Calling Chicago GSB 2008 applicants

Just dropping in to wish the best to all those waiting !!!

Really hope GSB opens its flood gates soon!

All the very best guys

The suspense is even killing me!

It wont take long to call people this afternoon to let them know. Its only a few minutes per phone call so they could easily punch through 300-400 acceptances this evening. I doubt people will complain about getting a phone call at 7pm.

well go run into their office and ask when they are going to be making calls. Or just go peak and see if all the adcoms have phones pressed to their ears with smiles on their faces.

Actually, they are in the back burning piles of papers, dancing around the inferno chanting something about the "necronomicon"... I'm not sure whats going on.

Love me some H.P. Lovecraft, Rhyme...LOL...but that's just plain MEAN...

ack ....... are all of you sure that no-one has recieved the phone call........I'm pissing myself thinking that others have recieved calls, and in the celebratory mood they've forgotten to post abt it here

I'm actually at Gleacher, so I can't see them anyway...

In the interim, allow me to share my case interview question with you:

Our client is a large grocery chain in Texas. Their stores are concentrated in suburbs, and they want to grow the firm (but only in Texas). They feel they have saturated the grocery market in the suburbs but are not willing to consider opening stores in a downtown area. They already have an online service and delivery service and are thinking of entering the convenience store business. Is this a good idea? If so, how should they do it?

Here is a good out there answer.

Open organic/whole foods type grocery stores. It serves a very different clientele and in general wont steal much business from their other stores, focus attention on wealthy areas. Yes I know most stores now have organic sections but nothing compared to the selection at a whole foods, and those places are experiencing great growth.

Just a random guess...
They should focus on the latino or other ethnic market which are typically underserved?

what's the answer?

Nice. Mind if I give it a shot?

I actually wouldnt recommend it because convenience stores would mean lower margins which they need to make up by the number of stores. But if you have to go this route with your response, I assume you have to give an alternate idea to follow through and why that may be better?

In that case, I would do some research on the number of Costco's and Sam's clubs in the area see if there is an need to have something similar instead. Existing resources (warehouse) then may be used. Of course this needs some research.

If they want to stick to convenience stores, are they planning on buying an existing successful chain which is in the market. That may not be a bad idea if the price is right.

How much data do they give you? How does an MBA student (ie. you) proceed?

Not sure that would work in Texas. would work better in California. Think about the market.

You are supposed to ask clarifying questions like: "Who are their competitors" ... Not jump to an answer that fast What are the issues you should be considering? How might you come to the decision? What things will you consider? Based on those ideas, you come up with questions which the interviewer answers. It turns into a conversation, which helps you shape the position of your response. That said, your "fly from the hip" comments aren't entirely bad.

My opinion:

All in one Chains like walmart and target will eventually squeeze such pure grocery chains because they offer convenience and variety to consumers. Establishing convenience stores is not a great idea as it does not leverage any existing resources other than operational skills of running retail operation. So if you were to invest in a totally unrelated line of business, there are other good ideas to choose from.
Solution is to either go all-in-one where you face brutal competition from stores like walmart, or go very niche.
In any case the convenience store idea does not look promising.

Would be interested in seeing how people with business background approach such problem.

Actually, the biggest problem with his reply is that he's not answering the question the client asked. The client wants to know if they should open convenience stores, not whether they should be opening a different kind of grocery store. (In any case, they might already be selling organic foods, the interviewer never said otherwise).

Here's how I would approach the problem.

First, I need to understand WHY they want to enter this market. Likely, its because they want to grow and have excess cash. Second, I need to understand the market in general, who are the key competitors (Think 7eleven, etc). Since convenience stores, are by definition, a thing of convenience, one key question would be to understand how our client intends to differentiate itself. Why would someone shop at us rather than at X? So, then I'd ask myself what advantages I have as a grocery store - likely, its going to be in volume discounts, costs and advantageous pricing options. Our brand might be meaningful, but likely not a huge draw (when you go grab a snack from 7-11 how often do you actually "pick" where you go based on more than location?) ... So we would need to compete on price or location. So, first, we need to understand if there are any ways to compete on location. Barring that, we compete on price. Can we? Maybe. There are also some plausible economies of scale, namely since we already buy in bulk. Moreover, we should at least consider the possibility that we cannibalize our own grocery stores by doing this. That wouldn't help us at all. So, assuming we can compete on price (I'd assume that most good locations are likely already taken by the numerous other competitors) and that we are confident we wont cannibalize our own product lines (which you would get to by asking good questions of the interviewer), then the question boils down to two ways of entering:

1. Build our own - buying land, etc.
2. Buy out an existing small chain that maybe doesn't have great management or operations in place, revamp and relaunch.

For each of the 2 you'd want to list positives and negatives - synergies and concerns (for #1 for instance you have to buy land, build stores, find staff, etc.. for #2 you get all that off the ground, and possibly get advantageous locations as well)... If required, you could do a cost benefit analysis.

That would involve understanding key costs of each option, estimating market size, pricing, margins and profits. Based on those results (which I'd get by asking questions), I'd make a recommendation.

I am assuming that the convenience store has a gas station as well. If it does, then it would definitely make sense to have the convenience stores just outside the grocery stores (like costco). This would add a new line of revenue and also help the existing stores. You would have to do some market research and pick/choose the right stores to have this added 'convenience store'. As someone else mentioned, most of these CS are low margin stores, so you have to have high volume or act as a supplement to the existing GS.