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Case Interview Fundamentals: Lesson 20 [Drill: Building a Port in Africa] — Transcript

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0:00This is not your typical business case.
0:03It is a case about an entrepreneur of a
0:05growing African country trying to decide
0:08if he should build a port in this
0:10country or not. It's a pretty tough
0:12case. Uh and we're going to structure it
0:15today so we can stretch your abilities
0:18of adapting the three C's and creating a
0:21structure for pretty much any business
0:23problem. So, if you can build a good
0:25structure for this case, you can be
0:28quite sure that you're going to be able
0:31to build a structure for pretty much any
0:33business case in your case interviews.
0:36And we're going to talk about public
0:38sector in a later video. So, uh pay
0:42attention to this drill. Try to do it
0:44with all your heart and then watch my
0:47answer and try to absorb as much as you
0:49can. Now, here are some guidelines
0:52regarding time. The same from the other
0:54drills. If you're on skill building
0:56modes, if you're trying to learn how to
0:58create, how to adapt your frameworks,
1:01well, take 10 to 15 minutes to structure
1:04this case. There's no need to rush and
1:07later you can improve your timing when
1:09you're doing mock interviews. I'd say
1:12more than 95% of you guys are in skill
1:15or should be in skill building mode.
1:17Now, if you already know how to
1:19structure really well and you're just
1:21trying to improve your times, then two
1:23to three minutes to structure, which is
1:25how much you get in an interview. A lot
1:28of people come to me to ask, "Hey,
1:30Bruno, some people are saying that I
1:31only have a minute to structure in an
1:34interview." Uh, so let me quickly
1:37address this here. You get two to three
1:40minutes before your interviewer gets
1:42impatient.
1:44if you're taking those minutes to write
1:47down a lot of ideas on paper and they
1:49can see it because they're right in
1:51front of you. So if you're taking a
1:53little longer than a minute, two, three
1:56minutes and they can see from your
1:59writing that you're doing a good job,
2:01they're not going to get bothered of
2:03giving you a bit more time. They very
2:06much prefer uh a candidate that takes a
2:09bit longer to structure and comes up
2:11with a really good structure than one
2:14that takes a minute and falls into the
2:16guidelines that are not written anywhere
2:19really uh and come up with a structure
2:22that is really not really good. So, oh
2:26and by the way, I have never met a
2:28candidate who can do a good structure in
2:30just one minute. Not even I can do that.
2:34you to do a good structure that's
2:35exhaustive. You need to have ideas. You
2:38need to write them down. You need to
2:40cover a lot of stuff. So regardless of
2:42if you're doing a case at McKini, at
2:43Bane, at BCG, if they say even if the
2:46interviewer tells you you just have a
2:48minute, you can safely ignore that. Uh
2:51I've done that in my interviews. I've
2:53recommended that to all my coaching
2:55clients and none of them uh did poorly
2:57because they took two, three minutes. No
2:59one's really counting the time anyway.
3:02Uh, all the interviewer wants is you not
3:04wasting your time and most candidates
3:08waste their time because they don't know
3:09how to structure. But that's not you.
3:11You're going to know how to structure.
3:13So, take your time to structure well in
3:15your interview. In this drill, however,
3:17take a bit more. Take 10 to 15 minutes
3:20so you can learn how to actually build
3:22them before you can learn how to do it
3:24quickly. So, let's jump into the case.
3:27The case question is pretty simple.
3:30Should an African entrepreneur build a
3:33port in his country?
3:36And that's all you get. I mean, you
3:39could ask clarifying questions, of
3:41course, which is what we're doing next.
3:44So, let's jump into that. A structure is
3:47a plan to solve a problem. That's the
3:50basic definition. Clarifying questions
3:52are only needed when you don't know
3:55exactly what the problem is. when you
3:57need to define the problem and if so you
4:00can't build a plan to structure a
4:02problem because you don't know this
4:04problem. So my two clarifying questions
4:07for this case are there because these
4:09are two areas that could change the
4:12nature of the problem that we need to
4:14solve and so my structure to solve it.
4:17So let's jump into the clarifying
4:19questions themselves. I have two of
4:21them. Who is this entrepreneur and does
4:24he have the capital and the connections?
4:27And second, what is the economy
4:30structure? What is the economic
4:32structure of this country? What does the
4:34economy of this country look like? Now,
4:36let's check the answers. Let's say this
4:38entrepreneur is a rich and influential
4:40businessman who wants to remain
4:43anonymous and that you can assume that
4:44he's got the capital and the connections
4:47to do so. And the answer to the second
4:50question is that this country's primary
4:53economic activities are agriculture,
4:56mining, and the oil industries.
4:59Now, let me just go through really
5:01quickly the reasoning behind these two
5:04clarifying questions. My two clarifying
5:06questions are there because these are
5:08two areas that could change the nature
5:10of the problem and so my structure to
5:13solve it. Your clarifying questions may
5:15be different and still be good. For
5:17example, you could ask if this country
5:19already has a port or if this is going
5:21to be the first port in this country or
5:24how do they export their stuff
5:26currently. I honestly think that this
5:29case doesn't need any clarifying
5:31questions to be solved, but it's still
5:34safer to ask a couple of good ones
5:36because it shows your interviewer that
5:39you're aware that you need to define
5:41well the problem before attempting to
5:44solve it. So, even if you're pretty sure
5:46about the nature of the problem, it's
5:47still better to confirm a couple things
5:49so that you're signaling to your
5:51interviewer that you understand that
5:53this is really important. Now, pause the
5:56video, take your time, uh write down
5:59your structure, and preferably record it
6:02in your smartphone, your delivery of it,
6:04and then come back to the video and
6:06watch my answer just so you can compare
6:08it with yours and gain some insights
6:11along the way. So here we go. Uh I'll
6:15start my answer and I'll do that as in
6:18other drills. First listing the
6:20categories then uh talking through my
6:23issues or key questions. It's another
6:25way to to call them. And then the third
6:28step is to in each issue or in each key
6:31question mention what's the underlying
6:34hypothesis or the underlying reason why
6:36we need that information.
6:39And from now on, I'm going to speak as I
6:41would to the interviewer. So to help
6:44this African entrepreneur decide if he
6:46should build a port in this country or
6:48not, I have to analyze five categories.
6:51The first is the demand for port
6:54services in this country. And I'd focus
6:56on exports because it seems like a
6:59country that exports a lot of raw
7:01materials. So exports, demand for ports
7:05is probably larger than imports. Then I
7:09want to know what is this port like? I
7:11imagine they have uh this entrepreneur
7:13has a specific port in mind or if he
7:16doesn't what could be uh reasonable
7:18ports to build in this country like. The
7:21third category I want to understand
7:23other competing ports national and
7:26international.
7:27So other parts that uh agricultural
7:30producers or mines or oil uh producers
7:34in this country use to export their
7:37products.
7:38Next fourth category I want to
7:41understand what are the national issues
7:42in the country that might influence this
7:44decision. I mean a port is a huge
7:47infrastructure project for a developing
7:50country. So we need to understand if the
7:53country itself is quote unquote uh
7:57worthy of this port and then finally I
8:01want to double check this entrepreneur
8:03just to see if he's the right person to
8:05do that. So let's start with the demand
8:08for port services. There are three main
8:12things that I want to look at here. The
8:15first one is I want to get a sense of
8:18what the exports and the imports and the
8:21domestic economy is like. So what are
8:24the types of industries exporting
8:26importing and in the domestic economy
8:28and the volumes of this I need to know
8:31how much is exported, how much is
8:33imported and so on. And there are two
8:36reasons for this. The first one is to
8:38size the current demand of exports and
8:40imports. And then the domestic economy
8:43part is to see the potential for latent
8:46export or import mainly export demand
8:49due to high operations costs or
8:52logistical bottlenecks. So the
8:54hypothesis here is that if this country
8:56had a new port that is cheaper to
8:58operate and thus has cheaper fees or
9:02that could expand the capacity that they
9:04could export more or move their domestic
9:08economy more. Now the second issue I
9:11want to analyze is demand growth and
9:14here there are two things as well. First
9:17is the expected growth from current
9:20industries. So we have some uh crops
9:22that we cultivate some types of mines in
9:24this country. What is the expected
9:27growth from these industries? This could
9:29be from more demands internationally or
9:33from currency shifts that make other
9:36countries preferably buy from this
9:38country because it's cheaper due to a
9:40currency shift or even productivity
9:43improvements. I also want to know what
9:46are the new mining, agriculture or oil
9:50projects in this country. If there are
9:52current uh mines being built or other uh
9:56type of land being developed, we can
9:59pretty uh not precisely but we can
10:03pretty confidently uh size the the the
10:06growth of demand for port services. So
10:09the growth of exports in this country.
10:12Finally, I want to know what is the
10:14customer satisfaction with the current
10:17exporting infrastructure.
10:20What is the cost to use the ports they
10:22use today? If there are time delays, if
10:24there's company specific bureaucracy
10:27that we could avoid, or if the current
10:29ports are losing cargo or something that
10:32may disrupt this business's activities,
10:35my next step after analyzing this demand
10:39with these three key questions is to
10:42understand what is the sport like? And
10:45now there are three questions that I
10:48want to ask again. The first one is
10:51regarding location. Are we close to the
10:54demand? Are we going to be close to the
10:56mines or to the uh agriculture fields or
11:00to the oil uh
11:03to the oil producers and then also I
11:06want to know the quality of the demand.
11:08So regarding the proximity, the
11:11hypothesis is that for agriculture
11:14products, for mining products, even oil,
11:17there's high land transportation costs
11:20compared to the value of the uh product.
11:24So logistics is really important. If we
11:26build a port too far away from them,
11:28they may still use other options because
11:30it's cheaper to take the products to the
11:32port. Regarding quality, it's basically
11:35if the waters are deep enough to receive
11:37cargo ships, if they're calm enough for
11:39the port to be operating day in and day
11:42out. Now, the next issue here is the
11:45projected capacity either in containers
11:47or ships per year. I don't know how they
11:50measure capacity in this industry, but
11:52the idea here is to compare with latent
11:54demand or with demand growth to project
11:58the utilization rate. So we need to
12:00balance our our capacity the capacity of
12:03the market and growth in demand to know
12:06how much of the port is going to be
12:07utilized uh given the competitiveness of
12:10this port against other ports. Finally
12:13the technology
12:15how good are we going to be able to
12:17handle products? So maybe we will have
12:21technology that makes we handle liquids
12:23such as oil or uh food products such as
12:28agriculture products better than our
12:30competitors and also the technology
12:34related to productivity. So if we are
12:37going to be a more productive port,
12:40I have an hypothesis that this is really
12:42important because it if a ship comes and
12:46we can load it much faster than other
12:48ports, this ship's going to be being
12:51utilized. It's going to be sailing for
12:53more days in the year. If I were a ship
12:55operator, I'd like to go to a port that
12:58can quickly unload my ship, reload it
13:01with other goods, and start sailing as
13:04soon as possible because I want that
13:06ship to be sailing more time and waiting
13:09for products to be loaded less time. And
13:12this is related to the port
13:13productivity. So if we are a port with
13:15more productivity than other ports,
13:17other competing ports, we will probably
13:20get a lot more business than if we're as
13:23productive or less productive than other
13:25ports. So these are the three issues
13:28related to port uh location, the
13:31capacity and the technology. Now I also
13:34want to analyze the other competing
13:36ports, the ports that get business from
13:38this agriculture, mining and oil
13:40companies in this country. The first
13:42thing is I'd look into the same three
13:44things as in our part and then I'd also
13:47look into three other things. The first
13:49is can they improve their productivity?
13:53So say they're less productive than our
13:56part will be which will bring business
13:58to us. Can they improve this
14:00productivity to be competitive again?
14:03And if so with low or with high
14:05investment. So the hypothesis here is
14:08that there's uh they're going to react
14:11to our product being more productive if
14:14they can because if they're losing
14:16business because of productivity issues,
14:18they're going to react. They're going to
14:20invest, especially if it's a low
14:22investment thing. Now, maybe they can't
14:25be more productive at all. Even if they
14:28invest because of the way the part is
14:30set up and the bay they chose to to
14:33build the sport. You get the idea. Maybe
14:35they can't improve productivity even
14:38with high investment which would be
14:39really good for us or maybe then they
14:42can easily improve productivity which
14:44would take that advantage away from us.
14:46Now, the other thing that I'd look at is
14:49the current utilization rate just to see
14:53if they're fully utilized, which means
14:56there's room for an expense in capacity,
15:00or if they're they have low utilization,
15:03which means that they could uh basically
15:07do price wars against. So, if they have
15:09high utilization, we can capture demand
15:11e more easily. And if they have low
15:14utilization and we build a port, they're
15:16probably going to be uh even lower in
15:19utilization unless they drop prices
15:21because this is a fixed costheavy
15:24business, they will be able to drop
15:26prices further. Uh I mean probably if
15:30they're pricing above marginal cost,
15:31they will and they will want to do that
15:33because they can't afford to lose
15:35business. Finally, I want to know what
15:38their operational problems are. what if
15:42anything is bringing customer uh
15:44dissatisfaction
15:46down? So if the customers are not
15:49satisfied with timeliness or loss of
15:53cargo or costs all the stuff that uh
15:57we've explored in the demand side of the
15:59analysis here on the competition side of
16:02the analysis I want to know what are the
16:04operational problems that are leading
16:07these parts these competing parts to uh
16:11have their customers dissatisfied
16:13because maybe they're easy fixes or
16:16maybe They're really tough things to
16:18change. If it's tough, then bringing a
16:20new port to the market will make even
16:22more sense. Now, I don't want to build a
16:25port in a country unless I know that
16:29that country doesn't have any issues
16:32that might negatively influence this
16:35building of the port because a port is
16:38an infrastructure project. I can't just
16:40take it away of the country if something
16:42happens and move it to other country. I
16:44just will lose the investment. And there
16:46are a few things that I want to look at
16:47here. First is the political stability.
16:52My hypothesis is that if the country is
16:54not stable politically, it's not worth
16:57the risk of making a long-term fixed
16:59investment here because what if there's
17:02a government takeover and we just lose
17:05the port due to political reasons? Might
17:08as well build a port in a neighboring
17:10country that's more stable politically.
17:12Second, what are the required permits to
17:16build a port and to operate a port?
17:18Third, is there civil or political
17:21corruption? And here the idea or the
17:24hypothesis that in order to build and
17:27operate this port with certain degree of
17:30stability, the entrepreneur might need
17:32someone's favor quote unquote to do the
17:34project. It is an African country. uh I
17:38don't know which one but many of them
17:40are plagued with corruption and I'm not
17:42saying the entrepreneur should get this
17:45favors quote unquote from people but uh
17:48the idea is we need to know beforehand
17:50so that the the entrepreneur does
17:52whatever he feels comfortable doing I
17:55don't know anything about this country
17:57but the thing is if there's corruption
17:59and if this corruption is so ingrained
18:02in the system that the they can't
18:04operate apart without doing borderline
18:09illegal stuff or even illegal stuff.
18:10It's better to know it beforehand and
18:13we're not lawyers, but we need to to
18:16make the client aware of that if he's
18:18not already. Then we need to check about
18:21the unions. Uh port operations required
18:25really specific people to work at it.
18:28These people are probably unionized
18:31because of the nature of the job. And if
18:34the unions are really strong in this
18:36country and tend to be aggressive, we
18:38run the risk of not operating well.
18:41Finally, the tax the tax and finances of
18:44this country both taxation for port
18:47services because that's part of the the
18:49work but primarily is this country
18:52economically
18:54uh stable in the long run because I
18:57don't want to make a huge long-term
18:59investment in a country that is probably
19:03going to have it an economic crisis in
19:06the next few years or so on. So I
19:08checked that as well. And finally, the
19:10entrepreneur.
19:12There's a few things that I want to know
19:14about him, and we've checked a bit in
19:16the clarifying question, but I just want
19:18to make sure that he has the knowledge,
19:21the connections, and the access to
19:23capital to build and operate a port.
19:27Uh, I found it strange at the case
19:29question that it is an entrepreneur and
19:32not a conglomerate or an infrastructure
19:35company or a private equity. It's one
19:38person. Uh, and it's weird because I
19:41mean maybe a really rich and influential
19:43person, but a port is a billion plus
19:47dollar project. Usually it is. It's a
19:50huge project and can one person do it.
19:54Uh, and the dimensions I analyze is
19:58knowledge, connections and access to
20:00capital. So that's how I would structure
20:03this problem and tackle this idea of
20:06building a port in this country. And the
20:09first thing I would look at here
20:12[snorts] would probably the demand for
20:14port services in the country. Uh I think
20:17if there's no demand, it makes no sense
20:19to build this port. And if we find that
20:22there is no demand then I would look at
20:25the competition just to make sure that I
20:29mean maybe there is no latent or excess
20:31demand uh but we can still be profitable
20:34because the competition is so bad and
20:36they can't do anything about it. So if
20:38we build this we will get all the market
20:40share in this market and we can be
20:42successful even if demand doesn't grow.
20:44So these are the two areas that I'd
20:46start with. Uh actually before I start
20:49doing that I'd ask a few questions about
20:52the national issues because if it's a
20:54politically charged environment maybe it
20:58doesn't make sense even if the man grows
21:00it's too risky of an investment although
21:03I'd assume this entrepreneur knows what
21:05he's doing in this side. So yeah let me
21:07circle back and let's start with the man
21:09first.
21:10Now let's debrief this case and this is
21:14kind of the more tactical debrief and
21:16then we'll do a business sense debrief
21:18as well for to talk about the specific
21:20issues that were in this case. So the
21:23first theme here is that this structure
21:25is the adapted 3C's which makes sense
21:27because we're in the part of the uh
21:30course where we adapt the three C's.
21:34However, this case was pretty tough to
21:38adapt. I mean, it's a stretch. The
21:41structure doesn't look much like the
21:44three C's. And here's the adaptions I
21:47made just so you can make sense of it.
21:49The first one is instead of calling
21:51customers, I called it demand. And the
21:55reason is a lot of parts will have
21:59specific customers that they deal with,
22:02but others I mean, and some of the
22:04customers are kind of unknown. Let's
22:06call it like that. uh there's a mess of
22:11products and uh cargo that needs to come
22:15into the country and leave the country
22:17and in this case
22:20the port offers the infrastructure to do
22:23so. So they don't really know their
22:25customers that well uh or at least many
22:28of the customers. So and they should
22:31think about aggregate demand how much
22:33stuff is leaving and getting in the
22:36country. The second change I did is
22:38instead of calling the company
22:41uh I broke it down into the port and the
22:43entrepreneur and the reason is there is
22:45no company yet but there's a port or
22:48there's going to be a port and there is
22:51an entrepreneur.
22:52So there's the infrastructure side of
22:54the company and there is the person or
22:57the people side of the company which in
22:59this case is just one person and there
23:01are specific things I want to know about
23:03each but there's no company yet and it
23:06wouldn't make sense to have a company
23:08bucket asking about organizational
23:10structure or culture or competitive
23:13advantages because there is no company
23:15we need to know about the part and about
23:17the entrepreneur
23:19uh also I called competition the other
23:22ports or the other export import
23:25infrastructure for this kind of uh goods
23:29agriculture oil and mining. Now, you
23:33could argue that, you know, you can
23:35export and import via airplane or by
23:38land, but because it's an African
23:41country and I assume that they're not
23:44exporting and importing a lot by land,
23:47it might be a wrong assumption and
23:49actually it's something that I check
23:50with the interviewer, but my assumption
23:53is that they're exporting to other
23:54continents who buys uh food and oil and
24:01mine products from Africa. Usually a
24:04more developed countries. Uh although I
24:07could be wrong here. Now airplane
24:08doesn't make sense at all because of the
24:10type of product we're talking about.
24:12We're talking about raw materials and
24:15exporting via airplane would be too
24:17expensive. So I called competition the
24:18other parts which makes sense.
24:23And then I added a category called the
24:26country or national issues. And this is
24:29kind of a broader category where I put
24:31in every other player, every other
24:34decision maker that could influence this
24:38and they're part of the country. So the
24:40unions and the corrupt or potentially
24:44corrupt government officials or
24:47politicians and the country's finances
24:51and so on.
24:53And the second issue that's important
24:56for you to take away from this case in
24:58terms of how to build the case, how to
25:00present the framework is that I
25:02explained all the major issues. And I
25:05did so using three main tools. First is
25:08wise, second is hypothesis, and third is
25:11examples. And they're pretty much
25:13they're cousins. They're they're
25:15similar. So wise is basically well I
25:18need to know this information because
25:22this this and this. So it's an why way
25:24to explain it. Another one is
25:26hypothesis. So basically scenarios I
25:29need to know this information because
25:31this scenario could happen. I have this
25:34hypothesis of what could happen and in
25:36this case this information would be
25:38highly relevant and we don't know if
25:40this scenario is true or not. That's why
25:42it's a hypothesis. But we want to know
25:46and then examples. So you can say well
25:48uh I need to know
25:51if there's any
25:54source of latent demand or any growth in
25:58demand that we might know of for example
26:01new mines being built in the country or
26:03new oil extraction platforms or anything
26:07like that.
26:09Okay. So this is the debrief for this
26:12case structures the adapted three C's
26:16and explain major issues with wise
26:18hypothesis and examples. You can stretch
26:21the three C's a lot if you want and you
26:24get a completely different structure
26:25from the three C's but that still makes
26:27sense. Just use the technique that we
26:30taught in the video explaining how to
26:32adapt the three C's. Now let's move on
26:34to the business sense debrief where I
26:37will explain to you what are the issues
26:39that you couldn't have missed.
26:42What are some issues that will add value
26:45uh and make you outstanding as a
26:48candidate in terms of business sense and
26:50then there's one specific issue that I
26:52want to talk about uh because of being
26:55sensitive to the client and to the issue
26:58at hand. So let's start with three
27:00required issues to do well in this case.
27:03The first one is future demand. Building
27:07a port is a very long-term investment.
27:11If you as a candidate just ask, well,
27:13what is the demand for port services
27:15now? And it's projected growth in terms
27:18of a number. Ah, it's growing 3% per
27:21year. Oh, that's cool. That's not an
27:24insightful way to do it. You need to do
27:25it better. You need to know where does
27:28this future demand come from? And you
27:30need to make the interviewer aware that
27:31you know that future demand is perhaps
27:35more important than current demand.
27:37We're talking about building a port.
27:39It's not something that goes away in a
27:41few years. It's something that lasts for
27:43decades. Second issue, capacity. You
27:47need to have mentioned capacity of the
27:49port of the other ports versus the
27:52demand. So the whole capacity of the
27:55market after you build the sport should
27:58be wellsized versus the demand. What
28:00does wellsized mean is subject to other
28:04analysis. So but basically you need to
28:07be profitable. If you're building a port
28:09in a country that has excess capacity
28:11for ports, it's probably not going to be
28:14profitable. Third, stability of the
28:17country. That's the main source of risk.
28:19And I'm talking about political
28:21stability, economical stability. And the
28:24key thing here is this is a very
28:26long-term investment. So this is this
28:29makes future demand be a critical issue,
28:32but it also makes stability of the
28:35country be a critical reason especially
28:37as you couple that with it being a
28:39developing African country. So these
28:42three issues should be in your framework
28:44in some uh form or shape. And if you
28:48didn't include them, if you missed it,
28:50you made a mistake. And you'd probably
28:53get a call from uh the consulting firm
28:55or your interviewer telling you, well,
28:58unfortunately, you're not going to go to
29:00next round because your business sense
29:03wasn't good enough. Now, there are three
29:05standout issues. Three issues that if
29:07you did mention, you would stand out as
29:10a candidate. Having a standout issue
29:12doesn't uh make you bulletproof to not
29:15saying the required issues. You still
29:17need the required issues, but as you add
29:20these standout issues, your interview is
29:23going to get a sense that you have an
29:25excellent business sense. And these are
29:26some examples. There may be others. The
29:28first one is productivity
29:31matters because ships want to be
29:34sailing. So I've gone through that in
29:36the in the in the framework
29:39presentation. Let me go through it again
29:41for those of you who didn't understand
29:44because I was a bit quick there. So,
29:46here's the deal. A ship operator likely
29:50has the option to choose which port to
29:53get the cargo from. And if you're a ship
29:56operator, you have a huge cost, which is
29:59your ship. It's a million millions of
30:02dollars uh capital expense and you want
30:06that ship to be sailing because if it's
30:09stuck in a port because of some
30:11bureaucracy or lack of productivity in
30:13the port, you're just losing money just
30:15like an airline wants its airplanes to
30:18be flying.
30:19Uh a ship operator wants its ships to be
30:23sailing. And one driver of whether a
30:27ship is parked in the port or not is the
30:30port productivity. So the ability of the
30:32port to quickly unload and load your
30:36ship. Some of it is off the port's
30:39control, but some of this productivity
30:41is due to the operation of the port. So
30:45how organized they are, how much
30:47technology do they have to load and
30:49unload? Are their workers skilled? So
30:53recognizing that your port gets business
30:57as they are productive and that this
31:00could be an issue a competitive
31:02advantage for the sport is something
31:04that makes you stand out in businesses.
31:06Now let me make a a side note here. I
31:09don't even know if in real life this
31:11actually matters or not. Maybe it
31:14doesn't matter because all ports are
31:16prod are as productive and there's
31:18little difference. Maybe the cargo
31:21operators, the ship operators can't
31:23really choose what port to use because I
31:27don't know some regulation or because
31:29who chooses is the the person who's
31:31exporting or or sending the materials. I
31:35don't even know if this is an issue or
31:37not. And here's the deal with
31:39businesses. You don't need to know
31:41stuff. You don't need to have facts
31:44about the port operator market or the
31:47international shipping market. What you
31:49need to know is have good business
31:51logic. And I'm saying here that if ship
31:54operators can choose the port and if
31:58there is a variance between how long a
32:01ship is parked there uh regarding
32:05depending on the port productivity then
32:07it makes sense that a ship operator uh
32:12wants to choose a port that is more
32:14productive and thus this more productive
32:17port will get a boost in market share.
32:21Now I'm saying if then statements based
32:24on business logic and so should you. As
32:27a consultant you get the chance to talk
32:29to people who know about uh port
32:33operations and the shipping market and
32:35everything else in between. But what
32:38they're testing in the interview is
32:40really if you're able to ask the right
32:42questions to these people and if you're
32:44able to craft this kind of logic in your
32:47interview, your interview is going to be
32:49sure that if you're faced with a similar
32:51situation, you're going to be able to
32:52call an expert within the consulting
32:54firm, outside of the consulting firm, or
32:56even look look up in Google or ask your
32:59client uh these questions and this and
33:02and then come up with the logic that
33:05shows you know, you're going to be much
33:07more productive which means you're going
33:09to get this much market share more. So I
33:12I was saying all this logic I don't even
33:14know if the facts are true but if they
33:16are true then it's important to ask them
33:19because of this second issue port
33:22location matters because of low dollar
33:25value per kilogram or per pound if
33:27you're American and this happens because
33:31we're dealing with mining and
33:32agricultural products. Now, this is
33:36important because if you're selling
33:39jewelry, you can afford to transport
33:43your product for far for longer
33:45distances through more expensive means,
33:49airplanes, and everything. If you're
33:51selling TVs or furniture, you don't care
33:55too much about the freight costs. I
33:58mean, you always care, but it's not that
34:00big of a deal because compared to the
34:03value of the product you're
34:04transporting, uh, the freight cost is
34:07not very relevant. Now, if you're
34:10selling iron or or soybeans,
34:13the value per kilogram is not very high.
34:17These are raw materials and
34:19transportation costs are driven by how
34:22much weight you uh send or volume. It
34:26depends. But the key thing here is a
34:30trucking operator doesn't care if they
34:33transport iron ore or or expensive
34:36vehicles. They care about how much it
34:39weighs, how what's the volume, and
34:41here's the the the cost to transport.
34:45And if the port is too far away, maybe
34:48it's cheaper to go through that port,
34:51but you have to transport your goods for
34:53a longer road and thus pay higher land
34:57transportation costs. The person who's
35:00exporting is looking at total exporting
35:02costs, not just what they spend with
35:04you. So because this country exports low
35:08dollar value per kilogram products,
35:12uh port location matters and if you're
35:14able to make that logic or something
35:16like that, then it will really make you
35:19stand out. Third, currency fluctuations.
35:22These are an important long-term driver
35:25for poor demanding countries with a weak
35:28monetary policy. So I don't know if this
35:31country has a weak monetary policy or
35:33not. I don't even know what country this
35:35is, but it's an African country. It's
35:38developing. Probably not as strong as
35:41the dollar in the US or the euro in
35:44Europe. They probably have a weaker
35:47monetary policy
35:49with their uh exchange rates. And if
35:53this is true, then you know what? If
35:57their currency appreciates a lot in the
35:59short run, that makes the exports drop.
36:03which makes the demand for port uh in
36:06for for port services in this country
36:08lower. So you have to be able to make
36:11that logic that connection make sense.
36:14Now there's an issue that I want to talk
36:16about here which is corruption. It is a
36:19sensitive topic that I talked about in a
36:22sensitive way and I did so because
36:25you're a consultant. You're not a
36:26lawyer. You have to talk about the topic
36:28because it's important to your client.
36:31But you have to be politically neutral
36:34and honestly
36:35it's even hard to judge if the
36:38entrepreneur wants to go through with
36:40this uh even if they have to pay some
36:43people or whatever because maybe it's
36:46the way things work in this country.
36:50I personally wouldn't do it but I know
36:52that a consulting firm wouldn't uh
36:55approve this because
36:57it's illegal it's immoral but uh so this
37:02topic has to be handled in a very
37:04sensitive way in a sensitive way because
37:06you can't say yeah go through with this
37:08it's fine but you have to handle this
37:11this topic because it's important to
37:13make the decision now the way this is
37:15handled in real projects is by much more
37:19senior people probably no one below
37:22partner would talk about this but in a
37:24case interview if the topic comes up
37:27talk about it just make sure you're
37:29sensitive and talk in a way frame the
37:32discussions as if you were talking to
37:34your manager your partner within the
37:37consulting firm because it's safer that
37:39way if you frame the framework
37:42presentation as if you were telling the
37:44client this then it raises some I
37:47wouldn't say red flags but maybe yellow
37:49flex. So this is it for this case. Go
37:53through your own framework. Compare with
37:55this page of required issues, standout
37:57issues, compare with my own answer of
38:01the framework. And I hope you've learned
38:03something. I hope you've learned how to
38:05stretch the three C's and adapt them
38:08really well. I hope you've learned how
38:09to come up with good issues for your
38:13cases, even infrastructure cases if you
38:16if you get some of them. But even if you
38:18don't, there are ideas here that could
38:20be used in other cases as well. Hope
38:24you've liked this R. I hope it was
38:26useful and I'll see you in the next

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