Professional Documents
Culture Documents
Consulting ClubCasebook
2022 – 2023
October 2022
Edition 1
DMCC 2022-2023 Sponsors
The Duke MBA Consulting Club is grateful for the support of our sponsors:
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Welcome Message
Welcome students,
The Duke MBA Consulting Club (DMCC) is proud to present the 2022-2023 DMCC Casebook. This year we have included
12 brand new cases. The objective of this book is to help you prepare for your upcoming consulting case interviews. Case
interviews are an integral part of the hiring process for consulting firms. These interviews give you the opportunity to
showcase your communication, client, creative, and analytical skills to your interviewer. This book was developed to
complement the Duke MBA Consulting Roadmap curriculum. We hope that using both will help lead you to success during
the upcoming recruiting season.
This casebook could not have been completed without all of the wonderful cases submitted by your classmates. We would
also like to thank our friends at other MBA programs for sharing with us their old casebooks to supplement the cases herein.
Note that casing is a journey and a process. While many cases herein follow a prescriptive nature, actual interviews may
vary with respect to time, organization, and detail. It’s important to be adaptable, stay creative, and respond to mistakes
with a confident and professional demeanor.
We wish you luck with your preparation and would like you to remember that your fellow DMCC members are here to help!
Please reach out to anyone on the cabinet if you feel that you are not “cracking the case”. Lastly, to the students from other
top MBA programs who are using this casebook during their preparation, we warmly welcome you to “Team Fuqua.”
Good luck!
Kastur Bhattacharjee
The DMCC 2022 Casebook Chair
Acknowledgements
This casebook would not have been possible without the case contributions from the following second
year students:
Abidemi Owokoya, Alejandro Castro, Alfonso Barajas, Ali Lightbourne, Ali Stelletello, Chithraa
Veldurairaj, Clay Brezinski, Cory Dowd, Courtney Kaplan, Devika Mathur, Ernesto Almonacin, Gitika
Lakhotia, Huong Bui, Jin Zhang, Kevin Liscovitz, Maureen Ojukuwu, Nishanth Bharadwaj, Sherman
Wilhelm, and Thiago Silva
Thank you!
Overview, Changes, and Notes
• Industry primers were added back to help candidates familiarize themselves with the
fundamentals of a particular industry. However, given the ever-changing market
landscape, candidates should always stay up-to-date with recent events and market
trends
• Quantitative and qualitative difficulty were combined into a single case difficulty metric.
Experience showed that candidates would overemphasize particular rankings whereas real
interviews coalesce both components.
• Ask the behavioral questions EVERY TIME you give a case! Do not neglect this portion of the
interview
• All cases are adaptable. Sample frameworks and brainstorms should be used as baselines to
guide thinking. Be creative and leverage personal experience in every case
• For the 2022 academic year, send Kastur Bhattacharjee (kb487@duke.edu) any comments,
corrections or errors found in this casebook
• HAVE FUN! Casing is very representative of the day-to-day life as a consultant. Enjoy the
casing process, and you’ll enjoy your future career!
Industry Overviews
Oil & Gas
Products/ Services Products are categorized along the value chain as upstream, midstream, or downstream
Upstream: Identify, extract, or produce raw materials. Also called exploration and production
Midstream: Link upstream and downstream through storage and transportation services
Downstream: Anything related to the post-production of crude oil and natural gas
*The closer an oil and gas company is to supplying consumers, the further downstream it is
Revenue Volume of goods sold; Price is generally determined by global indices; Products can include diesel, natural
gas, gasoline, heating oil, propane, etc.
Costs It is important to note that this is a high fixed cost industry, resulting in a significant barrier to entry. Other
costs may include extraction costs, COGS (i.e., oil), labor, technology, transportation, and licensing
Competitive Landscape Upstream: BP, Shell, Aramco, Exxon Mobil, and China National Offshore Oil Corporation
(Competitors, Oilfield services: Schlumberger, Halliburton, Baker Hughes
Substitutes, New Downstream: MPC, PSX, COP, BASF, Dow, SABIC; Any oil refinery, natural gas distributor, or retail outlets
Entrants)
Suppliers/ Supply Products are mostly transported in large quantities by vessels and require long lead times.
Chain
Recent Trends & Key Oil prices have been volatile over the past few years. The recent American shale oil boom, & slowdown
Concepts have been the result of high oil variance.
COVID-19: There was a surplus of oil causing many refineries to halt operations. The oil price went negative
Key trends as a result of a lack of storage for oil. It is important to understand the current state of OPEC, and if there
have been any recent agreements to cut production.
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Consumer Packaged Goods (CPG)
Products/ Services CPG companies provide consumers with items used daily by average consumers that require routine
replacement or replenishment. These items include cleaning agents, beauty products, food, beverages, pet
food, clothes, tobacco, makeup etc.
Revenue Volume of goods sold; Price premium on branded goods
Costs Sales and Marketing (branding, discounting, trade spend); COGS (raw materials, packaging, and
processing), shipping/distribution, product development, product testing
Costs can vary depending on how horizontally integrated the CPG company is within the supply chain
Competitive Landscape Procter & Gamble (P&G), Unilever, Clorox, Mondelez, PepsiCo, Frito Lay, Chobani, Casper, Philip Morris
(Competitors, USA, Coca-Cola, etc.
Substitutes, New Private label products, home remedies, small mission-driven niche brands
Entrants)
Customers Walmart, Sam’s Club, Costco, Target, Grocery stores, Convenience stores, Consumers
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Manufacturing
Products/ Services Includes companies in the business of mechanical, physical, or chemical transformation of
materials/substances/components into new products
Revenue Volume of goods sold; Price premium on branded goods; Revenue is generated by selling the finished
goods. These may be sold to other manufacturers to produce more complex products, or to wholesalers,
who then sell them to retailers.
Costs Process efficiency, supply chain management, labor, raw materials; commodities, channel management,
marketing, capital investment
Competitive Landscape General Motors, Chrysler, Ford, Toyota, Honda, Boeing, Airbus, GE, Phillips, Siemens, Caterpillar,
(Competitors, Honeywell, Dow, Corning, HP, Intel
Substitutes, New
Entrants)
Customers Varies by industry and position in supply chain, can be consumers or raw goods to businesses
Distribution Channel(s) Direct Distribution: The manufacturer sells straight to the customer and uses no intermediary
(Manufacturers selling their products through their own retail chains)
Indirect Distribution: Utilizing intermediaries to get the product to the end user (a product manufacturer
utilizes Costco to reach and sell to their target market)
Suppliers/ Supply Supply chain varies widely by product and region; plants are owned/operated or contract manufactured;
Chain Supply chains are typically comprised of geographically dispersed facilities and capabilities, including
sources of raw materials, product design and engineering organizations, manufacturing plants, distribution
centers, retail outlets, and customers, as well as the transportation and communications links between them.
Recent Trends & Key Increased automation; Trump has been pushing to re-shore manufacturing supply chains
Concepts COVID-19: COVID has forced some companies to re-evaluate “just-in-time” manufacturing processes; some
Key trends companies are looking to diversify the steps of their manufacturing processes, and build up ‘emergency’
inventory; Many manufacturing companies shifted production to support the shortage of masks
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Financial Services
Products/ Services Retail banking, commercial banking, investment banking, deposit-based services, credit cards, consumer
loans (personal and commercial/business), payments, insurance, mortgages, securities, private wealth
management, underwriting for IPOs, retirement accounts, real estate loans
Revenue Net revenue is the spread between bank’s borrowing cost and the interest rates charged to borrowers;
underwriting fees; commissions; insurance companies generate revenues from premiums received;
Costs Overhead (branches, administration, compliance), salaries, bad debt expense, marketing
Competitive Landscape Large national players (Wells Fargo, Bank of America, Citi) compete with regional banks. The largest
(Competitors, players’ services extend well beyond commercial banking to investment banking, securitization, proprietary
Substitutes, New trading, etc. with services that are increasingly opaque
Entrants) Fintech is increasingly becoming a player within financial services
Customers Individual consumers (with the emergence of FinTech these services are now more accessible to the
underbanked community)
High net worth consumers (priority segment as result in higher profits)
Small/medium businesses without sufficient size for larger investment banking financing services; private
companies going public looking for underwriting
Distribution Channel(s) Face-to-face presence with bank branches, tellers, etc.
ATM services, online, mobile, robo-advisors (COVID-19 is increasing the use of these services)
Banks increasingly offer credit cards, home loans, etc. as means to increase asset base
Recent Trends & Key Consolidated, mature industry with primary growth through acquisitions
Concepts Demographic shift (baby boomer aging) creating large market for retirement products
Offshoring of various functions to reduce expenses (e.g. call centers, back office functions)
Customer intelligence and the ability to act in real-time to customer needs
Digitization of services (fewer customers visiting bank branches); zero-commission trading
Key trends COVID-19: Since COVID many consumers have reduced visits to the bank and further relied on digital
services; Many banks underwrote PPP loans to businesses seeking government support
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Healthcare (Provider)
Products/ Services Care provided to patients in doctor’s offices/clinics, urgent care facilities, emergency departments, acute
care facilities, etc. Providers may be for-profit or non-profit.
Patients typically are billed for the facility fees (ex. hospital beds, medication, etc.) as well as for physician
services received
Revenue Net Patient Service Revenue: revenue for care provided minus expenses for providing services
Academic institutions and other health systems often receive philanthropy
Most providers receive the actual money from insurance companies and tend to generate greater margins
on elective surgeries
Costs Corporate shared services (admin, IT, finance, legal, billing, etc.), salaries (physician groups often
contracted), pharmaceuticals, research, capital expenditures for large facilities, equipment, etc.
Competitive Landscape Consolidation among smaller regional health systems or by acquisition of larger health systems; Increased
(Competitors, emergence of urgent care facilities (ex. CVS Minute Clinic) and Telemedicine service providers; Decreased
Substitutes, New power from smaller organizations to negotiate favorable rates with payers
Entrants)
Customers Any one in need of health care services (growing as the US population continues to trend older)
Inpatient (stay in hospital) vs. outpatient (DO NOT stay in hospital)
Distribution Channel(s) Hospitals (acute care), clinics, doctor’s offices, emergency departments, urgent care, telemedicine providers,
large health systems, IDNS (Investor-owned), regional health systems, academic institutions urgent care
facilities, specialized pediatric facilities, rehabilitation facilities, hospice care, etc.
Suppliers/ Supply Suppliers to healthcare providers: pharmaceutical companies, technology providers (ex. radiology
Chain equipment, healthcare IT)
Recent Trends & Key Pay for performance; expanding and aging populations; increasing numbers of people with chronic, long-
Concepts term conditions; potential changes to healthcare coverage depending on the November election (i.e.,
healthcare for all); increase in technology (telemedicine, electronic medical records and protection of data,
wearables, predictive technologies, etc.); focus on preventative care
COVID-19: CARES Act; Since COVID more providers have relied on delivering their services virtually.
Key trends Voluntary procedures have halted at hospitals (these tend to generate the highest margins for providers).
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Private Equity Investments
Products/ Services Equity that is not publicly traded
Common forms include Leveraged Buyouts (LBOs), Venture Capital (VC), Mezzanine Capital,
Distressed Investments, and Growth Capital
Revenue Return on investments (carried interest) and management fees
Levers pulled to increase revenue (value-creation): timeframe, identifying efficiencies, new management,
acquisitions
Costs Investment expenses, legal, technical assistance to firms, administrative expenses, travel, labor is very
costly (few and highly paid employees), taxes
Competitive Landscape Supply of capital in the market is greater than demand. This has resulted in PE firms having a lot of ‘dry
(Competitors, powder’
Substitutes, New Large (e.g. KKR, Carlyle, Blackstone, TPG), Mid ($250M to $5B), and Small Market PE shops
Entrants)
Customers New customers of PE deals may be corporations
Institutional investors
Customers can range from small family-owned companies to large corporations
Distribution Channel(s) Leveraged Buyouts: controlling interest (of equity) is acquired through borrowing a lot of money
Venture Capital: investors give cash in exchange for shares/control; typical with start-ups
Mezzanine Capital: financing that contains equity-based options and subordinated debt
Growth capital: financing to expand, restructure, or enter new markets with little change in management
Distressed Investments: investing in financially stressed companies
Suppliers/ Supply Private investors, large corporations, foundations
Chain
Recent Trends & Key Larger amounts of equity required for each deal; Startup financial performance not always meeting high
Concepts valuations; Healthcare and tech are seeing most of the activity; Increased focus on value-creation rather than
financial engineering to generate investment targets
Key trends COVID-19: PE firm exits have halted and there has been a focus on supporting existing portfolio companies
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Pharmaceuticals
Products/ Services Brand name drug manufacturers produce original, patent-protected (for a certain period) drugs for human
and animal diseases. Generic drug producers produce ‘copy-cat’ drugs (with the same medical result) at a
lower development cost when the originator drug’s patent expires.
Revenue Determined by: size of specific treatment area/level of competition; buy-in from doctors that will prescribe;
speed to market (1st to market is important); dosage and frequency
Revenue can come directly from patients, but most is received from third party insurers
Costs VC: sales and marketing (doctor visits, sponsored studies)
FC: R&D (drug discovery, formulation, clinical trials; a lot of this is now outsourced; generic companies only
need to perform clinical trials and are therefore fast to come to market once a patent expires)
Competitive Landscape Success is contingent on drug effectiveness, adoption/buy-in from doctors, coverage approval from private
(Competitors, and public insurers, patient adherence and ease of use.
Substitutes, New US, Europe and Japan are the largest markets although emerging markets are growing (e.g., China, India,
Entrants) Brazil)
In the US, the Food & Drug Authority (FDA) needs to approve all drugs before sale. Generic drugs are
treated as substitutes and usually receive more favorable reimbursements and coverage by insurers.
Customers Doctors who prescribe these medicines
Insurance companies (i.e. private insurers, Medicare (over 65), Medicaid (low-income/disabled))
Patients/consumers who need these drugs/medicines
In some emerging markets officials (provincial and central government) may control channel access
Distribution Channel(s) Over the counter (“OTC”, can be sold without prescription); Retail outlets – CVS, Walgreens; Mail order/online;
hospitals; pharmacies; doctor’s offices; Emergence of prescription delivery; B2B: Distributors/intermediaries
Suppliers/ Supply Drug manufacturer –> Drug wholesaler/distributor –> retailer/pharmacy/doctor’s office/hospital –> patient
Chain
Recent Trends & Key Price competition from generic drug manufacturers. Increasing pressure from health insurance companies
Concepts and hospitals to reduce prices. R&D challenge of finding high revenue drugs (‘Blockbusters’ have annual
sales > $1B). Weaker investments in R&D in recent years. Loss of patent on key drugs for many large
Key trends pharma companies, especially for specialty biologic drugs in the next 5 years;
COVID-19: COVID has disrupted pharma supply chains (especially involving China)
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Airlines
Products/ Services Air transportation for passengers and cargo
Revenue Ticket sales, baggage fees, food and beverage sales, freight fees, new classes (Economy Plus as well
as Economy “Basic”), seat allocation, in-flight entertainment, in-flight WIFI, frequent flyer programs, consumer
credit cards
Costs Fuel, food and beverage, ground crew, air crew, aircraft lease/payments, airport fees, IT/admin
fees, frequent flier program fees, marketing and sales, offices, hangars, insurance
Competitive Landscape Legacy carriers (Delta, United, American, Lufthansa, Air India, British Airways) compete with each other and
(Competitors, are also competing with low cost carriers (Southwest, Allegiant Air, Frontier Airlines, Eurowings, Gogo Air).
Substitutes, New New entrants are more common in the low-cost model. Barriers to entry include available gate space / airport
Entrants) leasing agreements and extremely high startup costs
Customers Individual passengers, corporate travelers, travel agents/websites, freight/cargo shipping companies
Distribution Channel(s) Direct from the airline (website, at the airport, over the phone), travel agents (website, in person, over the
phone), through other providers as a bundle (cruise and flight bundle, hotel and flight bundle etc.),
increasing number of tickets sold through trip aggregators (Kayak, Priceline, etc)
Suppliers/ Supply Aircraft manufacturers, avionics manufacturers, aircraft leasing companies, fuel providers, airport
Chain operators, flight training providers, catering providers, aircraft maintenance providers
Recent Trends & Key Metrics: Available Seat Miles (Total # seats available for transporting) * (# miles flown in a period), Revenue
Concepts Passenger Mile (RPM) = (#Revenue-paying passengers)*(#miles flown in a period), Revenue per Available
Seat Mile = (Revenue) / (# seats available), Load Factor = % of available seating capacity which is actually
filled with passengers
737 MAX: Due to multiple crashes from a malfunctioning flight control, this plane has been grounded since
March 2019, and is still in the process of getting reapproval for passenger flights (negatively affected Boeing)
COVID-19: Significant reduction in passengers resulting in fewer flights; many airlines have laid off employees
and/or declared bankruptcy; airlines have offered vouchers for cancelled flights; as passenger flights were
Key trends cancelled, the cost of sending cargo by air increased; industry experts anticipate it will take many years for
demand to reach pre-COVID levels.
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Media
Products/ Services Media sector includes print, audio, and video content generation & distribution
Revenue Advertising is a key revenue driver. Additional revenue sources are subscriptions, one-time purchases (video
on demand, DVD purchase), and licensing fees. For online portals (Netflix, Hulu, etc.) the key value driver is
content.
Costs Production costs (salary, technology, location fees etc.), distribution costs, marketing and advertising,
promotions, capital costs (studios, equipment etc.)
Competitive Landscape Highly competitive with a few major players owning most of the market.
(Competitors, The fight over content exclusivity is a big issue among legacy players (Netflix, Hulu) and content providers
Substitutes, New (Disney, etc.). Content providers have begun to launch their own media platforms.
Entrants) Traditional cable companies are facing issues resulting from web-based solutions providers and cord
cutting.
Customers Two main customers: End customer (i.e., the viewer) and advertising companies (i.e., to whom the media
provider sells ad space). The more end customers the platform has, the more they can charge advertising
companies.
Distribution Channel(s) Online streaming is the fastest growing channel, but traditional distribution still exists. Additional distribution
channels include theaters and ‘live’ events.
Suppliers/ Supply Technology providers (internet service providers are becoming particularly important in allowing high-speed
Chain streaming), actors, artists, and musicians
Recent Trends & Key Online streaming and cord cutting is changing the industry. There is a large focus on creating and
Concepts controlling content. Companies such as Netflix and Yahoo are creating original content to remain
competitive. Ad-supported video is increasingly becoming the dominant model of delivering streaming
video to consumers.
COVID-19: Since COVID many companies have suspended movie and television production, causing
delays in release dates. Social distancing has generated a boost in digital media including video and music
Key trends streaming and downloads, as well as online publications.
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Technology
Products/ Services Broad industry consists of PCs, servers, semiconductors, internet service providers, communications providers,
IT services, software and application development, and internet companies. Technology plays a role in every
other industry, and there has been a push for companies to become more ‘digitized’.
Revenue Revenues vary by type of product. PC revenue: primarily from sales of PCs and subsequent support; internet
mobile applications revenue: driven by ad clicks; IT services revenue: tied to staff utilization per employee
Costs Costs vary by type of product. For software, the initial R&D costs are high but the marginal cost for production
is negligible. For PCs and servers input costs include component costs, labor costs, distribution and support
For semiconductors it is important to note these companies have high fixed costs, but are constantly
improving their products (i.e., Moore’s Law).
Competitive Landscape There are a few large competitors in the PC and server space, but many competitors in the software and
(Competitors, application development space.
Substitutes, New Internet companies have low barriers to entry, resulting in a highly competitive industry. It is common for
Entrants) smaller players to be acquired by the internet giants.
Customers Varies by type of product: ranges from individual customers and corporations for things like PCs or software;
Also could be companies looking for advertising channels.
Internet companies tend to be B2C, while companies such as IBM, Oracle, Cisco focus on B2B.
Distribution Channel(s) Distribution through retail outlets and B2B channels for hardware, online distribution through app stores/
websites for software. Limited distribution of software through physical media.
Suppliers/ Supply Hardware: various suppliers include raw material providers, semiconductor manufacturers, machine and
Chain technology providers
Software: supply chain includes software testing houses, and distribution channels such as App Stores
Recent Trends & Key Acquisition of talent and technology by established industry players. ”Freemium” and ad-driven revenue
Concepts models for software. New technologies entering the business segment: Internet of Things, cloud computing,
big data (predictive) analytics, mobile (computing everywhere), 3D printing, machine learning.
COVID-19: Remote work, online education, and social distancing has generated demand for products and
services delivered by the tech industry. Tech companies have achieved historic valuations and are driving
Key trends historic stock market prices; Tech continues to get scrutinized regarding their data security processes
(especially with upcoming election)
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2022 New Case List
Case Name Industry Type Difficulty Notes
Note: Cases are ordered in relative difficulty. Comfort with medium and hard cases are representative of interview proficienc y
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Other Classic Cases
Case Name Learning Goal Difficulty Casebook
Sardine Airlines Good starter case for starting casing Entry Fuqua 18-19
Lactose King Starter/refresher case with profitability twist Entry Fuqua 17-18
Rubber Bumper Non-traditional topic with good math Medium Darden 18-19
Great Burger McKinsey style case with difficult quant Hard Stern 16-17
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Case Logs
We recommend keeping a case log to track progress, notes and takeaways to refer back to. It is
recommended to use an Excel or Google Sheet that can be easily shared with others. Here’s a
breakdown of the basic sections of a case log:
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Case Dynamics
The makings of a good caser can be summarized in two buckets
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Case Checklist
❑ Education
❑ Public Sector/Government
10
Ikoyi Co in America
Industry: CPG
Case Type: Market entry
Led by: Interviewee
Case Level: Easy
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Behavioral Questions
Question 1:
• Tell me about a time you worked with someone with a different perspective/point of
view
Question 2:
• Tell me about a time you had to convince someone to change their mind
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Ikoyi Co in America
Prompt #1:
• Your client, Ikoyi Co is a UK-based company selling skincare products. They have
been successful in the UK and are considering entry into the US. They have asked
us to help identify if this is a viable strategy and which key US markets to enter.
Case Background:
• Background information to be divided into these categories
– Client/Company information: client is looking for $500M Net Sales Value in 3 years, after
retailers take their cut (40%). The imagined split is 50% DTC (no margin cut, 100%) and 50%
retail
– Industry/Competition information: currently one of the biggest players in the UK market.
Industry is very fragmented
– Product information: general skincare products (e.g. moisturizers, vitamin C serum,
exfoliators)
– Value Chain/Revenue information: earns revenue from selling directly to final consumer on
their website and through retail
– Any constraints on the case: the company is considering US only
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Ikoyi Co in America
Framework Buckets:
• MECE Framework for the prompt (high level buckets can be mentioned – details
under each bucket are optional)
Company Other
Economics
Competencies considerations
• Profit
✓ Potential rev in US • Power of brand to • Regulations
✓ Cost of operating in attract customers • Macro-economic
US • Expertise to succeed risks
• Market ✓ Staff skill • Taxation
✓ Competitive ✓ Supply chain • Political risk
environment • Channel access • Currency risk
✓ Consumer ✓ Access to retail
preferences shelves
✓ Industry trends ✓ Digital marketing
✓ Market growth capabilities for
• Investment DTC
✓ Upfront cost
required
✓ Payback period
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Exhibit #1
50%
2%
40% 6%
27%
10%
30% 14% 0%
8% 4%
20% 10% 12%
25% 24%
10%
13% 14%
0%
East West Midwest South
Interviewer guidance on Exhibit 1
Exhibit #1 Guidance: Analysis:
• Market size is given by the total at the top, • Candidate should deduce that the West is
with competitor share in each region\ heavily consolidated and will be difficult to
enter
• Assume Other accounts for sum of all
other competitors with negligible share • The other three regions are smaller but
less consolidated and should be explored
• Push candidate to eliminate West as it is
highly concentrated
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Exhibit #2
Potential
Total market size Potential market Potential market
Region market share
(Year 1) share Year 1 share Year 3
Year 2
East 500 10% 12% 20%
17
Interviewer guidance on Exhibit 2
Exhibit #2 Guidance: Analysis:
• Need to work backwards to get gross revenue
• Assume market size will grow at 10% annually goal
for each region • (.5)(.6)X+ (.5)X= 500M
• Candidate should recognize that even though • .8X=500M
the West is the largest region it will produce the • X= Gross revenue= 625M
least revenue and has the most consolidated
competitive landscape, making it the least
attractive
• Candidate should conclude that the revenue
target is unattainable after entering the 3 most
promising markets; LEAD INTO BRAINSTORM
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Brainstorming
Prompt: Analysis:
• What are other ways client could reach their
revenue target? • Price:
– Increase price of skincare products sold
– Have tiered pricing for skincare products based on customer
loyalty
– Renegotiate percentage/price with retailers
• Quantity:
– Increase quantity of products sold by gaining more final
consumers/retailers
– Increase quantity sold by exploring B2B business model; e.g.
partnering with hospitals/dermatologists
– Explore other channels of servicing customer; e.g. company
owned physical stores
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Ikoyi Co in America
Recommendation
• Yes, the US market should be entered (3 regions or 4). Ikoyi is a powerful brand
abroad which may translate well to an American audience. They can leverage
existing capabilities
• No, the US market should not be entered. You would need to enter all 4 regions
to reach your revenue goal and there are challenges to a nationwide launch
(logistics, supply chain, upfront marketing costs). However, there are benefits to
getting your brand in a new geography and access to new customers
• Candidate should choose one choice of action or the other
Risks and Next Steps:
• Yes: Risks include establishing new international supply chains, FDA regulation
compliance, competitor response
• No: Loosing potential revenue streams and access to new customers, diminishing
brand presence should a US competitor enters the US market
• Next steps are to perform feasibility studies, stress test assumptions, perform
due diligence on new suppliers, establish shipping contracts, and expand production
capacity to the extent necessary.
20
Home Improvement Co.
Industry: Retail
Case Type: Profitability
Led by: Interviewee
Case Level: Easy
21
Behavioral Questions
Question 1:
• Describe a time you had to deliver bad news to a client, manager, or superior. How
did you approach it?
Question 2:
• Tell me about a time where you had to work in an ambiguous environment? How did
you approach it?
22
Home Improvement Co.
Prompt #1:
• Home Improvement Co. is a major home improvement retailer in the U.S. that sells tools,
construction products, appliances, and services. Since 2020, the company has struggled to hit
their profitability targets and are looking for possible solutions.
• Our client, the CFO of the company, has hired us to come up with a plan reverse this trajectory
and return the company to its profitability level from 3 years ago.
Case Background:
• Background information to be divided into these categories–
– Client/Company: $50B in Revenue in 2021. 3 distribution channels: In-store, buy online pick-
up in-store, deliver to home.
– Industry/Competition: The improvement retail industry has been experiencing growth the
last few years as consumers are spending more time at home with the pandemic and
focusing a bigger share of their budget on home projects.
– Value Chain: Home Improvement Co. has dozens of suppliers for each category they sell in.
Due to world supply chain constraints and increased demand, the lead time for lower turnover
products has increased dramatically.
– Goal: Reach the same level of profitability of 3 years ago (2019)
– Market: Only the U.S.
23
Home Improvement Co.
Framework Buckets:
• See below for an example of MECE buckets, interviewee may have different buckets.
24
Brainstorm #1
Prompt: Analysis:
• Before we deep dive into our analysis, • Brainstorming should be structured and
what could be drivers for decreasing contain some of the following:
profitability? – Decreasing Revenue
• Decreasing quantity of units sold
– Due to decreasing purchase power of
customers or customers being more cautious
about expenditures
• Decreasing average price of units sold
– To stay competitive, Home Improvement Co.
decreased prices (price war against
competitors)
• Decreasing number of customers
– Due to sell-outs, long wait times for orders,
etc.
– Increasing Costs
• Variable costs
– Increase in materials supply costs due to
worldwide supply shortage
– Increase in wages due to worker shorter and
decreased worker safety during the pandemic
• Fixed costs
– Increase in overhead costs to stay competitive
against competitors
25
Exhibit #1
Revenue and Costs (2019-21)
50
45 Costs
42
Revenue
35 36
28
26
Interviewer guidance on Exhibit #1
Exhibit #1 Guidance: Analysis:
• If candidates do not explore revenue and • Analysis for the exhibit to have 2 parts –
costs on Brainstorming, push them to do – Basic
so. • Candidate should immediately notice that both
revenue and costs went up in the last two
years.
• After that, hand them exhibit #1 and ask • Despite that, costs increased more than
them which conclusions can be drawn. revenue, reducing profits from $7B in 2019 to
$5B in 2021.
– Second order insights
• If candidates, after calculating year • A strong candidate will notice that besides
profits, do not mention shrinking profit decreasing profits ($2B decline in 2 years),
profit margins shrunk aggressively:
margins, push them to analyze it. They
should calculate profit margins for 2021
2019 profit margin: 20.0%
and 2019 (since this is our benchmarking 2020 profit margin: 14.28% (as 6/42 is 1/7)
year). 2021 profit margin: 10.0%
27
Exhibit #2
Cost Breakdown (2019-21)
45
COGS
36 Rent
21 Marketing
28 Salaries
16
12
8
6
5
6 8
5
6 8 8
28
Interviewer guidance on Exhibit #2
Exhibit #1 Guidance: Analysis:
• After understanding that increasing costs • Analysis for the exhibit to have 2 parts –
is the driver of decreasing profitability, – Basic
candidates should ask for more • Candidate should notice that exhibit #2 is a
information on costs. breakdown of costs.
• Even though costs increased across the
board, the main driver of cost increase is
• Show them this exhibit only when COGS.
29
Brainstorm #2
Prompt: Analysis:
• What are the reasons for increased • Reason for increased COGS
COGS in the last few years and how can – External Factors
Home Improvement Co. work to decrease • Global Supply Chain shortage
them? • Loss of bargaining power
– Internal Factors
• As Home Improvement Co. quickly grows, it
may be facing difficulties to find qualified labor
• To suppress this need, Home Improvement
Co. might have invested in more expensive
production methods
• Some things the interviewee should • How to Decrease COGS
mention: – Dealing with External factors:
– As supply is running short and demand is • Renegotiate agreements with suppliers with
increasing with the recent growth of home minimum SLA and long-term fixed price
improvement retailers, raw material may be adjustments
overvalued • Invest on verticalization and produce own raw
– If Home Improvement Co. is losing market share to materials
its competitors or its competitors are outpacing its’ – Dealing with Internal factors:
growth, suppliers may be raising prices • Invest on a Training and retaining talent
program
• Negotiate new technologies to decrease
production costs
30
Exhibit #3
31
Interviewer guidance on Exhibit #3
Prompt/Guidance:
• The CFO agrees that increased COGS are driving profit margins down. After the second
quarter business plan review, the board of Home Improvement Co. can say with confidence
that revenue will keep growing strongly, as will fixed costs.
• Considering that Revenue will increase 20% vs 2021 and Rent, Marketing and Salaries
will increase 25% vs 2021, what is the maximum value that the company can spend on
COGS?
• Note: The solution will be to dramatically change the relationship with suppliers if Home
Improvement Co. wants to reach 20% of profit margin.
Analysis:
• The maximum value that Home Improvement Co. can spend on COGS in the year of 2022 to
reach profit margin of 20% is $18B.
32
Home Improvement Co.
Prompt: Analysis:
• The CFO met you in the Hall of Flags
chatting with your fellow associate • In order to bring back profit margin to 2019
levels, Home Improvement Co. has to decrease
consultants and told you she is more
COGS to $18B.
excited than ever to hear your
• To do so, we recommend that the company
recommendations.
renegotiate agreements with defined SLAs and
price adjustments and invest in new technology
to reduce production costs.
• Some risks associated with this strategy is
suppliers not being able to change SLAs due to
an aggravation of the world supply chain crisis
and that our fixed cost investment in new
technology is ineffective.
• To mitigate this risk, it is important that we map
potential suppliers to meet our needs and that
we draw a verticalization plan in case we need
to integrate part of the production process into
our supply chain.
33
Bring the Angels back
Industry: Healthcare
Case Type: Human Capital
Led by: Interviewee
Case Level: Easy
34
Behavioral Questions
Question 1:
• Most significant achievement in life
Question 2:
• Why consulting?
35
Bring the Angels back
Prompt #1:
Your client is a multi - specialty hospital in the United States offering emergency care,
scheduled surgeries, labor and delivery services, diagnostic testing, lab work, and
patient education. The hospital is experiencing a high turnover of nurses in the past 12
months. The client needs your advice on how to better retain nurses and reduce
turnover.
Case Background:
• Background information –
– Client’s main goal is to bring back retention numbers to pre-12 months level of
85% with a strategic initiative(s) budget of $1M
– The competition is facing high turnover as well. However, the turnover rate for our
client is higher than the industry average
– The hospital has a revenue of ~$10M with 2% YoY growth for the last 5 years
– Turnover rate for doctors, technicians, and other administrative staff is lower than
industry average and is not concerning
36
Bring the Angels back
Framework Buckets:
• MECE Framework for the prompt (high level buckets can be mentioned – details
under each bucket are optional)
37
Exhibit #1 - Wage Chart
40 40
40 4,500
4,050
35 4,000
3,520 4,160 30 30 3,500
30
3,360 3,000
25
20 2,500
20
2,400 2,000
15
1,500
10 1,000
5 500
0 0
Client Hos A Hos B Hos C Hos D
* 4 weeks in a month
38
Guidance on Exhibit #1
Exhibit #1 Guidance: Analysis:
• Ask candidate about what they think the • Analysis for the exhibit -
reason(s) might be for ahigh turnover and – Basic
push them towards Exhibit #1 • Hours / week is highest for client (40 hrs)
• $ / hour is lowest for client
• Focus on increasing wages and reducing
• Once the candidate identifies that the working hours
wages / hr for client is the lowest and
suggests increasing wages, tell them that Client Hos A Hos B Hos C Hos D
increasing wages is not an option Monthly Pay ($) 3,520 4,160 3,360 2,400 4,050
Hrs / Week 40 40 30 20 30
$ / hr 22 26 28 30 33.75
• Push candidate to think about what other
information can be helpful to solutionize
39
Exhibit #2 - Nurse Pulse Survey
Nurses’ Client Hos A Hos B Hos C Hos D
Preference
Pay
Benefits
Career
Advancement
Good
Management
Schedule
Flexibility
Continuing
Education
40
Guidance on Exhibit #2
Exhibit #2 Guidance: Analysis:
• In Exhibit #2, ask candidate to choose top • Analysis for the exhibit to have 2 parts –
2 nurse preferences which, if addressed, – Basic
can have maximum impact • Career advancement and Schedule flexibility
are very important to nurses and our client
lags behind by 75% is each. Hence, these are
• If candidate talks about wages, tell them the two most critical areas to deep dive
that wage increase is not a possibility, as
mentioned earlier – Second order insights
• Continued education is also a factor where
our client lags, but its an industry wide issue
• Push candidate towards Career that can be addressed in the long term
Advancement and Schedule Flexibility • All other hospitals are doing really well on
schedule flexibility and are lagging by just
25%
• Push candidate towards a brainstorm on
ideas to improve these two preferences
for our client
41
Brainstorming
Prompt: Analysis:
• Please provide the client with some ideas • Career advancement –
on how to improve career advancement – A standard promotion schedule, with raises and
bonuses for good performance
and create schedules with better flexibility – Path to management of other nurses or
administrative/leadership roles
– Mentorship program
– Sponsorship for higher education
– Cross department rotation program
• Flexibility –
– Control over # of hours worked
– Allow more agency for nurses to pick hours
– Online scheduling tool
– Better structure/lead time for management to
communicate shift assignments
– Make it easier to change/drop shifts
42
Exhibit #3 - Strategic Initiatives
TTM Attrition Drop TTM Attrition Drop Implementation
Initiative
(>=80% adoption) (<80% adoption) Cost
43
Guidance on Exhibit #3
Exhibit #3 Guidance: Analysis:
• Post brainstorming, provide the candidate with Exhibit • Analysis for the exhibit to have 2 parts –
#3 and ask them to choose the most impactful and – Basic
feasible initiative(s) • Calculate weighted avg. attrition drop by
multiplying the TTM attrition drops with the
• If candidate asks about current TTM retention - 70%; probabilities of adoption
the delta to reach the 85% target is 15% • Avg. = P*(Drop >=80%) + (1-P)*(Drop <80%)
• Check which set of initiatives are crossing the
• To calculate weighted avg. adoption rates, provide the 15% retention inc. target and are within the
candidate with the probabilities only when asked (table $1M budget
below) – Second order insights
• We can increase retention further with
• Nudge candidate to consider the $1M budget constraint additional $100k - $200k capital infusion
Eliminating mandatory
overtime 75% 6% 2% 5.0% 250K
44
Brind the Angels back
Recommendation
• We recommend that you invest in eliminating mandatory overtime and launching a
digital scheduling tool – Retention target of 85% achieved with $50K less budget
45
Skooters
Industry: Hospitality
Case Type: Profitability/Growth
Led by: Interviewee
Case Level: Medium
46
Skooters
Prompt #1:
• Skooters is a popular nightclub in Durham, NC. The establishment attracts students
and young professionals year-round and is especially favored by Duke students. It
boasts a well-established in-house DJ and a wide variety of snacks and beverages.
However, since 2020, Skooters has been facing declining profits. Their management
has approached you to analyze the reasons for Skooters declining profits and
develop suggestions to reverse this trend.
Case Background:
– Skooters has two primary sources of revenue: 1. Entry fees of $10 per person 2.
Beverages and Food
– Their goal is to reverse the trend of declining profitability and restore profit
levels to those of 2019
– There is one other large competitor in Durham as of now: Froot. We have limited
information on their profitability as of now.
– Skooters is open all days of the week from 7pm to 2am. However, it is busiest on
Fridays and Saturdays.
– The menu consists of popular bar foods such as fries and nachos. Other popular
attractions include upstairs seating and pool tables.
47
Interviewer Notes for framework
Framework Buckets:
• MECE Framework for the prompt (high level buckets can be mentioned – details
under each bucket are optional)
Operating Costs
SG&A 1.8 1.7 1.8 1.6
49
Interviewer guidance on Exhibit #1
Exhibit #1 Guidance: Analysis:
First-order insights:
2021 2020 2019 2018
Operating Revenue • Declining profitability is a revenue issue and not a cost issue
Ticket revenue 1.5 2 2.5 2.4 • Both ticket and non-ticket revenues are declining (at similar
Non-ticket revenue 2.3 2.9 3.8 3.5 rates)
Total Revenue 3.8 4.9 6.3 5.9 • Profitability needs to improve from 11% currently to 29%
Operating Costs (same level as that of 2019)
• SGA remains relatively constant while cost is declining due to
SG&A 1.8 1.7 1.8 1.6
COGs
COGs (food &
beverages) 1.6 2 2.7 2.5
Second order insights
Total costs 3.4 3.7 4.5 4.1
Net income 0.4 1.2 1.8 1.8
• Non-ticket revenue is roughly 1.5x that of ticket revenue
Profitability 11% 24% 29% 31% indicating that 60% of Skooters'revenues come from food,
Candidate should use available information to calculate beverages and/or other activities
net income and profitability. They should identify from the
• COGS for food and beverages remain proportionate to non-
prompt that the goal is to return to 2019 profitability of
ticket revenue over the years.
29% from current 11%.
• Given that revenue has been decreasing at a similar rate
There is no need to calculate 2018 given that the goal is across ticketed and non-ticketed revenue, it may be
2019, and the prompt specifies that profitability has been that number of visits are declining
dropping since 2020. Candidates should identify this and
can clarify with the interviewer.
50
Exhibit #2
Revenue Breakdown per customer (2021)
40%
29%
Skooters Fruit
Froot is Skooter’s primary competitor in Durham and opened in early 2020. It has a similar business model with primary
revenue streams coming from entry fees, alcohol and food. Fruit had a total revenue of $4.9Mn in 2021.
51
Interviewer guidance on Exhibit #2
Exhibit #2 Guidance: Analysis:
52
Exhibit #3
Having identified that a higher entry fee is reducing number of visits (and
consequently revenue), Skooters has decided to reduce its entry fee for one of its
target segments. The reduction will be such that the entry fee for that segment will
be equivalent to that of the Froot. Which segment would you recommend it gives
this discount to?
We can assume operating costs will be $3.8 million for the year, irrespective of which segment the discount is given to
53
Interviewer guidance on Exhibit #3
Exhibit #3 Guidance: Analysis:
• When interviewee asks, clarify that the discount to entry fees Revenue lost is calculated by multiplying the reduction in ticket prices
(new entry fee = $7 per person from exhibit 2) will only impact ($5) by number of current visits (Total size of segment *current market
the market share. It will not increase number of visits per share* number of visits per person)
person or expenditure on beverages and food
Revenue earned is calculated by multiplying incremental market
• Push the interviewee to calculate revenue lost and then share* Total size of segment *number of visits per person * $25
revenue gained for each segment revenue per person (new ticket prices of $7 + original beverage and
food prices from exhibit 2 of $18)
Post-
Total size of Visits per Current Incremental Revenue Incremental
Segment discount Revenue lost
segment person Market share visits earned revenue
market share
Duke 14,000 9 50% 60% 12,600 315,000 315,000 0
UNC 30,240 5 25% 50% 37,800 945,000 189,000 756,000
Young
Professionals 63,000 12 2% 11% 68,040 1,70,1000 126,000 1,57,5000
54
Brainstorming
Prompt: Analysis:
• In addition to offering a 50% discount to
working professionals, what are some Spend per visitor:
potential ideas to increase revenues from • Offers on 2+ beverages
this establishment • Wider menu
• Parking fees
• Discounted weeknight entry
• Loyalty programs for frequent visitors
• Arcade games / photo booths
Number of visitors:
• Marketing
• Tie-ups for school events
• Wider variety of music / activities (eg:
potentially hosting concerts etc.)
• Open during afternoons
55
Skooters
Recommendation
• Recommend reducing ticket price to $7 for young professionals – helping us achieve
profitability target of 29%
56
Erween Mills
Industry: Manufacturing
Case Type: Operations / Profitability
Led by: Interviewee
Case Level: Medium
57
Behavioral Questions
Question 1:
What drives you?
Question 2:
What are your core values and why?
58
Erween Mills
Prompt #1:
• Your client, Erween Mills, is a palm oil mill based out of Guatemala. The mill is
facing profitability problems for the past couple of years. Erween Mills needs your
help in identifying the root cause(s) and improving the mill’s profitability.
Case Background:
• Background information to be divided into these categories (Please mark N/A if information is not provided)–
– What is a palm oil mill? A palm oil mill extracts crude oil from fresh palm fruit and then sells it in the
commodity market.
– Industry/Competition information: the client competes with a nearby mill for palm fruit. The producer sells the
fruit to the highest bidder.
– The mill has steady revenue, but capacity utilization has been decreasing YoY
– Product information: Palm Oil is edible vegetable oil. It trades as a commodity. Palm oil is the only product
currently sold by the mill
– Value Chain/Revenue information: The mill buys fresh palm fruit from producers around the area, extracts
the oil, and sells it in the commodity market.
– The mill is struggling financially and needs a solution ASAP.
59
Erween Mills
Framework Buckets:
• MECE Framework for the prompt (high level buckets can be mentioned – details
under each bucket are optional)
Market &
Revenues Costs
Regulations
60
Exhibit #1
Operating Expenses ($M)
60
Machinery Operations
55 Raw Materials
10 12
50 Labor
SG&A
45
40
35 9
30 35
36
25 5
20 22
15 13
10 7
4 6
5 5
4 5 6 5
0
2018 2019 2020 2021
61
Interviewer guidance on Exhibit #1
Exhibit #1 Guidance: Analysis:
• Post framework discussion, push • Raw material costs have increased to ~3x
candidate towards Costs / Operating the 2018 levels – maybe due to poor
Expenses supplier mix, increase in supplier power,
etc.
• Good candidate – Will observe that raw
material cost is increasing rapidly • PP&E expenses have increased to ~2x
the 2018 levels – Reduced throughput,
increase in maintenance costs, etc.
• Excellent candidate – Will also like to
investigate PP&E post solving for raw
material cost increase • Labor and SG&A are relatively steady
62
Exhibit #2
Palm Fruit Supplier Map
Supplier A
- Material Cost - $175 per ton
50 miles
Mills Supplier C
Supplier D - Material Cost - $112 per ton
- Material Cost - $124 per ton - Import Duty – 5%
Supplier B
- Material Cost - $140 per ton
Interviewer guidance on Exhibit #2
Exhibit #2 Guidance:
• Prompt candidate that Erween Mills wants to choose a new supplier for crude palm oil –
how should they proceed?
• Candidate should approach this problem by calculating total cost of raw material per ton
(supplier + transportation + taxes/duties)
• Give the following info (only when candidate asks, or is stuck)
– Last year's supply was 1,500 tons
– Shiping cost is $1.6 per ton per mile
– VAT is 12.5% for each location, to be added to raw material cost only
– Import duty for Supplier C is 5%; to be added to overall cost
Analysis:
64
Exhibit #3
Prompt #3:
To reduce machinery operations cost, the firm is considering two options:
– 1) Purchasing a new equipment ($500K investment)
– 2) Overhauling the old equipment ($300K investment)
How would you make a choice, what will be your choice, and why?
For the current machine, assume raw material to finished product ratio to be 1:1
66
Interviewer guidance on Exhibit #3
Exhibit #1 Guidance: Analysis:
• How – Candidate should point towards ROI • Throughput for all three scenarios will be the
same at 50,000 tons
• The savings is in the amount of raw material
• What – After calculating the cost savings for
each scenario and the corresponding needed for producing 50,000 tons of palm oil
investments, candidate should calculate ROI (if • Calculate total cost (raw material +
asked, tell them to calculate ROI for 3 years) maintenance) for each scenario
– Multiply maintenance cost * frequency
– Multiple $35*(Raw material needed)
• Overhaul has a higher ROI and should be the
• Current – $35*50k
primary choice
• New Equipment - $35*80%*50k
• Overhaul - $35*85%*50k
• Calculate ROI for Scenario 2 and 3
– ROI = (Cost Savings – Investment)/Investment
Current New Overhaul
Production Volume (tons) 50,000 50,000 50,000
Raw Material Cost per ton ($) 35 35 35
Raw Material savings (% per ton) - 20% 15%
Total Raw Material Cost ($) 1,750,000 1,400,000 1,487,500
Maintenance Cost ($) 10,000 5,000 6,000
Maintenance Frequency (times per year) 3 3 4
Total Maintenance Cost ($) 30,000 15,000 24,000
Total Cost ($) 1,780,000 1,415,000 1,511,500
Cost Savings ($) - 365,000 268,500
Investment($) 500,000 300,000
ROI (3 years) - 119% 169%
67
Erween Mills
Recommendation
• Recommendation is to go ahead and start contract with Supplier D to reduce raw
material costs
• Also, overhauling machinery will reduce machinery operations cost with a 3-year ROI
of ~170%
68
Orange Music
Industry: Media and Entertainment
Case Type: Growth/Cost
Led by: Interviewee
Case Level: Medium
69
Behavioral Questions
Question 1:
• Most significant achievement in life
Question 2:
• Why consulting?
70
Orange Music
Prompt #1:
Orange Music, a music streaming app, is losing market share to its primary competitor
Soundhaven, for the past 3 years. Additionally, Orange Music’s Ad Spend as a % of
revenue has been increasing and has become higher than Soundhaven’s. Orange
Music needs your help to turn things around.
Case Background:
• Background information –
– OM’s main goal is to increase market share and reduce Ad Spend (% of revenue)
– OM operates in NA (North America), LAD (Latin America Division), and EMEA
(Europe, Middle East, and Africa)
– OM has 4 main competitors; all have a higher YoY growth than OM
– OM earns revenue through in app ads, user subscriptions, and partnerships
71
Orange Music
Framework Buckets:
• MECE Framework for the prompt (high level buckets can be mentioned – details
under each bucket are optional)
Ad Spend Implementation
Growth Levers
Reduction Strategy
• Organic • Changing marketing • Use pilot – scale
• UX/ UI changes channel mix approach for organic
• Exclusive content • Moving from Google Ads growth strategies
• Bundling options to Google SEO • If inorganic, conduct
with cell phone • Improve CTR (Click commercial due diligence
carriers through rate) and for potential acquisition
• Partnerships with conversions of digital ads targets
hardware • Explore influencer • Change marketing
companies marketing channel mix for certain
• Inorganic target segments and
• Acquisitions check success rate
• Launch-Learn-Iterate-
Launch model
72
Exhibit #1
Music streaming market landscape 2022
Ad spend
Market Share YoY Growth Geographies
(% of revenue)
NA – North America, LAD – Latin America Division, EMEA – Europe, Middle East, and Africa, APAC – Asia Pacific
73
Guidance for Exhibit #1
Exhibit #1 Guidance: Analysis:
• Candidate should see the market • Objective is to increase market share
landscape and realize that there is a rapidly – inorganic growth is a good
potential for inorganic growth through strategy
acquisitions
• Play 360
• Candidate should finalize Audio Auteur as – Market share of 5% is good; growth of 15% is
good; but ad spend is very high (our second goal is
the primary acquisition target to reduce CAC)
• Boss Music
• Post clearing this exhibit, nudge candidate – Almost as big as Orange Music – difficult to
towards the second problem – Ad spend acquire, may lead to a merger; Growth rate not as
good as Audio Auteur or Play 360; ad spend is very
high at 25%
• Audio Auteur
– Good market share, double digit growth, low ad
spend – better acquisition target than the rest
– Second order – Will unlock Orange Music’s
presence in APAC
74
Exhibit #2
Orange Music’s Ad Spend Breakdown Orange Music’s Cost per Click ($ per click)
(% of total Ad Spend)
20%
40% 35%
25% 0,80
0,75 0,75
25%
25%
0,60 0,60 0,60
50% 0,55
25% 35%
0,50 0,50
10% 5% 5%
2020 2021 2022 2019 2020 2021
1. Ad Spend = (#Clicks)*($ per click) 2. BTL – Below the Line, Offline ads
75
Guidance for Exhibit #2
Exhibit #2 Guidance: Analysis:
• In Exhibit #2, no math is needed • Bar chart
– We know that ad spend is increasing YoY for OM.
• Candidate should highlight the following From 2019 to 2021, we see that there has been a
critical insights – significant share shift from Social Media Ads to
– Candidate should remember from the prompt that Display Ads. Google Ads and BTL (Below the Line)
the increase in ad spend is as a % of total revenue ads have largely stayed the same
– Display Ads spend as a % of total Ad spend is – This share shift might be due to
increasing and that might lead to the increase in • Increase in cost per click for Display Ads
total ad spend (as % of revenue) • Increase in #clicks for Display Ads
– Display Ads spend can increase due to either • Increase in both
increase in $ per click or increase in #clicks
– The line chart suggests that its not a $ per click
• Line Chart
issue – We see that cost per click for Display Ads have
– Increase in #clicks is increasing ad spend (% of gone down. This suggests that the share shift
revenue) as OM is not getting the same revenue happened due to an increase in the #clicks in
for the same #clicks (low conversion rate) Display Ads
– This increase in number of clicks led to an increase
in Ads spend (as % of Revenue). This is because
• Once the candidate gives this insight, ask the conversion rate for these clicks is lower than
the for the final recommendation other channels. Hence, for the same ad spend, OM
is getting lower revenues
76
Orange Music
Recommendation
• To gain market share, OM should consider the acquisition of Audio Auteur given the
company has good market share, growth, and lower Ad spend. It will also unlock
OM’s presence in APAC
• To reduce Ad spend, OM should focus its marketing efforts away from Display Ads
as conversion rates are low
77
Athletic Athleisure
Industry: Consumer & Retail
Case Type: M&A
Led by: Interviewee
Case Level: Medium
78
Behavioral Questions
Question 1:
• Tell me about a time you made a decision with incomplete information.
– What information did you have?
– What was the result?
Question 2:
• Tell me about a time you overcame a challenge to build an important relationship.
– What were the challenges to the relationship?
– How did you establish/improve the relationship through the challenge?
– What did you do to overcome the challenge?
79
Athletic Athleisure
Prompt #1:
• Athletic Athleisure (AA) is a boutique, high-end athletic apparel brand that is
considering acquiring Vinyasapp, an app-based yoga and Pilates platform. The app
has been performing very well over the past two years, so the management team at
Vinyasapp is willing to sell for $50M. Should Athletic Athleisure purchase this
company?
Case Background:
– Client/Company information: AA has strong brand recognition and enjoys a positive reputation in its industry.
– Industry/Competition information: The wellness industry has grown exponentially in recent years, as
individuals have become more concerned about their health and are exploring more convenient ways to
exercise.
– Product information: AA’s customers are very loyal to its brand and its main customers are individuals who
practice yoga and Pilates regularly. Their products include compression and moisture-wicking workout attire
and accessories. Their customers are generally technologically savvy and would be interested in taking
virtual workout classes.
– Value Chain/Revenue information: In recent quarters, AA has experienced a decline in profitability due to
supply chain constraints and an increase in fixed operating costs from keeping large stores open. They are
considering closing down some of their brick-and-mortar locations in favor of selling more of their products
online.
– Any constraints on the case: AA’s CEO wants to reverse the trend in profitability and hopes to add $8M in
annual EBITDA over the next 3 years
80
Athletic Athleisure
Framework Buckets:
a
Capabilities
Market Synergies Financing
& Risks
81
Exhibit #1
Yoga App Market Size, $M
278
+11% 253
234
209
182
17 18 18
16 16 15
Pigeon Pose Pros Vinyasapp Cat Cow Coach Downward Dog Warrior II Guru Other Apps
for Dummies
82
Exhibit #2
Vinyasapp 2022 Operating Expenses, $M
App Development 18
Cost of Revenue 9
0 5 10 15 20
83
Interviewer guidance on Exhibits
Exhibit #1 Guidance: Exhibit #2 Guidance:
• Interviewee should notice that the market • Interviewee should identify that App
is growing and that Vinyasapp is the Development costs are the largest
largest player in the market expense (represent over 40% of
operating costs – there is potential to cut
costs here in order to improve EBITDA;
• Interviewee should be able to calculate
however, it might be unwise to cut given
revenue from the information given:
the competitive nature of the yoga app
– 18% x $278M = $50M
market)
• After calculating revenues, candidate
should transition towards identifying costs • Interviewee should calculate total
and calculating the EBITDA operating expenses:
– $11 + $6 + $18 + $9 = $44M
Post EBITDA calculations, the candidate should start estimating the enterprise value of Vinyasapp. If
candidate asks for DCF info, nudge towards multiples method of valuation and show Exhibit #3
84
Exhibit #3
Recent Sports & Recreation App Acquisitions
Analysis:
• Vinyasapp’s $50M sticker price is comparable to recent acquisitions, but the additional
EBITDA does not entirely satisfy the CEO’s goal in year 1. AA should identify cost
cutting initiatives and synergies to increase EBITDA to $8M in the next 2 years
86
Brainstorming
Prompt: Analysis:
• What should the client consider about Frame the brainstorm as follows:
expanding into the wellness app space? • Opportunities
What are some possible advantages or – This acquisition could represent an entry point into
disadvantages of this expansion strategy? a lucrative and growing wellness app industry
– Vinyasapp would diversify AA’s business and help
kickstart a move away from traditional brick and
mortar retail
– AA’s current customers would make natural
additions to Vinyasapp’s user base
• Challenges/risks
– AA does not have expertise in app development
– It will likely take significant marketing spend to
grow Vinyasapp’s user base, which could
jeopardize AA’s EBITDA targets
87
Athletic Athleisure
Recommendation
As you’re getting a coffee, you run into the CEO of Athletic Athleisure who asks you for
an update on the acquisition due diligence.
89
Behavioral Questions
Question 1:
• Tell me about a cause you care about.
Question 2:
• What is something you’ve learned about yourself recently?
90
I Want My Em-TV
Prompt #1:
Emerson is a $10b company that offers landline phone and broadband internet services
to an area with 20 million households and businesses. To diversify their revenue,
Emerson has decided to enter the television market. They have invested in cable boxes
that can be used by homes and businesses to watch tv. Emerson has sought our help
to determine their pricing strategy, independent of their existing phone and internet
plans, to maximize profit and whether they will be able to successfully beat competitors.
Case Background:
– Emerson has 50% market share in their region.
– 80% of their customers are households and 20% are businesses.
– Pay television networks (e.g. HBO, Showtime) have set rates that should not be considered
in the pricing strategy.
– There are two other companies that provide cable boxes in the area and both are smaller
than Emerson. They also compete with DirectTV (satellite tv provider).
– The infrastructure is already in place so startup costs are minimal and can be excluded for the
purposes of this case.
– Emerson believes they need to be 15% below market prices in order to attract customers.
– Emerson wants at least a 25% margin on their services.
91
I Want My Em-TV
Framework Buckets:
• MECE Framework for the prompt (high level buckets can be mentioned – details
under each bucket are optional)
92
Exhibit #1
Market Research: Average Prices for Cable Packages of Competitors
93
Exhibit #2
List of Variable Costs for Cheetah Cable Television Services
Installation / Account $5
94
Interviewer guidance on Exhibit #1
Guidance: Analysis:
• The point of the exhibit is for the interviewee to Basic:
think through what is driving the price from our • The price increases more for larger packages
competitors. than for an extra cable box.
• Heavy math on the exhibit is not required – The price for the largest tv package is between 3.5 and
5 times higher than the price for the smallest package
– The price for 5 cable boxes is never more than double
Additional Information - the price for 1 cable box within the same tv package
• The packages are standard within the industry • Customers tend to purchase 1 or 2 boxes
and are the only options for customers (e.g. they
can’t mix and match channels). Advanced
• Emerson plans to use this same package • There are higher costs associated with package
structure. increases than with cable box increases.
95
Interviewer guidance on Exhibit #2
Guidance: Analysis:
Supply if not asked by the interviewee:
• Emerson believes they need to be 15% below • Account Costs = $15 (Installation + Support).
the market in order to attract customers. Add 40% for margin and competitive pricing
• Emerson wants at least a 25% margin on their requirements ($6). The minimum base price =
services. $21.
• Cable boxes cost Emerson $5. Plus 40% ($2) =
The goal is for the interviewee to create a basic framework $7 minimum per box.
for pricing the cable boxes and tv service based on the • Channels cost Emerson $0.25. Add 40% ($0.10)
costs. If their prices include the required 25% margin and = $0.35 minimum per channel.
are still 15% below average market price, they should
expect their launch to be successful.
Therefore, Emerson can price an account with 1 box and a
10-channel package for no less than: $21 + $7 +
A good strategy is to have a base price that accounts for (10*$0.35) = $31.50. This is below the average market
installation and support, then add set rates for each cable price of $35, so they should expect to be successful with
box and channel package based on a per channel rate. this strategy. Candidate should compute the pricing for all
Margins (25%) and Competitive Pricing (15%) should also packages in the "1 box" category and see if this pricing
be considered (during or after itemized computation) strategy holds true.
The interviewee does not need to price every combination Advanced: An astute interviewee will notice that they
of package and boxes. Once they have determined a cannot include their 25% margin and be 15% cheaper than
strategy and set rates, the interviewer can ask them to spot the market for the 400-channel package. They may offer a
check combinations to verify strategy. hypothesis as to why and/or make suggestions about what
to do about it.
96
Brainstorming
Prompt: Analysis:
• What other factors should Emerson • Pricing-related
consider when planning to enter the cable – Bundling with Phone/Broadband
– Promotions/Discounts
tv market?
– Marketing/Advertising
– Customer Segmentation (e.g. Households and
businesses)
– Raising prices over time once they gain market
share
• Additional Product Features
– Streaming service partnerships
– Revenue and cost synergies with phone and
internet
– Value of data from customers on viewing habits
• Risks
– Poor service could negatively impact their existing
client relationships
– Declining TV viewership
– New technology could disrupt market
97
I Want My Em-TV
Recommendation
• We recommend that Emerson enters the market in the 1 box category for the 10, 35,
80, and 150 channels packages given they have a margin target of 25% and pricing
competitiveness target of 15%
98
Audio Inc.
Industry: Consumer/Health Tech
Case Type: Market Entry
Led by: Interviewer
Case Level: Hard
99
Behavioral Questions
Question 1:
• What career achievement are you most proud of?
Question 2:
• Tell me about a time you failed at something, and then how you responded to this
experience.
100
Audio Inc.
Prompt #1:
• Audio Inc is a consumer tech company specializing in headphones, speakers, and audio
equipment. Lately, they have been losing market share to competitors in the domestic
headphones market, and they have been exploring ways to increase revenue. They are
considering entering the health tech space by developing a direct-to-consumer hearing aid.
Currently, hearing aids require assistance from an audiologist to set up, and the process takes
weeks before the patient has the hearing aid in hand. Audio Inc.’s product would ship in 2 days
and allow patients to set it up at home without the help of a doctor. Audio Inc wants your help to
understand if this product launch is a good idea.
Case Background:
• Client/Company information: Audio Inc primarily sells headphones, speakers, and other
premium audio equipment (think Bose)
• Objective: Assess product viability; reach $1B annual revenue by 2026 (4 years from now) and
$100M of total, cumulative net profit for the project by 2026
• Industry/Competition information: Audio Inc. has been losing market share in core products
(headphones) to larger competitors with stronger brand appeal
• Value Chain/Revenue information: Audio Inc. develops, manufactures, and distributes audio
equipment. They sell through retail channels, amazon, and a small percentage as direct to
consumer through their website
• Geography: US only
• Product information: To be shared in the case
101
Audio Inc.
Prompt #1:
What factors should Audio Inc. consider when making this strategic decision?
Framework Buckets:
• A suitable framework should investigate the typical factors involved in a new product offering:
Market Financials Capabilities Entry Strategy
• Hearing aid total • Investment needed • Technological overlap • Build (internal R&D)
market size & growth (internal R&D or between headphones
rate M&A/partnership) and hearing aids • Buy (M&A)
• Winnable share of
• Product margins (and • Fit of current brand, • Borrow (partner)
market
resulting project customer base, and/or
• Major profitability/ROI) distribution to hearing
competitors/market aid market
fragmentation (+ • Product pricing strategy
potential competitor (and basis, e.g. cost- • Manufacturing strategy
response) plus) (in-house or contract)
• Potential regulatory
risks and pushback
from audiologists
• Given the client’s disruptive plan and nature of US healthcare, Risks could be compiled under a
separate category
• Entry strategy is important to consider but not evaluated in this case
102
Audio Inc.
Prompt #2: Solution:
What is the total addressable market for • A good candidate will create a structure for market sizing
before moving to calculations
hearing aids in the US on an annual basis?
• A good candidate will follow up with the interviewer from
And how much of that can Audio Inc.
time to time to get their input
realistically capture?
• The approach used for market sizing is more important
than the final answer
Guidelines for the interviewer: This is a guided market
sizing exercise.
Example of an approach that can be used –
103
Exhibit #1
104
Audio Inc.
Analysis for Exhibit #1:
• Good candidates will be able to understand and clearly explain the key
information in the exhibit:
– Enough market fragmentation to enter and take share, but unlikely to dominate
– Hearing aids are a smaller market than their two existing core markets shown – perhaps there are
better alternatives to enter (i.e. opportunity cost)
• Strong candidates should realize that the market leader in hearing aids holds
20% share. Hence, Audio Inc. could achieve at most 20% of $3B market =
600M/year
If candidate asks, market growth outlook for hearing aids is flat YoY
105
Audio Inc.
Prompt #3: Analysis:
Audio Inc. has determined that the hearing Risk factors to propose could include:
aid market is an attractive market and
presents a strong revenue opportunity, Financial: What is the R&D cost? Would additional
provided they can gain market share. Aside employees/engineers need to be hired to develop this product?
from competition, what are some other risk What is the payback period?
areas to consider before launching this new Regulatory: How involved is the FDA approval process? Would
product? insurance providers cover this product?
Guideline for the Interviewer: Distribution: What is the ideal distribution channel for this
Let the candidate continue to brainstorm till product? Will patients know to look for DTC hearing aids online?
they arrive as financials/cost as an important Will retailers be willing to stock medical equipment? Will doctor’s
factor. offices recommend this product?
Consumers: How is hearing-aid purchasing behavior different
Potential mini-structures are:
from headphones? Will older, commonly fixed-income hearing aid
• Financial/Non-financial
customer be price sensitive/limited? Will there be insurance
• Short Term/Long Term
coverage implications that reduce the total addressable market?
• Internal/External
Brand: What are the branding implications for this new product?
After brainstorm, provide Prompt #4 How should we brand and advertise this product differently from
existing products?
106
Audio Inc.
Prompt #4:
Audio Inc. is strongly considering developing this hearing aid product in-house. What
would be the project’s total revenue and profits over the next four years?
107
Exhibit #2
Revenue and Costs (2023-26)
Projected
90,000 250,000 400,000 700,000
Customers
108
Audio Inc.
Analysis for Exhibit #2:
Main insight (1): Annual revenue for 2026 is $567M (<$1B)
Main insight (2): Gross revenues total ~$1.2B, Costs total ~$1.1B, ➔ $100M in total net profit
Good candidates will:
• Calculate (1) Gross revenue = Σ [ MSRPs * volumes ] & (2) Total net profit = [ Σ gross revenue - Σ costs ]
• Determine that Audio Inc. will not meet its target of achieving $1B in annual revenue by 2026, but will reach the $100M
cumulative net profit target
Strong candidates will:
• Realize that gross margin is 33% all four years; gross profit is therefore gross revenue * (1/3)
Calculation Instructions:
𝐺𝑟𝑜𝑠𝑠 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 = 𝛴 𝑀𝑆𝑅𝑃 × 𝑣𝑜𝑙𝑢𝑚𝑒 𝑓𝑜𝑟 𝑎𝑙𝑙 𝑦𝑒𝑎𝑟𝑠 = $1,197M = $𝟏. 𝟐𝐁
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝑙𝑜𝑛𝑔 𝑚𝑒𝑡ℎ𝑜𝑑 = 𝐺𝑟𝑜𝑠𝑠 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 − [𝑅&𝐷 + 𝛴 𝐶𝑂𝐺𝑆 × 𝑣𝑜𝑙𝑢𝑚𝑒 ] = $1.2B − [$0.3B + $0.8B] = $𝟎. 𝟏𝐁
1 1
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝑠ℎ𝑜𝑟𝑐𝑢𝑡 = 𝐺𝑟𝑜𝑠𝑠 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 × − 𝑅&𝐷 = $1.2B × − $0.3B = $𝟎. 𝟏𝐁
3 3
*Candidate can ignore all other expenses (SG&A, etc.) to arrive at net profit
109
Audio Inc.
Prompt #5 (can skip if candidate is progressing slowly):
For Audio Inc.’s to achieve their $1B annual revenue goal, they are considering
increasing prices. Based on the following product performance information, do you
think Audio Inc.’s product is fit for the market, and they could increase their MSRP
over average market price?
110
Exhibit #3
Product Performance for Hearing Aids
10 5
8 4
Performance Rating
Importance
6 3
4 2
2 1
0 0
Audio Quality Comfort Reliability Ease of Use Battery Life
111
Audio Inc.
Analysis for Exhibit #3:
• Main Insight: Audio Inc. likely cannot increase price above MSRP; it trails Be Sound and Hearall in 2 of
the 3 most important product performance characteristics
• Interviewee should identify which performance characteristics are most important and then assess Audio
Inc. position against key competitors
Recommendation
• No separate recommendation is required of the interviewee in this case
• Overall, there is no clear answer. The logical recommendation is likely not to invest in this project due to
combined low ROI of 9%, lagging customer performance ratings, and numerous entry risks. However, well-
supported argument to mitigate those risks and proceed with project are acceptable.
112
State of Blue Devils
Industry: Public Sector (Construction/Infrastructure)
Case Type: Growth/Strategy
Led by: Interviewer
Case Level: Hard
113
Behavioral Questions
Question 1:
• Tell me about a time you influenced a senior stakeholder
Question 2:
• Tell me about a time you used data to solve an ambiguous problem
114
State of Blue Devils
Prompt #1:
• Your client, state of “Blue Devils” is looking to grow their capital project footprint post-
Covid-19 now that construction restrictions have been lifted. They are particularly
interested in infrastructure and construction projects and have come to you asking for
help setting a strategic growth plan. How would you advise your client?
Case Background:
• Background information to be divided into these categories (Please mark N/A if
information is not provided)–
– Client/Company information – Public sector, state government
– Industry/Competition information – US market
– Any constraints on the case – Labour force is currently constrained
– Specific goal – The current construction investment is $200M. We aim to reach
$1B of construction in 3 years
115
State of Blue Devils
Framework Buckets:
• MECE Framework for the prompt (high level buckets can be mentioned – details
under each bucket are optional) (Organic vs Inorganic not possible here)
116
Brainstorming
Prompt: Analysis:
• The client has identified that labor
availability after COVID-19 is challenging – Financial
in their state. How would you suggest • Financial Incentives to work in the state
easing this issue? • Attractive contract terms and bonuses for
meeting goals/deadlines
• Profit sharing when applicable
• Interviewer Guidance: – Operational
– Internal/External also works as long it covers these • Moving machinery and labor around the state
points
• Supply chain robustness to ensure labor is not
affected by lack of supplies or poor inventory in
the area
– Marketing
• Advertising work and scale to contractors and
the attractive wages for labor
• Benefits to labor for working on project and for
their families
• Advertising the cause for improving people’s
lives through infrastructure
117
Exhibit #1 – Your client is concerned recent budget forecasts are affecting their
project completion timelines, and the overall bottom line, what do you observe in
this exhibit?
180
Cumulative Project
160
140
120
100
80
60
40
20
0
Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22
Year
118
Interviewer guidance on Exhibits
Exhibit #1 Guidance: Analysis:
• The chart is for interpretation. This exhibit • Takeaways:
has 3 lines, the original forecast of the – Project delay at the start
project budget, the budget finance uses, – Difference in forecast to actual
(which has been delayed) and the actual – Actual always lower
final budget and timeline from – 5-year timeline, $200M actual project
construction spend
– Optimistic original forecast
• The finance team is locked to a budget – Opportunity cost due to budget lock –
forecast 6 months prior to actual costs Excellent candidates
due to liquidity issues.
119
Prompt #2 – How much money is foregone in interest earned due to improper
budgetary planning and how would this translate to a $1B portfolio
120
Brainstorming
Prompt: Analysis:
• The client is interested in making more – Internal
• Clear expectations and communication
accurate forecasts moving forward as this internally between teams
is instrumental for appropriate capital • Using historical benchmarks and iterating
management and setting realistic • Improved forecasting and tracking
timelines. How would you recommend • Quantification of processes to better
your client approach this? understand factors that cause discrepancies
and disruptions
• Optimizing investments to minimize loss due
to budgets
• Estimation algorithms
– External
• Working with contractors that complete work
on time historically
• Better communication with contractors and
managers to understand evolution of project
timelines and delays
• Favorable payment terms with vendors for
better capital management
• Payment plans
121
State of Blue Devils
Recommendation
• The Governor of Blue Devils would like a final recommendation on implementing a
strong infrastructure growth plan. What would you recommend?
• Recommendation should target adding improvements to budgetary and planning
processes to ensure viable long-term growth
• Next Steps
– How to implement changes
– Working with marketing team to attract talent
122
Muni Golf Opportunity
Industry: Real Estate/Private Equity
Case Type: M&A, Market Sizing
Led by: Interviewee
Case Level: Hard
123
Behavioral Questions
Question 1:
• Tell me about a time you had to make a decision with limited information.
Candidate should respond with a relevant CAR (Challenge, Action, Result) story.
Action portion of the response should delineate how candidate structured the decision-
making process to reach action in a reasoned manner absent necessary
data/information. Strong answers will use #s throughout. Time constraint in Challenge,
impact of Results, etc.
Question 2:
• What do you consider your greatest strength?
Candidate should express their personal view of their greatest strength and then relate
a CAR story validating how that strength led to personal and professional success.
124
Muni Golf Opportunity
Prompt:
Our client, FSB Capital Holdings LLP is a real estate focused private equity firm, with
experience in developing and operating properties over medium to long term time horizons.
Recently, the FSB Capital deal origination team has been made aware that the City of San
Diego in California is considering divesting one of its municipal golf properties, the Balboa Park
Golf Course located near downtown San Diego. FSB Capital has engaged us to value the
potential asset, evaluate potential growth strategies for the property if acquired, and provide a
final recommendation regarding whether to pursue a deal with the City of San Diego.
Case Background:
• Client/Company information: FSB Capital has experience operating golf resorts, hotels, and developing
commercial and limited residential real estate.
• Industry/Competition information: Nearby privately-held Riverwalk GC (27-hole course) is being redeveloped into a
master-planned community of housing, offices, shops, and an 80-acre riverside park.
• Product information: Course consists of an 18-hole championship course, 9-hole executive course, driving range,
pro-shop, and clubhouse bar/restaurant.
– Property is situated on the Southeast corner of the larger Balboa Park complex which contains the famed
City Zoo, museums, and the Naval Medical Center. (think a corner of Central Park)
– Course is 5 minutes from downtown, Convention Center, hotels, historic nightlife district (Gaslamp)
– Residential communities border the course to the east and south.
• Value Chain/Revenue information: Golf revenue comes from golfers paying a greens fee for a round of golf.
Typical round consists of 4 golfers. Patrons often buy food & alcohol on the course or after a round
• Any constraints on the case: N/A
125
Muni Golf Opportunity
Framework Buckets:
126
Muni Golf Opportunity
Alternate Framework:
Free Cash Flow
Method
Valuation
1 Multiples Golf Facilities
Method
Bar/Restaurant
Existing
Infrastructure
2
New
Development Commercial
127
Exhibit #1
128
Interviewer guidance on Exhibit #1
Exhibit #1 Guidance: Analysis:
Candidate should quickly recognize that the existing rate • Candidates will not generate the exact revenue
card is too complex to model the Discounted Cash Flow numbers in the example math – That is OK
valuation and make key assumptions to simplify the • Focus should be on remaining structured and
calculations: Prompt candidate if struggling with how to logical as they conduct a bottoms-up market sizing
proceed, should approach like market sizing of the revenue
• Separate rates for resident/non-residents superfluous 1. Assume a fee per golfer
as the course would no longer be city owned. 2. # golfers per round
Candidate should pick a round number to simplify
3. Rounds per hour
math. Can roll up to ~avg spend per golfer including
food & drink 4. Hours per day
• Separate weekday/weekend rates should remain 5. Days a week
• Ignore Sr./Junior rates 6. Weeks per year
• Tee times can be staggered either every 12 minutes (5 7. Annual Revenue!
groups of 4 golfers/hr) or every 15 minutes (4 groups
of 4 golfers/hr) • Strong candidates will recognize product dynamics
• Cart fees can either be rolled up into higher golf rates (twilight rates, cart fees, etc.) and incorporate them
(charge everyone, even walkers) or can be applied as into their analysis
a fraction of golfers. *only on the 18 hole course
• Optional: Current rate card has 5 different Twilight
times: simplify into 2 seasons, Peak: 8 months (Mar –
Oct) of 12 hr operating days, Off-Peak: 4 months (Nov
– Feb) of 10 hr operating days, twilight rates apply to
last 4 hours of operations of 18-hole course. If they
choose to ignore/simplify they should state that
129
Exhibit #1: Off Peak Revenue
Data Calculations
130
Exhibit #1: Off Peak Revenue (Discount)
Data Calculations
Total Off Peak Weekend Revenue $640,000
Off Peak Twilight Hours 4/10 40% % Revenue Twilight hrs 40%
Round to
Twilight Discount ~25% Undiscounted WE Twilight Revenue $256,000 $250K
x (1 - Discount) 0.75
Round to
Total OP Weekend Twilight Revenue $187,500 $190K
+ OP Non-Twilight Revenue (640K-250K) $390,000
Total OP Weekend Revenue After Rounded
Discount $580,000 #s
131
Exhibit #1: Peak Revenue
Data Calculations
132
Exhibit #1: Peak Revenue (Discount)
Data Calculations
Total Peak Weekday Revenue $2,250,000 Total Peak Weekend Revenue $1,200,000
Total P Weekday Twilight Revenue $562,500 Total OP Weekend Twighlight Revenue $300,000
Off Peak Twilight Hours 4/12 33% or (1/3) Total P Weekday Revenue After Discount $2,062,500
Twilight Discount ~25% Total P Weekend Revenue After Discount $1,100,000
Total Peak Revenue $3,162,500
133
Exhibit #1 Discounting Cash Flows
Exhibit #1 Discounting Analysis:
• If not asked prompt candidate with following
information: $4.8𝑀 × 0.85 ≈ $4𝑀 𝐹𝐶𝐹
“FSB Capital demands strict financial discipline within
its portfolio companies. Typically, FSB Cap portfolio
companies have an average FCF to Sales ratio of
0.85”
• Candidate should ask for an appropriate growth and
discount rate, r – g in PV calculation denominator
should equal 10%, so (15-5, 12-2, etc.)
• Candidate may ask how many years to discount.
Prompt them to consider if they expect the FCF to vary
year to year. To value the asset on a set # of years
they would need to know the cash outflow at Year 0 for
the acquisition (what they are supposed to determine:
price or valuation). Valuing the asset as a perpetuity is
sufficient.
• Strong candidates should point out that this valuation
is solely based on operational revenues. The land
value is not included and could potentially be
substantially higher.
Ask candidate what they think is the best way to triangulate if $40M is attractive. Push
them towards comparable, similar business valuations. Hand exhibit 2.1 and 2.2
together and ask for their insights.
134
Exhibit #2.1
Golf Course Satellite Imagery
Interviewer guidance on Exhibit #2.1
Exhibit #2 Guidance: Analysis:
• Lower right hand is the Executive 9- Key Takeaways:
hole course. Approximately 1M ft 2 • Sizable land in the middle of urban
• Eyeballing the map, that 1M ft 2 could core
fit into the rest of the course ~3 • Proximity to other attractions
times. Total area roughly 4M ft 2
• Rough land area of ~4M ft 2
• Do there need to be 2 courses? No!
If asked:
• The 18-hole course is extremely hilly
with a canyon running through it
(dark green area)
• Off map to the East (right side) and
South (bottom) are residential
neighborhoods. Mostly Single-
Family Homes, some low-rise
apartments and condos.
136
Exhibit #2.2
Residential $700
Commercial $600
Industrial $300
Undeveloped $350
137
Interviewer guidance on Exhibit #2.2
Exhibit #3 Guidance: Analysis:
• Candidate should recognize that they can
conduct a very general multiples valuation X Approx.
Type $/ft2 Valuation
ft2
using ~4M ft2 from Exhibit 2
– This provides a check on the DCF
valuation conducted earlier
Residential $700 X 4,000,000 $2.8B
– Strong candidates will bracket the
multiples approach at the two extreme
comparisons to get a sense of
boundaries on the valuation. Not just
calculate all 4 . Commercial $600 X 4,000,000 $2.4B
138
Brainstorming
Prompt: Analysis:
Should FSB acquire the asset, what are Organic: Inorganic:
some growth strategies they could • Raise prices • Bolt-on
pursue? • Rebrand (more acquisitions
hip) – Nearby hotels
– Nearby
– Golf facilities
restaurants
– Restaurant
– Marketing • Partner with
• Memberships other party
– Top golf or similar
Redevelopment:
• Use land for other purposes:
– Hotel
– Residential housing
– Commercial office space
139
Muni Golf Opportunity
Recommendation: Pursue Deal
FSB Capital should pursue the acquisition of the Balboa Park Golf Course. It is a cash
generating asset that we project to generate $4.8M in annual sales from golf operations
alone. Discounting the cash flows at the average FSB port-co rate we’ve estimated a
value of the golf operations business as approximately $40M. Further, the property
value of the land in the land-constrained urban core justifies the acquisition.
140
Muni Golf Opportunity
Recommendation: Do not pursue deal
FSB Capital should not pursue the acquisition of the Balboa Park Golf Course at this
time. The land value (billions) and cost of acquiring far exceeds the cash returns the
golf business generates. Unlikely that the golf course operations would be able to
service the debt burden from the acquisition. Without information on the zoning and
feasibility of redevelopment on the property FSB should not move forward.
141
Rush Hour
Industry: Transportation
Case Type: Market entry
Led by: Interviewer
Case Level: Hard
142
Behavioral Questions
Question 1:
• Tell me about a time you worked with someone with a different perspective/point of
view
Question 2:
• Tell me about a time you managed conflict at work
143
Rush Hour
Prompt #1:
• The authorities of the Lagos Nigeria airport have decided to issue 2,500 new taxi
permits for $1,000 each. These permits authorize a taxi to service arriving
passengers. Your client has taxi fleets in different US cities but does not have a
presence in Nigeria nor has serviced an airport in the past. She has asked you to
determine if she should buy those new permits. If so, how many should she buy?
144
Rush Hour
Framework Buckets:
• MECE Framework for the prompt (high level buckets can be mentioned – details
under each bucket are optional)
145
Question #1
• Estimate the daily demand for taxis. Is this demand being met? If not, how many
more taxis are needed? (Information below should be provided to candidates)
– Airport handles 42 million passengers yearly. There are 5,500 taxis operating in the
airport.
– On average a taxi takes 60 minutes to drive passenger and return to airport for next
pick up.
– On average 40% of domestic flights passengers and 80% of international flights
passengers use taxis.
– 30% of daily demand occurs between 6:00 a.m. and 10:00 a.m., 40% occurs between
6:00 p.m. and 10:00 p.m.
– Assume each passenger uses one cab and drivers keep 30% of the fare
– On average each taxi requires $8,000 yearly on maintenance.
146
Interviewer guidance on Question #1
Guidance: Analysis:
• Assume that passenger • Estimate number of passengers arriving each day:
volume is equally ✓ 42million/12 months = 3.5 million passengers monthly
distributed through the ✓ 3.5 million passengers / 4 weeks = 875,000 passengers weekly
year/week/day. ✓ 875,000 passengers / 7 days = 125,000 passengers daily
• Assume that 50% of • Estimate passengers that will require taxis:
passengers are from
✓ 62,500 domestic passengers x 40% of domestic use taxis = 25,000
domestic flights and 50%
✓ 62,500 international passengers x 80% of international use taxis = 50,000
international flights.
✓ Total passengers demanding taxis daily = 75,000
• Assume that the client has ✓ 6am – 10am = 22,500 passengers need a taxi (= 75,000 x 30%)
capacity (meaning he has ✓ 6pm – 10pm = 30,000 passengers need a taxi (=75,000 x 40%)
cars and drivers available
✓ Non-peak hours = 22,500 passengers need a taxi (=75,000 x 30%)
in Lagos Nigeria at $0
investment cost). • Is the demand being met?
• Assume all taxis can run ✓ From 6 to 10am, each taxi makes 4 trips (average trip takes 60min). If we have
during peak hours and that 5,500 taxis operating, then capacity serves 22,000 passengers. Excess
maintenance is a minimal demand=500 passengers. 250 domestic x 40% = 100 passengers + 250
time commitment. international x 80% = 200 passengers for a total of 300 passengers needing a
taxi / 4 rides per hour = 125 taxis needed to meet excess demand.
✓ From 6 to 10pm, using the same logic capacity meets 22,000 passengers: 5,500
• This is a very complex
taxis operating thus excess demand = 8,000 passengers (need 2,000 taxis).
exercise; please work with
the candidate through the ✓ During non-peak hours (16 hours) 22,500 passengers will need a taxi. With
math 5,500 taxis in operation there is capacity to serve 88,000 passengers during
that time. In that time period there is excess capacity.
• To service demand not being met in the morning and night periods 2,000 taxis
are required.
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Question #2
• Estimate possible revenue. An average passenger pays $200 cab fare via regulated
rates
• Now that you have the revenue, what do you think are some cost considerations that
our client needs to take for taxi operations?
– Sample answer:
• Fixed cost: Back-end staff cost; General overheads, Permits, Insurance, tech cost
• Variable cost: Drivers' salary, Gas, Car repairs, Car maintenance etc.
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Interviewer guidance on Exhibit #1
Prompt: Analysis:
• Candidates should be encouraged to list cost stream for
running the taxi operations • Cost can be calculated by taking XX% of revenue and
plugging absolute values. For Gas Prices, ask candidate to
divide revenue uniformly across $ quarters to get to period
• After initial brainstorming, show candidate the exhibit #1
revenue. Calculate: Profit = Revenue – Cost
on the next page to compute profit calculation
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Exhibit #1
Fixed cost
Back-end staff cost 0.5% of revenue
Insurance 0.5% of revenue
General O/H 1% of revenue
Driver salary 30% of revenue
Permit $1000 per taxi
Variable cost
Maintenance $8000 per car per year
Gas prices As below
Q1 10% of period revenue
Q2 15% of period revenue
Q3 20% of period revenue
Q4 25% of period revenue
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Rush Hour
Recommendation
• Client should buy 2,000 permits based on the potential yearly profit of $270,456,000
from excess demand at the airport.
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Final Remarks
Enjoy the casing process. This is very representative of the day-to-day life as a consultant!
It’s important to mock case as if it were the real interview. The “day of” often brings
additional stress and anxiety. Below are excerpts from students who previously interviewed
at firms sharing their experiences and advice for future applicants.
• Identify and remember math shortcuts. Margin shortcuts, weighted average, price
elasticity are all fair game
• Get clarity and background information. Easier said than done, but do not be afraid to
repetitively ask for clarification if it is a novel or niche industry or company
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Recommended Classes
This list comes from 2 nd year students who interned in consulting
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