BCG Interactive Case Interview Practice #1: Airline Profitability
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- čas přidán 30. 05. 2020
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This BCG case interview is a profitability case, one of the most common types of cases in BCG first-round interviews. To pass your consulting interview and land a consulting job offer, it is critical that you practice and master case interviews.
To successfully solve or pass this case interview, you will need to create a framework to identify the key drivers of profitability, both on the revenue-side and cost-side. Afterwards, you will need to determine which drivers have the greatest impact on profitability. Finally, you will brainstorm ideas to improve the selected driver. Once you've developed an impactful and feasible strategy, you will deliver a case recommendation.
This case is from BCG's interactive case interview library, which can be found at: www.bcg.com/Interactives/ICL/
Looking to learn case interviews quickly? Check out our comprehensive case interview course: hackingthecaseinterview.thinkific.com/courses/consulting
The fact that I'm picking the same exact answers as you for the same reasons is giving me a lot of joy. I CAN DOOO IT!!!! 🔥🔥🔥
Very helpful, articulate, and clear explanations. I love following along with your thought process, makes concepts easy to understand!
HI! I came across your channel a while ago and I am so glad that I did. Your videos are very informative and they have been helping me a lot during my case interview preparation. I can't wait to see the upcoming videos you have planned. Thank you so much for this!
Glad you found it helpful!
This is so useful! I did this case in the library before and had a lot of questions and uncertainties. Your video helped me understand them better.
Thanks Kelly!
Thank you for uploading this, it was a very fun experience solving the case together.
hey! would you have the link for accessing this BCG case library? thanks.
It was full of insights and valuable strategies to structure the approach. This one kind of teaches how to think step-by-step and think logically, and the importance of moving towards the solution with provided data at hand. Thanks a lot, greetings from Turkey!
Thanks for the kind comment!
Truly optimistic & root cause evolved video! Expecting more at near future....
This has been so helpful
Glad you found it helpful!
Amazing, thank you! Just a quick question: at 18:11 doesn't it make more sense to look first at capacity utilization and then to price discounts..? Because if the flights are full all the time it would be hard to sell any further "quantity" (service) no? :)
well, you're right. if he had chosen to check the capacity util first he could skip a step by not bothering to further increase number of tix sold
Where can I find this on their website, I do not see the case library
This is awesome! Very clear and very articulate.
One question on your answer at 11:06, agree and appreciate that current data is better than historical data in most cases. However, in this case, I'd imagine reviewing historical price increases and impact to demand would give you a better understand pricing impacts. To me, this is more contextually relevant to the data point you should be seeking. Keen to hear your thoughts, thanks!
Your point definitely makes sense! I can see merits for both answers. I wouldn't worry too much about this decision point since it was so minor in the context of the entire case. As long as you have reasons to support your decision, I think you can go with either answer in an actual interview.
If the competitors drop prices to gain volumes in tickets, wouldn't the elasticity relationship of price and demand change (lesser negative slope on price-demand plot), should we then decrease price like others or do we then have the incentive to keep the price stable to lose lesser in demand drop than gain in prices, because of lesser elasticity?
Amazing , Thank you! But one dbt that at 27:11 why cant we focus on optimizing the fuel usage despite knowing that fuel prices are bound to increase anyways so what's the point of going with option 2?
I follow your math at 13:11 and saw that the test marked "13.33" correct, but how does that "maintain its profits?" Wondering why the correct answer is not "16.666" since sales would need to increase to 1750 to maintain the 20% profit margin. Any input would be greatly appreciated.
Cause the question is asking for maintaining "profits" not the margin. Got me tricked up as well. I suppose it'd be good "insight" to bring up in the interview for brownie points.
Got tricked too
agree - usually the objective would be to achieve the same margin rate %. rarely would the objective be to achieve the same margin $ number
13:10 I'm confused as to how and why the "average ticket price" translates to "sales".. isn't sales/revenue essentially price*quantity? don't we need to solve for quantity also then?
Fixing the numbers of ticket, it's actually the same
Can someone explain what the MECI thing is about? I keep hearing it in these videos but haven’t heard the explanation.
MECE = Mutually Exclusive Collectively Exhaustive.
Example: Splitting Population into age groups (0-20, 20-40, 40-60, 60-80 under assumption max age is 80) so that you have summarized the whole population in non-overlapping age categories.
Thanks a lot! , Have a BCG Test today , the one thing I want to ask is at 27:11 why cant option 1 be true like since fuel prices have increased so it makes sense to optimize its usage ryt rather than negotiating for fuel prices , if they have to increase anyways?
How did it go? Was it similar to these on the channel? I´m doing mine today
I'm puzzled as to why we are assuming that our client is incurring losses. Previously, it had a profit of $300 million. With an increase in fuel costs by $200 million but a decrease in non-fuel costs by up to $80 million, it would still realize a profit of $180 million. This even leaves room to potentially reduce prices, further accelerating the process of edging out other market players.🤔🤔
Why is it 200/1500 and not 200/1700 ? Any help will be greatly appreciated
Because 1500 is the initial cost - we are trying to find out by how much % the price needs to increase (from 1500 to 1700).
If the fence is two metres high and the house is four metres high, then the fence is half as high as the house.
18:15 this is where i dropped a dislike, im very sure that discussing about price increase and suddenly going for price discounts is a wrong thing to do. In the next question you hit a dead end by choosing discount on the previous question where you should've chose option 3, i was just hoping that you could clarify that you made it wrong and re-explain how option 3 in the previous is better instead of trying to defend your wrong answer
Can someone explain me why in min 12:28 he says the cost ful is 400 million? Is this a assumption he is making?
Hi Juliana, the total cost will be 1200. So fuel cost should be half of non-fuel cost which should be 800, and half of 800 is 400 and when you add 800+400 it gives 1200. Hope I was able to explain. Old cost= 800 (Non fuel cost) +400 (Fuel cost) = 1200
@@celldna8866 But how did you get the 800?
@@aflow97 the point is that we know the total cost (1200) and we also know from the data given that we have fuel costs and non fuel costs. The only option to have a total cost of 1200 AND to have fuel cost half of non fuel is if non-fuel cost are 800 and fuel cost are 400.
View it like the following equation: 1200 = F (fuel cost) + NF (non fuel cost); F = NF/2
1200 = NF/2 + NF --> if you solve this you get 1200 = 3NF/2 --> 2400 = 3NF --> NF= 800
Hope this clears everything :)
at about 18th minute, I felt disappointed. Your option 1 was wrong and that's why you lead a dead end. Moving towards promotions directly does not make sense unless you see the full picture.
Same thing goes for cargo as well. How do you find it random in an airline business? In the beginning we already show that primary revenue is tickets BUT there are other sources of income as well. So why completely ignore it?
@@oz4lm4mm4dli I agree with your first comment, but when you refer to entering other business areas such as cargo I think that the reason for not choosing that option was right. Before entering a completely new area of which we don't have any data, and that will for sure, lead to new revenues (what's the increase? will it be enough to overcome costs?) but to other costs as well (what type of costs? how much will the total cost increase?), not considering the competition there and the market characteristics, it is best to stick with what we know and to explore every option fully.