Medium
Profitability
Elena's Electronics
Practice this intermediate profitability case interview question in the Technology sector. Includes detailed problem prompt, clarifying questions, structured framework, and expert recommendation. Part of ProHub's 835+ consulting case library.
ProHub Comment
This is a quantitative profitability case that tests the candidate's ability to analyze financial data and identify a critical misalignment between incentive structures and business outcomes. The case reveals that while the pilot increased total phone volume sold, the product mix shift toward lower-margin budget phones eroded per-store profitability—a classic example of optimizing for the wrong metric. The recommendation requires both data analysis and strategic insight about compensation design.
Estimated Time
26 minutes
Difficulty
Medium
Source
Chicago Booth
10
/ 100
Our client is Elena’s Electronics, an electronic goods chain store. Historically, the client relied on rapid opening of new stores to increase growth. However, the client’s presence is now so broad that it must also look for internal growth. In 2017, Elena’s Electronics tested a pilot that changed the responsibilities of staff in its cell phone division. In the old model, all employees were expected to handle all tasks related to sales and products. Under the new program, there are two different types of employees: sales specialists and product specialists. Sales specialists handle all customer interactions, such as talking to customers about their needs and recommending products. Product specialists handle all product management functions, including inventory, ordering, and shelf management. The purpose of the pilot was to see whether sales specialists could target customer needs better and thus increase profits from phone sales. Our client wants us to assess whether or not the program was successful and whether it should expand the pilot program to all the divisions of the stores.
Clarifying Information
- Other Divisions: The other primary divisions at Elena’s Electronics are televisions, laptops, smart appliances, and new tech (drones, 3D headsets, etc.). Their sales were unaffected by the pilot for the cell phone division.
- Competitors: The primary competitors to Elena’s are big box electronics stores, such as Best Buy. These stores have a wide variety of staffing models – there is no clear industry standard.