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That means that the competitive set is anybody who provides movies in the home. We see variations throughout. As most automobile manufacturers are very large, it is assumed that the simpler locking mechanism needed for the doors could be reused across many product lines or purchased from large parts suppliers who supply the industry as whole and the development cost of a separate locking mechanism would be low. There are also internal factors to consider such as poor food quality, higher prices, or a major event like someone getting sick or a health code violation. SlideShare Explore Search You.
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Show related SlideShares at end. WordPress Shortcode. Published in: Full Name Comment goes here. Are you sure you want to Yes No. If not, how do they protect market share from the emerging market that is threatening to steal business? Background This is a market strategy issue. The interviewer is looking for a discussion of the client's customers, competitors, costs, core competencies and the overall market dynamics.
In addition, the candidate should be able to present a solution and identify the key success factors for this solution. The client must first do some preliminary work examining the market for groceries delivered over the Internet. I would like to get a better sense for the company's current customers, as well as potential customers, to see if the Internet is a viable delivery mechanism for the company.
Can you tell me more about the client's customers in the area? The client serves primarily upper-middle class customers.
That's important to know. I would guess that prospective users of an Internet-based delivery system are upper-middle class. Can you confirm this and elaborate on the growth prospects for this market? Your guess is correct. Users of the Internet delivery system are typically upper-middle class.
As far as the market is concerned, home grocery shopping among Internet users is growing rapidly and the percentage of homes with Internet access is also growing. We've established that the market is an attractive one, however I still need more evidence before presenting a recommendation.
I'd like to now turn to the two competitors described in your opening. Can you explain their current market share? And can you address recent growth trends among the competition? The competitor without stores in the target region is gaining market share more rapidly than the company with stores in the target region. We've established pretty convincingly that the market is attractive.
I'd like to now focus on our client. Clearly not all companies are prepared to put their operations on the Internet. There are two central issues I'd like to better understand. First, the company's core competencies—does it have the requisite skills to address the Internet user?
Secondly, I'd like to understand the company's cost structure. Is such a move feasible for the client? Do you have any information on the company's distribution capabilities? Specifically, is it able to address the Internet market?
The company's current distribution facilities are not adequate for the delivery system. How about the company's employees? Are they sufficiently trained to handle delivery tasks associated with the Internet? The current employees cannot perform these tasks without more training. Those are some important considerations to ponder. However, given the market attractiveness for Internet groceries, the client would be crazy to pass up this opportunity.
Its customers are Internet users, the competition has already shown a willingness to invest in the market, and the competitor with no stores in the region i. That said, the company must be willing to invest in this market to succeed. First, it must improve its distribution capabilities. Further analysis must be done as to whether it should improve its current operations or develop a stand-alone capability exclusively devoted to the Internet market.
Next, it must develop an inventory management system so that it can effectively track what it orders from suppliers, what customers are ordering, and where the product is delivered Internet vs.
Finally, it must spend enough money to cross-train its employees so that tasks associated with Internet delivery can be effectively performed. Are there any other considerations? When the company rolls out its Internet operations, it must not disappoint customers. Many of the Internet-based customers will be cannibalized from the traditional operations.
In itself, this is not bad. These customers obviously prefer the alternative, and it's better for the company to retain them versus losing them to competitors.
However, failure to deliver on Internet delivery will cause customers to consider switching to the competition. As such, the company must be sure it can effectively deliver on its promises from the moment it enters the Internet market. General Summary Comments The candidate does not necessarily have to recommend market-entry for this case.
If the candidate believes the company should not enter the market, it must present a compelling business reason why and craft creative alternatives for market share protection.
In either case, the key components of market strategy must be understood and addressed. They sell their product nationwide, and are in the middle of the pack in terms of market share. They are currently trying to boost their market share while maintaining profitability. There is a government welfare program called WIC Women, Infants, Children that allows individuals living below the poverty level to receive vouchers for infant formula for their children.
Unlike most welfare programs, this one is subsidized by the actual producers of infant formula. On a state-by-state basis, infant formula producers bid for the right to be the sole supplier of infant formula to welfare recipients in that state.
In addition to paying the government for the WIC contract, the client also provides rebates to retailers for WIC sales. As a result, income received from WIC sales is substantially less than that received from normal formula sales.
In fact, sales to mothers that remain in the WIC program for more than 12 months result in a net loss. In trying to determine how much to bid on a WIC contract for a given state, what factors should you consider? Background This case is fairly wide open, and presents an issue that is most likely unfamiliar and ambiguous.
One challenge will be for the interviewee to find one or more issues that they can explore more in-depth. The basic focus of their analysis should deal with the relative profitability of a WIC contract.
I think for this case I would first look at who the typical WIC customer is, and the dynamic of the relationship, meaning how long are they a customer, and what kind of loyalty is there. Obviously the typical WIC customer is poor, since this is a form of welfare. But some things you might not know are that 1 the average WIC recipient stays in the program for less than 12 months, 2 mothers typically remain loyal to a brand through infancy for their first child, but for subsequent children recipients often switch back and forth between brands, and 3 infants typically require formula the first 22 months of their life.
With that knowledge, I can start to think about the issues facing this company. In trying to decide the terms for the contract, profitability is the primary driver. There's obviously some issue of social-enterprise here, but even so, I think profitability will drive much of the decision.
Since the WIC recipient gets rebates in addition to the subsidized cost of the product, we need to quantify that rebate in order to understand what the profitability per recipient is. Can you tell me that? As long as we're paying less per customer for these rights to be the sole-supplier, we're in the black. For the most part, your logic is correct. But is there anything else that might be a factor in determining profit? Well, related to the actual profitability of the WIC product I'm not sure.
But maybe there are some hidden costs or revenues that I'm not thinking about. In fact, maybe there are some synergistic revenues that the company can achieve.
If they get the contract, that gets them additional shelf-space in the stores. And not just WIC recipients shop in the stores. So maybe they will be able to increase market-share, just by being on the shelf. Of course, they are getting full retail price for those sales.
But to try and get an idea of that figure might be tough. How long to these contracts last? Typically, several years. Ok, so knowing that a contract is several years, say 5, we can begin to get a total dollar value for the contract.
If we know how many WIC recipients there are in this state that we're bidding, we can calculate expected revenues. Also, if we can get an idea of how much shelf space we would have, we can quantify the synergistic sales. I'm not going to make you go through the math on it, because we're about out of time, but you're right.
There are 1. So for this company to get the contract, it can help them have more sales volume, and thus more shelf-space, and hopefully then more market share.
General Summary Comments Ultimately, they should come up with some sort of explanation for how numbers would be run to estimate an appropriate contract bid.
One example might be: Real world situation is that synergies are strong, and WIC recipients bounce in and out of program but stay loyal to product for first-borns.
Not only are the synergies positive, but also on average WIC recipients are profitable because they pay retail for nearly half of the formula that they purchase over the first 22 months of their child's life. In about six months the division will receive FDA approval to launch an anti-depressant drug.
Despite this apparent good news from the FDA, the U. It has concerns over the market potential for this drug and its ability to reach the key prescribers in this therapeutic category. We have been asked to help determine whether they should 1 launch alone, 2 co-market with a partner, or 3 sell, license or swap the drug. The concerns over market potential center on whether the drug can gain adequate competitive advantage in a market segment having two dominant, patent-protected competitors and nearly generic competitors.
Additionally, a higher technology antidepressant, which appears to offer therapeutic advantages, was recently introduced by a competitor. Gaining the professional endorsement of psychiatrists is crucial to success in this therapeutic category since they write approximately half of the prescriptions for antidepressants. However, the division has no experience marketing drugs to this physician group. The client would be able to leverage its existing sales force to reach the other half of the prescribers Internal Medicine Specialist and Family and General Practitioners.
How would you help them decide whether to 1 launch alone, 2 co-market with a partner, or 3 sell, license or swap the drug to a third party? Note here what is being asked, "How would you help them decide.
Also note that it is totally appropriate to take some time to organize your thoughts before launching into the case discussion. In helping the client decide which option they should choose, I will want to guide them to the option that will create the most value. To understand main value drivers i. After that, I will explore the major cost issues. Starting with the revenue, I'll want to understand first what the overall market revenue opportunities are for this type of drug in addition to our product specifically.
Now, the client expressed concern over the market potential for this drug. How big is the market and what is its potential growth rate?
Here the Candidate has done several things. First, the Candidate has stated the overall objective, value creation. Next, the candidate stated the method of walking through this problem, looking at revenue by using a market economics and competitive position framework, then looking at costs. The Candidate provided a roadmap. Now the interviewer understands the approach and expected direction of questioning.
This helps the interviewer understand the student's thought process - how he or she thinks through business problems. You mentioned that concerns over market potential center on whether the drug can gain adequate competitive advantage in a market segment having "two dominant, patent-protected competitors and nearly generic competitors. Is the antidepressant market segmented by technology? And the two patent-protected competitors along with the generic competitors are within our technology segment?
That's correct. Tricyclic antidepressants. How fast is this technology segment growing?
As a matter of fact, substitution by the new technology may cause a decline in sales over the next 5 years. Additionally, the existing competitive environment is very intense and will only increase if the market shrinks. So, the overall segment is not very attractive. What percent of the volume do the two main competitors have?
How much will our client's product be able to differentiate itself within our technology segment? Not much. In a market research study we commissioned, the product was seen as very similar to the number two product in our technology segment, slightly inferior to the number one product, and slightly better than the generic products.
The new technology was viewed as far better due to a lower level of sedation. So to summarize the market environment, although the anti-depressant market is attractive, the segment that we would be participating in is relatively unattractive and runs the risk of becoming smaller and more competitive over time. Additionally, within this unattractive segment, we have limited ability to differentiate ourselves relative to our competitors, and thus, will not be able to charge a premium price.
I would think that this unattractive market and relatively undifferentiated position within that market would translate to a lower market share. That sounds about right. In understanding the revenue potential, the Candidate did several key things.
This enabled the Candidate to come to the correct conclusion that an undifferentiated position within a relatively unattractive market will limit the revenue potential.
Also, note that the Candidate is doing most of the talking. Use the interviewer to clarify questions or provide information, but the Candidate must lead the discussion. Knowing that our revenue potential is relatively low puts more pressure on minimizing the costs if we were to market the drug.
What percent of net sales is COGS? And what is the bulk of the remaining line items? Most of it is selling expense. So, selling expense is the largest portion of the cost structure, which means that whichever option we choose, launching alone vs.
Spend time on things having high impact and feel free to test and see how important they are. Tests might include how large something is as a percentage of sales, how important it is to the customer, or how much of an impact it has on manufacturing economies, etc. In understanding the effect of the co-market agreement on number of prescribers reached, I think it would be helpful if I could get an idea of who makes the purchasing decision. Well, there are four main parties involved.
There are the manufacturers such as our client , the doctors who prescribe the drug , the druggists who fill the prescription and the patient who initiates the transaction. Selling is concentrated on the doctors, since they are the group that determines if medication is needed and, if so, what type. Is the growth in managed care going to influence the dynamics of this?
This group prescribes half of the antidepressants. Can we launch the drug by only marketing to IMs and general practitioners and ignoring psychiatrists?
So if we are to market this product, we cannot do so without the Psychiatric group. The weight of the decision then becomes a matter of what is the most efficient and effective way to reach them—either through a newly hired sales force or with a co- marketing agreement.
What are the advantages and disadvantages of marketing the drug ourselves? In terms of having our own sales force, the main benefit would be that we would be concentrating on our product only and this may help sales.
On the downside however, the cost of this focus is all attributed completely to our product, and having a dedicated sales force representing only one product would be expensive. Do you have any other psychotheraputic drugs in development or plans to expand this part of your portfolio through licensing? Nothing is planned for the next three years.
So by entering a co-marketing agreement, the costs of the sales force is spread across several products, and, if the co-marketer did not have a competing product, then our product would get the appropriate selling attention warranted. So, all in all, I would think that if we were to market this product, it would be a less costly and higher value option to enter into a co-marketing agreement rather than go it alone.
The Candidate has chosen to do this here with one type of cost, the sales force. In the case of the sales force, the Candidate correctly identified the key value drivers as being: Remember, there are many value drivers.
OK, and what about the third option, to sell, license or swap the drug to a third party? Again, the client would want to choose the option that was more value creating. There could be several reasons for going with the third option: In any case, for the options being considered, I would want to forecast cash flows and discount them back to see what option is more value creating before making a final recommendation.
OK, thank you for your input on how to approach this problem. This is fine. The Candidate has demonstrated how he would approach the problem, and in doing so, has hit on many of the key issues you would find in a real client case situation.
On the revenue side: On the cost side: Provide summary comments and wrap-up. Before getting into the details on this particular case, how would you define strategy? What kind of information would you want to understand in order to determine the reason for the steady volume decline up to , explain the "kink" in the volume decline, and then forecast what market volume is likely to do over the next several years?
Fewer people have been drinking scotch for two reasons. First is a general decline in the popularity of scotch. Other distilled spirits, such as vodka and wine have increased in volume and become more popular. Second is a decline in the age group that traditionally drinks scotch the age group. As the baby boomers age, this segment of the population is growing, so even if popularity doesn't change, the scotch market should improve going forward due to the growth in this segment.
In addition, scotch is becoming more popular, especially the unique single malt scotches. What information would you like to know about the industry, in general? Regional Jet Corporation is a U. Its business consists of two types of aircraft: In fiscal year , Regional Jet delivered jet engine aircraft and props. Over the past several years, Regional Jet has experienced eroding profitability in its jet engine aircraft business. Its prop business, despite being profitable, has been flat in most recent years.
At a January 5th analyst conference a meeting with the investor community Regional Jet's senior management team announced that the company was committed to managing for value. To this end, Regional Jet has hired you and a team of consultants to help the company develop and implement the value-maximizing strategies for its businesses.
For our case discussion today, please focus on the jet engine aircraft business: However, the market for jet engine aircraft is profitable.
Although Regional Jet has a parity offering and operating position, it has a disadvantaged overall competitive position, driven by a pricing disadvantage in serving its large lessor customer segment. Lessors, in purchasing large volumes of aircraft, have been able to exert significant buying power over our client to achieve large price concessions.
Market Economics An "A " candidate should seek to understand market size, growth and profitability, as well as conduct an indirect structural assessment of the industry, e.
Information to be provided to student if asked, although some may require prompting: In , the U. There is no dominant competitor in the jet engine, seat or less market. In , a total of jet engine regional aircraft were delivered to customers. Answer to be provided post discussion on structural forces below: Hence, supplier power is low. Fairly concentrated market with only 6 jet engine regional aircraft manufacturers.
Hence, intensity of direct competition is low-to-moderate. In , there were customers. Types of customers include airlines, aircraft lessors, local and national governments, businesses and private individuals. Hence, customer power varies by segment. Aircraft lessors i.
Hence, aircraft lessors have high customer power. All other customers have low-to-moderate buying power, depending on their credit worthiness. Larger commercial jets seats or greater with longer range manufactured by large commercial aerospace and aircraft manufacturers can be used on regional routes.
However, these larger aircraft are expensive for customers to operate solely on a regional basis. Hence, intensity of indirect competition is low. Jet engine, regional aircraft manufacturing requires significant capital investment in production facilities and equipment, as well as strong relationships with various labor unions. Hence, barriers to entry are high. Competitive Position An "A" candidate should seek to understand competitors and Regional Jet's offering, pricing and operating position..
Overall, the company's offering position is at parity. The company's jet engine aircraft has a cockpit that is similar to the industry standard and results in low switching costs for new customers pilots and flight crew do not need extensive re-training. The company's aircraft offers a range of miles, which is similar to the market average. The majority of the fragmented jet engine aircraft maintenance companies have the capabilities and parts to service Regional Jet's aircraft.
For the aircraft customer, maintenance costs over the life of the asset is in line with regional jets of the company's competitors. On average, the life of the aircraft is 20 years. Question for the student: Hence, Regional Jet is pricing for share, i. Regional Jet's operating cost per aircraft is at parity with the industry.
Every jet engine aircraft the company delivered in cost approximately the same to produce. The student should recognize that achieving scale is critical to the spreading of fixed costs, and hence, the lowering of per unit costs.
Regional Jet serves 3 types of jet engine aircraft customers: Provide the student with the handout: The data to support this can be quickly calculated by the student by referencing the "Profitability by Customer Segment" handout: Overall Competitive Position Question for the student: Regional Jet is competitively disadvantaged overall with negative profits compared to a profitable market driven by a disadvantaged pricing position, particularly to the large lessor customer segment.
Alternative Generation Key Question: What are some strategy alternatives that Regional Jet can pursue in order to improve its jet engine aircraft profitability? Aggressively pursue new small and medium, non-aircraft lessor customers and do not increase sales to existing aircraft lessor customers.
Key risks may include a slow road to profitability and unlikely to result in the doubling of the jet engine aircraft business' value. Aggressively pursue new small and medium, non-aircraft lessor customers and do not serve any aircraft lessors.
Regional Jet to increase its negotiating leverage vis-a-vis aircraft lessors by entering the aircraft leasing market. Enter the Aircraft Leasing Market Some facts to share with the student: Regional Jet works with these end-users to help them configure the plane during the front end of the sales process. You're a new senior strategy associate and have just finished your orientation training. You are immediately assigned to our British Times team.
The British Times is an upscale, highly respected newspaper. It is the most widely read newspaper in Great Britain, especially its very strong business and financial section.
The paper is a cross between the Wall Street Journal and the New York Times, both in content as well as in reputation. The team has already had one meeting with the newspaper's online spin-off: You are going to join the team for the second meeting, which will be held with only the CEO of the BritishTimes. Currently, their web site is nothing more than an online version of the newspaper, otherwise called brochureware. British Times. The purpose of this second meeting is for the consulting team to present its response to the CEO's current predicament: Company Background: Your team has provided you with the following information as background about BritishTimes.
Your Challenge: Create 3 or more ideas for the BritishTimes. Possible Solution: In general, it's fair to say that the bulk of Internet revenues comes from three sources: The candidate did not try to use an ill-fitting framework such as 3Cs or 5 forces to approach this case.
Instead he's showing a good understanding of the Internet's major sources of revenues. He also acknowledges that further discussion of the company's core assets is critical to formulating a robust solution. Good points. Can you give me more details on each of these sources of revenues? Well let's look at advertising first. We could suggest two avenues: Upscale or corporate banner ads such as insurance companies, banks, or brokerage firms would make a lot of sense with our audience.
They are highly educated and more importantly, have the highest level of disposable income. In addition to banner ads, we should look into corporate sponsorship. We should take full advantage of the fact that the strong business section can obtain corporate sponsorships; for example, banks or e-trade companies pay for their section of the site. The candidate is using the case facts to support his answer.
They do some of that already but probably not as much as they could. You also mentioned other sources of revenues.
Could you explain your subscription model? We could imagine a three-tier approach. For example, in tier 1, readers could have access to today's news for free. For a small fee, Tier 2 subscribers could research up to one-week-old articles in the archive.
Finally, in the last tier, subscribers could have access to the entire archive. Coming from a traditional publishing company, they are fairly familiar with these two models. I would be interested in hearing more about your third option. One way to "monetize" their attractive audience would be by offering targeted products and services. Some examples could be a tollbooth model similar to Amazon Z shop concept or selling tabs on their site. This would clearly require a deep analysis of the competitive landscape and of the company's capability technical, people These products or services would have to be: Golf equipment?
This is interesting. How would you go about sizing the market for golf equipment in the UK? Here the interviewer could have chosen to discuss more in detail how the candidate would have thought about launching a completely new line of service. To determine the golf store's equipment only first year total revenue, we would have to figure out the following: If we assume that a third of them are connected to the Internet, we have: Do not hesitate to round up the number to help your calculations.
The examiner is not looking for an accurate answer.
We can now estimate the number of people browsing the golf site: Case Situation: It's a Friday afternoon. You've just accepted an offer to join our consulting company as a Senior Associate in the Business Strategy Competency. You've just called in to confirm your start time on your first day and find out you have an excellent opportunity to be the lead business strategist on a high profile project. We have partnered with a leading bricks-and-mortar children's apparel retailer to help them analyze, design, and build their Internet strategy.
There will be a kick-off meeting for the project with the client including the client's CEO on Monday morning. Right now, the client only has a marketing and informational presence on the web a. The client's web site and some associated articles found on the Internet have provided the following information. They claim to expect similar growth going forward. Sales are roughly split between boys and girls. It designs all its own products, has deep relationships with contract manufacturers in Asia, and distributes all of its products through company owned stores.
The brand remains relatively unknown. Structure the problem at hand. What questions would you ask? Possible Approach: To present the best solution, the candidate must have a better understanding of the customers, the competitors and the client. Some of the important questions to ask are: Market and Competitive Landscape: To reduce costs?
To increase market capitalization? IT infrastructure, legacy, processes? Operational structure, processes, procedures, policies? Accounting processes? The interviewer will often play the devil's advocate and challenge the hypothesis the candidate generates. Quantitative Analysis: After spending part of the weekend preparing for your kick-off meeting and discussion facilitation, you check your voicemail from the airport before hopping onto the shuttle on your way to the client's office for the meeting.
As you step onto the plane, you realize that you'll have no access to the Internet or other research before the meeting starts. Instead, you will need to create a "back-of-the-envelope" analysis on the plane. Spend about 5 minutes creating an answer to these two questions: What would you estimate the size of today's online component of domestic children's apparel sales today? How large do you think it will grow in the next 5 years?
There are approximately M people in the U. The 5-year growth estimate would be: The company has offices in the US and has been selling through traditional channels throughout its history. It designs and manufactures plastic products like pens, pencils, disposable razors, etc. It's an old company that's been around for about 60 years and wants to take advantage of the Internet, starting with the US sales. Company Background You talked at length with the President of the dot-com part of the company and this is what you learned: It is open 24x7 and has more product information.
This coming Thursday, you will meet with the President and her team. Her expectation is that you will present a plan for your consulting team to build the functionality ASAP. Candidate Response: There are many ways to answer this challenge, but the candidate should at least know not to accept the client at face value, realizing that the functionality the President wants will not materially improve the hit rate or revenue, at least as far as the information provided indicates.
The candidate should want to create a conversation with the President and her team to present the plan for delivering the functionality or state that there is a plan , primarily to gather additional information to better understand the online company's business issues and goals. In other words, the candidate should want to open the eyes of the President and her team through questioning. The candidate will want to offer the notion that the additional functionality will not solve the pressing problem.
The candidate's questioning of the President should follow a logic path that includes asking about the value proposition of the line store; for instance: Two business school classmates laud their entrepreneurship intentions and mock your interest in entering the management consulting industry.
They decide that despite trends that indicate otherwise, what is needed is a video rental store closer to the HBS campus. They try to convince you to join, but in your infinite wisdom you instead join a prominent strategy consulting firm in Boston. Their first two years meet unprecedented success. They buy matching Porches and a townhouse in Beacon Hill. Needless to say, each time you meet up for social occasions, they share with you mostly with tongue in cheek their success and a "I told you so" attitude.
You handle their jabs well, as you feel you have had a terrific experience at your consulting firm. The story, however, changes in about 12 months. Despite two and a half years of dramatic profit and revenue growth, profits have dramatically fallen. They call you with a fair amount of egg on their face and say "we don't know what happened and our mortgage and car payments are getting tougher to meet.
Can you help us? We know that you help CEO's of large companies get to the bottom of their issues. What do you think the problem is? Suggested Questions: This is an example of a case where the student must probe to get to the heart of the matter. The student needs to ask questions which first diagnose the situation and then and only then talk about causes of the situation and then and only then talk about areas of improvement.
Here are questions that the student should ask to get to the analysis that will help them diagnose the problem: Suggested "Excellent" Response: This is an example of a case that is founded in 3C's type issues. The student has to diagnose the problem and find out what exactly is going on and then find out what is causing it.
This is how efficient analysis is performed: If profits have declined then I assume that either revenues have declined or costs have increased, what is the case? Revenues have decreased. Why would you think that cost is probably not the problem? Video rental is a high fixed cost business - rent, videos, and labor are all fixed in the context of rental revenue. Thus, the business' profits will be susceptible to changes in revenues capacity utilization.
Revenues are made up of the number of videos we rent in a year and the price we charge. Has the management changed the price of the videos? What does that tell you? That means that either fewer customers are coming to the store or each customer on average is renting fewer videos. Which is it? How would you figure that out? The security system probably has a counter so that could tell us store traffic, and clearly the register receipts could give us number of videos rented per day.
We can look at that data last year versus this year and determine whether there is a traffic problem or share of wallet problem.
If you found out it was a share of wallet problem, what would you think might be the problem? Share of wallet problems are often driven by internal execution problems bad selection, poor service, etc whereas, traffic is often external or market problems. Again, excellent. The data shows that traffic has fallen. What now? They have diagnosed the problem My inclination is that video rentals are not that impacted by economic factors, so it is probably a competitive situation.
Has a new store opened in the area? Has a new movie theatre opened? That is surprising. Let me ask you something and maybe this will help you along.
What business is your client in? They are in the video rental business or the entertainment business or leisure business I see there could be other entertainment preference shifts or options, etc.
What does your client do? What purpose to they serve? They rent movies for people to watch at home. They are in the home entertainment business and specifically in the home movie entertainment business. That means that the competitive set is anybody who provides movies in the home. Not just video stores. What do you think is going on? Here the student has now diagnosed the problem and can make a very good hypothesis that either delivery, cable, PPV, or new Movie on Demand technology has infiltrated the market or is experiencing rapid growth, reducing the market size for video rentals at stores.
Assume you are the new pastor of a rural English church in the late nineteenth century. Over the last three years, attendance has been declining. Your boss has just come to town to tell you that she is considering shutting down the church.
You have two weeks to diagnose the problem and come us with possible solutions. How would you think through what these problems might be and the possible solutions? Suggested Sample Response: There are many potential reasons why the churchgoers of the parish have stopped going to church. First, I will talk about the possibility of competitive churches; secondly, I will talk about the possibility that people in the area have simply stopped going to church.
There is the possibility of competing churches. There are two reasons why competing churches could be taking our parishioners away: I remember from my history classes in college that some churches were located far away from pockets of the population, and churchgoers often would establish churches closer to home.
Also, sometimes people change what they believe or new ways of thinking emerge.
This could also be driving people to other churches. I would also want to figure out if the nearby churches are preaching different religions. There is at least a chance that these churches are offering parishioners a different kind of religious viewpoint that is more attractive than the religion we have been preaching. Their rules regarding behavior, for instance, may be different from ours. Lastly, I would want to understand the different services being offered at "competing" churches.
There may be different value that these other churches offer that we do not. For instance, these churches might provide childcare, adult education and job training, or singles dances. These churches may offer more personal attention and guidance from the pastors. I will also talk about the possibility that people who live in the area around the church simply may have stopped going to church.
Off the top of my head, I can think of two reasons why people may stop going to church: As science and communication advance, people may rely less on the church to explain the world and more on scientific findings and written forms of communication such as books and newspapers.
This could be happening in our parish. On the other hand, going to church may be becoming inconvenient or economically nonviable. Maybe our parishioners feel that they need to stay at home to work in the fields in order to maintain subsistence. I think the most important thing is to talk to the former parishioners to ask them why they have left the church and what we would need to do to entice them back. After that, I would want to send someone or myself to the other churches in the area during services to understand what is being preached at these churches.
To help prove if the issue is location, I would draw a map of our current and former parishioners and analyze how distance from the church affects attendance.
To understand if there are other churches in the area taking away our parishioners, I would also map these new churches on my newly created map. Once I understand why people are leaving, I would devise a plan to bring the parishioners back. I would want to be focused on the needs of my parish, by offering enhanced services, such as day care as well as flexibility, such as offering services at different times of the day. If distance is a factor, I may want to consider having services at different locations at different times, making our church more accessible.
Summary Comments This would be a very good answer.
The candidate came up with a number of hypotheses, identified ways to test those hypotheses, and formulated an action plan to address the issues.
This answer shows thoughtfulness, creativity, and structured thinking. For a 3Cs answer to be good, a candidate does not have to address every single issue. You are Dean Clark. The grant is contingent, however, upon you using the money effectively.
You have 1 week to propose to the benefactor where you would use the money before she will finalize the transfer. How would you, as Dean Clark, propose to use this money? First, as Dean Clark, I need to think through what does spending the money effectively mean?
This is a not-for-profit learning institution, but that does not mean that it is not a business. For Dean Clark to be successful, he needs to understand what drives his business and where he can achieve the biggest return for his investment. There are currently 4 major "business units" that provide a revenue stream for HBS. These include: If you rank the relative profitability of these revenue streams, you would likely find that the least profitable of the four is-the MBA program.
Publishing is a very profitable business but it seems to have high reliance on the education business. Executive Education is very profitable, as the fees charged to the executives are quite large when compared to the length of program. Grants and donations are virtually pure profit. At first glance one might conclude that HBS should focus their resources and efforts on the highest return areas of securing grants, publishing and expanding the Executive Education program.
It would follow then, that the MBA program would fall as the lowest priority for resource allocation. That would be an incorrect conjecture, however. Consider what draws people to the executive education program, for example. The brand cache of HBS drives the attendance and enables the price premium. Similarly for publishing, the value of the HBS brand provides the credibility behind the content and drives sales. So what drives the HBS brand?
Clearly it is the MBA program. It is then the academic and professional work of these people that contributes to the integrity and value of the brand. Obviously the professors publish, hence enabling that revenue stream. The MBA students graduate and achieve notable success, further driving the brand. Finally, the alumni are responsible, to a large extent, for the grants and donations that HBS receives. In the end, the MBA program effectively ties in every other revenue stream both directly and via the resulting brand cache.
Summary Comments This is not a particularly difficult case but it does assess the candidate's ability to think through the school as a business and reason through to the underlying driver of that business.
A superb candidate will need little to no prompting to think through this case in its entirety. Six months out of HBS, a frustrated classmate calls you to complain that the fast food burger joint that he bought has been steadily losing money for the last 3 months. He wants to know what you think he should do about it. Where do you start? This is an example of a case where virtually no information is provided and the student needs to take a minute to figure out where to start probing.
In this type of case, the student is evaluated based on the number of factors questioned up front plus the ability to logically pare down that list to get at the heart of the matter. Here are some of the initial questions the student should ask: What has changed? Health code violation? These answers will help to frame the extent of the required analysis.
What do you mean by "losing money"? Have profits declined or is the business in the red? Profits have declined. Have revenues decreased?
Costs increased? If revenues have decreased, there are either fewer paying customers or the customers are spending less when they visit. Which is the case?
While they could both play a role, in this case, there are actually fewer customers. Fewer customers could be due to external factors like new competition, change in eating habits, local changes like a major business closing in the area. There are also internal factors to consider such as poor food quality, higher prices, or a major event like someone getting sick or a health code violation.
Recognizing that there are likely many factors involved, is the issue primarily internal or external? The issue is external and is driven by a new competitor that opened across the street. This new competitor must be offering a better value to have made such an impact on the burger joint. What is their value proposition?