Case Study-Beispiel Oil, Retail: Ölindustrie (Gas Station)
Die folgenden englische Case Study ist ein Projektbeispiele bzw. ein möglicher Interview Case aus dem Bereich Retail in der Ölindustrie.
Im Vorstellungsgespräch verlangen alle großen Management Beratungen mindestens ein Case Interview auf Englisch. Mit einer englischen Case Study der Case Interview Plattform PrepLounge.com könnt ihr euch gezielt darauf vorbereiten.
The case study: "Your objective today is to estimate the number of gas stations in the city of Paris. For that, please first describe 2 different estimation strategies, then choose one of them and do the estimate. The consulting case topics you have to cover are market sizing and market entry."
There are a number of ways to tackle this estimation and to a certain degree they may be governed by the amount of information that the interviewer is prepared to give away (in this case not much). A good recommendation for any estimation question however is to choose quantities that may be easily estimated and “sanity checked” (verified with another approach).
The following framework/structure would be a good approach for the problem at hand: Strategies - Selection - Calculation
Suggestion: You should share the structure with the interviewee after the introduction of the case (after the discussion of the problem definition and a quick brainstorming of the candidate).
Information, that can be shared with the interviewee on his/her inquiry:
- Offer: this strategy is the more direct one of the two. We will estimate the offer of gas stations in Paris by thinking about the usual availability of gas stations in a big city. We can thus assume that there is more or less on gas station per block in Paris (a block being for example an area of 1 km²). By estimating the total surface of Paris we can then come to a rough estimate of how many gas stations there are in Paris.
- Demand: this strategy builds on the demand of gas in Paris. The demand will be proportional to the number of vehicles in the city which in turn is proportional to the number of inhabitants. After calculating the whole demand of the city, we need to estimate the demand that one single gas station can serve. By dividing the two we will find approximately how many stations there are in Paris.
As discussed at the beginning, the second strategy will be chosen as it is more representative of the reality (gas stations are built as the market demands it).
The first approach is also very inaccurate as the population density of a block can vary significantly, demanding more or less gas stations per block as a consequence.
Now the amount of gas stations should be calculated.
First we will calculate the left side of the tree, the total city demand per day. The number of inhabitants in Paris is about 10 million. We can suppose that for every 5 people there is a car (as people less than 18 have no car at all and a lot of people use public transportation in Paris).
Then we have 2 million cars in Paris. There are also (not shown in the tree above for simplicity’s sake) commercial vehicles like trucks and company cars. Let’s say there are 4 times less of those vehicles than there are cars. Then the total number of vehicles is 2.5 million.
To estimate the consumption per vehicle, let’s assume that cars have tanks of 50 liters and replenish them every 10 days, that is, a consumption of 5 liters of fuel per day. Commercial vehicles are almost always on the road and consume up to 5 times more.
By making a weighted average of the two vehicle types we have an "Ø consumption = 20% * 25 liters + 80% * 5 liters = 9 liters/car
That gives us a daily city demand of 9 liters/car * 2,5 m cars = 22.5 m liters
Now, to estimate the right side of the tree, let us first assume that an average gas station has about 5 pumps. Each pump serves about 12 cars per hour (one every 5 min) in rush hours and 5 in normal hours. Assuming a gas station is open for 10 hours per day, of which 4 are rush hours, we have 78 vehicles being served per pump per day (4 * 12 + 6 * 5). That gives us 390 vehicles served per gas station per day. Let us consider it 400 for simplicity’s sake.
Assume that, every time they go to the gas station, normal vehicles buy about 50 liters and commercial vehicles (some of them trucks) about 100.
This gives us an average of = 80% * 50 Liter + 20% * 100 Liter = 60 Liter bought per vehicle.
The demand served by one gas station per day is then "60(liters/car)* 400(cars/day+gas station) = 24,000(liters/day+gas station)
The last step is then very simple and gives us = 22.5m(liters/day) / 24,000(liters/day+gas station) = 937.5 gas stations in Paris.
Case Study Englisch – Part 2
After the first part of the case is finished, the interviewer should then ask the second question: Suppose a friend of yours wants to open a gas station in Paris. What aspects should he consider?
This question opens a general discussion about the attractiveness of an industry or a specific business, in this case a gas station. A good response to this question should focus on the attractiveness of the industry in general terms as well as in the specific location at hand – the city of Paris:
- What do the margins look like? Hypothesis: the margins in the gas station industry are generally low due to the open competition between gas stations.
- What is the intensity of competition? Hypothesis: high as gasoline is a commoditized good and a common good in big cities like Paris.
- What is the bargaining power of suppliers? Hypothesis: high, suppliers are massive multinational oil companies.
- What is the bargaining power of customers? Hypothesis: Low as they cannot bargain on the buying price. On the other hand they can easily drive to a different gas station.
- Are there substitutes in sight? Hypothesis: minor ones, like electricity for electric cars. This isn’t however a short-term problem at the current global oil industry conjuncture.
The conclusion should be that this is a difficult industry to get into. The friend should only go ahead with this idea with the individual opportunity is very good (special location with big market growth, low local competition, other sources of revenue like a small market at the gas station etc.).