DMCC 2014-2015

Casebook

DMCC 2014-2015 Sponsors

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Editors Note
Welcome 2nd year students:

The Duke MBA Consulting Club (DMCC) is proud to present the official 2nd Year Student 2014-2015 DMCC Casebook.
This year we have included over 20 brand new cases. The objective of this book is to help you prepare for your upcoming
consulting case interviews. Case interviews are an integral part of the hiring process for consulting firms. These
interviews give you the opportunity to showcase your communication, client, creative and analytical skills to your
interviewer. This book was developed to complement the Duke MBA Consulting Roadmap curriculum. We hope that
using both will help lead you to success during the upcoming recruiting season.
A couple of changes have been made to enhance the training of those utilizing the book. First, we have included
behavioral questions with each case. Through feedback it was communicated that structured opportunities to practice
behavioral type questions was lacking so this should help address - please take the time to administer and answer these
questions! Second, although we cannot prepare you for everything you might encounter during a your case interviews
we went to great lengths to better diversify the case content. Current cases cover a wide variety of topics from
pharmaceuticals to insurance sales, across several problem types.
This casebook could not have been completed without all of the wonderful cases submitted by your classmates and the
valuable contributions of the DMCC Cabinet Officers. We would also like to thank our friends at other MBA programs for
sharing with us their old casebooks to supplement the cases herein.
We wish you luck with your preparation and would like you to remember that your fellow DMCC members are here to
help! Please reach out to anyone on the cabinet if you feel that you are not cracking the case. Lastly, to the students
of other top MBA programs using this case book during their preparation, we warmly welcome you to Team Fuqua.
Good luck!
Jeff Kaloski and Vineet Hingwe
3

Overview of this book and

recommendations
The first section provides an overview of the firms, followed by a case table of contents, then the cases
Qualitative and quantitative case difficulty is identified within the case table of contents; difficulty is on a scale of 1 to 7
(7 being the most difficult)
The last two cases were provided by BCG so these are very representative of the type of case you will receive in a
BCG interview
Ask the behavioral questions EVERY TIME you give a case!
Most cases are adaptable so try to familiarize yourself with the case prior to giving
Print exhibits before giving the case or be prepared to share digitally (we tried to ensure that all exhibits are effective
when printed in black and white, but recommend double checking your print outs to be sure!)
HAVE FUN!

The Firms

Accenture
High Performance, delivered. Accenture brings strategic thinking, innovative approaches and the ability to
make a difference to companies and governments around the world.

Overview

Interview Overview

Accenture has recently re-structured its Management Consulting practice. Most or all on-campus
recruiting opportunities will fall into the Strategy group. Candidates will interview for the general
Strategy group but may wish to express interest in a specific functional area or industry during the
recruiting process.
Strategy- Offerings in Mergers and Acquisitions; Operating Model Strategy; Sales and Marketing
Strategy; Finance & Enterprise Performance Strategy; Operations Strategy; Talent & Organization
Strategy; Technology Strategy; Digital Strategy
Federal- Helping government clients solve complex problems
Round 1
2 Behavioral / Case interviews

Round 2
2 Behavioral / Case interviews

Cases- Cases are often based on real client experiences. Cases may or may not have a
quantitative component, so listen for verbal clues. Cases are often very conversational and are an
opportunity to showcase your interpersonal skills.
Unique Interview Features

Career Progression

Behavioral/Fit- Fit is very important. The interviewer may have a brief conversation about your
background and experience instead of a standard question & answer format. Also, in the first
round at least one of the interviewers may focus much more heavily on behavioral/fit and place
less emphasis on the case.

Analyst
Consultant
(Business School); Summer Consultant
Consultant
Manager
Senior Manager
Managing Director

Bain & Company

Bain is a leading strategy consulting firm based in Boston, MA with 49 offices across the globe.

Overview

Interview Overview

Unique Interview Features

Career Progression

Bain follows the generalist model. There is no need to align with a specific industry or area before
interviewing.
Strategy - Influential experts and deep expertise in dozens of industries, provides consultants with
a broad foundation on which to build their own expertise
Private Equity Group (PEG) - Work with private equity firms to assess potential deals
Round 1
2 Interviews (~45min. each)
A few behavioral/fit questions
and a case (Note: interview may
start with the case)

Round 2
1 fit interview (~45min)
1 written case interview (~45min)
1 typical case interview (~45min)

Shorter prompts- Most cases feature shorter prompts (2-4 sentences) . Candidates should feel free
to ask additional questions before creating a unique framework
Charts and graphs- Bain has a few unique chart and graph formats that should be reviewed
(marimekko and 100% stacked bars are most common materials are on the website) before
interviews to become familiar
Second level insights- Candidates should focus on the business implications of information provided
during the case (the so what?). Some of the data presented will not provide insights into the case sift through the data.
Action-oriented recommendation The recommendation should be concise and contain specific
actions the client could take immediately along with any additional work streams that are needed to
complete the analysis

Associate Consultant
Senior Associate Consultant
(Business School); Summer Associate
Consultant
Case Team Leader
Manager
Principal
Partner

Boston Consulting Group (BCG)

BCG is a premier strategy firm developing and implementing high-value opportunities for change for
Private, Public and Not for Profit Organizations

Overview

Interview Overview

Unique Interview Features

Career Progression

Generalist in the beginning can choose to focus on industry as one moves into project leader
Regional staffing model, though each office values its own culture and network
Flat organization with a lot of transparency; communication is direct and feedback is highly valued
Chart your own course philosophy you can specialize in a particular industry early or take on a
variety of assignments across different countries or take a sabbatical to work for a non-profit for a
year
Strong mentoring culture, frequent interaction with partners on cases and lots of training
opportunities if you join BCG full-time. Personal development is taken very seriously

Round 1
Two analytical cases with a portion
of the time dedicated to behavioral
fit questions - 45 min each

Round 2
Two to three analytical cases with a portion of
the time dedicated to behavioral/fit questions
- 55 minutes each

Be prepared for the behavioral portion of the case to bleed into the analytical portion of the case.
The break between the two is not always obvious and clear cut.
Highly quantitative be prepared for lots of complex math.
Partners look for driving the case and the application of common sense judgment. They look for
creative thinkers who can structure their thoughts
Not simply textbook knowledge

(Undergrad); Analyst A1/A2 (denotes the years in the position)

(Business School); Summer Consultant
Consultant C1/C2
Project Leader PL1, PL2, PL3
Principal P1, P2, P3, Px
Partner
Sr. Partner / Managing Director

Deloitte Consulting LLP

Deloitte is a leading strategy firm bringing executable strategies to the Fortune 500

Overview

Interview Overview

Unique Interview Features

Career Progression

Deloitte has three service areas (below). Student must align with a service area before applying.
Human Capital professionals bring industry expertise in integrating business, HR and talent
strategies to create business value through people
Strategy and Operations professionals bring deep industry experience with capabilities spanning
corporate and business unit strategy, M&A strategy, and sales and marketing
Technology professionals focus on internal technology solutions, challenges, and innovation and
full-spectrum delivery across strategy, implementation, management and operations
Round 1
Analytical Case 30 min
Behavioral 30 min

Round 2
Strategy Case 60 min
Behavioral 30 min
Group Case 90 min

Long prompts- Some cases feature multi-paragraph introductions that include lots of data. Make
sure you capture all the information before moving on, since its usually not repeated.
The Data Sheet- Deloitte often hands you a page with multiple exhibits (chart, graph, list, or data
table etc.), usually one in each of the four quadrants. Often you will need to combine information
from different exhibits to synthesize an answer.
The Group Case- You interview with 4-5 candidates. Each of you is assigned a role (usually
different than your prior work experience) and presented with overall and role specific questions.
Collaborate with your peers to successfully crack the case.

Business Analyst
Consultant
(Business School); Summer Associate
Senior Consultant
Manager
Senior Manager
Partner/Principal/Director

L.E.K. Consulting
L.E.K. is a global strategy consulting firm. We counsel our clients on their key strategic issues, leveraging our
deep industry expertise and using analytical rigor to solve their toughest and most critical business problems.

Overview

Interview Overview

Unique Interview Features

Career Progression

L.E.K. follows the generalist model with new consultants. There is no need to align with a specific
industry or area before interviewing. However, there is potential to specialize in a particular industry
starting in your second year.
L.E.K. has particular expertise include life sciences/ pharmaceuticals, aviation and travel, basic
industries (building materials/ manufacturing), media & entertainment, retail, and private equity
Round 1
2 Interviews (~30min. each)
Traditionally one qualitative and one
quantitative (each will include a few
behavioral/fit questions)

Round 2
1 written case interview with presentation(1
hour to prepare, 30 min to present )
1 typical case interview with Manager (~30min)
1 case/fit interview with Partner (~45min)

Shorter cases - L.E.K. cases are designed to be shorter than some of the other firms. First round
interviews last only 30 minutes including behavioral questions, meaning candidates must get
through the case within 20-25 minutes.
Quantitative focus - Each L.E.K. interview round will contain a significant quantitative component,
and quantitative aptitude is very important in the evaluation of candidates. Many cases also require
familiarity with financial statements or basic finance concepts such as NPV. First round cases
typically include at least one market sizing case.
Leadership potential - in addition to standard behavioral questions such as why L.E.K.?
interviewers look specifically for candidates able to take on immediate management responsibility,
as consultants are given responsibility for managing associates on casework as soon as they join.

Associate
Associate Consultant
(Business School); Summer Consultant
Consultant (manages single project)
Manager (manages multiple projects)
Principal (managing director in training)
Managing Director (Partner)

10

McKinsey & Company

McKinsey & Company is a global management consulting firm. We are the trusted advisor to the world's
leading businesses, governments, and institutions.
McKinsey recruits students into generalist and business technology tracks. Students can express an
interest in business technology (BTO) during the application process
Overview

Interview Overview

Summer Associates are assigned to any of a wide range of industries, touching any point in the value
chain. Project (study) staffing is collaborative between SAs and Professional Development staff.
Structured, formal feedback is provided by a senior firm member twice during the summer. Informal
feedback is common, and is highly emphasized in the firms culture. M-Th travel is typical.
Depending on office preference you will either have a one day Power Round session or the standard
tiered process. The Southern office and international offices typically conduct Power Round style
interviews.
Power Round (at or near Fuqua, if intl. at office)

Unique Interview Features

Career Progression

4-5 Interviews
20 min experience
30 min case

Round 1 (at or near Fuqua)

2 Interviews
20 min experience
30 min case

Round 2 (at McK office)

3-4 Interviews
20 min experience
30 min case

The Personal Experience Interview- Unlike other firms behavioral interviews, McKinsey asks
candidates one question before each case to asses behavioral/fit. These questions are rooted in at
least one of the following areas: personal impact, entrepreneurial drive, problem solving, personal
achievement, and leadership. The interview will ask the initial question and then probe deeper by
asking several follow up questions to understand your thought process in that situation. Its not
uncommon to spend 20 minutes on one experience.
Highly Structured Cases- Cases often have discrete framework, brainstorming, and quantitative
sections that focus on a question specific to that section. Although candidates must drive the
analysis, the interviewer may redirect towards the next section.

Business Analyst
(Business School); Summer Associate
Associate
Engagement Manager
Associate Principal
Partner
Director

11

Pricewaterhouse Coopers (PwC)

PwC Advisory helps clients build their next competitive advantage. You will help our clients improve business
processes, transform organizations and implement technologies.

Overview

Interview Overview

Unique Interview Features

Career Progression

Students must directly apply to one of the following practice areas:

Health Industries
Public Sector
Financial Services
Products & Services Industry
Round 1
2 Interviews (~45min. each)
Only behavioral/fit questions

Round 2
2 behavioral/fit interviews (~45min)
1 case interview (~45min)

First/Second Round Behavioral Interviews - PwC puts extra emphasis on your background and fit
with PwC. Your first interview will also include a discussion of which vertical (above) best fits with
your work experience and career goals.
Case Interview - The case interview is a little different than other firms. The case is very
conversational as the candidate and interviewer discuss a business situation. Candidates may be
given a case to prepare 1-2 days in advance (usually 4-5 pages). On the interview day, candidates
are given questions on the case and are asked to prepare a slide deck presentation in an hour
before discussing it with the interviewer.

Associate/ Experienced Associate (Undergraduate level)

Summer Senior Associate (Business School internship)
Senior Associate (After Business School)
Manager
Director
Partner

12

ZS Associates
Our singular focus over our 30 years has been to help global companies maximize their sales and marketing
organizations performance and results.

Overview

Interview Overview

Unique Interview Features

Career Progression

Students must directly apply for one of two roles:

Business Consultant- serve on project teams that deliver high-quality marketing and sales
strategy projects to clients. In particular, Business Consultants possess qualitative research and
unstructured problem solving skills and/or advanced quantitative analytics skills
Business Operations Consultant- manage overall projects and client engagements. They
support our clients' sales and marketing activities and ensure productivity and profitability in their
business operations.
Round 1
2 Interviews (~45min. each)
1 behavioral
1 case

Round 2
1 fit/behavioral interview
1 case interview
1 presentation case

Case Focus- Although ZS rigorously tests a candidates public math skills and ability to synthesize,
do not neglect the qualitative component. In recent years ZS has begun to focus on both qualitative
reasoning as well as quantitative skills.
Presentation Case- Candidates are provided information and must synthesize a presentation to a
panel of interviewers. ZS provides a laptop to create the slides. Expect to be challenged and
questioned.
Rounds- ZS holds its second round interviews within a few days of its first round. Candidates
should plan accordingly to minimize potential conflicts.
Interviewers- Partners and senior managers conduct the first round interviews on-campus, unlike
some firms that use consultants and junior managers in the first round.

Associate
Associate Consultant
(Business School); Business Consultant Intern
Consultant
Manager
Associate Principal
Principal

13

The Cases
Case #
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

Name
Purple Pill Company
Buy Low, Sell High
Oklahoma Gas Company
Heavy Things Fitness
Orange Yoga Studio
Surfboard Wax in Hawaii
Pacific Northwest Telco
The Everything Retailer
Gee & Gees House of Brands
Going Green
AllHealthy CRM
Coyotes
Ferry Follies
AutoDrivers
Steel Works
WOEM
Money in Michigan
Pharma Co.
Quality Control
WorkIT
So Fresh and So Clean
Kid Country
Texas Oil
Consumer Products Strategy
Pharmaceutical Business Growth

Difficulty (1 - 7)
Qual
Quant
4
4
2
5
5
3
4
3
6
4
2
2
1
1
5
4
3
6
4
5
4
1
5
5
3
4
4
3
5
2
2
1
2
3
6
6
4
2
4
4
4
3.5
3
4
5
3
N/A
N/A
N/A
N/A

Page
15
23
34
42
53
66
74
81
91
99
111
116
129
137
150
163
170
178
189
194
205
215
225
235
243

14

CASE 1 PURPLE PILL COMPANY

15

Case 1: Purple Pill Company

Prompt
Your client is a multinational pharmaceutical and biologics company. The client has a portfolio of drugs for major disease areas,
including cancer, cardiovascular, and gastrointestinal diseases, to name a few. The client has experienced a decline in revenue over the
last 18 months, and is fearful of further declines, especially given that its most commercially successful drug, which treats acid reflux
disease, will be going off of patent in May of next year. What are the areas they should look into to change the course of this trend?

Behavioral Questions
Why consulting now (after xx years in xx industry)?
Tell me one industry that youre interested in right now. What are the trends or opportunities for key players in this industry? (can
also be a function, area of business, etc.)

Interviewer Guidance
The candidate should come up with a MECE framework that covers the following areas: product mix, industry trends, competitors

The candidate should identify that this is a revenue problem, given the prompt.
A good candidate will identify the patent expiration impact on revenues quickly.
A good candidate may also discuss sales by region (since it is a global company) in addition to product mix.
Additional information should be provided upon request:
o Exhibit 1 Revenues by disease area (Product Mix)

16

Case 1: Purple Pill Company

Exhibit 1
Company Revenues by Disease Area (in $B)

Neuroscience
Respiratory
Gastrointestinal
Cardiovascular
& Oncology

Drug

Category

% 2013 Revenues

% Chg Revenues

Market Share

Red Pill

Cardiovascular

22%

-8%

Steady

Purple Pill

Gastrointestinal

15%

-2%

Respiratory

14%

+10%

Neuroscience

7%

-40%

Blue Pill
Green Pill

17

Case 1: Purple Pill Company

Analysis
What are the largest drivers of revenue decline over the last year? (Provide Exhibit 1 if not already provided)
Guidance:
Give the candidate 20-30 seconds to review the chart. Then, prompt them to start sharing insights.
o E.g. - Overall business is declining ~10%, driven by neuroscience, and cardiovascular & oncology
o E.g. - Respiratory is driving growth, driven by the blue pill; has also gained market share
Ask: Which drug is largest source of dollar declines from 2013 to 2012? How much is the loss?
Math:
o Red Pill: 22% x $21B = $4.6B / .92 = $5B 4.6B 5.0B = $0.4B, or $400M loss
o Purple Pill: 15% x $21B = $3.15B / .98 = $3.21B 3.21-3.15= $0.06B, or $60M loss
o Green Pill: 7% x $21B = $1.5B/ .6 = $2.5B 2.5B 1.5B =$1B loss

Recommendation
Brainstorming Ask candidate: What are some issues that could have caused this decline?
o Acceptable answers: lower price, lower tablet sales volume, generics coming on market, regulatory restrictions, out of
stocks, currency and geographic trends
o Good candidates will connect generics coming on market to reduced market share in Exhibit 1.
Additional information to be provided as confirmation:
In addition to other issues, the decline is attributed to the introduction of generics in the US and other established markets. Its fair
to attribute 50% of the decline to generics. The additional declines were related to Medicaid liability and other inventory related
issues.
18

Case 1: Purple Pill Company

Analysis
Given these issues with the Green Pill, the client would like your help in determining specifically how to maintain as much revenue
as possible from the Purple Pill when it goes off patent next year. It has several options that it would like for you to evaluate.
Options:
1. Do nothing
2. License the brand to an over the counter (OTC) manufacturer for $250M one-time revenue
3. Direct-to-patient campaign online and pay 3rd party for delivery
Additional facts and assumptions:
With no action, Green Pill lost 20% of annual volume in the past (use this assumption)
Current revenue per pill is $1 at an 80% margin (remember, total revenue $3.2B)
10% of current Purple Pill volume will transfer to OTC brand we get only one time revenue
Direct to patient will retain 25% that wouldve been lost to generic but the margin would be reduced to 50%
Over 2/3 of the Purple Pills revenue comes from the US.

Recommendation
Ask: What would you do and why? What are your assumptions on incremental or retained volume in each scenario? Why?
The head of Purple Pill brand needs to make a decision would like for us to share our recommendation today. Please share your
analysis and recommendation.

19

Case 1: Purple Pill Company

Analysis
Decision
Math:
Do nothing: $3.2B x .80 retained (20% lost) = $2.5B revenue x 80% margin = $2B gross profit
License for $250M = $2B + $250M = $2.25B (10% x $3.2B x 80%) = $2.25B - $0.256B = -$60K
Direct to patient program - Do nothing = $2B + (20% lost x 25% of this retained x $3.2B x 50% margin) = $2B + $.08B = $2.08B

Guidance:
The math is important here, but more important is that the candidate can think through short-term and long term scenarios. For
example, licensing may look like breakeven in year one and retain the brand, but it is a long-term loss as there is no additional revenue
(the $250B) in year 2. You would want there to be little to no cannibalization.
Also, if the direct to patient program cannibalizes more of your existing 80% margin business, you will lose money if you dont increase
the price.
This case gauges the candidates comfort with making assumptions and making strategic decisions.

20

Case 1: Purple Pill Company

Performance Evaluation
Expected:
Completes all math
Guides the conversation and probes for additional facts and data without prompting
Good:
Is able to think creatively and drive the process forward
Walks the interviewer through the logic
Provides next steps for the analysis
Excellent:
Is comfortable providing own assumptions around cannibalization and patient retention
Brings up the possibility of a merger with another drug producer or other out of the box ideas.
Provides financials for multiple years and has a forward thinking strategy.

21

Case Interview feedback form

Case _________________________ Case type _________________ Interviewer ____________________

Execution

Case start time ___:____

Structure

1 2 3 4 5

Logical approach
MECE
Appropriate drive to solution

Comments:

Quantitative Ability

1 2 3 4 5

Speed
Accuracy
Comfort, reaction to mistakes

Comments:

Business intuition
Practical
Insightful
Breadth & depth across multiple functions
Creativity

1 2 3 4 5
Comments:

Framework development
Framework explanation
Case discussion

______ min
______ min
______ min

Case end time ___:____

Overall Rating: 1 2 3 4 5
Strengths

Communication
Professionalism

1 2 3 4 5

Poise
Confident-Persuasive
Articulate-concise
Client ready

Comments:

Weaknesses

Written
Clarity of writing and page layout
Ability to refer back
Comfort, reaction to mistakes

1 2 3 4 5
Comments:

Behavioral (optional)
Quality of star stories
Length
Clarity
Relevance

1
1
1
1

2
2
2
2

3
3
3
3

4
4
4
4

5
5
5
5

Comments:
Key: 1=Bottom 10%, 2= 10th-25th percentile, 3=
middle 50%, 4= 75th-90th percentile, 5=Top 10%

CASE 2 BUY LOW, SELL HIGH

23

Case 2: Buy Low, Sell High

Prompt
Your client is a rich financier who has decided recently to the capital markets as a market maker. Market makers make % commissions
off of transactions in capital markets, and are necessary to provide liquidity and orderly market action. The year is 2014 and he
believes that we have recovered long enough from the financial collapse to warrant an investment in this sector. There are multiple
opportunities in the financial market and you have been hired to advise him on how and where to invest his money. He is considering
entry into one of four markets: Commodities, Options, Equities, and Fixed Income.

Behavioral Questions
What is one situation you have been in where you had to lead upwards (be a leader when you didnt have the authority)?
How would you deal with a team environment where you did not feel welcome?

Interviewer Guidance
This case is designed to see if a candidate can perform an analysis of market segments and determine a profitable entry point into
an established market. This is a two-part analysis.
Facts (to be provided if asked) Amount to be invested: up to $2.5 billion.
Client has experience in finance, but not in trading
Investment to be focused inside of United States
Goal is to have a positive NPV investment. Limited to only one investment (he feels his attention can only be focused on one
opportunity at a time)
Size and market shares of four markets to be provided upon asking
Market makers make a fixed % commission on each transaction, so more volume and bigger $ value of transactions is usually better.
These markets each intrinsically have different commission rates (which we dont have).
Candidate should be handed Exhibit 1 and Exhibit 2 after he has walked through the structure of the problem and finished asking
questions. He should perform an analysis of market attractiveness with this data.

24

Case 2: Buy Low, Sell High

Exhibit 1

Number of transactions
(millions/yr)

Total assets in market ($trillion)

Commodities

Options

Equities

Fixed Income

1200
1000
800
600
400
200
0
Commodities

Options

Equities

Fixed Income

25

Case 2: Buy Low, Sell High

Exhibit 2

*Note: Player 2 in the Equities market recently had a rogue trader incident and is looking to exit through asset liquidation

26

Case 2: Buy Low, Sell High

Interviewer Guidance
Exhibit 1: Candidate should be able to conclude from the two charts that total asset value and number of transactions suggest options
and commodities are the most attractive markets to enter. However, none of these charts show actual profit earned in the four
markets, so more information is necessary (what are the levels of commissions?).

Exhibit 2: From this exhibit, commodities and equities seem the most attractive for an entrant, since there are fewer major players in
commodities and there is a major player exit in equities. Again, actual profit from entry is not apparent.

Prompt
Our analysts have done some research on the costs of entry and expected profits from entering these markets. Please look at their
analysis in Exhibit 3 and tell me what you can extract from these findings.

Guidance
Candidate should perform an NPV analysis based on the data provided.

27

Case 2: Buy Low, Sell High

Exhibit 3
$MM

Commodities

Options

Equities

Fixed Income

200

??

150

160

Salaries

50

40

20

30

Rent & Utilities

50

40

40

30

Depreciation

??

30

25

50

60

70

65

??

30

20

20

40

Earnings before tax

30

50

45

10

Taxes

10

10

??

20

40

30

2,000

2,500

1,500

2,100

Expected Revenue

Operating Profit
Interest expense

Net Income
Expected Investment

*Cost of capital = 5%, all income assumed to last forever and begin in year 1, depreciation constant YoY

28

Case 2: Buy Low, Sell High

Exhibit 3 Guidance for Interviewer
$MM

Commodities

Options

Equities

Fixed Income

200

180

150

160

Salaries

50

40

20

30

Rent & Utilities

50

40

40

30

Depreciation

40

30

25

50

60

70

65

50

30

20

20

40

30

50

45

10

10

10

15

20

40

30

2,000

2,500

1,500

2,100

100

100

90

100

2,000

2,000

1,800

2,000

(500.00)

300.00

(100.00)

Expected Revenue

Operating Profit
Interest expense
Earnings before tax
Taxes
Net Income
Expected Investment
EBITDA
Investment return
NPV

*Cost of capital = 5%, all income assumed to last forever and begin in year 1, depreciation constant YoY

29

Case 2: Buy Low, Sell High

Analysis
Market attractiveness:
Initial analysis should show commodities and options to be most attractive in terms of market size, with commodities as the most
attractive due to the lack of major players to inhibit entry. Both Options and Fixed Income seem to be markets where a few players
dominate, making potential entry very difficult. Equities is interesting because of potential for cheap entry due to the liquidation of a
major players assets, so further analysis is necessary
Valuation:
Based on NPV analysis, equities are the investment to make due to the cheap entry cost. This carries an added benefit of leaving $1
billion free for other uses. Candidate can include this excess sum in calculation, but that isnt necessary.

Recommendation
Recommendation should be to invest in equities. Ask candidate to give a recommendation to a the actual investor (he is about to
come into the room, etc)
Next steps may include: ascertain process for buying liquidated assets, determine if there are other buyers, look at other passive
investments for excess funds.
Potential risks: regulatory delays, volume of equities market is low, market at all time highs and crash could mean future profit
projections are off
Next steps and risks are open ended and dont have to be these suggested options. Make sure candidate has thought out logical points
and can explain his reasoning.
30

Case 2: Buy Low, Sell High

Performance Evaluation
Initial problem solving:
Distinctive - Well-structured problem solving that is MECE and covers major factors to be considered. This is very open-ended
so there are no musts, but candidate should quickly realize this is an investment/market entry problem and approach
it as such.
Very strong - Structured analysis that covers many aspects, but may not be fully MECE. Candidate might need some guidance
to ask for right information.
Strong - Analysis covers many factors and is thoughtful. Needs some guidance to direct candidate towards data and
crux of problem.
Needs improvement - Analysis is fragmented. Candidate unable to structure problem and needs a lot of guidance to proceed.
Exhibit 1&2 - market analysis:
Distinctive - Candidate quickly grasps what the three charts are trying to say and comes to conclusions quickly. Realizes that
there is some possibly conflicting information and asks for data (potentially asks to do NPV).
Very strong - Candidate comes to solid conclusions from the charts and is ready to proceed. May need prompting before
next step.
Strong - Candidate can handle multiple tables but may struggle to fully realize the conflicts embedded in the data. Might try to
end case here. Needs some prompting to proceed.
Needs improvement - Analysis is fragmented. Candidate cannot handle the multiple charts and needs a lot of
guidance to proceed.

31

Case 2: Buy Low, Sell High

Performance Evaluation Continued
Exhibit 3- valuation:
Distinctive - Candidate understands how to do an NPV and performs calculations quickly and accurately. Exceptional if
candidate understands most of data is superfluous and calculates from Operating Profit and Depreciation numbers only.
Very strong - Candidate performs calculations in a timely manner. May make some mistakes.
Strong - Candidate takes a bit of time to perform calculations. May need some guidance on where to start.
Needs improvement - Candidate does not understand what an NPV is. May try a breakeven analysis or other kind of
calculation. Interviewer needs to cut calculations short to get to recommendation.
Recommendation:
Distinctive - Candidate concisely gives accurate recommendation and covers logical next steps and reasonable risks.
Very strong - Candidate gives accurate recommendation with some next steps and risks. May be a little long-winded.
Strong - Candidate gives a recommendation but may forget next steps and risks. May need some guidance on where to start.
Needs improvement - Candidate isnt structured and struggles to give a recommendation.

32

Case Interview feedback form

Case _________________________ Case type _________________ Interviewer ____________________

Execution

Case start time ___:____

Structure

1 2 3 4 5

Logical approach
MECE
Appropriate drive to solution

Comments:

Quantitative Ability

1 2 3 4 5

Speed
Accuracy
Comfort, reaction to mistakes

Comments:

Business intuition
Practical
Insightful
Breadth & depth across multiple functions
Creativity

1 2 3 4 5
Comments:

Framework development
Framework explanation
Case discussion

______ min
______ min
______ min

Case end time ___:____

Overall Rating: 1 2 3 4 5
Strengths

Communication
Professionalism

1 2 3 4 5

Poise
Confident-Persuasive
Articulate-concise
Client ready

Comments:

Weaknesses

Written
Clarity of writing and page layout
Ability to refer back
Comfort, reaction to mistakes

1 2 3 4 5
Comments:

Behavioral (optional)
Quality of star stories
Length
Clarity
Relevance

1
1
1
1

2
2
2
2

3
3
3
3

4
4
4
4

5
5
5
5

Comments:
Key: 1=Bottom 10%, 2= 10th-25th percentile, 3=
middle 50%, 4= 75th-90th percentile, 5=Top 10%

CASE 3 OKLAHOMA GAS COMPANY (OGC)

34

Case 3: Oklahoma Gas Company (OGC)

Prompt
(~Present day) The Oklahoma Gas Company (OGC) is a medium-sized private company that has a rich history of drilling and producing
natural gas wells in Oklahoma. They possess a diverse, and they believe valuable, set of land assets where more wells could be drilled.
The company is well capitalized, but profits have been falling the last few years and are projected to be negative next year.
One of the key drivers in the drop in profitability is the price of natural gas, which has dropped substantially, thanks in part to
companies like OGC, that have perfected unconventional drilling techniques and have subsequently oversupplied the North American
natural gas market. Natural gas prices are currently at a five year low.
A larger competitor has approached management about acquiring OCG for $250 M. Management would like your help in assessing the
offer as well as identifying alternate strategies.

Behavioral Questions
If you could only do one of the experiences on your resume over, which would it be and why?
If you could change one experience on your resume, which would it be and why?

35

Case 3: Oklahoma Gas Company (OGC)

Interviewer Guidance
The interviewee will likely dwell on the acquisition offer. Guide them away from this, as it will only serve as the baseline for option
selection. The objective of the case is for the interviewee to evaluate viable options before recommending a course of action.
Ideally the candidate creates a basic profitability framework, and focuses on what OPTIONS the company has.

Present Valuation of OCG is not readily available. Tell the interviewee that more data on the topic will become available later
Costs have remained stable
While Natural Gas demand fluctuates seasonally, the annual demand has been stable over the past few years
Land Assets = OGC owns 100% of the mineral rights of their land
While regulations have changed, and may continue to change, they have yet to have a large impact on OGCs business
OGC has not drilled oil wells in the past, but would likely have the competency to do so in the future
Natural gas and oil prices are volatile and out of the control of OGC. Future prices are difficult to predict.
Only operated in Oklahoma

36

Case 3: Oklahoma Gas Company (OGC)

Interview Guidance
Note: This case is meant to be adaptable. The interviewer can make it more or less difficult at anytime based on their discretion.
Potential Options for OGC:
1. Explore oil wells (Obvious - if candidate is aware of booming shale oil revolution in the US or current price of oil)
2. Continue drilling gas wells in the areas that they own
3. Sell some land assets
4. Acquire land and drill gas wells elsewhere
5. Acquire smaller competitor
6. Go Public
7. Sell for $250 M
8. Negotiate the $250 M offer upwards
Guide the candidate towards (1) drilling oil wells, (2) continue drilling gas wells, (3) considering the acquisition offer
While continuing to do what is NOT working may seem counterintuitive, but OGC is very good at drilling gas wells. Key takeaway from
this case is that all the assumptions and projections made my OCG and the candidate are based on highly volatile commodity prices.

37

Case 3: Oklahoma Gas Company (OGC)

Interview Guidance
OCG has found an oilfield in South Texas that it can acquire and drill on immediately.
The candidate should begin asking for DATA to analyze the three options on a present value basis:
Natural Gas
The present value of all OCGs currently producing gas wells is $50 M
The Price of gas is $3.00/mcf (thousand cubic feet)
Cost of capital = 10%
Cost of acquiring and drilling the additional natural gas wells is $50 M Each well will come online in the Year 0 and stop producing
after Year 2
Year 0 Gas production projected = 40,000 mmcf (million cubic feet unit change)
Year 1 Gas production projected = 30,000 mmcf
Year 2 Gas production projected = ~17,000 mmcf
At a price of $3.00 this gives you a total PV of $194 M
PVs:
Year 0- $70 M (include the $50 M drilling cost)
Year 1- $81.8 M
Year 2- $42.1 M NOTE: A $.20 increase in the price of Natural Gas would mean the wells PV is greater than$210 M

38

Case 3: Oklahoma Gas Company (OGC)

Interview Guidance
Note: This case is meant to be adaptable. The interviewer can make it more or less difficult at anytime based on their discretion.
Oil if the candidate got the the PV for Gas correct, begin giving them the data below. Go straight to last bullet if they struggled.
Current Price of oil is $120 (NOTE: historically high $)
The cost of acquiring and drilling all necessary wells in the oilfield is $100 M
Cost of capital = 10%
Production horizon for each well is 10 YEARS - at this point candidate should realize that the math is too much, and even if they do
the math, the value is far too dependent on the price of oil
State that projected PV of the oilfield is $210 M
Candidate now has three values - $210 M for drilling oil wells (+$50 M in legacy gas well), $250 M to sell the company, $194 M to
continue drilling gas wells (+$50 M in legacy gas well). At this point they will likely give a firm answer that acquiring the new
oilfield and drilling is the correct path forward.

39

Case 3: Oklahoma Gas Company (OGC)

Interview Guidance
The interviewer should then push back:
Is OGC sure they can successfully drill oil wells, out of state, with no experience?
Where did the $210 M value come from - projecting oil recovery is VERY DIFFICULT?
Drilling costs are highly variable, likely to run over?
Finally, how sure are they about FORECASTING PRICES?
The correct answer to the case is that there is not enough information given to provide a firm answer at this point. Thorough price
forecasting (for both oil & natural gas) needs to be done. A counter offer should be made. OGCs competency to drill and produce oil
wells should be reviewed. A second opinion should be taken on the PV projection of the oilfield. Assumptions play a huge role in the
valuations.
Note: candidate may push back regarding the chances that gas prices rise because of the oversupply situation. As we see in reality
today, large oil & gas companies will stop drilling for gas when prices drop, and gas wells inherently produce for shorter lifespans, thus a
significant change in the supply of natural gas is possible.

40

Case Interview feedback form

Case _________________________ Case type _________________ Interviewer ____________________

Execution

Case start time ___:____

Structure

1 2 3 4 5

Logical approach
MECE
Appropriate drive to solution

Comments:

Quantitative Ability

1 2 3 4 5

Speed
Accuracy
Comfort, reaction to mistakes

Comments:

Business intuition
Practical
Insightful
Breadth & depth across multiple functions
Creativity

1 2 3 4 5
Comments:

Framework development
Framework explanation
Case discussion

______ min
______ min
______ min

Case end time ___:____

Overall Rating: 1 2 3 4 5
Strengths

Communication
Professionalism

1 2 3 4 5

Poise
Confident-Persuasive
Articulate-concise
Client ready

Comments:

Weaknesses

Written
Clarity of writing and page layout
Ability to refer back
Comfort, reaction to mistakes

1 2 3 4 5
Comments:

Behavioral (optional)
Quality of star stories
Length
Clarity
Relevance

1
1
1
1

2
2
2
2

3
3
3
3

4
4
4
4

5
5
5
5

Comments:
Key: 1=Bottom 10%, 2= 10th-25th percentile, 3=
middle 50%, 4= 75th-90th percentile, 5=Top 10%

CASE 4 HEAVY THINGS FITNESS

42

Case 4: Heavy Things Fitness

Prompt
Your client is Heavy Things Fitness, a small fitness center chain with 15 locations in a minor metropolitan area in the US, established
during the fitness boom in the late 70s. After decades of continual growth, Heavy Things has seen membership decline by alarming
rates. Over the past 5 years, it has seen total membership numbers decrease an average of 6% annually. The client has asked us to
determine what is causing this trend and how they can reverse this trend to begin growing again. Based on what you know about this
industry, what do you believe is causing this membership attrition?

Behavioral Questions
Tell us a time when you had a conflict with your manager or peers. How did you resolve it?
When was the last time you were creative in solving a problem?

Case 4: Heavy Things Fitness

Interviewer Guidance
The focus of this case is on market segmentation and determining/targeting the optimal segment. The candidate should demonstrate
an understanding that profit is the ultimate goal. Various strategies will have different implementation costs and potential revenues,
and the candidate should return to these numbers at every step.
If they ask for more information on the city, tell them it has a population of about 1-1.5M, similar to Providence, RI; Milwaukee, WI; or
Jacksonville, FL. No other information is relevant (such as location within the US), as this is not the focal point of the case.
Relevant additional information:
-Gym memberships in this city have been growing 3% each year, both in this city and in all regions of the country
-Heavy Things Fitness gyms offer cardio rooms, free weights, and weight machines
-Membership prices and payment plans are in line with their closest competitors
-Heavy Things Fitness targets serious fitness enthusiasts, believing that these are the most loyal customers
When interviewee asks for industry or client customer demographic information, provide Exhibit 1 and 2, respectively.
Potential Causes:
-Changing fitness trends, such as towards class-based fitness or high intensity training
-Negative attributes of Heavy Things, such as poor customer service or deteriorating facilities
-Competitors offer better services, such as personal trainers or basketball courts
-Shifts in city or industry demographics, away from Heavy Things target demographic
Unlikely Causes:
-Decreasing city population (as the rest of the citys gyms are seeing increasing memberships)
-Competitors offer lower cost (already established that Heavy Things costs are comparable to competitors

Case 4: Heavy Things Fitness

Exhibit 1: Local Interest in Gym Memberships, Demographic Segmentation

Case 4: Heavy Things Fitness

Exhibit 2: Client Customers, Demographic Segmentation

Case 4: Heavy Things Fitness

Prompt 2
Given the information in Exhibits 1 and 2, what do you believe is the source of Heavy Things declining membership?

Guidance
Clarifying Note: The legend order corresponds with the Generation graphic in Exhibit 1. In other words, the top portion of the chart
represents Seniors, and the bottom represents Millennials.
Extractable Facts:
Local gym memberships are trending towards Gen X and Y and away from Millennials, Baby Boomers and Seniors
Genders seem to have shifted towards men, then back to women
Heavy Things membership is heavily concentrated in the Millennial generation
Heavy Things membership is evenly split between men and women
Key Takeaways:
Heavy Things membership gender profile parallels local industry gender profile
Heavy Things membership generation profile is focused on the declining Millennial population rather than the growing Gen X and Y
populations
Potential Conclusions:
Target Gen X and Y customers
Become more of a niche gym for declining millennial customer segment

Case 4: Heavy Things Fitness

Prompt 3
After reviewing this data, Heavy Things leadership agrees that they should target Gen X and Y customers. What are some possible
ways that Heavy Things Fitness can target these growing demographics? What would be the benefits and risks of each of these
solutions?

Guidance
Good Potential Solutions:
Marketing campaign targeting consumers aged 30-50
o Spokesperson in that age range
o Ads run in areas of interest for these consumers
o Explanation that this gym is for these consumers (a la Planet Fitness ads)
Offer new services more to the liking of middle aged customers
Make prices more appealing to middle aged customers
o If price is believed to be a primary concern, lower prices
o If not, raising prices would help offer more services and prevent younger customers with less disposable income from joining
Make the gym an exclusive club where only those members can join
Top level candidates will address the inherent cannibalization when switching from one target demographic to another, and include
solutions that will minimize this cannibalization. If the candidate does not mention cannibalization, lead them to it. Some such
solutions would be:
Convert some existing locations to more Gen X and Gen Y-friendly establishments, while keeping the rest the same, enabling current
customers to go to another Heavy Things if theirs gets shut down
Develop a brand extension in brand new clubs that target these customers
Divide the physical space of each gym into two distinct gyms (like a combination Pizza Hut and Taco Bell)

Case 4: Heavy Things Fitness

Prompt 4
We presented your findings to the client at a recent status meeting, and Heavy Things leadership liked the idea of a brand extension of
5 facilities targeted at Gen X and Y customer, called Fast Class Fitness, which will focus on the class-based fitness program that our
clients research has shown appeals to Gen X and Y customers. They want us to determine whether it is more profitable to convert
existing Heavy Things properties into Fast Class, or to find new properties in which to open Fast Class fitness centers.

Guidance
Pertinent Information:
Costs
Rent of All Facilities (Including Cost of Fitness Equipment), Heavy Things and Fast Class = $10K per month
Labor at Heavy Things Facilities = 2 Employees at $36K per year each
Labor at Fast Class Facilities = 4 Employees at $48K per year each
Revenues
Membership Dues at Heavy Things Facilities = $50 per month
Membership Dues at Fast Class Facilities = $75 per month
Average Memberships at Heavy Things Facilities = 300
Average Memberships at Fast Class Facilities = 400
Retention of Members from Converted Heavy Things Gyms= 33% of Each Gyms Membership
o This is a small city, so when a club is converted, members can simply move to a neighboring location
o In other words, when a gym is closed, 1/3 of the members will join a different Heavy Things gym, but 2/3 of the members
will leave Heavy Things for a competitor
Assume Heavy Things Can Maintain These Membership Levels

Case 4: Heavy Things Fitness

Analysis
Sample Calculations:
Convert
Costs (Monthly, in $K)
Heavy Things Rent
Heavy Things Labor
Fast Class Rent
Fast Class Labor

10 locations, $10K each

10 locations, 2 employees per location,
$3K per employee
5 locations, $10K each
5 locations, 4 employees per location,
$4K per employee

Expand
$100 15 locations @ $10K each
15 locations, 2 employees per location,
$60
$3K per employee
$50 5 locations, $10K each
5 locations, 4 employees per location,
$80
$4K per employee

$150
$90
$50
$80

Revenues (Monthly, in $K)

Heavy Things (current members)
Heavy Things (retained members)
Fast Class
Total Corporate Income (Monthly, in $K)

10 locations, 300 members per location,

$50 per member
5 locations, 33% of 300 members per
location, $50 per member
5 locations, 400 members per location,
$75 per member

$150

15 locations, 300 members per location,

$50 per member

$25 N/A
$150

5 locations, 400 members per location,

$75 per member

$35

$225
$0
$150
$5

However, the fastest way to calculate this is to realize that the revenues and costs from Fast Classes are constant, so the only necessary
calculation is subtracting the additional cost to maintain the 5 heavy things locations ($80K) from the revenue gained by keeping all 15
Heavy Things locations ($50K).

Either way, the correct conclusion is that it is more profitable to convert the 5 locations rather than expand.

Case 4: Heavy Things Fitness

Prompt 5
Olaf Dungren, the CEO of Heavy Things Fitness, is about to walk into this office, and hed like to hear our recommendation. How would
you summarize our findings?

Guidance
Answers may vary, but should include:
Recommendation to convert five Heavy Things fitness centers to Fast Classes fitness centers
Justification based on the ability to attract new members and increase profitability at a more efficient rate than by expanding to new
properties
Potential risks to this suggestion that include five not being the optimal number to convert, increasing properties serving as
advertising that would generate additional memberships, the 33% estimate of retention being inaccurate
Next steps, such as hiring class teachers for the new gyms, developing an advertising campaign to build the Fast Class brand, and
hiring contractors to convert the Heavy Things gyms to Fast Class centers

Case Interview feedback form

Case _________________________ Case type _________________ Interviewer ____________________

Execution

Case start time ___:____

Structure

1 2 3 4 5

Logical approach
MECE
Appropriate drive to solution

Comments:

Quantitative Ability

1 2 3 4 5

Speed
Accuracy
Comfort, reaction to mistakes

Comments:

Business intuition
Practical
Insightful
Breadth & depth across multiple functions
Creativity

1 2 3 4 5
Comments:

Framework development
Framework explanation
Case discussion

______ min
______ min
______ min

Case end time ___:____

Overall Rating: 1 2 3 4 5
Strengths

Communication
Professionalism

1 2 3 4 5

Poise
Confident-Persuasive
Articulate-concise
Client ready

Comments:

Weaknesses

Written
Clarity of writing and page layout
Ability to refer back
Comfort, reaction to mistakes

1 2 3 4 5
Comments:

Behavioral (optional)
Quality of star stories
Length
Clarity
Relevance

1
1
1
1

2
2
2
2

3
3
3
3

4
4
4
4

5
5
5
5

Comments:
Key: 1=Bottom 10%, 2= 10th-25th percentile, 3=
middle 50%, 4= 75th-90th percentile, 5=Top 10%

CASE 5 ORANGE YOGA STUDIO

53

Case 5: Orange Yoga Studio

Prompt
Your client is Yoga Jones, the owner of Orange Yoga Studio. Orange Yoga is a very popular, up-scale yoga studio in New York City known
for high quality instruction and a relaxed vibe. Yoga Jones has owned and operated Orange Yoga for the past 5 years. For its first four
years, Orange Yoga was very financially successful; however in the past year, Yoga Jones noticed that her profits seem to be declining.
She doesnt keep very good financial records and has made a few big investments lately, so is having a hard time figuring out a)
whether she is actually losing profit and b) how to fix her financial woes.
How do you help Yoga Jones?

Behavioral Questions
Please give an example of a time you led in an ambiguous or uncertain context
What are you most proud of?

Interviewer Guidance
Note: This case requires extensive guidance by the interviewer. Make sure to review carefully before giving.
Provide the following background information upon request, or to help provide clarity after the initial framework
Orange Yoga offers 5 classes daily on weekdays. On weekends, they offer 4 classes. All of of their classes are Vinyasa Flow style
Orange Yoga clients pay on a per-class basis. There are currently no package deals or membership rates.
The competitive landscape for yoga studios in NYC has remained unchanged over the past three years.
Yoga Jones recent investments were major maintenance upgrades for her studio (installing hardwood floors, fresh paint, and new
shower facilities). These investments were financed primarily through loans.

54

Case 5: Orange Yoga Studio

Analysis
The candidate should quickly get to a = Revenue-Cost framework. Framework considerations may include:
Revenue: Price per class, number of clients per class, potential other sources of revenue (i.e. yoga mats, water bottles, etc.)
Cost: Rent, insurance, instructors, utilities, loan payments
Other Considerations (a strong candidate will think of these): potential decline in popularity of yoga, marketing promotions, etc.
Information on Cost (provide when asked)
No variable costs on a per-customer basis - all costs are fixed.
5 main fixed costs: Rent/utilities building = $3500 a month; Liability Insurance = $1800 a year; administration costs (including owner
salary, supplies, computer system, marketing supplies) = $800 a week; Yoga instructor salaries: $50 a class; Loan Payments (to pay
off major paint/floor/plumbing renovations) = $500 a month
Information on Revenue (provide when asked)
Class fees are Orange Yogas only source of revenue
All classes cost $12 and there are average of 8 students per class on weekdays and 6 students per class on weekends
Assume every month has 22 weekdays and 8 weekend days

55

Case 5: Orange Yoga Studio

Analysis Continued
Answers:
Revenue: ($12 per class * 5 classes per day *8 students per class * 22 weekdays in a month) = $10,560 a month on weekdays
($12 per class*4 classes per day*6 students per class * 8 weekend days in a month) = $2304 a month on weekends
Total Revenue per month = $12,864 (can be rounded to $12.8K)
Costs: Monthly costs = $3500 in rent per month+150 in insurance per month ($1800/12) + $3200 in admin costs per month
($1000*4) + $5500 in yoga teacher salaries on weekdays ($50 a class * 5 classes a day *22 weekdays a month) + $1600 in yoga
teacher salaries on weekends ($50 a class*4 classes a day*8 weekend days a month) + $500 a month in loan payments.
Total Costs per month = $14,450 (can be rounded to $14.5K)
After being provided information on cost and revenue, the candidate should realize that Yoga Jones currently is losing approximately
$1.7K ($1650) a month in profit.

56

Case 5: Orange Yoga Studio

Prompt #2: Brainstorm
(Note: A strong candidate will naturally begin to go into the So What after analyzing the profit scenario, and begin to hypothesize on
the potential ways to improve revenue or lower costs. Steer the conversation by using the following prompt)
Prompt: After analyzing her books, Yoga Jones realizes that her decline in profit began after a $2000 per month rent increase last year
and a decision to raise all teacher salaries by $10 per class. She does not want to move and believes strongly in paying her teachers a
high wage for their work.
What else can she do?

Analysis
Potential solutions
Revenue:
Charge more for classes
Variable pricing: charge more for certain clients or for certain classes
Diversify products: Offer higher-priced classes, like pilates; start offering private classes or teacher-training classes; or start selling
related products, like yoga mats or water bottles
Offer more classes
Get more clients
Cost:
Eliminate unprofitable classes, cut down on her own salary, etc..
(Not a great idea: refinancing loansher loan payments are relatively small)
After the candidate has run out of ideas, show them Exhibit #1 and ask: Yoga Jones feels that she may not be meeting her students
demands with class times and this could be creating problems. Here is some information that may help.
57

Case 5: Orange Yoga Studio

Exhibit 1 A
Average number of weekday students in Orange Yoga classes, 2010-2014
Average number of weekday students in
Orange Yoga classes (2014)

12
10
8
# of students

6
4
2
0
7am 10am 12pm 6pm

8pm

11
10
9
8
7
6
5
4
3
2
2010

7am
10am

12pm
6pm
8pm

2011

2012

2013

2014

58

Case 5: Orange Yoga Studio

Exhibit 1 B
Average number of weekend students in Orange Yoga, 2010-2014
Average number of weekend students in
Orange Yoga classes (2014)

12
12

10
8
6

# of students

10

10am

12pm

6pm

8pm

0
10am

12pm

6pm

8pm

0
2010

2011

2012

2013

2014

59

Case 5: Orange Yoga Studio

Analysis
Chart insights: The presentation of information on the four graphs is deliberately overwhelming. All candidates should realize that the
top two graphs both pertain to weekday trends and the bottom two graphs pertain to weekend trends; strong candidates will structure
their analysis separately for weekends and weekdays. No detailed calculations are necessary for this graph - just insights
Key Weekday Insights:
Midday classes have a lower number of students than morning and evening classes
This trend has become more pronounced over last 5 years
Strong candidates will note that the 10am classes are not generating enough revenue to even cover teacher salary
Key Weekend Insights
Has opposite profile of weekday classes: midday classes are much more popular than evening classes
This trend has remained somewhat steady over past 5 years, though has become slightly more pronounced
Strong candidates will note that evening classes are not generating enough revenue to even cover teacher salary
A strong candidate will also notice that the max number of average participants peaks at 10 for both weekday and weekend classes
Strong candidates will also begin to hypothesize potential solutions, including restructuring class times to better meet the needs of
clients, eliminating unprofitable classes, and perhaps adding additional classes/instructors in the evening

60

Case 5: Orange Yoga Studio

Prompt #3: Increase Class Size
(Note: A strong candidate will notice that the max number of average participants peaks at 10 for both weekday and weekend classes.
If they do not realize this, steer them towards this realization).
Prompt: Good point. Yoga Jones currently allows a max of 10 students per class in order to keep the classes small. However, upon
looking at her registration records, it appears that she is almost always turning away students for her weekday evening classes and
weekend morning classes.
She would like to see if she can fit more students in her studio. Her studio is 13ft long and 21 ft wide. The average yoga mat is 6 ft long
and 2 ft wide. Yoga Jones feels that the minimum distance between 2 mats should be one foot, and the minimum distance between a
mat and a wall should be 6 inches. How many mats can she fit in her studio?

Analysis

13 ft

21 ft

Potential solution: See chart at left. She can fit up to 13 mats in her
studio. Candidates can solve this either drawing it out (at left) or
realizing that each mat will need a total of 21 square feet (6 inches on
each side) and the studio is 273 square feet. 273/21=13
(The instructor does not need a mat)

61

Case 5: Orange Yoga Studio

Prompt #4: Implementation
Prompt: If Yoga Jones eliminates all of her classes that currently do not cover teacher salary and begins allowing 13 students into each
class, will this be enough to save her studio?
Assume all current classes that currently have 10 students always have a waiting list of at least 3 students

Analysis
Cost
Yoga Jones will eliminate 1 weekday class (10 am) and 2 weekend classes (6pm and 8pm). Instructor salaries will change, all other
costs will remain the same:
Rent/utilities building = $3500 a month; Liability Insurance = $1800 a year; administration costs (including owner salary, supplies,
computer system, marketing supplies) = $800 a week; Yoga instructor salaries: $50 a class; Loan Payments (to pay off major
paint/floor/plumbing renovations) = $500 a month
Monthly Total = 3500 (rent) + 150 (insurance) + 3200 (admin) + $500 (loans) + $800 (weekend teacher salary) + $4400 (weekday
teacher salary = $12,500
Revenue
New weekday schedule: 3 classes with 13 students each; 1 class with 5 students = 44 students per day *$12*22= $11,616
New weekend schedule: 2 classes with 13 students each= 26 students per day *$12*8 = $2,496
Profit: $1612 (ok to round to $1.6k)
Strong candidate may also want to try to explore adding additional evening classes to increase revenue.

62

Case 5: Orange Yoga Studio

Recommendation
What are your final recommendations to Yoga Jones?

Analysis
All candidates should summarize their analysis and recommend increasing the max class size to 13 and eliminating classes.
Strong candidates will briefly summarize their analysis and results, but focus primarily on risks and next steps (emphasizing growth).
Risks include: losing long-term clients who valued flexible class times, upsetting clients who enjoyed small class sizes, and upsetting
valued teachers whose classes were eliminated.
Next step include: Mitigating against risks mentioned above - but more importantly, exploring some of the other options that were
outside of the scope of this case, including raising prices, diversifying products, etc

63

Case 5: Orange Yoga Studio

Performance Evaluation

What does the case test?

This case has both quantitative and qualitative elements. None of the math in this case is particularly tricky, but does require a
lot of quick calculations, as well as tying multiple pieces together to get a holistic recommendation. It also tests creativity by
encouraging candidates brainstorming and thinking outside the box ability.

What should good interviewee be doing/asking/providing throughout the case?

There are many different potential paths that this case could takea good candidate should test a variety of hypotheses with
the interviewer throughout the case.
Provide examples of what exceptional interviewees are doing throughout this case.
This case may be tricky for candidate who have no familiarity with yoga; however strong candidates should put themselves in
the shoes of the small business owner and try to see the problem for her perspective.
Exceptional candidates will always be thinking one step ahead, and provide next steps and hypotheses throughout the case.

64

Case Interview feedback form

Case _________________________ Case type _________________ Interviewer ____________________

Execution

Case start time ___:____

Structure

1 2 3 4 5

Logical approach
MECE
Appropriate drive to solution

Comments:

Quantitative Ability

1 2 3 4 5

Speed
Accuracy
Comfort, reaction to mistakes

Comments:

Business intuition
Practical
Insightful
Breadth & depth across multiple functions
Creativity

1 2 3 4 5
Comments:

Framework development
Framework explanation
Case discussion

______ min
______ min
______ min

Case end time ___:____

Overall Rating: 1 2 3 4 5
Strengths

Communication
Professionalism

1 2 3 4 5

Poise
Confident-Persuasive
Articulate-concise
Client ready

Comments:

Weaknesses

Written
Clarity of writing and page layout
Ability to refer back
Comfort, reaction to mistakes

1 2 3 4 5
Comments:

Behavioral (optional)
Quality of star stories
Length
Clarity
Relevance

1
1
1
1

2
2
2
2

3
3
3
3

4
4
4
4

5
5
5
5

Comments:
Key: 1=Bottom 10%, 2= 10th-25th percentile, 3=
middle 50%, 4= 75th-90th percentile, 5=Top 10%

CASE 6 SURFBBOARD WAX IN HAWAII

66

Case 6: Surfboard Wax in Hawaii

Prompt
Your client is a surfboard manufacturer based in Hawaii. The company has high brand recognition and a strong distribution network in
the state. The CEO wants to expand the companys product line and revenues and is thinking of entering the market for surfboard wax.
It has hired us to help them determine how big the market for surfboard wax is in Hawaii.

67

Case 6: Surfboard Wax in Hawaii

Interviewer Guidance
Before the Framework:
The candidate should recognize that this is a market sizing case and confirm this with the interviewer. If the candidate asks what
surfboard wax is, you can tell them that the wax comes in a bar form (similar to soap) and is used to coat the top of the surfboard in
order to provide surfers with a surface that their feet can grip. The candidate may ask how much the wax costs and is used. You can
explain that we will discuss this later in the case. A strong candidate will also ask if the client is looking for an annual dollar amount and
you should respond yes. Typically, all market sizing cases are in dollars but its good to clarify this upfront.
Framework:
A strong candidates framework will have the units needed to calculate the market size at the top of the paper. In this case, the units
are the average number of bars of wax sold annually * the average price of a bar of wax. The candidate should demonstrate an
understanding that he/she needs to know the number of surfboards in Hawaii, usage frequency, amount used and price in order to
crack the case. A good framework will outline an approach for how he/she will estimate the numbers for all of these units and present
this to the interviewer. For average number of bars of wax sold in a given year, the candidate would need to know the number of
surfboards in Hawaii, how frequently wax is applied to each surfboard and how much wax is used with each application. For price, the
candidate should show some approach for how the price might be estimated. Some suggested approaches are discussed later in this
case.
A common mistake is that the candidate will immediately attempt to estimate the population of Hawaii without explaining how this
will determine the market size. If the candidate does this, interrupt them and ask why they are estimating the population of Hawaii. If
they are unable to link the population of Hawaii with the number of surfboards and therefore units of wax sold in Hawaii, guide them
until they are able to correctly identify the units that are needed to solve the case.

68

Case 6: Surfboard Wax in Hawaii

Interviewer Guidance
After the Framework:
Calculating the Number of Surfboards
A strong candidate will recognize that Hawaii has a large tourism industry and would therefore have to estimate the number of
resident surfers and number of tourists who surf and the average number of boards per surfer for each population.
Resident Surfers
One approach is to estimate the population of Hawaii by starting with the estimated US population of 300 million divided among 50
states. This gives each state an average population of 6 million. Hawaii is a smaller state bigger than Wyoming, which has a
population of 500k but smaller than Maryland which has a population of 6m. (The actual population of Hawaii is 1.4m). Assuming that
the candidate is not wildly off, you can provide this number to the candidate after he/she estimates the population and allow for
rounding of 1m or 1.5m to make the math easier.
The candidate can then calculate the number of surfers by segmenting the population by age (0-20, 21-40, 41-60, 61+ is easiest) and
estimating the percentage who surf. An estimate of 25%-50% is acceptable. Another approach is to draw from personal experience. A
candidate from Minnesota might say 25% of Minnesotans play hockey, the states most popular sport. Since surfing is the most popular
sport in Hawaii, Ill assume that 25% of the population surfs. After the candidate calculates the number of resident surfers, you can tell
the candidate that the average number of surfboards per surfer is 2.
The candidate should calculate the number of surfboards owned by residents is 25%*1m*2=500,000 on the low end and
50%*1.5m*2=1,500,000 on the high end.

69

Case 6: Surfboard Wax in Hawaii

Interviewer Guidance
Tourists
Companies that rent surfboards to tourists comprise the other major segment of the market and there are many ways to estimate the
number of surfboards in this segment. Ask the candidate to brainstorm what the number might be and how they would calculate the
number of surfboards needed to serve tourists. The key here is to check whether the candidate understands that tourists are
sharing/renting boards so the number of surfboards in this segment be much smaller than the number of tourists who visit might
imply. It also is meant to showcase the candidates ability to structure an approach to solve a very complex problem. One approach is
to start by estimating the number of tourists who visit Hawaii. Since Hawaiis primary industry is tourism, it is safe to assume that the
number is going to be a multiple of the states population since the vast majority of the states jobs depend on it. Think about how
many tourists would be needed in a hotel to cover the cost of overhead and pay for the salary of one hotel worker.
At the end of the brainstorm, the interviewer should tell the candidate that there are 7m tourists who visit Hawaii a year staying an
average of 10 days. Twenty-five percent of tourists surf an average of two days. It is assumed that all of them rent surfboards. The
candidate should calculate the number of surfboards needed for rental: 7m*25%*2=3.5m/365 days = 9,589 boards needed per day
(Rounding the year to 350 days or the solution to 10k is fine). Therefore, the total number of surfboards in Hawaii ranges from 510k or
1.51m.
Usage
If there is time, ask the candidate to brainstorm the amount of how wax used per waxing and how frequently the product is used. One
approach is for the candidate to relate it to something they are more familiar with such as car wax. A candidate might say that they
wax their car 4 times a year and use 25% of the jar per use. In this case, the interviewer can share that a surfboard is waxed every
three months and uses 50% of the bar with each use. Therefore, there are 510k*4*50%=1.02m bars of wax sold annually on the low
end and 1.51m*4*50%=3.02m on the high end.

70

Case 6: Surfboards in Hawaii

Interviewer Guidance
Pricing:
If there is time, ask the candidate how they might determine the average price. There are two approaches to this. The candidate can
either estimate costs on the value chain or identify comparable products (like car wax) and what their costs are to provide an estimate.
Since a value chain approach is more difficult in this case, the candidate should use a comparable product to estimate what the
average price of wax is. The interviewer can then share that the average price is $2 per bar.
Market size:
The candidate can then calculate the total market size: 1.02*$2=$2.04 M or 3.02*$2=$6.04 M
Ending the Case:
Market sizing questions dont typically need recommendation but the candidate could end the interview with something like this: The
total market size we calculated is $2.04m. We arrived at this estimate by calculating the total number of surfboards in Hawaii among
residents and at rental companies and multiplying this by how frequently wax is purchased - which in this case is every three months,
and the average price of wax at $2. If our client is looking to expand its product line and revenue, it may want to consider selling higher
revenue items like clothing or sell its surfboards in the mainland.

71

Case 6: Surfboards in Hawaii

Performance Evaluation
Exceptional Candidate:
Candidate asks clarifying questions at the beginning of the prompt and recognizes that this is a market sizing case. Framework is
appropriately customized and has correct units listed and a clear plan for how the candidate will estimate those units. Candidate drives
case, executes mathematical computations flawlessly and provides a market size within the accepted range.
Strong Candidate
Candidate asks clarifying questions at the beginning of the prompt and recognizes that this is a market sizing case. Framework is
appropriately customized and has correct units listed and a clear plan for how the candidate will estimate those units. Candidate may
need some guidance on moving forward in the case and may make small mistakes on mathematical computations. The candidate
provides a market size within the accepted range.
Borderline Candidate
Candidate recognizes that this is a market sizing case. Framework is appropriately customized and has correct units listed but may lack
a clearly defined plan for how the candidate will estimate those units. Candidate may need guidance on moving forward in the case
and may make some mistakes on mathematical computations. The candidate provides a market size within the accepted range.
Weak Candidate
Candidate recognizes that this is a market sizing case. Framework is not customized, does not have correct units listed and lacks a
defined plan for how the candidate will estimate those units. Candidate may begin to estimate Hawaiis population without conveying
how this will help them size the market. Candidate needs guidance on moving forward in the case and makes many mistakes on
mathematical computations. The candidate does not provide a market size within the accepted range.

72

Case Interview feedback form

Case _________________________ Case type _________________ Interviewer ____________________

Execution

Case start time ___:____

Structure

1 2 3 4 5

Logical approach
MECE
Appropriate drive to solution

Comments:

Quantitative Ability

1 2 3 4 5

Speed
Accuracy
Comfort, reaction to mistakes

Comments:

Business intuition
Practical
Insightful
Breadth & depth across multiple functions
Creativity

1 2 3 4 5
Comments:

Framework development
Framework explanation
Case discussion

______ min
______ min
______ min

Case end time ___:____

Overall Rating: 1 2 3 4 5
Strengths

Communication
Professionalism

1 2 3 4 5

Poise
Confident-Persuasive
Articulate-concise
Client ready

Comments:

Weaknesses

Written
Clarity of writing and page layout
Ability to refer back
Comfort, reaction to mistakes

1 2 3 4 5
Comments:

Behavioral (optional)
Quality of star stories
Length
Clarity
Relevance

1
1
1
1

2
2
2
2

3
3
3
3

4
4
4
4

5
5
5
5

Comments:
Key: 1=Bottom 10%, 2= 10th-25th percentile, 3=
middle 50%, 4= 75th-90th percentile, 5=Top 10%

CASE 7 PACIFIC NORTHWEST TELCO

74

Case 7: Pacific Northwest Telco

Prompt
Your client is a large, regional telecommunications provider in the Pacific NW. Amidst increased competition, the client has brought you
on to explore ways which it can increase customer relationship and revenue. What are your thoughts?

Behavioral Questions
Whats your favorite hobby?
Tell me about something interesting youve done thats not on your resume?

Interviewer Guidance
The clients goal is to increase revenue and stabilize customer base. Costs should not be considered
The client provides the following services : cable television, fixed telephone lines, internet, and mobile phones
Profitability and revenue have remained constant, but the client is concerned about new market entrants (Verizon and AT&T, among
others)
Interviewee should first walk through an analysis of where money is made in this business
o After creating a profitability tree, ask where they see opportunities to increase revenue

75

Case 7: Pacific Northwest Telco

Exhibit 1
Potential bundling options
4X bundle
Feature

3X bundle

Price / month

Components

Bundled:

2x bundle

Price / month

Components

Bundled:

Internet

Internet

Price / month

Phone line
$

Cable

Internet

75

Phone line

25

Cable

100

75

150

150 Cable

185
Unbundled:

Cable
Unbundled:

Cell phone
Cell phone
54 months

Price / month

Unbundled:

Internet
$

Components

Bundled:
$

Phone line

No Bundle

Phone line

25 Cell phone

75 Cell phone

75

42 months

36 months

30 months

Average customer life

76

Case 7: Pacific Northwest Telco

Interviewer Guidance, continued

Push the interviewee to create 6-8 ideas for the client to increase revenue after presenting their profitability analysis. Continue to
ask what else? Continue to push for a few minutes, even if they are stumped

If the interviewee suggested bundling products say, the client liked your suggestion of beginning to bundle products, and has
conducted the following analysis. They would like you to tell them which of the following bundles would be most likely to achieve
their goals. Show them Exhibit 1

If the interview did not suggest bundling, say The client believes that beginning to bundle products will increase revenue and
customer retentions rates, and has conducted the following analysis. They would like you to tell them which of the following
bundles would be most likely to achieve their goals. Show them Exhibit 1

See appendix 1 for explanation of exhibit and required calculations

Recommendation

The interviewee should recommend that the client begin offering / promoting the 4 bundle product: fulfills goal of increased
revenue and customer retention

77

Case 7: Pacific Northwest Telco

Performance Evaluation
What does the case test?
o Basic profitability analysis of telecom industry
o Opportunities to increase revenue when costs are not a concern
o Basic math and exhibit comprehension
What should good interviewee be doing/asking/providing throughout the case?
o Should have a solid profitability analysis
o Should ask about products offered by client
o Should provide accurate answers to mental math on Exhibit 1
o Should be able to understand exhibit 1 without asking too many clarifying questions
Provide examples of what exceptional interviewees are doing throughout this case.
o Excellent interviewees will ask about product mix without prompting and will mention the fact that they know there has
been a lot of consolidation (M&A) and product line expansion in this industry
o Should be able to come up with ideas on demand until the interviewer provides the bundling suggestion
- Coming up with the bundling idea should not be expected
o Ideal candidate would ask about cannibalization / opportunity size (even though its not relevant)

78

Case 7: Pacific Northwest Telco

Exhibit 1
Explanation
4X bundle
Feature

3X bundle

Price / month

Components

Bundled:

2x bundle

Price / month

Components

Bundled:

Internet

Internet

Price / month

Cable

Internet

75

Phone line

25

Cable

100

75

150

150 Cable

185
Unbundled:

Cable
Unbundled:

Cell phone
Cell phone
54 months

Price / month

Unbundled:

Internet

Phone line
$

Components

Bundled:
$

Phone line

No Bundle

Phone line

25 Cell phone

75 Cell phone

75

42 months

36 months

30 months

Average customer life

Total value:
9990

9450

9000

8250

Interviewee should realized that lifetime value is the key here. Therefore monthly revenue should be multiplied by average
customer life. Assume client buys all 4. Also, cannibalization and market size should not be considered
79

Case Interview feedback form

Case _________________________ Case type _________________ Interviewer ____________________

Execution

Case start time ___:____

Structure

1 2 3 4 5

Logical approach
MECE
Appropriate drive to solution

Comments:

Quantitative Ability

1 2 3 4 5

Speed
Accuracy
Comfort, reaction to mistakes

Comments:

Business intuition
Practical
Insightful
Breadth & depth across multiple functions
Creativity

1 2 3 4 5
Comments:

Framework development
Framework explanation
Case discussion

______ min
______ min
______ min

Case end time ___:____

Overall Rating: 1 2 3 4 5
Strengths

Communication
Professionalism

1 2 3 4 5

Poise
Confident-Persuasive
Articulate-concise
Client ready

Comments:

Weaknesses

Written
Clarity of writing and page layout
Ability to refer back
Comfort, reaction to mistakes

1 2 3 4 5
Comments:

Behavioral (optional)
Quality of star stories
Length
Clarity
Relevance

1
1
1
1

2
2
2
2

3
3
3
3

4
4
4
4

5
5
5
5

Comments:
Key: 1=Bottom 10%, 2= 10th-25th percentile, 3=
middle 50%, 4= 75th-90th percentile, 5=Top 10%

CASE 8 THE EVERYTHING RETAILER

81

Case 8: The Everything Retailer

Prompt
A mass retailer Everything Retailer is seeing stagnating growth in its year-over-year sales. You were brought in to identify the issue and
propose ways to boost sales growth.

Behavioral Questions
Describe a time you were confronted with a failure or an obstacle at your job, and how you handled it.
Describe a time you exercise creativity or outside-the-box thinking.

Interviewer Guidance
This starts as a broad case on strategy there are many different ways the interviewee may want to proceed. Quantitative analysis
begins when the interviewee identifies the need for a new store format. Bonus points if, at the end, the interviewee mentions other
risks and ways to mitigate them.
Additional information:
Large US retailer (think Walmart) with an extensive network of big-box discount stores across the US.
Sales growth slowed to 1-2%, while industry is growing at 3%. Clients target: double-digit comp sales growth.
If asked about any increases in costs, say no. This is irrelevant.

82

Case 8: The Everything Retailer

Analysis
1) Ask the interviewee to identify the source of Everything Retailers problem by presenting data on sales from Everything Retailer
Show Exhibit 1

Recommendation
Some potential sources of flat growth that the interviewee may mention are:
New competitors, especially e-commerce as consumers shift away from big-box stores to shopping online tell him/her that this is
an interesting additional consideration, but steer him/her away from delving into this.
Big-box stores product assortment no longer as relevant to the customers shopping in those stores.
Macroeconomic factors recession and decrease in consumers disposable income.
Exhibit 1 shows that stores are now opening faster than the sales are increasing. Thus, the current store format has reached its
maximum penetration, and sales are flat.
Need to tap into a new customer segment.

83

Case 8: The Everything Retailer

Exhibit 1
Everything Retailer's Historical Sales ($M) and
Number of Stores
5,000
4,500
4,000
3,500

3,000
2,500
2,000
1,500
1,000
500
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

# of Stores

Sales ($M)
84

Case 8: The Everything Retailer

Analysis
2) In proposing ways to grow sales, interviewee may have (MECE):
International expand overseas (build stores or M&A or Joint Venture) steer interviewee away.
Domestic
o Grow current big-box store sales steer interviewee away current stores have the optimal product mix and
locations for big-box retailer.
o Reach new customer:
- Product go up-market or down-market to target more affluent or less affluent shoppers. Good point, but
steer interviewee away.
- Format say that the client has piloted 3 formats and show Exhibit 2

Recommendation
Entering the grocery market with Local Market stores represent the biggest revenue opportunity.
Ask the interviewee what analysis he/she would need to do next. How to gauge whether Everything Retailer should go ahead with
opening Local Markets?

85

Case 8: The Everything Retailer

Exhibit 2
Format

Description

Competitors

Market
(FY2015)

Expected
market share

Local Market

Grocery store +
pharmacy

Kroger, Safeway,
regional grocers

$620B

30%

MiniBox

Same product
assortment as bigbox stores, but much
smaller size
Big-box stores on
college campuses,
with some
assortment tailored
to students
shopping habits

Dollar stores,
convenience stores

$106B

60%

Campus
Companion

Depends on location N/A

(urban vs. college
town)

N/A

86

Case 8: The Everything Retailer

Analysis
3) Use a simple NPV analysis to determine whether Everything Retailer should go ahead with opening Local Markets.
Show Exhibit 3 and ask to calculate NPV. Give formula, if needed: NPV = (FCFt)/(1+WACC)^t
Assume market growth rate of 0% annually

Exhibit 3 Guidance
Year 0
Market share
Revenue
Costs

$6.25M *1,000 stores =

$6.25B

Discount rate (WACC)

Year 1

Year 2

Year 3

10%

20%

30%

$62,000,000,000

$124,000,000,000

$186,000,000,000

$1,000,000,000

$4,000,000,000

$8,000,000,000

10%

10%

10%

FCF

($6,250,000,000)

$61,000,000,000

$120,000,000,000

$178,000,000,000

FCFt/(1+WACC)t

($6,250,000,000)

$55,454,545,455

$99,173,553,719

$133,734,034,560

NPV

$282,112,133,734

* Acceptable for Interviewee to round numbers

Recommendation
Ask the interviewee whether the client should undertake this venture. The answer should be Yes since it is NPV-positive.
87

Case 8: The Everything Retailer

Exhibit 3
NPV of building 1,000 Local Market stores
Year 0

Year 1

Year 2

Year 3

10%

20%

30%

$1M per store to

maintain

$4M per store to

maintain

$8M per store to

maintain

Discount rate (WACC)

10%

10%

10%

(1+WACC)t

1.10

1.21

1.33

Market share
Revenue
Costs

$6.25M per store

to build

FCF

FCFt/(1+WACC)t

NPV

88

Case 8: The Everything Retailer

Performance Evaluation
This case tests the interviewee's ability to consider the client (which is a huge and mature big-box retailer), and hone in on the fact
that the current store format has reached its optimal penetration, and that a new format strategy is needed.
Interviewee will also suggest a basic NPV analysis as a way to evaluate whether Everything Retailer should build Local Market stores.
A good interviewee will have a MECE approach for exploring the levers to grow sales growth, and in his/her Recommendation and
Next Steps slide, will also include risks such as:
o Competitors other brick-and-mortar grocers can be mitigated if Everything Retailer leverages its economies of scale to
maintain a price leadership position on the products in in its Local Markets, thus differentiating itself from other grocery
chains.
o Competitors e-commerce, like Fresh Direct or AmazonFresh can be mitigated by a move into e-commerce.
o Cannibalization of grocery sales from existing big-box stores, which also carry groceries. Can be offset by offering a different
grocery assortment in its big-box stores versus its Local Markets.
o Overcoming a brand perception of quality that can be an obstacle to winning grocery customers trust can be mitigated by
spinning off Local Markets as a separate brand.

89

Case Interview feedback form

Case _________________________ Case type _________________ Interviewer ____________________

Execution

Case start time ___:____

Structure

1 2 3 4 5

Logical approach
MECE
Appropriate drive to solution

Comments:

Quantitative Ability

1 2 3 4 5

Speed
Accuracy
Comfort, reaction to mistakes

Comments:

Business intuition
Practical
Insightful
Breadth & depth across multiple functions
Creativity

1 2 3 4 5
Comments:

Framework development
Framework explanation
Case discussion

______ min
______ min
______ min

Case end time ___:____

Overall Rating: 1 2 3 4 5
Strengths

Communication
Professionalism

1 2 3 4 5

Poise
Confident-Persuasive
Articulate-concise
Client ready

Comments:

Weaknesses

Written
Clarity of writing and page layout
Ability to refer back
Comfort, reaction to mistakes

1 2 3 4 5
Comments:

Behavioral (optional)
Quality of star stories
Length
Clarity
Relevance

1
1
1
1

2
2
2
2

3
3
3
3

4
4
4
4

5
5
5
5

Comments:
Key: 1=Bottom 10%, 2= 10th-25th percentile, 3=
middle 50%, 4= 75th-90th percentile, 5=Top 10%

CASE 9 GEE & GEES HOUSE OF BRANDS

91

Case 9: Gee & Gees House of Brands

Prompt
A large CPG company Gee & Gee is looking to shed half of its brands in an effort to boost growth, simplify its operations, be more
nimble, and cut costs. How do you decide which brands to eliminate in order for Gee & Gee to reach its growth targets? What are the
additional considerations that the client should be aware of?

Behavioral Questions
What achievement are you most proud of? Why?
Describe a time you faced a conflict in a team, and the outcome.

Interviewer Guidance
The client is looking to exit any industry or brand that it does not have a market leadership position in. Make sure the interviewee
grasps this motivation, and it informs his/her analysis of which brands to eliminate. Bonus points for the interviewee who appreciates
why the client is willing to cull its brand portfolio in order to become more nimble in responding to consumer trends.
Additional information:
The client is a large, multinational CPG company (think P&G, Unilever), with ~$6B in annual sales.
Assume a 10-brand portfolio spanning beauty, personal care products, baby care, cleaning supplies, pet food, etc. Client wants to
shed 5 brands.
If asked about any increases in costs, say there has been nothing unusual, but that Gee & Gee will benefit from eliminating the costs
associated with maintaining unproductive brands.

92

Case 9: Gee & Gees House of Brands

Analysis
1) How would you choose which 5 brands to divest from the 10-brand portfolio? Show Chart 1.
Are some metrics more important or relevant to Gee & Gee than others?
Reiterate that size of the business may not matter a billion-dollar in sales brand can go on the chopping block if Gee & Gee
does not have a market leadership position in that space.

Recommendation
The interviewees criteria for which brands to eliminate should be similar to the criteria he/she will see in Chart 1.
The interviewee should point out the following observations from Chart 1:
Top 5 brands are bringing in ~80% of sales revenue.
Quickly identify the obvious market leaders for Gee & Gee (Warrior Two Detergent, Triangle Diapers) across all the metrics.
Acknowledge the trade-offs of eliminating smaller brands that may be higher-margin, have strong brand equity, or give Gee & Gee access to a
certain retail channel.
Interviewee does not need to calculate the annual profit of each brand; he/she can just point to the trade-off inherent in divesting
smaller brands that may have with higher margins.
Pet food is probably not strategic fit with CPGs overall focus on personal care products.
The client might look into eliminating (and give the rationale):
1. Downward-Facing Dog Food does not have a market leadership position.
2. Bird of Paradise Feed does not have a market leadership position.
3. Headstand Hair Color relatively small annual sales and low consumer brand perception, despite being high-margin.
4. Soapvasana relatively small annual sales and low margin, but strong consumer brand perception.
5. Sun Salutations Soak relatively small annual sales and low consumer brand perception.
The interviewee should name some risks associated with divesting each of these brands, such as:
An exit from the Pet food market means there is less portfolio diversification for Gee & Gee and Downward-Facing Dog Food is a large brand
in terms of annual sales.

93

Case 9: Gee & Gees House of Brands

Exhibit 1
Gee & Gees Brand Portfolio
Category

Annual
sales

Profit
margin

Gee & Gees

market share

Consumer
perception*

Beauty

$980M

18%

2nd

Personal care

$110M

12%

4th

Baby care

$660M

22%

3rd

Cleaning supplies

$415M

14%

2nd

Pet food

$915M

27%

4th

Personal care

$125M

29%

5th

Baby care

$1.05B

33%

2nd

Cleaning supplies

$1.150B

19%

1st

Bird of Paradise Feed

Pet food

$230M

26%

3rd

Headstand Hair Color

Personal care

$190M

36%

5th

Brand
Upward-Facing Wash
Soapvasana
Happy Baby Shampoo
Cat Cow Cleaner
Downward-Facing Dog Food

Sun Salutations Soak

Triangle Diapers
Warrior Two Detergent

* A proxy for brand equity, measured on a scale of 1-5, where 1 is perceived as the as cheapest and lowest-tier
brand in that market, 5 as the highest-tier brand.
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Case 9: Gee & Gees House of Brands

Analysis
2) After proposing to sell the 5 brands identified in Chart 1, if the interviewee does not dive into next steps, prompt him/her to
discuss:
How to calculate the sale price?
How to evaluate potential buyers?

Recommendation
Calculate the sale price interviewee can suggest a Discounted Cash Flow analysis or a Comparables analysis.
Potential buyers are:
Other CPG firms
Pro: Less aggressive in price negotiations than PE firms
Con: May become more competitive vis--vis Gee & Gee; may end up leveraging Gee & Gee brands retail channels or
hiring Gee & Gee employees
PE firms specializing in turning around orphaned CPG brands
Pro: Do not directly compete with Gee & Gee
Con: Traditionally, aggressive in extracting value from the deal

95

Case 9: Gee & Gees House of Brands

Analysis
3) Suppose Gee & Gee divests the 5 brands you identified. Propose a strategy that will drive company growth post brandrationalization.

Recommendation
This prompt is broad, and tests the interviewees ability to tackle ambiguity in a structured way.
Interviewee may suggest levers for growth such as:
Appeal to new customer segments in the same distribution channels:
Demographic trends brands that target Baby Boomer or Millennials, which are growing segments
Social-economic segmentation for example, grow Gee & Gees market share in premium or all-natural products
Look for new distribution channels:
Brick-and-mortar undertake co-branding campaigns with major big-box retailers; pharmacies; Costco/Sams Club
E-commerce grow Gee & Gees market share in Amazon.com, Soap.com

96

Case 9: Gee & Gees House of Brands

Performance Evaluation
This case tests the interviewees ability to:
Sift through a lot of information quickly and ignore the extraneous data.
Put him/herself in the clients shoes as the CPG client undergoes the process of brand rationalization, and refreshes its growth
strategy (intentionally ambiguous prompt).
A good interviewee will drive the case after the 5 brands are eliminated, discussing the potential buyers and the growth strategy, and
will deliver a Recommendation and Next Steps slide that succinctly ties the whole case together.

97

Case Interview feedback form

Case _________________________ Case type _________________ Interviewer ____________________

Execution

Case start time ___:____

Structure

1 2 3 4 5

Logical approach
MECE
Appropriate drive to solution

Comments:

Quantitative Ability

1 2 3 4 5

Speed
Accuracy
Comfort, reaction to mistakes

Comments:

Business intuition
Practical
Insightful
Breadth & depth across multiple functions
Creativity

1 2 3 4 5
Comments:

Framework development
Framework explanation
Case discussion

______ min
______ min
______ min

Case end time ___:____

Overall Rating: 1 2 3 4 5
Strengths

Communication
Professionalism

1 2 3 4 5

Poise
Confident-Persuasive
Articulate-concise
Client ready

Comments:

Weaknesses

Written
Clarity of writing and page layout
Ability to refer back
Comfort, reaction to mistakes

1 2 3 4 5
Comments:

Behavioral (optional)
Quality of star stories
Length
Clarity
Relevance

1
1
1
1

2
2
2
2

3
3
3
3

4
4
4
4

5
5
5
5

Comments:
Key: 1=Bottom 10%, 2= 10th-25th percentile, 3=
middle 50%, 4= 75th-90th percentile, 5=Top 10%

CASE 10 GOING GREEN

99

Case 10: Going Green

Behavioral Questions

Describe a time a teammate was not pulling their weight. What did you do about it?
What three things would your previous supervisor identify as your areas of improvement?

Prompt
Over the last few years some states have legalized medical marijuana sales on a prescription basis, and some have even legalized recreational use.
The cultivation and sales of marijuana most often take place in small storefronts called dispensaries. In most states, limits have been created on
how many dispensaries are allowed to exist at any one time.
Your client, North Carolina Tobacco Company, made $8 Billion in revenue and $2 Billion in profits last year, but has seen declining use of cigarettes
in the United States, which currently makes up 25% of its total revenue and profit. NC Tobacco is considering moving into the recreational
marijuana market. What should they do? Assume that federal regulations are not a concern in this case.

Interviewer Guidance
Provide if requested:
Global use of tobacco has not declined and is even increasing in some areas
NC Tobacco is interested in diversifying their portfolio of products
NC Tobacco is normally focused on long-term profitability, but because this is a very new market they arent completely sure what else they
should be thinking about.
NC Tobacco only interested in entering the recreational market, as medical marijuana is highly regulated and requires the dispensary to be a not
for profit organization. (Assume recreational dispensaries are for-profit)
A good candidate will recognize that this is a market entry question. The framework can include:
Market Evaluation: Market Size, barriers to entry,
Entry: Buy, Build, Partner
Economics: Costs, Revenue, synergies with cigarette business, NPV
Risks: Political fallout in NC (tobacco centric state), Negative PR for getting in drug business, potential substitution of cigarette sales, consumer
100
distaste for big corporate, problems with financing (banks dont want to finance due to risks associated with Marijuana).

Case 10: Going Green

Prompt
NC Tobacco is interested in Washington and Colorado, which are two states that have legalized recreational use of marijuana. What is
the potential market size in Washington and Colorado?

Interviewer Guidance
Guide the candidate toward a top-down approach. Provide the following information if requested:

Colorado Population: 5 Million

Colorado Population that smokes: 15%
Washington Population: 7 Million
Washington Population that smokes: 10%
Number of grams consumed per week: 1
Price per gram (assume this is the equivalent of 1 marijuana cigarette): $15

Candidate should lay out information requested on an organized chart or data table.

Analysis
Washington Market size: $15/gram * 50 grams/yr * 7M people * 10% = $525 M
Colorado Market Size: $15/gram *50 grams/yr * 5M people * 15% = $562.5 M
Candidate should note a fairly large market size relative to current NC Tobacco profits, and a relatively larger market size in Colorado.

101

Case 10: Going Green

Prompt
Now that NC Tobacco understands the market size, how should they enter the market?

Interviewer Guidance
The candidate should analyze the cost/benefits for buy, build or partner. Guide them to the primary analysis of buy or build, if they
dont arrive there quickly. If candidate inquires about JV, assume NC Tobacco wants full control of the process. The candidate should
approach this in a structured way that analyzes the positives and negatives of each. Utilizing a table is one way to facilitate this:

Analysis
Strategy

Buy

Build

Benefits

Quick to ramp up and capitalize on first mover advantage

Utilize local expertise
Few states have marijuana cigarettes so easy to consolidate
Utilize local brand recognition

Easier to build culture

Few consolidated competitors means less competition
Similar products may allow ease of entrance into market

Disadvantages

Integration into new company

Scattered, independent operators may make consolidation
challenging
Financing may be challenging for marijuana dispensary
purchases

Limited licenses distributed restrict ability to build from scratch

Time to grow plants, establish brand name and sell may take too
long other competitors may enter

Recommendation
Candidate should recall limited amount of licenses distributed and recognize that building would be more difficult. Client should buy
rather than build.
102

Case 10: Going Green

Prompt
NC Tobacco is interested in purchasing a portion of the dispensaries currently in the market. What do they need to know in order to
determine the worthiness of the investment, and which market they should enter, if any?

Interviewer Guidance
Potential avenues of pursuit could be an ROI, a Breakeven, or an NPV analysis. Guide the candidate towards an NPV analysis and a
determination of the value of the purchases to NC Tobacco. Once they have asked for financial information, provide Exhibit 1.
The first step of this analysis is to determine the revenue for each individual dispensary. Candidate should recognize that they require
the number of individual dispensaries in each state. See below for information individual revenue numbers are on interviewer copy
of Exhibit 1.
Total number of dispensaries in Colorado: 100
Total number of dispensaries in Washington: 200

One they calculate the individual revenue, the candidate should begin pursuing an NPV valuation with the data at hand. Provide the
following information upon request

Total number of dispensaries in Colorado available for sale: 10

Estimated purchase price of each Colorado dispensary: $4M
Total number of dispensaries in Washington available for sale: 30
Estimated purchase price of each Washington dispensary: $1.5M
Discount rate: 10% (assume the NPV is in perpetuity)

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Case 10: Going Green

Exhibit 1
Estimated Income Statement for a Future NC Tobacco Dispensary
Colorado

Washington

Revenue

Cost of Goods Sold

$2,175,000

$1,050,000

Overhead

$1,100,000

$450,000

Salary

$525,000

$375,000

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Case 10: Going Green

Exhibit 1: Interviewer Guidance
Estimated Income Statement for a Future NC Tobacco Dispensary
Colorado

Washington

Revenue

$5,625,000

$2,625,000

Cost of Goods Sold

$2,175,000

$1,050,000

Overhead

$1,100,000

$450,000

Salary

$525,000

$375,000

105

Case 10: Going Green

Analysis
Colorado

Washington

Market Size

$562,500,000

$525,000,000

# of Dispensaries

100

200

Revenue/Dispensary

$5,625,000

$2,625,000

Cost of Goods Sold

($2,175,000)

($1,050,000)

Overhead

($1,100,000)

($450,000)

Salary

($525,000)

($375,000)

CF/store

$1,825,000

$750,000

# of stores available for purchase

10

30

Total CF/Store

$18,250,000

$22,500,000

Discount Rate

10%

10%

DCF of purchased stores

$182,500,000

$225,000,000

Cost to purchase 1 store

Cost to purchase available stores

($4,000,000)
($40,000,000)

($1,500,000)
($45,000,000)

NPV

$142,500,000

$180,000,000

Recommendation
A good candidate will immediately note the higher NPV for Washington over Colorado. An excellent candidate will realize that both are viable
options due to the positive NPV..

106

Case 10: Going Green

Prompt
Should NC Tobacco move forward with purchasing dispensaries? What are some other factors that NC Tobacco might want to consider
before moving forward with their decision?

Interviewer Guidance
Candidate should provide a conclusion slide clearly identifying the recommendation, along with the risks associated with the strategy.
Recommended action would be to move forward with purchase of both Colorado and Washington dispensaries due to NPV, but the
candidate can make a case for either moving forward or for not purchasing as long as sufficient support is provided. This is a good
opportunity to push the candidate with what else questions, particularly during the risk assessment.

107

Case 10: Going Green

Analysis
Potential Rationale for moving forward with purchase:
Positive NPV
Higher profit margin than cigarettes
First mover advantage
Potential high-growth market as more states legalize
Synergistic opportunities in supply chain, marketing, etc.
New (and highly loyal) customer base
Cigarettes inviable for long term
Potential Rationale for not continuing:
NPV small for company making $8 Billion/yr in revenue
Potential variability in projected vs. actual income statement estimates
Potentially low estimate of purchase price (given low NPV/store)
Potential first mover disadvantage
Negative PR for getting in drug business
Potential substitution of cigarette sales
Potential consumer distaste for big business
Problems with financing (banks dont want to finance due to risks associated with Marijuana)
Cigarette sales still strong abroad focus on international opportunities

108

Case 10: Going Green

Performance Evaluation
This case tests the candidates ability to:
o Work through complicated math
o Develop structured approaches to problems
o Recall key facts discussed earlier in the case
o Understand key factors that drive market entry and M&A cases
o Make a recommendation in the face of ambiguous information
o Remain professional in a business case that may otherwise encourage individuals to lose their professionalism
Good interviewees will:
o Will have an understanding where the case is going throughout
o Have 1-2 math errors but recovers appropriately
o Displays good ability to utilize public math
o Creates basic MECE structure (bucketed approach, etc.) to analyze problems
o Provides conclusion with support
o Provides a recommendation after analysis with 3-4 potential risk factors
o Maintains professional composure throughout
Exceptional interviewees will
o Drive the case forward throughout with hypothesis based inquiry
o Have 0 math errors
o Will maintain composure throughout the math
o Add creative ideas to qualitative analysis
o Addresses prompts with advanced matrices or analytical structures that show depth of thinking and organization
o Is engaging, displays interest in the subject and has appropriate body posture and presence
o Provides a strong, efficient, concise recommendation with at least 4-5 risk factors.
109

Case Interview feedback form

Case _________________________ Case type _________________ Interviewer ____________________

Execution

Case start time ___:____

Structure

1 2 3 4 5

Logical approach
MECE
Appropriate drive to solution

Comments:

Quantitative Ability

1 2 3 4 5

Speed
Accuracy
Comfort, reaction to mistakes

Comments:

Business intuition
Practical
Insightful
Breadth & depth across multiple functions
Creativity

1 2 3 4 5
Comments:

Framework development
Framework explanation
Case discussion

______ min
______ min
______ min

Case end time ___:____

Overall Rating: 1 2 3 4 5
Strengths

Communication
Professionalism

1 2 3 4 5

Poise
Confident-Persuasive
Articulate-concise
Client ready

Comments:

Weaknesses

Written
Clarity of writing and page layout
Ability to refer back
Comfort, reaction to mistakes

1 2 3 4 5
Comments:

Behavioral (optional)
Quality of star stories
Length
Clarity
Relevance

1
1
1
1

2
2
2
2

3
3
3
3

4
4
4
4

5
5
5
5

Comments:
Key: 1=Bottom 10%, 2= 10th-25th percentile, 3=
middle 50%, 4= 75th-90th percentile, 5=Top 10%

CASE 11 ALLHEALTHY CRM

111

Case 11: AllHealthy CRM

Prompt
Your client, AllHealthy, is one of the largest health plans in the United States with over 30,000 employees. They are facing drastic
changes in the health care industry. Healthcare reforms have pushed AllHealthy to pursue a route of customer-centric strategies. To
remain competitive with the raise of Health Care Exchanges, your client has decided to implement a Client Relationship Management
(CRM) system in order to enhance the customer and employee experience.
Currently, contact center associates have no visibility into customer call history. When a customer calls with a follow up question, new
cases are created in AllHealthys legacy CRM system instead of being attached to the original case. Additionally, when calls are
transferred, the next associate does not the previous call history and must re-ask demographic and issue questions. This process
decreases customer satisfaction and leads to re-work and decreased productivity for contact center associates.
You are the change management lead for the new CRM system adoption project. AllHealthy wants to understand how you will help
them prepare their business for this large scale change.
There are several questions and considerations they want you to address in your plan:
Who are the stakeholders? How will you communicate to these stakeholders?
What are the change issues and how will you address them?
How will you measure success?

Interviewer Guidance
Note: Human Capital cases are intended to be carried in a conversational manner. They may take multiple different routes and have
multiple acceptable answers. The candidate should not abandon the use of a framework. The focus of this case is on the approach
needed to mange the proposed changes in the organization.

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Case 11: AllHealthy CRM

Analysis
Who are the stakeholders? How will you communicate to these stakeholders?
Stakeholders: Leadership, contact center associates, customers, and rest of organization
Consider how the organization currently receive communications and leverage current policies and procedures.
Identify change champions and change agents, some of which may serve as super-users for the IT adoption project
Videos can provide context to the reasons why the new CRM system creates greater value for stakeholders
Ask for honest and open feedback through anonymous surveys
What are the change issues and how will you address them?
Leadership alignment: While top leadership may want the new CRM system, leadership throughout all levels should be engaged. The reasons
for the change must be explained and understood by all stakeholders as well as how they will be rewarded.
Buy-in: Change is always met with resistance. Employees need to see that leadership is aligned and are all behind the new CRM system.
Change agent networks should be set up and provided with speaking points to engage the rest of the organization.
Communications: Mistrust and resistance is rampant when employees do not know that change is coming. Clear, consistent, and early
communications plans help to facilitate feedback and manage negative perceptions.
Training: While employees may undergo training, the main consideration here is adoption. The training must be concise, yet thorough. It must
take into account knowledge gaps, competency tests, and continued use post deployment.
Incentives: Employees are more likely to adopt if there is an established benefit or incentive for the new system. Design and implement or tie
the adoption to Performance Management.
How do you measure success?
Determine a collective, measurable set of success metrics at the onset of the project from the perspective of leadership, customers, and contact
center associates. Examples include:
75% employees trained, logged in, and using new system by the end of the deployment
Greater customer satisfaction on surveys relating to call quality
Enhance employee satisfaction, adoption, and productivity through surveys and call metrics like call issue resolution time, open issue past due,
etc

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Case 11: AllHealthy CRM

Performance Evaluation
The case tests candidates ability to critically think about IT adoption projects from the lens of a Human Capital practitioner.
Expected: The candidate will recognize that the CRM project will affect the entire organization and will touch on the major points
mentioned.
Good: The candidate will touch on the major points mentioned and also provide his/her analysis in a structured framework.
Excellent: The candidate will thoroughly discuss the major components of change management in a thoughtful and structured
framework. The candidate will show an in-depth understanding of Human Capital concepts and be able to prioritize change
management issues.

Behavioral Questions
Tell me about a weakness that you have turned into a strength.
Tell me about a failed client interaction and how you have grown from that experience.

114

Case Interview feedback form

Case _________________________ Case type _________________ Interviewer ____________________

Execution

Case start time ___:____

Structure

1 2 3 4 5

Logical approach
MECE
Appropriate drive to solution

Comments:

Quantitative Ability

1 2 3 4 5

Speed
Accuracy
Comfort, reaction to mistakes

Comments:

Business intuition
Practical
Insightful
Breadth & depth across multiple functions
Creativity

1 2 3 4 5
Comments:

Framework development
Framework explanation
Case discussion

______ min
______ min
______ min

Case end time ___:____

Overall Rating: 1 2 3 4 5
Strengths

Communication
Professionalism

1 2 3 4 5

Poise
Confident-Persuasive
Articulate-concise
Client ready

Comments:

Weaknesses

Written
Clarity of writing and page layout
Ability to refer back
Comfort, reaction to mistakes

1 2 3 4 5
Comments:

Behavioral (optional)
Quality of star stories
Length
Clarity
Relevance

1
1
1
1

2
2
2
2

3
3
3
3

4
4
4
4

5
5
5
5

Comments:
Key: 1=Bottom 10%, 2= 10th-25th percentile, 3=
middle 50%, 4= 75th-90th percentile, 5=Top 10%

CASE 12 COYOTES

116

Case 12: Coyotes

Prompt #1
Your client is the American Southwest Preservation Trust (ASPT). The trust is a non-profit organization tasked with promoting
conservation & eco-tourism in the American Southwest. One of the biggest tourist draws is local fauna, particularly coyotes. The
coyote population has declined significantly from historical levels. The Trust requests your help to figure out why & what it should do.

Behavioral Questions
If your C-LEAD teammates had to describe your biggest point for improvement, what would it be and why?
Can you tell me about a time when you handled an especially sensitive or high-risk assignment or project?

Case Guidance
This case is geared towards challenging brainstorming and frameworking skills, while at the same time honing public math and
analytical skills. It simulates cases which have uncommon or unanticipated structural elements, and may be especially appropriate for
individuals who need practice building creative frameworks.

Interviewer Guidance Prompt Q&A

Provide the additional information if requested:
Coyotes are medium size canine carnivores (between a fox and a wolf) native to the American Southwest.
Coyote populations were historically stable until recently. Only 10,000 coyotes exist today down from 25,000.
Geographically, only consider the area administered by the trust.
No other fauna or flora have been impacted as much.

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Case 12: Coyotes

Interviewer Guidance: Framework
Species loss is a not a common framework, and so be prepared to iterate by asking what else. Quality frameworks should include at
least the following buckets or nodes (for those who use trees):
- Environmental factors (pollution, climate change, species migration)
- Dietary factors (number of predators, number of prey, availability of water)
- Human-generated factors (hunting, poaching, habitat loss)
- Disease and Genetics
Award brownie points for additional creative ideas.
Steer the candidate gradually towards human-generated factors (habitat loss and hunting). Have the candidate brainstorm for a few
minutes how habitat loss would impact the species, especially given that other factors havent changed significantly with time (prey
availability, water, hunting, etc).
A strong candidate may immediately guess changing birth rates, fertility, and the availability of finding partners. Regardless of whether
the candidate gets to this or not, steer the candidate by issuing the next prompt (below).

Prompt #2 For Analysis

The client is likewise concerned by the impact of development and interactions with man on the coyote population, and wants to
understand the expected impact on the population this year. ASPT has provided a few demographic details they have on the coyote
population in the area (Exhibits A and B).

118

Case 12: Coyotes

Exhibit A: Habitat Loss
The coyote population is currently split into three groups (shown by silver clouds) following the construction of highways (black
lines) and cities (yellow dots).

Group B
Group A

Group C

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Case 12: Coyotes

Exhibit B: Group Statistics
The following table shows estimated demographics by group

Group

Percent of
Total Pop

Percent Male

Percent Female

Hunting Licenses

40

60

40

800

20

35

65

200

40

90

10

400

120

Case 12: Coyotes

Interviewer Guidance: Exhibits and Analysis Part 1
From the exhibits, the candidates should point out links between groups, unequal gender sizes, and different numbers of hunting
licenses for similarly sized territories.
The candidate should grasp that the overall goal of the analysis is to find out how populations are changing. The first step is finding out
the current number of coyotes in each group by gender.
The total population should have been asked for during the Q&A portion. If the candidate did not get to it then, provide the number
now (10,000).
The first step is to break out the 10k by each group by gender. If the candidate doesnt think of this, steer them towards it. Some
candidates may try to jump towards calculating births and deaths, in which case they guessed the missing steps (see next section), but
have them work out the calculations by gender and group first.

Analysis Part 1 Solution

The candidate should arrive at the following numbers (series of multiplications) needed for the second part.
Group

Percent of
Total Pop

Number of Coyotes

Number
of Male

Number
of Female

40

4000

2400

1,600

20

2000

700

1,300

40

4000

3600

400

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Case 12: Coyotes

Interviewer Guidance: Analysis Part 2
Let the candidate drive the continuation of the analysis. If the candidate is lost, ask them how they would calculate the change in
coyotes every year. The general equation they should arrive at:
Change in coyotes for this year = Number Born in this year Number Died in this year. Focus them on calculating the change for this
year!
Several pieces of information have been deliberately withheld from the candidate. A perceptive candidate will ask for them:
Litter size: This is the number of coyotes born to each pregnant female. Assume 2 pups/litter.
Gestation period: Assume coyotes breed once per year.
Partner fidelity: Assume that coyotes are monogamous (meaning that once a male coyote has impregnated one female coyote, he
will not impregnate another female coyote).
Availability or % Mate: Not all coyotes will breed each year. Assume that only 40% of potential pairs birth a litter each year.
The candidate should notice that hunting isnt the only cause of death. Assume that all other deaths are natural and the death rate
is 10% (applies to adults only use beginning population and dont include pups).
Assume that hunting deaths happen at the end of the year, and hence so is cumulative with the natural deaths.
Other questions that the candidate could ask:
What are the frequency of hunting licenses? Answer: annual
How many coyotes does a license permit to be killed? Answer: one
Can both males and females be hunted? Answer: yes
Do all hunting licenses get used? Answer: assume yes
Lastly, because of the monogamous nature of coyotes, the candidate should pick up on the fact that the lesser occurring gender in
each territory is the limiting factor on births.
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Case 12: Coyotes

Analysis Part 2 Solution
The candidate should arrive at the following numbers.
The equations for getting them are:
# of Births: # of Pairs * % Mate * Birth Rate
# of Deaths: (Beginning Population Hunting Deaths) * Natural Death Rate
Note that calculating Deaths as (Beginning Population * Natural Death Rate) + Hunting Deaths wrongfully assumes that none
of the hunted coyotes would have died naturally if they had not been hunted
Group

Limiting Gender

# of Pairs

% Mate

Birth Rate

# of Births

Female

1600

40%

1,280

Male

700

40%

560

Female

400

40%

320

Group

Beg. Population

Hunting Deaths

Natural Deaths

# of Deaths

4,000

800

320

1,120

2,000

200

180

380

4,000

400

360

760

123

Case 12: Coyotes

Group

Total Births

Total Deaths

Total Change

1,280

1,120

160

560

380

180

320

760

-440

Total

2,160

2,260

-100

Advanced Conclusions from Analysis

A very perceptive candidate should notice:
The decline is gradual (only 100 coyotes per year). Hence the historical number of 25k must either imply a long time ago or a large
drop due to other circumstances.
The C population group will be gone in approximately 10 years, or even sooner if females are hunted or die disproportionately.
The other groups should grow if hunting and natural deaths affect both genders equally and at present rates.
Overall, coyotes are likely to remain in the Southwest.

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Case 12: Coyotes

Prompt #3 (if time)
ASPT is considering lobbying for a reduction in hunting licenses. How would you design a proposed reduction, and what information
would you use to support it?

Interviewer Guidance:
The candidate should hopefully mention some of the bullet points under the advanced analysis section if they have gotten to this
point. If not, spend some time with the analysis results and ask the candidate what they imply.
Afterwards, redirect the candidate towards the topic of hunting licenses. Ask if hunting licenses are really the issue. If after the
candidate struggles for a few minutes, they are still lost, point out that more hunting licenses were issued for Group A rather than C,
even though the groups were the same size.
This should mean that Group A should not be sustainable, while Group C should be growing. However, the reality is exactly the
opposite. Ask the candidate why?
The candidate should quickly zero in on two potential culprits:

The gender ratio in Group A v. Group C

The percentage that mate

Since the percentage that mate (and other factors) are constant, the gender ratio must be the key. Once the candidate realizes this,
proceed to the recommendation portion of the case.

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Case 12: Coyotes

Recommendation
Recommendations should include:
Overall, the population of coyotes is not at risk.
o One group of coyotes (Group C) will die out within 10 years, if no interventions are attempted.
ASPT can help rescue or foster coyote population growth by:
o Evening out the gender ratio between populations by building wildlife bridges, transplanting coyotes, etc.
o Helping coyotes locate each other and increasing the mating pair percentage.
o Increasing fertility levels (# of pups/pair) using medical techniques.
(For those who made it to Prompt #3) The ASPT should not invest significant resources in a legislative battle against hunting licenses
if licenses are maintained at the current levels.
o That said, a temporary hunting ban in Group C would likely help as an effort is made to stabilize the female population

126

Case 12: Coyotes

Performance Evaluation
What does the case test?
This case involves a non-traditional framework, extensive public math, and a logic puzzle with clearly identifiable missing pieces. This
makes this a fairly all-around good practice case. However, it is especially appropriate for individuals that need practice with being
creative with frameworks or figuring out withheld pieces of a puzzle.
Expected: The candidates framework may have missing elements, but should be MECE. The candidate is able to brainstorm ideas for
species loss, and perhaps habitat loss. Once provided with the framework elements, the candidate is able to proceed to and solve
Analysis Part 1. The candidate may get stuck with Analysis Part 2 and will probably not get all the way through it and to Prompt #3.
Recommendations are likely to be primarily around the framework and exhibit observations.
Good: The candidate creates a complete MECE framework, and is able to brainstorm ideas for habitat loss. The candidate does a good
job noticing the hunting licenses, gender ratios, and groups in the exhibits. With minimal direction, the candidate is able to solve
Analysis Part 1. The candidate makes it through Analysis Part 2 with minimal or moderate assistance and attempts to make advanced
observations. The candidate probably wont get to the third prompt. Recommendations from the analyses #1 and #2 should be correct,
but are likely to be incomplete.
Excellent: The candidate is undaunted by a uncommon framework, and comes up with a solid MECE framework. He or she is able to
identify habitat loss, and provides interesting and creative brainstorming ideas. Analyses #1 and #2 are solved with minimal direction,
and the candidate is able to make advanced observations. Analysis #3 is solved with minimal to moderate assistance, and
recommendations are complete, clear, and concise.

127

Case Interview feedback form

Case _________________________ Case type _________________ Interviewer ____________________

Execution

Case start time ___:____

Structure

1 2 3 4 5

Logical approach
MECE
Appropriate drive to solution

Comments:

Quantitative Ability

1 2 3 4 5

Speed
Accuracy
Comfort, reaction to mistakes

Comments:

Business intuition
Practical
Insightful
Breadth & depth across multiple functions
Creativity

1 2 3 4 5
Comments:

Framework development
Framework explanation
Case discussion

______ min
______ min
______ min

Case end time ___:____

Overall Rating: 1 2 3 4 5
Strengths

Communication
Professionalism

1 2 3 4 5

Poise
Confident-Persuasive
Articulate-concise
Client ready

Comments:

Weaknesses

Written
Clarity of writing and page layout
Ability to refer back
Comfort, reaction to mistakes

1 2 3 4 5
Comments:

Behavioral (optional)
Quality of star stories
Length
Clarity
Relevance

1
1
1
1

2
2
2
2

3
3
3
3

4
4
4
4

5
5
5
5

Comments:
Key: 1=Bottom 10%, 2= 10th-25th percentile, 3=
middle 50%, 4= 75th-90th percentile, 5=Top 10%

CASE 13 FERRY FOLLIES

129

Case 13: Ferry Follies

Prompt
Your client is a Department of Transportation for a state in the northwestern United States. The Department of Transportation controls
six modes of transportation: aviation, biking, ferries, rail, public transportation (e.g. busses), and walking. With budget cuts and rising
energy costs projected for the coming fiscal year, your client evaluated each mode of transportation and determined that it must
improve the financial performance of its ferries. The Department of Transportation has employed your firm to assess the current state
of its ferry operations and recommend a strategic plan for improving financial performance.

Behavioral Questions
Imagine that it is a Friday afternoon and you have just been given your new client assignment to begin on Monday morning. What
steps will you take to prepare for your first day? What steps will you take when you arrive at the client site to get up to speed?
What type of teammate are you?

Interviewer Guidance
Provide this information to the candidate if asked:
o The client defines improved financial performance as increased profit margins.
o The client wants to cut $70M from its annual budget after 2 years
o There are 24 ferry vessels and 18 ferry terminals. The ferries are used by both commuters and tourists.
o Over 20 million passengers travel on these ferries annually.
Note: Not all of this information is relevant to the case; a strong candidate will be able to assess what is salient.

130

Case 13: Ferry Follies

Analysis
The candidate should ask about the measurement of financial performance. If they have not, encourage them to think through
various ways to measure financial performance and guide them towards profit margin.
Prompt 1: Identify sources of cost and revenue for the Department of Transportations ferry system.

Recommendation
These brainstorming questions test the candidates ability to think through the underpinnings of transportation operations. Encourage
the candidate to be creative when brainstorming.
Answers may include but are not limited to:
COST
o Ferry Maintenance
o Fuel
o Employees: salaries, wages, benefits
o Overhead (e.g. Executive, HR, Legal)
o Marketing & Advertising
o Weather Services
REVENUE
o Fares/Tickets
o Advertising (e.g. promotions)
o Corporate partnerships
o Food and drink on board
Dont hesitate to ask what else to push them.
o For example, if they list employees as a source of cost, encourage them to think through categories of employees (DOT
administrators, ferry captains, ferry crews, ticket office staff, etc.)
Strong candidates will identify that cost is a more salient option than revenue for improvement.

131

Case 13: Ferry Follies

Analysis
Prompt 2: The client has decided to focus on cost control. Your consulting team investigated the cost structure of the ferries and
identified four main cost buckets: diesel fuel, salaries & wages, overhead costs, and miscellaneous (e.g. dock fees and ferry
maintenance). We know that:
o Diesel fuel accounts for 1/3 of the clients total ferry budget, which is $270 million
o There are approximately 2000 employees with average salaries of $54,000
o Overhead is 20% of all costs

Recommendation
This question tests the candidates ability to process ambiguous information, identify missing pieces, develop a clear
understanding of the clients cost structure, and perform accurate calculations.
Strong candidates will create a table to look at each of the four cost buckets and reach the following conclusions, remarking on
the implications of each:
Cost bucket
Fuel
Wages
Overhead
Miscellaneous
TOTAL

Percent of total cost

33%
40%
20%
7%
100%

Total (in $M)

90.0
108.0
54.0
18.0
270.0

Calculations
33% of $270
2000 x 54k
20% of $270
Plug
Given

132

Case 13: Ferry Follies

Analysis
Prompt 3: Given the cost structure, the client would like your consulting team to determine if the targeted savings are feasible
and identify potential areas for cost reduction.
Hint: What percentage cost reduction would be needed in order for the client to shed $70M from the ferry budget?

Recommendation
Note: This question is intentionally ambiguous and tests the candidates ability to drive the case, handle ambiguity, and think
logically under pressure. If needed, remind the candidate that the client aims to achieve $70M in savings in two years.
Calculation: $70M of $270M is approximately a 25% cut.
A strong candidate will:
o A. Investigate the four major cost buckets and brainstorm solutions to each
- Examples: Using alternative fuel sources other than diesel, explore staff reductions, pooling shared services across
Department of Transportation divisions, better understand the miscellaneous cost bucket
o B. Prioritize solutions that address the clients primary cost centers
- Diesel fuel and wages collectively account for over 3/4 of the clients annual costs; solutions that address these highcost buckets are more likely to help the client achieve significant cost savings than solutions focused on overhead or
miscellaneous costs
o C. Determine if $70M in 2 years is feasible
- $70M is a ~25% cost reduction in 2 years; this tests the candidates logical thinking
o D. Create a recommendation
- A strong recommendation will include an assessment of whether the clients goal is feasible and specific actions the
client may take to reach this goal AND/OR a suggested revision of the clients goal either should mention the targeted
timeframe
133

Case 13: Ferry Follies

Analysis
Prompt 4: The client has requested that you design an implementation strategy to achieve the targeted savings of $70M in 2
years. They have provided this additional information:
Switching from diesel to alternative fuel sources will cut fuel costs by 45% over the next two years
The client has told us they can accommodate the following labor reductions over the next two years: 10% cut of ferry
captains, 500 cut administrative staff, 100 cut operational staff
Is the clients $70M goal feasible? What potential hurdles or backlashes could results from these cuts?

Recommendation
Provide this additional information if asked:
# of Employees
% of Total
Drivers
50
2.50%
Admin
1300
65.00%
Operational
650
32.50%
TOTAL
2000
100%
Calculations:
Fuel Costs
Diesel
Gas
Cost cut:

Salary
$110,000
$50,000
$58,000
$54,100

Total Wages
$5,500,000
$65,000,000
$37,700,000
$108,200,000

Labor Costs

Total Cost Cuts (Million)

Total
$90,000,000
GAS
40.5
Drivers
5
$550,000
45% savings
Labor
31.4
Admin
500
$25,000,000
$40,500,000
Total:
71.9
Operational
100
$5,800,000
$31,350,000
The candidate should conclude that the client can reach the targeted $70M savings by implementing these recommendations. Risks
include fuel contract renegotiation challenges and negative PR from laying off state government employees.
Request that the candidate articulate succinctly the recommendation, risks, and next steps as if presenting to a client.
#

Salary
$110,000
$50,000
$58,000

134

Case 13: Ferry Follies

Performance Evaluation
This case tests the candidates ability to:
o Understand the underpinnings of profit margins:
- Determine appropriate measures of financial performance
- Brainstorm sources of costs and revenue as they relate to profit margin and determine which area should be
investigated
o Determine what information is salient to solve the case
- Employ critical thinking skills to weed through information
o Think logically in ambiguity
o Complete calculation quickly and accurately
A strong candidate will:
o Hone quickly in on cost reduction
o Handle the math of the cost table smoothly and without aid
o Drive the case with little prompting by the interviewer
An exceptional candidate will
o Transition between Prompt 2 and Prompt 3 without the interviewer asking the next question
o Exhibit what else thinking and provide creative brainstorming
o Create a logical, actionable, prioritized recommendation for the client with specific time parameters

135

Case Interview feedback form

Case _________________________ Case type _________________ Interviewer ____________________

Execution

Case start time ___:____

Structure

1 2 3 4 5

Logical approach
MECE
Appropriate drive to solution

Comments:

Quantitative Ability

1 2 3 4 5

Speed
Accuracy
Comfort, reaction to mistakes

Comments:

Business intuition
Practical
Insightful
Breadth & depth across multiple functions
Creativity

1 2 3 4 5
Comments:

Framework development
Framework explanation
Case discussion

______ min
______ min
______ min

Case end time ___:____

Overall Rating: 1 2 3 4 5
Strengths

Communication
Professionalism

1 2 3 4 5

Poise
Confident-Persuasive
Articulate-concise
Client ready

Comments:

Weaknesses

Written
Clarity of writing and page layout
Ability to refer back
Comfort, reaction to mistakes

1 2 3 4 5
Comments:

Behavioral (optional)
Quality of star stories
Length
Clarity
Relevance

1
1
1
1

2
2
2
2

3
3
3
3

4
4
4
4

5
5
5
5

Comments:
Key: 1=Bottom 10%, 2= 10th-25th percentile, 3=
middle 50%, 4= 75th-90th percentile, 5=Top 10%

CASE 14 AUTODRIVERS

137

Case 14: AutoDrivers

Prompt
A large auto insurance company, AutoDrivers is exploring telematics and has identified whether OBD (On-Board Diagnostics) or a
mobile solution is the right fit for them. Telematics is defined as the convergence of informatics and telecommunications to transmit
data. Think about Fit Bit, On Star which collect and use data to deliver additional services to consumers. With Telematics, Auto Insurers
can capture driving data and use it to better price insurance premiums.
The company hopes that using telematics will enable it to enroll new customers and reverse its decline in market share. The company
has hired you to identify which telematics strategy is the right fit for them. The company is also interested in understanding how it can
increase its engagement with its customers and provide them additional services.

Behavioral Questions
Tell me a time when you encountered a challenging situation and how did you overcome it?
What are your areas of development?

Interviewer Guidance
This is a strategy case where the interviewee will identify the right strategy for AutoDrivers and help it select either the OBD
approach or the mobile app approach.
Additional Information
1) AutoDrivers is a medium size auto insurnace company operating mostly in NJ, PA and MD
2) AutoDrivers currently only offers auto insurance

138

Case 14: AutoDrivers

Interviewer Guidance Continued
3) AutoDrivers had revenues of $300 M in 2013 and has seen a 5% slide in market share for each of the last 3 years
4) The US auto insurance industry as a whole had revenue of $3B in 2013
5) Major competitors of Auto Insurance are all currently exploring telematics options and operate in the same geographies as Auto
Drivers
6) If interviewee asks about customer engagement then explain how insurance is a commoditized business and insurance companies
are developing services (Competitions for safe drivers, teen-driving programs) to differentiate themselves from competitors and
increase their engagement with their customers.

Analysis
Question 1
Ask the interviewee to identify what are the first steps that AuoDrivers should consider when deciding which telematics strategy to
implement.

Interviewer Guidance
Expected response from the interviewee should consider several factors including, margin for OBD vs mobile solution, will AutoDrivers
be able to implement in a timely manner, what are the technology considerations for AutoDrivers (Is this a product that will be
developed inside the company or will AutoDrivers need to partner with another firm), what is competition doing

A advanced response will also consider factors such as which options offers AutoDrivers the best way to increase customer
engagement, what are some of the regulatory considerations and customer adoption rates.
139

Case 14: AutoDrivers

Interviewer Guidance Continued
After the interviewee has presented the initial framework, share Exhibit 1 with them
Question 2
Which strategy should AutoDrivers select

Exhibit 1 Guidance
Based on the information presented in the Exhibit, the interviewee should calculate two data points
1) Potential Size of the Market
Correct Calculation should be as following
OBD potential customers are 1000 and with an adoption rate of 25%, OBD will enable AutoDrivers to enroll 250 new customers
Mobile solution potential customers are 1000 and with an adoption rate of 50%, mobile solution will enable Aut0Drivers to enroll
500 new customers
After the interviewee has identified the size of potential new customers, the next step is to calculate the net profitability for both
OBD and Mobile Solutions
2) Calculation of Profits (OBD)
OBD total fixed cost = $0.9 M
OBD variable costs are $OBD variable costs are $1400
OBD revenue = $2000
Margins = $2000 - $1400 = $600
Net Profit = $600*250 customers - $0.9 M = $(0.75 M)
The right number of customers is 250 based on the adoption rate]

140

Case 14: AutoDrivers

Exhibit 1 Guidance (Continued)
3) Calculation of Profits (Mobile Solution)
Mobile Solution total fixed cost $2 M
Mobile Solution variable costs are $OBD variable costs are $500
Mobile Solution revenue = $5000
Margins = $5000 - $500 = $4500
Net Profit = $4500*500 customers - $2 M = $250,000
[The right number of customers is 500 based on the adoption rate]

4) Based on the calculation of profitability, the interviewee should recommend that AutoDrivers choose the strategy of
Mobile Solution

Analysis
Question 3
Ask the interviewee to identify what are some of the pros and cons of choosing the Mobile Solution. Ensure the interviewee does
not focus on financial figures and thinks of several other reasons

141

Case 14: AutoDrivers

Exhibit 1
OBD

Mobile Solution

Potential Customer Size for telematics

10000

20000

Potential Market Share

10%

5%

Variable Marketing Cost per customer

$400

$0

Variable Equipment Cost per customer

$1000

$500

Revenue per customer

$2000

$5000

Customer Adoption Rate

25%

50%

Technology Development

Partner with a firm in NJ

Partner with a firm in China

Cost of technology development

$0.9 M

$2 M

Expected over next 3 years

142

Case 14: AutoDrivers

Interview Guidance for Question 3
A strong interviewee will identify the following factors when evaluating the pros and cons of the Mobile Solution
Keep probing the interviewee until he or she has come up with a detailed list
Pros of Mobile Solution

Cons of Mobile Solution

Ease of use. Customers will only download a Mobile App

Reliability of data capture Mobile technology is still

under development

High scalability for AutoDrivers

Partnering with a firm in China could increase

development lead time

Updates to technology can be easily sent to customers

Regulators could impose restrictions on collecting driving

data via mobile phone

Fits in with new customer demographics Mobile, flexible

Higher Cap Ex

Mobile phone technology keeps improving at a high speed

High speed to market
A good interviewee will come up with a few pros and cons. Keep probing them until they have exhausted their list of responses.
An excellent interviewee will show understanding of mobile platforms and applications and be able to identify advantages of having a
mobile solution

143

Case 14: AutoDrivers

Analysis
Question 4
AutoDrivers has now requested your help to identify in which state they should pilot the Mobile Solution. What is the state for the
AutoDrivers? Share Exhibit 2 with the interviewee

144

Case 14: AutoDrivers

Exhibit 2
% of New Customers Interested in Telematics

35
40

25
NJ

PA

MD

New customers represent the customers who are considering signing up for a telematics program provided by
Auto Drivers
Brand Perception is based on a customer survey comparing different auto insurance companies and how they are
perceived in providing high customer engagement

145

Case 14: AutoDrivers

Exhibit 2 (Continued)

% Increase in Adoption Rates

20
15
10

5
0
Year 1

Year 2
NJ

PA

Year 3
MD

% of Adoption Rates is the number of customers who will continue signing up for AutoDrivers Mobile solution

146

Case 14: AutoDrivers

Interview Guidance for Question 4
The interviewee should be able to identify that NJ has the highest % of new customers who might be interested in signing up for
telematics and also has the highest brand perception for Auto Drivers. This seems to be an ideal state for Auto Drivers to launch its
Mobile Solution
However the rate of increase in the adoption rate for NJ is lower than PA and may hurt AutoDrivers in its long-term strategy of
reversing its slide in market share
Since AutoDrivers wants to increase customer engagement i.e. provide more value-added services, PA represents the best option for
AutoDrivers. Although it has low brand perception in the state, the Mobile Solution will give it opportunity to offer new features to its
customers and increase customer engagement. The rate of increase in customer adoption is also the highest in PA which will enable
AutoDrivers to enroll new customers.

147

Case 14: AutoDrivers

Recommendation
We anticipate running into the CEO in the cafeteria. What would you say to him?

Interview Guidance for Recommendation

An average response should be concise and structured. It should include why AutoDrivers should implement the Mobile Solution and
what are some of the risks associated with implementing this solution. The interviewee should also identify which state they should
pilot the program in
Next steps
An exceptional response should include the next steps for selecting the Mobile Solution and the state to pilot the program in. These
can include developing a contract with the partner in China, ensuring that the partner can successfully develop the product in a timely
manner, identifying the distribution channels for the Mobile Solution (Agents, Third-party vendors), selecting the right marketing
strategy for the Mobile Solution and conducting a testing program to validate the solution.

Risks for telematics

How to subside customer concerns over privacy
Potential barriers from regulators and state governments
Contingency plan if telematics does not succeed

148

Case Interview feedback form

Case _________________________ Case type _________________ Interviewer ____________________

Execution

Case start time ___:____

Structure

1 2 3 4 5

Logical approach
MECE
Appropriate drive to solution

Comments:

Quantitative Ability

1 2 3 4 5

Speed
Accuracy
Comfort, reaction to mistakes

Comments:

Business intuition
Practical
Insightful
Breadth & depth across multiple functions
Creativity

1 2 3 4 5
Comments:

Framework development
Framework explanation
Case discussion

______ min
______ min
______ min

Case end time ___:____

Overall Rating: 1 2 3 4 5
Strengths

Communication
Professionalism

1 2 3 4 5

Poise
Confident-Persuasive
Articulate-concise
Client ready

Comments:

Weaknesses

Written
Clarity of writing and page layout
Ability to refer back
Comfort, reaction to mistakes

1 2 3 4 5
Comments:

Behavioral (optional)
Quality of star stories
Length
Clarity
Relevance

1
1
1
1

2
2
2
2

3
3
3
3

4
4
4
4

5
5
5
5

Comments:
Key: 1=Bottom 10%, 2= 10th-25th percentile, 3=
middle 50%, 4= 75th-90th percentile, 5=Top 10%

CASE 15 STEEL WORKS

150

Case 15: Steel Works

Prompt
A large steel manufacturing company based in Chicago called Steel Works has been facing some challenging times. They are facing
pressure from competition who are stealing away customers by offering cheaper prices. Steel Works is currently exploring the option
to shut down one of its three business units to consolidate operations and reduce its total operating costs. You have been asked to
identify which business unit they should close down in order to reduce their total operating costs.
Share with interviewee Exhibit 1

Behavioral Questions
Provide two behavioral questions. (Outside of any questions asked by the interviewer during administration of the case - will be asked
prior to the prompt).
Tell us about a time when you explored alternatives to a solution and how you went about choosing between the alternatives?
What is your most exemplary leadership experience?

Interviewer Guidance
This case tests the interviewees ability to digest information and identify a solution that reduces the overall operating cost for Steel
Works. The interviewee will also be tested in his ability to identify synergies among the business units after a consolidation process.
Additional Information
1) Steel Works is a global steel manufacturing company that has several operations in the US.
2) Its competitors include other major steel makers who offer similar products at lower prices
151

Case 15: Steel Works

Interviewer Guidance
3) Steel Works recently hired a new CEO that is open to investing in new technology as long as overall operating costs
can be reduced
4) Steel Works supplies products to several industries including aerospace, automotive, appliance makers, construction and roofing
5) Steel Works is operating in a growing steel market with a CAGR of 2.5%

Analysis
Question 1
What should Steel Works consider when choosing which business unit to close

Interviewer Guidance
Expected response from the interviewee should consider several factors including the following
Production Costs
Shipping Costs
Process Capability and access to technology
Potential investment required to accommodate increase in production
How will the integration be planned and executed
An exceptional response can also include the following
Will testing be required for products being moved from one facility to the other
If we reducing workforce, how will this affect the morale of the company

152

Case 15: Steel Works

Exhibit 1

Direct Shipping Route

via Canal

Shipping
Location

To Lake
Michigan

Sparkling Water Canal

Shipping
Location

Shipping
Location
Direct Shipping Route
via Trucks

Direct Shipping Route

via Canal

Figure not drawn to scale

A,B and C are the 3 business units of Steel Works
Shipping is managed via road and canal

153

Case 15: Steel Works

Analysis
Question 2
Can you come up with a new production plan for Steel Works and the impact on their total costs
Share Exhibit 2 with the interviewee

Interviewer Guidance
The interviewee should be able to correctly identify the new production plan.
The first step is calculating current production levels at each of the 3 business units. Based on the production capacity and
utilization for the 3 business units, the candidate should correctly identify spare capacity available

Production Capacity

2 M tons

4 M tons

1 M tons

Utilization

85%

50%

80%

Actual Production

1.7 M tons

2 M tons

0.8 M tons

Spare Capacity

0.3 M tons

2 M tons

0.2 M tons

154

Case 15: Steel Works

Interviewer Guidance
After the interviewee has identified the correct spare capacity, guide the interviewee to develop the new production plan for each
business unit with the goal of closing 1 business unit

Production Capacity

2 M tons

4 M tons

1 M tons

Utilization

85%

50%

80%

Actual Production

1.7 M tons

2M tons

0.8 M tons

Spare Capacity

0.3 M tons

2 M tons

0.2 M tons

1 M tons

1.5 M tons

0 M tons

Dual Phase Steels

0.5 M tons

0.7 M tons

0 M tons

Complex Phase Steels

0.5 M tons

0.3 M tons

0 M tons

New Production Plan

TRIP Steels

155

Case 15: Steel Works

Exhibit 2
A

Year Built

1965

1940

1955

Production Capacity

2 M tons

4 M tons

1 M tons

Utilization

85%

50%

80%

Number of Employees

1000

800

600

1 M tons

1 M tons

0.5 M tons

Dual Phase Steels

0.5 M tons

0.7 M tons

0 M tons

Complex Phase Steels

0.2 M tons

0.3 M tons

0.3 M tons

Production Cost

$300 / ton

$100 / ton

$ 200 / ton

Major Customers

Automotive,
Appliance

Aerospace,
Appliance

Automotive,
Aerospace

Type of Products Manufactured

TRIP Steels

TRIP Steels, Dual Phase Steels and Complex Phase Steels are 3 types of advanced steels
Unit B and C can only produce a maximum of 0.3 M tons of Complex Phase steels
1 ton = 2,000 lbs
156

Case 15: Steel Works

Interviewer Guidance Continued
The interviewee should correctly allocate production by business unit
This requires taking into account the capacity constraint for Business Unit B for production of Complex Phase Steels and the cost of
production per business unit.
While the average interviewee might recommend closing down Business Unit A because of its highest production cost, the products will not
be able to shifted to Business Units B and C.
Therefore the correct recommendation is to close Business Unit C
The interviewee should also correctly identify the new production costs
Old production costs = $ 870M
Business Unit A Total tons: 1.7 M, Total cost: 1.7 M tons * $300 / ton = 510 M
Business Unit B Total tons: 2 M, Total cost: 2 M * $100 / ton = 200 M
Business Unit C Total tons: 0.8 M, Total cost: 0.8 M * $ 200 / ton = 160 M
New production costs = $ 850M
Business Unit A Total tons: 2 M, Total cost: 2 M tons * $300 / ton = $600 M
Business Unit B Total tons: 2.5 M, Total cost: 2.5 M * $100 / ton = $250 M
Business Unit C Total tons: 0 M, Total cost: $0 M
An excellent interviewee will recognize that although Steel Works is saving $20M by closing one Business Unit, the savings are not
substantial. An excellent interviewee should ask if there are other costs that have been considered or if closing the Business Unit is the only
option for Steel Works to reduce its operating costs.

157

Case 15: Steel Works

Analysis
Question 3
Present Exhibit 3 to the Interviewer and ask how this will affect the choice of Business Unit to close.

Exhibit 3 Guidance
Based on the information presented in the Exhibit, the interviewee should be able to observe the following
1) Shipping cost for Business Unit A is the highest
2) Although it is highest, it should not change the decision of Steel Works to close Business Unit C
3) An advanced interviewee will quickly recalculate the total costs saved after taking into account the shipping costs for
each business unit
4) Old Operating Cost (Including Shipping) - $1.418 B
Business Unit A - $688.5 M
Business Unit B - $410 M
Business Unit C - $320 M
5) New Operating Cost (Including Shipping) $1.322 B
Business Unit A - $810 B
Business Unit B - $512.5 M
Business Unit C - $0 M

Savings of $96 M

158

Case 15: Steel Works

Exhibit 3 Shipping Costs
A

Via Canal

$ 105 / ton

$ 100 / ton

Via Truck

$ 100 / ton

To Business Unit

$105 / ton

Business Unit A ships products to Business Units B or C to ship to final customers

Assume that % of steel shipped via canal or via truck is not relevant

159

Case 15: Steel Works

Analysis
Question 4
What factors should Steel Works consider when they are integrating different business units?

Interviewer Guidance
The interviewee should be able to come up with a detailed list of factors that Steel Works should consider when integrating different
business units
o Does the new labor force have the right skills to operate on new machinery or technology that might exist in a different
business unit
o Are we going to layoff any of the workforce? If yes, how many and how will the compensation be structured
o Will any of the workforce be relocated to another business unit
o Is there any investment that would be required to ensure business units can run at 100% utilization
An advanced response can consist of the following
o How is employee morale affected by closing of 1 business unit. How can Steel Works mitigate loss in employee morale
o Will customers care if they are being products from a different business unit
o Is there a need for a testing phase to accommodate production of new products
o Are business units setup to accommodate increase in production and manpower

160

Case 15: Steel Works

Recommendation
The CEO after attending a recent shareholders meeting is under pressure to reduce costs. Request the interviewee to come up with a
recommendation for the CEO.

Interviewer Guidance
An expected response from the interviewee should include recommendation to close Business Unit C in order to reduce total operating
cost for Steel Works. The interviewee should explain that shipping costs do not alter the recommendation. He or she should also
outline risks and next steps for the company.
Risks
Loss of employee morale
Business Units may not be able to operate at 100% utilization
Closing 1 Business Unit may affect Steel Works ability to meet demand for Complex Phase Steels, if demand continues to rise
Next Steps
Communicate with customers of closing down of 1 Business Unit
Setup planning team to carry out closure and consolidation of operations
An advanced recommendation can consist of the following
Savings of $77 M after shipping costs may not be substantial for Steel Works to reduce its overall operating costs. The
recommendation can include ways of reducing costs by looking at inefficiencies in the process as well as labor costs.
Steel Works should consider making investments in its equipment to produce more volumes of the Complex Phase Steels
Consider building a shipping facility at Business Unit and avoid shipment of products between business units.

161

Case Interview feedback form

Case _________________________ Case type _________________ Interviewer ____________________

Execution

Case start time ___:____

Structure

1 2 3 4 5

Logical approach
MECE
Appropriate drive to solution

Comments:

Quantitative Ability

1 2 3 4 5

Speed
Accuracy
Comfort, reaction to mistakes

Comments:

Business intuition
Practical
Insightful
Breadth & depth across multiple functions
Creativity

1 2 3 4 5
Comments:

Framework development
Framework explanation
Case discussion

______ min
______ min
______ min

Case end time ___:____

Overall Rating: 1 2 3 4 5
Strengths

Communication
Professionalism

1 2 3 4 5

Poise
Confident-Persuasive
Articulate-concise
Client ready

Comments:

Weaknesses

Written
Clarity of writing and page layout
Ability to refer back
Comfort, reaction to mistakes

1 2 3 4 5
Comments:

Behavioral (optional)
Quality of star stories
Length
Clarity
Relevance

1
1
1
1

2
2
2
2

3
3
3
3

4
4
4
4

5
5
5
5

Comments:
Key: 1=Bottom 10%, 2= 10th-25th percentile, 3=
middle 50%, 4= 75th-90th percentile, 5=Top 10%

CASE 16 WOEM

163

Case 16: WOEM

Prompt 1
Your client is WOEM, a wedding cake and clothing company located in Los Angeles, California. WOEM has two separate entities;
WOEM cakes and WOEM clothing. WOEM was unprofitable last year. WOEMs CEO believes that the creation of a third entity, WOEM
wedding planning, will lead to sustained profitability. WOEMs CEO wants your perspective on how to make WOEM profitable again.

Behavioral Questions
Tell me about a time when you resolved a conflict within your team
What are your strengths and weaknesses list 2 for each

Interviewer Guidance
This is a profitability case, within the context of evaluating the current state of the company and expanding offerings
Additional information, should be provided only upon request:
Major players in the wedding cake, clothing and wedding planning industry were profitable last year
WOEMs current customers include middle income individuals (40%) and wedding planners (60%)
WOEM has no experience in wedding planning, but it understands the wedding business and have a network to pull this off
There is no specific goal for WOEM (no ROI or specific profit) WOEM just wants sustained profitability
The interviewee should break the case into two parts. Part A should focus on WOEMs current operations and part B should focus on
understanding the wedding planning industry. Ask interviewee to present a framework focusing on part A only.
The interviewees current operations framework should include questions on the industry, for example competitors and trends (no
information available) and a basic profitability tree to understand why WOEM is unprofitable.
164

Case 16: WOEM

Prompt 2
Provide the interviewee with the following financial information:
WOEM Cakes:
2013: Sales: 900 cakes; Price: $1000 average per cake; costs: $600 average per cake
2012: Same average price and cost but number of cakes sold was 1300
WOEM Clothing:
2013 Revenue: $150,000; Total Costs: $560,000
2012 Revenue: $140,000; Total Costs: $400,000

Interviewer Guidance
A good interviewee will state that WOEM is unprofitable because of WOEM Clothing. A good interviewee will do the math quickly and
state that WOEM cakes is selling about 30% fewer cakes than it did in 2012 and that although WOEM clothings revenue increased 7%
in 2013, costs increased by 40%.
Ask interviewee why WOEM is selling 30% less cakes. Possible answers include:
New competition
Substitute: Customers are switching to other types of cakes that WOEM doesnt offer
Decreased income level: Customers are purchasing fewer cakes/having fewer weddings
The answer is that consumers are switching from vanilla and chocolate cake to red velvet cake, WOEM doesnt sell red velvet cake.
If interviewee asks why WOEM clothing is unprofitable: It has been unprofitable since its inception. Customers dont associate
WOEM with clothing and Los Angeles customers are very brand conscious.
165

Case 16: WOEM

Prompt 3
Ask the interviewee how he or she will determine if WOEM should enter the wedding planning market.

Interviewer Guidance
The interviewees framework should cover the following:
Industry (Understanding the key players in this market, market size and trends): 4 reputable players control 50% of the wedding
planning market in Los Angeles. Reputation of wedding planners is the main purchase driver in this market. No market size or trend
information is available (to make this case more advanced you can test interviewees market sizing thought process.
Company Capability (Understanding if the company has the resources to pull this off): Ask interviewee what he or she thinks.
WOEM has access to financing and can leverage its current customer base, but will need to hire wedding planners.

Economics: Projected Revenue and costs from entering this market (no information available)
Risks associated with entering this market: Ask interviewee what he or she thinks - No experience, loss of current WOEM
customers (since wedding planners make up 60% of WOEMs current customer base) and opportunity costs are some of the risks

166

Case 16: WOEM

Recommendation
WOEM should not expand into wedding planning at this time. Instead, WOEM should expand its cake line to include red velvet cake
and sell its clothing business in order to be profitable
Supporting facts:
Wedding planners make up 60% of WOEMs customer base. WOEM will face intense competition from its current customers and
thereby reduce profitability on current business. WOEM also doesnt have a reputation in wedding planning
Consumer tastes are changing, for WOEM to stay profitable it needs to enter the red velvet market
WOEM clothing has been unprofitable since its inception, as WOEM is not associated with clothing
Risks
WOEM and competition might be leaving money on the table by not entering the wedding planning business
Closing the clothing business might affect the sales of WOEM cakes
Cannibalization
Immediate Next steps
Expand cake line to include red velvet cake (understand the costs associated with this)
Start looking for buyers of the clothing business

167

Case 16: WOEM

Performance Evaluation
What does the case test?
Structure and Strategy
What should good interviewee be doing/asking/providing throughout the case?
Interviewee will develop a structured approach
Interviewee will do the math accurately
Interviewee will generate at least 3 ideas to explain why WOEM is selling fewer cakes
Provide examples of what exceptional interviewees are doing throughout this case.
In addition to what is above, interviewee should do the following:
Be able to drive to insights within the case without prompting
Be able to come up with a solid recommendation even though the case is unstructured and has limited financial information
Be able to maintain poise under pressure from the interviewer

168

Case Interview feedback form

Case _________________________ Case type _________________ Interviewer ____________________

Execution

Case start time ___:____

Structure

1 2 3 4 5

Logical approach
MECE
Appropriate drive to solution

Comments:

Quantitative Ability

1 2 3 4 5

Speed
Accuracy
Comfort, reaction to mistakes

Comments:

Business intuition
Practical
Insightful
Breadth & depth across multiple functions
Creativity

1 2 3 4 5
Comments:

Framework development
Framework explanation
Case discussion

______ min
______ min
______ min

Case end time ___:____

Overall Rating: 1 2 3 4 5
Strengths

Communication
Professionalism

1 2 3 4 5

Poise
Confident-Persuasive
Articulate-concise
Client ready

Comments:

Weaknesses

Written
Clarity of writing and page layout
Ability to refer back
Comfort, reaction to mistakes

1 2 3 4 5
Comments:

Behavioral (optional)
Quality of star stories
Length
Clarity
Relevance

1
1
1
1

2
2
2
2

3
3
3
3

4
4
4
4

5
5
5
5

Comments:
Key: 1=Bottom 10%, 2= 10th-25th percentile, 3=
middle 50%, 4= 75th-90th percentile, 5=Top 10%

CASE 17 MONEY IN MICHIGAN

170

Case 17: Money in Michigan

Prompt
Your client is Michigan Economic Development Corporation (MEDC), a state agency tasked with economic development for the state of
Michigan. Michigan is still recovering from the economic recession in 2009, when Michigan had the highest unemployment rate in the
country at 13.4% and also the highest net emigration, with over 86,000 citizens leaving the state, presumably to find work elsewhere.
Five years later the state is slowly recovering and MEDC wants to know what to do to make Michigan more attractive.

Behavioral Questions
Tell me about a time you faced a challenging situation in a team and what you did to solve it
What is your proudest accomplishment that is not listed on your resume?

171

Case 17: Money in Michigan

Interviewer Guidance
Background data that the candidate may request:
The candidate should confirm that increasing employment is MEDCs main goal, but a second goal is to increase the CAPEX or capital
expenditure in the state. Numbers will be provided later.
Suggestions about how the case is to be delivered:
Interviewers should read the case in advance and be prepared to lead the candidate through and provide answers to questions as
necessary.

What to look for in a candidates responses:

The candidate should come up with a MECE framework that strategically addresses ways to make Michigan more attractive. A few
examples include:
Determine what industries are new/growing
Offer financial incentives:
o Financial/other incentives for companies to relocate to Michigan
o Tax credits for companies already in Michigan to expand
Make policy/regulatory changes:
o Change policies to make it easier for companies to be successful and grow
o Examine tax code and ensure it incentivizes growth
o Improve quality of life for citizens (e.g., education, poverty, health, crime)
Create programs:
o Prepare citizens with training programs (private and public)
o Offer public work programs
Research competition:
o Learn what are other states doing to create jobs/ attract Michigans workforce

172

Case 17: Money in Michigan

Prompt 2
A. MEDC is focused on adding 1,000 jobs and bringing in $40MM in CAPEX (capital expenditure) in the next year, what else can they do to achieve
this goal?
B. The state of Michigan has created a special fund of $10 MM to spend to incentivize companies to relocate their business to Michigan. The state
has given MEDC sole discretion on how to spend the money and MEDC has decided to go all in and try and get the best project it can. To do
this, MEDC has some information about direct, indirect, and induced job creation. Direct jobs are those created by the new company, indirect
jobs are those created by related businesses (e.g., suppliers to the new company), and induced jobs are those created by a stimulated economy
(e.g., a hotel increases its employees due to more usage from the new company). For example, if a new company creates 10 jobs and the
indirect job multiplier is 1.5, then there would be 15 new jobs total, 10 direct and 5 indirect.

Analysis
A. This is a quick way to get candidates prepared for the what else, question. Have the candidate provide 5 additional ideas not included in
his/her framework OR finish when the candidate says I have a strong list, and I would like to proceed with.. and then gives you a concrete
next step.
B. Calculations: (A trick is to subtract 1 from the multiplier and multiply it by the direct jobs (e.g., 3.2*100 =320 indirect jobs instead of 4.2*100
=420 total 100 direct jobs = 320 indirect jobs); another trick is to use relationships between indirect/induced jobs to do calculations quicker

Name

Industry

Gamer Zone

Software
Development
Retail chain for
children
Capital-intensive
Manufacturing
Call Center

Kidoodle
PreFab
Speedylane

CAPEX Indirect Induced Total

Total
Total
(MM) Jobs
Jobs
Indirect Induced Jobs
100
70
4.2
2.6
320.0
160.0
580.0

Direct Jobs

280

16

1.4

1.2

112.0

56.0

448.0

70

420

7.0

2.0

420.0

70.0

560.0

520

1.1

1.05

52.0

26.0

598.0

173

Case 17: Money in Michigan

Prompt 2
Projects under consideration

Job multipliers
Direct
Jobs

CAPEX
(MM)

Software
Development

100

70

Kidoodle

Retail chain for

children

280

PreFab

Capital-intensive
Manufacturing

Speedylane

Call Center

Name

Industry

Gamer Zone

Indirect
Jobs

Induced Jobs

Software
Development

4.2

2.6

16

Retail chain for

children

1.4

1.2

70

420

Capital-intensive
Manufacturing

7.0

2.0

520

Call Center

1.1

1.05

Industry

174

Case 17: Money in Michigan

Prompt 3
A strong candidate will have provided a recommendation/thoughts after completing the calculations. Whether a recommendation is provided or
not, say the following:
It is clear that a single project will not achieve MEDCs goal of adding 1,000 jobs in a single year. Which project do you think most closely achieves
the goals and additional concerns/benefits will be provided to the state of Michigan?

Analysis
The candidate should immediately remove Kidoodle and Speedlylane are they do not meet both the job creation or CAPEX goals. Given
that Gamer Zone and PreFab both meet the CAPEX goal and are close in terms of job creation, the candidate should create a
framework to determine which project to go with and then make a suggestion based on the prompt. The can be done with a chart, or
any way that shows organization. Brief suggestions below:
Gamer Zone

PreFab

Jobs

580

560

CAPEX

420

70

Concerns

Smaller CAPEX could lead to less permanence;

availability of trained employees?; located in
already prosperous area?;

High indirect jobs multiplier suggests reliance on

another industry; manufacturing projects are highly
competitive-other states might offer greater incentives

Benefits

Software Developers are usually highly

educated/white collar;

High CAPEX suggests permanence; highest potential

to spur indirect/induced job creation

If time, feel free to use the above suggested answers to play devils advocate with the candidate the important part of this is to
ensure the candidate does not easily change his/her opinion.
175

Case 17: Money in Michigan

Prompt 4/Conclusion
An MEDC official is walking into the room and wants to know where MEDC should send their $10MM. Please take 30 seconds to gather
your thoughts and then provide a recommendation.

Recommendation
The candidate should suggest: Recommendation (and provide a single project), risks (concerns from the last prompt), and offer some
next steps (ideas to mitigate the concerns suggested). The candidate should take no longer than 30 seconds to wrap up.

Performance Evaluation
This case tests a candidates ability to think creatively and should be an easier case due to fewer numbers/much of the information is
provided. However, like more difficult cases, it introduces a problem that is not usually top of mind and it does not require a traditional
profit formula to complete.

A good candidate:
Asks clarifying questions only to move the case forward
Remembers MEDCs goals
Has minor calculation errors
An exceptional candidate:
Reads signs of the interviewer and organizes information without being prompted
Does not make calculation errors
Offers insightful next steps without being prompted
Is able to suggest logical next steps and defend decisions
176

Case Interview feedback form

Case _________________________ Case type _________________ Interviewer ____________________

Execution

Case start time ___:____

Structure

1 2 3 4 5

Logical approach
MECE
Appropriate drive to solution

Comments:

Quantitative Ability

1 2 3 4 5

Speed
Accuracy
Comfort, reaction to mistakes

Comments:

Business intuition
Practical
Insightful
Breadth & depth across multiple functions
Creativity

1 2 3 4 5
Comments:

Framework development
Framework explanation
Case discussion

______ min
______ min
______ min

Case end time ___:____

Overall Rating: 1 2 3 4 5
Strengths

Communication
Professionalism

1 2 3 4 5

Poise
Confident-Persuasive
Articulate-concise
Client ready

Comments:

Weaknesses

Written
Clarity of writing and page layout
Ability to refer back
Comfort, reaction to mistakes

1 2 3 4 5
Comments:

Behavioral (optional)
Quality of star stories
Length
Clarity
Relevance

1
1
1
1

2
2
2
2

3
3
3
3

4
4
4
4

5
5
5
5

Comments:
Key: 1=Bottom 10%, 2= 10th-25th percentile, 3=
middle 50%, 4= 75th-90th percentile, 5=Top 10%

CASE 18 PHARMA CO.

178

Case 18: Pharma Co.

Prompt
Pharma Co. has developed a new AML drug X (type of cancer). Preliminary Phase I trials indicate tremendous potential, but the costs
to get the drug FDA approved and to market are extremely high. A private equity firm has approached Pharma Co. offering to pay
$150M for 50% of all future drug X profits. Pharma Co. wants you to tell it what to do.

Behavioral Questions
What are three traits that your former colleagues would use to describe you? Briefly explain each.
Tell me about something not on your resume that you are proud of.

Interviewer Guidance
Information that can be provided to the interviewee / used to direct the interviewee during case:
The only known objective is to determine how Pharma Co. should proceed
Pharma Co. has no experience taking a drug to market
Cancer drugs tend to be extremely expensive ($100k+) for the patient
ONLY U.S. insurance will reimburse the cost of the drug, thus Pharma Co. only wants to consider the U.S. market
Pharma Co. does have other drugs in the pipeline
This new drug has not completed U.S. FDA Phase I, Phase II, or Phase III trials
Assume patent life of 10 years
Side effects are consistent with similar drugs so a non-factor
There will be competition (will be explored later)

179

Case 18: Pharma Co.

Analysis
The interviewee should quickly recognize that market opportunity needs to be evaluated against the total costs - a good framework will
include these two points as its primary pillars. Other points that would likely be included within the framework include patent expiration,
insurance reimbursement, current experience / capability set, probability of FDA trial success, and competition.
Guide interviewee towards total market opportunity if not initiated. Begin by asking interviewee what inputs should be used to determine
total opportunity and how these inputs could be collected (sample answers - push interviewee to explore and defend new inputs):

Interviews with experts in the field (doctors, insurance experts, pharmaceutical business experts, healthcare experts)
Review of government census data for population / demographic data
Review of medical journals for cancer incidence trends
Review of FDA records of trials of competitive drugs to see if competition could cut into market share
Review of the ramp of adoption of similar drugs
Survey / interview with potential patients and their willingness to try drug X
Review of the price points of similar drugs
Financial reports for competitors drug performance / drug pipeline information (competition)
Review of negotiated blanket contracts similar drugs have in place with the government (think Medicare)

Fortunately, for the interviewee a lot of that information has already been collected. Provide Exhibit 1 to the interviewee. Ask interviewee
to provide total market opportunity for drug X.

180

Case 18: Pharma Co.

Exhibit 1

Annual patients afflicted with

AML are 3,300
Estimated cost of drug X is
$125,000 per patient per year
Interviews indicate that
doctors are willing to
prescribe drug X to 70% of
their patients
Assume drug X achieves 100%
of its projected market share
after Yr 3

Competitor market share

Year (Yr)
Competitor Market Share

YR1
0%

YR2
0%

YR3
0%

YR4
0%

YR5
25%

YR6
25%

YR7
25%

YR8
25%

YR9
25%

YR10 (1)
25%

YR11
100%

(1) Drug X goes off patent after 10 years

181

Case 18: Pharma Co.

Total market opportunity calculation (for interviewer only)
Number afflicted
Willingness to prescribe
Patients (pre-ramp)
Share of market
Patients (after competitor cut)
Ramp
Patients (after ramp)
Total patients (after ramp)
Price
Total Market Opportunity

YR1
3300
70%
2310
100%
2310
11%
254

YR2
3300
70%
2310
100%
2310
55%
1271

YR3
3300
70%
2310
100%
2310
100%
2310

YR4
3300
70%
2310
100%
2310
100%
2310

YR5
3300
70%
2310
75%
1733
100%
1733

YR6
3300
70%
2310
75%
1733
100%
1733

YR7
3300
70%
2310
75%
1733
100%
1733

YR8
3300
70%
2310
75%
1733
100%
1733

YR9
3300
70%
2310
75%
1733
100%
1733

YR10
3300
70%
2310
75%
1733
100%
1733

16,543
$
125,000
$ 2,067,875,000

182

Case 18: Pharma Co.

Analysis
Great! That is a lot of money! But we need to take into consideration the probability that drug X receives FDA approval.
This probability is applied to the total market opportunity to determine the risk-adjusted market opportunity.
An internal team has developed percentages of failure at each phase. The percentages that drug X completes each stage are (TOTAL
PROBABILITY AND RISK-ADJUSTED MARKET OPPORTUNITY TO BE CALCULATED BY INTERVIEWEE):
Phase I probability - 90% (already begun and results are promising resulting in high %)
Phase II probability - 30%
Phase III probability - 50%
How should these probabilities be applied to the total market opportunity that was just calculated?
Total probability that drug X receives FDA approval - 13.50% (FOR INTERVIEWER ONLY)
Risk-adjusted market opportunity for drug X is ~$280M (FOR INTERVIEWER ONLY)

183

Case 18: Pharma Co.

Analysis
With the risk adjusted market opportunities in hand, costs should now be calculated. Ask the interviewee what costs should be
considered (sample answers - difficulty can be increased by eliminating time to structure thoughts):
Regulatory fees
Promotional materials
Marketing campaigns
Production costs (e.g. materials, quality, sourcing)
Adding personnel (e.g. sales, marketing, administrative, regulatory)
New facilities
Packaging materials
Shipment (e.g. logistics)
Distribution costs (e.g. McKesson)
Taxes
Fortunately, Exhibit 2 outlines these costs and should be provided to the interviewee. Using Exhibit 2 and the market opportunity
numbers calculated in the first half of the case the interviewee should be prompted to begin calculating the EBITA for the riskadjusted scenario (FOR RISK ADJUSTED KEY THAT INTERVIEWEE RISK ADJUSTS COSTS AS THEY ALIGN WITH THE FDA PHASES - HINT IF
NECESSARY). Total EBITA is $38M (FOR INTERVIEWER ONLY). If interviewee initiates NPV discussion, redirect to total EBITA noting
management has specifically requested a total EBITA number as part of the analysis and that NPV will follow.
Interviewee should ask for discount rate to calculate NPV of the 50% profit stream that the private equity company has offered $150M
for. Provide a discount rate of 5% BUT BEFORE interviewee begins to calculate ASK HOW they would structure the NPV calculation.
Once explained, note that the NPV will likely be negative (or ask interviewee based on information provided where they think it would
fall without doing any calculations), and that time is running short so you need to move on
With a negative NPV estimate (approximate NPV is -$25M) for the 50% profit stream, total EBITA, and the total assuming the private
equity firms offer is accepted of $181M ($150M offer + $31M profit split), ask for the recommendation.
184

Case 18: Pharma Co.

Exhibit 2

Phase I

$160M (1)

Phase II

$125M

Phase III

$75M

Production

Manufacturing costs: 5%
of price
Logistics: 5% of price
All other costs: 10% of
price

(1) The $160M includes both what has been invested AND the projected amount required to complete Phase I trails

185

Case 18: Pharma Co.

Exhibit 1 (RISK ADJUSTED ANSWERS - FOR INTERVIEWER)

Phase I

$160M

Phase II

$125M

Phase III

$75M

Phase I: $160M x 90% = ~$144M

Phase II: $125M x (90% x 30%) = ~$34M
Phase III: $75M x (90% x 30% x 50%) = ~$10M
Total for production:
~2B x (5% x 5% x 10%) = $400M
$400M x (90% x 30% x 50%) = ~$54M
EBITA is: $280M - $242M = ~$38M

Production

Manufacturing costs: 5%
of price
Logistics: 5% of price
All other costs: 10% of
price

186

Case 18: Pharma Co.

Recommendation
An argument can be made to both accept and turn down the private equity firms offer, though most will suggest that it be accepted based on the
numbers. But an argument could be made that because other drugs are in the pipeline this could serve as a foundation drug, that the risk
adjustment numbers are too conservative, etc. Either recommendation should mention risk tolerance of Pharma Co., need for capital, validation of
the risk adjustment percentages, risks because Pharma Co. has never taken a drug to market, possible exploration of alternative paths forward
(partner, license, or sell the technology). Additional questions to probe / challenge recommendation:

Probe for alternative solutions?

What additional analysis would the interviewee like to perform?

Would it make sense for Pharma Co. to revaluate after Phase I approval? Phase II and III approvals?

What data would be required to further explore / validate alternative solutions?

What are the non-financial risks to pushing forward with development?

How can the risk adjusted numbers be validated?

What are logical next steps for Pharma Co.?

Performance Evaluation
The case evaluates the interviewees ability to recognize a profit case, thinking logically and quickly through a long-term strategic problem, and
perform simple math. An exceptional interviewee will do the following:
Recognize that there is risk that the drug will not make it through all FDA approvals (and appropriately apply to the total market
opportunity and costs)
Able to quickly and logically identify reasonable means for collecting inputs required to determine market opportunity
Understand that there are both non-recurring costs (R&D, trials, etc.) and recurring costs (manufacturing, staffing, selling, etc.)
Note that the market will be cut or end because of generic competition once the patent ends
Identify other geographies and other uses as key channels to push total profits higher
Able to quickly and logically identify key costs
Note that competition is likely and needs to be considered

187

Case Interview feedback form

Case _________________________ Case type _________________ Interviewer ____________________

Execution

Case start time ___:____

Structure

1 2 3 4 5

Logical approach
MECE
Appropriate drive to solution

Comments:

Quantitative Ability

1 2 3 4 5

Speed
Accuracy
Comfort, reaction to mistakes

Comments:

Business intuition
Practical
Insightful
Breadth & depth across multiple functions
Creativity

1 2 3 4 5
Comments:

Framework development
Framework explanation
Case discussion

______ min
______ min
______ min

Case end time ___:____

Overall Rating: 1 2 3 4 5
Strengths

Communication
Professionalism

1 2 3 4 5

Poise
Confident-Persuasive
Articulate-concise
Client ready

Comments:

Weaknesses

Written
Clarity of writing and page layout
Ability to refer back
Comfort, reaction to mistakes

1 2 3 4 5
Comments:

Behavioral (optional)
Quality of star stories
Length
Clarity
Relevance

1
1
1
1

2
2
2
2

3
3
3
3

4
4
4
4

5
5
5
5

Comments:
Key: 1=Bottom 10%, 2= 10th-25th percentile, 3=
middle 50%, 4= 75th-90th percentile, 5=Top 10%

CASE 19 QUALITY CONTROL

189

Case 19: Quality Control

Prompt
Your client is a leading medical device company and just recently acquired a smaller company to help grow their orthopedics division.
Shortly after the acquisition, the parent company found several quality problems within the acquired companys manufacturing sites
that have to be remediated within six months to avoid FDA violations. You have been hired to come up with a plan that will successfully
complete all remediation efforts on time.

Behavioral Questions
Tell me about a time when you received feedback (positive or constructive) and you acted upon the feedback to further improve?
What kind of client interaction would be the most difficult for you to manage and why?

Interviewer Guidance
This care requires a nontraditional framework and requires flexibility and creativity.
Additional key details if asked: (Provide only after initial framework is given by interviewee)
5 manufacturing sites are affected
25 quality problems found at each site that all need to be remediated
Client can not extend beyond six month time frame and assume six months starts from today
Candidate should focus on first understanding the scope of this remediation effort and if it is feasible to complete given certain
constraints. They should consider the costs, constraints/barriers, and offer potential next steps.

190

Case 19: Quality Control

Analysis
1) There are 5 manufacturing sites that are affected with 25 quality defects found at each site. Their current level of resources can
remediate at a rate of .125 defects/day. Will they meet their remediation goals? Let interviewee know that they can assume they
are working weekends
2) What do you suggest that our client do in order to complete remediation on time? What are some potential options?
3) The CEO of our client is about to walk into the room, please summarize your findings and suggestion to him. You do not have time
to prepare.

Recommendation
1) No, they will not meet their remediation goals
5 sites * 25 defects = 125 total defects
.125 = 1/8 so it takes 8 days to complete one defect
125 defects * 8 days = 1000 total days to complete all defects
1000 days / 30 days in month = 33.3 months needed at current rates
33.3 months / 6 month timeline = over by ~5.5 times
Conclude that need 5.5x the number of resources at the same rate or improve their productivity
2) Brainstorming question: many different options (hire more, increase productivity, contract out, etc) with each option the candidate
should be thinking about the potential costs associated or other barriers in addition to how feasible. A great candidate would be able
to structure their brainstorming (ex: greatest impact, least cost, feasibility)

191

Case 19: Quality Control

Performance Evaluation
Fairly easy case but should test candidates ability to structure thoughts and their creativity in suggestions
Exceptional candidates will drive to a solution upon discovering the objective is unachievable
Exceptional candidates will structure their thoughts logically in response to brainstorming questions (written structure is not
required as long as conveyed verbally in a structured manner)

192

Case Interview feedback form

Case _________________________ Case type _________________ Interviewer ____________________

Execution

Case start time ___:____

Structure

1 2 3 4 5

Logical approach
MECE
Appropriate drive to solution

Comments:

Quantitative Ability

1 2 3 4 5

Speed
Accuracy
Comfort, reaction to mistakes

Comments:

Business intuition
Practical
Insightful
Breadth & depth across multiple functions
Creativity

1 2 3 4 5
Comments:

Framework development
Framework explanation
Case discussion

______ min
______ min
______ min

Case end time ___:____

Overall Rating: 1 2 3 4 5
Strengths

Communication
Professionalism

1 2 3 4 5

Poise
Confident-Persuasive
Articulate-concise
Client ready

Comments:

Weaknesses

Written
Clarity of writing and page layout
Ability to refer back
Comfort, reaction to mistakes

1 2 3 4 5
Comments:

Behavioral (optional)
Quality of star stories
Length
Clarity
Relevance

1
1
1
1

2
2
2
2

3
3
3
3

4
4
4
4

5
5
5
5

Comments:
Key: 1=Bottom 10%, 2= 10th-25th percentile, 3=
middle 50%, 4= 75th-90th percentile, 5=Top 10%

CASE 20 WORKIT

194

Case 20: WorkIt

Prompt #1
Your client is WorkIt an insurance firm that sells workers compensation insurance policies exclusively. Workers compensation is an
insurance policy that companies purchase to protect themselves from lengthy litigation and unexpected and incredibly high legal fees
related to employees who are injured at work. Workers compensation is paid by the company on a per-employee basis each month
and in exchange, the policy covers medical, indemnity, and other expenses. For example, if an employee falls off a ladder and breaks a
leg, workers compensation pays for the employees medical bills and indemnity or lost wages. The policy also covers other related
expenses. Companies are required by state law to purchase workers compensation plans.
WorkIt has been successful in North Carolina, South Carolina, and Georgia but is considering entering a new state. WorkIt would like
your help to determine if this is a good idea.

Behavioral Questions
Tell me about a time you had to make a difficult decision when you had limited information
What is your greatest transferable skill?

195

Case 20: WorkIt

Interviewer Guidance
Background data that the candidate may request:
This case does not provide a lot of information about the direction upfront, but successful candidates will work through the content
and uncover the direction as they proceed. The candidate may ask some clarifying questions; however, the main goal is to determine
whether WorkIt should expand (and then where the company should expand) and candidates will receive more information as they
proceed. Profit is a big concern, but so are qualitative issues.
Suggestions about how the case is to be delivered:
The first prompt is meant to be open ended, so there is not any additional information for the candidate at this point (e.g., WorkIts
main goals are not explicit)
If candidates need more information about workers compensation, please provide the optional overview / explanation:
It is an insurance policy in which a company pays a premium to be protected from unpredictable accidents
The following example can be repeated to explain components: If an employee falls off a ladder and breaks a leg, workers
compensation pays for the employees medical bills (medical) and also pays the employee for lost wages (indemnity). The
policy also covers other expenses (e.g., overhead, benefit delivery, occasional attorney fees paid by workers compensation).
What to look for in a candidates responses:
The candidate should come up with a MECE framework that covers the following areas: revenue and cost (profitability),
competitors, WorkIts current market saturation/industry mix of clients, regulatory concerns/changes, economic conditions, and
company network geographically
The prompt mentions that WorkIt sells workers compensation policies exclusively, so a successful candidate will not ask about
additional insurance offerings, though this could become a suggestion for WorkIt to consider later in the case.

196

Case 20: WorkIt

Optional Overview of Workers Compensation

Employee

Employer

Workers Compensation Provider (e.g.,

WorkIt)

Covered if injured (whether the

employee is at fault or not)

Pays insurance premium to cover

employees injured at work
Benefits by avoiding lawsuits and
unexpectedly large expenses if an
employee is injured at work

197

Receives insurance premium in

exchange for providing benefits to
employees injured at work

Benefits include:

Medical (e.g., hospital bills)

Indemnity (e.g., lost wages)

Expenses (e.g., overhead,

benefit delivery, occasional
attorney fees)

Case 20: WorkIt

Prompt #2
Great, so WorkIt is thinking of expanding in the South to remain regional. WorkIt has gathered data on 9 states; however, WorkIt does
not want to engage with markets smaller than South Carolina (30,000 cases of injured employees) or larger than Georgia (70,000 cases
of injured employees). In this case, you can assume that WorkIt would be able to control the entire market in the state. Please take a
moment to review the data sheet and gather your thoughts on which states to consider.

Analysis
The candidate should determine that only four states fit WorkIts criteria: AL, MS, TN, VA
Total Employment (Ths.)
AL

Employed
% injured each year
Total injured (Ths.)
Total injured

AR

2000
2%
40
40000

FL

1200
2%
24
24000

LA

7700
2.00%
154
154000

MS

2000
4%
80
80000

198

TN

1150
4%
46
46000

TX

2800
2%
56
56000

VA

11400
4%
456
456000

WV

3900
1%
39
39000

800
2%
16
16000

Case 20: WorkIt

Prompt #2
Exhibit 2: Growth in Cost Per Claim

Exhibit 1: Total Employment (Ths.)

AR
FL
LA
MS
TN
TX
VA
WV

10
% Change In Cost Per
Claim

AL

% injured each
Employed year at work
2000
2%
1200
2%
7700
2%
2000
4%
1150
4%
2800
2%
11400
4%
3900
1%
800
2%

5
0
-5
-10
2012 to 2013

2013 to 2014

Exhibit 3: Medical Costs Per Claim (2013)

Exhibit 4: Breakdown of Total Costs

Average Medical
Cost/Claim

$20,000

Expenses
17%

$15,000
$10,000
Medical
50%

$5,000
$0
AR WV MS TN FL TX
Claims by State

LA VA AL

199

Indemnity
33%

Case 20: WorkIt

Prompt #3
Lets proceed with Alabama, Mississippi, Tennessee, and Virginia. Now determine WorkIts profit. Please note that WorkIts revenue is
a flat 101% of total costs.

Analysis
Provide hints if the candidate needs it. Here is one way to solve:

Costs
Step 1: # of injuries (exhibit 1) x cost per (medical) (exhibit 3) = total medical
Step 2: total medical x 2 (medical is half the total expense from exhibit 4) = total cost by state
Revenue/Profit
Step 3: Total per state x 101% commission total cost by state = profit
OR
Step 3: Candidates could realize that profit is 1% of total costs

AL
MS
TN
VA

Costs
Revenue
Profit
# of injuries (ths.) Cost per injury (medical) Total cost (medical) Total cost (all three) 101% (Costs)
1% (Costs)
40
$17,500
$700,000
$1,400,000
$1,414,000
$14,000
46
$10,000
$460,000
$920,000
$929,200
$9,200
56
$11,000
$616,000
$1,232,000
$1,244,320
$12,320
39
$16,000
$624,000
$1,248,000
$1,260,480
$12,480

The candidate should comment about the state with the highest revenue potential. Also, note that the commission could still be in
(ths.) from earlier (i.e., $14,000 is actually $14,000,0000) making this a worthwhile option for WorkIt.
200

Case 20: WorkIt

Prompt #4
WorkIt is concerned about recent policy changes and hospital and judicial reform, which could impact the companys 1% commission.
Without doing any math, what state should WorkIt now consider?

Analysis
Based on Exhibit 4, Alabama is now less attractive as total costs have decreased significantly over the past year (and prior year).
Mississippi and Tennessee show variability and have decreased costs from 2013-2014, which shows decreased profits from the 2013
numbers. It also suggests it will be difficult for WorkIt to predict future profits.
In this case, Virginia is the most stable state and it could be argued, the most attractive state.

201

Case 20: WorkIt

Prompt #5
What else should WorkIt research before making a decision?

Analysis
Suggested response should include a few of the below:
1. Additional Costs will there be future changes to fixed and variable costs?
2. Competition what other company is operating in each state? Does WorkIt stand a chance of getting the contract? Could there be
a bidding war?
3. Different legal/regulatory changes will WorkIt need to hire a new legal team? Any reason a state might not be ideal (that is not
included in Exhibit 3)?
4. Company Capabilities cost of entry, will their be a bidding war for the contract, can WorkIt operate successfully from afar? If not,
can WorkIt be successful in the selected state?

202

Case 20: WorkIt

Prompt #6/Conclusion
WorkIts CEO is walking into the room and wants to know if the company should expand and if so, where? He is now in the room, let
him know what you suggest.

Recommendation
The candidate should suggest: Recommendation (go or no go is fine as long as it is supported), risks (concerns from the last prompt),
and next steps (these could be based on earlier work from the initial framework/concerns). In this case, the candidate was told to give
the conclusion right away and should not ask for 30 seconds. However, the candidate could write the recommendation as he/she
presents to remain organized.

Performance Evaluation
This case involves a market entry decision. The decision is based on limited information, as the candidate knows the revenue, but does
not have the associated costs needed to determine profit.

A good candidate:
Asks clarifying questions only to move the case forward
Remembers crucial information and is able to disregard extraneous information
Has minor calculation errors and is able to continue after an error is made
An exceptional candidate: (in addition to the above)
Finds shortcuts for calculations
Reads signs of the interviewer and organizes information without being prompted
Offers insightful next steps without being prompted
Is able to suggest logical next steps and defend decisions
203

Case Interview feedback form

Case _________________________ Case type _________________ Interviewer ____________________

Execution

Case start time ___:____

Structure

1 2 3 4 5

Logical approach
MECE
Appropriate drive to solution

Comments:

Quantitative Ability

1 2 3 4 5

Speed
Accuracy
Comfort, reaction to mistakes

Comments:

Business intuition
Practical
Insightful
Breadth & depth across multiple functions
Creativity

1 2 3 4 5
Comments:

Framework development
Framework explanation
Case discussion

______ min
______ min
______ min

Case end time ___:____

Overall Rating: 1 2 3 4 5
Strengths

Communication
Professionalism

1 2 3 4 5

Poise
Confident-Persuasive
Articulate-concise
Client ready

Comments:

Weaknesses

Written
Clarity of writing and page layout
Ability to refer back
Comfort, reaction to mistakes

1 2 3 4 5
Comments:

Behavioral (optional)
Quality of star stories
Length
Clarity
Relevance

1
1
1
1

2
2
2
2

3
3
3
3

4
4
4
4

5
5
5
5

Comments:
Key: 1=Bottom 10%, 2= 10th-25th percentile, 3=
middle 50%, 4= 75th-90th percentile, 5=Top 10%

CASE 21 SO FRESH AND SO CLEAN

205

Case 21: So Fresh and So Clean

Prompt
Our client, So Fresh and So Clean, is a cleaning supply distributor and operates a national distribution network. Over the past 5 years
the client has acquired several small regional players and has experienced decreasing margins. In 2009, the companys net margin was
3.1% and since the net margin has dwindled to 2.4% at the end of 2013. The CEO is worried about long-term longevity of the company
and hired us to conduct an extensive diagnostic of the companys health. How would you approach this problem?

Behavioral Questions
Ask the candidate which industry theyre passionate about. Then ask them what they think the future state of the industry will be
over the next ten years.
Tell me about a time you had to convince someone of your ideas where there was a lack of data.

Interviewer Guidance
This is intended to be an overarching case, which requires candidates to analyze the overall market and diagnose a specific company
issue. The crux of the case is an ineffective sales force. However, the candidate is not expected to discover this right away.
The candidate should first probe about market health. Once they realize the overall market is stagnant and the companys
profitability is aligned with competitors they should push towards a profitability tree.
Clarifying questions
What products do we sell? Our client provides chemicals, cleaning supplies, uniforms, and equipment to restaurants,
hospitals, schools, and other food service providers. Located within the United States.
Questions about the industry: Market has averaged 2% growth over the past five years. So Fresh and So Clean is the industry
leader with 20% market share, followed by competitor A at 15%, B at 8%, C at 5%, and others make up the rest.
The company acquired a $3.3B revenue competitor in 2010 and $3.1B revenue competitor in 2012
206

Case 21: So Fresh and So Clean

Prompt A
The team has recently conducted a market analysis and reviewed the companys audited financial statements. Please review the
following Exhibits (1 & 2).
Guidance: Exhibit 1 The candidate should quickly recognize the market is mature and the clients profitability is aligned with
competitors. As a result, they should assess the companys internal operations. Exhibit 2 - The candidate should discover SG&A costs
have skyrocketed with the companys acquisitions in 2010 and 2012.
Ask the candidate to brainstorm reasons how to lower sales costs (e.g., reductions, organization structure redesign, technology)

Prompt B
After each acquisition, the client did not fully rationalize its salesforce and as a result SG&A costs have skyrocketed. The team has
conducted 20 field surveys with sales reps to benchmark their monthly activity to the competition. Based on Exhibit 3 what would you
recommend to the client?
Guidance: Once the candidate identifies competitors spend 2x the amount of time selling, then the candidate needs to brainstorm
specific ways to increase this percentage.

Case 21: So Fresh and So Clean

Prompt C
The team has recommended a new selling model to the client to increase the amount of time sales representative spend working with
customers. Under the new model, the client would hire entry level account coordinators to perform administrative tasks and help sales
rep service the customers. This position would then allow the client to increase sales reps customer account coverage and reduce the
workforce. The client wants to know how much this model would save them a year.

Prompt D
The CEO is coming in for a quick update in a minute. Please prepare a recommendation.

208

Case 21: So Fresh and So Clean

Exhibit 1
Market analysis and competitor benchmark
Industry Benchmark
Industry Benchmark

Net margin

Net margin

USD Billions

Cleaning Supply
Distribution Market Size

209

Case 21: So Fresh and So Clean

Exhibit 2

5 Year Financial Performance (2009-2013)

Industry Benchmark

Net margin

So Fresh and So Clean - Income Statement (billions)

2009
2010
2011
2012
2013
Sales
$ 18.79 $ 22.30 $ 22.85 $ 25.82 $ 26.39
Cost of sales
$ 15.31 $ 18.17 $ 18.74 $ 21.18 $ 21.64
Gross profit
$ 3.48 $ 4.12 $ 4.11 $ 4.65 $ 4.75
Depreciation
$ 1.50 $ 1.55 $ 1.62 $ 1.60 $ 1.61
Selling, General & Administrative $ 0.60 $ 0.95 $ 1.00 $ 1.55 $ 1.60
Other
$ 0.50 $ 0.55 $ 0.60 $ 0.55 $ 0.56
Operating expenses
$ 2.60 $ 3.05 $ 3.22 $ 3.70 $ 3.77
Operating income
$ 0.88 $ 1.07 $ 0.89 $ 0.95 $ 0.98
Income taxes
$ 0.29 $ 0.38 $ 0.25 $ 0.30 $ 0.35
Net earnings
$ 0.58 $ 0.69 $ 0.64 $ 0.65 $ 0.63

Gross Profit Margin

Operating Margin
Net Margin

Financial Performance Metrics

2009
2010
2011
18.5%
18.5%
18.0%
4.7%
4.8%
3.9%
3.1%
3.1%
2.8%

2012
18.0%
3.7%
2.5%

Year-over-Year Change
2010
2011
2012
19%
2%
13%
19%
3%
13%
19%
0%
13%
3%
5%
-1%
58%
5%
55%
10%
9%
-8%
17%
6%
15%
23%
-17%
6%
31%
-34%
19%
19%
-7%
1%

2013
2%
2%
2%
1%
3%
2%
2%
3%
15%
-2%

2013
18.0%
3.7%
2.4%

210

Case 21: So Fresh and So Clean

Exhibit 3

Net margin

Breakdown of typical sales person monthly

in 2013
Industryactivity
Benchmark

211

Case 21: So Fresh and So Clean

Interviewer Guidance (Do not share with Interviewee)

Information and calculation for new sales

model
benefit
Industry
Benchmark

Net margin

Required information for calculation:

Number of new account coordinators - 148

Salary of account coordinators - $55K

Amount of time saved for Sales Reps - 16

orders per week, each order takes 25 minutes

Total time worked by sales reps in a week: 40

hours

Sales Reps salary - $120,000

Total Sales Reps - 1,500

Calculation:
Investment
148 sales reps (~150) x $55,000 = $8,250,000
Time saved
16 orders x 25 minutes = 400 minutes
40 hours x 60 minutes = 2,400 minutes
17% (1/6) reduction in time spent

Benefit
$120,000 x 1,500 sales reps = $180,000,000
Total Savings
(1/6) * $180,000,000 = $30,000,000
Net Saving = $21,750,000

212

Case 21: So Fresh and So Clean

Recommendation
This case is intended to follow a structured path. The case intentionally begins high level and then quickly narrows upon a specific
problem, a bloated sales force. Each prompt is meant to spur creativity and challenge the candidates problem solving. Ensure the
candidate holistically assesses each prompt and identifies potential risks to the end solution.

Performance Evaluation

This case tests a candidates ability to diagnose a specific problem with initially vague information.
Each prompt is suppose to test the candidates ability to brainstorm potential solutions to a problem.
Strong candidates will drive the case through each prompt and solve the cost-benefit analysis
Exceptional candidates will also come up with innovative solutions to solve the companys profitability issue and highlight the
challenges a 17% reduction in salesforce would create for the customer base. The Salesforce reorganization only saves $21M which
is a 2.1% improvement to 2013 operating income. Small in the grand scheme of enterprise.

213

Case Interview feedback form

Case _________________________ Case type _________________ Interviewer ____________________

Execution

Case start time ___:____

Structure

1 2 3 4 5

Logical approach
MECE
Appropriate drive to solution

Comments:

Quantitative Ability

1 2 3 4 5

Speed
Accuracy
Comfort, reaction to mistakes

Comments:

Business intuition
Practical
Insightful
Breadth & depth across multiple functions
Creativity

1 2 3 4 5
Comments:

Framework development
Framework explanation
Case discussion

______ min
______ min
______ min

Case end time ___:____

Overall Rating: 1 2 3 4 5
Strengths

Communication
Professionalism

1 2 3 4 5

Poise
Confident-Persuasive
Articulate-concise
Client ready

Comments:

Weaknesses

Written
Clarity of writing and page layout
Ability to refer back
Comfort, reaction to mistakes

1 2 3 4 5
Comments:

Behavioral (optional)
Quality of star stories
Length
Clarity
Relevance

1
1
1
1

2
2
2
2

3
3
3
3

4
4
4
4

5
5
5
5

Comments:
Key: 1=Bottom 10%, 2= 10th-25th percentile, 3=
middle 50%, 4= 75th-90th percentile, 5=Top 10%

CASE 22 KID COUNTRY

215

Case 22: Kid Country

Prompt
Our client, Kid Country, is the purveyor of an increasingly unpopular form of hybrid rap/rock/country music. An early boom in the
market for awful music allowed him to amass a substantial war chest and offer products (music related) in a variety of areas. His
accountants have recently informed him of consistently declining revenues over the last three years and encouraged him to seek
outside expertise.

Behavioral Questions
What was your most challenging moment at work?
Tell me about a time you led a team

Interviewer Guidance
A quality framework will seek to identify which lines of businesses are problematic and which have opportunities, address the basic
economic levers within these businesses, and take into account both internal and external factors impacting these levers.
When asked about Kid Countrys diversification, have the candidate brainstorm some likely possibilities and then share the key lines of
business: apparel (tasteless t-shirts), beverages (tasteless beer), CD/MP3 sales, concert ticket sales.
When asked about revenue trends, confirm that overall revenue numbers are down but that trends vary across lines of business. Well
address specifics later on.
Strong candidates will also ask about profitability: profitability trends vary by line of business as well, but well get into those later on.

216

Case 22: Kid Country

Analysis
Once the candidate identifies Kid Countrys products (either through bucketing each line of business separately, or through a
revenue/profitability bucket addressing them all), give him the chance to guide the case towards understanding how each product is
performing. Weak candidates may require your prompting to focus in on this.
When the candidate requests information on products performance, provide Exhibits 1 and 2.
After reviewing the exhibits, the candidate should move into discussing potential recommendations. If the candidate fails to do so,
prompt him to.

Recommendation
Candidate should identify several takeaways from Exhibits 1 & 2

Concert tickets are the core business - highest revenue, great profitability, highest profit, but declining revenues due to Kid
Countrys out-of-style music

Apparel seems like a dud- profitability is too low and it hasnt improved much since 2011

CD/MP3 sales are high but declining with low profitability, and getting squeezed by channels - the rise of Spotify, Pandora, and
iTunes are eating into artist margins - candidates should identify channel margin growth as a problem here, but Kid Country lacks
the leverage to fight back against this

Beverages are a growth opportunity - very good profitability, but low current sales - Candidate MUST be able to recognize that this
line of business was added since 2011
After reviewing exhibits, candidate should guide case forward by suggesting that we explore how to improve Kid Countrys position.
Strong directions should attempt to shore up the core business of tickets (which is likely a driver for the brand and thus the side
business) while capitalizing on growth opportunities in beer and considering ways to either kill or fix the apparel business.
217

Case 22: Kid Country

Exhibit 1

2014 Sales ($M)*

7
6
1

5
3

4
3
3

0.5
0.5

1
0.75
0.25

0
Apparel

CD/MP3
Profit ($)

Concert Tickets

Channel Margin ($)

Beverages

Other Costs ($)

*Forecast through EOY

218

Case 22: Kid Country

Exhibit 2

2011 Sales ($M)

1.5

1.5

6
3

4
1
6

2
3
0.9

0.4

0.2

Apparel

CD/MP3
Profit

Concert Tickets

Channel Margin

Other Costs

219

Case 22: Kid Country

Prompt #2
After letting the candidate explore recommendations for improving Kid Countrys business, introduce the following:
Kid Country would like us to evaluate a proposal he just received from his concert promoters, which would substantially change the
business model of his tours - tell us what you think of it
Provide Exhibit 3 and voice over the following: The promoters have been able to negotiate a unique deal with the venues which host
Kid Country - if he is willing to drop ticket prices dramatically (while increasing the venues cut of course), they will allow him to
perform back-to-back shows (either the same night or on consecutive nights) and will agree to carry exclusively Kid Countrys own
Real American Red White and Blue Lager for sale during these shows.

Recommendation
Candidate should recognize that he is being asked to make a go/no-go recommendation, and should not depend on interviewer
prompting to come to one. THIS IS THE CASE CONCLUSION- if a candidate waffles after it, prompt him to conclude.
If the candidate asks what our base case forecasts look like, tell him that we dont have any and ask for his input - a strong candidate
should be able to recognize that 2011->2014 trends and the general context of the case imply declining performance.
If the candidate has questions about the forecasts, explain that we are confident in them; a strong candidate will likely express
concerns about the fact that we arent taking into account the extra costs of a second show- explain that, because almost all costs for a
given location are fixed, back-to-back shows add negligible costs which do not need to be considered.
Candidate should be able to quickly build a profit calculation table to produce a go/no-go recommendation along with
acknowledgment of the risks associated with either.
Pros: Major revenue and profit opportunity; movement into higher profitability space; reversal of disastrous trend
Cons/risks: Redefines core business - Kid Country is now essentially a brewer who uses music to sell beers; can Kid Country scale his
beverage business?; Kid Country will have to play twice as many shows- this is a huge personal burden - does he want to?
220

Case 22: Kid Country

Exhibit 3
Tour Forecast Data
Tour
Dates

Ticket
Price

Tickets/
Show

Beer
Price

Beers/
Show

% of Own
Brand Beers

Ticket
Margin

Beer
Margin

221

Case 22: Kid Country

Exhibit 3 Interviewer Guidance
Tour Forecast Data Key

*Exceptionally curious candidates may wonder if this is actually a good deal

for our venues. It is- their profits go from $2M to $2.4M.

222

Case 22: Kid Country

Performance Evaluation
Skills tested
o Rudimentary case math, identification of trends, strengths, and weaknesses within a business, ability to drive a line of
thought to an actionable conclusion
Strong candidates will:
o Complete necessary math with minimal stumbles
o Handle Exhibit 3 with a clean, well-organized profit calculation table while avoiding unnecessary calculations
o Consider qualitative factors (will Kid Country want to work twice as many shows? Could he re-brand by playing another type
of music? [probably not])
o Drive to conclusions- above all else, a strong candidate will drive this case, recognize that Prompt #2 is a go/no-go decision,
and present a crisp, concise, and decisive conclusion upon its completion rather than depending on the interviewer to wrap
the case up for him.
o Incorporate data on relative impact of project in conclusion (e.g. circle back to total 2014 profits across all lines of business
to show % profit increase in overall terms)

223

Case Interview feedback form

Case _________________________ Case type _________________ Interviewer ____________________

Execution

Case start time ___:____

Structure

1 2 3 4 5

Logical approach
MECE
Appropriate drive to solution

Comments:

Quantitative Ability

1 2 3 4 5

Speed
Accuracy
Comfort, reaction to mistakes

Comments:

Business intuition
Practical
Insightful
Breadth & depth across multiple functions
Creativity

1 2 3 4 5
Comments:

Framework development
Framework explanation
Case discussion

______ min
______ min
______ min

Case end time ___:____

Overall Rating: 1 2 3 4 5
Strengths

Communication
Professionalism

1 2 3 4 5

Poise
Confident-Persuasive
Articulate-concise
Client ready

Comments:

Weaknesses

Written
Clarity of writing and page layout
Ability to refer back
Comfort, reaction to mistakes

1 2 3 4 5
Comments:

Behavioral (optional)
Quality of star stories
Length
Clarity
Relevance

1
1
1
1

2
2
2
2

3
3
3
3

4
4
4
4

5
5
5
5

Comments:
Key: 1=Bottom 10%, 2= 10th-25th percentile, 3=
middle 50%, 4= 75th-90th percentile, 5=Top 10%

CASE 23 TEXAS OIL

225

Case 23: Texas Oil

Prompt 1
Your client, Texas Oil, is a large, integrated oil and gas company which competes with the likes of ExxonMobil, Shell, and Chevron. They
have assets in 72 countries, on 5 continents, and own one-quarter of the US oil market. They recently purchased a large area of land
from a small, independent oil company and are attempting to integrate it into their portfolio in West Texas. They hired your firm to
help them determine how to develop the purchased land.
While the company is large, it is capital constrained. This is because of low crude oil prices and an over-budget refinery in Angola. As
a result, the company cannot develop all of the purchased land in the coming years.

How would you frame this problem for the client?

Behavioral Questions
What was your favorite team moment?
Can you tell me a time when you exhibited strong leadership qualities?

Interviewer Guidance
Background information (if requested):
All of the purchased land has proven oil and gas reserves (with 90% confidence)
Other major competitors are also in West Texas.
Oil and Gas are commodities, and traded on an international, liquid market (meaning the quality of the reserves is not important for
the case)
Texas oil does not have enough market share to influence the price of oil/gas
The purchased lease will expire in 3 years
The total amount purchased is 320,000 acres
226

Case 23: Texas Oil

Interviewer Guidance Continued
The candidate should frame this as a prioritization problem. The key value measure for prioritization is a cost/benefit analysis:
Costs: Land development (building roads, infrastructure), appraisal costs (geological analysis), construction and drilling costs, labor
costs, production costs (pipelines, etc.)
Benefits: Revenue, market share, production

227

Case 23: Texas Oil

Prompt 2
The land on which the drilling rights were purchased is owned by the government and leased to companies on a five-year timeline. If a
lease holder does not develop that land in that time, the lease expires and the lease holder can no longer develop it. Texas Oils
purchased land has only three years remaining on its lease agreement.
How many acres can Texas Oil develop before their lease expires? What percentage of their purchased land does this represent?

Interviewer Guidance
This is a short, back of the envelop calculation. The candidate should ask for figures, but if they are having difficulty you can start from
the top with information.
Historically, the company has been able to develop (drill and produce) land at a rate of 100 square miles per year.
640 acres = 1 square mile
Texas oil has three years remaining on the lease, so 3*100 = 300 square miles
300*640 = 192,000 acres can be developed in 3 years
Company purchased a total of 320,000 square acres
192,000 / 320,000 = 60% of its purchased land

228

Case 23: Texas Oil

Prompt 3
OK, now that weve determined how much of the land can be developed, we need to prioritize. The company has categorized the land
into five focus areas, each with 64,000 acres (show exhibit 1 to candidate).
How would you go about prioritizing focus areas?

Interviewer Guidance
This is purely a brainstorming question, and if the candidate asks for specific figures, you can indicate that they are forthcoming.
NPV is the base answer (i.e. prioritize land based on expected revenue from reserves minus expected costs of development), but you
should push the candidate to be a bit more creative.
2nd Level Insights:
Capital efficiency (some areas may have slightly higher profits but cost much more to develop)
Total cost of development (the prompt indicated that the company is capital constrained)
Total production
o Some companies may be more production focused than profit because it boosts stock price and/or valuation of the company
(e.g. independent oil companies looking to sell)

229

Case 23: Texas Oil

Exhibit 1

Focus Areas
Coyote
Tooth

Eagle
Mountain

Midland

Fox Path
Nag River
Head

230

Case 23: Texas Oil

Prompt 4
Each one of these areas can be developed independently, but not at the same time. The firm has provided you with exhibits 2 and 3
and asked you to determine its optimal course of action. According to the head of the West Texas Business Unit, the company has 300
million available to spend.
How should Texas Oil develop its purchased land?

Interviewer Guidance
The Oil, Gas, and NGL figures are a distraction, and feed directly into revenue. If the candidate asks about priorities, suggest that the
company wants to maximize profitability given its capital constraints
The key to answering this question is capital efficiency.
The correct answer is : Eagle Mountain, Midland, and Fox Path.

Coyote Tooth can also be substituted for Fox Path, but it spends more money and gets the same amount of revenue. Nag River Head is
attractive because it has a higher NPV, however, it violates the 300 million limit set by the business unit head (when developed with
any 2 other areas), and is not capital efficient. If the company decides to develop Nag River Head, then, it must give up developing a
third segment, thus forgoing profits on that segment as well.
2nd level insights:
Texas Oil could re-categorize land within those segments and achieve higher portfolio efficiencies (i.e. not all land in one segment is
equally profitable)
Texas Oil should sell the excess acreage to other competitors, rather than sitting on the lease and allowing it to expire.
231

Case 23: Texas Oil

Exhibit 2

Focus Area Figures

Acres

Oil Revenue Gas Revenue NGL Revenue

($MM)
($MM)
($MM)

Revenue
($MM)

Total Cost
($MM)

NPV
($MM)

Eagle Mountain

64,000

100

30

139

94

45

Fox Path

64,000

110

45

158

108

50

Midland

64,000

90

50

141

96

45

Nag River Head

64,000

180

10

15

205

150

55

Coyote Tooth

64,000

80

80

160

110

50

Total

320,000

560

215

28

803

558

245

232

Case 23: Texas Oil

Exhibit 3

Focus Area Capital Efficiencies

233

Case Interview feedback form

Case _________________________ Case type _________________ Interviewer ____________________

Execution

Case start time ___:____

Structure

1 2 3 4 5

Logical approach
MECE
Appropriate drive to solution

Comments:

Quantitative Ability

1 2 3 4 5

Speed
Accuracy
Comfort, reaction to mistakes

Comments:

Business intuition
Practical
Insightful
Breadth & depth across multiple functions
Creativity

1 2 3 4 5
Comments:

Framework development
Framework explanation
Case discussion

______ min
______ min
______ min

Case end time ___:____

Overall Rating: 1 2 3 4 5
Strengths

Communication
Professionalism

1 2 3 4 5

Poise
Confident-Persuasive
Articulate-concise
Client ready

Comments:

Weaknesses

Written
Clarity of writing and page layout
Ability to refer back
Comfort, reaction to mistakes

1 2 3 4 5
Comments:

Behavioral (optional)
Quality of star stories
Length
Clarity
Relevance

1
1
1
1

2
2
2
2

3
3
3
3

4
4
4
4

5
5
5
5

Comments:
Key: 1=Bottom 10%, 2= 10th-25th percentile, 3=
middle 50%, 4= 75th-90th percentile, 5=Top 10%

CASE 24 CONSUMER PRODUCTS

STRATEGY
(PROVIDED BY BCG)

235

Case 24: Consumer Products Strategy

Prompt
Our client is a large, multinational consumer products company with business in over 200 countries. Today, we are going to focus on its
US business.
Our client has been following US demographic trends and has found that low income households have been growing two times as
quickly as other consumer segments Low income is defined as families with income at the poverty level or below.
Our client has always had a premium product strategy. It sells its products in grocery stores, convenience stores, mass retailers, etc. but
its products are always priced at the high-end of their respective categories It has never targeted the low income segment before and
doesn't have a low income strategy, but given the growth of this segment, our client is considering entering the low
income segment.
Our client has 3 questions for BCG.
1) Should it have a low income strategy?
2) If it should have a low income strategy, what are some tactics it should deploy?
3) What are some of the risks the client may face?

Interviewer Guidance
Ask the candidate the following question
1) What would you like to know to help the client answer its questions?
When the candidate asks about products, share Exhibit 1. The client has shared some data for its key products. What do
you make of this information?
236

Case 24: Consumer Products Strategy

Interviewer Guidance Continued
Ask the interviewee the second question
2) What else would you like know about diapers and cold medicine to assess the opportunity?
Ok. The client is not interested in cold medicine, but it has done customer research that suggests low income consumers are interested
in buying diapers. Share Exhibit 2
What do you see that could help us figure out why low income consumers aren't buying our client's diapers?
What else should our client think about as it develops a low income strategy? What are the risks?

Interviewer Guidance (Provide only upon request)

Low income consumers purchase largely in smaller, local shops

Low income consumers can't afford salons, but will indulge on shampoos
Low income consumers are willing to spend more on baby food to protect their children
There are valid generics that compete with our client's cold medicine

237

Case 24: Consumer Products Strategy

Recommendation
The client should pursue a low income strategy, focusing on diapers, which could
generate an additional $25M in revenue.
To pursue low income consumers, our client should reduce its package size. Today, our client's package size is significantly larger than
its competitors. Our client could keep the price /diaper the same, but if it dropped the package size from 40 diapers to 20 diapers, it
would cut the absolute price of the box to $10, even lower than its competitors.
There will be some risks involved with adopting a low income strategy including cannibalizing business from existing products and
brand risk.

238

Case 24: Consumer Products Strategy

Exhibit 1

LI: Low Income

239

Case 24: Consumer Products Strategy

Exhibit 2

240

Case 24: Consumer Products Strategy

Quantitative analysis and solutions

241

Case Interview feedback form

Case _________________________ Case type _________________ Interviewer ____________________

Execution

Case start time ___:____

Structure

1 2 3 4 5

Logical approach
MECE
Appropriate drive to solution

Comments:

Quantitative Ability

1 2 3 4 5

Speed
Accuracy
Comfort, reaction to mistakes

Comments:

Business intuition
Practical
Insightful
Breadth & depth across multiple functions
Creativity

1 2 3 4 5
Comments:

Framework development
Framework explanation
Case discussion

______ min
______ min
______ min

Case end time ___:____

Overall Rating: 1 2 3 4 5
Strengths

Communication
Professionalism

1 2 3 4 5

Poise
Confident-Persuasive
Articulate-concise
Client ready

Comments:

Weaknesses

Written
Clarity of writing and page layout
Ability to refer back
Comfort, reaction to mistakes

1 2 3 4 5
Comments:

Behavioral (optional)
Quality of star stories
Length
Clarity
Relevance

1
1
1
1

2
2
2
2

3
3
3
3

4
4
4
4

5
5
5
5

Comments:
Key: 1=Bottom 10%, 2= 10th-25th percentile, 3=
middle 50%, 4= 75th-90th percentile, 5=Top 10%

CASE 25 PHARMACEUTICAL RARE

DISEASE BUSINESS GROWTH
(PROVIDED BY BCG)

243

Case 25: Pharmaceutical Rare Disease Business Growth

Prompt
Our client is a large pharmaceutical company with a strong business in "Rare Disease" (rare diseases are conditions that affect fewer
than 200,000 people in the US).
Historically, pharmaceutical companies have not invested significantly in Rare Disease because it has not been cost effective to conduct
research for such small populations. Due to the fall off in the number of pharmaceutical blockbusters and improved regulation to make
R&D cheaper for Rare Disease, pharmaceutical companies have begun to invest more in Rare Disease R&D over the last few years.
Our client has hired BCG because it would like to grow its Rare Disease business.

Interviewer Guidance
Case question to solve
1) How can the client double its Rare Disease business in 5 years?

244

Case 25: Pharmaceutical Rare Disease Business Growth

Interviewer Guidance
Ask the candidate the following questions
1) How would you approach our client's question on growing its Rare Disease business?
2) Where would you like to start?
When the candidate asks about the existing business, share Exhibit 1. Based on the data, how large will the client's rare disease
business be in 2016? [If necessary,] what is the shortfall to its goal of doubling its business?

What does the client need to do to double the Rare Disease revenues by 2016? [If candidates discusses acquisitions] ask who should
the client acquire and how many assets will client need to buy?
Let's say the CEO walks in, could you summarize for me?

Interviewer Guidance (Provide only if requested)

Our client is an industry leader with a track record of success. Its existing business is $2.5B, expected to grow at 5% per year
Rare disease market is $30B and is as profitable as "Big Pharma
While research is relatively expensive, the government provides tax credits for drugs designated to treat rare diseases
Additionally, prices tend to be higher to make up for the upfront research investment. It's also growing faster than Big Pharma.
There are many small bio-techs that are attractive targets and there are also other big pharmaceutical companies that have rare
disease divisions / assets

245

Case 25: Pharmaceutical Rare Disease Business Growth

Recommendation
Internal growth will not be sufficient to achieve your goal of doubling your business. You will need to acquire ~3 "peak revenue" assets
to close the gap between your goal of $2.5B and the $1.1B your portfolio will generate organically.

246

Case 25: Pharmaceutical Rare Disease Business Growth

Quantitative Analysis and Solutions

LI: Low Income

247

Case 25: Pharmaceutical Rare Disease Business Growth

Exhibit 1

LI: Low Income

248