What are some of the equations or formulas I can use to solve this question?
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Bain Business Case Test
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Hi there,
You can stick to the formulae provided in the prompt.
Here's how you can solve the problem, based on these formulae and the data provided in Graph 4:
- Calculate value shares and F&P RMS in 2006
- Start with F&P revenue: 260 tons (volume) x 1.7 R$/kg (price) = $442k revenue
- Calculate value share of F&P: S&P revenue by total market revenue ($882k = 260tons x $1.7 + 100 tons x $1.6 + 200 tons x $1.2 + 60 tons x $0.7) = 0.5
- Calculate value share of 2nd largest player (Good Flour): 200 tons x $1.2/kg = $240k revenue -> divide by total market revenue ($882k) = 0.27
- Derive RMS for F&P, based on b) and c), following the formula (value share F&P / value share Good Flour): ~0.5/~0.27 = ~1.84
- Repeat the same exercise for 2008 (note that 2nd largest player now if Great Floor) -> ~1.71
- Log answer (d) 1.84 and 1.71
As a short cut, you can simply also divide revenue of Market Leader / revenue of 2nd player to get the same result.
Hope this helps. Let me know in case you have further questions.
Regards, Andi
(edited)
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Hello!
Precisely for the high amount of questions (1) asked by my coachees and students and (2) present in this Q&A, I created the “Economic and Financial concepts for MBB interviews”, recently published in PrepLounge’s shop (https://www.preplounge.com/en/shop/prep-guide/economic_and_financial_concepts_for_mbb_interviews).
After +5 years of candidate coaching and university teaching, and after having seen hundreds of cases, I realized that the economic-related knowledge needed to master case interviews is not much, and not complex. However, you need to know where to focus! Hence, I created the guide that I wish I could have had, summarizing the most important economic and financial concepts needed to solve consulting cases, combining key concepts theorical reviews and a hands-on methodology with examples and ad-hoc practice cases.
It focuses on 4 core topics, divided in chapters (each of them ranked in scale of importance, to help you maximize your time in short preparations):
- Economic concepts: Profitability equation, Break even, Valuation methods (economic, market and asset), Payback period, NPV and IRR, + 3 practice cases to put it all together in a practical way.
- Financial concepts: Balance sheet, Income statement/P&L and Performance ratios (based on sales and based on investment), +1 practice case
- Market structure & pricing: Market types, Perfect competition markets (demand and supply), Willingness to pay, Pricing approaches, Market segmentation and Price elasticity of demand, +1 practice case
- Marketing and Customer Acquisition: Sales funnel, Key marketing metrics (CAC and CLV) and Churn, +1 practice case
Feel free to PM me for disccount codes for the guide, and I hope it helps you rock your interviews!
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Dear candidate,
I would stick to calculating RMS in their suggested way, as this seems to be there accepted definition. Please feel free to specify your question further.
Best regards
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