Consulting Case Interview

Preparation Guide

Marquis, Stanford GSB Class of 2006

Version #1 - Fall 2006
 Table of Contents
• Prior to the Interview
– Resume Preparation
– Answering the “Why Firm X?” Question
– Describing Your Work Experience
– Generating a List of Questions
• Approaching the Case Interview
– Interview Technique Basics
– Math Tricks
– Key Business Concepts
• Case Execution
– Case Execution Tips
– “The First Four Steps”
– Types of Cases
• Case Examples
Prior to the Interview
 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
– Communication skills
– Leadership/Management experiences
– History of achieving results
• Use the “Additional Information” section to bring out
qualities/interests to differentiate yourself
 Answering the “Why Firm X?”
Question
• Show a “specific” desire to work at Firm X, instead of
simply a general desire to work in Consulting
• Learn the “ins and outs” of the company
– Locations
– Business areas of specialty
– Reputation (i.e. what the firm is known for)
– 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
Describing Your Work Experience
• 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
structured when describing the sections of your resume
• W ork experience stories
– Allow firms to learn about your experiences in a variety of work
situations
– Have four or five unique stories ready to share; Examples include:
• Led an initiative to a successful/unsuccessful 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 work environment
• Initiated change within an organization
 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 (offices, leadership, areas of focus, career progression)
– Ask questions that pertain to your own background
(educational/professional, gender, ethnic, etc)
– If given an interviewer biography, ask him questions about
his background and how he was able to leverage it at the
firm
 Generating a List of Questions
• Sample questions
– Could you tell me a little about the culture in [FIRM]’s [CITY] office? How
does it compare to the culture in the company as a whole?
– When thinking about your co-workers, do you consider them to be your
colleagues, your friends, or both? (this question can tell you a lot about the
kind of culture within a company or an office)
– As a minority/female consultant, have you ever experienced any negative
interactions with client representatives where you felt that race was an
issue? If so, how did you deal with it? Did your managers support you with
your concerns?
– As someone with a tech background, I'm wondering whether my previous
experience will translate well into Consulting. Could you tell me how much
you've reached back into your prior experience in Technology during your
career at [FIRM]?
– I really like the fact that your company operates on a generalist model where
consultants can float around on different types of assignments early in their
careers. What was your experience like when you were in this stage of your
career? Did you find it difficult to jump onto client engagements where you
had no prior background and hit the ground running? What sort of support did
your team give you in these cases?
Approaching the Case
Interview
 Interview Technique Basics

• Keep clean and organized notes

– Use two separate sheets (landscape-oriented) for your
information/analysis and math calculations
– W rite in pencil
• This may seem basic, but being able to erase mistakes can go
a long way toward producing clean and easy-to-read notes
– W rite as neatly as possible
• Some companies will collect your notes and evaluate them to
get insight about how you structure your thoughts on paper
• Use tables and graphs during your case breakdown to
demonstrate structured presentation of information
• Get used to using “educated estimates” for values
when concrete data is not provided
 Math Tricks
• Use round numbers wherever you can, especially
when you have the chance to pick the numbers
• Do “ballpark” calculations if possible
– Often it isn’t about getting the exact mathematical response
– Since there is usually some allowable margin of error, take
advantage of that and “ballpark” whenever you can
• Don’t try to do calculations in your head unless you’re
sure you can solve them correctly
– W hen doing calculations in your head, be sure to write
your solutions down so you can refer to them later
 Math Tricks

• Rule of 10’s and Rule of ½’s

– Break difficult numbers into either tens or halves to
do quicker calculations
– Example: 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:
– (3 * 2,500) + 1,250 + 625 = 9,375 = 37.5% of 25,000
 Math Tricks Example

• What is the annual U.S. market for chewing

gum?
– In total number of consumers?
• Estimate the total U.S. population (~300 million people)
• Segment the population based on some metric (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
• Complete the math and arrive at a final figure
 Math Tricks Example

• What is the annual U.S. market for chewing

gum?
– In units (packs) sold?
• Start with the estimate for total chewing gum
consumers (as determined earlier)
• Make a guess at the number of packs that an average
consumer purchases in a given week
• Multiply the above two numbers to estimate the packs
of gum sold each week in the U.S.
• [Annual packs of gum sold] = [W eekly estimate] * 50
– There are 52 weeks in a year, but using 50 takes advantage of
“ballparking” and the inherent margin of error in estimating
 Math Tricks Example

• What is the annual U.S. market for chewing

gum?
– In revenue?
• Start with the annual number of packs sold (as
determined earlier)
• Make a guess at the average price of a pack of gum
• [Annual revenue] = [Annual packs of gum] * [Avg. price]
 Math Tricks Example

• What is the annual U.S. market for chewing

gum?
– In profits?
• Method #1: Use the annual revenue estimate and apply
a guessed profit margin
– [Total annual profit] = [Annual revenue] * [Profit margin]
• Method #2: Use the average price, apply a guessed
profit margin, and multiply by the estimate annual packs
sold
– [Unit profit] = [Average price] * [Profit margin]
– [Total annual profit] = [Unit profit] * [Annual packs sold]
 Key Business Concepts

• Profitability
– Revenues
– Costs
• Industry attractiveness / Market issues
– Total size of the market in dollars
– Number of competitors  Minimum Efficient Scale
– Market conditions (shrinking/growing/stagnant) and
associated implications
 Key Business Concepts
• Mergers and acquisitions
– Financials of the deal  W ill it be profitable?
– Product-line synergies
– Market reaction
– Culture issues
• Marketing
– Pricing
– Placement (distribution channels)
– Product
– Promotion
 Key Business Concepts
• Product introduction
– Potential market for product
• Do consumers want it?
– Overall profitability of the product
• Cost to introduce product
• Expected revenues
– Competitor reaction
• Can they copy it?
• Do they already competing products?
– Does the new product fit your company and current product
line?
• Does it make sense for your company to introduce the
product?
 Key Business Concepts
• Other concepts that show deeper business insights
– Labor issues
• Implications of unionized labor and compensation (salary,
benefits, etc.)
– Long-term contracts
– Revenue streams
– Costs
• Fixed vs. Variable
• Direct vs. Indirect
– Supply and demand issues and their effects on pricing
– Culture and morale issues
– Operational issues
Case Execution
 Case Execution Tips
• Break case problems into distinct segments to create a
structured roadmap
– Use trees to set up analyses
• 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 are present between issues to be
investigated
– “Collective exhaustive”: All potential high-level issue areas have
been covered by the first-level branches of the tree
 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

… … … … … … … … … … … …
 Case Execution Tips

• Don’t be afraid to ask questions if you don’t

understand something
• Use frameworks, but don’t let your interviewer
recognize that you are using frameworks
• Assumptions are powerful, but use them wisely
• Be quick, but correct, when doing math
calculations
• Be confident in your analysis, but be open to
changing direction if guided to do so
 “The First Four Steps”

• Summarize the question

• Verify the objectives
• Ask clarifying questions
• Lay out your structure

The information from this slide and the ten slides that follow were adapted from “Case in Point” by Mark Consentino
 Types of Cases
• Entering a new market
– Step 1: Investigate the market to determine
whether entering the market would make good
business sense  Assess market attractiveness
– Step 2: If you decide to enter the market, you need
to figure out the best way to become a player
• Start from scratch
• Acquire an existing player
• Form a joint venture or strategic alliance with another
player
 Types of Cases

• Developing a new product

– Step 1: Think about the product
– Step 2: Think about your market strategy
– Step 3: Think about your potential customers
– Step 4: Think about financing the project
 Types of Cases

• Pricing strategies
– Step 1: Investigate the product
– Step 2: Choose a pricing strategy
• Cost-based pricing vs. Price-based costing
– Cost-based pricing: Determining the cost of a product, choosing a
desired profit margin, and generating a sales price
– Price-based costing: Choosing a desired sales price and costing
out production to meet that sales price with a desired profit margin
• Supply and demand forces
 Types of Cases

• Growth strategies
– Step 1: Ask feeler questions
• Ask questions to determine the nature of growth that
your interviewer is looking for (focusing on product,
division, or the entire company)
– Step 2: Choose a growth strategy
• Some options are increasing sales, increasing
distribution channels, increasing product line, invest in a
major marketing campaign, diversify products/services,
or acquisition of another firm
 Types of Cases
• Starting a new business
– Step 1: Investigate the market to make sure that entering
the market makes good business sense
– Step 2: Look at the project from a VC’s point of view
• Management team
• Market and strategic plan
• Distribution channels
• Product
• Customers
• Finance
 Types of Cases
• Competitive response
– Step 1: Ask probing questions
• What is the competitor’s new product and how does it differ
from ours?
• What has the competitor done differently?
• Have any other competitors picked up market share?
– Step 2: Choose a response action
• Examples: Acquiring the competitor or another player in the
market, merging with a competitor, copy the competitor, hire
the competitor’s top management away, use marketing and
public relations to increase your profile
 Types of Cases
• Increasing sales
– Step 1: Ask probing questions to gather information
about the market and our product line
– Step 2: Determine a strategy to increase your sales
• Increase volume
• Increase revenue from each sale (make buyers buy
more)
• Increase prices
• Create seasonal balance
 Types of Cases

• Reducing costs
– Step 1: Ask for a breakdown of costs
– Step 2: If any costs are out of line, determine why
– Step 3: Benchmark competitors
 Types of Cases

• Increasing profits
– Step 1: Look at revenues
– Step 2: Look at costs
– Step 3: Determine whether you want to increase
volume and how to do so
• Example actions include expanding into new areas,
increasing your sales force, increasing marketing,
reducing prices, and improving customer service
 Types of Cases

• Turnarounds
– Step 1: Gather key information about the company
and its situation
– Step 2: Choose an appropriate action
• Be creative, but base your action upon a structred and
well thought-out plan
Practice Cases
 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 (as shown earlier):
– 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
 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? What would you
recommend to reverse this past season’s
financial performance?
 Case Example

• You are the owner of a small, but relatively

successful, towing company with a handful
locations throughout the Southeastern U.S.
Two recent MBA graduates have approached
you about purchasing the company.
• Should you accept the offer to sell your
company?
 Case Example

• Your client is an industry-leading security

software company that is considering acquiring
a data management software company.
• Should the client go through with the
acquisition?
 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.
• Should they do it? What issues come into play
when making this decision? Under what
circumstances could the venture be
successful?
 Case Example

• A publishing company that has traditionally

created news and entertainment magazines is
thinking of introducing a new sports-focused
magazine.
• Should they do it?
 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 problem be? What can be
done to resolve the issue?
 Case Example

• You have just accepted a job as the

Superintendent of 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 would
you need to implement your plan?
 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” does the
company have to do in light of this event? Will
there be any negative effects on the
company’s brand as a result of this discovery?
 Case Example

• Your client is an enterprise software company

that has spent over $100M developing a new
product that isn’t selling well.
• What could the problem be and what can they
do to resolve the situation?
 Case Example

• A friend of yours is considering becoming a

franchisee of a national fast-food chain.
• What issues should he be thinking about in
making his decision? And, do you think he
should open the franchise?