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Ross Casebook by the Consulting at Ross Club
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Contents
Case Structure
Understand the Question (~1-2 minutes)
Develop Framework (~1-2 minutes)
Exhibits, Analysis, Brainstorming (~25 minutes)
Form Recommendation (~1-2 minutes)
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
•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
•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)
•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