Deloitte Case question

Nick asked on May 23, 2019 - 2 answers

Hi all,

I'm trying to solve one of Deloitte cases about retail strategy.

Please see in attachment the actual case and exhibit. The question I'm puzzled with is "What is the expected overall market size for Club Co., regardless of the business model selected?". The answer provided by Deloitte is $8.8M, due to 88% usage rate out of current 10M visitors. I would agree with the answer with 8.8M wouldn't have a dollar sign, meaning there are potentially 8.8M clients who might buy the product. However, those 8.8M members are not equal $8.8M in potential revenue! I'm sure I'm missing something, could someone advise if I'm wrong in my logic?

2 answers

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Best Answer
Anonymous updated his answer on Jun 03, 2019

Hi Nick,

honestly, given the data I believe there is a flaw somewhere in the case. Why not contact them to find out?

Best regards

(edited)

Hi Jakob, thanks for reply. That's what I'm thinking to do, but to be on a safe side posted here first, in case I'm wrong. — Nick on May 24, 2019

ASAM replied on Oct 11, 2019

Hi.

I have a question with the same case. I am not sure how they have the following solution to the question:

Using the provided data, model a P&L for both business model options for year one. Calculate operating profit (ignore interest, taxes, and depreciation) and round dollar amounts to the nearest $100K.

Correct Answers

Model A – Carrier 1 only total revenue: $6.5M

Model A – Carrier 1 only total costs: $1.7M

Model A – Carrier 1 only operating profit: $4.8M

Model B – Multiple carriers total revenue: $6.9M

Model B – Multiple carriers total costs: $2.3M

Model B – Multiple carriers operating profit: $4.6M

Could someone please elaborate how they arrived at those numbers? I can't even find the revenue answer correctly. Thank you so much!

Regards,

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