Interviewer view · keep this screen to yourself
An Australian pet-food maker enters Japan: build, partner, or buy?
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
1. Read the prompt aloud
Read it slowly, then pause. Let the candidate ask questions before they structure.
An Australian maker of premium dog food wants to enter Japan. The table below shows three ways to enter, with the interviewer's estimates. Which should it choose?
The prompt refers to Exhibit 1. After reading it, say: "Open Exhibit 1 now."
Format note: Interviewer-led: the interviewer shows the table and asks for year-three profit, then three-year cash, then the risks, and then your recommendation.
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 success look like?
Answer: Positive cumulative cash within three years. The board has capped the entry budget at JPY 2,000 million.
If asked: How big is the market?
Answer: About 30 million bags of premium dog food a year in Japan, growing slowly.
If asked: How fast does volume build?
Answer: If we build or partner, year one sells a third of the year-three volume and year two sells two thirds. A bought brand already sells its full volume.
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.
Japan is a large premium pet market, but new brands find it hard to reach shelves there. My hypothesis is that partnering beats building, because a partner cuts local fixed costs while the brand is still unknown.
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.
- Which mode gives the most cash within the budget, and holds up if share is lower?This comes from cash for each way in = market x share x profit per unit minus its costs (or minus the price paid to buy), tested at a lower share.
- Is the share assumption realistic?
- Key: Year-three profit and three-year cash for build and partner
- Buy: price against profit and against the budget
- Downside: share one quarter lower
Exhibit 1
The prompt uses this exhibit, so the candidate opens it right after you read the prompt ("Show exhibit 1" on their screen).
| Entry mode | One-time cost (JPY m) | Contribution per bag (JPY) | Local fixed cost (JPY m a year) | Bags sold in year 3 (millions) |
|---|---|---|---|---|
| Build own sales team | 400 | 900 | 300 | 1.2 |
| Partner with a distributor | 100 | 700 | 120 | 1 |
| Buy a local brand | 15,000 | 900 | 500 | 3 |
So-what
Building earns more per bag, but partnering costs far less up front and each year. Buying is far above the budget.
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: Sense-check the share
What a strong candidate does: Building assumes 1.2 million bags in year three, 4 percent of a 30 million-bag market. For a new foreign brand that is ambitious but possible.
Year-three share if we build (%): 1.2 ÷ 30 × 100 = 4
Step 2: Build: year-three profit
What a strong candidate does: 1.2 million bags at JPY 900 is JPY 1,080 million of contribution, minus JPY 300 million of local fixed costs.
Build year-three profit (JPY m): 1.2 × 900 - 300 = 780
Step 3: Partner: year-three profit
What a strong candidate does: The distributor takes a share, so contribution is JPY 700 a bag, but local fixed costs are only JPY 120 million.
Partner year-three profit (JPY m): 1 × 700 - 120 = 580
Step 4: Build: three-year cash
What a strong candidate does: Volume ramps 0.4, 0.8, and 1.2 million bags. Subtract three years of fixed costs and the JPY 400 million one-time cost.
Build cumulative cash, 3 years (JPY m): (0.4 + 0.8 + 1.2) × 900 - 3 × 300 - 400 = 860
Step 5: Partner: three-year cash
What a strong candidate does: Volume ramps from a third of a million bags to 1 million. Lower fixed and one-time costs give more cash in the first three years.
Partner cumulative cash, 3 years (JPY m): (1 ÷ 3 + 2 ÷ 3 + 1) × 700 - 3 × 120 - 100 = 940
Step 6: Buy: price against profit
What a strong candidate does: The local brand would earn about JPY 2,200 million a year, so the price is about 6.8 times profit. That may be fair, but JPY 15,000 million is seven and a half times the JPY 2,000 million budget, so it is out for now.
Price as a multiple of yearly profit: 15,000 ÷ (3 × 900 - 500) = 6.82
Step 7: Downside: build at 3 percent share
What a strong candidate does: Interviewer: "What if share reaches only 3 percent?" Year-three volume falls to 0.9 million bags, with the same ramp.
Build cumulative cash, downside (JPY m): (0.3 + 0.6 + 0.9) × 900 - 3 × 300 - 400 = 320
Step 8: Downside: partner
What a strong candidate does: Partner volume falls by the same quarter, to 0.75 million bags in year three. Low fixed costs protect the cash.
Partner cumulative cash, downside (JPY m): (0.25 + 0.5 + 0.75) × 700 - 3 × 120 - 100 = 590
Step 9: After year three
What a strong candidate does: Interviewer: "Is there any reason to build?" Candidate: "Yes. At full volume, building earns more each year, so it may pay to run distribution ourselves later."
Extra yearly profit from building at full volume (JPY m): (1.2 × 900 - 300) - (1 × 700 - 120) = 200
The recommendation to listen for
At the end, say: "The CEO walks in. What is your recommendation?"
I recommend entering Japan through a distribution partner. First, it gives more cash over three years, about JPY 940 million against JPY 860 million for building, for a quarter of the one-time cost. Second, it holds up better if share disappoints: at a quarter less volume it still gives about JPY 590 million, against JPY 320 million for building. Third, buying a local brand costs about 6.8 times its profit, far above the entry budget. The main risk is that building earns about JPY 200 million a year more at full volume, so the contract should allow a later takeover of distribution.
Risks a strong answer names: A partner with many brands may not push ours hard enough; Contract terms may make a later move to our own sales team costly; The share assumptions may be too high for an unknown foreign brand.
Next steps: Interview three distributors that already serve pet shops and supermarkets in Japan; Test the brand and price with Japanese dog owners before signing; Draft contract terms that allow a later takeover of distribution.
Strong versus weak
A strong answer
Checked the share assumption, compared year-three profit and three-year cash, ruled out buying on budget, tested a downside, and still named the case for building later.
A weak answer
Picked building because it earns the most per bag, without looking at three-year cash, the downside, or the budget.
Score the candidate
Score each criterion from 1 to 5. A 2 or a 4 sits between the descriptions.
Total
0 out of 25
Score all five criteria to see the band and the feedback template.