Ross Casebook by the Consulting at Ross Club, Slides of Integrated Case Studies

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• Ross Casebook

I. Welcome

• Case Writers 2024

II. How to Use the Ross 2024 Casebook

• Case Interview Structure
• Administering Cases

III. Review Materials

• Key Formulas
• Industry Overview

IV. 2024 Casebook Index

Contents

How to Use the

Ross 2024 Casebook

Case Structure

How to Case

•LISTEN

•Summarize the problem

statement to make sure

you understand the

situation and objectives

•Ask ~3-4 clarifying

questions around the topic

and/or metrics to be used

for the analysis

•The questions posed

should necessitate a short

response

•Ask for a moment to plan

your structure

•Develop ~3-4 areas to

analyze along with a few

tailored sub- topics

•Structure the framework in

a logical fashion – it should

open with the most important

topic and provide the

interviewer with a roadmap

of where you plan to take the

case

•Refer back to the framework

as you move through each of

the main areas

•Tie back each piece of

analysis to the main

objective or problem

statement

•Walk through the calculations

/analysis, driving insights

•Answer brainstorming

questions using structure

•Keep your notes on the

page organized

throughout the case!

•State your

recommendation as a

direct response to the

problem/objective – it

should not come as a

surprise to the interviewer

•Incorporate key

metrics/ findings as a

part of your

recommendation

•Include risks and next

steps

Understand the Question (~1-2 minutes)

Develop Framework (~1-2 minutes)

Exhibits, Analysis, Brainstorming (~25 minutes)

Form Recommendation (~1-2 minutes)

Key

Formulas

Industry Overview

*Note: Please know that this industry reviews do not consider any impacts of

COVID-19. Since case interviews are supposed to resemble real world

conversations, we would recommend taking the pandemic into account and

acknowledging how it may impact these industries.

Airlines

•Ticket sales to economy and business passengers •Charges for baggage and on-board services (up-selling) •Cargo transportation •In-flight purchases •Credit cards and loyalty programs

•Consolidation in industry •Low cost carriers and fare competition on competitive routes •Online booking and check-in •Expansion of domestic and international routes •Capacity optimization (Load Factor)

•Leisure travelers – (generally price sensitive) •Business travelers – (very important to airlines due to margins and services purchased) •Freight/Cargo transportation

•Internet - online travel sites, airline websites •Airline sales team: call centers, online, or kiosk •Travel management companies (TMCs) serving corporate clients, travel agents

•Changes in fuel prices have a major impact on profitability •Macro-economic conditions greatly impact amount of leisure travelers •Intensely competitive market with narrow margins; many airlines partly government subsidized

•World price of crude oil •Trips by US residents

•Aircraft purchases/leases •Fuel •Labor (often unionized) •Marketing •Aircraft maintenance •Takeoff/landing fees •Insurance/legal fees

Key Companies

•Delta Airlines •American Airlines •United Airlines •Southwest Airlines •Emirates •Air France •KLM •British Airways •RyanAir •AeroMexico •Singapore Airlines

Channels

Risk

•Optimization of capacity •Per capita disposable income

Key Ideas Revenue Streams (^) Cost Drivers

Customer Segments

Key Economic Drivers

Commercial Banking

-Education -Personal

•Loan interest •Loan types -Real estate -Auto •Service fees •Spread between interest rate charged & Fed rates •Credit cards

•Consolidation/acquisitions •Increased mobile banking •Channel innovation in digital & physical channels •Customer attrition rate •Offshoring of call centers, back office functions •Digitization of processes •Cross-selling

•Savings and loan •Credit union •Traditional checking

•Change in savings behavior •Loan default, interest rates and federal funds rates

•Consumer confidence •Household debt •Employment statistics

•Wealth: deposit balances, income •By lifestyle: buying behavior

•Wages •Bad debt expense •Interest rates on deposits •Branch and compliance costs •Overhead costs - paper fee; error rate costs for manual processing

•Urbanization •Home and car buys •Disposable income

•Size: small businesses and consumers •Age: under 35 adapt to technology better

•Online banking •Microfinance

•Interest rate •Government regulation

Key Companies

•Wells Fargo •Citicorp •US Bank •HSBC •Bank of America •JP Morgan Chase •Barclays •Deutsche Bank •Credit Suisse •Morgan Stanley

Key Ideas Revenue Streams (^) Cost Drivers

Customer Segments

Key Economic Drivers

Channels

Risk

Health Care

•Hospital care •Physician and clinical services •Prescription drugs •Nursing •Dental services •Research, equipment, investment

•Affordable Care Act •Highly fragmented: top 50 organizations account for 15% revenues •Employers pushing health care costs onto employees •Aging Baby Boomer population driving increased revenues

•New legislation (impact of Affordable Care Act still uncertain) •Funding availability

•Regulation for health & medical insurance •Federal funding for Medicare and Medicaid

•Hospitals •Doctors offices •Nursing homes

•Patients/consumers •All generations and segments of the population require different products/services

•Dependent on segment •Significant costs related to new technology implementation •Often inefficient organizational structures

•Aging population •Advances in medical care and technology

•Outpatient surgery centers •Pharmacies •Medical equipment

Key Companies

•HCA Healthcare •Ascension Health •Trinity Health •CommonSpirit Health •Advent Health •Dignity Health

Key Ideas Revenue Streams (^) Cost Drivers

Customer Segments

Key Economic Drivers

Channels

Risk

Non-profits

Intended Impact •Define success criteria •Think big picture (e.g., society, people you are working for/with •Consider trade-offs •Depth vs. breadth of reach -Quality vs. quantity of program initiative -Intended impact should align with strategic goals

Theory of Change •Define specific actions steps to achieve the intended impact •Define timelines, initiative priorities and ownership responsibilities

Implementation Feasibility •Revenue impact (self sustaining model, grants) •HR costs: creating new roles, hiring new staff, train existing and new staff, modify existing organization structure •New infrastructure cost – IT systems, office space •Indirect costs -Impact on culture of organization -Impact on scale on quality of outcomes

Performance Measures & Reporting Impact

•Measure performance vs. peers •Set milestones for financial and operational goals •Monitor and modify plan accordingly •Consider performance during and after implementation of initiatives

Key Ideas

•Growth through existing platforms •Growth through new partnerships •Growth driven by policy changes

•Thought sharing to strengthen the industry Topics^ Case •Growth using technology

Oil & Gas

•Crude oil •Gasoline •Natural gas •Refining products such as lubricants •Gas stations: gasoline, food market, car wash

•Upstream, midstream, downstream •PV- •Cost per gallon •OPEC •GDP growth •Renewable energy •Fracking

•Access to reserves •Energy policies •OPEC decisions

•Government regulation •International oil production and demand

•Petroleum refiners •Electricity generators

•Retail •Wholesale •Commercial

•Exploration: seismic studies, drilling rigs and labor •Production: refining •Pipelines •Gas station: oil, labor, insurance, licenses

•Domestic and commercial users •Other industries

•Political pressures •Substitutes/renewable energy

Key Companies

•Exxon Mobil •Baker Hughes •Saudi Aramco •Gazprom •Pemex •Philips 66

Key Ideas Revenue Streams (^) Cost Drivers

Customer Segments

Key Economic Drivers

Channels

Risk

Private Equity & Hedge Funds

•Wages and profit-sharing •Administrative costs (regulatory filings, record keeping, accounting and travel) •Outsourcing of capital intensive IT functions for algorithmic trading

•Components of the revenue charge -Invested capital -Transaction and advisory fees -Carried interest •Divestures

•New regulation -> compliance costs, Rising competition -> decreasing industry fees •Competition also exists with sovereign wealth funds and corporate buyers •Changes in tax structure

•Investor uncertainty/pension demand •Access to credit/interest rates •Regulations

•Pension funds (largest share) •Private investors (e.g. high net-worth individuals) •Banks, sovereign funds and life insurance companies

• Large firms focus on deals ~ $1.0B; middle market firms cover deals between $15.0M- $1.0B
• Average holding period before sale has increased from 3 years to 6 years in the past 15 years
• Borrowing can typically range from 65.0% to 85.0% of the purchase price of the firm
  • Value creation: sell under-performing assets, optimize price, diversify customer base, operations efficiency
  • Exit: strategic or IPO
  • Synergies
  • Stability of cash flows (IRR, NPV)
  • Targeted returns ~ 40%+
  • Un-invested capital vs. invested

•Exit opportunities •GDP/investment returns

Key Companies

•Blackstone •KKR •CVC Capital Partners •The Carlyle Group •EQT •TPG Capital

Key Ideas Revenue Streams (^) Cost Drivers

Customer Segments

Key Economic Drivers

Channels

Risk

Retail

• Women’s apparel sale
• Drugs & cosmetics
• Furniture & household appliances
• Children’s apparel
• Men’s apparel
• Toys
• Footwear
• Misc. items

•Same store sales •Sales per square foot •Inventory turnover •Seasonality/recessions •Trends

•Consumer confidence index •Per capita disposable income •International export/import

•The industry is consumer-oriented and, due to the spectrum of products, its markets are generally segmented into different incomes, demographics and age groups

•Department stores/big box retailers •Discount retailers

•Changes in disposable income •Demand and supply issues

•Cost of Goods Sold (74% of costs) •Transportation •Wages •Rent and utilities •Marketing

•Gross domestic product/inflation •Households > $100,000 income (luxury goods)

• Commodity prices (eg. gold price for jewelry)

•Demographic retailers •Shopping malls

•Overstock •Easy entry invites competition

Key Companies

•Walmart •Target •Costco •CVS •Walgreens •Kroger

Key Ideas Revenue Streams (^) Cost Drivers

Customer Segments

Key Economic Drivers

Channels

Risk