Problem-solving - Differences Between This and Another Business
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Investment Banking Superday interview problem-solving question - Differences between this business and another business.
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And what sort of difference about this business, in comparison to selling, you know, Hein selling cans of beans or, or something like that, how does nature of this business, impact those sort of risks going forward? that actually makes me think of a skilled labour, right? When you are doing, you know, nails, that is something, it's like an art, right? You need to be able to, be very accurate. You need to know what you're doing. You know, there's a lot of nuance to it, right? So whether that workforce is available in your town, whether, you know, salaries need to go up because competition is getting more fierce for these, you know, nail painters.
and so you're going to have to train people and give them expertise or hire people that are already experienced. And so, there could be, you know, key man risk, right? So if this person started the business on their own, and they're leaving, but they had all the good designs, they had all the technique, right? that could be a very big element of the business that, you know, is leaving and that could have a big impact on the valuation.
Yep. No, absolutely. Sure.
And, and I guess also, you know, just think about the labor markets at the moment, you know, what's happening in the labor market again, you know, how, how's that, how's that impact the, the risks in relation to this company? Yeah, I would definitely say that we are in a high interest rate, sorry, high, well, high interest rate environment and high inflation environment, right? Yeah. you know, I come at it from more of the, American side, so I know that inflation is definitely cooling, but to my understanding, inflation is also quite a big issue in the UK as well.
And Europe, you know, European central banks are still raising interest rates.
you know, Rishi Sunak is still trying to deal with, you know, these economic factors, right? So when prices go up, people demand that wages go up. And so that could mean that the price of labour, the, you know, the amount of money you have to pay, the people doing these nails would have to increase as well. So that is another risk, that's definitely present.
Cool. Absolutely right. Let's get that.