COMPENDIUM

Consulting and Strategy Club

TABLE OF CONTENTS
1. SUBJECT CONCEPTS………………….…………………………………………………………………………………………….……….2
1.1 What is Consulting?........................................................................................................................2
1.2 What is Strategy?............................................................................................................................3
1.3 What is Value Chain Analysis?........................................................................................................4
1.4 Merger……………………………………………………………………………………………………………………………..……….4
1.5 Acquisition…………………………………………………………………………………………………………………………………5
2. LATEST NEWS & TRENDS…………………………………..…………………………………………………………………………….6
3. PRACTICE MCQ QUESTIONS……………………………………...……………………...…………………..…….………………...8
3.1 Questions…………………………………………………………………………………………………………………………………..8
3.2 Answer Sheet…………………………………………………………………………………………………………………………….9
4. IMPORTANT QUESTIONS AND ANSWERS………….………………………………………………………………….………10
4.1 Guesstimates……………………………………………………………………………………………………………………………10
4.2 Case Based……………………………………………………………………………………………………………………………….15
5. REFERENCE MATERIALS…………………………………………………………………………………………………………………21

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1. SUBJECT CONCEPTS

1.1 What is Consulting?

Management consulting is a service that assists clients in identifying and analyzing business issues or
opportunities. When it comes to client difficulties, management consultants provide solutions or
suggested actions and assist in their execution when needed. Consultants provide guidance and
expertise in problem resolution, and they are recruited by firms that require their expertise and outside
perspective. Consultancies are believed to be aware of industry 'best practices' because of their
exposure to and contacts with different organizations. Organizational change management help,
coaching skills development, technology implementation, strategy formulation, and operational
improvement services are all possible services provided by consultancies. Management consultants
typically bring their proprietary approaches or models to help identify problems and make
recommendations for more effective or efficient ways of carrying out corporate operations.

Management consulting is a broad term that encompasses a variety of business consulting services,
including information technology consulting, human resource consulting, and others, many of which
overlap, and most of which are offered by the large diversified consultancies listed below. So‐called
'boutique' consultancies, however, are smaller organizations specializing in one or a few of such
specializations.

Roles Performed by Management Consultants are:

• Professional advisor and counselor: the consultant has mastered an established body of knowledge,
has completed educational requirements and is governed by a code of conduct.

• Qualified resource: Management consultants are a resource upon which managers and administrators
of organizations can draw as needed qualified resource: Management consultants are a resource upon
which managers and administrators of organizations can draw as needed.

• Change Agent: Management consultants are a catalyst for change. By solving client problems, the
consultant must consider how solutions can be implemented. These solutions often require changes in
organizational structure, procedures, or job responsibilities. The Management consultant's
recommendations have value only if these changes are understood and accepted by employees and
managers.

Management Consulting is becoming more prevalent in non‐business-related fields as well. As the need
for professional and specialized advice grows, other industries such as government, quasi‐government
and not‐for‐profit agencies are turning to the same managerial principles that have helped the private
sector for years. One important and recent change in the industry has been the spin‐off or separation of
the consulting and the accounting units of the large diversified firms. For these firms, which began
business as accounting firms, management consulting was a new extension to their business. But
precipitated by several highly publicized scandals over accounting practices, such as the Enron scandal,

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accountancies began divestiture of their management consulting units, to more easily comply with
tighter regulatory scrutiny that arose in the wake of the scandals.

Consulting companies
McKinsey & Company, Boston Consulting Group, Bain & Company, Booz Allen Hamilton, Monitor Group,
Mercer Management Consulting, IBM Business Consulting Services, A.T. Kearney, Deloitte Consulting,
Hewitt Associates, Accenture, Capgemini, KPMG, Ernst & Young, PricewaterhouseCoopers, Diamond
Management & Technology Consultants, Avalon Consulting, BMR Advisors, SAP Value Engineering

1.2 What is Strategy?

A business strategy is a clear set of plans, actions, and goals that outlines how a business will compete in
a particular market, or markets, with a product or number of products or services. A business strategy
must take into account many factors including the market, competitors, and the business environment,
as well as the company's structure, strengths, and weaknesses. It should also be flexible enough to
handle change. Planning and preparing a business strategy, therefore, requires strong skills in strategic
planning and business analysis, as well as a good understanding of functions like marketing, sales, and
distribution.

Strategy
Consists of the combination of competitive moves and business approaches used by managers to run
the company. Management’s “game plan” to attract and please customers, stake out a market position,
compete successfully, grow the business and achieve targeted objectives.

Competitive advantage
A competitive advantage is an advantage over competitors gained by offering consumers greater value,
either through lower prices or by providing greater benefits and service that justifies higher prices.

Competitive Strategies:
Following on from his work analyzing the competitive forces in an industry, Michael Porter suggested
four "generic" business strategies that could be adopted to gain a competitive advantage. The four
strategies relate to the extent to which the scope of businesses' activities are narrow versus broad and
the extent to which a business seeks to differentiate its products.

1. Strategy ‐ Differentiation
This strategy involves selecting one or more criteria used by buyers in a market ‐ and then positioning
the business uniquely to meet those criteria. This strategy is usually associated with charging a premium
price for the product ‐ often to reflect the higher production costs and extra value‐added features
provided for the consumer. Differentiation is about charging a premium price that more than covers the
additional production costs, and about giving customers clear reasons to prefer the product over other,
less differentiated products. Examples of Differentiation Strategy: Mercedes cars; Bang & Olufsen

2. Strategy ‐ Cost Leadership

With this strategy, the objective is to become the lowest‐cost producer in the industry. Many (perhaps
all) market segments in the industry are supplied with the emphasis placed on minimizing costs. If the

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achieved selling price can at least equal (or near) the average for the market, then the lowest‐cost
producer will (in theory) enjoy the best profits. This strategy is usually associated with large‐scale
businesses offering "standard" products with relatively little differentiation that are perfectly acceptable
to the majority of customers. Occasionally, a low‐cost leader will also discount its product to maximize
sales, particularly if it has a significant cost advantage over the competition and, in doing so, it can
further increase its market share. Examples of Cost Leadership: Nissan; Tesco; Dell Computers

3. Strategy ‐ Differentiation Focus

In the differentiation focus strategy, a business aims to differentiate within just one or a small number
of target market segments. The special customer needs of the segment mean that there are
opportunities to provide products that are different from competitors who may be targeting a broader
group of customers. The important issue for any business adopting this strategy is to ensure that
customers do have different needs and wants ‐ in other words, that there is a valid basis for
differentiation ‐ and that existing competitor products are not meeting those needs and wants.
Examples of Differentiation Focus: any successful niche retailers; (e.g. The Perfume Shop); or specialist
holiday operator (e.g. Carrier)

4. Strategy ‐ Cost Focus

Here a business seeks a lower‐cost advantage in just one or a small number of market segments. The
product will be basic ‐ perhaps a similar product to the higher‐priced and featured market leader, but
acceptable to sufficient consumers. Such products are often called "me‐toos". Examples of Cost Focus:
Many smaller retailers featuring own‐label or discounted label products.

1.3 Value chain analysis

Value Chain Analysis describes the activities that take place in a business and relate them to an analysis
of the competitive strength of the business. The activities of a business could be grouped under two
headings:
(1) Primary Activities ‐ those that are directly concerned with creating and delivering a product (e.g.
component assembly); and
(2) Support Activities - which whilst they are not directly involved in the production, may increase
effectiveness or efficiency (e.g. human resource management). It is rare for a business to undertake all
primary and support activities. Value Chain Analysis is one way of identifying which activities are best
undertaken by a business and which are best provided by others ("outsourced").

1.4 Merger
A merger is a combination of two companies into one larger company. A merger generally results in a
new company name (often combining the names of the original companies) and in the new branding.
Accretive mergers are those in which an acquiring company's earnings per share (EPS) increase. An
alternative way of calculating this is if a company with a high price-to-earnings ratio (P/E) acquires one
with a low P/E. Dilutive mergers are the opposite of the above, whereby a company's EPS decreases.
The company will be one with a low P/E acquiring one with a high P/E.

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1.5 Acquisition
An acquisition, also known as a takeover, is the buying of one company (target) by another. Acquisition
usually refers to a purchase of a smaller firm by a larger one. Sometimes, however, a smaller firm will
acquire management control of a larger or longer established company and keep its name for the
combined entity. This is known as a reverse takeover.

Difference between merger and acquisition:

When one company takes over another and established itself as the new owner, the purchase is called
an acquisition. From a legal point of view, the target company ceases to exist, the buyer "swallows" the
business and the buyer's stock continue to be traded. However, in a true merger both the businesses
dissolve and fold their assets and liabilities into a newly created third entity. This entails the creation of
a new corporation.

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2. LATEST NEWS & TRENDS

2.1 The future is digital: Redefining the consultant’s role and global resourcing
The consulting business thrives on consultants, who visit client sites to understand their processes
before beginning their collaboration. However, going forward, onsite consulting is expected to be an
antidote to crises only. Consultants will redefine work from remote locations spread globally and gain
more traction from end clients. Virtual platforms will be leveraged to manage consulting cases and
coordinate with teams scattered worldwide.

2.2 Bespoke solutions: Role of experts and SME pool

The industry is moving away from high-value short-term projects in favor of longer-term strategy
development and broader input engagements. Firms are increasingly looking for consultancies that can
provide fully customized solutions formulated by first gaining deep insights into their business. This will
promote the role of Subject Matter Experts (SMEs) in strategy articulation. Additionally, consultancies
will need a robust resource pool with expertise in various sectors. Tapping third-party research
capabilities will be beneficial, as it will yield on-demand solutions at low costs.

2.3 Strategy moving in-house: Lean consultant teams and technology to tap this market
The growth of strategy as a function has seen corporates scurrying to build their internal strategy teams,
including ex-consultants who had served in consulting behemoths. Consulting firms will do well to
provide such clients with no-frills services, as well as an array of offerings (backed by robust technology
and digital products) difficult for internal teams to replicate. Automated decision-making, predictive
analytics, machine learning, and codeless software will be in vogue, alongside mandates to automate
administrative tasks and improve productivity.

2.4 Clients’ ROI: Sustained margins

Clients remain price-savvy about consulting services. Freelancers as well as boutique firms do not have
many frills added to their services and are hence able to quote a much lower price compared to a global
consulting major. Even billing models are being disrupted because of clients’ pricing concerns; firms are
seeking more return on investment and ‘proof’ of quality on consulting advice. Additionally, off-the-shelf
technology tools available online and stiff competition have eroded margins and profitability for
consultancies. They will likely implement cost-effective solutions over expensive diagnoses based on
actual billing hours. These trends will also mean enhanced collaboration with boutique firms/freelancers
for expert advice, leaving the onus of heavy lifting to offshoring partners.

2.5 Technology sector demand: Tech companies will provide enhanced business opportunities
Technology-related businesses are on the upswing and will increasingly rely on consultancy support to
exploit the current favorable conditions. This may bolster the demand for strategy and operations-
related mandates for consulting firms. The latent demand for technology-enabled start-ups, such as
fintech and app-based firms, will further fuel this practice, with these start-ups gaining critical mass and
taking steps to drive their next phase of growth.

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2.6 Deal-driven market: Restructuring practices to witness high demand
End clients, impacted by the current turbulence, may seek consulting advice to focus on core vs non-
core activities. M&A looks set to increase, as there will be some value-buying. This will keep consulting
firms engaged, with mandates to advise firms on restructuring and divestments. Additionally, business
sectors that plan to re-engineer themselves to adapt to altered market scenarios will require change
management and support for strategic, cultural, and operational development, along with upskilling
employees to revised business requirements. Consultancies with capabilities in these twin areas are
expected to capture a pie of consulting mandates for this market.

2.7 How Acuity Knowledge Partners can help consultants:

Our services are based on the triad of technology, research, and data expertise, which ensures that the
research we provide is technology-backed, based on exhaustive data points, and driven by the best
insights. Leveraging our proprietary technology solution, Business Excellence and Automation Tools
(BEAT), and highly qualified professionals with deep expertise, who work with more than 200 global data
providers, we not only ensure that the interests of the biggest names in the consulting world are well
guarded, but also equip firms to stay a step ahead when the rules of the game begin to change.

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3. PRACTICE MCQ QUESTIONS

3.1 QUESTIONS
Question 1: Strategy is developed by the visionary chief executive in ____ mode of strategic
management.
(a) Planning mode (b) Adaptive mode
(c) Strategic mode (d) Entrepreneurial mode
Question 2: Stability strategy is a ____ strategy
(a) Corporate level (b) Business level
(c) Functional level (d) Strategic level
Question 3: What are the means by which long-term objectives will be achieved?
(a) Strategies (b) Policies
(c) Strength (d) Opportunity
Question 4: Marketing strategy is a ____ type of strategy
(a) Business Level (b) Growth Strategy
(c) Corporate Strategy (d) Functional Strategy
Question 5: When an industry relies heavily on government contracts, which forecasts can be the most
important part of an external audit?
(a) Economic (b) Competitive
(c) Political (d) Multinational
Question 6: A possible and a desirable future state of an organization is called:
(a) Mission (b) Vision
(c) Strategy implementation (d) Strategy formulation
Question 7: What does a question mark symbolize in the BCG matrix?
(a) Remain diversified (b) Invest
(c) Stable (d) Liquidate
Question 8: Selling all of a companies assets in parts for their tangible worth is called :
(a) Divestiture (b) Concentric diversification
(c) Liquidation (d) Unrelated integration
Question 9: What do cash cows symbolize in the BCG matrix?
(a) Remain diversified (b) Invest
(c) Stable (d) Liquidate
Question 10: The BCG matrix is based on :
(a) Industry attractiveness and Business strength
(b) Industry growth rate and business strength
(c) Industry attractiveness and Relative Market Share
(d) Industry growth rate and relative market share

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3.2 ANSWER SHEET
Question 1: (d) Question 2: (a) Question 3: (a) Question 4: (d)
Question 5: (c) Question 6: (b) Question 7: (a) Question 8: (c)
Question 9: (c) Question 10: (d)

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4. IMPORTANT QUESTIONS AND ANSWERS

4.1 GUESSTIMATES
Before proceeding with some questions, here are some useful tips to keep in mind when solving
guesstimates:
1) When answering a guesstimate, you want to showcase your ability to analyze a situation and
form conclusions by thinking out loud
2) Be sure to talk through your reasoning, allowing your interviewer to see (and hear) that you're
arriving at your answer in a logical manner
3) Remember that you choose the numbers, so pick nice round numbers that are easy to
manipulate. The logic that you use to derive an answer from your assumptions is much more
important than the perfect accuracy of the assumptions themselves
4) Begin by thinking broadly, then slowly narrowing down towards an answer
5) If assumptions are difficult to make, or you run into difficulty assuming anything, you should go
ahead and ask your interviewer for clarification

Question 1: How many bowling balls can you fit in a Boeing 747?
Answer 1:
Assumptions
1) Number of seats in Boeing 747 – 550
2) Each seat along with foot-space takes 4 ft. length and 3 ft. breadth on average (lounge seats, XL
seats, etc.). Each row has a 3-4-3 seating arrangement
3) The plan has two isles and each isle has a width equivalent to that of 4 seats
4) The cockpit is conical in shape and has a length of about 5 meters
5) The average diameter of a bowling ball is 25 centimeters
Steps for Computation
1) According to our assumption, there are 550 seats in a Boeing 747 aircraft. With the assumption
of the 3-4-3 arrangement, there are effectively 55 rows in the plane.
2) With every row taking a foot-space of 4 ft. on average, the main deck length is computed to be
220 ft. which is approximately 70 meters.
3) With 10 seats and two isles in a row, the diameter of the plane is 18 seats wide i.e., 54 ft. which
is approximately 17 meters. For computational purposes let’s take this figure as 20 meters.
4) So, the volume for the deck can be computed by using deck length (70m) and Radius (20/2 =
10m). By using the formula 𝜋𝑟 2 ℎ, we compute the volume to be 22000 m3.
5) Out of this 22000 m3, we assume that approximately 7000 m3 worth of volume is unusable
(seats, flooring, interiors, etc.). Therefore, the usable space has a volume of 15000 m3.
6) For computing the area of the cockpit, we assumed that it has a conical shape with a length of
around 5 meters and a diameter of 20 meters (as computed above). Using this the volume of the
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cockpit can be computed via the formula 3 𝜋𝑟 2 ℎ

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 7) Using the formula above the volume of the cockpit comes to be around 500 m3. So the final
cumulative space for putting in the bowling balls is 15500 m3.
8) For computing the number of bowling balls that can be fitted, we have to assume a cubical
shape around the ball to account for the spaces in between the balls.
9) The length of a side of the cube will be equal to the ball’s diameter i.e., 25 centimeters which
are 0.25 meters. Using the formula of Side3 for the volume of a cube, we compute it to be 0.016
m3.
10) The final number of bowling balls thus can be computed as: 15500/0.016 which is equal to
9,68,750 bowling balls.

Question 2: What is the distance between Srinagar and Cochin?

Answer 2: India measures approximately 3000 km from North to South. Srinagar is around 200 meters
below India’s Northern tip. Cochin is around 300 meters above India’s Southern tip. Therefore, the
distance, assuming it to be a straight path, is effectively: 3000-200-300 i.e., 2500 km.

Question 3: What is the number of Gmail accounts that are active in India?
Answer 3:
Assumptions
1) The population of India is – 1,300,000,000 i.e. 1.3B
2) Internet penetration in India is – 30%: 390,000,000
3) Population Distribution – 0-20 : 25%, 21- 60 : 60%, >60 : 15%
Steps of Computation
1) We assume that these internet users require a Gmail account for many purposes (like accessing
the play store). So the number of personal Gmail accounts is 390,000,000
2) In addition to this, a major proportion of email users are employed people. Since in India, the
employment rate is 75% but not all of them need an email account.
3) People of age between 0-20 using internet= 0.25*390000000, i.e. 97500000 ~100,000,000
Similarly, people aged between 21-60 and >60 using the internet will
be 230,000,000 and 60,000,000 respectively.
4) The number of employed people above the age of 21 is 75% of 230,000,000 i.e., 173,000,000.
5) We assume that 45% of this working population has work email accounts. Out of these, 20%
belong to Gmail.
6) The number of work email accounts is 20% of 45% of 173,000,000 i.e., 15,570,000.
7) The number of school/college-related accounts can be computed with the assumption that 45%
of the people below 20 years of age have these accounts. Therefore, the number comes to be
45,000,000.
8) Therefore, the total number of active gmail accounts is :
Personal Email (390,000,000) + Work Email (15,570,000) + School/ College Email (45,000,000)
= 450,570,000 Accounts

Question 4: What is the number of Gmail accounts that are active in India?

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Answer 4:
Assumptions:
1) 29 states + 7 union territories ~ 30 states
2) Ignoring transit travellers (People waiting for layover flights etc.)
3) Ignoring special travellers like Military, Government officials for duty, etc.
Steps for Computation
1) Interstate flights: Top 10 states have an average of 6 flights per day between themselves. The
top 8 & the smaller 20 have an average of 2 flights/day between themselves. The 20 smaller
states have an average of 1 flight/da between themselves. ~ 140 flights/day*200 average no. of
passengers = 28,000
2) Interstate Trains: Top 10 --> average 3 trains per day. Between top10 & smaller 20 --> 2 /day.
Between smaller 20 --> 1/day. ~80trains*Average of 1500 passengers = 120,000
3) Interstate Buses: Each state will have buses to an average of 6 neighbouring states. Each
interstate segment is covered by an average of 3govt and 3 private buses. 30 states * 6 buses *
60 Average. passengers = 10,800
4) Summing it all up. ~ 158,800 travellers /day using mass transport + around 30% of this in private
transport vehicles (47,640) ~ 206,440 inter-state travellers/day in India

Question 5: How many cups of tea were consumed in Mumbai last month?
Answer 5:
Assumption
1) Each day of the week is being considered equally. Tea consumption might likely decrease during
the weekend as people do not go to the office—so you might consider that as well. We shall go
with the first assumption.
2) The population of Mumbai is 18 Crore; we shall round it up to 2 crores.
3) 20% of this population is assumed to be children who do not drink tea.
4) Of the remaining population, 20% are habitual drinkers, 30% are regular drinkers, 20% are
occasional drinkers, and 10% are non-drinkers.
5) The habitual drinkers may be said to have three cups of tea in a day. Regular drinkers may be
said to have one cup of tea in a day. The tea consumption of occasion drinkers maybe once a
week, and that of non-drinkers none at all.
Computation
Habitual – 3 x 0.2 x 7 = 4.2; Regular – 1 x 0.3 x 7 = 2.1; Occasional – 1 x 0.2 x 1 = 0.2
Non – 0; Total = 6.5; Total cups per week = 6.5 x 1.6 crore = 10.4 crore

Question 6: How many cars are there in Delhi?

Answer 6:
Assumptions:
1) Cars can be bought by individuals, taxi owners, institutions
2) Average family size is 5; Car purchasing power - 40% of families
3) We assume taxis should be equal to 2% of the population
Computation

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 1) The population of Delhi is around 1.5 Crores. With our assumption of 5 members per family, the
approximate number of families comes to be 30 Lakh families
2) With our assumption of purchasing power to be around 40%, it comes out to be 12 lakh families
3) Let's take an average of 2 cars per family in Delhi, then we have 24 lakh cars individually owned
cars.
4) Taxi can be of two types: Commuting in Delhi and those used for outstation
We assume taxis should be equal to 2% of the population. The number of taxis can be 3 lakh
5) Institutions: Institutions can be Govt, Private Institutions, Private businesses
Let's assume 1 business entity for 100 citizens. We have 1.5Lakh such entities.
Lets assume 2 cars per such entity, we get 3 lakh cars
6) Total cars : 24lakh + 3lakh + 3 lakh = 30 lakh cars in Delhi

Question 7: How many people travel through local trains in Mumbai in the month of June?
Answer 7:
Assumptions:
1) The Mumbai local trains undertake an average of 2500 journeys every day
2) Every train has a seating capacity of 1000 passengers and a standing capacity of 3000
passengers
3) Due to over-populations, we assume the average occupancy to be at 60% during non-rush hours
(11 AM-4 PM, 8 PM-9 PM) and 110% during rush-hours (7 AM – 11 AM, 4 PM-8 PM)
4) The period considered is 7 AM – 9 PM
5) During non-working days, the number of passengers reduces by 40%
6) The month of June witnessed a reduction of 10% in the daily crowd due to heavy rains
Computation
1) The number of train journeys per hour can be calculated by dividing the total train journeys
(2500) by the number of operating hours (14 hours) which approximately equals 180 trains per
hour
2) The number of passengers during non-rush hours per train can be computed by multiplying the
train capacity (seating + standing) i.e., 4000 with the occupancy rate of 60%. This results in 2400.
3) The number of non-rush hours is 6 which can be multiplied by 2400 to get 14,400 which is the
number of passengers during non-rush hours per train.
4) Similarly, the number of passengers during rush hours per train can be computed by multiplying
the train capacity (seating + standing) i.e., 4000 with the occupancy rate of 110%. This results in
4400.
5) The number of rush hours is 8 which can be multiplied by 4400 to get 35,200 which is the
number of passengers during rush hours per train.
6) The total number of passengers per train is 14,400+35,200 which equals 49,600
7) This can then be multiplied by the number of trains per hour (180) which come to be 89,28,000
passengers per day
8) The month of June has an average of 8 non-working days. With our assumption, the number of
passengers per non-working day can be computed as: 53,56,800 (89,28,000 X 0.6)

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 9) The number of normal days is 22. The total number of passengers on a normal day is therefore,
19,64,16,000 (89,28,000 X 22). Similarly for non-working days it is 4,28,54,400(53,56,800 X 8).
Adding these we get 23,92,70,400 passengers per month.
10) Due to heavy rainfall, we assume a reduction of 10 % from the number computed above, which
gives us the final number as 21,53,43,360 passengers for June.

Question 8: How many ATMs are there in India?

Answer 8:
Assumptions:
1) 1 ATM has been mapped to ~500 users in the Urban area, & ~2000 users in the Rural area
2) Let the Rural:Urban split be 70:30 of the total population. The population of India - 1.4 billion
3) There are 4 people in a household for both urban and rural on an average
4) 70% of Rural household has ATM cards; 90% of Urban Households has ATM cards
5) In Urban, let say 10% of a household has 2 ATMs and the rest of the 90% has 1 ATM
6) 1 ATM has been mapped to ~500 users in the Urban area, & ~2000 users in the Rural area
Computation:
1) Population Split - Therefore, the population split approximately comes to,
Rural = 980 million; Urban = 420 million
2) Household split come to,
Rural = (980 million / 4) = 245 million; Urban = (420 million / 4) = 105 million
3) Total number of ATM cardholders in India -
(70% of 245 million) is approximately 170 million ATM cards in Rural
(90% of 105 million) is approximately 95 million ATM cards in Urban
4) Let’s assume: In Urban, let say 10% of household has 2 ATMs and rest of the 90% has 1 ATM,
= (10% X 95M) X 2 + (90% X 95M) X 1= 19 + 85.5M ~ 105M ATM users
5) Total number of ATMs in Urban + Rural India = 105M/500 + 170M/2000 =2,10,000 + 85,000
= 2,95,000 ATMs are there in India.

Question 9: What is the number of people flying from Delhi airport on a daily basis?
Answer 9:
Assumptions:
1) The flights being considered are passenger flights, both domestic and international, taking off
from IGI airport (T1, T2, and T3)
2) The total number of gates in the IGI airport is 100
3) During the rush hour (10 hours), 60 of these gates are operational and during the non-rush hour
(14 hours), 40 of these gates are operational per hour
4) The flights being considered are of standard size with 180 seat capacity
5) All flights are working at full capacity and have a crew of 8 members
Computations:
1) The number of flights during rush hour can be calculated as the number of hours (10) X number
of operating gates (60) i.e., 600.

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 2) The number of flights during non-rush hours can be calculated as the number of hours (14) X
number of operational gates (40) i.e., 560
3) The total number of flights is, therefore, 1160
4) The number of passengers comes out to be 1160 X number of seats in a plane (180) i.e.,
2,08,800 passengers
5) The number of crew members flying comes to be 1160 X average number of crew members (8)
i.e., 9,280
6) The total number of people flying from Delhi is therefore 2,18,080.

Question 10: How many pieces of paper would it take to completely encircle the earth at the
equator?
Answer 10:
Assumptions:
1) The width of India is around 3000kms; A piece of paper measures 30 cm in length
Computation:
1) We estimate that approximately 3 times India’s width will equal 1 time Russia’s width (3000X3 =
9000 km)
2) 4 times Russia’s width can approximately cover the entire equator (9000X4 = 36000)
3) Computing this, we calculate the equator to be approximately 40,000 km or 4,00,00,00,000 cm
in length
4) Dividing this number by the average length of a piece of paper (30 cm) we get approximately
13,33,00,000 pieces of paper

4.2 CASE-BASED QUESTIONS

Question 1: Volvo claims it is the safest car in the world because fewer people die in a Volvo than in a
car made by any other manufacturer in the world. What’s wrong with this conclusion?
Answer 1:
The validity of the claim that Volvo has the safest car in the US because fewer people die in it is at best
ambiguous. I have several concerns about this claim:
1) The definition of “safe” — the statement assumes that a safe car is only one where someone does
not die IN the car. But it’s possible the passenger died later or suffered severe injury.
Now assume that a safer car is one where fewer people die in it, the next concerns I have are:
2) Number of cars on the road – Perhaps Volvo has FEWER cars on the road and you’d expect them to
have FEWER deaths in their cars because of it. To test this, I would need to know how many cars from
Volvo are on the road vs. other brands, and compare the relative market share of cars to the share of
deaths.
3) Number of passengers in the car – Perhaps single people drive Volvo’s so there’s only one person in
the car, compared to say a Toyota which is perhaps a family car that perhaps carries more passengers.
So maybe when a Volvo crashes it kills the 1 person in the car more OFTEN, but in other car brands

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people die LESS OFTEN, but there are MORE passengers. To test this, I would need to know the average
number of passengers per trip in Volvo cars vs. other manufacturers.
4) Number of accidents – Perhaps Volvos get in more accidents a lot more often than other cars, but
perhaps once you get in an accident you’re less likely to die. For example, maybe Volvo brakes don’t
work so you crash all the time, but the Volvo body frame construction and airbags are excellent. To test
this, I’d need to know how many accidents involve Volvos compared with other cars — especially in
comparison to their relative market shares.
5) Mileage – Perhaps Volvos are driven less often for shorter distances than cars from other
manufacturers. If Volvo’s are driven less often, for fewer miles, then it’s possible Volvos have less time
risk of being in an accident — so it’s possible the car is more dangerous but used less. To test this, I’d
need to know how many miles per year the average Volvo is driven compared to other car brands.
6) The driver – Perhaps Volvo’s are not safer cars, but perhaps Volvo DRIVERS are safer. This might be
hard to test with data, but to start it would be useful to get the accident history of drivers who own
Volvos when they drive NON-Volvo cars.
To summarize conceptually,
No of deaths* = (Number of Volvos on the road) X (Number of passengers in the car) X (% chance of
having an accident) X (% likelihood of dying in the event of an accident**) X (Miles driven per year) X
(Driver’s Likelihood of getting into an accident)

* assuming fewer deaths = safe car ** this can be computed from the original statement

Question 2: Your nephew runs a lemonade stand. Yesterday was Monday and he was open from 2
pm – 5 pm and sold 2 cups. What should he do differently tomorrow?
Answer 2:
I’d like to understand a few things about my nephew's business. When did he start? What are his
working hours every day like?
He started last week. He works from 2 PM – 5 PM every day except Sunday.
Sure. Does he sell different types of lemonades or any other products? Where is his stall located?
He sells only one type of lemonade. He has a small cart that he pushes around the neighborhood to
make his sales.
Sure. Who are his main competitors? Does he have supply-side constraints?
There are no other lemonade vendors around him. However, there are quite a few corner shops and
supermarkets that sell juices and other substitutes. No, he does not have supply-side constraints. He
has a lot of lemonade every day that goes unsold.
Sure, I can begin now.
Total Revenue = Revenue per customer * Number of customers

Starting with the number of customers – There are 5 strategies he can use:
1) Time - He can change the time he operates. This would require researching when there is maximum
potential for tapping customers. Two strategies can be used - increase in hours worked and optimum
time brackets chosen 


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2) Area - His biggest advantage is that he can cover a large area through his cart. He can identify
hotspots and be there at particular times. For example, near a school or playground. He can also cover a
larger part of his neighborhood. 

3) Quality - He needs to ensure that his lemonade is of good quality. The moment word spreads about
its taste, he can be sure to garner more daily attention. 

4) Marketing - Distributing pamphlets and putting up small banners across his neighborhood will garner
more attention. His mother and father can inform all of their friends to purchase their son’s lemonade.


5) Different Channels - Instead of just relying on sales through his cart, he can also set up home delivery
for his neighborhood. He can also invite bookings for birthday parties and other gatherings. 

Next, we move on to increasing revenue per customer. There are two ways he can increase this - By
increasing the price of his product or by increasing the volume sold. Do we have any information on the
price he charges?
He sells his lemonade at Rs. 20/glass of 200ml.
That seems like a reasonable price. Keeping in mind that his only competition is established stores that
have much higher prices, he can probably increase his price to Rs. 25 without seeing a dip in demand.
To increase his volume sold, he can do two things – First, he can offer discounts on every additional
purchase or larger purchase. Second, he can increase the products available - Maybe, selling cookies
would incentivize people to buy a combo and help him cross-sell.

Question 3: Delhi Metro Rail Corporation has approached you; their ridership is declining year after year
They want you to analyze and consult them on this issue. How would you go about it?
Answer3:
We first try to do the financial Cost-Benefit analysis of the Delhi Metro. Before we assess the economic
viability, we need to check the project’s financial feasibility. The first step would be to find the fiscal
parameters, the cash flows. Revenue collected, the capital cost of the project, investments made by
companies, cost of construction are some of these parameters. The project’s investment expenses
constitute expenditure on construction goods, salaries of employees and unskilled labor, land-
acquisition costs, whereas the cost incurred on maintenance of equipment, energy are the operational
expenses including Government subsidy or concession on the goods tax for commodity purchases. Also,
we accordingly consider the subsidized interest rate at which a company has given funds to the project.
Now moving on to the income part, the following are the sources of income that work as financial
benefits for DM. Please add in other sources if applicable:
i. Traffic operations: Fare collected from Metro operations, feeder bus earnings, rental income from
various sources in the vicinity of metro stations like parking facilities, restaurants, kiosks.
ii. Sale of tender forms and carbon credits
iii. Consultancy: working as a consultancy firm to other metro projects in India or abroad
iv. Land development and advertising
v. Government grants and concessions

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May I have some more info on what percentage of drop in ridership was seen over the year and how
much was the fare revised?
With this analysis, we also observe that fare prices are vital in the computation of benefits and that only
an admirable fare of a transportation project can attract commuters as well as increase their income.
Lower fare tends to decrease the revenue and make the project financially unsustainable, whereas high
fares like what the Delhi Metro had done leads to a fall in ridership. Previous research also shows that
the feeder system is an important external factor that impacts ridership. If an efficient and effective
feeder service is provided to the commuters, they will not have not to choose private modes as an
alternative or opt for rider hailing cab services.

Suggestions to improve ridership

• Fare revision: The Delhi Metro’s Fare Fixation Committee is set up to revise the fare if the MRTS seems
to be running at a loss or will in the future. The FFC so far has been constituted intermittently and
reformed the ticket prices in a manner that did not consider the whole out-of-pocket costs to use public
transport for its citizens. The recent fare hike in 2017 harmed the ridership and suffered a substantial
financial loss that year. Keeping in mind the average monthly income of the citizens of Delhi. The fare
price should be revised periodically as well as with due consideration of affordability. The FFC should
also take into account the cost of the trip that is not part of the metro.
• Feeder services for access and egress trips: Last mile connectivity is one of the primary reasons that
Delhi Metro lost its share of ridership. Nevertheless, the popular Transport Network Companies like
Uber and OLA in Delhi overcame this problem and provided better connectivity, but hardly had
improved the ridership of the MRTS. Therefore, an efficient feeder bus or rickshaw service that
integrates with the whole transportation system is what is required.
• Integration of all the public transportation under one system: Like most European cities, where there
is an integrated public transportation system that has high accessibility and connectivity in a populated
city like Delhi. The first step to establish an integrated system in Delhi NCR is by a single ticket payment
system that covers all the transportation systems in that region which is similar to the MVV ticket in
Munich or Oyster ticket in London.
• Prioritization of expenditure according to the statistical data: The DM should spend more on the
elements that matter like the development of pedestrian walking infrastructure, higher frequency of
feeder services, planning the network length to improve accessibility.
• Travel Demand models: Developing realistic travel demand models for the MRTS will indeed help the
metro increase its ridership to a significant amount.
• Discouraging private modes: Congestion pricing to reduce traffic congestion on roads as well as
increase ridership in public transport modes. Execution of policies such as the odd-even rule, parking
restriction, or parking pricing should become frequent.
The lack of detailed analysis of the determinants that triggered a decline in ridership, responses from
metro users commuting daily, validation of those determinants is the limitations of this study. However,
overcoming such drawbacks can lead to future studies to gain further insights and fruitful discoveries.

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Question 4: Two malls have opened quite close to each other, and the dates of their openings were also
separated by only a few months. Both malls have managed to attract almost the same brands. Mall A is
doing much better in terms of revenue and profitability as compared to Mall B. The owner of Mall B has
hired you to find out what are the things that are holding Mall B back. Also, suggest ways to improve the
top line and the bottom line.
Answer4:
Things that are holding Mall B back and potential reasons for consumers to prefer A over B :
● First Mover advantage for mall A: It might be a possibility that Mall A has opened earlier than
mall B.
● Location: It might be a possibility that Mall A is located before Mall B and going to mall A might
be more convenient for shoppers.
● Attractive Storefront: Mall B's storefront might not be as attractive as mall A's storefront. Mall
B’s business sign should be more prominent and in good condition — nothing repels customers
as quickly as an old sign in disrepair. Banners and tapestries should match your overall aesthetic.
● Infrastructure: Customers want variety, diversity, comfort, comprehensiveness, convenience,
safety (from traffic), security, ambiance, parking, and ease of access. Mall A might provide all of
the above in a more efficient manner that attracts more shoppers and increases their stay time.
● Ambiance: when you look at stores or go inside them, you’ll notice a few things, such as The
lighting and ventilation in the store, The use of music, The amount of space available to move
around in, The actual display of each product, etc. These things might need changes in mall B.
Ways to improve the top line of mall B:
● Introduction of New Brands or brands different from the ones available in mall A
● Turn mall to entertainment hub: Offer additional services like gaming, arena, movie theater food
court, and dedicate spaces to hold events that offer forms of entertainment.
● Promotions: the promotional events include fashion shows, display of important cricket
matches, football finals, or the F1 Grand Prix hold, themed events especially during festivals,
which not only provide footfall and boost retailers' sales.
● Addition of discount shops like Rs99 store.
Ways to improve the bottom line of mall B:
● Negotiating better margin with companies/brands
● Bulk Purchasing of goods
● WIFI Hotspots- Creating a Wi-Fi café or multiple hot spots that promote a quiet haven for the
growing work-from-home workforce.

Question 5: The profitability of an ice cream launched by an FMCG company was good from Nov- Feb,
but it is going down from Feb onwards. What is the possible cause?
Answer 5:
Possible factors affecting profitability decline in the ice cream segment of an FMCG company ahead of
February month-
1. Increase in dairy input costs (Rise in milk prices)

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Being the core component in ice cream production Milk prices have a pivotal role to play in determining
the profit margins in the Ice cream segment for an FMCG Co. Milk prices generally rise during summers
when buffaloes and cows produce less, and ease during the winter-spring months, when the calve reach
peak lactation.
2. Increase in freight charges because of a possible rise in oil prices
Surging fuel prices have led to an increase in freight rates which is likely to dent the profitability margins
of FMCG companies across the supply chain.

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5. REFERENCE MATERIAL
• https://managementhelp.org/consulting/consulting.htm
• https://www.oxfordhandbooks.com/view/10.1093/oxfordhb/9780199235049.001.0001/oxford
hb-9780199235049-e-1
• Kipping, M. & Clark, T. (2012). The Oxford Handbook of Management Consulting: Oxford
University Press. Google Scholar.
• Kotter, J. P. (1995). Leading change: why transformation efforts fail. Harvard Business
Review, 73(2), 59–67.Google Scholar
• Ackermann, F. & Eden, C. (2011). Making Strategy: Mapping Out Strategic Success. London:
Sage.Google Scholar
• https://www.upgrad.com/blog/guesstimate-interview-questions-answers/
• https://firsthand.co/blogs/interviewing/how-to-answer-guesstimate-interview-questions
• https://www.caseinterview.com/mckinsey-problem-solving-test-example
• https://www.researchgate.net/publication/334545477_Evaluating_the_failing_transit_ridership
_of_the_Delhi_Metro
• https://www.google.co.in/amp/s/www.zeebiz.com/markets/commodities/news-reversed-milk-
price-in-india-soars-you-can-blame-your-higher-money-spending-on-this-reason-146712/amp

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