IIM A

Case Book
2018-19

2018-19 1
Issue Details and Copyrights

Casebook, Consult Club, 5/e

©2014 by Consult Club

All rights reserved.

Notice
No part of this publication may be reproduced or transmitted in any form or by any means – electronic or mechanical,
including photocopy, recording or any information storage and retrieval system – without permission in writing from the
Consult Club, IIM Ahmedabad.

First edition: July 2014

Second edition: August 2015
Third edition: September 2016
Fourth edition: September 2017
Fifth edition: September 2018

2018-19
 What is this year’s IIMA Casebook all about?

Foreword
Building on the first 4 editions of IIMA Case Book, the Consult Club of IIM Ahmedabad is proud to present the 5th edition of the
IIMA Case Book. Leveraging feedback from alumni and the student community the Case Book aims to give the reader a
comprehensive view of the type of cases that form a major part of consulting interviews. This Case Book brings an extensive
range of completely new cases and guestimates, along with a wide range of previous discussed and explored cases. Throughout
the Case Book, we have tried to ensure enhanced readability while retaining the comprehensiveness of the cases.

How to make the most of it?

While reading this Case Book, we would suggest the reader should use the interview transcripts to set up a case between 2
people(or groups), and after solving the case, the solution process sheet should be looked into to gain a broader understanding
of the approach and areas of improvement.

The frameworks are there to give a direction initially to new case-solvers and should not be treated as a fixed boundary, but
could be utilized by the reader to cover any case which comes up their way according to their own logical structure. Also, the
reader should leverage the recommendations, tips, and suggestions to apply learnings from one case to another.

Remember, journey is as important as the destination. Case preparation is a group exercise with individual self-preparation as
well.

Enjoy the process of preparation and let’s crack the case!

(C) Consult Club, IIM Ahmedabad 2018-19

 Acknowledgements

We are grateful to all the people that have helped by sharing their cases and interview experiences, that has enable us to put
together a comprehensive preparation resource for the future batches.

We would like to thank Naitik Jain, Manager, Placement preparation, along with Arushi Jamaiyar, Praneet Agarwal, Shameek
Datta, Sharanya Dulasiraman and Vrinda Lohia (PGP 2017-19) for leading the Case Book initiative and putting together this
edition of the IIMA Case Book. We would also like to acknowledge the efforts of Aaditya Agarwal, Anish Sahni, Ayush Rawat,
Purav Shah, Swapnil Jain and Tishya Kapoor(PGP 2018-20) for volunteering to help the Club put together this case book. They
have ensured breadth, and depth in the cases to give the reader a comprehensive view of the kind of cases they may be
administered.

We are also grateful to the alumni of the Consult Club, IIM Ahmedabad for their feedback on the cases which has helped us
further enhance the overall quality of the book. We would also like to extend a special acknowledgement to the contributors of
the previous editions of the IIMA Case Book.
 
Copyright © 2014
Consult Club, IIM Ahmedabad
Vastrapur, Ahmedabad 380015

(C) Consult Club, IIM Ahmedabad 2018-19

 Table of Contents
Business Cases
SERIAL NO. CASE PAGE NO.
1. Declining Revenues Oil Distributor 9
2. Declining Revenues Alcohol Company 11
3. Declining Revenues Washing Machine Firm 13
4. Declining Revenues Tractor Company 15
5. Declining Revenues Oncology firm 17
6. Declining Revenues Airport 19
7. Declining Revenues Urea manufacturer 21
8. Cost Reduction Retail Bank 23
9. Cost Reduction Lease fee 25
10. Cost Reduction Beer manufacturing company 27
11. Cost Reduction Cement Manufacturer 29
12. Cost Reduction Auto Insurance Company 31
13. Cost Reduction Retirement benefits policy 33
14. Profitability Photography Firm 35
15. Profitability Fishing Company 37
16. Profitability Healthcare Firm 39
17. Profitability Airline operator burning cash 41
18. Profitability Jet Airways v/s Indigo 43
19. New Market Entry Retail Bank Portfolio Management 45
20. New Market Entry HBS Satellite Campus 47
21. New Market Entry Insurance company 49
22. New Market Entry US Magazine publisher 51
23. New Market Entry Electric Bus Market 53

(C) Consult Club, IIM Ahmedabad 2018-19

 Table of Contents (Continued)
Business Cases
SERIAL NO. CASE PAGE NO.
24. Threat of New Entrant Discount Retailer 55
25. Operations Strategy FMCG Company 57
26. Growth Strategy Apparel Manufacturer 59
27. Growth Strategy Ice Cream Vendor 61
28. Growth Strategy Pharma Company 63
29. Growth Strategy Video on demand Service 65
30. Pricing Helair Service 67
31. Pricing Residential Complex in Kolkata 69
32. Declining market share Commodity Chemicals 71
33. Due Diligence Chain of Schools 73
34. Due Diligence Investment in PVR 75
35. Customer Satisfaction Telecom Industry 77
36. Unconventional case Loss in a Football Match 79
37. Unconventional case Drug Pricing 81
38. Unconventional case Reducing turnaround time 83
39. Unconventional case Risks of Oil transportation company 85
40. Unconventional case Declining footfalls in Church 87
41. Unconventional case Political party in LS elections 89
42. Data Int. - Business Expansion Telecom Video Project 91
43. Data Int. - Profitability Telecom MArket 93
44. Data Int. - Mergers and Acquisitions BevCo 95
45. Data Int. - Unconventional Strategic Fit/ Merger Feasibility 97

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 Table of Contents (Continued)
Guesstimates
SERIAL NO. GUESSTIMATE PAGE NO.
1. Gold Flake Cigarettes 99
2. Crows in Ahmedabad 100
3. Revenue of a multiplex 101
4. Coffin maker’s revenue 102
5. Electricity Consumption 103
6. Gujarat Tourism 104
7. Mobile Data 105
8. Airport Revenue 106
9. IPL Team 107
10. Mails at IIMA 108
11. Barbed Wire 109
12. Bank Branch Revenue 110
13. Post office Revenue 111
14. Golf balls in the air in India in an average second 112
15. X-Ray machines in India 113

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 Business Cases

Interview Transcripts and Proposed

Solutions

(C) Consult Club, IIM Ahmedabad 2018-19

Declining Revenues – Oil Distributor– Interview Transcript

Your client is an oil distributor. It owns 4 petrol pumps. Its profits have been constant for the past We are located in metro city like Mumbai and location is not an issue. Our services are also top-notch
few years in one of the petrol pumps. Diagnose and recommend solutions. Ok. So we need to look at the possibility of either increasing the prices or decreasing them and see
I would like to begin with a few clarifying questions on our client. As per my understanding our their effect on the number of customers vising the petrol pump. Do we have any projection
client owns these petrol pumps and the problem is specific to one of them. Is that correct? regarding the same?
That is correct. Based on the market research, we have found that on every 10% increase in price, the number of
Is the client a national distributor or a regional distributor? Also is the problem being faced by customers decrease by 20% and for every 10% decrease in price, the number of customers increase
other petrol pumps in that region? by 5%
Being national or regional distributor is not relevant here. The problem is specific to the client’s This implies changing price will lead to overall reduction in revenues. Can we look at other ways of
petrol pump increasing the number of customers, like advertising?
Since the petrol pump is facing profitability problem, I’ll like to study the profit structure of the Petrol is a commoditized product and advertising won’t be helpful.
petrol pump and break it down into revenues and costs which are the two components of profit Okay. Then we don’t see any way of increasing the revenues from fuel sources in isolation. Can we
Fair. You can assume that costs are not of concern right now and start by analysing the revenues. look at non-fuel sources and see if that is related to the number of customers visiting the petrol
pump.
In that case, I’ll like to list break down the revenue sources between fuel sources and non-fuel
sources. Among the fuel sources, do well sell only petrol or have other products as well? That’s correct. 30% of people visiting petrol pump end up visiting the convenience store as well. The
other non-fuel revenue sources can be neglected for this analysis.
Only petrol is sold currently.
So this means we can look at the possibility of increasing the number of customers and see the net
Among the non fuel sources, the possible revenue streams would be convenience store, value effect on revenue based on decreased prices and increased revenue from convenience store. Do we
added services (paid air filling station, garage). Are there any other revenue stream I should be have any numbers related to revenue per person from the convenience store?
looking at?
Yes. Currently the revenue per person from convenience store is Rs100. Your analysis is correct.
No you can go ahead. Assume that the prices are decreased by x% and the revenue per person from the convenience store
I’ll like to start by analysing the revenue from fuel sources first. I’ll break it down into no of changes to y. Can you get the condition that must be satisfied for increasing net profit.
customers visiting per day, ticket size per customer and the price of petrol. Do we have any data of (Writes the equation). This means that decreasing the prices is not the sole criteria. We also need to
these based on current operations. look at ways of increasing the revenue per person or the percentage of people visiting the store.
Currently the average no of customers per day is 100, ticket size per customer is 1 lt and the price What are the products being sold at convenience store?
of petrol is Rs100/lt. We currently sell general consumption items like chips, biscuits and other FMCG products. We don’t
Alright. So to increase the profits, we need to look at increasing any one of them at least. How do have a big range of products. Can you give recommendations on ways to increase the revenue from
these numbers look for our competitors? conveniences store.
You can assume that the prices are competitive and ticket size is almost the same. The no of 1. We can stock more items both in terms of variety and volume so that any customer visiting
customers depends on a combination of multiple factors. usually gets the product of his/her choice.
Okay. So the number of customers will depend on three major factors :Location, Price and Service. 2. We can stock more items related to vehicles.
How are we in terms of location and service as compared to our competitors? 3. We can look at the possibility of advertising the store
4. We can also explore the option of introducing a new process where the payment for petrol will
be done the store counter. This will essentially lead to all customers visiting the store and many
people may turn up finally buying something. (Trade off needs to be done based on
inconvenience caused for people who don’t want to go to the store)
This will be fine. Thank You.

(C) Consult Club, IIM Ahmedabad 2018-19 9

Declining Revenues – Oil Distributor

You have been approached by an oil distributor facing with profitability problem in one of the 4 petrol pumps owned by them. Diagnose the
problem and recommend appropriate solutions.

Interviewee Notes Case Facts Approach/ Framework

• Profits have been constant • Only petrol being sold at petrol Profits of Petrol
over past few years due to pump Pump
problem in revenue • No problem on the cost side
generation • No new competition
• Client owes 4 petrol pump • Petrol pump facing issue situated in
and the problem is in only metro city, no issue with the
one of the pumps location
• Identify the revenue sources
for petrol pump and identify Revenue Cost
possible areas of
improvement Value
• Understand the Added
Petrol
interdependence of revenue revenue
Services
sources on each other

Price Ticket Size Customers Price Ticket Size Customers

Accessibilit Sales &

Branding Variety Location
y Marketing

Recommendations % of customers
Revenue per
customer
• Reduce price of petrol Price of petrol
No of
visiting convenience from
customers
• Increase the convenience store revenue store convenience
store
Observations/Tips/Suggestions Original price (Rs 100) 100
Customers
30 100

Price increased by x% decreased 30 z

• It is essential to figure out the key revenue streams for the petrol pump and their interdependence by 2x%
• Calculate the net effect of reduction in prices on profit and the possible ways of increasing revenue from Customers
Price decreased by x% increased by 30 y
convenience store (x/2)%
• Develop equation between x and y and find the desired relationship for ensuring overall profits

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Declining Revenue–Alcohol Company - Interview Transcript

The Client is an experienced alcohol manufacturer in India. They have been facing a gradual Focus on the consumer demand and change in demographics. Why do you think that is a
decline in profits and have also experienced a sudden dip in profits recently. The client wants you reason?
to identify the reasons for the decline in profits and give recommendations for improvement
I would like to ask you if the Whiskey we sell is Premium quality.
Yes, it is
Could you please tell me the product portfolio? Is the decline related to all products?
Thank you for the information. I hypothesize that due to a younger generation entering the
The alcohol manufacturer makes several types of alcohol; however, the decline in profits is faced market, they do not identify themselves with a Premium brand of Whiskey, and they may be
by their Whiskey Brand. more willing to spend on inexpensive brands. Further, I suspect that a change in demographics
has also led to an increase in small bars and pubs where Premium Whiskey may not be sold.
What Geographies does the company cater to? Should I limit myself to particular geography? Price sensitivity could be another added factor for the lack of demand.
It caters Pan India and some foreign markets. You may want to focus only on India.
Great! I would now like to dive into the case and structure it to get to the bottom of the problem. Yes, you are correct. The problem lies in the changing ideology of consumer and their preference
I will begin by breaking down profits into Revenues minus Costs. Next, I will identify which of in Whiskey. The current market does not value a premium Whiskey in the same way, and the
these are a problem and further look into Internal and External Factors that may have changed to shift towards pubs is making it difficult for people to enjoy Whiskey for the taste. Why do you
alter the revenue or the cost structure. Would you like me to proceed in this way? think there was a steeper drop in profits recently?

Yes, that sounds like a good start. Why don’t you go ahead? I would now like to analyse the external factors: the introduction of new whiskey by a
Since profits are a function of revenues and cost, I would like to know if the cost has increased or competitor, negative publicity of our whiskey brand, and other government policy reforms.
the revenues have decreased. That’s a good list. I would like you to think about possible government policies that could have
We have seen a decline in revenues whereas the costs have remained the same. impacted our sales.
Okay. I would like to break revenues down into quantity sold times price per unit. Have we seen a Sure. The government policy changes could be – reform in the drinking age in the country, the
decline in quantity sold or a decrease in price per unit or both? shutdown of several bars, wine shops and pubs due to legal or political reasons, renewal of
licensing for all alcohol manufacturers.
The price of units has remained the same. However, the units sold has decreased.
Great. So far, I know that the decline in profits is due to a decrease in quantity sold. Now, I would Great! You are close to the answer. The government recently passed a law where all bars at a
like to analyse why the quantity sold has been declining over the years. I would like to look at distance of 500 meters of a national highway were no longer allowed to sell alcohol causing
Internal and External factors. further damage to our sales figures. What recommendations do you have for the company?
Sure. Go ahead. I have two recommendations. First, to address the changing preferences due to demographic
I will start with problems that could have reduced quantities sold due to internal factors. I would change – I would recommend that the company invests in product innovation to launch a non-
like to divide the factors into production, distribution push and consumers pull. Would you like premium label of Whiskey and indulge extensively in marketing the product. Further, the
me to explore all options or look into any one of them specifically? premium whiskey should be placed in upscale locations such as sports bars, hotel lounges, and
high-end restaurants. This way its perception as a premium remains and the value is not diluted.
Why don’t you walk me through your framework and I will be able to tell you more as we go My second recommendation deals with the change in law – the company can look into lobbying
along? with the government since all companies would be faced with the problem and there is no scope
to find a way around the law.
Okay. There may be a problem with production wherein we are not producing enough. This could
be because of lack of investment in R&D, decrease in manufacturing – labour issues or machinery
issues, packaging issues. Apart from this, there could be a change in distribution strategies Those are good recommendations. We can end the case here.
wherein the push of products towards the market has reduced. This could be because of two
reasons – either a change in distribution channels or a change in the number of distributors or
change in the margins given to distributors. Lastly, there is a decrease in consumer demand due
to – decrease in marketing or change in taste, demographics, age or location preference.

(C) Consult Club, IIM Ahmedabad 2018-19 11

 Declining Revenue–Alcohol Company

The client is an experienced alcohol manufacturer in India. They have been facing a gradual decline in profits and have also experienced a sudden
dip in profits recently. The client wants you to identify the reasons for the decline in profits and give recommendations for improvement

Interviewee notes Approach/ Framework

• Enquire about
product variety and
Internal
geography. Whiskey Factors External Factors
sold is a premium
product and appeals
to a certain section Production
Distribution Consumer
of society (Push) (Pull) Government Policy
Competition Negative Publicity
• Keywords – ‘gradual’ Change
and then ‘sudden’ Distribution Marketing
drop in profitability. R&D Manufacturing
channels efforts
The sudden drop may
New product Licensing
have factors that are
independent of Number of Product
Labour Issues
distributors Quality
gradual drop
• Alcohol industry is
governed by several New entrant Drinking Age
Machinery Change in
Margins
external factors like Issues tastes
laws, licensing etc.

Packaging Shutdown

Recommendations
• For change in consumer invest in product innovation to launch a non-premium brand to cater to the changing demographics who prefer cheaper alcohol
and are not keen on the brew and taste. This new product can be positioned where the current target population is most likely to visit.
• Firm can lobby with the government to negotiate with rules.

Summary and Tips

• The case was simple and straightforward
• Received help from interviewer due to good structure and appropriate questions leading to necessary answers
• Interviewer liked the framework, and it could be tweaked for other similar profitability cases
• List could have been more exhaustive in some cases for example, with factors affecting distribution
(C) Consult Club, IIM Ahmedabad 2018-19 12
Declining Revenues –Washing Machine Firm– Interview Transcript
Your client is a washing machine manufacturer who is facing a decline in profits. He wants you to Our washing machines are smaller than our competitors.
figure out the reason for the same Is there a particular reason for this?
Since how long has he been facing this decline? The machines are more compact and can be fit into any corner of the house which increases the
Last 2-3 months convenience for the customers.
Where does he operate? Since the sales have gone down only in Rajasthan I can assume that the issue of size is particular
All across India to that region
Is this decline seen in a particular region? Yes
The decline is mostly seen in Rajasthan A smaller size would increase the number of times the clothes need to be loaded in the machine
What are the different products he sells? and would in turn lead to increased use of water and detergent. Detergent shouldn’t be a problem
Assume a single product but for a water scarce state like Rajasthan the additional use of water might be an issue.
Where do we lie in the value chain?
That’s correct. Rajasthan recently faced a drought which has led to a decrease in the availability of
We manufacture the washing machine and sell them through retailers water. Due to additional water requirement in our machines the sales went down during this
Ok. The decline in profits could be due to a decline in revenues or an increase in costs. What have period. What do you recommend?
been the recent trends in the revenue and cost?
There are two possible recommendations. First, since drought is not something that would last
The revenue has gone down forever he could look into the possibility of offering some discounts on the products for this period
Revenue can go down either due to a decrease in number of units or due to a decrease in the to increase volumes. Secondly he could look into starting a new line of washing machine that are
revenue/unit bigger in size. The bigger size would help not only for Rajasthan but would also provide additional
The number of units sold have decreased benefits to the consumer who are looking for bigger washing machines to reduce the amount of
times they have to load clothes
Great. So far, I know that the decline in profits is due to a decrease in quantity sold. Now, I would
like to analyse why the quantity sold has been declining. I would like to look at Internal and
External factors. Good

What are the factors you would consider?

In terms of internal factors there could be a problem due to production, distribution or the
customer pull. Do we know where the problem lies?

There is not enough consumer demand

The decrease in consumer demand could be due to decrease in marketing efforts, change in
consumer preference or due to the product itself.
Why don’t you look into our product?
Have there been any recent changes in the product?
No
Then I would like to benchmark our product with respect to the competitor on various parameters
to understand why the demand for our product might have gone down.
All right
Is our product different from our competitor in terms of quality, features or size?

(C) Consult Club, IIM Ahmedabad 2018-19 13

Profitability- Fishing company - Interview Transcript

A fishing company has faced a decline in profits of 15% over the last year. The CEO has hired you Ok the problem seems to be on the revenue side. I can think of three reasons why the revenues
to find out why this has happened. could have gone down. It could be because average selling price has gone down, volume has gone
down or the product mix has changed. Do we have any indication about which of these it could be?
 I would like to ask some preliminary questions to understand the situation better. What exactly
does the company do? Yes, actually our product mix has changed. We have found out that we are selling more big fish and
fewer small fish than we used to last year. Can you help the company understand why this could be
It employs fishermen, who use the company’s boats to go to sea and catch fish. They sell this fish the case?
directly to customers in the town.
It could either be a demand side issue or a supply side issue. By demand side I mean it could be that
I’d also like to know whether the drop in profits is an industry wide phenomenon or is it just consumers have changed their preferences and are now demanding more big fish, which is why we
limited to our company. are supplying more big fish. However, demand side issues should have affected the whole industry.
The drop in profits is limited to our company. Since this is a company specific problem, my hypothesis is that this could be a supply side problem
Does our company have any different product lines or types of fish that they sell? i.e. we are not able to catch or sell small fish and are therefore supplying more big fish. Do we know
which of the two these could be?
Yes they sell two types of fish – big fish and small fish. Customer preferences have not changed. The problem seems to be on the supply side.
Do these products differ based on price, cost per unit and margins? Ok so consumer preferences are the same as earlier but for some reason we are not able to supply
the same product mix. So the problem could be either external or internal. Has there been any
Small fish are premium and sell at a 25% higher price than big fish and it costs the same to catch change in the composition in the water body where our fishermen fish? Is it possible that there are
those fish. fewer small fish available?
No there’s been no change in the composition of the sea. The proportion of small fish available is still
I’d like to break profits down into its component parts of revenues and costs. What has been the the same.
trend in each of these over the last year?
Ok then it seems to be that there is some problem with our process of catching fish or we have
Our costs have gone down by 5% and revenues have gone down by 20%. changed the location where we fish, which is why we are picking up more big fish now. Has there
been any change in the process or method of catching fish over the last year, which is leading to us
catching more big fish?
Actually yes there has been. Last year we went on a cost cutting drive. We wanted to reduce our
expenditure on nets so we started using nets with larger holes in them. This is why we are able to
catch fewer small fish. Thank you for your analysis.

(C) Consult Club, IIM Ahmedabad 2018-19 14

Declining Revenues –Washing Machine firm

Your client is a washing machine manufacturer who is facing a decline in profits. He wants you to figure out the reason for the same

Interviewee Notes Case Facts Approach/ Framework

• Preliminary questions • Decline is only across

were very important for Rajasthan Internal
this case as without • The profits have been Factors
knowing that the declining for last 2-3 Profits
problem is in Rajasthan months Distribution Consumer
the link between water • Washing machines Production
(Push) (Pull)
usage and size would are sold through Revenues Costs
have been difficult to retailers
analyze • The problem is in the Distribution Marketing
R&D Manufacturing
• channels efforts
Product features need features of the
to be benchmarked product Price per unit Fixed Costs
with respect to time Number of
Labour Issues Product
and with respect to distributors
competitor Quantity Variable Costs
Machinery Change in
Margins
Issues preference

Packaging

Recommendations
• Introduce new lines of washing machines
• Offer discounts for a limited period

Observations/Tips/Suggestions
• It is important to think about complimentary goods that go with a product as they can lead to a change in demand for the product
• It is important to understand how long the problem has been going on . In this case the problem started around 2-3 months ago which means that
something must have changed during this period which has led to a decline in profits

(C) Consult Club, IIM Ahmedabad 2018-19 15

Declining Revenues – Tractor Company - Interview Transcript

Our client is a major tractor manufacturer facing declining sales and is unable to compete. You Yes, what all activities can you think of?
have been approached to find the problem. Promotional activities will majorly be of two types – discounts or channel based promotion. Is the
OK, so the key problem I need to focus on is finding the issue with declining revenues from tractor competitor offering heavy discounts in the market?
sales. Is there any other objective I need to keep in mind? No , it is the same.
No, please go ahead Okay. Other channels for promotion can be the print media, bill boards, TV, radio and digital (SMS,
Is this a national issue or should I focus on a particular market? internet, etc) and the word of mouth publicity
Focus on the West, where there is a major decline That is correct – the major issue was that our word of mouth publicity was less. Can you guess why?
What are the key product offerings and target market of the company? Is the company involved in Is there a negative branding about our company in the market?
direct retailing? No nothing of that sort. Think about what the competition could do to enable word of mouth?
There is only one type of tractor in the market. Please focus only on that for the rural market. The They can organize trade fairs to directly connect with the consumers – telling them about the product
company does indirect retailing through various distributors. and branding themselves.
Is there any supply side issue? Correct. They did organize a trade fair in multiple villages, called people to get free test drives and
No, we can manufacture even for a 50% increase in demand. Capacity is idle. gave away prizes at the event. This was a part of the focused strategy to gain market in the West.
OK, so the issue I at the demand side. Who are the key competitors of the company and what is Thank you.
their recent sales history?
There are 3 main competitors. Sales of one player have increased alarmingly while those for others
have seen only a modest increase.
Okay, so clearly, we are losing sales to our competitors. I would like to approach this problem by
dividing into 5 key areas where the problem could lie – uncompetitive pricing , technologically
inferior product, lesser number of dealers or distribution margin change, promotional activity and
not giving enough financing options / facing regulatory challenges. May I go ahead with this
framework or should I add something?
No, the key issue is with the promotional activity. Why would that be?
Has the competitor increased the promotional activity more than us?

(C) Consult Club, IIM Ahmedabad 2018-19 16

Declining Revenues – Tractor Company

Our client, a tractor manufacturer, has been facing a decline in sales. You have been approached to find a solution to the problem.

Interviewee notes Case Facts Approach/ Framework

• Issue with promotion • Declining sales
activity • Major tractor manufacturer,
• Same discounts as with only one major product
competition • Only an issue in the West Declining
• Same promotion spending • No new competition sales
across print and other • No supply issue
media
• Low word of mouth Price Distribution Promotion Technology Miscellaneous
publicity
• Increased competition
activities Number of Distribution Advertising Financing Regulatory
Discounts
dealers margins and publicity provisions issues

Banners and Word of

Print Media Digital Media
hoardings mouth

Competition
Quality issue
activities

Recommendations
• Increase penetration with counter offers and schemes
• Give away indirect distributor inputs to increase retailing

Tips / Suggestions
• Declining sales problems can also be separated into internal and external issues
• Once the problem is identified to be in the publicity and advertising part, including word of mouth publicity is especially critical

(C) Consult Club, IIM Ahmedabad 2018-19 17

Declining Revenues – Oncology Firm– Interview Transcript

Your client is an oncology firm. It has recently seen a decline in profits. Diagnose and recommend There has been a fall in volumes.
solutions. Ok. So if there has been a fall volumes it is a demand issue. It is important to understand if the
I would like to begin with a few clarifying questions on our client. As per my understanding our demand has fallen across the industry or is it just our product. Have our competitors also seen a
client manufactures specialised cancer treatment drugs. Is that correct? Is there any other business similar declining demand?
that our client is engaged in? The fall in demand is specific to our firm, not an industry wide phenomenon.
That is correct. Manufacturing oncology drugs is the client’s only business. Alright then. This fall in demand can then be attributed to a number of factors- branding of the
product, emergence of substitutes, sales & marketing, after sales services and competitor
Does the client operate globally or in any specific geographies? Is the client a leading player in the performance. Is there any segment you would like me to focus on specifically?
industry? Focus on sales & marketing
The client operates globally and is one of the biggest firms in the industry. Since the client only manufactures prescription drugs, we can ignore the marketing effort in
Since the client specialises in oncology drugs, I would assume they are all prescription drugs (not advertising through mass media channels. Most of the marketing effort in this firm can be divided
over the counter). Is that fair? into 2 channels. The first would be door-to-door selling to medical units and doctors and the second
would be through publicity in professional magazines and medical journals.
Fair.
That’s correct. Let’s focus on the first channel for now.
In that case, what is the product portfolio of the client i.e. what are the different kinds of drugs that
the client manufactures? The door-to-door marketing channel would involve the following- efficiency of sales personnel,
referral schemes, long-term contracts, targeting the right medical centres. Is there any specific
The client manufactures two types of drugs (A & B) channel that is causing the decline in revenues?
What is the percentage share in manufacturing of each of the drugs and have both of them seen a Yes, it has been found out that our competitors have started offering referral schemes to doctors. Our
decline in profits? client has a strong anti-referral policy due to ethical reasons. What would you recommend?
Type A is about 80% of total manufacturing and B the remaining 20%. Both are being hit in terms Alright. The decline in revenues is largely coming from referrals and that is an option our client is
of profitability. reluctant to explore. So we can explore other marketing options. A few of them are-
Does the client operate across the value chain or in a specific part? 1. Improving the efficiency of sales personnel –increase the time spent per doctor, training
2. Loyalty programs- The client could explore loyalty schemes with doctors. Such loyalty schemes
Operates across the entire value chain. would act as a substitute to the competitor’s referrals and not compromise ethics either
Alright. So, profit can be broken down into revenue and cost. I would like to understand if the 3. Explore new geographies- The client could target more geographies (increase outreach)
declining profits is due to declining revenues or increasing costs? 4. Explore new market segments- The client could also explore newer segments where their
product could be useful (secondary healthcare centres, specialised clinics of doctors)
Let’s focus on revenues for now.
There are two products with individual revenue streams. I will begin with Type A since it has 80%
share and then move over to Type B. So, revenue from the product can be written as Price X Ticket
Size X Frequency of demand. I will look at each of these components individually to understand the
problem area. Has there been a decline in the volume of our product sold or have there been some
pricing changes?

(C) Consult Club, IIM Ahmedabad 2018-19 18

Declining Revenues – Oncology firm

You have been approached by an oncology firm that is facing declining profitability. Diagnose the problem and recommend appropriate solutions.

Interviewee Notes Case Facts Approach/ Framework

• Declining profits due to • Leading global firm Profits of oncology
revenue fall • 2 products- A (80%), B (20%) firm
• Client manufactures • Operates across the entire value
specialised cancer treatment chain
drugs (only business)
• Ask if revenue fall is across
the industry or firm specific
• Understand client product
Price
portfolio and check if decline Revenue Cost
is across both
• Identify components of
revenue and the problem Product A
Product B Ticket Size
component subsequently (same as B)
• Identify drivers of the
problem component
Frequency
(Fall)

Alternate/ Compleme Sales & Decline in

Branding Competitor
Substitute nt Marketing need

Recommendations
• Loyalty programs
• Long-term contracts
• Explore new geographies and market segments
Interview Summary
The candidate did a good job in understanding the product portfolio (prescription drugs) and diagnosing appropriately. The candidate was able to create a MECE framework for revenue first and
then fall in frequency. The key to the case was identifying referrals by competitors as the major reason behind frequency fall.

Observations/Tips/Suggestions
The interview was designed to judge how quickly could the candidate move through layers of revenue and identify referrals given by competitors as the major problem component. The candidate
should have been able to apply knowledge of prescription drugs marketing to the case in order to identify referrals as the largest component.

(C) Consult Club, IIM Ahmedabad 2018-19 19

Declining Revenues – Airport - Interview Transcript

Our client is a major city airport which has been facing declining revenues. Identify the major Yes, it is. Why would that be?
reasons for this and suggest how to improve the same. Is it specific to any category such as food or apparel?
So to clarify, our goal is to diagnose the root cause for the declining revenues at the airport, and Consider it across all shops and stores at the airport.
recommend ways to overcome the same. Any other objectives I should keep in mind? Considering that it is affecting all shops, I would further break down the sales of an outlet as the
product of the operating time, average waiting time per person at the airport, number of people at
No, please proceed. the airport and the average spending per person. Have the operating hours of the airport changed?
Okay, so I would like to look at the various sources of airport revenues. They can be broadly No, they are the same. Neither has the traffic at the airport or the average spending capacity
identified as – airline domestic and cargo fees, revenues from shops and outlets in the premises, changed.
advertisement hoardings and other miscellaneous streams like parking fees and entry tickets. Is So, the key issue here seems to be that the average time spent by the customers at the airport has
there anything else you would like to add to this list? reduced automatically leading to less time and money spent on airport shops.
No, that is about it. Why would that happen though?
There can be three major reasons why this can happen. First, the customers are all coming in late.
Any particular segment where there is a major decline in revenue for the airport in question for me Second, there is an increase in the time to enter the airport due to ID check / luggage check in. Third,
to focus on? time spent at the security checks and boarding has gone up.
Yes, major problem of the declining revenues is because of shops and outlets at the airport. You are correct, the main issue was that there were continuous complaints that people were
spending a lot of time at the security. Very good. Can you suggest on how it can be improved?
Great, I would breakdown the revenue from the shops and outlets as the product of the number of
shops at the airport multiplied by the total revenue per shop. Has there been any decline in the Well, I think we need to open up new security check in counters, or man the already existing ones in
number of shops at the airport? case they are understaffed. Temporary manpower can be used for the same till the final solution is
reached .
No, they are the same. Very well, that will be all. Thank you.
I will then focus on the total revenue per shop. It can be further broken down as the fixed rental
plus the percentage of sales which is charged by the airport. Has there been any change in the
fixed rental charged by the airport?
No
Was the percentage of sales as fees charged by the airport changed?
No, they were the same..
So, the issue is that the total sales of the airport shops is going down. Is that so?

(C) Consult Club, IIM Ahmedabad 2018-19 20

 Declining Revenues – Airport

Our client, a major city airport has been facing declining revenues for sometime. You have been approached to find a solution to the problem.

Interviewee Notes Case Facts Approach/ Framework

• Find solution to declining • Major decline is in airport
airport revenues’ revenues for a metro airport Airport
• Major decline is in revenue • No changes in fees accrued Revenues
from the shops and outlets from airlines or marketing
at the airport hoardings.
• No change in fixed rental per • No change in accessibility to
shop, number of shops or the airport to reduce traffic Airlines fees Hoardings Shops and Stores Lounges Others
the percentage fee charged
for sales
• Sales declining across shop
categories
• No change in airport traffic Fixed rental % fee of sales Sales Number of shops
or shop operating times

Operating shop Time spent Average spending

Airport Traffic
times waiting per person

Security and
Arrival time Luggage check in
Boarding

Recommendations
• Man the existing security checkpoints with temporary labor.
• Increase the infrastructure to accommodate the future traffic

Tips / Suggestions
• It is essential for the candidate to figure out the key revenue streams for the airport.
• Once it narrows down to shops and stores, interviewee needs to break the revenue down into chunks for efficiently solving the problem

(C) Consult Club, IIM Ahmedabad 2018-19 21

Declining Revenues – Urea Manufacturer– Interview Transcript

Your client is a manufacturer of urea. They have recently seen a decline in their revenues. Identify Competitor action is the driving cause.
the potential reasons and recommend a solution. Alright. So, our client is seeing a decline in revenues due to competitive action. A decline in demand
I would like to begin with a few clarifying questions on our client. As per my understanding urea is due to competitive action could be broken down into improvement in product quality, operational
used as a fertilizer in agriculture. Is there any other usage of urea that the client is manufacturing improvements (procurement, processing and distribution), change in marketing strategy or an
for? improvement in after sales services . Which of the 4 would you say is more important?
That is correct. Manufacturing urea for use in fertilizers is the client’s only business. So we know that our competitors have colluded and launched a new promotional campaign, called
Does the client operate globally or is it located in some specific regions? Is the client a leading the Krishi mela which has gained popularity. The client has seen declining revenues ever since
player in the market? competitors launched this new campaign.
The client is located in India, manufactures primarily for 4 states in North India. It is a leading Okay, so it is a marketing campaign then. In terms of the mela, our competitors could be doing a
player in the market. number of things- they could be running creative advertisement schemes, offering discounts or
subscriptions, giving away the product for free or rebranding existing product. Which of the above is
Is our client the only one seeing a decline in revenues or is it an industry wide trend? the competitor doing?
Our client is the only one. Which of them do you think would make an actual difference to our revenues?
Alright. I would like to then begin the analysis. For starters we know revenue is comprised of price You said that there is little product differentiation in the industry which rules out the advantage of a
and quantity. Has there been any significant price change recently in the industry or by the client? creative advertisement, which would be more useful when we are working with a unique product.
No. It is a competitive set-up with little scope for product differentiation. Prices across the industry Our target population is the agriculture sector, where farmers would be reluctant to subscribe to
including our client are roughly the same and have not changed recently. anything in the fear of long term commitment and ease of availability of products of competitors.
Okay. That is very helpful. I would then assume it is a quantity issue. Quantity decline could be This leaves us with discount on the product or free distribution. Considering the competitor has
attributed to 3 reasons. The client could have seen a fall in the number of customers, or in the launched this campaign with a probable to make its brand more familiar, the latter seems likely.
frequency of visit of a customer or in the number demanded by each customer. Is there any other That is absolutely correct. The competitor has been giving out products for free at the mela to
reason that I am missing? Was the decline specific to one of the factors mentioned above? improve the recall value of their product. What would be your recommendations for our client now?
No, there was a decline across all the segments. I would make the following recommendations to our client-
Alright. A decline across all the buckets would mean an overall fall in demand. This could have 1. Given the standardised industry, mimicking the competitor by distributing freebies would help
happened due to multiple reasons. They would include the emergence of an alternate, competitor 2. Explore other promotional schemes such as discounts on product, innovative tie-ups with
action, change in branding, change in production of a complement, mismatch in product complementary product manufacturers, rebranding the product
targeting, decline in the quality of product, cannibalisation, distribution fallacies and decline in 3. Explore other advertisement campaigns such as painting on walls, digital media if currently
overall need for the product. Considering the decline is specific to the client (in a minimised absent
product differentiation setting) we can safely rule the last cause out. Among the others, is there a 4. Since customers are largely indifferent between brands, it would help to tie-up with retailers
particular cause that is more relevant? and forge long term contracts with them
5. Explore new markets and geographies

(C) Consult Club, IIM Ahmedabad 2018-19 22

Declining Revenues – Urea manufacturer

Your client is a urea manufacturer. They have recently seen a decline in their revenues. Identify the potential reasons and recommend a solution.

Interviewee Notes Case Facts Approach/ Framework

• Declining revenue fall due to • Leading Indian firm with presence
fall in quantity demanded in 4 North Indian states Revenue
Competitor
Competitor
• Ask if revenue fall is across • Minimal product differentiation in
the industry or firm specific the industry, similar to a perfect After
Operational Product
Product After sales
sales
• Identify if there have been competition set-up Operational Marketing
Marketing quality
quality service
service
price shifts or demand shifts • Client manufactures only one
• Identify drivers of a fall in product used in fertilizers by Procurement
Procurement
demand or change in price farmers
• Study the drivers and make Price Quantity
Processing
Processing
appropriate Demanded
recommendations
Distribution
Distribution

Number of Ticket Size

Frequency
Customers

Improved
Alternate/ Compleme Sales & Decline in
Branding Competitor product
Substitute nt Marketing need
quality

Cannibalisa Targeting Distribution

tion mismatch fallacies

Recommendations
• Imitate competitor
• Innovative advertisement and promotional campaigns
• Long term contracts with retailers
• Explore new markets
Interview Summary
The candidate did a good job in understanding the problem (usage of urea) & diagnosing appropriately. The candidate was able to lay out detailed MECE structures
Observations/Tips/Suggestions
The interview was designed to judge how quickly could the candidate move through layers of revenue and identify recall value improvement by competitors as the major problem component.
The candidate should have been able to apply knowledge of fertilizer industry to make appropriate recommendations.

(C) Consult Club, IIM Ahmedabad 2018-19 23

Cost Reduction– Retail Bank

Our client is a major retail bank facing declining profits and is unable to compete. You have been The salary per employee is similar to the others, however the we are employing higher number of
approached to find the problem and suggest changes. people.
OK, so the key problem I need to focus on is finding the issue with declining profits of our client Are we catering to higher number of customers?
which is a major retail bank. Is there any other objective I need to keep in mind? No , it is the same.
No, please go ahead Then this means that we are having higher number of employees per customer served. Can’t this be
I’ll start with a few clarifying questions. Is the problem specific to a particular branch or common reduced? Do we have employees who remain idle for most of their time?
to all the branches of the bank? No, the employees have been observed to be working continuously.
The problem is being faced by a specific branch located in a metro city This means that the efficiency of our employees are less as compared to other banks. Is there any
Given the problem is specific to a particular branch, it is fair to assume that the problem is not specific reason behind this?
faced by the banking industry in general? Are the competitors located in that region also facing Can you elaborate on how you’ll define the employee efficiency?
similar issues?
Employee efficiency will comprise number of customers served per employee which will depend on
No, the problem is only being faced by our client. the time taken by the employee per customer and the total non-working hours.
Since the client is facing declining profits, I’ll like to analyse the profit structure of the bank and Yes correct. So it has been observed that the time taken by the employee per customer is high. Can
break it down into revenue and costs. Do we have any information on how our revenue and costs you think of the possible reasons for the same?
have been in the recent past?
1.) The employees may not be competent enough or they maybe lacking the required training to
Our revenues have been fairly constant. However, we have been facing the issue with increasing cater to the demands of the customer.
costs. 2.) The functioning may not be divided and the customer may have to visit multiple people for
OK, so the issue is on the costs side. I’ll like to break the cost further into fixed costs and variable performing any task
costs. The fixed costs will constitute cost of rent, employees salaries, maintenance costs(including 3.) The employees may not be incentivised enough to work and they maybe taking longer breaks
water, electricity etc). The variable costs would include cost of bad debts, customer handling costs. Yes, the bank was actually facing the a similar issue. The customers had to come multiple times for
Is there anything else I need to consider? opening a bank account or getting an ATM card due to lack of information by the employees.
No go ahead
Okay, do we have any information of where the costs have been increasing specifically or any
comparison with our competitors?
Our rent is fairly similar to other banks, maintenance costs have also been the same. We don’t
have significant bad debts. In fact our employee salaries are higher than our competitors and our
customer handling costs is also increasing.
So looking first into the employee salaries, are we paying more to the employees or the number of
people are more as compared to competitors?

(C) Consult Club, IIM Ahmedabad 2018-19 24

Cost Reduction– Retail Bank

Our client is a major retail bank facing declining profits and is unable to compete. You have been approached to find the problem and suggest
changes.

Interviewee notes Case Facts Approach/ Framework

• Issue with costs • Increasing costs
• Fixed cost of employee • Problem specific to a
salary higher than particular branch Profits of Retail Bank
competitors • No new competition
• Low efficiency of • Employee salaries increasing
employees
• Multiple visits by
customer for any service

Revenue Cost

Variable
Fixed Costs
Costs

Maintenan Employee Customer

Rent Bad Debts Handling
ce costs Salaries
Costs

Recommendations
• Improve the systems in place to ensure customer service is improved and time devoted by an employee decreased
• Give proper trainings to employees and find the redundant tasks being currently performed

Tips / Suggestions
• Declining costs are majorly due to higher employee salaries. This can also be figured through higher customer handling charges
• Once the problem is identified, it is important to figure out the reasons for the same.

(C) Consult Club, IIM Ahmedabad 2018-19 25

Cost Reduction- Lease fee-Interview Transcript

Your client is a private company in the United states that leases a jet. The lease contract is soon To analyze one more alternative I would like to know the length of the lease contract and thus
expiring and the company want to renew the contract. The client now contacted you and asked how often the contract is renewed?
you to find ways to reduce the lease amount. The current amount is $1 million, how can the
company lower it?
That is an interesting case. To start of the case, I would like to know whether the jet should be The contract is renegotiated on a yearly basis.
exactly the same as the jet leased under the past lease contract?
Excellent question. The jet leased under the new contract does not necessarily have to be the Ok, and for how long has the client renewed the contract so far?
same.
Ok, what is the general occupancy of the plane over the last few years and what is the seating
capacity of the leased plane? For the last 7 years.
The seating capacity of the plane is 40 and the occupancy has ranged between 8 to 10
Ok, so based on this I conclude that it is highly likely that the company will continue its
Great, so one way the firm could reduce its cost is by leasing a plane with a lower seating relationship with the leasing party. The company could hence opt for a contract with a longer
capacity. Considering that the occupancy rate was around 10, I believe that a plane with 15 seats period. This should provide the firm with a discount.
should be sufficient. Assuming that the occupancy rate follows a normal distribution it is very
unlikely that there will be more than 15 people in the plane at the same time. However, if this is
the case it is always possible for the plane to fly multiple trips. Good suggestion. As you can see in the graph the leasing price per year in the initial contract is 1
I agree, that is a great suggestion. What else would you consider? million per year. The total price for a contract with a duration of 5 years is 4.2 million. What would
To evaluate other options, I would like to know how often the leased plane is used per year? be the cost savings for the firm if they switch to a contract with a longer leasing period?
The company uses the plane 3-4 times per year.
Ok, taking into account the low usage rate, the company could possibly share the plane with The cost savings would be $160000.
another firm. The sharing of cost would then result in substantial cost savings.
Fair suggestion, but this might result in complications in case both companies require the plane Excellent suggestions. It was nice interacting with you.
at the same time.
That is true, the companies would hence have to establish stringent contracts regarding the
usage of the plane.
Good point.

(C) Consult Club, IIM Ahmedabad 2018-19 26

 Cost Reduction- Lease fee

Your client is a private company in the United states that leases a jet. The lease contract is soon expiring and the company want to renew the
contract. The client now contacted you and asked you to find ways to reduce the lease amount.

Interviewee Notes Case Facts Approach/ Framework

• Assume occupancy follows a • The current lease fee is 1 million
normal distribution and will Dollar Lower Leasing
rarely exceed 15 passengers • The contract duration is 1 year fee
• Seating capacity of the plane is 40
• The company uses the leased jet 3-4
per month Lease plane with
Share leased plane Increase contract
• Average occupancy rate for the plane lower seating
with third party duration
are as follows: capacity
• 2014: 8 People
• 2015: 8 people
• 2016: 10 people
• The contract has been renewed for
the last 7 years
• The cost of leasing is:
• Short leasing period (1 Type of contract Short (1year) Long (5 years)
year): 1 Million
• Long leasing period (5
years): 4.2 Million Total cost 1 million 4.2 million

Cost per year 1 million 0.84 million

Cost savings per year 160000

Recommendation
• To reduce the leasing cost I propose 3 measures:
1. Lease plane with lower seating capacity. Since the plane hardly ever is used at max capacity, a smaller plane can be leased.
2. Share the lease contract with another party. Stringent contracts need to be established regarding usage
3. Increase contract duration. A longer contract duration should result in discounts
Interview Summary
The interviewer wanted the candidate to identify options to lower the leasing fee. The candidate was expected to elaborate on the feasibility of the proposed recommendations

Observations/Tips/Suggestions
• Analyze the feasibility of each recommendation carefully

(C) Consult Club, IIM Ahmedabad 2018-19 27

Cost Reduction – Beer manufacturing company– Interview Transcript
Your client is a beer manufacturing company that operates in India. The cost structure for the Are we facing a logistics problem with picking up the used bottles from the pubs and bars?
company is poor compared to the international benchmarks, and you have been asked by the
client to find out why. No, there is no issue with the logistics. We can pick up the bottles easily.
Is the problem only on the cost side, or should I also analyse the revenues of the company to look Okay. Is there a problem with the used bottles that we are picking up?
for a problem there? Yes, the bottles that are returned to us are too scrubbed to reuse.
No, the problem is only on the cost side. Are the bottles getting scrubbed due to issues in the transportation, or are the competitors using
Alright. Is the problem with only one specific beer product, or is the problem spread out across better quality glass than ours?
different products? Additionally, is this an industry wide problem, or specific to our client? There is no problem in the transportation. The competitors use the same quality of glass that we do.
The problem is not limited to one product. In fact, the client is facing the problem across many Okay. Is there any specific way that the competitors are being able to reuse the bottles, but we are
beer products. There is no relevance to the problem being limited to our client or the industry. not?
Okay. I think it would make sense to break the costs down into the value chain to see where the Can you think of a way that they are doing it and we can use?
cost issue lies. Should I go ahead with the same? I think that the competitors are labelling the product in a manner that the scruffiness of the bottles is
Sure, you can do that. hidden from the consumer’s view.
I would start by looking at the raw material costs. Are they larger than the industry average? Okay. What would be your final recommendation to the client?
No, our raw material costs are in line with the industry. The primary problem that the client is facing is in the packaging of the beer in bottles. This is due to
Okay. Next, I would look at the processing costs. Have there been any issues out there? the fact that we are using new bottles, while our competitors are re-packaging the bottles, thus
saving on costs.
Yes, as a matter of fact, our processing costs are higher than the benchmarks. My recommendation to the client would be to collect the bottles once used, and label them in a way
Okay, in that case, I would like to delve deeper into processing costs. However, before I proceed that the bottles do not appear scruffy to the consumer. This shall lead to significant cost savings.
with the same, I would like to see if this is the only cost head that has an issue. Additionally, the client can also push for the sale of cans over bottles, as cans can be recycled even if
You may proceed with processing costs. There are no other cost heads where the client is facing a they get scruffy.
problem. Okay. Sounds good.
Okay. Is the client facing labour or rent issues, or is having underutilisation of capacity?
No, the client is not facing any issues under these heads.
Is there a problem with the packaging costs?
Yes. The client is indeed facing a problem in the packaging costs. The costs are significantly higher
than the benchmarks.
Okay. Is our client facing cost issues with both beer bottles and cans?
No, the client is facing cost issues with only the bottles
Are the bottles that we source more expensive than the benchmarks?
No, the cost for the bottles is the same as the benchmark
Okay. Is there anything that other manufacturers are doing and we are not?
Yes. The other manufacturers usually reuse their bottles, so they incur much less costs for the
bottles, while we are having to pay a lot more.

(C) Consult Club, IIM Ahmedabad 2018-19 28

Cost Reduction – Beer manufacturing company

Your client is a beer manufacturing company that operates in India. The cost structure for the company is poor compared to the international
benchmarks, and you have been asked by the client to find out why.

Interviewee Case Facts Approach/ Framework

Notes • Client is a beer
• Qualitative case, no manufacturing company
Storage
Storage &
& Distribution-
Distribution-
numbers provided with multiple products R
R&&D
D Raw
Raw Material
Material Processing
Processing Transportation Sale
Marketing
Marketing
Transportation Sale force
force
• A single cost head case • It is facing cost issues
where one issue needs with more than one beer
product Cost
Cost of
of raw
raw Transport
Transport to
to Marketing
Marketing
to be identified Equipment
Equipment Machinery
Machinery warehouse Sales
Sales Channel
Channel
material
material warehouse channels
channels
• The cost problem is
Contract Storage
Storage (Rent,
(Rent,
identified to be in Human
Human Capital
Capital Contract &
& bulk
bulk Factory
Factory rent
rent Sales
Sales Force
Force
Strategy
Strategy
deals
deals Labor)
Labor)
packaging
Cost Transport to
Transport to
Cost of
of finance
finance Quantity Labor
Labor hours
hours Training
Training
Quantity used
used customers
customers
Technology
Technology
Capacity
Capacity
utilization
utilization
Packaging
Packaging Repackaging
Repackaging of
of bottles
bottles

Label
Label bottles
bottles to
to hide
hide Switch
Switch to
to using
using cans
cans more
more
scruffiness
scruffiness frequently
frequently

Recommendations
• Reduce the excessive expenditure on new bottles by labelling the bottle to hide the scruffiness
• Increase the use of cans over bottles as cans can be recycled even if they get scruffy

Interview Summary
This is a cost reduction case where the interviewee should quickly establish the major cost buckets after discussing with the interviewer. The candidate can either probe each bucket along the
value chain, or ask the interview which buckets to look into.

Observations/Tips/Suggestions
• Each cost component should be broken down into multiple cost levers to ensure that nothing is being missed out
• Breaking down cost of the buckets ensures that the problem identification is more specific in nature

(C) Consult Club, IIM Ahmedabad 2018-19 29

Profitability – Cost reduction for a cement player – Interview Transcript

You’ve been hired by the CEO of a cement company to reduce their logistics cost. What are the Moving to outbound logistics, what is the mode mix? What is the proportion of orders that go directly
key areas you will assess? to the dealer?
I would like to clarify the objectives before we begin. Our objective is to reduce their logistics cost in We ship 70% of our orders through road. Rail is cheaper in most cases, but rake availability is an issue.
order to improve their margins right? We ship all orders above 30 MT directly to the dealer and smaller orders go to warehouses. The split
Yes between direct-depot is 50-50
I would first like to understand the cement value chain. My specific queries on logistics are : Can we look at increasing direct % as it will be cheaper and we will avoid handling costs? We could club
1. What are the key raw materials I need? Where do I buy from? How is it transported to my a few orders and use a single truck
plants? How many plants do I have?
2. What do I transport from the plant? Who are my customers? How do I sell to them? Increasing direct % is a priority area for the firm, but we have strict customer service level guidelines
and order delivery times can’t be overshot. Hence clubbing orders is tough
So our key raw material are limestone, petcoke, flyash and gypsum. Limestone is extracted from
mines, which are located within the plant complex. The others are bought from refineries, thermal Noted. Moreover, for our network, how do we assess if the right plant is serving the right market? Is
power plants and gypsum mines respectively. A mix of road and rail is used to transport raw there any network optimization opportunity given the client has 40 plants and they may not have
materials to the plant. The client has 40 plants in the country updated their systems for newer plants
Cement plants manufacture & transport cement and clinker. Clinker is an intermediate good and is Correct. The client has a network optimization tool, but it has not been updated to reflect newer
used to manufacture cement at grinding units (which are closer to market) while cement is sold to plants, updated freight rates and new warehouses. It also has constraints built into it that are not
dealers and transported via road or rail to customers directly or to company owned warehouses relevant anymore
Thank you. I have a clear idea about the cement value chain now. I would like to start with raw
materials (inbound logistics). Which mode is cheaper? Rail or road? How many vendors do I have? What is our vendor mix on our current routes? Similar to inbound, can we reduce rates by offering
Can I leverage higher volumes for lower rates? individual vendors more business? Can we reduce TAT for plants and warehouses?
Road is cheaper than rail. But trucks carry upto 30 tons while a rake can carry upto 4200 tons. This All that is feasible. However, reducing TAT at plants and warehouses entails additional investment in
allows me to keep adequate inventory at the plant and minimizes risk. capacity. We will have to assess the returns to take the decision
I have high vendor concentration across key routes. I can look at reducing the number of vendors
and offering them more volumes, but that would lead to monopolization of routes. I would need to Finally, I wanted to ask if we have any inventory norms at our warehouses? Are we losing sales because
maintain a balance of empty warehouses while other warehouses are flooded with material? Can we balance inventory
Duly noted. I would now like to focus on the operational aspects. What is the turnaround time at the better across all geographies
plant for a truck? Can I reduce that and allow trucks to do more trips every month? I can ask them to
pass on part of the cost benefit to the company Stock-outs have been 3-4% of our sales while they are 1.5% for our competitors. The firm has been
trying to adhere to their inventory norm of maintain 4-5 days of inventory at our system by beefing up
Our average in-plant turnaround time is 12 hours, which is high and can be reduced. But plant TAT is capacity at warehouses
20% of the overall trip turnaround time. Travelling time is hard to reduce as distances are long Can you quickly sum up the key areas you will address for the CEO?
I will look at vendor concentration across routes and rationalize rates by giving more business to key
vendors. I will look at improving turnaround time at plants and depots. Additionally, I will review the
firm’s service network (plant-to-market) and define inventory norms
That will be all. Thank you

(C) Consult Club, IIM Ahmedabad 2018-19 30

 Profitability – Cost reduction for a cement player – Interview notes

Logistics cost reduction for a leading Indian cement manufacturer

Interviewee Notes

• Understand and use value chain to

identify different cost heads
• Break down logistics cost into rate* Logistics Cost
distance. Think of simple levers to value levers
reduce rates (negotiation with vendor,
TAT, direct %) and distance (network)
without losing volume (by setting
inventory norms) Inbound logistics Outbound logistics

Mode Vendor Vendor

Plant TAT Direct %
Mix concentration concentration

Network Inventory
Optimization norms

Recommendation
• To touch on all the possible cost heads and identify potential sources of value
Interview Summary
• The interviewer wanted the candidate to identify the major drivers of logistics cost. The interviewee was then expected to come up with simple solutions based on his
understanding of the explained cost heads. Given the technical nature of the problem, listening to the interviewer’s upfront summary was of the essence
Observations/Tips/Suggestions
• The interview is technical in nature. As a result, the candidate may feel intimidated. However the candidate should just listen to the interviewer’s explanation very carefully
and take notes diligently to keep pace with the problem. The candidate is not expected to have background knowledge of the sector

(C) Consult Club, IIM Ahmedabad 2018-19 31

Cost Reduction – Auto Insurance Company - Interview Transcript

Your client (IA) is an auto insurance company operating in India and has been facing reducing No, you can focus on claim costs
profitability in the last 2 years. They have come to you for help to identify the reasons and explore Okay. So with claim costs, it is possible that the difference may be arising out of the difference in
possible solutions. You can ignore reinsurance for the purpose of the analysis. the customer portfolios of the company as compared to competition?
Can you tell me a little bit more about the industry, and the position of IA? The kind of competition, Okay, that may be a possible reason. But how will you analyse the portfolio?
the growth?
We can segment customers into buckets based on
Sure. IA is one of the 5-6 major players who dominate the industry and hold around 95% of the a. Age group
market. The market has been growing steadily at around 10% p.a. b. Income bracket
Okay. And how is the company growing? Is it in line with the industry? c. Geography and terrain
The market is growing at around 10% p.a, and the company's market share is growing in almost the d. Traffic in the area.
same proportion. That would give us an idea of the risk, based on the general profile of the customers. So do we
have any data regarding this?
Alright, is this reduction in profitability only being faced by the company or by competitors as well?
Yes, so although there is a fair mix in all the buckets, the portfolio is generally dominated by
We do not have very accurate data of competitors, however, reliable estimates indicate that most of people of relatively younger age groups (less than 25 years). In terms of income, IA has a large
them have maintained profitability levels and some have even increased profitability. What do you base of lower and middle level income groups. It has its operations in all major cities –Delhi,
think are the possible causes for this? Bangalore, Mumbai, etc.
It can either be due to higher revenues, or due to lower costs. That explains a lot. You mentioned that the company has more number of customers who are
The industry is fairly competitive, and none of the players can get away with charging higher prices young. They can be considered more risky, as they tend to be more rash while driving, increasing
without losing out on market share. And as for number of customers, there has not been any major risk of accidents, when compared with middle aged people having families. Further, you
change as such. So you can move on from revenue. mentioned that they do not have too many customers in the higher income brackets. Higher
Okay. Then I will move on to the costs side. There will be fixed costs, and variable costs. Fixed costs income groups can be considered less risky as they use expensive cars, usually have professional
in such a company would generally include salaries, administrative expenses, etc., and the main chauffeurs who are generally more careful. Also, it has a lot of clients in cities with extremely high
variable costs would be the claim costs. Am I missing anything here? and aggressive traffic like Delhi, which have higher incidents of accidents
No, go on. Thus, the company should either focus on improving the portfolio mix, or should adjust premiums
Do we have any data about these costs? Any increase in a particular cost head? more appropriately to factor in the risks.
Umm, fixed costs have been growing as per normal trends. That sounds good to me. Thank you.
And what about claim costs?
IA has been seeing a rise in the claim costs over the past few years, faster than revenue growth.
Right, so would it be fair to say that it may be a major reason for the decline in profitability.
Probably yes.
Okay, then I would like to understand the possible causes of the rising costs, and why competitors
are not incurring this cost. But before I go into a deeper analysis, I would just like to ask, is it possible
that competitors have implemented stringent policies for claim approvals, or somehow provide
lesser cover using fine print in the policies due to which the costs are lower for them?
I do not think that is the case. This would result in unnecessary loss of goodwill for the company.
Further, the industry is highly regulated and all players have similar policy terms and claim
processes. Hence, this is not practical.
Alright, then I would like to look at the claim costs in greater detail. Before I do that, is there
anything other significant cost item I am missing?

(C) Consult Club, IIM Ahmedabad 2018-19 32

 Cost Reduction – Auto Insurance Company

To increase profitability of an auto insurance provider

Interviewee Notes Case Facts Approach/ Framework

• Profitability changes can be • Client is a top 6 player
due to both revenue and costs in a concentrated auto Profitability
Profitability
• Since revenues have been insurance industry in
growing in line with industry, India
declining profitability must be • Client has experienced Revenues
Revenues Costs
Costs
due to rising costs falling profitability but
• Problem is also specific to the competitors haven’t
client (not an industry-issue) • Revenues have been Competition's
Competition's Environmental
Environmental
Firm
Firm
• Analyse variable and fixed growing in line with Costs
Costs Factors
Factors
costs of the client industry

Variable
Variable Fixed
Fixed Economy
Economy

Customer
Customer Service
Service Salaries
Salaries
Costs
Costs

Administrative
Administrative
Claim
Claim Costs
Costs Expenses
Expenses

Licenses
Licenses

Recommendations
The problem arises due to high claim costs. High claim costs arise due to an unfavorable customer profile mix. Thus, the company should either focus on improving the portfolio mix, or should
adjust premiums more appropriately to factor in the risks.

Interview Summary
The candidate began by asking relevant, probing questions on competition and market to get an initial feel. Very early on in the case, he indicated that he was going to take the revenue-cost
approach to drill down the problem. Despite some occasional hiccups and incorrect hypotheses, he eventually arrived at high Claim Costs as the root cause of declining profitability. His true
potential came across in his suggestion that customer risk profiles must be different. He neatly segmented customers into relevant buckets and provided a strong and logical recommendation.

Observations/Tips/Suggestions
Have a clear approach. In this interview, the candidate took many questions before being able to pin down claim costs as the root cause. Nonetheless, it is clear that the candidate had a very clear
framework in mind (Profitability  Revenues/Costs  Industry-Wide/Firm-Wide Issue  Fixed/Variable  Claim Costs). Furthermore, the candidate also asked if there were cost components he
was missing. This shows that the candidate tried to have a MECE approach, which is what interviewers are looking for.

(C) Consult Club, IIM Ahmedabad 2018-19 33

Cost Reduction – Retirement benefits policy- Interview Transcript
A new retirements benefits policy has been introduced whereby every employee makes a Great. So the increase to the investable assets would be 150 million times ₹10000, or ₹1.5 trillion.
contribution ranging from ₹5000 to ₹20000. The savings grow tax free till the employee retires. We That sounds like a substantial increase, given that last year the new addition to assets under
have been approached by a client that runs a large mutual fund to help answer the following management was ₹5 trillion. Are there any other regulatory issues or exogenous factors that would
questions: Is this a big opportunity? What are the various possibilities and challenges they would govern or restrict how these assets can be invested?
face? There are some stipulations, but let’s not worry too much about them for now.
I’d like to explore three broad areas to answer the first question – the dynamics of the mutual fund Excellent. In that case, our response to the first question would surely be that this is a substantial
industry, the additional earnings that we will make in leveraging this opportunity and any regulatory opportunity for our client in aggregate.
or exogenous factors affecting the mutual fund industry due to the change to existing policy. I’d probably agree that this is a substantial opportunity in aggregate. But how would you go about
First, can you tell me more about the size and dynamics of the mutual fund industry? determining if is this a profitable opportunity?
I think I see where you are going. You mentioned our client charges some sort of management fee
for services rendered. How much is this fee and what types of expenses does the client incur?
Sure. As you may be familiar, mutual fund companies solicit investments from individuals,
retirement accounts of various firms, etc. They then invest these monies to create and manage a Good question. The client charges a 1% management fee on assets under management.
well-diversified portfolio for a management fee. From the investors’ perspective, the creation of Simplistically, let’s assume that administrative expenses on these assets like mailing statements, etc.
such a portfolio minimizes the risk. is about ₹100 annually, while other operating expenses add up to about 10 basis points.
Got it. How big is this industry?
There are a large number of players in the industry, and the total assets under management would Interesting. So then on every ₹10000 invested, we make ₹100 in revenues per customer but have
be running into trillions. ₹100 plus ₹10 or ₹110 in expenses per customer. That doesn’t seem like it is profitable.
Do we know approximately how much new money enters the industry each year? This might help
me gauge whether or not the new policy will be a big opportunity for the industry. No, it does not, does it? Would you still think that this still a substantial opportunity?
We can look at future earnings as well. If I assume a 20% growth rate based on the return earned
Based on our internal studied and analysis, last year approximately ₹5 trillion was new money or from the additional AUM, then the ₹ 10000 grows to ₹12000, our revenue grows to ₹120, but our
addition to assets under management in the mutual fund industry. expenses grow only to ₹112. We begin to make a profit. If we know the average length of the
customer’s investment, we can use the present value of cash flows to estimate a lifetime customer
Okay. Is it safe to assume that only the people working in the organised sector shall be benefitting value to the client. So it does appear to be profitable, though I’m not sure how it compares to
from this policy? profits currently.
Yes, the policy shall be valid only for employees in the organised sector. You are correct. It is a profitable business. Right now, the size of each customer’s account is pretty
Okay, let me now move to gauging the incremental savings that is likely to enter the investment substantial. The profit margin is much more attractive. We seem to be running out of time. Can you
pool. I shall make some assumptions, please stop me if any of them are unrealistic. My goal is to size quickly summarise for me the opportunities and challenges the client faces, given our analysis so
the number of people working in the organised sector in India, as they shall be paying the premium far?
amount for this policy. Sure. There are a number of opportunities and along with it. Among the opportunities, the first is
I shall assume that individuals between the ages 18 and 60 are eligible to be employed. I shall cross selling the mutual fund opportunity to customers of the brokerage and other services. This
assume the life expectancy in India to be 70 years, with the population distributed uniformly by age. would result in enhancing customer loyalty and also increase switching costs, leading to higher
customer retention. Second, emphasizing convenience, sort of the one-stop shop for financial-
Okay, that sounds fine for now. services idea, can enhance the client’s value proposition to their customers. On the challenges
front, the most critical is probably competition. If indeed ₹1.5 trillion additional funds are likely to
I shall break the population of 1.2 billion people into rural and urban with a 70/30 split. That gives be invested, every financial services firm is going to want a slice of the pie, which only underscores
me 360 million people working in the urban areas. I shall assume that the rural employment sector the need to cross sell and increase customer loyalty. This is something the client is going to have
is not the organised sector. Additionally, people in the ages 18-60 comprise 60% of the urban deal with.
population, and approximately 70% of these people are employable in the organised sector. This
helps me exclude individuals like homemakers, students etc. who would be in the 18 to 60 age Great. Thank you.
bracket. So that brings the labour force to 150 million. Figuring a 10% unemployment rate, the
population in 135 million.
Why don’t we ignore the unemployment rate for now and assume a round number of 150 million?

That would be easier for the calculations. You indicated a range of ₹5000 to ₹20000 for retirement
account contributions. Would these be recurring contributions?
No. Also, you may assume that the contribution will be ₹10,000 on average.

(C) Consult Club, IIM Ahmedabad 2018-19 34

Cost Reduction – Retirement benefits policy

Estimate the additional earnings and profitability scope of a new retirement benefits policy on the mutual fund industry.

Interviewee Case Facts Approach/ Framework

• Last year approximately Rs. Financial Projections
Notes
10 trillion was addition to
• Have a decent
AUM Filters Number projections
knowledge of the • Average investment per Total population
Indian population person is Rs. 10000 annually 1200m
breakdown, in terms • Total number of people Potential AUM 10000*350 = 3.5 trillion
of rural/urban, age covered under scheme is Revenue projection for client (Y1) 10000*0.01 = 100/cus
demographics, income approximately 600 million Cost projection for client (Y1) 100+10000*0.001 = 110/cus
levels etc. • Revenue per consumer is 1% Revenue projection for client (Y2) 12000*0.01 = 120/cus
• Don’t stop the of AUM Rural population Urban population
Cost projection for client (Y2) 100+12000*0.001 = 112/cus
30% = 360m
• Cost per consumer is fixed 70% = 840m
profitability analysis at
(Rs. 100 per consumer) and
the first year. Look for variable (0.1% of AUM)
future years to see if
the opportunity Not considered

becomes profitable. Employable age Not Employable age

60% = 216m 40% = 144m

Employable
70% = 150m

Recommendations
• Cross sell the mutual fund opportunity to customers of the brokerage and other services
• Emphasizing convenience, sort of the one-stop shop for financial- services idea, can enhance the client’s value proposition to their customers

Interview Summary
This is a market analysis case where the interviewee is expected to size a particular opportunity and gauge its expected profitability.

Observations/Tips/Suggestions
• Run through the population split step by step, calculating the number of people at each step and not just in the end
• In case you reach a scenario where the company is initially making losses, make sure you analyse future prospects to see if there is a turnaround in the additional year

(C) Consult Club, IIM Ahmedabad 2018-19 35

Profitability– Photography Firm– Interview Transcript

Your client is a Photography firm called Foto Flash based in Mumbai, they have experienced The Price of a single digital print is 50 rupee’s. The cost of the same is 10 rupee’s. Cost per Kiosk
declining profits over the last 5 years. Figure out the problem. for a year is Rs. 100,000.
I would like to understand the company’s business. What products does the firm currently With this information, I will calculate the break even demand.
produce? Have their costs increased over the last 5 years? Breakeven : Revenue = Cost
The firm makes money by selling film and photo paper. Their costs have not increased over the 50 * Q = 10* Q + 100000
last 5 years 40Q = 100000
Q= 2500
If their costs have not increased, I would assume that the revenue has decreased - quantity of  
products sold has declined over the last 5 years - owing to the decline in profitability. What is the The break even Quantity they will have to sell is 2500 digital prints. The market demand
general trend in the market? are similar firms facing the same issue? according to our calculations is 50,000. Therefore, Fotoflash should place Kiosks in Food World
Stores.
Yes, the volume sold has reduced. All firms in the film and photo paper industry have seen
similar declining profits, however, firms that have moved to digital photography have seen an
increase in profit and sales.
It is therefore evident that Foto Flash is experiencing reduced profitability due to digital
substitution. For the same, the company needs to consider new business ideas to enter the
digital Photography space.

Foto Flash has been approached by Food world supermarket to place ‘Kiosks’ in all their stores.
Kiosks are self service stations that allow users to print their pictures digitally, on Foto Flash’s
papers. How do we evaluate the attractiveness of this opportunity?

I would like to estimate the potential demand for digital prints in a single Food world store in
Mumbai. Assuming there are 20 million people in Mumbai, and 10% are Food world customers.
2 Million are customers, Out of the 2 million, assuming 10% go to Food world to do the Photo
printing - 200k customers. 5% of these customers use a digital camera = 10K. Assuming the
average customer prints 50 digital prints per year. Total Prints for the Food world for one year =
50K.
The potential demand for a digital prints at a single Food world store is 50,000.
Can I know the approximate cost/ price per digital print and how much each Kiosk would cost
Foto Flash per year?

(C) Consult Club, IIM Ahmedabad 2018-19 36

 Profitability– Photography Firm

Your client is a Photography firm called Foto Flash based in Mumbai, they have experienced declining profits over the last 5 years. Figure out the
problem.

Interviewee Notes Case Facts Approach/ Framework

• Reduction in profitability due to
• Reduced profitability reduced quantity demanded of Profits of Fotoflash
because of digital product - due to digital
substitution/ decrease in substitution
quantity sold • explore opportunity of kiosks at
• calculate market demand food world supermarkets
and break even demand • cost of kiosk per year = Rs.
to recommend growth 100,000. Cost of one photo
strategy paper = Rs. 10, Price of one Revenue Cost
photo paper = Rs. 50

Selling Quantity
Price Sold

New strategy Approach

Size the market Calculate breakeven

demand demand

If Market demand is significantly larger than breakeven demand, recommend

new strategy.

Recommendations
• The firm should go into setting up kiosks at Food world stores as breakeven demand is much less than market demand.

Observations/Tips/Suggestions
The interview was designed to see how the candidate could identify the problem of digital substitution, and how well they could use assumptions to quantitatively assess and recommend a new
strategy to the firm

(C) Consult Club, IIM Ahmedabad 2018-19 37

Profitability- Fishing company

Drop in profits of a fishing company

Interviewee Notes Case Facts Approach/ Framework

• Company owned boats – • Profits down by 15% over 1 year
employ fishermen • Costs down by 5%
• Directly sell to customers – • Revenues down by 20% Profits
no distributors • 2 product lines: big and small fish
• Not an industry wide
problem
• Big fish: low revenue, low Revenues Costs
margin
• Small fish: high revenue,
high margin Product
• No change in consumer Price Volume
Mix
preferences
• No change in sea
composition Demand
Supply side
side

Internal

External

Interview Summary
• The candidate did a good job in getting to to root cause of the problem quickly.
• Breakdown of the problem was always MECE – Profits (into revenue and cost), fall in revenues (price, volume and product mix), change in product mix (demand side or supply side) and supply
side (internal problem or external problem)

Observations/Tips/Suggestions
• It is important to ask preliminary questions to understand the company and the industry. A key insight (different product lines and different margins for each) was derived from the
preliminary questions.
• It was important to note that change in sales of one product was not linked with change in consumer preferences. The problem can be on the supply side as well so it is useful to analyse the
entire value chain to understand where the problem is.

(C) Consult Club, IIM Ahmedabad 2018-19 38

Profitability – Healthcare Firm– Interview Transcript

Our client is a US based healthcare company. They have been facing reduced profitability over the Yes, we have had some complaints regarding side effects.
last six months. Can you help us figure out why? Additionally, the product could have changed from an OTC drug to a prescription drug which would
I would like to first know more about the company and the industry it is in. Are all similar players result in a fall in the number of channels we could sell it through. For example, we may only be able
facing such issues? What products does our client sell? Also, what is the size of our client in to sell the product at selected pharmacies. Moreover, we may also only be able to sell the drugs at
comparison to the market? And what is the size of the market? much fewer Watsons and Boots since not all of them have a pharmacy section. Alternatively, we
Other players have not been facing these issues. Our client is one of the top 5 players in the could have reduced distributor margins resulting in a lack of acceptance for our drug or a change in
market, the market size is about $2 Billion. Our client is into Antibiotics, Allergens and Analgesics. the placement of our drug in the pharmacies making them less visible to the consumer.
I would now like to analyse this case by splitting profitability into revenue and costs. There have been no changes in the margins we offer to our supply chain partners. However, due to
To begin with, can I know if the reduction in profitability is due to an increase in cost or a reduction certain changes in the ingredients od the product it could no longer be sold as an OTC drug. I want
in revenue. you to summarize the case and state you recommendations.
Our costs have more or less been the same, however, there has been a reduction in revenues All medical products come with a disclaimer that there could some side effects. Since this is cream,
the chances of it not suiting a persons skin is also high which could result in side effects such a burns
Alright, so I can break the revenue down into Price, quantity sold & product mix. or rashes. Once we know the exact circumstances under for the customers who complained about
Can we associate this decline with a specific line of products? Or is this decline throughout our the side effects we can find out the reason behind the same and alter the product accordingly. A
product range? change from OTC to prescription drug means that our promotion strategies need to change as the
The revenue decline is stemming from the Analgesics division. product demand cannot stem from the customers anymore but will through the doctors prescribing
What products does the analgesic division consist of, has there been any change in this over the them to their patients. Therefore, while ensuring that our product is available at all medical outlets it
last 6 months? is equally important to focus on collaborating with doctors in order to increase our final demand
through the consumers. Collaborating with doctors will also help us study the exact effects of this
The analgesics division has two types of creams, we replaced one of these creams with a new cream on the patients as the patients are likely to return to the doctor for a follow up treatment.
variant about six months ago.
Is it okay to assume that the decline in profitability is due to this new cream? If so, has a change in
price led to the reduction or has the quantity sold reduced. Additionally, could this new cream
have led to a cannibalization in the demand for other products?
There could have been some cannibalization but I want you to focus on quantity.
Okay, so the fall in quantity demanded could have come from supply side or demand side factors.
Supply side would include the capacity*utilization and demand side include a change in the
marketing mix through 3 P’s (i.e. Product, Place or Promotion).
There has been no change in the supply of the product.
Since supply has remained constant, I can move to the demand side factors. Is there a problem
with the product, place or promotion?
I want you to evaluate product and place.
So in terms of the product; the new variation or the cream could have led to burns, have some side
effects or be steroidal.

(C) Consult Club, IIM Ahmedabad 2018-19 39

Profitability – Healthcare firm

You have been approached by a US based healthcare firm that is facing declining profitability. Diagnose the problem and recommend appropriate
solutions.

Interviewee Notes Case Facts Approach/ Framework

• Investment fund looking to • One of top 5 firms Profits of healthcare
invest in PVR • No problems faced by other firm
• Client manufactures players and industry performing
antibiotics, allergens, well
analgesics • Decline stemming from the
• Ask if revenue fall is across analgesics division
the industry or firm specific • Costs same, revenue decline
• Understand client product
portfolio and check if decline Revenue Cost
is across all three Price
• Identify whether the decline
in profitability is coming
through costs of revenues Product
Antibiotics Allergens Analgesics
• Identify drivers of the mix
problem component
Promotion
Quantity
(Fall)

Product
Demand
Supply side
side
Place

Recommendations
• Collaborate with doctors to push sales to the final consumer
• Feedback from doctors to find out the effects of the cream on the consumers skin
Interview Summary
The candidate did a good job in understanding the product portfolio and diagnosing appropriately. The candidate was able to create a MECE framework for revenue first and then evaluate the
reasons for a decline in quantity. The key to the case was identifying that the cream had changed from an OTC drug to a prescription drug.

Observations/Tips/Suggestions
The interview was designed to judge how quickly could the candidate move through layers of revenue and identify the issues pertaining to the issues with the product characteristics and
placement.

(C) Consult Club, IIM Ahmedabad 2018-19 40

Profitability- Airline operator burning cash - Interview Transcript

Your client is a low cost airline operator in Europe. Over the past 2 to 3 years, it has been burning Please go ahead.
cash. Diagnose and recommend solutions. So, I would break the entire value chain into the components. Those are procedure for flight
I would like to ask a few clarifying questions before I begin to analyse the case. I would want to booking, Reaching airport, Procedure at the airport, taking the flight, taking the luggage at
understand the client’s business. What kind of flights does the company run? destination airport. I would now further like to understand each of the mentioned processes.
Okay. Lets focus on reaching the airport segment. I would further like to tell you that though the
The company operates short flights across Europe. We have direct as well as connecting flights. airport is in the outskirts, the time cost of reaching the airport is same.
How many competitors do we have and are they facing similar problems? I would break down the cost into time cost and effort cost. Now, since the time cost is same, I
We do have 2 major competitors but unfortunately none of them are facing this kind of a assume that the effort cost has gone up. Is that a fair assumption?
problem. You can go ahead and work out the revenue streams for our client. Quite right. I have few numbers. Can you work with them and let me know your suggestions. At
Ok. So I believe that the major revenue streams would be hospitality, revenue generated from earlier airports mode of transport was: Public 30%, Own 20% and Taxis 50%. Now in this airport it is
tickets and cargo. I wanted to confirm once that have the revenues gone down and has there Public 50%, Own 40% and taxis 10%.
been any significant changes in cost? That’s interesting. So, the availability of taxis in this airport location has gone down. This is primarily
Yes the revenues have gone down and the costs have increased. Let us focus now on the revenue because the airport is situated in the outskirts. So the taxis do not get any passengers while
generated from sale of tickets. returning. Hence the number of taxis in this area have gone down. Now the taxis being less in
number, it has become difficult for passengers to reach the airport. Hence that explains the reason
That’s very helpful. I would want to analyse this problem by looking at various components of the why the occupancy rate has gone down.
revenue. I would break them down into price per ticket, occupancy rate, number of seats/flight
and number of flights? Do we have any information on any of these parameters? Yes. You are correct. Can you summarise the case and suggest a few recommendations?
Yes. So, the number of direct flights have gone up and the occupancy rate in both direct and As per my understanding, the company has burned cash because of huge investments in building
indirect flights have gone down. airports. Now the airport, being located in the outskirts has very less availability of taxis which are
the most preferred mode of transport to an airport. Hence the passengers preferring this airlines
Okay. So I understand that the drop in revenue is mainly due to the drop in occupancy rate. Do we have gone down leading to decrease in occupancy rate. I would now state my recommendations.
have any data regarding the same? Also to further understand why we are burning cashes, I
would like to look into the costs side. Yes. Please go on.
Sure. Go ahead and tell me what are the major cost components? So I would suggest that the client should start its own shuttle service or collaborate with taxis
providing them added incentives. Further, the client can also include transportation cost from
Ok. I would break down my costs into fixed Costs and variable Costs. The fixed costs would airport to desired location as part of the ticket price.
comprise of lease, hangar costs, salaries and marketing. The variable costs would be fuel,
maintenance and operations etc. Do we know how these cost heads have changed over the last 3
years?
Yes, the hangar costs have gone up.
I am trying to understand why the costs have gone up and whether this has gone up for the entire
industry or only specifically for us.
It has been such that the hangar costs have gone up only for us. This is because we have started
owning airports. The speciality is that people need to reach our airport only half an hour prior to
flight.
Okay. That helps a lot. So what I understand is that we have started owning airports and this has
led to large investment cost hence leading to burning of cashes. Further I would like to
understand why the occupancy rate has gone down.

(C) Consult Club, IIM Ahmedabad 2018-19 41

Profitability- Airline operator burning cash

To analyze the revenue for an airline operator

Interviewee Notes Case Facts Approach/ Framework

• Revenue –cost analysis • Client operating both direct and
• Client currently in airlines connecting flights across Europe
industry • Problem exists only for client Profit
• Ask about the current status • Revenues have gone down and the
of the industry and costs have increased
competitive scenario • Hangar costs have gone up
• Which are the revenue • The client have started owning
streams? own airports – arrival only 30 mins
prior to departure
• Airports located in outskirts, but
Costs
time cost of reaching airport Revenue
remains same

Occupancy No of No of
Price/ticket flights seats/flight Variable
Rate Fixed costs
Costs

Marketing Salary Hangar Costs Lease

Recommendations
• Should start its own shuttle service
• Should collaborate with cab aggregators by providing added incentives and ensure taxis stay outside the airport
• Can bundle two services together – Air ticket price and transportation price and ensure passengers are picked up /dropped from respective locations
Interview Summary
The candidate did a good job in figuring out the fundamentals in why the revenue has gone down. Also after the cost analysis, the candidate was able to further elaborate on the reasons why the
revenue has gone down. Overall a good performance.

Observations/Tips/Suggestions
The interviewer must have been impressed by the overall logical consistency that the candidate applied during the course of the problem.

(C) Consult Club, IIM Ahmedabad 2018-19 42

Profitability – Jet Airways v/s Indigo - Interview Transcript

Your client is Jet Airways which has recently seen a decline in profitability compared to Indigo. That makes sense. Let us now come to the cost aspect of the problem.
Analyze the problem and provide solutions For the cost aspect of the problem, I would like to draw the cost value chain for Jet which consists of
I would like to ask a few clarifying questions before I begin to analyse the case. Firstly, I would like the following- Cost of materials i.e. expenditure on fleet, processing costs which would include
to confirm that we are focussing only on Jet’s airline business and domestic travel at that since we airport rent, employee salaries, IT services and fuel costs, storage costs which is maintaining
are comparing with Indigo? inventories of spare parts, distribution and marketing and customer services (on-board services).
Yes, that is correct. Which part of the value chain would you say is suffering?
Alright. I would like to then understand the recent industry trends over the last 5 years. Is the Jet is experiencing high storage costs which have recently risen further.
decline in profitability specific to Jet or is it an industry wide phenomenon? Is Indigo also facing similar costs or is it just Jet?
Jet specifically has been facing the issue of decline in profitability. Only Jet.
Since this is the airline industry, has the decline been on some specific routes? Inventory costs can be split into types of inventory held, number of inventory parts and cost of carry
Across the nation. which would include pilferage, warehouse rent, poor demand prediction, poor inventory
management & late supply costs. Is the cost higher than Indigo across all these components?
Is there a specific reason we are comparing our profitability to Indigo’s since our scale and target
population of premium customers (if I can assume that) is different? The cost is high specifically due to the types of inventory held. Jet operates with different kinds of
fleet whereas Indigo has one standardised fleet. Due to this, Jet needs to hold more inventory. What
No specific reason. Indigo is doing well in the domestic market, they are not seeing the same implications would this have?
decline that Jet is.
Due to different kinds of planes, there is a greater number of spare parts that Jet is having to hold
Alright then. Since this is a profit problem, I would begin by splitting it into revenue and cost. Are which is the reason behind higher costs. The costs have risen now more than before, could probably
we observing rising costs or declining revenues? be driven by the new fleet purchased by Jet for the niche routes. If the new fleet is of a different
Both. Let’s start with revenues and move over to costs. type, then cost of inventory due to the new purchase has increased overall costs and led to a fall in
Okay. Revenue for Jet’s airline business can be written as Price X Occupancy X Capacity. Have we profitability.
observed a change in any of these components or across all ? That is correct. The new fleet purchased by Jet is smaller and requires an inventory of different parts.
Price has remained the same. Occupancy has declined and capacity has increased. What would your recommendations be?
Again, have these changes occurred across the country or only on some specific routes? Okay. So there are a few things that Jet could do vis-à-vis the inventory costs-
1. Standardise the fleet going forward. Make sure new purchases in the future are standardised.
Jet recently started its business across some niche routes. Occupancy in those routes has been 2. Renting agreements with suppliers of inventory – alternative to purchasing expensive
suffering. inventory
That makes sense. Just to clarify, since this is a new business for Jet I would like to understand 3. Hub & spoke model- Have a centralised location where inventory is stored and supply to all
what kind of investments have been made? Has Jet purchased a new fleet or has it simply re- airports instead of maintaining inventory at every airport
routed its existing fleet? 4. Need basis- Order inventory on a need basis instead of maintaining excess
New fleet has been purchased.
Since it is an occupancy issue (low demand for Jet), I would like to understand the customer
profile in these niche routes. Do these routes have low airline travel demand or is this occupancy
issue specific to Jet? Is this demand likely to grow in the future?
Currently these routes have low airline travel demand but it is likely to grow in the future, and
therefore the investment. The demand for premium Jet travel has also been projected to rise.
That’s very helpful. Since we have already made substantial investment we may not want to
withdraw fleets from these niche routes entirely for now. We can do the following-
1. We can expedite our marketing activities in these regions
2. We can analyse price sensitivity of the customer pool and accordingly price for now
3. Instead of having flights catering to these niche routes specifically, we can have our new flights
on the conventional routes and have re-routing via these routes
4. We could also try to bundle a few parallel businesses e.g. cargo and travel

(C) Consult Club, IIM Ahmedabad 2018-19 43

Profitability – Jet Airways v/s Indigo

Your client is Jet Airways. It has observed a decline in profitability vis-à-vis Indigo. Analyze the problem and provide solutions.

Interviewee Case Facts Approach/ Framework Price

Price
Notes • Jet airways facing declining
• Revenues have fallen and profitability. Not an industry
Customer
Customer
costs have risen wide trend Revenues
Revenues Occupancy
Occupancy segmentation
segmentation
• Identify revenue • Focus on airline business, Profits
Profits
components, problem domestic travel.
Costs
Costs Capacity
Capacity
area and subsequent • Problem across India and not
recommendation restricted to a particular route.
• Draw the cost value chain, • New fleet purchased for niche Storage
R Storage &
& Distribution-
Distribution- Customer
Customer
routes. R&&D
D Raw
Raw Material
Material Processing
Processing Transportation Sale
Marketing
Marketing
identify the problematic Transportation Sale force
force Service
Service
segment
• Segment the specific cost
Cost
Cost of
of raw
raw Transport
Transport to
to Sales Marketing
Marketing Repairs
further to identify cause Equipment
Equipment material
Machinery
Machinery warehouse Sales Channel
Channel channels
Repairs
material warehouse channels
and make
Human Contract &
Contract & bulk
bulk Strategy
recommendations Human Capital
Capital deal
Factory
Factory rent
rent Inventory
Inventory costs
costs Sales
Sales Force
Force Strategy Spare
Spare parts
parts
deal
Cost Transport
Transport to
to
Cost of
of finance
finance Quantity
Quantity used
used Labor
Labor hours
hours Training
Training Returns
Returns
customers
customers
Technology
Technology
Capacity
Capacity
utilization
utilization
Packaging
Packaging

Recommendations
• Revenues- rerouting, bundling, expediting marketing, re-analyzing customer segment
• Costs- Standardize fleet, hub & spoke, renting agreements, need based inventory procurement

Interview Summary
This is a profitability case where cost reduction and revenue increase are intertwined due to client’s expansion activities. The candidate should split profits into revenues and costs, identify key
drivers and value chain, segment and develop recommendations. The purpose of the case was to identify maintenance of different types of inventories as the major cost driver.

Observations/Tips/Suggestions
• Each cost component should be broken down into multiple cost levers to ensure that nothing is being missed out
• Revenue should also be appropriately split into its components given the airline travel industry

(C) Consult Club, IIM Ahmedabad 2018-19 44

New Market Entry – Retail Bank Portfolio Management

Your client is a retail bank looking into entering high net individual’s portfolio management. You Good. Can you list what are the major factors which you’ll be considering for comparison.
have been approached by the client to understand how to go about it.
I’ll consider the following as the major factors on which the comparison should be done
Could you give me some additional information regarding the case. What are the primary objectives 1.) Expertise in handling such customers
for entering in this segment? 2.) Regulatory requirements
3.) Cash flows and liquidity
The client believes that retail banking is not providing sufficient profits and there is a potential 4.) Investment changes required (Trading)
market which is expected to grow substantially in HNI portfolio management. Is there anything else which needs to be considered?
(The interview explained each one of the factors briefly)
Okay, first I’ll like to know more about HNI portfolio management and how is it different from retail
banking? No, this will be fine. Can you elaborate more on why the expertise required will be different?
Retail banking is what is offered by banks like ICICI, HDFC Bank where it performs daily transactions Typical HNI portfolio management requires investment advisors which help the customers in financial
and provides loans and other services. A typical HNI portfolio management is a wider category that planning, managing their portfolios taking into account their risk taking abilities. It involves performing
involves dealing with optimization of a client’s portfolio. a variety of other financial services in relation to a client’s private financing choices.
So as I can understand, there maybe a lot of changes which the bank needs to undertake to get into I think we can stop here. Thanks a lot for your time. I liked the way you approached the case
this business. My overall strategy would be to first analyze the industry, the major competitors, the
bank (in terms of current capacity and additional requirements) and the potential customers.
Good. You can assume that since the client has already decided to enter this area, the industry and
competitor analysis has already been done by the client and it has been found favorable.
Okay, so first coming to the customers, I’ll like to understand who all are our major customers
currently and do we have any potential customer with whom we can engage in HNI portfolio
management?
The bank has a few high net worth customers which may be engaged. However this is not a concern
as of now.
So then, I’ll start analyzing the bank and its current operation. I would like to know how is the bank
placed in the retail banking industry and how its financials have been over the past few years?
The bank is fairly stable in its operations. It has a firm position in the market and is one of the most
preferred banks among the customers.
Okay, now I’ll to see what are the major differences in a retail banking and HNI portfolio
management. A retail banking is mostly involved in dealing with loans, MF investment, managing
finances of the individuals. The returns are mostly fixed. In contrast, in HNI portfolio management, a
lot of real-time trading is needed and it takes into account the customers’ need.

(C) Consult Club, IIM Ahmedabad 2018-19 45

New Market Entry – Retail Bank Portfolio Management

Your client is a retail bank looking into entering high net individual’s portfolio management. You have been approached by the client to
understand how to go about it.

Interviewee Notes Case Facts Approach/ Framework

• Understand the •Client is a major retail bank having
vision/objective of entering a firm position in the banking
the new market sector New
Factors of
•The industry has been found Market Industry Competitors Customers Company
• Determine the possible Consideration
Entry
differences in processes and attractive
systems required in the two
functions. Visions
Size & Competitors Customer Product Expertise
• Analyse how to use current Growth & Share Expectation Offerings
strengths (industry
presence)/resources (sales
people) to expand into the Resources – Regulatory
Goals
new market Technology, requirements
• Identify potential Capital &
problems/barriers that Labor
company may face while Cash flows
entry Objectives and liquidity
Our
Strengths
&
Strategic Investment
Assets changes

Market
Share

Recommendations
• The client should bring in an expert in the field of trading or who has managed HNI portfolio management before.
• The client should leverage the current position of bank and try to take benefit of the possible synergies between the two functions. It should take the help of existing customers and target
potential customers.
• The client should make sure that all the regulatory requirements are considered before hand.
Interview Summary
• The interviewer was happy with the overall analysis.
• The candidate could’ve dwelled a bit more into the implementation which would have added more value to his arguments.
• (Fact: The bank actually went on to hire a specialist in the field of trading)

(C) Consult Club, IIM Ahmedabad 2018-19 46

New Market Entry- HBS Satellite Campus – Interview Transcript

HBS wants to set up a new satellite campus in India. They want to your advice about the I just want to add that I would also want to look at the additional Indian students that we
proposal. can capture because of the lower cost of this program vis-à-vis the Boston one.
I will use the CAT enrollments as a proxy for estimating the demand. So around 2 lakh
What is the primary objective of the school in setting up the new campus? students apply for CAT to do their MBA. Let us assume 1% would meet the HBS criteria, i.e.
The mission of HBS is to educate leaders who make a difference in the world. They want 2000 students.
to increase their impact. This means that the market is significant. However, the competition is another factor that I
would want to look at. Can you give me some information about the competitive scenario?
So is it safe to assume that the target audience would be young Indians?
The satellite campus would face competition from primarily two sources: one would be the
Actually that is a bad assumption. It so happens that HBS wants this campus to be global schools setting up campus in India. Currently, that is not a potent threat. The other is
International like the one in Boston. Having said that, the college does expect the from IIMs and ISB.
proportion of Indians in the batch to increase.
I believe HBS would have an edge over Indian schools as the global exposure and the brand
The motivation would be to expand their current capacity of the program in that case? value that it would offer would give it a clear competitive advantage.
And also what is the timeline they are aiming to set up the campus? However, I would like to look at feasibility. The factors that I would look are the regulatory
barriers and the feasibility of establishing the value chain. For that, I would want to know if
That is correct and they want to set it up in 5 years. there are any regulatory restrictions in India?
To evaluate the market entry, I would want to look at aspects under the three major The regulations in India prevent any institution that is not AICTE approved from giving a
heads: opportunity analysis, feasibility and viability. In Opportunity analysis, I would look degree. Compliance with AICTE guidelines would dilute the HBS curriculum.
at the market size and the market share that we can capture. In the feasibility, I would
analyse the barriers to entry and analyse the feasibility of setting up the value chain. In In that case HBS would not go for the AICTE approval. It wouldn’t be able to offer a degree.
viability, I would analyse if it would make economic sense in the long run and also see for But I don’t think that will be a constraint. ISB has a similar model and is successful. The other
any risks. factor would be the ability to set up the value chain. The key facets would be the teachers &
To do this, I would look at the current demand for the HBS course and would use that to land for the campus. Initially, teachers might need to travel from parent campus. The rent
estimate the demand for the new campus. As far as I know, I believe top US schools like for the campus would be a challenge and would increase costs.
HBS receive around 10k applications every year for their MBA program. Those would
automatically be our target market. However, I believe a proportion of them would not Good. What else do you want to look at?
be interested in studying at the Indian campus due to preference for the US market. Do I would next look at viability. In terms of financial viability, I am assuming pricing will remain
we have some data about their preferences? same as the parent campus to maintain parity. However, the additional cost due to the land
That is a good approach. Let us assume that 50% of the applicants are interested in and teacher travel would drive up the costs. Additionally, there would be risks due to the
studying at the Indian campus as well. Can you estimate the rough size? Ignore lack of acceptance of India as a study destination among International students. Hence, I will
affordability as a concern for now. suggest against the proposal.
Thanks. That would be all.
Thank you. It was a pleasure interacting with you.

(C) Consult Club, IIM Ahmedabad 2018-19 47

 Market Entry- HBS Satellite Campus

HBS wants to set up a new satellite campus in India. They want to your advice about the proposal.

Interviewee Notes Case Facts Approach/ Framework

• Objective: Expand capacity • 50% interested in studying in India
of MBA program (400) • AICTE approval
Existing-
• Timeline: 5 years
Market 5000
• 10k applications
• CAT benchmark Size Additional-
2000
Opportunity
Global
Market schools
Share Indian
Regulatory schools
Barriers
External Feasibility
Value chain

Pricing
Financial
viability
Viability Costs
Other risks

Recommendations
• Should not go ahead with the satellite campus.
• Serious concerns about the viability of the operations considering the high costs and also uncertainty of regulations.

Observations/Tips/Suggestions
The interview was designed to judge how quickly could the candidate move through layers of this case and structure the problem. The case required taking some assumptions and quick thinking.
It is best to not lose sight of the structure in quest for creativity and that is what the candidate achieved in this case.

(C) Consult Club, IIM Ahmedabad 2018-19 48

New Market Entry - Insurance company - Interview Transcript

Written problem statement handed to interviewee (The interviewer questioned the assumptions for each segment)
Moving on, assume that the client has decided to enter this market. How would you roll-out the
Could you give me some additional information regarding the case. What are the primary objectives products to their intended customers?
for entering the home insurance segment?
As the client is already present in the life and health insurance segment, it would have insurance
The client believes that there’s a real-estate boom happening across India, and hence a potential agents on the ground. So, my first move would be to educate the agents about our products through
market which is expected to grow substantially in the coming years. training programs in main cities in the first couple of months. Initially, we can go ahead with the
existing agents then over the period we would look to hire specialized agents.
Okay, so they’re concentrating on the growth of the housing market. What products are they
planning to sell in this segment? Training the sales people is good, but how would that ensure that customers buy these products if they
aren’t interested in them in the first place?
Their home insurance products would not only be limited to new houses but would also be relevant
for renovation of existing houses. If the penetration of home insurance is low then either the people don’t know or trust these products.
So, we need to educate them about the importance of getting their home insured. We will reach out to
So ideally we’ll be looking at not only people who own houses, but also people who are planning to these customers through home builders and contractors. We can also tie-up with banks, who can
buy new homes. Can you tell me a bit more about the current competition in this segment? inform clients about home insurance while giving out home loans.
There is low penetration; not many companies have ventured into this segment. Okay. Do you see any other roadblocks or pitfalls of your roll-out plan?
That’s great. So we don’t have to fight competitors to grow our share. We can build our customer The roll-out would be slow and gradual. Since our current sales force is trained to sell health & life
base from scratch. Can you tell me what kind of clients are we planning to sell our products to? insurance products, they would need training regarding the home insurance products. Also since we
are educating the masses, then we are also educating them for the competitors. So even if the
The company hasn’t decided this yet and would like to know your thoughts on this. competitors have marginally better prices, then people would go for them as people in this segment
would be price sensitive.
I would start by segmenting the Indian population in terms of their income groups in the rural and
urban market. Since the company wants to enter the home-insurance market, initially, it can ignore What analysis can you do, that would help the CEO to take much more decisive action.
the rural population since home ownership among this population is low. In terms of the urban
population, I would segment this market according to income groups. We can do the “customer lifetime value analysis” by taking into account their acquisition cost and the
revenue earned per customer over their lifetime. This will give an indication to CEO if this is segment is
That’s right. What segment should the clients target? worth entering.
Very few people in the low-income segment would would own a house, whereas for a middle-class We could have also explored the option of acquiring any existing player.
person, buying a house is a dream. So there would be a large portion of the population in this
segment who would be thinking about purchasing a house. Also, the individuals in this segment are I think we can stop here. Thanks a lot for your time. I liked the way you approached the case.
more risk-averse, and would want to protect their house with insurance. People in the high-income
segment would also be interested in our products. Therefore, the client should target the middle-
income and high-income groups.

(C) Consult Club, IIM Ahmedabad 2018-19 49

New Market Entry - Insurance company

A foreign insurance company has observed very low penetration of home insurance in the Indian market. It already has its presence in the health
insurance and life insurance segment in the Indian market. It is planning to enter the home insurance category. You have to build a go to market
strategy for the client.
Interviewee Notes Case Facts Approach/ Framework
• Understand the •Client is a foreign insurance
vision/objective of entering company, and is already present in
the new market the health and life insurance New
Customer – Entering
Market Product Company Industry
• Determine Target Segment; segment in the Indian market New Market Strategy
Entry
based on this try to •Low penetration in the home
determine how to plan for a insurance segment
successful product offering Customer Product Competitors If yes,
Visions Segments No
using the 4 P's of marketing: Expectation Offerings & Share how?
Price, Product, Promotion,
and Place
• Analyse how to use current Available SWOT Start from
Goals Needs Resources –
strengths (industry Products Analysis Scratch
Technology,
presence)/resources (sales Capital &
people) to expand into the Labor
new market Identify
Barriers to Joint
• Identify potential Objectives Profiling gaps of
Entry/Exit Venture
above 2
problems/barriers that
Our
company may face while Strengths
entry Size & &
Strategic Our Acquisition
Growth
Assets Estimate
of Market
Share
Target
Market
Markets
Share
Share

Recommendations
• The client should enter the home-insurance segment
• They are already present in the health and life insurance segments, and can leverage their existing salesforce to introduce home insurance products to their clients
• The real-estate industry is projected to grow; also the home products cover both new and existing houses, thus making the Urban Middle and High-income group as the preferred target
segment
• Training their sales people & customers, developing a specialized sales team & collaborating with builders & banks is essential to the successful rollout of home-insurance
Interview Summary
• The interviewer was happy with the overall analysis.
• The candidate could’ve dwelled a bit more into the implementation which would have added more value to his arguments.

(C) Consult Club, IIM Ahmedabad 2018-19 50

New Market Entry – US Magazine publisher – Interview Transcript

Your client is a major magazine publisher based in the US. It is considering the idea That sounds good to me. Do you have any other things you would want the
of launching a new lifestyle magazine targeted to wealthy males. Diagnose and publisher to keep in mind?
recommend if he should go ahead with this idea. There are three major issues that need to be kept in mind:
I would like to ask a few clarifying questions before I begin. I want to understand a 1) Given this revenues and our costs, we should check if our profits are touching
few things about the publisher. What is his current product portfolio and how the $10 Million target.
successful are they in the market? 2) There’s a chance that this magazine might cannibalise the sales of our personal
The publisher has two other magazines- one on personal finance and the other on finance magazine. If that is the case, this launch may not be a very good idea
women empowerment. Both the products are the leaders in their categories. since we wouldn’t want to dilute an existing high performer.
3) It would be important to identify if any synergies can be utilised while
In that case, what is the objective of launching a new product from scratch? Why producing this magazine with the existing portfolio. These economies of scope
doesn’t the publisher simple want to work on growing the existing portfolio itself? can go on to reduce costs significantly
The market for those two products has saturated by now. There isn’t much scope for
further expansion. Thank you, that would be all.
Okay. And what are the target figures for this magazine in terms of volume and
profit?
The publisher hopes to increase his bottom line by $10 Million through this new
launch over a reasonable period.
I would like to know a little about the competition as well to gauge how difficult it
would be to capture the market.
Through a survey we found out that we would be able to capture 5% of the target
population, if we launch the magazine at this time.
Okay. I think I have enough information. Can I go on and do a market sizing for this
launch?
Sure.
For the market sizing, can I know the price at which this magazine is going to be
sold? And if there are different channels or models that the company employs?
The company offers a subscription model for $3 per copy for a year and sells copies
for $5 through retail shops. You can assume a 50-50 split between these two.
Okay. I would first divide the total male population of the US into different age
groups and look at the likely percentage of people who would be willing and able to
buy our magazine, within each age group. I would further multiply this by 5%, since
through our survey we know this is what we’ll be able to capture. Lastly, I would
multiply this figure with the frequency of purchase to get the total number of copies
sold. 50% of these would be sold at $3 and the rest at $4. Multiplying these prices in
50-50 weights will give me the final revenue figure.

(C) Consult Club, IIM Ahmedabad 2018-19 51

New Market Entry – US Magazine publisher

A magazine publisher wants to know if he should launch a new lifestyle magazine targeted to wealthy males in the U.S.

Interviewee Case Facts Total Population

Notes
(300M)
• Will capture 5% of the
• Assume a
market
population of 300 Male Population
• Wants $10 Million
Million
profit (150K)
• Assume 50%
males in the • 50% sold at $3 per
population copy, 50% at $5 per
• Assume equal copy
spread across
0-21 (37.5M) 21-40 (37.5M)) 41-60 (37.5M) 61-80 (37.5M)
different age
categories
10% 10%
0% 5% (1.875M)
(3.75M) ( 3.75M)

12
9.375M 5%
issues/customer

Recommendations
• It is very important to understand the goals and motivations of a client in doing something or in this case, launching a new product.
• The strength of your solution lies to a large part to the insights you can show through your recommendations.
Interview Summary
This case is for pricing of a magazine publisher considering the launch of a new magazine in order to expand its present product portfolio. The case was
solved through a guesstimate-styled market sizing after a thorough understanding of the client’s business.

(C) Consult Club, IIM Ahmedabad 2018-19 52

New Market Entry – Electric Bus Market - Interview Transcript

The client is an international manufacturer of Electric Buses and has a substantial presence in the That’s a fair point. Assume that the government is providing a 5-year tax holiday to companies
European market. The client is impressed by the initiatives taken by the Government of India (GoI) investing in the electric vehicle industry and would give special tax breaks to private operators who
to promote the usage of Electric Vehicles (EVs). You have been hired to find out if the client should promote environmentally-friendly buses.
introduce these buses in India.
Ok, this means that our major target customers – both in the public and private sector - are receptive
I would like to confirm if I have understood all the critical aspects of the client’s situation. Our client to the product. Can you also tell me if there are existing EV bus operators in India?
is an electric bus manufacturer who has a substantial presence in other markets, so I am assuming
that their buses are beyond the technical feasibility stage and are complaint with the stringent No, the client would be the first-company to introduce such buses.
European environment laws. We need to see if this product can be feasibly launched in India and
evaluate the market characteristics to analyze if this would be a good move. That does play for and against us. Its good for us since we would have the first mover advantage and
will be able to capture more market, but it might play against us because the infrastructure required to
That’s correct. The client does not face any regulatory barriers to entry in India. You’ve understood support these buses may not be present and awareness of the EV buses might be low. Can you also tell
the situation well, how do you propose going about the solution? me what is their target region or cities in India?

Since this is a new product in a new market, I would like to structure my discussion around the Assume that the company will initially operate only within Ahmedabad, and has the capital and
product characteristics (development and customization) for the Indian market. If the introduction resources for this. Given this information, can you suggest some company and market specific
of the product is feasible, I’ll move on to the launch (competition, challenges, distribution and strengths and possible problems that the company might face.
promotion) part of the case.
(draws and discusses SWOT table) To summarize, the company has the requisite experience to
This sounds fine to me. manufacture and customize these buses, and the environment-friendly policies of the government,
and the associated financial incentives, are a good reason to expand into India. The growing
To start with, can you tell me something more about these electric buses? How are they different urbanization in India, and the large population that uses public transport, also justify the need for a
from traditional fuel-based buses? product that can meet demand without compromising the environment. However, there are certain
major problems/barriers as well – oil is currently at its lowest price in over a decade, which may make
There are quite a lot of differences between these buses, but to help you out, I’ll point out a few it difficult to convince operators to switch to these electric buses. Also, the high-price of these buses,
major ones – the major difference is that these buses produce less than 90% greenhouse gases as the lack of charging infrastructure and operability for a short distance (before being put to charge
compared to traditional buses. These buses also run on electric batteries, which means that these again) are some other problems that the company might face. One other major problem that I foresee
buses can run 150-200kms on one charge. is that tenders in the public sector are often offered to lowest-bidders, and if the client can’t match the
prices of its competitors, then it won’t get business from the public sector companies operating in the
That is good. It gives us the advantage to position our product as an environmentally-friendly transport sector.
alternative that can be used for an extended period of time. I would also like to understand how has
our client priced these buses in their existing markets. Ok, that sounds like a detailed analysis. Based on this, what is your recommendation?
They are selling these buses at approx. 1.6 times the price of fuel-based buses; however due to the My final recommendation would be not to introduce these buses in India since current industry
presence of heavy environment taxes, many companies prefer to buy these buses in the long-run. landscape and market conditions are not favorable for such a move. However, in the near future, once
the government policies become more supportive and the market conditions change to favour EVs, the
That might be a problem for us. Since these are short-to-medium distance buses, they would be company may reconsider its position on entering the market
used mostly for intra-city travel, and private/public bus-operators won’t accept a more costly option
until they don’t have a similar incentive. Very good. Thank you.

(C) Consult Club, IIM Ahmedabad 2018-19 53

New Market Entry – Electric Bus Market

The client is an international manufacturer of Electric Buses and has a substantial presence in the European market. The client is impressed by the
initiatives taken by the Government of India (GoI) to promote the usage of Electric Vehicles (EVs). You have been hired to find out if the client
should introduce these buses in India.
Interviewee Notes Case Facts Approach/ Framework
• Customers – Target • Client is a manufacturer of Electric
customers may be receptive Buses and has a substantial New
Customer – Entering
presence in Europe – product is Market Product Company Industry
of the Electric buses due to New Market Strategy
Entry
financial incentives promised beyond technical feasibility stage
by government • These buses produce less than Competit
Product If yes,
• Competitors – There are no 90% greenhouse gases as Visions Segments Customer Offerings ors & No
Expectation how?
other direct competitors – compared to traditional buses Share
first mover advantage but • Buses run 150-200km on one
that means proper charge Resources – SWOT
Goals Needs Start from
infrastructure to support • Client is currently selling buses at Available Technology, Analysis Scratch
Products Capital &
these buses is also missing approx. 1.6 times the price of fuel-
Labor
• Industry – Lowest prices of based buses Barriers to
Objectives Profiling Entry/Exit Joint
oil in over a decade; tenders
Venture
often offered to lowest- Identify Our
bidders in public/transport gaps of Strengths
Size & above 2 & Our
industry
Growth Strategic Estimate Acquisition
Assets of Market
Target Share
Market
Markets
Share
Share

Strengths
Strengths Weaknesses
Weaknesses Opportunities
Opportunities Threats
Threats

Technical
Technical Large
Large
Lack
Lack of
of Other
Other Foreign/
Foreign/
Expertise //
Expertise population
population
charging
charging Domestic
Domestic
First
First mover using
using public
Recommendations mover
advantage
advantage
infrastructure
infrastructure
public
transport
transport
Players
Players
• The client should not enter the Electric Bus market
Increased
Increased
• While the government has introduced various incentives to promote these vehicles, the current business Saving
Saving on
on Urbanization
Urbanization
Growth
Growth of
of
Fossil
Fossil Fuel
Fuel High
High Price
Price of
of other
other Public
Public
environment and market conditions don’t support entering into India costs
costs // Electric
Electric Buses
Buses
and
and Transport
Transport
Acceptance
Acceptance of
• In the near future, once the government policies become more supportive and the market conditions change pollution
pollution EV/Buses
of solutions
solutions
EV/Buses
to favour EVs, the company may reconsider its position on entering the market
Short-Medium
Short-Medium Global
Global Crude
Crude
Interview Summary Government
Government
Policies
Policies
distance
distance use
use
BRTS
BRTS
Infrastructure
Infrastructure
Prices
Prices –– all
all
only time
time low
• This is a strategy case where some knowledge of the public transport system in cities would’ve helped only low

(C) Consult Club, IIM Ahmedabad 2018-19 54

Threat of new entrant – Discount retailer - Interview Transcript

Your client, C-Mart is the largest discount grocery retailer in West India with 300 stores. For several Close. N-Mart's sales are approximately 5 times that of the nearest competitor.
years, C-Mart has surpassed the second-largest retailer (200 stores) in both relative market share
and profitability. However, the largest discount grocery retailer in North India, N-Mart, has just I would think that sales of that size give N-Mart significant clout with suppliers. Does it have a lower
bought out C-Mart’s competitor and is planning to convert all 200 stores to N-Mart stores. The CEO cost of goods and hence lower prices than the competition?
of C-Mart is perturbed by this turn of events, and asks you the following questions: Should I be
worried? How should I react? How would you advise the CEO? In fact, its cost of goods is approximately 15 percent less than that of the competition and its prices are
on average about ten percent lower than those of the competition.
This is how I would like to approach the problem: First, I’d like to understand the market in West
India to understand how C-Mart has become the market leader. Then I’d like to look at the market in I think I've learned enough about N-Mart. I'd like to ask a few questions about N-Mart's ability to
North India to understand how N-Mart has achieved its position. Finally we can merge the two succeed in the West. I’d first like to understand whether N-Mart has a strong brand name in our market
discussions to understand whether N-Mart's strength in the North is transferable to the our market. and does it carry products similar to C-Mart’s?
That sounds fine. Let’s start with our market. N-Mart has no brand recognition in the West. The two companies carry similar products, although the
C-Mart stores lean more heavily toward local suppliers.
I’d like to understand what is causing C-Mart’s higher profitability. Is C-Mart more profitable because
it has more stores, or does it have higher profits per store? Is there any reason to think that the costs of doing business for N-Mart will be higher than they are for
C-Mart in the West? Specifically, is N-Mart likely to have higher labour costs, leasing costs or higher
It has higher profits per store. raw material or distribution costs? N-Mart might incur higher distribution costs than C-Mart because it
Higher profits could be the result of lower costs or higher revenues. Do we have any indication on will have to ship products from its Northern warehouses to the West.
which of the two is causing the higher profits per store? You are partially right. C-Mart must also cope with the same labor costs. C-Mart has the advantage in
C-Mart's cost structure is similar to that of competitor’s but it has higher per-store sales. distribution costs, since it gets more products from Western suppliers. However, since C-Mart
continues to get a good deal of product from the North, the actual advantage to C-Mart is only about
Higher per store sales could be because the prices are higher or quantity sold per store is higher. two percent of overall costs.

Since we are a discount retailer, our prices need to be competitive. Quantity sold per store is higher. All this suggests that N-Mart will be able to retain a significant price advantage over C-Mart's stores: if
Can you think of why this could be the case? not ten percent, then at least seven to eight percent.

This could be because our stores are larger, C-Mart has greater product variety or because the stores I would agree with that conclusion. Can you please summarize your findings?
are better managed.
In the near term, C-Mart might be safe. Its stores have a much stronger brand name in the local market
Our store size is similar and we sell similar products to competitors. C-Mart’s stores are managed than N-Mart's, and they seem to be well managed. However, as consumers get used to seeing prices
differently from those of competitors. C-Mart uses a franchise model in which each individual store that are consistently seven to eight percent lower at N-Mart, they are likely to shift to N-Mart. The CEO
is owned and managed by a franchisee who has invested in the store and retains part of the profit. certainly has to worry about losing significant share to N-Mart stores in the long term.

In that case, I would guess that the C-Mart stores are probably better managed, since the individual Can you suggest possible strategies for C-Mart?
storeowners have a greater incentive to maximize profit.
Given that in discount retailing competitive prices are a key way to retain customers, C-Mart can look
You are right. C-Mart's higher sales are primarily due to a higher level of customer service. The at the value chain from procurement to distribution to retailing and see where it can cut costs and
stores are cleaner, more attractive, better stocked, and so on. I think you've sufficiently covered the hence offer more competitive pricing. In procurement, it can try negotiating competitive prices with
Western market-let's move now to a discussion of the North Indian market. suppliers. It might want to consider offering fewer product lines, so that it can consolidate buying
power and negotiate prices with suppliers that are more competitive. In distribution it could try cutting
How many stores does N-Mart own in the North, and how many does its closest competitor own? down on transportation costs. With retailing, it can look to negotiate lower margins for retailers if
possible. Finally, they might want to consider instituting something like a frequent shopper program,
N-Mart owns 2,000 stores and its largest competitor owns approximately 500 stores. where consumers accumulate points that entitle them to future discounts on merchandise.

Are N-Mart stores bigger than those of its competitors? Thank you. All your suggestions are interesting and worth analysing further.

Yes. N-Mart stores average 20,000 square feet, whereas competitor stores are 10,000 square feet.
This suggests that N-Mart should be selling almost 8 times the volume of the nearest competitor.

(C) Consult Club, IIM Ahmedabad 2018-19 55

Threat of new entrant – Discount retailer

The Leading discount grocery retailer in West India is facing the threat of a new entrant

Interviewee Notes Case Facts Approach/ Framework

• Understand C-Mart’s • C-Mart: market leader in
competitive advantage (in West
terms of profitability) • N-Mart: market leader in C-Mart's
• Understand N-Mart’s North advantage
N-Mart's advantage
competitive advantage • C-Mart: no cost advantage
• Can N-Mart’s competitive
• C-Mart: franchise model –
advantage be transferred to More profit per
West? better managed – higher More stores
store
• C-Mart has 300 stores sales
compared to nearest • N-Mart: large bargaining More stores More profit per store
competitor’s 200 stores power with supplier Higher revenue Lower cost per
• N-Mart has 2,000 stores per store store
compared to its nearest
competitors 500 stores
Higher revenue Lower cost per store
• N-Mart sales are 5x that of because of lower raw
nearest competitor More variety Higher prices Better Managed per store material prices

Strategies for
Procurement Distribution Retail
cost reduction

Recommendations
• It is important to cut costs to compete with N-Mart
• Costs can be cut in
• Procurement: Negotiate lower prices with suppliers
• Distribution: Cut transportation costs
• Retail: lower retailer margins and introduce loyalty programme
Interview Summary
• The interviewer was happy with the overall analysis.

(C) Consult Club, IIM Ahmedabad 2018-19 56

Operations Strategy Case (FMCG) – Interview Transcript

The Director, Sales of a FMCG firm wants to improve their channel management strategy. Sure. So I will do a potential-possibility analysis here. The first go-to channel will be one high
He wants you to provide suggestions. on potential for savings and improvements and one where it is the easiest to effect such
improvement. These are in turn a function of the channel characteristics, our engagement
Before analyzing the problem statement, I would like to understand our client better and strategy, our revenues from them, etc.`
familiarize myself with the context a little more. Where are we based and how big is our Sounds good. How will proceed?
client vis-à-vis the market?
Sure. I would like to take a minute here to gather my thoughts.
The company has global operations but for this case, we are dealing with India only. Our (After a pause)
presence is across India and we are one of the top 3 FMCG firms in the country in terms So focusing on General Trade, I would like to analyze this through the lens of benefits-
of market share. engagement possibilities. We should typically strive to be in a high engagement and high
benefit category for the distributor.
Understood. I want to better understand the motivation of the Director. Is the Benefits can be broken down into monetary benefits like margins offered and non-monetary
improvement sought due to some recent issues in the channel management internal to benefits could be further broken down into operational benefits or non-operational benefits.
the firm or is it a response to the external environment? Also, when we say The former is the level of help that we can offer our distributor in their own operations like
improvement, how are we measuring it? sharing of best practices in terms of MIS, Inventory management, fire safety etc. The latter
are things like loyalty points or other incentive schemes.
Engagement would look at quality and quantity of engagement. Quantity depends on
So measurement is by channel partner satisfaction. Can you clarify what you mean by number of visits an Area Sales Manager might make and the amount of time spent on per
the external environment? engagement. The quality aspect would refer to the channel of engagement and behavior of
the sales manager. We can look at more factors if need be.
Sure. So what I meant was that there might have been either a recently introduced
change by a competitor that we also want to imitate or there could be non-competitor This looks good. How will you prioritize between these possibilities?
environments which affects every player like channel characteristics changes in terms of There could be a couple of things. The best would you to simply ask the distributors what
their size, preferences and demands their pain points are and try to match that gulf. Second could be looking at best practices
globally and see what we can deliver given our resources.
Got it. So basically, nothing much has changed internally or externally. The Director Sounds practical. If you had to quickly recommend one thing, what will it be?
wants to just check the possibility of improvement.
Focus on the non-monetary operation benefits as they create a clear win-win situation.
Thanks for the information. I would now like to look at the channels and ask you more That is what the Director is also keen on. It was great interacting with you. Best of luck.
questions along the need if need be.
I want to divide the channels into General Trade (your small kirana shops), Modern Trade Thank you. It was great interacting with you as well.
(the marts) and e-commerce. Is there a particular channel that you want me to look at
first?

Yes. Look at General Trade. Before that though, can you tell me factors you will consider
to pick a channel for improvement?

(C) Consult Club, IIM Ahmedabad 2018-19 57

 Ops Strategy Case (FMCG) – Interview Transcript

The Director, Sales of a FMCG firm wants to improve their channel management strategy. He wants you to provide suggestions.

Interviewee Notes Case Facts Approach/ Framework

• Channel partner • India based FMCG
satisfaction • Leading player (1/3)
• Types of channels Channel Channel
Potential Engagement
• General Trade focus selection Improvement
• Making matrix (H,H)-
Desired (H,L) (H,H)-
Possibility Benefit Desired (H,L)
state
(L,H) (L,L) delivered state
(L,H) (L,L)

Competitor Operations
based
External Non-monetary
Non-Competitor Non operations
Benefits based
(environment
factors) Monetary

Recommendations
• Understand and deliver the unmet needs of the distributors.
• Understand and implement global best practices.
• In absence of data, focus on non-monetary operations benefits.
Interview Summary
• The case was well structured and the preliminary questions clarified the key issues in the case. It is usually important (and useful) to ask about the context of the problem and the company..
• The interviewee requested for time to structure the problem and then delivered an exhaustive structure. That was well done.
• Towards the end, the interviewee tied his answer (of asking the distributor directly) to the initial given data that metric was distributor satisfaction.

(C) Consult Club, IIM Ahmedabad 2018-19 58

Growth Strategy– Apparel Manufacturer - Interview Transcript

The client is in the apparel business in the US and wants to expand their top line. They Sounds reasonable. How do you suggest the client expand his business to other regions?
need your suggestions on how to achieve the growth.
So we will have to explore different target markets on the following 4 factors-
I would like to confirm the objective before I proceed. The client is seeking suggestions to 1) Size of the market in terms of demand for jeans and favourable attitude to jeans
increase revenues. Is there any other objective? And do we have a number on the 2) Paying capacity
increase envisioned? 3) Ease of setting up manufacturing/distribution operations
4) Competition
Yes, 25% and that is the only objective.
Okay, I would like to understand the client a little more. Specifically I want to understand Ok. So on the basis of this, we have decided to pick China as our new market. What
three things- the products they operate in, the price point to get a sense of the segment possible bottlenecks do you foresee?
they deal in and the position of the industry- fragmented or consolidated?
I will build on the same analysis I just did-
Alright. So to answer your first and second question- we are mid priced jeans 1) No problem
manufacturer known for our quality at affordable price. We operate in a fragmented 2) Under question because mid priced jeans might be expensive in China
market with push from both low and high end manufacturers along with same segment 3) Getting licenses might be difficult
competitors. However, in this fragmented space, we are one of the top 5 players. 4) Presence of low cost competitors
On the basis of this, I am not very confident about China’s potential.
That helps. So given it is a fragmented market, the growth within the market can come by
either acquisition or without. In the first case, we will have to do a due diligence to
acquire a company or in the latter case, we will more strategies. We can look at Alright. That makes sense. Let us wrap it up here. Thank you.
increasing number of customers or revenue per customer.
Thank you. It would a pleasure interacting with you.
Sounds good. Can you quickly run me through how you can increase revenue per
customer for a product like jeans? Best of luck
Sure. So we can either change the price depending of price elasticity or increase buying
frequency of the customer. The latter can be done by reducing shelf life of our jeans.
However, given that we are known for the quality, this is a bad idea possibly. What other
things we can look at are discounts, loyalty programs and seeing if there is a possibility of
cross selling across products.
Alright. Let us look at the other idea of increasing number of customers. How do you
think we can do that?
We will have to study the segment we have targeted and strengthen our positioning to
acquire more customers. This could be through channel improvement or advertising.
Here I am assuming, we are not trying to redesign the product. So can you give me some
data around which is our target segment and how do we reach them, both product wise
and through advertisements?
Our target segment is low-mid income adults, both male and female. Instead of
advertisements, I would like you to explore what else can you do to augment revenues?
In this case, we can look expanding into new geographies, new product lines or new
customer segments.

(C) Consult Club, IIM Ahmedabad 2018-19 59

 Growth Strategy– Apparel Manufacturer

The client is in the apparel business in the US and wants to expand their top line. They need your suggestions on how to achieve the growth.

Interviewee Notes Case Facts Approach/ Framework

• Expand by 25% • Jeans manufacturer in US
• Look at elasticity • Mid priced Cross-selling
• Acquisition • Quality
• No go- China • Fragmented market but top 5 Increase
• TG- Male and female adults frequency of Loyalty Programs
Increase purchase
revenue/user
Bulk and other
Increase price
discounts
With acquisition

Increase revenue
New geographies
Without
acquisition
New customer
New markets
segments

New product
Increase # of launches
customers

Improve
marketing
Existing markets

Improve channel

Recommendations
• The client should not expand In China and look at alternative location based on parameters developed.
Interview Summary and Tips
• The case was quite simple, straightforward and open-ended.
• The interviewer was happy with the overall detailed analysis.
• The interviewee displayed consistency in analysis and the structure was fairly exhaustive.
• Proactively could have done market sizing and market share calculations for China to back up the
recommendation.

(C) Consult Club, IIM Ahmedabad 2018-19 60

Growth Strategy– Ice Cream Vendor - Interview Transcript

The client is an ice-cream pushcart vendor in Ahmedabad. He believes that, due to due to the Sounds reasonable. How do you suggest the client expand his business to other regions?
scorching summers, there is tremendous potential in the ice-cream market. He now wants to
expand his business. Suggest a growth strategy for him. There are two ways in which the client can expand to other regions – either by introducing more
pushcarts or by opening a chain of ice-cream parlors across different areas.
I would like to confirm if I have understood all the critical aspects of the client’s situation. I am
assuming that our client, the pushcart vendor, can only cover a small area at present but would like Ok, what option do you think is more feasible?
to cover a larger area and attract more customers.
Since the client is a small vendor who has experience with pushcarts, I think he should go with the
Your assumption is correct. former option of introducing more pushcarts in other areas – this option would instantly give him
access to a huge new customer base. This option is also less-capital intensive as compared to the other
Okay, I would like to understand how does his expansion affect his inventory. Could you confirm if he option of opening ice-cream parlors, and requires considerable less investment into fixed-assets.
manufactures his own ice-cream or is it sourced from a distributor.
Introducing new pushcarts into different regions sounds like a reasonable option. Can you quickly help
The client sells Vadilal ice-cream, and sources it from a distributor. me understand how would you determine how many new pushcarts would need to be introduced?
(becomes a mini-guesstimate now)
That helps. The availability of ice-cream wont be an important factor for the expansion. Next, I
would like to understand the competitive landscape in this industry. (Interviewee calculates table similar to one on next page) I would segment the entire area of
Ahmedabad based on a rough estimation of income. Depending on this, I would introduce pushcarts in
There aren’t many ice-cream vendors in Ahmedabad. However, there are quite a few corner shops different areas/sectors/colonies. More pushcarts would be introduced in effluent areas, or areas with a
and supermarkets that sell ice-cream. targeted customer base – such as near schools. (After discussing the numbers) The client can introduce
850 pushcarts in total across Ahmedabad.
That helps. One of the major strengths of our client, against its competitors, is his ability to move
around and distribute the product. However, I believe that due to the nature of the inventory (ice- After deciding on the possible number of pushcarts that can be introduced, I would additionally
creams), combined with hot weather may lead to more pilferage. analyze the expenses involved in running one pushcart and match this against the total capital that the
client is willing to invest after discounting for working capital requirements.
You can assume that the pilferage due to pushcarts is not significant as compared to total sales.
I think the analysis is sufficiently thorough. We can stop here. Thank you.
In that case, the client can increase his sales in two ways – either by increasing the revenue per user
or increasing the number of customers. I think the first option can be achieved by adding additional
costs/charges to the original price, however for an inelastic commodity like ice-cream, this may not
be feasible as people would just go to corner stores if they believe that they can get a better price.
Also, ice-creams are an undifferentiated product and the price is set by the manufacturer (Vadilal in
this case) and thus high-margins may not be possible. Therefore, the first option of increasing the
revenue per user has quite limited scope.

Moving to the second option of increasing the number of customers – this can be done either by
entering different regions of Ahmedabad, or by increasing sales in the current area. May I ask how
much growth is the client aiming for? Does he have the capital to expand into other areas?
You may assume that client has limited capital which allows him to expand to other areas.
In that case, expanding to other regions is a better idea since it provides access to more customers.

(C) Consult Club, IIM Ahmedabad 2018-19 61

Growth Strategy– Ice Cream Vendor

The client is an ice-cream pushcart vendor in Ahmedabad. He believes that, due to due to the scorching summers, there is tremendous potential in
the ice-cream market. He now wants to expand his business. Suggest a growth strategy for him.

Interviewee Notes Case Facts Approach/ Framework

• Expand in Ahmedabad • Client is an ice-cream pushcart
• Differentiating factor: client vendor in Ahmedabad, and want to
can move around and sell expand his business
ice-cream as opposed to • Client doesn’t manufacture his
competitors own ice-cream; sources Vadilal ice-
• Pilferage due to ice-cream cream from a distributor
spoilage can be ignored • There are quite a few corner shops
• Client can expand either by and supermarkets that sell ice-
increasing the revenue per cream
user or increasing the
number of customers –
choose latter
• Client can expand to other
regions – either by
introducing more pushcarts
or by opening a chain of ice-
cream parlours across
different areas.

Starting Assumption: Ahmedabad

Area : 500 (25x20) sq. km

Recommendations
• Medium High
The client should expand by introducing more pushcarts in different areas of Ahmedabad Income Low Income
Income Income
• The client can budget for the expansion by analyzing number of pushcarts required in different areas
• Different areas can be segregated according to their average income/household and pushcart allocation may be Percentage Area 60% 30% 10%
decided accordingly.
Pushcarts / required
Interview Summary and Tips (1 x 1 sq. km)
1 2 5
• The case was quite simple, straightforward and open-ended.
• The interviewer was happy with the overall detailed analysis. Number of Pushcarts
300 300 250
• (region-wise)
The candidate could’ve guesstimated numbers differently; some assumptions can be challenged logically – high
income earners may not buy from pushcarts – no point of introducing more pushcarts The candidate could’ve
Total Pushcarts 850  
dwelled a bit more into the implementation which would have added more value to his arguments.

(C) Consult Club, IIM Ahmedabad 2018-19 62

Growth Strategy - Pharma company- Interview Transcript

Your client is a pharmaceutical company in India. How would you increase their sales? Now let’s move on to the options related to exploring new business
Could you please tell me what the business model and product portfolio of our client are?
So within new business we can either acquire another pharma company, we could enter a new
What can be the type of products? market or we could introduce a new product. To analyse the first option, I would like to know
They can be producing either generic medicines, medicinal products under their brand name or whether the company has the financial resources to acquire another firm?
medicinal concentrate for other companies Those are fair suggestion. Coming to your question, the company does not have the capital to
Let’s say the client manufactures both generic and branded cardiovascular and diabetes acquire another firm and M&A is hence not an option
medicines.How would you proceed with the case?. Ok, let me explore the other options. One thing the company can do is introducing new medicines
Ok, so I would split the options to increase sales into exploring existing business or exploring new for other diseases. To determine whether this is an attractive option, I need to know whether the
business. Within existing business I will look at options to increase volume or price and within firm is currently considering to introduce a certain new medicine, and if they are how the
new business I will consider M&A, entering a new geographical market or introducing a new competitive landscape looks like, whether the industry is growing and whether it concerns a
product. profitable segment?
Ok, that sounds like a good structure. Let’s start with the options related to the existing business. The only information I have is that competition is fierce for other pharmaceutical products in India.
To evaluate whether a price increase is possible I would need information about the price This leaves us with the option to enter a new geographical market. Is the company currently
sensitivity of the firm’s customers. Do you have information regarding this? considering certain markets and how is the size of the market, the growth, the level op the
Yes, since the firm operates in India, a developing country, the customer are price sensitivity. competition and the enforcement of IP laws in the respective countries?
Based on this I conclude that a price increase is not feasible. Let me discuss the options to The company is analyzing 3 options, Brazil, Russia and Poland. Brazil is the largest markets with
increase volume. To analyse the options thoroughly I would require information about the 28bln and also is a fast growing market. Additionally the level of competition is low and there is
customers or products. medium protection of IP laws. Russia, is the second largest market with 15 bn, but experiences slow
growth. Moreover, the Russian market is relatively fragment and there is good enforcement of IP
Sure, the pharma company serves two types of customers which are large and small customers. laws. The last option is Poland, which is a market of 7bln but with high growth. The competition is
The large customers are hospitals and pharmacy chains while the small customers are small fierce in this market and there is good IP protection
pharmacies
That information is very helpful. Taking this into account I would suggest the Pharma company to
Thank you for the information. Do we also have info about the profitability, growth and expand to Brazil, due to the large market, the high growth and the low level of competition.
competitive landscape for the 2 type of products?
Great suggestion. Overall what would you suggest the company to do?
I don’t have information about the competitive landscape, but I can tell you that the large
customers have a higher profitability and higher growth than the smaller customers The case highlights that there are 2 viable options to boost sales. On the one hand the company
could expand globally by entering the Brazilian market with existing product. On the other hand the
company can increase volume sold to large clients. To increase sales I propose to create a dedicated
Ok, the focus of our growth strategy should thus be on the large customers, as they represent a sales force for large players. The customer oriented sales structure should result in an improved
more attractive segment. To increase sales I propose to create a dedicated sales force for large customer relations and tailored offerings for customer needs. Moreover, the firm should invest in
players. The customer oriented sales structure should result in an improved customer relations training of the sales force
and tailored offerings for customer needs. Moreover, the firm should invest in training of the
sales force Thank you for your time. It was nice interacting with you

(C) Consult Club, IIM Ahmedabad 2018-19 63

Growth Strategy - Pharma company

You have been approached by the CEO of a pharmaceutical company in India. He is looking to grow the sales of the company. How would you go
about increasing the firm’s topline?

Interviewee Notes Case Facts Approach/ Framework

• Pharmaceutical player • Customers are price sensitive
operating in India • The company has insufficient
• The client serves different capital for M&A transactions Grow sales
customer segments • Competition is fierce for other
• Client manufacturers both pharmaceutical products in India
generic and branded • There are 3 possible foreign Explore existing Explore new
cardiovascular and diabetes markets the company considers business
business
medicines • Brazil: size 28 bn, high growth,
• The firms global presence is low competition and medium
limited to India protection of IP laws
• Russia: Size 15 bn, slow
Increase Enter new Introduce new
Increase price M&A
growth, good enforcement of Volume market product
IP laws, relatively fragmented
• Poland: Size 7 bn, fierce
competition, good IP
protection, high growth Client Type of customer Facts
• There are 2 type of customers
a) Large customers Large • Hospital • High margins
b) Small customers Customer • Pharmacy chain • High growth rate

Small • Low margins

• Small pharmacies
customer • Highly competitive

Recommendations
• The case highlights that there are 2 viable options to boost sales
1. Expanding global footprint by entering the Brazil market with existing products
2. Improve sales by expanding volume sold to large clients. To increase sales I propose to create a dedicated sales force for large players. The customer oriented sales structure should
result in an improved customer relations and tailored offerings for customer needs. Moreover, the firm should invest in training of the sales force
Interview Summary
is a strategy case where interviewee should quickly eliminate options with limited growth opportunities and use creativity to come up with at least one suggestion to increase volume from
existing business
Observations/Tips/Suggestions
• Use the 4C framework to obtain information that will support the analysis of the different revenue options
• Segment current volume into type of customers to derive different options to enhance sales

(C) Consult Club, IIM Ahmedabad 2018-19 64

Growth Strategy - Video on demand Service - Interview Transcript

Your client is a video on demand service provider. How would you increase revenue for the client? Can you now go ahead with a few recommendations?
So, I would recommend the client to do the following things
I would like to ask a few clarifying questions before I begin to analyse the case. I would want to 1. Diversify into other genres
understand the client’s business. What kind of channels does the company run? 2. Diversify into other regional languages apart from English & Hindi
3. Set up an effective payment gateway system and enhance the user interface
The company broadcasts TV series in both English and Hindi channels. As of now, it only focusses 4. Improvise the content of the shows
on TV series. 5. Set up a recommendation system as well
Alright! Also, I would like to know how many competitors do we have and are they facing similar
problems?
We do have 2 major competitors but unfortunately none of them are facing this kind of a
problem. First, you can go ahead and work out the revenues for our client and we may come to
competitor analysis later.
Ok. So I believe that the revenues of our client would depend on the number of customers,
number of zones the channel is operated, the time spent per customer and the price of the
subscription.
Now let us focus on the time spent per customer. It has gone down significantly.
I would list down a few reasons why the time spent per customer would go down. But before
going there, I would break my customers into subscribed customers and non subscribed
customers and try to understand time spent of which customer segment has gone down.
The time spent for both the segments have taken a hit.
Okay. So I understand that the time spent would be a function of (a) Internet availability (b)
Content (as compared to competitors) (c) User Interface and accessibility (d) Age and
demographics pattern.
Sure. So recently our competitor have moved into the sports sector as well. And market study
tells that our user interface is not favoured by the clients
Ok. That sounds interesting. So, I believe, since our competitor has moved into the sports
segment, our client has faced decrease in customers. Also, since the user interface is not
favoured, most of the customers are going out from our channel thus decreasing the time spent
per customer.
Okay. What are the factors that you should consider in the UI?
I believe the user interface would comprise of mostly the basic design and the payment gateway.
Is there any issue with any one of them in particular.
Yes, the payment gateway has caused problems for the last few months.
Okay. That is the main reason why the number of un subscribed customers are not able to
subscribe to our service.

(C) Consult Club, IIM Ahmedabad 2018-19 65

Growth Strategy - Video on demand Service

Increasing the revenues for a video on demand service provider

Interviewee Notes Case Facts Approach/ Framework

• Client is a video on demand • Both Hindi & English
service provider which • Focusses on TV series
broadcasts TV series in both • Client specific problem
Hindi and English • 2 major competitors

Revenues

#Customer
#Zones Time spent Pricing Others
/zone

Internet
Content User Interface Demographics
Availability

Framework Summary
Broke down revenue into the various segments to try and understand the revenue drivers. Figured out that the problem lay in the time spent per customer. Broke it down further and identified
the major issues why a customer would not spent much time in the app.

Questions
1. Competitive market analysis of the sector
2. What type of channels does the company have? How many mediums?
Key Recommendations
• Diversify into other genres
• Diversify into other regional languages apart from English & Hindi
• Set up an effective payment gateway system and enhance the user interface
• Improvise the content of the shows

(C) Consult Club, IIM Ahmedabad 2018-19 66

Pricing – Heliair service- Interview Transcript

Your client is a Heli air service provider. How would you price this service? Is it a viable business? We plan to rent it and start with one helicopter.
Alright. First of all, I would like to understand what exactly is a Heli air service and where is the client Ok. Other fixed costs would be the airport charges, maintenance charges, salaries of the employees,
planning to operate it? insurance cost etc. The main variable cost would be the fuel cost. Do we have data about the costs?
Heli air service is a helicopter service for inter-city transport. The client is planning to operate it in The cost of renting the helicopter is Rs 16 Lakhs per month. Airport charges us Rs 2 Lakh per month
Delhi. The service would be from the airport to two different ports at the two ends of the city while the salaries of the employees come out to be Rs 4 Lakhs per month. The other overheads are
around Rs 1 Lakh per month. The helicopter uses 60 Litres per hour. The cost of the fuel is Rs 75/litre.
Are they operating anywhere else?
I would like to estimate the minimum amount that our client would need to charge in order to break
Yes, the client has operations in London, Paris and New York even. Our fixed costs come out to be Rs 23 Lakhs per month. The cost of the fuel would depend on
the number of trips that we would take in a day. Is there a fixed number of trips that we are planning?
Is there any specific reason for choosing India?
They are excited about the growth opportunities in India and feel that it is the right time to enter the
market
No, why don’t you calculate the optimum amount
Are there any existing players in the market?
You mentioned that our heliair service would go to the two ends of the city. On taking a cab it would
No take around 2 hours to reach. The helicopter would cover the distance in 1 hour. Since we only have 1
helicopter we would need to alternate between the two ports. After completing 1 trip we would need
to have a break both for the pilot and the helicopter. Thus, I would like to assume that we can
complete the whole trip in 2.5 hours and be ready for the next one.
Then our main competition is with existing services like cab or metro. How are we placed in
comparison to these services? Go Ahead
What according to you are the advantages of the proposed service? We can complete 4 round trips per day. The helicopter would be in use for 8 hours. Thus, the cost
comes out to be Rs 36,000 per day. How many days in a month are we planning to operate it?
The major advantage would be in terms of time saved and the luxury and convenience
25 days
That’s right. The travel time would reduce to half.
Then the total cost would be Rs 9 Lakhs per month. Thus, in order to break even we would need at
OK. Now coming to the pricing part there are 3 possible pricing strategies that we can look into least Rs 32 Lakhs per month from the passengers. We have a total of 100 trips in a month. Can I
assume the helicopter would accommodate around 4 people?
1) Cost based pricing
Yes
2) Competitor based pricing
Even if we get 100% occupancy for all our flights we would need to charge the people Rs 8000 per
3) Value based pricing trip just to break even which is a pretty high cost. I would like to do a sanity check in order to make
sure that the number is in the right range. The only heli air service I know is for Vaishno Devi which
Since we do not have a direct competitor I would like to focus on cost based and value-based pricing. costs around Rs 1100 for a 5 minute ride. Thus it would be around Rs 13,200 for 60 minutes however
Is there a particular strategy that you would like me to start with? since the fixed costs don’t change with increase in length of trip Rs 8000 seems to be a good
estimate. This is in contrast to taking a cab would cost around Rs 800 thus they are paying 10 times
Why don’t we start with the costs? What are the major costs involved? the amount. In order for this to be a viable option their time should be worth at least Rs 7200 per
hour. This is true only for the very rich people who can actually buy their own helicopter and would
The cost can be divided into fixed and variable. One of the major fixed cost would be for the thus have no need for our service. Thus, I don’t think that it is a viable business.
helicopter. Are we planning to buy a new helicopter, lease it or get it from another market where we
currently operate? How many helicopters are we planning to get? Well done

(C) Consult Club, IIM Ahmedabad 2018-19 67

Pricing –Heliair service

Your client is a Heli air service provider. How would you price this service? Is it a viable business?

Interviewee Case Facts

Notes
• The cost of renting the
• First service of helicopter is Rs 16 Lakhs per
Pricing
such kind thus month.
there are no • Airport charges us Rs 2 Lakh
competitors per month
• Operating in Delhi • Salaries of the employees Competitor
Cost based Value based
• 2 ports will be are Rs 4 Lakhs per month based
• The other overheads are
operated to the
around Rs 1 Lakh per month
two different ends • The helicopter uses 60 Litres
of the city per hour. The cost of the fuel
• Time would reduce is Rs 75/litre Fixed Costs
to half

Variable Costs

Recommendations
• Understand the client’s business and his expectations through clarifying questions before going on with the structure
• It is important to analyze all the possible pricing strategies. Here the service has a value-based price but the cost is so high that it becomes unviable
• Do sanity checks wherever possible

Interview Summary
This case is for pricing of a heliair service.. The student should detail three ways of pricing. Cost based pricing became a very important factor in this
problem since the amount of price needed to be charged in order to break even is very high and makes the business unviable

(C) Consult Club, IIM Ahmedabad 2018-19 68

Pricing – Residential Complex in Kolkata - Interview Transcript

Your client is an upcoming builder in Kolkata. He has recently built a housing complex and wants Well yes, a metro project has been announced by the State Government, which would make it very
to figure out how to price the apartments. Help him decide a price. convenient for residents to travel to the main city.
I would like to ask a few clarifying questions before I begin. I want to understand a few things Well then that can certainly be a reason to add a premium to the competitor- based pricing I had
about the complex. What kind of a locality is it located in and how crowded is the market in that discussed earlier, assuming the competitors don’t offer this advantage. Therefore, I would price the
region? apartments at a premium above the competitors’ prices, with an overall constraint of keeping prices
above or equal to the cost-based rate that was computed.
The complex is on the outskirts of the city. It is an upcoming region which the client has managed
to make headway into before any other builder. There are just a few offices coming up near by, That’s fair. But can you compute how much premium we can add because of the proximity to the
but largely we are the only major housing option in that region. metro stations?
What are the number of apartments and buildings in the complex? I guess I can compute the monetary and non-monetary costs saved by a resident due to the
availability of the metro lines, multiply it by the % of people that will actually avail this benefit and
There are 10 buildings with 100 apartments each. then divide this total figure over all the occupied apartments to get the premium per apartment.
So 1000 apartments. Okay, and are these segmented into different categories? And if yes, what
are the kind of amenities offered by each of the categories?
Assume all the apartments fall into the economy category and that the amenities are at par with
the industry standard.
How much has the builder invested in this project and what is the gestation period he is
comfortable with?
The builder has invested 250 crores and expects a 10-12 year gestation period
Okay, lastly what is the average size of a single apartment?
A single apartment is on average 2000 square feet.
All right. I will like to look at three kinds of pricing and then take a decision on which pricing
method to go ahead with. I will look at cost based, competitor based and value based pricing.

That sounds reasonable, let’s look at cost-based first in that case

Our price would be such that the profits generated give a 0 NPV when discounted with our
desired growth rate. Since the number of flats occupied will increase gradually, for each year, we
will essentially take: number of flats occupied * price/sq. feet * 2000 sq. feet.
Okay, and what would be the questions you would consider with regard to the competitors?
I would find the competitors’ prices and costs in the economy category to gauge their margins.
Moreover, I would compare their offerings with ours to see if they offer more or less for unit price.
One to go now. What about value based costing? What questions would you want to ask their?
Was their a particular reason why these outskirts were chosen for the project? Was the builder
expecting any infrastructural facilities or any kind of positive externalities from this area?

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Pricing – Residential Complex in Kolkata

A builder has approached you to know the price at which he should sell the apartments in his newly developed housing complex in Kolkata

Interviewee Case Facts

Notes
• 10 buildings x 100
• No product apartments/ building =
differentiation as 1000 apartments
such • Located on the outskirts
• First mover of Kolkata
advantage • 10-12 year gestation
• Cost, competitor, period
value • Capex 250 crores
• Regulatory
concerns

Recommendations
• Understand the client’s business and his expectations through clarifying questions before going on with the structure
• Figure out a way to collate or coalesce the three prices found through the three methods

Interview Summary
This case is for pricing of an apartment in the outskirts of Kolkata.. The student should detail three ways of costing and use formulae and rationale to
identify the different factors that will break down those three heads and integrate them to come up with a single conceptual figure

(C) Consult Club, IIM Ahmedabad 2018-19 70

Declining market share- Commodity Chemicals- Interview Transcript

Your client is a commodity chemicals manufacturer. It is facing declining market share. Figure out The client is working at 100% capacity. The product mix is not an issue.
why, So, I would now move on to the demand side and figure out the issues there.
I would like to ask a few clarifying questions before I begin to analyse the case. I would want to Okay. Based on the analysis as of now, why don’t you comprehend the case and recommend
understand the client’s business. Where does it lie in the value chain? Is the industry facing solutions?
similar problems?
So the client has faced declining market share because the firm has grown less as compared to the
The client manufactures and sells commodity chemicals. The industry as a whole is not facing industry. The growth has not been that great because of certain key factors. Those are:
similar issues. 1. Production capacity being fully utilised
So, it is a company specific problem where our client is losing market share. I will now list down 2. Factories and warehouses being located far away from customer base
the reasons for decline in market share. Now go ahead with the recommendations
Sure. List down the reasons why you think there would be decline in market share. The client could shift the warehouses to locations which are close to the customer base. This would
The decline in market share is due to two reasons – (i) Drop in actual sales (ii) Less growth rate of lead to less damages of products as it would not be required to ship them over large distances.
company as compared to industry. Has the actual sales dropped? Additionally, the client could go into long term contracts with the customers which would lock in the
No, the actual sales have not dropped. However the company is not growing at the same rate as sales volume. Also, the client should look into increasing production capacity.
that of industry.
So, I understand that the company is growing less as compared to the industry which had led to
decline in market share. So let us focus on the reasons why there can be less growth of company
as compared to industry.
Yes, sure. Go ahead.
Okay. So, I will now further segment low growth rate of company into two major heads: (i) Supply
and (ii) Demand.
On the supply side, I would look into parameters like production capacity, accessibility and
Product Mix. On the demand side, I would look into price, competitors and product quality. I
would first analyse the supply side and then go to the demand side.
What do you think can be issues on the accessibility scenario?
In terms of availability, the products may not be reaching the customers or may not be accessible
due to certain constraints. Is the client facing any issues like that?
Yes, so the factories are located quite far off from the client’s major customer locations. What
problems can this lead to?
Since the factories are located far off, then there would be a large transportation cost associated
with the transfer of goods. Apart from that, the products while shipping may get damaged, which
would lead to bad reputation of the client among the customers.
It is exactly so. The products are being damaged while shipping.
Okay. Now, I will move on to the production capacity aspect. At how much capacity is the client
working as of now? What about the product mix?

(C) Consult Club, IIM Ahmedabad 2018-19 71

Declining market share- Commodity Chemicals

To analyze the declining market share for a financial services provider

Interviewee Notes Case Facts Approach/ Framework

• Client currently dealing in • Market share declining;
commodity chemicals • Company specific problem
• Focus on production • Company growing at a rate which
Decline in market
capacity is less than the market share
• Focus on accessibility • Production facilities are running at
100% capacity

Growth less as Drop in actual

compared to sales
industry

Supply side Demand Side

Production
capacity Accessibility Product Mix

Recommendations
• Shift warehouses to locations which are close to the customer base
• Go into long term contracts with clients to lock in the sales volume
• Increase production capacity in the factories or look for alternatives to produce more
Interview Summary
The candidate did a good job in figuring out the fundamentals in terms of the factors on which the market share will depend. Identifying that the company was growing at a rate less than the
industry. Overall a good performance.

Observations/Tips/Suggestions
The interviewer must have been impressed by the overall logical consistency of the client.

(C) Consult Club, IIM Ahmedabad 2018-19 72

Due Diligence - Chain of Schools - Interview Transcript

Your client is a PE Firm. It wants to take up a stake in a chain of schools. Diagnose and recommend Okay, that’s good. Now, we know that the school gets demand equal to its supply, but it is still not
whether it should go ahead with the acquisition. able to cater to this total demand. What do you think could be the reasons for this anomaly?
I would like to ask a few clarifying questions before I begin. I want to understand the client’s There may be some regulatory requirements to apportion some seats to the Economically Weaker
business. What is the average portfolio, the expected growth rate and exit time? Sections (EWS) or the school might be reserving seats under a management quota, maybe?
The company has a mixed portfolio of different sized investments and is looking for a 30% growth That’s fair. We have come up with a way to compute the NPV. Do we need to consider anything else
rate on this investment. It wants to make a quick exit in about 4-5 years. that might be a factor in our total earnings?
Yes! This NPV has to multiplied with the percentage of equity that we are going to buy in.
Why is the firm considering a chain of schools for investment?
Assume it would be a 100% acquisition
The firm does not have any investments in the education sector and this investment may help us
complement a future investment. Well in that case yes, this NPV would be our total earnings.
Can you think of another reason why that may not be true? Think of the education industry broadly
Ok. So finally can I know some details about the schools? Are they private or public? Exactly how
many schools are being run as of now and where? Does the school maintain a trust or a similar fund maybe as a contingency reserve or for
philanthropy?
The schools are privately owned. There are 4 schools as of now but we would like you to focus on
only on the one in Mumbai. Yes, well done. Conclude the case for me now.
The one last thing that is left is comparing the estimated growth rate of the NPV with our estimated
Okay. Which education board do these schools fall into? growth rate. The former would basically be our estimates of the school’s organic growth and how
The school follows the IB Board. much we can add to it through inorganic growth. If the sum of these two is not less than 30%, and
the NPV of the recurring profits seem adequate, the firm should go ahead with the purchase.
Interesting. So that would mean it competes with only about 4-5 other IB Board schools that
there are in India and its annual fees would typically be around 10 Lakhs? Can I go ahead with
these figures?
Yes, that’s fine. How would you value the investment?
I can find the NPV of the profits by guesstimating the revenue and cost figures. Further I can try to
come up with an annual growth rate and compare it to our expected growth rate to check
feasibility.
That sounds reasonable, though slow down a little bit. Assume the cost to be X. How will you
compute the revenue?
Can I know if the school has any other revenue streams apart from the education fees it must be
charging the students? Hostel charges maybe?
Assume that the education fees is the only source of revenue.
Revenues will be equal to the total seats x occupancy rate x the fees/ student. The total fees was
7-8L as discussed earlier and the maximum occupancy depends on the size of the school..
Assume the total number of seats is 200. Go on..
I can find the occupancy rate by estimating the demand. The demand would primarily be from
urban areas. Proximity is one of the most important factors in computing demand though as one
of the very few IB Board schools in the country, I think I should add, say 5% to whatever figure I
come up with to account for the students coming in from different states. Taking the square of a
radius of 15km x household density of say 100 per square km x pi (pi*r^2*density), we get the
number of houses in proximity. On average there will be 2 school going kids in each household so
multiply that figure by 2. Out of this figure we can multiply the % of students who would be
interested and able to join an IB Board school and the % of students out of those, who would like
to join our school in particular.

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Due Diligence - Chain of Schools

To estimate the number of wizard hats in London

Interviewee Notes Case Facts Approach/ Framework

• Check the valuation and • Wants >=30% growth rate Profit

feasibility • Will exit in 4-5 years 100%
• Demand would acquisition
exclusively be from • IB Board School in Mumbai
urban areas
• Assume 200 seats, 7-8L Board School in
fees Mumbai Revenue Costs

Total No Occupancy
of Seats Fees/ Student
Rate

Population
Density of 100 % interested in % interested in
(15 km)^2 households/ sq. IB Board our school out of
km Schools all IB Schools

Recommendations
• If the computed growth rate is more than or equal to 30% take up the investment.
• The purchase price should be less or equal to the computed NPV
Interview Summary
This is a due diligence case which envelops a guesstimate to find the market share and market-size of an IB Board School in Mumbai. The candidate should
estimate revenues from the demand side and determine the various factors that might affect these figures.
Observations/Tips/Suggestions
• Make sure formulae are elaborately and explicitly laid out in front of the interviewer
• Look for cues as to where the interviewer wishes to take the case.

(C) Consult Club, IIM Ahmedabad 2018-19 74

New Market Entry– Investment in PVR– Interview Transcript

Your client is an investment fund, they want to invest in PVR. Is this a good Okay, can you evaluate the risks associated with the investment?
investment? What factors would you consider? In my opinion, the biggest risk comes from online movie streaming services such as
I would like to ask a few clarifying questions before I begin. First, I would like to Hotstar, Netflix and Amazon Prime. Since this gives the customers the easy of
understand the client’s investment portfolio and their investment horizon. What watching movies anywhere. Therefore, there is a strong competition between the
sector do they generally invest in and how long are they looking to invest for? movies in the theatre and the one available online. Additionally a Netflix
The client has decided that they want to invest in PVR, you can move on to analyse subscription for 4 screens costs about 1000 rupees a month i.e. 200 per screen with
the factors to consider for this investment. the choice of watching unlimited movies or TV shows as compared to a movie in the
theatre that costs 200 rupees per ticket. An added risk for theatres is that the
In that case, I would begin by analysing the following: demand they faced is derived demand since it a factor of the movies that are
1. Company analysis: How is PVR currently performing and what is the future currently in the theatre which could be very cyclical. Moreover, with the increasing
growth expected? penetration of streaming services the bargaining power for theatre is also reducing
2. What are the risks in investment through the increase in competition in this as a distributor could soon go to one of these services and sell the rights of the
industry? movie to them instead of going to a theatre.
3. What could be the exit strategy for our client?
How do you think these risks can be mitigated?
Okay, you can go ahead by estimating the current revenues for PVR from the
demand and the supply side. I think one of the things PVR is already doing is uplifting the whole experience
associated with watching a movie. They have been differentiating on the basis of the
Okay, the demand for PVR tickets with depend on the accessibility of PVR theatres, food available the services offered inside the theatre such as on seat delivery. They
Affordability of tickets. In terms of the accessibility, PVR is currently present in Tier I are gradually moving towards giving the whole movie experience a fine dining feel
and II cities hence our consumer base is limited to this. For affordability, there are where a customer could place the order from his/her seat and the choices are not
different ranges of tickets offered by PVR; the consumers who could afford it would limited to basics such as popcorn or a sandwich.
depend on the price of the tickets available.
That should be all.
You can assume that they have a flat price structure.
Assuming that the average ticket at PVR would cost INR 200, I can estimate demand
in a month through the price per ticket*potential market*frequency of visits. The
potential market would be about 40% of the population of Delhi (18.6 million) i.e.
the high income & middle income. In order to estimate the frequency of visits I
could split the customers into three groups; 1) Two visits per month, 2) 1 visit per
month, 3) 0.5 visits per month.
That sounds good, please move on to estimating the revenues through the supply
side.
In terms of the supply side, the revenue in any month can be estimated through
number of theatres in a city*number of screens per theatre*number of seats per
screen*price per ticket*shows in a month*occupancy rate. A city like Delhi has
about 20 PVR theatres with 5 screens each and a capacity of 200 seats per screen.
The occupancy rate would be about 60% and there would be about 5 shows per
screen on any given day.
Can you explain how you derived the occupancy rate?
I would assume that during the peak times a screen would be on average 90%
occupied. This would be on weekends and in the evenings. At any other time of the
day/week, the screen would be about 30—40% occupied on average.

(C) Consult Club, IIM Ahmedabad 2018-19 75

New Market Entry– Investment in PVR

The client is an investment fund looking to invest in PVR, explore the viability for the same.

Interviewee Notes Case Facts Approach/ Framework

• Investment fund – investing • The client specifically looking to
in PVR invest in PVR no need to explore Revenues
• Explore viability by the possibility of investment in any
estimating revenues other entertainment company
Theatres/
(demand side, supply side), city
risks associated with the
investment & exit strategies
Demand Screens/
Supply side theatre
side

Seats/
screen
Price per Potential Frequency
ticket Market of visits
Shows/
month

Occupancy
rate

Recommendations
• The risks can be mitigated by providing services that uplift the whole experience of watching movies in the theatre; increasing the value provided by visiting a theatre
• Different areas can be segregated according to their average income and theatres in that area can charge prices and provide service in line with the propensity to spend
Interview Summary and Tips
• The case had a wide number of things that could be analyzed; key was in focusing on the important aspects of the issue at hand
• The interviewer was happy with the overall detailed analysis.
• The candidate could’ve guesstimated numbers differently; some assumptions can be challenged logically

(C) Consult Club, IIM Ahmedabad 2018-19 76

Customer Satisfaction- Telecom Industry-Interview Transcript

Our client is a large African telecom company, and it has recently been experiencing a decline in Our workforce is adjusted according to weekly and monthly seasonality, but the staff strength is
the customer ratings. It has hired you to identify and resolve the issue. constant for a particular day, which leads to high waiting time at peak hours. Our executives broadly
To clarify, the objective at hand is to find out the reasons for decline in telecom industry customer handle 3 types of calls – customer requests for activation and modification, enquiries for usage
ratings and propose steps to resolve it. Is there any other objective I should keep in mind? information and grievance redressal.
No, please go ahead Firstly I would recommend the firm to incorporate some automation in terms of IVRS and issue
specific mapping, so that a significant number of our calls (primarily requests and enquiries) can be
Before delving on to the possible reasons, I would want to get some idea about the firm. Could you addresses without manual intervention. These modifications can be communicated vie SMSs, mails
give me some idea about the African Telecom industry, the client and its competitors? and can be promoted at the Point of Sale as well.
Assume that all of those factors have no direct impact on the problem. Good. What can we do to improve the operational efficiency of the centre?
Sure. So I would like to analyse the case from the customer point of view, and explore the various We can also employ some data analytics to determine call volume patterns to vary the staff strength
touch points that he has with the firm. The issue could be at any of the stages, ranging from SIM in multiple shifts within a day, which could help decrease the customer waiting time as well as idle
procurement, service quality, dissatisfaction with pricing policy or after sales service (customer time.
service).
Great Job. Thanks a lot!
The problem is actually in the customer service area. Our users are not satisfied with our current
levels of customer service. What do you think could be the reasons for the same?
OK, I would like to analyse the various stages that make up a customer’s interaction with our
service. The problem could be because difficulty in reaching the executive due to complexity of the
portal, high waiting times, call drops, service experience or failure to address / resolve customer
issues.
Our waiting times are indeed very high, much more than those of our competitors portals.
The waiting times could be high because of understaffing, intraday/week load variations, or
executives spending too much time on trivial issues. Could you tell me the profiling of the call
purpose for our customers?

(C) Consult Club, IIM Ahmedabad 2018-19 77

 Customer Satisfaction- Telecom Industry

Our client, a major African telecom company, is facing a decline in customer ratings. You have been approached to find a solution to the problem.

Interviewee notes Case Facts Approach/ Framework

• Issue with customer service • Africa based company
• High waiting times • No change in industry
• Seasonal variations scenario
accounted for by workforce • No new competition
hiring Declining
• Intra-day variations not Customer ratings
taken into account – issue in
the peak hours
• Requests, Enquiries, Call Service
Grievances SIM Procurement Pricing Customer service
quality

High waiting Failure to address

Call Drops Service quality
times concerns

Intra-day/week Trivial duties of

Understaffing
Load variations executives

Recommendations
• IVRS system to automate specific issues – promotion through SMS etc.
• Data analysis to manage intra-day call variations and shift design

Tips / Suggestions
• Structuring an issue with reference to the entire value chain makes it easy to spot problems.

(C) Consult Club, IIM Ahmedabad 2018-19 78

Unconventional case- Loss in a football match - Interview Transcript

A football team recently suffered a surprise loss. You have been approached to find out why this Sure. Go ahead.
happened. I can think of three broad areas regarding where the problem could lie: Player level Issue, team level
First I would like to understand a bit more about the context. What kind of match was this (was it issue or an external environment issue.
in a league/knockout tournament/friendly) and what kind of team was this? Can you explain each and think of which one is most likely?
This was in a league tournament like the EPL and the team is one of the top 5 teams. External environment problems could be a change in the playing conditions, field, weather, crowd etc
Why was it a surprise loss for the team? causing a sudden drop in performance. This is less likely to be the case if we are looking at a
It was surprising because our team lost to one of the bottom ranked teams. professional league like the EPL.
Team level issues could be changes in the playing XI, support staff, management or strategy that
How has our team’s performance been in the past. Has our performance been steadily declining or could have caused the poor performance. These are more likely than external environment
was this a sudden drop? problems.
We’ve been performing quite well in the tournament. That’s why we are in the top 5. This was a Player level issues can be further broken down into physical and emotional issues. Physical issues
sudden loss. could be fatigue or unavailability of players due to injury. Emotional issues could be stress or any
I would like to break down the problem into two parts. We could have lost the match either other emotional problems that one/some of the players could be facing, which was affecting their
because we did not score enough goals or we conceded too many goals (i.e. it could be a problem performance. In my opinion player level issues seem to be the most likely as I would expect a
of either attack or defence). What score line did we lose by? professional management to mitigate some of the team level issues.
We lost 2-0. Yes, we have found out that two of our forwards had picked up an injury but had continued playing
and this affected their performance. Thank you.
What has been the average number of goals we have scored and conceded in the matches prior to
this?
On average we score 4 goals and concede 2 goals in a match.
It looks like the problem in this match lies in our attack and not defence. Our defence usually
concedes 2 goals and even in this match they conceded two goals. Our attack usually covers up for
this by scoring four goals but in this match we weren’t able to score. I would like to further explore
why this was the case.

(C) Consult Club, IIM Ahmedabad 2018-19 79

Unconventional case- Loss in a football match

A football team recently suffered a surprise loss. You have been approached to find out why this happened.

Interviewee notes Case Facts Approach/ Framework

• Top 5 EPL team. Lost to • Team scores 4 and
bottom team concedes 2 goals on
• Defence was always weak. average
Strikers covered up for this • This match: conceded 2
• Attackers did not perform this but did not score Cause of loss
match

Poor defense
Poor attack
(conceded too
(scored too few)
many)

Player level issue Team level issue External issue

Tips/suggestions
• Understanding the context is important. Need to understand what kind of match/tournament was being played and past performance of the team to identify whether this was a one-off
situation.
• It is important to adopt a structured approach and cover all the possible reasons rather than just listing several reasons.

(C) Consult Club, IIM Ahmedabad 2018-19 80

Unconventional case (Drug pricing) – Interview Transcript

Your client is WHO and they are concerned with the cyclicity in the prices of Malaria Oh alright, thanks! Before I look at farm aspects, I want to highlight that lower outputs
medicine and want your help to figure out why this is happening. would increase cost at downstream steps also as fixed cost per unit will be higher when units
are less. Ignoring that I would like to break down the total farm output as follows (Exhibit 2).
Before I begin solving for the root cause, I would like to understand the facts of the case I will consciously not be including external factors such as government policy and
better. (1) What exactly is the cyclicity pattern-annual or something else and for how environmental factor changes as these are unlikely to have annual impacts. Before I proceed
long have we observed this? (2) What is the magnitude of amplitude of cyclicity? (3) Are further, I would like to understand the spatial distribution of farmers and the type of
we considering global changes or restricting to a geography? farmers.
Fair enough. (1) The cyclicity is annual with similar annual variations of highs and lows I agree with your assumption and the process map is good. To answer your question, the
for about a decade (2) Let us assume that it only a few percentage points but enough. I peculiar aspect here is that 95% averaged farm output comes from 4 eastern Chinese
want you to focus on the qualitative aspects here. (3) Global. provinces from small and marginal farmers.
Thanks. So, from the annual cyclicity, we can make two assumptions- (1) There is no That is interesting! I would like to focus on these farmers then. Productivity and other factors
structural industry level shift presently, though there might have been 10 years ago are unlikely to be this cyclical. Thus, I would like to first focus on the macro aspects of
which we can explore later & (2) From a supply-demand perspective, it is unlikely that for number of farmers and area sowed per farmer. Do we have any data to suggest cyclicity in
a disease, the demand will have similar annual variations. So, I will assume that it is a farmers sowing the crop each year?
supply side issue. Is it alright to go ahead with that?
Yes. All the other factors are fairly constant over the years but the farmer count is cyclical.
You are quite right. Can you think of a reason why? Take a moment.
Oh alright. Can we assume that the supply cyclicity is the main reason and that it is I think it can be because of two factors, either the farmers (1) CANNOT grow every year or
opposite of the price cyclicity? In which case, I will like to understand the medicine a for some reason (2) DO NOT want to grow every year. The first could largely be because of
little more. Are we considering multiple variants? Also, what is the API (active cyclicity in inputs to grow the crop, like seeds or specialized fertilizers and the second would
pharmaceutical ingredient)? largely be dependent on price realized last year. Given the case facts that the farmers are
Yes and you can assume that there is only one standardized product with one API which small and marginal and that there is price cyclicity, I am inclined towards the latter. There are
is chemically derived from a plant source grown through individual farming. more farmers growing in year N, which leads to more supply with a constant demand and
thus prices fall. Next year there are less farmers, thus less supply and higher prices, leading
Oh alright. So, my strategy here would be 2 step- (1) Understand the model of flow of the to a cyclical behavior.
product from farm to client to identify the location of supply bottleneck in a lean supply
year. (2) Once that is identified, I would like to understand the factors contributing to You are right. This is what we diagnosed the problem to be as well. Can you tell me the
that lean supply. To understand the first, am I correct in assuming the following process? assumptions you are making here?
(Exhibit 1) Sure. There are 3 fundamental assumptions- (1) The crop also has an annual growing cycle
The strategy seems good. You can assume that the problem is the total farm output (2) The farmers arrive at the market at a similar time and thus do not have bargaining power
cyclicity. All the other downstream steps are standardized. and there are no losses and no storage infrastructure at the farm level (3) The introduction
of the plant as a raw material must have happened 10 years ago replacing something else.
Great. This was well done. Best of luck for the subsequent rounds.
Thank you. It was a pleasure interacting with you.

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Unconventional case (Drug pricing) – Interview
Transcript
Your client is WHO and they are concerned with the cyclicity in the prices of Malaria medicine and want your help to figure out why this is
happening.

Interviewee notes Case Facts Approach/ Framework

• Be qualitative. Global • Malaria, WHO, cyclicity in
impact. prices.
Farm (includes Number of farmers
• SUPPLY side issue. • Facts-Annual phenomenon.
sourcing inputs)
• API is unique and one 10 years ago.
variant. Derived from • 95% from small marginal
PLANTS! Chinese (east) farmers Field area under
Exhibit 1: Process map cultivation/farmer
• Issue- farm level. Processing of Exhibit 2- Process
of the product
• Ignore Government and raw material map of the annual
production steps (Please
weather. output drivers
note that transportation % Field area under
• Focus on macro issues (upstream to cultivation for this crop
costs/processes
• No of farmers- cyclical Medicine downstream). Every
discussion between any
manufacturing point is multiplied in
2 processes will be No. of cropping
the total; change in
discussed along with cycles/year
any of the 6 factors
these if needed)
Supply to will lead to change in
wholesaler output. Units of crops/unit field
area (Cropping density)

Supply to
retailer Productivity factor

Recommendations
• Increase penetration with counter offers and schemes
• Give away indirect distributor inputs to increase retailing

Tips / Suggestions
• Declining sales problems can also be separated into internal and external issues
• Once the problem is identified to be in the publicity and advertising part, including word of mouth publicity is especially critical

(C) Consult Club, IIM Ahmedabad 2018-19 82

Unconventional case- Reducing turnaround time -Interview Transcript

This case focusses on the optimization of the logistics of an Indian company. Just imagine a truck So now let me focus on the extra travel time caused by breaks. For the waiting time when passing
delivering goods from Delhi to Mumbai. This currently takes up a substantial amount of time. states, I propose a monthly/yearly pass. Drivers could show this pass, and would be allowed to
The goal of the company is thus to reduce the turnaround time. Basically the firm wants to immediately pass the security. For the other breaks, I believe that sleeping is the primary driver of
reduce the amount of time the truck spends on the road. How would you go about solving this the additional traffic time. To solve this problem, the company could rotate drivers. This can be done
case? in 2 forms. Either, the company could use 2 drivers per truck or establish certain locations where
Ok, let me start off by estimating how much time it would take from Delhi to Bombay on the drivers would switch. Additionally, the firm could give its drivers prepacked-food to reduce the need
road. To do this I will first estimate the distance between the 2 cities. I know that the flight time for breaks.
is around 2.5 hours and that a plain has an average speed of 800 kilometers per hour. The Excellent suggestions. It was nice interacting with you. Thank you for your time.
distance is therefore approximately 2000 kilometers.
Now that you know the distance, how would you proceed with the case?
So what I would do is, I would split the travel time into 2 components. On the one hand the
travel time consist of the time on the road and on the other hand it consists of breaks. When it
moves it operates with an average speed of 35 km/hour. However, the average speed depends
on the type of road, the route and on traffic. The breaks are caused by numerous factors. We can
split this into primary needs and other issues. Primary needs concern bathroom breaks, as well
as breaks for eating and sleeping. With the other issues, I refer to the waiting time caused by the
need to fill out paper work when passing states.
Ok, so you now understand what variables affect the travel time. What kind of measures would
you propose to reduce the turnaround time?
Let me start off with the measures with which I can improve the average speed while driving.
One option is to set-up a new traffic schedule, where we take into account the rush hours and
avoid them. Do you maybe have information on when the drivers usually depart and arrive on
their destination?
They usually leave around 7.30 and will be on the road throughout the day.
Ok, so we could adjust the drivers schedule to ensure that the driver passes the major cities
during night time or during non-peak hours. This would result in a higher average speed and thus
a faster turnaround time.
That is fair suggestion. What else?
One other issue could be the fact that the truck drivers might not be aware of traffic and
construction works. To overcome this problem, I suggest to provide all truck drivers a mobile
phone with Google Maps. Google maps would always indicate the fastest route and drivers are
hence expected to deliver the goods in a faster time
I agree, what about the breaks. Are there things the company could do to limit the time spent for
breaks

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Unconventional case- Reducing turnaround time

You have been approached by the CEO of a company in India. The client asks you to come up with ways to lower the turnaround time of its trucks
between Delhi and Mumbai

Interviewee Notes Case Facts Approach/ Framework

• Contingencies are ignored in • Truck driver travels from Mumbai to
the case New Delhi Reduce
• Truck drivers have to fill in turnaround time
paper work when passing
states
• Assume that there are 2 Time driving Breaks
types of road: Highway and
city-roads

Controls when
Traffic Type of road Route Primary needs
passing state

Toilet
Food Sleep
Non peak hour breaks
scheduling

Pre-packed Driver Monthly

Implement Google
food rotation plan subscription to
Maps: Fastest route
pass security

Recommendation
• To reduce the turnaround time, the firm can implement measures that affect either the time of driving or the length of breaks. Possible measures include the adoption of a
new transportation schedule where peak hours are avoided, a driver rotation plan to minimize the amount of breaks, and the use of pre-packed food to make food-breaks
unnecessary. The company can provide drivers with mobile phones with maps to ensure that drivers follow the fastest route
Interview Summary
The interviewer wanted the candidate to identify the major drivers of the turnaround time. The interviewee was then expected to come up with well-reasoned, logical and
solutions that would lower the turnaround time
Observations/Tips/Suggestions
When confronted with unconventional cases the interviewee should remain calm and define a structured approach to go through the numerous steps

(C) Consult Club, IIM Ahmedabad 2018-19 84

Unconventional case- Risks of Oil transportation company- Interview Transcript
Your client is a transport company, which has been offered a contract to transport oil for an oil rig There might be an increase in the transportation costs for our client, or the oil prices might decrease.
company. We need to decide if it should take the contract or not. If our contract has a variable component that is impacted by the prices, then we might be facing
Okay. Is our client specifically into oil transport, or are the transportation areas diverse? reduced revenues because of this. Also, in case we are purchasing the ships, we might face cost
No, our client is not into oil transport right now. It is diversified in terms of what it transports. problems if the client backs out.
Okay. How long is the contract for? What’s your solution to this problem?
The contract is a long term one, and will last for approximately 15-20 years We can try to sign futures contracts, and fix the charges within a certain range, in order to ensure
that we are not adversely impacted by a price fall, that is, our downside is minimised. Similarly, we
Okay. Where is the oil rig company located, and where is the customer located? can pass on prices to the customer to an extent in case of transportation cost increase. To handle the
The oil rig company is located in the Middle East, and the customer is located in the USA. purchasing of ships, we can choose to lease the ships till we get confirmed contracts from other
clients as well. Short term leases would be the best option. Additionally, we should include provisions
Alright. Does the client own any ships that might be suitable for this purpose? for compensation in case of cancellation of the contract.
No, the client doesn’t currently own any suitable ships. They will have to purchase new ships to do Okay. What are the labour related risks that we might face? Additionally, please provide solutions
the job. with the problems.
Okay, so that is a large initial capital expense. Can these ships be used elsewhere? Okay. We have to employ highly skilled labours, as any issues with handling might lead to oil spills,
No, these ships can be used only for this purpose that will lead to economic losses as well as a hampering of our client’s reputation, besides causing
In that case, the large capital expense would be justified only if the long term returns are good environmental destruction. This might be a high cost factor, and hence the client could have training
enough to cover the costs. Are we expecting any other contracts of this nature? programs in case they land more oil contracts.
Yes, we expect that we shall get more contracts in the future, as the demand for energy in these Alright. Are there any other risks that you’d like to look at?
areas is increasing. Yes. There are a few general risks that the client might face. First, we should look at the ship’s
Okay. Now I would want to look at the long-term profits for the company. Do we have any data for occupancy, and see if they’re being optimally utilised in transportation. Additionally, in the contract
expected profitability? structure, we should ensure that there is no exclusivity clause, and that the requirement of
deliverables is within our reach. Finally, we might also want to look at the entry/exit barriers in the
No, we don’t have the numbers for the profitability. We would like you to assess the risks market, since if it is a lucrative market with a low entry barrier, we might face competition in future
associated with the contract. contracts.
I’d like to segment the risks down bucket wise. According to me, the company faces geopolitical Okay, that seems comprehensive enough. Thank you.
risks, economic risks, labour related risks and general risks. Does that cover the risk areas of the
client? Additionally, is there any specific bucket that you’d like me to focus on?
Yes, you may proceed further with these risk buckets. We don’t want you to focus on a particular
risk bucket, just give a general analysis of the risks faced by the company.
Okay. In the geopolitical risks, the company may face trade embargoes in case there is an unrest in
the region, as the Middle East is a very sensitive region. Additionally, the change in the tax laws in
either of the countries might lead to extra costs.
How do you plan to solve this problem?
In case of trade embargoes, we might look to source the oil moving to the USA from another
country, and use land routes to cover the deficit in that region. For tax laws, we can include
provisions in the contract to ensure that the additional cost is passed on to the customer.
Okay, please proceed further with the economic risks.

(C) Consult Club, IIM Ahmedabad 2018-19 85

Unconventional case- Risks of Oil transportation company

Your client is a transport company, which has been offered a contract to transport oil for an oil rig company. We need to decide if it should take
the contract or not.

Interviewee Case Facts Approach/ Framework

Notes • Client is a transportation
company with no prior oil
• Qualitative case, no
experience
numbers provided • It is facing cost issues
• Instead of focussing on Geopolitical Risks Economic Risks Labour Related Risks General Risks
with more than one beer
one specific issue in product
depth, candidate was
required to cover a Increase in Need to employ
Trade embargoes Low ship occupancy
transportation costs highly skilled labour
breadth of issues

Variable component Sol: Develop a Exclusivity clause in

Sol: Re-routing via training program to
Asian countries on oil prices contract
reduce hiring costs

Sol: Sign futures High requirement of

Tax law change contracts to fix price deliverables

Sol: Contract High capital Sol: Structure

structured to charge investment contract accordingly
customer accordingly
Sol: Lease ships for Low Market
short periods entry/exit barriers

Sol: Secure long term

contract to avoid
competition

Recommendations
• Ensure that most of the risks are mitigated in the contract signed with the client’s customer
• Minimise capital risks by using short term leases on ships instead of purchasing them

Interview Summary
This is a market risk analysis case where the client is looking to enter into a new opportunity and we need to look into the possible risks associated with the opportunity, and explore ways to
mitigate those risks.

Observations/Tips/Suggestions
• It is important in cases like this to be comprehensive, and hence bucketing the problems into different sections helps in structured thinking
• Most of the risks faced by the client should be problems which have solutions available and can be thought of within the interview

(C) Consult Club, IIM Ahmedabad 2018-19 86

Unconventional case- Declining footfalls in Church- Interview Transcript

Our client, a Church, has approached us with the issue of declining number of church goers. Find There is no issue with any of those activities. Where else could the problem lie?
out why. Ok, there are also various programs which the Church takes up for the society – such as health check-
To clarify, the objective at hand is to find out the reasons for declining church footfalls. Is there any ups and meals.
other issue I need to focus on? That is correct. Due to a budget cut recently, the mid-day meal program in the church was scrapped
No, please go ahead and health check up programs were minimized. Can you suggest ways to improve them?
Is the issue limited only to our client or generally to the entire industry? What was the reason for the budget cut? Was the total budget for the church cut or was it only for
It is only for our client the specific programs and it can be reallocated?
Is the problem seasonal or associated to a particular age group? No, assume that the budget allocated cannot change. What best can you do?
No nothing of that sort. The number of visitors has been declining for over four months now across Ok, we can look at the option of having fundraising campaigns to fund the programs first.
age groups and all age groups. Additionally we can also target HNIs or even corporates to sponsor these programs as their CSR
initiatives.
OK, before proceeding, I would like to structure the issue into possible reasons. Any change in
number of hours the church remains open, accessibility to the church due to road or traffic, new Sounds good. That will be all. Thank you.
church in the vicinity or lastly, reduced inherent demand to go to church will lead to a decline in Thank you.
number of church goers
There is no change with the working hours or accessibility. Explore the reasons why there is a
reduced inherent demand
Primary reason to visit a church is religious.. Has there been any issue with the authenticity of the
church programs recently leading to bad publicity?
No
Additionally, there are also weddings and obituaries and tourist visits which happen in the Church.
If aesthetics of the Church are affected in any way, people might not prefer to have weddings
there. Even tourist visits will be reduced. Obituaries will be affected by possible closure of
cremation facilities nearby.

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Unconventional case- Declining footfalls in Church

Our client, a major church, is facing a decline in number of visitors. You have been approached to find a solution to the problem.

Interviewee notes Case Facts Approach/ Framework

• Reduced inherent demand • Declining number of
• No aesthetic issues, similar visitors
tourist numbers • Limited to our client
• No change in weddings and • No diversion to a new
obituaries church; no accessibility
• No decline for religious issue Visitors to a
reasons church

New Church in Number of Inherent

Accessibility
vicinity operation hours demand

Religious Weddings, Meals, Health

Tourists
reasons Obituaries Check up

Recommendations
• Increase fund raising initiatives
• Tie ups for corporate / HNI sponsorships

Tips/suggestions
• Understanding the reasons for reduced inherent demand is critical and tends to be overlooked while looking at external factors.
• Can also be done by dividing the reasons into internal and external factors

(C) Consult Club, IIM Ahmedabad 2018-19 88

Unconventional Case– Political party in LS elections –Transcript

You’re Prashant Kishore. Your client is Rahul Gandhi and he’s asked you to come up I will use the leader’s image to bring the party on board. Then I will ensure consistent top
with a strategy to win the 2019 Lok Sabha elections. How would you go about it? down messaging to the state cadres. I will set up state-wise units and allocate responsibility
I would first like to know if I’m targeting 272 seat by myself or whether I would need to monitor our voter access/penetration metrics and see if any local modifications need to
coalition partners to get there. Based on that, I would craft a message (state-specific) that be made to our message
lets me get me the required following and votes How will you manage the campaign economics?
He is more interested in knowing areas of focus as opposed to a detailed action plan That brings me to the last part. I will identify big business houses and create a pitch for
In that case, my plan would be look at different aspects of running an election campaign. them. I will reassure them about how their sector is going to benefit from my government. I
I would look at playing with the anti-incumbency factor, getting a strong central will keep keep reviewing that list continuously to see which organizations we need to make
leadership figure, driving the poll message to the state cadres and coming up with the more effort with and where we’re getting traction from
money to do all this Thank you. That will be all
Okay this looks fine. Can you elaborate a bit more on all these points?
I would start by positioning our party as the change this country needs after 5 years of
costly hits and misses. We will need a strong message that challenges the present
government on their biggest failures (demonetization, lynchings, fuel prices etc) to
capitalize on anti-incumbency and help us with the public sentiment
What else will you look at?
Then I will look at bringing a central leadership figure to drive this message through
(similar to BJP in 2014 with Modi)
Who will that central leadership figure be?
I will carry out a grassroot level survey to identify a party leader who unites the party
cadre and who enjoys a high public approval
How will you drive this message?

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Unconventional Case – Political party in LS elections

Poll strategy for Congress in 2019 LS elections

Interviewee Notes

• Identify relevant factors to devise an

appropriate poll strategy
• Identify relevant stakeholders to drive Key action points
elements of this strategy

Strong leadership Campaign

Clear message State cadre
figure finance

High Consistent
Target internal messaging Approach
critical and and big business
failures external continuous houses
approval reviews

(C) Consult Club, IIM Ahmedabad 2018-19 90

 Data – Business Expansion – Telecom Video Project

You have been approached by the Chief strategy officer (CSO) of a telecommunications service provider for advice on options to
improve the economics and performance of it’s recently introduced video strategy

Interviewee Notes Case Facts Miscellaneous

• Focus in on client’s options • Business Situation Information
to quickly gain scale in • Our client is an integrated wireline and wireless telecommunications Client’s subscribers 50 Million
video services services provider that recently began offering wireline video services
Buildout costs $1500/household
• Analyze the benefits and in a portion of its geographic footprint in response to competitive
pressure from cable operators offering triple-play bundles with video, Programming cost 25% above
deficiencies associated
broadband and voice services. competition
with each option • Thus far, complexity, technology and cost issues have limited the
• Appropriate the value of rollout and adoption of this service and reduced our clients ability to Installation cost $500/new subscriber
a effectively counter the competitive threat. Some terms key to
video subscriber, along understanding the client are as follows: Video ARPU $75/month
with the incremental • Video offerings: Our client currently offers video services across its Triple play ARPU $120/month
value of a triple play wireline footprint in partnership with a national satellite operator
(DBS); the satellite operator is the largest source of new subscribers to % of new video subscribers who take
subscriber 90%
• What is the value of scale our client’s wireline geography. triple play
• Buildout costs: Cost of putting in place the delivery infrastructure
in video to the client? that must be incurred before service is delivered to that % of triple play customers who churn relative to
neighborhood. voice only 50% less
• Programming costs: Cost of procuring and packaging content.
• Installation costs: The cost to connect a subscriber to the delivery
infrastructure.
• ARPU: Average Revenue Per Unit
• Churn: Loss of customers as they switch to other service
providers

Market Information
US TV Client Video Services
Market
Total US Households 116.2 M Client video buildout households passed 31.3 M
Total US TV Households 111.2 M Client total video subscriber monthly churn rate2 2.75%
Total US MVPD Subscribers1 (HH) 98.0 M Client Consumer access lines 36.4 M
MVPD Penetration in TV HHs 88% Annual change in client Consumer access lines -4%
Total Triple play Subscribers 9.7M
Competitor programming cost per subscriber/month = $20.63
1. MVPD = Multichannel video programming distributors; MVPD subscribers pay a monthly fee to a MVPD provider (e.g., cable company, satellite
company)
2. Video subscriber monthly churn = Total disconnects for the month / average subscribers for the month

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 Data – Business Expansion – Telecom Video Project – Interview Transcript

What are your client’s options to quickly gain scale in video services?  Contribution per Month
The client can look out for both organic or inorganic growth options, with preference to inorganic • Monthly Revenue = $75
due to the desire to acquire scale rapidly • Monthly Service programming cost = $20*1.25 = $25 (Pull 25% from Misc. Info table)
• Contribution per subscriber/month = $75-$25=$50
Can you please elaborate on both these options?  Expected Lifetime
Sure. By Inorganic, I meant to acquire current satellite distribution partner, cable operator (e.g. • Annual Churn Rate=2.75%*12=33%
Comcast), or disruptive competitor (e.g., Vudu, Veoh, etc.). While the organic strategy can involve • Expected life in years=1/33%=3 years
Increasing the speed of video build out/rollout schedule for client video offering and/or offer  Lifetime Value
significantly lower promotional pricing for video services to increase penetration in available • Installation Cost = $500
markets • Contribution/year = $50*12
What are the benefits and deficiencies associated with each option? Please detail them out. • Cost of Capital: NOT PROVIDED – Should make an assumption e.g. may choose 10% for easier
calculations
 Acquire current satellite distribution partner: • DCF = -$500 + $600 + $600/1.1 + ($600/1.1*1.1) = -$500 + $600 + $545 + $495 = $1,140
• Benefits: provides a large number subscribers quickly, national footprint, expanded footprint
to new geographies and savings on cost of installation
• Deficiencies: price, potential loss of distribution from other telcos, integration challenges (not
wireline) Makes sense, on another note additional assumptions could have been made regarding other costs
 Acquire cable operator: not provided (e.g., cost of sales, cost of care, etc.) that would alter the lifetime value
• Benefits: expands footprint to new geographies, wireline video offer calculation. But, we are good with your explanation.
• Deficiencies: price, potential mismatch in geographic coverage, savings on cost of installation So, moving on can you try figuring out the incremental value of a triple play subscriber?
 Acquire disruptive competitor:  Incremental life of triple play customers
• Benefits: lower price, national coverage, rapid roll-out • Annual churn rate of triple play customers = 2.75%*.5*12=16.5%
• Deficiencies: may not be considered a true substitute to traditional video services, may require • Expected life in years = 1/16.5% = 6 years
higher speed connections Incremental life of triple play customers = 6 years – 3 years = 3 years
•
 Rollout owned service faster:  Incremental value due to triple play
• Benefits: lower operating costs due to one network / optimal network design • Incremental lifetime value = (600/1.1^3)+(600/1.1^4)+(600/1.1^5) = $450 + $410 + $373 = $1,233
• Deficiencies: time to market, proof of success at scale • Adjust for 90% triple play = 90% * 1,233 = $1,110
 Lower pricing:
• Benefits: increase penetration in target markets, rapid implementation (only in areas where
service currently offered)
• Deficiencies: margin implications, devaluing service in customer perception, risk of churn when Any thing else, that you may considered as incremental value?
prices rise, competitive response
The value drivers related to scale can be summarized as :
• On another note, getting people to sign up for triple play if they currently have nothing might • Increased bargaining power with video programmers
be even more expensive than converting the households currently with MVPD
• Retention benefits from triple play subscriptions leading to fewer access line losses
That was a good take. Moving on, how would you estimate the value of a video subscriber? • Faster realization of video revenue streams
We can do it by lifetime value analysis. I’ll start it by calculating contribution per month per
subscriber and the corresponding expected lifetime Any thing else, that you may considered as incremental value?
Sounds good. Can you please walk us through your calculations? As a part of our implementation strategy, I would like to assess our technical knowledge, ability to
attract personnel, availability of capital and grid accessibility. Is there anything else I should
consider?
Please try quantifying some of these drivers.
Value of scale can be estimated as follows:
• Programming cost benefit: $5 * 12 months = $60 per subscriber per year [$5 is difference
between estimated $25 programming cost and $20 cost for competition]
• Retention benefits from fewer access line/broadband losses: $45*12 = $540/retained
subscriber/year [$45 is the difference between the $120 and $75/month ARPU]

That’s good, thank you

(C) Consult Club, IIM Ahmedabad 2018-19 92

 Data - Profitability – Telecom Market : Interview Transcript

How would you approach identifying the source of our client’s lagging financial performance?  Market 8
• Revenue from ARPU = 1,200,000 X $45 X 12 = $648M
I would break down the various sources of Revenues and Costs to identify the factors that are • Device Revenue = (1,200,000 X 20%) X $100 = $24M
causing decreasing profitability. I will analyze at individual market level rather than at national level, • Total Revenue = $648M + $24M = $672M
given the lack of success of national level initiatives in the past
That’s Great. Now please have a look at Exhibits – 4 & 5 and calculate the costs for those same
Can you please elaborate on both these options?
markets? What are the profits by market?
Sure. Total Cost has three cost components; Customer Acquisition cost, Operations cost and Store cost
1. Revenue - I shall break it into components using multiple criteria like Recurring vs One-Time • Customer Acquisition cost = Cost per New Subscription X No. of New Subscriptions
revenues and those revenues arising from existing customers vs those coming in from new • Operations cost = Annual network maintenance + (Marketing spend X % for market) + (G&A
customers. spend X % for market)
2. Costs – Break Costs into its components, Fixed Costs and Variable costs and further break it • Store Cost = No. of stores X (Personnel cost + Rent). Is there data available on rent for the store?
down into Cost to acquire and Cost to serve.
Consider Rent per store at $70K per store. Please calculate the total costs and profits for each market for
We could also leverage competitor benchmarks to identify areas in which client is underperforming
year 2013?
in the marketplace for different markets and thereby suggest methods to increase revenue or
 Market 4
decrease costs or both.
• Customer Acquisition Cost = $250 X 50K = $12.5M
Our client decided to conduct a market-level performance analysis, and has provided you with the data
• Operations Cost = $75M + ($250M X 15%) + ($1B X 5%) = $162.5M
(Look at Exhibits – 1,2). What trends do you observe?
• Store Cost = 50 X ($450K + $70K) = $26M
• Markets 3 and 8 have a large population and the client has a higher share with a low level of • Total Cost = $12.5M + $162.5M + $26M = $201M,
competition. They seem to be driving a lot of revenue. Indicates they are good to focus on and to • Profit = $94.5M - $201M = -106.5M
drive more from those markets.  Market 5
• Market 2 is fairly insignificant, can ignore • Customer Acquisition Cost = $300 X 75K = $22.5M
• Market 4 has high growth potential – Relatively higher number of new subscribers, strong • Operations Cost = $50M + ($250M X 5%) + ($1B X 10%) = $162.5M
market growth from 2010 and low competition level • Store Cost = 100 X ($550K + $70K) = $62M
• Market 5 is big, has smartphones and high Revenue per Subscriber, but is competitive and the • Total Cost = $22.5M + $162.5M + $62M = $247M,
client’s network isn’t great. It may be an opportunity • Profit = $278M - $247M = 31M
• Smartphone tends to be tied to higher ARPU. Better network where competition is low.  Market 8
Based on your analysis, the client has identified three key markets to focus on. Please calculate the • Customer Acquisition Cost = $200 X 250K = $50M
annual revenue for markets 4, 5, and 8. • Operations Cost = $75M + ($250M X 35%) + ($1B X 35%) = $512.5M
• Store Cost = 170 X ($450K + $70K) = $88.4M
• Total Revenue = Revenue from ARPU + Device Revenue
• Total Cost = $50M + $512.5M + $88.4M = $650.9M,
• Revenue from ARPU = Subscribers X (ARPU X 12 months)
• Profit = $672M - $650.9M = 21.1M
• Revenue from Devices = (Subscribers X % buying devices X Average Device Price)
• Is there data on Average Device Price? After the market segmentation, client determined that they have 2 markets that are profitable but have
Average Device price across the markets is $100. Please calculate the total revenues for year 2013 a declining subscriber base. What would you recommend the client in order to make sure profitability is
maintained and/or grown?
 Market 4
• Revenue from ARPU = 150,000 X $50 X 12 = $90M • Recognize that revenue needs to be prioritized to improve profitability given declining subscriber
• Device Revenue = (150,000 X 30%) X $100 = $4.5M base
• Total Revenue = $90M + $4.5M = $94.5M • Suggest expansion of subscriber base through targeted marketing
 Market 5 • Identify opportunities to grow sales through upsell (e.g., try to get everyone on smartphones and
• Revenue from ARPU = 400,000 X $55 X 12 = $264M the highest available data plans) and cross-sell (e.g., other non-mobile products (cable from
• Device Revenue = (400,000 X 35%) X $100 = $14M parent company, content partnerships) and adding other family members or devices to the
• Total Revenue = $264M + $14M = $278M contract

(C) Consult Club, IIM Ahmedabad 2018-19 93

 Data - Profitability – Telecom Market

You have been approached by a Regional Wireless Service Provider who is facing declining profitability over the last few years due to strong
competition from larger companies to identify an approach to reach improved profitability across their footprint
Interviewee Notes Case Facts
• Focus on various market segments and their profitability • The client’s past efforts to improve performance focused on national-level initiatives in marketing and customer
• Analyze the factors associated with profitability for each market experience, but saw no meaningful improvement in their financial metrics
• Look at various options to boost revenue while reducing costs to be able to • Client operates in 8 US metropolitan areas. Market metrics of these 8 areas have been provided in the tables
increase profitability below in Exhibits - 1 and 2.
• Various Costs incurred by the company are provided in Exhibits – 3 and 4.

EXHIBIT – 1: Summary Metrics by Market

Network Quality (1 %
of All Subscribers that
Avg. Revenue per
Market Market Population Market Share # of Stores Buy New Device During Smart phone % Level of Competition in
Subscriber per Month Low – 10 High) Market
Year
1 3.3M 14% $55 125 5 25% 60% Strong
2 0.35M 5% $35 20 3 20% 35% Moderate
3 2.9M 32% $45 170 9 15% 45% Low
4 1.9M 7% $50 50 7 30% 50% Low
5 4.0M 10% $55 100 2 35% 65% Strong
6 1.2M 18% $40 50 4 25% 50% Moderate
7 1.3M 12% $45 50 5 25% 55% Moderate
8 4.9M 24% $45 170 9 20% 40% Low

EXHIBIT – 2: Subscribers by Market over Time EXHIBIT – 3: Summary Costs by Market EXHIBIT – 4: Marketing and G&A Spend
Breakdown by Market
New Avg. Annual Cost to client
Market Subscribers in Subscribers in subscribers in Marke Personnel Costs per New Annual Market Marketing Cost G&A Cost
2010 2013
2013 t per Store Subscriber network cost

1 450K 400K 150K 1 $500k $300 $25M

Total Cost $250M $1B
2 20K 20K 5K 2 $500k $200 $10M 1 5% 12%
3 800K 1000K 150K 3 $400k $250 $75M 2 0% 3%
4 75K 150K 50K 4 $450k $250 $75M 3 25% 25%
4 15% 5%
5 600K 400K 75K 5 $550k $300 $50M
5 5% 10%
6 400K 200K 40K 6 $500k $250 $25M
6 5% 5%
7 250K 150K 30K 7 $450k $250 $25M 7 10% 5%
8 1,100K 1,200K 250K 8 $450k $200 $75M 8 35% 35%

(C) Consult Club, IIM Ahmedabad 2018-19 94

 Data - Mergers & Acquisitions – BevCo : Interview Transcripts

What is the most suitable approach for assessing BeerCo’s value? What operational considerations should BevCo keep in mind when standing up this new business unit?
• Market based approach: specifically M&A valuation using multiples is the most suitable approach • People: BevCo should understand what people will come over with the acquisition (in this case, all
for assessing BeerCo’s value. Two or more approaches are necessary to arrive at fair value range brewery operations personnel, no corporate management). BevCo will then need to develop the
organization chart, reporting relationships, and roles and responsibilities for the organization.
What purchase price would you estimate based on current financial projections? (using M&A • Process: BevCo will need to establish management processes for coordinating amongst operations,
information provided by the client’s bankers, and considering BeerCo’s revenues to be $1100M and finance, procurement, and logistics personnel as well as related functions such as sales and legal.
EBITDA at $240M. Processes need to address key inputs, deliverables & metrics to drive compliance & improvement.
• Transaction multiples from the historical M&A comps chart can be used for valuation, and we can • Technology: BevCo should conduct an assessment of technology and the migration plan with existing
use the appropriate comps from the chart (#2-#5 are for appropriate since they are in beer systems. BevCo should then identify gaps, determine critical requirements, and develop a strategy for
market & Park Ave is too small to be included). investing in new technology systems that will enable them to achieve expected benefits.
• Need to calculate both revenue and EBITDA multiples, and use them with BeerCo Rev/EBITDA to Additionally BevCo can also
get a valuation range . • Conduct a Gap Assessment of people, processes, and tools to leverage from BevCo to the new BeerCo
• We should also recognize that these are transaction comparables, so they already include the • Address Org Structure and required staff skill and leadership for running the business
impact of synergies. • Training: Identify skill requirements and expected capabilities, and develop desired competencies
• However these are very rough valuation estimates, and are highly sensitive to the way EBITDA is • Developing Metrics aligned to driving and managing across both business units
calculated • Address Tax implications and Alignment to strategy of deploying key functions (e.g., procurement)
• Pilot new processes and scorecards within the organization to promote adoption and improvement
Transac.
Acq. Target's Target Rev. ($M) Target Transac. Rev EBITDA As a part of optimizing operations, BevCo would like to better understand BeerCo’s supply base. In
Price Segment EBITDA ($M) Multiple particular, should BevCo continue to purchase cans from the existing supplier or open a new production
Multiple
Beer Market Average 688 Beer 380 67 3.0x 14.3x facility?
Beer with Answer Key 2014 2015 2016 Total
Beer Market Average 880 appropriate 501 88 1.78x 10.5x
(Excluding Park Ave) Number of Cans 500M 700M 900M 2,100M
size
Only Craft Beer 630 Craft beer 333 53 1.80x 11.4x Build Scenario Costs: $125M ($100M + $85M($50M +
Average $95M($50M+$45M) $305M
CapEx+Variable Cost $25M) $35M)
Transaction Rev Multiple Transaction EBITDA Multiple Buy Scenario Costs:
Cost per cans $75M $105M $135M $315M
Valuation Range (Overall beer) -$M $3300M $3432M
Valuation Range (Beer with appropriate At what point, if any, would building a new facility be more economical?
$1958M $2520M
size) -$M • When we look at the cumulative costs, year on year, we can clearly see that the cumulative cost
Valuation Range (Craft beer only) -$M $1980M $2736M for Build scenario falls below that of Buy scenario in year 2016

Beyond synergies, what considerations could impact the purchase price? Cumulative Answer Key ($M) 2014 2015 2016

Build Scenario Costs: $125M $210M $305M

• Access to newer customers and/or suppliers
• Access to the vast distribution network and sales routes Buy Scenario Costs $75M $180M $315M
• Established craft beer brands
• • Additionally we can look at financial implications with debt financing for an initial investment, how Op
Access to quality talent
• Regulatory/political reasons etc. costs may effect the bottom line, depreciation/amortization tax implications & overall risk tolerance
• A step further we should also think about physical constraints, including local infrastructure, available
Additionally reasons can be explored that would increase and decrease the price or that is specific to
BevCo or BeerCo to draw conclusions • Overall we can also consider a possibility of a JV instead of acquisition for benefits like: Reducing initial
investments, sharing risk with 3rd party and potential synergies

(C) Consult Club, IIM Ahmedabad 2018-19 95

 Data - Mergers & Acquisitions – BevCo : Strategic Target Assessment

BevCo, a leading international producer and marketer of wine and spirits, has been facing declining revenue and profitability due to shifts in
consumer tastes to other categories such as beer. Due to their limited experience in beer industry, you have been asked to determine if they should
acquire BeerCo and identify integration considerations that need to be addressed.
Interviewee Notes Beer Co:
• During acquisition, profitability & • BeerCo’s operating margin is greater than BevCo’s as well as that Recent M&A Activity in the Market
investment required are the most of the industry average
Transac.
important factors, followed by the • BeerCo’s portfolio includes six of the top 20 craft beer brands in Target
Acq.
Segment
Rev. EBITDA Transac. Rev
EBITDA
the US and a coveted portfolio of premium brands Price ($M) ($M) Multiple
market competition and the growth Multiple
rate • Lager product line demonstrates the largest top line growth but
On the Rocks 1,000 Margarita 641 103 1.6x 9.8x
• BevCo should keep in mind lowest operating margin
• Its lower margin is potentially due to the use of Cans vs. Glass Craftbev Co 990 Craft beer 510 80 1.9x 12.3x
operational considerations when
integrating BeerCo – i.e., how to and the associated COGS difference Park Ave. 112 Beer 17 4 6.5x 25.9x
optimize the integration of people, • To improve profitability of the Lager line, reducing variable cost Mark North 1,380 Beer 836 159 1.7x 8.7x
process, and technology. could be considered as a key lever
Epic MJ 270 Craft beer 156 26 1.7x 10.4x
• To improve profitability of the Lager
line, reducing variable cost could Market Situation: Won Winery 130 Wine 96 13 1.4x 10.1x
be considered as a key lever • Wide range of wine, beer and distilled spirits by brand and by Jane Co. 280 Spirits 175 34 1.6x 8.1x
type.
General pointers: • Demand is relatively inelastic & Premium alcoholic beverages are
• BevCo should keep in mind growing in popularity like the flavored offerings. Supply Base Data
operational considerations when • Craft beers are popular, priced higher and are profitable, as long
integrating BeerCo – i.e., how to as the cost of their rich ingredients is covered. Build Own Facility Status quo
optimize the integration of • Producers invest large amounts of cash in marketing and
advertising. Debt burdens have been growing in recent years as • Number of cans in 2014 is 500M, increasing by • Number of cans in
people, process and technology 2014 is 500M,
• companies aggressively expand through acquisitions. 200M annually
Making cans from its new facility increasing by 200M
• Gradual consolidation (70% market concentration) from last • Variable costs will be $.05 per can
annually
is more economical than • Initial CapEx of $100M, with additional $25M
purchasing cans from existing decade. CapEx for each 125M volume milestone over the • BeerCo pays $0.15
• Large domestic brands, while still holding the majority of US beer initial 500M (i.e. $25M at 625M and an additional per can to its
supplier starting from 2015 existing supplier
• Profitability & investment sales, are declining as consumer tastes shift to craft brews and $25M at 750M)
required are the most important imports. • Assume no: fixed costs, taxes, depreciation &
• Growth trends in the overall US beer market don’t look very amortization, or cost of capital calculations
factors, followed by the market
competition and the growth rate good whereas growth trends in the US craft beer market are very
• Based on our analysis, we can good, relative to other beer segments as well as to the alcoholic
achieve 5% revenue growth and beverage market overall. Unit Information – Ale (in 2014)
10% total cost reduction through • Other market characteristics (margins, growth rate, competition, Number of units 1000
this acquisition (based on 2014 investment needed) also look attractive for craft beer
financials)”. • Average operating margin is 20% in the craft beer segment. Price/unit $0.91

COGS/unit $0.50

SGA/unit $0.12

(C) Consult Club, IIM Ahmedabad 2018-19 96

 Unconventional Case – Strategic fit/Merger feasibility dilemma
Our client owns one of the largest global card payments networks. As of 2007, the consumer card payments business had reached maturity in
the US and Europe, with stagnation in annual revenue growth. The client has identified a small start-up, currently a provider of payment
service in the e-commerce industry, as a potential acquisition target. You have been called in to evaluate the potential acquisition, and provide
guidance on the integration of these two companies, should the merger occur.
Interviewee Notes Case Facts Approach/Framework
• How should a large •E-Commerce has been identified as a key •Data Requirements
organization such as our growth driver, as the industry has grown at •Some data that can be used to structure analyses includes:
client evaluate this 20% and is expected to grow at a 15% CAGR •information about the size and history of the target; growth rate for the target
acquisition opportunity? over next 5 years. •information about the leadership and culture of the target
• What data would you •PayPal, Amazon 1-Click and Google Checkout •financials about the level of commitment and level of gain, and whether this
need and what analyses dominate the industry, controlling over 50% could even "move the needle" from a growth perspective
would you conduct to of
develop a the market share. Our client’s Senior Executives Assess Strategic Fit
recommendation? feel that they need a capability in E-
• The client does not Commerce, an area where they have Business
Synergies External
have historically lagged. Element
a track record of •The small start-up identified as the potential s Qualitative Growth Options
acquiring and successfully acquisition target has an innovative business Revenue Market Size in Customers Competitiv
aspects
& & Growth core Analysis e
integrating small, model and has grown rapidly. It is a provider Costs
(strategic
Reaction
fit) payments
innovative companies. of micro payments for social networks, which business
• What cultural differences Same Different/
is New
/
will the client have to used to pay small amounts to publishers of Similar
overcome? How would online content and for downloadable
you advise the client to media.
overcome them? •Industry leaders such as PayPal find it inefficient
to manage these small transactions and charge
Recommended Thought disproportionately
Process high fees, making traditional
Fit with existing business: Canonline
a company
paymentsfocused on security and reliability successfully integrate with a start-up focused on peer-to-peer payments, which are
unfeasible.
notorious for fraud? How similar are the business models (i.e. both generate revenues as a percentage of transaction amounts)?
• Overall business case: Growth in target revenues, possible synergies in external settlements, options for cross-selling with existing business, obtaining deep
consumer behavior insights in a segment of current “non-users,” organizational synergies.
• Qualitative aspects: Can the entrepreneurial spirit of a start-up be combined with the client’s behemoth organizational bureaucracy? What will be the keys to
success? (May include holding the company as a separate unit, or giving it complete autonomy for a finite period)
• Customer analysis: Will the combined company serve more customers, or the same customers in different ways? The target’s customers are typically
younger, but may be in households with the client’s existing customers.
• Technology considerations: Is the new technology for micro-payment clearing compatible with the Client’s payment systems, and can they be settled
profitably on the Client’s network given the small size of the transactions (and, hence, small per-transaction revenues)?

(C) Consult Club, IIM Ahmedabad 2018-19 97

 Guestimates

Brief Description and Proposed

Solutions

(C) Consult Club, IIM Ahmedabad 2018-19

 Guesstimate 1

Estimate the demand for Gold flake cigarettes in Mumbai

Interviewee Notes Case Facts Approach/ Framework

• Begin by understanding total • Market share for
market for cigarettes in Mumbai Gold flake in Population of
• Market share for gold flake Delhi is 20%, Mumbai
would be similar to other Bangalore is 22%
20 Mn
metropolitan cities such as Delhi
and Bangalore

Of smoking age Not of smoking age

(75%) (25%)
15 Mn

Smokers (50%) Non Smokers (50%)

7.5 Mn

400 days (Year 20 Cigs per

1 pack a day
approx.) pack

7.5Mn * 400 * 20 = 60,000 Million Cigarettes a year

Approx. market share of Gold flake = 20%
Demand for Gold flake = 20* 60,000 Million = 12,000 Million Cigarettes a year

Interview Summary
The candidate used good enough assumptions to get to an approximate number of cigarettes consumed in Mumbai in a year, and correctly compared the market shares of other metropolitan
cities to determine market share of Gold flake in Mumbai

Observations/Tips/Suggestions
• Be careful with numbers; silly calculation mistakes could be harmful.
• First create structure, then put numbers to it.
• Make reasonable assumptions and clarify with interviewers at each stage.

(C) Consult Club, IIM Ahmedabad 2018-19 99

Guesstimate 2

Estimate the number of Crows in Ahmedabad

Interviewee Notes Approach/ Framework

• Since crows will be flying
over different areas during
the day, it would be difficult Ahmedabad Starting Assumption: Ahmedabad Area : 500 (25x20) sq. km
to determine total number (500 sq. km)
of crows.
• Assume no crow leaves or
enters the city (or assume
number of crows during the Low Forest Cover Medium Forest High Forest Cover
day to be the same as during (60%) Cover (30%) (10%)
the night) Number of Crows in Ahmedabad
• At night, crows rest on trees.
Try to find out the trees in Low Forest Medium Forest High Forest
Area Type
different regions of Trees / area Cover Cover Cover
Ahmedabad, and using this
data, guesstimate the Percentage Area 60% 30% 10%
number of crows. Trees / (100x100 sq. m) 10 20 50
Nests / tree Nests / Tree 0.2 0.1 0.1
Crows / Nest 4 4 4
Number of Crows
(region-wise) 240,000 120,000 100,000
Crows / nest
Total Crows 460,000  

Suggestions
• This is an interesting guesstimate; take some time to create the structure, get interviewer’s approval for your logic, and then possibly put numbers
• Make reasonable assumptions, clarify with interviewers at each stage

Interview Summary
The candidate brought structure to an out-of-the-box question.

Observations/Tips/Suggestions
Candidates should not get flustered when faced with unconventional questions. It is ok to take some time to work through the question. Take the interviewer through your thought process at
every stage

(C) Consult Club, IIM Ahmedabad 2018-19 100

 Guesstimate 3

Estimate the annual revenue of a multiplex

Interviewee Notes Case Facts and calculations

• Only cover the most
substantial revenue streams Average daily revenue/screen Revenue streams
• The footfall will depend on 1. Ticket Sales Revenue per day= (Average
whether it is a weekday or footfall per day)*(Average price per show)*(No of
weekend shows/day)
• Price can also be considered =200*250*4=Rs 2,00,000 Ticket sales Parking Food & Beverage Advertising
different for weekday and 2. Revenue from parking per week:
weekend, here although (Average footfall per show)*(% people using
parking)*No of shows/day)* Digital
average price has been taken (Average ticket size) Average Average Billboards
No of Ads
• Assume that the revenue 200*0.5*4*50=Rs 20,000 footfall per price per
show show shows/day
from advertising primarily
comes from billboards and 3. Advertising Revenue= Assuming it is 10% of
digital ads between movies. the total revenue
4. Food & Beverage= (Average footfall per Weekdays Weekend (Fri-
• This is average revenue per
show)*(% people buying)*No of shows/day)* (Mon-Thur) Sun)
screen, can be multiplied by (Average ticket size)
number of screens to obtain 200*0.5*4*150=Rs 60,000
revenue of multiplex Weekdays Weekends
Average daily revenue/screen =Rs 4.2lac Seating Capacity 300 300
Average 60% 75%
Total Revenue = Average daily occupancy rate
revenue/screen*No of screens*No of days Average footfall 180 225
=4.2*4*300 = 5040 lacs =50.4 Cr
(Taking into account some days when the footfall will
be extremely low) Average footfall per day = (180*4+225*3)/7~200

Interview Summary
This is a guestimate case where the interviewee should quickly identify the most important revenue streams before laying down a structure and solving the case

Observations/Tips/Suggestions
• Should first create structure, then put numbers to it
• Make reasonable assumptions, clarify with interviewers at each stage
• Be prepared to justify your assumptions at each stage

(C) Consult Club, IIM Ahmedabad 2018-19 101

Guesstimate 4

Estimate the value of a coffin maker’s business in Ahmedabad

Interviewee Notes Approach/ Framework

• NPV analysis
• 1% of Ahmedabad assumed Profits
to be Christian Estimating quantity
• Life expectancy assumed to
be 70 and population growth
rate of Christians assumed to Population (60,00,000) Revenues Costs
be 0%
• Only 3 coffin makers in
Ahmedabad (info received
from interviewer) so market % Christian (1%) = 60,000 Price Fixed costs
share assumed to be 1/3
• FC and VC provided by
(Rs. 10,000) (Rs. 4,00,000)
interviewer when asked
• Discount rate assumed to be No. of deaths per year =
10% (chosen for ease of (1/70)*60,000 = ~900 Quantity Variable Costs
calculation and reasonable (300) (60% of price)
since risk free rate is ~7%)
• Profits assumed to stay
Market Share = 1/3
constant into perpetuity

NPV = (10,000*300 – 4,00,000 - .

6*10,000*300)/0.1 = Rs. 80,00,000
Quantity = 300

Suggestions
• Make reasonable assumptions, clarify with interviewers at each stage

Interview Summary
• The candidate had a good logical structure

Observations/Tips/Suggestions
• This guesstimates tests the basics of finance (NPV, PV of perpetuity)
• Common mistakes include not account for the % of population that is Christian (assuming everyone that dies needs a coffin) and errors in calculating no. of deaths

(C) Consult Club, IIM Ahmedabad 2018-19 102

Guesstimate 5

Estimate the monthly electricity consumption (residential) in India

Interviewee Notes Case Facts Approach/ Framework Electricity

• Clarify end-markets to be • NA Electricity
included (residential /
commercial) because
consumption rates are very
different in these segments. In Residential
Residential Commercial
Commercial
this case, focus only on
residential.
• Within rural segment,
Urban
Urban Population
Population == Rural
Rural Population
Population ==
interviewee should consider 300m
300m 700m
700m
adjusting for (1) homeless
people and (2) areas which are
not electrified
• Weighing monthly consumption Households
Households == Households
Households ==
300m/4
300m/4 == 75m
75m 700m/6
700m/6 == 120m
120m
by % of households in the
income type and multiplying this
by # of households will give
monthly units consumption Low
Low Income
Income 60%
60% Mid
Mid Income
Income 30%
30% High
High Income
Income 10%
10% Low
Low Income
Income 70%
70% Mid
Mid Income
Income 25%
25% High
High Income
Income 5%
5%

Monthly
Monthly Monthly
Monthly Monthly
Monthly
Consumption Monthly
Monthly Monthly
Monthly Consumption Consumption Monthly
Monthly
Consumption Consumption Consumption Consumption
300 Consumption 1200
1200 Consumption
Consumption 3000
3000 Consumption 1000
Consumption 1000
300 units
units 100
100 units
units 300
300

75m x (60% x 300 + 30% x 1200 + 10% x 3000) = 63,000 120m x (70% x 100 + 25% x 300 + 5% x 1000) = 23,400 units
units
Interview Summary
The candidate clarified the scope of the case (whether to include both residential and urban). Where he did not know, he made reasonable assumptions which he could justify.
Candidate showed awareness of demographic information (rural/urban split, income distribution split)

Observations/Tips/Suggestions
• Be careful with numbers; silly calculation mistakes could be harmful.
• First create structure, then put numbers to it.
• Make reasonable assumptions and clarify with interviewers at each stage.

(C) Consult Club, IIM Ahmedabad 2018-19 103

 Guesstimate 6

To estimate the revenue of tourism in Gujarat in peak months

Interviewee Notes Case Facts Approach/ Framework

• Was required to estimate • Cost per trip =
Market for tourism per
cost per person per bucket Lodging + Travel
peak month
and number of people in + Food +
each bucket Sightseeing
• Usually it’s easier to • Total Revenue =
analyse group costs over (Population x
individual costs Can afford x No.
• Was required to take in India x No. in Couple Groups Family International
several assumptions Gujarat x No. in
• Quantitatively intensive peak month/ Filters Couple Groups Family International
case, required a significant No. of people
amount of breaking down per group) x Population 20mn 110mn 200mn 2mn
into cost per trip Can afford 20% 10% 10% N/A
• Number of marriages Number in India 80% 100% 80% N/A
Number in Gujarat 5% 10% 5% 10%
taken to be 10mn Number in peak month 25% 8.33% 16.67% 25%
• Calculation done for Number of people per group 2 5 5 2
tourists only from urban
Cost per trip/group 11,500 6,000 12,000 20,000
India and abroad Lodging 4,000 2,000 5,000 5,500
Travel 2,000 1,500 2,000 4,000
Food 3,000 1,500 3,000 3,000
Sightseeing 2,500 1,000 2,000 7,500
Total revenue 230mn 110mn 320mn 500mn

Recommendations
• It’s extremely important to know which buckets to consider in this case. Taking too many or too few buckets can lead to large errors
• Make reasonable assumptions with cost per group in each bucket. Lower income groups have less costs, and shall pull the average cost down

Interview Summary
The candidate was required to analyse several buckets to come to a reasonable approximation for the revenue of the Gujarat tourism industry.

Observations/Tips/Suggestions
When faced with guesstimates like these, which require the candidate to go into multiple directions one by one, it helps a lot to take structured notes and highlight important figures, so that the
candidate does not lose track of the final solution in the process of analysing the smaller buckets.

(C) Consult Club, IIM Ahmedabad 2018-19 104

Guesstimate 7

Estimate the monthly mobile data usage (GB) in 2020

Interviewee Notes Approach/ Framework Monthly Data Usage (in GB) by different age groups & income levels
• Divide current population
into Urban and Rural.   Income Low Medium High
Calculate data for only Current Population
Urban population, and (1 billion)
extrapolate for Rural
Age   60% 30% 10%
population using a similar
logic 0-15 25% 0 0 0.5
• In Urban areas, data usage is
dependent on factors like 15-30 35% 0.1 5 6
age group (older generation Urban (30%) Rural (70%)
may not be tech savvy) and 30-50 25% 0.1 2 4
income (lower income
groups might not have
access to smartphones)
>50 15% 0 0 2
• Estimate usage for 2017, and
assuming an annual growth, Age Group Weighted Average (WA) 0.036 0.675 0.353
predict usage for 2020

Total Data Usage Data Usage

Annual
Population (GB) / month (GB) / month
(Sum of WA) (2017)
Growth
(2020)
Income 1.064 300 m 320 m 10% 425 m

Recommendations
• Should first create structure, then put numbers to it
• Make reasonable assumptions, clarify with interviewers at each stage
• Be prepared to justify your assumptions at each stage

Interview Summary
The candidate clarified the scope of the case; and made relevant assumptions wherever necessary. The candidate could have taken whole numbers to simplify the calculations.

Observations/Tips/Suggestions
Should be careful with numbers; silly calculation mistakes could be harmful. Case could have more layers.

(C) Consult Club, IIM Ahmedabad 2018-19 105

 Guesstimate 8

Estimate the daily revenue of an airport

Interviewee Notes Case Facts and calculations

• Only cover the most
substantial revenue streams Revenue airline fee: 5% of the total Revenue streams
• Assume shops pay a fixed ticket fare
and a variable fee to the
airport Revenue from shops:
• The number of flights per Airline fees Parking + lounge Shops Advertising
hour depends on whether it (Fixed fee per shop + % of revenue *
is a rush hour Volume) * Number of shops
• Assume that the revenue fixed fee: Fixed fee Variable fee Billboards
Variable fee
from advertising primarily Advertising Revenue= Meters of check-in
for slot
comes from billboards. billboards * price/meter spaces
• Assume that parking + Small Med Large
lounge are only a minor
Domestic International
revenue stream for airports
and can be skipped. Type Small Medium Large
• Assume that the airline fees Size 1x1 2x2 3x5
primarily come from the Number 500 200 50
Rush [hour]
variable fee for slots. Total Area 500 800 750

Low(7) Med(6) High(11)

Rush hour Low Medium High
Hours 7 6 11
Flights/h 2 6 12
Flights/day 14 36 132

Interview Summary
This is a guestimate case where the interviewee should quickly identify the most important revenue streams before laying down a structure and solving the case

Observations/Tips/Suggestions
• Should first create structure, then put numbers to it
• Make reasonable assumptions, clarify with interviewers at each stage
• Be prepared to justify your assumptions at each stage

(C) Consult Club, IIM Ahmedabad 2018-19 106

 Guesstimate 9

Estimate the yearly revenue of an IPL team

Interviewee Notes Case Facts and Calculations Approach/ Framework

• Only cover the most
substantial revenue streams Revenue advertising: Revenue streams
• IPL revenue only receives a
(Price per m of billboard * length)* Matches
small fraction of the revenue
(35% for home games, 5% 5000*400*7= 1.4 Crore
for away), the rest is paid to (Small shirt ads*Price +shirt sponsor)* matches Price
Ads TV ads Stadium Merchandise
the league Money
• The circumference of a (10*5 Lakh +20 Lakh)*14= 10 Crore
cricket pitch is
Revenue tickets:
approximately 400 meters Shops Tickets
• The probability of winning No. of home matches*Tickets*Ticket price*% of Billboards Uniform
revenue (same for away matches)
the league is the same for
each team (1/8) 7*50k*500*0.35+7*50k*500*0.05≈7CR
• A league season consist of
14 matches Price Money
• Merchandise is only a minor Probability of winning * price money Inter-over Special breaks
revenue stream for an IPL breaks
(1/8) * 5 Cr ≈ 60 Lakh
team, and hence, can be
skipped TV ads (See Framework) Inter-over
Type of Advertisement Special Breaks
Breaks
No. Of slots 40 3
Price per slot 20 Lakh 5 Crore
Total 8 Cr 15 Cr

Recommendations/Solution
Based on my assumptions and analysis I conclude that the yearly revenue of an IPL team is 42 Crore

Interview Summary
This is a guestimate case where the interviewee should quickly identify the most important revenue streams before laying down a structure and solving the case

Observations/Tips/Suggestions
• Candidate should define the structure first before moving to the calculations
• Clearly communicate your assumptions to interviewer
• Only focus on the most important revenue streams. Communicate to the interviewer why you leave out certain revenue sources

(C) Consult Club, IIM Ahmedabad 2018-19 107

Guesstimate 10

Estimate the number of emails flowing though IIMA mail server

Interviewee Notes Approach/ Framework

• Guestimate and was told to
exclude PGPX and other Mails
programs for simplicity.

Academic Administrative SIF Peer-to-peer

PGP 1 : GNB: 10/week * 4 Joos + 6 SPFS/JPNS/day 5 mails per community

=# courses * # students * # Community size (2k) =10/day * 7 * 1000( No ofmember =5*2k
mails/course = 20k/week students) =10k/week
= 6* 450* 3 = 8.1 k/week =70k/week

PGP2:
=# courses* # students * #mails/week
= 30*80*3
=7.2 k/week

Framework Summary
Structured the case into 4 parameters – Academic, Administrative, SIF and Peer to peer.
#mails/course: 2 from Instructor on average and 1 for the quiz notification
Community size: 1000 students + 1000 faculty, academic and other staff.
There will be some other additional external mails which are sent from outside.
Also PGPX and other programs are not taken into consideration.

Tips
Well structured thought process.

(C) Consult Club, IIM Ahmedabad 2018-19 108

 Guesstimate 11

Estimate the total length of barbed wire used in India

Interviewee Case Facts Approach/ Framework

Notes • NA
Total used, land area
• Assume square of India
farmlands
• Find the average
perimeter of each Farmland Residential Industrial
size of farmland (70%) (20%) (10%)
• Barbed wire needed
= perimeter *
number of times the Small Sized Medium Sized Large Sized
wire is wound (30mx30m) (50mx50m) (100mx100m)
• Adjacent farmlands 50% 30% 20%
would be sharing a
common side of
barbed wiring.
• Multiply the total
number with a Perimeter Number of Discount for
factor to account for Times shared sides
how barbed wire is Wound (2)
usually used: circled
through the
perimeter

Recommendations
• Should first create structure, then put numbers to it
• Ask the interviewer if he would like you to focus on all the three branches or just one.

Interview Summary
The candidate was challenged to figure out that the major use of barbed wires is done on farmlands. In the structure, he was asked to ignore the residential and
industrial sector and focus only on the farmlands.
Observations/Tips/Suggestions
Think deeply about the major uses of a product before you begin segmenting a suitable variable. Sometimes it may be hard to identify the major source of use of a
product if you haven’t seen that source yourself.
(C) Consult Club, IIM Ahmedabad 2018-19 109
 Guesstimate 12

To estimate profit made by SBI branch in IIMA Campus.

Calculations Approach/ Framework

• Loans per year ~100; Lifetime – 5 yrs.
• 500 active loans at any point
• Principal Rs.10 lakh (for 20 lakh fee –
averaged over repayment of 5 years) Bank Profit
• Net interest margin – 3%
• Interest income = 500*10*3% = INR 1.5 Cr

• Exchange students – 100 trips/ year

Interest Insurance Forex Fees Less: NPA
• Faculty – 200 trips / year
• Insurance Premium per person – 2000
• ~ 40% commission for per policy
• Fees – 300*2000*0.4 = INR 2.4 lakh Number of loans Net interest margin Loan life and value
Exchange Students
Premium
Average FOREX Defaulters
• Forex – INR 6000 per person (assume and Faculty (300 carried (1 lakh
(500 active) (3%) (5 years, 10 lakh) (2000*40%) (very low, 1 in 500)
trips / year) @6% income)
everyone carries INR 1 lakh worth FOREX)
• Forex income = 300*6000 = INR 18 lakh

• NPA – Total Loss of Principal and Interest –

1 per year
• ~INR 25 lakh

Recommendations
• Understanding the concept of loan life and other bank revenue streams is important

Tips / Suggestions
• Reasonable assumptions were made regarding number of students going on exchange.

(C) Consult Club, IIM Ahmedabad 2018-19 110

Guesstimate 13

Estimate the revenue of a typical post office in India.

Calculations Approach/ Framework

• Major portion of revenue – logistics and
Post office revenue
parcels. Others ignored

• Typical circle of coverage for a metro

post office ~ 2 km radius or 12 km2
• Typical metro area = 500 km2 Logistics and
Account deposit Sale of Forms etc. Co-branding
• Thus, 40 post offices in the metro parcels
• Assume, high volume – 20 and medium,
low - 10

• Two approaches – demand side (number Demand side Supply side

analysis analysis
of transactions) and supply side (number
of counters, utilisation in a day)
• Revenue per parcel ~ 50, neglect any
Number of Post Transactions per Transaction
charges for extra weights etc Hours per day Counters Traffic / Efficiency Hours per day
offices hour capacity / hour

• Total parcels ~20000

• Total revenue ~ INR 10 lakh Traffic High Medium Low Traffic High Medium Low

# PO 20 10 10 # PO 20 10 10

Transaction/hour 80 30 15 Counters 10 5 3

Hours / day 10 10 10 Hourly capacity / transaction 10 10 10

Total 16000 3000 1500 Hours / day * Utilisation 10 * 30% 10* 20% 10* 50%

Total 18000 3500 1500

Recommendations
• Can be approached from either of the demand / supply sides.

Tips / Suggestions
• It is essential to structure the revenue into different streams first.
• Interviewer will automatically guide you to focus only on the stream of logistics and parcels.

(C) Consult Club, IIM Ahmedabad 2018-19 111

Guesstimate 14

Golf balls in the air in an average second in India

Calculations Approach/ Framework

• #golf players : assume only people earning ₹15 lakh and above
will play golf as it is an expensive hobby to pursue. The #people
above that income threshold is around 5 million. Out of these 50 Income eligible players 5 million
lakh, assume 70% live in urban areas and have access to a golf
course
 Out of remaining 3.5 million,1.5 million will be 3.5 million
children and senior citizens. Hence 2 million people
Facility eligible players (urban)
eligible
 Out of these 2 million, assume 50% play any sport
(assumption on basic fitness) Age eligible population 2 million
 The remaining 1 million can play one out of upto 20
sports (cricket, badminton, tennis, swimming etc).
Thus 5% on average will end up playing golf i.e there Population that plays sports 1 million
are 50,000 players
• Frequency of play
 We assume that the average player plays once a Population that plays golf 50,000
month (expensive and time consuming sport)
• Number of hits
 We assume that the average game is one round, 18
Avg # of players/week ~1666
hole
 The average number of hits per game is 108 (18
holes, par score is 4 and everyone hits 2 above par as
players are not professionals)
Avg number of hits/game Number of hits/day # of balls in the air/second
 We assume that he average ball spends about 1
second in the air 108 (18 holes, 4 par, 2 above) 1,80,000 2.08 per second
 Thus the number of ball seconds in the air is ~1,80,000
per day =108*1666 =180000/86400
 The average number of balls/second is 2.08

Recommendations
• This case can also be approached from the supply side. The supply side in this case is the number of golf courses, their average utilization etc

Tips / Suggestions
• It is essential to reverse ladder the population to arrive at the number of golf players. You can clarify your assumptions with the interviewer at all points of time
• Lay out your approach upfront for the interviewer so that if a different approach is to adopted, course correction can happen at the earliest

(C) Consult Club, IIM Ahmedabad 2018-19 112

Guesstimate 15

Calculate the annual market for medical X-ray machines in India

Calculations Approach/ Framework

Illustrative
• Replacement demand
• Calculate the stock of X-Ray machines in
India
• Break India into rural and urban areas
• Estimate bed per thousand people in urban and
rural areas separately and make assumptions
Demand Sources
about average hospital size and #X-Ray machines
per hospital (2.5 for urban and 1 for rural)
• This will give you the stock of X-Ray machines at
hospitals
• Do similar exercise for clinics by calculating the Replacement sources New sources
stock of orthopaedicians in private practice
• Demand: Divide the stock by life cycle to get the 1
year demand for X-Ray machines
• New demand
• Estimate the growth in healthcare expenditure and
use that as a growth rate for hospital bed
availability. Then calculate the number of hospitals
and the number of X-Ray machines/hospital Hospitals Small clinics Hospitals Small clinics
• Differentiate this rate for urban and rural areas
and calculate the new demand for X-Ray Beds/Thousand #Hospitals #Xray Machines Growth (#Number of Total annual market
machines coming from hospitals Machines) (hospitals only)
• Calculate the new demand coming from clinics by : 0.5 4000 (100 4000 (Stock)
(Doctors graduating - #Doctors joining public Rural (800m) beds avg) Replacement Demand : 400 +10% per year (400) 800
sector)*Proportion of Orthopaedicians
• This will give the number of new orthopaedicians Urban 2 4000 (200 10000 (Stock) +15% per year (600) 1600
(400m) bed avg) Replacement demand : 1000
who will join private services every year and buy
an X-ray for their clinic

Recommendations
• Can be approached from the patient demand side in this case. The demand case in this guesstimate is the number of injuries and use cases

Tips / Suggestions
• It is essential to structure the demand into different brackets first.
• Interviewer will automatically guide you to focus on the most important bracket

(C) Consult Club, IIM Ahmedabad 2018-19 113