Case Interview Workshop
October 29, 2004
Agenda
Introductions
What firms are looking for in the case interview
Skills evaluated
Keys to success
How to approach the case
Process
Frameworks
Demonstration
What firms are looking for in case interviews
Case questions test many of the skills necessary to be a successful Consultant
Evaluate analytical skills, ability to think logically and to structure thought processes
Consulting is about problem solving
Consulting calls for “thinking quickly on your feet”
Test candidate’s tolerance for ambiguity and data overload
Consulting can be vague
Consulting requires ability to quickly screen and synthesize relevant data
Assess a candidate’s poise and communication skills
Consulting requires strong teamwork
Consulting demands effective client relationships
Case interviews evaluate far more than a candidate’s academic skills
Analytical Skills
Strategic Thinking
Structuring Skills
Interpersonal Skills
Communication Skills
Working Style
Skill
Is the candidate thinking creatively?
Is the candidate demonstrating analytical horsepower?
Is the candidate logical, intuitive, detail oriented, big picture?
Is the candidate comfortable discussing the multifunctional aspects of the case? Is the candidate examining the strategic, organizational, and cultural issues as well as the functional issues? Is the candidate approaching the problem at the right level of detail?
Is the candidate good at organizing the information provided? Is the candidate good at developing a framework for analyzing the information? Is the candidate stating assumptions clearly?
Is the candidate relaxed and confident?
Is the candidate engaging? Is the candidate a good listener? Is the candidate asking insightful, clarifying questions?
Is the candidate participatory, verbal, aggressive?
Key Questions
Consulting firms evaluate case interview performance in several parts
Assimilate and Structure Problem
Articulate Findings
Assemble Solution
Candidate Performance
Collect and Evaluate Data
The case is often won or lost in the structuring of the problem
Assimilate and Structure Problem
Articulate Findings
Assemble Solution
Collect and Evaluate Data
Candidate’s Keys to Success
Understands the question(s)!
Creates a structure
Organizes the given data
Candidate’s Common Mistakes
Doesn’t listen
Doesn’t understand objective
Moves too quickly into fact finding
Lacks clear structure
Thorough fact finding is needed to gain complete understanding of the problem
Assimilate and Structure Problem
Articulate Findings
Assemble Solution
Candidate’s Common Mistakes
Generates answers too quickly
Lacks of specificity in questions
Logic is not obvious
Candidate’s Keys to Success
States assumptions and hypotheses
Starts at a high level
Keeps the objective in mind/prioritize
Is thorough and organized
Collect and Evaluate Data
All relevant facts must be pieced together to answer the original question
Assimilate and Structure Problem
Articulate Findings
Assemble Solution
Candidate’s Keys to Success
Drives to answer question
Organizes data to supporting arguments
Is thorough
Candidate’s Common Mistakes
Loses sight of the original question
Gives incomplete solution
Does not gather complete data
Collect and Evaluate Data
Case closure should summarize conclusions and address any open issues
Assimilate and Structure Problem
Articulate Findings
Collect and Evaluate Data
Assemble Solution
Candidate’s Keys to Success
Summarizes
Is persuasive, complete
Communicates game plan for any open issues
Candidate’s Common Mistakes
Fails to summarize
Fails to fully answer question
In summary, successful case resolution involves…
Listening carefully and not rushing into an answer
Asking enough questions
Identifying relevant information
Framing/organizing problems
Prioritizing issues
Stating assumptions
Drawing conclusions from facts
Demonstrating unique viewpoints and creativity
Identifying key implications and next steps
Understanding broader ramifications but maintaining scope
Projecting a positive and energetic attitude throughout the case interview
What makes a great answer? The framework and process, not the “correct solution”
Key qualities for which interviewers are looking
Is the candidate relaxed and confident?
Is the candidate demonstrating analytical horsepower?
Is the candidate a good listener? Is the candidate engaging and enthusiastic?
Is the candidate asking insightful and clarifying questions?
Is the candidate effectively organizing the information and developing a logical framework for analysis? Is the candidate stating assumptions clearly?
Is the candidate examining the strategic, organizational and cultural issues as well as the functional?
Is the candidate thinking creatively?
How to approach the case
Case studies are the longest and most important part of consulting interviews
Welcoming Small Talk
Fit Interview
Questions
Complete Evaluation
2 Minutes
Case Interview
8 Minutes
25 Minutes
5 Minutes
5 Minutes
Use a logical, hypothesis-driven process to answer case questions
Framework
Issue
Key Questions
Hypothesis
Recommendation
Reformulate Hypothesis - or - Next Hypothesis
Listen To The Case As Presented
For Each Issue Develop One Or More Hypotheses
Ask Key Questions To Validate Or Invalidate Each Hypothesis
Make a Recommendation
Clarify Major Issues
Restate problems
Ask clarifying questions
Organize issues
General approach - Structure analysis around issues and hypotheses
Business Situation/Client Objectives
Issue
Issue
Issue
Hypothesis
Hypothesis
Hypothesis
Hypothesis
Hypothesis
Hypothesis
Key Question
Key Question
Key Question
Key Question
Key Question
Key Question
Recommendation
Example: Hypothesis Development
Subsidiary of a French spring water bottler is experiencing
a drop in profits despite overall market growth. Why?
Revenue is flat after years of growth
Distribution costs are rising
Hypothesis
Hypothesis
Hypothesis
Hypothesis
Key Question
Key Question
Key Question
Key Question
Example Hypothesis: Client X can increase revenue by entering new markets
Key Question: How has the market for water evolved in the last few years?
How to do well? Be creative with your hypotheses
Raise the multifunctional aspects
Adopt CEO/shareholder perspective
Consider organizational and cultural issues
Challenge conventions
Force fit a standard framework
Speak before thinking carefully
Rely on finding a “silver bullet”
Use buzz words
Do
Don’t
State your hypotheses to clearly show where you are going with your line of questioning. For example:
“With revenue flattening out after years of growth, I see a couple of areas I’d like to investigate further. Perhaps there are opportunities to enter new markets, or compete better in our existing markets. To start I’d look at the bottle water industry. How has this segment been growing over the last several years?”
Drive to answering your key questions so you can build your recommendation
Assume you are on a 6-week project, request the data you need to answer your questions
Usually you will be given the necessary information, or be told to make logical assumptions (make sure to explain your assumptions)
Do not just say “I would want to know this”, ask for it!
Ask for the right information
Not too broad of data that it could not be obtained or analyzed
Not too narrow that it does not help answer your question
Answering the key questions is often where your analytical abilities will be tested
Finish with a strong recommendation
Don’t just summarize your findings
Show you can translate analysis into results with an action-oriented recommendation
Your recommendation should
Address all issues identified in the opening
Quantify, or at least define, the benefits expected
Identify risks and mitigation plans
Taking notes during a case interview serves two purposes
Keeps your thoughts organized
Diagrams such as Fishbone, Issue Trees, and Causal loops can help organize your train of thought and give structure to your thinking
If you must retrace your steps due to the flow of the interview, you will have documentation right in front of you to help answer these additional questions
Demonstrates the clarity of your thinking
Helps both you and the interviewer trace your logic flow
Visually displaying your analysis or recommendations can be a useful technique
Requires practice
Get comfortable taking effective notes quickly
Don’t ignore the interviewer or forget to communicate
Case questions can be classified into three broad categories
Types of case questions
Business case
Profitability, industry analysis, market expansion, pricing
Derive an estimate (Market Size)
“How many inches of zipper were sold in the . last year?”
Brain teaser
“How many cubes are on the outer layer of a 10x10x10 cube?”
Profitability case studies
Examples
The . subsidiary of a French spring water bottler is experiencing a drop in profits. Why?
A Japanese automotive components (brakes, shocks, struts) manufacturer with a 12% share of the . market is experiencing declining profits. 20% of the products are shipped in from Japan and 80% are manufactured in . facilities. What might be causing the decline and what actions should be taken?
A company makes stairmasters, treadmills, etc. to sell to health clubs. How can profits be increased?
Your client is a consumer products company. The board wants to know if its advertising campaign for their new brand of chips has been successful. How would you evaluate the campaign’s performance?
Industry analysis case studies
Examples
A group of investors is considering building a 40,000-seat concert pavilion in the Northwest suburbs. What factors should they consider?
A manufacturer of automotive batteries is losing market share and profitability is eroding. What should the company do?
A national provider of in-home health care services is considering purchasing a regional managed care facility with 250 physicians. What factors should our client consider in making this decision?
A leading manufacturer of automobiles is considering acquiring a national rental car company. What factors are important in this decision?
Market expansion case studies
Examples
. domestic express package company; both air and ground transport capability. Over $7 billion in revenue. Highly profitable. European company suggests they form an alliance to provide service between the . and Europe. Should the client enter the international market? If so, what should the client’s strategy be? How should revenues be split?
European manufacture of confectionery products wants to enter the . market with premium product line. Should the client consider entering the . market?
A national retailer has approached our client, a manufacturer of fast-moving consumer products, and asked them to consider manufacturing a private label product line for them. The manufacturer is burdened with excess manufacturing capacity, so the proposal looks attractive. What factors should management consider in making the decision?
Pricing case studies
Examples
Your client is a concert pavilion. Revenues at performances are declining. Given the concert pavilion’s goal is to maximize exposure while covering costs, what should be done?
An inventor of a new athletic shoe wants to know: (1) What the market is for his goods, and (2) how to produce it. What steps should be taken?
How should a major retailer price its services in the electronic and appliance service business?
Investment cases
Examples
A German manufacturer of consumer products is considering opening a manufacturing facility in Poland to meet Eastern Europe’s growing demand for its products. What factors should the company consider?
A Midwest-based pharmaceutical company is considering opening distribution warehouses on the West Coast to handle the growing Western territory. What factors should it consider?
An automotive manufacturer is considering consolidating three of its East Coast assembly plants into one location. What factors should it consider?
A company of chocolate and confectionery products is considering acquiring a regional soft drink manufacturer. Are the distribution synergies sufficient enough to justify an acquisition?
Wild card case studies
How many gas stations are there in the .?
Why is a manhole cover round?
What would it cost to move Mt. Fuji 100 miles?
What’s a good R-squared?
Examples
Common frameworks for answering business case questions
Revenue/cost structure
The “Three Cs”
The “Four Ps”
Porter’s five forces
Company profitability problems
Company’s market positioning
Marketing assessment
Market entry/industry analysis
Case Category
Framework
Use these frameworks to develop a strategic approach to the business situation – from there develop issues and hypotheses
Revenue/cost structure framework
Revenue
Cost
Price
Quantity
Fixed
Variable
(
X
)
(
+
)
Price discrimination
Changes in pricing structure
Viability of pricing over time
Discounts or couponing
Competitor’s pricing
Customer segmentation
New/existing
Loyal/ switchers
Channel restrictions or temporary disturbances
Changing consumer demands
Capital equipment
Land
Buildings
Labor
Raw materials
Energy
—
—
Profit
The “Three Cs” framework
Market Positioning Of XYZ Company
Cost
Customers
Competitors
Capabilities are sometimes used as a “fourth C”
Break down the company’s cost structure
Fixed
Variable
Estimate the competitor’s cost structure
Understand trends in cost structures
Are costs increasing or decreasing?
Opportunities to lower costs through volume consolidation?
Segment the company’s customer base
New/existing
Loyal/switchers
Examine company profitability by segment
How much do they purchase?
At what price?
Are there other segments you could attack?
Elasticity of demand for each segment
Identify major competitors
Traditional
Unexpected substitutes
What are the competitor’s strengths and weaknesses?
Profits
Costs
Investigate market share
By segment
The “Four Ps” framework
How effective is this product’s marketing campaign?
What are the product’s differentiating attributes?
Why does the consumer purchase this product?
Unique packaging
“Superior cleaning power”
Affinity marketing — “cool people drink XX”
How is the product distributed to consumers?
What new methods of distribution are coming available?
Retail store
Warehouse store, Sam’s Club
Mail order
Internet/electronic distribution
What advertising methods are used to reach your target customer?
How well do those methods match your customer’s buying process?
Newspaper versus TV versus radio ads
Retail placement — aisle-end displays
New media?
How is this product priced?
How are its competitors priced?
Value pricing/ “Every Day Low Price”
Premium pricing
Price discrimination
Product
Place (Distribution)
Promotion
Price
Porter’s five forces framework
Economies of scale
Capital costs
Cost advantage of existing competitors
Barriers to exit
Patents
Number and size of competitors
Industry growth rate
Product differentiation factors
Industry margins/pricing
Relative price/value of the substitute compared to industry’s product
Cost of switching to substitute
Buyers’ propensity to switch
Significance of the purchase relative to cost structure
Switching costs
Purchase volume
Threat of backward integration
Barriers To Entry
Number and size of suppliers
Switching costs/product differentiation
Availability of substitutes
Possibility of forward integration
Supplier Power
Market Rivalry
Buyer Power
Substitutes
Key points to remember
Remember that process and framework are critical: issues, hypotheses, key questions, recommendations
Think big picture first, then drill down to increasing levels of detail
Explaining your thinking is good, showing it is even better
Develop and express alternatives
Listen to the interviewer’s feedback
Be “coachable”
Integrate feedback quickly
Make a strong recommendation
Be enthusiastic — demonstrate that you like problem solving
Case Demonstration
Automotive case
Overview
“Our client, a global automobile manufacturer has been losing money for several years in its North American division”
“The new CEO suspects a big reason may be his company’s high degree of vertical integration. This client makes about 70% of its own parts, compared to 30-50% at its chief competitors”
“The CEO has asked us to develop a cost saving strategy around this issue”
Automotive case (cont’d.)
Background information (available if asked for)
The client spends 35% of its North American revenues on its parts-making operations
It buys (sources) another 10% from independent suppliers, most but not all of which are located in North America
Its parts-making operations are spread over six divisions and cover about 100 plants in the . and Canada. The same parts are often made in several plants
All the plants are union, with high labor costs and generally average (often poor) quality
Top UAW executives are split over issue of “give backs” — reducing labor rates, benefits, retirement perks, etc., in return for fewer layoffs. Some union execs want to work with the new CEO, others want to show him how strong the union is
There is excess capacity in our client’s parts manufacturing plants, as well as throughout the auto parts supplier industry
Auto parts suppliers would be eager to win business from our client because it would reduce their dependency on the other two . auto manufacturers
Automotive case (cont’d.)
First question
“Given the situation, what is the key hypothesis? How would you state it?”
Note to interviewers: a strong hypothesis is a testable statement that, if true, has significant implications for the client
Expected answers should be something like:
“The client could save $X millions by making only those parts where it has a competitive advantage or a strategic requirement (., to be in the business of making a certain part)”
Second question
“Let’s assume for the moment that your hypothesis proves to be true. What are the significant implications to our client?”
Listen for the soundness of the candidate’s logic, or for the creativity/intuition she uses to answer this question
Third question
“Let’s assume the hypothesis is as follows: The client could save $X millions by making only those parts where it has a competitive advantage or a strategic requirement”
“How would you go about testing this hypothesis?”
Note to interviewers: this is the same as asking for a basic framework or work plan — what are the key issues that need to be resolved? How are you going to resolve them?
Stay at the “big picture” level — no need for details here
Automotive case (cont’d.)
At a minimum, frameworks should cover these key points:
Comparative costs
What it costs our client to make the parts, versus what it would cost to buy them from independent suppliers
Strategic value
What strategic value is there to making certain parts, even though they could be purchased for less than it costs to make them, ., batteries for electric vehicles
So a good framework might be:
Buy
Attack Costs
Rationalize
Make
Cost To Make Versus Buy
Strategic Value
Low
High
High
Low
Automotive case (cont’d.)
Whatever framework is offered by the candidates, ask yourself:
Would this be practical?
Would it build a solid answer?
Does the candidate have a real insight to the issues of the case, or is he simply tossing out what he hopes will sound like an acceptable answer?
Better frameworks would incorporate some of these features:
Include union and client managers on the study team to promote buy-in of the results
Benchmark the client’s North American parts manufacturing plants
Against themselves to show “best current capabilities”
Against other firms’ auto parts manufacturing plants to show “best attainable position”
Get quotes from potential suppliers around the world for a broad cross-section of parts to establish market prices
Interview the client’s R&D, design and engineering managers to determine which parts are strategically important and why
Given the excess capacity in the industry, assess the opportunity for further cost savings by consolidating parts currently made in several plants into a single plant
Analyze the cost chain and cost drivers of parts manufacturing. This would lead to the importance of standardization of parts across platforms, and economies of scale
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