Guesstimates: by ICON-Consulting Club of IIM-B

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Guesstimates By ICON- Consulting Club of IIM-B

The Team Today

Mehak
Srijit Modi
Gupta Rohan Jain Shubham Maurya

Intern:
Intern:
BainKearney
& Company Intern: McKinsey & Company Intern: Boston Consulting Group
Work-ex:
Work-ex:
Accenture
CitiStrategy Work-ex: Goldman Sachs Work-ex: Tata Motors

St. Stephen’s
LSR College IIT Bombay, CFA L3 BITS Pilani
Agenda for today

Introduction to Important Guesstimate Questions and


Guesstimates Statistics Demo answers
Guesstimates are mini-cases, used frequently for opportunity sizing

q Back of the envelope type calculations, very open-ended, important to establish boundaries
Guesstimates
q Example: #Burgers sold in a McD outlet in GK, #Cigarettes smoked by Indians annually (market entry)
q Can be unconventional: #hair strands on a full-grown dog, #golf balls that can be fitted in a plane

Idea behind q Test candidate’s ability to deal with abstract questions which are not really complicated
q Buy-in from interviewer: stating the assumptions with justification and thought process
guesstimates
q Comfort with numbers: spontaneity in basic arithmetic calculations and keeping it simple
q Capability to act fast: guesstimates are candidate-driven; not losing track, if prompted, is very imp

How to prepare q Practice making your equation as MECE as possible, and verbalize your approach
q Fix your approach: Top-down/Bottom up, Demand /Supply side; new and replacement demands
q Have some basic statistics on the top of your head. E.g. population of metro cities, demographics
splits/ratios – income, gender, age; round off numbers for calculations
q Sanity Check: Build a habit to “sniff” your final answer. E.g. trillion-dollar market size of a pen?!
Useful Statistics to keep in mind while solving Guesstimates
Population and Area of Indian Cities Age Distribution in India* Important Indian Macro Data*

Population Area Age Spread Population Figures


(in Crore) (sq. km) (%)
Per capita Income of India (annual) INR 135000
Mumbai 2.0 603 0-14 25%
Population Growth Rate 1%
Delhi (NCR) 3.0 1484 15-24 20%
Unemployment Rate 5%
Kolkata 1.5 206 25-54 40%
CPI Inflation 5%
Bangalore 1.2 709 55-64 10%
Hyderabad 1.0 625 65 and above 5% Other useful statistics wrt. India*
Chennai 1.0 426 Average Life Expectancy: 69 years
Median Age: 27 years Figures
India 135.3 3.29 M
Digital penetration (mobile users) 50%
Income and Employment Distribution in India*
Urban and Rural Spread in India* Literacy rate 80%
Income band (per month per Population Average Size of households 5 members
household) (%)
Population Population
Distribution Density Percentage of area under forests 30%
(%) (persons per sq. km)
Low Income (<INR 10k pm) 50%
Percentage of area in waters 10%
Urban 30% ~800 Medium Income (b/w 10k and 100k pm) 40%

Rural 70% ~200 High Income (> INR 100k pm) 10%

Average population density of India: 328 persons per km2 Contribution Population
Employment Sectors
to GDP (%) Employed (%)
Agriculture 20% 50%
Manufacturing 30% 20%

Note: All star marked tables have rounded-off figures Service 50% 30%
Let’s solve one!

Estimate the number of flights operating every day at


Bangalore airport.
Let’s solve one more!

Estimate the number of golf balls to be bought in India in one


year.
Guesstimate Demo
THANK YOU!
Q&A

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