P
ProHub
English 简体中文 繁體中文
BCG Medium Profitability Business Expansion Investment Decision

Lonely Gas Station

#Financial #Retail #Oil & Gas
ProHub Comment

This case tests financial modeling ability and strategic thinking under uncertainty. The NPV calculation yielding zero is intentionally designed to push interviewees beyond quantitative analysis toward qualitative strategic considerations like diversification and competitive positioning.

Estimated Time 15 minutes
Difficulty Medium
Source Darden
50 / 100
Our client is the owner of a gas station between towns A and B – 10 miles to each town. He is wondering if it would make sense to add a convenience store to the gas station.

Clarifying Information

  1. There are no other gas stations in town A or B
  2. Gas is 75% of revenue (10% profit margin) and the gas station also offers car washes (25% of revenue, 20% profit margin)
  3. Criteria for “making sense” – 1) making profit, 2) having a better chance to hold off new competitors enter the market, 3) diversifying income
  4. The gas stations current customers are residents of town A and B; there are no other customers