worldwide. We have to find out why the competitors are not selling their
full capacity. We can think of many possible reasons. Geographical distance, transaction costs, transportation costs, export taxes,
etc.
Interviewer: But competitors are able to export some metal right?
Interviewee: Competitors might have operations abroad so it makes it easier to export to international facilities. They also might
produce part of their capacity close to harbors, which we don’t. Considering that the international price is much lower than the local
one, I would expect some barriers for international trade.
Interviewer: Brazil does have some taxes for foreign products and producers struggle with transaction costs. Let’s look at cost
structure. Why could there be a difference in costs?
Interviewee: I would consider geographic location, technology, economies of scale, supply chain synergies.
Interviewer: Yes, enough to convince the CEO to invest in a new production facility. This would be a $400 million investment in year 0
for a capacity of 1,000,000 tons with a cost of $420/ton. How would you evaluate this investment if the new production would be
traded in the international market? Would you recommend this investment?
Interviewee: The margin will be $30 per ton ($450-$420) * 1,000,000 which would be $30 Million per year. Using a 10% discount rate
(they should at least mention this and whether they will be discounting or not) this will generate $300 million total. The $400
million investment would not be worth it.
Interviewer: So would you advise against it?
Interviewee: I would advise against it unless he is willing to engage in a price war in the local market.
Interviewer: What would be the minimum price he could go to turn this investment profitable?
Interviewee: We should be cautious because a lower price would impact current profitability. To break even the increase in annual
international margin would have to equal 10 million ($100 million * 10% discount rate) plus the loss in local annual margin. Setting
this up we have (($600-x) * 600,000) + $10,000,000 = ((x-$420) * 1,000,000). Solving for x we get ~$493.
Interviewee: That’s correct, but the competitor has a lot more to lose with a price reduction. In our client’s case we found out that it
would lose money as the margin of current production drops. However, the client only sells 600,000 tons right now while the
competitors sell 4,800,000 combined. They would probably reduce their production to avoid a higher price reduction.
Interviewer: Really? So you are recommending our client to invest $800 million in a 2,000,000 tons capacity plant?
Interviewee: I haven’t done the math but I guess this would be too risky. I would recommend our client to invest $400 million and see
how the market reacts.
Interviewer: That is a fair recommendation. After all they will be playing a game with no real expected result.
The interviewee should now summarize the findings from this discussion for the client, highlighting the approach and key
recommendations.
Exhibit 1
Potential Structure
Operation
s Market Competition
• Suppliers • Price comparison

• Equipment • Reputation
• Transportation • Location differences
• Within country • Cost comparisons
• Across country • Market share
• International
• Partnerships
• Local and International
• Sales
13
13 / Engineering & Construction Co
A large engineering, procurement, and construction company has seen its valuation drop recently. It builds large refineries and
industrial plants. It is global in nature and operates in four main regions. This company is a recent roll-up of three smaller companies
that operate independently. They have $1B in revenue. How would you approach the problem?
Industry: Industrial Goods • This case is interviewer guided/lead.
Case Format: M&A • This is an M&A case where the candidate is required to evaluate why a
recently-created conglomerate has dropped in market valuation in the
industrial goods space.
Concepts Tested:
• Market valuation
• Structured problem solving • The candidate should use a comprehensive framework, walk the
• Mathematical analysis interviewer through it, and be prepared for analytical detours throughout
the flow of the case.
• Major Buckets Include:

• Revenue trends
• Cost trends
• The engineering and construction market
Revenue growth Case Structure

• Is strong organically and from
acquisitions
The case should start with the candidate hypothesizing the reasons that could
lead to a declining valuation. This is a simple test of idea generation. Ask the
Margins candidate to list a structure with which they will approach the problem. Does it
• Have been shrinking seem reasonable and comprehensive?
Additional Points The remainder of the case should follow a “call and response” in which the
• There is a backlog of work – lots of interviewer is asking direct questions, and is looking for thorough and
business structured thought from candidates in each answer.
1 / Shrinking Margins
What do you think the main potential causes for shrinking margins could be?
Potential answers: • The answers themselves will not be the indicator of

• Lack of integration of the three units excellence here. What is really important is that the
• Poor reporting candidate approaches this brainstorming problem with some
• Competing business units sort of structured analysis.
• Multiple procurement units • For instance, following along with their framework, the
• Lack of cross-selling over the units candidate could bucket potential reasons into revenue, cost,
• Lack of knowledge sharing across units and market or some other combination.
• High-revenue but unprofitable clients
• No prioritization of backlog
• Sales force compensation structure
• Declining business need for their services – long-term
2 / Increasing Margins & Man Hours
The Company thinks they have an idea as to where they could improve their costs after integrating.
The goal is to increase their margins by 10%. (Note: candidate has already been told company has $1B in revenues.)
Solutio
n
Data to be provided: Calculation of Effective Man-Hours:

• Business Unit # of Engineers Utilization • Business # of Utilization Effective
Unit Engineers Man-Hours
1 1,800 50%
1 1,800 50% 900
2 3,000 90%
2 3,000 90% 2,700
3 1,200 50%
3 1,200 50% 600
Total 6,000 4,200
Question Continued:
• The industry benchmark for optimal utilization is 80%
and engineers make $100k each.
• Assuming constant man-hours, how many engineers will
be needed post-integration?
Calculation:
3 /Concerns? 4 / Recommendation
What would you think are some possible concerns with Can you please summarize and give us your final
integrating the three units? recommendation?
Possible Answers: • Candidate should provide a succinct but comprehensive

• Different corporate cultures recommendation with risks and next steps.
• Different global areas of operations • Exceptional candidates will mention other future areas of
• Do they operate in fundamentally different businesses? synergy from the merger, e.g. CapEx, admin costs, PP&E,
• Lack of a sufficient reporting system etc.
• Will the dynamics of the integration be communicated
clearly?
• Time frame of integration – 3 months versus 3 years
Potential Structure
Revenue
Revenue Cost Trends Eng. & Constr. Market
Trends
Trends
• By business unit & region • By business unit & region • Growing or shrinking?
• By product mix • By product mix • Revenue & cost benchmarks
• Ability to achieve cross-sell • Fixed cost synergies • Regulatory trends

opportunities
• Variable cost synergies

14
14 / After School Programming
Our client offers after school programming focused on supporting at-risk youth through high school, helping them to enter and succeed
in college. The client is trying to figure out the best way to meet its growth target of most efficiently serving students at 7 new sites
while raising the client’s national profile. You’ve been asked to help them vet potential sites to maximize social and financial impact.
Industry: Other (non-profit) • This case is interviewer guided/lead, and is designed to emulate a
McKinsey interview.
Case Format: Growth Strategy

• The key to this case is understanding the client’s business and goals.
Encourage the candidate to take time to understand the business model
Concepts Tested: and questions being asked.
• Organizational
• Capacity Expansion
• Customer Strategy • This case focuses not just on financial objectives but the client’s other
• Marketing Strategy wishes/hopes, and the analysis and recommendation should adequately
consider those recommendations.
• At-risk youth are students who are at Question 1: What are the client’s options for locating and opening new sites,
risk of dropping out of high school or and what considerations should it consider in selecting these options?
have already done so (for behavior,
grades)
• Client operates local centers attached Question 2: Let’s look at the effect of additional sites on central costs. Client
to high schools with full-time staff allocates them uniformly across each site (e.g. total central costs / 8 =
• Client offers tutoring/test prep support allocation per site). The client wants to understand how expanding sites will
to youth, plus internships/career affect the allocation of central costs. Assume central costs don’t vary
opportunities depending on selected expansion method (Show Exhibit 1)
• All centers in Massachusetts or south
New Hampshire
• 8 sites, 2,500 youth served
Question 3: The client thinks serving high density areas of at-risk youth will
• School districts and state agencies
be best for its mission and raise its national profile. Which geographic areas
reimburse client for activities
show the most promise for its mission fulfillment? (Show Exhibit 2 with data
• Client has high national profile and
from representative school districts.)
has declined offers from high school
systems in Florida and California
offering to pay for client to establish
centers in their districts Question 4: You (the candidate) listed additional factors that could help the
client evaluate new locations. What are the pros and cons of these factors in
each geographic area, and how would they influence new geographies?
Question 5: Final Recommendation and Next Steps

1 / Organizational Changes
What are the client’s options for locating and opening new sites, and what criteria should they consider in selecting from
these options?
Candidate should focus on geographic options for sites: • Candidates should go back to their original framework and
• Near existing sites (middle schools, high schools) note the client cares about mission and financial impact.
• New standalone sites in existing states This should lead to two sets of criteria:
• New sites in states neighboring existing states
• New states who’ve contacted the client 1. Mission-related
• # of at-risk youth
• Other youth organizations nearby
Information to the provide the candidate: • Working with high schools
• 3 primary methods for opening new sites are:
• (1) partnerships 2. Financial-related
• (2) licensing • Funding potential
• (3) wholly-owned sites • Potential to leverage existing infrastructure/relationships
• Ability to recruit talent
2 / Expansion 3 / Mission
Client thinks serving high density areas of at-risk youth will

Let’s look at the effect of 7 additional sites on central costs. be best for its mission and national profile. Which areas
(Show Exhibit 1) show the most promise for its mission? (Show Exhibit 2)
Notes to
Interviewer
• Candidate should point out that the 74% increase in costs • Worcester, MA neighbors existing client site. Nashua, NH
is less than the 88% increase in number of sites, meaning doesn’t have a site.
that central office cost allocation per site should decrease. • Help the candidate if they struggle. Assume uniform
• Look for an exceptional candidate to quantify the impact distribution of class size, dropout rate, and GPA’s across
of growth on costs per site. grades.
4 / Marketing 5 / Recommendation
What are the pros/cons of the additional factors in each area, Can you please summarize and give us your final
and how would it influence the client’s location choices? recommendation?
• Look for a table matching geographic options vs. • Answer should show that client should focus on existing
screening criteria from the candidate’s framework. and maybe neighboring states
• Interviewer can help the candidate set up the chart but • Should not consider expansion outside New England
should let the candidate lead the analysis. • Financial analysis should show benefits of scale, but
• An illustrative chart: mission fit should indicate that existing/neighboring
• geographies have the highest density of at-risk youth.
Neighboring site Neighboring or
• Growing within existing/neighboring states has fewer risks
New site in new state
existing state for the client.
Mission fit Pros/cons Pros/cons
Financial fit Pros/cons Pros/cons

Exhibit 1
Exhibit 2
Exhibit 2 Solution
Potential Structure
Geographic
Bucket Financial
Social Impact
Options
1 Impact
• Near existing sites • # of at risk youth • Funding potential
• New sites • Youth organization presence • Talent recruitment

opportunities
• Methods for opening new sites • Partnership opportunities with

high schools • Ability to leverage existing
relationships or infrastructure
15
15 / Brazilian Road Concessions
Our client is a Brazilian road concessions company looking to expand internationally. Economic growth in Brazil is stagnant, and the
client wants to diversify its portfolio to keep growing revenues and profitability. What factors should the client consider as it thinks
through its options to expand internationally?
Industry: Government • This case is interviewer guided/lead.
Case Format: Investment Valuation • This case is meant to emulate a McKinsey final round.
Concepts Tested:
• International expansion
• Interpreting graphs
• Market entry
• Math
• Client operates in Brazil, has scouted Question 1: Graph analysis. Client has decided not to pursue opportunities
opportunities in South America. Its outside South America because of cultural differences and complexity of
staff mostly speaks Portuguese management. (Show Exhibit 1)
• Client only focuses on road
concessions (building and operating
public roads) Question 2: There are no viable joint venture opportunities. Client wants to
• Client’s customers are municipal, decide primary investment vs. M&A. What inputs to compare the value of
state, or national governments. Bids each investment? (Show Exhibit 2)
usually through competitive requests
for proposal (RFPs)
• Client is open to all geographies with
Question 3: Final Recommendation and Next Steps
South American bias
1 / Which Markets?
We’ve decided not to pursue opportunities outside South America because of culture differences and managerial complexity.
Based on this graph, which market should our client focus on in South America? (Present Exhibit 1)
Follow up
Question
Correct Answers: Assuming the client chooses to enter one (or more)
markets, how should it approach market entry?
• Upper-right countries (Mexico, Colombia, Chile, and Correct answers:

Peru) and could maybe argue for Argentina • Greenfield/primary investment
• Joint venture (JV)
• Acquisition (M&A)
• For Argentina, ease of doing business is not high but the

Follow-up: What are the pros/cons of each?
pipeline is strong
Example answers:
• Primary investment – pro: greater control, con: limited
market knowledge
• Joint venture – pro: some market knowledge, con: less
control
• M&A – pro: local market knowledge, con: more expensive
2 / M+A Options
The client’s decided there are no viable joint venture opportunities, and wants you to evaluate primary investment and M&A as
potential options. To evaluate the opportunities side by side, what inputs are needed to compare the value of each investment?
Notes to Interviewer – provide Exhibit 2 after interviewee walks through major inputs
below
Note: interviewee may ask here how revenue is earned for the client. Client is paid by kilometer for each vehicle which travels
over their roads (see in annual profit below and in exhibit 2).
Primary Investment: M&A:
• Annual profit = [KM * $/KM * vehicles] * [1 – • Annual profit = Revenue * [1 – OpEx] + [Revenue *
OpEx] Synergies]
• Payback period = initial investment / annual profit • Payback period = initial investment / annual profit
• Investment Value = annual profit / discount rate • Investment Value = annual profit / discount rate
(*assume perpetuity) (*assume perpetuity)
Closing Thoughts
Recommendation – ask for conclusion after ROIC calculation in

exhibit 2
What should the client do? What next steps do you recommend?
Answer
Client should enter a South American market (e.g., Columbia, Chile, Mexico) via primary investment:
• High levels of cultural similarity, low levels of managerial complexity in South American markets
• Above countries and Peru all have big pipelines are relatively easy to do business in vs. other S. American markets
• Primary investment has a higher ROIC and shorter payback period vs. M&A route
Example Next Steps

• See if you can negotiate lower M&A price
• Sensitivity analysis of investment comparison to macroeconomic factors
• Client’s ability to win deals as the primary investor in a new country
Exhibit 1
Exhibit 2
Input Primary Investment M&A
KM $300 N/A
$/KM $5 N/A
Expected Traffic 20K N/A
(vehicles/year)
Annual Revenue KM * $/KM * Expected Traffic $120M
OpEx 30% 40%
Investment $150M $750M
Contract Term Perpetual N/A
Discount Rate 10% 10%
Synergies N/A 15% (of rev.)

Exhibit 2 Solution
Input Primary Investment M&A
Annual Revenue $30M $120M

(300*$5*20K)
Annual OpEx $9M $48M
($30M*30%) ($120M*40%)
Annual Profit $21M $90M
($30M - $9M) ($138M - $48M)
Payback Period 7 Years 8.3 years

$150M/$21M ($750M/$90M)
NPV $210M $900M

($21M/10%) ($90M/10%)
ROIC 40% 20%
($210M/$150M) - 1 ($900M/$750M) - 1
Note: $138M annual revenue under M&A scenario includes $120M base revenue plus synergies of $18M (15% of rev.)
Potential Structure
Bucket Economic
Culture/management Politics Competition
1 Prospects
• Language/culture barriers • Project Pipeline • Regulatory environment • Current/multinational

players
• Countries with similar • Future Project Value • Political climate

working and management • Industry
culture concentration/nature
• Target Country • Target Country business
growth/infrastructure climate
• Geographical distance • Bid competitiveness
16
16 / Rock Energy
Rock Energy, an Oil & Gas company, is evaluating buying one of three oil fields in South America. They plan to outsource all drilling
activities after purchasing the rights to extract oil from one of the fields. Your job is to identify the best potential investment for Rock
Energy. How would you evaluate the three oil fields, and which oil field should Rock Energy purchase?
Industry: Energy • This case is interviewee guided/lead.
Case Format: Opportunity Assessment • Interviewee should follow these broad steps:
Concepts Tested: 1. ID how long it takes to drill 1 well in each region, using provided
• Investments depth/penetration rate
• Creativity
2. Quantify cost of 1 well
3. Price and barrels extracted per day should lead to revenue/profit by well.
Need to understand that you can produce a different number of wells by
region, and only have a limited number of rigs
4. After calculations, interviewee should consider other factors or risks that

• The rights offered to Rock Energy Question 1 (Exhibit 1): Hand out exhibit 1 after introduction of the case.
give the right to drill for 1 year and Interviewee should conclude that each region’s characteristics will affect Rock
produce oil for 20 years. No oil Energy’s drilling time, production, revenues/costs
production until beginning of year 2.
Question 2 (Profitability): Give out current spot price and ask interviewee to
• Can deploy max of 10 rigs in each work out each field’s profitability, not just each well’s. Answer will be a
region function of investment, variable costs, and quantity of oil extracted per field,
which in turn depends on the number of wells drilled in one year
• Cost of rig day includes crew,

consumables, services, etc. Question 3 (Conclusion): Buy the rights to Region 2 because it is the highest
profitability, but interviewee should acknowledge other factors that could
impact that decision in their recommendation:
• Any extracted oil will be sold at spot • Insurance costs
market price • Political stability
• Labor unions/contracts
• Oil price volatility
• Quality of oil extracted
• Assume oil wells will produce the
same amount of oil for the next 20
years with no ongoing maintenance
costs
Core Case Question 1 and 2
Exhibit 1
Analysis
This exhibit should give the interview enough information to identify (a) the number of wells and (b) amount of total oil that could
be extracted from each field, as well as (c) per well yearly production. At this point, reveal to the interviewee that the missing spot
price is $50. (Ask math question on following page after interviewee has walked you through Ex 1)
Math
Summary
Three major points to identify as interviewee walks Yearly profits per region (see next page for math):
through profitability analysis: • Region 1 - $50M
1. Average well production in Region 3 is the largest of • Region 2 - $68M
all regions, but you can only drill 33% or 50% the • Region 3 - -$4M
wells, respectively, vs. Regions 1 and 2.
2. Region 1 is the most profitable on a per well basis (as Follow-up: What qualitative issues would you consider
variable costs show) when making an investment like this? (interviewee should
3. But different numbers of wells can be drilled in each mention at least 2)
region in year 1 and there are fixed costs, making • Insurance costs – different country regulations and
Region 2 the most profitable for Rock Energy coverage required, etc
• Political stability – political instability could create
additional risks
• Oil price volatility – all regions have a negative return
below $27/barrel
• Oil quality – lower quality oil could result in lower than
spot market sales price
Detailed Math Answer
Ask this question after the interviewee has walked you through
exhibit 1
What are the profits during year one of production in each region? (e.g., first year after drilling or year 2)
Math Solution – allow rounding to 360

days/yr
• Time to complete well (Depth / penetration rate): Region 1: 60 days, Region 2: 90 days, Region 3: 180 days
• Production per well (Daily production* 360 days): Region 1: 36K barrels, Region 2: 72K, Region 3: 108K
• Formulas: Cost per well (Days to complete well*Cost per rig per day), Annual revenue per well (Price* # barrels per year),
# of wells per year (360/[well completion time]) * (# rigs)), Profit margin (profit per well/cost per well), Total Revenue
(annual revenue/well * #wells/year), Total Cost (Cost/well*# of wells + oil extraction rights), Profit (Total Revenue – Total
Cost)
Region 1 Region 2 Region 3
Investment cost (oil extraction rights) $40M $40M $40M
Cost per well $0.3M $0.9M $3.6M
Annual revenue per well $1.8M $3.6M $5.4M
Profit per well $1.5M $2.7M $1.8M
Profit margin per well 500% 300% 50%
# wells per year 6 wells/rig * 10 rigs = 60 40 20
Total Revenue $108M $144M $108M
Total Cost $58M $76M $112M
Profit $50M $68M $ -4M

Recommendation and Next Steps
Example
Answer
• Rock Energy should invest in buying the rights for Region 2

• Even though the profit margin on Region 1 is much higher per well, return on investment depends on total wells that can be
drilled in year 1 and the upfront cost of extraction rights in that region
• Interviewee should touch on other qualitative reasons that might affect the investment decision
• An excellent interviewee might also discuss the impact of an expected value analysis as a potential next step, including how
different probabilities could be assigned for number of barrels extracted per day
Exhibit 1 – Oil field profiles (2018)
Drilling rates by Region Average well depth by Region

4000 4000
3500 3500
3000 3000
Avg. depth ( in meters)

Meters per day
2500 2500
2000 2000
1500 1500
1000 1000
500 500
0 0
Region 1 Region 2 Region 3 Region 1 Region 2 Region 3
Region 1 Region 2 Region 3

# Operating Rigs 10 10 10
Average well production (barrels/day) 100 200 300

Cost per rig/day ($US) $5,000 $10,000 $20,000
Note: Wells are continuously dug for one year only, with oil extracted going forward. Wells are dug by rigs. Once a well is
completed, a rig can move on to dig another well.
Potential Structure
Revenu Qualitative
Costs
es Considerations
• Oil spot market price • Drilling costs • Insurance Costs
• Daily oil field production per • Rig costs • Political stability of the region
region
• Labor costs • Labor contracts and unions

• Nature of extraction rights?
• Extraction rights costs • Oil price volatility
• Oil quality differences
• Other macroeconomic factors

17
17 / Diabetes Testing Meter
• Our client is a laboratory that provides diabetes testing services to hospitals in the UK. They have developed a self-diagnosis meter
that patients can use to do testing on their own. They have hired us to determine if we should take this product to market.
Industry: Pharma • This case is interviewer guided/lead.

• This is a market entry case where the candidate is required to evaluate
the feasibility of a new product in in the pharmaceutical/healthcare
Case Format: Market Entry space.
Concepts Tested: • The candidate should use a comprehensive framework, walk the
• Market Entry interviewer through it, and be prepared for analytical detours throughout
• Market Sizing the flow of the case.
• Break-Even / Profitability • Major Buckets Include:
• Customer Demand
• Competition
• Costs & Revenues
• Candidates should answer following questions during the case:
• Is there enough long term demand for this product given current
competition?
• What options does the company have, in terms of taking this
product to market?
• Note: UK Population is ~60M
Demand Estimation Case Structure

• UK Population = ~60M
• 30% of people have diabetes
• 5% > 65 have diabetes The first question will focus on long-term demand given current competition.
• 20% population is > 65 Candidate should first focus on break-even and profitability, and then
• No growth in % or population understand the size of the total market.
Competition
• 4 competitors
• Market share 25%, 25%, 15%, 15%
The remainder of the case should follow a “call and response” in which the
• Client has 20% share
interviewer is asking direct questions, and is looking for thorough and
• Growth was 20% until two years ago
structured thought from candidates in each answer.
• Growth since is flat
Revenue & Costs
• Fixed cost is $25M
• Marginal Cost is $20
• Per Unit Revenue is $25
Additional Points Answers
• Patients could op to use both methods Candidates should identify the breakeven point, then recognize that even at
• Product could be promoted as a 100% capture the firm won’t be profitable. Candidate should work to use
prevention device (low cost option for industry-specific language, and identify that there are potential cannibalization
testing diabetes) issues for the company.
1 / Break Even & Market Potential
Is there enough long term demand for this product given the current landscape?
Candidate should conduct a break-even analysis here: • This number doesn’t account for canibalization, or taking market
• Per Unit Profit = $25 - $20 (MC) = $5 share from existing competitors. This product, if it brings positive
PR and attention, could act as a loss-leader to get customers to
• Fixed Cost = $25M / $5 = 5,000,000 units to break even
purchase other medications from the brand. Because this is zero-
sum, every customer you gain is lost from a competitor.
How Big is the Total Market?

• 80% pop. < 65 = 48M @ 30% Prevalence = 14.4M
• Note that there could be opportunities outside of the UK, such as the
• 20% pop > 65 = 12M @ 5% Prevalence = 0.6M USA and Mexico which are the two countries, globally, with the
• Total Diabetic Population = 15M highest rate of diabetes.
• Client’s Market Share = 20% * 15M = 3M
Assuming they capture 100% of their market share, they

still won’t be able to make a break even point. Given no
population growth, there is not enough long term demand
for a profitable or break-even product.
2 + 3 / Break Even & Market Potential
What options does the company have in terms of taking this Are there any cannibalization effects with regards to
product to market? hospitals in terms of introducing the product?
This is a high-level discussion and should touch on delivery Giving patients capability to test glucose levels in home may
channels for the medical industry. Candidate should do best remove revenue models for hospitals (no longer have patients
to use industry specific vocabulary, rather than speak in visiting to have service performed) so revenue would decrease
generic distribution methods. for hospitals from this business line and they would likely
• Concepts should include: Through National Insurance decrease orders and eat into our client’s revenue from its
(U.K. has nationalized insurance) Partnership (i.e. sign w/ hospital business.
national insurance as , partnerships w/ hospitals; door-to-
door sales; doctor’s offices
4 / Other Options 5 / Summary
If the product can’t be launched within the UK, what else Can you please summarize and give us your final
can the lab do with the product? recommendation?
Consider launching the product in other markets like the US • Due to the limited number of customers available and low future
or Mexico where diabetes prevalence is high and our client growth prospects, the product should not be launched in the UK
market at this time.
may not have hospital testing business, thereby reducing
• The company should look at markets outside the US, or sell it to
cannibalization efforts.
hospitals or competitors
• Keys to a good finish: Find a way to deliver difficult news while
remaining optimistic for future prospects and growth.
Potential Structure
Market Customers Company
• Number of Patients • Hospitals and doctors • Product Mix
• Competitors • National Health Insurance • Cannibalization Risks
• Trends • Patients • Launch Considerations
• Benchmarking similar • Willingness to pay • Break-even analysis

products
• Alternatives • Fiscal / Time Restrictions

18
18 / Stew’s Connections
Our client is a start-up with the ability to deliver broadband internet to commercial airlines. How would you help them think about
their offering?
Industry: Airlines / Tech • This case is interviewer guided/lead.
Case Format: Market Entry • This is a market entry case where candidate is required to evaluate the
feasibility of a new product entry in the airline industry.
Concepts Tested:
• Market Entry • Candidates should use a comprehensive framework, and be willing to
• Market Sizing guide the interviewer through a logical progression.
• Breakeven
• Risk Evaluation
• Calculations are only one approach - please allow flexibility for other
approaches that are logically sound.
• Interviewee should mention industry and market size as a major bucket

in the case structure.
1 / Market Sizing
Present Exhibit 1 and inform candidate there are 3,000 planes. Then ask candidate to estimate the market size for broadband for
airlines based on the provided information.
Provide the following information as necessary

• Broadband for Airlines: there is general interest from the airlines. The start up would have to invest relatively little, and would
keep most revenues. The airline would charge customers on a per flight pricing model.
Example Analysis /
Present Exhibit 1
Present Exhibit 2, at which point the candidate should recognize they need to produce a breakeven analysis. If they don’t
recognize this probe them and ask them to think beyond market size as to what they should consider next.
Information to be given if asked • Assume 100 passengers at various

• The company has discovered that if they can generate $250,000 per
price/penetration combinations
plane in annual revenue, they will be profitable. • 30 users @ $5 = $150/flight
Guidance • 25 users @ $10 = $250/flight
• 250,000 / 2,000 legs/plane = $125/leg
• 20 users @ $15 = $300/flight
• $125 / $15 = 8 users/leg
• 5 users @ $25 = $125…
• 50 laptop users/leg, and at $15 there is 20% penetration (Exhibit 2)
so we estimate 10 users.
Set Price at $15

•
Probe the candidate for breadth and understanding of new market entry - ask about some other factors to consider - keep asking
what else until they can’t come up with other factors to consider.
• Competition: candidate should dig deeper into competition, especially with regard to intellectual property. For this case, the
company has the patent on the high speed connection.
• Risks: ask candidate which risk are associated with business model. Use your judgment when considering answers.
Closing Thoughts
Wrap it Up
The recommendation should provide clear and succinct guidance on why the company should or shouldn’t enter the market, as
well as next steps to proceed.
Potential Structure
Market Size Go to Market Risks
• Number of planes • Pricing/Revenue Model • Barriers to Entry
• Segmentation • Launch Strategy • FAA & Regulatory
• Growth & Trends • Installation Capabilities • Existing Competition
• Number of Passengers • Maintenance and Training • Emerging Competition
• Type of Passengers • Capital Investment
• Laptop Penetration • Airline/Economic Risk
• Price Sensitivity/Elasticity
Exhibit 1
Exhibit 2
19
19 / Upscale Restaurants
• Our client is an upscale restaurant in TianJin, China. It serves government officials and high-level business customers. Its monthly
revenue is 1.2M Yuan. The CEO recently hired us to help them increase their profitability.
Industry: • The interviewee should lead the case, but interviewer should use
Restaurant/Hospitality structured question prompts.
Case Format: • This is a profitability case where the candidate is required to evaluate the
Improving Profitability revenue side of the equation. Candidates should dive deeper than just R
& C and think about revenue drivers, product mixes, etc.
Concepts Tested:
• Core business • Question 1 is all about framework.
• Revenue drivers
• Product mixes
• Cultural awareness • Major challenge is getting all the information up front - the monthly
revenue given in the very first sentence becomes integral later. If they
ask later in the case about revenue, challenge them to find it in their
existing notes.
Information to Share if Asked Interviewer Guide to Case and Handouts
• Exchange Rate: 8Y:1USD Case Structure
• As China’s economy is booming, the Candidate will begin with a deep dive into their structure and approach. When
upscale dining market is growing 20% candidate arrives at product mix/variability in revenue, give Exhibit 1.
every year.
Candidates throughout the case should be working toward solving the two key
• Customers for high-end dining are issues - raising prices and turning big room tables into individual rooms.
generally price insensitive
Question 2 will focus on brainstorming, after which you will pursue the
• All competitors are earning money. quantitative portion. Candidates should identify demand capacity and profit.
(Price and value proposition are
similar)
Question 4 will require the candidate to look back to the initial prompt.
• Variable costs across industry are 50%

of revenue. Assume no fixed costs.
• On weekdays, there is always a line for

1 / Structure & Product Mix 2 / Potential Solutions
After structure, push candidate to identify variability in What are potential solutions for this situation?
customer value. Once achieved, provide Exhibit 1.
There are two approaches that could (and should) be taken.

Exceptional candidates will easily identify the first, and the
interviewer can move straight to the second approach if
desired.
Candidate should recognize that government officials and 1. Raising prices. This is to see if they listened to the critical
business customers prefer individual rooms to big rooms information “there is always a line for individual rooms”
because of their requirement for privacy. Currently our and customers are generally price insensitive.
client is not meeting customer demand.
1. Converting the big table rooms into individual rooms

Additional information to be provided on previous page at which generate significantly higher income.
this stage.
Exhibit 1 / Reference for Interviewer
3 / The Quant 4 / Alternate Solution
Through market research, we have determined that if we raise weekday individual A second solution is converting half of big room tables into 5 individual rooms. It
room price by 33%, we will lose 10% of customers. How will it change our will take two weeks to renovate, during which the entire restaurant will close. The
profitability? conversion will cost 100k Yuan. What’s the total project cost?
Analysis 3 Analysis 4
Changing Price will result in 10% customer loss

The observant candidate will quickly calculate this from the initial
Weekday Lunch Previous Now revenue information given at the beginning of the case rather than
Customer 4*20*.80 = 64 64*(1-.10) = 58 making heavy calculations using the table.
Price 150 150*(1+.33) = 200
Revenue 64*150 = 9600 58*200 = 11600
Profit 9600 *.50 = 4800 11600*.50 = 5800 • Capital Investment = Y100,000
Incremental Profit - 5800-4800 = 1000 • Opportunity Cost = Y1.2M *.50*.50 = Y300,000
Underlying demand is 200% capacity, price increase won't reduce
• Total Cost = Y400,000
volume
Weekday Dinner Previous Now
Customer 6*20 = 120 120
Price 300 300*(1+.33) = 400
Revenue 120*300 = 36000 120*400 = 48000
Profit 36000*.50 = 18000 48000*.50 = 24000
Incremental Profit - 24000-18000 = 6000
Daily Incremental Profit = 7k * 20 days/mo = 140k / mo profit

Final Thoughts
Final Recommendation
Please provide an overview of your findings and recommendations for how the client should best proceed.
Final recommendations in this case should focus on the value of targeting the appropriate audience, and doing so at the profit
maximizing price. Good candidates will explore both price increases and restaurant renovation, with exceptional candidates
recognizing that the next steps should include evaluating both options together, and separately, to estimate long-term profit
benefits moving ahed.
Note: This case provides a relatively easy opportunity for the candidate to properly deliver a case closing. This should be crafted
as if it’s actually being delivered to a client. That is, it should remain positive, definitive, and lay out a clear path for how the
candidate/firm would approach this problem moving ahead. (Demonstrating continued/future value is vital in any service
industry.)
Potential Structure
Customers Profit Tree Competition
• Time of Day • Revenue • How are we priced

• Down times? • Primary Source? comparatively?
• Size of Party • (80/20)
• Type of customer • Product
• govt Mix/Profitability? • What is the reputation
• family • Food/Bev compared to competitors?
• business • Customer elasticity
• Alcohol? • Pricing
• Happy hour? • Capacity?
• How are we located relative to
• Location
comparable restaurants?
• Near what?
• Costs
• Lost business
• Do we have a distinct
• Staff
advantage compared to other
• Ingredients
options?
• Facilities
• Variability of product
mix
• Vendors
Exhibit 1
20
20 / High Q Plastics
• Our client, High Q Plastics, is an automotive parts supplier in the US. They primarily manufacture and sell plastic injection-molded
parts, such as grills, door handles, decorative trim, etc. to automotive customers
• The client has two primary revenue sources: large automotive OEMs, and aftermarket. The client has recently seen declining
profits, primarily due to increased price competition from new overseas competitors in China. Annual profits have declined from
$50M to $20M over the last few years.
• What is the reason behind declining profitability? How can High Q improve profits? Can they reach $100M in profit by 2014?
Industry: • The interviewee should examine the following MECE questions

Industrial Goods about the competitive dynamics of the industry.
• Industry:What is the sales volume trend? What is the % of demand and
growth of OEM vs. aftermarket segment? Is one of these segments more
Case Format: profitable than the other?
Improving Profitability through cost reduction. • Competitors: Who are they? What is their relative market share? What
are their prices vs. our clients’? What is their cost structure vs clients?
Do they have the tech or quality competitive advantage relative to client?
• Revenue: How have our clients prices changed in recent years? have they
Quant/Structure Score: 8/5
declined across all customers and products?
• Costs: What trends is our client seeing in their cost structure? Increasing
labor and material costs?
Concepts Tested:
• Competitive Analysis
• Creativity
• Operations
Clarifying Answers to Provide if Asked Questions & Hand Out Guide
Industry Characteristics 1. What key questions would you ask an industry expert in order to better
• Automotive sales overall still growing understand the reasons behind High Q’s declining profits?
steadily, driven by emerging markets 2. The CEO of High Q wants to know if $100M in annual profit is achievable
• Automotive manufacturing is leaving by 2014. What would you need to know in order to determine this?
the United States 3. What ways can you think of to increase revenues? Reduce costs?
Client Characteristics 4. Our client is planning to implement lean manufacturing across all four of
• Client is currently one of the leaders its US plants in order to provide cost savings and increase profits. (EX1)
• Client has US based mfg 1. The client is expecting to produce 80% of 2010 volumes (this is a
• Revenues have slowly declined for the frequently missed step in calculation) in 2014
last fifteen years 2. Planning to reduce prices by 10%
• Clients products are higher quality 3. Lean manufacturing across all plants will provide 20% savings in
than Chinese competitors’ raw materials and 30% savings in labor.
Competitive Dynamics 4. What is the change in profits the High Q CEO can expect from
• Automotive OEM customers are 2010 to 2014 based on this information?
looking to reduce cost, driving 5. High Q’s CEO has also asked us to take a look at competitive dynamics
increased price competition among among the automotive OEMs in order to predict any increase in profits
parts suppliers from increased sales. (Hand Exhibit 2 & 3)
6. Please summarize your findings to the CEO, including any other potential
opportunities to increase High Q profit in the next few years.
1 / Break Even & Market Potential
What key questions would you ask an industry expert in order to better
understand the reasons behind High Q’s declining profits?
Interviewee should examine the following MECE questions about the competitive dynamics of the industry:
1. Industry / What is the sales volume trend? What is the % of demand and growth of OEM vs aftermarket segment? Is one of
these segments more profitable than another?
1. Competitors / Who are they? What is their relative market share? What are their prices vs our clients’? What is their cost
structure vs. our clients’/ Do they have a tech or quality competitive advantage relative to our clietn?
1. Revenue / How have our clients prices changed in recent years? have they declined across all customers and products?
1. Costs / What trends is our client seeing in their cost structure? Increasing labor and material costs?
2 / Break Even & Market Potential 3 / Brainstorming Increases in Profit
The CEO of High Q wants to know if $100M in annual profit

What ways can you think of to increase revenues? Reduce
is achievable by 2014. What would you need to know in order
costs?
to determine this?
In order to understand if $100M in profits by 2014 is Interviewee should come up with 2-3 ways each for cost
achievable, the candidate will need to know the following: reduction and increasing revenues. A few examples include:
• Annual quantity sold Reduce Cost / find alternative material sources, invest in
• Selling price process automation to reduce labor, consolidate multiple
• Clients fixed & variable costs manufacturing sites to reduce SG7A, relocate close to
customers to reduce transportation costs
Profit = Q*(P-VC)-FC
Increase Revenue / segment customers to determine price
sensitivity, increase marketing in aftermarket segment,
negotiate long-term contracts with OEM customers.
4 / Lean manufacturing and cost savings
Our client is planning to implement lean manufacturing across all four of its US plants in order to provide cost savings and
increase profits. (Exhibit 1)
1. The client is expecting to produce 80% of 2010 volumes in 2014
2. Planning to reduce prices by 10%
3. Lean manufacturing across all plants will provide 20% savings in raw materials and 30% savings in labor.
4. What is the change in profits the High Q CEO can expect from 2010 to 2014 based on this information?
The interviewee should use the information provided to

calculate the probability for each plant in 2014 (left). It is
important to note that revenues, labor, and material will
decrease by 20% due to the reduced quantity output, plus the
additional 20% savings in material and 30% in labor.
Overhead costs will not change.
From this calculation, the interviewee should reference question two. Even with lean manufacturing implementation, High Q is
still a long way from the CEO’s goal of $100M in annual profits, and is therefore likely unrealistic. A strong candidate will
make note of this. If they do not, it may be worth asking them if they have any larger insights from this section.
5. High Q’s CEO has also asked us to take a look at competitive dynamics among the automotive OEMs in order to predict any
increase in profits from increased sales. (Hand Exhibit 2 & 3)
Interviewee should be able to use the information provided in the exhibits to calculate the following
6. Please summarize your findings to the CEO. Include any potential opportunities to increase High Q profit in the next few years.
Interviewee should concisely summarize overall goal of case (increase declining profits due to new, low cost competition, and
main findings from each question, as well as a recommendation. (Yes, they should implement lean manufacturing). Interviewee
should also generate a list of additional opportunities not included.
a. consolidation of 4 major manufacturing plants
b. pursue growth in the aftermarket segment
c. diversify business into plastic injection-molded parts for other industries with less price competition
Exhibit 1
Exhibit 2
Exhibit 3
Potential Structure
Industry Competitors Profit Tree
• Sales volume trends? • Who? • Revenue
• % of demand for OEM • Relative market share • how are clients prices?
• % demand for aftermarket • what are their prices? • have competitors prices
dropped also?
• Is one better than others? • cost structure?

• Costs
• Trends?
• technology?
• Labor costs?
• comp advantage?
• SG&A
• Materials

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Key Ideas Revenue Streams Cost Drivers

• Consolidation in industry • Ticket sales to economy and business • Fuel

Customer Segments Channels Risks Key Economics Drivers

Key Ideas Revenue Streams Cost Drivers

• Automakers, Original Equipment • New car sales • Labor

Customer Segments Channels Risks Key Economics Drivers

• Personal car buyers • Automobile dealers • Globalization of the • GPD growth

Key Ideas Revenue Streams Cost Drivers

• Consolidation/acquisitions • Loan interest (Loan types: Real estate, • Wages

Customer Segments Channels Risks Key Economics Drivers

Key Ideas Revenue Streams Cost Drivers

• Affordable Care Act • Hospital care • Dependent on segment

Customer Segments Channels Risks Key Economics Drivers

• Patients/consumers • Hospitals • New legislation (Impact of • Regulation for health

Key Ideas Revenue Streams Cost Drivers

• Create, license and / or distribute • Content sale/subscription • Labor

Customer Segments Channels Risks Key Economics Drivers

• Individual customers • Cinema • The business model is • The growth of streaming

Key Ideas Revenue Streams Cost Drivers

• Upstream, midstream, downstream • Crude oil • Exploration: seismic studies, drilling

Customer Segments Channels Risks Key Economics Drivers

• Petroleum refiners • Retail • Access to reserves • Government regulation

Key Ideas Revenue Streams Cost Drivers

• Affordable Care Act • Insurance payments • Research & Development

Customer Segments Channels Risks Key Economics Drivers

Key Ideas Revenue Streams Cost Drivers

Investors Averages in Industry Risks Key Economics Drivers

Key Ideas Revenue Streams Cost Drivers

Customer Segments Channels Risks Key Economics Drivers

• Preferred/loyal customer • Dine-in • Maintaining a safe • GDP growth

Key Ideas Revenue Streams Cost Drivers

Customer Segments Channels Risks Key Economics Drivers

Key Ideas Revenue Streams Cost Drivers

• Deregulation led to spur of new • Voice calls • Infrastructure

Customer Segments Channels Risks Key Economics Drivers

Key Ideas Revenue Streams Cost Drivers

Customer Segments Channels Risks Key Economics Drivers

# Week Cohort Title Type Industry

Overview for Interviewer Notes

Clarifying Answers to Provide if Interviewer Guide to Case and

Products Case Structure

Understand Market Size and

Table for Reference – To be calculated by Candidate

Notes to Interviewer Notes to Interviewer

3 & 4 / Interviewee should probe on the following topics

Interviewee should identify the critical role the new competitor(s)

Notes to Interviewer Notes to Interviewer

Candidate should provide a crisp recommendation in under one minute.

A good recommendation will address the following:

Is this a real threat?

How should PLD react?

• Flavor trends • Total market growth • Discontinued chip flavors

• Health trends • Segment growth • New pricing strategy

• Pricing changes • Changes in taste • Supply chain changes

• Distribution channel changes • Changes in chip type • Lawsuits

• Public relations scandals

Overview for Interviewer Notes

• Is the loss of profitability due to product mix, store mix, increasing

• This is a great case to begin incorporating some brainstorming given

Clarifying Answers to Provide if Asked Interviewer Guide to Case and Handouts

Stores are typical to CVS, located in Case Structure

Annual expected benefit to zoo = ($250,000 -$225,000)(0.40) + ($250,000 –135,000)(0.20) = $33,000