Our client is a Canadian TV company, Universal TV. They recently entered the US market in the northeast to expand its market share and capture a large part of the 4 m consumers in a market that has little competition. However, in the past few years, Universal TV has been unable to realize a profit.
You are hired to figure out why this is the case and what their next move should be.
This is a profitability case where the candidate also has to explore the business situation to get to a conclusion.
This is a combination of an interviewer-led & a candidate-led case. The case consists of two parts and is mainly qualitative with an emphasis on understanding WHY the company isn't making a profit.
Suggested case structure:
Candidate should start with revenue & cost to see if they have changed and what type of pricing the client maintains.
It seems that the company hasn't been able to increase its revenues and costs have stayed the same. So the absence of profit is caused by a lack in revenue growth.
Now we need to understand why consumers aren't signing up.
Candidate should now get into the second part and ask more on consumer behavior and competition/substitutes.
It seems that the American consumer was alright with the free local tv and doesn't see the value of adding cable. Their lower income also means that they are more critical of spending more on watching TV.
Clearly, there is a lack of market fit with what the client is offering and what the American consumer wants.
Candidate should come up with recommendations. These can include the following, but any other recommendation that makes sense can work:
Hi, 1) Youproactively ask in the beginning, even before drawing the structure (something like "What kind of products / revenue sources do we have) and then split the structure into price, qty,... (more)
Hi Anonymous! Both are valid approaches. As a rule of thumb, 1) is more suitable for a quantitative assessment (e.g. "By how much has profit declined?"), while 2) seems like a good approach for a... (more)
Anonymous, Case questions will obviously depend on the interviewer and the group you are trying to join. When I looked st the credit card side for example, I wasgiven credit card related questions.... (more)
Hi, Focus on the most common industries in the followingpriority (sorted by probability of geting a case): 1-retail and CPG; 2-airlines; 3-Telecom; 4-banking; 5-natural resources; 6-tech There a... (more)
I think accounting break-even is enough because lots of candidates are from non-business background and may not know NPV, WACC, etc, and the interviewers know. They probably will not trick on this. Ho... (more)
A break-even analysis aims to find the point at which a project generates neither losses nor gains. This so-called break-even point can be a point in time, an amount of money or a certain condition
4 Comment(s)The Value Chain - as e.g. by Porter - is a classic framework to structure the activities of a business and add value to products by transforming resources.
3 Comment(s)Learn to crack Profitability Framework Consulting Cases, which are the number 1 reason for real consulting projects and hence are an important case type.
2 Comment(s)
