Expert case by Bernard

MBB Case: JimboTel

MBB Case: JimboTel MBB Case: JimboTel
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Problem Definition

Our client is JimboTel, an African mobile telecom company with operations in four West African countries: Nigeria, Cameroon, Ghana and Sierra Leone. JimboTel has experienced revenue declines in the last two years.

How can JimboTel grow its revenues organically in the next year?

Comments

This is a standard MBB case covering a standard revenue analysis in a very important industry (Telecom).

This case better fits an interviewer-led approach but could be adapted to interviewee-led. The case should be solved in ~30min.

Short Solution

Solution

Paragraphs highlighted in green indicate diagrams or tables that shall be shared in the “Case exhibits” section.

Paragraphs highlighted in blue shall be verbally communicated to the interviewee.

Paragraphs highlighted in orange indicate hints for you on how to guide the interviewee through the case.

Part 1 – Case Opening

Our main goal is to ensure JimboTel increases its revenues in the next three years.

QUESTIONS

A great solution starts with great questions to help you define the company's business model and goals. Examples of relevant questions:

High-level questions (business model-focussed):

- Products: Does JimboTel offer any products in addition to mobile phone plans, such as broadband and cable TV?

- Target customers: Who are JimboTel target customers? Does the company focus on specific segments (e.g. low-end, high-end)?

Specific questions:

- Objective: Does JimboTel have a revenue target in mind?

- Scope: Does JimboTel want to focus on a specific West African country?

EXAMPLE OF AN EXCELLENT ANSWER

An excellent answer covers the major revenue drivers: volume and price. We will identify opportunities in each driver through hypotheses describing what may be causing the revenue decline:

Volume:

The total number of customers is determined by how many existing customers leave (churn rates) AND how many new users come in (customer acquisition). These two volume drivers are influenced by:

  • Product offering:
    • JimboTel selection of mobile phones is weaker versus competitors
    • JimboTel's product offering is restricted to mobile phones
    • JimboTel's data and roaming packages are not attractive versus competitors
  • Network:
    • JimboTel's network coverage is poor, especially in more remote/rural areas
  • Customer services:
    • Poor customer experience metrics (e.g. low call resolution rates, long call times, attendant impoliteness) may be causing high churn rates
  • Channels:
    • JimboTel needs to reach the right people with the right channel (e.g. stores in urban versus small shops in rural areas)
    • JimboTel needs an omnichannel strategy to improve user experience and drive better relationships with customers, especially via digital channels (e.g. apps, website)
  • Branding:
    • JimboTel must strenghten its brand image, leveraging celebrities that appeal to specific customer segments

Price:

  • Pricing versus competitors:
    • Competitors may be attracting customers through cheaper offerings
  • Cross selling opportunities:
    • JimboTel could explore premium pricing opportunities through bundles (e.g. broadband, cable TV), roaming or data packages

Part 2 – Population Analysis

After the structure, verbally communicate the information below, followed by Exhibit 1.

We looked at the population breakdown by income and geography in the countries where JimboTel operates. After looking at Exhibit 1, what are your conclusions?

Show Exhibit 1.

EXAMPLE OF AN EXCELLENT ANSWER

From the graph we can infer the following:

  1. The low income population represents the bigger slice of the total. Most low income people live in rural areas
  2. Very low income groups are the second most representative and are evenly distributed between urban and rural areas
  3. High income groups represent the minority of the population and are mainly concentrated in urban areas

Part 3 – Mobile Phone Penetration by Geography and Income Level

After the population analysis, verbally communicate the information below, followed by Exhibit 2.

After looking at the population, we looked at the mobile phone penetration by geography and income level. After looking at Exhibit 2, what are your conclusions?

Show Exhibit 2.

FOLLOW-UP QUESTION

After the candidate has given you the results and intepretation, ask the following question:

What strategies would you adopt to increase mobile phone penetration amongst low income populations in rural areas?

EXAMPLE OF AN EXCELLENT ANSWER

Exhibit 2:

Unsurprisingly, low and very low income levels are underserved compared to higher income, regardless of location. Importantly, within the low income group, penetration is significanly lower in rural compared to urban areas across all four countries. As a result, we should focus on the low income groups in rural areas for the following reasons:

1. They represent a significant share (over 1/3) of the total population (Exhibit 1)

2. Low mobile phone penetration

3. Potentially higher revenue per user versus the very low income group

Follow-up question:

Potential ideas to increase penetration in low income groups in rural areas:

  • Product offering:
    • Selection of mobile phones that are affordable and appeal to local tastes. Could negotiate large volume orders with mobile phone manufacturers to bring costs down
  • Network:
    • Better coverage in rural areas
  • Channels:
    • Increase presence in rural areas through partnerships with local stores or local community leaders
  • Financing:
    • Options to help people finance their mobile phone purchases (e.g. payment in installments, dilute cost monthly plan)

Part 4 – Distribution Channel Analysis

After the mobile penetration analysis, verbally communicate the information below, followed by Exhibit 3.

We analysed the total sales of mobile phones by channel in urban and rural areas. After looking at Exhibit 3, what are your conclusions?

Show Exhibit 3.

EXAMPLE OF AN EXCELLENT ANSWER

We can see a clear distinction between urban and rural areas in terms of channel distribution. Whereas urban areas are dominated by traditional stores, rural areas rely on a more granular distribution network with 3rd party stores and sales vans to reach remote areas

Part 5 – New Sales Model

Verbally communicate the information below:

JimboTel is considering launching a new sales model targeting low income populations in rural areas. The model is based on rural ambassadors, people who are very well regarded in the villages and are responsible for bringing supplies from larger towns.

What total sales are expected one year after the introduction of the programme? Consider the following:

- There are 60 million low income people living in rural areas

- The programme will target people who do not have a mobile phone already

- Average mobile phone penetration is currently at approximately 15%

- The expected buy rate is 25%

- Each person is expected to buy one phone per year

- The estimated revenue per phone is $15

EXAMPLE OF AN EXCELLENT ANSWER

Calculations:

The programme is expected to make approximately $190 million in one year:

Step 1. To determine the total expected revenues, we will focus on people who do not currently own mobile phones by subtracting the 15% who already own mobile phones from the total population:

  • 60 million * (100%-15%)= 51 million people

Step 2. We will calculate how many mobile phones will be sold

  • 51 million * 25% (buy rate)= 12.75 million mobile phones

Step 3. Multiple by average revenue per phone to get the total revenue per year

  • 12.75 million phones * $15 = $190 million

Part 6 – Conclusion

You have a minute to present your conclusions to JimboTel's CEO. What is your recommendation?

EXAMPLE OF AN EXCELLENT ANSWER

RECAP THE OBJECTIVE

An excellent candidate would start with a small recap of the objective:

"In order to meet its goal to increase revenues in the next year, JimboTel should..."

CONCLUSION

A great candidate would provide and answer-first approach to the question, highlighting three main actions:

JimboTel should target low income people in rural areas through a new sales model expected to generate around $190 million in one year. The reasons are:

  1. Low income people living in rural areas represent over 1/3 of the total population but mobile penetration is still low
  2. There are opportunities to improve distribution in rural areas by leveraging the power of local ambassadors
  3. The rural ambassador programme is expected to generate around $190 million in one year

The candidate should highlight some risks and areas for further investigation:

  • Cannibalisation: sales from rural ambassadors may cannibalise sales from existing channels (e.g. third party vendors)
  • Incentives: need to ensure rural ambassadors are properly incentivised to deliver on sales targets
  • Differences between countries: the West African four countries may differ in how they rely on rural ambassadors (e.g. they may play a more central role in some cultures but not others) and different customer preferences
  • More in-depth customer research: to determine potential drivers for low adoption amonsgt low income groups
  • Margins: although this is a revenue problem, in the future we will need to compare the margins from the different channels. For instance, rural ambassadors may charge higher comission per unit sold compared to third party stores

Final remarks

Thank you for completing my case!

Do you have any feedback or questions on the case or on your preparation? Feel free to reach out!

Wish you all the very best in your preparation,

Look forward to connecting!

Bernard

Exhibits

Exhibit 1

Exhibit 2

Exhibit 3

Do you have questions on this case? Ask our community!
500+
Times solved
Beginner
Difficulty
Do you have questions on this case? Ask our community!

Exhibits

Exhibit 1

Exhibit 2

Exhibit 3