Paragraphs highlighted in green indicate diagrams or tables that can be shared in the “Case exhibits” section
Paragraphs highlighted in blue can be verbally communicated to the interviewee
Paragraphs highlighted in orange indicate hints for you how to guide the interviewee through the case
Part 1 - “Where to play”
The candidate’s initial structure should include comparison of the two markets. Given the objective is increasing overall growth of the company, it is important that the candidate ask about each market’s growth rate earlier in the process. If the candidate couldn’t get to ask this data point, ask him/her to revisit the objective of the client.
When a candidate asks about growth rates in the two markets, tell him/her that the client has been growing at 1% in Indonesia (which is also in line with the overall Indonesia market growth), and ask the candidate to calculate what is the current client growth in the US market.
A good candidate should be able to come up with the formula quickly and solve the math with no error. It can be done in less than 3 minutes.
80%* 1% + 20%*X% = 3%
The current client growth rate in US = 11%
An excellent candidate would put this number into context and compare the number both internally (with client data in Indonesia) and externally (ask for competitors data).
When the candidate asks about market share and competitors growth, share exhibit with the candidate. A good candidate should notice that the overall Indonesia market is having slow growth, while the client has a much lower growth rate compared to others in the US market.
Once the candidate has sufficiently understood the market and competition, ask the candidate to make a suggestion which market the client should focus on.
The candidate should recommend the US market because:
Indonesia market is growing at 1% and the client is already the top 1 player. Not likely to increase growth from 3% to 5% by focusing on Indonesia
Client’s growth rate in the US is higher than Indonesia, at 11%. Yet at the same time it lags behind competitors (15-25%) which means there is still big headroom for growth
The US market is more fragmented which also means more opportunities for client
Part 2 - “How to win”
After the candidate makes the suggestion on “where to play”, share with them that the client has been trying to grow their business in the US faster but so far made not much progress. “The client wants you to help them understand what went wrong and how to fix it?”
There are different ways to approach this question.
One approach the candidate can use here would be to think along the value chain - what is the client doing differently from its competitors at the various stages, from manufacturing, logistics (shipping + warehousing), selling, to after sales service.
Another approach is that, If the candidate struggles, can also ask the candidate to make an analogy to his/her own purchase. If he/she is going to buy from a potential supplier for a relatively expensive item, what are the purchase criteria? Typically the answer would include product quality, pricing, delivery time, and sales & services.
The key is for the candidate to really probe the root causes before jumping into suggestions (trying his/her luck).
Information to be provided when asked:
Manufacturing & logistics:
The client manufacturers in Indonesia, ships product to the US to store in its US warehouses, and then supplies from US warehouses.
Assume product lead time is not an issue, as the client keeps enough inventory in warehouses.
Product: Assume product is a commodity and quality is similar to competitors’
Pricing: Assume product is a commodity and therefore price is tagged to a public marker and the difference is very small amongst players
The client works with US distributors, while at the same time also has some direct sales to customers
The client has not been able to get long term contracts, only spot deals with smaller customers with duration no more than 12 months; while main competitors have locked in long term contracts with bigger customers
After sales service:
Customer claim handling has been a big pain point for customers.
Competitors process claims within a week and some give unconditional refund.
The typical handling process for client can drag to a couple of months.
Once the candidate identifies the key gaps in sales and after-sales service, an excellent candidate would probe further to uncover the why behind the gaps.
Additional information to be provided when asked:
Sales: The client has hired a local US sales team. However, the sales team is compensated based on mostly fixed salary with a small portion of variable commission (similar to their colleagues in Indonesia), while competitors’ sales are paid on mostly commission.
After sales service: There is no dedicated PIC for claim handling in the US; claims have to be approved by HQ in Indonesia which also require a lot of internal communication and coordination.
Part 3 - Conclusion
Now it should be pretty straightforward what the client could do to improve their business and grow faster in the US market. Ask the candidate “assuming you have been working on this case for a few weeks, and now you need to give an update to the BoD. What would you tell them?”
A strong candidate would start with the conclusion that the client should focus on the US market (reasons as mentioned above in Part 1). In order to achieve faster growth in the US, the client needs to change both:
How they incentivize the sales team (suggest to move to a higher commission base, benchmark to competitors)
How they handle the claims (create a role as person in charge in the US, and provide enough autonomy for faster and better claim handling)