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A weaker rupee and an importer's margin

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.

A fictional Indian company imports wireless speakers and sells them in India. Each speaker costs USD 100 to buy. The exchange rate has been 85 rupees per dollar, and the rupee then weakens so that a dollar costs 10 percent more rupees. Each speaker sells for INR 12,000 and carries INR 1,500 of local costs (duty, freight, store and staff). All numbers are illustrative. What happens to profit per speaker, and what price would keep the rupee profit the same?

2. Answers to clarifying questions

This case has no scripted clarifying answers. Answer from the prompt, and say "assume what you think is reasonable" if the prompt does not cover it.

3. 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.

Profit per unit = price minus import cost minus local costs
- Price in rupees (unchanged so far)
- Key: Import cost = USD cost x rupees per dollar
- Local costs in rupees (unchanged)
- Options: raise price, hedge, or source locally

Exhibit 1

Reveal to candidate: when they ask for this data, say "Open Exhibit 1" (they press "Show exhibit 1" on their screen).

Profit per speaker before and after the rupee weakens (illustrative, INR)(INR per speaker)

So-what

A 10 percent currency move removes about 42 percent of the importer's profit per unit, because the import cost is large and the margin is thin.

4. 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: Import cost before
What a strong candidate does: USD 100 times 85 rupees per dollar.
Import cost before (INR): 100 × 85 = 8,500
Step 2: Profit before
What a strong candidate does: Price minus import cost minus local costs.
Profit per speaker before (INR): 12,000 - 8,500 - 1,500 = 2,000
Step 3: Margin before
What a strong candidate does: Profit divided by price.
Margin before (percent): 2,000 ÷ 12,000 × 100 = 16.67
Step 4: New exchange rate
What a strong candidate does: A dollar now costs 10 percent more rupees.
Rupees per dollar after: 85 × 1.1 = 93.5
Step 5: Import cost after
What a strong candidate does: USD 100 times 93.50.
Import cost after (INR): 100 × 85 × 1.1 = 9,350
Step 6: Profit after
What a strong candidate does: Same price and local costs, higher import cost.
Profit per speaker after (INR): 12,000 - 9,350 - 1,500 = 1,150
Step 7: Margin after
What a strong candidate does: Profit divided by price.
Margin after (percent): 1,150 ÷ 12,000 × 100 = 9.58
Step 8: Change in profit
What a strong candidate does: From 2,000 to 1,150 rupees.
Change in profit per speaker (percent): (1,150 - 2,000) ÷ 2,000 × 100 = -42.5
Step 9: Price that keeps the same rupee profit
What a strong candidate does: New import cost plus local costs plus the old profit.
Price needed (INR): 9,350 + 1,500 + 2,000 = 12,850
Step 10: Price rise needed
What a strong candidate does: From 12,000 to 12,850 rupees.
Price rise needed (percent): (12,850 - 12,000) ÷ 12,000 × 100 = 7.08

The recommendation to listen for

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

A 10 percent weaker rupee cuts profit per speaker by about 42 percent, from INR 2,000 to INR 1,150, and the margin from about 16.7 percent to about 9.6 percent. To keep the same rupee profit the company would need a price rise of about 7.1 percent, to INR 12,850. Whether that works depends on rivals: if they import too, they face the same cost and prices across the market may rise; if a rival makes speakers in India, it does not, and customers may switch. So test a partial price rise now, and for the longer term look at buying dollars in advance at a fixed rate (hedging) and at local assembly.

Risks a strong answer names: All figures are illustrative; check the client's real cost split before quoting a number.; A hedge only delays the hit; if the rupee stays weak, the higher cost arrives when the hedge ends..

Score the candidate

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

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.