IESE Case Book 2023 - Vfinal - Internal Version

I E S E C O N S U L T I N G C L U B
INTERNAL C A S E B O O K
2023
1
CONTENT ❖ INTRODUCTION TO CONSULTING
❖ IESE STATISTICS
❖ INDUSTRY KNOW HOW
❖ BEST PRACTICES AND TIPS
❖ CASES
❖ BCG CASE COMPETITION CASES (3rd EDITION)
❖ PREVIOUS CASEBOOK CASES
2
The Management Consulting Landscape
General Management Consulting Internal Consulting

✓ McKinsey and Company
✓ Boston Consulting Group ✓ BASF (Chemicals)
✓ Bain and Company ✓ DHL Consulting
✓ Kearney ✓ AMEX Strategic Planning Group
✓ Strategy& ✓ Disney Internal Consulting
✓ Oliver Wyman
✓ Roland Berger
✓ L.E.K. Consulting
Capability Specific Consulting Firms
✓ OC&C strategy consultants
✓ Arthur D. Little
✓ McKinsey Digital
Industry Specific Consulting Firms ✓ McKinsey Operations (within McKinsey)
✓ Deloitte Digital
✓ Delta Partners (TMT)
✓ BCG DV
✓ ZS Associates (Pharma / Healthcare)
IESE CONSULTING CLUB IESE CASE BOOK 2023 | 3

Consulting Journey
CV/CL Submissions Interview Rounds
Career Forum Interview Selection Offer

Consulting Interview Process
Case interviews take very similar formats across the various consultancies where they are used. Before landing your dream role with any
consulting firm, you will need to complete between four and six case interviews, divided between 2 rounds in most cases, with each interview
lasting approximately 50- 60 minutes. Over the past few years, consulting firms are also increasingly using logical reasoning tests or gamified
assessments as the first step of the interview process.
Typical Interview Format (Varies from firm to firm)

1. Fit Interview: 15-20 minutes
2. Case Interview: 25-35 minutes
What do the firms look for?

“While there’s no exact template for success at McKinsey, our people share some qualities that help make us successful–and that make working here fun:
Personal Impact, Entrepreneurial Drive, Problem Solving Skills, Inclusive Leadership” - Mckinsey & Company
“We seek passionate, open-minded individuals with a wide range of academic backgrounds, work experiences, perspectives, thinking styles, and expertise.
Excellent academic credentials are a necessary, but not sufficient, requirement. You also must demonstrate the curiosity to ask the right questions, the
courage and creativity to blaze new paths, the ability to collaborate with colleagues and clients, and the leadership skills to transform your ideas into action”
– Boston Consulting Group
“ We seek individuals demonstrating the following attributes: Problem solving skills, The Ability to Lead, Results Delivery, Passion” – Bain & Company
“If you’re reading this, you’re smart enough to already know what we’re looking for. Insightful, yes. Inquisitive, naturally. Collaborative, of course. But we’re
also looking for people who think further than that, who don’t accept the first thing in front of them, and who are always unapologetically themselves.” -
Kearney

What does a case interview consist off?
A case interview can be thought of as a simplified and shortened version of an actual consulting project. The candidate is presented with a business
problem, after which he or she will need to segment the information provided, navigate his or her structure, identify key factors which are driving the
issue that is being addressed, lead a hypothesis driven analysis and ultimately suggest a recommendation to solve the issue.
Quantitative Listening and Synthesizing and

Business Sense Structured Thinking
Capabilities Synthesizing communication
How comfortable are Are you able to listen Can you identify how Are you able to break Can you synthesize all
you with numbers? to the question the business operates? down your thought the analysis done in a
You need to not only prompt, understand What the pain points process in a structured clear, concise and
do quick and accurate the company and the or synergies within the manner and follow a actionable manner for
calculations but also overall business business are? Are you hypothesis-driven your client? Can you
clearly communicate environment, and ask able to create analysis of the then communicate it in
business insights and the right kind of solutions to help problem that needs to the same way?
other implications of questions to elicit resolve it? be solved?
your quantitative more relevant
analysis. information?
Common Types of Cases:

Profitability, Market Entry, New Product Development, Pricing, Valuation , Competitive Interaction, Estimates/Market Sizing
IESE CONSULTING CLUB IESE CASE BOOK 2023 |

Fit Interview
Consultancy firms use the Fit or Personal Experience Interviews to learn about the candidate’s personal interests and passions, gauge the
candidate’s interpersonal skills and ability to successfully work in diverse teams, and most importantly assess how well the candidate understands
the firm and its values.
Examples of questions asked during Fit interviews:
General Questions: Competency Based Questions: Forward looking Questions:

• Tell me about yourself / Walk me through • Tell me about a time when you • Suppose we hire you and you need to
your CV demonstrated entrepreneurial drive manage a team of 5 analysts who know
• Tell me something about yourself that is • Tell me about a time you worked in a more about consulting that you – what
not on your CV diverse, cross functional team would be your leadership style?
• What are you most passionate about? • Describe a failure you’ve experienced at • Suppose you are in a client meeting and
What matters most to you and why? work? What were the biggest learnings you see a competitor’s consulting report on
• Why Consulting? Why that specific firm? from that experience? the client’s desk, do you look at the report?
Why that specific location? • Tell me about a time when you led a team • Suppose we assign you to a project in an
• What are your interests outside of work? and accomplished impactful results industry you have minimal knowledge
• What is your proudest accomplishment? about – how do you start your work?
Both the Case and Fit components of the selection process are accorded equal importance by recruiters and good performance in one will not make up
for a poor performance in the other. Ultimately, consultancy firms simply will not employ someone who they doubt will be a good fit with the company,
regardless of how great the candidate is at cracking cases.

A brief overview of the preparation
Balancing your fit and case prep, as well as updating your documents and researching/networking
Documents Fit interview preparation: 20 – 30 hours
Many are under prepared – start now!

• CV: Don’t spend too much time adapting Tell me about yourself: Autobiographical Qs: Competency Qs:
• CL: Why consulting? Why this firm? Why location? • Autobiographical or theme- • Strength/weaknesses • 6 – 8 stories
Why me? based • Long-term plan • Brainstorm stories, not
• 2.5 – 3 minutes • Why consulting? Why the firm? answers
• Prep the most! Why location? • Practice adaptations
Research and Networking Case Prep: 40+ hours

Tips: Mocks (some might take more, and others Drills:
• Watch office selection video less): • Market sizing
• Follow partners on LinkedIn • Frameworks
• Look for “high activity” profiles Use RocketBlocks to
Ability ~30 mocks • Brainstorming complete drills,
• LinkedIn Cover Photo • Quants
• Shares and Likes posts suggestion:
5 – 10 mocks • Charts & Graphs 1 hour/day
• Premium subscription • Industry Sprints
• Look for similar profiles # of mocks
• Learn 1-3 cases to deliver
In the session • Take good notes & synthesize findings
• Ask questions about them • MBA 2yrs, professional coaches, alumni, Use CaseCoach to partner up with other students and
• Ask “who else” to talk to or if you can follow-up and CDC professional coaches (more info later). Also, review
with them concepts.

❖ IESE STATISTICS
❖ CASES
9
Internships by Sector – Class of 2021
Finance 27%
Consulting 20%
Healthcare 16%
Tech 14%
Consumer Goods and Retail 11%
Other 8%
Energy & Manufacturing 4%

Finance 27%
Consulting 20%
Tech 16%
Healthcare 15%
Other 9%

Consulting 27%
Finance 20%
Tech 16%
Other 11%
Healthcare 8%

Consulting 25.2%
Finance 18%
Tech 12%
Energy, Manufacturing & Industry 11.1%
Consumer Goods & Retail 10.5%
Education 10.5%
Healthcare 8.4%
Other 4%
Fulltime Employment by Sector – Class of 2021
Consulting 34%
Financial Services 25%
Technology 17%
Industry 24%
28% 22% 20% 14% 12% 4%
Latin Europe (Ex Spain Middle East North

America Spain) Asia Pacific America
& Africa

Fulltime Employment by Sector – Class of 2022
Consulting 36%
Corporate Management 19%
Finance 18%
Operations & Logistics 12%
Marketing & Sales 12%
Other 3%
35% 27% 15% 14% 7% 1% 1%
Latin Europe (Ex Middle East North

Spain Asia Pacific Oceania
America Spain) & Africa America
Average Compensation by Sector – Class of 2021
Average of Annual Min of Annual Base Max of Annual Average of Other Min of Other Max of Other
Sector
Base Salary* Salary Base Salary Compensation Compensation Compensation
Consulting 93,981 47,500 168,652 58,789 5,539 350,844
Finance 83,998 50,000 133,408 58,363 1,000 160,219
Industry 82,235 52,887 120,025 35,436 2,000 142,203
Technology 86,051 46,162 132,951 46,041 8,500 182,303
*In Euros

Average Compensation by Sector – Class of 2022
Average of Annual Min of Annual Base Max of Annual Average of Other Min of Other Max of Other
Sector
Base Salary* Salary Base Salary Compensation Compensation Compensation
Consulting 95,300 41,500 176,000 67,600 3,900 136,800
Finance/Accounting 101,200 50,000 181,000 77,700 9,100 286,600
Management 90,200 55,000 144,700 63,900 11,000 134,300
Marketing/Sales 84,300 50,000 174,200 85,700 3,500 198,700
Operations/Logistics 81,900 30,000 164,600 90,000 14,000 221,600
Other 78,000 66,000 88,000 44,200 7,600 104,000
*In Euros

❖ IESE STATISTICS
❖ CASES
18
Industry Know How – Airline
Airline Overview Revenue Streams Cost Drivers
• Low margins - high volumes • Ticket sales (Passengers & Award) • Fuel • Landing/terminal
• Consolidation in industry over last few • Ancillary: Charges for baggage, seats, and • Depreciation fees
Automotive decades ticket flexibility • Maintenance • Insurance/legal
• High prevalence of loyalty schemes for • Cargo transportation • Labour (on-board fees
Banking / Financial differentiation Specific to low cost carriers vs. terminal) • Booking systems
Services
• Competition from state owned companies • Advertising • Sales & (GDS)
• Power concentration in the suppliers and in • On board duty free sales Marketing • Lease/payment
Insurance
the demand • Food and beverage • Frequent flier
program fees
Healthcare
• Leisure travellers – generally price sensitive • Freight/cargo transportation
Customer • Business travellers – important due to high margins and • VFR (Visiting friends & relatives)
Manufacturing
Segment purchase of value added services • Travel agents/websites
Energy (Oil & Gas) • Direct – Airline sales team, airline website
Channels • Indirect online – Travel sites (OTA), price comparison sites (Metasearch)
Energy (Power & • Indirect offline – Travel agencies, corporate travel management companies
Utilities) • Travel affected by business cycle • Weather – especially extreme events
External • Oil prices • Sanitary (COVID-19)
Retail drivers/risks • Security • Currency fluctuation
• Rise of low cost airlines has increased air traffic and expanded routes
TMT • Increase in online booking and check-in
Trends • NDC (New distribution capability)
Information • Sustainability (Green fuels, emissions, and others)
Technology

Industry Know How – Automotive
• Low margins (but increasing) • New car sales • Raw materials
• High capital and labour intensive • Used car sales • Labour
Automotive • Sector under transformation/disruption • Parts sales • Marketing (Advertising)
• Key players: • Servicing • Depreciation
Banking / Financial ‒ Original Equipment Manufacturers (OEMs)
Services ‒ National Marketing & Sales Companies (Affiliates or Non-affiliated) • Financing • Financing costs
‒ Components & Replacement parts Suppliers (Tier#1 to #3) • Leasing • Recall costs
Insurance ‒ Retailers • Subscription model • R&D
‒ Others: RAC (Rent-a-Car) companies / Ride-hailing & Ride sharing companies / MaaS
(Mobility as a Service) companies / Geo-location & Cloud companies)
• Data-sales to 3rd parties • Logistics
‒ Public Sector (Governments & Municipalities)
Healthcare
• By business model (B2B/B2C/B2G) • By product type (Mini/Urban, Hatchbacks, Sedan, Crossovers, SWs2,
Manufacturing Customer • By vehicle type (Cars/LCVs1/Trucks) SUVs, Pickup Trucks, Vans, Sports Cars, Performance3)
Segment • By price point (Mass/Premium) • By usage (Off-road, On-road, Performance/Track)
• By route frequency (Commuters/One-off) • By powertrain (Petrol, Diesel, Hybrids4, BEVs5, Others6)
Energy (Oil & Gas)
• Car dealerships Service outlets for automotive parts (affiliates & independents)
Energy (Power & Channels • Secondary market (online and offline)
Utilities)
• Business cycle • Steel/Lithium/Nickel prices
External • Disposable income per capita • Consumer confidence index
Retail
drivers/risks • Oil/Gas/Electricity prices • Regulation
TMT • Shift to cleaner energy (electric, hybrid or fuel • Congestion & pollution in big cities
cells) • Multi-modal transportation & hubs
Trends • Self driving (Autonomous) cars • Smart Infrastructure / Connected cars
Information
Technology

Industry Know How – Banking / Financial Services
• Retail banks: Take deposits, Retail banks: • Labour (wages)
provide loans • Loan/credit interest • Overheads – costs for running branches
Automotive • Investment banks: Raise debt/capital, M&A • Service fees (Balance check, withdraw) • Interest rates on deposits
advisory, market making • Interest rate on reserves (spread) • Fines
Banking / Financial
• Cornerstone of economies • Commissions on the distribution of third party • Bad debt expense
Services
• Highly capital intensive products (such as insurance)
• Complex and highly regulated Investment banks:
Insurance
• Underwriting (IPOs or bond offerings)
• Deal completion fees (M&As)
Healthcare • Fees for financial advice (Asset Mgmt)
• Proprietary Trading
Manufacturing Retail Investment
Customer • Business customers • Acquiring companies
Energy (Oil & Gas) Segment • Low, medium and High net worth individuals • Companies looking to raise capital
• Everyday customers • Companies looking to IPO
Energy (Power & • Retail banks (ATMs, cashiers, branch managers, online banking, call center)
Utilities) Channels • Investment banking (Officer – Account manager; investment advisor)
Retail • Business cycle (default rates) • Regulation
External • Central bank interest rates • Customers centricity
drivers/risks • Consumer saving behavior
TMT
• Rise of challenger and digital only banks (customers in the centre)
Information Trends • Increasing digitization and decentralization
Technology • Increase in mobile banking

Industry Know How – Insurance
Airline
Overview Revenue Streams Cost Drivers
• Insurance companies: covers the risks in Premium • Payments of claims + Adjustments
exchange for a premium • Charging premiums in exchange for insurance • Acquisition expenses (broker´s commissions,
Automotive • Intangible services being provided coverage sales personnel, and marketing expenses)
• Complex and highly regulated industry Investment • Administrative Expenses (legal, compliance,
Banking / Financial • Investing the premium acquired into other underwriting, etc.)
Services
interest-generating assets (spread)
Insurance
Healthcare
B2C B2B
Customer • Customers from low, medium and high income • SME (Small and medium enterprises)
Manufacturing Segment • Clear credit line • Corporations
Energy (Oil & Gas) Offline Online

• Brokers (branches and call centres) • Insurance company´s website
Energy (Power & Channels • Retail bank (ATMs, cashiers, managers) • Online banking
Utilities) • Online insurance shopping
Retail • Regulations
External • Cybersecurity (client´s database)
drivers/risks • Climate change
TMT
• Rise of big data in the industry – important to understand customers´ behaviors and design an specific insurance for
Information Trends them - Metromile
Technology • Evolution of insurtechs (customers in the Center) – Lemonade

Industry Know How – Healthcare
• High margins • Sales of drugs • Manufacturing
• Highly capital intensive with long time horizons • Insurance payments • Sales & marketing
Automotive • Patent lasts for approx. 20 years • R&D
• Blockbuster is > $1bn. In sales
Banking / Financial • Branded vs. generic drugs
Services • Cannibalization – key aspect
• Dosage
Insurance • Drug Effectiveness: -> Cure / Treatment ->Time
to market -> Adverse / Side effects
Healthcare
Manufacturing • Doctors • Patients

Customer • Pharmacists • Insurance providers
Energy (Oil & Gas) Segment • Hospital administrators • Governments
• Over the counter (OTC) • Pharmacies
Energy (Power & • Prescription • GP practices
Channels
Utilities) • Hospitals • Direct to Consumer (DTC) – few countries
Retail • Regulation (FDA Approvals)

External • Politics
drivers/risks • Loss of patent leads to big loss in revenue
TMT
• Numerous M&As as big players look to enhance R&D pipeline
Information Trends • Consolidation of players focusing on specific treatment areas
Technology • Wearable Medical Devices, Gene Therapy, Value based healthcare

Industry Know How – Manufacturing
• Mechanical, physical, or chemical • FG (finished good) sales – standard products • Raw materials
Automotive transformation of raw materials into new • Module sales – customized products • Labour
products • Machinery (CAPEX)
Banking / Financial • Margin fluctuates by volume (economies of • Quality control (COPQ)
Services scale, high fixed cost) • Inventory costs
• Capacity utilization is key KPI • Customization costs (prototyping)
Insurance (normally target is around 90%) • R&D costs
Healthcare
• Businesses
Customer • Retailers
Manufacturing
Segment • End consumers
Energy (Oil & Gas) • Retail (industries selling directly to end consumers / FG sales)
Channels • Wholesale (B2B, products used to manufacture other products / module sales)
Energy (Power &
Utilities)
• Business cycle • International trade agreements (or wars)
Retail External • Commodity availability/price • Tax cuts (China – LEDs, semiconductors)
drivers/risks • Labour unions • Technology trends
TMT • 3D printing • Automation
Trends • High quality outsourcing ‒ M2M, IoT
Information • Platforms ‒ Industry 4.0
Technology

Industry Know How – Energy (Oil & Gas)
• Upstream – exploration & production • Raw materials (crude oil, gas) • Drilling & Exploration
• Midstream – processing, transporting, and • Derivatives • Maintenance & Reliability
Automotive
storage ‒Petroleum • Transportation
Banking / Financial • Downstream – refining, distribution, and ‒Plastics • Labour
Services marketing ‒Lubricants
• Renewable energy – hydro, solar, wind • Trading
Insurance • Commodity transportation (midstream)
• Construction of new pipelines
Healthcare • Operations • End user
Customer • Upstream/Midstream/Downstream • Airplanes/Utility Companies/Facilities
Manufacturing Segment • Gas Stations • Refineries
Energy (Oil & Gas) • Retail • Trading

Channels • Commercial
Energy (Power &
Utilities) • Price of Oil • Reserves
External • Strikes / Protests • Demand
Retail
drivers/risks • Government regulation / political factors • Substitutes
• Equipment age • Safety
TMT
• Efficient/smart machinery • Alternative energy increasing
Trends • Pricing differences between countries • Political views of production and transport
Information
Technology

Industry Know How – Energy (Power & Utilities)
• Generation – Solar PV, Thermosolar, Generators: Renewable Generators:
Wind, Biomass, Cogeneration, • Electricity wholesale market • Large CAPEX: Land, EPC (inc. OEM equipment)
Automotive
Hydro, Pumping, Nuclear, Waste, • Feed-in-tariffs (if winner of an electricity • Small Opex: O&M
Combined Cycle and Coal Power auction) or PPAs Conventional Generators and Biomass:
Banking / Financial Plants Transport and Distribution Operators (TSO & • Large CAPEX: Land, EPC (inc. OEM equipment)
Services • Distribution – DSOs): • Large Opex: Fuel costs and O&M
(voltage level <=132 kV) • Regulated remuneration Transport and distribution operators:
Insurance • Transport – Retailers: • Recurrent CAPEX: asset renewal, digitalization &
(voltage level >= 220 kV) • Electricity bills automation, (new and replacement OEM equipment)
Healthcare • Retailers • Natural gas • Large OPEX: O&M, Customer Service
Retailers: Electricity Trading and Customer Service
Manufacturing
Customer Segment Electricity Prices:

Energy (Oil & Gas) • Retailers: Households and Commercial sector, • Wholesale market price
• Retailers and Generators: Industry and government • Government charges to pay networks and FITs
Energy (Power & • Government Taxes
Utilities)
• Marginal Pricing System (Scarce goods) • Natural Gas Prices
Retail External • Government Taxes • CO2 Prices
drivers/risks • Interconnection with other countries • Storage (Security of Supply)
TMT • Decarbonization of economy (100% Green) • Renewables CAPEX and OPEX decreasing
Trends • Storage (Security of Supply) • Deployment of renewables
Information • Increase of demand (electrification)
Technology

Industry Know How – Retail
• Key ideas • Fashion: apparels, bags/wallets, accessories (e.g., Gucci, • COGS
> Same store (comp) sales Coach) > Fixed: facilities
Automotive > Store productivity • Drugs & cosmetics (e.g., L'Oréal, Estée Lauder) > Variable (production could be outsourced)
- Sales per square foot • Furniture & household goods (e.g., Maison de Monde, - Raw materials
- Sales / traffic Maiden Home) - Labor
Banking / Financial - Traffic per labor hour • General merchandise (e.g., Dollar Tree, JC Penny) - Duty and freight
Services > Inventory turnover • Key metrics - Shrinkage and obsolescence
• Low margins (except for luxury brands) > Offline sales = Traffic * Conversion% * Units per • Compensation of store employees
Insurance • Likelihood of price war (usually through discounts) transaction * Price per unit • Occupancy (i.e., rent and utilities)
> Online Sales = Impressions * Conv% to traffic * Conv% • Marketing
to purchase * $ per purchase
Healthcare
• Household income
Customer • Age/gender
Manufacturing • Geography
Segment • Purchase frequency
Energy (Oil & Gas) • Hypermarkets • Shopping malls

• Discount retailers/outlets • Department stores
Channels • Flagship stores • Duty free stores
Energy (Power & • Wholesale/distributors • Ecommerce (direct site/third party)
Utilities)
• GDP/Inflation/consumer confidence index
External • Business cycle (holidays, sale season)
Retail • Geopolitics (e.g., trade war, nationalism)
drivers/risks • Natural disasters/pandemic
TMT • Omnichannel
• More concentrated toward high and low end brands
Information Trends • Sustainability
• Supply chain diversification
Technology

Industry Know How – TMT
• High capital expenditure Subscriptions (Avg. Revenue per User) • Raw materials
Automotive
• High R&D costs • Voice calls ‒Fiber optic network
• Use of bundling to differentiate • Messages ‒Transmission towers
Banking / Financial • Always consider churn! • Data/internet ‒Spectrum frequency
Services • IT/cloud services ‒Customer premise equipment
Other Revenues • Sales & Marketing
Insurance • Accessories • Labour
• Mobile handsets
Healthcare
• Consumer and Small Businesses (price sensitive)
Customer • Businesses (price insensitive)
Manufacturing Segment
• Retail stores
Energy (Oil & Gas)
Channels • Online
Energy (Power &
Utilities) • High entry and exit barriers
External • Rapid development of technology
Retail drivers/risks • Highly regulated industry (specific frequency open/closed by the government)
• Shift from desktop to mobile
TMT • Artificial intelligence, machine learning, deep learning
Trends • Virtual and augmented reality
Information • 5G (high data speed) & IoT (LPWAN, Low Power Wide Area Network)
Technology

Industry Know How – Information Technology
• Projects are delivered in an onsite and offshore Largely, multi year B2B contracts. For e.g. imagine • Manpower and overhead costs ( includes
model an AI product for a bank. Revenue could be training, upskilling on evolving technologies)
Automotive • Onsite team (in US, EU): the functional 1. Consulting to identify product needs (8 • Infrastructure – Storage, Connectivity, Systems
consultants and the lead developer. weeks) • Facilities
Banking / Financial • Offshore(In India, Philippines etc.): Dev, Test, 2. Product Development ( 6 – 12 months – • Research and Development (not major but IT
Services Deploy based on complexity) firms are trying to build industry specific
• Generally, consulting led approach across 3. Test and Roll out (ongoing 6 – 12 months – products – can assume that annual revenue
Insurance • Software development lifecycle and multiple See Agile and DevSecOps) from products is about 5% on average)
domains – AI, Cybersecurity, Cloud, IoT, 4. Product Maintenance (at least 18 months to
Blockchain etc. 24 months – driven by customer’s inhouse
Healthcare
• IT Infrastructure capability to manage, budget and
• Business Process Outsourcing complexity)
Manufacturing • Checkout website of Accenture or Tata 5. Business Process Outsourcing
Consultancy Services to understand more
Energy (Oil & Gas) • Big IT players qualify companies with revenue upwards of USD 500mn+ (Accenture, IBM, Tata Consultancy Services, Infosys)
Customer • Increasing focus on subscription model for SMBs
Energy (Power & Segment
Utilities)
• Marketing – All (not limited to any channel now)
Channels • Sales – Typical Account development and management ranging from cold calls to farming accounts
Retail
• Customers may want to have their own low cost IT ”captive” set up in emerging economies
External • Tech product firms offering bundled services – Salesforce, SAP, Microsoft, etc(often pricier)
TMT drivers/risks • Regulations (some governments want a foreign IT firm to have a certain percentage of local workforce)
• Shifting focus on building products along with services
Information Trends • Facing competition from telecom providers traying to become one-stop-shop System Integrator
Technology

❖ IESE STATISTICS
❖ CASES
30
How you apply to Consulting firms will vary based on their
recruitment structure
Global Recruitment Regional Recruitment
McKinsey, Bain, BCG Strategy&, Monitor

Submit one application with
Deloitte, EY-Parthenon, ZS
up to three office selections, Submit one application to one
broken down by rankings and office; relationships with
percentage; global offices are individual
relationships with offices

Some basic strategies can improve your chances of success
significantly
Narrow down your office Invest in local office

selection – very rarely will you networking in any market you
get called from an office you are applying to, particularly
mark with < 30% non-home countries
Some firms have areas you can Improve the odds of getting
apply to: General, Digital, and invited to interview – send as
Operations – do due diligence many applications as you can!
before applying!

How To Use This Case Book
1 4 2 1
3 3
We designed this book to be practical and straightforward for both the interviewer and the interviewee. Read the following
instructions to ensure a smooth application process and to extract most value out of this case book.
•1 Red titles mean information that the interviewer has to give to the interviewee, including the prompt, clarifying questions and
exhibits.
•2 Exhibit pages provide necessary information to interviewees solve the cases and should be handed in their entirety when
instructions asked to do so
•3 Green titles mean information that can help the interviewer in guiding the case including expected takeaways, expected
considerations, calculations and sample recommendations. Interviewers should not disclose this information to candidates but
use it to guide themselves into the flow of the case and help candidates in navigating the numbers.
•4 Each case is classified by its industry, theme, and concept tested as well as by its level of difficulty.

❖ IESE STATISTICS
❖ CASES
34
Case Title Industry Type of Case Difficulty Level Source
NutriPreg Healthcare Market Entry & ROI Medium New
ElectroCorp Manufacturing Market Entry & Profitability Hard New

2023 CASES
Pest Pro Services Market Entry & Market Sizing Hard New
Thirsty for Rain Maritime & Logistics Operations Management & Cost Reduction Hard New
Parking & Co Infrastructure Profitability & Payback Analysis Medium New
The Flying Metro Airlines & Infrastructure Market Sizing & Profitability Hard New
Fixing SilverLand Public Sector Strategy & Economic Development Hard New
TBell Mining Mining Optimization & Profitability Hard New
Employee Vaccination
Healthcare Product Launch & Market Sizing Medium New
Benefits
Grab your popcorn Entertainment Operations & Revenue Increase Medium New
Product Launch & Market Sizing

Hello Telecom Telecom Hard New
BCG case competition 2023 winning cases 35

NutriPreg
By Pratik Shah (MBA 2024)
Health and Nutrition Easy

Market Entry Medium
ROI Hard
36
Market Entry Medium
NutriPreg ROI Hard
PROMPT CLARIFYING POINTS (if asked)

• NutriPreg has 1 key product – for women throughout their pregnancy journey (from week 1 to delivery)
NutriPreg is a manufacturer of prenatal
• No financial constraints. Main aim is profitability.
vitamins, with strong presence in the US
market. They are considering expanding to • How do they sell? DTC and have their own distribution in USA, not decided on the distribution in Europe
Europe, starting with Spain. • Expansion to other parts of Europe will depend on the success of Spanish market. Currently in USA only.
• There are many competitors, but NutriPreg aims to place itself as a premium brand with higher price but
The CEO of NutriPreg has hired you to assess better quality and benefits.
the profitability of this new Market and • Want 25% ROI within 4 years but have a threshold of 20% within 5 years.
whether Spain is an appropriate penetration
• Price: 50 Euros per 30 tablets in a bottle. COGS: 10 Euros. Marketing and setup spend = 1 Million Euros.
point. Other costs: 500,000 per year.
CASE GUIDANCE
This case covers 1) Case structure, 2) Market Sizing, 3) ROI, and 4) Brainstorming
Market sizing is using the Work in Progress (WiP) Formula:
37
Market Entry Medium
ROI Hard
NutriPreg
STRUCTURE GUIDANCE
Key requirements: Market and Financials. Other parts of the structure are more fluid. A clear understanding of what is
Required to figure out the ROI should be seen from the structure. Should include non-quant considerations (will come
Back to this during brainstorming)
SAMPLE STRUCTURE
Company
Market Financials Go-to-Market Plan
Capabilities
Competitors Market Size Expected growth Revenues Costs Current Warehousing Sales Channels Acquisition Partnership Organic growth
product/customer
mix
Fixed Costs
Price per bottle
(advertising)
•Assess the target market

Bottles sold
Variable costs
(COGS)
•Assess company capabilities
•Assess the opportunity
•Develop a go-to-market plan
38
Market Entry Medium
NutriPreg ROI Hard
Market Sizing
What is the market size (Quantity) of Prenatal Vitamins in Spain? (Let the candidate ask if we want it in terms of
Quantity or Price, and whether quantity of bottles or pills).
If asked for the price of pills, ask why. Important to make them clarify which market size they are solving for.
Sample Answer
Assumptions: Note: Check if the candidate thinks about how much of this
Population of Spain: 50 Million (not needed to solve) market can be captured. If they don’t give a number, provide
Yearly birth rate: 340,000 2% from 1st year itself.
Pregnancy time: 9 months
Days in month: 30
Pill consumers: 1 in every 2 mothers
Market size = 340k * 9 * 0.5 = 1.53 Million bottles

Market size = 1.53 M * 30 = 45.9 Million Pills
39
Market Entry Medium
NutriPreg ROI Hard
ROI calculation
What is the ROI of the move after 5 years?
Allow rounding of the market to 1.5M bottles
Provide when asked: Price: 50 Euros per 30 tablets in a bottle. COGS: 10 Euros. Marketing and setup spend = 1 Million
Euros. Other costs: 500,000 per year. Market penetration: 2% for the next 5 years. Assume no discounting
Sample Answer
Market = 1.5 Million bottles Market = 1.5 Million bottles Initial Investment: 1 M
Yearly: Total: 5-year profits: 5 * 700k = 3.5 M
Units sold: 2% * 1.5 M = 30k Units sold: 5 * 2% * 1.5 M = 150k
Revenue = 30k * 50 = 1.5 M Revenue = 5 * 30k * 50 = 7.5 M ROI = 30% annually (approximately)
COGS = 30k * 10 = 300k COGS = 5 * 30k * 10 = 1.5 M
Other costs = 500k Other costs = 5 * 500k = 2.5 M Note: Give a pause to see if candidate
Profits = 700k / year Profits = 3.5 M gives any inferences. Eg this is higher
than company threshold, so financially
it’s a good decision.
40
Market Entry Medium
NutriPreg ROI Hard
BRAINSTORMING QUESTION
What other factors would you consider before entering the Spanish Market?
Note to interviewer: There is no right answer but see how they answer this in relation to their original structure.
Government regulation and distribution channels are important aspects to be on the lookout for.
SAMPLE ANSWERS
Market related: Market Potential, Competitive Landscape, Customer Insights, Long term growth potential;
Operation Related: Regulatory Environment, Distribution Channels, Operational Capabilities, etc.
Even internal vs external or any other structure will work.
41
Market Entry Medium
NutriPreg ROI Hard
RECOMMENDATION QUESTION
The CEO is going to be on call soon, what would your recommendation be for her?
SAMPLE RECOMMENDATION
Yes, it is a good idea to enter the Spanish market as it’s a 46 Million Pills market, and capturing around 2% of the
market would lead to a 25% Yearly RoI over the next 5 years, which is higher than the threshold of NutriPreg.
Based on NutriPreg’s expertise capturing the 2% of the market is feasible. However, other factors that we will need to
be mindful are the regulatory requirements, setting up of the distribution channels, and the long term growth
potential. We also need to understand how our competitors will react.
To mitigate these, we will need to focus on understanding the approvals required, see if we can hire a 3PL for logistics
at the start, and run a market study specifically focusing on mother’s changing dependence on these types of pills.
42
ElectroCorp
By Ignacio Granero (MBA 2024)
Manufacturing Easy
Market entry Medium
Profitability Hard
43
Manufacturing Easy
Market entry Medium
ElectroCorp Profitability Hard

• ElectroCorp has revenues of 6bn and sells its products globally however for this
Your client is ElectroCorp, a US
opportunity the only consider the US
manufacturer of electronics such as
computers, TVs, mobile phones… in • 3D printing enables to manufacture a three-dimensional object from digital 3D
the mid-tier segment. model.
In order to grow to diversify the • The objective of the investment is to have payback in less than 3 years
product line and keep growing the
top line, the company is thinking
about launching a new product in the
US market: headphones CASE GUIDANCE
• This is an interviewee –led case where the candidate should guide the
The CEO of the company hires you to interviewer asking the information when needed.
know your opinion about the launch
• For simplicity reasons, time value of money, taxes, cost of capital and other
(i.e. whether to launch or not) and in
financial measures have been ignored. However, a excellent candidate can
case of launching what would be the
mention them.
best operational strategy:
manufacture in one of their factories
in China or use 3D printing
technology.
44
Manufacturing Easy
Market entry Medium
SAMPLE STRUCTURE
Market size
Market analysis Competitors
Expected market STRUCTURE GUIDANCE

share
Product launch? The structure design is very open-

ended but should include at least the
mentioned points in the proposed
Expected revenues structure
Expected costs (China

Financials
vs 3D printing)
Investment
45
Manufacturing Easy
Market entry Medium
MARKET SIZING (Optional)- Interviewer’s information

The candidate should do an estimation of the total market of earphones in the US. Focus only on B2C sales. The estimation should be
in volume. The market sizing is an optional part of the case. If you consider it’s not needed give the candidate an estimated figure of
60M units per year
PROPOSED SOLUTION
0-20 years 45M 15M
Assumption: 60% buy
75M Assumption: buy every
3 years
Total population
20-40 years
300M 60M 30M
75M Assumption: 80% buy Assumption: buy every
Assumption: uniform distribution of population 2 years
63M
40-60 years pairs/year
45M 15M
75M Assumption: 60% buy Assumption: buy every
3 years
Round to 60M
60-80 years
75M 15M 3M
Assumption: 20% buy Assumption: buy every 46
5 years
Manufacturing Easy
Market entry Medium
EXHIBIT 1- Interviewer’s guidance
After looking at the market size, the candidate should ask more data about
the market: competition, market share we can acquire…
The objective of these exhibits is to define the type of product to launch:
wireless or wired and where to position the company: low, mid or high.
A good candidate will mention the following:
-75% of the market concentrated in 4 players which makes a market entry
possibly more challenging
-The overall market of headphones is expected to grow
-The wireless segment is taking over the wired segment
-The best positioning for the company will be to enter in the wireless
segment and position as mid-tier: makes more strategic sense for the
company (they’re mid-tier) and that segment has the lower customer loyalty
for the previous player
47
Manufacturing Easy
Market entry Medium
EXHIBIT 1
Competitors Analysis
Main product Customer Average

Company Positioning
Market Share overview type loyalty selling price
Competitor A Wireless High High $150
100%
Competitor B Wireless Medium Low $100
Competitor C Wireless Low Low $50
35%
Competitor D Wired High High $70
25% US headphones market

5%
10% 25%
Total Competitor Competitor Competitor Competitor Others

Market A B C D
Share 2017 2018 2019 2022 (E)2023 (E)2024 (E)2025
Wired Wireless
48
Manufacturing Easy
Market entry Medium
Financial analysis- Interviewer’s guidance

In this step, the candidate should do a projection of the next 3 years revenues and costs. To do so, candidate will need to estimate a market share for
ElectroCorp based on the chosen positioning of the product.
Rounding is allowed. To simplify calculations candidate should consider no market growth. An excellent candidate should ask about market growth.
After the analysis the candidate should point out that the company should go for the investment as it’s profitable in less that a year and the requirement
was to break even under 3 years. The 3D printing option is almost 4 times more profitable.
Revenues Costs- Interviewer’s information

Assumptions (these might change according to candidate’s estimation) The company needs to decide whether to use 3D printing or use its current manufacturing
-Position the product in the wireless mid-tier segment processes.
-Market share “stolen” from Competitor B→20% -Option 1: Manufacture in China. 40M€ investment needed. Transportation costs $1,000 per batch
(batches are 10,000 units). Cost per unit $20. No hiring or extras costs needed.
-Option 2: Use 3D printing. Cost per machine $10M. Each machine has a capacity of 1,400,000
Year 1 Year 2 Year 3 units per year. Cost per production batch $500 (100 units per batch). No shipment costs. 20 FTE:
$50,000/each
=60M*25%*20%*$100 $300M $300M
=$300M
ElectroCorp Year 1 Year 2 Year 3
China =(3M/10,000)*1,000+ $60 M $60 M

20*3M≈ $60 M
US 3D printing =(3M/100)*500+50,0 $16 M $16 M
00*$20≈ $16 M
49
Manufacturing Easy
Market entry Medium
Brainstorming question
What are the benefits you can think of using 3D printing to manufacture headphones?
Economic benefits Operational benefits
→Production costs: Using 3D printing reduces the →Demand matching: The production method is
variable costs in the production process as well as quicker and in US land for US customers which
the fixed costs. makes the company faster to adapt to demand
peaks
→Investment: It’s cheaper to buy a 3D printing
machine that to open a factory →Inventories: Less inventories as the company
adapts better to demand
→Shipment costs: The company can reduce the
shipment costs →Diversify operational risk: Having a production in
US grants the company more diversification in its
production
50
Manufacturing Easy
Market entry Medium
The candidate should do make a final recommendation based on all the information analyzed in the case using top-down
communication.
The candidate should make a recommendation including the following points:
→Recommendation to enter the US headphones market

-Focus on wireless headphones as it’s the fast growing segment and the biggest category
-The company can get a significant market share
-Use 3D printing because it’s less costly, offers more flexibility and the payback is in less than 3 years
→Risks: Competitive response, analysis highly-dependent on assumptions
→Next steps: Sensitivity analysis for estimations, look for suppliers in 3D printing and establish a marketing strategy to
enter the market.
51
PestPro
By Saroop Peetamber (MBA 2024)
Property Services Easy

Market Entry Medium
Market Sizing Hard
52
Industry Easy
Case Type Medium
PestPro Function Hard

• PestPro signs contracts with property management firms that provide exclusivity to treat pest issues in the
Your client, PestPro, is a leading B2B pest building as requested. Technicians drive to location and complete the service. PestPro charges clients on a
control company that works with large per treatment basis and the scope of treatment/time needed drives the price
property management companies to service • The company directly employs their licensed technicians, they do not sub-contract the labor
the apartment buildings in their portfolios.
• PestPro leases all vehicles (does not own any)
After experiencing strong growth in the U.S., • PestPro would source the materials/chemicals within the local market
PestPro is looking to expand internationally • This would be the company’s first international expansion
and enter a new market organically. They • They have identified these three markets because of the population, number of apartment buildings, and
have identified three potential markets, the attractive industry growth rates
U.K., France, and Germany. • The company wants to achieve at least 10 million euros in annual sales after three years
The CEO has hired you to understand which

market they should enter.
CASE GUIDANCE
This is an interviewee-led case, and they should be able to quickly see this is a growth case
that focuses on revenue rather than profitability. Pest control is a unique industry that is not
well-known and while the interviewer may give some guidance, the interviewee should ask
the right questions to understand the business model and drive towards the important
aspects for solving the problem.
53
Industry Easy
Case Type Medium
STRUCTURE GUIDANCE
A good framework should focus on analyzing each market relative to each other and break out which markets are better financially and non-financially. A
strong candidate should also understand the business model well enough to evaluate the capability to set up operations in international markets and
potential alternatives. Financially, the candidate should focus on the components that would impact revenue given the objective, but also understand
that variable cost could vary significantly across markets.
SAMPLE STRUCTURE
Financial Non-Financial
Revenue Costs Capabilities Other/Risks

• Price differences • Variable cost differences • Sourcing talent (techs) • Other alternatives
• Treatment differences • Labor wages • Sourcing fleet/materials • International
(product mix) acquisition
• Material costs • Market knowledge
• Market size (population • Other market
• Fleet and fuel • Timeline for market
& # of apartments)
entry • Further domestic
• Fixed cost differences
• Competitive landscape growth
• Customer concentration
• Rent
• Market penetration (average buildings per • Legal/regulatory risks
• Insurance PM firm)
• Investment requirement 54
Industry Easy
Case Type Medium
EXHIBITS
Competitive Landscape by Market Share Market Statistics
100% 5.0% 4.7%
7% 3.8%
90% 23% 7%
80% 37% 9%
6%
70% 13%
17%
60%
15%
50%
83.2
67.3 67.8
40% 15% 26%
64%
30%
16%
20%
28%
10% 17%
0%
United Kingdom France Germany United Kingdom France Germany
Company 1 Company 2 Company 3 Company 4 Remaining Market Population (In Millions) Annual Population Growth (Last 5 Years)
*Notes: Remaining companies in each market are: 12 (U.K.), 50 (France), 5 (Germany)

Annual population growth primarily driven in metropolitan areas
55
Industry Easy
Case Type Medium
SAMPLE EXHIBIT CANDIDATE RESPONSE

First Chart:
• Candidate should highlight the chart outlines market share for the top 4 competitors by market, and a combined market share for remaining companies
• Candidate should notice that the note indicates the # of companies that make up the “remaining market” share percentage and France has the highest number of
companies at 54
• Germany has a major player with 64% share and the remaining companies are small
• France has two major players, another company with significant enough market share at 17% and remaining market averages ~0.5% so they are small
• United Kingdom has 4 evenly sized companies and the largest share in the remaining market (37%) for 12 companies which is ~3% per company
Second Chart:
• Germany has the biggest population and France/U.K are the same size
• U.K. with highest annual growth and France with the lowest
Conclusion
• Candidate should eliminate Germany as an option given the large player and remaining companies having solid share so it would be hard to break into the market.
The candidate should justify why they choose U.K. or France (growth rate vs. smaller companies to earn market share from)
• Candidate should show case leadership and inquire about additional information to make final decision between U.K. and France (# of apartment buildings, trying
to understand market volume, etc.)
56
Industry Easy
Case Type Medium
QUANTITATIVE ANALYSIS
Given the market statistics, the client has now decided to enter the U.K. and would like for you to calculate two things:
(i) What is the annual revenue currently for the total market (in euros)
(ii) What is the annual revenue that PestPro can achieve after three years in this market (in euros)
SAMPLE SOLUTION
(i) Annual Market Revenue = # of apartments * blended average annual revenue per apartment
# of apartments = population / # of people per family (assumption) * % of families living in apartments (assumption)
Blended average annual revenue per apartment = (X% of apartments with no treatments + Y% with some treatments + Z% with a lot of
treatments) * revenue per treatment (assumption)
Example solution = [67M population / 3 per household * 20% living in apartments] * [ (25% with 0 treatments/year + 50% of treatments with 2
treatments/year + 25% with 5 treatments / year) * 40 EUR per treatment
= 4.45M * (3.5 treatments/year * 40 EUR) = 4.45M * 140 EUR = 623M EUR
(ii) Annual revenue that PestPro can achieve after three years = annual market revenue * population growth rate for 3 years * PestPro penetration rate
Annual market revenue = number calculated in part (i)
Population growth rate = population growth rate from exhibit. Note: Candidate should justify using the full growth rate or majority of it,
given the footnote that population is driven in urban areas which typically have the apartment buildings
PestPro penetration = assumption. Note: this penetration rate should be justified based on how much market share small companies have
Example solution = 623M EUR * (1.05^3) * 2% market share = 623M EUR * 1.158 * 2% = 721M EUR * 2% = 14.42M EUR
Note: Candidate could also justify that market size * market share would be > 10M EUR so no need to calculate population growth
57
Industry Easy
Case Type Medium
In addition to the sales analysis, what are the other strategic decisions and risks that PestPro should consider to become successful in
this new market over the next three years?
SAMPLE ANSWERS
Note: These are simply a few ideas that the candidate may outline. It is more important for the candidate to think big-picture and consider all aspects of
what makes a service-based business successful
Cost Optimization Service Excellence Employee Satisfaction Branding Diversification

• Labor productivity • Training programs for • Employee hiring • Industry associations • Adding new treatments
(efficiency, optimal treatment quality • Employee retention • Marketing – print • Entering residential sector
scheduling)
• Routine audits of materials, online, etc. (organic or through
• Competitive compensation
• Supplier negotiations treatment acquisition)
• Client referrals
(fleet, insurance, • Attractive incentives
• Administrative excellence • Annual preventative
materials) • Employee surveys, events
(technology, quick programs (recurring
• Fixed costs response) revenue)
58
Industry Easy
Case Type Medium
The CEO is on their way to meet with us in a few minutes and would like to hear your recommendation.
To conclude, the candidate should outline:
Problem: Summarize the situation – entering one of three markets and meet 10M euros in annual sales
Recommendation: Proceed with entering the U.K. market given that they can achieve their goal of 10M euros in annual sales after 3
years
Calculation: Sales were calculated by considering the population living in apartments and the blended average revenue per
apartment unit
Strategic Risks/Decisions: In addition to sales, PestPro should consider cost optimization, service excellence and their branding to
remain competitive over the next 3 years
Next Steps: Recommend setting up a meeting with key stakeholders to review the analysis and outline key next steps for entering the
market
59
Thirsty for Rain
By Javi Salinas (MBA 2024)
Maritime and Logistics Easy

Water Management Medium
Cost Reduction Hard
60
Cost Reduction
Thirsty for Rain Hard

The Panama Canal is one of the most important • The Panama Canal Administration is an agency of the government of Panama responsible for the operation
maritime routes in the world. The canal serves and management of the Panama Canal. The agency is one of the top contributors to the national treasury.
around 144 trade routes that represent about 3% • Provide Exhibit 1 – if the candidate ask more clarification on the geography or about the company
of world trade. The Panama Canal's biggest asset, operations or the business overall. If the candidate did not ask, share the Exhibit 1 in Q1.
however, is its water. Water management has
• Objective: avoid loss of revenue and evaluate mitigation strategies to maintained water level.
become an increasingly important concern for
the Panama Canal Administration due to irregular • If the candidate asks what is the Panama Canal currently doing, share the Canal has no current action plan.
rainfall and changing weather patterns in the last • Water management definition: for this case, water management means monitoring the water level in the
decade. Water levels in the Panama Canal are Gatun Lake, the biggest source of water for the Panama Canal and provide potable water to the capital city.
critical to avoid delays in transit that can cost
millions of dollars to the maritime and logistics
businesses, ultimately affecting the Panama
CASE GUIDANCE
Canal’s bottom line. This case is an opportunity to challenge candidate beyond market-entry and profitability cases. Candidates
are expected to look at the problem in a holistic way. This case challenges candidates with an industry and a
The Administrator of the Panama Canal has problem that is not common. The case is designed to throw the candidate a lot of data from which he or she
hired you to help evaluate what are the business should funnel down and use what it is necessary to complete the case.
implications of improving the canal’s water A Good candidate will successfully analyze the data presented, extract the information necessary to perform
management. What set of criteria would you calculations, and make a final recommendation taking into consideration the external factors affecting the
problem.
use to evaluate these implications?
61
Cost Reduction
STRUCTURE GUIDANCE
Note: There are many possible alternatives to this framework. These are only provided as possible suggestions.
The structure should evaluate internal and external criteria. Internally, financial, operational and risks are some of the criteria to considered. Finally,
external considerations should be accounted as well. The external criteria can follow a PESTEL framework (e.g., political, societal, and environmental
implications). A great candidate will remember this framework and apply on a case-by-case basis when evaluating alternatives.
SAMPLE STRUCTURE
Costs of Alternatives
(Implementation + Agency budget
What are the Ongoing Costs) What are the Political
financial
Implications?
implications? ROI, Payback period, Political Opposition
NPV of projects
Do we have the
Community
What are the capabilities?
What are society
Internal Operational External
implications?
implications? Do we require external
Water consumption
vendors?
Disruption from
ESG Commitments
Operations What are the
What are the risks? environmental
implications?
Reputational Risks Biodiversity impact
62
Cost Reduction
Before thinking on alternatives for improving water management, the administrator has asked you to calculate the potential loss of revenue for this
upcoming year using last year numbers as assumptions. “El Niño” (a weather phenomena that affects rainfall patterns in the tropic zones) is expected
to cause 10 days of operational disruption due to critical low water levels in the canal.
Q1: How much revenue from tolls per ship is the Panama Canal expecting to lose in 2023 due to lower water levels?
Q2: How much revenue from tolls does that represent on an annual basis (2023), considering al previous assumptions?
SOLUTION
The candidate should identify missing information. Provide Exhibits as the candidate asks relevant questions.
If the candidate has not asked about the business model or operations, please provide Exhibit 1.
1. Form Exhibit 1 – calculate number of ships on an annual basis -> 360 days x 28 ships per day = 10,080 ~ 10,000
2. If candidate asks for financial information, provide Exhibit 2. (Please see Exhibit 2 chart analysis for possible candidate answers) After analyzing the
chart, the candidate should continue to answer Q1. If the candidate is having difficulties, remind the candidate to continue the calculations for Q1.
3. From Exhibit 2 – calculate price per PC/USM per ton -> $3,000 M (Toll Revenue) / 500 M (PC/USM per ton) = $6 per PC/USM per ton
4. Next, calculate the avg. PC/USM per ton per ship -> 500 M (PC/USM per ton) / 10,000 ships annually = 50,000 PC/USM per ton per ship on avg.
5. Q1: calculate the expected loss from revenue toll per ship = 50,000 PC/USM per ton per ship X $6 per PC/USM per ton = $300K per ship
6. Q2: calculate total expected loss of revenue for 2023 = $300K per ship x 28 ships per day x 10 days of op. disruption = $84 M
A Great candidate will notice that the amount of loss revenue from tolls is greater than the annual route investment budget.
63
EXHIBIT 1 – Transit & Operations Cost Reduction Hard
Panama Canal
Alajuela Lake Locks
Lakes
Gatun Lake
Panama Canal Transit Route
Panama Canal Basin

(Protected Area)
28 Ship Capacity per day

360 Operational Days
Million balboas* Route
80 Investment budget**
(non-operational)
*Balboa is the national currency denomination in Panama. However, 1 Balboa = 1 USD dollar. Panama uses USD as its legal tender.
**The Route Investment Budget is the budget designated to water management, community outsource, and other non-operational initiatives
64
EXHIBIT 2 – Financials Cost Reduction Hard
Total revenue by source (in billions balboas*) Total PC/UMS tons (in millions)
Total Revenues PC/UMS
Tolls
Transit-Related Services
Other Revenues 500
5 500 495
4.27
3.96
4 475
3.44
2.97 3.00
3
2.66
450
1.15
1 0.88
0.68
0.10 0.12 0.12

0 400
2020 2021 2022 2020 2021 2022
*Balboa is the national currency denomination in Panama. However, 1 Balboa = 1 PC/UMS is a unit of measurement. One PC/UMS net ton is
USD dollar. Panama uses USD as its legal tender. equivalent to 100 cubic feet (2.83 m3) of capacity. The Panama
Canal sets its Toll pricing policy per PC/UMS ton.
65
Cost Reduction
SOLUTION – Chart Analysis

EXHIBIT 1 – Transit & Operations EXHIBIT 2 – Financials
Describe the following to the candidate: The candidate should identify the following:
1. The Panama Canal main business model is to be a worldwide water 1. Total Revenue graph:
tollway that connects maritime trade routes between the Atlantic A Good candidate will identify:
and Pacific oceans. • Revenues have grown ~20% since 2020.
• Tolls remains the most important source of revenue,
2. The Panama Canal Basin is a protected area. 90% of its area is accounting ~70% of total revenue
comprised of rainforest. A Great Candidate will:
3. The only two water sources of the Canal are the Gatun Lake and • Ask for the details of “Other Revenue” – Other Revenue refers
the Alajuela Lake. to the sale of potable water and electric power, weighted
equally.
2. PC/UMS graph:
A Good candidate will identify:
• PC/UMS tons have grown by 5% since 2020.
A Great Candidate will:
• Identify the relationship between PC/UMS tons and Toll
Revenues and derived the unit price per PC/UMS ton.
66
Cost Reduction
QUALITATIVE ANALYSIS
After sharing your initial calculations on the impact of loss revenue for this upcoming year, the administrator has asked you to analyzed the following
data in Exhibit 3. In addition, please provide a recommendation of which is the best alternative for improving water management from Exhibit 4.
Q2: From the options identified, which project would you recommend the Panama Canal Administration?
SOLUTION
EXHIBIT 3 – Water Level EXHIBIT 4 – Identified Projects
The candidate should identify the following: The goal of exhibit 4 is for the candidate to select a combination of
• In the last decade, water levels have drop from the safe operational the projects and considered the short term and long term
level with higher frequency and magnitude. implications given the urgency of the matter.
• Identify that over the last decade water levels depict a higher A great candidate should conclude the Panama Canal should invest in
standard deviation than the years between 2000 and 2013 cloud-seeding in the short term and start investing in a watershed
plan for the long term
67
EXHIBIT 3 – Gatun Lake Water Levels Cost Reduction Hard
GATUN LAKE HISTORICAL AVG. WATER LEVEL (ft.)

88.00
87.00
86.00
85.00
84.00 Avg. Water

Level
83.00
Trend
82.00
Safe
Operational
81.00 Water Level
80.00
79.00
Qtr1 Qtr4 Qtr3 Qtr1 Qtr4 Qtr3 Qtr2 Qtr1 Qtr4 Qtr3 Qtr2 Qtr1 Qtr4 Qtr3 Qtr2 Qtr1 Qtr4 Qtr3 Qtr2 Qtr1 Qtr4 Qtr3 Qtr2 Qtr1 Qtr4 Qtr3 Qtr2 Qtr1 Qtr4 Qtr3 Qtr2
2000 2003 2006 2009 2012 2015 2018 2021
68
EXHIBIT 4 – Identified Projects Cost Reduction Hard
Cloud-seeding Dredging Watershed Planning
Helps attain or maintain water

Weather modification that aims Excavate the bottom floor of
storage, decrease erosion, and
Description to change the amount or type the canal to reshape the water
creates protected wildlife
of precipitation. route.
corridors.
Cost
(CAPEX + Ongoing)
Implementation
(Time)
Water Level Impact

(helps achieve 85ft)
Environmental Impact
69
Cost Reduction
Thirsty 4 Rain Hard
Q3: Beyond the identified solutions presented earlier, what other alternatives (economic, operational or engineering) could the Panama Canal
Administration adopt to hedge, mitigate or control water management?
SAMPLE ANSWERS
The idea here is to test the candidate on creativity. These are few ideas but are not exclusively the only ones. The candidate should bring up feasible
activities that have economic, operational or engineering sense.
Pricing Boat Weight Limits Pump Ocean Water Scheduling
Change to dynamic pricing Limit boat weight per Research feasibility of Invest in weather technology to
per PC/UMS per ton based transit, yet this might affect pumping ocean water as a improve water levels forecast
on water level profitability source for the Panama Canal and boat transit scheduling
70
Cost Reduction
Thirsty 4 Rain Hard
You are meeting with the Panama Canal Administrator to present your solutions, what are your set of recommendations?
After evaluating the economic impact as well as the qualitative criteria of the 3 solutions identified by your administration, we recommend the
following:
1. We recommend to invest in cloud-seeding in the short term and build a long-term watershed plan.
2. Through this actions, the Panama could reduce the probability of operation interruption, which accounts for $8.4M per day of loss revenue.
3. However, beyond implementing the short-term and long-term projects, such as the cloud-seeding and watershed planning, we recommend
looking into implementing a dynamic pricing model to economically hedge against water level fluctuations, as well as to invest in R&D for
opportunities to use ocean water as water supply source.
We are happy to help you into digging deeper into these analysis.
71
Parking & Co
By Juan Fernandez Daza (MBA 2023)
Parkings Easy
Profitability Medium
Investment Decision Hard
72
Parkings Easy
Parking & Co Investment Decision Hard

• Objective: to payback the investment within the next 5 years.
A tender to own the concession of a
street in Madrid has recently opened • Additional info:
and our client is interested on the bid. – The client owns the concession of other streets in Madrid and other Spanish cities.
They have come to us to help them on
– No financial constraint, the bid can be as high as we want.
the bid. The street is C/Jorge Juan
located in the prestigious – The concession lasts 8y.
neighborhood of Barrio Salamanca.
CASE GUIDANCE
How much should the client bid for? This interview should be like a conversation that is always led by the candidate.
The candidate should take the lead, nevertheless, if he/she is pointing in the
wrong direction, the interviewer should re-direct without penalizing the
candidate.
Once the candidate structures the problem, the interviewer should ask the
candidate what information he/she needs to calculate the payback period, and
from there show the exhibits. The exhibits should lead to the math, and with
these calculations, the candidate must jump into the conclusion.
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Parkings Easy
STRUCTURE GUIDANCE
As in any investment analysis, the candidate should separate the initial investment from the operational revenues & costs from
running the business. Having understood that there is a payback period, the candidate should point to that structure
SAMPLE STRUCTURE
• # Cars
Revenues • Average ticket price
• Average car park duration
Profitability
Operational • Salaries (additional employees needed)
Bid amount • Maintenance (street + park-meters)
$$ Costs • Software (park-meters & controllers’ devices)
Licence/Concession
Total
Investment • Park-meters
Operational investment
• Street improvements
74
Parkings Easy
EXHIBITS – Weekly revenue estimation

Capacity Occupation Average Ticket
Days Type Occupation
Monday to Saturday
Peak
90% Jorge Juan St
4h
01 00
Sidewalk
No Peak 50%
8h
3€
Sunday
No Peak
2m
40%
6h
All cars park perpendicular to the Demand is not flat in a weekly basis but
All cars park just 1h/day
sidewalk all the weeks are equal
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Parkings Easy
Provide upon request!! A good candidate identifies:
• Street’s details:
• 600m where cars can park both sides – though only 400 effective meters to There are different occupation
park on each side rates depending on the
• Due to parking entrances, garbage containers, terraces…etc on the street day/hour – though we will
(the candidate must conclude this on his/her own). ignore it to simplify
• There are two parking areas blue and green – residents can park in the green area, calculations
but we can ignore residents to simplify. The street has two sides to
park in but not 100% of the
street is “parkeable”
Revenue estimation
Parking capacity: 400m x 2 sides x 1 car /2m = 400 cars
Total cars/week: 48h (see below) x 400 cars/h = 19.200 cars/week
• Mon-Sat average occupation: 4hx90% + 8hx50% = 3.6+4 = 7.6h/d => 6d/wk x 7.6h/d = 45.6h/wk
• Sunday average occupation: 2.4h/wk
Total revenues: 19.200 cars/week x 3€/car x 50w/1 yr ~ 3M€/year
76
Parkings Easy
BRAINSTORMING QUESTION – Operational costs

The candidate must identify three main cost items – challenge the candidate to find them all, you may give some hints:
• Maintenance – both street and park-meters = 0.9M€/year
• Salaries – only new staff needed, only inspectors = 3x30k€ = 90k€/year
• How many people needed? Minimum 3 inspectors
• Salary per inspector ~30k€/year
• Software – both park-meters and inspector’s devices: 10k€/year
Total operational costs in a year = 0.9M + 90k + 10k = 1M€
THE ANSWER
• CONTRIBUTION MARGIN: 2M€
• Operational Revenues: 3M€
𝑰𝑵𝑰𝑻𝑰𝑨𝑳 𝑰𝑵𝑽𝑬𝑺𝑻𝑴𝑬𝑵𝑻 • Operational Costs: 1M€
𝑷𝑨𝒀𝑩𝑨𝑪𝑲 = • INITIAL INVESTMENT: License + 2M€
𝑪𝑶𝑵𝑻𝑹𝑰𝑩𝑼𝑻𝑰𝑶𝑵 𝑴𝑨𝑹𝑮𝑰𝑵 • License: Unknown
• Machinery: 1M€ (the candidate must identify this item, then provide)
• PAYBACK PERIOD: 5 years
Max to pay for the license: 9M€ = 5yr (2M€/yr) − 1M€
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Parkings Easy
We have found out that there are more bidders to the tender. What would you propose the client to do?
If we think that the tender is going to be tight, we could increase the offer of 9M€ that we have calculated that we can shoot. How?
• Increase the payback period – suggest to increase the period to 6-7y and still have decent profits on the 10y contract. Though
only if the payback period is not a super red line for the client.
• Improve the operational margin:
• Revenues => Increase the price during the peak hours
• Costs => Synergies may bring efficiency: 1) Optimize salaries using already hired personnel and/or 2) Reduce software fee
per parking leveraging that we will have one more parking to operate.
I recommend the CEO to bid for 10-11M€ to have some buffer to mitigate the risk of losing to competitors.
Next steps? Deeper analysis on the suggestions on the synergies to increase the the bid.
78
The Flying Metro
By Gianmarco Bertelli & Mohamad Yassine (MBAs 2024)
Airlines/Infra Easy
Market Sizing Hard
79
Airlines/Infra Easy
The Flying Metro Market Sizing Hard

• The goal is to have a positive NPV and to sell the asset the first year that is ready to operate
Your client “Y Invest” is a Private Equity (PE)
firm that is considering to buy the rights to • We forecast that the construction time will be of 1 year.
construct, build and operate a solo metro • No other metro lines go from the City Center to this airport
line that would connect Times Square in
• Initial Investment is not an issue
Manhattan (the City Center) to JFK Airport
(major airport and one of the world’s busiest • 2 Major companies are competing with us
airports) in New York. The line operates in • The PE firm has an expertise and has a focus on metro/subway projects
both directions (from & to the airport). The
firm has hired you to help them determine • There are 3 Major Airports in NYC – Just focus on JFK for this case, others are not relevant
whether this is a good investment • There are 4 Runways at John Kennedy (JFK) International Airport
opportunity or not? • Assume that the PE firm has the rights to operate the project for 99 years (only needed for
perpetuity formula later on)
CASE GUIDANCE
Market Sizing on the supply side is one of the key points that is tested (don’t start with
population)
No PE experience is required
No rounding is allowed, numbers should be calculated accurately
Time: 35 mins
80
Airlines/Infra Easy
The Flying Metro Profitability
Market Sizing
Medium
Hard
STRUCTURE GUIDANCE
The focus of the case is for the interviewee to give a MECE structure with Market, Financials & Risks Buckets. The Market Branch is
the most important/relevant since it is necessary to compute the expected Revenues and Profits of this project (Market Sizing). The
candidate isn’t expected to dig deep on all branches.
SAMPLE STRUCTURE
$ to be Bidded
Actual Market Financials

Risks
Outlook (NPV)
Delay in Financial
Size Growth Substitutes Revenues Costs Travel issues
construction Stability
Tickets Rev Ancillaries OPEX CAPEX
81
Airlines/Infra Easy
The Flying Metro Profitability
Market Sizing
Medium
Hard
MARKET SIZING GUIDANCE

- A good candidate would approach this market sizing by looking at supply side (how many planes can land in the
airport, # of runways, operating hours…)
Market Sizing Data to be provided when asked

- # of Runways in JFK = 4 # of Planes/Runways/day = Opening Hrs * 60mins/hr / Avg. Time per plane=240
- Average Time for Landing/Departure per plane = 5 mins
# of Planes/Day = # of Runways X # of Planes/Runways/day=960
- # of Operations Hrs/Day for JFK = 20 hrs/day
- # of days/year = 350 days (some days there are strikes or bad # of people/plane = Avg. # of ppl/plane x Utilization %=150
weather) # of people leaving the airport = # of ppl/plane X # of Planes/day X (1- %
- Utilization of Planes = 83.33 % (Hint: It’s 5/6) – They should Transiting) = 96’000
know it by now Multiply the above by 350 days to get the annual traffic=33’600’000
- Average # of people/plane = 180 seats (let the person
calculate as per the below) A good candidate would start to brainstorm on the possible ways passengers
- # of rows/plane = 30 rows can commute to Manhattan:
- # of seats/row = 6 seats/row
- Taxis/Ubers
- % of people who are just transiting (not leaving the airport) =
33.33% (Hint: 1/3) - Buses
- Pick Ups (Family/Friends/Hotels)
- Walking (not realistic but creative)
→ Proceed to Exhibit 1 82
Airlines/Infra Easy
EXHIBIT 1
Mean of Transp. Price Waiting Time Overall Satisfaction (over 10) % Of usage
Taxi $ 35 12 mins 9 22%
Uber/Lyft $42 8 mins 8 22%
Bus $21 15 mins 8 23%
Pickups* $15 25 mins 5 33%
* Price for Pickups is the price paid to the airport parking while waiting for passengers
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Airlines/Infra Easy
EXHIBIT 1
Mean of Transp. Price Waiting Time Overall Satisfaction % Of usage
Taxi $ 35 12 mins 9 22%
Uber/Lyft $42 8 mins 8 22%
Bus $21 15 mins 8 23%
Pickups* $15 25 mins 5 33%
SOLUTION
A good interviewee should deduce the following:
- Although the pickups is the cheapest the overall satisfaction is the lowest
- The Overall Satisfaction for the Taxi, Uber & Bus isn’t that varied
- Price, Waiting Time and Overall Satisfaction are correlated in all categories except Pickups where the Satisfaction is low
A great interviewee should point out that if priced well the easiest mean of transportation to tackle is Pickups (customer are not
satisfied by that) this mean has also the highest penetration in the market. As follow up the candidate could should out that this can
give us an idea on how to price the tickets.
If not tell the candidate that we decided to target pickups and move to the second brainstorming session.
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Airlines/Infra Easy
Our research team found that with a subway departing every 10 mins the customer satisfaction will be 7.
How would you price the tickets?
BRAINSTORMING ON TRAIN TICKET PRICES

A good candidate will point out that there are 3 main way to price a ticket:
- Cost Based
- Value Proposition / WTP: Willingness to Pay
- Comparable / Competition
Given the information from the previous exhibit any price between $15 & $21 is logical
Provide the candidate that we will price the ticket to 15$/trip and that this will capture all the Pickups market
(1/3 of the total market).
A good candidate will now refer to the structure and proceed to the computation of the ROI.
Use the perpetuity formula to solve for NPV; you can give it to the interviewee if he/she doesn’t know it
Perpetuity formula = (Net Profit/Loss per year )/(Interest rate – growth rate)
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Airlines/Infra Easy
Data to be provided by the

interviewer: SAMPLE ANSWERS
Capex = $ 2’000M Revenues Price*Market Size*Market Capture
15*33.6M/3=$ 168M
Opex = $ 68M
OPEX - $68M
Interest Rates = 8% Profit/year $ 100M
Growth = 3%
The PE fund will use the perpetuity formula to Perpetuity formula= 100M/(Interest rate – growth rate)=2’000M
evaluate the investment.
By that we deduce that the NPV = 0
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Airlines/Infra Easy
Julia Dixon the Managing Director of the PE Fund is here, what do you recommend?
Given the 0 NPV of the project there is not a “correct” recommendation. Here the candidate should demonstrate the ability to
refer to its structure and to introduce in its recommendation the risks that have not yet been included, the possibility to lower
up the total investment to be made thanks to government involvement since this project can reduce CO2 emissions…
Recommendation Sample: Proceed with the project
Why:
1) NPV is not negative
2) Great branding to have such an asset in our portfolio
Next Steps:
1) Check if we can have more revenue streams and optimize costs
2) Hire construction company
Risks:
1) Interest rates might fluctuate
2) People will not use the metro and new means of transportation such as bikes or scooters will appear
87
Fixing Silverland
By Nicolas Fernandez Lavalle (MBA 2023)
Economic Development Easy

Strategy Medium
Public Sector Hard
88
Strategy Medium
Fixing Silverland Public Sector Hard

The government of Silverland, an imaginary South American nation, • Context - How much debt the currently government has? – Very little, you
has approached us requesting a consultation. Upon taking office in can assume current external debt is $50bn (Only 10% of GDP - $500bn)
20x5, they promised to combat inflation. However, by 20x8, the • Objective - What is the main objective of the government? – Implement a
country still grapples with high inflation rates (over 40%) and plan that will sustainable close the fiscal gap without increasing inflation
widespread public dissatisfaction. Silverland's government recognizes • Country structure – The country produces mainly agricultural products
its substantial public deficits, mainly financed with currency issuance, and no immediate productivity shocks or growth solutions are expected
but has found it challenging to address them without generating
negative public reactions to cost-cutting measures. In search of a CASE GUIDANCE
solution to this crisis, the government is considering seeking If the candidate lacks a fundamental understanding of economics, kindly
assistance, potentially including financial support from the guide them in comprehending (without explicitly telling them) the
International Monetary Fund (IMF). With an election looming in 20x9, balancing act governments face between printing money to finance the
the current administration aims for a victorious outcome. gap between expenditures and tax revenue, in order to maintain political 89
backing, which can result in inflation. On the other hand, a government
How can the President of Silverland effectively address the ongoing may choose to finance this deficit by issuing external debt, but doing so
crisis and stabilize its economy? could jeopardize the nation's future capacity to repay its obligations.
Strategy Medium
STRUCTURE GUIDANCE SAMPLE STRUCTURE

What are the Government Revenues?
This is an interviewee led case. The candidate should be framing
• Tax Collection
the problem towards the solution addressing several factors. • Tax Rate (How much do I charge)
• Tax Base (To how many people do I charge)
• Understanding the fiscal gap– Not attempting to understand • Public Companies
• Other income (Sell of assets)
what is causing the problem can be considered a mistake
What are the Government Expenses?
• Macroeconomic indicators (interest rates, GDP growth, etc.) –
• Public Services (Education, Healthcare, Defense, etc.)
Not measuring the problem can be considered a mistake • Employees
• Social Subsidies (Transfer to lower income population)
• Social and political implications – A serious mistake would
• Economic Subsidies (Transfer to companies)
be to avoid considering impact on the society or in the
What are the current financing tools?
public opinion (elections result) • Currency issuance
• Stakeholder mapping – A nice to have would be an idea of • Public Debt (Debt level, Interest rate)
stakeholder mapping in order to assure potential allies What is the impact of closing the gap?
(International organisations, other governments, internal • Economic results (Productive sector winners and losers)
• Social results
parties, etc.) • Political outcome
• International community trust/reputation
90
Strategy Medium
Can you think of some potential solutions to tackle the fiscal deficit problem?
SAMPLE ANSWERS
Increase revenues Reduce expenditures Finance the deficit in a different way
• Increase tax rate • Eliminate public companies • Request assistance to IMF
• Increase taxpayer number • Eliminate subsidies to companies • Request assistance to private sector
• Create new taxes • Eliminate subsidies to people
• Increase economy (Increase tax base to • Improve public sector efficiency (More
collect more with the same rate) technology)
• Reduce the number of public employees
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Strategy Medium
EXHIBITS (I)
We have met with our experts in the subject and they presented some of the following information to us:
Exhibit 1: Historic relationship between inflation, debt and Exhibit 2: Fiscal Deficit and targets
currency issuance 9%
250% Correlations:
Inflation & Currency issuance = 0.9 8%
Inflation & External debt = 0.1
200% 7%
6%
Fiscal Deficit/GDP
150%
5%
Share of GDP
100% 4%
3%
50%
2%
0% 1%
80-85 85-90 90-95 95-00 00-05 05-10
0%
-50% 20x4 20x5 20x6 20x7 20x8 20x9
Inflation Currency issuance External debt Result Target
92
Strategy Medium
EXHIBITS (II)
We have met with our experts in the subject and they presented some of the following information to us:
Exhibit 3: Cost of debt & Social Perception Polls Exhibit 4: 20x8 Debt in Neighbour Countries (% of GDP)
90%
Private Debt IMF 80%
Cost (Interest rate) 18% 4%

70%
After being showed the above chart, people responded the following to two questions 60%
Share of GDP
Poll 1: How do you perceive IMF to help Silverland? 50%
I hate it, it will ruin our country 70% 40%

I don't know what this is 25%
I would like to help us 5%
30%
Poll 2: How do you perceive Private Debtors to help Silverland? 20%
I hate it, it will ruin our country 5% 10%

I don't know what this is 90%
I would like to help us 5% 0%
Silverland Danceland Mineland Surfland Tacoland
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Strategy Medium
CHART ANALYSIS
From the four graphs the candidate should come to the following conclusions:
Key takeaways from the graphs should be:

1) Inflation is correlated highly with currency issuance and not correlated with external debt
2) The fiscal deficit has been reducing, but not fast enough to meet already set targets
3) Private Debt is unknown in society (possibility of taking the debt without impact in the society) while going to the IMF is very negative
for people. Still, going to the IMF is much cheaper.
4) Debt levels in Silverland seem to be way lower than in neighbour countries which indicate that there is room to take more debt
Outstanding candidates should point out the following ideas:

1) Financing the gap with public debt seems to be a short term alternative to reduce inflation by cutting currency issuance
2) There is a limit to public debt issuance as that can be riskier for the country
3) Why has Silverland not taken more debt? Is it feasible for them to do it? (Is Silverland creditworthy?)
4) A political sense of the trade-off between winning elections next year (keeping the fiscal gap) and accomplishing the economic
objectives would be highly valued in the case (IMF has a higher negative perception in society and might harm chances for elections).
94
Strategy Medium
QUANTITATIVE ANALYSIS (i)

If the candidate does not propose it on its own, guide them to calculate the fiscal gap:
Silverland has four main areas to finance in it’s budget: Healthcare and Wellbeing (HW), Education and Research (ER), Defense and Security
(DS) and Infrastructure & Development (ID). Total fiscal income in Silverland is $133bn. HW represents 20% of fiscal income, ER represents
30%, DS represents 10% and ID represents 35%. Each area gap is measured independently, so some have deficit and others do have
superavit. HW has expenditures of 1.5 times their budget, ER has 1.3 times their budget, DS has 1.2 times their budget and ID has superavit,
spending 0.97 times its budget. Calculate the gap (round to two decimals).
PROPOSED SOLUTION
Weak candidates will aim to linearly calculate the fiscal deficit. Strong candidates will find out that multiplying share and gap size is quicker:
• HW: 20% x (1.5 – 1) = 20% x 0.5 = 0.1
• ER: 30% x (1.3 – 1) = 30% x 0.3 = 0.09
• DS: 10% x (1.2 – 1) = 10% x 0.2 = 0.02
• ID: 35% x (0.97 – 1) = 35% x - 0.03 = - 0.01
• Fiscal gap: (0.1 + 0.09 + 0.02 - 0.01) x $133bn = 0.2 x $133bn = $26.6bn
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Strategy Medium
QUANTITATIVE ANALYSIS (ii) - Optional

Now present the two options to the candidate and calculate each cost (IMF and Private Sector). Assume no time value of money and 5
years loans:
• Fiscal Gap: $26.6 bn • Safety margin for the next 5 years deficit: $9.4bn
• Current public refinancing needs in the next 5 years: $14bn • Costs: Private Debt 18% and IMF 4% (If they don’t remember from the graph)
Calculation:
Total Gap: $26.6 bn + $14bn + $9.4bn = $50bn
Cost of Private Sector: $50 x 18% = $9 (Per year)
Cost of IMF: $50 x 4% = $2 (Per year)
Calculation:
Cost of Private Sector = $9 x 5 = $45 bn in 5 years
Cost of IMF = $2 x 5 = $10 bn in 5 years
After arriving to the result, an outstanding candidate would associate this numbers with either GDP levels ($500 bn), current debt $50bn, or
any intuition of how much this debt is. They should come to the conclusion that Private Debt is too expensive.
96
Strategy Medium
BRAINSTORMING QUESTION (ii) - Optional

Can you think of potential risks of asking money to the IMF?
SAMPLE ANSWERS
IMF Conditions Reputation
• Loss of autonomy • Stigma associated with IMF Assistance
• Higher debt burden • Internal social rejection to the program
• Austerity measures • Creditors negative perception to increase financing in the future
• Currency management conditions
97
Strategy Medium
What would you advice to the president of Silverland?
SAMPLE RECOMMENDATION ALTERNATIVE RECOMMENDATION

Most typical answer will include: Alternatively, the recommendation can suggest:
Recommendation: A) Do not ask for debt and close the fiscal gap immediately. To accept this
A) Go to IMF and request for $50 bn to cover the financial needs recommendation it needs to come with an idea of how to deal with social
Reasons: discontent.
1) That is enough to cover the fiscal gaps and avoid the discontent from
expanding the public opinion disappointment
2) It shifts pressure away from currency issuance and inflation
3) Is much cheaper than private debt
Risks:
1) The debt burden can start to pile up
2) The public opinion might react poorly to the strategy
Next steps:
1) Establish a solid electoral strategy to win next term and accelerate the reforms
to reduce fiscal gap
98
TBell Mining
By Javier deArquer Rilo (MBA 2024)
Mining Easy
Optimization Medium
Profitability Hard
99
Mining Easy
Optimization Medium
TBell Mining Profitability Hard
CURVEBALL QUESTION
You have a car in a racetrack. The car completed the first lap, and the average speed was 20km/h. What should be the speed of the second lap so as the average speed of the 2
laps is 40km/h?
SAMPLE ANSWERS
I got this question in a Kearney Madrid interview. It was the starter of the interview and set the mood for the rest of the case
This problem has no solution. The solution is that is not possible. There are multiple ways to solve it, the next one is a sample:
- Let’s assume that the circuit has a dummy distance of 100km. Does not matter which number you choose here
- The time of the first lap at 20[km/h] is 1[lap]·100[km/lap] / 20[km/h] = 5h
- For the average speed to be 40km/h the total time should be: 2[laps] · 100[km/lap] / 40[km/h] = 5h
- This means that the car already consumed all the time in the first lap and therefore should do the second lap at infinite speed
100
Mining Easy
Optimization Medium

Everything that is not cultivated or fished has its • The mining company has been operating for several years and has a well-established production process
origin in a mine. Your client is a mining company • The production process consists of several stages, including drilling, blasting, crushing and screening. Once
that extracts rocks from an open pit in the the mountain is blasted, they mineral is crushed into smaller pieces and then classified into the different
mountains. products
• A product is considered a range of grain sizes. For example, 8-17mm (rocks from 8 to 17 mm), 50-150mm,
The company is experiencing difficulties in etc. Every product must comply with a technical datasheet (TDS) that stablish thresholds for the different
optimizing its production process. On the one grain sizes. If not met, TBell faces a penalty from the client.
hand, their facilities are at top capacity working
3 shifts per day working at almost 100% capacity
utilization.
On the other hand, the finer products are piling

CASE GUIDANCE
up (more than 500 000t) since the mine • This is ideated as an interviewee led case
necessarily produces fine particles in the milling • The candidate is not likely to know all the clarifying points, necessary for the following steps. Therefore,
process. in this case questions are really important
• The case makes the candidate 1) understand how open pits work 2) identify what are the products in
The client wants your consulting team to help mining industry 3) generate hypothesis on the potential causes 4) quantify the impact on the business 5)
them identify and evaluate the best solutions to propose solutions
optimize their production process and increase • The case tries to test the candidate’s curiosity and ability to generate assumptions. Moreover, the
their output while driving profits up. candidate should get familiar with the mining concepts fast thus showing ability to adapt and be flexible
101
Mining Easy
Optimization Medium
SAMPLE STRUCTURE STRUCTURE GUIDANCE

% fines
Reduce fines • The candidate can come up with multiple
structures that are very different from this
generation Material one as it is not a typical structure
processed • However, some ideas as classification, and
Reduce waste reducing the fine generation in the process
Fit better to should pop up
datasheet • The candidate should also think about
Material mix increasing the capacity of the system to be
How to Break datasheet MECE
increase and get penalty
output
Increase capacity of
bottleneck
Increase
capacity Use stockpile of fines
Outsource production 102

Mining Easy
Optimization Medium
EXHIBIT 1 – 1/10 mm product
Yearly production of 1/10mm: 500 000t

Finished product
Cost: 2€/t
Specs
Sale Price: 6.5€/t
Avg 65%
TECHNICAL DATA SHEET
From To Threshold Threshold

(mm) (mm) min (%) max (%) Avg 30%
0 3 0 25
3 10 50 80 Avg 5%
10 - 15 40
103
Mining Easy
Optimization Medium
EXHIBIT 1 – 1/10mm product

• When presented the information of exhibit 1 the candidate should highlight that there is room for improvement in the fit of the production to the datasheet
• In this graph it is visible that TBell has room to include more fine particles in the product. Since the amounts of particles smaller than 3mm is way below the threshold. This
solution would drive production up as well as reducing the problem of the pile of the fines
• It is also visible that some of the samples are out of the specs for the particles greater than 10mm
• The interviewer should ask the candidate for an estimate of the potential extra profit that can be generated after including the maximum number of fine particles
CALCULATION 1: HOW MUCH CAN TBELL INCREASE ITS PRODUCTION IN TONS PER YEAR?
The production can include up to 25% of fines and currently includes just 5%. There are 2 Scenarios, either >10mm is the limiting fraction or 1-10 is the limiting fraction:
baseline 1-10mm limiting >10mm limiting

>10 1-10 <1 >10 1-10 <1 >10 1-10 <1
PERCENTAGE 30% 65% 5% PERCENTAGE 25% 50% 25% PERCENTAGE 30% 65% 5%
kt 150 325 25 Kt 162.5 325 162.5 kt 150 325 25
500kt 650kt 1000kt

CALCULATION 2: HOW MUCH EXTRA PROFIT CAN BE GENERATED?
• If the production of particles 1-10 mm is the limiting factor, the extra profit would be (650-500) [kt]*(6.5-2) [€/t]=675 000€
• If the production of particles >10 mm is the limiting factor, the extra profit would be (1000-500) [kt]*(6.5-2) [€/t]=2 250 000€
104
Mining Easy
Optimization Medium
EXHIBIT 2 – 1/10 mm production

PRODUCTION BEFORE SCREENING
From To (%)
(mm) (mm) TECHNICAL DATA SHEET
0 3 20
From To Threshold Threshold
3 10 60 (mm) (mm) min (%) max (%)
10 - 15 0 3 0 25
PRODUCTION AFTER SCREENING 3 10 50 80
From To (%) 10 - 15 40
(mm) (mm)
0 3 5
3 10 65
10 - 30
105
Mining Easy
Optimization Medium
EXHIBIT 2 – 1/10mm production & final recommendation

• The candidate might ask more information about the screening of the material (the process where they separate the different sizes). This exhibit presents that information
• In this exhibit, the candidate should spot that there the fine particles are taken out of the finished product
• This is the reason why the company is piling up the fine material
• By updating the screening, the company can achieve a double win.
• On the one hand, TBell would increase the production as seen in the previous exhibit.
• On the other hand, TBell would manage to reduce the stock pile of fine material. Observe that the threshold for fine material is 25% and the production is just 20%.
That difference would allow for a
• The candidate should be able to spot the low hanging fruit coming from the mismatch between the production and the datasheet
• The expected increase in profits ranges from 0.65M€ to 2.25M€ and the increase in production (from 500kt to 650kt to 1000kt)
• The candidate should notice that the screening is the cause of the problem
• The future steps might include an analysis of the implementation, a real time quality control that ensures that production and datasheet match.
106
Employee Vaccination Benefits
By Alex Pont (MBA 2024)
Healthcare / Pharma Easy

New product launch Medium
Market prioritization and sizing Hard
107
Employee Vaccination Benefits Market prioritization and sizing Hard

Our client is a large Pharma manufacturer • Currently, patient access to vaccines generally occurs through public National Immunization Programs (NIP)
that is looking to boost sales of its Dengue or private out-of-pocket clinics. Our client believes there is an opportunity to fill the gap between these two
vaccine by adding vaccine coverage to segments by adding vaccines to Employee Benefit Programs.
company Employee Benefits. • Employee benefits include various types of non-wage compensation provided to employees in addition to
their normal wages or salaries.
The vaccine requires two doses, has a price of • “Employee Vaccination Benefits” could take several shapes or forms, including (1) vaccine discounts for
$300 per dose and is only effective for those employees, (2) vaccine coverage included in Group Insurance plan, (3) on-site vaccination days etc. For
aged 13-35. Employers would offer a pre-paid simplicity, we assume that employers would offer a pre-paid 50% vaccine subsidy to employees (e.g.,
50% vaccine subsidy to employees (e.g., a through a voucher to be redeemed at certain provider clinics).
voucher to be redeemed at certain clinics). • Note that while this type of Employee Vaccination Benefits is already quite common for the seasonal flu /
influenza, our client does not have a flu vaccine in its portfolio. Their focus is primarily to grow sales of their
The CEO has hired us to answer the following Dengue vaccine (two dose vaccine), suitable for males & females from 13-35 years.
key questions: • Dengue is a viral infection caused by the dengue virus, transmitted to humans through the bite of infected
1. In which markets within Asia-Pacific mosquitoes. It has emerged as the most widespread and rapidly increasing vector-borne disease worldwide.
region would Employee Vaccination
Benefits be an attractive opportunity? CASE GUIDANCE
2. What is the “size of the prize” of the
opportunity in prioritized markets? The objective of the case is to test the candidate’s ability to structure a specific problem with a tailored
approach and ask the right questions, rather than applying general cookie-cutter frameworks. It has a good
3. How should the company opertionalize mix of qualitative and quantitative components. The case is not designed to test specific knowledge of the
the opportunity in prioritized markets? Asia-Pacific region, healthcare industry or employee benefits landscape.
108
[Part 1] STRUCTURING QUESTION: Shortlisting priority markets

Question: What dimensions / Key Success Factors (KSFs) can be used to assess the attractiveness of each market within the Asia-Pacific region?
Note for interviewer: Highlight early on that this is not an exercise to “test” the knowledge of specific markets, but to see how candidate would
conceptually approach this market prioritization exercise (without having to crunch the numbers or make an actual decision). An understanding of the
Asia-Pacific region is not required. At the end of exercise, mention that Singapore has been selected as the “pilot” market
SAMPLE STRUCTURE
There is no “standard” framework to apply here – candidate should think from “first principles” about what are the KSFs to consider, such as:
1) Workforce dynamics in that market – ideally a large workforce, high proportion of foreign / expat workforce (with more attractive benefits
offering), high prevalence of multinational / large companies and industries with generous Employee Benefit offerings (e.g., tech, finance)
2) Public healthcare coverage in that market – ideally low public healthcare coverage and weaker public National Immunization Programs, with gaps
in coverage and enforcement
3) Consumer awareness and latent demand in that market – ideally low vaccination rates (i.e., room for growth), positive sentiment towards
vaccines (i.e., lack of vaccine hesitancy), and high prevalence of vaccine-preventable diseases (e.g., Dengue)
4) Prevalence / richness of Employee Benefits in that market – ideally rich Employee Benefit offerings, paternalistic approach/culture of employers
towards employees, appetite for preventative health & wellness
5) Strengths of partner ecosystem to operationalize this new segment – ideally large/mature Private Health Insurance players, prevalence of
regional employer brokers, large/mature provider clinics or corporate health providers
6) Existing capabilities of the Pharma company in each market (e.g., previous experience, local capabilities)
109
[Part 2] QUANTITATIVE ANALYSIS: Estimating expected revenue in pilot market

Question: What is the “size of the prize” (in terms of revenue) of the opportunity in Employee Vaccination Benefits in Singapore (pilot market)?
Note for interviewer: See below for a sample solution – interview could take a different approach. If prompted, show information in tables / exhibits.
SAMPLE SOLUTION
1) Population that is employed in formal sector: ~4MM
2) # of employees working for target companies that are likely to offer “Employee Vaccination Benefit” program (see Exhibit 1):
• Option A (simple): Large multinational companies and large local companies are likely to offer generous benefits: 4MM x 30% = 1.2MM
• Option B (complex): Some industries are generous regardless of size (e.g., tech and finance), for other industries only large multinational
companies are generous: 4MM x 15% (finance) + 4MM x 5% (tech) + 4MM x 80% x 30% (other industries, large corporates) = ~1.8MM
3) # of employees for whom vaccines is appropriate (excluding dependents, assume voucher can only be redeemed by employees):
• Option A: 1.2MM x ~1/3 (approx. from Exhibit 2) = 400K // Option B: 1.8MM x ~1/3 (approx. from Exhibit 2) = 600K
4) # of employees who have not already been vaccinated (see Table):
• Option A: 400K x (100% - 15%) = 340K // Option B: Option B: 600K x (100% - 15%) = 510K
5) # of employees that will take-up the “Employee Vaccination Program” (see Table):
• Option A: 340K x 10% = 34K // Option B: 510K x 10% = 51K
6) Expected total revenue from “Employee Vaccination Benefit” (assuming two-dosage vaccine, 300$ revenue per dose):
• Option A: 34K x 2 x 300 = 20.4M$ // Option B: 51K x 2 x 300 = 30.6M
110
[PART 2] QUANTIATIVE ANALYSIS: Relevant data to be provided (if asked)

Item Relevant data Additional comments (for interviewer)
Note that they should use employee size and not “total” population”, as they should
Total employee size in Singapore ~4MM
exclude children, retired, informal self employed etc.
Employee split by company size See Exhibit 1 The key assumption would be that large companies have more generous benefit offerings
Only relevant if candidate correctly assumes that finance & tech are the most generous
Employee split by industry See Exhibit 1
industries for employee benefits
Interviewer should proactively correct the candidate if they assume that anyone can
Relevant age groups for Dengue vaccine 13-35 years old
receive the vaccine regardless of age
Average working ages in Singapore 20-64 years old n/a
Interviewee can simplify the numbers in the exhibit by assuming that each 5-year bracket
is approximately ~11%; so the 20-35 year-old range (for which the vaccine is appropriate)
Age distribution of employed residents See Exhibit 2
would be approximately ~1/3 of the total workforce. Calculating the exact number (to the
nearest decimal) would not be necessary
Estimated number of relevant employees that
Important for candidate to understand that some employees would have already received
are already vaccinated (adult vaccination rates 15%
the vaccine (either through the National Programs or out-of-pocket private clinics)
for Dengue)
This is just a working assumption – in Part 3 of the case, this assumption should be
Employee adoption/ “take up” rate for
~10% challenged further, as adoption would depend on the design of program (i.e., offering a
Employee Vaccination Benefit program
50% discount voucher to be redeemed at a clinic is not as effective as on-site vaccination)
111
[PART 2] QUANTIATIVE ANALYSIS: Exhibit 1

Exhibit 1A: Employee distribution by sector Exhibit 1B: Employee distribution by company size
30%
25%
25%
20% 20%
20%
30%
15% 15%
15%
70%
10%
5%
5%
0%
Financial & Technology Government and Manufacturing Retail and Others
professional education hopsitality Multinational and large local companies
services
Small and Medium enterprises (SMEs)
112
[PART 2] QUANTIATIVE ANALYSIS: Exhibit 2

Exhibit 2: Age distribution of Singapore workforce
20-24 10.1%
25-29 11.0%
30-34 10.7%
35-39 10.9%
40-44 11.2%
45-49 11.8%
50-54 11.5%
55-59 11.9%
60-64 11.0%
113
[Part 3] BRAINSTORMING QUESTION: Changing the design of the program

Question: After doing the numbers, challenge the interviewee to think “deeper” about the simplified assumptions behind employee “adoption” of the
Employee Vaccination Benefit program (i.e., the number provided if prompted was around ~10%). In particular, challenge them to think about:
• What are some of the barriers that are preventing vaccination adoption?
• How can “Employee Vaccination Benefit” programs be designed to effectively address these barriers and increase employee adoption?
SAMPLE ANSWERS
• Some of the key challenges & complexities for private patients to access and pay for vaccinations are:
- Affordability and cost
- Education and awareness
- Access and adherence (particularly for multi-dose vaccines such as Dengue)
- Vaccine hesitancy / negative perceptions
• Possible ways to increase employee “take-up” rate (i.e., changing the design beyond the assumed 50% employer-paid voucher):
- Offer on-site vaccination at the office, rather than having to redeem the voucher at a clinic
- Increase size of “subsidy” (e.g., from 50% to 100% subsidy)
- Drive awareness campaigns about the importance of vaccination to protect against the disease
• The idea is for candidate to appreciate that “size of the prize” is not a fixed number, but also depends on the design of the “Employee Vaccination
Benefit” program itself
114
You have 45-seconds to provide an update to the CEO on your recommendation. Do you think it makes sense for our client to pursue this opportunity?
What additional information would be relevant? Is the Dengue vaccine suitable for this type of “Employee Vaccination Benefit” program?
POTENTIAL CONSIDERATIONS
• The sales volume / revenue for the pilot number seem somewhat small. However, it is important to highlight that Singapore is just a “pilot” market
– it is useful to start small and get some insights / reactions from the market; then scale the program to larger sized markets
• Beyond revenue numbers, it is important to consider profitability. Indeed, margins for the Dengue vaccine are very high (PVP is 300$ per shot,
compared to 15-30$ for the flu shot, with margins of ~90%). Hence, even if the volume is low compared to the flu vaccine, the “size of the prize” in
terms of profit contribution can be significant
• Overall, it makes sense to recommend starting with a pilot in the prioritized market (Singapore) and based on results from pilot, decide whether to
scale to other shortlisted markets in the Asia-Pacific region (based on some of the criteria identified in Part 1)
115
Grab your popcorn
By Vitaly Pisarenko (MBA 2024)
Entertainment Easy
Operations Medium
Increasing revenue Hard
116
Entertainment Easy
Operations Medium
Grab your popcorn Increasing revenue Hard

• The company has a wide network of cinemas in best malls of Wonderland
Our client, Cinematron, is the largest movie
• Closest competitor has 20% market share. Cinematron’s share was constant, but started to slowly
theatre operator in Wonderland with 40% deteriorate in the last couple of months
market share (by box office). After a tough
• Revenue structure before COVID – 64% ticket sales, 32% concession, 4% - advertising
period of COVID, when they had to cut half
of their employees just to stay alive, they are • Admissions are at around 65% of pre-COVID levels
finally starting to recover. • Cost of sales remains stable with 50% for tickets and 40% for concessions, OpEx very lean after the COVID
crisis
As clients are returning to cinemas,
Cinematron’s leadership is beginning to CASE GUIDANCE
notice that their financials are not looking
very good. They have put on a lot of debt • This is an interviewee-led case, so they would be expected to unfold the movie theatre business model
during the COVID crisis, and it is essential and, most importantly, generate viable ideas for a company in a complicated situation
that the company is able to service it. • The case is aimed to evaluate understanding of revenue-driving factors, ability to do high-level operations
analysis and generating strategic ideas,
Cinematron’s CEO hired you to find the root • Candidate should not focus on cost factors (as costs were severely cut during the COVID period, and
cause of the problem and figure out how can ideally the interviewee should be able to understand that context)
the company get back on track, being highly • If candidate is struggling, the interviewer can nudge them towards the logic of less staff + more tickets
profitable same as before COVID. sold = more lines, leading to less sales per patron.
117
Entertainment Easy
Operations Medium
STRUCTURE GUIDANCE
It is ok if the candidate uses the classic profit case structure. Important addition is that revenues and COGS are directly
linked to every admission. If candidate paid attention before, they will focus on revenue side, and ask for more data on
that.
SAMPLE STRUCTURE
Average ticket price
Operating profit Attendance X

-
Royalties
Profit - Average concession sales
Fixed cost
Salaries
Rent
-
Cost of goods sold
Maintenance
Marketing Advertising price per impression
… 118
Entertainment Easy
Operations Medium
Prompt: here is some key data about the last 6 months of the company. What insights would you provide? After
reading, show Exhibit 1 to the candidate (next slide).
SOLUTION
Sales, in thousands, Wonder- 90000 800000 Scale for attendance, equal to
land local currency WAH 80000 700000 number of tickets sold
70000 600000
Ticket sales have direct January is peak season, so
60000 some cooldown after it is
correlation with attendance, 500000
with price being constant at 50000 completely normal. But as
400000
120 WAH per ticket 40000 more growth is expected, it
300000 can be used as a basis for
30000
analysis
Total bar sales are growing 20000 200000
slower as sales per patron Losing 10 WAH per customer
10000 100000
decrease from 60 WAH to at approximately 700,000
lowest of 50 WAH in January 0 0 customers per month and 60%
Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 margin is equal to
Ticket sales K Bar sales K Attendance 4,200,000WAH of net profit
lost
119
Entertainment Easy
Operations Medium
EXHIBIT 1: Sales and attendance after COVID
90000 800000
80000 700000
70000
600000
60000
500000
50000
400000
40000
300000
30000
200000
20000
10000 100000
0 0
Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22
Ticket sales K Bar sales K Attendance
120
Entertainment Easy
Operations Medium
Prompt: after brainstorming about possible solutions, three main options were studied in-depth. Here are key metrics
for them. What do you think about these options? After reading, show Exhibit 2 to the candidate (next slide).
SOLUTION
For a base month of 700,000 tickets sold, 560,000 of 112,000/40=2800 hours needed to fix the problem, resulting
them are prime time and 112,000 don’t buy bar because in 560,000 cost vs 4.2M extra profit. Good solution and fast
of operational problems to implement.
It will only solve half the problem but will do it

cheaper at 100,000/month vs 280,000, making the
payback period 3,600,000/(280,000-100,000)=20
months. Could work well in combination with first
solution.
Total price=construction+50*700,000*.6=26M vs
alternative 3.6M+380K/month, so payback=59
months (5 years). Too long! But if they expect to
reach 1M prime time customers/month, the
alternative would be 340000/40*200+100,000
maintenance of online sales (1.8M WAH/month),
about a year of payback.
121
Entertainment Easy
Operations Medium
EXHIBIT 2: Options for concession bars

Prime time attendance share: 80%
Prime time bar checks per ticket decrease: 20%
Solution Productivity Price
Extra stuff hours 40/hour 200WAH/hour
3,600,000 WAH development fees,

Online bar sales 10% of Prime-time customers
100,000 WAH/month maintenance
Reconstruction into self-service pop- Up to 1,000,000 Prime time Construction 5,000,000 WAH + 1
corn market customers/month month closed bar
122
Entertainment Easy
Operations Medium
COVID has accelerated certain trends in the industry. In the light of latest technological shifts and studios launching
their own streaming services, the outlook for movie theatres is not too bright. What would you recommend your
client to look into to ensure sustainability of the company and maximize shareholder return.
SAMPLE ANSWERS
• As the influence of one Wonderland company on the global movie market is limited, Cinematron needs to ensure
shareholder return right now through accelerated dividend payment
• To decrease dependance from Hollywood, Cinematron can invest in local production
• Further excel in operation, ensuring maximum spend per patron
• Company’s main assets are its premises located in quality shopping malls. They could be repurposed for other
entertainment-related activities
• The population is getting older, and special campaigns can be launched to get more mature audiences back to
cinemas
• Not so good ideas: acquire competitors (anti-monopoly regulation very likely to not allow), go to other
geographies
123
Entertainment Easy
Operations Medium
Cinematron’s CEO is on their way to the room and will like to hear a recommendation based on our recent findings.
A good recommendation should include:
• Specific measures to solve the problem, for example increase stuffing, to prevent losses during peak hours, potentially starting to develop online
bar sales module and to track attendance dynamics, to see whether reconstruction becomes an attractive option.
• Arguments backing the previous recommendations. Example:
• Profits will grow by 4,
• Customer satisfaction will increase (concessions are a part of the moviegoing experience)
• Risks that should be further evaluated. Examples:
• Productivity may be diminishing with more employees working at the bar
• Actual premises will not be able to accommodate new processes
• Online sales can produce worse results, take long to develop and go overbudget
• The growth trend will not continue, making investments not profitable
• Next actions that Cinematron should do. Example:
• Pilot project for stuffing, study best practices for online sales and self-service popcorn markets
124
Hello Telecom
By Nikhil Suri & Supriya Jaiswal (MBA 2024)
Telecom & Airlines Easy

Product launch Medium
Market sizing Hard
125
Hello Telecom Market sizing Hard

Hello Telecom, a prominent telecom service
• Industry trends indicate a growing adoption of inflight connectivity by airlines to enhance the
provider in the US, is facing a critical decision passenger experience. The objective of the case is to decide if Hello Telecom should enter the
that could significantly impact its future in the market of inflight internet services.
airlines’ internet services industry. The
• The telecom provider recognizes the emerging opportunity to expand its services beyond
company is contemplating whether to start traditional telecommunications and aims to provide seamless and reliable internet access to
providing inflight internet service for airlines airlines' passengers.
looking at growing demands of tech-savvy • The company expects to implement it within a year
passengers.
• Company is headquartered in the United states and looking to provide inflight internet services
only in the US
As a consultant, you have been engaged by
• Hello Telecom will need the necessary equipment and infrastructure to provide these services
the CEO of the Hello Telecom to assess
which would cost them the initial investment of $50M
whether they should pursue this opportunity or
not. CASE GUIDANCE
• The case is interviewer led case and can be adjusted for different difficulty levels and skills
tested.
• The case tests numerous skills of candidate such as market sizing, estimation of revenue and
costs, profitability of project, break-even analysis, brainstorm regarding challenges and go to
market strategy, and decision-making ability to ability to evaluate a project.
• The quantitative part requires an organized and structured approach to be solved.
• A good candidate must evaluate the feasibility, risks, and strategic implications of offering inflight
internet connectivity to meet the growing demands of tech-savvy passengers.
126
SAMPLE STRUCTURE Growth trend of inflight

STRUCTURE
Market Analysis of inflight
internet in the US
Current players providing this
GUIDANCE
internet service service
• The candidate should take into account
Market size of inflight internet
in the US the market size, growth rate,
competitors, customer preference for
Expected revenue
pursuing this opportunity.
Financial Analysis for inflight • Good candidates will also mention risks
Expected costs
internet service
associated with the this move.
Initial investment • Under revenue and costs, the good
Should Hello Telecom start
providing inflight internet candidate will talk about the various
service?
Infrastructure requirements revenue streams and costs involved in
Technical and operational Internet coverage capabilities this business.
feasibility of this solution in the sky
• Once the candidate has given the
Airlines and telecom
Regulatory compliance structure and if it mainly includes the
criteria mentioned above, ask the
Passenger’s Data privacy
and cyber security candidate to size the market of
Risks of starting this vertical
Internet Connectivity and
inflight internet in the US in $.
reliability
127
MARKET SIZE FOR INFLIGHT INTERNET SERVICES

Market Sizing for Inflight Internet Services in the United States in USD
POSSIBLE SOLUTION
Variables Values Assumptions and Reasons
Total population of the United States 331 Mn Based on the latest available population data from reputable sources.
Assumes that a significant portion of the population engages in travel, including both domestic
Percentage of population that travels 60%
and international trips.
Average number of trips per person per year 2.5 Assumes an average travel frequency that includes both business and leisure trips.
Represents the proportion of travelers who choose air travel as their preferred mode of
Percentage of travelers preferring air travel 50%
transportation.
Average number of passengers per flight 200 Based on typical aircraft capacity for domestic flights in the United States.
Average flight occupancy rate 85% Represents the average percentage of seats occupied on flights.
Percentage of passengers considering inflight internet
80% Assumes a high proportion of passengers value inflight internet connectivity.
important
Percentage of passengers willing to pay for inflight
60% Represents the estimated portion of passengers willing to pay for the service.
internet
Average ticket price $300 Represents an approximate average ticket price for domestic flights in the United States.
Percentage of revenue allocated to inflight internet
2.5% Assumes a percentage of the overall ticket revenue allocated to inflight internet services.
services
Revenue from inflight internet services = Passengers willing to pay for inflight internet * Average ticket price * Percentage of revenue allocated to inflight internet services = 47.66
million * $300 * 0.025 Revenue from inflight internet services = $3.5845 billion
Therefore, the potential market size for inflight internet services in the United States is estimated to be approximately $3.5845 billion in annual revenue.
128
QUESTION AFTER MARKET SIZING

After completing the market sizing and testing the assumptions of the candidates. Ask candidate to make the decision of
go or no go based on the exhibits on the next slide.
EXHIBIT GUIDANCE
• There are 3 exhibits. Competitor analysis, Market trend, and Hello Telecom’s important financials.
• From market trends candidate should be able to figure out that the market of inflight internet is growing by 15% YOY.
• After looking at the Hello Telecom’s revenue, EBITDA, market share and growth, candidate should quickly identify that the margin of
inflight internet is ~40% more than the company’s current margin
• Looking at the competitor analysis should inform candidate that Hello telecom can target to achieve 9% of the market share in the
inflight internet as well.
• The initial investment in the notes can help the candidate find the payback period of the project.
129
EXHIBITs
Exhibit 1: Market Share Inflight internet 2023 (%) Exhibit 2:Market Size inflight internet
$ 4.59 Bn
Global
Inmarsat,
Eagle,
$ 4.06 Bn
14.0%
12.0%
Panasonic 4.9%
$ 3.5 Bn
Avionics
4.4%
$ 3. Bn
Corporation,
3.8%
$ 2.7 Bn
14.0% 25.0%
3.3%
$ 2.2 Bn
Viasat, 15.0% 2.9%
$ 1.9 Bn
2.7%
1.6%
$ 1.4 Bn
0.2% 0.3% 0.4% 0.5%
Gogo, 20.0%
2018 2019 2020 2021 2022 2023 2024 2025
Note: The margin of Inflight Internet service is 32%;

Exhibit 3: 2023
Initial investment required to set up the inflight internet service is $ 50 Mn
Revenue of Hello Telecom $ 30,14 Bn
EBITDA of Hello Telecom $ 7,54 Bn
Current Market Share 9%
YoY Revenue Growth 2%
1
For quantitative analysis, the candidate has 2 ways to solve this. Either to check the NPV/payback period of the return or
look at the growth in the revenue.
SOLUTION
Option 1: Revenue growth Option 2: NPV/Breakeven analysis
Market size of Inflight internet = 3.5 B Market size of Inflight internet = 3.5 B
Expected market share = 9% Expected market share = 9%
Revenue gain = 3.5B*9% = 0.315B or 315M Revenue gain = 3.5B*9% = 0.315B or 315M
% of revenue increase: Inflight internet margin = 32%
Revenue gain/current revenue = 0.315/3.14 = 1.04% EBITDA from new service = 315M*32%=100.8M
1.04% growth is 50% increase in the growth rate of Initial investment = 50M
current YoY growth, hence they should do it Payback period = 50/100.8 = ~0.5 year
Since payback period is just 6 months, they should do it
Note: Candidate should also realize that telecom is a slow
growing industry (~2%) and hence, additional growth of 1.04% is
around 50% more growth.
131
What additional services or features can be offered alongside basic internet connectivity to enhance the value proposition for airlines and passengers?
SAMPLE ANSWERS
Additional services and features to enhance the value proposition:
1. Inflight entertainment with on-demand movies, TV shows, and live TV channels

2. Productivity tools such as business applications and virtual meeting capabilities
3. Destination-specific content like travel guides and language learning modules
4. Airline services including real-time flight information and seat upgrades
5. Personalisation options for customized content and targeted advertising
6. Social connectivity through an inflight social network
These services provide convenience, entertainment, productivity, and personalisation for passengers.
Telecom providers can collaborate with airlines to identify specific needs and preferences for value-added services.
By offering these additional services, airlines can differentiate themselves and enhance the overall inflight experience.
132
Hello Telecom’s CEO is on his way and would like to hear your recommendation based on the recent findings
I recommend that Hello Telecom should enter the inflight Internet service market because of three reasons:
1. This service has a payback period period of 0.5 years and annual revenue potential of $ 100 Mn
2. The demand for inflight internet service is growing at the rate of 15%, which is exponentially more than the growth rate of telecom industry of 2%
3. Additionally, it makes strategic sense for the Hello Telecom to venture into this emerging opportunity to expand its services beyond traditional
telecommunications
However, this entails following risks:

1. Airline industry is heavily regulated
2. Reliability of Network
3. Privacy and Cybersecurity related risks
As next steps, I’d suggest to:

1. Look for potential airline partners to run a pilot with
2. Develop a comprehensive inflight internet solution that meets the evolving needs of airlines and passengers
133
❖ IESE STATISTICS
❖ CASES
134
Case Title Industry Type of Case Difficulty Level
OLD CASES REEVE TEC.

StoreStuff
Nabaco
Automotive
Real Estate
Mining
Profitability, Product Launch
M&A, Self-Storage
Investments, Alternatives
Medium
Medium
Medium
PaintTech Chemicals Product Launch, Pricing, Sustainability Hard
IoT and Flexible Loans Financial Services M&A, Synergies Hard
Fastcar Automotive Market Entry, Profitability Medium
Travel Wizard Airlines Competitive Threat, Profitability Medium
Eurotech TMT M&A, Profitability Medium
Crunch Yo’ Burger Food Service Profitability, Operations Medium
Transantiago Transportation Public Sector, Profitability Medium
California Wildfires Public Sector Climate Change, Strategic Response Medium
South bank Financial Services Product Launch, Profitability Medium
Cricket Mania Sports Investment Decision, Profitability Hard
The Bookstore Retail Market Entry, E-Commerce Medium
Green Airlines Airlines Growth Strategy, Investments Hard
Pipeline Oil Technology Oil & Gas Operations, Pricing Medium
Nica Productions Media & Entertainment Profitability, Operational costs Medium
Cowbon Emissions Agriculture Sustainability, Operations Hard
OncoCo PE/Pharma Profitability, M&A Medium
Investment Bank Spin-off Financial Services Profitability, Banking Hard
135
REEVE TEC.
By Íñigo Losada
Automotive Easy
Profitability Hard
136
Automotive Easy
REEVE TEC. Profitability Hard

REEVE TEC., is a TIER 2 automotive supplier • TIER 2 suppliers are experts in their specific domain, but they don’t have the desire to
specialized in VAI (Video Artificial produce auto-grade parts. Thereby they can also sell to non-automotive customers. REEVE
Intelligence). currently sales to OEMs only
• REEVE sales pre-collision video technology as in a catalog of 3 different product segments,
The company offers safety related having gained its competitive advantage thanks to its in-house developed Software
products, and currently serves the most
relevant OEMs in Europe (original • The company has its core in Software development. Product manufacturing is
equipment manufacturers). subcontracted in a long-term contract and thereby doesn’t affect REEVE’s profitability
• Car safety technology is a fierce market, with many players interested to gain market share
After 9 years of growth, profitability has
• The CEO doesn’t have a specific growth target. He’s looking for short & long-term solutions
stagnated for the past year.
The CEO hires you to:

• Find why is this trend happening
CASE GUIDANCE
• Define ways to increase profits This is an interviewee-led case, where the candidate is expected to drive the case and
suggest the next course of action. The candidate should notice this is a case about a middle
market company in the automotive industry. Therefore, the company’s competitive
landscape and margins may differ to the ones of an OEM.
The interviewer should guide the candidate towards focusing on improving revenues and
not get stuck on reducing costs.
IESE CONSULTING CLUB IESE CASE BOOK 2023 |137

Automotive Easy
STRUCTURE GUIDANCE
The structure of this case should be mainly about profitability. The candidate should notice there are external and internal factors that may influence
in the company and should highlight which of those can be potentially harming the company’s revenues (market trends, competition, customer
needs, etc.). Most of REEVE’s costs are from R&D. The company has no factories and has a tiny sales force, mostly focused on the aftermarket.
• Once the candidate has given an overview of the structure, hand them Exhibit 1, and let them use this to decide where to focus
SAMPLE STRUCTURE
• Market : Car sales decreased in Europe?
• Competitors: Do they have any expiring patents? Are competitors including new products? Are
competitors becoming more profitable? Are existing competitors consolidating? New competitors?
Quantity • Customer needs: OEMs switching to a different technology? Is new regulation affecting the industry
(OEMs forced to use more energy efficient solutions to improve car consumption rates)?
Revenues • Product mix: Are we selling less high-priced products? Has product bundling changed?
• This is a competitive market, has the company run any excessive discounts recently?
Price • Are OEMs holding a bargaining position and have they adjusted our prices?
Why is profitability
decreasing?
Variable • Have any of the Cost of good sold raised sharply recently?
costs
Costs • R&D: Research and development
• Labor
• SGA: Sales, General and administration
Fixed costs • Recall costs

Automotive Easy
REEVE TEC. – Exhibit 1 Profitability Hard
MARKET EVOLUTION AND REEVE’S PRODUCT MIX
Market evolution EU REEVE Product Mix

A B
Revenue; M€ Revenue; M€
250 244 150 144 144
220 128
+5% 200 28 31
200 180 112 24
+8% 104
156 164 20
148 100
150 140 20 44 48
128 40
116 36
32
100
50
64 72 65
50 52 56
1 2 3 4 5 6 7 8 9 10 6 7 8 9 10
Year Cars Vans Trucks Year

Automotive Easy
EXAMPLE CANDIDATE RESPONSE

• The exhibit on the left shows the market revenues for the past 10 years
• The market has evolved from growing at +8% for the first 4 years, to a period of lower growth at a +5% rate, getting back to a +10% growth rate
from years 6 to 10. The candidate should discard a market trend as the cause of the decrease in sales
• A great candidate should notice cyclicality of the automotive industry as a cause of different growth rates
• The exhibit to the right shows the REEVE’s revenues by product from years 6-10
• The company has lost market share, from ~65% Y6 to ~60% in Y10, meaning that company’s sales have not increased despite the increasing
market trend in the industry
• This is caused by a decrease in sales of product segment “Trucks”, which is preventing the company from growing
• The candidate should identify that this decrease in sales can be caused either by a problem with “Trucks” or by a negative trend in its market
segment
• The candidate should suggest to investigate further about product segment “Trucks”

Automotive Easy
FOLLOW-UP QUESTION AFTER EXHIBIT 1 - BRAINSTORMING

• We have discovered there is a sales problem with product segment “Trucks”
• Talking to the CMO, he admits that a competitor has caught up in the development of a similar software, offering a similar product to that of
REEVE’s, but at a cheaper price
• What are different ways in which the company can respond to this competitive threat?
SAMPLE ANSWERS
• Do nothing: this doesn’t seem a good idea since it is your largest market segment
• Mitigate: try to retain your clients by offering discounts; this ends up in lower margins for REEVE, not resolving its actual profitability problem
• Align: Enter in a price war with the competitor, also discarded since it may harm the company’s long-term profitability
• Acquire: depending on the size of the competitor and given that REEVE is a leading player in the market, acquiring the competitor is a good
possibility to be explored
• Replicate: Launch a competing product
• Note to interviewer: Try to steer the candidate to “Replicate”, in order to set up the next part of the case

Automotive Easy
CALCULATION QUESTION
• REEVE is considering launching one of the different prototypes they have been working on for “Trucks” segment
• Which of the 3 prototypes should the company launch?
OPTIMAL ESTIMATIONS
• Assume equal sale price and no customer preferences among the three products
• The candidate should compare the 3 products by developing a break-even analysis
• INVESTMENT = MARGIN*MARKET SHARE
• MARGIN = PRICE (P) – VARIABLE COSTS
• MARKET SHARE = QUANTITY (Q) * MARKET CAPTURE
• Comparing the three products we determine which is most convenient for the company to launch
• A → 20 = 0,5P*0,8Q -> PQ = 20/0,4 -> PQ = 50M€
• B → 30 = 0,8P*0,9Q -> PQ = 30/0,72 -> PQ = 41.6M€ ≈ 42M€
- Notice: 30/0,72 ≈ 3.000/72 ≈ 1.000/ (8*3) ≈ 500/ 12 ≈ 40
• C → 15 = 0,6P*0,7Q -> PQ = 15/0,42 -> PQ = 35.7M€ ≈ 36M€
- Notice: 15/0,42 ≈ 15/0,45 ≈ 1500/45 ≈ 100/3 ≈ 33.3
• A great candidate should realize rounded calculations are sufficient to compare the results for the three products
• Product C is the most convenient, it allows to recover the investment with less PQ (Sales)

Automotive Easy
YEAR 11 - LAUNCH ANALYSIS
PRODUCT A B C
INVESTMENT 20M 30M 15M
VARIABLE COSTS 50% 20% 40%
MARKET
80% 90% 70%
CAPTURE

Automotive Easy
You are at the client’s office. The CEO showed up an hour late to your meeting and he needs your recommendations now. What would you tell him?
The candidate should summarize that:
• The company should launch product C to compete in the market segment “Trucks”
• The market grew by +10% in Y10 while REEVE’s sales stagnated; the company moved back in its market-share
• The segments “Cars” and “Vans” grew at the market rate, but Trucks underperformed growing just +5%
• REEVE should “replicate” its competitor and launch a new product to compete in this new environment
• Product C presents the best conditions to do so, with a breakeven point of 36M€ sales, +50% of the current market share in the Trucks
segment

StoreStuff
By Lucas Delgado
Real Estate Easy

Self-Storage Medium
M&A Hard
145
Real Estate Easy
Self-Storage Medium
StoreStuff M&A Hard

Our Client, StoreStuff, is a successful chain of • The company only provides the space for rental – no additional services such as logistics are provided by
Self-Storage units, specialized in rental of StoreStuff. Their buildings are owned and managed by the company.
spaces for both people and companies to • In the customer jorney, a new client goes to the store or on-line, rents a space, and receives a password to
access his Box. Contracts are paid, renewed and readjusted on a monthly basis.
store their belongings such as old documents,
furniture, and all sort of equipment. A New • StoreStuff has 60% of total market, and the rest 40% is divided among smaller companies
York based company, StoreStuff is the market • StoreStuff has 20 units mainly located on the East side. Each operating unit has an approximate $5Mi
revenue. As Operational Expenses are low (mainly building maintenance and security), StoreStuff enjoys a
leader in the US sector and has grown steadily
40% Net Margin
in the past 10 years, mainly through
• A typical StoreStuff facility provides two sizes of rental space, called “Box”. The “Large Box” has 10 square
acquisition of smaller, regional companies. meters, and the “Regular Box” has 2,5 square meters. Boxes can be both aggregated to form a larger one,
Aiming to increase their presence in the West or dismantled, to form small boxes.
side of the country, StoreStuff has identified • The company wants to understand wether this is a good target. So far, they are not worried with the size of
YourPlace, a Self-Storage unit in Nevada, that the deal
seems to be a good target for an acquisition.
The CEO has hired us to figure if they should

move on with this acquisition.
CASE GUIDANCE
While this a M&A case, the potential synergies are key to crack this case. The Self-Storage is a very unique
industry and relatively unknown, but while the interviewer could work on leading the candidate to the right
path, if it is required, it is expected that a good interviewee can use his business sense to lead the case in its
distinct parts.

Real Estate Easy
Self-Storage Medium
StoreStuff M&A Hard
STRUCTURE GUIDANCE
A good framework should, as a typical M&A situation, address:
• Understanding the Standalone value of the target
• Considere possible Synergies, both in Revenues and Costs – a good candidate should mention Marketing and Brand power to increase revenues
• Capabilities & Risks – in the context of the case, Real Estate risks related to the infrastrcture of the target’s building should be mentioned
Additionally, the candidate should understand the market, since Nevada is a new market for StorageStuff
• Market analysis should consider market size, growth, and competitors
SAMPLE STRUCTURE
Market • What is the demand for Self-Storage in Nevada? • Business sense can also be evaluated in
opportunity • Do we have any competitor that we should be aware?
the structuring part, as a good candidate
• Is the company profitable? is expected to raise hypothesis that can
Standalone Value • Is it growing at good level?
of the target • Is the building in good conditions? be related to the business situation
Should StoreStuff • Is the location attractive (populational density; average income level)?
move on with the
acquisition? • Candidate should be led to address the
• Do we have opportunities to leverage Revenue synergies? Ex. Leverage
Synergies brand recognition/marketing; improve pricing Synergies analysis, as following Exhibit
• Do we have opportunities to leverage Cost synergies?
will address this matter
• Is our business model adequate for the transaction? Ex. Size of Boxes to
rent are similar? If not, can we remodel the building?
Capabilities & Risks • Can we operate in Nevada?
• Any permit or regulatory matters can be a barrier?

Real Estate Easy
Self-Storage Medium
StoreStuff M&A Hard
EXHIBIT 1
To assess if YourPlace is a good target, we received some preliminary information and the client want our help on defining if YourPlace is a good target for acquisition, and if
there any clear synergies opportunities. Candidate should be presented with Exhibit 1.
Exhibit 1 – StoreStuff and YourPlace average store 2021 P&L Expected insights:
StoreStuff 2021FY • In a highlevel analysis, candidate should conclude that YourPlace is a
Figures in US Dollars YourPlace 2021FY
(average store)
promising target for acquisition. Since the company demonstrate a ~53% of
+ Sales 5.650.000 5.000.000 Net Profit Margin.
- Operations and Maintenance 941.667 500.000 • To better understand the financial figures of both, candidate should compare
- Salaries 385.000 350.000
numbers in a comparable measure. If candidate fails to do that, lead him to
analyzing in a Dollar/Area approach - Sales/Sqm and Cost/Sqm makes
= Operating Profit 4.323.333 4.150.000 comparison easier
-Sales & Marketing expenses 864.667 830.000 • Candidate should spot the difference in Operating and Maintenaince cost
levels between the companies. In a cost/area comparison: YourPlace has a
- Administrative expenses 432.333 415.000 $475/sqm, while StoreStuff has $250/sqm – In a synergy perspective, a good
candidate would move on with cost synergies calculation. Taking YourPlace
= Net Profit 3.026.333 2.905.000 Operations and Maintenance costs to the level of StoreStuff would bring
USD450k/year in cost synergies – Difference of costs*Total Area = (475 –
Total Area of store (sqm) 2.000 1.500
250)*2.000
• Additionally, the candidate should do a similar analysis to conclude potential

Revenue synergies. Setting Revenue/Sqm in same level would entail revenue
synergies of USD700k/year

Real Estate Easy
Self-Storage Medium
StoreStuff M&A Hard
Which ideas of initiatives could you come up for the identified Revenue and Costs synergies?
SAMPLE ANSWERS
• Leverage brand recognition, for example through marketing campaign
Expected insights: • Implement better sales processes
• Include on-line sales if not already implemented
• Following previous analysis, the candidate should move on Revenue
• Improve pricing techniques
with ideas of how to capture the synergies
• Readjust contracts of lower Dollar/Square meter revenue
• Main points of analysis are Revenue and Costs, specially Ideas to • Adequate size of boxes to fit demand (increase or decrease average area per box
capture
Operations and Maintenance costs the
synergies • Leverage economies of scale to decrease supply material utilized on Operations
• On the costs side, the candidate should bring up ideas on
and Maintenance, such as cleaning products, and equipments
both reducing consumption cost (such as reducing costs of
• Implement higher standard processes of maintenance, for instance increasing
supply materials), and reducing consumption rate (such as Costs preventive mantenaince in the building
avoiding machines breakdowns) • Implement technology to monitore possible bad usage of the building, or
equipments, for instance a set of cameras and closed circuit tv system
If you are aiming for a ~30 minutes case, you may skip the Quantitative Analysis and jump directly to final recommendation

Real Estate Easy
Self-Storage Medium
StoreStuff M&A Hard
EXHIBIT 2
Now, we just received some new information from the client. He wants our help on identifying the differences in the sizes of boxes that are offered for rent in both StoreStuff
and YourPlace stores that we are analyzing in order to increase YourPlace sales.
Exhibit 2 – StoreStuff and YourPlace occupation evolution
Stores Occupancy Rate (2020-21) Expected insights:

120 %
100 %
90%
90% • After delivering the Exhibit, remember the candidate that Regular Boxes are
100 %
80%
2,5sqm and Large Boxes are 10sqm.
70%
60% 80%
50% 50% • Candidates should remember key data that were given through the case. If not,
60%
60%
50%
gently remember that YourPlace has 2.000sqm and StoreStuff has 1.500sqm of
40%
40%
30%
20%
20%
area.
10%
35% 90% 30% 20% 35% 90% 100%
0%
15% 0%
• Also, mention that, in this industry, a set of 4 Regular Boxes can easily be
YourPlace 2020 YourPlace 2021 StoreStuff 2020 StoreStuff 2021
aggregated to form a larger one, or a Large Box can be dismantled, to form a 4
% Regular Boxes occupancy rate Regular Boxes. The cost of this adaptations is considered very low.
% Total Large Boxes occupancy rate • Candidate should mention that YourPlace demand is increasingly looking for
% Total Occupancy rate Regular Boxes, and that a building adaptation could be beneficial

Real Estate Easy
Self-Storage Medium
StoreStuff M&A Hard
After the second exhibit conclusion, lead the candidate to calculate the possible additional revenue if all the available Large Boxes were transformed into Regular Boxes.
See suporting data below and communicate to candidate.
SOLUTION
Supporting Information: Calculation guidelines:
• The YourPlace area is distributed equally on Large Boxes and • Current amount of Large Boxes = 50%*Total Area/Area of Large Boxes (50%*2.000/10 = 100 Large
Regular Boxes Boxes)
• The cost to dismantle Large Box will not be considered for • Unnocupied area of Large Boxes = (1 – Occupancy Rate)*Total Area of Large Boxes ( (1-30%)*1000 =
this analysis 700sqm)
• Candidate should assume that a 90% occupation rate would • Total New Regular Boxes to be added from unnocupied Large Boxes = Total Unnocupied area/Area
be achieved in the Regular Boxes category of a Regular Box (700/2,5 = 280 new Regular Boxes)
• Sales/square meter is the same as current level in YourPlace:
• Current amount of Regular Boxes = 50%*Total Area/Area of Large Boxes (50%*2.000/2,5 = 400)
$2.850/sqm (Total 2021 Revenue/Total Area = $5,7Mi/2.000)
• Additional Revenue of newly created Regular Boxes = Occupancy Rate*Additional Number of
Expected Formula to calculate:
Regular Boxes*Area*Sales/Area (90%*280*2,5*2850 = $1,795Mi/year)
Additional Revenue = Total New Regular Boxes Created*Area
Expected Insights:
of a Regular Box*OccupationRate*Sales/Area
Candidate should conclude that this would be a very beneficial move. Additional ~1,8Mi in revenue
would add great value to the deal. Anyhow, candidate should mention that a better understanding of
the feasibilities and costs should be done.
Real Estate Easy
Self-Storage Medium
StoreStuff M&A Hard
We received a call from the StoreStuff CEO asking for our preliminary understanding of the problem. How would you summarize what we have
learned so far to him?
A good recommendation should support the M&A transaction as a good move for StoreStuff to expand to Nevada, for 3 main reasons:
• The YourPlace business has already a good level of profit as a standalone company
• StoreStuff can leverage on synergies on both Revenue and Costs sides after the integration of the company that could add more value to the deal. On our calculations,
Revenue opportunities adds up to the sum of $700k/year, while costs were estimated to give a $450k/year
• Finally, StoreStuff could remodel the YourPlace offering of boxes in terms of their size. Considering low occupancy of Large Box, a project to dismantle Large Boxes and
created Regular Boxes has a potential benefit of ~$1,8Mi/year in revenues
The main risks of the transaction are related to the current state of the building (and a possible investment requirement to adaptations), and the possibility of demand level for
Self Storage in Nevada to not be attractive.
Next Steps should touch on the required refinements to validate the strategic acquisition. Candidate should mention that a better understanding of the synergies, of the Nevada
market and competitors, and of the value asked by YourPlace for the acquisition (valuation) would be logical next steps for our company to support StoreStuff.

NABACO
By Robinson Redford
Mining Easy
Land Use Alternatives Medium
153
Mining Easy
NABACO Investment Decision Hard

• If asked about objectives, in addition to financial considerations, what NABACO is looking to get out of its
North American Bauxite (pronounced box- selected alternative is a “social license to operate.”
site) and Aluminum Company (NABACO) is an • NABACO is market leader with $12 billion in revenue, 5% net income, and a solid balance sheet and cash
American mining company specializing in position.
extracting bauxite. Bauxite is a type of
• The land tends to be in rural locations, usually close to a community. That being said, NABACO has no
sedimentary rock with an aluminum content specific country or plot of land in mind yet.
of 40%-60% and is the world’s principal
• Bauxite mines tend to be shallow, open-pit mines.
source for aluminum metal.
NABACO’s mineral extraction operations are
concentrated in Australia, USA, Guinea, and
Brazil, in that order. NABACO owns many CASE GUIDANCE
inactive plots of land in these countries,
them being either exhausted or unexploited This case is an opportunity for candidates to move beyond profitability and market-entry cases. Candidates
bauxite reserves. are expected to take a macro perspective in a case where financials are not the main criteria for decision-
NABACO is wondering how to make the most making.
of this idle land and has hired you to help The case is designed to lead the candidate away from the original prompt. The candidate must make an
them decide between alternatives. What effort to keep the objective in mind, first of helping NABACO choose criteria (rather than rank them), and
then of making a decision based on the social benefit rather than financials.
criteria should NABACO consider when
evaluating alternatives? A good candidate will drive the case starting at the quantitative analysis and demonstrate business-sense
throughout.

Mining Easy
STRUCTURE GUIDANCE
The candidate should use a combination of internal and external considerations; external considerations should be loosely structured around PESTLE (most relevant are
Political/Legal, Social, Environmental), and internal considerations should include Financials, Strategy, and Capabilities/Operational Impact.
A good candidate will not try to rank considerations; they will recognize that the relevance of each consideration will be determined on a case-by-case basis, depending on the
unique location and features of each individual plot of land.
SAMPLE STRUCTURE
Internal External
Financial: Operational: Strategic: Political/Legal: Social: Environmental:

• Budget • Capabilities (tech, human, • Company strategy • Legal? • Local community • Resources of the land (sun,
infrastructure, expertise) wind, rain)
• Required return • Effect on brand • Government stability • Pressing local needs
• Past failure (food, water, housing, • Topography
• Payback period • Reversibility • Government support
employment, health) • GHG emissions (or removal)
• Upkeep requirements • Regulatory approval
• NPV • Ethical/compliance risk
• Community • Pollutants or waste
• Implementation length • Property protection laws
• Diversification engagement
• Partnerships required • Energy consumption (or
• Law enforcement • Visual impact creation)
• Water consumption
• Ecological impact

Mining Easy
BRAINSTORMING QUESTION (optional)

“What type of projects do you think could work for NABACO?”
A simple brainstorming exercise to test creativity and to ensure that the candidate has understood the context of the case.
SAMPLE ANSWERS
• Renewable energy farm (solar, wind)
• Conservation area
• Reforestation
• Agriculture
• School
• Space for cultural events
• Space for entertainment (mountain bike trail, rock climbing)

Mining Easy
“With your guidance in mind, the President of NABACO Africa has applied your framework to an unexploited bauxite reserve in Guinea. After having conducted legal due diligence and evaluated
her organization’s operational capabilities, she has narrowed her alternatives down to three: install a solar panel farm, plant sorghum (a cereal crop native to East Africa used for biofuel), or
build a school.”
“NABACO would now like to analyze the financials. NABACO’s internal policy states that for a project of this type to be considered, it must reach breakeven within five years. NABACO would
also like to understand the pre-tax profitability of each alternative. Here is a table with sample investment data gathered by NABACO.” (share Exhibit 1).
Once computations have been completed, ask the candidate what they think. The candidate should not give a recommendation; they should say that all are valid due to falling within the five-
year payback threshold, and that sorghum will generate the most profit, but that NABACO’s objective is to have a “social license to operate” and therefore other criteria should be considered.
SOLUTION
The candidate should easily calculate the annual profit for each alternative, as well as the payback period.
They should compare this to the five-year maximum.
Location Guinea
Available Land Area 400m x 250m =100,000m2
The candidate should also calculate how many of the “sample investments” fit on the available land, in order
to calculate the total profit for each alternative. Note that this step is not necessary to calculate the payback
period (the ratio of investment to profit remains the same regardless of the number of 200m x 200m fields, Sample Investment Data Solar Panels Sorghum Field School
for example). Occupied Land Area 100m x 100m 200m x 200m 100m x 200m
The candidate should recognize that by nature, a field does not need to maintain a fixed dimension (ie. it is OK Land Area =10,000m2 =40,000m2 =20,000m2
to have 2.5 fields). Investment (k$) 28 80 180
The candidate should also recognize that it does not make sense to build 5 schools on the same piece of land. Annual Revenue (k$) 11 50 140
Clarifying points (if asked): Annual Operating Cost (k$) 4 20 100
Profit (k$) (Revenue - Costs) 11-4=7 50-20=30 140-100=40
• Solar Panels and Field dimensions are flexible.
Payback (yrs) (Investment/Profit) 28/7=4 80/30=2.67 180/40=4.5
• Dimensions already include area needed for maintenance, irrigation, etc.
All paybacks <5 years, therefore all OK
• The area not occupied by the school would be considered unused, and therefore could still be adapted for The available land area can accommodate…
any type of land use. 10 solar farms 2.5 fields 1 school
=100,000m2 / Land Area of the alternative
Total Profit (k$) 7*10=70 30*2.5=75 40

Mining Easy
EXHIBIT 1 – ALTERNATIVES
Location Guinea
Available Land Area 400m x 250m
Sample Investment Data Solar Panels Sorghum Field School

Occupied Land Area 100m x 100m 200m x 200m 100m x 200m
Investment (k$) 28 80 180
Annual Revenue (k$) 11 50 140
Annual Operating Cost (k$) 4 20 100

Mining Easy
CHART ANALYSIS
Following the quantitative analysis, the candidate should express a need to conduct a qualitative analysis. Present the candidate with Exhibit 2 and ask for their observations.
The candidate should relate back to the “social license to operate” prompt and identify which of the proposed alternatives best meets the social or environmental needs of the
local community. Limited data is presented so as to force the candidate to come up with a conclusion based on their own logic. Argumentation should be sound.
With this analysis, the candidate should recognize the school as the best option to support the local community. An excellent candidate will propose an additional land use for
the excess land left unused by the school. This additional use should be consistent with NABACO’s strategic goals and/or the community needs. A fourth alternative not included
could be to plant a food crop instead of sorghum.
TAKEAWAYS
• High “Days of Sun” suggests an opportunity for solar panels, however high “Access to Energy” suggests that there is no pressing need.
• High “Water Security” and medium “Food Security” suggest an opportunity for agriculture meant for food, however we have specified
Rating
earlier that the alternative being considered is for sorghum, meant for biofuel production. Food Security
• Low “Employment” supports both sorghum or the school (staff + future employability).
• Low “Access to Education” combined with the Age Pyramid and low “Employment” point to the school best fulfilling the community’s
Water Security
needs.
Days of Sun
• “Biodiversity” and “Air Quality” are not necessarily relevant to the analysis; however, they can be linked.
Population pyramid
• A good candidate will not look for insights where there are none (ie. “Biodiversity”, or the male-female distinction in the Age Pyramid).
Access to Energy
Clarifying points (if asked): Access to Education
• The rating given is for the presence of a specific criteria, not the level of need (ie. there is a high level of Biodiversity in the area currently).
Employment
• Despite the payback being calculated on five years, the length of the project is indefinite. Candidate can assume minimum fifteen years.
Biodiversity
Air Quality
Mining Easy
EXHIBIT 2 – SITE-SPECIFIC INFORMATION
Rating Age Pyramid, Guinea 2019

Food Security 80-84
Water Security 70-74
Days of Sun 60-64 48% 52%
Access to Energy 50-54
Age
40-44
Access to Education
30-34
Employment 20-24
Biodiversity 10-14
Air Quality 0-4
M F
Mining Easy
“What risks should NABACO consider before going ahead with this alternative?”
SAMPLE ANSWERS
School: Agriculture:
• 15-year operation period: is that enough time to have an impact? What • External risks due to climate or pests
will the community do afterwards? • Ecological impact (ie. water usage, biodiversity)
• Will NABACO be able to attract qualified staff to operate the school? • Use of chemicals or creation of waste
• Will NABACO need to partner with an external organization or with the • Will NABACO have to implement and maintain control mechanisms?
Guinean authorities?
• Is there demand for this crop?
• Does the local community have a preference for a different alternative?
• Is there qualified and sufficient staff?
• Payback period is 4.5 years. What if the investment ends up being
greater than $180k? • Is there access to other inputs needed (fertilizers, pesticides)?
• Will the grain processing be on-site?

Mining Easy
The President of NABACO Africa has just logged in to the Zoom call. She only has one minute to hear what you have to say. What will you tell her?
I recommend NABACO to build a school…
…because it is the option that best meets the community’s needs, which is
NABACO’s principal objective. The remaining unused land can be employed
for agriculture to serve the local community.
The mains risks that I see are if the project goes over-budget causing the
payback period to extend beyond five years, and what would happen if we
are forced to close the school after fifteen years.
To combat these risks, NABACO should negotiate for greater tax breaks
from the Guinean government thus increasing the annual return from the
school, and for NABACO to keep the school open beyond fifteen years, by
first exploiting other areas of the mine.

PaintTech
By Daniel Plested
Chemicals Easy
Product launch/Pricing Medium
Sustainability Hard

Industry Easy
Case Type Medium
PaintTech Function Hard

Your client is ChemCo, a global manufacturer • The company will manufacture the product in the UK and commercialize it in the US.
of Chemical specialties based in the UK with • Chemco is very interested on generating positive impact to climate, but the project needs
profits of approximately $200M. Although to be profitable.
Petrochemical solvents are necessary in • The performance of the paint with water does not change compared to the traditional
paint formulators, they are a source of CO2 formulation
emissions, represent a safety hazard (they • Carbon credits can be sold in the market.
are flammable) and, also, a health hazard to • No other competitor has developed yet a competitive technology.
operators and painters. • Fixed costs will increase by $10M due to the new operation.
ChemCo has recently developed an

innovative chemical ingredient that paint
CASE GUIDANCE
manufacturers can include in their • This case is Interviewee-led and ideally the candidate should guide the case to the
formulations allowing them to eliminate all questions showed in the following slides.
Petrochemical solvents from their • The case will evaluate the ability of the candidate to approach to a product launch case and
formulation and replace them with water. his/her ability to price a product in a structured approach.
Chemco’s CEO has hired you to understand • The numbers required for the calculation are in the solution.
whether it is a good idea to proceed on • When estimating the price of the product, A good candidate will propose climate benefits
commercializing the product. or sustainability benefits as a source of value. An outstanding candidate will try to suggest
carbon credits as a potential source of economic benefit. Give the opportunity to the
candidate to come to these conclusions on their own, progressively giving hints as required.

Industry Easy
Case Type Medium
STRUCTURE GUIDANCE
What are the relevant factors that you will consider to solve this problem?
• A good candidate will develop a tailored market entry/product launch structure.
An outstanding candidate will also delve deeply into “how to price the product”.
• An acceptable structure should show an intention to size the potential market for this product and assure that Chemco has the capabilities to
execute it.
• Volume
• Volume of paint in the US?
Sample • % of chemical in formulation?
• Potential share:
Market • Status of competition?
attractiveness • Customer willingness to switch to
this alternatives.
• Profitability
• How can the product be priced?
• Logistics from UK to USA What is the value generated?
Can Chemco be profitable by launching • What are the costs? Variable? Any
• Channels USA
this product? Capabilities • Plant capabilities incremental fixed costs?
• Knowhow
• Will the product perform as expected

• Changes in tariffs?
Risks • Carbon credit prices?
• Competitive response?

Industry Easy
Case Type Medium
What are the different ways in which this product may add value to the paint manufacturer?
SAMPLE ANSWERS
• The candidate may use many approaches for this response, but the answer should cover benefits that are not only financial.
• After the candidate rans out of ideas, try to give hints that allow him or her to talk about carbon credits.
Financial:
• Savings from raw materials. (No need for solvents)
• Insurance savings
• Carbon credits
• Transport savings
Nonfinancial:
• Differentiation from competitors
• Reputation uplift/PR benefit
• Safety of employees
• Safety of the process
• Access to new market niches

Industry Easy
Case Type Medium
What are the potential revenues of the chemical product once the business reaches stable growth?
• Let the candidate lay out an structured approach to respond and share the datapoints when asked to do so, the candidate may need hints to ask for “carbon credits”.
• When discussing the “value generated”, go to the BRAINSTORMING question on the next slide and then come back to this calculation.
SOLUTION
Potential Revenues will be = Volume (Kgs of chemical product)* Price/kg
Volume Calculation:
• Size of the US paint market in volume: 900k tons per year
• 2.4 kg of chemical are required for every 100kg of Paint.
• Share of market interested in a green alternative – assume 20%.
Price:
• Price floor/ Variable cost=$4/kg
• Price ceiling (Value generated)
• Raw material savings
• 1kg of solvent costs $0.8/kg
• 100KG of paint has on average 30 kg of solvent.
Computation: Value from 1 kg of Chemical: ($0.8/kg solvent*(30%*100)kg solvent)/(2.4 kg chemical)= $10/kg of chemical
• Additional value from Carbon credits.
• Each ton of CO2 emitted costs the company $100 through carbon credit.
• 1kg of solvents represents 800gr of CO2 emissions for the customer.
Computation: Value from 1 kg of Chemical: ($100/ton CO2)* (0.8 kg CO2/kg solvent)*(30kg of solvent)/(2,4 kg of chemical)= $1/kg of chemical
Total value: $10 + $1 = 11
• Where to price it?
• The candidate should suggest a price point that splits the value created between the customer and Chemco, any division will make sense as long as the candidate supports it appropriately.
Volume calculation: (900k) ton of paint * 2.4% * 20% = 4320 ton of chemical
Assuming a $10/kg price - Revenue: 4320 ton * $10/kg = $43.2M

Industry Easy
Case Type Medium
What are the expected profits?
SOLUTION
• Gross Profit : 4320 ton* (10-4)$/kg= $25.9M
• Subtracting the extra 10M in Fixed costs.
• Total Profit: $15.9M
• Increase in profits: 15.9/200 ~ 8%

Industry Easy
Case Type Medium
What are the main challenges and risk that you think Chemco may face by launching this product?
SAMPLE ANSWERS
• The candidate may use many approaches for this response, hopefully the candidate covers different types of challenges and risks.
• Examples of operational/technical
• Performance of the “green paint” compared to the traditional counterpart
• Supply chain related (procurement)
• Adjust manufacturing site for the new product.
• Compatibility with other ingredients.
• Regulatory:
• Change in prices of carbon credits.
• Commercial:
• Customer acceptance of new technology.
• Price changes on petrochemical solvents.
• Price elasticity of paint manufacturers.

Industry Easy
Case Type Medium
Chemco’s CEO is on its way to the room and will like to hear a recommendation based on our recent findings.
A good recommendation should include:
• Whether to launch or not the product and at what price Example:
• My recommendation is that ChemCo should launch the product at $X/kg
• Arguments backing the previous two recommendations. Example:
• Profits will grow by XX%.
• Impact on environment of XX tons of CO2.
• Risks that should be further evaluated. Examples:
• Change in price of carbon credits
• Performance not as expected
• Assumption on % of the market that they will capture
• New entrants (competition response)
• Next action that Chemco should do. Example:
• Pilot tests, launch in one small city, approach first customers, sensitivity analysis, start the required plant adjustments etc.

IoT and Flexible Loans
By Javier Burgos
Financial Easy
M&A Medium
Synergies Hard

Industry Easy
Case Type Medium
IoT and Flexible Loans Function Hard

Industrial Bank (IB) is a leading financial institution • What is the objective? What does attractive means? → To acquire more clients and
providing loans to manufacturing companies to improve profitability of the bank.
finance machinery and Capex-intensive equipment. • Why is IB interested in this acquisition? → To diversify its product offering and add new
solutions to its clients.
IB is considering to acquire IoTech, which installs IoT
(Internet of Things) devices in production machines • Where is the bank located and/or where does it operate? → United States.
and leverages their usage data for various uses.
IB believes that having this production data will be CASE GUIDANCE

useful to launch a new product: flexible loans in
Context: This case engages the candidate in how the combination of two business
which clients repay the loan instalments in a
models (industry 4.0 and traditional financing) can generate an innovative
per-use basis (this means, as they produce), instead
solution to the banking industry: flexible loans.
of as in a standard fixed-payment loan. This could
be attractive for seasonal businesses, for instance.
Objective: The case is designed to push the candidate to think creatively – to evaluate the
increased value proposition to the bank’s clients, explore benefits and
IB’s president would like you to evaluate if the
downsides, competencies and risks to implement, among others.
value proposition of the new flexible loans after
acquiring IoTech would be attractive for the bank.
Prompt: The prompt may suggest an M&A case, but the prompt specifically asks to
evaluate the attractiveness of the new flexible loan product. Therefore,
listening is evaluated.

Industry Easy
Case Type Medium
STRUCTURE GUIDANCE SAMPLE STRUCTURE

The case is intended to evaluate the creative Main structure Possible brainstorm ideas
thinking of the candidate. • What of our clients’ problems would we be solving?
Product E.g.: payment flexibility in times of low liquidity
A great structure will be one the provides out- • What industries could be interested?
of-the-box ideas of the implications of Strategic fit Clients E.g.: Seasonal businesses
launching the flexible loan product (e.g.: in
• Are competitors providing this kind of solutions?
revenues, monetizing usage data in other Competitors • Can we make it a competitive advantage?
ways, such as predictive maintenance) • Can we charge a higher interest rate?
Revenues • SaaS (software as a service) fees?
Economic • Alternative ways to monetize data?
Suggested next course of action: evaluate the benefits
Attractiveness • Fixed: technical team, platform infrastructure
economic benefits of the flexible loan. Costs • Variable: IoT devices, platform scaling
of the new
flexible loan • What technical team and skills would we need?
product IT / technical • How would we install the IoT devices?
Capabilities • How will the data be shared among stakeholders?
Operational • Are the flexible loan terms and conditions different
than those of a standard loan?
Loan re- • What if the client doesn’t use the machine as
payment planned?
Data • Would clients be willing to share their production data?

Risks • What kind of usage data will be used?
confidentiality
• How can we guarantee the usage data is trustful?
Fraud • How can we cover from customer tapering the IoT?

Industry Easy
Case Type Medium
TABLE AND CHART INTERPRETATION (EXHIBIT 1)

Read to the To evaluate the attractiveness of the flexible loan, IB is considering to analyze the case of ToyGame, a toys manufacturing company.
candidate: To start, ToyGame shared next year’s financial projections with IB and IB has asked you to help them understand the forecast.
What insights would you provide? After reading, show Exhibit 1 to the candidate (next slide).
GUIDANCE SOLUTION
The objective of Exhibit 1 is to Possible insights
understand the candidate’s 1. High revenues at the end of Ordered top-down from 1 to 6 3. Gross margin increases →
top-down interpretation of the year → Insight: Implies a Insight: more efficient
seasonal business operations, could be because
basic financial statements of new assets (machinery,
from a strategy perspective. equipment).
2. Drop in price per unit
(candidate should do the
The main conclusion is that
calculation) → Insight: might
ToyGame could be an imply a growth strategy 4. Increase in depreciation from
attractive client for the flexible (discounts or liquidating). QI to QII → Insight: Suggests
loan proposal since it has a investment in new fixed assets.
highly seasonal business
6. Positive annual cashflow but
(negative cashflows in the first negative cashflow in QI and QII 5. Positive EBIT and higher
quarters but overall annual → Insight: Even though EBIT is margins → Insight: Growth
positive cashflow). positive, debt repayments strategy seems profitable.
creates negative cashflows. It is not expected the candidate
to mention every insight.
Industry Easy
Case Type Medium
EXHIBIT 1
ToyGame’s financial statements for next year ToyGame’s projected revenues and cash flow
US$ 000s QI QII QIII QIV Annual Operating profit COGS & Opex Debt instalment Cash flow
Profit & Loss Statement
+ Revenues 600 600 1,200 3,000 5,400 3,000
Units sold (000s) 10 20 40 100 170
- COGS -360 -300 -600 -1,500 -2,760
= Gross profit 240 300 600 1,500 2,640
Gross margin, % 40% 50% 50% 50% 49%
- Operational expenses -150 -160 -160 -450 -920
- Depreciation -15 -30 -30 -30 -105
- Other expenses 0 -35 65 -45 -15 1,200
= Operating profit 75 75 475 975 1,600
Profit margin, % 13% 13% 40% 33% 30% 600 600
Cashflow Statement
+ Operating profit 75 75 475 975 1,600 0
- Debt instalment* -275 -275 -275 -275 -1,100
= Cash flow -200 -200 200 700 500
QI QII QIII QIV
*Includes interest expense and principal payment.

Industry Easy
Case Type Medium
QUANTITATIVE ANALYSIS (EXHIBIT 2)

First, share Exhibit 2 with the candidate (next slide).
Read to the Industrial Bank considers that ToyGame is a great candidate for a flexible loan – it could solve its liquidity issues of negative cash flows in QI
candidate: and QII by allowing to repay the loan later in the year according to their seasonal production and sales.
In Option 1, ToyGame would have to incur in an additional 10% financing cost to cover any negative cashflow balance. Therefore, IB
believes that it can charge a higher interest rate on the flexible loan if ToyGame would not have to incur in this additional financing.
A) What is the maximum annual interest rate that IB can charge on the flexible loan for the options to be indifferent from each other?
B) What would be a reasonable rate to charge?
GUIDANCE HINTS SOLUTION

The math is HINT #1 OPTION 1 (US$ 000s) QI QII QIII QIV Annual 20 out of a $1,000 loan
simple, the The annual cost of financing is is equal to 2%
challenge is to 10%; therefore, the quarterly Quarterly cash flow -200 -200 200 675 -
understand the rate is 2.5%. A) Therefore,
Cumulative cashflow -200 -400 -200 500 500 the maximum interest
difference
rate would be 12%
between options HINT #2
and structure the For simplicity, the cost of B) A reasonable rate
could be 11%, to split
calculation. financing should be calculated on Cost of financing 5 + 10 + 5 + - = 20
the benefit among IB
the ending cumulative cashflow 2.5% of 2.5% of 2.5% of Positive and ToyGame
of the period. 200 400 200 cash flow, no
financing needed

Industry Easy
Case Type Medium
EXHIBIT 2
OPTION 1. Standard loan (fixed payments) OPTION 2. New flexible loan using IoTech
Loan amount: US$ 000s US$ 000s
$1,000,000
Same for both options
Operating profit 975 975
Annual interest rate: Loan re-payment
10%
700
Amount to be re-paid:
$1,100,000
475 475
275 275 275 275 300
75 75 75 50 75 50
QI QII QIII QIV QI QII QIII QIV
Quarterly cash flow -200 -200 200 675 25 25 175 275
Cumulative cashflow -200 -400 -200 500 25 50 225 500

Industry Easy
Case Type Medium
NOTE: Do as many brainstorming questions as time

allows, move to recommendation after total case
BRAINSTORMING SAMPLE ANSWERS time is 30 minutes at this point.
Brainstorming question 1:
What risks could you foresee of offering Categories Loan re-payment Fraud Data confidentiality
the new flexible loan based on
production usage data measured by • What if the company • How can IB secure that • How can IB address
IoTech? doesn’t produce as the companies don’t companies’ reluctancy
expected? tamper the IoT device? to share their
Ideas
• What systems can we • How can IB guarantee production data?
put in place as data is shared • Can the data shared be
thresholds for re- trustfully among as simple as ‘time in
payment? stakeholders? production’?
Brainstorming question 2: Access to new market

What other benefits can Industrial Bank Categories Monetize data Clients’ profiling
segments
obtain from the new product?
• Can we monetize the • Could the usage data • Could the flexible loan
usage data with other help the bank to product give IB access
Ideas third parties like predict the credit to other high-capex
insurance companies profile of certain type market segments that
or for preventive of clients / industry usually require another
maintenance segments? type of financing (e.g.:
purposes? leasing)?

Industry Easy
Case Type Medium
Read to the The executive committee leading the acquisition of IoTech is calling you to provide a summary of the evaluation of the flexible loan
candidate: product so far, could you please brief them on the initial findings?
GUIDANCE SAMPLE RECOMMENDATION

A good recommendation would be concise, top- Acquiring IoTech would allow IB to offer the new flexible loan, which could be an attractive
down structured and highlighting the relevant product to offer because of three reasons:
points discussed in the case. 1. New solution for seasonal businesses: as we can offer loan re-payments aligned with the
seasonality of our clients’ operations.
As the case involves a complex product and 2. Opportunities to push higher interest rates: as we are helping our clients to solve their
different companies (IB, IoTech and ToyGame), liquidity issues.
clear communication would be key to provide a 3. Opportunities to monetize usage data: for preventive maintenance or through partnerships
great answer. with insurance companies.
However, there are risks worth considering, for instance the risk of fraud by tampering the IoT
device or the risk of data confidentiality or reluctancy of clients to share their production data.
I believe further insights could be obtained from these risks and further benefits if we continue
to a due diligence phase in the acquisition of IoTech.

Fastcar
By CR7
Automotive Easy
Market entry Medium
Profitability Hard
180
Automotive Easy
Market entry Medium
Fastcar Profitability Hard

• Fastcar has only one brand of cars, in the luxury segment. Its main competitors are
• Fastcar is a big multinational automotive
Mercedes, Audi and BMW.
company in the luxury segment
• There are no financial constrains, but all the investments should have a maximum payback
• It has the headquarter in Germany in
period of 5 years.
production plants in Europe, North
America and Latin America • 5 years ago, Fastcar tried to enter in Asia, in the Chinese market, but it decided to quit after
2 unsuccessful years, due to local regulations. Legislative environment will not represent an
• Fastcar is considering to expand its sales
issue this time.
network and to enter in Pakistan.
• After-sales and maintenance market are outside the scope of this case
• The company is also asking what is the
best supply chain strategy: shipping cars
from Europe or opening a production plant CASE GUIDANCE
in Pakistan.
• This is an interviewer led case that can be adjusted for different difficulty levels and skills
• The CEO of Fastcar has hired you to assess tested
this opportunity and which supply chain
strategy should pursue. • The case makes the candidate (i) assess the attractiveness of a market opportunity
(market sizing), (ii) estimate the market penetration (iii) evaluate different alternatives
and translate them into business recommendations
• The brainstorming part requires the candidate to apply common sense and knowledge
of a familiar business (restaurants) to identify possible business opportunities.
• The quantitative part requires an organized and structured approach to be solved
Automotive Easy
Market entry Medium
SAMPLE STRUCTURE STRUCTURE GUIDANCE

• The case allows for a very wide structure,
Competitors Focus of the case
however the (i) analysis of the market, (ii)
Market Market size the financials and (iii) the operational
landscape aspect (since it was asked in the prompt),
Trend/growth
are the must haves for a complete analysis
Mkt penetration
• The candidate should be able to mention
Price the breakdown of the price: base price,
Revenue optionals and discounts
Volume
Investment • Regarding the costs, the candidate should
Financials Production cost
opportunity be able to compare the all the different
Cost (Europe vs. Transp. cost cost items between the 2 scenarios:
Pakistan) Customs shipment from Europe and production in
Pakistan
Investment
Time to deliver
Other
Regulation
aspects
Talent

Automotive Easy
Market entry Medium
MARKET SIZING QUESTION

What is the market size of luxury cars in Pakistan?
SAMPLE ANSWER
• Assumptions:
o Population in Pakistan: 220M
o No population growth (for simplicity)
o Average household size: 5 people/household
o Share of wealthy household: 10%
o All wealthy households, on average, own a luxury car
o Average car life-cycle: 10 years
o In the market there is only one competitor: BMW
• Calculation solved
o Number of luxury cars sold per year: (220M/5)*10%*10%/10 = 440,000 cars

Automotive Easy
Market entry Medium
REVENUE ESTIMATION QUESTION

What are the forecasted revenues of Fastcar in Pakistan? But before going into the calculation what are the factors that affect the
revenues? What are the methodologies to determine the price?
SAMPLE ANSWER – FACTORS FOR SAMPLE ANSWER – PRICE

REVENUES DETERMINATION
The candidate should summarize the following aspects: The candidate should point out and explain the following
• Economic factors methodologies:
• Price of Fastcar • Cost-based pricing: determined with a mark-up is added to
• Price of competitors the cost of the car
• Promotions • Competitors based-pricing: competitors’ price
• Non-economic factors • Value based-pricing: willingness to pay of customers
• Marketing effort
• Availability of cars
• Reputation of the brand

Automotive Easy
Market entry Medium
REVENUE ESTIMATION QUESTION

What are the forecasted revenues of Fastcar in Pakistan? But before going into the calculation what are the factors that affect the
revenues? What are the methodologies to determine the price?
SAMPLE ANSWER – REVENUE CALCULATION

Willingness to pay of customer in Pakistan for cars Assumptions:
€ 100,000 • Market penetration: 10% in 1° year, 25% in 2° year, 50% in
€ 80,000 3° year
• Competitor price: €75k
Car Price
€ 60,000 • Competitors based-pricing

€ 40,000 Calculation solved
• 1° year: 440,000*10%*75,000 = €3.3B
€ 20,000 • 2° year: 440,000*25%*75,000 = €8.25B
€0 • 3° year: 440,000*50%*75,000 = €16.5B
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Population (%)
Exhibit 1 – Willingness To Pay of customers for cars

Automotive Easy
Market entry Medium
COST ANALYSIS
Index • The candidate should be able to recognize that this the base
Cost item Base scenario Index EU
Pakistan scenario represents the point 100 of the index
Production cost 50,000€ 110 90
• The custom duty is applied on the production cost
Transportation cost 1,500€ 170 10
• The customer should give some explanation on why the time
Customs duty 1.25% 3000 0
to deliver a car is higher if produced from Europe than from
Exhibit 2 - Index cost in Europe and Pakistan Pakistan. Possible reasons are:
• Higher waiting time from suppliers and third-party
manufacturers
Region Investment Time to deliver a car • More time is required for training the local workers
Europe 50,000,000€ 4 months • Roundings are allowed

Pakistan 1,000,000,000€ 5 months
• The candidate should not consider any discount rate for
Exhibit 3 – Cost of the investment and time to deliver a car summing up the costs
from Europe and Pakistan

Automotive Easy
Market entry Medium
COST ANALYSIS - EUROPE

Europe 1° year 2° year 3° year 4° year 5° year Total cost: €63.6B
€50k*110/100*44,000 cars = €50k*110/100*110,000 cars = €50k*110/100*220,000 cars =
Prod. Cost €12.1B €12.1B
€2.42B €6.05B €12.1B
€1.5k*170/100*44,000 cars = €1.5k*170/100*110,000 cars = €1.5k*170/100*220,000 cars =
Trans. Cost €561M €561M
€112.2M €280.5M €561M
€2.42B*1.25%*3000/100 = €6.05B*1.25%*3000/100 = €12.1B*1.25%*3000/100 =
Customs €4.54B €4.54B
€907,5M €2.72B €4.54B
Total €3.44B €8.6B €17.2B €17.2B €17.2B
COST ANALYSIS - PAKISTAN

Pakistan 1° year 2° year 3° year 4° year 5° year Total cost: €36.7B
€50k*90/100*44,000 cars = €50k*90/100*110,000 cars = €50k*90/100*220,000 cars =
Prod. Cost €9.9B €9.9B
€1.98B €4.95B €9.9B
€1.5k*10/100*44,000 cars = €1.5k*10/100*110,000 cars = €1.5k*10/100*220,000 cars =
Trans. Cost €33M €33M
€6.6M €16.5M €33M
DIFFERENCE IN
Customs - - - - -
COST = €26.7B
Total €1.99B €4.97B €9.93B €9.93B €9.93B

Automotive Easy
Market entry Medium
Great, can you provide a brief summary and your feedback on Fastcar about entering in the luxury car market in Pakistan?
• Fastcar should enter in the Pakistan market because the market is very promising, achieving 50% of the market in 3 years,
corresponding to €16.5B in revenues.
• Considering only economic factors, Fastcar should open the production plant in Pakistan, achieving cost saving of €26.7B in 5
years
• Building a production plant can improve the reputation of the company and strengthen the brand in the local market
A great candidate should also discuss any risks and next step:
Risks
• Building a new factory may require more time than forecasted
• Attracting, training and retaining the local talent
• Setting up a supply chain of raw material and components
Next steps:
• Design of the plan for opening the plant
• Analysis of local regulation
Travel Wizard
By Sahaj Garg
Airlines Easy
Competitive Threat Medium
Profitability Hard
189
Airlines Easy
Travel Wizard Profitability Hard

• Assume that SG Airlines loses customers only to Travel Wizard and to no other player
The R&D team of Travel Wizard, a technology
• Travel Wizard only has 2 teleportation rooms for now, and does not intend to create any new teleportation
innovator, just announced that they have rooms
successfully invented a teleportation device
• One room will be placed in New York, while the other one will be placed in London. Each room can act as a
which they plan to launch commercially next
transmitter or a receiver room
month. This device consists of a transmission
room and a receiver room which can be • The main objective for the owner/CEO of SG Airlines is to calculate the loss in profit and to give ideas to
turnaround the business
placed at any distance and this one-of-a-kind
device will be able transport a passenger • SG Airlines is not looking to enter the teleportation business
between the two rooms within seconds.
Your client is the owner & CEO of SG

CASE GUIDANCE
Airlines, one of the biggest airlines in the
world and she wants to know a few things: In this case, the candidate will need to lead through directive questioning. Although the answer may seem
(1) How many customers should they straightforward, the case will force the candidate to analyze the problem from different perspectives; it will
demand not only math and problem-solving skills, but also creativity.
expect to lose to Travel Wizard?
(2) What will be their annual reduction in A strong candidate will quickly realize that in order to answer the questions of SG Airlines’ CEO, it will be
necessary to assess the annual demand of the teleportation device.
profit as a result?

Airlines Easy
STRUCTURE GUIDANCE
The main focus of the first part of this case is predicting demand & estimating loss, hence the structure should include market opportunity as well as
profitability. The interviewee may estimate the size of the market first, and then develop a structure. A big aspect of this case is creativity and thinking
about a unique product, and this should reflect in the interviewee’s structure.
SAMPLE STRUCTURE
• Market opportunity: Is there a market for teleportation? What is the market size? What are the travelling trends in London and New York? What is
the demographic of the target audience?
• Potential share: Are there barriers to entry or can other companies join the teleportation industry? Do our customers need this device, and can this
device meet expectations? Does Travel Wizard have marketing capabilities? Can our customers afford this means of transport? What is their
willingness to pay?
• Potential profit: What is the lost revenue? What would be the impact on margins and profitability? Do they have other ways to generate profits?
• Capabilities & risks: Does Travel Wizard have the ability to scale this device to other locations as well? Can this industry be regulated by the
government to provide us an advantage?
The candidate may choose to dive deeper into other areas, but must start by sizing the demand for the teleportation device across these regions.

Airlines Easy
MARKET SIZE ANALYSIS

Provide the candidate only with the following information: SG Airlines currently runs 5 flights from London to New York and 5 flights from New York to
London per day. SG Airlines’ flights have 5 first class rows, 5 business class rows and 40 economy class rows, with 6 seats in every row.
Market size (provide only if asked): The suggested framework is: Total # of flights per day x Capacity of passengers per plane x Churn rate x Load factor
Capacity of
Total # of flights per passengers per
Load
day plane Churn rate factor
80%
Flights from Flights from New
London to New York to London
First class Business class Economy class First class Business class Economy class
passengers passengers passengers passengers passengers passengers
York per day per day
5 flights per day 5 flights per day 5 rows x 6 seats 5 rows x 6 seats 40 rows x 6 seats 80% 50% 10%
Total # of flights impacted per day = = 30 passengers = 30 passengers = 240 passengers
5 + 5 = 10 flights
First Class: 30 first class passengers / flight x 80% = 24 first class passengers / flight = 240 first class passengers / day
Business Class: 30 business class passengers / flight x 80% = 24 business class passengers / flight = 240 business class passengers / day
Economy Class: 240 economy class passengers / flight x 80% = 192 economy class passengers / flight = 1920 economy class passengers / day
(240 first class passengers x 80%) + (240 business class passengers x 50%) + (1920 economy class passengers x 10%) = 192 lost first class passengers + 120
lost business class passengers + 192 lost economy class passengers ~ 500 lost passengers per day ~ 180,000 lost customers per year

Airlines Easy
REVENUE LOSS ESTIMATION

After finding the number of lost passengers per day, the candidate should estimate the loss of revenue per annum for SG Airlines.
(Provide only if asked) The flight tickets currently sell for $3,000 for first class, $2,000 for business class and $1,000 for economy class passengers
• First Class: 192 passengers / day x 360 days x $3,000 = $207.4 million
• Business Class: 120 passengers / day x 360 days x $2,000 = $86.4 million The candidate should note that first class passengers are
leading to 57% loss in revenue, while economy class
• Economy Class: 192 passengers / day x 360 days x $1,000 = $69.1 million passengers are leading to only 19% loss in revenue.
Total lost revenue per year = $363 million
ESTIMATION FOR REVENUE NEXT YEAR

To move forward, ask the candidate to calculate the estimated revenue for SG Airlines for next year, after losing customers to Travel Wizard.
(Provide only if asked) The revenue growth rate by 2% per annum.
Revenue in previous year:
• First Class: 240 passengers / day x 360 days x $3,000 = $259.2 million Predicted revenue for next year =
• Business Class: 240 passengers x 360 days x $2,000 = $172.8 million Revenue in previous year x (1 + Growth rate) – Lost revenue
• Economy Class: 1920 passengers x 360 days x $1,000 = $691.2 million = $1,123 million x (1 + 2%) - $363 million
Revenue for SG Airlines last year = $1,123 million or $1.12 billion = $783 million

Airlines Easy
IMPACT ON PROFITABILITY
After the candidate estimates the revenue for next year, ask the candidate to brainstorm what are the various costs that SG Airlines would incur.
The candidate should come up with at least 4 different costs. Possible answers include the list below:
Purchase price of aircrafts, purchase price of fuel and oil, maintenance costs, flight and cabin crew costs, other labor costs, financing costs, insurance
costs, hangar rental / tie-down space, annual inspection fees, real estate for offices
After this, the candidate should make their best estimates for each of the costs mentioned and decide: what could be the profit margin for a company
like SG Airlines? Any answer between 2.5% to 15% is acceptable as long as the explanation provided by the candidate is reasonable.
A good candidate will automatically look to estimate the profit for SG Airlines for next year based on the assumption made above. An excellent
candidate will notice that the revenue declined by roughly 33% and with low margins, the profitability may be at a higher risk.
As a brainstorming exercise, ask the candidate to come up with alternate methods for generating additional revenue in the future. The candidate
should come up with at least 4 different ideas. Possible answers include the list below:
Charge customers for additional services like food or baggage, introduce Wi-Fi in the air as an option, enter into a code-share with another airline to
fill the unused capacity of the planes, introduce a diverse in-flight shopping catalog, reducing the price of tickets for first & business class
passengers, lease hangar space to other airlines when not being used, enter into transportation markets, launch a complementary suitcase and
handbags subsidiary

Airlines Easy
Inform the candidate: After noticing that first class passengers led to 57% of the loss recognized by SG Airlines due to competitive pressure from Travel
Wizard, the team decided to reduce the price of first class tickets from $3,000 to $2,500. How can SG Airlines accurately estimate how much the churn
would reduce?
The candidate can be creative here, however the ideal answer would be by collecting data from competitors and past sales of SG Airlines so that they can
run regression models on the price/demand ratio and predict the churn rate with high accuracy.
Lastly, ask the candidate if they would change their marketing strategy given there is a clear threat to the industry and how?
This is an open-ended question and the candidate can feel free to use 4P’s or 5C’s framework if they wish.
The candidate may focus on marketing via different channels like company website, travel agencies, billboards, TV advertisements, banners on social
media etc. The candidate may choose to offer bundling of options or discounting of tickets during certain periods. Irrespective of what they choose, it
should clearly address why their preferred method of marketing will reduce churn to Travel Wizard.

Airlines Easy
You meet the CEO of SG Airlines at the gate of the building. During the 1 minute walk to her office, she asks you to briefly introduce your findings about
the competitive threat from Travel Wizard.
• SG Airlines should keep the flights from London to New York and vice-versa running, even though there is a significant loss in revenue
• The routes are still profitable and can generate a revenue of $783 million per year, despite losing customers to Travel Wizard
• Majority of the loss in revenue is due to churn of first class passengers, however SG Airlines can consider other options to generate revenue
And some of the following risks should be considered:
• There may be an additional loss of passengers due to the novelty factor of the teleportation device
• Since this is a new industry altogether, there may be an influx of other players in the market in the near future, further reducing revenues
Possible next steps:
• SG Airlines can potentially reduce prices for all tickets to keep airlines attractive as an industry
• Evaluate if SG Airlines possesses the capability to produce and launch their own teleportation device

Eurotech
By Íñigo Arteche
TMT Easy
M&A Medium
Profitability Hard
197
TMT Easy
M&A Medium
Eurotech Profitability Hard
Total time: 36-45 min

CASE FLOW – FOR INTERVIEWER
Prompt & exhibit I Structure Exhibit II & quant Risk brainstorming Recommendation
Time: 5-7 mins Time: 6-10 min Time: 12-15 min Time: 8 mins Time: 5 mins
Main Objectives: Main Objectives: Main Objectives: Main Objectives: Main Objectives:
• Understand the • Elaborate a structure • Calculate the main • Elaborate a list of • Outline target
industry & company to address the synergies risks associated with synergy
size problem • Notice one-off costs the NewCo synergy • Comment on main
• Address the problem • Use main levers (cost • Understand the implementation and synergies
to be solved: synergy and revenue) as part difference between future operations • Elaborate on risks
calculation of the structure target and potential and mitigation
synergy actions
(*) Refers to the manufacturing and installation of reception devices (antennas), transmission infrastructure (Wiring), and end-terminals (set-top-boxes, smart TVs, phones…)
TMT Easy
M&A Medium

• If the interviewee asks to know more about the audio-visual industry, show exhibit I
Two technologic firms within the audio- • The companies work on a per project basis, mainly for hospitality segment (75% of their revenue)
visual tech industry have decided to join
• Their operations are limited to the manufacturing & assembly of the Hardware components, the
forces. Their market*: manufacturing of installation is done by a third party
Hardware components for audio-visual • The companies are not based in the same country, one company is in France and the other in Poland
transmission has been declining at a 14% • They are both of similar size and have similar operations
rate and this has affected their • The French company owns two plants (one in Southern France and the other next to Paris) while the
profitability jeopardizing their future Polish part owns one bigger plant near Warsaw
operations. • The objective is to improve their common profitability by a 10% of the aggregated revenues
Both of their CEOs have agreed on

contracting a consulting firm to help them CASE GUIDANCE
navigate the process.
The objective of this case is to test the candidate’s ability to navigate through an M&A operation between
technological firms. It is designed to test brainstorming and focuses on a not very known industry to test
Your job is to size the potential synergies the candidate’s capacity of applying a structured approach to divide the problem into more manageable
that the operation may yield for the parts.
NewCo in the future
The case is not to test the specific knowledge on the AV infrastructure market, but to test the proficiency on
how to confront a merger operation, more concretely, how to approach the synergy calculation.
(*) Refers to the manufacturing and installation of reception devices (antennas), transmission infrastructure (Wiring), and end-terminals (set-top-boxes, smart TVs, phones…)
TMT Easy
M&A Medium
Eurotech – Exhibit 1 Profitability Hard
INDUSTRY INSIGHTS PRODUCT CATEGORIES – HW TRANSMISSION

• 80% of TAM1 depends on Hospitality
purchases
• Hotels have recently been moving to
Software services, reducing RECEPTION TRANSMISSION TERMINALS
dependence on Hardware providers Antennas, Encoders, & Wiring for different End user devices such
• Market size for HW companies has Converters* signals and network as Smart TVs, Tablets,
been declining for the last 3Y (see devices computers…
graph)
MAIN COMPETITORS AND 3Y CAGR
800
680 660 CLIENT CLIENT
Country
LY Revenue M€ 150 85 83 75 70
2018 2019 2020
3Y CAGR -20% -10% -5%** -12.5% -15%
EU Total Accessible Market (M€)
Notes: (*) An encoder/converter is a device that converts different signals (Satellite, Terrestrial, IP…) into playable content (video and/or audio). (**) The Swedish competitor has
recently acquired a SW company which is offsetting its decline in sales. | Glossary: (1) Total Accessible Market
TMT Easy
M&A Medium
GUIDANCE
This exhibit is for the candidate to understand better the industry, it is important to try to link it to the reason behind the M&A operation
The candidate should notice that:
1. The market is experiencing an overall decline ( (660-800)/800 = -140/800 = -7/40 = -17.5%). If the candidate makes the calculation, it would be
considered positive
2. This decline is caused by the fact that clients are switching traditional Hardware for Software services. If the candidate notices that the Swedish
sales have declined less due to the acquisition of a Software firm it would be considered a plus
3. The operation will create the biggest company in the market (75+80 = 155M€)
4. The Polish company initially presents a better financial outlook (lesser decline than most competitors and bigger revenues)
5. The market relies heavily on one type of client: hospitality. If the candidate links the fact that consumers now bring the content linked to their
devices (i.e. Netflix, Hulu…) to the increased importance of software services it would be considered a good understanding of the industry
behaviour
6. Finally, the candidate should try to guess that since the industry is experiencing such a decrease, the operation might help capture synergies
that help both companies survive in such a demanding market
If the candidate does not suggest the reason for the operation, the interviewer might ask him/her to brainstorm a set of possible reasons. When
synergies come up, the interviewer might suggest moving on to the structure.

TMT Easy
M&A Medium
STRUCTURE QUESTION
The interviewer will ask the candidate to create and present a structure to address the potential synergies upcoming from the
M&A operation
STRUCTURE GUIDANCE
The candidate needs to identify the information that will help him solve the problem:
• He should indicate that there are two main sources of synergies: sales and costs
• In terms of sales synergies, the candidate should indicate that there is potential due to access to new clients, countries,
and products that were exclusive to each of the companies
• In terms of cost synergies, the candidate should explain that there are potential synergies and elaborate on the
different lines where the companies can save costs from merging (i.e.. Purchase of raw materials, direct labour
reductions and/or relocations, R&D costs, and selling/administrative)
• Last, the candidate could create a bucket to assess the feasibility/risks associated with the synergy calculation

TMT Easy
M&A Medium
Eurotech – Proposed structure Profitability Hard
Products • New potential cross-selling opportunities coming from gaining access to:
SALES SYNERGIES ✓ New products
Geographies ✓ New countries
✓ New clients
Products
Raw Materials • Potential Savings in terms of purchasing and supplier optimization
Direct Labour • Cost reduction derived from optimization of production process

COST SYNERGIES
R&D • Savings associated to duplicated R&D functions
Structure Costs • Potential savings in centralizing Selling & Administrative costs
• Risk analysis for determining potential threat to synergy consecution i.e..

OTHER Risks cannibalization, high costs associated with terminations, reputational risks,
liquidity issues…
CONSIDERATIONS
• Feasibility of the merger operation: action plan, funding & liquidity, stage of the
Feasibility
industry (i.e. mature close to obsoletion…)
Notes: (*) An encoder/converter is a device that converts different signals (Satellite, Terrestrial, IP…) into playable content (video and/or audio). (**) The Swedish competitor has
recently acquired a SW company which is offsetting its decline in sales. | Glossary: (1) Total Accessible Market
TMT Easy
M&A Medium
REVENUES FY20 ADDITIONAL INFO

All Numbers in M€ French Company Polish Company
• Variable Costs have remained
Revenues 70 85
stable over the last 10 years and
Variable Costs 10 11.5 are not expected to change
Raw Materials (components, 9 9.5 since relation with the provider
wirings, hardware pieces…) is good
Transportation 1 1.5
Energy 1 0.5 • Fixed costs have been increasing
Fixed Costs 55 50.5 over the last 5 years at a slow
steady pace (no hiring nor firing
Production (Salaries of employees) 42 33.5 has occurred for the last 6 years)
Research & Development 10 15
Sales and Administration 3 2
Operational Profit 5 23

TMT Easy
M&A Medium
GUIDANCE
If the candidate asks:
1. There is enough capacity in Poland to move production from France, with the associated increase in Fix Cost (salaries)
2. Termination costs in France (associated with production employees in France) have been estimated to be 10M€ (one-off)
3. The sale of the French Plant would lead to a net profit of 2M€
4. The candidate can consider a target of 70% consecution of the potential synergy. The candidate should indicate that 100% of the synergy is
not attainable.
The candidate should notice that:

1. Raw Materials (small electronic components that both companies assemble to create their products) are being managed more efficiently in
Poland, it could be an effect of volume but with such a difference it is more likely that they are working with different providers
2. French salaries are consuming a big portion of profitability. The candidate should be able to associate this to the fact that wages in France are
much higher than in Poland, and ask if it is possible to shift production from France to Poland
3. He should also notice that Poland is spending more on R&D and state that for a technologic company this is a relevant issue, if he links it with
the lesser decline seen in Exhibit I it would be considered a plus
In conclusion, candidate should state that the Polish have a leaner operation and that this gives them the possibility to invest more in R&D and
retain sales with more advanced products.
Gathering all this information the candidate should propose to move on with the structure and start the synergies analysis.
TMT Easy
M&A Medium
For the quantitative analysis, the interviewer will ask the candidate to calculate the synergies between the two players using the information contained in the first exhibit.
(It is important that the candidate makes the calculation with at least 2 decimals, specially for the ratios)
SOLUTION
• Sales synergies (0M€): here the candidate should brainstorm some ideas on where he thinks the synergies are (i.e. cross-selling of non-common products, access to
new countries…). He should state that this type of synergy is more uncertain and speak about the possibility of cannibalization. The interviewer should indicate the
candidate to consider zero in terms of sales synergies.
• Raw Materials: here the candidate should use the purchasing ratio from Poland to quantify the potential synergy behind Raw Materials. 9 – (70 x 9.5/85) = 1.17M€
• Production: in terms of salaries, the candidate should try to explore the possibility of moving production to Poland, as it is more cost-efficient this would yield: 42 –
(70 x 33.5 / 85) = 42 -27.588 = 14.41 M€
• Research & Development: here the candidate should notice that this cost is duplicated, with one R&D department they would be able to serve the whole organization,
and since the Polish one seems to be more effective (in terms of sales) he could propose to move all R&D to Poland maintaining the Polish budget. 10M€, all French
R&D cost
• Sales & Administration: same reasoning as before yet more unclear since Spain would need to retain some Financial controllers/administrative staff. 2-3M€
Target Recurrent Saving of:
(1.17 + 14.41 + 10 + 2.5) x 0.7 = 28.09 x 0.7 = 19.66 M€
One-off Profits/Losses:
+2 – 10 = -8 M€
TMT Easy
M&A Medium
Last, the interviewer must ask the candidate to elaborate on the last point of the plan, which is risks/feasibility. The candidate
must elaborate a list of risks that could harm the synergies and the profitability of the NewCo in the future. (Broader scope)
SAMPLE ANSWERS
The candidate should explore the different risks associated with the future of the NewCo. If he proposes a structure that is
linked to profitability, it would be considered a plus, i.e.:
REVENUES VARIABLE COSTS FIX COSTS
• Substitute products • Increase in the price of • Moving production from France

• Competitive environment (i.e., components to Poland might not be possible
price-war) • Decline in bargaining power (gov. pressure, legal procedures…)
• Failure in the R&D process against suppliers (i.e., bankruptcy • Employee dismissal may harm
• Harming client relations of current providers) reputation in the French market
• … • Increase in the price of utilities… • Loss of capacity in the R&D
function…

TMT Easy
M&A Medium
After this analysis, the client has called us, they want us to have a call with them and propose them our main conclusions over
the synergy analysis. You have 2 minutes to elaborate an adequate response that captures what we have been discussing during
the project.
• The response should start by first answering the question of how much potential does the operation has in terms of
synergies ( ~20M€).
• The candidate should explain that this number has been calculated using a safety coefficient that assumes that the NewCo
will be able to capture a 70% of the potential synergy
• Then he should move to explain where the synergies are mainly being captured: Production and R&D
• He should talk as well about one-off profit/losses: in Year 0 (2021) the company would experience a -8M€ loss due mainly to
the termination costs associated with the employees in the French plant
• Present a brief risk analysis, if he speaks about the French employment laws and the fact that moving production to Poland
might be difficult/costly it would also be considered a plus. Presenting risk mitigation initiatives would also be considered
positive.
• Last, he should try to establish a small action plan or suggest a follow up to the call
Crunch Yo’ Burger
By Pieter Swart
Food service Easy

Operations Hard
209
Food service Easy
Crunch Yo’ Burger Operations Hard
UPFRONT NOTE FOR INTERVIEWER

• This case is designed to be as long or short as you want
• There are two optional estimations to test candidate’s market sizing ability
– # Subway restaurants in the US
– # of sit-in customers per Subway per day
• If you are short on time, you can simply give the candidates the values of these inputs
• If the candidate would like to practice estimations, they can estimate these inputs

Food service Easy
INTRO PROMPT CLARIFYING POINTS (if asked)

• You are the CEO of a large • Your company sells fast food that is cooked onsite (similar price point
multinational fast food chain to McDonald’s/Subway)
• In recent years, you have noticed • Crunch Yo’ Burger operates all its own stores (i.e. no franchises)
that your profitability in the US has
• There are four major players in the market, differentiated only by the
been lagging behind competitors
type of food they offer (prices are the same)
• Your Board of Directors would like – Crunch Yo’ Burger makes hamburgers
to know: – TacoCo sells tacos and other Mexican food
– Why profitability is below that of – NoodleCo is focused on different varieties of noodles
competitors
– PizzaCo sells pizzas
– How you plan to get profitability back
in line • We are concerned only with the US operations of Crunch Yo' Burger
and its competitors
• Our customers can be either takeout or eat-in customers
• Note for interviewer: If asked for detailed figures on profit or revenue,
tell the candidate you will show an exhibit after you have seen their
IESE CONSULTING CLUB structure IESE CASE BOOK 2023 |211
Food service Easy
EXAMPLE CANDIDATE RESPONSE: SAMPLE STRUCTURE

Trends • Are health trends negatively impacting our burgers more than other foods?
Market growth
• Has regulation affected the industry (forced players to use healthier and more expensive ingredients,
External market Regulation limited growth etc.)?
• Have competitors recently become more profitable?

Competitors Performance • Did any of our big competitors recently make any changes to their offering?
• Are there any new competitors?

New entrants • Did any existing competitors consolidate to get economies of scale?
• This is a price sensitive market, so we can assume that prices have not changed much flat, is this
Price correct?
• Have we run any excessive discounts recently?
Revenue
Quantity • Have we opened or closed any branches recently?
• Are we upselling / cross-selling enough?
• Are we selling less high-priced food products?

Profit Product mix • How are we bundling products together?
• Typical fixed costs might be rental, labour, utilities etc. – how have these evolved?
Fixed costs • Are we tied into any long-term contracts for rentals?
Costs • Variable costs are food, packaging, cooking utensils – how have these evolved?
• Are we taking advantage of bulk discounts by centralizing purchasing?
• Any changes in food (commodity) prices that have adversely affected us in particular? (e.g. beef – since
Variable costs we use more beef than competitors)
• Product mix – could we be selling more products that have higher variable costs?
Once the candidate has given an overview of their structure, hand them Exhibit 1 (revenues and profits) and let them use this to
decide where they should focus
Food service Easy
Crunch Yo’ Burger – Exhibit 1 Operations Hard
REVENUE AND PROFITS (ONLY FOR US)
Note: Food variable costs relate

to raw ingredients that are
actually eaten by customers,
non-food variable costs are all
other variable costs
Food service Easy
Crunch Yo’ Burger – Exhibit 1 Operations Hard

• This chart shows 2017 and 2018 revenues of the four main players, including our own company (Crunch Yo' Burger),
as well as 2018 net profits
• We can see that Crunch Yo' Burger has the highest revenue, thus we are the market leader in fast food in the US
• Revenue growth rates for all competitors have been ~10% since 2017; hypothesis is that this is not a revenue issue
• If we divide net profit by revenues to be able to compare margins, Crunch Yo' Burger has the lowest net profit
margin out of its peer group (~1% vs competitors in range of 1.5-2%); this extra 0.5% represents ~$100M
• This issue is caused by non-food variable costs (11% of sales for Crunch Yo’ Burger vs 10% of sales for our peers),
and we should investigate these costs further
• Note for interviewer: The presentation of the chart (showing net profit in absolute terms and variable cost as % of
sales in relative terms is intentional in order to ensure that the candidate can turn these into comparable figures

Food service Easy
FOLLOW UP QUESTION AFTER EXHIBIT

• We have concluded that Crunch Yo' Burger’s cost issues lie in its non-food related variable costs
• What are some creative ways in which Crunch Yo' Burger could decrease these costs?
• Some of the major non-food costs that we would have are:
– Condiments (ketchup packets or ketchup dispenser)
– Packaging (burger wrappers, soda cups)
– Other consumables (napkins toilet paper, plastic cutlery, hand sanitizer)
• Some ways to reduce these could be:
– Limit ketchup to 1 packet per order, and charge extra for extra packets
– Use cheaper packaging (although this might pose an environmental and customer experience risk)
– Limit the number of napkins per customer by handing them out at the teller (this might cause a delay in getting orders out) or
by setting up a napkin dispensing machine
• Note for interviewer: Try steer the candidate towards napkins, in order to set up the next part of the case; if the
candidate does not arrive at this, mention it as a high potential solution

Food service Easy
CALCULATION QUESTION
• Crunch Yo' Burger is considering purchasing a machine that dispenses napkins one by one (Napkins are currently
placed a large stack, customers take a few at a time before they sit down to eat)
• 1 machine will be needed per store, and needs to be replaced every 2 years; cost is $1000 per machine
• How much money can Crunch Yo' Burger save per year by implementing this machine?
– What are the inputs you would need in the calculation and how would you structure it?
– How much money is saved?
– This solution will only apply to eat-in customers
• Note for interviewer: You should try to assess the candidate on two elements here:
– How well they structure their calculation – do they identify all the elements in a logical way?
– How well they execute the calculation

Food service Easy
Crunch Yo’ Burger Note for interviewer: remember this

case has 2 optional estimations! If you
Operations Hard
want the candidate to estimate, use

‘long version’ prompts
CALCULATION SOLUTION
Decrease in Number of Number of Cost per napkin Days per year Total gross
napkins per customers per stores in the US saving
X store per day X X X =
customer
3 960 22500 $0.005 365 ~$118M
-
• Before the • Short version of • Short version of • Napkins are • Candidate can
machine, the case: Give the case: Give purchased in assume 360 to Cost of machine
customers took figure of 960 sit- figure of 22500 boxes of 6000 make
5 napkins each in customers per stores in US napkins. A box calculations
store per day costs $28 easier
• If machine is • Long version of
implemented, it • Long version of the case: • Note: Allow • Important that ~$11M
will reduce to 2 the case: Candidate candidate to the candidate =
per customer Candidate should estimate round to $0.005 notes takes note
should estimate this (see (half a cent) if that fast food Total net saving
this (see Optional needed restaurants tend
Optional Estimation 2) to be open most
Estimation 1) days of the year
~$106M
Food service Easy
OPTIONAL ESTIMATIONS
EXAMPLE RESPONSE: ESTIMATION #1 – # OF SIT-IN EXAMPLE RESPONSE: ESTIMATION #2 –
CUSTOMERS IN TYPICAL SUBWAY RESTAURANT PER DAY # OF SUBWAY RESTAURANTS IN THE US
• Assume a typical Subway or similar takeout restaurant has ~30 tables, with ~4 chairs • We have 50 states in the US, let’s assume each state is split into rural and urban
per table; capacity of 120 sit-in customers • Urban areas mostly comprise two large cities
• Rural areas are small towns
• Assume it is typically open from 6am to 10pm to sit-in customers (16 hours a day)
• There are 150 Subways stores per city, potential way to estimate this:
• 50% of the time is peak (8/16 hours), 50% of the time is off-peak (8/16 hours), – Each large city is roughly 10 km long by 10km wide
(example breakdown in table below) – Each km has roughly 12 blocks
– Thus 120 blocks long by 120 blocks wide = 15000 blocks per city
• During peak hours, the restaurant is 80% full – Let’s assume that as you walk, you are likely to encounter a Subway store every 10 blocks, thus
150 Subways per city
• During non-peak hours, the restaurant is 20% full
• Average meal duration is 1 hour (i.e. in a 3 hour time period, a table is rotated 3 times) • Let’s assume the cities contain 2/3 of all Subway restaurants, and the towns the
remaining 1/3, Thus 2*150 = 300 Subway restaurants in cities, and 150 in towns =
Capacity 450 Subway restaurants per state
Timeslot Peak/ off-peak utilisation Calculation # customers
• 450*50 states = 22,500 Subway restaurants in the US
06:00-09:00 Peak 80% 120*3hrs*80% 288
• Note for interviewer: There are many potential ways in which the candidate could do
09:00-12:00 Off-peak 20% 120*3hrs*20% 72 this estimation (land area or Subway restaurant per person)
12:00-14:00 Peak 80% 120*2hrs*80% 192
14:00-18:00 Off-peak 20% 120*4hrs*20% 96
18:00-21:00 Peak 80% 120*3hrs*80% 288
21:00-22:00 Off-peak 20% 120*1hrs*20% 24
IESE CONSULTING CLUB Total 960 IESE CASE BOOK 2023 |218
Food service Easy
EXAMPLE CANDIDATE RESPONSE: INTERPRETATION OF SAVINGS VALUE

• We have calculated that we will save $106M per year
• This $106M represents an additional 0.5% of net profit margin
• With this additional saving, our profit margin will increase from 1% to 1.5%, putting us within the band of our
competitors (although still at the lower end)
• We should consider other cost-saving initiatives to continue to increase profitability
PROMPT: BRAINSTORM
What are some other ways we could save on variable costs?
• Raw materials bulk discounts
• Extend useful life of consumable utensils
• Run similar initiatives with ketchup, straws etc.
• Decrease cost of napkins (cheaper napkins)
• Note for interviewer: There are many potential options here, extra points for creativity
Food service Easy
PROMPT FOR FINAL RECOMMENDATION

• You have a 45-second slot in the Board meeting tomorrow to update the Board on your progress. What will you say?
EXAMPLE CANDIDATE RESPONSE: RECOMMENDATION

• (Candidate should assume an air of authority and confidence when addressing board)
• Good day and welcome
• We have run a diagnosis and can conclude that our lower profitability is caused by high non-food variable costs, specifically in napkins
– customers are currently using excessive napkins when they enter our stores
• We have found a way of bringing our net profit margin closer in line with our competitors, increasing it from 1% to 1.5% by
implementing a new napkin dispensing machine in all of our stores
• This machine will reduce napkins taken per customer by 3 napkins (60%), and on a national scale, save Crunch Yo' Burger ~$100M per
year
• There are some implementation risks related to customer experience and ease-of-use of this new machine
• In order to mitigate these risks we will pilot the machine in 100 stores nation wide and record feedback and improvements
• Furthermore, we are investigating similar cost-saving initiatives in our ketchup and straw dispensing, in order to surpass the
profitability of competitors

Transantiago
By Michael Stefanic
Transportation Easy
Public Sector Hard
221
Transportation Easy
Transantiago Public Sector Hard

• The main goal is to see if they will be able to cover all their operating costs this year
Transantiago is the public transportation system of
Santiago de Chile. It is managed by the Ministry of • The only actual source of revenue is the transportation tickets sold
Transportation and has more than 5 million users, • Each ticket can be used in buses and subway or mixing both
integrating all the city's urban buses and subway. • The only price discrimination is if it is a student or not
Transantiago' s main source of revenue is the one
generated by the tickets sold. They have two types
of tickets. One normal ticket, that has a price of 2
dollars per trip, and one discounted tickets, that
CASE GUIDANCE
has a price of 1 dollar.
This is an interviewee-led case, where the candidate is expected to drive the case and suggest the next
With this revenue, plus a fixed subsidy of 900
course of action.
Million USD, Transantiago must cover all their
operating costs of the year. This case strongly focuses on profitability and requires the interviewee to think about the cost and revenue
Suppose it is April 2021. The Ministry of and analyse the total impact generated considering both. Also, the candidate must consider the risk behind
the forecast and the consequences if some of the forecasted numbers are not reached.
Transportation has called you because, After
Covid-19, Transantiago has been experiencing a From the quantitative aspect, the interviewee will have to connect numbers given in different stages of the
substantial decrease in the demand and is worried case.
if they to cover all their operating costs. That's Since the case is talking about a service that has a big social impact, the interviewee is expected to be aware
why they want you to investigate all the possible of the consequences of each of his decisions and try to pick the solution the impacts the less.
impacts of Covid-19 and see how they will be able
to cover all their operating costs this year.

Transportation Easy
STRUCTURE GUIDANCE
The structure for this case should be mainly about profit. The more related to transportation, the better. A good candidate should also consider all the risks and limitations
involved in this process since we are talking about a case in the public sector under a lot of uncertainty. After the candidate presented the structure, handle Exhibit 1 or 2
depending on the candidate's request.
Before handling Exhibit 2, ask the candidate to do a brainstorming of the main operating costs and possible covid-19 impact on them.
SAMPLE STRUCTURE
Price of ticket
Tickets Revenue
Number of trips
Revenue Subsidy
Publicity
Others
Profits Partnerships
Maintenance
Limitations
Electricity
Risks Operating Costs
Drivers
Fuel

Transportation Easy
Transantiago – Exhibit 1 Public Sector Hard
DEMAND FORECAST
Normal Ticket Students
Total Trips projected 2021 500 million 100 million
Expected price 2 USD 1 USD*
Scenarios Covid Impact

Optimist (30%) -10% -30%
Neutral (40%) -20% -60%
Pessimist (30%) -30% -100%
*Note: Prices for Students can not be modified during 2021

Transportation Easy
DEMAND FORECAST ANALYSIS

From Exhibit 1 the candidate should understand the differences between each passenger and each one of the scenarios. A good candidate should be
aware of the consequences of only considering an average scenario since there is a significant risk if the pessimistic scenario happens.
Also, it is expected that the candidate takes some shortcut to calculate the revenue of each type of ticket, special for the “Normal Ticket”.
NEW EXPECTED REVENUE

Revenue Normal Tickets = Normal Price * Expected Demand = 2 USD * 400 MM = 800 MM USD
Expected Demand = Projected Demand * (1+Expected Impact Covid) = 500 MM * (1-20%) = 400 MM
Expected Impact Covid = 0,3*-10% + 0,4*-20% + 0,3*-30% = -20%
Revenue Student Tickets = Students Price * Expected Demand = 1 USD * 37 MM = 37 MM USD

Expected Demand = Projected Demand * (1+Expected Impact Covid) = 100 MM * (1-63%) = 37 MM
Expected Impact Covid = 0,3*-30% + 0,4*-60% + 0,3*-100% = -63%
TOTAL REVENUE = Revenue Normal Tickets + Revenue Student Tickets = 837 MM USD

Transportation Easy
Transantiago – Exhibit 2 Public Sector Hard
INITIAL COSTS PROJECTION

Total Costs* MM USD 2,000
Covid-19 Effects
Buses 1,500 • Average price of oil is expected to decrease 20% versus the
Maintenance 300 initial projected price
Fuel 500
Total Kilometres MM km 1000
Consumption Lt/km 0,5 • Average price of electricity is expected to decrease 10%
Price of oil USD/lt 1
versus the initial projected price
Bus drivers 500
Other costs 200
• Night curfews we will have two effects (only for buses):
Subway 500
Maintenance 100 • Bus driver's cost will decrease 10% because fewer part-
Electricity 100 time drivers will be required
Total Kilometres MM km 200
• The total amount of kilometres of buses will be
Consumption Kwh/km 1
Price of electricity USD/Kwh 0,5 reduced by 10%
Subway drivers 200
Other costs 100
*Note: This cost where projected before Covid-19 effects

Transportation Easy
COSTS ANALYSIS
Brainstorm - Before handling Exhibit 2, the candidate is asked to do a brainstorming of the main operating costs and possible covid-19 impact on them.
For the brainstorm, the candidate is expected to mention most of the costs shown in the exhibit and some of the covid effects.
From Exhibit 2 the candidate is challenged to quickly understand all the information and see the relationship between each of the numbers with the
covid-19 effect mentioned. Also, the candidate must understand the different types of units shown on the table.
NEW EXPECTED COST

New Fuel Cost = New Total Kilometres * Consumption * New Oil Price = 900 MM * 0.5 * 0.8 = 360 MM USD
New Total Kilometres = Original Total Kilometres * (1 – Night Reduction) = 1000 MM * (1-10%) = 900 MM
New Oil Price = Original Oil Price *(1 - Oil Price Change) = 1 * (1-20%) = 0.8
New Electricity Cost = Total Kilometres * Consumption * New Electricity Price = 200 MM * 1 * 0.45 = 90 MM USD
New Electricity Price = Original Electricity Price *(1 - Electricity Price Change) = 0.5 * (1-10%) = 0.45
New Bus Drivers Cost = Original Bus Drivers Cost * (1 – Night Reduction) = 500 MM * (1-10%) = 450 MM USD
TOTAL COSTS = Original Total Cost – Change in Fuel Cost – Change in Electricity Cost – Change in Bus Drivers Cost = 2000 MM – 140 MM – 10 MM – 50 MM = 1800 MM USD
Change in Fuel Cost = Original Fuel Cost – New Fuel Cost = 500 MM – 360 MM = 140 MM USD
Change in Electricity Cost = Original Electricity Cost – New Electricity Cost = 100 MM – 90 MM = 10 MM USD
Change in Bus Drivers Cost = Original Bus Drivers Cost – New Bus Drivers Cost = 500 MM – 450 MM = 50 MM USD

Transportation Easy
PROFIT ANALYSIS
After analysing all the revenue and costs, the candidate should be able to link both and conclude that there will be a deficit of -63 MM USD. The
candidate is expected to start thinking about options to cover the expected deficit for this year. A good candidate will also mention that all these
numbers are based on an average scenario and that the final difference could be covered or even increase depending on many of the variables.
Ask the candidate to do a brainstorm of possible solutions and, if there is time, ask him to quantify one of them.
A good candidate would deliver his brainstorm in a structured way.
POSSIBLE SOLUTIONS
Revenue solutions
Tickets Revenue 837 MM • Increase the price of the “Normal Ticket” – the price should be increased by 13 cents (6%)
Revenue • Increase safety measures to generate more demand – it would be required an increase of
Subsidy 900 MM 31,5 MM “normal tickets”
-63 MM • Ask for more Subsidy – An increase of 63 MM USD (7%)
Profits
• Create other source of revenue
Cost solutions
Operating Costs 1800 MM • Decrease the kilometres to reduce costs – it would be required a decrease of 160 MM
kilometres of Bus (17%)
Other
• Wait until July to see which of the scenarios occur before taking actions that may not be
necessary

Transportation Easy
The Ministry of Transportation has entered the room and is asking you for your analysis and recommendation.
The recommendation should be given in a structured way. Starting with the concrete action, then the reason behind that action, and after that,
mention the risks involved. A possible recommendation structure would be:
1) Action/conclusion: Mention that, after the analysis, we will have a gap of 63 million and bring up one of the possible solutions from the final
brainstorm.
2) Reason: Give two or three reasons why he thinks that is a good solution for the problem.
3) Risks: Assess the possible negative impacts of the recommendation. A good candidate should also mention the risk behind all the numbers analysed,
since they are all based on forecasts and could have high variability.
4) Recommendation: Give a future recommendation to improve the analysis or to increase the action's probabilities of success.

California Wildfires
By Alan Bleiberg
Public Sector Easy

Climate Change Medium
Strategic Response Hard

Public Sector Easy
California Wildfires Strategic Response Hard
PROMPT
The state of California has experienced devastating wildfires in recent years, causing deaths and billions of dollars worth of damage.
The disasters are only projected to intensify, and the government needs to act fast. The governor has hired you to propose an action
plan for prevention and mitigation. What factors would you analyse?
STRUCTURE GUIDANCE
Given the open-ended nature and scale of the problem, there are a variety of approaches. However, the candidate’s structure should cover the
following key aspects of the problem. Push the candidate to brainstorm and elaborate on ideas, as the rest of the case is speculative.
Diagnosing Crisis Action Measures Feasibility
Geographic Trends Over Ability to Legal and

Causes of Fire Prevention Response Time Horizon Financial Cost
Spread Time Implement Regulatory
• Understand what are current prevention methods and • What are the costs and ability to implement the proposed
• What are the causes of wildfires and where do they what are addressable gaps? solutions?
occur? • What are the current response tactics? What new or • Are there legal barriers from stakeholders (lawmakers,
• Are certain causes more preventable than others? existing tactics should be implemented? utility companies, private sector)?
• Are come types of wildfires more devastating than others? • Action measures should be categorized by time-horizon: • Given scale, feasibility should be factor considered for each
• Understand any trends (time of year, certain geography, short-term quick fixes and long-term infrastructure solution.
identifiable causes)? changes
• What is the effectiveness of various strategies?

Public Sector Easy
California Wildfires – Exhibit 1 Strategic Response Hard
CALIFORNIA HISTORICAL WILDFIRE REPORT

Number of Fires by Source Total Area Burned by Source (Thousand Acres)
6,400 460
4,500
270
3,000 220
1,200 1,250 1,400 100 95

80 70
40 50
350 500 450
2000 2010 2020 2000 2010 2020

Utilities Failure Human Error (campfires, cigarettes, gender reveals) Natural Causes (lightning)

Public Sector Easy
INSIGHT ANALYSIS
Hand over Exhibit 1 if the interviewee asks about causes of wildfires or trends over time
EXPECTED TAKEWAYS FROM EXHIBIT

Candidate should note the temporal data set and identify trends and outliers
• Candidate should explain that fires due to human error have increased over the last 20 years (2x), while other causes of fires are relatively constant
• Next, candidate should note two observations on the quantity of acres burned:
1. In-line with increased quantities of fires, acres burned due to human error has steadily increased over the last 20 years
a) Candidate should note these are likely frequent but smaller fires, hence the relative magnitude is not extremely high
b) Candidate should highlight this is an area to focus on prevention, as the cause is avoidable and various policies should be able to
reverse the increase
2. The candidate should also note outlier years, 2010 (natural causes) and 2021 (utilities)
a) Candidate should speculate these were likely single “disaster” fires that inflate the year’s statistics
b) Candidate should think these are likely impossible to prevent in the short-term due to the nature of the cause, but could suggest long-
term prevention or mitigation measures
• Let the candidate think out loud and drive ideas, but next present Exhibit 2

Public Sector Easy
2022 CALIFORNIA DEPARTMENT OF FORESTRY ANALYSIS
% of
Cost to Build Residential Annual % that are Avg Property
City Structures
SafeWall 1 ($M) Structures Wildfires catastrophic 2 Value ($M)
At-Risk
Oakland 6.4 400,000 2% 10 5% 1.00
Santa Barbara 7.0 100,000 4% 15 15% 2.50
Sacramento 5.8 250,000 3% 12 10% 0.50
Notes
1. SafeWall reduces the probability of a catastrophic fire by 50%
2. “Catastrophic” defined as destroying 10% of at-risk structures

Public Sector Easy
An environmental minister has suggested that a fireproof structure, SafeWall, could be built and would reduce the
probability of a catastrophic wildfire. To start, they can only build around one city – which should they build and why?
SOLUTION
Candidate should assess each option and systematically compare the expected outcomes
Step 1: Calculate the at-risk value in each location: Residential % of Structures Total At-Risk Avg Property Total At-Risk
City
Residential Structures * % At Risk * Avg Property Value Structures At-Risk Structures Value ($M) Value ($B)
#1 Oakland 400,000 2% 8,000 1.00 8.00
Step 2: Calculate the likelihood of catastrophic fire in each location Santa Barbara 100,000 4% 4,000 2.50 10.00
Annual Wildfires * % that are catastrophic Sacramento 250,000 3% 7,500 0.50 3.75
Step 3 Multiply the probability of a catastrophic fire by the at-risk value in each location City
Annual % that are Expected
by 10% destruction. Reduce expected damage by 50% to determine Value Saved Wildfires catastrophic Catastrophic Fires
At Risk Value * Expected Wildfires * 10% Destruction; → * 50% reduction and Compare Values #2 Oakland 10 5% 0.5
Santa Barbara 15 15% 2.25
Expected Insight:
• Candidate should note that SafeWall in Santa Barbara would save the most Sacramento 12 10% 1.2
value ($1B) compared to the other locations (~5x)
Total At- Expected Damage of Expected Cost,
• Candidate should take a stance on basing the decision on financial Impact of Expected Cost, Value Saved
City Risk Value Catastrophic Catastrophic No SafeWall
considerations compared to population or at-risk structures. SafeWall SafeWall ($M) ($M)
($B) Fires Fire ($M)
Candidate should note more data is needed on population.
• Should note that construction costs are not a factor given #3 Oakland 8.00 0.5 10% 400 50% 200 200
relatively similar in all locations Santa Barbara 10.00 2.25 10% 2,250 50% 1,125 1,125
Sacramento 3.75 1.2 10% 450 50% 225 225

Public Sector Easy
California Wildfires Strategic Response Hard
Between your structured approach & data provided, what are your recommendations for the governor?
Allow for flexibility based on the candidate’s structure. A balance of creativity and practicality should be embraced
• Based on data trends, action should be taken to reduce the frequency of wildfires from human error
• Long-term solutions should also be implemented to mitigate “disaster” fires that cause more damage
• Building SafeWall around Santa Barbara is expected to save over $1B in real estate value, 5x the value of other locations
• Overall response risks are plentiful, namely effectiveness, cost, and ability to implement
• Action steps should be relevant to the prior conclusions and include other proposed solutions, such as:
Short-Term Actions Long-Term Changes (Infrastructure)

• Station more firefighters
• Update high-risk power lines
• Purchase more water-planes
• Clear break-lines in forests
• Ban the use of campfires
• Implement drone detection fleet
• More frequent forest management

South bank
By Giancarlo Young
Financial Services Easy

Profitability Hard
237
South bank Profitability Hard

South Bank (SB) is the leading retail bank in • Peru has 35 M inhabitants. The local currency is PEN. Adults represent 70% of population.
Peru, an emerging South American country. • Country has 3 main economic segments, with clear different behaviours in credit card use.
SB has a dominant performance on high- • Consider Credit Card business as an independent unit of analysis.
income and a very good performance in • Revenues are only generated by merchant fee, a percentage of the amount paid with the
medium-income customers but has not been card. During the last years has been stable at 2%.
capable of entering to low-income market. • Each client can only have 1 credit card at the same time.
CMO has told us that his team has been • To be approved, a project is required to have a payback period of 3 years. As a secondary
evaluating the option to launch a new credit metric, CMO prefers to generate the highest possible net cash flow in the first 3 years.
card with cashback benefits, which are
perceived as much more valuable in this
segment, and the product has already shown CASE GUIDANCE
some results in competitors.
The case requires the candidate to financially estimate (using payback period) the feasibility
Currently, SB has a credit card with a loyalty of launching this new product and assess the option of a new sales channel. After calculating
program based on airline miles. This program both results, as a counterbalance, there are qualitative, country-related situations that have
is considered part of a strategic alliance with to be considered and open a chance to brainstorm, and even propose a different
an important regional airline. recommendation.
The candidate will need to ask for information to create a market sizing logic. Then, the
The CMO would like you to evaluate if it is interviewer can start showing exhibits. Is expected to work with order to avoid reprocessing
convenient to invest in this project. and don’t get confused with numbers.

STRUCTURE GUIDANCE
• Candidate should focus on main aspects that imply to release a new product: financial impact, market situation, risks involved, and capabilities that
the company has.
SAMPLE STRUCTURE
I) Revenues: # customers, frequency of use, size of ticket, merchant fee value.

FINANCIALS II) Costs: variable -> sales commissions, plastic cards, loyalty program; fixed -> wages, system maintenance
I) Competitors: BS market share, positioning, value proposition

MARKET II) Clients: segments, purchase behaviours and perceptions
III) Ecosystem: availability of POS, trends in cashless options
I) Commercial: brand awareness, know how of regional needs and customs

CAPABILITIES II) Financial: Budget for investment, need of additional CAPEX/OPEX
III) Operational: scale and granularity of sales force, logistics for credit card supply
I) Financial: small ROI

RISKS II) Commercial: bad experience of user because of lack of knowledge regarding credit cards or not enough
POS to pay, cannibalization vs current credit card
QUANTITATIVE ANALYSIS, PART 1

• Candidate should propose a market sizing as first action, explaining the reasoning before doing numbers. Interviewer should show EXHIBIT 1 once
the candidate has identified many variables implied. Candidate should mention macro features (e.g. large market vs small ticket and small
penetration)
• After having calculated revenue per segment, challenge the idea (so what?) of entering low income since is a very small market (3% of total, 0.3% of
BS revenues).
• If the candidate only considers calculating values for low-income segment, is adequate. Still, he/she should calculate all segments in order to
compare them and find some insights of the whole potential.
SOLUTION, PART 1
Credit Card Spending per Merchant fee
Total Adult Population, by Market share
penetration year 2%
population population % income (# cards)
(# cards) (PEN) (PEN)
high = 10% 80% 60% 100 K

2.45 M 1.96 M 1.176 M 117.6 B 2.352 B
70%
medium = 30% 50% 30% 30 K
35 M 24.5 M 7.35 M 3.675 M 1.102 M 33.075 B 661.5 M
low = 60% 10% 5% 6K
14.5 M 1.47 M 0.0735 M 441 M 8.82 M
South bank – Exhibit 1 Profitability Hard
CREDIT CARD MARKET MAIN INDICATORS
% of Credit card SB market Avg. spending

Segments
population penetration share per year
High-income 10% 80% 60% 100,000
Medium-income 30% 50% 30% 30,000
Low-income 60% 10% 5% 6,000

QUANTITATIVE ANALYSIS, PART 2

• Once the interviewee calculates the revenues, the interviewer has to indicate that we have receive additional information about 2 options of sales
channels: traditional (branches) or online. Criteria for choosing an alternative remain the same as indicated during clarifying questions.
• Interviewer mentions main revenues and costs (see SOLUTION, PART 2).
• Once cash flows have been calculated, show (in EXHIBIT 2) that we don’t have branches in the majority of low-income regions.
SOLUTION, PART 2
• Compare marginal impact on branches vs online sales:
o Market share growth (# cards) -> branches: from 5% to 15%; online: from 5% to 8%. Average spending and merchant fee remains the same.
o Variable costs (paid only at year 0) -> plastic card emission = PEN 5 // sales commission (per card sold) = PEN 50
o Variable costs (paid every period) -> cashback = 1% of payments, per year
o Fixed costs (paid every period) -> online channel maintenance = PEN 200 K per year
o Net cash flow after 3 years (PEN) -> Branches = 18.4 M vs. Online = 7.2 M. Payback time = 1 year for both options.
Branches // # new cards = 147 K 0 1-3 Online sales // # new cards = 44.1 K 0 1-3
Payments 882 M Payments 264.6 M
Revenue 17.64 M Revenue 5.29 M
Costs (plastic & sales) (8.085 M) 0 Costs (plastic & online) (0.735 M) (0.200 M)
Cashback (8.82 M) Cashback (2.65 M)
Margin (8.085 M) 8.82 M Margin (0.735 M) 2.65 M
PERU’S POLITICAL MAP
• Lima City concentrates around 10M inhabitants (disregard the segment), medium-
income regions represent other 10M inhabitants, and 15M inhabitants live in low-
income regions.
• Branch penetration is usually preceded by a developed POS ecosystem,
implemented by a Credit Card global company.
• Technologies adopted by low-income segment: 65% has a smartphone, 65% has
Internet access.
Lima City High penetration of SB branches

High income regions
Medium income regions
Low income regions

TAKEAWAYS
• The candidate should recognize that we don’t have any presence in the majority of low-income regions. Thus, it would imply an additional
investment in building branches.
• A good candidate should also consider the cash flow differences between sales channels (PEN 18.4M – 7.2M = 11.2M) as additional CAPEX that
could be used for building branches and still generating higher cash flows vs online.
• Since Lima City has the third part of Peru’s population, is probable that there is a hidden low-income segment that we can prioritize. The same for
other high-income, medium-income regions.
• Leverage on technologies could help to foster financial literacy or as payment methods.

1. What are the main potential problems/risks that we have in order to launch the new product?
2. What would you suggest to do to hedge these risks?
SAMPLE ANSWERS
1. Candidate should bundle possible risks:
• Commercial: acquiring the card through online sales could be daunting, clients don’t understand how to use the card, 1% cashback could
not be perceived as attractive, erosion of partnership with airline.
• Financial: clients show high default levels, high-income clients turn to cashback credit card (cannibalization).
• Operational: there are not enough POS nor branches in the majority of low-income regions, low density of population in low-income
regions.
2. Bundling is, again, a good practice:

• Commercial: partner with local authorities or leaders to give financial education and training, focus on capture competitors’ clients using
higher cashback or other discounts, revisit analysis and focus on high-density, higher-income regions.
• Financial: evaluate if opening mini-branches (less CAPEX).
• Operational: deliver credit cards by courier, negotiate with Credit Card provider/competitors/government to accelerate POS instalment,
evaluate other technologies as Digital Credit Card (in smartphones).

What is your recommendation to South Bank CMO?
• The candidate should recommend implementing the project. Payback period is only 1 year regardless of sales channel. Ideally, he/she should
suggest implementing branches, because they generate higher net cash flows in the first 3 years.
• Consider that, if we have to invest more than PEN 11.2 M in opening new branches, is better to go online.
• As possible risks to consider: low adoption of product (due to access, lack of knowledge, or small POS network), potential cannibalization, and
erosion on airline partnership.
• Finally, mention next steps: consider push POS penetration with Credit Card provider or even with competitors, work on financial education, etc.
A good candidate will:

• Recognize that there is an underlying, structural problem that has to be solved to increase probability of success. He/she explains that the project
is a long-run bet, since these markets have to be developed.
• Consider other costs/losses as defaults or frauds, and suggest a sensitivity analysis (e.g. % of market captured, payback period required = 1 year,
higher cashback %).
• Size how many low-income clients are in medium or high-income regions. For instance, Lima City probably has a relevant low-income population,
and already counts with a high branch penetration.
• Ponder to explore medium-income segment, since the size, penetration and market share put SB in a better position.
Cricket Mania
By Participation Code - CB11
Sports Easy
Investment Decision Medium
Profitability Hard

Sports Easy
Cricket Mania Profitability Hard

PCC is one of the cricket franchise in • Success here would be defined based on improved profitability
worlds largest cricket league, LPI. • The team has been relatively stable with no abnormal changes
Despite having one of the strongest • The owners are willing to incur Capex to attract up to two star-performers in the auction
teams in league, PCC has continuously • PCC lacks brand recall, amongst the lowest in the league
disappointed its fans and owners and
• All franchisees in the league are profit making
has failed to live up to its true potential.
• The overall cricket viewership and popularity has been on the rise (assume pre-covid time)
Mr. Gandhi, has recently replaced Mr.
Modi as the new CEO of PCC. Mr.
CASE GUIDANCE
Gandhi has been handed the task of In this case the candidate should not rely on any pre-knowledge of the game and think of the
turning around the fortunes or PCC. Mr. problem as a classical profitability issue.
Gandhi has been an ardent cricket fan The candidate should ask the right questions and aim to grow the existing revenue streams
and player of the sport all his life. He and add new revenue streams to improve profitability. The interviewer should guide the
also has a track record of turning around candidate towards focusing on improving revenues and not get stuck on reducing costs.
Given, that a franchisee’s brand has a high impact on revenues, the candidate should be
corporates. conscious of making recommendations to improve the brand as well.
For Interviewer’s understanding ONLY (to understand the business model):
Mr. Gandhi has hired you to investigate
and recommend on the action plan. • Key revenue streams - Broadcasting Rights, Sponsorship, Ticket Sales, Merchandize Sale,
Player trading
• Major Costs heads – Player Fee (30-35%), Franchise Fee (20%)
Sports Easy
SAMPLE STRUCTURE INTERVIEWER GUIDANCE

The interviewer should allow the Candidate
Increase Ticket to share different ideas but eventually guide
Sales
Improve Existing the Candidate to focus on improving the
Revenue Revenues
Increase Non-
Ticket Income
Increase Revenue The next exercises, focuses on increasing
existing revenues streams by improving team
Add New Add ancillary performance and brand-rating, thereby
Revenue Streams businesses
charging more for tickets, merchandize, etc.
The Interviewer should try to guide the
Improve Profit Improve success
Candidate towards identifying that both
linked fee
Reduce Player these objectives can be achieved through
Fee
Trade/Fire non- acquiring Star players.
performing
Staff and expensive players Once the Candidate takes that path, the
Reduce Costs Corporate
Expenses interviewer should share Exhibit-1 & Exhibit-2
with the candidate and let them make the
Other choice
Operational
Expenses

Sports Easy
Exhibit-1 (INTERVIEWER VERSION) Profitability Hard
LPI TEAM RANKINGS FOR THE LAST 3 YEARS AVERAGE STAR RATING SCORE
League Rankings Average Star-Rating
CSC
DDC
HYC
KKC
MMC
PCC
2020 2019 2018
CSC DDC HYC KKC MMC PCC RBC RJC

RBC
RJC
INTERVIEWER GUIDANCE
The Candidate should be able to identify that while the performance for most team typically varies, PCC has consistently performed poor. A great
candidate would even calculate average ranking over the 3 years and see PCC as the lowest average ranking.
At this point, Interviewer should ask the Candidate that could be the potential reason for this and then guide the candidate towards looking to
acquire new Start Players, to improve the team “Star-Rating”. Once the Candidate has gotten there, the Interviewer should show Exhibit-2
Note: Rankings and reflect the team’s performance i.e., highest bar indicates the winning team and the lowest reflects the last finishing team
Sports Easy
Exhibit-1 (CANDIDATE VERSION) Profitability Hard
LPI TEAM RANKINGS FOR THE LAST 3 YEARS AVERAGE STAR RATING SCORE
League Rankings Average Star-Rating
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0
CSC
DDC
HYC
KKC
MMC
PCC
RBC
2020 2019 2018
RJC
CSC DDC HYC KKC MMC PCC RBC RJC
Note: Rankings and reflect the team’s performance i.e., highest bar indicates the winning team and the lowest reflects the last finishing team

Sports Easy
Exhibits-2 (INTERVIEWER VERSION) Profitability Hard
Star batsmen available for auction Star bowlers available for auction
Signing Fee Games Avg. Score / Start Rating Signing Fee Games Wickets Avg. Wicket / Start Rating
Runs Scored
(USD Mn) Played Game (out of 10) (USD Mn) Played Taken Match (out of 10)
VK 15.0 200 6000 30 10 LM 7.0 125 200 1.6 7
MD 15.0 200 4800 24 9 YC 5.5 100 121 1.2 6
RS 12.0 200 6000 30 8 JB 8.0 75 140 1.9 9
DW 10.5 150 5250 35 7 AM 5.5 150 175 1.2 6
CG 12.0 130 5200 40 9 DS 10.0 70 97 1.4 8
Note: Maximum permitted budget for acquisitions is $20mn
The Interviewer should explain that a Batsmen’s success is linked to scoring more, whereas the Bowlers success is linked to maximum wickets – a great Candidate would suggest
and analyse additional metrics such as bowling economy, strike-rate, run-rate etc to refine his model. (although not necessary for people who don’t understand the game)
The Interviewer should assess the Candidate’s decision making on the basis of his/her ability to derive some kind of mechanism to put the data into perspective and make an
objective decision. The ideal decision would be based on “highest average runs” and “highest average wickets” (which they do not have in their version). If the Candidate doesn’t
get to calculating average, the Interviewer should guide the Candidate to it.
The most ideal combination is “CG as the batsmen” and “JB as the bowler” – a) highest averages, b) together add up to the allowed budget and c) highest combined Star rating

Sports Easy
Exhibits-2 (CANDIDATE VERSION) Profitability Hard
Star batsmen available for auction Star bowlers available for auction
Games Start Rating Games Wickets Start Rating

USD Mn Runs Scored USD Mn
Played (out of 10) Played Taken (out of 10)
VK 15.0 200 6000 10 LM 7.0 125 200 7
MD 15.0 200 4800 9 YC 5.5 100 121 6
RS 12.0 200 6000 8 JB 8.0 75 140 9
DW 10.5 150 5250 7 AM 5.5 150 175 6
CG 12.0 130 5200 9 DS 10.0 70 97 8
Note: Maximum permitted budget for acquisitions is $20mn

Sports Easy
ACQUISITION DECISION
Would you spend money on acquiring the Star-Players?
INTERVIEWER GUIDE
At this stage Candidate can take the decision of acquiring the two star-players given that the budget allows them to spend $20mn. In
this case, the Interviewer has two options -:
a) Skip the Exhibit-3 and straight move to Brain-Storming exercise
b) Challenge the Candidate by trying to quantify the financial impact of the decision in terms of additional profitability
However, a great candidate would proactively ask if we have any data or predictive analysis of the likely impact of the acquisitions.
Given the aim is to improve profits, Candidate should try to assess the impact in terms of numbers and not just direction.
Interviewer should share Exhibit-3 if the Candidate asks for additional data to quantify the impact

Sports Easy
Exhibit-3 Profitability Hard
PCC PPREDICTED YEARLY LEAGUE RANKING (3 YEARS) LPI PRIZE MONEY DISTRIBUTION BASIS
70% 65% Rank Prize (USD Mn)
60% 55%
50% Below-5 0.0
40% 35%
30% Top-5 10.0
30%
20% Top-3 20.0
10%
10% 5%
0% 0% Top-2 50.0
0%
Below-5 Top-5 Top-3 Top-2
With Acquisitons Without Acquisitons
➢ Predicted Yearly Profit with acquisition (USD Mn) = 65%*10.0 + 30%*20.0 + 5%*50.0 = $15.0mn (for 3 years)
➢ Predicted Yearly Profit without acquisition (USD Mn) = 55%*0.0 + 35%*10.0 + 10%*20.0 = $5.5mn (for 3 years)
➢ Additional Profit of ~10Mn/year for next 3 years just from Prize money. The investment of $20mn will get covered in two years. A great candidate
would remember that the Star-Ranking of the team would also improve and thus lead to additional Revenues and hence even higher profits

Sports Easy
BRAIN STORMING EXERCISE – NEW REVENUE STREAMS

What are some of the additional revenues streams that PCC can look to add to their operations in order to support
the company turnaround and profitability?
SOME SAMPLE IDEAS

✓ Merchandizing revenue ✓ Launch a sport magazine, sport website, online talk
show for ad-revenues
✓ Start a junior training academy
✓ Launch co-branded credit/debit cards for fans to make
✓ Launch a mobile gamming app
commission income
✓ Create a paid fan club with special privileges like
✓ Ultra-Premium Membership for seats close to players,
priority access for tickets, lunch with players, etc.
allowing hotel access to fans, and similar incentives
✓ Partner with a co-branded cafes and sports bars

Sports Easy
FINAL RECOMMENDATION (SAMPLE RECOMMENDATION)

Acquire the two-star players, because:
• The acquisition improves the probability of winning
• The Probability adjusted winning prize money increases profits by ~$10mn/year for the next three years
• The additional profits cover for the upfront investment of ~20mn
• The other revenue streams can add a significant headroom to the profits, given the non-prize revenues (typically a major
chunk of income), will be directly related to the brand-value of the franchise and the star players. Which would improve a lot
given the better performance in the league and the presence of Star players
Risks:
• Players come with high chances of injury, which means the winning probability may not be accurate
• Team sports also depend a lot on the team dynamics, maybe the players are not able to perform well with the franchise

The Bookstore
By Víctor Manzanares Bonilla (IESE MBA 2021)
Retail Easy
E-commerce Medium
Market Entry Hard
258
Retail Easy
The Bookstore E-commerce

Market Entry
Medium
Hard

Our client, Classic Bookstore (CB), is a • CB only sells to customers through physical stores, no online business is available.
traditional bookstore chain in Spain, • CB has stores in the largest cities in Spain.
specialized in non-technical books. CB’s • CB has 3 types of customers: AVID READERS (2 books/month), OCCASIONAL READERS (1 book/2 months)
and RARE READERS (1 book/6 months).
revenue has stagnated for the past 3
years, with a stable and loyal customer • Non-technical physical book market in Spain has been stagnated for the past 3 years.
base. Now, as part of its new growth • CB has reached an agreement with an e-Reader manufacturer in China. Total cost per device would be 60€.
These devices can only support the e-books sold on CB’s new website.
strategy, CB is considering whether to
• CB has no specific growth rate in mind and are open to suggestions from us.
enter the electronic books market.
The client is considering to sell a CB

branded reading device and develop a
website to sell e-books for it. CASE GUIDANCE
This is a case designed to be led by the candidate. Start by reading the case question and let the candidate
Our client asked us to analyze this drive the analysis. Do not provide any information until it is asked.
opportunity and provide a
recommendation. This case primarily tests the understanding of market entry and its implications on the current business model.
For simplicity, taxes and value of money over time have been ignored in this case, although excellent
candidates should mention them during the case.

Retail Easy

Market Entry
Medium
Hard
INTERVIEWER GUIDANCE – STRUCTURE

Candidate’s structure should cover the following key aspects of the problem.
MARKET OPPORTUNITY: What is the market size of generic e-books in Spain? What is this market’s growth?
POTENTIAL SHARE: What would be our market share? How many competitors are we facing in this market?
POTENTIAL PROFIT: What is the potential profit of this new market? Expected revenues vs expected costs? What investment is required to enter
in this new market? What is the expected return on investment of our client? Payback period?
CAPABILITIES & RISKS: Does this new market align with our client’s strategy and capabilities? Do they have the know-how required? Have they got
the financial capabilities to undertake this investment? What is the potential cannibalization of this new business model with the current one?
The analysis should be led by the candidate, starting for the market size. When the candidate requests information about the market and size,
ask him to estimate the size of the non-technical books in Spain, both in paper and e-books.

Retail Easy

Market Entry
Medium
Hard
INTERVIEWER GUIDANCE – MARKET SIZING

(Suggested approach) Total books: 24 + 30 + 30 = 84M books
1. Population of Spain: 45M 5. Percentage of paper books and e-books and average prices:
PAPER BOOKS (93% of books): 78M books x 15€/book = 1,170M€
2. Target population that reads: We assume people from 15 to 80 E-BOOKS (7% of books): 6M books x 8€/book = 48M€
years old.
Population 0 – 20 (25%): 11.25M (Population 15-20: 11.25/4=2.8M) TOTAL MARKET: 1,170 + 48 = 1,220M €
Population 21 - 40 (25%): 11.25M
Population 41 – 60 (25%): 11.25M
Population 61 – 80 (25%): 11.25M
Total target population = 2.8 + 11.25 + 11.25 + 11.25 = 36.5 M
3. Percentage of population that buys books: We assume 60% of

people between 15 and 80.
Total target population = 36.5M x 0.60 = 22M people
4. Type of readers: We assume the following categories and quantities

Avid Readers: 12 books/year x 2M readers = 24M books/year
Occasional Readers: 6 books/year x 5M readers = 30M books/year
Rare Readers: 2 books/year x 15M readers = 30M books/year

Retail Easy

Market Entry
Medium
Hard
PROFITABILITY ANALYSIS – GIVEN DATA

In the next step, the candidate should focus on profitability. Hand Exhibit 1 for this part and provide the following information if requested:
REVENUE COSTS
• Market Annual Growth: 5% • Webpage Investment: 150,000€
• Expected Market Share: 1% • General Expenses website: 50,000€
• Paper book Gross Margin: 33% • Cannibalization: Candidate needs to calculate the number of users that will
switch from paper to e-reader with Exhibits 1 & 3
• E-book Gross Margin: 40%
• E-reader price: To be determined by the candidate with

Exhibit 2. Price range should be between 60 and 100€
to compete against Kindle.
• No customers change from paper to e-book after year 1.

New readers are coming from new customers.

Retail Easy

Market Entry
Medium
Hard
PROFITABILITY CALCULATION
YEAR 1 2 3 4 5
Market Size 48M € 50.4M € 52.92M € 55.6M € 58.38M €
Revenue e-books 480,000 € 504,000 € 530,000 € 560,000 € 584,000 €
Gross Margin 190,000 € 201,600 € 212,000 € 224,000 € 232,000 €
Profit from e-readers 120,000 € * 3,000 € ** 3,250 € 3,750 € 3,000 €
Webpage investment - 150,000 € - - - -
General Expenses -50,000 € -50,000 € -50,000 € -50,000 € -50,000 €
-90,000 € (50,000
Cannibalization -90,000 € -90,000 € -90,000 € -90,000 €
books x -1.8€)
TOTAL PROFIT 20,000 € 64,600 € 75,250 € 87,750 € 95,000 €
(*) This calculation has taken into account a gross margin of 10€ per e-reader. Candidate will have to pick the price in each case. 12,000 readers are sold the first year, 11,000 to
customers switching from paper to e-book and 1,000 to new customers.
(**) No customers switch from paper to e-book after 1st year. New readers are sold to new customers acquired by market growth.

Retail Easy

Market Entry
Medium
Hard
EXHIBIT 1: NON-TECHNICAL BOOKS MARKET IN SPAIN

PAPER BOOKS MARKET IN SPAIN E-BOOKS MARKET IN SPAIN
Subscription Google
Competitor Chain
Others Apple
7% 10% 5%
Telephone 5% 9%
CB 2%
2%
Specialized Store Others
20% 11%
28%
Department Stores
75%
27% Amazon
Internet
Market Size: 1,170M€ Market Size: 48M€
Annual Growth = 0% Annual Growth = 5%
Average price per book: 15€ Average price per e-book: 8€
Average consumption per reader: 10 e-books/year

Retail Easy

Market Entry
Medium
Hard
EXHIBIT 2: ELECTRONIC READERS

Amazon Kindle
CB e-Reader Sony e-Reader Amazon Kindle
PRO
Price TBD 120€ 100€ 150€
Cost 60€ - - -
Formats accepted CB All formats All formats All formats
Storage Up to 1,000 Up to 1,500 Up to 750 books Up to 2,000
books books books
Extra Features Medium Medium Low High

Retail Easy

Market Entry
Medium
Hard
EXHIBIT 3: CB’S CUSTOMERS INFORMATION

What do you value the most about CB?
50%
TOTAL CUSTOMERS: 390,000
Avid Readers 22%

18%
13% 10%
Customer Quality of Variety of Promotions

Occasional Service products stock
18% Readers
Would you consider switching to an electronic reader?
96% 97% 97.4%
69%
Rare Readers No
Yes
4% 3% 2.6%
Avid Occasional Rare
Readers Readers Readers

Retail Easy

Market Entry
Medium
Hard
BRAINSTORMING 1 BRAINSTORMING 2
How would you launch this product? What other measure could our client implement in order to
increase revenues?
EXPECTED EXPECTED
BRAINSTORMING 1 BRAINSTORMING 2
In this question, the analysis should be carried out by focusing on the following In this question, the candidate should come up with additional measures to
main aspects: increase the current revenue streams. This measures should include:
• Segmentation: What users are we targeting? What could be our main target • Increase number of products. Maybe including technical books in our
considering the company’s strategy and client base? offer could increase the number of customers.
• Product: How can we highlight the strong aspects of our product? What do • Creation of a loyalty scheme to try to increase average spending per
the customers want and how can we meet their demands? customer.
• Price: Although the price has been set before, additional measures can be • Creation a referral program to increase our customer base.
explored, such as promotions, free gifts to great customers, etc. • Negotiate with e-reader supplier to include additional features.
• Promotion: How should this product be marketed? What promotions
should be used?
• Place: Through which channels should this reader be sold?

Retail Easy

Market Entry
Medium
Hard
RECOMMENDATION
What is your final recommendation for Classic Bookstore?
• The candidate should recommend to enter in this new market of electronic readers and e-books.
• Based on our calculations and projections, our client should expect a return of 342,600€ over 5 years from an initial investment of 150,000€.
• RISKS: 1) Calculations have been based on projections of market share and a survey given by the client. Any deviation from this data could affect the profitability of
the investment. 2) Similar book chains to CB could enter this market and reduce our client’s potential market share. 3) Cannibalization with our client’s current
business model could damage the company’s results and image.
• POTENTIAL NEXT STEPS: These risks could be mitigated by producing a deeper market analysis and carrying out further surveys among customers to have a more
accurate prediction of the market behavior. Different programs could be explored to increase customer loyalty and new customers acquisition.
Excellent candidate:
• A candidate who points out that taxes and time value of money have not been considered during the profitability analysis and this would reduce the profitability of
the investment.
• A candidate who mentions the lack of experience and knowledge of our client in this new business as part of the risks. This could lead to a reduction in customer
service, which is very valued by our CB’s clients.

Green Airlines
By Antonio Niemeyer (IESE MBA 2021)
Airlines Easy
Growth Strategy Medium
269
Airlines Easy
Green Airlines Growth Strategy

Investment Decision
Medium
Hard

Due to the recent bankruptcy of a major • An airport slot is a permission granted by the owner of an airport, which allows the grantee to
airline, the aviation authority of Brazil recently schedule a landing or departure at that airport during a specific time period
• Green airlines currently does not operate in the airport that is being discussed
opened an auction for landing and takeoff
• Green airlines currently only flies regional flights and has no plans to include international flights in its
slots in one of the country’s biggest airports. offerings
A slot is the right to land and depart from an • Green airlines currently does not have the necessary planes to operate the slot. Management will
airport during a given time period. need to lease 5 airplanes to operate the 10 slots
• The $100M that Green Airlines would have to pay is a one-off payment, due before operations start
Green Airlines, a small, regional airline • The main objective of the owner/CEO is financial gain
• Green Airlines can sell the slots, but only after five years of operation
operating in the North part of the country,
• If Green Airlines does not buy the slots, they will be sold to another airline
was offered 10 slots, for the total price of
$100M. If Green accepts to buy the slots, it
will have to operate them for at least 5 years.
The ow ner and CEO of Green Airlines
approached your firm looking for an
CASE GUIDANCE
In this case, the candidate will need to lead through directive questioning. Although the answer may
advice on w hether they should buy the seem straightforward, the case will force the candidate to analyze the problem from different
slots or not. perspectives; it will demand not only math and problem-solving skills, but also, creativity.
A strong candidate will quickly realize that in order to answer the questions of Green Airlines' CEO,
it will be necessary to understand the strategic fit and the financial implications of buying the slots.
After realizing that it does not make sense to buy the slots to operate them, the candidate should
explore alternative way to explore the opportunity that has emerged.

Airlines Easy

Investment Decision
Medium
Hard

The candidate should realize that this is an opportunity for Green Airlines to expand its business into one of the country’s main airport.
Suggested items-to-consider are:
Market - What’s the trend for the demand of flights in the airport’s region? What’s the profile of travelers (business or leisure)? Are the other airlines going through
financial difficulties? Is the industry suffering in general or was the bankruptcy a one-off event?
Competition - How many companies operate at this airport? Are the slots currently concentrated in the hands of a few companies or are they split among several
companies? Do Low Cost Carriers operate in the airport? What’s competitor’s price?
Revenues/Costs - What’s the expected number of passengers per day per slot (plane size, load factor, flights/day)? What’s the expected price per passenger? What are the
fixed costs? What are the variable costs?
Internal Capabilities - Does Green Airlines have the operational capabilities necessary to operate the slots (planes, overhead, sales system, suppliers)? Does operating in a
big airport demand a different strategy than operating small, regional airports? Does Green Airlines have the financial capabilities necessary to pay for the slots? If not, what
are its options?
Risks/Alternatives - Cultural issues of setting up operations in a different area. Are there other regions that might be more attractive?

Airlines Easy

Investment Decision
Medium
Hard
INTERVIEWER GUIDANCE – PART 1

If the candidate raises concerns related to competition, operational challenges or the aviation market in Brazil, hand Exhibit 1 (next page) to clarify these points.
KEY TAKEWAYS – EXHIBIT 1

• The candidate should notice that Green Airlines operates in a very distinct region of Brazil and is much smaller than the main players of the Sao Paulo region
• Buying the 5 planes would mean almost doubling Green Airlines fleet, and represents a significant strategic shift
• Airlines A and C are big players located in Sao Paulo, and they currently operate planes bigger than the other airlines, however, the price per ticket is lower (this may be
due to shorter flights and high competition)
• The average load factor in Sao Paulo is significantly higher than the average for Green Airlines
• If Green Airlines were to buy the slots, it would most likely need to have bigger planes and keep prices low

Airlines Easy

Investment Decision
Medium
Hard
EXHIBIT 1
Green
Current Operations Airlines A Airlines B Airlines C
Airlines
City Hub São Paulo Santa Catarina São Paulo Pará
G Total # of planes 100 80 70 6
Avg plane size (# seats) 300 200 300 100
Avg Load Factor (%) 80% 70% 80% 60%
Avg Ticket Price ($) 200 250 200 300
Airport selling slots
A Airlines A Main Hub
A B Airlines B Main Hub
B C C Airlines C Main Hub
G Green Airlines Main Hub

Airlines Easy

Investment Decision
Medium
Hard
REVENUE ANALYSIS
First step is to estimate the potential revenues of the slot operation. Ask the candidate what factors s/he would use to estimate the revenues. When asked, provide the
following information in the table:
Revenues – For operation of 10 slots
# of planes 5
REVENUE CALCULATION
Revenue per month = # of planes * # flights/plane * # seats * load factor * ticket price
flights / plane / month 50 flights
= 5 * 50 * 250 * 80% * 200 = 50,000 passengers * $200/passenger
Seats / plane 250 seats = $10 million/month
Average Load Factor (%) 80%
Average Ticket Price $ 200

Airlines Easy

Investment Decision
Medium
Hard
COST ANALYSIS
Second, the candidate should estimate the costs of operating the slots. Ask her/him what s/he believes to be the main costs of an airline (fuel, crew, maintenance,
insurance, leasing, fees, overhead, etc.). After discussing the main lines of cost, provide the following information in the table:
Costs – for operation of 10 slots

COST CALCULATION
Initial Investment $5M (to set up Fuel: $14k * 50 * 5 = $ 3,5M/month Expected Insight:
operations) Other Variable Costs: $4k * 50 * 5 = $ 1,0M/month The candidate should realize that
the expected operational result is
Fuel $14k per flight Salaries: $ 1,5M/month
-$5M in Year 1, and zero in the
Maintenance & Leasing: $400k * 5 = $ 2,0M/month following years for the 10 slots on
Other Variable Costs $4k per flight Insurance, Fees & Others: $ 2,0M/month sale.
Total Cost: $10M/month

Salaries $1,5M per month
Maintenance & Leasing $400k per Expected Profit:

plane/month
Year 1: -$5M + $120M - $120M = -$5M
Insurance, Fees & Others $2M per month Following years: $120M - $120M = $0

Airlines Easy

Investment Decision
Medium
Hard
ALTERNATIVE ANALYSIS
After concluding that the operating profit would be zero for the slots, ask the candidate what additional analyses s/he would make in order to decide whether to buy the
slot or not.
POTENTIAL ALTERNATIVES
The candidate should come up with potential alternatives:
Improve operational metrics
• Possibility to increase revenues (increase ticket price, include non-ticket revenues, offer packages, shuttle services, etc.)
• Possibility to reduce costs (use bigger planes to reduce fixed costs, negotiate lease terms, exclude food inflight, automatization of processes, change fuel supplier, etc.)
Buy slots and sell to other company
• Airlines A and Airlines C have their Hubs in Sao Paulo. The slots are probably worth a lot for them.
• How much is the market value of a Slot?

Airlines Easy

Investment Decision
Medium
Hard

After discussing the potential alternatives, state that management has already explored all alternative ways to improve the operational result, and the numbers
presented are already considering all operational improvements possible.
EXPECTED TAKEWAYS
If the candidate does not reach this solution by herself/himself, say that the slots are very valuable for the big airlines operating in the region.
The big airlines have operational advantages related to scale. They operate bigger planes (300 seats) than Green Airlines, so their potential revenues are higher (all other
assumptions remain the same, including costs).
Ask the candidate to calculate the value of the 10 slots for the big airlines, considering planes with 300 seats.
Expected Calculation:
New Revenue per month = 5 * 50 * 300 * 80% * 200 = $12M/month

New Monthly profit = $2 million/month
= $24 million/year

Airlines Easy

Investment Decision
Medium
Hard

Now that we know the operational results for a big company utilizing these 10 slots, ask the candidate to estimate the value of the slot for a big company such as Airlines
A. Provide the following information if requested
Discount Rate
Valuation of Slots
10% per year

CALCULATION
Expected calculation (assuming the Net Profit as a perpetuity):
Right to use perpetual
Value of slots = $24M / 10% = $240M
Expected Insight:
The candidate should identify that the 10 slots have a total value of approx. $ 240M for the big
airlines, and that the best choice is to buy the slots, operate them for 5 years at zero profit, and sell
them to a big airlines for a value between $105M and $240M.
RECOMMENDATION SAMPLE RECOMMENDATION

Ask the candidate her/his final recommendation The recommendation should be that Green Airlines buy the 10 slots, operate them for the
mandatory 5 years and then sell them at a potential profit of approx. $135M

Pipeline Oil Technology
By Roberto Carlos De Araujo (IESE MBA 2021)
Oil & Gas Easy

Operations Medium
Pricing Hard

Oil & Gas Easy
Pipeline Oil Technology Operations

Pricing
Medium
Hard

Minerva’s University Fluids Research Lab What is the market? such as rail car, barge and truck.
has discovered a more efficient way to - Mexico. How is the demand for crude oil?
transport crude petroleum oil inside How big is the market? - NOC sells all the crude oil it buys. See Exhibit 2 for the next
pipelines. This new technology can be - 4,800 km of pipeline. years’ forecast.
used in midstream applications where Who are the competitors and market share? Can NOC build more pipelines to substitute other means of
the oil is acquired from the extraction - National Oil Company (NOC) is the only player. However, the transportation?
plant and delivered to the refinery plant. market is open for the last two years. - Yes, it is an alternative. However, there are costs involved. See
The university invested $ 1,200M in this Which are the potential buyers? “4. Given Data - Alternative: Expand Pipeline Network”
project during the last 12 years. - Primarily, NOC. However, the other two prospects are How long does it take to implement this technology?
interested in entering the market. - Minerva’s University estimates that the technology would be
The new technology mixes water and oil Does the University have a patent? How long does it last? running in 100% of the pipelines in one year at $2,000 M
under certain conditions to reduce the - The University has already filed for a patent, which lasts for installation cost.
loss of energy, caused by the friction 20 years.
between the oil and the pipeline surface What is NOC pipelines current capacity?
while being transported. As a result, the - Full capacity. Surplus is transported by more expensive means
CASE GUIDANCE
transport between two given points gets
15% faster and the useful lifetime of the
pipelines increases by 20%.
Crude oil Value chain Midstream Business Model
Minerva’s University asked our help to Dow nstream: 1) Buy from the extractors (*)
determine the value at which they - Exploration - Extraction 2) Transport crude oil from the extractor to the refinery
should sell the technology. Midstream: 3) Sell to the refineries at $10 per barrel
- Transportation
Upstream: (*) Assume that Cost of transportation already
- Refinery - Marketing/Sales incorporates the buying price from the extractors.

Oil & Gas Easy

Pricing
Medium
Hard

Identify the main drivers of the pricing and evaluate the results by comparing to other investments.
A) PRICING:
Value = (1) Savings Costs of transportation + (2) Savings Cost of replacing pipelines – (3) Cost to implement
(1) Savings in Cost of transportation

- Increase in flow speed leads to increase in the pipeline’s delivery capacity
- Save costs of sales by switching from other means of transportation to pipelines
(2) Savings in Cost of replacing pipelines

- Save Costs by using the pipelines for longer, reducing the replacement
(3) Cost of installation

- $2,000 M
B) COMPARISON: Compare the value of the technology to other investments to validate the final pricing
(4) Research Investment (by Minerva’s University):

- $1,200 M (spent in the last 12 years by Minerva’s University)
(5) Alternative investment (for National Oil Company):

- Investment to expand the pipeline network from 2 M to 2.5 M barrels per day

Oil & Gas Easy

Pricing
Medium
Hard
REVENUE ANALYSIS DEMAND ANALYSIS

Hand over Exhibit 1 if the candidate asks for revenues Hand over Exhibit 2 if the candidate asks about the demand
and/or costs breakdown for the next years
PRICING CALCULATION
(1) Savings in cost of transportations (SCOT):
SCOT = (I) Sales for 20 years * (II) Savings in switching transportation = $162,000 M * 0.035 = $5,670 M ~ $6,000 M in 20 years (or $300 M / year)
(I) Sales for 20 years = Chart area (trapezoid) * 360 days * price per barrel: = [(2+2.5) * (20) x (1/2)] * 360 * 10 = $162,000 M
(II) Savings in switching transportation = % increase pipeline use * proportional savings = 10% * 0.35 = 0.035
Switching from truck (5%) and rail (5%) to pipeline: % increase pipeline use = 15% * 70% = 10.5% ~ 10%
Proportional Savings:= [% truck * (cost truck – cost pipeline) + % rail * (cost rail – cost pipeline)] = 5% * ($6 - $2) + 5% * ($5 - $2) = 0.35
TIP: ROUND OFF NUMBERS

Suggest the candidate to round off numbers to facilitate easier calculations. Some suggestions are underlined in the case. Nonetheless, strong candidates figure out these
opportunities by themselves.

Oil & Gas Easy

Pricing
Medium
Hard
EXHIBIT 1
Income Statement
+ Sales $7,200 M
- Cost of transportation (*) $1,980 M
- Cost of replacing pipelines $1,000 M
- Other operating costs (**) $3,500 M Table 1: Income statement for Year 0,
assuming sales of 2M barrels per day.
Operating profit $720 M
Means Cost Barrels
Pipeline $2 per barrel 70%
Truck $6 per barrel 5%
Barge $3 per barrel 10% Table 2: Cost of Sales breakdown

per means of transportation
Rail $5 per barrel 15%
(*) Cost of transportation already includes the buying price from the extractors.
(**) Assume that Other Operating Costs do not change over the years.

Oil & Gas Easy

Pricing
Medium
Hard
EXHIBIT 2
Crude oil demand forecast
(*) Demand in millions

2.5
2
Barrels per day
1.5
1
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Year
(*) In a given year, assume that the demand per day is the same for all the 360 days.

Oil & Gas Easy

Pricing
Medium
Hard
PRICING CALCULATION GIVEN DATA:

(2) Savings in Cost of replacing pipelines (SCRP): - Cost of replacing pipelines: $1,000M per year
= Cost of replacing pipelines per year * 20 years * (1 - new lifetime/current lifetime) - Lifetime of regular pipeline: 5 years
= $1,000M * 20 * [1 - 4/5 years] = $4,000M in 20 years (or $200M per year)
ALTERNATIVE ANALYSIS GIVEN DATA:

Expand network pipeline - Additional capacity: 50,000 barrels per day
Investment to expand the pipeline network: - Time to implement: 2 years
= (Additional capacity in 20 years / Additional Capacity) * cost to implement - Cost per additional capacity = $ 700 M
= (2.5 M – 2M) / 0.05 M * $700 M = $7,000 M

Oil & Gas Easy

Pricing
Medium
Hard
COMPARISON ANALYSIS
PRICING $8,000 M INVESTMENTS
(+) Savings in Cost of transportation $6,000 M (-) Research Investment

(University) $1,200 M
(+) Savings in Cost of replacing
$4,000 M
pipelines (-) Alternative investment
(National Oil Company) $7,000 M
(-) Cost of installation $2,000 M
NEGOTIATION
The University can recover its investment by selling the technology for any price over $1,200 M. Given the estimated savings and cost of installation, NOC will pay less
than $ 8,000 M to guarantee profits/savings.
Alternatively, NOC can construct its own pipeline network for a total investment of $7,000 M. Then, it is better to buy the technology for $ 7,000 or less than to go forth
with this alternative investment. Note that the alternative investment is limited by additional 50,000 barrels/day capacity in two years, while the new technology can be
put in operation in just one year.
Therefore, a reasonable price for selling this technology would be between $1,200 M and $7,000 M.

Oil & Gas Easy

Pricing
Medium
Hard
RECOMMENDATION
What would be your final recommendation to Minerva’s University?
The general recommendation is open. One of the possibilities is to sell the new technology for a price of $1,500 M plus a 30% participation in the additional revenue while
the University holds the patent (40% of $10,000M = $3,000M in 20 years, disregarding cost of installation). There are three reasons that support this proposal:
1) Cost savings by increasing the volume of crude oil transported in pipelines. According to the calculations, $300 M per year (around 40% of the current Operating
Profits)
2) The improvement in the pipeline lifetime is also relevant accounting for $200 M per year (around 25% to 30% of the current Operating Profits)
3) The alternative of expanding the pipeline network is a higher investment than the cost savings generated by the new technology. Besides that, expanding the
pipelines is limited by additional 50,000 barrels/day in two years, while the new technology can be put in operation in just one year.
A great candidate would also briefly discuss any risks or next steps:
Next steps:
- Verify calculations with NOC’s calculations/data to validate
Main risks / sensitive assumptions:
the assumptions
- Delay in installation of the new technology
- Define a negotiation strategy based on the
- Limitation in reaching some regions, since it can be done only by a specific means of transportation
calculations/assumptions
- High investment ($2,000M). Options: cash surplus, bank loan, increase in equity
- If the negotiation fails, look for other prospective buyers
- Crude oil price fluctuation -> Use future contracts to guarantee buying and selling prices
- Demand fluctuations because of crisis or other external factor

Nica Productions
By Alfonso Tomás Durandeu (IESE MBA 2021)
Media & Entertainment Easy

Operations Cost Hard

Nica Productions Profitability

Operations Cost
Medium
Hard

Nica Productions is an American Media • There is no specific profitability goal
company that is trying to figure out its next • The company is known worldwide, with access to top star directors, actors and technical
project. This company has an extensive staff
experience producing series and movies • It has not budget limitation
for all types of audiences and has got many
awards doing so. This company has two • Both alternatives look for a worldwide reach but target different type of customers
alternatives: to produce a series for a • Production of any alternative will last one year
streaming company or a movie to be • There is no alternative project
projected in cinemas worldwide.
• The main source of revenue of both projects depends on audience
Producing media content implies big
investments and low certainty about CASE GUIDANCE
potential incomes, which depends on
This is a quantitative case that requires the candidate to estimate the potential cashflow of
many factors; for that reason, our client
different alternatives in order to get the NPV and decide the best option for the client.
has hired us to help her decide which is
the best alternative for her. The candidate will need to ask for additional information that is necessary to solve the
problem, rather than relying on the interviewer to dispense it.
Especially for less finance-read candidates, you may have to help nudge trough the math and
formulae.


Operations Cost
Medium
Hard

The candidate should express that the company will pursue the project that generates the higher positive profits and show that in his/her
Framework.
• A good candidate will take into consideration uncertainties related to production and revenues streams and express the intention to estimate NPV
of each project.
• Other aspects to bear in mind are competition, market trends, company’s strategy, etc.
If asked for information about REVENUES and COST, make him/her BRAINSTORM about it.
• A good candidate would understand that revenues come not only from tickets or broadcasting royalties but also from merchandising, games,
DVD/Blu-rays, etc. In terms of cost, the candidate should mention the basics: director, actors, production, marketing, etc.


Operations Cost
Medium
Hard
PROJECT ALTERNATIVES ANALYSIS – MOVIE

The company is not sure about which type of movie they want to produce and if it will be able to hire the director and actors for the desired
alternative. However it was able to assign probabilities for each scenario. Income will depend on the size of audience movie attracts, which further
depends on the critics received. Which project (movie or series) should our client choose? (Show Exhibit 1).
ANALYSIS TAKEWAYS - MOVIE

In order to estimate the NPV of this alternative, the candidate should calculate the corresponding Cash Flows and request for a Discount Rate (20%).
The investment are made at the beginning of the project and incomes are received at the end of year 1 (Solution in the following slide).

- read the note to get the information about how much money the company receives from Cinema chains
- be structured and present the calculation with clarity (ideally, in the form of a decision tree)


Operations Cost
Medium
Hard
ANALYSIS CALCULATION - MOVIE

TOTAL AUDIENCE (TA):
TA = [ (AudienceGood * %Good ) + (AudienceBad * %Bad) ] (M USD) ALTERNATIVE 1 ALTERNATIVE 2
TA NOLAN = [ (600M * 70%) + (400M * 30%)] = [ 420M + 120M ] = 540M Year 0 1 0 1
TA BAY = [ (400M * 80%) + (200M * 20%)] = [ 320M + 40M ] = 360M
Investment -150 0 -100 0
INCOME:
1ST YEAR (Year 0) Income 0 540 0 360
There is no income Cash Flow -150 540 -100 360
2ND YEAR (Year 1) NPV -150 450 -100 300
Income = Total Audience * Ticket Price * %Commission
Income NOLAN = 540M * 10 USD/t * 10% = 540M USD Accumulated NPV 300 200
Income BAY = 360M * 10 USD/t * 10% = 360M USD
INVESTMENT:
Each alternative has its own cost structure (See exhibit 2)
ALTENATIVE 1 ALTERNATIVE 2
GOOD BAD GOOD BAD ALTERNATIVE 1 ALTERNATIVE 2
Probability (%) 70% 30% 80% 20% Probability (%) 60% 40%
Audience (M) 600 400 400 200 NPV (M USD) 300 200
Contribution (M) 420 120 320 40 Contribution (M) 180 80
Average audience 540 360 Average NPV (M USD) 260 -


Operations Cost
Medium
Hard
EXHIBIT 1: MOVIES ALTERNATIVES

Alternative 1 Alternative 2
Target Audience Teenagers and Young Adults Kids and Teenagers
Probability (%) 60% 40%
Director Christopher Nolan 25M USD Michael Bay 10M USD
Main Actor Tom Hardy 50M USD Mark Walhberg 25M USD
Support Actor Michael Cain 25M USD Tyrese Gibson 5M USD
Others Production & Marketing 50M USD Production & Marketing 60M USD
Critics Critics
Good 70% chance of getting 600M audience 80% chance of getting 400M audience
Bad 30% chance of getting 400M audience 20% chance of getting 200M audience
Note: Filmmakers receive as income 10% of the ticket sales (10 USD/ticket);


Operations Cost
Medium
Hard
PROJECT ALTERNATIVES ANALYSIS - SERIES

The company already has the script for a potential Series, and in case of choosing this alternative, it will receive an upfront payment from the
Streaming company. Income will be based on the Audience per episode in the first year (Show Exhibit 2).
ANALYSIS TAKEWAYS - SERIES

In order to estimate the NPV of this alternative, the candidate should calculate the corresponding Cash Flows and request for a Discount Rate (20%).
The investment is made at the beginning of the project and incomes are received at the end of year 1 (Solution in the following slide)

- understand that the Script expense (10M USD) is a sunk cost and it should not be taken into consideration to make the decision
- be structured and present the calculation with clarity (ideally, in the form of a decision tree)
If the candidate realizes about the sunk cost, she/he will choose to produce a Series. If not, make him/her identify the mistake
NPV NPV (w ith sunk cost)
Movies 260 260
Series 270 260


Operations Cost
Medium
Hard
ANALYSIS CALCULATION - SERIES

TOTAL AUDIENCE (TA):
TA = [ (AudienceGood * %Good ) + (AudienceMedium * %Medium) + (AudienceBad * %Bad) ] * GOOD MEDIUM BAD
#Episodes
TA = [ (100M * 30%) + (70M * 40%) + (40M * 30%)] * 10 = [ 30M + 28M + 12M ] * 10 = 700 M Probability (%) 30% 40% 30%
INCOME:
Audience (M) 100 70 40
1ST YEAR (Year 0)
The income in the first year is the Upfront = 20M USD Contribution (M) 30 28 12
2ND YEAR (Year 1)
Income = Total Audience * Income per episode (PMV) = 700M * 600k USD = 420M USD
INVESTMENT:
If the company chooses this alternative, it should make an additional Investment of 100M USD
(The Script is a sunk cost)
(M USD) SERIES
Year 0 1
Investment --100 0
ADDITIONAL DATA INVESTMENT (USD)
Income 20 420
Upfront (M USD) 20 Cost (M USD) 100
Cash Flow --80 420
# episodes 10
Upfront income (M USD) 20 NPV --80 350
Income per episode
600,000 Investment (M USD) 80
(PMV) (USD) Accumulated NPV 270 -


Operations Cost
Medium
Hard
EXHIBIT 2: SERIES
EXPENSES ADDITIONAL DATA
Script (already bought) 10 Upfront income (M USD) 20
Actors 60 # episodes 10
Production 40 Income per episode (PMV) 600,000
AUDIENCE PER
AUDIENCE LEVEL PROBABILITY
EPISODE (M USD)
High 100 30%
Medium 70 40%
Bad 40 30%
PMV: per million views


Operations Cost
Medium
Hard
PROJECT ALTERNATIVES ANALYSIS – ADDITIONAL INFO

Would your decision change with this new information? (Show Exhibit 3)
TAKEWAYS – EXHBIT 3
Show the candidate Exhibit 3, which contains an additional cash flow for Michael Bay movie from merchandising and other incomes.
The candidate should identify the tendency in the cashflow (CAGR -10%) and calculate a perpetuity.
Adding those Cash Flows to Alternative 2 will affect the NPV.
As a result of this information, the final decision will change.
ALTERNATIVE 1 ALTERNATIVE 2
PERPETUITY
Probability (%) 60% 40%
Initial Cash Flow (M USD) 20
NPV (M USD) 300 266.6
Growth (%) -10%
Contribution (M) 180 107
Discount Rate (%) 20%
Average NPV (M US) 287 -
NPV (M US) 66.7


Operations Cost
Medium
Hard
EXHIBIT 3 – MOVIES ALTERNATIVE 2

Cash Flow (M USD)
20,00
20
18,00
16,20
15 14,58
13,12
11,81
10,63
10 9,57
8,61
7,75
5 4,58
2,70
1,60
0,00
0
0 1 2 3 4 5 6 7 8 9 10 15 20 25
Year


Operations Cost
Medium
Hard
PROJECT ALTERNATIVES ANALYSIS – OTHER FACTORS

Which other factor would you take into consideration?
EXPECTED CONSIDERATION
The candidate should quickly identify the uncertainty and our capability to assess it as the main risk.
Factors that can influence:
• Production is not finished on time and target launch is missed
• The launch of a good movie made by a competitor
• An economic crisis that affects the consumption
• Others
This question is to test the candidate’s business sense and creativity. There is room for the candidate to discuss other factors, including other
revenue streams and intangible factors, always justifying his/her answer.


Operations Cost
Medium
Hard
RECOMMENDATION
Great, our client is coming and will request a recommendation.
RECOMMENDATION – SUGGESTION
The candidate should be concise and structured, without mentioning topics that were not discussed.
It is important to highlight the uncertainty of the decision process and he/she should suggest potential ways to reduce it.

Cowbon Emissions
By Emily Hinton (IESE MBA 2021)
Agriculture Easy
Sustainability Medium
Operations Hard

Agriculture Easy
Cowbon Emissions Sustainability

Operations
Medium
Hard

Our client is a major milk producer in New • MIC produces approximately 100% of New Cowland’s milk supply
Cowland, Milking it Co., MIC. New • MIC does not have plans for expansion, but reducing volumes is not an option
Cowland has recently introduced a law • They only produce milk and have no plans to diversify
that means MIC has to reduce its GHG • Budget for this project is $750m/year for the next five years (for perspective, current revenues are
emissions by 45% of 2019 levels within $15billion)
the next five years or face being shut • MIC owns the entire production chain – from farms, production and transport, they sell to a variety of
down or heavily fined. They currently clients
produce 20% of New Cowland’s GHG The candidate might ask what the breakdown of where GHG comes from within the business, this is shown in
emissions. Exhibit 1
• 5% of their market is local, the rest is foreign
The CSO has hired us to figure out a way • Only need to reduce GHG directly produced by MIC
to reach this target.
CASE GUIDANCE
This case is designed to test brainstorming, business decision-making skills and logic. It will help candidates
wanting to practice market sizing and working on unconventional problems. For calculations ignore the time
value of money.
It is a long case designed for advanced candidates; some aspects can be removed for the sake of time – these
are clearly marked.
Interviewer guidance has been provided at various stages.

Agriculture Easy

Operations
Medium
Hard
INTERVIEWER GUIDANCE - STRUCTURE

A good framework would touch on:
• Different ideas to reduce GHG emissions in the different segments of • Non-financial implications – PR, risks (e.g., change in government, a
the business (farming, processing, transportation, overheads, etc.) backlash from farmers)
• Ability to implement changes The candidate should lead the case towards understanding the current
• Financial implications breakdown of GHG emissions – if not, the interviewer should gently nudge
toward this path.
GHG EMISSIONS ANALYSIS EXHIBIT 1 TAKEAWAYS

• GHG emissions have been increasing over the last three years with farming
The candidate should be presented with Exhibit 1 if s/he asks about being the key driver
the breakdown of GHG in each business segment. Candidate should
be told that MIC has already taken measures to reduce Overheads • Farming is the largest emitter followed by production
Emissions and MIC believes that there is no further that can be done • From farming, cows are by far the largest emitter producing 63% of 2019’s
to reduce these. emissions – this would be the key thing to look into first as it can make the
biggest difference (it is the only value that is over 50% of the emissions by
itself)
• Processing is the second biggest emitter so that should be focused on next
(20% of total emissions)
The candidate should identify cows as the first logical step to explore in
reducing emissions.
Agriculture Easy

Operations
Medium
Hard
EXHIBIT 1 - TRENDS OF GHG EMISSIONS OF MIC

Total GHG emissions (millions of tons) 5,0
19,5 20,0
19,0 5%
5% 80% Processing
Overheads 10%
25% 25% 20% Transportation
Production 25% Production (2019)
14,0
70% 70%
Farming 65%
90% Cows
10% Other
2017 2018 2019 Farming (2019)

Agriculture Easy

Operations
Medium
Hard
COW EMISSION ANALYSIS ESTIMATION DATA

There is a new breed of cow that MIC is interested in to replace their Provide only if requested:
current herd. All characteristics are the same as the current herd, but • Population of New Cowland: 5 million
they produce 33% less GHG emissions.
• Milk produced per cow: 10L/days
As MIC owns farms all over New Cowland, they want us to approximate
how many cows they have in total. • Number of days in a year: 300
• Domestic market: 5% of sales
• Domestic market share: 100%
• Average milk consumption per person: 150L/year
SUGGESTED CALCULATION
** if the interview is progressing slowly, skip this estimation and give the number Total annual domestic consumption:
of cows of 5 million, then move straight to part 2 after reading the prompt [Milk consumption per person]*[population of NZ]
below** = 750 million L/year
Cows required for domestic consumption:
This is an estimation problem – the candidate should recognize the need to size the [Annual dom. Cons.]/([Daily pro./cow]*[days in a year])
herd using suitable assumptions, provide the estimation data only if the candidate = 250,000 cows
asks. Total cows:
[domestics cows]/[% of market]
= 5 million cows

Agriculture Easy

Operations
Medium
Hard
COW EMISSION ANALYSIS

Knowing that there are 5 million cows in the MIC herd and the average life of a dairy cow is 5 years. Calculate the total cost of replacing the herd
and the total emissions saved from this replacement.
• The old breed cost $2000 and the new breed costs $2500 to purchase
• The old breed emits 2.5 ton/year and the new breed emits 33% less GHG
SUGGESTED CALCULATION & TAKEAWAYS

YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
Cost [1 million cows] [1 million cows] [1 million cows] [1 million cows] [1 million cows]
*[$500/cow] *[$500/cow] *[$500/cow] *[$500/cow] *[$500/cow]
= $500 million = $500 million = $500 million = $500 million = $500 million
GHG ton reduction [1 million cows]* [2 million cows]* [3 million cows]* [4 million cows]* [5 million cows]*
[0.33*2.5t] [0.33*2.5t] [0.33*2.5t] [0.33*2.5t] [0.33*2.5t]
Or Or Or Or Or
[12.6million tons]* [12.6million tons]* [12.6million tons]* [12.6million tons]* [12.6million tons]*
[33%]/[5/1] [33%]/[5/2] [33%]/[5/3] [33%]/[5/4] [33%]/[5/5]
= 0.825 mil tons = 1.65 mil tons = 2.475 mil tons = 3.3 million tons = 4.125 mil tons
% GHG reduction 4.125% 8.25% 12.375% 16.5% 20.625% (~21%)
Candidate can calculate only Year 5 as this is the final number required but must check that the annual budget is not exceeded.
Candidate should conclude that this is approximately halfway to our goal, spending 67% of our budget.
Next should look at reducing emissions from production.

Agriculture Easy

Operations
Medium
Hard
PRODUCTION EMSSIONS ANALYSIS

What are some ways that the GHG emissions can be reduced during the production phase?
BRAINSTROMING SAMPLE
** if the interview is progressing slowly, skip this brainstorming and move straight to part 2 after reading prompt 2 on this page**
This brainstorm is a chance for the candidate to be creative. No structure is superior but looking at options split between processes and transportation is one way to go. Keep
pushing until you are satisfied with the ideas generated.
PROCESSES TRANSPORTATION
Alternative power sources (all renewable) Larger trucks (i.e. less GHG/L transported)
Carbon capture of emissions Electric vehicles
More energy-efficient processes Shorter routes of transportation
R&D into different ways to process milk Regular maintenance to increase efficiency
Outsource production Outsource transportation
Shutdown inefficient plants

Agriculture Easy

Operations
Medium
Hard
PRODUCTION EMSSIONS ANALYSIS

MIC has been looking into different ways to reduce GHG emissions in both processes and transportation and they have identified these options
(show Exhibit 2).
CALCULATION AND TAKEAWAYS – EXHIBIT 2

This exhibit is intentionally challenging to understand, point
the candidate towards the footnotes if they are struggling to TOTAL GHG
COST PER TOTAL COST GHG REDUCTION
understand the meaning of each column. REDUCTION (5
YEAR (5 YEARS) PER YEAR
YEARS)
Key insights from Exhibit 2:
Renewable $150 [$150m] * [25%]*[80%]*[70%] [2.8%] * [5 years]
• Conversion to renewable energy has the largest emissions
energy million [5years] *[20%]= 2.8% (0.56 = 14% (2.8 mil
savings (potential reduction of 14% of GHG) and can be
source =$750 million mil tons) tons)
completely replaced within the 5-year period
• Replacing sterilizing units will only reduce emissions by 4% New $100 [$100m] * [25%]*[80%]*[20%] [0.2%] * [5 years]
total and will take 20 years to carry out Sterilizing million [5years] *[5%]= 0.2% (0.04 = 0.8% (0.2 mil
Process =$500 million mil tons) tons)
• The other processes are also not cost-effective and should
be written off straight away Transport $50 [$50m] * [25%]*[20%]*[100% [2.8%] * [5 years]
electrification million [5years] ]*[20%]= 1% (0.2 = 5% (1 mil tons)
• Transportation is a cost-effective method of GHG reduction
=$250 million mil tons)
which can be completed within 5 years and will reduce
emissions by 5% total
The candidate should conclude that conversion to renewable energy and electrifying the transport
fleet will be the most efficient costing $200m/year and reducing the GHG emissions by 19% in total
by year 5

Agriculture Easy

Operations
Medium
Hard
EXHIBIT 2 - ALTERNATIVES TO REDUCE GHG EMISSIONS OF MIC

PROPOSED TOTAL %
MAX. % ANNUAL UNIT ANNUAL TOTAL COST
CHANGE TO REDUCTION OF # OF UNITS 2
REPLACEMENT 3 OF MAX REPLACEMENT4
PRODUCTION EMISSIONS 1
Renewable energy 70% 10 20% $150m

source
New Sterilizing 20% 20 5% $100m

Process
Process
New Packaging 2% 50 20% $50m
process + material
Other 0.1% 500 10% $1m
Transport Electrification of 100% 500 20% $50m

fleet
1 % of reduction in GHG emissions that the process or transportation will emit, based on the current emissions shown in Exhibit 1, once 100% of the units have been replaced
2 number of units MIC currently owns that can be replaced in a 1:1 ratio with the new alternatives
3 % of units that can be replaced annually (due to end of life requirements) e.g. a total of 2 units can be replaced per year for ‘renewable energy source’
4 How much it will cost MIC annually to replace the maximum allowable units e.g. will cost MIC $150m to replace 2 units of ‘renewable energy source’ per year

Agriculture Easy

Operations
Medium
Hard
RECOMMENDATION
Great, the CSO is about to join us, can you please provide her with a brief summary of what we have discussed today?
• We should replace the herd with the new breed to reduce emissions by 21% in year 5, costing $2.5 billion
• We should convert to renewable energy and replace our transport fleet reducing our emissions by 19% in year 5, costing $1 billion
• These actions will get us 90% towards our target of 45% reduction
• We have $50m/year of our budget left to figure out the last 10% which could include.... (any ideas that you have discussed e.g., carbon credits, hiring a lawyer to reduce
potential fines, other emission reductions)
A great candidate would also briefly discuss any risks or next steps:
• Adaption to new technology
• Chance new breed has challenges
• Views from employees and farmers about changes
• Chance of lobbying government so the law is reversed
• Next steps: contact breeders to make sure they have enough cows, look for other reduction methods, etc.

OncoCo
CB21
PE / Pharmaceuticals Easy
M&A Hard

OncoCo M&A Hard

• PE target: EBITDA margin > 20%
A private equity client owns a specialized • Liquid Morphine: Used to treat severe pain, for example after an operation or a serious injury, or pain from
pharma manufacturer called OncoCo which cancer or a heart attack. Morphine liquid is fast acting and used for pain which is expected to last for a
focuses on cancer treatments. OncoCo is not short time, e.g. when you start taking other forms of morphine to help find the right dose. Usually
only profitable, but also experienced steady morphine is prescribed by pain specialists
growth in the past years. Hence, the PE fund • Commercial rights means that OncoCo will be able to produce and sell the product under its name. Often
was surprised when the management board pharma companies purchase existing stocks and have the opportunity to either renegotiate the contracts
of OncoCo stated that they expect declining with raw material suppliers or continue under existing conditions
profits in the future. OncoCo’s management • Declining revenue: expect a drop in revenues of 100m€
board has also suggested, to cushion the • BM: OncoCo’s income stems from one drug to treat a very niche, late stage cancer
decline with the acquisition of an additional • Price (treatment costs) per year: 10k€
asset. In particular, OncoCo’s board received • Location: EU
the opportunity to purchase the commercial
rights of liquid morphine. CASE GUIDANCE
The PE fund has asked us to figure out why a • Ask value added question: Its is a complex industry, candidates might feel tempted to ask unimportant
decline is expected and whether they questions because they don’t know the industry
should move forward with the acquisition. • Don’t boil the ocean: Despite being a PE case, we don’t get into the business model of the PE itself and
despite being an M&A case, we focus only on the target product (asset in pharma language).
• Acquisition price is irrelevant in this case
• Case duration: ~35 mins
OncoCo M&A Hard
SAMPLE STRUCTURE
The main focus of the case is the acquisition,
hence the structure should emphasize the
Total yearly revenue of the
deal over the decline in revenue (or even target asset
exclude). Creating two structures to answer
both business questions is totally fine as long Can the PE achieve >20%
as the M&A structure is more thorough. EBITDA margin Total yearly costs of the
Either way, both questions have to get target asset
answered. Ideally, the candidate starts with
the OncoCo’s current business first before Should OncoCo acquire
diving into the acquisition. the commercial rights for Strategic fit of the
acquisition
liquid morphine?
Simplicity and specificity wins!
Does OncoCo have the
Can OncoCo mitigate the capacity and capability to
potential risks produce and sell the new
drug
Are there less risky

opportunities to pursue

OncoCo M&A Hard
Profit analysis of OncoCo

Begin by investigating why profits are expected to fall and hand out Exhibit 1: profit analysis OncoCo. The candidate can spend a few moments to
digest the information but is expected to comment on the insights fairly quickly as all the math can be done mentally.
Expected takeaways from Exhibit 1

A good candidate will mention:
• Expected drop in revenue in 2022? 100m€, loss of 2/3
• Price of the drug? 10k€
• Profit in 2020? 40m€
A very good candidate will mention:

• EBITDA margin is not only >20% (26.7%) but also very high in general in 2020 & 2021
• However, margin drops to 0% in 2022
• Possible reasons for the expected price drop?
• E.g. new entrant of a better performing drug, no longer owning the commercial rights to sell it in certain geographies
• Real answer: patent expiration and with that entry of generics
• Once the candidate understood why the decline is happening, he / she should suggest to look into the acquisition next, e.g. getting a better
understanding of the morphine market

OncoCo M&A Hard
EXHIBIT 1 – Profit analysis

OncoCo profit development from 2018 – 2022 [in M€]
Forecast
160 M€ 150 150 30.0%
140 M€
125 25.0%
120 M€ 110 110
100 20.0%
100 M€ 95
80 Revenues
80 M€ 15.0%
Total Costs
60 M€ 50 50 EBITDA Margin
10.0%
40 M€
5.0%
20 M€
0 M€ 0.0%
2018 2019 2020 2021 2022
Volumes
10 12.5 15 15 5
[in K]

OncoCo M&A Hard
Market analysis of liquid morphine

Continue with the analysis of the morphine market and hand out Exhibit 2: morphine market. The candidate is expected to request the missing
information proactively. This slide has some more complicated calculations, hence the candidate can spend more time on the math part. Ensure that
the candidate receives all the quantitative information mentioned and bolded below (ask questions if the candidate does not pro-actively requests it).

• Some data is missing, ideally the candidate asks for the total revenue of the morphine market. 6,25bn€
• Quantify and comment on the fact that liquid morphine is a rather small part of the morphine market. 8% (500m€)
• The target assets represents the category leader with a share of 25 % of the liquid morphine market (125m€ revenue)

• Comment more on the fact that the target is category leader: Most likely originator & the strongest brand and hence can influence the market
• Asks for the average EBITDA margin of the industry: 20%
• With this information, the candidate should directly mention that it meet’s the PE fund’s target margin of 20%, but also highlight that profit
is lower than the profit from OncoCo’s current product (25m€, 15m€ less)
• An outstanding candidate will calculate the market share required to achieve the same profit (40m€), suggested approach:
• Required revenues: 40m€ / 0.2 margin = 200m€ revenues
• Required market share: (0.25+x)500=200 → x = 0.15, required market share = 40%
• The candidate should finish by arguing whether achieving 40% is possible. There are good reasons for and against it, e.g.: Adding 15% more
market share is doable as target asset is the category leader and there seem to be many very small players that could be consolidated.
• Either way, the candidate should request more details on the target asset’s performance or company
OncoCo M&A Hard
EXHIBIT 2 – Morphine market

Morphine market by formulation in 2020 [in % of sales] Liquid Morphine market in 2020 [in % of sales]
40%
25%
4%
8%
55%
10%
16%
32% 10%
Intravenous Liquid Injection Capsules Tablet Target Asset Drug A Drug B Others

OncoCo M&A Hard
Profit analysis of target asset

The candidate might wants to rush and analyze competition or other external factors. However, we still know very little about the actual target and
should investigate further, hand out Exhibit 3: profit analysis of target asset. The chart looks very similar to the first exhibit, but the difficulty here is to
identify the differences correctly (and not fall for the traps).

• Profit has decreased after 2017, but it looks like the company was able to get back on track and previous performance
• Since we talked about price before, the candidate should calculate it here too. Exhibit 1 and 3 show [volumes in K] but given the figures in exhibit
3 are in thousands, a careless candidate might ignore it and compute 10k as result. Correct answer, 10€

• Suggestions as to why profit decreases and identifies possible explanations for the decrease in revenues and increase in costs:
• Revenues down: competitor entry, stock-outs, scandal that led to bad perception of product
• Costs up: production issues, investments in new technology directly related to product, legal costs
• Correct Answer: Opioid crisis -> physicians used morphine much less (revenues down) and had to settle several legal lawsuits (costs up)
• However, morphine sales recovered as it is a basic medicine, but manufacturers has to stick to tighter guidelines (Fixed costs up)
• Realize that this is a mass product which requires a total different business model than OncoCo’s existing ones
• The candidate should end this slide by computing the EBITDA margin (32%) and highlight that: (i) it is higher than market average, presumably
based on higher price since originator or economies of scale, (ii) margin meets the PE funds requirements
• Despite meeting PE fund’s target margin, the candidate should suggest to assess more qualitative aspects of the acquisition
OncoCo M&A Hard
EXHIBIT 3 – Profit analysis target asset

Profit development of target asset from 2016 – 2022 [in M€] Forecast
160 M€ 150
140 M€
125 125 125 125
120 M€ 110
100
100 M€
82 85 85 85
80
80 M€ Revenues
Total Costs
60 M€ 50
45
40 M€
20 M€
0 M€
2016 2017 2018 2019 2020 2021 2022
Volumes
12,500 15,000 10,000 11,000 12,500 12,500 12,500
[in K]

OncoCo M&A Hard
What other aspects than the EBITDA margin should the PE fund consider, before acquiring the commercial rights? Ideally, this part is covered by the
rest of the candidates framework and hence the candidate can quickly come up with a structure. Either way, a very good candidate will be able to
structure the points and have a meaningful discussion with the interviewer about the pros and cons of each point. The discussions does not need to
capture all points mentioned below and should not last longer than 5 minutes.
SAMPLE ANSWERS
Strategic Operational Other opportunities
Is pain medicine a strategic reasonable addition to the Is OncoCo able to serve a mass market? Lawsuit to extend patent
portfolio? + ”Simple” product that does not require a lot of + Requires little “extra” effort since it can be outsourced
+ Diversification marketing efforts - High uncertainty until lawsuit is settled (which probably
- Different business model - Likely a need to build up production facilities and sales will take some time)
team from scratch
Does OncoCo want to get associated with Opioids and Are there any synergies in our production facility we can Change formulation
their negative reputation? use to reduce costs? + Allows to extend patent for another 5-10 years
+ Morphine has the “best” reputation + Lots of spare capacity starting 2022 - Likely too late as R&D phase has to be initiated
- Can harm the other product as well, image issues - Totally different production process and magnitude
Switch from specialized product with few patients to Acquire another asset
mass products with many patients + Identify a more similar asset
+ Enter a larger market - Assessment has to be repeated
- Management might not know how to play in that
market
OncoCo M&A Hard
We have the Zoom call with the PE fund in 3 minutes, could you please present our findings?
There are good reasons for and against an acquisition. A good answer answers the initial questions first and then presents the findings:
[Recommendation] OncoCo’s board expects a 2/3 drop in revenues because of the loss of exclusivity of its only product and suggests to acquire the
commercial rights of liquid morphine to cushion the profit decline. However, despite the attractive EBITDA margin of 32%, we do not recommend to
proceed with the acquisition as the risks outweigh the potential financial benefits.
[Risks] In particular, we think that OncoCo’s current business model is in stark contrast to the ones of the target asset, making it very questionable
whether the PE fund will be able to achieve the financial return without heavy investments in their production facilities and sales team. Further, it has
to factor in the negative reputation of Opioids that might affect OncoCo’s enterprise value in the long term.
[Next steps] We propose to look for another asset that fits better to OncoCo’s current portfolio, potentially within the same therapeutic area
(Oncology).

Investment Bank Spin-off
By CB16

Investment Bank Hard

Investment Bank Spin-off Investment Bank Hard

• The main reason behind the VP’s request is financial – i.e. end goal is additional profits for the IB
Your client is a leading retail bank in a South
• IBs operate on a fee-based model. They are remunerated as a percentage of the total transaction in which
American country, with over 3,000 branches they facilitated for the company (e.g. 2% fee of a USD 100M transaction means USD 2M in revenues for the IB)
across the country. In addition to the retail
• She suspects that even though being attached to the retail bank provides benefits (e.g. shared systems and
business, the bank also has an Investment
services, access to clients), the IB unit is unable to tap additional sources of revenues (e.g. through Joint
Banking (IB) unit, which acts as an Ventures with other Investment Banks)
intermediary and/or advisor when
• She is also worried about the bureaucracy imposed by the conglomerate, which slows down relevant (and
corporations want to engage in complex sometimes urgent) decisions for the IB unit
financial transactions (for example M&A,
• For simplicity, you can assume that there is no discount rate, time value of money and required NPV
raising capital, initial public offering (IPO),
calculations for the case
etc.).
• Considerations regarding the momentum of the Investment Banking industry are not relevant for this case
The IB unit of this bank is headed by a Vice
President who reports to the bank’s CEO. CASE GUIDANCE
This IB VP hired you to evaluate whether the • This is an interviewee-led case and the candidate should always drive the case and suggest the next
course of action
IB should spin off from the retail bank,
becoming fully independent from the • This is a profitability case on its essence, nevertheless it touches significantly on qualitative aspects of the
Investment Bank spin off
conglomerate.
• It is not expected any prior knowledge of the Investment Bank industry, due to the sector’s specificity,
and candidates with previous knowledge should not benefit from it in this case

STRUCTURE GUIDANCE
A good structure would touch on:
• The financials of the spin off: (i) additional revenues (ii) expected higher costs and (iii) potential lost revenues due to previous cross-sold customers from the retail bank
• Considering break even period, NPV and other metrics related to the financial return of the spin off is a nice plus of the structure (although not used for case’s calculations)
• Consideration of several qualitative aspects regarding the newly created IB is crucial: new IB strategy, legal entity, culture, organizational structure, operational model,
governance, positioning against competitors, etc.
SAMPLE STRUCTURE
• Revenues impact: impact on transaction volume and average fee by business line (M&A and Advisory, Sales, etc.). When the candidate asks for data on revenues, please
show them Exhibit 1
• The candidate is not expected to know that revenues for an Investment Bank are generated, in general, based on a fee of the total transaction. The information
should be given to the candidate if he/she does not mention this aspect
• Cost impact: in general, costs are expected to grow because the Investment Bank benefitted from sharing structure and services with the retail bank conglomerate. When
the candidate asks for data on costs, please show them Exhibit 2
• Qualitative aspects of the spin off:
• IB Strategy
• Governance
• Organizational structure
• Operational model
• Capabilities to become standalone
• Competitive landscape 324
• …
Revenues: when the candidate asks for data on revenues, show them Exhibit 1 and ask for insights. It will be then expected that the candidate starts the revenue calculation
• The fastest way of calculating is to compute the revenue differential by the difference of market share between the current and expected scenario.
• A slower calculation would be to calculate the current revenues, expected revenues and subtract one from the other. One benefit of using this approach is that the expected
revenues will be used for the Costs calculations
Costs: likewise for revenues, show Exhibit 2 and ask for insights. Then, the candidate should be prompted for starting the calculation (please refer to Exhibit 2)
• It is expected that the current cost structure of the IB will change because it benefitted from shared services with the retail bank (e.g. IT, rent, etc.). The IB would now have
to, for example, rent a building, hire an IT provider and other extra expenditures that were not previously needed
• Here the candidate should make fair assumptions on what is the fair share of cost items (as % of revenues) based on benchmarks of Investment Banks similar to our client,
shown in Exhibit 2 (which are separated standalone Investment Banks)
SOLUTION
Revenues:
• Current revenues: Transaction market * Average fee * Current market share = 500M * 5% * 10% + 600M * 4% * 35% + 400M * 8% * 20% + 1,500M * 2% * 5% = USD 18.8 M
• Expected revenues: : Transaction market * Average fee * Expected market share = 500M * 5% * 20% + 600M * 4% * 25% + 400M * 8% * 30% + 1,500M * 2% * 15% = USD 25.1 M
• Thus, incremental revenues of USD 25.1 – 18.8 = 6.3 M - One good insight is that the USD 6.3M revenue increase is precisely a 1/3 increase in total revenues
Costs: the items that the client, when associated with the Retail Bank, paid apparently less than peers were IT and systems, and Rent & Maintenance (likely due to shared services,
premises and systems). For IT, the cost representativeness will increase from 1% to 5% of total revenues and Rent from 2% to 6%
• Current IT Costs: USD 200k ; current Rent & Maintenance costs: USD 400k
• New IT Costs = 5% * 25M = 1.25M ; New Rent & Maintenance costs = 6% * 25M = 1.5M → Incremental costs of USD 2.75M – 600k = 2.15M
Profit: in summary, the new bank will have a greater profit of USD 6.3 – 2.15 M = USD 4.15 M (meaning that financially speaking, it makes sense to spin off)

EXHIBIT 1 – CURRENT AND EXPECTED REVENUES BY BUSINESS LINE
Business Line Total transaction Average fee1 Current market Expected market
market share share2
Equity Capital Market (ECM) USD 500 M 5% 10% 20%
Debt Capital Market (DCM)3 USD 600 M 4% 35% 25%
M&A and advisory USD 400 M 8% 20% 30%
Sales and trading USD 1,500 M 2% 5% 15%
1. Revenues of Investment Banks are generally calculated as a standard fee that is a percentage of the total value of a determined transaction (e.g. an IPO)
2. After the spin off from the retail bank. Estimates provided by the client
3. The market share in DCM is expected to drop because the Retail Bank cross-sells DCM deals to the Investment Bank, which will not happen if they are separate

EXHIBIT 2 – INVESTMENT BANKS COST STRUCTURE BENCHMARK (P&L)

Sales (USD M):
The two benchmarked banks are comparable to our client’s bank in
operations, sales mix, geography and other aspects relevant to the P&L 19 55 40
Both banks are purely standalone IBs, with no Retail Bank unit
Our client understands that front office and back office staff will not
change their representativeness on total costs with the spin-off
35% 37%
39%
P&L Summary USD’000 % sales
(+) Sales 18,800 100%
(-) Personnel - Front office 7,300 39%
6%
(-) Personnel - Back office 1,500 8% 7%
8% 5%
(-) IT and systems 200 1% 1% 4%
2% 6%
6%
(-) Rent & Maintenance 400 2%
49% 47% 45%
(-) Other expenses 150 1%
Operating profit 9,250 49%
Our client’s bank Benchmark bank 1 Benchmark bank 2
Front office staff Back office staff IT & systems Rent & maintenance Other expenses Operating profit

Aside from financial considerations, what are other pros and cons of spinning off the Investment Banking unit from the rest of the conglomerate?
SAMPLE ANSWERS
Here there is no right answer, but the idea is rather to test the candidate’s creativity on this type of business situation
Pros
• Reduced bureaucracy with no formal ties with conglomerate
• Greater organizational “identity” - new IB culture
• Possibility of more flexible work arrangements typical of Investment Banks
• Openness for engaging with other institutions (for example establishing a Joint Venture with another Investment Bank)
Cons
• Increased costs (IT & systems, Rent & maintenance) end up higher than expected
• Cross sell with retail bank is significantly reduced or clients leave the IB bank after spin off non mapped reasons
• In the future, the Retail Bank may create another IB unit (new competitors)
• Lack of strategic perspective previously provided by other areas of the bank
• Limitation on talent transfer between bank areas
• Legal aspects not considered

Our client just messaged you saying that she is now free and would like to hear your current viewpoint on the project. What is your recommendation?
Being concise, structured, and mentioning only relevant points mentioned in the case are crucial for a good recommendation.
Based on the financial calculation, the recommendation should be to pursue the spin off. When explaining the reasoning, the candidate should bring critical numbers calculated
during the case
It is also important that the candidate mentions the pros, cons and risks associated with the recommended spin off
A great plus from the recommendation would be to suggest potential next steps for implementing the spin off

SPECIAL THANKS
IESE CONSULTING CLUB CASE BOOK COMMITTEE BCG DIRECT SUPPORT AND JUDGES
Alejandro Ex ss Jaramillo Mike Mascarenhas
A.Exss@iese.net Michella Warren
Raghad Gomaa
Raghad.Gomaa@iese.net
Mohamad Yassine
Mohamad.Yassine@iese.net

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I E S E C O N S U L T I N G C L U B

General Management Consulting Internal Consulting

IESE CONSULTING CLUB IESE CASE BOOK 2023 | 3

CV/CL Submissions Interview Rounds

Career Forum Interview Selection Offer

IESE CONSULTING CLUB IESE CASE BOOK 2023 | 4

Typical Interview Format (Varies from firm to firm)

What do the firms look for?

IESE CONSULTING CLUB IESE CASE BOOK 2023 | 5

Quantitative Listening and Synthesizing and

Common Types of Cases:

IESE CONSULTING CLUB IESE CASE BOOK 2023 |

Examples of questions asked during Fit interviews:

General Questions: Competency Based Questions: Forward looking Questions:

IESE CONSULTING CLUB IESE CASE BOOK 2023 | 7

Documents Fit interview preparation: 20 – 30 hours

Many are under prepared – start now!

Research and Networking Case Prep: 40+ hours

IESE CONSULTING CLUB IESE CASE BOOK 2023 | 8

Consumer Goods and Retail 11%

Energy & Manufacturing 4%

IESE CONSULTING CLUB IESE CASE BOOK 2023 | 10

Consumer Goods and Retail 10%

Energy & Manufacturing 4%

IESE CONSULTING CLUB IESE CASE BOOK 2023 | 11

Consumer Goods and Retail 14%

Energy & Manufacturing 4%

IESE CONSULTING CLUB IESE CASE BOOK 2023 | 12

Energy, Manufacturing & Industry 11.1%

Consumer Goods & Retail 10.5%

Financial Services 25%

28% 22% 20% 14% 12% 4%

Latin Europe (Ex Spain Middle East North

IESE CONSULTING CLUB IESE CASE BOOK 2023 | 14

Corporate Management 19%

Operations & Logistics 12%

Marketing & Sales 12%

35% 27% 15% 14% 7% 1% 1%

Latin Europe (Ex Middle East North

Consulting 93,981 47,500 168,652 58,789 5,539 350,844

Finance 83,998 50,000 133,408 58,363 1,000 160,219

Industry 82,235 52,887 120,025 35,436 2,000 142,203

Technology 86,051 46,162 132,951 46,041 8,500 182,303

IESE CONSULTING CLUB IESE CASE BOOK 2023 | 16

Consulting 95,300 41,500 176,000 67,600 3,900 136,800

Finance/Accounting 101,200 50,000 181,000 77,700 9,100 286,600

Management 90,200 55,000 144,700 63,900 11,000 134,300

Marketing/Sales 84,300 50,000 174,200 85,700 3,500 198,700

Operations/Logistics 81,900 30,000 164,600 90,000 14,000 221,600

Other 78,000 66,000 88,000 44,200 7,600 104,000

IESE CONSULTING CLUB IESE CASE BOOK 2023 | 17

IESE CONSULTING CLUB IESE CASE BOOK 2023 | 19

IESE CONSULTING CLUB IESE CASE BOOK 2023 | 20

IESE CONSULTING CLUB IESE CASE BOOK 2023 | 21

Energy (Oil & Gas) Offline Online

IESE CONSULTING CLUB IESE CASE BOOK 2023 | 22

Manufacturing • Doctors • Patients

Retail • Regulation (FDA Approvals)

IESE CONSULTING CLUB IESE CASE BOOK 2023 | 23