LOMS-Case-1-Moving-Ex-1-Transcript

Case1–Moving–Ex1–TranscriptThefollowingcaseisamarketentrycasethatwillinvolvethebusinesssituationframework.AndwhatIwantyoutonoticeisthisparticularcasewasafairlygoodoneintermsofthecandidate’sperformance,andwhatIwantyoutopayattentiontoishowthecandidateisassessingthebusinesssituationbothquantitativelyaswellasqualitativelyatthesametime.Sothey’reaskingbigpicturequestionsaswellasdetailedquestionssimultaneously.Andthat’sactuallyveryimportantinabusinesssituationcase.Youtypicallycan’tsolvethecasepurelyonthenumbers,andyoutypicallycan’tsolvethecasejustbyaskingverygeneralconceptualquestionswithoutanynumbers.Youreallydohavetodoboth.AndthereasonImentionedthisinadvance,inthiscase,isIfindalotofcandidateshavetroubledoingbothquantitativeandqualitativeatthesametime.Sopleasepayattentiontothatasweenterthiscase,andalsotheonethingthatthiscandidateprobablycoulddo,alittlebitbetterjobofdoing,isasthepersonwastransitioningbetweenthevariousanalyses,theycouldhavedoneaslightlybetterjobintermsofsynthesizingtheworkingconclusionandrefiningthehypothesisaswewentalong.Inmycommentaryyou’llnoticethatIsometimesrestatedthehypothesisorrestatedthesynthesisinabetterway,soIdidwanttomakesurethatyoupayattentiontothat.Thanksandlet’sgoaheadandgetstartedwiththiscase.Interviewer:Thiscompanythatwe’reworkingwith,theclient,isacompanythatisinthegarbagehaulingindustry.They’rea4$billionayearcompany,andthecompanyprimarilyworkedwithindustrialandcommercialbuildings.Sothosebig,verylargetrashdumpstersbehindthebuildingsiswhattheywouldcomeforeverydayandpickthemupanddumpitintothetruckandbasicallyhaulthattrashaway.00:02:00Theyareconsideringstartinganewbusiness,anewdivisionofcompany,andthey’rethinkingofenteringthemovingindustry.Theirideaisthatifyoutakeatrashdumpster,youmakeitbigger,youputapadlockonit,youcouldputfurnishingsinsideit,boxes,andmoveitfrompointAtopointB,whichtherestoftheindustrywouldcallmoving.Theythinkofitasjustmovingstuff,theyareverygoodatmovingstuff,iskindofwhattheythink.Sothey’veaskedyoutocomehelpthemfigureoutwhetherthiswouldbeagoodideaornotandtofigureout–ifitisagoodidea–why,andifthereareanyissuesthatareofconcern,whatthoseissuesmightbe.Candidate:Okay.JusttoasksomebackgroundquestionsbeforeIgetstarted.Interviewer:Sure.Candidate:Thiscompanyisbasicallyplanningtomovingtomoving,likethey’regoingtomoveanything,butit’snotnecessarilygarbage.CopyrightVictorChengAllRightsReservedPage1of20Case1–Moving–Ex1–TranscriptInterviewer:Correct.Candidate:Orisitthey’regoingtobemovinggarbageinlargerquantities?Interviewer:No,thiswouldbethingspeoplewanttokeep.Soboxesofgoods,furnishings,theirideaistotakelargesteelcontainers,probablyclosetothesizeofasmalltruck,andmovethosefromonepointtoanother,asanewbusiness.Candidate:Andtheirexistingbusinessisjusttotakethegarbage,moveitawayanddisposeandgetridofit.Interviewer:Correct.Candidate:Okay.DoyoumindifItakeaminutetostructuremythoughts?Interviewer:Sure,noproblem.Candidate:Okay,soIthinkinordertounderstandwhetherthiswouldbeagoodideaornot,weneedtolookatfourareas:customers,andtheproduct,thecompanyitself,andthecompetition.Interviewer:Okay.Candidate:So,I’dliketostartwithcustomers.Iunderstandthatcurrentlythey’reservingtheindustrialandcommercialsectors.Iftheydecidetomove,goaheadwiththisnewproject,wouldtheybeonlylookingatindustrialandcommercialcustomers,ordotheywanttoexpandintoothercustomersegmentsaswell?Interviewer:Actuallytheywerethinkingofmakingamoveintotheresidentialmovingmarket.Candidate:Okay,sothey’regoingtohaveaprojectintheresidentialmovingmarket?Interviewer:Correct.00:04:00Candidate:Okay,dowehaveanyinformationabouttheresidentialmovingmarket?Inparticular,whatarethesegmentsandgrowthratesforeachsegment?Interviewer:Let’ssee,wedohavesomeinformationonthat.Therearethreemajorsegmentsinthemarketplace.Thereiswhatwecallthefullservicesegmentwhichistypicallyamovingtruckandtwomoverswillcomeandpackeverythingup,putitinthetruck,driveittothenewhomeorlocation,unpackit–wecallthatfullservice.Thatcurrentlyrepresents20percentofthemarket.Andtheothersegmentwecalldoityourselfmoverswhereyouprovideyourownlabor,andCopyrightVictorChengAllRightsReservedPage2of20Case1–Moving–Ex1–TranscriptyousimplyrentthetrucklikeaU-Haultruck,andthatcomprisestodayabout80percentofthemarket.Candidate:Okay.Itmeansthatdoityourselfisthelargermarket.Dowehaveanyinformationabouttheprofitabilityofeachofthesesegments,whatiseachcustomersegmentwillingtopayforthisservice?Interviewer:Sointermsofpricing,thetypicalpricingforatruckrunsaslittleassayprobably$100to$200.Andforafullservicemove,ifit’slocal,itmightbe$1,000to$1,500.Ifit’slongdistanceitmightbeupfrom$5,000to$10,000dependingonthisdistance.Candidate:Okay.Alright,thatsoundsgood.Whatdistributionchannelsdoeachsegmentprefer?Interviewer:Thechannelsarebothsimilar,mostofthecustomerswilltypicallydosomeresearchonlineorthroughtheyellowpages,that’sfairlypopular.Theywillgetinformationviawordofmouth,butgenerallytheactualtransactiontakesplace,inthisdoityourselfsegment,theywillgotoaphysicallocationtogorentthetruck,andusingaretailpointofpresence,retailtypefacility.Andthenfo