Several exhibits at once, and the next hypothesis
Linking two or three exhibits into one conclusion, then saying what to test next.
Key takeaways
- When you get several exhibits, find what links them, combine them into one number that answers the question, and end with the next hypothesis to test.
- The strong answer combines the exhibits, says what it means, and moves the case forward with a testable hypothesis.
- Common mistakes: Describing each exhibit separately without linking them.
Key idea
When you get several exhibits, find what links them, combine them into one number that answers the question, and end with the next hypothesis to test.
The routine for several exhibits
- 1Read every title and unit first, before any detail.
- 2Find the common link (the same products, regions, or years).
- 3Combine them into the number that answers the question, for example revenue x margin = profit.
- 4Say the so-what in one sentence.
- 5Say the next hypothesis: what you think explains it, and what data would test it.
Worked case
Which channel really makes the money?
The prompt
Exhibit 1 shows revenue by channel for a fashion brand in Europe (EUR millions): stores 300, online 150, wholesale 50. Exhibit 2 shows operating margin by channel: stores 12 percent, online 4 percent, wholesale 20 percent. The CEO wants to put all new investment into online. What do the exhibits say?
The structure
- Profit by channel = revenue x margin
- Profit per channel
- Online share of revenue versus share of profit
Working it through
1. Stores profit
300 times 12 percent.
Stores profit (EUR millions):300 × 0.12 = 362. Online profit
150 times 4 percent.
Online profit (EUR millions):150 × 0.04 = 63. Wholesale profit
50 times 20 percent.
Wholesale profit (EUR millions):50 × 0.2 = 104. Total profit
Add the three.
Total profit (EUR millions):36 + 6 + 10 = 525. Online share of revenue
150 out of 500.
Online share of revenue (percent):150 ÷ 500 × 100 = 306. Online share of profit
6 out of 52.
Online share of profit (percent):6 ÷ 52 × 100 = 11.54
The recommendation
I recommend that the CEO not put all new investment into online yet, because online is 30 percent of revenue but only about 12 percent of profit. First, its 4 percent margin earns EUR 6 million, against EUR 36 million from stores and EUR 10 million from wholesale. Second, this means growing online adds little profit until its margin is fixed, while wholesale earns 20 percent. The risk is that delivery and returns costs make many online orders unprofitable. As a next step, get the cost per online order, split into delivery, returns and marketing.
After reading the two channel exhibits above
Description only
"Stores are 300, online is 150, wholesale is 50, and the margins are 12, 4, and 20 percent."
So-what and next hypothesis
"Online brings 30 percent of revenue but only about 12 percent of profit. My hypothesis is that delivery and returns costs are too high. Could I see the cost per online order?"
Why the stronger answer wins: The strong answer combines the exhibits, says what it means, and moves the case forward with a testable hypothesis.
Region A has revenue of AED 80 million at a 15 percent margin. Region B has revenue of AED 120 million at a 5 percent margin. Which region makes more profit, and by how much (AED millions)? Enter the difference.
Describing each exhibit separately without linking them. Missing that two exhibits use different units or years. Stopping at the so-what without saying the next step.
You get three exhibits at once. What should you do first?
Which is a good next hypothesis after finding that online profit is low?
Revenue by region is in USD millions, margin by region is in percent. How do you get profit by region?
Sources for this lesson (1)
- Recognized public explanations of case-interview concepts and frameworks
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