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Medium Profitability Comparative Analysis Growth Strategy

Big Wheel

#Transportation #Sharing Economy #Urban Mobility
ProHub Comment

This case tests revenue modeling, cost structure analysis, and profitability drivers. The interviewee must move beyond surface-level revenue comparisons to identify that despite Chicago generating higher total revenue ($52M vs $24M), DC is more profitable ($4M vs $2M) due to operational efficiencies in inventory rebalancing. The case then prompts strategic recommendations to improve overall profitability across both markets.

Estimated Time 26 minutes
Difficulty Medium
Source Cornell
20 / 100

Your client is Big Wheel Bike Share and they operate bike sharing services in two major cities, Washington DC and Chicago. Their bike sharing business is self-service, where they have stations across each city with a number of bikes docked and customers simply pay at the station kiosk to rent bikes. They operate as a monopoly in both Washington DC and Chicago. The management believes that their operation in Washington DC is more profitable. Our objective is to determine:

  1. Is the management right that Washington DC is more profitable than Chicago?
  2. If so, why?
  3. How can Big Wheel improve their overall profitability?

Clarifying Information

  1. Annual subscription - $70 / year
  2. Daily rate - $10 / day (unlimited for 24 hours, 1 day pass = 1 ride)
  3. Washington DC: 200K annual subscribers and each person rents 10 rides a year; 1M rides a year from daily rentals
  4. Chicago: 600K annual subscribers and each person rents 5 rides a year; 1M rides a year from daily rentals
  5. Bike Depreciation - Chicago: $13M (26%); Washington DC: $5M (25%)
  6. Rebalancing Inventory - Chicago: $16M (32%); Washington DC: $5M (25%)
  7. Bike Maintenance - Chicago: $8M (16%); Washington DC: $3M (15%)
  8. Station Cost - Chicago: $8M (16%); Washington DC: $4M (20%)
  9. SG&A - Chicago: $10M (10%); Washington DC: $3M (15%)
Mock Interview
Interviewer

Your client is Big Wheel Bike Share and they operate bike sharing services in two major cities, Washington DC and Chicago. Their bike sharing business is self-service, where they have stations across each city with a number of bikes docked and customers simply pay at the station kiosk to rent bikes. They operate as a monopoly in both Washington DC and Chicago. The management believes that their operation in Washington DC is more profitable. Our objective is to determine: 1) Is the management right that Washington DC is more profitable than Chicago? 2) If so, why? 3) How can Big Wheel improve their overall profitability?

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
Practicing...
Score coming soon
Practice this case with AI Mock Interview

Big Wheel Bike Share operates monopoly services in DC and Chicago. While Chicago generates 2x more revenue per ride ($13 vs $8), DC is actually more profitable overall ($4M vs $2M profit) because it has significantly lower rebalancing costs (25% vs 32% of revenue). The candidate must identify this counterintuitive finding and propose growth strategies.

Key Insights:

  1. Revenue per unit is not the same as profitability - Chicago’s higher per-ride revenue ($13) masks lower overall profit margins
  2. Cost structure and operational efficiency are critical differentiators - rebalancing inventory costs vary significantly between markets despite similar business models
  3. Market dynamics differ: DC has fewer but more frequent users (200K subscribers × 10 rides), Chicago has more subscribers but less frequent usage (600K × 5 rides)
  4. Monopoly status doesn’t guarantee profitability - efficiency and cost management are essential
  5. Growth opportunities include tiered pricing, targeted demographics, and operational optimization using analytics