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What Is a Case Study?

When you’re performing research as part of your job or for a school assignment, you’ll probably come across case studies that help you to learn more about the topic at hand. But what is a case study and why are they helpful? Read on to learn all about case studies.

Deep Dive into a Topic

At face value, a case study is a deep dive into a topic. Case studies can be found in many fields, particularly across the social sciences and medicine. When you conduct a case study, you create a body of research based on an inquiry and related data from analysis of a group, individual or controlled research environment.

As a researcher, you can benefit from the analysis of case studies similar to inquiries you’re currently studying. Researchers often rely on case studies to answer questions that basic information and standard diagnostics cannot address.

Study a Pattern

One of the main objectives of a case study is to find a pattern that answers whatever the initial inquiry seeks to find. This might be a question about why college students are prone to certain eating habits or what mental health problems afflict house fire survivors. The researcher then collects data, either through observation or data research, and starts connecting the dots to find underlying behaviors or impacts of the sample group’s behavior.

Gather Evidence

During the study period, the researcher gathers evidence to back the observed patterns and future claims that’ll be derived from the data. Since case studies are usually presented in the professional environment, it’s not enough to simply have a theory and observational notes to back up a claim. Instead, the researcher must provide evidence to support the body of study and the resulting conclusions.

Present Findings

As the study progresses, the researcher develops a solid case to present to peers or a governing body. Case study presentation is important because it legitimizes the body of research and opens the findings to a broader analysis that may end up drawing a conclusion that’s more true to the data than what one or two researchers might establish. The presentation might be formal or casual, depending on the case study itself.

Draw Conclusions

Once the body of research is established, it’s time to draw conclusions from the case study. As with all social sciences studies, conclusions from one researcher shouldn’t necessarily be taken as gospel, but they’re helpful for advancing the body of knowledge in a given field. For that purpose, they’re an invaluable way of gathering new material and presenting ideas that others in the field can learn from and expand upon.

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6 business terms you should know before your case interview

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If you’re a graduate chasing a career in consulting, chances are you’ll come across a case interview. Case interviews allow you to demonstrate how you think - your ability to understand a problem, break it down into its requisite parts, analyse them and communicate a solution. Check out Case Interview 101 to find out more about what a case interview is and seven tips on what to do in a consulting case interview . Right now, it’s time for you to get familiar with these six business terms that you absolutely must know before your case interview.

Things to know

It’s important to remember that consultants come from all different walks of life. And by that, what we mean to say is that not everyone has a business background. So, if you don’t have a commerce, business, finance, accounting or strategy degree, never fear! Consulting is about logical, rational and analytical thinking with creative flair.

However, it is worth understanding a few fundamental business basics so you’re not resorting to ‘Please Explain’ throughout the entire case interview. So, here is our quick ‘Business 101’ guide to ‘things you ought to know.’

When we talk about revenue, what we are referring to is the amount of money a company makes. At its simplest, revenue is calculated by multiplying the price at which goods and services are sold by the number of units or amount sold within a time period. For example, say a coffee shop makes 100 coffees a day and sells them each for $3. The revenue that the coffee shop makes is, therefore, $300 a day. Over a year their revenue would be $109, 500. This assumes of course, they sell the same number of coffees every single day for the entire year.

As you can see, there are two ‘levers’ of revenue here – the price and volume sold. If a business wanted to increase its revenue, it may consider either raising its price, attracting new customers or increasing the number of coffees bought by existing customers. It may do a combination of all these things.

Often a business will have more than one type of revenue stream. In our coffee example, the coffee shop may also make money by selling food, catering for lunches at nearby offices or displaying art for sale on its walls. In consulting speak, we call these ‘revenue drivers’. Typically, you will find that one driver is more dominant than another.

You will often hear revenue called the ‘top line’ or ‘gross income’ figure. This is because it is the amount of money that the company receives during a specific period. It does not take into account the costs of running the business itself.

Applying revenue to the case interview

It is common during the case interview to consider how a business might make money. After all, this is what a business is set up to do! Whether an organisation is seeking to launch a new product or service, enter a new industry or geographic market, it must consider how it will generate revenue.

As a consultant-to-be, you will be making a number of assumptions about how the business operates. In our coffee shop example, we assumed that the number of coffees sold every day remained the same. Would this really be true in real-life? It’s here that you can have a bit of fun and apply some logical thinking. For example, a coffee shop that’s in the middle of the CBD may be busiest during the week compared to the weekends or over the Christmas break.

The opposite may be true for a coffee shop on the beach. When making assumptions be careful about what it is you are actually assuming and be sure to take a step back and look at the bigger picture. At the same time, don’t over complicate things. If you need to make a simplifying assumption so that you can move on, that’s perfectly ok. Just state that you are doing exactly that and check in with your interviewer.

A good way to practice ahead of the case is to think about organisations you interact with regularly and ask yourself, ‘How does this business make money?’. Whether that is your local coffee shop down the road, or companies such as Spotify, Telstra, Westfield or Google, consider what their different revenue drivers might be.

Spotify, a digital music service, for example, allows users to stream music for free if they are willing to listen to advertisements, alternatively, they offer users a subscription fee for a premium service. If you were given a company like Spotify during a case interview, you may be asked to estimate their revenue. You would need to make assumptions for example about how many users they have, what proportion of users are free vs. paid, how much it costs to subscribe, the different rates of subscription (e.g., student vs. regular vs. family accounts), how many advertisers they have and what their advertising rates are.

See if you can break down each of these assumptions in a logical way to come up with a final revenue number – and then see how it compares to the real-life thing! Don’t forget, it’s not about the ‘right’ number, it’s about the thinking process.  

Expenses refer to the costs of running a business. They are the opposite of revenue. For example, for our coffee shop to make its coffees it must buy all the materials required including coffee beans, milk and sugar. The coffee shop must also pay its employees to make the coffee and serve customers.

Expenses may be further divided into fixed and variable costs. Fixed costs refer to those which are independent to output – that is, no matter how many coffees our coffee shop makes, the shop must still pay rent (a fixed amount), the lease of the coffee machine and other equipment.

In contrast, variable costs refer to those that do vary with output. For example, the more coffees we make, the more coffee beans, milk and sugar we will need to buy. Similarly, if the coffee shop grows and as a result, we make more coffees, we will also likely have to hire more staff.

Applying expenses to the case interview

Just like revenue, when you’re practising for the case interview, consider what’s going on the ‘other side’ i.e. what types of costs that business may be incurring. In our Spotify example, costs include streaming, music licensing and royalties, hosting, product development, sales and marketing and employee wages. For each of these you would need to come up with a logical explanation of what these costs may be and be able to justify your assumptions.

Let’s work through the potential streaming costs, as an example. What do we need to know to make these calculations?

First, we need to consider how long an average user listens to Spotify every day. Well, the average user may listen to Spotify part of the way to/from work or school, and perhaps a little bit during their day. As a conservative estimate, we can assume that this is about an hour a day.

We may then ask ourselves, what does this actually mean in terms of streaming? You may not know anything about streaming and it is ok at this point to ask the interviewer for some guidance. Suppose the interviewer tells you that streaming is in kilobits per second and that an average user would stream 160 kilobits per second.

This means we can then calculate per user that they are streaming 160*60*60 = 576, 000 kilobits per day. The interviewer at this point may suggest we convert this to megabytes, indicating that 1 kilobit =0.000125 megabytes (MB). Once we crunch the numbers, we will find that per user, they are streaming 72MB per day.

We then need to make some assumptions about how many Spotify users there are in total. After some guesswork about countries that Spotify is in and what proportion of the country would have access to the Internet and be of the demographic that would listen to Spotify, we may come up with a total of about 100 million give or take. (Actually, the latest we heard was that the number of Spotify active users is actually much higher and more around the 150 million mark but for simplicity, we’ll go with 100 million).  

If we assume that all these users are listening for an hour per day, that’s 100 million users x 72MB = 7.2 billion MB per day or 7.2 million GB per day of streamed day (where 1MB = 0.001 GB).

To continue with estimating the streaming costs, we would then have to find out how much it would cost to stream per GB. Again, you are not expected to be familiar with streaming so you may ask for guidance at this point. Let’s say we find out that it costs about $0.10 per GB. So, 7.2 million*0.10 = $720, 000 per day in streaming costs.  

Now, we basically pulled these numbers out of a hat and have no idea if this is actually correct or not. The point is, it doesn’t matter. So long as along the way we have justified each assumption to the satisfaction of ourselves and the interviewer, then the end number doesn’t really matter.

It does however, pay to look at that number and consider if it makes sense. Perhaps paying $720, 000 per day in streaming costs is actually outrageous and we should backtrack a little to adjust some of our earlier assumptions. For example, is it really accurate to assume that every single user is listening to Spotify an hour a day? Maybe we can adjust that number to one in five instead. Are streamling costs really at $0.10 per GB or is that too high? As you can see, it does pay to sanity check your end result.  

It’s also worth checking what the original question was. Did your interviewer ask you about the costs over a day, a month or a year? Be sure to adjust and calculate accordingly. Often the numbers can get quite large as you can see in this example. Be mindful of your zeros and the difference between your millions and billions!   

And then we come to profit. Profit therefore is calculated as revenue less expenses, which is why it is often referred to as the ‘bottom line’. It is the aim of every business to have its revenue higher than its expenses and therefore, a positive profit. Any profit that is made can either be invested back into the business so that it continues to grow, for example, in buying new equipment or hiring more staff, or paid out to investors of the business.

Profit is also often called net income as it is the amount that is ‘left over’ after all the necessary expenses are subtracted for that period. This includes the cost of doing business, depreciation, interest, taxes and other expenses. This number is typically found on a company’s income statement and indicates how profitable the company is over a period of time. If the net income number is negative, this shows that the company has suffered a loss (called a ‘net loss’).

As a company varies in size, it is sometimes appropriate to consider the profit margin of a company when comparing one to another. This is calculated as a percentage of sales or revenue.

Applying profit to the case interview

During the business case, we are typically seeking to reach a conclusion about what a company should do. A way to evaluate this is to consider how much it makes in terms of net income or profit. For example, how much money will it make it if it launches that new product line or if it enters that new geographic market?

As we know now that revenue less expenses equals profit, we can begin to better evaluate a company’s options by deep diving into each.  

This is where being systematic and structured helps. Rather than jumping from revenues back to expenses and back again in a ‘brainstorming’ fashion, it is easier to do all revenue items in one go together, then move on to expenses. You will likely be making notes or doing this on a whiteboard, so we suggest being super clear in the way you write it down as well. There’s nothing worse than scrawled words and numbers hastily written down and then not being able to understand them. If you are working on a whiteboard for example, then you use one side of the board to calculate revenues, and the other side to calculate expenses. When you get to your total revenue and total expenses number, you can then calculate your net income or profit at the very bottom of the board.

It seems straightforward enough but we know that in the heat of an interview, it’s easy to just start writing and then realise halfway through you’ve run out of room or you’ve confused yourself about which number is a revenue or expense item. Here’s an example of how you might set out your numbers (note, we haven’t filled in the table but this is just to give you an idea!):

I ncome Statement or Profit and Loss Statement

The income statement brings together the revenue, expenses and profit altogether. The purpose of the income statement is to provide a snapshot of the company’s financial performance over a specific accounting period. It is also referred to as the profit and loss statement – as it provides details into exactly that! The income statement begins with sales and then works its way down to net income.

It can be helpful to look up a few income statements to understand how they are laid out. You can usually find them in the annual report of any publicly listed company. Again, you’re not expected to have an accounting or finance background for the purposes of the case interview but it can be insightful to understand what the revenue and expense line items might be for a company – and to give you a few clues about things to think about when doing your own case practice!

The Balance Sheet

Another important financial statement for any company is its balance sheet. A balance sheet provides a snapshot of the organisation’s financial position at a given point in time. More specifically, it gives an idea as to what a company owns and owes, and the amount invested by its shareholders. In other words, the balance sheet represents the economic resources the company has, including the claims that creditors and equity holders have on those resources. It can help a company work out its working capital (the money required to fund day-to-day operations) and business liquidity (how quickly it is able to pay current debts). This gives an overall indication of the financial health of the business.

The balance sheet is ‘balanced’ in that it adheres to the following formula: Assets = Liabilities + Equity

Assets refer to the economic resources that a company uses to run its business. Assets are typically further categorised by how ‘liquid’ they are, that is, how easily they can be converted to cash. Those that are more liquid are known as ‘current assets’ as opposed to ‘non-current’ or ‘long-term’ assets.

Current assets include for example cash, accounts receivable and inventory. Non-current assets include, for example, fixed assets such as land, machinery, equipment and buildings and intangible assets such as intellectual property or goodwill.

Liabilities are the debts of the company or what the company owes to outside parties. In other words, liabilities are the claims that creditors have on the company’s resources.

A company may have debts because it has borrowed money to buy new equipment or to run their business for example, bills it must pay suppliers. Similar to assets, liabilities can be subdivided into current and non-current. Current liabilities are those that are due within one year and include for example, rent, tax, utilities, wages, dividends payable and interest. Non-current liabilities include long-term debt and deferred tax liabilities.

Equity is calculated as assets less liabilities. It represents the net worth of a company or the claims that the investors have on the company’s resources. For example, like a creditor, an investor may provide cash to a company to run their business. However, unlike a loan made by a creditor, an equity holder’s investment is not guaranteed as a company does not promise to pay back their investors a specific amount over a specified period of time. Instead, an investor’s return is often contingent on the operating performance of a company.

It is not common that you will be given a balance sheet during a case interview but there have definitely been some instances such that we thought it was helpful to go through it here. It is important to remember that a balance sheet on its own is simply a snapshot in time. It must be compared to previous periods in order to understand a company’s trends. Instead, if you are presented with a balance sheet during a case interview, think about why you are given this information and how it is relevant to the problem at hand.   

Statement of Cash Flows

The statement of cash flows basically shows how much cash is coming in and out of a business. It helps to determine the short-term viability of a company, particularly its ability to pay its bills. Cash inflows include for example cash from ongoing operations and external investment sources. Cash outflows refer to cash paid for business expenses and other investment activities.

Cashflows in the cash flow statement are categorised as either cashflows from operating activities; cashflows from investing activities; or cashflows from financing activities.

Between the balance sheet, the income statement and the statement of cash flows, you will be able to get a pretty good picture of a company’s financial position and performance. Again, remember the interview is not about demonstrating you are the best accountant ever. Instead, if you are presented with any one of these statements, ask yourself what information are you being shown, why and how it is relevant to the case.

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Glossary A - Z

The following are all Terms used throughout the Australian Business Case Studies website. This Glossary should help you understand the meaning behind each term.

Accounting reports

Accounting standards, acquisition(s), acquisition/s, affirmative action, ambassadors, animal welfare, annual turnover, audit (non-accounting), audit/auditing, basket of goods, benchmark/ing, best practice, biodiesel fuel, biological diversity (biodiversity), board of directors, bottom line, brainstorming, brand awareness, brand equity, brand loyalty, brand management, brand personality, brand values, brand-funded entertainment, business ethics, business model, business objectives, business plan, business planning, business strategy, business units, call-to-action, carbon footprint, carbon sequestration, carbon sinks, centralised model, certified agreement, change management, change management process, chief executive officer (ceo), climate change, co-operatives, code of conduct, collective bargaining, commercial breaks, commercial broadcaster, commercial television, company culture, company values, competitive advantage, competitive economic sector, competitiveness, consolidated, constructive behaviour, consumer-driven, consumption items, contingency planning, continuous improvement, control group, convergence, core business value, core value proposition, corporate citizenship, corporate governance, corporate responsibility, corporate social resonsibility (csr), creative agency, critical success factor/s, critical success factors, cross-train, cultural diversity, cultural fit, custom-built, customer experience, customer focus, customer insight, customer service, customer-driven innovation, customer-focused strategy, demographic, deregulated, design element(s), differentiate/ differentiation, direct customer business model, direct marketing, direct report, direct reports, distribution, diversification strategy, diversified, dividend(s), domestic market, dotted line, dual-listed company, due diligence, economic progress, economic sustainability, economically sustainable, economies of scale, electronic direct marketing, employee engagement, employee retention, employer of choice, employment brand, endorsement, enhanced greenhouse effect, entrepreneur, entrepreneurship, entreprenurial, environmental managment system (ems), environmental progress, equal employment opportunities (eeo), equity raising, ethical practice/s, ethical standards, ethics/ethical, european union emissions trading scheme (eu ets), external environment, feasibility study, fee-for-service, financial reports, financially literate, flow-on effects, franchise(d), franchisees, free-to-air, ftse 100 index, generation y, genetic technology, global business, global warming, globalisation, gross domestic product (gdp), halo effect, health and safety at work, human capital, human resource management, human synergistics organisational cultural inventory (oci) tool, humanitarian, idea culture, individual development plan (idp), industrial action, industrial relations, information society, infrastructure, initiatives, intellectual capital, intermediary-based insurer, internal brand knowledge, internal environment, job analysis, joint venture/s, key performance indicator/s, key result area, knowledge management, legislation, line managers, liquefied natural gas, listed company, livestock exports, local procurement, localisation, macro environment, management systems, market based management (mbm), market capitalisation, market leader, market research, market share, market specifications, market trends, marketing mix, marketing plan, marketing position, marketing strategy, marketplace, methodology, mission statement, modular buildings, multi-channel, multi-national companies, multi-platform format, national minimum wage, nationally accredited qualification, niche (market), not-for-profit, online community/ies, operating profit, operational efficiency, operational management, partnership, perennial plants, performance culture.

The Typical Terms in Case Study Interviews for Consulting Firms

Case study interviews are a crucial component of the recruitment process for consulting firms. However, candidates without a business background often grapple with unfamiliar business terms frequently appearing in case studies. This article aims to provide aspiring consultants with a crash course on the most common business terms encountered in case study interviews, and guide them on learning and integrating these terms into their preparation practice.

In short, read this and you will already know 95% of all the terms likely to appear in consulting interviews .

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Join the world’s leading case interview community today and get everything you need to prepare for your upcoming case interviews!

• 1. The Common Terms That Show Up in Case Study Interviews
• 2. The Terms Everybody Worries About But Rarely Appear in Case Studies
• 3. Strategies for Learning and Practicing Business Terms
• 4. Conclusion
• 5. About the Author
• Breakeven: Breakeven refers to the point at which total revenue equals total costs, resulting in zero profit or loss. It helps determine the minimum level of revenue needed to cover expenses. The breakeven point is calculated using the formula: Breakeven = Revenues – Cost = Zero profit
• % Change: % Change calculates the percentage difference between two values. It is often used to assess growth or decline. The formula for % Change is: % Change = ((New Value - Old Value) / Old Value) * 100
• Return on Investment (ROI): ROI measures the profitability of an investment by comparing the gain or loss relative to its cost. A higher ROI indicates better investment performance. The formula for ROI is: ROI = (Profit / Investment Cost) * 100
• Margin: Margin refers to the percentage of profit generated from sales. Margin is calculated as: Margin = (Revenue - Cost) / Revenue
• Markup: Markup represents the amount added to the cost of a product to determine its selling price. It helps businesses set prices to ensure profitability. The formula for markup is: Markup = (Profit / Cost) * 100
• Market Share: Market share represents the portion of the total market that a company or product controls. It indicates competitiveness and market position. It is calculated as: Market Share = (Company's Sales / Total Market Sales) * 100
• Supply and Demand: Supply and demand refer to the relationship between the quantity of a product or service available (supply) and the quantity desired by customers (demand). Understanding this dynamic helps assess pricing, market equilibrium and potential shortages or surpluses.
• Cost-Benefit Analysis: Cost-benefit analysis compares the costs incurred with the expected benefits of a decision or project. It assists in evaluating the feasibility and profitability of potential endeavors.
• Fixed and Variable Costs: Fixed costs remain constant regardless of production volume, while variable costs change proportionally with production. Understanding cost structure helps in analyzing profitability and breakeven points.
• Competitive Advantage: Competitive advantage refers to the unique qualities or assets that differentiate a company from its competitors. It can include superior technology, brand recognition, cost efficiency, or exclusive resource access.
• Market Segmentation: Market segmentation involves dividing a broad market into distinct groups based on characteristics such as demographics, behavior, or preferences. It helps target specific customer segments effectively.
• Value Chain: The value chain describes the sequence of activities a company performs to create value for its customers. It includes inbound logistics, operations, outbound logistics, marketing and sales, and customer service.
• Opportunity Cost: Opportunity cost refers to the value of the next best alternative forgone when making a choice. It represents the potential benefits or profits sacrificed by choosing one option over another.
• Economies of Scale / Economies of Scope: Economies of scale occur when the average cost per unit decreases as production volume increases. Economies of scope refer to cost savings achieved by producing a variety of products using shared resources.
• Balance Sheet: A balance sheet provides a snapshot of a company's financial position at a specific time. It lists assets, liabilities, and shareholders' equity. It helps assess a company's solvency and liquidity.
• Income Statement: An income statement , also known as a profit and loss (P&L) statement, summarizes a company's revenues, expenses, and net income over a specific period. It helps evaluate profitability and performance.
• Cash Flow Statement: A cash flow statement tracks the flow of cash in and out of a company during a specific period. It helps assess the company's ability to generate and manage cash.
• SWOT Analysis: SWOT analysis evaluates a company's strengths, weaknesses, opportunities, and threats. It provides a comprehensive overview of internal and external factors affecting the organization's strategic position.
• Stakeholder Analysis: Stakeholder analysis identifies individuals or groups with a vested interest in a company's operations. It helps understand their influence, interests, and potential impact on decision-making.

I spent 5 years in McKinsey, handled financial models that required a special computer , conducted over 500 coaching interviews AND I still do not know most of these formulas by heart, which is why interviewers are unlikely to expect this from you.

I advise reading and practicing them 1 – 2 times, so you know how they work . If they appear in the interview, tell the interviewer you are familiar with the concept but do not remember the formula by heart. Say that under normal circumstances, you would look it up, but ideally, now they would help you by providing it directly.

That will confirm to the interviewer that you know how to think through the process, have business knowledge and know how to leverage others around you to reach your goals – and that is what matters, not memorizing formulas.

Regardless, here they are:

• CAGR (Compound Annual Growth Rate): CAGR measures the average annual growth rate over a specific period, smoothing out fluctuations. The formula for CAGR is: CAGR = (Ending Value / Beginning Value)^(1 / Number of Years) - 1
• ​DCF: Discounted Cash Flow
• CF₁, CF₂, ..., CFₙ: Cash flows expected to be generated in each period (e.g., year)
• r: Discount rate, representing the required rate of return or cost of capital
• The discount rate reflects the risk and opportunity cost of investing in the asset or business. It typically considers factors such as the risk-free rate of return, the company's cost of capital and the expected rate of return on similar investments.
• NPV (Net Present Value): NPV measures the value of an investment by comparing the present value of expected cash flows with the initial investment cost. Positive NPV indicates a profitable investment. NPV can consider growth by using cash flows projected over multiple years. The formula for NPV is: NPV = CF0 + (CF1 / (1+r)^1) + (CF2 / (1+r)^2) + ... + (CFn / (1+r)^n) CF represents cash flow, r is the discount rate, and n is the time period.
• Gross margin: It represents the profitability of a company's core operations. It indicates the percentage of revenue after deducting the direct costs associated with producing or delivering the goods or services. Gross Margin = (Revenue - Cost of Goods Sold) / Revenue
• Net margin: It measures the percentage of revenue a company retains as net income after deducting all expenses, including cost of goods sold, operating expenses, interest, taxes, and other non-operating costs. Net Margin = (Net Income / Revenue) * 100
• Operating margin: It represents the percentage of revenue left after deducting all operating expenses, such as cost of goods sold, marketing expenses, salaries, rent, and other overhead costs. Operating Margin = (Operating Income / Revenue) * 100
• Inventory Turnover: Inventory turnover measures how efficiently a company manages its inventory by calculating the number of times inventory is sold and replaced within a given period. The formula for inventory turnover is: Inventory Turnover = Cost of Goods Sold / Average Inventory

To avoid learning these terms by heart, here are three alternative strategies to consider:

• Organic Learning: This is the approach I recommend to most candidates. It consists of doing nothing aside from practicing cases .

Active Vocabulary Building: Whenever a new term shows up, look it up, write it down and make sure you understand it. As you continue practicing, you will soon realize that the terms start repeating themselves. After the first 20–30 cases you practice, you will have already come across 80% of the most common terms. This saves you time from proactively looking up terms you might never need and helps you learn faster through contextualization.

• Research and Study: One of the most fundamental approaches to learning business terms is through research and study. Start by leveraging reputable online resources, business textbooks, and industry publications to gain a solid foundation of knowledge. Explore materials that provide explanations, examples and practical applications of each term. Consider creating flashcards or summaries for quick reference and review.

Here are some of the sources for learning

• Online Learning Platforms: Websites like Coursera, edX, and Udemy offer a wide range of business courses that cover various topics, including finance, accounting, strategy, and marketing.
• Business Books: Reading books written by renowned business authors can provide valuable insights into different aspects of business. Some recommended books include "The Lean Startup" by Eric Ries, "The Innovator's Dilemma" by Clayton M. Christensen, "Thinking, Fast and Slow" by Daniel Kahneman, and "Good to Great" by Jim Collins.
• Case Study Books: Case study books designed for management consulting interviews can be incredibly helpful. These books typically contain a collection of business cases with detailed explanations and solutions. Classic examples include "Case in Point" by Marc P. Cosentino and "Crack the Case System" by David Ohrvall.
• Business Publications and Journals: Magazines like Harvard Business Review, Forbes, and The Economist provide insightful articles on various business topics, including strategy, finance, and leadership.
• Seeking Mentorship: While self-study and practice are crucial, seeking guidance from experts or mentors in the field can provide valuable insights and feedback. Connect with individuals with management consulting experience or a strong business background. They can offer guidance on prioritizing specific terms, provide real-world examples, and share their experiences with case interviews.

Furthermore, if you have the opportunity, attending workshops, seminars, or specialized training programs in consulting can provide structured learning environments to deepen your knowledge of business terms and their application .

Mastering business terms is crucial to excelling in case study interviews for management consulting positions . These terms demonstrate your understanding of fundamental business concepts and enable you to analyze complex situations and propose strategic solutions. Throughout this article, we have explored 25 common business terms that frequently arise in case study interviews, providing clear explanations and formulas where applicable.

This synthesis should provide you with almost all the terms you will likely need. Still, i t is essential to remember that consulting interviews do not test for knowledge . They test for skills and mindset. No consultant will fail you because you do not know a formula by heart, but they will do so if you are unable to communicate with them effectively to obtain the formula.

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After graduating from Oxford, Cristian gained several years of experience at McKinsey. Until today, he was working in eight different countries and nine different industries and founded his own consultancy, Writer & Entrepreneur.

Cristian  is the highest rated McKinsey coach on this platform by both rating and recommendation rate . Though  he specializes in MBB and particularly McKinsey , he is the perfect coach to help you apply to these companies. With his 5-star rating, the expert has the highest recommendation rate of the coach.

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Hacking the Case Interview

Although case interviews do not require any technical math or finance knowledge, there are basic formulas that you should know in order to do well.

This article will cover the 26 formulas you should know for case interviews. These formulas are organized into the following categories:

• Profit Formulas
• Investment Formulas
• Operations Formulas
• Market Share Formulas
• Accounting, Finance, and Economics Formulas

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Profit Formulas for Case Interviews

1. Revenue = Quantity * Price

Revenue is the amount of money a company brings in from selling its products. This can be calculated by taking the number of units sold and multiplying it by the price per unit.

Example: Your company sells shirts for $20 each. Last year, your company sold 1,000 shirts. So, your total revenue last year was 1,000 * $20 = $20,000.

2. Total Variable Costs = Quantity * Variable Costs

Costs are payments that a company needs to make in order to run and operate its business. There are two different types of costs, variable costs and fixed costs.

Variable costs are costs that directly increase for each additional unit of product made. It represents the cost of raw materials needed to make the product.

Total variable costs are calculated by taking the number of units produced or sold and multiplying it by the raw material cost per product.

Example: It costs your company $5 to purchase the raw materials needed to make a shirt. If your company sold 1,000 shirts last year, the total variable costs are 1,000 * $5 = $5,000.

3. Costs = Total Variable Costs + Fixed Costs

Total costs for the company can be calculated by adding total variable costs and fixed costs.

Fixed costs are costs that do not directly increase for each additional unit of product made. They may include costs such as rent for the building or equipment needed to make the product.

Example: Your company pays annual rent of $10,000. It also leases the equipment it needs to make its shirts for $2,000 a year. Therefore, fixed costs are $10,000 + $2,000 = $12,000. Total variable costs were calculated to be $5,000 from the previous example. So, total costs are $12,000 + $5,000 = $17,000.

4. Profit = Revenue – Costs

Profit is the amount of money the company keeps after paying for all of its costs. Profit is calculated by subtracting total costs from total revenue.

Example: Last year, your shirt company generated revenues of $20,000 and had costs of $17,000. The profit last year was $20,000 - $17,000 = $3,000.

5. Profit = (Price – Variable Costs) * Quantity – Fixed Costs

This formula summarizes the previous four formulas into one concise and simplified equation.

6. Contribution Margin = Price – Variable Cost

Contribution margin represents how much money each product sold brings into the company after accounting for the cost of raw materials needed to make the product.

Example: If your company’s shirts sell for $20 and raw materials cost $5, then the contribution margin is $20 - $5 = $15 per shirt.

7. Profit Margin = Profit / Revenue

Profit margin represents the percentage of revenue that a company keeps as profit after taking into account all of its costs.

Example: Last year, your company generated $20,000 in revenue and had $17,000 in costs. Its profit was $3,000. Therefore, your company’s profit margin is $3,000 / $20,000 = 15%.

Investment Formulas for Case Interviews

8. Return on Investment = Profit / Investment Cost

Companies make investments by spending money in the hopes of earning even more money in the future as a result of the investment. Return on investment, or ROI or short, represents how much additional money a company generates relative to the size of its initial investment.

ROI is calculated by taking the profit that the company generated from the investment and dividing it by the investment cost.

Example: Your company spent $5,000 on marketing to advertise its shirts. As a result, the company generated an additional $6,000 in profits from selling shirts. This profit does not yet take into account the costs of the marketing campaign.  Therefore, the company has a net increase in profits of $1,000 from its original $5,000 investment. The ROI is $1,000 / $5,000 = 20%.

9. Payback Period = Investment Cost / Profit per Year

Payback period represents how long it would take a company to recoup the money it spent on an investment. It is usually specified in years.

Example: Your company invested in redesigning its shirts for $5,000. As a result, the company expects annual profits to increase by $1,000 for every year going forward. Therefore, the payback period for this investment is $5,000 / $1,000 = 5 years.

Operations Formulas for Case Interviews

10. Output = Rate * Time

The output of production can be calculated by taking the rate of production and multiplying it by time.

Example: The machine that your company uses to produce shirts can produce 5 shirts per hour. If the machine runs for 12 hours, then it will produce 60 shirts.

11. Utilization = Output / Maximum Output

Utilization represents how much a factory or machine is being used relative to its maximum possible output.

Example: The machine that your company uses to produce shirts can produce 5 shirts per hour. Therefore, its maximum capacity in a day is 5 shirts per hour * 24 hours = 120 shirts. If your machine is being used to only produce 60 shirts per day, then it is at 60 / 120 = 50% utilization.

Market Share Formulas for Case Interviews

12. Market Share = Company Revenue in the Market / Total Market Revenue

Market share measures the percentage of total market sales a particular company has. Market shares can range from 0%, no presence in the market, to 100%, complete dominance in the market.

Example: Your company sells shirts and generates $100M in annual revenues. The market size of shirts is $500M. Therefore, your company has a market share of $100M / $500M = 20%. 

13. Relative Market Share = Company Market Share / Largest Competitor’s Market Share

Relative market share compares a company’s market share to the largest competitor’s market share. It measures how strong of a presence a company has relative to the market leader. If the company is the market leader, relative market share measures how much of a lead they have over the next largest player.

Instead of using company market share and the largest competitor’s market share, you can use company revenue and the largest competitor’s revenue. This will give you the same answer.

Example: Your company has a 20% market share in the shirts market. Your largest competitor has a 50% market share. Therefore, your relative market share is 20% / 50% = 0.4.

Example 2: Your company is the market leader and has a 50% market share in the shirts market. Your largest competitor has a 25% market share. Therefore, your relative market share is 50% / 25% = 2.

Accounting, Finance, and Economics Formulas for Case Interviews

These formulas are much less commonly seen in case interviews than the previous formulas. You likely won’t need to use these formulas since they require more technical knowledge of accounting, finance, and economics.

However, you should still be familiar with these formulas in the small chance that one of these concepts shows up in your case interview.

14. Gross Profit = Sales – Cost of Goods Sold

Gross profit is a measure of how much money a company makes from selling its product after taking into account the costs associated with making and sellings its product. These costs are often called the cost of goods sold.

Compared to the previous profit formula, which was simply revenue minus costs, gross profit is always higher since it does not take into account all of the costs of the business.

Example: Your company sold $20,000 of shirts last year. The cost to produce these shirts was $5,000. Therefore, your gross profit is $20,000 - $5,000 = $15,000.

15. Operating Profit = Gross Profit – Operating Expenses – Depreciation – Amortization

Operating profit is calculated by taking gross profit and subtracting all operating expenses and depreciation and amortization.

Operating expenses may include rent, utilities, maintenance and repairs, advertising and marketing, insurance, and salaries and wages. So, operating profit is always less than gross profit.

Depreciation is the spreading of a fixed asset’s cost over its useful lifetime.

For example, let’s say that a company purchases a new machine for $10,000 that it expects to last for 5 years. Instead of stating that it incurred $10,000 in costs in its first year, the company may choose to state that the new machine costs $2,000 per year for the next five years.

Amortization is the spreading of an intangible asset’s cost over its useful lifetime. It is the exact same principle as depreciation except that it deals with intangible assets, or assets that aren’t physical.

For example, let’s say that a company purchases a patent for $10,000 and expects the benefits of the patent to last for 20 years. Instead of stating that it incurred $10,000 in costs in its first year, the company may choose to state that the patent costs $500 per year for the next twenty years.

Example: You sold $20,000 of shirts last year. Cost of goods is $5,000, operating expenses are $10,000, depreciation of a machine is $2,000, and amortization of a patent is $500. Therefore, your operating profit is $20,000 - $5,000 - $10,000 - $2,000 - $500 = $2,500.

16. Gross Profit Margin = Gross Profit / Revenue

This is the exact same formula as the profit margin formula except that gross profit is used. Gross profit margin measures how much money a company keeps from selling its products after taking into account cost of goods sold.

Example: Your company has a gross profit of $15,000 from $20,000 of revenue. Therefore, your gross profit margin is $15,000 / $20,000 = 75%.

17. Operating Profit Margin = Operating Profit / Revenue

This is the exact same formula as the profit margin formula except that operating profit is used. Operating profit margin measures how much money a company keeps from sellings its products after cost of goods sold, operating expenses, depreciation, and amortization is taken into account.

Example: Your company has an operating profit of $2,500 from $20,000 of revenue. Therefore, your operating profit margin is $2,500 / $20,000 = 12.5%.

18. EBITDA = Operating Profit + Depreciation + Amortization

EBITDA stands for earnings before interest, taxes, depreciation, and amortization. It is a financial metric used to measure a company’s cash flow or the amount of cash that a company has generated in a period of time.

To calculate EBITDA, start with operating profit and add back depreciation and amortization expenses.

Example: Your company has an annual operating profit of $2,500. Depreciation expenses are $2,000 and amortization expenses are $500. Therefore, your EBITDA is $2,500 + $2,000 + $500 = $5,000.

19. CAGR = (Ending Value / Beginning Value)^(1/Time Period) – 1

CAGR stands for compounded annual growth rate. It measures how quickly something is growing year after year.

Example: Your company generates $144M in annual revenue. Two years ago, your company only generated $100M. Over this time period, your CAGR was ($144M / $100M)^(1/2) - 1= 20%. In other words, your company grew by 20% each year for two years.

20. Rule of 72

The Rule of 72 is a shortcut used to estimate how long a market, company, or investment would take to double in size. To use it, simply divide 72 by the annual growth rate to get an estimate for the number of years needed to double in size.

Example: Your company is growing steadily at 9% per year. Using the Rule of 72, we’d expect it to take 72 / 9 = 8 years for your company to double in size if it maintains its current growth rate.

21. NPV = Cash Flow / [(1 + Discount Rate)^(Time Period)]

NPV stands for net present value. It measures how much future cash flow is worth today.

Receiving $1,000 right now is not the same as receiving $1,000 five years from now. If you received $1,000 right now, you could invest it and grow your money. Therefore, it is better to receive $1,000 right now than to receive the same amount in the future.

Net present value takes this into account.

Cash flow is the amount of money you expect to receive in the future. Time period is how many years in the future you will receive that amount of money. The discount rate is the return you expect to get from investing your money.

Example: You expect to receive $1,000 five years from now. You expect that you will be able to get 8% annual returns by investing in the stock market. Therefore, the net present value of your future cash flow is $1,000 / [(1 + 0.08)^5] = $680.58.  In other words, receiving $680.58 today would give you the same value as receiving $1,000 five years from now.

22. Perpetuity Formula: Present Value = Cash Flow / Discount Rate

An annuity is a fixed sum of money paid at regular intervals such as every year. Perpetuity is an annuity that lasts forever.

The present value of a perpetuity is calculated by taking the cash flow of each payment and dividing it by the discount rate.

Example: You are expecting to receive $1,000 per year for the rest of your life. You expect that you will be able to get 8% annual returns by investing in the stock market. Therefore, the present value of this perpetuity is $1,000 / 0.08 = $12,500.  In other words, receiving $12,500 today would give you the same value as receiving $1,000 each year for the rest of your life.

23. Return on Equity = Profit / Shareholder Equity

Return on equity , or ROE for shirt, measures how effectively a company is using its assets to create profits. It is calculated by taking profit and dividing by shareholder equity, which represents the net worth of a company.

In other words, shareholder equity is the value of a company’s total assets minus its total liabilities.

Example: Your company’s profit this year is $100M. Shareholder equity, or the net worth of the company is $1B. Your company has a ROE of $100M / $1B = 10%.

24. Return on Assets = Profit / Total Assets

Return on assets , or ROA for short, measures how profitable a company is relative to its total assets. In other words, it shows how efficiently a company is using its assets to generate income.

Assets can be anything that has value that can be converted into cash. This includes cash, property, equipment, inventory, and investments.

Example: Your company’s profit this year is $100M. Your company as $400M worth of assets. Your company has a ROA of $100M / $400M = 25%.

25. Price Elasticity of Demand = (% Change in Quantity) / (% Change in Price)

Elasticity is a measure of how much customer demand changes for a product given a change in the product’s price. In almost all cases, an increase in a product’s price results in a decrease in customer demand. Therefore, price elasticity of demand is usually negative.

Example: Your company has decreased its product’s price by 10%. As a result, the number of units sold has increased by 20%. Therefore, the price elasticity of demand is 20% / -10% = -2.

26. Cross Elasticity of Demand = (% Change in Quantity for Good #1) / (% Change in Price for Good #2)

Cross elasticity of demand measures how much customer demand changes for a product given a change in price of a different product.

If two products are complements, an increase in price of one product will result in a decrease in demand of the other product. Complementary products have a negative cross elasticity of demand.

If two products are substitutes, an increase in price of one product will result in an increase in demand of the other product. Substitute products have a positive cross elasticity of demand.

Example: A competitor has decreased the price of a competing product by 20%. As a result, the demand for your product has dropped by 10%. The cross elasticity of demand is -10% / -20% = 0.5.

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A Corporate Glossary Case Study

There have been several events that have transpired in my current place of business which have created the need for making a common corporate glossary explicit. Perhaps the most notable of these was a migration to a new commercial off-the-shelf (COTS) software system, which essentially manages the heart of the business. 

As you would expect, this system has its own terminology, and this has caused the entire business to learn a new vocabulary. Terms that are important to the business are important enough to expend time and resources in tracking them and making sure everyone in the enterprise is “speaking the same language”—literally. We have therefore identified the need for a corporate glossary.

A corporate glossary also sets the stage for “the semantic web,” intelligent search, and real knowledge management: The establishment of a corporate, shared knowledge base where different groups within the organization can learn from the successes of others. 

Publisher’s Note: From time to time, TDAN.com republishes article from earlier issues (this one from July 2005) that are still relevant today. Thanks, Bonnie, for allowing me to repurpose this updated article on a topic that is very relevant today. This is not part of Bonnie’s regular series on TDAN.com, Tales & Tips from the Trenches .

This feature will share a case study in launching a corporate glossary. In the process, we will explore the lifecycle of a term and discuss the beginning of a governance process for business terms. I will be exploring our journey to the creation of a knowledge base. The next step after a glossary is to expand and build it into an encyclopedia of sorts. Along the way, we will be looking at infrastructure, lifecycle, architecture, and governance. We have discovered some exciting things in our adventures, and I look forward to sharing these nuggets of knowledge with you.

Purpose and Function of the Glossary

The purpose of the glossary is to provide anyone with the definition of any term or data element name, no matter where they are or what software they are using. 

In order to provide this capability, the glossary must be ubiquitous—available from anywhere in the organization, at any time, and always accessible by everyone. It should be easy to use and require as few keystrokes as possible. It should also be able to be modified by not just the subject matter experts (SMEs), but also by anyone in the company. Therefore, our portal is the perfect place for the glossary to reside; it comes up when you click the Internet Explorer icon in the tray. 

Governance Lite

If anyone is allowed to create or update an entry, some control is needed to reconcile terms cross-functionally with other groups in the organization who may have different uses for a term. This creates the need for governance.

We have all experienced data dictionary initiatives that have been burdened with too much governance. The governance gets in the way of flexibility: The business needs to be able to change the definition when the business itself changes. The resulting situation involves definitions that may have been correct at one point in time, but as things change, they never are in sync with the business as time goes on because it takes an act of Congress to change the dictionary. We have therefore created what we call “Governance Lite” in order to create a flexible structure to accommodate both the need for governance and the need to keep constantly in synch with the business.

Governance Lite works as follows: Anyone in the organization can create a Business Term entry in the glossary. When a new term is created, it has a state of “Candidate.” Anyone can see all candidate terms, and the state will be shown to users of the Glossary.

We have a “Terms Team” whose job is to rationalize and normalize terms. The Terms Team is electronically notified when a new term is entered into the glossary. The team then researches the term with other terms already in the glossary and makes sure there are no conflicts. The team makes sure the wording of the definition is accurate, and that the definition follows the format mentioned in an earlier article – Business Metadata: How to Write Definitions published by TDAN.com (link unavailable). Sometimes, this work may require researching reference documents, and/or contacting line of business SMEs directly. When the definition has been successfully researched, its state is changed to “Authorized.” 

The business is alerted to its use of a Candidate term since the term is displayed in the glossary along with its state. The business should take steps to clarify the meaning of Candidate terms whenever they are used, since it is possible that a candidate can have more than one meaning. 

“Wiki” Updating

“Wikipedia” is an open-source encyclopedia on the internet. What’s cool about it, is it’s the “People’s encyclopedia”—anyone can update an existing entry or add a new one. In this way, everyone can participate in it and “own” it. On the downside, it can be very chaotic, because it lacks governance. We are trying to strike a balance and enable everyone to feel like they can contribute, therefore only applying minimal governance. Where it gets interesting is when someone wants to update an existing entry, especially someone else’s entry. This is when the governance is really needed.

How We Are “Faking” Wiki

Our portal software (we are using Plumtree) has two types of development: custom and straight out of the box. When you use the latter, with a tool called Studio, you can implement stuff very quickly. The tradeoff is you cannot do any custom development. Since we wanted to launch our glossary quickly, we wanted to use the straight out-of-the-box software. We had to then get creative in how we implemented it. Since the “plain vanilla” implementation does not offer versioning, we decided that every time someone wanted to edit an existing term, they can click the “edit” button (even on a term submitted by someone else) and they would be allowed to edit it. The system would create a new term behind the scenes, using a database trigger. So, if they were editing an Authorized term, the dictionary would essentially have both: the older version, which is the Authorized one, and the proposed new one, which would be a Candidate. The “new” one would contain the edited version of the definition. So ,what we are doing is not a true wiki because we need the entries for both before and after the edit in order to apply governance and resolve conflicts. 

Resolving Conflict

Suppose a business term has been entered more than once in the glossary, with two different meanings. There are several ways this can be resolved:

• Add a modifier to the term to create a new term. There may be a general definition of customer, but Marketing uses the term differently so you can have a “Marketing Customer.”
• a small furry mammal,
• an indentation in the skin,

In our glossary, we will be using what I call “enumerated definitions,” meaning a term will have numbered definitions. We have not decided whether the order of the definitions will reflect the most-to-least commonly used definition. I think for now it will be a “first in” type queue—the first definition received will be the first shown. Therefore, every term will have only one “Authorized” entry. 

   3. Replace the term—discussed in the next section.

Replacing and Merging Terms

The Term Team examines two or more existing definitions for the same term, either from separate submissions by different people or the modification of an existing term. Here are the resolution scenarios:

• One of the definitions looks better than the others: it is more complete, language is more precise, etc. In this case, one term will replace the others.
• Elements of all the candidate definitions can be merged together to create a new definition. 
• One definition may be incorrect or may apply to a different term.

In all of these cases, one definition will replace others. The replaced term will have a status of “Replaced” and there is a data element Replaced By which would contain the Term ID of the new term. 

Lifecycle of a Term

The states of a term are:

1. Candidate 2. Authorized 3. Replaced 4. Retired

Sometimes it will be determined by the business that a term is not useful anymore and is no longer part of the common business language. In this case, its status will be Retired.  We are still setting policies concerning retired terms. Right now, our intention is that if the Term Team uncovers a term that should be retired, the status will be set to Retired, and if no one comments on this or edits the definition, it will cease to be an active part of the glossary and will no longer be displayed to users.

Using the Glossary: How Search Works

The first step in a glossary search is accessing the main portal page by launching the browser. There are two portlets for the glossary, both shown on the main portal page: one for search and one for submission. The search portlet has only one entry area, for the term name, along with the search button. The results window displays one definition with an arrow indicating more rows found if they exist. The results are sorted by the state of the term, so if there is an Authorized definition it will show first. Otherwise, the results are sorted secondarily by date entered, so if there are multiple candidates, the most current will show first.

The submit portlet allows the user to enter a term name and a definition if desired. We want users to be able to submit a term even if they don’t know the definition.

One of the immediate goals of our project is getting the business to be familiar with the glossary and to use it. We are in the process of launching a publicity campaign, which includes a contest, to generate excitement and awareness of the glossary. Every time someone enters a term, their name will be entered into the drawing to win a gift certificate for company merchandise like polo shirts, tote bags, etc.

The purpose of the contest is twofold:

• To collect as many terms from actual businesspeople as we can, and
• To get people familiar with the glossary so they can start using it in their daily work.

The Future of the Glossary: Semantic Web and Encyclopedia

The Terms Team in the background will quietly be collecting synonyms. Eventually we want to display synonyms to the user when the definition is shown. This will require customization, so it will be implemented in a later release. It is our goal at this time to have the display limited to the term name, the definition, and its status. Synonyms and related terms lead to ontological information—terms that can be related and can therefore supercharge searching. 

The stage is being set for semantics to empower search. Although the tools are not here yet, it helps to be aware of the emerging standards, such as Resource Description Framework (RDF) and Web Ontology Network (OWL), which will enable related information to be tagged for easy navigation. We see that our dictionary work is preparing us for semantically enabled search capability when it arrives. At the same time, another group is gearing up for the creation of an in-house taxonomy for corporate search. Our glossary will help define the base terms used in this taxonomy.

Our next evolutionary step for our “wiki-glossary” will be a corporate “wikipedia,” like its namesake on the web. We want to be able to enable businesspeople to capture the largely unstructured data that they uncover every day that helps them perform their jobs better. We want to create a way that when people make a discovery of knowledge that helps them, they can enter it in the wikipedia as an entry (sort of like a business term entry but more detailed) and others can search on it. We already have a document library, but it contains only formal documentation on business processes. We would like to capture all the informal knowledge embedded in “carbon-based life forms” so others can benefit.

Everyone knows that most business rules live informally, the large majority in people’s heads. If we can create a very simple tool that makes it easy to capture this informal bed of knowledge, then the corporation will benefit greatly. This is our next step, along with the creation of a “wiki-ontology,” a classification of corporate knowledge that can be grown from the businesspeople themselves. 

Generating Business Value

Our glossary is making the business community aware of the meanings of the words they use. We see confusion every day in word usage that often translates into misunderstood business metrics, which can have a drastic impact on decision-making. It is our hope that we can clarify terms so systems and metrics can be understood better, which will eventually have an impact on the bottom line.

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Bonnie O'Neil

Bonnie O'Neil is a Principal Computer Scientist at the MITRE Corporation, and is internationally recognized on all phases of data architecture including data quality, business metadata, and governance. She is a regular speaker at many conferences and has also been a workshop leader at the Meta Data/DAMA Conference, and others; she was the keynote speaker at a conference on Data Quality in South Africa. She has been involved in strategic data management projects in both Fortune 500 companies and government agencies, and her expertise includes specialized skills such as data profiling and semantic data integration. She is the author of three books including Business Metadata (2007) and over 40 articles and technical white papers.

View all posts by Bonnie O'Neil →

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• Bond Coupon
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• Merger Waves
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• Project Analysis
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• Analysing Financial Performance
• Average Rate of Return
• Balance Sheet
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• Cash Flow Budget
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• Cash Flow Improvement
• Cashflow Problems
• External Sources of Finance
• Financial Objectives
• Financial Performance and Stakeholders
• Financial Statements
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• Internal Sources of Finance
• Investments
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• Sources of Finance
• Boundary Spanning
• Contract of Employment
• Departmentalization
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• Employee Engagement
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• Employee Training and Development
• Employment Policy
• Expectancy Theory
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• HR Policies
• Hackman and Oldham Model
• Herzberg Two Factor Theory
• Human Resource Flow
• Human Resource Management
• Human Resource Objectives
• Improving Employer - Employee Relations
• Incentives for Employees
• Internal and External Communication
• Intrinsic Motivation
• Job Characteristics Model
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• Labour Productivity
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• Maslow Theory
• Matrix Organizational Structure
• Methods of Recruitment
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• Motivation in the Workplace
• Organisation Design
• Organizational Justice
• Organizational Strategy
• Organizational Structure Types
• Pay Structure
• Performance Evaluation
• Performance Feedback
• Recruitment And Selection
• Reinforcement Theory
• Retention Rate
• Self-Efficacy Theory
• Taylor Motivation Theory
• Team Structure
• Termination
• Training Methods
• Work-Life Balance
• Business Ethics
• Business Risks
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• Consumer Law
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• Effects of Interest Rates on Businesses
• Employment Law
• Environment and Business
• External Factors Affecting Business
• Government Policies on Business
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• Information and Communication Technology in Business
• Multinational Company
• Sustainability in Business
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• Business Enterprise
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• Classification of Businesses
• Evaluating Business Success Based on Objectives
• Measuring Success in Business
• Motivation in Entrepreneurship
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• Risks and Rewards of Running a Business
• Behavioral Theory in Organizational Management
• Charismatic Leaders
• Conflict Management
• Conflict Process
• Contingency Theory
• Decision Making
• Decision Making Model
• Ethical Decision
• Ethical Leadership
• Fiedler Contingency Model
• Impression Management
• Individual Differences
• Leader Member Exchange Theory
• Leadership Challenges
• Leadership Theories
• Negotiation
• Office Politics
• Organizational Leadership
• Organizational Politics
• Positive Leadership
• Social Network Analysis
• Stakeholder
• Trait Theory of Leadership
• Transactional Leaders
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• Types of Conflict
• Business Aims and Objectives
• External Environment
• Forms of Business
• Franchising
• Key Business Terms
• Limited Liability
• Shareholder
• Sole Trader
• Evaluating Total Quality Management
• Importance of Quality
• Improving the Supply Chain
• Measuring Quality
• Operational Data
• Operational Objectives
• Operational Performance Analysis
• Outsourcing
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• Quality Management
• Total Quality Management
• Affective Events Theory
• Attitude in the Workplace
• Behavioral Science
• Big Five Personality Traits
• Biographical Characteristics
• Bureaucratic Structure
• Causes of Stress at Work
• Challenges and Opportunities for OB
• Challenges of Management
• Choosing the Right Communication Channel
• Classification of Groups
• Conflict Results
• Contingent Selection
• Creative Behavior
• Cultural Values
• Decision Making Biases
• Direction of Communication
• Discrimination in the Workplace
• Diversity Management
• Diversity in the Workplace
• Effective Management
• Effective Negotiation
• Effective Teamwork
• Effects of Work Stress
• Emotional Intelligence
• Emotional Labor
• Emotional Regulation
• Employee Involvement
• Employee Selection Methods
• Evidence Based Management
• Factors Influencing Perception
• Functions of Emotions
• Functions of Organizational Culture
• GLOBE Framework
• Group Cohesiveness
• Group Decision Making
• Group Development Stages
• Group Norms
• Group Roles
• Group Status
• Group vs Team
• History of Motivation Theory
• Hofstede's Cultural Dimensions
• How to Measure Job Satisfaction
• Impact of Power
• Importance of Leadership in Human Resource Management
• Influences on Organizational Culture
• Initial Selection Process
• Innovative Organizational Culture
• Integrating Theories of Motivation
• Interpersonal Skills
• Job Attitude
• Job Dissatisfaction
• Job Satisfaction Causes
• Job Satisfaction Outcomes
• Leadership Trust
• Maintaining Organizational Culture
• Mechanistic vs Organic Structure
• Models of Organizational Behavior
• Modern Motivational Theory
• Myers-Briggs
• Negotiation Process
• Organizational Behavior Management
• Organizational Constraints
• Organizational Culture Problems
• Organizational Decision Making
• Organizational Structure Management
• Organizational Values
• Paradox Theory
• Perception in Decision Making
• Personal Stress Management
• Personality Models
• Personality and Values
• Personality at Work
• Planned Change in an Organization
• Positive Company Culture
• Power Tactics
• Power in Work
• Responsible Leaders
• Self-Evaluation
• Simple Structure
• Situation Strength Theory
• Social Loafing
• Stereotype Threat
• Stress Management in Organization
• Stress in the Workplace
• Substantive Selection
• Team Challenge
• Team Composition
• Team Player
• Team Process
• The Study of Organizational Behavior
• Third Party Negotiation
• Training Effectiveness
• Trait Activation Theory
• Types of Diversity
• Types of Emotions
• Types of Moods
• Types of Power in the Workplace
• Types of Teams
• Understanding and Developing Organizational Culture
• Unequal Power
• Virtual Organizational Structure
• Work Emotions
• Working as a Team
• Workplace Behavior
• Workplace Spirituality
• Communication Barriers
• Communication Channels
• Communication Process
• Cultural Barriers
• Oral Communication
• Persuasive Strategies
• Types of Communication
• Written Communication
• Assessing Business Performance
• Business Considerations from Globalisation
• Competitive Environment
• Core Competencies
• Corporate Mission and Objectives
• Corporate Social Responsibility
• Economic Change
• Economic Environment
• Financial Ratios
• Interest Rates in the UK
• Investment Appraisal
• Lifestyle and Technological Environment
• Non-Financial Data
• Porters Five Forces
• SWOT Analysis
• Social and Technological Environment
• Areas of Competition
• Bowmans Strategic Clock
• Diversification
• Strategic Positioning

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Business case studies are important as they help us understand how real-life business scenarios are different from classroom teaching. Businesses are dynamic, meaning they are susceptible to external forces. A business case study tells us how a particular business responded to a unique situation. Other businesses can learn from them and be prepared for what can happen, how-to, or how not to respond to a similar situation.

What is a business case study?

A case study is a research tool that is also implemented as a research methodology. It is preferred by many students while writing their bachelor's or master's thesis. A case study gives students a chance to apply theory to a real-life situation, analyse, and draw insights. The business case study can be a fictitious account of a business situation provided by the instructor to check the critical thinking and problem-solving skills of students. We have developed 44 case studies that provide students with detailed problem statements and analyses to understand real-life business scenarios. Students can use these case studies as examples with the corresponding theory to stand out in exams. For example in Figure 1 below, what strategy would a salesman implement to increase his sales? We need to study his business case to find out!

A business case study summarises a real-life business issue faced by a company and explains how it may affect society within a business context.

Business Case Studies Format

In this study set, we have divided case studies into groups as per the business situation. The groups include case studies regarding mergers and takeovers, strategy overviews, SWOT analyses, business leader characteristics, corporate social responsibility, franchise models, Porter's five forces, change management and ethical issues.

Business Case Studies: Mergers and takeover case study

In Layman’s terms, When two equal-sized companies join forces to capture more market share, it is called a merger. While if a big company buys out a smaller company, it is called a takeover. Virgin Media O2 merger happened in June 2021 through a 50:50 joint venture between Liberty Global and Telefónica, the owners of Virgin Media and O2.

Another example of a merger is analysed in the Disney Pixar Merger Case Study. The former CEO of Pixar, Steve Jobs, has said that this merger will allow companies to focus on what they do best. But did you know that Kraft Food Ltd. tried to acquire Cadbury in a hostile takeover? Kraft Cadbury Takeover is a case study that explains how hostile takeovers may occur.

Case studies about strategies of businesses

A strategy is not the same as a plan. Strategy is the first step in business that determines why, considers all known and unknown factors, multiple different paths, and multiple outcomes. Without a strategy, businesses cannot reach their goal and their plans will wander. Businesses create different strategies to reach different goals. We have presented marketing strategies and global and internationalization strategies for some successful companies like Apple, Starbucks, Nike, Ikea, Netflix, and Coca-cola.

You might have observed that Coca-cola has similar branding all over the world. Their marketing strategy is to be a common household name that can be recognized anywhere globally. Starbucks and Mcdonald’s also use the same branding even if their products differ from country to country.

Business Case Studies: SWOT analysis

SWOT analysis is a tool all businesses use before making decisions. The tool helps put Strengths, Weaknesses, Opportunity, and Threats concisely so that one can easily analyze them before making any decision. Studying cases of companies like Apple, Tesco, and Cadbury gives us more insight into the company than we see. Hershey has acquired the rights to produce Cadbury products in the U.S. in 1988. Cadbury was facing issues expanding its market reach. This is a weakness Cadbury has.

What do you think will be the threats to tech giant Apple? Read the Swot Analysis of Apple case to find out.

Business Case Studies: Business leaders

Who is your role model in business? Whose leadership style do you admire? Is it Bill Gates, Richard Branson, or Jeff Bezos? Perhaps you wish to know more about Warren Buffet or Reed Hastings of Netflix.

Mary Barra, the first female CEO of General Motors, practices an inclusive and transformational leadership style. Have you heard about the innovative leadership style employed by Susan Wojcicki, who is the CEO of Youtube? Or you can read all to know how these business leaders differ in their leadership styles.

Business Case Studies: Corporate social responsibility (CSR)

Corporations often undertake practices and policies for the betterment of society along with profit maximization. Common examples of CSR include green initiatives, donating to charities, or organizing fundraisers. In our case studies regarding CSR, you can read about Ben and Jerry’s CSR strategies. Ben and Jerry’s has, over the years, supported protestors against income inequality, protested drilling in Arctic regions and has launched several climate action campaigns.

Are you aware of Walt Disney CSR Programs? Disney's CSR programs include CSR programs for children, investment in youth programs, social influence and workforce programs and supply chain investment programs. Disney not only has children as their main audience but also takes responsibility for helping children in need, showing exemplary CSR practices.

Business Case Studies: Franchise model

The first company that might come to mind when asked about an example of a franchise model could be McDonald’s. McDonald’s model has ensured the ability of the franchise to run sustainably for 10 years.

Another brand that grew using the franchise model is the well-known clothing brand, Zara. Zara took 13 years to make its presence via franchising as they moved forward cautiously. Zara gives the opportunity to franchisees to repurchase their stocks.

Oyo, a unicorn hospitality start-up from India, is growing internationally via a franchise model. Oyo implemented an aggregator model in which it leases some rooms from partner hotels, refurbishes them to match quality standards, and rents them out on their platform. From 2018, Oyo switched to a franchise model in which partner hotels make a contract with Oyo to provide quality service for brand name and posting hotel rooms on Oyo platforms.

Business Case Studies: Porter five forces

Porter's Five Forces is a method for analyzing a company's competitive environment. It identifies and analyzes five competitive forces that shape the industry:

Competitive rivalry,

New entrants,

Power of buyers,

Power of suppliers,

Threat of substitutes.

There are many coffee shops that could match Starbucks’ quality of service. Starbucks is always under the threat of new entrants, competition, and substitutes. To survive, Starbucks has to keep innovating new flavours, drinks, and coffee substitutes.

Walmart is another case study that we analyzed for Porter’s five forces. We realized that the strongest force of Porter’s Five Forces for Walmart is the competitive rivalry from other retailers like Costco, Amazon, and eBay.

What is your opinion about these forces on Apple? Is it the customer bargaining power or threat from substitute products that have the most influence? Read Porter’s five forces Apple to learn more!

Business Case Studies: Change management

Change management is the process of managing responses to changes in the internal and external environment of a business. Businesses that do not change in time, perish. When Apple launched touchscreen phones, Nokia stuck with QWERTY keypads. When Google launched Android, Nokia stuck with the development of the Symbian operating system. What happened to Nokia and why were they resistant to change? On the other hand, you can also read about Apple's change management. The decision-making and acceptance to change are what differentiates Apple from Nokia.

Business Case Studies: Organizational structure

Organizational structure decides how flexible the company is towards the process of change. Modern organizations like Google keep innovation at the centre of their strategy. Google has a flat, function-based, and product-based organizational structure.

McDonald’s has separate departments for each country/region. They have a centralized decision-making body and a decentralized structure for each country they operate in. Tesco, one of the big five grocery retailers in the UK, has a decentralised, hierarchical, and product-based structure. These businesses are active in different sectors and their organisational structure depends on it. The other factors that influence organizational structure are company work culture, management , and business model.

Business ethics case studies

Keeping a check on businesses ethically is not just the government’s job but also consumers'. Unfortunately, there seemed to be several ethical issues with Apple such as poor working conditions, health and safety risks, child labour , poor environmental reporting, contributing to e-waste and tax avoidance. Starbucks is not an exception for it either. They have an aggressive marketing strategy, poor employee conditions, and a weak position on fair trade ratings. Companies like Apple, Starbucks can improve their ethical issues but some companies have faced sandals.

Nike's Sweatshop Scandal and the Enron Scandal are two such examples. Nike Sweatshop Scandal began in 1991 when Jeff Ballinger published a report detailing the appalling working conditions of garment workers at Nike's factory in Indonesia. Since then Nike has taken positive steps to reinforce CSR. The Enron Scandal was financial fraud. Enron did not show large debt on its balance sheet . But why did it happen? You can read about it in our case study called Enron Scandal!

Business case study examples

In this section, we have mentioned case studies that do not fall into any of the categories mentioned above but still hold importance in business studies. These case studies are unique and one may find that these companies have created new markets via their business model.

Business Case Studies: Ryanair Strategic Position

Ryanair is a cost-friendly budget airline that operates in 40 countries. How can they sell tickets so cheap? Well, they travel to less busy airports, usually far from the city, outside business hours when there is a high rush at airports, and they charge you for almost every small addition. Ryanair operates only one type of aircraft to speed out ground crew processes. Ryanair tries to keep their planes for small times on airfields to save on rent. Budget flyers across Europe prefer Ryanair for its cheap tickets. More insights at Explanation: Ryanair Strategic Position .

Business Case Studies: Unilever outsourcing

You might have heard that many major companies outsource their IT operations. Unilever Outsourcing is different as they have outsourced their HR operations to Accenture. Outsourcing has helped Unilever save fixed costs and share risks.

Business Case Studies: Nivea Market Segmentation

Nivea is a well-known name in Asian countries. Nivea effectively targets the young adult market in the tropical equatorial region. Nivea’s market segmentation thus concluded to be geographical and demographic. But how did we reach this conclusion? Read more about our Explanation: Nivea Market Segmentation .

Here are the links to each case study.

Table 1 - Summary of StudySmarter Case Studies

Find out more about how businesses function in the 'real world' by reading our case studies mentioned above!

Business Case Studies - Key takeaways

• A case study is a research tool that is implemented as a research methodology.
• A business case study summarises a real-life business issue faced by a company and how it may affect society within a business context.
• StudySmarter has provided 44 case studies that provide students with detailed problem statements and analyses to understand real-life business scenarios.
• In Layman’s terms, When two equal-sized companies join forces to capture more market share, it is called a merger while if a big company buys out a smaller company, it is called a takeover.
• Strategy is the first step in business that determines why, considers all known and unknown factors, multiple paths, and multiple outcomes.
• SWOT analysis is a tool all businesses use before taking any decision.
• Corporations undertake practices and policies for the betterment of society, this is known as CSR.
• Porter's Five Forces is a method for analyzing a company's competitive environment .
• Change management is the process of managing responses to changes in the internal and external environment of a business.
• Companies are always in the moral dilemma of doing things the 'right' way or the profitable way!

Final Business Case Studies Quiz

Business case studies quiz - teste dein wissen.

what year was Nike founded?

Show answer

Show question

What was the nike sweatshop scandal about? 

Nike has been criticized for using sweatshops in Asia as a source of labour. The company was accused of engaging in abusive and verbal behaviour toward its workers. 

Does nike sweatshop scandal involve human rights violations? 

Yes. A report by the Washington Post in 2020 stated that Nike doesn't have evidence of a living wage for its workers. The same year, it was revealed that the company uses forced labor in factories. 

What is the main reason Nike is considered unethical? 

Nike has been criticized for using sweatshops in Asia as a source of labor. The company was accused of abusing its employees. In addition, some of the factories reportedly imposed conditions that severely affected their workers' restroom and water usage. 

Was Nike involved in child labour? 

In what year did Nike created the Fair Labour Association, which was created to oversee the company's 600 factories?

In what year did the company started improving the conditions of its factories?

Where was the first Nike store to be open?

First Niketown store to launch open in Portland, Oregon. 

When was Nike first founded?

Life magazine in America did a report on child labour in 1996, which included a shocking photo of a 12-year-old boy sewing a Nike football. What country was he from?

Where and when was Tesco founded?

Tesco was founded in London, the United Kingdom in 1919.

Who is the founder of Tesco?

 Tesco’s founder is Jack Cohen. 

What type of market does Tesco belong in?

Tesco belongs to the grocery and merchandise retailer market. 

Is it true that Tesco only sells its own brand products?

No, as well as selling its own brand products Tesco also supplies and sells other popular grocery item brands.

Why do businesses use SWOT analysis?

 Business uses SWOT analysis to analyse their strategic positioning in terms of strengths and weaknesses. Additionally, it assists companies in decision making with consideration of external factors and the environment, in terms of opportunities and threats.

What are the key elements that are included in SWOT analysis?

There are four key elements that are included in the SWOT analysis. They are strengths, weaknesses, opportunities and threats. 

Regarding SWOT analysis, what elements are used for internal analysis and which ones are used for external analysis?

For internal analysis: Strengths and weaknesses

For external analysis: Opportunities and threats

 What is meant by threats?

Threats are external factors that can potentially be harmful to the organisation. 

What are the key Tesco’s strengths?

The key Tesco’s strengths are:

• Having the largest market share in the UK
• The ability to increase its growth even during events such as the Coronavirus pandemic, 
• High adaptability to the constantly changing environment, 
• Innovation especially in regards to new technology,
• Holding the largest employer’s title in Europe. 

What are the key Tesco’s weaknesses?

The key Tesco’s weaknesses are:

• Failure to adapt to markets outside of Europe, 
• Being involved in scandals regarding food safety and quality.

What are the key Tesco’s opportunities?

The key Tesco’s opportunities include:

• Investing in optimising consumers’ experience of online shopping,
• Increasing youth employment rates, 
• Investing in expanding the range of plant-based products.

What are the main Tesco’s threats?

The main Tesco’s threats include:

• Post-Brexit rules
• Competition
• Government’s regulations
• Price inflation of necessities 

Why SWOT analysis is an important part of Tesco’s strategic analysis and decision-making process?

SWOT analysis is an important part of Tesco’s strategic analysis as it assists in identifying the business’s strategic positioning and making decisions with consideration of external factors and the environment.

What is meant by market analysis?

 Market analyses are used by businesses to get a sophisticated understanding of the market that they are operating in and identify the competition in the market. 

Why is it important for Tesco to conduct market analysis?

 It is important for Tesco to conduct market analysis as it will allow Tesco to fully understand its market and see the company’s positioning among the competitors.

What are the key elements that market analysis is made of?

The market analysis is made upon the following elements:

• Market size
• PESTLE analysis
• Competitors
• Consumer loyalty in the market
• Market segmentation
• Consumer decision making within the market

What is the full name of the IKEA Foundation?

Stichting IKEA Foundation

Who founded the IKEA Foundation?

Ingvar Kamprad

Is the IKEA Foundation independent from the IKEA company?

When was the IKEA Foundation founded?

According to its founder, why was the IKEA Foundation founded?

It was founded to make sure that IKEA continues to be an independent company using some of its profits to help people in need long after he is not there.

According to Ingvar Kamprad, what are the basic needs we all share?

a secure home, good health, a regular income, and a desire to keep our children safe and to see them get a good education and succeed in life

What are the objectives of the IKEA Foundation?

• To help families in poverty across developing countries to fulfil their basic needs such as a secure home, good health, a regular income, and a desire to keep their children safe and to see them get a good education and succeed in life
• To help young people, women and refugees who often struggle to find a job and earn a sustainable income

What are the six programs funded by the IKEA Foundation?

• climate action
• renewable energy
• agricultural livelihoods
• employment and entrepreneurship
• refugee livelihoods
• special initiatives and emergency response

What is the main goal of the IKEA Foundation’s climate action?

to reduce carbon emissions

How does the IKEA Foundation work on supporting agricultural livelihoods?

Partnering with Enviu they support social entrepreneurs in Africa and India in creating local markets by building local supply chains.

What is an initiative launched by the IKEA Foundation to enable underprivileged people to earn income and lift their families out of poverty?

Green Entrepreneurship Initiative

What institution was a research on refugees carried out by?

by the Refugee Studies Centre at the University of Oxford

What did the IKEA Foundation do to help during the COVID-19 pandemic?

It donated €3 million to Médecins Sans Frontières (MSF), an international humanitarian medical non-governmental organisation. The donation is expected to support ongoing life-saving medical activities caused by the spread of COVID-19 in India.

What is IKEA's international strategy?

Its concept is to combine high-quality design and functionality with low prices. Ikea's goal is to keep the prices low enough to allow the customer to buy the product directly. 

Is IKEA a transnational company? 

Does IKEA use standardization or adaptation? 

standardization

What type of global business is IKEA? 

IKEA is a global home furnishing brand that was started in 1943 by Ingvar Kamprad. It started as a mail order catalog business. 

Who is the founder of IKEA?

In what year was IKEA founded?

What does IKEA mainly sell?

 it is mainly focused on selling ready-to-assemble furniture

True or False?

The company started by developing innovative modular designs and sourcing components from eastern Europe.

Ikea strategy allowed it to offer quality furniture at very low prices. 

What is Ikea hybrid strategy?

Ikea hybrid strategy is aimed to achieve competitive advantage by producing at the lowest cost.  It allows the company to charge lower prices and increase the profitability. 

To achieve its goals, IKEA constantly bring costs up and is always looking for the most costly suppliers. 

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Business Case Approach glossary

 | A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

As part of our Business Case Refresh, we're in the process of updating this Business Case Approach (BCA) page to make sure it reflects the most up-to-date guidance.

An individual land transport intervention to address a problem or opportunity , which will have a defined start, end and scope, for example a bridge replacement. Activities are usually part of a programme .

Activity class

A grouping of similar activities for National Land Transport Programme (NLTP) funding. The purpose of the classification of activities is to:

• ensure conformity of the NLTP funding structure with the activity classes defined in the current Government Policy Statement on Land Transport (GPS)
• identify activities that are eligible for funding from the  National Land Transport Fund  (NLTF) and from funds Waka Kotahi is managing on behalf of the government
• provide a basis for comparing transport costs over time and between organisations.

2021-24 NLTP activity classes and work categories

Activity-level business case

The  single-stage business case (SSBC) , SSBC-lite,  indicative business case (IBC) and detailed business case (DBC) , are sometimes called activity-level businesses cases because they focus on the details of an activity (as opposed to a programme of activities). They are funded from the relevant activity class.

Activity management plan (AMP)

Plans prepared by the owners of infrastructure assets that detail how they manage these assets in the context of the services they are supporting and explain the purpose of holding the asset. The goal of good asset management is to support the delivery of a level of service (whatever the service may be) in the most cost-effective manner, taking long-term sustainability into account. Local authority AMPs are prepared in accordance with clause 2 of schedule 10 of the Local Government Act 2002 . AMPs should be based on the New Zealand Asset Management Support (external link) (NAMS) Group’s International infrastructure management manual.

Alternatives

A strategic way of responding to the problems and delivering the benefits identified in the strategic assessment of a business case . Alternatives and options are sometimes referred to interchangeably, however, in this context they have different definitions. An alternative is a higher-level response, such as exploring potential for different land use arrangements, or encouraging greater use of other modes to address projected growth in network demand, alongside more conventional supply focused approaches involving new infrastructure.

Alternatives and options are usually considered and assessed during the programme business case phase and developed during the detailed business case phase. In developing alternatives, it is important to consider ones that address:

• demand – for example, ways in which the need for travel can be reduced
• productivity – for example, by making sure the current system is optimised as far as reasonably practicable
• supply –  for example, provision of new services or infrastructure.

See also Options  

Approved organisation (AO)

A regional council, territorial authority, or public organisation that has been approved to apply to for funding from the National Land Transport Fund .

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Benchmarking

Benchmarking is where an investment proposal is compared against a normalised group of other proposals within a pre-determined peer group with a similar network levels of service to ensure value for money . Waka Kotahi will use peer groups for cost–benefit appraisal benchmarking and act as the basis for cost comparison discussions.

A benefit is the measurable improvement that results from an outcome . It answers the question: ‘what value is derived from this outcome?’ In the context of a business case , a benefit is normally a positive consequence of responding to an identified problem or opportunity . Examples include:

• a reduction in travel time between A and B
• a reduction in the number and duration of road closures
• a more affordable maintenance programme
• people have access to a wider range of transport choices.

Note that a specific use of the term benefit arises when monetised benefits are used to determine a benefit–cost ratio (BCR) . Not all benefits can be monetised.

See also Benefits map

Benefit–cost ratio (BCR)

Waka Kotahi uses BCR as a measure of economic efficiency from a national perspective as defined in the Monetised benefits and costs manual . The ratio compares the monetised benefits to land transport users and the wider community from implementing a project or providing a service with the whole-of-life costs of that project or service. For example, a project which has the total benefits of $100 million, with a total cost of $50 million (both in present value), has a BCR of 2.  It enables different projects to be compared with each other. BCR is used to assess improvement activities for the efficiency factor of the Investment Prioritisation Method , which Waka Kotahi uses to assess proposed investments.

Benefits map

A one-page flowchart that shows the benefits of a potential investment to an organisation or its customers in a form that can quickly be understood by decision makers. It should also include:

• at least one supporting measure that demonstrates the investment’s specific contribution to each identified benefit
• an obvious connection between the benefits and outcomes in the context of their local impact.

Benefits maps are typically created as an output of a benefits workshop and usually continue to be developed as the business case progresses.

See also investment logic mapping .

Business case

A document that expresses the reasoning and justification for investing in a change,  project or programme . It:

• describes the case for change
• explains how to achieve best public value
• considers commercial viability
• recommends a preferred option, which is affordable and achievable.

The Business Case Approach provides a robust and flexible way of developing business cases for transport investment.

Business Case Approach (BCA)

The Waka Kotahi  principles -based framework for developing a business case  for investment, which must be followed by organisations seeking funding from the National Land Transport Programme .

Read more about the BCA

Business Case Approach principles

These underpin the Business Case Approach :

• Investing for benefits : investments are made to obtain organisational benefits. An investment should: contribute to the organisation’s strategic outcomes ; represent value for money ; and deliver benefits for customers.
• Clarity of intent : the intention driving an investment must be clear. Simple concepts and plain language will provide a clear understanding of the problems and benefits.
• Fit-for-purpose effort : the level of effort required to develop a business case must be proportionate to the complexity and risk of the problem and the proposed investment.
• Gathering information through informed discussions : successful investment management relies on gathering knowledge through informed discussion with appropriate stakeholders who have the most knowledge of a subject.
• Building the case for investment progressively : the BCA relies on a structured, sequential approach to decision making, checking each phase as you go. All investments must follow the same line of enquiry. 

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Commercial case

This looks at the commercial viability of a preferred option and the consenting and procurement strategy that will be used to engage the market. It presents evidence on risk allocation and transfer as well as details of responsibilities for delivering different aspects of the programme . The commercial case is usually part of the single-stage  business case or detailed business case .

Constraint mapping

This is the identification of constraints to a proposed investment, such as no-go areas or where there would be additional cost for a preferred solution. For example, what is the environment (physical, social)? How do locals use this environment? What is the context? What are the constraints? Constraint mapping sets the scene for how problems impact on people and places in the area.

Continuous programme

A continuous programme  is a group of activities, relating to existing assets and services, delivered on an on-going basis from one National Land Transport Programme (NLTP) to the next to maintain an adequate customer level of service (CLoS)  

That includes:

• road maintenance (maintenance, operations and renewal of existing services)
• public transport (existing services and operational amenities)
• road safety promotion.

Cost effectiveness

Cost effectiveness analysis is used instead of a full cost–benefit appraisal  where the objective is to compare the cost of different ways of achieving a given effect (such as a customer level of service ), or comparing the relative cost of different strategies with different effects. Waka Kotahi uses this approach to evaluate the economic efficiency of components of a public transport programme and operations, maintenance and renewals programmes, by comparing a programme with other similar programmes.

Cost–benefit appraisal (CBA)

Waka Kotahi uses CBA as a way of quantifying the monetary value of the national benefit that results from government investment in transport. Assessment tools vary according to the context. For example:

• improvement activities are assessed based on the Monetised benefits and costs manual  
• maintenance (continuous) activities are assessed against cost-effectiveness and performance benchmarks  for road maintenance
• core public transport services programmes are assessed against passenger metrics and a range of existing public transport benchmarks.

CBA is part of the Investment Prioritisation Method , which Waka Kotahi uses to assess proposed investments.

See also Benefit–cost ratios .

Customer levels of service (CLoS)

CLoS are agreements between the transport user and the system provider that defines expectations, in measurable terms, for what the customer will experience when using the transport system for their journey.

Waka Kotahi uses the following CLoS:

• One Network Road Classification (ONRC) , which can be applied to the road network for commuting, freight and tourist journeys, and also provides CLoS attributes for resilience, travel-time reliability and roughness.
• For safety levels of service Waka Kotahi adopts thresholds for medium and high safety risk derived from Safer Journeys (external link) (the government’s road safety strategy) areas of concern.
• For cycling journeys, Waka Kotahi Cycling Network Guidance adapts the Austroads Levels of Service. A New Zealand level of service for cycling is in development and will be available in 2018.
• For public transport journeys, Waka Kotahi uses the investment partner’s business case or supporting evidence to guide options and services in major metropolitan areas for commuter journeys, and for social services in other areas.

Where there is a gap between the expected service level and the current service level, it helps define the efficient level of investment needed.

Detailed business case (DBC)

This phase develops a proposed activity , providing more detail about the economic , financial and commercial  cases, and how it would be implemented. Because they are developed for each activity, one programme  may have multiple DBCs.

DBCs usually only involve detailed analysis of the preferred option and the do-minimum option identified in the indicative business case (IBC) .

Elements of the DBC phase, and the IBC phase, may be developed in a single-stage business case .

Find out more about the detailed business case

Do-minimum option

In developing business cases, the do-minimum option should represent the minimum level of expenditure required to maintain a minimum level of service , not the minimum level of investment required to achieve the investment objectives. For example, the most likely transport situation over the course of the appraisal period if no further intervention were to occur.

In theory, every option should be compared with the option of doing nothing at all, that is, the do-nothing option; however, for many transport activities it is not practical to do nothing at all.

It is important not to overstate the scope of the do-minimum option, that is, it should only include activities that are absolutely essential to preserve a minimum level of service. Where network interdependencies exist, the do-minimum option should take into account other activities elsewhere on the network where these other activities have a commitment to funding, and where they affect the demands and level of service at the location of interest.

The minimum level of investment to achieve the investment objectives is explored through the use of further options, in addition to the do-minimum. The do-minimum option is used as a baseline for comparing marginal costs and benefits of alternative activities. It provides the benchmark for determining the relative marginal value for money added by the other options under consideration.

Economic case

The main purpose of the economic case is to demonstrate that the investment proposal optimises value for money . This is achieved by identifying and evaluating a wide range of options in terms of how well they will meet the investment objectives .  Initial development of the economic case takes place during the  programme business case , where the emphasis is on consideration of alternative responses and identification of a preferred programme . The economic case is further developed as part of the  indicative business case , by the identification of a long list of options which are then evaluated to a short list, and ultimately a preferred option .

Financial case

Outlines the financial viability of the programme and possible funding sources by demonstrating that the preferred option will result in an affordable and fundable investment. The financial case is usually developed within the detailed business case .

Funding assistance rate (FAR)

The usual contribution, in percentage terms, that Waka Kotahi makes to an approved organisation , for the delivery of an activity or combination of activities. The FAR system identifies how the costs of delivering transport activities are shared between central government through the National Land Transport Fund and local government (primarily through local body rates). Funding assistance rates are not subsidies, but part of a co-investment system which recognises that there are both national and local benefits from investing in the land transport network.

Government Policy Statement on Land Transport (GPS)

The GPS sets out the government’s priorities for expenditure from the National Land Transport Fund (NLTF) over the next 10 years. Waka Kotahi uses the results alignment  portion of the Investment Prioritisation Method to ensure that NLTF investments are aligned to the GPS.

Government Policy Statement on Land Transport (GPS) (external link)

Improvement

Improvements are activities that increase levels of service to address an identified or significant gap in customer levels of service (CLoS) , or improve the efficiency of the land transport system in delivering existing CLoS.

These activities include but are not limited to state highway improvements, local road improvements, regional improvements, resilience improvements, walking and cycling improvements and public transport improvements.

Indicative business case (IBC)

A phase of business case development where individual activities or combinations of activities within the preferred programme are developed further. The purpose of an IBC is to provide decision makers with an early indication of the preferred option for an investment at an activity level.

The IBC will typically include:

• re-confirming the strategic case at an activity level
• developing a longlist of options
• evaluating the longlist to identify a shortlist and a preferred option (or options) and a do-minimum option .

An IBC will typically form the first part of a single-stage business case , although for high risk /high complexity activities it may be carried out as a separate phase, followed by a decision by investors whether to continue to detailed business case .

Find out more about the indicative business case

Integrated planning

For Waka Kotahi, integrated planning means leading and working with central, regional and local government, private developers and other partners such as Kiwi Rail and port companies, to bring land use planning, and transport planning and investment together to deliver an affordable transport system that supports a growing economy, safe and vibrant communities and a healthy environment, now and in the future.

Interdependency

 A system describes interdependent relationships. Economic or social activity generally leads to increased transport and land use demands. Facilitating those demands may reinforce increased economic or social demands. Different parts of the transport network may also be interdependent. A highway capacity improvement in one location may lead to increased demand upstream or downstream, or demands on other parts of the road network. Similarly, a public transport improvement may lead to less highway travel. These system interdependencies must be understood if the full implications of an intervention are to be identified.

Intervention

Any action or change that is designed to impact positively on the transport system. This is used to refer collectively to a broad range of actions or changes, including but not limited to policy and regulation, infrastructure, services, land use, demand management or other system optimisations.

Intervention hierarchy

Related to the value scale that has to be given to each type of intervention . For National Land Transport Fund investments, that means alternative and option selection should start with lowest cost alternatives and options before considering higher cost alternatives and options. The hierarchy considers integrated planning first, followed by demand management, then best use of existing network, and lastly, new infrastructure.

Investment Prioritisation Method (IPM)

We use the IPM to prioritise investments proposed for the National Land Transport Programme (NLTP) , giving effect to government priorities and direction as outlined in the Government Policy Statement on Land Transport (GPS) .

Investment Prioritisation Method

Investment decision gate

The point at which an organisation makes a formal decision whether to continue to develop an investment proposal to the next stage.

Investment gates are normally required after each phase of business case development before progressing to the next appropriate phase, and prior to implementation.

It follows that the number of gates will vary depending on the exact business case development path followed by each investment; low complexity/risk investments may only require investment decision gates following the strategic case and prior to implementation. More complex investments, and particularly large and complex programmes of investments, will require more decisions and hence need more investment decision gates.  

Before deciding whether to continue to support an investment proposal from the National Land Transport Programme (NLTP) , Waka Kotahi will make an assessment, which includes determining:

whether the business case supporting the investment proposal is fit for purpose, guided by the relevant questions from the 16 business case assessment questions

the degree of alignment of the investment proposal with strategic priorities and objectives in the Government Policy Statement on Land Transport (GPS) , using the criteria set out in the Waka Kotahi  Investment Prioritisation Method

whether the investment proposal is consistent with the purpose of the Land Transport Management Act (2003)

whether the scope of the next phase is consistent with the complexity and risk of the investment proposal.

Investment logic mapping and investment logic map (ILM)

An investment logic map, often called an ILM, is a single page depiction of an investment story . It sets out the problem statements, benefits, strategic responses and changes necessary to deliver a particular business outcome.  

Investment Logic Mapping is used to develop investment logic maps, and is a structured way of reaching agreement on problems and the benefits of addressing them, and testing the rationale for potential investment with key stakeholders . Investment logic mapping involves a series of workshops, led by a facilitator (who may or may not be an accredited ILM facilitator), and involving key stakeholders. Usually, it comprises two workshops:

• a problem and consequences workshop
• an outcomes and benefits workshop.

The outputs of the workshops are an investment logic map and a benefits map , both of which are flowcharts that show the underpinning logic of investing to solve a problem. Using ILM, even the most complex investments can be communicated clearly on a single page.

Find out more about investment logic mapping

Investment objectives

The intended  outcomes  or goals of an investment – what the investment is aiming to achieve. Investment objectives are stated so as to make them SMART, that is: specific, measureable, achievable, realistic and time-bound. Setting good investment objectives is a critical part of a  business case  and informs the later assessment of potential  options .

See also  Objective

Investment partners

The organisations that are investing or co-investing in a project. In the  Business Case Approach (BCA) , investment partners may include approved organisations, Waka Kotahi and any other co-investors. In early stages of the BCA, these organisations are potential investors, as there is no guarantee they will invest funds in a  project .

Investment story

The investment story is a narrative about why it is worth investing in something – in the context of the National Land Transport Programme , it is about solving a transport-related problem. It should be compelling, in plain-language and able to be understood by laypeople, not just transport experts.

See Investment partners

Land transport

Transport of people and freight on land by any means, and the infrastructure, goods and services facilitating that transport. Includes coastal shipping and associated infrastructure.

Land Transport Management Act 2003 (LTMA)

The LTMA provides the legal framework for managing and funding land transport activities. The purpose of the LTMA is to contribute to the aim of achieving an affordable, integrated, safe, responsive and sustainable land transport system.

Read the Land Transport Management Act 2003 (external link)

Local Government Act 2002 (LGA)

The legislation that provides the framework and powers under which New Zealand’s local authorities operate.

Read the Local Government Act 2002 (external link)

Maintenance programme

An organisation’s approved maintenance, operations and renewal activities, which continue to meet the agreed customer levels of service (CLoS) . Maintenance programmes can be core or enhanced. Core maintenance programmes refer to work required to continue pre-determined and appropriate CLoS. Enhanced maintenance programmes refer to continuing existing appropriate CLoS at a higher cost due to an external factor (generally for a short, defined period).

See also Continuous programme

Management case

Assesses whether a proposal is achievable and able to be delivered. It tests project planning, governance structure, risk management, communications and stakeholder management, benefits realisation and assurance. The management case is usually a key part of the single-stage business case or detailed business case .

Monetised benefits and costs manual

The Waka Kotahi Monetised benefits and costs manual (MBCM) is the industry's standard for the economic evaluation of land transport activities in New Zealand. The MBCM sets out economic evaluation procedures and values used in calculating benefit–cost ratios, necessary for applications seeking investment where a cost–benefit appraisal is a mandatory Waka Kotahi requirement.

See also Benefit

Multi-criteria analysis (MCA)

A tool that can be used to compare and evaluate alternatives and options in a longlist to produce  a shortlist, from which a recommended programme  or preferred option  is identified. It is generally used during the programme business case  and single-stage business case (or indicative business case ) phases of the Business Case Approach . A less formal or structured approach may work just as well for less complex programmes.

National Land Transport Fund (NLTF)

A dedicated fund for maintaining and developing local and national transport services, administered by Waka Kotahi and distributed through the National Land Transport Programme . The fund was established under section 10 of the Land Transport Management Act 2003 .

National Land Transport Programme (NLTP)

The NLTP is issued every three years and contains all the land transport  activities, including public transport, road maintenance  and improvement , and walking and cycling activities, that Waka Kotahi anticipates funding over the next three years. It reflects the priorities of the government, as outlined in the Government Policy Statement on Land Transport (GPS) . It includes investment in projects  and programmes  with local authorities and other investment partners , state highways, road policing, road safety, research and emergency works.

An objective is a statement of a result that is to be achieved, usually within a specific timeframe and with available resources. Objectives are used in a number of ways for business case development. Investment objectives are the specific results that are sought from a particular business case, either at a programme level or an intervention level. Other objectives are likely to be external to a business case , and may relate to the overarching goals or aims of the organisation, government or both. They are stated as outcomes , not as specific activities or interventions.

Examples of relevant objectives could include:

• a regional objective to reduce deaths and serious injuries from road crashes by a particular time and amount
• a national objective for councils experiencing high population growth to maintain the amount of land available for development above a certain level
• a local authority objective to increase the transport choices available to transport system users within a city, by a specific date.

See also Investment objectives

One Network Road Classification (ONRC)

A road network classification for commuting, freight and tourist journeys. It also provides customer levels of service  attributes for resilience, travel-time reliability and roughness. ONRC divides New Zealand’s roads into six categories based on how busy they are, whether they connect to important destinations, or are the only route available:

• primary collector
• secondary collector

Find out more about ONRC

Opportunity

In the context of a business case , an opportunity typically refers to a set of circumstances which make it possible to further the goals and objectives of an organisation.

Opportunities are closely related to problems . The term ‘opportunity’ is often used together with ‘problem’ to refer to a ‘problem or opportunity’ as the situation, issue or driver that has given rise to a perceived need for change. It is important that the problem elements of cause and consequence are still fully explored when identifying an opportunity, as these are essential areas of understanding to develop a robust business case.

Typically, the problem statements and benefits need to be considered together to fully understand the ‘problem or opportunity’.

Optioneering

To ‘engineer’ an option , that is, to consider various options in depth and compare, contrast and score them to find the best option. 

Options represent different ways to achieve an outcome  or objective . They are often confused with alternatives  but, in this context, they have different definitions. Alternatives are the broader level of an intervention , whereas options are more detailed. For example, if it had been decided that the best way (the favoured alternative) to address a particular problem was to improve an intersection for safety or efficiency reasons, options could include simple rearrangement of geometry or sight lines, building a roundabout, installing traffic signals, or grade separation.

Options considered and shortlisted should include a do-nothing option and/or a do-minimum option (where only already planned work such as maintenance is carried out).

See also Alternatives , Preferred option

The result of a change (action or intervention). Examples include:

• improved customer experience
• a safer transport system
• a more efficient transport system
• a more liveable city.

The product, change or solution that is implemented to achieve an objective . Examples of outputs include:

• a new or improved public transport service
• a replacement bridge deck
• a new transport policy, for example to manage travel demand.

Point of entry (PoE)

The first step in the Business Case Approach (BCA) , where the problem owner  develops an initial view of the potential problem  or opportunity , and reviews existing information so an informed decision can be made about what phase the business case should start at and how it should progress through the BCA.

Find out more about the point of entry

Preferred option

The preferred option is typically the one with the highest, risk adjusted net present value (NPV: the present value of an investment’s expected benefits minus the costs of acquiring the investment), based on all costs, benefits and risks having been quantified and valued robustly.

Where an option has significant intangible benefits , these can out-weigh the difference in NPV between this and alternative options . These considerations should be evaluated at the same time as trade-off discussions. For example, an option that isn’t lowest cost, or doesn’t deliver against all objectives , may be chosen as the preferred option because it has a more acceptable risk level than a lower-cost option that meets objectives.

The preferred option must be supported by robust analysis and be articulated in a clear, compelling way to explain why this is the ‘right’ option.

In the context of the Business Case Approach  it is the issue that has been identified that may lead to a business case for investment to address the problem. There are various ways the problem could come to light, for example:

• something entirely new (an emerging issue) is identified through monitoring, customer feedback or another source
• a council or other stakeholder identifies a service level agreement (SLA) isn’t being fulfilled, or an existing activity isn’t delivering value for money
• a review of documents, such as activity management plans (AMPs), by local government reveals that an investment might be required
• a need for investment is indicated in a national, regional or local strategic plan or policy.

See also Problem statement  , Opportunity

Problem owner

The person (or organisation) who has identified the business problem or opportunity , and who initiates the Business Case Approach (BCA) .

Problem statement

A problem  is the reason action needs to be considered. Problems are usually stated in negative terms and are made up of two parts – cause and consequence (or effect). The problem statement or statements are critical to understanding the need for an investment and need to be stated at a level that enables the reader to get a sense of the significance of the investment.

A problem statement is a brief statement (usually a single sentence) that summarises the cause and consequence of a problem. It is typically supported by a brief explanation that provides further detail of the causes and consequences. In identifying problems, it is important to get to the root cause  so that it can be addressed effectively, otherwise the problem is likely to continue occurring.

Problem statements are developed during the strategic case  phase of the Business Case Approach (BCA) , but are reviewed and refined throughout the development of the business case  as the causes and consequences of the problem are better understood.

See also Investment logic mapping and investment logic map

Problem trajectory

The problem trajectory helps ‘unpack’ a problem by analysing and considering the component parts in detail. It is useful in problem definition sessions for testing initial views of a problem and determining consequences and underlying causes.

Interrelated and complementary combination of activities  that address a problem . A programme can span more than one work category and more than one activity class , for example a programme could include a road improvement activity and public transport improvement activities.

Programme business case (PBC)

The Business Case Approach phase in which options  and alternatives  to address the underlying or root causes of the   problem  are identified, and a recommended solution is proposed, which could include a broad mix of activities that might be delivered by multiple parties over a period of time. PBCs are generally developed only for investments that have a higher complexity or risk and could involve more than one transport mode or other interventions. It reduces risk and ensures all appropriate options are considered.

Find out more about the programme business case

An activity that has a defined start, end and scope.

Regional land transport plan (RLTP)

Regional transport committees prepare RLTPs every six years to set out all the transport activities the region intends to progress over the next six years. They feed into the National Land Transport Programme (NLTP) , but also include aspects outside of the NLTP.

Regional transport committees (RTCs)

These committees prepare regional land transport strategies and regional land transport plans , and provide advice as requested by the regional council. Membership is specified by section 105(2) of the Land Transport Management Act 2003 , and must include representatives from the regional council, local councils in the region, Waka Kotahi and other stakeholders.

A risk is a variance (either positive or negative) from an expected outcome . Risks usually apply to the delivery of a project. They are within the project team’s control to manage (avoid, minimise or mitigate) to achieve the defined scope and expected benefits . Risks differ from uncertainties .

A root cause is a fundamental reason for the occurrence of a problem – either now, or in the future. Essentially, a root cause represents a fundamental process or system that is failing or that doesn’t exist, which needs to be addressed if the problem is to be avoided or prevented from recurring.

Single-stage business case (SSBC)

A phase of business case development where individual activities or combinations of activities within the preferred programme are developed further. A SSBC combines the steps that are typically carried out in separate indicative business case and detailed business case phases for high- risk or high-complexity investments.

The SSBC confirms the strategic and economic  cases, and develops the financial , commercial and management cases prior to implementation.

A SSBC does not require a formal decision for the release of funds at the end of shortlisting options, however the problem owner may still elect to seek an investment signal from Waka Kotahi at this point, to assist in managing investment risk.

Find out more about the single-stage business case

A solution describes the changes that must be made by the organisation to deliver benefits ,  including details of how the strategic intervention will actually happen. Unlike a strategic intervention, it is able to be specified in terms of time and cost. Solutions may include any physical assets that are required to allow the changes to occur.  

  Stakeholders

Investment partners , people who have the most knowledge of a subject and/or represent an interested or affected party, for example a local authority, community group or iwi. They will be consulted at various stages of business case  development.

Strategic assessment

The strategic assessment uses robust tools and methodology to determine quickly and at low cost:

• what the problem  is and whether it has a consequence that needs to be addressed
• what outcomes  will be gained from any potential investment
• what potential benefits  will arise from investing, and
• whether there is stakeholder  agreement to proceed or not to proceed.

The strategic assessment is initially developed as part of the strategic case , but is reviewed to ensure it is still fit for purpose at every stage in the development of the business case .

Strategic case (SC)

This is the  Business Case Approach phase where the problem owner , together with other stakeholders , develops their understanding of the problem  and whether the benefits  of investing in addressing it are justified. The strategic case is made up of a strategic assessment ( problem  and consequence) and strategic context  (assumptions, environment and interdependencies). Workshops, such as investment logic mapping , or other consultation may need to be undertaken to ensure agreement between stakeholders.

Find out more about the strategic case

Strategic context

The strategic context is the alignment of the potential benefits from a proposed investment with the business problem owner’s  priorities, regional and national priorities, other programmes and strategies, and other organisations’ priorities (if relevant).

It includes:

• agreed assumptions or views of the future, including transport and population growth, economic and industry change statistics
• relevant objectives from overarching strategic documents, such as the Government Policy Statement on Land Transport (GPS) , the Long-term Strategic View or regional strategies, to position the outcomes sought within the strategic assessment against wider national, regional and local outcomes
• the proposing organisation’s objectives .

The strategic context is part of the strategic case , but is reviewed to ensure it is still fit for purpose at every stage in the development of the business case .

Transport activities are derived demands, which means they do not happen for their own sake but form part of a wider system that includes land use, economic and social activity, technology and other system pressures. To understand a problem or opportunity it is important to understand the dynamics of this system, which may include positive and negative feedback.

Transport Investment Online (TIO)

The Waka Kotahi web-based funding allocation system. It is the key source of project information and a record of investment decisions made in the National Land Transport Programme (NLTP) . All activities funded through the NLTP are recorded in TIO, including the expected benefits  and long-term outcomes  from each decision.

Access TIO (external link)

Uncertainties

An uncertainty is an event or change in conditions. Uncertainties usually relate to the problem or investment need, and are usually external factors that lie outside the project team’s control. Uncertainties can result in a different future state from that anticipated or assumed in the business, and can impact the need for an investment and/or require a change in the response to a problem.

Examples of uncertainties include technological developments, major shifts in markets and economic conditions, the behaviour of other organisations, changes in demographics including variance from growth forecasts, or events related to the natural environment. If such events occur they can have both positive and negative impacts on benefit delivery. Uncertainties are distinct from risks . 

See also Uncertainty log

Uncertainty log

Records assumptions and uncertainties that may have an impact on the investment proposal. For example, a major housing development in the locality may be on the books but it’s not clear when it will happen. Make assumptions about what some of the effects may be if a proposal goes ahead, such as changes to road, rail, or ports.

Value for money

Value for money requires the delivery of desired outcomes where the net present value of benefits exceeds the net present value of costs. The benefits and costs should take into account intangible factors where possible. An intervention is ‘value for money’ if the national welfare after an intervention is greater than before the intervention. Delivering value for money is a statutory requirement.

The individual elements that make up an activity .

Business Case Studies: What are Business Case Studies?

• Sources for Free Case Studies

What are Business Case Studies?

• Case Studies in Databases
• Library Books & E-Books

Case studies present a business or management scenario with a narrative of the pertinent facts but, often, leave the central question(s) unanswered. There is a lot of variation in the definition of a case study.

Commercial, educational case studies, like the well-known Harvard Business School Cases, provide structured cases and often  also provide teaching notes and other resources to facilitate learning.

Case studies found in business texts and tradtional books, journals and magazines, and even freely available on the Web, may not provide the same structured learning goals as commercial cases. However, they may be valuable for engaging student discussion and problem solving.

Click on the tabs above to explore library books and article databases, and websites for finding and using business case studies.   

Videos: Analyzing Case Studies

Case study videos from harvard business school .

Business and Entrepreneurship Podcasts

Black Entrepreneur Blueprint  

Join Black Entrepreneur Blueprint as we welcome some of the most exciting and renowned Black Entrepreneurs to our weekly interview podcast.

Deloitte Resilient Podcast Series  

Resilient podcast series Welcome to Resilient, an award-winning podcast series. The voice of leaders. Their stories of risk, crisis, and disruption. How will you embrace complexity to lead, navigate, and disrupt to accelerate performance? Listen to learn how others have.

Harvard Business School (HBS) Podcasts  

Includes HBS podcasts such as Cold Call, Dear HBR, and Women at Work.

IndieHackers Podcast  

Raw conversations with the founders behind profitable online businesses. Hosted by Courtland Allen.

Mixergy Podcast with Andrew Warner  

Each episode features an interview with a different successful entrepreneur; they currently have interviews with more than 1129 big-name founders. This podcast focuses a lot on not only starting a business, but finding a purpose and a vision..

This guide was based on a LibGuide created by Webster University Library .

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• Last Updated: Oct 17, 2023 12:52 PM
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What is a business case study?

Explanation, tips, and advice on writing a response to a business case study when applying to Geneva Business School

When you apply to Geneva Business School to undertake a bachelor’s, master’s, or MBA program, you will be asked to write a 500-word written response to a business case study .

Business case studies explained

A business case study summarizes a real-life business issue faced by a company and looks at how it may affect society within a business context. A case study is a research tool and can form part of the research methods you will use in your final projects in our programs.

Here are examples of the cases you are required to write about for the application process:

• Bachelor’s program
• Master’s or MBA

Answering a business case study is an opportunity to improve your writing skills by applying theory to a real situation , analyzing the scenario, and drawing insights from your observations. This might be the first time you write a case study, so here are some pointers from our Academic Team to help guide you. Happy writing and good luck with your application!

How to respond to a business case study

1. Read the article and/or watch the video provided in the document.

Sometimes you will remember more information if you repeat watching or reading them a few times, or pause to write notes and then rewatch sections to understand them better.

2. Make notes as you go.

Write down important points, dates, names, roles, important events, and details in the case.

3. Look for things that stand out to you.

If something seems unusual, good, or bad it most likely will hold some importance in the reflection you will write. Reading and watching the materials provided multiple times will make it easier to spot these irregularities.

4. Organize your points to form a summary of your opinion.

A good technique is to arrange your thoughts by answering the following: who, what, where, when, and how to get the main details out as a list, and go from there.

5. Analyze the situation presented.

Ask yourself what really happened in the case.

• What business is the case based on? Is it a product or a service?
• What set of conditions caused the situation?
• What happened?
• Who was involved and what decisions were made?
• What was the outcome? Evaluate it.
• What impact did the case have on the wider community?

6. Look at the questions.

See which parts of your notes can answer each one and use these as a starting point as you flesh out your paragraphs. Start your response with a thesis statement and summarise what you intend to cover in your response. Write a topic sentence for each paragraph.

7. Look at the word count.

If the case study requires 500 words, keep that in mind as you split it up between your answers. Write a response that answers the questions without any extra information. Be economical with words.

Advice for answering a business case study

1. don’t just repeat the information given..

Repeating the business case study question will show that you did not think independently about your answer. Dedicate some time to think about the case study and ask yourself what you think about it.

2. Do not copy information from the internet.

Plagiarism is unacceptable, and who wants to make a bad first impression?

3. There is more than one correct answer.

Don’t write what you think you are expected to write – everyone’s response will be different and that’s how it should be. Use your critical thinking skills and personal reaction to the case study to shape an answer that reflects your own thoughts and opinions.

Watch how to write a business case study

Have any questions for us don't hesitate to get in touch..

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Case Interview Types: Master Common Ones Before Your Interview

• Last Updated November, 2023

Rebecca Smith-Allen

Former McKinsey Engagement Manager

On Case Study Preparation , we described what a case interview question is and how you should approach answering one. You can think about that page as your Consulting Case Interview 101 course.

But if we could tell you how to ace your consulting case interview in just one page, Bain, BCG, McKinsey, and other top consulting firms would give out a lot more offers than they do every year.

On this page, we discuss the most common types of case study interview questions . We’ll take your understanding of how to answer these to the next level by outlining the key issues to consider when structuring your answer.

Let’s get started!

Here are the types of cases you might come across during your case interview :

• Profitability Cases 1.1 Profit Optimization 1.2 Revenue Growth 1.3 Pricing Optimization 1.4 Market Entry 1.5 M&A 1.6 Cost Optimization 1.7 Startup / Early-Stage Venture
• Non-Profitability Cases 2.1   Lives Affected 2.2 Retention 2.3 Industry Landscape and Competitive Dynamics
• Market Sizing Questions (also called dinner conversation cases)
• Case Interview Math (also known as consulting math) 4.1 Consulting Math Example 4.2 Summary of Key Things to Remember on Consulting Math Questions

How To Make the Most of Case Interview Practice Time

Help with case study interview preparation.

Nail the case & fit interview with strategies from former MBB Interviewers that have helped 89.6% of our clients pass the case interview.

Profitability Cases

On this page , we discussed case interview  frameworks   that can help you structure your answers to case study interview questions, we introduced the profitability equation. It’s 1 of 2 basic business frameworks you can use to answer any type of case question. 

This formula can help ensure you address all the key aspects of straightforward profitability cases like the following:

A sports apparel retailer has experienced declining sales in its stores over the past year and declining profits. How would you recommend they address their profitability problem?

A cell phone manufacturer is experiencing declining profitability despite strong sales. What should they do to improve their bottom line?

For more detail on the components in this formula and an example of how to use it to solve a case interview question, see our  Case Interview Frameworks  page . Below, we’ll discuss types of profitability problems that go beyond the basics.out

Profit Optimization

Perhaps a company is profitable… just not profitable enough . 

Maybe its margins are lower than those of an industry rival. 

Maybe they’ve dipped below its own prior-year performance. 

Perhaps management sees an opportunity to launch a new product, leapfrogging the competition, but needs to generate more cash to invest in development. 

Any of these can be reasons to improve the performance of an already profitable company. 

Sample questions:

A nationwide fast-food chain failed to meet Wall Street expectations on its latest investor call and as a result, its stock price fell significantly. Management wants help identifying opportunities to improve the bottom line.

The CEO of a regional hospital chain is concerned that his company’s profitability is half that of the market leader. How can the company grow its net income?

Use the Profitability Equation

In structuring your analysis of a profit optimization case, you should touch on all 4 components of the profitability equation to understand what the company is doing well and where things have taken a turn for the worse. 

But the underlying problem in this type of case may be more subtle than in a basic profitability question. 

Instead of a big jump in costs or the loss of a large customer wiping out a significant chunk of revenue, the company may be experiencing a couple of small problems that add up to bad news for the bottom line. 

Benchmark Relative to Competition of Past Performance

For example, if our client is a TV manufacturer and we find out that our cost of producing a TV has increased overtime while our prices have remained the same, we can see that rising costs is the reason for our profits declining. 

To turn around the situation, we could look into what the competition is doing to reduce costs. For example, if a competitor is sourcing the same materials as us but from a cheaper supplier, we want to see if we can lower our cost by sourcing from the same supplier.

Benchmark One Business Segment to Another

Another way consultants benchmark performance on revenue and cost levers is by comparing the performance in one business segment or type of end-customer to another . 

Continuing with our TV manufacturing example, we might find that the client has seen costs rise on components in its high-end models but remain constant for its low-end models. 

We can look into what is being done differently in the low-end product group: low-cost sourcing, process improvement, etc. to find opportunities to improve the cost position in the high-end segment.

Use Key Performance Indicators (KPIs)

The company may also need more disciplined business processes and a system for measuring key performance indicators . 

Our TV manufacturer might institute a system for measuring cost per unit on a weekly or monthly basis in order to ensure they have an early warning system to monitor if costs are getting out of line.

To go with these KPIs, a regular process for reviewing the costs and taking necessary action could be instituted. Disciplined processes and performance indicators will help to fine-tune operations over time, taking them from good to best-in-class.

Key concepts to consider when addressing a profit optimization case:

The profitability equation including all its components,

• Benchmarks of cost and/or revenue relative to best-in-class competition and prior year performance.  
• Benchmark the company’s performance segmented by product or type of customer .
• Opportunities for business process improvement and key performance indicators that will allow management to monitor profitability more closely. 

Revenue Growth

Revenue growth case questions focus on companies that, while already profitable, still want to grow. 

They can do this by increasing market share, by selling their existing products to new markets, by selling new products to their existing customers, or by pursuing a combination of these opportunities. 

They can also capture more revenue by increasing prices.

A national chain of fitness centers wants to leverage its brand equity by selling additional products and services to its client base. What incremental products and services can profitably grow revenue?

The president of a printer and ink manufacturer thinks there is an opportunity to provide after-sale service to its customer base. What might be the impact on revenue from entering this market?

Capture Additional Market Share

As its name suggests, this type of case study focuses on the first half of the profitability equation — revenue = price x quantity of units sold. in examining units sold, you should consider the company’s ability to capture additional market share for existing products in the markets it already serves. , what is the company’s current share of the market that of its largest competitor what would it take to capture additional share product improvements a shift in marketing and promotion.

If a chain of fitness centers was our client, for example, we’d look at whether the primary competition was 1 or 2 large chains or a number of small, single-location gyms and tailor our strategy to increase market share accordingly. 

If the competition was single-location gyms, we could promote flexibility for members to use our facilities in multiple locations to bring in new customers. We could also leverage the client’s greater size to outspend the small gyms on advertising.

Branch into New Products or Markets

Also, consider the new products and/or markets the company could branch into . What products do competitors sell that the company doesn’t? Does the company have capabilities that would help them  succeed in other markets?

Our fitness center client could consider selling new products like fitness apparel or vitamins. They could expand into new markets, such as towns and cities adjacent to ones currently served.

Offer Services to Existing Customers

In addition, consider  services that can be sold to existing customers . Post-sales support for equipment, for example. Or consumables used with their products, like ink for a printer manufacturer. Our fitness center client could look into providing personal fitness coaching services to members.

Review Pricing

Lastly, consider the company’s  flexibility to raise prices . Where do their prices stand relative to competitive products or services? Do their products or services have higher quality or value-added capabilities that would command a higher price?

Pricing Optimization

A company must have a solid product or service offering to be able to take a price increase without seeing a significant loss of sales to competitors. 

If their products or services are strong, then optimizing price can be an important lever to grow revenue.

A manufacturer of kitchen knives sells a range of products, from low-end to professional, to customers at different price points. They’ve developed a new line of knives in collaboration with a celebrity chef and would like help setting the prices for these products.

The airline industry has experienced significant changes in its pricing model over the past few years, with some airlines charging separately for checked baggage, meals, and beverages. A global carrier has asked us to help optimize the pricing of the additional services it provides to customers who fly with them.

Elasticity of Demand

When prices rise, demand for a product goes down and when prices fall, demand rises. You’ll remember this from Economics 101, or perhaps just from common sense. Pricing optimization is all about how much . 

If you can raise prices with demand going down just a little, you can improve a company’s revenues by raising price. If a change in price has a big impact on demand, then raising price could be a big mistake.

The term for this is Price Elasticity of Demand . If demand for a product or service changes a lot in response to a change in price, it’s said to have price elasticity. Products with many substitutes or ones that consumers can easily do without are the most sensitive to price changes. 

For example, if McDonald’s raised the price of the Big Mac, more customers might go to Burger King, Taco Bell, or just eat lunch at home. McDonald’s hamburger sales would fall dramatically.

Substitutes

For some products, demand is relatively insensitive to changes in price. This can be the case for luxury goods, for products that have few substitutes , or for when there are large switching costs. When the cost of home heating oil rises, some customers consider switching to natural gas to heat their homes. But if doing so will require buying a new furnace to run on gas or paying for pipes from their house to the gas distribution network, they won’t make the change unless the change in price is dramatic and/or expected to persist for a number of years. 

3 Methods for Setting Prices

Competitive-based pricing — Setting prices based on the prices of other similar products in the market. This is the simplest method for setting prices. Companies who use competitive-based pricing are price takers.

Cost-based pricing —Setting prices as a function of the cost to provide a good or service plus a profit margin. Cost alone can’t be used to set pricing because if a company’s costs are out of line with its competitors, it may price itself out of the market.

Value-based pricing — Setting prices based on the value provided to customers. Luxury goods are priced well above the cost of their production because customers of these products value association with the prestigious image the product conveys. Products that provide significant value to customers in terms of saving time or providing features not found in other products can be priced higher because they are worth more to customers.

Value-based pricing the best pricing method but it can only be used for products and services that are sufficiently differentiated in the eyes of the customer that they will not change their buying behavior in response to higher prices.

Market Entry

Significant start-up costs will be incurred to develop and manufacture a new product, to launch the marketing campaign, or to build the sales force needed to find customers. 

To ensure that spending money on start-up costs are worthwhile, due diligence needs to be done to estimate the size of the market being considered and the cost of successfully entering it.

A teen fashion retailer has seen its sales boom in the North American market for the past 5 years. They’re considering expansion into international markets. They’d like help identifying which markets provide the best opportunities for their line of clothing.

A not-for-profit organization has been successful at hiring the long-term unemployed to manufacturer furniture made from pallets and other recycled items. They’ve not only designed and created beautiful pieces of indoor and outdoor furniture, but also helped to improve the lives of individuals in one city. They’d like to expand to other products and potentially to other cities and have asked for our help in assessing their options.

There are  4 parts to any market entry case : market size, market attractiveness, costs of entry and capabilities required. Let’s look at each.

Market size

Market sizing is sometimes used as a case interview question on its own. See below for more details . It’s also usually the first part of a market entry case. It addresses how large a market is in terms of annual revenue, number of units sold, or both. The underlying issue is whether there is enough opportunity in a market to make it worth the up-front cost.

To determine whether the amount of sales revenue or unit volume is “enough,” estimate the size of the market based on the information provided by your interviewer or by using factors you can reasonably estimate about the market. You can then consider profit margins and what portion of the market the company must capture to break even.

Market attractiveness

The market a company is thinking about entering may be huge, but it can still be unattractive. Key questions include: What is the profit margin for companies already in the market?  What does the competition in the market look like? Large firms with huge marketing budgets or small companies? 

Costs of entry

Will new technology, equipment, sales staff, or something else be required to succeed in the new market? If so, what will it cost? The greater the investment required to enter a market, the more difficult it will be to recoup the initial investment.

Capabilities

Does the firm being discussed have what it takes to succeed in the new market? In some markets, the key to success is marketing expertise and distribution. In others, it’s low costs and disciplined business processes. Identify the key attributes of success in the market and whether the company possesses those attributes.

To learn how you can structure and break down a case such as these, visit the  Case Interview Frameworks  page can help you think through important factors in this type of consulting case interview question.

Above, we looked at how to analyze a market entry case. 

If a market is attractive but the client does not have all the capabilities required to succeed in it, it may decide to buy the right capabilities through a merger or acquisition (M&A). 

They could also consider M&A opportunities if they need to enter the market fast rather than build capabilities over time.

The number 3 competitor in the cellular phone services market is at a disadvantage relative to its larger competitors. Providing cellular phone service has high fixed costs—for the equipment that transmits calls, the retail stores that sell phones and provide in-person customer support, and the marketing spend that is key to customer attraction and retention. The CEO is considering acquiring a smaller competitor in order to gain market share. He would like our help thinking through this decision.

The president of a national drug-store chain is considering acquiring a large, national health insurance provider. The merger would combine one company’s network of pharmacies and pharmacy management business with the health insurance operations of the other, vertically integrating the companies. He would like our help analyzing the potential benefits to customers and shareholders.

When you get this type of case, ask your interviewer why the company is considering the merger or acquisition. They may provide key information on the size and attractiveness of the market the target company is in. Assuming the target company is in a large, attractive market and has the critical capabilities required to succeed in that market, then you should consider whether it is better to build the new business internally or undertake a merger or acquisition. 

If two companies are considering a merger, they still have to persuade their shareholders that the 2 companies would be more valuable working together than on their own. The value the companies can create by working together is called  synergy .

Synergies from a merger or acquisition can be on the cost side, the revenue side, or both. Cost synergies include leveraging fixed costs across more business or cutting costs duplicated in both firms’ operations. Revenue side synergies include selling a broader range of products through the existing sales force or distribution channel. 

The synergies created by the merger or acquisition must be greater than the premium that must be paid to secure the deal in order for the transaction to make sense.

Integration

Mergers and acquisitions are large and complicated transactions. They require  integrating  the talent, systems, policies, and processes of the 2 organizations. Synergies that look good on PowerPoint slides do not always accrue in real life. In addition, key employees may quit during the disruption and uncertainty the M&A activity causes. Even if substantial synergies are identified, a company should consider whether it can successfully undertake the integration.

Regulatory Approval

Lastly, mergers of large companies in regulated markets (financial services, telecommunications) and concentrated markets (ones with only a few large competitors) can require government approval . The possibility of the government blocking the merger or acquisition should be considered in this type of case.

Cost Optimization

A top-3 home improvement retailer has seen price increases from several of its vendors, squeezing its bottom line. The company wants to know how it can cut costs to restore its margins to their previous levels.

The head of an automobile manufacturer has seen its production costs rise over the last several years. She wants your help in turning around this trend.

The most important thing to understand when addressing this type of case is what is going on with fixed costs and variable costs . The costs can be broken down and compared to competitors’ costs or costs in prior years to identify opportunities for improvement.

As a reminder, here are the definitions of fixed and variable costs:

Fixed Costs

Costs that you incur just because you are in business regardless of how many units you sell. Examples: factory rent, equipment depreciation, compensation for salaried employees, and property taxes. A way to think about fixed costs is that a cost that does not change over the short-term, even if a business experiences increases or decreases in its sales volume.

Variable Costs

Costs that only incur when you begin to produce units (if you sell nothing you have no variable costs). Examples: sales commissions, credit card transaction costs, and sales taxes. A way to think about variable costs is that a cost that does change over the short-term. More sales volume will mean more variable costs.

Startup / Early-Stage Venture

Startup and early-stage venture cases have some similarities to market entry cases. 

Ensuring that the market the company is going after is big enough and has high enough margins to be attractive is important, as is understanding their competition. 

Startups are small, nimble companies with only a handful of key employees and limited access to cash. These factors need to be taken into account.

A student from Iceland studying in the U.S. has determined there’s a big opportunity to bring Icelandic-style yogurt to this market. How would you recommend he proceed?

A software company has developed video technology that can be used to quickly and easily create short videos that can be sent to a colleague in place of typing a long email. This disruptive technology will take advantage of the cameras built into cell phones and laptops as well as consumers’ preference for watching a video rather than reading text. The company has a small number of beta customers and is looking for advice on how to ramp up their product to attract a wider audience.

When answering this type of case, focus on the key things that help these small, fast-growth ventures move with agility as they search for the product and business model that will attract customers and investors. 

The Right People

They need the right people —ones with product savvy, marketing savvy and investor savvy to make it. 

A Minimum Viable Product

They need a minimum viable product . This is an initial version of their product offering that will attract paying customers, allowing them earn money and to collect feedback that can be used to improve the product. It will also serve as a proof-of-concept to investors. 

A Business Plan

Start-up and early stage venture also need an initial business plan addressing how they will bring their product to market.

Non-Profitability Cases

Some might focus on charitable organization. Others might focus on businesses issues that don’t relate directly to profits, such as employee retention or understanding the competitive dynamics in an industry. 

An overview of how to approach non-profitability cases is found on this page .

This section focuses on key concepts to address in a few common types of non-profitability cases.

Lives Affected

Government agencies and charitable organizations don’t aim to maximize profits. Nonetheless, they do important work that affects many lives. 

They might hire a consulting company to help them improve their effectiveness, or a consulting firm might take on an important project for a charitable organization on a pro-bono basis. 

The state agency that administers the free summer lunch program for children of families under a certain income threshold wants to increase the reach of its program. How would you advise they approach this? 

Malaria is a devastating disease, affecting hundreds of millions of individuals each year. It’s transferred to humans by mosquitoes, with most of the cases occurring in South Asia and Sub-Saharan Africa. Though drugs to treat the disease exist, many in the affected regions don’t have access to or can’t afford these drugs. The disease is a strain on the economies of several nations, perpetuating the cycle of poverty. What can be done to alleviate this disease and its adverse economic effects?

Key Performance Indicators (KPIs)

A detailed example of how to approach a lives affected case is provided  here .  As discussed in that case, the key to answering this type of question is to find the key performance indicator (KPI) the organization is trying to improve. In the case of the first sample question above, this is the number of free lunches served to needy children. 

Benchmarking

Once you’ve established the KPI, the case can be answered in the same way you’d answer any case question on business improvement. You can benchmark the organization’s performance by looking at trends in the KPI over time or comparing the growth of the organization’s KPI to that of other organizations serving the same target population to assess whether the agency is doing a good job meeting their mandate or falling behind. If they are falling behind, drill down into the factors that might be causing them to do so.

Cases focused on employee retention are not directly about profits, though the loss of key skills when employees depart and the cost of training new hires require hurts the profitability of organizations with high turnover. 

A fast-food chain is experiencing an increase in the already-high rate of employee turnover typical in its industry. It’s also experiencing trouble attracting qualified new employees. What would you suggest?

The school system in a middle-class suburban town is experiencing higher-than-normal rates of teacher attrition. With a tight budget, they are unable to simply raise salaries to hold onto experienced teachers. What options does the school system have for increasing teacher retention?

Conducting retention interviews —interviews with departing employees to find out why they’re leaving the organization—is a standard practice in most organizations. Because of this, there should be data available on what employees like about their jobs, don’t like about their jobs, why they looked for new opportunities and what new job they’re taking. Ask your interviewer for this information, as well as survey data on the job satisfaction of all employees. It can be used to develop a multi-pronged approach to improving employee retention.

• Look for opportunities to enhance aspects of the job that appeal to employees and change the negative aspects of working for the organization. For instance: What about the job is appealing? 
• Do employees see the work of the organization positively impacting the broader community? 
• Do employees like their colleagues, recognition they receive from management, the financial package provided? 

Industry Landscape and Competitive Dynamics

Cases focused on the landscape of an industry and its competitive dynamics are about the big-picture strategic issues that must be taken into account to compete effectively in that industry.

The traditional newspaper industry is facing heavy pressure from free online news organizations that don’t face the cost of printing a traditional newspaper and are able to leverage Internet ads as a source of revenue. The publisher of an award-winning regional paper would like your help in assessing and responding to this new threat.

The food and beverage industry faces disruption to their traditional brands as organic and small-batch products gain favor with consumers. How should companies in this industry respond to this new of competitive threat?

When analyzing this kind of case, first look for what is changing in the industry —consumer preferences, brand loyalty, barriers to entering the market, regulation, the industry’s cost structure, etc. Ensure you know what the source of change is before you begin to look for a strategy to help the client succeed in the new marketplace. 

For tips on structuring a case like these, visit the  Business Frameworks page . SWOT analysis and other frameworks include some factors to consider in this type of consulting case interview question.

Market Sizing Questions (Also Called Dinner Conversation Cases)

Market sizing cases are focused on establishing the size of a market in terms of annual revenue or the number of units sold rather than determining how to compete successfully in the market. 

Consulting firms often ask market sizing questions early in the consulting interview process or in interviews of undergraduate students who may not have a deep business background. 

They can also be one component of complicated, multi-step cases in later-round interviews. Market sizing questions focus on making logical estimates, showing creativity, and doing basic math.  

What is the size of the market for organic toothpaste in the United States?

How many golf balls would fit inside the Empire State building?

What Are Consulting Interviewers Looking for on Market Sizing Cases?

With case interview questions of this type, you’re not expected to know the answer, but instead to show a logical way of deducing it. Committing a few key facts to memory would serve you well. For example, knowing the population of the United States (or the country you live in) would give you a good place to start as you think through the size of the market for various retail goods. Gross domestic product can help with sizing industrial markets.

Key Statistics to Know for Market Sizing Case Questions:

The Population of the United States 2019 – 329 million according to the US Census Bureau .

World population in 2015 – 7.4 billion according to the United Nations DESA / Populations Division .

2018 Gross Domestic Product of the United States – $20.5 trillion according to the Bureau of Economic Analysis of the U.S. Department of Commerce .

Statistics like these give you a good foundation to start your market size analysis. For instance, you could begin estimating the size of the U.S. market for organic toothpaste with the US population. From there, make logical assumptions:

• How many times a day does the average American brushes their teeth?
• How many toothpaste applications are in the average tube of toothpaste?
• How much does the average tube of toothpaste cost?

These assumptions will allow you to calculate the size of the overall toothpaste market in terms of annual revenue. To get to the annual revenue of organic toothpaste you’ll also need to estimate:

• What portion of toothpaste consumers prefers organic toothpaste?

You can (and should) bring paper and a pen into consulting interviews. Use these to keep track of your assumptions as you work through them and to do the basic math required to come to a conclusion.

 Our Market Sizing Questions article has a list of the 7 steps to answering this type of question.

Key Things to Remember When Answering a Market Sizing Question:

• Ask clarifying questions. Does the interviewer want the market size in terms of dollars or units? For the United States, North America, the world?
• Use round numbers for simplicity. For instance, using $20 trillion for U.S. GDP rather than $20.5 would be fine.
• Creativity in your approach to approximating the market is important, but so is good sense. Don’t be so creative that your answer lacks credibility.
• Practice case math so you can do it quickly and correctly even under the stress of an interview.
• Give your answer a sniff-test at the end. Does it make sense? This will both show that you are careful in your analysis and give you the chance to fix an arithmetic mistake if you find you’re way off. 

Case Interview Math (also known as consulting math)

Management consulting interviewers screen candidates to ensure that they can do basic math. 

Don’t worry if you didn’t ace multivariate calculus, the math is usually basic arithmetic—addition, subtraction, multiplication, division and fractions/percentages. You may also be asked to extract data from charts and convert from one unit of measure to another.

As mentioned in the discussion of market-sizing case questions above, you can and should bring a paper and pen into the interview. It’s fine to write out your calculations.

Consulting Math Example

In each step, we’ll provide a sense of how we are making the estimate so that the interviewer knows we’re not just grabbing a number out of the air. We want our answer to be as grounded in fact as possible. 

The population of the United States: 329 million. We’ll round to 330 million for simplicity.

The number of times the average American brushes their teeth – 2 times per day. Some people brush at lunchtime too, but that’s probably offset by people who only brush once a day.

330 million people brushing 2x’s per day gives us 660 million toothpaste applications/day.

To get to an annual number of toothpaste applications, we need to multiply by 365. That’s 241 billion toothpaste applications. We’ll round to 240 billion for simplicity.

A tube of toothpaste usually lasts me about 2 months. That means we need to divide by 120 toothpaste applications per tube to come up with the number of tubes sold annually (2 months x 30 days/month x 2 applications/day). 240 billion toothpaste applications / 120 applications per tube = 2 billion tubes of toothpaste sold in the U.S. every year.

The cost of toothpaste ranges from $1 for inexpensive brands to $4 for expensive brands, but the average cost is probably about $2. This means the total revenue for toothpaste sold in the U.S. is 2 billion tubes x $2 or $4 billion.

The percent of the toothpaste market that’s organic is a little tricky to estimate. In the grocery store I shop in, there’s 1 aisle of organic goods in a store that has 20 aisles – that means organic products make up 5% of shelf space (and presumably also of sales). 

I think that people would be less likely to buy organic toothpaste than organic food, because you eat organic food, but you spit organic toothpaste out into the sink. Organic products always cost more and organic toothpaste doesn’t seem quite as important to your health. 

Conclusion: Based on that, I’ll say that 1% of the market for toothpaste is organic, so if $4 billion in toothpaste is sold in the U.S. every year, $40 million of it is organic toothpaste.

Is our answer right? 

Probably not exactly. There are different sizes of toothpaste tubes, a complication that we did not consider in this analysis. There might be some people who don’t brush their teeth every day. That would mean that we overestimated consumption. 

But our estimate of the market size for organic toothpaste is reasonable and grounded in logical assumptions. We could sniff-test our answer by comparing it to a market size we know, or to GDP, one of the facts we suggested having in your back pocket for market sizing case questions. 

U.S. GDP was about $20 trillion in 2018. Our estimations suggest that the overall toothpaste market is $4 billion. That means toothpaste is 1/5,000 of the U.S. economy, and the market for organic toothpaste is 1% of that. 

That sounds plausible. If your answer showed that the market for organic toothpaste was larger than U.S. GDP, it would be a clear indication that you made a mistake somewhere along the way.

For the 4 types of math problems you’ll be asked to compute as part of case studies, read Case Interview Math.

Above, we’ve provided you with 11 different types of case interview questions you might be asked during your consulting interviews. We’ve also told you that you need to get great at doing case math. 

Overwhelming? It can be.

But it doesn’t have to be.

The best way to prepare for your consulting case interviews is NOT to spend hundreds of hours reading every case study question and answer you can get your hands on. Instead, see our page on Case Interview Practice  to find out how to make the most of your interview prep time. In addition, check out this video where Davis Nguyen, Founder of My Consulting Offer, talks about how mastering the case interview is made easier when you focus on the most common types of cases. 

Here in an online workshop he conducted for  Columbia University, NYU, and Cornell students, you can see why this approach is so effective:

After studying the information on this page, you have an in-depth understanding of the types of cases you could be asked to analyze in consulting interviews. From Davis’s video, you know why this is so important to focus on the main types of cases. You’re well prepared to find a case study practice partner and begin practicing.

As you prepare for case interviews, you should use this page in conjunction with  Case Interview Examples , where you’ll find links to sample case study questions and their answers. Remember that while it is important to discuss all the appropriate aspects of a business case, it’s important to structure your analysis and your answer. Refer back to our page on  Case Interview Frameworks   to ensure that you’re not just practicing more cases, but doing them better.

If you still have questions, leave them in the comments below. We’ll ask our My Consulting Offer coaches and get back to you with answers.

• Market Sizing Questions ,
• Case Interview Workshop Video , and
• Written Case Interviews ,

Thanks for turning to My Consulting Offer for advice on case study interview prep. My Consulting Offer has helped almost 89.6% of the people we’ve worked with get a job in management consulting.  For example, here is how Thomas was able to get a BCG offer with just a short time to prepare..

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