Bain Case Interview Practice #1: Coffee Shop Startup
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- เผยแพร่เมื่อ 6 มิ.ย. 2020
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This Bain case interview practice case is a market entry case, one of the most common types of cases for Bain first-round interviews. To pass your consulting interviews and land a consulting job offer, it is critical that you practice and master case interviews.
To solve or pass this case, you will need to create a consulting framework to assess the market attractiveness, strength of competitors, the client's capabilities, and the expected profitability. Afterwards, you will deliver a case recommendation that summarizes your analysis and key takeaways from the case interview.
This case is taken from Bain's case interview library, which can be found at: www.bain.com/careers/intervie...
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I would also do a sense check in the end to make sure the number makes sense and if we can even have capacity to serve 205k cups which translates to 560 cups a day which seems inflated. So it would make sense to add in some complementary products like cakes and pies or whatever to break even or reduce the costs and increase the price etc.
I like the extra tip about estimating the market share required and sense checking if that's achievable in a year or not - good business sense. However I think it comes to a required approx 35% and not 3% probably begging the question if the up front capital can be spread out over 5 or 10 years to make break even annually more possible..
Great video!
Great content!
Nice jobs,thanks share
At 07:16, how can 9 million cups for 2 pounds per cup be equal to 18 billions (BILLIONS). Might need fore coffee or three zeros just got added at the end?
superb
Why estimate the percentage that drinks coffee when the assumption is already " assume that each person drinks 1 cup per day" ?
I think the assumption is that "coffee drinkers" each drink 1 cup/ day; however, not everyone in the 100,000 population is a "coffee drinker".
But the case tells us that they drink an average of 1 cup per day why would we need to calculate that?
Really feel like the sample answers on the Bain website are way too simple...
Hi. Just one quick clarification, your calculation for the coffee market size is 18B but it should be 18M, correct?
Yes, that's right! Small typo there :)
About your coffee market sizing equation. Is it better if I breakdown the population by age demographic (let's say per 15 years) with each age group has their own % that drinks coffee (so it's not general 50%)?
Yes, you can definitely segment by age before estimating the percentage that drinks coffee. It all depends on how granular or specific you want your estimation to be.
If you are segmenting by age, make sure there is a reason that you are doing so. In this example, you'd have to believe that coffee consumption varies by age, which makes sense to some degree.
Thanks for your reply. I can assume that a certain age group drinks more coffee than the others, for example very young and old age tend to drink less than working age group.
However, I'm curious. Is it NECESSARY to go that granular? Will it give extra point for me or instead getting myself into trouble?
So, this is where market sizing / estimation questions become more of an art than science. You'll have to use your own judgment to decide the right level of granularity. Ideally you want to give an answer that is based on a structured, well-thought out method. However, your approach should also be realistic and reasonable.
If you feel that your approach is too simple or too straight forward, you can add another dimension or segmentation to make it more specific. An approach that is too simple or too vague may not best showcase your analytical capabilities.
However, if your approach is overly complicated with too many steps. You may be shooting yourself in the foot by making the math and calculations difficult for yourself. Adding an extra step or dimension in this case will not give you extra points.
Hope this helps!
Shouldn't the Cost of Opening the Shop be amortized over a period of time? e.g. 250k over 10 yrs (+ some financial cost). Then, annual fixed costs would be 163k + 25k (+2.5k).
Sounds weird to amortize the entire investment in just 1 year for the break even calculation. Also, break even in Yr2 would be significantly different...
I thought the same and totally agree with this. The cost of opening is investing in long-term assets that generally are amortized over a number of years depending on the asset type.
It is explicitly stated that the population of 100k people drinks 1 cup of coffee on average, meaning this average includes both coffee drinkers and non-coffee drinkers. So the claculation you proceed with assuming that only 50% of the 100k drink 1 cup per day doesn't make much sense unfortunately, and neither does Bain's.
this is a problem for a strategists who never be in a business. calculating business size as easy as doing assumtion here and assumption there. based on the based limited logic. businessman never do that. defining market size must be real and accurate
Excellent video!