Associate Mock Case Interview Dartmouth College October 8, 2004
Agenda • Case Preparation • Case Assessment • Case Execution
Case PreparationCase Question: Fenway Park T-Shirt Vendor • Case Question • Assess whether or not a Red Sox t-shirt vending cart operated outside of Boston’s Fenway Park can be a profitable business • Background Facts • Fenway Park is home to the Boston Red Sox, a major league baseball team • Many vendors operate single-cart businesses (e.g., hotdog carts, ice cream carts, t-shirt carts,etc…) immediately outside ballpark grounds for pre- and post-game sales • Average game attendance: 30,000 • Average game duration: 5 hours (includes pre- and post-game) • 160 games per season: 50% home, 50% away • Average ticket price: $40 per person • Business intention is to operate a single vendor cart outside of Fenway Park on Yawkey Way, where people come to enjoy the festive pre-game atmosphere
Case PreparationBefore You Start… • Take a deep breath and relax • Write down your thoughts and other notes (you need to bring pen/pencil and paper!) • Identify a framework that will help you structure the problem • Think before you talk • Start your case with a thought process – explain briefly how you intend to approach the problem • Throughout the case ask probing questions and/or state your assumptions • Be aware of time constraints and be prepared to summarize your findings • Smile
HOW DO I BREAK THIS DOWN?? HOW DO I PROCEED? Case PreparationThoughts & Notes • Fenway Park – is it profitable to operate a t-shirt cart? • What do I know? • Attendance 30,000 • 80 home games per year • T-shirts sell for between $10 - $25
Excellent(Home Run) Good(Double) Needs Improvement (Strike Out) • Demonstrates clear logic • Uses relevant framework and/or provides structure to case problem • Guides interviewer through thought-process • Offers both broad and detailed assumptions • Calculates numbers accurately • Sanity checks answers & recovers from potentially “off” estimates • Summarizes findings and makes a firm and actionable conclusion • Makes creative considerations beyond obvious case issues: • Product differentiation • Location • Seasonal influences (e.g., weather, playoffs, etc.) • Customer loyalty • Shows enthusiasm • Demonstrates reasonable logic • Uses framework, but not necessarily most relevant • Provides some explanation of thought-process • Makes broad assumptions, but lacks detailed considerations • Does not gauge all answers for reasonability or accuracy • Summarizes findings but conclusion lacks conviction • Makes some creative considerations, but could push to another level of detail • Shows enthusiasm • Fails to grasp key issues or demonstrate clear logic • Does not use framework or structured approach • Thought-process is rambling (or not communicated at all) • Assumptions lack depth and fail to consider key issues • Estimates are unreasonable or calculated incorrectly • Does not summarize findings, or summary does not take into account key issues and/or estimates • Lacks creative thinking and enthusiasm • Nervous and fidgety Case AssessmentHow Did I Do?
Case AssessmentWrap-Up • Case Tips • Bring a pen/pencil and paper • Listen carefully to case details and general interview questions • Respond in a thoughtful and structured manner (take your time!) • Remember that your thought-process is usually more telling than your answer • PRACTICE, PRACTICE, PRACTICE!! • General Interview Tips • Be on-time and dressed appropriately • Know your resume and academic/work experience background • Answer interview questions concisely • Be able to state clearly and concisely why you want to work in consulting • Be enthusiastic • Be yourself
Profit Revenue Cost Quantity Price Fixed Variable Case ExecutionThe Framework • Use a framework that will help you and your interviewer understand your thought process M I N U S • How many t-shirts can you sell per game? • What factors affect sales? • How much can you charge for t-shirts? • What are my costs?
Profit Revenue Cost Quantity Price Fixed Variable Case ExecutionCost Analysis • Start with something straight-forward (low-hanging fruit) – in this case, the cost component is easiest to estimate • How many t-shirts can you sell per game? • How much can you charge for t-shirts? • What are my costs? • What costs are start-up, (e.g., one-time only)? • What costs are recurring? How often? (Annual, monthly, periodic?)
Profit Revenue Cost Quantity Price Fixed Variable • Labor • $10/hour • 5-hour (incl. pre- and post-game) • $50 labor per game, plus… • T-shirt cost • $2 per t-shirt • how many t-shirts do I need? • Total ???? Case ExecutionCost Analysis • Cart Purchase ~$5,000 (one-time) • or • Cart Lease ~$1,000 (semi-annual) • Operator’s License $1,000 (annual) • How many t-shirtscan you sell pergame? • How much canyou charge for t-shirts? • $6,000 Total
Profit Revenue Cost Quantity Price Fixed Variable • Labor • $10/hour • 5-hour (incl. pre- and post-game) • $50 labor per game, plus… • T-shirt cost • $2 per t-shirt • how many t-shirts do I need? • Total ???? Case ExecutionRevenue Analysis • Cart Purchase ~$5,000 (one-time) • or • Cart Lease ~$1,000 (semi-annual) • Operator’s License $1,000 (annual) • How many t-shirts can you sell per game? • How much can you charge for t-shirts? • $6,000 Total
How many people buy t-shirts per baseball game? How many people buy t-shirts from us? What is the best metric to use? 30,000 people per game What is per game attendance? How many people buy things at baseball games (food, hats, t-shirts, banners, balls, etc.)? 6,000 Buyers (20%) 24,000 Non-Buyers (80%) 1,500 T-shirt Buyers (25%) 4,500 Buy Other Things (75%) How many people buy t-shirts? How many people buy t-shirts from us? 50 Buy Our T-shirts (3%) 1,450 Buy T-shirts from Others SANITY CHECK: DOES THIS MAKE SENSE? Case ExecutionQuantity Estimation
50 Buy Our T-shirts SANITY CHECK: DOES THIS MAKE SENSE? OUR ASSUMPTIONS SEEM REASONABLE Case ExecutionSanity Check • The Sanity Check: • Does 50 t-shirts sold per-game sound right? • There are 1,500 t-shirts sold and I am selling 50 shirts, so that implies that there are ~30 t-shirt vendors at the park. Is that a reasonable number? • If we really only sell t-shirts for 2 pre-game hours and 1 post-game hour, we effectively have 180 “selling minutes” OR… we sell 1 t-shirt every 3-4minutes • Can one person handle a t-shirt sales transaction every 3½ minutes?
Profit Revenue Cost Quantity Price Fixed Variable • Labor • $10/hour • 5-hour (incl. pre- and post-game) • $50 labor per game, plus… • T-shirt cost • $2 per t-shirt • 50 t-shirts per game • Total $150 • Total Revenue per Game $750 Case ExecutionRevenue Analysis • Cart Purchase ~$5,000 (one-time) • or • Cart Lease ~$1,000 (semi-annual) • Operator’s License $1,000 (annual) • 50 t-shirts sold per game • $15 per t-shirt • $6,000 Total
Profit Revenue Cost Quantity Price Fixed Variable ANNUALIZE & SUMMARIZE Case ExecutionRoll-It-Up • Now that you’ve calculated the various components of the profit tree, roll-it-up to an annual level and summarize… • 50 t-shirts sold per game • $15 per t-shirt • $5,000 start-up costs (cart purchase) • $1,000 annual operator’s license • $50 labor wages per game • $2 cost per t-shirt x 50 shirts = $100 • $750 per game revenue • $6,000 annual costs • $150 per game costs
What do you think? Too high? Too low? Case ExecutionRoll-It-Up • Sanity check your findings once again and summarize to the interviewer • Total Revenue per Game $ 750 • Less: Total Costs per Game ($ 150) • Net Income per Game $ 600 • Total Home Games per Year 80 • Annual Income $48,000 • Less: Annual Fixed Costs ($6,000) • Total Annual Profit $42,000