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Standard: Gyeolhwa Skin Lab: online or a big retailer in the US?

You run the case. Read the prompt, answer questions from the notes below, and share data only when the candidate asks for it or gets stuck. Score at the end.

Case timer

00:00

Target length:

1. Read the prompt aloud

Read it slowly, then pause. Let the candidate ask questions before they structure.

Gyeolhwa Skin Lab, a South Korean skincare brand, wants to grow in the United States. It can focus on online marketplaces or sign with a large US beauty retailer. Which should it choose? Figures are in Korean won (KRW) billions unless stated otherwise.

Format note: Difficulty: Standard. Format: candidate-led, with interviewer dialogue. Industry: Consumer goods (beauty). Region: South Korea and the US. Interview length: about 30 minutes. The company is fictional and all figures are illustrative.

2. Answers to clarifying questions

Give these answers only if the candidate asks. If they ask something not listed, give a sensible answer or say it does not matter here.

If asked: What does each option bring in by year three?
Answer: Online marketplaces: sales of about KRW 30 billion a year. The retail chain: about KRW 50 billion a year across 1,000 stores.
If asked: What are the margins?
Answer: Online, gross margin after marketplace fees and delivery is 45 percent of sales, and advertising costs 20 percent. In retail, gross margin after the retailer's share is 35 percent, in-store marketing costs 10 percent, and a reserve for unsold stock that the retailer can return costs 5 percent.
If asked: Any one-time costs?
Answer: Retail needs KRW 6 billion up front for listing fees and displays. Online needs very little up front.
If asked: Over what period should I compare?
Answer: Three years.

3. The hypothesis a strong candidate states

Listen for an early, testable guess like this one. It does not need to match word for word.

Retail brings more sales but lower margins and an upfront cost. My hypothesis is that the two options are close over three years, so the answer depends on how sure we are about retail sales.

4. A model structure

Compare the candidate's structure with this one. A different split can be just as good if it is clean and fits the problem.

Compare three-year contribution, then test how sure each option is
- Online contribution = sales x (gross margin - advertising)
- Retail contribution = sales x (gross margin - marketing - returns) - upfront cost
- Key: Sales retail needs to win
- Retailer rules and a smaller test

5. The working, step by step

Each step shows how a strong candidate works it out. Share a new fact from it only when the candidate asks or is stuck, and let them do the math: the result in the dark box is what they should reach.

Step 1: Online, yearly contribution
What a strong candidate does: Candidate: "KRW 30 billion at 45 percent margin minus 20 percent advertising."
Online contribution (KRW billion a year): 30 × (0.45 - 0.2) = 7.5
Step 2: Retail, yearly contribution
What a strong candidate does: Candidate: "KRW 50 billion at 35 percent minus 10 percent marketing and 5 percent for returns."
Retail contribution (KRW billion a year): 50 × (0.35 - 0.1 - 0.05) = 10
Step 3: Online over three years
What a strong candidate does: Candidate: "No real upfront cost."
Online, three years (KRW billion): 3 × 30 × (0.45 - 0.2) = 22.5
Step 4: Retail over three years
What a strong candidate does: Candidate: "Minus the KRW 6 billion up front. Retail wins, but only by KRW 1.5 billion."
Retail, three years (KRW billion): 3 × 50 × (0.35 - 0.1 - 0.05) - 6 = 24
Step 5: Sales retail needs to match online
What a strong candidate does: Candidate: "Retail must earn KRW 22.5 billion plus its upfront cost over three years at a 20 percent margin."
Break-even retail sales (KRW billion a year): (3 × 30 × (0.45 - 0.2) + 6) ÷ (3 × (0.35 - 0.1 - 0.05)) = 47.5
Step 6: Curveball: the retailer's rule
What a strong candidate does: Interviewer: "The retailer drops brands that sell less than KRW 40 million per store a year." Candidate: "Across 1,000 stores, that line is, in KRW billion:"
Delisting line (KRW billion a year): 1,000 × 40 ÷ 1,000 = 40
Step 7: Retail if sales land on that line
What a strong candidate does: Candidate: "If retail sales are only KRW 40 billion, three-year contribution is:"
Retail at KRW 40 billion, three years (KRW billion): 3 × 40 × (0.35 - 0.1 - 0.05) - 6 = 18
Step 8: A smaller test
What a strong candidate does: Candidate: "A test in 200 stores would need only this much of the upfront cost:"
Upfront cost of a 200-store test (KRW billion): 6 × 200 ÷ 1,000 = 1.2

The recommendation to listen for

At the end, say: "The CEO walks in. What is your recommendation?"

I recommend that Gyeolhwa start with online marketplaces and test retail in 200 stores before signing for all 1,000. First, over three years online earns about KRW 22.5 billion and retail about KRW 24 billion after its KRW 6 billion upfront cost, so retail is only slightly better. Second, retail wins only if sales reach about KRW 47.5 billion a year, close to the KRW 50 billion forecast, which leaves almost no room for error. Third, if sales per store sit at the KRW 40 million delisting line, retail earns only about KRW 18 billion. The 200-store test costs about KRW 1.2 billion.

Risks a strong answer names: The retailer may not offer the same terms later; Marketplace advertising costs may rise as more Korean brands compete online.

Next steps: Ask the retailer for a 200-store test on the same terms; Track repeat-purchase rates on the marketplaces for six months.

Strong versus weak

A strong answer

Compared both options over the same period, found the sales retail needs, and used the retailer's rule to show how thin the margin for error is.

A weak answer

Chose retail because its sales are larger, without subtracting the upfront cost or the returns reserve.

Score the candidate

Score each criterion from 1 to 5. A 2 or a 4 sits between the descriptions.

This case has no exhibit. Score Exhibit reading on how the candidate used the data you gave them: did they pick out the number that matters and say what it means?

Structuring

1: No clear structure, or a memorized framework that does not fit the problem.
3: A sensible structure, but with some overlap, a gap, or no clear priority.
5: A structure built for this problem, with no overlap and no gaps, a stated hypothesis, and a clear first step.

Math

1: Frequent errors, no units, or needed heavy help to finish.
3: Right answers but slow or messy working, or one error caught late.
5: Accurate and clearly narrated, with units, a sense check, and what the number means.

Exhibit reading

1: Read the chart aloud without finding the number that matters.
3: Found the key number but gave only part of the so-what.
5: Pulled the right number quickly and said what it means for the case.

Synthesis

1: Summarized what was done, with no clear answer.
3: Gave an answer, but with weak reasons or no next step.
5: Answer first, then two or three reasons with numbers, the main risk, and next steps.

Communication

1: Hard to follow: long silences, no signposting.
3: Clear most of the time, with some rambling.
5: Calm and concise, signposted each step, and checked in with the interviewer.

Total

0 out of 25

Score all five criteria to see the band and the feedback template.