Acing the Case
Interview
MIT Careers Office
Room 12-170
Agenda
Introductions
Business Case Interview Overview
Types of Cases
Frameworks
Example Case
Case Interview Tips
Case Practice in Groups
Questions
Source: Deloitte, 2005
Business Case Interview Overview
Q
What is a Business Case Interview?
A Business Case interview is an interactive experience where you will be
presented with a business problem / scenario and asked to work through the
solution based on the information available. The case interview is used to
evaluate how you think and how you approach a problem. There is typically no
right or wrong answer. A business case interview normally consists of a
challenging question with incomplete information. Sometimes, business case
interviews are based on actual client engagements.
"Remember that the best leaders never
stop learning."
Abraham Lincoln
Source: Deloitte, 2005
Objectives
Consulting Companies Use Business Case
Interviews to Assess:
1
2
3
4
5
6
7
Logical / analytical thought processes
Communication skills
Creativity
Business insights
Performance under pressure
General knowledge
Problem solving with incomplete information
Source: Deloitte, 2005
Types of Cases
1.
Market Sizing
Determine how big a particular problem is, or how many of X products are used.
Examples:
How many golf balls are made in the US each year?
How many cans of paint are needed to paint the Delta fleet?
2.
Brainteasers
Puzzles or questions that challenge a candidates ability to think creatively.
Examples:
Why are manhole covers round?
Why do fashions change every year or two?
3.
General Business
Typical general business cases include the following subjects:
Falling Profits, New Product Introduction, Entering a New Market, Where to
Locate a New Facility (Site Selection), Mergers and Acquisitions
Source: Deloitte, 2005
Market Sizing
How many new golf balls would be used in the US in a given year?
Possible Approach:
Number of golfers in the US
~ 50 million people
play golf in the US
250 million people in the US, 20% of
population plays golf
Number of balls they use per round
2 to 3 balls per round
~ 2 to 3 balls per
round
Number of rounds they play per year
Average of 10 rounds per year
~ 10 rounds per
year
~ 1.25 billion golf balls
Source: Deloitte, 2005
General Business
Best Buy has asked you to develop an expansion strategy
Possible Solutions:
Increase number of stores
Increase revenues within existing stores
Build new brands
Acquire competitor
Add products and services
Source: Deloitte, 2005
Use of Frameworks
Frameworks can help logically structure problem solving
Many different methodologies exist, for example:
Porters 5 Forces (Suppliers, New Entrants, Buyers/Customers,
Threat of Substitutes, Industry Competitors)
S.W.O.T. (Strengths/Weaknesses, Opportunities/Threats)
4 Cs (Customer, Costs, Competitors, Capabilities)
4 Ps (Price, Promotion, Place, Product)
Dont blindly follow a framework! Choose a framework based on the
problem you are solving, and use the framework to organize your
business case analysis
It is better to not apply a framework if you are unsure of how to use it.
You dont need to use a framework as long as your response is well
structured and your solution is sound
Source: Deloitte, 2005
Framework: Porters Five Forces
Porters Five Forces is useful for understanding the competitive intensity and
overall attractiveness of an industry.
Force
Description
Barriers to Entry
Threat of new entrants
entering the market and
stealing share from existing
competitors
Threat of Substitutes
Threat of substitute products
and services stealing share
from existing competitors
Industry Competition
Rivalry among existing
competitors
Buyer Power
Bargaining power of
customers
Supplier Power
Leverage of suppliers over
buyers
Source: Deloitte, 2005
Framework: S.W.O.T. Analysis
The S.W.O.T. analysis is a useful framework for understanding a companys core
competencies and shortcomings at a high level.
Strengths
Sustainable distinctive competitive
competency
Acknowledged market leader
Adequate financial resources
Cost advantages
Management assets
Opportunities
Likelihood of entrance of new
competitors
Changing consumer trends
Economic upturn
Changes in government regulation
New technologies
Threats
Weaknesses
Obsolete facilities, products or
services
High debt, low equity
Lack of management depth
Too narrow (or wide) product line
Myopic promotion strategy
Source: Deloitte, 2005
Market saturation
Inflation or recession
Threat of national security
Natural disaster
Trade restrictions
Framework: The Four Cs
The Four Cs are a useful tool for understanding retail and sales oriented
cases as well as for analyzing new product introductions.
Customers (Examples)
Demographics
Purchasing Criteria
Sales and go to market strategy
Segmentation
Competitors (Examples)
Competitive Advantage
Market Share
Perceived Value
Price
Source: Deloitte, 2005
Costs (Examples)
Economies of Scale
Inventory and other holding
costs
Labor
Leverage over suppliers
Capabilities (Examples)
Acquisition of Raw Materials
Production Strategy
Organizational Strategy
Framework: The Four Ps
The Four Ps are a useful tool for understanding marketing problems.
Product
Important Product Attributes
Selection Criteria
Value added
Promotion
Advertising
Discounting
Incentive Programs
Source: Deloitte, 2005
Price
Predatory Pricing
At Market Pricing
Premium Pricing
Place
Distribution Strategy
Location
Organizational Strategy
Approach for Solving a Business Case
Study
Use this 5 step approach for solving a business case study:
Understand
the problem
As the case is
being
presented, the
interviewee
should write
down key facts.
Source: Deloitte, 2005
Obtain more
information
The interviewee
will need to ask
questions in
order to gain
clarity and
insight into the
problem.
Apply
Frameworks
As more
questions are
asked, it can be
helpful to
structure
thoughts in an
appropriate
framework.
Present
Conclusion
Recommend
After all of the
information
has been
analyzed, the
interviewee
should develop
and present a
conclusion.
Once the
conclusion has
been made, the
interviewee
should offer a
recommendation
and present their
insights.
Cracking the Case
Listen and understand the business case situation
Determine your structure up front
Communicate to the interviewer the issues you plan to evaluate
If the Interviewer redirects you, dont fight them they may be trying to
pull you back on track
Perform the appropriate calculations
Ask questions that support or refine your framework
Check your progress
Wrap it up!
> Based on the facts you have gathered, draw a
conclusion that answers the interviewers question
> Be prepared to wrap it up even if you run out of
time
Source: Deloitte, 2005
Example Business Case - Background
Client:
Drug Co, a major North American Drug / Convenience store has been
losing market share for three years. They have asked us to determine
the cause for this trend and to recommend solutions to regain market
share.
Background:
Drug Co has 3000 stores in metro, suburban, and rural areas. Along
with prescription drugs, Drug Co sells food and beverages, and health
and beauty aides.
Financial Snap Shot:
Over the past three years Drug Co sales have increased at a
compound annual growth rate of 3%. During that same period, market
share has declined from 10% to 5%.
Source: Deloitte, 2005
Step 1: Understand the Problem
As the interviewer presents the case, you should write down key facts. You
will need to recall these facts later on in the case study.
Client: Major Drug Retailer (Drug Co)
Locations: 3000 Stores in metro, suburban, and rural areas
Products: Prescription drugs, food and beverages and health and
beauty aides
Financial: 3% Growth in sales 50% decline in market share
Objective: To determine why market share has declined and to offer a
recommendation on how to reverse this trend
Source: Deloitte, 2005
Step 2: Ask Questions and obtain more
information
In order to solve the case, you will need to ask questions which will add
clarity and structure to the problem.
Financial: 3% Growth in sales and a 50% decline in market share
What does the industry growth outlook look like
What are the competitive characteristics of the industry
Products: Prescription drugs, food and beverages, and health
and beauty aides
What is breakdown of Drug Cos revenue by product
Which products have the highest and lowest growth
Locations: 3000 Stores in metro, suburban, and rural areas
What is Drug Cos geographic foot print
Where has Drug Co experienced the greatest growth
Source: Deloitte, 2005
Step 2: Ask Questions and obtain more
information
Some cases will present qualitative as well as quantitative information.
Over the past 3 years, the retail drug store industry has experienced a CAGR* of 7%. This growth
has been fueled by:
More price sensitive consumers
Discounting and other loyalty programs
Growth in certain geographic segments
There are three types of competitors:
National Drug Store Chains, e.g., CVS
National Discount Chains, e.g., Wal-Mart
Online Drug Store
Drug Co Revenue & Growth by Product
%
Revenue
Product
CAGR Last 3
Years
Prescription Drugs
20%
11%
Health and Beauty
Aides
50%
1%
Food and
Beverages
30%
Source: Deloitte, 2005
1%
* CAGR is the average annual growth rate
Drug Co Revenue & Growth by Region
Region
%
Revenue
CAGR Last 3
Years
Metro Area
40%
2%
Suburbs
20%
7%
Rural Area
40%
2%
Step 3 Apply Frameworks
As you think of questions it is important to structure your thoughts by applying an
appropriate framework that you are comfortable using.
The Four Ps
Drug Co Revenue & Growth by Product
%
Revenue
CAGR Last
3 Years
Prescription
Drugs
20%
11%
Health and
Beauty Aides
50%
1%
Food and
Beverages
30%
Product
How do prices differ from
competitors
What kind of promotional incentives
exist, e.g., loyalty programs,
discounts
How are products distributed to the
stores within the different regions
How important are cost and
convenience to consumers
1%
Porters Five Forces
Drug Co Revenue & Growth by Region
%
Revenue
CAGR Last
3 Years
Metro Area
40%
2%
Suburbs
20%
7%
Rural Area
40%
2%
Region
Source: Deloitte, 2005
What are the barriers to expanding
in each geographic region
What is the threat of substitutes
from online stores such as
drugstore.com
What is the rivalry between
existing firms in each market
How much choice do consumers
have in where to shop
What is Drug Cos relationship with
its suppliers
Step 3 Apply Frameworks - Continued
The Four Ps is a useful framework to apply when analyzing the marketing
effectiveness of a companys product.
The Four Ps
Offerings
Prescription Drugs
Health and Beauty
Aides
Price
Premium pricing. Prices
typically 20% higher than
market
Promotion
Free personal
No promotion or loyalty No promotion or loyalty
consultations with
program for consumers program for consumers
pharmacist
Meant to be a follow on Meant to be a follow on
sale after customer has sale after customer has
Prescription database
filled prescription order
filled prescription order
which allows a customer
to pick up a prescription in
any store
Place
#7 buyer of prescription
drugs
Relationships with all of
the major drug producers
Tier 2 status with
Tier 2 status with
consumer products
consumer products
companies
companies
Quantity discounts with Quantity discounts with
vendors less frequent
vendors less frequent
Product
Customers value the
ability to purchase
prescriptions at one
location
Customers value price
and availability of
desired products
Source: Deloitte, 2005
Market pricing. Prices
typically 10% higher
than discounters
Food and Beverages
Market pricing. Prices
typically 20% higher
than discounters
Customers value price
Step 3 Apply Frameworks - Continued
Porters Five Forces is a useful framework to apply when assessing the attractiveness
of a certain customer segment or channel.
Porters Five Forces
Region
Metro Area
Suburbs
Rural
Barriers to Entry
High real-estate costs
Lack of space for prime
locations
Threat of Substitutes
Online drug stores and
Online drug stores and
grocers are widely used
grocers moderately used
and are taking away share
from traditional brick and
mortar stores
Industry Competition
Intense. There is a drug
store on every corner
Buyer Power
Buyer can buy similar
Buyer has a some options
products in many different
within a particular region.
stores
Choice often made based
on proximity to home
Buyers have few options to
choose where to shop
Buyers constrained by
budgets
Supplier Power
Suppliers are global
pharmaceuticals and
consumers goods
companies
Suppliers are global
pharmaceuticals and
consumer goods
companies
Source: Deloitte, 2005
Moderate real-estate costs Building awareness
Prime locations available in Lack of high foot traffic
sprawling communities
areas
Online drug stores and
grocers moderately used
Territorial. Stores serve a
Biggest threat from
particular geographic niche
discounters such as Target
and Wal-Mart
Suppliers are global
pharmaceuticals and
consumer goods
companies
Step 4 Present Conclusion
Use your analysis to develop a conclusion.
Drug Co is losing market share for two principle reasons
Incorrect geographic footprint
Incorrect product strategy
Problems with Drug Cos current footprint
Losing share from online drug stores in the metro areas
Losing share from discount stores in the rural areas
Not capturing growth opportunities in the suburbs
Problems with Drug Cos product strategy
Too little emphasis on selling prescription drugs
Lack of customer loyalty program for health and beauty aides and food and
beverages
Source: Deloitte, 2005
Step 5 Structure Recommendation
Present a well-structured and comprehensive recommendation.
What Drug Co should do to improve market share
Concentrate on expanding in suburban areas
Sell more prescription drugs
Why Drug Co should expand in suburbs
Moderate to low real-estate costs
Low penetration from online drug stores and discounters
Strong growth opportunities and prime locations available in developing
suburbs
Why Drug Co should sell more prescription drugs
Prescription drugs were the highest growth products for Drug Co
Build brand identity as the leading provider of prescription drugs in order to
reinforce customer loyalty program
Source: Deloitte, 2005
Case Interview Tips
Preparation
Practice! Grab a friend and practice some cases with him/her
Wet Feet Press and The Vault have good practice cases on their web sites
Check out Case Interview Resources tip-sheet from the MIT Careers Office
Contact alumni in the Consulting field for insider tips
Bring paper and pencil to the Business Case Interview
Execution
Relax. The interviewer wants you to succeed as much as you do.
Maintain your composure. Pretend you are having a conversation rather
than an interview
Dont jump to an answer. Take your time and explain how you arrived at
your answer
Ask questions, but if you need to make an assumption, state it and move on
Source: Deloitte, 2005
Things NOT To Do In A Case
Panic or become emotional
Guess
Ramble
Say I have no idea
Change the subject or lose focus
Make the problem more complicated
Jump to conclusions
Source: Deloitte, 2005
