Case Interview Preparation Guide V5

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1. Peter Anderson, KPMG Peter Purcell, Deloitte & Touche Adapted from Consulting Interview Preparation Guide Marquis, Stanford GSB Class of 2006 Case Interview…
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  • 1. Peter Anderson, KPMG Peter Purcell, Deloitte & Touche Adapted from Consulting Interview Preparation Guide Marquis, Stanford GSB Class of 2006 Case Interview Preparation Guide
  • 2. 2 Prior to the Interview
  • 3. 3 Building Relationships at your Target Firms  Attend as many events as possible for the firms that interest you  Including school / company-wide, affinity groups, and regional / office-specific events  At these events, talk to as many people as possible to make an impression  Have a set of good questions to ask firm representatives to show your level of interest in the company  Don’t ask about topics that can easily be found on the company’s website  Get the contact information for each person with whom you speak and follow up with an e-mail after an event
  • 4. 4 Building Relationships at your Target Firms  Always make a positive impression when interacting with company representatives  This includes when attending official company presentations and dinners, during informal exchanges, and even at school sponsored functions  Be on the lookout for deliberate attempts to see how you act when you’re not “on the clock”  Assume that all interactions with a firm’s employees could affect your standing, so be on your best behavior AT ALL TIMES!
  • 5. 5 Resume Preparation  Without a prior banking or consulting background, you will likely have to tailor your resume to appeal to the consulting firms  Instead of focusing on the “must have” skills for your previous industry, emphasize the following:  Analytical abilities  Experience in teams  Communications skills  Leadership / management experiences  History of achieving results  Use an “Additional Information” section to highlight qualities / interests to differentiate yourself
  • 6. 6 Answering the “Why Firm X?” Question  Show a specific desire to work at Firm X, rather than simply a general desire to work in consulting  Learn the “ins and outs” of the company  Locations  Business areas of specialty  Reputation  Career progression and direction  Company culture  Research the firm’s competitors to find points of differentiation  Give reasons that the firm is a good fit for you and that you are a good fit for the firm
  • 7. 7 Describing your Work Experiences  Resume “walk through”  Develop a coherent story for each step along your educational and career path – it should not seem like a random walk  Some firms analyze the walk through as if it were a case – be structure when describing the sections of your resume  Work experience stories  Allow firms to learn about your experiences in a variety of work situations  Have four or five unique stories ready to share − Led an initiative to a successful conclusion − Had an impact on a team where you were not in charge − Worked in a group where there was internal conflict − Found success in a challenging environment − Initiated change within an organization
  • 8. 8 Generating a List of Questions  It is crucial for the candidate to develop good questions to ask the interviewer at the end of the interview  Tips for creating strong questions:  Ask questions beyond standard travel and work-life balance issues (interviewers hear these questions all the time)  Show that you have done some prior research about the firm  Ask questions that pertain to your own background  If given interviewer biographies, ask questions about their backgrounds and how they were able to leverage them at the firm
  • 9. 9 Generating a List of Questions  Brainstorm sample questions  Firm culture / office culture  Performance management  Specialist vs. generalist skills  Long-term employee development  Others??
  • 10. 10 Approaching the Case Interview
  • 11. 11 Interview Technique Basics  Keep clean and organized notes  Use two separate sheets (landscape oriented) for your information, analysis, and calculations  Write in pencil and write neatly − This may seem basic, but being able erase mistakes helps produce clean and easy to read notes − Some companies will collect your notes to get insight into how you structure your thoughts  Use tables and graphs to demonstrate structured presentation of information  Get comfortable with using “educated estimates” when concrete data is not provided
  • 12. 12 Interview Practice Basics  Practice makes perfect  Start with sample cases early to develop your own technique  Seek opportunities to participate in, or observe, case studies  Case guides can help build your case analysis skills  Run through cases with classmates and friends  Friends who’ve graduated before you; those with internships  Mock interviews and case study workshops  Don’t practice with company reps unless you’ve developed a case approach  Being unpolished during a company case coaching session is a wasted chance  Coaching sessions should sharpen your skills, not initiate them
  • 13. 13 Math Tricks  Use round numbers wherever you can, especially when you have the chance to pick the numbers  Do “ballpark” calculations if possible  It isn’t about getting the exact mathematical response  There is usually an allowable margin of error, so take advantage of that  Calculations must be solved correctly  KISS  If you do calculations in your head, write your solutions down so you can refer to them later
  • 14. 14 Math Tricks  Rule of 10’s and Rule of ½’s  Break difficult numbers into either tens or halves to do quicker calculations  Quick! What is 37% of 25,000? − 25,000 / 10 = 2,500  10% of 25,000 − 2,500 / 2 = 1,250  5% of 25,000 − 1,250 / 2 = 625  2.5% of 25,000  From the above, you can approximate the answer (2,500 * 3) + 1,250 + 625 = 9,375  37.5% of 25,000
  • 15. 15 Math Tricks – Exercise  What is the annual U.S. market for chewing gum  Total number of consumers  Units sold  Revenue  Profit
  • 16. 16 Math Tricks – Example  What is the annual U.S. market for chewing gum (total number of consumers)  Estimate the total U.S. population (~300 million)  Segment the population based on some metric (hint: age is usually a good metric)  Estimate the number of people in each population segment  Make a guess at the percentage of each segment that chews gum [(100 m) * 80%] + [(150 m) * 60%] + [(50 m) * 20%] = 80 + 90 + 10 = 180 million
  • 17. 17 Math Tricks – Example  What is the annual U.S. market for chewing gum (units sold)  Start with the estimate of total gum chewing consumers  Make a guess at the number of packs an average consumer purchases in a given week  Multiply the above two numbers to estimate the number of packs sold each week  Multiply by number of weeks in the year (ballpark!) 180 million X 2 X 50 = 18 billion
  • 18. 18 Math Tricks - Example  What is the annual U.S. market for chewing gum (revenue)  Start with the annual number of pack sold  Make a guess at the average price of gum per pack (ballpark) 18 billion X $1 = $18 billion
  • 19. 19 Math Tricks - Example  What is the annual U.S. market for chewing gum (profit)  Method #1: Annual revenue X estimated profit margin $18 billion X 10% = $1.8 billion  Method #2: Unit profit X number of units $1 per pack X 10% X 18 billion units = $1.8 billion  Use round numbers: − Round, but reasonable (e.g., wouldn’t expect a 50% margin) − It’s the methodology they want to see!
  • 20. 20 Learning to “Think Business”  Structuring the case well and executing the math are great, but… you need to get to the “so what”  Relationships within and between industries is important in determining implications of business decisions  “Connecting the dots” in a business scenario can demonstrate key business insights in a case analysis
  • 21. 21 Learning to “Think Business”  Useful tactics for learning to “think business” include:  Reading business related periodicals (WSJ, CNN Money, Fortune, etc.)  Watching business related programs (MSNBC, Bloomberg, etc.)  Analyzing business events to figure out the full set of implications  Example: OPEC nations decide to restrict the supply of oil − Direct: US gas prices increase  oil company revenues increase − Indirect: Sales of SUVs decrease  auto companies offer promotions − Indirect: Airlines raise fares  travelers fly less  airline layoffs − Indirect: Use of public transportation increases  revenues for business related to auto use decline − Indirect: US government faces pressure  US applies trade sanctions
  • 22. 22 Key Business Concepts  Solvency / Profitability  Revenues  Costs  Industry attractiveness / market issues  Total size of market (in dollars)  Number of competitors  Minimum efficient scale  Market conditions and associated implications
  • 23. 23 Key Business Concepts  Mergers and acquisitions  Financials of the deal (will it be profitable?)  Product, service, or support synergies  Market reaction  Culture issues  Marketing  Pricing  Placement (distribution channels)  Product  Promotion
  • 24. 24 Key Business Concepts  Product introduction  Potential market for product or service − Do consumers want it? − Does market have to be developed?  Profitability of the product − Cost to introduce − Expected revenues and margin  Competitor reaction − Can they copy it? − Do they already have competing products  Does the new product fit your current company and product line − Does it fit with the brand? − Are there implications on existing products?
  • 25. 25 Key Business Concepts  Other concepts that show deeper business insights  Labor issues − Unionization − Defined benefit programs  Long-term contracts  Revenue stream analysis  Costs − Fixed vs. variable − Direct vs. indirect  Supply / demand issues, and their affect on pricing  Operational issues  Culture and morale issues
  • 26. 26 Case Execution
  • 27. 27 Case Execution Tips  Break case problems into distinct segments to create a structured response  Use decision trees to set up the analysis  The case question serves as the root, and the problem components serve as the branches  Once you’ve presented a roadmap, follow it!  Be sure that your problem components are “MECE” − Mutually exclusive: No overlaps between issues − Collectively exhaustive: Key issues are covered by the branches
  • 28. 28 Case Execution Tips  Example: An automobile dealership is experiencing declining profits  What could be the problem? Why is profitability declining? Revenues Costs Price Quantity Fixed Variable … … … … … … … … … … … …
  • 29. 29 Case Execution Tips  Don’t be afraid to ask clarifying questions if you don’t understand something  Assumptions are powerful; be clear when you use them  Be quick, but correct, when doing calculations (use round numbers and ballpark estimates)  Be confident in your analysis  Be ready to change direction if guided to do so
  • 30. 30 The First Four Steps  Summarize the question  Verify the objectives  Ask clarifying questions  Lay out your structure – it’s OK to ask for a few minutes to collect your thoughts!
  • 31. 31 Types of Cases  Entering a new market  Step 1: Investigate the market − Would entering the market make good business sense? − Assess market attractiveness  Step 2: If you decide to enter the market, determine the best way to become a player − Start from scratch − Acquire an existing player − Form a JV or strategic alliance with a complementary player
  • 32. 32 Types of Cases  Developing a new product  Step 1: Analyze the product  Step 2: Analyze the market and develop a strategy  Step 3: Analyze potential customers and segments  Step 4: Develop project financial model
  • 33. 33 Types of Cases  Pricing strategies  Step 1: Investigate the product  Step 2: Determine pricing strategy − Pricing methodology: ○ Cost-based pricing: Analyzing product cost, estimating margin, and generating sales price ○ Price-based costing: Analyzing market for price point, costing out production to meet price point with desired margin − Supply / demand forces and price elasticity
  • 34. 34 Types of Cases  Growth strategies  Step 1: Clarify objectives − Nature of growth (organic, acquisitive − Scope of growth (division vs. enterprise)  Step 2: Analyze and select growth strategy − Increasing sales − Expanding distribution channels − Expanding product line − Invest in major marketing programs − Diversify products / services − Acquire another firm
  • 35. 35 Types of Cases  Starting a new business  Step 1: Investigate the market to make sure entering it makes good business sense  Step 2: Analyze the project from a VC’s point of view − Management team − Market and strategic plan − Business model and operational strategy − Product and service footprint − Customer segmentation − Distribution channels − Financing
  • 36. 36 Types of Cases  Competitive Response  Step 1: Ask probing questions − What is the competitor’s new product or service? − How does it differ from ours? − What has the competitor done differently? − How has market share shifted?  Step 2: Analyze and select a response action − Acquiring the competitor − Merging with or acquiring another complementary player − Copy the competitor − Hire the competitor’s top management − Launch marketing and PR campaigns to increase profile
  • 37. 37 Types of Cases  Increasing sales  Step 1: Ask probing questions to gather information − Market − Product line − Customer  Step 2: Analyze market factors and determine sales strategy − Increase sales force (and presumably sales volume) − Increase price point (or reduce price point) − Increase marketing − Enter new markets − Expand customer base − Improve customer service − Rationalize product line − Create seasonal balance
  • 38. 38 Types of Cases  Reducing costs  Step 1: Ask for a breakdown of costs  Step 2: Identify and analyze cost drivers for significant cost categories  Step 3: Analyze market dynamics and their impact on cost drivers  Step 4: Benchmark competitors  Step 5: Determine cost reduction strategy − Labor − Facilities and real estate − Capex − Opex − Other
  • 39. 39 Types of Cases  Turnarounds  Step 1: Evaluate the magnitude of the problem − Test the business model − Analyze liquidity and understand debt covenants − Review costing and pricing and develop top down cost model − Review business model and market strategy  Step 2: Choose appropriate actions (and be creative!) − Control cash and cut all non-essential spending − Clean up the balance sheet − Retain key staff and cut non-essential payroll − Communicate / negotiate with key constituencies − Suppliers − Banks − Tax authorities − Customers
  • 40. 40 Case Examples
  • 41. 41 Case Example Introduction  The following case samples are provided to facilitate first-level analysis  For each case, practice setting up the high-level tree that could be used to attack the problem:  Place the key question for the case at the root of the tree  Break the problem into a set of solvable components and assign those components to the tree branches  Define the high level steps you would take to solve each component
  • 42. 42 Case Example  Your client owns a professional football team that has just won the Super Bowl. Despite the Super Bowl victory, the team finished the season with a financial loss for the 5th season in a row.  What could be the cause of the team’s profitability problems?  How would you go about developing recommendations to reverse this past season’s financial performance?
  • 43. 43 Case Example  You are the owner of a small, but relatively successful towing company with a hand full of locations throughout the Southeastern U.S. Two recent MBA graduates have approached you about purchasing the company.  How would you go about determining whether you should accept the offer to sell your company?
  • 44. 44 Case Example  Your client is an industry-leading security software company that is considering acquiring a data management software company.  How would you go about determining if your client should go through with the acquisition?
  • 45. 45 Case Example  Your client is a national chain of fitness centers with locations in 35 major cities. The company is thinking of creating a sub-brand of gyms for the small-town market.  How would you go about determining whether your client should launch the sub-brand?  What issues come into play when making this decision?
  • 46. 46 Case Example  A publishing company that has traditionally created news and entertainment magazines is thinking of introducing a new sports-focused magazine.  How would you go about determining whether they should do it?
  • 47. 47 Case Example  You have taken over as the Executive Director of a non- profit that has had trouble raising enough money to fund its programs.  What could the problems be?  How would you go about determining what might be done to resolve the issues?
  • 48. 48 Case Example  You have just accepted a job as the Superintendant of a city school district where more than 90% of the students have scored below proficient in English and Math for the past 15 years.  How will you solve this long-standing academic performance problem?  What resources might you need to implement your plan?
  • 49. 49 Case Example  Your client is a beverage company that was excited to see its sponsored cyclist win the Tour de France. That is, until authorities announced that the cyclist had tested positive for performance enhancing drugs.  What sort of damage control should the company do in light of this event?  What could be the effects on the company’s brand as a result of this discovery?
  • 50. 50 Case Example  Your client is an enterprise software company that has spent over $100 million developing a new product that isn’t selling well.  What could the problem be?  How would you go about identifying what could be done to resolve the situation?
  • 51. 51 Case Example  A friend of yours is considering becoming a franchisee of a national fast-food chain  What issues should she be thinking about in making her decision?  How would you go about determining whether she should open the franchise?
  • 52. 52 Final Words of Advice
  • 53. 53 General Advice  Relax, and don't let yourself get too stressed out before or during the interview – succumbing to nerves is the quickest way to sabotage yourself.  Be confident during the interview, but be humble!  Be sure to have a strong list of questions to ask the interviewers  This is your chance to gain insights from their experiences  It shows that you care enough about getting a position to ask insightful questions
  • 54. 54 General Advice  If you make a mistake, learn from it and move on.  Don’t let it fester in your mind  It will serve as a distraction later on.  Make sure the interviewer understands your thinking.  Gives the interviewer a chance to give you correct information if you've got something mixed up  Gives the interviewer a chance to ask follow-up questions to gain more insight about you as a candidate  Take time to think about what you're going to say before you say it.  There is nothing wrong with taking 5 or 10 seconds to think through something  Fight the urge to say the first thing that comes to mind
  • 55. 55 Advice on Cases  Focus on structure from start of interview until the end  Initial case breakdown  Set up and execution of calculations  Final case wrap-up  Having a structured approach in a case interview is just as important as getting the "right" answers  Think “big picture” whenever you can  Don’t dig too deep into the details until you have to  The big picture
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