Case Study Prompt
Two high net-worth individuals want to invest in the local Boston telephone network. More specifically, they would like to acquire a CLEC (Competitive Local Exchange Carrier).
The telephone industry was deregulated now allowing CLECs to lease telephone lines from the big Bell companies. The idea is that the CLECs lease the lines for a limited time (7 years). During that time, they will build their own networks so that at the end of 7 years they can operate lines independently. CLECs sell phone service packages to commercial customers (not end consumers).
There are 20 – 30 CLECs in the Boston area. All CLECs currently in the Boston area are unprofitable. This is due to the high start-up costs and the lack of current revenues. Most will turn around in the next few years. Both investors have no telephone expertise, but both have experience in the cable TV industry. Investors are looking to hold the company for three to four years before selling.
What are the key success factors they should seek when analyzing the CLECs?
Case Study Overview
You have been called in to help two investors find the most profitable way to enter the local Boston telephone network. They are looking to you for guidance about how to break into the market and which CLEC would be the wisest investment. In this Strategy& style case study, it is your job to determine the factors necessary to make this decision and to give the client a strong yes/no recommendation on how to move forward. In an M&A case, pay attention to the type of buyer you’re serving – corporate or financial. They have different goals!
Preparing for a first round Strategy& interview? We recommend using the M&A Framework to solve this case, but put be sure you branch out and use it to build your own custom framework. The most sought after candidates bring their own original spin to it utilizing their history and business acumen.
The qualitative difficulty is 2 out of 4, which makes this an intermediate case interview you would more likely see in a Strategy& first round interview.
Strategy& Interview Tips
What does Strategy& look for in its case interview candidates? They are looking for a high level of creativity and innovation in problem solving.
Make sure you are comfortable working outside basic frameworks and can find unique solutions.
In this case, focus on a couple of things:
- Time yourself throughout the case (2min to build structure and 2min to present it; 2min each for a brainstorming question; 2min for final recommendation)
- Focus on finding one area you can improve upon for next time.
For out-loud practice with an expert, book an hour with an ex-MBB coach.
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