Career

Centre

Case Book
A Practical Guide on How to
Crack Case Interviews
Acknowledgements

Career Centre would like to thank the following companies for their generous contribution to the London
Business School Case Book.
Contents

Foreword 2 McKinsey & Company 64

OldPharma 64
The Interview Process 3 RefreshNow! Soda 70
The consulting interview process 3
What are they looking for? 4 Monitor Deloitte 77
Demonstrating problem solving skills 5 Footloose 77
Demonstrating personal impact 6
Demonstrating leadership 7 Roland Berger Strategy Consultants 86
Demonstrating drive and motivation 8 Mobile Phone Company (MPC) – Market Share Gain 86
Private Jet Co (PJC) – Fleet Renewal 88
Preparing for Case Interviews 9
Overview of Case Interviews 9 Solon Management Consulting 92
Tackling a Case Interview – A step-by-step illustration 10 Free to Air TV Network 92
Estimation Cases 15 Rural Broadband 95
Brainteasers 17
Major Types of Business Case 18 Strategy& 98
Business Class Airline 98
Preparing for Fit Interviewing 24 Rapid Margin Improvement 102
Overview 24 Mobile Network Revenue Generation 106
The Importance of Fit 24
Competency Based Questioning 25 Case Competition Example 111
Two key ‘Why do you want to …?’ questions 26
Do you have any questions for me? 27 Johnson and Johnson 112
A Two-Way Process 27 EMEA Trocar Business Case 112
Additional Resources 28

Corporate Strategy Cases 118

Cases for Practice 29
BT 119
Bain & Company 30 Followers-of-Fashion Online Retail 119
Entertainment Co 30

Ericsson 127
BCG 44 OTT services from vodafone 127
Iceberg 44
Cupid’s Arrow 49 Schlumberger Business Consulting 133
Rising Sun Service Group 133
L.E.K. Consulting 56
NewCo Petrol Retailer 56 Zurich 138
Internal Consulting (iCON) 138
Marakon 59
AirJet Inc. 59
2 London Business School – Case Book

Foreword

Welcome
Welcome
Cases are real-life business problems, usually complex We hope you will find this Case Book useful in a number
Welcome
or ambiguous to theenough
LBS consulting team case book.
that a management team Consulting
engages Weways:
of hope you will find this Case Book useful in a number of
careers
valuableare a hugely support
consulting popular to choice
solvefor students
them. following
We hope you •ways:
An introduction to fit and case interviews
their graduation
will approach from
the casesLondon
in thisBusiness School and
official London recruiters
Business • A theoretical guide (how to address cases, what
are
School keenCase
to attract
Book,ournotstudents
with thetonarrow
join their
aimcompanies.
of convincing • interviewers
An introductionare to fit andfor)
looking case interviews
We hope that
employers you use
to hire you,thebutguidance in this
with a spirit case book not
of intellectual • AA source of practice cases from a number
theoretical guide (how to address of firms to
cases, what
only to help
curiosity thatyou perform
drives yourinenjoyment
the selection process,
of the interviewbutprocess
also do with friends/colleagues/anyone
• interviewers are looking for) who will help
to
and stimulate your intellectual
a problem-solving careercuriosity
beyondand enthusiasm for
that. • An insight into the type of answers you might give to a
• A source of practice cases from a number of firms to
problem-solving now and in your future career. particular case – this is only a guide (there are no right
Case interviews are not just used by consulting firms. • answers)
do with friends/colleagues/anyone who will help
Other firms
Solving use them
complex in business
problems school hiring,
is fundamental to the especially
career of • AAnreference
insight into the type ofresources
to additional answers you might give
available to a
elsewhere
forsuccessful
a internal consulting
consultant. and corporate
Dealing strategy roles,
with ambiguity, and
adopting • particular case – this is only a guide (there are no right
they
a are a great
structured way to applying
approach, hone your business
both problem
analytical solving
skills and It
• just remains for us to wish you all the best.
answers)
skills.
creativity are all competencies that are required to perform • A reference to additional resources available elsewhere
in a consulting environment. Consulting is also not the only Consulting Careers Team
Practice
sector a lot!
to use case interviews as part of the selection process Career Services
It just remains for us to wish you all the best.
–We are sure
problem you will
solving is afind that ‘Practice,
fundamental Practice,for
skill required Practice’
a variety London Business School
is the
of otherbest preparation.
industries People
and career often ask us ‘how much
paths. Consulting Careers Team
practice is enough?’ There are two answers – the minimum Zoe McLoughlin
Career Centre
is
Thepractice
case bookuntilhelps
you feel
youconfident;
develop anthe maximumcuriosity
intellectual is practice
that Head of Consulting, Career Services
with all your energy until you have nothing left to give.
London Business zoem@london.edu
School
will underpin your success and enjoyment of the interview
process and career beyond. It helps you understand the key Zoe McLoughlin
components of completing a case and provides a wide range Head of Consulting, Career Centre
of examples with which to practice. zmcloughlin@london.edu
Remember, case practice is essential, but not the only thing Daniel Lay
that recruiters are looking for. As you research the different Sector Manager, Strategy Consulting
Daniel Lay
firms across the sector, you will need to be confident in why Career Centre Sector Manager, Strategy Consulting
you are a good fit for each firm and demonstrate the wider dlay@london.edu Career Services
commercial interest that is typical of this sector. Ultimately
dlay@london.edu
recruiters also want team players with strong commercial
acumen who understand and are enthusiastic about the role.

Students often ask how much they should practice. Rest

assured that recruiters often feedback that LBS students
are typically extremely well prepared for the recruitment
Natasha Fay
process. But beware – they also say that students can be too
Sector Manager, Professional Services
formulaic. So, practice enough to be confident, but don’t lose
and Boutiques
your creative edge by trying to make every case follow the nfay@london.edu
same sequence.

Overall, apply yourself to the entire application process,

including both fit and case competencies, address any skills
gaps and enjoy the journey.
 London Business School – Case Book

The nterview Process

The consulting interview process

rocess
Whenfirms
Most applying to work
require to youwith a
complete Often
At bothcalled
stages ‘decision round’,
you will have a ound Be very self-aware
Throughout duringprocess
the interview your first try
consulting
several firm,ofyou
stages will go through
interviews, consisting will be conducted
combination of fit andalong
casevery similar
interview round interviews
and remain and afterwards:
self-aware. This will help
a multi
of both fitstage interview
interviews and process.
case studies. lines to ound
questions. At the, 2nd
but will
roundgenerally
you may •youAnalyse
to analyse points
where onyou
which you feel
performed
Most firms’ interviews
Understanding and preparing follow afor similar be tested
held atontheweak
officeareas basedyou
to which on well, and where you might needdown
you might have let yourself to or
both case and fit components ofa the
pattern. Some firms might use are applying.
feedback fromIncreasingly, recruiters
the fit questions or case underrepresented your
focus on improving for your next abilities;
written problem
interview processsolving
greatlytest as a your
improves are using
studies in video-conference where
round 1, and your motivation •interview.
SpendSome time practicing
firms provide answers
feedback to
screening tool before the
chances of securing a consulting first roundoffer students are applying to
to join the firm will need to be remote offices questions on these topics;
after the first round and you can use
of interviews. This is becoming
and also reduces the stress associated less from London. The interviewers
compelling. So for example if you don’t will •this Some
to focusfirms provide
further feedbackIt after
preparation. can
common
with but worth being
the interviewing process.aware Some of. probably be more
structure your seniorcase/s
1st round than those
well, it the first round –
also help you prepare more use thisthoroughly
to focus
firms might use a written problem who interviewed you in the first round
is likely that the 2nd round interview will further
for other preparation
company (especially
interviews you may
The rst
solving round
test as a will generally
screening toolconsist
before –focus
oftenonincluding
your case partners.
structure.ou will important
have lined up. with BC )
of two interviews with consultants
the first round of interviews. This is be given two or three business cases
at the firm less
becoming you common
are applying but to join,
worth and, in addition,
Recruiters your ‘fit’
use a variety ofwill be tested
different nderstanding
Case interviewsand preparing
are dealt fordetail
with in
each lasting
being aware of. around min – hour. again.
styles and often introduce new both case and fit components
on page 9 – 23 of this Case Book of and
the
Case and fit interviews are usually interview techniques each year. interview process greatly improves
Fit interviews are covered in detail on
combined,
The although
first round they mayconsist
will generally be Interviewers
Cases may be invery
this specific
round will or test
quite your chances
page 24 – 28. of securing a consulting
of two interviews with consultants irst
separate (notably at Mc insey). at ‘weak spots’ based on feedback
unstructured. Interviewers might ask from offer and also reduces the stress
round
the firminterviews are often
you are applying to held
join, oneachthe the first round (competencies
you to give your point of view on an that associated with the interviewing
London Business School campus. were not tested, or where performance process.
lasting around 30min – 1 hour. Case event in the world or respond to an
faltered during ound ).
and fit interviews are usually combined, article that they share. Whilst you
Case interviews are dealt with in detail
although they may be separate. may find these different techniques
ew decision round formats are on page – of this Case Book and
Structured hire programmes often hold challenging, do not lose sight of the
creeping into our recruiters processes. it interviews are covered in detail on
their first round interviews on the LBS fact that they are testing whether
While largely variations on the case page – .
campus. you will make a good consultant. If
theme, such formats include role
you understand the behaviours and
plays with more than one consultant;
Often called ‘decision round’, Round skills required in the role, you can
situations where you are given more
2 will be conducted along very similar practice and focus your responses
data than in a typical minute
lines to Round 1, but will generally accordingly. They are not expecting
case, with more time to think about
be held at the office to which you you to be a world expert and the more
it; and requests to prepare a brief
are applying. Recruiters may use you can enjoy the conversation and
presentation on a written case, which
video-conference where students are buildthen
you rapport, the morewith
talk through likely that the
consultants
applying to remote offices from London. as if you were presenting to awith
recruiter will see you fitting in teamtheir
The interviewers will probably be more company culture.
leader or client.
senior than those who interviewed
you in the first round and may include
partners.
 London Business School – Case Book

The nterview Process

What are they loo ing or

The purpose of both fit and case • ‘Outstanding’ or ‘truly distinctive’ If you are above the bar on all four
interviews is to assess you on a on at least one of the four dimensions, but not outstanding in
number of selection criteria. These dimensions one, you will not get the consulting job.
vary from firm to firm but can be
broadly grouped into four main ‘Outstanding’ or ‘truly distinctive’ is ote: These are a measure of ‘raw
competencies, all of which are key to judged as ‘this candidate would be talent’ rather than looking for a specific
performing well in a consulting job. within the top of consultants background, industry or functional
currently working in the firm on this experience in the consultants that they
Successful candidates will dimension’. employ.
demonstrate both:
• Strong ability on three of the four
dimensions (i.e. ‘above the hurdle’
on at least three dimensions)

ey Com etencies Sought By Consulting ecruiters

Pro lem Solving Personal m act

• Analytics/quantitative skills • Presence
• Intellectual capacity • Team player
• Comfort with ambiguity • Sense of humour
• Business judgement • Credibility
• Creativity
• Ability to listen and learn

Leadershi Drive Motivation

• Maturity • nthusiasm
• Integrity • esire to excel
• Inspirational • riven by results – action oriented
• Willing to take personal risks • Other interests
• Track record (eg sporting, clubs)

Can send you to a client on day

Can I send you to a client on day 1?
CanCan
s Iend 2 hours
spend in a on
12 hours caraon a lane
plane withwith
you?you
 London Business School – Case Book

The nterview Process

Demonstrating problem
ro lem solving sskills
ills
A consultant
consultantis,is,above
aboveall else,a a ro
allelse, lem solver
problem solver– –i.e.
i.e.they
they
are contracted
are clients to
contracted by clients to solve
solve their
theirbusiness
businessproblems
problems. Analytics / quantitative skills
problem solving
Strong problem solvingisistherefore
thereforekeykeytotosecuring
securinga ajobjobinin • nalytics
Generatesuantitative
hypotheses/identifies
s ills data requirements
consulting industry.
the consulting industry. • for testing
enerates hypotheses/identifies data requirements
• for testing
Logical, fast and accurate calculations
our problem
Your problem solving
solving ability
abilityiswill be primarily of
a combination evaluated
underlying •• Logical, fast assumptions
Reasonable and accuratebacked
calculations
by logic and/or
through the case
competencies andinterview.
behaviours.Although problem
There is solving
no written is
formula, • easonable assumptions backed by logic and/or
analogy
not the same as intelligence, very often recruiters
but we suggest that to perform well at problem solving you use the analogy
• Common sense approach to rounding
shorthand
need to: term ‘smarts’ – a clue to how they may think • Common sense approach to rounding
about problem solving performance. •• Probes inconsistency
Probes inconsistency
•• Checks own
Checks own work
work
• demonstrate intrinsic abilities including intellectual
Three elements
capacity, will drive ability
quantitative your performance:
and creativity • istinguishes fact from
Distinguishes from opinion
opinion
• Intrinsic abilities: intellectual capacity, quantitative
• spend time preparing so that you know what is expected
ability, creativity
of you and have practiced good techniques
• Preparation: time/effort spent learning what is expected ntellectual capacity
Intellectual ca acity
• of
beyou
well informed. Reading the commercial press and •• Usingsing complex/sophisticated reasoningto
toaddress
address
demonstrating a curiosity complex/sophisticated reasoning
• Practice in solving cases for the business world Is vital. issues within the case
Every company situation is a potential case study! issues within the case
• Picking up on hints given by the interviewer during
• Picking up on hints given by the interviewer during the
the interview process
interview process
• Applying new concepts introduced by the
• interviewer,
Applying new concepts
later during introduced
the case by the interviewer,
later during the case

Com ort with am iguity

Comfort with ambiguity
• Willingness to attempt to solve the problem
•• Willingness
ot – ‘I don’ttoknow
attempt to solve
anything the problem
about this area/industry’
• –Not
that’s
– ‘I the whole
don’t knowpoint
anything about this area industry’
– that’s the whole point!

Business udgement
Business
• ocusing judgement
on where the real problem is (Can they
• identify
Focusing the
on‘big buckets’
where and
the real ‘smell is
problem money’)
(Can they
• Logical
identify and well-structured
the ‘big buckets’ andapproach
‘smell money’)
•• Can youand
Logical identify the key issues
well-structured and address these in
approach
a logical and structured way?
• Can you identify the key issues and address these in a
• sing frameworks only if they are appropriate; not
logical and structured way?
shoehorning the case into the last framework they
• learned
Using frameworks only if they are appropriate; not
shoehorning
• Clearly the case‘conclusions
summarising into the last framework they
so far’ at each
learned
stage of the case
• Clearly summarising ‘conclusions so far’ at each
stage of the case
Creativity
• Coming up with alternative ideas or creative
Creativity
suggestions
• Coming up with alternative ideas or creative
suggestions
ility to listen learn
• Thinking about everything discussed so far and its
Ability to listen for
implications & learn
this
uestion,about
• Thinking rathereverything
than answering eachso
discussed question
far and its
in isolation for this
implications
• Question, rather than answering each question in
isolation
 London Business School – Case Book

The nterview Process

Demonstrating ersonal im act

Consulting is about working closely with clients, so an
interviewer will be looking for you to demonstrate that
you are intuitive around people – both from your track Presence
record and that you interact with him/her in an intuitive and • Confidence, composure and grace under pressure
em athetic way during the case and fit interviews. vs. ego
• Are you comfortable and in control?
uring the fit aspect of the interview the interviewer will ask • o you remain confident even when you make
questions about your experience on the various dimensions mistakes?
they want to test, e.g. • o you keep forging ahead?
• Are you a team player?
• How have other people you have interacted with
in the past viewed you? (work and fellow students, Teamwor
team mates) • o you use new information or feedback on wrong
answers to push forward your thinking?
our ‘personal impact’ is assessed during both the case • o you respond to the interviewer’s feedback with –
and fit interviews. ‘That’s interesting, and it must mean that .’ rather
than getting defensive?
• Have you demonstrated strong team working in your
am le past jobs and extracurricular activities?
It is more intuitive in the case interview to say ‘I’m not
familiar with the UK credit card industry. Do you pay off
the balance in full each month like we do in Germany?’ Sense o humour
rather than making a bold assumption such as ‘I’m going • Are you enjoyable to interview?
to assume that in the UK you pay the balance on your • Can the interviewer see himself having a laugh with
credit card each month’. you when you’re stuck in a hotel in the middle of
Scotland together?

Credi ility
• Will you be taken seriously by the client?
• Are you someone that other people will listen to?
 London Business School – Case Book

The nterview Process

Demonstrating leadershi
leadership
Leadership is
Leadership is incredibly
incrediblyimportant
importanttotoconsultants.
consultants.Nototonly only
level (and
do MBA level (and above)
above)hires
hiresenter
enterfirms
firmsininpositions
positionsofof Maturity
leadership e.g.
leadership (e.g.leading
leadingjunior
junioranalysts
analystsininday-to-day
day-to-day work),
work , •Maturity
Balance of gravitas and enthusiasm
consultants are
but all consultants areessentially
essentiallyexpected
expectedtotoleadleadclients
clients • Balance of gravitas
Able to draw and enthusiasm
on experience to inform opinion
good, implementable
towards good, implementablesolutions.
solutions.Plus
Plusconsulting
consulting •• Able
Cleartoand
draw on experience to inform opinion
concise
culture tends
firm culture tends toto place
place‘extra
‘extracurricular’
curricular’leadership
leadership • Clear and concise
• Questions and disagrees appropriately
requirements
requirements of of one
one sort
sortororanother
anotheron
onallallmembers
membersofof • uestions and disagrees appropriately
the firm.
the firm.
Integrity
our leadership
Your leadership abilities
abilitiesare
areassessed
assessedduring
duringbothboththethecase
case ntegrity
• Solving the problem posed
and fit interviews, but primarily through exploring
and fit interviews, but primarily through exploring your your • Solving the problem posed
track record asas aa leader
leaderininthe
thefitfitsection,
section,as
asititisishard
hardtoto •• Responding
esponding to to the
the questions
questions actually
actuallyasked
asked
track record
demonstrate real leadership abilities during a case
demonstrate real leadership abilities during a case interview. interview. • Not trying to bend the rules
ot trying rules

Depending on your years of work experience, you may or

Inspirational
ns irational
may not have had specific leadership roles at work. The
“Additional Interests” section of your CV can be a valuable
• Demonstrates
emonstrates real insights
insights
area to demonstrate leadership skills obtained outside work. •• Passionate
Passionate about creative new
about creative new ideas
ideas––willing
willingto
tostick
stick
with
with them
them when tested
when tested
Recognise the competencies that companies require, and
position your experience and examples to reflect these,
making your responses as specific and results focused
Willingness to
Willingness to take
ta e personal
ersonalrisksris s
as possible.
• Not ot frightened
frightened to challenge
challenge the the interviewer
interviewer(within
(within
reason
reason!) )
•• Will
Will argue
argue their corner ifif they
their corner they are
are convinced
convincedofofthe
the
value of their ideas
value of their ideas

Trac record
Track record
•• Uses
ses appropriate interpersonal styles
appropriate interpersonal stylesand
andmethods
methods
to inspire and guide individuals or teams towards
to inspire and guide individuals or teams towards
achieving a common goal
achieving a common goal
• Takes a lead in the interview – drives to completion,
• Takes a lead in the interview – drives to completion,
insight and results
insight and results
• Solid track record of leadership achievements e.g.
• sporting
Solid track record
clubs, of leadership achievements e.g.
military
sporting clubs, military
 London Business School – Case Book

The nterview Process

Demonstrating drive and motivation

Consulting recruiters use
Consulting recruiters useboth
bothcase
caseand
andfitfitinterviews
interviewstoto
demonstrate to the
demonstrate to the candidate
candidatethe
thetype
typeofofwork
workthat
thatthey
theydo.
do.
nthusiasm
Therefore
Therefore the the case
case study
studyisisnot
notjust
justaahurdle
hurdletotobebecleared
clearedto • Are you enthusiastic about trying to solve the case
(e.g.
get theby job.
learning
During‘crack-a-case
the case the methodology’)
interviewer will tobeget the
looking and wanting to know what the solution was at the
job.
for youuring the case thethat
to demonstrate interviewer will be looking
you are enjoying solving for
theyou end of the interview?
to demonstrate
case, that you are that you are enjoying
enthusiastic solvingby
and engaged the
thecase, that
business • Will you thrive in a consulting environment?
you are enthusiastic and engaged by the
problem and that you are interested in finding out thebusiness problem
and that you
solution. Mostare interestedwill
interviewers in finding
give you out the solution.
a case that theyMost
have
interviewers will give you a case that
personally worked on or are currently working on,they have personally
and they Desire to e cel results orientation
worked on or are
will be pleased and currently workingifon,
react positively youand
showtheyanwill be
interest. • Persistence in solving the problem; not giving up
pleased and react positively if you show an interest. • Striving to excel in everything that you take on
Drive and motivation will also be tested in the fit interview, by • ot content with reports or recommendations –
rive and
looking at motivation willachievement
your levels of also be tested in the
in your fit interview,
past work and demonstrate desire to see actions, results, outcomes
by looking at your levels
extracurricular activities. of achievement in your past work
and extracurricular activities.
It is important to be able to demonstrate your personal
ther interests
motivation for the specific firm, not just consulting in general.
Sum u • emonstrating success in activities outside the
During your preparation through online research, coffee chats
Are you both interested, and interesting? work arena
and reaching out through your network it is important that you
understand each company, how their culture differs and what
attracts you about them in particular. The interviewers want to
Company Knowledge
see that you have done your homework.
• Communicate what you know about their firm and
why you are attracted to them
Ti The challenge that you face in consulting, then you•might
Showwant to Identify
enthusiasm these areas to
and commitment quickly, both by
their internal
in interviewing is to convey your consider other career options.
career path looking at your past performance in
excellence on all of these dimensions interviews and by internalising the
in a minute time period. With understanding of what is feedback given to you from mock
required of you and practice, you will interviews at London Business
our ability to achieve this goal is find that many of the elements listed School, and work actively to improve
a function of three things: innate above come across naturally. If you your ability to convey them to an
ability, understanding of what is are a quantitative and/or engaging interviewer.
required of you, and practice and person, you will come across as so in
self-awareness. There is little you the interview without thinking about In every interview, you must also
can do about innate ability, though it. ou still need to practice, however, maintain significant self-awareness
the very fact that you are a student since these natural predilections will of how you are being (or might be)
at London Business School suggests easily be masked if you enter the perceived. Actively manage the
that you have the ability to get a job in interview unprepared or nervous. image you are conveying. That may
consulting. If, however, you know that Practice will also help you identify seem like a lot to think about while
you are not strong on a number of the areas that don’t naturally come you’re also trying to solve a complex
the skills highlighted in the previous across for you in a short interview. case, but it is very important.
section as being critical to success
 London Business School – Case Book

ow to cefor
Preparing Case nterviews
Case Interviews

verview o Case nterviews

Why consulting recruiters use Case nterviews Ty es o Case nterview

Many recruiters – consulting companies in particular – will An interviewer may use any or all of three types of cases
test for a high degree of competence in the area of solving during a case interview:
complex, business problems. A management consultant
is, above all else, a problem solver and therefore this is
the core skill that recruiters look for when interviewing Business Case
candidates. • ou are the C O of an insurance company. ou want
to launch an e-commerce business that is synergistic
Consulting firms use case interviews because cases give with your current insurance products, but which is
them the opportunity to see how a candidate thin s about not an insurance product. How do you decide what
business problems and tests a candidate’s ability to solve this on-line business should sell and who it should
these business problems. sell to?

The primary purpose of a case interview is, therefore, to test stimation

a candidate’s problem solving skills in the widest sense, • How many gallons of white house paint are sold in
including his/her skills in: the each year?
• Structured, logical thinking • stimate the weight of a Boeing
• Issue identification
• Analysis Brainteaser
• Creativity • What is the angle between the big and small hands
• Insight on your watch if the time is a quarter past three?
• Business judgement • Why are manhole covers round?
• umerical ability
• Taking a collaborative approach.

Case interviews also give the candidate some insight into The majority of consulting interviews are Business Cases
the type of work that consultants conduct. If you do not because it is the only case type that really tests the skills
en oy solving problems during a case interview, it may be an that a recruiter is looking for, and also demonstrates the
indication that, in fact, a career in consulting is not for you. work that a consultant will be required to do once in the job.

In a business case, the interviewer presents a business

situation and asks the interviewee to ‘solve’ it through
discussion.
 London Business School – Case Book

ow to cefor
Preparing Case
Casenterviews
Interviews

London Business School – Case Book

ow to ce Case nterviews

An interviewer may give an stimation Case either in

am les: irm A’s profits have been declining for the addition to or instead of a business case. enerally an
past eighteen months. Why has this happened, and estimation case would not be used instead of a business
what would you recommend to help irm A improve its case because it does not test for the required intrinsics in as
performance? robust
An a way asmay
interviewer a business
give an case.
stimation Case either in
am les: irm A’s profits have been declining for the addition to or instead of a business case. enerally an
irm eighteen
past B makes months.
jewelleryWhy
and has
is considering expansion
this happened, and estimation case would not be used instead of a business
into
whatthe fashion
would you retailing
recommendbusiness.
to helpWould you
irm A improve its caseam le: stimate
because it does the
not number of BMW
test for the carsintrinsics
required in ermany in as
recommend
performance? that it does so? robust a way as a business case.

irm C B makes jewellery

tin cans. Itand
is planning to expand
is considering its
expansion An interviewer
interviewer may
may throw Brainteaser,
throwininaaBrainteaser, but
butwillwill
virtually
virtually
manufacturing capacity and is debating
into the fashion retailing business. Would you whether to add neveramusele:
use aa brainteaser
brainteaser as
as the
the sole
sole case
case in
in an
an
stimate the number of BMW cars in ermany interview.
interview.
to its existing plant or
recommend that it does so?build a new plant. What would you The problem with brainteasers is that they are binary – the
recommend that it does? candidatecases
Business eitheroften
‘gets’include
them or doesn’t.
a calculation, such as a market
irm C makes tin cans. It is planning to expand its estimate, and a section that requires
An interviewer may throw in a Brainteaser, butcreative thinking within
will virtually
manufacturing capacity and is debating whether to add the
nevercase.
useIfayou find either
brainteaser asofthe
these
solemore
casechallenging,
in an interview. it makes
to its existing plant or build a new plant. What would you sense to practice
The problem withestimation
brainteasers andisbrain teasers
that they arebeforehand
binary – theto
recommend that it does? help improve
candidate your‘gets’
either performance.
them or doesn’t.
Tac ling a Case nterview ste y ste illustration
Tackling a Case Interview – A step-by-step illustration
Business Cases
Business Cases
ow do you eat an ele hant
Tac
“Howne doling aa
iteyou
at Case
time
eat
nterview
an elephant?”
ste y ste illustration
“One
Businessbite atCases
a time.”
It’s the same with solving business cases. When you get a case posed in an interview, don’t just think, Oh no, I have to
solve
The ow this huge
do you
following problem
eat
pages eleinhant
anbreak one go
down . Solving
a typical a caseproblem
business successfully
into aconsists of running
step by step through
approach. theare
If you following four basic
new to solving casesteps:
ne ite this
problems, at aistime
a useful way to start practicing and becoming familiar with the techniques used. As the question says, one bite
Business
at Case sonewhen
a time is essential, ste you
atget
a time
a case posed in an interview, don’t just think, “Oh no, I have to solve this huge problem in
It’s the
one go”.same witha solving
Solving business cases.
case successfully When
consists you getthrough
of running a casethe
posed in an interview,
following four basic don’t
steps:just think, Oh no, I have to
solve this huge problem in one go . Solving a case successfully consists of running through the following four basic steps:
Ste
Business – Listen
Caseand – AClarify
four step Ste 2 – Structure
process Ste Analyse Ste – Conclude
Business Case ne ste at a time
nsure complete evelop approach to solve equest information to test Synthesise findings into
understanding of business problem: hypothesis: recommendations:
issue:
Ste – Listen and Clarify •SteStructure problem
2 – Structure •SteAsk questions
Analyse and •SteSummarise your findings
– Conclude
• Listen carefully • Identify key issues collect information (not just by recapping
• nsure
Takecomplete
notes if it helps you prioritise
evelop approach to solve • equest
evelop, test andto
information refine
test your analysis)
Synthesise – draw
findings into out
• Ask clarifying
understanding of questions
business • ormulate an initial
problem: hypothesis
hypothesis: key facts
recommendations:
as needed
issue: hypothesisproblem
• Structure Iterate
• Ask questions and Make a recommendation
• Summarise your findings
• Take
Listentime to evaluate the
carefully • Articulate approach
Identify key issues • Hone
collectininformation
on the solution • Add nextby
(not just steps
recapping
• Take notes ifgiven
information it helps you hypothesis
prioritise • erbalise yourand
evelop, test thought
refine your analysis) – draw out
• Ask clarifying questions • ormulate an initial process
hypothesis key facts
as needed hypothesis • Iterate • Make a recommendation
• Take time to evaluate the • Articulate approach • Hone in on the solution • Add next steps
information given hypothesis • erbalise your thought
process
 London Business School – Case Book

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Preparing Case
Case nterviews
Interviews

Ste – Listen and Clarify Ste 2 – Structure Ste Analyse Ste – Conclude

The interviewer will introduce the case to you y giving Clari ying uestions
• A bit of background, e.g. type of industry, who your client
is The interviewer may have used terms that you are not
• escribing the specific business situation familiar with – ask him/her to explain what those terms
• iving you some initial information mean.

Some of this information will be important, other bits will

prove to be irrelevant. am le When talking about the insurance industry,
the interviewer may use the term ‘loss ratio’. If you
In some cases there may be very little information up front, haven’t heard of this term, ask them to explain what it
deliberately leaving the question vague to see how you cope means
with initial ambiguity.

One thing
thing is
is vital
vital –– make
makesure
surethat
thatyou listenvery
youlisten verycarefully.
care ully. Clarifying questions show that you are taking a real
Ta
Take e notes.
notes. Make
Make sure sure that
thatyou
youtake
takeaapenpenand
andpaper
paperwith
with interest and demonstrate that you are serious about fully
you into the
the interview.
interview.The Theimportance
importanceofoflistening
listeningcannot
cannotbebe understanding the business problem posed.
emphasised enough. Taking time to understand the question
emphasised enough.
is extremely important - consultants don’t get paid to answer If you don’t make sure that you understand what the
the wrong question! Here are some tips to help with this interviewer is asking you to do upfront you are denying
Ti
stage. ou will create a very bad impression if you need yourself the opportunity to perform well in the interview. In
the interviewer to repeat the question or if, through not general, you should not need to ask more than one or two
listening, you
Paraphrase backhave themissed the key facts and therefore
question clarifying questions, and it is fine if you don’t have any.
One skill in actively listening is to or
go on to solve the wrong case fail to paraphrase
verbally focus on thethe
important issues in the case.
situation and information back to the interviewer before Ta e time to evaluate the in ormation
you begin to tackle the problem to ensure that you have
understood the key facts.You might also want to write down It is polite to ask the interviewer if he/she wouldn’t mind if
One
a fewskill
key in actively
words listening
which is to
will help verbally
keep you onparaphrase
track. the you take a minute to think about the problem.
situation and information back to the interviewer before
you begin to tackle the problem to ensure that you have There is no right or wrong amount of time to spend thinking
understood the key facts. about the problem though, generally, you should s end
a out a minute, maybe slightly less than that if you can.

am le Would you mind if I take a few seconds to

collect my thoughts?

A minute’s silence will feel like a long time to both you and
the interviewer.

Bear in mind that a large part of the interview is about

generating a rapport with your interviewer and the only way
you can do this is through a quality, two-way dialogue. Too
much silence and lack of eye contact, i.e. staring hard at
the paper in your hand as if it will give you the answer, are
all negative to creating rapport. However, thinking time is a
valuable part of the process – do not neglect it.
 2 London Business School – Case Book

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Preparing Case
Casenterviews
Interviews

Ste – Listen and Clarify Ste 2 – Structure Ste Analyse Ste – Conclude

our ne t ste should e to structure your answer i e

give yoursel a coherent structure that you can use to Ti Most strategy consulting firms take a ‘hy othesis
guide your analysis driven a roach to solving actual business problems.
• The structure that you use can be one that you have This means that they will come up with a ‘straw man’ as
‘made-up’, but one that is logical and fits the problem to what the likely solution to the business problem might
• It could be a framework that you have been taught at be and use this straw man to guide, and prioritise, their
business school, e.g. the three Cs or Porters orces. analysis.
• ou may decide that a combination may be the most
relevant.
At the end of the case they may have either proved or
However, it is key to remember that the objective of the disproved their initial hypothesis in coming up with the
exercise is not to ‘fit a framework to the problem’. A answer – and each is equally legitimate.
framework is no more than a tool that you can use to help
you organise your thoughts and analysis and ensure that If you disprove your initial hypothesis, it shows that your
you are exploring all the key issues. analysis was rigorous and succeeded in disproving the
‘obvious’ straw man. In disproving your initial hypothesis,
Once you have thought of a good structure: your analysis should also have revealed what the true
• Communicate that clearly to the interviewer, so that he/ solution to the problem is. If you prove your initial hypothesis
she understands how you are structuring your thoughts with your analysis, all well and good.
• Break the central issue into a num er o athways
to addressing the problem, based on the structure/
framework that you have developed am le or Company A above, an initial hypothesis
• iven that your time is limited it is important to rioritise might be: iven that Company A’s profits are declining
the issues that you investigate in the case. and that you’ve mentioned an aggressive new entrant
has come into the market, I would hypothesise that it is
more likely to be a revenue rather than a cost issue, and
am le Why have Company A’s profits been declining so I’ll start my analysis by looking at revenues first .
for the past two years?

sing the Profit evenue – Costs equation is a good As you conduct your analysis throughout the case interview,
structure to start with. Company A’s declining profits remember to relate your findings back to your initial
could be due to loss in revenues (price x volume) or hypothesis: This seems to support my initial hypothesis . ,
increase in costs (fixed costs variable costs). This seems to refute my initial hypothesis , and if you are
refuting your initial hypothesis indicate that Actually, is
more likely to be where the solution to this problem lies .
• The interviewer may have given you a hint early on which
might steer you towards a particular path first. Otherwise
that might become clear as you progress through the
pathways you have laid out.

am le: The interviewer might say that a new,

aggressive competitor entered the market eighteen
months ago, which is a steer that perhaps Company A
has been losing market share and hence revenue.
 London Business School – Case Book

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Preparing Case
Case nterviews
Interviews

Ste – Listen and Clarify Ste 2 – Structure Ste Analyse Ste – Conclude

The analysis hase should orm the ul o the case uestions

interview
There is also a skill to drawing information out of the
interviewer. Many interviewers will give candidates who they
Ti This is an iterative process. believe are asking questions in a structured, thoughtful way
much more information than they would give to candidates
who they believe are just reeling out an unstructured
In this phase you will: laundry list of questions in the hope that they will be able to
• Ask your interviewer uestions piece some kind of analysis together from that laundry list.
• Collect the in ormation you need to conduct your ou must only ask questions that you can justify – and then
analysis demonstrate that you are using the answer to that question
• evelop, test and refine your hy othesis to further your analysis and push the case forward.
• And hone in on a solution based on the facts

Ti By asking questions and bringing to light new

Ti Throughout the analysis phase you must verbalise information, you will be able to determine whether your
your thought process to the interviewer so that they can initial hypothesis was valid or not.
see how you are thinking.

If your analysis proves that your initial hypothesis was

nter ersonal style invalid:
• Systematically follow your structure and progress to the
emember the interview is a dialogue between you and issue with the next highest priority
the interviewer. In addition to judging your Problem Solving • Then, based on the new information you receive,
abilities through the business case, they will be judging you develop a new hypothesis as soon as possible.
on Personal Impact, rive Motivation and Leadership, so
you need to work on building rapport.
am le: Based on what I’ve learnt from my analysis
Therefore during your case interview you must demonstrate so far, it appears that actually a reduction in market
that you are: share and therefore revenue is not responsible for
• ood with people (clients) Company A’s declining profitability. It appears to be a
• Convincing in your arguments cost issue. Though we haven’t lost any market share
• Can take feedback/challenge without becoming due to the increased competition in the market, our
defensive CO S have increased as we’ve tried to increase the
• That you are a good listener, etc. quality of our product but maintained the same price
to hold on to our market share. To solve the profitability
issue, Company A probably needs to look at ways
Ti In meetings with a client you need to have a non- of maintaining the additional quality, whilst reducing
confrontational, collaborative style. se this as a model CO S, or perhaps saving on costs in other areas if this
for your interactions with the interviewer. proves difficult.

Try to ensure that the interviewer enjoys the interview.

Bear in mind that they will probably be seeing twenty

or thirty candidates over a two or three day period and
interviews can blend into each other for the interviewer.
However, if they really enjoy the interview they will
remember you very positively.
 London Business School – Case Book

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Preparing Case
Casenterviews
Interviews

Calculations
Calculations and Exhibits
Most cases include a calculation and/or some slide exhibits. Ti While asking questions is a fundamental part of the
When doing calculations, e lain all of the steps you process, you must ask these questions in the context of
are taking to test
Calculations the interviewer.
your mental This illustrates
maths. You mayyour thought
be given the your structure and the issues you are exploring – rather
process and maximises the ability of the interviewer to than just firing off questions randomly or in no particular
data or you may have to request the data required to make
coach you. order.
the calculation. The challenge is doing the calculation under
the pressure of an interview environment. You will seldom
As you work through the case, it is also a good idea to
be given something that is beyond your ability, but it may be
Ti Once again, it is key to continually verbalise your summarise where you are at various stages – what you
beyond your level of self-control in a high-pressure situation.
thoughts and analysis to the interviewer. have learnt, what this learning means in diagnosing the
problem, and which issue you are going to explore next.
If you are worried about the mathematical calculation -
practice, practice, practice. Use fast maths techniques, ask
If you then get the wrong answer at the end of the
friends to test you, or search for example calculations on the
calculation, the interviewer will be able to see where you
internet. The more you practice the more comfortable you
went wrong and see whether it was a minor error which they
will be in the interview situation. When doing calculations,
can ignore, or if it was a major error which may indicate you
explain all of the steps you are taking to the interviewer. This
do not have the quantitative skills to be a consultant.
illustrates your thought process and maximises the ability of
the interviewer
If you conduct to coach
your you.
calculations in silence and just reveal
the answer at the end, and this answer is then wrong, the
interviewer
Tip: Oncewill have
again, nokey
it is idea
to as to whether
continually your mistake
verbalise your is
major or minor
thoughts and and mayto
analysis just
theassume the worst.
interviewer.

If you then get the wrong answer at the end of the calculation,
the interviewer will be able to see where you went wrong and
see whether it was a minor error which they can ignore, or if
it was a major error which may indicate you do not have the
quantitative skills to be a consultant.

If you conduct your calculations in silence and just reveal

the answer at the end, and this answer is then wrong, the
interviewer will have no idea as to whether your mistake is
major or minor and may just assume the worst.

Exhibits
Exhibits test your ability to interpret information on slides. As
you progress through your studies you will be exposed to a
wider range of exhibits for different scenarios. Read articles
and papers written by consulting firms (see the Careers
Centre Portal for some links) and business journalists; these
will often include complex charts and will help develop your
skills in this area. There are of course many exhibits in the
following case studies in this book.
 London Business School – Case Book

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Preparing Case
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Interviews

Ste – Listen and Clarify Ste 2 – Structure Ste Analyse Ste – Conclude

nce you eel that you have e hausted all the issues ou may also want to add some ne t ste s or additional
and conse uently lines o analysis nish the considerations, as appropriate, to your conclusions and
interview y summarising the situation and roviding a recommendations.
recommendation or recommendations • This shows that you recognise the limited amount of
B – Try not to just recap the analysis you have just time and information you had available in getting to your
conducted in your summary. ather, summarise the key conclusion
things that you learnt as you performed your analysis and • There may be issues you haven’t had the time or the
how these added together to reach your recommendation. information to address properly
• Cases are short – Implying to the interviewer that you
have covered every base in a complex business issue
am le I recommend that Company A looks at ways in or minutes, might indicate that you are short
to reduce their indirect costs to try to reverse the slide sighted, naive or perhaps even arrogant
in profitability. iven that the industry is characterised
by intense competition, it will be difficult to grow their
market share or to increase prices. educing CO S Ti It is much better to make reasonable
without negatively affecting the quality of the product recommendations – but also to acknowledge that you
and losing customers would be difficult. Therefore they haven’t been able to be completely exhaustive and
should look at other ways to save money through, for highlight the areas you’d like to penetrate further (if you
example, reducing factory overheads, saving money had more time).
through supply chain efficiencies, reducing head office
costs, and improving marketing spend and sales force
efficiency.

stimation Cases
An estimation case is usually in the form of something like – If you run into one of these cases:
How many gallons of white house paint are sold in the . . • Make sure that you have clarified, and therefore fully
each year? understand, the question
• emember the interviewer may deliberately not have
Other examples of estimation cases are: given you all the information
• How many tube trains are there on the nderground? • Another sensible, perceptive question to ask in this case
• How many golf balls would fit in Canary Wharf tower? is whether the paint is internal or external
• If a male and a female goat are put on a deserted island • The paint is actually for external walls only
that has plenty of food and water on it, what would be • An interviewee may be marked down if they failed to
the island’s goat population after ten years? establish that at the start, though they would probably
• How many wedding dresses are sold in the each not fail the case on this point alone
year? • Break the problem down into logical ste s
• How many divorces are there in the S each year? • Solve each step one at a time
• How many fire extinguishers are there in London
Business School?
• How many coke cans would fit in Buckingham Palace? Ti Always clarify when uncertain. or example, with
the house paint case, if you do not come from the .
you may be unfamiliar with gallons. Ask the interviewer
what a gallon is (approx . lts).
 London Business School – Case Book

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ssum tions v additional in ormation Ste Total area to e covered

• Total external ‘white’ wall space is ( , , , )
How do you decide whether you should be estimating ( , ) , million million
required information or requesting it from your interviewer? , , , sq foot (round to , million sq foot)
There is no clear answer to this, as it varies from case to
case. Ste Fre uency
• But an external wall will only be painted once every ten
Here is an example that expresses the alternatives well, years
leaving the interviewer the option of providing additional • So the total external white wall space to be painted
information if it is available. I know capacity per hour, and every year is , million/ , , sq foot.
in order to determine maximum capacity, I need to know I’ve done a lot of painting in my life and, on the side of
how many hours per day the factory is working. Can you a gallon, it says that coverage is about sq foot per
give me this information or should I make an assumption? gallon. But I’d give a wall two coats, therefore coverage
is sq foot per gallon
Sam le solution to the house aint uestion
nswer
Ste omes million gallons of white house paint are sold in the
• The population of the is about million every year.
• One quarter of the population live alone – million • ach step involves making estimations – hence the
homes name estimation case
• Three quarters live in families of between two and six • However, the estimations are (hopefully) sensible,
– I’ll assume an average of three people per household – relevant and are based on sound reasons
million homes • It is legitimate to use any information that the interviewer
• Total number of homes in the is million might have given you and to estimate other facts you
need based on your own best judgment
Ste 2 ouses or ats • While you do have some liberty to make guesstimates,
• Some of these are houses, some are ats your guesstimate is an indication of your common sense
• very single person I know lives in a at. However, ou will not be expected to know exactly how many
because I live in Central London, I’ll assume that is not people live in the , but you should have a ball park
entirely typical. I’ll assume of single people live in figure for key, likely statistics
ats, in houses. million ats; million houses uesstimating the population of the . . at billion
• Assuming the opposite for families is probably fair people is likely to make a very poor impression.
• million houses; million ats If you have no idea about the magnitude of what you
are guessing at, state that and see if the interviewer
Ste Paint colour offers up some information
• Because the is a cold country, most houses are not • State all your assumptions out loud
painted white. • Lead the interviewer through your solution
• There are centres where white houses are popular:
evon and Cornwall, some coastal towns, ‘chocolate
box’ villages. Ti That said, do not panic, and do not spend an undue
• But the population in these areas is sparse and mostly amount of time trying to get the answer to be perfect – a
live in houses. I will therefore assume that only of good approximation is fine.
ats are painted white, and of houses.
• , ats and , , houses

Ste rea to e covered house

• My house is , square feet. I’ll assume that’s
average. The height of a wall is about foot, so, in the
average house there is ( ) ( ) , sq
foot of external wall per house, ignoring windows
• The average at is about a third the size of the average
house – sq foot. ( ) ( ) sq foot of
external wall per at (assume of ats exterior walls
are on building’s exterior)
 London Business School – Case Book

ow toforce
Preparing Case
Case nterviews
Interviews

ther oints to remem er

In addition to solving the case in a sensible way, the Saying things like – very single person I know lives in a
interviewer will be looking for you to generate some rapport at. However, because I live in central London, I’ll assume
with them that is not entirely typical – is chatty and gives a little of
yourself away. It also serves to illustrate to the interviewer
that you are not just pulling your numbers out of the air

Level of detail to use in your answer This depends on whether the estimation case is given to
you as the only case in the interview or as an add-on to a
business case. ou should adjust the response accordingly

ey statistics and formulae It will be useful to know some common numbers and
formulae to get you through these types of questions

Brainteasers
Brainteasers are not cases in which a technique can be learnt, mainly because a brainteaser can be about virtually anything
and posed in any way. However, brainteasers are increasingly rarely used as interviewers seem to be realising that they do
not give a good insight into a candidate’s ability to ‘do the job’. If you get a brainteaser, just try to stay calm and ta e some
time to think about the problem. Also, and very importantly, don’t panic if you don’t manage to solve the brainteaser. They
are binary – you either get the answer or not – and, if you don’t, it certainly does not mean that you won’t get the job. It will
just be one of many data points that the interviewer will use to make a decision.
 London Business School – Case Book

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Preparing Case
Casenterviews
Interviews

Ma or Ty es o Business Case

Ty es o Business Case

In general, there are six main types of business case:

P FT ND ST M T C P CT C ST N N STM NT
N L SS NT P NS N

However, it must be remembered that these six categories are not mutually exclusive or completely exhaustive.

or example, a market entry case might require industry analysis, and an acquisition case may involve evaluating return on
investment.

Some cases may not fit neatly into any of the six major business case types, but may incorporate certain elements from one
or more of them. xamples of some of these categories are included in the practice cases within this Case Book. Please
look out for the icons at the start of each case.

P FT

Pro t m rovement
am le Company A’s profits have declined by
Profit improvement cases are probably the most common over the last eighteen months. The C O would like
business cases that you will encounter in an interview. They you to help him/her understand why this profitability
are also arguably one of the easiest as the problem is easily decline has happened and what he/she can do to return
structured through systematically examining each aspect of Company A to profitability.
the profitability relationship: Pro t evenue Costs

In this business case the interviewer will typically ask you As mentioned above,
to analyse why a firm’s profits have decreased and what a Profits evenues - Costs
firm could do to reverse this decline and bring itself back rice ariable costs uantity
to profitability. i ed costs

sing the expanded form Other valuable profitability

of the equation (in italics) formulas that you could
adds an additional degree incorporate in your analysis
of depth to your analysis include:
and ensures that you don’t
neglect the difference evenues (Price uantity)
between fixed and variable
costs during your analysis. Costs ixed costs
ariable costs

Break even quantity C/

(Price - ariable cost)
 London Business School – Case Book

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Preparing Case
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Interviews

ou should ensure that you are familiar enough with each Cost related issues to consider during your analysis
of these formulae to be able to use them in a case interview include
situation. • ixed versus variable costs
• Short-run versus long-run costs
A good way to tackle this kind of case is to use the • Capacity utilization and its impact on total average cost
profitability formula to structure your answer up front – per unit
laying this structure out for the interviewer – and then • Benchmarking costs against industry competitors
exploring each dimension in detail. • elative percentage weighting of cost components:
Cost of oods Sold: labour, raw materials, overheads
In addition to the formula, you should have a sound Operating Costs: sales and distribution, marketing,
understanding of both revenue and cost related issues. general and administrative, research and
development
evenue related issues to consider during your analysis
include An analysis of costs will vary with the type of industry
• Factors that im act rice being considered. It is very important to demonstrate
Market power sound business sense by showing the interviewer that you
Price elasticity understand, for the specific industry that you are examining
Product differentiation in your case, where the big money buckets are, i.e., that you
Opportunities for differential pricing of the same can ‘smell the money.’
product, e.g., airline seats
Methods of Pricing: cost plus, matching, market
based (think about the pros and cons of each of or example, for a pharmaceutical firm, research
these) and development expenses will be the biggest cost
Brand Implications, e.g. strength buckets. or an airline, fixed costs (i.e., leasing of or
depreciation on the planes, fuel costs, landing fees,
• Factors that im act volume maintenance costs) are huge. In the case of a firm with
xternal factors: multiple products, how the company is allocating their
• Competition (share of market, positioning/image, costs between the products and, therefore, their ability
customers, profitability, differentiation, future to properly understand which products are making
plans) a positive contribution and which are not, may be an
• Substitutes/complements important issue.
• Market forces (declining market size, technology,
regulation)
• Customers (needs – latent vs demonstrated, price
sensitivity, segmentation – product extension) ND ST
N L SS

Internal factors:
• istribution channels ndustry nalysis
• Manufacturing capacity
• Logistics/supply chain/inventory management With an industry analysis case an interviewer will ask you
to evaluate the structure and/or desirability of a particular
rowth strategies: industry.
• Sell more existing products to existing customers
• Sell existing products to new customers
• Sell new products to existing customers am le our client is the C O of Company B, a
• Sell new products to new customers; think of . manufacturer of rolling stock for the railways. He/
product extensions she would like you to help him/her understand whether
the rolling stock industry a good one to be in. Why or
why not?
Ti ew products do not need to be completely new.
A line extension, e.g., iet Coke, is classed as a new
product, so remember line extensions when thinking Porters orces is a tool to analyse industry attractiveness,
growth strategies but if you are going to use this to structure your answer,
ensure that you don’t say to the interviewer – ‘Oh, an
industry analysis case, I’ll use Porters orces.’
2 London Business School – Case Book

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Casenterviews
Interviews

Suggested phrasing: ‘There are six areas I’d like to look at

to determine whether the rolling stock industry is potentially M T
NT
a good one for our client to be in. I’d look at the overall
industry structure and market conditions as a whole, then
I’d like to look in more detail at customers, competitors, Mar et ntry
suppliers, threat of substitutes and finally what barriers
there are to entry/exit.’ ou can then analyse each of these In a market entry case, the interviewer will ask you to decide
in turn. whether a company should expand into a new geographic
region, a new/related business, or a new customer segment.
ssues to consider in industry analysis usiness
cases include
• What is the industry s structure (competitive, oligopoly, am le ‘Company C manufactures and sells costume
monopoly)? jewellery in the SA. They are considering expanding
their operations to include fashion clothing, still within
• What are the relevant mar et conditions, e.g. size, the SA. Would you recommend that they do so?’
growth, profitability, segmentation, technological
change, regulatory issues?
The three Cs (customers, competitors and capabilities) is a
• Com etition Who are the key players? How valid framework to use to solve this case.
concentrated is the industry in terms of competitors?
What are the strategic positions of the key competitors
in the market? How is market share divided? How Ti As with the industry attractiveness example, you
differentiated are competitors? What is price competition should not just blurt out to the interviewer that you are
like? What are competitor’s relative cost positions? How going to use the Cs framework. Think what you can
vertically or horizontally integrated are competitors? add to the three Cs to enhance its value.

• Su liers What is the industry’s vertical chain

of production? Who are the industry’s buyers and Another approach that can be useful is to contrast the
suppliers, and how powerful are they? What economies company’s current business model, with an outline of the
of scale/synergies are there? Are there any alternatives? proposed business model for the new business. A
What are the trends? How stable/continuous is supply? comparison between the two is a good starting point to
identify potential synergies and risks of the proposed
• Barriers to ntry it How significant are barriers to expansion.
entry and exit, e.g. economies of scale, learning curve,
high fixed costs, and access to distribution channels? general a roach to mar et entry cases is to
How frequent is entry/exit? What is the likely competitive Si e the mar et
response? How steep is the learning curve? How • De ne the mar et roduct geogra hy etc
important is brand equity? Is the industry regulated? valuate industry structure
Assess market size, profitability, and growth by
• What current and potential su stitutes exist for the asking how much capacity is in the market
industry’s product/service? Identify relevant trends (regulatory, technological,
demographic, etc.)
• verall What factors drive success in the industry, Identify key success factors
e.g. technological leadership, consumer insight, brand valuate risks
equity? That is, what are the benefit and cost drivers?
• nderstand the com etition
• Are there any trends that affect the benefit or cost ey players
drivers? Competitive situation (concentration and intensity)
Share and positioning
on’t forget to summarise, with an overall conclusion, as Core competencies (strengths and weaknesses) and
to whether this is an attractive market to participate in, in resources
terms of likely profitability and growth, and how your earlier Likely reaction to entry
analysis supports or explains that view. ifferentiation
Cost structure
 London Business School – Case Book 2

ow toforce
Preparing Case
Case nterviews
Interviews

• nalyse customer needs Highlight this prioritised list during a summary of the
Segmentation (size, profitability, share, growth) preceding discussion, in order to build up to a go/no go
rivers of purchase behaviour (product, price, recommendation. It is perfectly acceptable to say that you
promotion and place) need further information in certain areas, but that your initial
Power in the market hypothesis is:

• denti y ga s in customer needs We should (or should not) explore this business opportunity
further .
• Match etween the com any s strengths and those
needed or the new mar et
Core competencies
• Product/service portfolio C P CT
P NS N
• ifferentiation
• Management
• Workforce Ca acity ansion
• ey skills
• esources - can the firm establish a competitive Capacity expansion cases usually revolve around how a firm
advantage –v- key success factors can optimally increase its output potential.
Potential positioning and price positioning
Source of volume - steal share (from whom?) or
expand category? am le our client, the C O of Company has
iche or mass strategy? decided that he/she needs to expand Company ’s
Cost structure - scale –v- scope economies manufacturing capacity and is considering either
Capital expenditure required building a new plant in uala Lumpur, Malaysia, or
Potential returns increasing the scale of its current plant in Singapore.
Which would you recommend that it do?
• valuate arriers to entry
Customer-related:
• Product differentiation A good approach to tackling capacity expansion cases is:
• Brand loyalty ) stimate the potential benefit of capacity expansion by
• Switching costs quantifying market demand and potential revenue gains
• Access to distribution channels ) valuate the means of capacity expansion (existing
on-Customer-related: plant or new plant?). Issues to consider here include
• Proprietary technology availability of desirable location for a new plant,
• conomies of scale proximity to customers and suppliers, transportation
• Capital requirements costs, cost and availability of labour, technology, time
• xperience curve required to complete expansion, capital costs of new –v-
• egulation existing plant
) Market considerations
• valuate methods o entry ) Impact on industry demand pricing: will expansion
Build, acquire, partner? create excess capacity in the market?
uantify investment cost and risk ) Likely competitive response
) Cost/Benefit analysis
• nalyse how the rm has entered mar ets in ) Alternatives: investigate other options to ensure that you
the ast whether has it een success ul or have fully analysed the problem; other options could
unsuccess ul and why include outsourcing, leasing or acquisition of an existing
plant.
Bear in mind this is a very long list, and will not all apply in
each case. It is vital, having used this approach to structure As in the earlier cases you need to summarise your
your thought processes and initial discussion on the topic, analysis, in order to support a go/no go recommendation.
to identify a prioritised list of those areas that seem to be It is perfectly acceptable to say that you need further
the biggest potential issues/factors in the decision making. information in certain areas, but that your initial hypothesis
is: We should (or should not) explore this business
opportunity further .
22 London Business School – Case Book

ow to cefor
Preparing Case
Casenterviews
Interviews

• the ac uisition is vertical as o osed to lateral

new usiness or hori ontal increasing the rms
C ST N
current scale consider the ollowing
What are the benefits of using the market that is
c uisition keeping the entities separate?
What are the co-ordination costs associated with
In acquisition cases, an interviewer will typically ask you to using the market?
evaluate whether a company should purchase another firm. How might the firm enhance the benefits of using the
market or reduce the coordination costs associated
with using the market? That is, how might the firm
am le Company , a manufacturer of engines for improve its situation without integration?
sports cars, is considering an acquisition of Company , How does ownership add value?
which makes sports cars. Would you recommend that it What organisational issues might be introduced
does so? (agency costs) as a result of ownership?

Potential synergies When approaching acquisition cases, Ti While you may not have enough information to
the easiest thing to remember is will ?, i.e. will the answer many of the questions above, indicating that you
acquisition add value over and above the value of the two understand the importance of these questions is useful,
component companies? so do bring up a few. They are all questions that you
would find critical to answer in coaching a firm through
• nderstand the ac uiring com any s line o an acquisition to demonstrate that you understand what
usiness this type of analysis is likely to focus on.
Core competencies
Cost structure
Structure of the industry in which it currently As in the earlier cases, you need to summarise your analysis
competes in order to support go/no go recommendation. It is perfectly
acceptable to say that you need further information in
• ssess the rationale or ac uisition e g Why is certain areas, but that your initial hypothesis is: We should
the com any considering the ac uisition What (or should not) explore this business opportunity further .
otential synergies e ist
Acquire resources: increase capacity, increase
distribution, broaden product line, improve
technology, human capital, brand name, customers
(network effect)
ecrease costs: economies of scale, economies of
scope (brand, distribution, advertising, sales force,
management talent, etc.), climb the learning curve
more quickly
Other strategic rationales

• ssess the li ely res onse o com etitors i the

ac uisition occurs

• Consider organisational issues

Will potential synergies be realised?
Might the firm make any changes in advance of the
acquisition to be better positioned post-acquisition?
Is the firm in a position to perform the integration?

• Determine whether the otential revenue increase

cost decrease e ceeds the rice o ac uisition NP
analysis

• Consider alternatives to the ac uisition other

targets organic growth
 London Business School – Case Book 2

ow toforce
Preparing Case
Case nterviews
Interviews

• o financial analysis ( P analysis)

What are the up-front costs of the investment?
N STM NT
What are the projected cash in ows and out ows of
the investment and how will they occur over time?
nvestment What are the opportunity costs of the investment
upfront and ongoing?
Investment cases usually take the form of examining the What is the firm’s cost of capital?
potential purchase of a new business or installation of new What is the investments upside/downside potential
infrastructure. (sensitivity analysis)?

• Other general considerations

am le Company is considering whether or not ffect on competition - if the investment is made or
to purchase and install a new inventory management not made, what will the competition do?
system. Would you recommend that it does so? oes the investment have option value, e.g. follow-
on opportunities?
Timing: should the investment be made now?
general a roach to investment cases is
• nsure that you understand the firm and its line of • Other strategic considerations
business, and the fundamentals of the industry it
competes in • Alternatives to making the investment.

• etermine why the firm is considering the investment As in the earlier cases, you need to summarise your analysis
in order to support go/no go recommendation. It is perfectly
acceptable to say that you need further information in
certain areas, but that your initial hypothesis is: We should
(or should not) explore this business opportunity further .

The one month emergency action lan

Wee Wee 2 Wee Wee

• mail to find people • ead or practise cases • Practise at least case • Continue reading
interested in practising per day. Practise at least a day with friends. If you business articles,
case interviews with you market size estimation run out of cases, have a practising behavioral
questions during the week friend make up one based questions, and doing
• Practise answering fit on recent business news mock case interviews
questions. ocus on • very day, read T stories with friends
concrete examples articles. or each, identify
illustrating your the main business issue, • Continue reading business • Meet with someone
achievements, role on and spend m developing articles and practising from industry. Ask
teams, leadership and an issue tree for the case behavioral questions about the company,
analytical abilities as if for interview. iscuss their experience, and
with your case buddy, and if they can give you a
• each out to or see what other areas they case/provide feedback
people in industry and would have considered. on your resume. It’s
network. et at least ou’re striving to learn to vitally important to
lunch scheduled for structure things in a M C have someone review
weeks / , after you’ve way your resume before
practised cases. on’t things get too serious.
only ask them to look at • Practise different fit It’s also useful to get
your resume; they can question per day, in front a professional opinion
also give you a practice of a mirror or with a friend on your current case-
case with instant cracking ability
feedback
2 London Business School – Case Book

Fit nterviewing
Preparing for Fit Interviewing

Overview
verview
addition to
In addition to your
your case
caseinterviews,
interviews,you
youwill
willbe
begiven
givenone
oneorormore
morefitfitinterviews
interviews during
during thethe consulting
consulting interview
interview process
process withwith
firm. These
each firm. These interviews
interviewsmay
mayeither
eitherbe
becombined
combinedwith
withthe
thecase
caseinterview
interview (hybrid
(hybrid case
case and
and fit)fit)
or or conducted
conducted separately,
separately,
depending
depending on on the
the firm.
firm.

The Importance of Fit

The m ortance
Preparation o Fitshould focus on “fit” as much as
for interviews Company culture
case. All recruiters will want to see that you understand the Working long hours with teams of highly motivated
While students increasingly understand the importance of
sector and that you can illustrate why you are a good fit with individuals,
preparing for and practising case interviews, it is a common Ti If the it‘fit’
is essential
aspect ofthat your workisstyle
an interview is compatible
not working and
the culture and work of their company, not just consulting with
misunderstanding that fit interviews are less important you don’t feel like you’re gelling with the interviewer,use
their overall culture. You might find that recruiters it is
in general. You might also hear recruiters talk about behavioural style questions
in the interview process. While it is true that consulting your responsibility, not thetointerviewer’s.
understand your preferences
“behavioural interviews”. These are part of the fit selection, and how you might respond to different situations. You can
recruiters will spend less time testing fit than case, be
with questions designed to illicit responses that indicate find examples of these on the Career Centre portal.
under no illusions: a poor performance in the ‘fit’ interview
how you behave at work, rather than testing competency
can destroy your chances of securing a consulting job. If the interview doesn’t seem to be working:
examples that you may have pre-prepared. There are plenty Client
So please remember when you are preparing for your • Try confidence
to analyse on the hop what is not working
of examples
interviews of behavioural
that questions
performing well on is
on both the Career
critical toCentre
landing • Change
Clients makeyour behaviourof consulting. Typically you
the business
portal.
the job. • Often thefacing
interviewer will give
will be client very early on inyou
yourquite strong
career, andhints
if you
aboutto
progress why
beingyouaare not ‘gelling’
partner, most of your work will be with
So
In awhat does “fit”the
fit interview, mean?
interviewer does not need to believe clients. IfSo
they
partkeep
of fitasking
is about you to go
how youinto more yourself
conduct depth inwith
your
you’d make a great best friend – that’s not the point. answers, make sure that the next answer you give,
the right balance of confidence and with impact. Much of
Fit distils into
However, they4doareas:
need to: and all the others after that, are very detailed
this is assessed on how you behave in the interview. Being
• espect you
•• Want
You have the competencies to perform the role; should well prepared is essential to making a good professional
to work with you Pre aration is vital. now why you want to work for that
you bethatgoing impression that gives the recruiter confidence in your ability
• Think youfor a specialist
would area
fit into the or experienced
company’s culturehire, company (how is it different?). nderstand what they are
you will that
alsoyou’d
need beto have therepresentative
relevant experience to engage with clients.
• Believe a great with clients looking for and be prepared to illustrate your fit with this
• Be
Youhappy
have atogood
spend ten hours on of
understanding a plane withfirm
what the youdoes through anecdotes from your past experience.
• eel can
and that demonstrate
you are ‘above theyou
that bar’ onmotivated
are key dimensions
to work Tip: If the ‘fit’ aspect of an interview is not working and
Leadership
there; it is not sufficient to talk about consulting in on’t expect
you don’t to like
feel ‘wing it’ ingelling
you’re the interview
with the–interviewer,
you would notit is go
Personal
generic termsImpact into a client
your meeting not
responsibility, unprepared. Why should your interview
the interviewer’s.
rive Motivation be different
• You behave in a way that is compatible with their culture
• You are good with clients If the interview doesn’t seem to be working:

Looking at each of these in turn, here are some areas to • Try to analyse on the hop what is not working
consider in your preparation. • Change your behaviour
• Often the interviewer will give you quite strong hints
Competencies and experience
about what you may be missing.
Be really clear on what these are for the role and company
– If they keep asking you to go into more depth in your
you have applied to. They are well articulated on recruiter
answers, make sure that the next answer you give, and
websites. The Career Centre online and workshop events can
all the others after that, are very detailed
help you describe your evidence concisely using competency
and results focused language. Preparation is vital. Know why you want to work for that
company (how is it different?). Understand what they are
Understanding and motivation looking for and be prepared to illustrate your fit with this
A key area to prepare is your knowledge of the firm, and why through anecdotes from your past experience.
you are motivated to work there. All consulting firms produce
white papers and thought pieces on sectors that they work Don’t expect to ‘wing it’ in the interview – you would not go
in. Reading these can help you demonstrate knowledge of into a client meeting unprepared. Why should your interview
the individual firms. Coffee chats with alumni and current be different!
employees can also give you an insight into the individual
culture and work of the firm. Communicating that you have
done your research and why that firm is attractive to you is an
important part of the fit.
 London Business School – Case Book 2

Fit nterviewing
Preparing for Fit Interviewing

Criterion
CompetencyBased uestioning
Based Questioning
In fit interviews
interviews you
you will
willbe
beasked
askedabout
aboutyour yourbackground,
background,motivations,
motivations, experiences
experiences and
and capabilities.
capabilities. Many
Many consulting
consulting recruiters
recruiters are reasonably
are reasonably sophisticated sophisticated in the fit
in the fit interview interview
and, insteadand, instead
of just of justthrough
ploughing ploughing through the biographical
the biographical aspects
aspects of your of
CV, they
your C , theyyou
will interview will using
interview you using
a technique a technique
called competency called criterion
based based questioning:
questioning:

Fit Interview – Competency Based Questioning uses 6 sources of evidence

Fit nterview Criterion Based uestioning

eneral e
General experience
erience

nowledge attitudes

Pro
Knowledge / attitudes SSpecific
eci c e am les
examples

Probe

e e
Pr P

e
o ro

oPbro
eb

Pr
e

Candidate s a ility on a s eci c

Candidate’s ability on a specific
criterion
competency, ege.g.integrity
integrity
not
(not leadershi
leadership)
Pr

e
ob
o

Probe

Pr
e
be

Pr
e

o
o
Pr

thersappraisal
a raisal Sel
Self evaluation
Pro

Others’ evaluation

Comparison
Com arison with
with others
others

In criterion based questioning, the interviewer will explore An explanation of the six probing questions is as follows:
In detail
in competency based questioning,
the candidate’s experiencethe andinterviewer
ability onwill explore
a specific An explanation of the six probing questions is as follows:
criterion,
in detail thee.g., drive, teamwork,
candidate’s experience entrepreneurial
and ability onspirit.
a specific eneral e erience
•competency
Problem Solving: criterion
, e.g., drive, – tested
teamwork, mainly through
entrepreneurial the
spirit. •General
The amount of experience a candidate has had overall in
experience:
case • using/developing that criterion
The amount of experience a candidate has had overall in
• Personal Impact: tested
Problem Solving: criterion – listening/understanding/
mainly through the case • using/developing
xample – esire that
to excel: How important has working
criterion
responding, empathy, in uencing,
• Personal Impact: listening/understanding/ teamwork, confidence
responding, hard and being driven been
• Example – Desire to excel: How in your career has
important to date?
working
–v- ego, sense of humour
empathy, influencing, teamwork, confidence • hard and being driven been in your career to date?
• Leadership: criterion – integrity, maturity, willingness to S eci c e am les
• –v- ego, sense of humour
take personal risks, ability to take initiative • Specific examples where a candidate displayed that
Specific examples:
•• Leadership: integrity, maturity,
rive and Motivation: criterion willingness
– enthusiasm, to take
desire to criterion
personal risks, ability to take initiative
excel, self-development, energy, perseverance •• Specific
xample examples
– esire towhere a candidate
xcel: escribe adisplayed
previous that
• Drive and Motivation: enthusiasm, desire to excel, criterion
achievement for which you had to strive
The self-development,
interviewer will exploreenergy, perseverance
these criteria by probing the • Example – Desire to Excel: Describe a previous
interviewee in detail on the six different topics highlighted Sel achievement
evaluation for which you had to strive
The
in theinterviewer
slide above, will though
exploreof these
courseskills by will
they probing the not
probably • How the candidate assessed his/her ability on that
interviewee
run throughin alldetail on the six
six probing differentfor
questions sources
each andof evidence
every Self-evaluation:
criterion
highlighted
criterion in the
they are slide above,
testing though of course
an interviewee they will
on, because of time • How xample – esire toassessed
the candidate xcel: Could youability
his/her have ondone
thatmore to
constraints.
probably not run through all six probing questions for each make sure you achieved your full potential over the past
competency
and every competency they are testing an interviewee on, • three
Exampleyears?
– Desire to Excel: Could you have done more to
because of time constraints. make sure you achieved your full potential over the past
three years?
2 London Business School – Case Book

Fit nterviewing
Preparing for Fit Interviewing

Com arison with others To re are or the t as ect o your interview

• How the candidate compares with others on that • denti y
criterion ou should go through your C and experience to
• xample – esire to xcel: How would you compare date, both professional and personal and, for each
your level of drive and motivation to succeed against the criterion, come up with at least two anecdotes which
top quartile of your peers at ..? demonstrate your experience, abilities, etc., on that
criterion.
raisal
• What others think of the candidate on that criterion • Pre are
• xample – esire to xcel: How did your manager in Once you’ve done this, write an answer to each of the
role appraise your desire to excel? six probing questions for each of your two/three/four/five
examples
nowledge attitudes
• How well the candidate understands the need for that • Practise
criterion in consulting If you can, run your examples and answers by a fellow
• Whether the candidate has a good perspective on the student or colleague (preferably someone who has had
attributes necessary for good performance on that some consulting experience) and see if your examples
criterion and answers are convincing
• xample – esire to xcel: In what circumstances do
you think it would it be appropriate to give up on an
objective? Ti Once you get into an interview – a situation which is
stressful, and at which you will be required to give well-
developed, relevant answers very quickly – you will be
grateful for this level of preparation.

Two ey Why do you want to uestions

In fit interviews you will be asked about your background, will be well aware that most people joining consulting firms
motivations, experiences and capabilities. Many consulting from their MBA view it as a reasonably short term, career
recruiters are reasonably sophisticated in the fit interview accelerating move. As such, stating that you have always
and, instead of just ploughing through the biographical wanted to be a consultant and that your ultimate aim is
aspects of your C , they will interview you using a technique to become a Partner in their firm may come across as
called criterion based questioning: In addition to testing sycophantic and somewhat less than true.
the above criterion, the interviewer will almost certainly
ask you two key questions: Why you want to go into Conversely, saying that you want to work in consulting for
consulting , and Why their articular rm . our two to three years as a career accelerator may be viewed as
‘story’ is very important in answering these questions. ou uncommitted. It is all about balance
should very succinctly be able to tell the interviewer why
you have made the choices that you have made to date, If you do envision yourself being in consulting long term
e.g. choice of college, choice of post college/pre MBA work there is nothing wrong with saying that, but you might want
experience, choice of London Business School over other a slightly less emphatic approach than the one above.
MBA schools and, owing from all this, why you are now
seeking a position in consulting and why, in particular, their If you believe that you won’t be in consulting for the long
firm. term, be honest about the fact that you may want to look
elsewhere after a while. or example: My ultimate goal is to
This story needs to convey to the interviewer exactly why run my own business in the travel industry, and I think that
you are at London Business School and convince him/her consulting as a medium term post-MBA career will provide
that you are serious about a career in consulting and about me with great experience to do that in the longer term.
his/her firm in particular. Having said that, if I really enjoy consulting, I am very open-
minded about making it my long term career.
etting the balance right in your answers to these two
key questions is important. emember that most of your ou will also certainly be asked a question about Why
interviewers were in your shoes not too long ago, and they their firm in particular? . ou must be able to articulate a
 London Business School – Case Book 2

Fit nterviewing
Preparing for Fit Interviewing

few reasons why

few reasons why that
that firm
firmisisthe
thebest
bestfitfitfor
foryou.
you.Readeadthe
the However,
However, do do not
not put
put yourself
yourselfunder
underundue
unduestress
stressresearching
website, go to the company’s presentation, talk
website, go to the company’s presentation, talk to their to their researching little known facts about the
little known facts about the firm or trying to come firm or trying to
up with
representatives after the
representatives after thepresentation,
presentation,use usethe
theConsulting
Consulting come up with genius questions that no-one else
genius questions that no-one else will ever have thought of. will ever
Club discussion threads and talk to Career
Club discussion threads and talk to Career Centre. Services. have thought of.isThe
The interviewer onlyinterviewer is onlythat
trying to assess trying
yourtointerest
assessinthat
your interest in their firm is genuine and
their firm is genuine and that you have good reasonsthat you haveto good
back
reasons to back up this interest. eep that in
up this interest. Keep that in mind when you’re preparing mind when
you’re
answers preparing answers to this question.
to this question.

Do
Do you
you have
have any uestions for
any questions or me
me?
The fit element
The fit element that
that isis most
mostcommon
commonininconsulting
consultinginterviews
interviews
and is often overlooked by candidates as being a fitasquestion,
and is often overlooked by candidates being Tip: Spend
Ti Spend time
time preparing
preparingfirm
firmspecific
specificquestions
questionsbefore
before
a fit question, is the o you have any questions
is the “Do you have any questions for me?” question that for me? each interview.
interview. Try
Try to
to make
makethese
thesehigh
highcalibre
calibrequestions,
questions,
question that mostwill
most interviewers interviewers
pose at thewill
endpose at the
of their end of
interviews. not just questions
questions that
thatcan
canbe
begleaned
gleanedfrom
fromaaquick
quickscan
scan
their
Your questions communicate your level of interest in level
interviews. our questions communicate your their of of the company’s
company’s website.
website.
interest
case, their firm, the type of work that they do and also they
in their case, their firm, the type of work that
do and also demonstrates
demonstrates your ability to–ask or not – yourquestions.
insightful ability to ask And finally, make sure you listen to and show interest in the
insightful questions. And finally,
response make
and thinksure youasking
about listen atofollow-up
and showquestion
interest to
in the
response and think about
demonstrate that interest. asking a follow-up question to
demonstrate that interest.

A Two-Way Process
Two Way Process
Fit interviews are very much two-way conversations between It is also very important to go to interviews having confidence
it interviews
the interviewerareandvery much two-way
interviewee. conversations
You should feel that you are It
in is also very
yourself andimportant to goAstoI interviews
your abilities. mentionedhaving
earlier, students
between the interviewer and interviewee.
interviewing the firm as much as they are interviewing ou should you.
feel In confidence
can be too concerned about being career As
in yourself and your abilities. I mentioned
changers –
that you are interviewing the firm as much as they
addition to having insightful questions about the firm, try to are earlier, students can be too concerned
forgetting that 80% of people who go through theabout being career
consulting
interviewing you. Inthat
analyse the people addition
you areto speaking
having insightful
with whenquestions
you’re changers – forgetting that
selection process are career changers.of people who go through
about the firm, try to analyse the people that
interviewing with that firm. If you get the job, you will you arealso the consulting selection process are career changers.
speaking
need to sitwith
on awhen you’re
ten-hour interviewing
flight with peoplewith that to
similar firm. If you
your
get the job, you will also need to sit on a ten-hour ight with Tip: Do not feel that you have to apologise for your past
interviewers and work very, very long (often stressful) hours
people similar to your interviewers and work very, very long careerochoices.
Ti not feel However,
that you haveas mentioned previously,
to apologise for yourdo
past
with them. Is that really something you want to do?
(often stressful) hours with them. Is that really something have a good story that illustrates a ‘train of thought’
career choices. However, as mentioned previously, do
you want to do? running
have through
a good your
story career
that decisions.
illustrates a ‘train of thought’
‘Career Search’ is not just about getting a job (any job). It is
running through your career decisions.
about getting the right job – even though it may be hard to
‘Career Search’ is not just about getting a job (any job). It is
remember that at times. The recruitment opportunities at Also think hard about what you have learnt and how this
about getting the right o – even though it may be hard to
London Business School are unlike anything else you will learning applies to a new career in consulting. There are
remember that at times. The recruitment opportunities at Also think hard about what you have learnt and how this
experience in your life. You have a whole array of fantastic aspects of almost any job that can relate to consulting.
London Business School (especially if you are participating learning applies to a new career in consulting. There are
firms all wanting to hire talented students – all of whom Consulting firms are looking to hire the best people,
in ‘on-campus recruitment’) are unlike anything else you will aspects of almost any job that can relate to consulting.
are prepared to come to you and lay out their wares. Make regardless of background, so remember that and have
experience in your life. ou have a whole array of fantastic Consulting firms are looking to hire the best people,
sure that you don’t waste that opportunity by not having the confidence when you interview.
firms all wanting to hire talented students – all of whom regardless of background, so remember that and have
confidence to ensure that the firm you end up working for is
are prepared to come to you and lay out their wares. Make confidence when you interview.
the one you really want to work for. Getting the job is not the
sure that you don’t waste that opportunity by not having the
only goal here. The goal is to be happy and professionally
confidence to ensure that the firm you end up working for is
satisfied long after you have left London Business School,
the one you really want to work for. etting the job is not the
whether that is in consulting or in another field altogether.
only goal here. The goal is to be happy and professionally
satisfied long after you have left London Business School,
whether that is in consulting or in another field altogether.
2 London Business School – Case Book

Fit nterviewing
Preparing for Fit Interviewing

dditional Resources
Additional esources
Go to the dedicated consulting pages on the Career Centre Portal:More you should loo into
ssential
https://careercentre.london.edu/portal/consulting/index.php
• Career Services’ Portal Pages • Previous London Business School and other B-schools’
•We Career Services training
also recommend sessions
joining the for consulting
Consulting Club for access to further case
case books
support:
• Consulting Club posts (Portal and Campus roups)
http://clubs.london.edu/consultingclub/about/ • ault and Wet eet guides
• irms’ websites – O OT go to an interview with a firm • www.caseinterview.com
Don’tbefore
forgetyou go on its
to check website
firms’ own web-sites too for lots of specific case and fit preparation resources.
Cases for Practice

Bain & Company

BCG
L.E.K. Consulting
Marakon
McKinsey & Company
Monitor Deloitte
Roland Berger Strategy Consultants
Solon Management Consulting
Strategy&
 London Business School – Case Book

Bain Com any

ntertainment Co P FT

Case Summary or nterviewee

Situation
• Premier touring live entertainment company
• Company has enjoyed five years of tremendous growth in ticket sales and revenue

Com lication
• While ticket sales and revenues have continued to grow steadily, profitability growth has lagged

ey uestion
• What is the root cause of the client’s lagging profitability?

Please follow the steps below to guide you through the case.

Case structure Ste

Structure nalyse dvise

Frame the se framework to Dig dee er evelop insights Synthesise what Make a
problem guide analysis you learned recommendation

How would you frame the problem?

Suggested ramewor evenue and Costs

Pro t

evenue Cost

Price uantity Fi ed aria le

Note or nterviewer The quantitative component of this case is very straight forward. Intent is for the bulk of the interview
to be spent on the qualitative elements.
Copyright - by Bain Company, Inc. All rights reserved
 London Business School – Case Book

Bain Com any

ntertainment Co

Case structure Ste 2

Structure nalyse dvise

Frame the se framework to Dig dee er evelop insights Synthesise what Make a
problem guide analysis you learned recommendation

iven this framework, what questions would you ask your interviewer?

denti y the drivers that matter

evenues Costs

Price uantity Fi ed aria le

nterviewee eed to understand revenue drivers eed to understand cost drivers

Has there been a What has happened How have ixed How have ariable
significant change in to of tickets sold in Costs ( C) changed Costs ( C) changed
ticket prices? past five years? in past five years? in past five years?

nterviewer Average ticket price Ticket sales volume C have grown as C from stop to stop
changes from stop varies greatly the client has added are generally very
to stop. Cities with from stop to stop. more tour stops. consistent. Primary
largely wealthy ntertainment Co. is C are generally drivers of differences
populations typically more popular in some allocated by length are venue rental
have higher avg ticket places than others of stop
prices

Copyright - by Bain Company, Inc. All rights reserved

 2 London Business School – Case Book

Bain Com any

ntertainment Co

hi it ntertainment Co nancial results

C
, M
( – )
ntertainment Co revenue

ross margin
ross profit M M M M M M

hi it 2 ntertainment Co ro t margin y tour sto

ro t margin
ntertainment Co

-
City
City

City

City

City

City

City

City

City

City
City

City
City

City

City
City
City

City

City
City

City

Show (width equals revenue)

of shows:
Occupancy rate ( ):

Copyright - by Bain Company, Inc. All rights reserved

 London Business School – Case Book

Bain Com any

ntertainment Co

hi it Most recent er ormance results rom selected tour sto s

City City B City C

Average ticket price:
Total shows:
Total attendance: , , ,
Occupancy rate:
ariable costs per show:
ixed costs M M . M

of stops in previous years:

ear of first visit:

Case structure Ste

Structure nalyse dvise

Frame the se framework to Dig dee er evelop insights Synthesise what Make a
problem guide analysis you learned recommendation

How can you dig deeper to find the source of the problem?
o you have a hypothesis about what is causing the problem?

ints
hi it Interviewee should immediately recognise disparity in growth of revenues and profit.
hi it 2 Interviewee should point out that the unprofitable shows have shorter LO and occupancy rates.

Copyright - by Bain Company, Inc. All rights reserved

 London Business School – Case Book

Bain Com any

ntertainment Co

Develo a hy othesis that you can test dig dee er into the drivers that matter

y othesis ntertainment Co s slow growth in ro ta ility is a result o e ansion to mar ets that are
un ro ta le or marginally ro ta le

evenues Costs

Price uantity Fi ed aria le

nterviewee Avg ticket price Attendance ranges ixed costs (which ariable costs range
varies from from to are allocated by run from -
to as result of different length) vary from M
run lengths and to M
occupancy rates

nterviewer How does profitability vary from city to city?

Most recent er ormance results rom selected tour sto s

Dar grey rows to e calculated y interviewee
CT CT B CT C
Average ticket price

Total attendance , , ,
ross revenue 2 M M 2M

ariable costs per show

Total shows
Total variable costs . M . M . M
ixed costs M M . M
Total costs M M M
ross ro t M M 2M

Copyright - by Bain Company, Inc. All rights reserved

 London Business School – Case Book

Bain Com any

ntertainment Co

Case structure Ste

Structure nalyse dvise

Frame the se framework to Dig dee er evelop insights Synthesise what Make a
problem guide analysis you learned recommendation

What insights can you draw from the data you have?

Dig dee er to understand the im lications o the ro ta ility analysis

ey insights

nterviewee • It appears that ntertainment Co. is growing ticket sales and revenue at the
expense of profitability
• They should be more selective about the markets that they enter. Several
possibilities exist for continued growth.
Stay longer in the good markets and don’t go to the bad markets
educe cost of the show
evelop a lower cost show format for the marginal cities
Combination of the above

nterviewer • educing the cost of the show is not an option for artistic reasons
• We have some data on ticket sales by week in two markets that I would like you to
analyze
• ntertainment Co. has launched a new lower cost format show in a few markets. The
new show will be performed in Ice-rinks (rather than in Theatres like the current show)
I have the initial profit analysis of the most recent Theatre and Ice-rink show in three
markets for you to analyze

Copyright - by Bain Company, Inc. All rights reserved

 London Business School – Case Book

Bain Com any

ntertainment Co

hi it Theatre show tic et sales y wee

City City C

, ,
Tickets sold

Max capacity Max capacity

Tickets sold per show

Tickets sold per show

, ,

Avg. attendance Avg. attendance

, ,
Show

Show

Show
Show

Show

Show

Show
Show
Show

Show
Show

Show
Show

Show

Show
Show

ey nsights
City Some markets continue to have strong attendance throughout (suggesting that they could add additional shows
without dramatically decreasing occupancy)

City C Other markets already see a significant drop-off in sales by the end, suggesting that there is no additional
capacity for adding shows and that the city may not be able to adequately utilize the Theatre format with it’s very high C

Copyright - by Bain Company, Inc. All rights reserved

 London Business School – Case Book

Bain Com any

ntertainment Co

hi it ce rin ormat introduced in 2 to o er lower cost o tion or younger eo le amilies

Total tic ets sold verage tic et rice

. M

Ice-rink

Theatre Theatre
.

. .
Theatre Ice-rink

Theatre occupancy rate Avg of shows per stop

hi it verage cost structure o two show ormats

Fi ed costs er city visit aria le cots er show

M

Other
.

Marketing Accomodations
Talent transport
enue rent Other
Stage
Accomodations
transport
Crew
compensation enue rent
Crew
compensation
Stage
construction Marketing Artist
compensation Artist
Talent transport
compensation
.

Theatre Ice-rink Theatre Ice-rink

ey nsight
Fi ed costs er visit Theatre format has very high fixed cost base relative to Ice-rink. This suggests a need to
maximize utilization (i.e., sell as many tickets as possible)

Copyright - by Bain Company, Inc. All rights reserved

 London Business School – Case Book

Bain Com any

ntertainment Co

hi it Theatre and ce rin customer demogra hics

o attendees y household income Share o o ulation y age

-
-

Theatre ticket buyers Ice-rink ticket buyers Theatre ticket buyers Ice-rink ticket buyers

ey nsights
o attendees y household income Customers appear to have the same profile, which is not what the client
expected to happen when they introduced the new show format.

2 Share o o ulation y age In fact it seems a greater proportion of Ice-rink customers are older and slightly
wealthier.

Copyright - by Bain Company, Inc. All rights reserved

 London Business School – Case Book

Bain Com any

ntertainment Co

hi it Most recent Theatre and ce rin results

CT CT CT Z
Theatre total tickets sold , , ,
Theatre gross profits M M -
Theatre incremental profit per customer
of Ice-rink tickets sold
Ice-rink gross profits . M
Ice-rink net profit per customer
eplacement ate : : . M
Breakeven Cannibalization
atio of incremental Theatre profit per customer to Ice-rink net profit per customer. We compare incremental to net because we want to understand
the profit impact of losing one additional Theatre ticket assuming that erson ought a ce rin tic et instead
of additional Theatre tickets that would have needed to be sold to match the profit of the Ice-rink format

ey nsights
City Some markets may be able to sustain both formats without significant cannibalization. Therefore using both
formats in the market may make sense.

2 City Some markets appear to be more susceptible to cannibalization (i.e. only incremental Theatre tickets
would have exceeded the profit of the Ice-rink tickets. ntertainment Co. should probably stick to only the Theatre
format.

City Z Theatre format is not always profitable. emember that there are very high C so if you cannot sell a large of
tickets it might make sense to use the lower cost format.

Copyright - by Bain Company, Inc. All rights reserved

 London Business School – Case Book

Bain Com any

ntertainment Co

Case structure Ste

Structure nalyse dvise

Frame the se framework to Dig dee er evelop insights Synthesise what Make a
problem guide analysis you learned recommendation

How would you bring together everything you have learned?

o ac to your initial hy othesis

ey nsights
• The root cause of the slower growth in profitability is that as ntertainment Co. has grown they have not segmented
their markets and used the appropriate show format or length of stay
Theatre show has very high C and therefore should only be taken to cities that can support a lot of shows and
sell a lot of tickets, otherwise Ice-rink format may be a better choice
Some markets can probably sustain both the Ice-rink and Theatre formats
Cannibalization is a risk that must be mitigated. Ice-rink format should only perform in cities where it is very likely
to not impact Theatre sales

Copyright - by Bain Company, Inc. All rights reserved

 London Business School – Case Book

Bain Com any

ntertainment Co

Case structure Ste

Structure nalyse dvise

Frame the se framework to Dig dee er evelop insights Synthesise what Make a
problem guide analysis you learned recommendation

This is O client. What do you tell them?

ecommend a ractical course o action to achieve results

ey nsights
• Improve profitability by segmenting mar ets
Large markets (e.g., City A) where cannibalization is relatively low risk should be targeted for both the heatre and
the Ice rink format
Medium markets (e.g., City B) should be limited to only the heatre format to avoid cannibalizing the more
profitable Theatre ticket sales
Small markets (e.g., City C) should be limited to the Ice rink format which can deliver greater profits than Theatre

• esult will be higher enetration in large mar ets im roved ro ta ility per ticket sold in the medium mar ets,
and greater ro ts (at a lower risk due to lower cost base) in the small mar ets

Copyright - by Bain Company, Inc. All rights reserved

 2 London Business School – Case Book

Bain Com any

ntertainment Co

Case Summary or nterviewer only

Detailed case answer ntertainment Co

• Client is a live entertainment • Possible solutions include: • However introduction of the

com any that tours around the voiding un ro ta le mar ets new ormat creates a ris o
world staying or longer in ro ta le canni ali ing the very ro ta le
mar ets and introducing a new Theatre show in certain mar ets
• In recent years, the client has lower cost show ormat so canni ali ation must e
witnessed slower than e ected mitigated y a ro riate tour
growth in ro ts despite double- • The Theatre ormat has very high lanning
digit growth in ticket sales and ed costs as tic et rices are
revenue high and show run lengths are • Client should lan tours so that
long so once costs have been they only go to mar ets with
• Cause of the slower profit covered, every incremental ticket is ce rin that are not suita le
growth is that due to expansion, profitable or Theatre i e not enough
ntertainment Co. has started Theatre sales to cover high FC
to visit several cities that do • ce rin costs are su stantially or can sustain oth ormats
not sell enough tic ets to cover lower and run lengths without causing signi cant
costs are shorter so it may be canni ali ation and stay or
more appropriate in certain more shows in good mar ets
underperforming Theatre markets where they can li ely sell more
tic ets

Copyright - by Bain Company, Inc. All rights reserved

 London Business School – Case Book

Bain Com any

ntertainment Co

Detailed Case Structure ntertainment Co

Structure nalyse dvise

Frame the se framework to Dig dee er evelop insights Synthesise what Make a
problem guide analysis you learned recommendation

How would you iven this How can you What insights can How would you
frame the problem? framework, what dig deeper to find you draw from the bring together
questions would you the source of the data you have? everything you have
isaggregate ask your interviewer? problem? learned?
drivers and Some markets have
components of rill into price and ig in to price and much lower ticket Ice-rink show has
revenue and cost cost drivers over time cost drivers by market prices and attendance, shorter run lengths,
or by different market suggesting that they may be appropriate
o you have a may be inappropriate where Theatre cannot
hypothesis? for such a high cost sustain long runs and
product cover C. But in cities
As ntertainment with long Theatre runs,
Co. has grown they Ice-rink format should
have started to be avoided
Fist ass

visit cities that are

unprofitable

uantitative? raw insights Synthesize the new This is your client.

n de th analysis

data What do you tell them?

Compare the Potentially
profitability across introduce a lower cost Cannibalization Plan your tours so
multiple cities and show may be a problem in that you choose the
look for root causes of select markets. Market right format for the
variances segmentation will be right markets and sell
required to avoid it the most profitable
tickets for that market

Copyright - by Bain Company, Inc. All rights reserved.

Bain Company grants the London Business School permission, without charge, to use, copy, modify, merge, publish, distribute, sublicense, and/or sell copies of the content in
the above Bain Company practice case (the Works ) subject to the following conditions:

The above copyright notice set forth at the bottom of each page and this permission notice shall be included in all copies or substantial portions of the Works.

TH WO S A P O I AS IS , WITHO T WA A T O A I , P SS O IMPLI , I CL I B T OT LIMIT TO TH WA A TI S O

M CHA TABILIT , IT SS O A PA TIC LA P POS A O I I M T. I O T SHALL TH A THO S O COP I HT HOL S B LIABL O
A CLAIM, AMA S O OTH LIABILIT , WH TH I A ACTIO O CO T ACT, TO T O OTH WIS , A ISI OM, O T O O I CO CTIO WITH TH
WO S O TH S O OTH ALI S I TH WO S.
 London Business School – Case Book

BC
ce erg P FT

uro e

Case at a glance (for the interviewer only)

Part Part B Part C

Structure hy othesis nter retation numeracy ecommendations summary

ening statement Present the candidate with the slide Ask the candidate:
Our client is Iceberg, a major titled: ice cream tub prices and What strategies could Iceberg use
global branded ice cream producer. tell them: to address the performance issue in
Iceberg develops, manufactures and The Associate on this case prepared urope and how would you prioritise
markets ice cream products and this slide. What is causing the them?
sells to retailers who, in turn, sell to performance issue in urope?
the end consumer. Ice cream is one (If the candidate is struggling, ask:
of the most profitable products that How should Iceberg segment the Tests strategic thinking, creativity
Iceberg makes. The business has market and what is happening in each and ability to prioritise and provide
grown at led by orth America segment? ) reasons
and developing markets. However,
Iceberg has recently seen poor
growth and competition intensifying Tests business intuition and What are your recommendations for
in the uropean ice cream market, in the ability to interpret data, Iceberg’s management?
particular from supermarkets’ own- draw conclusions and identify
brand ice cream. Iceberg management implications
are sure they have great products: Tests ability to synthesize and
they continue to win in consumer taste structure recommendations,
tests, there is a strong pipeline of How does the market opportunity business intuition and empathy
planned product launches, and they compare to Iceberg’s business
have strong brands in many markets. today?
Management believes this allows them (If the candidate is struggling,
to sell their products at a higher price ask: Which segment would you
than the competition. What could recommend Iceberg focus on and
be causing the performance issue in what is the margin and volume
urope? potential in that segment? )

Tests ability to structure a Tests numeracy, ability to make

problem and state and explain a reasonable assumptions, degree
clear hypothesis of confidence/insecurity and
personality in the face of challenge
to their work (ask Are you sure
you’re right? )
 London Business School – Case Book

BC

ce erg

ey case insights an e cellent candidate might uncover (for the interviewer only; do not tell the candidate)
• There are market segments: • Iceberg is winning market share in • In any given segment
economy, mass market and a shrinking mass market recommended: Iceberg’s volume,
premium-priced products margin or profit potential; its
• Premium segment is likely growing, competitiveness to customers
• Iceberg competes primarily in the as brands distinguish themselves and consumers (realising they are
mass market segment (defined as from the mass market to retain and different); and its ability to win
price points . – . ), with a grow margins against branded and private label
market share by value ( m products
out of m), by volume • To compete, Iceberg should:
( m L out of m L) rive volume to improve plant
utilisation ( in Western This case is long and candidates
urope, vs. in orth would not necessarily be expected
If the candidate delineates America) and reduce unit to finish it
segments slightly differently, their costs, so that it is better able to
market size and share numbers compete on price in the mass
would differ accordingly market
Increase presence in premium
(relying on taste performance
• Mass-market consumers are and strength of brand)
becoming more price conscious Optimise drivers of consumer
(sales of . - . are strongest purchasing behaviour besides
in the mass market category) price (e.g. packaging /
advertising / shelf placement)
• In the mass market and economy Potentially expand in the upper
segments, Tesco is undercutting end of the economy market,
Iceberg and other competitors although its retailer purchase
on price, growing the economy price may be less competitive
segment and pushing down
Iceberg’s revenue in the mass
market
 London Business School – Case Book

BC

ce erg

hi it ice cream tu rices (show to candidate)

Mar et rice architecture am le roducts

. - .

. - . Haagen azs
Ben errys
. - . Tesco inest
. - .
etail price segment /L

. - .

. - .

. - .

. - . Iceberg L anilla .

. - . Tesco L anilla .

. - .

. - .

. - . Tesco al. L anilla .

Market value of price segment at retail price ( m)

Iceberg ice cream tubs Other company ice cream tubs

Source: ielsen: Store research; BC analysis

hi it ce erg cost structure o 2L vanilla ice cream tu in

(show to candidate if this data is requested)

. .

.
.

.
Product cost /L

.
. .

.
.

.
.
.

.
Ingredients Packaging Production istribution Product Advertising Overhead Profit etailer
cost promos purchase
price
Source: Client data; BC analysis
 London Business School – Case Book

BC

ce erg

hi it ce erg glo al ice cream roduction lant utilisation (show to candidate if this data is requested)

uro e N merica

Max Max

A B C HI L A B C H I

Western urope C

Production plant size Production plant size

Productive capacity nused capacity (based on hrs per year)

am le o a ossi le case structure (for review after the case interview)

What can ce erg do to im rove their com etitiveness in uro e

Product Pricing
Cost structure Com etition
com are with com are with

Other branded ice creams Other branded ice creams ixed costs istribution channels

Own label ice creams Own label ice creams ariable costs Shelf positioning

Substitutes Substitutes
Promotions
(other desserts) (other desserts)
 London Business School – Case Book

BC

ce erg

Di erentiation etween oor average and su erior er ormance (for review after the case interview)

Poor Per ormance verage Per ormance Su erior Per ormance

Framing ro lem Suggests what Sets out a structure for Sets out a clear, logical
rioritising issues supermarkets are doing analysis; identifies price structure for analysis;
without clear rationale segments, and possibly recognises that market
or structure; does not that supermarkets have has three segments,
consider differences power because Iceberg is with Iceberg strongest in
across the range of reliant on them to sell its the mid-price segment;
supermarket products products identifies need to
understand Iceberg s
ability to compete

denti ying relevant Starts asking for a variety Asks a series of specific efines information
in ormation of information – no clear questions related to a needed, including
logic single logical line; identifies rationale; identifies key
some key points from points and explains their
the graphs; can process implications from the
answers and move on graphs presented

unning calculations Calculates incorrectly that Correctly calculates ealises lowering price
drawing conclusions rom Iceberg cannot compete at Iceberg can compete at may dilute margins and
acts supermarket price points lower price points except suggests ways to avoid;
Tesco alue and quantifies identifies production
margin utilisation issue and
proposes solution;
Calculates volume /
revenue / profit potential

denti ying ey im lications Limited or eeds to be asked Identifies the key case
and ne t ste s illogical additional for ideas on potential insights; drives to
demonstrates creativity recommendations solutions; has a few ideas solutions on their own;
on where to improve; for how to improve prioritises a list of alternate
formulaic approach opportunities; goes beyond
(e.g. spend more on the obvious throughout the
marketing) case process
 London Business School – Case Book

The nterview Process

BC

M T
Cu id s rrow NT

North merica v nited ingdom

Case at a glance (for the interviewer only)

Part Part B Part C

Structure numeracy nalysis usiness udgement ecommendations summary

Do not share any e hi its until Candidate is expected to continue Ask the candidate:
Part B with their case analysis. Share facts of So, what recommendations would
the case or exhibits (see the following you make to Cupid’s Arrow’s
Structuring the case pages for details) when these are management?
specifically asked for by the candidate.
Our client is Cupid’s Arrow, a
successful subscription-based online When sharing an exhibit, ask the Tests ability to synthesize and
dating agency. They currently operate candidate: structure their recommendations,
exclusively in the S market, where What does this exhibit tell us? How business intuition and empathy
they are the market leader. Cupid’s might this affect Cupid’s Arrow’s entry
Arrow are considering entering the into the market?
online dating market. What are
the main factors that they should
consider? Tests business intuition and
the ability to interpret data,
draw conclusions and identify
Tests ability to structure, implications
hypothesise and think creatively
around a problem

2 Mar et si e estimation

How would you estimate the size of

the online dating market? (if the
candidate is struggling, clarify this as
being revenue per year )

Tests structure, numeracy and

ability to make reasonable
assumptions

What does this tell us so far about

the attractiveness of the market for
Cupid’s Arrow? What else do we need
to think about?
 London Business School – Case Book

BC

Cu id s rrow

ey case insights an e cellent candidate might uncover (for the interviewer only; do not tell the candidate)
• The market will nearly double The soul mates segment • ntry into the market could be
in size over the next years and is may already be quite via organic growth or syndicated
quite fragmented with at least a few competitive: HappyHearts ( from the existing S Cupid’s Arrow
new entrants share and p.a. growth) and site, but would be fastest via
Lovebirds ( share) together acquisition and rebranding of a
• Profit margin is healthy at per have share and the soul smaller site, for instant network
customer ( p.a. per customer) mates segment is only of effects between subscribers. iven
the market the anticipated pace of growth in
• Cupid’s Arrow may struggle in may increasingly shift the market and the likely lock-in
entering the market (candidate towards soul mates, like the effect in this market based on the
may take a slightly different view S as online dating loses its size of a subscriber base,
of the future direction of the stigma, but it is not there yet acquisition and rebranding of a
market and optimal strategy, but is smaller site would be advisable
expected to support their position • Overall, the market is attractive,
with similar insights): but may require Cupid’s Arrow to
There is greater stigma around adapt its image / focus in the This case is long and candidates
online dating in the ( ) more towards the interests of would not necessarily be expected
than in the S ( ), although customers (socialising / casual to finish it
this is declining over time dating) and to form a clear strategy
Cupid’s Arrow’s core strength to compete against the aggressive
in the soul mates segment in growth of HappyHearts and the
the S ( of the S market), threat of new entrants
is less applicable in the
where this segment comprises • Along with a clear strategy,
only of the market aggressive marketing campaigns
(socialising and casual dating and friend referral benefit schemes,
segments comprise of etc. are key to establishing a
the market) presence in the market

Facts to share with the candidate i as ed or s eci cally (for the interviewer only)
• Cupid’s Arrow currently has S • Set-up costs for Cupid’s Arrow • hi it unning costs or a
revenues of S m per year in the for organic growth ty ical online dating agency
are minimal (e.g. IT equipment, share if asked about costs
• Cupid’s Arrow currently focuses on customer survey) pro tability
finding soul mates / life partners
for its subscribers in the S • HappyHeart’s growth is due to • hi it S vs erce tions
aggressive marketing campaigns o online dating share if asked
• xpected revenue for Cupid’s and friend referral benefit schemes about market segmentation
Arrow in the is per month demographic differences types of
per customer • hi it istoric and ro ected online dating sites in the U ersus
growth o the online dating the UK
mar et share only in art of
the case after the market si ing
if asked about market growth or
competition
 London Business School – Case Book

BC

Cu id s rrow

hi it istoric and ro ected growth o the online dating mar et

(show to candidate if this data is requested)

C
2
Other ( players m)
Table Two
TakeAChance
C
TakeMeOut
revenue ( m)

2
MatchMe p
Lovebirds
HappyHearts

hi it unning costs or a ty ical online dating agency (Show to candidate if this data is requested)
per customer/year

Marketing IT support Admin support Total costs per customer

 2 London Business School – Case Book

BC

Cu id s rrow

hi it S vs erce tions o online dating (show to candidate if this data is requested)

es onses to uestions rom a survey

uestion Do you elieve there is a stigma uestion 2 What are you loo ing or rom an
around online dating online dating agency
respondents

respondents
S S

es Meet new people for socialising

es, but less than it used to be ind someone for casual dating
o, not anymore Meet my soulmate/life partner
o, there never was

Source: Survey of a random sample - year olds from the S and (n in each country)

am le o a ossi le case structure (for review after the case interview)

Main actors a ecting the attractiveness o the online dating mar et or Cu id s rrow

verall attractiveness o Mar et attractiveness Com etition in relevant

Mar et entry method
the mar et to Cu id s rrow segment

alue proposition in the Syndicated from S site

Size Current competition
S vs into

rowth rates ew entrants Organic growth

Profitability Acquisition
 London Business School – Case Book

BC

Cu id s rrow

am le calculation or the si e o the mar et ( or review after the case interview)

Drivers ssum tions

population m

in target age range for

dating websites ( - yrs)

Num er o
of target range that
customers
are single
. m

of single potentials
Su scri tion revenue that are interested in
Total si e o the internet dating
mar et year
m willing to pay for a
subscription service

evenue er customer Subscription fee

/month
per month
/year

A superior candidate may also identify other revenue

streams (e.g. advertising and events)
 London Business School – Case Book

BC

Cu id s rrow

am les o creative ideas to ma imise success in the (for review after the case interview)

Candidate may take different views of optimal strategy – not all of these will apply

Potential views o challenges Potential creative solutions

The has a stigma around online dating com ared da t mar eting to integrate with the mar et
to the S mar et • Be less overt about finding The One
• mphasise socialising and meeting new people
• Supplement sites with in-person social events

a y earts is e anding aggressively through nalyse the target segments o a y earts

mar eting cam aigns • Survey the target customers to understand their needs
and identify those met by HappyHearts
• If this segment is attractive to Cupid’s Arrow in the
context of its new brand, offer initial sign-up deals (e.g.
first months free) and some free events

customers are loo ing or a di erent ty e o online e rand in the towards a more social ocus
service socialising casual dating less geared • Appropriate branding to attract a wider pool of singles
towards nding a li e artner • Modify the website to emphasise meeting friends/
casual dates as well as partners
• Offer regular managed events to get single people
together in a fun setting (e.g. ice skating, bowling)

lthough mar et is today ocussed on and e isting S site directly into the with
socialising casual dating with ra id mar et strong randing to reduce online dating stigma
growth online dating is e ected to ra idly lose • Maintain focus on finding life partners
its stigma and customers will increasingly see li e • Aggressive, wide marketing base showing real
artners online as has een the case in the S members and matches to emphasise that everybody’s
using it
• xpect potentially slow growth until stigma reduces
 London Business School – Case Book

BC

Cu id s rrow

Di erentiation etween oor average and su erior er ormance (for review after the case interview)

Poor Per ormance verage Per ormance Su erior Per ormance

Structuring the analysis Only identifies one or Sets out a good structure Sets out a clear, logical
two factors that affect for analysis- identifies at structure for analysis;
the attractiveness of minimum three factors. touches on wider issues
the market (e.g. market Is able to provide a few such as the attractiveness
size, growth) and needs explanatory points about of the in the wider
significant prompting to each factor context of the client s
think of other factors. business (e.g. compared to
May focus exclusively on other potential markets)
revenues/costs

Ma ing a mar et si e Struggles to identify the Makes a clear structure Makes a clear structure for
estimate main drivers of the market. for estimation, makes estimation and completes
oes not have a rough no / very few errors with analysis with confidence
idea of population. numerical steps and enthusiasm.
Struggles to provide Makes insightful
rationale for estimates. commentary around
Makes basic numerical estimate assumptions.
errors Acknowledges potential
other revenue sources.

nter retation o gra hical eeds significant Correctly interprets main Identifies all main trends
gures identi ying ey in o prompting to understand competitor trends from plus more subtle features
output. raws only basic graph, is able to calculate of graphical outputs,
conclusions from the data; profit margin, understands asks probing questions
little insight some of the survey findings (e.g. o we know what is
with little prompting driving the doubling of the
market size?) and suggests
hypotheses; synthesizes
clearly between the market
and survey exhibits

Synthesi ing ey Poor recollection of main Can correctly draw Summary is a well
ndings and ma ing findings; laundry list together key findings with synthesized and structured
recommendations recall with little synthesis reasonable synthesis of view that incorporates
demonstrating creativity / insight. nable to ideas; needs prompting all the main findings.
provide creative ideas for to come up with creative rives independently to
success in the market (e.g. ideas for Cupid’s Arrow to the need for a change
suggests just offering a be successful in strategy for entry into
low subscription price) the , gives a clear
strategy recommendation
and rationale and makes
creative suggestions
 London Business School – Case Book

L Consulting
NewCo Petrol etailer N STM NT

Case
The nterview
Bac ground
Process
ou are an entrepreneur on an island However, you do not have any She asks you to estimate what capital
of million people. ou feel that there meaningful capital and are going to you are likely to need in the business.
is an opportunity to invest in petrol need to raise the investment required
retailing (there are already , petrol so you visit your local banker.
stations on the island).

If prompted, the interviewer will clarify that no additional information is available to answer the question.

ou have not been given much The approach set out below starts together with a reasonable assumption
information with which to form a by determining the potential sales of for the required rate of return on
view of the size of the investment the new petrol outlet, which in turn capital, the amount of capital required
required. Before starting to answer the depends on the total market size from the bank can be calculated.
question, it is worth taking a minute and expected market share. The
to think through a logical framework economics of the business are then
to structure your response, and to mapped out to develop an estimate
explain the intended approach to the of the profitability of the business.
interviewer at the outset. sing this estimate of its profitability,

A strong candidate would receive no further guidance. Where necessary, candidates would be prompted to address
each of the following areas in turn to arrive at an estimate of the capital requirement.
 London Business School – Case Book

L Consulting

NewCo Petrol etailer

uestion
The What
nterview is the total mar et si e or etrol retailing
Process
This can be tackled either at an Alternatively the market size can be Additional points that could be
individual or household level. At an tackled at the household level. Here mentioned to improve the market size
individual level, an assumption would assumptions would need to be made estimate would include factoring any
need to be made about how many around average number of people per taxation that is applied to fuel before
of the m population own cars / household, proportion of households deriving the final value of the market
drive and therefore purchase petrol. owning a car, and average petrol from the perspective of petrol retailers.
An assumption would also need to expenditure per annum (perhaps In additional, the contribution from
be made about their typical annual based on average mileage per annum ancillary revenues e.g. convenience
expenditure, which could be based on and fuel economy). retail formats on the forecourt could
assumed miles travelled, typical fuel also be considered.
economy, and typical fuel price.

am le calculation

• m households on the island (assuming . people on average per household)

• of households are assumed to own cars

• Average annual mileage of k per household

• Annual expenditure of
( k miles @ miles per gallon gallons x . litres per gallon litres @ . per litre)

• Annual revenue net of tax c. (assuming tax take of c. )

• Ancillary revenue of
- c. refuels per annum (assuming average refuel size of c. litres per visit)
- average ancillary spend per visit of

• Total market value c. bn ( mx x( )

uestion 2 What share o the mar et might you e a le to get

The market size estimate can be
divided by to obtain the average am le calculation
revenue per petrol outlet. In practice,
however, the prime sites for locating • Market size bn
a petrol outlet are likely to have been
taken already, and therefore some • Average revenue per station m (market size / stations)
downward adjustment to re ect this
would be required to develop an • Potential revenue of proposed investment m per annum (assuming
estimate of the likely revenue for the declining revenue from new site locations)
proposed new development.
 London Business School – Case Book

L Consulting

NewCo Petrol etailer

uestion
The What
nterview are the economics o the usiness li ely to loo li e
Process
Having already estimated the revenue
for the site, there are two possible am le calculation
approaches here. One would be
to identify the various elements of • Typical operating margin
fixed and variable costs and develop
estimates for each of these. The • BIT k( mx )
second (simpler) approach is to
consider typical operating margins
for retail businesses, and assume this
business would perform in line.

uestion What is the re uired rate o return

In market equilibrium, the return Having derived the implied investment
achieved on an investment on an am le calculation amount, it should be sense-checked
incremental petrol station will be just to ensure it appears reasonable, and
sufficient to meet the market rate of • Assumed pre-tax required prior assumptions revisited where
return for this asset class. Having rate of return (the asset necessary. Strong candidates would
calculated the BIT for the outlet, this class would require a return consider which assumptions the final
relationship can be used to derive the above the risk free rate, but is result is most sensitive to, and would
implied total investment capital that potentially less risky than C- pay particular attention to the degree
would be necessary to maintain this style investments that typically of uncertainty around the values
equilibrium state. require a target return of c. attributed to these items.
- )

• Investment . m( BIT of
k/ )
 London Business School – Case Book

Mara on
ir et nc P FT

North merica

The nterview
Case Summary Process
(for interviewer only)
Overall, aircraft manufacturing is Air et Inc. is losing money in the buy or more planes. Lessors, in
a profitable business, but market jet engine business. However, the purchasing large volumes of aircraft,
economics vary depending on the average player in the jet engine have been able to exert significant
business segment. Air et participates aircraft market is profitable. Air et buying power over our client and
in two segments has gained significant market share achieve large price concessions.
• jet engine, to -seat aircraft by aggressively serving the Lessor
• propeller, to -seat aircraft customer segment which tends to

nterviewer s Discussion uide

Ste Provide the candidate with the ollowing ro lem statement

• Air et Inc. is a .S. manufacturer volume increase year-over-year • Air et’s senior management team
of small, regional airplanes. It of and , respectively, and has hired a team of consultants to
manufactures two types of aircraft: revenues of million and help the company develop a value-
et engine ( to -seat) and million, respectively maximizing strategy. We need your
propeller aircraft ( to -seat) help to understand
• Although overall Air et turned What are the key issues and
• In , Air et delivered jet a profit, profitability varied opportunities at Air et?
engine aircraft and propeller significantly by business What solutions would you
aircraft. This represented a unit recommend to management?

Ste 2 Structure the Pro lem

ncourage candidate to develop an approach to root cause the profitability issue. Provide the following information
(either in full or as requested by the candidate)

et ngine ircra t Business Pro eller ircra t Business

inancials m of ales inancials m of ales
evenues
CO S - - - -
S A - - - -
elivery Other - - - -
Net ncome
Capital Charge (at ) - - - -
conomic Pro t 2

conomic Profit et Income – Charge for Cost Capital

ote conomic profit includes a charge that accounts for the required return on capital. When P value is created,
when P value is destroyed (even if et Income is positive ),and at P the business generates exactly the
required return
 London Business School – Case Book

Mara on

ir et nc

sing a typical profitability framework, the candidate should make the following observations

• The et ngine business is • The problem lies with the et • et engine parts are complex and
unprofitable while the propeller ngine business typically bought from specialized
business is highly profitable O Ms
• ross margins in the et ngine dditional information
business are much lower than the • Costs and hence margins are in
Propeller business line with market average

Ste naly e the et ngine egional ircra t Business

The candidate should focus the rest of the discussion on the et ngines business and understanding market size,
growth and profitability within the segment. Provide the following information (in full or as requested)

Mar et Structure and conomics

verall Mar et conomics

2 m
Total S Market Size ,
Average Costs per Aircraft .
of ets Sold
Total Capital Invested ,
Cost of Capital

Mar et Structure

deliveries

Competitor : C
deliveries Competitor
Competitor :
eliveries

Competitor : Competitor
Competitor : Competitor : 2 Competitor
Competitor
of

Competitor :
Competitor : Air et Inc.
Competitor : Total Mar et
Air et Inc.:
Air et Inc.: 2
 London Business School – Case Book

Mara on

ir et nc

ey insights

The market is profitable and growing with the average Good candidates would seek to e plore the market growth.
competitor generating economic profit margins dditional information for discussion
Total evenues mn
evenue per aircraft / mn The market is expected to continue growing at for the
Cost per Aircraft . m of mn Capital next years due to:
. mn a Changes in regulation (e.g. Open Skies) and
conomic Profit per aircraft mn - . mn . globalization (India, China) have lifted restrictions on
mn .S. based airlines to service these segments
P Margin . / b The current customer base for Air et is largely S based
Air et has the largest market share at (was c Success of newer businesses such as ractional et
years back) Programs (time sharing of jets)
Air et growing at , market growing at d xpected replacement cycles as older jets are retired
our other competitors control the remaining market
ranging from -
There is no dominant competitor in the jet engine
business

Com etitive Position

Once the candidate identifies that Air et has gained market share over the last years, he/she should explore the
reasons for it. Information for supporting this discussion

Air et is pricing its product lower than the market on b erformance ange of miles which is similar to
average. They can increase price by and still have the market average
a competitive product which provides a fair benefit to c aintenance and sset ife The majority of
customers the fragmented jet engine aircraft maintenance
companies have the capabilities and parts to service
There doesn’t seem to be much differentiation versus Air et’s aircraft
products from competitors Therefore, just increasing the price by will put Air et
a ockpit: Similar to industry standard, resulting in low in midst of the cluster. Without any offer advantage, Air et
switching costs for new customers will lose market share relative to its current position

ir et s Customers

Once the candidate identifies pricing disadvantage as the issue, direct the conversation to lead to customer
segmentation at the root of the issue. Provide the candidate with the following information

et ngine conomics et ngine Customer Segments

m er ircraft otal m f uent Indi iduals orporate ustomers essors
ixed Cost . Air et evenues
ariable Cost . Customers
Total Cost 2
2 Aircraft sold
ote Market share .
Per Aircraft costs based on volume of planes
Total Cost includes Cost of Capital

Share the following information as requested by the candidate

• Af uent Individuals: Buy aircraft during a buying cycle (approximately every to years)
• Corporate Customers: Buy - aircraft, mostly large multinationals for executive travels
• Lessors: Buy or more aircraft and lease to airlines, governments, corporations etc.
2 London Business School – Case Book

Mara on

ir et nc

ey nsights Drivers o Segment Pro ta ility

Ask the student to compute average price by customer segment

• The main driver of profitability • The Lessor segment makes • Lessors comprise the largest
between segments is solely large purchases and exploits a customer segment more than
price without doing any math, negotiating leverage over Air et of the total market by volume
since operating cost per aircraft Segment : planes, our
produced and delivered is the • Average revenue per customer is: share .
same regardless of the intended M/ aircraft . M per Segment : planes, our
customer aircraft from Lessors, compared to share
. M from Af uent Individuals and Segment : planes, our
. M from Corporate Customers share

Ste enerate lternatives

Prompt the candidate to develop alternatives for solving the profitability issues. Some suggestions based on
participation choices

Increase prices for Lessors: for xit the Lessors segment: Similar nter the leasing business:
every we lose customer calculations show that the loss orward integration. Also creates a
( aircraft). After a few calculations of scale makes the other two threat for the Lessor customer and
the candidate should see that segments unprofitable as well improve negotiating leverage
with such elasticity this alternative (cannot cover fixed costs)
cannot be profitable, e.g. Other
a ncrease in Price to mn
losing customer
b Total Aircrafts sold

c Total Aircrafts Cost

x
d Total evenue
x
e Profit (Loss) ( ) mn remains
unprofitable at . m and m
– i.e. losing or customers
 London Business School – Case Book

Mara on

ir et nc

iscuss with the candidate possible pros and cons of each alternative. Specifically for Alternative (enter the leasing
business) the following information should indicate that it is a good opportunity that can help prop-up the Lessor
segment as well

• Mar et rowth: The jet engine, • Mar et conomics • Customer Air et has marketing
regional aircraft leasing market is i The aircraft leasing market relationships with all aircraft end-
large and growing. In , the new is profitable with the average users who are leasing their aircraft
aircraft leasing market represented competitor generating O ’s of from the company’s aircraft lessor
almost of all new aircraft (cost of equity ) customers. Air et works with these
delivered (with operating leases ii The key driver of profitability is end-users to help them configure
comprising half) and is expected to cost of funds. Air et would be the plane during the front end of
grow per year at parity the sales process

• Com etition Three aircraft

lessors (also Air et’s customers)
dominate the market with a
combined share of

If time permits and the candidate has reached a satisfying solution for the profitability issue, use the rest of the time to
brainstorm additional growth alternatives for the business. The following is a starter list

Other Markets: et ngine eographies – International nderstand the propeller business

Segments – to seaters, xpansion to find avenues of growth
segment nter ractional et Ownership
Market
 London Business School – Case Book

Mc insey Com any

M T
ldPharma NT

uro e

Case Bac ground

This document is intended to help that the following case is a good The example below is set up to teach
prepare you for the case portion of a example of the type of case many of you how to approach a typical case.
Mc insey Company interview. While our interviewers use. However, in most
interviewers at Mc insey have a good interviews the interviewer will only ask
deal of exibility in creating the cases a selection of the questions in this
they use in an interview, we believe case.

Conte t
The interviewer will typically start the case by giving a brief overview of the context, ending with a question that is the
problem definition. At the end of the description you will have an opportunity to ask any questions you might have to
clarify the information that has been provided to you.

Let’s assume our client is ld harma Biological is vastly different Should OldPharma ac uire
a major pharmaceutical company from small molecule . To gain BioFuture
(pharmaco) with S billion these capabilities, pharmacos can
a year in revenues. Its corporate build them from scratch, partner with
headquarters and primary research existing startups, or acquire them. • Write down important
and development ( ) centers are in Since its competitors are already information
ermany, with regional sales offices several years ahead of ld harma
worldwide. ld harma wants to jumpstart its • eel free to ask interviewer for
biologicals program by acquiring explanation of any point that is
ld harma has a long, successful Bio uture, a leading biologicals start- not clear to you
tradition in researching, developing, up based in the San rancisco area.
and selling small molecule drugs. Bio uture was founded years ago
This class of drugs represents the by several prominent scientists and
vast majority of drugs today, including now employs people. It is publicly
aspirin and most blood-pressure or traded and at its current share price
cholesterol medications. ld harma the company is worth about S
is interested in entering a new, rapidly billion in total.
growing segment of drugs called
biologicals . These are often proteins ld harma has engaged Mc insey
or other large, complex molecules that to evaluate the Bio uture acquisition
can treat conditions not addressable and advise on its strategic fit with
by traditional drugs. ld harma’s biologicals strategy.
 London Business School – Case Book

Mc insey Com any

ldPharma

uestions

In Mc insey Company case interviews, the interviewer will guide you through the case with a series of questions that
will allow you to display a full range of problem solving skills. Below is a series of questions and potential answers that
will give you an idea of what a typical case discussion might be like.

uestion

What factors should the team consider when evaluating whether ld harma should acquire Bio uture?

• Take time to organize your thoughts before answering. This tells the interviewer that you think about the problem in a
logical way

• evelop overall approach before diving into details

good answer would include the BioFuture s mar eting or sales OldPharma ca a ility ga s
ollowing ca a ilities specially how in iologicals , sales and
alue o BioFuture s drug i eline promotional messages will be marketing, etc.
umber of drugs currently in delivered, e.g., relationships with key
development. uality of drugs opinion leaders that can promote OldPharma alternatives to this
(likelihood of success). Potential biologicals; ey opinion leaders can ac uisition Alternative companies
revenues and profits come from the academic arena, like ld harma could acquire. Other
prominent medical school professors, strategies for entering biological
Bio uture s D ca a ilities uture or from the public arena, like heads segment, e.g., enter partnerships
drug i eline Scientific talent. of regulatory bodies or prominent rather than acquisition. Pursuing other
Intellectual property (e.g., patents, telejournalists strategies than entering the biological
proprietary processes or know-how segment.
for biologicals research). Buildings, c uisition rice
equipment and other items that allow
Biofuture’s to operate very good answer might also
include multi le additional ey
actors OldPharma should consider
For e am le
BioFuture s e isting artnershi s or
other relationshi s with harmacos
 London Business School – Case Book

Mc insey Com any

ldPharma

uestion 2

The team wants to explore Bio uture’s current drug pipeline. The team decides to focus first on evaluating the value of
Bio uture’s drug pipeline – both its current portfolio, as well as its ability to generate drugs on an ongoing basis. What
issues should the team consider when evaluating the value of Bio uture’s existing drug pipeline?

nsure to mention different issues instead of immediately diving very deep into one issue. Then ask your interviewer if
he/she wants to go deeper on any of them.

good answer would include the • Costs to manufacture and sell, e.g., • Side effects and potential legal
ollowing marketing, distribution, etc. exposure, e.g., potential law suits
Further cost o D until each drug due to unexpected side effects
is ready to e sold • Press about these drugs, e.g., have
famous doctors called for this kind • mergence of substitutes – are
Potential value o selling each drug of drug, is it only slightly improving competitors working on substitutes
• Market size, e.g., size of patient on what is on the market already? already? Is it about speed and
population, pricing does Bio uture have enough
researchers working on the
• Market share, e.g., number of very good answer would also respective drugs?
competitive drugs in or on include the ollowing
the market; different side effects, is level • Strength of underlying patents, i.e.,
convenient dosing schedule (i.e., • Likelihood clinical trials of a drug how likely is it that a competitor
patients are prescribed to take a will prove effective can successfully copy Bio uture’s
drug at regular intervals that are drug?
easy to remember such as once a • Likelihood drug will win regulatory
day or every hours), etc. approval

uestion

Below is a description of expected probability of success, by stage, in the Pharma pipeline.

ote: iling is the process of submitting all of the clinical and safety evidence from Phase I, II, and III trials, and asking
for regulatory approval to actually sell the drug.

hi it Fictitious e hi it

ected ro a ility o success y stage o research and develo ment

Percent

Success ul
Phase Phase Phase
Candidate drugs Filing mar eting
trial trial trial
and sales

ail ail ail ail

 London Business School – Case Book

Mc insey Com any

ldPharma

ld harma believes that the likelihood of success of Bio uture’s primary drug candidate can be improved by investing an
additional S million in a larger Phase II trial. The hope is that this investment would raise the success rate in Phase II,
meaning that more candidate drugs successfully make it to Phase III and beyond. By how much would the Phase II success
rate need to increase in order for this investment to breakeven?

The interviewer would tell you to assume that if the drug is successfully marketed and sold, it would be worth S .
billion (i.e., the present value of all future profits from selling the drug is S . billion).

• Ask for clarification of information if necessary

• Take notes of the numbers
• Take time to plan out how to approach the calculation
• escribe your approach and talk the interviewer through your calculation

very good answer would include • To breakeven, i.e. to make the Phase II probability would have to
the ollowing million investment worth increase from to
Investment would need to increase while, value of the candidate ( x )
probability of success in Phase II drug that passes Phase II would
from to (increase of need to increase to million • This seems like a very big
percentage points). There are multiple million million. This challenge as an increase by
ways to approach this calculation. One means, the probability of combined percentage points means that the
method is shown here: success in Phase I and II would current probability of needs
• If a candidate drug passes Phase need to increase by ( / ) to double
II, then it has a x percentage points
chance of being successfully
marketed and sold. Since a • So the current probability of
successful candidate drug is worth Phase I and II, i.e., x
. billion, a candidate drug that would have to increase
passes Phase II is worth x by percentage points, i.e., to
. billion million . In order to come up to ,

uestion

ext, the team explores the potential setup with Bio uture after the acquisition. Although Bio uture’s existing drug pipeline
is relatively limited, ld harma is highly interested in its ability to serve as a biological research engine that, when
combined with ld harma’s existing assets, will produce many candidate drugs over the next years. What are your
hypotheses on the major risks of integrating the functions of Bio uture and ld harma?

very good answer would include • Language barriers severely hinder • ey scientific talent leaving
the ollowing communication and sharing of Bio uture after the acquisition –
• Scientists do not have overlapping information either because acquisition makes
disease (therapeutic area) interests them independently wealthy or
or expertise and are unable to • Poor management and sense of because they don’t want to be a
materially collaborate community as a result of part of the new big ld harma
operations that might come with a pharmaco
• Integration into the process- time difference of hours
driven ld harma culture kills the
entrepreneurial culture at Bio uture
that has been key to its success
 London Business School – Case Book

Mc insey Com any

ldPharma

uestion

Post-acquisition, ld harma believes that it will be necessary to consolidate all biologicals into one center. There are
two logical choices: ld harma’s existing headquarters in ermany, and Biofuture’s current headquarters in San rancisco.
ld harma does not have any current biologicals facilities or operations in ermany, so new facilities would have to be built.
How would you think about this decision?

very good answer would include • Overall easier to integrate • asier to retain the entrepreneurial
the ollowing Bio uture’s capabilities into spirit and culture of Bio uture
easons or consolidating at ld harma
OldPharma cor orate in • o need to rebuild e.g.
ermany easons or consolidating in manufacturing plants, research
• Better coordination with non- BioFuture s San Francisco location facilities
biologicals at ld harma • Less likely to see ight of talent:
many top scientists would likely
• Better coordination with other leave rather than relocate to
business units of ld harma (e.g., ermany
marketing, manufacturing)
• asier to recruit and find top
• asier to intermix scientists in research talent in San rancisco
biologicals and traditional vs ermany
units, and transfer any unique
capabilities knowledge

uestion

While researching the integration barriers, the team learns that one of ld harma’s top competitors, rugMax, has already
partnered with Bio uture on their lead drug candidate essentially agreeing to split all development costs and future profits
/ . ld harma is considering buying out rugMax’s share of the Bio uture lead drug candidate. As a first step in
valuation, they have asked the Mc insey team to estimate the potential peak sales of this drug candidate – this is another
way to verify potential future profits of a drug. The drug candidate is intended to treat non-Hodgkin’s lymphoma. ew cases
are diagnosed each year in out of every , .S. men and out of every , .S. women. iven this and any
other information you might need, what are the estimated .S. peak sales of this compound?

The following information will be given to you by the interviewer upon request:
• .S. population is million, half men, half women.
• ull course of therapy takes days and ld harma believes the drug can be sold at a price of per day.
• stimated market share (i.e., of eligible patients who are treated with this drug), is .

very good answer would include • ach course of therapy will yield
the ollowing , in revenue ( days at
• xpected peak sales of this drug per day). Therefore total .S.
candidate are S million market potential is . billion.
stimated market capture is ,
• Assuming a .S. population of leading to an estimated .S. peak
million men and million women, sales of million.
there would be , estimated
diagnoses among men, and
, diagnoses among women,
or , new cases of non-
Hodgkin’s lymphoma per year
 London Business School – Case Book

Mc insey Com any

ldPharma

uestion

On the third day of the engagement you run into the ice President of Business evelopment for ld harma in the cafeteria.
He asks what the team’s current perspective is on the Bio uture acquisition and what next steps you are planning to take.
How would you respond?

There is no right or wrong answer on in Phase II trials is not likely to be a ld harma. There are significant risks
whether to uy or not uy and there profitable investment; secondly, one of to this as well, given the two worlds
are various ways on how to uild an your competitors, rugMax, currently nature of their organizational cultures.
argumentation ne ossi le very has a cooperation with Bio uture for
good answer would e its lead drug candidate. This needs to As next steps we therefore want to
An acquisition of Bio uture can be taken into account when trying to better understand the feasibility of
bring two major sources of value to acquire Bio uture. We are still looking bridging the cultural gap and better
ld harma: the value of its existing into other potential synergies, but it understand pros and cons of different
compounds and the potential value of appears unlikely that ld harma can consolidation options; estimate the
integrating its research capabilities into justify the cost of an acquisition purely cost of this research integration; get
ld harma based on Bio uture’s existing pipeline a better understanding of the value of
Bio uture’s future potential to develop
In terms of Bio uture’s existing pipeline The greater source of upside is likely to drugs
there are a couple of challenges: firstly, be the long-term benefits of integrating
the proposed idea of investing heavily Bio uture’s research capabilities with
 London Business School – Case Book

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M T
e reshNow! Soda NT

North merica

Case Bac ground

This document is intended to help believe that the following case is a good The example below is set up to teach
prepare you for the case portion of example of the type of case many of you how to approach a typical case.
a Mc insey Company interview. our interviewers use. However, in most
While interviewers at Mc insey have interviews the interviewer will only ask a
a good deal of exibility in creating selection of the questions in this case.
the cases they use in an interview, we

Conte t
The interviewer will typically start the case by giving a brief overview of the context, ending with a question that is the
problem definition. At the end of the description you will have an opportunity to ask any questions you might have to
clarify the information that has been provided to you.

Our client is efresh ow Soda. efresh ow is evaluating the

efresh ow is a top beverage launch of a new product, a avored • Write down important
producer in the .S. and has non-sparkling bottled water called information
approached Mc insey for help in atura. The company expects this
designing a product launch strategy. new beverage to capitalize on the • eel free to ask interviewer for
recent trend towards health-conscious explanation of any point that is
As an integrated beverage company, alternatives in the packaged goods not clear to you
efresh ow leads its own brand market.
design, marketing and sales efforts.
In addition, the company owns the efresh ow ’s ice President of
entire beverage supply chain, including Marketing has asked Mc insey to help
production of concentrates, bottling analyze the major factors surrounding
and packaging, and distribution the launch of atura and its own
to retail outlets. efresh ow has internal capabilities to support the
a considerable number of brands effort.
across carbonated and non-
carbonated drinks, large bottling Which factors should efresh ow
plants throughout the country and consider and act on before launching
distribution agreements with most atura into the .S. beverage
major retailers. market?
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uestions

In Mc insey Company case interviews, the interviewer will guide you through the case with a series of questions that
will allow you to display a full range of problem solving skills. Below is a series of questions and potential answers that
will give you an idea of what a typical case discussion might be like.

uestion

What key factors should efresh ow consider in deciding whether or not to launch atura?

• Take time to organize your thoughts before answering. This tells the interviewer that you think about the problem in
a logical way

• evelop overall approach before diving into details

good answer would include the Com etitors Which products is packaging, or distribution? Is it
ollowing atura going to compete with? possible to accommodate atura
Consumers Who drinks avored Which companies are key players and in the current production and
water? Are there specific market how will they react? distribution facilities? What impact
segments to address? does geography have on the plant
very good answer might also selection?
Cost Price Is the avored bottled include multi le additional ey
water market more profitable than actors r h should Channels What is the ideal
those markets for efresh ow ’s consider For e am le distribution channel for this product?
current products? Is it possible to Ca a ilities and Ca acity Are current retail outlets willing to add
profitably sell (price set by the market, Are the required marketing and atura to their product catalogue?
internal production costs) atura? sales capabilities available within
iven fixed costs involved, what would efresh ow ? oes the product
be the break-even point for atura? require specialized production,
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uestion 2

After reviewing the key factors efresh ow should consider in deciding whether to launch atura, your team wants to
understand the beverage market and consumer preferences to gauge potential success of atura.

The bottled market splits into non-sparkling, sparkling, and imports. lavored water falls within non-sparkling. our team
has gathered the following information on the .S. bottled water market. The information shows an estimate for the share of
avored water, as well as the current share for the two main products: Cool and O lavor.

hi it
Fictitious e hi it
S Bottled water mar et
Millions of gallons

Non s ar ling Flavoured y roduct

,

Cool

on- lavoured lavoured la our

Other

Based on the target price and upfront • In order to launch atura, • The P of Operations estimates
fixed costs, what share of the avored efresh ow would need to incur that each bottle would cost .
non-sparkling bottled water would million as total fixed costs, to produce and deliver in the newly
atura need to capture in order to including marketing expenses as established process.
break even? Here is some additional well as increased costs across
information for you to consider as you the production and distribution
form your response: network
• atura would launch in a oz.
presentation ( / of a gallon) with a
price of . to retailers

• Ask for clarification of information if necessary

• Take notes of the numbers

• Take time to plan out how to approach the calculation

• escribe your approach and talk the interviewer through your calculation. The more you talk the easier it will be for
your interviewer to help you
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very good answer would include atura would need to sell atura would need to capture a
the ollowing million units in order to break . market share:
atura would need to capture a even: on-sparkling avored bottled
. market share of avored non- ariable profit per unit water market x ,
sparkling bottled water in order to . – . . million gallons million
break even. Therefore, atura would gallons
need to be the umber product in Break even units Total fixed
the market: costs / ariable profit per unit atura sales in millions of
million / . per unit gallons million units /
million units units per gallon million
gallons

Market share million

gallons / million gallons
. .

uestion

efresh ow executives believe that the company’s position as the top beverage company in the country gives them
strategic strengths toward achieving the desired market share. However, they ask the team to characterize realistically what
they would need to achieve that target.

What would efresh ow need to ensure realistically to gain the required market share for atura ( . of non-sparkling
avored bottled water)?

very good answer would include Strong Branding Mar eting Create erational Ca a ilities. nsure
the ollowing a successful introductory marketing access to preferred distribution
Match with Consumer Pre erences campaign, including advertising, channels. nsure sales force
nsure product image, attributes, pricing, and bundling promotions. capabilties to sell the new product.
and quality fulfill the needs of all Leverage top producer status and nsure production ramp-up that allows
consumers or niche segment, reaching limited market fragmentation in order response to increased demand.
desired market share. nsure target to position atura brand within top
price is consistent with other products in the market segment. Anticipate
in the market and the consumer’s response from competitors (e.g.,
expectations advertising, pricing, distribution
agreements). nsure product
positioning does not cannibalize on
other, more profitable, efresh ow
products. ( ote: In marketing, the
decreased demand for an existing
product that occurs when its vendor
releases a new or similar product
is called cannibalization . It is not
important for you to use this business
terminiology.)
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uestion

Within the key drivers for market share, efresh ow wants to know which to tackle first and what the strategy should be.
Therefore Mc insey helped efresh ow design and run a study to understand branding and distribution. The following
information shows results from the study, based on a sample of target consumers. What can you conclude from the study in
regards to the preferred marketing image and strategy of atura?

hi it 2 Fictitious e hi it
Consumer Pre erences
In percent

identi y roduct with would uy everage in

Cool la our Other

Healthy non-alcholic Other

beverage

Caf / restaurant

Sports drink
Convenience store

Leisure beverage Supermarket

lavoured water Other beverages

(e.g., other
efresh ow
Products)

very good answer would include Distri ution di ers rom Mar eting message to em hasi e
the ollowing insights current outlets and needs new identity and availa ility Marketing
Branding should em hasi e s orts agreements research Major shifts campaign should be built around the
drin identity Healthy identity is compared to current distribution currently unaddressed market need
dominated by Cool product, Leisure model required in Supermarkets , for sports drink in order to connect
by O lavor and Sports fragmented Other , and Convenience stores . with customers in that segment.
in other products. Clear niche within Agreements with major retail players iven required changes in distribution
Sports identity, with top brands may accommodate for product channels, atura messaging should
currently occupying only of share introduction, with efresh ow clarify new distribution strategy.
of mind. Sports branding should also managing mix across channels.
determine thinking around the sales Other channels need further
channels (e.g., sales during sports research, since they are a major
events or at sports facilities) component of the lavored water
segment
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uestion

The team now explores efresh ow ’s internal operational capacity to fulfill the projected atura demand. efresh ow
has decided to produce atura from an existing dedicated production line in a single facility. In order to be on the safe
side in case of increased demand they plan for an annual capacity of million bottles (units) of atura. The production
line they have in mind currently operates for hours per day, days a week and weeks per year. The speed for the
current bottling process is units per minute.

Is the current production capacity sufficient to fulfill the desired annual production plan of million bottles of atura?

very good answer would include • aily production bottles per • Annual production . million
the ollowing minute x minutes per hour x bottles per week x weeks per
efresh ow Would need to increase hours per day . million bottles year million bottles
its capacity because it would currently
only allow to produce million • Weekly production . million
bottles of atura: bottles per day x days per week
. million bottles

uestion

iven the need for a specialized production process for atura, the company has decided to add a new production line to
only one of their facilities. What factors should they consider in selecting the adequate plant?

good answer would include very good answer would include

economic actors li e oth economic and non economic
conomic actors actors and rovide e am les o
• equired investment in target plant how di erent conditions could shi t
consistent with atura budget decision
Non economic actors
• Match of selected plant cost • Availability of additional resources,
structure with fixed and variable for example:
cost targets for product Space
Water
• Product assignment matches Material supplies (e.g., bottle
network growth targets (i.e., caps, labels)
expected growth due to atura Local labor pool
is consistent with planned growth Management bandwidth
for the plant) Skills and training needs due to
specialized process
• Speed of installation given current Commitments to and support
plant commitments from selected plant community

• Adequate location for overall

logistics; if only one plant
concentrates on production,
national shipments should be
optimized
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uestion

The efresh ow C O has seen the team’s analysis and confirms that the decision to launch atura has been made.
The product will be marketed as a sports drink, produced in the Midwest S, and distributed through supermarkets,
convenience stores, and sport outlets. He asks the team what the company should start doing tomorrow?

nsure to mention different insights instead of immediately diving very deep into one insight. Then ask your interviewer
if he/she wants to go deeper on any of them

very good res onse would include Mar eting to start designing launch Sales to start designing roduct
the ollowing strategy a roach and training or
Finance to allocate re uired • esign product identity, message, ssociates
resources or launch packaging, etc. • Collaborate with marketing in
• Communicate launch decision and defining message for retail outlets
timeline to inance department • Create advertising and promotional and consumers
campaign
• Analyze upfront investment and • esign distribution strategy and
ongoing profitability targets • efine any channel-specific allocate resources for new product
considerations (e.g., displays,
• Secure resources required for alternative campaigns) • esign and deliver product training
initial investment and allocate to for sales
each department (e.g., Marketing, • Prepare product communications
Sales, Production, istribution) for investors, customers, and • Communicate new product
consumers characteristics and targets to
clients (e.g., supermarkets,
erations to egin roduct convenience stores, restaurants,
testing roduction line design and sport clubs).
logistics.
• Create and test product

• Communicate and negotiate

product characteristics and prices
with suppliers

• enegotiate supplier contracts

for materials and water supply if
necessary

• Increase capacity of the existing

production line (maybe building a
new one)

• Hire new people if needed

 London Business School – Case Book

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uro e

Footloose ntroduction
ura ex is a erman footwear Together, these four brands represent on-the-job purposes. Casual boots is
company with annual men’s footwear approximately of the . billion the fastest growing sub-category, and
sales of approximately . billion erman men’s boot market. The boots is geared more towards white collar
uro( ). category includes four main sub- workers and students who purchase
categories: these boots for week-end / casual
They have always relied on the boot wear and light work purposes.
market for the majority of their volume Work boots, casual boots, field and
and in this market they compete with hunting boots, and winter boots. Work The four key competitors in the market
three other major competitors. boots is the largest sub-category and are Badger, ura ex, Steeler, and
is geared to blue collar workers who Trekker.
purchase these boots primarily for

Com etitor Pro les

Badger and Steeler are both well
established as work boot companies, Mar et Share o Wor and Casual Boots y Com any
having a long history and strong brand
recognition and credibility among blue
collar workers. At the other extreme is
Trekker, a strong player in the casual Badger
boot market but a very weak player
in work boots. ura ex, however, is a
cross between the other competitors, uraflex
having a significant share in both work
boots and casual boots.
Steeler
Historically ura ex had an even
stronger position in the work boot
sector. However, since when
Trekker
the company began selling casual
shoes and focusing on the growth
opportunity in casual boots, sales
Other
of the ura ex work boot line have
steadily declined. Also, around
the same time ura ex shifted its
emphasis, Badger became a much
Market Share
more assertive competitor in the work
boot market, increasing its market Work boots Casual boots
share to in just three years.

Blue collar workers: wage earners who generally work in manual or industrial labour and often require special work clothes or protective clothing, which are replaced
approximately every months
White collar workers: salaried employees who perform knowledge work, such as those in professional, managerial or administrative positions
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Consultants ole Data Collected

In the fall of , Badger launched a In anuary of ura ex hired a telephone survey that was conducted
new line of aggressively priced work leading consulting firm to conduct among randomly dialed
boots. The strong success of this line research to help management in its consumers across the country’s
has caused ura ex’s management decision making. To make an informed primary regions. In addition,
to re-evaluate their position in recommendation, the consultants the consultants completed some
work boots. With limited additional realised they needed to collect internal cost and pricing analysis for
resources, management must now information that would enable them to ura ex’s work and casual boot lines.
decide if they should focus their efforts size the market and better understand The market pricing analysis showed
on competing with Badger in the work ura ex’s competitive position. ura ex competing at the premium
boot sector, or focus their resources end of the market for both its casual
on further strengthening their position To begin with, the consultants and work boot lines.
with casual boots. developed a minute quantitative

hi it ne Pro ensity to uy oots y o ulation segment Male Po ulation 2

Bought work boots

in past year

Bought casual boots

in past year

Blue Collar White Collar Student

Population . MM . MM . MM
Average Price Paid for Boots
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hi it Two Channel Pre erence y Brand

2 2
2 Other
Other Other
Other

Athletic Store Apparel Store

ept. Store
Channel Share ( )

Sporting oods
ept. Store
iscount / Outlet
Shoe Store iscount / Outlet

2 22
Athletic Store Safety / Work

Shoe Store

2 Safety / Work 2
Shoe Store Shoe Store

uraflex Badger Steeler Trekker

hi it Three Buyer Purchase Criteria y Brand

Dura e Badger Steeler Tre er

uality /
Styling Comfort Comfort
urability

uality / uality /
urability Comfort urability Styling

Past
Comfort Styling Price
xperience

Brand Styling eatures Brand

Past
eatures Brand Price xperience

Share ( ) Share ( ) Share ( ) Share ( )

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hi it Four etail rice o selected oots s lit y rice com onent

( )
euros

Company Margin 22
euros

2 euros etailer Margin Company Margin

Company Margin eneral Admin. etailer Margin

etail price ( )

eneral Admin.
etailer Margin 2 esign
esign
eneral Admin.
Sales Mktg. Sales Mktg.
esign 2
Labour
Labour
Sales Mktg.

Labour 2 Materials 2
Materials 2
Materials

uraflex – Casual uraflex – Work Badger

Case Study uestions

Work through these questions on your own, using the text and exhibits in the preceding pages. An answer key is
provided in the pages that follow

uestion

How big is the work boot market (expressed in euros)? oes ura ex get more of its revenue from work boots or casual
boots?

uestion 2

xplain why Badger is outperforming ura ex in the work boot market.

uestion

What changes would you recommend to ura ex’s work boot strategy? Why? Would you recommend they introduce a sub-
branded boot line?
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nswer ow ig is the wor oot mar et e ressed in euros Does Dura e get more o its
revenue rom wor oots or casual oots

To nd the si e o the mar et we can use the ollowing e uation

(Average Boots Price) x ( of male population that bought work boots in past year)
x (total population for the segment) x (number of pairs bought in a year)

hi it ne gives us the populations for each segment and the percentages that bought boots. We therefore need to
find the number of boots sold and the a erage price of each pair. or this question, the candidate will need to make some
assumptions.

verage num er o oots urchased er user 2 verage rice er air o oots

• or work boots, we know that blue collar workers Work boots cost more (compare Blue Collar vs. Student) so
purchase an average o 2 airs er year (from the average price should be higher than for all (
Introduction, ootnote ) is reasonable); casual should be lower than student ( -
is reasonable).
• White collar workers and students who buy work
boots probably use less rigorously and less frequently,
therefore probably only pair per year

• or casual boots, we can make a reasonable

assumption, knowing that casual boots are purchased
primarily for weekends and light wear (from text) so the
average number of pairs should be no more than work
boots from xhibit (i.e. pair per year)

The total mar et value will then e the sum or each segment o the ollowing e uation

(Average Boots Price) x ( of male population that bought work boots in past year)
x (total population for the segment) x (number of pairs bought in a year)

( x x Mill x ) ( x x Mill x ) ( x x Mill x ) 2 Mill or 2 Bill

The following table shows another way to see it:

Pairs
Buying Wor wor oots
Po ulation Boots ought year Price Per Pair Segment Si e
Blue Collar . Million . Billion
White Collar . Million Million
Student . Million Million
Total 2 Billion
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Following the same rocedure the casual oot mar et is then

(Average Boots Price) x ( of male population that bought work boots in past year)
x (total population for the segment) x (number of pairs bought in a year)

( x x Mill x ) ( x x Mill ) ( x x Mill x ) 2 Mill or Bill

Or:
Pairs
Buying Wor wor oots
Po ulation Boots ought year Price Per Pair Segment Si e
Blue Collar . Million Million
White Collar . Million Million
Student . Million Million
Total Billion

Summary

• We know from xhibit that ura ex has a share of the work boot market and of the casual boot market,
therefore:
Dura e s revenue rom the wor oot mar et 2 Bill Mill
Dura e s revenue rom the casual oot mar et Bill Mil

• So ura ex gets most of its revenue from work boots, even though the revenues are almost evenly split

ur nswer
The work boot market is . Billion . The casual boot market is . billion . ura ex generates Million from
work and Million from casual. epending on assumptions, casual may be slightly larger but the two should be
relatively close.
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nswer 2 lain why Badger is out er orming Dura e in the wor oot mar et

Ways to a roach the uestion

According to the data we have, and what we know as industry dynamics, the analysis can be split in main areas that would
demand further study:

• istribution

• Buyer Purchase Criteria by Brand (BPCs)

• Pricing

• Cost analysis

ven if you have many good ideas to answer this question, you won’t be impressive without ST CT . ou don’t
need a formal framework, just be methodical and organised in your approach – and summarise at the end

Distri ution Buyer Purchase Criteria y Pricing

Brand BPCs
ura ex is not sold where work boots We know that Badger is launching an
are being purchased. xhibit shows xhibit shows us that Badger’s top aggressively priced work boot line.
that Badger’s and Steeler’s boots two associated criteria are: uality / ura ex can alter its pricing strategy,
are often purchased in safety / work urability ( ) and Comfort ( ). e.g. lower its own boot price
channels, whereas ura ex does not The same holds true for Steeler. Thus, • However, looking at xhibit ,
have a significant presence in them these seem to be critical criteria for among the stronger work boot
work boot market market competitors, we see that
• However, ura ex’s top criteria only Steeler shows price as a top
Therefore, ura ex will need to are Styling ( ) and uality BPC (and then it is the lowest one)
broaden distribution if it is to / urability ( ), with Comfort – potentially because they are the
increase its share; it needs to is a distant rd at , far from its lower cost option is this market
get shelf space in the relevant competitors figures
channels
iven that price does not appear
ura ex is not meeting the key to be an important criteria for work
needs of blue collar workers boot consumers, ura ex will likely
and will need to strengthen its not realise great benefits from this
comfort perception strategy, and will also lower its
profits in so doing

Additionally, we should note that

Badger has built up a loyal customer
base: past experience as a criteria We know from the case that
represents and is rd on its list of ura ex has premium price
associated criteria positioning, hence lowering its
price may lead to perception of
lowering quality
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Cost nalysis

Comparing Badger to ura ex work • Sales Marketing spend is lower

boots, from xhibit , there is one key for Badger – potentially driven by Badger has lower margins (both
area where Badger proportionately lower marketing requirements in absolute and relative); given
and absolutely spends more than safety / work channel as well as already higher market price,
ura ex: materials . This supports established brand name among ura ex has limited exibility to
their perception of quality / durability blue collar workers; Also, Badger raise its boot prices; ura ex
and comfort among their consumers. has built a loyal customer base, may lower its margin somewhat
Also, they spend more on labour and it is less costly to maintain and shift emphasis to labour and
• etailer margin is lower for Badger existing customers than attract materials
– due to significant presence in new ones
safety / work channel

Summary
• ura ex is not sold where work boots are being purchased

• ura ex is not meeting the key needs of blue collar workers, as it is weaker than competitors on the critical ‘Comfort’
dimension

• Badger prices its boots more competitively, which is likely to be particularly appealing to the large work boot market; this
has helped develop a large and loyal consumer base

• Badger has lower retailer margins (both absolute and relative) and spends less on Sales Marketing

nswer What changes would you recommend to Dura e s wor oot strategy Why Would you
recommend they introduce a su randed oot line

There are two reasona le answers to this uestion The com any can either

• Focus on increasing its wor oots activities or

• m hasi e casual oots

ach option has its own justifications and implications.

The important thing with a subjective question is not what you answer to the question, but how you answer the question
– pick a point of view and support it with critical reasoning
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ncreased Wor Boot Mar et Focus

usti cation m lications

• epresents approximately of ura ex’s business • nter safety / work channel – we may be faced with
(from question ), making it very difficult to profitably pressure from Badger exerting in uence on retailers in
ignore this market this channel

• While ura ex does have greater market share in the • Build comfort and quality / durability perception
casual boot market, we know from information given in among blue collar workers
the case that the casual boot market is smaller in size
than the work boot market, which may indicate less • Increase proportion of costs allocated to materials and
opportunity for share growth; also, we derive lower labour – potentially reducing company margin
margins ( vs. ) from casual boots (from xhibit )
• There may be unique / niche positionings for ura ex
• iven that Badger is introducing a new work line, they (suggestions should be well thought out)
may see new growth potential in the market which
ura ex may also want to capitalise on • Introduce sub-brand or increase promotion of brand
with a focus on blue collar workers: may include on-
• Building a stronger image among blue collar workers site promotions, advertising in industry publications,
may entice them to try other ura ex footwear products or advertising in magazines / on television during
programmes with a higher blue collar readership /
viewership

m hasise Casual Boots

usti cation m lications

• Stronghold for ura ex right now ( market share) • nlikely to be a strong competitor reaction, since
ura ex is already dominant player
• astest growing market
• ura ex will not need to enter new distribution channels
• epresents approximately of ura ex’s business
(from question ), making it very difficult to profitably • Candidate should discuss a strategy for work boot
ignore this market market – either winding down, maintenance etc. and
implications of this
• ocusing additional resources on work boot market
would risk of alienating casual boot buyers (white collar
workers and students)

• Style is the top BPC for ura ex (from xhibit ). rom

the statistics on Badger and Steeler, we know this is
likely not an important criteria for the work boot market.
By focusing on the casual boot market ura ex can
devote additional resources to keeping up with styles to
better appeal to this target
 London Business School – Case Book

oland Berger Strategy Consultants

Mo ile Phone Com any MPC Mar et Share ain P FT

uro e

Case Bac ground

MPC is a global mobile phone handset manufacturer that has seen its market share in urope (by value) slip from five
years ago to today. MPC has discussed its ambition to become relevant in urope again and has set itself a stretch
target to get back to its previous market share position. The uropean handset market has traditionally been dominated by
two players but the last few years has witnessed new entrants from the far ast.

uestion
What volume does MPC need n ormation to e rovided as a Suggested a roach
to regain its ast mar et share res onse to candidate uestions Assess the size of market in five
osition and what ey challenges • Assess only the five key markets of key countries by volume and value
does it ace in getting there , ermany, rance, Spain and Assess what MPC needs to
Italy (populations of m, m, achieve to reach its goal by volume
m, m, m) and value
• uropean mobile market is iscuss the key challenges that
dominated by four key operators ABC needs to overcome
that handset manufacturers sell to
( odafone, Orange, Telefonica/O ,
T-Mobile)
• Handsets are split into two tiers –
smartphones and feature phones
• Smartphone penetration rate
across key markets should be
assumed to be

Ste Si e o the mar et

Start with confirming the expectations evelop first key assumption of the ey step – candidate should
on splitting the market – i.e. key mobile penetration rate. The candidate discuss the rate at which handsets
markets (e.g. , rance, ermany, should come up with one rate across in circulation will be replaced by
Spain and Italy), expectations of urope for calculation purposes but consumers. They should quickly
assumptions between different should discuss that this would not be identify that the replacement rate for
markets, only two tiers of handset the case in reality (the candidate might smartphones and feature phones are
types: standard handsets and wish to give some indication of how different. rom this, the candidate
smartphones. they think this might differ by market). should develop assumptions for the
two replacement rates.
Calculation – candidate should apply
nterviewer rom the population mobile penetration rate to the market Calculation – candidate should use
across the five key markets – populations to give the number of the replacement assumptions to
expect the candidate to do this on handsets in circulation. calculate the number of smartphones
an aggregated basis, but if they and feature phones sold in one year
start doing it for each of the five At this point the candidate should (market volume) and follow this on with
markets then let them continue. bring in the smartphone penetration an assumption on the value per unit
and calculate that number of (smartphone and feature phone) to
smartphones vs. feature phones in give the market value.
circulation.
 London Business School – Case Book

oland Berger Strategy Consultants

Mo ile Phone Com any MPC Mar et Share ain

Ste 2 MPC am itions

This is a relatively simple calculation to assess what MPC’s market ambitions translate to in terms of value and volume from
to market share.

The main task will come in the next section where the candidate will need to demonstrate the ability to rationalise what this
ambition means for MPC.

xample calculation:

er Fr S t Total T
Po ulation ata provided
atio o Mo ile enetration . . . . . Assumptions from candidate
Mo iles in circulation Calculation required
Smart hone ata provided
Smart hone mn hones Calculation required
Feature hones mn hones Calculation required
Smart hones re lacement rate yrs Assumptions from candidate
Feature hone re lacement rate yrs Assumptions from candidate
Smart hones sold in a year mn hones Calculation required
Feature hones sold in a year mn hones Calculation required
alue o average smart hone Assumptions from candidate
alue o average eature hone Assumptions from candidate
Mar et value n . . . . .
MPC current mar et share value n . . . . .
ssume s lit o MPC hones smart hone Assumptions from candidate
vs eature
in smart hones mn hones . . . . . . Calculation required
in eature hones mn hones . . . . . . Calculation required
MPC mar et share am ition value n 2 . . . . . .
ssume s lit o MPC hones smart hone Assumptions from candidate
vs eature
in smart hones mn hones . . . . . Calculation required
in eature hones mn hones . . . . . . Calculation required

Ste ey challenges
The candidate should be able to identify that MPC is not Apple or Samsung and be able to straight away determine that
to reach its ambitions it will have to overcome significant challenges. The candidate should group these into some of the
following areas:
• Consumer trends
• Product capabilities
• Marketing spend vs. brand value
• Competitor positioning
• elationships with key operators
• Large and diversified markets
• lobal hardware solution for localised markets

Creative view oints additional oints or discussion

• Candidate should discuss the time frame for such ambitions and conclude that such ambitions in the short to medium
term could be too challenging
• MPC should have more realistic goals in the short to medium term to ensure operationally it is focused in the right areas
but can still keep a stretch target for the future
• eeping employees incentivised to realistic targets will help to maintain staff moral
• In such a fast changing environment the right product with the right support and market execution will always do well
• uick assessment of what the candidate thinks have been Apple’s and Samsung’s recipe for their recent successes and
what learning MPC could take away for themselves
 London Business School – Case Book

oland Berger Strategy Consultants

Private et Co P C Fleet enewal P FT

Case Bac ground

A private jet charter company, P C, has aircraft, Lear ets which are used by businessmen, heads of state and high
net worth individuals. The jets are now years old and while recent performance has been very good, there are some
individuals in the company who think it is time to replace the eet as it is looking a little tired. In fact, customers are
beginning to say that they prefer competitors’ planes because they are new, but this might be just because the cabins
are more up to date. The market is growing and P C remains the market’s leading prestige brand. If the aircraft fulfil the
customers’ criteria, there is enough demand to go round.

uestion
Should Privet et Co re lace its n ormation to e rovided as a Suggested a roach
eet res onse to candidate uestions stablish that the options are:
ircra t tilisation a do nothing, continue with the
• Aircraft utilisation is measured existing eet
in Block Hours – hours is b replace the eet with new
considered excellent aircraft
• Older aircraft are less popular – in c refurbish the existing eet
another years, utilisation will
halve Start with asking the interviewer
• tilisation is driven more by questions about the business
facilities (e.g. cabin, seats, in- ight model and various dynamics.
movies) than aircraft age Identify the revenue and variable
cost components of P C’s
Pricing business and demonstrate clear
• The price to charter a Lear et is thinking about the dynamics
S , per BH that affect each.

Costs valuate each option. A good

• Assume all fixed costs will remain answer considers the revenue and
the same; they can be ignored in cost implications of each option and
this case looks to build a simple, top down
• Old aircraft will get increasingly business case. Creative candidates
expensive to operate (fuel will be able to identify more cost
efficiency, maintenance) - assume and revenue dynamics but the
S , per BH for an -year- successful answer will be able to
old plane, rising to S , per keep one eye on the scope and time
BH in another years available in the case.
• Cost of a new aircraft is S m
• Cost of refurbishing an aircraft is raw conclusions about the best
S m (inc. new cabin, in- ight investment case. This is about
entertainment, SM etc) more than the numbers; we want to
• ngines require full overhaul after see candidates who can interpret
, hours; cost of S . m (per the analysis into actionable
engine) recommendations.
• Cost of capital available to P C can
be assumed to be
 London Business School – Case Book

oland Berger Strategy Consultants

Private et Co P C Fleet enewal

The nterview
Ste denti yProcess
the evaluation structure
A simple evaluation model can be used The key differentiator here is criteria including cost, safety, prestige,
to generate three P cases. The key recognising that there is a third way – comfort and the latest facilities (e.g.
point here is to first create a baseline refurbishment. This is hinted at in the being able to connect phones and
case in which the cash ow of a do- question and will be made available laptops while in ight).
nothing approach is calculated. Once in the information above should the
this has been achieved, the same candidate ask the right questions. The
calculations can be re-run for the other aircraft age is a key driver of costs but
investment scenarios. the customer is driven by a range of

Baseline Do Nothing 2 e New Fleet e ur ish Fleet

Calculate revenue from declining Calculate revenue which will hold firm as Calculate revenue which will hold firm
utilisation as customers choose customers continue to use P C’s newer as customers continue to use P C’s
competitors’ planes’ over P C planes newer planes (cabin not aircraft is
important)
Calculate varia le costs driven by cost Calculate varia le costs which will
per Block Hour, which will increase over remain stable due to lower maintenance Calculate varia le costs driven
the time due to aircraft age and fuel costs on newer planes by cost per Block Hour, which will
increase over time due to aircraft age
Calculate cash ow which will be the Calculate cash ow driven by investment
same as gross margin due to absence of in replacement eets Calculate cash ow driven by
capital investment investment in re-furbishing eets

Ste 2 valuate each investment o tion

The second thing to get right is the structure of the calculation itself. The important thing here is to concentrate on
answering the question and avoid getting trapped in the detail or going off on tangents. A tree structure will help and,
indeed, shows the interviewer that you understand the big picture.

Price er B S , per BH

, hours pa., dropping to

evenue tilisation B , hours p.a. after yrs
for old a/c

Cash Flow
S , per BH, rising to
P calculation
aria le Cost Cost er B , hours per BH after
should assume
yrs for old a/c
discount rate

Ca C urchase S m per aircraft

S m per aircraft
C re ur ishment S . m per engine after
, BH
 London Business School – Case Book

oland Berger Strategy Consultants

Private et Co P C Fleet enewal

eveloping a top-down revenue and In addition, variable costs (fixed costs that the company is no longer
cost model over years will enable can be ignored in this comparison) are growing; a lack of investment leads to
the candidate to build a cash ow rising as the aircraft spends more time stagnation and eventual decline.
and P . or the baseline case, on the ground being fixed, fuel costs
revenues will decline over time as the increase. By , the engines will
aircraft interiors look increasingly old have completed the maximum , The comparison only needs to be
compared to newer aircraft owned by hours and will require an overhaul completed for a single aircraft but
the competitors. In years’ time, as costing S million for two engines. it is important that the candidate
many as half of all bookings are going clearly states this assumption.
to competitors. The resultant cash ow will be positive
but the candidate should recognise

Baseline 2 2 2 2 2 2 2
Block Hours
Price per BH ( S ) , , , , , ,
evenue 2
ar. cost per BH , , , , , ,
Total 2
ross Profit , , , , , ,
Cap x , ,
C , ( , ) , , , ,
NP discount rate

or re- eeting, P C needs to spend S million on a new plane in but no longer needs to overhaul the engines. The
new plane will enable full utilisation of block hours per aircraft and will stop costs from rising so fast in the future (at
least for the time being).

e New Fleet 2 2 2 2 2 2 2
Block Hours
Price per BH ( S ) , , , , , ,
evenue
ar. cost per BH , , , , , ,
Total
ross Profit , , , , , ,
Cap x , ,
C ( , , ) , , , , ,
NP 2 discount rate

or re-furbishing the planes, P C incurs much lower capital expenses - S m per aircraft in and S m per
aircraft in (remember the engines will still need overhauling ). The costs will continue to rise as the aircraft maintenance
bills will still be higher – although fuel costs may be improved due to the overhaul. Most importantly, P C will maintain full
utilisation on the aircraft without needing to tie up S million in capital.

e ur ish Fleet 2 2 2 2 2 2 2
Block Hours
Price per BH ( S ) , , , , , ,
evenue
ar. cost per BH , , , , , ,
Total e
ross Profit , , , , , ,
Cap x , , , ,
C ( , ) ( , ) , , , ,
NP discount rate

eplacing a single aircraft will generate and negative P of over S million using the above assumptions.
Simply re-furbishing the aircraft will generate a positive P of over S million if the numbers provided here are applied.
 London Business School – Case Book

oland Berger Strategy Consultants

Private et Co P C Fleet enewal

Ste Ma e a recommendation
The candidate needs to interpret the figures to make a clear recommendation. Comparing P over years’ values would
dictate that P C is best placed if it does nothing but candidates are encouraged to demonstrate an understanding of the
limitations of the P calculation.

good answer would e

• oing nothing gives the best P over years but is likely to lead to stagnation or decline in the long term as P C fails to
generate top-line growth
• Private et Co should invest for future growth
• It seems too early to replace a eet of only years old. Learjets are designed to last far longer than that as along as their
engines are maintained
• Business jet charter customers are looking for prestige and this is often cosmetic; the experience needs to be luxury
• P C should refurbish what remains a relatively young eet and should sweat their asset base

Creative view oints additional oints or discussion

• A longer term view on P is important; years is not enough for an asset with such a long lifetime
• A further alternative would be to lease newer planes
• Aircraft management services would give cheap access to newer planes
• P C should consider market signalling to show that year of manufacture is not important - it’s all about cabin luxury,
safety records etc. distract from the competition
• olling replacements would help to reduce P impacts
 2 London Business School – Case Book

Solon Management Consulting

Free to ir T Networ P FT

Case uestion
A free-to-air T network is experiencing stagnating revenues. At the moment, a major shareholder is seeking to exit and is
expecting management to create and deliver on a growth strategy for the group. ou are supposed to support management
in finding ways to grow revenues through diversification.

ntro Facts (tell the candidate if asked) ey nsights (do not share with the candidate)
What are the client’s current revenue streams? • The core business, T advertising, is stagnating.
More than of revenues stem from T advertising Additionally, winning market share from other free-to-air
T broadcasters is hard to achieve
How is the T advertising market developing?
In general, it follows the economy, but the share of T in • Client’s main assets are promotional power, brand, and
overall ad spending is stagnating / declining content

• These assets can be leveraged through platform variety,

product variety, and innovative strength

Case at a glance (for the interviewer only)

Part Part B Part C

nderstanding the ro lem Structuring the solution uanti ying one o the ideas
• The T advertising market is • Ideas to leverage content • Structure depending on the idea
stagnating • Ideas to leverage brand • xpectations:
• Advertising budgets are being • Ideas to leverage promotional Structured approach, driven by
shifted to online reach volumes and prices
• igitization has led to various new Business sense: What
T stations and increasing client’s assumptions are reasonable /
share of the advertising market is achievable?
very hard to achieve
 London Business School – Case Book

Solon Management Consulting

Free to ir T Networ

hi it Net advertising s ending y media ty e

Media s lit o net advertising s ending n

2
Other
. . Outdoor
.
. . . . . Online
. . . .
. .
. . . . . .
. Other print
. . .
. . . . Magazines

. . . . .
. . ewspapers

. . . . . . . T

ear ear ear ear ear ear ear

am le or structuring the ro lem

Shift in advertising Shift in media

budgets usage

Com any alue B TD Multi le

timise core em lary

usiness T diversi cation
not art o case Secure uture growth through initiatives

Plat orm variety • Online ideo

xhaustive sourcing and exploitation • Play T
Leverage of video rights across all platforms
• rand • Online
• content 2 Product variety • Licensing /
• romotional Systematic brand extension into Sports
ower growing B B and B C markets • Music

and nnovative strength • Online

ollow the target group through • ames
strengthen investments into disruptive media
inde endence rom assets
T advertising
 London Business School – Case Book

Solon Management Consulting

Free to ir T Networ

Possi le structure or calculating the moneti ation otential o online videos

New sers ey uestions or success ul ad monetisation

( rom own T e eat sers
promotion, search (mostly direct visits)
• T reach and brand successful transformed into
engines) online reach?
• Suitable content and service offerings available to
generate loyalty, frequency and stickiness?
• Optimised adjustment of amount and value of
nique ser isits per advertising formats?
• Optimised yield management established?
• ight sales strategy?
• Attractive environments and target groups for
Total isits PI per ist advertisers?

ideo views Ad Intensity

Available inventory Sell-out atio iscounts ross CPM

Sold Inventory et CPM

et advertising
ross- et
ey figures for website performance measurement revenues
ap
eported / calculated data PIs
 London Business School – Case Book

The nterview Process

Solon Management Consulting

ural Broad and N STM NT

North merica

Case uestion (for the interviewer)

) Ask the candidate to read the attached article from the T. Ask them what the story is about and whether the proposed
business venture is a good one ) Ask the candidate to size the market for satellite broadband ) Ask the candidate how to
structure the product to improve its appeal beyond the target segment

ntro Facts (tell the candidate if asked) ey nsights (do not tell the candidate)
All of the required facts are in the article • The company invested m in launching a satellite

urther assumptions to be provided by the interviewer • Theoretically the best way to assess whether this is a
good business is to perform an P analysis. But that is
too complicated for mental maths

• Main driver of P other than WACC will be addressable

market and market share

• Addressable market is rural broadband which doesn’t

have access to SL (as product is more expensive
than SL)

• May be possible to adapt product to compete with SL

by using direct marketing to adjust prices down in SL
capable areas

Case at a glance (for the interviewer only)

s this a good usiness Mar et si ing Product mar eting

Identify the rural broadband market as Start with S population Product is aimed at very specific
the target segment (ok to identify other segment, which is probably too small
segments, eg. Air transport as upside) Convert to households to sustain it

Candidate should suggest calculating Make estimate about urban/rural split Ask candidate what could be changed
an P and explain how this shows to widen appeal of product. ey insight
that this is a good business Make further assumption about how here is that the company should look
much of this is already served by SL for ways to market the product more
Candidate should notice that the widely without destroying the price
product cannot compete against other Identify that some households will premium it enjoys in its target markets
technologies because of price never be addressable

emainder addressable market

 London Business School – Case Book

Solon Management Consulting

ural Broad and

iaSat launch targets rural S we demand FT com

By avid elles in ew ork

A newly launched m satellite will While most satellites are primarily used intensive services such as et ix and
soon start transmitting broadband for one-way broadcasting, iaSat- Hulu has increased. Wild Blue hasn’t
internet to rural S consumers the will be able to handle the two-way changed its service for six years, he
latest effort by telecommunications transmission of data at gigabytes said. That isn’t considered a good
groups to satisfy skyrocketing demand per second. That is more bandwidth value anymore. iaSat had revenues
for high speed residential data than the combined capacity of Intelsat of m in the most recent quarter
services. and S S, iaSat’s two largest peers, with net income of just m.
Mr ankberg said.
The new satellite from iaSat will give Shares in the company are up per
the asdaq-listed company, based Intelsat, the worlds largest provider cent over the past month to about
in California, the ability to effectively of fixed satellite services, recently , giving it a market capitalisation of
compete with other non premium outlined plans to invest . bn in four bn. Its Wild Blue service has about
internet providers, which still are new satellite launches by the end of , customers in the S paying
the only options for millions of S . iaSat, in October successfully about per month for satellite
consumers. launched its new iaSat- , one of the internet services. Mr ankberg hopes
highest capacity data satellites in the to treble the number of subscribers in
Its bandwidth will also be used to world. Launched with a Proton rocket the coming year with capacity from the
power the in- ight wireless internet in azakhstan, the satellite is now in new satellite. The company also makes
service for etBlue, the S carrier. geosynchronous orbit , miles money by supplying components to
above the earth. It is powered by other satellite makers, and selling
The iaSat launch is likely to meter wide solar panels. Including services to companies and the S
be welcomed by the ederal launch costs and insurance, the government.
Communications Commission, which satellite cost iaSat m.
is pushing for solutions to the digital One of iaSat’s customers is ish
divide, especially in rural areas. If Mr ankberg conceded that his etworks, the satellite T provider,
we have a really good service at industry faces an uphill battle. which resells its service to S
a reasonable price, we can keep Satellite doesn’t have a good consumers. arlier this year ish’s
expanding the market, said Mark reputation for broadband service, parent company, choStar, acquired
he said. Moreover, WildBlue, the Hughes Communications, a iaSat
ankberg, iaSat’s chief executive. consumer facing service iaSat rival, a move that could see ish drop
Satellite will be better for a lot of acquired in , has not upgraded iaSat as a supplier.
people than SL, or . its service, even as the use of data
 London Business School – Case Book

Solon Management Consulting

ural Broad and

Di erentiation etween oor average and su erior er ormance (for review after the case interview)

Poor Per ormance verage Per ormance Su erior Per ormance

Framing ro lem ails to identify the target Identifies rural market Correctly identifies rural
rioritising issues market as being the rural as target but fails to see market. nderstands
market service from consumer nature of consumer
point of view choice in this market and
understands how central
this is to proposition

denti ying relevant oes not correctly identify Identifies, amount invested nderstands that
in ormation sum invested (which is and attempts to drill down consumer choice in rural
written into the story). ails into definition of rural, but markets very different
to understand importance stops short of a convincing to other markets. g. o
of rural target market for reason why rural market is unlikely to be cable
the product an important definition internet. Only choice is
SL. Probes to find out
about SL distance limits

unning calculations oes not size the market Is able to correctly size the Sizes the market and is
drawing conclusions rom correctly – ie. does not market using appropriate able to relate size of market
acts use estimates to drill down assumptions/guided by the to likely market revenue
from S population to rural interviewer using A P assumptions.
population. Sizes market Candidate then attempts to
on people not households compare BIT A potential
against investment cost

denti ying ey im lications oes not realize how Sizes the market correctly Sizes the market and
and ne t ste s small the target market and is able to identify proposes creative ways
demonstrates creativity is compared to the requirement for further to expand the appeal
investment cost upside (non rural markets, of the product without
airline market) to justify compromising the price
investment cost premium the product
can command in its main
market
 London Business School – Case Book

Strategy
M T
Business Class irline NT

uro e

Case uestion
Our client is a budget airline considering entering a new market for business class ights. They are considering running an
all business-class service within urope. They want your advice on whether this is a good idea, and if so, how they should
do it.

ntro Facts (tell the candidate if asked) ey nsights (do not tell the candidate)
What is the client’s current business • Issues exist around the brand of a low cost airline,
A range of cheap short haul ights from the to various meaning the rebranding might be necessary
uropean destinations
• Landing slots at hub airports are critical to business
o they offer any business class ights at the moment? travel, and will be very hard to acquire
o, but passengers can pay for various upgrades such
as speedy boarding and greater legroom • They do not have the full set of capabilities required to
deliver a business class service, so choice of partners
How is their current brand perceived? will be critical
xtremely cheap, but very low quality service

Case at a glance

Part Part B Part C

Structure the case and discuss the Identify some innovative service Work out the cost to break even on a
challenges that will be involved in offerings for the luxury tourism market ight to ienna
entering this market

Structure se a classic Cs market entry structure

Mar et ntry Structure

Customers Com etition Ca a ilities ntry Mode

Business Travellers Incumbent Airlines xisting slots at airports Set up new subsidiary

Provision of onboard and

Luxury Tourism Possibility of new entrants Acquire existing company
airport services

Substitute products Brand

 London Business School – Case Book

Strategy

Business Class irline

Structure xamples of typical questions that the interviewer could ask around each of the four areas

Customers Com etition

Business Travellers • How will incumbent airlines react to this?

• How price sensitive are they? • Are alternatives such as train travel serious competition?
• What is most important to them? • Can they position themselves as competition to other
airlines’ economy offerings?
Lu ury Tourists
• Is there a likely market for this?
• How would it differ from the market for business
travellers?

Ca a ilities ntry Mode

• Will their budget brand be a limitation or an asset? • Can this simply be launched as another route with a
• What capabilities do they have as a budget airline that different service?
are particularly useful? • Whom could they partner with?
• What do they not currently do that they will need to be • Is an acquisition or partnership a viable option?
good at? • Should they consider setting up a new company?
• o they have access to landing slots?

Creativity Here are some ideas for innovative services in this market
Basic deas More nnovative deas
ly a scheduled service to high end holiday resorts Charter to luxury cruise lines to offer passengers ights
Partner with luxury hotel chains and travel companies to to the ship
offer packages o not y scheduled ights, but focus on one off ights
ly from regional airports and include a chauffeur to get to key uropean social events – Monaco rand Prix,
passengers there Paris ashion Week, LBS winning MBAT
Offer packages including entry to these events
un on board events, such as wine tastings
Offer ‘experience ights’ e.g. over the orth Pole
 London Business School – Case Book

Strategy

Business Class irline

Calculation Our first destination will be ienna. How much would we have to charge to break even with
/ seats filled?

What are the main cost items that you would expect an airline such as this to face?

Costs

Airport charges –
uel Aircraft dry lease Aircraft servicing Aircrew costs Other overheads Landing, passenger Catering costs
use of facilities

pilots @ ph
kg @ . / g / ight / ight / ight / ight / ight
crew @ ph

• The figures in each cost item can be given to the interviewee, although they should expect to make a reasoned
estimate where possible
• Any cost items the interviewee does not identify should be given to them
• The interviewee should then work through to the answer below

evenue Passengers , costs per passenger

 London Business School – Case Book

Strategy

Business Class irline

Di erentiation etween oor average and su erior er ormance (for review after the case interview)

Poor er ormance verage er ormance Su erior er ormance

Framing ro lem ails to offer a structure ses a Cs structure well, ses the structure to
rioriti ing issues or to understand what is and identifies some of the identify where the major
relevant within it major challenges challenges lie and has
ideas about how they
might be resolved

denti ying relevant Struggles to identify what Identifies a number of the Identifies a number of
in ormation the cost categories are, major cost categories, can the cost categories,
does not ask the right make reasonable rule of understands what drives
questions to get there thumb estimations them and can make
estimations

unning calculations Struggles with arithmetic, eaches an answer and eaches an answer
drawing conclusions rom unable to work out a break shows the ability to sense easily and demonstrates
acts even figure check their numbers structure in their approach

denti ying ey im lications Thinks of only basic ideas Comes up with - ideas Comes up with a wide
and ne t ste s for the airline service, for the airline service which range of ideas, including
demonstrates creativity probably things that are are at least sensible innovative ones that may
being done already not have been heard before
 2 London Business School – Case Book

Strategy

a id Margin m rovement P FT

uro
eogra
e hy o the case

Case uestion
Our client is a packaging coating company that produces coatings to protect beverage cans. They are experiencing a profit
margin erosion and would like you to help them restore profitability without modifying their cost structure.

ntro Facts (tell the candidate if asked) ey nsights (do not tell the candidate)
Where and what is the company producing? Without touching at the cost structure, volume, price
They provide uropean fillers with coating for the inside product mix are the key levers to improve margins.
of beverage cans.
The most effective margin lever is price, hence we shall
What explains the margin erosion is competition facing focus on improving the pricing strategy.
the same challenge?
The reason is macroeconomic: a slow economic recovery
since the financial crisis a raw material volatility have been
affecting the entire market.

What is the specific objective what is the deadline?

A profit margin improvement is expected within yrs

Case at a glance

Part Part B Part C

Let s review the main ricing denti y some innovative service Let s estimate the rice increase
strategies to rices Let s loo at a value ased ricing that could e reali ed than s to a
iscuss the main pricing strategies: a roach or their roduct what value ased ricing a roach on
cost-based; value-based; competitive- could e the ene ts that customer their roduct
based pricing strategies. are loo ing or Based on the following benefits -
Imagine potential customer benefits Technical Assistance; Coating Waste
from product features services eduction Scratch esistance - let’s
offerings. assess the potential price impact
(total gain, gain per g and price
increase).
 London Business School – Case Book

Strategy

a id Margin m rovement

am le o Structure

Margin Levers cluding Cost

evenue Price olume

Ma imising Pricing ncreasing Sales olume

Increase Average Selling Price of existing products Increase Market Share at existing customers
( lasticity) (more often, more per command, for longer, etc.)

Improve Product Mix by selling more high margin products each out to new customers
(Positioning) (within the existing area or in new regions)

Structure How do you set price and what are the main pricing strategies?

alue Bene ts Driven aw Material Cost Driven Mar et Com etitor Driven

Base prices on product and service Base prices on raw materials volatility Base prices on competitor prices,
benefits to be shared between the to reduce margin exposure supply-curve, and supply/demand
customer and the supplier balances

• Works better if product or service • Works better if raw materials are • Works better if competitor prices
benefits are explicable to the increasing and are expected to are known and collecting them is
customers – ideally quantifiable continue to do so legal
• Works better if customer knows • Works better if price negotiation • Works better if price elasticity is
the next best alternative prices period is shorter than the calculable
and features purchasing period
 London Business School – Case Book

Strategy

a id Margin m rovement

Creativity Let’s now focus on value-based pricing: what could be the customer benefits of a coating product
for the inside of cans of soda?
Below verage verage ove verage
Thinks about a couple of product Suggests: Same as before plus a couple of the
features but does not manage to • educe down time to increase following:
translate them into benefits for the productivity • Protect brand image (scratches,
customers • educe product usage taste, customer claim)
• educe labour cost • Provide local support
• xtend product life expectancy
• ulfil legislation compliance
• Shift ordering responsibility to the
supplier

Comes up not only with product

related but also service based benefits

uantitative analytics What is the potential price increase to be realized thanks to a value-based pricing
strategy on a coating product for soda cans?
What is the price and volume sold of our product?
We sold Tons of ua oat at 2 2 g to our only client

What is the next best alternative and what is its price?

The closest competitive product is rime oat and costs 2 g

What are the key differentiating benefits of our products?

The main benefits are technical expertise, coating waste reduction and scratch resistance

Bene ts ssum tions Calculation Total Saving

Price m act g

Technical • Technicians on site: ays / ear ays of Technician , Total

Assistance • Cost of a technician: , / ear x aily Cost ( / ) . / g
• Travelling xpenses: / ay Travelling cost

Coating Waste • product saved Product Saved , Total

eduction • Cost of disposal: / Ton x olume , g . / g
x ASP . isposal .

Scratch • educe scratched cans by of the Product Saved , Total

esistance overall production x Cans M( , / . ) . / g
• grams of coating / can x Can cost .
• illed can cost: . / Can

, Total
Total , -( . - . ) ,
. / g
Potential Price ncrease 2 g( . - . ): 2 ( . / . )
 London Business School – Case Book

Strategy

a id Margin m rovement

Di erentiation etween oor average and su erior er ormance (for review after the case interview)

Poor er ormance verage er ormance Su erior er ormance

Framing ro lem ocusses on potential cost • Only one level tree raws at least a level tree:
rioriti ing issues savings (off topic) • ust mentions price • Price from ASP
volume product Mix
• olume from new
existing customers

xplains with case

terminology

denti ying relevant • Comes up with • nderstands the • Imagines - relevant

in ormation less than pricing industry potential customer
strategies • igures out objectives benefits
• Comes up with less • Comes up with ideas to • efers to the filler’s
than product benefits improve volume price supply chain
• Lists pricing • inds all pricing
strategies strategies

unning calculations
drawing conclusions rom • o clue on how to • Mixes units or makes a • Perfect ow to come
acts assess the premium calculation error once up with the numerical
generated by each • inds the potential solution proactive
benefits financial gain of each about assumptions
• orgets to include the benefits but does • Puts outcome in
price difference vs. not put findings in perspective:
the competition in final perspective and does • Mentions next steps:
outcome not do the So What? ifficulty to pass it all
• Mixes units (day vs. to the customer
year or tons vs. g)
• Multiple calculation
errors

denti ying ey im lications • ust thinks of • Articulates wrap up As before plus:

and ne t ste s increasing the price including clear answer • Thinks of a strategy
demonstrates creativity by the exact number to improve margins to conduct the pricing
estimated during the • nderstands the need negotiation
case to share the benefits • Includes next steps in
with the customer the wrap up
 London Business School – Case Book

Strategy

Mo ile Networ evenue eneration P FT

nited ingdom

Case uestion
Our client is a mobile network operator in the . It has recently been suffering from high costs driven by increasing data
usage, and this has led to a fall in profit. They want to explore options for increasing their revenue

ntro Facts (tell the candidate if asked) ey nsights (do not tell the candidate)
Is it just data usage driving costs? • The market for mobile network operators is becoming
es. rowth in data usage leads to the need for constant commoditised – there is little to distinguish between
investment in the network infrastructure and higher running networks and customers switch easily if prices are
costs too high

Are we interested in reducing costs? • The money in mobile internet is made by those who
Of course, but it’s out of our scope control the content, not the ow of data

What is the charging structure?

There is a monthly line rental, which includes some calls
and SMSs, and beyond that calls are charged per minute,
SMS per message, and data is unlimited on all tariffs for a
monthly fee

Case at a glance

Part Part B Part C

What are the drivers of revenue for Beyond the commodity business of A quantitative assessment of whether
a mobile network operator and what transmitting data, in what other ways it would be better to charge customers
improvement levers do we have? could a network operator generate per Mb of data used rather than a fixed
revenue from the growth in the mobile fee, and a qualitative view on whether
internet? it is a good idea or not.

Structure A particularly good structure for this case is one that really understands the breakdown of
quantity and price

evenue ty Price

uantity Price

umber of individual Phones / evices per Monthly fixed charges e.g.

ixed Monthly Line rental
customers customer data, roaming

Other services, e.g. Price per unit of usage Price of content

Level of usage
content (minute, MB, SMS) (payable to the network)
 London Business School – Case Book

Strategy

Mo ile Networ evenue eneration

Discussions around the structure Could involve some of the following

Possi le Discussion To ics

ot xhaustive

Num er o Devices • Increase market share by winning customers from other networks
How? If those customers also consume a lot of data, what will the impact
on costs be?
• Create new devices that people may sign up to in addition to their existing
ones
What sort of device? How will we charge for the data on it?

sage • rive increased usage of those services where we are able to charge on a
‘per-usage’ basis
Would we have to lower price to do that? Are there ways we could
increase the value-add of our services?
• Conversely we could try to discourage data usage if it is charged on a at fee
basis, to reduce costs rather than increase revenue
How? Introduce limits?

Pricing Models • Increase the fixed price we charge for data

Could this make us uncompetitive?
• Introduce a variable charge for data based on how much people use, e.g. a
cost per Mb
Would this scare off the high data users? Would that even be a bad thing?
• se a combination of the two, such as a range of different packages
How might you segment your users?
 London Business School – Case Book

Strategy

Mo ile Networ evenue eneration

Creativity Transmitting data is becoming commoditised. How else might the network generate revenue from
mobile internet?

Possi le Ways o enerating evenue

ot xhaustive
Positives Negatives
Create content and charge • The network will get the full revenue for • etwork operator likely to have no
customers or it any content it creates experience at generating content

Charge or hosting • Can provide customers with a easy • May be difficult to persuade content
content i e a we ortal way of finding suitable content owners to provide content if they can
where content owners • Could be a distinguishing feature for offer it for free elsewhere
ay or their content to e the network, e.g. Apple Apps Store
included

ntroduce advertising to • enerates easy revenue • Likely to meet resistance from

the networ customers who are already paying

ther services e g credit • Creates a new revenue stream for the • equires close involvement of device
card readers stolen car networks manufacturers and access to new
trac ers etc markets

• A strong candidate will identify a number of ways of monetising content and creating further forms of usage,
understand the positives and negatives of each and form a view on what the network has the capabilities to actually
do. They may get to this stage without prompting

• An average candidate will identify some additional ways of generating revenue and understand which are more
suitable than others

• A oor candidate will identify one or two additional options, but recommend those that are not likely to be suitable
for a network operator to do
 London Business School – Case Book

Strategy

Mo ile Networ evenue eneration

Calculation How much additional revenue could we generate if we charged users . per Mb rather than
monthly fixed fee? Would you recommend doing this?

The m users figure and the usage data is

given to the candidate, although they should This should all be calculated by the candidate
ask for it first

Top Mb x . mx x
Average – b m

nd
Mb x . mx x
Average – Mb m

rd
Mb x . mx x p
m users
Average – Mb m

Bottom Mb x .
Total m
o data package

x mx dditional revenue
fixed fee
m m

Proposed Pricing
Current Pricing
 London Business School – Case Book

Strategy

Mo ile Networ evenue eneration

Di erentiation etween oor average and su erior er ormance (for review after the case interview)

Poor er ormance verage er ormance Su erior er ormance

Framing ro lem ses a standard profit A good structure that is The ability to understand
rioriti ing issues framework and examines able to break quantity and which measure of quantity
costs instead of revenues price down to at least is relevant depending on
components within each how the price is charged

denti ying relevant oes not understand that As a minimum identifies Would identify what is
in ormation the fixed fee for data is the that charging for data with driving data usage, and
problem, and focusses on a fixed fee is the problem, then begin to discuss other
other factors instead and suggests alternatives ways of generating revenue
from this

unning calculations ails to account for the The right answer as a An understanding of
drawing conclusions rom current revenues, or a minimum, structured by whether this is a good
acts simple average of data use each usage segment idea based on more than
across all customers a comparison of numbers,
showing good commercial
sense

denti ying ey im lications Thinks in terms of pricing One or two good ideas As per an average
and ne t ste s models only, fails to around monetising content, candidate, but would show
demonstrates creativity understand where the and understanding of the a real understanding of
money is in mobile internet, pros and cons of each where money is being
suggests things that will made in mobile internet
also drive up costs and what the network has
the capabilities to do
Case Competition Example

Johnson and Johnson

Strategy&
 2 London Business School – Case Book

ohnson and ohnson

M Trocar Business Case P FT

uro e Middle ast and rica DSL 2

Case Bac ground

It was the end of the week; Paul Marcun was shutting down for the day, no closer to resolving his dilemma. As ice
President for thicon ndo Surgery ( S) in M A, he had been working on the business plan for the next financial year
when his attention was drawn to the data on the trocar business. It was clear that something was going on in the market and
that he needed to quickly get to the bottom of it.

S is one of the ohnson ohnson’s surgery globally through innovation in The S product range for
medical devices businesses, product design, high quality products, laparoscopic surgery includes access
specialising in products used for open professional education and excellent devices (trocars), stapling devices,
and minimal access surgery as well support teams across the world. This ligating devices, surgical instruments
as advanced energy devices. The contributed to the increase in lap and advanced energy devices.
business has grown from start-up in surgery adoption from inception in
to a . B global business. With to estimated in .
headquarters in Cincinnati Ohio, its
business extends across all regions.

S led the adoption of laparoscopic

new way o er orming surgery 2

In , r. . Barry Mc ernan, after ow Minimally nvasive Bene ts o minimally invasive
making only a mm incision, inserted Procedures wor rocedures
a laparoscope (or miniature camera) Minimally Invasive Procedures (MIP), ot only do these procedures usually
into a patient’s abdomen and removed which include laparoscopic surgery, provide equivalent outcomes to
a gall bladder. The patient recovered use state-of-the-art technology traditional open surgery (which
in days, rather than weeks or months. to reduce the trauma to human sometimes require a large incision), but
This was the first laparoscopic tissue when performing surgery. minimally invasive procedures (using
cholecystectomy performed in the .S. or example, in most procedures, a small incisions) may offer significant
and the beginning of the minimally surgeon makes several small inch benefits as well:
invasive movement in surgery. incisions and inserts thin tubes called
trocars. Carbon dioxide gas may be uicker reco ery Since a minimally
Since then, minimally invasive used to in ate the area, creating a invasive procedure requires smaller
procedures have been changing space between the internal organs incisions than conventional surgery,
the way people think about surgery. and the skin. Then a miniature camera the body may heal much faster.
Patients who choose these innovative (usually a laparoscope or endoscope)
procedures over conventional surgery is placed through one of the trocars horter hospital stays Minimally
usually have shorter hospital stays and so the surgical team can view the invasive procedures help get patients
quicker recovery. This means getting procedure as a magnified image out of the hospital and back to life
back sooner to the things that are on video monitors in the operating sooner than conventional surgery.
important in life. room. Then, specialized instruments
are placed through the other trocars ess pain Because these procedures
to perform the procedures. In some are less invasive than conventional
cases, such as minimally invasive surgery, there is typically less pain
colon surgery, a slightly larger incision involved.
may be needed.
ess scarring Most incisions are so
small that it’s hard to even notice them
after the incisions have healed.

Annual eport
Information about laparoscopic surgery - http://www.smarterpatient.com/patient/learnmore/minimallyinvasivesurgery
 London Business School – Case Book

ohnson and ohnson

M Trocar Business Case

Two categories o la arosco ic d anced laparoscopy these

surgical rocedures comprise more advanced procedures
asic laparoscopy these are broadly requiring advanced laparoscopic
basic procedures that require basic to surgery skills. These include colorectal
intermediate laparoscopic skill levels. (removal of large intestine segments),
These include cholecystectomy (gall bariatrics (obesity surgery), thoracic
bladder removal), appendectomy (removal of lung tissue) and advanced
(appendix removal) and a number of gynaecology procedures. These
basic gynaecological procedures. are often cancer related procedures
These procedures are usually that require longer than one hour to
completed in less than an hour with complete and involve relatively larger
relatively few instrument exchanges numbers of instrument exchanges .
and often non-cancer cases.

The trocar mar et overview

Trocars are placed through abdominal eusable trocars cost-conscious S and the other leading players
incisions to allow laparoscopes and hospitals continue to show a in the trocar market are primarily in
other instruments to enter a patient’s preference for reusable trocars, which the disposable market. This market
body. Because they are used in all offer a lower cost per procedure at million in is growing at
laparoscopic procedures, trocar unit despite a higher upfront price and can . compared to . growth in
(or volume) sale growth will closely be used many times before damage. the reusable market.
correlate to surgical procedure volume The preference for reusable trocars is
growth. particularly strong in ermany, which There are however significant
typically has a high reuse rate for variations in the market between the
Trocars are available in M A in either many medical devices for developed developed and emerging markets as
disposable or reusable versions: markets, and is also evident in the shown in table . table . .
emerging markets. Manufacturers
Disposable trocars consisting of of disposable devices, however,
bladeless, bladed, and blunt-tip are responding to this tendency by
trocars, will continue to represent the aggressively marketing the advantages
majority of the revenues earned in the of disposable products. On average,
trocar market over the next several the basic laparoscopic procedures use
years. These devices are generally trocars per case whereas advanced
seen as more convenient and safer laparoscopic procedures use –
than reusable devices because they do trocars per procedure.
not carry a risk of biological cross-
contamination. Because these devices The M A trocar market, comprising
can only be used once, they generate reusable and disposable devices
higher revenues per procedure, which generated revenues of over
supports market revenues. million in . The continued increase
in laparoscopic procedures will lead to
steady growth through (table ).
urthermore, as a result of sterilization
concerns, there is a strong preference
for disposable trocars, which generate
higher per-procedure revenues and
contribute to greater market growth.
By , the M A trocar market
will be valued at over million,
representing a CA of approximately
. .

This means that the procedure requires more instances of passing instruments through the trocars and thus the quality of the trocar can have a direct impact on
procedure duration.
 London Business School – Case Book

ohnson and ohnson

M Trocar Business Case

Com etitive landsca e

In , thicon ndo-Surgery led Applied Medical held the third-leading Hospitals in developed markets
the uropean market for trocars position in the disposable trocar will typically sign an annual supply
with the OPATH C L trocar market in , and has been rapidly contract with a trocar manufacturer
range, followed closely by Covidien. gaining market share in urope over so that switching between suppliers
OPATH C L is seen as the the last few years, particularly in the during a year is uncommon. However,
premium top performing trocar in , ermany, and rance. Applied emerging markets are often tender
the market. Both of these firms were Medical competes in this market by driven for quarterly purchases.
successful by holding strong positions offering its products at a much lower
in the disposable segment, which price than thicon ndo-Surgery and In the much smaller reusable trocar
generates about times the revenue of Covidien, which allows it to secure segment, A L STO is the market
the reusable segment (about times in contracts among cost-conscious leader, followed by Olympus. A few
developed markets). urthermore, both hospitals. Applied Medical is also other competitors were also active in
of these companies are well-known expanding its reach into the emerging the uropean trocar market, including
international firms with high-quality markets of M A with its low cost ichard Wolf, Aesculap (a B. Braun
devices and wide product ranges. offering being very attractive to those company), and CO M . See table
markets. for market share estimates. Also see
Both of these companies are well table for estimated relative pricing.
positioned to remain leaders in the
trocar market through .

Signi cant trends

eports from the market have in some countries. In emerging euse of trocars disposable trocars
highlighted the following key trends in markets, the reverse has occurred are often re-sterilised and reused in
the markets: where countries are posting good the emerging markets of the region.
P growth and increasing healthcare iven infection risks, the trend is not
Growing inimal In asi e rocedure spend. observed in the developed markets but
doption countries all across the it is estimated that trocars are used
M A region are increasingly adopting Increasing power of non clinical approximately . times in the emerging
laparoscopy with MIP penetration rate stakeholders the role of the markets. The main identified motivation
of overall. or basic procedures physicians as the primary decision for reuse is cost reduction as the price
in developed markets, the penetration maker in the selection of medical of a trocar is spread across multiple
rates are over while emerging consumables has been changing over uses. However improving patient
countries are still below . The several years to a point where hospital awareness and regulatory environment
MIP penetration rates are expected administration staff now have equal in the emerging markets may reduce
to increase into , mostly in the or greater roles in product selection. level of reuse.
advanced laparoscopy segment This has increased the role of price
aided by improved physician skills in purchase decisions for hospitals ingle port laparoscopy In urope,
and acceptance by health technology across the region. there is considerable interest in
assessment bodies of laparoscopy as the use of single-port laparoscopy
recommended over open procedures . Growth of low cost competitors there devices, which are generally priced
See table for procedure volume are increasing numbers of low cost at a premium. Whereas adoption
forecasts into . manufacturers entering the trocar rates are still very low (less than
market, targeting customers in both of laparoscopic procedures), industry
Global economic performance the the developed and emerging markets. sources expect that the use of these
recent recession and current sovereign Whereas the quality and performance devices will increase over the forecast
debt crisis across much of urope has of the low cost competitor products period, driven by improved physician
led to cuts in government spending are usually – below the training, favourable results from clinical
across the region. In developed levels for the premium products , the studies, and patient demand for the
markets, government healthcare quality is perceived to be improving single-port technique . S piloted a
spending is declining by up to especially for basic laparoscopic Single Site Laparoscopy (SSL) port in
procedures. but has not executed a full launch.

Source – Millennium esearch roup

See http://www.nice.org.uk/nicemedia/live/ / / .pdf for a recent ational Institute for Health and Clinical xcellence review of laparoscopic colorectal surgery
This is an internal estimate based on comparative performance in ease of entry, maintenance of gas pressure and trocar retention
http://en.wikipedia.org/wiki/Single port laparoscopy
 London Business School – Case Book

ohnson and ohnson

M Trocar Business Case

Paul s dilemma
The data from the field was showing ND P T C L trocar u grade The B S ro ect
increasing price pressure in the There has been very limited innovation S has developed a new range of
trocar business with more customers in the trocar product space. The trocars called BAS . These trocars
considering the lower cost trocars product technology has largely are suitable for basic laparoscopic
as a way to reduce procedure input remained the same over the last procedures but not considered ideal
costs. It increasingly looks like the years with only limited enhancements for advanced procedures . There is
OPATH C L will struggle to made by the leading competitors. the possibility to launch this product.
maintain its market share at the current However, S has been working on The manufacturing and distribution
price point. A number of marketing some significant enhancements to the costs of the BAS will be similar to
teams from countries in the region are OPATH C L range which would the OPATH C L so that there
considering price changes to respond significantly improve its performance will be gross margin variation with
to the growing low cost competition. by addressing some of the key OPATH C L based on the
This will have significant implications concerns reported by physicians in relative price decided.
on the business plan numbers for next performing laparoscopic surgery.
year and into the strategic planning
horizon. He also has two projects to
consider in deciding a plan for the
trocar business.

our challenge
Paul needs to make some decisions and has scheduled a meeting with S President to discuss his plans and requires
your advice.

uestions to answer

As Paul, would you recommend What change (if any) would you What steps and/or other
the launch of BAS and at what make to the positioning of the considerations would you
segment / market should it be C L trocars range? What will be propose for implementing your
positioned? If decided to launch, the revenue impact? recommendations?
at what price relative to the
OPATH C L range? What (if any) wider strategic
recommendation would you
make to the Company President
regarding the trocar portfolio in
M A?

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 London Business School – Case Book

ohnson and ohnson

M Trocar Business Case

hi its
Ta le M Trocar Mar et stimates
alue Mar et in M SD 2 2 2 2 2 2 2 2 2 2 2 2 C
Total market (reusable disposable) ‘M . . . . . . . . . . . .
reusable market ‘M . . . . . . . . . . . .
isposable new market ‘M . . . . . . . . . . . .
S Sales ‘M . . . . . . . . . . . .
on- S Sales ‘M . . . . . . . . . . . .
Total market growth rate . . . . . . . . . .
Source: Internal stimates

Ta le Develo ed Mar et Trocar Mar et stimates

alue Mar et in M SD 2 2 2 2 2 2 2 2 2 2 2 2 C
Total market (reusable disposable) ‘M . . . . . . . . . . . .
reusable market ‘M . . . . . . . . . . . .
isposable new market ‘M . . . . . . . . . . . .
S Sales ‘M . . . . . . . . . . . .
on- S Sales ‘M . . . . . . . . . . . .
Total market growth rate . . . . . . . . . .
Source: Internal stimates

Ta le 2 merging Mar et Trocar Mar et stimates

alue Mar et in M SD 2 2 2 2 2 2 2 2 2 2 2 2 C
Total market (reusable disposable) ‘M . . . . . . . . . . . .
reusable market ‘M . . . . . . . . . . . .
isposable new market ‘M . . . . . . . . . . . .
S Sales ‘M . . . . . . . . . . . .
on- S Sales ‘M . . . . . . . . . . . .
Total market growth rate . . . . . . . . . .
Source: Internal stimates

Ta le 2 2 Trocar Mar et Share stimates

Dis osa le eusa le
S .
Covidien .
Applied Medical .
A L STO .
ichard Wolf .
Olyreusables/ yrus/ACMI .
Aesculap (a B. Braun company) .
Other . .
. .
Source: Internal stimates

Ta le 2 Dis osa le Trocar elative Prices

S
Covidien
Applied Medical
Source: Internal stimates

Ta le M Procedure olume stimates

2 2 2 2 2 2 2 2 2 2 2 2 C
Basic Procedures (Colecystectomy/ All , , , , , , , , , , , , , , , , , , , , , , .
Appendectomy)
Advanced (C/ , pper I Bariatrics, All , , , , , , , , , , , , , , , , , , , , , , .
Thoracic, )
Total All , , , , , , , , , , , , , , , , , , , , , , .
Basic Procedures (Colecystectomy/ MIP , , , , , , , , , , , , , , , , , , , , , , .
Appendectomy)
Advanced (C/ , pper I Bariatrics, MIP , , , , , , , , , , , , , , , , , , , , , , .
Thoracic, )
Total MIP , , , , , , , , , , , , , , , , , , , , , , .
Basic Procedures (Colecystectomy/ Open , , , , , , , , , , , , , , , - .
Appendectomy)
Advanced (C/ , pper I Bariatrics, Open , , , , , , , , , , , , , , , , , , , , , , .
Thoracic, )
Total Open , , , , , , , , , , , , , , , , , , , , , , .
MIP adoption rate All . . . . . . . . . . .
MIP adoption rate Basic . . . . . . . . . . .
MIP adoption rate Advanced . . . . . . . . . . .
Source: Internal stimates
 London Business School – Case Book

ohnson and ohnson

M Trocar Business Case

Ta le Develo ed Mar et Procedure olume stimates

2 2 2 2 2 2 2 2 2 2 2 2 C
Basic Procedures (Colecystectomy/ All , , , , , , , , , , , , , , , , , , , , , , .
Appendectomy)
Advanced (C/ , pper I Bariatrics, All , , , , , , , , , , , , , , , , , , , , , , .
Thoracic, )
Total All , , , , , , , , , , , , , , , , , , , , , , .
Basic Procedures (Colecystectomy/ MIP , , , , , , , , , , , .
Appendectomy)
Advanced (C/ , pper I Bariatrics, MIP , , , , , , , , , , , , , , .
Thoracic, )
Total MIP , , , , , , , , , , , , , , , , , , , , , , .
Basic Procedures (Colecystectomy/ Open , , , , , , , , , , , - .
Appendectomy)
Advanced (C/ , pper I Bariatrics, Open , , , , , , , , , , , , , , , , , , , , , , - .
Thoracic, )
Total Open , , , , , , , , , , , , , , , , , , , , , , - .
MIP adoption rate All . . . . . . . . . . .
MIP adoption rate Basic . . . . . . . . . . .
MIP adoption rate Advanced . . . . . . . . . . .
Source: Internal stimates

Ta le 2 merging Mar et Procedure olume stimates

2 2 2 2 2 2 2 2 2 2 2 2 C
Basic Procedures (Colecystectomy/ All , , , , , , , , , , , , , , , , , , , , , , .
Appendectomy)
Advanced (C/ , pper I Bariatrics, All , , , , , , , , , , , , , , , , , , , , , , .
Thoracic, )
Total All , , , , , , , , , , , , , , , , , , , , , , .
Basic Procedures (Colecystectomy/ MIP , , , , , , , , , , , .
Appendectomy)
Advanced (C/ , pper I Bariatrics, MIP , , , , , , , , , , , .
Thoracic, )
Total MIP , , , , , , , , , , , , , , , .
Basic Procedures (Colecystectomy/ Open , , , , , , , , , , , .
Appendectomy)
Advanced (C/ , pper I Bariatrics, Open , , , , , , , , , , , , , , , , , , , , , , .
Thoracic, )
Total Open , , , , , , , , , , , , , , , , , , , , , , .
MIP adoption rate All . . . . . . . . . . .
MIP adoption rate Basic . . . . . . . . . . .
MIP adoption rate Advanced . . . . . . . . . . .
Source: Internal stimates
Corporate Strategy Cases

BT
Ericsson
Schlumberger Business Consulting
Zurich

Strategy&
 London Business School – Case Book

BT
Followers o Fashion nline etail

The BT MBA Leadership Programme (MLP) is a platform for The MLP hires candidates whose profiles match the needs
injecting diverse talent into BT’s senior leadership. The MLP of the business. This often includes people who can bring
team works on high priority projects across the business structure, intellectual rigour, drive and ability to think
and gains exposure to senior leadership from the start. disruptively to BT. The case forms an important tool in our
On the programme, team members rapidly develop their interview process to help identify the right candidates for
capabilities on several fronts by taking on a mix of strategic, both internship and full time recruiting.
commercial and delivery projects. The programme is exible
and runs from to months. The MLP also offers its team
members opportunity to manage and lead people.

Case Summary (for the interviewer)

Share xhibit – -O- inancials with the candidate to start

ey uestion he hibit should lead the candidate to ask rele ant key
Ask the candidate what they make of the exhibit and uestions to clarify the situation complication and the key
what are their inferences uestions to be addressed in the case

Please use the steps below to guide the case

Suggested Case roach

Ste Ste 2 Ste Ste

Clari y Situation Develo Structure s and Listen nalyse and thin ! ecommend

Ask clarification evelop a framework Ask for additional Consider the Propose the best
questions to around which to focus useful information information provided, possible solution(s)
understand the the discussion based on the state any assumptions, supported by evidence
situation framework and listen synthesize and
carefully to responses organize information

For the interviewer

The following clarification information should l be gi en to candidates when they ask for it. It is up to the candidate to
demonstrate the structure to the interviewer and investigate each angle:

What is F F • -O- provides access to latest ow things wor at F F

• -O- provide online presence for fashion items from all over the • -O- s rimary asset is their
small fashion retailers. globe, creating a more appealing we site They are very careful to
platform. ensure the consistency of their
Why do small retailers sell through website experience for all product
F F What is sold the roducts lines.
• They lack necessarily market • F F s etailers sell unique and • When items are sold through
presence and customer reach bespoke lines from the world’s top -O- , -O- first purchases each
• -O- is open to customers across brands in their stores and through item (at time of sale) from the
the globe. -O- . retailer and then sells on to the end
customer.
2 London Business School – Case Book

BT

Followers o Fashion nline etail

• All of the unique items sold Who are the Customers Com etitors
through -O- are shi ed to • The product lines sold by -O- • Traditional competitors include
S ain rom their etailers to etailers are most appealing traditional brick and mortar stores
e hotogra hed and lmed to ashion-istas from all over and other web based retailers.
and entered into the inventory the world. • -O- ’s main online competitor,
management system as a new inderskeepers.com have an
item. ow it wor s or customers attractive website and a rapidly
• Photogra hy is a key activity for • erience Customers visit -O- growing business with an attractive
-O- . ’s website and view products by butler delivering an expensive
• In , around items category, by retailer or by designer. product to the recipients’ office –
went through this rocess each They make purchases through mostly.
season. the website. Customers can buy
• -O- have installed an inventory products from multiple retailers in nly rovide i candidate
management system in each the same transaction and expect s eci cally as s a out usiness
of the retailers. The system the same level o customer model for -O- or inderskeepers.
eliminates the risk of discrepancy service com:
between advertised and available • Pricing Customers pay shipping • -O- purchase items at retail.
merchandise. Once an order is costs for products to be shipped inderskeepers.com wholesale all
received through the inventory directly from the retailer. There o their roducts
management system, the retailer is a matrix based pricing system
is responsible for shipping the depending on from where to where
product to the customer. shipping is from / to verage
rice eturns are free to
the customer.

For the interviewer

ollowing from the clarification questions, give the following information to the candidate to proceed the case.

Situation ollowers-of-fashion ( -O- ) operate an international website portal for small fashion retailers around the
world. They provide a consistent lu ury we site e erience for consumers globally.

Com lication -O- have experienced significant revenue growth over the past three years, however their profits have
remained negative.

ey uestion What measures should -O- adopt to maintain growth but also start making a profit? ou will need to
provide your recommendations to the C O of -O- in minutes.

trong candidates will unco er the situation and complication by drawing inferences from hibit and asking the right
key clari cation uestions.
 London Business School – Case Book 2

BT

Followers o Fashion nline etail

Ste Ste 2 Ste Ste

Clari y Situation Develo Structure s and Listen nalyse and thin ! ecommend

Suggested Case Framewor

Candidate should realize that the key framework for the case is the profit framework (see below)

Pro t

Cost evenue

Inventory IT Photography H costs Co S Ave Price olume

Ste Ste 2 Ste Ste

Clari y Situation Develo Structure s and Listen nalyse and thin ! ecommend

For the interviewer to understand the case and give to candidate i as ed

Ask candidate to list down the sources of costs and revenues before giving them the information.

Cost evenue

Inventory IT Photography H costs Co S Ave Price olume

• The inventory • A photo team costs • H costs • Cost of clothing is • Average product • olume sold to
management er day were m of retail price. retail price is be derived by
system cost is • ach team can • Average cost of in . interviwee from
2 er year er photo and video shipping is • Average shipping revenue numbers
retailer approx. uni ue • Average cost for charge is in xhibit .
• There are 22 items er day returns is
retailers. • There are
items each season.
22 London Business School – Case Book

BT

Followers o Fashion nline etail

Calculations (to be done by candidate)

Cost estimate or 2 evenues estimate or 2

nventory T costs evenue er roduct

The inventory management system Current H costs are Average product price and
cost is k per year per retailer, shipping average charge is .
there are retailers. Co S
• Total inventory management The cost of clothing is of etail rice
system cost the retail price. Cost of shipping Average evenue per product
, 2 is / item. of purchases
are returned and cost of shipping shi ing charges
2 Photogra hy returns on average can be taken as
A photo team costs , per day. / item.
ach team can photo and video • Cost of clothing / item
approximately unique items per . olume
day. There are , items per • Cost of shipping / item • rom xhibit : Total revenue in
season. 2
• Cost / day • Total Co S volume cost • olume total revenue /
• o. of team days needed: ( , / ) ( . ) revenue per item , /
• Items photographed in a approx. 2 items
day by team
• o. of teams days needed T T L C STS er year T T L N 2 in 2
, / in 2
• o. of seasons / year
• Total cost of photo shoot
annually

For the interviewer to understand the case and given to candidate i as ed

• The case is written to allow candidate to explore multiple avenues and will allow the interviewer to test a number of
key skills in each avenue, should time allow.
• andidates should realise that pro tability can be impro ed by making a difference to one or more of the abo e
mentioned dr r
 London Business School – Case Book 2

BT

Followers o Fashion nline etail

Possi le Solutions educing Costs

Current Cost driver dditional in o i as ed Possi le solutions

nventory T All of the items sold through the liminating un o ular su liers
The inventory management system website last season came from just et candidate to work out how much
cost is k per year per retailer, retailers (out of ); in fact only of money is wasted on supporting
there are retailers. the retailers have e er sold anything retailers with the inventory
through -o- . management system which is of no
Total inventory management system benefit to -o- .
cost , 2
Let candidate recommend solutions
to reduce this cost. xamples
include:
• liminating suppliers.
• enegotiating contracts by
imposing hefty penalties on
suppliers for not being able to sell
a minimum volume on -o- .

Calculate how much cost would

be reduced because of these
assumptions.

2 Photogra hy ach season, of the , unique liminating un o ular roducts

A photo team costs , per day. products, only of these unique et candidate to work out how
ach team can photo and video products ever get sold. much money is wasted on videoing /
approximately unique items per photographing items which are of no
day. There are , items and the benefit to -O- .
exercise needs to completed in one
month. Let candidate make suitable
• Items photographed in a day by assumptions on how many items to
team photographed. They should make
• Items photographed in a month/ assumptions based on how many
team , suppliers they are also reducing.
• o. of teams needed
, / , Calculate how much cost would be
• o. of seasons / year reduced because of this assumption.
• Total cost of photo shoot
annually

costs eaches an answer and shows the Candidate might be able to

Current H costs are ability to sense check their numbers recommend solutions like:
• educing real estate cost by
moving to less prime area.
• Other ways of reducing H costs.
2 London Business School – Case Book

BT

Followers o Fashion nline etail

Current Cost driver dditional in o i as ed Possi le solutions

Cost o clothing o retail Margin on an item bought at ‘retail’ 2 ossi le solutions
rice ence Margins on retail have a margin. Items at wholesale ncrease margin on retail rice
are only have a margin. Currently, -o- takes of the
The cost of clothing is of revenue from a particular product.
the retail price. Cost of shipping give this in ormation only i as ed -o- could use its scale to
is / item. of purchases change the , thereby increasing
are returned and cost of shipping revenue. Market dynamics have
returns on average can be taken as changed; initially, -o- ’s model
/ item. was built because they didn’t
• Cost of clothing / item have access to the designers
due to scale and the designers’
• Cost of shipping / item nervousness about diluting their
brands by selling online.
• Total Co S volume cost
( , / ) ( . ) 2 Buy items on a wholesale asis
-o- sells all items of clothing
through retailers, i.e. it buys an
Average price / item exhibits no item at retail and doesn’t take
particular trend. It was in inventory risk. ow that the
and in . company is much bigger it can
take some inventory risk (and
be financially compensated),
increasing margin from
to for each item sold.
Optimal solution would be to
select some of their (likely) high
selling items and order inventory
and build a distribution centre
for those products. Again they
would require a merchandising
team. They can also offer better
shipping costs as they can move
inventory around at bulk and
ship from the customer’s home
country. Candidates who present
this balanced view score more
highly.

etail rice Candidate would want to know if the Changing retail prices is not an
retail price of items sold through - - option.
can be changed.

etail prices are set by designers for

consistency and monitored carefully
across the globe.
 London Business School – Case Book 2

BT

Followers o Fashion nline etail

Current evenue Driver dditional in o i as ed Possi le solutions

etail rice Candidate would want to know if the Changing retail prices is not an
retail price of items sold through - - option.
can be changed.

etail prices are set by designers for

consistency and monitored carefully
across the globe.

Shi ing Model o shi ing Shipping is confusing for consumers (it • -o- might be able to use some
cost is not a at rate) and is very variable – of the cash from cost savings
depending on a rough formula. to reduce shipping costs or
standardize them.
Most online retailers ship for free and
their main competitor ships for • lat fees are likely to increase
per item with free returns. ollowers- sales significantly and has an
of-fashion also occasionally do free affect on driver . However
shipping days and sales nearly triple on reducing shipping costs are also
those days. likely to reduce overall margins
due to average cost of shipping
and returns shipping.

olume Social media / oogle; Increase sales by increasing

• rom xhibit : Total revenue in -o- currently has a S O (Search competitiveness of advertising.
, k ngine Optimisation) strategy. Their
• olume total revenue / revenue main rivals have bought the Adwords
per item , / approx. for all of the main brands at . per
2 items click for Burberry, Mc ueen etc. Share
hi it 2

Ste Ste 2 Ste Ste

Clari y Situation Develo Structure s and Listen nalyse and thin ! ecommend

Start ma ing a ro t Measures to maintain growth revenue

educe costs across the various costs factors: Increase volume of sales by:
– liminate unpopular suppliers to reduce inventory – Improving competitiveness in online advertising.
management costs.
– liminate unpopular products to reduce photography
costs.
– educe H costs.
These alone are not su cient to realise ro ts

2 -O- also need to increase the margins they make on

Co S
– Increase margins on retail price to greater than .
– Purchase items on wholesale basis to realise
margins
2 London Business School – Case Book

BT

Followers o Fashion nline etail

For the interviewer s candidate to resent their nal set o recommendations to C o F F

ey uestions: What measures should -O- adopt to maintain growth but also start making a profit?
• andidates should present their recommendations in a structured manner.
• tronger candidates lead with their nal recommendations and then talk through any supporting facts. heir
response will also be structured according to key uestion asked initially.
• trongest candidates are able to talk through the operating model and implementation risks of mo ing from one
model to the other. ho chooses the product where is it stored what are the effects on shipping.

hi it Follower Fashion F F Financials

Financials 2 a 2 2a 2 a 2 a
evenue , , , , , , , ,

Costs , , , , , , , ,

Pro t - , , - , , - , , - , ,

ey outcomes candidates should identify the following.

• Both revenues and costs are increasing over the period.
• The strongest candidates follow up from this exhibit to ask questions around:
– What the -O- business is
– What is the business model for -O-
– How customers and retailers experience -O-

Based on the exhibit and answers to the questions, the candidates should uncover the current situation, complication
and key question to be addressed by the case.

Calculations or nterviewer only

Current 2 e Scenario Scenario 2 Scenario

No o etailers

No o items retailer

Total No o items to hotogra h , , , ,

Cost hotogra hy team day , . , . , . , .

tems hotogra hed day

No o team days rounded

No o seasons year

Total Cost o Photogra hy , , , , , , , ,

 London Business School – Case Book 2

ricsson
TT services rom oda one
uro e

Case Summary
The nterview Process
odafone are considering an extension ey uestions to answer Prepare a minute presentation to be
to their current offering. They want to • Is this a good idea for odafone? presented to a jury
add et ix, Spotify and Skype to their – How can ricsson benefit from
customer offering this?
• What additional information should
be considered?

oda one rgani ation

lobal C O

H Strategy

xternal
affairs

CCO C O lobal CTO C O orth C O South C O AMAP

PC lobal C O lobal CIO CTO orth CTO South CTO AMP

PC W C O CTO CTO S CTO

PC Core BP CTO I CTO PT CTO T

PC T adio CC CTO CTO IT CTO SA

PC adio Core CC CTO BL CTO CTO A

PC OSS CC CTO MT CTO

Services
CTO AL CTO I

ote: CCO – Chief Commercial Officer, – odafone roup nterprise, C O – odafone Core etworks
organization, BP – Business product development, PC – odafone Procurement Company
2 London Business School – Case Book

ricsson

TT services rom oda one

Country dee dive ermany

Country overview Telecom mar et

• Population: million • Total telecom market of Billion uro

• P/capita: , • Slow growth expected with CA of , until
• ermany is the largest economy in urope – Pay-T (CA ) and mobile data (CA )
• ermany experience macro economic pressure strongest revenue opportunity
– Germany’s economy remains more resilient than the • Overall strong decline expected within voice revenues
rest of the euro one but business conditions ha e • A P in ermany one of the lowest across western
steadily worsened yramid urope

oda one er ormance Com etitive landsca e

• Largest market for odafone with good performance • Tough competitive landscape driving down A P and
– evenue , B BP ( of total) BIT
– A P , (highest on the market) • Large share of M O of subscriptions
– market share on • Main mobile players and their market share
– Churn ,
O2 (Telefónica)
• odafone introduced on the erman market during
17%
as a simplified offering Telekom
33% (Deutsche
E-Plus (KPN) 21% Telekom)

29%
Vodafone
Source: Annual reports, Wireless intelligence, Pyramid esearch

Country dee dive

Country overview Telecom mar et

• Population: million • Total telecom market of Billion uro

• P/capita: , • Slow growth expected with CA of , until
• is the strongest economy in the uropean market – Broadband services mobile and fixed together with
with exible exchange rate Pay-T main drivers
• experience macro economic pressure – rowing popularity for bundled services
– se erely weakened banking sector is unable to UK continues to be one of the most dynamic telecoms
re amp lending to the economy I markets and a regional leader in terms of our estern
urope isk eward atings I

oda one er ormance Com etitive landsca e

• Large market for odafone with good performance • Tough competitive landscape while maintaining
– evenue , B BP ( of total) A P levels
– A P , ( nd on the market) • Average share of M O of subscriptions
– ot launched however spectrum acquired • Main mobile players and their market share
– Churn , 3 (Hutchison)
• Acquisition of CWW for fixed network 12%
• etwork sharing deal with O EE (Deutsche
33% Telekom / Orange)
Vodafone 25%

30%
O2 (Telefónica)
Source: Annual reports, Wireless intelligence, BMI, Pyramid research
 London Business School – Case Book 2

ricsson

TT services rom oda one

Country dee dive taly

Country overview Telecom mar et

• Population: million • Total telecom market of , Billion uro

• P/capita: , • Slow growth expected with CA of , until
• Italy currently have very large public debt and very high – Mobile data and Pay-T main drivers
unemployment – Mobile and fixed voice expected to decline
• Italy experiences recession – rowing popularity for mobile banking
– Italy’s economy will struggle this year hampered by • High share of prepaid customer leave opportunity
rising unemployment weak household spending and to migrate
tight credit oody’s analytics • High demand for mobile content services

oda one er ormance Com etitive landsca e

• Large market for odafone with good performance • Scattered competitive landscape starting to consolidate
– evenue , B BP ( of total) • TIM expected to loose market share
– A P , (Market average , ) • Low share of M O
– arly launch resulted in market share • Main mobile players and their market share
– Churn , 3 (Hutchison)
• Branded payment solution launched 10%
• Successful launch of odafone red
• Impairment loss of , B BP 34% TIM
WIND (VimpelCom) 24%

32%
Vodafone
Source: Annual reports, Wireless intelligence, Moody’s Analytics, Pyramid research, BMI

Country dee dive gy t

Country overview Telecom mar et

• Population: million • Total telecom market of , Billion S

• P/capita: , • Healthy growth expected with CA of , until
• Political uncertainties remains in gypt – Mobile and fixed data main drivers
• Low wages in global terms and stable conditions – ixed voice only area expected to decline
considering region give good investment potential – rowing popularity for mobile banking
• Still corruption issues in gypt which is unfavorable to • Still room for growth through penetration
peers • Low PC ownership opens mobile market including
banking

oda one er ormance Com etitive landsca e

• ood position on growth market • airly low competition however increasing with tisalat
– evenue , B BP ( of total) misr
– A P , (Market average , ) • Telecom gypt has monopoly on fixed telephony and is
– not launched (by any operator) trying to enter the mobile market as M O
– Service revenue growth of , • Main mobile players and their market share
• Shared service center situated in gypt
• In legal dispute of , B with co-owner Telecom
gypt Etisalat 27%
39% Vodafone

Mobinil (ECMS) 34%

Source: Annual reports, Wireless intelligence, Pyramid research, BMI
 London Business School – Case Book

ricsson

TT services rom oda one

Country dee dive ndia

Country overview Telecom mar et

• Population: , billion • Total telecom market of , Billion S

• P/capita: , • Healthy growth expected with CA of , until
• High interest rates expected slowing overall growth – rowth in all areas but fixed voice
however still high growth – Mobile voice remain of total market
• Some uncertainties in relations to Pakistan and possibly • rowth in voice through coverage expansion into rural
China areas
• omestic market key driver for growth though fueled by • ixed broadband expansion expects to drive fixed
cheap labor which attracts offshoring segment faster than mobile

oda one er ormance Com etitive landsca e

• Largest market in terms of customer with increasing • Highly competitive market with many players and price
margin and market share pressure
– evenue , B BP ( of total) – Situation expected to remain until
– A P , (Market average , ) • Main mobile players and their market share
– not launched
– , revenue growth y-o-y Other Airtel (Bharti Airtel)
21% 22%
• India remain a strategic market
• India accounts for half of odafone groups radio sites
and voice calls BSNL 12% 18% Vodafone
14%
14%
Idea Cellular
Reliance Communications
Source: Annual reports, Wireless intelligence, Pyramid research, BMI

Data growth er mar et

ected data growth er country
uarterly –
35
32
Germany
30
25 26 India
25
25 Italy
20
PB

15 15
12
10 10 Spain
7 9 United Kingdom
5 6 6 Egypt
0 3

Q4 2012 Q1 2013 Q3 2013 Q3 2013 Q4 2013

Country 2 2 B 2 B 22 B 2 B 2 B
gypt
ermany
India
Italy
Spain
nited ingdom

Source: Wireless intelligence

 London Business School – Case Book

ricsson

TT services rom oda one

Potential answer
alue tree
Business Business
model model 2
olume
Current revenue
streams
Price
Increase revenue

Increase C
ew business
models

ew revenue
streams
ew Products

Sourcing
CO S
Other
educe cost

W OP OP
OP
on- W OP

alue Creation

Improve
commercial
conditions

Improve billing
discipline
WC
Improve
collection
discipline
educe invested
capital Improve back-to-
back agreements

educe capital
charge CAP

educe Cost of Capital Structure

Capital

is
Strategic t
2 London Business School – Case Book

ricsson

TT services rom oda one

Lever am les

olume Particularly et ix will drive more data

Current revenue usage and the possibility to increas
streams data revenues

Price
Increase revenue
Premium packages can enable price
increase

Increase C
ew business
et a channel fee
models

ew revenue
streams
ew offerings, e.g. Premium packages
ew Products

Sourcing
CO S
Other
educe cost
Higher requirements in oS for video
W OP OP services will drive OP
OP
on- W OP More attractive services will reduce
SAC and particularly S C - Largest
alue Creation OP components

Improve At the same time, a business model

commercial with free subscription but data usage
conditions would boost OP

Improve billing
et ix will drive massive capacity
discipline
requirements and therefore
investments WC
Improve
collection
discipline
educe invested
capital Improve back-to-
back agreements

educe capital
charge CAP

educe Cost of Capital Structure

Capital

is
odafone’s competitor offers B and odafone has made public that they
Spotify gets bought by B
Strategic t will focus on enterprise market
 London Business School – Case Book

Schlum erger Business Consulting

ising Sun Service rou

Case Study Process

The nterview
ising Sun Service rou The ingdom is currently cash- Over the last years, the Boldurian
Business Model for Bolduria – Oil and strapped: Boldurian banks made huge OC has accrued a S m debt
as Industry bets on American sub-prime, and are with S , mostly in unpaid bills for
now repaying IM loans out of their services.
Our client, ising Sun Service roup hydrocarbons production.
( S ) is a apanese Oil ield Services To counterbalance the existing debt,
company operating in the ingdom S provides two main services to the the OC asked our client to define
of Bolduria, an oil rich country Boldurian OC: a year business model to provide
near reenland with mature fields • Well production technologies exclusive services (well production and
and declining production but huge (services, products, tools, and water treatment) for their biggest field
untapped reserves. equipment to maximize and extend CH ST C, the crown ewel among
production for a reservoir) all Boldurian assets.
• Water treatment (treatment of water
that is produced as a byproduct
along with the oil)

uestion

What are the ey actors that you would li e to understand in order to assess whether this sort o
venture is li ely to e success ul

A good answer should consider the C ST C reserves data

following to understand whether there STOIIP (volume of oil in a reservoir prior to production) billion barrels
is likely to be enough recoverable oil to emaining eserves . billion barrels
make the venture feasible:
Current recovery factor (recoverable oil )
• emaining eserves (does the field
xpected oil price S per barrel
have sufficient reserves)
• Current production (what is the
current production for the field)
• Current recovery factor C ST C roduction
• xpected oil price
350
Candidate should conduct a sanity
check by comparing the field potential 300
with the debt size, monetizing the
opportunity presented by remaining 250
reserves:
Production (kbpd)

• ield opportunity size 200

– ( emaining eserves) x
( ecovery actor) x ( xpected 150
oil price) . billion
barrels x x S /b 100
approximately S bn
• In principle, the field offers the 50
potential to comfortably repay
the S m debt assuming that 0
1975 1980 1985 1990 2000 2005 2010 2014
CH ST C ecovery factor and
the oil price will remain stable in
the future.
 London Business School – Case Book

Schlum erger Business Consulting

ising Sun Service rou

uestion 2

What are the usiness models which could e ro osed ased on S service o erings

A good answer would include analyzing models based on • Water treatment:

the two main services S provides to the Boldurian OC, – S makes a CAP investment to build a water
including investment requirements and how S earns its treatment plant for the field
fees: – S then charges a per barrel fee for treatment of
• Well production: the water that is produced as a byproduct of the oil
– S makes a CAP investment to improve the
infrastructure of the wells within the field
– S then charges a per barrel fee based on
production volumes, with a bonus – malus scheme
as added incentive (bonus payment or penalty as a
of fees, based on whether production exceeds or
falls below certain agreed thresholds)

uestion

ow would you go a out assessing these o tions What data would you as or

In order to assess these options an P calculation should • evenue (fees from services)
be performed. A good answer would enquire about the • etails of bonus – malus scheme
following for each service provided by S : (thresholds, payment / penalty amounts)
• CAP investment required • Timeframes
• OP requirements • iscount rate
• xpected production
• xpected oil price

uestion

Which model would you assess rst

A good answer would recognize that the revenue received Therefore it would be a good idea to perform the analysis
for water treatment would be dependent on the results from for well production project first as this would allow us to
well production. gain a better understanding of the production profile. Once
the expected production is understood, the fees for water
Since the fees for water treatment are based on production treatment can be predicted based on the expected volumes.
volumes (fee is charged per barrel processed), an increase
in production would mean higher volumes to treat and
therefore an increase in fees earned.
 London Business School – Case Book

Schlum erger Business Consulting

ising Sun Service rou

uestion

Through analysis o the data which i any o the ro osed scenarios would you recommend or
our client

Well roduction model data ta le

ebt million S
xpected oil price S per barrel
umber of wells
CAP . million S per well
OP
Bonus – Malus
ee . S per barrel
Production for r , r , r , r , r , , , , kbpd
iscount rate
OP can be considered negligible for this service

Bonus Malus Limits Bonus – Malus Scheme

260 Limit for

bonus
Projected
240

Bonus
220
Historical
Production
Production (kbpd)

200 Bonus Limit

US$
180 Production
Malus Limit
(bbl/d)
Penalty

160

140

120 Limit for

Penalty
Applied bonus or penalty
Baseline
0

Yr-1 Yr-0 Yr-1 Yr-2 Yr-3 Yr-4 Yr-5

Water treatment model data ta le

CAP million S
OP . S per barrel
Water cut (ratio of water produced compared to the volume of total
liquids produced)
ee . S per barrel
iscount rate

An P calculation should be performed for each model (please see next page)
 London Business School – Case Book

Schlum erger Business Consulting

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Well roduction NP

r r yr r r Comment
Production (kbpd)
Annual production , , , , ,
(kb)
ee ( S ) , , , , , , , , , ,
Bonus/ Malus B B B M se production
Total fee by year , , , , , , , , , , volume and
( S ) bonus / malus
diagrams to
determine fee
adjustment
iscount factor . . . . .
P ( S ) , , , , , , , , , ,
Total P of in ows , ,
( S )
CAP ( S ) , , (CAP per well)
x ( umber of
wells)

Project P ( S ) , ,

Water treatment NP
r r yr r r Comment
Production (kbpd)
Annual production , , , , ,

(kb)
Water produced (kb) , , , , , (Production) x
(Water cut)
ee ( S ) , , , , , , , , , ,
OP ( S ) , , , , , , , , , ,
Profit ( S ) , , , , , , , , , ,
iscount factor . . . . .
P ( S ) , , , , , , , , , ,
Total P of in ows , ,
( S )
CAP ( S ) , ,
Project P ( S ) , ,

A good answer would include the following observations: Com ining ro ects
• Well production alone would not return sufficient profits Well production P ( S ) , ,
to cover the debt Water treatment P ( S ) , ,
• Water treatment alone would not return sufficient profits Combined P ( S ) , ,
ebt ( S ) , ,
to cover the debt
Profit ( S ) , ,
• Combining both well production and water treatment
would return sufficient profits to cover the debt Combining both projects and offsetting the debt would
result in profits of almost million S .
 London Business School – Case Book

Schlum erger Business Consulting

ising Sun Service rou

uestion

What are some other onus malus schemes that can e considered

A good answer would include schemes both with and without a neutral region, as well as schemes where the bonus / malus
is applied incrementally:

Bonus Malus Scheme alternatives

Scheme 1 Scheme 2 Scheme 3

Limit for Limit for Limit for

bonus bonus bonus
Bonus

Bonus

Bonus
US$ US$ US$
Production Production Production
(bbl/d) (bbl/d) (bbl/d)
Penalty

Penalty

Penalty
Limit for Limit for Limit for
Penalty Penalty Penalty
Applied bonus or penalty Applied bonus or penalty Applied bonus or penalty

Scheme 4 Scheme 5 Scheme 6

Limit for Limit for Limit for

bonus bonus bonus
Bonus

Bonus

Bonus

US$ US$ US$

Production Production Production
(bbl/d) (bbl/d) (bbl/d)
Penalty

Penalty

Penalty

Limit for Limit for Limit for

Penalty Penalty Penalty
Applied bonus or penalty Applied bonus or penalty Applied bonus or penalty
 London Business School – Case Book

Zurich
nternal Consulting iC N

This case represents a real project done by an iCO consultant and former London Business School student. In an interview
typically only specific sections, rather than the whole case, will be discussed with the candidate.

Case utline

Process ste Structural elements Tested Dimensions

• emonstrates ability to identify core issue

P T Hypothesis
• ormulates clear hypothesis that helps to develop a
ssue raming
coherent tailored structure
structure
• Identifies several concrete solution levers
Synergies Costs
• Conducts prioritization of levers before diving into
analysis

• emonstrates solid logic in conceptually outlining

P T
calculations up front
Calculations
• Shows rigor in calculations
numeracy Cross-selling
• Identifies implications for overall analysis ( so what )
• emonstrates sense for magnitude and pragmatic
rounding of numbers

• Shows ability to identify relevant information and plan

P T
analysis accordingly
nalysis
• Links approach to analysis of sub-issue back to initial
lanning Corporate
hypothesis
data customers
• Prioritizes for greatest potential ( / )
inter retation
• emonstrates business acumen
• emonstrates ability to derive conclusions from data
presented.

Case Brie ng
urich’s roup C O is expected to present a new strategy Based on this valuation, urich’s C O has asked iCO to
for . To kick things off, urich’s C O has asked a develop the roup strategy, which should address
major investment bank to conduct an industry analysis investors concern. The strategy will be presented at the next
and benchmark urich against its global peers. The report investors day in six months time. How would go about this?
concludes that investors are skeptical about diversification
strategies within the insurance industry. Hence any
valuation of diversified insurance players include a sizable
conglomerate discount.

iversified in the sense that an insurance company operates both, a eneral Insurance ( I) and a Life Insurance segment, under one umbrella
All figures and data used in this case are fictitious
 London Business School – Case Book

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ra h or candidate
Fair value assessment o Zurich nsurance rou SD

1 14 -2
6
-2
10
7

General Insurance Life Segment Non-core business Enterprise Value* Subordinated debt Conglomerate Equity value
(GI) segment discount

nterviewer rie ng and structure that outlines all relevant areas o synergies and incremental costs Bonus
Probe the candidate to present an initial hypothesis and structure for a winning strategy as a diversified insurer. iscuss
several examples on how to generate synergies between segments to test the candidates business acumen.

am le Structure ew customers ( )
umber of customers ( )
xist. customers ( )
Top-line synergies ( )

umber products /
alue / customer ( ) customer ( )

alue / product ( )

Synergies
between segments
Claims ( )

Synergies in core Sales istrib. ( )

functions ( )
Invest. Mgmt. ( )
Bottom-line synergies ( )

nitial y othesis
Managing a eneral H ( )
insurance and a Life
insurance segment under
one roof is a competitive inance ( )
advantage as synergies Synergies in on-core
between segments funct. ( ) IT ( )
outweigh costs.

Legal ( )

roup H ( ) Other ( )

ncrem Costs IT complexity ( )

of managing two
segments under one roof egulatory requirem. ( )

Other ( )
 London Business School – Case Book

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Brie ng Part
The team has identified cross-selling as a top priority for future growth based on a conglomerate strategy

irst estimates for required investments in IT infrastructure and organizational capabilities to enable a large-scale cross-
selling strategy total at S . bn. The roup xecutive Committee sets a minimum return on this investment at for
year-period. our team has been asked to deliver the following three insights:

What metric would you look at to determine success in cross-selling? (wait for answer before reading )
2 Calculate the current percentage of urich’s total customers, which are shared customers
etermine by how much this percentage needs to increase to justify the investments and deliver a OI of over
years

or ease of calculation neglect any compounding and discounting.

Data availa le
2
Total urich customers , , Investments required S . bn
Life active policies , , equired OI over years
Life estimated product density . Amortization period years
I active policies , , Profit per single segment customer p.a. S
I estimated product density : . Profit per shared customer p.a. S
etention rate over yrs
Increase in loyalty per add. product over yrs

Solution
A straightforward metric that indicates a company’s success in cross-selling is the percentage of customers that own
products in both the eneral Insurance and Life Insurance segments, defined as:

Num er o shared customers Total num er o customers

2 Solution
Calculation conce tual

Percentage of shared customers number of shared customers / Total number of customers

B umber of shared customers (Life I customers) – Total customers

C Customers per segment Active polices / Product density

Calculation numerical

C m/ . m
. m/ . m I Life

B ( m m) – m m

m/ m
m m m

Candidate should pro-actively round numbers

or ease of calculation focus on profits of customers, who are becoming shared customers in year only
efined as average amount of products owned by one customer
 London Business School – Case Book

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Solution
Calculation conce tual

Increase in shared customers ( ) Increase in shared customers ( ) / Total customers ( )

B Increase in shared customers ( ) Investments required OI ( ) / (Profit / customer ( )) ear –

C Profit per customer for year - ( S ) ears ( ) x Increase in profit per customer p.a. ( S ) x Increased retention rate ( )

Calculation numerical

C yrs x ( S - S ) S
( S x( . ( . x . )))/ S

B S . bn ( )/ S . m

. m/ m

Brie ng Part
The roup xecutive Committee ou are assigned to lead the global
decides to further develop the analysis for the Corporate group. How
strategic initiative on cross-selling. do you decide in which countries you
our team spans across three would invest resources to capture the
workstreams according to urich’s maximum cross-selling potential?
customer groups:

Pro osed a roach

As we are trying to maximize synergies relationships is most significant. To reduce the list of countries to
between the eneral Insurance ( I) These countries provide the biggest a feasible number for entry, it is
segment and the Life segment, the opportunity to leverage the customer advisable to go in a three-step
candidate should look for countries, relationships of one segment for approach from a long- to a target-list.
where the gap between segments the other.
in terms of number of customer

Long list Short list Target list

xclude countries: Split countries by presence into Prioritize top countries with largest
• Countries under international four buckets: ( ) I presence only, delta in number of customer
sanctions ( ) Life presence only, ( ) presence relationships.
• Countries with safety-concerns of both segments and ( ) no urich
(e.g. due to war, terrorism) presence
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nterviewer rie ng
Candidate should identify the bucket of Only I network as an obvious opportunity to capture synergy potential as a
diversified insurer by cross-selling Life products to I customers.

ra h or candidate
Brea down o countries y segment resence
of countries
214 6 208 98

108

Total number of Not coveredby Coveredby Zurich Both (GI and GL Only GI network Only GL network
countries Zurich* network)

urich is not present in the following countries: Bhutan, uam, Iran, em. ep. of orea, Turk. ep. of orther Cyprus, and imbabwe

Below, you will find an exhibit showing the number of Corporate customers by country, where only urich’s I segment has
a presence.

nterviewer rie ng
Candidate should identify priority countries according to the number of headquarters and domestic single locations, as
buying decisions are made there.

ra h or candidate
Num er o Zurich Cor orate customers within res ective country

South Korea 500 2,150

Colombia 700 1,479

Poland 400 1,125

France 810 1,093

Czech Republic 390 870

The Netherlands 700 851

Hungary 310 710

Greece 150 650

Sweden 450 562

Ukraine 280 432

Denmark 400 427

Slovenia 117 401

Belgium 350 399

Local HQs & domestic single locations* Subsidiaries Branches

Local H and single locations includes parent company headquarters and parent company single locations
All figures are fictitious
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Challenge to the candidate

o you see any risks or obstacles for implementation in pursuing a cross-selling strategy? If so, which ones?

am les
• ssum tions do not turn out • Customers deli erately diversi y • Mar eting ris s Can you
as antici ated (e.g. due to an rocurement i.e. purchase effectively communicate the added
economic downturn, strong eneral Insurance ( I) and Life value of a holistic product suite
competitors in the market, products from different suppliers (including I and Life products) to
customer loyalty) as part of their risk management customers
strategy
• Procurement of eneral • Whole Customer iew rather
Insurance ( I) and Life products • Cultural differences between than segment s eci c view
is conducted y di erent urich’s two segments result in An overall profitable customer
eo le within the customers insufficient coordination. with policies from both, the I
organi ation ( I products, and the Life segment, might
typically used as risk-hedging • ncrease in organi ational be loss-making for one of the
instruments, are often within com le ity (which key account segments. Incentives/profits need
the area of the C O or the Chief manager is responsible for which to be appropriately set to enable
isk Officer, while Life products, customers?); requires increased collaboration between the two
used within mployee Benefits alignment between both segments segments
schemes, are often in the area
of responsibility of the H • Other
department)

Challenge to the candidate

ou meet the C O on your way to the cafeteria. He recognizes you as part of the project team and asks you where you stand
with your project.

am le recommendation
Based on our initial analysis, we ext steps:
understand that urich needs to Set up meetings with executives of
extract more value from managing both segments to gain their buy-in
a I and a Life segment under one for the initiative(bonus: Prepare
roof. Among the levers identified, we storyline on why I should support
prioritized cross-selling as first deep- Life in selling products to their
dive. or Corporate customer group, customers)
we should focus on the markets of 2 Identify target I customers in
rance, Columbia and the etherlands prioritized markets to approach for
for the following three reasons: Life cross-sell
These countries have currently Set up road-map for first pilots
no shared customers as there
is an established I, but no Life
operation
2 They have the highest number of I
customers with H locations and
therefore decision makers in the
respective markets
rom our analysis, none of these
countries exhibits any major show-
stoppers that would render an
entry of Life operations infeasible
 London Business School – Case Book

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Per ormance ssessment

Poor er ormance verage er ormance Su erior er ormance

ssue raming structure • Suggests generic • evelops a structure, • ses hypothesis to
Part framework based recognizing the develop a clear and
on growth and cost relevance of leveraging logical structure,
improvement levers synergies between explaining that a
with no direct link to segments. Candidate diversified set-up
the question of how is able to name several only creates value, if
to generate additional concrete examples of synergies between
value as a diversified such synergies segments outweigh
group • Presents structure in a additional costs of
• Structure contains M C format managing a more
several overlaps and complex organization
does not frame the • Pro-actively discusses
issue exhaustively and prioritizes sub-
branches
• Presents structure in a
M C format

Calculation numeracy • Candidate dives right • Performs calculations • Outlines calculation

Part into the calculations with adequate conceptually up-front
without having full accuracy (recognizes • Performs calculation
understanding of data minor mistakes when without mistakes
presented, nor having prompted) and speed and without losing
outlined an approach (rounds numbers the interviewer along
• nable to compute reasonably) the way
share of common • Comments on/ • Conducts sense-check
customers without help sense-checks results on results and puts
• Makes several immediately them in perspective
calculation mistakes

Conducting analysis • Suggests generic • evelops analysis • Candidate develops

Part market attractiveness approach that helps clear and logic analysis
analysis, which is not to identify synergy approach, outlining key
directly related to potential between pieces of data needed
the question of how segments to reach target list of
to capture synergies • nderstands countries
between segments graphs without help • istills key implications
through cross-selling (excl. questions on of data presented and
• Has troubles to distill terminology), identifies links them back to
so what’s from so what’s and links initial hypothesis
graphs autonomously. findings back to the • xudes enthusiasm
• oes not pro-actively case question asked and drives analysis
link findings back to pro-actively
analysis
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Per ormance ssessment (continued)

Syntheses • umps between • egularly synthesizes • Pro-actively uses
ecommendation analysis parts without finding at appropriate syntheses to transition
syntheses times in the case (e.g. from one analysis part
• Has troubles before switching from to the next, linking
integrating analysis one analysis to the analysis findings back
insights into bigger next) to hypothesis and
picture • Presents action-driven outlining next steps
• Presents (chronological recommendation, • Presents action-driven
process of analysis supported by key recommendation in
rather than top-down insights from target top-down fashion,
recommendation, i.e. market prioritization starting with big picture
action-statement, of initial case question,
supported by key explaining how the
insights from analysis country prioritization
fits in and naming key
insights

endi Terminology

Term lanation
Cross Selling The action or practice of selling an additional product or service to an existing
customer.

eneral nsurance eneral insurance or non-life insurance policies, including automobile and
homeowners policies, provide payments depending on the loss from a particular
financial event. eneral insurance is typically defined as any insurance that is not
determined to be life insurance. It is called property and casualty insurance in
the .S. and Canada and on-Life Insurance in Continental urope.

Li e nsurance Life insurance (or commonly life assurance) is a contract between an insured
and an insurer, where the insurer promises to pay a designated beneficiary a
sum of money (the benefits ) in exchange for a premium, upon the death of
the insured person. epending on the contract, other events such as terminal
illness or critical illness may also trigger payment. The policy holder typically
pays a premium, either regularly or as a lump sum. Other expenses (such as
funeral expenses) are also sometimes included in the benefits. On top of isk
products, the Life insurance segment also markets pension products.

M C Mutually exclusive (no overlaps between parts of a structure), collectively

exhaustive (cover all possible aspects of the solution space).

2 Pareto principle: oughly of the effects come from of the causes, i.e. if
done right, approx. of the effort delivers of the impact
146 London Business School – Case Book
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148 London Business School – Case Book
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No part of this book may be reproduced in any form, except

brief excerpts for the purpose of study, without permission of
The London Business School

Compiled and edited by Zoe McLoughlin and Daniel Lay,

Consulting Careers Team, Career Centre, London
Business School.
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United Kingdom
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