ACE THE CASE

A comprehensive guide, full of expert advice and

pages of example case based questions, including
worked solutions taken from real life management
consulting job interviews all over the world
 ACE THE CASE
Ace The Case is a highly effective tool in preparing yourself to meet
your potential future employer. The diversity of the cases gives you
enough scope and depth into the methods needed for almost every
interview and will, together with training of numerical skills help you
utilise your potential to the full
R. Lundsgard, Denmark

When I got invited to an interview with a leading business consulting

firm I searched the Internet to see what kind of information is out
there about the firm recruiting process. I was quite surprised to find
that there is a book made for people in my situation.

I was very satisfied with the form and content of Ace The Case. It is
full of relevant information about the case interview system, sample
case studies and lots of relevant “pointers” to additional reading
materials. Bottom line – If you are about to take such an interview
buying ‘Ace The Case’ is a very smart decision.
B. Glass, Israel

Copyright 2015
www.AceTheCase.com
ACE THE CASE
ACE THE CASE

Titan Websites
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Taren Point, NSW, 2229
Australia

2015 edition
Paperback printed in Sydney, Australia
E-book published in Sydney, Australia

Copyright © AceTheCase.com 2005-2015

All rights reserved. No part of this publication may be reproduced, stored in a retrieval
system, or transmitted in any form or by any means, electronic, mechanical, photocopying,
recording or otherwise, without the prior written consent of the publisher.

As with answering any case interview question, we make assumptions and assume facts that
may be inaccurate, out of date or simply not true in our workings. Sometimes familiar
companies are used in our example questions because of their recognition by the reader.
Any information concerning actual companies cited or inferred may be inaccurate, out of
date, or simply not true. Any information we provide is generally based on research, but
should not be used as reliable, up-to-date data.

This publication has been designed to provide advice only. No guarantees can be made in
regard to interview success. The publisher takes no responsibility for misinformation,
inaccuracies, calculation errors or any harm caused as a result of reading this guide and
applying any of the techniques discussed within this publication.

ISBN 978-0-9803684-2-0 (paperback)

ISBN 978-0-9803684-3-7 (e-book)

www.AceTheCase.com
Table of Contents

Introduction ..................................................................................................................... 7
What is a Case Interview? ...................................................................................................... 8
Answering Case Interview Questions .................................................................................... 9
Structure of This Guide ........................................................................................................ 13
Using This Guide................................................................................................................... 13
1. Case Interview Skills ................................................................................................... 14
Maintaining Neat and Organised Notes .............................................................................. 14
Mathematical Calculation Advice ........................................................................................ 15
Key Business Concepts ......................................................................................................... 17
2. Market Sizing / Estimating Cases ................................................................................. 19
Other Market Sizing / Estimating Cases............................................................................... 68
3. Business Problem & Strategy Cases ............................................................................. 69
Different Strategy Case Styles.............................................................................................. 70
Other Business Problem & Strategy Cases .......................................................................... 89
4. Data & Chart Based Cases ......................................................................................... 138
Other Data & Chart Based Cases ....................................................................................... 165
5. Logic Problem Cases ................................................................................................. 166
Other Logic Problem Cases ................................................................................................ 185
6. Candidate Case Interview Narratives......................................................................... 186
Conclusion.................................................................................................................... 202
7 ACE THE CASE

Introduction

This 2015 edition of the Ace The Case interview guide was created to help you, the aspiring
management consultant, understand and prepare for the challenging rounds of case
interviews that lie ahead as you attempt to launch your career in the competitive but
rewarding field of management consulting. This guide combines our team’s personal case
interview experiences from when we were in your shoes several years ago, with what we
now look for when we interview candidates to join our firms. It also includes many more
consulting interview questions that have been given to individuals across the globe in real-
life job interviews at some of the top consulting firms in the world including McKinsey, Booz
& Company, Bain, Boston Consulting Group, A.T. Kearney, and L.E.K Consulting to name just
a few. The worked solutions in this guide combine the actual answers given by candidates at
the time of interview as well as constructed answers, additions and recommendations made
by the expert team here at AceTheCase.com

Unlike other information available on consulting case interviews, this guide and our website
take on much more of a global perspective, making it useful to individuals of all nations, not
just the United States. Many of the questions have been sourced from Europe, Australia, the
United Kingdom, the Middle East and India. Some US based case interview questions in this
guide have been reworded to help maintain this publications uniquely global perspective.

The case interview questions you will inevitably be asked in management consulting job
interviews are generally drawn from and related to the country where the interview is
taking place. However, our combined experiences with the consulting interview process
show that questions based on global markets and organisations operating in foreign
countries are not uncommon. Having a reasonable understanding of different countries,
demographics, and economies will therefore be an advantage to you. Remember, case
interview questions are often just a small taste of the international business scene you will
experience once you score the management consulting job of your dreams.

Before reading any further, it’s important to mention that by purchasing and reading this
guide, you are not guaranteed interview success or a place at a prestigious consulting firm.
By learning the skills required to answer case-based interview questions and through
practice, you can improve your chances of interview success. We all hope you will gain
something from taking the time to read this guide. You should at a minimum, obtain
valuable insight into the art of confidently tackling different types of case questions in the
rounds of management consulting interviews that lie ahead. Good Luck!
 Introduction 8

What is a Case Interview?

A case interview is a unique type of job interview question and a technique used
predominantly by management consulting firms to better screen candidates, by assessing
their analytical skills in a pressured real-time environment. The case interview question is
generally either a business problem, estimating exercise, arithmetic or logic problem
designed to make you think on your toes, use reason and common sense. Consulting firms
want to see that you can analyse information, structure an answer and perform basic
calculations with large numbers, whilst under pressure. The pressure being that you are in a
job interview at a top global firm most likely seeking a role you’ve worked hard towards.

The objective of the case interview is not to get it right. In fact, there is often no right
answer. Instead it’s designed for you to demonstrate your ability to solve complex problems
and to show the interviewer how you think. The interviewer wants to see you as a colleague
with whom he or she would want to work with in an engagement team. Case interviews are
generally very interactive as you ask questions, seek clarification, and bounce ideas off your
interviewer.

The case interview is usually one-on-one and you would be given a pen and paper, or
perhaps a marker and whiteboard, where you can brainstorm, perform calculations, and
structure your answer. Some consulting firms will even take your notes after the interview
has concluded to help them further assess and discuss the performance of candidates with
colleagues.

After some light conversation and “getting to know you” type questions, the interviewer will
pose the case question. You may want to start taking notes because a lot of information will
be coming your way. Clarify all of the details to ensure you have a common understanding
and are on the right track before diving into the case. The interviewer will then step back to
watch you think it over but is there to answer any questions, give additional information
when needed and guide you through the problem.

You can expect to be interviewed by one to three different people on any one day with
around 30 minutes to an hour assigned for each interview. A case question itself can last
anywhere from 20 - 40 minutes of that time depending on its difficulty and the specific
round of interview, or entry level to the firm.

Although you may feel tense, nervous and anxious during a case interview, the important
thing is to relax, be confident, and have fun with it.
9 ACE THE CASE

Answering Case Interview Questions

In this introductory section, we will first offer you some basic advice for answering a case
interview question before moving into more detailed sections on case interview skills and
finally the many example case questions which you are no doubt keen to sink your teeth
into.

When answering case interview questions, the most important thing above all else is to
demonstrate to the interviewer your intellect and ability to solve problems. Essentially, that
is what a management consultant does. They help solve complex business problems that
their clients cannot easily solve themselves.

There is a real chance that during a case interview you will not end up generating a final
answer nor will it be anywhere near correct, however don’t be concerned if this happens to
you. Case interviews can sometimes end up being an exploration of issues, with the
interviewer guiding you down one of many possible paths, allowing you to formulate a
solution to a problem, give recommendations, or simply ‘ball park’ an estimate.

With this in mind don’t rush your analysis, as you may overlook important elements to the
problem and have too narrow a focus. Still work at a steady pace however, to ensure you
can at least give a final answer if required by the interviewer.

Interact with the interviewer and ask lots of questions to gauge the scope of the problem or
fill in missing pieces of the puzzle. Certain details of the case and critical information will
often be intentionally withheld to see if you can determine by yourself what extra
information or data would be useful to help solve the problem. This will help demonstrate
how inquisitive and thorough you are in your analysis.

Don’t be afraid to be creative because management consulting requires a large element of

‘thinking outside the box’, i.e. coming up with innovative ideas. Be enthusiastic, confident,
and comfortable. Always let your personality come through. You may get way off track in a
case interview and think that there is no way you will make it to the next round, however
your personality, attitude and enthusiasm can often be what gets you over the line.
 Introduction 10

A good point to make early in this guide is the importance of bringing structure to your
problem solving when analysing and answering case interview questions. Using a simple
step-by-step problem solving method such as below may help:

1. Understand and summarise the case question

2. Determine and clarify the case question objective
3. Pull together existing information, ask for and gather more information
4. Analyse this information
5. Group similar issues together and layout a structure
6. Perform calculations or design solutions for issues
7. Formulate and present answer/s

Common business frameworks and other strategic problem solving methods such as Porters
5 forces, the BCG Matrix, SWOT Analysis, Revenue and Cost modelling, Business Life Cycle
Analysis, Process Analysis, Mind Mapping, Key Issues Grouping or Problem Decomposition,
and Reverse Engineering are often useful tools and can also be great ways of bringing
structure to your thoughts, provided you use the right one for the problem. Never try to
force a framework or methodology onto a problem. Only use one if there is a natural fit to
the case question. Structure your solution in any way you can, keeping in mind what feels
appropriate given the nature of the question. Within this guide some of these methods and
frameworks are used and briefly discussed in relation to specific case questions, however
feel free to research some of them further by yourself or with a classmate, colleague or
friend.

A simple way of executing a case analysis is a simple and common method of breaking the
problem into distinct segments to create a structured logic map. It is highly visual and you
will see this method used several times throughout this guide as we strongly recommend it
as a problem solving technique. Try to make your problem components ‘MECE’ i.e. Mutually
Exclusive - with no overlapping logical concepts and Collectively Exhaustive - considering as
many high level issues as possible with no gaps. From here you can work top-down using a
tree-based structure to set up your analysis. Be confident in your analysis and be sure to
stick to your logic map once it is created. However, be open to changing direction if you are
guided to do so by the interviewer. An example is shown on the next page.
11 ACE THE CASE

Sample Problem – Automobile Dealership

An automobile dealership is experiencing declining profits. What could be the
reason for this?

The diagram below shows the structure of a simple logic map, which can form the starting
point for which you could begin your analysis of the question and further discussion with
the interviewer.

Sample Logic Map – Automobile Dealership

Why is profitability declining?

Revenues Costs

Price Volume Fixed Variable

... ... ... ...

... ... ... ...

...

A simple MECE based hierarchical structure such as this will allow you to dive into different
lines of thought with the interviewer as to why the dealership is seeing a declining profit
trend. By taking the time at the start of the case analysis to get a visual breakdown onto
paper (or a whiteboard), you can more easily probe and ask further questions under each
category, then move onto new avenues for consideration when you hit a dead end without
forgetting what it was you wanted to explore in the first place.
 Introduction 12

The last point that should be made in relation to answering case interview questions is in
regard to the appearance of your key strengths. Consulting firms hire from a variety of
backgrounds and university degrees including engineering, science, law, business, finance,
accounting, economics, management, business administration and commerce. They take
anyone who shows the right attitude and intellect for the job. Management consulting firms
look for the most intelligent individuals who are also ‘all-rounders’ with competencies and
interests in a range of disciplines. It’s therefore important, that if you are a business or
commerce oriented individual, you must be sure to demonstrate creativity, problem solving
skills, and a level of thinking outside of the traditional number crunching financial analyst,
economist or accountant mindset. Conversely someone like a scientist or engineer needs to
demonstrate a level of business acumen with at least some knowledge or interest in the
commercial drivers of the finance world.

Play to your strengths but do not show the interviewer that you are one dimensional and
only strong in solving problems from one particular approach, or based on one educational
style. In saying all of this, number and math skills are a must, so make sure you can add,
subtract, multiply, and divide large numbers in your head or on paper without the use of a
calculator.
13 ACE THE CASE

Structure of This Guide

This guide is divided into six sections. The first section covers some specific skills and tips in
relation to case interviews. The next four cover example case questions from real life
consulting interviews. These have been categorised into four common question types that
you may encounter in any of your interview rounds. The sixth section finishes by providing
some interview narratives recorded from real life case interviews, transcribed and
summarised to demonstrate how the interaction with the interviewer can play out (both
good and bad) and how the general conversation might flow during your case interview.

Section 1: Case Interview Skills

Section 2: Example Market Sizing / Estimating Cases
Section 3: Example Business Problems & Strategy Cases
Section 4: Example Logic Problem Cases
Section 5: Example Data & Chart Based Cases
Section 6: Sample Candidate Case Interview Narratives

Using This Guide

Depending on when you purchased this guide, it is suggested that for maximum benefit, you
first attempt answering some of the questions in this guide yourself before looking at our
workings and possible solution. Use pen and paper only (no calculator) to mimic the real life
interview. Once completed, refer to the worked solutions provided to see how you did,
what ideas you missed, what you did better, and where you can improve. After this, attempt
some of the extra questions at the end of each section by yourself or with a friend.

Remember, just because your answer does not match the solution or recommendations we
provide, it doesn’t mean you are wrong. Firstly, we may be wrong, so feel free to write in
and tell us your thoughts. Second and more important is that case questions can be
answered in a number of ways and often there are several issues that can be considered
and explored, of which we could not attempt to cover all. Our worked solutions serve only
as guide and are based on actual answers given by candidates in real life interviews. Your
solutions may be even better!
 Section 1: Case Interview Skills 14

1. Case Interview Skills

This first section of the guide gives more detailed advice on answering case questions and
covers valuable skills and concepts which should be understood before you flick through to
the other sections of the guide to start working your way through the many example case
interview questions.

Maintaining Neat and Organised Notes

If possible, use two separate sheets of paper in the interview. Use one for writing down all
the data and information you are given as well as any analysis, issue grouping, logic maps,
etc. Use the other sheet for your mathematical calculations. Turn them on their side (to
landscape) as we have found that this is much easier for working through problems on
paper. Depending on the type of case question you are given, you could even summarise
and present your final answer to the problem on a third sheet of paper.

Write everything down in pencil and write as neatly as possible. This may seem basic, but
being able to erase mistakes as opposed to scribbling out in dark pen ink helps in producing
clean and easy-to-read notes. This is important, because as we mentioned earlier, some
consulting firms will want to collect your notes to show and discuss with their colleagues,
and potentially review again later. Ultimately they will be evaluated to gain further insight
into how you structure your thoughts. McKinsey is a firm who has been known to do this.

Feel free to draw basic tables and graphs during the analysis stage of your case question to
demonstrate structured presentation of information.
15 ACE THE CASE

Mathematical Calculation Advice

You will first need to become comfortable using educated guesses and estimates for values
where concrete data is not provided.

E.g. the population of the USA is roughly 300 million, UK 60 million, Canada 30 Million,
Australia 20 million, India 1 billion, Japan 125 million etc.

E.g. the average number of people per household in most western countries is roughly 2.5

E.g. the life expectancy of most countries is around 80 years.

These are all essentially variables in your problems, so as long as they are not wildly
farfetched and you can justify your chosen values and explain where more accurate data
could be obtained, then you should be alright. Remember, when modelling data and doing
calculations, inputs and variables can always be changed later and the answer re-calculated.
No-one expects you to turn up with an encyclopaedic mind. However, a decent worldly
general knowledge and explaining the difference between say an African Elephant and an
Indian Elephant without consulting the internet via your iPhone is probably expected (Note:
African Elephants have much bigger ears!)

The next point is to round large numbers to make calculations much easier. As mentioned
earlier, you generally do not get to use a calculator nor should you ever reach for your
Smart Phone. This becomes easiest when you get to pick the number yourself. e.g., the
average price for a glass of beer across all of Australia may be something like $4.18 AUD, but
it makes a lot more sense just to say it is $4.00 and go from there. Your calculations will be a
lot simpler as a result and you will still get a feel for the correct quantum of your answer.
This is generally more important than its exact accuracy anyway, since you cannot really
hope to achieve any real level of accuracy in a pressured job interview setting.

Feel free to ‘ballpark’ calculations and estimates if possible. Ballparking is derived from the
game of baseball and is slang for the approximate proper range of something. E.g. “Your
estimate is high, but still in the ballpark”. During your calculations you may have to find
24.33% of 617,800 (which equals 150,310.74 if you’re interested) but it’s easier to just
ballpark this calculation by working out say 25% of 600,000 = 150,000. Remember it is not a
university exam and you do not have a calculator or an Excel spreadsheet handy, so your
mathematical responses are not expected to be exact since there is usually some allowable
margin of error. Take advantage of the ‘ballpark’ whenever it seems sensible to do so.
 Section 1: Case Interview Skills 16

Don’t try to do every calculation in your head unless you are sure you can solve them
correctly. When doing calculations in your head, be sure to write your solutions down so
you can refer to them later. If you remember how to do long division and multiplication of
large numbers from your high school days then use these methods, however remember
they can be slow. So if you have rounded the larger numbers as we advise, these methods
will probably be quick enough or even unnecessary.

The rule of 10’s and ½’s is an extremely useful method of calculation and one well suited to
the case interview environment. Basically you break difficult numbers into either tens or
halves to do quicker calculations.

E.g. If calculating 37% of 45,000:

 First take 45,000/10 = 4,500, this is10% of 45,000

 Then halve that to get 4,500/2 = 2,250, this is 5% of 45,000
 Now halve again to get 2,250/2 = 1,125, this 2.5% of 45,000
 Or you can divide the original 10% to get 4,500/10 = 450, this is 1% of 4,500

From the above calculations, you can approximate the answer to:

 (3 x 4,500) + 2,250 + 1,125 = 16,875 = 37.5% of 45,000

Or more accurately calculate it exactly as:

 (3 x 4,500) + 2,250 + (2 x 450) = 16,650 = 37% of 45,000

17 ACE THE CASE

Key Business Concepts

The following bullets are a very brief set of key business concepts which we believe you may
find useful when attempting case interviews at management consulting firms. Depending on
your background, education and experience, some of this should be familiar to you already
and you should research each concept yourself that is not at least intuitive to you.

 Generally speaking Profit is all Revenues less all Costs. Revenues are a function of
price and quantity. Cost items can be broken down into fixed or variable. Costs can
also be considered as direct or indirect. Beware of Operating Expenditure vs. Capital
Expenditure as the accounting treatment is different.

 When discussing Sales & Marketing options for a company consider the 4 P’s.
Product, Price, Place (distribution alternatives) and Promotion.

 A Supply Chain is activity and information flow for a product. It will consist of
suppliers, manufacturers, distributors, sellers, and finally customers. It applies
equally to physical goods as well as intangible goods and service industries.

 Economies of Scale refers to that fact that often the more of something that is
produced or purchased the cheaper it is to make or buy.

 Price is affected by supply and demand. High demand and low supply equals higher
prices.

 Long Term Contracts can affect business decisions. They can be beneficial (e.g., if a
lower price is achieved for raw materials) or obstructive (e.g. if a binding contract
prohibits you from getting out of what has become a financially detrimental
initiative).

 When discussing and analysing Industry Attractiveness consider the size of the
market in dollars, the number of competitors, the minimum efficient scale, and
market conditions (growing, stagnant or shrinking)

 When discussing and analysing Mergers and Acquisitions consider such things as
whether it will be profitable, financing the acquisition, break even time, product line
synergies, market reaction, and cultural issues.
 Section 1: Case Interview Skills 18

 When discussing and analysing Product Introduction consider such things as, the
potential market and whether customers want or need it. Consider profitability of
the product including price, revenues and costs of introduction to the market. Think
about the competitor reaction. Can they copy it or do they already have competing
products. Also think about whether the new product makes sense for the company
and its current portfolio of product lines.

 When discussing and analysing any Organisational Change, try not to overlook
operational level issues (e.g., new processes), labour issues (e.g., salary, benefits and
unions), cultural and moral issues.
19 ACE THE CASE

2. Market Sizing / Estimating Cases

Case interview questions based on market sizing and estimation are designed to assess your
ability to quickly derive rough estimates or ‘ball park’ figures based on a combination of
assumptions, variables, existing knowledge, common sense, and sound reasoning. They also
test your confidence with numbers and mathematical capacity to perform quick calculations
of large figures. Generally no calculator is given and you must work out the problems on
paper, a whiteboard, or in your head.

It is practically impossible to get the ‘right answer’ in this style of case interview question so
your goal here instead, should be to cover a significant amount of issues and discuss
important variables and assumptions which would affect your answer. Always justify any
numbers or figures that you use. Explain where you got a number from or where you could
go to source a more accurate percentage, statistic of data point. Don’t be afraid to involve
the interviewer asking for their thoughts and input on any assumptions you make. They may
have withheld information from you, and will provide it, if and when prompted. This is much
like the real-life relationship between consultant and client.

The concept of ‘triangulation’ coined from the mathematical discipline of trigonometry

whereby the location of a point can be determined by measuring angles to it from other
known points is also very important in these types of case questions. If you can estimate an
answer using more than one model/method and then compare and maybe even average
the two answers then your final solution will probably be more accurate than going with the
first that you calculated. Time will however dictate whether you can use this strategy during
the case interview. Using more than one approach will also demonstrate open mindedness
because you recognise that there is more than one way to solve a problem.

Performing a reality check on your final answer is always a necessary step demonstrating
your capacity for common sense answers. If you end up with an answer that shows for
example that in the United States each citizen must be drinking/consuming 10 bottles of
coca cola per day then clearly you made some unrealistic assumption or incorrect
calculation back through your answer. Voice this and then try to determine where you may
have gone wrong which will demonstrate your capacity for self-reflection and critical review.

As mentioned earlier in this guide, it is important to structure your solutions and this cannot
be stressed enough. Management consulting firms are looking for calm collected individuals
with sound reasoning and logic. The ability to create and follow methodologies, models, and
frameworks is a key skill within the consulting industry. By structuring your answer, not only
 Section 2: Market Sizing / Estimating Cases 20

will you impress the interviewer but you will also generate a plan of action to follow in
answering the question. Unlike answering business problems there are few set methods or
techniques when it comes to ‘guesstimating’. Working down from population sizes, upwards
from consumption data, or sideways by initially gauging possible throughput, are three
common techniques which can be used in these problems.

When asked a market sizing or estimation type question, seek clarification and be sure to
understand what type of final answer is required. Will the answer need to be in units,
customers, sales/revenue, or profit? This important piece of information can affect your
approach as well as the length and level of detail in your analysis. For example, if asked a
simple case question in which you are to estimate the annual US market for lipstick, four
different answers can be given based on what type of answer is required, each taking longer
to derive. See the 4 responses below and on the next page:

Sample Problem – US Market for Lipstick

What is the annual US market for lipstick?

Sample Solutions – US Market for Lipstick

1. In total number of consumers

 Estimate the total U.S. population (~300 million people)

 Segment the population based on some metric (age is usually a good metric, but
gender would also be at play here)
 Estimate the number of people in each population segment
 Make a guess at the percentage of each segment that uses lipstick
 Complete your calculations and arrive at a final figure
21 ACE THE CASE

Sample Solutions – US Market for Lipstick (Continued)

2. In units sold

 Start with the estimate for total lipstick consumers (as determined earlier)
 Make a guess at the amount of lipstick that an average consumer uses in a given
month
 Multiply the above two numbers to estimate the tubes of lipstick sold each month in
the U.S.
 [Annual volume of lipstick sold] = [Monthly estimate] x 12

3. In revenue

 Start with the annual number of lipsticks sold (as determined earlier)
 Make an assumption of the average price of a tube of lipstick
 [Annual revenue] = [Annual tubes of lipstick sold] x [Avg. price]

4. In profits

Method #1: Use the annual revenue estimate and apply a guessed profit margin

 [Total annual profit] = [Annual revenue] x [Profit margin]

Method #2: Use the average price, apply a guessed profit margin, and multiply by the
estimate annual tubes sold

 [Unit profit] = [Average price] x [Profit margin]

 [Total annual profit] = [Unit profit] x [Annual tubes sold]

The answers from these two methods could form the basis of some ‘triangulation’ and
averaging the two answers to derive your final answer.
 Section 2: Market Sizing / Estimating Cases 22

We hope from this simple lipstick market sizing example that you now see how important it
is to understand your case interview question and what type of answer you are trying to
come up with.

As we have mentioned earlier, be sure to explain the approach you will take to the
interviewer. When writing, use diagrams, clearly space out text and any calculations, link
objects, words, and numbers with lines and arrows. Because like we said before, some
consulting firms will even keep the note paper you used during the interview for later
reference when making decisions on which applicant to send through to the next round of
interviews or to finally hire.

A final note on time management is needed before moving into the actual market sizing and
estimation sample questions within this section. As mentioned earlier, the trick is to not go
too quickly. You show nothing if you finish in 5 minutes with a very basic answer which
considers only simple and obvious variables. The amount of time for the case question will
vary depending on the length of the interview. Half-hour interviews generally mean 20
minutes assigned to the case question and one hour interviews mean 40 minutes, the longer
the interview the larger and more difficult the problems. When you think about it, you
actually have lots of time to plan, structure, and calculate a good answer. If you feel the
need to go fast then try the technique of triangulation as mentioned earlier to solve the
problem from two different approaches. Going slower means you can discuss key variables
used in your calculations with the interviewer, like debating over the percentage of females
under the age of 25 in the UK that smoke, as opposed to just making a wild guess.
Remember, using your time well also demonstrates good time management skills, which is
yet another key skill of a management consultant.
23 ACE THE CASE

Problem – Light Bulbs in Australia

Estimate the market for light bulbs in Australia

This is a very general question without much up-front detail, so

you would first need to seek some clarification from the
interviewer. Questions you should ask may be: Are you to look at
all market segments? (e.g., Business/Commercial, Domestic and
Public Lighting). Are you looking at all types of globes or just a few
styles? (E.g. Fluorescent and Conventional Incandescent bulbs). Are
you calculating the market in terms of units or dollars? Are you
looking at the market for one year of sales? After asking some questions you may have
narrowed the problem down to only being concerned with:

 Household (Domestic) lighting only

 Traditional incandescent bulbs i.e. Simple Edison screw and Bayonet styles
 Market is expressed in terms of revenue for a year

Possible Solution – Light Bulbs in Australia

Knowing the specifics of the problem, we can now work out how to answer it. First, you
would want to brainstorm what variables and factors need to be considered. Involve the
interviewer, bounce ideas off them, if possible, and note that this initial list is by no means
exhaustive and can be improved upon later. This process alone may take several minutes.

Types of demand for light bulbs: Some initial size related variables:

• Replacement Demand • Homes in Australia

(i.e. in existing homes to replace globes
that have blown/died) • Rooms per home

• New Demand • Globes per room

(i.e. from new housing)
• Average lifespan of globe

• Average price of globe

 Section 2: Market Sizing / Estimating Cases 24

Possible Solution – Light Bulbs in Australia (Continued)

You would want to start off with replacement demand because it is probably larger than
new demand. Looking at the variables, we now need to work out how to estimate each one.

If you don’t already know, Australia has roughly 20 million people, your interviewer would
probably give you this to start with, unless, of course, you live in Australia, because then you
should know the population of your own country. It is a westernised country and so
probably has some similarities in terms of culture, housing, and economics to countries like
the US, UK, Canada, etc. Using this and considering the mix of large families, small families,
singles, elderly, split families, second homes, etc., you can make an educated guess and say
there is probably on average 3 people per household. This is a nice simple figure and you
should point out to the interviewer that it is also probably the most critical and influential
assumption so far.

This then makes 20 million / 3 = 6.7 million households. From here you should then think
about how many rooms a typical house has. Consider large homes, small homes,
apartments, etc. Think about houses you’ve been in, like your own, friends’, extended family
etc. However, don’t get too caught up on your own personal experiences as you may not be
from a ‘typical’ or average household. You may be very wealthy and live in a large home or
live in a small dorm room or studio apartment which is at the other end of the scale. Always
think about the average or norm.

Again using the concept that Australia has a western culture, 2-3 bedrooms, a kitchen,
lounge room, 2 bathrooms, 1.5 car spaces, another room, a hallway, and maybe a staircase,
can probably be considered to be pretty normal. This makes roughly 11 rooms or really
spaces where lights may be found. You can round it to 10 for simplicity in your calculations.

Thinking about the number of lights in a room or space it is usually about 1 or 2. So taking
1.5 as the average and multiplying it by 10 rooms and you have 15 globes per household.

If you also want to consider any outside lighting and lamps you should probably throw in
another 5 globes. That makes an average of 20 globes per household. This is a nice rounded
figure to work with.

Now you must think about the average life of a globe. Anywhere from 6 months to 2 years is
the norm depending on usage. You can base this on personal life experience. Take 1.5 years
and you have each household going through about 20 / 1.5 = 13.3 globes per year.
25 ACE THE CASE

Possible Solution – Light Bulbs in Australia (Continued)

Time now for a quick reality check. This 13.3 globes per year number means about one
globe in each household dies per month, or conversely one globe is purchased per
household per month. This seems somewhat reasonable. On instinct, it may be a little high
but we’ll go with it anyway.

Multiplying the 13.3 globes per year by the 6.7 million households, means about 90 million
globes are purchased per year in Australia. Since the question asked for market demand as a
dollar figure, you must now work out the average cost of a light bulb. Try to think of the
price they cost in a supermarket. Explain to the interviewer that if you were to research this
in real life you may go and get a sample of prices from a range of different stores in different
locations around Australia of different strength and size globes. Consider that buying a 4
pack generally makes each unit cheaper than buying them individually. Also note that if the
answer is to be expressed in Australian dollars and you live in the UK for example, then you
may need to ask for an exchange rate to help estimate the price. It may of course be
acceptable to answer in your local currency.

Globes are generally between 50c – $1 in Australia so take 75c as the average. You can state
such a price based again on personal life experience and you may want to consult with the
interviewer if this is indeed accurate. Multiplying this through and you have $0.75 x 90
million = $67.5 million Australian dollars ($AUD).

Now at this stage you may want to throw another variable in which was not brought up
initially, but has been on your mind since you moved into the calculations. It is an obvious
fact that not all households would be using the standard types of globes that are under
consideration. Some may have converted to the now common energy saving globes such as
compact fluorescents, some would be using fluorescent tubes, others may have fancy down
lights or even chandeliers - the list is endless. Households using these different style globes
may make up as much as 10% of all homes, and so this fact should be considered by taking
10% off 67.5 million dollars resulting in a revised $60.75 million Australian dollar figure for
replacement demand. Let’s round that down to $60 million.

By now you may be running low on time and haven’t even touched on the new demand
market as a result of new homes being built. It’s good that at least something has been
worked out above and this can form the basis for determining a dollar figure for new
demand. Just remember that for calculating new demand, a globe’s useful life is irrelevant
because a new home requires every globe to be installed at the same time. It is really just
about how many new homes are being built.
 Section 2: Market Sizing / Estimating Cases 26

Possible Solution – Light Bulbs in Australia (Continued)

Without knowing the specific economic climate in Australia in relation to construction, in
particular new housing development, you can explain to the interviewer that researching
Australian government websites, Australian statistics bureaus, and Australian reserve bank
data on new housing development or development approvals would give you a more
accurate picture of the numbers. For now, find a reasonable percentage figure like 3% (i.e.,
you are assuming that around 3% of 6.7 million, the total number of homes in Australia,
which is about 200,000, is the number of new homes being built within a year).

So 200,000 new homes x 20 globes x $0.75 per globe x (1-10%) for the globe type variable
=$2.7 million

Adding these two figures together gives 62.7 million Australian dollars as the market for
light bulbs within Australia.
27 ACE THE CASE

Possible Solution – Light Bulbs in Australia (Continued)

Below is a basic diagrammatic view of the method assumptions and calculations used to
come up with this final market size estimate which you might produce in answering the
question yourself:

Australian Light
Bulb Market

New demand – Replacement demand

resulting from new – resulting from
homes existing homes

Population of
New homes = 3% of 6.7 million x 3% = Australia
existing homes per 6.7 million households
200,000 new homes ~ 20 million with say
year 3 people per
household

2-3 bedrooms,
kitchen, lounge room,
200,000 homes x 6.7 million x 13.3 = 90 10 rooms/spaces per 2 bathrooms, 1.5 car
$2.7 million AUD
20 globes x $0.75 million globes house spaces, another
AUD x 90% room, hallway,
Average cost of light maybe a staircase.
globe = $0.75 = $67.5 This makes ~10.
million AUD

1.5 globes per room.

10% of homes not 20 globes per house Plus extra globes to
$62.7 million
using the standard cover outside, as well
AUD
bub globes as lamps etc.

$67.5 million x 90% =

roughly $60 million
AUD 13.3 globes per year Lifespan of globe
per household about 1.5 years
 Section 2: Market Sizing / Estimating Cases 28

Problem – Car Battery Market in India

Estimate how many car batteries are sold each year in India, focusing yourself
more on the explanation and justification of your methodology rather than the
exact figures and calculations.

By shifting the focus of this estimation based case interview

question from the calculations to the methodology, the
interviewer will be aiming to gauge your base level of general
knowledge, intuitive reasoning and problem solving approach.
Because performing calculations is not the focus here, you should
try and provide several methodologies rather than get too caught
up in running the math as in the previous question.

Explain that if given adequate time and resources, following more than one approach and
triangulating a final estimate based on the outcome of different approaches, should yield a
more accurate estimate of the market compared to using just one methodology.

Possible Solution – Car Battery Market in India

Assuming the interviewer does not start by giving you any additional guidance on the
question, you could kick off by laying down a few different approaches to the problem.

Methodology I) Market Research Driven

Your first method could utilise physical market research by talking to car dealers, battery
wholesalers and retailers within India and asking them to divulge the number of batteries
they sell in a year (expressed in units) and whether they sell direct to consumers, to
mechanics, car dealerships, or all. If they sell to more than one market then attempt to
obtain data on their sales mix. Be sure to then eliminate any double counting by making
necessary adjustments, since you may be obtaining data from multiple points within the
supply chain. Once the number of units per seller is adjusted and cleansed, call this variable
N.
29 ACE THE CASE

Possible Solution – Car Battery Market in India (Continued)

You would then need to estimate the number of these sellers in India. Make this variable S.
To do this you’d need the number of sellers in your sample and some associated
demographics:

 Taking a rough estimate of their area density (number of sellers per unit area)
adjusting for densely populated cities, rural districts, and sparsely populated villages.
Make this variable S1.
 Estimating the number of sellers on a per capita basis. Make this variable S2.
 Estimating the number of sellers per number of cars in the country. Make this
variable S3.

Obtain the necessary data on the country of India to calculate the variables S1, S2, and S3.

 Area of India. Make this variable IA

 Population of India. Make this variable IP
 Number of cars in India. Make this variable IC

Now determine the variable S (the number of sellers across India) by averaging the results of
the following 3 calculations:

 S1 x IA
 S2 x IP
 S3 x IC

Multiplying Variable N and S should give you a reasonable estimate of the number of car
batteries sold in a year in India.

Methodology 2) Assumption driven

A different approach and one more practical for deriving an actual answer within the
confines of the interview room, may be to drive your problem solving by making intuitive
assumptions which could be cross-checked and improved upon later through further
research. You would be expected to come up with at least some of the things needed to
derive an estimate for a car battery market on your own. You aren’t expected to have any
detailed mechanical knowledge, nor ever owned a car to know these things. Understanding
the basics, i.e. all new cars need a battery and car batteries need replacing every few years
 Section 2: Market Sizing / Estimating Cases 30

Possible Solution – Car Battery Market in India (Continued)

can help get you started. Ask your interviewer for some basic data and they should be kind
enough to give it to you.

Assume there are X million new cars sold in India this year and 15X million on the road.

Each new car sold in this year must have a new battery, however maybe 1/4 of these cars
are imported and thus have foreign car batteries, however roughly the same amount may
be exported to other neighbouring countries and thus net off against each other for the
purpose of your calculations.

Assume batteries in cars need to be replaced after say 3 years on an average.

Assume the average life of a car is say 15 years on average.

Now take data from the past 15 years and pick the number of cars on roads in India at
intervals of 3 years, i.e., at t=3, 6,9,12. The total of these cars would be approximately due
for a battery change this year. If data is not available for the past 15 year’s then just take X +
4X (this assumes there has been no growth in the last 15 years however).

Combining all of these assumptions and variables into an equation or simple algorithm
should lead you towards a reasonably accurate answer than can be tweaked as assumptions
are tightened and researched in greater detail.

If you combine this answer with the one above and they are not too wildly different, then
you should be reasonably confident that you are narrowing in on a sensible figure. If the
opposite is true then you should begin reviewing your assumptions and cross checking your
market research analysis.
31 ACE THE CASE

Problem – College Rock Concert

Estimate the revenue potential of a Rock Concert that is organised by your
college or university.

On the face of it this is a pretty straight forward case interview

question. It was a first round question for a graduate position at
a mid-tier consultancy firm in Canada. Because of its simplicity,
exploring different revenue sources beyond just the ticket sales,
such as event sponsorship, food & beverage, merchandise, CD
sales, VIP seating, after parties etc. is probably the key to
demonstrating your ability and business acumen.

Possible Solution – College Rock Concert

In order to help you derive an answer that meets the reasonableness test, you would want
to first discuss with your interviewer some of the qualitative and quantitative constraints of
the problem. This will enable you to better frame certain variables that are required to
formulate a sensible revenue potential for the event. For example knowing who will be
allowed to attend the concert (Students, Staff, Guests or General Public) will be important.
Knowing if the concert is outdoors or indoors and what the seating/standing arrangements
are will help to understand capacity. Finally the length of the concert, number of bands in
the line-up and the rules around exit and re-entry may be key drivers that need to be
understood for calculating secondary revenue sources such as food and beverage sales.
Start off by casually talking to the interviewer about all of these things that enter your mind
to see what she’ll divulge and what she’ll leave up to you as assumptions that must be
made.

When it comes to exploring unknowns and laying down some assumptions, don’t be afraid
to discuss and debate them with your interviewer. Also try to come to a mutual agreement
on each one to ensure it is reasonable, it will also make you feel more comfortable as you
progress with your calculations.

Let’s assume you have fleshed out these initial assumptions about the event with your
interviewer.
 Section 2: Market Sizing / Estimating Cases 32

Possible Solution – College Rock Concert (Continued)

The concert is conducted outdoors on a stage in an open space on campus grounds for one
night only. Further:

 Only students and staff with valid identification can attend the concert.
 There are 15 rows of 15 seats each, out of which the first 5 rows are reserved for
VIPs. Behind and to the sides there is standing room where two thousand people can
stand and watch the concert.
 There are 2 bands in the line-up. A warm up act and the main act. The warm-up band
is from your university. The main act is a popular mainstream band, yet to break
onto the international scene, but who is building popularity through radio airplay
and their first tour of the country. 80% attendance is therefore expected for
budgeting purposes.
 The concert will be in the evening and go for 2.5 hrs.
 The general admission ticket charges are $40 for sitting and $20 for standing. It is
$100 for VIP’s as they get access to the backstage area before and after the concert
which includes and after party.
 There are several sponsors for the concert - a title sponsor, two associate sponsors,
four co-sponsors, and two media partners.
 The sponsorship amounts are $1,000 for the title sponsor, $600 for the associate
sponsors, $400 for the co-sponsors, and $200 for the media partners.
 There are 4 food and beverage counters brought in for the concert which sells food
items at $5 each and drinks at $5 each.
 It is assumed that approximately 500 people will buy two food items and two drinks
each during the concert.
 There is a merchandise booth situated near the entrance selling $20 shirts and $20
CD’s. It is assumed that 10% of the audience would buy one of these items.
 The event organiser’s commission is 50% of any retailer profits. The retailer’s profit
margins are 25% across food, beverage, merchandise and CD’s

Now, given these assumptions agreed upon by you and the interviewer, you can start doing
the math.
33 ACE THE CASE

Possible Solution – College Rock Concert (Continued)

Revenue from ticket sales

((10 rows x 15 seats x $40/ticket) + (5 rows x 15 seats x $100/ticket) + (2,000 standing

audience x $20/ticket)) x 80% = $42,800

Revenue from sponsorship

$1,000 [title sponsor] + $600 x 2 [associate sponsor] + $400 x 4 [co-sponsors] + $200 x 2

[media partners] =$ 4,200

Revenue from food & beverage

500 x 2 x $5 + 500 x 2 $5 = $10,000 sales revenue

$10,000 x 25% x 50% = $1,250

Revenue from merchandising

(2,225 x 80% = 1,780 total audience) x 10% x $20 = $3,560 sales revenue.

$3,560 x 25% x 50% = $445

Total Revenue

$42,800 + $4,200 + $1250 + $445 = $48,695

If you were the actual organiser of the concert and you were going through this estimation
process, you could tell the key stakeholders (e.g. your university) that the event has a
revenue potential for the college of between $45,000 and $50,000 depending on
attendance levels.

The next steps would of course be to prepare a breakdown of the costs to ensure that the
event is first feasible and second worth the time and effort. I.e. if it is forecasted to generate
a profit, is the profit large enough given the inherent business risks of the hosting the event.
 Section 2: Market Sizing / Estimating Cases 34

Problem – Automatic Garage Door Motors

Estimate how many automatic garage door motors are sold each year in
California, USA.

To understand this question you would again need to seek some

clarification from the interviewer. Through questioning you are
given more information and it is explained that only the domestic
household market is to be considered. Such motors on average
have a 10 year life and therefore need replacing after this period
of time. The population of California is roughly 36 million and the
answer should simply be expressed in units.

Possible Solution – Automatic Garage Door Motors

Things you’ll need to consider in answering this question include:

New demand will result from 2 sources, both new homes and old homes, because some
older homes get automatic garage door motors installed on their existing doors. In addition
more new homes will have an automatic garage door compared to old homes since
automatic garage doors are relatively new technology and sales/ installations would
increase each year as these become more affordable and popular.

An item such as an automatic garage door can be considered a luxury and therefore
wealthier homes are more likely to have them compared to lower income households.

Apartments and units can be eliminated from the question because they generally have
either no parking or an underground parking area and if it has an automatic door at the
entrance it would probably be more of an industrial sized motor and is therefore out of
scope for this question.

In terms of households then, some have two doors for two car spaces, some one big door
for two spaces, some have one door for one space, some simply a car port and therefore no
door, whilst other large homes can have up to 4 separate garage doors. 1 garage door per
home therefore seems like a good average and sensible number to use to answer the case.

Automatic garage doors have been around for say at least 15 years now. This fact will largely
determine replacement demand
35 ACE THE CASE

Possible Solution – Automatic Garage Door Motors (Cont’d)

Using these initial ideas, an answer to the case question can then be worked out. A possible
solution is presented below with the aid of a rough logic map

California’s Automatic California has a 36 million population

Garage Door Motor A wealthy western culture made up of families, couples, singles , elderly,
Market second homes etc. means probably about 3 people per household
Therefore approximately 12 million households
Not all homes have garage doors (e.g. car ports, older apartment blocks).
Without knowing California, this is guessed at about 15%
Therefore only 85% of homes even have garages = approx. 10 million homes

Replacements
New Demand
Demand

Motor has 10 year life span

Automated garage doors have been in
existence for say 15 years, however
Installations in Installations in growth would have occurred, Maybe
new homes existing homes 10% growth each year

Housing in California may be At a guess, about 3% of existing

increasing at a rate of say 2-3% p.a. homes probably upgrade to an
in line with economic inflation, GDP automatic garage door each year. So
and population growth. This means 10 million eligible homes x 3% =
12 million x 2.5% = 300,000 new 300,000 homes having an
developments p.a. Of this only 85% installations done each year
even have garages = 255,000. Of this
only 25% would even get an Motors
automatic garage door = 65,000 365,000
eligible homes approximately
215,000

120,000
Using the average 1 Using the average 1
garage door per garage door per 75,000
home you get home you get
65,000 300,000 Time
-15 yrs -10 yrs -5 yrs Present
365,000
motors
These will all need
replacing

365,000 + 120,000
= 485,000 motors p.a.
 Section 2: Market Sizing / Estimating Cases 36

Problem – Indian Cinema Hall

Estimate the gross revenue of a cinema hall in India for an average week of the
year.

India has the largest film industry in the world in terms of the
sheer number of ticket sales. The most popular actors and
actresses are tremendously famous and treated like heroes. The
billion plus population loves to go to cinemas and watch their
favourite actors perform in the entertaining Bollywood films
which are often filled with music, colour, romance and dance.
The burgeoning middle class (or ‘motor class’ as it is sometimes known due to the new
prevalence of motor vehicle ownership) is comprised of approximately 300 million people
predominantly living in the cities, urban areas and surrounding suburbs. Taking all of this
basic demographic information into account will greatly help in making sensible estimates
and assumptions. Answering this case question should be relatively straight forward. Like
other revenue based case questions, you’ll impress the interview if you consider more than
just one revenue source and perform the necessary calculations on paper or in your head
with accuracy and speed. Thinking of key variables that can be ‘flexed’ to do some sensitivity
analysis on your answer, and then researched in greater detail later will also make you stand
out as a candidate. A lot of junior consultants spend time performing financial analysis,
forecasts and estimates for larger client engagements, so also clearly explaining these
concepts as you go should help to improve your chances.

Possible Solution – Indian Cinema Hall

To begin answering this question, ask if you can assume that you will be determining the
weekly revenue of a single cinema hall in a busy district. You believe the primary source of
revenue would therefore be the ticket sales and movie advertisements. Other sources of
revenue will come from food & beverage sales and maybe even parking fees.

Ticket Sales

You could begin by estimating the seating capacity of the cinema hall. Let’s assume that
there are 20 seats per row and there are 40 rows in all. The maximum number of people it
can accommodate is therefore 800 people per show. If you assume the cinema is open 7
37 ACE THE CASE

Possible Solution – Indian Cinema Hall (Continued)

days per week and that there are say four shows per day then there would be a maximum
capacity of 3,200 per day and 22,400 per week.

Now thinking about this logically, cinemas are never 100% full and during weekdays, people
go to work and school so there are significantly lesser film viewers on these days. However,
during weekends, lots of people storm the cinema. So let’s say the cinema occupancy is at
60% during weekdays and 90% during weekends. The results, multiplied by the price of a
ticket, assume 150 Indian Rupees (note: if you are not from India then you’ll probably have
no real idea of ticket price, so ask you interviewer for some guidance on this, or price
against another currency, apply a foreign exchange rate and maybe a divisor if necessary to
account for price disparity) would yield us the revenue from the ticket sales per show. The
math is illustrated below.

Weekdays
Occupancy: 800 x 60% = 480 moviegoers
Revenue per show: 480 x 150 = 72,000
Revenue per day: 72,000 x 4 = 288,000
Total weekdays’ revenue: 288,000 x 5 = Rs. 1,440,000

Weekends:
Occupancy: 800 x 90% = 720 moviegoers
Revenue per show: 720 x 150 = 108,000
Revenue per day = 108,000 x 4 = Rs.432,000
Total Weekends’ Revenue = 432,000 x 2 = Rs. 864,000

Total Weekly Revenue from Ticket Sales = 1,440,000 + 864,000 = Rs. 2,304,000

Advertising

Now, to determine the revenues from cinema advertisements, we need to have an

educated guess on the number of advertising spots per show. Assume the cinema allots
eight 30 second advertising spots at the beginning of the show in between any movie
trailers for new movies. That would be 240 seconds for each show. For simplicity let’s
assume it cost Rs. 5,000 for each ad spot regardless of the day of the week. In addition
assume that all 8 ad slots will be taken for each movie time.
 Section 2: Market Sizing / Estimating Cases 38

Possible Solution – Indian Cinema Hall (Continued)

That would generate: 8 x Rs. 5,000 = Rs. 40,000 per show.
Multiply it by the number of shows in a week, 40,000 x 28 = Rs. 1,120,000.

Food & Beverage

To account for other sources of income, let’s start off with the revenues from the snack
counter. Since the cinema hall has its own centre, we can assume that the snack bar is also
run by the theatre management. You can peg the cost of snacks at Rs. 50 each. Of the
hundreds of moviegoers, you can roughly estimate that 50% would buy snacks. Again, using
our estimate of the number of people during weekdays and weekends, we can easily
calculate the gross revenues from food & beverage as illustrated below:

Weekdays
480 people x 4 shows x 5 days x 50% = 4,800 people
4,800 x 50 = Rs. 240,000

Weekends
720 people x 4 shows x 2 days x 50% = 2,880 people
2,880 x 50 = Rs. 144,000

Adding the two figures would give us Rs. 384,000

Parking Fees

Like above, because the cinema hall has its own centre, we can assume that the
hypothetical parking station is also run by theatre management. Now to work out the
revenue from parking, we must consider the fact that people in India use both 2-wheeled
and 4-wheeled vehicles. Let us assume that 25% of the moviegoers come via motorbike and
25% come by car. The remainder come by bus, train bicycle or walk. We should also
consider that moviegoers will bring companions when they go to the cinema. We could say
that on average 1.5 persons come by a two-wheeler and 2.5 in a car.

Parking for two-wheelers would naturally cost less than for four-wheelers. Let us assume
that the parking fee for motorcycles is at Rs.10 while the fee for cars is at Rs.20.
39 ACE THE CASE

Possible Solution – Indian Cinema Hall (Continued)

The calculation is therefore as follows:

Total number of viewers per week: 9,600 on weekdays and 5,760 on weekends.

Adding this up will give us a total of 15,360 moviegoers.

For motorcycles: (15,360 x 25%) / 1.5 = 2,560

2,560 x Rs. 10 = Rs. 25,600

For cars: (15,360 x 25%) / 2.5 = 1,536

1,536 x Rs. 20 = Rs. 30,720

Adding these two will give us Rs. 56,320

Total Gross Revenue

Summing all revenues from ticket sales, advertisements, snack counter and parking fees:

= 2,304,000 + 1,120,000 + 384,000 + 56,320

= Rs. 3,864,320

= approx. Rs. 4,000,000 per week.

 Section 2: Market Sizing / Estimating Cases 40

Problem – UK Beer Market

Estimate the amount of beer consumed per capita in the UK in one year.

With the rise of premixed alcoholic beverages, beer companies are

worried that the amount of beer consumed in the UK will steadily
decline compared to the 70’s, 80’s and 90’s. This question, at first
glance, appears reasonably straight forward if you live in the UK and are
a beer drinker because you could probably just think logically about
how much you and your friends drink. If you do not fit this description
then the question becomes a lot harder. In addition, your analytical skill
comes into play when thinking about the term ‘per capita’ and deducing facts about the UK
population. The answer is to be expressed in terms of volume and specifically litres (L). You
are not given any more information other than the question statement above.

Possible Solution – UK Beer Market

The current population of the UK is approximately 60 million people. If you don’t know this
figure then you may be able to ask the interviewer, otherwise, they may instruct you to
think about it based on the size and population of the US or even other European nations
like France. Parts of the UK are quite multicultural and it has an ageing population like many
western nations.

The first thing to do is work out what percentage of the population consume beer. Variables
to consider here are religion, age, and gender. The legal drinking age in the UK is 18 so
anyone below this age should be eliminated, although underage drinking is a problem.
Many females do not drink beer at all, preferring drinks such as pre-mixed beverages, wine
and champagne. In addition, those females that do drink beer tend to consume less than
males. Drinking beer is generally a very social activity and a younger person’s leisure. As
such, people over the age of say 65 can probably be eliminated from consideration. Certain
religions also disapprove of alcohol meaning more people can be eliminated.

Logically thinking about these variables and their associated percentages is what will
impress your interviewer rather than pulling them out of thin air. Even if you are wrong, at
least you have thought about it logically. On the next page is a hypothetical diagram you
may draw up in the interview, attempting to segment the UK population.
41 ACE THE CASE

Possible Solution – UK Beer Market (Continued)

No. People

10 million 25 million 15 million 10 million

18 Beer Drinking Age 65 Age

From this hypothetical population diagram, we have approximately 40 million people within
the beer drinking age. Now, in most populations, the male to female ratio is roughly 50/50.
There is no reason why the UK would be vastly different so we shall use this ratio. That
makes 20 million males and 20 million females in the beer drinking age. It is fair to assume
that more men drink than women. However, not all men drink beer. Personal lifestyle
choices, substitute forms of alcohol, as well as religion, are the largest probable factors
influencing beer consumption in both men and women. For males non beer drinkers may
account for as much as 15% of the 20 million. Likewise, not all females drink alcohol, and as
mentioned, many of those who do drink substitute for wine, champagne, and other pre-
mixed or post-mixed drinks such as vodka and orange, Bacardi lemon lime, rum and coke
etc. It therefore may be fair to assume that only 20% of all females in the UK drink beer.

We then have 20 million x 85% + 20 Million x 20% = 21 million beer drinkers in the UK.
 Section 2: Market Sizing / Estimating Cases 42

Possible Solution – UK Beer Market (Continued)

Now you must try to determine how much each drinks in a year. If you drink beer yourself
or you know someone who does, it will become an easier estimate. What we suggest
regardless, is to again segment the market. Create three categories of beer consumption,
small, average and heavy beer drinkers.

Based on your knowledge of drinking you can assume that a small beer drinker would on
average drink less than 5 beers per week, an average beer drinker 5 to 15 a week, and a
heavy beer drinker 15 to 30 a week. Assuming the population of beer drinkers (21 million) is
normally distributed between the two extremes (i.e. a bell shaped curve for consumption).
The average across males and females is probably about 10 beers per week.

Now the volume measure of a standard quantity of beer in the UK is the Pint, which is
roughly 0.5L or 16 US Fluid Ounces. Bottles and cans of beer are a little smaller, however we
shall stick with the 0.5L measurement for simplicity of calculation.

Here then are the final calculations:

0.5L X 10 x 52 weeks = approximately 250L of beer per year for an average beer-drinking
individual.

250 x 21 million = 5,250 Million litres of beer consumed in the UK each year

5,250 million / 60 Million population = approximately 90L of beer per capita per year

Now, depending on your personal consumption this may seem a little high or low,
depending on your own personal consumption levels but the actual figure is very close at
97L for the UK believe it or not.

If you have time and want to further impress you interviewer you can attempt to ‘reality
check’ your 90L answer or triangulate it by taking the 90L figure and working across to find
how much beer is therefore produced per day by breweries. It comes out to approximately
15 Million litres a day – that’s a whole lot of beer!
43 ACE THE CASE

Problem – NYC Taxis

Estimate how many taxis there are in New York City

This is another classic management consulting case interview

question used across the world. The site of yellow taxi cabs in
New York City, and particularly Manhattan, is a famous image
worldwide. Estimating just how many taxis are actually there in
the city, is of course a challenge, especially if you don’t live in
NYC or have never visited there. This question will therefore
test your logic and reasoning. It asks for a single unit estimate.

Possible Solution – NYC Taxis

After some initial discussion and questioning, you find out that you need only consider the
area of Manhattan. Now, to impress the interviewer, it is best to really break this question
down and consider a range of variables. Two methods present themselves as possible ways
of answering the problem:

Capacity

Think about the physical layout of the city streets and surrounding areas. Work out how
many taxis fit onto the streets, then considering that roughly every second vehicle in NYC is
a yellow taxi, make a judgment based on capacity.

Demand

Start with the population of Manhattan, categorise and divide the population and then
determine how often citizens get a taxi and how many trips a taxi would do in a standard
shift.

We will perform an analysis using both methods so that we can the compare the two
answers in order to triangulate a more accurate final answer. See the logic maps on the next
two pages for the workings of both possible solutions.
 Section 2: Market Sizing / Estimating Cases 44

Possible Solution – NYC Taxis (Continued)

Method 1: Capacity

By making some assumptions we can determine a maximum capacity figure through

understanding how many taxis can actually fit onto the streets.

Number of
NYC Taxis in
Manhattan

Manhattan is roughly rectangular in

Area of Manhattan shape. 13 miles long and 2 miles wide.
= 26 square miles

Think logically about a bird’s eye view of

any high density city to come up with
20% Streets
80% Blocks, Buildings, some reasonable assumptions.
= 5.2 square miles
Parks, Sidewalks etc.

40% Intersections, 60% Travelled Streets

street parking, small = 3.12 square miles
streets and alleys

10% Vehicles
= 0.312 square miles 90% Empty Space

Now a single taxi takes up an area of 50% Taxis

50% Other Vehicles
about 15 ft. by 25 ft. to be conservative = 0.15 square miles
= 375 square feet.

There is 27 878 400 square feet in a

square mile

= (0.15 x 27 878 400) / 375

= approximately 11,000 taxi’s
11,000 + 10%
To consider taxi’s being repaired, = 12,000 taxis
garaged, out of town etc. add 10%
45 ACE THE CASE

Possible Solution – NYC Taxis (Continued)

Method 2: Demand

By working top-down, starting from the population of Manhattan, we can estimate the
demand for taxis if we make enough assumptions.

Number of
NYC Taxis in
Manhattan

Manhattan’s population is 1.5 million

Population of then add another 500,000 people
Manhattan because of those who commute into
= 1.5 + 0.5 = 2 million Manhattan for work, tourists, business
travels etc.

75% Catch Taxi’s

25% Never catch taxis’ = 1.5 million

1/6 Catch taxi’s daily 1/6 Catch taxi’s three 1/3 Catch taxi’s once 1/3 Catch taxi’s once
= 250,000 times per week per week per month
= 250,000 = 500,000 = 500,000

= 7 x 250,000 + 3 x 250,000 + 1 x 500,000 + ¼ x 500,000

= 3,125,000 taxi rides per week

Now, an average taxi ride = say 20 mins

And, over two shifts a single taxi can take

maybe 40 rides per day
= 280 rides per week

No. Taxi’s = 3,125,000 taxi rides per week / 280

Approximately
11,000 Taxis
 Section 2: Market Sizing / Estimating Cases 46

Possible Solution – NYC Taxis (Continued)

Triangulating an Answer

As discussed earlier in this guide, approaching an ambiguous problem from multiple

directions allows you to sensibly check two or more answers against each other to hopefully
find a more accurate middle ground. The concept of triangulation helps to achieve this and
can assist in verifying one or more answers to the problem by having an additional basis for
comparison.

The concept of triangulation is used in navigation and comes from the world of geometry, in
particular trigonometry, in which the distance to an object can be determined by knowing
distances and angles of two other reference points, thus forming a triangle. The term is
often borrowed by the business world, including management consultants, when solving
ambiguous business problems, which require an element of estimation. If more than one
technique is used and the estimates align, then a greater level of confidence in your answer
can be assumed. However, this concept also works in reverse and if the two estimates are
far apart, confidence in both answers is reduced and you’ll probably need to begin revising
your assumptions and variables, or worse, start over.

As a real world example, triangulation is often done by investment banks, finance houses
and corporate advisory firms during financial valuations of organisations. Whereby a time
consuming and detailed discounted cash flow (DCF) valuation model is constructed and
compared against a more simplified calculation of enterprise value using a revenue, profit or
share price multiple approach or some other consensus valuation methodology.

In this particular problem, looking at both of the methods used above, the answers are very
close to one another. You should therefore have a greater degree of confidence that you are
on the right track in estimating your final answer. You can be confident in presenting a final
answer to the interviewer knowing that the two calculation methodologies resulted in
similar answers. Taking a simple average of the two answers results in a final estimate of
11,500 yellow taxis in Manhattan. This seems reasonable and agrees with the two values
calculated above. You should now explain to the interviewer in relative confidence your final
answer to the problem – “I estimate that there are approximately 11,500 yellow taxi cabs in
Manhattan on any one day”.
47 ACE THE CASE

Problem – Bank Branches

Estimate how many Commonwealth Bank branches there are in Australia

The Commonwealth Bank of Australia is one of Australia’s largest

and most popular retail banks with branches all over the country.
With the rise in internet banking, ATM’s, and cost cutting in the
retail banking sector, many banks have consolidated and or
closed branches around the country in recent years. You will
therefore need to think very logically in estimating how many physical Commonwealth Bank
branches actually exist.

Possible Solution – Bank Branches

This looks like a pretty difficult and complicated case interview question. It can however be
made easier to roughly estimate an answer by using a concept known as ‘Critical Mass’.
Critical Mass was first coined in the world of nuclear physics, relating to the amount of
fissionable material needed to sustain nuclear chain reactions. Like many things, the
terminology has now been applied to the business world. Usually if you want to purchase
and setup something like a gym franchise the franchisor company requires that the city,
town or area where you want to put the complex has a certain population within a certain
area.

For example in the United States, a Gold’s Gym franchise requires a minimum of 50,000
people within a 25km radius. This general concept can loosely be applied to many
businesses that require foot traffic, including bank branches. Of course, you would expect a
bank branch’s critical mass to be a lot less than a gym since almost everyone needs to do
some form of banking, including businesses. To further prove this concept, there are even
statistical comparison reports of nations and how many bank branches they have per million
citizens. To get started you’ll first need the population of Australia. If you did not already
know it, the population of Australia is about 20 million people.

To work out the critical mass for a retail bank, you’ll need to look at a reasonably large, yet
familiar area, such as your own city, town, municipality, shire, county, zip code/postcode, or
district for which you have a good idea of the resident population and the number of a
specific bank’s branches. This can take 5-10 minutes alone as you try to work out the
 Section 2: Market Sizing / Estimating Cases 48

Possible Solution – Bank Branches (Continued)

population, think carefully about where banks are located. If you have taken your time to be
accurate you can then simply extrapolate this to the entire country’s population. After doing
this, you may then want to tweak your answer based on where people work and do
business as well as small remote townships.

You can even triangulate or simply reality check the answer by assessing throughput and
back calculating using a frequency estimate against the population to see how many people
go into a bank branch each day, and logically deducing if your estimate seems accurate. For
example, if it turns out that only 10 people are going into a bank branch each day then you
have probably over estimated the number of branches. Conversely, if you determine that
your answer results in 10,000 people going into a bank branch each day, then you must
have underestimated the number of branches.

Now, the area in mind that will be used for this question is an actual region in Sydney,
Australia. It has a population of approximately 215,000. There are about 30 suburbs in this
region, and after thinking about the number of bank branches of a specific bank, there
appears to be about 9 and so we’ll make it 10 for good measure. This means that each bank
has a critical mass of on average 21,500 people. This doesn’t mean that this is the number of
people that use the bank. This is simply the population that it can potentially draw
customers from. Its customers may only be 1/6 of that based on market share and how
many competitor banks there are in the area.

Assuming the Commonwealth Bank has a true national presence and is represented equally
in all states and territories, then you can use this critical mass figure of 21,500 and
extrapolate to the entire Australian population. Doing this you’ll get a calculation of:

20,000,000 / 21,500 = 930 commonwealth bank branches in Australia

This is a sensible final estimate, since the actual answer is approximately 1,000. Remember
though, it’s not how close you come to the answer but the assumptions, reasoning and
method you use to get there.
49 ACE THE CASE

Problem – Bowling Balls in a Jumbo Jet

How many bowling balls could you fit into a jumbo jet?

This is a classic management consulting case interview question. It tests

purely your logic and math skills through trying to estimate something that
is completely non-realistic, even absurd. The question requires you to think
about the dimensions and available volume of a jumbo jet as well as the
size of a bowling ball and how they might sit or stack with other bowling
balls in a large space. For those not strong in math and calculating volume, the use of π (pi)
is needed and without a calculator, calculations can become tricky if you don’t be smart and
round off to more simple whole numbers. Despite the introduction of new Airbus A380’s
into several airlines around the world, you are told that for the purpose of this question,
that a jumbo jet is a Boeing 747 airplane. The bowling balls are to go only in the fuselage
where passengers sit. I.e., do not consider things like the fuel tank, wings and cargo hold.

Possible Solution – Bowing Balls in a Jumbo Jet

Aside from working out the size of a Boeing 747 and the volume of a bowling ball the key to
impressing the interviewer here, is including other factors which take up volume within the
fuselage of the airplane e.g., seats, the galley, and overhead compartments. The other trick
is working out how bowling balls stack together.

To start with, let’s think about a Boeing 747 or ‘jumbo jet’. It is longer than an Olympic
swimming pool (50m or 163.5 ft.) but less than a football field (usually around 100m or 100
yards). Let’s say it is 70m, which seems about right. Inside this type of airplane, the seating
configuration is usually 3 - 4 - 3 with two aisles. Each seat is about 0.5m wide and the aisles
about the same. This makes the interior of the airplane in question 12 x 0.5 = 6m wide. We’ll
stretch it to 7m for good measure.
 Section 2: Market Sizing / Estimating Cases 50

Possible Solution – Bowing Balls in a Jumbo Jet (Continued)

Since the fuselage is roughly of a tube shape, you get a cylinder as shown below.

7m

70m

The volume of this cylinder in cubic meters is therefore:

(7/2)2 x π x 70 = 12.25 x 3.14 x 70 = 2,700m3 approximately

The technical diagram below confirms our dimension assumptions. You can see that the
shape of a jumbo jet includes a second level for first class passengers at the nose, and like
most airplane designs, it tapers at the tail. Looking side on at the airplane, the addition of
the second level practically fills the space that the tapered tail takes away. The basic cylinder
volume above can therefore be used as a reasonable assumption for this question.
51 ACE THE CASE

Possible Solution – Bowing Balls in a Jumbo Jet (Continued)

Now, things like seating, galleys, toilets, structural components, flooring, roofing, cargo hold
and cockpit probably take up about 15-20% of the cylinders volume. Taking 20% off this
volume figure is probably reasonable from an overall picture. So 80% of 2,700m3 is equal to
2,160m3 and this is the volume we will work with.

We need to now look at the bowling ball side of the question. A bowling ball is a sphere. If
you picture one in your head or hold up your hands you should be able to estimate its
diameter to be roughly 20cm. In fact they are actually 22cm in diameter so 20cm was a good
guess but we’ll use the real measurement in the following calculations.

Before we calculate volume, it’s important to note something about spheres or balls and the
way they sit on top of each other when stacked. You would know from experience, that
when a lot of balls are stacked together they take up less space than what you would first
assume. Look at the illustration below:

The height of the stacked balls on the left is about 85% of the height of the 3 balls on the
right. However, it is not the same for the dimensions of length and depth as these remain
relatively unchanged. This height reduction factor therefore needs to be taken into
consideration in this problem. Let’s first work out how many bowling balls fit into 1 cubic
meter.
 Section 2: Market Sizing / Estimating Cases 52

Possible Solution – Bowing Balls in a Jumbo Jet (Continued)

Drawing up a basic diagram of some stacked bowling balls and doing a count reveals 125
bowling balls within the defined box. The box is actually 1.1 x 1.1 x 0.935 = 1.13 m 3

Working with simple ratios now, we can therefore say that in a 1m3 volume you can fit
(1/1.13) x 125 = 110 bowling balls.

Taking this figure to the available volume in the fuselage of 2,160m3 means the airplane can
hold approximately 2,160 x 110 = 237,600 bowling balls.

Because the seats on the plane take up space in quite a disruptive pattern, it means the
balls would not always stack as well we have depicted above. In addition, placing bowling
balls into overhead luggage compartments would have the same result. Although the
volume taken up by the seats was already factored into the total available volume of the
cylinder, this disruption of the space available inside the airplane and its impact on the way
the bowling balls stack together, means that to account for this, we should take at least
another 5% off the estimated number of bowling balls.
53 ACE THE CASE

Possible Solution – Bowing Balls in a Jumbo Jet (Continued)

This gives 237,600 x 95% = 225,000 bowling balls fitting in the passenger area of a jumbo jet
and this approximation would be your final answer.

To actually demonstrate the concept of triangulation we will try and estimate an answer to
same question through another method.

A jumbo jet holds just over 400 passengers. Ignoring the cargo hold, each passenger has
roughly one item of hand luggage on board and combined, usually completely fills all of the
overhead compartment space on the airplane. When you sit on an actual airplane seat and
look around, the actual human bodies probably only take up about 10% of the available
space taking into account the empty space of the aisles and head room. That means you
could probably cram and squash 10 people for every one body into the extra space. 10 x 400
= 4,000 people squashed into the passenger hold of a jumbo jet. You now have 4,000 bodies
and 400 items of hand luggage. Assuming that each item of hand luggage can hold 5 bowling
balls on average and the volume of a human body about 15 – 20 bowling balls depending on
size (let’s take the high side and say 20). We have 20 x 4000 + 5 x 400 = 82,000 bowling balls.
You will see that this is far less than the earlier estimate.

Depending on your preference, you may wish to propose this figure instead, keep the
previous estimate or average the two estimates to get a final answer of about 150,000
bowling balls.

Obviously a 747 jumbo jet has never been filled with bowling balls, as it is a pointless
exercise. We therefore have no way of ever verifying our estimates, unless the engineers did
some serious computer modelling. Remember, though, it’s all about how you devise an
answer, not the value of the actual answer. As long as it is within reasonable limits (e.g., 500
would be far too small and 5 million far too large), then you can be happy you have done a
good job.

As was done in this possible solution, demonstrating two or more ways to solve a problem is
viewed very highly by management consulting firms because it shows your ability to think
outside the square and approach a problem from multiple viewpoints.
 Section 2: Market Sizing / Estimating Cases 54

Problem – Sydney Harbour Bridge

Estimate the number of vehicles that cross the Sydney Harbour Bridge
(Australia) in one day

This question is both challenging and interesting. It

has often been applied to other famous bridges
around the world such as the Golden Gate in San
Francisco, Brooklyn Bridge in New York, or Tower
Bridge in London, and you may come across it
depending on the location of your interview.
Different possibilities present themselves in answering this question however the method of
calculating ‘throughput’ is used here in our possible solution.

Possible Solution – Sydney Harbour Bridge

If you don’t know, the Sydney Harbor Bridge (located in Sydney, Australia) is probably the
most famous bridge in the southern hemisphere spanning across one of the world’s most
beautiful natural harbors. The first thing you’ll need to do is clarify and further define the
question. After some basic discussion with the interviewer, you come to an understanding
that in this question, vehicles mean anything traveling on the road such as cars, buses,
trucks, bikes, motorbikes, vans, etc. and that you are considering a standard week day.

In answering the actual question by calculating throughput, what we’ll need to do is first
workout the length width and usage patterns of the bridge.

Here you may try and interact with the interviewer to get some hints on how long it is. You
would probably not be given a picture such as that shown above. However, from it and the
surrounding office buildings we can see that the bridge is somewhere between 300m and
500m. We’ll therefore take the middle ground and say it is 400m long. In calculating
throughput however, the length is not as important as the width. If you lived in Sydney, you
would know that the bridge has 8 traffic lanes. It also has a pedestrian footpath and two
train lines. However, these can be ignored sine the question only asks about road vehicles.
In addition to this, you may conclude that the bridge has 4 distinct periods during the day
that dictate traffic flow.
55 ACE THE CASE

Possible Solution – Sydney Harbour Bridge (Continued)

You could draw a rough time line chart to illustrate traffic flow during different time periods.
It may look something like this:

From this chart, we can see the assumption that more traffic flows across the bridge during
the peak periods (7-10am & 4-7pm), slightly less flows in the middle of the day, even less in
the early morning and evening, and less still during the night hours 12-5am. You would base
such assumptions on personal experience and a general knowledge of how traffic flows in
large cities. Such a chart can be further modified based on any comments made by the
interviewer.

You would now need to attempt to quantify the 4 categories of traffic flow from your chart
(High, Medium, Low, and Very Low). The city of Sydney is Australia’s largest city with just
over 4 million residents and the harbor bridge, despite a toll and new harbor tunnel, is still a
primary route for motorists crossing and entering the CBD (Central Business District).
Therefore, it is fair to assume that traffic is reasonably heavy.

From personal experience of driving a car during peak hour, you may estimate that cars are
spaced roughly 3 car lengths apart during such time and this is considered heavy traffic. To
sense check this, draw a sketch. Heavy traffic on the Sydney harbor bridge may therefore
look something like on the illustration on the next page:
 Section 2: Market Sizing / Estimating Cases 56

Possible Solution – Sydney Harbour Bridge (Continued)

Taking into account all car shapes, trucks, busses, motor bikes, etc., the average length of a
vehicle is probably about 6m. This means, that one lane of length 400m has (400/ 6 x 4) =
400 / 24 = 17 vehicles at any one second during peak hours. The Sydney Harbor Bridge has a
speed limit of 60km/h so this means that in one hour, one lane of traffic during peak hour
sees:

60km / 0.4km x 17 = 150 x 17 = 2,550 vehicles pass through it.

This means 4 lanes would have roughly 10,000 vehicles passing through in one hour during
peak periods.

Since the bridge is used to access the CBD and also cross the city, flow in both directions can
be considered, although in reality there is probably some difference. Hence we now have
20,000 vehicles traveling across the bridge in one hour during peak periods.

If you are short in time you may want to estimate the other traffic categories as a
percentage of peak flow. E.g. medium traffic could be 25% of this, low traffic 10% and very
low 5%. From here all you must do is calculate all of the numbers through for every hour of
the day and then add all of the results together. See the table on the next page.
57 ACE THE CASE

Possible Solution – Sydney Harbour Bridge (Continued)

Hour Traffic Level and % of peak Calculation

12am Very Low 5% 5% x 20,000 = 1,000
1am Very Low 5% 5% x 20,000 = 1,000
2am Very Low 5% 5% x 20,000 = 1,000
3am Very Low 5% 5% x 20,000 = 1,000
4am Very Low 5% 5% x 20,000 = 1,000
5am Low 10% 10% x 20,000 = 2,000
6am Medium 25% 25% x 20,000 = 5,000
7am High 100% 100% x 20,000 = 20,000
8am High 100% 100% x 20,000 = 20,000
9am High 100% 100% x 20,000 = 20,000
10am High 100% 100% x 20,000 = 20,000
11am Medium 25% 25% x 20,000 = 5,000
12pm Medium 25% 25% x 20,000 = 5,000
1pm Medium 25% 25% x 20,000 = 5,000
2pm Medium 25% 25% x 20,000 = 5,000
3pm Medium 25% 25% x 20,000 = 5,000
4pm Medium 25% 25% x 20,000 = 5,000
5pm High 100% 100% x 20,000 = 20,000
6pm High 100% 100% x 20,000 = 20,000
7pm High 100% 100% x 20,000 = 20,000
8pm Medium 25% 25% x 20,000 = 5,000
9pm Medium 25% 25% x 20,000 = 5,000
10pm Low 10% 10% x 20,000 = 2,000
11pm Low 10% 10% x 20,000 = 2,000
Total = 196,000

By using the method of calculating throughput per hour, the final answer comes out at
196,000 vehicles crossing the Sydney harbor bridge each day. You’ll be interested to know
that after working this problem through, the actual answer was looked up on an Australian
government website and was found to be just over 160,000 vehicles per day. 196,000 is
pretty close and in the right order of magnitude. Remember though, as we have mentioned
before, the interviewers are looking at your method, skills, and calculations, not the exact
accuracy of your final answer.
 Section 2: Market Sizing / Estimating Cases 58

Problem – Rubber Tyres

Estimate the number of rubber tyres on the planet right now.

On first inspection this question appears near impossible to get

anywhere near an accurate answer as the world is just so large
and diverse. The key to impressing the interviewer is therefore
thinking out loud and discussing possible variables to the
problem. There is so much to discuss that you may not even
come out with a final number, so try to stay on track. After some
discussion, you find out a bit more regarding the question. You are to consider tyres for
motorised vehicles only (i.e., not bicycles or toys) and further, only whole tyres, i.e., broken
tyres are out of scope.

Possible Solution – Rubber Tyres

The first step in such a question may be to brainstorm some variables or things that need to
at least be considered. This may take about 5 or so minutes and might involve some
interaction with the interviewer. Below is such a list.

 Motorised vehicles and rubber tyres have been around since at least the 1930’s
 Many used tyres go into landfill, others are dumped, abandoned or burned whilst
some are recycled
 The world population is over 6 billion. However, only a fraction has the wealth to
even own a motorised vehicle.
 New tyres are being produced every year
 New tyres will exist in the inventory of wholesaler and retailer organisations
 Cars actually have 5 tyres because generally speaking they should all carry at least
one spare tire.
 The lifespan of a tire ranges from 1 to 3 years
 Motorised vehicles with tyres include private cars, motor bikes, trucks, buses, taxis,
courier vans, race cars, airplanes, military vehicles, construction vehicles, trailers etc.

You could spend hours trying to accurately quantify everything above. However, in limited
time, you may be best off just creating percentages and whole numbers based on gut feel
and intuition, to at least derive and answer to the case question.
59 ACE THE CASE

Possible Solution – Rubber Tyres (Continued)

Below is a table assigning some values to the ideas and variables already outlined:

Variable Estimate Explanation

World Population 6 Billion Educated guess
Percentage with 20% Poor regions in places such as Africa, India, Asia and
wealth to afford south America have huge populations but little
vehicles vehicle ownership by private individuals or
organisations
Percentage of these 25% Think of places like the US, Canada, UK, Europe
individuals who own where about 1 in 4 people own a vehicle. (this may
vehicles be a little high)
Comparative 50% I.e., for every two private vehicles there is one vehicle
Percentage of owned by industry/government. This includes trucks,
Business & taxis, airplanes, buses etc.)
Government vehicles
to private ownership
Average number of 6 This takes into account the diversity and range
tyres per vehicle between motor bikes, cars, trucks, etc.
Average life of a tyre 3 years Based on personal experience of car ownership.
Larger vehicles such as trucks may be different.
Tyre Production each Will be 1/3 of what is currently in use
Year
Percentage kept in 5% Educated guess – ½ of month
inventories
Tyre Disposal each Calc Will be almost identical to production minus growth
year factor
Percentage of tyres 50%
into landfill
Percentage of tyres 25% Realistically, these percentages would have changed
recycled over time since the early days of tyres.
Percentage of tyres 10%
abandoned
Percentage of tyres 15%
destroyed
World straight-line 2.5% pa. Realistically probably an exponential growth with
growth in vehicles peaks and troughs along the way
since 1930’s
 Section 2: Market Sizing / Estimating Cases 60

Possible Solution – Rubber Tyres (Continued)

From this data we can formulate an equation using the variables on the previous page.
However, it will be difficult to calculate without the use of a calculator. A rough set of
preliminary calculations will therefore look something like this:

Tyres currently in use

= [(6 billion x 20% x 25%) + (6 billion x 20% x 25%) x 50%] x 6
= [300 million + 150 million] x 6
= 450 million x 6 = 2.7 billion tyres

Tyres produced this year

= Tyres in use x 1/ lifespan
= 2.7 billion x 1/3
= 900 million

Tyres currently kept in inventories

= Tyres produced each year x 5%
= 900 million x 5%
= 45 Million

Tyres disposed this year

= tyres produced – growth factor
= 900 million – 2.5%
= 877.5 million

Tyres into landfill and abandoned this year

= tyres disposed x (landfill % + abandon %)
= 877.5 million x (50% + 10%)
= 877.5 million x 60%
= 530 million (rounded up)

Using some of these figures and the 2.5% growth rate, we can estimate how many tyres
exist out there in the world considering they have existed since say the 1930’s. The
interviewer may stop you there and tell you not to bother, as by now you have already
performed enough calculations and made many useful assumptions. However, if asked, it
would look something like this:

2.7 billion + 900 million + 45 million

+ Ʃ 530m + 530m x 0.975 + 516m x 0.975 + 503.1m x 0.975 … for ~80 years
= 22 Billion!
61 ACE THE CASE

Problem – Cigarettes
Estimate the number of cigarettes consumed per day in Canada.

The popularity of tobacco in western nations has marginally

declined in recent years due to research results on the links to
lung cancer and extensive health warnings. With population
growth however, the sale of cigarettes still slightly increases each
year in many of these countries. However, Canada has seen a
downward trend in cigarette consumption. This question
therefore simply asks for a single estimate of unit consumption of cigarettes in one day for
the entire nation of Canada.

Possible Solution – Cigarettes

For those who don’t know, the population of Canada is just over 30 million. Cigarettes are
classified as a fast moving consumer good and therefore huge numbers of them are
consumed each day. Regular smokers may go through a pack per day. However, not
everyone who smokes consumes this many cigarettes. This question is therefore all about
segmenting the population and estimating reasonable percentages. See the logic map on
the next page for a possible solution:
 Section 2: Market Sizing / Estimating Cases 62

Possible Solution – Cigarettes (Continued)

Canada’s Daily
Cigarette
Consumption

Population of Canada = 30 million

Potential Smoking 80% of the population is over the age of

Population 15 which is generally the age people start
24 Million smoking. 30 x 0.8 = 24.

Think logically about a representative

20% Smokers
sample of your friends, relatives, co-
80% Non-Smokers = 4.8 million
workers, classmates, etc. to derive
necessary percentage splits

Again, think about

75% Daily smokers 25% Recreational people you know who
= 3.6 million smokers do smoke and how
= 1.2 million frequent they smoke
to make a guess at
this split.

Normal pack has 20 This is harder to

cigarettes. Some 12.5 Cigarettes 0.3 Cigarettes estimate since
people smoke per day per day occasional smokers
more than a pack a consume anywhere
day whilst others from 1 cigarette per
less. The average is month to 1 per week
probably therefore to 5 per week.
between 10-15 per Generally these types
day. Say 12.5 of smokers only
= 12.5 x 3.6 million = 0.3 x 1.2 million
smoke when
= 45 million = 3.6 million
socialising i.e. at a bar
or club. So let’s make
this average 2 per
week = 0.3 per day.

48.6 million
cigarettes smoked
per day in Canada
63 ACE THE CASE

Problem – Online DVD Rental

XYZ Ltd. is a movie portal website. They rent out DVDs movies all over India.
Estimate the annual revenue of this online business.

To be able to calculate the annual revenue for XYZ Ltd. we need to

have an idea of the size of the customer base. To understand the
customer base in a country like India, it would be good to know the
size and quality of the movie data base too. Begin by quizzing the
interviewer to see where it leads. Upon talking to the interviewer
about XYZ Ltd. he divulges 3 key pieces of information:

 The company rents out DVDs in English and other vernacular languages
 Customers are only from the cities, as delivery, pick-up and drop off centres exist
only in the cities
 There are two methods of transaction:
1) the customer can send an SMS with the movie details to the number provided
by the company for information regarding the availability of any DVD movie
2) the customer can log in to the company’s website using the username provided
to them and can check out the stock to select a movie of their choice

Possible Solution – Online DVD Rental

Since the interviewer has given some information away, you can already start pulling
together some assumptions. Knowing that the company operates through both mobile and
internet service, you could first estimate the internet and mobile phone market in India.
However, for simplicity it is probably fair to assume that all mobile phone customers have
already registered an account with the online portal and simply use the mobile service for
convenience while on the go. Therefore, there might be no need to drill into the size of the
mobile phone market.

We can start by calculating the urban population. Assume that 30% of the population live in
urban areas. So, if given a total population of 1 billion people, only 300 million people would
be living in cities. After this, we need to find out the number of urban households in India.
Assuming an average of 4 persons per household for urban areas, we get 75 million
households. If 50% of this is the average internet market for urban areas in India, we can say
 Section 2: Market Sizing / Estimating Cases 64

Possible Solution – Online DVD Rental (Continued)

that roughly 35 million urban households have an internet connection. That’s 35 million
urban internet connections, give or take. There is probably only one person per household
who has membership to the online DVD rental service. So this gives a potential market of 35
million people.

Now realistically, this service is not yet very popular in India. So, assume it to have a
penetration of less than 1% of the population (that’s 1 in 100 people). Depending on the
level of advertising done by XYZ Ltd and word of mouth success it may be as low as 0.5%.
Assume it to have maybe a 20% annual growth rate. This gives a nationwide customer base
of 1.75 million and 350,000 new customers for the year.

After estimating the probable customer base, we need to find out the revenue generated
per customer. We would need the schedule of prices charged to customers and maybe an
idea of how frequently customers use the service. The interviewer explains that it is a
membership revenue model and hands you some data on pricing:

Plan No. Plan Charges Plan Details

1 100 Rs. Per Month 1 DVD per week for a year

2 200 Rs. Per Month 2 DVDs per week for a year

3 300 Rs. Per Month 3 DVDs per week for a year

There’s also a one-time registration fee of Rs. 1,000 for any new customer.

After being told of the membership revenue model you may decide to revise down your
assumptions on the customer base, as the annual payment plans would restrict interest in
the online service down to avid DVD renters only. Let’s take only a quarter of the customer
base previously estimated. I.e. 440,000 active members with let’s say 80,000 new
registrations for the year.
65 ACE THE CASE

Possible Solution – Online DVD Rental (Continued)

So, in calculating the revenue for the year, we would compute for registration fees and plan
charges income:

Registration Fee

= No. of new customers x Rs. 1,000

= 80,000 x 1,000

= Rs. 80 million

Plan charges income

For simplicity, assume the product mix is skewed towards the cheaper end and therefore
every customer is charged a weighted average of Rs. 150 /month

= No. of customers for the year x Rs. 150 x 12 months

= 440,000 x 150 x 12

= Rs. 800 million

Total Revenue

= Rs. 80 million + Rs. 800 million = Rs. 880 million p.a.

And there you have it. Your final answer for a revenue estimate for XYZ Ltd.’s online DVD
rental service based on very little data is 880 million Rupees p.a.

How correct this figure actually is will be based purely on your assumptions and logic. Why
not try and back calculate how many DVD rentals this means per day (you’ll have to guess
an average price first) and see if this revenue figures stills seems sensible.
 Section 2: Market Sizing / Estimating Cases 66

Problem – US Pizza Consumption

Estimate the number of pizzas consumed in the USA in one year.

With so many ‘fast food’ and ‘take-out’ options available in the

United States, it is no wonder that the humble pizza is
consumed on such a large scale. The USA is arguably the world’s
largest consumer of pizza and it is your job to estimate just how
many pizzas the nation consumes in one year.

Possible Solution – US Pizza Consumption

This question can be answered much like the earlier question on cigarettes. Again, it is
probably easiest to work down from the population and make some assumptions. The logic
map on the next page proposes a possible solution using this same method.
67 ACE THE CASE

Possible Solution – US Pizza Consumption (Continued)

Number of
Pizzas consumed in
the USA p.a.

Population of USA
= 300 million

5% Never eat pizza 95% Eat pizza

(health conscious, = 285 million
dieting, infants,
religion etc.)

20% Heavy eaters 60% Regular eaters 20% Occasional eaters

Once per week Once per month Once per quarter
= 57 million = 171 million = 57 million

57 million x 1/2 x 52 weeks 171 million x 1/2 x 12 weeks 57 million x 1/2 x 4 weeks
= 1,480 million p.a. = 1,020 million p.a. = 114 million p.a.

Since pizza comes in a

variety of different sizes
you can assume that on
average the act of
eating pizza involves 2.6 billion pizzas
eating 4 slices or consumed in the
roughly half a pizza. USA annually
 Section 2: Market Sizing / Estimating Cases 68

That concludes the worked solutions for estimation and market sizing case questions. Here
are more examples of this style of case interview question for you to attempt and practice
on your own.

Other Market Sizing / Estimating Cases

 Estimate the market size (in Euros) for car leasing in Germany

 Estimate how many fridges are made in the USA each year

 Estimate the total number of ears pierced in the UK

 Estimate the market for ‘high end’ handbags in Japan

 Estimate the number of cows used in McDonald’s burgers in one year in the USA

 Estimate the market for used cars in France

 Estimate the market for boats in Australia

 Estimate the market for helicopters in New Zealand

 Estimate the number of shoes in the world

 Estimate how many products are sold on ebay.com every day

 Estimate how many people worldwide will watch the 2016 Rio Olympics Opening
Ceremony live on television

 Estimate how many printed business cards exist in the city of London

 How many gas stations are there in Chicago

 How many buildings higher than 10 floors are there in the Northern Hemisphere

 Estimate how many people live exactly on the equator

 Estimate how many people have a tooth removed each day worldwide
69 ACE THE CASE

3. Business Problem & Strategy Cases

Case interview questions based on business problems and strategy decisions are designed
to assess your ability to truly act like a management consultant thinking logically and
creatively at the same time, to develop a practical business solution. In doing this, you can
also demonstrate your strong commercial acumen. Unlike the previous style of estimation
style questions, which are often largely hypothetical in nature, this type of case question is
often firmly based on real life problems the consulting organisation has faced with clients or
that your interviewer has personally encountered whilst working as a management
consultant.

Again, there is no one right answer to this style of case interview question, however, your
ability to propose inventive yet pragmatic solutions, will get you across the line with the
interviewer. Sometimes you won’t really end up giving a final solution to these types of
question, rather an in depth discussion of the issues being what evolves during the course of
the interview and this is all that is expected from candidates as their answer to the case
question.

What the interviewer ultimately wants from you here is to be able to view you as a peer,
either a consultant or analyst as part of their engagement team solving real life business
problems and doing real management consulting work for clients. Gauging personal and
organisational fit is therefore of key concern to them on top of your analytical skills.

Because this style of case interview question often comes in 2nd round interviews or after
estimation based case questions, the focus on numbers and calculations is generally not as
intense. Occasionally however, calculations will be required and often the numbers or
percentages are given to you so that you may calculate things like marginal costs,
profitability and required revenue per unit to break even.

It is obvious that some ground knowledge gained via university courses such as
management accounting, managerial economics, engineering, project economics or any
business and strategy courses for that matter will be of some advantage here. However, like
all consulting interviews they are looking for anyone with an outstanding mind, a strong
intellect, great attitude and a healthy, balanced personality.

Certain models and frameworks mentioned in the introduction to this guide can be applied
to this style of case question. Porter’s 5 forces, the BCG Matrix, SWOT Analysis, Revenue
 Section 3: Business Problem & Strategy Cases 70

and Cost modelling, Business Life Cycle Analysis, Mind Mapping and Key Issues Grouping are
just some that are used and explained throughout the worked solutions of this section.

Again, the same recommendations from earlier in this guide regarding the need to structure
your solution and discussion, as well as demonstrating good time management should be
applied to business problem and strategy cases.

Different Strategy Case Styles

Before getting into the actual real life case interview question examples and solutions, we
should look at the several different types of business problems and strategy cases you may
encounter. Each has a few obvious steps you should take to try and answer such problems,
as well as areas you should think about and focus on. From our combined experiences and
discussions with consultants, we believe there are around 10 of these generic types of
business problem and strategy case questions.

You can find more detailed information on common business problems/decisions in any
organisational strategy textbook. So, in the interest of providing you with more example
case interview questions rather than business theory, in the later pages we have not
provided specific examples for each one of the 10 types of question styles outlined on the
following pages. We simply include this summary information here to help you be better
prepared for anything that comes your way in your rounds of case interviews ahead.

Type 1) Entering a new market

Step 1: Investigate the new market to decide whether entering the market would
represent a good business decision. Essentially assess the market’s attractiveness.

Step 2: If you are going to enter the market, you need to determine the best way to
become a player in the market. The options are:
- Start operations in the new market from scratch
- Acquire an existing player in the market
- Form a joint venture or strategic alliance with another player

Type 2) Developing a new product

Step 1: Think about the actual product and if there is a need for it

Step 2: Think about your potential marketing strategy

71 ACE THE CASE

Step 3: Think about who your customers will be

Step 4: Think about the market position of the product. Will it be at the low end of the
market and be low cost, or will it focus on quality and be priced high at the luxury
end?

Step 5: Think about how to distribute the product

Step 6: Think about how to finance the project

Type 3) Pricing strategies

Step 1: Investigate the product and its components in detail

Step 2: Choose a pricing strategy:

- Consider Cost-based pricing or Price-based costing
- Cost-based pricing means determining the cost of a product, choosing a desired
profit margin, and calculating a sales price.
- Price-based costing means choosing a desired sales price and costing out
production to meet that sales price with a desired profit margin
- Consider any supply and demand forces as this will impact on price.

Type 4) Growth strategies

Step 1: Ask probing questions to determine the nature of growth that your interviewer is
looking for. Is it a focus on product, division, or the entire company?

Step 2: Choose the growth strategy Some options are: increasing sales, increasing
distribution channels, increasing product line, investing in a major marketing
campaign, diversification of products/services, or acquisition of another
organisation.

Type 5) Starting a new business

Step 1: Investigate the market to make sure that entering the market is a good business
decision.

Step 2: Look at the project from a Venture Capitalist’s view point:

 Section 3: Business Problem & Strategy Cases 72

- The management team

- Business Plan (including market and strategic plans)
- Distribution channels
- Product/s and or Services
- Customer base
- Financing
- Financial analysis of the proposition such as Return on Investment, Break Even
Point, and Net Present Value.

Type 6) Responding to a competitor’s actions

Step 1: Ask probing questions

- What is the competitor’s new product or service offering and how does it differ
from this organisation?
- What has this competitor done differently?
- Has this or any other competitor increased their market share?

Step 2: Create a response plan. Examples include: Acquiring the competitor or another
player in the market, merging with another competitor, copying the competitor,
hiring the competitor’s top level management away, and utilising marketing to
increase your profile.

Type 7) Increasing sales

Step 1: Ask probing questions to gather information about the market and the product line

Step 2: Determine a strategy to increase sales

- Increase volume or increase prices
- Increase revenue from each sale (make buyers buy more)
- Create seasonal balance
- Increase demand for the product through marketing

Type 8) Reducing costs

Step 1: Ask for or create a breakdown of the organisations costs

Step 2: If any costs seem too high, determine why

73 ACE THE CASE

Step 3: Benchmark costs to industries or competitors

Step 4: Look at areas where quality can be improved or to initiate process improvement
which may reduce idle time, waste, errors and re-work.

Type 9) Increasing profits

Step 1: Look at sales volume, price and revenues

Step 2: Look at costs – fixed and variable

Step 3: Determine whether you want to increase volume and how to do so.
Example actions include expanding into new areas, increasing the sales force,
increasing marketing, reducing prices, and improving customer service

Type 10) Organisational Turnarounds

Step 1: Gather important information about the company and its situation

Step 2: Choose an appropriate action. Be creative, but base your action upon a structured
and well thought-out plan

So now you have briefly seen the 10 different styles of generic business problem and
strategy based case interview questions including some simple steps to structuring a
solution. We now present several real life examples of business problem and strategy based
case interview questions which have actually been asked to real life candidates in
management consulting case interviews around the world. See if you can recognise any of
the styles of cases from the 10 mentioned above.
 Section 3: Business Problem & Strategy Cases 74

Problem – IT Consulting
An IT consulting company operating in London is your client. It is experiencing
some strong growth. In the coming months, it is therefore planning to expand
the size of its workforce to meet this increased demand in business. How
would you go about formulating a recruitment strategy for this company?
What else would you need to consider?

This is a relatively short case question involving business

strategy. The problem attempts to put you in the shoes of a
consultant working with a client on an operational business
issue. It would be useful to first brainstorm and discuss the
issues around employee recruitment. Thinking out loud about
where to source skilled IT labour, how much it will cost to
attract the required talent, training costs and time frames looks to be what’s needed in this
case question. During this initial thinking and discussion stage the interviewer may stop you
and give you some more information, explaining that the client has come back to you and
said that they are willing to assign only £300,000 ($500,000 USD) of additional cost to the
recruitment project and that they are looking for roughly 20 new employees of varying skill
levels and experience.

Possible Solution – IT Consulting

As mentioned, this question is all about discussing issues before proposing any strategy.
Grouping issues into what consulting firms call ‘Buckets’ is the easiest way to start off. In
formulating an overall recruitment strategy you may therefore start to brainstorm and think
about dimensions such as:

Location – Where will you get people from? International, domestic, local or interstate?

Skill and Experience – Can they get new graduates and train them up or do they need
experienced hires. Maybe a mix of these would be best?

Cost – The budget is currently at $500,000 USD. This will get eaten up by recruitment
agencies, contractor fees, head hunter fees, training, finder’s fees, incentive pay or sign on
75 ACE THE CASE

Possible Solution – IT Consulting (Continued)

bonuses to entice people to switch jobs and come work for the client organisation, travel,
and advertising are costs that will be incurred. Can the budget be increased?

Time – When are staff needed, how long will they be in training before they hit the ground
so to speak, what about long term needs e.g., further growth?

Sources - Recruitment Agencies, Graduate Programs at universities, specialist executive

head hunters, and advertising though employment websites and job classifieds are all
options

Specific skills – What kinds of skills are actually needed by your client to achieve business
growth? Sales, Consulting, Customer Relations, Administration, or Technical IT Consultants
e.g., Business Analysts, Programmers, Systems Analysts, Database Developers, Network
Professionals, Security Specialists, etc.

Numbers – how many new employees do they actually need? Is business demand driving
the decision to hire new staff or does your client want new staff to first build a platform and
capacity for growth.

You may even draw these issues up into some form of diagram such as a mind-map on the
next page to better explain the thinking.
 Section 3: Business Problem & Strategy Cases 76

Possible Solution – IT Consulting (Continued)

77 ACE THE CASE

Possible Solution – IT Consulting (Continued)

From this initial identification of issues the interviewer tells you that the client has
responded to some of your questions, specifying the following criteria:

 20 new staff are needed

 Only half of these need to have strong technical skills
 A quarter need sales and or consulting experience
 A quarter are simply needed for administration.
 The budget has now increased to $600,000 for the recruitment effort with $10,000
assigned specifically to training.
 There is to be a mix of experience and skill
 All possible sources and locations are to be exploited. They want the best they can
get for their money.
 All hires need to be made within the next 3 months and all new hires to start
chargeable work within 6 months

The task now, is to break up the budget as logically as possible, therefore partially
formulating a recruitment strategy to meet the client’s criteria. See the diagram on the next
page for a possible first draft budget solution. Further work would obviously be required to
create a full recruitment strategy for the client such as determining salaries, formulate
timing schedules for hiring and training, etc. but we’ll finish it at the budget as that is
probably all you’ll have time for given all of the initial discussion that you will have done.
 Section 3: Business Problem & Strategy Cases 78

Possible Solution – IT Consulting (Continued)

$600,000 USD
Recruitment Budget

$100,000 Training of
$500,000 Hiring
new hires

$10,000 to $100,000 to set $100,000 in $100,000 for $150,000 for 2 $40,000 for
advertise on up a graduate recruiting fees to executive head current contingency and
local online recruitment find 10 technical hunter fees to employees to or incentive
jobsites for 5 program from staff find 2 more top travel to the USA deals to get
admin staff (e.g. UK universities consulting/sales and India to experienced
accountants, HR, staff from headhunt 2 top hires to join
IT Support etc.) Europe and or IT consultants company.
UK and make
international
contacts.

Maximum of $25,000 each for Use two

$2,000 to be the top 4 different
spent per hire. business/IT recruiting
Means company universities in agencies. Maybe
can probably Britain one big and one
advertise small since
position on generally pay
several different only on success
sites
79 ACE THE CASE

Problem – Radio Station Website

A large commercial radio station in Calcutta India, let’s call it ‘ABC FM’, is
interested in setting up a website to build loyalty by giving listeners more
information on programming, events, competitions and to hopefully add some
more to the radio stations bottom line. You are to estimate the monthly
visitors the website may receive and identify the different costs of building and
maintaining the website. In the long run, the management wants to see a
return on the investment so weigh in at least three potential revenue streams
as a result of establishing an online presence.

This is an example of a case interview question which is very open and

you could go down any number of paths. It is important therefore,
that you ask the interviewer for some guidance on things such as
target market, audience share, or qualitative things like what
particular goal is being pursued by the radio station. In a real case
interview, the interviewer may focus you in on certain scenarios as
your discussion and analysis progresses. Let’s say you were asked two
more questions to focus your analysis:

 If similar websites can gain revenues of between 5 rupees to 10 rupees per visitor
and the associated cost is somewhere in between 70% to 80% of revenues, what is
the range of additional annual profit that could be expected from the website given
your initial website visitor estimates?
 Would there be any material seasonality effects on profits? Justify the explanation.

Possible Solution – Radio Station Website

For the purpose of having a clear and directed solution, let us dissect the case into four
parts:

Part 1: Website Traffic Estimates

Part 2: Revenue Opportunities
Part 3: Website Costs & Profit Scenarios
Part 4: Traffic Seasonality
 Section 3: Business Problem & Strategy Cases 80

Possible Solution – Radio Station Website (Continued)

Part 1: Website Traffic Estimates

Your first task is to estimate the monthly visitors to the website. To aid you in this process,
the interviewer may give some additional information. Let’s say, we have some data from
the marketing department

ABC FM’s share of the Calcutta listener Market = 17%

16% of listeners in a recent survey said they would visit such a website at least once per
month.

You will obviously need to make further assumptions to derive an estimate. So maybe start
by guessing the population of Calcutta. Since it is a city of India you can assume it’s a fairly
populated place. In fact it has around 15 million people when including the surrounding
suburbs. If you guessed anywhere between 5-20 million then that’s fine as you can explain
to the interviewer that this is a key variable in your calculations and that you would research
it and other assumptions further after developing the logic behind your estimate.

Now, of the 15 million population, not all will listen to the radio. You might want to assume
that only 25% actually listen to the radio daily. So from the assumptions above, ABC FM
could have as many as 15,000,000 x 25% x 17% = 640,000 daily listeners approximately.

For simplicity, let’s assume that no visitors are expected to come to the website who are not
already a listener of the radio station. This may not be realistic of course, but will at least
help in generating a conservative analysis.

Thinking about this carefully, of these listeners not all would have internet access. In India
only about 5% of the population have internet access, but this is growing. We have already
cut down the Calcutta population by striking out those who don’t listen to the radio daily, so
simply applying this 5% and then making assumptions on frequency of visit could result in a
severe understatement since people who own and listen to the radio are probably more
likely to also have access to the internet. Thankfully the marketing department has done
some research of its listeners which we can draw on instead.

We’ve been told that 16% of listeners would visit the website at least one per month. So
how much reliance do we want to place on this statistic? The exact percentage will of course
81 ACE THE CASE

Possible Solution – Radio Station Website (Continued)

depend how much the website is promoted on air, if it has good relevant content that is
updated regularly and whether it has advanced functionality like real time radio streaming,
etc.

The nature of this statistic is also a little ambiguous. ‘At least once per month’ is a very open
statement and only a measure of intent, not reality, since a website doesn’t yet exist.
Respondents to the survey are also likely to have overstated their intent due to a likely
optimism bias. If the marketing department had some more research it would be useful and
maybe an additional survey study should be commissioned. However, for now let’s just go
with what we have and make further assumptions to work out a sensible monthly visitors
estimate.

Of the 16% who say they will visit at least once per month let’s assume that half of these will
actually visit twice per month and of the other half, half of these (i.e., a quarter) will visit
once per month and a quarter only once every 12 months.

Calculating this through you get: 640,000 x (16%/2 x 2 + 16%/2/2 + 16%/2/2/12) = 130,000
visits per month approximately.

You may want to give a range 20% either side to account for any inaccuracies in your
assumptions, i.e., state that as a first pass estimate you think the website could achieve
between 105,000 – 155,000 visitors per month.

Part 2: Revenue Opportunities

With that many visitors per month there must be ways of monetising the traffic. In working
through the case question consider identifying as many realistic revenue opportunities as
possible and to show extra commercial acumen (time permitting) give some advantages and
disadvantages for each idea. Three examples are on the next page. See if you can add some
more.
 Section 3: Business Problem & Strategy Cases 82

Possible Solution – Radio Station Website (Continued)

Revenue Opportunity Advantages Disadvantage s

Hosting advertisements This method requires very Users may feel distracted by
from a variety of little additional effort on the advertisements and their
complimentary part of ABC FM. The website usage experience might suffer
companies (preferable developer should be able to (e.g. page loading times) thus
music, entertainment or easily integrate reducing the number of hits
news focused, local or advertisements into a on the website. Also
national). website and they or the untargeted advertising can
advertiser will be able to offend or alienate the
As a last resort host count the number of clicks on listeners.
Google Adwords or or impressions of an advert in
affiliate links. order to charge the
advertisers on a cost per click
or cost per impression basis.

Selling online music as An FM station would know The station might need
MP3s,, via iTunes or the current demand and additional staff for the back
taking orders for Music trends and may be able to office work which would
CDs, cassettes, DVDs, forecast better than music include order processing,
etc. stores. This would also gel procurement, delivery and
well with the current handling customer complaints
business line of the company and queries.
and ABC FM could create its It may be more cost effective
own recommendation or to partner with a music store
rating system for artists, or website and forward
singles, and albums. orders or traffic their way in
return for a commission on
each sale.

Merchandise (e.g. T- This will not be a big money The product wholesale costs,
shirts, Caps, Key chains, earner but could result in maintaining a suitable level of
Wrist Bands Jumbo sized some positive effect, albeit inventory and delivery of
Posters, etc.) can all be small, as the initial products to the consumers
made available on the purchasing of merchandise will be significant cost drivers
website for sale. The by youths may lead to further for this revenue source.
payment mode can be purchases and viral
either through credit marketing of the radio
card, PayPal or similar. station and website.
83 ACE THE CASE

Possible Solution – Radio Station Website (Continued)

Part 3: Website Costs & Profit Scenarios

With further information already given to you in terms of comparable revenue and costs per
visitor, calculating some profit potentials should be straightforward, since you have a
monthly visitor estimate of 130,000 already calculated.

Given the revenue per visitor and cost range you were provided with, you may want to
identify three profit scenarios for the interviewer:

Worst case scenario: Rs. 5 x (100 % - 80%) x 130,000 x 12 months = Rs. 2,340,000

Average case scenario: Rs. 7.5 x (100 % - 75%) x 130,000 x 12 months = Rs. 2,925,000

Best case scenario: Rs. 10 x (100 % - 70%) x 130,000 x 12 months = Rs. 3,120,000

Now before ABC FM gets too excited they’d need to properly cost the initial website
development and any extra ongoing costs that are not factored into the ‘costs = 80 - 70% of
revenue’ metric. You should mention things like this to the interviewer. There will also be a
period of ramp up before numbers like this are reached. These figures are probably what
can be expected after 2-3 years, i.e. once the site and revenue sources are fully established
and visitor numbers reach their full potential and stabilise.

Part 4: Website Costs & Profit Scenarios

130,000 visitors per month was what you estimated at the beginning of the case, but now
the interviewer wants to see if you understand seasonality.

Seasonality of revenues can really mess about with an organisations cash management and
planning. Discussing this sort of thing can also be highly speculative especially if you are not
from the geography in question i.e. Calcutta or India in general.

The good news is that the interviewer is not expecting you to provide accurate numbers.
This would require some good market research and assessment of economic data. They’ll
just want you to think in the shoes of the radio station owner and will probably just ask you
to explain how things can be better planned for the year.

You can start by going month by month or quarter by quarter in explaining seasonality. Your
reasoning may be based on personal experience, work experience, your studies, anecdotal
 Section 3: Business Problem & Strategy Cases 84

Possible Solution – Radio Station Website (Continued)

evidence or just gut feel. Either way, you might just want to say something like the
following:

1. Assuming the website visitors are predominantly young people, the number of visitors
might drop during examination season as school and college goers may cut down on time
spent on surfing the internet and recreational activities. Depending on the location or
school setup, you might want to say there will be a drop of 5-10% off the standard monthly
visitor estimates.

2. During summer vacation time, the usage might again increase as people would have a lot
of free time on their hands and also the time at school/college can now be potentially
utilised for surfing the website and listening to FM Radio. Visitors may go up 10-20% on the
standard monthly visitor estimates.

See if you can think of some other things that would have an effect, e.g., religious festivals
and holidays, weather etc.
85 ACE THE CASE

Problem – Bancassurance
A large retail bank wants to acquire and integrate a large insurance company
which sells a range of general insurance products and also life insurance, into
its banking operations. What benefits does it stand to gain in merging an
insurance business into the retail bank? At what costs would such benefits
come? What are the overall risks of this acquisition?

The merging of Banks and Insurance companies ‘Bancassurance’

in recent years has seen much regulatory debate. This business
problem style case interview question might be relatively short
and qualitative in nature but it also opens a lot of possible
approaches that one can use during case interviews. It is
intentionally open to test your commercial acumen and ability to
remain focused at the same time. How many issues will you
cover, how deep will you go on each one, how sensible are your
comments giving the underlying complexity of this question and industry specificity?

These are all things the interviewer will be assessing you on. Since the case question
requires you to show both benefits and costs, as well as the risks involved, you may want to
draw up a table and perform a simple cost-benefit analysis. This may help you to structure
your answer and better match costs and risks to the supposed benefits.

Possible Solution – Bancassurance

For simplicity, group costs and risks together. There may be some costs and risks that relate
to the overall acquisition so just include these at the bottom or in a separate box. See if you
can add more to our simple list.
 Section 3: Business Problem & Strategy Cases 86

Possible Solution – Bancassurance (Continued)

Benefits Costs & Risks

The bank can easily differentiate itself in The cost of financing the acquisition
the market by offering an important (especially if it’s a leveraged buy-out) may
complementary financial product to its put upward pressure on the banks pricing
clients. Offering both retail banking and (i.e. interest rates) and insurance premiums
insurance services will attract more in order for the new entity to maintain
customers to the bank and potentially profitability levels thus making it less
increase customer switching costs in the competitive from a price perspective in
long term. This should indirectly lead to both markets.
increased customer loyalty as the bank
grows to become a one-stop-shop for all The bank must also be able to acquire the
the customers’ financial needs. customer base of the insurance firm and
then maintain and grow it. This may require
retention of the insurance brand/s and
regulatory approval due to prudential
requirements.

The bank can leverage off its existing Not being able to adequately cross sell and
banking clients to cross sell insurance thus acquire new insurance clients due to a
products to. It could for example, extract breakdown of the expected synergies of
and analyse transaction histories and other the business model (e.g., capability of IT
information to profile existing customers systems, data access, privacy laws, etc.)
to work out what insurance products they may lead to losses as the investment
need at different times in their lives (i.e. hypothesis isn’t realised.
when they buy a new car, house, boat,
etc.) therefore offering customised
insurance products and services at the
right time.

An insurance business can provide capital As a retail bank, the acquiring company is
(in the form of premiums) to be liquidated already observing rules set by the
by retail banks for lending (mortgages, governing regulatory body. However,
business loans, auto loans, personal loans, buying an insurance firm would mean
etc.). There will of course be prudential additional regulatory measures to observe
regulations governing capital adequacy and may increase due diligence on the part
ratios for both the insurance and banking of the retail bank and a closer scrutiny of
business which need to be understood and the insurance firms data prior to acquisition
managed. and of the bank as a whole into the future.
Natural calamities and other unforeseen
87 ACE THE CASE

Possible Solution – Bancassurance (Continued)

Benefits Costs & Risks

circumstances that can lead to an

unexpected number of insurance claims
meaning huge cash outflow for the bank if
not properly utilising reinsurance.

Efficiency can be increased for routine With any merger or acquisition there is a
operations of the merged entity. The raft of similar issues when it comes to
following are just three areas where the integrating operations and striving for cost
acquisition could lead to improved efficiencies.
efficiency and there are bound to be many  Downsizing may lead to loss of
more: specialisation or expertise in the pool of
1. Electronic fund transfer for premiums as resources
well as claims by linking bank accounts  Cultural integration and relationship
to insurance and allowing bank issues between the two organisations
branches to process insurance can develop and impede progress
transactions.  Transitional organisational restructuring
2. Reduction in shared services costs such cost, which can be hiring cost or
as Human Resources, Information severance pay in case of downsizing.
Technology, Accounting & Finance,  Training of employees to learn the new
Executive Management, etc. business goals of the organisation.
3. A reduced branch network as insurance  Marketing re-branding and or Public
is integrated into the banking Relations
operations.

An acquisition of this scale and Developing new systems, enhancing

subsequent merger could provide a existing systems or integrating 2 sets of
unique opportunity to replace or disparate systems will come at a significant
enhance legacy core banking systems cost to the bank. Regardless of the strategy
built in an antiquated programming selected it should be fully costed into any
language, with new technology – thus financial analysis of the acquisition.
setting a platform for future growth and Naturally there will be some unforeseen
operating efficiency. development/integration issues in terms of
varying IT systems and databases thus,
increasing acquiring costs even further and
likely delaying some of the expected
synergies.
 Section 3: Business Problem & Strategy Cases 88

Possible Solution – Bancassurance (Continued)

Benefits Costs & Risks

If the acquisition is deemed Depending on the complexity of the

opportunistic in terms of the amount acquisition, transaction costs alone could
paid for the insurance business vs. its saw into the millions. Pooling in-house
implied value then the share price may resources or availing services of outside
get a nice uplift which will please professionals to assess the potential of the
shareholders, as will increased dividends insurance business with the bank, run
if the insurance business is and remains through all forms of due diligence, tax,
profitable once acquired and integrated. accounting, legal and regulatory issues.
Finally, don’t forget the expensive
management consultants that will
inevitably get involved in the merger
integration!
As alluded to earlier, unless sufficient
available cash is held on the balance sheet,
a large acquisition may require capital to be
raised or equity to be given away. If capital
is raised it may mean a rights issue with
existing shareholders, debt, or any number
of options. All carrying an obvious cost to
the bank. If the synergies from the merger
do not outweigh the transaction and
financing costs alone, then naturally it is a
bad investment decision.

Naturally this question would be very conversational, but if you are given pen and paper or
a whiteboard and marker, then drawing up a simple table like this should be invaluable in
helping you to stay on track. Use bullet points rather that writing as much as we have and
try to get 3-5 good points into each column and then discuss in more detail with the
interviewer as you go. Finally, don’t be concerned if a benefit doesn’t have an associated
cost and vice versa.
89 ACE THE CASE

Problem – Market Entry

Shoes Ltd. has been operating in the Footwear market for the past 8 years.
They believe they cannot expand their existing business any further in their
current market segment (as they are the market leader), and so are
considering the option of entering into the broader clothing and apparel
sector. As their management consultant what would you suggest to the
company before entering this market?

This is a very broad question and can be approached from many

different angles. A whole business plan could be written up and
probably would be by a consulting firm if engaged. However at its
heart it is a question on market entry & horizontal diversification,
so we’ll try and keep things simple. Several standard issues and
areas of consideration should be highlighted to the client and some
initial suggestions made. You would want to conduct market
research, develop forecasts and budgets and perform any other associated due diligence in
relation to their apparel strategy.

Conclusions would then be formed off the back of this research. In answering this case
interview question you can quite easily establish a simple framework and from there, give
quite generic answers, however you would also want to bring in some specifics relevant to
the two industries in question and probe for more information from the interviewer to help
frame some useful analysis.

Possible Solution – Market Entry

In our possible solution we have broken the analysis down into things external to the
business that cannot be easily controlled and things within the business that can be
controlled i.e. internal capabilities. Other simple frameworks for analysis could also be
applied to this case interview question, but as mentioned earlier in this guide, try to avoid
forcing a framework onto a problem if there is not a natural fit.

Upon probing for more information from the interviewer, she explains that the company
manufactures and sells footwear to retailers and has a nationwide market. Products include,
running, walking and cross trainer shoes for men, women and children. They also
 Section 3: Business Problem & Strategy Cases 90

Possible Solution – Market Entry (Continued)

produce select sporting shoes for different types of sports. Although the company produces
and sells footwear, it’s really only considering purchasing, branding and reselling apparel as
opposed to manufacturing it.

Now, to start off you may want to mention to the interviewer that in order to analyse
whether the new business can create value for the existing company, they’ll need to
consider two important areas. External forces and their internal capabilities.

Explain that this will be your focus and that you’ll dig down into several of the various
considerations under these two primary categories and make brief recommendations at
each stage. Sometimes, the interviewer would look more into the facets of the solutions
that you present rather than at the exact amount of detail and or how correct you are as
this can all be learned with in-house training and on-the-job experience. The interviewer
really just wants to know how adept you are in terms of identifying issues, thinking logically,
and if you can identify anything out of the ordinary compared to other candidates
interviewing later in the day.

External Factors

1) Competitive Environment of the Apparel Industry

One of the first and most important elements to be considered should be the industry’s
competitive structure. Who are the main players, what are their estimated market shares.
Basically is there room for a new apparel player? We need to find out whether the
competitive environment of the apparel industry is monopolistic, oligopolistic or does it
display perfect competition (i.e. even competition). Is it a young industry with room for
growth or is it already relatively mature?

Recommendation: The preferred competitive environment in order for the company to have
the best chance of successfully entering the apparel market should be perfect or even
competition since Shoes Ltd. would find it difficult to penetrate a market with one or a few
dominant players, establish its product and presence in the industry on the back of its
existing shoe brand. A young and growing industry is also preferred as it means Shoes Ltd.
does not have to rely so heavily on eroding its competitors market share, rather it can
generate organic growth as the industry matures.
91 ACE THE CASE

Possible Solution – Market Entry (Continued)

Detailed market data from the last 5 years should be purchased on the apparel industry and
competitors researched. Any analysts forecast on the industry will also be useful. Perhaps
draw up a chart or matrix to highlight to the client how the apparel industry differs to the
shoe industry to help the client understand the differences and thus the challenges they’ll
face or opportunities that can be exploited. It may look as simple as this.

2) Competitors

As alluded to above, you’d need to research the primary competitors. Also dig around to see
whether there are participants in the apparel market similar to Shoes Ltd. (i.e., a footwear
company managing an apparel business. Look for any case studies both domestically and in
foreign markets). If it has been done successfully before then this would give some
confidence in the strategy if similar shoe companies are performing well in the apparel
sector, but it could also indicate saturation of their product diversification idea at least
domestically. That said, if Shoes Ltd is a market leader in footwear with a strong brand
name, then it should not have too much trouble mimicking the diversification strategy of
any direct competitors.

Recommendation: Using the competitor data obtained in the industry research phase
above, collate and chart market share trends over the last 5 years. Maybe then extrapolate
plot this against the analysts forecasted growth in the market to derive the ‘open market’ or
left over opportunity. It may look as simple as the chart on the next page.
 Section 3: Business Problem & Strategy Cases 92

Possible Solution – Market Entry (Continued)

Depending on the results of this competitor analysis, competition may not be feasible. If so
begin considering mergers, acquisitions and joint ventures.

3) Consumer Reaction and Demand

In order to promote a new product, the client will need to consider the customers’ likeliness
and willingness to purchase the apparel products. Do they expect their shoe customers to
remain loyal to the brand and thus become customers of the apparel products or do they
hope to gain entirely new customers? Also they need to thoroughly analyse the future
prospects for ongoing demand of the products.

Recommendation: Take a close look at analyst’s growth outlook for overall demand in the
industry. Is growth being biased by price increases or is it driven by volume increases? Also if
it’s not stable, it might not be the right time to venture into the apparel market. To move
away from relying too much on this data, organise for the marketing department or the
consulting team to conduct research sessions with focus groups to gauge consumer reaction
from both existing shoe customers and others individuals who have never purchased the
brand. Also talk to store managers who stock the shoes to gauge their feelings, perhaps
there is enough anecdotal evidence from customer enquiries to support a demand
93 ACE THE CASE

Possible Solution – Market Entry (Continued)

hypothesis for Shoes Ltd brand apparel products. Retail store managers can be a great point
of call for any retail research assignment because they are at that customer interface and
therefore hold valuable information, if it can be extracted properly and delicately in
interviews and workshops.

You’d now want to present the results of all this different research to the client, along with
your recommendations. A bit of dialogue may open up with the interviewer at this point.
They may tell you that the client likes what they see so far and believes there is value in
their strategy. So now explain to your interviewer that you’d like to proceed to the next
stage where you’ll assess the client’s internal capabilities to further determine if
diversification into the apparel sector is feasible and if so how it will best be achieved.

Internal Capabilities

1) Production & Distribution

As explained at the beginning of the case question, Shoes Ltd plans to procure apparel from
suppliers or contract manufacturers, brand it (i.e. add logos and tags), market it and
wholesale it to retailers. Physical production capability of apparel items should therefore
not be a problem worth investigating at this stage, however, some side issues are definitely
worth analysing. How much control will Shoes Ltd. have over the apparel manufacture if
they are essentially outsourcing it? Will Shoes Ltd. need to procure the raw materials such
as cotton, lycra and other fabrics, elastic, thread, glue, Velcro , etc. or will this be left to the
contract manufacturer. Shoes Ltd. may have some control over concept and design but will
they have much control over quality and consistency of supply. Will contracts have a fixed
ex-plant price for a number of years or will it be variable and move around all the time. Can
Shoes Ltd. utilise its existing distribution channels or will it need to forge new relationships,
find new retailers, etc. Distribution channels also need to be effective so that not much of
the working capital is locked-up with stock in warehouses.

Recommendation: There are so many questions when it comes to how this strategy will
work operationally. A reasonably detailed study will be required before a decision can be
made on the apparel strategy to ensure costs and risks are understood. As a start Shoes Ltd.
needs to determine how they want an outsourced production arrangement to work and
then you could conduct a detailed review of short-listed contract manufacturers and
suppliers or initiate a formal RFP/tender process. Shoes Ltd. should also consider the
possibility of using more than one manufacturer to spread production risk and make sure
 Section 3: Business Problem & Strategy Cases 94

Possible Solution – Market Entry (Continued)

that any suppliers who supply to competitors are willing to supply goods to the company on
good credit, without any interruption and with proper protection of IP (e.g., designs &
colours). Finally, Shoes Ltd must make sure that there is a critical mass of retailers who are
willing to sell the new apparel products in their shops and begin building new relationships
as needed.

2) Personnel

Shoes Ltd. should have adequately trained or experienced human resources, or at very least
a plan of how to obtain the right skill sets, to handle the increased workload a new set of
apparel products will inevitably bring and the specific challenges that will need to be
overcome to be successful. Shoes Ltd. may need new managers, designers and marketers
just as a start. Shoes Ltd. will need to make decisions as to how they staff up for the
strategy. Will they poach the desired skill sets from competitors, or promote from within.

Recommendation: Shoes Ltd. should undergo a thorough human resource review and
planning exercise with your assistance of course to generate a gap analysis, so as to fully
understand the extent of the costs of recruiting and training any new or promoted staff to
successfully execute the diversification strategy into the apparel market.

3) Marketing & Promotion

The pre-requisite for the launch of any new product, especially a whole new set of products
separate to your core brand is to continually promote it among the target customer
audience so that they come to know about the product and ultimately want to buy it. Shoes
Ltd. will need to determine if it can leverage of its existing marketing team, whether
internal, external or a combination of both, and any advertising campaigns, strategies or
channels used for promoting its shoes or does it need to re-think its marketing strategies all
together for the apparel sector, and then pay the associated price.

Recommendation: A close eye on the budget and specific strategies or campaigns with the
highest probability for success is what is needed for marketing a new set of products. Not
being a marketer, you might want to explain that you’d want to talk to the marketing team
further on this to get their ideas and input, before providing real recommendations with
regards to this subject.
95 ACE THE CASE

Possible Solution – Market Entry (Continued)

4) Pricing

First Shoes Ltd. will need to decide if it will be a low cost - low quality apparel retailer, high
cost - premium quality retailer or somewhere in between. It should first analyse its shoe
business to see where it sits in its customer’s eyes. Its brand quality and value position
should transcend across to apparel, so this is important so as to not detract from the
established shoe brand once apparel starts appearing in stores. The selection of a contract
manufacturer as discussed above should also align with the outcome of this quality and cost
decision. Once the pricing strategy is determined it is important for the company to set its
retail and wholesale pricing for its apparel products, so as to be competitive whilst covering
the product cost, personnel cost and promotion cost whilst still providing a fair profit
margin.

Recommendation: The client should begin researching and costing certain products so as to
determine if competitor retail and wholesale price points for similar products make sense
for Shoes Ltd. and if the resulting margins for Shoes Ltd. will be healthy. If the volume is
expected to be significantly higher than the shoes business then lower margins relative to
their shoe products could be acceptable. However, low margins mean that the high volumes
must be reached quickly in order to return any profitability from the strategy in the medium
term. There is of course, no sense in apparel being a loss leader in an attempt to increase
brand awareness of the shoes business and thus increase shoe sales because the market
share of the shoes business is believed to have maxed out.

5) Capital Resources

No large obvious capital commitments are required to pursue diversification into the
apparel market, i.e. there’ll be no new manufacturing facilities built due to the contract
manufacturing approach. However to enter this new market, Shoes Ltd will still need
sufficient cash or pre-arranged access to capital to finance the pressure on working capital
that will inevitably arise as a result of the natural timing lag between making payments on
additional marketing, extra employees and associated costs, procurement of stock, and the
revenue receipts from sales. If there is insufficient cash within the company to support this
then capital in the form of Debt or Equity will be required. Specific finance decisions is
another discussion all together and one not covered in any detail in this book, however,
capital constraints is something the management consultant must be aware of.
 Section 3: Business Problem & Strategy Cases 96

Possible Solution – Market Entry (Continued)

Recommendation: Like with many finance decisions in large corporations, Shoes Ltd. may
want to construct a discounted cash flow model with your firms assistance to forecast,
analyse and compare the apparel market strategy with other growth strategies, e.g.,
geographical expansion, and compare such things as break evens, Net Present Value, Return
on Investment, etc. to ensure the strategy is the ‘biggest bang for buck’ or at a minimum
meet internal project hurdles or targets.

With several good discussion points and recommendation on the table for your hypothetical
client, Shoes Ltd, the case interview may draw to a natural close, however, be prepared for
the interviewer to push you further on certain areas and then throw some numbers around
specific to the context of the problem for you to do some calculations and mathematical
analysis right there on the spot.
97 ACE THE CASE

Problem – Airline
A small European airline is your client. They operate out of Eastern Europe.
They fly roughly 20 different short haul routes throughout Europe and 2 long
haul routes to Egypt and Morocco in Northern Africa. Profits are falling and you
must find out why.

This problem is more challenging and will require an

extensive exploration of the reasons why an airline may
experience falling profits. One useful method for
analysing this problem could be to use ‘Porter’s 5 forces’
model to analyse the forces at play in the industry and
those impacting on the company. With profit equalling
revenues minus costs, another suitable method to tackle
this problem would be to break down and model the major revenues and costs of the airline
to see where exactly revenues are falling or where costs are rising. However, we will not be
doing that here. Instead, we will just focus on the first method.

Possible Solution – Airline

Initial thoughts on why an airline may be experiencing falling profits may centre on such
things as price, demand, competition, fuel prices, hedging and rising operational costs.
Using concepts from the famous ‘Porter’s 5 forces’ industry analysis may expand the picture
beyond your initial thoughts and break open the problem at hand, helping us to find the real
root cause/s. On the next page is a brief summary of ‘Porter’s 5 forces’ industry analysis
model, if you are not familiar with it already.
 Section 3: Business Problem & Strategy Cases 98

Possible Solution – Airline (Continued)

POWER OF BUYERS

Bargaining leverage
Buyer volume
Buyer information
Brand Identity
Price sensitivity
Threat of backward integration
Product differentiation
Buyer concentration vs. industry
Substitutes available
Buyers’ incentives
THREAT OF SUBSTITUTES
BARRIERS TO ENTRY
DEGREE OF RIVALRY Switching costs
Absolute cost advantages Buyer inclination to substitute
Proprietary learning curve Industry concentration Price-performance trade-off of
Fixed costs/Value added substitutes
Access to inputs
Industry Growth
Government Policy
Intermittent overcapacity
Economies of scale Product differences
Capital requirements Switching costs
Brand Identity Brand Identity
Switching costs Diversity of rivals
Access to distribution Corporate stakes
Expected retaliation
Proprietary products

POWER OF SUPPLIERS

Supplier concentration
Importance of volume to supplier
Differentiation of inputs
Impact of inputs on cost or
differentiation
Switching costs of firms in the
industry
Presence of substitute inputs
Threat of forward integration
Cost relative to total purchases in
industry
99 ACE THE CASE

Possible Solution – Airline (Continued)

Starting from the top you may think out aloud or discuss with the interviewer each of
‘Porter’s 5 forces’ as they apply to the client airline company, in an attempt to uncover part
of the problem or at least narrow its scope.

Power of Suppliers

The primary suppliers in the airline industry are those that provide the aircraft (e.g., Boeing
& Airbus), aircraft leasing and finance companies, fuel suppliers, food and beverage
suppliers, and other services. Questions to be asked here should centre on ‘are the costs of
inputs increasing?’, ‘are suppliers driving up costs?’ You are told this is not much of an issue.

Barriers to Entry

There are naturally large barriers to entry for start-up airline companies due to initial capital
costs associates with aircraft and licenses, however the client in this case interview question
is already established. One point to note is that fixed costs are huge for airlines with variable
costs relatively low and this may be an issue worth exploring later. Other than that you are
told that entry barriers are not really the problem.

Power of Buyers

People fly more and more these days. However, in the last 5-10 years the airline industry
world-wide has seen a range of new low price competitors operating the short haul routes,
especially in Europe. Companies like EasyJet stand out as an example. Combined with the
internet and therefore availability of information, this gives a lot of power to buyers as they
can pick and choose airlines based on the lowest priced airfares. Loyalty point schemes also
play a part working as incentives for flying with certain airlines. Buyers, i.e., passengers,
therefore have a lot of choice when it comes to airlines. Questions that should be asked
here may centre on demand levels and how full each flight is (a term called load factor).
You’re told that loading levels have been lower than normal.

Threat of Substitutes

Substitutes to air travel are things like bus travel, cruise boat travel, train travel, and car
travel. Each of these has never really been able to compete with air travel. However, you
state that the terrorist attacks of 9/11 and terrorism threats in general may have played a
 Section 3: Business Problem & Strategy Cases 100

Possible Solution – Airline (Continued)

part in a reduction in demand for air travel. You are told this is not really an issue and
figures show that demand for air travel is actually on a steady increase.

Competitive Rivalries

This industry force ties into the points made above with more and more short haul
competitor airlines now in the market. With low switching costs to fly other airlines,
passengers are doing this in droves, changing from one airline to another based on the
cheapest airfare. Customer loyalty in the short haul airline industry is almost a thing of the
past. You are told that competitor rivalry in Eastern Europe has increased in the last 3 years.

Using a structured framework for your analysis, you have therefore narrowed the problem
down to issues with demand and load factor as a result of increased competition. The point
made regarding high fixed costs and low variable costs is now an important one. You are
told that the airline requires each flight to run at 75% capacity to break even (i.e. revenues =
costs) and that on average each flight over that last 12 months has only been at 76.5%
capacity leaving them well short of their profit goal, which requires a minimum capacity of
82% on each flight.

The seemingly simple fix is to somehow either increase the load factor and hence revenues
or decrease the costs to recast their break-even load factor of 75% down to maybe 70%.

With fixed costs by nature unchangeable (e.g., aircraft purchase/lease, fuel, crew,
maintenance, head office) and variable costs based heavily on the number of passengers,
the options to return profitability to its previous levels therefore, are:

 increase demand/passenger numbers

 reduce the number of flights to consolidate costs
 reduce the number of managerial and administrative staff to reduce costs
 increase the price of a ticket but risk a further lowering of demand
 reduce the price of a ticket to increase demand and cut costs elsewhere

The only real solution from the above list is the first one: to increase demand to fly on the
airline. This is generally done through marketing and promotion, which again costs money.
As you begin to see, it is actually a very difficult problem.
101 ACE THE CASE

Possible Solution – Airline (Continued)

At this point of the case question, the interviewer is happy with your discussion so far and
the way you’ve explored the issues and narrowed the problem to only a few root causes. He
or she may then get you to perform some simple calculations based on data regarding
revenues as well as fixed and variable costs in relation to seat loading to demonstrate your
mathematical ability and understanding of business concepts.

After all this, you are told that the CEO has been approached to enter into a new airline
alliance with other carriers in Europe. This could be a perfect opportunity to boost sales and
demand in the long term through established partnerships and shared deals. You are asked
by the interviewer what the CEO should know about the alliance.

After some thought you may provide questions such as:

 Number of airlines in the alliance?

 Which specific airlines are in the alliance? You would not want any direct
competitors who fly the same routes as you
 Any costs to join the alliance – initial and ongoing?
 Expected benefits of the alliance – tangible and intangible?
 Detailed rules and policies for member airlines
 Are new entrants allowed into the alliance?
 Does the alliance come with any exclusivity arrangements?
 Can you exit the alliance at any time?
 Are direct competitors flying the same routes, blocked from entering the alliance
after it’s initially established?
 Who manages/controls the alliance?

And with these questions regarding the alliance forming the final discussion, the interview
concludes. As you can see no single answer was ever given to the initial question, but a lot
of analysis and exploration of the issues were performed as the interviewer guided you.
Often analysis and exploration of issues is all you can hope to achieve in a case interview
concerning a business problem until some numbers are given to you.
 Section 3: Business Problem & Strategy Cases 102

Problem – RV Batteries
Your client is a company who makes expensive specialist batteries for motor
homes (Recreational Vehicle, RV) in the USA. The battery is very powerful,
long-lasting and of high quality. New industry conditions are occurring and
motor home dealers are starting to use a cheaper battery as the ‘factory
standard’ in an attempt to lower the overall price of motor homes. Your
client’s product is now only offered as an added feature, for which the
customer must pay an extra $500. In this case question you are to discuss how
your client should go about maintaining profits, given these new market
conditions.

This question is again somewhat strategy related

and will probably involve a brainstorming session
and or discussion with the interviewer to work out
possible avenues for the client to explore in an
attempt to maintain profits, given the changing
market conditions.

Possible Solution – RV Batteries

First you would want to write down some ideas and then discuss them with the interviewer.
More ideas may develop in this process and you may want to create a mind map or table to
categorise your ideas and ensure you have covered all the issues. Some of the profit
maintaining ideas which may be a possibility for the business include the following.

Differentiation

With the battery obviously being quite large, powerful and long-lasting the client company
could attempt to differentiate their existing product designed for motor homes into other
product markets and therefore attempt to sell the existing battery to work in large motor
boats/yachts, trucks, and buses/coaches. This would be an initially costly exercise setting up
contacts, finding sellers, marketing, etc. However, it has the ability to also grow profits in
the future.
103 ACE THE CASE

Possible Solution – RV Batteries (Continued)

International Markets

Similarly the client could export the existing battery to overseas markets such as Europe and
Asia for use in mobile homes/motor homes within those countries. Again this has high costs
up front as trade partners need to be established but long term growth prospects as a result
are high.

Enhance / Improve Service

Another somewhat simpler option is to stick with the current situation yet offer a greater
product warranty on the battery to entice customers to upgrade to the better battery for
the extra $500. For example, doubling or tripling the length of the warranty of their battery
could be an option. The only costs associated with this plan would be in added service and
or replacement.

Dealer Incentives

The client company could offer the dealerships selling the motor homes a 5-10%
commission on any of their batteries sold. Therefore the dealer’s sale staff would act as
direct marketers or promoters of the battery, strongly recommending it to every customer,
thus helping to increase sales. The only cost being the commissions that must now be paid
out.

Joint Venture / Alliance

The client company could attempt to bundle their battery with other companies who
provide added features or accessories that also do not come as part of the ‘factory
standard’ setup of the motor home. For example, bundling the higher quality battery with
leather seats, a better refrigerator unit, a high quality bed, larger hot water tank, etc. could
mean that all additional/higher quality items could be bundled into a discounted upgrade
package available together for an extra $5000 where if purchased separately would cost
maybe $10,000. The cost here is in administration of the JV / alliance and the discount
factor given for bundling.
 Section 3: Business Problem & Strategy Cases 104

Possible Solution – RV Batteries (Continued)

Produce cheaper and lower quality battery

The final option may be to compete directly with the battery manufacturer who has now
become the default supplier. Either supply the existing battery at their lower price
(however, this may not be possible) or design and produce a new lower quality, cheaper
battery to compete. This last option may be costly and not very effective depending on who
the competitor is and what their price point actually is.

With all these options raised and discussed the interviewer should be quite happy with your
answer to the case question so far. The interviewer would probably now ask you to do some
mathematical calculations in relation to the question.

For example, the CEO wants to know what the fall in profit will be given this new
competitive situation if they do nothing. You are given the following information:

 The battery wholesales for $5,000

 Fixed costs equal $50 Million
 Variable costs equal $3,000 per unit/battery
 Sales volume equals 50,000 units per year

They expect a 50% drop in sales if motor home retail customers are expected to pay an
extra $500 for the better quality battery.

Current State

Battery Price = $5,000

Fixed cost per unit = $50 million/50,000 = $1,000 per unit

Variable costs = $3,000 per unit

Therefore, profit per unit = $5000 – ($1,000 + $3000) = $1,000

Total Profit = $1,000 x 50,000 units = $50million

105 ACE THE CASE

Possible Solution – RV Batteries (Continued)

Future State

Battery Price = $5,000

Fixed costs per unit = $50 million/25,000 = $2,000 per unit

Variable costs = $3,000 per unit

Therefore profit per unit = $5,000 – ($2,000 +$3,000) = 0

Total Profit = 0 x 25,000 units = $0

Therefore it is clear that the client must act given the new market conditions or they will
only break even, making no actual profit!

The CEO has an initial idea of reducing the price by 5% to better compete with the lower
quality battery of their competitor. This means the end customer only has to pay an extra
$250 for their battery and the management team believes this may result in a drop in sales
of only 25%, what would be their profit under this plan?

CEO’s Scenario

Battery Price = $5,000 x 95% = $4,750

Fixed costs per unit = $50 million/ (50,000 x (1-25%)) = $1,333 per unit

Variable costs = $3,000 per unit

Therefore profit per unit = $4,750 – ($1333 + $3000) = $417

Total Profit = $417 x 37,500 units = approximately $15.6 Million

This initial idea may therefore be an option to enable the client to stay in business for the
short term. However, it doesn’t come close to the goal of maintaining profits. Therefore the
options proposed earlier should be explored.
 Section 3: Business Problem & Strategy Cases 106

Problem – Detonators
Your client is a company who manufactures small detonators for use in mining
and rock blasting explosives. They have factories in Latin American,
Scandinavia and North America (East Coast). They want to grow their profits
but see no real opportunity for increasing revenues through increased price or
volume. Therefore, you are to find how and where they can reduce costs.

This business problem has many issues and is in fact, very

complex. As a case interview question and in limited time, the
best way to approach the problem may be to first start
modelling the costs involved in research, production,
transportation, administration, marketing and corporate
overheads for the company. In fact, just as you mention that
you will use a cost modelling approach to tackle the problem,
the interviewer explains that the client company has no real
understanding of their costs for each factory, but has some key cost figures to give you, to
help work it out.

North America Latin America Scandinavia

R&D $0.25m R&D $0m R&D $0.25m
Inputs $15m Inputs $20m Inputs $20m
Production $20m Production $15m Production $22m
Distribution $20m Distribution $18 Distribution $25m
Administration $10m Administration $10m Administration $15m
Wages $10m Wages $6m Wages $14m
Total $75.25m Total $69m Total $96.25m

Possible Solution – Detonators

On first impression you can see that the Scandinavian factory has the highest costs and you
express the idea of perhaps consolidating the Scandinavian operations into the North
American factory to make one big factory. The interviewer explains that this could be a good
idea considering the location of the different markets for their products. The detonators are
sold primarily to mining sites in Australia, the USA, Korea, and Asia. You draw up a map of
the world and explain that consolidation of one or more of the factories would dramatically
reduce the transportation costs across the Atlantic.
107 ACE THE CASE

Possible Solution – Detonators (Continued)

The interviewer then sketches in the current transport routes for distribution of their
products to the different international markets. It is clear that the transport costs across the
Atlantic Ocean would be eliminated and since R & D is performed at the North American
factory this element of business would not be lost. In the graphic below, the circles show
the locations of the factories and the dotted lines indicate the current transport routes.

After this initial discussion the interviewer explains that you will now be flown to each
factory to see first-hand the operations there and collect more data. First stop is the Latin
American factory. It is medium in size, quite old and they appear to work hard and use
cheaper labour. As evidenced by the costs data table, no R & D takes place there. Next stop
is the North American Factory. It is large, very new, modern, and clean. They appear to be
running way under capacity considering the employee numbers and the amount of
equipment. You quiz the management and they explain that they could probably run
production in the North American factory at twice the current level, with a minimal increase
in costs. Any increase in costs would be variable and go mainly to inputs such as material
and energy. The last stop is the Scandinavian factory. It is more efficient than the North
American factory and runs at nearly full capacity but labour costs means it is not as efficient
as the Latin American factory.

After visiting each factory, you now have some additional information to add to the initial
cost data. The interviewer hands you the following table.
 Section 3: Business Problem & Strategy Cases 108

Possible Solution – Detonators (Continued)

North America Latin America Scandinavia
R&D $0.25m R&D $0m R&D $0.25m
Inputs $15m Inputs $20m Inputs $20m
Production $20m Production $15m Production $22m
Distribution $20m Distribution $18 Distribution $25m
Administration $10m Administration $10m Administration $15m
Wages $10m Wages $6m Wages $14m
Total $75.25m Total $69m Total $96.25m

No. Employees 100 No. Employees 100 No. Employees 150

Output (Units) 500,000 Output (Units) 750,000 Output (Units) 800,000
Cost per unit $150.50 Cost per unit $92.00 Cost per unit $120.30

Having the employee numbers and output volumes helps to complete the picture. It is clear
that the North American factory is least efficient and the Latin American factory most
efficient primarily due to cheaper labour. The Scandinavian factory falls somewhere in the
middle.

With this new information some additional options present themselves.

Your client could move 500,000 units of production from the Scandinavian factory to the
North American factory as the North American factory expressed that they could easily
absorb double the capacity with minimal cost increases. Part of the Scandinavian factory
could be decommissioned so that fixed costs at the Scandinavian factory would be reduced
significantly.

They could even expand the North American Factory to absorb all of the Scandinavian
production and shutdown the Scandinavian operations, thus reducing transportation costs
across the Atlantic.

Or, they could instead increase the size of the Latin American factory and consolidate all
operations there to take advantage of the low cost of labour. It’s more centralised location
would result in even greater transportation cost savings.

After discussing some of these options the interviewer explains that you now have only one
minute left to formulate a final solution and present it to the CEO, justifying why you have
made your decision.
109 ACE THE CASE

Possible Solution – Detonators (Continued)

You quickly consider everything discussed so far and in the heat of the moment decide on a
new option. Build a brand new, efficient factory on the West Coast of America and
consolidate all operations there, bringing equipment and key employees from the North
American and Scandinavian factories. It is envisaged that this plan will dramatically lower
transportation costs as the new factory is now central to key product markets.

This answer is neat and acceptable and you are congratulated by the interviewer on a job
well done. Later he expresses that the case question was based on his own personal
experience on a client engagement that he actually worked on whilst at the firm. It was a
very complex problem lasting several months with many additional issues such as:
 Where are input materials sourced? i.e., chemicals, metal components, etc.
 Competitors locations
 Cost of expanding and or building new factories

He informs you that what actually happened, was that the client company bought out a
larger competitor in Mexico and consolidated all 3 different operations into this single
factory taking advantage of both cheaper labour and the more economical location in terms
of transportation.
 Section 3: Business Problem & Strategy Cases 110

Problem – Ice Cream Stand

Assume you have been granted a license to operate an ice cream vending
business in a large urban park. Given the basic layout of the park (see below),
discuss where would be the best place to put the ice cream business to
maximise sales revenue. Be sure to justify any assumptions and explain your
answer.

This case interview question puts you into the shoes of a small
business owner to test your business savvy. It requires a careful
analysis of the variables that will affect potential sales revenue and
how they might be influenced by business location so that they can
ultimately be exploited to maximise the takings of the business.

You are provided with the following diagram of the parks layout
111 ACE THE CASE

Possible Solution – Ice Cream Stand

Breaking the problem down into some headline categories for discussion you begin your
analysis.

Competition

The first thing you should question the interviewer on is direct competition in the park. i.e.,
are there any other food or beverage stores currently operating in the park or near the
park? You are told that no one currently operates in the park. However, a large shopping
centre does back onto the park as stated in the diagram. Therefore, you will have a
monopoly of the market within the confines of the park for ice cream and more generally
food and beverage. Direct competition is therefore ruled out as an influencer.

Customer Traffic

Customer traffic will play a huge role in deciding where to place the business. You may
explain to the interviewer that if you were the business owner you may want to attend the
park on a few week days and weekends to see when the busy times are and where people
tend to congregate. Things to think about here may include:

Roads and passers-by - If potential customers can see the store from the road, no matter
whether they are in a car, bike, or on foot, then they may want to stop and purchase an ice
cream from your stand.

Shopping centre customers - Shoppers may take their children to the park before or after
shopping in which case they become potential customers of the ice cream business.
However, you would want to analyse distance to determine if they would move their cars
from the shopping centre car park to the park’s own car park as this would be a factor in
their decision to come to the ice cream stand.

People using the park - This is the most obvious and probably largest source of customers
for such a business. Those who come specifically to enjoy the park are most likely to
purchase ice cream especially on a warm summer’s day. Thinking about their movements
between features of the park i.e., car park, swings, toilets, and pond becomes critical.

People walking through the park - The final thing to consider when it comes to potential
customers are the people who may use the pathway that runs through the park as a
shortcut or means to get where they are going on foot.
 Section 3: Business Problem & Strategy Cases 112

Possible Solution – Ice Cream Stand (Continued)

Location

As mentioned earlier, location here refers to placement of the business relative to the other
attractions or features of the park. Intuitively, you may want to be equidistant or central to
all attractions of the park to maximise exposure and thus potential sales. Spending a few
days at the park would give you a better idea on this, but for now let’s assume that on
average there are as many people at the swings as there are at the pond, etc.

Based on this discussion you may want to draw up some kind of table and assign some form
of score and weighting system to each variable and sub-variable to help quantify the
decision. But for now let’s just say that we have decided to place the ice cream vending
business between the swings and the pond, but close to the path and close to the car park
(see below). This also leaves it close enough to the main roads.

Your interviewer says that this is a reasonable and well thought out decision, and a good
overall location. He goes on to explain that your business runs smoothly for a full year
turning a steady profit. However, now a hotdog vendor has obtained a license and just
113 ACE THE CASE

Possible Solution – Ice Cream Stand (Continued)

opened up in the park between the swings and the toilets (see below). He asks ‘what would
you do now?’

Obviously the hotdog vendor means a new competitive market situation in the park. Whilst
hotdogs are not a direct substitute for ice creams the business does represent a clear threat
to sales for the ice cream business since consumers now have more choice when it comes to
food and beverage in the park. Several options present themselves and should be discussed
at length with the interviewer. Below and on the next page, some of the many potential
options are briefly explained.

Do Nothing

This is the obvious first option. The two businesses will however cut into one another’s
revenues meaning less profit for each. This is not favourable for you, the ice cream vendor,
since you were enjoying healthy profits before the hotdog vendor came along. By doing
nothing, there is also a real chance that the two stores may end up in a price war whereby
nobody can win and in fact, both will suffer losses until one business crumbles due to lack of
cash flow. Doing nothing is therefore not the best option.
 Section 3: Business Problem & Strategy Cases 114

Possible Solution – Ice Cream Stand (Continued)

Joint Venture

The two vendors could go into partnership forming a joint venture operating from the one
location under the same name and share in the profits. In doing this, they could still
maintain prices and a monopoly in the park, however profits are shared.

Strategic Alliance

A softer version of the Joint Venture is a strategic alliance. It is based more on a shared
understanding. The two locations could still remain but they agree not to tread on each
other’s toes by not selling any of the other business’s non-core products i.e. drinks, chips,
etc. You may even go so far as to agree that the hotdog vendor operates solely in winter and
you solely in summer? But, of course, then you are only making money for half the year,
which means half the profits again.

Differentiation

Since you are the established business in the park you can always expand your operations
and start selling other products such as hotdogs, popcorn, burgers, etc. to fiercely compete
and drive the hotdog vendor out, or at minimum, capture some of his market. There is of
course nothing stopping him from doing the same.

Other possibilities exist and if you had time, you would want to rank each one based on
maybe a cost benefit analysis, however we will leave that for you to do yourself and move
onto yet more case interview questions.
115 ACE THE CASE

Problem – Concrete vs. Quarry

If you were given the option between owning a concrete business and owning
a quarry, what would you choose and why?

Essentially this is asking where in the supply chain you would

want to position yourself. A quarry extracts rock and stone
from the earth through open-cut excavation. Quarries extract
anything from simple rock through to high grade marble, and
generally supply the raw materials for building products
including concrete production. Quarries are therefore the first
link in the supply chain of the building materials industry.

A cement business uses some of the raw materials from quarries such as lime, sand, clay,
calcium, and other minerals, to mix and produce cement. This cement mixture is then
distributed whilst still moist to local construction sites.

In this case interview question, you have been given the choice of deciding which of the two
businesses outlined above you would prefer to own. Whilst this question will test your
analytical skills, it is a clever way of making you reveal what type of business person you are
(e.g., high risk, low risk, future oriented, micro or macro focused, etc.). You may first look at
basing your decision on a financial metric such as long term profitability. However, a sound
and complete analysis based on a framework such as Porter’s 5 industry forces, or even a
SWOT analysis, should help to impress your interviewer.

Possible Solution – Concrete vs. Quarry

Porter’s 5 forces industry analysis model would be ideal for answering this question.
However, since it was already demonstrated in an earlier question, a framework known as a
SWOT analysis will be used here instead. If you don’t already know, a SWOT analysis
provides a careful evaluation of an organisation’s internal STRENGTHS and WEAKNESSES as
well as its environmental OPPORTUNITIES and THREATS. It provides a holistic view of the
organisation considering both internal capabilities and external forces. With the limited time
to answer this case interview question, it is more than suitable in helping to structure a
discussion when comparing two businesses at different stages in the supply chain. In our
worked solution each business will be looked at and analysed using the SWOT analysis and
 Section 3: Business Problem & Strategy Cases 116

Possible Solution – Concrete vs. Quarry (Continued)

then a judgment call will be made based on which business has the strengths and
opportunities that can best be capitalised on and the weaknesses and threats, which can be
more easily avoided, mitigated or managed. You may want to interact with the interviewer
asking for more information about each business as you go. If you were to use the SWOT
analysis in answering this case interview question, you may end up with something like this:

Concrete Business

Strengths Weaknesses

• Opportunity for product innovation. • Once product is made, it must be

i.e. different grades and mixes delivered immediately. Therefore, for
each processing plant, you can only
• Higher priced end product with service the local market
healthy margins
• Liability if concrete quality is poor

• High capital cost for plant/factory,

including ongoing maintenance

• Process intensive and logistically

challenging

Strengths Weaknesses

• Potential for growth through • Selling price dictated by suppliers and

geographic expansion and takeovers the price of inputs

• With strong brand and a quality • Sales volume dictated by demand in

product, there’s the potential to the construction industry
increase market share
• Substitute building materials

• Highly competitive
117 ACE THE CASE

Possible Solution – Concrete vs. Quarry (Continued)

Quarry Business

Strengths Weaknesses

• Little input costs and resources, only • Little opportunity for change or
labour and machinery innovation

• Large number of buyers which can be • Low priced product with low margins
geographically dispersed
• Growth opportunities limited
• Product already exists in the ground,
just a matter of getting it out • High capital cost of machinery

• Generally a larger company with high

volumes

Strengths Weaknesses

• Low competition and high barriers to • Natural resources can and will run
entry due to permits/licenses and out in the long term
initial capital cost.
• Government legislation &
• Can operate on a global scale environmental protest

• Can vertically integrate and acquire • Susceptible to market price

cement plants and other building fluctuations
materials companies

From your SWOT analysis and some discussion with the interviewer, you might conclude
that a quarry business is the preferred business to be in. Minimal competition, global
opportunities, being at the start of the supply chain, having a large number of buyers, and
no input resources other than machinery and labour is definitely favourable. However, a low
opportunity for growth is a downside. Essentially you want to maximise the upside, whilst
 Section 3: Business Problem & Strategy Cases 118

protecting against any downside risk. This should really be the basis of all business decisions
including what industry to play in. In this question, you could make an argument for either
business depending on personal judgment and preference. However, it is the detail and
strength of your SWOT analysis, combined with your concluding argument that will
ultimately impress the interviewer.
119 ACE THE CASE

Problem – Bank Branch

A retail bank is expanding and wants to know where the optimum locations are
to put its bank branches. How would you go about creating a model or
framework for solving this? Consider a macro perspective, i.e., not what
specific street or block to put it on, rather, what suburbs, towns, districts, or
areas.

The location of a shop front for a physical business is always

important as you must maximise the potential customers who
could visit the premises. For an expanding retail bank, the
importance of the location of its bank branches should be no
different. On first glance this case interview question is
challenging to say the least, but it can be made easier by re-
introducing the concept of a population critical mass. You may remember this concept from
an earlier question in the guide within the estimation and market sizing section.

Possible Solution – Bank Branch

The first point you may think to mention to the interviewer is about how similar shops and
businesses, which have customers who must come to them, are found clustered together.
Consider the location of clothing stores in shopping malls, car dealerships along a stretch of
road and restaurants along a river side promenade. This happens because it makes it easier
for each business to capitalise on the collective foot traffic, as well as for customers and
potential customers to identify zones of clustered business. Bank branches are a little
different due to their relationships with the customers and the fact that their profitability
doesn’t rely on walk in traffic. However, this general rule of clustering can still be applied.
Locating them near other retail bank branches should therefore be the first aim. However,
this is in fact a micro objective and so is not helping to answer the question.

Now, in terms of developing a macro model for the optimum location of bank branches you
will need to discuss some better ideas with the interviewer.

Start by explaining your understanding of a population critical mass by hypothesising that

the bank probably requires a minimum population figure (i.e., potential customers) before it
will open a bank branch in any location. If it has a 10% share of the market and requires
 Section 3: Business Problem & Strategy Cases 120

Possible Solution – Bank Branch (Continued)

5,000 customers to make the branch feasible. Then, a population critical mass of 50,000 is
required in the area of say a 5 mile radius.

You may want to extend this idea and explain that since bank branches operate in the day
time and service both business clients and individual clients, the population critical mass
should probably be more of a day time calculation. Therefore taking into account where
people work, live, and the location of small businesses is important in the critical mass
calculation.

Business clients are generally more profitable and so some multiplier effect needs to be
applied to them. Since you must also be of a certain age to open a bank account, and
children generally don’t do much banking, those under the age of maybe 18, can be
eliminated from the model.

Bank branches differ in size between large and small so perhaps two critical mass figures can
be used for two different sized branches (large and small) which ensure that those living in
smaller townships, which do not even reach the initial critical mass, are not overlooked.

Alternatively perhaps the critical mass catchment area can be widened for less populated
areas such as country or rural towns.

With these initial ideas out in the open you can begin to formulate a simple model using
diagrams, equations and graphs.

So far you may have some variable such as:

 Number of residents above the age of 18: R

 Number of day time workers: W
 Number of small business: B
 Catchment area radius of Z miles for well populated areas
 Catchment area radius of 10Z miles for less populated areas.

And boundaries for your output such as:

 Critical mass of larger than X for a large branch

 Critical mass of between Y & X for small branch
121 ACE THE CASE

Possible Solution – Bank Branch (Continued)

Using these variables, you could draw a diagram such as the one below to explain the
conditions which must be satisfied to make opening a large branch feasible.

ƒ(R, W, B) > X

Z miles

As can be seen, some function of the number of residents, number of workers (exclusive of
those who are also counted as residents) and the number of businesses, times a multiplier
must be larger than the critical mass figure within an area of radius Z miles.

The function may be something as simple as:

(R - (number of residents under 18))/4 + (W – (number of workers already classified as

residents))/4 + B/3 x 10

So, if there were 60,000 residents in the area of a Z mile radius, of which 15,000 are under
the age of 18, with 20,000 workers coming into the area during the day not already counted
as residents and 500 small businesses. Your function would look like this:

(60,000 - 15,000)/4 + 20,000/4 + (500/3) x 10 = 18,000

If the result of the calculation to satisfy a large branch must be higher than 15,000, the area
under question would get a large bank branch close to the centre of that area. However be
sure to take into consideration the earlier micro objective of clustering, i.e. placing bank
branches close to one another or at the very least near a shopping mall, or other
commercial area.
 Section 3: Business Problem & Strategy Cases 122

Possible Solution – Bank Branch (Continued)

If the rules governing your model required the result of the calculation to be above 20,000
for a large branch and between 10,000 and 15,000 for a small branch then in the previous
example the area would get a small bank branch. Similar logic could be applied to less
populated areas by increasing the radius of the critical mass area.

You now have the basics of a simple working model to show to the Bank. The Bank may then
help to determine the required critical mass number and the size of the area based on their
existing bank branches, expansion strategy, expected market share, etc. You could then go
and obtain the vital population, demographic and business data from local and national
statistics bureaus for target states and cities. Putting all of the data, variables and
calculations into a well-designed spreadsheet or database, would then be well on the way to
creating a good model to use as a management decision making tool.
123 ACE THE CASE

Problem – IT Portfolio
A CIO / IT Manager wants to analyse his IT application portfolio. How would
you go about segmenting this?

This is a short case question and will primarily involve a

discussion with the interviewer around some key ideas. It is a
different style of question since it appears on the surface to be
very much IT specific, however, once you start thinking about
the problem it is simply a question designed to see how you
solve problems, think about a business, and categorise things.
Having an IT background may be an advantage, but having
strong business instinct and problem solving skills, is probably more important in
brainstorming possible solutions.

Possible Solution – IT Portfolio

The first thing that should be discussed is the motive or goal of the CIO in analysing the IT
application portfolio. Does he want to ultimately minimise the number of applications in use
within the organisation, cut costs by reducing technical support staff, introduce new
software applications, enhance security, form new outsource relationships, or simply neaten
up the current application portfolio by consolidating redundant and old systems?

Is the exercise part of a larger risk management initiative or something required by external
auditors? Points such as these should be raised initially to show the interviewer that you
recognise the importance of first truly understanding the drivers behind a problem before
attempting to solve it.

The interviewer may simply select one of the motives mentioned above to help you narrow
the scope of the problem, and formulate the best method of segmentation. Below and on
the next page are some simple options for segmenting an IT application portfolio.

Organisational Value

The first option for segmentation may be based on some estimates around value to the
organisation. Looking at all the applications, data and estimates could be combined to
determine how much revenue would be lost per day, or costs incurred if the application
 Section 3: Business Problem & Strategy Cases 124

Possible Solution – IT Portfolio (Continued)

disappeared or was down for a period of time. Both tangible and intangible impacts would
need to be considered and this may become hard to quantify, leaving a bias towards
transaction processing systems.

Total Cost of Ownership (TCO)

Similarly, the IT applications can be categorised based on the total costs they brings to the
organisation. TCO is a common term in IT management as it is something that should always
be considered and minimised. TCO includes such things as the initial build/purchase costs as
well as all ongoing support and maintenance costs, any associated hardware costs, licensing
fees, etc. However, this method of categorisation may leave a bias in favour of small, low
cost applications.

Business Process

Another way of categorising IT applications may be to look at what business process they
support. Business processes may include such things as sales, marketing, manufacturing,
purchasing, distribution, payroll, accounting, etc. For instance 4 different applications to
process purchases from suppliers could be considered somewhat inefficient and perhaps
the differing functionality could be consolidated into one application.

Users or Organisational Spread

A simple method of categorisation may be to look at how many people within the
organisation actually use the application, or how many instances of installation there are.
For instance, a piece of software may have been purchased along with licensing for 100
users. If only 20 people are found to actually use it, then perhaps the licensing
arrangements can be scaled back or at the very least all future software purchases and
license agreements will be looked at more carefully. Also, imagine an organisation in which
there are 6 offices around the country each with a different application for processing sales
orders. These 6 applications could probably be consolidated into one application, thus
reducing support costs dramatically.

Technology Platform

The last option we’ll mention is in relation to the underlying technology involved with the
application. Categorising the application portfolio based on things such as which
125 ACE THE CASE

Possible Solution – IT Portfolio (Continued)

organisational Database it draws on, what type of database it draws on, what language it is
written in, whether it is web-based, server-based or locally-installed, Windows-based, UNIX,
Mac, or Linux, etc. Knowing all of this may all help in categorisation and segmentation of the
application portfolio. For example the CIO may want to remove/replace all systems which
use Oracle databases in preference of SQL databases.

You may have other great ideas in addition to these possible methods of categorisation, as
the above is just a sample of a multitude of possible solutions. You may want to conclude
the discussion by reaffirming the need to first understand the CIO’s motivations and goals in
respect to the IT application portfolio and that if quantifications are to be made regarding
organisational value and costs, then a balanced approach should be taken. I.e. a variety of
approaches could be used and combined to ensure intangible benefits and costs are not
missed and that the inherent bias of some of the above categorisation methods does not
directly show through in any final evaluation and hence, decision. As a simple example,
there is no point removing the organisation’s largest application, which may be a huge ERP
system, because it has the largest cost of ownership and uses an oracle database.
 Section 3: Business Problem & Strategy Cases 126

Problem – Guide Dog Association

What would be the major costs associated with a ‘seeing eye dog’ or ‘guide
dog’ association?

As you may already be aware, many blind and vision impaired

people around the world use specially trained assistance dogs
called ‘Guide Dogs’ or ‘Seeing Eye Dogs’ to help them get around
safely. Individuals who have suffered from strokes and those with
other disabilities can also benefit from these aids. Guide dogs, as
pictured left, are specially trained from a very young age and are
usually provided to those in need by governments, charities, and
other associations. The objective in this case question is to outline and understand the cost
structure that an average guide dog association in any country would incur. Essentially it
examines your ability to understand the costs of a not-for-profit organisation, yet also apply
logic to the specific context of the problem.

Possible Solution – Guide Dog Association

You may want to begin answering this case interview question by first clarifying what
exactly you are expected to do here. After questioning the interviewer, you might discover
that you are to imagine you are performing some pro-bono work for a not-for profit guide
dog association in your city. They have healthy donation receipts, but seem to have a lot of
expenditure and no proper management systems for analysing where exactly all of their
money is going. Your task is to simply dig down into the business and draft up potential
areas or categories where the largest costs may be going, for later discussion with the
management. No specific estimation of costs is required, but you should consider both
operating expenditure and capital expenditure, so in essence, all cash outflow.

You decide that to structure your answer it may be best to draw up some kind of diagram to
help clarify your thought processes. You decide that something similar to the ‘Value Chain’
would be the best place to start. It will help to analyse costs and hopefully make sure
nothing is missed.
127 ACE THE CASE

Possible Solution – Guide Dog Association (Continued)

Thinking first about the value chain for an organisation and the main cost categories, you
may draw up a diagram that looks something like this:

Product/ Procurement Operations, Distribution Sales /

Service of Inputs Manufacture of Product or Marketing
Design or Assembly Service

Administration
(Finance Legal, IT, HR etc.)

Now, thinking specifically about a not-for-profit organisation and adapting your diagram,
you may get something more like this:

Promotion & Procurement Distribution

Operations
Fund
Awareness of Inputs of Product or
Raising Service

Administration
(Finance Legal, IT, HR etc.)

Now applying this same logic to a guide dog association you can map the context of the
problem to your not-for-profit value chain and start to build up a picture of where costs may
be going. An initial diagram may look something like this:

Breeding & Training & Distribution Promotion &

Fund Selection of Care of Dogs of Dogs & Awareness
Raising Dogs Services of
Association

Administration
(Finance Legal, IT, HR etc.)
 Section 3: Business Problem & Strategy Cases 128

Possible Solution – Guide Dog Association (Continued)

After sketching out a diagram to help collect your thoughts, you can then go into each item
in more detail to explain key points and ideas.

Fund Raising

Some fund raising activities would be performed by volunteers. However, some would also
be performed by regular employees of the association. Costs may therefore fall into these
areas:

 Salaries & Wages to employees

 Telephone Bills
 Travel Costs
 Merchandise Costs
 General & Administrative expenses (hence the overlap in the diagram)

Breeding and Selection of Dogs

A guide dog association would need to first obtain puppies, before actually training them.
Puppies can be purchased from breeders or created through an in house breeding program.
Costs may therefore fall into these areas:

 Purchase costs of puppies from breeders

 Purchase cost of suitable adult dogs for breeding
 Property, facilities and kennel costs (rented or owned)
 Veterinary expenses
 Food, Water, Equipment and additional care

Training and Care of Dogs

Guide dogs are trained from a very early age until they are suitable for release into the
community as someone’s aid. Costs here may fall into these areas:

 Trainer Costs or Wages

 Property, facilities and kennel costs
 Veterinary expenses
 Food, Water, Equipment and additional care
129 ACE THE CASE

Possible Solution – Guide Dog Association (Continued)

Distribution of Dogs and Services

Generally, guide dogs are provided to individuals in need free of charge. This is the main
difference between not-for-profit organisation and a commercial enterprise. The not-for-
profit makes no money for its goods and services, and must therefore rely on donations to
cover its costs. Costs would still be incurred even just to distribute and or deliver the dogs
and then there is ongoing care and maintenance of the dog. Costs here may therefore
include:

 Transport and delivery charges

 Costs in relation to owner initiation and training (i.e., employee wages)
 Ongoing veterinary costs
 Depending on the arrangement, living expenses such as food for the dog may be
paid for by the association.
 Administrative expenses

Promotion and Awareness

All not-for-profit organisations such as charities and associations must promote themselves
to increase the level of donations and funding. Some are given money from the government
and others subsidised rates for television commercials and radio ads. Costs here may
therefore include:

 Awareness Advertising (TV, Radio, Print)

 Merchandise Design and Manufacture
 Events and Functions

Administration

All organisations big and small, not-for-profit included, incur administrative expenses.
Therefore some costs here would go towards:

 Accounting and Finance (including wages of these staff, auditors, bank fees, etc.)
 Investment management (raised funds may be temporarily invested until actually
needed)
 Legal work, both in-house and external law firms
 Wages for general office and admin staff
 Section 3: Business Problem & Strategy Cases 130

Possible Solution – Guide Dog Association (Continued)

 Data entry
 Information Technology (equipment, systems, and people)
 General office expenses such as power, rent, stationary, fixtures and fittings, etc.

We finish there with a fairly simple yet well thought out explanation of some of the major
costs a guide dog association may incur. The early steps of diagramming the value chain,
demonstrate how important it is to structure your response in some way to provide a sound
platform from which to then best expand upon to best answer the case question.
131 ACE THE CASE

Problem – Widget Production

Widgets (a generic consultant speak manufactured product) are produced in
Boston and Houston, but both companies sell the widgets in New York. The
Houston costs, however, are lower than in Boston. Why?

Since much of a management consultants work

involves either maximising a client’s revenues or
minimising their costs it is important for an interviewer
to examine a potential employee’s general
understanding of business expenditure. This question
does just that, by asking for a comparison of the
organisational costs of two fictitious companies producing the same product in two
different locations, and selling it in the same market. In answering the problem, an
interactive discussion with the interviewer around some key ideas will no doubt develop.
Depending on the time available the interviewer may also want to introduce some figures
and numbers to allow you to demonstrate a basic mathematical ability. In providing a
possible solution to this problem we will focus only on the discussion side, centring on some
key reasons for possible differences in costs.

Possible Solution – Widget Production

The first thing you may want to do in answering this case question is to draw a rough map of
the USA noting the positions of Boston, Houston and New York. This can provide the basic
geography of the question and form the starting point of your cost investigation. Such a
map is provided on the next page.
 Section 3: Business Problem & Strategy Cases 132

Possible Solution – Widget Production (Continued)

Boston, MA

New York, NY

Houston, TX

Looking at this map of continental USA, you would assume that the Boston Company has
somewhat lower transportation costs that the Houston Company due to the large
discrepancy in distance between manufacture and market for the two companies. Since you
are told that Houston has the overall lower costs, transportation costs can probably be
eliminated from the investigation at this point.

The ensuing investigation of costs may then flow as follows.

Labour

Wages are one of the largest costs to any organisation. Perhaps Houston is paying lower
wages to its employees? You are told this is not the case and that both companies appear
on average to be paying their employees the same wage rate.

Economies of Scale

If Houston produces a greater amount of widgets than Boston, they may be spreading their
fixed costs over a greater output and hence achieving economies of scale over Boston,
through mass production? You are told this is not the case and that both companies
produce roughly the same volume of product.
133 ACE THE CASE

Possible Solution – Widget Production (Continued)

Climate

Since Boston has a rather cold climate in winter, perhaps the company operating up there is
incurring more costs in relation to heating bills or factory downtime, due to snow storms,
and or dramatic cold snaps? You are told this is not the case and that the company in
Houston incurs similar costs and disruption in regard to cooling due to its much warmer
climate.

Efficiency

Perhaps the Houston Company has better equipment, machinery, management and
processes, compared to Boston and therefore manages to keep costs down due to its
efficiency? You are told that this is not the case and that the organisational structure,
processes and factories are very similar. Houston however does seem to spend less on raw
materials and components. You decide to then investigate this comment.

Cheaper Inputs

It has been confirmed then, that Houston spends less on inputs than Boston. Why would
this be so? You quiz the interviewer on what a widget is made up of and begin discussing
manufacturing of widgets. You are told that to make a widget requires some raw materials
such as metal and glue but also some pre-made components. You quiz the interviewer
further by asking questions regarding who supplies such components and where raw
materials are sourced. You are told that Houston sources metals from South America, glue
locally within the city, and components from Dallas. Boston sources metals from Africa, glue
locally, and pre-made components from California.

Using this information you may guess that the raw material metals from South America cost
less since they don’t have to travel as far, and therefore transportation costs are lower.
However, you are told this is not the case and that both companies pay a very similar price
for sheet metal even though it is sourced from two different world locations.

Staying with this issue you discuss the supply of pre-made components and the fact that
Dallas is very close to Houston and California very far from Boston. Again you are told this
geographic fact has no impact on input costs.
 Section 3: Business Problem & Strategy Cases 134

Possible Solution – Widget Production (Continued)

Knowing that the root cause of the cost differential is related to the cost of inputs such as
raw materials and components you are determined to find the underlying reason. You
explore and discuss other ideas and discover that the Houston Company has a long standing
relationship with its component supplier in Dallas and signs 24 month contractual
agreements locking in a low, fixed price for the input components. The price Houston pays is
in fact 40% lower than what Boston is paying for its component supplies from California.

This single fact is what is contributing to the cost differential between the two companies
operating in Houston and Boston, yet both selling in New York.

As evident, the first assumptions related to geographical differences were not an issue, with
the cost differential coming down to supplier relationships and long-term contracts.
135 ACE THE CASE

That concludes the worked solutions for business problems and strategy based case
questions. Here are more examples of this style of case interview question for you to
attempt and practice on your own.

Other Business Problem & Strategy Cases

 There is an Aluminium window frame manufacturer based in Germany that supplies
Western Europe and achieves revenues of 2 billion Euros annually. The CEO went on
a recent holiday to nearby Russia and found out that there is a lot of medium density
residential construction work occurring there. The current sales into Russia amount
to a mere 5 million Euros, owing to the limited international presence of the
company. Could Russia be an attractive market to the aluminium window frame
manufacturer? If yes, how can it properly enter the market to become a significant
player?

 Create a short business plan for a pharmaceutical company, which has recently
developed a new medical device, illustrating how you would bring it to the market.
Within the plan, be sure to contemplate the main costs and talk about pricing of the
new device. Also address the advantages and disadvantages of the company using
only their own resources and capabilities to bring the device to market, versus
finding a business partner such as a medical equipment manufacturer?

 Imagine you were from Russia and tasked with organising the 2018 football world
cup. How would you organise the event so as to make the event the best it can be
whilst maximising the benefit to the nation and people of Russia?

 Is it profitable to launch a new coffee shop in your town? Consider up front capital,
ongoing costs, and revenue factors as well as market demand for coffee and related
products.

 What are the advantages and disadvantages of a cash transportation and processing
company buying its competitor?

 What are the major costs associated with a large retail bank?

 How would you go about verifying the accuracy of sales forecasts for the next 10
years in the cable TV market in Manila?

 I am a CEO of a large hotel chain. I am having profitability problems. Why?

 Section 3: Business Problem & Strategy Cases 136

 I am a company that sells a number of goods across Europe. Should I enter the high
end retail women’s clothing and accessories market in the USA?

 What are some reasons why a major retail bank would want to form an alliance with
another major retail bank? If your acquisition strategy included closing down
branches, what method would you take to choose which branches to close?

 An airline company is seeing its aeroplanes miss a great deal of their ‘leave times’.
How costly is this to the company? Consider both operational costs and
sales/reputation costs.

 Your client is deciding whether or not to purchase a struggling consumer Rental

Company. What do you need to consider and what information do you need to
know? Can the rental company be turned around from its current financial state?

 Determine if the 2012 London Olympics Games were profitable. Consider all possible
costs and revenues.

 The government has just announced that they are cutting tariffs on cement imports.
You have 10 mins to figure out whether this is a large issue, and how this will affect
your business if you are a cement manufacturer. Note: consider competitors,
transport of cement, demand now and in future, prices, your plans and strategies
e.g. expansion.

 Your client is a hotel attempting to make the decision on whether or not to setup a
website that sells stressed rooms (rooms that aren’t going to be used for the night)
at a short timeframe i.e. less than 5 days and at a cheaper price. What information
will they need to help them make a decision?

 How would you go about forecasting the production of jet engines in the world?

 Your client sells automobiles and is seeing falling profits. Investigate all possible
revenues and costs and try to determine why.

 Using revenue and cost modelling, try and workout the annual profit of a major shoe
company such as Adidas.
137 ACE THE CASE

 Your client manufactures average-cost, average-quality, LCD televisions. Sales have

recently been falling. What should be their strategy going forward and which
markets should they sell in?

 Your client is a new internet start-up. What information do they need to know in
order to increase their chances of being successful?

 Your client manufactures furniture. They are considering moving some of the
manufacturing process into India. What do they need to consider before doing so?

 Your client makes portable music players such as mp3 devices. What should their
strategy be given the huge wave of popularity surrounding Apple iPod’s?
 Section 4: Data & Chart Based Cases 138

4. Data & Chart Based Cases

Case questions involving the analysis of graphs and charts, the analysis of sizeable sets of
data and finally the creation of charts based on this data are becoming more popular in
management consulting interviews.

These exercises stray from the bounds of the more traditional styles of case questions
discussed so far. Data and Charts based exercises are generally more involved than
estimation based case questions and business problem cases, and can take longer to
complete. Others however, may be somewhat shorter and actually turn into a business
problem style case interview as you are made to discuss and explore the underlying issue
behind a graph. Some data and chart based exercises should be labelled as more of an
aptitude test or entry examination than an actual case interview as you may be left in a
room to complete the exercise by yourself and hence there is no interaction with the
interviewer till the end when you may have to present your answers and findings.

Data and Chart based exercises are designed to assess your ability to understand data and
see patterns and trends behind the data. They also give the organisation some insight into
your abilities as an analyst, which is a key role for a junior consultant. Having to construct
basic charts using pen and paper or more commonly with the assistance of software
applications such as Microsoft Excel and Microsoft PowerPoint brings to light your ability to
highlight key business themes within data and allows the organisation to see what type of
focus you take, whether it be macro or micro, operational or financial.

After creating some graphs and charts you may even be asked to stand up and present an
overview of your findings to a group which will allow you to demonstrate your presentation
and persuasion skills.

Data and Chart based exercises can also be a useful tool to assess a candidate’s basic
computer skills, especially in Microsoft Excel and to a lesser extent Microsoft PowerPoint if
asked to put a few slides together for an overview presentation.

As a final word, remember that graphs and charts are powerful decision making tools. So
when creating charts, use neutral colours, label each axis, maintain a legend, keep the chart
uncluttered, keep the chart relatively simple and feel free to use more than one chart but
remember to keep the scale and units consistent.
139 ACE THE CASE

In this section we first present one real life example of a Data & Charts based exercise which
was actually given in a management consulting interview. Due to the amount of data tables
we only have room for one of these examples in this guide, however we believe this single
example is comprehensive enough to adequately demonstrate this type of interview
exercise. It’s size should also help to prepare you for similar interview exercises involving
data and charts as there are obviously many possible answers which can be drawn from the
exercise, so see if you can find others.

The other case questions in this section then focus on the interpretation of graphs and
charts and applying business logic to explore and understand what the chart represents.
Note that they flow naturally into business problem style case questions.
 Section 4: Data & Chart Based Cases 140

Problem – Copper Production

The Process

This test was called a ‘remote analysis exercise’ in which the candidate was placed in a room
and given a laptop computer. They were told to read all the instructions included below
before commencing. They had 60 minutes to return their work back to the assessor.

If they had any questions about the test, the software or anything else, they could contact
them using the details provided in the covering email.

They were instructed to save their results using their name as a filename before emailing
them back to the assessor (e.g. JohnSmith.doc).

Documents Provided

The exercise required the use of the following documents included with the original email.
These were:

 Writing & analysis test.doc (Microsoft Word)

 Writing & analysis test.ppt (Microsoft Power Point)
 Tables.xls (the data in Microsoft Excel)

The candidate had to check that they could open and read them all before they were
required to start the test.

The Exercise

The spreadsheet containing tables had data used to support mock client organisations out-
of-date reports. The spreadsheet could be used to tell a number of different stories. The
assessor wanted the candidate to pick out one story from the data and to write up a 2 page
briefing that might be used in preparation for a meeting with an interested industry expert.

The candidate was instructed to include a chart in their briefing using either Microsoft
PowerPoint or Microsoft Excel.
141 ACE THE CASE

What they were looking for

The consulting firm was looking for:

 logical analysis,
 clear structure,
 correct spelling and grammar,
 concise expression and,
 an interesting story.

Therefore, if the candidate felt that the numbers were too dry and wanted to embellish
them, they could feel free to invent additional facts that supported their case.

It was noted that this exercise was not a test of their knowledge of the metals industry, and
that there are essentially no correct answers.

Background & Notes

The spreadsheet extracts that are shown on the following pages (the candidate could view it
in Microsoft Excel) includes 15 different data tables. The data refers to “copper and copper
alloy semis”. These are semi-finished products made from unwrought copper or copper
alloys, either rolled or extruded. They are used in a variety of applications, mainly in
electrical equipment and in construction.

“ACR” refers to air conditioning and refrigeration. “e” refers to an extrapolated full year
estimate, since the last year of data is incomplete and sometimes only goes from January to
October (months 1-10).
 Section 4: Data & Chart Based Cases 142

Table 1: Production and consumption of copper semis in selected

countries and country groups, by product, 1997-2002 (tonnes)

1997 1998 1999 2000 2001 2002e

Regional Total
Production 2,969,441 2,841,098 3,145,036 3,503,609 3,863,554 4,280,488
Consumption 3,234,245 3,135,482 3,499,268 3,947,290 4,446,194 5,029,523
Net imports 264,804 294,383 354,232 443,681 582,640 749,035

Wirerod
Production 1,948,100 1,882,435 2,105,985 2,377,325 2,656,325 3,004,415
Imports 89,611 105,971 129,158 183,114 264,407 392,954
Exports 43,848 54,042 37,952 32,353 37,389 36,368
Consumption 1,993,863 1,934,364 2,197,191 2,528,086 2,883,343 3,361,001

Copper Sheet, Strip and Plate

Production 202,220 189,548 214,275 210,694 229,506 248,450
Imports 97,530 115,103 109,324 154,867 179,984 178,135
Exports 4,893 4,523 7,291 7,875 7,505 11,651
Consumption 294,857 300,128 316,308 357,685 401,985 414,934

Copper Tube
Production 386,482 387,428 406,833 447,593 477,161 499,970
Imports 53,153 54,296 53,360 64,889 77,595 80,618
Exports 19,056 28,576 29,054 43,527 48,029 57,137
Consumption 420,579 413,148 431,138 468,955 506,727 523,451

Copper Alloy Strip

Production 306,399 258,947 291,348 330,023 351,896 367,929
Imports 102,985 109,086 143,081 162,050 168,485 232,627
Exports 28,693 20,141 29,208 40,739 24,387 33,398
Consumption 380,691 347,892 405,221 451,334 495,994 567,158

Copper Alloy Tube

Production 126,240 122,741 126,595 137,974 148,666 159,724
Imports 23,797 23,838 34,212 23,003 29,062 26,815
Exports 5,782 6,630 11,397 19,748 19,583 23,559
Consumption 144,255 139,950 149,410 141,229 158,145 162,980
143 ACE THE CASE

Table 2: Production and consumption of copper semis in selected

countries and country groups, geographically, 1997-2002 (tonnes)
1997 1998 1999 2000 2001 2002e
Regional Total
Production 2,969,441 2,841,098 3,145,036 3,503,609 3,863,554 4,280,488
Consumption 3,234,245 3,135,482 3,499,268 3,947,290 4,446,194 5,029,523
Net imports 264,804 294,383 354,232 443,681 582,640 749,035

China
Production 1,593,734 1,557,367 1,739,433 1,946,800 2,211,733 2,480,957
Consumption 1,716,169 1,711,906 1,930,415 2,201,793 2,555,469 2,958,810
Net imports 122,435 154,539 190,982 254,993 343,736 477,853

Egypt
Production 12,900 12,900 13,900 29,900 82,800 94,800
Consumption 15,950 16,714 16,979 33,050 85,950 97,950
Net imports 3,050 3,814 3,079 3,150 3,150 3,150

India
Production 339,600 369,700 410,600 448,200 493,900 531,600
Consumption 346,800 376,900 418,703 459,765 509,384 548,650
Net imports 7,200 7,200 8,103 11,565 15,484 17,050

Pakistan
Production 16,000 11,445 10,225 14,025 14,025 14,025
Consumption 17,564 12,545 11,126 14,897 15,843 15,105
Net imports 1,564 1,100 901 872 1,818 1,080

Saudi Arabia
Production 153,900 179,600 164,300 179,000 172,000 167,500
Consumption 200,200 222,488 198,507 235,258 225,300 220,800
Net imports 46,300 42,888 34,207 56,258 53,300 53,300

Turkey
Production 209,650 233,650 234,650 276,650 255,720 295,650
Consumption 198,250 223,712 226,532 269,494 240,697 281,950
Net imports -11,400 -9,938 -8,118 -7,156 -15,023 -13,700

South East Asia

Production 532,200 375,000 436,719 471,813 498,683 555,968
Consumption 604,097 440,781 533,732 560,447 619,253 707,066
Net imports 71,897 65,781 97,013 88,634 120,570 151,098

Gulf States
Production 28,000 31,990 37,810 40,000 40,000 41,000
Consumption 54,000 63,290 72,410 81,000 96,200 96,300
Net imports 26,000 31,300 34,600 41,000 56,200 55,300
Iran
Production 83,457 69,446 97,399 97,221 94,693 98,988
Consumption 81,215 67,145 90,864 91,586 98,098 102,892
Net imports -2,242 -2,301 -6,535 -5,635 3,405 3,904
Table 3: Chinese production and consumption of copper semis,
1997-2002 (tonnes)
 Section 4: Data & Chart Based Cases 144

1997 1998 1999 2000 2001 2002e

Total
Production 1,593,734 1,557,367 1,739,433 1,946,800 2,211,733 2,480,957
Consumption 1,716,169 1,711,906 1,930,415 2,201,793 2,555,469 2,958,810
Net imports 122,435 154,539 190,982 254,993 343,736 477,853

Wirerod
Production 893,900 911,000 1,044,400 1,186,000 1,375,900 1,590,290
Imports 38,908 49,955 63,471 101,226 171,768 275,983
Exports -8,292 -5,846 -464 -75 -120 -484
Consumption -924,516 -955,109 -1,107,407 -1,287,151 -1,547,548 -1,865,789

Copper Sheet, Strip and Plate

Production 74,100 62,400 70,100 67,400 84,000 96,000
Imports 38,192 39,701 46,091 64,103 59,503 69,692
Exports 3,394 2,000 1,097 1,450 1,596 5,320
Consumption 108,898 100,101 115,094 130,053 141,907 160,372

Water Tube
Production 276,795 276,386 272,213 274,208 281,808 283,333
Imports 3,089 4,112 2,761 1,533 998 785
Exports 3,180 5,832 3,696 5,653 9,899 14,896
Consumption 276,704 274,666 271,278 270,088 272,907 269,222

ACR Tube
Production 33,206 43,614 57,787 85,792 103,192 121,667
Imports 15,495 17,700 17,121 23,808 36,826 32,353
Exports 0 0 0 0 0 0
Consumption 48,701 61,314 74,908 109,600 140,018 154,020

Copper Alloy Strip

Production 247,400 197,300 226,600 263,400 286,000 298,000
Imports 65,822 71,891 91,600 106,400 108,481 152,180
Exports 25,147 16,127 22,431 30,242 18,078 24,881
Consumption 288,075 253,064 295,769 339,558 376,403 425,299

Copper Alloy Tube

Production 68,333 66,667 68,333 70,000 80,833 91,667
Imports 4,055 3,964 3,452 4,188 4,363 6,500
Exports 3,113 2,979 5,826 8,845 8,510 14,059
Consumption 69,275 67,652 65,959 65,343 76,686 84,108
145 ACE THE CASE

Table 4: Chinese imports of wirerod by origin,

1995-2002 (tonnes)

1995 1996 1997 1998 1999 2000 2001 2002 (1-10)

Taiwan 16,848 17,988 19,028 15,827 26,423 49,830 61,568 71,950
South Korea 455 3,364 7,551 19,881 25,536 39,837 47,865 64,586
Kazakhstan 11 0 0 0 34 1,950 34,676 63,529
Russia 0 55 0 0 0 0 15,662 19,905
Australia 1,936 2,930 2,658 3,755 3,429 5,141 6,637 13,974
Others 7,710 6,064 9,671 10,493 8,049 4,468 5,359 14,438
Total 26,961 30,403 38,908 49,955 63,471 101,226 171,768 248,384

Table 5: Chinese imports of copper and copper alloy sheet,

strip and plate by origin, 1995-2002 (tonnes)

1995 1996 1997 1998 1999 2000 2001 2002 (1-10)

Copper
Taiwan 12,013 7,681 8,534 10,174 12,554 17,212 14,216 17,052
Germany 1,673 1,234 889 803 1,607 4,235 8,860 9,686
Japan 16,272 14,811 17,065 16,992 17,992 13,592 15,316 6,121
South Korea 2,125 3,333 2,554 3,042 4,537 9,669 7,668 5,300
Singapore 879 1,239 84 86 96 1,724 1,719 2,549
Others 14,068 9,815 9,064 8,604 9,304 17,668 11,726 11,561
Total 47,024 38,110 38,192 39,701 46,091 64,103 59,503 52,269

Copper alloy
Taiwan 10,122 10,135 10,952 14,918 20,038 27,531 40,218 44,879
South Korea 6,231 4,831 9,395 13,989 15,335 23,253 22,053 16,614
Germany 391 1,643 4,951 6,066 11,922 13,762 9,895 12,851
Japan 10,148 16,008 23,027 21,198 26,675 15,338 11,973 11,617
Poland 6 579 68 679 2,211 2,944 1,307 2,069
Others 8,309 12,475 17,428 15,045 15,420 23,575 23,034 26,105
Total 35,207 45,671 65,821 71,895 91,601 106,403 108,480 114,135

Table 6: Estimated imports of ACR tube into China by origin,

1995-2002 (tonnes)

1995 1996 1997 1998 1999 2000 2001 2002 (1-10)

Japan 13,127 15,054 14,299 17,042 25,184 23,273 23,857 15,069
Malaysia 1,302 1,235 1,349 3,242 6,902 3,277 4,293 2,978
South Korea 770 1,326 1,357 3,103 4,264 4,239 4,134 2,703
Thailand 296 85 116 421 476 1,564 4,268 2,445
Total 15,495 17,700 17,121 23,808 36,826 32,353 36,552 23,195
 Section 4: Data & Chart Based Cases 146

Table 7: Chinese exports of copper and copper alloy sheet,

strip and plate, 1997-2002 (tonnes)

1997 1998 1999 2000 2001 2002

Copper 3,394 2,000 1,097 1,450 1,596 5,320
Copper alloy 25,147 16,127 22,431 30,242 18,078 24,881

Table 8: Egyptian production and consumption of copper semis,

1997-2002 (tonnes)

1997 1998 1999 2000 2001 2002e

Total
Production 12,900 12,900 13,900 29,900 82,800 94,800
Consumption 15,950 16,714 16,979 33,050 85,950 97,950
Net imports 3,050 3,814 3,079 3,150 3,150 3,150

Wirerod
Production 4,000 4,000 5,000 21,000 74,000 86,000
Imports 100 138 409 500 500 500
Exports 0 0 0 0 0 0
Consumption 4,100 4,138 5,409 21,500 74,500 86,500

Copper Sheet, Strip and Plate

Production 2,100 2,100 2,100 2,100 2,000 2,000
Imports 700 1,106 670 700 700 700
Exports 0 0 0 0 0 0
Consumption 2,800 3,206 2,770 2,800 2,700 2,700

Copper Water and ACR Tube

Production 0 0 0 0 0 0
Imports 700 657 720 400 400 400
Exports 0 3 0 0 0 0
Consumption 700 654 720 400 400 400

Copper Alloy Strip

Production 6,000 6,000 6,000 6,000 6,000 6,000
Imports 900 1,187 665 900 900 900
Exports 0 0 0 0 0 0
Consumption 6,900 7,187 6,665 6,900 6,900 6,900

Copper Alloy Tube

Production 800 800 800 800 800 800
Imports 650 730 616 650 650 650
Exports 0 1 0 0 0 0
Consumption 1,450 1,529 1,416 1,450 1,450 1,450
147 ACE THE CASE

Table 9: Indian production and consumption of copper semis,

1997-2002 (tonnes)

1997 1998 1999 2000 2001 2002e

Total
Production 339,600 369,700 410,600 448,200 493,900 531,600
Consumption 346,800 376,900 418,703 459,765 509,384 548,650
Net imports 7,200 7,200 8,103 11,565 15,484 17,050

Wirerod
Production 156,000 180,400 215,600 247,500 287,500 319,500
Imports 4,000 4,000 5,108 7,930 13,407 15,000
Exports 500 500 594 821 1,134 1,100
Consumption 159,500 183,900 220,114 254,608 299,773 333,400

Copper Sheet, Strip and Plate

Production 90,000 94,000 98,000 102,000 106,000 110,000
Imports 1,400 1,400 1,349 1,306 973 1,000
Exports 200 200 251 643 1,311 1,300
Consumption 91,200 95,200 99,098 102,663 105,661 109,700

Copper Water and ACR Tube

Production 5,000 5,000 5,000 5,000 5,000 5,000
Imports 1,300 1,300 1,459 1,748 1,749 1,750
Exports 0 0 66 332 552 600
Consumption 6,300 6,300 6,392 6,416 6,197 6,150

Copper Alloy Strip

Production 38,600 40,300 42,000 43,700 45,400 47,100
Imports 1,800 1,800 1,769 2,912 2,827 2,900
Exports 300 300 303 279 387 500
Consumption 40,100 41,800 43,466 46,333 47,840 49,500

Copper Alloy Tube

Production 50,000 50,000 50,000 50,000 50,000 50,000
Imports 1,000 1,000 905 1,400 1,181 1,200
Exports 1,300 1,300 1,272 1,656 1,268 1,300
Consumption 49,700 49,700 49,633 49,744 49,913 49,900
 Section 4: Data & Chart Based Cases 148

Table 10: Pakistani production and consumption of copper semis,

1997-2002 (tonnes)

1997 1998 1999 2000 2001 2002e

Total
Production 16,000 11,445 10,225 14,025 14,025 14,025
Consumption 17,564 12,545 11,126 14,897 15,843 15,105
Net imports 1,564 1,100 901 872 1,818 1,080

Wirerod
Production 16,000 11,445 10,225 14,025 14,025 14,025
Imports 507 210 42 79 1,460 600
Exports 0 0 0 0 0 0
Consumption 16,507 11,655 10,267 14,104 15,485 14,625

Net imports of other semis

Cu sheet & strip 45 34 29 32 18 30
Alloy sheet & strip 144 113 268 216 82 100
Cu tube 373 426 379 366 177 200
Alloy tube 495 318 183 178 81 150

Table 11: Saudi Arabian production and consumption of copper

semis, 1997-2002 (tonnes)

1997 1998 1999 2000 2001 2002e

Total
Production 153,900 179,600 164,300 179,000 172,000 167,500
Consumption 200,200 222,488 198,507 235,258 225,300 220,800
Net imports 46,300 42,888 34,207 56,258 53,300 53,300

Wirerod
Production 153,900 179,600 164,300 179,000 172,000 167,500
Imports 1,000 1,085 1,239 1,704 2,000 2,000
Exports 300 3,919 1,372 445 300 300
Consumption 154,600 176,766 164,167 180,259 173,700 169,200

Net imports of other semis

Cu sheet & strip 39,000 38,406 28,903 48,438 45,000 45,000
Alloy sheet & strip 1,000 1,042 806 1,152 1,000 1,000
Cu tube 4,000 3,872 3,378 3,554 4,000 4,000
Alloy tube 1,600 2,402 1,252 1,855 1,600 1,600
149 ACE THE CASE

Table 12: Turkish production and consumption of copper semis,

1997-2002 (tonnes)

1997 1998 1999 2000 2001 2002e

Total
Production 209,650 233,650 234,650 276,650 255,720 295,650
Consumption 198,250 223,712 226,532 269,494 240,697 281,950
Net imports -11,400 -9,938 -8,118 -7,156 -15,023 -13,700

Wirerod
Production 175,000 199,000 200,000 242,000 221,000 261,000
Imports 15,000 15,856 9,999 10,260 9,943 10,000
Exports 34,000 34,023 25,624 24,554 28,565 27,000
Consumption 156,000 180,833 184,376 227,706 202,378 244,000

Copper Sheet, Strip and Plate

Production 20,000 20,000 20,000 20,000 20,000 20,000
Imports 1,700 1,721 1,966 2,816 3,162 3,000
Exports 100 100 293 884 1,509 1,800
Consumption 21,600 21,621 21,673 21,932 21,653 21,200

Copper Water and ACR Tube

Production 10,000 10,000 10,000 10,000 10,000 10,000
Imports 4,000 4,427 4,337 5,109 3,724 4,500
Exports 200 259 149 374 535 600
Consumption 13,800 14,168 14,188 14,735 13,189 13,900

Copper Alloy Strip

Production 3,000 3,000 3,000 3,000 3,000 3,000
Imports 2,000 2,230 1,544 1,252 1,560 1,500
Exports 300 282 367 1,444 2,872 3,500
Consumption 4,700 4,948 4,177 2,808 1,688 1,000

Copper Alloy Tube

Production 1,650 1,650 1,650 1,650 1,720 1,650
Imports 600 608 540 777 257 400
Exports 100 116 71 113 188 200
Consumption 2,150 2,142 2,119 2,314 1,789 1,850
 Section 4: Data & Chart Based Cases 150

Table 13: South East Asian production and consumption of

copper semis, 1997-2002 (tonnes)

1997 1998 1999 2000 2001 2002e

Total
Production 532,200 375,000 436,719 471,813 498,683 555,968
Consumption 604,097 440,781 533,732 560,447 619,253 707,066
Net imports 71,897 65,781 97,013 88,634 120,570 151,098

Wirerod
Production 445,200 304,000 346,650 365,000 386,100 439,300
Imports 10,088 13,119 23,589 31,722 27,984 49,065
Exports 356 9,315 9,415 5,079 6,952 7,000
Consumption 454,932 307,804 360,824 391,643 407,132 481,365

Copper Sheet, Strip and Plate

Production 15,000 10,000 20,000 16,000 17,000 18,500
Imports 15,023 30,865 28,140 34,030 65,559 52,252
Exports 199 1,208 2,557 2,726 2,583 2,500
Consumption 29,824 39,657 45,583 47,304 79,976 68,252

Copper Water and ACR Tube

Production 59,000 50,000 59,069 69,613 74,383 76,668
Imports 21,096 17,633 19,002 22,487 21,617 27,332
Exports 15,626 22,430 25,071 37,100 37,000 41,000
Consumption 64,470 45,203 53,000 55,000 59,000 63,000

Copper Alloy Strip

Production 8,000 8,000 6,000 6,200 6,200 6,500
Imports 30,369 29,848 45,300 48,094 51,538 71,850
Exports 346 607 1,438 4,091 1,064 1,900
Consumption 38,023 37,241 49,862 50,203 56,674 76,450

Copper Alloy Tube

Production 5,000 3,000 5,000 15,000 15,000 15,000
Imports 13,097 10,088 23,599 10,350 11,065 11,000
Exports 1,249 2,212 4,136 9,053 9,594 8,000
Consumption 16,848 10,876 24,463 16,297 16,471 18,000
151 ACE THE CASE

Table 14: Gulf States production and consumption of

copper semis, 1997-2002 (tonnes)

1997 1998 1999 2000 2001 2002e

Total
Production 28,000 31,990 37,810 40,000 40,000 41,000
Consumption 54,000 63,290 72,410 81,000 96,200 96,300
Net imports 26,000 31,300 34,600 41,000 56,200 55,300

Wirerod
Production 28,000 31,990 37,810 40,000 40,000 41,000
Imports 20,000 21,600 25,300 29,300 36,400 39,000
Exports 0 0 0 0 0 0
Consumption 48,000 53,590 63,110 69,300 76,400 80,000

Net imports of other semis

Cu sheet & strip 1,000 1,500 2,000 3,300 4,000 4,500
Alloy sheet & strip 900 900 1,100 700 1,300 1,300
Cu tube 2,400 3,200 3,200 4,700 5,800 6,500
Alloy tube 1,700 4,100 3,000 3,000 8,700 4,000
 Section 4: Data & Chart Based Cases 152

Table 15: Iranian production and consumption of copper

semis, 1997-2002 (tonnes)

1997 1998 1999 2000 2001 2002e

Total
Production 83,457 69,446 97,399 97,221 94,693 98,988
Consumption 81,215 67,145 90,864 91,586 98,098 102,892
Net imports -2,242 -2,301 -6,535 -5,635 3,405 3,904

Wirerod
Production 76,100 61,000 82,000 82,800 85,800 85,800
Imports 8 8 1 394 945 806
Exports 400 439 484 1,379 318 484
Consumption 75,708 60,568 81,517 81,815 86,427 86,122

Copper Sheet, Strip and Plate

Production 1,020 1,048 4,075 3,194 506 1,950
Imports 470 370 177 142 1,070 1,961
Exports 1,000 1,015 3,093 2,173 506 731
Consumption 490 403 1,159 1,163 1,070 3,180

Copper Tube
Production 2,481 2,428 2,764 2,980 2,778 3,302
Imports 700 968 1,003 1,184 2,304 2,798
Exports 50 52 72 69 43 41
Consumption 3,131 3,344 3,695 4,095 5,039 6,059

Copper Alloy Strip

Production 3,399 4,347 7,748 7,723 5,296 7,329
Imports 50 76 29 424 796 897
Exports 2,600 2,825 4,669 4,683 1,985 2,617
Consumption 849 1,598 3,108 3,464 4,107 5,609

Copper Alloy Tube

Production 457 624 812 524 313 607
Imports 600 630 664 606 1,165 1,315
Exports 20 22 91 81 23 0
Consumption 1,037 1,232 1,385 1,049 1,455 1,922
153 ACE THE CASE

Possible Solution – Copper Production

Rather than simply present a two page summary solution, we have decided to provide you
with more detail and show some of the rough workings, notes and initial analysis that you
would want to perform in order to construct a 2 page summary analysis. Remember, you
only have 1 hour, so be sure to keep things simple and make sure you can draw out a story
from the data. We have decided to focus on China and create a story around its growing
demand for wirerod.

The data in Table 2 and the charts below show that China is by far the largest producer of
copper semi’s in the region. It produced just over half of the regional total in 1997 alone. Its
share of the total production has only increased over time whereby in 2002 it was producing
close to two thirds of the regional total. As a side note, South East Asia’s production levels
decreased over this time.

1997 Copper Semi Production 2002 Copper Semi Production

China Egypt
China Egypt
India Pakistan
India Pakistan
Saudi Arabia Turkey
South East Asia Gulf States Saudi Arabia Turkey
Iran South East Asia Gulf States
 Section 4: Data & Chart Based Cases 154

Possible Solution – Copper Production (Continued)

Staying in Table 2 and looking at the chart below it can be seen that China’s overall demand
for Copper semis has historically been greater than production, meaning they have to
import many tonnes to meet demand. This supply-demand differential gap has been rising
in recent years.

China - Production and Consumption

of Copper Semis Production Consumption
3,500,000

3,000,000

2,500,000

2,000,000
Tonnes

1,500,000

1,000,000

500,000

0
1997 1998 1999 2000 2001 2002e
Year

In Table 3. we see that wirerod is the most prevalent copper semi being produced and
consumed in China. From the graph on the next page we can see that imports of wirerod
have increased 6 fold in order to meet demand within the country, whilst consumption has
doubled. Exports within the graph are negligible and this is reflected in the data.

What must be happening is that China’s economy is growing so fast (evident by the growth
in consumption) that businesses are having to import more and more tonnes of wirerod to
meet their needs.

On a similar note ACR Tube (Air Conditioning and Refrigeration) consumption has tripled
and ACR tube inputs have doubled. China also does not export any of this copper semi.
155 ACE THE CASE

Possible Solution – Copper Production (Continued)

China - Wirerod
Production Imports Consumption
2,500,000

2,000,000

1,500,000

1,000,000

500,000
Tonnes

0
1997 1998 1999 2000 2001 2002e
-500,000

-1,000,000

-1,500,000

-2,000,000

-2,500,000
Year

With dramatic increases in both of these copper semis, we could be led to believe that there
may have been an increase in the level of construction and development in China, with
buildings demanding wirerod for concrete reinforcement and ACR tube for air conditioning

Table 4 and the chart on the next page illustrates that China originally sourced the majority
of its wirerod from Taiwan, however recently South Korea, Russia and Kazakhstan have
become major players in the exporting of wirerod to China. This graph also highlights the
massive growth in wirerod now crossing into China.

In terms of the ACR Tube, China sources almost all of its import requirements from Japan.
This is evident in Table 7.
 Section 4: Data & Chart Based Cases 156

Possible Solution – Copper Production (Continued)

Chinese Imports of Wirerod by Origin Others Australia Russia

Kazakhstan South Korea Taiwan

80,000

70,000
60,000
50,000

Tonnes 40,000
30,000
20,000
Taiwan
10,000 South Korea
Kazakhstan
0 Russia Country
Australia
1995 1996 Others
1997 1998
1999 2000
2001
2002 (1-10)
Year

From this graph we could speculate that countries such as Kazakhstan and Russia have only
just realised the growth potential in China for wirerod and started exporting to China on a
dramatically increased scale, or perhaps certain trade barriers between these nations have
finally been lifted.

Finally, looking at many of the other wirerod producing nations in the region (Tables 8-15)
we can see that wirerod is in high demand but not heavily exported. This leaves the door
wide open for resource rich nations in the region such as India, Australia and some of the
African nations to take advantage of the Chinese wirerod demand boom and the general
wirerod production shortage in the region.

In conclusion these nations just mentioned should perform further research on this topic
and consider extracting the required metal ore from the earth and either shipping it over as
ore, metal or finished wirerod, because with the growth boom in China, other nations in the
region will be soon to follow.
157 ACE THE CASE

Problem – Chart Interpretation 1

Interpret and explain the following chart

In this style of case question, you are presented only with the chart below
and no further information. You must be able to explain to the interviewer
what may be happening within the business that this chart possibly
reflects. Essentially, this type of charts based case is designed to assess
your graphical analytical skills and to see how you deal with ambiguity.
Feel free to make any necessary assumptions, but ensure these
assumptions are consistent with each other.

Example Company Ltd. Revenue Expenses Profit

180

160

140

120
$ Millions

100

80

60

40

20

0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Year
 Section 4: Data & Chart Based Cases 158

Possible Solution – Chart Interpretation 1

It is first best to describe the obvious things within the chart by listing the facts. This will
help to narrow your focus.

The Facts

This chart appears to be a forecast of an organisations revenue, expenses and profits over
10 years, reported in millions of dollars.

Revenue appears to be increasing each year at an exponential rate.

Expenses are also increasing but in more of a linear fashion and at a slower rate than
revenue.

Profit simply follows revenue and expenses, as expected since Profit = Revenue - Expenses.
Because the profit trend line is a derived value on the chart, based off the revenue and
expense values, we can ignore it from our analysis.

Next you should begin analysing why values on the chart are moving in a certain way by
asking yourself some key questions which you can write down.

Questions

Why is revenue forecast to increase at a greater rate than expenses?

Why is revenue increasing exponentially when expenses appear to be increasing linearly?

Now you can begin answering your questions through discussion, making assumptions and
proposing some generic solutions. A summary of such a discussion in relation to this chart
may look something like this:

Discussion & Analysis

Margins are obviously increasing each year, because the percentage gap between revenue
and expenses grows each year. Now because Revenue = Price x Volume, two things could be
happening. Perhaps volume with no associated variable costs or overheads is predicted to
increase, meaning the business assumes economies of scale will be reached in the near
future. We already know that sales volumes are forecast to
159 ACE THE CASE

Possible Solution – Chart Interpretation 1 (Continued)

to analyse we will assume that it is unlikely. Exponential revenue increases, however, does
infer year on year percentage price increases. This better explains the curve as the price
increase effect compounds upon itself.

Due to yearly inflation which effects the price of inputs such as labour and materials,
expenses should also be increasing exponentially each year, however with inflation of say 2-
3% this chart due to its scale, probably does not reflect this exponential growth trend in
expenses.

Concluding, price must be forecast to increase at a faster rate than inflation.

Finally you can discuss the business impact of any findings and conclusions which result
from the discussion and analysis.

Business Impact

This chart is the summary of an organisational forecast and we have just concluded that the
business is predicting their prices to increase at a higher rate than inflation. A risk therefore
exists that the market will not absorb or tolerate the planned price increases and sales
volumes could fall as a result.

As a consulting firm helping this organisation, greater research and analysis into competitors
pricing strategies, historical industry and market research on pricing increases in order to
better predict future price increases could be conducted and presented with
recommendations in a report to the organisations management.
 Section 4: Data & Chart Based Cases 160

Problem – Chart Interpretation 2

Interpret and explain the following chart

This question is identical to the style seen in the previous question. We

present this simply as another example and the possible solution will be
structured in the same way.

Monthly Sales Volume for the last 3 years

Sales Volume
1000

800

600
Units

400

200

Septem…
Septem…

Septem…
Novemb…

Novemb…

Novemb…
July

July

July
Jan
Feb

August

October

Jan
Feb

August

October

Jan
Feb

August

October
April

december

April

december

April

december
May

May
Jun

May
Jun

Jun
March

March

March

Month

Possible Solution – Chart Interpretation 2

The Facts

This is a historical view of an organisations monthly sales volume from the last 3 years.

Looking at equivalent months (e.g. start with January) it can be seen that sales have been
increasing each year.

A heavy seasonality pattern exists with sales dropping by around 30% in June, July and
August

Questions

Why does this business suffer from large seasonal swings in sales volume?
161 ACE THE CASE

Possible Solution – Chart Interpretation 2 (Continued)

What kind of business is this and what hemisphere is this business in? This will help to
understand the seasonal sales volumes and to determine if it is a drop due to summer
weather or a drop due to winter or neither.

Discussion & Analysis

This organisation may be heavily affected by the weather or similar seasonality affects such
as sporting seasons or school terms.

If we were to assume that this business is a growing travel company operating in the
southern hemisphere specialising in sunny island holidays in the Pacific Ocean. Then we
could explain the sales drop as the result of the weather getting cooler.

If we were to assume that this business is a sporting goods supplier for which the specific
sport for which it supplies equipment and apparel has its off season between June and
August, then we could explain the sales drop as a result of this.

Whatever the cause of the seasonal sales volumes, cash flow management must be a key
issue for this business. If cash flow management is an issue for this organisation then a
strategy of ‘seasonal diversification’ to offset the seasonal impact may be appropriate. E.g.
the sporting goods company begins selling sporting goods for a sport which is played in the
off season of its primary sports market. E.g. the southern hemisphere travel company
moves into selling ski holidays to boost cash flow in the winter months.

Business Impact

Seasonal sales volumes no matter what the cause places stress on cash within an
organisation. During the low season, financing is often required to meet short term
obligations to suppliers and employees, which is usually comfortably repaid with cash during
the boom time.

The constant challenge however, still persists and unnecessary interest payments and
negotiations with lenders can place a drain on management. As a consulting firm assisting
this organisation, a strategy to smooth this seasonality effect, tailored towards the
operating environment of the client could be designed after thorough analysis of the
business and its opportunities.
 Section 4: Data & Chart Based Cases 162

Problem – Chart Interpretation 3

Interpret and explain the following chart

This question is identical to the styles seen in the previous questions. We

present this simply as another example and the possible solution will be
structured in the same way.

Average Daily Product Weight (g) Limit Upper Weight (g) Limit Lower

110
108
106
104
102
Weight (g)

100
98
96
94
92
90
1 9 17 25 33 41 49 57 65 73 81 89 97 105 113 121 129 137 145 153
Day

Possible Solution – Chart Interpretation 3

The Facts

This chart shows the average daily weight of what could be a manufactured product,
probably one coming off a production line.

There appears to be defined limits, probably for quality control purposes.

The average weight has started to breach the upper limit more and more frequently in the
last 90 days and has become somewhat more erratic.
163 ACE THE CASE

Possible Solution – Chart Interpretation 3 (Continued)

Questions

Why has the manufacturing process started fluctuating so badly such that the average
weight varies so much daily?

Why has the average daily weight started to regularly exceed the acceptable high side limit
of 102 grams?

Why was corrective action not taken at the first sign of a breach in the quality control limits?

Discussion & Analysis

A process can start to fluctuate for many reasons. Machinery could be wearing down and
need replacing, staff may be tired and overworked, new staff may not have been adequately
trained, input materials may not be consistent, or there could be general problems with the
process itself for example the sequence and timing assigned to each sub process or event.

There appears to be a trend in the data, i.e. the average weight is regularly breaching the
upper acceptable limit, which would lead us to believe that it may be something simple like
a faulty piece of equipment which is over allocating the inputs to the end product. E.g. too
much of some type of component or ingredient is being added.

The erratic behaviour of the trend line however, indicates that it is more than just old
machinery and could in fact be a combination of things.

Business Impact

In terms of the business impact, this is a quality issue which by nature has multiple
ramifications. First, it is wasteful and costly because the consumer is in effect, getting more
than they have paid for when the weight is higher than the specifications, and hence
margins are eroded. Secondly large inconsistencies in weight make the product and
organisation look incapable as their output is not standardised, this impacts reputation.
Finally since this is a process control issue the business needs to ensure this does not
happen again both with this product and others they may manufacture. This can be
achieved through creating new processes and procedures and ensuring they are followed by
employees in charge of monitoring and quality control.
 Section 4: Data & Chart Based Cases 164

Possible Solution – Chart Interpretation 3 (Continued)

As a consulting firm working with this organisation, the first thing to do would be to address
the current situation and determine the root cause/s of the product weight inconsistencies.
Secondly a full analysis of and changes to internal processes would be required to ensure
that product quality is maintained across the organisation.

That concludes this section on data and charts based cases. We hope we have provided you
with some insight into answering this style of question should you come across it during the
management consulting interview process. On the next page you’ll find additional data and
charts based questions to try yourself. Good luck!
165 ACE THE CASE

That concludes the worked solutions for data & chart based case questions. Here are more
examples of this style of case interview question for you to attempt and practice on your
own.

Other Data & Chart Based Cases

 Analyse and explain what the following chart could represent.

70

60

50

40

30

20

10

0
0 5 10 15 20 25

 Analyse and explain what the following chart could represent.

70

60

50

40

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 Section 5: Logic Problem Cases 166

5. Logic Problem Cases

Logic problems are not uncommon when it comes to management consulting interviews.
They are not a case based question as such but have been known to be asked. Since most
management consulting firms put you through 2 - 3 rounds of case based interviews there is
a chance you will encounter a logic problems maybe in the final round interview just to test
you once more in a slightly different way through your ability to solve abstract puzzles
through logic or come up with creative, unique and interesting answers to strange and
unrealistic problems. They have been included in this guide to ensure you know what to
expect if you happen to be asked one of these questions in an interview.

Remember, management consulting firms are looking for the best people. Intelligence with
a sound mathematical ability, logical and analytical yet creative with an open mind are the
prized traits of a new recruit. All of these traits are required to first analyse data and then
devise new strategies for client organisations. Logic problems like those in this section help
test all of this.

It is unlikely that you will be asked a logic problem and from our experience this style of
question will generally only appear in the final round interview, if it appears at all. Often
difficult at first glance, they are generally easily solved if you think ‘outside the box’. Take
comfort in the fact that this style of question should be more familiar to you as such logic
problems are often popular brain teasers or puzzles that you may have heard throughout
your education and life in general. You may have even seen some of these in text books or
newspaper puzzle sections. Other logic problems are different and simply require creative
and interesting answers to impress the interviewer.
167 ACE THE CASE

Problem – Earth Rope

A very large rope is run around the Equator of the earth. If you added 600m to
its length how high above the ground would it sit?

At first, this question appears daunting. How are you to know the
circumference of the Earth? What’s it’s diameter for a start? If you
take the time to relax and think about what is actually being asked
before rushing into finding a solution, you’ll soon realise it is just a
test of basic high school mathematics.

Possible Solution – Earth Rope

Ignoring the impact of mountains, land and oceans on the Earth’s surface, the Earth is close
enough to a perfect sphere. The Equator cuts the Earth perfectly into two hemispheres and
therefore represents the circumference of the Earth when viewed on the two dimensional
plane.

Remembering your early mathematics education a circumference of a circle can be

calculated as 2πr, where r represents the radius and π the ratio constant of circumference
to diameter of approximately 3.14 as first derived by the ancient Greeks.

If the rope sits flush on the equator its length is therefore 2πr, where r = radius of the earth

If the rope’s length is increased by 600m it becomes a total length of 2πr + 600m

Call the new radius µ, whereby 2πµ = 2πr + 600m

Solving for µ gives, µ = (2πr + 600m) / 2π

µ - r is the height above the ground with which the rope would now sit

So, (2πr + 600m) / 2π – r will yield your answer

 Section 5: Logic Problem Cases 168

Possible Solution – Earth Rope (Continued)

Solving this equation you get the height above ground as

= 2πr / 2π + 600m / 2π –r
µ-r

= r + 600m / 2π –r
r

= 600m / 2π
µ
= 600m / 2 x 3.14

= 600m / 6.28

= ~ 100m
169 ACE THE CASE

Problem – Crossing the Canyon

It’s night time, and a team of four explorers, who are in a competition against
other teams, have to get across a canyon using a very narrow bridge made of
rope and wooded planks. This rope bridge can only hold a maximum of two
people at any one time and because it is dark, a torch must be carried by
someone crossing the bridge otherwise they could lose their footing and fall to
their death! There is only one torch however, and explorers are of different
experience, age, and fitness level. Person A takes 1 minute to cross, Person B, 2
minutes, Person C, 3 minutes, and lastly, Person D, 10 minutes. Naturally,
when two people cross the bridge together, they must go at the speed of the
slowest. All four people need to get across in exactly 17 minutes. How will this
be done?

Like most logic problems this question is somewhat unrealistic, but the
problem tests how fast you can come up with plausible solutions to a
“life or death” situation. It takes a mix of numerical ability and creativity
in order to come up with an elegant solution.

Possible Solution – Crossing the Canyon

The first thing to note is that the goal is to get everyone across the canyon in just 17
minutes. Therefore, it’s rational to assume that the two slowest people should cross
together otherwise a lot of time would be wasted having them cross separately.

However, another dilemma exists. Once we get them both across, we do need to make one
of them walk back with the flashlight. To solve this, we should instead have one of the faster
people already there waiting to sprint the flashlight back across.
 Section 5: Logic Problem Cases 170

Possible Solution – Crossing the Canyon (Continued)

Let the four persons be A, B, C, and D with following crossing times:

Person A: 1 minute
Person B: 2 minutes
Person C: 5 minutes
Person D: 10 minutes

And after some inevitable trial and error rearranging the order the solution is as follows:

Crossing the Bridge Total Time taken (cumulative)

1. Persons A and B cross the bridge

2 minutes
(2 mins)

2. Person B comes back with the torch

4 minutes
(2 mins)

3. Persons C and D cross the bridge

14 minutes
(10 mins)

4. Person A comes back for Person B carrying torch

15 minutes
(1 min)

5. Persons A and B cross the bridge

17 minutes
(2 mins)
171 ACE THE CASE

Problem – Red Wine, White Wine

You have a 90L barrel of white wine and an equal sized barrel of red wine. You
take a ladle of red wine and put it into the white wine and they mix perfectly.
You then take a ladle of the mixture and put it into the red wine. Assume no
spillage occurs. After completing the exercise you are asked: ‘Is there now
more red wine in the white wine than there is white wine in the red wine?’

First we must understand the question. Forget that no one in their

right mind would go mixing red and white wine together, but let’s
remember it’s an abstract logic problem. Basically it is asking, is
there more red wine polluting the white wine barrel compared to
the amount of white wine polluting the red wine barrel.

Possible Solution – Red Wine, White Wine

Answering this problem can be done in two ways.

First you could say okay let the ladle be 10L, and perform some basic calculations.

10L of red wine goes into the 90L white wine barrel

There is now 100L of wine in the white barrel in a ratio of 1:9, or one tenth red.

Taking a 10L ladle of the mixture in the same ratio results in 9L of white and 1L of red sitting
in the ladle

This means that there is now 10 - 1 = 9L of red wine left in the white wine barrel

Pouring this ladle into the red wine results in 9L of white wine ending up in the red wine
barrel which is the same as the amount of red wine left in the white wine barrel

Therefore the answer is “no, it’s the same”

 Section 5: Logic Problem Cases 172

Possible Solution – Red Wine, White Wine (Continued)

This is a good enough answer but your interviewer may ask, “well what if the ladle was a
different size?” or even the barrel? You could go on performing the same calculations using
different sized ladles and barrels and get the same answer to better demonstrate your logic
ability, or you can assign the ladle to be some variable, e.g. α and the barrel size β.Now you
can perform similar calculations using algebra.

αL of red wine goes into the βL white wine barrel.

There is now β + α litres of wine in the white wine barrel in a ratio of α : β (Red : White)

Taking a ladle of size α litres from the mixture in this same ratio results in the ladle
containing 1 ladles worth or liquid at a α / β + α ratio.

Since a ladle is of size α, the actual ladle contains α x (α / β + α) = α2 / β + α litres of red wine
and therefore α – (α2 / β + α) of white wine in the ladle.

This also means that there is now α – (α2 / β + α) of red wine left in the white wine barrel.

Pouring this ladle of the mixture into the red wine results in α – (α2 / β + α) of white wine
being in the red wine barrel and therefore there is the same amount of red wine in the
white wine as there is white wine in the red wine.

This method of using a variable is a bit more involved but clearly demonstrates your ability
to use mathematical ratios.
173 ACE THE CASE

Problem – Industries in Space

Aside from what already exists, what will be the next three industries
operating in space and why?’

This question involves more of an exploration of the issues as well as using

logic and creativity. Here there is no right or wrong answer, rather the
interviewer wants to see your potential for creative thought as well as
commercial judgement.

Possible Solution – Industries in Space

Among the many possible industries or business models people have explained at
interviews, here are just a few that we liked:

Holiday/Travel Industry

Civilian travel into space has a huge potential with many people dreaming of going into
space, feeling weightless and viewing the earth from afar. Such an industry would probably
grow much like the terrestrial transport based advances we have already seen throughout
history. With the advent of airborne flight speeding up travel and opening up new
destinations space travel should do the same. Like aeroplane jet travel once was, space
holidays would start off only for the very rich as costs would be huge for the operating
companies. You may be able to only be in space for a few hours before returning to earth or
perhaps extended stays may be possible by visiting special tourist space stations, setup like
luxurious hotels.

Construction

In line with this idea another early industry which may operate in space will be construction.
Large construction or specialist aeronautical companies may soon be offered contracts to
build such things as hotels in space. Much of the construction can take place on earth with
simple assembly teams required to get the modularised sections of building into space and
connected together.
 Section 5: Logic Problem Cases 174

Possible Solution – Industries in Space (Continued)

Advertising

Large brand focused multinational companies such as Nike, Coca Cola, McDonalds, Amazon,
Sony and Toyota may soon create giant advertising, billboard like objects which can orbit
the earth displaying their brand name. We already see sky writers create advertising
messages in the air so this would be taking it to the next level. Costs would be huge and
hence why only extremely large companies could justify such an expense

Such a billboard would obviously need to be huge, in the order of 100’s of football fields in
area, but if it could be built in such a way that it was made out of lightweight materials and
collapsible or compacted enough that it could go up in conventional space craft then a
possibility may exist to get the thing constructed and orbiting with only 2 or 3 manned space
flights.

A lower cost option may be to design some special kind of solar powered projector device
that can be triggered to shine a mirrored image onto clouds so that we could read it on
earth the other way round.

Mining

Minerals on other planets may be useful for medicines, construction purposes, forging
existing and new alloys or to substitute our dwindling supply. Such an industry would take a
long time to establish since initial costs would be huge in terms of machinery, transportation
and processing. If mining and processing were robotic and conducted on foreign planets
then all that would need to be transported back would be the finished product rather than
the basic unprocessed ore.

Real Estate

Potentially already in existence today is the buying and selling of planetary real estate.
Depending on laws and restrictions we should be able to purchase or claim land on planets
and moons within our solar system. In fact you can already purchase land on the moon, but
how legitimate these deeds are at this time is an interesting question. United Nations
restrictions and Government regulations may hold back this industry at this time, however
this line of business would be relatively low cost, and demand potentially high.
175 ACE THE CASE

Possible Solution – Industries in Space (Continued)

Telecommunications

Already in existence in the form of satellites, telecommunications is built for space since
data can travel with ease via radio and microwaves. Special repeater and amplifier receiver/
transmitter stations may be built in space as satellites, or fixed to planets and moons to
allow for more efficient and longer distance communication in space without the need for
an initial powerful transmission signal.

Funeral Services

This is an interesting idea where the family or the deceased may directly request to have
their ashes released in space, or alternatively sent out on a continual journey through space.
This business would be relatively low cost as the funeral service and cremation could be
held on earth and then hundreds of urns could be taken to space in one single voyage and
each is released as the space vehicle orbits the earth before returning to earth.

Private Investigators
Using current or new satellites and special cameras with powerful zooms and or thermo
detection, private investigators could utilise this technology to track a person’s whereabouts
and daily movements for a client, all from the comfort of his/her computer. Privacy and
Spying laws may be an issue here and would need to be researched.
 Section 5: Logic Problem Cases 176

Problem – Soda Cans

Why are soda cans concave at the bottom?

This question is short and sweet (pardon the pun), getting you to think on your
toes, use some common sense and logic to think about product design. An
Engineer would probably answer this better than a business student but
something along these lines should suffice.

Possible Solution – Soda Cans

Smoothly curved surfaces are actually stronger than a flat surface of identical diameter. This
strength in design prevents the pressurised, carbonated soda from forcing the can out of
shape.

As an aside, this concept also describes why European castles went from being built with
straight linear walls and rectangular prism shaped buildings and towers to rounded,
cylindrical structures to better withstand the force of enemy cannons or catapult fire.

Additional reasons could be to hide volume and give the appearance of more liquid. Also
maybe it makes them stack easier, however that’s probably what the grooved lid and ridged
circumference is for on the bottom.
177 ACE THE CASE

Problem – Sunrise
Does the sun always rise in the east?

This is yet another short brain teaser to test your ability to think
outside the box.

Possible Solution – Sunrise

The answer is no, because at the exact point of the North Pole there is no such thing as east
or west because everything is south.

The same can be said for the South Pole in which all directions are north.

In addition you may want to say that in the far northern winter and southern summer the
sun doesn’t rise at all.

To be even more clever, you could explain that the magnetic polarity of earth changes every
million or so years so that north actually becomes south and therefore east would become
west. Meaning the sun would rise in the new magnetic west.
 Section 5: Logic Problem Cases 178

Problem – Buckets
You have a 3 litre bucket and a 5 litre bucket. How will you measure out exactly
4 litres of water? Assume you have an endless supply of water and no markings
on the buckets.

This is a question you may have seen before and in fact it appeared in
one of the ‘Die Hard’ movies. It requires a bit of thinking but the
answer is relatively straight forward. There are actually two ways of
measuring out the 4L exactly so see if you can solve it the other way.

Possible Solution – Buckets

First fill the 3L bucket and pour all of its contents into the 5L bucket.

You now have 3L of water in a 5L bucket and therefore 2L of empty space.

Now fill the 3L bucket and pour as much as you can into the 5L bucket (i.e. 2L).

This leaves 1L in the 3L bucket.

Empty the 5L bucket and pour in the 1L of water you have sitting in the 3L bucket.

Now fill the 3L bucket to the top and pour it into the 5L bucket and you are done.

1L + 3L = 4L measured out exactly in the 5L bucket.

179 ACE THE CASE

Problem – Manholes
Why are manhole covers round?

You may be given some time to think about this question but like most
logic puzzles the answer is pretty simple.

Possible Solution – Manholes

Round lids or covers cannot fall into the hole they are covering. A square or rectangle cover
would fall in if angled correctly, i.e. on the hypotenuse or diagonal of the square whole. A
round lid cannot fall through a round hole no matter what angle you put it on. Therefore to
avoid losing the lid down the hole, manhole covers have been designed to be circular.
 Section 5: Logic Problem Cases 180

Problem – Clock1
In a 24 hour day how many times do the hands of a clock overlap?

Don’t rush these types of questions, as they are designed for fools to rush in
with the wrong response. Think carefully and don’t be afraid to get out the
pen and paper. When you have your final answer, speak it confidently.

Possible Solution – Clock1

The actual answer will vary depending if you count 12:00am once or twice. I.e. at the start
and then at the end for midnight.

Most people will assume the answer is 24 times, however if you take the time to think about
it and work it out in your head or on paper the answer is actually 22. If you make the
assumption above it then becomes 23.

The reason for 22 is that yes the hands overlap once every hour and then in the 10th and
22nd hour you see the hands overlap right at the end of the hour at roughly 10:54, but they
don’t overlap again until 12:00 noon. Therefore the hands never overlap in the 11th or 23rd
hour. Hence the answer is 24 – 2 = 22.
181 ACE THE CASE

Problem – Clock2
How many degrees are there between the hour hand and the minute hand on
a clock face when the time is ten past two?

We’ve helped you out by placing a graphic of the clock to the left. If you
encounter such a question, do sketch something on paper to get your
brain working. At its core this is just a simple maths problem.

Possible Solution – Clock2

Another annoying clock question is what you are thinking. And yes, we agree it is.

Most people jump out and say zero as their answer, believing that the two hands are
overlapping at this time.

This assumption is obviously wrong. At 2:10, the minute hand is exactly on the 2 indicating
10 minutes out of the hour. The hour hand, however, is just past the 2 but sitting just before
the first notch and is exactly 1/6 of the way between the 2 and the 3.

Between each numbered hour there is 360/12 = 30 degrees. 1/6 x 30 degrees = 5 degrees.

Hence the answer is 5 degrees.

 Section 5: Logic Problem Cases 182

Problem – Billiard Balls

You have eight Billiard balls. One is defective, meaning that it weighs more
than the others. How would you find it, using a balance, if you were allowed to
use the balance only twice?

This is quite a difficult logic puzzle and requires serious some thinking.
Sure enough it is easily solved using the balance three times, i.e. if you
compare 4 against each other, find the heavy side, then split them and
compare two against each other, and then find the heavy side and
compare one against another, but you are allowed only to goes.

Possible Solution – Billiard Balls

To solve it using the balance only twice you must, pick any three balls and weigh them
against any another three balls. If the scales balance then one of the remaining two balls is
defective so put one in either side of the balance and the heavier one is the defective ball.

If the starting three balls don’t balance then take the three balls from the heavy side and
pick two of them to compare against each other on the balance. If they balance the third is
defective and if they don’t then the heavy ball is defective.

A simple enough answer but difficult to deduce in an interview situation.

183 ACE THE CASE

Problem – Weighing an A380

How do you weigh a jumbo jet (A380) without any scales?

This is yet another rather abstract question which could be

solved in a number of ways. However, the interviewer just
wants to see what creative yet practical solutions you may
come up with. Below are some suggestions.

Possible Solution – Weighing an A380

Put it on a big boat. (E.g. a container ship or aircraft carrier) and mark the water line on the
hull. Now take it off the boat and add known weights onto the deck until the boat sinks to
that water line again. Add the weights up and there is your weight of the jumbo jet.

Use a big electro magnet placed above the aircraft and by utilising some magnetic attraction
formula from the world of physics which includes mass and magnetic force you should be
able to work out the weight. When the aircraft lifts off the ground determine the magnetic
force being exerted and thus calculate the mass of the plane. Note this may not work
because the fuselage is probably not designed to take the weight of the plane when lifted
directly from above by a giant electro magnet. You may also have trouble finding an electro
magnet of adequate strength and size and don’t forget that aircraft are made of aluminium
not iron. Given all of this, the first option is probably better
 Section 5: Logic Problem Cases 184

Problem – Candy
You have a large bucket full of pieces of candy in only three distinct colours
Red ones, blue ones and green ones. If you are blindfolded, how many pieces
do you have to take out, to be sure of getting a matching pair?

This is a simple exercise in probability and getting it wrong means you learnt
nothing back in high school. This type of question should be answered
quickly and should not require you to think for more that about 30 seconds.
It may be thrown at you in addition to a case question or another logic
problem.

Possible Solution – Candy

The correct answer is 4.

After taking out three pieces you may have a matching colour pair already, but you may also
have only one of each colour. Taking a fourth guarantees you that one will match up with
the coloured candy piece just selected.
185 ACE THE CASE

That concludes the worked solutions for logic problem case questions. Here are more
examples of this style of case interview question for you to attempt and practice on your
own.

Other Logic Problem Cases

 You have 120 seconds to come up with 10 uses for a paper clip

 A lily pad growing in a pond doubles in size every day. After 28 days it covers the
pond. If there were two of these lily pads in the pond, after how many days would
the pond be covered?

 How would you invest 1 million dollars?

 Three people check into a hotel. They pay $30 to the manager and go to their room.
The manager finds out that the room rate is $25 and gives $5 to the bellboy to return
to them. On the way to the room the bellboy reasons that $5 would be difficult to
share among three people so he pockets $2 and gives $1 to each person. Now each
person paid $10 and got back $1. So they paid $9 each, totalling $27. The bellboy has
$2, totalling $29. Where is the remaining dollar?

 A man lives in a small house with a farm and his back garden and has a river beside
his house. On the other side of the river is a shop. One day he visited the shop. He
bought a chicken and a fox for his farm and bought a bag of corn to feed the chicken
on. The man can only take one thing and himself across in the boat at any one time.
Without killing any animals or letting another animal eat an item or animal, how will
the man get across?

 You are in a room with three light switches. Each switch controls one of three light
bulbs in the next room. You have no way of seeing into the next room unless you
walk out and around via a corridor. You must determine which switch controls which
light bulb. All lights are off. You may flick only two switches and enter the room with
the light bulbs only once. How would you determine which switch controls which
light bulb?

 How would you design a spice rack for a blind person?

 Join all of these 9 dots together with only 4 straight lines.

 Section 6: Candidate Case Interview Narratives 186

6. Candidate Case Interview Narratives

So far we have presented many real life case questions and given you a possible solution in
a very structured way using text and diagrams. In this last section of the guide, we wish to
tie everything together and present a sample of case interview transcripts, or narratives as
we prefer to call them. Each narrative on the following pages is based on the actual
transcripts of real life case interviews. We hope that these consulting case interview
narratives give you a better indication of how a real case interview may unfold and to
demonstrate how the analysis could flow.

Narrative 1 – A Brain Teaser

After some brief ‘getting to know you’ style questions such as, “what was your favourite
course at university?”, the interviewer launched into a brain teaser style case question.

Interviewer: So… let’s see if you like puzzles.

Candidate: Sure.

Interviewer: Suppose there is a round chocolate cake, out of which somebody has taken a
slice. The remaining cake has to be divided equally amongst two boys by a blind man. He has
nothing except a cutting device. How would you do it?

Candidate: Ok. Give me a moment to think over this.

Interviewer: Yeah, sure.

Candidate: Ok, tell me one thing, is the cake flexible enough to be folded?

Interviewer: Yes, you can assume that.

Candidate: So, in that case the blind man can fold the cake right from the inside edge of the
slice taken out, into two parts, in such a way that the outside corners of that cake fold into a
semi-circle.
187 ACE THE CASE

Narrative 1 – A Brain Teaser (Continued)

Interviewer: Let’s assume that the slice is not symmetric in shape. The person, who has
taken it, has cut it in a haphazard manner. Then what do you do.

Candidate: Then we can try one other thing. Can I assume that the cutting device is a knife?

Interviewer: Yes

Candidate: And the knife is longer than the diameter of the cake?

Interviewer: Yes. What do you have in mind?

Candidate: Well…the blind man can sense the shape of the slice taken out, and place the
knife horizontally on the cake with one end touching the mid-point of the empty slot of the
slice taken, in such a way, that it covers the maximum area of the cake. There will be high
chance of that chord being the diameter of the cake. He can cut the cake into half on that
line.

Interviewer: But that is just an approximation.

Candidate: True, but it will be very near to the exact half.

Interviewer: Yes, you are right. But can you think of any other way of cutting it?

Candidate: (After thinking a while) No.

Interviewer: Let me give you my solution to this. The blind man can cut the cake vertically
instead of cutting it horizontally. In that way, each of the boys will get half of the sliced away
portion.

Candidate: But that is also an approximation I guess. How can a blind man know where is
exactly half the height of the cake is?

Interviewer: See… there can be number of answers to this case. This is just an example of
lateral thinking to the problem.

Candidate: Yes, but…ok, that is nice.

 Section 6: Candidate Case Interview Narratives 188

Narrative 1 – A Brain Teaser (Continued)

The candidate did not argue further with the interviewer, although she was not satisfied by
his answer.

Candidate: I have just thought of a more accurate way to divide the cake.

Interviewer: Ok, I’m listening

Candidate: Well… since the blind man has a knife which is larger than the actual cake, he
could balance the cake on top of the knife blade, until it balances perfectly. He will need
good judgement to do this and it can be done by touch alone. He may however, need the
two boys help to do this task. At this point of balance he knows that on each side the blade
the cake has equal weight and hence is an equal portion. He can then push the cake down
over the blade to get two equal halves for the boys.

Interviewer: Now that’s another good idea, well done!

189 ACE THE CASE

Narrative 2 – A Business Case

After some behavioural style interview questions such as, “tell me about a time when you
influenced someone”, the interviewer launched into a business case style question. Note:
This question is from India and was asked back in 2006.

Interviewer: Let me now ask you one case study.

Candidate: Ok

Interviewer: There is an electric tower manufacturer in India, who manufactures steel

towers via which electricity is transferred from one place to another. For example, the
electricity which you are consuming in Mumbai might have come from Himachal Pradesh.
The annual sales of the manufacturer are INR 1,000 million, and they want to increase sales
up to INR 3,000 million in a span of 3 years. How can they do this?

Candidate: Let me make sure that I understand the whole problem. There is a steel tower
manufacturer whose annual sales are INR 1,000 million, which he wants to increase up to a
level of INR 3,000 million in three years. We have to suggest to him a game plan to achieve
this. Are there any other objectives?

Interviewer: You are right. No, there are no other objectives.

Candidate: Just give me a few seconds to jot down my thoughts.

Interviewer: Sure

Candidate: Ok. I would go with the following framework:

 Get the overview of the steel tower industry, its growth rates, existing competition,
and barriers to entry, etc.
 Get an overview of the prevailing pricing environment and any expected changes
therein, if any.
 Identify potential industry verticals or geographies where the market for steel
towers is under penetrated/ un-organised.
 Assess capabilities of the company in terms of manufacturing, marketing and sales
expertise, both domestically and internationally. Also check the financial position of
the company if additional funds are available.
 Section 6: Candidate Case Interview Narratives 190

Narrative 2 – A Business Case (Continued)

Interviewer: Ok. So go ahead with your strategy.

Candidate: Fine. So first of all, can you tell me how big the steel tower industry is in India
and what is the market share of the company?

From here we have condensed the exact transcript of the conversation, and simply
consolidated the data provided by the interviewer in fewer responses, which was actually
revealed after asking about each aspect individually

Interviewer:

Industry Overview

Company is the most dominant player in the industry with 20% market share. There are
eight other players in the market. Our client has a dominant position in the market because
it is the oldest player (operating since last 20 years). There is no technology involved in
building a steel tower, but heavy initial investment required has limited the no. of players to
a handful. The industry is pretty mature and growing at a nominal annual CAGR of 10%

Pricing Overview

The pricing of all the players in the industry are same. Nothing can be done regarding the
price change. All players operate on the same margin level.

Potential Expansion

The company has its revenue break-up as – 60% from India, 40% from North Africa. (Here
comes some crucial information). The industry in North Africa is growing at a moderate rate
of 10-12% CAGR. Company enjoys a 25% market share in that industry.

Capabilities

Company is already running at its fullest capacity at three of its manufacturing locations in
India, which are widely dispersed over the country. If any additional demand comes,
company gets that manufactured from other suppliers (which have excess capacity) on an
outsourcing basis. It has all the manufacturing expertise needed. It also has access to debt
and capital markets from where it can raise additional funds, if needed. And since company
191 ACE THE CASE

Narrative 2 – A Business Case (Continued)

is already doing business internationally, it has management team capable of handling
domestic and international operations.

Candidate: OK. All this is interesting. So first of all, let me make an estimate what will be the
sales of this company after three years, assuming the growth rates mentioned for the North
African and Indian industry, and assuming that its market share will remain intact, if not
increase.

India

Total market now is (1,000 x 60%/20%) around INR 3,000 million. At a CAGR of 10%, it will
reach around INR 4,000 million in 2009. So company’s share out of it = 4,000 x 20% = INR
800 million

North Africa

Total market now is (1,000 x 40%/25%) around INR 1,600 million. At a CAGR of 12%, it will
reach around INR 2,200 million in 2009. So company’s share out of it = 2,200 x 25% = INR
550 million

That makes a total of INR 1,350 million in 2009 (3 years’ time). Now tell me is company
willing to expand to other geographies?

Interviewer: It is you who have to advise the company.

Candidate: OK. Tell me how is the market for steel towers in the Americas, Europe, and
APAC?

Interviewer: Americas have no potential. It’s Already a saturated market. APAC has a big
market but the customers (electricity suppliers) prefer Malaysian distributors there. So you
have no chance of expansion there. Europe also is an emerging market, with current sales in
line with those in North Africa (i.e. 1600 million). Actually there have been recent bombings
there and many of the towers have been damaged or destroyed, and are being rebuilt.
There are no local players in the steel tower industry operating there.

Candidate: That’s great news. So company can make a big entry into Europe, with already
having expertise in manufacturing and international operations management. Though it is
 Section 6: Candidate Case Interview Narratives 192

Narrative 2 – A Business Case (Continued)

short of manufacturing capacity, it can get the towers manufactured by other suppliers.
Does the company have any contacts with the suppliers outside India?

Interviewer: Yes. Company has been outsourcing its manufacturing to Indian as well as
international suppliers.

Candidate: Oh great. By getting it manufactured somewhere near to Europe, the company

can save on transportation costs from India to Europe allowing them to keep margins from
getting too small. Are there any government regulations or any other inhibitors to the entry
such as pricing?

Interviewer: There are no government regulations. Pricing is almost same globally, with the
same margins.

Candidate: ok. So I can assume that the company will be able to get 50% market share of
the industry in Europe in 3 years, as there are no local players operating and the industry is
under penetrated?

Interviewer: That is too high (given it has gained just 20% in India in 20 years).

Candidate: Ok, then I would revise that to 15%. Should that be fine?

Interviewer: That’s more realistic, yes.

Candidate: And how is the growth rate in Europe?

Interviewer: It will be around 20% annually.

Candidate: So companies share from Europe - Total market now is 1,600 million. At a CAGR
of 20%, it will reach around INR 2,800 million in 2009. So company’s share out of it = 2,800 x
15% = around INR 400 million.

That makes the total revenues of company in 2009 to be 1x750 million (India + Africa +
Europe). This is still well short of the 3,000 million target, so we need additional options
rather than just international expansion. Perhaps some kind of diversification strategy?

Now a thought has just struck my mind. I am going to want to research on the business of
193 ACE THE CASE

Narrative 2 – A Business Case (Continued)

leasing/ selling steel towers to the communication service operators. Since
telecommunications is one of the largest growing industries in India, APAC, and Africa, I
think that it will have huge potential. This model comes to my mind by looking at this
business growing in North America, where companies are doing billions of dollars business
by just leasing sites and towers to cellular telecommunications operators. Can you help me
out in doing a bit research on this?

Interviewer: Sure

Candidate: How big is the market in India for this business?

Interviewer: Around INR 3,000 million, growing at a CAGR of whopping 60%.

Candidate: So in 3 years, this market is going to touch around 10,000 million. If we take a
conservative estimate, I think our client company can gain at least 10% share in the market.

Interviewer: Sounds realistic.

Candidate: So that’s a jackpot. We have INR 1,000 million coming from there. So we have a
total of INR 2,750 million. And I believe the rest INR 250 million, we can get it by entering
into international markets like North Africa, where we already have a strong presence.

Interviewer: Yes

Candidate: In summary I would advise the company, first to make an entry into the
European markets where it can rapidly gain market share, taking INR 400 million into its
annual revenues in 2009. It should also consider expanding horizontally into the
manufacturing/ leasing of towers for mobile service operators, and monetise the growing
telecommunications market in India and North Africa. Leveraging its strong brand name and
positioning in these two markets, our client can easily gain somewhere around INR 1200 -
1500 million of annual revenues in 2009. Adding to this, the normal revenue contribution
coming from electricity towers in India and North Africa, our client can easily ramp up its
sales to INR 3,000 million in 2009. Actually it can also go ahead of the target by following
aggressive marketing and sales tactics in its core market.

Interviewer: A comprehensive strategy. Well done, and thank you.

 Section 6: Candidate Case Interview Narratives 194

Narrative 3 – A Logic Problem

This is an example of how a case interview can be rushed, if you do not take the time to
explore the issues before making assumptions about the problem. Think about how you
could have answered this question better and what answer the interviewer was looking for.

Interviewer: There is a wheat packing machine with a big hole at the top of it, wherein
donkeys pour wheat into it. There are a number of donkeys who are carrying wheat in the
baskets on their back. The man controlling these donkeys can make them walk, trot, run or
gallop. The wheat is packed into poly-bags and is sent to the market for sale. Now the
objective of the problem is to suggest to the person controlling the donkeys, whether he
should make the donkeys walk, trot, run or gallop.

Candidate: What is the packing speed of the machine?

Interviewer: There is no constraint on the speed of the machine. It can pack wheat into
wheat bags infinitely fast.

Candidate: Is there any constraint in terms of number of poly-bags available?

Interviewer: No

Candidate: What is the maximum speed at which a donkey can move?

Interviewer: We have infinite number of donkeys who can run at an infinitely fast speed.

Candidate: What is the demand of our wheat in the market?

Interviewer: How is that relevant?

Candidate: To reduce our inventory costs, we should not just stack up wheat bags. Meaning
thereby, we should not produce more than what we can sell. By doing that, we can
minimise on storage costs.

Interviewer: But I never said if that was our objective. We can pack the wheat and stock it in
our storehouse.

Candidate: But there is no logic in that. What is the need of producing in excess of demand?
195 ACE THE CASE

Narrative 3 – A Logic Problem (Continued)

Interviewer: Ok. For a moment let us say that our objective is to minimise our inventory
cost. Then what is your final answer?

Candidate: In that case, we should scour through our sales data and customer records to
identify the potential demand for wheat in the market, and should rationalise our packing of
wheat in such a way that there is no killing of demand, and at the same time there is no
excess stock of wheat bags. This approach will help us to minimise our inventory storage
costs.

Interviewer: That is good. Thank you

 Section 6: Candidate Case Interview Narratives 196

Narrative 4 – A Business Case

Interviewer: There is a refrigerator manufacturing company. As a management consultant,
you have to analyse the current sales incentive policy of the company, and suggest any
changes therein which make most sense for the company.

The current sales incentive policy is as follows:

 The minimum guaranteed salary for a salesperson is Rs. 6,000.

 The average salary of a salesperson is Rs. 10,000. This is the salary which one gets if
he meets his annual sales target. Meeting the annual sales target means the
achievement of 80% to 100% of target.
 If the actual sales fall below 80% of the annual target, the salary drawn by the sales
person is Rs. 8,000.
 If the salesperson beats the target by more than 10%, he earns Rs. 12,000.

Candidate: Ok, so this means their sales incentive is based on the value of sales, rather than
on any other factor, right?

Interviewer: Yes.

Candidate: OK. So first of all, let me ask one question. Does the client company manufacture
only one type of refrigerators or a variety of them?

Interviewer: That is a good question. The company manufactures four types of refrigerators.
Their respective sales price and profit margin (post S, G & A expenses) is as follows:

Product Sales Price Profit margin

A Rs. 8,000 15%
B Rs. 10,000 14%
C Rs. 15,000 10%
D Rs. 5,000 20%

Candidate: After analysing the above data, I would observe that there is a flaw in the
current sales incentive policy of the company. The company is currently giving uniform
incentives on all of its products, although they entail different selling prices and profit
margins. Company should rationalise its incentive policy to suit its interests.

Interviewer: That is an interesting observation. How would you go about that?

197 ACE THE CASE

Narrative 4 – A Business Case (Continued)

Candidate: Can you tell me the sales break-up of the company according to its different
products?

Interviewer: That is an irrelevant question.

Candidate: Ok. So now I would like to frame the final answer.

Interviewer: OK, go ahead.

Candidate: The company should focus on the sales of product D, because it enjoys the
highest operating margin. Currently what the company is doing is rewarding more to its
sales representatives for selling refrigerator C (since it has highest sale price), but which has
lowest operating margin. Focussing on the sales of product D will result in higher Return on
Investment (ROI) and will enhance shareholder value.

Interviewer: But the company is making highest profit on product C in terms of absolute
Rupee amount. Shouldn’t the company focus on higher absolute profits instead of higher
profit margin?

Candidate: No. The company should always focus on higher operating margin instead of
higher absolute profits. In the current case, higher profits by selling product C will come on
the base higher invested capital (as it has higher cost of production), which will more than
offset the incremental absolute profits. So, if the company wants to increase its shareholder
value, it should push for the sales of product D instead of product C.

So, my final recommendation for the company would be that it should re-design its
incentive policy in such way that sale of product D is maximum. This can be done by offering
differential sales incentive for different products in descending order of the operating
margins offered by them.

Interviewer: That is a good conclusion. Thank you.

 Section 6: Candidate Case Interview Narratives 198

Narrative 5 – A Business Case

In this case interview question, the participant did not have any accounting, finance or
economics background. They were a science student. You will see that to do well in a case
interview, you don't need to have all of the necessary knowledge and techniques, but
instead ask the right questions by following the interviewer’s lead.

Interviewer: Let's try a business case. We once had a client, a small ice cream shop, which
was not making a profit. It was located in a shopping centre, near the food court. This ice
cream shop was just a typical shop with a counter and it served ice cream, sundaes, shakes
and soft drinks. It had 4 employees: a cashier, two serving people, and a cleaner. It was part
of a franchise. The franchise supplied all of the goods, like ice cream, cones, spoons,
napkins, etc.

Candidate: I see, so we need to know why it's not making any profit. Is there a particular
segment of the ice cream shop where you want me to start my assessment from?

Interviewer: Nothing in particular, but it would be great if you will start by telling me how
the income is derived in the ice cream shop.

Candidate: Okay, first I will discuss revenue and cost. Revenue would come from the sales of
the goods sold in the ice cream shop, like sundaes, shakes, soft drinks, and of course, ice
cream. Cost will then primarily come from salary of employees and rent of the shop. Added
to that, there are also costs from materials needed in the shop like napkins and spoons.

Interviewer: Right. But let me also add the franchise fee that they pay monthly and the
maintenance costs of their machines.

Candidate: Oh, that's right. Going forward, do you have any numerical information
regarding their costs and revenues?

Interviewer: Yes, total sales typically reach 5000 units sold per month at $5/sale average.

Candidate: Okay, so that’s $25,000 in monthly revenue.

Interviewer: Right. On the cost side, there’s $15,000 for wages, $10,000 for rent, $10,000
franchise fee, and $1,500 maintenance cost per month.
199 ACE THE CASE

Candidate: That would be around $36,500 for cost. There would be no profit at all. The ice
cream shop is losing $11,500 every month!

Interviewer: Precisely. And also, the cost of goods sold is half of the revenue. So that would
be a further $12, 500 negative income. Well, then, how can you increase the profits?

Candidate: We can attack the problem from different perspectives. First, I would start
looking at increasing revenue. How about promoting aggressively the items sold in the ice
cream shop?

Interviewer: It can be done. However, the franchise is the one providing the price list and
posters.

Candidate: I see, how about taking a look at the product itself? Maybe we can advise the ice
cream shop to sell the flavour with the highest demand?

Interviewer: That can also be observed. Unfortunately, the flavours are rotated on a
monthly basis. The milk shake though, is average, and can be improved.

Candidate: Is it the only ice cream shop in the area?

Interviewer: Yes, it’s the only ice cream shop near the food court.

Candidate: In terms of margin, do we have information?

Interviewer: We have found out from their sales data that ice cream and soft drinks have
the lowest and highest margins, respectively. Sundaes and milkshakes have good margins.

Candidate: How about cutting cost? Like reducing the number of staff? Perhaps they can
multitask, like the cashier can do cleaning? There might also be downtime during the day
when they would need not much staffing?

Interviewer: That can be done, I think. Good.

Candidate: Thanks. I assume rent is fixed so we can’t do anything about it. How about
maintenance issues?

Interviewer: Right, rent is fixed. In terms of maintenance, they always have a broken
milkshake machine that cannot be used during repair sessions.
 Section 6: Candidate Case Interview Narratives 200

Candidate: I think I have all that I need. I can probably lay down my findings to you.

Interviewer: Okay, but how about looking at the cost of goods that they are selling?

Candidate: Oh! I’ve overlooked that one. But, the supplier is the franchisor, right? Is it a
premium brand and would there be other suppliers around?

Interviewer: Yes, it is a premium brand. We have to wait until the contract expires to look
for a new one.

Candidate: I see. So, to summarise: I have the following approach:

Revenue - Increase the ice cream shop's promotions. Let’s put the high margin items like
soft drinks as the most visible among the goods sold. We are sure to increase revenue from
this as the ice cream shop is unique within the vicinity.

Cost - I would check to see if it is possible for the employees to multitask, and possibly, have
one less person during downtime shifts. The milkshake machine needs to be replaced again.
I know it’s a high one-time cost, but the benefits would be felt in the long run, as we have
less maintenance cost and higher milkshake revenue due to the machine being more
available. And also, like what you have mentioned, we can change where raw materials such
as ice cream, milk, flavouring etc. are sourced from once the existing contract expires.

Interviewer: Very well said. I am happy with the recommendations. For someone without a
firm background on finance, you seemed to follow what I was leading you to. Actually, there
are also other approaches and suggestions to the ice cream shop. We would first look at the
competition and the price. Since there are no other shops like that around the area, we can
increase the prices by as much as 8-10%. This would greatly complement the promotions
approach that you mentioned.

Candidate: I greatly agree. That’s a very good and valid plan. How about the cost side?

Interviewer: For cost, we looked at employee training. There might be some lapses in
procedures that hinder profit. Maybe someone keeps on breaking the milkshake machine
due to improper usage. We can also change the suppliers after the contract expires. Do you
have any considerations when changing suppliers?
201 ACE THE CASE

Candidate: I am just thinking of how the prices differ between suppliers and how long the
contract is.

Interviewer: Those are valid points. You also need to consider the added costs, like if the
new contract would demand a manager onsite to deal with daily tasks. And also these
recommendations should always be in the long term as we cannot realise the effects of
profit methodologies without testing it for months.

Candidate: I very much agree. I think most of my recommendations are for the long run.

Interviewer: Right! I think we are good. Thanks and good luck!

Candidate: Thanks! I enjoyed this interesting conversation.

 202

Conclusion

You have now reached the end of our ‘Ace The Case’ management consulting case interview
guide. Inside you have found detailed information on the consulting case interview and
many examples of how to answer different types of case questions common amongst
consulting firms around the world. Hundreds of thousands of individuals apply to
management consulting firms every year hoping to land their dream job, so you are
privileged to have witnessed second hand, dozens of case interview questions which have
actually been asked to real life job seekers and university graduates like yourself.

By reading this guide you have gained an advantaged in the competitive interview process
as you now have a better idea of what to expect when you walk in the door. Our proposed
solutions were provided to demonstrate how to go about intelligently answering case
interview questions. We also provided several hints, tips and tricks for simplifying complex
problems and bringing structure to your answers. This should all help put you ahead of your
fellow candidates who may not even know what a case interview is, let alone the different
types and styles or how best to answer one.

At the end of each section you would have seen additional case questions for you to try
yourself in your own time. This is essential if you truly want an edge against the
competition, as they will allow you to practice answering management consulting case
based interview questions, ensuring you improve. Try using a friend to help you and be
conscious of sticking to a set length of time.

We hope you have enjoyed reading this guide and have gained an insight as well as some
experience when it comes to answering case questions in management consulting
interviews. We wish you the best of luck in applying for consulting jobs and in every round
of your consulting interviews. Remember to always be yourself, structure your answers, be
aware of time and most of all have fun with the case questions because this ensures that
your all-important personality shines through, in addition to your natural abilities in
business, mathematics, logic, analytics and creativity.

Good luck in scoring your dream consulting job and launching yourself into the rewarding
world of management consulting.

Sincerely,

The AceTheCase.com team