CASE INTERVIEW DAY

DELHI, 2015

Zsolt brahm
Istvn Juhsz

Table of contents
6 cases of increasing difficulty

Profitability cases
(2 x 30 min)1

Guesstimations
(2 x 20 min)1
1

3
Indian shoe
market

5
Das Kino

4
Swiss diaper
market

Complex cases
(2 x 30 min)1

Pet Food s.r.o.

6
Autobus GmbH

Water Meter Co.

1. Indicated time per case include both the time required to solve the case and time for a short discussion and feedback afterwards

2015 by CaseSolvers

CASE #1: INDIAN SHOE MARKET

Indian shoe market

Phase 1: Opening
What is the size of the Indian shoe market?

Pitch
Tell all of this in the beginning

We are looking for domestic sales in Indian in the current year (gross market value in
INR)
By shoe market, we mean the footwear market (incl. shoes, boots, slippers, etc.)
Both online and brick-and-mortar sales should be included

Clarifying info
Tell only if the interviewee asks

Top-down estimation via segmentation by genders.

Suggested approach
If interviewee has very different
approach, ask if he would like to
rethink

2015 by CaseSolvers

Indian shoe market

Phase 2: Solution

Top down estimation

Indian population

Market size

2015 by CaseSolvers

Population

1,250 million

New shoes purchased /

year / person

1.5 (1 leather shoe + a slipper

every second year)

Total number of new shoes

2 billion

Avg. price

150 INR

Indianshoe market

300 billion INR

CASE #2: SWISS DIAPER MARKET

Swiss diaper market

Phase 1: Opening
Our client, a European diaper manufacturer is considering to enter the Swiss market with
its premium category product. They asked our team to conduct an estimation for the
market size.

Pitch
Tell all of this in the beginning

Clarifying info

The client manufactures more product categories, but in this case they would like to
know only the premium segments size in Switzerland.
The client wants to know the annual gross value of the market (in CHF).
The client is only interested in manufacturing diapers for children, and does not want
to enter the adult diaper market.
Children aged 0-3 need diaper, and a decreasing amount per day as they age
Premium accounts for roughly 20% of the Swiss market volume

Tell only if the interviewee asks

Suggested approach has 2 parts:

1. Estimating volume: by segmenting the baby population by age
2. Calculating market value: converting volume into value

Suggested approach
If interviewee has very different
approach, ask if he would like to
rethink

2015 by CaseSolvers

Swiss diaper market

Phase 2: Solution
Part 1: Estimating volume

Age group

Share in total population

(assuming an even distribution
with life expectancy of 80 years)

Nr. of children in the age

group (Population of
Switzerland: 8m)

Average daily
diaper use

Diaper use per year

0-1

1.25%

1.25% * 8m= 100,000

10

100,000 *10 * 365 = 365m

1-2

1.25%

1.25% * 8m= 100,000

100,000 * 6 * 365 = 219m

2-3

1.25%

1.25% * 8m= 100,000

100,000 * 2 * 365 = 73m

Total

3.75%

300,000

657 million

Part 2: Calculating market value

Premium diaper volume
20% of total diaper volume
/
Number of diapers per pack
*
Price of premium diaper pack
Market size in Switzerland

2015 by CaseSolvers

131m
Data written in blue may be given
to the interviewee if asked

50
35
92m CHF

Swiss diaper market

Phase 3: Closing
The estimated ratios (e.g. 20% is premium).
The client would like to know the size of the whole market but in the next step it will
be necessary to know more about the players it is possible that it is not worth to
enter this market because of fierce competition etc.

Risks of proposal
Ask what risks of plan are

Further segmentation (diaper size and prices change by age).

There are children who do not wear diaper considering social factors.

Improvement areas
Wait for interviewee to sugggest

2015 by CaseSolvers

CASE #3: DAS KINO

Das Kino
Phase 1: Opening
An entrepreneur friend is considering opening a cinema in Dsseldorf. He would like to
know whether it is a good idea financially or not.

Pitch
Tell all of this in the beginning

He considers an investment to be financially sound if the Return on Sales is above

20%. Return on Sales = Profit after Tax / Net sales.
Lets disregard investment costs.
The cinema would operate with one screening room that seats 200 people.
Viewers can also buy popcorn and soft drinks.
He intends to operate the cinema 360 days in a year with 2 movies shown each day.

Clarifying info
Tell only if the interviewee asks

Suggested approach has 2 parts:

1. Revenue calculation: sum of different revenue streams (movies + snacks)
2. Cost calculation: sum of fix and variable costs

Suggested approach
If interviewee has very different
approach, ask if he would like to
rethink

2015 by CaseSolvers

11

Das Kino
Phase 2: Solution

Snacks (popcorn + soft drinks)

Nr. of customers (720*200*0.6)
*
Ratio of customers who buy
snacks
*
Avg. amount spent on snacks
=
Revenues from snacks

Total revenues

720

200

Part 2: Cost calculation

Copyright fees
10% of ticket revenues

86,400

Snacks
50% of snack revenues

108,000

Rent & utilities

12 x 30,000/month

360,000

Marketing

100,000

Labor costs
1 ticket controller + 1 snack salesman + 1 cleaner + 1
manager = 3 x 30,000 + 1 x 55,000

145,000

60%
10
864,000

86,400

Fix

Movie tickets
Nr. of movies shown per year
*
Nr. of seats available
*
Avg. capacity utilization
*
Net price of 1 ticket
=
Revenues from tickets

Variable

Part 1: Revenue calculation

Data written in blue may be given

to the interviewee if asked

0.5
5

Other

50,000

~216,000

1.08 million

Total costs

~850,000

EBIT - Corporate tax = Profit after tax

230,000* (1-30%) = 161,000

RoS = 161,000 / 1.08 million = ~14.9%

2015 by CaseSolvers

12

CASE #4: AUTOBUS GmbH

Autobus GmbH
Phase 1: Opening
A friend of yours wants to start a bus company. He plans to operate two buses between
Bonn and Mannheim. Before he begins this new venture, he would like to know at what
ticket price the business would break even.

Pitch
Tell all of this in the beginning

Clarifying info

The buses will be rented, lets assume no investment costs.

The buses will operate 360 days in a year, 2 trips in each direction per day.
The company would sell tickets online. Lets disregard the investment costs for the
website.
There is already a company operating buses on the Bonn-Mannheim line, although not
too frequently, therefore your friend thinks that this line still has potential

Tell only if the interviewee asks

Suggested approach

Suggested approach has 2 parts:

1. Cost calculation: Segment fix and variable costs, identify and calculate the major cost
groups within those segments.
2. Revenue calculation: estimate the number of customers and identify break even
ticket price.

If interviewee has very different

approach, ask if he would like to
rethink

2015 by CaseSolvers

14

Autobus GmbH
Phase 2: Solution
Variable

Part 1: Cost calculation

Data written in blue may be given to the

interviewee if asked, however they should
be guesstimated first if it is possible

Fuel
Nr. of trips per year x Nr. of 100 kms per
trip x Fuel consumption per 100 kms x
Fuel price per l = 1,440 x 2 x 25 l x 1.2

86,400

Marketing
12 x 5,000

60,000

Part 2: Revenue calculation

Number of days operating per year

x

Fix

Number of trips per day

Labor
Annual salary of 4 drivers + 2 admin staff
+ 1 manager = 4 x 65,000 + 2 x 50,000
+ 100,000

460,000

Bus rental
Nr. of buses x Nr. of months x Monthly
rent = 2 x 12 x 6,000

144,000

Capacity of one bus

40 passengers

x
Average capacity utilization

80%

Maintenance
1,000 per month

12,000

Other
2,000 per month

24,000

Total costs

360

786,400

Net price of one ticket

~17

Total revenues

783,360

Business breaks even at ~17 ticket price

2015 by CaseSolvers

15

Autobus GmbH
Phase 3: Closing
The capacity utilization may be overestimated. Marketing costs may need to be
increased to maintain or improve it.
Fuel prices can influence profitability, if they increase it can deteriorate the RoS
ratio.

Risks of proposal
Ask what risks of plan are

Pricing could be more sophisticated, e.g. different prices for students, retired people,
etc.
Seasonality can be taken into account when planning the number of trips per day.

Improvement areas
Wait for interviewee to sugggest

2015 by CaseSolvers

16

CASE #5: PET FOOD s.r.o.

Pet Food s.r.o.

Phase 1: Opening
Our client, a Slovakian pet food manufacturer has recently entered the Dutch market,
and would like to know its market share there. They asked our team to conduct an
estimation and propose potential ways to increase sales if the market share is low.

Pitch
Tell all of this in the beginning

Clarifying info

The client manufactures only one product category (dry pet food in 4-10kg packs) for
cats and dogs. This is a commodity product, with big pressure on prices from retailers
They sell mostly to hypermarkets
Key markets are considered to be Slovakia (SK, client's home country), and the
Netherlands (NL). There are also 10 other markets where client is present with
insignificant sales
Client has one plant in SK, which supplies all markets incl. NL

Tell only if the interviewee asks

Suggested approach

Suggested approach has 2 parts:

1. Market share calculation: market share is the fraction of company sales and market
size
2. Strategy for gaining share: Checking if NL market share is low, and possibly suggesting
solutions to increase it

If interviewee has very different

approach, ask if he would like to
rethink

2015 by CaseSolvers

18

Pet Food s.r.o.

Phase 2: Solution
Part 1: Market share calculation
Cats

Dogs

Number of cats

Number of dogs

16.8m people x 16% = 2.7m cats

16.8m people x 9.5% = 1.6m dogs

x
Consumption per cat (kg)

x
Consumption per dog (kg)

110g/day x 365days = 40 kg/year

210g/day x 365days = 75 kg/year

x
Calorific coverage1

x
Calorific coverage1

78% (ask what this depends on

disposable income, but tell the
exact number if interviewee asks)

78% (ask what this depends on

disposable income, but tell the
exact number if interviewee asks)

x
Price

x
Price

2.9 EUR/kg (ask first for a

guesstimation)

1.4 EUR/kg (ask first for a

guesstimation)

=
Market size

=
Market size

244m EUR

131m EUR

Data written in blue may be

given to the interviewee if asked

Company sales in NL
7m EUR

/
Market size

Market share in NL
7m / 375m = 2%

244m + 131m = 375m EUR

Part 2: Strategy for gaining share

Market share of 2% is very low compared to home market (=80%),
the company should increase it. NL market size expected to be
stable / grow slowly, therefore client needs higher sales in NL.
There are two potential ways to achieve this:
1) Increasing price: not possible
Product is a commodity, price increase via branding not realistic
Introducing premium dry pet food also not feasible due to the
Dutch customers looking for highest value/price ratio (which is
true for the current, mainstream product)
2) Increasing volume sold: possible, but only via acquisitions
a) NL volume sold increase not possible from SK plant
Hypermarkets are extremely price sensitive, and order from the
cheapest retailers who can supply reliably
Transportation from SK to NL is expensive, esp. not worth it for
a low-margin product in big packs, such as dry pet food
Reliability can't be guaranteed with the plant being in Slovakia,
and building a new plant in NL takes too long
b) Growth by acquisitions
Interviewee should realize that capacity can be quickly developed
by acquiring local plant(s). He should propose target selection
criteria, such as:
Feasibility: does the client have enough funds to buy a target,
and are the targets up for sale
Strategic fit: target should have plant in NL, and preferably also
good customer relations there
P&L impact: how profitable is the target
Bulding up local manufacturing capacity to be coupled with
increased sales efforts

1. The % of pet food purchased at stores (vs leftover given to animals)

2015 by CaseSolvers

19

Pet Food s.r.o.

Phase 3: Closing
Client is far from NL market, may have difficulties screening and reaching potential
targets
Client may miss funds to acquire
Post-merger integration issues

Risks of proposal
Ask what risks of plan are

Sophisticating price: break-down into smaller and bigger packs with different per kg
price points
Considering the effect of VAT: market size is a gross value, while company sales is net

Improvement areas
Wait for interviewee to sugggest

2015 by CaseSolvers

20

CASE #6: WATER METER Co.

Water Meter Co.

Phase 1: Opening
The Israeli government is interested in knowing the profit of Water Meter Co., an Israeli firm
who is the only licensed producer and distributor of residential water meters in the country.

Pitch
Tell all of this in the beginning

Clarifying info
Tell only if the interviewee asks

They are interested specifically in the companys Profit after tax figure for the previous year.
Water Meter Co. manufactures only one product category (water meters) for residential
users, they also install the equipment which is included in the 200 ILS (Israeli new shekel) price
of a water meter. Sales occus directly through the companys website.
WM. Co. has one plant in Tel Aviv, where the production of water meters is carried out
through an automated process with negligible human input.
Installation is carried out by technicians who drive to the customers houses.
One water meter is certified for 5 years, afterwards it needs to be replaced.
One house needs 2 water meters, one for hot water, the other one for cold.
Suggested approach has 2 parts:
1. Revenue calculation: based on the number of water meters sold and installed in a year.
2. Cost calculation: sum of fix and variable costs.

Suggested approach
If interviewee has very different
approach, ask if he would like to
rethink

2015 by CaseSolvers

22

Water Meter Co.

Phase 2: Solution
Population

~8 million

Avg. household size

~2.5 people

Variable

Part 1: Revenue calculation

Data written in blue may be

given to the interviewee if asked

~ 3.2 million

/
Lifetime of a water meter

5 years

640,000

Fix

Nr. of households getting a

water meter in a year

Manufacturing
Nr. of meters sold/yr. x Manufacturing cost/meter
(1.2 million x 40 ILS)
Selling, general, admin
12 months x 800,000 ILS/month

=
Nr. of households

Part 2: Cost calculation

Technician salaries
Nr. of technicians (640,000 customers/250 working
days/8 hours=320)
1 installation job = 1 hour
*

48 million ILS

~10 million ILS

48 million ILS

Salary of 1 technician (150,000 ILS)

*
Nr. of water meters per
house

Installation overhead (car leasing, etc.)

12 months x 3 million ILS

36 million ILS

Factory overhead

60 million ILS

*
Price of 1 water meter

200 ILS

Total revenues

256 million ILS

Total costs

202 million ILS

EBIT - Corporate tax = Profit after tax

54 million ILS * (1-26.5%) = ~40 million ILS

2015 by CaseSolvers

23

Water Meter Co.

Phase 3: Closing
Seasonality of sales is not taken into account even though it could have a significant
impact on the capacity of the installation service.

Risks of proposal
Ask what risks of plan are

Installation overhead costs may be elaborated further to show specific costs such as
fleet maintenance, fuel, etc.
Capacity usage could be elaborated as well, in reality there must be times when
technicians are not working due to lack of demand, while other times the company
may need to hire extra staff to satisfy demand.

Improvement areas
Wait for interviewee to sugggest

2015 by CaseSolvers

24

In case of any questions, get in touch

case-solvers.com

facebook.com/casesolvers

info@case-solvers.com
25