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Starter: Seorin Fitness: more members, less profit

You run the case. Read the prompt, answer questions from the notes below, and share data only when the candidate asks for it or gets stuck. Score at the end.

Case timer

00:00

Target length:

1. Read the prompt aloud

Read it slowly, then pause. Let the candidate ask questions before they structure.

Seorin Fitness runs 20 gyms in Seoul. It has 6,000 more members than a year ago, but its monthly profit has fallen. The exhibit shows the figures. Why did profit fall, and what should Seorin do?

Format note: Difficulty: Starter. Format: interviewer-led, with an exhibit. Industry: Fitness. Region: South Korea. Interview length: about 25 minutes. The company is fictional and all figures are illustrative.

2. Answers to clarifying questions

Give these answers only if the candidate asks. If they ask something not listed, give a sensible answer or say it does not matter here.

If asked: What changed in the offer?
Answer: Last year everyone paid KRW 70,000 a month. This year Seorin added a 12-month prepaid plan at KRW 45,000 a month, and 40 percent of members now use it (illustrative).
If asked: Did costs change?
Answer: Staff cost rose because the gyms are busier at peak times. Rent and other fixed costs did not change.
If asked: Is personal training important?
Answer: Yes. It is the main extra spending per member.

3. The hypothesis a strong candidate states

Listen for an early, testable guess like this one. It does not need to match word for word.

More members but less profit points to the price paid by new members. My hypothesis is that the prepaid discount brought in members who pay less and spend less on training.

4. A model structure

Compare the candidate's structure with this one. A different split can be just as good if it is clean and fits the problem.

Monthly profit = members x average fee + personal training - staff - rent and other fixed costs
- Key: Members and the mix of standard and prepaid plans
- Average monthly fee per member
- Personal training spending per member
- Staff cost at busy peak hours, and fixed costs

Exhibit 1

Reveal to candidate: when they ask for this data, say "Open Exhibit 1" (they press "Show exhibit 1" on their screen).

Seorin Fitness, an average month (illustrative)

Seorin Fitness, an average month (illustrative)
Measure	Last year	This year
Members	30,000	36,000
Average monthly fee per member (KRW)	70,000	60,000
Personal training revenue (KRW millions a month)	500	450
Staff cost (KRW millions a month)	900	1,000
Rent and other fixed costs (KRW millions a month)	800	800

So-what

Members rose 20 percent, but the average fee fell by KRW 10,000 and staff cost rose, so profit fell.

5. The working, step by step

Each step shows how a strong candidate works it out. Share a new fact from it only when the candidate asks or is stuck, and let them do the math: the result in the dark box is what they should reach.

Step 1: Profit last year
What a strong candidate does: Fees of 30,000 members at KRW 70,000, plus training, minus staff, rent and other costs, in KRW millions a month.
Profit last year (KRW millions a month): 30,000 × 70,000 ÷ 1,000,000 + 500 - 900 - 800 = 900
Step 2: Profit this year
What a strong candidate does: Fees of 36,000 members at an average of KRW 60,000.
Profit this year (KRW millions a month): 36,000 × 60,000 ÷ 1,000,000 + 450 - 1,000 - 800 = 810
Step 3: Where the average fee comes from
What a strong candidate does: 60 percent pay KRW 70,000 and 40 percent pay KRW 45,000.
Average monthly fee (KRW): 0.6 × 70,000 + 0.4 × 45,000 = 60,000
Step 4: Effect of more members
What a strong candidate does: 6,000 extra members, valued at the old fee, in KRW millions a month.
Effect of more members (KRW millions a month): (36,000 - 30,000) × 70,000 ÷ 1,000,000 = 420
Step 5: Effect of the lower fee
What a strong candidate does: All 36,000 members at KRW 10,000 less on average. Training fell by KRW 50 million and staff cost rose by KRW 100 million, which explains the rest.
Effect of the lower fee (KRW millions a month): 36,000 × (60,000 - 70,000) ÷ 1,000,000 = -360
Step 6: Training spending per member
What a strong candidate does: Last year it was about KRW 16,667 a member. This year:
Training revenue per member (KRW a month): 450,000,000 ÷ 36,000 = 12,500
Step 7: Curveball: end the prepaid plan
What a strong candidate does: Interviewer: "If we stop selling the prepaid plan, its 14,400 members could renew at KRW 70,000, but 30 percent of them would leave." Change in their fees, in KRW millions a month:
Change in monthly fees (KRW millions): (36,000 × 0.4 × 0.7 × 70,000 - 36,000 × 0.4 × 45,000) ÷ 1,000,000 = 57.6

The recommendation to listen for

At the end, say: "The CEO walks in. What is your recommendation?"

Seorin should stop selling the prepaid plan at KRW 45,000 a month, because it brought in members who pay less and spend less. First, profit fell from KRW 900 million to KRW 810 million a month. The 6,000 extra members added KRW 420 million, but the lower average fee took away KRW 360 million. Second, staff cost rose KRW 100 million, while training spending fell to KRW 12,500 a member from about KRW 16,667. Third, if prepaid members renew at KRW 70,000 and 30 percent leave, fees still rise about KRW 57.6 million a month. Offer a smaller discount for off-peak hours instead, and test it in three gyms.

Risks a strong answer names: More prepaid members may leave than the 30 percent expected; Rivals may copy the discount and win the members who leave.

Next steps: Test an off-peak plan in three gyms for two months; Track training spending by type of plan each month.

Strong versus weak

A strong answer

Built a bridge from last year's profit to this year's, split the fee change into more members and a lower price, and tested ending the discount.

A weak answer

Said more members is good news and suggested more marketing, without seeing that each new member pays less.

Score the candidate

Score each criterion from 1 to 5. A 2 or a 4 sits between the descriptions.

Structuring

1: No clear structure, or a memorized framework that does not fit the problem.
3: A sensible structure, but with some overlap, a gap, or no clear priority.
5: A structure built for this problem, with no overlap and no gaps, a stated hypothesis, and a clear first step.

Math

1: Frequent errors, no units, or needed heavy help to finish.
3: Right answers but slow or messy working, or one error caught late.
5: Accurate and clearly narrated, with units, a sense check, and what the number means.

Exhibit reading

1: Read the chart aloud without finding the number that matters.
3: Found the key number but gave only part of the so-what.
5: Pulled the right number quickly and said what it means for the case.

Synthesis

1: Summarized what was done, with no clear answer.
3: Gave an answer, but with weak reasons or no next step.
5: Answer first, then two or three reasons with numbers, the main risk, and next steps.

Communication

1: Hard to follow: long silences, no signposting.
3: Clear most of the time, with some rambling.
5: Calm and concise, signposted each step, and checked in with the interviewer.

Total

0 out of 25

Score all five criteria to see the band and the feedback template.

Next: another case in Partner mode

Swap roles and run the next case, so you both practise answering and scoring.

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