PowerPoint Presentation

Darden School of Business

Darden Case Book

2018-2019 Edition

New

Material +

12 Total

Cases

6 New

Cases

Writers

The cases featured in the 2018-2019 Case Book are some of

Darden’s best cases from prior years

This case book adds a new consulting industry guide, a

revamped company profile page, and 12 total cases

The 2018-2019 Case Book features 6 brand new cases that

will test a broad array of knowledge areas and math concepts

The 2018-2019 Darden Case Book has been made possible by

Darren Constantine (MBA ‘19), Stephen Mortensen (MBA ‘19), Pedro

Lemos (MBA ‘19) Seun Odekunle (MBA ‘19), & Caitlyn Unsworth

(MBA’ 19)

Darden Case Book 2018-2019 Foreword

Darden Case Book 2018-2019 Index

Case Book Topic Pages

Consulting Recruiting Schedule 6

Non-Verbal Tips for Success 8

What is a Case Interview? 9

Popular Case Themes 10

Case Interview Format 11-22

Industry Overview 23-32

Consulting Firm Overview 33-43

Case Book Guide 45-46

New 2019 Darden Cases 48-113

Updated Darden Cases 114-177

*(N) Denotes new cases to the Darden case book (R) denotes refurbished cases

Darden Case Book 2018-2019 Index

Case Title Firm Industry Round

Difficulty

Quant / Qual / OVR*

Page

National Express Trucking (N)* Bain & Co. Transportation 1 1 2 1 48

Styrofoam Situation (N) BCG Financial / PE

2 1 2 1 58

North-South Pharma (N) AT Kearney Healthcare 1 2 2 2 68

Fire Proof Inc. (N) Parthenon EY Manufacturing

1 2 2 2 83

Quality Bottling Co. (N) Parthenon EY Manufacturing

1 2 3 2 93

Canyon Capital (N) Bain & Co. Financial / PE 2 3 2 3 105

Transportation Tech Co. (R)* Parthenon EY Transportation

1 2 2 2 114

Lonely Gas Station (R) BCG Financial

2 3 1 2 126

Copier Co. (R) BCG Consumer

1 3 1 2 136

Maxicure (R) McKinsey Healthcare 1 3 2 2 147

To Automate or Not (R) BCG Retail

2 2 3 3 156

Rubber Bumper Laboratories (R)

McKinsey Manufacturing

1 3 3 3 167

*(N) Denotes new cases to the Darden case book (R) denotes refurbished cases

*(OVR) Denotes overall case difficulty

Recruiting Schedule & Tips

for Success

Consulting Recruiting Schedule

August

September

October November December January February

Q1 Q2 Winter Break

Second Year Time-line

First Year Time-line

FY Case Progression Tracker:

No Casing Beginner Intermediate Proficient Master Expert

Target Case & Communication Score: (xx/25)

12/25 18/25 23/25 25/25

Q1 Q2 Winter Break Q3

Company Briefings

Networking Events &

Socials

Firm Office Hours &

Workshop Sessions

CDC & Club

Introductions

Closed List

Networking Sessions

Application

Submission

Consulting

Interviews

Club Intro &

Recruiting Kick-off

Company Briefings &

Networking Events

Closed List

Networking Sess.

Application

Submission

Consulting

Interviews

*(Case score is based on the score sheet placed at the end of each case)

The Case Interview Process

Non-Verbal Communication (Tips for Success)

Communicating the correct message non-verbally is as important as the content that is communicated in a case

interview. In order to recommend a candidate, interviewers must:

1. Feel comfortable putting the candidate in front of a client

2. Believe they would enjoy spending 60+ hours a week with the candidate on a project team

You Need to Convey

• Trustworthiness

• Confidence

• Competence

• Honesty

• Positivity

• Curiosity

• Passion

• Practice and gain proficiency in the technical requirements of

a case – free up mental energy to focus on connecting with

the interviewer

• Practice positive self-talk – the best way to demonstrate

these traits is to truly believe you have them

• Practice quickly connecting with people about non-work

subjects – building rapport before diving into the interview

makes an enormous difference (Note: Not always possible)

How to Develop These Traits

What Is A Case Interview?

A case interview is a simplified, condensed version of a complete consulting project. The candidate is in the driver’s

seat and is expected to explore the data and provide solutions to an issue that a client paid the firm for.

Ideal Candidates

Demonstrate

Problem-solving

Ability

Interpersonal Skills

Cultural Fit & Passion

The case interview is an example of a real business problem based on your interviewer's past work experiences. The problems you will

encounter are not designed to be brainteasers, or theoretical problems designed to stump you, but rather to reflect the challenges

that our clients face. These real-life examples allow you to learn more about the type of work we do and the impact we have with our

clients.

From Bain’s Website (but representative of all firms):

Bain looks for:

• The approach you take to solving a problem

• How analytical and creative your thinking is

• Your usage of data to quantify your recommendation(s)

• Your communication skills in conveying your ideas

• How you would suggest implementing those proposals"

Profitability:Analyze potential sources of profit declines and identify ways to improve

profitability

Consulting Case Themes

The following case themes are the most popular topics tested and they are ranked in descending order of frequency.

Please note that there are plenty more case topics than the 5 listed below.

Market Entry / Market Sizing:Analyze the client’s opportunity to expand and quantify

the viable market for any new products

Growth: Identify opportunities for the client to optimally grow revenues or increase

market share

Acquisition / Sale: Determine whether the client should purchase another business or

sell an existing part of the company

Industry Assessment: Assess the health and attractiveness of a particular industry to

advise a client’s decision

Note: This not an exhaustive list of all the types of cases you may experience

Case Interview Format

Intro Fit Question Case Interview Q&A

3-5 Mins 5 Mins

20-30 Mins

5 Mins

Conclusion/

Next Steps

Brain-

storming

Exhibits &

Analysis

Framework

Prompt &

Clarifying Q.

Prompt: This is the premise of

the case. It will include some

background on who the client

is and lay out the problem.

Clarifying Questions: Some

basic contextual questions to

guide your framework; not a

time to get into the nitty gritty

Framework: Once you are

confident that you

understand the prompt and

context, you will take roughly

90 seconds to lay out a

"roadmap" for how to

approach the case. See the

section on "Case

Frameworks" for more tips.

Exhibits: Provide important

insights and next steps in

cracking a case. You should

walk through each exhibit with

the interviewer, confirming

understanding of its content

and identifying relevant

patterns or insights.

Math: See the section on

"Math" for more tips.

Brainstorming: After the

initial analysis, the

interviewer will often ask you

to brainstorm around

additional aspects of the

problem. See the section on

"Brainstorming" for more tips.

Conclusion: Recap (briefly!)

the initial problem, present

the logical conclusions and

solutions that arose from

analysis and brainstorming

(along with the data to

support them.)

Next Steps: Suggest some next

steps for implementation or

further research and point out

any potential risks

Note: This format may differ by firm or by interviewer

Fit / Behavioral Question Overview

Tell Me

About

Yourself

Why

Firm X or

Consult-

ing

Tell Me

About A

Time

When…

Consulting firms are assessing your ability to successfully work with teams and judge how well you understand their

firm and yourself

• Your pitch should include: Where you have been / what you have done, who / where you are now, and

what you are interested in going forward

• All answers must include: Relative skills & experiences, key transition points in your career, and a career

objective

• Strong answers have: Powerful “hook” –your value proposition that highlights how you have the

competencies they are recruiting for

• Firm & industry fit: Interviewee should have a deep understanding of a firm’s culture, functional expertise,

and working style

• Industry interest: Interviewee should highlight experiences they want to gain and skills they can bring

• Strong answers have: This question answered in opening pitch, structured reasons why, and answers

tailored to your prior experiences and future aspirations

• Experience/ behavioral: Interviewee should demonstrate leadership ability, “drive” –taking initiative, and

professionalism

• CAR: Context / challenge you faced, the action that you demonstrated, and the result of your actions

• Strong answers have: Concise response, a learning element if the situation helped you grow, utilizes

structure, and engages the interviewer with energy, emotion, and authenticity

The Prompt and Clarifying Questions

Conclusion/

Next Steps

Brain-storming

Exhibits & Analysis

Framework

Prompt & Clarifying Q.

• All case prompts will introduce the

company name, industry, and a brief

description of what the client wants

• Some prompts tend to leave the primary

objective to be vague

• Most prompts leave out the business

context of the clients core products or

operations in question

The Prompt

Clarifying Questions

• Clarifying questions should always be

high level (ex. Context on products, core

goal of the client, how client makes

money)

• Don’t ask for detailed insights that you

can include in framework (ex. Details on

profitability drivers, market trends, etc )

• Feel free to ask further clarifying

questions as you are building framework

The Case Framework

By laying out a framework for analysis at the beginning of a case interview, you are not only keeping yourself organized,

but you are providing a visual roadmap for the interviewer to see how you are thinking and where you are going.

Characteristics of Great Frameworks Incorrect Framework Myths

• MECE: Mutually Exclusive, Collectively Exhaustive

• Detailed but not lost in the weeds

• Thorough but not wasteful

• Insightful but not presumptive

• There is one perfect framework for every case

• There is a finite number of possible frameworks

that will provide answers to every case

• Frameworks are not that important to the overall

interview

Conclusion/

Next Steps

Brain-storming

Exhibits & Analysis

Framework

Prompt & Clarifying Q.

Framework Example

• Internal Capabilities

• Acquisitions

• Manufacturing Capacity

• Distribution Networks

• Brand Perception

• Exit Strategies

• Consumer Preferences

Some frameworks are better than others to address a particular case. There are always multiple approaches that can

yield the same answer.

A simple framework example:

Key Question in the Prompt

Notes +

Clarifying

Answers

Profitability Tree Market / External

• Competitors

• Economic Health

• Regulation / Government

• Industry Trends

• Geography / Climate

Customer / Company

Conclusion/

Next Steps

Brain-storming

Exhibits & Analysis

Framework

Prompt & Clarifying Q.

Other Framework Examples

Before After

Evaluation Criterion 1

Evaluation Criterion 2

Evaluation Criterion…

Company A Company B Company A + B

Evaluation Criterion 1

Evaluation Criterion 2

Evaluation Criterion…

Option 1 Option 2 Option 3 Option 4...

Evaluation Criterion 1 + - - +

Evaluation Criterion 2 -...

Evaluation Criteria...

• Compare current with future

• Ideal for a go/no-go decision

• Can be used with profit tree (profits before and

after)

Before & After

M&A (similar to Before and After)

• Compare Company A, Company B, and Company

A+B along various meaningful criteria

Alternative | Evaluation Criteria Matrix)

• Alternatives listed across the top

• Evaluation criteria listed along the left

• Use +, -, o, or check marks to go through the list

While being exposed to many frameworks can help build a strong repertoire of framework components, remember that

no amount of specific framework memorization will cover every possible case a candidate could encounter.

For more details on Framework, please see appendix xx

Guide to Exhibits & Analysis

Conclusion/

Next Steps

Brain-storming

Exhibits & Analysis

Framework

Prompt & Clarifying Q.

Read The title of the exhibit to have a

clear understanding of the information

Observe The legend and gauge the

sizes of any bar graphs for insights

Pay Attention To the footnotes for vital

information

Guide to Math Analysis

Conclusion/

Next Steps

Brain-storming

Exhibits & Analysis

Framework

Prompt & Clarifying Q.

Tips for Success

Although most case mathematics will involve simple arithmetic, it is still very easy to make mistakes. Follow the tips

below to ensure that you are set up for success.

Sanity Check

Make sure your

numbers make

sense in the context

of the case

Mistakes are OK

You can recover

from mistakes, just

don’t make the

same mistake twice

Use Shortcuts

Round when

needed and

manage your zero’s

appropriately

Talk it Through

Explain each step

that you are doing

with your

interviewer

So What

Tie the numbers

back to the

question and

explain the

implications

Practice

practice until you’re

comfortable doing

math in front of an

interviewer

Guide to Math Analysis

Conclusion/

Next Steps

Brain-storming

Exhibits & Analysis

Framework

Prompt & Clarifying Q.

Tricky Math Examples

Net Present Value

A. Calculates the discounted return on

investment over time

B. Requires cash flows (revenues - costs

over a time period), discount rate,

timeframe, and an upfront cost

C. Some cases will assume a calculation

into perpetuity (timeframe = forever).

D. Perpetuity: (Cash Flow per Period /

Discount Rate) - Upfront Cost

Payback Period

A. Calculates the amount of time required

to pay back an upfront investment

B. Requires cash flows per period and an

upfront cost

C. Payback period will be extremely long,

extremely short, or you will be given

some type of specific criterion the

client uses (e.g. 5 years)

D. Payback Period = Upfront Cost / Cash

Flows per Period

Break-even Sales

A. Calculates the number of units sold to

pay back an upfront investment

B. Requires per-unit selling price, per-unit

costs, and upfront investment cost

C. Break-Even Sales = Upfront Investment

Cost/(Per-Unit Selling Price - Per-Unit

Costs)

Guide to Math Analysis (Things to Take Note)

Conclusion/

Next Steps

Brain-storming

Exhibits & Analysis

Framework

Prompt & Clarifying Q.

Current

State

$ Mater. /

Unit

# Labor /

Unit

Volume Total

Cost

Product 1 15 10 1M = $25M

Product 2 5 20 2M = $50M

= $75M

Future

State

$ Mater. /

Unit

# Labor /

Unit

Volume Total

Cost

Product 1 15 9 1M = $24M

Product 2 5 18 2M = $46M

= $70M

Total Savings = $5M

How much money will the client save?

10% Labor Reduction on a per unit basis

A. Structure is crucial. The more you can structure information

like an Excel Spreadsheet, the better

I. Helps you recover information

II. Your interviewer can follow along

III. It makes you look organized

B. Write down prompts such as “How much money will the

client save” and “10% labor reduction per unit” to keep the

goal fresh in your mind

C. Circle any important numbers (Total Savings =$5M) that may

be relevant to your final recommendation

D. Go Deeper by speaking to the context of the number, ex: “ I

see the total savings is $5M, which represents about 6% of

our total costs. This seems like a reasonable deduction but

we should figure out how this labor reduction is being

generated and seek to understand any negative

unanticipated consequences as a result of it.”

Example Scenario

Tips For Brainstorming

The key to brainstorming is structure. The candidate should first devise two or more "buckets" or categories to organize

his/her thoughts. These constraints make it easier to be creative and provide a more vivid mental model to pull from.

• Internal represents any aspect internal to the client, (e.g.

products, brand, financials, leadership, etc.)

• External represents factors external to the client, (e.g. market

trends, geopolitical dynamic, competition, etc.)

Internal vs. External

Financial vs. Non-Financial

Long-term vs. Short-term

• Each step in the supply chain is a category: raw materials,

manufacturing, warehouse, transport, retail, customer, etc.

• Useful for exploring causes or solutions to cost problems

The Supply Chain

• Clients, employees, investors, suppliers, regulators, etc.

• How are they affected, or what are they looking for?

Stakeholders

• AIDA – Attention, Interest, Desire, Action

• Useful for increasing sales

Customer Journey

• Useful for examining potential consequences of a decision

• Financial includes things like costs, hurdle rates, cash flow, etc.

• Non-financial would be everything else

Conclusion/

Next Steps

Brain-storming

Exhibits & Analysis

Framework

Prompt & Clarifying Q.

Example Brainstorming Frameworks:

Conclusion & Next Steps

Conclusion/

Next Steps

Brain-storming

Exhibits & Analysis

Framework

Prompt & Clarifying Q.

There are three key elements that the interviewer should include while wrapping up the final portion of the case.

Say the action that the client should take and cite the key insights

in your analysis that have led you to the conclusion

1. Recommendation

2. Risks & Concerns

Mention the factors in the case that the client should be aware of

that may impact the client or the recommendation –(Concerns

should not contradict your overall recommendation)

3. Next Steps

Highlight at least one action the client should do to either help

mitigate any concerns or any actions needed to move forward

with the recommendation

While you can take a minute before you gather your recommendation, it is crucial to keep this segment concise

Industry Overview

Please note that these are commonly tested industries; This list is not exhaustive

of all the industries tested

Important Calculations

1. Inventory Turnover:

= (Sales / Inventory)

2. Gross Margin:

= (Revenues – COGS)

Revenues

3. Contribution Margin (CM):

= (Sales – Variable Costs)

CM Rate = (CM)

(Sales)

Industry Overview – Consumer / Retail

Key Industry Trends

Important Terminology

• Digital Marketing: CPG (Consumer Packaged Goods) companies are pivoting to digital marketing

solutions like Facebook and YouTube more than ever for smarter and more targeted advertising.

• Big Data: Consumer companies & retailers are ramping up the use of consumer shopping behavior data

now more than ever to create curated/ personalized shopping experiences and targeted advertisements

• Retail Omnichannel: Large brick & Mortar retailers are pivoting to an “order online, pick-up in store” mix

while also building out their online fulfillment capabilities to cater to the consumer. and keep up with

Amazon). Store foot-prints are also getting smaller to reduce inventory

• Private Label & Amazon Effect: Private label consumer products are eroding market share of large name

brand products. This is partially driven by “the Amazon effect” of quick and cheap replacement

fulfillments. -Brand loyalty is getting harder and harder to win.

• Direct to Consumer vs. In-store Experience: Brand names are slowly shifting resources to sell directly to

consumers as some retailers struggle. Retailers with large brick & mortar footprints are focusing on in-

store experiences to attract customers

• SKU: Stock Keeping Unit – Refers to a unique item sold in a store

• In-stock: Percent of items that are on the shelves and available for sale vs. what the total display can

hold

• CRM: Customer Relationship Management: Strategy & tools designed to boost profitability and

strengthen customer loyalty by using data – also the name for software that facilitates this

• Loss Leader: Merchandise sold at a loss to attract new customers or stimulate other profitable sales

• Mark-up: Percentage added to the cost of product to get selling price

*Please note that not all trends, terminologies, and calculations are listed above

Important Calculations

1. Return on Investment (ROI)

= (Profits – Cost of Investment)

Cost of Investment

2. Breakeven Point

= ______(Fixed Costs)____

Contribution Margin (CM)

Important Considerations:

• Transportation / Distribution costs

• Storage Costs

• Production Costs: Labor + Materials

• Plant Development Costs

• Depreciation & Taxes

• Overhead

Industry Overview – Energy

Key Industry Trends

Important Terminology

• Clean Renewable Energy: Wind, solar, and biomass power are increasingly replacing the use of fossil

fuels in developed and developing countries with some projections indicating 80% of the worlds energy

needs being met by renewable energy by 2050

• Technology: Advancements in drilling techniques like “fracking” and horizontal drilling have significantly

boosted the output of US oil companies and substantially reduced the cost and risks associated with

drilling for oil

• Shale: Newly found abundance of shale basins in the USA has helped to boost US oil production output

and has almost eliminated US dependence on foreign oil

• Natural Gas: Given its cheap and abundant supply, natural gas has become the primary source of energy

in the US, replacing crude oil and coal

• (Important) Petroleum Products: Gasoline, jet fuel, natural gas, fertilizer, plastics, detergent, propane,

diesel, lubricant

• Upstream (E&P): Exploration and Production – Process involving the finding, drilling, and producing

of crude oil and natural gas or liquified natural gas (LNG)

• Midstream: Focuses on the processing, storage, marketing, and transportation of oil and natural gas.

(Most pipe-line companies fall in this category)

• Downstream: Includes oil refineries, petrochemical plants, petroleum products distributors, retail

outlets and natural gas distribution companies

• OPEC: Organization of Petroleum Exporting Countries – Cartel of 14 nations that coordinate

petroleum policies. –Often influences output and thus oil prices

*Please note that not all trends, terminologies, and calculations are listed above

Important Calculations

1. Potential Savings by Switching

Equipment

= {New Profit – Old Profit} or

{ [(New Capacity x Price) – (New

efficiency x cost)] – [(Old Capacity x

Price) – (Old efficiency x cost)]}

Important Considerations:

• Gasoline / Fuel Prices

• Carrying Capacity

• Range / Distance

• Destination Routes

• Maintenance Costs

• Depreciation

Industry Overview – Transportation

Key Industry Trends

Important Terminology

• Airline Capacity Additions: Airline ticket prices have been steadily on the decline driven by companies

adding more routes to cities across the globe –led by low-cost carriers such as JetBlue, Southwest

• Fuel Efficiency: Airline companies have been investing heavily in upgrading their fleet to more fuel

efficient aircrafts to reduce their biggest cost driver

• EV (Electric Vehicles): Auto manufacturers are all racing to create battery powered vehicles

• Autonomous Vehicles: Autonomous vehicles are expected to hit the road as early as 2019 and will cause

major disruption to auto manufacturers, bus systems, taxis, insurance companies

• Shortage of Truckers: Transportation companies have been struggling to keep up with the booming

demand for cargo shipments due to a massive shortage of truck drivers –thus causing significant

increases in labor costs

• Load Factor: Measures the capacity utilization of transportation services and is equal to the average

actual utilization divided by the maximum capacity

• PRASM: Passenger Revenue per Average Seat Mile –Or RASM (revenue) is the revenue generated per

available set miles in which ASM = number of seats available x number of miles flown.

• Logistics: The detailed coordination of complex operations involving many people, facilities, or supplies.

• FOB: Free On Board –Represents the point at which the sale of a freight cargo is considered complete.

“FOB shipping” means ownership is transferred once the product is shipped of, “FOB shipping point”

means ownership is transferred once the product is delivered

• LTL & FTL: LTL (Less than Load) – Small freight that doesn’t fill a truck which is generally more expensive

to ship, (FTL) Full Truck Load) – Large shipments that fill a trailer and are thus cheaper to ship

*Please note that not all trends, terminologies, and calculations are listed above

Important Calculations

1. Potential Savings with New

Equipment

= (New Equip. Expenses – Old Equip.

Expenses)

[(Old Time x Old Labor) + (Raw Material

Cost x Old Quantity) + Old Depreciation)]

- [(New Time x New Labor) + (Raw Material

Cost x New Quantity) + New Depreciation)

Important Considerations:

• Raw Material Costs

• Labor & Wages

• Capacity Constraints / Bottlenecks

• Commodity or Not?

• Overhead Costs

• Supplier & Buyer Relationships

• Depreciation

Industry Overview – Manufacturing / Agriculture

Key Industry Trends

Important Terminology

• D2C: Direct to Consumer: More manufacturers are leveraging their own sales platform to market, sell,

and ship their products to the customer rather than use third party distributers or retailers to boost

profitability

• Data Driven Analytics: Manufacturers are using predictive analytics and algorithms to improve product

design, optimize production cycles, and improve demand forecasting

• Trade-war & Tariffs: In response to the US tariff on steel and more, Canada, the European Union, and

China have all implemented retaliatory tariffs of close to 25% on agricultural and automobile goods

produced in the US.

• Sustainable Food Systems: Vertical farming has been a growing trend in urban locations to minimize

environmental foot-prints and bring produce to major cities

• (JIT) Just-in Time Inventory: “Pull demand” inventory system in which assembly materials and support

items are delivered as needed to minimize raw material inventory

• Commodity: An interchangeable non-differentiated product or material that is sold freely. (Most

agricultural products are commodities)

• Bottleneck: The resource in a manufacturing process that is working at max capacity and thus limits the

output of the entire production

• Bushel: A unit of dry measure (1 cubic foot) for grain, fruit, etc., equivalent to 8 gallons of liquid

• Out-source: Process of contracting an outside party to complete a production or service task for a

business. –Typically done to save cost or due to a lack of expertise

*Please note that not all trends, terminologies, and calculations are listed above

Important Calculations

1. NPV (Net Present Value)

= (CF) x ___1 ___

(1+i)

Where n = # of periods

2. Pay Back Period

= _____(Fixed Costs)_______

Contribution Margin (CM)

Important Considerations:

• Current Portfolio

• Exit Strategy & Time Horizon

• Acquisition Price

• Employee & Customer Relationships

• Market Trends

• Tax & Regulatory Implications

• Client Risk Profile

Industry Overview – Financial Services

Key Industry Trends

Important Terminology

• AI, Block-Chain & Crypto Currencies: Digital distributed ledgers offer a cheaper and more efficient way

for firms to verify and facilitate transactions. Crypto currencies have proven themselves to be an

alternative set of asset investments that rival equities, precious metals, and debt holdings

• Digital-Only Banks & Payments: The prevalence of more digital transactions have eroded the need for

cash for most daily use, which has in turn lead to the proliferation of online banks that offer higher

savings account interest rates and comparable services

• Financial De-regulation: Congress passed legislation easing some of the restrictions from Dodd- Frank

that exempts smaller banks from certain capital requirements which frees up room for more loans

• More Transparency in PE Funds: With greater pressure to produce results that outperform their

benchmarks, more PE investors have been demanding greater transparency within their funds and firms

have been using transparency to attract investors

• AUM: Assets Under Management: Market value of all the financial assets that a firm manages on

behalf of all of their clients and themselves. –Includes capital raised by investors and leaders of a firm

• Private Equity: Composed of investors and funds that invest directly into private companies or

convert public companies to private companies to improve the target company’s operations and

financials with the goal of extracting a financial return from the company and reselling it another firm

or the public at a profit

• M&A: Mergers & Acquisition: Mergers are when two companies comes together to make a new

entity (Dow Chemical & Dupont) = DowDuPont, while an acquisition is where the smaller company is

consumed by the larger company (Amazon + Wholefoods) = Amazon

*Please note that not all trends, terminologies, and calculations are listed above

Important Calculations

1. Addressable Market size:

Top-Down: Total Population >>> Number

of users >>> Market share >>> # of Units

per User x Price per Unit

Bottom-Up: Current Customer Population

>>> Potential Customer Base (Estimated

using consensus data or industry info) >>>

Future user base x units per user x price

2. Customer Acquisition Cost:

_______Marketing Expenses_____

Newly Acquired Customers (Yearly)

Industry Overview – Information Technology

Key Industry Trends

Important Terminology

• Artificial Intelligence (AI)/ Machine Learning: Artificial intelligence is the ability for a computer program

to think and learn. The emergence of AI has enabled the rise of self-driving cars, smart homes, advanced

search algorithms, and smart digital assistants

• Cloud Computing: Is the practice of using a network of remote servers hosted on the Internet to store,

manage, and process data, rather than a local server or a personal computer. More companies are

moving to this platform for security, convenience, and cost savings

• Internet of Things (IOT): Smart devices that are all connected and communicate with each other via the

internet are rising in demand due to value of strategic data that they provide

• Blockchain: a digital ledger in which transactions made and recorded chronologically and publicly. –

Important for security and transfer verification purposes. Ex. include Bitcoin, and other cryptocurrencies

• GDPR: General Data Protection Regulation: Data protection regulation protecting privacy for all

individuals in the European Union.

• IP (Intellectual Property): A category of property that includes intangible creations protected by

trademarks and copyrights (e.g. software, code, algorithms, etc.)

• Unicorn: a start-up company valued at more than a billion dollars, typically in the software or

technology sector

• Freemium: A pricing model used by many digital services, a “freemium” model is one where the

majority of users are able to engage with a product or service entirely for free (perhaps in exchange

for data collection or being served advertisements)

• SaaS: “Software as a service” - a software distribution model in which a third-party provider hosts

applications and makes them available to customers over the Internet –Like Salesforce or Workday

*Please note that not all trends, terminologies, and calculations are listed above

Important Calculations

1. Profitability

(Revenues – Costs)

(Price x Quantity) – (Quantity x Var. Cost)

– (Fixed Costs)

Important Considerations:

• Revenue Factors

• Advertising Rev.

• Ticket sales (Price x Quantity)

• Merchandising

• Tours / licensing / Endorsements

• Cost Factors

• Artist fees

• Commission

• Promotion advertising

• Venues

• Content creation costs

Industry Overview – Media & Entertainment

Key Industry Trends

• Cord Cutting / Over the Top Streaming: The rise of Hulu, Netflix, YouTube, & Amazon Prime video has left

many to abandon traditional cable and opt for online streaming services to get the content they want

• Content is King: Media giants have been spending heavily to curate high quality content to hook

subscribers to their service and maintain and grow their subscriber base

• Ad-model Shift: Cable advertisement has been trending downward while digital online advertisements

have been trending up. As online viewers opt for ad-blockers, AI and big data are helping marketing

agencies personalize advertisements and increase user engagement

• Augmented Realty (AR)/ Virtual Reality (VR): While still in their early stages, AR and VR capabilities have

been gaining traction in the industry as a way to enhance storytelling and improve sporting coverage

• Music Streaming: The rise of Spotify, Apple Music, & YouTube Music has almost eliminated the physical

disc music market as most artist now prioritize online platforms to release albums and new songs

• Gaming & E-Sports: The video gaming industry has been one of the fastest growing segments in

entertainment led by mobile gaming and game streaming experiences via Twitch and E-sports. Many

video game creators are focused on a “games as a service model” as they monetize video games

overtime by selling in-game customizable perks

Important Terminology

• Digital vs. Linear: Linear is traditional broadcast or cable television. Digital is online (streaming, etc.)

• Ratings: A measure of viewers of a particular program or time segment in television. Nielsen is the

largest provider of ratings data in the US, but has been slow to provide digital ratings

• Box-Office: The total revenue generated by movies shown at theaters

*Please note that not all trends, terminologies, and calculations are listed above

Important Calculations

1. Market sizing:

Top-Down: Total Population >>> Number

with Illness >>> Number Diagnosed >>>

Market share of Drug >>>> (Dosage per

Time Frame) x Price per Dosage = Market

Size per Time Frame

Important Considerations:

• Regulations

• FDA Approvals

• Patent Rights

• Foreign Government Laws

• Competition / Cannibalization

• Drug Effectiveness

• Cure vs. Treatment

• Time to Market

• Side Effects

• Manufacturing Capabilities

• Pricing, Costs (Fixed / Var.), Dosage

Industry Overview – Healthcare & Life Sciences

Key Industry Trends

Important Terminology

• Wearable Medical Devices: Activity trackers help patients stay more active and healthier on their own

while also monitoring health metrics reducing the need to visit doctors frequently

• Smart Technology & Data: Data on a patient’s background and conditions allow more personalization

options, targeted treatments, and faster recommendations at hospitals

• Gene Therapy: The transplantation of normal genes into cells in place of missing or defective ones in

order to correct genetic disorders. –Growing trend using CRISPR to treat previously uncurable diseases

• Price Transparency: As drug companies receive criticism on the rising cost of their drugs, more states are

considering independent efforts to improve transparency in drug pricing and cost controls

• Government: With the repeal of the Affordable Care Act (ACA), legislation has stagnated on fixing the

rising cost of healthcare and Medicaid in the US, thus leaving a continued rise in insurance premiums

• Bundled payment, episode-of-care payment, etc.: Generally describes paying for the whole treatment at

once, rather than by individual tests or visits – an attempt to incentivize improved outcomes

• Orphan Drug: A pharmaceutical drug that remains commercially undeveloped due limited potential for

profitability as a result of a small curable population size

• FDA: “Food & Drug Administration” Federal organization tasked with protecting and promoting the

safety of food and pharmaceuticals in the US. FDA approval is needed for almost all drugs sold in the US

• Generic Drugs: A prescription drug that has the same active-ingredient formula as a brand-name drug

but sold at a cheaper cost. –Typically occurs when name branded drugs lose patents

• Biotech vs. Pharmaceutical: Biotech firms use live organisms like bacteria and enzymes to manufacture

their medicines while pharmaceutical companies primarily use chemicals synthesis

• Auto-immune Diseases: A disease in which the body's immune system attacks healthy cells

*Please note that not all trends, terminologies, and calculations are listed above

Important Calculations

1. Return on Investment (ROI):

(Future Profits – Cost of Investment)

(Cost of Investment)

2. Customer Acquisition Cost:

_______Marketing Expenses_____

Newly Acquired Customers (Yearly)

Important Considerations:

• Regional Competition

• Competitors

• New Entrants

• Barriers to Entry

• Substitutability

• Contract lengths & stipulations

• Infrastructure

Industry Overview – Telecommunications

Key Industry Trends

Important Terminology

• 5G Network Service: Next generation of mobile internet connectivity with faster speeds, more reliable

connections, and 100x more bandwidth capacity than 4G.

• Network operates mainly on the cloud

• Allows for “network slicing:” Creates separate wireless networks on the cloud for users to have

their own personalized network

• Roll-out may be 2020 in North America due to high infrastructure costs associated with

development

• Network Consolidation: The third and fourth largest cell phone carriers T-Mobile and Sprint are in the

process of merging, a move that will consolidate the telecom market to 3 major players

• Content Integration: High profile acquisition like AT&T of Time Warner and Verizon of Yahoo illustrate a

push to either get into the content creation game or to build out their advertising network

• Carrier: A company that is authorized by regulatory agencies to operate a telecommunications service

system: AT&T, Verizon, T-Mobile

• OEM: Original Equipment Manufacturer – A company whose goods are used as components in the

product of another company that sells the finished goods to users

• LAN: Local Area Network: Locally owned and administered data network that runs primarily through

cables –ex. Ethernet connection

• Fiber Optic: Transmission connectivity via glass strands which are 100x more faster than traditional

copper wires for more efficient cell phone and internet connections

*Please note that not all trends, terminologies, and calculations are listed above

Company Overview

Darden Recruiting Firm Overview

The are many different types of consulting companies that recruit at Darden each year

Big 3 MBB

Large Management

Consulting Firms

Specialized

Consulting Firms

Boutique

Consulting Firms

In-House / Internal

Consulting

McKinsey, BCG, & Bain: The largest and most well-known consulting firms in the industry. Projects /

cases typically encompass all ranges of business functions at the executive level.

Deloitte, Ernst & Young (EY), PWC, Accenture, AT Kearney: Traditional accounting firms (except AT

Kearney) with a large number of offices across the country. These firms have growing consulting

practices across many functions, including strategy, technology, M&A, and others.

Parthenon EY, IBM Consulting, ZS Associates: Large to medium sized consulting firms that have a wide

range of services but primarily specialize in a specific area, e.g. education, tech, or healthcare

Prophet, inCode, Triangle Insights, Monticello, Everest Group: Small consulting firms that specialize in

specific functional areas or operate in a local geographic region

Fidelity Business Consulting, Liberty Mutual, Samsung: Large industry firms with a consulting arm to

either support their own business or their own clients

Although there are many similarities between consulting firms, each firm has its own distinct culture, personality, and approaches to

solving problems. Make sure you take the time to know as many firms as possible to understand which firm has the right fit for you

Company Overview – Accenture Strategy

What Accenture Looks for

• Accenture traditionally recruits on grounds for its strategy and operations, federal and IT

strategy practices

• Accenture looks for well-rounded candidates who demonstrate a passion for creating

client value through practical, implementable solutions

• Summer Internships are ONLY IN THE CHICAGO AND NEW YORK OFFICES, office

preferences are selected upon full-time offer

Interview Process

• Round 1: On Grounds –Two Interviews

• Two interviews conducted on grounds with a manager in a typical case format

• Accenture’s interviews tend to be less quantitative

• Round 2: On-Grounds

• Conducted by at least one Managing Director

• The focus of the case interview is to access how the candidate communicates

his/her approach and thinking –Style, structure, and communication are key

Career Path

• Managing Director

• Senior Manager

• Manager

• Consultant (Post MBA)

• Analyst

General Facts

International Recruiting: No

Darden Representation: Alumni: 74, 2018 Interns: 7

Networking Importance: Medium

Organization: Key practice areas include:

• Business Strategy

• Information Technology & Digital Strategy

• Operations & Function Strategy

• Retail & Consumer Products

• Financial Services

• Utilities

• CMT (Communications, Media, & Technology)

PHO

SEA

SFO

SJO

DEN

DAL

HOU

MSP

CHI

DET

MIA

ATL

BOS

PHI

CHT

AUS

POR

NAS

*Not all Accenture locations are mapped out above

Company Overview – AT Kearney

What ATK Looks For

• “A.T. Kearney is a global team of innovative, insightful and collaborative experts who

deliver creative, meaningful and, above all, sustainable results. Consultants that generates

powerful strategic insights to address practical, real-world needs”

• National staffing model makes base office location less important

• ATK looks for candidates who are willing to work in its collaborative engagement model

• ATK does not recruit second year MBA students and their entire class comes strictly out of

their intern pool

Interview Process

• Round 1: On Grounds (with Principal or Partner)

• two interviews in 1st round –1 behavioral and 1 case (30 mins each)

• First round case tests quant skills and ability to structure (focused on ops)

• Round 2: In Office (Not necessarily recruiting office)

• Written Case with presentation to panel of Principals

• 30 minutes to read 15 slides and build a deck with your insights

• 2 Behavioral fit interviews with Partners

Career Path

• Director / Partner

• Principal

• Manager

• Associate (Post MBA)

• Analyst (Undergrad)

General Facts

International Recruiting: Yes

Darden Representation: 22 Alumni, 2018 Interns: 0

Networking importance: High

Offices: 60 offices & practices across 40 countries

Organization: Key practice areas include:

• Procurement and Analytics

• Marketing and Sales

• Organization and Transformation

• Digital Transformation

SFO

DAL

HOU

CHI

ATL

BOS

NYC

DET

Company Overview – Bain & Company

What Bain Looks For

• “Passionate about always doing the right thing for our clients, our people and our

communities, even if it isn’t easy..”

• Bain Operates a “Home Model” in which Consultants are staffed on projects with people

from the same office

• Generalist practice –no specializations

• Strong emphasis on cultural fit due to local-staffing model

• Want to see a balance of quantitative ability and qualitative strengths

• “Answer first” structure to responses – then give context

Interview Process

• Round 1: On Grounds

• First round is at Darden (two cases, with behavioral questions at the start)

• Round 2: In Office

• 1 typical case, 1 written case, 1 behavioral interview

• 2 typical cases, 1 written case

Career Path

• Partner

• Principal

• Manager

• Case Team Leader

• Consultant (Post MBA)

• Associate Consultant (Undergrad)

General Facts

International Recruiting: Yes

Darden Representation: 51 Alumni, 2018 Interns: 8

Networking Importance:High

Offices: 56 offices & practices across 36 countries

Organization: Key practice areas include:

• Strategy

• Private Equity

• Performance Improvement

• Organization

• M & A

SFO

SJO

DAL

HOU

CHI

ATL

BOS

NYC

Company Overview – The Boston Consulting Group

What BCG Looks for

• BCG looks for intellectually curious candidates that are looking to grow with the firm and

are open to new challenges.

• Fit with the firm’s culture is important, so it is good to start developing relationships with

BCGers early on in the process. There is no set professional background or profile that BCG

is looking for in prospective Consultants.

• BCG wants to know why you are passionate about a certain location. Be prepared to

network with BCGers at your office preference and explain why

Interview Process

• Round 1: On Grounds

• Two 45 minute interviews with behavioral & Case

• Interviewee is expected to drive the case

• Round 2: In Office (note that some offices do not have written cases)

• Two or three interviews with partners (more conversational)

• Written Case: 30 mins to read 15-20 page slide deck and prepare rec. in 3-4 slides

Career Path

• Partner 7+ Years

• Principal 5-8 Years

• Project Leader 3-5 Years

• Consultant (Post MBA) 2-3 Years

• Associate (Undergrad)

General Facts

International Recruiting: Yes

Darden Representation: 85 Alumni, 2018 Interns: 15

Networking Importance: High

Offices: 90 offices & practices across 50 countries

Organization: Key practice areas include:

• Consumer

• Technology, Media, and Telecommunications

• Energy

• Healthcare

• Social Impact/Education

• Industrial Goods

SEA

SFO

DEN

DAL

HOU

MSP

CHI

DET

MIA

ATL

BOS

PHI

Company Overview – Deloitte Consulting

What Deloitte Looks for

• Deloitte recruits on-grounds at Darden its Commercial Strategy & Operations practice,

although Federal, Technology and Human Capital are also a part of the consulting division

• Well-rounded candidates who understand their mantra of “executable strategy”

• Deloitte prides itself on not only doing the strategy assessment, but staying on for the

implementation and execution of the strategy as well

Interview Process

• Round 1 / 2 : On Grounds –First and second rounds are back-to-back days at Darden

• Behavioral interview + a 30 minute case designed to heavily test quantitative ability

• Deloitte interviews often feature a “data sheet” that presents all the information in

advance, but it is still important to follow the standard case format

• Round 2: On-Grounds

• Behavioral interview plus two individual case interviews

• A ~5 person group case in which you will play a specific functional role

• Show that you can own a work stream and work as a team

Career Path

• Director/ Principal

• Senior Manager

• Manager

• Sr. Consultant (Post MBA)

• Consultant

• Business Analyst

General Facts

International Recruiting: Yes

Darden Representation: Alumni: 79, 2018 Interns: 8

Networking Importance: High

Organization: Key practice areas include:

• Business Model Transformation

• Finance

• M&A

• Monitor Deloitte (Strategy)

• Service Ops

• Social Impact

• Supply Chain and Manufacturing Operations

PHO

*Not all Deloitte locations are mapped out above

OKC

IND

SEA

SFO

SJO

DEN

DAL

HOU

MSP

CHI

DET

MIA

ATL

BOS

PHI

CHT

AUS

POR

NAS

PHO

CLE

TPA

JAC

LVG

Company Overview – McKinsey & Co.

What McKinsey Looks for

• McKinsey looks for five aspects in its candidates. All areas are tested in the interview

process; the case interview will test problem solving and the other skills will be tested

through the experience interview. These are: personal impact, entrepreneurial drive,

problem-solving skills, achievement and leadership abilities

• McKinsey recruits MBA’s into three different practices: strategy, operations, and BTO

(Business Technology Office)

Interview Process

• Round 1: On Grounds –Two Interviews

• Two interviews, each with a case and experience question by EM’s

• Cases are less driven by the interviewee and more driven by the interviewer

• Recommendations need to take into account takeaways from each prompt/phase

of the interview

• Round 2: On-Grounds

• Generally 3-4 interviews, each with 1 case and 1 experience question

• Second rounds are normally conducted by Associate Principals & Partners

Career Path

• Partner / (Sr.) Partner

• Associate Principal

• Engagement Manager (EM)

• Associate (Post MBA)

• Business Analyst

General Facts

International Recruiting: Yes

Darden Representation: Alumni: 81, 2018 Interns: 9

Networking Importance: Low / Medium

Organization: Key practice areas include:

• Generalist

• Operations

• Business technology

• Sales and Marketing

• Corporate Finance

PHO

*Not all McKinsey locations are mapped out above

SEA

SFO

DEN

DAL

HOU

MSP

CHI

DET

MIA

ATL

BOS

PHI

CHT

AUS

POR

CLE

PIT

Company Overview – The Parthenon Group

What Parthenon Looks for

• Parthenon was acquired by EY in September of 2014, but is maintaining a separate brand

and operations

• Parthenon operates a “two-case model” and typically emphasizes light-travel

• Parthenon recruits at Darden for its Consultant and Summer Consultant roles.

• Parthenon describes its consultants with the phrase “Smart. Nice. Driven.”

Interview Process

• Round 1: On Grounds –Two Interviews

• Each interview begins with a behavioral question

• One interview will be a typical case, another will be a market sizing exercise

• (Ex. Determine how many sports cars are sold in the US?)

• Round 2: In Office (Only Boston, NYC, & Chicago Office) – 2 cases + 1 paper case

• 15 Minute chat with a Managing Director (Partner)

• 30 Minutes to review a paper case, then 45 minutes to discuss it with Director

Career Path

• Managing Director

• Vice President

• Sr. Consultant

• Consultant (Post MBA)

• Sr. Associate

• Associate (Undergrad)

General Facts

International Recruiting: Yes

Darden Representation: 2018 Interns: 3

Organization: Key practice areas include:

• Private Equity / Market Diligence

• Education

• Transaction Advisory M&A

• Life Sciences / Healthcare

• Consumer & Retail

SFO

HOU

CHI

NYC

BOS

Company Overview – PWC / Strategy&

What PWC Looks for

• Fit, and the typical consulting analytical toolkit, as well as relevant background

experience. PwC is functionally-based

• PwC Advisory has offices in most of the major cities in the US. The firm is quite flexible in

location. Relocation among offices within the US is common

Interview Process

• Round 1: On Grounds

• Two 45 minute interviews with behavioral & Case

• Interviewee is expected to drive the case

• Round 2: In Office (note that some offices do not have written cases)

• Two or three interviews with Partners (more conversational)

• Written Case: 30 mins to read 15-20 page slide deck and prepare rec. in 3-4 slides

Career Path

• Partner

• Director

• Manager

• Sr. Associate (Post-MBA)

• Experienced Associate

• Associate

General Facts

International Recruiting: Yes

Darden Representation: 64 Alumni, 2018 Interns: 2

Networking Importance: Medium

Organization: Key practice areas include:

• CIPS (Consumer Industrial Products & Services)

• TICE (Technology, Information, Com. Entertainment

Media)

• HIA (Health Industries)

• Financial Services

• Public Sector

• People & Organization (Human Capital)

SEA

SFO

SJO

DEN

DAL

HOU

MSP

CHI

DET

MIA

ATL

BOS

NYC

PHI

CHT

AUS

POR

NAS

PHO

CLE

*PWC and Strategy& locations denoted in red

*Not all PWC locations are mapped out

Company Overview – ZS Associates

Overview & What They Look for

• Mid-sized management consulting firm focused on sales & marketing, primarily in healthcare

• ZS is unique in their academic, non-hierarchical environment, casual, office-based culture,

and the level of responsibility given to MBA hires. As a consultant, you are often given the

responsibility of managing the project team and the project’s day-to-day operations

• The firm values candidates with strong quantitative abilities and sales and marketing

knowledge Parthenon operates a “two-case model” and typically emphasizes light-travel

• A thorough understanding of the pharmaceutical and medical devices industries is valued,

but not required

Interview Process

• Round 1: On Grounds –Two Interviews

• Interviews are mostly behavioral, with one case

• Round 2: On-Grounds

• Back to back interviews, including a presentation to principals

• Quantitative skills (theoretical and actual), ability to synthesize large amounts of

information, and presentation skills are rigorously tested

Career Path

• Principal

• Associate Principal

• Manager

• Consultant (Post MBA)

• Associate Consultant <<< Analyst

General Facts

International Recruiting: Yes

Darden Representation: Alumni: 19, 2018 Interns: 2

Networking Importance: Medium

Organization: Key practice areas include:

• Healthcare (80% of business)

• Travel & Transportation

• Technology

SFO

HOU

CHI

EV S

NYC

BOS

SDO

PHI

PRI

Darden Casebook

2018-2019

CHARLOTTESVILLE, VA WASHINGTON, DC SAN FRANCISCO, CA SHANGHAI, CHINA

Darden Casebook Guide

Indicates the overall difficulty of the case with a combination of mathematical technicality and creative

thinking ability. It is advised that you start with single star cases and work your way up to three star cases

Indicates the degree of math difficulty in the case. Harder cases typically have multiple stages of calculations

with multiple opportunities for mistakes

Indicates how creatively intensive the case will be. The more qualitative, the more thorough your framework

should be. These cases will place more emphasis on the brainstorming elements

To get the most authentic casing experience, you should aim to do at least one behavioral interview question at the

start of each case and have your interviewer take note of your timing

Grading

Rubric

Case Execution

High scorers should be well

structured, demonstrate

coachability, and make

insightful connections

Communication

High scorers should

demonstrate confidence, speak

clearly, and have a tidy case

work

Behavioral

High scorers should give clear

and concise answers that are

relevant

Casebook Suggested Practice Order

Case Title

National Express Trucking

Styrofoam Situation

North

-South Pharma

Fire Proof Inc.

Quality Bottling Co.

Canyon Capital

Transportation Tech Co.

Lonely Gas Station

Copier Co.

Maxicure

To Automate or Not

Rubber

Bumper Laboratories

Beginner Cases

Intermediate Cases

Expert Cases

Starter cases

Mid-point challenge

Final Challenge

Darden Case Book 2018-2019 Index

Case Title Firm Industry Round

Difficulty

Quant / Qual / OVR*

Page

National Express Trucking (N)* Bain & Co. Transportation 1 1 2 1 48

Styrofoam Situation (N) BCG Financial / PE

2 1 2 1 58

North-South Pharma (N) AT Kearney Healthcare 1 2 2 2 68

Fire Proof Inc. (N) Parthenon EY Manufacturing

1 2 2 2 83

Quality Bottling Co. (N) Parthenon EY Manufacturing

1 2 3 2 93

Canyon Capital (N) Bain & Co. Financial / PE 2 3 2 3 105

Transportation Tech Co. (R)* Parthenon EY Transportation

1 2 2 2 114

Lonely Gas Station (R) BCG Financial

2 3 1 2 126

Copier Co. (R) BCG Consumer

1 3 1 2 136

Maxicure (R) McKinsey Healthcare 1 3 2 2 147

To Automate or Not (R) BCG Retail

2 2 3 3 156

Rubber Bumper Laboratories (R)

McKinsey Manufacturing

1 3 3 3 167

*(N) Denotes new cases to the Darden case book (R) denotes refurbished cases

*(OVR) Denotes overall case difficulty

National Logistics Trucking

Bain | Round 1 | Transportation

01 | CASE: NATIONAL LOGISTICS

NATIONAL LOGISTICS

BEHAVIORAL

INTERVIEW

QUESTION:

1. What do you

consider to be

your greatest

accomplishment

so far and why?

2. Tell me about

a time when you

had to work with

a difficult client

or team member.

How did you

handle the

situation?

UVA Darden School of Business 2018-19 Casebook

Clarifying Information: Note: Provide this only if corresponding questions are asked.

What is the client’s primary goal? National express is looking to boost profitability by any means

Are other competitors facing the same issue? Yes, the entire transportation industry is feeling the wage pressure

Does the client have a profitability target? No, the client just wants to improve profitability from their current state

Are there other costs that have been influencing profitability? Yes, steadily rising fuel prices have also been

hampering the company’s profits

Is the company running at full capacity? Yes, the only thing limiting the company’s revenue growth is finding drivers to

drive their trucks

Has revenue also been in decline? No, revenue has been rising steadily over the last 5 years but is only capped by lack

of drivers to fulfill deliveries

Prompt:

Your client is National Logistics; a large transportation and logistics company

that delivers freight to all areas of North America. Over the last five years, the

company has experienced rising costs due to increases in wages resulting

from a shortage of truckers. The client is now looking to reduce operational

costs in the business. How would you advise the client?

01 | CASE: NATIONAL LOGISTICS

UVA Darden School of Business 2018-19 Casebook

How to Move Forward:

The candidate should mention “more fuel efficient trucks” (or something similar) in his/her framework. If they don’t, press them until they

mention it. Once included in the framework, mention that: the client was interested in exploring that option. Move on to question 1.

Framework Guidance:

Note: There are many possible alternatives to this framework. These are a few considerations that the interviewee should include in their framework

Profitability

Revenue:

• Prices: Can we

raise them?

• Delivery Mix:

Prioritize more

expensive freight?

• Use doubletrailers

per delivery instead

of single trailers

Costs:

• Fuel: What are fuel

prices? Can we hedge?

• Depreciation: What are

the depreciation life-span

on trucks?

• Overhead: Can we

reduce admin staff?

• Outsource: Contract labor

• Load per Truck: How full

are the loads per

delivery?

Investments

• Buy new fuel efficient

trucks

• Add energy saving

technology e.g. spoilers,

speed limiters, drag

resistant wheels, etc.

• Purchase a low cost-

leader transportation

company

• Develop drone delivery

capabilities

• Explore autonomous

trucks

Other

• Explore other high margin

markets e.g. airfreight,

shipping, railways, etc.

Innovate

Question 1:

The client is interested in purchasing more fuel efficient hybrid truck fleets that use both batteries and

diesel fuel. What are some of the cost considerations the client should be aware of in making this

decision?

01 | CASE: NATIONAL LOGISTICS

UVA Darden School of Business 2018-19 Casebook

Answer:

The candidate can list any number of factors to consider, but it is crucial for the candidate to list these five cost considerations below. Press

the candidate if he / she is missing any of the following five factors.

1. Price/cost of truck

2. Maintenance

3. Insurance

4. (Fuel usage) miles per gallon (MPG)

5. Depreciation

Bonus Question:

What costs do you believe would increase if National Express were to use hybrid trucks?

Guidance: This question tests a candidate’s business judgement. The price of the truck, maintenance, and insurance are good answers

because the hybrid models have more technology and are more complex than a standard truck. Hand the candidate Exhibit 1.

EXHIBIT 1: COST OF OPERATING EACH SEMI

01 | CASE: NATIONAL LOGISTICS

UVA Darden School of Business 2018-19 Casebook

*National Express pays an average $3.00 per gallon for fuel

Financial Metrics Standard Truck Hybrid Truck

Purchase Price $100,000 $150,000

Maintenance / Yr. $5,000 $8,000

Insurance / Yr. $2,000 $3,000

Avg. Miles Driven / Yr. 60,000 60,000

MPG 10 20

Vehicle Lifespan 10 Years 10 Years

Question 2:

We ran two cost scenarios for the client to compare the cost of operating a hybrid truck vs. a standard

diesel truck. What are the potential cost savings (if any) from switching to a hybrid truck?

Candidate should ask about the depreciation schedule: Answer –National express uses straight-line depreciation for all of

their trucks. All trucks will have a $0 salvage value at the end of their lifespan.

01 | CASE: NATIONAL LOGISTICS

UVA Darden School of Business 2018-19 Casebook

Answer:

Standard Semi:

Maintenance + Insurance = $7,000; Depreciation = $100k / 10 years = $10,000; Fuel = 60,000 Miles / 10 MPG = 6,000 x $3.00 per gallon

= $7,000 + $10,000 + $18,000 = $35,000 Annually per truck

Hybrid Semi:

Maintenance + Insurance = $11,000; Depreciation = $150k / 10 years = $15,000; Fuel = 60,000 Miles / 20 MPG = 3,000 x $3.00 per gallon

= $11,000 + $15,000 + $9,000 = $35,000 Annually per truck

There are no annual savings Move on to question 3

Question 3:

Given the results of the analysis, would you recommend for National Logistics to invest in hybrid

trucks? Why or why not?

01 | CASE: NATIONAL LOGISTICS

UVA Darden School of Business 2018-19 Casebook

Guidance:

There is no right or wrong answer (except “I don’t know”). This question is meant to judge how well a candidate can make a decision and

justify their decision during moments of ambiguity.

Possible answers could include:

Yes. Possible rationales: The savings can be even more if gas prices continue to rise; the company can extend the useful life of the hybrid

trucks to reduce depreciation expense; the company can explore negotiating maintenance costs down; Hybrid trucks are better for the

environment and may have tax reduction implications; Switch insurance providers or negotiate on costs

No. Possible Rationales: Gas prices may fall, this making the standard trucks cheaper to operate; the purchase doesn’t meet the company’s

primary goal of reducing costs; tying up resources in new trucks creates an opportunity cost against more potentially profitable projects

Many more sound rationales can be used to explain the candidate’s choice. It is up to the interviewer to judge whether the candidate’s

judgement I sound

BRAINSTORM

01 | CASE: NATIONAL LOGISTICS

The client also wants to get our thoughts on how they can reduce their shortage of truckers. Brainstorm some

ways National Logistics can reduce their shortage.

Internal

Pay & Benefits (call out that these reduce profitability)

• Offer starting bonuses

• Increase salaries

• Offer more vacation

• More Flexible hours

• Better healthcare coverage

Reduce employment restrictions

• Lower education restrictions

• Low work experience

Get help internally

• Have overhead employees drive during peak

seasons

External

• Hire contract drivers part-time during peak seasons

• Sponsor international drivers with visas

• Invest in autonomous truck technology

• Form delivery partnerships with competitors

• Lookinto heavy duty drones for short routes

Guidance: Internal options are plentiful. The most creative candidates will come up with innovative solutions that are

external to the company. (Buckets don’t have to be internal vs. external)

CONCLUSION

01 | CASE: NATIONAL LOGISTICS

UVA Darden School of Business 2018-19 Casebook

To conclude, the interviewee should provide the following:

Recommendation:

• Should National Logistics invest in new trucks? (Yes/ No) and why?

• (If not) what other cost saving initiatives can they explore (from framework)?

Risks:

• Fuel prices will impact savings

• Maintenance costs may vary

• Driver wages may continue to rise in strong economy

Next Steps:

• Explore other cost savings alternatives like… (refer to framework)

• Look for ways to reduce hybrid truck insurance or maintenance costs, etc..

INTERVIEWER FEEDBACK FORM

Case Execution:

 Framework

 Logical approach

 MECE

 Creativity

1 2 3 4 5

Notes:

 Quantitative Ability

 Accuracy

 Speed

 Analytical Approach

 Errors / Guidance

1 2 3 4 5

Notes:

 Business Acumen

 Insightful

 Implementable

 Business Judgment

 Creative Brainstorm

1 2 3 4 5

Notes:

 Presence & Non-Verbal

 Confidence

 Poise / Posture

 Clear & Concise

 Body Language

 Coachability

1 2 3 4 5

Notes:

Communication:

 Case Materials

 Organized Page Layout

 Recognition of Errors

 Resource References

1 2 3 4 5

Notes:

Case Name _________________________ Interviewer ___________________________

Case Book ____________________ Case Type ____________ Difficulty ____________

Strengths: Opportunities:

Case Execution: ___ / 15

Communication: ___ / 10

Behavioral: ___ / 15

Total Score: ___ / 40

Total Time: _____: ______

Behavioral:

 Overall Performance

 Quality of Answers

 Relevance

 Clarity & Time

1 2 3 4 5

Styrofoam Situation

BCG | Round 2 | Manufacturing

BCG | 2 | B2B

02 | CASE: STYROFOAM SITUATION

STYROFOAM SITUATION

BEHAVIORAL

INTERVIEW

QUESTION:

1. Talk to me

about how you

built credibility

in your first job

2. Tell me about

a time you were

part of a team

and things did

not go smoothly,

what did you

do? What

lessons did you

learn?

UVA Darden School of Business 2018-19 Casebook

Clarifying Information:

Note: Provide this only if corresponding questions are asked.

• Cup Co’s customer base consists of only of restaurant chains in the US

(think McDonalds etc)

• For the purpose of this case, assume Cup Co has only one product

• Cup Co manufactures its product in the US

• Chalice Inc is a Chinese based Company with no other product in the US

Prompt:

Your client is the CEO of Cup Co, a national supplier of Styrofoam cups to

restaurants. While profit has been steady, she is worried about the influx of

cheaper products from China by a new competitor (Chalice Inc) and has

called you in to give a recommendation on how to ensure continued

profitability.

Framework Guidance:

Note: There are many possible alternatives to this framework. These are only provided as possible suggestions.

• All items should be framed relative to Cup Co. vs. Chalice Inc. (could be in a table)

• Financial considerations – simple profitability tree

• Revenue – Number of customers, Average unit sold to customers, price per unit

• Cost – Fixed cost of production, variable cost of production, overhead like shipping etc.

• Mix – Not important since we are concerned about only one product

• Non-financial considerations

• Customers – What matters to them?

• Competition – both new and old

02 | CASE: STYROFOAM SITUATION

UVA Darden School of Business 2018-19 Casebook

How to Move Forward:

To get to the next portion of the case, the interviewee should ask to explore:

• The revenue and cost structure for both Cup Co and Chalice Inc (provide exhibit 1)

EXHIBIT 1

02 | CASE: STYROFOAM SITUATION

UVA Darden School of Business 2018-19 Casebook

Cup Co. (Cents) Chalice Inc. (Cents)

Price 10 7

Cost

Manufacturing 4 4

Shipping 3 3

Distribution - 2

Exhibit Guidance:

The interviewee should notice and verbally acknowledge the following in Exhibit 1.

• Calculate the profitability for both Cup Co and Chalice Inc

• Quickly notice that Cup Co’s net margin is 30% (which is good), while Chalice Inc is running at a loss

• All of Cup Co’s profit will be eroded if they try to match Chalice Inc’s price

02 | CASE: STYROFOAM SITUATION

UVA Darden School of Business 2018-19 Casebook

How to Move Forward:

To get to the next portion of the case, the interviewee should ask to explore:

• Good interviewees will move to brainstorming why Chalice Inc is willing to sell at a low price even though

they are losing money (possible ideas include lowering price to gain market share or US market

knowledge for other product launches)

• Next, the interviewee should begin to explore options available to the Cup Co. Provide Exhibit 2 when

interviewee asks for it

EXHIBIT 2

02 | CASE: STYROFOAM SITUATION

UVA Darden School of Business 2018-19 Casebook

0 10 20 30 40 50 60 70

Service reliability

Price

Design

Customers preference (%)

Cup Co Chalice Inc

Design Score

Cup Co Chalice Inc

Service Relaibility Score

Exhibit Guidance:

The interviewee should notice and verbally acknowledge the following in Exhibit 1. This is where you insert question and the answers to the question

• The most important metric to customers is reliability of service and Cup Co ranks a lot higher than Chalice

Inc

• Good interviewee might point out the fact that importing products from China adds additional logistics

problems which may be impacting their service reliability score

02 | CASE: STYROFOAM SITUATION

UVA Darden School of Business 2018-19 Casebook

How to Move Forward:

To get to the next portion of the case, the interviewee should ask to explore:

• At this point in the case, the interviewee should move on to brainstorm Cup Co’s possible responses

BRAINSTORM

02 | CASE: STYROFOAM SITUATION

UVA Darden School of Business 2018-19 Casebook

Cup Co is currently in a good position relative to Chalice Inc. What are possible strategies to reinforce

this position?

Offensive Strategies:

• Lower prices a little in order to send a signal to customers

• Negotiate contracts with customers to lock them in

• Improve design (candidate should realize that while this isn’t very important, it

is worth exploring)

02 | CASE: STYROFOAM SITUATION

UVA Darden School of Business 2018-19 Casebook

How to Move Forward:

To get to the next portion of the case, the interviewee should ask to explore:

• Good interviewees will identify which of the strategies identified above they want to explore first. Note that

there are no right answers as long as the interviewee justifies their thinking.

Brainstorming Guidance:

Note: This is just one possible set of categories and answers. Many more are possible, and interviewers should assess both the volume and relevance of answers.

Defensive Strategies:

• Further identify ways to improve service reliability e.g. optimizing delivery

routes

CONCLUSION

02 | CASE: STYROFOAM SITUATION

UVA Darden School of Business 2018-19 Casebook

To conclude, the interviewee should provide the following:

Summary:

• Cup Co is better positioned in the market than Chalice Inc. Price is not the customers’ pain point, hence

Chalice Inc does not currently present too much risks

Recommendation:

• Cup Co should not lower its price

• It should defend and possibly improve its rating in high service reliability

Risks:

• Price may become a pain point e. g if the economy experiences a down turn

Next Steps:

• Explore ways to improve service reliability e.g. delivery route optimization

North-South Pharma Co.

A.T. Kearney | Round 1 | Healthcare

03 | CASE: NORTH- SOUTH PHARMA CO

NORTH-SOUTH PHARMA CO

BEHAVIORAL

INTERVIEW

QUESTION:

1. Please tell me

about a time that

you had to

deliver difficult

news in a

professional

environment.

UVA Darden School of Business 2018-19 Casebook

Encourage the student to size the market, making assumptions as necessary.

Prompt:

North-South Pharma Co is a US-based pharmaceutical manufacturer. The

company owns a plant in the United States that is active in serving US

customers through pharmacies, and also owns an idle plant in South America.

1. Market Size: Forecast Revenue for North-South Pharma Co

2. What should North-South Pharma Co do with its idle South American facility

Market Sizing Guidance:

• 300M people in US x 10% visiting doctor = 30M people getting prescriptions

• 30M prescriptions x 20 refills/yr. = 600M prescriptions/yr

• 600M prescriptions x $0.50/prescription = $300M

• North-South Pharma Co 5% market capture = $15M revenue opportunity

UVA Darden School of Business 2018-19 Casebook

03 | NORTH- SOUTH PHARMA CO

UVA Darden School of Business 2018-19 Casebook

Prompt #2:

What should North-South Pharma do with its idle South American facility?

Candidate should now create a framework.

03 | NORTH- SOUTH PHARMA CO

Framework Guidance:

Note: There are many possible alternatives to this framework. These are only provided as possible suggestions.

• One possible framework would be a matrix with the different facility locations (US and SA) in the columns,

and cost categories (Fixed and Variable) in the rows.

03 | CASES: NORTH- SOUTH PHARMA CO

UVA Darden School of Business 2018-19 Casebook

Insights:

A strong candidate will point out items such as:

• The SA facility will have cheaper fixed costs for: land, SG&A, Marketing, PPE, etc.

• Shipping & Delivery to serve US customers (only serves US patients) will be expensive

• Variable cost for labor will be cheaper and materials may be cheaper.

How to Move Forward:

To get to the next portion of the case, the interviewee should ask to explore:

• Profitability, with a focus on operating costs in the US vs. in South America

03 | CASES: NORTH- SOUTH PHARMA CO

UVA Darden School of Business 2018-19 Casebook

EXHIBIT 1

UVA Darden School of Business 2018-19 Casebook

US South America

REMEMBER Revenue $ 0.50 $ 0.50

Labor $ 0.10 $ 0.05

Raw Materials $ 0.10 $ 0.05

Transportation $ 0.05 $ 0.20

To ta l $ 0.25 $ 0.30

Contribution Margin $ 0.25 $ 0.20

Fixed Cost $ 5,000,000 $ 4,000,000

Capacity 50,000,000

20,000,000

REMEMBER Max necessary production (based on #1)

30,000,000 30,000,000

CM To ta l $ 7,500,000 $ 4,000,000

Fixed Cost $ 5,000,000 $ 4,000,000

Profit $ 2,500,000 $ -

Interviewer

should not

show this to

the student. Let

them ask for

this cost info

then provide

verbally.

Provided in #1 market

sizing; interviewer should

not provide again

03 | NORTH- SOUTH PHARMA CO

Provided in #1 market

sizing; interviewer should

not provide again

Exhibit Guidance:

Based on profitability analysis, student should draw the following conclusions

• The SA facility is only breaking even whereas US facility is profitable

• “Based on this analysis, I’m led to believe the SA facility may be a candidate for shutdown.”

• Alternative idea: “Transportation cost is the driver of high variable costs, so either shut it down/dispose

of it, or get it up and running to serve local South American market where transportation costs would

likely be lower”.

• Student should seek to drive to conclusion – think about what North-South could do with SA facility…

03 | NORTH- SOUTH PHARMA CO

UVA Darden School of Business 2018-19 Casebook

BRAINSTORM

03 | NORTH- SOUTH PHARMA CO

UVA Darden School of Business 2018-19 Casebook

Brainstorming prompt:

Student should seek to drive to next step in conclusion – think about what North-South should do with SA

facility. If he/she does not get there, interviewer should prompt with question:

What else can North-South Pharma Co do with South American facility at this point?

Possible Brainstorm Responses:

Student should begin brainstorming opportunities:

• Sell facility

• As-is to a competitor or manufacturing company

• In-pieces with equipment, materials, land, sold separately

• Repurpose facility

• Use as training facility for workers in US plant

• Use as a sales facility only (may not be ideal as high cost for large lot of land and facility

• Sublet to competitor or manufacturing company

• Get facility up and running to serve South American medical market (enter new market)

• Burn facility to the ground for the insurance money (possible ethical dilemma?...but certainly creative)

03 | NORTH- SOUTH PHARMA CO

UVA Darden School of Business 2018-19 Casebook

CLOSING BRAINSTORM

03 | NORTH- SOUTH PHARMA CO

UVA Darden School of Business 2018-19 Casebook

Brainstorming prompt:

Interviewer should not need to provide prompt; student should begin to ask questions and consider implications

of actions described in previous slide. If student has exhausted thought process, provide final brainstorm:

What would be the implications of keeping the facility and entering the South American market for

pharmaceuticals?

Internal:

• Get workforce up and running

• Hiring (sales, manufacturing, distribution)

• Training (sales, manufacturing, distribution)

• Onboarding new employees

• Manage distribution

• Hold inventory for local distribution (vs. shipping inventory to US

immediately after production)

• Find and build relationships with distribution partners (medical

product carriers)

• Build relationships with hospitals/pharmacies to become

prescription provider

• Don’t alienate current workforce or clients; damage brand

• Paying too much attention abroad may lose sight of work in US

facilities

• Clients in US may be discouraged by entry into emerging market;

brand perception implications

03 | NORTH- SOUTH PHARMA CO

UVA Darden School of Business 2018-19 Casebook

Brainstorming Guidance:

External:

• Determine market size and opportunity in South America

• What is target population?

• Where is demand located?

• What are demand conditions for prescriptions in South America?

• Evaluate health landscape in South America

• What prescriptions will North-South need to manufacture/distribute and

what are dynamics of creating/selling them?

• Evaluate South American geopolitical environment impacting corporations

• What are taxation rules for corporations selling in South America?

• What regulations exist governing pharmaceuticals in South America

• How does corruption affect corporations and pharma market in South

America in particular

CONCLUSION

03 | NORTH- SOUTH PHARMA CO

UVA Darden School of Business 2018-19 Casebook

Summary:

• North-South Pharma Co is a pharmaceutical manufacturer and distributor with facilities in the US and South America but

distribution operations currently limited to the US

Recommendation:

There are multiple correct answers:

• Get rid of the facility

• Risks: low selling price, letting go of existing employees in SA bad for morale and expensive (severance)

• Next Steps: contact real estate agent in SA to identify potential buyers; work with human capital consultancy to limit

employee layoffs (repurpose employees) and impacts

• Maintain facility and enter market for pharmaceuticals (sell/distribute) in South America

• Risks: high cost of entering entirely new market; regulatory hurdles; alienate/neglect current US employees and clients

• Next Steps: Contact legal aid to determine regulation and steps to selling; prospect hospitals and pharmacies to

introduce selves

CASE EVALUATION (OPTIONAL)

03 | NORTH- SOUTH PHARMA CO

UVA Darden School of Business 2018-19 Casebook

The best interviews with this case include the following: (Enter key things an interviewer should look for in this

case

• Interviewee should be independent in sizing the market, willing to make assumptions where necessary and

asking for information as needed (ex. how much revenue does North-South Pharma Co make per

prescription)

• Interviewee should drive to solution after completing Exhibit 1 math (What does it mean for the US facility to

be profitable but the South American facility to be breaking even? How should North-South think about that

in the shut down/keep open context)

• This case hinges around brainstorming – interviewee should be creative in considering options for North-

South/what the firm can do with the idle facility, and in considering implications of entering a new market in

an emerging economy (potentially veering from existing US-centric sales/distribution model)

INTERVIEWER FEEDBACK FORM

Case Execution:

 Framework

 Logical approach

 MECE

 Creativity

1 2 3 4 5

Notes:

 Quantitative Ability

 Accuracy

 Speed

 Analytical Approach

 Errors / Guidance

1 2 3 4 5

Notes:

 Business Acumen

 Insightful

 Implementable

 Business Judgment

 Function Knowledge

1 2 3 4 5

Notes:

 Presence & Non-Verbal

 Confidence

 Poise/ Posture

 Clear & Concise

 Body Language

 Coachability

1 2 3 4 5

Notes:

Communication:

 Case Materials

 Organized Page Layout

 Recognition of Errors

 Resource References

1 2 3 4 5

Notes:

Case Name _________________________ Interviewer ___________________________

Case Book ____________________ Case Type ____________ Difficulty ____________

Strengths: Opportunities:

Case Execution: ___ / 15

Communication: ___ / 10

Behavioral: ___ / 15

Total Score: ___ / 40

Total Time: _____: ______

Behavioral:

 Overall Performance

 Quality of Answers

 Relevance

 Clarity & Time

1 2 3 4 5

Fire Proof Inc.

Parthenon | Round 1 | Manufacturing

Parthenon EY | Round 1 | Manufacturing

04 | CASE: FIRE PROOF

FIRE PROOF

BEHAVIORAL

INTERVIEW

QUESTION:

1. What is your

favorite class at

Darden and why?

2. Tell me about

a time where you

had to make a

decision with

limited

information.

What was your

approach?

UVA Darden School of Business 2018-19 Casebook

Clarifying Information: Note: Provide this only if corresponding questions are asked.

How does Fire Proof Inc. make money? They sign contracts with municipalities and cities to supply fire proof

apparel to fire departments

How large is Fire Proof Inc.? Fire Proof Inc. does $500M in annual sales and has been growing at 4% yearly over

the last 5 years

How many competitors do they have / Market position? Fire Proof is number 1 in the fire equipment market but

they have 3 main competitors that compete for government contracts

How diversified are their competitors: Fire equipment makes up no more than 25% of all 3 competitor’s revenue.

Why haven’t Fire Proof diversified their business before? The company focused on mastering what they knew

and improving their operations in building fire equipment

Prompt:

The CEO of Fire Proof Inc. wants to find new ways to diversify her revenue

and product line. Currently, Fire Proof only sells fire resistant jackets, gloves,

hard-hats, and tools to government sponsored fire departments nationwide.

The CEO believes the company can expand their operations to make

equipment for other industries. How would you advise Fire Proof Inc.?

Framework Guidance:

Note: There are many possible alternatives to this framework. These are only provided as possible suggestions.

04 | CASE: FIRE PROOF

How to Move Forward:

To move forward, the interviewee should address any form of product similarities as a criteria somewhere in their framework. Call attention to that bullet point and

mention the text below.

Mention: client has done some research into the supplying equipment for police departments. Exhibit 1 details some of the information they have found. Hand the

interviewee Exhibit 1.

Internal Capabilities

• Manufacturing capacity

- Can we build it?

• Supply chain capacity

- Do we have the

network?

• Industry knowledge

- Do they have the talent

to make a good

product?

• Financial resources

- Can Fire Proof afford

investment required?

Product Similarities

• Raw material overlap

- Can we use the same

materials

• Customer Overlap

- Are the customers

similar? (government)

• Production overlap

- Is the manufacturing

process similar?

Market Attractiveness

• How many competitors are in

the new industry?

• What is the size of the new

market?

• Is the new market growing?

• Are there high barriers to

entry?

Financials

• What is the investment

required to enter new market?

• Do you acquire a company or

build internally?

• What are the new profit

margins Fire Proof can

achieve?

• When can the company break

even?

Police Equipment

Production

Overlap

Market Size Market Growth* # of Competitors

Officer Uniforms $1.5B 5% 3

Hand Cuffs $300M -2% 8

Police Badges $100M 3% 4

Bullet Proof Vests $600M 10% 20

Weapon Holsters $300M 5% 12

Riot Shields $450M 12% 6

Body Cameras $250M 50% 25

EXHIBIT 1

04 | CASE: FIRE PROOF

UVA Darden School of Business 2018-19 Casebook

* Annual market growth over the last 3 years

Question 1

• Which product market is the most & least attractive for Fire Proof to enter? Why?

04 | CASE: FIRE PROOF

UVA Darden School of Business 2018-19 Casebook

Exhibit & Question Guidance:

After looking at exhibit 1, candidates should be able to identify and call out the following:

• The most attractive markets have 1. high production overlap, 2. large market sizes, 3. high growth, and 4. higher number of competitors (fragmented market)

• Call outs:

- Most attractive: Bullet Proof Vests –Why? 1. High production overlap, 2. Second largest market size, 3. Double digit growth, 4. Fragmented market for

easier penetration

- Least Attractive: Police Badges –Why? 1. Low production overlap, 2. Smallest market 3. Low growth, 4. Highly concentrated market

- Bonus call outs:

• Uniforms look interesting because of its large size and overlap, but the high concentration of competitors makes for a difficult market entry

• Body Cameras look interesting due to the high growth and market fragmentation, but this should be avoided because it is out of Fire Proof’s area of

expertise (as illustrated from the low overlap)

• Riot Shields are a close second place to bullet proof vests because although it has a faster growth rate, it also has fewer competitors (more

concentrated market)

• Once the candidate identifies that bullet proof vests is the most attractive market, move on to question 2.

Question 2:

Our team has done some internal analysis and have identified that Fire Proof can realistically capture 30% of the bullet proof vest market in 3

years. What is Fire Proof’s projected revenues for bullet proof vests in year 3?

* Supply only when asked: Assume that the market will continue to grow at 10% each year over the next 3 years

04 | CASE: FIRE PROOF

UVA Darden School of Business 2018-19 Casebook

Directions:

Math analysis:

Year 1: ($600M x 1.1) = $660M; Year 2: ($660M x 1.1) = ($660 + $66M) = $726M; Year 3: ($726M x1.1) = ($726M + $72.6M) = $798.6M ~round to $800M

Fire Proof Revenue = $800M x 30% = $240M In 3 years

10% of 660

Question 3:

Our team has identified that Fire Proof will need to invest $100M in capital expenditures to configure their plants to make bullet proof vests. If

the company has a target ROI in 3 years of at least 15%, will they meet their goal?

• Supply only when asked:

• Estimated market share by year: Year 1: 10%, Year 2: 20%, Year 3: 30%

• Average yearly net profit margin: 25%

04 | CASE: FIRE PROOF

UVA Darden School of Business 2018-19 Casebook

Directions:

Math analysis:

Year 1: Revenue = 10% x $660M = $66M Net Profits: (25% x $66M) = $13.2M + $3.3M = $16.5M

Year 2: Revenue = 20% x $726M = (72.6M x 2) = $145.2M Net Profits: (25% x $145.2M) = ($14.52 x 2) = $29.04M + 7.26M = 36.3M

Year 3: Revenue = 30% x $800M = $240M Net Profits: (240 / 4) = $60M

Total net profit over 3 years = $16.5M + $36.3M + $60M = $112.8M

ROI = ~$113M / $100M = ~13%

2 x 10% of 66

1/2 x 10% of 66

Post Analysis question:

Ask the interviewee if he/she thinks this is still a good investment despite not hitting the 15% goal. (No right or wrong answers). Expected answers: Yes, because it is

very close and the company needs to diversify (main priority); No, because there may be other markets we haven’t explored yet that can allow them to hit their goals.

Military Equipment

• Military vests

• Weapon Harness

• Military uniforms

• Etc.

04 | CASE: FIRE PROOF

UVA Darden School of Business 2018-19 Casebook

Creative candidates will be able to quickly map out alternative industries and products for diversification. The best candidates will have clear

buckets representing industries followed by a list of potential product lines to support that industry / market.

Brainstorming Guidance:

Note: This is just one possible set of categories and answers. Many more are possible, and interviewers should assess both the volume and relevance of answers.

Medical Accessories:

• Medical coats

• Stethoscopes

• Gloves

• Tunics

Construction:

• Hardhats

• Construction jackets

• Safety visors / glasses

• Hammers, pick-axe, etc.

Recreational Gear

• Hiking Boots

• Heavy duty jackets

• Sleeping bags

• Thermal gear

BRAINSTORMING

Beyond just the police department, what are other markets and/or products that Fire Proof can consider to diversify their revenue

stream?

CONCLUSION

04 | CASE: FIRE PROOF

UVA Darden School of Business 2018-19 Casebook

To conclude, the interviewee should provide the following:

Recommendation:

• Should Fire Proof diversify their product stream to make bullet proof vest for police departments? (Yes/No & why?

• Mention:

• What makes the market attractive / not attractive?

• What are the financial implications?

Risks:

• (If yes): Could include - Cost overruns to $100M projected investment, competitors fight back hard; thus eroding profit

margins, competitor relationships with customers may be strong, government budgets could change, etc.

• (If No): Potential lack of other alternatives, another competitor enters bullet proof vest market first, company is still

undiversified

Next Steps:

• Explore other potential markets (as discussed in brainstorming session), explore acquisition vs internal investment

approach, dive deeper into competitor contract relationships, etc.

INTERVIEWER FEEDBACK FORM

Case Execution:

 Framework

 Logical approach

 MECE

 Creativity

1 2 3 4 5

Notes:

 Quantitative Ability

 Accuracy

 Speed

 Analytical Approach

 Errors / Guidance

1 2 3 4 5

Notes:

 Business Acumen

 Insightful

 Implementable

 Business Judgment

 Creative Brainstorm

1 2 3 4 5

Notes:

 Presence & Non-Verbal

 Confidence

 Poise / Posture

 Clear & Concise

 Body Language

 Coachability

1 2 3 4 5

Notes:

Communication:

 Case Materials

 Organized Page Layout

 Recognition of Errors

 Resource References

1 2 3 4 5

Notes:

Case Name _________________________ Interviewer ___________________________

Case Book ____________________ Case Type ____________ Difficulty ____________

Strengths: Opportunities:

Case Execution: ___ / 15

Communication: ___ / 10

Behavioral: ___ / 15

Total Score: ___ / 40

Total Time: _____: ______

Behavioral:

 Overall Performance

 Quality of Answers

 Relevance

 Clarity & Time

1 2 3 4 5

High Quality Bottles

Parthenon | Round 1 | Manufacturing

Parthenon | Round 1 | Hospitality/ Manufacturing

05 | CASE: HIGH QUALITY BOTTLES

HIGH QUALITY BOTTLES

BEHAVIORAL

INTERVIEW

QUESTION:

1. Tell me about

a time where you

leveraged data

to make a

decision.

2. Tell me about

a time where you

had to convince

others to see

something your

way.

UVA Darden School of Business 2018-19 Casebook

Clarifying Information: Note: Provide this only if corresponding questions are asked.

What is the size of the city? –Medium sized city, about the size of Seattle or Dallas

How many hotels are in the local market? –There are roughly 50 hotels in the region

Are we looking for dollar value or units? The client is primarily focused on market size in dollar value

What is goal/ makes this a desirable venture? Right now the client only wants to know market size but later,

profitability, namely potential profit margins above 25% will be important in determining if the market is attractive

How broad of a market is HQB looking at? The client’s only focus is the local hotel market

Which products is HQB looking to supply? Only shampoos, body wash, conditioners, and lotions for each hotel

room (1 of bottle each for a total of 4 per hotel room

)

How big is HQB’s Business currently? –HQB currently does $20 million in revenue

Prompt:

After successfully servicing large beverage companies over the last 20 years, our

client, the CEO of High Quality Bottles (HQB), a small plastics manufacturing and

bottling company, wants to expand into the hospitality and leisure space. Specifically,

she wants HQB to supply local hotel chains with bottled toiletries like shampoos,

conditioners, body wash, and lotions. HQB already has the interest of local hotels in

their hometown and they need your help in identifying the potential size of this

business and deciding if it is worth pursuing. How would you approach finding the

market size for the

first year in this expansion?

Framework Guidance:

Note: There are many possible alternatives to this framework. These are only provided as possible suggestions.

• The interviewee should create a framework that identifies the key elements needed to find the market size. -An ideal

framework should contain some of the following elements:

• Strong candidates will identify that they will need to calculate: (first order + all future replenishment orders) = Market

size because they are looking at the first year’s market size.

05 | CASE: HIGH QUALITY BOTTLES

UVA Darden School of Business 2018-19 Casebook

How to Move Forward:

To get to the next portion of the case, the interviewee should ask to explore:

• Once the interviewee has at least some measures of (room count, occupancy, and replenishment), the interviewee

should ask for at least one of those values to get exhibit 1. –Hand the interviewee exhibit 1 and move on to question 1.

Room Count

• # of hotels in the region

• Avg. # of rooms per hotel

Occupancy

• Avg. occupancy rates (per night,

week, year, etc.)

• Average length of stay

• OR average number room turnover

per week

Order & Replenishment

• Number of bottles per room

• Avg. number of bottles used per

stay

• Price charged per bottle

EXHIBIT 1

REGIONAL HOTEL INDUSTRY STATISTICS

05 | CASE: HIGH QUALITY BOTTLES

UVA Darden School of Business 2018-19 Casebook

50 Hotels

120 Rooms /

Hotel

80% Occupancy

Rate

3 Stays per

Week**

*HQB Estimates that the average guest will use 2.5 bottles per stay

** The average stay is two nights per week which means each room typically turns over 3 times a week

Exhibit 1 Guidance:

• QUESTION 1: What is the market size of supplying hotel toiletries in this region in dollars in year 1?

• ANSWER:

(Additional pricing per bottle information listed in “how to move forward session below)

• INITIAL ORDER: Hotels (50) x Avg. Rooms / Hotel (120) = Total Rooms (6000) x Number of Bottles / Room (4) = Total Bottles 24,000

• REPLENISHMENT ORDERS: Hotels (50) x Avg. Rooms / Hotel (120) = Total Rooms (6000) x Occupancy Rate (80%) = Rooms being used (4800)

• Room Usage (4800) x Stays / wk. (3) = Total Stays / wk. (14,400) x Avg. Bottles Used / Stay (2.5) = (36,000) Bottles / wk.

• Bottles / wk. (36,000) x wks. / year (50) or (52) = bottles / year 1,800,000 or 1,872,000

• Initial Order (24,000) Bottles x Price ($0.50) per Bottle = $12,000 + Replenishment: 1.8M or 1.872M x (0.50) = $900k or $936k

• Market size for this region is ($12k + 900k) =$912k if they rounded and ($12k + $936k) = $948k if they didn’t round

05 | CASE: HIGH QUALITY BOTTLES

UVA Darden School of Business 2018-19 Casebook

How to Move Forward:

• The interviewee is missing information on the price per bottle. Only provide the following if asked: The price per bottle

charged to each hotel is $0.50

• It is strongly advised and acceptable that the interviewee uses 50 weeks/ year rather than 52 weeks

• Once the interviewee comes up with a number, move forward to the next brainstorming session

BRAINSTORM

05 | CASE: HIGH QUALITY BOTTLES

UVA Darden School of Business 2018-19 Casebook

What other information should the client know to determine whether this is an attractive business to

enter into?

The interviewee should list new things that were not previously included in the framework. Use the

brainstorming hints on the next page to identify possible solutions

Internal Factors

• Cost of Ingredients

• Cost of Labor

• Cost of Plastics / Raw Materials

• Distribution Costs

• Factory Capacity

• Capital Expenditure Costs

• Depreciation of equipment

05 | CASE: HIGH QUALITY BOTTLES

UVA Darden School of Business 2018-19 Casebook

Directions:

To get to the next portion of the case, the interviewee should ask to explore:

• Ask the interviewee which element he /she would like to focus on to gauge whether this is a great business

idea.

• The interviewee should at least mention one of the following costs: raw material, distribution, ingredients.

• Once mentioned, read off the data points on the next page to the interviewee.

Brainstorming Guidance:

Note: This is just one possible set of categories and answers. Many more are possible, and interviewers should assess both the volume and relevance of answers.

External Factors

• Number of Competitors

• Health of local tourism economy

• Health of local Businesses (Business Travel)

• Emergence of threats to hotels like Air BnB

• Sustainability trends (recycling, water usage, etc.)

100

ADDITIONAL DATA POINTS

05 | CASE: HIGH QUALITY BOTTLES

UVA Darden School of Business 2018-19 Casebook

HQB has supplied us with the following data points:

(Do not give this page to the interviewee)

Cost of Ingredients: $0.20 per bottle

Cost to make Bottle: $0.05 per bottle

Cost of Distribution: $1.00 per case

Bottles per case: 20 bottles

Fixed Labor* $100,000/ Yr.

Cap Ex for new equip.: $250,000

Depreciation Straight-line over 10 years starting with year 1 to $0 salvage value

QUESTION 2: What profit margin can HQB can expect in the first year if it captured 100% of the market?

101

Math Guidance:

The interviewee should notice and verbally acknowledge the following:

• Raw material & Ingredient Costs: 50% of revenue or 25% of total Y1 volume 1.824M x .25% = $456k, or ~1.9M x .25% =

~$475k

• Distribution Costs: Cost/ Bottle = ($1/ 20 bottles)= 0.05 x 1.824M = $91.2k or ~$95k (52 wks.)

• End formula: Rev – Fixed Labor – Variable materials costs – Distribution – Depreciation = Profit dollars/ revenue = PM

• $912k - $100k - $456k - $91.2k - $25k = ~240k/ $912k = ~26% Profit Margin (Answer Between 25-30% is fine)

• $950k - $100k - $474k - $95k - $25k = ~256k/ 950k = 27% Profit Margin (Answer Between 25-30% is fine)

05 | CASE: HIGH QUALITY BOTTLES

UVA Darden School of Business 2018-19 Casebook

Directions:

• The Interviewee should identify that the full Cap Ex. should not be included in the profitability calculation –only the first

year’s depreciation

• Interviewee is not expected to give the exact profit margins. Just the range to gauge mathematical judgement

QUESTION 3: Considering that HQB’s average profit margin on its beverage operations is 25%, is this new

business opportunity attractive?

- Generally, the answer is yes since the profits are close / a little higher in the new business

102

CONCLUSION

05 | CASE: HIGH QUALITY BOTTLES

UVA Darden School of Business 2018-19 Casebook

The client is about to come in at any moment, can you summarize your findings and recommendations for this expansion?

Summary:

• Interviewee should quantify the market size

• Quantify the profit margins

Recommendation:

• Move forward or not with expansion (No right or wrong) but should explain why

Risks:

• Changes to raw material costs could significantly reduce profitability below threshold

• Single region risk

• Market share is unlikely to be 100%

Next Steps: (Potential points)

• Look at scale expansions beyond region

• Looking at hedging process for input costs

103

CASE EVALUATION (OPTIONAL)

05 | CASE: HIGH QUALITY BOTTLES

UVA Darden School of Business 2018-19 Casebook

The best interviewees on this case include the following:

• Identify goals of the case in clarifying questions

• Include all elements needed to market size the region

• Realize that they’ll need to calculate the size of the initial order + replenishment order

• Understand how to pull the pieces together in exhibit 1 to calculate market size

• They should also recognize that they need the price per unit of each bottle (which isn’t directly given)

• Brainstorm appropriate measures needed to identify is business is attractive

• Able to pull all the cost information together to create a profitability picture

• Tie the fact that this business has a 25-30% margin vs. the former beverage business

• Identify the fact that fluctuations in raw materials variable costs can reduce profit margins to below threshold

104

INTERVIEWER FEEDBACK FORM

Case Execution:

 Framework

 Logical approach

 MECE

 Creativity

1 2 3 4 5

Notes:

 Quantitative Ability

 Accuracy

 Speed

 Analytical Approach

 Errors / Guidance

1 2 3 4 5

Notes:

 Business Acumen

 Insightful

 Implementable

 Business Judgment

 Creative Brainstorm

1 2 3 4 5

Notes:

 Presence & Non-Verbal

 Confidence

 Poise / Posture

 Clear & Concise

 Body Language

 Coachability

1 2 3 4 5

Notes:

Communication:

 Case Materials

 Organized Page Layout

 Recognition of Errors

 Resource References

1 2 3 4 5

Notes:

Case Name _________________________ Interviewer ___________________________

Case Book ____________________ Case Type ____________ Difficulty ____________

Strengths: Opportunities:

Case Execution: ___ / 15

Communication: ___ / 10

Behavioral: ___ / 15

Total Score: ___ / 40

Total Time: _____: ______

Behavioral:

 Overall Performance

 Quality of Answers

 Relevance

 Clarity & Time

1 2 3 4 5

105

Canyon Capital Partners

Bain & Co. | Round 1 | Financial Services

106

Bain & Co. | Round 1 | Industry

06 | CASE: CANYON CAPITAL PARTNERS

CANYON CAPITAL PARTNERS

BEHAVIORAL

INTERVIEW

QUESTIONS:

1. TELL ME

ABOUT A TIME

WHEN YOU WERE

PART OF A HIGH

PERFORMING

TEAM. WHAT

WAS YOUR ROLE

IN ACHIEVING

SUCCESS?

2. IF I TALKED

TO YOUR LAST

BOSS, WHAT IS

THE ONE BEST

THING HE OR

SHE WOULD

TELL ME ABOUT

YOU?

UVA Darden School of Business 2018-19 Casebook

Clarifying Information:

Note: Provide this only if corresponding questions are asked.

What do hedge funds do?



Manage their investors’money to generate above market investment returns. CCP only

invests in US public equity markets.

How much money does CCP manage?



Current assets under management (AuM) are $ 2.1 billion. In the past

three years, the fund has not had any new in or outflows of investor money.

What are management fees?



Fixed fees paid on the average balance of assets under management. CCP’s

managementfees were 2.0% per year, but were reduced to 1.5% since 2016 because of competitive pressure.

What are carried interests?



Share of investment performance appropriated by the fund’s managers as additional

compensation.CCP takes 20% of all investment gains in excess of the 15% hurdle rate in the year.

Your client is Canyon Capital Partners (CCP). CCP is a long-established

hedge fund headquartered in Hartford, CT. Hedge funds make money mainly

out of management fees and carried interests. Over the past two years,

CCP’s profits have been declining. Its CEO and founder has hired you to

help her understand why are profits trending down and what should she do to

restore the firm to a more profitable route.

107

Framework Guidance:

Note: There are many possible alternatives to this framework. These are only provided as possible suggestions.

• Revenues

• Management Fees

• Assets under Management

• Carried Interests

06 | CASE: CANYON CAPITAL PARTNERS

UVA Darden School of Business 2018-19 Casebook

How to Move Forward:

To get to the next portion of the case, the interviewee should ask to explore:

• The interviewee should explore both trends in Revenues and Costs. External factors should not be explored in this analysis.

• Exhibit 1 should be given upon request of data on Revenues.

• Exhibit 2 should be given upon request of data on Costs.

• Costs

• Employee Compensation

• Office Rent

• Research Materials

• External

• Regulation

• Competition

• Market Trends

108

EXHIBIT 1 – AuM & Investment Performance

06 | CASE: CANYON CAPITAL PARTNERS

UVA Darden School of Business 2018-19 Casebook

10%

20%

30%

40%

50%

500

1,000

1,500

2,000

2,500

Investment Performance

Assets under Management

AuM ($mm) Investment Performance

109

Exhibit Guidance:

The interviewee should notice that AuM is steadily increasing and that investment performance was good in 2015, but disappointing in 2016

and 2017. The interviewee should proactively calculate total revenues per year.

NOTE: The interviewee may require coaching and should not be penalized for this, but he or she should drive the discussion. If interviewee

asks for specific figures, ask them to estimate based on what is visible in the chart.

06 | CASE: CANYON CAPITAL PARTNERS

UVA Darden School of Business 2018-19 Casebook

How to Move Forward:

To get to the next portion of the case, the interviewee should ask to explore:

• If the interviewee started by exploring revenue trends, he/she should next ask about costs.

2015 2016 2017

Average AuM ($mm) 1,600 1,800 1,900

Management Fee (%) 2.00% 1.50%

1.50%

Management Fee Revenue ($mm) 32.0 27.0 28.5

Investment Performance 20% 5%

Carried Interests Revenue ($mm) 15.0 0.0 0.0

Total Revenues ($mm) 47.0 27.0 28.5

Carried Interest Revenues 2015

1 – Initial AuM ($mm) 1,500

2 – Total Return (%) 20%

3 – Total Return ($mm) [1×2] 300

4 – Excess Return ($mm) [3−1×

15%]

Carried Interests ($mm) [4×20%] 15

110

EXHIBIT 2 – Employee Headcount

06 | CASE: CANYON CAPITAL PARTNERS

UVA Darden School of Business 2018-19 Casebook

2015 2016 2017

C-Suite 3 3 3

Portfolio Managers 3 3 4

Associates 7 10 16

Analysts 13 11 9

Traders 3 3 3

Support Staff 7 8 9

111

Exhibit Guidance:

The interviewee should notice the increasing headcount and how the number of associates has been increasing rapidly while the number of

analysts has decreased in the same period.

• When asked about compensation structure, disclose that each employee receives annual salaries according to the table below.

• Only C-suite and Portfolio Managers receive variable compensation. It is directly tied to fund profitability and therefore irrelevant to

profitability analysis.

06 | CASE: CANYON CAPITAL PARTNERS

UVA Darden School of Business 2018-19 Casebook

Directions:

To get to the next portion of the case, the interviewee should ask to explore:

• If asked about office rent, say that the fund has a long-term lease with minor annual price adjustments. Irrelevant to the analysis.

• If asked about research material costs, say that the fund has not made any changes to its research resources in the past years, nor have

prices changed.

• If the interviewee started by exploring cost trends, he/she should next ask about revenues.

Salary ($)

C-Suite 1,500,000 Analysts

100,000

Portfolio Managers 500,000 Traders

200,000

Associates 250,000 Support Staff

75,000

2015

2016 2017

Total Revenues ($mm)

47.000

27.000 28.500

Total Salary ($mm)

10.175

10.800 12.675

112

CONCLUSION

06 | CASE: CANYON CAPITAL PARTNERS

UVA Darden School of Business 2018-19 Casebook

To conclude, the interviewee should provide the following:

Summary:

• CCP’s revenues have trended down because of lower management fees and recent poor investment performance. Costs have been up

because of increasing headcount and disproportionate ratio of associate to analysts.

Recommendation:

• ↑ Revenues  Increase management fee. Increase assets under management. Employ new investment strategies to improve returns.

• ↓ Costs  Promote employee turnover through meritocracy. Reduce number of associates and increase number of analysts.

Risks:

• Increasing management fee may scare off investors.

• Employee morale could be hurt by letting go of associates. Fund future growth could be hurt by decreasing headcount.

Next Steps:

• Create strategy for new round of fund raising.

• Which associates to let go. Set rules for employee turnover and promotion.

113

INTERVIEWER FEEDBACK FORM

Case Execution:

 Framework

 Logical approach

 MECE

 Creativity

1 2 3 4 5

Notes:

 Quantitative Ability

 Accuracy

 Speed

 Analytical Approach

 Errors / Guidance

1 2 3 4 5

Notes:

 Business Acumen

 Insightful

 Implementable

 Business Judgment

 Creative Brainstorm

1 2 3 4 5

Notes:

 Presence & Non-Verbal

 Confidence

 Poise / Posture

 Clear & Concise

 Body Language

 Coachability

1 2 3 4 5

Notes:

Communication:

 Case Materials

 Organized Page Layout

 Recognition of Errors

 Resource References

1 2 3 4 5

Notes:

Case Name _________________________ Interviewer ___________________________

Case Book ____________________ Case Type ____________ Difficulty ____________

Strengths: Opportunities:

Case Execution: ___ / 15

Communication: ___ / 10

Behavioral: ___ / 15

Total Score: ___ / 40

Total Time: _____: ______

Behavioral:

 Overall Performance

 Quality of Answers

 Relevance

 Clarity & Time

1 2 3 4 5

114

Transportation Tech Co.

Parthenon | Round 1 | Technology

115

Parthenon | Round 1 | Technology

07 | CASE: TRANSPORTATION TECH CO.

TRANSPORTATION TECH CO.

BEHAVIORAL

INTERVIEW

QUESTION:

1. Tell me about

a time you had

to motivate a

teammate to do

something

he/she didn’t

want to do.

2. Tell me about

a time when you

went beyond

your

responsibilities

to achieve a

goal.

UVA Darden School of Business 2018-19 Casebook

Clarifying Information:

Note: Provide this only if corresponding questions are asked

• Product – The device transmits location and ETA info to schools and parents/legal guardians. Parents, bus

drivers, and school administrators access transmitted data and messages via a proprietary phone/tablet

application

• Objective – The client’s primary goal is to figure out the best context/industry in which this product should be

rolled out. Success is defined as profit maximization.

• Business model – Our client will generate revenues by (1) initial sales of the devices and (2) technology service

plans. For purposes of this case, we are primarily focused on (1).

• Life span – The product would have a 5-year life span.

Prompt:

Our client, Transportation Tech Co., is a key player in the transportation

technology space. Recently, the client developed an innovative GPS fleet

tracking device which it believes could prove valuable to K-12 schools in the

US. We have been engaged to help our client determine whether this product

should be rolled out as a school bus tracking device.

116

Framework Guidance:

Note: There are many possible alternatives to this framework. These are only provided as possible suggestions.

• Customers – who would our client be selling to in a school bus context?

• Competitors – What, if any, similar products are being used?

• Financial considerations – (2) Potential market size and (2) profit tree

• Candidate should think about the potential sources and drivers of revenues and costs associated with the product. These should be

case/industry specific!

• Push the candidate to think through the buying process. If the candidate asks, you can tell them that purchasing decisions are made by

different decision-making units across school settings (i.e. district-level, school-level, bus drivers, etc.

• If they don’t do so on their own, push candidates to consider the specific benefits which could be derived from this product,for specific

key stakeholders (i.e. schools, bus drivers, students, parents, etc.)

07 | CASE: TRANSPORTATION TECH CO.

UVA Darden School of Business 2018-19 Casebook

How to Move Forward:

To get to the next portion of the case, the interviewee should ask to explore:

• Market sizing

117

QUESTION 1

07 | CASE: TRANSPORTATION TECH CO.

UVA Darden School of Business 2018-19 Casebook

What is the potential addressable year 1 market size for this device in the US school bus space?

Guidance:

Tip: Candidates should begin market-sizing by verbalizing their formula/approach to size the market. For each variable laid out, candidates should verbalize what information would

be needed to solve for that variable (i.e. sometimes there will be multiple layers) and then confirm that the approach is reasonable to the interviewer. The candidate should then ask

for the relevant info as they tackle each variable in solving the market-sizing problem.

1. # School buses in the US = (# K-12 students in the US * % students riding bus)/(# students per bus)

a. Assume school-aged kids are 4-18; assume 320M people in the US, evenly distributed across ages, with life expectancy of 80 yers (i.e. 4M/year) = 15 * 4M =

60M

b. Assume 60% of students aged 4-13 ride and 30% of students aged 14-18 ride = (10/15 * 60%) + (5/15 * 30%) = 120%/3 + 30%/3 = 150%/3 = 50%

c. Assume average bus has roughly 13 rows on each side and can seat 2 students per row = 13 * 2 * 2 = 53 students per bus (appropriate to round to 50 or 60)

d. ((a) * (b) / (c)) = (60M * 50%) / 50 = 600K buses

2. # units per bus = 2 (give to candidate once they ask)

3. Selling price per unit = $200 (give to candidate once they ask)

Total potential addressable year 1 market size: (1) * (2) * (3) = 600K * 2 * $200 = $240M

118

QUESTION 2

07 | CASE: TRANSPORTATION TECH CO.

UVA Darden School of Business 2018-19 Casebook

If the client were to enter the school bus market, what do you think its year 1 new device sales would be?

Guidance:

• Year 1 revenues = Potential year 1 market size * year 1 product adoption percentage

There is no correct response to this question. Here the interviewer should be looking for the candidate to

demonstrate business acumen and support his/her response. For example, most schools are very resource-

constrained, so year 1 adoption of 10% might be reasonable. Whatever the case, the interviewer should push

the candidate for supporting rationale for the product adoption % chosen.

119

QUESTION 3

07 | CASE: TRANSPORTATION TECH CO.

UVA Darden School of Business 2018-19 Casebook

What would you expect to be the annual revenues (in terms of new product sales) in year 5?

Guidance:

• If they ask, candidates can assume that the overall market will not grow

• Year 5 revenues = (Potential year 1 market size – year 1 revenues – year 2 revenues – year 3 revenues –

year 4 revenues) * year 5 product adoption percentage

• Here the key is to remember that the product has a 5-year life span, so any school purchasing the device in

years 1-4 would be “out” of the market in year 5

• Candidates should state their assumptions about adoption rates for years 2-5

120

QUESTION 4

07 | CASE: TRANSPORTATION TECH CO.

UVA Darden School of Business 2018-19 Casebook

What are some other sectors and outlets that could make sense for this new technology?

Guidance:

• Push the candidate to brainstorm

• Some examples might include commercial freight, shipping, public transportation, flight, cruise ships, rescue

boats, tour buses, drone fleets, etc.

121

QUESTION 5

07 | CASE: TRANSPORTATION TECH CO.

UVA Darden School of Business 2018-19 Casebook

Looking at the following data, which additional outlets do you think appear attractive? Why?

122

EXHIBIT 1

07 | CASE: TRANSPORTATION TECH CO.

UVA Darden School of Business 2018-19 Casebook

Note: Colors

represent

competitor

companies.

Letters represent

products.

123

Exhibit Guidance:

• The candidate should avoid getting confused by the large amount of detail included in the exhibit. They

should quickly drive to insights once they understand the data presented

• The key insights are:

• Commercial freighters and cruise liners are the two largest markets and lack dominant competitors (highly

fragmented)

• High growth rate in the commercial drone segment is not compelling enough to merit entry as annual segment

sales would only reach $120M in 5 years (using the rule of 72, sales wouldn’t double for 7.2 years), still making it

the smallest segment.

• Thus, commercial freighters and cruise liners would be the two most attractive additional segments from the exhibit.

This does not necessarily mean, however, that the client should enter these markets

07 | CASE: TRANSPORTATION TECH CO.

UVA Darden School of Business 2018-19 Casebook

124

CONCLUSION

07 | CASE: TRANSPORTATION TECH CO.

UVA Darden School of Business 2018-19 Casebook

How should the client proceed?

To conclude, the interviewee should provide the following:

Summary

• Recap the objective and important data and insights from the case

Recommendation:

• Make a recommendation about whether the client should enter the school bus segment and why

• Address any other segments that might be attractive for the client

Risks

Next Steps

125

INTERVIEWER FEEDBACK FORM

Case Execution:

 Framework

 Logical approach

 MECE

 Creativity

1 2 3 4 5

Notes:

 Quantitative Ability

 Accuracy

 Speed

 Analytical Approach

 Errors / Guidance

1 2 3 4 5

Notes:

 Business Acumen

 Insightful

 Implementable

 Business Judgment

 Creative Brainstorm

1 2 3 4 5

Notes:

 Presence & Non-Verbal

 Confidence

 Poise / Posture

 Clear & Concise

 Body Language

 Coachability

1 2 3 4 5

Notes:

Communication:

 Case Materials

 Organized Page Layout

 Recognition of Errors

 Resource References

1 2 3 4 5

Notes:

Case Name _________________________ Interviewer ___________________________

Case Book ____________________ Case Type ____________ Difficulty ____________

Strengths: Opportunities:

Case Execution: ___ / 15

Communication: ___ / 10

Behavioral: ___ / 15

Total Score: ___ / 40

Total Time: _____: ______

Behavioral:

 Overall Performance

 Quality of Answers

 Relevance

 Clarity & Time

1 2 3 4 5

126

Lonely Gas Station

BCG | Final Round | Retail/Oil & Gas

127

BCG | Round 2 | Retail/Oil & Gas

08 | CASES: LONELY GAS STATION

LONELY GAS STATION

BEHAVIORAL

INTERVIEW

QUESTION:

1. Tell me about

a time you’ve

failed as a

leader.

2.What would

your learning

team tell me

about you?

UVA Darden School of Business 2018-19 Casebook

Clarifying Information:

Note: Provide this only if corresponding questions are asked.

• There are no other gas stations in town A or B

• Gas is 75% of revenue (10% profit margin) and the gas station also offers car washes (25% of

revenue, 20% profit margin)

• Criteria for “making sense” – 1) making profit, 2) having a better chance to hold off new

competitors enter the market, 3) diversifying income

• The gas stations current customers are residents of town A and B; there are no other customersc

Prompt:

Our client is the owner of a gas station between towns A and B – 10 miles to each

town. He is wondering if it would make sense to add a convenience store to the gas

station.

This is intentionally open-ended. The interviewee will have to ask multiple questions to frame the

problem and gather the information necessary.

128

Framework Guidance:

Note: There are many possible alternatives to this framework. These are only provided as possible suggestions.

• Revenue/profit of current and potential business

• Gas station business

• Convenience store business

• Potential revenues, costs, up-front investment

• Would adding the convenience store bring in addition gas station customers?

• Market/Competition

• Market size

• Other convenience stores?

• Growth in town A and/or B?

• Changes in preference for gas (electric cars? Public transportation?

• Product and client capabilities

• Knowledge of retail/convenience stores

• Supplier contacts

• Management experience; potential to contract an external party to run convenience store

08 | CASES: LONELY GAS STATION

UVA Darden School of Business 2018-19 Casebook

129

QUESTION 1

08 | CASES: LONELY GAS STATION

UVA Darden School of Business 2018-19 Casebook

How profitable is the current business?

The interviewee should structure a logical approach to market sizing on their own; provide these numbers only after they identify that they need

the information

Market information:

• 1000 people in each town

• 80% of population owns a car

• 50% of car owners get gas from client

Math:

• Per town: 1000 * 80% = 800; 800 * 50% = 400

• Total: 400 * 2 = 800 person customer base

Math:

• 800 customers * $50 * 50 weeks/year = 2M on gas per year

• 2M * 40% of purchases made at client = $800K client revenue

• 75% of revenue is gas: $800K * 75% = $600K * 10% profit

margin = $60K profit

• 25% of revenue is other: $800K * 25% = $200K * 20% profit

margin = $40K profit

• $60K + $40K = $100K profit per year

Profitability information:

• Customers get gas on average 1x/week

• Can tell interviewee to round down to 50 weeks/yr

• Spend $50 each time

• Customers make 40% of all gas purchases at the client’s station

Interviewee should have already asked about gas station

revenue (clarifying questions) and learned that gas makes up

75% of revenue (10% profit margin) and other purchases are

25% (20% profit margin). Prompt if not: Do you think the

entire purchase is gas each time?

130

QUESTION 2

08 | CASES: LONELY GAS STATION

UVA Darden School of Business 2018-19 Casebook

How profitable would the convenience store be on an ongoing basis?

Information on convenience store:

Gasoline customers will spend an additional $20 at the convenience

store per purchase, but will not increase frequency of purchases

Recurring costs for convenience store are:

• Labor: $75K/year

• Utilities: $5K/month

• COGS: 50% of revenue

ONLY PROVIDE IF ASKED: 50% of town population who currently are

not customers (the remaining 1200 non-customers, not just the 80%

car owners) will spend $5 per week at the convenience store

Math:

• Revenue – existing customers:

• 800 customers * 50 weeks * 1 purchase/week * 40%

purchases made at our gas station = 16K total purchases

• 16K purchases * $20 = $320K addlrevenue

• Revenue – new customers:

• 1200 non-customers * 50% * $5 per week * 50 weeks =

$150K

• Total revenue: $320 + $150 = $470K

• Costs

• COGS: $470K revenue * 50% = $235K

• Labor: $75K

• Utilities: 12 months * $5K = $60K

• Profit:

• $470K - $235K - $75K - $60K = $100K/year

131

QUESTION 2B

08 | CASES: LONELY GAS STATION

UVA Darden School of Business 2018-19 Casebook

Given that, what is the NPV of opening a gas station?

Interviewee should ask for:

• Up-front investment cost: $1M

• Client’s Discount rate: 10%

• Town population growth rate: 0%

• Expected life: perpetuity

Calculation:

• $100K annual profit/10% discount rate = $1M

• Investment cost of $1M

• NPV = 0

132

QUESTION 2C

08 | CASES: LONELY GAS STATION

What does the NPV of 0 mean for our client?

A strong interviewee would have moved to these insights after calculating that NPV = 0. if not, prompt with this question.

The interviewee can provide a recommendation either for or against the convenience store as long as it recognizes the NPV of 0 and is backed

up by logic.

Possible Answer:

For investment:

• Diversification

• Gain new customers who may start purchasing gas/potentially

increase frequency of visits of current customers to store

Against investment:

• NPV of 0

• Could be even worse in reality

• High investment cost

UVA Darden School of Business 2018-19 Casebook

133

QUESTION 2D

08 | CASES: LONELY GAS STATION

UVA Darden School of Business 2018-19 Casebook

What happens to the NPV if a convenience store competitor enters the market?

The interviewee should recognize that a competitor entering the market would make the situation less attractive for our client.

Should also mention that a competitors likely has a 0 NPV at best given our client is an established brand in the market with an established

customer base, so it seems unlikely that a competitor would want to enter.

Strong interviewees could take initiative to discuss ways to improve NPV if a competitor enters the market.

134

QUESTION 3

08 | CASES: LONELY GAS STATION

UVA Darden School of Business 2018-19 Casebook

The client also asked us to provide him with a list of things to consider in this decision. What would you tell

him?

Looking for a qualitative discussion of things to consider; a balanced answer will indicated both potential benefits and threats to widening the

client’s business.

The interviewee can ask for a minute to brainstorm; a strong interviewee will have a structured approach

Possible answer:

Current Customers

• Greater convenience

• Higher revenue

• Increasing frequency of visit

• Longer wait times

New Customers

• Converted to buy gasoline

• Potential to attract customers from

other cities

Competition

• New entrants

• Supermarkets/restaurants/other

similar offerings

• Differentiate with week/night hours

or something similar

Other

• Is there enough space to add

a store?

• Are there any regulatory

issues?

135

INTERVIEWER FEEDBACK FORM

Case Execution:

 Framework

 Logical approach

 MECE

 Creativity

1 2 3 4 5

Notes:

 Quantitative Ability

 Accuracy

 Speed

 Analytical Approach

 Errors / Guidance

1 2 3 4 5

Notes:

 Business Acumen

 Insightful

 Implementable

 Business Judgment

 Creative Brainstorm

1 2 3 4 5

Notes:

 Presence & Non-Verbal

 Confidence

 Poise / Posture

 Clear & Concise

 Body Language

 Coachability

1 2 3 4 5

Notes:

Communication:

 Case Materials

 Organized Page Layout

 Recognition of Errors

 Resource References

1 2 3 4 5

Notes:

Case Name _________________________ Interviewer ___________________________

Case Book ____________________ Case Type ____________ Difficulty ____________

Strengths: Opportunities:

Case Execution: ___ / 15

Communication: ___ / 10

Behavioral: ___ / 15

Total Score: ___ / 40

Total Time: _____: ______

Behavioral:

 Overall Performance

 Quality of Answers

 Relevance

 Clarity & Time

1 2 3 4 5

136

Copier Co.

Boston Consulting Group | Round 1 | Information Technology

137

Boston Consulting Group | Round 1 | Information Technology

09 | CASES: COPIER CO.

COPIER CO.

BEHAVIORAL

INTERVIEW

QUESTION:

1. Tell me about

a challenge you

set for yourself

and then

accomplished.

2. What do you

want to get out

of a consulting

experience?

UVA Darden School of Business 2018-19 Casebook

Clarifying Information:

Note: Provide this only if corresponding questions are asked

Sales Process– The company actually bids on contracts; contracts are typically awarded to the

lowest bidder. The bid consists of a per copier cost which includes 1 year of maintenance as part of

sales price. Salesmen have free reign to determine bid price and are compensated based on

commission (% of overall sales)

Competition– One major competitor (American Copiers), but a new, low-cost competitor (Bottom

Dollar Copier) has recently entered the market. These three companies are distributors and service

technicians, NOT manufacturers.

Product– This case will focus on one identical copier sold/distributed by multiple firms

Prompt:

Copier, Co. is a national distributor of office equipment, particularly commercial-grade

copiers. The firm sells the equipment directly to companies for use in their offices, as

well as provides regular service including maintenance, repairs, and replacing

disposable parts. Recently, the company has experienced declining profit margins; we

have been hired to determine why this is happening and what to do to reverse the

trend.

138

Framework Guidance:

Note: There are many possible alternatives to this framework. These are only provided as possible suggestions.

09 | CASES: COPIER CO.

UVA Darden School of Business 2018-19 Casebook

How to Move Forward:

To get to the next portion of the case:

The candidate should ask for data related to revenue and costs to help determine why profitability is declining. Let the candidate probe until

they ask for information regarding unit price and copier quantity. Then, show them Exhibit 1 and ask for reactions.

Profit:

• Revenue:

• Volume: # copiers sold/contracts awarded

• Price: Avg. copier sale price/bid price

• Costs:

• FC: Sales force (base), warehousing, overhead

• VC: Service/labor costs, COGS, transportation, sales

force (commission)

Non-Financial:

• Competition:

• Size and share of competitors (AC, BDC), bidding

process

• Product:

• Product quality and characteristics

• Customer:

• Changing customer preferences, different markets

• Company:

• Salesforce compensation, product mix

139

EXHIBIT 1

09 | CASES: COPIER CO.

UVA Darden School of Business 2018-19 Casebook

140

Exhibit Guidance:

The interviewee should notice and verbally acknowledge the following in Exhibit 1. This is where you insert question and the answers to the question

• Good Response: Candidate should realize that there is a negative correlation – the more copiers in the contract, the

lower per copier bid price (price wars for more contribution). A candidate should hypothesize why that may be so –

perhaps the salespeople may be lowering bid price in effort to increase commission (due to higher sales from larger

quantity contracts) or looking to increase overall profit while overall margins are smaller.

• Great response: Candidate should point out that there are a few contracts with high bid prices. With the information

about the new competitor in hand, candidate should ask for information for average sales price based on the competitors

for the contract.

09 | CASES: COPIER CO.

UVA Darden School of Business 2018-19 Casebook

How to Move Forward:

To get to the next portion of the case, the interviewee should ask to explore:

• Information for average sales price based on the competitors for the contract

141

EXHIBIT 2

09 | CASES: COPIER CO.

UVA Darden School of Business 2018-19 Casebook

Copier Co. Successful Bid Info

* Service for 1 year included

Competing against

American Copier ONLY

Competing against

Bottom Dollar Copier

ONLY

Competing against

both AC and BDC

Average bid price $5,000 $4,000 $3,000

Average copiers in order 20 25 30

Cost of copier $3,000 $3,000 $3,000

Service cost* (per page

printed)

$0.05 $0.05 $0.05

Average pages printed

per copier (per month)

1,000 1,000 1,000

142

Math Guidance:

09 | CASES: COPIER CO.

UVA Darden School of Business 2018-19 Casebook

Competing against

American Copier ONLY

Competing against

Bottom Dollar Copier

ONLY

Competing against

both AC and BDC

Contribution per copier $2,000 $1,000 $0

Service cost per copier $600 $600 $600

Profit per copier $1,400 $400 ($600)

Total profit $28,000 $10,000 ($18,000)

143

Exhibit Guidance:

The interviewee should notice and verbally acknowledge the following in Exhibit 1. This is where you insert question and the answers to the question

The candidate should start by determining profit for bids against American Copier only – if he/she does not immediately

begin the profit calculation, prompt them to do so. Common pitfalls will be failing to realize the pages printed are provided

in months (needs to multiply by 12 months to get annual) and that service is only included for a year.

After the candidate calculates profit for bids against American Copier, ask them whether the other bidding scenarios are

profitable. If candidate begins to lay out the math, ask them to just answer without doing the entire extent of the math.

09 | CASES: COPIER CO.

UVA Darden School of Business 2018-19 Casebook

How to Move Forward:

• Good response: Candidate should recognize that bids against BDC are profitable (but less so) and that bids against

all three competitors are generally not profitable, due to a contribution margin of zero. A good candidate would do

profit calculations on a contribution basis (rather than total revenue and cost).

• Great response: Candidate should transition into possible solutions to the problem.

144

BRAINSTORM

09 | CASES: COPIER CO.

UVA Darden School of Business 2018-19 Casebook

Have the candidate brainstorm solutions to the low bid issue.

Don’t allow the candidate to stop with “don’t bid on contracts with all three competitors.” Let them know that the

firm’s management wants to bid on all contracts and they need to come up with creative solutions to solving the

profitability problem in those scenarios.

Possible answers include:

• Minimum allowable bid prices for sales people

• Change compensation structure

• Offer different packages (no service component, multi-year service contracts)

• Negotiate better pricing for copiers

• Offer complementary products to copier sales (paper, other equipment, etc.)

• Joint venture with competitors on large orders

145

CONCLUSION

09 | CASES: COPIER CO.

UVA Darden School of Business 2018-19 Casebook

The CEO is anxiously awaiting your analysis and recommendation – what answers do you have for

Copier Co?

To conclude, the interviewee should provide the following:

Summary

• Succinctly identify that the new competitor and commission-based compensation structure is resulting in

lower bid prices and thus lower margins.

Recommendation:

• One or two actionable solutions from brainstorming

Risks

Next Steps

146

INTERVIEWER FEEDBACK FORM

Case Execution:

 Framework

 Logical approach

 MECE

 Creativity

1 2 3 4 5

Notes:

 Quantitative Ability

 Accuracy

 Speed

 Analytical Approach

 Errors / Guidance

1 2 3 4 5

Notes:

 Business Acumen

 Insightful

 Implementable

 Business Judgment

 Creative Brainstorm

1 2 3 4 5

Notes:

 Presence & Non-Verbal

 Confidence

 Poise / Posture

 Clear & Concise

 Body Language

 Coachability

1 2 3 4 5

Notes:

Communication:

 Case Materials

 Organized Page Layout

 Recognition of Errors

 Resource References

1 2 3 4 5

Notes:

Case Name _________________________ Interviewer ___________________________

Case Book ____________________ Case Type ____________ Difficulty ____________

Strengths: Opportunities:

Case Execution: ___ / 15

Communication: ___ / 10

Behavioral: ___ / 15

Total Score: ___ / 40

Total Time: _____: ______

Behavioral:

 Overall Performance

 Quality of Answers

 Relevance

 Clarity & Time

1 2 3 4 5

147

Maxicure

McKinsey | Round 1 | Industrials/Manufacturing

148

McKinsey | Round 1 | Industrials/Manufacturing

1 0 | CASE: MAXICURE

MAXICURE

BEHAVIORAL

INTERVIEW

QUESTION:

1. Tell me about

an ethical

dilemma you

have faced.

2. Did you like

your previous

job? Why or why

not?

UVA Darden School of Business 2018-19 Casebook

Clarifying Information:

Note: Provide this only if corresponding questions are asked

• There are 2-3 larger players in this over-the-counter business who have distribution

across the country. Maxicure is one of them.

• Maxicure sells all of its products in the US

• Objective is to reduce production costs while maintaining product quality (cost,

quality and brand image all matter to customers)

Prompt:

Your client, Maxicure, manufactures and sells an over-the-counter cough and cold

medicine. Their sole plant in Kentucky is aging, and its increasing maintenance costs

are leading to low margins on their products. How would you advise Maxicure proceed

to solve this problem?

149

QUESTION 1

10 | CASE: MAXICURE

UVA Darden School of Business 2018-19 Casebook

What options does Maxicure have for purposes of tackling this problem, and what factors would you consider in

deciding which options to choose?

Framework Guidance:

Note: There are many possible alternatives to this framework. These are only provided as possible suggestions.

Options/Considerations Refurbish Rebuild,same site Rebuild, new location Outsource

Investment cost

New perunit cost

Financial/non-financial benefits

Effecton quality

Opportunity to improve tech/capacity

Proximity to distribution centers

150

QUESTION 2

10 | CASE: MAXICURE

UVA Darden School of Business 2018-19 Casebook

Maxicure has narrowed down its decision to 2 options: (1) build a new facility next to eh old plant, or (2) outsource the

manufacturing to a competitor. With the information given below, how many bottles of medicine would Maxicure need to sell

for the in-house option to be more profitable than the outsourcing option?

Data:

Candidate should ask for the following in order to answer the question:

• Selling price per bottle: $4.50

• In-house:

- Initial investment: $50M

- Total cost per bottle: $2.00

• Outsource:

- Total cost per bottle (first 20M bottles, regardless of total order size): $2.25

- Total cost per bottle (bottles after the first 20M, regardless of total order size): $2.50

151

Question 2 Guidance:

• Margin in-house: $2.50

• Margin outsourced: $2.25 <20M and $2 >20M

• Let’s say Maxicure needs to sell x bottles to make the two options have equal margins

• In-house margin = 2.5x – 50M

• Outsource margin = (x – 20M) * 2 + 2.25 * 20M

• Setting the profits as equal: 2.5x – 50M = ((x – 20M) * 2) + (2.25 * 20M)

• X = 110M Units

Note: After the calculation, push the candidate to select an option and give reasons why.

10 | CASE: MAXICURE

UVA Darden School of Business 2018-19 Casebook

152

QUESTION 3

10 | CASE: MAXICURE

UVA Darden School of Business 2018-19 Casebook

Maxicure has decided to build a new production facility, but it wants to build the plant in Indiana instead to be closer to a

major distribution center. How should it convince the governor of Indiana to offer Maxicure the necessary tax breaks to make

the move more profitable for the firm?

Question 3 Guidance:

Note: There are many acceptable answers. The following are just examples.

• More tax collection for the state, stimulating the economy

• More job creation

• Good press for the governor

• Attract other manufacturers to the state

• Suggestions to conduct community-building initiatives like building schools, parks, etc.

153

CONCLUSION

10 | CASE: MAXICURE

UVA Darden School of Business 2018-19 Casebook

What is your final recommendation for the client?

To conclude, the interviewee should provide the following:

Summary

• Recap the objective and important data and insights from the case

Recommendation:

• Make a recommendation about how the client should approach building the new production facility

Risks

Next Steps

154

QUESTION 4

10 | CASE: MAXICURE

UVA Darden School of Business 2018-19 Casebook

What is your final recommendation to the client?

Conclusion Guidance:

A strong response should include the following:

Summary

Recommendation, with 2-3 supporting, data-driven pieces of evidence

Risks

Next Steps

Restatement of recommendation

155

INTERVIEWER FEEDBACK FORM

Case Execution:

 Framework

 Logical approach

 MECE

 Creativity

1 2 3 4 5

Notes:

 Quantitative Ability

 Accuracy

 Speed

 Analytical Approach

 Errors / Guidance

1 2 3 4 5

Notes:

 Business Acumen

 Insightful

 Implementable

 Business Judgment

 Creative Brainstorm

1 2 3 4 5

Notes:

 Presence & Non-Verbal

 Confidence

 Poise / Posture

 Clear & Concise

 Body Language

 Coachability

1 2 3 4 5

Notes:

Communication:

 Case Materials

 Organized Page Layout

 Recognition of Errors

 Resource References

1 2 3 4 5

Notes:

Case Name _________________________ Interviewer ___________________________

Case Book ____________________ Case Type ____________ Difficulty ____________

Strengths: Opportunities:

Case Execution: ___ / 15

Communication: ___ / 10

Behavioral: ___ / 15

Total Score: ___ / 40

Total Time: _____: ______

Behavioral:

 Overall Performance

 Quality of Answers

 Relevance

 Clarity & Time

1 2 3 4 5

156

To Automate or Not

BCG | Round 2 | Operations

157

BCG | Round 2 | Operations

11 | CASES: TO AUTOMATE OR NOT

TO AUTOMATE OR NOT

BEHAVIORAL

INTERVIEW

QUESTION:

1. Tell me about

a time where you

made a mistake.

What lessons

did you learn?

2. What are

three words that

your learning

team would use

to describe you?

Why?

UVA Darden School of Business 2018-19 Casebook

Clarifying Information:

• The company does not have a specific goal in mind with this decision. This CEO trusts us and

will do whatever we advise. This is to test the candidate’s business judgment.

• Shipments are made to roughly 50 grocery stores in the immediate area, and the company does

1M shipments per year

• Costs to automate – (1) one-time outlay of $4M, plus (2) recurring OH, training, and additional

maintenance costs of $1.0M (make the candidate request BOTH pieces of info)

• The candidate should visualize the distribution process (i.e. receiving, holding & picking,

shipping) to think through this question

Prompt:

After returning from a trade show, the CEO of a large grocery distribution

center calls you. He enthusiastically describes a new technology which could

be used to automate part of his company’s process. He asks whether you

think this would be a good idea for his business. Knowing that this CEO is a

tech-enthusiast who loves innovation for the novelty of it, you ponder the

implications. How would you tackle this problem?

158

Framework Guidance:

Note: There are many possible alternatives to this framework. These are only provided as possible suggestions.

A strong framework could include:

Revenues

• Strong candidates will recognize that this is primarily a cost issue

• The company is not experiencing capacity issues and is satisfying customer demand, so optimizing the distribution process will not result in additional

revenues

Costs

• Existing

- Fixed Costs, Rents/Mortgage/Leases, Overhead, Salaries

- Variable – Hourly employees, repairs& maintenance, inventory holding, shipping

• Incremental

- One-time – Initial cost of automating, cost of initial training, downtime (there is none), severance pay for any employees terminated, etc.

- Ongoing – Servicing, repairs, additional costs of running upgraded facility (i.e. energy, insurance, etc.)

Product

• Considerations around changes to product quality (there are none)

• Ability to distribute additional types of product, etc. (none)

Other

• Potential for future synergies (i.e. could the new technology interface with other future tech)

• Impact on relationships with employees, grocers, and/or suppliers

11 | CASES: TO AUTOMATE OR NOT

UVA Darden School of Business 2018-19 Casebook

159

Framework Guidance:

Note: There are many possible alternatives to this framework. These are only provided as possible suggestions.

A strong framework could include:

Guidance:

• If the candidate hasn’t already visualized the process flow for a distribution center, press them to do so.

• After they’ve conceptualized the company’s business tell them that the 3 phases of the company’s

distribution process are 1) Receiving, 2) Holding & Picking, 3)

Shipping Brainstorm:

• Move them into brainstorming exercise around the potential costs associated each phase:

• Potential examples: Labor (time), equipment (forklifts, etc.), insurance, storage (i.e. cold and dry)

• After the interviewer is satisfied with the depth and breadth of the brainstorming, provide Exhibit 1

11 | CASES: TO AUTOMATE OR NOT

UVA Darden School of Business 2018-19 Casebook

160

EXHIBIT 1

11 | CASES: TO AUTOMATE OR NOT

UVA Darden School of Business 2018-19 Casebook

Receiving

Holding & Packing

Shipping

2,000 hrs.

10,000 hrs.

3,000 hrs.

* All units are hours per week

161

Exhibit Guidance:

The interviewee should notice and verbally acknowledge the following in Exhibit 1. This is where you insert question and the answers to the question

• After confirming their understanding of the process flow, candidates should focus in on the total time required for the

existing process

• Candidates should attempt to quantify the hours in terms of dollars of cost for each area of the process

• Info to provide upon request:

• Each employee works 40 hours per week

• Employee pay per hour is as follows: Receiving - $12/hr, Holding & Picking - $17/hr, and Shipping - $14/hr

• Once they obtain the above info, ask the candidate the calculate the total number of employees required in each

function and the annual cost of labor (NOTE – Force them to use 52 weeks instead of 50 weeks)

11 | CASES: TO AUTOMATE OR NOT

UVA Darden School of Business 2018-19 Casebook

Total

Hours

# Employees

Required

Cost per Hour

Cost per Week

Receiving 2,000 50

$12.00

$24,000

Holding &

Packing

10,000 250

$17.00

$170,000

Shipping 3,000 75

$14.00

$42,000

$236,000

x 52 weeks / yr.

$12,272,000

• After doing the calculations to the right,

strong candidates will want to see how

automating the process would change the

data in exhibit 1

• Provide exhibit 2 when they ask for that info

162

EXHIBIT 2

11 | CASES: TO AUTOMATE OR NOT

UVA Darden School of Business 2018-19 Casebook

Receiving

Holding & Packing

Shipping

2,000 hrs.

5,250 hrs.

6,000 hrs.

163

Math Guidance:

The interviewee should notice and verbally acknowledge the following in Exhibit 2. This is where you insert question and the answers to the question

• Once they obtain the above info, ask the candidate the calculate the change in the # of employees required in each

function and the change in the annual cost of labor

11 | CASES: TO AUTOMATE OR NOT

UVA Darden School of Business 2018-19 Casebook

Total Hours

# Employees

Required

Cost per

Hour

Cost per Week

Receiving

2000

50 $12.00 $24,000

Holding &

Packing

5250

131.5 $17.00 $89,250

Shipping

6000

150 $14.00 $84,000

$197,250

x52 per Yr.

$10,257,000

Current Automated

# Employees

Required

# Employees

Required

Change

50 50

250 131.25

119

75 150

Employee

Decrease

Annual Savings:

12,272,000

- 10,257,000__

2,015,000

Current Costs:

New Costs:

164

Math Guidance:

• Strong candidates should revert to the prompt and answer the initial question posed. This requires the candidate to

compare the annual cost savings to the costs of automating.

11 | CASES: TO AUTOMATE OR NOT

UVA Darden School of Business 2018-19 Casebook

Question 3:

• Ask the candidate to calculate a break-even in years for this investment:

Annual Savings

$2,015,000

Annual Incremental

Costs

$1,000,000

Annual Incremental

$1,015,000

One Time Outlay

$4,000,000

Break Even Years 3.9

Ask the candidate whether a break-even of 5 years seems attractive

• There is no correct answer, and the Company does not have any policy

on such matters. This should be used as an opportunity to test the

candidate’s business sense.

• Attentive candidates will consider the attractiveness of this payback

period in light of the prompt. For example, if the CEO is potentially

interested in the technology simply because of his love for innovation,

would he really be willing to tie up his firm’s cash for 5 years?

165

CONCLUSION

11 | CASES: TO AUTOMATE OR NOT

UVA Darden School of Business 2018-19 Casebook

Recommendation:

• “The CEO is about to call you to ask for your recommendation. What would you say?”

• A strong recommendation will include:

• Bottom Line – Automate or Do not automate

• 2-3 Supporting Reasons

• Risks pertaining to the bottom line

• Next steps

• Recommendations should be rooted in the prompt and should include numbers/data

166

INTERVIEWER FEEDBACK FORM

Case Execution:

 Framework

 Logical approach

 MECE

 Creativity

1 2 3 4 5

Notes:

 Quantitative Ability

 Accuracy

 Speed

 Analytical Approach

 Errors / Guidance

1 2 3 4 5

Notes:

 Business Acumen

 Insightful

 Implementable

 Business Judgment

 Creative Brainstorm

1 2 3 4 5

Notes:

 Presence & Non-Verbal

 Confidence

 Poise / Posture

 Clear & Concise

 Body Language

 Coachability

1 2 3 4 5

Notes:

Communication:

 Case Materials

 Organized Page Layout

 Recognition of Errors

 Resource References

1 2 3 4 5

Notes:

Case Name _________________________ Interviewer ___________________________

Case Book ____________________ Case Type ____________ Difficulty ____________

Strengths: Opportunities:

Case Execution: ___ / 15

Communication: ___ / 10

Behavioral: ___ / 15

Total Score: ___ / 40

Total Time: _____: ______

Behavioral:

 Overall Performance

 Quality of Answers

 Relevance

 Clarity & Time

1 2 3 4 5

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Rubber Bumper

McKinsey | Round 1 | Manufacturing

168

McKinsey | Round 1 | Manufacturing

12 | CASE: RUBBER BUMPER

RUBBER BUMPER

BEHAVIORAL

INTERVIEW

QUESTION:

1. Why do you

want to pursue a

career in

Consulting?

2. (Optional)

UVA Darden School of Business 2018-19 Casebook

Clarifying Information:

Note: Provide this only if corresponding questions are asked.

What type of products do they sell? The company only sells two products; rubber bands and

condoms

Is the companyseeingsimilar declinesin topline sales? Topline sales have remained relatively

stable over the last 3 years

What is Rubber Bumper’s market position? Rubber Bumper is the market leader in both of their

product industries

Rubber Bumper Co is a small family owned producer of rubber products. It

prides itself on producing a limited range of products but producing the

highest quality on the market. In general, new products are introduced after

much deliberation and careful market study. The company has recently

appointed a new President who noticed decreasing profits over the last

couple of years.

(See the next page for Framework directions)

169

Framework Guidance:

Note: There are many possible alternatives to this framework. These are only provided as possible suggestions.

Rubber Bumper Co has hired our firm to fix the decline in profits. What are all of the areas that need to be

examined in order to identify any major issues that should be a priority?

12 | CASE: RUBBER BUMPER

UVA Darden School of Business 2018-19 Casebook

How to Move Forward:

To get to the next portion of the case, the interviewee should ask to explore:

Expected Analysis: There are a number of possible frameworks for this question. A good answer will cover

all areas you’d expect: industry trends, margins, product mix, competitors, etc within reason. Generic

frameworks are inappropriate.

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EXHIBIT 1

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UVA Darden School of Business 2018-19 Casebook

Rubber bands sold each year (millions of pounds of rubber)

2011 2012 2013 2014 2015 2016 2017

Rubber Bumper 4 3 3 2.5 2.5 2.5 2

Max Rubber 17 19 21 21 22 23 24

Others (8) 9 9 8 7.5 6.5 4.5 5

Total 30 31 32 31 31 30 31

Condoms sold each year (millions of condoms)

2011 2012 2013 2014 2015 2016 2017

Rubber Bumper 1 2 5 10 10 10 10

Spartan 100 110 108 115 117 115 115

Durable 150 155 152 158 159 165 170

Others (15) 99 93 105 107 119 130 155

Total 350 360 370 390 405 420 450

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Exhibit Guidance:

The interviewee should notice and verbally acknowledge the following in Exhibit 1. This is where you insert question and the answers to the question

Question 1: The team decided to look at the product mix and their industry wide positions. The company only has two

products: rubber bands and condoms. The analysts on our team compiled these two tables. (Display Ex. 1). What does this

tell you?

12 | CASE: RUBBER BUMPER

UVA Darden School of Business 2018-19 Casebook

How to Move Forward:

Expected Insights:

1.The rubber band market is flat whereas the condom market is showing strong growth in the United States

2.The dominant player in the rubber band industry is gaining more and more market share

3.While the condom industry is growing (30% from 2005 to 2011) the major competitors are not growing as fast (~15% each).

4.The condom industry is more fragmented than the rubber band industry, and the smaller players are getting a larger proportion of the market

Commentary:

The candidate should ultimately start to see that the rubber band industry is becoming less attractive and the condom

industry is showing growth and the major market players are not keeping up with the growth. A great response will

automatically want to see why Rubber Bumper’s condom growth has tapered off while the industry keeps expanding. If they

do not get to that issue, prod them until they do.

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UVA Darden School of Business 2018-19 Casebook

Question 2: Rubber Bumper Co has two factories, each producing one of their two products. They essentially do not share

any fixed costs and for the most part are run as separate P&L’s. The team would like you to put together a quick summary

and compare the financial profitability of each of the two factories for the most recent year.

Rubber Band Factory

• They make boxes of 500 rubber bands that they sell to retailers for $20 a box

• 1 pound of rubber makes approximately 125 rubber bands

• They should already have the amount of rubber they used from the exhibit

• The rubber band factory has an inclusive $4MM in annual overhead

• [ONLY PROVIDE WHEN ASKED] It costs $1 to turn a pound of rubber into a pound of rubber bands (assume no

waste)

Condom Factory

• They sell 4 packs of condoms to retailers for $3 a pack

• They factory is smaller than the rubber band factory and only costs $2 MM in annual overhead, inclusive of everything

• [ONLY PROVIDE WHEN ASKED] Each condom costs $0.10 to make

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UVA Darden School of Business 2018-19 Casebook

Expected Calculations: (Question 2)

Students may get tripped up because one starts with the number of condoms, and the other starts with the amount of pure

rubber and need to infer the number of bands sold. (rb = rubber band):

• 2MM lbs of rubber x 125rb’s/lb = 250 MM rb’s

• 250MM rb’s / 500 rbs/box = 500K boxes x $20 box = $10MM in Revenue

• 2MM lbs of rubber x $1 = $2MM in variable costs

• RB Profit = $10 - $2 - $4 = $4MM in profit

• 10 MM condoms / 4 pack = 2.5 MM packs x $3 = $7.5MM in Revenue

• 10MM condoms x $0.10 = $1MM in variable costs

• Condom Profit = 7.5 – 1 – 2 = 4.5MM in profit

Commentary: A good answer will arrive at the math and note that the two profits are fairly comparable. A great answer will

also note that the margin on the condoms is significantly higher (4.5 MM in profit for 3 MM in costs, rather than 4MM in

profit for 6 MM in costs). Also, a great answer will question why the overhead for the condom factory is small compared with

the rubber band.

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12 | CASE: RUBBER BUMPER

UVA Darden School of Business 2018-19 Casebook

Question 3: It turns out that the two overhead figures are significantly different because the capacity of the second factory

is much smaller, about half as much. The President has asked us to evaluate whether we should switch production of the

first plant to make more condoms since we have reached capacity at the smaller plant (assume a factory can only make 1

thing).

Supplementary Information

Give out the following information ONLY WHEN REQUESTED.

• It will cost $2MM dollars to refurbish the new plant and take 1 year to complete during which time the factory will be off

line. (If asked, assume there are no tax benefits from depreciating the CapEx and no cost of capital)

• Overhead would remain the same

• During this time, we won’t be able to make any rubber bands

• The bigger plant can produce twice the volume of condoms as the smaller plant.

• Rubber Bumper Co’s payback period for such projects is 4 years.

• Assume that Rubber Bumpers rubber band demand has stabilized at 2MM lbs per year.

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UVA Darden School of Business 2018-19 Casebook

Expected Calculations: (Question 3)

A bad answer will simply look at 4.5MM in profit and 4.0MM and say that Rubber Bumper should make more condoms. A

great answer will look into the costs, the opportunity costs, and the payback period to evaluate whether this should go

forward. Also a great interviewee will recognize the timing of the payments, and while we don’t have a cost of capital there

is a timeline such investments must prove profitable.

• 1 year offline they are losing (10MM – 2MM ) = $8MM in contribution

• Capital Expenditures = $2MM

• Total Cost of Project = 8 + 2 = $10MM

Note we assume that overhead will be paid while the factory is offline, but it should not count as an additional cost, since we would pay that

anyways.

• The benefit is the difference in profitability between the two products.

• The bigger factory can produce twice as many condoms; 6.5MM x 2 = 13MM

• The bigger factory is currently producing 8MM in contribution (because we are looking for the difference, the $4MM of overhead is a

wash)

• Switching will create an additional $13 – 8 = 5MM in profit.

• The interviewee should draw a conclusion towards the end noting that under these assumptions the project will repay itself in year 3 (1

year offline + 2 years of operation) and that it is within the required time frame. Additional second level insights are encouraged.

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BRAINSTORM

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UVA Darden School of Business 2018-19 Casebook

What are some of the risks involved with this project?

Brainstorming Guidance

This is a “what else” section. Below are some basics but ideally you’re looking for the interviewee to be as creative as

possible. As with most questions of this type, a bad answer will stop at one or two. A good answer will have a creative list. A

great answer will have a structure that makes the answer MECE. A great answer should also prioritize the findings indicating

which ones he thinks are the most important.

Key Points to Consider

• Assumes that Rubber Bumper can sell 3x the number of condoms it sells today, immediately.

• Assumes that rubber band demand wont rebound. The bigger plant is equally profitable because it is being underutilized

• Political parties could kill sex ed.

• Less diversification in products exposes them to increased market risk

• Condoms are not as generic of a product as rubber bands and may require a larger investment in advertising to compete on a higher level

• Potentially more legal risk in selling contraception than rubber bands

• Employees may not want to make condoms.

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CONCLUSION

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UVA Darden School of Business 2018-19 Casebook

The President is walking in the board room and expects a summary. Please summarize your findings.

Expected Analysis

The summary should start with a recommendation. “You should convert the plant” and then back track into the

reasoning: industry trends and financial justification. Finally it should mention which of the risks are the most

problematic and how he would mitigate it. The interviewer should feel free to challenge any part of the

conclusion and expect a well worded response.

178

INTERVIEWER FEEDBACK FORM

Case Execution:

 Framework

 Logical approach

 MECE

 Creativity

1 2 3 4 5

Notes:

 Quantitative Ability

 Accuracy

 Speed

 Analytical Approach

 Errors / Guidance

1 2 3 4 5

Notes:

 Business Acumen

 Insightful

 Implementable

 Business Judgment

 Creative Brainstorm

1 2 3 4 5

Notes:

 Presence & Non-Verbal

 Confidence

 Poise / Posture

 Clear & Concise

 Body Language

 Coachability

1 2 3 4 5

Notes:

Communication:

 Case Materials

 Organized Page Layout

 Recognition of Errors

 Resource References

1 2 3 4 5

Notes:

Case Name _________________________ Interviewer ___________________________

Case Book ____________________ Case Type ____________ Difficulty ____________

Strengths: Opportunities:

Case Execution: ___ / 15

Communication: ___ / 10

Behavioral: ___ / 15

Total Score: ___ / 40

Total Time: _____: ______

Behavioral:

 Overall Performance

 Quality of Answers

 Relevance

 Clarity & Time

1 2 3 4 5