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Case Practicing

Join our Case Practicing series to analyze a case study on a bubble gum manufacturer's declining margin. Learn basic steps for case solving, feedback giving, and key skills. Explore profitability issues and solutions through a structured approach. Improve your consulting skills today!

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Case Practicing

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  1. Case Practicing Duke APD Consulting Club

  2. Meeting Agenda • Introduction to Case Practicing series, and our plan • Sample Case • Basic steps for case solving • How do give feedback • Skills for today: • Mental math • Framework No.1 • Case practice

  3. Meeting Agenda • Introduction to Case Practicing series, and our plan • Sample Case • Basic steps for case solving • How do give feedback • Skills for today: • Mental math • Framework No.1 • Case practice

  4. Introduction to Case Practice series • Number of meetings: 6 • Goal for 6 meetings: go over Level 1 items in the spreadsheet, and prepare for basic case solving skills

  5. Introduction to Case Practice series • Items to cover: • Mental math, • Market size estimation, • Case interview frameworks, • Basic case interview skills, • Case practice with peers

  6. Meeting Agenda • Introduction to Case Practicing series, and our plan • Sample Case • Basic steps for case solving • How do give feedback • Skills for today: • Mental math • Framework No.1 • Case practice

  7. Sample case Bubble Gum Manufacturer You are a consultant working for a bubble gum manufacturer. The CEO of the gum manufacturing company is concerned because his company is experiencing declining margin. My questions to you are: 1, the reasons behind declining profitability; 2, your suggestions for improving profitability. Wharton Consulting Casebook 2007-2008 Edition

  8. Steps to solve a case • Step one: Summarize the case and clarify the objectives Bubble Gum Manufacturer You are a consultant working for a bubble gum manufacturer. The CEO of the gum manufacturing company is concerned because his company is experiencing declining margin. My questions to you are: 1, the reasons behind declining profitability; 2, your suggestions for improving profitability.

  9. Steps to solve a case • Step two: Make hypothesis and develop “issue trees” Hypothesis: This is a profitability problem, the company needs to reduce their product cost Issue tree: typical profitability structure • Revenue • Price per unit • The number of unit sold • Cost • Fixed cost • Variable cost

  10. Steps to solve a case • Step three: drill down to each topic • Revenue • Price per unit-----------------------------------No info • The number of unit sold---------------------Has been increased • Cost • Fixed cost----------------------------------------No info • Variable cost------------------------------------Components of the cost

  11. Steps to solve a case • Step three: drill down to each topic Variable cost: • Components of the cost: • Cost of goods sold (COGS): ------------------------------------------No change gum, sugar, flavor, smell, color… • Labor-----------------------------------------------------------------------No info • Selling, General and Administrative expenses (SG&A)------------No info ! Product mix: There are some more profitable products and less profitable products. If the selling of a low profit product counting more, the profit margin will decline.

  12. Steps to solve a case • Variable cost: • Two types of products: flavored and flavorless gum • Both products are sold at the same price point • Composition products: • Flavored gum: gum, sugar, color dye, and flavor • Flavorless gum: gum, sugar, color dye • Note that the gum, sugar and color day raw materials are same in size for each of the two products. Conclusion for problem1: Because the increasing sales of the flavored gum, the profit margin declined despite of an increasing total sales.

  13. Steps to solve a case 2, suggestions for improve profitability: • Reduce the cost: negotiate with raw material providers (esp. flavor) • Increase the revenue: the price of flavored gum • …

  14. Steps to solve a case • Step four: wrap up the analysis 1, After our analysis on this case, we think the main reason for the declining profitability is the increasing in the sales of flavored gum, which has the same price with the flavorless gum while cost more to produce. 2, Our suggestions to improve the profitability are: • Reduce the raw material cost by negotiating with raw material provider • Or try lifting the price of the flavored gum • …

  15. Basic steps for case solving • First five steps: • Summarize the question • Verify the objective(s) • Ask clarifying questions • Label the case and lay out your structure • State your hypothesis • Basic steps for case solving: • Summarize the case and clarify the objectives • Make hypothesis and develop issue tree • Drill down on each topic • Summarize the results case in point 8th edition, 4: IVY CASE SYSTEM

  16. How to give a feedback • Time: usually 20 to 30 min. It can be extended for beginners • Track down the partners performance during the practicing, where they did good and where they got stuck • Summarize their strong points and weak points

  17. Meeting Agenda • Introduction to Case Practicing series, and our plan • Sample Case • Basic steps for case solving • How do give feedback • Skills for today: • Mental math • Framework No.1 • Case practice

  18. Skills for today • Tips for mental math: • Round up or round down: keep it in mind, you don’t have to be precise, just be accuracy enough • Be sensitive to some relations: like 1/4=0.25, 1/6= 0.16, 1/7=0.14 or 0.15, 1/8=0.125, 1/9=0.1 • Break it down to several easier parts: 10/6 * 24, 24*25 • To avoid unnecessary calculation: 25*40,000 and 65*20,000, which is bigger • Practice more: www.caseinterviewmath.com

  19. Skills for today • Mental math practice: (1 min, error should be controlled under 20%) 12% of 9,956 = 579 * 123,140,408 = 425,821 + 90,597,756 = 1,364 * 194 = 119,181,400 - 55,981,641 = 53,165,916 / 5,463 = 7,415 * 875 = 950,372,836 / 26,852 =

  20. Skills for today • Framework 1: profitability Case interview secretes, by Victor Cheng

  21. Meeting Agenda • Introduction to Case Practicing series, and our plan • Sample Case • Basic steps for case solving • How do give feedback • Skills for today: • Mental math • Framework No.1 • Case practice

  22. Case Practicing

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