Bain & Company Consultant Interview Questions, Process, and Tips

Q1. Why consulting, why Bain & Co.?
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Q2. Why consulting over finance?
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Your client is a cable manufacturer operating pan India. It is one of the 3 largest players in the country. For the last few years, his/her costs have been higher than industry standards. Can you help him/her figure out why is it so?
[Please note that I stands for Interviewer and C stands for Candidate]

C: Reiterated the problem statement and asked some scoping questions. How high have the costs been against the competitors? What is the value chain of the client? Understanding more about the product of the client. What are the costs to be looked at in a particular segment (process leg, geography etc. or at an aggregate level)? Who are the consumers? Have the competitors operated in a similar manner?

I: Let us look at what the various heads of costs can be.

C: Sure. So as per my understanding, the costs incurred can be broken down into the following heads- Raw material acquisition, Inbound logistics, Production and processing, Outbound logistics, Distribution, Marketing & after sales services, others such as depreciation, financing cost etc. Is there any particular cost head I should look at?

I: Do you mind taking a guess?

C: Since it is a high-volume industry, I believe the cost of raw material and logistics (inbound) must be high.

I: That's right, the cost of raw materials and logistics is a major chunk of the client's total cost. Can you maybe figure out why do we have a higher cost?

C: Sure, there can be few reasons for the same, quantity, quality, and suppliers.

I: The quantity we buy has been in line with our processes. We have also had the same suppliers for the last 10 years or so. Is there anything else you can think of?

C: If the quantity we are buying is not an issue, that rules out possibilities of efficiency related costs. We are essentially incurring higher cost per unit which might be because of difference in the quality, form etc.

I: Yes, that is right. While we are buying aluminum in form of sheets. Our competitors are buying it in the form of blocks.

C: That's interesting, is there anything else you want me to look at in this process?

I: No, this should be fine. (Had some discussion about how this industry works and the manner in which this case was actually solved.)

Client is a steel rod manufacturer who wants to reduce costs by a target amount.
[Please note that I stands for Interviewer and C stands for Candidate]

I: Client is a steel rod manufacturer who wants to reduce costs by a target amount. You need to help the client.

C: I would like to start by listing down the major cost heads for the manufacturer. Starting with the procurement of raw material, logistics, manufacturing, storage, and distribution are the major cost heads. Is there anything I am missing here?

I: Safety costs are also a major part of the overall cost. We also import 100% of our raw materials which again is a major cost head.

C: Understood. We can domestically source the raw material required to reduce the cost. Moving on I would like to understand more about the manufacturing process. Is the manufacturing output uniform across or is it cyclic as per the demand?

I: Our client has a uniform output across the year, but the demand is not uniform. This leads to higher holding costs during low demand period. The factory generally operates at 60% of max output.

C: As I understand, the fixed cost and the holding cost are high and there is a scope to optimize it. Instead of uniform production we could look at cyclic production and lease out our factory area to other players. This would also help us get the transportation costs down and we could operate closer to max capacity, optimizing the operating costs as well.

I: Correct, we could plan to move the production process to cyclic process rather than uniform and also revisit the procurement costs. Thank you, that would be it.

Q1. Tell me about yourself.
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The client is in the industrial sector and is a manufacturer of ropes and nets for the agricultural, fishing, and construction industries. It is a mid-size firm, and its growth has stagnated at 3-5% over the last few years and has margins in excess of 15%. Help the client realize its full potential.
[Please note that I stands for Interviewer and C stands for Candidate] 

I: This was an actual problem faced by one of our clients that we solved a few years ago.

C: Reiterated the problem statement and got it confirmed to ensure that I didn’t miss out on anything specified by the interviewer. Dissected the problem statement and got a few things clarified before proceeding further.

C: Before we start off, I want a little more clarity on the problem we are staring at. Could you please help me with a few points here?

1. What growth are we referring to, topline/bottom-line/others?

2. How do we define full potential? Is there any specific metric and quantum that we are looking at?

3. What is the timeline that we are looking at?

I: We are referring to stagnation of topline growth and by full potential, there’s no specific number, but we want to improve our business scale and grow rapidly in the short term, say two years.

C: So, it’s essentially the topline that we’re focusing on. I’d then like to get a little idea about the firm, the products they deal in, its customers, and the competitive scenario before I delve deeper into the analysis (basically, I asked the clarifying questions).

I: Sure, go ahead.

C: Firstly, can I get a little information about how established the firm is?

I: It’s an established firm and has been operating for quite a few years.

C: Where do they operate?

I: Pan India.

C: Does that mean that they only manufacture in India or is their market also restricted to India.

I: They serve only the Indian market currently.

C: Are they facing any issue with a specific geography within India or is it across?

I: It’s a firm level issue.

C: How many different variants/SKUs of fishing nets do they deal in?

I: They have all variants of fishing nets: size, shape etc., approximately 100 SKUs.

C: How about the customers that they cater to? Broadly I can think of two types of customers: one, the unorganized and second, the organized. Would that be right?

I: What do you mean by unorganized and organized?

C: Unorganized would be the local fishermen, while organized would be commercial fishing.

I: Yeah, so they deal with both B2C and B2B customers.

C: So, how is the competitive scenario?

I: Our client is the dominant player in the market, with a 70-80% market share.

C: Ok, how is the remaining market, are there any major players or is it fragmented?

I: There are 3-4 other players.

C: Jotted down a broad approach and checked with the interviewer for his buy-in. So, here we are looking at topline growth of fishing nets. We can break it down into two aspects, one, the market potential and second, the firm’s growth.

I: Lets come to market potential later. Before that let’s explore what can be done around the firm’s growth.

C: Sure, just one more piece of information before I dive deep. At what rate is the industry growing?

I: Around 5%.

C: Ok, and how was the firm fairing in the past?

I: It was growing at 10-15% earlier.

C: Ok. Sure, getting back to evaluating the firm’s topline growth prospects, there are again two ways to start off with: one, the organic and second, inorganic ways. Do you want me to evaluate any specific area?

I: Let's start off with organic and then come to inorganic later.

C: Ok. Under organic ways of growing, the client can focus on 2 things again, existing, and new. When I talk of existing/new, it could be both in terms of the market or product. Do you want me to look at any specific aspect?

I: Let's take some time here and quickly figure out the market potential for fishing nets in the unorganized sector that you had spoken about earlier.

C: Sure. Can I take a minute again to lay down my approach and we can then proceed with the calculations?

I: Sure.

C: Jotted down the factors I would be considering estimating the market size of fishing nets and then discussed it with the interviewer.

Firstly, I’d look at the geography: there can be coastal areas such as the seas/Indian ocean on one hand, and inland waterways on the other.

Then rural vs urban, followed by the income split, which would in-turn determine the various professions that people could be engaged in these areas (largely agriculture, fishing, labor, street vendors etc.), take a factor for the number of people involved in fishing which can be divided by the average number of people per household, to arrive at the number of households.

Then consider the number of people per household involved in fishing. Usually, from what I’ve seen around beaches in Chennai, they do not go individually for fishing. Rather, a group of 4-5 fishermen go together. So, we would have to divide the fishermen by this factor to arrive at the number of boats.

Then a factor for number of fishing nets used per boat, life of a fishing net, which would determine the replacement factor and then finally incorporate the average price of a fishing net to arrive at the market potential.

I: Sounds good. Proceed. Take simplistic assumptions and arrive at a number.

C: Was asked to consider only the coastal areas and not inland waterways. Went on to calculate the number. Arrived at the coastline length basis India’s dimensions (length and breadth of 3000 and 2500 km approx. basis some facts I had gathered beforehand). Then went down the wrong way in calculating and arrived at 14000. Quickly realized that there was something wrong with it. The interviewer also asked if it seemed right given India’s population of 140 crore. Took a step back, sought a minute and recalculated ~2 million fishermen.

I: So, let us consider whatever is the number you have arrived at: 2 million fishermen. How will you arrive at the market potential from here?

C: Specified the factors stated before.

I: Ok. So, what would you do to address the growth stagnation issue now?

C: Ok. So, broadly we can look at expanding to new markets: basically, going international. Within existing geographies, can evaluate from 4 different standpoints

a. Price

b. Product

c. Place/distribution

d. Promotion

Do you think this is a fair approach to follow?

I: Sure, go ahead.

C: From a pricing standpoint, we can evaluate the quantum by which we can reduce prices depending on the price elasticity of the product. This could help us gain significant volume without compromising on absolute profits earned, since volume could offset the reduction in price.

From a product standpoint, we can look at the type of material used, if there’s any betterquality material which could hold a better value proposition to customers, be it in terms of the life of the net for example (didn’t have much scope from a shape/size perspective, given the wide presence with about 100 SKUs).

From a distribution standpoint, [realized I had not asked the current distribution mechanism in place] if we currently reach out through distributors, we can evaluate our distributor'spresence, whether there is any geography that we are not catering to currently. We can also engage in direct selling instead of the distributor route. However, that would involve an evaluation of how it could pan out. Since the distributors could hold some influence on the unorganized sector where the buying behavior of customers is person dependent. This leads us to our last leg, promotions.In the B2C sector, there could be certain local influencers in the fishermen colonies. So, targeting them could help receive our products better. In the B2B sector, it is all about personal selling.

I: Ok. So, by doing all of this how much do you think that you can push the growth to?

C: Well, that’s a very subjective evaluation, and to attribute a number basis this would be a long shot. However, if we still want to look at a possible number, I might consider anything between 15-20%.

I: Ok. We have 3-4 minutes left. Let’s do a quick calculation here. You said that the client who holds a market share of 70% is likely to grow at 15%, while the market is growing at 5%. What would be the potential market share that it would hold after 3 years.

C: Arrived at a number in excess of 90% [helps to round numbers. I was calculating up to 5 decimals, which isn’t required. Will save a few seconds].

I: Ok. So, what do you think will happen in this scenario where the client might end up with a market share in excess of 90%?

C: Is the market regulated? If so, there could be restrictions from regulatory bodies.

I: No. The market is not regulated. What else?

C: There could be two other things that might happen. One, the competition could grow weaker and find it difficult to survive, resulting in scope for the client to acquire these players.

I: Do you think that would be possible?

C: Well, given the scenario and the projected market share, there could be concerns that might be raised by the competition commission.

I: What else?

C: The other possibility could be that the market consolidates with competitors coming together, basically merge like what Vodafone and Idea did to survive competition from Jio.

A well-established client is in the hospitality sector and basically operates hotels in South and East India. These hotels are in landmark locations, bang in the middle of the city and are about 30-40 years old. Post COVID-19, the company believes that it needs to achieve at least 35% occupancy to break even (i.e., to cover employee and operational costs). Usually, the utilization is in the range of 65-70%. Given the aftermath of COVID and associated lockdown restrictions, travel has reduced resulting in reduced utilization, especially the business segment (dominant segment) is down by 50%.

To clarify, if there are 100 rooms in total, about 70 rooms used to be occupied, 50 by business travelers and 35 rooms have to be occupied to break even.

How do we solve this problem and help bring the utilization back to pre-COVID levels?

Also, can they continue with the current business model?
[Please note that I stands for Interviewer and C stands for Candidate] 

C: Reiterated the problem statement. A few questions before we commence the case: first, what is the timeline we are staring at, i.e., should I consider that we are in the initial phase of lockdown / otherwise?

I: You can consider a timeline where we are beginning to get out of lockdown.

C: What restrictions are in place for commercial activities?

I: Commercial activities can take place without any major restrictions.

C: The second question would be on what timelines we are looking at for implementing the solution/ideas and whether we have any financial constraint?

I: 5 years, no capex constraint.

C: Ok. Now, to start off with, I’d like to understand a few aspects of the company, its offerings, customer segments and competition.

I: Sure, go ahead!

C: So, what type of hotel are we looking at: a basic one or luxury?

I: It’s a 5-star hotel.

C: What are its offerings and revenue streams?

I: Room rent obviously is the major source of revenue, while the other broad segments are broadly classified as F&B, comprising of bar, restaurant with various cuisines, events & conference revenue.

C: What is the customer mix that we have?

I: 70% business travelers, 30% leisure (foreign travelers, i.e., from abroad).

C: How is the competitive position in the market?

I: Overall, the demand and number of rooms have increased over a period of time pre-covid, given that our hotels are in the center of the city.

C: Sure, one last question before we deep-dive into the analysis, how many hotels do we have in total, and have we faced an issue in any specific ones or across the board?

I: They run 10-12 hotels, all owned, of which 4-5 are important and in major cities. We can focus on these for now.

C: Sure, can I take say Chennai as the reference for subsequent analysis.

I: Sure.

C: Given it was an issue with scaling up topline, jotted down my broad approach by splitting it into room and ancillary revenue (the F&B / events), further split room revenue mathematically considering that it would be the major revenue stream and laid it down to the interviewer for his buy-in.

I: That’s fine. But let us first focus on the customer segments and their use cases before getting deeper into this.

C: Split it into business travelers and other individuals and then wanted to evaluate the need, availability, affordability, awareness, and contractual arrangements that they might have in this setup.

Emphasized more on the need and contractual legs, given the new normal working style post covid (basically resulting in reduced travel). Specified a few options such as:

a. Having contractual arrangements with a minimum commitment from the companies in return for more favorable offerings/services.

b. Conversion of the facilities basis the space available: split the analysis into two aspects, something inside the hotel building and the second, any open area outside the building.

Within the hotel building, we can convert the rooms and offer them for people to work out of it (co-working spaces), improve the revenue from restaurants by making it more affordable, have more variety or a new model of home-delivery of food, which ITC, Marriott started during lockdown (ancillary revenue).

Outside the building, the options would be depending on the area available, to make the hotel more attractive.

c. Leasing out certain facilities altogether.

d. Demolishing the current setup and redesigning the hotel rooms to make them more friendly in terms of pricing, so that the rooms are more attractive.

e. Another converting a few locations basis the demand into a quarantine facility, subject to the timelines we’re looking at, given this may not be a long-term fix in light of the covid scenario.

I: Ok. So, one of the things that you mentioned is what is happening, i.e., conversion of facilities into co-working spaces model where companies are moving away from having their own facility (owned/leased). How about the other individuals, whom will you target?

C: So, here firstly, we need to focus on domestic travelers too, given the restriction on international travel. Although it would be less to start off with, given the timeline we are looking at, could be a good proposition in the long term.

I: Ok. But how would you go about attracting localities to stay in hotels, say people from Chennai to stay in Chennai?

C: Well, there are two things to consider here:

a. I may be wrong here, but I believe there are certain police restrictions on localities checking in to hotels.

b. Typically in the Indian scenario customers are price sensitive, so, for localities to check in to 5-star hotels, seems a distant possibility. However, if I relate it to a personal experience, we can have rooms booked for guests attending a wedding, that would be a feasible option.

We can change the customer behavioral pattern/mindset in the long run to promote localities checking in to hotels (subject to there being no regulatory restrictions), like Kellogg’s had taken 13 years to change the breakfast pattern in Japan.

I: Ok. Now, how would you go about pricing this for the workplace model and what would be your TG?

C: TG would be tech companies as we had discussed earlier.

I: But what size would you target?

C: We can target large companies and get the rooms booked upfront for a defined period.

I: Don’t you think that will change the core of the co-working space model in itself?

C: Well, yeah. I agree. It will become more of a lease than a co-working space setup. In that case, I would target mid-size firms and startups since they might be looking to save on facility costs in the aftermath of the pandemic and go for co-working spaces on a need basis.

I: Right, so, let's wrap it up quickly. How would you price it? Let’s only discuss the approach.

C: Specified the different pricing models with cost plus providing the base price and value based the ceiling.

Went ahead with value-based pricing: essentially how do the customers gain value from the services offered. Specified the different costs that tech cos would otherwise be incurring like facility & maintenance (including operating charges such as rental, electricity), staff: admin & maintenance, internet & telephone connectivity.

The other aspect would be a convenience factor that the companies would not have to spend their efforts any more in managing the infrastructure and upgrading it.

Q1. So, I have had a brief look at your profile. Can you please take me through the motivations behind your career choices till now?
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Your client is in the hospitality industry. They have 2 landmark 5-star hotels in Chennai and Kolkata which have been there established since the last 30-40 years.

After COVID, the hotels have been operating at only 70% capacity utilization. Can you help them by creating a sustainable revenue strategy going forward? Focus on making new use cases
[Please note that I stands for Interviewer and C stands for Candidate] 

C: Conducted CPCC, found out that 70% of the customers were from the Business segment. The drop in Business customers was more than the drop in Leisure customers.

I: Why do you think that may be?

C: Because of the whole remote working model? Travel by business travelers has decreased.

I: Precisely! Meetings are conducted over Zoom now. Given that, can you help the hotel?

C: Sure, please give me a minute to structure my thoughts. I drew a first level structure by dividing the problem into two: Boosting utilization of capacity within existing use cases & defining new use uses. Divided the first bucket further into 3 different types of customers:

Business, Tourists and Locals. The second bucket I divided further into revenue sources: Rooms, Restaurant, Spa, Gyms, Conference Hall etc.

I explored various ideas with each bucket. For example, (First Bucket) Corporate Partnerships, tying up with more tour operators, offering anniversary or birthday packages etc.

(Second Bucket) promoting staycations, opening the spa and the gym to outsiders, movie screenings or other ticketed events at the Conference Hall etc.

I: That is all valid and fine. But can you think something for the business customers specifically? Since their need to travel itself has gone down. A different kind of value proposition maybe.

C: I feel that shared capacity might result in a drop in our brand image. Since this is a luxury hotel.

I: Okay, what else?

C: I tried to explore more options but wasn't able to get to what the recruiter wanted. At each step I was letting him know what I was thinking. As soon as I repeated the point about shared capacity.

I: What exactly do you mean by shared capacity?

C: The hotel could save out on fixed costs by leasing out part of the property to a third party!

I: Correct, in terms of business customers this would mean?

C: A co-working space where the remote part of the office could work.

I: Exactly! Can you craft a value proposition for this offering? Also focus on how you will price it.

C: Did a basic STP analysis.

I: Great, and now pricing?

C: Outlined how we will arrive at value-based pricing based on the incremental change in cashflows to the corporate with which we will share capacity: We should focus on two aspects: fixed cost saved by the business & the value of the increased productivity the employees will deliver due to working in comfortable settings.

I: Sounds good. Now, Aditi can you please deliver an elevator pitch to the client about your proposed solution.

Your client is a manufacturer of Diesel Generator sets. They were pre-dominantly in the industrial space where they were #1, and they’ve recently ventured into the retail space (say for individual big houses, shopping complexes, nursing homes etc.) They are #3 in this industry with only 10% market share. They want to go to #1 in 3-5 years. Help them out.
[Please note that I stands for Interviewer and C stands for Candidate] 

C: Conducted CPCC. Major points were that our sets were priced at Rs 2.2 L while the rest of the market was priced at Rs 2 L. This was because we had a better performance in certain aspects.

Can you please tell me how are we performing better? Which metric is this measured on?

I: Why don't you tell me how one diesel generator set can be better than the other?

C: Latest technology, brand image, longer shelf-life, per liter fuel efficiency.

I: Okay, what else?

C: The number of variants offered, safety, ease of usage & installation.

I: Okay, & what else?

C: If it makes any sound or air pollution, how the generator looks, how compact is it for a residential setting.

I: Okay, what else?

C: (Struggling at this point) Availability of service centers, time taken for the generator to start, repair & maintenance cost, if the repair parts are easily available.

I: (Smiles) Good. We can stop now. So, what should the client do?

C: Started talking about increasing revenue through a loose consumer journey approach. E.g.: Commissioning influencers (electricians) etc.

I: You won't look at the costs?

C: Of course! The consumers are not valuing our product enough to account for the difference of Rs. 20,000. We should try to come down to the Rs 2 Lakh price tag so that we can have a distinct competitive advantage in terms of quality for money.

I: Yes, that is right. Now, you have walked into a lift at Bain, and you see the client standing there. He asks you for a solution. You only have this preliminary discussion worth of information. What would you tell him?

C: (Understood that he was also asking for an elevator pitch. Summarized the case as if I was
pitching to a client)

I: Good.


We had about 3-4 minutes of discussion after this about any questions I had. The Partner then
left the zoom call.

Q1. Tell me something about yourself? Why consulting?
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How will you value a broking / wealth management firm?
[Please note that I stands for Interviewer and C stands for Candidate]

C: As a financial services firm, we will have a number of services offered.

I: Let us consider a broking firm. What business verticals can you consider?

C: Major services offered would include the following:
1. Broking services
2. Debt syndication
3. Commodities
4. Advisory - Investment banking, Portfolio services etc.

I: Good, let us consider broking firm into equities.

C: What is the geography where the broking firm is located?

I: Bombay and has clients with NSE.

C: Do we operate in stock exchange across India?

I: Let us consider clients across India, operating in NSE.

C: What is the client base that we cater to?

I: HNI + General public.

C: When we are considering valuation of a broking firm, we can evaluate the revenue and cost to determine the cash inflows.

Revenue is based on value and % of brokerage. (Value = Price of shares * Quantity of shares * Mix of shares).

I: Which parameters affect the quantity?

C: No. of customers, type of customers (for instance - HNI will trade more than general people), exchanges traded in, we can also look at the geography, penetration, competitors, and the life cycle in stock exchange (gave relevance of 2008 stock crash leading to reduction in number of people).

I: How to evaluate price over a period of time.

C: We can assign a growth rate based on the growth rate of the economy and performance of equities related to it.

I: How will you value these?

C: As these are a series of cash flows, we can take a DCF approach.

I: This is on an ongoing basis. How about if I close the business?

C: We will also consider the terminal value. It can be calculated based on tangible and intangible assets. Tangible assets could include assets of the firm (computers, office etc.) and a broking card (important and holds great value as a license). Intangible assets could include assets - customer data and relations. The team will have access to funds of customers which is valuable.

We are a steel pipe manufacturer, and we are working on a cost transformation program and wish to reduce our cost by Rs. 150 Crs.
[Please note that I stands for Interviewer and C stands for Candidate]

C: What is the time horizon within which we would like to reduce the cost?

I: 12 months.

C: What is the product that we manufacture and whom do we cater to?

I: Large steel pipe and we cater to B2B and large customers.

C: Do we deal in separate product SKUs?

I: We have different diameters and variants depending on the process. But let us have one SKU for now.

C: What would be the location?

I: Hanjar port. We can import raw material from China and export it to the neighboring countries.

C: Would it be safe to assume that our customers are international?

I: Yes.

C: Given we are looking at reducing costs, what would our total current cost be?

I: Rs.6000 Cr. What are the various costs that I can incur?

C: Raw Material (RM), production, distribution, marketing, and support.

I: RM is my major cost, and it accounts for 60% of the overall cost.

C: RM will include purchase cost and inbound transmission.

I: Let us consider purchase cost.

C: Purchase cost = Price / tonne * Quantity

I: What parameters would affect the price?

C: The country from where we purchase - China, South Africa, Indonesia etc. It is a commodity and, thus, prices would fluctuate. We can consider domestic purchase as well. Quality, grade of the RM can also be considered. Concept of EOQ i.e., ordering cost v/s storage cost tradeoff.

I: Good, let us assume we have an order of 100 tonnes, and efficiency is 95%, so we will roughly order 105 tonnes. We have 2 options, order 105 in one go or in 2 parts, what would you recommend and why?

C: As melting steel is costly; it would be better to do so in one go. How much of it would be needed in the start?

I: Let us say 80% is needed in the start.

C: Then it is advisable to order in one go as it will help to reduce storage and transport cost and help to get a bulk discount.

I: Why would I consider ordering 20% in the start?

C: Maybe if it is a new supplier and we are not sure of the quality or the manufacture process with our infrastructure.

I: What if I have options to order, 3/4/5 times.

C: We will consider the EOQ concept and evaluate it independently based on requirement.

I: We can also consider the confidence we have on supplier to build a relationship.

C: Yes.

I: Let us do a quick calculation. If I am able to save 2% of the RM cost, what would the amount be and how am I able to justify the same with my target?

C: Total cost is 6000 cr. RM is 60%, i.e., 3600 Crs and 2% of the same is 72 Crs. Our target is 150 Crs and, thus, we will not be able to achieve it.

Q1. Being from St. Xavier's and Calcutta, why didn't you pursue CA?
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Q2. Tell me something about yourself apart from what's there on your resume.
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You are meeting the head of the logistics department of a company. They are involved in both B2B and B2C sides of the business. Talk about what would be the agenda of the meet and the proposition you would take to transform their logistics business.
[Please note that I stands for Interviewer and C stands for Candidate]

C: Asked me a couple of HR questions including why not CA.

I: Answered and realized he was a CA. He started laughing based on my answer.

C: Followed the CPCC approach.

I: (Stopping in between) Do not follow the conventional case solving models and logically explain the thought process and rationale.

C: What’s the name of company, chief products/ services, their operating cities? Can I also know the current system of logistics:

Internal/External vendors, technology being used for inventory/supply chain/vendor management?

I: The company name is Havells India selling all the current products you’re aware of. They have engagement with multiple outside vendors for delivery. The storage & warehousing is internal, and SAP is the ERP system currently being used by them for all internal purposes.

C: Okay. I have all the information I need. Can I take a minute to analyses the way to go?

The typical supply chain process comprises of the following 4 stages:

Inbound logistics, storage & warehousing, operations, and finally outbound logistics.

If this seems fair, I’d like to explore each stage and discuss the integral parts and deliberate upon the changes/improvements in each stage.

I: Fair enough. Go ahead but be very brief as we don’t have a lot of time. Only focus on the key element in each stage.

C: Sure. Under Inbound logistics, the key component is the number of vendors.

My suggestion here is to have limited but integral vendors with the aim of solidifying long term relationships with the same. This will give them confidence and give us higher bargaining power to cut costs via economies of scale.

C: Under storage & warehousing, and operations, I suggest having an end-to-end application linked to our ERP system for end-to-end internal tracking of orders, dispatches and an overall pulse over inventory.

If time permits, I would like to also talk about the current inventory system we follow.

I: No, let’s ignore that for now.

C: Under outbound logistics, again the number of vendors is important. Also, I’d also like to look at the reverse logistics aspect since electronic goods tend to have a high return percentage, hence would also explore this angle.

I: (Starts laughing and asks me to hold on). At this point, it seems you’re blabbering on and on. Take a minute and tell me what the three most important aspects in this entire process are.

C: (After a minute) The three most important part of this process would be the technology, employees and the current system of processes and operations.

C: Do you have any feedback for me?

I: I think you have a lot of ideas and despite the lack of industry knowledge, you were able to come up with good ideas. The three important aspects were correct, but you missed out on cost. In logistics, cost would be extremely crucial. For future cases, try to be a little more structured. That’s it.

Client is a steel manufacturing company. It was acquired as part of the bankruptcy process as a bankruptcy asset.

They need your help in turning them around. Please advise.
[Please note that I stands for Interviewer and C stands for Candidate] 

C: Who bought the company?

I: The new owner, details of whom are not relevant.

C: What are their targets?

I: They paid 1 billion dollars for the company and took a loan for the same. They need to pay back the loan plus interest in the next 3-4 years.

C: Where does the company have its operations?

I: East India.

C: How many plants?

I: 1 plant.

C: What is the current performance of the company?

I: Negative 5% EBITDA.

C: Who are their key customers? I imagine them being in the B2B space.

I: Yes.

C: Where are they in the value chain? Do they have mines for raw materials and then manufacture steel? How do they sell it?

I: They do not have mines for the raw material. They procure the raw material and then manufacture steel. Then the steel is manufactured into a finished product and then sold.

C: And selling is via sales reps?

I: Yes.

C: Got it. I will just take a couple of seconds here to gather my thoughts.

C: Alright, since we need to pay back our loan, we need to improve our profits. In order to do that we can either increase our revenues or look at reducing costs. Is there a particular bucket you would want me to look at first?

I: We will look at both but let’s start with costs.

C: With costs, I would look at the value chain and try to bring down costs at each stage.

I: Fair enough.

C: To start with there will be procurement costs, then processing, then distribution, sales and marketing and after sales costs.

I: Why after sales costs?

C: To service any requirements the customers have post sales.

I: The product in our case is a “sariya” (steel rod). There won’t be any after-sales costs. Chuck that.

I: What other costs would you look at?

C: I think I missed transportation and logistics costs.

I: Right.

I: Let’s move ahead. Pick any one cost bucket and tell me ways to reduce costs.

C: I would look at procurement costs first.

I: Sure. So, our client procures two raw materials. One is iron ore, and the other is coal. Coal is imported from Australia and Iron ore is procured from Indian mines. Take any one raw material and let’s begin.

C: I’ll look at Coal first since we are procuring it from Australia.

I: Ok. What are the 3-4 levers you would focus on in order to reduce costs?

C: Firstly, I would look at why are we importing this from Australia and not from any other mine in India.

I: This is not available in India.

C: Alright, so why Australia particularly. There would be countries which are closer to India from where we can procure. This would reduce transportation costs.

I: Fair enough, which other countries would you suggest?

C: I would look at other Southeast Asian countries or African countries. Probably prioritize Asian countries due to proximity.

I: Any country in particular? We know Australia is rich in minerals, but which Asian country has such mineral resources? You would have heard about this in the news some days back.

C: I haven’t been following the news recently but based on my previous understanding: Philippines, Malaysia and Indonesia come to mind.

I: Yup, Indonesia is what I was looking for. Carry on.

C: The next lever I would look at is the number of orders that we are making.

I: Right. So, we currently order 16 shipments of 30,000 tons each. So, the total requirement is for 480,000 tons a year.

C: How is the coal consumption pattern? I am asking this because based on this we could look at either increasing / decreasing the number of orders depending on shipment costs and inventory storage costs.

I: Coal is consumed continuously. No trend as such. But why do you say by reducing the number of orders we can save on costs?

C: The decision on optimum number of orders depends on two types of costs: inventory storage costs and ordering costs / shipment costs.

I: What are ordering costs? There is nothing called ordering costs.

C: By ordering costs I meant to place an order someone would have to sit and place it manually. In addition to it within ordering costs I am also including the shipping costs.

I: Okay, the costs for physically placing the order are negligible. Let’s focus on shipping costs.

C: Alright. With lower number of orders, the ships will have to make less trips. Hence in essence we would be saving on the fuel costs for the additional trips.

I: How? I still don’t get it.

C: So, let’s say that we earlier had 16 trips with 30,000 tones. Now we will have 8 trips with 60,000 tones being carried.

I: Yes, so how will you save on costs?

C: So, less trips would mean less money paid overall to the logistics provider.

I: Siddharth, you are fudging this. Don’t give me high level answers. You should be able to defend your point when challenged, so think hard and let me know how we will save costs.

C: Probably with bigger shipments we can rent out space in bigger vessels where the costs would be shared with other manufacturers as well.

I: Okay, let’s stop. I was thinking that you would mention we would have less costs per tonne as bigger ships have better fuel efficiency as compared to smaller ships. It is like the car and truck case where trucks are more efficient than cars in transporting. Let’s continue.

C: Got it. Next, we could look at the price per tonne being charged by the supplier. We could look at entering in long-term contracts to reduce prices.

I: Please elaborate.

C: So currently it might be the case that we are ordering coal on a per-year basis. Since the company owners now have a target timeline in mind, we could look at entering in a contract for the next 3-4 years with our supplier for coal.

Since we would be guaranteeing the demand for coal for the next 3 years to the supplier, there will be less risk for the supplier in terms of demand uncertainty and hence he would be able to give us a better rate per tonne of coal.

I: Makes sense. Let’s move onto the revenues now. How can we increase revenues?

C: To increase revenues, I would look at Price and volumes both. I will start off with ways to
increase volumes.

C: Before starting though, I just wanted to understand who our current customers are.

I: Contractors of NHAI.

C: Alright. So, we are catering only to the public sector. Any reason for this?

I: The size of the pie is huge and so it seems attractive.

C: Ok but have we investigated the private sector? Why aren’t we selling to them?

I: Not yet. That is a fair point, and we should be doing that.

C: Alright. So, in terms of our current customers, what market share do we have?

I: 2-3%.

C: Ok. So now I will look at why do we have a low share here and then think of ways to improve it.

I: Got it. But to make the discussion more pointed, tell me whether we should focus on: the government sector or private sector?

C: We currently have a 2-3% share in the public sector. I believe one of the reasons could be that we have a bad image in the market due to the fact that we are a bankruptcy asset.

My understanding of the public sector is that they would need to have dealings with a well-known and credible brand because at the end of the day they are answerable to the public. In addition to this, I believe the ordering cycle in the public sector is larger because they go through the tendering process which is very lengthy and places high thresholds on the quality of products.

The private sector on the other hand will have shorter buying cycles and the quality restrictions or levels will be lower as at the end of the day they would need to minimize their construction costs. Hence, I believe the private sector would be a better segment for our client.

Client is a ropes and nets manufacturer. Has been seeing growth rates of 3-4% and wants to target 15%. Help them.
[Please note that I stands for Interviewer and C stands for Candidate] 

C: How long have they been in business?

I: Decades.

C: What are the different products that they have?

I: Fishing nets and other sorts of ropes. For this case let’s focus only on fishing nets.

C: What market share do they have? Which markets?

I: 70%. Indian market only.

C: What sort of customers do they cater to? All types of fishermen?

I: Yes, they have a whole range of fishing nets and hence they sell to both small and big fisherman.

C: What are the timelines they are looking at for the 15% growth?

I: Next 3 years.

C: I’ll just take a couple of moments here to come up with a structure. To increase revenues, I’ll first look at trying to increase our market share within the Indian market and with the same set of products.

Then I’ll look at what other markets we could expand to. Finally, I’ll also look at what new products we can launch in order to increase revenues.

I: Fair enough. Let’s proceed.

C: To increase existing revenues I’ll look at ways to increase both prices as well as volumes. I’ll start with prices. Currently what sort of a pricing strategy do we follow?

I: We have a product which is of higher quality and hence we can charge a 5% price premium.

C: Got it. Since we already have a price premium, it seems tough to increase prices as we already have a 70% share. I’ll move on to strategies for increasing volumes.

I: Fair enough.

C: To increase volumes, I would first like to know that the 30% market that is occupied by the competitors, who are the sort of customers and who are the key players?

I: The other players are local players and consequently the customers are smaller scale fishermen.

C: So, it seems that for the smaller fishermen segment, the value proposition of local players is more attractive. That could be because they might have a cheaper product, or they might just be more accessible in that region, or it could just be an issue with brand awareness.

To tackle these issues, we could partner with more distributors/retailers to increase our reach, provide better trade margins to our channel partners, introduce a new product line for smaller fishermen and charge a lower price and finally rollout promotions specifically for these sorts of customers to improve awareness.

I: Okay. What else?

C: Another way to increase volumes is focusing on the frequency of purchase. Since you mentioned that ours is a high-quality product, I would assume that the lifetime of a net would be high.

To increase frequency, we could focus on modifying the quality of nets to have a shorter lifetime.

I: Wouldn’t this be exactly opposite of our value proposition leading to customers shifting to a different brand?

C: Not exactly, since we have been in the business for decades and have a 70% market share, we would have a huge chunk of brand loyal customers and hence shifting to a different brand does not seem likely.

I: Fair enough. What else?

C: Apart from the Indian market, we could look at entering other countries.

I: Before evaluating that, let’s estimate the size of the Indian market.

C: Okay. There would be two markets for fishing nets: coastal and Inland fishing. I’ll estimate the size of the coastal market and then add a certain percentage for inland fishing.

I: Lets focus only on the coastal market.

C: Alright, I’ll start off with the population of India. Considering 1.2 billion people, I’ll only consider half the population since we have a coast only in the southern part of India.

So, we now have 0.6 billion people. To estimate the coastal population, I’ll consider the state of Maharashtra. In Maharashtra we have 7 out of the 35 districts on the coast so approximately 20% of the population lives on the coast. Accordingly, we now have 0.6*0.2 = 0.12 billion people.

Dividing by 4 for the number of families, we have 0.03 billion families or 30 million families. Out of these coastal families about 50% would be involved in agriculture and about 50% of them would be involved in fishing which gives the total number of families as 7.5 million. Each family will need on average 2 fishing nets and hence 15 million nets is the total demand.

Factoring for the life of a net and considering 5 years as the average life, we have 3 million nets per year. Considering 1000 Rs as the average price, we have sales of 3 billion or 300 crore.

I: Right, this is very close to the actual amount. One last question: do you think the client can achieve 15% growth?

C: Since the client currently has 3-4% growth, even after following the above-mentioned strategies, it will be very tough to achieve this sort of growth in the Indian market.

If we expand to other geographies, then it’s a possibility but not in the Indian market alone.