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Medium Market Entry Revenue Sizing

Shisha: Just Blowing Smoke?

#Non-profit #Consumer Goods

Practice this intermediate market entry case interview question in the Non-profit sector. Includes detailed problem prompt, clarifying questions, structured framework, and expert recommendation. Part of ProHub's 835+ consulting case library.

ProHub Comment

This case requires a structured approach to revenue forecasting, combining multiple data points like market size, growth rates, adoption rates, and different fee structures. The candidate must not only perform calculations but also make a recommendation based on maximizing revenue over a specified period, taking into account the nuances of one-time versus recurring fees and business lifespans.

Estimated Time 26 minutes
Difficulty Medium
Source Darden
19 / 100
Over the past five years, the government of Saudi Arabia has been focused on reducing economic dependence on oil by diversifying the domestic economy. As part of this effort, the government has evidenced a willingness to relax certain social norms. As part of the diversification initiative, the government hired us to forecast the potential revenue impact of taxing shisha consumption.

Clarifying Information

  1. What is shisha? Shisha is an instrument for vaporizing and smoking flavored tobacco. In the Arab world and Middle East, people smoke waterpipes as part of the cultural traditions.
  2. How will the Saudi government make money off of shisha? Institutions must apply and pay for an annual license to sell shisha. Additionally, sales tax and import tariffs are levied by the government as appropriate.
  3. Is there a specific revenue target in mind? No, the Saudi government only wishes to maximize revenue over a 3-year period.
  4. How much revenue does the Saudi government currently earn? 2.5 trillion Saudi riyal annually. Tobacco and other related products currently generate 500 million SAR in revenue.
  5. Are there any social norms we should be aware of? Islam is widely practiced by Saudis citizens and governs their personal, political, economic and legal lives. Additionally, public consumption of shisha is currently banned but is widely consumed at home.
Mock Interview
Interviewer

Over the past five years, the government of Saudi Arabia has been focused on reducing economic dependence on oil by diversifying the domestic economy. As part of this effort, the government has evidenced a willingness to relax certain social norms. As part of the diversification initiative, the government hired us to forecast the potential revenue impact of taxing shisha consumption.

You

Thanks. Before analyzing, I'd like to clarify a few key questions...

Interviewer

Good question. Let me provide some background information...

You

Based on this, I suggest analyzing from these dimensions...

AI Score
Structure Analysis Communication Business Sense Quantitative
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Practice this case with AI Mock Interview

The Saudi Arabian government aims to diversify its economy by taxing shisha consumption. The consulting task is to forecast the potential 3-year revenue impact from shisha licensing and recommend the optimal licensing structure to maximize revenue.

Key Insights:

  1. Revenue forecasting requires careful consideration of various streams: one-time fees, annual fees, and sales taxes/tariffs.
  2. Market sizing involves understanding current businesses, growth rates, adoption rates, and the average lifespan of businesses.
  3. Comparative analysis of different licensing structures is crucial for identifying the maximum revenue potential.
  4. Attention to detail in calculations for existing businesses, new entrants, and businesses exiting the market is essential for accurate multi-year projections.

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