Case_In_Point_7th_Edition_Page001_183_2

CS1 Palm Tree Plantation Exports Notes
Summarize the case. Whenever you get a Suestion with numTers and the numTers are related, as in
this case (net income fell from $105m to $95m), you should quantify the numbers. So instead of saying
that net income fell from $105m to $95m, or that it fell $10m, you should say the net income fell about
10%.
Verify the objective. Determine what’s going on and how you can turn it around. There are no other
objectives we need to be concerned with.
Lay out your structure. Because this is a P&L case, you should use E(P=R-C)M. Look at external
factors first because we want to find out if this is a company problem or an industry problem. Economic
factors in this case should include unemployment, mortgage crisis, housing starts, state and city
budgets, interest rates, and water and gas prices. All those things are important not only to the company,
but to the industry as a whole.
Ask industry questions. Interviewers have a lot of information they want to give you but you need to ask
for it. Did you ask about industry growth trends? Competition? Changing landscape? Environmental
factors like drought and disease? Who are the main customers and what is their industry like (states’
and cities’ budgets are down, housing starts are down, and shopping mall and office building
development is also down)?
Ask company questions. Once you have a feel for the industry, go inside the parentheses to get a feel
for the company. Always start with the revenues. Ask, what are the major revenue streams and how have
they changed over time? What are the major costs, both fixed and variable and how have they changed
over time?