After Rebecca outlined her problem-solving approach, the interviewer told her that the client wanted to understand the beverage market and customer preferences to assess the potential success of the product launch. If it is not true, you revise your hypothesis. Top firms typically make offers to only about 1% of the people who apply. In business situations, it helps determine at which point the business, investment, or new product or service will become profitable. This answer should be both persuasive and logical based on all the information gathered over the course of the interview. It can be used to compare the profitability or efficiency of an investment or decide which of alternative investments to make. This typically describes how a company makes its products or services. If youre here, were assuming youre serious about investing time in preparing for a career in management consulting. Growth rates can be used in assessing the financial performance of a company over time. Consulting Case Prep Takes Time So Start Early, Learn How to Case Quickly by Mastering Each of the 4 Parts of the Case. If it is not true, you revise your hypothesis. article for more detail on these types of cases and more. Are they knowledgeable, professional, and confident enough to work effectively with client staff and leaders? quick brainstorming is useful here, but also take a step back to maker sure you consider all aspects of the clients business, its customer demand, and the competition. In the structure phase of the case interview, theres silence for several moments. This typically describes how a company makes its products or services. During this portion of the interview, you can ask any clarifying questions you need to. We divide the 400 million bottle (or can) breakeven point by 8 to get to 50 million gallons. Youre typically allowed a pen and paper in a virtual case interview but NOT a calculator. The main thing that recruiters are looking for in case study interviews is whether or not theyd feel comfortable putting a candidate in front of a client. These costs are rarely part of case interviews. How many cups of coffee does Starbucks sell in a day?Estimate the fleet size of Delta Airlines.Estimate market size for air-conditioners in New York.Estimate market size for an anti-smoking pill in the U.S.. How can they capture a significant market share?, A renewable energy company that specializes in large equipment such as windmills wants to enter the retail market and sell smaller equipment directly to individual homes. . Cost optimization cases or questions can be part of a profitability case where a client is experiencing declining profitability or when a client wants to improve efficiency. or Oliver Wyman, or with the consulting arms of the large accounting firms such as Deloitte, Accenture, PwC, Ernst & Young, or KPMG, we can help you get there. and they know what recruiters are looking for in answers. In particular, successful candidates know that consulting firms use a particular type of interview question the. Solving complex, ambiguous problems is at the heart at what consultants do every day. In a case interview, youll need to identify possible causes of the clients problem and then ask questions and do analysis to identify the root cause. By reading this article, you now have a strong understanding of: You are well on your way toward preparing for your first case interview and entering the exciting field of management consulting. . If so, move onto the deeper dive into case interview prep below! The 4 parts to answering a consulting case interview are: As we saw in the video above, the opening of a case question is a description of a client and the problem theyre facing. It cost $8 million. What is the root cause of the significant increase in cost?, A tour company would like to reduce their costs due to the falling number of tourists over the past few years. But after they do, the interviewer will direct them to first address a particular aspect of the case. It is a way of bucketing problems, ideas, or solutions with no overlapping between the buckets and with each item having a place in one bucket only (mutually exclusive), and with the buckets including all possible items relevant to the context (collectively exhaustive). Take you time to nail this aspect of case interview preparation anyway as leaving your interviewer with a strong impression of your casing capabilities is important. You can assess whether a companys growth rate is strong by comparing it to other growth rates such as: Mature companies are likely to see single-digit growth rates unless they launch a very successful new product or they acquire a company. What regions would have the biggest impact on its revenue?. Whether youre aiming for a job at one of the MBB firms (McKinsey, Bain, or BCG), with other consultancies such as AT Kearney, L.E.K. Its not impossible to get a job with firms like McKinsey, Bain, and BCG (also known as the MBB firms), but it requires preparation. stakeholders stakeholder pmp arabi If youre on this page, youre probably considering a career in management consulting or are already in the middle of the interview process. Its typically used to measure the financial health of a company. Utilization rates raise interesting issues in a case. What the 4 different formats for case interviews are. You can also use the concept of MECE when segmenting a market for example, if you are sizing a market and intend to lay out different purchasing behavior assumptions for different customer segments. In a case interview, you can use the issue tree to break down the clients problem into manageable chunks or to break down a formula such as the profitability formula into key components. number of units sold) (fixed + variable costs), Profit margin indicates how many cents of profit the company generated for each dollar of sale. MECE issue trees are considered the gold standard for problem-solving so this concept is very good to know. Once Rebecca clarified the problem, she asked for a moment to prepare her response. For example, a decline in sales volume is a symptom. Like the opening, mastering the conclusion is not difficult. Your client, a manufacturer, is facing a decline in profits. During the conclusion, youll be assessed on whether you present a well thought-out solution based on the relevant facts of the case. Many consulting candidates find that the analysis phase of the interview is the toughest of the 4 parts. This approach can be used to solve case interview questions where you first assume an answer to the case problem and check whether this is true or not through analysis. For example, a decline in sales volume is a symptom. Can you please explain the ROI formula? Last years revenue was $ 9.5 million therefore the revenue growth rate is: Revenue growth rate = ($10 million $9.5 million) / $9.5 million. So 1 gallon is 8 bottles (or cans) manufactured by our client. If a product required a $50,000 investment in equipment (a fixed cost), sold for $5, and cost $4 per unit in variable costs, its breakeven would be: Managers may also look at the payback period on an investment or, in other words, how long it would take to earn back the cash required to enter a new business. The term root cause is used to distinguish between symptoms of a problem, which may be obvious, and the underlying issue that needs to be solved, which may not be obvious. 
In a case, this is mostly used in situations where a client would like to make their processes more efficient. It comes down to, Would I want to be stuck in an airport with this person if the weather was bad and our flight was delayed? It assesses whether an individual is smart, fun and passionate about the projects they take on. In this example, the industry has annual revenues of $ 200 million. Nailing the opening is probably the easiest part of case interview preparation. And in our breakeven analysis, we find out we need to sell 400 million bottles (or cans) to break even. 
For example: Customer segment Purchase frequency for items from coffee shops, Women under 30 4 times per week, purchase includes food item plus beverageMen under 30 2 times per week, purchase includes only beverageWomen 31 and over 4 times per month, purchase includes only beverageMen 31 and over 3 times per month, purchase includes only beverage. How many cups of coffee does Starbucks sell in a day?, Estimate the fleet size of Delta Airlines., Estimate market size for air-conditioners in New York., Estimate market size for an anti-smoking pill in the U.S., For more information and examples, read our article on, For more information, read our article on, To find out more on this, read our article on. Where did that number come from? Your client wants your help solving this problem. An executive might want to know that they could break even at 100,000 units sold because if she thought they could sell more than that, it would be profitable to enter the market. The interviewer is looking to see that you know how to drive the analysis of a problem. What new product or service could they offer their customers? One thing to consider is the client and industry context when tackling revenue growth questions. Organize your questions into a comprehensive approach to address all key aspects of the problem. Do you have a background in business principles or are you willing to invest the time it will take to develop one? EBITDA is calculated by subtracting operating expenses from the gross profit. This is calculated by subtracting interest and tax from EBIT. Donations to Caring Hands are decreasing, straining the non-profits ability to help the families it targets. As with clarifying the question, this can feel awkward. To assess that, they ask themselves these questions: Nail the case & fit interview with strategies from former MBB Interviewers that have helped 85% of our clients pass the case interview. Shouldnt the formula just be (net profit)/(cost of investment)? The profit or loss can be calculated using the following formula: The formula can further be broken down into: Profit (or Loss) = (price per unit x number of units sold) (cost per unit x number of units sold). The profit or loss is calculated by taking the revenues generated and subtracting the expenses incurred over the same period of time. (Note, there can be overlap between revenue growth cases and market entry cases. An issue tree is used to break down complex problems into key components in a structured manner. George, thanks for pointing this out! Costs are expenses incurred by a company to make its products or services. Focus on this aspect of case interview preparation until you can structure almost every case right. Note you can combine both the formulas for faster calculation. What is the potential revenue growth if they choose to expand into India?, A telecom operator is looking to diversify their presence in the U.S. and wants to enter the video streaming market. The growth of the market or of competitors. That calculation gets a result of -75%. For example, here is how Brenda was able to get a BCG offer when she only had 1 week to prepare. It will also ensure that you are not quickly addressing a couple of aspects of the business problem but ignoring others, potentially ones that are critical to solving the clients problem. Management consultancies are not the only types of firms that use case interview questions to evaluate candidates. Using the example from above, say you decide to determine the companys market share as part of your analysis. tank process configurator inventor ilogic netherlands using So the profitability formula can also be written as: Profit (or Loss) = (price per unit x number of units sold) (fixed + variable costs). So if the amount of cash generated by selling a product or service is important to your analysis, you should look at EBITDA. For more information, see this article on, How to answer case studies using the 4-part approach, and. Or you may think that they sound like interesting business problems that youd enjoy solving. Right now, you may be thinking to yourself that consulting interviews sound impossibly difficult. meaning there is no loss or profit. If looking at a more fully-loaded cost is the focus of your analysis, use EBIT. If you still have questions on case interview prep, leave them in the comments below. In the case, were given that the size of the market for US sports drinks is 8 billion gallons. This type of interview question mimics the analytic process a consultant might go through in a 3-month project, but it does it in 30 minutes, the time allowed in a typical interview. That would make your answer completely wrong. MECE issue trees are considered the gold standard for problem-solving so this concept is very good to know. Revenue is the money generated from selling a product or service. Electrolyte drinks are 5% of this total or .4 billion gallons which equals 400 million gallons. Read our article for more about. You should also be aware of the written and group interview formats so that if you get one during the interview process, youre not caught by surprise. Management consulting firms are filled with smart, driven people working to solve hard business problems. A Case Study Interview is a real-time problem-solving test used to screen candidates for their ability to succeed in consulting. Are you passionate about pursuing consulting as a career? They could do this by building a new offering, buying another company, or partnering (joint venture) with another company that already offers what they want to sell. The best way to get smarter about answering case interview questions is to master this four-part approach. This interview question is sometimes referred to as the airport test. In a case, this is mostly used in situations where a client would like to make their processes more efficient. . Profit margin indicates how many cents of profit the company generated for each dollar of sale. Once youre confident you have enough information to understand the case and what needs to be done to solve the clients business problem, youll conclude the interview with a logical summary outlining the problem, key conclusions youve reached, and providing a persuasive recommendation on how youd help the client resolve it. Save my name, email, and website in this browser for the next time I comment. This work is a great launching pad for your career. Show you are coachable by listening for feedback as you answer a case study interview question and using suggestions to steer you toward the right solution. They would like to know if this is a good idea.. For more information, see this article on, Multiple candidates are brought in to discuss a case together and then present their solution to an interviewer. Well ask our My Consulting Offer coaches and get back to you with answers. Market share (%) = $ 10 million / $ 200 million. If you walk into your first consulting interview without having practiced case study interviews beforehand, youre in for a painful experience. Also, we have an article on practicing your case interview math. The candidate will break down the question into key parts and decide which part to probe first. Using the same example, imagine that the management tells you that in a 12-hour shift, the machine produces 50 units and there are two 45-minute breaks. A job at a management consulting firm will expose you to multiple different industries and types of business problems. In case interviews, you can use the break-even analysis to determine whether a client should make a certain investment, say in machinery or a new product line, based on how likely it is that theyll exceed the break-even threshold. You cant fix the symptom of declining sales volume until you identify the root cause behind the problem. For example, does the client have a good market size in the industry? The interviewer can probe whether a candidates approach is well-structured, creative, and displays good business sense. For example, high revenue growth rates would likely be a sign of strong financial performance. The case study interview is not as complex as it seems if you break it into 4 parts. It can be used in market entry cases because industries with a lot of small competitors are generally easier to enter than ones with only a few big competitors. Get this right, and youll start each case off strong. A candidate is given an open-ended business problem to solve by an interviewer. Instead, the interviewer wants to see that you can use simple math and logical deduction to build out an answer. Market share is the size of the company in relation to the size of the industry in which it operates, where size is typically measured in annual revenues. The correct answer is 25%. What should the organization do to turn this around? Do they have the analytic skills to solve tough business problems? If something is not clearthe clients product or industry, or the problem they want to solve ask! Market-sizing questions typically appear in cases where clients want to grow or expand their business such as market entry or profitability cases. This refers to the specific change of a variable within a specific period of time. Issue tree: This is a common approach in consulting used to solve complex problems. It can be broken down into, Costs are the expenses incurred to make the product or service and can be broken down into, Revenue can be broken down by product or service line, customer type, or geographic region (e.g., North American, Europe, Asia). You dont need an MBA or an undergraduate degree in economics to land a job in consulting. During this time, youll prepare a presentation using the slides you choose from the ones provided as well as others you create, and youll then present it to a panel of interviewers. 
Costs can be broken into fixed costs and variable costs, or components such as overhead, salary, etc. In fact, its best to develop your own structure for breaking down the problem as it shows you can solve a case without forcing a standard framework on the problem. To find out more on this, read our article on The Market Entry Framework. This refers to the specific change of a variable within a specific period of time. For example, a good place to start is the population of the U.S. or the population of a U.S. city (or country and city that you live in). They want to move quickly to the most likely answer and then test whether it is or is not the best answer. Break-even is typically used to help companies determine the minimum number of units that need to be sold to cover all the costs used to produce those units. Practicing each part of the case on its own will make your consulting interview preparation both more efficient and more effective. The root cause could be high prices, poor product quality, product unavailability, or any number of other issues. Remember, this clarification is an important step in the process. This is calculated by subtracting COGS or the cost of sales from the total revenue generated. Could the company stagger employee breaks to get potential output up to 72 units from 63? . But attractive jobs are usually highly competitive, and thats definitely the case in management consulting. For example, Porters Five Forces, Business Situation Framework or 3C&P (customer, competition, company, and product), and Supply & Demand among others. The client either wants to understand the market size of the current business or of a potential new product line or geography or customer group to understand whether it is big enough to be interesting. Its also used in profitability cases because, in general, companies with a large market share also have more market power to do things like set prices. It is used in problem-solving to identify solutions that appropriately address the problem. Best practices: Best practices are methods or techniques that are considered to be the working standards and guides in a given situation. Break-even analysis: This is the calculation used to determine the point at which the total revenue and total costs are equal meaning there is no loss or profit. For any specific case, youll want to make sure you understand how that company makes money. A manufacturer sees its revenue stagnating. All Articles on the Consulting Interview Process, Frequently Asked Questions for Consulting, All Our Articles on the Consulting Interview Process. This will allow you to watch/read through a few consulting cases to get a sense for what to expect (continue to our case videos below for one example!) Break-even is the point at which the total revenue and total costs are equal, meaning there is no loss or profit at that point. It is also referred to as gross sales or top line as it sits at the top of the income statement. For example, if our burger restaurant buys a grill to cook burgers on for $1,000 and expects it to last for 10 years, it would spread out the cost over that time period, $100 per year.
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