Management Consulting

Instructions: Please answer all eight sections of this final exam. Please respect the specific
word limits for the six parts of the exam. For each section of the exam, the relevant points value
is included. In addition to your written response in Word, where you deem appropriate, you may
also create and submit up to a total of five slides. Please refer to each slide in your Word
document so that I know to which part of your answer it corresponds. Words on the slides do
not count toward the word limit. You should only include slides that illustrate something that
could not be effectively illustrated in Word. (Hint: You don’t need slides for all the parts and
submitting slides for all the parts would be a significant waste of your time and effort. You will
only want to include slides when the facts require that you leverage a framework that we
learned to express through a slide).

This case and the company and characters described herein are entirely fictional. Any
resemblance to actual companies or individuals is purely coincidental. No outside research is
necessary or expected; in fact, as this is a fictional company, any outside research would be a
waste of your time.

Please submit this exam in Word (.doc or .docx format) and any additional slides either in the
Word Doc or as a separate PDF or PowerPoint file.

Please note that this case requires no financial knowledge or knowledge of venture
capital.
 KalKhet

You are the engagement manager of a strategy consulting team that was just hired to serve
KalKhet. KalKhet (a combination of the Hindi words for “Virtual” and “farm”) is a Virtual Reality
(VR) startup that provides farmers with VR headsets where farmers can login and access a
number of valuable resources via KalKhet’s proprietary applications.

The VR industry involves the development and production of technology and content that allows
users to experience immersive, computer-generated environments. This technology typically
involves the use of headsets that display 3D images and provide users with the ability to interact
with environments in a more natural way than computer technology has historically allowed,
such as by using hand gestures or body movements. The industry has grown significantly in
recent years, with a wide range of applications in areas such as gaming, education, healthcare,
and entertainment.

One of the key players in the VR industry is Oculus VR, a company founded in 2012 by Palmer
Luckey. Oculus VR was initially funded through a successful Kickstarter campaign and was later
acquired by Facebook (now Meta) for $2 Billion. Oculus VR has released several VR products,
most notably the Oculus Rift headset, which allows users to fully immerse themselves in virtual
environments. Oculus ceased operating as an autonomous subsidiary of Facebook in 2018, and
became a brand of Facebook Technologies, LLC (marketed as Oculus from Facebook)—a
subsidiary that includes other Facebook- developed hardware such as Portal. After plenty of
speculation, Facebook, the company that owns platforms including Facebook, Instagram and
WhatsApp, rebranded as Meta in October 2021, further cementing its commitment to invest in
and develop virtual reality technologies and environments.

One major challenge facing the VR industry is the high cost of VR hardware. Currently,
consumer VR headsets can cost upwards of $500 (Oculus costs $400), making them
inaccessible to many consumers. However, as VR technology becomes more advanced and
widespread, it is likely that the price of VR hardware will decrease, making it more affordable for
consumers.

The VR industry is still trying to break into business markets, with companies such as Meta
recently redoubling their efforts. The Quest Pro, Meta’s “most advanced headset yet” starts at
$1,500 and provides businesses with “a whole new way to work, create and collaborate.”
Employees can have meetings in virtual rooms (think Zoom meetings but where you control an
avatar that you can move around with your hand and head movements), conduct virtual security
audit walkthroughs of companies, and provide wearers with a digital keyboard and upwards of 9
virtual monitors that each offer the capabilities of the user’s actual computer workstation.

Another challenge facing the VR industry is the limited content available for VR devices. While
there are already a number of VR games and experiences available, there is still a lack of high-
quality, immersive content for VR users. This presents an opportunity for companies to invest in
the development of VR content, which companies such as KalKhet argue, could drive further
adoption of VR technology.
Despite these challenges, the VR industry has enormous potential for growth and innovation. As
VR technology becomes more advanced and affordable, tech enthusiasts hope that this
technology will become mainstream in the next 3-5 years, offering numerous applications
across a wide range of industries.

Naavya Shaan, the founder and CEO of KalKhet, holds the premise was that many farmers in
her home country of India—even though many of these traditional farmers have yet to fully
embrace the internet due to its relatively high costs and a still-developing internet infrastructure
—will nevertheless adopt these VR headsets once exposed to their clear value proposition and
provided with satellite internet that bypasses the need for on-the-ground internet infrastructure.

KalKhet’s staple product, the KHET headset, is a rebranded and lightly customized Oculus
headset (note that this is a white-label product with no Meta or Oculus branding but only
KalKhet branding). KalKhet purchases these headsets at 50% market value, or $200. When the
user wears the headset, he or she is placed into a lobby with separate virtual “rooms” where
they can access the following three key resources:

● 3D visualizations of their own farm's data (gathered from the farmer walking around their
farm with either the headset on or while scanning with their cell phone). This data is
further enhanced with recommendations derived from KalKhet’s proprietary machine
learning technology that crunches historical data and trends to make customized
recommendations for each user;

● Connections with local and international markets, along with state-subsidized agents that
answer any trade questions at a nominal fee for KalKhet and no additional fee from
KalKhet users. Users have access to physical and digital markets where they can sell
their crops without paying the expenses to haul their crops to the actual market only to
have wholesale buyers potentially reject them; and

● A learning environment with free resources including historical and predicted weather
information and on-demand lessons on treating various crop diseases.

Naavya argues that this product and service package presents exciting opportunities for
investors to engage with VR technology companies and capitalize on this growing industry’s
potential.

KalKhet has brought revolutionary, non-traditional methods to the selling and purchasing of
Indian farm produce by small-scale farmers. In the process, the company has helped hundreds
of thousands of millennial farmers (and other consumers) increase their families’ financial
futures. However, the company has recently faced challenges as it prepares to undertake a
Series F round of venture capital fundraising in early 2023. (Please note that a Series F is a
very late round of funding from investors and implies that KalKhet has already raised money in 5
earlier, separate rounds). While revenues continue to increase, numerous leading venture
capitalists, including investors in prior rounds, have expressed reservations about the Series F
round. The company’s founder and CEO is counting on you to “save” the Series F which is of
enormous importance to the company’s investors and team members. Without this additional
fundraising, KalKhet will be unable to continue supporting its existing operations and likely will
be placed into receivership by the bankruptcy courts.

Naavya Shaan started the company in Mumbai, India in 2015 after she was quoted what she
considered an astronomical price to hire a middleman to sell her family’s crops. The company
now does business all across India. Seeking to be closer to the communities of small, family
farms that she was most helping (most of the farmers on the North border and East Coast of
India are family farmers with 2 or fewer hectares of farmland) and desiring to be close to the
workers who were flocking to “India’s best city for innovation,” she relocated to Nagpur in 2018
and began expanding operations.

Naavya is well aware that she is expanding across a country that is rife with conflict centering
around farmers accusing existing agricultural marketplaces of collusion and price gouging. By
also trying to merge two disparate industries (agriculture and tech), such an endeavor could
prove impossible—or it could be the disruptive innovation needed to bring marginalized groups
newfound information and market access. Time would tell.

To provide a bit more background, crop farmers (the ones who provide the rice, sugarcane,
cotton) and a budding industry of entrepreneurial input providers (those who sell seeds,
pesticides, and herbicides) are struggling to consistently sell their products at a price that can
bring them enough of a profit to raise them (the rural farmers) from a subsistent life. The buyers
are predominately the large output buyers: Nestle, the Taj Hotels and the wholesellers who
have working relationships with—and who buy for— these industrial buyers or (for the inputs)
large farm collectives.

However, before the output or input providers can reach the industrial buyers, sellers currently
have to go through a friction-filled process. They have two main options:

Option 1: Sell to the Mandis, government-controlled markets where pricing is opaque and buyer-
collusion runs rampant. These are a main spark for ongoing and highly publicized farmer
protests.

Option 2: Sell to the eChoupals, private marketplaces that purchase select outputs at
transparent prices. However, farmers complain that they pay to transport their crops to these
markets, only to have the eChoupals declare that the quality is not up to their standard. The
farmers—victims of this illiquid market—often do not have cash on hand for the return transport,
and have to abandon their 4-month harvest. They're financially devastated.

In short, the existing marketplaces result in friction and frustration. The output providers are
frustrated by opaque pricing and unreliable and untrustworthy buyers. The input providers have
limited interactions with the farmers and they aren't trusted, because there's no way to judge
their credibility. The institutional buyers are frustrated at an inefficient marketplace where they
cannot obtain the outputs they need at consistent prices and quality.

To solve this problem, KalKhet’s IT and Salesforce teams have created an API for the
technologically lagging agricultural knowledge hubs, known as KVKs; this allows KalKhet’s
customers to quickly access weather information, request soil testing (for an additional cost),
and more via their KHET headset. Naavya has also built out this information system to provide
temporal and geographical pricing information for all common agricultural products at various
levels of quality. Perhaps most notably, when KalKhet’s customers use their headsets or
phones to scan their crops, this provides invaluable data to KalKhet about the pesticides used
on the crops, the quality of the crops, and the timing for the harvest. KalKhet compiles this data
and makes it accessible to buyers who benefit from having a reduced risk in making virtual
purchases on the KHET platform. Buyers can then make offers through the platform.

If KalKhet’s patented algorithm finds that crops, especially cash crops, will need storage before
delivery or, according to historical and real-time pricing data, would benefit from selling at a
different time, then KalKhet similarly coordinates with the API of Central Warehousing Corp. to
automatically find and book storage space. KalKhet has a similar relationship with a Delhivery, a
leading delivery company, to provide delivery to storage (if needed) or directly to a buyer.
KalKhet does not own any storage facilities.

In this way, KalKhet cuts out the illiquid market of eChoupals and their single, discerning buyer
who makes a decision to buy after the crops are already transported, and limits the dependency
on in-person buying and selling at the Mandis where buyers offer opaque pricing information.

Farmers using the KalKhet platform are provided with satellite internet (offered by Starlink and
largely subsidized by the Indian government so that costs to KalKhet are negligible). Institutional
buyers of these outputs work directly with a KalKhet salesforce located in Nagpur. The central
office staff coordinates the intense resources (money and time) required to provide training on
the initial devices as well as ongoing support to maintain the hardware and software.

The company’s early rounds of funding were from angel investors who believed in Naavya’s
mission of helping out the small farmer. Later rounds also included venture capital funds,
including the venture arms of numerous Wall Street banks and some of India’s most successful
VC shops.

KalKhet primarily markets its headset and accompanying services through an on-the-ground
salesforce that visits local farms. The company also markets itself during television programs
(live and on demand) geared towards millennials and Gen Z. To date, all of KalKhet’s growth
has been organic. It has not engaged in any M&A.

The company’s profits come solely from a commission charged on all sales through the
platform; both the buyer and seller are charged a percentage-based fee. The farmers have been
happy with the virtual market because it is transparent and, once deals are made, backed by a
100% guarantee. Buyers are able to purchase at a higher price than they could receive at an
eChoupal or a Mandi but have also been pleased because of the accompanying data that
showed the exact quality and pesticide history of their crops.

Below, you can find data on revenues from sellers (the farmers), revenues from buyers (Nestle,
etc.), salesforce expenses, and other expenses for the last four fiscal years (converted into
USD). Input (i.e. seed) sellers are included into the “sellers” revenues but their sales have so far
been negligible.

2018
Revenues from Sellers: $69 million
Revenue from Buyers: $22.1 million
Expenses from Salesforce: $22.9 million
Other expenses (administrative, headsets): $4.5 million
Net Profit: $62.6 million

2019
Revenues from Sellers: $110 million
Revenue from Buyers: $36.4 million
Expenses from Salesforce: $36.5 million
Other expenses (administrative, headsets): $14.6 million
Net Profit: $94.9 million

2020
Revenues from Sellers: $156 million
Revenue from Buyers: $52.2 million
Expenses from Salesforce: $52 million
Other expenses (administrative, headsets): $31.2 million
Net Profit: $124.8 million

2021
Revenues from Sellers: $226.1 million
Revenue from Buyers: $75 million
Expenses from Salesforce: $75.2 million
Other expenses (administrative, headsets): $60.2 million
Net Profit: $165.6 million

In speaking with Naavya, you are amazed at how well the company understands both its
technology as well as its clients and their experiences and challenges in buying and selling
agricultural outputs.

IMPORTANT NOTE: Management consultants are often brought in to assist with the strategic
due diligence of a company in the lead up to a sale, a significant new investment, and/or an
initial public offering. You job in such situations is not to consider if you would personally be a
customer of the company’s products or services. Your role is not to question how that demand
could possibly exist (which can be difficult if you don’t find the offering compelling) but instead to
consider the strategic implications of the business model, its sustainability, and how the
company’s strategy can be enhanced to attain its goals.

Part One (250 Words or Less, 10 Points)

Naavya knows that her industry is becoming increasingly competitive with big names entering
the space. Companies such as Meta, Google, and Samsung are investing heavily in the
development and application of this technology (both the headsets and the accompanying
software) and threaten to outcompete the much smaller KalKhet.

As Naavya looks out at these tech giants in a rapidly changing industry, she feels a bit lost and
wants to better understand her company’s general environment...so her first ask of you is for an
analysis of the general situation.

(Note: For this question, Naavya is not asking for recommendations but rather an overview.
Additionally, your response should come from the case; in other words, we don’t expect—nor
are we looking for— outside research here).

Part Two (300 Words or Less, 15 Points)

Naavya cannot understand why venture capital firms are hesitant to invest in KalKhet’s Series F
when the firm’s revenues continue to increase year after year (see the data above).

Naavya has shown you the slide deck that she used during the Series F roadshow that she and
her team just concluded. During the roadshow, the KalKhet team met with top venture
capitalists across the country and around the globe. You note that in that presentation, Naavya
convincingly lays out a plan for 15X revenue growth over the next decade. She reports to you
that when she presented that particular slide investors seemed to get even more concerned,
and she cannot understand why.

Naavya assumed that it must be that the investors did not believe her revenue growth plans
and/or that they did not think that the plans were aggressive enough so as the roadshow went
on Naavya became more emphatic about the company’s growth and even suggested that 20X
or 30X growth could be possible.

Naavya is open to any and all explanations regarding why the Series F is being met with such
fierce resistance.

Please state (using a framework we have often discussed) and structure (using one of the
methods we have studied in great depth) the problem that you have been asked to solve and
explain how you and your team will analyze this problem in a rigorous manner using the
structure you propose.
In addition, please identify the problem-solving pitfall(s) into which Naavya appears to have
fallen which have impaired her ability to solve this problem. Please explain why this/these
pitfall(s) apply to Naavya in this case. (Hint: We have learned about a series of potential pitfalls
earlier in the class.)

Part Three (300 Words or Less, 15 Points)

Next, leveraging the information and especially the data in the case, please explain why you
think that venture capitalists might be concerned about investing in KalKhet particularly if
revenues are expected to increase 15X over the next decade even though revenues have been
increasing to date. In other words, solve the problem.

Please be as specific as possible in answering this question getting as close to the root cause
as possible and suggest how Naavya might want to pivot the company’s strategy to overcome
the objections of investors. You may want to include a slide or two with your answer to this
question (these do not count toward the word count of this section).

As a reminder, this case requires no detailed financial background. You are simply looking at
the company’s finances when projected/extrapolated. Alternatively, you can simply look at how
the expenses compare to one another (hint: think of ratios).
Part Four (250 Words, 10 Points)

Naavya sees these larger tech companies struggle to reach a critical mass in their marketplace.
While KalKhet has received initial market fit, she worries that customers are not actually
invested in her services but instead only utilizing them because of the government subsidies,
which so far, have made the headsets free for her users.

With the government subsidies potentially disappearing in the next few years, how might
Naavya ensure she increases user adoption?

Part Five (400 Words or Less, 15 Points)

In order to try to make KalKhet more attractive to investors, Naavya is separately considering
expanding the business into other related fields in which she could leverage the firm’s
successful proprietary algorithms. For example, Naavya is considering competing with
companies such as Sunday who gather data on individual consumer’s lawn conditions to
recommend appropriate chemicals to ensure a green, healthy-looking grass. Naavya believes
KalKhet can better measure this data than the incumbents in this industry.

First, please analyze the current industry where KalKhet competes and give an assessment of
the industry’s strengths and weaknesses so that Naavya might better understand her industry
and the promises or perils it faces as she considers whether to expand to other areas.

Second, Naavya understands that at Harvard (she is very impressed with your education, by the
way) you read a chapter or two as well as some articles regarding how to better understand
users and their lived experiences through using a non-linear, iterative process, so that a
company might be able to better sell to them. Using this framework, Naavya has asked you to
put together a plan for her team to study potential clients and develop various services that will
best meet their needs. (Hint: You are not expected to come up with more than two or three
actual service offerings for these new clients. Instead, you should mostly focus on explaining
step-by-step how you would gain a better understanding of these potential clients and how you
would develop services to meet their needs. This question is primarily about the process you
would undertake to study and learn. It is only secondarily about the substance of the services
that Naavya would ultimately offer these potential clients.). Please be as specific as possible
regarding the tools you would use and the guidelines that you would set in this project.

Part Six (500 Words or Less, 15 Points)

While you are home on Saturday afternoon, you receive a frantic call from Naavya. She says
that she was listening to a podcast and just heard about this innovative concept called the
“Power Curve” and how the authors (that work for a competing management consulting firm) are
leveraging this concept to changes strategic planning. Naavya is sure that you must know about
this “Power Curve” and has numerous questions for you.

First, she would like to understand what the “Power Curve” is and why it is important for
companies and industries.

Second, she has heard that KalKhet’s industry of agricultural technology is in the third or middle
quintile on the “Power Curve.” She is wondering what this means and how it is relevant to the
company’s potential future.

Finally, Naavya understands that there are 10 levers that CEOs can use to move up the “Power
Curve.” Naavya is very ambitious and never met a financial curve that she would not like to
move up. So, she is wondering which of these 10 levers might be relevant to her business. She
knows that not all the levers would be relevant to her business which is not public yet and that
she has not yet shared with you all of the information required for some of the levers.

Nevertheless, Naavya is really hoping that you can suggest two or three levers that she could
pull. Please identify the two or three relevant levers of which Naavya should be aware and let
her know what she might do to move these levers in the positive direction at KalKhet.

Additionally, please briefly explain to Sanvi one variable that helps companies move up the
PowerCurve but which, in your expert opinion, most threatens to limit KalKhet’s growth. Give a
brief explanation of why that variable is currently weak and how it might limit KalKhet’s growth.
Part Seven (300 Words or Less, 10 Points)

Naavya is excited to be a disruptor in her industry. However, she worries about the eChoupals
—who staff a number of MBA strategists—and how they may respond to KalKhet’s rapid
disruption. Thankfully she knows that you are well read and have come across the typical
responses that an incumbent may take to combat a disruptive player in its industry.

Briefly (Naavya is very busy), she asks for your thoughts on how eChoupals might respond to
KalKhet’s entrance into their markets. (Note: please do not simply list all the possible reactions
the eChoupals may take but instead focus on 1-2 responses and argue why these are the most
likely responses.)

Part Eight (300 Words or Less, 10 Points)

As you seek to manage the various projects (Parts 1-3) for KalKhet and as your team has
ballooned to include 20 consultants and 30 KalKhet partners, you are beginning to feel
overwhelmed. As a seasoned management consultant, you know that a project plan will really
help you feel more relaxed and confident.

Please identify the various stages of any good project plan and the key guidelines for and
components of each stage in a generic project plan. (Hint: This part of the question is not
specific to KalKhet).

Given that the scope of your work with KalKhet has already expanded to include studying
potential users in new service areas, you are very worried that the project could expand out of
control to a point that it is no longer profitable for your firm (this would result in your losing your
job). Please identify two strategies that you can utilize to prevent such an expansion in project
scope and apply these to the KalKhet case.