Can a repair-first appliance brand enter Pune?
Before the decision
A pilot sold well after the founder personally resolved every warranty call. The city sales manager wants to open ahead of festival demand. The service lead points out that the original pilot never tested what happens when a retailer has to find a technician on its own.
The problem
Should the team choose Owned service desk or Retail partner for the next 12 months?
Decision owner: The business unit lead.
The retailer can stock immediately but will not share fault codes or repeat claims.
Option economics
Scroll the table to see all figures.
| Option | Volume (service plans) | ₹ per unit | Fixed cost | Net contribution |
|---|---|---|---|---|
| Owned service desk | 6,000 | 900 | ₹27 lakh | ₹27 lakh |
| Retail partner | 5,000 | 660 | ₹6.5 lakh | ₹26.5 lakh |
Make the call
- Calculate net contribution for Owned service desk and Retail partner. Which assumption makes the comparison most fragile?
- If the leading option delivers 10% fewer service plans, does your recommendation change?
- What evidence would you ask for before the team makes an irreversible commitment?
Reveal the worked solution
Start by validating Owned service desk. It contributes ₹27 lakh after fixed costs and leads by ₹0.5 lakh. Treat that gap as the amount of unmodelled cost or lost contribution the option can absorb before the ranking reverses.
- Frame the decision
Separate demand you can reach from demand you can serve reliably. Test reorder behaviour before using the full-year forecast.
- Calculate both options
Owned service desk: 6,000 service plans × ₹900 less ₹27 lakh in fixed costs gives ₹27 lakh. Retail partner: 5,000 service plans × ₹660 less ₹6.5 lakh in fixed costs gives ₹26.5 lakh.
- Stress-test the forecast
Owned service desk leads by ₹0.5 lakh in the base case. If Owned service desk delivers 10% fewer service plans (5,400) at the same margin and fixed cost, it contributes ₹21.6 lakh. Holding the other option constant, the stressed result falls behind. This isolates volume risk. Check whether both options would respond to the same change in demand.
- Set a decision threshold
Holding the other option’s result fixed, Owned service desk needs at least 5,945 service plans to match or beat it under the model. Audit 50 warranty tickets and compare resolution time by channel.
The retailer can stock immediately but will not share fault codes or repeat claims. Compare the cost of a limited test with the loss the business would face if the full commitment failed. Ask the team to agree the decision criterion before collecting more evidence.
Check whether your answer names the trade-off, cites a number from the exhibit and specifies a reversal condition.
What if the whole market moves?
The worked solution tests a change to one option at a time. Here, both options gain or lose the same percentage of volume. Unit contribution and fixed costs stay constant.
| Volume scenario | Owned service desk | Retail partner | Higher contribution |
|---|---|---|---|
| Both lose 10% of volume | ₹21.6 lakh | ₹23.2 lakh | Retail partner |
| Base assumptions | ₹27 lakh | ₹26.5 lakh | Owned service desk |
| Both gain 10% of volume | ₹32.4 lakh | ₹29.8 lakh | Owned service desk |
Explain which option you would take forward. Check whether capacity, price or customer mix would also change as the market moves.
Practise this case as an interview