IIM BANGALORE

CASEBOOK 2019-20

Volume 9(B)

ICON – Consulting Club,

IIM Bangalore 1
Accenture Strategy

2
Unconventional – TRANSPORTATION
Candidate : Kushagra Agarwal Company : Accenture Strategy Why don’t you start with looking at the qualitative factors first. What
Sector : Transportation Type of Case : Unconventional Interviewer
problems do you think are faced by the drivers and customers?
Sure sir. To begin with, I would like to look at the potential problems being
Problem Statement: Our client, a company in the transportation business, is facing faced by drivers. The daily revenue of a driver can be calculated by
problems. Identify the problems and give recommendations. multiplying the number of rides per day with the revenue earned per ride.
Hence, the problems a driver might face can be due to a lesser number of
Kushagra
rides being offered to the driver on the platform, or due to lesser revenue
The Interview earned per ride. Another source of problem can be the fact that
Interviewer Good morning Kushagra, how are you? customers cancel their rides when the driver is about to reach the pickup
location, leading to lost time and fuel in travelling this distance.
Kushagra Good morning sir, I am good.
Those are good points. What about the problems being faced by the
Interviewer Very well. So tell me something about yourself. Interviewer
customers?
The interviewee gave the prepared answer. The interviewer then asked I think customers face a number of issues. Sometimes drivers cancel rides
Progress questions about one of the interviewees’ internships and his value based on the destination. Many times it takes a long time for a customer
addition to the firm as an intern. Kushagra to be assigned a driver. Further, sometimes the driver is actually different
Okay, so let’s get into the case. Our client, a company in the from the one shown on the platform. All this leads to a lack of trust in
Interviewer transportation business, is facing problems. The client wants us to using the firm’s platform.
identify the problems and give recommendations. Interviewer What problem do you think all this creates for the firm as a whole?
Before proceeding with solving the case, I’d like to ask a few clarifying (After thinking for a minute) I think the main problem that the client
Kushagra Kushagra
questions about the client. might have to deal with is the Customer-Driver Expectation Mismatch.
You can assume the client to be a cab aggregator like Uber/Ola and Now that you have identified the main problem, what recommendations
Interviewer Interviewer
proceed with the case. would you like to give to the client?
Okay, so we can look at the problems being faced by the client in I think a robust two-way rating system can be implemented by the firm, if
quantitative/financial terms, or qualitative terms, from the point of view not already present. From the driver’s point of view, the client can hold
Kushagra
of the customers and drivers. Do you want me to look at it from both the Kushagra training sessions to improve customer handling by the drivers. The client
angles, or should I be focussing on one? can also try to educate the customers to be more sensitive towards the
drivers. All this can help reduce the expectation mismatch.
3
Unconventional – TRANSPORTATION

Approach

Problems being faced by a firm in the transportation business

Quantitative Qualitative
Factors Factors

Drivers Customers

Rides per Revenue per Ride Ride Long waiting Different

day ride cancellations Cancellations times driver

Problem : Customer-Driver Expectation Mismatch

4
Alvarez & Marsal

5
Market Entry – WINDMILL MANUFACTURER
Candidate : Ragashree Tiwari Company : Alvarez & Marsal
Sector : Energy Type of Case : Market Entry Interviewer Assume that the company is financially capable of setting up a plant. Also,
the existing manufacturing unit is operating at 50% of its total capacity.
Ragashree Then we can consider manufacturing at the Chinese plant for the initial
Problem Statement: A Chinese windmill manufacturer has decided to expand to the days in case transportation costs are lower than the fixed cost of setting
Indian Market, what factors should they consider for planning this expansion? up plant. It would also help in estimating demand for windmills and
therefore making a decision on the feasibility of an Indian manufacturing
The Interview unit and its capacity.
Interviewer Good Morning Ragashree, how are you doing today? Interviewer Are there any other factors that you would consider?
Ragashree Good Morning Sir, I am doing good. Ragashree Yes. I will look at the legal and political aspects of setting up
manufacturing unit as well as for transportation. For example, are there
Interviewer Very well, let’s get started with the case right away. any additional subsidies for manufacturing and/or transportation of
Your client is A Chinese windmill manufacturerlooking to set up shop in windmills since that would affect the total cost. Also I would see if there
India. What factors would you take into account? any legal constraints for both options.
Ragashree Okay, so a Chinese manufacturer of windmills is looking to enter the Indian Interviewer Great. I think we can end here.
market. Have they made the decision or do you want me to analyse the
overall feasibility of expanding? Also, when are they planning to enter the
market?
Interviewer Yes, they have decided to expand to the Indian market as soon as possible,
but they have not decided the manner of expansion.
Ragashree Alright, so are they just going to export the windmills to India or are they
going to set up manufacturing facility here?
Interviewer They are weighing both options, what factors would you consider while
making this decision?
Ragashree Firstly, I would consider the total cost of setting up a manufacturing facility,
along with the legal and political aspects of it. Is the company financially
capable of bearing the cost of set up. Next, I would examine the utilisation
of the existing Chinese manufacturing units.
6
Market Entry – WINDMILL MANUFACTURER

Approach

Options for
expansion

Setting up
Existing unit
unit in India

Capacity Transportation Political, Legal

Utilisation costs Set Up costs
concerns

7
Operational Optimization - GARAGE
Candidate : Akshay Saraogi Company : Alvarez and Marsal Akshay I will start by making a flow of the entire garage (Starts drawing a flow
Sector : Services Type of Case : Unconventional diagram while showing the interviewer). I will assume that the cars come
in and go to a washing area post which regular maintenance like oil checks
and tuning are carried out. If there is some major issue the cars move on
Problem Statement: There is a garage operator who is looking to improve efficiencies
to specialized tasks. After these are over, tire pressure is checked and the
and reduce cost. How will you go about it?
cars leave. Do you want me to build a more detailed flow?

The Interview Interviewer No. This is sufficient. Tell me how you will calculate efficiency.
Interviewer Good Morning Akshay, give me a short introduction of your self. Akshay Since process is manual, throughput will be varying within the day. I will
segregate processes and then calculate hourly, shift-wise and daily
Progress Answered. She was interested in the candidate’s work experience, typical
throughput per unit of labour employed of each individual process.
of most A&M interviews.
Interviewer Okay. How do you plan on improving efficiencies
Interviewer Great, let’s get started with the case. Your client is a small cab aggregator
owning about 100 cars. He operates a garage to maintain these cars. How Akshay Since the client does not have enough vehicles to warrant the cost of an
can we improve the efficiency and reduce costs in his garage? automated system, I will focus on the trend of hourly throughput within a
shift. As the day progresses, it is likely that the efficiency of workers goes
Akshay Okay. So do we want to look at improving costs and efficiencies for just the down. To counter this we can strategically position breaks so that the
garage or the overall business? workers get time to recover a bit before resuming work. This will increase
Interviewer Lets focus on the garage for now. the average efficiency of each shift. Also, we can consider decreasing the
duration of shifts in a day while increasing the number of shifts so that
Akshay Alright. I would like to know a little more about the garage itself. Does the new workers coming in the new shifts will perform more efficiently. This
client use the garage just for the cars he own or does he provide services needs to be weighed against the cost of employing additional labourers.
to others as well? Also, what types of services are covered in the garage? Is
there a flow to the process? How often are cars maintained? What is the Interviewer That’s a fair point. What are the costs that the garage incurs?
daily volume of cars that the car services on an average? Are operations Akshay The garage incurs fixed costs such as cost of equipment like water
manual or automated? compressor, generator etc., rent, electricity, other utilities and wages of
Interviewer The garage is meant for the vehicles that the client owns. Make workers and variable costs like consumables such as brake fluid , oils and
assumptions regarding the flow of the garage. Assume all cars that the grease and costs of spares.
client owns undergo some for of service in the garage on a weekly basis. Interviewer Which of these costs constitute a major portion of the expenses for the
Assume most operations to be manual. client?
8
Operational Optimization - GARAGE

Akshay Fixed expenses like wages, rent and utility will constitute the major portion Approach
of expense. Other fixed costs like machinery is depreciated over the life of
asset and hence should not be high. Variable costs for regular maintenance
should be fairly low as well
Interviewer Ok, good. That will be all Akshay. Please wait outside for your next round.

9
A.T. Kearney

10
Mineral Ore Processing – Efficiency Improvement
Candidate : Swayam Tibrewal Company : A.T. Kearney Interviewer There are around 15 different kinds of minerals processed, even ores
Sector : Natural Resources Type of Case : Efficiency Improvement themselves have several kinds. The client first procures the raw material
which is followed by the Mineral Breaking process, further broken minerals
Problem Statement: Your client is a typical mineral ore processing company based out are put in a furnace for the soaping process. Each kind of ore has a
of India. Even though the company is profitable, it has seen that its margins are stable different temperature to be set at for the separation of different kinds of
whereas the margins of its competitors are steadily rising. It wants to know what NEW minerals to take place. This is followed by shape/ size processing.
can be done? Candidate In the first step of procurement, the variability in procurement of minerals
of different kinds from different suppliers could be used find trends and
The Interview the efficiency could be increased by acting forward in a way which reduces
any holding costs/ ordering cost. In the metal breaking process, optimal
Interviewer Good Morning, Let’s see what is there on your resume (Analytics based
size of each mineral could be found out to make the remaining process
experience)
faster. In the soaping process, one can identify the various parameters such
Candidate Good Morning, Sir. Sure, Sir. as temperature, pressure, chemical mix, raw material mix, quantity etc
which is essential to the process. Basis that, we can prioritize on the most
Interviewer Okay, let’s now move to the case. ~ Explains the problem
significant one to find the best optimal parameter solution for an efficient
Candidate Could you let me know in last how many years is the trend being witnessed separation. For shape and size processing, the best optimal parameters in
by the client? Is it for any particular business division or customer target the earlier process should take into account for reducing wastage in shape
group or geography? and size processing.
Interviewer Trend was visible in the last one year, and it is for the entire business as a Interviewer Okay, good. Is there any other thing one can do to improve process
whole, all customers in general , all over the country. efficiency?
Candidate Do we have any information on what has the competitors done in the past Candidate We try to find process gaps to work upon them through business process
one year? re-engineering. We can identify processes which can be automated.
Interviewer They used data analytics. The client wants us to use analytics to find ways Optimal size of furnace could be identified to reduce costs and wastage.
to improve margins ultimately. Any redundant/ non – value adding process’s time could be reduce or
completely removed.
Candidate Profit margin depends upon gross revenue, costs and product mix. How
many different types of minerals does the client process? To use analytics, I Interviewer Good, thank you.
would go ahead with the analysing the client’s value chain to find ways to
improve efficiency and thus margins? What is its value chain?
11
Mineral Ore Processing – Efficiency Improvement

Approach

Profit Margin

Revenue Cost Product Mix

Shape/Size
Procurement Breaking Soaping Separation
Processing

Best optimal size Make it faster/ Reduce wastage

Reduce holding Prioritize the
and ordering for each mineral parameters such Automate
cost as temp,
chemical mix etc.
to find best
optimal solution

12
Telecom – Profitability Improvement
Candidate : Swayam Tibrewal Company : A.T. Kearney
Sector : Telecom Sector Type of Case : Profitability Improvement Interviewer No. This approach may not be helpful. Look at the costs. It is higher. Can you
think of a more practical approach to look at it?
Problem Statement: Your client operates in the telecom sector and is in huge losses. It Candidate Should I do competitor benchmarking looking at their margin trends and
wants you to figure out why and suggest some ways to improve the condition. identify which cost proportion is higher for us?
Interviewer Good idea, but how will you do that?
The Interview
Candidate We can look at the client’s and its competitors’ financial statements.
Interviewer Good Morning, how are you doing? Interviewer Okay, yes. What are the different components do you expect in the balance
Candidate Good Morning, Sir. I am doing good, thank you. sheet for the client?
Interviewer Okay, so our client is in the telecom sector and is in losses. What to do? Candidate The balance sheet comprises of assets and liabilities. Its assets consists of
the cable tower, related infra and equipment, cash etc. The liabilities are the
Candidate Is this specific to our client or is the situation similar for other players in debts. I assume, it is a asset heavy industry.
the same space as well?
Interviewer Yes, you may so. What can you infer from this? What do you expect to be
Interviewer Our client was in losses since 2-3 years. However, now the losses have significant in income statement?
increased significantly as compared to others. Also, our net losses are
much higher than other players in the market. Candidate For asset heavy industry, from accounting point of view, depreciation may
be a major cost. In case our client has borrowed more for its capital
Candidate What does the client do exactly?
investments, the interest it may be significant as well. We can look at the
Interviewer They are into manufacturing, setting up and maintenance of cable towers EBIDTA and EBIT margins for our client and competitors.
for telecom operators, end to end.
Interviewer Right, our EBIDTA margin is around 10%, a little higher than competition.
Candidate Do we have any information on whether margins are much lesser for a But our EBIT margin is negative 5%. Much lower than others. Any other
particular geography, any particular business customer? industry where this is seen? What do you suggest to the client?
Candidate This means that our depreciation costs are very high. Hotel and airline
Interviewer No such trend is visible. It is uniform across geographies and customers. industry are asset heavy as well. From accounting perspective, we can
Candidate To evaluate the reason behind losses, I would divide it into Costs and increase the machine lifetime by investing in better or technologically
Revenue. Either our costs are much higher or revenue too low. Are we advanced ones. We can try to increase the salvage value. We may also want
getting paid much lesser than our competitors? to see if some business model innovation or other sources of revenue is
possible. Thank you.
13
Telecom – Profitability Improvement

Approach
Liabilities

Loss

Interest

Revenue Cost
Balance Sheet

Depreciation

Income Statement

Assets

14
Telecom – Customer Service Improvement
Candidate : Kavya Marupudi Company : A.T. Kearney
Type of Case : Customer Service Improvement Candidate So, customers are not happy with the customer service. We can break the
Sector : Telecom Sector
entire customer journey. First they dial a number, fill in the start up menu
followed by a waiting time to connect with the personnel and finally
Problem Statement: Your client operates in the telecom sector & has witnessed problem resolution.
unsatisfaction from customers. We need to figure out the reason & suggest solutions.
Interviewer Okay, what are the typical reasons for which customers dial in?
The Interview Candidate Customers could call to get some information on offers, recharge,
complaints on service, to stop or renew a plan and other general queries.
Interviewer Good Morning, how are you ?
Where does the problem lie?
Candidate Good Morning, Sir. I am fine, thank you.
Interviewer Yes, customers wait too long before they speak to someone.
Interviewer Okay, so our client is in the telecom sector and has faced dissatisfaction
Candidate If the wait time is long, two possible factors arise. Either interarrival rate is
from customers. Can you help me in finding why ?
high and variable or the service rate is low and variable. Are there any
Candidate Is this specific to our client or is the situation similar for other players in shortage of manpower?
the same space as well? Also, where does the client operate and what is its
Interviewer Hmm, not really.
value chain?
Candidate It seems the arrival rate is high and variable. Do we have the breakdown of
Interviewer The client is based out of Kenya and is the market leader. Others are
the proportion of calls we get for general queries and specific ones?
dissatisfied with others as well. The client provides all kinds of services call,
data etc. It operates its own customer care centre. Interviewer There is a significant proportion of calls for both, and our client did not
Candidate Does it seem that the reason behind customer dissatisfaction is same account for general queries calls while optimizing tele-callers. What should
across players? the client do?

Interviewer It doesn’t seem so. The service is top-notch, that is why the client is risen Candidate Seems like this is the issue. The client can either increase its manpower or it
to the top. There seems to be an internal problem. can try to reduce the calls for general queries. This can be achieved by two
ways, the process can be automated or information that is generally sought
Candidate Okay, if there is an internal problem I would try to find out the customer in such queries can be tried to be conveyed to them through other
pain point. I would break into three parts, first is the before getting the mediums.
product, second during the use of the product and third is customer
service. Since service is second option neglected. Interviewer Yes, right. Thanks.

Interviewer Yes, there is no problem in first part also.

15
Telecom – Customer Service Improvement
Approach Internal Problem

Information to Customer During product

get product Service usage

Service Process

Start-
Customer Connect with Problem
Call Up
waits Teller Solving
Menu

Low Service
High Arrival Rate
Rate

General Queries
Existing
New Customers
Customers

Specific
Problems
16
Unconventional – SPORTS
Candidate : Avi Gupta Company : AT Kearney
Avi Sir, there are 3 major steps to be looked at:
Sector : Sports Type of Case : Unconventional 1. Players: We can collaborate with schools, colleges etc
2. Sponsorship
Problem Statement: Devise a strategy to collect funds for upliftment of hockey in India. 3. Stadium
4. Promotion
Interviewer Okay, what are the indicators you’ll look into ? Can you Categorise them?

The Interview Avi Basically there can be 3 main categories:-

1. Awareness:- We can go through online channels like YouTube,
Interviewer Good Morning Sahil, let’s get started with the case directly? Facebook, WhatsApp etc as well as offline channels.
2. Accessibility:- There are mainly 2 types of players who watch hockey.
Avi Good Morning Sir. Yes, sure.
A Those who possess keen interest
Interviewer Great. : Devise a strategy to collect funds for upliftment of hockey in India. B Those who don’t possess keen interest we can try to position it in
such a manner that no other game is scheduled at that point in time
Progress Preliminary questions asked on:
3. Acceptance:- We can try to make a documentary like Dangal so that this
1.Do I need to look at ground level or national level or increase the
game gets acceptance
participation on international level.
2. Another way could be increasing the revenue of Hockey Federation of Interviewer Alright can you tell me why Pro Kabaddi league was so successful?
India.
Avi They tried to associate the names of the team with the states. So if we
Interviewer Take it to be an increasing the revenue of Hockey Federation of India. can use same model ho connecting with the states we can be successful.
Interviewer Thank You.
Avi Some of the ways could be
1. Increased budget spending by Government. Avi Thank You.
2. Ewe can go for corporate sponsors
3. We can target the NGO’s who are focusing on sports
Interviewer Sounds right, what if we want to organise something like Kabaddi Pro
league in Hockey?

17
Unconventional – SPORTS

Approach
Cost

Increased Budget Corporate

Spending By NGO’s
Sponsors
Government

Organising A Hockey League

Awareness Accessibility Acceptance

Online Offline

18
Estimate Sales– MART
Candidate : Sonaal Gupta Company : AT Kearney Sonaal Let's assume that the average number of people in a family are 5
Sector : Retail Type of Case : Revenue Estimation members. So approximately 2700 families will be visiting the mart.
Interviewer You are in right direction proceed further.
Problem Statement: To predict sales of a newly opened Mart in Delhi. What are Sonaal Okay, Is there any data on the income of the families?
different things they need to keep in mind to increase sales.

Interviewer Nothing like that, assume whatever you like.

The Interview
Sonaal 20% of the families are high income and the average income would be Rs
Interviewer Good Morning Sonaal, let’s get started with the case unless you have any 1 Lacs per month and they would be spending 10% on our mart.
preliminary questions for us? Interviewer Go ahead.
Sonaal Good Morning Sir. Sure, we can start with the case. Sonaal 30% are middle class and they would be spending 5% of their average
Interviewer Well. Your need to predict sales of a newly opened Mart in Delhi. What are income of Rs 40,000
different things they need to keep in mind to increase sales. 50% are middle class and they would be spending 2% of their average
income of Rs 15000
Sonaal What type of mart is it? Any specific goods?
Interviewer OK Thank you.

Interviewer No , Nothing as such. It is a mart like big bazaar. Sonaal Thank you

Sonaal Alright, Delhi’s Population is around 2 crores. The area of Delhi is

1,484 km². So, 13531 is the population per km2. Is my approach correct?
Assuming that 10% of the people would be visiting the mart every month.
So 13500 people approx. will be visiting the mart.
Interviewer Very well, how would you go about finding the sales?

19
Estimate Sales– MART

Approach
Sales of a mart

2 Crore 13531 population

Population per km sq.

5 member 10% of
per family people will
visit

Starting Pop:
2700 Families

High Income Middle Income Lower Income

20% of the families=540 50% of the families=1350

30% of the families=810
1,00,000 income out of which 15,000 income out of which 2%
40,000 income out of which 5%
10% can be spent= 10,000 can be spent=300
can be spent=2000
Total=5400000 Total=405000
Total=16200000

Rs 22005000

20
Estimate Sales team– Whiskey Manufacturer
Candidate : Sonaal Gupta Company : AT Kearney Sonaal We’ll break the problem into 3 parts: Targeting, Segmentation and Field
Sector : Alcoholic Bev Type of Case : Revenue Estimation force deployment. First, we’ll identify all the targets i.e. Wine shops in
Bangalore city. Then we’ll segregate these stores into various segments
based on their sales data.
Problem Statement: Your client is a Whiskey manufacturer and wants to deploy a sales team
across Bangalore city. You must find the number of people required and design their pay-out Interviewer How would you segment if you don’t have their sales data?
strategy.
Sonaal We can use a proxy parameter of “number of people visiting the stores”
which can be done by selecting some stores in the city - a representative
The Interview
sample- and finding number of people visiting weekly and then
Interviewer Good Morning Sonaal. Can you briefly tell about your roles in your extrapolating it to yearly footfall. This is done by assuming that weekly
previous work and the projects that you handled? demand is constant throughout the year.

Sonaal Good morning sir. I have worked as an Associate with a consulting firm, Interviewer Ok. Go ahead.
working mostly with U.S. based pharmaceutical clients, handling their sales Sonaal Then using Bangalore’s avg. consumption pattern, either through surveys
& marketing strategies focused on field-force design & Incentive or market research data, we can find the percentage of people visiting to
compensation. purchase whiskey and their average spend. From this we can get sales of
Interviewer Great, can you briefly explain more about the field force (sales-team) whiskey in each of the stores. Then we can decile the stores based on this
design. data and club them into High (H), Medium (M) and Low (L) categories, e.g.
D10-D8 in H, D7-D5 in M and D4-D1 in L category.
Sonaal Gave a well-prepared answer.
Interviewer What is use of deciling the stores?

Interviewer Ok, so let’s get started with the case. Your client is a Whiskey manufacturer Sonaal By deciling we can clearly identify different segments of stores, where H
represents high amount on sales, while L represents store with low
and wants to deploy a sales team across Bangalore city. You must find the
amount of sales. Since the number of salespeople required for each store
number of people required and design their pay-out strategy.
category will be different, thus deciling will help us in deploying 3 different
Sonaal What all places are we targeting? Are we targeting just the Liquor outlets types of sales teams.
or also the restaurants, pubs and clubs where liquor is served?
Interviewer Okay that makes sense. How would you calculate the number of
Interviewer Let’s just focus on the liquor outlets (Wine shops). salespeople?

21
Estimate Sales team– Whiskey Manufacturer

Sonaal Then either through some benchmark data or by deploying some

salespeople in 2-3 stores of each of 3 categories, we can find number of
salespeople required in each of the category to market our product to all
the whiskey buyers and find its conversion ratio. Then we can multiply this
number (for different categories) to total number of stores in each
category to get our total number of salespeople.
Interviewer Okay. How would you design their incentive plan?
Sonaal In the initial years we can just focus on sales-based compensation. In this
for every bottle purchased by a buyer after being detailed by our sales
rep., he/she will get a fixed margin for every bottle sold. This extra income
will be separate from their fixed salaries.
In the later years, we can focus on target-based compensation, where
every rep. will have a fixed yearly (or quarterly) target to achieve and their
compensation will be based on as a percentage of target achieved.
Interviewer Very Good, we’ll see you in the second round.
Sonaal Tank you.

22
Estimate Sales team– Whiskey Manufacturer

Approach Salesforce
Estimation

Field Force
Targeting Segmentation Deployment

Number of people
visiting the store

Estimating Bangalore’s
Consumption Pattern

High Medium Low

D4-D1
D7-D5
D10-D8

How Will You Design The

Incentive Plan?
sales-based Target Based
compensation Compensation

23
Media Cost Reduction- AUTOMOBILE
Candidate : Sharvani Shakambari Company : AT Kearney
Sector : Digital Marketing Type of Case : Media Cost Reduction Interviewer Perfect. What are the factors that determine the cost of the
advertisements on radio, newspapers and TV?
Sharvani Sure Sir. For radios, the cost of the advertisement depends on the timing
Problem Statement: Your client is an automobile company and wants to reduce its (higher prices for evening and morning timings reflecting the pre and post
media costs. How will you go about it? office hour listener traffic on the radio), duration of the advertisement,
the frequency of the advertisement (number of times a day and the
The Interview number of times in a week/month) and celebrity endorsement costs. In
the case of the newspaper, the cost depends on the location of the
Interviewer Good Morning Sharvani, how are you doing today? advertisement in the newspaper (1st page, last page have higher prices),
the size of the advertisement, the day of the advertisement (Sundays have
Sharvani Good Morning Sir, I am doing well. higher prices), the colour of the advertisement (black and white
Interviewer Very well, let’s get started with the case right away. Your case for today is advertisements will have lower prices) and the celebrity endorsement
related to digital marketing since you have done an internship in Havas costs. In the case of the TV advertisements, duration of the
Media. Your client is an automobile company and wants to reduce its advertisement, the frequency of the advertisement (number of times a
media costs. How will you go about it? day and the number of times in a week/month), celebrity endorsement
costs and the timing of the advertisement (advertisements between
Sharvani Thank you for the question. I will take a moment here to gather my popular TV shows will be priced higher and advertisements during the
thoughts. breaks of key cricket matches in India will be priced higher).
Interviewer Sure. Interviewer Perfect. Can you tell me the factors that determine the cost of the
advertisements on websites/apps and online media in general?
Sharvani With respect to media costs, would you like me to delve into online or
Sharvani Sure. In terms of online media, the cost is dependent on the size of the
offline media?
advertisement and the amount of space it occupies on the website. The
Interviewer Both, can you list down the different types of online and offline media. cost also depends on the frequency with which it is shown to the site
visitors (cost per impression). Advertising agencies also charge based on
Sharvani Definitely. Offline media consists of advertisements in the radio,
the click through rate and the lead generation taking into account the
newspaper and TV. Online Media consists of advertisements on various
bounce rate.
sites such as news websites, apps, Google and social networking sites. The
primary social networking sites are Facebook, Instagram, Youtube and Interviewer Perfect. That will be all.
Linkedin.
24
Media Cost Reduction- AUTOMOBILE

Media Costs

Offline Media Online Media

Radio Websites Apps Google Social Networking

TV Linkedin

Newspaper Facebook

Youtube

Instagram

25
Manpower Utilization – AGRICULTURAL EQUIPMENT MANUFACTURER
Candidate : Namita Bhat Company : AT Kearney
Sector : Manufacturing Type of Case : Unconventional The client has only 1 manufacturing plant in India. It sources raw material
and parts, assembles the agricultural equipment. These markets are
characterized by changing nature of product.
Problem Statement: The client is an Indian agricultural equipment manufacturer. The
Namita I would like to start by identifying the bottleneck in the process – if there
client feels that there is some issues with manpower utilization at its plant. How can
is efficiency issue or some problem with capacity.
you help the client?
Interviewer Okay. There is some issues with the paint process in the plant. The
process rate at the paint station was 4 units per hour, while all other
The Interview stations were running at 3 units per hour.
Interviewer Good Morning Namita, tell us something about point X and Y on your Namita Alright. I can see with the rate that one unit takes 15 min at paint station
resume? while it takes 20 min at all other station. This means the paint process is
fastest of all and there could be accumulation of inventory between paint
Namita Good Morning Sir. Prepared a generic answer for this. and the next process.
Interviewer That’s good to hear. Let’s get started with the case. Interviewer Yes, That’s right. How would you handle this?
Interviewer The client is an Indian agricultural equipment manufacturer. The client Namita Since, we have a case of overcapacity at paint station, either we can
feels that there is some issues with manpower utilization at its plant. How increase the capacity of all other process or reduce the utilization of the
can you help the client? paint process.
Namita I would like to begin with a few clarifying questions on the client. Interviewer We don’t have that much demand to supply increased production. The
Interviewer Yes, Go ahead. paint unit works in 2 shifts. What will you suggest the client to improve his
manpower utilization?
Namita What kind of equipment does the client manufacture? Does it operate
across the value chain? Where are these automobiles produced? Since I do Namita Firstly, I would see whether the current demand can be met by running
not know about the farming equipment market, is there something the paint process in 1 shift. If possible, then we can have painting in only 1
peculiar about these markets that I should keep in mind? shift. Otherwise we can reduce the number of workers involved in both
the shifts.
Interviewer The Client is engaged in the manufacturing of variety of farming
equipment, but in this case the issue is particular to one of their product Interviewer The client went with running the paint station in only 1 shift.
lines – ambush harvester. That was an in-depth assessment. We’ll stop here.
(the interviewer Googled the images of ambush harvester)
26
Manpower Utilization – AGRICULTURAL EQUIPMENT MANUFACTURER

Approach
Man Power
Utilization Issue

Manpower Process
efficiency Utilization

Little’s Law can be used Over Capacity Under Capacity

Increase capacity of
Reduce utilization
all other processes
of one process
to produce more

Reduce Manpower Reduce no. of

per shift operating shifts

27
Auctus Advisors

28
Market Entry – DOMESTIC AIRLINE SERVICE PROVIDER
Candidate : Yash Pratap Singh Company : Auctus Advisors
Sector : Airline Type of Case : Market Entry Interviewer Sure, it is a 180 – seater plane and the route timing is 10:30 am Kolkata to
01:00 pm Goa and return at 02:15 pm from Goa, once daily. The
frequency once in a day. The flight runs at 95% occupancy on average.
Problem Statement: A leading airline service provider considering to where could Yash Ok, Can I know about our client’s plane (how many seaters?)
they increase their frequency and where could they add new routes.
Interviewer Yes why not, it is also a 180 seater plane.

The Interview Yash Can I have a few minutes to structure the case now??
Interviewer Sure take your time.
Yash I would like to ask a few more questions. Why have the other operators
Interviewer Hi Yash, let’s get to the case straightaway. not started operating on this route?
Yash Good Morning Sir, absolutely! Interviewer Well, many operators are evaluating this route.
Interviewer So, your client is a leading airline service provider. They have done a study Yash Ok. So with 95% average occupancy it seems to be a great route to run a
as to where could they increase their frequency and where could they add flight. So our concern should be to decide at what slot do we plan to run
new routes. The new policy got approved by their Board. You need to help the flight upon and what frequency do we plan to operate. I want to know
the client on starting on a particularly identified route which is Kolkata – more about the cost structure of operating a flight on a route?
Goa – Kolkata.
Interviewer Ok, what about the cost structure?
Yash Sure, so I have to help the client startup up with their new route in Kolkata
– Goa – Kolkata. Is that correct? Yash Tarrif at the airports, parking charges (if they are cheaper at Goa then we
park the plane there or Kolkata). Is the same plane used for other routes
Interviewer Yes. as well? Do I also need to size the market on this route?
Yash Ok, before I start structuring the case, can I know about the existing flights Interviewer Ok, ignore these factors for a moment. And there is sufficient demand on
on the route mentioned? the route so market sizing can be ignored as 95% occupancy on average is
an excellent occupancy.
Interviewer Sure, why not. So, we have an Indigo flight on this route which is a direct
flight. Yash Ok, how are the slots decided at the airport for an operator?
Yash Ok great. Can I know more about this flight, as in how many seater planes, Interviewer Assume, that you will be given the slot that you desire for, how would you
what is the timing, occupancy of the plane? suggest the client to operate on this route.
29
Market Entry – DOMESTIC AIRLINE SERVICE PROVIDER

Yash Ok, so the route is attractive. We have to decide on the slots at which we Yash It will also lower the price.
operate. We also need to check what differentiating services can we offer
to poach customers from competitors who also operates on the route? Interviewer So is it a good idea?
Interviewer Interesting, what differentiated services can you offer? Yash No, hence we can operate at the same price as competitor. And since our
Yash Well, achieve operational efficiency, allow faster check-in/check-out, costs could be lower because of one-stop flight and higher occupancy we
increased frequency for seasonal demand (as Goa has more tourists during can make higher profits.
winters and Christmas) and perhaps use data for some personalized Interviewer Alright, thank you Yash.
services and even provide more luggage facilities.
Interviewer Interesting, don’t you think that the operators are already doing it? And on
your luggage point, what kind of travellers go to Goa?
Yash Mostly tourists.

Interviewer Yes, and what kind of luggage requirement will they have?
Yash Less, light travelling is the norm, so it is not a feasible suggestion. Can we
operate indirect flights?
Interviewer So, our operator has direct flights on this route, so the flight is costly.
Yash Interesting! Then we can include indirect flights on this route which will
reduce our tickets cost and increase occupancy. We can have one-stop
flights with halts at Mumbai, Bengaluru.
Interviewer Ok, at what slot would you prefer the client to schedule the flight.
Yash As we have very high average occupancy it means there is demand on the
route. I would operate the flight at the same time or around the same time
as my competitor to take advantage of the demand. As our flight will be
with one-stop, we can lower our ticket prices as well.
Interviewer If the client lowers the ticket price, how will the competitor react?

30
Market Entry – DOMESTIC AIRLINE SERVICE PROVIDER

Approach

New Route for

Airline

Direct Indigo flight Existing Differentiated

Costs Slots
Flights Services

Occupancy Frequency Airport Tariff Airline Costs

Data based Operational

Luggage Facility Ticket Price
Efficiency

31
Market Entry in Indian banking sector– FOREIGN BANK
Candidate : Yash Pratap Singh Company : Auctus Advisors
Sector : Banking Type of Case : Market Entry Yash Other is acquire any existing bank and then turn it around using the
expertise that the global bank (client) has. Banks in India need a lot of
branches to operate in retail spaces and acquiring an existing bank might
Problem Statement: A foreign bank wants to enter India. How will you advise them on give them that network. The bank could use its strengths (say tech and
strategy? digital) to make the services and operations more efficient and turn it
around and create stronger market leader. A case in point, Yes Bank can
be a good acquisition assuming our client being a global bank has the war-
The Interview chest of money to acquire a big private sector player.
Interviewer Hi Yash, let’s do a quick case Interviewer Nice, how would you value a bank like Yes Bank?

Yash Good Morning Sir, sure! Yash On Market capitalization.

Interviewer Suppose a foreign bank wants to enter India. How will you advise them on Interviewer Ok, what particular digital strategy would you deploy?
strategy? Yash Well, it could be divided into two parts. Internally, data, AI could be used
Yash Ok, what is the objective of entering India? to make services more efficient and routine processes faster and accurate.
Externally, chatbots and AI-based services could delight the new age
Interviewer They see growth opportunity in India with a large young population and customers.
want to capture this market. Can you quickly come up with a certain
strategy with less number of questions? Interviewer Ok, thanks Yash!

Yash Ok, so is the bank interested in retail operations or they want to open up
multiple other services?
Interviewer Assume retail and all other services that bank’s offer.
Yash Ok, so there could be two strategies. One, the bank could get a license
from RBI and start the bank grounds up and use its strengths of global
competitiveness to capture market. A case in point is DBS and its digital
banking strategy in India.
Interviewer Ok, what else?

32
Market Entry in Indian banking sector– FOREIGN BANK

Approach

*Ask less questions

Retail Foreign
Bank
Example - Yes Bank can be a good
acquisition assuming our client
Example - DBS and its Start fresh Acquire being a global bank has the war-
digital banking strategy in Indian Bank chest of money to acquire a big
India. private sector player.
Digital Market
Strategy Capitalization

Data AI based
Internal
Analytics services + External
Chatbots

33
Bain & Company

34
Profitability – APPLIANCE MANUFACTURERER
Candidate : Siddharth Jayaprakash (JP) Company : Bain & Company Given this is retail, non-core activities won’t add much value. So, I will
Sector : Manufacturing Type of Case : Profitability focus on core activity based revenue which can be further broken into
price, product quality & quantity and variety.
Problem Statement: There is an appliance manufacturer. He has been facing stagnating Progress At this point the interviewee eliminates all aspects except variety.
profitability. Evaluate and make appropriate suggestions. Interviewer So, what do you think could be the issues the firm could be facing?
JP There might be competition in the localities where the stores are. E-
The Interview commerce must be hurting the market share of the company. In a
Interviewer Hi Siddharth, nice to meet you. nutshell, we can say that the both the number of customers and the ticket
size might be getting affected adversely.
JP Hello Sir, likewise!
Interviewer Yes, correct. Evaluate the effect of each one going down for me.
Interviewer Let’s start with a profitability case. Your client is into manufacturing. He is
looking at stagnating profits. Can you find ways to improve the situation? JP If the basket size is going down keeping the no of customers constant,
then this could be due to the poor arrangement of counters within the
JP Which industry is the client operating in?
store and poor management of queues. If the no of customers is
Interviewer He is into retail appliance manufacturing say like Reliance. decreasing but the basket size is the same, then we can blame it on the
competition, the location – it might be in a residential area versus a
JP When you say appliances, what all products does that cover?
commercial one and thus, might be attracting less people.
Interviewer Your basic appliances like mixers, radios, TVs, etc.
Interviewer Alright, good. What do you infer if I say both factors are going down?
JP So, I am assuming that the average customer is your everyday man looking
JP In this case, it could be due to stiff competition, it could be the impact of
for home appliances for daily use.
external factors such as poor economy.
Interviewer Yes, you’re right. They focus on middle income to lower income brackets.
Interviewer All external factors are constant. Nothing has changed. However,
JP So, about the company, I want to know how many outlets do they have? competition has gone up. 2 new stores have come up and e-commerce is
also hurting the firm. What would you recommend in general?
Interviewer They have 2 outlets – one in Delhi and the other in Mumbai.
JP I’d say that the firm should try e-commerce out given the big force it is
JP So, I would like to begin by breaking profits into revenue and costs.
and will be in the future. The firm could also look at acquiring its
Interviewer Please start with revenue competitors if it has the funds, given there are only 2 competitors.
JP So, for revenue, I will divide the company activities into core and non-core. Interviewer Alright, makes sense. Great, thank you!
35
Profitability – APPLIANCE MANUFACTURERER

Approach

Profitability

Costs Revenue

Core Non-Core

Price Variety Quantity

• Competition • Poor store management

No of Customers Ticket Size
• E-commerce • Long queues

36
Profitability/Unconventional – IT SERVICES
Candidate : Siddharth Jayaprakash (JP) Company : Bain & Company aspect. As far as how the services are delivered, not well. Think beyond
Sector : IT services Type of Case : Profitability/Unconventional the regular issues.
Interviewer Okay, please give me a moment.
Problem Statement: There is an IT services firm. It has been facing declining market
JP Sure, but hurry up.
share. Evaluate and make appropriate suggestions.
Interviewer So, I think one issue could be that given the firm is into IT services, it must
have a lot of technically sound employees but like typical IT firms it might
The Interview have compromised on the quality of the employees conducting other
Interviewer Hi Siddharth, this is the second round. We won’t waste time. activities including post sales.
Progress From the starting, the round was presented as a stress round. JP Go on.
Interviewer Let’s start with the case. There is a typical IT services firm, so I want you to Interviewer So, IT services today are moving beyond just products but into more
make your basic assumptions about what the business might be, the relationship-based industries where it is not just about the product but
industry make up, etc. Don’t ask me. The thing to focus on is that the also about the packaging and delivery. More importantly, customers want
market share is going down. Tell me what do you think is going on. to be able to reach out to the companies without any hesitation even
after a year, saying “Hey, I don’t get this.” Further, if you’re not listening to
JP I’ll straight away break it down into evaluating costs and revenue.
your customer, you might be making good products, no doubt, but you
Interviewer Okay. Costs have been the same. Focus on revenue. might not be making the ones that the customer needs.
JP Breaking revenue core and non-core again. Within IT both type of activities JP Right, so you’ve got the nerve of the issue. The firm has great people just
add a lot of value. not great for building customer relationships. The employees don’t feel
motivated to make the right changes. Why do you think?
Interviewer Before that, make the value chain for me or list the activities for me.
Interviewer So, there could be tangible and intangible factors. Tangible -
JP Ok, so there will be development, IP licensing, product management, sales
remuneration, bonuses. Intangible - team make up, growth stagnation.
and marketing, after sales customer services.
JP Tangibles are fine, within intangibles, the growth had hit a ceiling. What
Interviewer Okay, stop. Focus on the post sale services.
else?
JP So, how does the firm conduct the post sales service and how satisfied are
Interviewer Clearly, there is an ability mismatch for the after sales services part.
the customers presently?
Right, good enough. Thank you!
Interviewer The customers are not happy, that is why I have asked you to focus on this
37
Profitability/Unconventional – IT SERVICES

Approach

Profitability

Costs Revenue

Core Non-Core

Product Sales & After Sales

Value Chain Analysis → Developers IP Licensing
Management Marketing Service

• High on tech but low on

customer management
• Poor Product-Customer
needs fit

38
Design loyalty program for e-commerce platform– FLIPKART
Candidate : Rahul Karuppiah Company : Bain & Co.
their needs and Flipkart’s product offerings. On the basis of this, I would
Sector : E-commerce Type of Case : Unconventional then focus on the product types that we can push in our loyalty program.
Interviewer Sure but I want you to focus on Amazon’s loyalty program and tell me
Problem Statement: Flipkart wants to launch a loyalty reward program. How will you go what do you think is the unique aspect about it?
about it?
Rahul Can I take a minute to think about it?
Interviewer Sure, go ahead.
The Interview
Rahul I think the key element is that Amazon’s whole program is common for
Interviewer Good Morning Rahul, let’s do a quick and simple case.
every subscriber. For example, all subscribers get access to all services
Rahul Good Morning Sir, sure! such as Prime, fast delivery, etc.
Interviewer Flipkart is your client and it wants to launch a loyalty reward program. In Interviewer Right, so in light of this, how should Flipkart design its program?
Tier 1 cities. How ill you go about it?
Rahul I would recommend a reward point based system versus a subscription
Rahul So, for this, I will evaluate the company, its service, customers and the model wherein the more the customer buys, the more points accumulate
after sales service aspect. Before I proceed, I would like to know if there and that gets the customer hooked to the platform. We could also
are any competitors in the market with such similar programs? integrate the Jet-privilege model wherein we could introduce certain
privileges for frequent users across various product types.
Interviewer Yes, Amazon is in the market. Initially, Flipkart had a huge market share but
then it lost out to Amazon and its Prime program. Interviewer Sounds good. So, what factors would look at in this reward-point model?
Rahul So, I am assuming that Flipkart’s prime objective through this loyalty Rahul I would look at the basket size, the actual total price of a product, the
program is to gain back the market share? frequency of purchases. I would also see if there are higher points that I
can allocate on products that I want to push for.
Interviewer Yes.
Interviewer Alibaba has this policy where if you make high amounts of purchases the
Rahul So, I would like to ask some more preliminary questions. What is the
price for that particular account falls drastically. Can we do this in India?
market share that Flipkart wants to target? And are there any other
objectives? Rahul Of course, we can but this could lead to a situation where different people
pool in to buy from one account only. This could lead to abuse of the
Interviewer You can skip all of this. Please move to the solution.
program and avoidable loses.
Rahul Okay, so I will focus on the customers –current customers and potential,
Interviewer Correct, that is actually an issue Alibaba faces. Alright, thank you Rahul!
39
Investment Decision– White goods
Candidate : Vaidehi Agarwal Company : Bain & Co. Vaidehi The Possible reasons for this could be:-
Sector : Home Electronics Type of Case : Investment Decision 1. Bad decision making
2. Untapped opportunities
Problem Statement: PE firm wants to buy a white goods electronics retailer- should 3. Lack of proper infrastructure like supply chain
they? 4. Lack of proper Goals
Interviewer Can you think of some other reason ?

The Interview Vaidehi Yes, there could be a differentiation in product mix for example branded
Interviewer Good Morning Vaidehi, how are you doing today? products and private labels.
Our client might have a low proportion of private labels (which have higher
Vaidehi Good Morning Sir, I am doing good. margins) when compared to competitors.
Interviewer Let’s get started with the case. : PE firm wants to buy a white goods Interviewer Is it a good idea for our client to expand share of private labels?
electronics retailer- should they?
Vaidehi The benefits are Increased revenue, exclusivity, increased loyalty but on
Vaidehi What are white goods? the other hand there is no direct control, it can be costly, high promotion
cost etc. So, the client can start from a narrow products and see what is
the response and then think weather to expand or not.
Interviewer White goods consists of large electrical goods such as washing machine,
Interviewer Thanks
refrigerators etc.

Vaidehi Ok, I would like to start by looking at the Industry Landscape. And then the
Vaidehi Thank you sir.
company’s landscape.

Interviewer Yes, Go ahead. The growth rate of the industry is 8% and the company is
also growing at this rate but the competitors are growing at 12%.

40
Investment Decision– White goods

Approach Investment
Decision

Company
Industry analysis
Analysis

Company Competitors Growing at Company also

Client does not have private growing at 8% growing at 12% 8% grows at 8%
labels
Pros and cons of it:-

Increased No direct
Revenue control

High Promotion
Exclusivity Cost

Brand Loyalty Costly

41
Estimate Demand for Medical device/ Growth strategy – Medical device company
Candidate : Aishwarya Nair Company : Bain & Company
Sector : Healthcare Type of Case : Guesstimate + Growth strategy Aishwarya The Company can expand its sales by improving the sales in the existing
market, entering a new geographical market or a combination of both.

Problem Statement: Company manufacturing medical device looking to grow its sales. Interviewer Lets focus on India for now. Can you estimate the demand for this device
Demand for the device to be estimated along with recommendations for growth. in India?
Aishwarya Sure Sir. To begin with, can you tell me the types of surgeries for which
this device will be used? Also, the age limit, if any.
The Interview
Interviewer It will be used in surgeries requiring general anaesthesia. There is no age
Interviewer Good Morning Aishwarya, how are you doing today?
limit.
Aishwarya Good Morning Sir, I am doing good.
Aishwarya Okay, So the demand for this device will depend on the number of
Interviewer Very well, let’s get started with the case right away. surgeries, the affordability of the patients and the number of hospitals
Your client is an Indian company manufacturing medical devices. It holds a willing to purchase the device.
patent for a product named ‘Bearhugger’, useful in surgeries. It is a thin
Interviewer For now, you can calculate the number of surgeries in India
layer of sheet with settings that provide warmth to the patients during
surgery. The price charged by the Company is INR 20,000 and is a one- Aishwarya Okay, so I will divide the population into age buckets and apply a % for
time-use product. The company currently operates in Bangalore and surgeries.
Chennai and wants to expand its sales. The substitute for this device is
Interviewer I get where you’re getting at. How would you arrive at the demand now?
warm blankets.
Aishwarya I will calculate the affordability of this device based on income levels.
Aishwarya Okay, so the company ‘s objective is to expand its sales for this device. Can
Based on the rural-urban divide, I will calculate the % of hospitals willing
you explain the basis on which the Company is able to command such a
to use this device.
high price for a product, the substitute for which is warm blankets?
Interviewer Okay, go ahead
Interviewer Sure. The device provides extra comfort to the patients during the strategy
and aids surgeons in conducting the surgery more smoothly. Aishwarya Refer to the flowchart on the following page for calculation of the final no.
Aishwarya Alright. Is there a reason why the Company has limited its sales to Interviewer Very good, now that you have the annual demand, why don’t you tell me
Bangalore and Chennai only? Is there any manufacturing constraint? various ways through which the Company can grow its sales.
Interviewer It was the owner’s decision to select cities close to his residence. However,
the Company is open to suggestions. And there are no manufacturing
constraints. 42
Estimate Demand for Medical device/ Growth strategy – Medical device company
Candidate : Aishwarya Nair Company : Bain & Company
Sector : Healthcare Type of Case : Guesstimate + Growth strategy
Yearly demand
Problem Statement: Company manufacturing medical device looking to grow its sales. for devices
Demand for the device to be estimated along with recommendations for growth.

The Interview
0-15 years 16-60 years (70 >60 years (10
Aishwarya In order to expand its presence in Bangalore and Chennai, it can adopt Crores) crores)
several market penetration activities. Tie-ups with super speciality (40 crores)
chains such as Apollo and Fortis would provide a provide a Pan-India
presence. Advertisements with focus on comfort during surgeries will
provide knowledge about the benefits of the device. To expand
geographically across borders, the company should look at other Percentage of
countries. Does a similar product exist in the States or in Europe? 0.5% 1% 1.5% population
undergoing surgeries
Interviewer There exists a similar product in Europe and the States. Can you list
down other countries and any potential concerns.
Aishwarya We could look at Asian countries such as Japan, South Korea. China,
being populous would serve as a lucrative market. There are Total of the above*10% high
regulatory concerns when it comes to the medical sector. Establishing income segment
a new brand can be difficult in the initial stages. = 105 lacs*10%
Interviewer That’s all. Thank you. ~10 lacs

43
ERP vendor looking to enter Indian market – Market Entry
Candidate : Divya Singhvi Company : Bain & Co. There are other general ERP software, however, the functions mentioned
Sector : IT Type of Case : Market Entry are generally performed manually.
Divya Okay, does the client have any specific parameter to assess the success,
Problem Statement: Your client is a software solution (ERP) provider and wants to
say profitability, market share etc.?
implement the same at gyms, salons and spas in India. Advice the client regarding the
same Interviewer Nothing in particular.
Divya Right, so given that the client is entering a new market, I would like to
evaluate this decision on the basis of Market attractiveness assessed by
(a)market size, (b)competitors, (c) customers, (d)potential risks.
The Interview [Progress] Asked the interviewer if he would like me to perform market sizing. He
[Progress] Interviewer first asked general questions about myself to put me at ease. replied in the affirmative. Took a minute to think through and decided to
pick one type of client of the client, i.e. gyms, and asked the interviewer if I
Interviewer Your client is a software solution (ERP) provider and wants to implement could perform market sizing on that segment out of the three first.
the same at gyms, salons and spas in India. Advice the client regarding the Interviewer gave his go ahead.
same.
Divya Given that it is up to me which geography to choose in India, I would first
Divya So first and foremost I would like to understand what exactly does this focus on Tier 1 cities, since these would have a greater number of gyms (as
software provide well as salons and spas) with a higher spending capacity (contributed by
Interviewer The software is an ERP software which performs various functions such as higher footfall and revenues).
appointment scheduling, client management etc for the gyms/salons/spas. In a city like Mumbai, I can take the size of the city (in sq km) as the base
and calculate the number of gyms in a particular radius. I would take a
Divya Right, so where is the client located and any existing expertise? greater number of gyms in localities like South Bombay and lesser in
Interviewer The client is currently located outside India and wants to enter India certain other parts.
through the above mentioned sector Interviewer Can there be other ways of arriving at the number of gyms? Also, would
Divya Does the client have any specific geographic location in India in mind? we focus on all gyms?

Interviewer No, that is being left up to you. Divya We can first focus on brands which have a chain of gyms, such as Gold
Gym etc, as we can generate more revenue through selling to a chain than
Divya Okay, and are there other such software available in the market? individual gyms.
Interviewer There is no other software customized specifically to the needs of the
gyms, spas and salons at the moment. 44
ERP vendor looking to enter Indian market – Market Entry
Candidate : Divya Singhvi Company : Bain & Co. Divya The client will look at the market sizing and estimate the proportion of
Sector : IT Type of Case : Market Entry market that they can capture. Apart from that, (Going back to the initial
framework) since there are no ready substitutes and the tasks are
Problem Statement: Your client is a software solution (ERP) provider and wants to generally performed manually at present, there is no eminent competitor.
implement the same at gyms, salons and spas in India. Advice the client regarding the However, the client would have to demonstrate the benefits of the product
same to the gyms, salons and spas. This will create a market for the product, but
along with it comes a threat of new entrants looking to exploit this
potential
[Progress] Interviewer decided to end the interview here and did not delve further
Interviewer Okay, so how would you estimate their numbers? into the other aspects of evaluation.

Divya I can first make a list of all the prominent gym chains in Mumbai. Most of
these gyms have their websites which mention their locations. I could use Approach
that to find the number of branches they have in Mumbai. Market
Attractiveness
Interviewer Okay, go ahead.
Divya So I assume there are 10-15 such branches of a certain brand like Gold
Gym and say 10 such chains. Now taking 8 metro cities, there would be Market size Customers Competitors Risks
approximately 800 gyms. Moving to tier 2 cities, the number of gyms will
be much lesser, so I would have to reduce the above.
Interviewer [Interupts] So how would you find the revenue from Tier 1 city gyms? Threat of new
Share
entrants
Divya The fees can be subscription-based model or a one-time upfront fee. But I
think a subscription model is more feasible.
Interviewer So on what basis will you charge them? Growth
Divya I can charge them a one-time fees for purchase of software and then on
the basis of the number of branches in which they implement the system. I
could also charge on the basis of the number of modules implemented for Margins
the client.
Interviewer Alright. So, what else will the client have to look at? 45
 Profitability - PAPER MANUFACTURER
Candidate : Vinnie Choudhry Company : Bain and Company Interviewer The client manufactures A4 size sheets. It does not deal with the end
Sector : Paper Manufacturer Type of Case : Profitability customers. It has only one manufacturing plant. It is a medium scale
player.
Problem Statement: Your client is a paper manufacturer who has been facing falling margins Vinnie Okay, thank you. You talked about client’s profit margins having fallen over
for the last 6 months. You have been asked to probe the causes and recommend solutions the last 6 months. Is it a fall in absolute profits or profitability? What is the
around the same. magnitude of the fall? Is it an industry-wide phenomenon?
Interviewer The profitability has fallen by 50%. No, it is not an industry-wide
The Interview phenomenon.

Interviewer Hello, how has your day been? Vinnie Okay. I will start the case by analyzing the two components of profit and
then delve deeper to look for the exact causes and recommend solutions
Vinnie Oh, its been quite good. for the problem.
Interviewer Tell me something about your background Interviewer Go ahead.
Vinnie Answered (The interviewer had the same background in Economics from
Vinnie Profit is a function of costs and revenues. We know there has been a fall in
University of Delhi. We connected over it.)
profitability. Do we know if there has been any other trends apart from
Interviewer Okay, that’s good. Let’s move over to the case. Your client is a paper this?
manufacturer who has been facing falling margins for the last 6 months.
(The interviewer emphasized on “margins”.) You have been asked to probe Interviewer Yes, profitability has fallen by 50% but the price of paper has increased by
the causes and recommend solutions around the same. 20%. Can you solve for the change in costs?

Vinnie Okay. Before I begin with the case. I would like to clarify the problem Vinnie Okay. Profitability is margin over sales price. Let Sales price be 100, cost
statement. *Reiterates the problem* price be 90, then profit is 10. The margin comes out to be 10%. Now if the
I have some preliminary questions around the client and his business. margins have fallen by 50%, then the new margin percentage would be 5%.
What are the final products that the firm deals in? Where does it lie in the The sales price has increased by 20% to 120. The absolute gross margin
value chain? What geographies does it operate in? What is its standing in comes out to be 6. The cost would have shot to 114. That would be an
the industry? increase of around 25% in costs. (26.67% to be precise)
Interviewer That’s right. Now can you look into the reasons as to why this could have
happened?

46
 Profitability - PAPER MANUFACTURER
Candidate : Vinnie Choudhry Company : Bain and Company Vinnie Firstly, we need to probe the reason as to why the thickness of paper had
Sector : Paper Manufacturer Type of Case : Profitability been increased. Since, paper is a standardized product, unless there is
sufficient demand for the thicker paper, the firm shouldn’t change the
product specifications because that might make its paper incompatible for
Problem Statement: Your client is a paper manufacturer who has been facing falling margins further uses such as printing by usual printers. Also, we can enter into long
for the last 6 months. You have been asked to probe the causes and recommend solutions term contracts and ask for bulk discounts from our current dealers or look
around the same. for other alternatives.
Interviewer Good, anything else?
The Interview Vinnie We also learnt that the firm has increased its prices. I understand this could
be partly due to the increased thickness of the paper. We need to compare
our prices with the competitors’ to see how good a decision that was.
Vinnie Sure. I will start by looking at the various nodes in the value chain. There would
Interviewer That’s a good insight. Give me one reason why you won’t recommend the
be raw material sourcing, transportation, manufacturing, labour costs, sales and
distribution, administrative staff, and other utilities. Have we seen a change in firm to decrease its prices now?
any of these? Vinnie The firm can’t be sending mixed signals to the market. I believe it will be a
Interviewer Yes, the raw material cost have risen. Everything else has remained the same.
better idea to understand the pricing dynamics before recommending the
firm to decrease its prices. We shouldn’t decrease the prices unless we are
Okay. Raw material costs are a function of price of raw material and volume of sure we would be able to sustain it. Do you want to me to look into that?
Vinnie
raw material ordered. Also, there could be other changes such as changes in Interviewer No, this will be alright. Thanks and have a good day.
vendor, contract details, change in raw material specifications, scarcity of raw
material, etc.
Interviewer We have experienced an increase in raw material volumes ordered. Why do you
think this could have happened?
Vinnie This could be due to change in production policies such as product specifications.

Interviewer Yes, we have increased the thickness of our paper. Could you recommend
solutions for this?

47
Profitability - PAPER MANUFACTURER

Profitability

Profitability fell by 50% but the price of paper has

increased by 20%
Revenues Costs

Volume Utilities

Price Raw Materials

Let Sales price be 100, cost price be 90, then profit is 10.
The margin comes out to be 10%. Now if the margins
have fallen by 50%, then the new margin percentage
would be 5%. The sales price has increased by 20% to
Labour Costs
120. The absolute gross margin comes out to be 6.

Manufacturing

Sales and
Distribution
The cost would have shot to 114. That would be an
increase of around 25% in costs. (26.67% )
Transportation

48
Boston Consulting Group

49
Profitability Analysis - FOOD TECH START-UP
Candidate : Ankita Vashista Company : BCG Interviewer Your assumptions are in-line with the client’s, you may proceed. You can
Sector : Retail Type of Case : Profitability skip analysing revenue heads as we don’t have any problem there.
Ankita Sure. Coming to costs, I will start with fixed costs. Has there been any
Problem Statement: Our Client is a food tech start-up and is facing some profitability recent change in salaries of the employees or any increase in utility
issues. Identify the problem and make some recommendations. expenses.
Interviewer Since we are short of time, to speed up a bit, I can help you here, there are
The Interview no issues within any of the cost heads.
Ankita Sir, apart from cost and revenue, profitability issues can also arise due to
Interviewer Good Morning Ankita, how are you doing today? capacity underutilisation. This results in a low profit to expense ratio.
Ankita Good Morning Sir, I am doing good. Interviewer Well indeed, there is a capacity utilisation issue. Can you probably think
Interviewer Very well, let’s get started with the case right away. Your client is a food where could be the issue.
tech start-up like Swiggy and they are facing profitability issues. Ankita Sure Sir. Before I proceed, can you please tell me if our demand-supply ratio
is fine and also what slots do we work in ? Are we delivering 24/7?
Ankita Okay, so there is a food-tech start up and we are working on profitability. I
would like to use the standard profitability formula of revenue-cost. Interviewer Our demand-supply ratio is good and we deliver in 2 slots. 6 to 3 and 4 to 2.
Interviewer Sure, please go ahead. Ankita Since our client is a food delivery start-up, the capacity will depend a lot on
demand. The high demand slots are usually breakfast, lunch and dinner. But
Ankita I am assuming the only revenue source for our startup is via food delivery. looking at the time slots, we are operating in low to no demand time too.
Interviewer Yes, that is correct. Interviewer Yes, exactly. You have identified the correct issue. Can you suggest some
Ankita Before diving in to any specific option, I would like to list down all the recommendations?
possible heads that we can explore. So, coming to cost. We can divide the Ankita Sure Sir, I have 2 recommendations:
cost into fixed and variable. Under fixed, we would have utilities, salaries, 1. Revise the working slots, like we can start delivering from 8 or 9 and go
maintenance cost, rent and under variable costs, we have petrol expenses till 1.
and any promotional expenses. I am assuming here that the delivery boys 2. We can keep the existing slots and start delivering other things as we
are paid monthly salaries and the two-wheelers used are owned by the have a good network of delivery. Something on the lines of Dunzo,
client and not rented. May I proceed with these assumptions? along with food delivery.
Interviewer Great, That would be all Ankita, Thanks !
50
Profitability Analysis - FOOD TECH START-UP

Approach Profitability of a
food-tech start
up

Revenue Costs Utilization

Fixed Variable Demand-Supply

Ratio Delivery Slots

Operating in low to no
6 to 3 4 to 2
demand time zone

RECOMMENDATIONS

1. Revise the working slots. Example: start delivering from 8 or

9 and go till 1.
2. Keep the existing slots and start delivering other products
given the already established network of delivery. Something
on the lines of Dunzo, along with food delivery.

51
Unconventional – Understaffing and Revenue Decline
Candidate : Shubhra Tripathi Company : BCG So, if I understand correctly, the client is facing a decline in revenue. The
Sector : IT Services Type of Case : Decline in Revenues questions that we are attempting to address are firstly, whether the
Shubhra decline in revenue is due to an inability to adequately staff the IT
Problem Statement: Client is facing an issue with fulfilling the new programs that it has been programs that they offer and secondly, how can we go about solving the
offering which we suspect has been driving down the revenues. Diagnose and suggest. staffing issue.
Interviewer Yes, you have understood correctly.
The Interview
I would like to start with the first question. Before we go ahead with
Interviewer Good Morning Shubhra !! Lets Start with a small case. assessing the inability to fulfill the programs, we should look at the
Our client is one of the largest IT services firm, similar to Wipro etc. The various factors that could affect the revenues of the firm so as to
client is facing an issue with fulfilling the new programs that it has been eliminate other factors. These factors could include, for example, if the IT
Shubhra
offering which we suspect has been driving down the revenues. How programs are not competitively priced in comparison to other firms in the
Interviewer market or if there have been any recent changes in the cost structure. We
would you diagnose whether the problems in fulfilment of the programs
is the reason for the decline in revenue and how would you go about should also look at the status of the industry and whether the competitors
solving the problem? in the market are also experiencing a decline in profitability.

Before proceeding, I would like to ask a few questions to better There have not been any changes in the costs and the programs are
Shubhra competitively priced. The industry leader is growing in profitability at the
understand the problem.
rate of 19% (?) annually and our client is only growing at the rate of 5%.
Interviewer Sure !! Please Ask. Interviewer
What I would like you to focus on is how can we put a dollar amount to
Could you please explain what is the exact nature of the programs the inability to fulfil the programs to see whether that is the cause of the
Shubhra decline in profits.
offered by the firm?
Okay, so say the firm is hired to provide IT services to your company. The Okay, so we want to know how to calculate the potential loss due to the
Interviewer firm is essentially facing an issue in fulfilling the program it offers to its inability of our client to staff the programs it is offering. I am assuming
own clients. that our client offers these programs to buyers who then choose whether
to award the contract to our client. Therefore, there are essentially two
Could you elaborate what you mean by fulfillment of the program? For Shubhra streams of revenue that we should look at. Firstly, for the contracts /
Shubhra example, does it mean that the firm is not able to provide certain agreements that our client is servicing, if there is a delay in staffing there
services to its clients? might be certain penalty clauses or termination clauses in the agreements
No, essentially, they are unable to provide enough people to fulfil the which could be invoked by the buyers. This would lead to losses that can
Interviewer be easily calculated by looking at the books of accounts of our client.
services they are offering to their clients.
52
Unconventional – Understaffing and Revenue Decline

Shubhra Secondly, our client is also incurring a potential loss from the contracts Interviewer Great Job Shubhra !! Please wait outside for the further proceedings.
that it is unable to conclude successfully due to the reason that it is
quoting a higher time to fulfil the programs that industry competitors.
This can be assessed by looking at the pitches made by our client and the
queries received which did not lead to the contract being awarded to the
client. We can compare the winning bidders to find whether the time
quoted by our client to be able to service the programs was the reason for
losing out on the contract.
Interviewer Okay, we did look into the books of accounts but there were no penalties
as such. But we have been losing deals due to this issue. Now how would
you propose to solve it?
Shubhra Alright, so in order to solve this issue I would need some information
about why our client is unable to fulfil the programs. I have listed down
the possible reasons are:
1. Our client does not have enough number of staff to fulfill all the
programs – this can be further divided based on the hierarchy of staff and
employees required to service a program. I am unaware of the exact
structure here, but if there is a hierarchy in the team required to service a
particular program, our client may not have adequate numbers of people
in each level of hierarchy. Again, this could be due to a problem with the
employee hiring practices of our client (in the sense that our client is
simply not being able to hire adequate talent) or due to employee
retention issues (in the sense that attrition has increased among the
already hired talent)
2. Despite having adequate number of people, our client is unable to staff
the programs on time – this could be due to the lack of employee
motivation to move to different programs, lack of training to take on new
programs, inadequate incentives to take on new programs and so on.

53
Declining Profits – AUTOMOBILE MANUFACTURER
Candidate : Shubham Maurya Company : BCG
Sector : Automobile Type of Case : Profitability Interviewer The problem is faced across all the products and there has been no
change in the pricing lately. Major competition is also facing the decline in
their profits.
Problem Statement: The client is an Indian automobile manufacturer. Its profits are
Shubham With the data I can deduce that the issue is related to the industry and
declining constantly since last 1 year. It has approached you to identify the cause and
profits are falling overall.
recommend measures to counter the fall. Now, we can break profits into revenue and cost. Since the information
shows that issue is on the revenue side due to shrinking sales, should I
The Interview touch the cost side?

Interviewer Good Morning Shubham, how are you doing today? Interviewer The cost factors have remained stable more or less, you can focus on the
revenue side.
Shubham Good Morning, I am doing good.
Shubham Alright. I will further break revenue into price, product mix and volumes.
Interviewer Very well, let’s get started with the case right away. Since it is clear that pricing and product mix don’t have issue, I would dive
Interviewer Your client is an Indian automobile manufacturer. Its profits are declining deeper into volumes. Am I missing anything?
constantly since last 1 year. It has approached you to identify the cause Interviewer Yes, That’s right. Please go ahead with volumes.
and recommend measures to counter the fall.
Shubham Volume can be split into market share and the market size. Is their any
Shubham I would like to begin with a few clarifying questions on the client. data available which mentions any change in either of these.
Interviewer Yes, Go ahead. Interviewer As I said whole industry is facing the problem, assume that market share
Shubham What kind of automobiles does the client manufacture? Does it operate of the company has remained almost unchanged, but the overall market is
across the value chain? Where are these automobiles produced? shrinking.

Interviewer The client is producing cars from small hatchbacks to large SUVs. It has Shubham Now I would list the broad buckets which can impact the industry market
suppliers for some components while remaining it manufactures on its pie (given on the approach page). There could be new regulations that are
own. It has 3 plants at major production hubs across India. limiting the sales of Internal Combustion (IC) engine vehicles, one of the
complements has got impacted – steel, rubber, other raw material, fuel
Shubham Is the problem specific to part of the portfolio? Has there been any change prices, the financing conditions are not very favourable, new substitutes
in pricing strategy by the company? Is the problem specific to the company have entered the market, or customer sentiments have changed towards
or the whole industry? the IC vehicles. Which one should I focus on?

54
Declining Profits – AUTOMOBILE MANUFACTURER

Interviewer As you correctly listed, the problem is with the financing. Customers are
finding it difficult to get cheaper credit and are hence refraining from
making investment in cars.
Now tell me how would you help the company define its next strategy?
Shubham The company can follow one of the 4 strategy or their combination –
starting a leasing program for a fixed number of year, a guaranteed buy-
back offer after certain year, signing contracts with car-renting firms to
ensure alternate sales route, or offering extra benefits like buy-now pay-
later offer or lower maintenance other value added services.
Interviewer Okay, so let’s assume the client accepts your first recommendation of
starting a leasing service. Now tell me what factors the client should keep
in mind before going ahead.
Shubham If the client offers leasing services, the demand is expected to rise as
customers now would have to arrange lesser money. So the client has to
make sure it conducts a study to accurately forecast the new demand and
accordingly adjust the supply chain – increasing capacity in plant and
supplier end. Also, since now cash inflow per sales would reduce, which
would lead to lesser earnings from interest per sales, and lesser cash in
hand per sales, the client should do thorough cost-benefit analysis to
define the sales target so that the new strategy counters the current fall in
profits and not become another loss-making proposition.
Interviewer I think this would be enough for our discussion. We should wrap it up
here.
Shubham Thanks.

55
Declining Market Share – AUTOMOBILE MANUFACTURER

Approach
Profits

Fixed Cost
Revenue Cost Not discussed
in the case
Variable Cost

Price Product Mix Volume

Market Market Size

Share

Regulations Complements Financing Substitutes Customers

Recommendations Contracts with Extra

Leasing Buy-back
Car Renting Firms Benefits

56
Entertainment Industry/Market Entry – FILMFARE MAGAZINE
Candidate : Neetika Sharma Company : BCG Interviewer What do you think could be the reasons?
Sector : Entertainment Type of Case : Unconventional/Market Entry
Neetika Reasons could be: Less number of songs per movie, Few number of
singers, Biases towards singers, Poor process of evaluating singers
Problem Statement: It is 1962. Your client is Filmfare magazine. Filmfare has been receiving fan
mails to introduce the best singer award, should they introduce this award? Interviewer The reasons sound good. But none of these hold true in this case.
Neetika Okay, then I would like to know how is a singer selected?
The Interview
Interviewer So, a music director sells a package of 3-4 songs to the producer who then
Interviewer Good Morning Neetika, how are you doing today? gives a fixed lump sum amount to the music director who pays to others.
Neetika Good Morning Sir, I am doing good. Neetika Here lies the main issue. Music directors in order to keep a large portion of
Interviewer I see you used to write movie reviews. So, let’s do a case related to the money with themselves select singers on their personal preference.
entertainment industry. It is 1962. Your client is Filmfare magazine. They Singers don’t have any power .The music producers also take credit for the
sell magazines and hold an award function to build the magazine’s songs. Therefore, Filmfare never cared to reward singers either.
credibility. There are 2 types of awards, technical (best director, best
Interviewer You have got the reason correctly. Now, what do you suggest further?
cinematographer) and non-technical (best actor, best actress). In the
music field there is only one award - best song award, which is accepted Neetika I will look into the pros and cons of introducing the best singer award.
by the producer and the music director of the movie. Fans have asked Pros
Filmfare to introduce the best singer award, should they? 1. By giving the award, Filmfare will fulfill the audiences’ request.
Thereby, increasing the no of buyers.
Neetika First, I’d like to know if there are other such award functions being held. If
2. Singers will get popularity. Filmfare can increase the price of magazines
yes, did they give the best singer award? I will then look into the various
as they could get interviews of these popular singers.
stake holders of the film industry who influence the singers.
3. New concepts, like this award, will boost Filmfare’s popularity.
Interviewer Since, we are talking about 1962, let’s say there was only one magazine. 4. Acknowledging singers could help Filmfare gain positive attention.
Please list the various stakeholders for me. Cons
1. Introducing separate awards for singers might hurt the sentiments of
Neetika Actors, directors, producers, movie directors, singers, writers, technicians.
music directors who were quite influential during ‘60s.
Interviewer Sounds good. Please go ahead. 2. Giving awards to the limited number of singers could get biased.
All in all, I would say Filmfare has more to gain so it should start the award.
Neetika I would like to know why singers are not given awards.
Interviewer Great, that was a thorough analysis. Than you!

57
Entertainment Industry/Market Entry – FILMFARE MAGAZINE

Approach
Film industry

Music Singers Other

Actors Director Producer
director technicians

Less no. of songs

per movie
Few no. of singers
Best singer Biases towards
Award singers
Selection procedure
of singers

Cons Pros

1. Introducing separate awards for singers might 1. By giving the award, Filmfare will fulfill the audiences’ request. Thereby,
hurt the sentiments of music directors who increasing the no of buyers.
were quite influential during ‘60s. 2. Singers will get popularity. Filmfare can increase the price of magazines as they
2. Giving awards to the limited number of could get interviews of these popular singers.
singers could get biased. 3. New concepts, like this award, will boost Filmfare’s popularity.
4. Acknowledging singers could help Filmfare gain positive attention.

58
Deloitte USI

59
Miscellaneous/Market Entry– IIT+IIM IN LEH
Candidate : Naveen Joshua Company : Deloitte USI
Sector : Education Type of Case : Miscellaneous Naveen The factors that will come into play could be

1) Acquiring land will be crucial

Problem Statement: The Government wants to setup an IIT & IIM at Leh. Evaluate and 2) Feasibility in light of the fact that Leh stays shut for 6 mths of the year.
give recommendations. 3) Leh is not a very developed city so attracting the right academic talent
will be difficult. Same for students and recruiters. This makes for a
cycle given recruiters attract good students and vice-versa.
The Interview
Interviewer Which of these do you think is a major issue?
Interviewer Hi Naveen, how are you doing today?
Naveen Assuming that the Govt. has the land and we ignore the weather issues, it
Naveen Good Morning Sir, I am doing good. would be getting the recruiters and professors.
Interviewer Great, Let’s start with a short case. Interviewer So what can you do to solve that issue?
Your client is the Government of India. It wants to setup and IIT and IIM at
Leh. They want you to evaluate this move and make recommendations. Naveen The IIT/IIM can be under a nearby and older IIM/IIT which can act as a
parent. For example, IIM L or IIT D. Professors can also be outsourced
Naveen What is the Government’s objective for setting up these institutions? from these institutes.
Interviewer What do you think can be the reasons? Interviewer Are there any solutions that you can give to deal with the weather?
Naveen The reasons could be – Naveen We can look at having insulated classrooms.
1) There is a dearth of institutions, so the Government wants to build
Interviewer Alright, that works. Thank you, Naveen!
more
2) The Government wants to develop Leh.
Interviewer Let’s assume that development of Leh is the goal for the Govt.
Naveen What is the timeline?
Interviewer You don’t have to look at the timeline now. Assume 3-4 years. Just
evaluate the factors that will come into play and give recommendations.

60
Miscellaneous/Market Entry– IIT+IIM IN LEH

Approach

IIT + IIM in Leh

Issues

Weather Land Recruiters Professors Students

Recommendations

1) The IIT/IIM can be under a nearby and older IIM/IIT which can act as a parent. For
example, IIM L or IIT D. Professors can also be outsourced from these institutes.
2) We can look at having insulated classrooms.

61
Value Chain Analysis/Miscellaneous– CUP MANUFACTURER
Candidate : Naveen Joshua Company : Deloitte USI
Sector : Manufacturing Type of Case : Miscellaneous + Cost Reduction Naveen Okay. I am assuming that the typical after sales service process comprises
of sales people conducting walk-ins, reaching out to new and old
customers, getting the orders, transferring this information to
Problem Statement: You are a plastic cup/container manufacturer. Your sales have been manufacturing team, getting the final product delivered within time and
increasing but your customers are unhappy. Evaluate and make recommendations. then addressing any further concerns.
Interviewer Alright. So, here is a sheet with details about the service channels, order
The Interview type and customers. Use these to comment on what could be the source
of dissatisfaction.
Interviewer Hi Naveen, let’s jump into a case right away.
SNo Type of Customer Order Order Service Service Request
Naveen Good Morning Sir, yes please! Frequency Channel Request Channel
Frequency
Interviewer You are a plastic cup/container manufacturer. Your customers are the
middle men. Your sales have been increasing over the past few years, there 1 Food Manufacturer Daily Fax, Email Weekly Email
is growing discontent among your customers. Evaluate and make
2 Food Manufacturer Weekly Self Service Monthly Self-service
recommendations.

Naveen Okay, so I would like to start with the value chain. 3 Wholesaler – Bi weekly Email Bi-weekly Phone
Supermarket Supplier
Interviewer Go ahead. 4 Restaurant Chain Weekly Phone Daily Email, Phone

Naveen The typical value chain for a cup manufacturer would go as follows
5 Restaurant Chain Monthly Email, Fax Daily Self-service, web
Raw Material Supplier>Manufacturer > Transportation>Warehouse>Middle chat, phone
men>Transportation>Retail Stores>End Consumer.
Further, there will also be the component of After sale service. Order Type

Interviewer So, which among these do you think could be causing dissatisfaction? Customer Standard Customized

Progress At this point, the interviewee starts evaluating all the value chain heads. Food Manufacturers 100%

Wholesaler 50% 50%

Interviewer Alright, can you look into the after sales aspect?
Restaurant 100%

62
Value Chain Analysis/Miscellaneous– CUP MANUFACTURER

Naveen So, I will start with customer type and order frequency. By observation, I Naveen To manufacture using the new material, I believe we will be using new
can say that if the order frequency was daily or weekly, planning for machinery. This can be a major cost that can be involved.
inventory, raw material and delivery would have been difficult, especially, Rent, electricity will stay the same. Marketing costs will come into the
in light of the 100% or 50% customization demands. This could have picture here.
resulted in compromised delivery standards and quality, and could have
been a reason for dissatisfaction. Interviewer Can you elaborate on the marketing costs?
Coming to order channels, there are way to many of them and they need Naveen We will now have to focus on marketing to a completely new clientele
to be streamlined. Apart from ensuring better customer service, this will since our existing clientele might not be willing to pay higher for
also help in reducing costs and operational complexity. Example, channels biodegradable cups. So, we will be looking at more environment friendly,
like FAX are not used as much any more, so we can do away with them. We premium clients. So, reaching out to them and on boarding them will be a
can also use self-service web client to take in the orders and deal with cost in itself.
after sales service through email and phone, similar to what Amazon and
Flipkart do. Interviewer Alright, can you summarize the case now?
Looking at the frequency of service requests, I see some clients request Naveen So, we’re a cup manufacturer and we’re facing rising customer
daily servicing. This can also be an issue since too many requests can lead dissatisfaction. After evaluating the value chain, we encounter an issue
to compromised quality as labour is fixed. This can also lead to expectation with the after sales service. We explored the after sales service process
mismatch and cause dissatisfaction. and based on the information provided we came up with faults in the
Interviewer That is a thorough analysis. existing system. Next, we saw a shift in government policy which affected
Now, due to some government regulations, the manufacturer has to shift our costs. We then evaluated which costs would make the most impact, in
to biodegradable material to make containers. What will be the costs this case, equipment and marketing.
involved and how should they go about it? Interviewer Okay, can you make some recommendations now?
Naveen Costs can be classified into fixed and variable. Fixed costs will include – Naveen To deal with the changed government policy, we will have to look at
land, factory, equipments, marketing. Variable costs will include – labour, revamping our sales force by training them on how to deal with the new
rent, electricity. Can we use the same land? type of clients. We will also have to train the labour on the new machines.
Interviewer Yes, you can. Interviewer Alright, great work Naveen. Thank you.
Naveen Can we use the same factory as well?

Interviewer Yes, the same factory can be used as well.

63
L.E.K. Consulting

64
Investment advisory to a PE firm – Private Equity
Company : LEK Consulting Type of Case : Investment Advisory Interviewer Ok. Please go on.
Sector : Private Equity
Interviewee <I assumed some per annum fees for a pre-kg school. Then I assumed that
families spend x% on rent, y% on housing needs, z% on leisure etc. Using
Problem Statement: There is a PE firm which wants to invest in a pre-kindergarten the per annum fees assumption and the percentage of income spent on
school chain like Kidzee which operates in Mumbai. What advice would you give them? education, I was able to calculate the cutoff for families who could afford to
enroll their kids in the pre-kg school based on their income>
Interviewer Ok. How will you use this information?
Interviewee Now we can further segment the married couples between 27-35 into
those who can afford and those who cannot
The Interview Interviewer Ok, the market size is fine. What else will you advise the client?
Interviewer There is a PE firm which wants to invest in a pre-kindergarten school chain We should also look at the financials of the pre-kg chain. By looking at their
Interviewee
like Kidzee which operates in Mumbai. What advice would you give them? assets, liabilities, income and expenses we would be able to determine
Interviewee Can I ask some clarifying questions? what percent of their revenues come from operating activities.
Interviewer Yes of course Interviewer What kind of expenses do you think are applicable for a pre-kg chain?
Interviewee As they are operating in Mumbai, rent and lease would form a major part of
Interviewee Is it the first time that the PE Firm is venturing into the education industry
their expenses. Apart from rent, they would incur expenses for salaries,
Interviewer Yes, this is the first time maintenance and advertising.
Interviewee What is the horizon of investment that the PE firm is looking at? Interviewer Ok. What else? Do you foresee any risks for the client?
5-10 years. Can you tell me what all elements would you consider while Interviewee One risk could be that the client is not able to find suitable teachers for
Interviewer
analyzing the case? engaging with pre-kg children.
Interviewee First of all, I would like to estimate the size of the pre-kg industry, look at Interviewer Wait, who is our client?
the market share of the pre-kg chain that our client is looking to invest in I’m sorry. It is the PE firm. <Since this was a PE client who was looking to
Interviewee
and then look at the growth rate of the industry and the target’s market invest in another company, I got confused about the perspective from
share. which the question is asked>
Interviewer Good. Please proceed Interviewer No worries
Interviewee To estimate the market, I would divide Mumbai into 5 zones. For each zone, The risks for our client are that the pre-kg industry could become irrelevant
Interviewee
I would estimate the number of married couples in the age group of 27 to in the future. The government could come up with a law where children
35. Before, I proceed, I want to do a side analysis about who can afford to below x years are not allowed to study. The schools could start opening
enroll their kids in pre kg schools their own pre-kg chains.
Investment advisory to a PE firm – Private Equity

Interviewer Interesting. Anything else? Approach

Interviewee The technology is evolving so fast. In future, robots could be developed to
take care of and educate children when their parents are not at home.
Interviewer Hahaha. That is still 15-20 years away.
Invest in Kidzee?
Interviewee Do you see any alternate revenue streams for the pre-kg chain, if the need
arises for them?
Interviewer I can think of partnerships with some educational toy companies. In this
model, the toy manufacturers would pay the pre-kg chain to stock their Market
toys. Financials Risks
Interviewee Ok. Anything else?
Size
Interviewer Similarly, with children’s clothes.
•Assets •Relevance
Interviewee Yeah. Ok. Thank you for the ‘interesting’ discussion
•Liabilities •Technology
•Income
•Expenses (rent,
salaries,
maintenance,
advertising)
McKinsey & Company

67
Pricing – COAL MINE IN CHINA
Candidate : Purav Gandhi Company : McKinsey & Co. Interviewer Just wealth creation. We would like to maximize wealth. There are no
Sector : Coal Type of Case : Pricing other objectives.
Purav So, what is the price which is being asked for the coal mine?
Problem Statement: Someone has an opportunity to invest in a coal mine in China.
Progress At this point the interview takes turn to become a pricing case rather than
What would you recommend? Ho would you price the coal in the mine? a due diligence case.
Interviewer We need to give them a price. What should be the price we offer them?
The Interview
Purav So, we can value the project by calculating the returns we get from the
Interviewer Good Morning Purav, how are you doing today? project by discounting the cash flows we receive from the project. In
order to do that we need to calculate the revenues we are able to earn
Purav Good Morning Sir, I am doing good.
from the mine each year. So, could you tell me whether the mine is
Interviewer I see you have a strong technical profile, but I need to see whether you operational, else we will need to approach the problem differently.
have good business judgement as well, so that I am comfortable sending Interviewer The mine is operational already. We don’t need to worry about the
you to clients right from day 1. You have been taught Corporate Finance, operational aspects.
right? So tell me, how would you evaluate a company?
Purav So, we can calculate the revenue of coal in a year as the volume of coal
Purav Sir, we can look at the EBITDA value of a company & multiply it to the mined in a year multiplied by the price. So, do we have any data about
EV/EBITDA ratio of the industry. how much coal we produce in a year?
Interviewer How you would you decide whether to invest in a firm or not? Interviewer We produce 600 tonnes of coal per year. How would you figure out the
Purav I would look at profits & growth and see the PE ratio. price per tonne?
Interviewer You could also look ay NPV. Moving on, lets do a case. But, it’ll be more like Purav The price of coal depends on a number of factors which affect its quality
a conversation. like moisture content, carbon content & so on. First, we need to figure out
the quality of our coal. Then for a specific quality of coal, we can set
Purav Okay, I am ready. prices similar to our competitors. Also, there is publicly available data
Interviewer So, a friend of mine has an opportunity to invest in a coal mine in China. which indicates at what price a specific quality of coal sells at. We can set
What would you tell him? our price in that way.
Purav I would first like to know what are the objectives to buy this coal mine? Interviewer Public data is not always available. Assume the price to 7000 Rs. per ton.
Can you calculate the returns?
68
Pricing – COAL MINE IN CHINA

Progress The interviewee calculates the return after assuming opportunity cost of
capital.
Interviewer What are your observations?
Purav The returns seem less for a coal mine. As far as I know, a lot more volume
is generally produced. Is there any reason why we are producing just 600
tonnes?
Interviewer It is because the technology is very old & inefficient. Also, in the NPV
calculation, it seems you have considered infinite time of operation. Is that
correct?
Purav Sorry, I forgot to consider the fact that the coal reserves may get
exhausted. So, to calculate the number of years the operations can
continue, we need to divide the total tonnes of coal by our annual
production.
Interviewer We know that the mine is 300m x 180m x 20m in dimensions & you can
assume the density of coal to be 700kg per cubic metre.
Purav The total amount of coal comes out to be 756,000 tonnes. So, it should
last well over 1000 years at current levels of production.
Interviewer Suppose we increase our current levels of production to 4 times by
investing in new machinery, how will the NPV change?
Purav The increase in annual production volumes by 4 times will lead to 4 times
revenue each year. But, our operations will last for one fourth the previous
timespan, which is still over 250 years.
Interviewer You forgot to include the machinery cost in the formula. But, the rest is
correct. That’ll be all.

69
Pricing – COAL MINE IN CHINA

Approach

NPV Calculation Discounted Cash Flow Formula

Initial Annual
Investment Profit

Operational
Revenue Was to be considered fixed.
Cost

Weight
Price per Depends on coal quality.
Coal is priced per tonne. Tonne Value: Rs. 7000 per Tonne

Volume Density

Calculated by taking product

of length, breadth depth.

70
Feasibility and pricing of a medicine/ Pricing Strategy - PHARMA
Candidate : Shreya Saraiwala Company : McKinsey
Sector : Pharma Type of Case : Product Pricing Interviewer Lets say it seeks both the things.
Shreya Sure Sir. Can you tell me more about the product. In terms of the nature,
pros and cons which would help me place it against the other competitive
Problem Statement: Pharma Company with typically low presence in India wants to items in the market.
launch a new product for Lung Cancer. Assess the feasibility and consequent pricing.
Interviewer Yes. Why not. So the client’s product is an injection which is a substitute
to chemotherapy medicines. Typically dosage say once a day. Compared
The Interview to the competitors we have seen low side-effects in this product.
Interviewer Good Morning Shreya, how are you doing today? Shreya Makes sense. I will take a moment to lay down my thoughts. (Pricing not
being one of my strengths, I take more time than usual just to make sure I
Shreya Good Morning Sir, I am doing well. don’t miss points)
Interviewer Very well, let’s get started with the case right away. Interviewer Yeah sure.
Your client is a Pharma Company with typically low presence in India wants
to launch a new product for Lung Cancer. Assess the feasibility and Shreya Right, so I have broken down the assessment process based on 4
consequent pricing. parameters.
1. Market Attractiveness where the growth and market share that we
Shreya Thank you for the question. I will take a moment here to gather my look to capture will be assessed.
thoughts. 2. Risks: in terms of competitors, substitutes, product acceptance, macro
Interviewer Sure. economic conditions, etc.
3. Feasibility/Profitability in terms of NPV and payback period that we
Shreya Alright, so does the client operate internationally as well? (to assess if the expect
client is established else where and has a strong brand there) 4. Existing synergies in terms of knowledge and expertise, international
brand value, customer base from other products that can be leveraged
Interviewer Yes, it does exist internationally but is new in India. Given that, how do you Is there a specific field that you want me to look in depth?
think it should move ahead?
Interviewer So the risks you have mentioned looks mostly external? You don’t
Shreya Definitely. Before moving ahead, few more questions. What exactly does perceive internal risks?
the client seek with the launch. Is it market share or revenue or both?
Shreya Umh. Yes, I have mostly laid down external risks, but I guess you are right.
I should think of other internal risks as well like machinery breakdown,
supply issues, etc. (nervousness kicks in)
71
Feasibility and pricing of a medicine/ Pricing Strategy - PHARMA
Candidate : Shreya Saraiwala Company : McKinsey
Sector : Pharma Type of Case : Product Pricing Shreya Just to understand the customers that we are looking at, do we intend to
target the premium segment?
Interviewer Not really.
Problem Statement: Pharma Company with typically small presence in India wants to
launch a new product for Lung Cancer. Assess the feasibility and consequent pricing. Shreya Makes sense. There are typically 3 ways to go about pricing, value- based,
cost based and competitor based. I would actually focus more on value
based pricing given the strong functional value. Cost and competition are
The Interview factors that we would account for in pricing but the company I feel should
focus on driving the product home using the value offered. So given that
Interviewer So interesting that you mentioned substitutes. What substitutes can you we seek to leverage the functional value of our product to capture the
think of for a lung cancer medicine? required market share, I would say we should price it somewhere 12-13K.
Mainly for two reasons:
Shreya Given that ours is a one of a kind product (injection), I would look at
various substitutes based on the medium of ingestion. So say, pills, inhaler, 1. It should not be priced at the lower end of the spectrum given low
Liquids, etc. These can be further characterized based on the frequency of price is generally associated with low quality and medicine is
ingestion, price, availability, side-effects, degree of effectiveness, etc. something people do not wish to compromise on.
2. We should not also place it on the extreme end given we have low
Interviewer Very well. Do you want to think of any other forms of medicinal presence in the country so we would want to increase the rate of
substitutes? adoption among doctors and hospitals sooner.
Shreya (Thinks hard. Cannot think of any). Sorry Sir, I cannot seem to think of any.
A narrow margin should suffice in the start and then once the credibility is
Interviewer It is fine. I was thinking more in terms of say Ayurveda, Homeopathy, established, we can seek a higher margin from our sales.
Allopathy, etc.
Shreya Oh Yeah. Even for less intensive treatments say hair, skin allergy, we do Interviewer Makes Sense. Thank you so much Shreya. It was wonderful interacting
look at these alternatives. with you.
So Sir, given this can you give me more information on how the
competitors have priced their products, which will help us benchmark Shreya Thank you so much Sir. Have a great day.
further.
Interviewer Yes. So injections typically are priced within 10-15K. Where should we
place our product in the range?
72
Feasibility and pricing of a medicine/ Pricing Strategy - PHARMA

Feasibility
Assessment

Market
Risks Profitability Existing Synergies
Attractiveness

Knowledge &
Growth Competition NPV
Expertise

Existing Customer
Market Share Substitutes Payback Period
Base

International brand
Macro conditions
value

Product Acceptance

73
Cost optimization for an IT company – Cost Optimisation
Candidate : Rohan Jain Company : McKinsey Interviewer Client is a market leader in the IT industry. Client feels they can cut down
Sector : IT Type of Case : Cost Optimisation on certain costs. Cost of operations means cost of running the company.
Rohan Got it. Segmented the costs for the company (see approach section). Since
Problem Statement: Your client is an IT company who wants to reduce their cost of
IT is a service industry, I feel we should focus on cutting down the
operations. Recommend some strategies for the same. employees cost. Is my assumption correct.
Interviewer Good. That’s correct. How do you plan to do it?
Rohan Sure. Again broken down employees cost into hiring cost, training cost,
salaries paid and firing cost. Do you want want me to focus on any
The Interview particular item?
Interviewer Good Morning, Rohan. Why don’t you start by telling me something about Interviewer That seems fine. But you haven’t accounted for operational efficiency in
yourself. your structure. How would you incorporate that?
Rohan Gave the prepared answer. [Progress] Bit confused here. Didn’t quite understand what he wanted to say.
Interviewer How’s life going in IIM Bangalore? Rohan Umm.. Not sure if I understand correctly. Do you mean to optimise the
money spent on employees. In other words, reducing the money spent per
Rohan Told him about academic performance in Term 1 and other extracurricular employee?
activities and interests that I pursue.
Interviewer Exactly.
Interviewer Let’s go to the case right now. Your client is an Indian IT company. They
have majority of their clients in the US and they regularly send their Rohan Alright, so we can segment employees cost as # of employees and cost
employees onsite. They want to reduce their cost of operations. How will incurred per employee.
you help them? Interviewer Correct. Now how would you go about reducing each one of them.
[Progress] I started with basic set of clarifying questions to clearly understand the
problem statement. [Progress] Gave few recommendations like reducing incentives and fixed pay, giving
out stock options, having less people sent to onsite work, reducing the
Rohan I have a few preliminary questions to help me better understand the number of contract employees, giving option of early retirement to
problem our client is facing. Why does our client feel they should optimize people, cutting the workforce by letting underperformers go. However
on cost? Are their cost of operations higher vis a vis industry average? How interviewer was not convinced. He was looking for something else.
big is our client in terms of market share? What exactly do you mean by
cost of operations?
74
Cost optimization for an IT company – Cost Optimisation
Candidate : Rohan Jain Company : McKinsey
Rohan We can use the typical IT company’s PE ratio which is around 20. This
Sector : IT Type of Case : Cost Optimisation
would mean McKinsey would have added 20*200M = $4B market value for
the client
Problem Statement: Your client is an IT company who wants to reduce their cost of
operations. Recommend some strategies for the same. Interviewer Aren’t you forgetting something?
Rohan Taxes! Assuming corporate tax rate in India to be 30%, McKinsey would
have added $4B*0.7 ~$3B post tax.
Interviewer Good. You’ve done well. Any questions for me?
Rohan Since you’ve worked for more than 10 years in consulting, what keeps you
Interviewer That’s all fine. How do you think a typical team in an IT company would be
going?
structured?
[Progress] Now I understood what he is hinting at. Approach
Rohan Right. So a typical team would be of 10 members with 1-2 senior level Cost of Operations
employees, 3-4 mid level employees and rest all junior level employees. As
per my understanding, most of the cost would be driven by senior level
employees. So we can reduce the number of senior level employees and
delegate their work to the mid and junior level after proper training.
Employee cost Building lease cost Maintenance cost
Interviewer Good. That’s what we recommended to the client. As a result, McKinsey
saved $200M for the client. I see you have cleared CFA L3.
Rohan Yes sir.
Interviewer How much value do you think we added to the client’s business? No. of employees
Rohan Since McKinsey saved $200M annually, the cost savings would hit the PnL
statement, and thus the annual pre-tax profits would go up my $200M. If
we know the firm’s cost of equity, we can find out the value added by
discounting the additional $200M cash flow generated annually. Cost incurred per
employee
Interviewer I don’t have cost of equity with me. What do you think is the right ratio to
use here?
75
Estimate Cash flow and risks of an expressway project – Profitability
Candidate : Ankur Dua Company : McKinsey Ankur Right! So, the approach that I was thinking of is that we can delve into the
Sector : Infrastructure Type of Case : Profitability profitability of the expressway venture and see the sources of revenue and
costs involved which will correspond to the cash inflows and outflows.
Problem Statement: You are working with a private equity client who is exploring an However, this method would cover cash flows over the lifetime of the
investment opportunity in an infrastructure firm which has undertaken Mumbai- project, is that fine or are we looking at a specific timeframe?
Hyderabad expressway project. You have been called upon to examine the estimated Interviewer No that should be fine. Let’s drill down the revenue and cost heads.
cash flow statement of the project and enumerate the possible risks associated with
these cash flows. Ankur The major revenue sources associated with expressways according to me
are toll tax: both commercial vehicles and private vehicles as there will be
rate differential, interstate duties (though these might be simplified given
The Interview the GST regime), food mall or restaurant rents in case the sideroads
Interviewer Good Morning Ankur, since we have a limited time frame, let’s just start utilized by these places are on lease, advertisement revenue from
with the case. You are working with a private equity client who is exploring billboards on highways. Costs would include construction, road
an investment opportunity in an infrastructure company that works in the maintenance, running the toll collection systems, electricity expense on
area of roads, metros, sea ports etc. You are specifically looking at one lights and billboards and additional service expense (like telephone booths
project being undertaken by the infrastructure firm which is the Mumbai- or emergency ambulances). Am I missing out on any other major head?
Hyderabad expressway. You have been called upon to examine the Interviewer Well that pretty much covers all the heads. In fact, most of the cost comes
estimated cash flow statement of the project and enumerate the possible from construction which can be treated as a sunk cost in this case and the
risks associated with these cash flows. others are constant costs with very less variability. So let’s look at the
Ankur Alright, before I start thinking of a possible way to enumerate the risks, I’d revenue side, what do you think would be the biggest chunk?
like to clarify a few things if that’s fine? Ankur It’s a heavy traffic route between two major commercial cities and so the
Interviewer Sure! Go ahead. toll collections should be significant.

Ankur I wanted an idea as to the typical projects that the PE firm deals in and is
Interviewer Well absolutely! It is the biggest concern in this project. How will you
there any specific reason why they have chosen to go ahead with this
assess the potential risks associated with it?
infrastructure firm and this particular Mumbai Hyd expressway project
only? Ankur For that I would need to understand the current structure of toll
collections in terms of toll charged and distribution across commercial and
Interviewer Because I need to interview you to offer you an internship and we have got
private vehicles in terms of number of vehicles.
only 15 min so let’s just cover this one project for now.
76
Estimate Cash flow and risks of an expressway project – Profitability
Candidate : Ankur Dua Company : McKinsey
Interviewer Well, trade certainly seems to be the area of interest. Which industries do
Sector : Infrastructure Type of Case : Profitability you think account for greatest trade in general across land routes?

Problem Statement: You are working with a private equity client who is exploring an Ankur Typically, raw materials (steel etc), automobile industry and agriculture.
investment opportunity in an infrastructure firm which has undertaken Mumbai- Interviewer Well that pretty much covers all the heads. In fact, most of the cost comes
Hyderabad expressway project. You have been called upon to examine the estimated from construction which can be treated as a sunk cost in this case and the
cash flow statement of the project and enumerate the possible risks associated with others are constant costs with very less variability. So let’s look at the
these cash flows. revenue side, what do you think would be the biggest chunk?
Ankur Typically, raw materials (steel etc), automobile industry and agriculture.
Interviewer Gave the following data: Interviewer Correct, so agriculture and automobile are the major contributors in this
Total number of vehicles on a daily basis = 100,000 case, each contributing 50% to the total commercial vehicle traffic. And
Type Price Quantity declining trade in both the industries is a cause of concern, what do you
think is driving the decline in trade?
Private Cars 100 40%
Ankur Let’s look at agriculture first: it’s a heavily monsoon dependent industry
Comercial 200 40% and therefore the most likely reason for the dip in trade would be a bad
season. However, this is a seasonal variation that must have been
Buses 150 20% accounted for in the estimation of cash flows.

Ankur Alright! I’d like to calculate the respective revenue contributions of each Interviewer Yes, so let’s focus on just the automobile industry.
category to see who can create the maximum impact on overall earnings. Ankur So typical factors affecting trade vehicles are competition, demand for
Should that be fine? goods, alternate routes o modes of transport. Any specific head that I
Interviewer Absolutely! should look at?
Ankur The major traffic of commercial vehicles on this route would likely be due Interviewer Well Pune-Solapur belt is an automobile hub which has been supplying the
to trade given that both the cities are major industrial or commercial major chunk of automobiles to the South but recently Chennai has
centers in the West and South respectively. Hence, any change in volume emerged as a dynamically growing auto hub in the South.
of trade can impact the traffic. Additionally, any alternate route availability Ankur So, it seems like it’s become easier for Hyderabad retailers and stock
or possibility of alternate modes of transport can impact traffic also. Do holders to source automobiles from Chennai than Pune belt and hence
any of these causes seem pertinent as of the current circumstances? traffic on Mum-Hyd expressway might be taking a hit. Do we have an idea
as to what extent can the demand be fulfilled by the Chennai hub?77
Estimate Cash flow and risks of an expressway project – Profitability
Candidate : Ankur Dua Company : McKinsey
Sector : Infrastructure Type of Case : Profitability Approach
Problem Statement: You are working with a private equity client who is exploring an Revenue
investment opportunity in an infrastructure firm which has undertaken Mumbai-
Hyderabad expressway project. You have been called upon to examine the estimated
cash flow statement of the project and enumerate the possible risks associated with Food mall &
Advertisement
these cash flows. Interstate duties Toll Tax restaurant
revenue
leases
Interviewer 50% of the current demand. Also assume that the entire demand currently
is being met by transporting vehicles via the expressway. Commercial
Ankur So, we expect a 50% fall in traffic and hence revenue. Vehicle

Interviewer Also, you talked about an alternate route. So, there is a new highway
coming up that can help cut down the time of this route travel by 25%.
That will reduce the remaining traffic by another 50%. So, can you Private vehicle
calculate the expected number of commercial vehicles.
Ankur Initially we had 40,000. Due to Chennai hub the traffic dropped to 20,000
and now, due to this alternate route it’ll now go down to 10,000. So, we
will have only 10000 commercial vehicles which will be charged a toll of Seasonal nature of
200. This drop should be the major risk to estimated cash flows then. Do agricultural trade
you want me to calculate the new estimated revenue? Reduction in trade
Interviewer Not really, I’m sure you can multiply 10000 and 200. So, you have pretty Chennai hub
Fall in traffic
much proceeded in a way that we did for this case when we were working competition
with this client. Do you have any questions for me? Alternate routes
Ankur I wanted to know about the work that McK does in the field of retail and
brands, so we discussed that for a while and the interview ended.

78
Increase growth for car rental service provider – Growth
Candidate : Anushka Rastogi Company : McKinsey
Interviewer The industry is growing but is extremely fragmented with a lot of budget
Sector : Auto Type of Case : Growth
players in this sector.

Problem Statement: Your client is a self-drive car rental service provider. It provides Anushka So I would like to break down revenue into a function of Price X Quantity X
various car options on rent for trips or vacations wherein you can rent a car for a Product Mix. Here, Price would be a function of various factors such as
mode of pricing (per km. rate, with or without fuel, etc.), competitor's
certain number of days to drive and return. They have recently witnessed a dip in
price, car quality, demand for service, convenience and any value added
their growth numbers. You have been asked to diagnose the problem and offer
customisations such as chauffeurs, insurance, customized seats, etc. Is a
potential solutions. recent change in the Price a reason for the dip in revenues?
The Interview You seem to have covered the Price aspect well. We offer competitive
Interviewer prices and quality. Overall, there is no issue in the price which could have
Interviewer Your client is a self-drive car rental service provider. It provides various car
impacted the revenue. You can move on to the other two aspects.
options on rent for trips or vacations wherein you can rent a car for a
certain number of days to drive and return. They have recently witnessed a Anushka Sure. So Quantity could be broken down into quantity contributed by new
dip in their growth numbers. You have been asked to diagnose the customers and by existing customers. For new customers, we would focus
problem and offer potential solutions. on marketing aspects such as promotion of the product, placement of the
product, introductory offers, etc. The existing customer base will depend
Anushka I would like to ask a few clarifying questions to better understand the
on loyalty offers, competitive quality and recall brand value of the service.
problem. First, could you elaborate on what the meaning of growth is?
Does it refer to profitability or revenue or market share? Interviewer You can assume that customer base is not a challenge because we are not
losing our existing base and we have an increase in our new case as well.
Interviewer I would like to ask a few clarifying questions to better understand the
problem. First, could you elaborate on what the meaning of growth is? Anushka Okay, so finally product mix can be the main issue leading to a dip in
Does it refer to profitability or revenue or market share? revenues. The dip in revenues may be prevalent in one type of product
line. What kind of product mix exists in the organization?
Anushka Okay, and to understand the organization a little better, what geography
does it operate in and what sort of customers does it cater to? Interviewer Yes, the issue is related to product mix. Here is some data on the product
mix and daily rental charges: Hatchback - Rs. 6, Sedan - Rs. 8, Luxury - Rs.
Interviewer Good question. It operates in all states of US and caters to customers
10 and Ultra-Luxury - Rs. 15. The company has seen a dip in the revenue
across income segments. It offers everything from a hatchback to a luxury
from luxury and ultra luxury vehicles. Could you think of reasons why?
vehicle.
A few reasons could be the sheer charges being much higher and not ideal
Anushka Okay and lastly, could you throw a bit of light on the competitive landscape
Anushka for the middle income customers for whom this service is typically ideal or
and the industry in which the company operates?
79
Increase growth for car rental service provider – Growth
Candidate : Anushka Rastogi Company : McKinsey Anushka The product / service could either be differentiated in terms of features
Sector : Auto Type of Case : Growth and customisation or in terms of product quality. The pricing of the
economy and luxury segment products could be further reduced to
Problem Statement: Your client is a self-drive car rental service provider. It provides increase the demand. And the service should be made available with ease
various car options on rent for trips or vacations wherein you can rent a car for a in all locations to ensure convenience.
certain number of days to drive and return. They have recently witnessed a dip in Interviewer Those recommendations are good. You have solved the case, thank you.
their growth numbers. You have been asked to diagnose the problem and offer
potential solutions. [Progress] (The candidate then asked to be allowed to summarize the case which was
well received by the interviewer.)
The Interview a lesser number of luxury and ultra-luxury vehicles in stock leading to
Anushka
limited availability on demand.
Approach
Interviewer That is correct, there was poor demand estimation of customer needs Revenue
which did not allow the company to identify a target segment. That is why
it started operating on such a large scale and tried to cater to all customer
segments, including the luxury segment. But the demand for this business Product
Price Quantity
has dipped significantly due to prices and lack of availability for last-minute Mix
bookings. Can you suggest recommendations to tackle this problem?
Existing
Hatchback
Anushka Some recommendations would be to limit product categories for more cusotmers
efficient handling, to mandate early bookings to cater to all customers, to
limit scale of operations to a few focus states in the US, to identify and New
Sedan
focus on high-demand target customers such as middle income groups customers

Interviewer Those are some useful long-term suggestions, and in the long run the
Luxury
client did limit its operations to a few states and dropped the luxury
vehicles altogether. However, could you also suggest some short term
recommendations in the interim? Ultra
Luxury
Anushka Yes, some short term recommendations would include a renewed focus on
marketing in terms of product, pricing and placement of the luxury cars. 80
New Product Entry - PHARMACEUTICALS
Candidate : Anirudh Srivatsa Company : McKinsey
Sector : Pharmaceuticals Type of Case : New Product Entry Anirudh Alright, I would like to ask a few preliminary questions to better
understand the case. Could you please tell me what exactly are the
features of this new product? Does the client have any specific objectives
Problem Statement: Your client is a pharmaceutical company based in the United States. that they wish to meet through this launch?
They have developed a new product for diabetes, and would like to enter the Indian market
Interviewer The product is a tablet, that has been designed to be as effective as an
with the same. They would like us to do a comprehensive assessment of the same, and
insulin injection. The client wishes to break even with this product within
recommend whether they should go ahead with launching the product in India or not.
two years.
Anirudh Okay. May I know if the product will be taken on a doctor’s prescription or
The Interview over the counter, and the frequency at which it would need to be
consumed?
The interview was conducted over video conference, through a laptop placed in a cubicle.
Duration: About 20 minutes. Interviewer The product will be on a doctor’s prescription, and needs to be taken once
a day.
Interviewer Good morning, Anirudh! How are you doing?
Anirudh Okay. May I take a couple of minutes to collect my thoughts?
Anirudh Good morning, sir. I am doing fine.
Interviewer Sure.
Interviewer Great. [Introduces himself briefly here.]
Anirudh I would like to consider three major factors along which we could
Interviewer So, let us now discuss a case over the next 15-20 minutes. Your client is a evaluate this problem. The first would be the financial aspects, since we
pharmaceutical company based in the United States. They have developed have an objective to break even within a two-year time period. For this, I
a new product for diabetes, and would like to enter the Indian market with would like to understand the initial investments that would have gone in
the same. They would like us to do a comprehensive assessment of the towards R&D for this product, and the price at which we intend to sell the
same, and recommend whether they should go ahead with launching the product. The second would be from the market perspective – the current
product in India or not. market size for diabetes drugs, the growth rate of the market, and the
Anirudh Okay. Just to repeat the problem statement, our client is a pharma presence of existing competitors and any substitute products. The third
company in the US who have launched a new product for diabetes, and would be with respect to any legal and regulatory challenges we might
would like us to recommend whether they should launch it in India or not. face, while selling our product in India.
Interviewer That’s right. Interviewer Hmm, okay. Can you think of any further factors which could be relevant?

81
New Product Entry - PHARMACEUTICALS
Candidate : Anirudh Srivatsa Company : McKinsey Anirudh Alright. There are two primary means through which the product could be
Sector : Pharmaceuticals Type of Case : New Product Entry priced – either through a cost plus margin approach, or through a value
based approach that depends on what value we are able to offer to the
consumer. For the cost plus model, we could look at data on the typical
Problem Statement: Your client is a pharmaceutical company based in the United States.
industry margins for diabetes drugs in India, and price the product
They have developed a new product for diabetes, and would like to enter the Indian market
accordingly. However, since we would be competing directly against
with the same. They would like us to do a comprehensive assessment of the same, and
insulin injections and have a superior product offering (since it is a tablet,
recommend whether they should go ahead with launching the product in India or not
and consuming the drug would be more convenient and painless), a value
based pricing approach seems more appropriate. For this, we could try
and gauge the customer’s willingness to pay for such a product through
The Interview
market surveys. We could also potentially factor in any subsidies that may
Anirudh [Thinks for a while.] Yes, we could also consider the distribution channels be available from the government for such a product.
through which we would like the product to reach the customer, and how
Interviewer Okay. Could you tell me how you would estimate the potential market size
we would go about setting up and building our distribution networks.
for this product?
Interviewer Okay. You have missed out one more key aspect, relating to the
Anirudh Yes. We would first consider the number of diabetic patients in India.
manufacturing of the product – whether we would produce the product in
Within this, we could consider the fraction of patients who are on insulin
US or India, and how we would go about sourcing the ingredients for the
injections, since these would be our main target market. This could be
product in each case.
estimated through the sales of insulin injections already available in the
Anirudh Right, that makes sense. [Note: I had become nervous by this point, since I market currently.
had missed out on a major aspect of the case early on. This could have
Interviewer Okay. Suppose that an insulin injection in India currently costs Rs 100 per
been avoided had I considered how to set up the entire value chain for the
day, and that we plan to launch our product at Rs 80 per day. Can you tell
new product, which would have been a more comprehensive approach.]
me how much market share we are likely to gain at these prices?
Anirudh Since our product is superior in features in terms of easier administration
Interviewer Okay, let us now discuss the product pricing. Could you think of different
of the drug and hence more convenient for patients, and is also at a lower
ways how the client could go about this?
price, I would say that we are likely to capture a very large portion of the
market very quickly, possibly as high as 80-90%.
Interviewer That is okay. But can you tell me how we could estimate the exact
number? Will it be 50% of the market share? Or 80%?
82
New Product Entry - PHARMACEUTICALS
Candidate : Anirudh Srivatsa Company : McKinsey Anirudh Right.
Sector : Pharmaceuticals Type of Case : New Product Entry
Interviewer Let’s close the case here. I also hear you have received the Aditya Birla
Scholarship?
Problem Statement: Your client is a pharmaceutical company based in the United States.
Anirudh Yes, sir.
They have developed a new product for diabetes, and would like to enter the Indian market
with the same. They would like us to do a comprehensive assessment of the same, and Interviewer Could you tell me what was your one key takeaway from this experience?
recommend whether they should go ahead with launching the product in India or not
Anirudh [I talk about how I had an opportunity to discuss some of my ideas for the
education sector with some extremely senior leaders of corporate India at
The Interview the interview.]

Anirudh [Very confused by this point.] Could you please give me a minute to think Interviewer Great! Do you have any questions for me?
about this? Anirudh [Asks about his experience at McKinsey, and how he had chosen to focus
Interviewer Sure. on his current sector of work.]

Anirudh We could consider the frequency at which doctors re-prescribe diabetic Interviewer [Answers the question.] Thank you, Anirudh, and wish you all the best!
drugs to their patients. Such patients typically only visit their doctor once
in every 3 months or so, during which period they would continue to take Anirudh Thank you, sir.
their medicines as per their earlier prescriptions. So the shorter this
frequency, the faster we would be able to penetrate the market. Another [Notes: Though I had realized I could have done better at the case midway, the key was
factor would be the availability of out product in stores – while we may be to maintain my confidence and keep the interviewer constantly engaged. It is also
able to reach customers in Tier 1 cities very soon, building distribution perfectly okay to seek assistance from the interviewer if you find yourself stuck.]
networks to ensure our products are sold in smaller towns and villages
would take time, which would also impact our market share. However,
while these factors only determine the rate at which our market share
grows, I am not sure how we could estimate the exact final market share.
Interviewer That’s okay. We could also simply look at the history of the last 10 diabetic
drug launches in India, and see how much market share they have been
able to achieve since their launch.

83
New Product Entry - PHARMACEUTICALS

Market Entry

Other challenges to
Financial Aspect Market Perspective
entry

Research and
Market Size Regulatory Challenges
Investment

Pricing Growth rate Legal Challenges

Break Even in 2 years Threats of susbtitutes

84
Profitability - INFORMATION TECHNOLOGY
Candidate : Anirudh Srivatsa Company : McKinsey
Sector : Information Technology Type of Case : Profitability Anirudh [Slightly taken aback.] Okay, sir. I would like to clarify, does our client have
any other products and customers?
Interviewer No, this is our only product and IIM Bangalore is our only customer.
Problem Statement: Our client is a small IT company based out of Bannerghatta Road, that
has made the placement portal for IIM Bangalore to manage information on students and
companies. They wish to improve their profitability. Can you suggest how they should go Anirudh Okay. Profitability could be improved by either reducing our costs or by
about this? increasing our revenues. Shall I start with the cost side first?
Interviewer Okay, go ahead.
Interviewer Good morning, Anirudh! How are you doing? Anirudh Since we are a small IT business, the major cost heads for our client would
Anirudh Good morning sir, I am fine. include the rent and power expenses for the office premises, and salaries
for the employees. This in turn would depend on the average salary we
Interviewer Take a seat. Don’t be nervous, loosen yourself up a bit. We’ll just have a pay each employee, and the number of employees we have.
chat.
Interviewer Right. How can we achieve cost savings here?
Anirudh Okay, sir.
Anirudh Since the rent and power expenses would largely be fixed based on our
[We discuss my background and the cities I had lived in. The discussion even briefly lapses current location, I would like to start with the employee salaries. Would it
into my mother tongue, but we quickly switch back into English.]
be safe to assume that our employees are paid on par with the typical
Interviewer Okay, so let us discuss a case. Are you familiar with the IT industry? standard in the industry?
Anirudh Yes sir, but not in great detail. Interviewer Yes.
Interviewer Okay. Our client is a small IT company based out of Bannerghatta Road,
that has made the placement portal for IIM Bangalore to manage
information on students and companies. They wish to improve their
profitability. Can you suggest how they should go about this?
Anirudh Sure. [Starts writing the case facts on a sheet of paper.]
Interviewer No, don’t use pen and paper. I want you to just discuss whatever comes to
your mind.

85
Profitability - INFORMATION TECHNOLOGY
Candidate : Anirudh Srivatsa Company : McKinsey
Sector : Information Technology Type of Case : Profitability Interviewer Okay. Can you now think of ideas to increase our revenues?
Anirudh Sure. Since we know that IIM Bangalore is currently our only customer, it
Problem Statement: Our client is a small IT company based out of Bannerghatta Road, that shouldn’t be hard for us to quickly expand our existing offering to other
has made the placement portal for IIM Bangalore to manage information on students and educational institutes across the country, which would also need
companies. They wish to improve their profitability. Can you suggest how they should go placement portals. This can be done easily since our product is software
about this? and we do not need to expand our physical presence geographically. In
fact, we could improve our product based on feedback from these
Anirudh Okay, that means we should evaluate whether we have the appropriate institutions and then expand our product to international institutions such
number of employees for our operations, and whether there is any scope as Harvard as well, based on the fact that we would have already
to reduce the same. For this, I would like to understand the workflow of established a reputed customer base by then.
designing and producing the software. For instance, one team of engineers Interviewer Good. Can you think of more ideas?
would be working on handling the data at the back end, while another
Anirudh Yes sir. [Thinks for a while.] We could also look at what our core
team would be working on the front end of the portal and designing of the
competencies are and specialize into those. For instance, if we know we
user interface. If the company operates in a serial manner, i.e. working on
are great at making user interfaces, we could start designing user
the back end first and then working on the front end after that is
interfaces for other software companies across other applications, or
completed, then it would take them much longer to complete the final
venture into developing interfaces for websites, which would expand our
product, during which the front end team would be idle. In such a case, the
potential customers to virtually any organization with a website.
workflow could be reorganized to carry out these tasks in parallel, so that
no employee is idle and has to wait for the output of another team. We Interviewer Go on. Suggest some more ideas.
could also identify which step in the process of developing the software is [At first, I end up repeating the previous suggestions in a roundabout fashion, then
the bottleneck, and divert more resources for that operation so that the eventually admitted that that was all I could think of at that moment.]
overall time to produce the software comes down. Additionally, multi-
skilling the employees across different functions would also help, such that Interviewer Good, thank you! We’d most probably be making you an offer.
a back end developer could also work on the front end when required, Anirudh Thank you so much, sir.
thus reducing the need to maintain buffer employees within each team.
[Notes: Having never practiced solving cases without pen and paper except for a couple
Interviewer Good. I can see that you have experience in working in operations. of guesstimates, the interview initially felt somewhat daunting. But as the interview
progressed, discussing ideas aloud without paper seemed to have made the process
Anirudh Yes, sir. I had worked on increasing the capacity of my manufacturing line
easier and the conversation more free-flowing.]
at my last job by 10% by increasing the capacity of its bottleneck. 86
Profitability - INFORMATION TECHNOLOGY

Profitability

Revenue side Cost side

More customers Rent

Add more services Utilities

Salaries

87
 Profitability - CONSUMER GOODS INDUSTRY
Candidate : Saumya Gupta Company : McKinsey
Sector : Consumer Goods Industry Type of Case : Profitability Interviewer Pan-India. It is a usual FMCG player, operates in almost all major
segments.
Saumya Alright. Also, I assume that the player exists throughout in the supply
Problem Statement: Your client is a big FMCG player. They have been growing phenomenally
since past so many years. However, in the previous year they have seen a big dip in their chain, right from the manufacturing to sales and distribution. Am I
profits. You need to figure correct?
Interviewer Yes, of course.
The Interview Saumya So, profits are a function of Revenues-Costs. Are the profits declining
because of falling revenues or increasing costs or both happening
Interviewer Why don’t you introduce yourself?
simultaneously?
Saumya Gave a standard reply.
Interviewer Let’s look at both.
Interviewer Okay Saumya, it seems you have a decent experience in the consumer
Saumya Sure, so should I look at the costs or revenues side first?
goods industry. Let’s do a case on that industry only.
Interviewer Let’s look at revenues first.
Your client is a big FMCG player. They have been growing phenomenally
since past so many years. However, in the previous year they have seen a Saumya Okay, so I would like to see the revenues side from two angles- Demand
big dip in their profits. You need to figure out why. and Supply. Should I focus on Demand or Supply?

Saumya Sure, so let me just clarify the problem statement once. My client is a large Interviewer Please take me through the entire framework you have in your mind. We
FMCG player, who is facing declining profits this year. Otherwise, his will try to MECE it on the way.
business has been growing well. I need to identify the reasons for the Saumya Sure. So, I would like to look at the supply side first. There are two aspects
declining profits. Is there any other objective of this case? I would look at- Production and Distribution. Production essentially
Interviewer No, go ahead. involves two aspects- Capacity and Efficiency. By capacity I mean, no. of
plants*no. of machines. By efficiency I mean, utilization rate of machines.
Saumya I need to ask a few questions that will help me deep dive into the case. Any issue with supply side?
Interviewer Sure (Someone from outside comes and tell the partner that they are running out of time. I
Saumya Where does my client operate? What all products does it sell? panicked but did not this come on my face. The partner asked the person to allow me
more time as my interview began late).
Interviewer What probable issues could be there? 88
 Profitability - CONSUMER GOODS INDUSTRY
Candidate : Saumya Gupta Company : McKinsey Interviewer No, none of the factors have changed.
Sector : Consumer Goods Industry Type of Case : Profitability
Saumya Could it be because of change in operational efficiency/marketing
tactics/product quality/after sales services of competitors?
Problem Statement: Your client is a big FMCG player. They have been growing phenomenally
Interviewer No, I like how you are trying to deep delve into the situation. But
since past so many years. However, in the previous year they have seen a big dip in their
unfortunately, none of the factors you mentioned are into play. Okay, so let
profits. You need to figure
me tell you- it is an industry wide issue. Since past one year, FMCG industry
is marred by slowdown. But please quickly run me through the Costs side
The Interview also. I want to see what do you understand there.
(I made the entire value chain)
Saumya So, either the company does not have enough manufacturing plants or the
number of machines installed in the plants is less. This will lead to low Interviewer I know this. Please take me through every bucket.
production and therefore, low sales. However, since the fall in profits is
Saumya R&D costs include Cost of equipment, human capital, finance costs. Other
very recent, I assume this is highly unlikely.
costs could be costs associated with clinical trials etc.
Quite possible that efficiency has fallen. This could be due to several
Raw Material Costs depend on quantity * rate per unit. Also, we need to
reasons.
look at the vendor (if he is charging higher prices)
Interviewer No, problem is not in the supply side. Let’s move to the demand side. Inbound logistics costs depend on distance and cost per km. Other areas
where focus can be given on are- route optimization, underutilization of
Saumya The demand will be influenced by two broad aspects- Consumer related
truck space. The company should try to reduce wastage and pilferage too.
factors and exogenous factors. So, there could be several consumer related Storage costs include holding costs, ordering costs and cost of stockouts.
factors such as change in tastes & preferences of the customers, change in Holding costs include rent, labour, wastage costs etc. Ordering costs
price, decline in quality, dip in marketing activity by the company, poor depend upon no. of orders*rate. Moreover, storage costs also depend
after sales service reduction in distribution margins leading to distributors upon type of inventory and no. of inventory parts stored.
reluctant to push company’s products. Operations costs include rent, fuel, utilities, depreciation, packaging,
Interviewer No, it is not because of any of the factors you mentioned. depreciation, overheads and labour costs.
Outbound logistics costs’ breakup will be similar to inbound logistics costs.
Saumya Okay, I would like to look at exogenous factors. It could be because of Promotion Costs can be divided into two parts- sales costs and marketing
change in government regulations, or some change in supply and demand costs. Sales costs include sales force costs, sales force training costs.
of complementary or substitute goods.

89
 Profitability - CONSUMER GOODS INDUSTRY
Candidate : Saumya Gupta Company : McKinsey
Sector : Consumer Goods Industry Type of Case : Profitability

Problem Statement: Your client is a big FMCG player. They have been growing phenomenally
since past so many years. However, in the previous year they have seen a big dip in their
profits. You need to figure

The Interview
Saumya Marketing costs depend upon channel mix*channel costs*no.of
repetitions (essentially advertisement costs since FMCG companies of TV
ads). Also, celebrity endorsement costs and other ATL and BTL activities
costs.
After sales service costs will also be there. Moreover, one very important
thing that the company needs to control is trade spends.
Okay, any particular cost head you want me to focus on?
Interviewer Yes, lets discuss labour costs.
Saumya Okay, sure. Labour costs will be a function of absolute no. of
employees*compensation structure. Compensation structure will further
be fixed and variable. Variable component will depend on either no. of
units produced or no. of hours worked. Also, no. of permanent and
temporary workers will also have an impact on labour costs.
Interviewer Superb! Perfect! I was just checking your secondary level of thinking. It was
really good. Thankyou Saumya.

90
Profitability - CONSUMER GOODS INDUSTRY

Profitability

Revenues Costs

Raw Research and Outbound

Supply Demand Storage Operations Marketing After Sales
materials Development and Inbound

Customer
Production Labour costs
Related

Exogenous
Distribution
Factors

91
Consolidation- AIRLINE INDUSTRY
Candidate : Natasha Bhide Company : McKinsey
Sector : Airline Industry Type of Case : Consolidation Natasha So, if I’ve understood correctly, our client is a Finnish airline with
practically complete coverage of the domestic market. They now want to
enhance their bottom line through an alliance with a global airline.
Problem Statement: Our client is an airline in Scandinavia and is struggling to cope with
intense global competition due to which its profitability is taking a hit. The airline is Interviewer That is correct.
considering an alliance with a global airline. It has approached us to decide whether to make Natasha Before I proceed, I’d like to ask a few clarifying questions, if that’s okay
this strategic choice. What is your opinion? How would you think about it? with you.
Interviewer Sure, please go ahead.
The Interview Natasha Is our client a full service carrier (FSC), or a low cost carrier (LCC)? Have
General conversation for a couple of minutes about how my college experience has been profits declined, or has profitability taken a hit?
so far, whether I like the IIMB campus, the interviewer’s work and travel etc. Interviewer You may assume it is an FSC. The issue is with profitability. Margins have
Simultaneously, the interviewer is skimming a copy of my resume. shrunk due to increasing competition.
Interviewer Yeah, I do end up traveling a lot, and just recently we were working on this Natasha Sure. Airlines do tend to be an industry characterized by increasing
assignment in the airlines industry. It was really interesting! I believe you consolidation with maturity, due to low profitability accruing to individual
are familiar with the industry, yes? players. What does the competitive landscape look like, for our client –
particularly within Finland, on both domestic and global routes?
Natasha Yes Sir, I am.
Interviewer The airline is the largest in Finland. So, it covers practically most of the
Interviewer Oh, good. So, our client was this airline in Scandinavia – it is a Finnish
Finnish market. It does operate on international routes, but does not have
airline with the largest market share and route coverage in Finland.
the same scale that global giants do.
However, it is struggling to cope with intense global competition due to
which its profitability is taking a hit. The airline is considering an alliance Natasha Am I right in assuming that improving profitability is the only objective
with a global airline. It has approached us to decide whether to make this here? Is there anything else I should be aware of?
strategic choice. What is your opinion? How would you think about it?
Interviewer You may go ahead with that assumption.
The candidate came with 2 years of work experience in M&A Investment Banking, with
Natasha I’d like to use pen and paper here, to broadly structure the drivers of
commercial aviation as one of her key sectors. This case combined both domains, and in
profitability. Is that alright?
such a scenario the candidate is expected to bring incremental value to the table, as
opposed to another candidate with no prior exposure to a similar situation. Interviewer Sure, please proceed.

92
Consolidation- AIRLINE INDUSTRY
Candidate : Natasha Bhide Company : McKinsey
Sector : Airline Industry Type of Case : Consolidation Interviewer Okay, and what about Costs?
Natasha On the Costs side, I think primarily the client should look to collaborate
with an airline that has a similar fleet to its own. One of the keys to the
Problem Statement: Our client is an airline in Scandinavia and is struggling to cope with
success of LCCs globally has been their focus on single model fleets. If we
intense global competition due to which its profitability is taking a hit. The airline is
apply a similar thought process, I think it makes sense to partner with an
considering an alliance with a global airline. It has approached us to decide whether to make
airline with a similar fleet because this can help rationalize costs of
this strategic choice. What is your opinion? How would you think about it?
maintenance, as well as procurement and carry of stores and spares.
Interviewer Are you sure you aren’t missing anything?
The Interview Natasha (After thinking for a few moments) Not that I can think of, I’m afraid. Is
Natasha So, the way I’m thinking about it, profitability is essentially driven by there any particular direction that I should be thinking in?
Revenue & Costs. Improvement in margins can be achieved through Interviewer Don’t you think that scale achieved through the alliance will give the
optimization of costs more than proportionately to increase in revenue. Finnish airline more bargaining power in negotiating aircraft leases?
When we look at Revenue, there are several streams, broadly they are –
Passenger Fare, Freight and Value Added Services (VAS). Under Costs, an Natasha Right, I should have taken that into account. That makes a lot of sense!
airline typically has Aircraft Leases, Airport & Hangar Charges, Interviewer Don’t worry, I think you broadly covered all the important points. Well
Maintenance, Stores & Spares, GDS & Commissions, Aviation Turbine Fuel done, thank you very much!
(ATF), and other Operating & Admin Expenses, including salaries.
Interviewer Okay, so what are the strategic criteria that should be kept in mind when
evaluating such a potential alliance?
Natasha On the Revenue side, an alliance with a global giant would positively drive
codeshare arrangements which would enable scale. For instance, Finnish
passengers flying in and out of Finland would prefer flying through this
airline, rather than rely on a global competitor. It would also enable the
Finnish airline to achieve a global brand and international presence. So, in
that sense, the Finnish airline should look to collaborate with an airline
that has a complementary network coverage, and is present in those
geographies that our client is looking to target.
93
Media Cost Reduction- AUTOMOBILE

Profits

Revenue Costs

Passenger
Aircraft Leases
Fare

Airport & Hangar

Freight
Charges

Value Added
Maintenance
Services

Stores & Spares

GDS & Commissions

Aviation Turbine Fuel

(ATF)

Other Operating and

Admin Expenses
94
Monetizing Footfall at Bangalore Airport
Candidate : Natasha Bhide Company : McKinsey
Sector : Airport Type of Case : Increase Revenue Interviewer Absolutely not! Why would I want that? I don’t care how you arrive at the
answer, as long as you give me the correct one. Explain your workings to
me later. First do the math.
Problem Statement: Our client is GVK, the operator of Bangalore Airport. It wants to make
money from all the people who enter and exit Bangalore airport every single day. Do you (After 10 mins of calculations)
think it’s possible? Interviewer That’s enough. We’re running out of time. Why don’t you walk me
through your calculation?
The Interview Natasha Sure, Sir. So, broadly there are two categories of people who enter and
exit Bangalore airport – Passengers & Family/Friends who are there just to
Interviewer Let’s get started. Do you know who operates Bangalore airport? drop or pick up. Primarily, people either come by public transport like cabs
or buses, or have their personal vehicles. Rather than charge individual
Natasha I’m not sure, Sir. entry, it makes more sense to charge on a per vehicle basis.
Interviewer GVK does. Assume I’m GVK, you’re a McKinsey Partner. I’m your client. I
To estimate the number of people travelling from Bangalore airport
have come to you saying that lakhs of people enter and leave Bangalore
everyday, I will take a demand side approach. Assuming one runway each
airport’s premises each day. Yet, I make nothing out of them. I want to
for takeoffs and landings, I want to divide a 24-day into three bands of
make money from all the people who enter and exit Bangalore airport
every single day. Do you think it’s possible? high intensity, medium intensity and low intensity. I’m assuming that the
airport operates for 20 hours a day, all days being equal. For the sake of
Natasha It’s definitely possible, Sir. Whether or not it’s economically viable is simplicity, I’m not building in seasonality associated with weekends or
something that will have to be worked out. peak seasons.
Interviewer Work it out, then. Give me your final recommendation.
Of the 20 operational hours, I am assuming 6 hours to be high intensity, 8
Natasha So, the way I’m thinking about this is… hours to be medium intensity and 6 hours to be low intensity. During high
Interviewer I don’t want to know your thought process. Just give me the final answer, intensity, one flight takes off every 2 mins. During medium intensity, one
with a strategy for execution. flight takes off every 5 mins, and during low intensity one flight takes off
every 10 mins. Assuming each flight has a capacity of 300 seats with 100%
Natasha (a little confused) So, do you not want to walk with me through the occupancy (since we have adjusted for demand variability through flight
working? frequency), #passengers per day –

95
Monetizing Footfall at Bangalore Airport
Candidate : Natasha Bhide Company : McKinsey
Sector : Airport Type of Case : Unconventional Natasha Conservatively assuming similar estimates for arrivals, total revenue/day ~
3,50,00,000

Problem Statement: Our client is GVK, the operator of Bangalore Airport. It wants to make The only costs involved are those of constructing parking space, organized
money from all the people who enter and exit Bangalore airport every single day. Do you bays for pick-up/drop-off, peripheral infrastructure and recurring costs of
think it’s possible? operating the system. Considering this, the opportunity definitely seems
monetizable and lucrative. However, this computation is based on a
number of assumptions. We should definitely benchmark the numbers –
The Interview both footfall (from historical data) and toll taxes and charges that can be
levied (from rate charts in force at other airports e.g. Mumbai Airport) to
Natasha High Intensity – 6*30*300 = 54,000 validate the quantum of the opportunity at hand.
Medium Intensity – 8*15*300 = 36,000 Interviewer Understood, thank you.
Low Intensity – 6*6*300 = 10,800
Therefore, total # passengers per day (departures) = ~1,00,000
Assuming a similar pattern for other airports, total # passengers per day
(arrivals) – ~ 1,00,000
Let us assume that 50% come by cabs and buses, whereas 50% come by
personal vehicles. For the 50% who come by personal vehicles, a toll tax
can be charged basis the type of vehicle, and duration of wait in a slab
structure format. Of those commuting by bus/cab, the operators can be
charged an entry fee which may be passed on to consumers. For arrivals,
personal vehicles are likely to come earlier and incur waiting/parking time,
therefore the revenue is generally likely to be higher.
For departures: 50,000*300 (toll per car assuming 0mins wait time) +
50,000*50 (avg charge per person) = ~ 1,50,00,000 + 25,00,000 =
~1,75,00,000
96
Media Cost Reduction- AUTOMOBILE

20 Operational Total # of passengers per day (arrivals) – ~

Hours/Day
1,00,000
Let us assume that 50% come by cabs and
buses, whereas 50% come by personal vehicles.
High Intensity Medium Intensity Low Intensity

6 Hours 8 Hours 6 Hours

For departures: 50,000*300 (toll per car
assuming 0mins wait time) + 50,000*50 (avg
charge per person) = ~ 1,50,00,000 + 25,00,000
One Flight Takes Off One Flight Takes Off One Flight Takes Off = ~1,75,00,000
/ 2 mins / 5 mins / 10 mins

Each flight has a Each flight has a Each flight has a

capacity of 300 seats capacity of 300 seats capacity of 300 seats
with 100% with 100% with 100%
occupancy occupancy occupancy
Conservatively assuming similar estimates for
arrivals, total revenue/day ~ 3,50,00,000
6*30*300 = 54,000 8*15*300 = 36,000 6*6*300 = 10,800

97
Valuation of a Coal Mine
Candidate : Natasha Bhide Company : McKinsey
Sector : Coal Mine Type of Case : Valuation Natasha I’d first start out by commissioning a pre-feasibility/geological study of the
mine site if it hasn’t been done already. This will give us a sense of the
nature of reserves we’re looking at – in terms of quality of coal, total
Problem Statement: Your client wants to purchase a coal mine, and you have to advice on available reserves etc.
the decision on whether to go ahead with the investment. How would you value the mine?
Interviewer Okay, that’s done. What after that?
Natasha Then basis the quantity of reserves that we can extract on an annual
basis, we can determine the life of the mine and project its cash flows
The Interview
over its life. The price per tonne can be built in using the market rate.
Interviewer Hi Natasha, shall we quickly do a case before we wrap up? Further, we can use coal futures to determine the growth rate.
Natasha Sure! Interviewer Sorry, I don’t understand. What exactly do you mean use futures?
The candidate is seated in the center of the room. The interviewer is walking around the Natasha I mean, coal being a commodity, we can easily procure the values at
room and pacing around the candidate’s seat. This creates a more stressful environment. which its futures are quoted and use them as proxy for prices of coal in
the valuation model.
Interviewer Assume that your client wants to purchase a coal mine, and you have to
advice on the decision on whether to go ahead with the investment. How Interviewer Fair enough. What about costs?
would you value the mine? Natasha So, there will be two kinds of costs. Fixed costs for site development,
Natasha I’d like to begin by understanding where the mine is located and the machinery, infrastructure etc. These will be sunk in nature, so we should
objective behind buying it? If the client is looking to mine coal and trade it build them in right at the start.
in the open market, proximity to the ports is key and will command a Interviewer And what about the project manager’s salary?
valuation premium. On the other hand, if the mine is going to be used
captively, say for steel making, we will have to build in the cost of logistics Natasha There will be some costs which will tend to be recurring in nature, they
into valuation. will have to be adjusted on an annual basis.

Interviewer There is no particular objective other than wealth maximization. The client Interviewer How will you adjust them?
wants to make money. How would you value the mine? Natasha Basis the costs now, I will index them to inflation and then adjust against
the corresponding year’s cash flow in the future. I will then discount the
net adjusted cash flow using the expected IRR of the project, to arrive at a
valuation number. 98
Valuation of a Coal Mine
Candidate : Natasha Bhide Company : McKinsey
Sector : Coal Mine Type of Case : Valuation

Problem Statement: Your client wants to purchase a coal mine, and you have to advice on
the decision on whether to go ahead with the investment. How would you value the mine?
Valuation

The Interview
Pre- Life of Mine Costs
Interviewer Let’s say that there is about 69 MT (million tonnes) of soil in the mine, and Feasibility/Ge
the density of coal is 0.86 MT. How much reserve of coal are we looking ological Study
at?
Project Cash Fixed Reoccurring
Natasha Am I correct in understanding that every MT of soil has 0.86 MT of Flows over its Project
Quality of Life Manager's
extractable coal in it? Coal Salary
Interviewer That’s correct. Site
Price per Development
tonne using
The interviewer has been pacing around the room since the beginning of the interview. In Total
the market
order to maintain a conversation, it is impossible to use the notepad up to this point. Available
rate
Reserves Machinery
Natasha May I use pen and paper?
Coal Futures
Interviewer Absolutely! Please go ahead. to determine
the growth Infrastructure
Candidate quickly does a rough calculation. 69 x 0.86 = 59.34 MT, however we just need a
rate
ballpark figure. Therefore, no need to proceed with the entire calculation.
Natasha We’re looking at about 60MT of coal.
Interviewer Fantastic! Welcome to McKinsey, Natasha!

99
Roland Berger

100
Manufacture or Outsource – ELECTRIC VEHICLE MANUFACTURER
Candidate : Rohit Bharvesh Company : Roland Berger
Sector : Automobile Type of Case : Unconventional Interviewer Okay Rohit. What all decision factors would be you consider for helping
the company decide a route?

Problem Statement: The client is an EV manufacturer and wants to decide how to fulfill Rohit Do you want me to consider any one of them or both?
their requirement of batteries, help your client out. Interviewer You can consider both; start with in-house manufacturing.
Rohit Alright. For deciding on whether to go ahead with in-house
The Interview manufacturing, the client can investigate 4 factors (given on next page).
Interviewer You covered it well Rohit. I will add that the economies of scale is not
Interviewer Good Morning Rohit, tell us something about yourself?
forecasted at this point, and company is running on thin margins already.
Rohit Good Morning Sir. Prepared a generic answer for this. Also, the company has no prior experience in batteries, and EV cells are
also not their core competency. Do you think battery manufacturing could
Interviewer Very well, let’s get started with the case right away. become their core competency?
Interviewer Your client is an EV manufacturer and wants to decide whether they Rohit Based on the value it adds, its degree of inimitability, rarity, and non-
should manufacture or source batteries, help them out. substitutability, battery manufacturing could not be a core competency.
Rohit I would like to begin with a few clarifying questions on the client. Interviewer Okay, now why don’t you take us through the other approach you
Interviewer Yes, Go ahead. mentioned.
Rohit What kind of products or services does the client offer/manufacture? Does Rohit In the external approach, the client can either outsource only the cell and
it operate across the value chain? How does the competition landscape perform assembly in-house or source the complete assembly.
look like for the client? Interviewer Take me through both alternatives. What factors could be important to
Interviewer The client manufactures EV scooters and provides emergency power know?
solutions for home. It is an established player in the industry but not the Rohit To explore the first alternative of sourcing cell and performing the final
market leader. Also, industry has 4-5 players and market consists of budget assembly in-house, the client should consider 3 factors (given on next
buyers. page).
Rohit With the available information, I can approach the problem by considering While for complete assembly sourcing, 5 factors should be taken care of.
internal and external approach. Interviewer You have covered the factors nicely. We can stop the discussion here.
The client can either manufacture the batteries in-house or out-source Thanks.
them.
101
Manufacture or Outsource – ELECTRIC VEHICLE MANUFACTURER

Fulfilling Battery
Approach Requirements

Internal External
Approach Approach

In-house Out-source Out-source

Manufacturing only Cells Complete Assembly

In-house assembly
Prior Experience Cost Criteria
line

Availability of Tech Availability of Tech Technical capability

with client with client of vendor

Decision Criteria: Forecasted Forecasted

Quality Assurance
Economies of Scale Economies of Scale

Responsiveness and
Location

Capacity

102
Guesstimate – LUXURY PEN
Candidate : Rohit Bharvesh Company : Roland Berger
Sector : Consumer Goods Type of Case : Guesstimate Rohit I will split the population of India in 30-70 and only consider the urban
population for further calculations.

Problem Statement: Our client wants to enter India with its luxury pens priced at Interviewer Sounds okay. Go ahead.
around $50. Our client has had experience of China where their product has been Rohit Then I will split the urban population into income segments (20-60-20)
successful. Can you help our client with an estimate on market size for luxury pens in and given the luxury product type, I would continue with only the high-
India? income group.
Interviewer Yes, That’s sensible.
The Interview
Rohit The last step would divide the income group age-wise and ignore the less
than 25 years group as they are more interested in functional use of a
Interviewer Good Morning Rohit, let’s get started with the case directly?
pen.
Rohit Good Morning Sir. Yes, sure. Then I would introduce a factor 0f 0.5 to filter out from the final
population which would not be interested in buying the product.
Interviewer Our client wants to enter India with its luxury pens priced at around $50.
Finally, given the 10 years life of the product we can say that on an
Our client has had experience of China where their product has been
average the company has a market of 3.4 M per year.
successful. Can you help our client with an estimate on market size for
luxury pens in India? Interviewer Rohit, you did a thorough analysis. I think we are done with the case.
Rohit I would like to begin with a few clarifying questions on the client.
Interviewer Yes, Go ahead.
Rohit What is the life of the pen? And should we also consider the dynamics of
refilling option which could impact the total sales during the life?
Interviewer For this case, assume that a pen last for 10 years and the customer buys a
new one after that. Basically tell me the size for the life of the pen.
Rohit Alright. Since I have to limit the sizing for the 10 years life of the pen, I can
safely ignore the fact of refilling option.
Interviewer Yes, you can.

103
Guesstimate – LUXURY PEN

India Population
Approach (1300 M)

30% Urban
70% Rural
(390 M)

20% High Income 60% Middle

20% Low Income
(78 M) Income

50% Age<25

15% Age 25-34

(12 M)
Further Calculations (as per the interview):
• Market size = 0.5*12+12+8+8 = 34 million
15% Age 35-44 • Considering life of pen as 10 years = 34/10 = 3.4 million over a span of 10 years
(12 M)

10% Age 45-54

(8 M)

10% Age 55+

(8 M)
104
Strategy&

105
Guesstimate– AIRPORT REVENUE
Candidate : Sanjana V Kulkarni Company : Strategy&
Sector : Airline Type of Case : Guesstimate Sanjana So, the footfall at Chhatrapati Shivaji Airport is approximately 50 million a
year. 40% of that makes it 20 million for the new airport. Assuming that
only 20% of the passengers consume the food(~4million). This is because
Problem Statement: Find the revenue from passengers at the airport that they are only hungry people or rich people eat at the airport.
building in Navi Mumbai. Interviewer Okay, go ahead.
Sanjana Meals can also be divided into proper full course (Rs 500) or basic snacks
The Interview like tea, samosa, etc. (Rs 150). Since most people snack, I am assuming
that 60% of the eating crowd goes for small time snacks (Rs 150).
Interviewer Hi Sanjana!
Interviewer Alright, give me the final number.
Sanjana Hello sir!
Sanjana Rs 1160 million overall. The calculations are:
Interviewer Do you like guesstimates? 60%*4*150 + 40%*4*500 = Rs 1160 million
Sanjana Sure sir. Interviewer But the actual number is around Rs 3300 million. Do you think you’re
Interviewer Alright then, lets do one. A new airport is being built in Navi Mumbai. I forgetting something?
want you to come up with a number that represents the passenger Sanjana Oh right. I forgot the drinks. I have only accounted for food.
revenue at the airport. Also, don’t consider revenue from the tickets.
Interviewer That is correct. Drinks are typically expensive and make up for almost 60%
Sanjana Alright, why are they opening this airport? Also, is this a prime location? of the F&B revenue.
What sort of footfall are they expecting? Will there be both domestic and Thank you, Sanjana.
international flights?
Interviewer Assume all of this as the same as for Shivaji Chhatrapati Shivaji Airport.
Also, say 40% of the customers from the previous airport will get diverted
to this new airport. Both types of flights will be flying from this airport. Just
list out the main revenue streams for the airport.
Sanjana Alright, rentals from eateries, joints and restaurants, parking charges,
lounge expenses, advertising, currency exchange counters.
Interviewer Start with Food and Beverages.

106
Guesstimate– AIRPORT REVENUE

Approach
Airport
Passenger
Revenue

Currency
Tickets Rentals F&B Parking Advertising
Exchange

Food Beverages

Assumed 40% of Assumed 60% of

Big Meals Snacks Population
Population

Rs 500 Rs 150

40% * 4 million * 500 60% * 4 milion * 150

= Rs 800 million = Rs 360 million
Eating population = 20% of 20 million = 4 million

107
Analysing delay in project implementation – GOVERNMENT
Candidate : Yatin Maini Company : Strategy&
Sector : Government project Type of Case : Unconventional (1) Availability: Dealers for providing RFID tags may be limited. Or banks
may not be available near by , so it may require visiting banks which is
difficult given busy work life.
Problem Statement: Government of India wants to implement fast tag. But there is (2) Usability: People are not trained properly (how to link bank account).
delay in implementation. Analyse why. (3) Habit: People accustomed to cash payment lack incentive to switch, as
benefits not communicated by govt. properly.

The Interview Interviewer Dealers are easily available, bank work can be done online. Process is easy
and videos available. People are incentivised as it saves time at toll booth.
Interviewer Good Morning Yatin, how are you doing today? Anything else that you can think of? Also who will be the major customer?

Yatin Good Morning Sir, I am doing good. Yatin Major customer will be highway traffic. Mainly truck and heavy vehicles,
cab and then normal people who travel by their own vehicles.
Interviewer Very well. Your client is the Indian government. It wants to implement fast
tag, but it has noticed a delay in implementation. Analyse why this is the Interviewer Think about the truck drivers.
case. Yatin Trucks are owned by transport companies. There might be a problem for
Yatin Okay, before I structure my analysis, I’d like to begin with some preliminary a transportation company to link single account with a lot of trucks.
questions. Firstly, could you elaborate on fast tag? Interviewer No, that is allowed and is manageable. Anything for other stakeholders?
Interviewer Sure. It is like an RFID tag on the windshield which will make toll collection Yatin Banks would have to deploy some staff and train them for this. Do we
automatically. Your bank account will be linked to the ID and the amount have any lack of staff issues or has govt. partnered with limited banks?
will get deducted from account.
Interviewer No staff is not an issue and there are sufficient number of partner banks.
Yatin Fair enough. Would I be right in assuming that the key stakeholders are the
government, toll booth company, people using the highway, and banks? Yatin Okay consider toll both companies. In this new system they won't be
having cash in hand. Money will be transferred through bank – with
Interviewer Yes. possible transaction charges leading to reduction in cash in hand. Also
Yatin Okay, I’m going to analyse the customer side (people) to start with. Would every transaction will be recorded. So no tax evasion is possible. All these
that be fair priority-wise? reasons may discourage tool booth operators to co-operate.
Interviewer Sure. Interviewer Very good. That is one of the main reasons why the tags aren’t being
implemented. We’ll end here.
Yatin Possible reasons why people won’t be willing to adopt:
108
Analysing delay in project implementation – GOVERNMENT

Approach
Stakeholders

Toll booth
Government People Banks
company

Availability Usability Habit

Problems with Limited cash in
training staff? hand + no tax
Limited evasion possible
partnerships?
Major
customers

Trucks + Heavy Ordinary

Cabs
vehicles commuters

Problems with
linking single
account to
multiple
trucks?

109
Estimate Demand for Soft Drink – FOREIGN RETAILER
Candidate : Yatin Maini Company : Strategy&
Sector : Retail Type of Case : Guesstimate Interviewer Okay
Yatin I will now split this figure into urban and rural. In a developing country like
India, the split should be approx. 30% urban and 70% rural. Is that fair?
Problem Statement: Size the market for a new soft drink brand set up by established
cola producer. Interviewer Yes that is fair.
Yatin Based on my experience, urban was the major market. So I will focus on
The Interview that. That amounts to approx. 300 million. Is it fine to ignore rural
demand for the time being?
Interviewer Good Morning Yatin, how are you doing today? Interviewer Yes.
Yatin Good Morning Sir, I am well. Yatin Right, now I will divide the figure based on demographics. Based on our
Interviewer Tell me a bit about yourself. Your work history, etc. research, our main focus was on students and working professionals of
both sexes aged 18-45 (because of deadlines forcing them to pull all-
Yatin Okay. I have worked with company XYZ for the past 3 years. They are an nighters). This amounted to 95% of our demand. Since India is a young
established cola manufacturer. I led the first production run for ‘Sting’ – a country age-wise, I would estimate about 60% of our population fitting
carbonated energy drink. into this demographic.
Interviewer That’s very interesting. How about you estimate the market size for ‘Sting’ Interviewer That’s a fair assumption.
for me today?
Yatin Further, due to health concerns, around 40% of this number will not
Yatin Sure, I can do that. Current market size, or some years down the line? indulge in sugary drinks. So our final demand estimate comes to approx.
Interviewer Let’s say, market size 1 year from now. 33 million. Assuming on average each person drinks one 250 ml bottle per
day, that’s a demand of 33 million per day.
Yatin Okay, for this case I believe a top down approach would be most efficient.
For simplicity’s sake I am taking India’s current population level as 1 billion. Interviewer That sounds alright. Why have you not considered income?

Interviewer Yes that’s fair. Yatin I have not considered it because 250 ml is for Rs. 30. This is a reasonable
amount for any income level.
Yatin I know based on my reading that the population growth rate of no country
exceeds 1% annually. Since India is one of the fastest growing, I’ll take Interviewer Okay that’s fair enough. Alright we’re done.
India’s growth rate as 1%. This means in 1 year, population will be 1.01 Yatin Alright. Thank you for your time.
billion.
110
Estimate Demand for Soft drink– FOREIGN RETAILER

Approach Population – 1.1

billion

Rural (70%) Urban (30%)

Students + Others
Working (40%)
professionals
(60%)

Health Non-health
conscious (40%) conscious (60%)

Assuming average
33 million bottles
customer drinks one
per day
bottle per day

111