Case Prep - Group 14

22nd Dec., 2007

By : Nitin
To : Satish

Opening description: Client wants to invest in either Hyd Jets – football team or Hyd Heroes – hockey team. Objective is to maximize profit. Pl help him decide which one to pitch for.

1. Opens by asking about scope of the teams. Is told that the teams are part of India national league.
2. Secures clarification that the team has to be purchased. Determines no constraints on the investment monies available with client.
3. Criteria of profitability is Profitable in yr 1.
4. Defines the problem as – ‘Which team should client purchase to ensure profitability in yr 1’

Defines a structure as follows. Will:
- Identify cost structure of the business
- Identify the revenue drivers
- Identify the cost involved to purchase / maintain the team
Secures agreement from Nitin ... is told to proceed.

5. Scopes the sources of revenue first.
- tournament prize revenue
- sponsorship revenue
- ticket revenue
- parking revenue
- refreshment sales

6. Lets scope tournament prize rev first… then runs into an issue that this is not a sure source of revenue and hence pulls back – Wrong strart!!

7. Lets move to ticket revenue. Gets this data from Nitin….
a. Football matches: 30 nos x 65/ticket x 50,000seats x 70% capacity util
b. Hockey matches : 40 nos x 130/ticket x 20,000seats x 70% cap util

Ok.. give me a min to work out the nos of revenue.

8. What is the price of each team; is told that 100mln per yr is payable as the cost for each team. Secures clarification that this is annual fee.

9. We find that both are profitable, but football is more profitable.

10. ok…. So we take football, but what else can we do??? This question is posed by Nitin.
a. Hockey has more pricing power, explore elasticity of hockey demand; can we drop hockey prices slightly and secure additional revenue.
b. Football has more volume; explore elasticity again; can we raise football prices slightly and generate additional revenue.
c. Optimal can be determined – Marginal Cost = Marignal Revenue

Take away
i. Simple case - 5 on a scale of 10.
ii. Too long with the calculations.
iii. The wow section - point 10 - was not scoped enough. This is where there e3xists opportunity to make a diff in this case and Satish could have scoped this further.

By : Sudipto
To : Nitin

Client is a large conglomerate. Has experienced an increase in road accidents and the CEO is concerned about the loss of life leading to low morale. Further, for a fatality the CEO loses his bonus! 20 fatalities last year. Wants us to develop a plan to reach zero fatalities over 1 yr.

Is a bit flummoxed to start with, but then proceeds bravely.

1. Goes through the initial scoping about the company type, scope of accidents, location of accidents.

Defines the problem without any additional relevant information being added.

Obs: could have queried the relation between accidents and fatalities. Not doing this made him equate fatalities to accidents and subsequent analysis was on the lines of Zero accidents.

Strucuture definition... asked numerous questions, without formulating a definite framework....

Obs: A slightly ambiguos case and none of the usual structures would be applicable here. Best to take a common sense approach.... Possible structure...
- understand cause of accidents
- understand cause of fatalities and correlation between accidents & fatalities
- identify possible solutions to bridge gaps
- explore feasibility of solutions to yield results in 1yr

Scopes the problem as:
What work leads to road travel. Is told that various reasons - market visits, factory travel, visits to warehouses etc lead to road travel.

Intercity – This is where the accidents happen which means highway
Intracity – None
Secured a clarification that the issue is with intercity travel.

Are accidents in one particular geography? Was told that there is no pattern and that we should assume equal incidence across India.

Causes of accidents...? was told..
45% Our driver at fault or other driver at fault
25% Poor visibility, low illumination - drive at night, fog.
10% Mechanical failure - brakes, tyres etc.
20% Driver fatigue - drive for 3hrs + at a stretch.

Obs: Stopped at reasons for accident; did not develop this to reasons for fatality. This was due to a weak structure upfront that did not capture this.

The case proceeds along and Nitin gets to some good recos as

- Certified agents for car hire / Training of drivers / Audits of cars by independent personnel to certify the vehicles / No travel at night / SAfety awareness training of employees / Policy on distance of travel etc.

Takeaway: A bit unconventional; difficulty level 6/10; key is strucutre, the rest flows seamlessly if that is in place.

24th Dec., 2007

By: Satish
To: Nitin

Client is a Angel Investor (AI) with a lot of money. Has been advised that the KPO business in India has opportunities. Has also been told that Registrars in the USA can be bought out. Needs help on a plan to evaluate the KPO opps.

Opens with asking
- what is the exit criteria of profit? Is told that inv needs a exit multiple of 4 in 4yrs. Thus investment should be worth 4 times in 4yrs!!
- What are registrars? Is told that these are manual intensive ops in the US and that these can be relocated to India.

Defines the problem as – ‘Client needs to a plan to evaluate if transferring Registrar ops to India thus creating a KPO operation will return 4 times investment in 4yrs time’.

Structure - ????

Can I know something more about Registrar ops? Is told that they maintain record keeping and documentation for the Mutual funds (MF).

What is the revenue stream for registrars? Is told that fees are based on no of people deployed to a MF. Contracts are for 5 – 15yrs. The no of people deployed are based on volumes.

What are the charges per person? $60,000/person/yr

What are the costs per person? $30,000/person/yr direct and $20,000/person/yr indirect. Thus margins are $10,000/person/yr.

Determines that MFs would be keen to get lower prices!!

How many people does a typical registrar exist in the US?

A clarification – why does AI need to buy out? Is asked why do you think so? Says that long term contracts make customer acquisition easy and also access to the legal knowledge.

Ok…

So how much does a registrar company cost? What do you think??
Ok… we have margins of $10,000 per person per yr. Tax rate of 40%, thus Net Income per person is $6000 / yr/person. Thus for 200 people, we have 12,00,000 /yr. With a valuation multiple of 10, the firm is valued at $12mln.
So a typical firm will cost $12mln.

Now what are the charges when we move to India? Is told that you can charge $35,000/person/yr for off shore ops and costs are $15,000/person/yr.

Thus margins are post tax = $12,000/person/yr

Can we move all people to India? No, 50 people / 200 people will continue in USA.

Thus net margin = 0.25 x 6000 + 0.75 x 12000 = $10,500/person/yr

What is the applicable valuation multiple? Inv sources say that 16 – 24 multiple is possible. Ok…. So expected valuation will be 10,500 x 200 x 20

Thus actual investment will be = 10,500 x 20 / 6000 x 10 ~ 3.5 times

So is there an opps for future growth? Is told that yes this can grow as we will get more customers in future… hence future cash flows can come through soon in ~ 2yrs…
Ok… so possible to reach 4 times in 4 yrs…

Hence, we should go for this opprtnity…. Will meet the AI criteria…..

Takeaway: Structure was the weak link.
- No industry analysis done. Preferred mode for structure could be as:
…… to be done..

McKinsey BTO Challenge @ ISB - A report

The McKinsey & Company's Business Technology Office (BTO) conducted the McKinsey Business Technology Challenge for the first time at ISB. The challenge was to use breakthrough technologies to bolster the competitive positioning of leading companies. The technologies to choose from included crowd sourcing and co-creation, ubiquitous broadband and persistent connectivity, virtual worlds and smart network elements.

Senior management from the Mckinsey Business Technology Office, Mr. Oliver Schein from the Germany office, Mr. Shameek Kundu from the London office and Mr. Akil Jain from the Dubai office visited the ISB for the final presentation on 27th October.

The challenge received twenty five entries out of which only six teams were short listed on basis of the quality of the plan submitted. The finalists then made a presentation on the spot illustrating the innovativeness, impact and practicality of their plan. This was followed by Q&A.

The six teams did a fabulous job with innovative plans on a wide range of areas. The six plans covered as diverse segments as a 3D virtual banking environment for a leading bank, smart vending machine for one of the world’s largest soft drink providers, a virtual world environment to aid recruitment process of a top consulting firm, sourcing creative inputs and market data from internet users for animated movies and TV shows of a giant media and entertainment corporation and credit card fraud detection using broadband connectivity for one of the ubiquitous banks. All the ideas were backed by their economic impact, implementation plans and risks mitigation strategies.

Commenting on the plans, Mr. Schein from Mckinsey said, “What distinguishes these groups at ISB is not just the technical content but also the quality of the discussion.” He emphasized the importance of balance among ideas, implementation and risks that brings out the best of technology and strategy giving the competitive edge. Mr. Kundu also appreciated the quality of work of the teams at ISB.

The excitement in the room was accentuated in the end when the audience was told to decide the winners by voting. The team comprising Udayabhaskar Bidurukontam, Sarat Burle, Neha Mittal, Atul Saraogi and Nitin Pandey was voted as winners. Hemant Garg, Rohit Sehgal, Nishant Rawat and Avinash Tiwari were the runners up. These top two teams got latest iPods and the winners also get to enjoy a sponsored trip to the McKinsey office in London.

“Imagine Disney making Hanuman! This can really happen with our idea. It was awesome the way we pulled it off with our presentation.” recalled Atul.

“‘Exciting and great way to showcase and listen to ideas; but more importantly it was fun.” added Hemant.

“The McKinsey BTO Challenge was a fantastic way to explore the application of emerging technologies to specific industries. The entire experience from brainstorming the various combinations of technologies and companies to choosing crowd sourcing for Disney to the unique peer voting to select the winning idea was very exciting.” concluded Udayabhaskar.
Overall an amazing experience, they all agreed.

BCG - 24th October, 2007

Date: 24th Oct 2007
3rd visit to ISB this year

BCG Team:
Sachin Nandgaonkar, Partner and Managing Director [Chair of the Career Development Committee in BCG India]
Arvind Subramanian, Principal [Leads recruitment at ISB]
Ravi Srivastava, Principal
Anshuman Biyani, Consultant, ISB Class of 2004 [Senior most ISB alum at BCG]
Marc Weiner, Consultant
Sushma Vasudevan, Consultant
Rahul Kothari, Sr. Associate, ISB Class of 2007
Akshit Shah, Sr. Associate, ISB Class of 2007
Bindya Malhotra, Recruiting Manager

The talk consisted of 3 parts: (i) BCG Career track, (ii) Recruitment process followed by a chat over High Tea and (iii) Case Workshop

1. BCG CAREER TRACK: First Sachin talked about the different roles in BCG and the responsibilities of each of them. The roles are in order of hierarchy are:
Associate
Senior Associate
Consultants
Project Leader
Principal
Partner

ISB students generally get hired as Sr. Associates and can be described as Diligent, hardworking providers of insightful insights who typically work on a module of a project.
Sachin talked about his role as a Partner and a typical week in his life, about managing client relations and maintaining work life balance. Then Arvind spent a significant amount of time sharing his views on the role of a Project Leader and Principal. Finally Rohini discussed what does it mean to be a BCG Consultant, what does it take to be successful and how the load factor can change over the course of a year.

After that Sachin talked in some detail about Competencies across Career Levels. He highlighted the key attributes at each level that cater to these competencies but being most relevant to ISB students, I have only mentioned the attributes at Sr. Associate/Consultant level. The competencies and the corresponding attributes are:

A. Ideas and Insight - Problem Solving
B. Apprenticeship - Team Contribution
C. BCG values - Role Model
D. Influence - Credibility
E. Client Service - Effectiveness and Interaction

2. RECRUITMENT PROCESS: BCG is looking for 3 basic qualities:

A. Analytics and Insight (Problem Solving) - Structure, Judgement, Rigor, Creativity and Synthesis.
B. Communication and Presence - Listening, Precision, Presence, Relationship Management C. Effectiveness and Impact -Independence, Team contribution, substance, learning and achievement

Your CV should reflect the reflect skills and your differentiating factor.

You should try and bring out areas of strength and comfort for you that can be discussed in the interview. Based on the CV roughly 30-40 people would be shortlisted for interviews. The shortlisting is done by senior BCG people and is very thorough process with great attention given to each application.

There are 6 criteria in the evaluation of the CV:
(i) Academics
(ii) Work Experience
(iii) Co-curricular
(iv) Extra-curricular
(v) Position held (non-work related)
(vi) X-factor (Your USP)

It is ok to mention achievements before college if you find them to be significant.

The interview process is of two rounds and each round is two interviews. The interview is typically 35-45 min with the following general structure:

5-10 min: Personal/Resume based (Effectiveness and Impact)
25-35 min: Case (Problem Solving)
5 min: Questions you can ask (Effectiveness and Impact) Your communication and presence is tested throughout the interview.
After the interview you are categorized into a 2x2 matrix (OBVIOUSLY!!) the
2 dimensions being Hire/Reject and Strong/Weak. Within each you have three levels so finally you will be in one of the 6 categories: H+, H, H-, R-, R,
R+, with H+ being Definitely Hire and R- being Definitely Reject.

Do's and Don't's of the Interview:
DO's: Be genuine, relaxed, take time to structure your thoughts, organize the facts, develop a working hypotheses (it is ok to be wrong in your first attempt to come up with a hypotheses). Be willing to work numbers in a case.
DON'T's: Exaggerat, Fumble with the basics, impose artificial frameworks, ignore given information and clues, get bogged down.

Case Worskhop:
Satish kashyap gracefully volunteered for the mock case and Sachin gave him a real life situation in a manufacturing setting where Satish had to come up with the right product mix strategy (and of course he had to offer other insights along the case as well). After the case we had a feedback from the students and finally the expert opinion of the BCG partners and principals.

D'construct Report @ ISB

Oct 17th, 2007– Diamond Consultants @ ISB for the finals of the D'construct Competition

Participants
Vinod Nair - Managing Partner, India
Govind Balan – Sr Mgr Telecom Practice

Case Competition:
Simulation of a client consulting assignment – real live issues that were worked on

Feedback on the case competition:

Simulation of client interactions was a good experience
Choice of sector and topic was relevant
Backing up recommendations with the data – good approach
Clarity of Expectations/requirements

Vinod:

Imparting structure to the problem and drawing boundary around the same
Spending considerable time ahead to help customer define the requirement or the problem

As a consultant, data driven approach exhibiting a structured method to problem solving is best.

What diamond was looking for:

Telecom – degree of knowledge, understanding of the sector brought to the table
Knowledge that goes beyond the online resource
Structure – Have you understood the problem theory, have you understand what is being asked to solve
Flow - Is the logic flowing smoothly, do we see the overall structure of the problem solving effort
Presentation – written and oral
Interaction – Q&A, how do you interact with the customer, subjectively + overall impact

Feedback from Diamond Team:

+ve:

Quality of work was very impressive
Very impressed with the content that was picked
The issues that were learnt and data collected and analysis was very impressive
Very professional

-ve:

Govind:
-How easy are the slides, to read and also visually
-Present sources of data
-Not content, focus on the message and then pick data to support the message
-Don’t read off the slide, impact is powerful if the speech complements whats on the slide
-Anything that is not thoroughly done, exercise caution while answering, if not sure, admit the same
-When answering questions, if one of the team mates has answered the question to the client satisfaction, avoid piling on answers on the same

Vinod:
-Structuring is very important – has steep learning curve
Client was looking at 3 things
1.Which markets/circles to go after
2.What segments to look at
3.What do the segments need

Teams should have set this upfront instead giving a presentation on the entire Indian telecom scenario

About Q&A Session:

In a team env, when it comes to interaction with external clients, there is a pyramid where one person leads the response with others supporting.

Congrats to the winning team of Harsh Singhal, Gaurav Bagaria, Ashish Aluwhalia, Sameer Desai

Everest Consulting PPT @ ISB

Everest Consulting @ ISB for PPT, 22nd October, 2007

Conducted by

Vivek, ISB alum 2005, Prior Work Experience at Sapient+Areva

Gaurav Gupta, Head, Everest Consulting, India - 10 years work ex, started off in New York . Worked with Infosys before joining Everest. Then moved to McKinsey as an engagement manager.Worked for 5 years before joining Everest. Was a part of the McKinsey and Co. team which saw through the inception of ISB.

About Everest Consulting

Experts of Global Sourcing, Captive Strategies, Services Outsourcing, Specific sourcing issues and Outsourcing. Also help clients with syndicated data.

15 -16 years old firm. 130 – 140 ppl world wide.

Distinction – Analytics Insight, Experienced outsourcing professionals, Research group.

Main verticals of operation – Travel and Transportation, Manufacturing, Distribution, Retail, Financial Services, Healthcare and Energy.

Facts -85 % of the outsourcing is not labor arbitrage but for other reasons. They have set up a research institute to study outsourcing transactions. The Institute has around 30 – 35 people.

Indian Setup - 2.5 – 3 years in India. Mainly global projects. First Indian project completed 12 – 18 months back. Very focused career path. India to become the hub of all Everest activities in Asia. Office is in Gurgaon – 40 to 45 people.

Recruitment - No specific requirements for work ex. Two distinct skills will be given preference – strong analytical skills or some operational skills in terms of a shared service center. Moolah will not be a problem.

Oliver Wyman PPT, 19th October, 2007

These are the notes of the Oliver Wyman PPT on the 19th of October, 2007 at ISB.

The people present from OW were

Manny Montoria - Talent Manager, Mark Kremers - A principal from the Dutch(cluster) consulting and ISB alum of 2006 Sunil Rana.Mr. Kremers was a principal from the CMT group which is the Communications, Media and Technology group.

They informed the audience Mercer + Mercer O&W + Delta are al now under the umbrella of OW.The track record of OW was for all to see. They declared that OW makes 500 $ + per consultant per year. They have revenues of nearly 1.2 Billion $ and a market share of 3 % and a growth rate of 25 %.

Their CCG ( Core Consulting Group ) consists of the GMC ( General Managment Consulting ) and the FSC ( Financial Services consulting ). The GMC in particular caters to the following verticals-

- Automotive - Germany
- CMT - Middle East
- Aviation - Middle East
- Surface Transport - Middle East
- Retailing

They also explained as to why OW is placed in Dubai . Some key takeaways about O&W were

- A very collaborative environment
- Exposure to real clients and responsibility from day 1.
- Early and deep specialization
- International work from day 1
- Result oriented promotions
- Commitment to mentorship and feedback
- Large connected alumni network

Some of their major clients include Mashreq Bank, Q tel and Qatar airways. OW are specialists in capital markets. They have completed enormous assignments which involved due diligence and valuations of fast growing companies and hence specialized in M&A.

Key Dates

Deadline - 25th of Nov, 2007 ( Cover Letter + CV )
1st Round interview - Jan 2nd week ( knock - out ); 1 -2 interviews
2nd Round interview - Feb Mid;3 interviews at Hyderabad or Dubai

Additional Points - Try and be creative in the Cover letter;focus on industry rather than functional specialization

Oliver Wyman @ ISB

The students of the consulting club at ISB had an informal session with Oliver Wyman on the 29th of September, 2007. The highlights are as below

ALUMS PRESENT :
Abhishek (Class of 07) - IITD, Dubai Office
Sunil (Class of 05) - REC, Worked with Satyam, ISB, Oliver Wyman – Dubai Office

PREPARATION

FUNDAES FOR MAKING GROUPS
o Start with people you are comfortable with
o Later swap groups, to expose yourself to different styles

Team Size – Ideal 4
Frequency of meeting - Daily or 3 to 4 days / week * 1.5 hours = 8 hours + 3-4 hours study on your own = ~ 15 hours a week
Sources: Michigan, Kelloggs
Typical Time – 30 min per case in a team

TIMELINES
Groups who had started in term 5 were in good shape for interviews
Start PI by end of term 5
Started swapping groups at the beginning of Term 6
Mock interviews
Post shortlist, have mock again

CASE PREPARATION
Step 1 - Start on your own instead of a group. Helps you get familiarize to the cases and have better group interactions.
Step 2 - Individually spend 5 min on structure and share structures amongst the group members
Step 3
One Interviewer, One Interviewee, 2 Observers.
Observers play a very important role – should make exhaustive notes
Make case logs and share your way (structure) of solving
Develop the skill of developing your own structures. Don’t stick on pre-determined structures

TIPS FOR CASE SOLVING
Focus more on structure and rationale than the answers.
Work more on the approach
Structuring means breaking a larger problem into smaller problems. E.g. Use porter’s framework to break the problem not for the sake of using framework. Use frameworks to be comprehensive.
Once you have broken down the problem, prioritize the smaller problems
Here, interviewer helps incase you are off track. Pick up clues here.

Example - One person – very good at structuring but he couldn’t because he went straight to the answer without taking the interviewer through his logic. Hence, try and use MECE (Mutually Exclusive Collectively Exhaustive ). Make the interviewer feel that you have complete control over the case.

COURSE KNOWLEDGE
May not be vital. But could make a difference at the last stage
Individually or in group – upto individual style

HOW FAR CONSULTING PREP WILL HELP IN OTHER PREPS
Marketing & Sales – Theory ques could be asked
Finance – Needs a lot of subject knowledge

GRADES

HOW IMPORTANT ARE GRADES
Grades are always a consideration. Though some with low grades got shortlisted, majority of who get shortlisted have good grades.
Why? – Because it tells how consistent a guy has been!
Easiest to compare people
Min grades – avg grades

HOW DO YOU GET AROUND GRADES
Show that you were outstanding in your under-graduate!!!
Show that you have done great acad work like ELP
Diamond gives a lot of weightage to work experience
Last year's shortlist, had non-Dean listers!!

HOW IS AN INTERNATIONAL POSTING DIFFERENT FROM INDIA

DUBAI
All consulting firms – Mck, BCG, AT Kearney, Bain, Oliver present in dubai
More than 85% expats
Cleaner Mumbai with better infrastructure
Though accommodation is a big problem, it shouldn’t be a problem with the salary you get!
Clients don’t know much about consulting
Negatives - No clarity on expectations from consultants; no clear problem statements, Less push back
Positives – Opportunity to start from problem definition; Open to suggestions, respect for consultants

ABOUT THE FIRM - Some basics to know before PPT

No plans to open office in India in near future
Highest revenue per consultant
World Leaders in financial, aviation, retail and value engineering. They work for all large airlines
Lifestyle – possible to be in India once a week?

Related to recruitment
Timing of interviewing is an issue – we don’t want to come early as students are not best prepared. We weren’t happy with the interviews last year.
We visit Harvard, Wharton, Kellogg, Insead – hence expectations are high
Lot of pressure from IIMs – recruiting from IIMB this year
Last year – 13 shortlisted, 3 were recruited
Positions – Analyst, consultant, SA, Associate
Top payer
3 to 4 rounds – typically 7 interviews – PI + Case

A.D. Little - Pre Placement Talk at ISB

The consulting club at ISB had the honour of hosting Mr. Thomas Kuruvilla from Arthur D. Little for their pre-placment talk on the 26th of September. With great roles and international postings on offer, the buzz amongst the Student Body was very vibrant . Here are a few pointers.

Presence in India
ADL has no presence in India currently and does not intend to in the near future. However if the project is based out of India, ADL will be glad to move associates in the region.

ADL is resource constrained; no limit to the number of hires that they are looking to recruit from campus. ADL has never been faced with surfeit of manpower and they look at hiring at all levels – depending on experience and the interview performances.

Consultants in ADL in different locations have the same net pay. Hence ADL has international billing rates and since they are resource constrained, they have not pushed for presence in India. They see their operations outside India more profitable. However, ADL does numerous projects in India for international firms intending to enter India.

Recruitment & Process
ADL will look at recruiting for any location that the candidate is interested in. The typical locations are: Singapore, Dubai, Hong Kong, Korea, Europe, Japan etc.

Recruitment is based on 2 parts:
- initial rounds: by home office – Dubai
- later rounds: by the preferred office as indicated by the candidate
Recruitment process is uniform across offices and the criteria are similar; hence candidates are not disadvantaged or advantaged by choice of a particular office.

ADL does not view foreign language skills as an advantage to get through the interview. It will however, be an advantage to work in a particular country.

Process involves:
- Screen resumes
- Short list based on the resumes: each resume gets 30sec view
- 4 to 5 rounds of interview
- initial rounds based on cases
- later rounds are more soft skill based

Indication of clearing after indication by candidate that he/she is interested in the offer. If candidate has cleared, then the offer is made and is valid for 2 weeks.

Experience and relevance
Experience of 4-5 yrs is not considered enough for an individual to be knowledgeable about the industry. However, ADL sees this as allowing the individual to understand functioning of organizations and hence allows individuals to make more informed and practical decisions. ADL is not setting a bar on experience. However, the level of experience will determine the assessment methodology during the interview and hence will determine position and pay.

Hiring from other campuses in India
ADL will be visiting IIMA, IIMB, IIMC, IIMK this year, besides ISB. They had picked up 7 from the IIMs last year and are pleased with their performance.

Movement in ADL
ADL is open to having people move from one sector to the other. Further, they are open to employees moving across geographies.

Work style
ADL indicated that they do jot follow rigid and structured processes of problem solving. They believe in giving employees a greater level of innovation, freedom and this, in their opinion, will lead to superior results. Their areas of strength are: Technology, Telecom.

Indicative pay
Dependant on the role that one is recruited for.

Making a Difference - BCG Session on Campus

The Consulting Club at the Indian School of Business (ISB) recently hosted some Associates and Principals of the Boston Consultancy Group (BCG) to address students on a session titled ‘Making a Difference’. This is BCG’s second formal session with the Club this year. The inaugural session was a talk on Strategy. The purpose of this interaction was manifold - to inform students about the manner in which BCG approaches cases, to share real life examples of cases done by BCG India Office and to answer student questions regarding the organisation, in order to make them familiar with the BCG work environment.The session started with Chief Principal, Arvind Subramaniam, introducing his team and outlining the purpose of their visit. He briefly explained the work culture at BCG and elaborated on the organisational structure of the BCG, terming it as a “Mesh Structure” - where each vertical is represented by a function such as Marketing, Finance, Operations, etc. and each horizontal represents an industry such as Retail, Real Estate, Oil and Gas, etc. BCG also addressed the case approach methodology they follow.

This was described as a four step process:

Developing a hypothesis
Conducting an analysis
Working with a team
Ensuring impact

Recalls Consulting Club member, Varun Khullar, “A very interesting phase of the discussion was the concept of the ‘Sweet Spot’. It basically implies the intersection of three circles - namely People, Ideas and Impact. BCG described that attaining the ‘Sweet Spot’ was the main aim of the associates, at the start of a project.”The session was rounded of by discussing three cases that had been solved by BCG associates. They were cases from the fields of Industrial Goods, Fair Price Shops, and Innovation in the IT field. The interaction proved highly informative and insightful, with students left asking for more. In all a lively and worthwhile experience!

Start of the New Season - Event 1

THE BOSTON CONSULTING GROUP ON STRATEGY

The Boston Consulting Group visited the ISB campus to meet the Consulting Club members on the 5th of July, 2007. The BCG team comprised of Arvind Subramaniam, Akshit Shah, Ramesh Jha, Navneet Vasishth and James Abhraham. The BCG team gave an not only gave an introduction to BCG but also to the evolution and future of strategy. The club members were most interested in every word the team had to say and the riveting session lasted for 2 hours leaving the crowd even more insatiable than before.
The following topics were discussed

- Introduction to CC by the BCG team.
- The Contribution to the Intellectual Capital of Strategy by BCG over the years.
- Introduction to Strategy? What it is and where it originated from? How the Greek were the first ones to use this much clichéd term in the world of Strategy (Greek definition Strat=Lead and Argos=Army)
- The importance of the client in the consulting world.
- Foundation of Strategy and BCG’s Legacy in the field.
- Introduction to the much read concepts of Scale and Market share and how these to concepts evolved to being the first applications of strategy to business
- Analysis of the learning curve.
- Introduction to the BCG matrix.
- The changing face of the corporate world and along with it strategy. As James said “ A former CEO of BCG said that the corporates of today are moving from being Symphonies to Jazz ensembles”
- The concept of Positional Strategy vs Capability Strategy.
- The various diversifications of Capabilities i.e. of knowledge, of process and of nimbleness.
- The paradigm shifts from the Experience curve in the 60s to the Competitive cost structure in the 70s to the Competition of time in the 80s
- The evolution of Competitive advantage through sustainable relationships.
- The concept of tradeoff between how rich is the data and how far can it reach out to people and how the Internet has changed that!
- The concept of Traditional deconstruction
- How the internet Is helping the evolution of Competitive Advantage through relationships as the data can travel half way around the world and reach the person on the street in no time.
- Conclusion - Uniqueness is the innovation of strategy, looking for new frontiers, grounding research in client works and that is BCG’s competitive advantage
- The introduction of certain portals to help ISB students to resolve queries and benefit with the help of BCG resources.

Class of 2007 signs off

Dear All,

The placement process at ISB is in its final stages and hence it is a right time for the Class of 2007 to sign off from this blog.

If last year was a great year for ISB in terms of consulting placements – this year was even better. All records in terms of number of consulting offers were broken. ISB will officially announce the placement report at the end of the placement process. But in terms of consulting placements – this has perhaps been the best performance on any campus in India.

We hope this blog served its purpose of being a platform for sharing information and helping ISB students in preparing for consulting placements. For the non-ISB readers of the blog – we hope that this blog gave you some insights into consulting and how ISB students go about preparing for the top consulting jobs on offer.

A lot of people have played important roles in ensuring that ISB had great consulting placements this year. We would like to sincerely thank all of them. Special thanks to the ISB alums and students of the current batch who collaborated and helped each other through the last few months.

So with this – the Class of 2007 signs off. We welcome the Class of 2008 and wish them all the very best. We hope that they will continue with this blog and have even better consulting placements next year.

Class of 2008 students can contact me at Akshit_Shah@pgp2007.isb.edu or akshits@hotmail.com

Thanks.
Akshit

Case interview: Building products company

The following post is courtsey Tuhin and Tarun

" Tuhin interviewing Tarun29 Dec 2006

Topic: Investments / Acquisitions

The CEO of a large diversified building products company has asked to look at his division which manufactures china products, including tubs, toilets & urinals. He wants to evaluate the decision to invest $250m in a new manufacturing facility. What are the issues that need to be considered when making this decision?

Where does he have his ops?In the US. He's one of seven producers in the US. The largest has 20% mkt share. We are #3 with 15%.

Is the market equally distributed among the other four?Yeah, more or less

What are the kind of products that the client builds?The division builds tubs, toilets & urinals. Apart from that, we make anything that is used in construction.

Restate: Our client is a building products company, and wants to evaluate the decision of a $200m investment in a new manufacturing facility, which would manufacture china products.

Are the products only for commercial or residential buildings?Not specific, general

Is the construction market growing?Market, by itself, is linked to new housing. We can safely assume it is growing.

And do we have a dollar value of market?No, I don't have $$ value. Let's assume we grow at same rate as market, holding the same market share.

Maybe you want to think about other positives apart from increasing sales?Does the client also export stuff?No, primarily USA.

Apart from growing sales, he might want to shut down existing facilitiesNo, existing facilities will remain.

Do you think there'd be a cost impact?He could be considering economies of scaleYeah

How does the client fare with competitors in terms of prices?Competitor has been cutting prices. Ours have been flat. Two largest competitors are making a profit, we are only able to break even.

Are the supply sources the same for us & comp?Yes, the cheapest.

Are we catering to the same market as comp?How would you define market?E.g. Comp could be sourcing to commercial market. We're doing home segments. Maybe we're trying to subsidise home segment. Is that happening?No, we're targeting pretty much the same segments.

How much augmentation is this new facility going to make to his existing capacity?I don't know. All I know is he's asking for $200m.

What has been the reason that competitors have cut prices?Primary idea behind industry is volumes. No differentiation. Comp have managed to cut prices with scale.

I want to look at our cost structure and compare that with comp.OKSo, Yep

How's our distribution set up, as regards comp?Same. We use trucks.

How about current manufacturing facility?Anything specific you want to ask?
Do we have a stock out problem?No
With the added facility, will the client be able to sell excess stuff? Is there enough demand to justify that?True, that's a factor to be considered. Will be kept in mind when making the proposal for the $200m.

What are our operating costs? Labour, material, operating?Yes, yes. Any other costs?Overheads.Yep

How's our client's manufacturing facility?Mixed prod facility. Pretty much the industry norm - it's a moulding industry. The increased level of production would help me reduce VC.Will that be in form of material cost?No, it's currently the cheapest.Any automation in our facility?Yep, in line with industry stdAre we catering to entire US market?Yes, we try to.What are our ops cost? Do we use our own trucks?YesWill the new facility be located somewhere we don't have nay other place?It will be placed strategically.

Are our overhead costs in control?These are just allocated costs.

Is there anything apart from manufacturing you should be looking at?Is the distribution a problem?No, let's say I just hand it over to a distributor's warehouse.

How do we promote our products? How does our customer know of us?We have a good brand name, and get asked for from our distributor.

Is there any area I'm really missing here?You've covered most of the issues that are there. Question remains if I should invest 200m.

Umm.. there's nothing to be set right here. If he wants to invest 200m, what's the benefit he gets in terms of cost. If this facility gives us economy of scale... Look at location of facility, to ensure proximity to suppliers & distributors. Perhaps look at proximity to upcoming markets.If the benefits of all these amount to greater than cost, he should go ahead. That's about it.

Key Learnings

1) Completely skipped phase 2 and started to ask questions in phase 3
2) Interviewee did not realize that it was time to make recommendations inspite of covering all areas defined in the issue tree.
3) Did not apply MECE while covering cost areas (Missed out on operating costs but recovered eventually)"

Case Interview: US payfones

The following post is courtsey Tuhin and Disha.

"Tuhin interviews Disha Rustogi
++++++++++++++++++++
18 Dec 2006

Good evening, Ms Rustogi
Good evening, Mr Verma

Let's start with our case-based interview
The client is a major player in the payfone industry. His market share in the last year has gone up by 20% in the past year. But he's seen a decrease in profitability. The question is why has this happened? And what can we do about it?

Phase I
=======
Can you tell me which geography? Based in US.
Is the client active througout the US?
Pretty much.

I'd like to tell you about the workflow how the revenues of this client are generated. Please tell me if they're right.
Assuming that payfones owned & installed by the client. No, they're owned by the telecom company. I manuf these payfones, my telecom companies place orders and tell me the locations. I install them there, I also do maintenence, but maintenence contracts vary.

Restate: We're looking at a client that manufactures payfones. Its clients are telecom companies. The Market share has increased by 20% last year, but has reduced profitability, which it is looking to resolve.

Comments: No measure of profitability decline! By when do they want it resolved??

Phase II
========
Look at two sides - revenues & costs.
In costs - variable & fixed
In revenue - the company, competition, the environment & market, the pricing, promotion, essentially the 4Ps
How would promotion affect revenues? How would distribution affect revenues? -- to be debated later

Phase III
=========
Revenues first
---------------
Divide it into price & volume
Do we have revenue figures for last year? No, I just know my market share went up 20%
I know my price dropped by 10%
And my volume dropped by 15%

How much is my market share? 55%.
Am I market leader? Yes
Competitrs? Two major ones - they own the rest of the market, mostly.

So, this is a declining market. Is this a trend that has continued over a period of time.
Last year, two of my competitors dropped out, I gained their market share.

Do we know why competitors dropped out?
No, they didn't find it viable to continue.

Any idea why they didn't find it viable?
I don't know.. maybe their internal calculations.
Also, the competitors' market share is now mine --

Were these competitors based in a specific location?
Irrelevant

Were they selling to telecom operators at a specific price and we had to match it?
Why don't we try to find parity between volume decrease and price decrease? If we took over the installed base of the competitors, our volume should have gone up. Plus, the market prices would prevail as the payfone is not a differentiated product.

Are the other competitors faring well?
They have their market share. What do you mean by "faring well"?

My market share = total installed base

Do we have any idea of this year's market share?
We know my volume has gone down by 15%
Source of confusion: Market share is historical base of installed phone, not share of phones sold in the current year. And volume is the current year's sale.

Do I have an idea of the current year's market size? No, I don't know how big the pie is. But let's say I get the same proportion YOY.
Since price & volume are going down, therefore my profitability is falling.

Moving to costs
---------------
Have my fixed costs changed?
No, no change, I have enough capacity.

Are my labour costs higher?
Nothing out of the ordinary. Regualar pay hikes, etc, pretty much the same.

Any other labour issues? Unions?
Labour is unionised, but that's the way it's always been.
As my sales volume has gone down, but labour costs have gone up. Why should I do that just because of a one-year dip?

Material costs? Have those changed? Fuel costs went up, so material costs went up too. Same for everyone.
Is there a reason why my prices have dropped, inspite of cogs going up? Yeah, I had to stay competitive. Cost of materials has gone up for no fault of suppliers.
What is the profitability figure? No information available.

Can I frame my recommendations?
Can we answer both questions? Any questions that could be relevant to the latter question on what I can do about this?

Price cut is industrywide.

Considering I'm the largest player in the market, is it feasible I can increase the price?
Don't you think my volume would go down further? Please consider that this is a commodity product. I could lose a heavy amount of customers.
Ms Rustogi, have you used a payfone in the US? No. Have you seen one? When would you use one? When I don't have a cellphone, or in an emergency situation.
So, if I don't want to use a payfone, what would happen to demand? It would go down. The reason being alternate methods of calling.

Can I frame my recommendations?

Phase IV
========
-It is a declining market. But you're the largest player.
-Though it is a commodity market, you are a consortium of three players.
-Raise prices through price discrimination
-Either wait for others to go out of a business, or raise prices to increase revenues.
-You have issues on costs, labour is unionised.
-Material costs are highly dependent on fuel prices, and would fluctuate accordingly. Change policies so that competitors don't undercut you straightaway.

Reasons, summarised:
1. Market going down
2. Price competition
--> Gaining market share has not helped you

Depending on your cash flow, do either:
1. Bail out, probably not feasible
2. Acquire the others --> no, it is monopolistic.
3. Drive up the prices by forming a consortium.
4. Diversify, but not enough

Key Learnings
The interviewee missed out the following things:

1. Analysis of why the demand for payphones has fallen in-spite of increase in market share.
2. The structure is at an extremely high level and needs to be a bit more detailed in the branches of the decision tree.
3. Did not apply the SMART rule in problem definition (Missed out on M and T)
4. Recommended the possibility of collusion amongst the market leaders but needs to consider that it might have legal implications.
5. Out of the two questions posed, the first question was resolved but the question “What can the client to about it” was not analyzed.

Where is the Value add in a Case interview?

The following post is courtsey Manu and group. A useful set of takeaways from their mock interview.
======================================================
" We had our mock case analysis session with our ISB alumni, Mr. Ganesh Srinivasan from McKinsey & Co.

After going through our case, Ganesh gave us a few important pointers.

Key Take-Away:

1) Most people will get the problem definition and structure in place before the placement season. But, that is not where the value is.

2) It is true that everyone who has come to campus to advice us on case preparations has stressed on the structure and logical thinking. However, it is very important to keep in mind what the real purpose of the exercise is. If you take a step back and look at what one has achieved after putting a structure in place, and extracting all the information from the client/interviewer logically and exhaustively, there has been no value-add as such from the interviewer’s/client’s point of view. You have merely asked him to divulge all the information he already knows.

3) The most value-add is actually in the solution itself. Show your creativity here. It is very important to pace your analysis such that you give enough time to get to this stage. A major portion of the points allocated in assessing a candidate is based on creativity of solutions.

4) By around 20-25 minutes into the case interview, one should have already extracted all the information from the client/interviewer and identified the problem. This should’ve been accomplished keeping in mind the structure and logical flow of questions. The next 10 minutes should be spent in coming up with a number of creative solutions (as exhaustively as possible), and going over the pros and cons of each of those solutions. This further exhibits to the client/interviewer your structured thinking even in coming up with solutions.

5) Spend the last 5 minutes of the interview, synthesizing these solutions and eliminating the most risky/improbable ones. Then summarize the problem and restating the short-listed solutions.

"

Mock Case Interview with alumni

Many alums working in consulting firms, volunteer to help the current students prepare for the case interviews. The consulting club of class of 2007 had organized mock interviews via videocon with alumni in various firms. One such experience is posted below for the benefit of all:

“The other day we had a session for an hour with Jatin Pant( McKinsey), and discussed three cases, each for 15 minutes, and had 5 minutes of feedback after that, given by Jatin and the other observers.
The following is a case discussion and analysis. Inputs from Jatin have been incorporated within the case itself.

Case: Unannounced strike by servers forced Sarovar Dining Hall to close for a month. However, Sarovar Café remained open catering to ISB students and staff during the month. The management expected huge profits due to the heavy traffic frequenting the café. At the end of the month, the P&L statements showed losses. What is the cause of this loss?

The First stage: Problem definition.
Before the problem is defined with the customary, “As I understand…” one should ask a few questions to bring out the fact that the problem has been understood. Like, the magnitude of losses (in this case it was around 10%), the expected profits (+10%).

After this the problem can be stated like this: A month long strike of the Dining Hall made students flock to the Café for their meals. The management had expected the profits to be around 10%, however, the end-of-month P&L showed losses (negative profits of 10%). The reasons for this 20% setback in profits need to be analyzed.

Jatin had mentioned that one needed to have a framework to understand the real problem. Even before the solution space is defined, the real problem needs to defined.

The Second Stage: Solution Space
The interviewee had decided to analyze the case by looking at three levers 1. Traffic at the café 2. Menu served 3. Timings of the Café 4. Raw material
Another way to define the space is to talk of Internal and External factors. Internal factors are those related to the operations of the Café, while External factors pertain to competition, substitute products and so on. In this case, as it was known to the interviewee that it Sarovar was a monopoly, the external factors were not discussed.
The other way is to talk about Revenues and Cost, and then proceed further.

The third stage: Analysis
Traffic: 418 students frequented the Café, twice a day
Menu Items:
Price?: The standard prices were maintained during strike
Standard food v/s Variety?: In fact, students having been used to variety of the dining hall demanded customized orders. Hence, a significant number of orders were customized for them.
That led to asking about the price of these products – they were not charged a premium for customized food.
3. Timings?: Sarovar operated as they had always been operating, however, there was an extension of ½ hr in the morning to cater to the crowd.
4. Overtime wages? Yes, the Chef and 3 waiters who had come early had to be paid extra. Did the traffic justify their early arrival? – No, not many people came to the café around that time.
5. Infrastructure? – Furniture was leased (at a premium because of the short notice period of strike) to seat the crowd of students.
6. Raw materials? Our supplier remained the same. But the heavy customization orders forced us to obtain items which we hadn’t bought before, and we were charged a premium for the short notice that we gave them.

One needs to bring to a conclusion each of the findings, especially the fact that large number of customizations lead to high costs, and in the absence of capturing the same in the P&L, it is lost.
The profits have been eroded due to: premium paid for renting furniture, overtime expenses, and premium for raw materials.

Jatin mentioned having the second framework, which is essentially a checklist to ensure that the major ideas that can cause the loss for a Café/restaurant is captured.

The Fourth Stage: Synthesis
The case needs to be concluded with the main reasons for a loss and if possible, giving a solution for each of the problem identified.
For example – pricing for customization, staggered timings to control the traffic and remove the furniture/ get it from Sarovar Dining Hall, reduce the staff (cut the overtime) and other creative suggestions.

Jatin’s main feedback centered around developing two critical frameworks:
To pin down the real problem from the case presented to you
A checklist framework which captures the main reasons why such a thing usually happens.

He emphasized on being confident, listening and taking hints, clarifying in case of doubt, and being involved with the case.
He signed off with Good Luck!”


Posted by: Enakshi Chatterjee
Group members: Rishik Ghosh, Rutvik Pawgi, Ashish Kumar Patidar, Siddhartha Pakrashi