Case Book 1 2016 82613245 82613245

CASEBOOK 1
FIRM
TYPE
clubs.marshall.usc.edu/mcsc
INDUSTRY
MCSC 2016
Casebook 1: Table of Contents
FIRM
Case #
Type
Name
Industry
Page
Aviation
Sports
Automotive
General
Small Business
11
Market Sizing
Flying High
Market Sizing
Dry Cleaners in Philadelphia
Market Sizing
Car Tires in the United States
Market Sizing
What a Drag
Market Sizing
Japanese Golf Ball Market
Market Entry
RayQ Magazine
Publishing
13
Profitability
Youve Got Mail!
e-Commerce
15
Cost Reduction
MarshallCare
Healthcare
18
Profitability
Rays Streetside Slots
Entertainment
21
10
Profitability
Drakes Deposit Disaster
Finance
24
11
Market Entry
Trojan Airlines
Aviation
27
12
Private Equity
Wangs Bistro
Small Business
30
13
Market Entry
Giant-Sized Chickens
Vitamins
33
14
Profitability
Houston Firearms
Defense
36
15
New Product
Missle Misser
Aerospace
38
16
Market Entry
Home Alone
Security
41
17
New Business
Olympic Trials
Sports
47
18
Profitability
Chris Clothes
Fashion, Retail
50
19
Profitability
Make up your mind
Cosmetics
57
20
Profitability
Plastics
Manufacturing
60
TYPE
INDUSTRY
Case 1: Flying High

PROMPT
How many Americans fly domestically each day?
DESCRIPTION
ADDITIONAL INFORMATION (if asked)
This case is designed to test math

skills as well as well as present the
interviewer
Commercial
Assume 3,000 domestic flights per day
An average flight has 250 seats
Average flight occupancy is 80%
Average staff consists of 2 pilots and 8 flight attendants
Cargo
Assume 6,000 flights per day
An average flight has 10 crew members
Key assumptions
Can ignore which day of the week/holidays
Can ignore people who are flying through other means (helicopters,
hot air balloons, sky divers, etc.)
Passengers going through connecting flights, flying more than once a
day, etc. can be considered unique passengers
FIRM
IBM / R1
TYPE
Market Sizing
INDUSTRY
Aviation
Case 1: Flying High

CALCULATIONS
COMMERCIAL
(Flights per day) x (Number of seats) x (Occupancy) + (Flights per day) x (Crew members)
3,000 flights x 250 seats x 80% = 600,000
Math tip Break down math to logical digestible fragments
250 x 4/5 = 250/5 x 4 = 50 x 4 = 200
200 x 3k = 600k
3,000 flights x 10 crew = 30,000 crew members
600k + 30k = 630k Americans on domestic flights per day
CARGO
(Flights per day) x (Crew size)
6,000 flights x 10 crewmates = 60,000 crew members
TOTAL
Commercial flights + Cargo flights = total Americans flying domestically
630k + 60K = 690K
FIRM
IBM / R1
TYPE
Market Sizing
INDUSTRY
Aviation
Case 2: Dry Cleaners in Philadelphia

PROMPT
How many dry cleaners are located in Philadelphia?
DESCRIPTION
After the candidate has written out

their framework, ask them for their
approach.
The population of Philadelphia is 2MM
***After hearing their approach, ask

the candidate if there is any other
way to size the market (they should
be able to list 2 total top down
and bottom up)
Then proceed to have them size the
market using the top down
method. Make sure they drive the
case.
If they ask for any other information
other than the population of Philly,
respond with, I dont know, what
do you think?
FIRM
Accenture
TYPE
Market Sizing
INDUSTRY
Small Business
Case 2: Dry Cleaners in Philadelphia

CALCULATIONS
Demand:
Assumption: Population is uniformly distributed from 0-80 years old.
0-20 years: 0.5 MM
21-40 years: 0.5 MM
41-60 years: 0.5 MM
61-81 years: 0.5 MM
Number of clothing items dry cleaned per week:
0-20 years: No one dry cleans
21-40 years: 0.5 MM people * (30% use dry cleaning) * (5 articles of clothing/week) = 750K articles/week
41-60 years: 0.5 MM people * (40% use dry cleaning) * (5 articles of clothing/week) = 1MM articles/week
61-81 years: 0.5 MM people * (10% use dry cleaning) * (3 articles of clothing/week) = 150K articles/week
Total: 1.9MM articles/week
Supply:
Assumption: The average dry cleaner has 10 washers and 10 dryers, each with a capacity of 30 articles
Assumption: A wash cycle = 1 hour. Dry cycle = 1 hour. Transporting clothes is instant.
Assumption: Machines are utilized 60% of the time. Dry cleaners are open 12 hours a day. 5 day weeks
FIRM
10 sets of machines * 30 articles/hour * 60% utilization * 12 hr/day * 5 days/week = 10.8K articles/week
Total Demand/Week Total Capacity per Cleaner/Week
1.9 MM Articless / 10.8k Units per Cleaner per Week = ~175 Dry Cleaners
TOTAL = ~175 Dry Cleaners in Philadelphia
Accenture
TYPE
Market Sizing
INDUSTRY
Small Business
Case 3: Car Tires in the United States

PROMPT
Please estimate the number of passenger car tires sold each year in the United States.
DESCRIPTION
ADDITIONAL INFORMATION (if applicable)
None
Passenger car tires are defined as tires used on regular cars (no
motorcycles, semi-trucks, etc.)
Market Size
10M new cars sold each year
60M cars on the road
Cars have a 7 year life-span
Tires last 45k miles
The average driver drives 15k miles/year
Considerations
Some cars might come with a spare tire this will affect calculations
Key Assumptions
People purchase new tires immediately when necessary
When people replace tires, they replace all 4 at the same time
No growth in installed cars
FIRM
Samsung / R1
TYPE
Market Sizing
INDUSTRY
Automotive
Case 3: Car Tires in the United States

NOTES
CALCULATIONS
FIRM
Existing Cars
60M cars on the road
Because tires last for 45k miles and average usage is 15k, tires
need to be replaced every 3 years
60M cars/ 3 Years = 20M cars need replacement
20M * 4 tires = 80M tires
New Cars
4 new tires: 10M * 4 = 40M tires
4 new tires + spare: 10M * 5 = 50M tires
Total tires sold each year
80M + 40M = 120M (130M if every new car has a spare)
Samsung / R1
TYPE
Market Sizing
This is one way to do a bottomup approach. There are several

different ways to answer this
question provided that the
numbers and logic make sense
Push back on any assumptions
that fall outside the scope of
tires meant for a standard car
If interviewer entertains any uses
for tires outside of typical car
usage, ask them to estimate the
number (with logic) and then to
not include them into the final
calculations
INDUSTRY
Automotive
Case 4: What a Drag

PROMPT
How many cigarettes are smoked in a year in the United States?
DESCRIPTION
ADDITIONAL INFORMATION (if requested)
This is a case to explain how to

approach a case from a top-down
method. While we suggest breaking
the population down by age groups,
there are other ways to approach.
There are 320 million people in the United States
Aside from the size of U.S.

population, allow the interviewee to
use any numbers that he/she
chooses provided that the sound
logic is used.
FIRM
MCSC
TYPE
Market Sizing
INDUSTRY
General
Case 4: What a Drag

INTERVIEWER INSTRUCTIONS
This is a top-down approach. Allow the interviewee to approach the problem independently before suggesting that
they break this down by 4 distinct age ranges.
The breakdowns beyond this point is how we approached it but allow them to choose their own numbers. If the
interviewee struggles with calculations suggest that they use simpler numbers.
CALCULATIONS (do not reveal this to interviewee)

Age Groups
Total people in this age

range
% Smokers
Smokers in age range
0-20
80M
10%
8M
21-40
80M
25%
20M
41-60
80M
20%
16M
61+
80M
15%
12M
Assuming that each smoker smokes 5 cigarettes a day (some will smoke more than a pack a day but many will
smoke less).
(Total American Smokers) x (cigarettes per day) x (number of days a year)
(8M + 20M + 16M + 12M) x 5/day x 365 days/year
= 56M x 5 * 365
= 280M *365
= 300M x 350
= 105B cigarettes smoked by Americans each year
FIRM
Bonus: Interviewee considers alternates/substitutes to cigarettes (ex. E-cigs & Cigars, etc)
MCSC
TYPE
Market Sizing
INDUSTRY
General
10
Case 5: Japanese Golf Ball Market

PROMPT
You are going to visit a client who wants to sell golf balls in Japan. Having had no time for background research,
you sit on the plane wondering about the size of the market for golf balls in Japan. How big is this market?
DESCRIPTION

approach.
The population of Japan is 120M
***After hearing their approach, ask

the candidate if there is any other
way to size the market (they should
be able to list 2 total top down
and bottom up)
Then proceed to have them size the
market using the top down
method. Make sure they drive the
case.
If they ask for any other information
other than the population of Japan,
respond with, I dont know, what
do you think?
FIRM
McKinsey
TYPE
Market Sizing
INDUSTRY
Sports
11
Case 5: Japanese Golf Ball Market

CALCULATIONS
FIRM
Assumption: Population is uniformly distributed from 0-80 years old.
0-20 years: 30 MM
20-40 years: 30 MM
41-60 years: 30 MM
61-80 years: 30 MM
% of
Number of golf balls used
0-20 years: 3 MM people * (playing 3 times per year) * (4 balls used each time) = 36MM balls
20-40 years: 4.5 MM people * (playing 6 times per year) * (3 balls used each time) = 81MM balls
SIZE OF GOLF BALL MARKET IN JAPAN = 657 Million Balls
Golfers per Segment

0-20 years: 30 MM * 10% = 3 MM
20-40 years: 30 MM * 15% = 4.5 MM
41-60 years: 30 MM * 30% = 9 MM
61-80 years: 30 MM * 30% = 9 MM
TOTAL GOLFERS = 25.5 MM
McKinsey
TYPE
Market Sizing
INDUSTRY
Sports
12
Case 6: RayQ Magazine

PROMPT
Your client is the CEO of a publishing company producing a line of educational magazines and a line of women's
magazines. Both businesses are profitable but not growing quickly. He wants to start a third monthly magazine in
the US targeted at 25- to 55-year-old men (e.g. GQ Magazine). His stated goal is $5 million in circulation revenues
in the first year. Is this possible?
DESCRIPTION

approach. Make sure they are clear
exactly how they are going to size
this problem before they start.
None
If they are unclear or you dont

understand their approach, clarify
with them and challenge any
assumption you dont agree with.
If they ask for any information,
respond with, Thats a good
question, but we dont know. Why
dont you make an assumption?
Candidate is NOT allowed to round
numbers in this case.
FIRM
Strategos
TYPE
Market Entry
INDUSTRY
Publishing
13
Case 6: RayQ Magazine

CALCULATIONS
Population sizing:
Candidate is allowed to use different assumptions provided that they are logical. If you disagree with what they
stated question their logic and then ask them to use the numbers provided below
Start with a US population size of 320M people
Assumption: Population is uniformly distributed from 0-80 years old. The population that falls between 25-55
years is 120 million people (55 25 = 30; 30/80 * 320 = 30 * 320/80 = 30 * 4 = 120)
Assumption: Half of them are male, so 60 million males
Assumption: 25% of this demographic reads magazines of some sort = 15 million
Assumption: Given the wide range of magazines on the market, assume that only 10% of magazine readers
would want to read a men's journal = 1.5 million males that would read this type of magazine
Assumption: Market penetration rate of 5% for the first year, or 75K people
Revenue calculation:
2 sources of magazine sales: newsstand sales and subscription sales
Assumption: A cover price of $4/magazine at the newsstand and $2/magazine for a subscription.
Assumption: Assume 50% subscribe (37.5K customers) and 50% buy at the newsstand (37.5K customers).
Revenue/month newsstand = $150,000, Revenue/month subscription = $75,000
TOTAL ANNUAL REVENUE = $2.7 MM
Based on $2.7M being far short of $5M, recommendation would be to not pursue this venture
FIRM
Strategos
TYPE
Market Entry
INDUSTRY
Publishing
14
Case 7: Youve Got Mail!

PROMPT
It is 2004, and a major greeting card company is considering a proposal from Yahoo to advertise its e-commerce
product, a greeting card that is sent to the recipient as an e-mail attachment. Your client will get an exclusive
position on the websites front page that will help drive traffic to its greeting card site. The Yahoo exclusivity costs
$4.5 million per year for the next two years. Should your client do it?
DESCRIPTION
This is a classic profitability problem.
The interviewee should identify

revenues and costs in the
framework but also not forget about
other factors
****Do not mention cannibalization
unless interviewee brings it up
There is no right or wrong answer

to this case. The candidate should
be able to justify their
recommendation, whether it is a go
or no go.
The client has two products: traditional paper cards and electronic cards
50 billion visits to Yahoos site (per year)
Click through rate to greeting card site 1:1000
5% sell rate (ie: .05 cards sold per visitor)
Cannibalization would be 25% of traditional greeting card business
(number of visitors who would have bought traditional cards, but are
buying ecards instead)
Total company revenues: $20 million
$10 million from electronic cards
$10 million from traditional cards
All inclusive costs for e-cards (design, production, etc)= 50% of
revenues
All inclusive costs for traditional cards = 75% of revenues
Card price to customer = $4 per electronic card
Recommendations should include

risks and next steps.
FIRM
MCSC
TYPE
Profitability
INDUSTRY
E-commerce
15

ANALYSIS
Customer Base from Yahoo:
50 billion visits to Yahoos site (per year)
Click through rate to greeting card site 1:1000 5% sell rate
Result: 2.5 million sales via Yahoo (interviewee calculation)
Cannibalization:
25% of traditional greeting card business = 625,000 people
Profit Margins:
E-cards: Price =$4, at 50% margin, profit = $2 per card
Traditional cards: Price = $4, at 25% margin, profit = $1 per card
Net Profit:
Extra profit from electronic greeting cards = 2,500,000 x $2 = $5,000,000
Loss from Cannibalization = 625,000 x $1 = $625,000
Less $4.5 million exclusivity cost for Yahoo
Total Net Loss from deal = $125K in profit per year
FIRM
MCSC
TYPE
Profitability
INDUSTRY
E-commerce
16

CONCLUSION
If interviewee says GO:
Yes, should acquire because even if they lose $125K per year, they gain on other fronts such as:
Branding
Possibility to introduce and cross sell products (introduce more products to customer through site)
Prevent competitors from partnering with yahoo and stealing market share
Increase in internet usage resulting in increased foot traffic
Risks:
Cannibalization is larger than expected
Foot traffic is smaller than expected
Anything else that attacks assumptions made
Next Steps:
Talk with yahoo
Pilot test with other smaller websites
Optimize landing page for this new venture
Analyze demographic that will be coming to website and optimize accordingly
If interviewee says NO GO:
No, should not acquire because they are losing $125K per year
Risks:
Competitor partners with yahoo and steals market share
Company brand could deteriorate
Missing out on profits if any assumptions made are wrong
Next steps:
Find other small companies to partner with
Find out what competitors are doing
Renegotiate with Yahoo to see if they can get a better deal
FIRM
MCSC
TYPE
Profitability
INDUSTRY
E-commerce
17
Case 8: MarshallCare
PROMPT
A local hospital has been hurting. The 600 bed institution has had consistently high patient volume growth, but is seeing a rise in the
number of uninsured patients. Recently, it has been under operating margin pressure from the local government, which is requiring the
hospital to reduce its budget $100 million over the next three years. Also, the hospital cannot forego service in this budget cut it must
maintain its service. What do you recommend about the budget, and what implementation challenges to do you see in your
recommendations?
DESCRIPTION
The difficult part of this case lies in

collecting data effectively and
understanding how to re-do the
budget.
Product
Hospital known for decent quality -- relative to competitors it is middle-ofthe-road
Provides a range of service, from simple examinations to high-end procedures
(ankle sprains to brain surgery)
There is a growing demand for higher-margin services such as emergency
room procedures
A key component to doing well in

this case will be having a MECE
framework. At the very least, the
candidate must consider operations,
revenues, costs, and dive into each
of these during the case.
The recommendation should be
clear, concise, and address issues
talked about during the case.
Relevant risks and next steps should
also be mentioned
FIRM
Deloitte S&O
TYPE
Capacity
They have noticed unused capacity high quality doctors are spending time
doing routine examinations.
Also noticed doctors are working outside of their profession in an effort to
speed-up the process
Costs
Major variable costs
Personnel - Doctors forced to take care of administrative tasks
Supplies - Supply use has been high (medication, waste)
Ask interviewee how they would evaluate this (answer:
benchmark with comparable hospitals)
In this case, the volume of disposable waste has been growing
Major fixed costs: utilities, SG&A, sales and marketing, and capital
expenditures (equipment upgrades)
Cost Reduction
INDUSTRY
Healthcare
18
ANALYSIS
Capacity Issues
Re-align doctors: have them stay within their own practice to ensure they are working on what they are best at
Hire (lower salaried) generalists to deal with routine, low margin procedures
Cost Issues
Personnel cost
Supplies cost
Volume: encourage lower use of disposables (be environmentally friendly)
Price: re-negotiate cost of supplies with vendors, or even look for new, cheaper vendors
Equipment upgrade cost:
Focus on equipment maintenance to reduce frequency of repair
Consider lowering the quality of non essential equipment ie: perhaps use lower quality beds
Data (ASK INTERVIEWEE) What data would you want to collect in order to assess if the issues identified
were indeed issues? How would you validate this information?
Would want to collect info about usage rates, hours worked
Compare to: internal metrics over time, and to other comparable hospitals
Patient turnover
Possible solutions:
Can make beds more compact
Encourage home-care when possible to lower turnover
FIRM
Deloitte S&O
TYPE
Cost Reduction
INDUSTRY
Healthcare
19
RECOMMENDATION
Improve efficiency:
Change talent pool to reflect service needs: hire generalists, re-align doctors, re-shift work focus
Capacity: put beds closer together, encourage home care to reduce turnover
Costs:
Reduce volume (work with nurses & doctors) and price of supplies (work with suppliers)
Cut unnecessary equipment costs, reduce quality
RISKS
Economic
Legal: ramifications with local government?
Internal: unions / bureaucracy that make change difficult?
Competitive response: how will other hospitals react?
Community: PR issues with cutting quality in some areas
NEXT STEPS
FIRM
Patient surveys
Workflow analysis and begin realigning doctors
Talk with suppliers and begin renegotiating
Deloitte S&O
TYPE
Cost Reduction
INDUSTRY
Healthcare
20
Case 9: Rays Streetside Slots

PROMPT
Your friend owns a gas station on I-15 right outside of Las Vegas. He is thinking about installing a slot machine in
the gas station. He asked you if he should do it.
DESCRIPTION
This is a classic profitability problem.

The interviewee should identify
revenues and costs in the
framework but also not forget about
other factors
Candidate should be very clear and
easy to follow on paper.
Recommendation, risks, and next
steps should be coherent and
concise.
FIRM
Analysis Group
TYPE
He is looking to install 1 slot machine

Costs
Fixed Cost
Machine Install-$5,000 (one time cost)
There is an annual licensing fee of $1,000
Variable Cost
It has to have a minimum pay out rate of 80%. You are
able to set the payout rate yourself.
Variable costs electricity $1/day
Revenue
Benchmark - The average Vegas hotel casino slot machine brings
in $200/day in revenue.
Additional information:
Since the slot will not be located in a hotel, assume it would
bring in 50% of a hotel slot machine
The gas station is open every day
Taxes are 30%
Profitability
INDUSTRY
Entertainment
21

CALCULATIONS
Revenue:
Annual revenue = $100/day x 365 = $36,500
Revenue after payout rate: (1-0.80) x $36,500 = $7,300 (will vary based on chosen %)
Cost:
Fixed costs = $5,000 one time investment + $1,000 annual licensing fee
Variable costs = $1/day = $365
Profit = $7,300 $5,000 - $1,000 - $365 = $935
Profit after taxes = (1-0.70) x $935 = $654.50
FIRM
Analysis Group
TYPE
Profitability
INDUSTRY
Entertainment
22

RECOMMENDATIONS
Yes, he should install it because there is a profit and because he will not need to incur the $5,000 purchase cost
for several years
Extra points if candidate points out that machines have lifespans and because a machine is likely to last
longer than a year, the investment looks even more attractive
Additional items candidate could mention
Could place it near the bathrooms to let people play while they are waiting in line.
Assuming the gas station sell snacks, it may increase food purchases by drawing people inside.
You can adjust the payout rate, so the friend can play around with the optimal payout.
IE: he needs to consider the price of the slot $0.05, $0.25, $1, etc. A $0.25 may encourage more
people to play. People could use the change from their recent snack purchase to play.
RISKS
Short term variance if customer wins a jackpot
Other legal considerations
NEXT STEPS
Pick a machine, purchase, and install
Consider adding more machines if space allows
FIRM
Analysis Group
TYPE
Profitability
INDUSTRY
Entertainment
23
Case 10: Drakes Deposit Disaster

PROMPT
Your client manufactures and sells deposit slips to banks at a price of $1/slip. They are the leading firm in this
$100Mn industry with 60% market share. There is only one other competitor. Federal regulations will decrease the
industry size by 10% next year. Our client wants to maintain its profit to fund other projects. What options does it
have and are any of these appealing?
DESCRIPTION
The candidates framework should

highlight revenues and costs, but
should also consider competition,
industry, and other external factors
Total Cost for client is $0.70 per slip.

Competitor out-sources manufacturing for a total cost of $0.90 per slip.
***A successful candidate will

consider competitive response. If
this is not brought up, DO NOT
provide candidate with this
information.
FIRM
Bain
TYPE
Profitability
INDUSTRY
Finance
24

ANALYSIS
Candidate should calculate current profitability
Q = 60% x 100M = 60M
Total Revenue = Q x $1/slip = $60M
Total Cost = Q x $0.70/slip = $42M
Profit = TR TC = $18M
Candidate should determine who would win a price war
Client cost of $.70/slip is lower than competitor cost of $0.90/slip, so client should win the war if they change
their price to $.90/slip. Rational competitor should not price below cost.
and whether client will maintain current profits after price war.
The price war will end at P = $.90/slip. (Competitor would be selling at cost, they might leave the market)
Q = 90M (client has 100% of market now, but market has shrunk by 10% due to federal regulation)
Total Rev = Q x $0.90/slip = 81M Total Cost = Q x $0.70/slip = 63M
Profit = $18M Profits are maintained Go ahead with price war.
A
solid interview will address other potential risks

Capacity constraints: Q is increasing by significant amount (50%), so plant expansion may be necessary.
Federal regulation may be a sign of future trends and lower industry profitability in future years.
****Competitor may act irrationally and continue in market despite running a loss (Do not give this to the
candidate unless they mention competitive response)
BONUS: Give only if the candidate asks about reasons the competitor may act irrationally
The competitor has another division. Does this change anything?
The competitors other division comprises 75% of its revenues.
This division manufactures a specialty chemical that is sold to banks to check for fraud. (e.g. ink pen that
changes color when used on counterfeit money).
This division is highly dependent on bank relationships built through the deposit slip business.
FIRM
Bain
TYPE
Profitability
INDUSTRY
Finance
25

CONCLUSION
2 Different Recommendations:
If candidate does NOT ask about competitor acting irrationally and selling at a loss:
Client should engage in a pricing war to steal market share from the competitor. Even with the decline in
market size, the client will maintain current dollar profits.
If
FIRM
candidate does ask about competitor acting irrationally and selling at a loss:
The competitor is more likely to sell deposit slips below cost because its other division is so dependent on it.
Price war may not be a good idea.
Client should pursue other means of increasing profits and revenues, such as diversifying into other products,
selling to other customers, etc
Bain
TYPE
Profitability
INDUSTRY
Finance
26
Case 11: Trojan Airlines

PROMPT
Our client is a budget airline considering entering a new market for business class flights. They are considering
running an all business-class service within Europe. They want your advice on whether this is a good idea, and if
so, how they should do it.
DESCRIPTION

should also consider competition,
industry, and other external factors
Product
Current flights are cheap, short haul flights from the UK to various
European destinations
Company does not offer business class flights at the moment
Various upgrades such as speedy boarding and greater legroom are
available for purchase
Brand perception is that this airline is extremely cheap, but also has
very low quality service
Math should be organized, quick,

and easy to comprehend
The difficult part about this case are
staying organized and staying
composed under pressure.
Candidate will frequently be pushed
until they run out of ideas.
Make sure recommendation is
succinct (under 1:30) and logical.
Make sure Risks and Next Steps are
present.
FIRM
Strategy&
TYPE
Competition
The going rate for similar type business seats are $1k/customer
Entry Method
Company does not want to acquire a competitor
Partnerships are possible, but we have no data on any potential
candidates
Market Entry
INDUSTRY
Aviation
27

ANALYSIS
Do not move on to next section unless candidate has considered all of the following: competitors, method of entry,
company, and product. Ask the candidate What else do you want to consider? before moving on.
FIRM
Ask the following: Our first destination will be Vienna. How much would we have to charge to break even with
25/32 seats filled?
Costs
when
Breakeven Revenue:
25 passengers
$27,500 costs / 25 passengers = $1,100 / passenger
Then
(Ask the candidates to list as many cost items as possible. Keep pushing until they run out of ideas, and
they do so, provide them with the following list):
Fuel: 6,000 gallons @ $3.00/gallon = $18,000
Aircraft dry lease: $2,500/flight
Aircraft Servicing: $600 / flight
Aircrew Costs: 2 pilots @ $700 & 3 crew @ $400 = $2,600
Other Overhead: $1,500 / flight
Airport Charges (landing, passenger use of facilities): $900 / flight
Catering Costs: $1,400 / flight
TOTAL COSTS: $27,500 / flight
ask the following: What challenges do you think the client will face?:
Issues exist around the brand of a low cost airline, meaning the rebranding might be necessary
Landing slots at hub airports are critical to business travel, and will be very hard to acquire
They do not have the full set of capabilities required to deliver a business class service, so choice of
partners is critical
Strategy&
TYPE
Market Entry
INDUSTRY
Aviation
28

CONCLUSION
Then ask the following: If offering business class flights is not attractive, what are some innovative ways for
our client to get into the luxury tourism market? (Push them until they run out of ideas)
Possible Answers (chance to be creative these are simply some ideas):
Fly a scheduled service to high end holiday resorts
Partner with luxury hotel chains and travel companies to offer packages
Fly from regional airports and include a chauffeur to get passengers there
Charter to luxury cruise lines to offer passengers flights to the ships
Do not fly scheduled flights, but focus on one of flights to key European social events Monaco Grand Prix,
Paris
Fashion Week, etc.
Offer packages including entry to these events
Run on board events like wine tasting
Offer experience flights ie. Over north pole
Conclusion
Recommendation can be either a go or a no go, but make sure candidate has appropriate Risks and Next
Steps mentioned
Ie: If it is a go, make sure candidate mentions the challenges as risks and possible next steps moving
forward
If it is a no go, make sure candidate mentions risks company could face if not entering the business class
market as well as next steps to further assess the situation
FIRM
Strategy&
TYPE
Market Entry
INDUSTRY
Aviation
29
Case 12: Wangs Bistro

PROMPT
Your friend has been approached by a restaurant owner with an offer. The restaurant owner runs a restaurant in Los Angeles
with his wife. They are reaching retirement age and would like to pass on the business to someone else. The restaurant has
always been a family-owned business and is part of a strip mall near the freeway. This strip mall also have four other
restaurants and it sits across the street from two tall business centers. In the past four years, the restaurant has been losing
money and the owners dont know why. What is going on with their profits, what do you recommend to turn around profits
(if possible), and do you recommend your friend acquire the business?
DESCRIPTION

should also consider market share
and size, competition, and
customers
Market Share and Size

Business is based almost entirely on adjacent business centers.
Is a function mainly of lunch customers each day.
Each business center has 20 floors and sits 100 people per floor on
average (all of whom eat lunch).
On any given day, 5% of the people didnt show up for work, 50% of
the remaining go out to lunch, and 90% of them go to the adjacent
restaurants for food.
Our restaurant currently has 10% market share (relative to its 4
competitors).
No growth.
4 other restaurants are all fast-food.
Math should be organized, quick,

and easy to comprehend
present.
FIRM
Capgemini
Restaurant
When business declined 4 years ago, the owners had to fire 2
assistants, which put a strain on manager / employee relations.
Sell all kinds of food mostly a broad American food place.
Restaurant is like a sit-down diner, but also package food to go.
Average wait time at our restaurant is 5 minutes, average time at the
others is 3 minutes.
TYPE
Private Equity
INDUSTRY
Small Business
30

ANALYSIS
Market Size Estimation
2 buildings * 20 floors * 100 person capacity per floor = 4,000 people
4,000 * 95% present = 3,800 in buildings
3,800 present * 50% out to lunch * 90% who go to adjacent restaurants = 1,710 total market opportunity.
1,710 market opportunity * 10% market share = 171 customers each day
Customer
If interviewee asks about customer characteristics, ask them the following:
Given that our client only has 10% of the market, how would you find out why customers arent coming?
Stand outside business center and survey
Ask customers who do come
Ask business center management
Customers are workers looking for a quick lunch. (Candidate should deduce that our wait time is too long)
Most customers take food back to business center and eat at desk (dont sit and eat at restaurant).
Profits
Ask interviewee: what if breakeven for restaurant every day is 200 customers? Do you think buying would be a
good idea or not?
There is no right or wrong here
Interviewee should begin brainstorming of ways to increase profits (increasing revenue or decreasing
costs) and explain how to do so
Drill down revenues and costs and figure out how to improve the restaurant on both fronts. Push the
candidate until they run out of ideas, after which they should be asked to give a recommendation
Some sample ways to increase profits
Brand more as quicker food option, advertise in business centers, offer delivery, offer more fastfood items on menu, identify restaurant bottleneck and provide more resources
FIRM
Capgemini
TYPE
Private Equity
INDUSTRY
Small Business
31

CONCLUSION
Recommendation:
Acquire? No correct answer, many things to consider:
If yes: optimistic that can improve operations to reduce customer turnaround time; may be able to bring
down breakeven level of customers.
If no: market is not growing, strong competition, challenges in picking up family-owned business.
FIRM
Capgemini
TYPE
Private Equity
INDUSTRY
Small Business
32
Case 13: Giant-Sized Chickens

PROMPT
Your client is a chicken vitamin manufacturer. The vitamin helps increase the size of chicken breast and reduce fat
content. Should they enter China?
DESCRIPTION

include entry method, company,
industry, product, customers, and
external factors
Chicken Industry in China

Chinese chicken industry is twice as large as US in terms of amount of chicken
consumed
Growth trends are similar to those of the US
Customers
The customers in the US consist primarily of large corporate farmers e.g. Tyson,
Purdue
The customers in China can be segmented into 3 categories:
Family Poultry Farms 80% Market Size, 1% Growth Rate
Village Farms 10% Market Size, 19% Growth Rate
Corporate Farms 10%, 80% Growth Rate
Competition
There is no direct competitor at the moment in China. There is one substitute product
which sells for $0.47/lb.
The clients product is superior in performance and has no side effects compared to
the substitute product
Manufacturing Costs
Magnesium is an important ingredient used to manufacture the vitamins
The firm has one mine in Florida which is operating at max capacity
There are mines in other parts of the world, which have a cost structure as follows
(includes transportation to China.)
2 in Europe - $0.39/lb
1 in India - $0.37/lb
1 in Africa - $0.35/lb
1 in China - $0.38/lb
Candidate should thoroughly

explore each avenue listed in
Additional Information. Pros, cons,
and risks, should proactively be
brought up by the candidate.
present.
FIRM
PwC
TYPE
NOTE: These are prices if the client were to acquire the mines
The additional cost beyond the raw material is $0.10/lb
Market Entry
INDUSTRY
Vitamins
33

ANALYSIS
Before the recommendation, candidate should have covered the following:

Which customer segment is most appealing and why
Which mine to expand to and why
The competition, what the substitute product looks like, and how big competitors are
Any risks including government regulations, shipping, fixed costs of establishing a new mine, competitors
entering the market, competitive response
Recommendation
The client should enter China

It should target the corporate market since it is growing rapidly (80% growth in 5 years)
Supplying this segment is also much cheaper since corporations tend to have their supply chains in
place, while family farms would require that the client develop their own infrastructure
The client should acquire the mine in Africa due to lower cost, although candidate can also argue that
distance creates a bigger risk and opt for the mine in China
Risks
Next
FIRM
Competitive response
Government issues
New entrants
Large investment in expanding
Steps
Establish relationships with corporate farms
Do due diligence on business environment in China
Look into getting patent protection on product
PwC
TYPE
Market Entry
INDUSTRY
Vitamins
34

RECOMMENDATIONS
The client should enter China
It should target the corporate market since it is growing rapidly (80% growth in 5 years)
Supplying this segment is also much cheaper since corporations tend to have their supply chains in place,
while family farms would require that the client develop their own infrastructure
The client should acquire the mine in Africa due to lower cost, although candidate can also argue that distance
creates a bigger risk and opt for the mine in China
RISKS
Competitive response
Government issues
New entrants
Large investment in expanding
NEXT STEPS
FIRM
Establish relationships with corporate farms

Do due diligence on business environment in China
Look into getting patent protection on product
PwC
TYPE
Market Entry
INDUSTRY
Vitamins
35
Case 14: Houston Firearms

PROMPT
Our customer, Houston Firearms, is a 150-year old national market leader of firearm manufacturing and sales.
Recently, they have seen a decrease in sales. They want to know why theyve seen this drop and how to increase
sales
FIRM
DESCRIPTION
This decrease in sales is due to a

new market entrant: Bullseye. This
case presents a typical problem of
competitive reactions to a market
entrant and driving sales. A good
framework should help pinpoint the
problem quickly. Then a clear
framework for driving sales, along
with creative solutions, wrap up the
case well.
Houston Firearms
Market share in 2015 was 45%, in 2014 it was 55%
Firearms industry has grown by 3% annually in the past 5 years
IBM / R1
TYPE
Product
Most popular product Houston Rocket constitutes 75% of Houston
Firearms sales. Remaining sales come from firearm suppliers
Cost of production, distribution, and marketing have not changed
Prices have increased only at the rate of inflation
Competition
Dallas based firearms manufacturer Bullseye was established in 2005
and has been growing rapidly.
Outsource production and offer a cheaper alternative the Cowboy
There is no other major competition in this industry
Profitability
INDUSTRY
Defense
36
Case 14: Houston Firearms

ANALYSIS
Step I: Realizing the Issue
Decrease in sales is due to recent competitor Bullseye
Step II: Frame Solutions
Need to find competitive responses to respond to new entrant
Frame the solution: ex. Divide growth strategies into 4 categories (New/existing customers and New/existing
products)
Step III: Brainstorm and Present Solutions

If Bullseye is producing cheaper firearms, Houston Firearms must either compete on price or focus on
competitive advantage (quality, manufacturing, premium market position)
Engaging in a price war would likely decrease profitability as well as damage brand
Rockets competitive advantages are
Quality, safety, superior security
History of U.S. tradition and domestic production esp. given that many firearm users are patriotic
Additional suggestions may include the following:
Creating a cheaper firearm product to compete with the Cowboy (using a different name)
Move into different points of the value chain (gun cleaning equipment, bullets, etc)
Investing more heavily in underserved regions (be weary of international expansion)
FIRM
IBM / R1
TYPE
Profitability
INDUSTRY
Defense
37
Case 15: Missile Misser

PROMPT
Our client is a major defense contractor for the United States government. There has been a growing threat from
terrorists who are shooting down commercial aircrafts with rocket launchers. There is a potential solution to the
problem; equipping planes with anti-missile defense systems called IRCMs (Infrared Counter Measures). These
devices defend against ground-to-air attacks. Congress has approached your client requesting that these systems
be installed on commercial planes. Do you recommend that they take the deal?
DESCRIPTION
This case focuses on the profitability

of the new system. Selling to
congress means losing money but
there are huge opportunities
overseas. That opportunity may
make the deal worth taking. There is
also a major strategic threat: the
major competitor will have 50% of
the market. What would happen if
the competitor doesnt accept the
job (would our client be able to
gain the entire market?) What if the
competitor also moves overseas?
Market
6,000 commercial airplanes (3,000 eligible for installation)
Client can capture a maximum of 50% of the market government law
requires a competitive market
Product
System is installed beneath planes. Small device that does not affect
performance of aircraft. Installation is not an issue
Uses infrared lasers to redirect missiles away from plane, missile will
still detonate in a different location
Government will pay $2M per installation
Variable cost per system is $1.7M
System needs reinstallation every 10 years
Company
Current total revenue of $15B
Fixed costs: $250M for factory, $250 for management/employees, $250
for R&D
FIRM
Bain / R1
TYPE
New Product
INDUSTRY
Aerospace
38

ANALYSIS
Market Opportunities
3,000 eligible for installation * 50% market share = 1,500 planes
$2M in installation
1.5k * 2M = $3B Market opportunity
Profitability
Profit = Rev (FC + TC)
Revenue = $3000M
Variable Costs = 1,500 x 1.5 = $2,625M
Gross Margin = $375M
Total fixed costs = $750M
Profits = $3000M ($750M + $3,000M) = ($750M)
Opportunities
Expand geographically: what governments would be interested? (Fixed costs stay the same if expand internationally,
so marginal profit is positive.)
Ones with many commercial flights over terrorist areas
Middle East and southern Asia
What are criteria in selecting governments to sell to? Any governments NOT willing to sell to?
If they can pay (afford it)
Type of government (democratic?)
Level of corruption
Competitors in new market
PR issues
FIRM
Bain / R1
TYPE
New Product
INDUSTRY
Aerospace
39

RECOMMENDATIONS
Develop the domestic (U.S.) market before considering international expansion
RISKS
What if competitor does the same?

What if we dont sell in U.S., how will appear to other areas of the business?
Political: what if government changes its mind?
Internal: do have capacity for immediate production and installation of 1,500 systems?
Who takes responsibility for the missile after it is diverted from the plane? What if people on the ground are
killed? (ethical and PR issue.)
NEXT STEPS
FIRM
Develop contracts with the United States ensuring a certain volume or exclusivity
Continue R&D that disarms or detonates missile to limit collateral damage
Bain / R1
TYPE
New Product
INDUSTRY
Aerospace
40
Case 16: Home Alone

PROMPT
Your client is a financial investor interested in investing in a start-up national security company. The security
company sells and installs alarm systems and then provides monitoring service, patrolling the neighborhood and
following up if the alarm goes off. The client has hired you to size the market and recommend if this is a good
investment or not.
FIRM
DESRIPTION
Interviewee should identify first

how he or she would tackle the
problem by allocating resources
and deciding how the timeframe
of the project will work. As for the
project itself, it is a good idea to
enter the Scottsdale market
because doing so is profitable. It is
only profitable with 2 planes,
however. There are significant risks
to entering, and the interviewee
should consider how these might
affect the outcome
Only provide each support slide after being asked for the information
by the candidate
Slides:
Target companys current situation
Demographics and growth by income
Competitive landscape
Competitive estimated revenues and earnings
10M suburban households
1M new suburban households each year
System is priced at-cost
1-2 large local players per market
Large local players are entering national market and competing with
large national player
Bain / R1
TYPE
Market Entry
INDUSTRY
Security
41
Case 16: Home Alone

Exhibit 1
Client Market Situation
FIRM
Number of homes
in market
10 Million
Home growth last

year
1 Million
Competitors
Largest national player appears to have financial difficulties
System Price
$1,000 installed
Service Price
$30 per month
Bain / R1
TYPE
Market Entry
INDUSTRY
Security
42
Case 16: Home Alone

Exhibit 2
2015: US Homes by Value

100%
90%
1% Growth
80%
<$100k
70%
$100K to $200K
60%
$200K to $500K
50%
$500k to $1M
1% Growth
40%
>$1M
30%
2% Growth
20%
4% Growth
10%
4% Growth
0%
US
FIRM
Bain / R1
Own a security system
TYPE
Market Entry
INDUSTRY
Security
43
Case 16: Home Alone

Exhibit 3
Competitive Landscape
100%
National Player 5
National Player 4
90%
Local
Local
Local
Local
National Player 3
80%
Player
Player
Player
Player
1
2
3
4
National Player 2
70%
60%
50%
40%
National Player 1
Other Players (5,000+)
National Market
Local Market
30%
20%
10%
0%
FIRM
Bain / R1
TYPE
Market Entry
INDUSTRY
Security
44
Case 16: Home Alone

Exhibit 4
Competitive Estimated Revenues and Earnings

EBIT (%)
30%
25%
20%
15%
10%
5%
0%
National Player 1 National Player 2 National Player 3 Local Player 1
Revenues ($M)
FIRM
$1,500
Bain / R1
TYPE
$270
$100
Market Entry
$30
INDUSTRY
Local Player 2
$20
Security
45
Case 16: Home Alone

ANALYSIS
Market Sizing/Opportunity
Expected Annual revenue = New Systems + Existing Systems
New Systems
$1000 New System * 1M New Homes = $1B
Existing Systems
$30/Month Service * 12 Months *10M Existing Homes = $3.6B
Annual revenue = $4.6B
Market Growth
70% of alarm buying market is growing at 1% per year, with the overall alarm buying market growing at or less
than population growth
This makes market growth unattractive
Competitive Reach
The national market is dominated by one player with several other strong players making entry very difficult
The local market is highly fragmented with apparently 1-2 major players in each market, making entry in this
space equally difficult with local de-facto monopolies
Competitive Environment
Large national players appear to be operating with rather low EBIT numbers this may be due to spread out
infrastructure and inefficient utilization of resources
Smaller local players have stronger EBITs, however this leaves them in a strong position to compete, and entry
will be difficult
The market does not appear attractive at this time.
FIRM
Bain / R1
TYPE
Market Entry
INDUSTRY
Security
46
Case 17: Olympic Trials

PROMPT
Los Angeles is considering placing a bid to host the upcoming Summer Olympic Games. Our client, the bidding
committee, approached us to ask for our opinion of what the major considerations should be. Of major concern is
how to convince the state and federal governments that this would be beneficial for the city. How would you
recommend they go about doing this?
FIRM
DESCRIPTION
This case is designed to test the

interviewees ability to generate a
framework outside of what they
might be accustomed to; there is no
market, no competition, a very
unusual product. The case is
designed to initially revolve around
profitability, which will show a great
deficit. At this point, the interviewer
should ask If hosting the games is a
bad idea. If the interviewee says that
it is, then the case can turn into a
brainstorming session on how the
committee might convince the
government that it is a good idea
after all. Let the interviewee float
around with some questions, before
hinting that we should be looking at
this from a profitability angle.
Strategy&
TYPE
The Olympics are to be held over 15 days.

Costs: (give all at once)
$2.8 billion for the operation of the games (opening ceremony, security,
athlete support, transportation, etc.)
$2.6 billion for freeway upgrades
$6.0 billion for new and upgrading venues
$2.5 billion for new airport terminal
$1.1 billion for athlete facilities
Revenues (ask what interviewees think revenue streams could be, and give out one at
a time)
International Olympic committee support: $1.1 billion
Sponsorship: $75 per seat (occupied*) (Math Answer = $0.9B)
TV rights: combined with the preceding winter Olympic games, TV stations
pay $15 billion, and the summer games is expected to take 80% of this. Of
this total, 25% will go to the organizing committee. (Math Answer = $3B)
Tickets: Give Exhibit 1 but do not say occupied seat unless the interviewee
asks if this is the case. If this comes after the Ticketing section, then tell the
interviewee that he / she has omitted thinking about occupancy, and ask how
this would affect the numbers.
New Business
INDUSTRY
Sports
47

ANALYSIS
Profitability answer: revenue ($7B) costs ($15B) = $(8) billion This combines the chart below and the numbers
provided on the previous page.
Ask the interviewee if this makes the bid a bad idea. Regardless of the answer, ask how that gap could be closed (eg:
official merchandise, tolls on new freeways, changing seating price, changing capacity through marketing, utilizing
semi-temporary venues and facilities). After debating, concede that the gap might be narrowed to a $6 billion deficit.
Ask if bidding for the Olympics is still a bad idea.
Explain that historically, an Olympic games rarely shows a direct profit for the host city, however, indirectly it has
been shown the games can be hugely beneficial for a host city. Ask how this could be the case.
Arguments that could be made to the government that hosting the Olympics could be a good thing:
Tourism during and after the games would increase, reducing, and perhaps offsetting, the profitability deficit.
Upgrading city infrastructure (ex airports, surface roads, sports stadiums, etc) is beneficial
Sense of pride throughout the city good for everyone living there
The chart below shows Exhibit 1 plus the ensuing calculations.
Interviewee sheet
Additional Info (if asked)
Math Answers
Seating Type
Price per Ticket
Total Number of
Seats per day
Expected
Capacity*
Total Occupied Seating

(for entire 15 days)
Total Revenue
(for entire 15 days)
$200
420,000
95%
5,985,000
$1.197 B
$120
700,000
60%
6,300,000
$0.756 B
12,285,000
(~12 M)
$1.953 B
(~$2 B)
Exact totals:
(allow these when moving forward with further calculations)
*Provide if asked, but allow interviewee to complete workings without this first, and then ask what assumptions have been made. If the interviewee doesnt think
of this, provide the numbers
FIRM
Strategy&
TYPE
New Business
INDUSTRY
Sports
48

EXHIBIT 1: Seating
FIRM
Seating Type
Price Per Ticket
Total Number of
Seats per Day
$200
420,000
$120
700,000
Strategy&
TYPE
New Business
INDUSTRY
Sports
49
Case 18: Chris Clothes

PROMPT
Your client, Chris Clothes, is a clothing retailer that sells casual clothes such as t-shirts and jeans through several
channels, including department stores, its own retail stores, and its website. Although Chris has been a popular
brand for most of the past two decades, it has seen declining margins in the last few years. Its CEO has asked you
to help her understand why profitability has declined, and determine what Chris should do moving forward.
FIRM
DESCRIPTION
This case primarily tests an

interviewees ability in two ways:
1. Analytical: Whether the
interviewee can conclude that
the clients profitability issue is
due the recent opening of
unprofitable stores in less
desirable locations.
2. Quantitative
BCG Round 1
TYPE
Areas served: United States

Products sold: Casual clothes such as T-shirts and jeans. Think H&M.
Number of stores: 100
Customer profile: Think H&M. No data available.
Competitors: Think H&M. No data available.
Profitability
INDUSTRY
Fashion, Retail
50

EXHIBIT 1
Chris' Clothes Sales
Chris' Clothes Costs
700M
400M
600M
350M
300M
500M
400M
300M
250M
Retail
Wholesale
200M
Wholesale
Website
200M
Website
150M
100M
100M
50M
M
2011
FIRM
Retail
2012
2013
BCG Round 1
2014
TYPE
2015
2011
Profitability
2012
2013
INDUSTRY
2014
2015
Fashion, Retail
51

EXHIBIT 2
J&H Store Data

Sales
($M)
Rent
($K)
2,000
15
Sales
1.500
10
Stores opened
>10 years ago
Stores opened
5-10 years ago
Stories opened
0-5 years ago
1.000
500
0
FIRM
10
20
30
BCG Round 1
40
TYPE
50
60
70
80
Profitability
90
Rent
100
INDUSTRY
Fashion, Retail
52

INTERVIEWER GUIDE
The interviewee should begin by developing a framework that includes the following, at a minimum:
Profitability: The interviewee identify that first and foremost, we need to examine revenues (price * volume) and
costs (fixed costs and variable costs) to determine the cause of declining margins. This can include a
consideration of Chris product line, changes in customer tastes, revenues and costs by channel, and its value
chain.
Competitors: The interviewee should indicate that we need to benchmark against the clients competitors to
understand where it may have fallen behind the curve.
Part 1: Identifying the need to examine profitability
If the interviewee does not bring up revenues and costs after 1-2 minutes, guide him/her to ask about them.
Once the interviewee does, provide Exhibit 1 and ask what he/she sees.
Part 2: Exhibit 1 walk-through | Identifying that costs are the issue
Encourage the interviewee to walk you through the graphs. If asked, clarify that these are annual figures.
If the interviewee focuses on:
The website or wholesale business: Dismiss the notion by asking whether those are significant portions of
the business (they are not).
Sales: Dismiss the notion by asking why he/she is focusing on sales since theyre increasing.
Key Insight: If the interviewee is unable to identify that retail costs have grown twice as quickly as retail sales in
the last five years, guide the interviewee to compare growth in sales and growth in costs. Retail costs have
grown by 20% (($300M - $250M) / $250 = 20%) while retail sales have only grown by 10% (($550M - $500M) /
$500M = 10%).
Once the key insight is reached, ask the interviewee what the causes of this could be. Push the interviewee
several times to think of different possible reasons (to test the interviewees ability to think under pressure).
Ask the interviewee what data he/she would want in order to dig deeper into the retail cost issue.
If the interviewee does not ask for revenue and cost data for the retail stores, guide him/her to do so. Once
the interviewee does, provide Exhibit 2.
FIRM
BCG Round 1
TYPE
Profitability
INDUSTRY
Fashion, Retail
53

INTERVIEWER GUIDE (Continued)
Part 3: Exhibit 2 walk-through | Identifying that recently-opened stores are the issue
Encourage the interviewee to walk you through the graph. If asked, clarify that this data is for Chris 100 stores
and that the figures are annual.
Key Insight: If the interviewee is unable to identify that recently-opened stores (those opened within the last 5
years) are the cause of declining profits, ask what kind of stores seem to have the lowest margins. The
interviewee should realize that the stores opened within the last 5 years have the lowest margins.
Once the key insight is reached, ask the interviewee what the causes of this could be. Push the interviewee
several times to think of different possible reasons.
Ask the interviewee if he/she has any ideas on what the client can do to solve the profitability issue. Push
the interviewee to think of as many ideas as he/she can (keep asking what else?). If the interviewee does
not include a suggestion to close less profitable stores, guide the interviewee to do so after several
attempts. Then, ask what considerations the client should take into account when going through the process
of closing stores.
FIRM
BCG Round 1
TYPE
Profitability
INDUSTRY
Fashion, Retail
54

INTERVIEWER GUIDE (Continued)
Part 4: Quantitative Test
Tell the interviewee that Chris has three main types of stores that appeal to different customer segments. Type A
stores have the highest quality products and prices, followed by Types B and C. There are also a few flagship
stores. Provide the following information all at once:
Annual sales per store: Type A: $9M; Type B: $5M; Type C: $2M
Annual COGS per store: Type A: $5M; Type B: $3M; Type C: $1.5M
Annual cost of rent per store: Type A: $800K; Type B: $700K; Type C: $600K
Tell the interviewee that the client has identified 40 less profitable (or unprofitable) Type C stores that can be
closed without incurring significant one-time closing costs. Ask the interviewee to calculate the impact of the
closures on the clients annual profits. Also indicate that the client expects that 60% of the annual sales of each
closed store are expected to continue to be made at a nearby store (basically, 60% of sales will continue to be
bought each year by customers that travel to another location to make their purchase).
If needed, guide the interviewer through the calculations:
Cost Savings: $600K/store in annual rent * 40 stores = $24M
Loss of 40% of Purchases (since 60% of purchases will continue to be made at other stores):
$2M annual sales - $1.5M annual COGS = $500K annual profits, then
$500K * 40% lost = $200K in lost profits, then
$200K * 40 stores = $8M
Total Impact: $24M in savings $8M in lost profits = $16M
After the interviewee completes the calculation, ask if closing the stores seems like a good idea. A good
interviewee will observe that the $16M in savings is about 6% of the clients annual profits (a quick glance at
Exhibit 1 reveals a profit of $250M ($550M in revenues - $300M in costs)).
Then, tell the interviewee that the CEO has just walked into the room and ask him/her to provide a quick
executive summary with recommendations.
FIRM
BCG Round 1
TYPE
Profitability
INDUSTRY
Fashion, Retail
55

RECOMMENDATION
Close 40 Type C stores
RISKS
Closing 40 out of the clients 100 retail stores would significantly reduce its brick & mortar presence. J&H could
suffer from decreased exposure to potential customers
This strategy only increases total profits by 6%
NEXT STEPS
FIRM
Perform a more detailed analysis of both the short- and long-term impacts of closing the 40 stores
Perform an analysis of why the recently-opened stores are not doing well, and explore ways to make them
profitable (i.e. management changes, adjustment to product mix to better align to customers in those stores
locales)
BCG Round 1
TYPE
Profitability
INDUSTRY
Fashion, Retail
56
Case 19: Make up your mind

PROMPT
BeautyAsia (BA) is a health and beauty consumer products company headquartered in Malaysia. It manufactures
and sells a line of cosmetic products ideally suited for the Malaysian marketplace. Although it has been a successful
company for over twenty years, it has been losing money for the past two years and its market share has declined.
The CEO has asked you to assist in diagnosing the problem and generating a few possible solutions.
FIRM
DESCRIPTION
This is a classic profitability case
Company
Market share declined from 90% to 60% in the past two years.
Manufacturing is excellent
Inventory management systems are unsophisticated and ineffective,
resulting in excess inventory and order fulfillment problems
Brands are widely recognized throughout Malaysia
No new products have been launched in the past eight years
BA sells its health and beauty products primarily through local mom
and pop shops (i.e., convenience stores)
Management considered selling its current products outside Malaysia,
but has been distracted by problems in its home country
EY Round 2
TYPE
Profitability
INDUSTRY
Cosmetics
57

Competitors
Several large multinational manufacturers have entered the market
Competitors have flooded the market with new products
Multinational competitors sell their products through supermarkets
Consumers
As a result of multinational competitors entering the market, consumers have been exposed to new types of
products and their health and beauty product tastes have become broadened and become more sophisticated
Products
BA has multiple product lines ranging from lipstick to skin creams
BAs products appeal to price-conscious consumers
The health and beauty products industry is growing approximately 15% per year
Channels
BA products are currently sold through small proprietary shops
Supermarkets are becoming increasingly popular in Malaysia
Supermarkets have high order fulfillment and stocking requirements
FIRM
EY Round 2
TYPE
Profitability
INDUSTRY
Cosmetics
58

RECOMMENDATION
Good Conclusions
Multinational competitors are creating a new distribution channel for health and beauty products. The channel
shift is causing BA to lose market share. BA needs to update its inventory systems to compete in the new
channel and reduce its costs.
Competitors are driving changes in consumer tastes toward greater product variety and quality. BA has not kept
pace with new product introductions. BA needs to improve its marketing/market research.
Excellent Conclusions
BAs manufacturing expertise gives it an opportunity to sell high quality private label products at a discount to
current prices in the supermarkets.
There is danger in challenging multinational competitors by offering a wider assortment of products in the
supermarket channel. Alternatives for BA include: strengthening its position in the local shop channel; focusing
on profitable customer niches (premium, low price, etc.); targeting only certain product categories like lipstick
and blush for distribution through supermarkets.
The cost to BA of regaining its lost market share is extremely high. BA may be better off preventing further loss
in market share and focusing on improving its current profitability instead of regaining share.
FIRM
EY Round 2
TYPE
Profitability
INDUSTRY
Cosmetics
59
Case 20: Plastics

PROMPT
The CEO of the worlds largest plastic injection molding company has approached your consulting company to help
grow profits. The Company receives a prototype from its clients and has the competency to produce as many as
required. For example, a cell phone designer provides a design for a cell phone, and the company is responsible
for producing millions. The company makes its products faster, better and cheaper than all its competitors. It has a
5% cost advantage, commands a sustained 5% price premium, ships internationally, and has twice the market share
than the number two player.
Currently, the company has a 10% profit margin. The CEO wants your help in growing the profit margin to 20%
within the next two years. What do you recommend?
DESCRIPTION
This case tests two things: an interviewees ability to stay

cool under pressure, and the foresight to question
assumptions. Doubling the profit margin isnt possible
the company is already the best in the world! As the
interviewee suggests ideas and works through a
framework, the interviewer should aggressively shut down
various ideas.
Market
No significant threat from competitors
Too difficult to capture more share from
competitors
Keep pushing until the interviewee finally asks whether the

growth is possible. At that point, press for more
suggestions. Finally when the interviewee is out of ideas,
ask for a recommendation. See if the interviewee suggests
plan that try to grow profitability, or if the interviewee
addresses the fact that the goal isnt feasible.
FIRM
Bain / R1
TYPE
Product
Sells worldwide
Other products are much lower quality
Cell phone customers: are the trendy, up-andcoming players
Profitability
INDUSTRY
Manufacturing
60

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CASEBOOK 1

Casebook 1: Table of Contents

Dry Cleaners in Philadelphia

Car Tires in the United States

Japanese Golf Ball Market

Youve Got Mail!

Rays Streetside Slots

Drakes Deposit Disaster

Make up your mind

Case 1: Flying High

ADDITIONAL INFORMATION (if asked)

This case is designed to test math

Case 1: Flying High

Case 2: Dry Cleaners in Philadelphia

ADDITIONAL INFORMATION (if asked)

After the candidate has written out

The population of Philadelphia is 2MM

***After hearing their approach, ask

Case 2: Dry Cleaners in Philadelphia

0-20 years: 0.5 MM

21-40 years: 0.5 MM

41-60 years: 0.5 MM

61-81 years: 0.5 MM

Number of clothing items dry cleaned per week:

0-20 years: No one dry cleans

Total: 1.9MM articles/week

10 sets of machines * 30 articles/hour * 60% utilization * 12 hr/day * 5 days/week = 10.8K articles/week

Total Demand/Week Total Capacity per Cleaner/Week

TOTAL = ~175 Dry Cleaners in Philadelphia

Case 3: Car Tires in the United States

ADDITIONAL INFORMATION (if applicable)

Case 3: Car Tires in the United States

This is one way to do a bottomup approach. There are several

Case 4: What a Drag

ADDITIONAL INFORMATION (if requested)

This is a case to explain how to

There are 320 million people in the United States

Aside from the size of U.S.

Case 4: What a Drag

CALCULATIONS (do not reveal this to interviewee)

Total people in this age

Smokers in age range

Case 5: Japanese Golf Ball Market

ADDITIONAL INFORMATION (if asked)

After the candidate has written out

The population of Japan is 120M

***After hearing their approach, ask

Case 5: Japanese Golf Ball Market

Assumption: Population is uniformly distributed from 0-80 years old.

Number of golf balls used

SIZE OF GOLF BALL MARKET IN JAPAN = 657 Million Balls

Golfers per Segment

Case 6: RayQ Magazine

ADDITIONAL INFORMATION (if asked)

After the candidate has written out

If they are unclear or you dont

Case 6: RayQ Magazine

Case 7: Youve Got Mail!

ADDITIONAL INFORMATION (if asked)

This is a classic profitability problem.

The interviewee should identify

There is no right or wrong answer

Recommendations should include