ROSS CASEBOOK 2018

CONSULTING CLUB @ ROSS

Table of Contents

S. No. Description Page

1 Introduction & Acknowledgements 3
2 Industry Overview 5
3 Cases 20
4 Additional Resources 72

2
Introduction
We proudly present the Consulting Club at Ross 2018 casebook. This document is meant to provide a brief
overview of the case interview process and a series of practice cases. For each case, we have specified the
type, difficulty level, and industry. Some cases are also specific to certain formats used by the various firms.
We highly encourage you to practice with fellow students, as this method best simulates the case interview
process.

We have updated the industry overview sections of this casebook based on the most recent information
available. The materials in this casebook are intended to provide a starting point for interview preparation,
and we encourage you to build upon the information by doing your own research on industries and
engaging with firms to gain a deeper understanding of their practices.

Best of luck in the upcoming recruiting season!

- Consulting Club Board

3
Acknowledgements
Pulling together the casebook was a mammoth task and we are grateful to everyone who
contributed.

• Arjun Chakraborty (MBA ‘19)

• Caio Brandao (MBA ‘19)
• Gaurav Dhir (MBA ‘19)
• Liam Kraft (MBA ‘19)
• Madison Riley (MBA ‘19)
• Mithil Munshi (MBA ‘19)
• Rachel Sebastian (MBA ‘19)
• Sankalp Damani (MBA ‘20)
• Trevor Stengel (MBA ‘20)
• Varun Haralalka (MBA ‘19)

4
INDUSTRY OVERVIEW
Airlines
Key Ideas Revenue Streams Cost Drivers
§ Consolidation in industry § Ticket sales to economy and § Fuel
§ Low cost carriers and fare business passengers
§ Labor
competition on competitive § Charges for baggage and on-
routes board services (up-selling) § Marketing
§ Online booking and check-in § Cargo transportation § Terminal fees
§ Expansion of domestic and § Credit cards § Insurance/legal fees
international routes
§ Capacity optimization (Load
Factor)

Customer § Leisure travelers – (generally price sensitive)

§ Business travelers – (very important to airlines due to margins and services purchased)
Segments § Freight/Cargo Transportation
§ Internet - online travel sites, airline websites
Channels § Airline sales team: call centers, online, or kiosk
§ Travel management companies (TMCs) serving corporate clients, travel agents
§ Changes in fuel prices have a major impact on profitability
Risk § Macro-economic conditions greatly impact amount of leisure travelers
§ An intensely competitive market with many foreign airlines partly government subsidized
Key § World Price of Crude Oil § Optimization of capacity
Economic § Trips by US residents § Per capita disposable income
Drivers

6
Automotive/Manufacturing
Key Ideas Revenue Streams Cost Drivers
§ Automakers, Original Equipment § New car sales § Labor
Manufacturers (OEMs), § Auto part sales § Materials
Replacement Parts Production,
Rubber Fabrication § Services offered with vehicle § Advertising
purchase § Financing costs
§ Highly capital and labor intensive
§ Financing § Recall costs
§ Extensive competition due to
foreign automakers § Extended warranties
§ Unions § Leasing

Customer § Cars, vans, pickup trucks and SUVs § Commercial purchasers

§ Personal car buyers § Government purchasers
Segments § Rental car companies
§ Automobile dealers
Channels § Secondary automobile market
§ Automotive parts/services outlets
§ Globalization of the industry enables more ease of foreign competition
Risk § Extensive competition impact on already low margins
§ Changes in consumer trends and tastes
Key § GPD growth § Steel prices
Economic § Income growth/disposable income § Consumer confidence index
Drivers § Price of crude § Yield on Treasury note

7
Commercial Banking
Key Ideas Revenue Streams Cost Drivers
§ Consolidation/acquisitions § Loan interest § Wages
§ Increased mobile banking § Loan types § Bad debt expense
§ Channel innovation in digital and § Real estate § Interest rates on deposits
physical channels § Auto § Branch and compliance costs
§ Customer attrition rate § Personal § Overhead costs - paper fee; error
§ Offshoring of call centers, back § Education rate costs for manual processing
office functions § Service Fees
§ Digitization of processes § Spread between interest rate
§ Cross-selling charged and Fed rates
§ Credit cards

Customer § Wealth: deposit balances, income § Size: small businesses and consumers
§ By lifestyle: buying behavior § Age: under 35 adapt to technology better
Segments

§ Savings and loan § Traditional checking § Microfinance

Channels § Credit union § Online banking

§ Change in savings behavior

Risk § Loan default, interest rates and federal funds rates

Key § Consumer confidence § Urbanization § Interest rate

Economic § Household debt § Home and car buys § Government Regulation
Drivers § Employment statistics § Disposable income

8
Health Care
Key Ideas Revenue Streams Cost Drivers
§ Affordable Care Act § Hospital care § Dependent on segment
§ Highly fragmented: Top 50 § Physician and clinical services § Significant costs related to new
organizations account for 15% § Prescription drugs technology implementation
revenues § Often inefficient organizational
§ Nursing
§ Employers pushing health care structures
costs onto employees § Dental services
§ Aging Baby Boomer population § Research, Equipment, Investment
driving increased revenues

Customer § Patients/consumers
§ All generations and segments of the population require different products/services
Segments

§ Hospitals § Nursing homes § Pharmacies

Channels § Doctors offices § Outpatient surgery centers § Medical equipment

§ New legislation (Impact of Affordable Care Act still uncertain)

Risk § Funding availability

Key § Regulation for health & medical insurance § Aging population

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

9
IT / Infrastructure
Key Ideas Revenue Streams Cost Drivers
§ Cloud based platforms vs on- § Hardware sales § Labor
premise infrastructure § Maintenance contracts § R&D/Engineering of
§ User centric IT solutions – IT § Implementation consulting products
depts want to enhance usage and services § Sales/Marketing teams -
productivity huge front-end expense
§ SaaS
§ Open platforms / integrating and § Hardware manufacturing
partnering with other providers

Customer § Enterprise (SME / Large)

§ Consumer
Segments
§ Third party resellers (SHI, CDW)
§ Direct
Channels § Partnership
§ Reseller
§ Startups and new entrants
Risk § Bring your own device initiatives
§ Tariffs
Key § Cyber security § Mobility
Economic § Demand for enterprises to go digital § Data & Analytics
Drivers

10
Non-profits
Intended Impact § Consider tradeoffs
§ Define success criteria § Depth vs. breadth of reach
§ Think big picture (e.g., society, people you are § Quality vs. quantity of program initiative
working for/with § Intended impact should align with strategic goals

Theory of Change § Define timelines, initiative priorities and ownership

responsibilities
§ Define specific actions steps to achieve the intended
Key Ideas

impact

Implementation Feasibility § New infrastructure cost – IT systems, office space

§ Revenue Impact (Self sustaining model, grants) § Indirect costs
§ HR costs: creating new roles, hiring new staff, train § Impact on culture of organization
existing and new staff, modify existing organization
structure § Impact on scale on quality of outcomes

Performance Measures and Reporting Impact § Monitor and modify plan accordingly
§ Measure performance vs. peers § Consider performance during and after
implementation of initiatives
§ Set milestones for financial and operational goals

Case topics
• Growth through existing platforms • Thought sharing to strengthen the industry
• Growth through new partnerships • Growth using technology
• Growth driven by policy changes
Link for sample case:
http://www.bridgespan.org/MediaLibraries/Bridgespan/BridgespanMedia/AboutUs/HR/PracticecaseinterviewFall2007.pdf
11
Oil & Gas
Key Ideas Revenue Streams Cost Drivers
§ Upstream, midstream, § Crude oil § Exploration: seismic studies,
downstream drilling rigs and labor
§ Gasoline
§ PV-10 § Natural Gas § Production: refining
§ Cost per gallon § Pipelines
§ Refining products such as
§ OPEC lubricants § Gas station: oil, labor, insurance,
licenses
§ GDP growth § Gas stations: gasoline, food
§ Renewable energy market, car wash

§ Fracking

Customer § Petroleum refiners § Domestic and commercial users

Segments § Electricity generators § Other industries

§ Retail § Commercial
Channels § Wholesale

§ Access to reserves § Political pressures

Risk § Energy policies § Substitutes/renewable energy
§ OPEC decisions
Key § Government regulation
Economic § International oil production and demand
Drivers

12
Pharmaceutical
Key Ideas Revenue Streams Cost Drivers
§ Affordable Care Act § Insurance payments § Research & Development
§ Aging population § The federal government provides § Manufacturing cost (the largest
§ Patents and generics certain grants to subsidize R&D share of the industry’s costs)
§ Due to significant R&D lead § Marketing costs
§ Research & Development
times revenue is highly volatile § Wages
§ Insurance
§ Seasonality is high on certain § Liability insurance and legal fees
§ FDA products (vaccines and cold
§ Market penetration medicine) and low on other
products (pain medicines)
§ Contract v. in-house salesforce

Customer § Medical patients § Government insurance programs

Segments § Prescribing doctors § Health insurance companies

§ Over-the-counter
Channels § Prescription drugs: Hospitals, pharmacies
§ Mail order pharmacy: Express Scripts, Walgreens
§ Generic manufacturers pose a major competitive threat following patent expiration
Risk § Tariff barriers are no longer a relevant form of protection
§ Unfavorable government healthcare regulations and CMS rates
Key § Median age of population § Insurance and regulatory landscape
Economic § Research and development expenditure § Patent protection
Drivers

13
Private Equity & Hedge Funds
Key Ideas Revenue Streams Cost Drivers
§ Components of the revenue § Wages and profit-sharing § Value creation: sell under-
charge performing assets, optimize price,
§ Administrative costs(regulatory
diversify customer base,
§ Invested capital filings, record keeping, accounting
operations efficiency
§ Transaction and advisory and travel)(sub-bullets)
§ Exit: strategic or IPO
fees § Outsourcing of capital intensive
IT functions for algorithmic § Synergies
§ Carried interest
trading § Stability of cash flows(IRR, NPV)
§ Divestures
§ Targeted returns ~ 40%+
§ Un-invested capital vs. invested
§ Pension funds (largest share)
Investors § Private investors (e.g. High net-worth individuals)
§ Banks, sovereign funds and life insurance companies
§ Large firms focus on deals ~ $1.0B; middle market firms cover deals between $15.0M- $1.0B
Averages in § Average holding period before sale has increased from 3 years to 6 years in the past 15 years
industry § Borrowing can typically range from 65.0% to 85.0% of the purchase price of the firm
§ New regulation -> compliance costs, Rising competition -> decreasing industry fees
Risk § Competition also exists with sovereign wealth funds and corporate buyers
§ Changes in tax structure
Key § Investor uncertainty/Pension demand § Exit opportunities
Economic § Access to credit/interest rates § GDP/Investment returns
Drivers § Regulations

14
Retail
Key Ideas Revenue Streams Cost Drivers
§ Same store sales § Women’s apparel sale § Cost of Goods Sold (74% of
costs)
§ Sales per square foot § Drugs & cosmetics
§ Inventory turn-over § Furniture & household appliances § Transportation
§ Wages
§ Seasonality/recessions § Children apparel
§ Trends § Men's apparel § Rent and utilities
§ Marketing
§ Toys
§ Footwear
§ Misc. items

Customer § The industry consumer-oriented and, due to the spectrum of products, its markets are generally
segmented into different income, demographics and age
Segments

§ Department Stores/Big box retailers § Demographic retailers

Channels § Discount retailers § Shopping malls

§ Changes in disposable income § Easy entry invites competition

Risk § Demand and supply issues
§ Overstock
Key § Consumer Confidence index § Gross Domestic product/inflation
Economic § Per capita disposable income § Households > 100,000 income(luxury goods)
Drivers § International Export/Import § Commodity prices(eg : gold price for jewelry)

15
Telecommunications
Key Ideas Revenue Streams Cost Drivers
§ Deregulation led to spur of new § Voice calls § Infrastructure
companies § Additional lines/family plans § Wages
§ Bottlenecks: High capital, scarce § Text and image communication § Marketing and advertising
operating skills and management
experience § Data subscriptions
§ Shift from telephones to internet § Accessories
based services for mobile
§ Bundling of services

§ Residential and Small Business (Price sensitive)

Customer § Large multinationals (Price insensitive)
Segments
§ Retail stores - carriers and mass retailers
Channels § Online

§ Rapid development of technology

Risk § High exit barriers
§ Systems not reusable across industries
Key § Investment in rising technology services
Economic § Number of subscriptions to additional services
Drivers § Number of broadband and mobile internet connections

16
Utilities
Key Ideas Revenue Streams Cost Drivers
§ Increase in energy consumption § Transmitted electricity: base load § Purchased power accounts (nearly
and intermittent electricity half of total costs)
§ High investment costs and
regulations § Base load (95% of industry) § Infrastructure
§ Industry structure disintegrating § Coal, natural gas, nuclear, other § Wages
into smaller supplier segments § Intermittent: renewable energy § Marketing
§ Seasonality § Maintenance contracts
§ Gov. incentives for sustainable
initiatives
§ Bundling services w/renewable
§ Commercial and Industrial
Customer § Residential
Segments
§ Transmission lines/pipelines
Channels § Upstream electricity generators

§ Clean energy threatens the future of traditional power generation methods

Risk § Seasonal demand leads to uncertain estimates
§ Energy efficient appliances decrease consumption
Key § Economies of scale
Economic § Industrial production index
Drivers § Climate/seasonality

17
CASE INTERVIEW BASICS
Case Structure
Understand the Develop Form
Analyze
Question Framework Recommendation
(~20 minutes)
(~1-2 minutes) (~2 minutes) (~1-2 minutes)
••Listen! ••Ask for a moment to ••Refer back to the ••State your
••Paraphrase the problem organize your thoughts framework as you move recommendation as a
statement to make sure ••Develop 3-4 areas to through each of the direct response to the
you understand the analyze along with a few main areas problem/objective – it
situation and objectives tailored sub-topics ••Use one sheet of paper should not come as a
••Ask 1-2 clarifying ••Structure the per topic – think of the surprise to the
questions around the topic framework in a logical case as presentation interviewer
and/or metrics to be used fashion – it should open deck ••Incorporate key
for the analysis with the most important ••Tie back each piece of metrics/findings as a part
••Make sure you have all the topic and provide the analysis to the main of your recommendation
information you need to interviewer with a objective/problem ••Include risks, mitigation
develop a framework roadmap of where you statement of risks and next steps
••State an initial hypothesis plan to take the case ••Walk through the
which you plan to test ••Engage interviewer by calculations /analysis
using your framework turning framework ••Drive insights whenever
towards them and possible!
explain framework,
including relationships
between various buckets

19
CASES
Cases
S. No. Case Name Type Difficulty
1 Pressing Parts Problems Cost Reduction Hard
2 Hospital Mega Merger M&A Medium
3 Setflix or Chill Market Entry Easy
4 Retailco.com Profitability Medium
5 Zulu-Lemon Cost Reduction Medium
6 Hot Tiles Market Entry Medium
7 Vegan Bowl Market Entry Medium

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Case 1: Pressing Parts Problems
Industrial Goods | Operations & Cost Reduction

Case Prompt
Our client is a small auto-parts manufacturer (Name: APM Co.) with roughly $350M in revenue
and operations on two continents. The company has experienced extreme growth in recent
years, and the CEO is becoming pressured to improve profit margins to be more in line with
competitors. She want us to help identify and implement improvements.
How would you approach this problem?

Interviewer Guidance
This will be an interviewer led case. After prompt, let interviewee ask questions and then probe
for hypotheses on next steps.
After that, move into Exhibit 1.
Candidate strength can be measured by number of savings initiatives they work through.
Additionally, handling financials will be a key skill in this case.

Concepts Tested Accounting, Operations, Business Judgement, Mental Math

22
Case 1: Pressing Parts Problems
Industrial Goods | Operations & Cost Reduction

Clarifying Information Possible Framework

• Prices & quantities are contractually set in advance. Given that this is a cost reduction case, possible
Company has little-to-no ability to improve top line framework could look at operational buckets and
in short run. problems within those buckets. For example,
• Do not have a financial target for improving margins, Manufacturing:
want as much as possible as fast as possible
• Maintenance/Downtime,
• Company has grown through both organic and
inorganic means. Because company has grown so • Scrap Rates
quickly, staff have had limited time to share best • Materials/Sourcing
practices and analyze operations for flaws. They are
rushing to get orders out. Logistics:
• Company has plants in Michigan, Tennessee, and • Non-optimized order quantities
Tianjin China. MI + TN sell directly to OEMs. CN
• Redundant supply routes (i.e.. not consolidated)
does some such sales, but mostly still building smaller
components that are sold to manufacturers. • Selection of expensive routes and modes
• Primary customers are major US OEMs for MI + Procurement:
TN, and Tier 1 or Tier 2 suppliers for CN.
• Expensive sourcing
• Typically a product will run at contractual levels for 5
years. After company produces small batches for • Poor demand forecasting
warranty. • Lack of balance between inventory and freight costs

23
Case 1: Pressing Parts Problems
Industrial Goods | Operations & Cost Reduction

Interviewer Guidance
This is an interviewer led case. You should ask the candidate to brainstorm and test their knowledge before confirming
which is the right direction. The case has the following flow.
• Into & Build framework
• Present high level financials
- Candidate should identify which plant they want to pursue. A strong candidate will have ideas of where they want
to focus in that plant right away.
- If candidate wants to focus on MI Plant, push them to see if they notice R&D. If not redirect to TN.
- Ask candidates to calculate Gross Margin and Net Margin if desired.
• Present financials for TN plant if needed.
- Candidate should note four main areas for improvement: scrap, freight, overhead, workers comp/safety. If they
want to focus on labor, overhead, or workers comp, just note that it will take a few years to adjust due to union
negotiations.
• Present either scrap (Ex3) or freight (Ex4) exhibit depending on where candidate wants to start. Note more scrap has
the higher “sticker price” so it is a logical place to start.
- Further guidance for those exhibits is provided on the slide directly after the exhibit.
A very strong candidate will get through both scrap and freight problems. An extremely strong candidate will also bring in
the OH and Workers Comp issues.

24
Case 1: Pressing Parts Problems
Industrial Goods | Operations & Cost Reduction

Exhibit 1 – Company Financials by Manufacturing Facility

25
Case 1: Pressing Parts Problems
Industrial Goods | Operations & Cost Reduction

Exhibit 1 – Notes for interviewer

Intended to make it easier for the interviewer to
see the key disparities between the plants.

Note plant is in China, hence lower labor

costs and lower overhead. US branches have
more robust marketing & admin.

These four items together highlight a plant

struggling relative to others. This will be the
bulk of the case. Ask for ideas before giving
next exhibits.

Note this plant is the primary R&D center,

so while “profits” may be lowest, this plant
actually performs relatively well when you
factor out the R&D, which is critical for the
company.

26
Case 1: Pressing Parts Problems
Industrial Goods | Operations & Cost Reduction

Exhibit 2 – Financials for Tennessee facility by line

27
Case 1: Pressing Parts Problems
Industrial Goods | Operations & Cost Reduction

Exhibit 3 – Cumulative Scrap Rate by Manufacturing Step

Simplified Manufacturing Process for Line A

Coat Cure Trim Attach Re-form Clean

Contribution to Total Line Scrap by Step

2.5% 3.75% 1.25% 90% 2.5% 0%

Investment to Reduce Scrap Spend by 80%

2.5M 2.5M 1.5M 5.5M 4.0M N/A

28
Case 1: Pressing Parts Problems
Industrial Goods | Operations & Cost Reduction

Exhibit 3 – Interviewer Guidance

Clear to see that the “Attach” step is causing issue. If the interviewer desires to add context for interviewee, they can say...

“In the attach process we attach a fragile part to another subassembly. Dong so requires a precise amount of pressure. The
machine we use to do this is becoming less precise, so the applied pressure varies and results in high scrap. That 5.5M
represents the purchase price for a new machine. Given the high price tag, is it a good idea?”

Math to calculate…

Product is in year 1 of 5. No discount rates.

Attach accounts for 90% of Line A scrap = .9 * 3.7M = 3.33 M

If invest, it would reduce this scrap by 80%. Now 3.33*.8 = 2.66 M
Payback period = 5.5M/2.66M = 2.07 years or just over 2 years
This is a good investment. Should move forward.

29
Case 1: Pressing Parts Problems
Industrial Goods | Operations & Cost Reduction

Exhibit 4 – Tennessee Line A: Supply Chain Network & Spend by Segment

$170k
$460k
$80k
$380k

$1,800k
$320k

Tennessee Facility
Supplier
*Chinese route accounts for 100% of 1.1M expedited freight for Line A
30
Case 1: Pressing Parts Problems
Industrial Goods | Operations & Cost Reduction

Exhibit 4 – Interviewer Guidance & Data

When interviewee digs into the China to Tennessee segment provide…
• Factory in China is a relatively new JV and supplies a component for Line A
• High spend is because products are shipped by expedited air (think overnight shipping)
• Line is currently running “hand to mouth” – they produce and ship right away because the line barely has capacity to
meet demand. Accounts for 100% of expedited freight.
Then ask how interviewee would think about reacting to this? Possible answers include
• Increase capacity
• Resource to another facility (If they ask… Can’t - Takes too long – OEM’s have to approve)
• Increase hours worked by employees (If they ask… Can’t - Already working close to 24/7)
• Outsource to another facility to cover excess demand (If they ask… possible but client concerned about IP)
After brainstorming, provide the following options to increase capacity and reduce freight spend.

Note: inventory levels increase because

shipping frequency goes down. Current
every 2 days, Air Scenario every 1-2
weeks, Sea Scenario every 1-2 months.

When they ask, inventory holding cost is 20% and (again) product just finished year 1 of 5. Assume investment has no lead
time. Math is 12*Change Monthly Spend + .2*AvgInv. Rounding acceptable.
(150,000-40,000)*12 - .2*(2,500,000 – 50,000) = ~1.3M - ~.5M = ~ 8M / year

31
Case 1: Pressing Parts Problems
Industrial Goods | Operations & Cost Reduction

Recommendations Risks Next Steps

APMC can immediately enact Risks include APMC should:
changes to improve margins on
Line A in Tennessee by … 1. Movement to sea shipments 1. Complete “attach machine”
on China line increase purchase
1. Investing in a new “attach inventory, increasing the risk
machine” which will reduce of mark downs or 2. Invest in Chinese JV capacity
scrap by $2.6M a year obsolescence to make switch

2. Investing in capacity at their 2. Sea shipments could increase 3. Ensure shipping insurance in
Chinese JV so as to reduce the risk of lost or damaged place
expedited freight and switch goods
4. Explore TN management
to sea shipments, saving
3. Wide spread problems at training (or improvements)
$.83M a year.
Tennessee could indicate 5. Examine opportunities to cut
leadership challenges,
overhead in TN
suggesting these are only
short term fixes (note OH & 6. Examine extremely high
Workers Comp = indicator workers comp numbers at
of very strong candidate) TN

32
Case 2: Hospital Mega Merger
Healthcare | M&A

Case Prompt
In the face of increasing healthcare costs and decreasing margins our client, the board of
trustees for St. Scorekeepers Hospital, is exploring whether a merger would combat market
forces. Another local health system also located in Washtenaw county, Mount Ricks Hospital, is
a potential target and our client would like to evaluate whether a merger would be beneficial to
both parties to combat market forces. What are your thoughts?

Interviewer Guidance
The case will be focused on identifying what the current NOI of each hospital is, and whether
by coming together the joint system can hit the target NOI.
Interviewer guidance may be necessary to help provide context and explanation on healthcare
related concepts. However, a superior candidate will not need such guidance.

Concepts Tested General industry knowledge, M&A synergies, and heavy quantitative

33
Case 2: Hospital Mega Merger
Healthcare | M&A

Clarifying Information Calculation Assumptions

• Both hospitals have 2 different hospital facilities, all Revenue
of which are in Washtenaw county • SK saw a total of 150,000 patients last year, RI saw
• St. Scorekeepers Hospital has the following of 200,000 patients
departments: emergency, cardiology, OBGYN, and • Avg. revenue/patient – SK=$150 and RI = $100
orthopedics • Total Revenue (SK) = 150,000 x $150 = $22.5M
• Total Revenue (RI) = 200,000 x $100 = $20M
• Mount Ricks Hospital has the following departments:
emergency, radiology, dermatology and oncology Costs
• Brainstorm: Variable costs and fixed costs • VC: Scorekeepers and Ricks is both X% of average
revenue per patient
- FCs: capital expenditures, employee salaries
and benefits, building maintenance, and • SK = 150,000 x ($150 x 20%) = $4.5M
• RI = 200,000 x ($100 x 15%) = $3M
utilities.
• FC: Scorekeepers and Ricks is both X% of average
- VCs: health care worker supplies, patient care revenue per patient
supplies, diagnostic and therapeutic supplies, • SK = 150,000 x ($150 x 40%) = $9M
and medications • RI = 200,000 x ($100 x 30%) = $6M
- Overhead: legal, IT, HR, and finance • Overhead: SK = $4.5M and Ricks = $9.25M
departments • NOI
- SK = $TR – (VC + FC + OH) = $4.5M
- RI = $TR – (VC + FC + OH) = $1.75M

34
Case 2: Hospital Mega Merger
Healthcare | M&A

Exhibit 1 – Historical Revenue per patient

$300

$250

$200

$150

$100

$50
1998 2003 2008 2013 2018
St. Scorekeepers Hospital Mount Ricks Hospital Regional Competitor National Trend

35
Case 2: Hospital Mega Merger
Healthcare | M&A

Exhibit 2 – Hospital Facilities

Legend
St. Scorekeepers
Hospital

Mount Ricks
Hospital
Competitor –
BTB Health
System

Note: The red shaded area represents Washtenaw county

36
Case 2: Hospital Mega Merger
Healthcare | M&A

Exhibit 3 – Service Line Breakdown by Hospital

100%

Orthopedics Oncology
80%

60%
OBGYN Dermatology

40%
Cardiology Radiology
20%
Emergency Emergency
0%
St. Scorekeepers Hospital Mount Ricks Hospital

37
Case 2: Hospital Mega Merger
Healthcare | M&A

St. Scorekeepers and Mount Ricks Hospital Income Statement (Not to show candidate)

Cost Saving Opportunities

• Revenue would increase by 10% overall due to ability to collectively meet more patients needs by having a wider range
of departments. Increased ability to cross-refer patients to other facilities
• Economies of scale would bring down variable costs (i.e. materials) by 15%
• By consolidating facilities/functions (i.e. HR, IT, Finance, legal etc.), will save 30% on
• No impact to fixed costs would be realized

38
Case 2: Hospital Mega Merger
Healthcare | M&A

Insights – Exhibit 1 Insights – Exhibit 2

• Average revenue has been decreasing both at a • While two of the hospitals are spread out, two
regional level and national therefore NO ONE are very close to each other, presenting
is immune to market forces potential overlapping patient populations
• Should push candidate to want to further • Candidate may hypothesize that proximity of
explore merger potential two hospitals might also provide opportunity
provide potential opportunity to consolidate
some facilities

Insights – Exhibit 3
• There is overlap between the services that each hospital system offers, but ONLY in the emergency
department
• The candidate should infer that there may additional revenue generated if the two hospitals came
together due to being able to offer a wider range of services and thereby retaining more patients

39
Case 2: Hospital Mega Merger
Healthcare | M&A

Recommendations Risks Next Steps

Recommend merger for the St. • Regulation roadblocks • Announce merger and prepare
Scorekeepers Hospital and Mount meaning merger might not for regulatory review
Ricks Hospital systems. The new receive approval
health system would represent a • Reach out to insurance
$9.5M in cost saving synergies and • Ability to logistically pull companies (i.e. payors) to try
a new health system generating complicated merger to negotiate a better
$15.75M in net operating profit. reimbursement rate
• Erosion of brand equity
• Develop branding and
• Potential for culture class marketing strategy to inform
between employees and patients of new enhanced
clinicians of the two health future-state health system
systems

• Does not include transaction

costs

40
Case 3: Setflix or Chill
Media | Market entry

Case Prompt
Our client is a major US media and entertainment company that has over 50 years of experience
in making Hollywood. While its movies continue to dominate Setflix charts, tv series have been
gaining in market share. The client has hired you to advise if they should invest in creating a
Setflix focused division for series programming or chill, and if so- which category should they
target first.

Interviewer Guidance
The case will involve brainstorming on possible levers for entering the TV series market. After
the candidate has prepared a framework to analyze the problem, hand Exhibit 1. This will lead
the candidate to calculating the expected revenue from the show. The case will include
mathematical calculations to calculate cost of production and expected NPV.
The final recommendation should include launching an action tv series.

Concepts Tested Industry knowledge, quantitative analysis, NPV calculation

41
Case 3: Setflix or Chill
Media | Market entry

Clarifying Information Guide to case

• Region: Global Part 1: Brainstorming
• Goal: 14% R.O.I • The candidate should first put together an exhaustive
• Value Chain: End to End; list of all levers to include while considering this
decision. Good answers should include:
- Creation/Ideation
- Production - Market (Size, Genre, Competition)

- Distribution - Financials (Revenue, Cost, Opportunity Cost)

• Segment: All - Strategic (Competency, Management buy in,
Brand dilution)
• Competition: Major Hollywood production houses
Part 2: Hand Exhibit to interviewer
• The candidate should be able to sort through the
exhibit and calculate that action movies are more
profitable than horror and comedy movies
Part 3: Quantitative discussion
• The candidate should be able to calculate the costs
of production, and analyze the NPV of the
investment.

42
Case 3: Setflix or Chill
Media | Market entry

Exhibit 1

Demographic # Setflix users % Horror % Comedy % Action

(Million) Conversion Conversion Conversion
1- 16 years 30 30 35 35
16-30 years 50 20 35 45
30-60 years 60 20 40 30
60 + years 18 10 50 40

Category Name <40 M views; pay 40-60M views; >60M views; pay
per view pay per view per view
Horror .16 .18 .2
Comedy .1 .12 .14
Action .12 .16 .18

43
Case 3: Setflix or Chill
Media | Market entry

Math Solution
Part 1: Revenue Calculations

The candidate should calculate the total expected views and revenue for comedy and action
category (horror is visibly lower and shouldn’t need to be calculated)
Total Views by category = (# Setflix users) * (% conversion)

Comedy:
1-16: 11.5M; 16-30: 17.5M; 30-60: 24M; >60: 9M. Total = 62.1 M views

Action:
1-16: 11.6M; 16-30: 22.5M; 30-60: 18M; >60: 7.2M. Total = 59.3 M views

Total earnings: Views * Payout index

Comedy earnings: 62.1M * .14 = $8.68M
Action earnings: 59.3 * .16 = $9.48 M (Action> Comedy)

44
Case 3: Setflix or Chill
Media | Market entry

Math Solution
Part 2: Return on investment calculations

The candidate should be given the following cost (million) and assume 20% discount rate.
Writing/Ideation cost: 1.8
Production cost: 6.6
Casting cost: 3
Marketing Cost: .8/ year
SG&A : 1.2/year

Candidate should calculate one time cost = $11.4M and annual cost = $2M.
Expected annual revenue = $9.48M
NPV =( - One Time Investment ) + Annual Profit / Discount Rate
NPV = -11.4 + (9.48-2)/.2
NPV = $26M

45
Case 3: Setflix or Chill
Media | Market entry

Recommendation
• Our client should go ahead and create a Setflix specific for TV series. The NPV of future
cash flows is $26M.
• The client should launch with an action series as it is expected to earn the highest revenue at
$9.48M
• Risks involve opportunity cost, cannibalization, lack of competency in TV series
• Next steps could include: Finding script writers for action TV series, managerial buy in to
launch new division

46
Case 4: Retailco.com
E-Commerce | Profitability

Case Prompt
Your client is a large online retailer, Retailco.com. They sell a wide range of products online
from electronics to apparel, etc. They have witnessed strong growth and profitability, however
over the last 12 months their operating margins have been thinning. The TV business accounts
for a large share of the business and company managers think there is an issue in this division.
The CEO has engaged us to identify the cause and make suggestions to improve profitability.

Interviewer Guidance
The case will be focused on identifying that costs have increased over the time horizon. The
case focuses on shipping costs in particular.
Once candidate identifies the main driver, the case moves towards identifying the reason behind
increase in ship costs and making suggestions/ recommendation on the path forward.

Concepts Tested General industry knowledge, brainstorming, quant skills, etc.

47
Case 4: Retailco.com
E-Commerce | Profitability

Clarifying Information Guide to case

• Retailco.com is a major online retailer that sells all • As it is a profitability case, the interviewee should
types of products (think like Amazon.com) directly note that revenue and costs drive profits
to consumers in the United States.
• Revenue is not an issue in this case, but costs are:
• No particular target ROI/ profitability or time frame interviewee should be able to brainstorm the major
for goal. ASAP action needed costs for an online retailer. Only provide Exhibit 1
after comprehensive brainstorming
• Various retail-specific terms will be used throughout
the case. Interviewer should provide guidance upon • Interviewee should identify increase in shipping costs
request with definitions as the major driver behind cost increases. As next
steps, interviewee should identify that we need to
• In-region shipping: Shipping product from
dive into deeper analysis of shipping costs
warehouse in the same region in which the order was
placed (e.g. servicing a Mid-West customer order • Brainstorm reasons behind increase in shipping costs
from a Mid-West warehouse) (FedEx, etc. have increased rates, larger packages
shipped, packages shipped longer distances)
• Out-region shipping: Shipping product from
warehouse in a different region (e.g. servicing a Mid- • Longer distance shipping is the key reason behind
West customer order from a West Coast warehouse) the increase in shipping cost. Provide Exhibit 2 only
after sufficient brainstorming

48
Case 4: Retailco.com
E-Commerce | Profitability

Exhibit 1 – Average cost structure of a TV sold by Retailco ($)

90
80
70
60
50
40
30
20
10
0
2015 2016 2017 2018
COGS Shipping Holding Other

49
Case 4: Retailco.com
E-Commerce | Profitability

Exhibit 2 – TV units shipped by region type (%)

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2017 2018
In-region Out-region

Total TVs shipped = 100k

50
Case 4: Retailco.com
E-Commerce | Profitability

Exhibit 1 – Interview Guidance Exhibit 2 – Interview Guidance

• Share after sufficient brainstorming on various types • Before providing data, brainstorm with the candidate
of costs for an online retailer on possible reasons for increase in shipping cost over
• All costs provided are for 1 standard TV the last one year

• Interviewee should identify that all other costs are • Only after candidate identifies that longer distance
relatively stable, except shipping costs (increases shipping is a reason, then provide the information
from $15 to $20 in 1 year) • 2017 = 80K in-region and 20K out-region
• Holding cost is the cost of holding 1 unit of TV
• 2018 = 60K in-region and 40K out-region
inventory in the warehouse for 1 week ($5/ week in
this case) • Candidate should identify that out-region shipping
• Other costs include miscellaneous items, returns, has increased and move towards individual shipping
rates for the two types of regions
damages, etc.

51
Case 4: Retailco.com
E-Commerce | Profitability

Solution after Exhibit 2 Recommendation

• Upon request, provide in-region and out-region • Shipping costs have increased due to more out-
shipping rates to the candidate region shipping as it is more expensive
- $10/TV for in-region • Client should hold more inventory (up to 5 weeks
- $35/TV for out-region worth of demand) in warehouses to avoid issue of
out-region shipping
• Changing mix is increasing shipping cost on avg.
• Also brainstorm on various risks and next steps
• Ask candidate to brainstorm ideas for moving
towards more in-region shipping as compared to out-
region shipping
- (improving product placement, forecasting
demand, holding more inventory, etc.)
• Push candidate towards the idea of holding more
inventory to solve this problem
• Difference of $25 (35-10) for each TV that is
shipped out-region
• Candidate should recall holding cost of $5/week
from Exhibit 1
• Calculation = $25/$5 = 5 (the retailer can hold up to
5 addl. weeks of inventory vs shipped out-region)

52
Case 5: Zulu-Lemon
CPG | Cost Reduction

Case Prompt
Our client is a major US fitness apparel manufacturer that has recently lost market share due to
rising costs. Due to lower margin and company earnings, activist investors have threatened to
place the company for sale. The CEO feels that the true potential will be lost if the company is
sold to a large retail house and has hired you to help figure out its strategy. First, we want to
make sure we’ve identified all potential cost saving levers.

Interviewer Guidance
The case will involve brainstorming on reasons for declining profits. After candidate has
prepared an exhaustive list of savings opportunities, hand Exhibit 1. This will lead the candidate
to arrive at changing the fabric composition of the apparel. Include mathematical calculations to
calculate cost composition of apparel and expected impact of changing composition of fabrics.
Final recommendation to include changing composition and expected increase in profit margin.

Concepts Tested Industry knowledge, Chart reading, Quant analysis

53
Case 5: Zulu-Lemon
CPG | Cost Reduction

Clarifying Information Guide to case

• Region: US only Part 1: Brainstorming
• Value Chain: End to End; • The candidate should first put together an exhaustive
- Manufacturing list of all cost saving strategies for the client. Good
answers should include:
- Distribution
- Procurement/Fabric cost
- Retail
- Production cost
• Segment: Fitness; Yoga - Distribution cost
• Customer: High end; currently retailing leggings at - Marketing cost
$80 - Store operations/personnel cost
• Products: Workout gear Part 2: Hand Exhibit to interviewer
• Competition: Pioneer in the industry, recently 2 new
• The candidate should be able to sort through the 2
companies have been gaining market share
tables and identify that our product has higher
• Volume: 5 million (per year) composition of Material 1, and reducing to Material
2 will reduce cost.
Part 3: Quantitative discussion
• The candidate should be able to calculate the net
impact of changing the composition to be $25.4M

54
Case 5: Zulu-Lemon
CPG | Cost Reduction

Material composition and additional data

Name Material 1 Material 2 Material 3 Material 4

(%) (%) (%) (%)
Zulu lemon 20 33 30 17
Over Armor 19 21 28 32
Crooks 22 20 27 31
* Total material composition (100% = 150g)

Material Name Largest exporter Import duty Price Hazardous

(%) ($/kg)
Material 1 India 14% 140 No
Material 2 China 16% 240 No
Material 3 Brazil 15% 220 No
Material 4 Peru 16% 110 No

55
Case 5: Zulu-Lemon
CPG | Cost Reduction

Math Solution
The candidate should calculate the reduction in price caused by decreasing Material 2 by 12% and increasing Material 4 by
15%
Material 2:
Total decrease in weight of Material 2 = (Change in percentage) * Total weight
= (33-21%) * 150 = 31.5g
Total $ reduction due to Material 2 = (Total decrease in weight) * Price
= 31.5 * 240 / 1000 = $7.56
Material 4:
Total increase in weight of Material 4 = (Change in percentage) * Total weight
= (32-17%) * 150 = 22.5g
Total $ reduction due to Material 4 = (Total increase in weight) * Price
= 22.5 * 110 / 1000 = $2.48
Net change in price = $(7.56-2.48) = $5.08
Total impact = Net savings * Volume = 5.08*5M = $25.4M

56
Case 5: Zulu-Lemon
CPG | Cost Reduction

Recommendation
• Zulu lemons current declining profit margin is due to its high cost of raw materials. By
changing the composition of its fabric, it can receive cost savings of $25.4M.
• Risks involve loss of quality/customer, down fall of trade relations with Peru, supply of
Material 4, investments into change in production
• Next steps could include: Prepare sample apparel with new composition, Research ability to
procure increased volumes of material 4

57
Case 6: Hot Tiles
Industrial Goods | Market Entry

Case Prompt
Client Co. manufactures wooden boards (installed on walls of houses) and is thinking into the
Hot Tiles product category. Hot Tiles are tiles used to make BBQ decks in the backyards of
houses. They want us to help them understand if they should enter this market.

Interviewer Guidance
The case will be focused on 1) sizing the BBQ deck tile market 2) identifying operational levers
(demand side and supply side) that make this expansion viable
Interviewer guidance may be necessary to help provide context and data for market size
estimation. However, a superior candidate will be able to combine the quantitative as well as the
qualitative market drivers to reach an answer.

Concepts Tested Market sizing, identifying cost synergies, marketing levers

58
Case 6: Hot Tiles
Industrial Goods | Market Entry

Clarifying Information Guide to case

• Client has been in the house-board business for 20 • Start with market sizing. Candidate should identify
years in the US only that the market is big enough. The real question is if
Client Co can secure ~$1B in this market or 15%
• Expansion target: $1B in sales in Year 1; profitability
market share.
is not a focus
• What levers should be analyzed to understand if 15%
• No direct competitor data in the Hot Tile segment;
is feasible -> candidate should use the operational
we know there are substitute tile products in the
value chain to identify opportunities that will support
market called Super Hot Tiles
the market entry decision
• Client Co currently sells house-boards through big
• Candidate should identify that the product segment is
box retailers such as Walmart, Home Depot, Costco
1) Discretionary expense 2) Very expensive (based on
etc.
calculations). Hence, significant risks and volatility
would stem from the product characteristics

59
Case 6: Hot Tiles
Industrial Goods | Market Entry

Data to be given (if asked) Calculating assumptions

• 50% of US households (HH) are living in a house Quantity
with a backyard (and not in high-rises, apartments, • Population: 300M
condos etc) • #HH: 100M (#person/HH=3)
• #HH living in houses = 50%*100M=50M
• Factors that candidate should cite -> Income,
• #HH (old customers) = 30%*50M=15M
Location, Weather
• #HH (new customers)=70%*50M=35M
• %HH with houses and existing BBQ decks – 30% • #old customers= Total old customers/Replacement
rate=15M/15=1M
• Replacement period of HH with existing BBQ decks
• #new customers = Total new customers*Penetration
– 15 years
rate = 1%*35M=0.35M
• Expected conversion rate of new customers (HH • Total customers =1.35M
with houses and no existing BBQ deck) – 1% • Total customers adjusting for substitute tiles =
25%*1.35M= ~340K
• Hot Tile vs Super Hot Tile data in Exhibit 1
Price
• Price per tile is $100 per sqft • Avg size of a deck = 10ft*10ft = 100 sqft
• Size of a tile = 0.5 sqft
• Tile dimensions: 1ft x 0.5 ft
• #tiles=200
• Total price=200*100=$20000
Total opportunity = $20K *340K = $6.8B
Client Co target share = $1B/6.8B = ~15%

60
Case 6: Hot Tiles
Industrial Goods | Market Entry

Push candidate to following questions Information for candidate

Raw Materials • Raw materials are the same as current (Wood).
However, an extra layer of engineering is required on
• How different are the Hot Tile raw materials from
top of the raw materials to make it heat resistant.
current raw materials?
This cost is relatively small.
• Can our current suppliers be used?
• Exhibit B
Manufacturing
- Use Plant 1 (Plant 2 focuses on house boards
• How do we manufacture our current products? and Plant 3 will likely cater to regions of lower
demand of BBQ decks)
• Can we use our current capacity?
Distribution • Candidate should remember initial information about
Client Co having existing relationships with big brand
• Do we have distribution capabilities?
retailers
Marketing/Branding
• Strong brand image; known for reliability
• Does our client have a good level of consumer
loyalty in its current segment
• How is the brand perceived

61
Case 6: Hot Tiles
Industrial Goods | Market Entry

Exhibit 1 – Historical sales of Hot Tile vs Super Hot Tiles

Year Hot Tiles Super Hot Tiles

2013 547 1585
2014 406 1177
2015 940 2914
2016 913 2831
2017 556 1556

• Super Hot Tiles on average have 3X the sales of Hot Tiles. If prices are constant, then we can conclude that the Hot
Tile Sales penetration in the total addressable market is 25%
• This ratio should be used to narrow down the actual addressable market opportunity
• Additionally, candidates can investigate into why these Super Hot Tiles have higher sales
- Answer: These tiles (because of their larger heat resistant properties) can be used for more applications

62
Case 6: Hot Tiles
Industrial Goods | Market Entry

Exhibit 2 – Manufacturing utilization rates

• Plant 1 had a large capacity expansion in 2016

• Plant 2 is the central hub for house-board products and has been absorbing increasing regional sales
• Plant 3 catering to regions with lower house sales
• Same factories can be used for producing tiles and housing boards

63
Case 6: Hot Tiles
Industrial Goods | Market Entry

Recommendations Risks Next Steps

Recommend Client Co to enter • Post housing market crash, • Understand key differentiation
Hot Tile business as there is a people’s propensity to spend between Hot Tiles and
total opportunity of $6.8B. Given on high-value household substitute tiles (is it product
their capabilities in raw materials, assets is low (Price = $20K quality, brand?)
manufacturing, branding and which is very expensive)
distribution -> 15% marker share • Close all agreements with raw
is achievable. • Product is a discretionary material partners to keep
expenditure so volatility can upstream costs low
be expected
• Develop branding and
• Substitute deck tiles prove to marketing strategy for new
me more cost effective customers (potentially
bundling products at point-of-
• Lower house (with backyard) sale)
sales in the future driven by
millennial preference patterns • Develop service strategy for
(not owning cars or houses) old customers (to shorten
replacement rate)

64
Case 7: Vegan Bowl
CPG | Market Entry

Case Prompt
Our client is a start-up based out of Ann Arbor with a proprietary recipe of a vegan bowl.
These bowls are to be sold as a pack of seven units, each unit a meal. The CEO of the start-up
is willing to launch this product in metropolitan areas that can provide a margin of at least 40%
and wants to know if he should launch this new product line or not.

Interviewer Guidance
The case is focused on the market estimation for vegan bowls in the USA and the best cities to
target in this entry strategy. The candidate should calculate the estimated margins for each city
and decide where to focus.
Interviewer guidance won’t be necessary to help provide additional context to the industry.

Concepts Tested General industry knowledge, market estimation, match calculations

65
Case 7: Vegan Bowl
CPG | Market Entry

Clarifying Information Guide to case

Industry Characteristics/Market Economics Revenue
• Our client will focus mainly on traditional brick-and- On the revenues side, the candidate will have information
mortar distribution channels, with a partner on the number of vegan people per Metro area and the
distribution company. WTP, being able to calculate the market size of each
• The retailer and distributor’s margin is 35% in total. Metro Area:
• We currently have three different flavors: WildBeet, (Population x Vegan Index x Price x Expected
EnergyUmami and FireSprout, with plans to expand Consumption per client)
the product line if there is enough market response
Costs
to the initial products.
• Our client’s main focus is the US market, targeting Candidates will be given the cost estimate of a pack of 7
bowls ($4.85).
areas where the vegan market is expanding.
• There are no current significant individual Additionally, there is an extra variable cost related to
competitor in the markets we are launching. delivering the bowls to each different city. This
calculation will take place only when the candidate has
• Brainstorm 1: What would you look for in a city in both exhibits.
which you are launching such product?
Margins
• Brainstorm 2: Which could be potential
metropolitan areas to target? With both revenues and costs for each city, the candidate
should be able to calculate margins and answer the case.

66
Case 7: Vegan Bowl
CPG | Market Entry

Exhibit 1: The company’s cost structure

Average Cost per Pack

Packaging

Utilities
Retailer’s margin: 40%
Labor

Raw Materials

$0.00 $2.00 $4.00 $6.00 $8.00 $10.00 $12.00

Distance from Ann Arbor Distribution cost per bowl

Within 100 miles of Ann Arbor $0.75
From 100 to 300 miles from Ann Arbor $1.50
From 300 to 500 miles from Ann Arbor $1.75
From 500 to 700 miles from Ann Arbor $2.50

67
Case 7: Vegan Bowl
CPG | Market Entry

Exhibit 2: Metropolitan areas which our current distributors access

Annual
Vegan CAGR of Vegan Distance from Average WTP
Metro Area Population consumption of
Index* Index (2013-18) Ann Arbor for a bowl
bowls per customer

Detroit 4,200,000 1.5 12% 40 7.5 30

Chicago 9,400,000 2.9 6% 240 8 58

Milwaukee 1,600,000 3.1 15% 340 9 61

DC 6,200,000 2.6 5% 550 9.5 53

New York 8,100,000 3 10% 600 10.5 60

*Vegan Index: estimated number of vegans in a geography per 100 inhabitants.

**CAGR: Compound Annual Growth Rate

68
Case 7: Vegan Bowl
CPG | Market Entry

Vegan bowl calculations (Not to show to candidate)

Production Costs: ($4.70 + $9.70 + $2.90 + 6.95) x 1.35 = $33.89 per pack of seven or $4.84 per bowl.
Distribution Costs: Detroit = $0.75, Chicago = $1.5, Milwaukee = $ 1.75, DC = $ 1.75, New York = $2.5
Estimated revenue per city: (Population/100) x (Vegan Index) x (WTP) x (# Bowls per customer):
Detroit: $14.17 Million, Chicago $128 Million, Milwaukee: $27.5 Million, DC: $81.2 Million, New York:
153,1 Million. Total Market in these cities ~ $ 400 Million
Margins per city: Detroit: 34% (no launch), Chicago: 34% (no launch), Milwaukee: 39.5% (ambiguous), DC:
44% (launch), New York: 43% (launch)

Ambiguity related to market entry threshold of 40% margins:

• The NY and DC markets certainly adhere with the CEO’s expectations of at least 40% margins.
• Chicago and Detroit do not meet the target margins, so these cities should not make part of the launch of
Vegan Bowl.
• Milwaukee does not meet the 40% threshold by a thin margin. Since it has the fastest growing vegan
population among all presented, an excellent candidate will mention that there is an opportunity for
targeting the city’s growing market (such as developing specific SKUs for the local market).

69
Case 7: Vegan Bowl
CPG | Market Entry

Insights – Exhibit 1 Insights – Exhibit 2

• The candidate should notice that the cost • The candidate should be able to do the
from the chart refers to a pack of seven cost calculations now that the distance of
blows and the distribution costs refer to each city from AA is know.
individual packs.
• Also, revenues can be easily calculated
• Candidate should calculate retailer and since all relevant information is
distribution costs on top of total costs presented.
• The total cost of distribution won’t be • Vegan CAGR data are not relevant for
calculated until Exhibit B is shown; the calculations, it’s just a distraction that
brainstorm the profile of cities VB a good candidate will identify. An
should target before that. excellent candidate will mention that even
though Milwaukee is a small market, it
has grown three times faster than NY
and DC over the last years.

70
Case 7: Vegan Bowl
CPG| Market Entry

Recommendations Risks Next Steps

• Recommend launch in both • Low barriers to entry, since • Reach out to current
DC and NY. there is no significant patents distributor with selected cities
in place; and put the launch plan in
• Milwaukee has some potential motion
and is close to the target • No solid evidence that the
margins, but it doesn’t meet vegan market is going to grow • Pursue development of new
the previous CEO’s as fast as it has over the last SKUs that fit the WTP of
guidelines. A good candidate few years; discarded cities at this stage.
might defend the idea of
launching in Milwaukee • Too few SKUs: there has to • Investigate potential
be more options to make of additional cities and look for
• Detroit and Chicago should VB products a reoccurring additional distributors
be discarded as options for purchase
the launch. • Develop the marketing
strategy to target the selected
cities.

71
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