Alle Fragen zum Tag estimation - Consulting Q&A - PrepLounge.com

Hello!

I agree with the overall approach, and it´s very detailed.

I agree the numbers end up being a bit high, but this would probably mean that some of the assumptions are overstated.

In any case, what the interviewer looks into here is the methodology, and this one is solid.

Furthemore, this problem is far too complex for an MBB interview.

Well done in any case!

Cheers,

Clara

Hi Piyush,

I would not worry too much about your estimation error, a 50% estimation error would not be a big deal, you just need to get magnitude of a number.

Interviewer don’t want you to get the exact number, they are more worried about your reasoning.

Looking at your estimation process I think you should pay attention to the question: you are asked to estimate the number of houses (including single family houses and condos).

From your calculation seems you estimating the number of homes, (same as estimating the number of households), rather than the number of houses.

A different approach to this question could be the following:

• Hypothesis:
  • Avg. household size: 3 people
  • People leaving in single-family house: 70%
  • People leaving in condos: 30%
  • Avg. number of apartments per condo: Avg. number of floors * Avg. number of apartments per floor
    • Avg. number of floors = 5
    • Avg. number of apartments per floor = 5
• Number of single-family house = Total population * people living in single-family house / household size
• Number of condos: Total population * people living in condos / households / Avg. number of apartments per condo

Please reach me out if you want to discuss it further,

Thanks,

Ale

Hi Piyush,

I've read carefully all your assumptions, looks very good! In the real estimation within the case probably the second part would be left out (dividing demand by # of rides) because it becomes too cumbersome. You would probably just need to estimate it from the population top town, would arrive at 9.6 M and the interviewer would already stop you there.

Best,

Daniel

Hi PK,

Overall a good and logical approach!

Just some small points on assumptions.

(1) 70% penetration of ride-hailing seems high. While it could be possible in the big metropolitan cities like NY or SF, outside the handful of big cities the penetration rate would be rather low.

(2) Don't forget there is Lyft also. So besides the 70% penetration rate, you probably need to think about market share as well. At the moment Lyft probably is comparable or just a bit smaller than Uber?

Cheers,

Emily

Hi Piyush, you are getting better at this, good job :)

just out of curiosity: what company are you preparing for? I'm asking because at MBBs estimations are not that frequent (at McKinsey they can sometimes come in the second round, but also rarely) and it's better to focus your time and efforts on practicing the standard cases (structuring, analyzing exhibits and doing case math).

Best,
Daniel

Yes they are - it's not as common and often buried within a case but they are definitely a tool that people use.

Hello!

This is a classical and rather simple market sizing -you will see that, after doing some, they are all the same-.

I would:

1. Calculate the total # of households in the UK, for which you divide:
   1. Total population
   2. Average household (usually for Europe and US is 3)
2. Asuming each household only asks for 1 mortgage loan (you can also double check this with the interviewers, in case they want you to do 1.2 or 1.3 for those who have more than one, investors, etc), and each household´s life is 80 years (average life), divide by 80

Hope it helps!

Cheers,

Clara

Hello Piyush, overall agree!

The only challenge that I would make is that the assumptions on video consumption are rather low -particularly in your middle segment. Devopping countries, from my experience, do have better internet access than what you have estated.

However, for the market sizing purpose of the exercise, this does not matter -at most, they would correct on the spot some of this metrics if needed-. What counts is the approch, and this one is solid.

Congrats.

Cheers,

Clara

Hello PK,

I have alredy answered to some of your questions regarding market sizing, they are truly interesting.

I believe tought you always have the same flaw: you only consider one of the two big segments (personal vs. professional users)

In this case, for instance, you assume they are only private users.

Hope it helps!

Cheers,

Clara

Hello!

Overall agree, but you are focusing on the household markets and forgetting the "public" pianos (e.g., restaurants, music schools, concert halls, etc.)

Cheers,

Clara

Hi PK,

Your approach makes sense but you are not considering one important driver of required storage which would be the number of photos that are being deleted on a daily basis. It may not make a huge difference but maybe reduces the required storage by 5-10%. I do think it should be included in an ideal answer though to show you have a comprehensive answer!

Best,

Axel

Hello!

This is the classical market sizing question. This would be my overall approach:

1. Calculating total customers:
   1. Segment population of the given city
   2. Seeing at which times those groups go shopping most (in person, keep in mind online purchases, etc.) to see which is the max. number of people in peak hour
2. Calculating how many cash registers are needed given:
   1. Peak hour
   2. Normal hours (e.g., you cannot only dimension for peak hours if you would have empty cashiers the 90% of the time)

Hope it helps!

Cheers,
Clara

Hope it helps!

Cheers,
Clara

Hello,

How many people are drinking in this moment in the world?;)

Best,
Luca

I like your approach it is consistent and well thought through- also the internet says there are 3.5B Google queries a day so you aren't very far off.

A few things to consider to change your assumptions

1. Search is no longer capitalized by google (e.g., most searches for products start on Amazon)

2. Verticalized search is hurting google (e.g., LinkedIn for jobs)

3. Number of search queries is therefore lower in Developed markets

4. Access to internet in developing markets is not necessarily the same as in the US for example. A lot of 'smart' phones in India are very basic and have limited access in the traditional sense

All the best,

Udayan

Start with the types of airports. Civil vs. military. Then civil taking into account population, flights per year (as a function of wealth of the population), capacity of given airports (large, medium, small). Large airports = 4 runways, medium airports = 2 runways, small = 1.

Military would be something like the number of countries with airforces, how many planes per.

Hello Piyush,

I'm not an IT expert ut I think that you should consider also account used by enterprise to send marketing emails to larg mailing lists. They could be included in the bucket "professional" but the amount of email is larger.

Best,
Luca

Hello! I would follow these steps:

• Population calculation: if it´s not given, stimation based on your knowledge of other european cities.
• Different evacuation ways: cars, trains, buses, etc. How many people can each of those transportation means evacuate? (e.g., not everyone has a car, there are limited buses and trains, etc.)
• Bottlenecks: the total capacity of those transportation means is the "ideal" scenario in which there are no issues such as traffic jams, etc.

Always bear in mind that here there is not a right or wrong answer, and they are not looking for a candidate that only deviates X% from the solution they have calculated. What is being tested here is you ability to synthetise, be creative, estimate, etc.

Hope it helps!

Cheers,

Clara

Hi,

I would split Spain into 3 buckets and allocate % of the area:

1. Urban areas
2. Rural areas
3. National parks / uninhabited areas

1. Urban - you take an average size of the block and find out the number of roads between them (e.g. total Urban length from East to West of 1000km, each block is 1 km, thus 1000 roads from E to W. Same with S and N)

2. Rural - you just assume much lower density than in Urban (e.g. 50x lower)

3. National Parks - will be even lower

Best

Hi,

I would split into buckets and try to understand a trend in each of them:

Demand

• Lack of internal resources (lack of researched volumes, extraction capabilities, higher costs)
• Private consumption (Climate - heating and cooling, car ownership and usage, etc)
• Industrial consumption (Growth and structure of the economy)
• Alternative energy resources (Availability and adoption)

Supply

• Oil&Gas resources availability (volumes, quality)
• Cost of extraction (Labor, Taxes, Licenses, Technology)
• Cost of transportation (Location, supply chain infrastructure, taxes and quotas)

Externalities

• Regulatory organizations (e.g. OPEC)
• Conflicts in the Middle East
• Trading and speculative demand

Best!