Poker Inc. is currently operating four casinos in Royal City. Competitors are right now planning to open up a rival casino in Kingsville.
Poker Inc. has hired our company in order to assess the consequences of the possible competitor opening and what strategies Poker Inc. should follow.
This case is made to be interviewer-led. Therefore the interviewer should guide the interviewee through the interview. The questions should be read out and shared with the candidate.
The case is split into two parts:
The first part describes more qualitative problems and has more open questions that should make the interviewee think about the problem and its solution.
The second part is more about quantitative problems and calculations. Here the interviewee should try to make his own calculations and solve the questions.
Poker Inc. should built an own casino in Kingsville.
The following structure/framework provides an overview of the case:
This is a rather simple question, which should lead the interview to the conclusion that he/she has to evaluate the impact of an own casino on the company’s revenues compared to a competitor’s one.Information that should be shared with the interviewee:
Main conclusion
II. Consequences
Now we can start with the more quantitative part of the case.
Lost revenue = Revenue * % of rev from Kingsville Lost revenue per type: Gamblers = $400 m * 25% * 100% = $100 m Vacationers = $500 m * 25% * 0% = $0 m Experiencers = $100 m * 25% * 50% = $12.5 m Total revenue lost = $112.5 m As the $112.5m lost due to the new casino will in that case benefit Poker Inc., this will not result in a revenue loss. However, the tax rate in Kingsville is higher, and therefore the additional taxes that have to be paid will result in losses for Kingsville. Revenue lost = Revenue lost to taxes = Revenue of new casino * ∆tax = Possible solutions: More questions to be added by you, interviewer! At the end of the case, you will have the opportunity to suggest challenging questions about this case (to be asked for instance if the next interviewees solve the case very fast).After some analysis by the candidate share this information:
Revenue lost to new competitor casino in Kingsville
Revenue lost if Poker Inc. build casino in Kingsville
Revenue of new casino * (new tax-old tax) = $112.5 m * (50% - 25%) = $28.125 mMain conclusion
III. Conclusion
3. What is your recommendation to Poker Inc. about the strategy?
Main conclusions
Difficult Questions
How could Poker Inc. compensate the lost revenues?
As you describe it, this is the longest version of this case format; normally too long for an oral interview, so it's super important to listen whether the question is about if (the client should ente... (more)
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Investments or single business cases need to be evaluated based on a certain set of criteria. Since financial performance is the key criterion in most cases you need to have an idea about future financial impacts. A key tool to asses this impact is the cost-benefit analysis which is used to determine the net effect of potential revenues and costs.
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