PRESENTS

CASE BOOK
2020-21
ISSUE DETAILS AND COPYRIGHT

Edition 1
Case Book, Consult Club, IIM Calcutta

Notice:
No part of this publication may be reproduced in any form without prior consent of the Consult Club of IIM Calcutta.

©2020, Consult Club, IIM Calcutta

All rights reserved

2
FOREWORD

Greetings!

The Consult Club of IIM Calcutta is delighted to present the first edition of the IIM C Casebook. The purpose of this book is to better equip students, with a keen
interest in pursuing a career in the field of management consulting, with the different types of cases asked during the recruitment process in both summer and
final placements.

This casebook is a concise guide to developing the essential analytical approach to solving cases that is sought by most recruiting firms. It has been curated with
utmost care with inputs from the 56th and earlier batches and includes a collection of cases in the final interviews and in the buddy programs of various firms.

We are sharing this casebook on public domains to assist students with their preparation. Please note that this is meant to supplement the excellent work done
by our and other schools in earlier casebooks and interview experience compendia, so we strongly encourage you to not make this your sole reference.

We hope you enjoy reading this book and practicing cases with your peers. The process is just as fun as the destination!

Godspeed.

Regards,
Editorial Team

3
HOW TO USE THIS BOOK

Dear reader,

In lieu of the upcoming summer placements for the Batch of 2021, we have put together this concise guide to different types of cases that are asked during the
course of the selection process of various consulting firms. Apart from the different types of frameworks used, we have selected a bunch of cases that were asked
to the Batch of 2021 during their buddy calls and final interviews with various firms.

Before you dive into the vast pool of literature available to you in the form of casebooks, we urge you to make a note of the following:
• Do not memorize frameworks: Frameworks used in specific types of cases are mere guidelines and tools to enable you to think. Keep in mind that they are
not necessarily applicable in every situation as the interviewer might also test your ability to think on your feet.
• Work in non-homogenous groups: In order to maximize your learning when practicing cases, we urge you to work with groups of different people to consider
different aspects and points of view of the problem statement. We suggest the reader should use the interview transcripts in this casebook to set up a case in
groups of at least 2. An observer may keep note of hygiene factors.
• Structure is key: Always be MECE (Mutually Exclusive Collectively Exhaustive) when it comes to structuring your thoughts. Be exhaustive and list down all
possible alternatives under any scenario before the interviewer leads you in a particular direction.

We wish you all the best for your placements and hope you land a job of your choice. Feel free to reach out to us in case you require any assistance.

- Consult Club, IIM Calcutta

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CONTENTS
S. No Particulars Page No. S. No Particulars Page No.
1 The Case Interview Process 2.8 Telecommunications 25
1.1 What is a Case Interview? 8 2.9 Healthcare and Pharmaceuticals 26
1.2 Case Interview Format 9 2.10 Automobiles 27
1.3 Fit/Personal Questions 10 3 Frameworks
1.4 Clarifying Questions 11 3.1 General Frameworks 29
1.5 Case Framework 12 3.2 Porter's Five Forces 30
1.6 Guide to Doing Analysis 13 3.3 Important Matrices 32
1.7 Essential Concepts 14 3.4 Case Themes 35
1.8 Brainstorming 15 4 Profitability
1.9 Conclusion 16 4.1 Basic Framework 37
2 Industry Overview 4.2 Cost Reduction - Value Chain Analysis 38
2.1 Consumer Goods/Retail 18 4.3 Declining Revenues 39
2.2 Energy, Oil, and Gas 19 4.4 Customer Journey 40
2.3 Airline 20 4.5 Case 1: Delhi Metro Network 41
2.4 Manufacturing 21 4.6 Case 2: Four Star Hotel 43
2.5 Financial Services - Banking and NBFCs 22 4.7 Case 3: Beer Manufaturer 46
2.6 Financial Services - Insurance 23 4.8 Case 4: Lightbulb Manufacturer 48
2.7 Information Technology 24 4.9 Case 5: Bakery Shop 50
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CONTENTS
S. No Particulars Page No. S. No Particulars Page No.
4.10 Case 6: Insurance Provider 52 8.4 Case 14: Google – MSMEs 79
4.11 Case 7: Automobile Manufacturer 55 8.5 Case 15: Oil Manufacturer 81
5 Market Entry 8.6 Case 16: Consulting Firm 84
5.1 Framework 58 8.7 Case 17: Education Ministry 86
5.2 Case 8: Edible Oil Manufacturer 60 8.8 Case 18: VC Firm 87
6 Pricing 9 Guesstimates
6.1 Framework 62 9.1 Basic Framework 89
6.2 Case 9: Korean Fertilizer Manufacturer 63 Guesstimate 1: Monthly residential electricity
9.2 91
consumption in India
6.3 Case 10: Toothbrush Manufacturer 65
9.3 Guesstimate 2: Daily passengers in Calcutta airport 92
7 Growth
Guesstimate 3: Estimate the electrical car market size
7.1 Framework 68 9.4 93
in India/ any city
7.2 International Expansion 69 Guesstimate 4: Total revenue of a fast food
9.5 94
chain/restaurant
7.3 Case 11: Consulting Firm 70
Guesstimate 5: Foreign Nationals in Commonwealth
7.4 Case 12: Drug Manufacturer 72 9.6 95
Games
8 Unconventional Cases 10 Appendices
8.1 Increasing Capacity 75 10.1 A: Guesstimate Statistics 98
8.2 Merger and Acquisition 76 10.2 B: Glossary 99
8.3 Case 13: IT Services 77 11 Editorial Team 104
6
THE CASE INTERVIEW
PROCESS

7
WHAT IS A CASE INTERVIEW?

A case interview is a simplified, condensed version of a complete consulting project. The candidate (interviewee) is in the driver’s seat and is expected to explore
the data and provide solutions to a problem statement that a client gave to the interviewing firm.

IDEAL CANDIDATES
PROBLEM SOLVING ABILITY INTERPERSONAL SKILLS CULTURAL FIT
DEMONSTRATE

The case interview is an example of a real business problem based on your interviewers’ past work experiences. The problems you will encounter are not
designed to be brain teasers, or theoretical problems designed to stump you, but rather to reflect the challenges that our clients face. These real-life examples
allow you to learn more about the type of work we do and the impact we have with our clients.

We believe the following is representative of all firms and are qualities expected in a potential candidate:

➞ The approach you take to solving a problem

➞ How analytical and creative your thinking is
➞ Your usage of data to quantify and make your recommendations
➞ Your communication skills in conveying your ideas
➞ How you would suggest implementing these proposals

Read: Kearney’s guide to acing the case interview

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Source: Bain & Co. (www.bain.com)
CASE INTERVIEW FORMAT

A typical case interview lasts for 20-25 minutes and includes the following components*:

INTRO FIT QUESTIONS CASE INTERVIEW Q&A

3-5 mins 5 mins 10-15 mins 3-5 mins

Clarifying Questions Framework Analysis Brainstorming Conclusion

• Prompt: This is the • Framework: Once you • Most types of cases • After the analysis, the • Summary: Restating the
premise of the case. It are confident that you involve some basic interviewer can ask you facts discussed through
will include some understand the prompt calculations and to brainstorm around the course of the case
background on who the and the context of the guesstimates to come to additional aspects of the • Synthesis: Providing
client is and lay out the case, take roughly 90 a conclusion. Ask problem; refer to the additional insights and
problem seconds to layout a relevant questions, section on brainstorming takeaways from the case
• Clarifying Questions: structure on how to confirm the analysis with for some key takeaways in addition to a quick
Some basic contextual approach the case. Refer the interviewer before summary
questions to guide your to the Frameworks identifying any pattern or • One can go a step
frameworks; avoid section to get a better insights further and suggest ways
getting into the nitty- understanding to implement the
gritties of the case in this solutions provided in the
stage case, if time permits

9
*Note: While this is usually followed, this format may differ by firm or by interviewer
FIT/ PERSONAL QUESTIONS

While case preparation is key to cracking the interview, consulting firms are also assessing your ability to successfully work with teams and judge how
well you understand their firm and yourself. This is done through customary HR questions such as:

• Your pitch should include: Your past, key positions held, achievements in your career; highlight work experience and/or
Tell me internships focusing on results
about • All answers must include: Relative skills & experiences, key transition points in your career, and a career objective
yourself • Strong answers have: A powerful “hook” –your value proposition that highlights how you have the competencies they desire in a
candidate

Why Firm • Firm & industry fit: Interviewee should have a deep understanding of a firm’s culture, functional expertise, and working style
X or • Industry interest: Interviewee should highlight experiences they want to gain and skills they bring
Consulting • Strong answers have: Structured reasons, and answers tailored to your prior experiences and future aspirations

Give me • Experience/ Personal: Interviewee should demonstrate leadership ability, “drive” –taking initiative, and professionalism
an • CAR: Context / challenge you faced, the action that you demonstrated, and the result of your actions
instance • Strong answers have: Concise response, a learning element if the situation helped you grow, utilizes structure, and engages the
when… interviewer with energy, emotion, and authenticity

10
CLARIFYING QUESTIONS

Clarifying Questions Framework Brainstorming Analysis Conclusion

THE CLARIFYING
Guide to asking preliminary PROMPT QUESTIONS
Clarifying questions should
questions*: All case prompts will introduce
always be to the point (E.g.:
The following may be helpful in the company premise, industry,
context on products, core goal
asking clarifying questions in a and a brief description of the
of the client, revenue
structured manner: company’s issue
generations)

• 7Ps: Start with the 4Ps (Product,

Place, Price, Promotions) move It is up to the candidate to find Do not make any assumptions
to the remaining 3Ps (Physical out the business objective of unless necessary. Confirm with
evidence, People, Process) if the client by asking necessary the interviewer before making
need be clarifying questions any assumption
• 3Cs/4CP (Customer, Company,
Competitor, Product)
• 4As (Awareness, Accessibility,
Availability, Affordability) Most prompts leave out the Feel free to ask relevant
business context of the clients’ clarifying questions during the
Refer to the Frameworks section for core products or operations course of the case
detailed explanation.

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*Note: This is not a exhaustive list of frameworks. The candidate may ask more questions relevant to the context of the case
FRAMEWORK

Clarifying Questions Framework Brainstorming Analysis Conclusion

EXAMPLE* Key question in prompt

Profit Frameworks provide clarity of thought and helps you

structure your arguments better*.

MANTRA:
Revenue Cost MECE: Mutually Exclusive, Collectively Exhaustive
Notes and • Ensure your framework is as MECE as possible
Clarifying • Detailed but not lost in the weeds
Answers • Thorough but not wasteful
Price Volume Fixed Variable
• Insightful but not presumptive
Market/External Customer/Company
• Competitors • Internal MYTH:
• Government Regulations • Acquisitions • There is one perfect framework for every case
• Industry Trends • Capacity • Frameworks are not important
• Natural Calamity • Value Chain • There is a finite number of frameworks that will
• Consumer Preferences provide answers to every case

Recommendations

12
*Note: Different types of case frameworks have been explained in subsequent sections of this book.
**Structuring in this manner will help the interviewer understand and assess your thought process. Candidates can chose a format they are comfortable with.
BRAINSTORMING

Clarifying Questions Framework Brainstorming Analysis Conclusion

The key to brainstorming is structure. The candidate should first devise two or more “buckets” or categories to organize his/her thoughts.
Note: Be MECE in organizing your thoughts*

CUSTOMER JOURNEY
INTERNAL v/s EXTERNAL
When conventional frameworks do not help you get to the crux of
• Internal factors represent any aspect internal to the client’s
the problem, understanding the customer journey can bring useful
business (e.g.: products, process, brand, leadership, etc.)
insights.
• External factors represent those which are beyond the
• AIDA- Attention, Interest, Desire, Action
client’s control (e.g.: competition, government regulations,
• Useful in cases pertaining to improving sales of a
market trends, etc.)
company/product

VALUE CHAIN ANALYSIS SUPPLY v/s DEMAND

• Analyze each step of the value chain to identify the root • Useful in profitability cases to identify whether the root cause of
cause of the client’s issue the problem is due to supply push or demand pull
• Useful for exploring causes to cost related problems • Typically used in exploring revenue related problems

13
*Note: This is not an exhaustive list of frameworks. The candidate is encouraged to apply his/her creativity
GUIDE TO DOING ANALYSIS

Clarifying Questions Framework Brainstorming Analysis Conclusion

Most cases involve simple arithmetic or guesstimates. Follow these tips to avoid making mistakes:

TIPS FOR SUCCESS

SANITY CHECK MISTAKES SHORTCUTS TALK SO WHAT? PRACTICE

Mistakes are okay. Round-off when

Make sure your Talk it through and Draw necessary Practice until you
You can recover required and
numbers make sense explain each step inferences from your are comfortable
from them as long as manage your zeroes
in the context of the you are doing to numbers and tie it doing math in front
you don’t repeat correctly to avoid
case. your interviewer. back to the case. of the interviewer.
them. mistakes.

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ESSENTIAL CONCEPTS

Clarifying Questions Framework Brainstorming Analysis Conclusion

The following concepts maybe helpful in coming to necessary conclusions in some cases:

NET PRESENT VALUE Calculates the discounted return on investment over a period of time
• Requires cash flows (revenue-cost), discount rate, timeframe and initial investment
• Some cases require calculation of NPV to perpetuity (time period=forever)
• Perpetuity = (Cash flow per period/ discount rate) - initial investment

PAYBACK PERIOD Calculates amount of time required to recover an initial investment made on a project
• Requires cash flows per period and initial investment
• Can be the business objective of the client in some cases, especially market entry
• Payback Period = Initial Investment/ Cash Flow per period

BREAKEVEN SALES Calculates the number of units that need to be sold to recover initial investment
• Requires per unit selling price, per unit cost price and initial investment
• Breakeven Sales = Initial investment/ (Profit per unit)

15
*Note: This is not an exhaustive list of concepts. Candidate may use concepts as deemed fit for the context of the case.
CONCLUSION

Clarifying Questions Framework Brainstorming Analysis Conclusion

Conclusion may include the following key elements:

Summary STRUCTURING RECOMMENDATIONS

Restate the key facts mentioned in the case and the inferences drawn during the
course of the case

DIFFICULT
IMPLEMENTATION
⍟
Recommendation
State the actions that the client should take and cite the key insights in your
analysis that have helped arrive at the conclusion

Implementation

⍟⍟⍟ ⍟⍟
Highlight the actions the client must take in order to implement the

EASY
recommendation given in the case
E.g.: Establish a value chain in a market entry case that includes Production,
Distribution and Marketing

Risks & Concerns SHORT LONG

Mention the factors in the case that the client should be aware of that may impact TIME
their business or implementation of a recommendation Feasibility vs Impact is another way of structuring
Note: It should not contradict your overall recommendation recommendations derived from the case.

16
 INDUSTRY OVERVIEW

Note: The following is a non-exhaustive list of commonly tested industries. The interviewer may test the candidate on industries based on his/her prior
experience
17
CONSUMER GOODS/RETAIL
The growth of CPG (Consumer Packaged Goods) industry (10% CAGR) has taken place on the back of steadily rising incomes and population particularly
in emerging markets.

KEY INDUSTRY TRENDS

• Amazon effect: Growing importance of E-category management enables companies to sell select SKUs and pack
sizes via e-commerce platforms
• Digital Marketing: Tapping Social Media for rich consumer insights and shaping consumer opinions. CPG companies KEY CALCULATIONS
are increasingly using social media to understand needs, gaps, brand equity and consumer preferences Sales
1. Inventory Turnover =
• Big Data: CPG companies and retailers are ramping up the use of consumer shopping behavior data now more than Inventory
ever to create curated/personalized shopping experiences and targeted advertisements
• Retail Omnichannel: Large brick & mortar retailers are pivoting to an “order online, pick-up in store” mix while also (Revenue−COGS)
2. Gross Margin =
building out their online fulfillment capabilities to cater to the consumer. Store foot-prints are also getting smaller to Revenue
reduce inventory
3. Contribution Margin (CM)
• Predictive demand forecasting and agile supply chain: With the advent of e-commerce, CPG companies are actioning
insights that are predictive and forward-looking in nature. This brings supply chains close to real time (Sales−Variable Cost)
=
JARGON Sales
• SKU: Stock keeping unit – refers to a unique item sold in a store
• CRM: Customer Relationship Management – Strategy & tools designed to boost profitability and strengthen
customer loyalty by using data
• Loss Leader: Products sold at a loss to attract new customers or stimulate other profitable sales
Further Reading (click to read):
1. McKinsey: The decade ahead: Trends that will shape the consumer goods industry
2. Kearney: Continuous Disruption: Amazon.com’s Transformation of 21st Century Retailing
3. Seven Top Trends Shaping the CPG Industry
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ENERGY, OIL, AND GAS
Global energy generation is still dominated by conventional sources such as coal, oil and gas. Growth in energy consumption is driven by Asian and
other emerging economies – which are also leading the world in gradual adoption of renewable energy.
KEY INDUSTRY TRENDS
• Renewable Energy: India, a founding member of International Solar Alliance, plans to develop 175 GW of renewable
energy capacity (solar, wind, small hydro, etc.) by 2022. For the past 5 years, India and China have led global growth in
installed capacity of renewable energy. KEY CALCULATIONS
Imp. stats – India installed capacity: Wind - 36GW and Solar 34GW (30GW added in last 5 years)
• Natural Gas: Guided by a globally coordinated effort, most countries are expanding use of natural gas (primarily 1. Plant Load Factor =
methane), which is not only a less polluting but also a cheaper source of energy Energy produced
Max. energy that can be produced
• Shale Oil Boom: Led by the USA, countries all over the world are exploring an unconventional method of extracting
crude oil and gas from shale rock formations by a process known as fracturing. This has helped the USA emerge as one
of the largest producers of these hydrocarbons. However, it is pertinent to note that shale oil production is feasible 2. Gross Refining Margin = Price of
only beyond a certain price, which is driven by global markets refined products − Cost of crude oil
• Diversification Strategy: Major oil producing nations (even companies) are venturing into newer sources of revenue to
reduce their over-reliance on conventional sources of energy 3. Receivables Turnover =
Revenue
JARGON Average receivables
• Upstream: Part of value chain which is concerned with exploration and production of crude oil and gas Profit
• Downstream: Part of value chain which covers refining of crude oil and gas to multiple products such as motor diesel, 4. Return on Investment =
Investment
petrol, aviation turbine fuel, CNG, etc., and retail marketing of such products
• PPA: Power purchase agreement – long term agreements by electricity distribution companies to purchase electricity
from power producers
Further Reading (click to read):
1. McKinsey: Global Energy Perspective 2019
2. Seven Top Trends Shaping the Energy Industry
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AIRLINES
India is currently considered the third largest domestic civil aviation market in the world. India has become the third largest domestic aviation market
in the world and is expected to overtake UK to become the third largest air passenger market by 2024

KEY INDUSTRY TRENDS

• New Airport Development: As per IATA estimates, air traffic in India is expected to reach ~478 million passengers by
2036. To support such high traffic volumes, country needs to develop adequate supporting infrastructure. Additionally,
to support this growth we will need to develop adequate capacity and capability in the country KEY CONSIDERATIONS
• Capacity expansion of current airports: The airports at four metro cities in the country – New Delhi, Mumbai,
Hyderabad and Bengaluru – cater to nearly 55% of the country's total air traffic and are operating at near-full capacity. 1. Fuel Prices
Rising private consumption and healthy economic growth would continue to provide tailwind to traffic growth. 2. Carrying Capacity
• Regional Connectivity Scheme: The Government recognizes the need to generate demand at regional airports and a 3. Capacity Utilisation
lack of proper airport infrastructure. The Regional Connectivity Scheme launched in 2016, has the objective to promote 4. Range/Distance
tourism, provide employment and promote balanced regional growth by making flying affordable for the masses. The 5. Destination Routes
policy intends to improve regional connectivity via measures such as incentives for airlines, airfare caps, and revival of 6. Maintenance Costs
existing airstrips and airports 7. Depreciation of fleet
JARGON
• Load Factor: Measures the capacity utilization of transportation services and is equal to the average actual utilization
divided by maximum capacity
• PRASM: Passenger Revenue per Average Seat Mile – is the revenue generated per available seat miles in which ASM =
number of seats available x number of miles flown
• Hangar Costs: Costs associated with parking aircrafts; Companies need to conduct a cost benefit analysis in order to
assess whether to rent, lease or buy hangars
Further Reading (click to read):
1. Auctus Advisors: Civil Aviation and Cargo - A Knowledge Paper
2. How Airlines can gain a competitive edge through pricing
20
MANUFACTURING
Industry 4.0 is revolutionizing manufacturing by providing manufacturers with the opportunity to use IT and advanced technology throughout the
product life cycle. This has resulted in substantial cost savings, increased efficiencies, and operational excellence.
KEY INDUSTRY TRENDS
• IoT: Manufacturers are increasingly leveraging the Internet of Things (IoT), which entails the interconnection of unique
devices within an existing Internet infrastructure, to achieve a variety of goals including cost reduction, increased
efficiency, improved safety, meeting compliance requirements, and product innovation. IoT’s existence is primarily due
to three factors: widely available Internet access, smaller sensors, and cloud computing
KEY CONSIDERATIONS
• From B2B to B2C: Many manufacturers who traditionally had a B2B business model are shifting to a B2B2C 1. Raw Material Costs
omnichannel. The benefits include increased profit, faster Time-to-market, brand control, price control, collecting 2. Labor and wages
consumer data. Companies are leveraging various e-commerce platforms for this purpose 3. Supply capacity
• ERP Systems: Manufacturers can streamline their process by automating all business operations to get accurate real constraints/bottlenecks
time information thereby reducing costs 4. Overhead costs
• Increased Re-shoring: Growing economies in off-shoring countries requires manufacturer to increase wages. This 5. In-bound and out-bound logistics
coupled with lack of infrastructure in various countries and increased transportation costs has led to many firms costs
‘re-shoring’ operations to their country, especially US 6. Depreciation of equipment
JARGON
Ask: In what part of the value chain does
• Just-in-time (JIT): ‘Pull-Demand’ system in which raw materials are delivered as needed to minimize inventory
the client operate?
• Bottleneck: The resource in a manufacturing process that is working at max capacity and thus limits the output of the
entire production process
• Pareto: 80% consequences come from 20% causes. In general, 20% of the causes lead to 80% of the downtime
Further Reading (click to read):
1. McKinsey: IoT and Predictive Maintenance
2. Bain Insights: Lean Six Sigma and Performance Improvement
3. Manufacturing the future: The next era of global growth and innovation
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FINANCIAL SERVICES – BANKING AND NBFCs
Banking and lending has been one of the high growth and prominent sectors in the Indian economy. Though it is still dominated by public sector banks,
we do see industry growth being driven by private banks and lenders.
KEY INDUSTRY TRENDS
• PSB Consolidation: Public sector banks have been undergoing a consolidation spree. The Govt. has been merging weak
banks with the stronger ones based on IT compatibility, synergy in terms of geographies, asset classes served, etc.
• Focus on Retail Assets: Due to higher incidence of NPAs in corporate loan assets, banks (and lenders in general) are KEY CALCULATIONS
trying to increase their exposure to retail assets such as personal loans, home loans, car loans, etc. which have lower
risk but higher return 1. Net Interest Margin =
• NBFCs: Non-banking finance companies, which have boosted lending growth in India over the last decade, are likely to Interest earned − Interest expended
see subdued growth due to reluctance of banks to fund NBFCs. Banks have surplus liquidity, but it is the riskiness of Average loan assets
NBFC assets and loan defaults by NBFCs which have contributed to this industry wide issue
• Venture Debt: Start-ups, which find it difficult to borrow from banks, are increasingly raising funds from venture debt 2. Net NPA = Gross NPA −Provision for
funds such as InnoVen, Alteria, Trifecta, etc. loan assets
• Digital Banks and Payments: The prevalence of more digital transactions have eroded the need for cash for daily use,
leading to the proliferation of online banks that offer higher savings account interest rates and comparable services 3. Return on Assets =
Profit after tax
JARGON Average total assets
• NPA: Non-performing assets are loans which have remained unpaid for more than 90 or 180 days
• CRAR: Credit to risk weighted assets ratio is basically what proportion of a lender’s assets (loans, investments, cash,
etc.) are financed by equity and preference capital
• CASA: Current account and savings account – ratio of total deposits of a bank held in the form of current account and
savings account; since these deposits are cheaper, higher the better
Further Reading (click to read):
1. BCG: Digital Payments 2020
2. Retail Banking 2020
22
FINANCIAL SERVICES - INSURANCE
Insurance Industry primarily covers Life Insurance and General Insurance. The industry has witnessed growth rate of ~ 15% in the past decade on the
back of steadily rising incomes, population & increasing financial inclusion in India. IRDAI is the governing body for all insurance companies in India.

KEY INDUSTRY TRENDS

• Increasing Insurance Penetration: Insurance Penetration (premiums as a % of GDP) in India has increased from 2.71%
in 2001 to 3.68% in 2017 v/s. global average of 6%
• Increasing share of Pvt. Sector: Share of pvt. sector in general insurance has increased from 13% (in FY03) to 56% (in KEY CONSIDERATIONS
FY20); in life insurance it has increased from 2% (in FY03) to 34% (in FY19)
• Emergence of New Distribution Channels: Increasing use of new distribution channels like banssurance, online 1. Revenue Sources: Insurance
distribution and NBFCS especially by the new-age players premium, interest from re-investing
• Automation: High investment in Information Technology, Infrastructure and chatbots to automate various processes premiums
to reduce costs and increase efficiency as well as customer satisfaction 2. Costs: Customer service, claims,
• Discontinuation of Tax Incentives: In Budget 2020, the government discontinued tax incentives on life as well as health salaries, admin, licenses
insurance, among other things. This may result in strong headwinds for the sector 3. New policies and renewals
JARGON 4. Demographics and client risk profile
5. Marketing channels: Agents, online
• Insurance Density: It is the ratio of premium underwritten in a year to the total population i.e. per-capita premium and corporate tie-ups
paid by the people of the country. In India, it is ~ 74 USD (as of 2018)
• Reinsurance: It is a form of insurance purchased by an insurance company in order to mitigate risk
• Solvency Ratio: It is the ratio of Available Solvency Margin (ASM) to Required Solvency Margin (RSM). ASM is the
excess of assets over liabilities. RSM is based on net premiums and defined as per IRDAI guidelines. As per IRDAI
guidelines, Cos. need to maintain solvency ratio of at least 150%
Further Reading (click to read):
1. Bain: India's life insurers need smarter policies for growth
2. McKinsey: Digital Disruption in Insurance
23
INFORMATION TECHNOLOGY
The IT-BPM sector in India stood at US$177 billion in 2019 witnessing a growth of 6.1 per cent year-on-year and is estimated that the size of the
industry will grow to US$ 350 billion by 2025.
KEY INDUSTRY TRENDS
• Artificial Intelligence (AI)/Machine Learning: AI is the ability of a computer program to think and learn. Emergence of AI
and ML has enabled digitalization of various practices in organizations and is expected to contribute $1 Trillion to the KEY CALCULATIONS
Indian Economy by 2035
1. Addressable Market Size:
• Cloud Computing: Is the practice of using a network of remote servers hosted on the Internet to store, manage, and
process data, rather than a local server or a personal computer. More companies are moving to this platform for
security, convenience, and cost savings Top Down Approach:
• Internet of Things (IoT): Smart devices that are all connected and communicate with each other via the internet are Total Population ➝ No. of users ➝
rising in demand due to value of strategic data that they provide Market Share ➝ #Units per user * Price
Per Unit
• Blockchain: A digital ledger in which transactions made and recorded chronologically and publicly. –Important for
security and transfer verification purposes. Ex. include Bitcoin, and other cryptocurrencies
Bottom Up Approach:
JARGON Current Customer Base ➝ Potential
• Intellectual Property (IP): A category of property that includes intangible creations protected by trademarks and Customer Base (Secondary Research) ➝
copyrights (e.g. software,code, algorithms, etc.) Future User Base * #Units Per User *
• Freemium: A pricing model used by many digital services, a “freemium” model is one where the majority of users are Price per unit
able to engage with a product or service entirely for free (perhaps in exchange for data collection or being served
advertisements) 2. Customer Acquisition Cost:
• SaaS: “Software as a service” -a software distribution model in which a third-party provider hosts applications and
makes them available to customers over the Internet –Like Salesforce or Workday Marketing Expenses
Further Reading (click to read): Newly acquired customers
1. Digital India: Technology to transform a connected nation
2. Evolving Business Models for Sustained Growth: Indian IT/ITeS Industry (PwC Report)
24
TELECOMMUNICATIONS
Telecom industry has undergone a roller coaster ride, posting total losses of about INR 40,000 Cr over last 2 years. The industry has consolidated into 3
major players with Vodafone Idea, Airtel, Reliance-Jio retaining 90% of the industry.
KEY INDUSTRY TRENDS
• Subscriber Base: 2019 subscriber base in India was ~1162 Million, this however is projected to decline over the next 2-3 KEY CALCULATIONS
years at around 2-3% due to a INR 35/month minimum recharge regulation brought by the government
Revenue
• Penetration: It is gauged by the tele density in an area. Urban tele-density is ~156% while rural tele density is ~57% 1. ARPU =
No. of subscriptions
• SIM Card Consolidation: Urban penetration is expected to decline due to users dropping off secondary SIM cards and
switching to primary SIM cards due to the minimum recharge regulation. Rural penetration is expected to grow over 2. Customer Acquisition Cost =
the coming years. This is the primary driver of “Churn Rate” or % subscribers leaving the network per quarter Marketing Expenses
• Service Bundling: Industry is witnessing a structural shift from simple call services to bundled offerings including social Newly Acquired Customers
networking, OTT services, online shopping, news services packaged with the subscription to attract new customers
• Cell Tower Networks: Owned by Telecom firms under a separate entity, this is their primary asset driving growth. They
require high upfront cost to set up, generate a rent income based on traffic. Companies often let out traffic bandwidth KEY CONSIDERATIONS
to other companies for higher rents.
1. Regional Competition
JARGON 2. Competition
1. New Entrants
• ARPU: Average Return per User – Most Crucial revenue driver
2. Barriers to Entry
• Tele Density: No of subscriptions per 100 population in an area 3. Substitutability/Switching
• AGR Dispute: The government in 1999 announced the National Telecom Policy, which gave these companies an option Costs
to migrate from fixed license fee to revenue sharing fee. As per the new policy, 15 per cent AGR was fixed as a license 3. Contract lengths as stipulations
fee under the revenue-sharing model, which was later reduced to 13 per cent and then 8 per cent in 2013. The DoT 4. Infrastructure
claimed revenue share from all earnings under the AGR from the telecom companies, Telco’s owe Rs 1.47 lakh crore to
the DoT, including Rs 92,600 crore as license fee and Rs 55,100 crore as spectrum usage charges.
Further Reading (click to read):
1. The Business Case for 5G
25
HEALTHCARE & PHARMACEUTICALS
India is uniquely positioned in the global pharmaceutical industry, being the world’s largest producer of pharma products coupled with the conscious
governmental push to expand healthcare coverage for a continuously upwardly mobile demographic
KEY INDUSTRY
KEY INDUSTRY TRENDS TRENDS
• Ayushman Bharat Yojna: Launched in Sep 2018 by India, it is the world’s largest fully state-sponsored healthcare
coverage scheme. It aims to provide free secondary and tertiary healthcare coverage up to 5 lakhs per year per family
to the bottom 40% of population KEY CONSIDERATIONS
• Telemedicine: Higher smartphone and broadband penetration is creating a market that was largely untapped pre-Covid.
The pandemic also forced the government to finally issue telemedicine guidelines for virtual consultations on March 1. Regulatory guidelines from health
26, providing regulatory clarity for further market expansion, expected to grow to $5B+ by 2025, at a CAGR of 34% ministry and CDSCO – Central Drug
• Price capping: The National Pharmaceutical Pricing Authority (NPPA) has capped the prices of 50+ essential medicines, Standards Control Organisation
and devices such as knee caps and stents. First happened in 1962, this became more frequent in the last decade. 2. Price capping orders from NPPA
• Industry Joint Ventures: To reduce their dependency on production of generics (of which India is the largest producer), 3. Emergence of ASEAN countries as
Indian pharma firms are increasingly tying up with international firms for production of their patented drugs. manufacturing hubs
4. Data integrity and test results
JARGON
manipulation warnings from FDA
• HCP (Healthcare Professional): Umbrella term for medical professionals involved in supervision and treatment of 5. QC issues around substandard and
JARGON fake medicines
patients across industries (oncology, gynaecology, orthopaedics, etc.) Does not include nurses.
• Sales Rep and Detailing: POC for the HCP from the pharma company who lets them know of new products, provides
access to training resources on how to use products and answers HCP queries
• Generics: Much cheaper, exact copies of drugs that have lost their patent (after 20 years of coming to the market)
• Co-pay: Fixed amount that patients covered by insurance needs to pay before accessing a medical service. It is used by
health insurance companies to prevent moral hazard, i.e. to deter patients from seeking medical care that may not be
necessary. The amount is usually nominal - 5-10% of the total cost
Further Reading (click to read):
1. India Pharma 2020: Propelling access and acceptance, realizing true potential
26
AUTOMOBILES
India is expected to emerge as the world’s 3rd largest passenger vehicle market by 2021. Currently, the automotive sector contributes to 7% of India’s
GDP and is expected to increase to 12% as per the Automotive Mission Plan.

KEY INDUSTRY TRENDS

• Government Initiatives: Through the National Electric Mobility Mission Plan (NEMMP) and other initiatives, the
government seeks to achieve two objectives – facilitate long term growth and minimize emissions and oil dependence
• BS-IV to BS-VI: Targeted at making improvements in emission control, fuel efficiency and engine design; BS-VI fuel has KEY CONSIDERATIONS
lower Sulphur content; FAME1 and FAME2 introduced to incentivize EV buyers and electrification of public transport
• Electrification: India’s EV market is miniscule compared to China, Europe and the US. Declining prices of batteries and
supportive govt. policies are stimulating the segment’s growth. Reduction in emissions and less dependency on oil 1. Revenue Sources: New vehicle sales,
imports are clear advantages of electrification. There’s heavy dependence on China for raw material, competitive after sales service, used vehicles
disadvantage in battery manufacturing and lack of charging infrastructure are some challenges sales, etc.
• Make in India: Although there is still a long way to go before India becomes a leader in the manufacturing arena, 2. Costs: Explore the value chain
companies in the automotive sector are embracing this opportunity to leverage India as a hub for low-cost, high-quality (Suppliers, Manufacturing, Dealers,
products. After creating a strong value proposition in mini cars, India is gaining global recognition in the compact sedan Retailers, Customers)
and SUV category 3. Regulatory barriers
4. Import-Export split
JARGON
• OEMs: Automobile manufacturers do not produce every part of the vehicle and rely on OEMs for components
• SAAR: Most auto makers experience seasonality in sales – High: April to June, Low: November to January and hence
report seasonally adjusted annual rate of sales
• Net Promoter Score: Metric used in customer experience programs. NPS measures the loyalty of customers. Measured
with a single question survey and reported with a number from -100 to +100, a higher score is desirable.
Further Reading (click to read):
1. McKinsey: The future of mobility in India’s passenger-vehicle market
2. Bain: Innovation in automotive industry
27
FRAMEWORKS

28
GENERAL FRAMEWORKS
BUSINESS SITUATION FRAMEWORK (3C’S OR 3C-P)
Used for understanding the firm’s current position in the market and evaluating launch of new products, entry into a new market, growth etc.
Customers Understanding market segments; consumer behavior; demographics; Used for identifying target customers
Competitors Size of the market; Market share; Clients’ performance vis-à-vis competition; Competitors’ future aspirations
Company Understanding the firms’ goals and objectives; Strategy it in the short term and long term
Product Nature of the firms’ product/service vis-à-vis competitors; Customer requirements; Complements and substitutes
MARKETING MIX (4P’S AND 7P’S)
Used for identifying the differentiating factor between the firm and the industry and root cause analysis for any problem
Product Various attributes of the product; Differentiating factors; Value Proposition
Place Different distribution channels used by the firm (retail, wholesale, online etc.); Supply chain; Network optimization
Promotion Marketing message of the client; Promotion channels; Recent Marketing Campaigns Run
Price Price of client's product; Price Elasticity of the product; Willingness to Pay; Competitor Pricing
Physical Evidence Sales of the product/Contacting Customers; Product Packaging; Online experience
People Who are the people from the client’s side delivering services? How trained are they?
Process The systems and processes that deliver a product or a service to the customer; Quality Assurance; Value-Chain analysis
THE FOUR A’s
Used for identifying the supply and demand constraints of a product/service
Awareness Branding; Analyze whether sufficient people know about the product/service
Availability Sufficient supply; Appropriate stock; Analyze availability across various distribution channels
Accessibility Equitable distribution of product/service and accessible by all target consumers
Affordability Appropriate pricing of products/services to ensure it is affordable by all target consumers
29
PORTER’S FIVE FORCES
Michael Porter's Five Forces is probably the most famous framework used in preparing for case interviews. It has endured as one of the frameworks
most talked about by many in and out of the consulting field. Although the Five Forces is an excellent framework in helping you organize you thoughts,
its analysis is not complete. It should be used in conjunction with other frameworks to enable you to fully understand the issues at hand.

Competitive advantage in an industry is dependent on five primary forces:

• The threat of new entrants New
• The bargaining power of buyers Entrants
• The bargaining power of suppliers
• The threat of substitute products
• Rivalry with competitors

The degree of these threats determines the attractiveness of the market

• Intense competition allows minimal profit margins Competitive
• Mild competition allows wider profit margins Buyers Suppliers
Rivalry

The goal is to assess whether a company should enter/exit the industry or find a position
in the industry where it can best defend itself against these forces or can influence them
in its favour.

Note: Identification of buyers and suppliers is key. Here’s an easy heuristic: Substitute
• The company pays money to a supplier Products
• The company gets money from a buyer
Buyer can be intermediaries; They needn’t always be end consumers

30
Source: Michael E. Porter, Competitive Strategy: Techniques for Analysing Industries and Competitors
PORTER’S FIVE FORCES

Barriers to Entry: Relationship with Suppliers:

There are a number of factors that determine the degree of difficulty to A supplier group is powerful if:
enter an industry: • There are fewer substitutable products
• Economies of Scale • The industry is not an important customer of the supplier group
• Product differentiation • The supplier group is an import input to the buyer’s business
• Capital requirements • The supplier’s products are differentiated and have high associated
• Access to distribution channels switching costs
• Cost advantages independent of scale • The supplier group poses a credible threat of forward integration
• Propriety technologies
• Relationship with suppliers of raw materials
• Geographical presence Substitute Products:
• Time compression diseconomies Substitute products that deserve the most attention are those that:
• Government regulations • Compete in price with the industry’s products
• Are produced by industries earning higher products
Relationship with Buyers:
A buyer group is powerful if:
• It is concentrated or purchase large volumes as a % of seller’s sales Rivalry:
• Undifferentiated products Rivalry among existing competitors increases if:
• Low switching costs • Numerous or equally balanced competitors exist
• Buyers pose a credible threat of backward integration • Industry growth is slow
• The industry's product is unimportant to the quality of the • Fixed costs are high
• buyer's products or services • Undifferentiated products and low switching costs

31
Source: Michael E. Porter, Competitive Strategy: Techniques for Analysing Industries and Competitors
IMPORTANT MATRICES
Matrices are an excellent way to illustrate a small number of potential scenarios or concepts. Some examples include:
▪ High Impact versus Low Impact
▪ High Market Share versus Low Market Share
▪ Broad Market Reach vs Limited Market Reach

BCG – GROWTH SHARE MATRIX

High Growth Rate
The BCG Growth-Share Matrix is a portfolio planning model based on the observation that a company’s
business units can be classified into four categories based on combinations of market growth and market
share relative to the largest competitor. Market growth serves as a proxy for industry attractiveness (cash
usage) and relative market share as a proxy for competitive advantage (cash generation). Question
Star
Mark

High Market Share

Low Market Share
Low Share, Low Growth. Companies should liquidate, divest, or
Dogs
reposition these “pets”

High Growth, Low Share. Companies should invest in or discard these

Question Marks
“question marks,” depending on their chances of becoming stars
Dog Cash Cow
High Growth, High Share. Companies should significantly invest in
Stars
these “stars” as they have high future potential

Low Growth, High Share. Companies should milk these “cash cows” Low Growth Rate
Cash Cows
for cash to reinvest

32
Source: BCG Growth Share Matrix
IMPORTANT MATRICES

ANSOFF MATRIX PORTER’S GENERIC STRATEGIES

Increasing
Existing Markets Risk Cost Leadership

Mass Regional
Market Product Market, Player, Little
Penetration Development Economies Market
Existing Products

Focused Market
New Products

Broad Market
of Scale Power

Constant Niche
Market
Development
Diversification Cycle of Technology
Innovation Product

New Markets Differentiation

The Ansoff Matrix, also called the Product/Market Expansion Grid, is a tool Porter's generic strategies describe how a company pursues competitive
used by firms to analyze and plan their strategies for growth. The matrix advantage across its chosen market scope. The generic strategy reflects the
shows four strategies that can be used to help a firm grow and also analyzes choices made regarding both the type of competitive advantage and the
the risk associated with each strategy. . scope.
33
MATRICES - EXAMPLES
“You are a brand manager for P&G in the Health & Beauty Aids category, and “You are the head of R&D for a large pharma company, and a new
a competitor just introduced a new toothpaste that is gaining market share…” process has been created as a result of the work done to sequence the human
genome…”
Same Target Market Core Business

Examine product’s Identify if share Crash program to

benefits; identify loss is due to trials incorporate new Evaluate relevance
potential line or switching; re-do technology into and switching costs
extension? marketing mix existing processes

High Market Share

Low Market Share

High Impact

Low Impact
Re-examine market
Look for possible
segmentation & Watch to see if the
disposition or
Ignore it? potentially technology
outsourcing
introduce becomes relevant
opportunities
competing product

Different Target Market Non-Core Business

34
CASE THEMES
The following case themes are popularly tested in case interviews. Please note that this is not an exhaustive list of themes and a case interview can
include a combination of multiple themes.

PROFITABILITY: Analyze potential reasons for decline in profits by studying sources of revenue and costs and identifying sustainable
solutions to improve profitability

MARKET ENTRY: Analyze the client’s opportunity to expand and quantify the viable market for launching new products and services
or entry into a new geography

PRICING: Evaluate the product offering of the client and suggest appropriate pricing strategy through competitor, cost and value
based pricing. Often combined with market entry cases

GROWTH: Identify opportunities for the client to optimally grow revenues or increase market share

UNCONVENTIONAL: These cases usually test the candidates’ presence of mind and analytical skills. Structure is key to tackling such
open ended cases

35
PROFITABILITY

36
BASIC FRAMEWORK
What is driving the
The basic framework for profitability involves decline?
breaking down the profit as “Profit = Revenue –
Cost” and further delving into the branches. The
case can have issues with either revenue, cost or Gather Information
(Revenue or Cost)
both.

Starting with the basic, deep dive into each of these Analyze using profit
areas to identify the key problem. equation

Before starting with the framework, ask key

preliminary questions like – Revenues Costs
▪ Since when has the client been facing this issue?
▪ What was the trend before?
Variable Unusual
▪ Is this issue client specific issue or industry Price Volume Product Mix Fixed Costs
Costs Expenses
specific?
▪ Is there any timeline to solve this issue?
Benchmark Selling less Additional Direct Raw Material
against Increase Decrease profitable Capacity Costs (Value Write-offs
During the case analysis, make sure to ask questions competitor items added? Labour Chain)
like –
▪ Has the revenue been declining or has the cost Price Is there Market
Economies
of Scale Unions Cost Drivers Lawsuits
been increasing? Elasticity overtime? Conditions
▪ Which of the revenue/cost streams have an
issue? Are there *Can we explore economies
New Automation
any of scope with entry into
Markets*
leakages? adjacent industries?
37
COST REDUCTION – VALUE CHAIN ANALYSIS

Profit Client is facing reduction in earnings/profits (bottom line) due to possible increase
OVERVIEW
in cost of operations. You need to understand reasons and give recommendations

Revenue Cost

Storage &
R&D Raw Material Processing
Transportation

Transportation to Customer
Machinery Storage Distribution Marketing
Warehouse Service

Number of
Employees Quantity per trip Sales Channels CRM Repair
warehouses

Cost per
Technology Number of trips Sales Force Returns
warehouse

Capacity
Value per trip Efficiency Spare Parts
Utilization

Packaging Cost per trip

38
DECLINING REVENUES
Profit Client is facing reduction or stagnation in earnings/profits (bottom line) due to
OVERVIEW possible decrease in revenues (top line). You need to understand reasons and give
recommendations
Revenue Cost

Price Number of Units

Price Elasticity Number of Number of units/Ticket size

Frequency
customers per customer

Competitors Supply Internal Internal

Demand

Substitutes
Internal External Internal External External External

Competition Value Chain PESTEL

PESTEL

Change in consumer
preferences
39
CUSTOMER JOURNEY
Customer Journey is a framework which can be used in any kind of situation. At any point in analysis if you are stuck, this can be used to ensure that all
possible options are covered. This is the most common framework used in unconventional cases, and can be used as a part of other conventional cases as well.
It refers to the journey of customers right from the start – when they develop a need for something, and how various factors can influence their journey. For
example, if customers require something, they should know about it (awareness), they should be able to reach a point where they can buy it (accessibility), the
product should be in stock (availability), and they should be able to afford it (affordability).

Customer Journey
(from left to right)

Product Purchase Post Purchase

Need Awareness Accessibility Affordability Availability Ambience
Selection Action Services

External
Promotions Internal External Stock-outs Product Payments
Factors

Internal Factors Value Chain Competition Substitutes Final Packaging

Utility Compliments Billing

PESTEL

40
DELHI METRO NETWORK

The Delhi Metro network is facing profitability issues in CP – the profit is not as Since rent is the same clearly price is not an issue for the shopkeepers.
high as other stations. Figure out why and suggest recommendations. They would be looking into other aspects when they rent an outlet. They would
Sure. Since when has the station facing this issue? also be considering the expected revenue when they operate in a metro
Since the beginning. station, the other costs that they might incur, the margins that they have – if
Okay. Now, profits are a function of the revenues and costs. So are the costs they differ across stations, and also conditions of the rent agreement. Am I
higher as compared to other stations or is the station not generating revenue missing something?
as high as other metro stations? Yes, that is correct. Expected revenue, incurred costs and margins are the
The revenue is not as high as other stations. You can ignore costs in this case. same. You can explore the reasons of why rent agreement be an issue.
Okay. I would break down the revenue streams into 3 broad categories – Sure. The various terms of a rent agreement include the rent, the duration, and
tickets, advertisements and outlets. Is there any other source of revenue for the lock-in period. Since the rent is the same, is the duration or lock-in period
the station as well? different? Probably longer than others which would be a higher risk for the
No, you can proceed with these three. shopkeeper?
Is there an issue with one of these revenue streams as compared to other Yes, that is correct. The lock-in period for outlets in other metro stations is 2
metro stations, or shall I look at all of them to find where the problem is? months while in CP it is 6 months, due to which they do not prefer to rent
The revenue from outlets is less as compared to other metro stations. them. Can you suggest recommendations?
Okay. The revenue from the outlets depends on the total number of outlets, Yes. First, we should look into why the lock-in period is 6 months in CP while 2
and the rent per outlet. Is the number of outlets same as other metro months in other stations, and if it is possible it should be reduced. If not, then
stations? the rent can be reduced. We can also opt for differential pricing, where the
Yes, assume it to be roughly the same. rent is a function of the area and location of the outlet inside the station – for
What about the rent? How is it charged? example areas which attract high footfall can have a higher rent.
The rent is fixed for each outlet. That’s all. Thanks.

41
DELHI METRO NETWORK
Summary: I had to figure out why the Delhi Metro network is facing profitability issues in CP. The issue is that the lock-in period for outlets in this metro
station is 6 months, which was higher than other metro stations where the lock-in period for the same outlets is 2 months. Due to this, people are less willing to
take them on rent. To rectify this, I would recommend that they can look into reducing the lock-in period if possible. If not, they can consider reducing the rent.
They can also opt for a differential pricing, where rent can be a function of area of the outlet and footfall.

Tickets

Total Area

Revenue Advertisements

Profit Number of Outlets Area per Outlet Expected Revenue

Cost Outlets
Percentage of
Rent per Outlet Incurred Costs Duration
occupied outlets

Rent Agreement Lock-in Period

Rent Amount

42
FOUR STAR HOTEL

Client is a Four Star Hotel in Delhi who’s experiencing a dip in revenue. Come I see first off that number of guests have reduced. I will look into this
up with three key recommendations. after I detail out spend/day. I would split it into Room Rents, Food and
Alright, I will start with a few preliminary questions to understand the Miscellaneous, the last including concierge, laundry, On-Demand Movies etc.
situation better. Where is the client based out of and since when are they How have revenues changed in these segments?
facing this dip? The spends on Food and Misc. have remained the same. On Average, Room
The client is based out of Delhi and it has been a year since they’ve started Rents/Day have reduced. How would you proceed further?
facing this issue. I would like to segment the rooms into premium and regular and look at the
Okay. I would like to know a little more. Where in Delhi are they located, is it a revenues in each segment, unless there are more categories.
tourist spot or a business district and what is the mix of their customers? In That’s correct, there are only two segments. However, elaborate on how you
addition, I would like to know if there are any competitors in the same area, would segment revenue further in each segment.
what their mix and if they’ve been experiencing the same problems. I would write Rent/Day as Number of Rooms*Avg. Occupancy*Tariff/Day. So a
Our client is situated in a business district but sees about 30% of tourist decline could be due to non-availability, lower occupancy or reduced tariffs. Do
bookings too. There are four major competitors in the area, who have a you have the data for the same for both room categories?
similar mix and have seen a rise in revenues over the same period. You’re right, The premium suites have seen a reduced occupancy this year
That’s interesting, our competitors are not facing the problem that we are. So compared to last years whereas the regular ones have seen a small increase.
it is not a general industrywide trend. I would like to breakdown revenue into Rest all are same.
the number of guests per year times the number of days they stay times the I would like to split up occupancy across customer segments and seasons. Are
average spend per day. I would then compare with our competitors in each we seeing a drop in the tourist occupancy or for the business customers? Is
part. Do we have any information on how we’re doing on each of these there any particular time of the year where the fall in occupancy is most
fronts? pronounced? Similarly, what is the data for increase in regular rooms?
That’s a good enough split. The number of guests per year have reduced for We have noticed a fall in the tourist segment mostly. And as for the seasonal
our client and increased for the competition. Average stay duration has variation, there is none. Occupancy of regular rooms also increased y-o-y for
remained the same. How would you split the spend per day further? the winter holiday season.

43
FOUR STAR HOTEL

Okay, so I hypothesize that tourists are not staying as much as they used to in
the premium rooms and are instead staying in the regular ones during the
holiday season. This could be due to unaffordability or some hotel policy
reserving the premium rooms. I would like to analyse the tourist
characteristics to understand their preferences and see if my hypothesis is
true.
That won’t be necessary. The hotel has changed its policy on free upgrades if
regular rooms are full and stopped it. You can give your recommendations
now.
The hotel can look at bringing back it’s old policy of free upgrades. However,
in case it doesn’t want to provide perverse incentives to book at the last
minute, the hotel can look at offering premium suites at a discount or on a
long term basis, reduce the excess number of rooms in the Premium segment.

That will be all, thank you.

44
FOUR STAR HOTEL
Summary: Client is a four star hotel in Delhi facing a decline in profits. This was due to a decline in occupancy in the premium segment while the regular
segment had seen an increase/ This was because the hotel has changed its policy on free upgrades if regular rooms are full and stopped it. The client can look at
offering premium suites at a discount or on a long term basis, reduce the excess number of rooms in the Premium segment.

Number of rooms

Customer segment

Executive suites Occupancy

No. of guests/year Season

Tariffs

Revenue Duration of stay Room rent

Number of rooms

Revenue/guest/day Food Customer segment

Regular rooms Occupancy

Misc. Season
Tariffs

45
BEER MANUFACTURER

Client is a beer manufacturer. Its facing decline in profits. You have been brought I would like to split the revenue in number of units sold and average
in to figure out the reason and suggest some recommendations price of a beet bottle. Could you please let me know if there are any changes in
Just to reiterate, our client is a beer manufacturer and they have been facing a these two parameters?
decline in profits. I need to figure out the reasons and provide some As a matter of fact, industry price of beer has remained the same but units sold
recommendations for the same, To start with, may I know how long has the have gone down.
client been facing this problem? Ok, has there been any supply issue in distributing the beer through the
The company has been facing this issue since 2-3 years. channels? Or the demand from the consumer side has reduced?
In which geography does the client operate? Is there any particular region in There has been no change in the supply. Even the margins for the distributors
which we are seeing this issue? have remained the same. People are just not buying the product.
The client has different brands across the world. The problem is particularly Ok. Since, this has been an industry wide problem, it looks like an external issue.
evident in the US. I would like to analyse some macro economic factors that could have led to this.
Is this an industry wide issue or is it a client specific problem? (Applies PESTEL)
It an industry wide issue. Yes. Actually, there has been a social lifestyle change in the beer consumers of
Can you tell me more about the competitors of the client? US. They have become more health conscious as beer may lead to long term
There are 4 major players. Our client has almost 50% of the market share. obesity and other heart and liver problems.
Okay. Now I would like to break down the profits as revenue minus costs. Could OK. That’s why there is a fall in the demand. I think we have identified the issue.
you please tell me if there are any changes in the revenues and costs over the Can I take up a minute to come up with some recommendations?
past few years . Sure
The revenues have been declining. The costs have remained the same. I’ll split my recommendations into two parts : Existing products & New
That’s interesting. Here, I would like to understand a bit about the revenue Products. On the existing products, to stimulate demand, we can look at
stream of our client. I understand that beer is typically sold on liquor shops and promoting the beer brands that already have low alcohol content. On the new
pubs. Am I missing any other revenue stream? Has the revenue gone down in products side, we should plan to launch a new brand with zero alcohol content
both these channels? that tastes like beer, which can be healthier alternative for our consumers
No these are the two major channels. Revenue has gone down in both. Looks good. Thanks
46
BEER MANUFACTURER
Summary: Client was a beer manufacturer facing a decline in profits. This was an industry wide issue – there had been a social lifestyle change in the beer
consumers of US. They had become more health conscious as they thought beer may lead to long term obesity and other heart and liver problems. To stimulate
demand, the client can look at promoting the beer brands that already have low alcohol content. They can also plan to launch a new brand with zero alcohol
content that tastes like beer, which can be healthier alternative for our consumers.

Internal
# Customers Supply
External
Social healthy
Premium per Demand PESTEL
lifestyle
Revenue instalment per
Customer
Profit
Cost
Frequency

47
LIGHTBULB MANUFACTURER

Your client is a lightbulb manufacturer facing a decline in profits for the last 6 within a particular time frame.
months. Figure out why and suggest recommendations. Interesting. So the client has had to offer more discounts due to
Sure. I’d like to ask a few preliminary questions to understand the situation delayed delivery of the orders. I would like to explore the value chain to
better. What kind of lightbulbs does the company manufacture? determine the reason for delay.
The client manufactures a single standard lightbulb. The value chain would consist of (i) Research and Development (ii) Raw
Okay. Where in the value chain does the client operate? What is their Material Procurement (iii) Processing (iv) Testing (v) Storage and Transportation
business model? (vi) Distribution and (vii) Marketing. I would like to start with R&D. Have there
The client is responsible for R&D and processing. They have their own been any delays in this process?
distribution network. They place orders for raw materials from suppliers. The No delays.
client is a B2B company. They deal with big ticket orders. Okay. Have there been any delays in raw material procurement?
Alright. Which regions do they operate in? When the client places an order for raw materials, the receive it in time.
They manufacture in Uttar Pradesh and sell all over India. Their operations are Alright. Is there an issue with forecasting the requirement of raw materials?
uniform across the country. Yes. A new MBA graduate has been put in charge of forecasting 6 months ago.
Alright. I’d also like to know whether the drop in profits is an industry wide
On his advice, the client has changed it’s forecasting methodology. This has
phenomenon or is it just limited to our company.
caused a delay in raw material procurement. Do you have any
The decline in profits is unique to our client.
recommendations for the client?
Okay. Now, profits are a function of the revenues and costs. So in the past 6
Yes. I have 3 recommendations. (i) To understand why the forecasting method
months, have the costs increase or the revenues declined?
was changed and consider reverting to the previous method. (ii) To explore the
The revenues have declined.
Okay. The revenues could have declined due to decrease in (i) number of possibility of altering the contract with buyers to reduce discounts. (iii) To
orders (ii) size of order (iii) price per lightbulb or an increase in discounts. explore the possibility of storing raw material for longer time.
That’s all. Thanks.
Have we observed a change in any or these factors?
Alright. The client has had to offer more discounts in the last 6 months. The
client has a policy that it will offer discounts if their order is not delivered
48
LIGHTBULB MANUFACTURER
Summary: The client was a light bulb manufacturer facing decline in profits. They had to offer higher discounts due to delayed delivery of orders. The
client had recently changed their forecasting methodology, which caused a delay in raw material procurement. To fix the same, it is important to understand why
the forecasting method was changed and consider reverting to the previous method. The client can also explore the possibility of altering the contract with
buyers to reduce discounts, and explore the possibility of storing raw material for longer time.

Profit

Revenue Cost

Number of orders Size of order Price per lightbulb Discounts

Storage and Customer

R&D Raw material Processing Distribution Marketing
transportation service

Forecasting

49
BAKERY SHOP

A bakery shop is experiencing a decline in profits since past 6 months. Figure Sure. I want to analyse the customer journey. Since bakery sells all
out why. season products, seasonality won’t be an issue.
Where is bakery located? Does it has one branch or multiple branches? Does Customer Interest -> Travel to bakery -> Parking of vehicle and entry into
it sells online also? bakery -> Select items to buy -> Placing order -> Payment -> Waiting for order -
Bakery is located in Delhi. They have only one branch where they sell through > Dining-in/Takeaway
dine-in, takeaways and online. We have problems with parking. There is a construction work going on in
Are there any other bakeries or similar food shops nearby? Do they also face parking lot, hence customers can’t park their vehicles for visiting bakery shop.
the same problem? Got it. So decline in customer visits and hence revenue issue is due to parking
Yes, there are other bakeries nearby. However, they are not facing a decline in lot problems.
profits. I’ll move to cost now. Does increase in cost in both business - Online as well as
So, it’s a company specific problem. I want to divide Profits into Revenue & Dine-in/Takeaways?
Cost. Profits can decline due to 1. Decline in revenue or 2. Increase in cost or The “cost increase” problem is only in online segment.
3. A mixture of both. Okay. I want to analyse cost factors and then drill down on the issue. The major
The bakery is facing both decline in revenue and increase in cost. costs specifically for online sales will be maintenance cost of website/app,
I’ll start with Revenue. Does decline in revenue in both business - Online as transaction cost (for online payments), margin paid to food delivery services,
well as Dine-in/Takeaways? delivery cost.
The revenue decline problem is only in Dine-in/Takeaways segment. The delivery cost has increased.
Okay. Revenue can be divided into revenue per customer visit & number of Delivery cost can be broken down into (Number of deliveries) x (Cost per
customer visits. Revenue per customer can be analysed as (Average Price) x delivery); Cost per delivery is dependent on vehicle used, vehicle utilisation,
(Number of items purchase per customer visit) fuel cost, distance travelled, mileage.
To analyse decline in number of customer visit, the problem can de analysed Right. So we have started to deliver at longer distances. Although the number
from Demand and Supply side i.e. whether there is a decrease in demand or of deliveries and revenues have increased, it also lead to higher distance
supply issues. travelled and ineffective utilisation of vehicle leading to higher delivery costs.
The number of customer visits has declined and it’s a demand side issue.
50
BAKERY SHOP
Summary: Client was a bakery shop facing a decline in profits. There was a reduction in revenues due to construction work going on in parking lot, hence
customers couldn’t park their vehicles for visiting the bakery shop. There was also a rise in costs of online orders, since they had started to deliver at longer
distances. It lead to higher distance travelled and ineffective utilisation of vehicle leading to higher delivery costs.

Supply
Number of items
purchased per
customer visit Customer journey -
Dine-in/Takeaways Demand
Parking
Revenue
Average price
Online
Profit Maintenance cost of
website/app
Dine-in/Takeaways
Transaction cost (for
Cost Fuel cost
online payments)
Online
Margin paid to food
Distance travelled
delivery services
Cost per delivery
Delivery cost Mileage
Number of deliveries
Vehicle utilization

51
INSURANCE PROVIDER

Client is an insurance provider facing a decline in profits. Figure out why and Can I assume that major revenue comes from the insurance premium
suggest recommendations. that we collect from customers?
Just to reiterate, that the client is an insurance provider facing a decline in Yes, you can assume that.
profits. I need to find out why. What kind of insurance does the client provide The premium would be a function of the total number of customers, the
and since when have they been facing this issue? premium per customer per instalment, and the frequency of paying
Client deals with tractor insurance, and has been facing this issue for the past 1 instalments. Has there been a change recently in any of these?
year. Yes, the number of customers has gone down.
In which geography does the client operate? Okay. This means that less people are buying insurance for their tractors. This
The client operates Pan India. could be due to internal or external reasons. Internal reasons could be anything
Okay. Since they only deal with tractor insurance, can I assume that their that is related to the client, for example any changes that have been introduced
customers are only people living in rural areas and involved in farming? recently, or external reasons which could be related to any external factor,
Yes, you can assume that. which I’ll further examine in detail.
Is this an industry wide issue or is it a client specific problem? The decline is due to external factors.
It an industry wide issue. Is it a supply issue or a demand issue? Do we lack capacity to sell the policies or
Can you tell me more about the competitors of the client? has the demand reduced?
There are 5 more players in the industry and all have equal market share. There is a reduction in demand.
How does the client operate? How do they reach out to the customers? Do Okay. To see why the demand has reduced, I would go through the journey of a
they have their own offices with agents, or is there any other tie up? customer, starting from the need till the post purchase behaviour. Does that
The client does not follow an agent driven process. We have tie ups with local sound suitable to you?
banks, the customers can approach any bank to avail the insurance and other Yes, you can go ahead with this.
facilities are available are there. The process that I will consider will include need, awareness, availability,
Okay. Now I would like to break down the profits as revenue minus costs. Have accessibility, affordability, purchase behaviour, and post purchase behaviour. Do
the costs increased or revenues reduced or a combination of both? we know if there is an issue with any of these factors?
The revenues have declined. Yes, the customer need has declined.
52
INSURANCE PROVIDER

Okay, this means that the customer does not need insurance as they used to The affordability of a farmer would depend on the price of the tractor,
before, even though other factors have remained the same, is that right? and also the interest that he has to pay on the money he borrows. Has there
Yes. recently been any change in the interest rates?
The number of insurance policies that we have in the market would depend on Yes. Last year a lot of farmers defaulted on their loans, due to which the local
the total number of tractors and the percentage of them buying an insurance banks have increased the interest rates.
policy. So are less people preferring an insurance policy, or has the number of Do we know why the farmers defaulted on their loans?
people purchasing tractors gone down? No information is known for that. Can you suggest recommendations?
The number of tractors has reduced. Yes. We can focus on the farmers who already own a tractor, and reduce
Is it a supply side issue or a demand side issue? premiums so that the ones who do not have an insurance policy for their tractor
It is a demand side issue. can buy one. We can also backward integrate, and offer loans at a lower interest
Since the demand for tractors is declining, I will again consider the journey of a rate than the banks (if feasible) to help farmers finance their tractors.
customer when he buys a tractor, starting from need till the post purchase That would be all, thank you.
behaviour. Do we know if there is an issue with any of the factors?
The affordability of the customers has declined.
The affordability could again depend on both internal and external factors. Has
the income declined, or the price of the tractors has increased?
Neither. Both are the same.
Okay, I will look closely into the factors that affect the affordability of the
customers. When a farmer buys a tractor, he would either use his own finances
or borrow money from someone, which can either be a local bank or local
moneylenders. In this case, I think they would be borrowing money. Do we
know the source of their funds?
They generally borrow from a local bank.

53
INSURANCE PROVIDER
Summary: The client is an insurance provider providing tractor insurance, facing decline in profits. This was due to the decline in the number of tractors
purchased by farmers. Recently, the banks had increased their interest rate since a lot of farmers had defaulted on loans, hence many farmers could no longer
afford tractors. The client can look into reducing the premium to target farmers who don’t have an insurance for their tractors currently. They can also consider
backward integration, and offer loans to farmers at lower interest rates.

Internal
# Customers Supply
External Supply
Customer
Premium per Demand Need Income
Journey Customer
Revenue instalment Demand Affordability
per Customer Journey Interest
Profit
Rates
Cost
Frequency

Note: This is a typically tough case because the problem doesn’t lie within the industry in question, but an industry which is indirectly linked to it.
Customer journey framework needs to be applied twice to deep dive into the problem.
These type of cases are generally longer, and it is essential that they are started well, with appropriate preliminary questions to understand the context well.
The recommendations also urge the interviewee to think out of the box, since very less information is available.
54
AUTOMOBILE MANUFACTURER

Your client is in the automobile industry & is facing profit declines. You have to So it must be a demand side issue. I. would like to look at the customer’s
investigate the reason & suggest solutions. journey in making a premium bike purchase, following from awareness,
Is it an industry wide problem & since when is the profit declining ? likeability, availability, affordability. Are the customers aware that our product
No, it is company specific , & declining for last 3 years exists?
Which automobiles does the client manufacture? How many variations of Yes
motorbikes do they sell? Any competitors? Raw materials required? Since our other competitors are not facing this issue, I am assuming that
Processing? Distribution? market for premium bikes is unaffected. So, has the likeability of our premium
Motorbikes-2 types- economy range & premium. We have 3 competitors – bikes gone down since last 2 years ?
they sell both kinds of products Yes.
For other things, Assume it according to industry practices in automobiles. This could be due to multiple reasons like product change, marketing change,
Okay, Since the client is facing declining profits, It could be due to decreasing perceived brand image change or better offerings by competitors. Are any of
revenues or increasing costs. Are the total revenues declining? these reasons true?
Yes Yes, the brand image has changed.
Since there are 2 streams, is the revenue declining for both? Since the revenue for economy range has gone up, I would like to know when
No, revenue is declining for premium bikes. was the economy range launched?
Are revenues stagnant for economy range ? It was launched around 3 years back
No revenues are increasing for economy range Are economy and premium bikes under the same brand name ? If yes, then
For premium bikes, revenue could go down because of no of units sold, or the image of premium bikes could be downgraded as image as economy range
because of cost per unit. Has any of these changed? improves. Is that the case?
No of units sold has changed. Yes, that is correct.
Is it a supply side issue ? Have we had any issue in making the bikes available
in the market ?
No.
55
AUTOMOBILE MANUFACTURER
Summary: I had to determine the reasons for declining profits of a motorbike manufacturer who manufactured both economy & premium range bikes. The
reason identified is that due to the newly introduced economy range, there was brand erosion of the premium bikes. People were looking at this brand as an
economy range brand rather than a premium range brand. I recommended that the two bikes should be launched under different brand names to prevent such
brand erosion.

Awareness

Supply side

Premium Bike Likability

Revenue Demand side

Profit Economy range bike Affordability

Cost

Availability

56
MARKET ENTRY

57
FRAMEWORK
Client is considering entering a new market. Your goal is to recommend whether or not they should enter it (through various means).
For these types of cases, it is common that the client is looking to invest in the expansion and get returns. In addition to financial
OVERVIEW feasibility of the plan, one must also test:
- Likelihood of implementation success based on industry conditions and firm capabilities
- Risk Assessment

Strategy Economics Risks PRELIMINARY QUESTIONS TO CONSIDER*

• Why are they thinking of • New Market Conditions • Barrier to Entry ▪ What business is the client
market entry? • Market Size • Regulatory Barriers operating?
• Growth • Possible Revenue • Financial Capabilities ▪ How the client performing
• Mature current market • Possible Growth • Existing Players and their currently?
• Response to competitors market share ▪ Does the client have any prior
• Competition in New Market
• Resources and Capabilities • Porter’s Five Forces experience in the new
• Market Share
market/geography?
• What does the firm have • Pricing your product vis-à-vis • Risks
that makes them think they ▪ What is the aim of the client?
competitors • Implementation
will be successful? (Revenue, Profit, Payback Period
• Parameters to Consider • Political etc.)
• Brand • Investment Required • Currency ▪ How is the competitive landscape in
• Patents • Client Capacity to invest • Other macroeconomic the new market?
• Local Expertise • Expected Revenue factors ▪ What are the client’s capabilities
• Mode of Entry • Expected Profits and bottlenecks?
• Self Launch • Payback Period for
• Acquisition investment
• Joint Venture *3CP Framework can be used
58
FRAMEWORK
Price −Cost
Profits = Market Size × Market Share × − Fixed Costs Example: Estimate the market size of refrigerators in India
Unit

MARKET SIZING High Income

Once the preliminary questions have been answered and the

situation looks favourable, market sizing needs to be done to Urban Households Medium Income

Population of India
understand the financial viability of the market entry. This
guesstimate can be done either through a top-down or bottom-up
Low Income
approach.

MARKET SHARE High Income

Understand incumbents’ market share and estimate the possible
market share for the client. This is essential to understand the Rural Households Medium Income
serviceable obtainable market (SOM) for the client
PRICE Consider Units/Household and Average Life Span of a Low Income
Refrigerators to arrive at the final market size
If the client does not have a price point for the product/service in
mind, you can use any of the approach covered under ‘Pricing’ Once the market size and other financial parameters have been estimated,
frameworks to estimate the price. conduct a feasibility study for implementation.
FIXED COST
Production Distribution Marketing After Sales
This is the initial capital invested by the client in building capacity
and adding resources when entering the market

59
EDIBLE OIL MANUFACTURER

Client is an India-based edible oil manufacturer. They are strong in the Growth North West East Central
Southern part of India with ~98% market share. They want to enter new Sunflower Oil -4% 0% 2% 15%
markets – you need to draft GTM strategies for the same. Health Based Oil 12% 5% 25% 50%
Okay. Can you tell me more about the client? Is edible oil their only business Demand
or they have any other source of revenue as well? What is their product mix? Sunflower Oil 80% 80% 10% 95%
Do they manufacture the products inhouse? How do they distribute it? Does Health Based Oil 20% 20% 90% 5%
the client want to enter new markets because the market has saturated in North West East Central
South since they already have a high market share, or is there any other 85% - 3 players 85% - 2 players 25% - 2 players 35% - 3 players
reason as well? 15% - 10 players 15% - fragmented 75% - fragmented 65% - fragmented
Edible oil is their only business. They have 2 types of oils – sunflower oil or
vegetable oil, and health-based oils (soybean, coconut, mustard, etc.). They This is the data available, you can recommend basis these numbers.
manufacture it inhouse, and distribute it through third party distributors. As per this data, firstly I will not target North because 3 players have
They want to enter new markets because the current market is saturated. dominated the market and it would be tough penetrating the market.
Okay, thank you. Are there any particular markets that are being considered? Additionally, in sunflower oil even though there is high demand right now it is
Is it restricted to India or can we explore international markets as well? When declining. Next, I would also not target West because majority of the market is
is the client looking to enter these markets? of sunflower oil but it is stagnant. When I look at the other two markets, I
The aim if revenue growth since the south Indian market is saturated. We are would target health-based oil segment in East region, because it has a high
currently considering the north, east, west and central India. We are open to demand and is also growing at a high rate. In Central even though health-
international markets as well, but for this case consider India only. You need based oil segment has a very high growth rate, the market size is not attractive.
to figure out which market to target first. I can look at expanding into sunflower oils in the central region after entering
Is the demand of both products similar to South India in each of these the East region.
regions? Can you tell me if the market is growing for each of these products? That sounds good. Thank you.
No, the demands and growth rates are different.

60
PRICING

61
FRAMEWORK
While pricing can be standalone cases, they can be asked in conjunction with market entry cases to estimate the potential revenues
OVERVIEW generated by the client upon entry. You objective is to identify the best approach to estimate the price of the product.

Value Based Pricing

New Product Cost Based Pricing
(Innovation) Cost Based Pricing PRELIMINARY QUESTIONS TO CONSIDER*
Competitor Based Pricing
Pricing

Competition Exists ▪ What business is the client operating?

Value Based Pricing ▪ What is the product or service that is being
Existing Product offered?
(Modified)
Cost Based Pricing ▪ What are the various uses of the product?
No Competition ▪ How is it different from what is being offered by
the competitor?
▪ Who are the competitors and what are their
Value Based Cost Based Competitor prices?
▪ Expected margin
• Willingness to pay • R&D Cost • Existing Products ▪ Substitute products
• Benchmark against • Production Cost • If new product, NPV of ▪ Capital investments and expected payback period
similar products • Fixed Costs substitutes
• Opportunity Cost • Variable Costs • Supply-Demand
• Breakeven Period, Considerations
Margin

Note: Consider implications of price elasticity on demand of the product

62
KOREAN FERTILIZER MANUFACTURER

Client is a Korean conglomerate, and wants to launch a new fertilizer in the US Okay. To price the fertilizer, we cannot use competition based pricing
market. Monetize the fertilizer. since there is no competition, and cost-based pricing also cannot be used since
Okay, can you tell me more about the client? What is the main business of the we don’t know about the cost details, hence I think that value based pricing
client? Where does the client currently operate? will be the best way to monetize this fertilizer. You mentioned that it
The client manufactures chemicals, fertilizers, and other petroleum products. accelerates the growth of fruits. By how much does time get reduced?
They currently operate in the Asian market. The time gets reduced by 20%.
Since the client operates in the Asian market, why are they targeting the US How much time does the normal cycle of apples take to grow?
market? It takes 90 days.
Fertilizers is not a big market in Asia due to low income of farmers, hence for Okay. This means that a farmer can grow 4 cycles in a year, taking 360 days.
high profits the clients want to launch it in US directly. Reducing time by 20% means the new cycle will be complete in 0.8*90 = 72
What is the new fertilizer? Is it different from the fertilizers people generally days, and the farmer can now grow 5 cycles in a year. What is the price of the
use in US? fertilizer that they currently use?
Yes, it accelerates the growth of fruits. There is only one type of fertilizer in the market, which costs $40/kg.
Does it work on all kinds of fruits or any specific types of fruits? How much quantity do they generally require?
It has been tested successfully on apples, hence the client wants to launch it 5kg of fertilizer is required for 1 acre of land.
Okay. Now considering that we price the new fertilizer at $40/kg, we can say
only for apples as of now.
that the customers spend $40 for 0.2 acre land per cycle, and an additional
Does the client have a patent for this product? Does any similar market
$40 for the 5th cycle. In addition, they would be making an additional revenue
already exist in US?
from the 5th cycle. Added profit would be *profit per cycle* per 0.2 acre, from
Yes, the client has a patent. No such market exists.
1 kg fertilizer, per year. We can add a premium to the base price of $40
Okay. Does the client plan to set up a manufacturing plant in US or import the
depending on this value, it should be lower than the value (profit per cycle)/5,
product? How are they planning to sell to the customers?
since for the new fertilizer the customer will be paying this amount every cycle.
That will depend on the revenues we are expected to generate, you can
ignore that for now. They plan to sell it through retail chains across US. That looks good, thank you.
63
KOREAN FERTILIZER MANUFACTURER
Summary: The client was a Korean fertilizer manufacturer who wanted to launch a new fertilizer in the US market, and wanted recommendations regarding its
pricing. The fertilizer accelerates the growth of fruits, and enables farmers to grow one additional cycle per year. To price the fertilizer, we can add a premium to
the current fertilizer of $40/kg, which is less than 20% of the additional profit generated by the farmer so that they have an incentive to buy the product.

New product
Additional revenue
Pricing Competition exists
generated
Existing product
Value based pricing
(innovation)
No competition Extra cost incurred

Cost based pricing

64
TOOTHBRUSH MANUFACTURER

Client is a toothbrush manufacturer. It has recently come up with a toothbrush Ahh, ok. Since the cost to produce the brush is 50 Rs, the brush can
which can last forever. The client has hired you to suggest a price for this be priced at Rs. 100, to give a margin of 50% on revenue. This price looks very
toothbrush. low for such a novel product.
Ok, to begin with, I would like to ask a few question regarding the product. Ok, sounds good.
Could you please tell me a more about the product functionality and features? Let me move on to value based pricing. I would like to calculate this using the
So, it looks like a normal toothbrush only, but it can last the entire lifetime of a value i.e. lifetime functionality the product fives over normal toothbrushes.
person. Its used as the same way as a regular toothbrush. Go ahead.
What is the cost associated with manufacturing such a product? Considering an average age of a person to be 70 years, and if we ignore infant
The company spend 10 million dollars in R&D. Now it takes around 50Rs to and old age period, we can assume that a person uses a toothbrush for 60 years
manufacture this brush. and current toothbrushes are typically changed every 2 -3 months.
How does the company plan to distribute this product? Is there any geography That’s a fair assumption. You can assume 2 months and go ahead.
in mind to launch this product? This would mean that a person uses around 6*60 = 360 toothbrushes in their
Initially we plan to sell via retail grocery stores and on OTC medical shops. We lifetime. If we assume a price of Rs 50 per toothbrush, the ideal value of our
plan to make it available in major Indian cities. product is 360*50 = Rs 18000.
Are there any existing similar products currently in the market? Ok. What do you think are the factors that will change this price.
No there exists no such product which can last for a lifetime. I would like to split the factors in two. Factors that will reduce the price and
Does the company plan to recover its R&D cost through its pricing model? others that will increase the price.
No you can assume the R&D cost to be sunk cost. Sure sounds good. What will the be?
Since there are no current competitors, I would like to ignore the competitor I think the factors that will increase this value is inflation, time value of money,
based pricing. I would like to proceed with Cost based and value based pricing. convenience of one time buying and the factors that will reduce the price would
Sure that makes sense. be fear of loss, boredom of single product for entire life .
Is there a fixed margin that the client is looking for the product? Awesome. We can close the case here.
They would ideally like a 50% margin over revenue.

65
TOOTHBRUSH MANUFACTURER
Summary: The client was a toothbrush manufacturer who recently came up with a toothbrush that can last forever, and I had to price the product. The ideal
value of the toothbrush should be Rs. 18000, but it can increase due to inflation, time value of money, convenience of one time buying and the factors that will
reduce the price would be fear of loss, boredom of single product for entire life.

Cost per normal

New product
toothbrush
Pricing Competition exists
Existing product
Value based pricing Toothbrushes used per year
(innovation)
No competition

Cost based pricing Life expectancy

66
GROWTH

67
FRAMEWORK
In growth cases, the client is typically expecting to see some year-on-year growth. You are expected to understand growth targets,
OVERVIEW evaluate methods, and suggest recommendations to achieve the targets.

Increase Customer
Base
Increase Volume
Existing Market Increase Product Mix
PRELIMINARY QUESTIONS TO CONSIDER*

Increase Price ▪ What is the growth objective/target of the client?

Considering Price Elasticity ▪ What is the time period in which the client wants
to achieve the target?
Growth Target

Domestic
Geographic ▪ How has the client’s industry been performing?
Expansion ▪ Where does the client stand vis-à-vis competitors
International (number and respective market shares)?
▪ Does the client have the capacity to meet
Horizontal increase in demand?
Diversification
Diversification ▪ Does the client have any financial constraints for
investment?
New Market
Mergers
Inorganic Growth
Each L3 unit (Merger, Acquisition, etc.) require
Acquisition additional considerations.

Business Integration Vertical Integration

68
INTERNATIONAL EXPANSION
OVERVIEW International
Expansion

The following framework can be considered if you

are faced with a problem statement which involves Internal External Quantitative
international expansion growth strategy.
Does it match our Cultural Differences ROI/Hurdle Rate Cash Flows
growth strategy? of Customers

Contracts with Amount

JV with local firm? Governments

Educational Discount Rate

Differences
Can our resources
succeed overseas? Economy and NPV
Exchange Rates
Do our corporate
Payback Period
values match the new Seasonality
market?

Distribution Channel
and Logistics

Political Climate

Local Market (Size,

Competition)
69
CONSULTING FIRM

Client is a partner at a leading consulting firm. He wants to understand how Yes, that is fair. Go ahead.
they can potentially grow the revenue at a faster rate. To increase the number of projects, firstly we can look at how we can
Okay. Where is the firm based? What are the types of clients that they increase the number of modules per client. The firm can pitch different
generally work with? modules while working on one module, and suggest their recommendations in
The firm is based in India, with offices in Bangalore, Delhi and Mumbai. They other areas as well. They can improve their services by over delivering, which
deal with clients across India and Southeast Asia, in the oil and gas, consumer can increase the customer loyalty and will help in increasing modules from
and financial services industries. existing clients. We can also look at bundling, where we can offer discounts if
What is the growth in revenue that we are targeting? Does the partner have the client hires us for multiple modules.
any number in mind? Good. You can now go to the number of clients.
No, he just wants to explore options right now. To increase the number of clients, we can diversify into different geographies.
Okay. Can I assume that the only revenue stream is from the consulting We can approach clients in countries we haven’t worked yet. We can also look
services that we provide to the clients? at taking projects in more sectors.
Yes. Okay. Anything else you want to add?
Should I consider only the revenue or the cost as well? Yes. We can also look into expansion if the client is open to new investment.
Consider only the revenue. They can increase their employee base so that they can cater to more clients
Okay. I would first look at organic growth opportunities, and then move on to
and projects, and also expand office space. They can also increase on-shore
inorganic growth.
projects and promote work from home policies.
I would break down the total revenue into the average revenue per client and
In case of inorganic growth, the client can also look into acquiring small
the number of clients, and look at each of these separately.
consulting firms or merging with other consulting firms. Although this is rare,
Go ahead.
that can be looked into.
The average revenue per client would be a function of the number of projects
That would be all. Thanks.
that we have and the price that we charge for it. I don't think we would be
willing to charge a higher price, so I'll look at how we can increase the number
of projects that we have. Is that a fair assumption?
70
CONSULTING FIRM
Summary: The client was a partner at a leading consulting firm, and wanted to understand how they can grow revenue at a faster rate. They can pitch different
modules while working on one module, and suggest their recommendations in other areas. They can improve their services by over delivering, which can increase
the customer loyalty and will help in increasing modules from existing clients. They can also look at bundling, and offer discounts if the client hires them for
multiple modules. To increase the number of clients, we can diversify into different geographies. We can approach clients in countries we haven’t worked yet. We
can also look at taking projects in more sectors.

Revenue Growth

Organic Inorganic

Average revenue per

Number of Clients Mergers Acquisitions
client

Average price per

Projects Geography Diversification
project

Domestic International

71
PHARMACEUTICAL INDUSTRY

Your client is in the pharmaceutical industry & is facing stagnation in growth. So I am looking at the patient’s journey in getting diagnosed, to understand
You have to investigate the reason & suggest ways to improve? how we can increase the market size. My first question is , how does the
Is it an industry wide problem? patient get diagnosed?
No, it is company specific. There is a test for Rs. 2500
What are the products & their prices? Why does the customer go for the test?
Only one medicine- Rs 10 per tablet He goes for the test if there is a major injury & the bleeding does not stop. It is
What kind of disease does it solve? on the recommendation of the doctor.
A rare blood condition, in which if blood starts flowing a little, it does not So do customers know about this disease before that ?
stop. It is a fatal disease. No.
Any competitors?
So as I understand, the major problem is a lack of awareness about the
No – ours is the only medicine to treat this disease.
disease. Since the disease is diagnosed only when the customer is badly
Okay, Please give me a minute to gather my thoughts.
injured, most people would never know that they have the disease.
Sure
Yes that is correct.
Growth can be made by increasing the market size or by increasing our share
of the market. What is our share in the market?
Around 95%
Since there is a growth stagnation, we have no competitors & we have almost
full share of existing market, we need to increase the market size. I
understand that the market size comprises of patients who have been
diagnosed with this disease. Is that correct?
Yes

72
PHARMACEUTICAL INDUSTRY
Summary: I had to figure out why the manufacturer of medicines for a rare disease was facing stagnation, despite having no major competition. The main issue
was to have growth despite having saturation in the current market. The identified reason was a lack of awareness about the disease itself as the disease was
being diagnosed only when there was a major injury. The problem can be solved by undertaking a major awareness campaign through partnerships with NGOs,
hospitals, schools & corporates, to conduct free tests.

major injury

Doctor visit

Market size No of customers diagnosed

Total number of customers Diagnosis test

Market share

Report

73
UNCONVENTIONAL

74
INCREASING CAPACITY
OVERVIEW Should we
Increase
Capacity?
The following framework can be considered if you
are faced with a problem statement which requires
understanding capacity expansion. This can be an
extension of a growth or profitability case where the Investment vs
Market Demand
Improvement
client is looking to increase volumes and required
additional capacity.

Industry Improve
Market Trends Add Capacity
Capacity Productivity

Competitors’
Threats Seasonality Bottlenecks Add shifts
Plans

Global Design for Acquire

Economy
Competition Manufacturing another firm

Consumer Outsource
Substitutes
Preferences Production

75
MERGER AND ACQUISITION
STRATEGIC FIT Purpose

Deal Rationale
▪ Cost synergy Analyze
▪ Revenue synergy Opportunity
▪ Technology transfer (early stage start-up)
▪ Response to competitor
Type of Deal Internal Factors External Factors
▪ Vertical integration
▪ Horizontal diversification
▪ New market entry Industry Identify Acquisition
Strategic Objective
Attractiveness Candidates
DEAL ECONOMICS
Capacity and Hard Issues
Porter’s Five Forces Soft Issues
Valuation Resources
▪ Revenue and cost analysis
▪ CAPEX and Working Capital
Acquisition Fit 3C’s Culture Fit Deal Price
▪ PBT
▪ PAT
▪ Cost of Capital (R)
Strengths and Balance Sheet
▪ Value = PAT/R Weaknesses
Management
Deal Price
Synergies
▪ Cost and Revenue – New Firm Value Consider: Prior experience with M&A, Culture Retention of
New Firm Value > Deal Price employees
Compatibility, Post Merger Integration, Exit Strategy
76
IT SERVICES

Client is an IT services player. The number of applications for entry level training Now looking at the external factors, we can look into our competition.
program have been reducing. They want to figure out why. There could be other companies offering extra salaries or better profiles. There
Okay. Can you tell me more about the client? could also be a possibility that more companies are visiting campus which gives
The client is a top tier IT player, ERP support is outsourced to them. They students a wider pool to choose from and hence they are not considering
provide offshore support. applying to our firm.
Okay. Can you also tell me more about the training program? From where do Yes, recently a lot of start-ups have started recruiting from these campuses
we hire, what is the salary, what all do we expect from the applicants, etc.? which offer better profiles and better exposure, hence students are preferring
We hire freshers from engineering colleges across India, and we are open to those over us.
off campus applicants as well. Salaries are 20-30k per month. We hire Okay.
software engineers only. There is another reason why the applications are reducing. Can you continue
But we are not receiving enough applications as we used to, is that correct? your analysis?
Since when has this been happening? Sure sir. I would like to continue the journey and now further look at the
Yes, that is correct. It has been an issue for the past 2 years. process. After the students apply, there is a recruitment process like tests,
Okay. I will go through the whole journey of the application process and see interviews, etc. and then finally some candidates are offered full time
where the issue is. Does this work? employment. Has there been any change recently in the application or
Yes, go ahead. recruitment process, for instance, being longer or tougher?
The journey starts when the students apply for jobs during their final year. Yes, we recently moved to an online process since we found the offline process
After graduation, there are three most common options that students have – quite cumbersome, but we are facing issues with it and are still in the process
taking up a job in different fields like core, software, or any other non- of fixing it. That would be all, thank you.
technical field, going for higher studies, or starting their own venture. So firstly Thank you.
I would like to understand if the preference of the students has changed in the
last couple of years – that less students are now applying for these software
jobs and have different preferences.
No, the total applicants for taking up a job in colleges are the same.
77
IT SERVICES
Summary: The client was an IT services player and the number of applications for their entry level training program were declining. They mainly used to
recruit freshers from engineering colleges. There were mainly two reasons for the decline – first was increase in the number of startups that had started coming to
campuses for hiring, and students were preferring those roles over the one offered by the client. Secondly, they had recently moved to an online application
process but they have been facing many issues with it due to which students find it cumbersome to apply.

Application process

Total students applying for

Internal factors Recruitment process Test, interviews, etc.
jobs
Applications received
Percentage of students
Salaries offered by other Offer communicated,
applying for firm in
firms contract, etc.
question

Roles offered by other

External factors
firms

More firms visiting

campuses

78
GOOGLE - MSMEs

Google wants to onboard more MSMEs onto the new Google Store platform. Gpay’s value prop will be on 3 fronts, 1) Monetary – Discount on transactions,
Figure out the specifics and make recommendations. cash backs for the merchants accessing Gpay through the partner 2) Non-
Sure. Do they have a particular goal number of merchants in mind? monetary – Mini-app, notifications or other linkages with the partner apps 3)
Let’s say, 1/3rd of the market. So that amounts around 20M enterprises. Special features – will depend on partnership details.
Okay. There are 2 broad methods to enter this new space, organic and Okay. Now let’s look at the feature enhancements part. How should they go
inorganic methods. So do we any have particular preference from the client? about adding more features, given that they already have a lot of features
Can you elaborate a bit on this split first? targeted towards MSMEs? I would like you to talk about feature selection
Sure. Organic methods include customer/merchant acquisition through rather than the specific features themselves.
feature enhancements and marketing. Inorganic methods would include Sure. Given that MSMEs in itself is an umbrella term and has lot of internal
partnerships/acquisitions with other firms categories, we can focus on the needs of these particular categories for further
Okay. The client doesn’t have a preference as such, but they want to do it as feature ideas. For example: For small /medium retail category, inventory
quickly as possible. What do you think would be the right way to do so? management could be an issue. We can filter ideas based on 3 factors. 1)
Inorganic methods will get us bulk merchant acquisitions at once. However number of merchants in the particular category 2) ease of implementation 3)
there is the factor of discussions for partnership details. So it’ll be better to go potential impact.
for a hybrid approach. Use partnerships to get quick jump while Okay. Anything else you would like to add?
simultaneously working on marketing and feature enhancements. Yes. We can use the category wise approach to also filter down potential
Okay. Let’s focus on the partnerships for now. How will choose potential partners, i.e. on the basis of the distribution of merchants on their platform.
partners? This will ensure that there is synergy between the organic and inorganic effort.
We can break it down to few important factors. 1) Current merchant count 2) That would be all. Thanks.
Growth 3) Financial & operational health of the partner company 4)
Additional value proposition 5) Value proposition from Gpay to partner.
Makes sense. What value proposition do you think that Gpay can offer to the
potential partners?

79
GOOGLE - MSMEs
Summary: I had to figure out a kind of merchant acquisition solution for Google Stores for the MSME space. The main idea of the case was to test if I am able to
structure a broad set of ideas into a proper structure.

#Merchants in
category
Features Filtering
ideas
Ease of
implementation
Marketing &
Organic
advertisements
Merchant Impact
#Merchants
acquisition strategy
Partnerships /
Inorganic
acquisitions
Growth
Monetary

Filtering potential
Fin & Op health

Additional value Non-monetary

partners
prop from partner

Value prop to
partner Special

80
OIL MANUFACTURER

Your Client is an Oil Manufacturer, who is concerned about the transportation Absolutely, go ahead.
of produced oil. They want you to develop a framework through which they can Thanks! The mark-up is a function of the demand and supply of the
predict the cost of transportation. transportation ships. Since there is not much competition, we can assume that
Okay, I would like to ask a few clarifying questions. Where is our client located, there is not an infinite supply. If I assume that the transportation company
what parts of the value chain do they occupy and who are their competitors? serves all the Middle East players, demand is determined by how much our
Our client is based in the Middle East. They have their own rigs and they are client and competitors are willing to ship to India. This is a function of the
involved in the initial processing. Competitors in their country are none. Demand of Middle Eastern Oil in India and the Supply of the same. Indian
Does our client want a model for worldwide shipping or to any particular Demand for ME Oil is determined by total Oil demand in India and the
location? availability of other (cheaper) sources for oil and any political considerations on
Consider the costs of shipping to India for the purpose of this case. importing from the Middle East. Total Oil Demand can be divided into Industrial
I would like to now know about the transportation. I assume it is a third party Demand and Retail Demand. Since oil is inelastic in the medium to short term, I
transportation company who does the job. How many players are in this will not consider the price. Do you suggest I go into analysing the components
business in the Middle East? of Industrial and Retail Demand?
You’re correct, it is a third party company. There are a few players who do this I think this is good enough. What do you mean by political considerations?
job so you can assume there is moderate competition. For example, if there are sanctions against Iran for example, India would not
Okay. The transportation costs for our clients can be modelled as import as much from there. Or if there is any diplomatic fall-out, it might result
Volume*Cost/Volume/Km*Distance + Mark-Up. We can assume the Distance in trade-barriers.
to be fairly constant for a given shipping route. Cost/Volume/Km for the Good, what do you mean by supply of ME oil?
transporter is a function of their fuel costs + a constant overhead. The volume Any OPEC decision to cut oil production might push India to look for other
shipped is determined by our client. I think it would make sense to understand sources such as Russia, Venezuela etc.
what the Mark-Up is determined by. Do you think this is a good way to go Okay. How do you break-down the supply of transportation ships?
ahead with this? Supply can be split into number of serviceable ships with the players
*Availability in the Region*Competitors’ share. Availability in the region is a

81
OIL MANUFACTURER

dependant on better offers available elsewhere for the transporters. I will now
try to split up each of the above to understand them better.
That’s not necessary. Name three key recommendations for our client to
minimize costs
Okay. Our client can 1. Lease out storage in the destination and ship when the
costs are low, 2. Enter into long term agreements with any player to supply at
a fixed mark-up and 3. Pass on the responsibility to the buyer by engaging in
FOB Origin as much as possible.
That’s all. Thank you!

82
OIL MANUFACTURER
Summary: The client was an oil manufacturer, and I had to come up with a framework to predict their transportation cost. I considered the following factors to
construct a framework.

Volume

Cost/Volume/Km
Transporter Cost
Distance
Cost of Transportation

Retail Demand
Overhead Total Demand
Industrial Demand
Demand for ME Oil Availability of Other Sources

Political Considerations
Demand for Ships
Mark-up
Total Supply
Supply of Ships
Supply of ME Oil
Political Considerations
83
CONSULTING FIRM

You are an associate at a consulting firm. You have been noticing that recently a Since average speed is reduced but the driver is driving at the same
partner at your firm has been coming late to office. You need to figure out why. place, can I assume that they stop somewhere on the way, and time taken
Okay. How does he come to office? How long has this been happening for? there has increased?
He comes to office by car. This has been happening for about a week now. Yes, you can assume that. Can you figure out why?
Has such an event happened before? Generally people stop on petrol pumps or tolls.
No. He is generally regular in coming to office, and very particular about Yes, that is correct. Which one of these do you think would be the reason?
punctuality. I think tolls could be the reason. People generally don’t stop on petrol pumps
There could be two reasons why he could be late. Either he is leaving home everyday, so being late everyday for a week would not be due to this reason.
late, or there is a delay on the way. Do we know which one of these is the Yes, that is right. Since last week two toll booths have not been functioning,
reason? due to which he takes a lot of time to cross it, which is the reason for his delay.
He is leaving at the same time everyday. There is a delay on the way. Well done!
Since time = distance/speed, either he is taking a different and longer route to Thank you!
office, or his speed has reduced.
He is taking the same route.
Hence, there is a delay because his average speed has reduced. Reasons could
be internal or external. External reasons refer to issues like traffic, while
internal would be issues related to the car, or he or the driver is generally
driving slowly. Has any of these factors changed recently?
His driver drops him to office, but no changes in his speed of driving. The car
is also fine.
Okay. Shall I ignore internal factors and deep dive into external factors?
Sure, go ahead.

84
CONSULTING FIRM
Summary: I had to figure out why the partner at a consulting firm was being late to office for a week. He used to pass by a toll everyday, and since a
week two of the booths had shut down due to which it was taking a lot of time for him to cross it.

Car

Distance Internal

Time Driver

Average Speed

Traffic on the way

External Petrol Pump

Increase in stop time

Tolls

85
EDUCATION MINISTRY

Client is the education ministry of Rajasthan. They have hired you to improve the I think the 3 major stakeholders would be Government (Education
state board results for the students of Class X & XII in Rajasthan officers), School (Principals & Teachers) & Consumers (Students & Parents)
Ok. To begin with, could you please let me know what exactly constitutes That sounds good. We can start one by one.
improving Board results? Is there any metric we are looking at? On the government side, I believe past board data should be used to identify
That’s a good question. You can look at Pass % for a metric to be improved for subjects and schools that require the most intervention. Using that data, a
now monitoring team can be formed in each district which will visit these schools
Will we be looking at both private and public schools? regularly. A syllabus completion planner can be formed centrally which will
Lets focus only on public schools affiliated to the Rajasthan Education Board ensure uniform syllabus completion across schools and will help in identifying
Are there any particular problems that are causing poor board results for the schools which are lagging behind
state? Ok
Students often complain that they don’t get enough practice before the board Moving on to Schools, to ensure more practice for students, I would
exams. They also complain that teachers are unable to finish the syllabus on recommend 2 Pre-Boards to be conducted in the month of January & February.
time and skip important topics towards the end Based on the results of first Pre-board, remedial classes should be conducted
What do teachers currently do to ensure that students get enough practice for poor performing students before the 2nd Pre-Board. Good performing
before the exams? students may be excused from the 2nd Pre-Board to avoid burn out
Apart from their regular teaching, there are monthly tests and 1 full syllabus That sounds good
exam towards the end of December. Finally moving on to the 3rd Stakeholders, I believe involvement of Parents in the
Can I assume that board exams typically happen in the month of March? process should be increased. Monthly Parent teacher meetings should be
Yes they start in the first week of May organized at every school with feedbacks of student performance being shared
Ok. I would like to approach this by looking at the various stakeholders involved to the parents
in the education scene. To improve the board results, I would like to look at Those are good recommendations. I think we can close the case here
changes that can be implemented w.r.t to these stakeholders
Sure go ahead.

86
VC FIRM

Your client is a VC firm. They are currently valuing a group of semiconductor Right. The second method is called cost-to-duplicate. But let’s focus on
start-ups for home IOT devices. How will you value these startups? (Asked if I MM now. The industry MM is 15x. The 3 companies have requested valuations
have prior knowledge in startup valuation) at J- 10x, K- 20x and L- 25x of their revenues. How will you choose among
Not really. them? (J,K,L are company names)
Okay, so let’s go to the basics. How would you value a company in very basic Do we have their projected revenue numbers and which funding stage they are
terms. in?
Mainly by it’s financial health and operational health. Yes. I have both. J – 1M in 1 yr (series A), K – 3M in 5 yrs (series C), L – 10M in 4
Right. These are early phase startups, so assume they don’t have significant yrs (series B). Just tell me which company you would pick amongst these and
operations or significant revenue. What now? why?
We can look at how existing companies in the industries are valued. I would go with K. Given that this is it’s 3rd round of funding, I took there
Right. What else? revenue projections as the most reasonable baseline. So company L is
1) We can also look at how much the different part of the company, like obviously inflating the revenue numbers. Also, it seems unrealistic for company
production, development etc would cost. 2) We can do a discounted cash flow J to be able to start generating such a high revenue from the first round itself.
calculation for the projected revenue in future maybe. But K has a very high MM compared to J.
Right. So, the first approach is called market multiple. Essentially we valuate Right, I am assuming that would be because they assumed their would
existing companies as Value = MM x revenue. MM is determined by other negotiation on that and that’s why went with a higher start point. Moreover, J
companies in the industry. But again these are non revenue generating looking for a valuation of 10M in 1 yr and K of 30M over 5 yrs, which spreads to
companies. So what do we do now? 6M per year. This allows us the spread the investments over 5 years based on
We can go for other 2 approaches or adjust the valuation by 1) adjusting MM their performance. The 1yr time period of J makes that investment riskier,
– based on historical data for other companies and projected revenue value 2) Right. I think we will wrap it up. All the best.
an absolute adjustment in the valuation based on which stage the company is
and how much they usually raise in seed fund.

87
GUESSTIMATES

88
GUESSTIMATES
Guesstimates are estimates based on a mixture of guesswork and calculation. They can be given independently or as a part of a case. The interviewer is
generally looking to assess:
• Structure of your approach
• Comfort level with numbers and quick calculations
• Ability to make back of the mind checks to validate the numbers

As a part of the guesstimate you will required to make reasonable and logical assumptions, it is important to state them clearly and seek confirmation
from the interviewer. You will not be expected to calculate the exact value, but a rough number.

Approaches to solving guesstimates:

Top-Down approach
Involves starting with an entire population (in other words, the “top” level) and then breaking it down until you arrive at an answer.

The major elements of a top-down approach are:

• Identifying the correct starting universe
• Applying the right set of filters and relevant conditions. Segmentation can be carried out as follows:
- Demographics (age, sex, income, ethnicity, etc.)
- Psychographics (attitudes, behaviour, values, e.g. smoker vs non-smoker, dog vs cat person, etc.)
- Geography (urban vs rural, Tier I/II/III cities, country, continent, etc.)
- Channels (offline vs online, mobile app vs website, etc.)

89
GUESSTIMATES
Bottom-Up approach
For this approach, rather than starting from the “top” with a high-level figure such as population, the best approach is to start from the “bottom”—
some low-level statistic, such as Revenue per customer, and build your way up to the answer.
Some common bottom-up approaches:
• Household approach
- Example: For a guesstimate involving the number of cars, washing machines etc driving calculation using a household approach is easier
• Population approach
- Example: For estimating the number of mobile phones, chocolates consumed, apparel bought a population approach can be used
• Bottle-neck approach
- Example: For estimating the number of flights per day in a busy airport the number of available runways would serve as a handy bottleneck
to base your calculations. There could also be a limitation on the production capacity of the manufacturer in certain cases

Bottom-Up approaches

Household approach Population approach Bottle-neck approach

90
GUESSTIMATE 1: Monthly residential electricity consumption in India
Notes and assumptions Approach
• The 30/70 split of urban/rural
population has been considered
• The average household size assumed
for urban and rural areas is 4 and 6 Population of India = 1300mn
respectively
• Additionally, division of the income
groups into high, medium and low
Urban population Rural population
has been considered. The candidate
= 400mn = 900mn
can confirm the same with the
interviewer before proceeding

# of households =400/4 =100mn # of households =900/6 =150mn

Medium income Medium income

High income 10% Low income 50% High income 5% Low income 70%
40% 25%

# units/ month # units/ month # units/ month # units/ month # units/ month # units/ month
600 300 150 500 250 100

91
GUESSTIMATE 2: Daily passengers in Calcutta airport
Notes and assumptions Approach
• The daily # of passengers depends
on the # of flights handled which in
turn depends on the # of runways # of passengers in Calcutta airport
• The total operational hours of each
runway has been considered to be # of flights landing or taking off
20 hours ( an alternate approach can # of flights landing or taking off
be considering peak hours for the
runway)
• Split of domestic vs international Domestic flights (70%) International flights (30%)
Depends on the # of runways = 2
flights is 70/30

Total operational hours of Average capacity Average capacity

runways = 20 hours =180 = 400

Time between two consecutive Occupancy = 60- Occupancy =

flights = 6 min (10 flights per 80% 60%-80%
hour)
Total domestic passengers per day = 400*70%*180*70% = ~35,300
Total International passengers per day= 400*30%*400*70%= 33,600
Hence total flights handled in a day= 2*20*10 =
Hence total daily passengers = 69,000
400 flights

92
GUESSTIMATE 3: Estimate the electrical car market size in India/ any city
Notes and assumptions Approach
• The calculations have been
performed for a specific example of Electric vehicle market size
Kolkata, the same approach can be
extrapolated to other Tier 1 cities
• Rural areas, tier2 and tier3 cities can
be neglected stating a 80/20 rule,
Urban areas Rural areas
that majority of the electric vehicle
penetration would be in Tier 1 cities

Tier 1 cities Tier 2 cities Tier 3 cities

Kolkata (1.5
crore population)

Can afford cars Cannot afford

(40%) cars(60%)

Average Total number of cars in Kolkata = (1,50,00,000/4)*0.4 =15,00,000

household size Assuming a market penetration of 1% = 15,000 electric vehicles
=4
93
GUESSTIMATE 4: Total revenue of a fast food chain/restaurant

Notes and assumptions:

• The total revenue of a fast food chain is through two sources dine-in and takeaway
• MECE to calculate the # of items sold through drive-in can be handled through a comprehensive mathematical formula

Approach

Total revenue # of items sold in Dine-in

# of
Capacity Average # of people # of items
operational x (# of seats) x occupancy x per seat x per person
hours
Average price # of items sold
x
# of operational hours = 12 hours
Capacity (# of seats) = 50
Average occupancy= 70%
# of items per person = 2
Dine-in # of people per seat/ hour =2
[The average time every person eats at a fast food restaurant =30 min,
therefore 2 (60min/30min) people occupying a seat per hour]

=12*50*0.70*2*2
=1680 items
Takeaway

94
GUESSTIMATE 5: Foreign Nationals in Commonwealth Games

During the Commonwealth Games in 2006, how many foreign nationals players in the squad, 2 support staff and 1 coach. For the team sports, we can
entered India? approximate 10 players + 3 more in the squad, 5 support staff + 2 coaches.
Do you want me to calculate the total foreign nationals coming during that Apart from this, we can assume 3 administrative officials from each country to
period or those coming exclusively due to the games? manage the contingent and act as liaisons. This would give us 20*(3+2+1) +
Exclusively due to the games. 10*(13+7) or 320 per contingent. 15 contingents would mean 4800 individuals.
I would like to split the total number into two broad segments: Spectators and Does this seem decent enough?
Non-Spectators. Non Spectators can be divided into the organising officials for It is fine. How would you estimate the spectators coming in to watch the
the overall games, Neutral Staff and country-wise contingents. Does that games?
seem like a good way to go about it? Since it would be difficult to measure on a per game basis due to repetition
Yes, you can proceed. and absence, I would like to consider the opening ceremony and work forwards
Okay. Starting with the organising officials, I would assume five major from there. I will first assume that a majority of the foreign nationals who
functions like sports, liaisons, events etc. and consider roughly 5 officials per come to India, would plan to attend either the opening or closing ceremonies
function in addition to 5 more at the top making it roughly 30 members. or both. Let’s say 75% of all foreign nationals attend the opening ceremony. In
There are approximately 20 individual sports and 10 team sports in the a stadium with a capacity of 100,000; We can assume one stand to be filled
games. In the initial phases, we can assume each individual sport will have 4 with foreigners. This is about 1/10th of the stadium capacity or about 10,000
games running simultaneously and each game requiring a panel of 3 judges individuals. Going forward, it gives us a total of 13000 foreign nationals as
and 2 referees, which makes it 400 neutral staff. For the team sports, we can spectators.
assume 2 games per sport, 3 referees and 3 judges, giving us 120 neutral staff. That is good. Can you give me your total estimate?
In total, we can expect about 500 neutral staff. Sure. Organising Officials ~30, Contingents ~ 4800, Spectators ~ 13000 for a
That’s good. How would you estimate the number of people in the total of ~18000 foreign nationals who come to India for CWG.
contingents? The guesstimate is done. Thanks!
I will assume roughly 15 countries participating in the games. First, Thank you!
I will count the players. For each individual sport, I will assume there are 3

95
CASE FRAMEWORK
Percentage Attending
Opening

Spectators Capacity of Stadium

Fraction Occupied by
Total Foreign Nationals Max. Simultaneous Games/Sports
Foreign Nationals
Team Sports Judges/Game
Organizers
Referees/Game
Neutral Staff
Max. Simultaneous Games/Sports

Individual Sports Judges/Game

Non-Spectators
Referees/Game
Contingent
Managers Players + Subs

Team Sports Support Staff

Contingents
Coaches

Support Staff
Individual Sports
Coaches
96
APPENDICES

97
APPENDIX A
GUESSTIMATE STATISTICS
Following are some important statistics to keep in mind for solving guesstimates for market sizing and otherwise.
Population Distribution in India (in Millions) Population and Area of Major Cities

Total Population 1300 Income (in Millions) %Total Cities Population (in Mn) Area (in sq. kms)
Below poverty line 260 20% Mumbai 13 600
Gender (in Millions) %Total Low income 520 40%
Males 684 53% New Delhi 11 1500
Middle income 390 30%
Females 616 47% High income 130 10% Kolkata 5 200
Sex Ratio (M/F) 1.11 Chennai 4 400
Area wise Distribution of India (in '000 sq. kms)
Bangalore 5 750
Geography (in Millions) %Total Total Area 3300 Hyderabad 4 600
Urban 390 30%
Rural 910 70% Terrain (in '000 sq. kms) %Total
Land 2310 70% Tiers Population (in Mn) %Urban
Age Groups (in Millions) %Total Water 330 10% Tier 1 (Top 10) 60 15%
0-14 390 30% Forrests 660 20% Tier 2 (Next 50) 60 15%
15-24 260 20% Tier 3 (Next 100) 45 12%
Population Distribution by Religion
25-34 195 15%
35-44 195 15% Religion (in Millions) %Total
45-54 130 10% Hindu 1040 80%
55-64 130 10% Muslim 195 15%
65+ 65 5% Christian 26 2%
Note: 50% of the population is under 25, Sikh 19.5 1.5%
65% under 35 Others/Unspecified 19.5 1.5%
98
APPENDIX B
GLOSSARY
Following are definitions to some key terms often used during case analysis

Term Definition
Situation in which an individual’s demand for insurance is aligned to their risk of loss (i.e. people with the highest expected
Adverse Selection
value will buy insurance) and the insurer cannot account for this correlation in the price
Arbitrage The purchase of securities on one market for immediate resale on another market in order to profit from a price discrepancy

Break-Even Total amount of revenue needed to offset the sum of a firm's costs. Implies that the firm's profit will be $0
Compound Annual Growth Rate:
CAGR
[(Ending Value/Beginning Value)^(1/n)]-1, n=no. of years
Capacity The maximum level of output of goods and/or services that a given system can potentially produce over a set period of time
When a firm is able to deliver benefits equal to competitors but at a lower cost OR able to deliver greater benefits than
Competitive Advantage
competitors
Economic gain achieved when consumers purchase a product for a price less than their willingness to pay
Consumer Surplus
Consumer Surplus = Willingness to Pay - Price
Contribution Margin C=P-V, where P is unit price, and V is variable cost per unit

Core Competencies The activities that a firm does well to create competitive advantage

99
APPENDIX B

Term Definition

Customer Segmentation Subdivision of a market into discrete groups that share similar characteristics
Also known as cost of capital. There is an opportunity cost associated with every investment, with the cost being the expected
Discount Rate
return on an alternate investment
Economies of Scale The average cost per unit for a business entity is reduced by increasing the scale of production

Economies of Scope The average cost for a business entity is reduced by producing two or more products
If E>1, decrease price to increase revenue
Elasticity
If E<1, decreased price leads to lower revenue
Entering New Market Three main methods: start from scratch, form joint venture, acquire an existing player

Fixed Costs Costs that do not change with an increase or decrease in the amount of goods or services produced

Gross Margin A Company’s total sales minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage

Horizontal Integration The acquisition of additional business activities at the same level of the value chain

International Expansion Main mechanisms: exporting, licensing, franchising, joint venture, foreign direct investment (acquisition or startup)

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APPENDIX B

Term Definition
A ratio showing how many times a company's inventory is sold and replaced over a period. Should be compared to industry
Inventory Turnover
averages: low turnover implies poor sales or excess inventory; high ratio implies either strong sales or ineffective buying
At some point in the production process, the addition of one more unit of output, while holding everything else constant, will
Law of Diminishing Returns
eventually lead to a decrease in per unit returns
Visually shows how new skills or knowledge can be quickly acquired initially, but subsequent learning becomes much slower. A
Learning Curve
steeper curve indicates faster, easier learning and a flatter curve indicates slower, more difficult learning
Marginal Cost Cost of one more unit of output

Market Share The percentage of market size controlled by an individual firm

Total size of a population (usually measured in number of people or actual dollar value) that would purchase a company's goods
Market Size
or services. Market size is always relevant and is a question that should be asked
Entity is the only supplier of a particular good.
• Lack of competition ➝ produce less and charge more
Monopoly
• Barriers may include government regulation, networks, patents, scale, etc.
• Revenue is the midpoint of the demand curve
Net Present Value The difference between present value cash inflows and present value cash outflows

Payback Period The length of time required to recover the cost of an investment

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APPENDIX B

Term Definition
Firms take price ➝ MR = P
Perfect Competition Maximum profit = MR = MC
P<AVC ➝ shut down
Situation in which identical goods are sold at different prices from the same provider.
• 1st degree ➝ Different price for different willingness to pay
Price Discrimination
• 2nd degree ➝ Different price for different quantities
• 3rd degree ➝ Different price for different segments (attributes)
Product Lifecycle Four main stages: market introduction, growth, maturity, decline
Total number of product lines that a company offers to its customers.
Product Mix
Often an important area to explore in profitability cases to identify loss-making products
Promotion Coupons, discounts, trials, etc. designed to increase sales of a product or service

Risk Averse Individuals who prefer certainty over the uncertain for the same expected value (EV)

Risk Neutral Individuals who are indifferent on risk taking if the EV is the same

Risk Seeking Individuals who prefer risk even if the EV for a certain event and the risk is the same

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APPENDIX B

Term Definition

Sales per Square Foot The average revenue a business creates for every square foot of sales space. Used in the retail industry as a measure of efficiency
Same Store Sales A statistic used in retail industry to determine what portion of new sales has come from sales growth and what portion from the
(SSS) opening of new stores
Strengths, Weaknesses, Opportunities and Threats. Very basic framework, probably not a good idea to put down as your case
SWOT Analysis
framework, but good to have as a mental checklist
The idea that the value and performance of two companies combined will be greater than the sum of the separate individual
Synergies
parts. Used mostly in M&A
Value Chain Another concept from Michael Porter. His Value chain: Inbound Logistics, Operations, Outbound logistics, Marketing and Sales

Variable Costs Costs that vary depending on a company's production volume; they rise as production increases and fall as production decreases

Vertical Integration Degree to which a firm owns its backward suppliers or forward buyers

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EDITORIAL TEAM

Abhilash Gollapalle Abhishek Jain Harshank Agarwal

Accenture Strategy Kearney Boston Consulting Group

Joy Bhattacharya Mitali Seth

Bain & Co. Boston Consulting Group

Pratik Gandhi Rishab Mahnot Ruchira Arora

Credit Suisse McKinsey & Co. Bain & Co.

Shikhar Singhi Shourya Umang

NIIF Deutsche Bank

Sona Agarwal Sridhar Sirigudi Vaishnavi Ravi

Boston Consulting Group Kearney Kearney

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 HAPPY LEARNING!

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