Ross Industry

Ross Casebook 2021
1
Content
I. Welcome
• Case Writers 2021
II. How to Use the Ross 2021 Casebook

• Case Interview Structure
• Administering Cases
III. Review Materials

• Key Formulas
• Industry Overview
IV. 2021 Casebook Index
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Welcome to the Ross 2021 Casebook!
Dear CC@R Member,
Welcome to the Ross 2021 Casebook. This book focuses on the case-interview portion of the consulting interview and is to be
used in conjunction with other case-oriented club training materials.
The elements tested in a case interview are core to firms’ hiring decisions. These cases, or mini-business problems, are a glimpse
into a consultant’s life as they are frequently taken from real client experiences. Given practice and experience, cases become a
natural way of thinking about how you would structure approaches and solutions to nearly any type of problem. Along the way, we
hope you will find you enjoy solving problems in this manner and would enjoy performing this type of work for a living.
In order to facilitate your preparation, your fellow club members have created the following cases with customized frameworks and
solution elements. These cases act as a strong reference point for what to expect during a consulting interview but are in no way
all encompassing. Since each case comes down to a conversation between the interviewer and the candidate, it is very plausible
that one candidate could receive the same case from two different interviewers and have two very different conversations about
the business problem. In fact, we encourage this.
Finally, you may have noticed that you are reading this compilation in landscape format. This is intentional. Consultants think in
terms of PowerPoint slides much more often than essay-style documents. They also constantly work to devise the most succinct
way to illustrate and frame-out a problem, necessary action steps, and a solution.
Good luck, and remember your fellow club members are here to help!
2021-2022 Board
Consulting Club at Ross (CC@R)
3
Case Writers 2021-2022
This casebook would not be possible without the following members from the Ross Class of 2021.
Thank you and Go Blue!
Alan Boesing
Danielle Eisenberg
Brady Heidrick
Tanuj Maheshwari
Sai Masipeddi
Erik Zorn
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How to Use the
Ross 2021 Casebook
5
Case Structure
How to Case
Exhibits, Analysis,
Understand the Question Develop Framework Form Recommendation
Brainstorming
(~1-2 minutes) (~1-2 minutes) (~1-2 minutes)
(~25 minutes)
• LISTEN • Ask for a moment to plan your • Refer back to the framework • State your recommendation
• Summarize the problem structure as you move through each of as a direct response to the
statement to make sure you • Develop 3-4 areas to analyze the main areas problem/objective – it should
understand the situation and along with a few tailored sub- • Use one sheet of paper per not come as a surprise to the
objectives topics topic – think of the case as a interviewer
• Ask 3-4 clarifying questions • Structure the framework in PowerPoint deck • Incorporate key metrics/
around the topic and/or a logical fashion – it should • Tie back each piece findings as a part of your
metrics to be used for the open with the most important of analysis to the main recommendation
analysis topic and provide the objective/problem statement • Include risks and next steps
• The questions posed should interviewer with a roadmap • Walk through the calculations
necessitate a short response of where you plan to take the /analysis, driving insights
case
• Answer brainstorming
• Engage the interviewer questions using structure
by turning the framework
towards them
6
Administering Cases
Great case experiences are not solely determined by strong candidates formulating frameworks and solving
math. The interviewer’s interaction with the candidate and ability to convey information will very easily change
the style of a case. Given the interviewer’s position of power in the discussion, there are several things to keep
in mind prior to, during, and after a case interview.
Preparing for Interview During Interview After Interview
• Read the case over 2-3 times • Track time (about 25 minutes is average) • Provide feedback
• Familiarize yourself with the relevant - balance finishing case and letting • This is possibly the most critical step
numbers and details candidate struggle of the case interview process
• Determine your ‘character’ • Candidates can often think of very • Honestly let the candidate know
different approaches to cases. Before strengths, but more importantly areas
• Rushed partner or disinterested client discounting questions as wrong, ask the
representative? for improvement
candidate for their thinking... if it makes
• Prepare for how you will address sense, go with it • Without honest feedback and
irrelevant questions or requests for data constructive criticism, it is very difficult
• Consider what a consultant would be to improve
you do not have looking for in the candidate
• Make up fake data and let candidate go • Presentation: can I put this person in front
fishing, or let them know it is irrelevant? of a client?
• Aptitude: can this person do the work?
• Interest: does this person like what they
are doing?
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Key Formulas
8
Topic Formula
n
NPV or Valuing Money Over Time Value to Perpetuity =

Value of Asset
Discount Rate
NPV = ∑
t=0
Annual Cash Flow
(1 + r) t
Time for Invested Principle = 72

Rule of 72 r
r = Rate of Return (%)
Little’s Law Inventory = Throughput x Flow Time

COGS
Inventory Turns =
Inventory Average Inventory
Days of Inventory = Inventory Turns * 365
Profitability π = Q (P-VC) - FC
Breakeven Breakeven = Investment Price - Cost
Revenue - Cost Net Income

Margin Gross Margin = Net Margin =
Revenue Sales Revenue
Price - Cost
Markup Markup =
Cost
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Topic Formula
Net Income
Return on Assets (ROA) ROA =
Total Assets
Return on Equity (ROE) Net Income Net Profit Sales Assets

ROE = ROE = x x
Total Shareholders’ Equity Sales Assets Equity
DuPont Analysis
ROE = Operating Efficiency * Asset Utilization * Leverage
π
ROI =
K
Working Capital
K = Capital Invested (Assets, Working Capital, etc.)
Working Capital = Assets - Liability
Sales – COGS
= Gross Profit
- SG&A
= EBITDA
Income Statement
- Depreciation/Amortization
= Operating Profit
- Interest Expense
= EBIT
- Tax Expense
= Net Income
10
Industry Overview
*Note: Please know that this industry reviews do not consider any impacts
of COVID-19. Since case interviews are supposed to resemble real world
conversations, we would recommend taking the pandemic into account
and acknowledging how it may impact these industries.
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Airlines
Key Ideas Revenue Streams Cost Drivers
• Consolidation in industry • Ticket sales to economy and business • Fuel

• Low cost carriers and fare competition on passengers • Labor
competitive routes • Charges for baggage and on-board services (up- • Marketing
• Online booking and check-in selling) • Terminal fees
• Expansion of domestic and international routes • Cargo transportation • Insurance/legal fees
• Capacity optimization (Load Factor) • Credit cards
• Leisure travelers – (generally price sensitive)

Customer
• 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
• World price of crude oil • Optimization of capacity

Key Economic
• Trips by US residents • Per capita disposable income
Drivers
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Automotive/Manufacturing
• Automakers, Original Equipment Manufacturers • New car sales • Labor

(OEMs), replacement parts production, rubber • Auto part sales • Materials
fabrication • Services offered with vehicle purchase • Advertising
• Highly capital and labor intensive • Financing • Financing costs
• Extensive competition due to foreign automakers • Extended warranties • Recall costs
• Unions • Leasing
• Cars, vans, pickup trucks and SUVs • Commercial purchasers

Customer
• 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
• GPD growth • Steel prices

Key Economic
• Income growth/disposable income • Consumer confidence index
Drivers
• Price of crude • Yield on Treasury note
13
Commercial Banking
• Consolidation/acquisitions • Loan interest • Wages

• Increased mobile banking • Loan types • Bad debt expense
• Channel innovation in digital & physical channels - Real estate - Education • Interest rates on deposits
• Customer attrition rate - Auto - Personal • Branch and compliance costs
• Offshoring of call centers, back office functions • Service fees • Overhead costs - paper fee; error rate costs
• Digitization of processes • Spread between interest rate charged & Fed rates for manual processing
• Cross-selling • Credit cards
• Wealth: deposit balances, income • Size: small businesses and consumers

Customer
• By lifestyle: buying behavior • Age: under 35 adapt to technology better
Segments
• Savings and loan • Online banking

Channels • Credit union • Microfinance
• Traditional checking
• Change in savings behavior

Risk • Loan default, interest rates and federal funds rates
• Consumer confidence • Urbanization • Interest rate

Key Economic
• Household debt • Home and car buys • Government regulation
Drivers
• Employment statistics • Disposable income
14
Health Care
• Affordable Care Act • Hospital care • Dependent on segment

• Highly fragmented: top 50 organizations account • Physician and clinical services • Significant costs related to new technology
for 15% revenues • Prescription drugs implementation
• Employers pushing health care costs onto • Nursing • Often inefficient organizational structures
employees • Dental services
• Aging Baby Boomer population driving increased • Research, equipment, investment
revenues
• Patients/consumers
Customer
• All generations and segments of the population require different products/services
Segments
• Hospitals • Outpatient surgery centers

Channels • Doctors offices • Pharmacies
• Nursing homes • Medical equipment
• New legislation (impact of Affordable Care Act still uncertain)

Risk • Funding availability
• Regulation for health & medical insurance • Aging population

Key Economic
• Federal funding for Medicare and Medicaid • Advances in medical care and technology
Drivers
15
IT/Infrastructure
• Cloud based platforms vs on-premise • Hardware sales • Labor

infrastructure • Maintenance contracts - R&D/Engineering of products
• User centric IT solutions – IT depts want to • Implementation consulting services - Sales/Marketing teams - huge front-
enhance usage and productivity • SaaS end expense
• Open platforms / integrating and partnering with • Hardware manufacturing
other providers
• Enterprise (SME / Large)

Customer
• Consumer
Segments
• Third party resellers (SHI, CDW)
• Direct
Channels • Partnership
• Reseller
• Startups and new entrants

Risk • Bring your own device initiatives
• Tariffs
• Cyber security • Mobility

Key Economic
• Demand for enterprises to go digital • Data & Analytics
Drivers
16
Non-profits
Key Ideas
Intended Impact Theory of Change Implementation Feasibility Performance Measures

& Reporting Impact
• Define success criteria • Define specific actions steps to • Revenue impact (self sustaining
• Think big picture (e.g., society, achieve the intended impact model, grants) • Measure performance vs. peers
people you are working for/with • Define timelines, initiative • HR costs: creating new roles, • Set milestones for financial and
• Consider trade-offs priorities and ownership hiring new staff, train existing operational goals
• Depth vs. breadth of reach responsibilities and new staff, modify existing • Monitor and modify plan
- Quality vs. quantity of organization structure accordingly
program initiative • New infrastructure cost – IT • Consider performance during and
- Intended impact should systems, office space after implementation of initiatives
align with strategic goals • Indirect costs
- Impact on culture of
organization
- Impact on scale on quality
of outcomes
Case • Growth through existing platforms • Thought sharing to strengthen the industry
Topics • Growth through new partnerships • Growth using technology
• Growth driven by policy changes
17
Oil & Gas
• Upstream, midstream, downstream • Crude oil • Exploration: seismic studies, drilling rigs and labor
• PV-10 • Gasoline • Production: refining
• Cost per gallon • Natural gas • Pipelines
• OPEC • Refining products such as lubricants • Gas station: oil, labor, insurance, licenses
• GDP growth • Gas stations: gasoline, food market, car wash
• Renewable energy
• Fracking
• Petroleum refiners • Domestic and commercial users

Customer
• Electricity generators • Other industries
Segments
• Retail
Channels • Wholesale
• Commercial
• Access to reserves • Political pressures

Risk • Energy policies • Substitutes/renewable energy
• OPEC decisions
• Government regulation
Key Economic
• International oil production and demand
Drivers
18
Pharmaceutical
• Affordable Care Act • Insurance payments • Research & Development

• Aging population • The federal government provides certain grants to • Manufacturing cost (the largest share of the
• Patents and generics subsidize R&D industry’s costs)
• Research & Development • Due to significant R&D lead times revenue is highly • Marketing costs
• Insurance volatile • Wages
• FDA • Seasonality is high on certain products (vaccines • Liability insurance and legal fees
• Market penetration and cold medicine) and low on other products (pain
• Contract vs. in-house salesforce medicines)
• Medical patients • Government insurance programs

Customer
• Prescribing doctors • Health insurance companies
Segments
• 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
• Median age of population • Insurance and regulatory landscape

Key Economic
• Research and development expenditure • Patent protection
Drivers
19
Private Equity & Hedge Funds
• Components of the revenue charge • Wages and profit-sharing • Value creation: sell under-performing assets,
- Invested capital • Administrative costs (regulatory filings, record optimize price, diversify customer base, operations
- Transaction and advisory fees keeping, accounting and travel) efficiency
- Carried interest • Outsourcing of capital intensive IT functions for • Exit: strategic or IPO
• Divestures algorithmic trading • Synergies
• Stability of cash flows (IRR, NPV)
• Targeted returns ~ 40%+
• Un-invested capital vs. invested
• Pension funds (largest share)

Customer
• Private investors (e.g. high net-worth individuals)
Segments
• Banks, sovereign funds and life insurance companies
• Large firms focus on deals ~ $1.0B; middle market firms cover deals between $15.0M- $1.0B
Channels • Average holding period before sale has increased from 3 years to 6 years in the past 15 years
• 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
• Investor uncertainty/pension demand • Exit opportunities

Key Economic
• Access to credit/interest rates • GDP/investment returns
Drivers
• Regulations
20
Retail
• Same store sales • Women’s apparel sale • Cost of Goods Sold (74% of costs)
• Sales per square foot • Drugs & cosmetics • Transportation
• Inventory turn-over • Furniture & household appliances • Wages
• Seasonality/recessions • Children’s apparel • Rent and utilities
• Trends • Men’s apparel • Marketing
• Toys
• Footwear
• Misc. items
• The industry is consumer-oriented and, due to the spectrum of products, its markets are
Customer
generally segmented into different incomes, demographics and age groups
Segments
• Department stores/big box retailers • Demographic retailers

Channels • Discount retailers • Shopping malls
• Changes in disposable income • Overstock

Risk • Demand and supply issues • Easy entry invites competition
• Consumer sonfidence index • Gross domestic product/inflation

Key Economic
• Per capita disposable income • Households > $100,000 income (luxury goods)
Drivers
• International export/import • Commodity prices (eg. gold price for jewelry)
21
Telecommunications
• Deregulation led to spur of new companies • Voice calls • Infrastructure

• Bottlenecks: high capital, scarce operating skills • Additional lines/family plans • Wages
and management experience • Text and image communication • Marketing and advertising
• Shift from telephones to internet based services • Data subscriptions
for mobile • Accessories
• 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
• Investment in rising technology services

Key Economic
• Number of subscriptions to additional services
Drivers
• Number of broadband and mobile internet connections
22
Utilities
• Increase in energy consumption • Transmitted electricity: base load and • Purchased power accounts (nearly half of
• High investment costs and regulations intermittent electricity total costs)
• Industry structure disintegrating into smaller • Base load (95% of industry) • Infrastructure
supplier segments • Coal, natural gas, nuclear, other • Wages
• Seasonality • Intermittent: renewable energy • Marketing
• Gov. incentives for sustainable initiatives • Maintenance contracts
• 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
• Economies of scale
Key Economic
• Industrial production index
Drivers
• Climate/seasonality
23
Cases
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Table of Contents
Case Title Industry – Case Type Overall Quant Qual Page
Hospital Mega Merger Healthcare | M&A 26

Gaming Challenges Media & Entertainment | Go-to-Market Strategy 36
Chase-ing Equity Financial Services | Market Entry/Sizing & NPV 47
Fertilizer Innovation Industrial Goods | Pricing 54
German Luxury Car Maker Auto Mobility | Market Entry 59
Household Cleaners Growth CPG | Growth Strategy 66
Little Bud Co. CPG | Growth Strategy 73
GasCo Goes the Distance Oil & Gas | Market Entry/Profitability 81
Rubicon Co. Airlines | Post-Acquisition Profitability 90
Spice Up Your Life PE & Food/Retail | M&A, Valuation 103
Apogee Bank Financial Services | Growth Strategy 114
Attack Helicopter Defense | Market Entry 126
FLC Sports League Sports | Profitability & Market 133
Marie’s Café Food | Profitability 142
Midwest Hospital Healthcare | Profitability 152
Seaworthy Floating Hotel Hospitality | Profitability 163
25
Case 1
Hospital Mega Merger

Healthcare | M&A
Interviewee Led
Ratings:
Quant - 1
Qual - 1
Overall - 1
26
Prompt
Case 1 – Hospital Mega Merger
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. Our client would like to
evaluate whether a merger would be beneficial to both parties. What are your thoughts?
Notes / Advice to Interview / How to Move Forward:

• The case will be focused on identifying what the current NOI of each hospital is, and whether, by combining, 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.
27
Framework/Exhibit Summary
Market Analysis Financial Analysis Insights – Exhibit 3
Trends Current Revenues Post-Merger Integration Risks

• Cost/revenue pressures • Avg spend/patient • Cultural class
• Telemedicine • # of patients • New org leadership
Customers Current Costs Potential growth opportunities
• Shifting needs? • FC
• Aftercare • SG&A
• Digital presence • Salary
Competitors • Utilities
• PP&E
Exhibit Summary
• Benchmarking
• VC • Exhibit 1: Historical Revenue per Patient
• Financial performance • Exhibit 2: Hospital Facilities
• Income statement? • Hourly labor • Exhibit 3: Service Line Breakdown by
• Materials Hospital
Potential Synergies
• Revenue
• Wider range of offerings
• New dist channels for current
offerings
• Cost
• Mat’l reduction
• Potential facility consolidation
28
Clarifying Information
• Both hospitals have 2 different facilities; all 4 facilities are in Washtenaw County
• St. Scorekeepers Hospital has the following departments: emergency, cardiology, OB/GYN, and orthopedics
• Mount Ricks Hospital has the following departments: emergency, radiology, dermatology, and oncology
• Brainstorm: Variable costs and fixed costs
• FCs: capital expenditures, employee salaries and benefits, building maintenance, and utilities
• VCs: healthcare worker supplies, patient care supplies, diagnostic and therapeutic supplies, and
medications
• OH: legal, IT, HR, and finance departments
Calculation Assumptions
Revenue Costs
• SK saw a total of 150,000 patients last year, RI saw 200,000 • VC: Scorekeepers and Ricks are both X% of average
patients revenue per patient
• Avg. revenue/patient – SK=$150 and RI = $100 • SK = 150,000 x ($150 x 20%) = $4.5M
• Total Revenue (SK) = 150,000 x $150 = $22.5M • RI = 200,000 x ($100 x 15%) = $3M
• Total Revenue (RI) = 200,000 x $100 = $20M • FC: Scorekeepers and Ricks are both X% of average
revenue per patient
• SK = 150,000 x ($150 x 40%) = $9M
• RI = 200,000 x ($100 x 30%) = $6M
• Overhead: SK = $4.5M and RI = $9.25M
• NOI (Net Operating Income)
• SK = $TR – (VC + FC + OH) = $4.5M
• RI = $TR – (VC + FC + OH) = $1.75M
29
Exhibit Insights
Insights – Exhibit 1 Insights – Exhibit 2 Insights – Exhibit 3
• Average revenue has been • While two of the hospitals are • There is overlap between the
decreasing both at a regional level spread out, two are very close to services that each hospital system
and national, therefore no one is each other, presenting potential offers, but ONLY in the emergency
immune to market forces overlapping patient populations department
• Should push candidate to want to • Candidate may hypothesize that • The candidate should infer that
further explore merger potential proximity of two hospitals might there may be additional revenue
also provide potential opportunity generated if the two hospitals
to consolidate some facilities came together due to being able to
offer a wider range of services and
thereby retaining more patients
30
Synergies
• Revenue would increase by 10% overall due to ability to collectively meet more patients needs by having a wider range of
departments. There is also an increased ability to cross-refer patients to other facilities
• Economies of scale would bring down variable costs (eg. materials) by 15%
• By consolidating facilities/functions (e.g. HR, IT, Finance, legal etc.), will save 30% on overhead
• No impact to fixed costs would be realized
St. Scorekeepers Mount Ricks Total Change Factor Cost Saving NewCo
Revenue $22.50 $20.00 $42.50 110% $4.25 $46.75
Variable Costs $4.50 $3.00 $7.50 85% $1.13 $6.38

u m bers
All N re in
a
ns!
Millio
Fixed Costs $9.00 $6.00 $15.00 0% $– $15.00
Overhead $4.50 $9.75 $13.75 70% $4.13 $9.63
NOI $4.50 $1.75 $6.25 $9.50 $15.75
31
Exhibit 1
Historical Revenue per Patient
$300
$250
$200
$150
$100
$50
2000 2005 2010 2015 2020
St. Scorekeepers Hospital Mount Ricks Hospital Regional Competitor National Trend
32
Exhibit 2
Hospital Facilities
Legend
St. Scorekeepers Hospital
Mount Ricks Hospital
Competitor – BTB Health

System
Note: The red shaded area represents Washtenaw County
33
Exhibit 3
Service Line Breakdown by Hospital
100%
Orthopedics Oncology
80%
60%
OB/GYN Dermatology
40%
Cardiology Radiology
20%
Emergency Emergency
0%
St. Scorekeepers Mount Ricks
Hospital Hospital
34
Conclusion
Recommendation Risks Next Steps
• Recommend merger for the • Regulation roadblocks meaning • Announce merger and prepare for
St.Scorekeepers Hospital and merger might not receive approval regulatory review
Mount Ricks Hospital systems. The • Ability to logistically complete • Reach out to insurance companies
new health system would represent • complicated merger (i.e. payors) to try to negotiate a
$9.5M in cost saving synergies and • Erosion of brand equity better reimbursement rate
a new health system generating • Potential for culture clash between • Develop branding to inform
$15.75M in net operating profit. employees and clinicians of the patients of new enhanced future-
two health systems state healthcare system
• Does not include transaction costs
35
Case 2
Gaming Challenges
Media & Entertainment | Go-to-Market Strategy
Interviewee Led
Ratings:
Quant - 2
Qual - 1
Overall - 1
36
Prompt
Case 2 – Gaming Challenges
• Storm Games is a video game developer focused on computer games

• Their main title, King of the Forest, is an online RPG that has been extremely successful
• While the game still provides a steady cash flow to Storm Games, growth has stagnated in the recent years as
the numbers of new players has decreased significantly, and average revenue per user has reached a plateau
• Storm Games plans on going public in the near future and in order to show strong results before the IPO, the
company has hired you to develop a strategy to show investors that it can continue to grow
• RPG stands for “Role Playing Game”
• At this time, the company is exploring a number of alternatives and has yet to determine the target result
• Storm Games has only developed RPGs for computers
37
Interviewer Information
Clarifying Information:
• The case starts with an open-ended brainstorming question, and becomes more straight-forward after the
framework stage
• The two exhibits are fairly simple to read and understand. The numbers on Exhibit 1 may seem slightly intimidating
at first, but once adjusted according to the calculation method, they round up pretty easily
• The footnote on Exhibit 1 will be relevant to solving the case. Candidates may need help identifying that information
Exhibit Summary
• Exhibit 1: Revenues Mobile Game Industry per Segment
• Exhibit 2: Storm Games Estimated Game Development Costs per Segment
38
Brainstorming Question
At a high level, what are the main avenues where the company can potentially increase revenues?
Question Guidance:
The interviewee should recognize that there are basically two alternatives for Storm Games revenues to
continue growing.
1. Increase revenues originating from current games. A few possibilities include:

• Increase prices (basic)
• Displayed ads periodically, much like a commercial break on TV (basic)
• Increase the portfolio of additional in-game features as well as merchandise for purchase (basic)
• Product placement where other companies pay for in-game advertising. For example, Coke could
pay Storm Games to create a character that drinks the beverage from time to time (advanced)
2. Launch new games:

• Potentially branch out to new platforms and genres
Ultimately, we will proceed with the second alternative. If the interviewee does not identify it on their own, suggest it
so they can move to the framework.
39
Potential Framework
Storm Games decided to develop a new game for mobile platforms. They now must decide which segment
of the gaming market they will invest in. They can develop another RPG game for mobile devices, or they can
branch out into other genres. Regardless, their goal to payback the investment within one year.
Gaming Industry/Market Storm Games Capabilities Profit
• Size of each segment of • Expertise to develop

the market games in other segments Revenue Cost
• Industry trends • Synergies • Average revenue per user • Investment Costs
• Reputational risks • Number of users • Fixed Costs
• Variable costs

• This case requires a hybrid approach, combining the traditional profitability framework with additional buckets to account for
the qualitative aspects of the problem
40
Exhibit 1
Revenues Mobile Game Industry per Segment ($Billions)
$50
Average Gross
45 Other Genres Revenue per Active
Player Account/ Year*
6 39
$40 Adventure
35
31 5
5 $5.86
15 Sports
5
$30
23 13
RPG
11 12 $9.38
17 5
$20
12 4 18
11 9 13 15
4 11 $9.69
3 7
$10
6 6 7
5 10 12 11
3 3 9
7 $7.50
3 3 5
$0
2014 2015 2016 2017 2018 2019 2020 2021 (F)
• Note: Distribution platforms (i.e. Google Play and App Store) retain a 20% commission over gross revenue
• RPG = Role Playing Game
• *Players may play multiple games per year across different segments
41
Exhibit 1 Guidance
Revenues Mobile Game Industry per Segment
Candidates should recognize:

• Despite drop in 2021, the industry demonstrates a strong growth trend
• Adventure and Sports are the segments that are driving industry growth; RPG has remained stable
Best candidates will recognize:

• The most plausible explanation for the 2020 numbers is the impact caused by Covid-19. As people were isolated,
there was an increase in the pursuit for virtual entertainment options, thus boosting revenues from the gaming
industry. As the pandemic is expected to subside in 2021, revenues are expected to return to the previous trend
Additional guidance:
• Footnote about commissions will be important later in the case
• Player Accounts: An individual user may play multiple games, across different segments. For each game the user
must create a unique player account. Therefore dividing a segment’s Total Revenue by the average User Account
revenue will NOT yield the total number of users. Furthermore, the total number of users has no bearing in the
resolution of the case
42
Exhibit 2
Storm Games Estimated Game Development Costs per Segment ($M)
$20.15
20 $18
Legal/Licensing
$1.25 $6.15
$15 Marketing
$3.25
15
$1.50
$2.00 Coding
$4.00
$6.00
10 Design
$8.00
5 $6.00
$7.50
$3.50 $4.00
0
RPG Adventure Sports
43
Exhibit 2 Guidance
Estimated Game Development Costs per Segment
Questions for Candidates about Exhibit that the Interviewer should ask:
• How many player accounts does Storm Games need to gain in order to payback the investment within one year
(in each segment)?
• Based on that result, in which segment should Storm Games invest?
Question/Exhibit Guidance:
• To perform the calculation, the candidate will need the Average Player Account Revenues from Exhibit 1
• The values must be discounted of the commission charged by the distribution platforms. This information is in the
footnote of Exhibit 1
Additional Guidance:
• Legal/Licensing costs are significantly higher in Sports Games as athletes and teams are paid for the use of their
names and images
• Costs for RPG games are significantly lower because the company already has the expertise and resources
required to develop the games from this segment
44
Exhibit 2 Guidance
Estimated Game Development Costs per Segment
Design Coding Marketing Legal/Licensing Total Cost
RPG 3.50 6.00 4.00 1.50 15.00
Adventure 7.50 6.00 3.25 1.25 18.00
Sports 4.00 8.00 2.00 6.15 20.15
Gross Revenue * (1-Commission) = Net Revenue Note:

RPG $7.50 * (1 - 20%) = $6.00 Avg. Gross Rev per Active Player Account (Ex. 1)
Adventure $9.38 * (1 - 20%) = $7.50 Platform Commission Fees (Footnote Ex.1)
Sports $9.69 * (1 - 20%) = $7.75
Total Cost/Net Revenue = Player Accounts Note:

RPG 15.00/6.00 = 2.50 Millions of Player Accounts
Adventure 18.00/7.50 = 2.40
Sports 20.15/7.75 = 2.60
45
Conclusion
• Storm Games should develop an • Given that up until now Storm • Assess internal capabilities and
Adventure game. Games has only developed determine if external talent is
• Despite of the lower production games within the RPG genre, the needed to develop an adventure
costs for RPG games, the higher company may lack the expertise game
average revenue obtained in the to effectively branch out and
Adventure segment makes it a more penetrate other segments of the
attractive genre, as the company market
would need gain less users in order • Average revenues may be
to payback its investment. misleading. It would be helpful to
also understand the variance and
the range of the values comprising
the average
• If the new game is not successful,
this could damage Storm Games’
reputation, consequently affecting
the company’s plans for the IPO
46
Case 3
Chase-ing Equity
Financial Services | Market Entry/Sizing & NPV
Interviewee Led
Ratings:
Quant - 3
Qual - 2
Overall - 2
47
Prompt
Case 3 – Chase-ing Equity
Our client, Brandy Thomas-Chase (BTC), is a high-powered Black financial player and owns one of the most
successful VC firms in the country. She has come to us with an issue near and dear to her heart. She believes
that mid to large-sized banks have ignored an important potential consumer segment: the underbanked, usually
found in underserved minority populations. BTC wants our thoughts on how she can leverage her firm to
remedy this injustice, as well as how big this opportunity could be.
Note:
• “Underbanked” is defined as a household that has a bank account, but goes outside of the bank for financial services such as
money orders, cashing, payday loans, etc.
• Client is not currently in the banking space directly
• Client doesn’t have a threshold or an expected timeline in mind to recoup a return on the investment
• The main objective of our client is to increase access of some form of banking to underbanked populations
• Though they typically invest in somewhat established organizations, our client is interested in what taking on this
project from the start would look like
• The assumption can be made that they will have the capital ready to take on this endeavor
48
Framework
Feasibility Attractiveness Other
Market Size Financials Opportunity Cost

• How many underbanked? • Revenue: loans, fees, advertising • Is there another more attractive
• Expected value per customer? • Initial investment costs: physical opportunity?
• Demographic makeup of brick and mortar build out or • Is there another way to help
customers (age, regions, etc.) digital development this group, e.g. funding financial
• Ongoing Costs literacy programs?
Mode of Entry • Fixed: rent (if brick and mortar),
• Organic: internal capabilities and PPE
capital investment available? • Variable: marketing, personnel
• Partner/JV: work with existing
banks within proximity to these Company and Competition
areas • Too far from core competencies?
• Non-traditional partnerships • Brand impact of this move
with Venmo or grocery • Could signal CSR importance?
stores • Are there any incumbents/
existing competitors and are
they successful?
• Competitive positioning
impacted? What are other
players doing in this space?
49
Question 1: Market Sizing
How would you think through arriving at the number of underbanked households in the country?
Step 1: 320 Million Individuals in America
Step 2: Number of People Per Household? Assume 2.5 or 3
Step 3: Number of households is ~100M
Step 4: Assume a percentage that are underbanked and give a reason why?
• Strong candidates will note that the average household has a bank account, so it is under 50 percent
• Perhaps they will say that it is close to the country’s poverty rate of 12-13 percent or something of that nature.
At this point tell them that it is 15%
Step 5: # of households in United States X 15% = ~15 million underbanked households, which represents the total
addressable market
50
Question 2: Brainstorming
Many underbanked individuals lack access to brick and mortar banks. What are some ways that we can fix this?
What should be considered with each? Potential options and reasoning are below.
Build Brick and Mortar Joint Venture Build with Big Bank NeoBanking (Digital Only Bank)
Pros Pros Pros

• Full control over the operations and • Leverage brand name, expertise • Lowest cost
profits of the firm and infrastructure with big bank • Can reach largest number of
• Able to control branding and image • Greater access to capital people
• Can leverage the building for other • More companies able to advertise
services (Starbucks, etc on ground Cons on digital platform (more revenue)
floor) • Some level of control is lost
• Big banks have not played in this Cons
Cons space in particular, might have to • Limited amount of services (for
• Expensive, likely most costly option truly prove value example no mortgage agreements
• Government regulations and • Lack of trust in large institutions will be made digitally)
permits could delay build out • Lack of access to internet,
• No experience in building in poor/ comfortable for digital natives but
underserved areas hard to reach for older population
Moverd
a
forw this
with ion
opt
51
Question 3: NPV Calculation
How much will it cost to take on this endeavor and what is the NPV?
Costs Revenues
Upfront Investment $7M Customers • Digital bank can serve 10% of the
identified underbanked households
Personnel Costs For simplicity, assume all staff make per year
$130k/yr • Total: 1.5 M households
(VC) 20 engineers
80 digital bankers Revenue/Customer • Given lower income levels for this
Total: $13M/yr group, the Bank will only charge $1
in user fees per month
Fixed/Regulatory • Servers/Licensing/ Other Tech Fees: • Total: $12/yr per household
Costs $1M Annual
• Regulatory Costs: Quarterly pay- Total Yearly Revenue 1.5 million households
ments of $125K x $12 average spend
• General Operating Expenses:$500K
• Total: $2M/yr = $18 M/yr
Total Yearly Costs $13M + $2M = $15M
Annual Profit $18M - $15M= $3M

Discount Rate 40% for perpetuity
Present Value $7.5M
Net Present Value $7.5M-7= $500K
52
Conclusion
• BTC should move forward with • Costs may be understated and • Further validate cost and revenue
this investment. Even though the revenues overstated assumptions
NPV is relatively low, this endeavor • Regulations within the banking • Engage with policy experts to
will help close the gap on racial industry are very stringent and can understand more about regulatory
inequity and position BTC to delay project start especially as procedures in this space
identify other opportunities to they relate to online/digital banking • Think through strategic marketing
engage with this group whether • Unable to reach target population efforts and tactics to reach end
that be by way of creating other and gain trust users (underbanked communities)
financial products or otherwise.
This will also allow BTC to expand
on their digital capabilities.
53
Case 4
Fertilizer Innovation
Industrial Goods | Pricing
Interviewee Led
Ratings:
Quant - 2
Qual - 2
Overall - 2
54
Prompt
Case 4 – Fertilizer Innovation
Your client is an agricultural products manufacturer. They invented a product called “Green Nutrient”.
This product will help farmers by allowing a variable fertilizer rate which measures the specific amount of
fertilizer required for a plot of land, reducing the chance of using too little or too much fertilizer.
The company is interested in a pricing strategy.
• “Green Nutrient” measures the amount of fertilizer required, allowing for a “variable fertilizer rate”
• Two main benefits: Avoids over-use (reduce costs) & under-use (increase yield)
• Benefit #1: 20% reduction in fertilizer cost per bag @ 1 bag / acre @ $15 / bag
• Benefit #2: Improve yield 2% [Current average yield: 100 bundles / acre @ $2.5 / bundle]
• No competition
• Farms are about 400 acres on average
• 1,000 Large farms: 1,000 acres each
• 3,000 Medium farms: 400 acres each
• 6,000 Small farms: 200 acres each
• Product lasts 10 years after initial use.
• Product production cost: $1K per unit
• Unit works the same regardless of farm size
• Discount rate: 0%
• Assume no other costs (ex. cust. acq costs)
55
Framework
Different Pricing Methods

• Economic value to customer – savings from • Candidate should clarify if the product is a device or the fertilizer itself.
reduced fertilizer use, increased revenue from • Provide information only when asked.
yield improvement • Candidate should argue the pros and cons of each pricing method and
• Cost plus – variable cost per unit, margin of decide that EVC is the best way to go.
• Give bonus points if candidate mentions price discrimination or price skimming.
similar product
• Competitor based (market) – price of similar
product, margin of similar product
56
Solution
Pricing Analysis (Interviewee Led)
EVC/Acre
• $3.00 fertilizer savings per acre
• $5.00 yield increase ($2.5 * 100 * 2%)
• Maximum WTP per acre: $8.00 per acre
• WTP for each farm type: Small - $1.6k ($8 * 200), Medium - $3.2k, Large - $8k
Customer Segment Analysis

• Large: If we price the product at $8k, we sell 1,000 and profit $7M
• Large & Medium: If we price the product at $3.2k we sell 4,000 and profit $8.8M ← Best Option
• All farms: If we price the product at $1.6k, we sell 10,000 and profit $6M
57
Conclusion
Next Steps Excellent Case

Recommendation Risks Answers
• Our client should price • New entrant comes to • Market analysis on actual • Skimming: start by pricing
the device at $3.2k/unit market in next 10 years who WTP and competitive at $80k and then $31k and
and target the large and may price competitively response then $16k
medium farms. This will • Customers may not be • Research on channels and • Offer a service to the
allow our client to attain willing to pay EVC promotion schemes farms at up to $8/acre
the highest profits at that will achieve a price
$8.8M. discriminiation based on
acreage (perfect price
discrimination)
58
Case 5
German Luxury Car Maker

Auto/Mobility | Market Entry
Interviewee Led
Ratings:
Quant - 2
Qual - 2
Overall - 2
59
Prompt
Case 5 – German Luxury Car Maker
Our client is a German luxury car maker. They have come to us as they want to grow their business
and are looking into selling their cars in Bangladesh.
The GDP growth in Bangladesh is 5% per year. Currently, the only luxury car sold in Bangladesh is
Mercedes-Benz, and they have been in the market for the past 10 years.
The CEO wants to find out if the company enters the market, can they break even in three years?
60
Framework
Market Financial Analysis

• Industry • Revenue
• Size • Price/Vehicle
• Growth • Pricing strategy
• Trends • # of Vehicles sold
• Competition
• Strengths & weaknesses Cost
• Barriers to entry • VC
• Materials
Product • Hourly labor
• How are cars similar or different? • FC
• Do we have same branding? • Overhead
• SG&A
Customers • Set-up costs
• Brand loyalty
• Interest in new car?
• Features that drive WTP
61
& Case Guidance (Market)

Market Interviewer Guidance Solution Guide
• Mercedes-Benz imported and sold • Ask candidate how to estimate • Market Size: (the interviewee
10,000 cars in this market over the market share should calculate that 1,000 cars
past 10 years, and has their own • Possible answers: are sold to existing owners per
dealership in Bangladesh. • Understand customer needs year, and therefore the total market
• There are 1,000 new luxury vehicle through survey and estimate size per year is 2000 new cars)
buyers each year. how well we could meet those • # of cars sold per annum x price/
• The average selling price of a needs and therefore how much vehicle
luxury vehicle in Bangladesh is market share we could gain. • 2000 vehicles * $100,000/veh =
$100,000. • Find benchmark $200,000,000
• Existing owners replace their car • It turned out that our client
every 10 years already entered Vietnam
• We will have a 30% market share and other markets similar to
(don’t give this info out right away, Bangladesh and on average
ask candidate to brainstorm how to gained 30% market share in
estimate market share) each year.** each of those markets.
62
& Case Guidance (Financials)

Financials Solution Guide
Cost Structure • Manufacturing = $20k

• Initial Investment $7M • Transportation = $24k
• Customs / Taxes = $41.8k
Cost / Car • SG&A = $10.3k
• Manufacturing $20K
• Transportation 120% Manufacturing cost Variable per car rounds up to $96k/car
• Customs/Taxes 95% Manufacturing + transportation cost Therefore profit on each car is $4k
• SG&A 12% of all above costs
With a 30% market share, the client’s annual profit will
be $2.4M (2K cars/yr *30%* 4K) and will break even in 3
years ($7M/$2.4M= ~3 yrs).
63
Brainstorming
Evaluate potential risks of entering this market
Solution
• Assumptions might be inaccurate
• Bangladesh is not stable politically and economically, therefore our client will bear more risk
• There could be other new entrants
• Mercedes-Benz could react to our entry by
• Reducing price (the best answer might also mention that with the low income level in the country,
customers who can afford luxury cars might not be price sensitive)
• Ask candidate what price Mercedes-Benz will reduce their car to.
• Answer: $96k/car or less
• Improving their services if that’s the differentiating factor of our product
64
Conclusion

• The profit on each car is • Those gained from • Market analysis on • Excellent candidates will
$4k brainstorming competitive response and inquire on their own about
• With 30% market share, target customer ways to estimate market
the client’s annual profit • Determine the best way share
will be $2.4M and will to enter the market (JV, • Should recommend a
break even in 3 years greenfield, etc.) price sensitivity analysis
• Look into ownership to determine the correct
structure (franchise or price
owned showrooms)
65
Case 6
Household
Cleaners Growth
CPG | Growth Strategy
Interviewee Led
Ratings:
Quant - 2
Qual - 2
Overall - 2
66
Prompt
Case 6 – Household Cleaners Growth
Your client is a global consumer packaged goods company —Grime Co.

Grime Co. makes paper products (like paper towels), home cleaning products, and laundry care products. The
company’s Board of Directors has set an aggressive revenue target of $2 billion four years from now. Currently,
revenues are $1 billion. The CEO has come to you to ask for help. Specifically, our client would like you evaluate
the company’s position and to help develop a strategy to deliver top-line results of $2 billion by 2025.
Net sales: Retail sales minus trade spend. Trade spend is what manufacturers pay distributors or retailers to
incentivize them to sell their products to end consumers.

• This case is about growth both through internal actions and through acquisition. Initially, the candidate should brainstorm an
array of possible growth strategies. Eventually, he or she will have to drill down on new products and acquisition, in addition to
considering market growth. Then, they will have to evaluate two targets, demonstrating an understanding of positive and nega-
tive synergies. Without considering market growth, organic growth, and inorganic growth —and without exploring synergies in
acquisition — the candidate will not be able to solve the case.
Additional Information:
• The company has a strong stance if favor of sustainability
• Sales are divided evenly between the three categories — 33%
If the candidate asks which growth strategies Grime Co. has considered, the interviewer should prompt them to brainstorm
various options — see next slide.
67
Framework/Clarifying Information
Areas the candidate should explore: Information provided upon request
Market Growth: When the candidate asks, reveal that market growth alone will bring sales to
$1.5 billion by 2025. Specifically, the company is growing overall at 10% and
Growth through maintaining market share in expects to maintain a constant market share.(10% compounded over four
a growing market years is roughly $500 million incremental) In the interest of keeping this case
shorter, the candidate does not have to calculate this. If the candidate asks
about categories, tell him or her that growth is about the same in all three.
Organic Growth: The candidate must cite new products: it is the only organic growth strategy
that is viable for our client in this case. The interviewer should provide logical
Actions taken within the organization to drive revenue. reasons to why the other options are not available at this time.
Ex: Our client has a new toilet cleaning product in development that analysts
• Price adjustments to drive volume believe will do well.
• Increased advertising
The following details should be provided by request:
• Vertical integration • Product is near launch
• Promotions and deals • Price will be $5 a unit, but requires 20% trade spend per product to reach
• New products volume target
• Expected to sell 40 million units on average per year
Interviewer should steer candidate to explore new
products No other investment is required — sunk cost. (See slide 3 for calculations)
Inorganic growth: The candidate must identify growth through acquisition: our client’s
Corporate Development department has identified two high-priority
Growth through acquisition or joint venture acquisition targets —Organoclean and Home Defense Inc. (See slide
4 for detailed information)
68
Additional Information
New Product Calculations: The candidate must determine how much top line
growth can be achieved through the launch of the new product.
Current Net Sales $1 Billion Price** $5 per unit

Net Sales in 2025* $1.5 Billion
Profit: Trade Spend – 20% = $4 per unit
Deficit $500 Million
Avg. units per year x 40 Million
New Product $160 Million Net sales per year = $160 Million
New Deficit $340 Million
* $500 Million achieved through incremental market growth, as cited on the previous slide
** Data presented to candidate from previous slide, these are just calculcations
Note: Market Growth assumptions are built into new product calculations
69
Acquisition Calculations, Sales Forecast: The candidate must determine which property our client should purchase.
Candidate should request each data set: sales, products, and growth.
Target Organoclean (Private) Home Defense Inc. (Public)
Products Organic Household Cleaners Household cleaners, bug control
Sales $150 million $200 million
Growth Rate 10% 20%
2021 Sales $165 million $240 million

Instruct candidate to round $181.5 million $288 million
to the nearest $10 million $199.65 million $345.6 million
$219.615 million $414.72 million
Rounded 2025 Sales $220 million $410 million
With a deficit to the 2025 sales target of $340 million, However, the candidate must also
the candidate might be tempted to choose Home consider positive and negative
Defense Inc. as the better acquisition target. If asked, synergies before choosing a target…
confirm that our client can only buy one.
70
Acquisition Calculations, Synergy Considerations: The candidate must determine which property to purchase.
Candidate should brainstorm synergies and calculate financial impact.
A good interviee will cite several of these as potential Organoclean
synergies. Push the candidate along until he or she
lands on both distribution and values: Our client believes it can leverage its Europe distributon
network to generate additional sales:
• Distribution synergies • $40 million year one* $500 million deficit
• Procurement synergies • Should triple in 4 years - $160 million new product
POSITIVE
• Manufacturing synergies - $220 million Organoclean 2025

• Back-office synergies - $120 million Europe sales
• Co-branding new products
= $0 deficit to 2025 target
• Scale synergies
Home Defense Inc.
• Corporate culture mismatch
• Anti-trust issues
NEGATIVE
Our client will not sell harmful chemicals, and all of Home Defense’s bug
• Mission or values clash killers fall into this category. They cannot be reforumated or sold. Our
client would have to discontinue these products.
• Brand dilution
• 25% of sales are bug $500 million deficit
killers
- $160 million new product
- $410 million Home Defense 2025
Synergies impacting Organoclean and Home Defense + $102.5 million lost sales
*Candidate can consider year 1 today
= $32.5 million deficit to 2025 target
71
Conclusion
At this point, the candidate should realize that Organoclean is the best option between the two, and that together
with the launch of the new product and market growth, Grime Co. will hit its 2025 net sales target of $2 billion
• Although market growth and the • Growth trajectory of target could • Verify assumptions and assign
launch of a new toilet product should change roles
get Grime Co. to $1.66 billion in net • Price of target could be too high to • Draft pre-diligence plan
sales by 2025, the $2 billion net sales afford • Establish contact with target
target will not be met. Therefore, • Target could be unprofitable — risk • Conduct detailed valuation and
Grime Co. will also have to pursue of sales focus determine BATNA
growth through acquisition. Of the • Doubling in size itself could be a • Roll out new product
two targets preferred by the client risk — too fast
— and since Grime Co. can only buy
one — we recommend purchasing
Organoclean. The growth of the
company coupled with positive
distribution synergies will allow
Grime Co. to reach its 2025 target.
72
Case 7
Little Bud Co.

CPG | Growth Strategy
Interviewee Led
Ratings:
Quant - 2
Qual - 2
Overall - 2
73
Prompt
Case 7 – Little Bud Co.
Our client, Little Bud Co, is a beer company in a small country in Latin America. Little Bud and its main
competitor, Geineken, are the only players in the market. Geineken’s operations are significantly bigger than
Little Bud’s.
Little Bud’s CEO asked us to provide her with strategic options for the company and a recommendation on
what she should do.
• If interviewee asks, “What are the CEO’s Goals?”, turn the question back: “What are the goals of a company?” Then rapidly lead conversation to the
goal of maximizing shareholder’s value
• Market is mature (growth is low)
• 10% of sales are made through large retailers and 90% through bars, restaurants and small retailers
• Focus on market of regular beer; market for small brewers / specialty beers should be disregarded (very small market)
74
Possible Framework/Case Guidance
Revenue Competition Notes / Advice to Interview /

• Market Size • Fixed Costs How to Move Forward:
• Distribution • PP&E At the beginning of the case (after candidate presents their
• Retailers • Distribution framework):
• What are the two most relevant sources of information that
• Restaurants/bars • Marketing
you need to start this analysis?
• Price • Variable Costs Suggested answer: market size and P&L for Little Bud
• Product Mix • COGS and main competitor.
• Labor
Competition • Once the candidate asks for market size data, present
Exhibit 1 and ask for initial insights.
• Compare financials Company
• Operations • Supply chain • Exhibit 2 provides financial comparison information. What
• Pricing • Economics of scale are the margins for each player? What are the possible rea-
• Buy/sell • Geographics/related markets sons for the margin differences?
Suggested answer: Geineken could have higher margins
due to higher prices, lower costs or both.
Exhibit Summary • What are the strategies that Little Bud should consider?
Suggested answer: Go to niche market, go to related
• Exhibit 1: Revenues by Channel markets, sell to competitor
• Exhibit 2: P&L for Little Bud and Geineken
75
Brainstorm & Guidance
After the Interviewee has reviewed the given exhibits, ask them to Evaluate Potential Options for Little Bud.
Brainstorming Solution
• Increase market share:
• Product innovation: Consumer taste is already well defined. There is no room for new products.
• Price war: It’s virtually impossible for Little Bud to enter a price war against Geineken
• Marketing: Geineken spends 5x more in marketing. Trying to compete against a player this big on marketing
expenditures is not a good strategy.
• Reduce costs: There are no opportunities for further reducing costs.
• Focus on niche market: Interviewer should say that niche market for beer in this country is very small. Move into
related markets (e.g. carbonated soda, juices, etc.): interviewer should say that the company has already conducted
analysis and decided it’s not a good alternative, due to competition.
• After comparing both companies, the candidate should understand that scale economies are a major source of
competitive advantage in this market and propose some strategic alternatives to Little Bud. The interviewer should
rapidly move the discussion toward selling the company.
76
Guidance
The interviewer should propose to focus on the valuation of the business.

Ask the candidate to propose how to value the company.
Solution
• The candidate should be able to propose at least the two most common valuation methods: DCF and multiples
(multiples are used for quick assessments and we have EBITDA figures). Once asked for it, the interviewer should
give the multiple to be used: EV/EBITDA = 10x
• What is the market value for Little Bud?
• Suggested answer: based on the multiple and EBITDA figures, $50M
• What is Little Bud’s value to Geineken ?
• Suggested answer: considering Geineken margins and Little Bud revenues, Little Bud’s value to its
competitor is $214M (potentially higher, due to the fact that Geineken would become a monopoly and
be able to increase price and further squeeze suppliers)
• How to “force” Geineken to pay more than $214M?
• Suggested answer: Little Bud should open bid to other companies. Geineken has the incentive to
maintain its market dominance and doesn’t want a big international player to enter the market.
Note: When answering LB’s value to Geineken, Interviewee should assume new net profit margin will be same as Geineken
77
Conclusion

• Recommend the CEO to • There might be legal issues • Hire an investment bank to • Star candidates will
sell Little Bud. by antitrust agencies that structure the deal showcase business skill
• The company has no would prevent a transaction • Evaluate risk of ruling from in identifying the correct
competitive advantage. • Loyal customers might not antitrust agencies valuation model and price.
• Should justify reasons on
Geineken has margins perceive it positively • Identify potential cost
selling the company and why
high enough to enter a • Jobs may be lost due to the saving opportunities in not increase price or reduce
price war that would lead realized synergies and this case Geineken responds cost.
Little Bud to bankruptcy. may cause friction by reducing prices • Realize that a price war may
• Also, through an open bid • Company cultures could not offer as high a valuation
to the market, Little Bud clash/cause problems as discussed as Geineken
could achieve a higher is the only other potential
valuation. candidate at the moment and
more analysis must be done
to determine if there are
other prospective companies
that would be interested in
entering the market.
78
Exhibit 1
Revenues by Channel
Little Bud Geineken
10 Bar 70
15 Restaurants 105
45 Small Retailers 315
35 Retailers 210
*Figures in USD millions
79
Exhibit 2
P&L for Little Bud and Geineken
Little Bud ($M) Geineken ($M)
Revenues 100 700
COGS 30 178
Gross Profit 70 522
SG&A 10 70
Sales & Distribution 30 175
Marketing 25 127
EBITDA 5 150
80
Case 8
GasCo Goes
the Distance
Oil & Gas| Market Entry/Profitability
Interviewee Led
Ratings:
Quant - 1
Qual - 3
Overall - 2
81
Prompt
Case 8 – GasCo Goes the Distance
Your client is GasCo, a US-based natural gas company. In the last year, natural gas prices in the US have
declined while prices in APAC and EMEA have increased. GasCo currently has managed to develop a new
way to transport gas. The new technology significantly lowers the cost of transportation. Due to the new
technology, GasCo would like to expand in the global market.
GasCo would like to know if they should enter the APAC, EMEA, or both regions?
APAC - Asia Pacific & China

EMEA - Europe, Middle East, and Africa
• GasCo’s new technology is unique to their company and no other competitors have this technology. The new technology significantly lowers the
cost to transport gas. Gas normally has to be shipped in large containers, but now the gas is able to be liquified and then transported, significantly
reducing cost of transportation.
• GasCo’s main concern is overall profitability when entering the market.
• GasCo is worried about 1) whether there will be demand in the region and 2) which market is more profitable
• GasCo has 2 major customers: 1 in China and 1 in Japan
82
• This case is based off a final round interview with a partner who worked in O&G.
• This case is meant to be qualitative and test the candidate to see how creative they can be during brainstorming.
Brainstorming question:
• What conditions might affect profitability when entering a foreign market?
Exhibit Summary
• Exhibit 1: Proposed Entry Points Global Map –
to show the two options presented and
understand distance from US headquarters
83
Potential Framework
1. Market – Should we enter?

Market Size
• What is the size of the market in each region?
Competition
• How many competitors are there in each region?
Barriers of Entry
• Regulatory landscape in each region?
2. Incremental Revenue
• Number of customers in each market
• Pricing for both markets
• Channels currently sold in
3. Incremental Costs
• Fixed Costs – drilling, costs, salaries
• Variable Costs – cost of transportation, tariffs
84
Exhibit 1
Potential EMEA and APAC Market Entries
EMEA Port:
Spain
Texas es APAC Port:
5,000 mil
China
Note:
Natural Gas Prices
• GasCo US - $1.50
• EMEA (Russia) - $1.25
• APAC (China) - $2.00
Key:
• The dotted line shows the
shipping path that will taken
to get to the new ports
10,000 miles
85
Exhibit 1 Guidance
Questions for Candidates about Exhibit that the Interview should ask:
• What can you gather from this map?
• What is the estimated cost to transport gas to Spain vs China? (calculation on next slide – interviewer will need to
provide the candidate with some information)
• Candidate should recognize: 1) closer distance from US to Europe, but, 2) China is the furthest distance but has
large potential to capture more market share
• Strong candidates will: 1) notice that although Europe is the closest to the US, Russia has lower natural gas prices
in Russia than US which means there will be increased competition if GasCo enters the market. This could cause a
price war and increased competition in EMEA market, 2) China has higher natural gas prices which means GasCo
can enter the market competitively and capture more market share.
• Also, an extremely strong candidate will remember that 2 of GasCo’s major customers are based in Asia and is
another reason to consider APAC over EMEA
86
Exhibit 1 Guidance
When candidate asks for information provide the

candidate with the following: Calculations
Spain China
Spain China
Cost
Distance 5,000 10,000 Distance 5,000 10,000
Cost/Mile $10 $5.50
Cost/Mile $10 $5.50
Cost for distance $50,000 $55,000
# of days at sea 7 20 # of days 7 20
Cost/Day $750 $550
Cost/Day 750 550
Cost for trip length $5,250 $11,000
Est. Unit Sales 100,000 250,000 Total cost $55,250 $66,000
Revenue
Projected Sales $6 $3
Price/unit sold Est. unit sales 100,000 250,000
Sales price $6 $3
Potential Revenue 600,000 750,000
87
Brainstorming
What conditions might affect profitability when entering a foreign market?
Brainstorming Guidance:
• Market factors – change in natural gas prices across the market
• Competitor reaction – price war in market with local or regional companies
• Government response – potential tariffs or higher import tax
• Internal company capabilities – sales team, etc.
• Local technological development (more likely for competitors to catch up in tech focused market)
Good candidates will:

• Recognize that there are external and internal factors to consider
88
Conclusion
• GasCo should enter the Chinese • Competitor response in China – • Conduct a thorough market
market – although the total cost for Chinese government might impose analysis to better understand
China is higher, GasCo’s 2 major high tariffs or taxes on imported competition in China and
customers are based in APAC and US gas competitor response
will allow GasCo to better serve • Change in market demand due to • Put together a internal team to
their customers as well as have an alternative gas products available begin developing a market entry
opportunity to capture more market
in the market plan
share in the long term.
89
Case 9
Rubicon Co.
Airlines| Post – Acquisition Profitabilityy
Interviewee Led
Ratings:
Quant - 2
Qual - 2
Overall - 2
90
Prompt
Case 9 – Rubicon Co.
Your client is Rubicon Co, a low-cost airline operating in the US. A couple of years ago, Rubicon Co completed
the acquisition of Scarlet Air, an airline based primarily on the West Coast. The post acquisition profits do not
meet the executive committee’s expectations, and the CEO of Rubicon Co has brought you in to understand
the causes and improve profitability.
91
• The CEO wants to increase profit by $100M
• Assume Rubicon Co operates a single aircraft type across their fleet with similar seat layouts
• Rubicon Co is an all economy airline, not looking to change the business model
• At this point Rubicon Co is not looking to expand operations internationally
• The industry has remained relatively stable, with single digit profit % growth YoY
Exhibit Summary
• Exhibit 1: Pre & Post Acquisition Financials
[Candidate should prompt interviewer to share this exhibit]
• Exhibit 2: Northwest Region Route Comparison
[Candidate will likely require this exhibit to be handed
without prompt after exhibit 1]
92
Potential Framework
Revenue (Synergies) Cost (Synergies) Competitive Response
• Ticketing (all metrics should >= the combined metrics • Variable Costs (all metrics should <= the combined • Other airlines consolidating in the space
of the individual airlines) metrics of the individual airlines) could lead to greater pricing pressure as
• # of tickets sold • Hourly Labor cost structures are reduced
• Price of tickets • Aircraft operations
• Alternatively, less players in the space could
• Dependent on routes • Fuel
• Consolidation should decrease competition, • Maintenance & Servicing lead to more favorable pricing as consumers
resulting in increased prices • Parking/Storage have less choice
• Seasonality • Landing fees
• Fees (all metrics should >= the combined metrics of • Fixed Costs
the individual airlines) • Central functions
• On board • Marketing
• Wifi • IT
• Food & bev • HR
• Luggage • Etc
• Ancillary • Plant, Property, Equipment
• Change fees • Airport gate rental agreements
• Corporate building rentals
• Hanger space

• Candidate should look to understand the financials of the airline(s) pre and post merger – if asked, hand
Exhibit #1
• Alternatively, the candidate may ask to look at competitors financials as a comparable – if asked, let
candidate know that pre-merger Rubicon Co. and Scarlet both met industry averages on financials
• Ensure the candidate mentions that airline routes differ in terms of profitability – if not, ask candidate to think
about how the metrics for a flight from DTW to JFK are different than JFK to LAX
93
Exhibit 1
Pre and post acquisition financials
In Millions of Dollars Rubicon Co (Pre) Scarlet Air (Pre) Rubicon Co (Post)
Revenue (Tickets) 749 690 1439
Revenue (Non-Tickets) 251 210 461
Operations, Variable 650 605 1255
Marketing 50 40 90
IT 75 70 145
HR 20 14 25.5
PPE (Airport Slots, offices) 115 90 153.75
94
Exhibit 1 Guidance
• Are there areas of opportunity to positively impact profitability?
• If candidate is struggling, ask: although VC may need to remain at that level, does FC of the combined entity need to
be the combined individual FCs?
• Candidate should recognize that while synergies were found in HR and Property costs, Marketing and IT costs are
equivalent to the sum of the original airline line items – these are two opportunities for cost cutting
• Strong candidates will recognize that the combined company was able to find 25% net cost savings in property and
HR – this can be used as a rough baseline for potential cost savings in the IT and marketing buckets
95
Exhibit 1 Guidance

Rubicon Co (Post) w/
In Millions of Dollars Rubicon Co (Pre) Scarlet Air (Pre) Rubicon Co (Post) Potential Synergy Gains
Revenue (Tickets) $749 $690 $1439 Same

Revenue (Non-Tickets) $251 $210 $461 Same
Operations $650 $605 $1255 Same
Marketing $50 $40 $90 $67.50
IT $75 $70 $145 $108.75
HR $20 $14 $25.50 Reductions Already Made
Property (Airport, offices) $115 $90 $153.75 Reductions Already Made
Total Revenue $1,000 $900 $1,900 $1,900
Total Cost $910 $819 $1,669.25 $1,610
Profit $90 $81 $230.75 $289.50
Margin 9.00% 9.00% 12.14% 15.24%
Increased Profitability $58.75
Note:
• Case is looking for profitability in terms of dollars.
Percentages are given as a nice to have
96
Brainstorming
Now that we have identified a potential for cost reductions in the Marketing and IT functions,
what are some ways this can be accomplished?
• Candidates should list a few (2 – 3) ways costs could be reduced in each area
• Marketing: Reduce headcount, leverage digital solutions to streamline campaigns, outsource specific functions
• IT: Reduce headcount, outsource specific functions, merge disparate systems
Best candidates will:

• Identify risks associated with their recommendations and plan mitigation steps
• Notice that roughly half of the $100MM improvement target has been achieved, will organically think about other
areas to find profit
97
Exhibit 2 Rubicon Co
Northwest Region Route Comparison

Southeast Airlines
United
$350
$306 Gamma
$300
US Fleet Co
$250
$210
$199 $215 $203
$189
$200
$175 $169 $160
$150
$100
50
0
Seattle ↔ Denver Portland ↔ Seattle Denver ↔ Portland Seattle ↔ Denver Portland ↔ Seattle Denver ↔ Portland
Revenue Per Seat Cost Per Seat
**Rubicon Co flies ~500k passengers per route per year 98

Exhibit 2 Guidance
• One of our analysts flagged the Pacific NW as an area of concern. What are your initial thoughts on the routes?
• Candidates should recognize that Portland ↔ Seattle and Denver ↔ Portland are not profitable.
• Strong candidates will calculate the annual profit/loss the airline experiences from the routes and suggest
trying to cut costs and match competitors cost structure across all three routes
99
Exhibit 2 Guidance
Profit (Loss) Total Passenger Net Profit Profit Potential Net Profit
Per seat Volume (Loss) (if matching competitors)
Seattle ↔ Denver $91 500,000 $45,500,000 $131 $65,500,000
Portland ↔ Seattle ($4) 500,000 $2,000,000 $30 $15,000,000
Denver ↔ Portland ($21) 500,000 $10,500,000 $29 $14,500,000 Net Improvement
Total $33,000,000 $95,000,000 $62,000,000
100
Brainstorming
While Rubicon Co. is considering options to lower costs on these routes, some within the company
are thinking of cutting the loss-making routes completely. What concerns do you have with this?
• Candidates can think about the issue in terms of qualitative and quantitative buckets
• Quantitative: Loss of revenue from fees, inflight purchases, freight/shipping
• Qualitative:
• Knockback effect -> passengers flying these routes may be connecting to other profit positive flights, and
cutting routes may make other routes less attractive
• Political issues with city leadership
• Airport contractual obligations

• Think about potential changes in demand for the routes, and ask the airline to consider that before trimming routes
101
Conclusion
• To achieve the target profitability • Detriment in morale with • Research competitors cost
improvement, Rubicon Co should headcount reductions/outsourcing basis for PNW routes and begin
reduce costs in Marketing & IT to • Changes in demand on routes, matching methodology
match synergies achieved in other impacting pricing and profitability • Consider cross training employees
departments. In addition, the airline to reduce volume of layoffs
should look to reduce costs on • Identify strategy to reduce costs in
their Pacific NW routes to match marketing and IT by 25%
competitors’ cost structure
102
Case 10
Spice Up Your Life

Private Equity, Food/Retail | M&A, Valuation, Chart Analysis
Interviewee Led
Ratings:
Quant - 2
Qual - 1
Overall - 2
103
Prompt
Case 10 – Spice Up Your Life
Our client, Seasoned Investors (SI), is a private equity firm that has just launched a new fund focused on
investments in the food industry. For their first investment, they are considering acquiring Favored Flavors (FF),
a spice company specializing in premium organic spices.
Favored Flavors is asking for $75M, and the offer is final. Should Seasoned Investors pursue this acquisition?
• Financial Targets: SI seeks a Multiple of Invested Capital (MOIC) of 2x (i.e. it seeks to earn double the value of its investment by the end of the
holding period).
• The fund has a holding period of 4 years, at which point the fund will sell the business. SI is confident that they will be able to sell the business
at 10x EBITDA.
• FF does not have any debt.
• FF sells primarily to grocery store wholesalers (not an important part of this case).
• A couple SI managing directors have significant experience in this industry, but SI does not currently have any other portfolio companies in the
food/beverage market.
104
Notes/Advice to Interview
• MOIC does not involve time value of money, so a discounted cash flow analysis is not needed.
(If the interviewee begins to discuss a DCF and/or discount rate)
Exhibit Summary
• Exhibit 1: 2020 Income Statement and Industry Comparison
• Exhibit 2: Revenue Projections
Exhibit 1: 2020 Income Statement and Industry Comparison

• Provide this when the candidate asks about the company’s profitability.
Exhibit 2: Product Mix

• Provide this when the candidate asks about costs or revenues by product.
Exhibit 3: Revenue Growth

• Provide this when the candidate asks about growth rates or projections.
105
Potential Framework
Company PE Firm Market Valuation
Profitability/Cash Flow Analysis • Fund objectives • Market Growth • Cash flow during holding
• Revenue • Synergies/Improvements • Market Size period
• Price • Future bolt-on • Competition • Exit value
• Quantity acquisitions • Trends: • Multiples
• Cost • Investment-light revenue • ESG: Fair wages for
• Variable: growth opportunities farmers, ethically
• Raw Materials • Cost optimization sourced spices,
• Packaging • Firm expertise in industry sustainability in
• Shipping • Fund restrictions packaging Note/Advice to Interviewer/
• Fixed: • Financing the acquisition • Customer trends: How to move forward
• Manufacturing Plant • Exit strategy desire for more exotic • Handover exhibits 1 and 2 after
candidate asks for relevant
• Labor foods, healthier eating, information
• Other SG&A Costs more online grocery • A strong candidate will set up an
• Company Leadership/ purchases equation to evaluate the
Capabilities • Regulations: transaction, such as:
2*Purchase Price ≤ Sum of FCFs
• Trade restrictions, + Sale of Business
import/export
regulations
106
Exhibit 1
Industry Average Cost Breakdown
EBIT
FF 2020 Income Statement
Depreciation & Amortization
Revenue ($M) 50
Other
COGS ($M) 33
R&D
SG&A* (% of revenue) 23%
EBITDA COGS**
(Revenue – COGS – SG&A) ($M) 5
Labor
Free Cash Flow (% of EBITDA) 62.5%
*SG&A includes labor, marketing, R&D, and other costs

Marketing
**Industry average breakdown for COGS

is 90% raw material and 10% packaging.
107
Exhibit 1 Guidance
Questions for Candidates

“Favored Flavors provided us with a summary of their most recent annual income statement. Your consulting
team also pulled some industry average cost data for comparison. What insights do you get from this data?”

• FF’s EBITDA is 4% less than the industry average of 14% (EBIT of 11% + Depreciation and Amortization of 3%)
• FF’s COGS (33/50=66%) is 8% higher than the industry average. This could be because of the higher quality
of the spices, but there may still be opportunities to optimize.
• FF’s SG&A (11.5/50=23%) is 4% less than the industry average, which could be a competitive advantage.
From here, candidates should drive the case forward by asking for more information on COGS.
Notes/Advice to Interviewer:
• If the candidate has questions around net income or free cash flow, explain that free cash flow is the cash flow
available to funding providers (i.e. the amount the PE firm will receive from the business each year)
• If candidate asks for the company’s EBIT or Depreciation and Amortization expense, simply state that FF did not
provide those line items.
108
Exhibit 2
Product Mix
Black Pepper Cloves Coriander Cumin Oregano Paprika Saffron Sage Thyme Other
Revenue 26 6 11 8 15 4 5 6 11 8 $50M
Cost 20 5 7 8 12 5 9 4 8 6 16 $33M
Packaging
109
Exhibit 2 Guidance
Product Mix
Ask the candidate if they have any insights on the exhibit.
• Candidates should also note that packaging is significant at 16% of total cost, which is higher than the industry
average of 10%. If necessary, prompt the candidate to calculate the cost savings that would come from
bringing the packaging cost down to the industry average.
• Solution: 6% * 33M = $1.98M (rounding to $2M is fine)
• Candidates should also note that Saffron is currently losing money ($50M * 5% = $2.5M in revenue, $33 * 9% =
$2.97M in costs (tell the candidate they can round to $3M in cost). Once the candidate reaches this insight,
share that your team believes this cost can be reduced by 1/3rd.
• Solution: 9% * (1/3) = 3% change. 3% * $33M = $0.99M (rounding to $1M is fine)
• Total gain in profit/EBITDA = $3M. Prompt the candidate to calculate the free cash flow for 2020 if these changes
were made if the candidate does not automatically do so.
• Solution: $5M + $3M = $8M in EBITDA. 8 * 62.5% (or 5/8) = $5M. Strong candidates will note that EBITDA is
now 16%, higher than the industry average, and that FCF is 10% of revenue.
110
Exhibit 3
Projected Revenue Growth
80
80
75
70 69
Revenue ($M)
65
61
60
55 55
50
0
2020 2021 2022 2023 2024
111
Exhibit 3 Guidance
Projected Revenue Growth
Question/Exhibit Guidance
• Candidates should use this graph to calculate the future free cash flows for the business, using the new profit
margins that they calculated from Exhibits 1 and 2.
• When the candidate asks about the value of the business at the sale or terminal value, mention that SI
believes they will be able to sell the company at 10x EBITDA in 2024.
• By adding each year’s FCF and the terminal value, the total projected value of the business should be $154.50,
which is greater than the 2x MOIC requirement of $150. Once the candidate has reached this point, ask the
candidate to prepare a conclusion for the client.
Free Cash Flow Analysis Exit Value Analysis
2021 2022 2023 2024 EBITDA (16% of revenue) 12.8

Revenue 55 61 69 80 EV/EBITDA multiple of 10x $128
FCF (10% of Rev) 5.5 6.1 6.9 8
Total FCF $26.50 Total Projected Value ($M) $154.50
*Note: no discounting needed. If candidate asks about discounting, remind them

of the 2x MOIC requirement
112
Conclusion
• Seasoned Investors should move • Candidates could list a variety • Next Steps should either directly
forward with the acquisition of of risks, including but not limited relate to mitigating risks or to
Favored Flavors, as the projected to any of the factors included exploring additional workstreams
value of $154.50M is greater than on the framework slide. Strong identified in the framework that
twice the investment cost of $75M. candidates will briefly mention a were not covered in the case.
couple of the most salient risks
and include potential mitigating
strategies.
Notes for Interviewer:

• This case tests quantitative skills but also the candidate’s ability to remain organized as data from one exhibit often
needs to be compared to another for important insights. Strong candidates will be using their notes to not have to
ask the interviewer constantly to re-show an exhibit.
• The case topic should be easily relatable for most candidates, so pay attention to the candidate’s soft skills and
ability to be conversational.
113
Case 11
Apogee Bank
Financial Services | Growth Strategy
Interviewee Led
Ratings:
Quant - 2
Qual - 2
Overall - 2
114
Prompt
Case 11 – Apogee Bank
Our client Apogee bank, a regional bank with 700 branches in US Midwest, has seen a declining trend in
revenues in the past 2 years. Blake Moran, the CEO of Apogee bank, hired you to identify the reasons for
falling revenues and recommend ways to grow revenues.
• Apogee Bank offers checking and savings accounts, as well as personal, mortgage and auto loans.
• On the checking and savings accounts, Apogee bank makes money from service charges and account maintenance fees
whereas it earns interests on loans.
• Apogee bank provides services through both brick-and-mortar branches and online applications.
115
• Apogee Bank offers checking and savings accounts, as well as personal, mortgage and auto loans.
• On the checking and savings accounts, Apogee bank makes money from service charges and account
maintenance fees and earns interests on loans.
• Apogee bank provides services through both brick-and-mortar branches and online applications.
• The candidate doesn’t need to know any other information about the client’s business or the retail banking industry
to solve this case. If the candidate asks for any more clarification at this point, reverse the question to ask why that
specific information is needed for the case.
Exhibit Summary
• Exhibit 1: Average Revenue Per Account (ARPA) by Product
• Exhibit 2: Summary of email survey conducted on churning customers
• Exhibit 3: Partner with WizardTech or Buy Finvest Inc?
116
Potential Framework
Revenues falling Change in Market Dynamics Growth Opportunities
ARPU decreasing Competition Organic

• Volume of services used by customers • New regional banks in the area • Play with Price
decreasing • Better interest rates offered by regional or • Market expansion - acquire new accounts
• Mix of transactions shifting to low value online competitors • Market penetration - focus on cross selling
products • Increased consolidation amongst regional • Diversification - adding new products for
• Asset/deposit base shrinking banks new & existing customers
• Decrease in branch/ATM walk ins
Customer Trends Inorganic
# of customers decreasing • Less interest in traditional/regional banks • Buy market share - acquire fintechs/other
• Customer experience issues amongst the millennial/GenZ userbase banks
• Lack of online capabilities impacting • Inclining towards non-banking companies/
serviceability and scale challenger banks for banking needs
• Trust/Security/Conveience concerns • Lack of rewards/benefits
• No financial education resources
Notes / Advice to Interview /
• Lack of rewards/benefits Government/Regulartory Reasons How to Move Forward:
• New caps on reserves limitng lending • Candidate should recognize that this is a revenue
power problem
• Additional onbaording paperwork limiting • Hand Exhibit 1 if the candidate mentions reve-
new account opening userbase nues as the area of initial focus
• Inclining towards non-banking companies/ • If the candidate mentions costs or profitability,
challenger banks for banking needs ask why and then direct the candidate to focus
• Lack of rewards/benefits on revenues
117
Exhibit 1 Guidance
Average Revenue Per Account (ARPA) by Product
What additional insight does this chart provide on the potential root causes behind falling revenues at Apogee?
• Once the candidate recognizes falling # of accounts or deactivation of accounts in the last 2 years as the reason,
ask him or her how this trend translates into # of users active on the platform? (Highlight the footnote if the
candidate doesn’t acknowledge it)
• Once the candidate figures out the primary reason (Customer Churn) behind the fall in revenues in the last 2 years,
brainstorm on potential ways to identify reasons for churn and then move to Exhibit 2 after sufficient brainstorming
• Candidate should recognize: Falling revenues across all products, ARPA remaining constant -> Volumes decreasing
• Strong candidates will:
• Recognize the relation between ARPA and ARPU (Average Revenue Per User) -> ARPU = ARPA * # of Accounts per user.
Since the # of Accounts per user has not changed (as mentioned in the footnote), it can be deduced that customers are
leaving the bank
• Start brainstorming reasons for why customers could be churning and what are the best ways to identify reasons for
churn i.e. surveys
118
Exhibit 2 Guidance
Summary of email survey conducted on churning customers
What additional insight does this chart provide on the reasons for recent increase in customer churn?
• Once the candidate identifies the key reasons for churn, push him/her to brainstorm ideas for next steps – adding
new investment products.
• After sufficient brainstorming, hand out Exhibit 3 to the candidate.
• Candidate should recognize: Lack of investment/personal finance products offered digitally as the primary reason for
churn as can be deduced from: High interest in digital/challenger banks, and mention of digital investment platforms,
access to wealth management products and financial advice as the primary reasons for switching to a different platform.
• Strong candidates will: consolidate all the key takeaways to recommend next steps (acting on not having enough
personal finance products to offer)
119
Exhibit 3 Guidance
Partner or Buy?
Calculations
• The client here wants to finalize which mode of launch makes more financial sense for the bank
• Steer towards calculating payback/breakeven period if the candidate doesn’t move in that direction
• Candidate can assume that cost synergies as mentioned in the footnote can be realized from inception
• Strong candidates will: recognize cost synergies, structure profitability calculations separately and suggest
calculating payback period without prompting
Partner with WizardTech Buy Finvest Inc.

Total yearly cost 750,000 + 14 * 125,000 2,500,000 Total Fixed Cost 150,000 * (1 - 6%) $141,000
Total yearly revenue 23 * 125,000 2,875,000 Unit Revenue 800,000/100,000 $8
Yearly incremental profits 2,875,000 - 2,500,000 375,000 Unit Variable Cost 8 - 4 * (1 - 5%) $3.8
Payback (in years) 280,000/375,000 7.5 Total Variable Cost (125,000 + 100,000) * 3.8 $855,000
Total Revenue 8 * (125,000 + 100,000) $1,800,000
Yearly incremental profits 180,0000 - 141,000 - 855,000 $804,000
Payback (in years) 5,000,000/804,000 6.2

120
Exhibit 1
Average Revenue Per Account (ARPA) by Product
Total Revenue (in M) and Average Revenue Per Account (ARPA)* by Product
Checking/Savings
account
250 80
Loans
70
Other products
200
60 ARPA - loans
ARPA - other products

Total Revenue in M
50 ARPA - checking/
150 savings account
ARPA
40 *# Accounts per cus-
tomer and the mix and
100 30 volume of transactions
within each account type
have remained almost the
20 same across all products
in the last 5 years
50
10
0 0
2016 2017 2018 2019 2020
121
Exhibit 2
Summary of email survey conducted on churning customers
Where did the survey respondents switch to? Reasons for switching
29 High interest rates on deposits

78
Digital platforms/Online capabilities
195 780
Customer Service
478
Low fees
Acess to wealth managment products
Digital Banks Competitor Regional Banks Advice on financial health
National Banks Other Institutions
Access to a banker
0% 10% 20% 30% 40% 50% 60% 70% 80%
122
Exhibit 3
Partner or Buy?
Partner with WizardTech Buy Finvest Inc.
B2B tech company offering white labelled investment New Jersey based FinTech startup offering
products & services to retail financial services companies personal wealth management services
Setup cost $2,800,000 Buy Price $5,000,000
Annual maintenance cost $750,000 Annual Revenue $800,000
Price charged to Apogee $14 Annual Fixed Cost $150,000

for every user onboarded
Average Revenue Per User (ARPU) $23 Contribution Margin $4
Estimated new users 125,000 Current Userbase of Finvest 100,000
Estimated new users 125,000
Apogee bank expects Finvest to immediately save 6% on fixed costs

and improve contribution margin by 5% if the deal goes through
123
Brainstorming
What are some other pros and cons of acquiring Finvest Inc. over partnering with WizardTech?
Pros:
• New resources and competencies - access to additional customers as well as employees, assets and IP
• Reduced entry barriers to launch wealth management services
• Increase bottom line profitability once entities have completed the acquisition
• Increased market power; better positioned to fight competition
• See immediate and long-term tax advantages
Cons:
• High initial capital for acquisition
• Risk losing key employees and customers if combining the two companies is not executed carefully and effectively
• Risk financial detriment if the company being acquired turns out not to have enough value to justify the investment
• Longer implementation time and distraction from day-to-day operations
• Any regulations that limit the acquisition
Any other logical reason is also acceptable
124
Conclusion
• Acquire Finvest Inc. at $5M for a • The acquisition might not provide • Ensure appropriate liquid funds are
payback in 6.2 years the expected benefits due to a mis- available to fund the acquisition
• Extend Finvest’s investment managed or prolonged integration • Plan an integration strategy to
product offerings to all customers • With no experience in selling merge with Finvest and to roll-out
of Apogee Bank wealth management products investment products in phases
earlier, there may be hiccups • Explore ways to realize additional
that Apogee Bank can face in synergies post acquisition
marketing and opening new
investment accounts
• Finvest’s unstated intent to sell
and the confidence in maintaining
it’s current financials
• Customer adoption to these new
products by Apogee Bank could
be slow
125
Case 12
Attack Helicopter
Defense | Market Entry
Interviewee Led
Ratings:
Quant - 3
Qual - 2
Overall - 3
126
Prompt
Case 12 – Attack Helicopter
Our client is a US defense contractor and one of its divisions manufactures attack helicopters for military
operations. The company is considering setting up a new plant to meet increasing demand in the attack
helicopter space. These helicopters are fully equipped with guns and ammo when delivered to the end
customer. Our client has considered three sites to setup operations: Brazil, France, and the US.
How would you make this decision, and where should our client set up the plant based on that analysis?
• Our client has 3 plants in the US; 2 in Kansas and 1 in Michigan
• The plants operate at full capacity today
• One of the US plants can accommodate an additional assembly line at
a cost of $500M; the other 2 are landlocked in residential areas and cannot be expanded

• Candidate should structure the framework to consider the elements for evaluating 3 countries
• Candidate should start with a financial analysis. If not, nudge them in this direction
• If candidate does not mention examples of variable and fixed costs, prompt them to do so prior to revealing financials
127
Framework
Profitability Analysis
Customers Suppliers Logistics
of Each Site
• Where are they based? • Supply chain considerations • What’s it going to take to get the
• Cost
• Need to be close to the customer • Do we have an adequate product to the customer?
• VC
for design inputs? supply base in each location? • Labor
- Materials
• Additional customer points? • Assembly inputs • Availability of skilled managers
- Hourly Labor
• Do governments prefer to buy from • Spare parts & technicians
- Ship/Distribution
domestic companies? • Raw materials • Export control restrictions?
• FC
• Are there custom designs? Is each • Local regulations: can you
- PP&E
helicopter the same? import what is needed?
- Utilities
• Proprietary information: can you
- SG&A
build two helicopters for two
- Initial Cost
countries at once?
• Revenues
• Is there a market for private
- Price per helicopter
security and not just military?
- # of helicopters / year
- How frequently do
helicopters get replaced?
128
Financial Information
Cost Information Sales Information

Initial Plant Set up Cost: $500M (US) | $2B (BR) | $3B (FR) Each helicopter sells for $100M/unit, but if they are imported
into the US, the US government requires them to be certified;
Fixed Cost: $100M annually in all three countries
the certification process costs $15M/unit.
Variable Cost: $15M (US) | $20M (BR) | $25M (FR)
In the case of attack helicopters, the US and France each have
export control restrictions in place prohibiting the sale of attack
helicopters to other countries.
Market Size and Revenue Information Implication: If the client manufactures within the US, they will
only be able to sell to the US government – no exports are
Defense budgets for next 5 years: $100B (US) | $15B (BR) | $10B (FR)
allowed.
% of Defense budgets to be spent on our helicopters: 20% (US) | 50 % (BR) | 15% (FR)
129
Math Solution
If plant in the US If plant in Brazil

Revenues: Revenues:
US revenues over 5 years = 20% of $100B = $20B US revenues over 5 years = 20% of $100B = $20B
BR revenues over 5 years = 50% of $15B = $7.5B
Costs:
# of copters = $20B / $100M = 200 helicopters Costs:
Variable Cost: 200 helicopters * $15M = $3B # of US-bound copters: $20B / $100M = 200 helicopters
Fixed Cost: $100M annually # of BR-bound copters: $7.5B / $100M = 75 helicopters
Initial Cost: $500M Variable Cost: (275 helicopters * $20M)** + (200 helicopters * $15M)* = $8.5B
Fixed Cost: $100M annually
Profit = Rev – VC – FC – IC Start-up Cost: $2B
Profit = $20B - $3B – ($100M * 5) - $500M = $16B
Profit: $27.5B - $11B = $16.5B
Key Takeaway: Plant in Brazil will give us profits higher than US by $500M
Notes
• Interviewee should notice that France is not an attractive candidate due to having the same exact costs as Brazil but significantly smaller revenues in addition to
export issues.
• Once interviewee mentions a profitability calculation, nudge them to calculate profit over the next 5 years
• ** = VC to manufacture in Brazil *= Certification costs to sell to United States
130
Brainstorming
Evaluate the potential risks of acquiring helicopters in Brazil.
Brainstorming Guidance
• If the interviewee does not provide potential risks for moving forward with Brazil, ask this question.

• Drive the case toward potential risks of launching in Brazil without prompting.
Potential Solutions
• Political stability • Know-how in other countries
• Product quality • Brand image and trust in helicopters
• Robustness of supply chain • National security may be an issue as
• Cultural customs are different and may affect helicopters/defense equipment will be
business relationships manufactured outside of US
131
Conclusion
• Based on the financials, Brazil • Those gained from brainstorming • What is the potential for selling
appears to be a more attractive choppers outside of these 3
candidate for setting up the new countries to the global market?
plant because: • What will labor’s reaction at our
• Our profits over 5 years will be • existing plants be if we
higher by $500M • Are US relations with Brazil likely to
• We won’t be entirely dependent be cordial over the next 5 years for
on one single country (US) for us to benefit from favorable export
sales control policies?
132
Case 13
FLC Sports League

Sports | Profitability & Market Entry
Interviewee Led
Ratings:
Quant - 2
Qual - 3
Overall - 3
133
Prompt
Case 13 – FLC Sports League
Your client is a major sports league called FLC. They organize a national championship and several other
smaller competitions. Serving as the only professional men’s soccer league in the country, FLC currently has 10
teams. FLC is involved in general league management, which includes setting rules of gameplay, organizing the
US National Championship, drafts, matches, referees and deals with sponsors etc. Currently FLC only receives
revenues from royalties paid by the teams within the league, and the company is interested in increasing its net
income by expanding its operations.

• In this case, the candidate should NOT focus on FLC’s current existing costs. The main focus is to evaluate different options to
expand FLC’s operations to meet the target NI growth.
134
• This year, FLC’s revenue was ~$100M with 10% Net Income
• FLC wants to increase its NI by 20% in the next year, with an ROI (NI / Investment) hurdle rate of 15%
• For the purpose of this case, consider that FLC’s current operations and revenue management are fully optimized (no organic
growth possible)
• FLC is responsible for large upfront commercial, operational, and marketing costs when a new team enters the league
• FLC does not own any teams in the league
• Candidate should assume that teams are interested in joining the league for any option chosen
Guide to Handouts
• Provide Exhibit #1 when candidate requests information regarding potential revenues/market size
• Provide Exhibit #2 when candidate requests information on existing geographies or suggests evaluating geographic expansion
• Provide Exhibit #3 when candidate requests information on costs involved to accept new teams
• Candidate should clarify that FLC is a soccer league and that FLC’s only revenue stream is royalties from teams in the league
135
Possible Framework
Market Entry – Same Business Market Entry – Different Business Current Business
• New sport – hockey, baseball, • Acquiring a team – good idea, but • Increase royalties – not possible,
football if it is a soccer team, conflict of revenue management fully
• New geography – recruit new interest. If other sports, very risky, optimized
teams in US cities because FLC doesn’t have the • For each of the options, candidates
• New leagues – women, youth know how should come with a method to
evaluate revenues & costs to FLC
• Revenue drivers: royalties paid
to the league (soccer fans, avg.
spent with sports, team avg.
revenues)
• Cost drivers: marketing, labor,
SG&A
• Give extra credit for candidates
that come with those different
options and can point out different
drivers/risks
136
Exhibit 1
Average royalties paid for league management
Royalties
15
16
14
12
% of Revenues
10
10
8
6 5
4
2
2
0
Hockey Baseball Football Soccer
# of Teams 10 8 10 10
Avg Revenue
Per Team ($M) 40 50 100 60
137
Exhibit 2
Sports fans in cities where FLC is not present

Sports Fans Per City
7
6
Population (Millions)
5 Soccer
4 Football
Baseball
3
Hockey
2
0
San Diego Atlanta Detroit Houston
New club projected

revenue per sports $30 $50 $25 $40
fan (years)
138
Exhibit 3
FLC’s total cost to foster a new team

City Sport Cost ($M)
San Diego Hockey 1

Baseball 2
Football 3
Soccer 5
Atlanta Hockey 9
Baseball 10
Football 12.5
Soccer 7.5
Detroit Hockey 4
Baseball 1.5
Football 2.5
Soccer 2
Houston Hockey 1
Baseball 4
Football 8
Soccer 4.5
139
Exhibit Insights
Insights – Exhibit 1 Insights – Exhibit 2 Insights – Exhibit 3
A good candidate will exclude A great candidate will start with Atlanta A good candidate will get here
Hockey and Baseball from further and will remember to multiply the final with Atlanta soccer and football
revenue of each team by the royalties % recommendation. A great candidate
analysis after calculations, but a great
and NI margin will point out possible risks of moving
candidate will exclude these two
sports just looking at the graph and to another sport.
Calculations:
not doing any math. Atlanta football – (4M – 2.5M) x $50 =
$125M rev. x 10% royalties paid to FLC Calculations:
= $12.5M in new rev. x 10% NI margin = Atlanta football - $1.25M NI / $12.5M
Calculations:
$1.25M cost = 10% ROI
Hockey – 10 x $40M x 2% = $8M Atlanta soccer – (6M – 4M) x $50 = Atlanta soccer - $1.5M NI / $7.5M =
Baseball – 8 x $50M x 5% = $20M $100M x 15% royalties = $15M x 10% = 20% ROI
Football – 10 x $100M x 10% = $100M $1.5M Houston football - $0.8M / $8M =
Soccer – 10 x $60M x 15% = $90M Houston football – (4M – 2M) x $40 = 10% ROI
$80M x 10% royalties = $8M x 10% =
Houston soccer - $0.9M / $4.5M =
$0.8M
Takeaway: Houston soccer – (5.5M – 4M) x$40 20% ROI
Move on with soccer and football = $60M x 15% royalties = $9M x 10% =
$0.9M Takeaway:
Football’s ROI is lower than FLC’s
Takeaway: hurdle rate, so FLC should move on
Atlanta and Houston are good options with soccer in Atlanta and Houston
140
Conclusion

• FLC should invest in an • Customer preference can • Start negotiating with the • Candidates come up with
Atlanta ($1.5M) and a change from soccer to candidates two or more opportunities
Houston ($.9M) soccer other sports • Set up initial marketing to expand (other sports,
team in order to achieve • Average spend may be and communication plan other cities, other leagues)
the $2.4M (24%) increase lower than expected for the launch • Candidates who quickly
in net income and respect • As FLC grows, costs • Consider other cities to realize that hockey and
the ROI hurdle rate of can increase more than keep expanding in the baseball are not viable
15% in both investments expected following years • Candidates who identify
(Atlanta and Houston – risks involved in opening
20%) a football league (lack of
know how, competitors)
• Candidates with perfect
math calculations /
organization
141
Case 14
Marie’s Café
Food | Profitability
Interviewer Led
Ratings:
Quant - 2
Qual - 3
Overall - 3
142
Prompt
Case 14 – Marie’s Café
Marie’s Café is a small local coffee shop that serves coffee. Marie’s has been around for decades and is known
for its high quality drinks and cozy atmosphere. The café has seen declining profits over the last few quarters,
and the owner has hired you to increase its profits.
• There are two other coffee shops nearby that sell coffees and pastries.
(There is no further information on these competitors.)
• Marie’s currently serves two items (coffee and latte) in three different sizes.
Note:
• If the candidate touches on prices or costs, show Exhibit 1 and ask to calculate avg. profit / customer
• Next give candidate the relevant data points including Exhibit 2 and ask to calculate avg. profit / day
143
Framework
External Factors Internal Factors
Market Company
• Market growth • Foot traffic in the coffee store (Increase number of
• Changing consumer preferences (Product, atmosphere) customers)
• Process Efficiency (average time to cater to each customer)
Competition • Capacity of the cafe
• New low cost competitors
• New substiutes (restaurants or fast food chains close-by) Product
• Product diversification (limited product range)
• Price sensitivity of customers
• Complimentary products and services (wireless services)
• Quality of products/brand image (building on brand)
Exhibit Summary
• Exhibit 1: Products, Costs, and Customer Split
• Exhibit 2: Demand of coffee per hour
144
Question 1
Questions for Candidates about Exhibit Product Price Cost Unit Profit
% of
Customer
Profits per
Customer
that the Interview should ask: Purchases
• How much profit does Marie’s cafe currently make Coffee, 8 oz. $1.00 $0.50 $0.50 15% $0.08
per customer?
• Assume each customer only purchases one drink per Coffee, 12 oz. $1.50 $0.70 $0.80 15% $0.12
visit. (Show Exhibit 1)
Coffee, 16 oz. $2.00 $0.90 $1.10 15% $0.17
Guidance:
• Strong candidates will point out the larger sizes yield Latte, 8 oz. $3.00 $1.30 $1.70 20% $0.34
larger gross profit, and suggest new profit increasing
strategies (promoting sales of larger sizes, introducing Latte, 12 oz. $4.00 $1.90 $2.10 20% $0.42
a 20 oz size, eliminating 8 oz sizes). Profit here does not
include baristas. Latte, 16 oz. $5.00 $2.50 $2.50 15% $0.38
• Avg Profit = $1.50 / customer.
See Calculations to the right. Average Profit $1.50
145
Question 2
Questions for Candidates about Time Demand per

Served Current Optimal Optimal Optimal
Hour Profit Baristas Served Profit
Exhibit that the Interview should ask:
What is the average profit that Marie’s Café earns per day? 7AM to 10PM 100 60 180 3 90 270
• Each customer purchases exactly one beverage
• Two baristas are working at any given time. Baristas are paid $15/hr
• Hours: 7am to 10pm, Monday through Friday. Closed on weekends 10AM to 1PM 80 60 180 3 80 225
• The number of customers per hour is listed below. Customers leave
if they cannot be served quickly
• On average, it takes 2 minutes for a barista to complete an order 1PM to 4PM 60 60 180 2 60 180
• *Show Exhibit 2
4PM to 7PM 40 40 90 1 or 2 30 or 40 90
Guidance:
• Candidate should realize that the café is losing 7PM to 10PM 15 15 -22.5 1 15 22.5
money in the evening hours. Candidate should
suggest adding or subtracting baristas based on $607.50 $787.50
demand. Assuming 2 baristas per hour, the average
profitability per day would be $607.50. By adding a
third barista to the morning shift and reducing one
at night, the new profit would be $787.50
146
Exhibit 1
Products, Costs, and Customer Splits
Product Price % of Customer Product Cost

Purchases
Coffee, 8 oz. $1.00 15% Cup, 8 oz. $0.30
Coffee, 12 oz. $1.50 15% Cup, 12 oz. $0.40
Coffee, 16 oz. $2.00 15% Cup, 16 oz. $0.50
Latte, 8 oz. $3.00 20% 4 oz. of coffee $0.10
Latte, 12 oz. $4.00 20% 4 oz. of latte $0.50
Latte, 16 oz. $5.00 15%
Note: Food and packaging costs are separate.
147
Exhibit 2
Demand of coffee per hour
Time Average Demand per Hour
7AM to 10AM 100
10AM to 1PM 80
1PM to 4PM 60
4PM to 7PM 40
7PM to 10PM 15
148
Question 3
If candidate mentions that competitor sells pastries, while Marie’s Café does not: follow up by asking,
“what factors should Marie’s Café consider before purchasing an oven to sell pastries?”
Brainstorming Guidance
Revenue
• Doughnut sales, increased synergies with coffee/volume of customers
Costs
• Fixed costs – purchasing/maintaining oven, setting up display case, storage, advertising
• Variable costs – ingredients, hiring/training staff
Capacity
• Room in café for oven and ingredients
• Baristas available to accommodate for increase in demand
Brand Image – Marie’s is known for its coffee and atmosphere; adding pastries may change image
and drive away loyal customers, especially if they are low quality
Competition – Price and quality compared to competitors
Alternative Opportunities – Purchasing doughnuts from somewhere else
149
Question 4
A new espresso machine, priced at $2000, can greatly decrease the time it takes to make a latte.
The average time it takes to complete an average customer’s order decreases from 2 minutes to 90 seconds.
How long would it take to pay back the machine?
Demand per Optimal Optimal Optimal

Time Served Profit
Math Solution: Hour Baristas Served Profit
• Daily Profit shown below, calculated with the 7AM to 10PM 100 80 270 3 100 315
optimal number of baristas
• Machine would be paid back in 14.8 days 10AM to 1PM 80 80 270 2 80 270
• (2000/(922.5 - 787.5) from Question 3)
• Baristas in the 7-10AM would also yield similar
profits with the advantage of turning away few
1PM to 4PM 60 60 180 2 60 180
customers
4PM to 7PM 40 40 90 1 40 135
7PM to 10PM 15 15 -22.5 1 15 22.5
$607.50 $922.50
150
Conclusion

• Focus on driving profits • Offering wireless services • Hire 4 baristas for peak • An excellent caser will
through larger size of might make customers time or use the new provide both the pros and
coffee due to higher gross stay for longer and the machine. cons of starting wireless
profit per transaction capacity of the cafe might • Sell food along with services. He/She would
• Schedule 4 baristas not be enough to hold the coffee. As baristas are also be able to highlight
during peak times and customers. currently limited, think capacity and process
2 baristas during slower • Baristas unable to about buying food/ optimization issues.
periods accommodate demands pastries from wholesaler.
• Offer complimentary
add on services such as
wireless services
• Diversify product range by
including food.
151
Case 15
Midwest Hospital
Healthcare | Profitability
Interviewer Led
Ratings:
Quant - 2
Qual - 3
Overall - 3
152
Prompt
Case 15 – Midwest Hospital
Midwest Hospital is a research-based hospital and takes pride in its joint replacement surgery department.
Recently Midwest Hospital did a P&L analysis for all departments and found that the joint replacement surgery
department is providing losses.
The CEO has asked us to help out.
• There are no financial targets.
• Focus of this case is only on joint replacement surgery.
• Give the exhibits in the subsequent slides only when the candidate asks for the relevant data.
Note:
• At some point near the start of the case, interviewer should take the lead.
• Make Exhibit 1 and 2 available for the interviewee ahead of question 1 and 2.
153
Framework
Profit = Revenues - Costs Costs

• Fixed Costs
Revenue • Hospital
• No. of Surgeries • Doctors
• Complexity of surgery • Equipments
• Patient Mix • Insurance
• Price • License
• Other Charges (bed, medicines) • Variable Costs
• Post Surgery (visits, medicines) • Visiting Doctors/Surgeons
• Govt. regulation
Competition
• Price Customers Exhibit Summary
• Patient Mix • Age group
• Better facilities/equipment • Paying with insurance • Exhibit 1: Patient Mix
• Exhibit 2: Joint Replacement Department P&L
• Exhibit 3: Competitive Benchmark
154
Question 1
Would it be advisable to not cater to Medicare patients (assuming no backlash)?

(Show Exhibit 1 & 2)
Solution:
• On a fully cost allocated basis, Medicare patients are unprofitable but they are still paying $1k
above the variable cost (marginal cost). This helps cover the fixed costs of the department.
So, it is not recommended to stop conducting surgeries for Medicare patients.
• Total Cost / # of Surgeries = $21M / 1000 = $21,000 / surgery

• Marginal Cost / # of Surgeries = $14M / 1000 = $14,000 / surgery
• Revenue per Medicare patient = $15,000 / surgery
155
Question 2
What is the number of surgeries that Midwest needs to conduct in a year to breakeven?
Solution:
• Average revenue per patient is 19k. Average variable cost is 14k. Gross margin per patient is 5k.
Fixed cost are 7M, so 1400 surgeries are required to breakeven. Assuming same proportion as in
Exhibit 1 the hospital requires 140 commercial, 420 insurance, and 840 Medicare Patients
Avg. Revenue Per Surgery = Total Revenue / # of surgeries = $19M / 1000 = $19,000 per patient
Avg. Variable Cost = Total Variable Cost / # of Surgeries = $14,000 per patient
Fixed Costs = $7M
Breakeven = FC / (Rev - VC) = $7M / ($19000 - $14000) = 1400 Surgeries
Patient Mix:
Commercial = 10% * 1400 = 140 surgeries per year
Insurance = 30% * 1400 = 420 surgeries per year
Medicare = 60% * 1400 = 840 surgeries per year
**Percentages based on share of surgeries from Exhibit 1**
156
Question 3
Why is Competitor D able to stay profitable despite having fewer patients and unfavourable patient mix?
(Show Exhibit 3)
Solution:
• Competitor D might have a lower cost structure or was able to negotiate better pricing from
payers.
157
Question 4
Evaluate potential risks to increasing the number of surgeries.
• There might not be enough market demand and increasing surgeries
would mean stealing marketing share from competitors
• The competitors might reduce the price and enter a price war
• Quality of surgery may be reduced, impacting reputation.
• Surgeons may resent higher workload
158
Conclusion

• Increase total number of • Those gained from • Analyze scope for cost • Star candidates quickly
patients to cover brainstorming reduction, starting identify that competitor D
• Change mix of patients to with competitive has a similar patient mix
have a higher proportion benchmarking but is still profitable.
of commercial and insured • Analyze scope for • Candidate should provide
customers increase in price, a reason as to why the
• See if you can negotiate starting with competitive client should not eliminate
with insurers and benchmarking medicare patients
Medicare for higher • Analyze profitability of • Candidate should bring
reimbursement. post care services up the idea that joint
• Start conversations with replacement department
reimbursement providers may be a loss leader
and provides synergies
with other department
offerings
159
Exhibit 1
Patient Mix
Payer Type # Surgeries List Price Invoiced Price
Commercial
100 $40,000 $40,000
(Enterprises)
Insurance 300 $40,000 $20,000
Medicare
600 $40,000 $15,000
(Government)
160
Exhibit 2
Joint Replacement Department P&L
$M
Revenue $19
VC Physician $5
Materials $5
Others $4
FC Facilities $3.5
Others $3.5
Total Costs $21
Profit ($2)
161
Exhibit 3
Competitive Benchmark
Surgeries Commercial HMO Medicare Profitable
Midwest Hospital 1000 10% 30% 60% No
Comp A 1200 20% 20% 40% Yes
Comp B 800 30% 20% 50% Yes
Comp C 900 10% 20% 70% Yes
Comp D 1000 5% 25% 75% Yes
162
Case 16
Seaworthy Floating Hotel

Hospitality | Market Entry
Interviewee Led
Ratings:
Quant - 3
Qual - 2
Overall - 3
163
Prompt
Case 16 – Seaworthy Floating Hotel
• Your client is a successful entrepreneur based in Manhattan. She is always thinking of creative ways to start new
businesses. Her latest idea is to build a floating hotel (think of a skyscraper on a barge, and the combined structure is
seaworthy).
• Today is Oct. 1, and she must make a decision ASAP –her preferred construction company and barge manufacturer
conveniently have openings on Nov.1 for projects. If she misses this window it will be another two years before both
companies can simultaneously work together.
• The entrepreneur hires you to assess whether she should spend $20M to build a ‘floating hotel that is seaworthy’.
• If the candidate finds the case odd, let him/her know the entrepreneur‘s success rate is 100%, and the hotel project is vapid compared to previous endeavours
• Potential clarifying responses (only provide if asked):
• The hotel can travel on water like a sea vessel
• Time for construction and validation: 1 year
• Location for hotel & barge fabrication: New Jersey
• Locations of interests: Two city strategy. Miami 11/1 to 4/30 and Manhattan 5/1 to 10/31 to take advantage of high seasons year-round
• $20M is a sunk investment and represents all labor, material and testing costs to manufacture and validate the seaworthy floating hotel
• The financial objective is 20% ROI in the first year
• She wants to begin operating the hotel as soon as construction and testing conclude; that is, Nov. 1 of the following year
• Assume no construction delays
• Assume the client has sufficient funds
164
Potential Framework
Market Analysis Financial Analysis Implementation Considerations
• Size • Initial Investment • Marketing Strategy

• Competition • Revenue • Target segment(s)
• Market Share • Revenue Streams • Safety
• Preemptive Advantage • Rooms • Built to withstand tropical
• Barriers to Entry • Restaurants storms/hurricanes?
• State Restrictions • Souvenir Shops • Expertise
• Federal Restrictions • Cost • Management Expertise
• Fixed Cost • Hospitality
• Licensing
• Salary
• SG&A
• Variable Cost
• Hourly Labor
• Material (sheets, toiletries, etc.)
• Payback period / NPV
165
Part 1: Background Info &
Basic Market Analysis

• The candidate may want to start with ROI. Guide him/her to the Market Analysis first.
• Please ensure the candidate explains why s/he wants information before providing it
• Market Analysis:
• Travel & Tourism Industry: good growth in tourist cities
• Competitors: there are no other seaworthy floating hotels in the US (East or West Coast)
• Other Competitors and Substitutes: numerous & fragmented – chain hotels & motels,
small business operators, bed & breakfast, campers/RVs, weekly apartment rentals, etc.
• The exact size of the industry is unknown, ditto for market share
• The client is only considering the US market (East Coast to be specific)
• Government regulations will be addressed and met during the construction and validation
phases
• Once the candidate sufficiently addresses the market and any potential regulations, ask him/her
what location(s) the client should consider for the hotel?
• (Proceed to the next slide)
166
Part 2A: Will the Hotel Meet the
Client’s Objective?
Data for Revenues
• Ask the candidate how s/he would assess ROI
• After a sufficient explanation, start with revenues
• Please ensure the candidate explains why s/he wants information before providing it
Possible Candidate Questions The Interviewer’s Respone
How many floors does the hotel have? 26
Is there any room segmentation? Floors 2-26 have rooms (25 floors)
How many rooms per floor? Good question! Assume all rooms are the same
What’s the room’s daily rate? Each floor layout is the same: a 5x5 grid
(candidate should immediately calculate 25 rooms per floor)
Hotel occupancy rate? 80% year round for both cities
What’s on the first floor? Restaurant, bar/discotheque, convenience shop
In aggregate, what is the first floor’s revenue? $200,000/month
• Proceed to the next page for the annual revenue calculation

167
Calculating Total Annual Revenue
• First Floor Revenue: $200,000 x 12 months/year = $2.4M/year

• Annual Room Revenue: Rooms/floor x Floors x Occupancy Rate x Room Rate x 360 days/year
• Annual Room Revenue: 25 x 25 x 0.80 x $200 x 360 = $36M/year
• Total Annual Revenue = $38.4M/year
• Proceed to the next page for the annual revenue calculation
168
Cost Breakdown
Ask the candidate what cost buckets s/he would consider for the hotel
• For VC, guide the candidate to external house keeping if it is omitted
• For FC, docking fees and insurance are significant. Guide the candidate to these topics if they are omitted
Variable Costs (VC) Fixed Costs (FC)
House keeping Docking fees (significant)
External house keeping Insurance (massive!)

(daily exterior inspections)
Food & drink Yearly regulatory fees
Etc. Etc.
• Proceed to the next page for the Cost Data
169
Miami Total Cost = Total VC + Total FC
Miami Total Cost = Floors/rooms x Rooms/floor x VC/rm/day x 180 days per season + Fixed Cost
Miami Total Cost = 25 x 25 x $100 x 180 + $1,000,000 = $12,250,000
Manhattan Total Cost= 25 x 25 x $150 x 180 days per season + $3,000,000

Manhattan Total Cost = $19,875,000 (can round to convenience, within reason)
Total Annual Cost = $32,125,000
Manhattan Miami
VC $150/day/room $100/day/room
FC $3M/season $1M/season
• Note 1 indicates VC and FC are the same

Note 1: Seasonality doesn’t affect VC or FC in high and low seasons
Note 2: Federal regulations mandate that internal & external house • Note 2 indicates VC impacts all rooms
every day (assume housekeeping is 100%
keeping is required regardless of occupancy
of VC)
170
ROI
Part C: ROI
The ROI is calculated as follows:
Investment = $20M
Profit = Total Revenue - Total Cost = $38,400,000 - $32,125,000 = $6,275,000
ROI = Profit / Invest x 100% = $6.275M / $20M = 31.375%
Client’s target = 20% ROI within the first year
Once the ROI is complete, instruct the candidate that the client wants the final report in 60 seconds.
171
Conclusion
• The candidate’s recommendation Examples of risks and mitigating • Ensure contracts are drawn up for
should follow a similar format: factors: hotel and barge manufacturers
• Client’s target = 20% ROI within • Risk of being the first seaworthy • Scout port locations in Manhattan
one year floating hotel and not achieving the and Miami
• Resulting ROI = > 31% in the first anticipated 80% occupancy rate • Since the client is first to market
year • Promotions and advanced sales to and has, at least, a one year lead,
• Based on surpassing the financial
secure early bookings. Since the she should secure a multi year
objective, the client should proceed
ROI > objective, the client can trim contract for docking fees in Miami
with construction on Nov. 1 to
fabricate a seaworthy floating hotel.
the top line to achieve the desired and Manhattan
• The hotel’s unique feature to operate occupancy rate while maintaining • Begin advertising campaign at
as a sea vessel enables it to capitalise the financial target least 6 months in advance of the
on the high tourism seasons in Miami • Competitors will enter the market hotel’s opening
and Manhattan. due to the strong profits. As a
• Additionally, the client has adequate result, docking fees may increase
funding to finance such a project. and upset the profit equation
172
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Ross Casebook 2021

II. How to Use the Ross 2021 Casebook

III. Review Materials

IV. 2021 Casebook Index

Preparing for Interview During Interview After Interview

NPV or Valuing Money Over Time Value to Perpetuity =

Time for Invested Principle = 72

Little’s Law Inventory = Throughput x Flow Time

Breakeven Breakeven = Investment Price - Cost

Revenue - Cost Net Income

Return on Equity (ROE) Net Income Net Profit Sales Assets

• Consolidation in industry • Ticket sales to economy and business • Fuel

• Leisure travelers – (generally price sensitive)

• Internet - online travel sites, airline websites

• Changes in fuel prices have a major impact on profitability

• World price of crude oil • Optimization of capacity

• Automakers, Original Equipment Manufacturers • New car sales • Labor

• Cars, vans, pickup trucks and SUVs • Commercial purchasers

• Globalization of the industry enables more ease of foreign competition

• GPD growth • Steel prices

• Consolidation/acquisitions • Loan interest • Wages

• Wealth: deposit balances, income • Size: small businesses and consumers

• Savings and loan • Online banking

• Change in savings behavior

• Consumer confidence • Urbanization • Interest rate

• Affordable Care Act • Hospital care • Dependent on segment

• Hospitals • Outpatient surgery centers

• New legislation (impact of Affordable Care Act still uncertain)

• Regulation for health & medical insurance • Aging population

• Cloud based platforms vs on-premise • Hardware sales • Labor

• Enterprise (SME / Large)

• Startups and new entrants

• Cyber security • Mobility

Intended Impact Theory of Change Implementation Feasibility Performance Measures

• Petroleum refiners • Domestic and commercial users

• Access to reserves • Political pressures

• Affordable Care Act • Insurance payments • Research & Development

• Medical patients • Government insurance programs

• Generic manufacturers pose a major competitive threat following patent expiration

• Median age of population • Insurance and regulatory landscape

• Pension funds (largest share)

• Investor uncertainty/pension demand • Exit opportunities

• Department stores/big box retailers • Demographic retailers

• Changes in disposable income • Overstock

• Consumer sonfidence index • Gross domestic product/inflation

• Deregulation led to spur of new companies • Voice calls • Infrastructure

• Residential and small business (price sensitive)

• Retail stores - carriers and mass retailers

• Rapid development of technology

• Investment in rising technology services

• Commercial and industrial

• Clean energy threatens the future of traditional power generation methods

Hospital Mega Merger Healthcare | M&A 26

Hospital Mega Merger

Notes / Advice to Interview / How to Move Forward:

Market Analysis Financial Analysis Insights – Exhibit 3