Darden Case Book - Darden School of Business

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E-COMMERCE IN AIRLINE INDUSTRY • The interviewee should now say “so what” and talk about one or both of: • There will be $10MM annual return for $100MM investment. Without discounting, we know it is a 10 years till breakeven. In the software industry that’s unacceptable • $10MM till perpetuity. Discount rate for the software industry is high. Let’s assume 20%. $10MM/20% = $50MM. • So what? Meaning that the moment you investment the $100MM it is worth $50MM. this is a bad investment. • A interviewee can be confused and try and use the airline discount rate (which is extremely low). This is obviously a mistake as discount rate is directly correlated to risk.
E-COMMERCE IN AIRLINE INDUSTRY 2. Calculating the cash flow for customer • $-20MM investment (licensing fee). • Revenue stream (cost savings) • $50 transactions will only cost $15 (=$9+$6). • Savings of $35 per transaction • 500,000 transactions. • $35*500,000 = $17.5MM savings a year. • So what? • The investment in the software for the customer could be extremely good investment as it is returned in less than a year and a half. • However, first customer can be something else all together as there are risks than can decrease the returns: • Not all suppliers will join right away or at all. • The software will have bugs in the first few months /years. • The software company can go bankrupt, taking our licensing fee away and never give any returns.
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DARDEN CONSULTING CASE BOOK 2012- 2
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TABLE OF CONTENTS (CONT’D) 8. E-c
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STRUCTURE OF THE CASE INTERVIEW The
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STRUCTURE OF THE CASE INTERVIEW Str
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Frameworks FRAMEWORKS The most impo
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FRAMEWORKS Common Frameworks Bucket
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THE MATH So What? One of the most i
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ACCENTURE Firm Overview “Drawing
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BAIN AND COMPANY Firm Overview “B
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BOSTON CONSULTING GROUP Firm Overvi
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IBM GLOBAL BUSINESS SERVICES Firm O
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ZS ASSOCIATES Firm Overview A mid-s
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CASE 1: BIKE DVD RENTAL SERVICE IN
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BIKE DVD RENTAL SERVICE IN NYC Prof
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BIKE DVD RENTAL SERVICE IN NYC Calc
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CASE 2: DRYWALL COMPETITIVE THREAT
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DRYWALL COMPETITIVE THREAT Question
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DRYWALL COMPETITIVE THREAT Key Expe
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DRYWALL COMPETITIVE THREAT Exhibit
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ORGAN DONATION CASE Sample answer:
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ORGAN DONATION CASE Question 2: The
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ORGAN DONATION CASE Question 3: Wha
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ORGAN DONATION CASE Recommendation
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Exhibit 1 ORGAN DONATION CASE Cauca
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CENTRAL POWER Clarifying Questions
Page 59 and 60: CENTRAL POWER Note: Strong plans wi
Page 61 and 62: CENTRAL POWER Industrial Commercial
Page 63 and 64: Phase 2 CENTRAL POWER Generation of
Page 65 and 66: CENTRAL POWER Here are some ideas t
Page 67 and 68: CENTRAL POWER There are two other m
Page 69 and 70: CENTRAL POWER Questions to Further
Page 71 and 72: CASE 5: CHEMICALS, INC. Firm Style
Page 73 and 74: CHEMICALS, INC. Framework / Structu
Page 75 and 76: CHEMICALS, INC. Strong Plan Since s
Page 77 and 78: CHEMICALS, INC. Strong Recommendati
Page 79 and 80: CASE 6: HOSPITAL PROFITABILITY Case
Page 81 and 82: HOSPITAL PROFITABILITY Explore the
Page 83 and 84: HOSPITAL PROFITABILITY • Direct t
Page 85 and 86: Calculations Revenue Profit HOSPITA
Page 87 and 88: HOSPITAL PROFITABILITY Recommendati
Page 89 and 90: Exhibit 2 HOSPITAL PROFITABILITY
Page 91 and 92: CONTACT LENS MANUFACTURER GROWTH Fr
Page 93 and 94: CONTACT LENS MANUFACTURER GROWTH
Page 95 and 96: CONTACT LENS MANUFACTURER GROWTH Re
Page 97 and 98: Exhibit 2 CONTACT LENS MANUFACTURER
Page 105 and 106: E-COMMERCE IN AIRLINE INDUSTRY Clar
Page 107 and 108: E-COMMERCE IN AIRLINE INDUSTRY Fram
Page 109: E-COMMERCE IN AIRLINE INDUSTRY Calc
Page 113 and 114: E-COMMERCE IN AIRLINE INDUSTRY Ques
Page 115 and 116: BIG GREEN BIOFUELS Clarifying Quest
Page 117 and 118: BIG GREEN BIOFUELS Strong Plan Incl
Page 119 and 120: BIG GREEN BIOFUELS Interviewer: Goo
Page 121 and 122: CASE 10: NEW RUBBER PLANT INVESTMEN
Page 123 and 124: NEW RUBBER PLANT INVESTMENT Structu
Page 125 and 126: NEW RUBBER PLANT INVESTMENT Incomin
Page 127 and 128: NEW RUBBER PLANT INVESTMENT Income
Page 129 and 130: NEW RUBBER PLANT INVESTMENT • Hig
Page 131 and 132: CASE 11: ASIAN MOBILE SERVICE PROVI
Page 133 and 134: ASIAN MOBILE SERVICE PROVIDER Inter
Page 135 and 136: CASE 12: RADIATOR FINS FOR DEFENSE
Page 137 and 138: RADIATOR FINS FOR DEFENSE AIRCRAFT
Page 139 and 140: RADIATOR FINS FOR DEFENSE AIRCRAFT
Page 141 and 142: CAPITAL INVESTMENT FOR UTILITY Clar
Page 143 and 144: CAPITAL INVESTMENT FOR UTILITY Fram
Page 145 and 146: CAPITAL INVESTMENT FOR UTILITY Phas
Page 147 and 148: CAPITAL INVESTMENT FOR UTILITY Stro
Page 149 and 150: ELECTRIC CAR MANUFACTURER GROWTH Cl
Page 151 and 152: ELECTRIC CAR MANUFACTURER GROWTH We
Page 153 and 154: Question 5 ELECTRIC CAR MANUFACTURE
Page 155 and 156: Framework / Structure MINER’S DIL
Page 157 and 158: MINER’S DILEMMA Strong Plan The c
Page 159 and 160: Recommendation MINER’S DILEMMA Th
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BIG TRUCK COMPANY Framework / Struc
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Calculations BIG TRUCK COMPANY Ques
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Question 2 (cont’d): BIG TRUCK CO
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THE BIG TRUCK COMPANY Question 5 (c
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THE BIG TRUCK COMPANY Question 6 (c
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THE BIG TRUCK COMPANY
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Framework / Structure AUTO SPARE PA
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AUTO SPARE PARTS Calculations Size
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CASE 18: MACHINE COMPANY Firm Style
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MACHINE COMPANY Framework / Structu
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MACHINE COMPANY Recommendation My r
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NON-PROFIT REVENUE DECLINE Framewor
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NON-PROFIT REVENUE DECLINE • The
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CASE 20: GAS LIQUEFACTION Firm Styl
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GAS LIQUEFACTION Recommendation •
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ACKNOWLEDGEMENTS The following indi
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Darden Case Book - Darden School of Business

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