The following framework/structure provides an overview of the case:

The best way to solve this is by using a “3C’s” or “Porter’s Five Forces” analysis.

The answer should include some of the following points:

Good answers

• Purchase marketing analyses / research reports
• Internet research on competitors
• Contact real estate agent for real estate costs

Outstanding answer

• Contacting someone in the consulting company who has experience in the market or industry

This should be emphasized, as this point will make the candidate come across as “somebody from the team” and will make it easier for the interviewer to consider working with the interviewee.

Information that can be shared if inquired:

• If the candidate asks about the revenues, tell him/her that they are equal to the annual costs.
• Courts are always used during operating hours.
• The candidate should think about the possibility of doubles. If he asks he should assume 50% single and 50% double matches.

The calculation should look like the following:

This is meant to be a tricky question to show the confidence of the interviewee.

As the annual costs are divided by the total number of members this is indeed an annual fee.

The interviewee should not lose confidence in the previous answer.

Good answer

Further investigation is required, in particular what the competitor is offering and if Fysikum can differentiate its services from this offering.

For instance if the competitor is using a cost leadership strategy and offers a very cheap, but low quality service, Fysikum could launch a premium, high quality squash centre.

Outstanding answer

There could be other outcomes of the investigation.

If the competitor operates across all segments, from low-end to high quality, and has a lower cost base, Fysikum should not enter the market. An entrance would only lead to a price competition that our client cannot win.

Conclusion

• In order to make no loss, Fysikum would need to charge more than €90 per member.
• The client should only enter the market if there is a possibility to differentiate from the dominant competitor.
• Other issues, mentioned at question 1 should also be considered.