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
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