Prepare for your case interview
Case interviews provide a sneak peek into the work and impact you can have at ZS. Grab a notebook and explore this practice case to test your ability to analyze, strategize and innovate. Answers are complex and nuanced, so don’t worry about coming up with the perfect solution. We’re looking to see how you approach the problem, create a plan, incorporate feedback and uncover new ways of thinking. The format of cases will change in live interviews, but these examples should give you a high-level idea of what you can expect.
Situation description
All-Star Airlines is a subsidiary of the All-Star Airlines Group Inc. (NASDAQ: ASAL), which has a market capitalization of about $15 billion. In the U.S., All-Star Airlines is known for its friendly airplane staff and high-quality meals to purchase on board.
All-Star is profitable ($5B of cash on hand) but is forecasting slow market growth in the U.S. over the coming years. As a result, All-Star would like to explore its options to expand into new markets.
Question #1
All-Star Airlines is exploring the possibility of entering a new market. How would you recommend whether or not they should proceed with entry into a new market? Please outline the key factors and frameworks you would consider.
Reveal answer
To select a new market, you’ll need to determine the profitability of that market. A profit framework can be customized to apply to the case’s unique variables.
You may also start to identify questions or form hypotheses about other variables. These can help to demonstrate a creative and comprehensive thought process.
1. What are customers willing to pay for airline tickets?
2. Achieving profitability could take time—how quickly does the client need to break even?
3. Do we need to account for any regulatory constraints or competitive dynamics?
Question #2
The client conducted some preliminary research prior to engaging ZS and shared the following high level findings with your team.
Without getting into any calculations, what are your initial reactions to this information?
Reveal answer
Here you can voice over your initial observations about the data along with preliminary hypotheses, for example:
1. Market size: Market B has the largest volume of ticket sales—25% more than Market A and 50% more than Market C.
2. Market entry cost: Market B is also the most expensive market to enter (2-3x more expensive than either Markets A or C). These ratios suggest that entering Market B may be disproportionately costly for its market size.
3. Ticket price vs. cost: All markets charge similarly high-ticket prices, but the per-ticket costs are 2x higher in Market B.
4. Competition: Market B is crowded with the most competitors (15), while Market C has the fewest (5). We’ll need to learn more about competitor shares to assess the unique competitive threats.
5. Market growth: Market C is growing the fastest, followed by B and then A. The growth is appealing, but we’ll need to learn more about the competitive dynamics to better understand our opportunity.
You might even start to think about a break-even timeline. This could be useful for informing the client’s decision.
Question #3
The client mentioned that their goal is to break even within the first three years of entering the new market. Let’s dig deeper into the data to determine which market gives us the best opportunity to do this.
- How many tickets would the client need to sell in each market to break even in three years?
- What share of the market would the client need to capture to break even? Do these shares seem achievable? Why or why not?
Reveal answer
To determine the sales needed to break even, we’ll need to divide fixed costs by the margin per ticket (i.e., price minus cost). Don’t forget we’re looking at a three-year timeline.
To determine the market share, we’ll need to divide the break-even ticket sales by the size of the market over three years. Given that the market growth rate is only provided qualitatively, it’s reasonable to exclude this from your calculations. During a live interview, make sure to articulate your assumptions and thought process.
Now that you’ve calculated the break-even ticket sales and associated market shares, you can see that market B seems least appealing due to the high ticket sales and market share required to break even.
The break-even shares in Markets A and C are the same. How can we decide between them?
1. Market A has higher ticket margins, so a 5% share here would yield higher annual profits.
2. Market C requires fewer tickets to break even, and it has the highest growth rate.
Question #4
Based on the information you’ve reviewed, what is your recommendation for the client?
Please also be sure to speak to any risk areas and next steps.
Reveal answer
To deliver a well-supported recommendation, you’ll need to synthesize the key insights you’ve captured and supplement them with good business judgment.
Based on the client’s data, you could make a compelling case for either Market A or Market C:
1. Market A offers a realistic path to profitability within three years, as All-Star would only need to capture 5% of the market to break even. This market boasts the highest margins per ticket at $300, which is promising for long-term profitability.
2. We don’t recommend entering Market B because the market entry cost and annual operating costs are the highest of all options and its per-ticket margins are the lowest. All-Star would need to capture 10% of the market to break even, which is double the share required in other markets.
3. All-Star would need to capture 5% of the market to break even in Market C within three years, which is tied for the lowest among our options. This market has the fewest competitors and the highest growth rate, so a successful market entry here may yield a unique growth opportunity for All-Star.
You could also acknowledge any key risk areas or next steps that you would recommend for the client, for example:
1. We’d like to conduct further analysis of Market A to better understand what is causing the relatively low growth rate and whether this is historically typical.
2. We’re interested in learning more about the competitors in Market C, specifically to understand whether any particular player(s) own outsize market share and whether All-Star can enter with a unique positioning for customers.
