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CASEBOOK

CONSULT CLUB
IIM AHMEDABAD
AUGUST 2015
Issue Details and Copyrights

Casebook, Consult Club, 2/e

©2014 by Consult Club


All rights reserved.

Notice
No part of this publication may be reproduced or transmitted in any form or by any means – electronic or mechanical,
including photocopy, recording or any information storage and retrieval system – without permission in writing from the
Consult Club, IIM Ahmedabad.

First edition: July 2014


Second edition: August 2015
What is this year’s IIMA Casebook all about?
Foreword
Building on the 1st edition of IIMA Case Book, the Consult Club of IIM Ahmedabad is proud to present the 2nd edition of the IIMA Case
Book. This edition leverages the 1st edition, and feedback from alumni and the student community. The objective of the Case Book is
to give the reader a comprehensive view of the basic frameworks covering multiple industry horizontals and solution verticals. The
broad framework is then followed by specific interview experiences in both a transcript and crisp format. Throughout the Case Book,
we have tried to ensure enhanced readability while retaining the comprehensiveness of the cases.

Structure of the Case Book


This Case Book covers an extensive range of Conventional cases to build the basics of frameworks and their usage. However, since real
life problem solving may not involve deploying specific frameworks, we have incorporated a host of Unconventional cases which may
involve deploying multiple frameworks or no framework at all.

•Each of the 8 conventional frameworks has one page explaining the basic framework followed by cases based on those frameworks
•Conventional Cases: In the pages that follow, for each conventional case there are 2 pages, an interview transcript page to show how
the case interview could go, and the next page is a an outline of the solution process including interviewee notes, case facts and
recommendations, which provide the reader a detailed step-by-step process for case solving. The direction taken by the interviewee
in the interview has been highlighted in the basic decision tree here.
•Unconventional Cases: The unconventional cases have the solution process page only; the emphasis is on solving these cases in a
logical and structured way.

How to make the most of it?


While reading this Case Book, we would suggest the reader should use the interview transcripts to set up a case between 2 people(or
groups), and after solving the case, the solution process sheet should be looked into to gain a broader understanding of the approach
and areas of improvement.
The frameworks are there to give a direction initially to new case-solvers and should not be treated as a fixed boundary, but could be
utilized by the reader to cover any case which comes up their way according to their own logical structure. Also, the reader should
leverage the Recommendations, Tips, and Suggestions to apply learnings from one case to another.

Remember, journey is as important as the destination. Case preparation is a group exercise with individual self-preparation as well.

Enjoy the process of preparation and let’s crack the case!

(C) Consult Club, IIM Ahmedabad


Acknowledgements
We would like to thank Harshita Singh, Rajat Shaw & Stuti Agarwal (PGP 2014-16, Consult Club) for leading the Case Book
initiative, and putting together this second edition of the IIMA Case Book. They have ensured breadth, and depth in the cases to
give the reader a comprehensive view of the kind of cases they may be administered.

We would also like to thank members of the PGP 2014-16 batch of the Consult Club who have contributed through cases,
thoughts, comments and feedback. We would also like to acknowledge the efforts of Parv Aggrwal, Aditya B, Apoorv Singh,
Shrey Agarwal and Hardik Wadhwa for volunteering to help the Club put together this case book.

We are also grateful to the alumni of the Consult Club, IIM Ahmedabad for their feedback on the cases which has helped us
further enhance the overall quality of the book. We would like to extend a special acknowledgement to the contributors of the
First Edition of the IIMA Case Book on which we have built the Second Edition.

Copyright © 2014
Consult Club, IIM Ahmedabad
Vastrapur, Ahmedabad 380015

(C) Consult Club, IIM Ahmedabad


Table of Contents
CONVENTIONAL CASES
SERIAL NO. FRAMEWORK/CASE PAGE NO.
1. COST REDUCTION – Overview 8
Telecom Billing Process 9
Biscuit Manufacturer 11
Retail Store 13
2. INDUSTRY ANALYSIS – Overview 15
Insurance 16
Consumer Appliances 18
E-Commerce 20
3. NEW MARKET ENTRY – Overview 22
Lock Manufacturer 23
Retail Banking 25
Diagnostic Chain 27
4. GROWTH STRATEGY - Overview 28
Telecom Market 29
Boiler Company 31
5. NEW PRODUCT ENTRY – Overview 33
Anti-Smoking Pills 34
Automobile Service Station 36
Application Software and Bundling 38
6. SALES GROWTH – Overview 40
B2B Telecommunications Provider 41
Software Product Company 43
Retail Apparel Chain 45
7. PRICING – Overview 47
Proprietary Light Bulb 48
World Spacelines 50
Diagnostic Laboratory Chain 52
8. DIVERSIFICATION – Overview 54
Pharmaceutical Company 55
Oil Marketing Company 57
Mobster 59

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Table of Contents (Continued)
UNCONVENTIONAL CASES, GUESSTIMATES
SERIAL NO. CASE PAGE NO.
1. Help a Painter 63
2. Customers for an F.S. Product 64
3. US Airline Entry into China 65
4. Declining Response in a Competition 66
5. Pricing Strategy for Portkey 67
6. Call Operator 68
7. Vernier Calliper Manufacturer 69
8. School’s Deteriorating Performance 70
9. Partner Late to Office 71
10. Dip in Profitability of C.T. 72
11. Higher Costs faced by S.E. Asian Bank 73
12. Turn around a Copper Mining Company 74
13. Toffee Manufacturer 75
14. Restaurant 76
15. Open Plot of Land 77
16. Football Team – Diagnostics 78
17. Elementary, Dr. Watson 79
18. Merger and Acquisition 80
19. Pencil Manufacturer in India 81
20. Airline 82
21. Petrol Pump losing Business 83
22. Local Hospital 84
23. Hotel Mini Fridge 85
24. Robbery Planning 86
25. Consult a Consulting Company 87
26. Paint Manufacturer in India 88
27. Restaurant in Paris 89
28. PPP for Metro in Bangalore 90
29. Shahrukh Khan’s Net Worth 91
30. Inventory Management in a Milk Company 92
31. English Music Magazine 93
32. Entry of Home Furniture Maker 94
33. Surviving the Ad-Blockers 95
34. Testing a New Feature 96
35. Understanding the Customer 97
36. Hats in London 98
37. Books in IIM Ahmedabad 99
38. CASE INTERVIEW ASSESSMENT SHEET 100

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Conventional Cases - Overview
Interview Transcripts
Conventional Cases - Solved

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Cost Reduction - Overview

In a cost reduction case, a company is likely to aim for becoming more profitable by reducing their bottom line. An interviewee is expected to first
identify various cost component, followed by validating them, identify major cost drivers along with levers affecting their values, and finally
recommend how the company can change it’s ways to become more cost efficient.

Approach/ Framework (High Level) for the Case Type

Storage & Distribution- Customer


R&D Raw Material Processing Marketing
Transportation Sale force Service

Cost of raw Machinery Transport to Marketing


Equipment Sales Channel Repairs
material warehouse channels
Contract & bulk Storage (Rent, Strategy
Human Capital Factory rent Sales Force Spare parts
deals Labor, Inventory)
Cost of finance
Transport to
Quantity used Labor hours Training Returns
customers

Technology

Capacity utilization

Packaging

Framework Summary
A company can reduce cost and become more efficient across its components. The best way is the look at the journey of a product/service right from the time its raw materials are bought to the
time it is delivered to the customer and he is happy after the post sale support etc. This is called a value chain analysis as each step of the process adds some value to the initial raw material and
accelerates its journey towards the final product. At each of these stages, we expect to find some levers which can be tweaked to make the process more efficient.

Tips
• Clarify objective, especially the cost buckets the interviewer wants you to delve into
• Cost cases are generally very streamlined till the time you are identifying places where cost can be reduced. Creativity comes into play when recommendations are asked by the interviewer.
Key Questions
• Is this particular company facing the problem of high costs or is it something that the industry is facing as a whole?
• Chalk the value chain and then ask if it is the correct way to do it? Or should it be done by splitting fixed and variable costs?
• What are the last 3 year trends in growth for the organization?
• Any major shifts in cost over time?
• Does any of these cost seem out of line?

(C) Consult Club, IIM Ahmedabad 2015-16 8


Cost Reduction - Telecom Billing Process– Interview Transcript

You have been approached by the CEO of a telecommunications provider company. He is worried That’s interesting. How else can you reduce the cost of sending the bill to the customer?
about the high expenditure in their billing process and wants your help in identifying areas where Apart from this we can reduce the frequency of sending out the bills to the customers. Here, the
you can reduce costs. tradeoff is between the cost saved in mailing the bills and interest forgone from the money recieived
What are the different ways in which the client’s company send out bills to the customers? a month earlier.
Let’s reduce the frequency of sending bills from one per month to one per two months. When do
There are three ways in which the bill can be sent to the customer. Through post, internet and by you think this will become feasible?
sms. For this interview just concentrate on post and internet. Okay. To analyse this I would want to understand the approximate cost in sending out one bill by
Since sending bills thrugh internet would involve minimalistic cost, focusing first on snail mail and mail/courier.
looking at different cost component involved in the value chain. Sure. You can assume that one time cost of sending the bill by mail is around Rs. 20. And for all
Sure. Go ahead and list down various cost components. practical purposes, take the interest rate to be 10% annually.
There will be cost involved in buying raw material, printing bills, sending bills to customers. And By not sending the bills every month, The client will save Rs.20/bill. Assuming the rate of interest to
fixed cost involved will be the infrastructure renting cost and the employee cost. be approximately 1% per month, the bill amount should be above Rs.2000 for the client to be
Assume both rental cost and the employee cost to be optimal. making losses by reducing frequency of sending bills.
i.e. if the bill amount is more than Rs.2000 then the bill should be sent every month, But the majority
OK. So, let’s begin by evaluating the first component of the value chain. Raw material for printing of bill value in India would be much less than even Rs.500. So, in that case, reducing the frequency
are paper and ink. becomes a cost saving option.
Let’s take paper first and try to reduce paper cost followed by ways to reduce the cost of ink.
Can you think of a way in which you can reduce the costs overall?
Sounds reasonable. Go ahead.
We can bring down the paper cost by using thinner paper, by using smaller size of paper, by I think sending the bills through internet or sms would lead to massive reduction in overall cost.
printing on both sides of the bill, by leaving lesser margin, may also use a recyclable paper. How much does it currently cost to send a bill through internet?
To reduce the cost of ink used, reduce the number of words on the bill by eliminating unnecessary
details. Reduce the font size and only print a black and white bill to save on the coloured ink. Around 5 paise.
Should I move ahead and explore ways in which the client can save cost in sending the bills to the Okay, so our aim should be to encourage the customers to start using internet as a medium to pay
customer? bills/ view bills.
Yes. Why don’t you help the client in reducing their expenditure in sending the bills by snail mail. Interesting. How do you plan to do that?

OK. So, the total annual cost in sending bills by courir will be equal to = No. of bills sent/month* In the intitial phase we can target those customers who use internet to pay their bills. We ce shuld
Frequency of sending bills* (Base price for mail+ (Price/km)*No. of kms) incentivize them by telling them about the benefits of sending bills online. A few of them are-
Let’s start with Price/km first. To reduce this, switch to a cheaper mail/courier service. This can be 1.Prompt delivery of bills
achieved by using regional courier services as well. 2.No losses- no fudging of content, it wouldn’t get lost during transit, lesser chance of a bill going to
Next, I would want to understand the base price for mail. How many hubs does the client have to the wrong address
send out the bills to the customers? 3.Convenience of having a bill online. You can check it whenever you want and there’s no hassle of
storing them carefully.
As of now, the client has one facility in Mumbai and the bills are mailed all across India from the
4. Incentivize people to use internet to pay bills by giving some discounts in the initial phase.
Mumbai hub itself.
Ok. Another way in which we can optimize this is have smaller facilities in cities like Delhi, chennai,
Kolkata and send the bills to customer sin that region from there.
It would serve the purpose of lower base price as well as quicker and timely delivery of bills with
lower bill loss rates.

(C) Consult Club, IIM Ahmedabad 2015-16 9


Cost Reduction - Telecommunication Billing Process

You have been approached by the CEO of a telecommunications provider company. He is worried about the high expenditure in their billing
process and wants your help in identifying areas where you can reduce costs.

Interviewee Notes Case Facts Approach/ Framework


• Reduce cost of bills • 3 ways of sending bills- SMS,
• A cost benefit analysis for internet & Snail mail
Raw Storage & Distribution- Customer
each mode of sending bill • Internet and SMS are R&D
Material
Processing
Transportation Sale force
Marketing
Service
• Reducing the cost of optimized, possibility only in
preparing bill itself snail mail
Cost of raw
• Rental and employee cost are Equipment material Machinery
Transport to Sales Channel Marketing Repairs
warehouse channels
optimal
Contract & bulk Storage (Rent,
• Only one billing hub in India- in Human Capital
deals Factory rent Sales Force Strategy Spare parts
Labor)
Mumbai and bills are sent all
over india from Mumbai Cost of finance Quantity used Transport to Training Returns
Labor hours
customers
• Cost of sending a bill by snail
mail=Rs. 20 Technology
• Cost of sending a bill though
internet= 5 paise Quantity of Capacity
ink utilization
• Rate of return annually= 10%
Fewer Small font Packaging Transport to
Black only
words size customer

Move to Reduce Increase Hubs at shorter


Quantity of cheaper option frequency ticket size distance
paper

Size of
No. of bills Utilization
paper

Recommendations
• Reduce the unnecessary expenditure on paper and ink. This being an inelastic good, customers won’t be bothered by smaller size or lesser words until relevant info is present
• Explore the alternate route of sending the bill to the customer. Keep in mind the new evolving technology and try to push customers towards using it
• Highest cost component of snail mail can be brought down by reducing the frequency of sending bills to one bill per two months. Only when bill amount is less than Rs.2000

Interview Summary
This is a cost reduction case where the interviewee should quickly establish the major cost buckets after discussing with the interviewer. Also, instead of probing into each bucket, ask the
interviewer if he has a particular cost bucket in mind.

Observations/Tips/Suggestions
• Each cost component should be broken down into multiple cost levers to ensure that nothing is being missed out
• Breaking down cost of snail mail into components helped the interviewee to analyze each one carefully
• Further having to shift the customers to the low cost option is also relevant and important to bring down cost drastically and for having convenience in the future
(C) Consult Club, IIM Ahmedabad 2015-16 10
Cost Reduction - Biscuit Manufacturer - Interview Transcript

Your client is a biscuit manufacturer. Over the past couple of months it has seen a decline in The inventry losses in our case are high because of the presence of high percentage of expired
profits. Diagnose and recommend solutions. biscuits.
I would like to ask a few clarifying questions before I begin to analyse the case. I would want to The client’s warehouse has a lot of expired goods which keep sitting in the warehouse for longer
understand the client’s business. What kind of biscuits does the company make? duration and hence lead to higher storage costs. Reasons for this might be poor demand prediction,
delay in supply of goods to the warehouse or incorrect process for inventory management. Does
The company makes only 1 kind of biscuits. the client have a system in place to predict the demand of biscuits?
Yes, the client owns a software which takes into account the demand in the previous intervals and
Which country is the client based out of and how many factories do they have? I want to then predicts the demand for the next interval.
understand the scale of business and extent of coverage.
Since the problem of expiry is uniform across the warehouses, delay in supply to the far off
The biscuit company is based in one state of India with three factories spread uniformly across warehouses can be ruled out. Therefore, the biscuits might be getting expired due to inefficient
the state. inventory management system.
Ok. So the company manufacturers biscuits in a particular state of India. To understand about the What are the different ways in which an inventory can be turned over and what might be going
distribution process, to whom does the company sell the biscuits and are they based pan India? wrong here?
The supply of the biscuits is done to the wholesellers who can be from any state in India. An inventory management system can be First in First out or it can be Last in First out. The problem
That’s very helpful. Now since they supply the biscuits to these wholesellers across the country, of expiry might arise if the inventory management system is of LIFO type.
are their warehouses also located pan India? Yes. You are correct. At present the biscuit cartons which enter the warehouse last are the ones
which are sent to the retailers first. The company has employed two different transportation
Yes.You are correct. The warehouses are also spread uniformly across the country. I would urge agaencies to take care of moving biscuits from factory to warehouse and then from warehouse to
you to focus only on the cost side of their business. the retailers. Due to the lack in coordinaiton between these two entities, a lot of biscuits were
I would want to analyse this problem by looking at various components of the value chain in getting spoilt. Now that we have zeroed in on the problem area, how do you propose to solve this?
biscuit manufacturing. According to me, this can be broken down into raw material procurement, As per my understanding, the cartons of biscuits which come in last are placed near the gate of the
processing costs, storage & transportation, marketing & promotions. Do you think I have missed warehouse and the transportation company which takes them to the retailers just picks it up from
out on any cost bucket? there for the sake of convenience. Is that correct?
No. I would like you to focus on stoarge and transportation cost for the purpose of this problem. Yes. Please go on.
To ensure that FIFO is followed, either give the job to the same transportation company. Second
Ok. Looking into the storage costs first. Is the storage cost/packet of biscuit higher for the client solution could be to place the cartons that come in later behind those which have been lying in the
as compared to the avergae market? And is this trend uniform across all the warehouses warehouse for some time. Everytime, some of the boxes are taken away to retailers, the boxes kept
belonging to the client? at the back should be moved in the front. This will ensure that lesser biscuits get expired.
Yes, the overall cost of storage/unit is higher for the client as comparred to the competitors.

Storgae cost is one area where we can reduce costs for the client. Storage cost can be broken
down into rental cost, labor wages and inventory losses. Do you want me to look into a particular
component or should I go ahead and explore all of them?
Focus only on inventory losses for now.
Okay. So, inventory can be damaged because of three factors. First one is due to spoilage
(Breakage, pest infestation, warehouse conditions like moisture). Second one is due to
inefficiency in turning over the inventory due to which it might get expired. Third might be
because of pilferage.

(C) Consult Club, IIM Ahmedabad 2015-16 11


Cost Reduction - Biscuit Manufacturer

Your client is a biscuit manufacturer. Over the past couple of months it has seen a decline in profits. Diagnose and recommend solutions.

Interviewee Case Facts Approach/ Framework


Notes • 3 factories concentrated in one
• High storage & warehouse state
Storage & Distribution- Customer
costs • Higher storage cost/unit in all R&D Raw Material Processing
Transportation Sale force
Marketing
Service
• Makes 1 type of biscuits warehouses as compared to
• Warehouses spread the competitors
uniformly across the • Different transport company Equipment Cost of raw
Machinery Transport to Sales Channel Marketing Repairs
material warehouse channels
country whereas factories used for bringing biscuits form
factrory to warehouse and Human Capital Contract & bulk Storage (Rent, Sales Force Strategy Spare parts
only in one state deal
Factory rent
Labor)
• Supplies biscuits to from warehouse to the retailer
Cost of finance Transport to Training Returns
wholesellers Quantity used Labor hours
customers

Technology
Storage
Capacity
utilization Inventory
Rental Labor
Losses
Packaging
Expiry Spoilage Pilferage

Poor demand
prediction

Poor inventory
management

Late supply

Recommendations
• Use the same transport company to move the biscuit from the factory to the retailer
• Placement of the biscuits which come later should be done so that the ones which have come earlier remain visible and in the front
• Move the biscuits at the back to the front as soon as the biscuits kept in the front are being taken away for delivery

Interview Summary
This is a cost reduction case where the interviewee should quickly establish the major cost buckets after discussing with the interviewer. Also, instead of probing into each bucket, ask the
interviewer if he has a particular cost bucket in mind.

Observations/Tips/Suggestions
• Each cost component should be broken down into multiple cost levers to ensure that nothing is being missed out
• Always list down few possible options and then clarify with the interviewer if you’ve missed out on anything. Also, Ask him to whether he wants you to delve into a particular bucket

(C) Consult Club, IIM Ahmedabad 2015-16 12


Cost Reduction - Retail Store - Interview Transcript

The CEO of a retail company has approached you with the problem that his company is burning Sounds good. The store is rented. The cost of leasing is fixed. Can you think of something to
cash. He wants you to provide suggestions to improve his business. reduce that?
Sir, I would like to understand the question better. By burning cash you mean to say that the Sir, we can go in with the arrangement wherein the cost of leasing can be made a direct function of
store is incurring losses. the variable component of sales
Yes Ok.

Sir, before I analyse the reasons for this loss, I would like to understand the business better. Sir, I can make the salaries of the employees also variable and link them to the sales
What kind of retailing are they into?. generated. That would spur sales. Also are the cloth procurement costs stable and comparable to
They are in apparel retailing. competition?
Yes they are similar. Can you think of something else that could affect this cost?
I would like to know the region of operation of these stores and the number of stores that
they have.
Sir, there might be damages related to the clothes. The clothes that are on display get
So they have 12 stores across India. Out of these 2 are profitable and 10 others are in loss.. damaged generally. Is there a cost related to them?
As I understand the market conditions in different parts of India would be different and Yes we do have to sell such clothes at a 20% discount. Also, the number of customer returns the store
hence it would take different analyses for them. I would have to group the stores region wise and has been experiencing has been increasing at a steady rate
understand what causes them to be in profit or loss.
We can ensure that such clothes are sold off quickly. AT the same time, we might want to add
Sounds good. Let us concentrate on the Bombay city region.. resources in the preliminary inspection & training front to reduce the number of returns incidents.
Sir, within the Bombay region I would like to know the number of stores and the kind of
Well, that’s fine. The store has also been experiencing greater costs on account of loss of
segment they are targeting. Also I would like to know the kind of competition we have.
merchandise. Can you think any which way this might be happening?
So, they have 1 store in Bombay which is situated in a suburban mall. We are a value for This could either be on account of either stealing by external or internal customers(pilferage). This
money store. There are 2 similar stores in the mall which target the same segment. could easily be prevented by having better security measures in place such as CCTV recordings,
employee frisking etc.
Sir, the decline of profit may depend on external or internal factors. If the profit of all the
stores in the region is dropping then it may be due to a drop in demand or some regulatory
issues.
Internal issues will consider the operation side of the business.
There have been no external factors as you say. In fact the business of the competitors has
been growing steadily
In order to understand the loss I would like to consider the revenue and costs aspects of the
business. So, have the costs of our business been increasing?

Yes they have been. Let us focus only on the cost end.
Fine. The costs can be divided into fixed and variable costs. The fixed costs components would
include the rent of the store if it is not owned, maintenance, lighting etc. The variable costs would
include the procurement cost of clothes and the salaries of the employees.

(C) Consult Club, IIM Ahmedabad 2015-16 13


Cost Reduction - Retail Store

The CEO of a retail company has approached you with the problem that his company is burning cash. He wants you to provide suggestions to
improve his business.

Interviewee Case Facts Approach/ Framework


Notes • They have 12 stores across
• Limited to apparel India. Out of these 2 are
Storage & Distribution- Customer
profitable and 10 others are in R&D Raw Material Processing Marketing
retailing business Transportation Sale force Service
• Value for money store loss
• Focus only on reduction • Higher storage cost/unit in all
warehouses as compared to Equipment Cost of raw Transport to Sales Channel Marketing
of costs (may have material
Machinery
warehouse Repairs
the competitors channels
revenue stream problems
Human Capital Contract & bulk Storage (Rent, Sales Force Strategy
too) deal
Factory rent
Labor) Returns
• Rented Store with a fixed
Cost of finance Transport to Training
cost of leasing Quantity used Labor hours
customers Spare Parts
• Stable costs of cloth
procurement Technology
Storage
Capacity
utilization
Inventory Rental Labor
Packaging Losses Costs (Wages)

Pilferage Damages Spoilage

External
Customers

Employees

Recommendations
• Exploring the possibility of linking the rental costs and the employee wages as variable components of sale rather than as fixed components
• Countering Pilferage by investing in security measures
• Customer returns issue should be traced back to the procurement end of the chain with better monitoring & inspection systems in place.

Interview Summary
This is a cost reduction case where the interviewee should quickly establish the major cost buckets after discussing with the interviewer. Also, instead of probing into each bucket, ask the
interviewer if he has a particular cost bucket in mind.

Observations/Tips/Suggestions
• Each cost component should be broken down into multiple cost levers to ensure that nothing is being missed out
• In case of chains, for problem simplification always look for possible clustering /segmentation. This also suggests clarity of thought
• Issues may link across the value chain. For example a Customer returns issue in this case may have been primarily triggered at the procurement stage itself.
(C) Consult Club, IIM Ahmedabad 2015-16 14
Industry Analysis - Overview

A company is looking to enter/expand into an industry and wants to know about the industry. The candidate is expected to elucidate the relevant
characteristics of the industry and decide whether the industry is attractive for the client or not.

Approach/ Framework (Broad) for the Case Type


Analyse a given
industry

Opportunity Verdict on
Objective of attractiveness
analysis identification

Entry into the Decision on Synergies with


Need-gap
market expansion/ growth existing business

Identify risks
Industry
fundamentals
Current Macro-
Regulatory Substitutes Entry/Exit barriers
economics

Framework Summary
Industry analysis is usually required in most types of cases, where the candidate usually begins by analyzing the industry. Depending on the exact problem statement, parts of the framework
may be used to analyze the industry.
Tips
The interviewer will expect the candidate to know about certain aspects of particular industries. For e.g. the value chain for an industry might be very obvious and the candidate should avoid
asking about it and make their own assumptions. On the other hand, it might be detrimental to make assumptions about the market situation and the candidate should extract as much
information on that as possible from the interviewer.
Key Questions
• Is this industry synergetic to our current business?
• Are there barriers to entry?
• Are substitutions available?
• How will we price our products and services?

(C) Consult Club, IIM Ahmedabad 2015-16 15


Industry Analysis - Insurance - Interview Transcript

A financial services provider wants to understand the insurance industry. Can you analyse the The client has been in business for past 10 years and has grown to capture 10% of the market share
industry for them? in the asset management space, which is significant considering there are 50+ competitors. But
Sure Sir. So I have to analyse the insurance industry from a market-entry point-of –view. Is that recently, the share has stagnated and the company is finding it difficult to acquire new customers.
correct?
India, due to its large population, will be offering a large market to tap into for financial services
Yes.
providers. But considering that there is only a limited population will have disposable income, I
So can I begin by asking some clarifying questions? Are we looking at the insurance industry as a believe the client is looking to sell other products to the same customers rather than trying to
whole or certain specific verticals under it like life insurance, home insurance or health acquire new customers. I think this makes sense in the long run. Also, since there are so many
insurance? competitors and it might be difficult to make the customers switch their service providers, the client
I would like you to analyse the broader industry first, we can narrow it down later. should definitely look at other avenues.
Yes that is correct.
Do we know the current status of the industry? About its recent performance as a whole?
Also, since our client is having 10% share, this means it will have already have a large customer base.
What do you think? On what factors will the industry performance depend?
Coming to the sectors within insurance, I believe there are 3 major sectors- Life, health and property
On a broader level, I think the top-line of this industry will be defined by the number of policy insurance. Is that correct?
holders. People will buy insurance policies only if they have some disposable income. This means Partially. Property insurance is a part of the larger liability insurance area . This can also include
that the number of policies will be in some ways proportional to the economic status of the insurance for automobiles, business mishaps and other miscellaneous insurance apart from property
country. Thus I am assuming, as more and more countries are becoming economically advanced, insurance.
more policies must have been bought over the years.
So, among these the client should venture into property insurance first. There are two major reasons
Coming to the bottom-line, we need to look at how insurance companies make profits. As per my
for this- first, our client already has the knowledge of asset management and hence will be able to
understanding, insurance companies make money by investing the premiums collected into
locate lucrative investment opportunities. Second, since the customers for life and health insurance
government securities and other investments. Hence, their profits will be determined by the
will be individuals while those for liability insurance will be both individuals and corporates. Our
interest rates prevailing in the market. Do we know how the rates are in the market, currently?
client has a customer base of large conglomerates which will like to insure their property and the
That will depend on which market we are looking at. Let us focus on the Indian market for now. like.
So interest rates in India have been historically on the higher side.
That is a good way to look at it. Any other thing you think the client should know about the insurance
This would mean that the industry is structurally attractive in India at first glance. But we will have industry?
to look at several other factors before arriving on a verdict. And I think these factors will differ I feel in the insurance industry, as is the case with the larger financial services sector, the role of
significantly on which sector within insurance we are focusing at. Do we know which sector is the regulations is very large. The client should carefully study all the regulations in place and analyse
client looking at? how they will affect their current business as well as their future in the insurance industry before
You need to advise on that. Which sector makes more sense for our client entering into this industry. Also, I believe this industry should continue to grow in India as more and
more people are entering into the medium-income groups.
For this I would first like to know a little bit more about the client. What all financial services does
Okay. Thank you for your time.
our client provide currently?
The client has major interest in asset management and corporate treasury management for some
large conglomerates in India.
Okay. So our client has experience in handling the assets of large companies, which indicates they
already have the knowhow of investment and liquidity management. This means it will not be
that difficult for the client to enter into insurance. But may I know how the client has been doing
in their business currently?

(C) Consult Club, IIM Ahmedabad 2015-16 16


Industry Analysis - Insurance

To analyze the insurance industry for a financial services provider

Interviewee Notes Case Facts Approach/ Framework


• Market entry into insurance • Interest rates high in India
industry • Client in the market for 10 years;
Analyse insurance
• Client currently in financial holds 10% share in current market
services • Client in asset management and industry
• Top-line- no. of policies, corporate treasury
bottom-line- interest rates • Customers are large
• Look at broader industry conglomerates
first, then narrow down on • 3 areas- Life, health and liability
area. Tell about industry
fundamentals, depending on Verdict on
Objective of Opportunity
synergies choose the area. attractiveness
identification
• Ask about the current status analysis
of the industry
• Which area within Decision on Synergies with
Entry into Need-gap existing
expansion/ Area within the
insurance? the market business
growth industry
• Risks
Identify
risks
Industry
fundamentals Current
Entry/Exit
Regulatory Substitutes Macro-
barriers
economics
Top-line,
bottom line
determinants

Recommendations
• Should focus on liability insurance
• Should leverage the current user base
• Should be mindful of the regulations
Interview Summary
The candidate did a good job in figuring out the fundamentals in terms of the factors on which the top-line and bottom-line of the industry depend. Identifying liability insurance as the target
area was the easiest part. She seemed to know the basics of the finance industry and it could have been difficult for someone oblivious to those basics. Overall a good performance.

Observations/Tips/Suggestions
Since the client was already present in an allied industry, the question was designed to judge the candidate’s knowledge about the industry fundamentals. The interviewer must have been
impressed by her knowledge of the industry and the overall logical consistency.

(C) Consult Club, IIM Ahmedabad 2015-16 17


Industry Analysis - Consumer Appliances - Interview Transcript

Our client is looking at investing in the solar energy business, and would like us to advise him Considering that our client is a consumer electronics manufacturer, it could focus on the
regarding the attractiveness of the industry commercial side of the industry, as there could be synergies with its existing products. Also, its
existing infrastructure, such as manufacturing and distribution network, may facilitate that. It
So, our client would like to advise him about the attractiveness of investing in the solar energy
could expand its current portfolio to include solar-based products such as solar cookers, lamps
business. Is that correct?
and water heaters.
Yes And how could it do that?
So, I would like to begin by asking a few preliminary questions about our client. What business is it It could do that in three ways. First, it could invest in technology to build new products. Second, it
currently engaged in? What geography does it operate in? What are the products that it sells? could acquire a company which manufactures such products. Third, it could enter into a joint
venture with a solar company to manufacture solar-based products.
The client is a consumer appliances manufacturer, with a strong presence in most of the top Indian
And what are some of the factors it will have to keep in mind before investing?
cities, and some sales in Sri Lanka, Bangladesh and Malaysia. It manufactures various household
products such as ovens, food processors, vacuum cleaners, air coolers etc Should it go for in-house development of solar-based products, it will have to develop
technological capability, which may require developing R&D facilities and hiring capable
Why is it looking at investing in solar energy? Also, is it looking at investing in India, or abroad?
engineers. It will also have to consider the rate of return on investment and the time taken to
recover its investment. It may need to look at new markets, such as the rural market, and may
Our client has significant cash reserves, and is looking at investing in emerging industries. It has need to invest resources in developing distribution channels, if they do not currently exist. It may
been told that solar energy is an industry with a lot of growth prospects, and it would like to get a also need to look at the regulatory scenario around investing in the sector
piece of the action. It wishes to focus on India
Alright. Could you please summarize our discussion?
Alright. Could you tell me a little about the solar energy industry in India? What is the current
installed capacity? What are the growth prospects?
Our client, a consumer appliances manufacturer, would like to invest in the solar energy industry.
We looked at the different applications of solar energy and thought that, keeping in mind
Well, India is well-positioned to exploit solar as a potential energy source, due to the abundant
synergies with the existing business, it could focus on the commercial side, such as solar cookers,
sunshine that it receives. It has a current installed capacity of 34000MW, and solar energy accounts
water heaters etc. Regarding mode of entry, it could go for in-house development, acquisition of
for 1% of India’s total energy mix. The government recently unveiled a plan to boost capacity to
a smaller company or a joint venture. However, it would need to consider R&D capabilities, rate
100,000 MW by 2022.
of return on investment and regulatory aspects before taking any decision.
What are the different components of the industry?
That’s good. Thank you for your time.
Can you hazard a guess at the different applications of solar energy?

Sure. We can classify the applications of solar energy into two main components- industrial and
commercial. Under industrial, we can have solar energy used for generating electricity to replace
thermal power plants, or for agricultural purposes, such as water pumps for irrigation. Under
commercial, you could have different applications such as lighting, solar water heaters, cookers etc

That sounds like a good classification of the applications. What could our client focus on?

(C) Consult Club, IIM Ahmedabad 2015-16 18


Industry Analysis - Consumer Appliances

To analyze the solar energy industry for a consumer appliances manufacturer

Interviewee Notes Case Facts Approach/ Framework


• Similar to market entry case • Client among top 5 consumer
• Queries about client; later appliances manufacturers in India-
Analyse insurance
used to identify synergy makes ovens, food processors,
areas vacuum cleaners, air coolers etc industry
• Structured approach to • Presence in top Indian cities, Sri
laying out applications of Lanka, Bangladesh, Malaysia
solar energy • Solar energy- installed capacity of
• Market entry framework- in- 34000MW, govt plan to boost
house capacity to 100,000MW by 2022
development/acquisition/JV Verdict on
Objective of Opportunity
for mode of entry attractiveness
identification
analysis

Decision on Synergies with


Entry into Need-gap existing
expansion/
the market business Mode of entry
growth
Identify
risks
Industry
fundamentals Current
Entry/Exit
Regulatory Substitutes Macro-
barriers
economics

Applications

Recommendations
• Test structuring approach of candidate (Eg: describing applications of solar energy)
• Test ability of candidate ideate (Eg: factors to keep in mind before investing)
• Direct toward synergistic link between current business and target area

Interview Summary
The candidate did a good job in laying out the framework. Through her preliminary questions about the client, she was able to later establish a connection which helped in narrowing down
focus area of investment. She laid out the approach to market entry quite well, and was able to identify certain key issues to be kept in mind for the investment

(C) Consult Club, IIM Ahmedabad 2015-16 19


Industry Analysis - e-Commerce - Interview Transcript

Our client is a watch brand, who wants to move into the online space. However, he has no Sure. Let me take a couple of moments to gather my thoughts.
understanding or experience of the e-commerce space, and wants us to conduct an industry Our client could build its online presence in two ways- standalone website or e-commerce portal. If it
analysis. Can you help him with that? goes for a standalone website, it will need to drive traffic to it, by means of advertisements and SEO
Sure sir. So, just to clarify the question, our client is a watch brand which wants to move into the activities. If it goes the e-commerce portal way, it can do one of three things- put its entire product
online space, and wants us to analyse the e-commerce space. Is that correct? portfolio online, have only the bestselling products sold online, or have initiatives like flash sales such
as those conducted by Xiaomi, to generate publicity, especially for new watch variants.
Yes. That’s good. Say our client goes in for the e-commerce portal option. Which of his segments would
To start off, I’d like to ask a few clarifying questions about our client. What sort of watches does you suggest he focus on?
he sell, and in what proportion? Does he sell both men’s and women’s watches, and if so, what is The mid-range segment accounts for most of the sales and profits. Also, online shoppers are quite
the percentage of each? price-conscious and are always looking out for the best deals. It may be easier to offer discounts on
Our client sells wrist-watches in two main segments- luxury and midrange. He sells both men’s the mid-range segment, as doing so for the luxury segment may dilute brand equity. So I would
and women’s watches, in a 40:60 ratio recommend that it sell some or all of his mid-range watches online.
What is the proportion of sales and profits of each of the segments? What is our market share in That’s good. Anything else?
each segment?
Well, our client can use its offline stores to develop its online presence, maybe through promotion
Well, the luxury watches account for 20% of sales and 30% of profits. We have 26% market share activities in the stores which direct customers to the online store. Apart from the major e-commerce
in the mid-range segment and 24% market share in the luxury segment portals, it may also choose to look at the niche websites, which cater to a particular category of
That’s great. I’d also like to understand a little bit about our competitors. How many competitors products, where it may be able to get better traction. However, it will have to look at differentiating
do we have in each space? What are their market shares? with respect to its competitors on aspects other than price, and communicating the value of its
products to customers
In mid-range, segment, we have two main competitors, Arya and Sansa, with 30% and 18%
Great. Thank you for your time.
market share respectively. In the luxury segment, there are three other major players, Riordan,
Vance and Le Guin, with 29%, 26% and 18% market share each.
And do any of these players have a presence in the online space?

Arya and Sansa have their own online retail stores, and sell a few of their watches on major e-
commerce websites such as Flipkart and Amazon. Of the luxury watch makers, only Riordan has
its own online store. So, do you have any ideas as to how the client can develop an online
presence?

(C) Consult Club, IIM Ahmedabad 2015-16 20


Industry Analysis - e-Commerce

To analyze the e-commerce industry for a watch brand

Interviewee Notes Case Facts Approach/ Framework


• Understand client and • Client sells two types of wrist
current market situation watches- luxury (24% market
Analyse insurance
properly share) and mid-range (26% market
• Use general knowledge share) industry
about e-commerce to make • Mid-range competitors- Arya (30%
recommendations market share) and Sansa (18%
market share)
• Luxury competitors- Riordan (29%
market share), Vance(26% market
share) and Le Guin(28% market Verdict on
Objective of Opportunity
share) attractiveness
identification
• 17 stores across 10 cities in India analysis

Decision on Synergies with


Entry into Need-gap existing
expansion/
the market business
growth

Industry Competitor
fundamentals assessment

Recommendations
• Category to focus on for e-commerce option
• Explore niche websites for greater traction
• Could have explored more sales growth options

Interview Summary
This is a strategy case where some knowledge about the existing e-commerce environment would be helpful in making targeted recommendations.

Observations/Tips/Suggestions
• Do Keep a tab on industry happenings
• Further brainstorming to come up with challenges if the interviewer asks, “Anything else”?

(C) Consult Club, IIM Ahmedabad 2015-16 21


New Market Entry - Overview

Market Entry, Analyze and recommend entry strategy

Approach/ Framework (Broad) for the Case Type

Customer – Entering
New Market Product Company Industry
New Market Strategy?
Entry
Customer Competitors
Segments Product & Share
Expectation
Offerings
If Yes,
Vision Available Resources – SWOT No
Needs How?
Products Capital, Analysis
Technology
Identify
Identify Gaps & Labour
Barrier to Start from
Profiling ofGaps of2
above Our Entry/Exit Scratch
Goals above 2 Strengths &
Strategic Our
Size & Assets Acquisition
Estimate of
Growth
Market
Market Share Share
Client’s Joint Venture
Objectives Target
market share

Framework Summary
Understand what the company ‘s objectives and expectations are. Does it make business sense for them/ Does it align with the overall firm strategy. Analyze the feasibility of market entry by
considering 4 different buckets. Then recommend whether they should enter or not. If yes, how should they do it.

Tips
Not every aspect of the framework mentioned will be applicable to all cases. But try to cover as much as you can, so that you get a good idea of the industry and the client current status. It is
very important to identify where the client would stand in the industry compared to the existing competitors and what measures should be taken to mitigate competitive edge of incumbent.

Observations
Most of the times interviewer will be satisfied if you analyze and suggest, whether to enter or not. But it is always good to take an extra mile by giving a high level plan on how to enter and
capture the market.

(C) Consult Club, IIM Ahmedabad 2015-16 22


New Market Entry - Lock Manufacturer – Interview Transcript

Our client is a leading lock manufacturer in India. He wants to enter the Nigerian market. Nigerian Yeah that’s true. Focus on residential aspect as of now
market has a lot of oil refineries. He has approached us to know how he should go about entering
the market. Next, I would like to focus on our customers. Do we know the buying behaviour of our customers?
Ok good, now you are coming to the point. Nigeria is a land where you see a lot of thefts happening in
Reiterating my understanding of the question. Can you tell me a bit more about the Nigerian
broad day light. As a result, customers purchase locks not to protect their goods but to delay the theft.
market? I am unable to get the connection between the oil refineries and the lock manufacturers.
They lock their houses with some 10-20 locks in order to delay the theft.
Basically, locks are used for both the residential purposes and industrial purposes. Ok, that is interesting. Now I assume if this is the case, then primarily 2 things would drive the
What kind of locks are we in? Do we manufacture some hi-tech number locks or simple vanilla purchase – a) Price b) Availability
locks? I assume quality of the product won’t drive the customers.
We basically manufacture simple door locks. We also provide industrial purpose locks to Yes, the customers are not at all quality conscious. They buy local China locks.
safeguard oil and other industrial products. These are similar to door locks.
How different are we on the price point?
One final question: Has our client already decided to enter the Nigerian market. Or does he want
us to analyse this as well? Our locks are 40% expensive than the local China locks.

No he is yet to decide whether to enter this market or not. He wants our advice regarding whether Is there any specific reason why our locks are so expensive?
to enter or not? And if entry, how to go about entering this market? Yes, we provide premium quality locks that last for 15 years compared to Chinese locks.
Now the candidate comes up with a framework which captures industry parameters, client’s
But, I assume customers don’t bother much about the quality.
competencies, financials and mode of entry
Yes, that is true. So, now what you recommend?
Let’s just focus on the industry part. This is the data
available on the parameters you mentioned.. The 2 most important factors for customers are price and availability. On the price point, we are
expensive compared to the competition but superior in quality. But, the customers don’t bother much
I would like to focus on how we sell our products. I assume we would be selling residential
about our quality. On the availability front, it would take us huge time and investment to build up a
products through a distribution channel comprising of distributors and retailers while the
distribution network. Based on this, I am a bit apprehensive of going forward in the residential space
industrial products would be sold directly to the clients.
in this market.

(C) Consult Club, IIM Ahmedabad 2015-16 23


New Market Entry - Lock Manufacturer
Client wants to enter into Nigerian market. The objective is to analyze the market and recommend the client an entry strategy
Interviewee Notes Case Facts Approach/ Framework
• Noted down client industry • Client manufacture both simple
and the target market locks and industrial purpose locks
• Clarifying questions on for oil refineries etc.,
client industry and target Customer –
New New Product Company Industry Entering
market R I Market Market Strategy?
• Trying to understand client Entry
Size 400m 100m
product portfolio
• Questions on purchase Growth 12% 6% Customer Competit
Segments Product
pattern to understand Expectation
Offerings
ors &
customer behaviour Lifecycle Growing Growing Share
Broad-approach Vision If Yes,
Profitabilit low high No
• Considered 4 different Available Resources How?
y Needs
buckets to understand Products – Capital, SWOT
market dynamics, Competiti 3 major 8 major Technology Analysis
competition, entry strategy & Labour
on players players Identify Start
and financial strength Profiling Gaps of from
• Identified purchase drivers – •Lot of thefts happen in Nigeria, Goals
above 2 Our Scratch
Price and availability Strengths & Barrier to
hence customers buy 10-20 locks Strategic Entry/Exit
to delay theft Assets Acquisiti
Size &
•Customers are not quality Growth
on
conscious Our
•Client locks are 40% expensive Estimate
Objectiv Market of
Client’s Joint
than china locks es Target
Share Market
•Client lock are premium quality Venture
market Share
which last for 15 years share

Recommendations
• Client’s product did not match the customer requirements in the market. The client also had to invest heavily on new distribution channel. Hence going ahead with the client’s product in
this market is not attractive

Interview Summary
The interviewer was happy with the overall analysis. But the candidate could have consider all possible solutions.

Observations/Tips/Suggestions
• Interviewee did not consider other possibilities such as customizing the product based on customer needs. Customers tend to buy locks in bulk, this market could be a great way of getting
into a new product portfolio
• Always come up with all possible solutions and eliminate based on feasibility
• Try to back up the entry strategy with cost benefit analysis

(C) Consult Club, IIM Ahmedabad 2015-16 24


New Market Entry - Retail Banking - Interview Transcript

A UK based banking giant wants to enter the Indian market. They have hired you as a consultant to The industry is characterized by significant competition from numerous public sector banks, domestic
guide them with this decision and advise them on various aspects of this move. private banks and other international banks like the client; besides the numerous smaller scheduled
and co-operative banks throughout India.
Foremost, I’d like to know more about the client to evaluate their entry into the Indian market. Is
the client an investment bank or a retail bank? That’s not very encouraging for the client as it might significant barriers in penetrating the market.
However, this does not necessarily mean that the competition is fierce in all services. As I understand,
The client is into Universal banking i.e. they have both investment and retail banking arms. most of the business in the retail banking industry is currently generated out of
Can you tell me more about the core strong business areas of the client? corporate and consumer loans where banks primarily cater to the larger corporate and the upper
classes of the society. Would you agree with me?
The client has a strong presence in the retail banking business. It is the market leader in retail That’s right but I am not quite sure where this is leading. Please make your point.
banking in UK, Belgium, Netherlands, Luxembourg, Germany and Austria. Personal loans and
business loans for small and medium enterprises has been a big driver of its growth globally. Sure. I was trying to explore was the presence of untapped opportunities for the client in the market.
Alright, in that case, I believe that the client should probably enter the Indian market with an initial As you had mentioned earlier, the client has a strong presence in the personal and business loans
focus on retail banking. The client clearly has a lot of expertise in this segment and can efficiently business for small and medium enterprises. However, the other banks in the Indian
leverage on its strengths to make an impact in the Indian market. However, I’d also like to look at banking industry focus primarily on the larger enterprises. This means that the client can strongly
the Indian market before making this recommendation and first gauge whether entering the Indian leverage its core expertise in the Indian market and tap into the huge market of SME enterprises
market in itself makes good business sense. Okay, I follow your arguments now. Do you see any other roadblocks besides competition for the
Okay, that sounds reasonable. How would you ascertain the attractiveness of the market? client’s growth prospects?
I believe the existing regulations in the banking sector significantly restrict the number of branches
Foremost, the market should have attractive growth prospects in the near future. Can you help with foreign banks can operate and it is very difficult for them to get the authorization for every new
an estimate of the growth projections in the Indian retail banking industry? branch. This would pose a serious bottleneck to the client’s growth
The retail banking industry is booming ever since the liberalization of the economy was initiated. So would you recommend the client to enter India?
The industry is expected to grow at a CAGR of 28% to touch a figure of INR 9,700 billion by 2010.
Yes, I believe the Indian retail banking business holds immense potential and based on this discussion
The industry shows quite promising growth prospects and definitely looks attractive for the client to about the market, the competition and the clients existing core businesses and strengths, I’d make a
enter. Can you tell me something about the degree of competition in the industry? favourable recommendation. The regulatory restrictions exist but the presence
of numerous other international banks like HSBC, Standard Chartered Bank, Citibank; I believe the
opportunities surpass the threats. Also, I might sound too pragmatic but given the pace of India’s
liberalization and development, I would definitely expect the regulatory restrictions to get relaxed in
the near future.

(C) Consult Club, IIM Ahmedabad 2015-16 25


New Market Entry - Retail Banking
UK based banking giant wants to enter Indian market. Objective is to asses the market and to advise an entry strategy
Interviewee Notes Case Facts Approach/ Framework
• Clarifying questions on •Client into universal banking i.e.
client industry and core both investment and retail banking
competencies •Market leader in retail banking
• Questions on market trends business in UK, Belgium, Customer –
New New Product Company Industry
to understand future Netherland, Luxembourg, Germany Market
Entering
Market Strategy?
prospects of the industry and Austria Entry
• Assessed the competition by •Client has core competencies in
seeking information on personal and business loan for Customer Competit
small and medium enterprises Segments Product
existing players in the Expectation
Offerings
ors &
market •CAGR of retail industry is 28% Share
• Touched upon regulatory •Highly competitive industry with Vision If Yes,
presence of public, private and No
issues in the market Available Resources How?
Needs
Broad Approach: foreign banks Products – Capital, SWOT
• Covered four major Technology Analysis
aspects such as target & Labour
Identify Start
industry segments and Profiling Gaps of from
growth prospects, above 2 Our Scratch
Goals
competition, client core Strengths & Barrier to
Strategic Entry/Exit
competencies, Entry barriers Assets Acquisiti
Size &
on
Growth
Our
Estimate
Objectiv Market of
Client’s Share Joint
es Target Market Venture
market Share
share

Recommendations
• As the core competency of client is retail banking, they should first focus on leveraging that in Indian market
• Competitors largely focus on loans to large scale enterprises, Client can leverage their core competency by providing loans to small and medium scale enterprises
• Enter the market focusing on retail banking and leverage expertise on personal and business loans for small and medium enterprises

Interview Summary
Identified opportunities in the target market, mapped it to the core competencies of client. Assessed competition and suggested focusing on services which does not majorly overlap with
competitors.

Observations/Tips/Suggestions
After making a recommendation to enter to the market always suggest a full blown strategy on how to establish in the market, how the client should attract the customers, additional services to
mitigate competition etc., This will further strengthen your recommendation.

(C) Consult Club, IIM Ahmedabad 2015-16 26


New Market Entry - Diagnostic Chain - Interview Transcript

Interviewer: A diagnostic laboratory chain based in America wishes to enter the Indian market. Interviewer: That sounds interesting. Tell me something more about the fixed costs and other details
What are the factors which you would look into in order to advise them? the company should consider before launching services in India.
Candidate: Before I start, I would like to know more about the kind of operations this lab Candidate: Well, the sourcing of the technology will have to be thought of, as also the regulatory
undertakes. For instance, is it a general-purpose health laboratory or does it specialize in certain regime regarding investment in health infrastructure in India. Tie-ups with big hospitals will need to
areas of health? be explored as the first step toward gaining a foothold in the diagnostic laboratory industry, since
Interviewer: Well, it basically tests patients’ blood and urine samples for diseases as wide-ranging trust would be of paramount importance when it comes to health-related matters. Subsequent to that
as cancer, AIDS, diabetes, hepatitis etc. So you can refer to it as being fairly general in its of course, the client may want to extend operations to capture higher volumes.
operations. Interviewer: What about rural areas?
Candidate: And what is the nature of technology used in the labs? Candidate: In rural areas, there is huge scope for such labs because of two reasons. One- the large
Interviewer: They use the latest technology, the very cutting-edge. number of people residing in rural areas. Two, the huge investments that rural health-care has seen in
the last few years. However, there are certainly problematic issues as regards operating a diagnostic
Candidate: Okay. And lastly, what is the modus operandi of these labs by way of getting clientele. laboratory in the rural areas. Firstly, for such labs to be successful, strong backward and forward
Do they advertise or are they prescribed to patients by doctors in hospitals when the former need linkages with key infrastructural elements covering health as well as other fields are required. For
tests to be performed? instance, if there are no functioning hospitals, the labs will be of no use to patients.
Interviewer: These labs are fairly high-end and use the latest technology. So the main source of Similarly, the sourcing of technical equipment, medical supplies etc. to labs requires well-functioning
revenues from us is the hospitals which recommend patients to us. roads, communication networks etc. Secondly, and perhaps most importantly, the nature of health
services which would be in demand may be very different from that of the services demanded in
Candidate: Okay. To start my analysis, I would try and look at the nature of health services America.
industry in India and compare it what exists in the United States. In the course of so doing, I would Interviewer: Different in what way?
need to examine and compare the demographics, purchasing power and health infrastructure of
the 2 countries, amid other factors. Does that sound okay to you? Candidate: Typically, the nature of health ailments people in rural India will face will be very
different from that of those faced by Americans because of the vast difference in lifestyles. So, the
client will need to gauge if it is capable of catering to these widely different needs in a cost-effective
Interviewer: That sounds right. All I want from you is an enumeration of the various factors you manner.
would want to consider, just that. Interviewer: Good. That will be all.
Candidate: Okay. In keeping with what I said just now, I would like at the following. First, I would
look at the kind of market India possesses as far as diagnostic laboratories are concerned. In
relation to this, I would divide the market into urban and rural markets. In urban areas, I would
examine the kind of labs which currently exist and the nature of clientele they cater to. I would try
and explore how the patients are recommended to these labs viz. is it by the hospitals/doctors or
is word-of mouth ‘publicity’ important.

Interviewer: Okay. What other things?


Candidate: I would also look at prevailing competition from the point of view of the nature of
services that they offer. Such analysis will help in figuring out the competitive advantage our client
enjoys by way of tests not performed by other labs. Also, it would be important to find out about
the range of incomes we would cater to. For instance, we could depend on high volumes based on
low margins or on high margin low volume based services. While in the former, specialized
services would not be required and the client’s core competencies would not be the revenue-
generators, the high fixed costs of opening labs makes me believe that a high volume model may
in fact be feasible. On the other hand, the lab could service high-end clientele and use its
expertise in health matters relating to ‘rich’ and upwardly mobile lifestyles.

(C) Consult Club, IIM Ahmedabad 2015-16 27


New Market Entry - Diagnostic Chain

Client wants to enter into Indian Diagnostics space. The objective is to analyze market in terms of cultural, regulatory and customer preparedness
Interviewee Notes Case Facts Approach/ Framework
• Identify current client • Client is cutting edge latest
location and market technology in the US
• Clarifying questions on • Tests blood and urine samples for
client industry and target diseases – Cancer to Aids, hepatitis Customer –
New New Product Company Industry
market etc. Market
Entering
Market Strategy?
• Understand technology, •Mass player in blood test, no Entry
operations, market niche as such
positioning •Rely on hospitals to promote Customer Competit
Segments Product
• Questions on purchase testing and acquire customers Expectation
Offerings
ors &
behaviour to understand Share
customer behaviour Vision If Yes,
No
Broad-approach Available Resources How?
Needs
• Considered 4 different Products – Capital, SWOT
buckets to understand Technology Analysis
market dynamics, & Labour
Identify Start
competition, entry strategy Profiling Gaps of from
and financial strength above 2 Our Scratch
Goals
• Identified purchase drivers – Strengths & Barrier to
Strategic Entry/Exit
Price and availability Assets Acquisiti
• Analysed competition and Size &
on
Growth
demography of customers Our
• Understand cost structure Market
Estimate
• Study mass market vs niche Objectiv Client’s of
Share Joint
es Target Market
playing position Share
Venture
market
• ID cost structures & BEV share

Recommendations
• This case did not have a definite solution, more of capturing factors to be considered before entry. Candidate did a good job to capture most factors in terms of influencers, purchase
frequency, market segments willingness to pay.

Interview Summary
The interviewer was happy with the overall analysis. But the candidate could have consider all possible solutions.

Observations/Tips/Suggestions
• Niche positioning or acting as technology partner with existing players or hospitals could have been considered as an entry point
• Always come up with all possible solutions and eliminate based on feasibility
• Try to back up the entry strategy with cost benefit analysis
• The candidate could have given an high level entry strategy and idea of implementation which would have added more value to his arguments

(C) Consult Club, IIM Ahmedabad 2015-16 28


Growth Strategy - Overview

Growth strategy cases are generally open ended and have enough room to test the candidate for both creativity and comprehensiveness of
approach.

Approach/ Framework (Broad) for the Case Type


Cross-selling

Increase volume per


Loyalty programs
customer

Increase revenue per


Bulk Discounts
customer
Increase price
New geographies
Revenue Growth

New markets New customer segments

Increase number of New product launches


customers
Improve marketing
Existing markets
Improve access / distribution
channels

Framework summary
The growth in revenues is broken down into growth in revenue/customer and Key Questions
number of customers and then further methods like increase of prices, new
products, new geographies etc are utilized to achieve the desired growth • What are the major revenue streams, and what percentage of the total revenue does
each stream represent?
Tips
• Always ask probing questions immediately around time-frame, and • Does anything seem unusual in the balance of the percentages for this firm compared
to the industry?
quantification of impact. E.g. If the case interviewer states “XYZ wants to
increase it revenues quickly.” • Have the percentages changed lately?
• The first questions should be “What magnitude of increase is being • What are the companies trends in terms of revenue over the last 3 years?
envisaged?” and “What is time-frame to achieve this impact?”

(C) Consult Club, IIM Ahmedabad 2015-16 29


Growth Strategy - Telecom Market - Interview Transcript

The client is a telecom service provider and wants to grow in a saturated telecom market. How
would you go about this?

I would like to start by understanding the telecom market in India, looking at the revenue drivers
and advise the client on which ones he could use. I understand that the telecom sector works by
hiring its services from tower operators and then use their own brand name and services to
generate revenues.

Interviewer: True. Our client too hires such service at market rates.

Okay. Then I shall explore the meaning of saturated market. Has the client explored all
geographies? Like the whole of rural market? I recently read that we have about 680 million
telecom connections. So, I believe there is still some untapped market to explore.

Right. There is an untapped market. Let us go on and say the rural market has been penetrated
to the extent possible and they have probably done what they could in that respect.

Okay. So assuming a saturated market, we should look at increasing revenue from existing
consumers. We could analyse the existing calls being done and could think of schemes like STD
call rate packages, local call packages, local and STD SMS packages that suit to the area to
increase per user usage. The idea would be to have lower rates more than compensated by
higher usage.

Good, what else?

We could look at various value-added services like revenues through internet services on
mobiles. Having different plans and offering better speeds, we can get more consumers to use
internet on their mobiles. Also, with 3G technology, mobile internet will surely be a huge source
of revenues.

Good. Anything else?

Also from games and applications. There are many businesses coming up in the area of mobile
gaming and product development of applications. We could buy them and use them as sources
of additional revenue.

Okay, thanks for the inputs. We will now move to the next interview. Thanks for your time.

(C) Consult Club, IIM Ahmedabad 2015-16 30


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dell, 21-06-2015
Growth Strategy - Telecom Market

The client is a telecom operator in India and wants to increase his revenues and grow in this saturated market. What would your
recommendations be?

Interviewee Notes Case Facts Approach/ Framework


• How does the telecom • Client operates by hiring services
market in India is from tower operators and
performing? Is it growing? provides various services to earn
Tying up with mobile
• What are the possible revenues Cross-selling manufacturers and so on
revenue drivers for the • Rural market has been penetrated
client? to the maximum extent possible Increase Loyalty Loyalty benefits, free talk-time,
• What is meant by saturated usage/user programs discounts etc
Increase
market? Maximum
revenue/ user
penetration or saturation in Increase Bulk and other Discounts on high usage, benefits
economy or any other price Discounts on referrals etc
factor? Rural/urban India, lowly-
• Rural market has been New penetrated states, outside India
Increase geographies
penetrated to the maximum etc
Revenue
extent New New customer Age based(Youth, old), Usage
markets segments- based: Loyal vs first timers etc

New product Value added services, games and


Increase # of launches applications, internet etc
customers
Improve Celebrity endorsements,
marketing innovative ad campaign etc
Existing
markets Improve Strategically located stores, better
channels availability in existing stores

Recommendations
• Client needs to increase revenue from existing customers which can be done through analyzing services like STD calls & SMS packages to increase usage/customer
• Offering value added services like high-speed internet services, 3G could be a huge source of revenue
• Generate additional revenue sources by buying businesses concerning mobile gaming and application development
Interview Summary
This is a revenue growth case where interviewee should eliminate the option of increasing market penetration by asking directed question about the meaning of a saturated market in the
beginning itself. This tests candidate’s ability to quickly come up with new methods of revenue growth in a saturated market.
Observations/tips/Suggestions
• Candidate should have clarified upfront the potential targets and time period for revenue growth
• Increasing revenue by expanding in new geographies could have been discussed by asking the client’s objective of growth in the beginning as pertaining to just India or other geographies
• Multiple options for increasing usage/customer s could have been mentioned in addition to just mentioning analysis of STD calls and SMS packages
(C) Consult Club, IIM Ahmedabad 2015-16 31
Growth Strategy - Boiler Company - Interview Transcript

You’ve been approached by a boiler company and they want your help in devising a growth
strategy. Now that we have eliminated some of the options, I would like to focus on current market and
consolidation of the existing product line. Specifically, I would like to know the individual products on
offer, margins to be made on each of them and their individual growth potential.

I’d like to confirm that the company wants to increase its sales drastically and preferably its
profits too.
I think you have figured it out. What would you like to suggest to the company?

That’s right.
In my opinion, company should focus on the products which promise growth and also offer higher
margins. Possibly, they are currently providing a standard capacity type or a fuel type to most of the
Before we take a look at the company specific information, I would like to know more about the customers. They should rather look at the individual customer needs and design their offer
industry – current trends, any new technological advances, nature of competition etc. accordingly. This benefit to customer would also enable them to command a greater margin on each
product sold. Sales force incentives could also be aligned with customer-centricity in terms of correct
product requirement assessment and supply. In short, focusing on the right product is the key for
Boiler companies typically have a line of products based on capacity and fuel used. There are no
growth for our client.
new advances in recent times. 80% of the market is organized and main customers are the
thermal power plants.

I think the analysis is sufficiently thorough. We can stop here. Thank you.
A company can grow either by expanding market share in its existing market, entering new
geographical markets, coming out with new products or by acquiring another company. I would
like to know more about this company. What this company’s products are? Who are its customers
are? Where does it operate? Its access to cash/financing resources? Its competitors?

It’s a medium size firm – about $100 MN in sales, operates primarily in India. It’s the biggest player
in the organized segment which is approx. 80% of total market. Its main customers are thermal
power plants, etc. Products can be classified on the basis of capacity and fuel for the boilers. It
doesn’t have much cash or technology. It’s a midget compared to global players in the same
industry

Well, not being cash-rich restricts the firm from exploring various growth options. For instance,
new product development seems to be out of question given no access to technology advances.
Similarly, exploring new geographical markets, even overseas markets, would be out of reach
presently as there is dearth of capital. Acquiring another company is a possibility if synergies exist
that can to offer significant benefits out of the merged entity. But, we also must keep in mind the
results realization lag in case of a merger. Again, M&A activity presently does not seem feasible.

Sounds reasonable

(C) Consult Club, IIM Ahmedabad 2015-16 32


Growth Strategy - Boiler Company

You’ve been approached by a boiler company and they want your help in devising a growth strategy.

Interviewee Notes Case Facts Approach/ Framework


• Industry analysis – current • 80% of the market is organized and
trends, any new main customers are the thermal
technological advances, power plants.
Machines/devices across value
nature of competition etc. • Medium size firm – about $100 Cross-selling chain
• Understand client business MN in sales, operates primarily in
• Low on cash – restricts new India. It’s the Increase Loyalty Discounts for repeat purchase for
product development, M&A • biggest player in the organized usage/user programs new plants
Increase
not possible segment which is approx. 80% of
revenue/ user
total market. Its main customers Increase Bulk and other N/A
are thermal power plants, etc. price Discounts
Products can be classified on the
basis of capacity and fuel for the New New markets beyond India
Increase geographies
boilers. It doesn’t have much cash
Revenue
or technology. It’s a midget New New customer Diversify into unorganized
compared to global players in the markets segments- segments
same industry
New product Customized and tailored solutions
Increase # of launches
customers
Improve Highlight USP in markets
marketing
Existing
markets Improve Build relationships with purchase
channels managers

Recommendations
• Company should focus on the products which promise growth and also offer higher margins
• look at the individual customer needs and design their offer accordingly
• Sales force incentives could also be aligned with customer-centricity in terms of correct product requirement assessment and supply

Interview Summary
This is a revenue growth case where interviewee should give a broad framework with different options before filtering down to the recommended option.

Observations/Tips/Suggestions
• Candidate should have clarified upfront the potential targets and time period for revenue growth
• Candidate should have broadly tested each option with the interviewer instead of simply mentioned them all.

(C) Consult Club, IIM Ahmedabad 2015-16 33


New Product Entry - Overview

In a new product entry case, a company is likely to aim for introducing a completely new product in a market or expand its existing product’s
reach in a new geography. A interviewee is expected to first align on the product’s viability to succeed in the market followed by identifying the
correct price point and target market and finally recommend levers that can drive product success in the market.

Approach/ Framework (Broad) for the Case Type


New Product
Introduction

Establish Value Profit and Break


Initial Investment
chain even point

Debt Equity Variable cost per


Self Financed # Units sold Price per unit Fixed cost
Financed Financed unit

Production Distribution Marketing


challenges Challenges challenges

Framework Summary Key Questions Establish Value Chain


A company can either introduce a product in a market • What is the purpose of the new product • Are there any barriers to entry into the new areas?
where it has no presence or can extend product line in its introduction – capture increased market • Number and type of competition? Market share?
current market. Launching a product in a market with no share, entry into a new business line, profits, • For distribution etc. do you do it in-house or contract it
presence pose not only operational challenges but build brand? out?
viability of product’s success in the market also needs to • How big is the market for the product?
be explored. Extending the product line in current market • Segments in the target population? Profit or Break Even Point
may require looking into cannibalization while doing a • What is the price at which the product has • Expected time before break even? Should not be too long
feasibility check of product in the market and how the been introduced? a time
current value chain can be leveraged in making the
product available to its customers. Initial Investment
• What is rate of interest?
Tips • Do sales cover the interest expense?
• Clarify objective, especially focus area of a new
• Expected period of payback?
product entry case
• New product entry cases might involved multiple
issues linked to it and hence both depth and the
breadth needs to be covered for exhaustiveness

(C) Consult Club, IIM Ahmedabad 2015-16 34


New Product Entry - Anti Smoking Pills - Interview Transcript
The client is in the business of making anti smoking pills - the way we have those patches and Hmm… that is good. In our case, let us assume we did this and came up with Rs. 8 per unit. You
lozenges in the market to curb the urge to smoke. The client wants to sell it at a premium price. You think that sounds reasonable?
have been hired to find out if the product can be introduced in a country like India - and if so - what
I think a price of Rs. 8 per pill is feasible because of the lab results - people will be convinced that it
is the expected target market, market share and a feasible price at which the drug should be sold.
is a medically prescribed drug and since it is a pre-scheduled dosage for 3 months, results are
I would like to confirm if I have understood all the critical aspects of the client’s situation. Our client guaranteed. We can also stress on the on nicotine bit and indirectly position this as a life saving
is in the business of making anti-smoking pills that reduce the urge to smoke for smokers. We need drug.
to do see if the product is feasible to be launched in India and evaluate the market characteristics
such as size and client’s share based on the price. Ok, let’s estimate the market size assuming we decide to price it at Rs. 5 per unit.
That’s right. Now that you’ve understood the situation well, how do you propose going about the Let’s take Delhi as a base case. Population: 150 lakh. Target segment: 40% of them smoke * 20% of
solution? them would want to quit smoking * 75% can afford (Rs. 8 * 3 * 90 = Rs. 2160 drug to quit) = 9 lakh
people or INR 9 * 2160 ~ INR 200 crores. We can now assume that this drug will reach out to 25% of
Since this is a new product launch, I would like to structure my discussion around the product the population across India (urban + rural since its effective and one-time payment to quit
characteristics (development and customization) for the Indian market and then move on to the smoking), which means the total market is 200/150 * 0.25 * 10,000 lakh = INR 3,333 crores.
launch (competition, distribution and promotion) part of the case.
This sounds fine to me. Also, please note that this product is not entirely new; it has been
Very interesting. What will drive the market growth our market share?
introduced in other countries already.
Candidate: The market growth rate will be affected by the sales and distribution coverage,
Ok, that experience should definitely help us. To start with, can you tell me something more about willingness of people to quit smoking and addition of new smokers who would want to quit after
the product? How is it different? sometime. We can look to capture about 80% of this market eventually, assuming no major
competitor enters the market, which can be prevented by IPR support. Since this is a prescription
Unlike the lozenges or patches, this product is completely nicotine free - it is 5 times more effective drug, the bulk of the promotion costs in this industry are in targeting the doctors and chemists via
as proved by lab results and 50% of the test results responded to the pill (which in this industry is an direct sales agents or Medical Representative to convey the pros and cons for them to a) prescribe
extremely high number thus indicating success). Moreover, it is a drug that cannot be sold over the the drug and b) keep it in their pharmacies. This will drive our market share from the potential
counter – it requires a prescribed dosage given by the doctor. It is to be taken for 3 months daily, 3 market size.
times a day.
Good. What about the other 20%?
That is good. It gives us the advantage to position our product as superior due to the higher efficacy
of treatment. I would like to know take up the competitive scenario next so that we can decide the Candidate: I am assuming that the remaining 20% will comprise of smokers who are unwilling to
price before determining the overall market size. quit smoking (10%), perceive the price to be high (5%) or are not aware of the product (5%). This
percentage can decrease as we move further in the product life cycle and the product becomes well
That’s a fair point. So, there is no similar product in the market. Cheaper products like lozenges exist
established through marketing and promotion efforts.
but they contain nicotine and sell for Re. 1 per unit.
Good. Any other costs/concerns that you would like to address?
What are the other countries where the product has been introduced? How receptive have the
customers been in those countries? The training costs for the direct sales agents will also be critical as this is a new product and local
agents would need an in-depth understanding of the product. No. of sales people can be calculated
The other countries have smokers who are quite similar to the Indian consumers. The product has by total workload method: Assuming Doctor/Population ratio and say 3 doctors per day and repeat
been quite a success. visits every 2 months; and Chemist/Population ratio and 3 chemists per day and repeat visits every
15 days. The supply chain will have to be considered - the warehousing, distribution network, retail
Ok, this means that the target audience will be receptive to the product and we can assume that chains etc. We can perform the cost benefit analysis for using middle distributors v/s direct
there is a strong market for the same. I will now proceed with the estimation of the price and distribution.
market size. There are two ways that we can price a new product in a non-competitive market: Cost
based and ‘willingness-to-pay’ based. In the first, I would calculate the cost to company and charge Good, I think we have covered the different aspects of the case. Thank You.
a margin on the same while in the second case; I would calculate the propensity of the consumer to
pay for this drug. This would vary with my target segment chosen. Ideally, we should be able to
calculate the optimal profit case by considering the trade-off in sales volume vs. price for various
price points. The solution will also be influenced to an extent by the growth rates of the different
target segments overall, say movement of people to upper-class from lower-middle class.

(C) Consult Club, IIM Ahmedabad 2015-16 35


New Product Entry – Anti Smoking Pills

The client is in the business of making anti smoking pills - the way we have those patches and lozenges in the market to curb the urge to smoke.
The client wants to sell it at a premium price. You have been hired to find out if the product can be introduced in a country like India - and if so -
what is the expected target market, market share and a feasible price at which the drug should be sold.
Interviewee Notes Case Facts Approach/ Framework
• New product launch – Anti • Client is in the business of making
Introduce Anti-
smoking pills anti-smoking pills
smoking pills in
• Country - India • Client wants premium price for its India
• Premium product- requires product
premium price • Client wants to find product’s Profit and
Initial Establish value
Break even
• Product characteristics potential in India – target market, Investment chain
points
(suitability for Indian market share and feasible price
market) & Product launch Distribution Product
(competition, distribution challenges marketing Potential Cost
and promotion) Revenue
• How is the product different
from existing? products Target market
The drug cannot be sold as OTC and would Price
size
• What is the competitive require prescription. Medical
scenario in the market representative and direct sales agents need Filters Number projections
• Product has already been to be hired who can push the product to the
introduced in some doctors who in turn will prescribe it to the Population base (Delhi) 150 lakhs
countries patients.
% population who smoke 40%
Client needs to invest in training of its sales % smokers who want to quit 20%
reps so that they can convince doctors with % quitters who can afford the product 75%
product’s value proposition
Potential customer base 150*.4*.5*.75 = 9 lakhs
Potential revenue 9*2160 = 200 Cr

Revenue projection across India (25% 200/150*0.25*10000 =


penetration) 3333 Cr

Recommendations
• Price point should consider both customer’s willingness to pay and product’s incremental value proposition over existing products in the market
• IPR/ Patenting the drug can prevent competitors to enter market and facilitate capture of market share
• Spend more on training the medical representatives and direct sales agents to push the product to the doctors who in turn will prescribe it to the patients

Interview Summary
This is new product entry case where the interviewee should not only check products success viability in market but also touch upon operational issues

Observations/Tips/Suggestions
• Marketing of the product can be briefly discussed since the product charges a premium price to its customers
• Long term product goals and ways to improve product penetration across its lifecycle could have been discussed
• Candidate should have clarified upfront if the product has already been launched in other countries

(C) Consult Club, IIM Ahmedabad 2015-16 36


New Product Entry - Automobile Service Station - Interview Transcript

You are having tea with Mr. Ratan Tata. He has just returned from Germany where he saw third Ok. Now I want you to make a grid of the dimensions that you’ve mentioned and figure out where our
party car service stations which were doing very well. So, he is thinking of opening a chain of such competitors lie and where we should go.
stations in India. You need to give him your thoughts and make a pitch from our side for helping
him with the project. (Starts drawing a 2X2 matrix)
I’m not very sure of what you mean by third party service stations. Can you explain a little?
Let us club convenience with quality.
To service a car there are service stations. They can be authorized stations like the chain that
Maruti has or they can be local garages. The third type, which is currently missing in India, is an We’ll just analyze the situation based on 2 parameters. Now, Tata wants to start a third party chain of
independent chain of service stations which will service any brand. These are third party service service stations which will serve all brands. If Tata targets low quality, local garages will beat them
stations since these garages can service all brands and charge very low unbeatable prices. Also, they would be
Ok. This is a new business that Tata would want to enter. I’d like to look at a few things while built at strategic locations which Tata may not be able to acquire, coming late into the market. On
considering the new venture : comparing Tata stations with authorized service stations, Tata could stand a chance. They could
•Tata’s final aim - do they have a target profit /market share/return on assets as their target from ensure quality by sourcing parts from manufacturing companies and employing well trained
the venture mechanics. Since such a service station will service all brands it will be a convenient place to come to
•Market scenario – growth & size, competition for high quality services. However, the price charged will be high.
•Tata’s capabilities – financial capability, expertise in area, synergies with other businesses
Do you think anyone will come to such a service station when they can go to a Maruti or Hyundai
Tata is a big & profitable company, they want as high profits as possible from the venture. Also,
authorized service station?
they have no constraints with regards to finances. They build automobiles as you know and have
authorized service stations for their automobiles.
In India a majority of cars are Maruti and Maruti has a very good chain of service stations which are
convenient to reach and high quality. Hence, Maruti cars will definitely not come to Tata’s stations.
So, the aim of Tata is high profits and they have sufficient finances and expertise in the
Other brands like Hyundai would come since their service stations are few and far apart. If Tata offers
automobile area. I’ll go on to look at the automobile maintenance market. Currently in India there
the same quality at the same price; it might be cheaper and more convenient for consumers if Tata’s
are 2 kinds of garages – the local ones and authorized service stations. So, when we enter the
chain has numerous stations at strategic locations.
market, would we be servicing all kinds of brands and providing a full range of services?
Yes. All brands and full range of services.
Maruti has almost 50% of India’s car market share. Now do you think it is beneficial to set up Tata’s
We would need to differentiate ourselves from the 2 kinds of competitors that we have in order third party service chain?
to get customers.
Ok. How would you do that? Owners of other brands will prefer to go to their authorized service stations as they would be more
I’ll look at why a customer goes to a service station and why he chooses a particular station to go trusted. And given such a lopsided market in favor of Maruti, it will be difficult for us to compete with
to. A car would be taken to a service station for regular check-ups/services, in case of an accident Maruti directly. So, the number of cars coming to Tata’s stations might be too low for the venture to
and maintenance when it breaks down. be viable. But, if there are expectations that many new brands will enter India as some already have,
then Tata’s venture could be viable given that these firms would not want to open a service chain of
Ok their own due to small numbers and newer vehicles could mean that the local garages might not be
Now when an owner chooses a service station he would want : well-equipped to deal with all kinds of problems with the vehicle.
•Quality – In terms of genuine parts if replacements are done, trained mechanics, the car being
treated properly, delivery on time What would your final recommendation be?
•Cost – He would want the service to be as cheap as possible
•Convenience – The service station should be close or should have a pick & drop service.
My final recommendation would be to not start such a venture currently since Tata would not be able
There would be a segment of customers who would lay a lot of emphasis on cost while another
to beat competitors on any dimension - cost or quality. However, in the near future this could turn
segment would lay emphasis on quality. In case of an accident or break-down convenience would
sustainable so an eye should be kept on this market.
play a big role. Local garages will have low quality and low cost while authorized service stations
will have high quality and high cost. Also, local garages are generally more in number so would be
more convenient to reach in most cases. Ok. Thanks.

(C) Consult Club, IIM Ahmedabad 2015-16 37


New Product Entry - Automobile Service Station

You are having tea with Mr. Ratan Tata. He has just returned from Germany where he saw third party car service stations which were doing very
well. So, he is thinking of opening a chain of such stations in India. You need to give him your thoughts and make a pitch from our side for helping
him with the project.
Interviewee Notes Case Facts Approach/ Framework
• New product launch – third • Client wants to open third party car
Open chain of third
party car service station service stations in India
party service
• Country - India • Service similar to one existing in stations
• Independent service station- Germany
brand agnostic • Independent service station which Profit and
Initial Establish value
Break even
• Service needs – Regular can service any brand Investment chain
points
check-ups, accidents,
maintenance Distribution Product
• What is the client’s long challenges marketing Potential Cost
term and short term goal Revenue
• What is the competitive
scenario in the market Target market
Price
size
• 50% car market held by
Maruti whose service
stations have extensive Customers Competition
coverage Quality

High Low
Maruti has 50% share of the car
TATA would need market and has extensive reach with
Authorized Service

High
to be somewhere service stations.
Station
here to compete
Cost

If there are expectations for new car


brands to enter into the Indian

Low
Local garages market, Client can tap into the market
with high service quality

Recommendations
• Current market is too consolidated for a new player to establish itself by beating competitors on cost or quality dimensions
• Opportunity available for the client in near future with entry of more number of brands and thus making the market fragmented

Interview Summary
This is new product entry case where the interviewee should clarify long term and short term objectives of the client

Observations/Tips/Suggestions
• Service level differentiations could have been discussed to explore opportunities for the client in the current market scenario
• Success factors in Germany could have been talked about before arriving at the recommendation for the client
• Candidate should have clarified upfront the long-term and short-term objectives of the client

(C) Consult Club, IIM Ahmedabad 2015-16 38


New Product Entry - Application Software & Bundling – Interview Transcript

The client is a software manufacturer that offers shrink-wrapped software application products I see. One of the objectives of software design is to keep it simple and intuitive with in-built easy-to-
and has grown over the last few years – mainly through multiple acquisitions. In the recent times, use help. It appears to me that the company’s products could improve on this dimension. I suspect
their stock price has declined significantly. The sales have declined but their customer service that some of this is the result of integrating technology from aggressive acquisitions that we have
department has shown impressive growth in revenues over the last few months. The CEO has an made in recent years. I see broadly three ways to integrate acquisitions. First, the company can
offer from OEMs (Original Equipment Manufacturers) to bundle his product with their products simply add an acquired product as a new standalone offering in its product portfolio. Second, the
and he’s unable to decide what to do. You have been hired to help him analyze the situation and new technology from acquired companies could be utilized to add new features to the existing
charter the path ahead. products of the company. Third, the existing products of the company could be replaced by superior
Before I begin analyzing the case, I would like to clarify a few aspects of the case. acquired products. Can you help me understand what approach out of these has the company taken
for integration?
Sure, go ahead. That’s a good way to think about it. In this case, the company has primarily followed the first two
approaches. There has been both a portfolio expansion as well as product enhancements.
You mentioned that the sales have declined recently but the customer service revenues have I suspect that the rising customer service revenues actually point to poor integration of the
shown significant growth. How significant has the decline in sales been? Also, does the company acquisitions. There are two separate aspects to a successful integration. First, the product portfolio
have other sources of revenues besides product sales and customer service? has to be rationalized at a technical level. If the company offers multiple offers to accomplish the
same goal, it tends to be confusing for the customer. Similarly, products need to have a consistent
The sales have not declined by much but they have been stagnant amidst a growing sector. The look and feel so that it is easy for customers to navigate and configure various features. Second, the
customer service revenues have been increasing steadily over the last year or so, though. These sales and marketing team needs to be well trained about the company’s evolving product portfolio.
are the only two sources of revenue for the company. They should be able to help customers make good choices for their needs. Based on the type of
customer service incidents, it appears that there is scope for improvement on both fronts.
Thank you for the clarification. I would also like to understand the type of offer that OEMs have Customers are finding it difficult to configure and navigate the company’s software products. Also,
made. What is the revenue sharing model going to be, will there be a fixed payment or will it be acquisitions should have led to an increase in sales. But stagnant sales point to deficient sales and
based on profit sharing on per unit basis? marketing function. I think without addressing these integration issues, it would not be meaningful
to pursue the OEMs offer. It might lead to further dissatisfied customers.
The OEMs are desktop and laptop computer manufacturers who are offering a pre-installation of
trial versions of the company’s software on some of their product lines. In return, the company So what would your advice to the CEO be?
will have to pay a fixed fee to the OEM for every new pre-installed computer sold and a 20%
I would recommend that the sales force be effectively trained. There needs to be a strong
commission for every user who moves from the trial version and purchases a full version of the
mandatory training program for the sales staff to make them fully conversant with the company’s
software.
products. I’d also recommend that the redundancy in the product portfolio be reduced so as to
alleviate customers’ confusion. A technical push should be launched to make the software look and
I understand. This implies that the OEMs’ proposal can help us expand our sales volume, though feel consistent across products. This should improve customer satisfaction, drive repeat business
at lower margins. To be sure that this helps address the core issue that we are facing, I’d like to and improve sales. As for the OEMs offer, I would advice to hold off until these core issues are
analyze the current profitability situation of the company. As you mentioned, the customer addressed.
service revenues have been rising. Do we have any data on the types of customer service incidents
That seems fair. I think you have identified the main issues in the case and provided crisp
that are commonly seen here?
recommendations. We’ll close here. Thank you.

I do not have specific numbers on customer service requests. However, I can tell you that a major
category of service requests is for software configuration issues. Sometimes, the company’s
software applications provide multiple ways to accomplish the same goals. A significant number
of callers seek help on how to navigate different softwares.

(C) Consult Club, IIM Ahmedabad 2015-16 39


New Product Entry - Application Software & Bundling

The client is a software manufacturer that offers shrink-wrapped software application products and has grown over the last few years – mainly
through multiple acquisitions. In the recent times, their stock price has declined significantly. The sales have declined but their customer service
department has shown impressive growth in revenues over the last few months. The CEO has an offer from OEMs (Original Equipment
Manufacturers) to bundle his product with their products and he’s unable to decide what to do. You have been hired to help him analyze the
situation and charter the path ahead.
Interviewee Notes Case Facts Approach/ Framework
• New product launch – • Client is in the business of offering
Bundled product (hardware software application products Introduce bundled
and application software) • Client wants to prevent its share product
• Why is the new product price from declining
being developed? • Client wants to explore the Profit and
Initial Establish value
Break even
• Will be the current problem potential in offering a bundled Investment chain
points
of declining share price be product, along with the OEMs
resolved by introducing the
new product? Potential Cost
• What are the other potential Revenue
solutions for resolving the
current problem? Fixed fee per
The bundled product may result in 20% commission
Software simplification and additional sales for the client but it will also installation per conversion
efficiency in service delivery lead to increased costs. The resulting lower
profits will not resolve the problem of
declining share prices.

The client needs to re-align its acquisition


process to create simpler software solutions
and invest in salesforce training.

Recommendations
• Product improvement: The various software solutions need to be integrated to offer a simplified and easy-to-use software to the customers
• Service improvement: The sales force needs to be trained through mandatory programs to further improve customer service levels and drive repeat purchases

Interview Summary
This is a new product entry case where the interviewee should test the need and feasibility of launching the new bundled product

Observations/Tips/Suggestions
• There is scope for greater analytics for unit economics e.g., expected additional sales from bundled product, additional costs, contribution margin relative to unbundled product and the
resulting impact on profitability
• The link between share price and profits should have been mentioned up-front
• The objective (improve profits to increase share price) should have been clarified

(C) Consult Club, IIM Ahmedabad 2015-16 40


Sales Growth - Overview

In a Growth scenario, a company is likely to aim for XX% YoY growth. An interviewee is expected to first align the growth targets, followed by
validating them, identify pillars that can support the growth targets, and finally recommend how the company can leverage/show go about these
pillars.

Approach/ Framework (High Level) for the Case Type


Grow Sales by
20% in 1 year

Explore Existing Explore New


Business Business

Increase Prices
New Geography/ Increase Product Diversify into New Acquisitions/
Increase Volume (contingent on
Market Line Products/Services Mergers
elasticity)

Increase Increase
Customers Basket Size

Framework Summary
A company can grow either in its existing business (provided there is scope), else explore new business. Growing in existing business may be due to market growth and/or increased market
share, hence both situations need to be explored. If the company is venturing into a new business, a feasibility check from an operational, financial, admin etc. needs to be performed in the
end.

Tips
• Clarify objective, especially growth % and time period
• Growth cases involve have a larger creativity component, keep options open while checking operational feasibility

Key Questions:
• What is the expected growth of the industry. Are we targeting growth more/less/on par with that?

Existing Business
• Do we have existing capacity in the plants/services to meet the increased volume or would investments need to be made?
• What is the price elasticity in the market? (what is the relevance of this?) – to see whether an increase in prices in an option or not

New Business
• Are there any barriers to entry into the new areas?
• Number and type of competition? Market share?
• Effect of substitutes and complements
• Products of scope with the existing product line we have?
(C) Consult Club, IIM Ahmedabad 2015-16 41
Sales Growth - B2B Telecommunications Provider - Interview Transcript

You have been approached by the CEO of a telecommunications provider company. She is looking Your understanding is correct.
to grow the sales revenue. You are hired as a Consultant to identify opportunities and Our wires extend to certain hubs from where they reach select buildings. Each building may have
recommend a plan of action for the same more than one customer.
In order to quantify the objective, does the client have any growth targets and time horizon in Have we sold to all such customers?
mind?
Actually no. We have sold only to a few customers.
Yes, they want to grow sales by 4x in one year
OK, so as I see it. There is a potential market in the buildings that we currently cater to. Also, since
these are business customers, they may have more than one branch in a city or across cities. Have to
sold our services to all their business centers?
Ok, so prior to looking at the company specific information I would like to know more about this
No, these can be good potential growth opportunities though. We can do a market sizing if time
industry, customers, and competitors.
permits. I would like you to also explore the new business options.
Sure. In this industry B2B telecommunication provide 2 kinds of products/services. Data centre
Sure. For this I would like to understand what kind of products/services our competitors are
options and wired lines. Data centre options include providing real estate space, power, HVAC
providing?
systems, connectivity, monitoring systems etc. to a customer’s data /web/application servers.
Through wired lines, customers are provided with services such as internet, ethernet, AV services So a customer can either have their own real estate for their servers (captive) or they can rent a space
etc. (colocation) and purchase the necessary hardware & software. One of our major competitors
provides these services.
Great. Thank you for that information. So typically a company can grow through either its existing
business and/or new business. In existing business, we can look at increase number of customers, Ok. So one of the ideas that comes to my mind is providing the customer with the option of
basket size and pricing, while in new business I am thinking of options such as geographical completely outsourcing their IT requirements to us (i.e. hardware, software, management etc.). This
expansion, increasing product line, diversifying into new business, or by acquiring/merging with a way not only can we sell this as a pioneer product where customers can focus on their core business,
new company. To identify the best option I would like to know more about the company – but we also get a clear competitive advantage which can help us churn out some customers from our
specifically its products/services, customers, current geographies, financial health, and competitors.
competitors.
That seems to be a good idea, especially given that we already have the necessary real estate space
It is a medium size provider - about INR 300Cr. in sales, and operates primarily in Indian metros. and hardware/software purchases would not cost us much. But do you see any concerns with
It sells the products mentioned earlier to businesses which may include banks, insurance firms, launching a new service?
and any company that may have a server requirement and/or wired line requirements. The
client is cash strapped. It is the market leader in wired line services and 3rd in market share in data Yes, I can foresee that since this is a technical product, it may be difficult to capture customers who
centre services. already have purchased the hardware/software. Also, our current sales force may not be fully
OK. So being cash strapped limits some of the growth options such as geographical expansion and equipped to sell this kinds of a service.
mergers/acquisitions. Also, in an competitive environment, price increase may not be a good Yes, absolutely. Good. Your analysis has been thorough and recommendations are innovative. Thank
idea. you.
Sounds reasonable. Thank you

After eliminating some options. I would like to focus on the remaining options of growth. I would
like to know the growth potential of individual products in terms of # of customers, basket size.

Sure. There is potential for growth in wired line services which I would like you to think about.
However, there is very limited growth potential in data centre services with our current portfolio.

OK. So let us start with wired line services. As I understand, the client has laid down physical wires
in the cities that it operates in. It leverages these wires for providing wired line services. Is my
understanding correct? Also, could you help me with understanding the coverage of customers
through these lines.

(C) Consult Club, IIM Ahmedabad 2015-16 42


Sales Growth - B2B Telecommunications Provider

You have been approached by the CEO of a telecommunications provider company. She is looking to grow the sales revenue. You are hired as a
Consultant to identify opportunities and recommend a plan of action for the same

Interviewee Notes Case Facts Approach/ Framework


• 4x growth in 1 year • Current revenue = INR 300 Cr.,
• Understand existing product Geographical sales force Grow Sales by 4x in
and service offerings clearly distribution 1 year
• Clarify client’s value • Client provides real estate,
proposition (needed for power, AC, racks etc. to store Explore Existing Explore New
churn strategy) customers’ data servers in Business Business
Mumbai, Delhi
• Additionally client provides Telecomm Data
telecommunication services unication Center New Diversify
Broaden
(internet, AV products etc.) Geography/ into New
Product Line
through wired lines Market Services
Increase Increase
• Leader in telecom (80%), 2
Customer Basket
major competitors in data s Size
centre business – reduced
potential for growth Client can install its own servers and sell
Client’s Existing New Customers that space to customers (same space can be
• Basket size for telecomm. is Customers sold to multiple customers over a given
not a short term solution. period of time)
Why? Wired Lines Laid & Lowest Priority Highest Priority
• Geographical expansion is not customer has 1 PoP (scope for sizing) Client can also sell software security
feasible due to limited services for safeguarding data
Wired Lines Laid & 2nd Priority 3rd Priority
management bandwidth customer has >1 PoP
Implementation Plan
Client’s Wired Lines Not an option
Not Laid

Recommendations
• Sell wired services to new customers located in proximity of existing wired lines; also sell to existing customers’ all PoPs
• Offer hosting services to customers with data center requirements – client takes care of real estate, hardware, software etc, and charges management fees for these services
• Churn strategy can be formulated to churn out customers from competitors and lock them with client

Interview Summary
This is a strategy case where interviewee should quickly eliminate options with limited growth opportunities and use creativity to come up with atleast one new product offering idea

Observations/Tips/Suggestions
• A market sizing exercise can be done for new customers and conversation can be lead in that direction
• Diversification was ultimately the preferred option as it contributed almost 70% to the revenue growth
• Further brainstorming on implementation of new services (e.g. sales force training, incentive structure etc.) can be touched upon briefly

(C) Consult Club, IIM Ahmedabad 2015-16 43


Sales Growth - Software Product Company - Interview Transcript

Your client is an online software provider. And this company had grown fairly well on the past, but Yes.
this particular year they’ve really flattened out, unable to grow beyond the particular barrier. And
I’d like to repeat the same analysis for the Fortune 500 segment, to see if a similar pattern is
the company’s CEO has asked you for help to grow this business beyond the $110,000 in revenue
happening on that side. Do we have – of the ten clients we have this month – do we have any data
per month.
that indicates how many clients we had in the prior month, how many of them were new and how
So let me recap, so this is an online software as a service company with about $110,000 a month many did we lose?
in sales, and its sales have been flat. It is looking for ways to increase sales, is that right?
Sure, similar data is provided in the table (refer to the tree in the previous slide).
Yes, that is correct.
So we have a huge attrition problem in the small business segment and at the same time, we don’t
Ok. I’d like to know where do the sales come from today – whether that’s different products,
seem to lose any customers on the Fortune 500 side. I would like to investigate more on why this
different customers – what are the components that comprise $110,000 in sales?
might be happening. I would like to find out if we are selling the right product to the right segment.
Sure. Let’s start with the product – the company provides a software as a service, and their For this I would like to know what customers in the two segments are looking for and how our product
software does website analysis for companies that are doing business online. And their tools help is helping them.
them figure out what their customers are doing online, ultimately with a purpose of figuring out Sure, so the first segment is small mom and pop businesses that are trying to dabble in e-commerce,
how to improve the websites. So these companies doing business online can either make more and they’re looking to make more money online. However, they want to maximize the number of
money or accomplish whatever goals they’re trying to accomplish. visitors to their website.
Got it. Who are the company’s customers? Ok, and how is our product helping them do that?
The company currently gets sales from two different types of customers: small business
So it shows which users are visiting which parts of this website and are they shifting from the free
customers, as well as Fortune 500 customers.
content portions of the website to the e-commerce portions of the site where you can actually
Do we know what amount of sales came from each particular kind of customers? transact and generate a sale. This product is very good at just tracking those behaviours and figuring
Yes, it turns out that small companies, small businesses contribute or generate $100,000 a month out where people go, and has a number of tools to really help the company – the small business in this
in sales from the company and Fortune 500 companies drive $10,000 a month in sales case –optimize the layout of the website, change how information is presented to the end user to
really improve the ratio of visitors to buyers on the website
It sounds like sales have been flat overall versus prior years. I’m curious, have sales – for the
company overall – have sales for the competitors changed? So I’m trying to figure out if this an Okay, it sounds like this is a kind of a process improvement type tool to get more people who visit the
industry problem or if this is a company specific problem. Do we have any information on that? website to buy more often or to make them more likely to buy. It also seems like what we offer as a
Well, it turns out this company is the only company in the market. company, as a current product, is not really designed to solve what the customer really wants, and
they certainly want to make more money. But first I guess it sounds like they need more visitors to the
So this is not a competitive issue but an issue more with either the company itself or with website in order for this particular product to be of value to them. Does that seem reasonable?
customers. Do we have any data for each customer segment – the small businesses or the Fortune
Yes, actually it does.
500 –how have the sales changed for each of those customers over time?
Sales for Fortune 500 have increased while for the small business segment it has decreased. Ok, now we can do a similar analysis for Fortune 500 customers. Do we know what they are looking
for ?
Ok. Now the sales are driven by average price per customer or price times the quantity or number
of customers. And so do we have any breakdown as to how many customers there are and what’s These customers want to measure their RoI so that they can show their CEOs that the e-commerce
the pricing of that? The hypothesis I’m trying to test is, has the pricing change driven down division is achieving its objectives. These directors are worried that if they can’t prove or rely on return
revenues or are we actually having fewer customers, but each customer we do have is paying the on investment that their division might actually get shut down, and it seems that this product seems
same price. to be useful in measuring return on investment.
Sure, the data is provided in the table . The prices have remained constant for both the customer Great. So I can draw two conclusions here – one, small business segments –what they want and what
segments. The prices are like subscription fees paid per month. we offer – this shows a complete mismatch, and two - I think that the Fortune 500 is a better fit is
because the problems they have are exactly the problems we solve.
So your revenue is the price times new customers you bring in this month subtracting out how
many leave. What I’d like to do is actually break that down and look at the number of customers Ok. So what is your recommendation?
that are added each month versus subtracted each month. Do we have any data on that for – let’s To answer the question of how to grow sales for this particular client, I would recommend that the
start with the small business segment. company exit the small business market and focus all its resources on serving Fortune 500 clients.
Sure. The data is provided in the table (refer to the tree in the previous slide). Very good. Thank you.
So it means that we’re losing 1,800 clients a month and then adding 1,800 clients, so our net
change is always zero. Is my understanding correct? Did I do that right?

(C) Consult Club, IIM Ahmedabad 2015-16 44


Sales Growth - Software Product Company

The client is a provider of an online software product and is witnessing flattening sales. You are asked to help grow the sales beyond its current
$110,000 per month (pm) figure.

Interviewee Notes Case Facts Approach/ Framework


Grow Sales >$110K
• Online software provider • Product – online software that pm
• Flattening sales does website analysis for the Explore
• Customer segments client’s customers i.e. which users Existing
Explore New
• # and $ of each segment visiting which website, are they Business
Business
• Understanding product shifting from free content portion
SMB Fortune New Expand
features to e-commerce portions Diversif
Geogra Product M&A
• Segment profile and product • Sales grew earlier but plateaued Sales 500 Sales y
phy Line
proposition recently; not an industry trend # #
• Revenue model – recurring customer Price Price customer
monthly sales s s
• Assume no competitors
New = Renewal Churn = Renewal Churn =
Customer Small Business Fortune 500 New = 1
1800 = 200 1800 =9 1
Data

Price pm $50 $1,000 Value


Prop Value
# cust. pm 2,000 10 Prop
Doesn’t
Match (X) Matches
Sales pm $100,000 $10,000

# cust. trend Decreasing Increasing Market and Sell to Fortune 500


Profile mom-pop stores; want to e-commerce of large company;
maximize # visitors want to show RoI Explore Sales Force & Marketing
Product Helps improve user Helps track and improve sales; Resources
Suitability experience gives RoI

Recommendations
• The client should exit the small business segment
• It should focus all its resources on the Fortune 500 customers

Interview Summary
This case was focused on identifying the root causes of flattening sales through a customer segmentation approach. Growth opportunities are sought in 4 ways (# customers and prices in each
segment). Deeper investigation reveals under-allocation of resources to the target customer segment.

Observations/Tips/Suggestions
• In a single product case, understanding customer segments, their needs and the products’ value proposition is critical.
• Comparison of any sales data wrt. either time or industry/competitors is essential to understand where the problem lies

(C) Consult Club, IIM Ahmedabad 2015-16 45


Sales Growth - Retail Apparel Chain - Interview Transcript

Your client(La Moda) is a retail apparel company that designs, manufactures and sells (through its Great, that sounds quite reasonable. Let’s take your point around the economics of
own retail chains) high-end men’s fashion clothing. The client’s primary objective is to grow retail the deal, and cannibalization in particular, what specifically would you be looking
sales. In order to do this the client is considering expanding its distribution by partnering with a for and why? How would that be important?
high-end department store(Tendenza). What do you think would be the major factors to consider
in evaluating this partnership? I see. Very simply, I think there are a couple of things I would want to look at, to identify whether
cannibalization becomes a problem. So four broad areas I would look at under cannibalization – one
Sure, in order to get the objective right, I would like to know what do you mean by retail sales. is location. I understand we talked about location earlier, and I feel location also drives
Retail sales being defined as the total amount the consumers spend on their products, which is cannibalization in this context, primarily because if you have two stores beside each other, and one
different from what they may bring in as a client. of them starts carrying La Moda – if both stores carry La Moda, that obviously impacts the sales
across both stores.
Thank you. Let me recap and make sure I am getting the objective correctly. As you mentioned,
the client right now designs and manufactures men’s clothing sold. There is a high-end chain of Sure.
outlets and it has reached out to our client to try and carry our product. That is the overall theme.
The second is similarity of offering between the two. I’m not— depending on how the deal is
The big question is: what are the big things we want to look at, given the objective of growing
structured, if they are selling the exact same clothes, then that obviously has an impact on the sales
retail sales? Is that right?
of your current La Moda outlets.
Yes. I would also look at relative price points. For example, if the deal is structured where Tendenza sells
Okay, do you mind if I take a minute to jot down some ideas? the clothes at a 20% premium versus what it is sold at La Moda right now, that paints a very
different picture than say if they are both selling at the same price points, or Tendenzawas
Not at all. underselling, under cutting prices versus La Moda.
Okay, I think there are three broad areas that I would want to look at to try and figure out if it The fourth thing I would look at is marketing, and in terms of how much effort does Tendenza put
makes sense. The first one is the overall ability of Tendenza to sell client’s items, and there are a into pushing these items, and how are they positioning these items versus how La Moda is
couple of things I believe will determine whether Tendenza will be able to do that. positioning these items?
1. One would be very simply the location of Tendenza outlets. Where are they in relation to That seems to make sense. One point you mentioned – I think it was your third point – was
La Moda? comparing the price point that the products will be sold at through Tendenza versus La Moda’s own
2. Second is the type of items and type of customers that Tendenza services – how do stores, and you mentioned one scenario where if Tendenza were to sell at a 20% premium, that has
those fit or not fit, versus what La Moda is currently servicing? different implications than if the price were the same. I’m curious, what would the potential
3. Another thing that would determine Tendenza’s fit as someone to carry La Moda items, I implications be if the price were higher, lower or the same as the price point in the La Moda stores?
think, is what is Tendenza generally known for? As in, what is its image in the mind of the
general public, compared to what La Moda is. The cannibalization impact would be different. The relative pricing I think creates an image in
Apart from fit, the other thing I would look at is the economics of such a deal. You mentioned the consumers’ minds – a perception as to how to interpret it. Broadly, what I feel is that the
big objective of this distribution expansion is to grow retail sales, and I would interpret that as La cannibalization impact to La Moda would be higher, the lower Tendenza’s price point is.
Moda would be willing to accept any deal where they are at least not losing money on the deal, For example, if Tendenza prices at 80% versus La Moda– so if Ftendenza sells its clothing at $80, and
basically. And the big thing that I would want to look at, therefore, from an economic standpoint, La Moda sells at $100 – that creates a much larger cannibalization impact. As opposed to if
Tendenza were to sell at $120, and La Moda were to sell at $100. That would be my hypothesis.
is: what would the economics of a deal with Tendenza involve, in terms of the costs and benefits
to us financially? I would also look at potential cannibalization in back of such a deal to our own This is a thorough analysis. I would have liked to discuss the economics of the deal in detail.
sales. So that is all economics. However, we can end the case here due to time constraints. Thank you.
Good so far. Anything else that you would like to consider?
The third thing I would look at is risks associated with— any potential risks associated with such a
deal. I think there are three big ones that come to my mind. One is the risk associated with
implementation. Say, for example, Tendenza might not stock our items as effectively as they
should, and that ends up hurting our brand image, would be one.
Another one I would see is management, and the impact to management and sales force time for
La Moda. How much time is management going to divert away from its current operations to
focus on this expansion? I think the third thing would be some form of a dilution, which may
occur due to a possible difference in the scale of operations of these companies.

(C) Consult Club, IIM Ahmedabad 2015-16 46


Sales Growth - Retail Apparel Chain

The client is a retail apparel chain looking to grow retail sales by expanding its distribution network via a partnership with a department store.
She wants you to enumerate the factors you would consider to evaluate the partnership

Interviewee Notes Case Facts Approach/ Framework


• Clarification of retail sales Evaluation of
Partnership
• What are we selling v/s • Product – high end men’s
partner is selling? apparel
• Where are we v/s partner • High-priority cities identified
located? Ability to Economics Risks
• Does partner have sufficient Sell
resources?
• Will the partner cooperate # High Priority Cities 140 Product Custo Image Impleme Mgmt
Location Benefits Costs Dilution
fully? Fit mer Fit Fit ntation Bandwidth
# La Moda Retail Stores 30
• What do the economics of
the deal look like? # La Moda Retail Stores in 30
Cannibalization
High Priority Cities
# Tendenza Stores 90
Similarity of Relative Relative
Location
# Tendenza Stores in High 60 Offering Prices Marketing
Priority Cities
# Tendenza Stores in Same 20 Price
Cities as La Moda Stores Elasticity

Recommendations
• Ability of partner to sell client’s products, economics of the deal and potential risks of partnership have to be evaluated
• Risk of cannibalization is applicable on similar offerings, and may not be a risk if there is geographical exclusivity of stores

Interview Summary
This interview is focused on a deep-dive into factors to consider while locking down an option for sales growth. This interview witnessed a good opening, good structure and numbered
presentation of ideas. Economics of the deal (though not talked about in detail) can be worked out based on the case facts provided.

Observations/Tips/Suggestions
• A sales growth case can be open to a deep dive into one option.
• Keep concepts such as price elasticity, cannibalization, pricing and distribution network always handy in sales growth case
• Numbered presentation of thought is well received by the interviewer. So think through, number your ideas and then present to the interviewer.

(C) Consult Club, IIM Ahmedabad 2015-16 47


Pricing - Overview

In a pricing case the objective is to determine a methodology for pricing of any product. The product could be a new invention, it could have other
competitor products in the market etc. The student should determine the objective of the company, understand the product features and market
environment and then apply a relevant methodology to price the product.

Framework Pricing a Product


Value-based Pricing / Price
Skimming

Radical Modification to Similar to - Willingness to pay of buyers


Pricing w.r.t.
Invention existing product existing product - Opportunity cost of no product
another product
- Supply vs. demand tradeoff

Cost-plus pricing
(Penetration Pricing)

Competition Competition - R&D costs


Exists doesn’t exist - Manufacturing/Servicing costs
- Break-even costs, WACC

Comparable / Parity Pricing

- Existing product with similar features


- No similar product NPV of substitute
- Supply/Demand trade-off

Framework Summary
It is imperative to consider the objective of the company, since it directly affects the pricing strategy to be followed. Then the student should understand the product characteristics and the
market environment to apply a prudent pricing methodology. In case the pricing needs to be done for an old product (rare scenario), the utility of the product w.r.t a new product and the
depreciation/salvage value need to be taken into consideration.
Tips
A supply vs. demand tradeoff approximation is always helpful in such cases (best when demonstrated graphically)
Key Questions
• Which industry are we talking about?
• What is the objective of the company?
• What are the product features?
• How big is the market? What is the target segment?
• Who is the customer in the supply chain (margin to stakeholders)

(C) Consult Club, IIM Ahmedabad 2015-16 48


Pricing Strategy - Proprietary Light Bulb - Interview Transcript

Surya electrical company has invented a new bulb that never burns out. It could burn for more Ok go on.
than 500 years and would never blink. The director of marketing calls you into her office and asks
“How do you price this.” What would you tell her?
So how much have we spent on R&D for this?
Alright. So before we figure out the appropriate price for this new light bulb, I would like to ask a
₹120 Cr. for this light bulb.
few questions about our company, this product, the potential customers and the competition.
For a conventional bulb it costs us 4 rupees to manufacture, we sell it to the distributor for 10
rupees, the distributor sells to the store owner for 14 rupees and he sells it to the customer for 18
Go ahead rupees.
This light bulb costs ₹400 to manufacture.
What is the objective of the company regarding this product?
Ok so if the manufacturing cost is 100 times, then accordingly the customer will have to pay ₹1,800
To gain as much as possible. for one light bulb. On the up side this is a bulb that will never burn out, so say the people will buy it
once for the next fifty years and are essentially paying for 100 bulbs that they would have used in
the next 50 years. (considering a bulb change twice in a year)
Ok. I would like to know more about the product now. Is this a completely new product or has
our company/ any other company introduced something similar in the past? So? Will the customers agree?

No this is a completely new product that we have developed. ( the product is new: follow that I do not think so. However we have spent ₹120 Cr. on the project and it is a very useful invention.
branch) Let us broaden the scope for the product a little and think more about the customers. I think various
city councils are our customers too as they need to provide lighting for the streets and public places.
In that case, is the product patented? There may be around 3000 street lamps and another 1000 bulbs at various stations, hospitals etc.
Ok, what are you proposing?
We have a patent pending, and no one else is trying anything similar.

Can you tell me if the product has any disadvantages? Does it use more energy? Or is it harmful
to the customers in any way?
These customers incur an additional expense of maintenance and changing of the light bulbs and
maintaining staff for it etc. If we can sell this product to them, they will save on these additional
No it is safe product ready for the market. It also doesn’t use more energy
costs and will not have to worry about maintenance at all. Estimating that these bulbs are available
for ₹500 to the city, upon which they need to pay labour charges of ₹200 each to two workers
I see. I was thinking we could either price the product at a price comparable with the competition
needed to change the bulb, it still costs them ₹900 per bulb, twice a year. We can have a mark-up
or base it on the costs that we have incurred we can also look at the price the consumers might
over this and sell each bulb at ₹4,000 each. They would recover the amount in two years and we can
be willing to pay. Since you have mentioned there is no competition I shall rule that out and focus
use this price based costing to get a very good profit. It is important that we make a good profit on
on what costs we have incurred for this.
this product because for every sale of a new technology based bulb, we are losing the sales for 100
conventional bulbs.
Good point , thank you.

(C) Consult Club, IIM Ahmedabad 2015-16 49


Pricing Strategy - Proprietary Light Bulb

Surya electrical company, has invented a new bulb that never burns out. It could burn for more than 500 years and would never blink. The
director of marketing calls you into her office and asks “How do you price this.” What would you tell her?

Interviewee Notes Case Facts Approach/ Framework


• New product in the market • The invented light bulb lasts for 500 years
with a distinct longevity • No threat of competition in the near
feature future
• Other utilities are similar to • R&D cost is ₹120 Cr. Pricing a Product
a common bulb • Conventional bulb costs ₹4 to manufacture
• This is a modification to an • The new bulb costs ₹400 to manufacture
existing product yet comes
with an advantage that no
bulb in the market has. Radical Modification to Similar to Pricing w.r.t.
• The objective is to gain as Invention existing product existing product another product
much as possible

Competition Competition
Exists doesn’t exist

Recommendations
• Since the manufacturing cost is 100 times that of conventional bulb, customers would ideally have to pay ₹400 for us to recoup costs. This is improbable since customers would not shell out
a huge amount for a bulb and the longevity benefits are difficult to be perceived by the average customer.
• However, this innovation can be useful for public places such as streets, stations, hospitals etc. where additional staff is required for maintenance. A long-life bulb in such areas would be
extremely useful as maintenance costs would be largely reduced. Hence, such customers should be targeted for this product.

Interview Summary
This case is for pricing of radical invention. The student should be able to approximately determine the price based on manufacturing and R&D costs. In this case, the price estimate leads us to
carefully consider the customer segments, their willingness to pay for the product and carefully tailor the segment to achieve the company objective.

(C) Consult Club, IIM Ahmedabad 2015-16 50


Pricing Strategy - World Spacelines - Interview Transcript

ISRO has developed a rocket-boosted shuttle that can take passengers on a tour of Space while Ok, so how much would you charge per trip?
the take-off and landing are like a conventional airplane. ISRO wants to take passengers on a six-
hour tour of Mars. They have built a prototype which cost them ₹3000 Cr. Determine what price In this case I could follow a cost-based pricing and hence ₹1 lakh would probably be a good
they should charge for a ticket considering only the Indian market. margin, however, this is a special invention offering customers a travel close to fantasy. Hence, I
I’m assuming we want to build a successful business. Any other objectives that I should be aware think value-based pricing would be a more prudent approach.
of? So, how much would you charge?

No I would like to figure out the market for ₹4 lakhs a ticket. Let’s assume that ~0.2% of 1200 milllion
Indians make over a hundred lakhs a year and hence can afford a ₹4 lakh vacation. So that is 20
Are there any competitors and do we have a patent on our technology? million people. Out of them let’s assume ~20% would want to do it. So that is ~4 million customers.
Also, we can carry around 72,000 customers a year. Hence for 3 years, before competitors set in
There are currently no competitors and we have a patent which should safeguard us for around
we can make ~₹2880 Cr. million with a cost of ~₹400 Cr. which is a great profit margin for such an
3 years.
invention. Post that we will need to drop our prices depending on the market scenario.
How many passengers does the plane hold and how many trips per day are we planning? Good, thank you very much.

100 passengers and 2 trips

I will first try to estimate the market size which would majorly depends on the price. If we charge
₹100 the market size will be almost the whole of India, but if we charge ₹6 Cr. the market will be
much smaller.
Before I figure out the price, I will also try to estimate how much it will cost us per passenger.
How long is the life of the plane?
The life of the shuttle is 20 years and the costs can be allocated uniformly. What do you think the
major costs are?

I think the major costs would be cost of shuttle (including on-board and administrative costs),
maintenance, fuel airport fees, insurance and marketing.

Good, the total costs incurred per year would be ~₹200 Cr, excluding the fuel costs, which I
would like you to estimate.

The moon is around 300 km from the surface of the earth, so I’ll take a rough estimate of 600 km
as the total length of the trip. So 10 litre per km times 600 km equals 6000 litres, times ₹50 per
litre is ₹0.3 Mn. per trip. Also there would be 2 trips per day and hence ~₹200 Cr in yearly fuel
costs.
So total costs are ₹400 Cr. Assuming 720 flights per year with 100 passengers per flight, the cost
per passenger would be ~₹50,000.

(C) Consult Club, IIM Ahmedabad 2015-16 51


Pricing Strategy - World Spacelines

ISRO has developed a rocket-boosted spaceplane that can take off and land like a conventional airplane, but can also fly through the
atmosphere and orbit earth. ISRO wants to take passengers on a three-hour tour of space. They have built a prototype which cost them ₹3000
Cr. Determine what price they should charge for a ticket considering only the Indian market.
Interviewee Notes Case Facts Approach/ Framework
• This is a radical invention • The prototype cost is ₹3,000 Cr.
with no present competition • Per trip time is 3 hours
• The objective is to run a • The patent will last for ~3 years
successful business • The space-plane can carry 100 Pricing a Product
• Market-size in India needs passengers per trip and 2 trips can be
to be estimated planned per day
• Life of the plane is 20 years
• Total costs other than fuel is ~₹200 Cr.
(annual) Radical Modification to Similar to Pricing w.r.t.
Invention existing product existing product another product

Competition Competition
Exists doesn’t exist

Recommendations
• The cost-based approach indicates that charging ~2000 per trip will give us a profit margin of ~100%
• However, this is a radical innovation and hence the perceived value for the customer can be much higher than what the cost suggests. Hence a value-based approach with a price of
~$10,000 can help us gain a good potential of this innovation until competitors arrive and there needs to a reduction in prices.

Interview Summary
Since this is a radical invention, estimating the costs are critical to arrive at a lowest price threshold. However, the nature of the benefits offered to the customer also need to be taken into
consideration and in this case it allows us to gain a tremendously high profit margin. Of course, the passenger carrying capacity and timing of competition arrival are critical to keep in mind.

(C) Consult Club, IIM Ahmedabad 2015-16 52


Pricing Strategy - Diagnostic Laboratory Chain - Interview Transcript

A diagnostic laboratory chain based in America has decided to enter the Indian market. They I see. I was thinking we could either price the product at a price comparable with the competition or
want your help in deciding how they should price their products. base it on the costs that we have incurred. We can also look at value based pricing, and price
according to the willingness of the customers to pay. Since you have mentioned the technology is
Ok, so before we move on to deciding the price for the products I would like to know more the same as that of the two biggest competitors and they have a huge share of 85% , I shall focus on
about what kind of products the laboratory chain has to offer, the potential geographies in India pricing it in such a way that the price is lesser than the competition so that it helps us gain a
that they are looking at and the competition. presence in the saturated market, that is, penetration pricing.
Go ahead
Alright, go on.

So is this a general purpose health laboratory or do they specialise in some tests for specific We can go for cost plus pricing and have much smaller margins than the competitors. As the sales
diseases? are made through doctors, I think we can build a good client base by offering prices which are much
lower than the competition. Over time we will increase our prices when we have a loyal customer
It tests blood and urine samples- simple blood tests to various disease specific tests ranging base of doctors. Can you tell me on an average what is the price of one test offered by the
from tests for diabetes, cancer, hyperthyroidism, hepatitis etc. competitors?

On an average the tests are priced at Rs 2000 per test.


Ok. I would like to know more about these tests. Is the technology the same as that the Ok. So for the labs, I believe the fixed cost for the machines and the set up would be high. There
competitors are using in India of is it very new? will also be significant overheads for rent, salary of the personnel in the laboratory and the
promotion and advertising costs. We have to keep in mind to cover these costs and the variable
They use the latest technology, but the closest competitors are also using the same technology. costs. Accordingly, we will have a price which is lower than the competitors but with which we are
able reach the break even point in a reasonable period of time, say 2 to 3 years. So with Rs 2000 as
the average price and taking 70% as the margin, the costs are Rs 600 per test. If we decide to price it
So the tests that the lab offers are the same as that of the competitors. Can you tell me more at half of that of competition, then at Rs 1000, we have margins of 40%. Also, if promotion is good
about the competition. How many competitors are there, what geographies do they operate in enough, we will have more sales at the price that we are deciding and hence the break even point
and what are their margins. will be reached even faster.
So there are two main competitors that use the same technology as we do. They mainly operate Alright, this is about the urban market. What about the rural areas.
in the Tier 1 and Tier 2 cities. The chains have minimal presence in rural areas. The two
competitors have 85 % of the market share between them in these geographies and the I think once we decide on a price that is lower than the competition in urban areas, we should
remaining is stand alone pathology labs. The margins for the two competitor chains are as high follow the same in the rural areas. As of now, I think for the kind of latest technology that we offer,
as 60 to 70 %. customers from the rural areas would come to the cities. So it will not be wise to have a higher price
in the rural areas just because the closest competitors do not operate there. However, just like in
Alright. Can you tell me who our customers are; do the doctors recommend our tests or do we
the cities, the prices should be increased incrementally once a loyal customer base is formed.
incur additional costs in advertising to all the patients?
Ok, that will be all.
We sell the lab tests to the doctors. They in turn prescribe the tests.

(C) Consult Club, IIM Ahmedabad 2015-16 53


Pricing Strategy - Diagnostic Laboratory Chain - Solution Process

A diagnostic laboratory chain based in America has decided to enter the Indian market. They want your help in deciding how they should price
their products.

Interviewee Notes Case Facts Approach/ Framework


• US based company into • The company is a labs chain
Indian market- technology is • Has two big competitors, they have 85%
latest, but tests similar to market share
competition’s tests • Costs for machines, advertising and Pricing a Product
• General tests, not promotion are high
specialised, not much • Competitors on an average have 60 70 %
difference between them margins
and existing competition
• Sold through doctors Radical Modification to Similar to Pricing w.r.t.
Invention existing product existing product another product

Competition Competition
Exists doesn’t exist

Recommendations
• Since the product is similar to what the competition is offering, and we do not really have a strong POD in a saturated market, Penetration pricing is the best way .
• We have to keep in mind that the fixed costs will be high and they will be recovered over a longer period of time if we price our products lesser than the competition. But This strategy will
help us gain a foothold in a new country and new market.

Interview Summary
This case is for pricing of a product similar to existing products. The student should be able to identify fixed and variable costs. In this case, the price estimate will be based on the competitors’
prices and we will see how much lower a price can we offer to the customers. Once the company is an established name, the margins will be increased.

(C) Consult Club, IIM Ahmedabad 2015-16 54


Diversification - Overview

In a diversification case, the key is to understand the need to diversify. Only after that is it possible to ascertain the soundness of the strategy
proposed. The case may often require out of the box thinking, and due to the large number of varied factors that could affect or be affected by a
particular form of diversification, breadth is considered to be more important than depth.

Approach/ Framework (Broad) for the Case Type

Diversification
Current Business Market Structure Synergy Analysis
Strategy

Reason/Need for
Core Competencies Competition Regulation Sizing Trends Cost Benefit
diversification

Tips
Remain MECE and be ready to think on your feet
Candidates often make mistakes in cases where there are multiple reasons for diversification. It makes sense to understand the client’s priorities and proceed accordingly

Key Questions:
• What are our current capabilities?
• What are the future capabilities we want to have? Does diversification to the new company help us achieve the objective?
• What are the expected revenues? Revenue Streams?
• Expected cost of diversification?
• Any barriers to entry during diversification?

(C) Consult Club, IIM Ahmedabad 2015-16 55


Diversification - Pharmaceutical Co - Interview Transcript

A pharmaceutical company has discovered a by product of its manufacturing process which I would like to know who the current suppliers of this agent are., what price they are selling it at and
can be used in the FMCG food industry. What should it do with this discovery? how much it costs them to make it.
Sir, the first thing that I would want to understand is the current business, next I would want to Currently this is produced by specialised companies the market is highly fragmented. The total
understand the by-product, and lastly explore opportunities for potential use. estimated demand is 500 tons and the product sells at $50/ton in the market. Growth is forecast to
grow at 20% year on year. It costs them $20/ton to manufacture.
That sounds great. Currently the pharma company is into generic drug manufacturing and Ok so that makes a margin of 150%. Also, if we can offload all of our production in the market, it will
manufactures 10 different types of salts. What else would you like to know? meet 20% of the demand of the product. I would now like to explore the various options in front of
us. Currently I see 3 avenues – disposal, selling to existing FMCG players and diversifying out
I would want to understand the size of the business, the year-on-year growth and which area business to the food FMCG segment.
they operate in. We want to avoid disposal in anticipation of government sanctions. Also, we cannot sell to existing
players because they have long term off take agreements with their current suppliers. Which leaves
Fair enough. So they have a $100mn business with an 8% CAGR and operate out of Baroda. us with diversification as the only option. What are the various things you will look at?

Thanks. I would not like to understand the by-product, what exactly it is and what we currently
Firstly, I would like to understand the value chain required. The basic components I see are the raw
do with it.
materials and inbound logistics, technology, equipment and production, and finally the marketing
and sales aspect. Also I would like to know about the capital and regulatory clearances.
The raw materials are commodities, the technology is fairly standard and the capital requirements
Ok, it’s a non-calorific sweetening agent and currently it is a total waste which costs $10/ton to can be met fairly easily. Regulatory hurdles exist but are not insurmountable. What do you think
incinerate because of environmental regulations. Last year we produced 100 tons and estimate about the marketing and distribution requirements?
production to increase with a CAGR of 8%
Ok sir, I think I have a good understanding of the product and would like to understand the
potential opportunities other than disposal. The first one you mentioned is FMCG and the other
Though both businesses are B2C in nature, I believe that the distribution channels would vary
is any other potential uses. Is there any you would like to start with?
significantly and I would like to know our competency in dealing with operators in relevant
Yes, let’s start with FMCG and ignore the other potential uses for now. It can be used in the channels.
production of sugar-free biscuits, mints and gums.
Excellent, you’ve hit the nail on the head. When we researched, we realised that the channels are
Who are the players in this industry who use this agent? completely different and it would be unwise for our client to foray into this business. Any other
thing you would have liked to look at?
Sir, as our competencies fail at the marketing stage, perhaps we could act as private-label
Currently there are 5 major players in the FMCG market who contribute to 60% of the market manufacturers for one of the major FMCG players.
and the rest is fragmented
Excellent! Welcome to the company!

(C) Consult Club, IIM Ahmedabad 2015-16 56


Diversification - Pharmaceutical Company

A pharmaceutical company has discovered a by product of its manufacturing process can be used in the FMCG food industry. What should it do
with this discovery?

Interviewee Case Facts Approach/ Framework


Notes • 10 different salts currently
manufactured
• $100m turnover, 8% CAGR
• Relatively tough
• By product is focus
case.
• FMCG potential as sweetener
• Stay calm and solve
• 60% FMCG dominated by 5
it.
players
• Also a friendly
• Product demand: 500 tonnes
interviewer is
@20% CAGR, $50/tonne
recommended for Current Market Synergy Diversification
• Current manufactured at
practice Business Structure Analysis Strategy
@20/tonne by fragmented players
with long term agreements Core
Reason/Need
• Distribution does not gel well with for Competencie Competition Regulation Sizing Trends Cost Benefit
our competencies diversificatio s
n

Recommendations
• Not to diversify in true sense, but move into “limited” diversification

Interview Summary
• Good interview. The interviewer enjoyed it. Covered all verticals nicely.
• Got brownie points with the final recommendation

Observations/Tips/Suggestions
• Most diversification cases entail width rather than depth. Make sure you are MECE and cover relevant points

(C) Consult Club, IIM Ahmedabad 2015-16 57


Diversification - Oil Marketing Company - Interview Transcript

Hi! Our client is a downstream oil marketing company who wants to foray into renewable energy Also, as you mentioned 10% of 450 is 45 GW, and given that India currently generates close to 5 GW
generation. Please evaluate whether this idea holds merit. in solar, there is huge potential. I believe the world is moving towards stricter environmental norms
there will be a good demand for renewable energy by 2025.
First. I’d like to understand what our client does currently. I would like to analyse whether this is a viable option using a cost benefit analysis.
Okay, lets start with wind. What are the factors you will consider?

Our client operates in India and is the third largest player with a market share of 20%. It has two First I would like to look at the availability and suitability of land for setting up the wind farm. Then I
refineries, in Mumbai and Vizag. It buys crude oil and finished petroleum based products and sells would like to look at the technology involved. After that, I would like to figure out capex, opex and
them through its extensive distribution network. revenue generation potential and do an NPV analysis.
I’d also like to understand what type of renewable energy does our client have in mind, and are Great! However, lets look at solar energy. Can you do a payback period analysis for me?
they any preconceived hypothesis for doing the same?
Sure. For that I’ll require some basic things. First I’d like to understand the fixed costs involved with
Lets restrict ourselves to wind and solar energy. Also, the market for renewable energy generation setting up – the land, solar panels and connections to the grid. Next, I’d like to understand the
will have a high demand because of a government mandate which requires 10% of all energy operating expenses and tariff. But first I would need to understand the capacity in mind and the
production to be renewable by 2025. availability of land required for the same.
Next I’ll like to understand the energy market in India. What is the current size and expected The basic idea is that we have excess land around our refineries which means that there would be
trends? no additional cost to acquiring the land. Also, our technical experts tell us that we will be able to
generate solar energy for 10 hours a day, for 300 days a year.
Generally, it costs about 25cr per MW to set up, but as we have the land, it will only cost us 15cr per
MW. You can ignore operating expenses and the government has announced a 10 year tax holiday
Why don’t you estimate the market size? for large solar energy plants. The tariff that we will propose in the tender will be Rs. 10 per KWh

<does maths> So would I be right in saying the payback period is close to 5 years?
Okay. This seems like an interesting problem.
Yes, I think that is satisfactory. Is there anything else that you would consider?
<Does maths>
So we come to approximately 150 GW.
Yes, but this is the energy generation. India has a 20% energy deficit which leads to an approximate
market demand of 180 GW. As a part of our implementation strategy, I would like to assess our technical knowledge, ability to
attract personnel, availability of capital and grid accessibility. Is there anything else I should
Oh! Yes that is correct. We should factor that in. So if we assume a reasonable growth rate of about consider?
10% p.a. we get a market of about 450 GW in 2025.
No, I think this is pretty exhaustive. Please have a toffee.
Great that sounds like a very good number. Let’s proceed.

(C) Consult Club, IIM Ahmedabad 2015-16 58


Diversification - Oil Marketing Company

A downstream oil marketing company is considering foraying into renewable energy generation. Evaluate whether the company should.

Interviewee Notes Case Facts Approach/ Framework


• Involves estimation of • India has a 20% energy deficit
India’s energy demand and a • Client is 3rd largest oil marketer in
back-of-the-envelope India, located in Mumbai and Vizag
financial analysis • Government aims to have 10% of
• Sectoral knowledge not all energy production from
necessary renewable sources by 2025. 10
• Moderately difficult case year tax holiday.
• Friendly interviewer not • Client has sufficient surplus land
necessary • 300 days * 10h a day of solar
• Broad-approach is to energy can be produced per year Current Market Synergy Diversificatio
understand options, narrow • Assume solar plant set up cost = Business Structure Analysis n Strategy
down on the basis of 25Cr/MW with land being 10
interviewer’s requirements CR/MW. Reason/Need Core
Competition Regulation Sizing Trends Cost Benefit
and perform cost-benefit • Tariff fixed at Rs.10 per Kwh for 10 for Competencies
analysis years diversification

Recommendations
• Solar energy project feasible financially. Must explore other dimensions before final recommendation

Observations/Tips/Suggestions
• Financial leverage and government incentives have a huge role to play in final outcome
• Make sure your options are MECE and be calm when doing the guesstimates, financial analyses

(C) Consult Club, IIM Ahmedabad 2015-16 59


Diversification - Mobster - Interview Transcript

You have been approached by a mobster who wants to enter politics. How would you advise Next I would like to understand who the current MLA and municipal representatives are and what
him? their ambitions are.

So, firstly I would like to understand what exactly he does now and why he wants to enter the Great question. The territory under consideration has 1 MLA and 2 municipal corporators. The
political arena. Also, does he want to stand for elections, or earn a nomination, or just be a part current MLA is a party veteran who has occupied the seat for nearly 30 years. However, there are
of a political organization? rumors that he may not stand for elections this year. The municipal corporators are young, dynamic,
popular and have announced their candidacy for their seats once again. All three are from the same
His business currently comprises the ‘hafta’ system and gold smuggling from UAE. He is based in political party and one of the MLAs currently has business ties with our client.
a suburb in North East Mumbai and his total turnover is ~200cr with a 40% margin. The reason he
wants to diversify is that he believes he can earn money and fame through standing for elections Also, I would like to do a quick financial analysis to see if any one option can be preferable in terms
either with a party, or as an independent. of potential earnings. Would I be right in assuming that if he stands for elections, he would be
unable to devote as much time to his current businesses and would lose some fraction of revenue
What exactly is he looking for – money, or fame? from them?
Good observations. You can assume that if he becomes an MLA, he will have to get a partner in to
While he would like to earn money as well, fame is his primary motive. He has a healthy bank run his business and therefore will get only 50% of the proceeds. However, the business turnover is
balance. estimated to jump 1.5x within his tenure due to enhanced reach.
If he becomes a municipal corporator, he can continue as head of the business but revemues could
Great. So assuming that fame is our primary motive, we will proceed, however we will also look
drop by 20%.
at the monetary aspect. Also, I believe that looking at the current lines of business, our client’s
While the government salaries would be negligible, could you devise a formula to help him estimate
core competencies would be human resource management, persuasive negotiation skills, and be
a shrewd businessman. his earnings per annum in each of the roles? Make assumptions that you think fair.
Also, having a hafta system would give him a strong local presence and he would be well known Okay sir. So I believe that the earns will be highest at the start of the tenure and linearly decrease as
in his localities. the number of years remaining reduce. Also, should he be elected to a subsequent term, his
Most importantly though, we need to make sure he satisfies the eligibility criteria in terms of past influence and thus his earnings will exponentially increase.
criminal records, age, etc. If I am to assume that he would earn 5cr in his term as MLA, and every term would double this
figure, the formula this boils down to is : (5-n+1)x 2^(n-1)
Perfect, sounds like you have some experience in this matter.
And I think we can safely assume would not earn more than one-fifth as a municipal corporator.
While he has some cases registered against him, they are unlikely to have a conclusion any time
soon. He satisfies all criteria. That sounds great.
Haha, thanks. Next, I would like to look at his ambitions and the timeline he has in mind. Something else I would like you to consider is that the recent polls indicate that the party in
question will win with an overwhelming majority.
What else would you look at?
As you can imagine, our client is extremely ambitious. However, he is open to suggestions. Sir, other aspects important according to me are a synergy analysis and a strategy for entry.
I feel the fact that his lack of experience in politics, coupled with his henchmen and provides
I believe that politics can be entered at any of three levels – the national, state and local services to this party which is expected to do well are concrete reasons for him joining it. This
municipal levels. Since he wants to stand for elections, I would want to factor in when these coupled with financial muscle, good negotiation skills and human resource management are key for
elections will take place. doing well in politics.
As for entering the arena, our client can look at either joining the party he has ties with. This is
The national elections actually just concluded last month so you can exclude them from
consideration. The state elections are due sometime early next year and the local elections a because I believe he can make a strong case for replacement of the existing MLA who may not stand
month after that. for elections this year.
In case he does decide to stand I would like to either see if any other MLA seat can be taken or look
So I will focus only on state and local elections. Given that he operates in a particular area, would at the constituency not currently being ruled by this party in the BMC. Of course I would need a lot
he like to stand from that area or another area in the state or municipality? Personally I feel he more data for this analysis.
may have a better chance if he stands from the area in which he operates.
Don’t worry, that should be enough. Let’s hope our client becomes a MLA and then Chief Minister a
That’s a fair assumption. Please proceed. few years down the line!

(C) Consult Club, IIM Ahmedabad 2015-16 60


Diversification - Mobster

A mobster has decided that he would like to enter politics and has hired you as a consultant.

Interviewee Case Facts Approach/ Framework


Notes • Current turnover is
• No sectoral knowledge 200cr with 40%
required, just some margin
common sense • Area of influence
• Ensure you remain corresponds to 2
professional, no matter Municipal
the case Corporator and 1
• Out of the box cases are MLA seat
designed to test your • Revenues will
ability to think on your increase 1.5x if
client becomes an Current Market Synergy Diversification
feet Business Structure Analysis Strategy
• The reason for MLA and drop 20%
diversification is the if he becomes a
driving factor here. municipal Core
Reason/Need Competition Regulation Sizing Trends Cost Benefit
Important to understand corporator for Competencies
the primary and diversification
secondary objectives
• ‘Hafta’ system is
protection money

Observations/Tips/Suggestions
• In case of multiple objectives of the proposed diversification don’t forget to ask the primary objective
• At the same time don’t forget to consider the secondary objective(s)
• Reasonable assumptions are expected
• A child tells his dad he wants a career in organized crime. The father nods and asks, “Public or private sector?”

(C) Consult Club, IIM Ahmedabad 2015-16 61


Unconventional Cases
Technology Cases
Guesstimates

(C) Consult Club, IIM Ahmedabad


Unconventional Case (Pricing case)- Help a Painter

A painter wants your help to sell off a painting. Help him get the best price.

Interviewee Notes Case Facts Approach/ Framework


• Focus is on prospective • Painter is famous in India- Along
buyers first the stature of M.F. Hussain
• Somebody who would • He is famous amongst the painter,
appreciate a war painting dealer and collector community Help the Painter
and would pay a high price • He generally makes oil based
• HNWs, museums and paintings
commercial owners can pay • Last painting that he sold was for Prospective Price Methods to
and have space to display it 50 lakhs Customers determination sell
• Few museums in Europe • This painting is an oil based
have a dedicated war painting Profit on Market Painter’s Dealer
Individuals Institutions top of cost research Institution
section and Kalinga war • It depicts Kalinga war and is network network
painting could find a space encased within a beautiful frame
there High net Museums Past painting’s
Others (domestic, value Bidding
worth
International)
Competitor’s
Local value
Offices (small, Online
med, large)
International
Commercial
(Hotel/Airport)

Recommendations
• A museum in Europe which can pay good price (no dearth of money)

Interview Summary
The candidate did a good job in laying out the framework. Through her preliminary questions about the painter, the painting, he was able to correctly gauge the value of the painting and
aspirations of the painter. It is very important to be MECE while laying out the structure. Even if the interviewer doesn’t implore you to dig deeper into all branches, it’s always a good practice to
lay down two levels of the structure especially in cases like these.

(C) Consult Club, IIM Ahmedabad 2015-16 63


Unconventional Case(Strategy) - Customers for an FS Product

A financial asset management fund (AMF) wants to launch a new offsetting product for forex trades. You are asked to find the potential customers
and suggest pricing models for the product.

Interviewee Notes Case Facts Approach/ Framework


• Offsetting product – nets • AMFs charge their customers on Offsetting Product
the daily level currency pair each currency txn on a % basis e.g. – Customer
txns a $1 fee on a selling $100 and Segments
• Value proposition of product buying equivalent INRs
• Current pricing structure on • Offsetting product combines all
a per $ basis the transactions and nets them Customers with Customers with buy-sell
e.g. buying $100 in the morning txns Speculative Traders
largely 1-sided txns
and selling $105 in the evening
leads to net position of $5 sell.
• The new product will net the txns 3 2 Customers 1 Customers
and charge on the netted value. Customers largely transacting with transacting only
• Customers with largely one-sided transacting with the fund both the fund and with competitors
txns will not benefit as their gross competitors
position and net position is the
same; speculative traders will lose Pricing
profits if they adopt the product Strategies
• Key inference – if customers profit,
the fund loses money. How can
they create a win-win situation? Fixed Annual Variable Fee
• A win-win is created when Fee
customers bring in txns done by
fund’s competitors to the fund Based on % of profits
itself. Based on number of Based on $ value of Based on $ value of
the product
txns netted txns gross txns (annual)
generates

Recommendations
• High value customers are those who do large number of buy-sell transactions with competitor funds, next pitch to customers whose fund portfolio includes our client
• Pricing scenarios can be generated, and final model should be chosen based on value to customer – value to fund analysis for the target customers

Interview Summary
This is a strategy case where the candidate should understand the offsetting product very clearly. This leads to a clear value proposition. This case requires a bit of trading knowledge to identify
the three customer segments. Once this is done, the candidate should crack the point that if the customers benefit then the fund will lose money since the product is against their revenue
model. The win-win situation of bringing in competitors’ transactions then follows easily.

Pricing model generation can be tricky if the candidate misses out the first case fact. If she remembers that fact and the fact that it is a netting product, the models would then flow smoothly.

(C) Consult Club, IIM Ahmedabad 2015-16 64


Unconventional Case - US Airline Entry Into China

An international airline carrier is contemplating entering the Chinese market. You have to help the client evaluate the various factors to be
considered while deciding. In case of green, should the client use the same aircrafts?

Interviewee Notes Case Facts Approach/ Framework


• Market entry case • Airline current operates on US-UK Enter China?
• Market sizing & breakeven route
analysis may be required; • Has two aircraft models in the fleet
Growth prospects? – 150 seater and a 600 seater Competitor Operational Regulatory Financial Entry
Market Size
• Competitor scenario? • Competitor scenario is favourable Scenario Feasibility Factors Feasibility Options
• Regulatory factor? • China customer segment mix –
• Financial and operational expected to 70% business, 30% Business Foreign Partnership
Route
feasibility? leisure Customers Airlines with Chinese
• Entry options (JV, Acqui., • Some of the airports in China do
Captive) not allow large aircrafts to land Leisure Airport Airport Acquisition
• For market sizing – demand due to runway constraints Customers constraints Regulations of Smaller
estimation, customer Player
segments? Conversion?
Utilisation? Fleet Size Set-up Own
Brand

Ground
Force

A fleet size/shape modification may be


The split of business-economy seats can
desirable to increase seating capacity.
be chosen to reflect to proportionate
This makes sense since Chinese flyers
demand and utilisation.
may differ from US-UK flyers in physique

Recommendations
• Based on market sizing, growth analysis and break even analysis, the first go ahead should be given
• We should select the most attractive route followed by an operational feasibility check
• Immediate decisions would include entry options, route selection, fleet modification and procurement

Interview Summary
This is a classic market entry case with a flavor of airline industry. The interviewee should keep in mind the specific concepts such as customer segments, long-medium-short haul flights,
operational challenges, capital investment, and entry options.

Cracking the demographic difference and aircraft modification point would definitely be appreciated by the interviewer.

(C) Consult Club, IIM Ahmedabad 2015-16 65


Unconventional Case - Declining Response in a Competition

You are the executive advisor to the Campus Branding team at ABC Ltd. ABC has launched its case study competition at premier b-schools.
However, despite the overall increase in the number of students, the response from the students is lukewarm. ABC has asked for possible reasons
and ways to increase the response rate amongst students.
Interviewee Notes Case Facts Approach/ Framework Student
• Defining ‘response’ – • Last year 1300 students enrolled, Response
registrations? Submissions? out of which about 600 registered, Stages
Response on social media? and 200 submitted
• Likes have decreased in the • ABC has a FB presence which saw Awareness Incidence Registrations Submissions Queries
first week itself (this is a 500 new likes last year (spread
major problem) over 2 weeks after launch of Channels How is it Team Size Format
• Competitor scenario? competition). This year it is 100 Covered measured? Constraints
likes in the first week.
• ABC is an old recruiter at these Activities on Sites have
schools and has been having this Competitio Timeline
Each sufficient
n Timeline
competition for about 4 years Channel visibility?
Problems
now.
Marketing Portal Usability,
• A major competitor has also Uptime
launched a case study competition Budget Prize
Money
at the same time with a prize
money double that of ABC
• ABC’s prize money has not Competitor
Events
increased
• Marketing efforts are the same as
last year
• The number of likes on the social
network has not grown in
proportion to the number of
students (scope for number work
here)
Recommendations
• Incentive Strategy(this year): Since the prizes for this year have already been communicated through the marketing efforts, additional rewards in terms of goodies and PPIs can be
communicated as a branding strategy for this year.
• Incentive Strategy (future): ABC should focus on not only the quality of the competition (difficulty, scheduling, etc.) but also on rewards being more competitive
• Marketing Strategy: ABC should aggressively market the case study competition on social networks to catch the students early. It should also schedule its competitions well ahead of its
competitors to lock in participation. Further, students’ schedules of exchange programs in certain b-schools should be considered. Providing support systems in the form of buddies,
interaction forums, etc. can go a long ahead in giving a competitive edge to ABC.
Summary & Observations
This question involved seeking clarification on certain definitions such as ‘response’ and ‘lukewarm growth’. It is essential to narrow down these broad terms to specific pointers using which the
‘lifecycle – approach’ can be deployed and the significant links can be identified. If a question revolves around conversion, one can think of the ‘lifecycle – approach wherein, various stages of an
agent’s or activities lifecycle are enlisted. For e.g., in a purchase lifecycle, customer goes through a decision making stage, followed by purchase which is then followed by servicing and customer
satisfaction, and finally repeat purchase. In this approach, different stages of conversion are listed and a weak/broken link is identified. A lifecycle approach also ensures MECE steps.

(C) Consult Club, IIM Ahmedabad 2015-16 66


Unconventional Case - Pricing Strategy for Portkey

Your client has one of a kind (in the entire world) transportation machine which can take you anywhere on the globe within 5 seconds. Develop a
pricing strategy for the client.

Interviewee Notes Case Facts Approach/ Framework


• Important to figure out • No such machine is prognosticated
multiple ways in which the to be produced for the next 40
machine can be milked not years Pricing
limited to running the • The Machine can carry 50
machine. individuals at 1 time
• The machine needs at-least one Sell the Rent the Run the
• Since it is an unconventional hour of maintenance works Machine Machine Machine
product, full knowledge • Works on electricity, though
about all facets of the extremely high power
product is essential consumption
• Assumption of a fixed price and Customers Revenue Model Costs Revenue
• Start analysis from running a continuous demand when running
machine to have a the machine independently.
preliminary cost benefit Non-
Initial Lump- Operational
analysis. This analysis could Governments Operational No. of tickets
Sum Costs
be used to determine Costs sold in 40 years
pricing in selling and renting
scenarios Scientific Profit / Benefit
Fuel Costs Rent centers
Community Sharing
Price/Ticket

Annual
Operator Costs
Maintenance

Recommendations
The client could look at all 3 possibilities for deriving the maximum out of the transportation machine. The rough costs, based on client data has been formulated and assuming the required
profit percentage pricing has been determined.

Interview Summary
The candidate did a good job in laying out the framework. Despite the fact that the problem was somewhat unorthodox, the candidate put in a good effort to structure the problem. Though the
pricing strategy could have directly implied running the machine, the interviewee sought other possibilities for the client. Also, the rough Cost-benefit analysis done helped come up with a
reliable figure to base arguments on.

(C) Consult Club, IIM Ahmedabad 2015-16 67


Unconventional Case - Call Operator

Our client runs a multi-cuisine delivery only restaurant chain across the country. They had hired a call operator company for taking delivery orders
since the past 3 years. However for the past 4 months the revenue from the home delivery have suddenly taken a plunge. Help the client

Interviewee Notes Case Facts Approach/ Framework


• Focus is on first clarifying • There have been no changes from Revenue Decline
and deriving information the company’s end in terms of
from the problem statement marketing, operating standards,
to understand the roles and prices etc.
sequence of step followed No. of Consumers Average Revenue / Customer
during telephone ordering • The consumer target group has
roughly remained the same with
• Factors for Reduction in no other major outlets or “trends
Reduction in Reduced Customer
Customer Inflow derived in consumption” emerging Customer Inflow Conversion
from the basic branches of
management namely
Operations, Marketing,
Consumer Psychology Changing
Reduced
Reduced Quality Consumer Input Processing
Marketing
Attitude

Food Communication Software for


Other Competitors Operator info. Relay to
Medium
restaurant

Delivery
Services Reduced Restaurant’s
Change in Telecom
Marketing Inefficiency Info Reading
Connection
Expenses Systems

Customer
Relations Lack of training to
Faulty Phone-
handle customer/
Lines
Software
Recommendations
The problem lay in the reduction in Customer Conversion which was due to the problems in the new operating software that had been installed by the call operator company 4 months back. It is
essential that there is a quick rectification of the software problem to get back the revenues to previous levels

Interview Summary
The candidate firstly did a good job clarifying the role of all the parties involved. She then followed a simple yet exhaustive structure eventually leading in the Processing branch of the Customer
Conversion Problem. Could’ve looked at existing and new customers in isolation for better clarity.

(C) Consult Club, IIM Ahmedabad 2015-16 68


Unconventional Case - Vernier Calipers Manufacturer

A Vernier calipers manufacturer has for the past 2 months been seeing 100/1000 Calipers being produced are defective. Help him.

Interviewee Notes Case Facts Approach/ Framework


• Focus is on first clarifying • The problem is in the etching /
and deriving information marking process with uneven
from the problem statement marking for 100 calipers
namely kind of defect, single
lot/continuous problem • The factory is operational for 10 Manufacturer
hours everyday
• Understanding of the
production process in as • The defective pieces are produced
Intra-Factory Production
much detail as possible to in one continuous process which is Raw Material
Logistics Process
realise areas where the everyday from 3-4 PM
process may be faltering
Quality
Supplier Material
Inspection Internal External
Change Change
Change

Labour (Shifts / Electricity


Process Change
Breaks) Variation

External
People Change Machines Construction
(Vibrations)

Recommendations
The defects are happening due to construction of a bridge that happens in the vicinity everyday about 3-4 PM. One simple way is to provide rubber pads beneath the machines to damp the
vibration effects

Interview Summary
The candidate did a good job in laying out the framework. The initial set of questions on Vernier Calipers, kind of defect and defect frequency throughout the day helped in eliminating the need
for going in depths of possible problems. Consideration of external factors to the production process was the key to solving the case which was extremely well thought out.

(C) Consult Club, IIM Ahmedabad 2015-16 69


Unconventional Case - School’s Deteriorating Performance

A school principal has consulted you because the school has not been doing good. Find the reason and suggest solutions?

Interviewee Notes Case Facts Approach/ Framework


• What is the meaning of not • This is a private school
doing good? • Located in Patna, Bihar School not
Profit/performance/Image • Nursery-12th doing well
employee satisfaction? • Recent dip
• Which kind of school? • Middle-class students mostly
Location? Classes? • Situated in a densely populated
• Time period of bad region Internal External
performance • Close enough to residences
• No. of students enrolling has Profit Image Stakeholde Competitio Customer Ext. Infra.
decreased and students are also Perf.
decreasing affected? r satisfied? n increase preference Changes
leaving
Revenue Cost Mgmt. Students, Illegal noisy
Academic Teachers
decrease increase employees parents factory
Extra and
# students Fees/stude Polluted
cocurricula Infra+ transportation
decreased nt? Environment
r
Enrollment
Teaching Severed
?
expertise/attention Access
Students
leaving Fees

Recommendations
The solutions proposed to the problem created by the recently cropped up illegal factory could be short term and long term. Long term solution could be taking them to the court but it would
have some negative impacts of cost too. Some short term solutions could be talking to factory administration, trying to negotiate. Diversification to other locations or using some sought of
sound-proofing technology are a few far-fetched solutions as well.

Interview Summary
This was a very broad case with the very question having the possibility of being interpreted in multiple ways. A good idea is to lay down all the possible meanings of not doing good and ask for
the interviewer’s direction to move forward. A process driven or stakeholder driven approach is a MECE way to look at things here. Recommendations could be as creative as one can think of.

(C) Consult Club, IIM Ahmedabad 2015-16 70


Unconventional Case - Partner Late to Office

A consulting firm partner has been coming late to office since the past 2 weeks. Figure out what is the reason for the same?

Interviewee Notes Case Facts Approach/ Framework


• Partner late to office: How • The partner lives in South Delhi
late? Is that consistent since and his office is in Gurgaon
the past two weeks? • Mode of transportation is his car Delay
• Where? What is the setting and this has not changed since the
location? past two weeks
• 2 weeks only- eliminate long • Personal life and habits have
term events from the remained the same Internal External
analysis to follow • No change in home or office factors factors
• Internal factors- Habits, location
personal life, vehicle? Habits Home Route Office
• External factors- home,
route, destination? Location Obstructio Speed Traffic Location
Family Traffic Toll booths
change? ns breakers signals change?

Car related Constructi Infra(new


issues on etc lane)

New
hires/tech.

Pricing-
YES

Recommendations
There was a on the recently built highway. The prices of the toll have been recently changed from Rs. 20 to Rs. 21 and now, owing to the extra time which it takes for the drivers to search for
change, the line moves slowly as compared to what it was earlier. Hence, the partner has been reaching the office 15 minutes late everyday since the past 2 weeks.

Interview Summary
The key to this case was to ensure that you start structured, instead of asking random questions which pop in your head the very first time. Since, the solution was very unconventional, the
interviewers would be more impressed by the approach to the problem, rather than the actual answer.

Also, a MECE framework from the beginning, makes sure you cover all the aspects and are able to reach the final answer.

(C) Consult Club, IIM Ahmedabad 2015-16 71


Unconventional Case - Dip in Profitability of CT

The owner of CT has mentioned that they have witnessed a dip in profitability since the last 2 months. He needs your help in figuring out why.

Interviewee Notes Case Facts Approach/ Framework


• Profitability changes can be • Both revenues and costs have
due to revenue and costs increased in the last 2 months
• Since revenue and costs • Environmental factors and
have both increased, costs competition has not changed Profitability
have certainly increased • # of customers has slightly
more than revenues increased
• A product portfolio change • Operational costs have not
indicates either additions or changed
deletions or both to the • Product portfolio has changed Revenues Costs
menu • Maggi has been introduced 2
• As maggi has been added months earlier
while the number of
customers have gone
slightly up, it indicates that
the profitability of maggi is Environmental Competition’s
Firm
lesser than the average factors costs
profitability of other
products
Economy

Raw material Operational Product


prices Costs Portfolio

Recommendations
• As the decrease in profitability is due to maggi, we might want to benchmark its prices with other competitive outlets selling maggi
• Since, CT is confined within the IIMA campus there might be collusion opportunities on the price of maggi, with another 1 or 2 outlets selling maggi within the campus

Interview Summary
This is a classic case of profitability and should be solved from first principles. A general oversight is that when we realize that costs have gone up, we tend to focus on aspects such as R.M. prices
and other operational costs rather than considering the product portfolio as well.

(C) Consult Club, IIM Ahmedabad 2015-16 72


Unconventional Case - Higher Costs Faced by SE Asian Bank

A south-east Asian retail bank, which is present in multiple geographies, is facing costs 20-25% higher than the competitors. What needs to be
improved?

Interviewee Notes Case Facts Approach/ Framework


• Since operational costs are • We are discussing a retail bank
the main issue • Costs are 20-25% higher than
• Salaries are a function of competitors
number of employees x avg. • Operational costs are an issue Retail bank costs
salary • The cost problem is further
• The number of employees confined to clerks who are in
for cash/cheque charge of cash/cheque
transactions are higher transactions
• This can be due to paucity of • Number of ATMs is not an issue Transaction Foreign
Interest rates Operational cost
ATMs or lack of ATM cards • Average number of customers costs exchange
• All employees are not having an ATM card is lower than
getting cards on account that of customers in other banks
enrolment Borrowed
• Employees specifically need Deposit costs Overheads SG&A Equipment
money
to opt-in for an ATM card
• The default option for this
bank is opt-out while for
other banks it is opt-in
Salaries Advertising Admin

Management Clerks

Recommendations
• The default feature should be changed from opt-out to opt-in for card allotment.
• Also, emailers for opt-in/ in-house recommendation during customer visit for card enrolment should be given to current customers

Interview Summary
This case tests the idea of cost heads for a retail bank. Deep-dive into the clerk salaries is a slightly challenging aspect which needs the student to think about what kind of missing alternatives
can lead to more customers gathering for cash/cheque transactions. Further it is important to think not just about ATMs but also the availability of ATM cards with customers.

(C) Consult Club, IIM Ahmedabad 2015-16 73


Unconventional Case - Turnaround a Copper Mining Company

An Indian copper mining and smelting company is incurring losses for 5 years. Prepare a turnaround plan for the firm

Interviewee Notes Case Facts Approach/ Framework Value Chain


• For a plant and machinery • The client has been in the industry
company, it is good to look for 15-20 years Mining Smelting Outbound
into fixed and variable costs • Coal prices are regulated and
separately hence revenues cannot be Company Profits
• Coal extraction (operational) modified
costs dependant on quality • The mining and smelting plants are
of extract and the difficulty near the coal resource site
of extraction • Mining sites are determined as per
• Labour and machine the coal block allocation Revenues Costs
utilization are important
parameters in the
operational costs
• Technology used should also Fixed Variable
be benchmarked
• Interest rates/taxes should
be checked upon in case Rent Direct mat.
debt of the company is an
issue Machinery Direct labor

Electricity Operational

Plant maint.
Indirect
SG&A mat.

Recommendations
• The plant distribution currently is that we have 2-3 small plants across a narrow geography. Consolidating these into one large plant can help in leveraging economies of scale, especially in a
capital intensive company
• Labor and machine utilization can be optimized as they form a large chunk of the operational costs

Interview Summary
This is a very open-ended case which tries to gauge the spectrum of thinking that an individual has. Following a good structure along with covering most of the cost heads is the most important
part of the exercise. Moreover, progressing via a value chain can help in understanding the various processes and cost heads involved.

(C) Consult Club, IIM Ahmedabad 2015-16 74


Unconventional Case – Toffee Manufacturer

A toffee manufacturer is seeing its revenues reducing suddenly since past 2 months. Why?

Interviewee Notes Case Facts Approach/ Framework


• Focus on eliminating • Leading manufacturer
components of profit margin • Most of the revenues through 1
one by one product, e.g. Chlormint
• Decline has been sudden and Revenues
significant

Price Quantity

Rise of competition Substitutes Change in quality Customer preferences

Buying behaviour

Recommendations
The toffee was usually purchased as substitute for loose change along with purchase of cigarettes. However, with the price of cigarettes now being rounding off to a round number, toffees were
no longer purchased in lieu of loose change.

Interview Summary
The key to this case was to ensure less-frequently encountered options (such as customer preferences) are also covered. Arriving at the final solution requires lateral thinking and ability to
connect real life experiences to the case.

(C) Consult Club, IIM Ahmedabad 2015-16 75


Unconventional Case - Restaurant

A restaurant is witnessing a dip in its revenue since last 2 months. What is the possible reason?

Interviewee Notes Case Facts Approach/ Framework


• When analysing the • The decline in revenue has been
offering, go beyond the sharp and persistent
obvious – in this case the • Restaurant plays in the premium Revenues
offering is not only the food price segment – ambience one of
but the service, ambience they highlights
and layout • External environment in terms of
competitive intensity, catchment
area characteristics, cuisine Price Quantity
preference trends etc.

Rise of
Substitutes Change in product
competition

Customer
Personnel changes Cuisine Change Layout change
preferences

Changed from multiple 2 seater


tables to 4 seater tables resulting in
decline in couples

Recommendations
The restaurant had couples as a key segment of their customer base. However by changing the layout and increasing the number of 4 seater tables, they were unable to cater to this customer
segment.

Interview Summary
It can be easy to miss certain unconventional options, hence having a MECE mindset at every level of the tree is imperative.

(C) Consult Club, IIM Ahmedabad 2015-16 76


Unconventional Case - Open Plot of Land

Your client has a large plot of land in Mumbai. He wants you help him figure out what he should do with it

Interviewee Notes Case Facts Approach/ Framework


• Selling the land will not • Client has 3 major objectives in 1. Profits
achieve objective 2 and 3 order of preference - Maximize Overall Objective 2. Brand
• Regulation prevent profits, brand recognition, 3. Philanthropy
industries Philanthropy Residential
Commercial industries
• Residential land rate = • 1000 acre land surrounded by Apartments, homes, Sell the land
purpose and factories
50,000/sq-ft homes, offices, schools and bungalows
• Commercial lease rate = restaurant etc.; Prime location NPV = NPV =
1000/sq-ft/year • Textile mill present in the land 50000/sq-ft 30,000/ sq-ft
• NPV = Annual lease rate * which could not run profitably
30 yrs and hence was shut down Enter a
Develop
• Entering any commercial • Client’s procurement manager, commercia
and lease
activity on its own is operations manager and sales l activity
feasible due to manager have decided to follow
competitive advantage the client in its future venture Develop Marker Market Competitive
• Client could also develop Philanthropy
brand Size Share advantage
and lease a combination
of commercial and
residential space type Iconic buildings,
Niche attractions, Free schooling, Trusted Prime
projects managers location
luxury hospitals, free
apartments, space to NGOs
corporate offices,
celebrity homes
Recommendations
• Opportunity exists for the client to either develop and lease a combination of residential and commercial space or enter into a commercial activity on its own
• To develop brand client can consider building iconic building with niche attractions. It can have dedicated space for corporate offices and celebrity homes
• Client can either partner with an NGO or open up free schools and hospital to realize its philanthropic objectives
Interview Summary
This is a open ended unconventional case where it is important for the candidate to clarify objectives before getting started
Observations/Tips/Suggestions
• Candidate asked the right background questions at the start to understand the case better and move in the right direction
• Candidate was very prompt in clarifying the discrepancy in the lease amount of residential versus commercial space

(C) Consult Club, IIM Ahmedabad 2015-16 77


Unconventional Case - Football Team - Diagnostics

The owner of a professional football team has approached you because it has been underperforming on the field. Help them diagnose the issue.

Interviewee Notes Case Facts Approach/ Framework


• Focus is the team. Strengths • Renowned team, supporters have
weaknesses and factors that high expectations Football
could affect performance. • Squad size of 25 with 10 world Diagnostics
• Should cover all aspects of class players and 15 very good
performance including ones Ancillary
Team Tactics Competition Environmental
internal and external factors • Team dynamics good services
• No particularly weak position
• Conservative transfer policy Strengths and
Coaches Physios Scouts Facilities On field
Strengths and
Externalities
• Several injuries in the last few weaknesses weaknesses

years to key players


• Players and staff properly Dynamics Methods Methods Methods Training
Transfer Past
Supporters
market performance
incentivized
• World class ancillary services and
facilities Incentive
Experience Experience Experience Practice Rivalries Corruption
structure
• Scouting team excellent. Onfield
tactics satisfactory
Transfers and
• Diagnostics indicate team lagging Attrition
Incentives Incentives Incentives Analytics Tactics Distractions
competitors on Key Metric of
“World Class players per game”
not due to lack of such players but Fitness Levels Recovery Incentives
due to fatigue related injuries
• Intelligence indicates other teams
Fitness
give more recovery time in
between training and practice
sessions
Recommendations
• Sufficient recovery periods recommended in between training sessions

Interview Summary
The candidate did a good job in laying out the framework. The focus was rightly on the team, but any business is incomplete with the plethora of ancillary and support staff it relies on to
perform to its potential. It is very important to be MECE while laying out the structure. Even if the interviewer doesn’t implore you to dig deeper into all branches, it’s always a good practice to
lay down two levels of the structure especially in cases like these.

(C) Consult Club, IIM Ahmedabad 2015-16 78


Unconventional Case - Elementary, Dr. Watson

You stay in 222B Baker Street. Your friend Mr. Holmes is on holiday, and in his absence Dr. Watson is attempting to solve a case. He’d love your
help

Case facts More case facts Approach/ Framework


• Mr. Brown was found dead in his apartment • Brown and his business partner run a
by his neighbour at 10am pharmaceutical company which has seen a
Man found dead in
• His wife has been on holiday for a month decline in profitability of late. However, they
apartment
• Watson has narrowed down to 3 suspects – have recently developed a product which can
neighbour, old friend and business partner cure a type of cancer. The catch is that there
• One guard was on duty, not a suspect can be adverse side effects. Mr. Brown didn’t
• Brown was found dead in his bedroom want to launch this product but the partner did Death Suspects
• In his study, two glasses were found, only one and they argued over this, often aggressively.
of which had a few drops of alcohol in it The partner was known in the industry as an
• Traces of a rare poison were found in that unethical and overly dominating man
glass (and in the wine bottle), which causes • When the neighbour found Mr. Brown dead, Cause of death Relationships
the victim’s heart to stop beating 3 hours he had come to confess
after ingestion • Mr. Brown, the Old Friend and the Biz partner
• The cause of death was heart attack were in college together. The old friend and
• The poison molecule is produced as a by- business partner were still in touch Timeline Motives
product of a pharmaceutical process • The guard tells us that the old friend visited
• Friend is recovering alcoholic who came to Mr. Brown the night before from about 8pm-
Brown to borrow money to pay off gambling 10pm with a bottle of wine as a peace offering
Crime scene Alibis
debts. He was visiting Brown for the third • The coroner puts the time of death at about
time in a week, before that hadn’t met him in midnight
years • Biz partner has not visited Brown’s home in
• The neighbour was in love with and having an months Witnesses
affair with Mrs. Brown • Old friend’s gambling debt had suddenly been
paid off

Recommendations
• Business partner has committed crime in collusion with old friend. Business partner had paid the old friend’s debts, and given him the poison. The friend had come to meet Mr. Brown with
the poisoned wine. As he was a recovering alcoholic, he had an excuse not to drink it himself.

Interview Summary
Even in unconventional cases, structured thought is very important. There must be a logical flow to ensure no detail, however minor, is missed out. It is good practice to summarize the facts
occasionally in such cases, as they can lead you closer to the final answer

(C) Consult Club, IIM Ahmedabad 2015-16 79


Unconventional Case - Merger & Acquisition

After a hard day’s night as a second year student in a well known institute of management in western India, you have decided to open your own
consultancy firm. It’s a long and winding road ahead, and you’ll have to work seven days a week. For now, you have to help your first client - a
first year student from your dormitory, who wants a girlfriend. Will he get a little help from his friends, or should he just let it be?
Interviewee Notes Case Facts Approach/ Framework All you need is
• First thing first, what is he • NA love
REALLY looking for? WHY
does he want a girlfriend? Price of
Client Due diligence Competition girlfriend Action Plan
Can whatever he really acquisition
wants be obtained by any
other means? If yes, analyse Porter’s 5 Presence of Cost – benefit Method of
Objectives
each alternative. This case forces competitors analysis approach
structure laid out assuming
he insists on getting a Competitive Resource
Needs Market Size Norms
girlfriend. response availability
• Follow M&A structure for
the rest of the case. Not as Competencies
Market
SWOT analysis
Competitive
unconventional as it sounds. Segments strategies

Past Shortlisting Milestones and


experience parameters timelines

Exit strategy (if


Interests Actual shortlist
required)

Legalities and
Moralities

Possible
synergies

Interview Summary
Determine the objectives of the client. Start from the basic - Try to address what the client needs, which may be slightly different from what he has described the problem to be.

Next, understand the market and the alternatives. Shortlist the ones worth pursuing, and understand what unique synergies and benefits v/s costs each would offer. Opportunity cost must be
considered. Next, an action plan must be decided along with milestones, goals, and if required, exit strategies

(C) Consult Club, IIM Ahmedabad 2015-16 80


Unconventional Case - Pencil Manufacturer in India

The profits of pencil manufacturer in India is going down. Find out the reason and give recommendations to overcome the decline
Interviewee Notes Case Facts Approach/ Framework
• Is this a industry wide • Not a industry trend
Industry/
trends? • No new competitors Company
•Two kinds of products, one Profit
• How any new competitor
has entered the market? costly pencil and other cheap Current
• What are the products pencil Trends

we are currently selling? •No change in price Revenue Cost


• Who are our customers? •After going though all the Competitors
• Has there been a price possible reasons behind
change recently? reduction in quantity, it was
Revenue/
• Is there a reduction in mentioned there is no change Market Share Unit
Quantity
Raw
Storage & Distributio
Customer
sold R&D Processing Transporta n- Sale Marketing
quantity sold? in quantity sold (price) Material
tion force
Service

•Both the products are


Product Equipme
Broad-approach targeted at school children Offerings
Quality
nt
Cost of
raw
Machinery Transport to Sales Marketing Repairs
warehouse Channel
• Get a idea of industry and •No increase in any of the cost material channels
Spare
Human Factory rent
the client before probing involved Customer
Service
Capital Contract
Sales
Force
parts
Strategy
into the reason behind Segments & bulk
deals
Labor hours Storage
(Rent, Labor, Returns
Convenience Cost of
decline in revenue finance Technology
Inventory) Training

• Breakdown revenue into Quantity


Perception used
price and quantity Capacity Transport to
• Drill down into each utilization customers
Cost
aspect individually
Packaging
New Entrants

Substitutes

Recommendations
There was no change in price of the product and the quantities sold. But the client was getting more profit margin in costly product and low profit margin in cheap product.
The client sold more of the product with low profit margin. Even though the demand was good for their costly product and not much difference in production cost between
the two products. It was advised that the client should focus on manufacturing more of their costly product and sell it to increase their profits.

Interview Summary
In this case the problem was neither in revenue side nor in cost, But it was related to current product mix of the client

Observations/Tips/Suggestions
The traditional way of solving the case would not have assisted the interviewee in identifying the solution

(C) Consult Club, IIM Ahmedabad 2015-16 81


Unconventional Case - Airline

An airline company has started witnessing margins lower than that of the industry. Diagnose why?

Interviewee Notes Case Facts Approach/ Framework


• Focus on eliminating • Pricing of tickets is at par with the
components of profit margin industry so revenue side can be
one by one eliminated Profit margin
• Keep asking questions, to • Cost structure can be decomposed
quickly eliminate options as running costs, maintenance and
before drilling into a specific parking costs
option • Wages and other SG&A
components are within industry Revenue Cost
averages

Flying Costs – Fuel Maintenance Costs Parking Costs

Sourcing at higher
prices

Not hedging prices


– while
competitors do

Recommendations
The airline is not hedging its fuel purchases unlike its competitors thereby unable to reflect an improvement in margins despite a fall in fuel prices

Interview Summary
The key to this case was to quickly go through the standard profitability elements to hit at the right component and think a little unconventionally to reach the answer.

(C) Consult Club, IIM Ahmedabad 2015-16 82


Unconventional Case - Petrol Pump Losing Business

Your client is a petrol pump owner. He has recently seen losses in his businesses. What might be going wrong? What are your recommendations?

Interviewee Notes Case Facts Approach/ Framework


• Decline in profit of an • Client owns 50 petrol pump out
isolated petrol pump in of which one has a problem. It is Decline in profits by
20%
DL-CN highway located in Delhi-Chandigarh
• Decline primarily due to highway
Decline in Increase in
decreased transactions • All petrol pumps in the area Revenue Cost
• Industry wide issue have reduced profits
• Decline primary due to • The issue is recent – past few Decrease in #
Decline in
lower traffic years Revenue per
of transactions
transaction
• Dip in petrol business • The petrol pump sells petrol
more than diesel business and diesel- both businesses # of vehicle
% filling the % market
– implies car traffic has have suffered using
pump share
highway
reduced considerably
• Decline in car traffic
primarily due to alternate
Cars Trucks Buses # Transactions = (Vehicles in area
route or alternate
OR passing through the area) x (%
transport filling petrol) x(% Market share)
• Traffic shift to an
alternate air route Total % travelling % taking
• A new freeway route cars in between 2 the
DL/CN cities highway
going to open soon
Alternate mode of
Alternate route available
transport available

Recommendations
• Since alternate route (freeway) is going to open soon, a further decline in traffic is expected
• The client should close down the petrol pump and either sell or look to set up alternate business in the area
• The client should explore opportunity to open up a petrol pump in the new freeway
Interview Summary
This is decline in profitability case where a structured approach is used to pin point the reason in decline and further opportunities for client is explored
Observations/Tips/Suggestions
• Candidate followed a very structured approach- breaking down each block into its components to drill down to the real problem
• Candidate was very prompt in catching up an important fact of new freeway coming up and suggesting business expansion plan

(C) Consult Club, IIM Ahmedabad 2015-16 83


Unconventional Case - Local Hospital

A hospital’s profitability is decreasing since the past few years. The hospital is a local medical unit and has a single branch. Most of the patients
come from near by areas. The hospital primarily caters to elderly citizens and offers treatment for bone diseases. Most of the doctors are experts in
curing diseases related to old age.
Interviewee Notes Case Facts Approach/ Framework
• Focus is on elderly patients • The hospital caters primarliy to
• In particular, old-age elderly citizens
patients with bone diseases • Most of the doctors are experts in Reduce decline in
• The average number of stay treating bone diseases profitability
per patient is variable i.e. it • Most of the patients come from
can be decided by the nearby areas
doctor • The hospital is a local medical unit
• The profitablity (rate of and not a major brand Revenues Costs
increase in profits) is • The treatment duration is at the
decreasing descretion of the doctor i.e. it can
• The revenue model of the range from 2 weeks to a month
hospital – fixed registration Price/Fees # of patients Rent, Utilities Equipment Salaries
fee per patient and amount
per day for hospital stay

Registration fees Elderly patients Doctors

Per night spend


per patient Other patients Admin

Recommendations
• The number of days spent per patient needs to be reduced
• The resulting increase in new patients will result in higher collections from registration fees thereby preventing the decline in profitability

Interview Summary
The candidate did a good job in laying out the framework. It is also important to highlight that the candidate understands the difference between profits and profitability. The current framework
would enable the candidate to realize that the issue is the high number of days spent (per patient) in the hospital and the resulting loss in registration fees from prospective patients. There are
other areas also that need to be mentioned viz. marketing, catering to other target segments, alternate revenue sources, cost optimization, etc.

(C) Consult Club, IIM Ahmedabad 2015-16 84


Unconventional Case - Hotel Mini Fridge

A hotel wants to increase the profits from consumption of mini-fridge items in rooms. You are required to analyze the costs and revenues and
suggest optimal solutions

Interviewee Notes Case Facts Approach/ Framework


• Focus is on consumption of • The hotel is a 5 star hotel with
mini fridge items and not properties in key metro cities
Mini fridge items’
any other revenue source • There are various revenue sources consumption
• There are three categories but the focus is on mini fridge
of customers- families, items’ consumption
friends and corporates • The customers include families out
Revenues Costs
• The same mini fridge is on vacations, friends out on
installed in all rooms vacations and traveling corporates
• The items in all mini fridges • The consumption of mini fridge
are the same items varies according to type of Alcoholic Non alcoholic
Installation
beverages beverages
• There is scope for stocking customers
different items in mini
fridges in different rooms
• The past consumption data Avg. price per Items’ cost
Avg. price per item
for different customer item
categories is available
# of items Staff
# of items
consumed per consumed per
room room

# of rooms # of rooms

Recommendations
• The hotel needs to customize the items in the mini fridges depending on the customer category – for families, the mini fridge should stock more cold drinks; for friends and corporates, the
mini fridge should stock more alcoholic beverages. This is based on the past consumption data available with the hotel.

Interview Summary
The candidate did a good job in laying out the framework. The revenues from mini fridge items is driven by consumption of alcoholic beverages, implying that the two revenue streams
(alcoholic consumption and non-alcoholic consumption) need to be analyzed separately. This distinction is clearly shown in the framework drawn out by the candidate. Next, the items in the
mini fridge should be as per the preferences of the customers. This is achieved by having different items in the mini fridges in different rooms based on the past consumption patterns of the
customers.

(C) Consult Club, IIM Ahmedabad 2015-16 85


Unconventional Case - Robbery Planning

A thief in WIMWI Land is planning on his next robbery. He has shortlisted his options to 3 possible prospects- Chaipoint tea house, Archies gallery
and Supreme furniture shop. Help me choose where to rob, why and how?

Interviewee Notes Case Facts Approach/ Framework


• Any legal restrictions? • Assume normal police risk which
• Is the thief alone or with a he wants to avoid as any thief
Which place to
team? • He has been in this business for
rob?
• When is the robbery long
planned? How much time he • He does the robbery alone
has to plan? • He has a car which he can use if he
• What resources he has? has to
• How much skillful he is? Benefit Risks

Chaipoint Archies Galley Supreme


Luxury Additional cost
furniture shop Money Accessibility Security Exit options
req.
Time of 6am-8pm 8am-9pm 8am-9pm
operation
Chaipoint 16800 Roadside 2 attendants Direct by the Not really
Customers 20/hour 16/day 2/day cash side of road

Avg. Rs.60 Rs.900-1500 Rs.30K <=14400 Open No guard, 2 Near a road Not really; open
purchase
Archies shopping people in to candidate’s
/customer shop creativity

Payment All cash 40% credit, Only card, no Supreme 0 (60k by Situated in a No camera, In a mall Not really; open
method 60% cash cash card shopping mall security guard to candidate’s
transaction present creativity

Recommendations
The recommendation would be between the tea shop or the gallery depending on the risk assessment and creativity of the candidate to suggest robbery tactics.

Interview Summary
This is quite unconventional , open-ended and creative case. The trick here is to ask the payment method since otherwise, the candidate misses the entire objective of the thief to maximize his
monetary returns. This case can take quiet unexpected and creative routes to robbery plans depending on the candidate’s creativity, out of the box thinking and the interest level of the
interviewer

(C) Consult Club, IIM Ahmedabad 2015-16 86


Unconventional Case - Consult a Consulting Company

Your client is ABC consulting company. Recently, they have been faced with declining profits issue. The client is very concerned and has hired you
to diagnose the problem and recommend corrective measures.

Interviewee Notes Case Fact Approach/ Framework


• Is revenue declining? Or is • Cost has remained the same.
cost going up? Or is it the Declining profits is an issue for this
both? consulting company only
Service Quality Deliverables on time, quality
• Is this an industry wide issue • We are getting less business recommendaition, relations
(Product)
or is it specific to this • We are losing both repeat as well
consulting company? as new business Network Reputation of ABC, relationship
• Are we getting less business • No, only Pharma and IT have been New clients with partners, principals, reach
(Place)
or have we started to charge losing business No. of clients
less? • Partners in Pharma & IT have left Repeat Clients
Negotiation Skillful pitch in response to RFP,
• Are we losing out on repeat ABC resulting in lower reputation (Promotion) showcasing the brand ABC
business or the new one? and network with these clients
• Is this loss across all sectors?
Revenues
Curtailing
Attrition Amount Higher than industry
Fixed Fee
Cause for
Make them stay Look to Hire 100% is fixed fee, clients go to
attrition Structure competitor
Workplace Increase profit Fees/Client
culture sharing The clause to get 100% variable
Clauses fee isn’t performance dependent
Low Better division Variable Fee
compensation of work Clashes b/w client and company
Implementation for deciding the % compensation
Relaxed
deadline

Recommendations
• Client needs to find out the reasons for attrition of partners
• A plan to retain the partners should be prepared quickly
• Plugging the hole of vacancy is utmost important. Reaching out to clients in Pharma and IT and ensuring them of the same skill set team and leader to maintain their confidence in ABC
Interview Summary
This case tests how well can the candidate adapt to a completely different business model. This is based on Human resource based service provision to customers. The product that sells here is
the intelligence/effectiveness of the human brain.
Observations/tips/Suggestions
• It is very important in a services industry to not forget about the repeat businesses. 60% of consulting clients are repeat clients
• Ask the interviewer about the nuances of the industry instead of making random assumptions about it. For e.g. here, the fee is typically broken down into a fixed fee and a variable fee paid
when certain pre-decided and promised deliverables are completed and implemented successfully.

(C) Consult Club, IIM Ahmedabad 2015-16 87


Unconventional Case - Paint Manufacturer in India

A paint manufacturer in India is facing a decline in revenue and profit margin. You need to identify the reason for the same.
Interviewee Notes Case Facts Approach/ Framework
• Is this an industry wide • Decline in margin is an
Industry/
trend or our client is industry wide trend , but rate Company Profit
facing the issue? of decline is more for the client
• Who are our current • There are lots of players in Current
competitors and how is the market. Four major players Trends
the market share accounts for 90% of the Revenue Cost
distributed among them? industry market share Competit
• Client has the second highest ors
• What is our current
customer base? market share
Revenue
• Is there any change in • Client used to be a market Market
/Unit
Quantity Storage & Distributio
Share sold R&D
Raw
Processing Transporta n- Sale Marketing
Customer
price? leader, now dropped to second (price) Material
tion force
Service

• Makes a list if possible •Three customer segment


Product Equipme
cost drivers that could 1) PRO – Professional Offerings
Quality nt
Cost of
raw
Machinery Transport to Sales Marketing Repairs
warehouse Channel channels
affect the margin Industry (construction) material
Spare
Human Factory rent
2) Trade – Targeted at large Service Capital
Sales parts
Customer Contract Force Strategy
Broad-approach tier 1 cities (Retailers – Segments & bulk
deals
Labor hours Storage
(Rent, Labor, Returns
Convenience Cost of
• Get a idea of industry and Customers) finance Technology
Inventory) Training

the client before probing 3) Bharat – Targeted at tier 3 Quantity


cities (Large Perception used
into the reason behind Capacity Transport to
customers
decline in revenue retailers/wholesalers – utilization
Cost
• Profit margin depends on Retailers – Customers
Packaging
price and cost There is a decline in revenue
New Entrants
• Drill down into each generated in the professional
aspect individually industry segment
Substitutes

Recommendations
The decrease in profit margin is due to the increase in transportation cost. The decrease in revenue in the professional industry segment is due to decrease in quantity sold. The customers in
PRO segment perceive the client product as low quality compared to the competitors. But our client product is on par with the competitors product in terms of price and quality.
Interview Summary
The interviewer wanted the candidate to identify the major reason for the decline in revenue and profit margin. The candidate identified the reason but probing into each branch of the above
mentioned framework. Overall interviewer was happy with the analysis of the candidate. Due to lack of time constraint , there was no recommendation given. The reason behind the recent
change in the perception of the client product was not discussed in detail. It would be a real value add if the candidate could come up with various reason for the same.

Observations/Tips/Suggestions
All the aspects of the framework of covered. If the candidate could have provided few quick decisions/ recommendations to overcome the issue. It would have been a real value add.

(C) Consult Club, IIM Ahmedabad 2015-16 88


Unconventional Case - Restaurant in Paris
The revenue of restaurant in Paris is going down. Figure out the reason behind the fall in revenue.
Interviewee Notes Case Facts Approach/ Framework
• Is there any change in • No change in price
Industry/
price? • No new competitors Company
• Industry is not going through Profit
• Is there any change in
quantity sold? a decline in revenue Current
• What is the current • Familiar/ Regular customers Trends

industry trend? are missing Revenue Cost


• Any new entrant in the • Ambience of the restaurant Competitors
market? has been changed recently
• Is there any change in • The restaurant layout was
Revenue/
quality or service? changed from 2 per table to 4 Market Share Unit
Quantity
Raw
Storage & Distributio
Customer
sold R&D Processing Transporta n- Sale Marketing
per table (price) Material
tion force
Service

Broad-approach • As the number of people


Product Equipme
• Get a idea of industry and sitting in a table has increase, it Offerings
Quality
nt
Cost of
raw
Machinery Transport to Sales
Channel
Marketing Repairs
warehouse channels
the client before probing affected the ambience of the material
Spare
Human Factory rent
into the reason behind restaurant and the customers Customer
Service
Capital Contract
Sales
Force
parts
Strategy
decline in revenue felt the place is less romantic Segments & bulk
deals
Labor hours Storage
(Rent, Labor, Returns
Convenience Cost of
• Breakdown revenue into now especially for couples finance Technology
Inventory) Training

price and quantity • Number of couples visiting Quantity


Perception used
• Drill down into each the restaurant decreased Capacity Transport to
utilization customers
aspect individually
Cost
Packaging
New Entrants

Substitutes

Recommendations
The intention behind having more number of seats is to maximize revenue without expanding the size of the restaurant. As the result of this bad decision client lost their
regular customers. Hence it is advisable to have two different types of dining facilities with separate demarcations. Candle light dinners on one side and family dinner facilities
on the other. The client can also host corporate dinners, birthday parties etc.,
Interview Summary
The interviewer wanted the candidate to identify the major reason for the decline in revenue. The candidate went ahead and suggested few recommendations to overcome
current situation.
Observations/Tips/Suggestions
Interviewee did not ask questions on current customer base of the client which might have helped him to arrive at the solution much earlier. In most of the case interviews of
this nature, interviewer would be satisfied if the candidate can identify the reason behind the decline in revenue. But it is advisable to come up with few recommendations to
overcome the issue. This could act as a differentiating factor.
(C) Consult Club, IIM Ahmedabad 2015-16 89
Unconventional Case - PPP for Metro in Bangalore

The client has entered into PPP with the government of India to build a metro system in Bangalore. To make it lucrative for the client,
Government of India has allocated land around the metro stations. Help the client make the best use of the land.

Interviewee Notes Approach/ Framework Interview transcript


• Is maximization of Revenue (After diagnosis)
the objective? “Yes” After identifying malls as the best
• How can the given land be revenue source, how will you ensure
Advertisement in newspaper,
used so as to get the Offline search hoardings that people spend a lot in the mall?
maximum price? • Advertise about the latest offers in
• What are the possible Buyer/Rente Put on online portal like 99 acres, the metro
revenue drivers for the Online search housing, magicbricks
Sell/Rent the r • Passage to go out is through a
client? winding route inside the mall
land
• What are the pros and cons Price/ Rent
Land Value
Nearby property prices, NPV of
• Enable shoppers to use the same
of various options Determination total rental
card to make purchases & metro
ticket booking
Willinness to stay next to metro
Revenue Residential will be low
• Offer schemes of free travel on
Sources purchase of certain amount
Office/Public Noise, commotion, safety etc. will
Buildings lead to low willingness
(Schools)

Malls- High inflow/outflow of


Develop the Commercial people during the day
Land
Jogging track,
Parks children/amusement park, OAT for
movie/play
Open Spaces
Charge for parking (continuous
Parking income source)

Recommendations
• Client should develop the land by making commercial shopping complexes/ malls
• Push & pull strategy can be applied simultaneously to increase the expenditure per customer
Interview Summary
This case tests whether the candidate can come up with very basic uses of a product. Land could not just be developed, but also sold or rented. It’s important to evaluate all options rather than
just saying we can build houses on it. Once, developing the land has been identified, breaking it down again helps in further evaluation.
Observations/tips/Suggestions
• Clarify the regulatory constraints of a land parcel near metro
• Understand the clients capabilities and expertise. If he is a developer, then he can build the mall and then rent out the shops.
• Once the possible option has been identified, further drilling down into how to make the best use of it is recommended- So, try and provide how to extract maximum out of a mall

(C) Consult Club, IIM Ahmedabad 2015-16 90


Unconventional Case - Shahrukh Khan’s Net Worth

SRK feels that his acting career is nearly over. He has a net worth of $100 million and thinks that it may not be enough for his kids. Suggest ways for
him to increase his net worth

Interviewee Notes Case Facts Approach/ Framework


• Opportunity for blue-sky • None
type brainstorming
Increase SRK’s net
• Follow-up question: Choose
worth
one idea worth investing
and develop a 30-second
elevator pitch to convince
SRK to invest in it

Film/TV Non-film

Produce Launch Real estate


Acting Invest in Branded
more music investmen Others
school sports team products
movies record label t

Host more TV
Accessorie Personal
shows Clothing
s grooming

Recommendations
• Even during brainstorming, try to bring some sort of structure; will be appreciated
• Be prepared for the case to go in any direction
• If asked to prepare a pitch, take some time to think, form a structure putting together all the main points
Interview Summary
The candidate came up with a number of options based on existing knowledge, and then structured them as best as possible. In the follow-up question, demonstrated her ability to put together
all the facts and come up with a coherent pitch

Observations/Tips/Suggestions
The candidate came up with a lot of ideas based on existing investments done by movie actors. She could have explored further to come up with unconventional ideas such as angel investing
etc.
(C) Consult Club, IIM Ahmedabad 2015-16 91
Unconventional Case - Inventory Management in a Milk Company

A milk company is considering a proposal for improving its operations management. As of now, the company has a three day inventory cycle i.e. it
places an order once in three days. It is planning to shift to a one day inventory cycle. You are required to analyze the implications of this proposal
on the business’ profits and operations management.
Interviewee Notes Case Facts Approach/ Framework
• The product is a perishable • The company is in the business of
commodity implying that selling milk
the storage period needs to • It currently follows a 3 day Changing the inventory cycle
be optimal inventory cycle
• The reduction in inventory • It is planning to reduce that to 1
clyce days will have an day
impact on the business’ • The objective is to improve The ordering
costs (inventory operational efficiency, while costs will increase Ordering costs Handling costs Procurement costs
management) analyzing impact on profits due to increase in
• The operations need to be # of trips
optimized – balance stock
outs and spoilage Utilities e.g. Utilities e.g.
Transport electricity Price per packet
telephone

Space (rent) # of packets


Cost per truck trip

The volume
The variable discounts may
# of truck trips Staff reduce, impacting
handling costs
may decrease price per packet

Recommendations
• The milk company should consider switching to a one-day inventory cycle if the pros in terms of reduction in spoilage and inventory storage outweigh the cons of reduction in volume
discounts and stock-outs.

Interview Summary
The candidate did a good job in laying out the framework. It covers all vital aspects of inventory management – ordering costs, handling costs and actual costs of procuring the product. The
impact of changing the inventory cycle will can be analyzed by focusing on the mentioned three types of costs, thereby ensuring that the framework is mutually exclusive and collectively
exhaustive. The candidate will analyze whether the various costs would increase, decrease or remain unchanged as a result of the new proposal.

(C) Consult Club, IIM Ahmedabad 2015-16 92


Unconventional Case - English Music Magazine

An English Music channel wants to launch an English Music magazine in India. Analyze the viability of this venture.

Interviewee Notes Case Facts Approach/ Framework


• Guesstimate- can use the • Client not looking for immediate
current user base as a profits
Customer –
benchmark • The Music Channel well New New Product Company Industry Entering
• Population- Metro and Tier established Market Market Strategy?
II- Age Groups- Interested • The audience is niche but loyal Entry
Population
• Target area is niche, no Customer Competit
Segments Product
Expectation ors &
major competitors Offerings
Share
• Good content is very
important for this product Vision If Yes,
No
Available How?
• Initial pricing can be high to Needs
Products
Resources
add premium feel – Capital, SWOT
Technology Analysis
• Initially outsource & Labour
manufacturing to test the Identify Start
Profiling Gaps of from
waters above 2
Goals Our Scratch
Strengths & Barrier to
Strategic Entry/Exit
Assets Acquisiti
Size &
on
Growth
Our
Estimate
Objectiv Market
Client’s of
Share Joint
es Target Market
Venture
market Share
share

Recommendations
The product should be launched considering the synergies with the existing services. But a full fledged launch should be avoided as the acceptance of such a product is not known beforehand

Interview Summary
While the candidate covered all the relevant points related to the launch, they sought very little information from the interviewer. They could have asked about the current user base to get an
idea about the popularity of the channel. They also did not follow a very structured approach to the solution.
The focus of the interview was more on the Launch Strategy portion. The interviewer wanted to know the aspects the client should keep in mind while designing the content, the marketing,
pricing and distribution strategies

(C) Consult Club, IIM Ahmedabad 2015-16 93


Unconventional Case - Entry of Home Furniture Maker

A traditional home furniture maker wants to enter into office space. Should they enter or not?

Interviewee Notes Case Facts Approach/ Framework


• Can use Porter’s for • Currently offering dinner tables,
analysing the industry sofas and beds
Customer –
• Are the two markets too • Client catering to low-end of the New New Product Company Industry Entering
different? market Market Market Strategy?
• Target customers different • Good hold in the low-end segment Entry
in the markets • Manufacturing processes not
• The value proposition will automated, carpenters produce Customer Competit
Segments Product
Expectation ors &
have to be different the furniture in workshops Offerings
Share
• Need to conduct extensive • Market leader in the low-end
market research before segment Vision If Yes,
No
Available How?
attempting to launch the • Office furniture a $500 mn Needs
Products
Resources
new products industry in India – Capital, SWOT
Technology Analysis
& Labour
Identify Start
Profiling Gaps of from
above 2 Our Scratch
Goals
Strengths & Barrier to
Strategic Entry/Exit
Assets Acquisiti
Size &
on
Growth
Our
Estimate
Objectiv Market
Client’s of
Share Joint
es Target Market
Venture
market Share
share

Recommendations
In the current market, the client is offering low cost products, which might not be of very high quality. To enter into office space, quality will be the biggest concern. Therefore, they should first
expand in their current market by targeting other segments and then look towards other markets.

Interview Summary
The candidate was quite exhaustive in covering all the aspects relevant to the case.

(C) Consult Club, IIM Ahmedabad 2015-16 94


Unconventional Case - Surviving the Ad-blockers

An advertising company wants to avoid evident threat from ad-blockers. Help them out!

Interviewee Notes Case Facts Approach/ Framework


• Figure out why users use ad • The company has search as a core
blockers. Why didn’t they offering and advertising is its
use them earlier? major source of income. Surviving the Ad-blockers
• Focus on the core • The company has lost a significant
competencies of the amount of money due to the rise
company. in the use of ad-blockers.
Setting Up New Ad
• Identify other areas where • It had to pay billions to the ad Reasons for Using New Businesses
Standards
the company can foray into, blocking companies to get the ads
using its core competencies. whitelisted.
• But this has resulted in more ad Ads Started Build Platforms Build the go-to Ad- Create Ads that
blocking companies coming into Annoying People using Core blocker and Don’t interfere
the picture. Competencies Dominate Ad- with the UX
• The company can foray into new Blocker Market
businesses while the ad blockers They get into the
slowly eat away the revenues – so way in the User Create Ads that the
Experience Users don’t mind
that it can still be alive.
seeing
• The company’s core competency is This may look
advertising, huge IT infrastructure conflicting, but
Waiting Times
and tech-savvy employees are the promises the
asset to the company. user that only
• It has the history of setting up irrelevant ads
standards in the industry – both are blocked.
Spam
performance-wise and technology-
wise.

Recommendations
• Create ads that don’t interfere with the UX, and at the same time build platforms using the core competencies to have a backup.

Interview Summary
The candidate did a good job in laying out the framework. Through her preliminary questions about the company, its core competencies, revenues and latest happenings she was able to
correctly understand the company’s problem. After thoroughly understanding what the company can, and how its actions may be perceived, the candidate recommended an ideal
recommendation.

(C) Consult Club, IIM Ahmedabad 2015-16 95


Unconventional Case - Testing a New Feature

Your client is a tech company that wants to launch a new feature into market. It wants to get it right the first time. Please help!

Interviewee Notes Case Facts Approach/ Framework


• Focus on the traffic of the • The company has a recipe search
website. engine.
• Also note that the company • It wants to launch a new feature of
has tried introducing a buying ingredients directly from Testing a New Feature
feature earlier and lost 40% the search result.
of its visitors. • It has previously done such a
• It is really important for the feature addition attempt and lost
company to get this feature 40% of the visitors.
right, the first time. • The current feature is really
• So it makes sense to test out important to the company as it Usability Testing Feedback Analytics A/B Testing
the feature on a would open the avenue for
representative set of visitors revenues to the company.
to minimize the risk, and if • The company estimates that this
successful can be rolled out feature, if worked the first time Testing Two Versions
to everyone. would get 20% more visitors, and if Customers Won’t Like In-page Analytics to on Two different
Very Tedious
failed, 50% of the visitors might Writing a Lot Figure out Behaviour Representative
leave the site. Populations
• The company’s search engine
currently has a traffic of million
users per day. But No In-depth Can be Used if
• The company has another version Might Vary with Skewed or Non-Serious
Analysis Possible in Sufficient Customers
of the same feature as a backup if Individual Feedback is Possible
Case of Failures are Available
the first one fails.

Recommendations
• Do a series of A/B tests to figure out what the customers like and what they don’t. Over time, a strong feature could be developed minimizing the risk of losing out visitors.

Interview Summary
The candidate did a good job in laying out the framework. Through her preliminary questions about the company, its previous attempts, the feature details & the stakes at place, the candidate
understood the company’s position and figured out that given the huge traffic and ready availability of two versions, A/B testing is the way to go since it is a very powerful tool that throws in
ample insights.

(C) Consult Club, IIM Ahmedabad 2015-16 96


Unconventional Case - Understanding the Customer

An e-tailing company wants to understand the customer & recommend products, like Amazon does.

Interviewee Notes Case Facts Approach/ Framework


• Recommender Systems: • The company is an e-retailer.
Collaborative, Content- • The company has started its Understanding the
Based & Hybrid. operations back in 2010. Customer
• Collaborative systems are • It didn’t realize the importance of
based on what similar users recommender systems back then, Recommender System
do. Not scalable & have long so didn’t collect any data, except Device a Data Collection Plan
type
Cold start periods. order data and the user profile
• Cold start is a phenomena in data.
recommender systems, • The website is content-rich, with Collaborative Content-based Started Yet to Start
Hybrid
when the system behaves almost a million product listings. Filtering Filtering Operations Operations
abnormally due to skewness • There are million users using the
in the data. Over time, this site. More Collected Data Deal with the
Issues Match with
ideally subsides. • A user hardly reviews / rates 10-20 Collect Data effective Earlier Cold Start
User’s Past No Data
• Content-based systems are product listings and Analyze Behavior Collected
based on what the user did. User Behaviour Cold
• Hybrid is both content- Start
based & collaborative. Ideal for Extract Usable
• Many companies use Hybrid Content Rich Data from Server
Explicit Platforms Logs
• If the company is already Not Pre-process Data
established, figure out a way Scalable to Align with the
to use the existing collected Implicit New Collection
data to avoid cold start. Plan
• Understanding = context-
aware

Recommendations
• Build a context-aware hybrid recommendation system with the data extracted from server logs for better accuracy & to avoid cold start.

Interview Summary
The candidate did a good job in laying out the framework. Through her preliminary questions about the company and it’s existing data collection plan, she was able to correctly identify the
company’s requirement. To address the issue here, the candidate came up with a framework where she has to decide on the recommender system type first, and then recommend a data
collection plan accordingly. Also, to make the system relevant at the earliest, various possibilities of data extraction have been examined.

(C) Consult Club, IIM Ahmedabad 2015-16 97


Guesstimate

To estimate the number of wizard hats in London

Interviewee Notes Case Facts Approach/ Framework


• This question stemmed from • None
a discussion of the
candidate’s hobbies (reading Number of wizard hats
fantasy fiction) in London
• Asked questions about
situation (real
world/fantasy); was told to
assume whatever she
wanted
Individuals Institutions

Adults Children

Drama
Schools institutions
Non-
Readers
readers

Non-
Fantasy fiction
lovers fantasy
lovers
Recommendations
• Take some time to create the structure; take interviewer through it, then possibly put numbers
• Know some facts; make reasonable assumptions

Interview Summary
The candidate brought structure to an out-of-the-box question. By categorizing the hats into individuals and institutions, she showed ability to think beyond the obvious.

Observations/Tips/Suggestions
Candidates should not get flustered when faced with unconventional questions. It is ok to take some time to work through the question. Take the interviewer through your thought process at
every stage

(C) Consult Club, IIM Ahmedabad 2015-16 98


Guesstimate

To find the number of books in IIM Ahmedabad

Interviewee Notes Case Facts Approach/ Framework


• Clarify type of books (here, • None
notebooks, casemats,
magazines excluded) Number of books
• Number of books with
professors (10 areas, 10
profs each, average 5 years
experience, 5 books added
per year)
• Library: 3 floors, 10 racks per
floor, 5 shelves per rack, 30 Individual’s Library Novels
books per shelf) textbooks

Students Professors

PGP-1 PGP-2 FPM Others

Recommendations
• Should first create structure, then put numbers to it
• Make reasonable assumptions, clarify with interviewers at each stage
• Be prepared to justify your assumptions at each stage

Interview Summary
The candidate clarified the scope of the case; did not make assumptions. Where she did not know, she made reasonable assumptions which she could justify.

Observations/Tips/Suggestions
Should be careful with numbers; silly calculation mistakes could be harmful. Case could have more layers, by including casemats etc

(C) Consult Club, IIM Ahmedabad 2015-16 99


Case Interview Assessment Sheet

Some tips for your interviews. You can also use this sheet for feedback and as a checklist during your case
preparation interviews:

· Did you repeat the question? (It is important to solve the right question, that’s the first step).Did you clarify the
client’s objective(s)(there could be more than one) ?

· Are you writing down the important details legibly?

· Are you asking the right clarifying questions (about the client, company, industry, product etc.) at the right time?

· Are you being creative and conversing while taking hints at the right time? (Remember, it should not be a
monologue)

· Are you being MECE and structured in your approach?

· Are you getting bogged down by numbers/details or using them to your advantage?

· Are you thinking out aloud without being too verbose?

· Are you ready to go back and correct a mistake you did?

· Are you summarizing it all in the end?

(C) Consult Club, IIM Ahmedabad 2015-16