Optimize Distribution of Ice Cream Stands on the Beach
Case Type: business competition.
Consulting Firm: Novantas 1st round job interview.
Industry Coverage: Food & Beverages; Small Business.
Case Interview Questions #00112: Imagine that there are two ice cream stands that service a hot beach on the Jersey Shore during the summer. The two ice cream stands are identical in every way — product, pricing, size, staffing, business hour, etc – and are owned by two small business owners, Colin and Richie, 
who can’t stand each other. Each wants to maximize his profits and put his competitor out of business. The population of beach-goers is evenly distributed across the entire beach, and customers do not care about which stand they are walking to. The only thing they DO care about is proximity – they’ll go to the closest stand every time.
Question #1: Where will the ice cream stands end up on the beach?
Possible Answer:
They will end up back to back at the center of the beach.
If this was not the case, one ice cream stand owner could out-fox the other by moving his stand so that it faced the majority of the beach-goers. The only way this doesn’t happen is if they are both in the middle of the beach facing 50% of the crowd. (Free markets fans: Note that this is a representation of a perfectly competitive marketplace.)
Question #2: A young entrepreneur named Bruce raises enough money to buy both Colin and Richie out. Where will the stands be now, assuming he’d like to optimize the coverage of his two stands along the beach?
Possible Answer:
Since Bruce appears to be a savvy businessman, he will probably move the stands so that they are 1/4 and 3/4 of the way down the length of the beach, allowing him to minimize the distance that any one beach-goer will have to walk to get a sundae. This could also stimulate an increase in overall ice cream demand.
Question #3: How do you think that this ice cream stand competition situation parallels American politics? It’s not a perfect metaphor, but where do you see the similarities? How do you think this varies between party primary elections and national elections?
Possible Answer:
Think about this one. Shoot us an email or leave a comment if you’d care to share your thoughts. By the way, the power of metaphor is vital to consulting and advisory work; management consultants are always applying their knowledge from a wide range of industries or disciplines to the project work that they do.