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THE QUARTZ+CO

CASE INTERVIEW
HANDBOOK
NOVEMBER 2013
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HOW SHOULD I USE THIS
HANDBOOK?
The purpose of this handbook is to serve as
a source of inspiration during your interview
preparation. We recommend browsing through
all sections of the handbook to ensure that you
are familiar with the various topics covered in it.
The content will, however, not be explicitly test-
ed in any way during the recruitment process at
Quartz+Co.
IS THIS HANDBOOK RELEVANT FOR
ME?
This handbook is relevant for you if you are pre-
paring for upcoming interviews and are new to
case interviews. If you are already a seasoned
case solver or have read other literature on the
topic, this handbook may be of less relevance for
you. See our section Additional resources for
case preparation for other recommended sourc-
es of information.
SHOULD I PREPARE BEFORE THE
INTERVIEW PROCESS?
While it is possible to make it through manage-
ment consulting interviews without preparation,
we strongly recommend that you do prepare, as
it greatly improves your chances of securing a
job ofer. The vast majority of successful appli-
cants across all management consulting com-
panies have prepared by reading up on cases,
practicing with friends and brushing up on their
arithmetic skills. Preparing is especially relevant
for non-business students who may not be very
familiar with business terminology and problem
solving methods.
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Quartz+Co: a Nordic original . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Quartz+Cos recruitment process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The case interview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Types of case questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
How to open and close a case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Frameworks for business cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Protability framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Industry analysis framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Mergers & acquisitions framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Product strategy framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Additional resources for case preparation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Quantitative preparation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Example cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
TABLE OF CONTENTS
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Quartz+Co is a management consulting company
employing more than 200 professionals across our
ofces in Stockholm, Copenhagen and Oslo. Our
aspiration is to become one of the top-three con-
sulting companies in all Scandinavian markets a
seemingly tough goal, yet an inspiring challenge.
Even though rmly rooted in the traditional, profes-
sional values of high-end management consulting,
Quartz+Co was founded with the clear intention of
changing the industry from within. Our ambition
is to become the leading consulting company in the
Nordic region by presenting an alternative to the
standard consulting model. A Nordic model with
less dependence on standard methodologies and
more emphasis on listening and giving advice based
on the clients specic challenges and opportunities
as well as our specic insight and experience.
While strategy development has always been the
cornerstone of our ofering, Quartz+Co today works
QUARTZ+CO:
A NORDIC ORIGINAL
extensively within transactions, commercial and op-
erational excellence programmes and organisational
transformations. Our client base covers a range of
industries, including private equity, energy, pharma
& medtech, retail, transportation and many more.
Although most of our clients are large Nordic com-
panies, approximately 40% of our projects are car-
ried out outside the Nordics.
At Quartz+Co, we see consulting as a true career
path, not just a stepping stone. We ofer our consul-
tants the opportunity to inuence their own career
progression and work life to the highest possible
extent. We strive to provide individualised match-
making between personal wishes and project op-
portunities to ensure that our consultants develop
and succeed. For the same reason, we attempt to
nurture and develop our consultants as much as
possible through mentoring and internal academies
so that we can grow together as a company.
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QUARTZ+COS
RECRUITMENT PROCESS
FULL-TIME CONSULTANTS
Quartz+Cos recruitment process for full-time con-
sultants is centred around a comprehensive two-
day recruitment camp.
Over two days you will get the chance to learn more
about what it is like to be a consultant at Quartz+Co
and show us who you are through a combination
of interviews and group exercises on business di-
lemmas. You will also meet many of your potential
colleagues at Quartz+Co, and the diferent sessions
will ofer you an opportunity to learn more about
yourself and moreover provide you with concrete
input to be further applied in your career, whether
at Quartz+Co or elsewhere. Among other things the
programme includes
An introduction to Quartz+Co
A timed quantitative test
A series of case interviews
A group case session
A personal style and preference session
JUNIOR CONSULTANTS
Our Junior Consultants work on client projects just
like any other consultant. They perform tasks simi-
lar to those of newly hired full-time consultants, but
typically work 15-20 hours per week while complet-
ing their studies.
The recruitment process for Junior Consultants is
based on two rounds of individual interviews where
candidates will meet consultants from Quartz+Co in
two interviews each round. The Junior Consultant
recruitment process includes
An introduction to Quartz+Co
A timed quantitative test
A series of case interviews
THE CASE INTERVIEW
WHAT IS A CASE INTERVIEW?
In a case interview, the interviewer will present you with
a situation or a challenge faced by a ctious company
might be facing. You are asked to analyse and solve the
problem through a discussion with the interviewer. The
majority of case interviews are based on real client proj-
ects and the interviewer may therefore have additional
knowledge or information to draw upon during your
discussions than was initially presented.
WHY CASE INTERVIEWS?
Consultants solve problems. Case interviews are an ef-
fective way of simulating the kind of problems we en-
counter on a daily basis. They are a fast and concrete
way for us to understand how you frame and solve am-
biguous business problems. In addition, they also give
you an opportunity to gain a better understanding of
the work we do and if a consulting career is what you
want to pursue.
WHAT DO WE LOOK FOR IN THE CASE
INTERVIEW?
The case interview is designed to test skills that are
common to almost all consulting companies, though
they may be described and weighted slightly diferent-
ly in diferent places. During case interviews, the inter-
viewer is looking to answer at least two questions:
1. Would you thrive when solving our clients problems?
The interviewer will assess your ability to combine
skills such as logical reasoning, creativity, quantita-
tive skills and business acumen as well as your abil-
ity to put it all together and structure the problem
solving process. The interviewer checks whether
you can insightfully think through the problem and
then tailor your approach to the problem at hand,
rather than trying to t something in to a predened
framework. The interviewer also seeks to under-
stand if you base your conclusions on evidence
rather than beliefs, and if you sanity check your
answers to ensure they make sense in the context
of the case.
2. Would you work well with us and our clients?
Management consulting is based on teamwork. Your
ability to interact with others and your communication
and presentation skills are therefore of great impor-
tance. The interviewer wants to understand if you are
tactful and approachable, and how you handle con-
structive input. Additionally, he or she wants to evaluate
if you present your arguments in a clear and concise
manner that would be easy for a client to follow. Do not
be afraid to show that you are human; a welcoming and
attentive attitude goes a long way.
THE GROUP CASE SESSION
The group case session is designed to give you an op-
portunity to show how you work with peers on chal-
lenging problems. In addition to the problem solving
approach, teamwork along with efective communica-
tion and ability to show respect and empathy will be
evaluated. Throughout the group case solving process,
an interviewer will listen in on the groups communica-
tion to observe how its members interact, and continu-
ously provide feedback.
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QUARTZ+CO OPENED ITS STOCKHOLM
OFFICE ON BIRGER JARLSGATAN 7 IN 2010
Interview cases generally fall into two categories,
(1) Estimation or market-sizing cases, and (2) Busi-
ness cases. At times, the interviewer may also ask
you to include a market-sizing question as part of a
larger business case.
1. ESTIMATION OR MARKET-SIZING
CASES
In estimation or market-sizing cases, you are asked
to estimate a quantity that you will not likely know
in advance. Examples of estimation case questions
are: How many gas stations are there in Sweden?;
How many trains are in motion in the Stockholm
subway system right now?; or What is the value of
all coal produced in Sweden?.
Typically, there is no one correct answer, yet the pur-
pose of these cases is to understand how you work
logically through a mathematical problem, make
reasonable assumptions and interpret mathemati-
cal results. While you cannot prepare for the exact
problems, there are a few things to think about and
possible approaches you could consider.
Communicate your approach
Before you dig into the details, it is a good idea to
think through your mathematical approach on a
high level and then briey communicate it to the in-
terviewer. If the interviewer understands your mod-
el and its subcomponents, he or she can be certain
that you are on the right track from the start, or po-
tentially intervene and help you before you spend
time on an approach that may not work out in the
given time frame.
Approaches
A) Extrapolation
One approach is to extrapolate a metric from one
element against an entire population. As an illustra-
tive example, you could answer the question How
many gas stations are there in Sweden? by extrapo-
lating your knowledge about the number of gas sta-
tions in your local region against the whole country.
(E.g. three gas stations per 50,000 inhabitants in
a given city would bring you to 600 gas stations
across Sweden, assuming a population of 10 million
people).
B) Segment-by-segment breakdown
An alternative approach is to isolate the estima-
tion per segment. Visually, you could do your cal-
culations in a table format, which makes your work
well-structured and easy-to-follow. As an illustrative
example, you could answer the question How many
deodorants are sold in Sweden each year? by seg-
menting Swedens population by logical age groups
and then making sound assumptions of the average
amount purchased per capita for each group.
C) Driver breakdown
A third approach that works well for many estima-
tion or market-sizing cases, especially more uncon-
ventional ones, is the driver breakdown approach.
Here, you begin with the key metric and systemat-
ically decompose it into its corresponding drivers.
Keep attempting diferent decompositions until you
nd that the subcomponents are manageable to
make assumptions around. As an illustrative exam-
ple, you could answer the question How many golf
balls are in the air in the US at 11 am on a Saturday
morning? by breaking it down into its subcompo-
nents number of golf balls in the air per course
times number of courses in the United States, and
subsequently breaking those down further.
TYPES OF CASE
QUESTIONS
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2. BUSINESS CASES
The business case interview is by far the most com-
mon type of case interview. A business case inter-
view begins with the interviewer presenting you
with a challenge or opportunity faced by a company
and asks you to analyse and resolve the situation
through a discussion with the interviewer.
Business cases are designed to simulate real life
consulting projects, and sometimes the interviewer
may even role play one or several characters in-
volved in the case to get as close to a real project as
possible. He or she could provide you with relevant
data upon request - or - after a given section of a
case, ask you to analyse or investigate certain top-
ics. The types of topics vary; you may for example
investigate how to make a companys distribution
chain more efective, how to best enter the Brazilian
soda market or how to make use of overcapacity in
a car manufacturing facility.
The purpose of these types of cases is to under-
stand several of your competences: the depth of
your business acumen; how you structure and pri-
oritise issues; how you handle diferent types of
Strategy
Increasing market share
Market entry strategies
M&A transactions
Starting a new business
Competitive response
Pricing strategies
New product strategy
TYPICAL BUSINESS CASES YOU COULD BE PRESENTED WITH
information; and your overall t with the type of
work that we do.
You can signicantly increase your chances of be-
ing successful in a business case interview by prac-
ticing. The opening and closing of the case is fairly
generic, practicing how to open will get you of to
a good start and practicing how to close will make
your wrap-up more concrete and concise. The mid-
dle part is more difcult and requires more natu-
ral talent, yet there are a number of methods and
frameworks which can help you along the way when
practicing case interviews.
The following pages contain a selection of approach-
es and frameworks which might inspire you in your
case solving. But keep in mind always to adapt your
thinking. Interviewers look for candidates with busi-
ness acumen, who are able to develop high-quali-
ty frameworks on their own, in contrast to merely
repeating rehearsed frameworks. The key takeaway
is to use frameworks as a source of inspiration, but
not to force-t a case into one just because you are
familiar with it.
Organisation
Incentive systems
Organisational design
Roles and responsibilities
Post-merger integration
Operation
Cost-out
Strategic sourcing
Supply chain optimisation
Production capacity change
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SUMMARISE THE PROCESS AND
SYNTHESISE
Either the interview comes to a natural close when
you feel that you have solved the problem or when
the interviewer steers you in that direction as time
is running out. Regardless, a good close is one of
the most crucial parts of the interview. At this point
you have hopefully asked all the questions you want
and performed your analysis. So where do you go
from there?
If you feel you need to, take a moment to collect
your thoughts
Try to quickly take your interviewer through the
analysis as well as your most important ndings
Answer the question! If there is a clear question
at the beginning of the interview, do not forget
to answer it. If the question is whether or not to
enter a specic market, your conclusion should
be just that, whether to enter it or not. Not all
cases are the same but keep in mind to make
your conclusion as action-oriented as possible
Lastly, back up your conclusion with support-
ing arguments. Try to not include too many but
rather spend time on the ones that you nd
most important to your overall conclusion
RECEIVING AND GATHERING
INFORMATION
Listen carefully to the question and conrm that
you have fully understood the assignment or
problem the client is facing. A good way is to
paraphrase the question back to the interviewer.
And take notes, especially if you are presented
with data
Ask clarifying questions if necessary. Even the
most obvious questions are sometimes appro-
priate to ask and it provides you with more time
to think
PROCESS INFORMATION AND PRESENT
YOUR APPROACH
Ask for time to collect your thoughts and struc-
ture your analysis. Often the interviewer leaves
the room to give you some time, while at other
times the interviewer may stay in the room in
either case, do not feel stressed and take the
time you need
Present to the interviewer how you are going to
approach your analysis. This is very important
and often forgotten. Be a good listener, the in-
terviewer might give you hints on where to go
rst or if you should rethink your approach alto-
gether. If this is the case, ask for another minute
to collect your thoughts
HOW TO OPEN AND CLOSE
A CASE
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FRAMEWORKS FOR
BUSINESS CASES
You will quickly nd frameworks if you start look-
ing around for material on management consulting
interviews. Basically, frameworks are tools for you
to use when structuring your problem solving in a
case interview. Sometimes they could also just be a
checklist to avoid missing the most important steps
in the process. You should keep in mind that a case
question rarely turns out to t perfectly into a pre-
dened framework instead you will have to adapt
your approach and use the framework more as a
backbone in your analysis. In the following pages,
you will nd four useful frameworks.
In many cases you will be expected to analyse the
protability of a company at a more granular level.
The protability framework helps you to systemati-
cally break down the protability drivers. Your goal
is often to isolate signicant historic developments
(e.g. the cost of raw material has been surging);
benchmark protability drivers with competitors
(e.g. our prices are lower than our peers); and evalu-
ate opportunities (e.g. is it possible for us to increase
prots by boosting sales of product A?). The key to
solving these cases is often to understand the under-
lying mechanics that produce the eventual anom-
alies in the numbers (e.g. our prices are lower than
SEGMENT YOUR ANALYSIS
Think of diferent ways to segment costs and
revenue. During a real project you will have
time to investigate several diferent ways of
segmenting, but in case interviews the inter-
viewer often has a preferred segmentation.
PROFITABILITY
FRAMEWORK
our competitors because our brand is the weakest
in the industry, but it is possible to improve it by an
investment?).
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Decompose by applying appropriate segmen-
tation, e.g.
Business units
Customer types
Large vs. small customers
Geographies
Product types
Sales representatives
Etc.
Identify increases or decreases in components (e.g. have units sold gone up, down or stayed consistent)
Understand if trends are company-specic or an industry-wide problem
Decompose by applying appropriate segmen-
tation (by e.g. looking at revenue)
Decomposing according to the value chain is
another powerful way of analysing costs, e.g.
1. Raw materials
2. Inbound logistics
3. Production costs
4. Sales and distribution costs
Do not forget overhead costs (e.g. administra-
tive, IT and marketing costs)
PROFIT COMPONENTS
HINTS
REVENUE
(PRICE * VOLUME)
COSTS
(FIXED + VARIABLE)
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INDUSTRY ANALYSIS
FRAMEWORK
The industry analysis framework is designed to help you gather information on a companys external environ-
ment. At rst glance, it may appear overwhelming but many of the elements are likely already familiar to you.
Industry growth
Business life cycle
Is the industry cyclical, stable or counter cyclical?
Market share
Client Competitor A Competitor B ...
Financials
Product
(diferentiation, packaging, prices, etc.)
Other drivers
(brands, loyalty, etc.)
INDUSTRY FACTS
COMPETETIVE LANDSCAPE
Suppliers
Have their costs shifted?
Bargaining power?
Raw materials
Has the price changed?
Is the economy afecting prices?
Economies of scale
Is there better technology?
Can we change our staf?
Is outsourcing a possibility?
VALUE CHAIN ANALYSIS
OTHER FACTORS
UPSTREAM PRODUCTION
What is the channel mix?
Distributors
Have their costs shifted?
Bargaining power?
Sales personel
Are there large diferences in competences?
Is the right incentive system in place?
Marketing
New players in the market or new players entering?
Substitute products?
Is the market getting consolidated?
B2B or B2C?
Preferences
Product
Distribution
Price
Has the bargaining power shifted?
Can we change the mode of transportation to be more efective?
Can we manage inventory more efectively?
END USER
LOGISTICS
DISTRIBUTION, SALES AND MARKETING
CHANGE FACTORS
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MERGERS & ACQUISITIONS
FRAMEWORK
What does the client do?
What do our nancials look like?
Potential reasons for M&A
Increase market share or access
Economies of scale or scope
Learning curve advantages
Diversication
Pre-empt competition
Tax reasons
CLIENT AND PURPOSE
Do we expect to make an exit?
For how long are we going to hold the
company?
How are we planning to sell the company?
EXIT STRATEGY
Use a light version of the industry analysis
framework
DUE DILIGENCE
Can we aford the company?
Is the price fair?
Are there any benchmark transactions?
How do we nance the transaction?
What is our expected return?
PRICE AND FINANCING
This framework is seemingly quite narrow in scope and perhaps not as important as the other frameworks.
It is, however, not uncommon for transactions to come up in business case interviews and it is good idea to
have thought them through in advance, especially if you have no previous experience from transaction work
or studies.
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PRODUCT STRATEGY
FRAMEWORK
How does the product and its features com-
pare to competing alternatives?
Is there an intended price level for the prod-
uct?
If no, consider
Cost-based pricing
(Applying a margin on top of costs)
Market pricing
(Based on prices of competing products)
Value-based pricing
(What are customers willing to pay?)
Is our technology protected by patents?
Do we sell similar or competing products
today?
Do we benet from economies of scale or
scope?
Is there a risk of cannibalisation?
Do we have the capabilities necessary to in-
troduce the product? (e.g. technical knowhow,
nancing, operational set-up, suppliers)
COMPETITIVE POSITION STRATEGIC FIT WITH PRODUCT
Who are the target customers?
Are there diferent customer segments? (e.g.
businesses vs. consumers?)
Is there an overlap with our existing customer
base?
What are the customers key purchasing
criteria?
Do we have an appropriate distribution set-up?
(e.g. retail sales, internet sales, direct salesmen
or distributors)
What is the revenue potential?
What are the corresponding costs?
Are there any capital expenditure requirements
to consider?
What is the break-even volume?
What would be the expected payback period?
ECONOMICS REACHING THE CUSTOMERS
This framework is similar to the industry analysis framework but with some important diferences and addi-
tional issues.
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ADDITIONAL RESOURCES
FOR CASE PREPARATION
www.caseinterviews.com A recent and popular case site developed by a
former consultant.
The site includes a range of material containing
useful and concentrated frameworks and case tips.
The materials come in the form of videos and PDFs
and are typically free of charge. However, beware
that the site is designed to encourage you to make
large add-on purchases not necessary for interview
preparation.
SOURCE COMMENTS
Case Interview Secrets
Author: Victor Cheng
Same as above, in book format.
How to Get Into the Top Consulting Firms:
A Surere Case Interview Method
Author: Tim Darling
A book written by a VP of a large American con-
sulting rm.
The book ofers a condensed overview of how to
create problem solving structures and communi-
cate like consultants. It also provides ten well-writ-
ten practice cases.
Case in Point
Author: Marc Cosentino
One of the most frequently used case preparation
books.
The book contains detailed descriptions of case
interviews and samples of how a case interview
may play out.
The Pyramid Principle
Author: Barbara Minto
Almost all consultants have a copy of this book.
This is not a typical case interview preparation
book, but reading it will provide you with a solid
understanding of how consultants work with struc-
ture and communication.
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QUANTITATIVE
PREPARATION
Most management consulting companies put em-
phasis on a candidates numerical capabilities, and
strive to test these in one way or another as part of
the recruitment process. Numerical skills are easy to
improve with practice and we strongly recommend
that you put some time aside for practicing numeri-
cal accuracy and speed by repeating basic arithme-
tic operations.
WHY ARE YOU TESTED QUANTITATIVELY?
We need to be condent that every team member
is able to structure and carry out quantitative anal-
yses. Most client recommendations are based on
quantitative evidence. Comfort with numerical es-
timations and arithmetics is also a cornerstone of a
consultants sanity checking procedures.
HOW ARE YOU TESTED QUANTITATIVELY?
Normally you will be tested on
Your ability to make computations accurately
and efciently without a calculator
Your ability to develop and communicate a nu-
merical model
Your ability to interpret quantitative measures
and data
A TOOL FOR ARITHMETIC PRACTICE
For the arithmetic operations practice, please refer
to Quartz+Cos quantitative exercise model found
on the attached USB-stick.
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EXAMPLE CASES
Interviewer
Interviewer
Interviewer
Interviewer
Interviewer
The interviewer walks out of the room and returns a couple of minutes later
Candidate
Candidate
Candidate
Candidate
Candidate
Candidate
Our client, a Scandinavian private equity fund, is considering an acquisition of a Swedish
company that produces freshly squeezed juice. We have been invited to help the client
evaluate the attractiveness of such an investment. What are the key elements for us to
look at?
Just to be clear, are we talking about a retail juice chain or a wholesale juice manufacturer?
Good question, we are evaluating a manufacturer/wholesaler.
Interesting, let me think about my approach for a short while.
Sure, Ill be back in a minute or two
All right! On a high level, I would like to understand
1. The attractiveness of the market in terms of size and growth
2. The competitive landscape and the target companys competitive position
3. The companys current business portfolio and its performance
Okay, that sounds appropriate. Why dont you start with the size and growth of the mar-
ket? How would you estimate the size of the Swedish juice market?
Okay, let me take a minute to think through my approach.
The candidate thinks for about a minute and resumes the conversation
THE JUICE CASE
In order to estimate the market size in terms of value, I need to look into the drivers of
market value, which are (a) yearly juice consumption in litres and (b) price per litre. Ill start
with the consumption.
Okay, good. It sounds like you have a good overall approach but I would like you to rene
your structure a bit; what do you think is an appropriate customer segmentation to nd
out how much juice is consumed every year?
Hmm, we could segment the consumers into diferent categories both in terms of be-
haviour and in terms of age groups.
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Interviewer
Interviewer
Interviewer
Interviewer
Candidate
Candidate
Candidate
Candidate
Sounds good!
Lets start with the behavioural parameters. Since we are only focusing on the wholesale
market, I will look at the consumption of pre-bottled juice. This is more or less the same as
breakfast consumption, according to my experience. Lets create three types of breakfast
juice drinkers; a) everyday drinkers, b) occasional drinkers and c) non-drinkers. I assume
that the weekly consumption within the three groups is: a) 7 glasses (1.5 litres), b) 2-3
glasses (0.5 litres) and c) nothing.
Great, then you mentioned that you were going to analyse age groups. How?
In addition to the behavioural aspects, I believe that age is relevant due to diferent life-
styles. I think that the share of people who belongs to the diferent behavioural groups (a,
b and c) varies with age. I would like to start of by dening the age groups: 0-20 years,
20-40 years, 40-60 years and 60-plus.
Okay, tell me why you chose those age groups?
Hmm, I get your point; I need to explain the rationale for dening diferent age groups
which has to be connected to the diferent lifestyles I was talking about.
Thats right!
OK, so 0-7 is the rst group and I assume they do not drink juice at all. The next group is
720 as they typically live at home with their parents and are not buying juice themselves.
Based on my experience, half of these people do not drink juice at all, in fact many of them
dont even eat breakfast. I assume 1 out of 4 drinks every day and the rest drinks a couple
of times per week. The next group is 20-65, which is basically the working population. If
I look at my friends and family, there are about 50% who do not drink juice at all. Then I
think there is a slightly higher share of everyday drinkers than in the 7-20 age group. Based
on my experience, I assume 30%, leaving us with 20% drinking occasionally. Finally, in the
group 65-plus I think the share of everyday drinkers goes down a bit due to lower income,
I assume 20% and I think the non-drinkers are still about 50%, leaving us with 30% occa-
sional drinkers.
Behavioural distribution
Occassionally Never Everyday Occassionally Never Total week
Total yearly
consumption
Everyday Ages
0-7 700,000 0% 0% 100% 1.5 0.5 0 - -
7-20 1,300,000 25% 25% 50% 1.5 0.5 0
20-65 4,500,000 30% 20% 50% 1.5 0.5 0
65-plus 3,500,000 20% 30% 50% 1.5 0.5 0
650,000 33,800,000
2,475,000 128,700,000
1,575,000 81,900,000
4,700,000 244,400,000 Total 10,000,000
Number of
people
Weekly litres/behavioural type
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Interviewer
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Interviewer
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Candidate
Candidate
Candidate
Candidate
Candidate
Candidate
The candidate runs the numbers based on an assumed retail price and calculates
backwards to nd out the wholesale price
Excellent, what do you do next?
Lets continue with (b), price per litre. Based on my experience from ICA, a package of
juice is about SEK 18 per litre
Okay, but before you do the calculation I would like to ask you there is an element, which
youre missing, can you think of what it is?
Ah! Yes, since we are talking about a wholeseller, my price includes a retailer mark-up
which should not be considered in the wholeseller market.
Yes, thats it. There is also another consideration. What do you think that is?
We are only talking about one juice type here. Maybe we should consider diferent types
of juices?
Yes, what would that mean?
That we get diferent prices for diferent juices; I would say that there are three basic types
with diferent price levels; high end, low end and private label.
Exactly, Ill help you out and give you some numbers.
Share of sale
Volume in
litres
Retail price VAT Retail mark-up
Price/litre to
retailer
Total value
Brand
high end
10% 24,440,000 30 25% 20% 20.0 488,800,000
Brand
low end
65% 158,860,000 18 25% 20% 12.0 1,906,320,000
Private label 25% 61,100,000 20 25% 60% 10.0 611,000,000
Total 100% 244,400,000 3,006,120,000
Okay, so given these price levels, I arrive at approximately SEK 3 billion in wholesale value.
In terms of weaknesses of the estimation I would say that the consumption assumptions
are the ones that Im least comfortable with. If I had more time I would dig deeper into that.
What do you think of SEK 3 billion? Is it realistic?
Well, a simple sanity check is to nd out how much that would be per person per week,
and it is about SEK 6 plus retail mark-up across the entire population. To me, that sounds
reasonable, which would make 3 billion a realistic estimate.
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Interviewer
Interviewer
Interviewer
Interviewer
Candidate
Candidate
Candidate
Candidate
Okay, it sounds like you have thought this through. Assume for the rest of the case that
your estimate of SEK 3 billion is correct. So whats next?
Next I would like to look at the market growth and if we have any information on whether
it is set to grow in the next years.
Okay, you can assume that the market has been declining by 4% per year over the past ve
years and is set to continue do so over the next ve years.
Is that 4% in real decline or nominal decline?
Good question, assume it is 4% in nominal decline.
Okay, so is it fair to assume that we can expect even more than 4% real decline in the next
ve years?
Yes. So where do you want to go next?
Next I would like to analyse (2) the competitive landscape and the target companys com-
petitiveness to see if it might have some kind of unique position in a particularly attractive
subsegment because overall, the market does not seem very attractive.
We will wrap up the case example at this stage. We do, however, encourage you to try and think what your
approach would have been in mapping the competitive landscape and how you would have proceeded in
analysing whether we should recommend the private equity fund to acquire the company or not.
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The candidate takes around three minutes and then resumes the conversation
Interviewer
Interviewer
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Candidate
Candidate
Candidate
After years of engineering work, you nally have the worlds rst commercially viable
spacecraft. It costs you EUR 50 million to build. From its launch pad outside Paris, it can
take a load of up to 12 passengers into space, orbit earth and then return safely eight hours
later. There are no safety concerns whatsoever. The spacecraft can do three trips per week
and the operational costs related to the trips (salaries, fuel, maintenance) are EUR 75,000.
There are no competing products, and the design is efectively protected by patent rights
for the next 25 years. It will take you three years to build an additional spacecraft.
My question to you is: how would you take the product to the market in the next three
years, before you could have another spacecraft?
So were talking about a commercial spacecraft here? Our goal is to push this thing to the
market, right? Okay, let me make sure that I caught all the details in the data.
In terms of costs, we have invested EUR 50 million, and each round trip costs us ap-
proximately EUR 75,000.
We can do three trips per week, so basically 150 trips per year, and each trip can carry
12 passengers.
Our technology is completely protected for the next 25 years.
Did I get all that right?
Yes, thats right. What I want you to start with is deciding on a couple of areas that you
would like to investigate further.
Okay, give me a minute and Ill collect my thoughts a bit.
All right - there are a couple of areas that I would like to explore, which fall into three main
categories
1. What is the market for commercial space trips?
2. What are the economics behind the operation?
3. How do we market the space trip?
My primary concern with area (1), the market, is that I want to understand the product and
situation a bit better. My hypothesis is that the demand is rather high in relation to our
supply
Well, the demand would depend on the price, right?
THE SPACE CASE
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Interviewer
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Candidate
Candidate
Candidate
Candidate
Candidate
Candidate
The candidate takes about half a minute to think before he proceeds
Yes, of course you are right. I would like to explore the dynamics of the market by understanding:

(1.1) Who are our potential customers? What are the segments? What are their consider-
ations when buying a ticket?
(1.2) How big is our market? What I would like to gure out is whether we can ll our ca-
pacity or not.
(1.3) What is the competition like? I.e. are there any substitutes?
For (2), the economics, I would like to do a break-even analysis to understand whether it is
a protable idea, and if yes, how much room do we have left for marketing?
For (3), marketing, I dont have a clear idea yet. But well dig deeper into that later.
Good. I would like to hear your thoughts on topic (1.3), competition, what do you think?
Well, I dont know of any other space trips, and I guess it is safe to assume that no one else
will develop such a concept in a three-year period?
You are right, and in addition, I did mention that there are no competing products,
remember?
You are right, I forgot to note that down.
No problem, so what about substitutes?
Good question, the closest thing I can think of is diferent types of leisure trips, which
arent really comparable to this, if you ask me. My hypothesis is that there are no real sub-
stitutes. I mean, what compares to travelling to space?
I agree. Lets assume there are no substitute products either, so efectively there is no com-
petition of any kind for the remainder of the case.
Okay, then I would like to continue with the rst branch of the analysis: (1.1), customers,
who are they in this situation?
Well, what do you think?
This is a bit tricky, because I would assume that the vast majority of the human population
would be interested in travelling to space but, as we concluded, this depends on the tick-
et price. For example, I would denitely go for EUR 100, but maybe not for EUR 1 million
in my current situation. The key takeaway here is that: the higher the price, the fewer the
people who would be interested in a ticket.
Yes, of course. Can you look at the customer group and price issue from another angle
perhaps? Lets assume we are looking at the market for the next three years.
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The candidate writes down his calculations on a piece of paper
Interviewer
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Candidate
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Candidate
Ah, yes, we could look at how many tickets we could possibly sell per year, and divide this
by the number of inhabitants in the world. I think this can give us a clue as to how much
we can charge for the tickets.
Okay, let us explore that.
We have around 150 trips per year, with 12 passengers each, which adds up to 1,800 seats
per year to ll. Considering a world population of 7 billion people, this corresponds to less
than one person in a million. Given that, I think it is safe to assume that we could charge a
lot for these tickets. I mean, one person in a million is quite a small group of people.
That sounds reasonable, with that in consideration I would like you to go into issue (2), the
economics, and run some numbers on the break-even price for the rst three years.
All right, we have two cost components that I noted down during the introduction of the
case, the initial investment cost and the round trip cost. Im not completely sure of whether
we should consider the initial investment as a sunk cost or use it in the break-even analysis.
My suggestion is that we should include it.
Great! Do that.
Okay. I will translate both costs into costs per seat, so given that and assuming that there
are no additional costs, the investment cost of EUR 50 million will be EUR 16.7 million per
year, and a little less than EUR 10,000 per seat, lets assume EUR 9,500. The round trip cost
of EUR 75,000 becomes EUR 6,250 per seat since we have 12 seats. So in total we have a
cost per seat of around EUR 16,000, which would be our price if want to break even after
three years.
Okay, what does that tell you? That we should charge at least EUR 16,000 per ticket?
It completely depends on the circumstances. If the useful life of the spacecraft is three
years we would have to charge signicantly more to make a good prot but if the useful
life is longer it could be a viable option to charge the 16 thousand.
Good thinking, unfortunately we dont have any information on the useful life right now so
lets leave it at that. But what about EUR 16,000, how do think that ticket price sounds?
Well, since we are looking at the one-in-a-million-most-willing-to-pay-person as our cus-
tomer group, I think that it is safe to assume that we can charge at least that. EUR 16,000
is a lot but I am condent we could sell the tickets to at least that price. As I mentioned
before, however, I think we should make a large marketing campaign to build some mo-
mentum around the demand so we might want to add a bit of a margin on top of that EUR
16,000 if we are to break even including that in three years.
That is true. We should probably try to make a splash before the launch, but at the same
time, a big attraction like this might almost sell itself, dont you think?
Candidate
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Well, yes, you might be right but we should still ensure that the word gets out there so we
dont risk not lling the seats during the rst weeks before the word spreads.
Okay, so what are your ideas on marketing?
Candidate
Interviewer
We will wrap up the case example at this stage of the case. We do, however, encourage you to try and think
what your approach would be for a marketing campaign for the rst commercial space trip.
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