Problem-solving - Would You Rather Own or Supply Shops
- 02:27
Investment Banking Superday interview problem-solving question - Would you rather own or supply shops?
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Side question. As your CEO of your bakery, would you rather own your own shops? Mm-Hmm. Or would you rather supply other people? It's entirely subjective. Mm-Hmm. But talk me, talk me through either of those that you think might, and how, how it would work out Well. Well, I'd look at kind of the opportunity cost of each and the kind of NPV of each. I don't think, without kind of the figures, I don't think I could come to a decision where I'd be certain. But in terms of supplying others, how, how would that work? What would the model be there? Well, I suppose your options could be supplying a restaurant Okay. Or being, a supplier to a deli or something like that. Mm-Hmm. Or you can have a bakery. There's a bakery near me, which is standalone. Yeah. Where everyone flocks there to buy their products. Mm-Hmm. Is it risks to consider to both if you could? Yeah. Well I'm instantly there that's made me think that if I was to be a supplier, I'd be B2B, whereas if I was a baker selling to consumers, I'd be B2C. And I think that with the supplier route, the B2B route, I think there's perhaps more visibility in that because you can have contracts, um, with your customers that offers you that revenue visibility and the recurring revenue. Mm-Hmm. I feel as if, if I'm managing the business, it's a lot easier to kind of go off that. Whereas if I'm the bakery selling directly to the consumers it obviously depends day by day what my, what my revenue will be, will be based on, on the customers. So I feel as if the supplier route, you are able to, there, there's a time lag to it, I feel as if, if there are any, macro environment, changes or, or sector changes, I feel as if you'd have the, the period of the contract you have with your suppliers as a, as a way to perhaps pivot elsewhere and delay that, that change. Yes. Yes. I agree. Yes. I think it'd be nice to have your own shop because then you'd have your brand and a personal, a personal touch to it. But yes, you face possibly a higher degree of uncertainty. Yeah. Sure. So I think that makes good sense.