Interactive Case Review - Management Consulting

Interactive Case
Exercise #1
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End-to-end case exercise
Instructions for the interviewee:
1) This is a detailed case walkthrough that should be used as a practice exercise
2) Use the pages provided and go through each of these steps on your own
3) This was designed to be done individually, or by following our narrated version
4) Note that this is an Interviewer-led case type, in that there will be questions asked directly
5) We have provided a SUGGESTED solution, but remember that there a many different ways to solve the case –
focus on the process more than the result
6) We’re going to cover the five elements of a case:
Defining the Structuring Interpreting Performing Synthesizing

problem your approach exhibits calculations takeaways
Let’s get started with the case prompt
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The initial prompt
Initial prompt
Your client is a US-based baby product manufacturer, called QT Co. The company is the market leader in
strollers and car seats, offering the safest products on the market, which is a feature that parents value
greatly. In addition to the exceptional product quality, QT Co. has managed to keep its prices competitive
especially relative to the competitors in the premium end of the market in which they play. Despite QT Co.’s
market leadership, they have watched their profits dwindle significantly over the past two years. In fact, the
last quarter saw profits that were 30% lower than the same quarter two years earlier. The CEO is
wondering what she can do to correct this trend of declining profitability.
How would you think about solving this problem?

Try defining the problem for yourself
Grab some paper and try “Defining the problem”
Remember to go through the four steps of defining the problem…
1 Listen 2 Recap 3 Clarify 4 Define
…and to structure your page clearly
Take notes here

• … Your problem statement here
• …
• …
• …
• …

Possible problem definition: Listening
Case prompt:
Your client is a US-based baby product manufacturer, called QT Co. The company is the market leader in strollers and
car seats, offering the safest products on the market, which is a feature that parents value greatly. In addition to the
exceptional product quality, QT Co. has managed to keep its prices competitive especially relative to the competitors
in the premium end of the market in which they play. Despite QT Co.’s market leadership, they have watched their
profits dwindle significantly over the past two years. In fact, the last quarter saw profits that were 30% lower than the
same quarter two years earlier. The CEO is wondering what she can do to correct this trend of declining profitability.
Listen and capture

1 the key information
QT Co.
• Stroller & car seat leader Your problem statement
• Profits ↓30%
• What can they do?

Possible problem definition: Recap
Case prompt:
Recap the situation in

2 your own words
• QT Co. is a US-based market leader in strollers

Situation
and car seats
• The company has seen a significant decline in
Complication
profits over the past two years
• The CEO is wondering what can be done to
Question
increase profits

Possible problem definition: Clarify
Case prompt:
Clarify any unclear or

3 missing information
• What is profit currently?

Providing more clarity to
• Does QT Co. sell outside of the US or just domestically?
the situation
• Are strollers and car seats the only products they sell?
Setting boundaries to • Is there a specific profit target we are striving to achieve?

your analysis • Is there a time window in which we are looking to achieve this?

Possible problem definition: More information
Additional information (provided if you asked for it)
• Profits are currently at $70 million
• QT Co. only sells in the US and Canada
• Strollers and car seats are the only product categories and QT Co., but they have different models
• QT Co. is really looking to get to $100 million in annual profit
• As soon as possible

Possible problem definition: Define
Case prompt:
Define the question

4 you are addressing
How can QT Co. get to $100 million in annual

profits as soon as possible?
Now that you have clearly defined the problem you should communicate to the interviewer that you are going to take a
minute to “Structure your approach”

Try structuring the approach for yourself
Continue cracking the case by “Structuring your approach”
Remember the…
Issue tree Key frameworks Four layers
Your problem statement

Market Sizing
Profitability Creativity
A B C
Context
Market Study
Merger & Priority

A.1 A.2 A.3 B.1 B.2 B.3 C.1 C.2 C.3
Acquisition
(M&A)
Structure
A.3. A.3. A.3.
Value Chain
1 2 3

Possible approach: Structure (1)
How can QT Co. get to $100 million in annual profits as soon as possible?
Revenue Costs
Price # Units Sold Fixed Cost Variable Cost
# Units Sold Cost / Unit
Revenue segmentation Fixed cost segmentation Variable cost segmentation

• What are the different strollers
and car seats sold? • Manufacturing – where does QT
Products • Material costs – what is unit
• What are their prices and Co. manufacture and with what
volumes and has it changed? cost? is there a cost breakdown of
method? Have the labor or
each material? packaging?
overhead costs changed at all?
• Where are the products sold?
Sales • Marketing – have there been any • Distribution – how are the
• Have the volumes or prices
Channels major campaigns lately? what products shipped? what are the
changed by channel?
were their costs? any changes? per unit shipping costs? any
difference between sales
• How are sales distributed by • R&D – have any new products
channels? geographies?
Regional state and city? been developed lately? what were
products?
geography • Have there been pricing or their development costs?
volume changes?
Possible approach: Structure (2)
How can QT Co. get to $100 million in annual profits?
External Internal
An “everybody” problem A “QT co. only” problem
Macro Industry Products Operations Sales
Market trends • What are the Analyze changes Analyze changes

• Has there been a different products? across… across…
Economic market-wide sales Analyze pricing, Design QT Co. Customers
• how is household decline? volume, and unit cost • New designs • Who they are
spending in the US • Are there major new changes by: • R&D costs • Segment sizes by
on goods? trends? cheaper Manufacturing value
• Product • Process used, cost • Purchase habits
products? new
Social • Customer-type • Labor costs • Demographics
channels?
• What is the social Customers • Error/return rate Channels used
• Geography
sentiment toward • What are the Distribution • Promotions
premium baby • Sales channel • Method used • Messaging
segments have their
products? habits changed? • Distance and time
Competition • Damaged products
• Has there been a
growth in second • Who are the main ∆𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 ∆𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 ∆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐
hand products? competitors? = 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 − 𝑢𝑢𝑢𝑢𝑢𝑢𝑢𝑢 𝑐𝑐𝑐𝑐𝑐𝑐𝑐𝑐 = R&D + labor = 𝑚𝑚𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎
• Have their profits × 𝑄𝑄 + overhead + ⋯ + 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 + ⋯
declined?
Possible approach: Priority
Priority example # 1 Priority example # 2
I would start on the revenue side looking specifically at I would start on the costs side, looking first at
the change across the different products based on my manufacturing costs, as I a potential opportunity to
belief that there is a increasing demand for lower-cost introduce new technologies, such as automation or 3D
products, which has affected the premium positioning. printing, to reduce these costs.
Revenue
Fixed Cost
Price # Units Sold
• What are the different strollers and
1
car seats sold? 1
Products
• What are their prices and volumes • Manufacturing – where does QT Co. manufacture
and has it changed? and with what method? Have the labor or overhead
• Where are the products sold? costs changed at all?
Sales
• Have the volumes or prices changed • Marketing – have there been any major campaigns
Channels
by channel? lately? what were their costs? any major changes?
• How are sales distributed by state
Regional and city? • R&D – have any new products been developed
geography • Have there been pricing or volume lately? What were their costs?
changes?
Possible approach: Context and creativity
How can QT Co. get to $100 million in annual profits?
Revenue Costs
Price # Units Sold Variable Cost
# Units Sold Cost / Unit
Revenue segmentation Context – including a piece about Variable cost segmentation

• What are the different strollers the specific materials used
and car seats sold? recognizes that there are multiple
Products materials used in creating strollers • Material costs – what is unit
• What are their prices and
volumes and has it changed? and car seats, with some being cost? is there a cost breakdown of
more important than others each material? Packaging?
• Where are the products sold?
Sales • Distribution – how are the
• Have the volumes or prices
Channels Creativity – note the focus on products shipped? what are the
changed by channel?
geographical segmentation rather per unit shipping costs? any
than customer-type, recognizing difference between sales
• How are sales distributed by that customer segmentation may channels? geographies?
Regional state and city? be less useful given the similarity Products?
geography • Have there been pricing or between segments
volume changes?
Information will be shared as you investigate
Additional information (provided as you navigate your framework)
• Market has been increasing in size slightly

• Competitors haven’t changed though our main rival has begun selling exclusively online
• Customer needs are largely the same: they are willing to pay a premium for safety, but also value utility
Revenue information Fixed cost information Variable cost information
• Three products: Strollerall, Care

seat, and the duo, which are • Manufacturing – manufacturing is
priced $400, $250, and $600, US-based and automated for
Products
respectively quality reasons, and cost
• They have all seen declining optimized
volumes • All of the variable costs
• Marketing – the company has
• Three channels: Big box, together – each item ends up
Sales never marketed much, mainly
specialty retailers with about a 20% gross margin
Channels focused on word of mouth and
• They have declined equally strong placement
• R&D – no changes, just standard
Regional • Distributed relative to population,
costs
geography no change
Now that you’ve gotten some information, the interviewer would share an exhibit that contains more data

Exhibit # 1
Sales volume by product for QT Co.
Strollerall Care seat Duo

450k
400k
350k
Units sold (annually)

300k
250k
200k
150k
100k
50k
k
2014A 2015A 2016A
What can you conclude from this exhibit?

Try interpreting exhibits for yourself
Continue cracking the case by “Interpreting exhibits”
Remember the four steps to interpreting exhibits…
1 2 3 4
What does it say? What does it mean? Why is it happening? What to do about it?
Show that you are Show that you can spot Show that you can draw Show that you can lead the
comfortable with trends and identify quick hypotheses by: problem solving by:
data by: links by:
• Formulating ways to test

• Understanding what the • Hypothesizing why the
• Detecting relationships the hypotheses
exhibit is conveying trends are occurring
within the data
• Driving the case
• Prioritizing the • Determining potential
• Identifying their effects analysis forward
important information drivers of the trends
on the problem
• Recommending next
• Contextualizing the • Linking what you see to
• Isolating critical trends steps for both the
message the central problem
analysis and the client

Possible analysis: Interpreting exhibits
1 What does it say?
• There’s been a decline in volume in all products from 1.2M to less than 900k
• The Duo has experienced the worst decline losing about 40% of its volumes,
Sales volume by product for QT Co. which is especially challenging given it is the highest margin product
2 What does it mean?

Strollerall Care seat Duo
450k • It seems that sales volume declines explain the majority of the 30% loss in
profits given they volumes have declined about 30%
400k • But, the market has grown which means that a competitor has stolen share
350k
Units sold (annually)
3 Why is it happening?
300k
• I could see this being for two reasons:
250k
• Customer-related – our products, especially the Duo, may not be meeting
200k needs of customers or sold in the right channels, given that they are not online
150k • Competitor-related – a main competitor could have introduced a new product,
or products, that is outcompeting ours
100k
50k 4 What to do about it?
k Analysis:
2014A 2015A 2016A • Customer analysis – where and what products are selling?
• Competitor analysis – which competitor has stolen our share? what are their
products? what are their sales channels and marketing methods?
Client:
• Revisit past marketing and R&D projects to see if it is a product or sales issue
Exhibit # 2
Relative total value of sales by channel
Online Specialty Bigbox

100%
90%
80%
70%
Sales by channel
60%
50%
40%
30%
20%
10%
0%
2010A 2011A 2012A 2013A 2014A 2015A 2016A 2017E 2018E 2019E
What can you conclude from this exhibit?

Possible analysis: Interpreting exhibits
1 What does it say?
• The value of sales by channel has shifted significantly over the past six years
and is expected to continue toward favoring online rather than Bigbox and
Relative total value of sales by channel Specialty stores
2 What does it mean?

Online Specialty Bigbox
• For QT Co., this should be eye opening given that their sales are exclusively
100%
through Bigbox and Specialty stores meaning that there may be an
90% opportunity to increase sales by focusing more on online sales
80%
3 Why is it happening?
70%
Sales by channel
60% • This trend is probably consistent across most retail items, but I think could be
driven by the generation with children being increasingly tech savvy and
50% demanding more convenience
40% • Additionally, people may be more likely to trust online reviews of items than
30% touching and feeling
20% 4 What to do about it?
10%
Analysis:
0% • Margin differences – given this is total value of sales I would want to look at
the margin across channels to decide if we’d have to re-price to enter online
Client:
• I would recommend exploring the online sales channel; where people sell,
where people buy, logistics, etc.
Performing calculations
Now that you have pushed the analysis past the exhibits, the interviewer would direct you to calculate something related
to the exhibit or something related to the overarching problem
The client believes that the issue is not the quality of the products, but the channel through which they are sold. An
analysis your team performed internally showed that introducing sales through online channels could boost sales
volumes by 10% per item. How much would this increase QT Co.’s profits?

Try for yourself
Continue the analysis by “Performing the calculations”
Remember the three steps to performing the calculations…
1 SETUP 2 EXECUTION 3 REFLECTION
Clarify the objective Follow your initial structure State your answer
Lay out your formula Perform the mental math Derive the insight
Convey your approach Sanity check the result Communicate the next steps

Possible approach: Performing the calculations
1 SETUP
• Increase all product volumes by 10% Information to shared earlier in analysis
• New profit?
𝐀𝐀𝐀𝐀𝐀𝐀𝐀𝐀𝐀𝐀 𝐩𝐩𝐩𝐩𝐩𝐩𝐩𝐩𝐩𝐩𝐩𝐩 = 𝐚𝐚𝐚𝐚𝐚𝐚𝐚𝐚𝐚𝐚 𝐯𝐯𝐯𝐯𝐯𝐯𝐯𝐯𝐯𝐯𝐯𝐯 × 𝐩𝐩𝐩𝐩𝐩𝐩𝐩𝐩𝐩𝐩𝐩𝐩 𝐦𝐦𝐦𝐦𝐦𝐦𝐦𝐦𝐦𝐦𝐦𝐦
2 EXECUTION
• Prices: Strollerall - $400; Care seat -
$250; Duo - $600
Volume 10% 20% Total new
Product Price
(2016A) increase margin profit • Margin: 20% for all items
• Current volumes from exhibit # 1 -

Strollerall $400 350k 35k $80 $2800 k 2016A
Care seat $250 300k 30k $50 $1500 k
Duo $600 225k 22.5k $120 $2700 k
$7 million

Reflection
3 REFLECTION
QT Co. could increase profits by $7 million if they introduced online sales, thereby
State the answer
increasing the sales volumes by 10% across all products
Though this is about 10% more than they are making now, it is still $23 million short of the
Derive the insight $100 million dollar target. Additionally, I think it’s critical to work through the logistics of
online sales and any potential revenue cannibalization.
My next steps would be two things:

1) Work through the logistics of online sales – identifying where items should be sold, how
Communicate to handle shipping and fulfillment, and assess other best practices
the
2) Investigate other growth opportunities – we are still short of the target meaning more
next steps work is left to be done. My first thought would be to investigate adding a new product
line or expanding internationally, both of which would require significant further
investigation.

Synthesizing takeaways
You’ve now gone through all of the major components of a case, despite not getting to a firm solution. Your interviewer
would at this point guide you to propose a recommendation.
The CEO just walked into the case team room and is looking for an update on what you have discovered. She is
looking for a quick, thirty-second synthesis of key findings.

Try synthesizing takeaways for yourself
Conclude the case by “Synthesizing takeaways”
Remember the three four levels of synthesizing…
PAST Recap the Frame your recommendation by restating the initial problem and recapping
1 problem the analysis performed, briefly
State a
2 recommendation State your solution for solving the initial problem presented by the client
Support your recommendation with 3-4 key facts – ideally quantified – from
Support with 3-4 the case
PRESENT 3 key facts
(Profits will increase 15% rather than profits will increase)
Two levels:
Suggest the
4 next steps
• Where you would take the analysis to strengthen the recommendation
• What the client should do next to act on the recommendation
FUTURE
Synthesizing takeaways
PAST Recap the

1 problem
We set out to determine how QT Co., can get back to $100 million of profit…
… and based on my findings I would recommend that you introduce an online

State a
2 sales channel, but also, explore other expansion opportunities. I believe
recommendation
these both warrant further effort for three reasons:
1. Market-wide sales have shifted toward online where you are not
present, meaning that you can better meet customer channel preferences
2. Adding online sales could boost profits by $7 million annually, which is
PRESENT
Support with 3-4 still $23 million short of the target, but a worthwhile effort especially thinking
3 key facts ahead when sales continue trending toward the online channel
3. Looking at international expansion or product extension may increase
the size of your market, possibly boosting profits closer to your target,
through this needs significant analysis
Despite this, there are still some risks. For the online expansion, the logistics
Suggest the still need significant research and there may be meaningful time and capital
4 next steps investments required to realize it. With the internationalization or extension, we
FUTURE still must assess where attractive markets are and how viable they to enter.

Interactive Case Review - Management Consulting

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Interactive Case Review - Management Consulting

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Interactive Case

Instructions for the interviewee:

1) This is a detailed case walkthrough that should be used as a practice exercise

3) This was designed to be done individually, or by following our narrated version

6) We’re going to cover the five elements of a case:

Defining the Structuring Interpreting Performing Synthesizing

Let’s get started with the case prompt

All rights reserved © 2017 Vocaprep.com

How would you think about solving this problem?

All rights reserved © 2017 Vocaprep.com

Remember to go through the four steps of defining the problem…

1 Listen 2 Recap 3 Clarify 4 Define

…and to structure your page clearly

Take notes here

All rights reserved © 2017 Vocaprep.com

Listen and capture

All rights reserved © 2017 Vocaprep.com

Recap the situation in

• QT Co. is a US-based market leader in strollers

All rights reserved © 2017 Vocaprep.com

Clarify any unclear or

• What is profit currently?

Setting boundaries to • Is there a specific profit target we are striving to achieve?

All rights reserved © 2017 Vocaprep.com

Additional information (provided if you asked for it)

• Profits are currently at $70 million

• QT Co. only sells in the US and Canada

• QT Co. is really looking to get to $100 million in annual profit

All rights reserved © 2017 Vocaprep.com

Define the question

How can QT Co. get to $100 million in annual

All rights reserved © 2017 Vocaprep.com

Continue cracking the case by “Structuring your approach”

Issue tree Key frameworks Four layers

Your problem statement

Merger & Priority

All rights reserved © 2017 Vocaprep.com

Price # Units Sold Fixed Cost Variable Cost

# Units Sold Cost / Unit

Revenue segmentation Fixed cost segmentation Variable cost segmentation

Macro Industry Products Operations Sales

Market trends • What are the Analyze changes Analyze changes

Price # Units Sold Variable Cost

# Units Sold Cost / Unit

Revenue segmentation Context – including a piece about Variable cost segmentation

• Market has been increasing in size slightly

Revenue information Fixed cost information Variable cost information

• Three products: Strollerall, Care

All rights reserved © 2017 Vocaprep.com

Sales volume by product for QT Co.

Strollerall Care seat Duo

Units sold (annually)

What can you conclude from this exhibit?

All rights reserved © 2017 Vocaprep.com

Continue cracking the case by “Interpreting exhibits”

Remember the four steps to interpreting exhibits…

• Formulating ways to test

All rights reserved © 2017 Vocaprep.com

2 What does it mean?

Relative total value of sales by channel

Online Specialty Bigbox

What can you conclude from this exhibit?

All rights reserved © 2017 Vocaprep.com