Ross Casebook 2022

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Content
I. Welcome
• Case Writers 2022

II. How to Use the Ross 2022 Casebook

• Case Interview Structure
• Administering Cases

III. Review Materials

• Key Formulas
• Industry Overview

IV. 2022 Casebook Index

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Welcome to the Ross 2022 Casebook!
Dear CC@R Member,

Welcome to the Ross 2022 Casebook. This book focuses on the case-interview portion of the consulting interview and is to be
used in conjunction with other case-oriented club training materials.

The elements tested in a case interview are core to firms’ hiring decisions. These cases, or mini-business problems, are a glimpse
into a consultant’s life as they are frequently taken from real client experiences. Given practice and experience, cases become a
natural way of thinking about how you would structure approaches and solutions to nearly any type of problem. Along the way, we
hope you will find you enjoy solving problems in this manner and would enjoy performing this type of work for a living.

In order to facilitate your preparation, your fellow club members have created the following cases with customized frameworks and
solution elements. These cases act as a strong reference point for what to expect during a consulting interview but are in no way
all encompassing. Since each case comes down to a conversation between the interviewer and the candidate, it is very plausible
that one candidate could receive the same case from two different interviewers and have two very different conversations about
the business problem. In fact, we encourage this.

Finally, you may have noticed that you are reading this compilation in landscape format. This is intentional. Consultants think in
terms of PowerPoint slides much more often than essay-style documents. They also constantly work to devise the most succinct
way to illustrate and frame-out a problem, necessary action steps, and a solution.

Good luck, and remember your fellow club members are here to help!

2022-2023 Board
Consulting Club at Ross (CC@R)

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Case Writers 2022-2023
This casebook would not be possible without the following
members from the Ross Class of 2022 and 2023.
Thank you and Go Blue!

Danielle Eisenberg
Hardik Rathod
Nilayan Das Gupta
Aanchal Gupta
Shriya Suriyanarayanan
Amanda Bourlier
Kartik Verma

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 How to Use the
Ross 2022 Casebook

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Case Structure
How to Case

Exhibits, Analysis,
Understand the Question Develop Framework Form Recommendation
Brainstorming
(~1-2 minutes) (~1-2 minutes) (~1-2 minutes)
(~25 minutes)

• LISTEN • Ask for a moment to plan your • Refer back to the framework • State your recommendation
• Summarize the problem structure as you move through each of as a direct response to the
statement to make sure you • Develop 3-4 areas to analyze the main areas problem/objective – it should
understand the situation and along with a few tailored sub- • Use one sheet of paper per not come as a surprise to the
objectives topics topic – think of the case as a interviewer

• Ask 3-4 clarifying questions • Structure the framework in PowerPoint deck • Incorporate key metrics/
around the topic and/or a logical fashion – it should • Tie back each piece findings as a part of your
metrics to be used for the open with the most important of analysis to the main recommendation
analysis topic and provide the objective/problem statement • Include risks and next steps
• The questions posed should interviewer with a roadmap • Walk through the calculations
necessitate a short response of where you plan to take the /analysis, driving insights
case
• Answer brainstorming
• Engage the interviewer questions using structure
by turning the framework
towards them

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Administering Cases
Great case experiences are not solely determined by strong candidates formulating frameworks and solving
math. The interviewer’s interaction with the candidate and ability to convey information will very easily change
the style of a case. Given the interviewer’s position of power in the discussion, there are several things to keep
in mind prior to, during, and after a case interview.

Preparing for Interview During Interview After Interview

• Read the case over 2-3 times • Track time (about 25 minutes is average) • Provide feedback
• Familiarize yourself with the relevant - balance finishing case and letting • This is possibly the most critical step
numbers and details candidate struggle of the case interview process
• Determine your ‘character’ • Candidates can often think of very • Honestly let the candidate know
different approaches to cases. Before strengths, but more importantly areas
• Rushed partner or disinterested client discounting questions as wrong, ask the
representative? for improvement
candidate for their thinking... if it makes
• Prepare for how you will address sense, go with it • Without honest feedback and
irrelevant questions or requests for data constructive criticism, it is very difficult
• Consider what a consultant would be to improve
you do not have looking for in the candidate
• Make up fake data and let candidate go • Presentation: can I put this person in front
fishing, or let them know it is irrelevant? of a client?
• Aptitude: can this person do the work?
• Interest: does this person like what they
are doing?

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Key Formulas

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 Topic Formula
n

NPV or Valuing Money Over Time Value to Perpetuity =

Value of Asset
Discount Rate
NPV = ∑
t=0
Annual Cash Flow
(1 + r) t

Time for Invested Principle = 72

Rule of 72 r
r = Rate of Return (%)

Little’s Law Inventory = Throughput x Flow Time

COGS
Inventory Turns =
Inventory Average Inventory
Days of Inventory = Inventory Turns * 365

Profitability π = Q (P-VC) - FC

Breakeven Breakeven = Investment Price - Cost

Revenue - Cost Net Income

Margin Gross Margin = Net Margin =
Revenue Sales Revenue

Price - Cost
Markup Markup =
Cost

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 Topic Formula
Net Income
Return on Assets (ROA) ROA =
Total Assets

Return on Equity (ROE) Net Income Net Profit Sales Assets

ROE = ROE = x x
Total Shareholders’ Equity Sales Assets Equity
DuPont Analysis
ROE = Operating Efficiency * Asset Utilization * Leverage

π
ROI =
K
Working Capital
K = Capital Invested (Assets, Working Capital, etc.)
Working Capital = Assets - Liability

Sales – COGS
= Gross Profit
- SG&A
= EBITDA
Income Statement
- Depreciation/Amortization
= Operating Profit
- Interest Expense
= EBIT
- Tax Expense
= Net Income

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Industry Overview
*Note: Please know that this industry reviews do not consider any impacts
of COVID-19. Since case interviews are supposed to resemble real world
conversations, we would recommend taking the pandemic into account
and acknowledging how it may impact these industries.

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Airlines
Key Ideas Revenue Streams Cost Drivers

• Consolidation in industry • Ticket sales to economy and business • Fuel

• Low cost carriers and fare competition on passengers • Labor
competitive routes • Charges for baggage and on-board services (up- • Marketing
• Online booking and check-in selling) • Terminal fees
• Expansion of domestic and international routes • Cargo transportation • Insurance/legal fees
• Capacity optimization (Load Factor) • Credit cards

• Leisure travelers – (generally price sensitive)

Customer Key Companies
• Business travelers – (very important to airlines due to margins and services purchased)
Segments
• Freight/Cargo transportation
• Delta
• Internet - online travel sites, airline websites • American Airlines
Channels • Airline sales team: call centers, online, or kiosk • United
• Travel management companies (TMCs) serving corporate clients, travel agents • Emirates
• Air France
• Changes in fuel prices have a major impact on profitability • KLM
Risk • Macro-economic conditions greatly impact amount of leisure travelers • British Airways
• An intensely competitive market with many foreign airlines partly government subsidized • RyanAir
• AeroMexico
• Singapore Airlines
• World price of crude oil • Optimization of capacity
Key Economic
• Trips by US residents • Per capita disposable income
Drivers

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Automotive/Manufacturing
Key Ideas Revenue Streams Cost Drivers

• Automakers, Original Equipment Manufacturers • New car sales • Labor

(OEMs), replacement parts production, rubber • Auto part sales • Materials
fabrication • Services offered with vehicle purchase • Advertising
• Highly capital and labor intensive • Financing • Financing costs
• Extensive competition due to foreign automakers • Extended warranties • Recall costs
• Unions • Leasing

• Cars, vans, pickup trucks and SUVs • Commercial purchasers

Customer Key Companies
• Personal car buyers • Government purchasers
Segments
• Rental car companies
• Ford
• Automobile dealers • General Motors
Channels • Secondary automobile market • Toyota
• Automotive parts/services outlets • Honda
• Fiat Chrysler
• Globalization of the industry enables more ease of foreign competition • Tesla
Risk • Extensive competition impact on already low margins • General Electric
• Changes in consumer trends and tastes • Boeing
• Airlines
• Embraer
• GPD growth • Steel prices
Key Economic • Lockheed Martin
• Income growth/disposable income • Consumer confidence index
Drivers
• Price of crude • Yield on Treasury note

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Commercial Banking
Key Ideas Revenue Streams Cost Drivers

• Consolidation/acquisitions • Loan interest • Wages

• Increased mobile banking • Loan types • Bad debt expense
• Channel innovation in digital & physical channels - Real estate - Education • Interest rates on deposits
• Customer attrition rate - Auto - Personal • Branch and compliance costs
• Offshoring of call centers, back office functions • Service fees • Overhead costs - paper fee; error rate costs
• Digitization of processes • Spread between interest rate charged & Fed rates for manual processing
• Cross-selling • Credit cards

• Wealth: deposit balances, income • Size: small businesses and consumers

Customer Key Companies
• By lifestyle: buying behavior • Age: under 35 adapt to technology better
Segments
• Wells Fargo
• Savings and loan • Online banking • Citicorp
Channels • Credit union • Microfinance • US Bank
• Traditional checking • HSBC
• Bank of America
• Change in savings behavior • JP Morgan Chase
Risk • Loan default, interest rates and federal funds rates • Barclays
• Deutsche Bank
• Credit Suisse
• Morgan Stanley
• Consumer confidence • Urbanization • Interest rate
Key Economic
• Household debt • Home and car buys • Government regulation
Drivers
• Employment statistics • Disposable income

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Health Care
Key Ideas Revenue Streams Cost Drivers

• Affordable Care Act • Hospital care • Dependent on segment

• Highly fragmented: top 50 organizations account • Physician and clinical services • Significant costs related to new technology
for 15% revenues • Prescription drugs implementation
• Employers pushing health care costs onto • Nursing • Often inefficient organizational structures
employees • Dental services
• Aging Baby Boomer population driving increased • Research, equipment, investment
revenues

• Patients/consumers
Customer Key Companies
• All generations and segments of the population require different products/services
Segments
• HCA Healthcare
• Hospitals • Outpatient surgery centers • Ascension Health
Channels • Doctors offices • Pharmacies • Trinity Health
• Nursing homes • Medical equipment • CommonSpirit Health
• Advent Health
• New legislation (impact of Affordable Care Act still uncertain) • Dignity Health
Risk • Funding availability

• Regulation for health & medical insurance • Aging population

Key Economic
• Federal funding for Medicare and Medicaid • Advances in medical care and technology
Drivers

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IT/Infrastructure
Key Ideas Revenue Streams Cost Drivers

• Cloud based platforms vs on-premise • Hardware sales • Labor

infrastructure • Maintenance contracts - R&D/Engineering of products
• User centric IT solutions – IT depts want to • Implementation consulting services - Sales/Marketing teams - huge front-
enhance usage and productivity • SaaS end expense
• Open platforms / integrating and partnering with • Hardware manufacturing
other providers

• Enterprise (SME / Large)

Customer Key Companies
• Consumer
Segments
• Third party resellers (SHI, CDW)
• Microsoft
• Direct • HP
Channels • Partnership • IBM
• Reseller • Dell-EMC
• SAP
• Startups and new entrants • Oracle
Risk • Bring your own device initiatives
• Tariffs

• Cyber security • Mobility

Key Economic
• Demand for enterprises to go digital • Data & Analytics
Drivers

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Non-profits
Key Ideas

Intended Impact Theory of Change Implementation Feasibility Performance Measures

& Reporting Impact
• Define success criteria • Define specific actions steps to • Revenue impact (self sustaining
• Think big picture (e.g., society, achieve the intended impact model, grants) • Measure performance vs. peers
people you are working for/with • Define timelines, initiative • HR costs: creating new roles, • Set milestones for financial and
• Consider trade-offs priorities and ownership hiring new staff, train existing operational goals
• Depth vs. breadth of reach responsibilities and new staff, modify existing • Monitor and modify plan
- Quality vs. quantity of organization structure accordingly
program initiative • New infrastructure cost – IT • Consider performance during and
- Intended impact should systems, office space after implementation of initiatives
align with strategic goals • Indirect costs
- Impact on culture of
organization
- Impact on scale on quality
of outcomes

Case • Growth through existing platforms • Thought sharing to strengthen the industry
Topics • Growth through new partnerships • Growth using technology
• Growth driven by policy changes

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Oil & Gas
Key Ideas Revenue Streams Cost Drivers

• Upstream, midstream, downstream • Crude oil • Exploration: seismic studies, drilling rigs and labor
• PV-10 • Gasoline • Production: refining
• Cost per gallon • Natural gas • Pipelines
• OPEC • Refining products such as lubricants • Gas station: oil, labor, insurance, licenses
• GDP growth • Gas stations: gasoline, food market, car wash
• Renewable energy
• Fracking

• Petroleum refiners • Domestic and commercial users

Customer Key Companies
• Electricity generators • Other industries
Segments
• Exxon Mobil
• Retail • Baker Hughes
Channels • Wholesale • Saudi Aramco
• Commercial • Gazprom
• Pemex
• Access to reserves • Political pressures • Philips 66
Risk • Energy policies • Substitutes/renewable energy
• OPEC decisions

• Government regulation
Key Economic
• International oil production and demand
Drivers

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Pharmaceutical
Key Ideas Revenue Streams Cost Drivers

• Affordable Care Act • Insurance payments • Research & Development

• Aging population • The federal government provides certain grants to • Manufacturing cost (the largest share of the
• Patents and generics subsidize R&D industry’s costs)
• Research & Development • Due to significant R&D lead times revenue is highly • Marketing costs
• Insurance volatile • Wages
• FDA • Seasonality is high on certain products (vaccines • Liability insurance and legal fees
• Market penetration and cold medicine) and low on other products (pain
• Contract vs. in-house salesforce medicines)

• Medical patients • Government insurance programs

Customer Key Companies
• Prescribing doctors • Health insurance companies
Segments
• Roche
• Over-the-counter • Pfizer
Channels • Prescription drugs: hospitals, pharmacies • Johnson & Johnson
• Mail order pharmacy: Express Scripts, Walgreens • Merck
• Novartis
• Generic manufacturers pose a major competitive threat following patent expiration • Abbvie
Risk • Tariff barriers are no longer a relevant form of protection
• Unfavorable government healthcare regulations and CMS rates

• Median age of population • Insurance and regulatory landscape

Key Economic
• Research and development expenditure • Patent protection
Drivers

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Private Equity & Hedge Funds
Key Ideas Revenue Streams Cost Drivers

• Components of the revenue charge • Wages and profit-sharing • Value creation: sell under-performing assets,
- Invested capital • Administrative costs (regulatory filings, record optimize price, diversify customer base, operations
- Transaction and advisory fees keeping, accounting and travel) efficiency
- Carried interest • Outsourcing of capital intensive IT functions for • Exit: strategic or IPO
• Divestures algorithmic trading • Synergies
• Stability of cash flows (IRR, NPV)
• Targeted returns ~ 40%+
• Un-invested capital vs. invested

• Pension funds (largest share)

Customer Key Companies
• Private investors (e.g. high net-worth individuals)
Segments
• Banks, sovereign funds and life insurance companies
• Blackstone
• Large firms focus on deals ~ $1.0B; middle market firms cover deals between $15.0M- $1.0B • KKR
Channels • Average holding period before sale has increased from 3 years to 6 years in the past 15 years • CVC Capital Partners
• Borrowing can typically range from 65.0% to 85.0% of the purchase price of the firm • The Carlyle Group
• EQT
• New regulation -> compliance costs, Rising competition -> decreasing industry fees • TPG Capital
Risk • Competition also exists with sovereign wealth funds and corporate buyers
• Changes in tax structure

• Investor uncertainty/pension demand • Exit opportunities

Key Economic
• Access to credit/interest rates • GDP/investment returns
Drivers
• Regulations

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Retail
Key Ideas Revenue Streams Cost Drivers

• Same store sales • Women’s apparel sale • Cost of Goods Sold (74% of costs)
• Sales per square foot • Drugs & cosmetics • Transportation
• Inventory turn-over • Furniture & household appliances • Wages
• Seasonality/recessions • Children’s apparel • Rent and utilities
• Trends • Men’s apparel • Marketing
• Toys
• Footwear
• Misc. items

• The industry is consumer-oriented and, due to the spectrum of products, its markets are
Customer Key Companies
generally segmented into different incomes, demographics and age groups
Segments
• Walmart
• Department stores/big box retailers • Demographic retailers • Target
Channels • Discount retailers • Shopping malls • Costco
• CVS
• Walgreens
• Changes in disposable income • Overstock • Kroger
Risk • Demand and supply issues • Easy entry invites competition

• Consumer sonfidence index • Gross domestic product/inflation

Key Economic
• Per capita disposable income • Households > $100,000 income (luxury goods)
Drivers
• International export/import • Commodity prices (eg. gold price for jewelry)

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Telecommunications
Key Ideas Revenue Streams Cost Drivers

• Deregulation led to spur of new companies • Voice calls • Infrastructure

• Bottlenecks: high capital, scarce operating skills • Additional lines/family plans • Wages
and management experience • Text and image communication • Marketing and advertising
• Shift from telephones to internet based services • Data subscriptions
for mobile • Accessories
• Bundling of services

• Residential and small business (price sensitive)

Customer Key Companies
• Large multinationals (price insensitive)
Segments
• Verizon
• Retail stores - carriers and mass retailers • AT&T
Channels • Online • T-Mobile
• Vodafone
• NTT Corp
• Rapid development of technology • Telefonica SA
Risk • High exit barriers
• Systems not reusable across industries

• Investment in rising technology services

Key Economic
• Number of subscriptions to additional services
Drivers
• Number of broadband and mobile internet connections

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Utilities
Key Ideas Revenue Streams Cost Drivers

• Increase in energy consumption • Transmitted electricity: base load and • Purchased power accounts (nearly half of
• High investment costs and regulations intermittent electricity total costs)
• Industry structure disintegrating into smaller • Base load (95% of industry) • Infrastructure
supplier segments • Coal, natural gas, nuclear, other • Wages
• Seasonality • Intermittent: renewable energy • Marketing
• Gov. incentives for sustainable initiatives • Maintenance contracts
• Bundling services w/renewable

• Commercial and industrial

Customer Key Companies
• Residential
Segments
• PG&E
• Transmission lines/pipelines • AES
Channels • Upstream electricity generators • Duke Energy
• Exelon
• National Grid
• Clean energy threatens the future of traditional power generation methods • Nextera Energy
Risk • Seasonal demand leads to uncertain estimates
• Energy efficient appliances decrease consumption

• Economies of scale
Key Economic
• Industrial production index
Drivers
• Climate/seasonality

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Cases

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Table of Contents
Case Title Industry – Case Type Overall Quant Qual Page

Gaming Challenges Media & Entertainment | Go-to-Market Strategy 26

Household Cleaners Growth CPG | Growth Strategy 37
Little Bud Co. CPG | Growth Strategy 44
GasCo Goes the Distance Oil & Gas | Market Entry/Profitability 50
Rubicon Co. Airlines | Post-Acquisition Profitability 59
Spice Up Your Life PE & Food/Retail | M&A, Valuation 72
Apogee Bank Financial Services | Growth Strategy 83
Attack Helicopter Defense | Market Entry 95
FLC Sports League Sports | Profitability & Market 102
Marie’s Café Food | Profitability 111
Midwest Hospital Healthcare | Profitability 121
EuroRail Hospitality | Growth 132
DoWork Technology & Real Estate | Growth 140
Banana Heaven Public Sector | Profitability 152
One Tree Hill Non Profits | Micro-Economics, Financing 159
Alternative Milk Consumer Packaged Goods | M&A 169
Jab We Profit Telecom | New Product 177
New England Trucks Power & Utilities | Operations 187
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 Case 1

Gaming Challenges
Media & Entertainment | Go-to-Market Strategy
Interviewee Led
Ratings:
Quant - 2
Qual - 1
Overall - 1

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Prompt
Case 1 – Gaming Challenges

• Storm Games is a video game developer focused on computer games

• Their main title, King of the Forest, is an online RPG that has been extremely successful
• While the game still provides a steady cash flow to Storm Games, growth has stagnated in the recent years as
the numbers of new players has decreased significantly, and average revenue per user has reached a plateau
• Storm Games plans on going public in the near future and in order to show strong results before the IPO, the
company has hired you to develop a strategy to show investors that it can continue to grow

Clarifying Information
• RPG stands for “Role Playing Game”
• At this time, the company is exploring a number of alternatives and has yet to determine the target result
• Storm Games has only developed RPGs for computers

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Interviewer Information
Case 1 – Gaming Challenges

Clarifying Information:
• The case starts with an open-ended brainstorming question, and becomes more straight-forward after the
framework stage
• The two exhibits are fairly simple to read and understand. The numbers on Exhibit 1 may seem slightly intimidating
at first, but once adjusted according to the calculation method, they round up pretty easily
• The footnote on Exhibit 1 will be relevant to solving the case. Candidates may need help identifying that information

Exhibit Summary
• Exhibit 1: Revenues Mobile Game Industry per Segment
• Exhibit 2: Storm Games Estimated Game Development Costs per Segment

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Brainstorming Question
Case 1 – Gaming Challenges

At a high level, what are the main avenues where the company can potentially increase revenues?

Question Guidance:
The interviewee should recognize that there are basically two alternatives for Storm Games revenues to
continue growing.

1. Increase revenues originating from current games. A few possibilities include:

• Increase prices (basic)
• Displayed ads periodically, much like a commercial break on TV (basic)
• Increase the portfolio of additional in-game features as well as merchandise for purchase (basic)
• Product placement where other companies pay for in-game advertising. For example, Coke could
pay Storm Games to create a character that drinks the beverage from time to time (advanced)

2. Launch new games:

• Potentially branch out to new platforms and genres

Ultimately, we will proceed with the second alternative. If the interviewee does not identify it on their own, suggest it
so they can move to the framework.

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Potential Framework
Case 1 – Gaming Challenges

Storm Games decided to develop a new game for mobile platforms. They now must decide which segment
of the gaming market they will invest in. They can develop another RPG game for mobile devices, or they can
branch out into other genres. Regardless, their goal to payback the investment within one year.

Gaming Industry/Market Storm Games Capabilities Profit

• Size of each segment of • Expertise to develop

the market games in other segments Revenue Cost

• Industry trends • Synergies • Average revenue per user • Investment Costs

• Reputational risks • Number of users • Fixed Costs

• Variable costs

Notes / Advice to Interview / How to Move Forward:

• This case requires a hybrid approach, combining the traditional profitability framework with additional buckets to account for
the qualitative aspects of the problem

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Exhibit 1
Case 1 – Gaming Challenges

Revenues Mobile Game Industry per Segment ($Billions)

$50
Average Gross
45 Other Genres Revenue per Active
Player Account/ Year*
6 39
$40 Adventure
35
31 5
5 $5.86
15 Sports
5
$30
23 13
RPG
11 12 $9.38
17 5
$20
12 4 18
11 9 13 15
4 11 $9.69
3 7
$10
6 6 7
5 10 12 11
3 3 9
7 $7.50
3 3 5
$0
2014 2015 2016 2017 2018 2019 2020 2021 (F)

• Note: Distribution platforms (i.e. Google Play and App Store) retain a 30% commission over gross revenue
• RPG = Role Playing Game
• *Players may play multiple games per year across different segments
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Exhibit 1 Guidance
Case 1 – Gaming Challenges

Revenues Mobile Game Industry per Segment

Candidates should recognize:

• Despite drop in 2021, the industry demonstrates a strong growth trend
• Adventure and Sports are the segments that are driving industry growth; RPG has remained stable

Best candidates will recognize:

• The most plausible explanation for the 2020 numbers is the impact caused by Covid-19. As people were isolated,
there was an increase in the pursuit for virtual entertainment options, thus boosting revenues from the gaming
industry. As the pandemic is expected to subside in 2021, revenues are expected to return to the previous trend

Additional guidance:
• Footnote about commissions will be important later in the case
• Player Accounts: An individual user may play multiple games, across different segments. For each game the user
must create a unique player account. Therefore dividing a segment’s Total Revenue by the average User Account
revenue will NOT yield the total number of users. Furthermore, the total number of users has no bearing in the
resolution of the case

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Exhibit 2
Case 1 – Gaming Challenges

Storm Games Estimated Game Development Costs per Segment ($M)

$20.15
20 $18
Legal/Licensing
$1.25 $6.15

$15 Marketing
$3.25
15
$1.50
$2.00 Coding

$4.00
$6.00
10 Design

$8.00

5 $6.00
$7.50

$3.50 $4.00
0
RPG Adventure Sports

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Exhibit 2 Guidance
Case 1 – Gaming Challenges

Estimated Game Development Costs per Segment

Questions for Candidates about Exhibit that the Interviewer should ask:
• How many player accounts does Storm Games need to gain in order to payback the investment within one year
(in each segment)?
• Based on that result, in which segment should Storm Games invest?

Question/Exhibit Guidance:
Candidates should recognize:
• To perform the calculation, the candidate will need the Average Player Account Revenues from Exhibit 1
• The values must be discounted of the commission charged by the distribution platforms. This information is in the
footnote of Exhibit 1

Additional Guidance:
• Legal/Licensing costs are significantly higher in Sports Games as athletes and teams are paid for the use of their
names and images
• Costs for RPG games are significantly lower because the company already has the expertise and resources
required to develop the games from this segment

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Exhibit 2 Guidance
Case 1 – Gaming Challenges

Estimated Game Development Costs per Segment

Design Coding Marketing Legal/Licensing Total Cost

RPG 3.50 6.00 4.00 1.50 15.00

Adventure 7.50 6.00 3.25 1.25 18.00

Sports 4.00 8.00 2.00 6.15 20.15

Gross Revenue * (1-Commission) = Net Revenue Note:

RPG $7.50 * (1 - 20%) = $6.00 Avg. Gross Rev per Active Player Account (Ex. 1)
Adventure $9.38 * (1 - 20%) = $7.50 Platform Commission Fees (Footnote Ex.1)
Sports $9.69 * (1 - 20%) = $7.75

Total Cost/Net Revenue = Player Accounts Note:

RPG 15.00/5.8 = 2.59 Millions of Player Accounts
Adventure 18.00/7.50 = 2.40
Sports 20.15/7.75 = 2.60

35
Conclusion
Case 1 – Gaming Challenges

Recommendation Risks Next Steps

• Storm Games should develop an • Given that up until now Storm • Assess internal capabilities and
Adventure game. Games has only developed determine if external talent is
• Despite of the lower production games within the RPG genre, the needed to develop an adventure
costs for RPG games, the higher company may lack the expertise game
average revenue obtained in the to effectively branch out and
Adventure segment makes it a more penetrate other segments of the
attractive genre, as the company market
would need gain less users in order • Average revenues may be
to payback its investment. misleading. It would be helpful to
also understand the variance and
the range of the values comprising
the average
• If the new game is not successful,
this could damage Storm Games’
reputation, consequently affecting
the company’s plans for the IPO

36
 Case 2

Household
Cleaners Growth
CPG | Growth Strategy
Interviewee Led
Ratings:
Quant - 2
Qual - 2
Overall - 2

37
Prompt
Case 2 – Household Cleaners Growth

Your client is a global consumer packaged goods company —Grime Co.

Grime Co. makes paper products (like paper towels), home cleaning products, and laundry care products. The
company’s Board of Directors has set an aggressive revenue target of $2 billion four years from now. Currently,
revenues are $1 billion. The CEO has come to you to ask for help. Specifically, our client would like you evaluate
the company’s position and to help develop a strategy to deliver top-line results of $2 billion by 2025.

Net sales: Retail sales minus trade spend. Trade spend is what manufacturers pay distributors or retailers to
incentivize them to sell their products to end consumers.

Notes / Advice to Interview / How to Move Forward:

• This case is about growth both through internal actions and through acquisition. Initially, the candidate should brainstorm an
array of possible growth strategies. Eventually, he or she will have to drill down on new products and acquisition, in addition to
considering market growth. Then, they will have to evaluate two targets, demonstrating an understanding of positive and nega-
tive synergies. Without considering market growth, organic growth, and inorganic growth —and without exploring synergies in
acquisition — the candidate will not be able to solve the case.

Additional Information:
• The company has a strong stance if favor of sustainability
• Sales are divided evenly between the three categories — 33%

If the candidate asks which growth strategies Grime Co. has considered, the interviewer should prompt them to brainstorm
various options — see next slide.

38
Framework/Clarifying Information
Case 2 – Household Cleaners Growth

Areas the candidate should explore: Information provided upon request

Market Growth: When the candidate asks, reveal that market growth alone will bring sales to
$1.5 billion by 2025. Specifically, the company is growing overall at 10% and
Growth through maintaining market share in expects to maintain a constant market share.(10% compounded over four
a growing market years is roughly $500 million incremental) In the interest of keeping this case
shorter, the candidate does not have to calculate this. If the candidate asks
about categories, tell him or her that growth is about the same in all three.

Organic Growth: The candidate must cite new products: it is the only organic growth strategy
that is viable for our client in this case. The interviewer should provide logical
Actions taken within the organization to drive revenue. reasons to why the other options are not available at this time.
Ex: Our client has a new toilet cleaning product in development that analysts
• Price adjustments to drive volume believe will do well.
• Increased advertising
The following details should be provided by request:
• Vertical integration • Product is near launch
• Promotions and deals • Price will be $5 a unit, but requires 20% trade spend per product to reach
• New products volume target
• Expected to sell 40 million units on average per year
Interviewer should steer candidate to explore new
products No other investment is required — sunk cost. (See slide 3 for calculations)

Inorganic growth: The candidate must identify growth through acquisition: our client’s
Corporate Development department has identified two high-priority
Growth through acquisition or joint venture acquisition targets —Organoclean and Home Defense Inc. (See slide
4 for detailed information)

39
Additional Information
Case 2 – Household Cleaners Growth

New Product Calculations: The candidate must determine how much top line
growth can be achieved through the launch of the new product.

Current Net Sales $1 Billion Price** $5 per unit

Net Sales in 2025* $1.5 Billion
Profit: Trade Spend – 20% = $4 per unit
Deficit $500 Million
Avg. units per year x 40 Million

New Product $160 Million Net sales per year = $160 Million

New Deficit $340 Million

* $500 Million achieved through incremental market growth, as cited on the previous slide
** Data presented to candidate from previous slide, these are just calculcations
Note: Market Growth assumptions are built into new product calculations

40
Additional Information
Case 2 – Household Cleaners Growth

Acquisition Calculations, Sales Forecast: The candidate must determine which property our client should purchase.
Candidate should request each data set: sales, products, and growth.

Target Organoclean (Private) Home Defense Inc. (Public)

Products Organic Household Cleaners Household cleaners, bug control

Sales $150 million $200 million

Growth Rate 10% 20%

2021 Sales $165 million $240 million

Instruct candidate to round $181.5 million $288 million
to the nearest $10 million $199.65 million $345.6 million
$219.615 million $414.72 million

Rounded 2026 Sales $220 million $410 million

With a deficit to the 2025 sales target of $340 million, However, the candidate must also
the candidate might be tempted to choose Home consider positive and negative
Defense Inc. as the better acquisition target. If asked, synergies before choosing a target…
confirm that our client can only buy one.
41
Additional Information
Case 2 – Household Cleaners Growth

Acquisition Calculations, Synergy Considerations: The candidate must determine which property to purchase.
Candidate should brainstorm synergies and calculate financial impact.
A good interviee will cite several of these as potential Organoclean
synergies. Push the candidate along until he or she
lands on both distribution and values: Our client believes it can leverage its Europe distributon
network to generate additional sales:
• Distribution synergies • $40 million year one* $500 million deficit
• Procurement synergies • Should triple in 4 years - $160 million new product
POSITIVE

• Manufacturing synergies - $200 million Organoclean 2025

• Back-office synergies - $120 million Europe sales
• Co-branding new products
= $0 deficit to 2025 target
• Scale synergies
Home Defense Inc.
• Corporate culture mismatch
• Anti-trust issues
NEGATIVE

Our client will not sell harmful chemicals, and all of Home Defense’s bug
• Mission or values clash killers fall into this category. They cannot be reforumated or sold. Our
client would have to discontinue these products.
• Brand dilution
• 25% of sales are bug $500 million deficit
killers - $160 million new product
- $410 million Home Defense 2025
Synergies impacting Organoclean and Home Defense - $102.5 million lost sales

*Candidate can consider year 1 today

= $32.5 million deficit to 2025 target
42
Conclusion
Case 2 – Household Cleaners Growth

At this point, the candidate should realize that Organoclean is the best option between the two, and that together
with the launch of the new product and market growth, Grime Co. will hit its 2025 net sales target of $2 billion

Recommendation Risks Next Steps

• Although market growth and the • Growth trajectory of target could • Verify assumptions and assign
launch of a new toilet product should change roles
get Grime Co. to $1.66 billion in net • Price of target could be too high to • Draft pre-diligence plan
sales by 2025, the $2 billion net sales afford • Establish contact with target
target will not be met. Therefore, • Target could be unprofitable — risk • Conduct detailed valuation and
Grime Co. will also have to pursue of sales focus determine BATNA
growth through acquisition. Of the • Doubling in size itself could be a • Roll out new product
two targets preferred by the client risk — too fast
— and since Grime Co. can only buy
one — we recommend purchasing
Organoclean. The growth of the
company coupled with positive
distribution synergies will allow
Grime Co. to reach its 2025 target.

43
 Case 3

Little Bud Co.

CPG | Growth Strategy
Interviewee Led
Ratings:
Quant - 2
Qual - 2
Overall - 2

44
Prompt
Case 3 – Little Bud Co.

Our client, Little Bud Co, is a beer company in a small country in Latin America. Little Bud and its main
competitor, Geineken, are the only players in the market. Geineken’s operations are significantly bigger than
Little Bud’s.

Little Bud’s CEO asked us to provide her with strategic options for the company and a recommendation on
what she should do.

Clarifying Information
• If interviewee asks, “What are the CEO’s Goals?”, turn the question back: “What are the goals of a company?” Then rapidly lead conversation to the
goal of maximizing shareholder’s value
• Market is mature (growth is low)
• 10% of sales are made through large retailers and 90% through bars, restaurants and small retailers
• Focus on market of regular beer; market for small brewers / specialty beers should be disregarded (very small market)

45
Possible Framework/Case Guidance
Case 3 – Little Bud Co.

Revenue Competition Notes / Advice to Interview /

• Market Size • Fixed Costs How to Move Forward:
• Distribution • PP&E At the beginning of the case (after candidate presents their
• Retailers • Distribution framework):
• What are the two most relevant sources of information that
• Restaurants/bars • Marketing
you need to start this analysis?
• Price • Variable Costs Suggested answer: market size and P&L for Little Bud
• Product Mix • COGS and main competitor.
• Labor
Competition • Once the candidate asks for market size data, present
Exhibit 1 and ask for initial insights.
• Compare financials Company
• Operations • Supply chain • Exhibit 2 provides financial comparison information. What
• Pricing • Economics of scale are the margins for each player? What are the possible
• Buy/sell • Geographics/related markets reasons for the margin differences?
Suggested answer: Geineken could have higher margins
due to higher prices, lower costs or both.

Exhibit Summary • What are the strategies that Little Bud should consider?
Suggested answer: Go to niche market, go to related
• Exhibit 1: Revenues by Channel markets, sell to competitor
• Exhibit 2: P&L for Little Bud and Geineken

46
Brainstorm & Guidance
Case 3 – Little Bud Co.

After the Interviewee has reviewed the given exhibits, ask them to Evaluate Potential Options for Little Bud.

Brainstorming Solution
• Increase market share:
• Product innovation: Consumer taste is already well defined. There is no room for new products.
• Price war: It’s virtually impossible for Little Bud to enter a price war against Geineken
• Marketing: Geineken spends 5x more in marketing. Trying to compete against a player this big on marketing
expenditures is not a good strategy.
• Reduce costs: There are no opportunities for further reducing costs.
• Focus on niche market: Interviewer should say that niche market for beer in this country is very small. Move into
related markets (e.g. carbonated soda, juices, etc.): interviewer should say that the company has already conducted
analysis and decided it’s not a good alternative, due to competition.
• After comparing both companies, the candidate should understand that scale economies are a major source of
competitive advantage in this market and propose some strategic alternatives to Little Bud. The interviewer should
rapidly move the discussion toward selling the company.

47
 Guidance
Case 3 – Little Bud Co.

The interviewer should propose to focus on the valuation of the business.

Ask the candidate to propose how to value the company.

Solution
• The candidate should be able to propose at least the two most common valuation methods: DCF and multiples
(multiples are used for quick assessments and we have EBITDA figures). Once asked for it, the interviewer should
give the multiple to be used: EV/EBITDA = 10x
• What is the market value for Little Bud?
• Suggested answer: based on the multiple and EBITDA figures, $50M
• What is Little Bud’s value to Geineken ?
• Suggested answer: considering Geineken margins and Little Bud revenues, Little Bud’s value to its
competitor is $214M (potentially higher, due to the fact that Geineken would become a monopoly and
be able to increase price and further squeeze suppliers)
• How to “force” Geineken to pay more than $214M?
• Suggested answer: Little Bud should open bid to other companies. Geineken has the incentive to
maintain its market dominance and doesn’t want a big international player to enter the market.

Note: When answering LB’s value to Geineken, Interviewee should assume new net profit margin will be same as Geineken

48
Conclusion
Case 3 – Little Bud Co.

Next Steps Excellent Case

Recommendation Risks Answers

• Recommend the CEO to • There might be legal issues • Hire an investment bank to • Star candidates will
sell Little Bud. by antitrust agencies that structure the deal showcase business skill
• The company has no would prevent a transaction • Evaluate risk of ruling from in identifying the correct
competitive advantage. • Loyal customers might not antitrust agencies valuation model and price.
• Should justify reasons on
Geineken has margins perceive it positively • Identify potential cost
selling the company and why
high enough to enter a • Jobs may be lost due to the saving opportunities in not increase price or reduce
price war that would lead realized synergies and this case Geineken responds cost.
Little Bud to bankruptcy. may cause friction by reducing prices • Realize that a price war may
• Also, through an open bid • Company cultures could not offer as high a valuation
to the market, Little Bud clash/cause problems as discussed as Geineken
could achieve a higher is the only other potential
valuation. candidate at the moment and
more analysis must be done
to determine if there are
other prospective companies
that would be interested in
entering the market.

49
 Case 4

GasCo Goes
the Distance
Oil & Gas| Market Entry/Profitability
Interviewee Led
Ratings:
Quant - 1
Qual - 3
Overall - 2

50
Prompt
Case 4 – GasCo Goes the Distance

Your client is GasCo, a US-based natural gas company. In the last year, natural gas prices in the US have
declined while prices in APAC and EMEA have increased. GasCo currently has managed to develop a new
way to transport gas. The new technology significantly lowers the cost of transportation. Due to the new
technology, GasCo would like to expand in the global market.

GasCo would like to know if they should enter the APAC, EMEA, or both regions?

APAC - Asia Pacific & China

EMEA - Europe, Middle East, and Africa

Clarifying Information
• GasCo’s new technology is unique to their company and no other competitors have this technology. The new technology significantly lowers the
cost to transport gas. Gas normally has to be shipped in large containers, but now the gas is able to be liquified and then transported, significantly
reducing cost of transportation.
• GasCo’s main concern is overall profitability when entering the market.
• GasCo is worried about 1) whether there will be demand in the region and 2) which market is more profitable
• GasCo has 2 major customers: 1 in China and 1 in Japan

51
Interviewer Information
Case 4 – GasCo Goes the Distance

Clarifying Information
• This case is based off a final round interview with a partner who worked in O&G.
• This case is meant to be qualitative and test the candidate to see how creative they can be during brainstorming.

Brainstorming question:
• What conditions might affect profitability when entering a foreign market?

Exhibit Summary
• Exhibit 1: Proposed Entry Points Global Map –
to show the two options presented and
understand distance from US headquarters

52
Potential Framework
Case 4 – GasCo Goes the Distance

1. Market – Should we enter?

Market Size
• What is the size of the market in each region?
Competition
• How many competitors are there in each region?
Barriers of Entry
• Regulatory landscape in each region?

2. Incremental Revenue
• Number of customers in each market
• Pricing for both markets
• Channels currently sold in

3. Incremental Costs
• Fixed Costs – drilling, costs, salaries
• Variable Costs – cost of transportation, tariffs

53
Exhibit 1
Case 4 – GasCo Goes the Distance

Potential EMEA and APAC Market Entries

EMEA Port:
Spain
Texas es APAC Port:
5,000 mil
China

Note:
Natural Gas Prices
• GasCo US - $1.50
• EMEA (Russia) - $1.25
• APAC (China) - $2.00

Key:
• The dotted line shows the
shipping path that will taken
to get to the new ports
10,000 miles

54
Exhibit 1 Guidance
Case 4 – GasCo Goes the Distance

Potential EMEA and APAC Market Entries

Questions for Candidates about Exhibit that the Interview should ask:
• What can you gather from this map?
• What is the estimated cost to transport gas to Spain vs China? (calculation on next slide – interviewer will need to
provide the candidate with some information)

Question/Exhibit Guidance:
• Candidate should recognize: 1) closer distance from US to Europe, but, 2) China is the furthest distance but has
large potential to capture more market share
• Strong candidates will: 1) notice that although Europe is the closest to the US, Russia has lower natural gas prices
in Russia than US which means there will be increased competition if GasCo enters the market. This could cause a
price war and increased competition in EMEA market, 2) China has higher natural gas prices which means GasCo
can enter the market competitively and capture more market share.
• Also, an extremely strong candidate will remember that 2 of GasCo’s major customers are based in Asia and is
another reason to consider APAC over EMEA

55
Exhibit 1 Guidance
Case 4 – GasCo Goes the Distance

Potential EMEA and APAC Market Entries

When candidate asks for information provide the

candidate with the following: Calculations

Spain China
Spain China
Cost
Distance 5,000 10,000 Distance 5,000 10,000
Cost/Mile $10 $5.50
Cost/Mile $10 $5.50
Cost for distance $50,000 $55,000
# of days at sea 7 20 # of days 7 20
Cost/Day $750 $550
Cost/Day 750 550
Cost for trip length $5,250 $11,000
Est. Unit Sales 100,000 250,000 Total cost $55,250 $66,000
Revenue
Projected Sales $6 $3
Price/unit sold Est. unit sales 100,000 250,000
Sales price $6 $3
Potential Revenue 600,000 750,000

56
Brainstorming
Case 4 – GasCo Goes the Distance

What conditions might affect profitability when entering a foreign market?

Brainstorming Guidance:
• Market factors – change in natural gas prices across the market
• Competitor reaction – price war in market with local or regional companies
• Government response – potential tariffs or higher import tax
• Internal company capabilities – sales team, etc.
• Local technological development (more likely for competitors to catch up in tech focused market)

Good candidates will:

• Recognize that there are external and internal factors to consider

57
Conclusion
Case 4 – GasCo Goes the Distance

Recommendation Risks Next Steps

• GasCo should enter the Chinese • Competitor response in China – • Conduct a thorough market
market – although the total cost for Chinese government might impose analysis to better understand
China is higher, GasCo’s 2 major high tariffs or taxes on imported competition in China and
customers are based in APAC and US gas competitor response
will allow GasCo to better serve • Change in market demand due to • Put together a internal team to
their customers as well as have an alternative gas products available begin developing a market entry
opportunity to capture more market
in the market plan
share in the long term.

58
 Case 5

Rubicon Co.
Airlines| Post – Acquisition Profitabilityy
Interviewee Led
Ratings:
Quant - 2
Qual - 2
Overall - 2

59
Prompt
Case 5 – Rubicon Co.

Your client is Rubicon Co, a low-cost airline operating in the US. A couple of years ago, Rubicon Co completed
the acquisition of Scarlet Air, an airline based primarily on the West Coast. The post acquisition profits do not
meet the executive committee’s expectations, and the CEO of Rubicon Co has brought you in to understand
the causes and improve profitability.

60
Interviewer Information
Case 5 – Rubicon Co.

Clarifying Information
• The CEO wants to increase profit by $100M
• Assume Rubicon Co operates a single aircraft type across their fleet with similar seat layouts
• Rubicon Co is an all economy airline, not looking to change the business model
• At this point Rubicon Co is not looking to expand operations internationally
• The industry has remained relatively stable, with single digit profit % growth YoY

Exhibit Summary
• Exhibit 1: Pre & Post Acquisition Financials
[Candidate should prompt interviewer to share this exhibit]
• Exhibit 2: Northwest Region Route Comparison
[Candidate will likely require this exhibit to be handed
without prompt after exhibit 1]

61
Potential Framework
Case 5 – Rubicon Co.

Revenue (Synergies) Cost (Synergies) Competitive Response

• Ticketing (all metrics should >= the combined metrics • Variable Costs (all metrics should <= the combined • Other airlines consolidating in the space
of the individual airlines) metrics of the individual airlines) could lead to greater pricing pressure as
• # of tickets sold • Hourly Labor cost structures are reduced
• Price of tickets • Aircraft operations
• Alternatively, less players in the space could
• Dependent on routes • Fuel
• Consolidation should decrease competition, • Maintenance & Servicing lead to more favorable pricing as consumers
resulting in increased prices • Parking/Storage have less choice
• Seasonality • Landing fees
• Fees (all metrics should >= the combined metrics of • Fixed Costs
the individual airlines) • Central functions
• On board • Marketing
• Wifi • IT
• Food & bev • HR
• Luggage • Etc
• Ancillary • Plant, Property, Equipment
• Change fees • Airport gate rental agreements
• Corporate building rentals
• Hanger space

Notes / Advice to Interview / How to Move Forward:

• Candidate should look to understand the financials of the airline(s) pre and post merger – if asked, hand
Exhibit #1
• Alternatively, the candidate may ask to look at competitors financials as a comparable – if asked, let
candidate know that pre-merger Rubicon Co. and Scarlet both met industry averages on financials
• Ensure the candidate mentions that airline routes differ in terms of profitability – if not, ask candidate to think
about how the metrics for a flight from DTW to JFK are different than JFK to LAX
62
Exhibit 1
Case 5 – Rubicon Co.

Pre and post acquisition financials

In Millions of Dollars Rubicon Co (Pre) Scarlet Air (Pre) Rubicon Co (Post)

Revenue (Tickets) 749 690 1439

Revenue (Non-Tickets) 251 210 461

Operations, Variable 650 605 1255

Marketing 50 40 90

IT 75 70 145

HR 20 14 25.5

PPE (Airport Slots, offices) 115 90 153.75

63
Exhibit 1 Guidance
Case 5 – Rubicon Co.

Pre and post acquisition financials

Questions for Candidates about Exhibit that the Interview should ask:
• Are there areas of opportunity to positively impact profitability?
• If candidate is struggling, ask: although VC may need to remain at that level, does FC of the combined entity need to
be the combined individual FCs?

Question/Exhibit Guidance:
• Candidate should recognize that while synergies were found in HR and Property costs, Marketing and IT costs are
equivalent to the sum of the original airline line items – these are two opportunities for cost cutting
• Strong candidates will recognize that the combined company was able to find 25% net cost savings in property and
HR – this can be used as a rough baseline for potential cost savings in the IT and marketing buckets

64
Exhibit 1 Guidance
Case 5 – Rubicon Co.

Pre and post acquisition financials

Rubicon Co (Post) w/
In Millions of Dollars Rubicon Co (Pre) Scarlet Air (Pre) Rubicon Co (Post) Potential Synergy Gains

Revenue (Tickets) $749 $690 $1439 Same

Revenue (Non-Tickets) $251 $210 $461 Same
Operations $650 $605 $1255 Same
Marketing $50 $40 $90 $67.50
IT $75 $70 $145 $108.75
HR $20 $14 $25.50 Reductions Already Made
Property (Airport, offices) $115 $90 $153.75 Reductions Already Made
Total Revenue $1,000 $900 $1,900 $1,900
Total Cost $910 $819 $1,669.25 $1,610
Profit $90 $81 $230.75 $289.50
Margin 9.00% 9.00% 12.14% 15.24%
Increased Profitability $58.75
Note:
• Case is looking for profitability in terms of dollars.
Percentages are given as a nice to have
65
Brainstorming
Case 5 – Rubicon Co.

Now that we have identified a potential for cost reductions in the Marketing and IT functions,
what are some ways this can be accomplished?

Brainstorming Guidance:
• Candidates should list a few (2 – 3) ways costs could be reduced in each area
• Marketing: Reduce headcount, leverage digital solutions to streamline campaigns, outsource specific functions
• IT: Reduce headcount, outsource specific functions, merge disparate systems

Best candidates will:

• Identify risks associated with their recommendations and plan mitigation steps
• Notice that roughly half of the $100MM improvement target has been achieved, will organically think about other
areas to find profit

66
Exhibit 2 Rubicon Co
Case 5 – Rubicon Co.

Northwest Region Route Comparison

Southeast Airlines

United
$350
$306 Gamma

$300
US Fleet Co

$250
$210
$199 $215 $203
$189
$200
$175 $169 $160

$150

$100

50

0
Seattle ↔ Denver Portland ↔ Seattle Denver ↔ Portland Seattle ↔ Denver Portland ↔ Seattle Denver ↔ Portland

Revenue Per Seat Cost Per Seat

**Rubicon Co flies ~500k passengers per route per year 67

Exhibit 2 Guidance
Case 5 – Rubicon Co.

Northwest Region Route Comparison

Questions for Candidates about Exhibit that the Interview should ask:
• One of our analysts flagged the Pacific NW as an area of concern. What are your initial thoughts on the routes?

Question/Exhibit Guidance:
• Candidates should recognize that Portland ↔ Seattle and Denver ↔ Portland are not profitable.
• Strong candidates will calculate the annual profit/loss the airline experiences from the routes and suggest
trying to cut costs and match competitors cost structure across all three routes

68
Exhibit 2 Guidance
Case 5 – Rubicon Co.

Northwest Region Route Comparison

Profit (Loss) Total Passenger Net Profit Profit Potential Net Profit
Per seat Volume (Loss) (if matching competitors)

Seattle ↔ Denver $91 500,000 $45,500,000 $131 $65,500,000

Portland ↔ Seattle ($4) 500,000 $2,000,000 $30 $15,000,000

Denver ↔ Portland ($21) 500,000 $10,500,000 $29 $14,500,000 Net Improvement

Total $33,000,000 $95,000,000 $62,000,000

69
Brainstorming
Case 5 – Rubicon Co.

While Rubicon Co. is considering options to lower costs on these routes, some within the company
are thinking of cutting the loss-making routes completely. What concerns do you have with this?

Brainstorming Guidance:
• Candidates can think about the issue in terms of qualitative and quantitative buckets
• Quantitative: Loss of revenue from fees, inflight purchases, freight/shipping
• Qualitative:
• Knockback effect -> passengers flying these routes may be connecting to other profit positive flights, and
cutting routes may make other routes less attractive
• Political issues with city leadership
• Airport contractual obligations

Best candidates will:

• Think about potential changes in demand for the routes, and ask the airline to consider that before trimming routes

70
Conclusion
Case 5 – Rubicon Co.

Recommendation Risks Next Steps

• To achieve the target profitability • Detriment in morale with • Research competitors cost
improvement, Rubicon Co should headcount reductions/outsourcing basis for PNW routes and begin
reduce costs in Marketing & IT to • Changes in demand on routes, matching methodology
match synergies achieved in other impacting pricing and profitability • Consider cross training employees
departments. In addition, the airline to reduce volume of layoffs
should look to reduce costs on • Identify strategy to reduce costs in
their Pacific NW routes to match marketing and IT by 25%
competitors’ cost structure

71
 Case 6

Spice Up Your Life

Private Equity, Food/Retail | M&A, Valuation, Chart Analysis
Interviewee Led
Ratings:
Quant - 2
Qual - 1
Overall - 2

72
Prompt
Case 6 – Spice Up Your Life

Our client, Seasoned Investors (SI), is a private equity firm that has just launched a new fund focused on
investments in the food industry. For their first investment, they are considering acquiring Favored Flavors (FF),
a spice company specializing in premium organic spices.

Favored Flavors is asking for $75M, and the offer is final. Should Seasoned Investors pursue this acquisition?

Clarifying Information
• Financial Targets: SI seeks a Multiple of Invested Capital (MOIC) of 2x (i.e. it seeks to earn double the value of its investment by the end of the
holding period).
• The fund has a holding period of 4 years, at which point the fund will sell the business. SI is confident that they will be able to sell the business
at 10x EBITDA.
• FF does not have any debt.
• FF sells primarily to grocery store wholesalers (not an important part of this case).
• A couple SI managing directors have significant experience in this industry, but SI does not currently have any other portfolio companies in the
food/beverage market.

73
Interviewer Information
Case 6 – Spice Up Your Life

Notes/Advice to Interview
• MOIC does not involve time value of money, so a discounted cash flow analysis is not needed.
(If the interviewee begins to discuss a DCF and/or discount rate)

Exhibit Summary
• Exhibit 1: 2020 Income Statement and Industry Comparison
• Exhibit 2: Revenue Projections

Exhibit 1: 2020 Income Statement and Industry Comparison

• Provide this when the candidate asks about the company’s profitability.

Exhibit 2: Product Mix

• Provide this when the candidate asks about costs or revenues by product.

Exhibit 3: Revenue Growth

• Provide this when the candidate asks about growth rates or projections.

74
Potential Framework
Case 6 – Spice Up Your Life

Company PE Firm Market Valuation

Profitability/Cash Flow Analysis • Fund objectives • Market Growth • Cash flow during holding
• Revenue • Synergies/Improvements • Market Size period
• Price • Future bolt-on • Competition • Exit value
• Quantity acquisitions • Trends: • Multiples
• Cost • Investment-light revenue • ESG: Fair wages for
• Variable: growth opportunities farmers, ethically
• Raw Materials • Cost optimization sourced spices,
• Packaging • Firm expertise in industry sustainability in
• Shipping • Fund restrictions packaging Note/Advice to Interviewer/
• Fixed: • Financing the acquisition • Customer trends: How to move forward
• Manufacturing Plant • Exit strategy desire for more exotic • Handover exhibits 1 and 2 after
candidate asks for relevant
• Labor foods, healthier eating, information
• Other SG&A Costs more online grocery • A strong candidate will set up an
• Company Leadership/ purchases equation to evaluate the
Capabilities • Regulations: transaction, such as:
2*Purchase Price ≤ Sum of FCFs
• Trade restrictions, + Sale of Business
import/export
regulations

75
Exhibit 1
Case 6 – Spice Up Your Life

Industry Average Cost Breakdown

EBIT
FF 2020 Income Statement
Depreciation & Amortization
Revenue ($M) 50
Other
COGS ($M) 33
R&D
SG&A* (% of revenue) 23%

EBITDA COGS**
(Revenue – COGS – SG&A) ($M) 5
Labor

Free Cash Flow (% of EBITDA) 62.5%

*SG&A includes labor, marketing, R&D, and other costs

Marketing

**Industry average breakdown for COGS

is 90% raw material and 10% packaging.
76
Exhibit 1 Guidance
Case 6 – Spice Up Your Life

Questions for Candidates

“Favored Flavors provided us with a summary of their most recent annual income statement. Your consulting
team also pulled some industry average cost data for comparison. What insights do you get from this data?”

Candidates should recognize:

• FF’s EBITDA is 4% less than the industry average of 14% (EBIT of 11% + Depreciation and Amortization of 3%)
• FF’s COGS (33/50=66%) is 8% higher than the industry average. This could be because of the higher quality
of the spices, but there may still be opportunities to optimize.
• FF’s SG&A (11.5/50=23%) is 4% less than the industry average, which could be a competitive advantage.
From here, candidates should drive the case forward by asking for more information on COGS.

Notes/Advice to Interviewer:
• If the candidate has questions around net income or free cash flow, explain that free cash flow is the cash flow
available to funding providers (i.e. the amount the PE firm will receive from the business each year)
• If candidate asks for the company’s EBIT or Depreciation and Amortization expense, simply state that FF did not
provide those line items.

77
Exhibit 2
Case 6 – Spice Up Your Life

Product Mix

Black Pepper Cloves Coriander Cumin Oregano Paprika Saffron Sage Thyme Other

Revenue 26 6 11 8 15 4 5 6 11 8 $50M

Cost 20 5 7 8 12 5 9 4 8 6 16 $33M

Packaging

78
Exhibit 2 Guidance
Case 6 – Spice Up Your Life

Product Mix

Questions for Candidates about Exhibit that the Interview should ask:
Ask the candidate if they have any insights on the exhibit.
• Candidates should also note that packaging is significant at 16% of total cost, which is higher than the industry
average of 10%. If necessary, prompt the candidate to calculate the cost savings that would come from
bringing the packaging cost down to the industry average.
• Solution: 6% * 33M = $1.98M (rounding to $2M is fine)

• Candidates should also note that Saffron is currently losing money ($50M * 5% = $2.5M in revenue, $33 * 9% =
$2.97M in costs (tell the candidate they can round to $3M in cost). Once the candidate reaches this insight,
share that your team believes this cost can be reduced by 1/3rd.
• Solution: 9% * (1/3) = 3% change. 3% * $33M = $0.99M (rounding to $1M is fine)

• Total gain in profit/EBITDA = $3M. Prompt the candidate to calculate the free cash flow for 2020 if these changes
were made if the candidate does not automatically do so.
• Solution: $5M + $3M = $8M in EBITDA. 8 * 62.5% (or 5/8) = $5M. Strong candidates will note that EBITDA is
now 16%, higher than the industry average, and that FCF is 10% of revenue.

79
Exhibit 3
Case 6 – Spice Up Your Life

Projected Revenue Growth

80
80

75

70 69
Revenue ($M)
65
61
60

55 55

50
0
2020 2021 2022 2023 2024

80
Exhibit 3 Guidance
Case 6 – Spice Up Your Life

Projected Revenue Growth

Question/Exhibit Guidance
• Candidates should use this graph to calculate the future free cash flows for the business, using the new profit
margins that they calculated from Exhibits 1 and 2.
• When the candidate asks about the value of the business at the sale or terminal value, mention that SI
believes they will be able to sell the company at 10x EBITDA in 2024.
• By adding each year’s FCF and the terminal value, the total projected value of the business should be $154.50,
which is greater than the 2x MOIC requirement of $150. Once the candidate has reached this point, ask the
candidate to prepare a conclusion for the client.

Free Cash Flow Analysis Exit Value Analysis

2021 2022 2023 2024 EBITDA (16% of revenue) 12.8

Revenue 55 61 69 80 EV/EBITDA multiple of 10x $128
FCF (10% of Rev) 5.5 6.1 6.9 8
Total FCF $26.50 Total Projected Value ($M) $154.50

*Note: no discounting needed. If candidate asks about discounting, remind them

of the 2x MOIC requirement

81
Conclusion
Case 6 – Spice Up Your Life

Recommendation Risks Next Steps

• Seasoned Investors should move • Candidates could list a variety • Next Steps should either directly
forward with the acquisition of of risks, including but not limited relate to mitigating risks or to
Favored Flavors, as the projected to any of the factors included exploring additional workstreams
value of $154.50M is greater than on the framework slide. Strong identified in the framework that
twice the investment cost of $75M. candidates will briefly mention a were not covered in the case.
couple of the most salient risks
and include potential mitigating
strategies.

Notes for Interviewer:

• This case tests quantitative skills but also the candidate’s ability to remain organized as data from one exhibit often
needs to be compared to another for important insights. Strong candidates will be using their notes to not have to
ask the interviewer constantly to re-show an exhibit.
• The case topic should be easily relatable for most candidates, so pay attention to the candidate’s soft skills and
ability to be conversational.

82
 Case 7

Apogee Bank
Financial Services | Growth Strategy
Interviewee Led
Ratings:
Quant - 2
Qual - 2
Overall - 2

83
Prompt
Case 7 – Apogee Bank

Our client Apogee bank, a regional bank with 700 branches in US Midwest, has seen a declining trend in
revenues in the past 2 years. Blake Moran, the CEO of Apogee bank, hired you to identify the reasons for
falling revenues and recommend ways to grow revenues.

Clarifying Information
• Apogee Bank offers checking and savings accounts, as well as personal, mortgage and auto loans.
• On the checking and savings accounts, Apogee bank makes money from service charges and account maintenance fees
whereas it earns interests on loans.
• Apogee bank provides services through both brick-and-mortar branches and online applications.

84
Interviewer Information
Case 7 – Apogee Bank

Clarifying Information
• Apogee Bank offers checking and savings accounts, as well as personal, mortgage and auto loans.
• On the checking and savings accounts, Apogee bank makes money from service charges and account
maintenance fees and earns interests on loans.
• Apogee bank provides services through both brick-and-mortar branches and online applications.
• The candidate doesn’t need to know any other information about the client’s business or the retail banking industry
to solve this case. If the candidate asks for any more clarification at this point, reverse the question to ask why that
specific information is needed for the case.

Exhibit Summary
• Exhibit 1: Average Revenue Per Account (ARPA) by Product
• Exhibit 2: Summary of email survey conducted on churning customers
• Exhibit 3: Partner with WizardTech or Buy Finvest Inc?

85
Potential Framework
Case 7 – Apogee Bank

Revenues falling Change in Market Dynamics Growth Opportunities

ARPU decreasing Competition Organic

• Volume of services used by customers • New regional banks in the area • Play with Price
decreasing • Better interest rates offered by regional or • Market expansion - acquire new accounts
• Mix of transactions shifting to low value online competitors • Market penetration - focus on cross selling
products • Increased consolidation amongst regional • Diversification - adding new products for
• Asset/deposit base shrinking banks new & existing customers
• Decrease in branch/ATM walk ins
Customer Trends Inorganic
# of customers decreasing • Less interest in traditional/regional banks • Buy market share - acquire fintechs/other
• Customer experience issues amongst the millennial/GenZ userbase banks
• Lack of online capabilities impacting • Inclining towards non-banking companies/
serviceability and scale challenger banks for banking needs
• Trust/Security/Conveience concerns • Lack of rewards/benefits
• No financial education resources
Notes / Advice to Interview /
• Lack of rewards/benefits Government/Regulartory Reasons How to Move Forward:
• New caps on reserves limitng lending • Candidate should recognize that this is a revenue
power problem
• Additional onbaording paperwork limiting • Hand Exhibit 1 if the candidate mentions reve-
new account opening userbase nues as the area of initial focus
• Inclining towards non-banking companies/ • If the candidate mentions costs or profitability,
challenger banks for banking needs ask why and then direct the candidate to focus
• Lack of rewards/benefits on revenues

86
Exhibit 1 Guidance
Case 7 – Apogee Bank

Average Revenue Per Account (ARPA) by Product

Questions for Candidates about Exhibit that the Interview should ask:
What additional insight does this chart provide on the potential root causes behind falling revenues at Apogee?

• Once the candidate recognizes falling # of accounts or deactivation of accounts in the last 2 years as the reason,
ask him or her how this trend translates into # of users active on the platform? (Highlight the footnote if the
candidate doesn’t acknowledge it)
• Once the candidate figures out the primary reason (Customer Churn) behind the fall in revenues in the last 2 years,
brainstorm on potential ways to identify reasons for churn and then move to Exhibit 2 after sufficient brainstorming

Question/Exhibit Guidance
• Candidate should recognize: Falling revenues across all products, ARPA remaining constant -> Volumes decreasing
• Strong candidates will:
• Recognize the relation between ARPA and ARPU (Average Revenue Per User) -> ARPU = ARPA * # of Accounts per user.
Since the # of Accounts per user has not changed (as mentioned in the footnote), it can be deduced that customers are
leaving the bank
• Start brainstorming reasons for why customers could be churning and what are the best ways to identify reasons for
churn i.e. surveys

87
Exhibit 2 Guidance
Case 7 – Apogee Bank

Summary of email survey conducted on churning customers

Questions for Candidates about Exhibit that the Interview should ask:
What additional insight does this chart provide on the reasons for recent increase in customer churn?

• Once the candidate identifies the key reasons for churn, push him/her to brainstorm ideas for next steps – adding
new investment products.
• After sufficient brainstorming, hand out Exhibit 3 to the candidate.

Question/Exhibit Guidance
• Candidate should recognize: Lack of investment/personal finance products offered digitally as the primary reason for
churn as can be deduced from: High interest in digital/challenger banks, and mention of digital investment platforms,
access to wealth management products and financial advice as the primary reasons for switching to a different platform.
• Strong candidates will: consolidate all the key takeaways to recommend next steps (acting on not having enough
personal finance products to offer)

88
Exhibit 3 Guidance
Case 7 – Apogee Bank

Partner or Buy?

Calculations
• The client here wants to finalize which mode of launch makes more financial sense for the bank
• Steer towards calculating payback/breakeven period if the candidate doesn’t move in that direction
• Candidate can assume that cost synergies as mentioned in the footnote can be realized from inception
• Strong candidates will: recognize cost synergies, structure profitability calculations separately and suggest
calculating payback period without prompting

Partner with WizardTech Buy Finvest Inc.

Total yearly cost 750,000 + 14 * 125,000 2,500,000 Total Fixed Cost 150,000 * (1 - 6%) $141,000

Total yearly revenue 23 * 125,000 2,875,000 Unit Revenue 800,000/100,000 $8

Yearly incremental profits 2,875,000 - 2,500,000 375,000 Unit Variable Cost 8 - 4 * (1 - 5%) $3.8

Payback (in years) 280,000/375,000 7.5 Total Variable Cost (125,000 + 100,000) * 3.8 $855,000

Total Revenue 8 * (125,000 + 100,000) $1,800,000

Yearly incremental profits 180,0000 - 141,000 - 855,000 $804,000

Payback (in years) 5,000,000/804,000 6.2

89
 Exhibit 1
Case 7 – Apogee Bank

Average Revenue Per Account (ARPA) by Product

Total Revenue (in M) and Average Revenue Per Account (ARPA)* by Product
Checking/Savings
account
250 80
Loans
70
Other products
200
60 ARPA - loans

ARPA - other products

Total Revenue in M

50 ARPA - checking/
150 savings account

ARPA
40 *# Accounts per cus-
tomer and the mix and
100 30 volume of transactions
within each account type
have remained almost the
20 same across all products
in the last 5 years
50
10

0 0
2016 2017 2018 2019 2020

90
Exhibit 2
Case 7 – Apogee Bank

Summary of email survey conducted on churning customers

Where did the survey respondents switch to? Reasons for switching

29 High interest rates on deposits

78

Digital platforms/Online capabilities

195 780
Customer Service
478

Low fees

Acess to wealth managment products

Digital Banks Competitor Regional Banks Advice on financial health

National Banks Other Institutions

Access to a banker

0% 10% 20% 30% 40% 50% 60% 70% 80%

91
Exhibit 3
Case 7 – Apogee Bank

Partner or Buy?

Partner with WizardTech Buy Finvest Inc.

B2B tech company offering white labelled investment New Jersey based FinTech startup offering
products & services to retail financial services companies personal wealth management services

Setup cost $2,800,000 Buy Price $5,000,000

Annual maintenance cost $750,000 Annual Revenue $800,000

Price charged to Apogee $14 Annual Fixed Cost $150,000

for every user onboarded

Average Revenue Per User (ARPU) $23 Contribution Margin $4

Estimated new users 125,000 Current Userbase of Finvest 100,000

Estimated new users 125,000

Apogee bank expects Finvest to immediately save 6% on fixed costs

and improve contribution margin by 5% if the deal goes through
92
Brainstorming
Case 7 – Apogee Bank

What are some other pros and cons of acquiring Finvest Inc. over partnering with WizardTech?

Pros:
• New resources and competencies - access to additional customers as well as employees, assets and IP
• Reduced entry barriers to launch wealth management services
• Increase bottom line profitability once entities have completed the acquisition
• Increased market power; better positioned to fight competition
• See immediate and long-term tax advantages

Cons:
• High initial capital for acquisition
• Risk losing key employees and customers if combining the two companies is not executed carefully and effectively
• Risk financial detriment if the company being acquired turns out not to have enough value to justify the investment
• Longer implementation time and distraction from day-to-day operations
• Any regulations that limit the acquisition

Any other logical reason is also acceptable

93
Conclusion
Case 7 – Apogee Bank

Recommendation Risks Next Steps

• Acquire Finvest Inc. at $5M for a • The acquisition might not provide • Ensure appropriate liquid funds are
payback in 6.2 years the expected benefits due to a mis- available to fund the acquisition
• Extend Finvest’s investment managed or prolonged integration • Plan an integration strategy to
product offerings to all customers • With no experience in selling merge with Finvest and to roll-out
of Apogee Bank wealth management products investment products in phases
earlier, there may be hiccups • Explore ways to realize additional
that Apogee Bank can face in synergies post acquisition
marketing and opening new
investment accounts
• Finvest’s unstated intent to sell
and the confidence in maintaining
it’s current financials
• Customer adoption to these new
products by Apogee Bank could
be slow

94
 Case 8

Attack Helicopter
Defense | Market Entry
Interviewee Led
Ratings:
Quant - 3
Qual - 2
Overall - 3

95
Prompt
Case 8 – Attack Helicopter

Our client is a US defense contractor and one of its divisions manufactures attack helicopters for military
operations. The company is considering setting up a new plant to meet increasing demand in the attack
helicopter space. These helicopters are fully equipped with guns and ammo when delivered to the end
customer. Our client has considered three sites to setup operations: Brazil, France, and the US.

How would you make this decision, and where should our client set up the plant based on that analysis?

Clarifying Information
• Our client has 3 plants in the US; 2 in Kansas and 1 in Michigan
• The plants operate at full capacity today
• One of the US plants can accommodate an additional assembly line at
a cost of $500M; the other 2 are landlocked in residential areas and cannot be expanded

Notes / Advice to Interview / How to Move Forward:

• Candidate should structure the framework to consider the elements for evaluating 3 countries
• Candidate should start with a financial analysis. If not, nudge them in this direction
• If candidate does not mention examples of variable and fixed costs, prompt them to do so prior to revealing financials

96
Framework
Case 8 – Attack Helicopter

Profitability Analysis
Customers Suppliers Logistics
of Each Site

• Where are they based? • Supply chain considerations • What’s it going to take to get the
• Cost
• Need to be close to the customer • Do we have an adequate product to the customer?
• VC
for design inputs? supply base in each location? • Labor
- Materials
• Additional customer points? • Assembly inputs • Availability of skilled managers
- Hourly Labor
• Do governments prefer to buy from • Spare parts & technicians
- Ship/Distribution
domestic companies? • Raw materials • Export control restrictions?
• FC
• Are there custom designs? Is each • Local regulations: can you
- PP&E
helicopter the same? import what is needed?
- Utilities
• Proprietary information: can you
- SG&A
build two helicopters for two
- Initial Cost
countries at once?
• Revenues
• Is there a market for private
- Price per helicopter
security and not just military?
- # of helicopters / year
- How frequently do
helicopters get replaced?

97
Financial Information
Case 8 – Attack Helicopter

Cost Information Sales Information

Initial Plant Set up Cost: $500M (US) | $2B (BR) | $3B (FR) Each helicopter sells for $100M/unit, but if they are imported
into the US, the US government requires them to be certified;
Fixed Cost: $100M annually in all three countries
the certification process costs $15M/unit.
Variable Cost: $15M (US) | $20M (BR) | $25M (FR)
In the case of attack helicopters, the US and France each have
export control restrictions in place prohibiting the sale of attack
helicopters to other countries.

Market Size and Revenue Information Implication: If the client manufactures within the US, they will
only be able to sell to the US government – no exports are
Defense budgets for next 5 years: $100B (US) | $15B (BR) | $10B (FR)
allowed.
% of Defense budgets to be spent on our helicopters: 20% (US) | 50 % (BR) | 15% (FR)

98
Math Solution
Case 8 – Attack Helicopter

If plant in the US If plant in Brazil

Revenues: Revenues:
US revenues over 5 years = 20% of $100B = $20B US revenues over 5 years = 20% of $100B = $20B
BR revenues over 5 years = 50% of $15B = $7.5B
Costs:
# of copters = $20B / $100M = 200 helicopters Costs:
Variable Cost: 200 helicopters * $15M = $3B # of US-bound copters: $20B / $100M = 200 helicopters
Fixed Cost: $100M annually # of BR-bound copters: $7.5B / $100M = 75 helicopters
Initial Cost: $500M Variable Cost: (275 helicopters * $20M)** + (200 helicopters * $15M)* = $8.5B
Fixed Cost: $100M annually
Profit = Rev – VC – FC – IC Start-up Cost: $2B
Profit = $20B - $3B – ($100M * 5) - $500M = $16B
Profit: $27.5B - $11B = $16.5B
Key Takeaway: Plant in Brazil will give us profits higher than US by $500M

Notes
• Interviewee should notice that France is not an attractive candidate due to having the same exact costs as Brazil but significantly smaller revenues in addition to
export issues.
• Once interviewee mentions a profitability calculation, nudge them to calculate profit over the next 5 years
• ** = VC to manufacture in Brazil *= Certification costs to sell to United States

99
Brainstorming
Case 8 – Attack Helicopter

Evaluate the potential risks of acquiring helicopters in Brazil.

Brainstorming Guidance
• If the interviewee does not provide potential risks for moving forward with Brazil, ask this question.

Best candidates will:

• Drive the case toward potential risks of launching in Brazil without prompting.

Potential Solutions
• Political stability • Know-how in other countries
• Product quality • Brand image and trust in helicopters
• Robustness of supply chain • National security may be an issue as
• Cultural customs are different and may affect helicopters/defense equipment will be
business relationships manufactured outside of US

100
Conclusion
Case 8 – Attack Helicopter

Recommendation Risks Next Steps

• Based on the financials, Brazil • Those gained from brainstorming • What is the potential for selling
appears to be a more attractive choppers outside of these 3
candidate for setting up the new countries to the global market?
plant because: • What will labor’s reaction at our
• Our profits over 5 years will be • existing plants be if we
higher by $500M • Are US relations with Brazil likely to
• We won’t be entirely dependent be cordial over the next 5 years for
on one single country (US) for us to benefit from favorable export
sales control policies?

101
 Case 9

FLC Sports League

Sports | Profitability & Market Entry
Interviewee Led
Ratings:
Quant - 2
Qual - 3
Overall - 3

102
Prompt
Case 9 – FLC Sports League

Your client is a major sports league called FLC. They organize a national championship and several other
smaller competitions. Serving as the only professional men’s soccer league in the country, FLC currently has 10
teams. FLC is involved in general league management, which includes setting rules of gameplay, organizing the
US National Championship, drafts, matches, referees and deals with sponsors etc. Currently FLC only receives
revenues from royalties paid by the teams within the league, and the company is interested in increasing its net
income by expanding its operations.

Notes / Advice to Interview / How to Move Forward:

• In this case, the candidate should NOT focus on FLC’s current existing costs. The main focus is to evaluate different options to
expand FLC’s operations to meet the target NI growth.

103
Clarifying Information
Case 9 – FLC Sports League

• This year, FLC’s revenue was ~$100M with 10% Net Income
• FLC wants to increase its NI by 20% in the next year, with an ROI (NI / Investment) hurdle rate of 15%
• For the purpose of this case, consider that FLC’s current operations and revenue management are fully optimized (no organic
growth possible)
• FLC is responsible for large upfront commercial, operational, and marketing costs when a new team enters the league
• FLC does not own any teams in the league
• Candidate should assume that teams are interested in joining the league for any option chosen

Guide to Handouts
• Provide Exhibit #1 when candidate requests information regarding potential revenues/market size
• Provide Exhibit #2 when candidate requests information on existing geographies or suggests evaluating geographic expansion
• Provide Exhibit #3 when candidate requests information on costs involved to accept new teams
• Candidate should clarify that FLC is a soccer league and that FLC’s only revenue stream is royalties from teams in the league

104
Possible Framework
Case 9 – FLC Sports League

Market Entry – Same Business Market Entry – Different Business Current Business

• New sport – hockey, baseball, • Acquiring a team – good idea, but • Increase royalties – not possible,
football if it is a soccer team, conflict of revenue management fully
• New geography – recruit new interest. If other sports, very risky, optimized
teams in US cities because FLC doesn’t have the • For each of the options, candidates
• New leagues – women, youth know how should come with a method to
evaluate revenues & costs to FLC
• Revenue drivers: royalties paid
to the league (soccer fans, avg.
spent with sports, team avg.
revenues)
• Cost drivers: marketing, labor,
SG&A
• Give extra credit for candidates
that come with those different
options and can point out different
drivers/risks

105
Exhibit 1
Case 9 – FLC Sports League

Average royalties paid for league management

Royalties
15
16
14
12
% of Revenues

10
10
8
6 5
4
2
2
0
Hockey Baseball Football Soccer

# of Teams 10 8 10 10

Avg Revenue
Per Team ($M) 40 50 100 60

106
Exhibit 2
Case 9 – FLC Sports League

Sports fans in cities where FLC is not present

Sports Fans Per City
7

6
Population (Millions)

5 Soccer

4 Football

Baseball
3
Hockey
2

0
San Diego Atlanta Detroit Houston

New club projected

revenue per sports $30 $50 $25 $40
fan (years)

107
Exhibit 3
Case 9 – FLC Sports League

FLC’s total cost to foster a new team

City Sport Cost ($M)

San Diego Hockey 1

Baseball 2
Football 3
Soccer 5

Atlanta Hockey 9
Baseball 10
Football 12.5
Soccer 7.5

Detroit Hockey 4
Baseball 1.5
Football 2.5
Soccer 2
Houston Hockey 1
Baseball 4
Football 8
Soccer 4.5
108
Exhibit Insights
Case 9 – FLC Sports League

Insights – Exhibit 1 Insights – Exhibit 2 Insights – Exhibit 3

A good candidate will exclude A great candidate will start with Atlanta A good candidate will get here
Hockey and Baseball from further and will remember to multiply the final with Atlanta soccer and football
revenue of each team by the royalties % recommendation. A great candidate
analysis after calculations, but a great
and NI margin will point out possible risks of moving
candidate will exclude these two
sports just looking at the graph and to another sport.
Calculations:
not doing any math. Atlanta football – (4M – 2.5M) x $50 =
$125M rev. x 10% royalties paid to FLC Calculations:
= $12.5M in new rev. x 10% NI margin = Atlanta football - $1.25M NI / $12.5M
Calculations:
$1.25M cost = 10% ROI
Hockey – 10 x $40M x 2% = $8M Atlanta soccer – (6M – 4M) x $50 = Atlanta soccer - $1.5M NI / $7.5M =
Baseball – 8 x $50M x 5% = $20M $100M x 15% royalties = $15M x 10% = 20% ROI
Football – 10 x $100M x 10% = $100M $1.5M Houston football - $0.8M / $8M =
Soccer – 10 x $60M x 15% = $90M Houston football – (4M – 2M) x $40 = 10% ROI
$80M x 10% royalties = $8M x 10% =
Houston soccer - $0.9M / $4.5M =
$0.8M
Takeaway: Houston soccer – (5.5M – 4M) x$40 20% ROI
Move on with soccer and football = $60M x 15% royalties = $9M x 10% =
$0.9M Takeaway:
Football’s ROI is lower than FLC’s
Takeaway: hurdle rate, so FLC should move on
Atlanta and Houston are good options with soccer in Atlanta and Houston
109
Conclusion
Case 9 – FLC Sports League

Next Steps Excellent Case

Recommendation Risks Answers

• FLC should invest in an • Customer preference can • Start negotiating with the • Candidates come up with
Atlanta ($1.5M) and a change from soccer to candidates two or more opportunities
Houston ($.9M) soccer other sports • Set up initial marketing to expand (other sports,
team in order to achieve • Average spend may be and communication plan other cities, other leagues)
the $2.4M (24%) increase lower than expected for the launch • Candidates who quickly
in net income and respect • As FLC grows, costs • Consider other cities to realize that hockey and
the ROI hurdle rate of can increase more than keep expanding in the baseball are not viable
15% in both investments expected following years • Candidates who identify
(Atlanta and Houston – risks involved in opening
20%) a football league (lack of
know how, competitors)
• Candidates with perfect
math calculations /
organization

110
 Case 10

Marie’s Café
Food | Profitability
Interviewer Led
Ratings:
Quant - 2
Qual - 3
Overall - 3

111
Prompt
Case 10 – Marie’s Café

Marie’s Café is a small local coffee shop that serves coffee. Marie’s has been around for decades and is known
for its high quality drinks and cozy atmosphere. The café has seen declining profits over the last few quarters,
and the owner has hired you to increase its profits.

Clarifying Information
• There are two other coffee shops nearby that sell coffees and pastries.
(There is no further information on these competitors.)
• Marie’s currently serves two items (coffee and latte) in three different sizes.

Note:
• If the candidate touches on prices or costs, show Exhibit 1 and ask to calculate avg. profit / customer
• Next give candidate the relevant data points including Exhibit 2 and ask to calculate avg. profit / day

112
Framework
Case 10 – Marie’s Café

External Factors Internal Factors

Market Company
• Market growth • Foot traffic in the coffee store (Increase number of
• Changing consumer preferences (Product, atmosphere) customers)
• Process Efficiency (average time to cater to each customer)
Competition • Capacity of the cafe
• New low cost competitors
• New substiutes (restaurants or fast food chains close-by) Product
• Product diversification (limited product range)
• Price sensitivity of customers
• Complimentary products and services (wireless services)
• Quality of products/brand image (building on brand)

Exhibit Summary
• Exhibit 1: Products, Costs, and Customer Split
• Exhibit 2: Demand of coffee per hour

113
Question 1
Case 10 – Marie’s Café

Questions for Candidates about Exhibit Product Price Cost Unit Profit
% of
Customer
Profits per
Customer
that the Interview should ask: Purchases

• How much profit does Marie’s cafe currently make Coffee, 8 oz. $1.00 $0.50 $0.50 15% $0.08
per customer?
• Assume each customer only purchases one drink per Coffee, 12 oz. $1.50 $0.70 $0.80 15% $0.12
visit. (Show Exhibit 1)
Coffee, 16 oz. $2.00 $0.90 $1.10 15% $0.17
Guidance:
• Strong candidates will point out the larger sizes yield Latte, 8 oz. $3.00 $1.30 $1.70 20% $0.34
larger gross profit, and suggest new profit increasing
strategies (promoting sales of larger sizes, introducing Latte, 12 oz. $4.00 $1.90 $2.10 20% $0.42
a 20 oz size, eliminating 8 oz sizes). Profit here does not
include baristas. Latte, 16 oz. $5.00 $2.50 $2.50 15% $0.38
• Avg Profit = $1.50 / customer.
See Calculations to the right. Average Profit $1.50

114
Question 2
Case 10 – Marie’s Café

Questions for Candidates about Time Demand per

Served Current Optimal Optimal Optimal
Hour Profit Baristas Served Profit
Exhibit that the Interview should ask:
What is the average profit that Marie’s Café earns per day? 7AM to 10PM 100 60 180 3 90 270
• Each customer purchases exactly one beverage
• Two baristas are working at any given time. Baristas are paid $15/hr
• Hours: 7am to 10pm, Monday through Friday. Closed on weekends 10AM to 1PM 80 60 180 3 80 225
• The number of customers per hour is listed below. Customers leave
if they cannot be served quickly
• On average, it takes 2 minutes for a barista to complete an order 1PM to 4PM 60 60 180 2 60 180
• *Show Exhibit 2

4PM to 7PM 40 40 90 1 or 2 30 or 40 90
Guidance:
• Candidate should realize that the café is losing 7PM to 10PM 15 15 -22.5 1 15 22.5
money in the evening hours. Candidate should
suggest adding or subtracting baristas based on $607.50 $787.50
demand. Assuming 2 baristas per hour, the average
profitability per day would be $607.50. By adding a
third barista to the morning shift and reducing one
at night, the new profit would be $787.50

115
Exhibit 1
Case 10 – Marie’s Café

Products, Costs, and Customer Splits

Product Price % of Customer Product Cost

Purchases

Coffee, 8 oz. $1.00 15% Cup, 8 oz. $0.30

Coffee, 12 oz. $1.50 15% Cup, 12 oz. $0.40

Coffee, 16 oz. $2.00 15% Cup, 16 oz. $0.50

Latte, 8 oz. $3.00 20% 4 oz. of coffee $0.10

Latte, 12 oz. $4.00 20% 4 oz. of latte $0.50

Latte, 16 oz. $5.00 15%

Note: Food and packaging costs are separate.

116
Exhibit 2
Case 10 – Marie’s Café

Demand of coffee per hour

Time Average Demand per Hour

7AM to 10AM 100

10AM to 1PM 80

1PM to 4PM 60

4PM to 7PM 40

7PM to 10PM 15

117
Question 3
Case 10 – Marie’s Café

If candidate mentions that competitor sells pastries, while Marie’s Café does not: follow up by asking,
“what factors should Marie’s Café consider before purchasing an oven to sell pastries?”

Brainstorming Guidance
Revenue
• Doughnut sales, increased synergies with coffee/volume of customers

Costs
• Fixed costs – purchasing/maintaining oven, setting up display case, storage, advertising
• Variable costs – ingredients, hiring/training staff

Capacity
• Room in café for oven and ingredients
• Baristas available to accommodate for increase in demand

Brand Image – Marie’s is known for its coffee and atmosphere; adding pastries may change image
and drive away loyal customers, especially if they are low quality

Competition – Price and quality compared to competitors

Alternative Opportunities – Purchasing doughnuts from somewhere else

118
Question 4
Case 10 – Marie’s Café

A new espresso machine, priced at $2000, can greatly decrease the time it takes to make a latte.
The average time it takes to complete an average customer’s order decreases from 2 minutes to 90 seconds.
How long would it take to pay back the machine?

Demand per Optimal Optimal Optimal

Time Served Profit
Math Solution: Hour Baristas Served Profit

• Daily Profit shown below, calculated with the 7AM to 10PM 100 80 270 3 100 315
optimal number of baristas
• Machine would be paid back in 14.8 days 10AM to 1PM 80 80 270 2 80 270
• (2000/(922.5 - 787.5) from Question 3)
• Baristas in the 7-10AM would also yield similar
profits with the advantage of turning away few
1PM to 4PM 60 60 180 2 60 180
customers
4PM to 7PM 40 40 90 1 40 135

7PM to 10PM 15 15 -22.5 1 15 22.5

$607.50 $922.50

119
Conclusion
Case 10 – Marie’s Café

Next Steps Excellent Case

Recommendation Risks Answers

• Focus on driving profits • Offering wireless services • Hire 4 baristas for peak • An excellent caser will
through larger size of might make customers time or use the new provide both the pros and
coffee due to higher gross stay for longer and the machine. cons of starting wireless
profit per transaction capacity of the cafe might • Sell food along with services. He/She would
• Schedule 4 baristas not be enough to hold the coffee. As baristas are also be able to highlight
during peak times and customers. currently limited, think capacity and process
2 baristas during slower • Baristas unable to about buying food/ optimization issues.
periods accommodate demands pastries from wholesaler.
• Offer complimentary
add on services such as
wireless services
• Diversify product range by
including food.

120
 Case 11

Midwest Hospital
Healthcare | Profitability
Interviewer Led
Ratings:
Quant - 2
Qual - 3
Overall - 3

121
Prompt
Case 11 – Midwest Hospital

Midwest Hospital is a research-based hospital and takes pride in its joint replacement surgery department.
Recently Midwest Hospital did a P&L analysis for all departments and found that the joint replacement surgery
department is providing losses.

The CEO has asked us to help out.

Clarifying Information
• There are no financial targets.
• Focus of this case is only on joint replacement surgery.
• Give the exhibits in the subsequent slides only when the candidate asks for the relevant data.

Note:
• At some point near the start of the case, interviewer should take the lead.
• Make Exhibit 1 and 2 available for the interviewee ahead of question 1 and 2.

122
Framework
Case 11 – Midwest Hospital

Profit = Revenues - Costs Costs

• Fixed Costs
Revenue • Hospital
• No. of Surgeries • Doctors
• Complexity of surgery • Equipments
• Patient Mix • Insurance
• Price • License
• Other Charges (bed, medicines) • Variable Costs
• Post Surgery (visits, medicines) • Visiting Doctors/Surgeons
• Govt. regulation
Competition
• Price Customers Exhibit Summary
• Patient Mix • Age group
• Better facilities/equipment • Paying with insurance • Exhibit 1: Patient Mix
• Exhibit 2: Joint Replacement Department P&L
• Exhibit 3: Competitive Benchmark

123
Question 1
Case 11 – Midwest Hospital

Would it be advisable to not cater to Medicare patients (assuming no backlash)?

(Show Exhibit 1 & 2)

Solution:
• On a fully cost allocated basis, Medicare patients are unprofitable but they are still paying $1k
above the variable cost (marginal cost). This helps cover the fixed costs of the department.
So, it is not recommended to stop conducting surgeries for Medicare patients.

• Total Cost / # of Surgeries = $21M / 1000 = $21,000 / surgery

• Marginal Cost / # of Surgeries = $14M / 1000 = $14,000 / surgery
• Revenue per Medicare patient = $15,000 / surgery

124
Question 2
Case 11 – Midwest Hospital

What is the number of surgeries that Midwest needs to conduct in a year to breakeven?

Solution:
• Average revenue per patient is 19k. Average variable cost is 14k. Gross margin per patient is 5k.
Fixed cost are 7M, so 1400 surgeries are required to breakeven. Assuming same proportion as in
Exhibit 1 the hospital requires 140 commercial, 420 insurance, and 840 Medicare Patients

Avg. Revenue Per Surgery = Total Revenue / # of surgeries = $19M / 1000 = $19,000 per patient
Avg. Variable Cost = Total Variable Cost / # of Surgeries = $14,000 per patient
Fixed Costs = $7M

Breakeven = FC / (Rev - VC) = $7M / ($19000 - $14000) = 1400 Surgeries

Patient Mix:
Commercial = 10% * 1400 = 140 surgeries per year
Insurance = 30% * 1400 = 420 surgeries per year
Medicare = 60% * 1400 = 840 surgeries per year

**Percentages based on share of surgeries from Exhibit 1**

125
Question 3
Case 11 – Midwest Hospital

Why is Competitor D able to stay profitable despite having fewer patients and unfavourable patient mix?
(Show Exhibit 3)

Solution:
• Competitor D might have a lower cost structure or was able to negotiate better pricing from
payers.

126
Question 4
Case 11 – Midwest Hospital

Evaluate potential risks to increasing the number of surgeries.

Brainstorming Guidance:
• There might not be enough market demand and increasing surgeries
would mean stealing marketing share from competitors
• The competitors might reduce the price and enter a price war
• Quality of surgery may be reduced, impacting reputation.
• Surgeons may resent higher workload

127
Conclusion
Case 11 – Midwest Hospital

Next Steps Excellent Case

Recommendation Risks Answers

• Increase total number of • Those gained from • Analyze scope for cost • Star candidates quickly
patients to cover brainstorming reduction, starting identify that competitor D
• Change mix of patients to with competitive has a similar patient mix
have a higher proportion benchmarking but is still profitable.
of commercial and insured • Analyze scope for • Candidate should provide
customers increase in price, a reason as to why the
• See if you can negotiate starting with competitive client should not eliminate
with insurers and benchmarking medicare patients
Medicare for higher • Analyze profitability of • Candidate should bring
reimbursement. post care services up the idea that joint
• Start conversations with replacement department
reimbursement providers may be a loss leader
and provides synergies
with other department
offerings

128
Exhibit 1
Case 11 – Midwest Hospital

Patient Mix

Payer Type # Surgeries List Price Invoiced Price

Commercial
100 $40,000 $40,000
(Enterprises)

Insurance 300 $40,000 $20,000

Medicare
600 $40,000 $15,000
(Government)

129
Exhibit 2
Case 11 – Midwest Hospital

Joint Replacement Department P&L

$M

Revenue $19

VC Physician $5
Materials $5
Others $4

FC Facilities $3.5
Others $3.5

Total Costs $21

Profit ($2)

130
Exhibit 3
Case 11 – Midwest Hospital

Competitive Benchmark

Surgeries Commercial HMO Medicare Profitable

Midwest Hospital 1000 10% 30% 60% No

Comp A 1200 20% 20% 40% Yes

Comp B 800 30% 20% 50% Yes

Comp C 900 10% 20% 70% Yes

Comp D 1000 5% 25% 75% Yes

131
 Case 12

EuroRail
Hospitality | Growth
Interviewee Led
Ratings:
Quant - 2
Qual - 2
Overall - 3

132
Prompt
Case 12 – EuroRail

Our client, EuroRail, is a railway company that operates luxury trains across Europe. It is a very different kind of
railway company where tourists sign up for a 24-hour trip on the train. The trains are like hotels on wheels with
various amenities on board - ranging from a ball room, jacuzzi, spa, and a bar. These trains are very popular
in the Europe and run at 100% capacity throughout the year. Its end of 2022 and the company is looking to
quickly increase its yearly revenue for year 2023. What should they do?

Clarifications (provide only if asked for):

• Goal: Increase revenues by at least €44M for the year 2023
• Current revenue can be calculated later (but for reference current revenue is €365M, so €44M is about 12%
growth)
• The company charges €100 per person per trip (note, this is average price and candidate should ideally ask about
different tiers or segments in the train. If they ask about segments tell them ticket prices by segments from exhibit 1)
• The company operates 20 trains across Europe
• The trains run at 100% capacity and 365 days a year.
• Demand for Luxury currently perfectly matches with capacity but the demand for economy is so high that company
has to deny many registrations everyday.
• No competitor in the market

133
Expected Framework
Case 12 – EuroRail

Increase Average Spend Find New Revenue Stream Grow Inorganically

• Increase prices • Introduce casinos on-board similar • Add new trains to the feet
• Change mix of cabins tiers to casinos on cruise ships • Expand to other geographies and
• Introduce new tiers in train • Place advertisements inside introduce new routes
• Improve quality of onboard services and outside the trains to get ad- • Acquire competitors
to drive more onboard sales revenues • Explore partnering with other
• Partner with luxury companies to railway operators
drive commission-based sales
onboard
• Add more coach to the train
• Any practical idea is acceptable…

What is acceptable performance? What is expected from an exceptional performance? Notes for Interviewer
• A good candidate will create a framework that explores ways to • An exceptional candidate will acknowledge the fact that the • Shoot down ideas such as new routes / new trains (not possible
grow revenue and will not include other out of scope levers such trains are running at 100% capacity and will not suggest revenue in one year) or add coach (no engine capacity)
as costs or profits growth strategies that aim at increasing volume (Example: • Push candidate to towards ideas such as increase price or
decrease price to drive more sales, target new customers, change mix of cabin tiers (the ideal idea at this point is to explore
improve marketing and sales, etc.) price increase of one or both segments)
• Additionally, an excellent candidate will not only discuss inorganic • Ask candidate to hold the thought on new revenue stream ideas
growth strategies but will also acknowledge that EuroRail • If candidate asks for information regarding willingness to pay,
wants to increase revenues within the next year so acquisition, current pricing and tiers, etc. show them Exhibit 1
partnerships, buying new trains, etc. might not be feasible options • In any case, do not show Exhibit 2 without going through (and
due to time constraints solving) exhibit 1

134
Exhibit 1
Case 12 – EuroRail

Data from consumer insights team

EuroRail Train
Economy Coach
1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10
10 cabins per coach
2 PAX per cabin

Price Demand Relationship Luxury Coach

10 cabins per coach
30%
EuroRail Revenue Strems Economy Luxury 2 PAX per cabin

% Decrease in Demand
25%
Ticket per PAX €75 €125 20% PAX = passenger
Onboard spend per PAX 15%
€25 €25
10%
5%
0%
0% 10% 20%
% Increase in Price

Luxury Economy

Notes
• This is only a graphical representation of train to show split of economy and luxury cabins.
Actual trains also have more coaches dedicated to onboard amenities such as spa, jacuzzi, bar, etc.
• EuroRail does not want to increase prices by more than 20% due to fear of public outrage

135
Exhibit 1 Guidance
Case 12 – EuroRail

Pre and post acquisition financials

Notes for Interviewer

• This case is difficult to solve at yearly level. Candidate should bring everything down to per train per day level (ok to use 360 days / year)
• A good candidate will indicate that economy price cannot be increased because of high demand elasticity (higher quantity decrease per percent increase in price).
Therefore, increase price of luxury segment.
• An excellent candidate will realize that increase prices will free up some cabins due to reduced demand. These empty cabins can then be used for other purposes.
• Mini Brainstorm: Ask candidate to generate ideas about what to do with the free cabins. Ask “what else” till they are out of ideas. Direct candidate towards the idea of free upgrade for loyal economy
passengers at price of economy cabin i.e., €75 per person.
• After candidate has explored 20% price hike and realized EuroRail is still not able to meet the target, communicate that you like the idea of 20% price hike but what else can we do. Candidate should go
back to the framework and suggest exploring additional revenue streams.

Goal = €44M over next year = €44M / (20 trains x 360 days) = €6,111 per train per day additional revenue (Okay to go with €6,000)

Scenario Luxury Ticket Sales Economy Ticket Sales Total Sales

Current = 10 coaches x 10 cabins x 2 PAX x €125 = 10 coaches x 10 cabins x 2 PAX x €75 = €25,000 + €15,000
= €25,000 = €15,000 = €40,000

10% price increase for luxury segment = €25,000 x 1.1 x 0.95 = €15,000 x 1.05 = €41,875
• 5% demand drop = €26,125 = €15,750 = €1,875 additional revenue
• Free upgrade for economy travelers to freed up 5% (not enough, so explore 20% price increase)
luxury cabins

20% price increase for luxury segment = €25,000 x 1.2 x 0.90 = €15,000 x 1.1 = €43,500
• 10% demand drop = €27,000 = €16,500 = €3,500 additional revenue
• Free upgrade for economy travelers to freed up 10% (still not enough, so explore additional
luxury cabins
revenue growth ideas)

136
Exhibit 2 (for interviewer)
Case 12 – EuroRail

• After asking candidate about additional • After candidate calculates net new
revenue streams, inform that EuroRail would revenue form Casino Coach, ask
like to add a casino coach onboard and give them to brainstorm some pros and
cons of casino and then move on to
below information about the Casino Coach:
the recommendations
• Additional Revenue: €25 per PAX
• Casino coach will be created by
converting 1 economy coach
• Casino will require 6 moths to launch

Solution to Casino Coach

Revenue Lost Due to Coach Conversion New Revenue Net New Revenue

• 20 Economy PAX x (€75 ticket + = 380 PAX x €25 x 50% year €2,750
€25 onboard purchases) = €4,750
• = €2,000 Note:
• Candidate should realize that there will only be 380 PAX and not 400 PAX since EuroRail
will convert one of its economy coach to casino and will lose 20 economy PAX
• If candidate misses the time factor, direct them to think how time required for launch
will impact the new revenue (Casino Coach will take 6 months, therefore it will generate
revenue only for 50% of the year

137
Brainstorming
Case 12 – EuroRail

What are some pros and cons of each program having a Casino Coach?
Below is an example of answer. This is not an exhaustive list, and any additional reasonable points are acceptable

Pros:
• High revenue potential in the long term
• Will make train more attractive for all passengers
• Adding a casino could be a good way to justify 20% price increase

Cons:
• Might face regulatory issues
• Casinos are risky investments and EuroRail might lose money on bad days
• Will require high investment (security, surveillance, dealers, etc.)
• High time to launch

138
Conclusion
Case 12 – EuroRail

Recommendation Risks Next Steps

• To achieve its revenue growth • Increase in price might not be well • Announce launch of onboard
target of €44M in 2023, EuroRail received by the travelers casino along with price
should increase price of its luxury • Price hikes might make this hike – create marketing and
segment by 20%. industry more attractive and invite communication material
• This will lead to 10% drop in competition • Perform customer research to
demand. EuroRail can give free • Casinos are risky and capital- decide games to be place in casino
upgrades to its loyal economy intensive investments • Consult lawyers to discuss
travelers to backfill freed up regulations around casino
luxury cabins. (combined €3,500 operations
additional revenue per train per • Hire designers to redesign coach
day) as a casino
• EuroRail should also convert one
of its economy coaches on each
train to a casino (Additional €2,750
revenue per train per day)

139
 Case 13

DoWork
Technology & Real Estate | Growth
Interviewee Led
Ratings:
Quant - 2
Qual - 3
Overall - 3

140
Prompt
Case 13 – DoWork

DoWork is a provider of coworking spaces (both physical and virtual) and uses Technology solutions to run
a lean and efficient operation. The company went through acute financial stress post Covid but has since
recovered with increasing number of people returning to office and companies opting for more flexible lease
arrangements due to hybrid work. The CEO has approached you to explore new growth frontiers while
maintaining a strong focus on profitability.

Clarifications (provide only if asked for):

• What is our client’s business model? Or How does our client make money?
Answer: Our client makes money by renting office places at a cheap rate by signing long term contracts
and renting them out at higher rates to enterprises and start-ups. It has recently started exploring providing
technology enabled services for lease and commercial space management
• What is the current revenue and profitability?
Answer: Revenue is at around 1 BN and Profit Margin is at 15%
• What is the growth target? What timelines?
Answer: Double revenue in 3 years, increase or maintain profitability
• What is the market or geography in consideration?
Answer: US
• What does virtual coworking space mean?
Answer:. Virtual meeting software solutions

141
Expected Framework
Case 13 – DoWork

Revenue Growth Opportunities Profitability Market

• Organic: • Revenue • Competition

• Price increase • Cost • Covid and related challenges
• Increase # customers • Fixed Cost: Long term lease, • Real estate cost
• New customers, same products labor • Leasing vs. upfront purchase
(segmentation and marketing) • Variable Cost: negligible but
• Same customers, new products limited to consumables like food
(R&D, pricing and marketing) and beverages, stationary etc
• New customers, new products
(riskier bet)
• Inorganic:
• Acquire a competitor
• Expand geographically

What is acceptable performance? What is expected from an exceptional performance?

• A good response will mention growth • An exceptional framework will have the acceptable framework with
opportunities and profitability framework structured market conditions / other considerations to consider for
growth and profitability

142
Exhibit 1
Case 13 – DoWork

Exhibit 1a: US Revenue in BN $ for 3 largest commercial lessors Exhibit 1b: Revenue share that can be captured by
DoWork organically
2.5 0.5 1.0

15% AllWork BeeWork

20% 20%
5% SMEs 10% 20%
8%
Big Corporates 25% 10%
40%
Startups 30% 20%

80% 72%

40% SMEs

Big Corporates

AllWork BeeWork DoWork Startups

143
Exhibit 2
Case 13 – DoWork

Net profit margin by segment post organic expansion

0.30
Profit Margin
0.25

0.20

0.15

0.10

0.05

0.00
SMB Corporate Startup

144
Interviewer Guidance for Solving Exhibit 1
Case 13 – DoWork

Guidance for the Interviewer

Once Exhibit 1 is presented, the interviewer should move forward by guiding that organic expansion is the right way
to go to meet the company objectives. The interviewee calculates the incremental revenue using the table 1 and
2, the interviewer should ask for additional observations/inferences (if any) from the Exhibits and follow up with
questions on other key considerations (profitability) that the client should consider.

What should a good response look like?

• Exhibit 1a: Candidate should be able to call out key observations and risks basis revenue and market share number
for each competitor
• Exhibit 1b: Candidate should be able to calculate incremental revenue gain for DoWork

What should an excellent response look like?

A candidate should call out considerations around profitability (case objective) and capacity (does DoWork have
existing capacity to meet additional demand or does it need further investments which can impact profitability)

145
Interviewer Guidance for Solving Exhibit 1
Case 13 – DoWork

AllWork BeeWork DoWork AllWork BeeWork

Revenue 2.5 0.5 1.0 SMEs 10% 20%

SMEs 20% 15% 20% Big Corporates 25% 10%

Big Corporates 40% 5% 8% Startups 30% 20%

Startups 40% 80% 72%

Objective is to double revenue from 1 to 2 BN USD.

Incremental Revenue:
From SMEs: 20%*2.5*10% + 15%*0.5*20% = $ 65 MN
From Big Corporates: 40%*2.5*25% + 5%*0.5*10% = $252.5 MN
From Startups: 40%*2.5*30% + 80%*0.5*20% = $380 MN

Total incremental Revenue : ~700 MN (ok to approximate)

However, this is falling short by 300 MN. Hence, the interviewer should follow up with a brainstorming
session on meeting the 300 M shortfall only after guiding the candidate through the profitability exhibit.

146
Interviewer Guidance for Solving Exhibit 2
Case 13 – DoWork

Segment Profit Margin

Objective is to maintain or increase profitability.
SMEs 15% Incremental Revenue and Profit:
From SMEs: 20%*2.5*10% + 15%*0.5*20% = $ 65 MN | Profit: ~ $ 10 MN
Big Corporates 30% From Big Corporates: 40%*2.5*25% + 5%*0.5*10% = $252.5 MN | Profit: ~ $ 75 MN
From Startups: 40%*2.5*30% + 80%*0.5*20% = $380 MN | Profit: ~ $ 76 MN
Startups 20% Total incremental Revenue and Profit: ~700 MN (ok to approximate) | Profit : ~ $ 160 MN

New Profit Margin : (150 + 160) / 1.7 = 18% which is more than 15%

Alternatively, an exceptional candidate should be able to infer from the graph that
since each segment’s profit margin is more than 15% the overall margin would stay
above 15%.

Interviewer should guide the discussion towards technology solutions and ideas that the
client can pursue to further increase their revenue from existing customers.

147
Guidance for Brainstorming
Case 13 – DoWork

Question
• What are some tech led initiatives that Do-Work can pursue to make customers feel safe about in-person work?

Potential Solutions
• Autonomous Cleaning Solutions
• Zero touch and voice enabled tech
• Mobile and App based accessibility
• Remote Collab Tools
• People Counting sensors and over crowding alerts
• Attendance management
• Lease management for B2B enterprises

148
Exhibit 3
Case 13 – DoWork

Tech initiatives for incremental revenue generation

Idea Name Implementation Implementation Incremental Revenue Operational Cost Risk* Lead Time to Revenue
Realization post Implementation
Timeline Cost (in USD) (in USD)

Attendance
management for 2 years NA 150 MN 10 MN Medium .5 years
enterprises

CRM management 1 year NA 200MN 50MN High 1 year

Lease management
SaaS
1.5 years NA 300MN 5MN High 2 years

Voice enabled
1 year NA 350MN 50MN High 2 years
Technology

*Riskiness of a project is a function of internal parameters.

Due to internal controls DoWork is not able to execute more than one High risk project at any given point of time.

149
Interviewer Guidance for Solving Exhibit 3
Case 13 – DoWork

Objective is to increase revenue by 300 MN in the next 3 years

• First initiative has an implementation + lead time of 2.5 years and incremental revenue of 150 MN which is short of
300 M
• Second initiative has an implementation + lead time of 2 years and incremental revenue of 200 MN which is short of
300 M
• Third initiative has an implementation + lead time of 3.5 years and hence not eligible
• Fourth initiative has an implementation + lead time of 3 years and incremental revenue of 350 MN: this initiative
should be prioritized over other

Since these initiatives don’t have a fixed cost component there is no impact on the profitability of the enterprise
during implementation and lead time.

Also, since operational cost is negligible compared to revenue profit margin improves considerably.

150
Conclusion
Case 13 – DoWork

Recommendation Risks Next Steps

• DoWork should focus on • Covid can cause further disruption • Hire a dedicated marketing and
capturing more market share from and hinder growth research team for competitor
competitors using aggressive • Rising real estate costs in major analysis and growth marketing
marketing techniques to grow its cities can increase long term lease
market share and focus on the rentals
most profitable segment i.e. Big
Corporate
• DoWork should also implement
technology led initiatives to boost
revenue and cost-saving

151
 Case 14

Banana Heaven
Public Sector | Profitability
Interviewer Led
Ratings:
Quant - 1
Qual - 3
Overall - 2

152
Prompt
Case 14 – Banana Heaven

The government of Banana Haven (an island in the Indian ocean) is predominantly an agricultural economy.
Majority of the population is involved in the farming of paddy (rice).
Once grown on the farm, paddy is then bought by the government at a predefined price called as the Minimum
Selling Price (MSP). Banana haven is going through a crisis of depleting groundwater (water that is used for
agriculture). Since paddy uses a lot of water in its cultivation stage, the water level is reducing by ~ 50 feet
every year. This is a major cause of concern on the island and the government is planning to introduce a
crop diversification program as a pilot to incentives farmers to shift from paddy to other crops that use less
groundwater. What should be the government’s plan of action to conduct a successful pilot and replicate the
program in the whole island nation.

Clarifications
It’s a McK style case, so just ensure that the interviewee understands the prompt and can use clarification questions to -
• Summarize the prompt
• Ask you to repeat any information that the interviewee might have missed

153
Expected Framework
Case 14 – Banana Heaven

Financials/Economics Market/External Factors Risks

• Farmers • Market for alternate crop • Operations

• Profit from new crop • Market Size/Demand trend • Technical knowledge to the
• Profit from old crop • Existing players farmers to shift
• Government • Soil/Climate • Implementation
• Actual ground water reduction • Does the country have the right • Supply chain of new crop
• Subsidy to be given to make up soil/climate for the crop • Government budget
for loss • Other factors like crop damage, • Adoption by farmers
wild animals etc. • Scaling
• Resources to scale

What is acceptable performance? What is expected from an exceptional performance?

• Ability to identify that the project can be successful only when • Taking into account external factors like soil/climate
it makes economic sense to the farmers. The new crop plus • Being creative on ways to ensure adoption of the new pilot.
government subsidy should ensure that the farmers make at Giving incentives to farmers through subsidy
least the same they were making earlier • Introduce gamification/tech for review and monitoring of the pilot
• Keeping in mind the objective to reduce ground water and keeping in mind the challenges faced during scaling

154
Exhibit 1
Case 14 – Banana Heaven

Financial analysis of crop options

Ground water
Crop Crops/acre ($) Revenue/acre ($)
saved (%)

Paddy
Paddy 200 500 –
Paddy
Paddy
Maize
Maize
Maize 150 300 50%
Maize
Pulse
Pulse
Pulse
Pulse 300 400 40%

• Total farmers - 1k
• Area per farmer - 500 acre

155
Interviewer Guidance for Solving Exhibit 1
Case 14 – Banana Heaven

Crop Crops/acre ($) Revenue/acre ($) Profit/acre ($) Cost to government for shifting from Paddy to maize:

Total profit (Paddy) = 300 * 1k*500 = $150 M

Paddy
Paddy 200 500 300
Paddy Total profit (Maize) = 150*1k*500 = $75M
Paddy
Maize
Maize
Maize 150 300 150 Extra $75M budget needed from government.
Maize
Pulse
Pulse Each farmer to be given at least $150/acre to shift
Pulse
Pulse 300 400 100 from paddy to maize

What is acceptable performance? What is expected from an exceptional performance?

• Calculating profits directly from the data for all the 3 sources • Understanding that there is a difference of 150 profit/acre that needs to be
• Combining the profit with information about groundwater reduction and filled by the government
deciding to go ahead with maize as an alternate crop • Calculating the budget needed from the government. Multiplying the gap in
• Calculate the total profit. Multiplying the profit/acre with total number of profit ($150/acre) and multiplying the profit/acre with total number of acres
acres and total number of farmers and total number of farmers to get the yearly budget for the government
• number of acres and total number of farmers

156
Brainstorming Question
Case 14 – Banana Heaven

Question
After 6 months, the pilot project was successful and the government now plans to rollout the pilot to all the 100k
farmers in the island. What should the government do to ensure scaling the pilot from 1k farmers to all the 100k
farmers in the island nation of banana heaven?

Solution
Supply Demand

• Adoption of maize • Creating Market for alternate crop

• Mitigating risks from crop transfer • Export opportunities
• IEC/Awareness • Raw material for other industries like alcohol
• Using education content to increase • Government subsidy/support
awareness about groundwater • Non monetary incentives to farmers
• Operations/technical support to farmers • 100% assurance of buying the maize crop
• Expert consultation to farmers from farmers

157
Conclusion
Case 14 – Banana Heaven

Recommendation Risks Next Steps

• Government should go ahead with • Financial burden - Extra budget of • Due diligence on the existing
the pilot with maize as a possible $75M needs to be given to the pilot market for maize including exports.
alternative to current paddy to make economic sense to the Any possible ways to increased
cultivation to tackle groundwater farmers demand
depletion • Dependence on rice - If country • Analysis of soil/climate conditions
is dependent on rice for domestic to identify potential land areas for
use, then alternate sources need to pilot implementation
be figured out • Creating a plan for scaling the pilot
• Soil/Climate needs might not be
optimum for maize production

158
 Case 15

One Tree Hill

Non Profits | Micro-Economics, Financing
Interviewee Led
Ratings:
Quant - 3
Qual - 3
Overall - 3

159
Prompt
Case 15 – One Tree Hill

The nonprofit organization, One Tree Hill (OTH), has a mission of restoring forest cover globally. They typically
give grants (donations) to local NGOs, communities, or startups that reforest (i.e., plant trees) in a given area.
Due to the limited supply of grant funds in recent times, and in order to enter a very lucrative market, OTH
is looking for ways to fund some reforestation projects through the sale of carbon credits (CC), also called
“carbon financing”. They have a portfolio of projects in need of funding, and they would like to select a few for
carbon financing. Should OTH pursue carbon financing, and if yes, for which projects?

Clarifications (provide only if asked for):

• A carbon credit (CC) is a tradable certificate that provides the holder of the credit the right to emit greenhouse gases, typically
1 ton of carbon dioxide equivalents. Corporations and countries purchase carbon credits to “offset” their emissions above
allowable limits.
• If the candidate asks about the process for selling carbon credits, show them the flowchart in Exhibit 1 (this is just meant to
help them understand the process, candidate is not expected to draw insights from this)
• There is no target amount to be raised for funding these projects (there are many). The case is about whether financing a
project via generating and selling carbon credits is a feasible option. If feasible, OTH will proceed with that project.
• Who is the customer? Typically, corporations or countries wanting to offset emissions from their operations.
• This is a forward-looking analysis, i.e., only for new projects. We can ignore any past planted trees or projects.

160
Exhibit 1
Case 15 – One Tree Hill

Estimate carbon removal

Reforestation External Audit Carbon Credits Sale of CCs
potential of project (carbon
projects identified of estimates (CCs) certified to buyers
credits generated)

• 1 ton of CO2 removed by trees = 1 carbon credit generated

• Done by external agencies/certification bodies

161
Expected Framework
Case 15 – One Tree Hill

C. Legal &
A. Financial factors B. Logistical factors
Regulatory factors

Costs of Revenue generating Resources & capacity

Opportunity costs Timeline Geography of project –
carbon financing potential to execute
national policy on CCs?
Who can you sell to?

Costs of certification; Price at which carbon Does this preclude

Manpower, technical
external audit; credits are sold; projects from other
assistance, on-field
commissions to CC customer demand forms of funding or Any unique taxation
resources, etc. for data
issuing body tree for purchasing CCs; other revenue sources policies to consider?
collection and ongoing
planting & maintenance market trends – (e.g.: sustainable
monitoring
costs; labor nascent vs growing timber sales)

CC Regulatory bodies
like the UNFCCC –
• This is a sample MECE framework, but there can be more factors candidates explore. what is their role?

• A good candidate will identify that the process in Exhibit 1 involves many costs, and the final goal is
to find the projects that are ”profitable”. The framework will reflect that this case boils down to doing a
cost-benefit analysis.
• An exceptional candidate will also identify the variety of other factors that can go into this decision,
such as the timeline, national climate policy, etc. The candidate should also bring in knowledge and
examples from this widely covered subject in the real world.

162
Interviewer Guidance (After Framework)
Case 15 – One Tree Hill

After the framework, the candidate should ask for data on the costs of the various steps – tell them the
information in Table 1. If they do not ask, guide the interviewee towards thinking about how an organization
can generate carbon credits, who would issue these, certify them, etc.

Table 1 (To share with candidate)

Fixed costs (do not change with size of project):

1. Audit cost = $325,000
2. Project certification cost = $175,000

Variable costs:
1. Carbon Credit issuance fee = $2 per CC issued
2. Tree planting & maintenance cost = $5 per tree (throughout
the tree’s lifetime)

Price of CC sold in the market:

$10 per CC

After receiving Table 1 information, the candidate should realize that the costs are variable and should seek
information on the number of trees in various projects and the number of carbon credits that can be sold.
Show them Exhibit 2

163
Interviewer Guidance (Solving Exhibit 2)
Case 15 – One Tree Hill

(Time value of money can be ignored)

Method 1: Candidates can solve this in the traditional method of calculating variable costs for each of the projects, add fixed costs, then subtract total cost from
revenue to find if it’s profitable. However, this is extremely lengthy and not advised.
[Example for Project A: Total CCs generated = Number of trees*CC potential per tree = 3M * 1 = 3M
Total revenue = Total CCs generated * $10 per CC = 30M; Variable costs = $2 * Number of trees + $5 * CCs generated = $21M;
Total costs = $21M + $0.5M (Fixed cost) = = $21.5M; Profit = Revenue - Cost = $8.5M. Hence, this project breaks even]

Total Variable
Project Number of trees Tree species Location Total CCs Fixed costs Total costs Profit
revenue costs
A 3000000 Oaks France 3000000 30000000 21000000 500000 21500000 8500000
B 7000000 Mangroves India 5250000 52500000 45500000 500000 46000000 6500000
C 4000000 Acacia Ghana 2000000 20000000 24000000 500000 24500000 -4500000
D 3000000 Alder Peru 1800000 18000000 18600000 500000 19100000 -1100000
E 350000 Rubber Venezuela 280000 2800000 2310000 500000 2810000 -10000
F 2000000 Apple Turkey 600000 6000000 11200000 500000 11700000 -5700000
G 3000000 Acai Palm Brazil 1200000 12000000 17400000 500000 17900000 -5900000
H 4000000 Maple Canada 2200000 22000000 24400000 500000 24900000 -2900000

Method 2: Instead, candidate should take a unit economics approach – what is the minimum carbon credit potential per tree beyond which it becomes profitable?
(if candidate is struggling, ask them this question as a hint).
Let “x” be the Carbon Credit potential/ number of CCs per tree (0.5, 0,6, 1, etc).
Our break-even equation per tree then becomes: 2x + 5 = 10x [We converted all costs and revenues to a per tree basis; 2x = Cost per CC * number of CC per tree
= Cost per tree; 5 is the planting cost per tree; 10x = Price of CC * CC per tree = Price per tree]

Solving this, we get x =0.625. Projects with CC potential per tree > 0.625 could breakeven, depending on fixed costs (Projects A, B, E). Now candidate can perform
the calculations shown above only for these 3 projects and find that Projects A & B are profitable!

164
Exhibit 2
Case 15 – One Tree Hill

Project # of trees Tree Species Location

CARBON CREDIT POTENTIAL PER TREE
A 3,000,000 Oaks France
Maple 0.55 B 7,000,000 Mangroves India
C 4,000,000 Acacia Ghana
Acai Palm 0.4
D 3,000,000 Alder Peru
Apple 0.3
E 350,000 Rubber Venezuela
F 2,000,000 Apple Turkey
Tree species

Rubber 0.8

G 3,000,000 Acai Palm Brazil

Alder 0.6
H 4,000,000 Maple Canada
Acacia 0.5

Mangroves 0.75

Oaks 1

0 0.2 0.4 0.6 0.8 1 1.2

Number of Carbon Credits generated*

*Carbon credits generated are over the tree’s lifetime of 30 years, not annually

165
Brainstorming Question
Case 15 – One Tree Hill

What other factors would you consider when evaluating if OTH should proceed with carbon financing of Projects A & B?

Expected Answer:
Candidate should provide a structured list of factors other than financial feasibility to be considered when evaluating
this decision, including but not limited to:
a.) Legal ramifications of selling carbon credits generated in reforested areas
b.) Double counting of carbon credits with national commitments of reforestation
c.) Availability of manpower to perform the tasks required
d.) Timeline of cash flows – when does the money from sale of CCs come in?
Does this overlap with the requirement of funds?
e.) Availability of grant capital in the country – we may want to explore CCs in regions where grants are limited

Interviewer Guidance for Exhibit 3

Once candidate lists a few factors, show them Exhibit 3 and ask for their thoughts. The chart and map in Exhibit 3
is intentionally ambiguous. While India (Project B) has lower availability of grant funding capital and hence may need
to do carbon financing more, it has fewer forest protection services available – which makes implementation very
difficult. Similarly, existing forest cover and density is very different for both projects.

There is no “right” conclusion from Exhibit 3, it is meant to test the candidate’s ability to interpret ambiguous data.
Any reasonable conclusion is accepted.

166
Exhibit 3
Case 15 – One Tree Hill

Source:

Resource Availability

Project A
B

Project B

Availability of Strength of
capital for grant forest protection
funding services

167
Conclusion
Case 15 – One Tree Hill

Recommendation Risks Next Steps

• There can be multiple reasonable • We have ignored the time value of • Source start up capital for projects
recommendations for this case. money in our calculations. $8.5M to begin planting of trees
Project A and B are both profitable, over a significantly long project • Work with French and/or Indian
however they differ significantly period could mean very little governments to understand
on other factors. Candidate can returns on a yearly basis to the carbon sale rights, policy, and
recommend to proceed with both project. other legal ramifications of this
projects or either one, but they • The source of revenue is sale project
should give a sound justification of carbon credits in the future. • Gauge interest from potential
for their choice. The justification Upfront capital is still required corporate customers for carbon
should summarize all the areas that to plant trees and kickstart the credits
were covered in this case (financial project, so OTH will have to find
feasibility, geography, resource other sources of cash for that
availability, and any others from purpose.
framework/brainstorming). • Any regional limitations/ policy
risk/ other area covered in
brainstorming

168
 Case 16

Alternative Milk
Consumer Packaged Goods | M&A
Interviewee Led
Ratings:
Quant - 2
Qual - 2
Overall - 2

169
Prompt
Case 16 – Altnerative Milk

Your client is FoodCo a multi billion dollar company looking to enter the growing alternative milk market.
FoodCo has partnered with Bain to understand the best way to enter the market through acquisition of a
growing brand, Smilk. Smilks profits have doubled in the last 3 years in both the US and Europe. FoodCo has
expressed interested in purchasing the US business of Smilk. FoodCo’s main objective is to increase Smilk
market share in the US to 8% in the next 5 years and increase profitability by 6x in the next 5 years. How would
you help FoodCo think about a potential acquisition of Smilk?

Clarifications
• What products does Smilk sell: drinkable alternative milk products (like oat, almond and soy milk)
• Value Chain: Smilk handles everything from manufacturing to distribution in supermarkets
• Specific financial target for FoodCo: 6x profit and increase market share to 8%

170
Expected Framework
Case 16 – Altnerative Milk

Smilk Profit Market of Alternative Milk FoodCo Company

• Revenues in US • Growth + size of market in US • Revenue Synergies

• # of Sales • Competition in the space • Cost Synergies
• Current distribution channels • Customers preferences / trends • Savings in manufacturing
(Supermarkets, ecommerce) in market • Economies of scale
• Pricing • Supplier cost savings
• Costs in US • Expertise
• Variable Costs
• COGS
• Distribution costs
• Fixed Costs
• Manufacturing costs
• Facilities cost

What is acceptable performance? What is expected from an exceptional performance?

• Candidate mentions the above three buckets. • Candidate mentions the three buckets, sufficiently expands on
each bucket, and remembers that the goal is to increase profit.

171
Question 1
Case 16 – Altnerative Milk

Question #1: what is the total market size today and in 5 years of the alternative milk market?
Provide candidate with 5 year growth rate of 40%

Alternative Milk
Crop Smilk Market Size Smilk Market Share
Market Size

Today $5M 4% =5M/4% = $125M

5 year growth rate

=125M*1.4=$175M
is 40%

**8% of Alt Milk Solve For

Market (Answer $14M) 8% =$175*.08=$14M

**Candidate should remember that FoodCo wants to increase Smilk market share in the
US Alt Milk market to 8% in the next 5 years and therefore note that to be successful Smilk
must be able to obtain a market size of $14M in 5 years to reach FoodCo target.

172
Question 2
Case 16 – Altnerative Milk

Our client is curious in understanding the profitability of the US SMILK businesses.

Question #1: What is Smilk’s profit for the US?
Question #2: What would the growth rate need to be to obtain 6x profit?

Question 1 US Smilk Calculation Notes Question 2 US Smilk Calculation Notes

Business Business

Sales Worldwide 2.5M products sold Profit 750K

Candidate should Profit 5 Years $750k*6 = $4.5M

40% 2.5M*.4 = SOLVE FOR
% of business solve for number of
(provided) 1M products
products sold in US ($4.5 – 750K)/ **
Growth Rate SOLVE FOR 750k = 5%
Average
Sales Price price $5
**A good candidate will contextualize the 5% growth rate indicate if they
Revenue SOLVE FOR =1M * $5 = 5M believe this is reasonable or not.

Profit Margin 15%

Profit SOLVE FOR 5M*.15 = 750K

173
Brainstorming Question
Case 16 – Altnerative Milk

Question
What are some synergies we can expect to see if FoodCo acquires SMILK?

Solution
Revenue Synergies
• Diversify product mix with alternative milk products from SMILK
• Cross-sell SMILK with complementary FoodCo products
Cost Synergies
• Supply Chain & Operations – Greater buyer power and economies of scale by producing products in the same
location
• SG&A – reduce headcount to share marketing, finance, sales, and IT teams

174
Brainstorming Question
Case 16 – Altnerative Milk

Question
What are some risks to FoodCo if they acquire SMILK?

Solution
• Culture clash – the culture at SMILK and FoodCo are not compatible and
they don’t see the synergies that they expected
• Operations in US
• Brand cannibalization

175
Conclusion
Case 16 – Altnerative Milk

Recommendation Risks Next Steps

• Yes, FoodCo should acquire Smilk • Culture clashes may occur • Send Smilk a term sheet with
because they will be able obtain between FoodCo and Smilk details for the acquisition
their goal of increasing market • Government approval of • Start preparing internal teams to
share by 8% and profitability by 6x. acquisition onboard and transition the Smilk
team
• Conduct a survey to
further understand the alternative
milk market and remain a leader in
the category

176
 Case 17

Jab We Profit
Telecom | New Product
Interviewee Led
Ratings:
Quant - 2
Qual - 2
Overall - 2

177
Prompt
Case 17 – Jab We Profit

Telecom Co, a large Indian telecom service, has a new CEO who is determined to revive the struggling
company. He has come up with the idea to launch a new, unlimited long-distance minutes cell plan called
‘Geet’ to attract new customers. This is a big strategic risk at a time the company is under intense scrutiny
from shareholders and the general public, so he has hired us to evaluate if this product is a good idea.
Should he launch this product or not?

Clarifications
• Telecom Co has operations only in India
• Telecom Co only has B2B and B2C subscriptions. We’ll treat it as one pool of subscriptions.
• Telecom Co does not currently have an unlimited minutes plan; customers looking to make long distance calls must pay per minute.
• Telecom Co’s main business is providing mobile communication services (e.g., data and minutes). It has some smaller investments in
areas such as television and home internet, but these are minor parts of the business.
• There are several telecom players in India; our client is the fourth largest.
• The CEO needs the investment to break even by the end of the 2nd year, due to pressure from investors to see improvement to the
company’s performance.

178
Case flow (interviewer only)
Case 17 – Jab We Profit

Steps:
1. Interviewer reads the prompt and answers any clarifying questions
2. Candidate develops a framework referencing revenues and costs (among other possible things). Let the candidate pick if they want
to start with revenues or costs (the order isn’t important).
3. Revenue side steps:
• Ask candidate what they would need to estimate potential revenue
• The candidate needs to know the market size, estimated market share and pricing per year. The market size will be given in
Exhibit 1; the market share will be given in Exhibit 2; pricing will be given by the interviewer when asked (flat $4 / yr pricing for
long-distance plans)
• Have the candidate estimate revenue.
4. Cost side steps:
• When the candidate asks about costs, read them the cost information, share Exhibit 3
• Have the candidate estimate total costs from this information.
5. Break-even analysis:
• With the revenue and cost analysis done, the candidate can put it together to estimate the breakeven timeline
6. Final brainstorm: If the company does not invest this money in the new product, what else should they consider doing instead to
revitalize the company?
7. Final recommendation

Note that all values are given in US$ throughout the case. Assume constant terms (no need to factor in inflation).

179
Expected Framework
Case 17 – Jab We Profit

What is acceptable performance? What is expected from an

A good framework will be along the lines of the following: exceptional performance?
• Revenues from launching product
• Number of prospective customers A great framework will be along the lines of the following:
• Price • Break-even analysis
• Costs from launching product • Projected revenues (market size * share * price)
• Fixed • Projected costs (fixed, variable, overhead)
• Variable • Market factors
• Other Considerations • Short-term view (do consumers want this
• Alternatives to launching this products product? how big is the market today?)
• Competition • Long-term view (is the market growing? are
competing technologies like FaceTime on the
horizon?)
• Competitors (how fragmented is the market?
how powerful are competitors?)
• Risks
• Cannibalization (will this product cannibalize our
existing customers?)
• Competitive response (can competitors just copy
this product?)

180
Brainstorming Question
Case 17 – Jab We Profit

How would you estimate the potential revenues for this product?
Note: it is not necessary to do math just yet - just discuss what inputs would be needed.
The interviewer will give the candidate information in the subsequent exhibits.

Solution
Revenue is equal to the market size * the market share * the price of the product
Thus, you would want to know the number of consumers, the share we think we can
get, and the price we plan to charge annually.

Tips
To keep it simple, consider only B2C, consumer cell phone plans (e.g., do not need to
factor in work-issued cell phones)

181
Exhibit 1
Case 17 – Jab We Profit

182
Exhibit 2
Case 17 – Jab We Profit

183
Exhibit 3
Case 17 – Jab We Profit

Fixed Costs:
• Leasing bandwidth: $500 mn over 5 years
• Operating costs: $125 mn over 5 years

Variable Costs:
• Annual maintenance costs of $7.5 mn/yr for 5 years

184
Brainstorming Question
Case 17 – Jab We Profit

If Telecom Co does not decide to move forward with the new, unlimited long distance minutes product,
what else should they consider to try to revive the company?

Solution
There are several ways the candidate can approach this. Two options are given
below, though they are not the only possible ideas. It is important that the candidate
is structured in their response.

Improve core business:

• Evaluate if existing costs can be lowered to improve profitability on existing customers
• Try to steal share of phone subscriptions from other competitors (via lower pricing, better
customer service, more convenient locations, etc)
• Try to reach first-time mobile phone customers to grow share of consumers that use
mobile phones
Expand beyond the core business:
• Expand into adjacent businesses (home internet, digital streaming services)
• Expand into adjacent geographies
• Expand into selling other types of electronics in addition to phones, such as laptops, tvs,
and appliances

185
Conclusion
Case 17 – Jab We Profit

Recommendation Risks Next Steps

• Two options: • Risks could include: • Next steps should draw from the
• The candidate can argue that Telecom • Chance that a competitor brainstorm, and include items such
Co should move forward with the
product because it should become launches a competing long as:
profitable in the medium term, although distance product, since there it • Work to steal share from
it will not deliver the quick win the CEO not much moat competitors to grow (via
is looking for. • Chance that long distance competing on price or
• The candidate can argue that Telecom
Co should not move forward with the
calling becomes obsolete as differentiating the product)
product because it will not break even other technologies (such as • Work to grow the share of
within the two years the CEO is looking Skype, Zoom, FaceTime) come consumers that use mobile
for. into the mainstream phones
• Good candidates will note that because
• Expand into adjacent products,
the biggest cost is the fixed cost (leasing
broadband), the revenue estimates such as home internet and
would need to be dramatically different to entertainment streaming
make it work (e.g.,this is not a case of an
assumption being a little wrong).
• Strong candidates will offer alternatives the
company could invest in instead.

186
 Case 18

New England Trucks

Power & Utilities | Operations
Interviewer Led
Ratings:
Quant - 3
Qual - 3
Overall - 3

187
Prompt
Case 18 – New England Trucks

Our client (Power Grid) is a power and utilities company with a national presence. The client has 3 hubs in the New England
region where their maintenance activities are centered in. Each hub is identical in size and operations.
Overview of operations:
• Maintenance operations are done between Monday and Saturday.
• Sunday is a day off with only one driver and one engineer at the hub for emergency calls.
• Each hub operates a fleet of trucks which go on routine maintenance runs on a daily, bi-weekly (2 times per week) and weekly
basis.
• Each truck carries around diagnostic equipment, replacement parts and two other maintenance personnel
• Each truck starts at their base location at 8AM and has to be back at their base by 5PM

Power Grid is under pressure from the investors to reduce costs but has been facing a shortage of qualified truck drivers. To
keep their workforce Power Grid has temporarily increased the hourly rate of each driver from $18/hour to $25/hour, but this
rate is not sustainable for the entire workforce.
The VP of Operations thinks costs on the power generation and transmission side have been completely optimized and can see
no further reduction and needs your help to bring costs down further.

Clarifications
This is a McKinsey style, interviewer led case and no further clarifications are needed on the prompt except for the parts that the
interviewee missed while the prompt was read out
Notes to Interviewer
This case has a lot of details and brainstorming. Try to adjust the pace of the case as needed in question 2. If the candidate takes
a long time in Q2 ask them to only find the optimal route for one of the cities and push them to find the optimal case. Once the
candidate finds the optimal route give them the optimal number of drivers required.

188
Question 1
Case 18 – New England Trucks

How would you advise the VP of Operations to bring the costs down further?

Expected framework for Average Performance Additional Buckets for Exceptional Performance

Needs Usage New Initiatives New Technologies

Hubs Personnel Change Routes

• Autonomous vehicles
• Drones for diagnostics
• Number of hubs • Driver work hours • Increase driving time by adding • Sensors to monitors station health and conduct
• Stations served by each hub • On-site engineer work hours more stops per run maintenance only when required
• Operating hours • Hub employees
• Cost of engineer
Fuel Efficiency
• Cost of driver Risks
Trucks • Cost of hub employees
• Use fuel efficient vehicles or EVs
• Use more fuel-efficient routes
• Number of Trucks • Layoffs may not be good for company’s reputation
Assets
• Distance travelled by each Truck • Longer routes may not be great for driver safety
• Driving hours Hub Reduction • Reduced maintenance runs may increase risk of
• Asset used per maintenance outages and fires
activity • Increase of decrease the
Maintenance • Cost of assets per maintenance number of hubs
activity
• Maintenance activities • Age of vehicles
• Fuel usage Asset Allocation
• Time required for each activity
• Vehicle maintenance
requirements • Allocate the right size of the
truck per trip

189
Question 2
Case 18 – New England Trucks

[Give Exhibit 1 and 2] Here is the current network of Power Grid and an overview of the current staffing at each hub.
Is there an opportunity to reduce costs here by changing the routes?
Give this information when asked:
• Each driver is allowed to drive a maximum of 8 hours by government regulations (this time includes the time to drive back from the last
station)
• Daily stations require 30 minutes at each station
• Bi-weekly stations require 45 minutes at each station
• Weekly stations require 1 hour at each station
• When a driver shows up to work he is paid for the entire duration of 8 AM – 4 PM

Solution
If candidate takes too long to
determine the best routes let
them do just Boston and Hartford

H -> B1 -> B2 -> B3 -> B4 -> B5 -> H H -> H1 -> H2 -> H3 -> H4 -> H (Wed, Sat): H -> N1 -> N2 -> N3 -> N4 -> N5 -> N6 -> N7 -> H
Daily Trips 30 + 30 + 30 + 30 + 30 + 30 + 30 + 30 + 30 + 30 + 30 = 5.5 Hrs 30 + 30 + 30 + 30 + 30 + 30 + 30 + 30 + 30 = 4.5 Hrs 30 x 15= 7.5 Hrs

(All 6 Days): H -> N8 -> N9 -> H

(Tue, Thu) H -> B8 -> B7 -> B6 -> H (Mon) H -> H1 -> H6 -> H2 -> H3 -> H4 -> H 30 x 5= 2.5 Hrs
Bi-weekly Trips 60 + 45 + 60 + 45 + 60 + 45 + 60 = 6.25 Hrs 30 + 30 + 45 + 45 + 45 + 30 + 30 + 30 + 30 + 30 + 30 = 6.25 Hrs

Wed) H -> H1 -> H2 -> H5 -> H3 -> H4 -> H (Mon, Thu) H -> N1 -> N2 -> N3 -> N4 -> N10 -> H
(Mon) H -> B12 -> B11 -> H | (Wed) H -> B10 -> B9 -> H 30 + 30 + 45 + 45 + 45 + 30 + 30 + 30 + 30 + 30 + 30 = 6.25 Hrs
Weekly Trips 90 + 60 + 90 + 60 + 90 = 6.25 Hrs
This is a little tricky as the weekly stations need to be visited only once
per week and each weekly station can be visited as a part of a daily trip
(Tue, Fri) H -> N1 -> N2 -> N3 -> N4 -> N11 -> H
30 x 8 + 45 x 2 + 60 = 6.5 Hrs

Asset Req. 2 Trucks, 2 Drivers 1 Truck, 1 Driver 2 Trucks, 2 Drivers

190
Question 2 – Solution Continued
Case 18 – New England Trucks

Days of Week Mon Tues Wed Thu Fri Sat Sun Old Costs
19 Drivers Days x 8 hours per day x
Boston 3 3 3 3 3 3 1 $25 per hour = $3800 per week

13 Drivers Days x 8 hours per day x

Hartford 2 2 2 2 2 2 1 $25 per hour = $2600 per week

25 Drivers Days x 8 hours per day x

NYC 4 4 4 4 4 4 1 $25 per hour = $5000 per week

Total: $11,400 per week

Days of Week Mon Tues Wed Thu Fri Sat Sun Old Costs
10 Drivers Days x 8 hours per day x
Boston 2 2 2 2 1 1 1 $25 per hour = $2000 per week

7 Drivers Days x 8 hours per day x

Hartford 1 1 1 1 1 1 1 $25 per hour = $1400 per week

13 Drivers Days x 8 hours per day x

NYC 2 2 2 2 2 2 1 $25 per hour = $2600 per week

Total: $6,000 per week

Savings: $5,400 per week

191
Exhibit 1
Case 18 – New England Trucks

B10 Hubs
B9

B11
Daily Stations
B6

B7
B5
Bi-weekly Stations
B4

B12

B8 B3 Weekly Stations
B1
B2

H6 H1 Assume:
• Each daily station is 30 minutes away from the
H2 H4 hub and 30 minutes away from the nearest
H5 daily station
H3
• Each bi-weekly station is 1 hour away from the
nearest hub and 45 minutes away from the
N1
N2 N3 nearest bi-weekly station
N11
• Each weekly station is 1.5 hour away from the
N8 N5 N4 N10
nearest hub and 60 minutes away from the
N9 N6
nearest bi-weekly station
N7
• Daily station to weekly or Bi-weekly station
takes 45 Minutes
• Bi-weekly station to weekly stations stations
take 45 Minutes

192
Exhibit 2
Case 18 – New England Trucks

Current driver staffing schedule:

Days of Week Mon Tues Wed Thu Fri Sat Sun

Boston 3 3 3 3 3 3 1

Hartford 2 2 2 2 2 2 1

NYC 4 4 4 4 4 4 1

Drivers on payroll:
Regular Weekday Sunday On-Call

Boston 3 1

Hartford 2 1

NYC 4 1

193
Question 3
Case 18 – New England Trucks

For every driver laid off, the client would have to pay a severance pay of $30K, how long would it take to break
even on the costs of layoff?

Baseline New Scenario Calculation

Regular Weekday Sunday On-Call Regular Weekday Sunday On-Call Layoffs Cost of Layoffs

Boston 3 1 2 1 1 $30K
• Total severance payout : $120K
• Savings per week: $5,400
Hartford 2 1 1 1 1 $30K • Time to breakeven: ~22 Weeks

NYC 4 1 2 1 2 $60K

Exceptional candidates would recognize that the client no longer requires the extra trucks without the drivers.
At this point tell them that each truck would currently sell for $30K and ask them to re-consider their calculations.

Solution
4 trucks could be sold for $30K each, resulting in $120K cash,
which would ensure that there is no breakeven period.

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Question 4
Case 18 – New England Trucks

[Brainstorming question] The client is considering selling the current fleet and upgrading to a new fleet of
trucks. How do you think this would affect their operations and costs?

Cost Increases Cost Reductions

• Training Cost/Hire new personnel • Fuel efficiency

• Learning Curve and initial failures • Less truck maintenance
• Maintain new set of spare parts • Reduced downtime

Question 5
[Brainstorming question] Is there anything else they could do to reduce costs further?

• Reduce frequency of maintenance

• Remote monitoring of station health
• Train engineer to drive the trucks i.e instead of employing two people
send only person can who can do the job for the engineer and the driver

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