Race to the Bottom

ProHub Comment

This case tests profitability diagnostics in a competitive industry with declining margins across all players. The key is distinguishing between industry-wide headwinds (affecting all competitors equally) and company-specific issues (explaining why Gamma's decline of ~27% significantly exceeds competitors' 9-11% declines). The candidate must pivot from macro factors to micro analysis of revenue drivers and cost structure.

Estimated Time 15 minutes
Difficulty Medium
Source Wharton
50 / 100
We have been hired by Bernard, the CEO of Gamma Airlines, a regional carrier in Germany. Their profitability has been declining since the past year and they want our support in thinking of next steps.

Clarifying Information

  1. Geography of client’s operations/sales
  2. Client’s goal/objective
  3. Business model of the client