Customized for: Jessica ([email protected]) CASE INTERVIEW is madepossiblethroughthegeneroussupportoffollowingsponsors: VAULT GUIDE TO THE 2008 EDITION 2008 Customized for: Jessica ([email protected]) — HoustonChronicle “A richrepositoryofinformationabouttheworld ofwork.” — TheWashingtonPost and commentaryfromemployeesindustryanalysts.” information... SitessuchasVault.comdothis,featuring insights “If onlythecompanyprofilesontopsiteswould listthe‘real’ — NewYorkTimes “Another killerappfortheInternet.” — Money.com insights arepriceless.” “For thosehopingtoclimbtheladderofsuccess,[Vault.com’s] — Fortune corporate grapevine.” “Vault.com hasbecomeadefactoInternetoutsourcerofthe — Yahoo!InternetLife sharp insightintocorporatecultureandhiringpractices.” “Best waytoscopeoutpotentialemployers...Vault.comhas — Knight-Riddernewspapers guys.” propaganda tothenitty-grittyinsidedopebetterthanthese “Unflinching, fly-on-the-wallreports...Noonegetspastcompany Here’s asamplingofourcoverage. The media’swatchingVault! Customized for: Jessica ([email protected]) GUIDE INTERV CASE © 2007VaultInc. INTERVIEW CASE VAULT GUIDETOTHE Customized for: Jessica ([email protected]) GUIDE INTERV CASE © 2007VaultInc. AND THESTAFFOFVAULT MARK ASHER,ERICCHUNG INTERVIEW CASE VAULT GUIDETOTHE Customized for: Jessica ([email protected]) Printed intheUnited StatesofAmerica ISBN 13:978-58131-530-1 ISBN 10:1-58131-530-9 Library ofCongressCIPDataisavailable. 150 W.22ndSt.,5thFloor,NewYork, NY10011,(212)366-4212. For informationaboutpermissionto reproduceselectionsfromthisbook,contactVaultInc., Vault Inc. Vault, theVaultlogo,and“themosttrustednameincareerinformation Inc. electronic ormechanical,foranypurpose,withouttheexpresswritten permission ofVault No partofthisbookmaybereproducedortransmittedinanyformby anymeans, the accuracyandreliabilityofinformationcontainedwithindisclaims allwarranties. All informationinthisbookissubjecttochangewithoutnotice.Vault makes noclaimsasto Copyright ©2007byVaultInc.Allrightsreserved. TM ” aretrademarksof Customized for: Jessica ([email protected]) family, andfriends. Thank you! would liketoacknowledgethesupportofourinvestors,clients,employees, all theirhelpintheeditorial,productionandmarketingprocesses. Vault also Vault’s acknowledgments: ACKNOWLEDGMENTS We areextremelygratefulto Vault’s entirestaff for Customized for: Jessica ([email protected]) NRDCIN1 INTRODUCTION Table ofContents AEFAEOK 23 7 CASE FRAMEWORKS CASE STRATEGIES insider firm profiles, messageboards, theVaultFinanceJob Boardandmore. Visit theVaultConsulting CareerChannelat htKn fCs ilIgt . . .6 get? WillCase I of Kind What ..3 Interview Case the Skills in Assessed . . .2 Interviews TypesCase of ..1 Case the Why taeyto/rmwr hr . ..45 chart tool/framework Strategy . ..44 curve cycle life Product ..43 Framework S Seven The . . .42 Analysis SWOT ..40 Forces Five Porter’s of generation next The PIE: ..38 Forces Five Porter’s ..35 (CAPM) Model Capital Pricing The Asset . ..34 value present Net . . .34 Frameworks and Concepts Advanced ..27 Statements Financial of Overview Basic ..26 Frameworks and Concepts Basic ..17 Cases TypesSpecific Business of ..16 Checklist Case The ..15 Case Thinking the About ..14 Troubleshooting and Problems Common ..10 successfully questions case business answering for Toptips 10 ..9 Fret Don’t ..9 YourObjective www.vault.com/consulting — with L C I A B R R A E E R R Y ix Customized for: Jessica ([email protected]) Customized for: Jessica ([email protected]) UIESCSS73 67 59 BUSINESS CASES REAL LIFEINTERVIEWS BEING THERE insider firm profiles, messageboards, theVaultFinanceJob Boardandmore. Visit theVaultConsulting CareerChannelat A Written Case . . . .100 WrittenCase A . . . .94 Cs Five the Sailing . . .92 Ps Four the Using . ..89 Strategically Thinking . ..76 Questions Practice . ..75 Formats Case ..72 Consulting L.E.K. . . .71 A.T.Kearney ..71 Group Monitor ..70 Company & McKinsey ..69 Group Consulting Boston ..62 Case The ..61 Interview Case a in It’sBeing What Like ..56 analysis and gathering Data cases: M&A . . .54 Target cases: assessment market and M&A Value cases: ..53 framework drivers M&A . ..52 matrix BCG The ..51 matrix 2x2 The ..50 practices” “best and Benchmarking ..50 competencies Core Value ..49 analysis chain ..47 Cs Five The ..47 Cs Four The ..46 Ps Four The www.vault.com/consulting Table ofContents Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y xi Customized for: Jessica ([email protected]) Customized for: Jessica ([email protected]) RITAES209 193 BRAINTEASERS GUESSTIMATES 137 111 PRESENTATION CASES INTERACTIVE CASES insider firm profiles, messageboards, theVaultFinanceJob Boardandmore. Visit theVaultConsulting CareerChannelat n r hs o oePatc . ..207 Practice More Tryfor And These ..204 Guesstimates... More ..199 Questions Guesstimate Practice ..196 Guesstimates Acing ..195 Interviews Case “Guesstimate” ..190 Phone by Interviews Consulting ..175 Cases Situation Difficult ..173 TypeCase Teach– Presentation Something 3 Me ..164 WellsExample: Presentation Incorporated the Complete ..164 Presentation the Complete TypeCase – Presentation 2 ..144 Meats Pure Example: Case Research . ..142 Case Research TypeCase – Presentation 1 . . .141 Cases TipsTricksGeneral and for Presentation All ..117 Cases Interactive Sample ..116 Case the Tipsfor ..114 Exercise Case Interactive an Run to How ..113 Cases Interactive the Use to How . . .113 Disguise in Interview Fit A ..109 Practice More Tryfor And These ..105 Questions Practice Additional ..102 Interview Case Financial The www.vault.com/consulting Table ofContents Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y xiii Customized for: Jessica ([email protected]) Customized for: Jessica ([email protected]) PEDX223 219 APPENDIX FINAL ANALYSIS insider firm profiles, messageboards, theVaultFinanceJob Boardandmore. Visit theVaultConsulting CareerChannelat Consulting Glossary ..225 Glossary Consulting ..212 Brainteasers... Practice ..211 Remember... ..211 Brainteasers www.vault.com/consulting Table ofContents Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y xv Customized for: Jessica ([email protected]) Introduction Why theCase? insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat for evaluatingthesecharacteristics. professionalism andexcellence. The caseinterviewhasevolvedasamethod a candidate’s abilitytomanagetheseparticularcircumstanceswith All thesefactorsnecessitateauniqueinterviewstructurefocused onassessing among co-workersassignedtothesamebusinessunit. assistance, faxing,andphotocopying,thecamaraderie thatdevelops return homeeachnight,easilyaccessedservicessuchas administrative the traditionalworkplacestandards:apermanentworkingspace, theabilityto the individualmustbeabletofunction,andfunctionwell,without manyof Consultants areoftenstaffed insmallgroupsfar-flung areas. As aresult, professional. and havetheabilitytomaintainabalancebetweenpersonal smallest aspectsofaproblem(whilesimultaneouslyseeingthebigpicture), condescending, behighlyanalytical,havetheabilitytounderstand an individualbecoolunderpressure,influentialwithoutbeing political machinations,andnear-perpetual travel. These factorsmandatethat There arenonstopco-workerchanges,hostileclientenvironments,countless to besuccessful. The consultant’s workenvironmentisextremelyturbulent. Consultants musthaveaselectsetofpersonalityandleadershiptraitsinorder constantly interviewclientemployeesandexecutives. business dayinteractingwithclientsandcolleaguesmustthemselves industry, sinceconsultingprofessionalsspendthelion’s shareoftheir candidates. The interviewprocessisespecially pertinentintheconsulting dynamic people,thefirmsrelyheavilyoncaseinterviewtoscreen And becauseconsultingfirmsdependonemployingthosemulti-faceted, only atwo-dimensionalrepresentationofmulti-faceted,dynamicperson. it won’t getyouthejob.Consultantsknow thataresume,atitsverybest,is Your impressiveresumemaygetyouaninterviewwithaconsultingfirm,but www.vault.com/consulting — with L C I A B R R A E E R R Y 1 Customized for: Jessica ([email protected]) 2 Types ofCaseInterviews case interviewquestionorquestions.Makethemcount! questions aboutthecompany.Thisleaves5to15minutesforyour chat andbehavioralquestionsfiveminutesofyouasking hour. Ofthistime,about5to10minutesistakenupwithpreliminary The interviewwithaconsultingcompanynormallylastsabouthalfan understanding ofbusinessmodelsandprocesses. business worldexperiencereceivecasequestionsthatrequireadeeper necessary. Businessschoolstudentsandcandidateswithsignificant of theindustrycoveredbycasequestionisabonusbutnot consultants lovetocall“out-of-the-box”thinking).Specificknowledge a thoughtprocessthatisbothanalyticalandcreative(what candidate, areexpectedtogive.Whattheinterviewerislookingfor of caseinterviewersdon’thaveaspecificanswerthatyou,the that willpermityoutomakeadetailedrecommendation.Themajority for youropinion.Yourjobistoasktheinterviewerlogicalquestions Your interviewerwillpresentyouwithabusinessproblemandask Unlike mostotherinterviewquestions,itisaninteractiveprocess. Simply put,acaseinterviewistheanalysisofbusinessquestion. What isaCase? Case interviews business cases,guesstimates,andbrainteasers. Case interviewsvarywidely, butingeneraltheyfallintothreegroups: open foryou. Triumph over yourcaseinterviewsandchancesarethataslotatthefirmwill skill assessment. This meansthatthecaseinterviewisyourstolose. your background,GPA, andexperiencefoundyouworthyofadeeper interview stage,takeadeepbreath–theconsultingfirmhasalready weighed professional, orexperientialqualifications.Ifyou’vereached thecase What caseinterviewsarenotdesignedtodoisexploreeducational, recommendations. Mostcasesarepresented inoralform,thoughsome presented withabusinessscenario andaskedtoanalyzeitmake common typeofcaseinterview isthebusinesscase,inwhichyou’re Case interviewsvarysomewhat intheirformat. The classicand most L C I A B R R A E E R R Y Introduction Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) Skills AssessedintheCaseInterview insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat through thecaseinterview: consulting insiders, against thelist.Followingis a listofthesespecialtraitsthat,accordingto qualities, traits,andabilitiesasktheinterviewertoassess thecandidate written evaluationform. The evaluationformsoftenincludealistof Following yourcaseinterview, yourconsultinginterviewerwillcompletea thinking, aswellgraceunderpressure. Often, brainteasersaremeanttotestbothanalyticand“out-of-the-box” Brainteasers arenormallylogicpuzzlesorriddles. They maybetimed. Brainteasers guesstimates –givenindependentlyofacase. and otherswhoappeartobeweakquantitativelymaygetstand-alone should comeclose–hencetheguesstimate.Non-businessschoolstudents European market.) You willnotbeexpectedtogettheexactnumber, butyou size forthewardrobesoftwareasafirststepindetermininghowtoenter wardrobe mightbe.(Forexample,youneedtofigureoutthemarket what themarketsizeforanewcomputerprogramthatorganizes your estimate howmanywatermelonsaresoldintheUnitedStates eachyear, or of thecaseinterview. As partofaguesstimate,youmightbeaskedto the-envelope” calculations(rough,yetbasicallyaccurate)isanessentialpart Whether free-standingoraspartofacase,learninghowtomake“back-of- Guesstimates a-mano on caseinterviews,youaremostlikelytocomeacrossthetraditional, presentations. Though youshouldcertainlybepreparedforthesevariations firm watchassilentobservers.Somefirmsnowaskcandidatestodo grouped togetherandtoldtosolveacasecooperatively. Consultantsfromthe interview isthegroupcaseinterview, wherethreetosixcandidatesare information besideswhat’s onthehandout.) Another variationonthecase written. (Inawrittencase,theinterviewerwillnotcontributeanyother involve handoutsorslides,andafew(likeMonitorCompany’s) areentirely case interview. interviewers willbekeepingan eyeoutforasyouwork www.vault.com/consulting Introduction Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y mano- 3 Customized for: Jessica ([email protected]) 4 coffee and useeyedrops–justbeenergized. at workthenextdayalert,perky, andreadyto go.Ifyoumust,drinklotsof Remember thatconsultingfirms expectyoutotakealongflightandshowup zest andenergy –firmhandshake,sincereandwarmsmile,brighteyes. quits at5p.m.duringalongand arduousengagement.Interviewerslookfor Even themostqualifiedandanalyticalconsultantwon’t bemuchgoodifshe Energy babble. Ask theinterviewertorestateinformationifnecessary. stumps you,takeadeepbreathandpause.It’s alwaysbettertopausethan you’re speaking,slowdownandsmile.Ifaskedaquestionthat temporarily frequently, orappear jitteryunderclosequestioning.Remember: When you stumbleoverwords,useinadvisablefillerslike“um” or“like” team andtotheirclients.Interviewerswillbewatchingyou closely toseeif action, theymustpresenttheirfindingsandrecommendationstocase have analyzedtheircaseengagementanddecidedonthepropercourseof Presenting youranalysisisanessentialpartofconsulting.Onceconsultants Presentation skills solution. efficient, on-target, andaccuratequestionswhilewrestlingyourcasetoa conclusion orrecommendation. You shoulddisplaythisskillthroughyour formulating itintoapatternthatmakessense,andderivingsensible The corecompetencyofconsultingisanalysis–breakingdowndata, Analytical skills ability, yourdemeanorinthecaseinterviewcanhelp. leadership experiencewillprobablymoststronglyconveyyour the interviewer’s ownexperience. While yourresume andprevious Ask yourquestionsconfidently. Inquirewhetherthecaseinterviewrelatesto demonstrate yourleadershipskillsbytakingcharge ofthecaseinterview. shape projectswithverylittledirection,anddirectothers. You should fact is,however, thatconsultantsareoftencalledupontoworkindependently, beginning consultantsareconsignedtonumber-crunching andresearch. The Why, youmightask,wouldaconsultingfirmneedleader? After all,many You’ll hearthisfromeveryconsultingfirmoutthere–theywantleaders. Leadership skills L C I A B R R A E E R R Y Introduction Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat interviewer seemsreceptive. references toawesomefraternityeventsyoumayhaveattended, evenifthe answer thequestion,“Howoldareyou?”)Eliminategiggling, fidgeting,and older thantheyare.(Thisiswhyconsultantsaretaughtthe rightwayto Consultants mustoftenworkwithexecutivesandcompanyofficials decades Maturity thinking. I saidearlier?”)andthenwatchhowquicklyyou’reable toalteryour terms ofthecaseinterview(“Whatifthislaborcontractisnotguaranteed,as let’s saythefactoriesmustbeopenedeitherinCanadaorChina”)flip the interviewermaysuddenlyintroduceanewpieceofinformation(“Okay, mirrored intestsformentalflexibility. To testyourgraspofacaseinterview, Winnipeg forsixmonthsthenext. This kindofflexibilityschedule is Consultants mayhavetoarriveattheoffice onedayandbepackedoff to Flexibility question orseparately. your quantitativeskillsbygivingyoua“guesstimate,”eitherwithinthecase numbers andyourabilitytomanipulatethem.Manyinterviewerswillassess numbers tofillthem.Consultinginterviewswillinevitablytestyourgraspof Those spreadsheetsyou’llbeworkingwithasamanagementconsultantneed Quantitative skills materials. You mustarriveontime. paper andapen.Interviewersnoticewhencandidatesmustaskforthese up foryourinterviewprepared. You’ll wanttotakenotes,sobringapadof through adisciplined,logicalapproachtoyourcasesolution,andbyshowing over theworldmustbeextremelyorganized. You candisplaythisskill And consultantswhojuggletwoormoreflightsaweekandengagementsall Consultants mustbeaspainstakingscientistsintheirattentiontodetail. Attention todetail/Organization analysis anddepthofinsight. Don’t beafraidtoaskquestionsforfear of Rather straightforward–consulting interviewersarelookingforquicknessof Intelligence, a.k.a. “mental horsepower” www.vault.com/consulting Introduction Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 5 Customized for: Jessica ([email protected]) 6 What KindofCaseWillIGet? people canmakeareasonableassumptionofnumbers. out thetotalworldwiderevenuesof on you’llbethatmuchmoreimpressive.”Someguesstimates, likefiguring you maybeaskedaboutrecentdevelopmentsinit.Ifknow what’s going “it makessensetofollowuponyourfieldin about investinginadvertisingagencies.”Forthisreason,adviseconsultants, the advertisingstaff fortheschoolnewspaper, youmightbegivenaquestion your pastexperience.“Forexample,”saysoneconsultant,“ifyouwereon love todoislookatyourresumeandgiveyouacasequestionthatrelates be abletobackupyourreasoning! Alternatively, onethingcaseinterviewers doesn’t meanyouhavetomakethesame recommendation–butyou’dbetter course ofactiontheconsultancyactuallyendeduprecommending. This interviewer maypositsomethingfromherownexperience–knowingwhat probably belessopen-endedanddrivetowardanactualsolution. Your Are youabusinessschoolstudentorgraduate? Then yourcasequestionwill to getguesstimatesandbrainteasersthanMBAs. and articulatecomplexconcepts.”Undergraduates arealsomuchmorelikely confides oneinterviewer. “Whatwedoexpectistheabilitytobreakdown expect ourundergraduate candidatesto know thatmuchaboutbusiness,” safely assuredofgettingacreativeor“open-ended”question.“We don’t student,youcanprobablybe If you’reanundergraduate orothernon-MBA some thingsthatcantipyouoff tothekind ofcaseyou’llreceive. While there’s nowaytotellforsurewhatcasequestionyou’llget,thereare elementary (orirrelevant)concept20timeswillnotdoyouanyfavors. information. At thesametime,askingyourinterviewertorepeatan looking stupid–smartpeoplelearnbyaskingquestionsandassimilatingnew L C I A B R R A E E R R Y Introduction Vault GuidetotheCaseInterview Shrek 2 , arebroadenoughsothatmost The Wall Street Journal © 2007Vault Inc. because GUIDE INTERV CASE Customized for: Jessica ([email protected]) career message boards,expertresume reviews,theVaultJob Boardandmore. Visit Vaultat STRATEGIES CASE www.vault.com for insidercompanyprofiles, expertadvice, Customized for: Jessica ([email protected]) Customized for: Jessica ([email protected]) Your Objective Don’t Fret! insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat just spendtherestoftimeon chitchat.” candidate. “Ifyou’vescrewed up,”statesaninterviewer, “they’llprobably if theinterviewermovesonto another case,itshowsthatyou’restillaviable your interviewermaywishtomove ontoadifferent subjectorcase.In fact, successfully demonstratedthatyouhavethecapabilitytoperform thesetasks, set upaframeworkforpursuingotherinformation.Ifyou havealready your abilitytoanalyzeandsynthesizevariousfacts,clarifythe situation,and The interviewerisnotlookingforadefinitiveanswer. Ratherheisassessing other questions. This isnotasignthatsomethinghasgoneterriblywrong. times youwillnotreachaconclusionbeforetheinterviewer movesonto There areno“correct”answerstobusinesscasequestions. Infact,many an unfamiliarsituation,overallconfidence,andgraceunderpressure. deliberately choosethisvaguenesstoassessacandidate’s poise,reactionto In additiontoappraisingtheaforementionedskills,interviewermay countries. What wouldyouadvisethem?” Then theinterviewer fallssilent. a multi-billiondollarconsumerproductsclientwithoperationsin15 information. The interviewermaysimply tossoutafewfactslike,“We have In somesituations,businesscasesmaybepresentedwithlittleorno you maybegiventwoormoreshortercases.) to anhour. (Whileyouwillusuallybegivenonlyonecaseinaninterview, cases, thebusinesscasewillbetimed,andcanlastanywherefrom15minutes business experience,anddeductivereasoningtocrackthecase.Inmost hand. As acandidate,youwillneedtodrawuponyouranalyticalabilities, different situationalelementsintoacohesive understandingoftheproblemat The interviewerisattemptingtoassessyourabilitysynthesizemany Regardless oftheformat,objectivebusinesscaseremainssame. information, andotherexhibits. candidate ispresentedwithapacketoftextincludinggraphs,charts,financial common) oronpaper. They mayalsotake cases canbepresentedasanarrativedetailedbytheinterviewer(most provided withasetoffactsaboutbusinessorproblem.Business Business casesinvolvereal-worldsituationsforwhichacandidateis www.vault.com/consulting Case Strategies Vault GuidetotheCaseInterview — with the formofacasestudy, wherethe L C I A B R R A E E R R Y 9 Customized for: Jessica ([email protected]) 10 about thehelicoptermarket,ask howmuchitcoststomanufacturearotor. If questions isafatalerrorincase interview. Ifyoudon’t knowthefirstthing ignorant, ornotwishto“bother” theinterviewer. Remember–notasking interviewer toofewquestions. They maybeafraidthattheywill look Many inexperiencedcaseintervieweesmaketheerrorof askingtheir as youneedtoobtainanaccuratepictureoftherelevantfacts inthecase. Your interviewerexpectsyoutoaskquestions–asmanyintelligent questions 3. Ask • What haveothercompaniesfacingthissituationdone? Has thecompanyfacedthisproblem(oropportunity)before?Ifso,howdid • • Howlongwillthisengagementlast? • Who hiredus? • What istheproduct? apply tomostcases: sensible questions.Somegoodbasic“professional”questionstoask,which not releasethatinformationbutwillbeimpressedyouaskedthese the fieldhavedonewhenfacedwithsimilarsituations. Your interviewermay the companyhasencounteredasimilarproblem,orwhatothercompaniesin actual consultanttryingtolearnaboutanassignment. You shouldalsoaskif constricting thesupplyofapples.) You shouldassumethepersonaofan example, yourinterviewerprobablywon’t mentionthetreeblightthat’s an applejuicemanufacturerhasseenitsexpensesrisedramatically, for interviewer willinevitablyleavethingsoutofthecasepresentedtoyou.(If As acaseinterviewee,youshouldnevermakeanyassumptions. Your 2. Makenoassumptions have toaskyourinterviewerrepeatinformation. bringing graphpaper(whichshowsmajorforesight). Take notessoyoudon’t consulting interview.) Ifyouplanondrawinggraphs,addbrowniepointsby numbers orotherfactsgiven.(Alwaysbringanotepadandpento As yourinterviewerpresentscase,besuretotakecarefulnotesonthe 1. Takenotes questions successfully Top 10tipsforansweringbusinesscase it react? What wastheoutcome? L C I A B R R A E E R R Y Case Strategies Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat minutes. The caseisonlysupposedtobe15or20minutes.” really overkill. You don’t wantyourinterviewer waiting thereforfive the otherhand,while“aminute ofdeepthinking”isfine,“fiveminutes case interviews,“myinterviewersalwayssaid,‘Okay, good,goahead.’”On collect mythoughts,”reportsoneconsultantwho’s undergone “dozens”of interviewers finditpreferable.“WheneverIaskedtotake the timeoutto It’s perfectlyfinetotakeaminutethinkthroughyouranswer–infact,most time 6. Takeyour simulates theworkenvironmentconsultantsmustfaceevery day. see whybusinesscaseinterviewingissoimportantto consulting –it only ahalf-hourago. And thenyouhavetoanswerquestions!Socan executives atamajorcorporationpresentingstrategyyou were briefedon authority. Rememberthatinconsultingyoumayfindyourselffrontof20 critical whenansweringcasequestions–itdemonstratesconfidenceand Always maintaindirecteyecontactduringthecaseinterview. Eyecontactis 5. Maintaineyecontact to theinformationyoureceiveandincorporateitintoyouranalysis. response theygot. That throwsoff theirreasoning.”Makesureyourespond through amentallistofallthequestionstheywanttoask,andignore perfect questionsthattheydon’t listento theanswerstheyreceive. They go One interviewerwarns:“Manycandidatesgetsocaughtupinaskingthe 4. Listentotheanswersyouget interviewer’s role. In thisway, youtakecharge ofthelinequestioningwithoutsteppingon client’s currentrelationshipwithitsdistributionpartner. Would thatbeOK?” you havetoldmeaboutthesituation,Iwouldliketofindoutmore I asksomedetailedquestionsaboutthis?”Oryoumightsay, “Givenwhat ask, “Ifindthelackofariskassessmenttobepotentialshowstopper. Might little directionasyoumovethroughyourinitialquestions,maywishto simply asktheinterviewer. Forinstance,ifyoufindtheintervieweroffering in casetheinterviewerdoesnotdirectyourreasoning.Ifyouareunsure, to aspecificarea,butyoumustalwaysbereadycontroltheconversation You willoftenfindthatyourinterviewerdirectlineofquestioning Kansas, thenfeelfreetoaskthepopulationof Wichita andenvirons. you needtoestimatethedemandforabeef-flavoredpotatosnackin Wichita, www.vault.com/consulting Case Strategies Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 11 Customized for: Jessica ([email protected]) 12 • Identifythekey players • Pinpointtheobjectives • Understandthescopeofengagement will wantto: which canbeappliedtodifferent situations.Ingeneral,inanysituationyou You shoulddevelopaframeworkforassessingcaseinterviewquestions answer frameworks andbusinessconceptstoorganizeyour thinkinginaclear, logicalmanner. Where useful,use 9. Present your build yourconfidencethinking“onthefly”whilesimultaneously speaking. what shouldIbuy?”Evenspeakingtoyourselfinfrontof themirrorwill between BankXand Y?” or“I’vegot$50tospendongroceries,so which bankIshouldopenacheckingaccount. What arethetrade-offs you mustassessasituation.Forexample,theymightask,“I’m notsureat Next, trypracticingonfriendsorfamily. Havethemaskquestionsforwhich say isconcise,directandclear. how youbrushyourteeth.Minimize“ums”andotherfillers,sothatwhat something simplelikeexplainingaloudtoyourselfhowchangeatireor feeling confidentthinkingaloud,trypracticingbyyourself.Start with You maynotbeentirely comfortablethinkingoutloud.Soifyou’renot This istheonlywayinterviewercanassessyourperformance. presented toyou,besurethatyouspeakaloudandexplainyourreasoning. and logicalfashion. As youassess,compile,andanalyzetheelements how youthink. Your interviewerwantstoknowthatyoucanreasoninarapid and confidently. The businesscaseisanopportunitytoshowtheinterviewer In ordertonavigatecaseinterviewssuccessfully, youwillneedtoactquickly 8. Think outloud you togetyourownthinkingstraight.” allow youtoconfirmanyassumptionthatyou’remaking,butitwill time toexplainyourreasoning.Notonlywillitimpressinterviewerand in alucidmanner,” explainsoneinterviewer. “That’s whyyoushouldtake of themostimportantthingsconsultantshavetodoispresentcomplexideas ask aboutourentrystrategy. Finally, I’mmakingarecommendation.”“One “First, I’mgoingtodiscusstheMexicanandCanadianmarkets.Second,I’ll interviewer whatapproachyou’regoingtotake.Forexample,youmightsay, After you’veselectedyourapproach,don’t keepitasecret. Tell your interviewer your 7. Layoutaroad mapfor L C I A B R R A E E R R Y Case Strategies Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat the “60secondpitch.”Practicesummarizingyouranswerina minuteorless. taking awhilereachingyourconclusion,interviewermayaskyoufor especially inconsulting,wheretimeisapreciouscommodity. Ifyouare encounter time-pressuredsituationsmanytimesinyourprofessionalcareer, While thisisnodoubtanurbanlegend,itextremelylikelythatyouwill elevator togofromthe1stfloor34thfloor.” him completelyonthemajorfindingsofprojectintimeittook Directors meetingonthe34thfloor. Hetheninstructedtheconsultanttobrief on theelevator, theCEOannouncedthathewasonhiswaytoaBoardof into theCEOofcorporationwhilewaitingforelevator. As theygot consultantworkingforamultinationalcorporation inadvertentlybumped “A faced withthisclassicsituation: uncomfortable withquicklysummarizingyourconclusions,thinkaboutbeing You havelimitedtimein your caseinterviewtomakepoint.Ifyouare conclusions 10. Quicklysummarizeyour frameworks) tohelporganize yourthoughts andimpressyourinterviewer. Porter’s FiveForcesor Value Chain Analysis –(seethechapteroncase Where useful,alsouseadvancedbusinessconceptsandframeworks–suchas paper ifyouwish)foruseatanytime. Capture andpackagethisframework,haveitavailablebymemory(oron framework unconsciouslyasyouattempttogainclarityoverasituation. you feelcomfortable. As youpractice,willfindyourselfdevelopingthis Beyond this,youmaychooseanylineofquestioningorstructurewithwhich • Work towardsarecommendation www.vault.com/consulting Case Strategies Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 13 Customized for: Jessica ([email protected]) 14 Troubleshooting Common Problemsand What ifIGetOneofThoseGroupCaseInterviews? similar toaregularcase.” like you’rehavingagoodtime.Otherwise,theanalysisispretty thoughts orestimates,sayso,butneverbedenigratingrude.Look say. Trytodetermineareasofexpertise.Ifyoudisagreewiththeir thoughts onhowtodividetheanalysis.Listenwhatothershave are told.Onerecentgroupcaseintervieweesuggests,“Presentyour bully yourfellowcandidates,butdon’tsitbackandquietlydoasyou is toshowyourkeenorganizationalandteamworkabilities.Don’t offer,” confirmsoneconsultant.Thekeywithgroupcaseinterviews zero sumgame.“Everyonemaygetanoffer,ornoone One importantthingtorememberisthatthegroupinterviewnota electric blankets intheUnitedStates as3billionisabit high,considering you –“Well, don’t youthinkyourestimation oftheannualconsumption an assumptionthatisblatantly wrong, andtheinterviewermakesthispointto stick toyourguns.”Ontheother hand,ifyou’vedoneananalysisbasedon will startarguing foranotheroutcome. They arejustdoingthattoseeifyou lotoftimes,you’llmakearecommendation,andthe interviewer doomed. “A But, sayrecentinterviewees,don’t besostressedthatyouassumeyou’re “You’re reallyonthespot,andyoukeepthinkingaboutjob.” interviews. “EvenMBAsgetnervous,”saysonebusiness school student. are anotherstory),invariably, consultingcandidatesgetnervousduringtheir Even thoughthecaseinterviewisn’t designedtostressyouout(brainteasers L C I A B R R A E E R R Y progress. candidates tosilentlyobservetheir from thefirmremainwith findings inonehour.Afewconsultants given acaseandaskedtopresenttheir between twoandfivecandidatesare increasing. Inagroupinterview, group caseinterview,itspopularityis few consultingcompaniesthatgavea While Monitorusedtobeoneofavery Case Strategies Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) Thinking AbouttheCase insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat • • • • fall intothesegeneralcategoriesofthoughtprocess: should becomefamiliar. While notexhaustive,manybusinesscasequestions process. Herearesometypesofbusinesscasequestioningwithwhichyou All businesscasequestionsaskyoutodisplayreasoningorlogicalthought this andfollowtheirlead,youwillstillbeintherunning.” interviewers willtrytoleadyoubackthetruepath.Ifcanpickupon it doesn’t necessarilyresultinading,”confirms anotherconsultant.“Most will beimpressedifthecandidatecanrebound.”“Ifyougowrongway, learning frommistakesisabigpartofbeingconsultant. The interviewer assume thatthey’veirrevocablyruinedtheirchancesatthefirm.Butinfact, mistakes caseintervieweesmakeistoscrewuponceandthenfreeze. They during thecaseinterview. Oneconsultantsays:“Oneofthemostcommon In fact,it’s prettynormaltomakeerroneousassumptionsorconclusions flawed conclusion. there areonly275millionpeopleinthecountry?”–don’t blindlysticktoa • Interpret thenumbers argue successfullyforyourconclusion. framework forresolution. There maybeno“correct”answer;youmust elements areindirectdisputeoropposition,youwillbeasked todevelopa Resolve aconflict of theissue. the problem’s piecesintodistinctelementsandarticulatetheoverallnature Break downacomplexsystem various trade-offs betweentwoormorechoices. Weigh thepros andcons categories listedabove. with theinterviewerandthen mostprobablyaddressoneoftheother information. You willbeexpectedtoscopethesituationthroughadialogue Fill intheblanks necessarily ananswertotheproblem). of thisinformation,whichmayinvolvesomebasicconclusions (butnot other quantitativeexhibitsandbeaskedtodeveloparticulate asynthesis – When presentedwithasituation inwhichtwoormore – The interviewerwillprovideyouwithminimal www.vault.com/consulting – You willbepresentedwithaseriesoffinancialor – You willbeaskedtoidentifyanddescribethe – Givenalarge multi-facetedproblem,sort Case Strategies Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 15 Customized for: Jessica ([email protected]) 16 The CaseChecklist • • • • • During thecase • • • • Before thecase goes lessthansmoothly. basic stepsthatcanmake but don’t getsohunguponmemorizingframeworksthatyou forget some You maybeabletotellthedifference betweentheFourCsand Four Ps, cost ofourproduction ofwidgetsisrisingrapidly. Am Iontherighttrack interpreting agraph,say“Iwould interpretthesenumbersasstatingthatthe statement (justthink—theopposite of help. Don’t beafraidtoaskfor know ifyou’veconceptualized thecasecorrectly. Repeat thecaseback. may missimportantpoints. isdescribingthecase. interviewer Take noteswhen your will noteinconsistenciesinstatementsthatyoumake. thin (intheeyesofyourinterviewers). At thesametime,yourinterviewers like totelloronestoryaboutyourgreatleadershipability, it’llwearalittle about, andyourstrengthsweaknesses.Ifyouhaveone jokethatyou interviewers keepnotesonwhattheytalkedtoyouabout, youtalked Be consistent,butnotmonotonous. potential forpoiseandteamworkaswellsheermentalhorsepower. Don’t ignore thechitchat. the calculator, butifyouare,you’llbegladbroughtone. paper, somegraphpaperandacalculator. You maynotbeallowedtouse Bring thefollowingitemswithyou: firms havegonebusinesscasual,youshouldstillwearasuitforyourinterview. Dress appropriately. one-way process.Ifyou’reuncomfortableintheoffice, that’s notagoodsign. surroundings. Take timetoassessyour interviewer waiting,willyoualsokeepclientswaitingaswell? Arrive ontime. L C I A B R R A E E R R Y Time ismoneyforconsultants.Ifyoukeepyour It bearsrepeatingthateventhoughmostconsulting This willbothconcentrateyourmindandletyou the difference betweenagreatcaseandonethat Your interviewerisevaluating youonyour Case Strategies Vault GuidetotheCaseInterview Phrase yourquestionsintheform ofa Jeopardy a pen,watch,pencil,padof Remember, interviewsaren’t a In mostconsultingfirms, .) Ifyou’rehavingtrouble Otherwise, you © 2007Vault Inc. Customized for: Jessica ([email protected]) Specific TypesofBusinessCases insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat • • • • • Falling ProfitsCase categories. three casetypes,orrequireyoutosolveproblemsthatfallintodifferent common typesofbusinesscases.Somecasesmaybecombinationstwoor Many businesscasescanbecategorizedasoneofthefollowingeight • After thecase ac ormouth! Watch your consultant nexttoyouinyourclassmaybeaskedassessyou. even asktheiralumniforassessmentsofcandidates—sothatex-McKinsey sitting inthelobbyoffirm,you’restillonaninterview. Somefirms wait untilyou’reathomewithfriends.Iftakenouttolunchorare where youwentwrong.Consultantslikepeoplewhoaskquestions. the job,”advisesoneconsultant.Remaincalm—andaskforpointerson If youscrew up,don’tpanic. at herblanklyandpleadformercy. here?”) Your interviewerwillbemorelikelytohelpyouthanifstare achieve thebestresultsifyoucitespecificthingsaboutinterview. mix assessment Useful concepts/frameworks: instruments, communication,industryknowledge drilldown fromahigh-levelstatement,understanding of financial What thistypeofquestionisdesignedtoassess: behind acompany’s dropinprofits. In anutshell: Send thankyounotes This typeofcaseasksyoutoexplorethepossiblereasons Never discussacasewhileyou’restillintheoffice — www.vault.com/consulting — thesoonerbetter. E-mailworks,andyouwill “You canmessupaninterviewandstillget Market assessment,BCGmatrix,product Case Strategies Vault GuidetotheCaseInterview — with Analytical ability, L C I A B R R A E E R R Y 17 Customized for: Jessica ([email protected]) 18 Some examplesoffallingprofits cases: Some examplesofnewprofit product introduction: • • • Entering anewmarket • • • New productintroduction omre vrtheInternet. What doyouthink? to marketover Microvilla Software hasanewsoftware applicationtheywould like should theybringittomarket? market.How Joe’s Aircraft Engineshasanewdesignready for time lastyear. What isthecauseofthisdecline? financial statementshowsasteepdeclineinprofits relative tothis Angeles tobuildanewsubwaystation.However, Hill’s latest contractwiththeCityofLos Hill Constructionhasbeenunder profits thisquarter. What hashappened? straight quartersofhighprofit gains,followedbya50%drop in thathashadthree Bunny NewMediaisanInternetcontentprovider Useful concepts/frameworks: industry knowledge understanding ofmarketdynamics, supplychaindynamics, What thistypeofquestion isdesignedtoassess: company’s currentbusiness.) (Usually, thenew productsorservicesaresomehowrelatedtothe should enteranewmarketordeveloplineofproducts orservices. In anutshell: analysis, productportfolioassessment Useful concepts/frameworks: industry knowledge understanding ofbrandmanagement,supplychain,communication, What thistypeofquestionisdesignedtoassess: introducing anewproduct. In anutshell: L C I A B R R A E E R R Y This typeofcaseasksyoutoanalyzewhetheracompany This typeofcaseasksyoutorecommendastrategyfor Market assessment, productportfolioanalysis Case Strategies Vault GuidetotheCaseInterview Four Ps,marketanalysis,competitor Analytical ability, Analytical ability, communication, © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat Some examplesofnewgeographicmarketquestions: • • • Entering anewgeographicmarket Some examplesofnewmarketquestions: custo,i ihr sbs o thecompany? acquisition, ifeither, isbestfor care products. Howwouldyou decidewhich makeshair other acquisition:onemakesfrozen juiceconcentrate,the companies for product portfolioisconsidered mature, andithasidentifiedtwo currently makessoap, detergent, andcannedmeatproducts. Mostofthecompany’s products manufacturer consumer major A analysis? How wouldyougoaboutyour abilitytoprovide thisservice. you toprovide ananalysisoftheir approached Hasmaaboutmanufacturingcalculators.asked high-techcompanies.Oneofthesecompanieshas major several printersfor Hasma Systems,Inc.currently assembleslaser proceed? product inCalifornia.Howwouldyourecommend thecompany and Oklahoma. The company isinterested inintroducing their onecannedchiliproduct in Texas Billy BoBob’s Chiliisthenumber India. Howwouldtheygoaboutassessingthefeasibilityof thisidea? Miller’s Wheat Branwantstointroduce itslineofbranproducts in competitor analysis Useful concepts/frameworks: supply chaindynamics,communication,industryknowledge understanding ofglobalmarketdynamics,geographiccurrencyissues, What thistypeofquestionisdesignedtoassess: should expandintoanewcountryorregion. In anutshell: This typeofcaseasksyoutoanalyzewhetheracompany www.vault.com/consulting Market assessment,supplychainanalysis, Case Strategies Vault GuidetotheCaseInterview — with Analytical ability, L C I A B R R A E E R R Y 19 Customized for: Jessica ([email protected]) 20 • • • Mergers &acquisitionscase Some examplesofsiteselectioncases: • • • case”) Where tolocateanewfacility(“siteselection requirement? inevaluatingthis India. What factorsshouldyouconsider the addedspecificationthatcompanyopenbottlingplantsin demanded thatthecompanysellonlyproducts madeinIndia,with isnegotiatingwiththeIndian government tosellitsproducts inIndia. The governmenthas beveragemanufacturer major A this decision? inmaking operations toMexico. What factorswould youconsider States. Duetocostpressures, thecompanyisthinkingofmoving Yaya Manufacturingassemblesbicyclesexclusively intheUnited What thistypeofquestionisdesignedtoassess: competitor analysis,structural analysis Useful concepts/frameworks: knowledge regulatory environment,supply chaindynamics,communication,industry acquisition wouldbeadvisable. In anutshell: competitor analysis Useful concepts/frameworks: industry knowledge import/export environment,supplychaindynamics,communication, understanding ofglobalmarketdynamics,regulatoryenvironment, What thistypeofquestionisdesignedtoassess: company’s entireoperationsshouldberelocated). should locateanewplantorotherfacility(andsometimes,whetherthe In anutshell: L C I A B R R A E E R R Y The siteselectioncaseasksyoutoevaluatewhereacompany h & caseasksyoutodeterminewhetheraparticular The M&A Market assessment,supplychain analysis, Market assessment,supplychainanalysis, Case Strategies Vault GuidetotheCaseInterview Analytical ability, Analytical ability, © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat oeeape fMAcases: Some examplesofM&A More competitiveresponse questions: Changes ingovernment/regulatory environment • Competitive responsecase • • • them. HowshouldStarstruck Video react? 30daysbefore Starstruck isallowedtooffer Brothers videosfor Warner Brothers whichgivesthemexclusiverightstooffer Warner Video, competitor, hassignedanexclusive dealwith Vader that their Starstruck Video rents andsellsvideotapes. They havejustlearned Pretty Cosmeticsreact? Cosmetics,has just announced theopeningof10stand-alonestores. HowshouldSo competitor, Porter major stores. Their department So Pretty Cosmeticssellsproducts onlythrough major thiswouldbeanappropriate decision? determining whether in toretailer. What factorswouldyouconsider manufacturer cycletimefrom supplychainandreduce their compress their software companyisinterested inacquiringalogisticscompanyto A Describe thewayyoumightassessviabilityofthisdecision. cruiseline. Club Medisconsideringtheacquisitionofamajor What thistypeofquestionisdesignedtoassess: In anutshell: client. country whereacompanyhas operations)andasksyoutoadviseyour regulatory environment(forexample, achangeinthelawsofparticular In anutshell: competitor analysis,structuralanalysis Useful concepts/frameworks: chain dynamics,communication,industryknowledge,marketdynamics your clientshouldreacttoamovebyitscompetitor. This typeofcasepresentsachange inthegovernmentalor competitiveresponsecaseasksyoutorecommendhow A www.vault.com/consulting Market assessment,supplychainanalysis, Case Strategies Vault GuidetotheCaseInterview — with Analytical ability, supply L C I A B R R A E E R R Y 21 Customized for: Jessica ([email protected]) 22 • Detailed 40-pageemployerprofilesontopemployerslikeMcKinsey, • • One-on-oneVaultCaseInterviewPrepwithconsulting experts • TheVaultCaseinterviewPracticeGuide • The onlyjobboardontheWebdedicatedtoconsultingjobs– • Surveysofemployeesathundredsconsultingfirms to theVaultConsultingCareerChannel For moreinformationoncaseinterviewsandconsultingcareers,go BCG, Bain,Accentureandmore Vault ConsultingJobBoard www.vault.com/consulting Some examplesofchangeinenvironment questions: • • foreign nationals.Howwouldyouinvestigate this? importingthemas people withoutaskingthemtoemigrateor They are interested inunderstandinghowtheymightemploythese TSC Software islookingtohire 25software developersfrom Asia. to imposeheavytariffsonallexports. What shouldLaPiñatado? currency upheavalsin Asia havecausedtheMalaysiangovernment La Piñata,Inc.manufactures partysupplies inMalaysia. The recent competitor analysis,structuralregulatoryanalysis Useful concepts/frameworks: regulatory environment chain dynamics,communication,industryknowledge,market What thistypeofquestionisdesignedtoassess: L C I A B R R A E E R R Y Market assessment,supplychainanalysis, Case Strategies Vault GuidetotheCaseInterview Analytical ability, supply © 2007Vault Inc. GUIDE INTERV CASE Customized for: Jessica ([email protected]) career message boards,expertresume reviews,theVaultJob Boardandmore. Visit Vaultat FRAMEWORKS CASE www.vault.com for insidercompanyprofiles, expertadvice, Customized for: Jessica ([email protected]) Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat consideration inbusinesscases. what haveyou. The reasonistoavoid theuseofInternetasa Consultants areincreasinglysettingtheircasesinthepast–1985,1969,or specialnoteabouttheInternetandcases A the FourCs.”Justdoit! solution inandofthemselves.Don’t tell yourinterviewer“I’mgoingtouse We mustremindyouthatcaseframeworks arejustthat–frameworks,nota concepts aswell. (including MBAs)willbeexpectedtohaveastronggraspoftheadvanced limited businessbackground. Those withastrongbusinessbackground expect youtoknowthebasicconceptsandframeworks,evenifhavea levels: basicandadvanced. At aminimum,yourconsultinginterviewerwill We’ve dividedtheconceptsandframeworks youshouldknowintotwo audience –theinterviewerwillappreciateit.” creativity oralterationyoumaketothatmodelislikeseasoning. Your “The modelandconceptsarelikeabasicrecipe,”saysoneconsultant.“Any and businessconceptsthatyouwillfindusefulinstructuringyourthinking. understanding andansweringcasequestions,therearesomeclassicmodels While youarestronglyencouragedtodevelopyourownpersonalmethodfor www.vault.com/consulting Case Frameworks Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 25 Customized for: Jessica ([email protected]) 26 Basic ConceptsandFrameworks with loweroperatingcosts.) run, thefirmcanmovetosmaller offices, oreventoanotherstatecountry nearly allcostsarevariable,even thingslikerent.Forexample,overthelong company can’t changeitsfixedcostsintheshortrun.(Note:Inlong run, decisions intheshortrun,onlyvariablecostsshouldbeconsidered sincethe or falldependingonthecompany’s levelofproduction. When making production levels. Variable costs,ontheotherhand,areexpenseswhichrise much itproduces(forexample,rentandoverhead),sotheydo notvarywith incurred byacompanymonthafterregardlessofwhat itdoesorhow There aretwotypesofcosts:fixedandvariable.Fixed costs arethose Fixed vs.variablecosts prices, atightlabormarket,andsoon). external marketforces(forexample,price-cuttingbycompetitors,risingfuel into newmarkets,marketingstrategy, laborpolicies,andsoon)aswell actions aspossiblecausesforitsdropinprofits(forexample,expansion fallen byhalfthisyear. Why?” You shoulddiscussboththefirm’s own your interviewerasksyou:“Ourclientisamajorairlinewhoseprofitshave both byitsownactionsandexternalmarketfactors.Forexample,let’s say This basicframeworkremindsyouthatacompany’s performanceisaffected Internal vs.externalmarketfactors and thenproceedtodiscussthem. saying, “FirstIwouldlookatthecostsandbenefitsofthiscourseaction,” whether yourclientshouldcloseaplant,youcanbeginanswerby recommendation. Forexample,ifyourinterviewerasksyoutodetermine saying “weightheprosandcons”ofadecisionbeforemaking hypothetical consultingclient.Cost-benefitanalysisisjustanotherwayof Case interviewsoftenrequireyoutomakearecommendation Cost-benefit analysis thinking inthewayaconsultant’s business-mindedclientswouldexpect. without significantbusinessexperience. They allowyoutostructureyour These “starter”conceptsareusefultouchstonesforundergrads andothers L C I A B R R A E E R R Y Case Frameworks Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) Statements Basic OverviewofFinancial insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat statements. The nextfoursectionsprovideageneraloverviewofthe basicfinancial about thenumbersprovidedinfourbasicfinancialstatements. notes tothefinancialstatements. These notesprovideadditionalinformation In addition,acompany’s annualreportisalmostalwaysaccompaniedby need toevaluateacompany. They include: There arefourbasicfinancialstatementsthatprovidetheinformationyou accounting, don’t panic–thesestatements arerelativelyeasytounderstand. comprehension ofbasicfinancialstatements.Ifyouhaven’t studied strong financialconsultingbents,willexpectyoutohavesome Even ifyou’renotanMBA,manyconsultingfirms,especiallythosewith or notmakingaparticulardecision. possible opportunitycoststhatthesubjectofcasemightincurbymaking When analyzingapossibledecisionincaseinterview, trytoexamineall actuality “spent”onthatCDwhateverthreehoursofyourtimeisworth. example, ifyoustandinlineforthreehourstogeta“freeCD,”have to doonething,itmayprecludeyoufromdoingsomethingelse.For Every decisionhasanopportunitycost. This meanssimplythatifyouchoose Opportunity cost spent orarerecoverablecalled“relevantcosts.”) should notbefactoredintoyourdecision-making.(Costswhichareyet made andarenotrecoverable.Sincesunkcostscan’t berecovered,they relatedconceptis“sunkcosts,”orexpenditureswhichhavealreadybeen A • The Statements ofCash Flows • The Statements ofRetained Earnings • The IncomeStatement • The BalanceSheet www.vault.com/consulting Case Frameworks Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 27 Customized for: Jessica ([email protected]) 28 Assets ulig19,000 203,000 Total Assets 26,000 Building Accounts Receivable Cash level ofoperating performance. investors areturnontheirinvestment thatisoftencontingentuponacertain specified amountovera periodoftime.Instead,companiespromise economic resources.However, theydon’t promise topayinvestorsbacka performance ofthecompany. Companiesalso seeknewinvestorstoobtain time. This promisetopayisfixedandnotbasedupon theoperating their businessesandpromisetopaythedebtbackoveraspecified periodof Companies incurdebttoobtaintheeconomicresourcesnecessary tooperate is classifiedasaLiabilityandtheothertype asEquity. one mustbeabletodistinguishbetweenthetwoandunderstand whyonetype Because acompanycanobtainresourcesfrombothinvestors andcreditors, This exampleusesthebasicformatofaBalanceSheet: on thecompany’s resources. owe tocreditors.Equitycanalsobedefinedastheclaimsthatinvestorshave a company, whichequalstheassetsthatcompanyownslessdebtsthey resources. The EquitysectionoftheBalance Sheetpresentsthenetworthof the company. Liabilitiesaretheclaimsthatcreditorshaveoncompany’s earnings. The Liabilitiessectionofthe Balance Sheetpresentsthedebtsof its businessbyincurringdebt,obtainingnewinvestors,orthroughoperating companynormallyobtainstheresourcesitusestooperate are capitalized.) A Equipment. (Bothfinancialstatementsandaccountsin the companyusestooperateitsbusinessandincludeCash,Inventory Assets are point The BalanceSheetpresentsthefinancialpositionofacompanyatgiven The BalanceSheet in time.Itiscomprisedofthreeparts: Assets, LiabilitiesandEquity. L C I A B R R the economicresourcesofacompany. They aretheresourcesthat A E E R R Y Media Entertainment, Inc Media Entertainment, 248,000 December 31,2003 Balance Sheet Since anequity holder’s investmentisnot Case Frameworks Vault GuidetotheCaseInterview Liabilities omnSok10,000 231,000 7,000 Retained Earnings Common Stock Equity Accounts Payable Total Liabilities&Equity © 2007Vault Inc. 248,000 Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat a fire,forexample,wouldbe loss. of one-timeorincidentaltransactions. The destructionofoffice equipmentin operations, itisconsidereda“loss.” Lossesareexpensesincurredasaresult of thebusiness. When acompanyincursanexpenseoutside ofitsnormal all typesofexpensesthatacompany canincurduringthenormaloperations must alsopaysalariestotheindividualswhooperatebusiness. These are company mustpaypeopletobothmakeandselltheproduct. The company it mustbuythematerialsneedstomakeproduct.Inaddition, thatsame time. Forexample,inorderforamanufacturingcompanyto sellaproduct, period oftimetogeneratetherevenuesearnedduringthat same periodof Expenses: usual andfrequent). from peripheralorincidentaltransactions(alleconomicevents thatarenot income wouldbeconsideredagainonsale.Gainsaresources ofincome capital equipmentgeneratesatypeofrevenueforcompany. This type of from othersources.Forexample,sellingabusinesssegmentorpieceof the salewouldbeconsideredrevenue.However, revenue mayalsocome when itisearned.Forexample,aretailerofrollerbladesmakessale, of goodsorservicesthatthecompanyisinbusinesstosellandrecorded Revenue: Net Income. year, onequarter, onemonth)andiscomprisedofRevenues,Expenses, results ofoperationsabusinessoverspecifiedperiodtime(e.g.one resources isthroughitsownoperations. The IncomeStatement presentsthe thirdwayinwhichacompanycanobtain debt andseekingnewinvestors. A obtains theeconomicresourcesnecessarytooperateitsbusiness:incurring We havediscussedtwoofthethree waysinwhichacompanynormally The IncomeStatement accounted forintheEquitysectionofBalanceSheet. equity holdersandareclassifiedasLiabilities,whileinvestments resources. Debtsowedtocreditorsaremoreseniorthantheinvestmentsof business, includingtheclaimsthatcreditorsandequityholdershaveonthose To summarize,theBalanceSheetrepresentseconomicresourcesofa accountant wouldsay, more“senior”thanequityholdings. to-pay” elementmakesloansmadebycreditorsaLiabilityand,asan company performswell,thereturntoinvestors guaranteed, itismoreriskyinnature Revenue isasourceofincomethatnormallyarisesfromthesale Expenses arethecostsincurredbyabusinessoverspecified www.vault.com/consulting Case Frameworks Vault GuidetotheCaseInterview hnaloanmadebycreditor. Butifa than — with is oftenhigher. The “promise- L C I A B R R A E E R R Y 29 Customized for: Jessica ([email protected]) 30 company hasanetlosswhentotal expensesexceedtotalrevenues. earned netincomewhenits total revenuesexceeditsexpenses. A companyhas the profitabilityandcreditworthiness oftheenterprise. A operations; itprovidesinvestors andcreditorswithinformationtodetermine To summarize,theIncomeStatement measures thesuccessofacompany’s Here isanexampleofIncomeStatement: company suffered aloss(called“netloss”). indicates aprofit,whilenegativenetincomenumberthat positivenetincomenumber specified periodoftime,equalsitsnetincome. A Net income: more thanoneaccountingperiod. classified asanasset,itwillprobablybeusedtomanufactureaproductfor the otherhand,purchaseofapiecemanufacturingequipmentwouldbe they alreadyprovidedduringthemonthwouldbeconsideredexpenses.On period. Forexample,monthlysalariespaidtoemployeesforservicesthat economic benefittothecompany, whileexpensesonlyrelatetothecurrent Assets vs.expenses: when isitconsideredanexpense? resources (i.e.,cashordebt).So,whenisapurchaseconsideredanasset,and Incurring expensesandacquiringassetsbothinvolvetheuseofeconomic Revenues tlte xes 700 (57,000) 100,000 (7,000) (17,000) (33,000) Utilities Expense Rent Expense Salaries and Wages Expenses Services Billed Net Income L C I A B R R A E E R R Y The revenueacompanyearns,lessitsexpensesduring (For theyearendedDecember31,2003) Media Entertainment, Inc Media Entertainment, purchaseisconsideredanassetifitprovidesfuture A Income Statement Case Frameworks Vault GuidetotheCaseInterview 43,000 © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat distributions toshareholders.) more inclinedtoinvestin a companythatpaysquarterlydividend resources. Conversely, aninvestorinterestedinreceivingcurrentincomeis back” itsresourcesintothecompanyforpurposeofgenerating additional returns oncapitalmaybemoreinclinedtoinvestinacompany that“plows strategy ofacompany’s management. An investorinterestedingrowthand (Investors canusethisinformationtoaligntheirinvestmentstrategy withthe shareholders, ordistributingcurrentandaccumulatedincome to shareholders. retaining partorallofitsearnings,distributingcurrent incometo may be“plowingback”thecompany’s netincomeintothebusinessby about whatmanagementisdoingwiththecompany’s earnings.Management in otherfinancialstatements.Butitdoesprovideadditional information Retained Earningsdoesn’t provideanynew informationnotalreadyreflected As youcanprobablytellbylookingatthisexample,theStatement of Here isanexampleofabasicStatement of RetainedEarnings: account. NetlossesanddividendpaymentsdecreaseRetainedEarnings. Statement ofRetainedEarnings.NetincomeincreasestheEarnings announces incomeordeclaresdividends,thisinformationisreflectedinthe Earnings accountfromthebeginningtoendofyear. When acompany The Statement ofRetainedEarningsisareconciliationthe The StatementofRetainedEarnings Plus: Retained Earnings,January1,2003 eandErig,Dcme 31,2003 Retained Earnings,December Less: e noefrteya 43,000 Net incomefortheyear iied elrd(12,000) Dividends declared (For theyearendedDecember31,2003) Statement ofRetainedEarnings Media Entertainment, Inc Media Entertainment, www.vault.com/consulting Case Frameworks Vault GuidetotheCaseInterview — with $ 231,000 L C I $200,000 A B 243,000 R R A E E R R Y 31 Customized for: Jessica ([email protected]) 32 • • • based onthreetypesofactivity: inflows andoutflowsduringtheperiodisdividedintothreesections Statement ofCashFlowspresentsadetailed summaryofallthecash receive cashinJuly, thesalewouldstillbeconsideredJulyrevenue. The in July—butdidn’t paythebilluntil August. Although thestoredidnot say youwentshoppingandboughtanewmountainbikeonyourcreditcard using economicresourcesdoesn’t alwaysinvolvecash.Forexample,let’s use ofcashgeneratedduringitsoperations. That’s becauseobtainingand Income Statement doesnotprovideinformationabouttheactualsourceand economic resourcesinvolvedintheoperationofacompany. However, the Remember thattheIncomeStatement providesinformationaboutthe The StatementofCashFlows dividends aswellissuingpaymentofdebtorequity liabilities andequityintheBalanceSheet;itincludespaymentof Cash flowsfrom financingactivities: investments the BalanceSheetandincludespurchasesaleofequipment Cash flowsfrom investingactivities: transactions involvedincalculatingnetincome Cash flowsfrom operatingactivities: L C I A B R R A E E R R Y Case Frameworks Vault GuidetotheCaseInterview involves itemsclassifiedasassetsin includes thecasheffects of involves itemsclassifiedas © 2007Vault Inc. Customized for: Jessica ([email protected]) Cash attheendofyear Cash atthebeginningofyear Net increase (decrease) incash Cash flowsprovided from financingactivities Cash flowsprovided from investingactivities Cash flowsprovided from operatingactivities insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat Net cashprovided byfinancingactivities Net cashprovided byinvestingactivities Net cashprovided byoperatingactivities amn fDvdns(12,000) 10,000 (19,000) 35,000 Issuance ofCommonStock 33,000 Payment ofDividends 10,000 7,000 (26,000) Sale ofLong-Term Investment Purchase ofBuilding Increase in Accounts Payable Increase in Accounts Receivable Depreciation Expense Net Income • Investments, Accounts Payable, andotherassetliabilityaccountsfrom • DividendsfromtheStatement ofRetainedEarningsisshowninthesection • NetincomefromtheIncomeStatement isshowninthesection“cashflows gets itsinformationfromallthreeoftheotherfinancialstatements: As youcantellbylookingattheaboveexample,Statement ofCashFlows Flows: Here isanexamplethatshowsthebasicformatofStatement ofCash the BalanceSheet areshowninallthreesections. “cash flowsfromfinancingactivities.” from operatingactivities.” For theyearendedDecember31,2003 Media Entertainment, Inc Media Entertainment, Statement ofCashFlows www.vault.com/consulting Case Frameworks Vault GuidetotheCaseInterview — with 16,000 24,000 203,000 165,000 (2,000) 38,000 L C I A B R (9,000) R A E E R R Y 33 Customized for: Jessica ([email protected]) 34 Advanced ConceptsandFrameworks P =-C NPV flows associated withthefactoryare asfollows: Hernandez mustcalculatethenet present valueoftheinvestment.Thecash company shouldgoaheadand buildthefactory. To makethis decision, uses adiscountrateof12percent. Hernandezmustdeterminewhetherthe of Year 4,thecompanywouldthen sellthefactoryfor$200,000.Thecompany 1, $200,000inYear 2,$400,000in Year 3,and$400,000inYear 4. At theend forecasts thatthefactorywillgenerateafter-tax cashflowsof$100,000inYear in Ohiothatwillrequire aninitialinvestmentof$1million. Thecompany automobile manufacturer. The companyisconsideringopeninganewfactory Example: investment. The followingexampleshows howtocalculateNPV. of theseriescashflowsgeneratedbyinvestment,minusinitial The netpresentvalue(orNPV)ofaninvestmentissimplythe investments thathavepositivenetpresentvalues. net presentvalueofeachproposedinvestmentandmakingonlythose budgeting decisions. The consultantmakessuchdecisionsbycalculatingthe factory? Investinanewproject? These types ofdecisionsarecalledcapital should thecompanybuyacertainpieceofequipment?Buildparticular on adailybasisiswhethertoundertakeproposedinvestment.Forexample, Perhaps themostimportanttypeofdecisioncompanymanagersmustmake Net presentvalue an undergraduate wouldhave.Herearesomecommonlyusedcaseconcepts. interviewers willexpectyoutohaveamoredetailedtakeonyourcasethan MBAs andothercandidateswithbusinessbackgrounds,takenote– L C 0 I A B + R R Jim HernandezistheCFOofWestern ManufacturingCorp.,an A E E R R Y 1+r (1+r) (1 +r) C hr:C Where: 1 + C 0 C Discount rate r = t 2 InitialInvestment = Cashflowinyeart = Case Frameworks Vault GuidetotheCaseInterview 2 + (1 +r) C 3 3 +...+ (1 +r) C t © 2007Vault Inc. t Customized for: Jessica ([email protected]) $10000+$0,0 2000+$0,0 + $400,000 +$400,000 +$200,000 +$100,000 -$ 1,000,000 P =-$1,000,000+100,000200,000400,000600,000 NPV insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat er0Ya Ya er3Year 4 Year 3 Year 2 Year 1 Year 0 investment. calculating netpresentvalues. The discountratemayvarydependingon the consultant’s jobistodetermineanappropriatediscountrate(r)usewhen In theaboveexample,weassumedagivendiscountrate.However, partofa The CapitalAssetPricingModel(CAPM) investment ismakingapositivenetcontributiontothecompany. As longastheconsultantfollowsthisrule,shecanbeconfident thateach investment byapplyingthenetpresentvaluerule: ofaproposedinvestment,shethendecideswhethertoundertakethe NPV Note fromtheexampleabovethatonceconsultanthasfiguredout The netpresentvaluerule = -$85,252 = -$1,000,000+$89,286$159,439$284,712$381,311 Make onlythoseinvestmentsthathaveapositivenetpresent value. decides thatthefactoryshouldnotbebuilt. Since thefactoryhasanegativenetpresent value,Hernandezcorrectly ofthefactoryasfollows: Hernandez thencalculatestheNPV www.vault.com/consulting 1.12 (1.12) Case Frameworks Vault GuidetotheCaseInterview — with 2 (1.12) + $600,000 +$200,000 3 L C I A B R R (1.12) (Sell Factory) A E E R R Y 4 35 Customized for: Jessica ([email protected]) 36 the investmentwillbe: of Therefore, thediscountrate Apelbaum willusewhencalculating the NPV 500stockindexis12percent. yields 7percent, whilethereturn ontheS&P U.S.Treasury noteofcomparable maturitycurrently investment is1.5. A the riskinessofproposed venture, Apelbaum determines thatthebetaof to determinewhetherthecompanyshouldmakeinvestment. After studying oftheproposed venture inorderofficer, Apelbaum, wantstocalculatetheNPV that wouldmanufacture andmarketcarbonfilters.Shen’s chief financial Example: 500). a well-diversifiedportfolioofstocks(forexample,S&P market rateofreturnisthecompanycouldreceive byinvestingin a risk-freeinvestment(forexample,byinvestinginU.S. Treasury bills). The The risk-freerateofreturnisthecompanycouldreceive bymaking discount rate(r): can use Once theconsultanthasdeterminedbetaofaproposedinvestment,she CAPM percent). the An investmentwithbetaof2willbetwiceasriskythemarket(sowhen percent, thevalueofinvestmentwillonaveragefall10percentaswell). the marketasawhole(so,forexample,whenmovesdown10 market asawhole. An investmentwithabetaof1hasthesameriskinessas is measuredbyits“beta”(ß),whichmeasuresriskinesswhencomparedtothe is determiningtheinvestment’s riskiness. The marketriskofaninvestment The firststepinarrivingatanappropriatediscountrateforagiveninvestment Beta market falls10percent,thevalueofinvestmentwillonaveragefall20 L the Capital Asset PricingModel(CAPM)tocalculatetheappropriate C I A B Shen, Inc.,acoalproducer, is consideringinvestinginanewventure R R A E E R R Y hr: = discountrate = Where: r r r = Betaoftheinvestment = ß r = r r = m f Marketrateofreturn = Therisk-freerateofreturn = f + ß(r Case Frameworks Vault GuidetotheCaseInterview m – r f ) © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat • Detailed 40-pageemployerprofiles ontopemployerslikeMcKinsey, • • One-on-oneVaultCaseInterviewPrepwithconsultingexperts • TheVaultCaseinterviewPracticeGuide • The onlyjobboardontheWebdedicatedtoconsultingjobs– • Surveysofemployeesathundredsconsultingfirms to theVaultConsultingCareerChannel For moreinformationoncaseinterviewsandconsultingcareers,go BCG, Bain,Accentureandmore Vault ConsultingJobBoard www.vault.com/consulting value toselecttheappropriatediscountrate. overview ofhowconsultantsincorporatethenotionaninvestment’s market the discountratetouseintheircash-flowanalysis,itdoesgiveyouan Although thisisanoverlysimplifieddiscussionofhowconsultantscalculate www.vault.com/consulting =.07+1.5(.12–.07) = r 14.5% = .145 = .07+.075 = Case Frameworks Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 37 Customized for: Jessica ([email protected]) 38 power dosuppliersbear? How muchbargaining Suppliers there’s ahighriskofpotential newentrants. with onecopierandemployee. Therefore, barrierstoentryarelow, so stores arenotveryexpensiveto open–youcanconceivablyacopystore Potential entrants: attractive isthecopystore market? Take, forexample, entryintothecopystore market(likeKinko’s). How companies evaluateindustryattractiveness. Consultants frequentlyutilizePorter’s Five Forcesasastartingpointtohelp Five Forces,acompanycanbegintodevelopthoughtfulanswer. itself, “Istheindustrywe’reenteringorexitingattractive?”ByusingPorter’s divests productlines,acquiresnewbusinesses,orsellsdivisions,itshouldask attractiveness ofanindustry. Beforeanycompanyexpandsintonewmarkets, Competitive Strategy Developed byHarvardBusinessSchoolprofessorMichaelPorterinhisbook Porter’s FiveForces L C I A B R R A E E R R Y What isthethreatofsubstitute What isthethreatofnewentrants intothemarket?Copy , thePorter’s FiveForcesframeworkhelpsdeterminethe What rivalryexistsamong What isthethreatofnew entrants intothemarket? present competitors? products orservices? Competition Substitutes Potential Entrants Case Frameworks Vault GuidetotheCaseInterview power dobuyershave? How muchbargaining Buyers © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat to beanattractiveone. differentiate themselves.Butoverall,thecopystoreindustrydoesnotappear services, suchascreatingcalendars orstickers,mayhelpcopystores Value-added services, such aslatehours,convenientlocations,oradditional enter. Advances intechnologymayreducethesizeofcopy storemarket. inexpensive tosetup;andthemarketisrelativelyeasyfor competitorsto commodity market.Consumersareveryprice-sensitive; copy storesare From thisanalysis,youcanascertainthatcopystoresare something ofa such asexpandinghoursto24-hourserviceandoffering freedelivery. printing contracts.Stores continuetoaddnewfeaturescompeteaswell, often competeonpriceandarewillingto“underbid”one another towin Competition: services. for thetimebeing,thereisstillrelativelystrongdemandcopystore hard copywillnowbepostedonthe Web orsentthroughe-mail.However, stores aswell,becausesomedocumentsthatformerlywouldbedistributedin still usetheservicesofacopyshop. The Internetisapotentialthreattocopy large-scale projects,mostindividualsand employeesatsmallcompanieswill companies willnormallyhavetheirowncopyingfacilities.However, for machines havethecapabilitytofulfillcopyfunctionsaswell.Large jobs, morepeoplenowpossesscolorprintersathome. Additionally, fax Threat ofsubstitutes: power. have littlebargaining power. Suppliersinthissituationhavelowbargaining collating, andsoon)arerelativelylowaswell,meaningthatemployeeswill employees needtooperateacopyshop(forbasicservices,likecopying, paper pricesmaybeontherise,copiercontinuetofall. The skilllevel power: Supplier locations arerelativelyinconvenient. customers maysimplypatronizethecopystoreclosesttothemifother that arewillingtostayopen location andhours.On threatening totaketheirbusinesselsewhere. The onlymitigatingfactorsare have theleveragetobargain withcopystoreownersonlarge printjobs, usually headforthecheaperstore.Becausecopystoresarecommon,buyers that charges 5centsacopyandstorethatcharges 6centsacopy, buyerswill customers arerelativelypricesensitive.Betweenthechoiceofacopystore power: Buyer Competition withintheindustryappearstobeintense.Stores How muchbargaining powerdobuyershave?Copystore How muchbargaining powerdosuppliers have? While the otherhand,priceisnotonlyfactor. Copystores What istheriskofsubstitution?Forbasiccopying www.vault.com/consulting 24 hoursmaybeabletocharge apremium,and Case Frameworks Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 39 Customized for: Jessica ([email protected]) 40 industry muchlessattractiveto apotentialnewcompetitor. them theabilitytotakePIEfrom thediamondwholesalersandmakesthat The concentrationofthesuppliers andtheirpowertocutoff supply gives they takethediamondstomarket themselves,cuttingoutthemiddlelayers. one ofthelargest players,haspushedtowardsaverticalstructureinwhich few companiescontrolamajorityofdiamondssoldonthemarket. DeBeers, depends ondiamondminingandpurchasingcartelstoprovide itsinputs. A PIE theycancapture.Forexample,thediamondwholesaling industry how muchleveragesupplierscanhaveovertheindustryand muchofthe Concentration ofsuppliersandinternalcompetitionamong them determine may includelaborunionsandrawmaterialsproviders, among others. Suppliers areprovidersoftheinputstoindustrybeingevaluated. This power Supplier such asscaleorbrandingsomesort. share ofprofitsunlesstheycancreatesometypebarriertonewentrants a smallcrew, meanthatincumbentfisheriesarenotlikelytocapturealarge undifferentiated products,suchasoceanfisheries thatonlyrequireaboatand by newcompetitors.Forexample,industrieswithlowcostofentryand and scalebrandingofexistingcompetitorspreventtheerosionprofits Barriers toentrysuchashighcapitalcosts,proprietarytechnologyorpatents, Potential entrants opportunity cost. significant value,asshowninthepricescustomersarewillingtopay, atalow designer clothingindustryhavesignificantPIEsincetheyareabletocreate installation costsandthereforelowPIE. The diamondindustryandthe cells havehighresearchanddevelopmentaswellproduction but alsoanextremelyhighopportunitycosttoproducegoods.Photoelectric Some industrieslikesolarpowerhaveahightotalvalueaddtotheconsumer, PIE = Total valueaddedbytheindustry– Total costtoproduce thegoods industry value. share ofprofitsthatthegroupincumbentfirmsretainsfromtotal enjoy Potential IndustryEarnings(PIE)totheanalysisevaluateafirm’s abilityto Joel PodolnyrefinedtheFiveForcesModelandintroducedconceptof In their2001text PIE –ThenextgenerationofPorter’sFiveForces its shareoftheindustryprofits. This additionishelpfulinassessingthe L C I A B R R A E E R R Y Strategic Management Case Frameworks Vault GuidetotheCaseInterview , GarthSaloner, Andrea Shepardand © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat direction inwhichacompany should go. industry anditscustomers,youcanmakespecificrecommendations aboutthe being incompetitiveindustries.Byidentifyingwhatismostimportant foran some companiesareabletoachieveandmaintainmarketleadership despite In 1992,theconceptofvaluedisciplineswereintroduced to explainhow Value disciplines overselling theirquotatomaximizeprofitsoverthegoodof whole. it hasbeenthevictimoffreeriderproblem,withsomecountries secretly able todisciplinethemarketandraiseoilpricesbylimitingoutput, buteven true. Forexample,OPEC,thecartelofoilrichcountries,hasrecentlybeen are somewhatdifferentiated. However, theserulesofthumbarenotalways portion ofthemarketissplitamongoneorafewlarge playersandproducts Internal competitionisusuallylessintenseinindustrieswhichalarge Internal competition acceptable substitutes. phones; today, however, cellularphonesandcallingcardsareconsidered PIE. Forexample,atonetimetherewerefewsubstitutestopublicpay to bypasstheindustryproductscompletelyandlowersizeofoverall The availabilityofacceptablesubstitutescancausebuyersandendcustomers Substitutes because therearesubstitutesfortheirproducts. smaller manufacturersarenotabletocapturealarge portionofthePIE buyers canleveragetheirstrengthintolowerwholesaleprices. As aresult, successful andanunsuccessfulproductlaunch.Knowingthis, Wal-Mart making itonto Wal-Mart’s shelvescanmeanthedifference betweena small andmediumsupplierssimplybecauseoftheirsizescale.Not of manyconsumergoodscompanies. They haveagreatdealofleverageover buyer strength.Forexample, Wal-Mart and Target areverylarge customers among buyersandtheirinternalcompetitivenessarebothdeterminantsof buyers cantakeawaysignificantPIEfromincumbents.Concentration Buyers aretheoutletsforproductsofindustry. The powerofthe power Buyer www.vault.com/consulting Case Frameworks Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 41 Customized for: Jessica ([email protected]) 42 Opportunities / Threats Strengths / Weaknesses corporations. leisure components,andisoften thein-housetravelagencyformajor planning servicesintheU.S. Itspecializesinbusinesstravel,withsome Let’s taketheexampleofCarlson Wagonlit Travel, oneofthelargest travel weaknesses andthreats. capabilities tocapitalizeonnewopportunities,whilemitigating risksdueto isinassessinghowacompanycanuseitssuperior The valueofSWOT environment. similar tothe3Cs,foruseinanalyzingacompanywithinitsbusiness Strength-Weakness/Opportunity-Threat Analysis isanother general tool, SWOT Analysis achieve success. The threevaluedisciplinesare: Companies whosurpasscompetitorsinoneofthethreevaluedisciplinescan needs. pursues leadingtechnologyandproductdesigntomeetitscustomer the technologyandproductcurves.Forexample,Nokiacontinuously Companies thatexhibitproductleadershipareinnovators,wellaheadof 3. Product leadership customers byextensiverecommendationsandtailoredmarketing. example ofacompanythatcreates“marketsegmentone”forits painpointsandanticipatingtheirneeds. Amazon.com isone customers’ Companies whopursuecustomerintimacyfocusonunderstandingtheir intimacy 2. Customer a relativelylow used itsmanufacturingprocessleadershipto operations asthemeanstomarketleadership.Forexample, Toyota has Companies whoemploythisvaluedisciplinefocusonefficient internal 1. Operationalexcellence L C I A B R R A E E R R Y cost. Used toevaluatethecompany’s environment Used toanalyzethecapabilitiesofcompany Case Frameworks Vault GuidetotheCaseInterview produce highqualitycarsat © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat light ofthesethreatswillbekeytoitslong-termsuccess. also facesachangingindustryandrevenuemodel.Itsability toevolvein Wagonlit hasmanyimportantstrengthsthatitcanleveragegoingforward,but analysis,Carlson the positionofacompany. BasedontheaboveSWOT frameworkissimple toemployandusefulintryingunderstand The SWOT and seekoutthebesttravelplansontheirown. This trendwillencourageendcustomerstobypasscorporate travelagencies a portionofthesavingsforbookinglower-priced, restrictedtraveltickets. some companieshavebeenexperimentingwithallowingemployees toretain without theassistanceofCarlson Wagonlit anytimeofday. Additionally, planning, corporateemployeescannowfindtheirownfaresandschedules What marketthreatsdoesthecompanyface? With thedawnofInternettravel Threats planning servicesforwhichuserswillpayapremium. leisure travel. Additionally, itcanrefocusonmorehigh-pricednichetravel- brand canbeleveragedintoothervalue-addedservicesforbusinessand What opportunitiesdoesthecompanyhave? The installedbaseandstrong Opportunities services. This canexertagreatdealofpricepressureonCarlson’s othervalue-added has majorcorporatecustomerswhoareseekingtolowertheirtravelexpenses. commissions, whichhavebeendecreasinginrecentyears. Also, thecompany with theeconomy. Itsbusinessmodelisdependentonairlineticket What arethecompany’s weaknesses?Carlson Wagonlit’s successfluctuates Weaknesses capabilities andanetworkofknowledgeableemployeestodeliveritsproduct. and multinationalpresenceareallstrengths. Also, ithasinstitutional base withinthecorporationsofworld.Itsstrongbrand,formidablesize What arethecompany’s strengths?Carlson Wagonlit hasamajorinstalled Strengths company). The frameworkisaMcKinseyfavorite.Itemphasizes thatall of acompany(i.e.,todetermine thesourcesofcompetitiveadvantagefora The SevenSFrameworkisauseful frameworkforanalyzingthe“internals” The SevenSFramework www.vault.com/consulting Case Frameworks Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 43 Customized for: Jessica ([email protected]) 44 Dollars or serviceis. If you’reconsideringaproductcase,figureouthow“mature”your Product lifecyclecurve copy thecomplexwebofinterrelationshipsbetweenthem. duplicate anyoneofthe“S”attributes,butitwillbenearlyimpossibleto competitive advantage. The logicisthatcompetitorsmayfinditpossibleto seven “S’s” areneededtoforma“network”thatreinforcesandsustains L C competition. with littleorno and createneed define product engineering, on R&Dand Concentrate I mrigGot auiyDeclining Maturity Growth Emerging A B R R A E E R R Y Hardware • Systems • Structure • Strategy Sales entrants. expect new on quality, growth, focus manage rapid marketing, Emphasize Profits Product LifeCycle Strategic Focus Case Frameworks Vault GuidetotheCaseInterview intensifies. competition Prices falland and cost. manufacturing Focus on Software • Shared Values • Style • Skills • Staff player. or aniche being low-cost exit, focuson competitors low-share High-cost and © 2007Vault Inc. Time Customized for: Jessica ([email protected]) Strategy Markets Typical Capabilities Required Examples Timing Market insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat differentiation. provider orcarvingoutahigher-end marketniche–whatconsultantscall Here’s onewaytothinkaboutthechoicebetweenbeinglowest-cost Strategy tool/frameworkchart Low Cost temporary services transportation, and Grain, gold,floppydisks, markets Mature anddeclining differentiation brand awarenessor or othermarketswithlittle Commodity, low-growth, overhead facilities andlean dedicated) manufacturing Efficient (large and www.vault.com/consulting Case Frameworks Vault GuidetotheCaseInterview — with Differentiation manufacturing, etc.) (strong marketing,flexible based purchasecriteria deliver onnon-priced- Ability toidentifyand consulting attire, wine,andstrategy Breakfast cereal,formal and decliningmarkets preceding market)growth Emergent (growsoutof delivery, features,etc.) price factors(quality, purchase basedonnon- Markets wherecustomers L C I A B R R A E E R R Y 45 Customized for: Jessica ([email protected]) 46 the caseyouarepresented. competitor. You maywanttosuggestapromotional strategyinthecontextof maintain consumerawareness,opennewmarkets,ortarget aspecific consumers andsuppliers,celebrityappearances,etc.)canbeused tocreateor category. Promotionalactivity(includingadvertising,discountingto marketplace, itisdifficult foranyoneproductorservicetostandoutina With somuchnoiseintoday’s consumer(andbusinesstobusiness) Promotion competition. determine theplacementofproductorservicecomparedtoits over itscompetition.Inthecontextofabusinesscase,youmaywantto consume, orifitmakestheconsumermoreawareofproductservice superior toitscompetition,ifitiseasierormoreconvenientforpeople The physicallocationofaproductorservicecanprovideanadvantageifitis Position/Place marketplace, basedonthecasedetailsyouhavebeengiven. not muchofabenefit. Try toteaseoutthevalueofproductin Or itmaysimplybeanextensionofalreadyexistingproducts,andtherefore product orservicethatsatisfiesaparticularintersectionofcustomerneeds. The productorservicemayprovideastrategicadvantageifitistheonly Product you. Consider howpricingisbeingusedinthecontextofcasepresentedto or itcanbesetslightlyabovemarketaveragetoconveya“premium”image. For example,itcanbepredatory(setverylowtoundercutthecompetition), The priceafirmsetsforitsproductorservicecanbestrategicadvantage. Price to bothproductsandservices. The FourPsconsistof: This isausefulframeworkforevaluatingmarketingcases.Itcanbeapplied The FourPs L C I A B R R A E E R R Y Case Frameworks Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat for whatreason?Isthecompany progressiveaboutitswastedisposal,quality company. Are thereanylegalactionspending againstthecompany?Ifso, Evaluate thededication,trackrecord, andoverallconsumerperceptionofthe Character situations ifyouthinkitisappropriate. (although itcanbeappliedtoindividuals). You mayemployitinother This frameworkismostlyappliedtofinancialcasesand tocompanies The FiveCs Capabilities Cost Competition Customers and forindustryanalysis. The FourCsareespeciallyusefulforanalyzingnewproductintroductions The FourCs What istheproductionsystem? How istheclientorganized? What resourcescantheclientdrawfrom? Will increasedproductionlowercost? What istheclient’s experiencecurve? What kindofeconomiesscaledoestheclienthave? Do competitorshaveanymarketadvantages? What isitscostposition? What isitsstrategy? What isitsmarketposition? What isthemarketshareofclients? What arethepurchasecriteriathatcustomersuse? How isthemarketsegmented? www.vault.com/consulting Case Frameworks Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 47 Customized for: Jessica ([email protected]) 48 alternatives ifthatcompanyhasnodiscernibleadvantage. recommend leverage itscompetitiveadvantagemore aggressively or meet thecriteriamentionedabove. You maysuggestthatthecompany thoseuniquequalitiesthatacompanypossessesandidentifyany for In evaluatingbusinesscasesusingthefiveCsframework, you shouldlook case, theseadvantagesareusuallydefensibleandnoteasilycopied. other assetsthatcreateanadvantageovermarketplayers. Whatever the product/service atalowercost,charge a market premium,oranynumberof an unparalleledsetofbusinessprocesses,theabilitytoproducea This istheuniqueedgeacompanypossessesoveritscompetitors.Itcanbe Competitive Advantage company/industry inhabits. you in market characterized?Isitemerging or mature? These questionscanassist What istheshort-andlong-termgrowthpotentialinindustry?How What isthecurrentbusinessclimatecompany(anditsindustry)faces? Conditions healthy areitscashflows,revenues,anddebtloadrelativetocompetition? What isthecompany’s costofcapitalrelativetoitscompetitors?How Capital What aboutproductionoverseas? improve thetechnologyinexistingplants,orcloseunderperformingplants? below capacity, andforwhatreasons? Are thereplanstoaddnewplants, If youaredealingwithamanufacturingentity, areitsfactoriesat,above,or Capacity would thishaveonthecaseyouareevaluating? of lifeforitsemployees,andcharitablecontributions? What sortofimpact L C evaluating thefactsofcaseagainstenvironmentthat I A B R R A E E R R Y Case Frameworks Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat • Cost ofgoodssold(Howmuchdoesitcosttomanufacturethefruit • cloudberry juice?) • Researchanddevelopment(Willmangoreallytaste goodwith following valuechainelements: For example,amanufactureroffruitjuicemight havethe per-volume purchaseslower than,forexample,thoseofTropicana?) Is thecurrencycrisisinIndonesia makingpapayaverycheap?Are juice? IsthereafrostinFloridathatdrivesupthecosts oforanges? of theprocessesaredefensiblecompetitiveadvantages. company’s overallbusinessprocessessetandthendetermineifoneormore In thecontextofabusinesscase,youcanusethisframeworktoidentify retain highermarketsharethanitscompetitors. in question toperformatalowercost,charge apremiuminthemarket,or set canbe is thatcompany’s competitiveadvantage,or“valuechain.”Sometimesthis “value-added” qualitiesonlythecompanyunderscrutinypossesses. This set by othercompetitors,butthereisusuallyauniquesubsetthatrepresentsthe perform onasetofrawmaterialsorotherinputs.Mostcanbeeasilycopied deconstructing thevarious“changes”acompany’s businessprocesses Value chainanalysisattemptstoidentifyacompetitiveadvantageby not existatall. anticipating marketconditions. Thus, these advantagesarefleeting,ormay manufacturing lightning-fast defensible strategies.Buttoday, businessesaregloballyconnectedby configuration, orhavingexclusivityinamarketwereoncelong-term products/services. Beingfirsttomarket,havingauniqueformulaor In mostcases,acompetitiveadvantageisonlytemporaryformanyoftoday’s less thecostofitsproduction,asdeterminedbyvaluechain. The totalmargin ofprofitwillbethevalueproductorservicetobuyers, identifying wherethatcompanyactuallyaddsvaluetoaproductorservice. This approachinvolvesassessingacompany’s overallbusinessprocessesand Value chainanalysis copied, butauniquesetofcircumstancesmaystillallowthecompany technologies aregettingbetterandfasteratreactingto communications andknowledge-sharingsystems, www.vault.com/consulting Case Frameworks Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 49 Customized for: Jessica ([email protected]) 50 • Manufacturing (Howmuchdothosejuicepulperscost?Howoften • Packaging andshipping(Howmuchdoesthatnewbanana-shaped do factoriesneedtobereengineered?) costs ofshipping?) container cost?Aremanybottleslostintransit?Whatarethefixed costs foreachpartoftheprocess (includingorder-taking andshipping) processing costswiththoseofother mail-ordercompanies,breakingdownits wants toreduceitsorder-processing costs,itwouldwanttocompareitsorder areas wheretheclientcancut costs. Forexample,ifamail-ordercompany order toevaluatewhetheryour clientisoperatingefficiently, ortoidentify means researchingwhatothercompaniesintheindustryaredoing, usuallyin implementation engagements)is“benchmarking.”Benchmarking basically commonlyusedconceptinconsulting (especiallyinoperationsand A Benchmarking and“bestpractices” manufacturing andmarketingbeverages,notinmanagingrestaurants. restaurant operationsafteritconcludedthatitsexpertise wasin that arenotpartoftheir“core”business.Forinstance,Pepsi spunoff its Companies shouldseriouslyconsidersellingorspinningoff businessunits scanners, andotherdocument-handlingequipment.) outsourcing formajorcorporations,aswellofthemarketfaxmachines, advantage ofthemorelucrativebusinessdocumenthandlingand company,” ratherthanamakerofcopymachines,itwasabletotake marketplace. (Forinstance,whenXeroxdefineditselfasa“document competencies broadlyinordertobeflexibleenoughadaptchangesthe firmshoulddefineitscore should beidentifyingitscorecompetencies. A When restructuringorreengineering,oneofthestartingpointsforacompany it isverygoodat(thatis,itscorecompetenceorcompetencies). “Core competencies”istheideathateachfirmhasalimitednumberofthings Core competencies Techniques for Analyzing IndustriesandCompetitors consider theauthoritativetextoncompetitivestrategy: For moredetailedinformationonthistypeofanalysis,youmaywantto L C I A B R R A E E R R Y Case Frameworks Vault GuidetotheCaseInterview , byMichaelE.Porter. Competitive Strategy: © 2007Vault Inc. Customized for: Jessica ([email protected]) Acquire/Build? insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat Hot Faucet with eitherstockordebt. The potentialoutcomesmightlooklikethis: or buildingadistributioncenter, anditis considering financingthisdecision Let’s sayacompanyisinterestedinunderstandingthedifficulty ofacquiring morebusiness-appropriateexamplewouldinvolveacquiringacompany. A would bewhathappenswhenyouturnonyourbathroomfaucets,asfollows: veryrudimentary example that, whencombined,yielddifferent outcomes. A The 2x2matrixisagoodframeworktouseanytimeyouhavetwofactors The 2x2matrix particular processoroperation. your client’s particularindustry, ifnecessary, tofindthebestpracticesfora (in thecase)emulateorcopywhatthey’redoing?Remembertolookoutside they doingright(i.e.,whataretheir“bestpractices”)? And howcanourclient particularly lowcostsorwhichotherwiseoperatewell. What are companies aredoing,youwanttofocusonthosethathave relatedconceptis“bestpractices”:Onceyou’ve benchmarkedwhatother A where itscostsarehigherthanaveragefortheindustry. comparing themwithindustryaverages.Itcanthenpinpointthoseareas ACQUIRE BUILD OFF ON www.vault.com/consulting Medium Difficulty Low Difficulty Warm Water Cold Water Case Frameworks Vault GuidetotheCaseInterview TC DEBT STOCK ON Financing — with Cold Faucet Medium Difficulty High Difficulty Hot Water No Water L C I OFF A B R R A E E R R Y 51 Customized for: Jessica ([email protected]) 52 axis. relative marketshareonthehorizontalaxisanditsgrowthratevertical perhaps themostfamous2x2matrix. The matrixmeasuresacompany’s The BCGMatrix,namedaftertheBostonConsultingGroup(BCG),is The BCGmatrix Growth L C I A B R R A E High Low E R R Y ahCwDog Cash Cow Relative MarketShare (RMS) ihLow High Star Case Frameworks Vault GuidetotheCaseInterview Question Mark ? © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat • • • required goingforward? and workingcapitalare What investmentsinplant slower thansales? Will costsrisefasteror increase ordecrease? Will volumes/prices The valuecomponentscanbefurtherbrokenoutintospecific“valuedrivers”: drivers: In ordertounderstandvalue,weneedthethreeprimaryvalue Value Drivers(M&A)Framework acquisition. wildly popularatinvestmentbanks.Here’s howtoanalyzeapotential Case interviewsaren’t justforconsultants.Mergers &acquisitioncasesare an acquisition M&A cases:Determiningthedriversofvaluefor Business Value Unit Operations Cash Flow from Requirements Cost Levels Investment Revenues (margins) www.vault.com/consulting Investment Operations to Support Required Discount Profit Cash Rate Case Frameworks Vault GuidetotheCaseInterview — with Expenditure Operating Revenues Working Cash Flow Cost of Margin Capital Capital Capital Taxes Future Gearing Cost ofdebt Cost ofequity V Scale ofoperations Maintenance Replacement equipment Plant life Contract terms Creditors Debtors Effective taxstructure Raw materialprices Wage rates Staffing levels Retail prices Sales mix Market share Market size ALUE L C DRIVERS I A B R R A E Value E R R Y 53 Customized for: Jessica ([email protected]) 54 Issues: Definition: Value ($M) target itself,aswellthemarketinwhich itcompetes(seenextpage). In assessingthefactorsdrivingvalue,wecandetermineoutlookfor value ofthetarget. The ultimateobjectiveofatarget andmarketassessmentistodeterminethe M&A cases:Targetandmarketassessment 10 20 30 40 50 0 Š Š Value ofexistingearnings business? How secureistheexisting performance) with: stream (basedonactual – Nocapitalexpenditures – Nochangesinmargins – Nogrowth above depreciation L C I A B Business asUsualor R R A Baseline Value E E R R Y Š Š What upsidesexistfor Value ofpossibleimprove- stand alonebusiness? ments from: – Margin improvements – Sharegain – Marketgrowth Case Frameworks Vault GuidetotheCaseInterview Stand Alone Upside th e Š Š Available tomarket Available toacquirer What addedvaluedoesthe Value ofbenefitsarising acquisition bring? target company andacquirer from relationshipsbetween Synergies © 2007Vault Inc. Customized for: Jessica ([email protected]) ot • Are industrycostsincreasing • Costs aia • Is thebusinesschangingin • Capital • What drivesdemand? • Revenues insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat Is thisanattractivebusiness? • Is atechnologyshiftlikely? • Is theindustrybecoming • What istheregulatory • What istheoutlookfor • What substituteproductsare • Isdemandincreasing? capital inthefuture? higher fixedorworking a waythatwillrequire increasingly competitive? or decreasing? environment? and competitiverivalry? prices, givensupply/demand available? Market www.vault.com/consulting Case Frameworks Vault GuidetotheCaseInterview — with • Isthetarget’s workingcapital • What capitalexpendituresare • What isitscapacity? • Howoldisthetarget’s plant? • Howisthetarget’s cost • Howisthetarget positioned What isthetarget’s• strengthin • Is thetarget’s marketposition • What pricepremiumor • Will thetarget’s marketshare • Why docustomersbuythe Is thetarget well-positionedin likely tochange? expansion? needed forupgradesor the future? position likelytochangein versus competitor’s costs? supply chain? sustainable? command? discount doesthetarget increase ordecrease? of competitors? target’s productsversusthose this market? Target L C I A B R R A E E R R Y 55 Customized for: Jessica ([email protected]) 56 • Costbenchmarking • Relativecostposition • Margin and expensestructure • Cashflowanalysis • Salesandprofitabilitybysegment • Financialhistory • Customer’s keypurchasecriteriaandrelative performance • Capacity(growthandutilizationof) • Marketshare(overtimeandbysegment) • Business system–comparisonwithcompetitors T • Keysuccessfactors • Trends andoutlook • Experiencecurves • Porter’s FiveForces • Segmentationanalysis • Supplyanddemandanalysis • Productlifecycle • Relative valueversuscompetitorstocustomerthroughsupplychain • Competitivepositionframework Market M&A cases:Datagatheringandanalysis arget – Regressions – Demanddrivers – Industryutilization – Industrycapacity Analysis L C Analysis I A B R R A E E R R Y T T ools ools Case Frameworks Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) frameworks withoutidentifyingthem.) you proudlyproclaim,“I’mgoingtoapplyPorter’s FiveForcesnow.” Apply these frameworkssparingly. (Anothernote:Nointerviewerwillbeimpressedif candidates. You mustbecreativeandoriginalinanalyzingcasequestions.Use unique analyticalanddeductivereasoningskillsthatsetyouapartfromother techniques. While thisisfine,considerthatyou aretryingtodemonstrateyour recognize whenyouareapplyingthem,sincetheyalreadyfamiliarwiththe teach themaspartoftheircorecurriculums. Your interviewerswillinstantly All theframeworksdetailedabovearewidelyused,andmostbusinessschools A frameworkcaution insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat Abundant No Data Little or Data Your datagatheringstrategywillvarydependingonindustry:

AMOUNT OF INFORMATION AVAILABLE Š Š <$100 $10B< “basics” of timejustputtingtogetherthe You willspendasignificantamount mary sources 80% ofthedata willbefrompri- – Share – Profitability – Industrygrowth M www.vault.com/consulting INDUSTRY SIZE Case Frameworks Vault GuidetotheCaseInterview Š Š industry the target competes withinits You willbeabletofocusonhow ondary sources 80% ofthedata willbe fromsec- — with L C I A B R R A E E R R Y 57 Customized for: Jessica ([email protected]) visited lately? job boardshaveyou How manyconsulting criteria ande-mailthemdirectly toyourinbox. and more.We’llmatch job listingswithyourinterestsand and customizeyoursearchbyareaofconsulting, experience Vault takesmatch-makingtothenextlevel:postyour resume VaultMatch ResumeDatabase openings thatyouwant.Nosurfingrequired. consulting, function,andexperiencelevel,find thejob consulting professionals.Targetyoursearch by areaof The mostcomprehensiveandconvenientjob board for Vault ConsultingJobBoard professionals. job searchtoolsforconsulting Use theInternet’smosttargeted (Thought so.) GUIDE INTERV CASE Customized for: Jessica ([email protected]) career message boards,expertresume reviews,theVaultJob Boardandmore. Visit Vaultat BEING THERE www.vault.com for insidercompanyprofiles, expertadvice, Customized for: Jessica ([email protected]) Customized for: Jessica ([email protected]) Interview What It’sLikeBeinginaCase insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat You sitbackandtakeadeepbreath. Your caseinterviewisabouttobegin! let’s getstarted.” much timeaspossibleforthecase.Sounlessyouhaveanyquestions forme, At 10afterthehour, Jimlooksathiswatch andsays,“Iwanttogiveyouas assignments youweregivenandtheroleofnewspaperat theuniversity. You talkaboutthe was yourtoughestchallengeasaneditor?” “I seeyou’rethemanagingeditorof over it. resume (thoughyoustashedacopyinyourportfolio,justcase)andglances After aminuteofchattingaboutthe Top Ten Pumas,Jimpullsoutyour “Blank House,”youtellhim.“Howaboutyourself?” “I’m analumof Top Ten U.myself,”saysJim.“Whatdormdoyoulivein?” “I’m gladtohearit,”yousay, hopingyoulookpoisedandconfident. was veryimpressedbyyourresume.”Hesoundssincere. “Hi, Jane,”Jimsays.“It’s greattomeetyou.Everyoneonthecommittee you wenttoinOctober. You shakehandsfirmly. than you.Infact,youvaguelyrememberhimfromtherecruitmentmeeting You walkinandaregreeted byJimInterviewer, whodoesn’t lookmucholder these interviewslastabouthalfanhour. glove-leather portfolio.It’s timeforyourinterview. You understand that you’ve dutifullytuckedacopyofyourresumeandtranscriptinsidethat best navysuit);you’vecharged aleather portfolioonyour Visa card;and You’re carefullydressedin yourbestnavysuit(OK,soit’s yourroommate’s You areJaneCandidate. It’s yourfirstinterviewwithaconsultingfirm. 30-minute caseinterviewmightbelike. interview atBoomConsulting.Whatmightitbelike?Here’s whatasample Let’s justpretend foraminutethatyou’re JaneCandidate,andyouhavean Top Ten Tribune www.vault.com/consulting Being There Vault GuidetotheCaseInterview Top Ten Tribune for afewminutes,talkingabout — with ,” Jimsays.“What L C I A B R R A E E R R Y 61 Customized for: Jessica ([email protected]) 62 The Case food market.” “No, theyhaven’t,” saysJim.“Thereseemstobenouptickinthebreakfast as well?” “Have salesofotherbreakfast foods orourownbreakfastproductsincreased “No, ourwaffles salesarenormallysteadyyear-round.” people eatmorewaffles whenit’s cold?” “Is thereaseasonalreasonforthisincreaseinwaffle consumption?Perhaps “It seemsso,”confirmsJim. “That meanswe’retakingourwaffle salesfromotherwaffle manufacturers.” “No,” saysJim.“Demandforwaffles seemstobeholdingsteady.” recently?” “Okay, then,”yousay. “Whatistheoverallmarketforwaffles? Hasitgrown “That seemslikeareasonablewaytoproceed,”commentsJim. the waffles themselves.” price-based reasonsforthesurge inwaffle sales.Finally, I’llaskyouabout how thewaffles arebeingpromoted. After that,I’llaskwhetherthereareany about themarketpositionofwaffles. Then, I’mgoing totryfigureout “Let’s breakdownthesituationlikethis.First,I’mgoingtotryfindout You tellJimhowyou’regoing toproceedwithyouranalysis. promotion andproduct. four Ps,yourecall(withoutlookingatyournotepad),areprice,position, the fourPsmodelmightbeagoodwaytostructurethisparticularcase. The Fortunately, you’vedoneyourresearchonhowtostructurecases. You think matter. What wouldyoudo?” “That’s right,Jane,”saysJim.“That’s why theyaskedustolookintothe experience abigjumpinsales.” marketing, butthatdoesn’t seemlike aproductthatwouldsuddenly “Their waffles?” youinterject.“Idon’t knowalotaboutbreakfastfood rose significantly.” company. They toldmethatinthepasttwoquarters,salesoftheirwaffles “Recently,” saysJim,“Iwasatastrategymeetingwithconsumerbrand L C I A B R R A E E R R Y Being There Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat “Then tellmeaboutourclient’s promotionprocess,”yousay. Jim laughs.“That’s notit.” eating ourwaffles?” You guessblindly:“Isthereacelebritywho’s recentlybecomefamousfor “That wouldaffect theconsumptionofallwaffles,” saysJim. “Maybe thepriceofallsyruphasgonedown?”youguess. Jim answersnotoboth. started advertisingitswaffles? Isitpromotingarelatedproduct,likesyrup?” “Then maybethere’s somekindofpromotiongoingon.Hasthecompany You getthefeelingthatJim istellingyoutobackoff thepriceissue. and abitlessthanothers.” quarters. Infact,ourwaffles areslightlymoreexpensivethansomewaffles competing waffle products. And priceshavenotvariedinthepasttwo “No,” saysJim.“Thereislittlepricedifferential betweenourwaffles and “Is ourproductapremium–haveweraisedprices?” “Nope,” saysJim. “Have otherwaffle manufacturersraised their prices?” “No,” saysJim. lowered pricesrecently?” “Okay, let’s talk aboutpromotionandprice,”yousay. “Hasourclient reasoning isunsound. You’re gettingalittlefrustrated, butsofar, Jimhasn’t indicatedthatyour area.” can replicateit.Butforthetimebeing,no,theyhaven’t expandedthesales That’s whytheywanttoknowthereasonbehindsalesupsurge –sothey the companydoesplantoexpandintoEuropeanand Asian markets. “Your assumptioniscorrect,andthatagoodquestion,”saysJim.“Infact, American the “Has ourcliententeredanynewmarketsrecently?Perhapsthey’ve Asian market?I’massumingthatthesewaffles areonlysoldinNorth markets.” www.vault.com/consulting Being There Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 63 Customized for: Jessica ([email protected]) 64 would respondinasimilarmanner toournewwaffle product. We shouldalso “Then Irecommendthatweinvestigate whetherEuropeanand Asian markets improved waffle.” the waf “Yes,” saysJim.“Ourfocusgroupsshowthatthetextureandcrispinessof production processthathascreatedabetterwaffle.” prefer aflatter, larger waffle. There must besomethingaboutthenew “Then,” yousay, “IwouldventuretoguessthatconsumersinNorth America “Those havechangedtoo. We’re usinganewsupplier.” “Are theingredientssame?” of ageneralfactorymodernization.” “Yes, ithas,”saysJim.“We’re usinganewtemplateforthewaffles aspart “Why? Hastheproductionprocesschanged?” “It’s flattenedoutsomewhat.” “How so?” “Well,” saysJim,“ithaschangedabit.” our product,”yousay. “Hastheshapechanged?” don’t havethatmuchtimeleft.“Thenperhaps somethinghaschangedabout You’re determinedtouncover thereasonbehindthiswaffle case–andyou hasn’t changed,”saysJim. “As faraswecantell,themakeupandaudienceofouradvertisingtargets now pitchingtopeoplewhoaremorelikelyeatwaffles?” “Has thedemographicofouradvertisingchanged?”youask.“Isclient the same. We havenoticedmoreuseofourcoupons,however.” our promotioncampaign. The ratingsof the showsweadvertiseonareabout To yourfrustration,Jimshakeshishead.“We haven’t significantlychanged improved?” commercials Now, youthink,you’reontosomething!“Havewestartedputour coupon promotionsandacommercialthatrunson TV.” month, werunadvertisementsinthreeselectedmagazines. We alsohave “Our clientspendsabout$10millionyearlyonwaffle promotion.Every fle hasimproved.Consumers arerespondingtoourinadvertently L C I A B R R A E E on morepopularprograms?Hasthequalityofouradvertising R R Y Being There Vault.com GUidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat • Detailed 40-pageemployerprofiles ontopemployerslikeMcKinsey, • • One-on-oneVaultCaseInterviewPrepwithconsultingexperts • TheVaultCaseinterviewPracticeGuide • The onlyjobboardontheWebdedicatedtoconsultingjobs– • Surveysofemployeesathundredsconsultingfirms to theVaultConsultingCareerChannel For moreinformationoncaseinterviewsandconsultingcareers,go BCG, Bain,Accentureandmore Vault ConsultingJobBoard www.vault.com/consulting “Good job!DoyouhaveanyquestionsformeaboutBoomConsulting?” “Your suggestionsareinteresting,andwe’lllookatthemlater,” saysJim. markets forwaffles, likeusingthemfordinner, ascrepes.” promote ourwaffle advantageinthemarket.Perhapswecouldenternew www.vault.com/consulting Being There Vault.com GUidetotheCaseInterview — with L C I A B R R A E E R R Y 65 Customized for: Jessica ([email protected]) Unsure howtohandleacaseinterview? up withaconsultingfirm? Do youhaveaninterviewcoming www.vault.com/consulting For more information goto consulting expertoverthetelephone. and answersessionwithour interview anda30-minutequestion interview witha30-minutemock prepare forthatall-importantcase consulting firms.We’llhelpyou prepare forinterviewswith you anewservicetohelp Vault’s consultingexpertsbring Interview Prep Vault LiveCase • Andmore! • Arepresentativebusiness strategycase(forexample, • Marketsizingcases • Caseframeworks,includingValueChainAnalysis • Casestrategiesforattackingdifferentcasetypes The prepsessionwillcover: dissect it,andgivearationaleforyourresponses. case atyourappointmentandwillbeaskedtoexplainit, used bythemajorconsultingfirms.Youwillbegiven A Vaultconsultingexpertwillputyouthrougharealcase a market-entrycase) and ValueDriversFrameworks GUIDE INTERV CASE Customized for: Jessica ([email protected]) career message boards,expertresume reviews,theVaultJob Boardandmore. Visit Vaultat INTERVIEWS REAL LIFE www.vault.com for insidercompanyprofiles, expertadvice, Customized for: Jessica ([email protected]) Customized for: Jessica ([email protected]) Boston ConsultingGroup,MBA insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat and takenotesoryouwillgetlost. The caseisusually20to25minutes. and gotgoodhints.Isuggestthatyoustopinthebeginningof theBCGcase discussions. Inoneinstance,Ihadtroublewithadatachart. I askedforhelp I foundBCGconsultantstobefriendly—myinterviews were morelike were andthesupplychain—basically, thefourPs. online andwhichyouwouldn’t. You havetothinkaboutwhothecustomers case askedwhatthebestwaywouldbetodeterminewhichservicesyouput Another casewasaboutapharmaceuticalcompanytryingtogoonline. The specifically soIcouldn’t offer Internetsolutions. Sometimes casesarenotsetinthepresentday. Ihadonecasesetin1985, fixed versusvariablecosts. knows anythingaboutthemoffhand.) You shouldthinkaboutrevenueand of casesareaboutpapercompanies,becausethey’rebigbusinessbutnoone about apapercompanythatwasbecominglessprofitable.(Apparentlylot One ofmycaseswasaboutacontentsyndicationcompany, andonewas and a typically talk aboutwhatwassaid,asopposedtotalkingacaseperse. That’s a unusual wasthattwodifferent peopleasked metolookatdataandcharts I hadfivecaseinterviewsatBCGandtworegularinterviews. What was vary byoffice andinterviewer. typical case are theunique accounts of There’s nosubstituteforexperience.Readonsomefrom-the-trenches graph. unusual BCGthingtodo. They’d showyou, forexample,adatatable real-life consultinginterviews.Pleasekeepinmindthatthese experience inanyconsultingfirm.Consultinginterviewsmay experiences ofindividualsandshouldnotbeconstruedasthe www.vault.com/consulting Real LifeInterviews Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 69 Customized for: Jessica ([email protected]) 70 McKinsey &Company,MBA bathroom. They didn’t getanoffer. know somepeoplewhodiscussedtheircaseswhilethey wereinthe Keep inmindthatyou’rebeingwatchedeveryminutetheoffice. I I alsohadthequestion“Whatwillyourphonebilllooklikeinfiveyears?” estimate thevolatilityofrealestatemarket. of buildingitwas,whatkindlocation,theincomewasfromrental, return. It’s adiscountedcashflowproblem. You hadtodeterminewhatkind You canbuyabuildingin New York Cityoryoucaninvestitat7percent I alsohadafewothers.Herewasonecase: You havefivemilliondollars. information, like“Let’s saythefactoryisclosedonSunday.” moving, thescheduleoffactory, etc.Sometimestheywouldaddnew was complicated.Ihadtocalculatehowquicklytheconveyorbelt estimate thenumberofcarsproducedonanassemblylineeveryday. That I hadtoestimatethesizeofrestaurantmarketinNew York Cityand another one. sizings, andyouwereonlysupposedtohaveone.Isolvedittoofast,sogot million.” Ontheotherhand,Ihadoneinterviewwheretwomarket throw somethingintospeedthingsup,like“Oh,whydon’t wejustsay20 math. Istruggledalittlebitwithsomeofthecalculations,andtheywould McKinsey wereaboutestimatingmarketsize,andthereissometimesdifficult lotofcasesat as well,thatthecasesatMcKinseyareveryquantitative. A studentsinterviewing I found,anditwastheexperienceofmyfellowMBA I hadsixcaseinterviewswithMcKinsey. L C I A B R R A E E R R Y Real LifeInterviews Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) Monitor Group,undergraduate A.T. Kearney,undergraduate insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat points forthebusinessplan. about acompanytryingtoget intosellingservices.Ihadtoidentifykey I hadanotherinterviewthatwas alsoaboutcomputermanufacturers.Itwas lose valueveryquickly. speed upthemanufacturingandshippingprocess. That’s becausecomputers takeaway wasthattheyhadalotofcomputersontheshelf. They neededto how tosavethemtenmilliondollars. After askingalotofquestions,thekey I hadonecasewithamanufacturerofcomputerproducts. tofigureout about theInterneteconomy. asked mewhatIthought.thinkshejustwantedtoseehow muchIknew virtually impossiblenumberofpeoplewouldneedtogetonline. Then she Internet companieswereallovervaluedandthattojustifytheir valuationsa interview whereIwasgivenalotofinformationthatessentiallysaid things. They areveryinterestedindifferentiating themselves.Ihadone asked aboutwhereIsaw A.T. Kearneyfittingintotheconsultingschemeof me asaninvertedpyramid. At thefirstinterview, Ididn’t haveacase.Iwas the undergraduate level,andtheyarevery top-heavy. They describeditto My experiencewasatypical.[A.T. Kearney]doesn’t havealotofpeopleat have doneinthesamesituation. client-consultant situationandaskyouforyourfeedbackwhatwould friendly orsupportive. Afterwards, theyshowyouastagedpresentationof They didn’t knowwhetherornottobeaggressive. Ingeneral,everyonewas together, likeyouwereanengagementteam.Everyonewasprettycautious. a quickpresentationtothewholegroup. Then youtalkaboutthepresentation qualitative dataout. You havehalfanhourtolookattheproblemanddevelop The finalroundisagroupinterview. You getdataandareaskedtopull market size,itsmaincompetitors,andhowitshouldincreasetheirrevenues. Afterwards, youtalkthroughyouranswers.Minewasamanufacturer, its answer, someofthemquantitative. They doallowyoutohaveacalculator. with alotofdataandnumbers. There arefourspecificquestionsyouhaveto Monitor hasaweirdcaseprocess. They haveawrittencasetheygiveyou www.vault.com/consulting Real LifeInterviews Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 71 Customized for: Jessica ([email protected]) 72 L.E.K. Consulting,MBA • Detailed 40-pageemployerprofilesontopemployerslike McKinsey, • • One-on-oneVaultCaseInterviewPrepwithconsulting experts • TheVaultCaseinterviewPracticeGuide • The onlyjobboardontheWebdedicatedtoconsultingjobs– • Surveysofemployeesathundredsconsultingfirms to theVaultConsultingCareerChannel For moreinformationoncaseinterviewsandconsulting careers,go BCG, Bain,Accentureand more Vault ConsultingJobBoard www.vault.com/consulting I haddoneonExcel,whichfoundodd. I wasalsoaskedalotofquestionsaboutExcelandthemostadvancedthing passionate about. In thesecondhalfofinterview, Iwasaskedtoexplainanything company. We talkedaboutNordstrom.com forawhile. technology andthattheInternetcompanyisn’t alwayslinkedwiththeparent retailer. They wantedtomakesurethatIunderstoodcurrenteventsabout disadvantages ofmovingoperationsonlineifyou’reabricks-and-mortar case abouttheInternet.Itwasthinkingadvantagesand In thesecondround,Imetwithmanagers[seniorconsultants].hadaneat costs?” Itwasallaboutthelinegraph. that it’s fixed,andwehavethesecosts.Okay, whatifyoutookoutvariable “We haveacoststructurewhereit’s variableupuntilacertainpoint,butafter of company, andwehadtodrawalotofgraphs. They wouldsaythingslike, In mysecondcase,Iwasgivenalotofdifferent scenariosaboutagenericsort the techmarket. about theirviability?” They reallywantedtoseeifyouknewanythingabout lot aboutthe Web boxesontelevisions. What aresomeofyourthoughts interview. The interviewerjustlookedatmeandsaid,“I’vebeenthinkinga I hadtwocasesinthefirstround.Onewasfitandsecondoneacase L C I A B R R A E E R R Y Real LifeInterviews Vault GuidetotheCaseInterview © 2007Vault Inc. GUIDE INTERV CASE Customized for: Jessica ([email protected]) career message boards,expertresume reviews,theVaultJob Boardandmore. Visit Vaultat CASES BUSINESS www.vault.com for insidercompanyprofiles, expertadvice, Customized for: Jessica ([email protected]) Customized for: Jessica ([email protected]) Case Formats insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat make greatadditionalinteractivecases. interactive casesandwanttotrysomemore,theadditional practicecases cases aredesignedforyoutopracticewithanotherperson.If youuseallthe Finally, inthisedition forthefirsttimeweincludeinteractivecases. These point ofjumping-off analysis,whileothersareblank. You willalsofindsomeadditionalpracticecases.Someoftheseincludea cross-section ofcaseanalysis. a detailedanalysisofthecasequestion. This allowsyoutoseeabroader Other cases,insteadofasampleinterviewer/candidateconversation,include response totheinterviewerinacasesituation. the candidate. These casesaremeantto giveyouanideaofwhatagood Some ofthesecasessimulatetheconversationbetweeninterviewerand research. description ofhowthesecasesdiffer and howtousethemforyourcase Readers mayobservethattheformatofthesecasesdiffers slightly. Here’s a graphs aspartofyourcase. consulting trade).Increasingly, interviewersmayaskyoutointerpretdataor analysis (andimpressyourinterviewer, asgraphs are thecoinof you’re makingthem.Sketchingoutafewgraphsmayhelpclarifyyour should youmakesensibleassumptions–whileinformingtheinterviewerthat move forward,ask!Onlyifyourinterviewerrefusestogiveyouinformation confident, andtomakeNOassumptions.Ifyoudon’t haveenoughfactsto line ofreasoningyouarecomfortablewith,butremembertobeconciseand outline orframeworkforworkingthroughyoursolution. You mayuseany answer tothesequestions,sowhatfollowseachquestionisasuggested with suggestedanswersorlinesofreasoning.Rememberthatthereisnoright The followingisasamplingofbusinesscasequestions.Someareprovided www.vault.com/consulting Business Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 75 Customized for: Jessica ([email protected]) 76 Practice Questions Interviewer You Interviewer You Interviewer You MBA-level candidate.) finding informationonceyouarriveattheclient?(Thiscasewasgiventoan is essential.Howwillyouactuallygoaboutassessingthesituationand experienced intheindustry, soyourabilitytocopewiththistypeofsituation find themselvesinfrontofkeyclientpersonnelwhoareolderandmore professionalism infrontofaseniorexecutive.Inmanycases,consultants deductive abilities,butshewillalsobeevaluatingyourpoiseand exercise. Notonlywilltheinterviewerbeassessingyouranalysisand Here isagoodexampleofdirectedquestioncombinedwithrole-playing situation? toassessthe What wouldyouneedtoknowfrom mein order ofthecompany. the firsttime.IamChiefOperatingOfficer Consultant,meetingwiththeOperatingCommitteefor the Senior business performance intheshorttermaswelllongterm. You are howthispurchase willaffecttheir are unclear airlineisconsideringthepurchase of24newplanes. They major A 1. LeavingonaJetPlane Whatisthecurrentaveragecostperflight-hourof : Howmanyplanesareinthecurrentfleet? Are thereany : Whatistheplanneddeliverycycleofnewaircraft? : L C I A B R R Itvariesbyaircrafttype. The rangeisanywherefrom : Thereare120planesinthecurrentfleet. There areno : Aircraftwillbedeliveredastheyaremanufacturedover : A E E R R Y $1,000 to$5,000. fleet? arrive. plans togetridofourolderaircraftasthenewones delivered? plans toselloff olderaircraftasthenewerare the nextfiveyears,atapproximatelyfourperyear. Will itbestaggered,serial,orallatonce? Business Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat Interviewer: You Interviewer You Interviewer drill downintothecoreof woes besettingthefirm. slump! This dialogueillustrateshowyou,theperspicacious candidate,might done youthefavorofdefining theproblem–yourclientisinsomethingofa studentinanearlyinterviewround)mightreceive. The interviewerhas MBA This isanexampleofthetype ofquestionanundergraduate student(or an company’s problems? of themarketfrom 25percent. What isthesource ofthe have fallen20percent andmarketshare hastumbledto15percent thepastthree years,profit margins household appliances.Over You are theconsultanttoacompanythatproduces large 2. Help!OurProfitMarginsareShrinking! You Iwouldfirstneedtoknowappropriatecontact peoplein : Well, inmanycasesIhaveusedacompany’s costof : Doyouhaveanyframeworksinmindforassessing this : Yes, as abeginning.Howwillyougoaboutfindingthe : No. What wouldyousuggest?(Thisisatoughresponse : assembled adraft. to validatetheinformationIhavecompiled,once through eachofthemaftertheinitialinterviewssimply gather theinformation.Iwouldneedtocircleback of thesepeople,fromtwohourstoahalf-day, inorderto With yourintroduction,Iwouldliketomeetwitheach the quantitativefactsIneedtoperformassessment. purchasing, finance,andaccountingwhocouldprovide information youneed? these soundreasonabletoyou? cost savings,increasedpassengerload,andsoon.Do efficiencies broughtaboutbyyourpurchase, asinfuel method choice.Iwouldalsowanttoassessthenew flight-hour, asIalreadymentioned,anddepreciation industry, industry-specificmetricslikethecostper capital, relativetotheaveragecostofcapitalin because itasksyoutoputastakeintheground.) situation? That soundslikeaworkableplan. www.vault.com/consulting Business Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 77 Customized for: Jessica ([email protected]) 78 You You Interviewer Interviewer You Interviewer You Interviewer You Itprobablysuffices tosaythatsomeofyourdeclinein : Doanyofyourcompetitorsmanufactureoverseas? : Doyoubenefitfromanadvantageintechnology, : Howwouldyoucharacterizeyourmanufacturing : Howwouldyoucharacterizethecurrentmarketplacefor : L C I A B R R Ournumberonecompetitorproducesallofits : We havenotupdatedourmanufacturingprocesssince : Canyoubemorespecific? : Theproductlineisconsideredmature. : A E E R R Y and anypromotionalactivityyou havehad? position, strength ofyourbrand,price, yourproducts’ about anyrecentmarketresearch youhaveregardingthe market, whereconsumersbuy whatever’s onsale.) price. Forexample,toiletpaperislargely acommodity customers maketheirpurchasingdecisionslargely on commoditymarketplaceisoneinwhich commodity. (A product categoryandthemaybeconsidereda market whereconsumersaremostlyawareofthe domestically. This isespeciallytroublesomeinamature higher costsassociatedwithmanufacturing facing relativetooldermanufacturingtechniquesand profit canbeattributedtotheincreasedcostsyouare costs.) manufacturing outsidethe appliances inIndonesia. priced inthemarket,thoughnotlowest. good reputation. As forprice,weareoneofthelower- these products,wehaveareliablecustomerbaseand United States. As oneoftheoldestmanufacturers 1988. We manufactureourproductsexclusivelyinthe manufacturing elementoveryourcompetition? economies ofscale,exchangerates,orother see ifthecompanyhasastrategicadvantage.) process relativetoyourcompetition?(You’re lookingto these products?Emerging? Mature? Let’s talkaboutmarketshare now. Canyou tellme Business Cases Vault GuidetotheCaseInterview country significantlylowers (Here’s yourclue– © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat purchased. (Thisquestion, and questionslikeitthatrequireadvanced by reducingthenumberofsources fromwhichcommonproducts/servicesare istheamountof“spend”reduced,definedascost savings realized FVP across businessunitsofcommon purchasesandservices. The measure of an isarationalization This isanexerciseinfull-value procurement(FVP).FVP efficiency? What issuesmightariseinsuchastudy? operating determine thepotentialsizeofopportunityfor tocutcosts.Howwouldyou personnel expensebaseinorder consulting teamhasbeenaskedtolookatthenon-interest, non- istryingtoincrease bank itsoperatingefficiency. Your A 3. BankingonSavings You You Interviewer Interviewer Itwouldappearyouarecompetinginanundifferentiated : Whatformdoesyourpromotionalactivitytake? : We offer apricediscounttoconsumerstwiceyear. We : Ourmarketresearchdepartmenthastoldusthat : haven’t beenutilizedbythecompanyasofyet. may beresponsivetoothertypesofpromotionsthat programs, relativetoyourcompetition. The consumer investigating theefficacy ofyourcurrent promotional differentiation effort. Ibelieveitwouldalsobeworth additional sharethroughanaggressivebrand marketplace, andtheremaybeanopportunitytocapture underway. consumer, andwehaveanactiveoutdoorcampaign regularly advertiseinmajormagazinestargeted toour cotton-blend paper.) introducing newdesignercolorsandspeciallyquilted differences inthebrand–like,case oftoiletpaper, markets includepromotionsandmakingvalue-added product. The waysofbreakingout of commodity (This isconsistentwiththedescriptionofacommodity twice ayearandhavesmallerpromotionsoncequarter. appliance retailersintheU.S. We promoteaggressively brands. We selltoallmajor brand andourcompetitors’ they donotunderstandthedifferences betweenour consumers areconfusedabouttheproductcategory, that www.vault.com/consulting Business Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 79 Customized for: Jessica ([email protected]) 80 You Interviewer You Interviewer You Interviewer You You interviews oftentakethiskindofrole-playingform(whichcanbefun!). In thiscaseinterview, yourinterviewerwillimpersonatetheclient.Case undergraduates withnobusinessexperience.) candidates andcaseintervieweeswithsignificantbusinessexperiencethanby frameworks, aremuchmorelikelytobereceivedbybusinessschool Interviewer Areyourcost concerns theresultofanimpending : Isconsolidatingbranchoffices orreducing ATM counts : Howmanyvendorsprovidesimilarproductsand : Whatarethecommonitemsandservicesthat all : Whatisyourrevenuelevelonanannualbasislike? : L C I A B R R Notatthistime.Infact,we’replanningtoexpandin : We buyoffice productsfromOfficeMax’s corporate : Well, obviouslywehavemostcommonoffice products : In1998ourrevenueswere$1.2billion.(Theseseemto : A E E R R Y another bankthatmightdriveup costs.) undergone, orisplanning,amerger oracquisition of out animportantpieceofinformation –thebankhas merger? (Perhapstheinterviewerhasdeliberatelyleft three different states. a possibility? services. believe wecontractregionallyforhousekeeping escapes merightnow, fortheretailbanks. Also, I in California,andsomeoneelse,thenameofwhich services inIndiana, Avery Dennisoncorporateservices services tothebank? center, andourretaillocations. services forourcorporateheadquarters,printing shared acrossallourfunctions. We alsohavecleaning suppliers orhousekeepingservices? business unitsuse?Doyouhavecommonoffice bulge bracket.) be therevenuesofaprosperousregionalbank,not Business Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat You Interviewer You You Interviewer Interviewer You Interviewer You Interviewer (Time toreturn toalesscontroversialaspect.) What : Well, sir, Iunderstandyourobjections.However, many : Canyouexplainyourobjections? : Well, whataboutinformationsystems,callcentersand : Haveyouconsideredoutsourcingnon-criticalbusiness : Thatsoundsinteresting, andI’dlikemoreinformation. : Don’t youthinkoutsourcingthoseprocessesisextreme? : Oh,no. That’s notpossible.(Rememberthatthisis a : Whatkinddoyousuggest?(Your interviewer isprobing : No,ourgrowthisorganic, notthroughacquisition. : office products? would youestimateyourspending tobeforthingslike suggestion mysupervisorwilllike? of yoursuggestions.)Butcanyougivemeaconcrete (Your interviewergraciouslyacknowledgesthewisdom information. of whichalsohavetradesecretsandconfidential activities likecopycentersandconferenceplanning,all major corporationsuseorganizations thatcentralize internal functions. integrity wouldbeputatriskifweletothersmanageour information onbothpaperandelectronicmedia.Our We’re abank,andwehavelotofconfidential actions!) Businesses aren’t alwaysentirelyreasonable intheir reasonable suggestion;youshouldprobeabitfurther. role play. This seemsabituncommunicativefor those kindofthings? customer service,billcollection,documenthandling, successfully outsource.) to seeifyoucannamethekindofservicesabankmight tasks? considerations.) (Looks likethisisadeadend. Time tomoveonother www.vault.com/consulting Business Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 81 Customized for: Jessica ([email protected]) 82 information fromthesuppliersofdryingfacilities: In theinitialresearch,restaurantownerhasfoundout thefollowing some moreinformation: economics ofthethreeoptions–inwhichcaseinterviewer willgiveyou Fairly soonintheprocess,youshouldstartaskingquestions aboutthe influence yourdecision. In theinitialanalysis,youmightaskanumberofquestions,whichwill inhisdecision-making process? dryers. What shouldheconsider towelsandhotair towels,roller three options–paper hands.Initialresearch suggeststhathehas customers todrytheir making adecisiononthefacilitiestoplaceinrestrooms for making somebasicdecisionsonhowtofititout. Today heis iscurrently settingupanewrestaurant and restaurant owner A 4. PaperorAir You Interviewer • Dryers have aninitialcostof$500each(butyou’llneedtwo–onefor • Hashedoneanycustomerresearchtoseewhatcustomerswould prefer? • How manycustomersdoesheexpect?tables?Isitopen • What typeofrestaurantisitgoingtobe–luxurious,budget,middle- Ithink,basedonyourinformation,thatthereareample : supplier estimatesthatthelifetime ofadryerisfouryears. each restroom)andmonthlyservice charge of$100per month. The during theday?Inevening? market? L C I A B R R Iestimateabout$100milliononoffice products, : A E E R R Y savings. Outsourcingpromisesevengreater allow youtouseeconomiesofscaleextractcost now. Reducingyourvendorsdowntooneortwowill opportunities forcostsavingsthatIcanidentifyright our operationspeople,ofcourse. corporation wide,in1998,thoughyou’dhavetotalk Business Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat economic pointsthatmightsway thebalance: Following theeconomicanalysis, youmightmentionafewmorenon- option. you’d switchtothedryers’ would preferthetowels.Oncenumberofcustomersincreases abovethis, than 2,400customerspermonth(or2,400/30=80 pernight)you Therefore therealeconomicdecisionisbetweentowelsand dryers. At less unfavorable. option, andwithmorethan2,000customers,itwillonly lookmore per month. This initselfis morecostlythanboththedryerandtowels per month,therollswouldcost$10everyotherdayorx15 days=$150 Is thisbreak-evenaffected bytherollsoption? At lessthan2,000customers customers permonth. towels wouldhavetoexceed$120permonth,equating$120/$0.05=2,400 restaurant eachmonthtomakethedryersmorecosteffective? The costof cheaper thandryerswill.Howmanycustomerswouldhavetocomethe Therefore, withalownumberofcustomerspermonth,papertowelswillbe number ofcustomersintherestaurant,atacost$0.05percustomer. Secondly, lookatthepapertowelsoption. These varydirectlywiththe customers comingintotherestaurant. approximately $120permonth–andthisdoesnotvarywiththenumberof $1,000/(4 x12)permonth=$21month). Therefore theirtotalcostis of $1,000thatyoushoulddepreciateovertheirlifetime(i.e.anadditional First ofall,takethedryers. They cost$100 permonth,plusanupfrontcharge look atabreak-evencalculation. select willvarywiththenumberofcustomers. Therefore, itmakessenseto At thispoint,it’s obviousthatfromaneconomicstandpoint,theoptionyou • How manysuppliers ofeachoptionarethere?Ifthereisasingle • Are thereadditionalstaff costsofcleaninguppapertowelwaste? • If youusetowelingrolls,theywillcost$5perroll(andagainyou’ll Paper towelscost5centseach,andthenumberofpaperthatyou • supplier, mighthehavethe capacitytoraisepricesinthe future? day iftherearelessthan2,000customerspermonth. the restauranthasmorethan2,000customerspermonthoreveryother need two–oneforeachrestroom). The rollswillbechangeddailyif 50 customersanight,theywillusetowels. will needvariesdirectlywiththenumberofcustomers.Soifyouexpect www.vault.com/consulting Business Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 83 Customized for: Jessica ([email protected]) 84 You Interviewer You Interviewer You Interviewer You notepad. is tryingtoseeifyoucansetupavaluechainforyourniece.Getout Isn’t shecute? Yet thisisaseriouscase(fromBain,noless). The interviewer stand toearnthemoney. Tell mewhatyouthinkofmyplan.” birthday, andIwasthinkingofopeningalemonade her present for a consultant, maybeyoucanhelpme.Iwanttobuymymother nieceapproaches youandsays,“Sinceyou’re amanagement Your 5. MakingaCaseoutofLemons Hints onquantitativecases: • In break-evencases,itissometimeseffective todrawagraph When you’rejottingdownnumbers,makesureyoukeepatrackofwhat • • Make thenumberseasy–roundupordownwhenpossibletomake Whatkindof time commitmentcanyoumake tothe : Okay. When is yourmom’s birthday? What’s your : That’s averynice idea.I’mgoingtoassumethatyou : Whatkindofpresentdoyouwanttogetforyour : month alongthex-axisvs.costofdryingoptiony-axis). illustrate thebreak-evendecision(inthiscase,numberofcustomersper the analysis,youcanmakecomparisonsbetweenoptions. is what,sowhenyoupulltogetheryourrecommendationsattheendof further calculationseasier. L C I A B R R Mymother’s birthdayisinthreemonths. : Actually, theearringsIwantcost$100.(The : Iwanttogetherapairofgoldearrings. : A E E R R Y run thestand? lemonade stand?Howmanydays aweekdoyouplanto timeframe? interviewer istryingtoraisethebarabit.) want tobuyapairofearringsthatcost$50. mother? Business Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat Interviewer You Interviewer You Interviewer Assume$10in sunkcosts–$2forthepitcherand$8 : Herearesomeoftheconsiderationsyouneed tomakeif : Doesthissoundreasonable toyou? : Sohowlongwillittakemetogetenoughmoneyforthe : Ihavetogoschoolduringtheweek,sothinkjuston : weekend. gallons aweekend,or24cups oflemonadeeach enough topayoff thepitcherandcups. That’s three gallons oflemonade. Then you’dearn$111 dollars– weekends inthreemonths,youwouldneedtosell37 you’d earn$3oneachgallonoflemonadesold.Infour you $1tomakethecheapestgallonoflemonade,then is theupwardendoflemonadestandprices–anditcosts you charge 50centsacupoflemonade–whichIbelieve 800 cups. You thenneedtodecidewhatcharge. If earrings? lemonade soldatthestorefor$1.50agallon. gallon. And youmightbeabletogetprepackaged and eightlemonstoagallon,itwouldcost$2foreach advantage, butit’s moreexpensive. At $0.25alemon from freshsqueezedlemonshasadefinitequality the cheapest–perhaps$1agallon.Lemonademade Lemonade madefrompowderedconcentrateisprobably only fourperpitcher.) perceived asabettervalue,meansthatyoucanserve per pitcher. Sixteen-ouncecups,whichmaybe gallon jug,with64ounces,thenyoucanserveeightcups can servemorecupsoflemonadeperpitcher. (Ifit’s a cups willyouuse?Eight-ouncemeanthat you $1indirectcosts. Those areyourbase expenses. the pitcher, whichis$2.Every100plasticcupswillcost lemonade stand. you wanttoearn$100inthreemonthsfromyour weekends. You mustalsodecidewhat kindoflemonadetoserve. You thenhavetomakeseveral costdecisions. What size What areyourexpenses?Let’s saythatyouneedtobuy www.vault.com/consulting Business Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 85 Customized for: Jessica ([email protected]) 86 You Sofar, yes.Butthisisjustthecoststructure. You must : L C I A B R R A E E R R Y in additiontothelemonade,might increaseyourprofits. besides lemonade.Perhapsselling cookiesorbrownies, free –Iassumewordofmouth. attention toyourstand. You canrelyonyourparentsfor which mightbeimportanttoyourcustomers. perhaps permityoutooffer better-quality lemonade, cups, andperhapsthecostoflemonade? This would willing tocoveryourstart-upcosts–thepitcher, the competition. lemonade, whichmayhurtyouroverallsalesifyouhave lemonade standshaveareputationforrelativelypoor your youngentrepreneurialactions. At thesametime, cute. You maygetbusinessfrompeoplewhoapproveof weather turnsbad. Indoor orshelteredlocationsarealsopreferableifthe not attractthefoottraffic tomakethose numbers. your stand?Ifyoujustsetuponthesidewalk,may lot, orfleamarket,wheremanymorepeoplewillpass lemonade standatasportingevent,supermarketparking will passyourlemonadestand?Canyousetup you mightwanttoconsidersellinghotciderinstead. have difficulty movingyourlemonade.In coldweather, time outdoors,generatingfoottraffic? If not,youmay when peopledrinkalotoflemonadeandarespending competing beverages? and restaurantsstreetvendorswhomightsell lemonade atthesametime? Are youlocatedneardelis competitors? Are thereotherkidstryingtosell consider otherfactorsaswell. Who areyour You shouldalsoconsideroffering anotherproduct Consider youradvertising. You’ll needabigsigntocall Do youhaveanysubsidies? That is,wouldyourdadbe You haveacompetitiveadvantage –you’reyoungand Where areyoulocated?Howmanypotentialcustomers What isthedemandforyourproduct?Isitsummertime, Business Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat Interviewer You You You Interviewer Interviewer Interviewer You even begintothinkaboutrecommendingit. Whoa! Betterfindoutmoreaboutthisprepaidphonecardfirstbeforeyou prepaid phonecardtoitscustomers.Isthis agoodidea? You are advisingacredit cardcompanythatwantstomarketa 6. PhoninginaCase What’s thecost ofeachthesemarketingtechniques, : Whatareourmarketingexpenses? : Whatareourexpensesconnectedwiththecard? : Whatistheroleofourcompany?Dowesimplymarket : income requirements. earrings orfindtheonesyouwantonsale. This wouldloweryour It’s alsopossiblethatyoumightbeabletochooseanotherpairof enough tobabysit. you are14,apaperrouteispossibility. You mayalsobeold You shouldconsiderotherrevenue-generatingactivitiesaswell.If Telemarketers havea 2percentresponserateandcost : We normallyuseslips ofpaperthatareattachedtothe : We mustpay15cents foreveryminutewesell. We also : Thiscardwillbeco-marketedwithanoutsidephone : mailing andhavea0.50percent rateofresponse.Our $1.00 percall.Directmailings costus40centsper and whatistheirresponserate? selected customers. separate envelope.Orwecanhavetelemarketerscall sometimes alsosendcustomersadirectmailing–in backs ofourcreditcardpaymentenvelopes. We systems. have topay$1.00asastart-upcostforthecardand telecommunications functions. company. We donotneedtoperform expected toprovidethetelephoneservices? the cardormustwecreatethemourselves? Are we www.vault.com/consulting Business Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 87 Customized for: Jessica ([email protected]) 88 You Interviewer You Interviewer You Interviewer You Interviewer You We shouldalso considerthecompetitivelandscape for : Okay, let’s figurethisout. To sell1,000cardsthrough : Soifwesellthecardsfor$30,havea$20profit, : Andwhatisourexpectedrevenueonaone-hourphone : I’mgoingtoassumewewillsellone-hourphonecards. : L C I A B R R Whataresomeother issues youmightwanttoconsider? : What’s ourcoststructurelooklike? : Assumeit’s 50centsaminute. : Okay, thatsoundsreasonable. : A E E R R Y minutes expected tofall?Ifso,andourcosts areheld this business.Istheper-minute rateforcallingcard your analysis.) (Notice howtheintervieweris nudgingyoutoadd might beworthselling. $35, orconvinceourco-marketertoreducecosts,it envelope attachmentsapennyorso,sellthecardfor the priceofcard.Ifwecouldslicecost unless wecanfurthercutourmarketingcostsorincrease would be$20,000. We shouldn’t marketthiscard, only breakeven,becauseourprofitson1,000cards cheapest promotionalvehicle,at$20profit,wewould cents each,itcostsonly$20,000tosell1,000cards. contact 800,000peopleusingthatmethod.Butat5 envelope insertsaren’t veryreliable,we willneedto at 40centspermailing,costsus$80,000.Sincethe would havetocontact200,000thousandpeople,which, That wouldcostus$50,000. To usedirectmail,we telemarketing, wewouldneedtocontact50,000people. minus ourexpendituresonmarketing. phone card? card? What isthecurrentmarketratefor a60-minute card –soeachcostsus$10. That willcostus$9.00fortheminutesandadollarper response, butonlycostus5centseach. payment attachmentshavea0.25percentrateof We make$20profitoneachcard. Butevenusingthe Business Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) Thinking Strategically insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat Interviewer You You Interviewer Interviewer You Interviewer You mightproceed: Let’s seehowthisQ&A can orcan’t do.(Inthiscase,non-Trekkies mayhaveanadvantage!) should makesureyoudon’t assumeexactly whatthetransporter, asinvented, the transporterisanear-instantaneous teleportationdevice.However, you question, isprobablyafan)howexactlythetransporterworks.Effectively, the show–askyourinterviewer(who,ifsheorhehasgivenyouthis remember nottomakeanyassumptions.Don’t apologizefornotwatching Here’s another(actual)casewhichcallsforstrategyanalysis.Firstofall, of theeffectsontransportationindustry. hasjustbeeninvented.Spelloutsome Trek transporter The Star 7. BeamMeUp! Doesthereneedtobeanothertransporterattheend Canittransportanywhereatanytime? : : Thatwouldbeabout200pounds.Canittransportonly : Couldyoutellmeexactlyhowthetransporter works? : No,it’s prettymucha one-wayprocess. : Yes. : Anytypeofobject. : Let’s saythetransportercantransportaboutmass : receive thetransport? living things,orinanimateobjectsaswell? of CaptainKirk. How muchcanittransportatonetime? travelers andcouldbetargeted forotherpromotions. people likelytobuythesecardsmightbefrequent more frommarketingthesecards.Itcouldbethatthe constant, wemaylosemoney. Ofcourse,wecanlearn www.vault.com/consulting Business Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 89 Customized for: Jessica ([email protected]) 90 You Interviewer You You Interviewer Interviewer You Interviewer You Thesetransporters don’t seemlikethey’lltaketheplace : Thatmakesthemverysafeindeed.Okay, whatI’m Aretheysafe? You saidtheywerejustinvented. : : Thatclearlytakesthemoutoftherangemosthome : Howcommonarethesedevices? Are theygoingtobe : L C I A B R R Fine.Goahead. : Exceptfortheoccasionalfreakaccident, yes,theyare : Assumethatthemarginal costofatransportisnearzero. : Forthetimebeing,transportersareexpensive. They : A E E R R Y anyone weighingover200pounds maynotbeableto luggage wouldneedtobebeamed separately. And only drawbackthatIcanseeto thetransporteristhatany their destination,insteadofgoing totheairport. The Conceivably, passengerscouldbebeameddirectly to definitely beaseriouscompetitortoairlines. say, assafe planetravel. The transporterwill for planetravel.It’s instantaneousandfromwhatyou transporters aswell,theimpactontraffic maybegreater. perhaps 10to20percent.Ifmasstransitsystemsadopt So theremightbesomeimpactoncommutertraffic – office. They wouldneed atransporterchief,ofcourse. transport theiremployeesandclientsbackfromthe some companiesbuyingtransportersinorderto companies couldafford them,however. Icouldsee of cars. They aretooexpensiveforhome use.Larger airlines, cargo shippingandpackagetransport. following transportationindustries:cars,passenger going todoisanalyzehowtransporterswillaffect the safe. They areassafeplanetravel. relatively small. The onlycostisforthetransport-operatortime,which users. Howmuchdoesitcosttousethem? would costabout$100,000each. do theycost? readily availabletotheaverageconsumer?Howmuch On theotherhand,transporterisaterrificsubstitute Business Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat • Detailed 40-pageemployerprofilesontopemployerslikeMcKinsey, • • One-on-oneVaultCaseInterviewPrepwithconsulting experts • TheVaultCaseinterviewPracticeGuide • The onlyjobboardontheWebdedicatedtoconsultingjobs– • Surveysofemployeesathundredsconsultingfirms to theVaultConsultingCareerChannel For moreinformationoncaseinterviewsandconsultingcareers,go BCG, Bain,Accentureandmore Vault ConsultingJobBoard www.vault.com/consulting You Interviewer Thengettingpackagessentsameday, toanywhereinthe : That’s howIunderstandit,yes. : from itsintroduction. Shipping companieslikeFederal double ortriplethepriceof an one packageatatime. You mightbeabletocharge world, wouldbeapremiumservice. You couldonlyship once. transporter, thatyoucanonlybeamstuff tooneareaat assuming thatyoucan’t separatethe contents ofa too smallanamountformasstransport,andI’m used formostcargo transport. Two hundredpoundsis passenger traveltosupplementtheirflights. serve fewermarkets,astherewouldbemuch-reduced transport andotherheavierloads. They wouldprobably disappear, buttheywouldbeusedmostlyforcargo beamed atall. This meansthatairplaneswouldn’t As farascargo, Ithinkshipsandplaneswouldstillbe www.vault.com/consulting Business Cases Vault GuidetotheCaseInterview — with Express mightprofit overnight package. L C I A B R R A E E R R Y 91 Customized for: Jessica ([email protected]) 92 Using theFourPs Price some scopingquestionstounderstandtheevolutionofidea: goodanalysiswouldkickoff with membership asasubstituteoraddition.) A interviewer hasdeliberatelysetthiscaseatatimewhenyoucannotuseonline This isagoodcandidatefortheFourPsframework.(Notethat faults oftheprogram. Howdoyourespond? flights. Heturnstoyouandasksanalyzethemerits free reward loyalpassengerswith“points”they canredeem for wants toinstitutesomethingcalleda“frequent flyer”program to that American can’tseemtokeepmanyrepeat customersand client, whoistheCEOof American Airlines. The clienttellsyou It’s 1982. You’re aconsultant sittingontheplanenexttoyour 8. TakingWing ae nyu utmr’currentflighthabits,wouldyouset • Based onyourcustomers’ • Would therebeamembershipfeeforthisprogram? Would this • Would the currentcustomerservicebusinessunitbecharged with • Can yousketchthepurchasinghabitsofyourtopflyersforme?How • Have youdoneanymarketresearchwithinyourcustomerbaseto • Are youawareofanyprogramscurrentlyinexistencethatcaused milestones forawardredemption? at oroveracertainthreshold? program beavailabletoall American customersoronlythosewhofly separate initiative? implementing thisprogramorwouldyouconsiderinvestment ina airlines, etc.? frequents, dotheystickwithoneairlineorpurchasetickets onmany business vs.leisure,arethereaparticularsetofroutes this group much dotheycurrentlyspendonairtravelperyear, what percentageis determine howwellthisprogramwouldbereceivedifinstituted? major advantages/disadvantages? to considerthisideafor American Airlines? Ifso,whatdoyoufeelare L C I A B R R A E E R R Y Business Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat Promotion Position/Place Product the long-termbenefitsarenotworth thecreationofprogram. flyer milesareafactofbusiness history, your analysismightshowthat Be carefulofusinghistoricprecedent inhistoriccases. While frequent • Would thereeverbeanypromotionaldrivessuchasdoublingawardsor How wouldcustomerssignupfor thisprogram? Would• itbeautomatic, • How wouldyouintroduce thisprogramtoyourcustomers? Through behavior, wouldyouthink Based onyourknowledgeofcustomers’ • • Are youawareofanysimilarprogramsintoday’s marketplace?Ifso, • Would youawardextremelyhigh-volumeflyerswithadditionalperks? • Would theseaccumulated criteriaeverexpire? • What wouldbeaccumulated–points,miles,levels? • What otherrewardswouldbeavailabletomembersbesidesflights? • Would therebeany redemptionrestrictionsbasedonrouteorday? What needwouldthisprogramsatisfythatdoesnotcurrentlyexistinthe • • Would theprogrambebasedonmiles,segments,priceoftickets,or offering bundlepricing(suchastwo-for-one)? a form,phonecalltocustomerservice? flyers oralltheflyingpublic? airports, themedia,travelagents? Would itbeavailableonlytofrequent airlines duetothelossofmiles/statuswith American? that itwouldmakedifficult forhigh-volumecustomerstoswitch that afrequentflyerprogramwouldinducehighswitchingcosts,such what woulddifferentiate yourprogramfrom othersthatalreadyexist? attained, woulditbegoodforlife? What wouldtheybe? Would flyershavetore-earnthisstatusor, once Special memberloungesinairports?Carrentals?Hotelrooms? marketplace? another factor? www.vault.com/consulting Business Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 93 Customized for: Jessica ([email protected]) 94 Sailing theFiveCs ol o eiewehro o obyi,adhwmc opyfrit? nottobuyit,andhowmuchpayfor or would youdecidewhether 9. You havetheopportunitytopurchase alandscapingbusiness.How Conditions Collateral Capital Capacity Character This questionisagoodcandidatefortheFiveCs.Determine: • Describe themarketspacebusinessoccupies.Isitaleader? Are assetsimpairedinanyway? Obsolete • Are anyofthebusiness’ • What isthecompany’s newaccount history?Howmuchbusinessis • What isthecompany’s cashflowlikeoverthelastfiveyears? • Isthelandscapingbusinesscarryinganydebt? What isitsdebtratio? • Are theassetsofcompany(property, plant)strainedorinastateof • Is thebusiness turningawaynewcustomersduetolackofequipment/ • Doesthebusinesshaveapositiveemployeeculture?itengagein • Isthereanylegalactionpendingagainstthebusiness? • How wouldyouevaluatethesincerity, honesty, andintegrityofthe there manyplayers? equipment, forinstance? new vs.repeat? disrepair? employees? any charitableorenvironmentalinitiatives? issues? suppliers, customers)valuethemaspartners,oraretherecharacter owner ofthebusiness?Doothersthattheydealwith(employees, L C I A B R R A E E R R Y Business Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat Capital Capacity Character the uniquedynamicsofstart-upenvironment. Another greatcandidateforthefiveCs.Herearesomepointsadjusted problems? estimate marketsize?Onwhichfronts doyouanticipate 10. You haveinheritedastart-upsoftware company. Howdoyou • What advertisingandpromotionalactivityhasbeendone?Howmuch • Is themarketforlandscapingsaturated? Are thereopportunitiesfor • What definesdominanceinthismarket?Cost?Economiesofscale? • What isthemakeupofinitialseed capital tostartthebusiness? • What is theplanforproducingproductwhencodeisready?Is What istheprevioustrack recordofeachtheprincipalsstartup? • • What isthetimeline/progressofdevelopment,coding,testing,and • Does themissionofstartupmakesense?Isitsbusinessconcept • Isthereanylegalactionpendingagainstthebusiness? • How wouldyouevaluatethesincerity, honesty, andintegrityofthe does thebusinessspend(asapercentofsales)onmarketingitsservices? expanding thecurrentcustomerbase? business fallagainsttheaforementionedmetrics? Speed tomarket?Relationshipswithcustomers? Where doesthis Personal assets,smallbusiness loan,venturecapitalfunds? it anoptiontooutsourcestamping, packagingandshipping? sense? production asoriginallyconceivedinthebusinessplan?Does itmake sound? issues? suppliers, customers)valuethemaspartnersoraretherecharacter owner ofthebusiness?Doothersthattheydealwith(employees, www.vault.com/consulting Business Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 95 Customized for: Jessica ([email protected]) 96 Conditions Collateral First ofall,youneedtoaskyourinterviewersomebasicquestions: continue thecontractswiththirdparties? tobuildadistributionnetworkor would youassesswhether products through athirdparty. How continue todistributetheir clientmay not. There isstillachancethatour favorable termsor thenewcontracts contain whether expiring, anditisunclear established entities,butthecontractswiththosecompanies are distributionthrough other, more currently contracttheir homevideo. They them inbuildingadistributionnetworkfor entertainmentcompanytoassist We havebeenengagedbyamajor 11. DistributionCase • What istheadvertisingandpromotionalactivityplannedforthis • Is themarketforthistypeofproductsaturated?thereaparticular • What definesdominanceinthismarket?Cost?Economies ofscale? Describe themarketspacebusinessoccupies. Why didthebusiness • • What hasbeendonetoprotecttheintellectualcapital/property • Haveanypatentsbeenappliedfor? What istheirstatus? • What isthedebtstructurelikeifitexists?Interestrates,duedates, • It makessensetoaskyourinterviewerabout bestpractices–thatis,what • product? against otheralreadyestablishedproducts? unfulfilled segmentwherethisproductfits,orwillitbecompeting business fallagainsttheaforementionedmetrics? Speed tomarket?Relationshipswithcustomers? Where doesthis come intoinception? associated withthesoftwaredesign? rollover ability, securedassets,etc.? distribution network? Does thecompanyhave staff andresourcestocreate itsown are otherentertainmentcompanies doing? What arethecurrentcosts? L C I A B R R A E E R R Y Business Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat After answeringthesequestions,makearecommendation. its currentdistributor, orchooseanewone? makes themostsense.Nowquestionis–shouldcompanystaywith questioning, you’vecometodecidethatstayingwithathird-partydistributor the ramificationsofreassigningpersonnel.Let’s saythat,through staff tohandlesettingupitsownnetwork, there’s nocalltodelvedeeperinto the interviewerconfirmsthat,yes,companydoeshaveenoughcurrent interviewer mayalludetocertainavenuesdiscuss,orshutdownothers.If After establishingsomebasicfacts,it’s timetogetmoredetailed. Your • Does theclienthaveanyfinancialinterestindistributionpartnerthat • • How receptivearetheclient’s accountstochangingdistribution • How manyweeksofsupplyarecurrentlyinthedistributionpartner’s Could youcharacterizetherelationshipbetweenclient’s• distribution • Who arepossiblealternativepartners? Who usesthem? Does theclienthaveadedicatedfunctionalstaff assignedtotheproject? • Has theclientattemptedtoassessbuildingitsowndistributionnetwork • • What istheclient’s currentcostofdistributionthroughitscontractual • Of themajorentertainmentcompaniesthatproducevideo,domost might havetobesevered? valuable, etc.totheaccounts? accounts thataclient-ownedsupplychainwouldbemore efficient, partners? Hasavaluepropositionbeencreatedtoshowthe client’s pipeline? the distributionpartnerifclientseversitstiestothisparty? partner andtheclient?Isthereapossibilityofretaliationonpart If so,whatfunctionalareasdotheyrepresent? before retainingus?Ifso,whatwereitsfindings? partner(s)? parties? distribute through theirownproprietarysupplychainorthird www.vault.com/consulting Business Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 97 Customized for: Jessica ([email protected]) 98 turn onpower?) At thesametime, yourcompanymayneedtostartcharging addresses andcontactnumbers? Perhapsrequiringadepositfromstudentsto students thatneglecttheirbills? Shouldyoustartaskingforsecondandthird arrangement withtheuniversity thatdeniesdiplomasorregistrationto frequently andoftenneglecttheir lastutilitiesbills.(Canyouworkoutan Perhaps yoursmalltownishometoauniversity, andstudentsmove recommendation onhowtosolveit. You mayhavemorethanoneproblem. After you’vedeterminedthenatureofproblem,you canmakea Some questionsyoushouldask: woes. down theproblem–andthenyoucandetermineasolutionforcompany’s now neglectingtheirregularphonebills? You won’t knowuntilyoupin instead ofgas?Haveyourcustomersadoptedcellphonesenmasseandare customers turntotheirwood-burningstovesforheatandcookingpower Gas? Phone?Coulditbethatyouarebasedinasmall,ruralareawhere First ofall,you’llneedtoknowwhatkindcompanyyouare.Electric? customerstopayontime. What doyoudo? trouble gettingyour You’re autilitiescompanyinsmalltown,andyou’re having 12. APowerfulCase • At whatpointdowecurrentlycutoff slowpayers?(Perhapsthe actions? • Are thereanygovernmentorstateregulationsthatwillaffect our • What dowecurrentlytomotivateslow payerstopaytheirbills? • Howlatearethepaymentsofslowpayers? Is theareainarecessionorslumpthataffects theabilityofcustomersto • • Isthereacertainsegmentofthepopulationthatisnotpaying? • Howmanyofthoseslowpayersneverpay? • Howmuchmoneydowelosefromslowpayers? • What percentageofourcustomersarenot payingontime? • What isthecompositionofourcustomer base? • Where arewebased? employees whorefusetocutoff powertotheirfriendsandfamily.) company. Or, ifthetownissmallenough,it’s possiblethatthereare company issoslowtodothatcustomersaretakingadvantage ofthe pay theirbills? L C I A B R R A E E R R Y Business Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat suppositions withtheinterviewer. industry you’representedwith–don’t proceedwithoutclarifyingyour if youthinkunderstandtruckleasing,orshrimpfarming, oranyother It goestoshow–youcannevermakeassumptionsincaseinterviews! Even Interviewer Candidate Interviewer Candidate Interviewer Candidate Interviewer Candidate Interviewer Candidate Interviewer Candidate Interviewer Candidate Interviewer actual exampleofhowone“pressure case”startedoff: interviews thatare seeminglydesignedtobe stressful. Here’s an While mostinterviewerswillbepleasant,there are some 13. UnderPressure months offorgiveness yourutilitygives. higher latefeestoothercustomerswhoaresimplytakingadvantageofthesix Igiveup! : Whatkindsoftrucksdowelease? : (Taken aback) Who areourcompetitors? : Well, whatcountriesinEuropearewe targeting? : What? : Um,marketentry? : Huh? : Whatistruckleasing? : Wrong, wrong. : Wrong. : Wrong! : Truck leasing.Europe. : Okay. Truck leasing. : We don’t havemuchtime.Givemeacase. : Okay, whatkindofcasedoyouwant? : www.vault.com/consulting Business Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 99 Customized for: Jessica ([email protected]) 100 A WrittenCase 1) Strategic assessment use asaframeworkforthisanswermightbe: successfully istobesuccinct,logical,andspeedy. An appropriateoutlineto under timepressure. The art ofansweringwrittencaseinterviewquestions detail. This isaveryeasymistaketomakesinceyouwillbenervousand outline andthenfleshoutthosepoints.Don’t writetoomuch,orinmuch The bestwaytoapproachwrittenbusinesscasequestionsiscreateabrief like. You have30minutestocompletetheexercise. answers. You maybulletpointifyou Please besuccinctwithyour approach tothefollowing: describe your consistentwiththisinterest. Below, please assets inamanner information andhightechnologywouldliketoutilizetheir billion inassets. They are primarilyfocusedontheconfluenceof 14. Widget Associates isaprivateequityplacementfirm with $3 and apotentialoutline. interviewer andthecandidate.Here’s anexampleofactualwrittencase Some casesarewrittenanddonotinvolveaninteractiveprocessbetweenthe • Suggestionsforinitialplacementoffunds • Creating avaluepropositionthatmarriesitsstrategicvisionwith • Evaluatingitsmarketinterestandpotentialforsuccess direction strategic Widget• Assessing Associates’ (e) Riskassessment (d) Widget’s potential foraroleinthisindustry (c) Tools touse(Porter’s FiveForces,BCGMatrix,etc.) (b) Keymembers,marketpotential/forecast,volatility (a) Industryassessment marketplace dynamics L C I A B R R A E E R R Y Business Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat situation. would taketoassess,evaluate,analyze,andrecommendactionforthe or evenflashesofwhatyouperceiveaswit.Justincludetheactions Remember thattheinterviewerisn’t looking for The Great American Novel, question simplyasabove,withalittlebitofdetailattachedtoeachsub-point. This isprobablyanoverlydetailedoutline,butyoumaychoosetoanswerthe 3) Tacticaleffort 2) ValueProposition (d) strategy (c) Evaluateallpotentialmarketplaceoutcomesandvalidateagainst etc.) (b) Assess readinessofkeyplayers(managementteam,legal,financial, (a) Identificationofashortlistprimarytargets (b) Justificationforinjectionofoutsidefundsintothisindustry (a) Assessment ofthevalue Widget bringstothisindustry decision points Construction ofworkplanwithmilestones/deadlinesandgo/no www.vault.com/consulting Business Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 101 Customized for: Jessica ([email protected]) 102 The FinancialCaseInterview worthwhile investment,including: Tell yourintervieweryouwouldlookatvariouscriteriatodetermine ifit’s a investment? 15. What isacompanythatyoufollowclosely? Isitagood Consulting firmsoftenusesimilarcases.Hereareafewsuchquestions. interviews –theyofteninvolvebothstrategyandquantitativeknow-how. give questionsthatcould,underothercircumstances,becalledcase Case interviewsaren’t justforconsultantsanymore.Manyinvestmentbanks • • • • • or superiormanagement. contracts, adifferentiated product,brandequity, alower cost structure, competitive advantagesoveritscompetition,suchaspatents, exclusive products areconsideredcommodities. competitors; whethermarketplayershavepricingpower;and industry isconsolidating;howintensethecompetitionamong at factorsincluding:howrapidlytheindustryisgrowing;whether determine whetherthisisanattractiveindustryinwhichtoinvest.Look model inExceltotestvariousassumptions. services; analystestimates;andperhapsbuildingyourownfinancial companies intheindustry;growthrateofmarketcompany company’s historicgrowthrate;earningsratesofother expected togrow, lookingatthefollowingfactors(amongothers): portfolio andobjectives. You wouldwanttoaskquestionslike:Does whether aninvestmentinthe companyfitswellwithyouroverall relatively expensiveor affordable. to othercompaniesintheindustry todeterminewhetherthecompanyis price-to-book-value. You wouldalsocomparethesevaluationmeasures valuation measures,likeprice-to-earningsratio,price-to-sales ratio,and would comparethecompany’s expectedearningsgrowthtovarious Earnings growth: Valuation: Competitive advantages: Industry analysis: Portfolio considerations: L C I A B R R A E E R R Y Given itsprospects,isthecompanyagoodvalue? You Determine howfastthecompany’s earningsare Evaluate theindustrycompanyisinto Evaluate whetherthecompanyhasany Business Cases Vault GuidetotheCaseInterview Finally, youwouldwanttodetermine © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat gives youthischart: What isthemarketpositionofflourcompany?Let’s sayyourinterviewer goodwill taxwrite-offs, thetotalbaseline valueis$120. divided bythediscountrateis$112 million. Assuming $8millionin the discountrateusingCapital Asset PricingModel).Let’s sayCashFlow discount rateis0.10.ifyourinterviewerasks,tellhimyouwouldcalculate Cash Flowdividedbythediscountrateisnetpresentvalue(Let’s saythe will bestable. Therefore, CashFlow=Net OperatingProfitafter Tax. At zerogrowth,CapXshouldequaldepreciation,andtheworkingcapital Depreciation +/-Changesin Working Capital) cash flow/discountrate.(CashFlow=NetIncome–CapitalExpenditures+ margins andzerogrowth. The valueofthecompany(ornetpresentvalue)= Calculate thebaselinevalue–ofcompanywithconstant reason, anddeterminewhatthetarget’s valueistoyourclient. First, assesswhethertheaskingpriceof$130millionisinballpark audited financialinformation,andyoucandointerviews. is$11.2 million. You have taxthisyear The company’s profit after company basedintheSoutheast. The askingpriceis$130million. asked toassessthepotentialacquisitionofapremium pricedflour foodmanufacturer. You havebeen 16. You represent amajor meet yourportfolio’s riskprofile? the companyhelpdiversifyriskinyourportfolio?Does 00 20 40 60 80 0 www.vault.com/consulting Target's 3-StateMarket Area Flour Share Business Cases Vault GuidetotheCaseInterview — with Target Other Private Label Competitor D Competitor C Competitor B Competitor A L C I A B R R A E E R R Y 103 Customized for: Jessica ([email protected]) 104 value-added consumerproducts Provide learningexperiencein revenue realizationforby-product Leverage know-howtoimprove in outlyingmarkets Leverage distributioncapabilities Economies ofscaleinpurchasing Potential Synergy million. there willbeinmarketexpansion, synergies arelikelytobeatleast $30 The baselinevalueis$120million. While itisuncertainhowmuchupside chart: What arethepossiblesynergies withthe foodmanufacturer?Sketchouta Interviewer You Interviewer You about theflourcompany. Now youmustaskyourinterviewerquestionstosupplementknowledge Will furtherexpansion intoothermarketsbepossible? : Will priceincreases besustainable?Howmuchwill : L C I A B R R Lessthan2percent. While thefirmhasexpandedinto : Priceincreaseshavebeenseeneveryyear, andprices : A E E R R Y lower margin thanexistingbusinesses. very high.Sharegainsarepossiblebutslowlyandata non-core markets,advertisingandmarketingcostsare What isthefirm’s shareinnon-coremarkets? to 3percentperyear. will probablycontinuetoriseoverthenextfiveyears,2 prices increaseperyear?Howmodernarethefacilities? NPV Impact ($M) 12.0 20.0 14.0 Business Cases Vault GuidetotheCaseInterview ? Probability Total 70% 70% 60% ? NPV Impactx © 2007Vault Inc. Probability ($M) 30.2 12.0 9.8 8.4 ? Customized for: Jessica ([email protected]) Additional PracticeQuestions insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat probably like. parking lotsat4a.m.(andother suchhijinx)moreoftenthantheywould win pointswithconsultants,whoactuallyhavetodrivearound andlookat period oftimeindifferent locations? This kindofreal-worldapproachwill rented outatanygiventime,andwhatkindtheyare– do thisovera approach. Why notsimply look outonthelotandseehowmanycarsare Another waytolookatthisquestionisuseareal-life“out-of-the-box” This casequestionisagoodcandidateforthe Value Chainapproach. company. Howdoyoumeasure itsefficiency? ofarental car 17. You havebeenappointedthemanager business isagoodbuy. price increases.Itsbrandpositionshouldallowapremium. The flour The flourbusinessismature,butsecure.Itsvolumedeclinesaresetoff by From thisyoucanascertain: • Does thebusinessexhibitanyseasonality(forexample,areyou • What percentageofyouremployees callsinsickeverydayon • What percentageofyourfleetisdownforrepairsonaverage?How • How fastisavehicleturnedaround(fromdrop-off tobackonthe • What isyouraveragerentaltimeperiod?(Onhowlonga advertising)? • What areyourexpenses(cars,insurance, rentalofcaroffice, do youaccountfortheseeffects? located nearaskiresortthatseesbusinessboominthewinter)? How average? Howdoesthiscomparetotheindustry? does thiscomparetotheindustry? line)? What istheindustryaverageforthis turnaround? car checkedout?) www.vault.com/consulting Business Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 105 Customized for: Jessica ([email protected]) 106 formulating yourrecommendation. attractive industry?),Porter’s FiveForcesisoneframeworkusefulin Since thiscaseisprimarilyaskingforanindustryanalysis (isthisan market. attractiveness ofthehelicopter company. You havebeenaskedtoassessthelong-term helicopter nottoinvestina or clientistryingtodecidewhether 19. Your Questions thatwouldhelpfocusthissituationinclude: impact ofheadcountreduction,theintroductionnewtechnologies,etc. is tobalancethefinancialrealitiesofsituationagainstorganizational This isanorganizational changequestion. What isespeciallyimportanthere thenexttwoyears. over sales force. They wanttocut$50millionincostsfrom thisarea clienthasengagedustoassisttheminreorganizing their 18. Our • What arethemeasurementsofsuccessforthisproject? • What arethemajorriskfactorssurroundingthisproject? • Canyoudescribeanydynamicsuniquetothisclient’s businessthatput • What istheearlyassessmentoforganizational climateforchange? • What isthescopeofchange?Doesitincludedownsizing, • What istheearlyestimateofhowmanypeoplecouldbeinvolved? • What isthetimelineforreorganization process? • What istheprimarybusinessforthisclient? the successofprojectatrisk? any? Are theyreceptiveorresistant? What are thereasonsforresistanceif reengineering businessprocesses? introduction oftechnologies,closing/selling-off oflocations, L C I A B R R A E E R R Y Business Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat to consideracountryorregion of America wherethecostoflaborislower. other hand,yourpaperplantrequires thousandsofemployees,youmaywant another developedcountrywhereyouhaveaccesstoskilledlabor. If,onthe plant ishighlyautomated,itmightmakemoresensetobuild it in America or Analyze yoursupplychain. Where doyouincuryourcosts?Ifpaper build theplantin. What factorswouldyouconsider? plant. You mustdecidewhich countryto must buildanewpaper 22. You company are headofalarge American corporation. Your customers totightentheirbelts. slump intheeconomythat of ABC’s fleetduetostringentnewgovernmentregulations,ageneral Causes mightrangefromariseinthecostoffuel,toneedreplacemost other airlinesarelosingmoney, orsuffering dropsinprofits.Ifso,why? such asthecompetitiveenvironment.Questionsincludeaskingwhether Remember toconsiderthefirm’s actionsaswellexternalmarketforces client, ABC Airlines, islosingmoney. Why? 21. Our take yourclient’s wishesasrepresentingthebestcourseofaction. recommend thebestcourseofaction,includinganoptimaltimeline,notto whether threeyearsisarealisticorevenoptimaltimeline. Your jobisto unless yourinterviewertellsyouotherwise.Inthiscase,shouldquestion constrained bythecompany’s hoped-fortimelinesorbudgetconstraints, without spendingmorethan$5million;etc.). You shouldnotnecessarilybe wants toreachitsgoalwithinsixmonths;thecompany “constraints” thatrepresentthewishesofclient(forexample, Note thatyourinterviewerwilloftenimposedeadlinesandother hopes toreach itsgoalinthree years. What doyouadvise? improving profitability through growth. The company strategy for largehealthcare companyhashired youtodeterminea 20. A www.vault.com/consulting reduces thenumberoftouristsandcausesbusiness Business Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 107 Customized for: Jessica ([email protected]) 108 important toaskquestions.) The nextsetofquestionsyou shouldaskwould activity inpreparationforentry into Asia. (Nowyouseewhyit’s so involves asoftwarepackage selectionforautomatingtradepromotions Let’s saythatinresponseto yourquestions,youlearnthattheproject questions. Fromhere,youcan pursueamorespecificseriesofquestions. You shouldhavemoreinformationaboutthenatureofprojectafterthese seriesof“helicoptering”questions: situation inmoredetail. A This isanexampleofabroadquestionwhereyoumustfirstassessthe would youadvise? is considering introducing itsflagshipbrandinto Asia. What brandproduct manufacturer consumer multi-billiondollar 24. A particularly wellthatmayapplytotheairlinebusiness?) ticket theirpassengers? Are companiesinthatindustrydoinganything the airlineindustry. Forexample,howdopassengerrailroadsorcruiseships (Remember thatbestpracticesforaparticularprocessmaybefoundoutside handling? What aretheydoingright,andhowcanweemulateit? lowest costsineachofthethreeareasfoodservice,ticketing,andbaggage You wouldalsowantto examine“bestpractices”:whichairlineshavethe industry? handling. Are yourclient’s costsineachoftheseareashighorlowforthe airlines spendoneachpassengerforfoodservice,ticketing,andbaggage certainly wanttoknow(oratleastbeableestimate)howmuchother Benchmarking isonegoodstartingpointforthistypeofcase. You would baggage handling. What wouldyouadvise? onfoodservice,ticketing,and passenger of moneyitspendsper airlinethatwantstoreduce theamount clientisamajor 23. Your • What businessunitwithintheorganization hasengagedus? • What isthenatureofclient’s business? What istheir flagshipbrand? • What isthetimingforourinvolvementwiththisclientandproject? • What aretheriskfactorsassociatedwiththisproject? • Why hasthecompanyengagedourservices? L C I A B R R A E E R R Y Business Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) And TryTheseforMorePractice insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat loigo disallowing snowboarding? allowing or before considering allowingthesport. What shoulditconsider skiresort currently forbidssnowboarding, butis major 27. A you adviseJerseyWeb todo? innearbyConnecticut. What would small Internetaccessprovider in annualrevenues. JerseyWeb isconsideringacquiringanother with$20million 26. JerseyWeb isasmallInternet accessprovider before youmeetwiththe client? gather about advisingthisclient? What information wouldyouwantto group. Howwouldyougo firm’s M&A our potential clientfor mediaassetsandisa considering diversifyingintonon-newspaper chainthatis 25. EasternNewspapersisalargenewspaper gathered. Forexample: be drilldowns– • What arethemeasuresthathavebeenestablishedtoevaluatesuccess • • Has aworkplanbeendevelopedforthisproject? What isanoverview • What experiencedoesthefirmhavewithsimilar • What clientstaff willbeparticipating intheproject? What aretheir • What isthetimeframeforpackageselection? • Haveanyvendorsbeenidentifiedfortheselection?Ifso,whom? of thisselection? of thisplan? engagement? Why orwhynot? engagements/industries? Canwedrawuponthatexperienceforthis roles intheorganization? teasing outthefinerpoints–oninformationyou’vejust www.vault.com/consulting Business Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 109 Customized for: Jessica ([email protected]) 110 • Detailed 40-pageemployerprofiles ontopemployerslikeMcKinsey, • • One-on-oneVaultCaseInterviewPrepwithconsultingexperts • TheVaultCaseinterviewPracticeGuide • The onlyjobboardontheWebdedicatedtoconsultingjobs– • Surveysofemployeesathundredsconsultingfirms to theVaultConsultingCareerChannel For moreinformationoncaseinterviewsandconsultingcareers,go BCG, Bain,Accentureandmore Vault ConsultingJobBoard www.vault.com/consulting ae fyu music. What shouldyoudo? sales ofyour 29. You are BritneySpears. You are afraidthatMP3swillhurt $3.55 unit What kindofmarketisthis? priceper $3.50 unit Delight Syrupshare 15percent priceper Catchall Syrupshare 16percent $4.10 $5.00 unit Beastly Syrupshare 27percent priceper unit priceper Absolute Syrupshare 42percent unitare asfollows. market share andpriceper 28. h al yu akthsfu maincompetitors. The The maplesyrupmarkethasfour L C I A B R R A E E R R Y Business Cases Vault GuidetotheCaseInterview © 2007Vault Inc. GUIDE INTERV CASE Customized for: Jessica ([email protected]) career message boards,expertresume reviews,theVaultJob Boardandmore. Visit Vaultat CASES INTERACTIVE www.vault.com for insidercompanyprofiles, expertadvice, Customized for: Jessica ([email protected]) Customized for: Jessica ([email protected]) A FitInterviewinDisguise How toUsetheInteractiveCases insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat have toprovide theapproach.) problem, butyoumayhaveto make estimatesandassumptions,youwill your clientandmayprovidecertain backgrounddatanecessarytosolvethe designed tosimulatetheactual consultingenvironment–theintervieweris environment ascloselypossible. (Remember, thecaseinterview is The ideaofourinteractivecase exercisesistosimulatethecaseinterview interactive caseexercisescomein. practice yourpoiseistowithsomeoneelse. That’s wherethese The goodnewsis,youcancrackthispartofthecase,too. The bestwayto analysis inclear, succinctsentences,thebetter youwilldoattherealthing. prepared youaretowalkthroughyourthinkingaloudand explainyour tougher communicationpropositionthanpublicspeaking. The better interview andnailedit.Butformostofus,thecasecanbea We knowofahandfulpeople who walkedrightintotheirfirstcase analysis itself. actual vocaldeliveryoftheanalysisasitistobeablethinkthrough you beliketoworkwithonateam?Itisjustasimportantpracticethe communicating yourlogic?Howwouldclientsperceiveyou? What would It’s notjustaboutwhat’s goingonupstairs.Howgoodareyouat interviewer isgettingasnapshotofwhatitwouldbeliketoworkwithyou. In fact,smartcandidatesrealizethatthecaseinterviewisanaudition. The poise asmuchyourintellect. presentation inaninterview too manyum’s, a solutiontosomeoneelseandstumbledonwords,stuttered,threwinfew thoughts andbeevenabitantagonistic.Howmanyofushavetriedtoexplain out loudforacompletestranger–someonewhoispreparedtochallengeyour space. Butitisanentirelydifferent endeavor towalkthroughthatanalysis It isonethingtotearapartabusinessproblemintheprivacyofyourown your preparation:delivery. preparation. Nowit’s timetobuildonyourskillsandaddthesecondhalfof cases. Congratulations! You’ve acedtheanalysishalfofcaseinterview You’ve memorizedtheframeworksandyou’vewalkedthroughpractice or hadtoretraceourstepsafterlosingplace?Poor www.vault.com/consulting can sinkyou–consultantsareassessingyour Interactive Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 113 Customized for: Jessica ([email protected]) 114 Exercise How ToRunanInteractiveCase logical stepintheanalysis. the backgrounddataprovided or assisttheintervieweeinreachingnext an impasse.Iftheinterviewee iscompletelystuck,offer adatapoint from It’s theinterviewer’s responsibilitytonudgethingsalongifthey’vereached ask “Whydoyouthinkthat?”or“Wherearegoingwith youranalysis?” assumption orstatesafactwithoutgivinglogicalreasonsfor her assumption, interviewee gives,butthelogicbehindthem.If makesan If you’retheinterviewer, youmustanalyzenotjusttheanswers necessary. interviewer revealinginformationfromthebackgrounddata sectionas ask questionsoftheintervieweraboutfacts case, withthe question sectionsdirectlytotheinterviewee. The intervieweeshouldthen To beginthepracticesession,interviewershouldreadcontextand prepared toanswerquestionsfromtheintervieweebasedoncase. and understandtheentirecaseexerciseaheadoftime.Heorsheshouldbe To runoneofthesecaseinterviews,thedesignatedinterviewer shouldread • • • • • As you’llsee,eachofthesecaseshasfivesections. with you!) andfindsomeonetopractice (If youplantousethesecasesyourself,STOP case. Makesuretheintervieweehasn’t readthroughthecaseaheadoftime. understand theanalysis,andbepreparedtoguideintervieweethrough interviewee. The interviewershouldreadthroughthecasebeforehand, other. Haveonepersonplaytheinterviewerandotherbe The followingsetofcasesisdesignedfortwopeopletopracticewitheach to theintervieweeasheorsheisaskedforit. Study notes Suggested approach Background data Question Context L C I A B R R – Initialsetupforthecase. A – What theintervieweeneedstoanswer in solvingthecase. E E R R Y fewkeytipsforsolvingthecase. – A – Additional informationthattheinterviewerwillreveal – Onepossiblesolutiontothecase. Interactive Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat score theinterviewer’s performanceasfollows: on hisorherperformanceandgooverthestudynotes.Forexample,youcan After thecase,interviewershouldgiveintervieweebalancedfeedback Scoring thecase engagements, whenthingsroutinelycomeupatthelastminute. well; it’s designedtopushtheintervieweeevenfurtherandsimulatereal main question. This happensinrealcaseswhentheintervieweehasdone interviewer shouldposethisquestionaftertheintervieweehasanswered At theendofdatasection,you’llfindafollow-upquestion. The e) d) c) b) a) f) specific totheinterviewer’s firm.(5points) Questions guesstimates (15points) contact throughouttheinterview. (10points) solid mannersandbusinessetiquettethroughout.Maintainedeye recommendations andfollow-upinsights.(10) together thepiecesofpuzzleandoffering thoughtful Summary Quantitative Skills Presentation wanted toguidethecaseadifferent way. (30points) the abilitytobeflexibleandchangedirectionsifinterviewer continued tothinkoutloud.Usedaframeworkifappropriate.Showed of reasoningtosolvetheanswer. Laidoutaroadmapupfrontand Problem Solving interviewer. (30points) and succinctly. Explainedthoughtprocessesinsufficient detailforthe Communication – Asked theinterviewertwoorthreethoughtfulquestions – Wrapped upthecaseforinterviewer, bringing – Shookhands,smiled,waswell-dressed,anddisplayed www.vault.com/consulting – Relayedthoughtsandideastointerviewerclearly – Followedalogical,thorough,well-connectedpath – Showedgoodfacilitywithnumbers,including Interactive Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 115 Customized for: Jessica ([email protected]) 116 Tips fortheCase seems tocover revenues.Let’s moveontocosts next.Ithinkthevariable transitioning tothenextstepof youranalysis,signalthatfactclearly. “That lay outyourapproachahead of timefortheinterviewer. When youare Practice communicatinginasuccinct, clear, engagingmanager. Forexample, – oratleasttounderstandwhat thequestionis! to demonstrategoodlistening. Above all,don’t forget toanswerthequestion forget totakenoteswhiletheinterviewerisspeaking,andnodparaphrase Review theframeworksinthisguideandapplythemjudiciously. Don’t If youaretheinterviewee,bringyourleathernotepadand favoritepen. For theinterviewee also havesomebasicquestionsreadyfortheintervieweeabout “his”firm. quick, thoroughanswerstothesequestionsready. The intervieweeshould for thisfirm?”and“Whyshouldwehireyou?” The intervieweeshouldhave These are“Whydoyouwanttobeaconsultant?”work and almostallofthetimetheywillfallinsomeformthreebasicquestions. Note thatcaseinterviewsoftenstartwithahandfuloffitinterviewquestions, solving rightaway. Hereisthetypicalformatforacaseinterview: If youreallywanttosimulateacaseinterview, don’t startwiththecase Simulate theactualcaseinterviewformat then steertheconversationbacktocaseathand. covered inyourmaterials,acknowledgethatagoodpointhasbeenmade,and and revealit.Iftheintervieweecomesupwithsomebrilliantpointthatisnot but iftheintervieweeasksforapieceofinformationthatislisted,goahead overly willingtovolunteerthebackgroundinformationwithoutbeingasked, average, businesslikeyetfullyintendingtohelpyoucrackthecase.Don’t be If youaretheinterviewer, berealistic.Realconsultinginterviewersare,on For theinterviewer case exercises. Here areafewpointerstomakesureyougetthemostoutofinteractive 3) Questionsfortheinterviewer(3-5minutes) 2) Casequestion(15-20minutes) 1) Directfitquestions:(5-10minutes) L C I A B R R A E E R R Y Interactive Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) Sample InteractiveCases insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat MediaCocouldbenefitfrom economiesofscaleproductionifitwereto • Assumetherearenoothercostsofproduction. • Eachplanthasidenticalcostsofproductionat75centspermagazine. • Bothplantsareatequalcapacity. • Background data Question: What shouldMediaCodo? considering shuttingdownoneoftheplantsinordertosavecosts. operating plants:oneinupstateNew York, andoneinOregon.Itis delivers amagazinewithnationaldistribution.Currently, ithastwo Your client,MediaCo, isapublishingcompanythatcreatesand 1. MagazinePublishingCompany case studies,orbusinessideasyou’vebeendrummingupinyourhead. cases onyourown. Take them frompreviousworkexperiences,classroom and convertthemintotheinteractivecaseformat. You canalsomakeup If yourunoutofinteractivecases,feelfreetotakepreviouscasesinthisbook employees, orfellowstudents. These includecurrentconsultants,alumniofyourschool,careerservices practicing withfolksyoudon’t knowverywellbutarewillingtohelpyou. interviewers, wemighttendtobealittlemoreforgiving ofourfriends. Try don’t wanttogetusedacertaincasegiver’s style.Moreover, asmock You neverknowwhatkindofpersonalityyourinterviewerwillhave,andyou give himthechancetocommunicatethisyou. interviewer wantsyoutospendmoretimeonapartofyouranalysis,thiswill costs couldbethemostimportantpart,solet’s startthere.”Ifyour inking processbutnosavingsin thepaperprocess. produce fromjustoneplant. This wouldresultina20% savingsinthe – Ink: 35cents/magazine – Paper: 40cents/magazine www.vault.com/consulting Interactive Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 117 Customized for: Jessica ([email protected]) 118 Shut downOregon Shut downNew Keep bothplants We cannowworkoutthepermagazinecostsundereachscenario: readership isintheEasternU.S. because itcostsmoretodeliverfromOregon,wecaninferthat mostofthe one plant(thecasegivermightpushthereceivertoexplainwhy). Moreover, Distribution occur ifeitherplantwereshutdown. decrease from75centsto68permagazine. This costsavingswould reduce itsinkingcostsfrom35centsto28cents,sotheoverall costwould Production Let’s analyzethetwomajorcostbuckets:productionanddistribution. impacts toeachscenario. upon margins ineach.Intermsofcosts, we candeterminepossiblenegative shut downOregon),andwehaveenoughinformationtoassesstheimpact there arethreepossiblescenarios(keepbothplants,shutdownNew York, or cost-benefitframeworkwillworkwellforthiscase.Interms ofbenefits, A Suggested approach Therearenointernationalsubscriptions,andthecompanyhasplantoseek • Eitherplantcouldproducetheentirecapacitywithoutadditionalcosts. • There arenoadditionalcostsbesidesthoseofproductionanddistribution. • The costsofdistributionwouldchangeifMediaCohadjustoneoperational • MediaCo deliversitsmagazinesfromplantstoregionalpostoffices at • any. There arenoadditionalfixedcostsofproductionanddistribution. plant. the costof35centspermagazine. This costisthesameforeachplant. – Deliverywouldcost43centspermagazineifMediaCoweretodeliver – Deliverywouldcost37centspermagazineifMediaCoweretodeliver only fromtheOregonplant. only fromtheNew York plant. L C I A B R R A E – Ifthecompanyweretoproducefromasingleplant,itwould E R – We nowknow thatitismoreexpensivetodeliveroutofjust R Y Y – Total cost permagazineis$0.75+$0.35=$1.10 ork – Total cost permagazineis$0.68+$0.37=$1.05 – Total cost permagazineis$0.68+$0.43=$1.11 Interactive Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat • their industry. and theyhavecalledyouintohelpthemunderstandtheeconomics of However, theyaretechnologistswithoutmuchbusinessknowledge, cutting-edge softwarepackageforcablebroadband companies. Your client,SoftCo,isastartupsoftwarefirm. They havebuilta 2. BroadbandSoftwareCompany • the plants. These includethefollowing: Ask theintervieweetoaddresspossibledownsidesshuttingdownoneof Follow-up recommend thissolution. the magazineentirelyoutofNew York plant. The intervieweeshould Therefore, itsavesMediaCothemostmoneytoshutdownOregonandrun • • If itiscost-effective, createanewplantinbetweenOregonandNew York• Close theOregonplantbrieflyasatest. This retainsthe“realoption”to • shutdown proposal.Possibilitiesinclude: Finally, theintervieweecouldbeaskedtosuggestalternatives might createbadpublicityandgeneralillwill. fee tobreakalease? What long-termoverhead contractsdoesithave? costs itmightincurifweretoshutdownaplant.Doesneedpay cheaper there. plant fromacompetitor, orlookingabroadtobuildbuyaplantifitis economies ofscaleinproduction.MediaComightalsolookintobuyinga to alleviatethediscrepancyindistributioncostsandstillachieve reopen itatalaterdate. future costs? change afteranyperiodoftime. Are currentcostshighlyindicativeof Possible shutdowncosts Layoffs Shortsighted decision-making – ItislikelythatMediaCowouldhavetoreduceheadcount. This www.vault.com/consulting – MediaCoshouldinvestigateanyadditional Interactive Cases Vault GuidetotheCaseInterview – Costsareneverconstantandcould — with L C I A B R R A E E R R Y 119 Customized for: Jessica ([email protected]) 120 Noone playerinanyaspectofprovisioning(orcablebroadband)has more • The marketsizeisratherlarge andgrowingatasteady4%year, post- • There arecurrently23playersinthecablebroadbandsoftware space.12 • • Cable operatorsarelarge companiesthattendtopreferoutsourcing • Provisioning servicesrequiresomesortofsoftware.Hardwarecould It isveryimportantforthesoftwaretoreflectactualbusinessflowsin • Themaincostsofsoftwaredevelopmentarelaborandtechnology(suchas • • Cable broadbandsoftware providersoffer packagesthathelpwithany SoftComakesprovisioningsoftware,whichhelpscableoperatorstoinstall • • Cable broadbandsoftwareprovidersoffer packagesthathelpwithany Background data industry? What shouldSoftCodo? Question: Howattractiveisthecablebroadband software than 10%marketshare. Internet boom. the cablebroadbandspaceforrelatedaspects,suchasbilling. of themcurrentlymakeaprovisioningproduct. The restmakesoftwarein Most cableoperatorshaveanenormouscustomerbase. learn packagesthatarescalableandcanhandletheirlarge capacity. provisioning softwaredevelopment. They liketochooseintuitive,easy-to- across theUnitedStates, thisisn’t feasible. theoretically bemanuallyconfigured,butwithmillionsof subscribers provide customerservice. interviewing cable cable operator’s provisioningbusiness. SoftCospentmanyhours unreasonable. computer software.Developmentsoftwareisexpensivebutnot hardware andlicensing).Itisquiteeasytofindcomputerprogrammers packages. provisioning, billing,configuration,speedenhancements,orcustomercare aspect ofmaintainingacableoffering to customers. This mightinclude and maintainhigh-speedInternetcableserviceforendcustomers. procedure andadministration. aspect ofmaintainingacableoffering tocustomers,includingstart-up L C I A B R R A E E R R Y operators tounderstandhowtheyinstall,maintain,and Interactive Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat Competition– We wouldexpectcompetition tobefierce.Indeed,thereare • Threat ofsubstitutes– There isnorealsubstitute forthisproduct.Hardware • Supplierpower– This isprobablylow, asitisnotdifficult tofindsoftware • Buyerpower– is tremendous. The productsareprobably not • Potentialentrants–Entrybarriersarefairlylowinmostsoftwareindustries. • Using Porter’s FiveForces,theindustry can beanalyzedasfollows: formulate aconclusion,andoffer arecommendation At theend,summarizeyourfindings,synthesize“so-what”insights,and clarify ifnecessary Ask probing,openquestionstogatherthenecessaryinformationand summary ofwhereyouareandwhatyou’velearnedinyourtransitions from onepartofthestructuretoanother. Considerincludingaverybrief Follow thatstructureandcommunicatetotheinterviewerwhenyoutransition question interviewer knowwhatinformationyouthinkneedtoanswerthe Lay outastructure(Porter’s) atthebeginning ofthecasethatlets questions fromtheintervieweewillresultinasuccessfulanalysis. yet comprehensiveassessmentofthecablebroadbandspace;thorough information containsallofthenecessarytocreateahigh-level usually thebestframeworkforthistypeofquestion. The background The questioncallsforanindustryassessment,andPorter’s FiveForcesis Suggested approach Use ofnewcablebroadbandsoftwarerequirestwoweekstrainingper • that theother11 playerswouldoffer provisioning asanaturalfit. 23 playersinthearena,with12 directcompetitors,anditishighlylikely isn’t afeasible alternative. programmers anddevelopmentplatforms training. and thefixedcostofchangingsoftwarepackagesislowat two weeksof highly differentiated (sincetherearenotmanydifferent featurestooffer), acquire. but theinterviewershouldsuggestthatcableknow-howisnot difficult to interviewee mightsuggestthatcableexpertiseisnecessary, andthisistrue, This one,withlowcostoflaborandmaterials,isnoexception. The person, onaverage. www.vault.com/consulting Interactive Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 121 Customized for: Jessica ([email protected]) 122 hitting, bottom-lineflourish. heavy caselikethisone.Bring italltogetherattheendwithaconcise,hard- Remember towrapupyourframeworkwithasummary, especiallyinadata- tied moretoaframeworkandlessoriginalanalyticalthinking. Porter’s FiveForcesforthiscase,”assuchastatementsuggeststhatyouare external tothefirm.Becarefulnotsaysomethinglike, “I willbeusing examine aparticularcompanyinternally;Porter’s isachecklistthatstrictly would notbeusingPorter’s FiveForcesifthequestionhadpromptedyouto Remember thatforindustryanalysis,nothingbeatsPorter’s FiveForces. You The keytakeawayfromthiscaseistochooseanappropriate framework. Study notes Exittheindustry • Seek tomerge withoneormoreofthecompetitiontoincreasescaleand • Seektobeacquiredbyalarge cableoperator • options fortheclient: What optionsdoesSoftCohave? The intervieweecouldsuggestsome Follow-up question The intervieweeshouldconcludethattheindustryisnotattractive. With fiercepricecompetition,profitmargins wouldbelow. • We• mightexpecttheindustrytohavelargely similarproducts,differing Competitionisintense,andwiththepossibilityofsomeremaining11 • The industryisprobablyhighlyfragmented,withlotsofsmallplayers.It • following summary: The intervieweeshouldwrapuphisoverviewoftheindustrywith rvdsarltdpout(S provisioning,cable TV). provides arelatedproduct(DSL Another optionwouldbeamerger witha technology softwareproviderwho market shareandthereforeincreaseattractivenesstocableoperators. mostly inlookandfeel. players enteringthemarket,itcouldgetevenmorecompetitive. will likelygetworse. L C I A B R R A E E R R Y Interactive Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat • the FourC’s: to crackthiscase.Hereisanexample ofhowtheintervieweemightdiscuss The intervieweecoulduseeithertheFourC’s orthecost-benefitframework Suggested approach Margins arehigherforthesmallermodelthantheylarger model. • • FreezeCo buildsandsellstwo different kindsofrefrigerators,alarger Variable costsperrefrigeratorhavenotchanged. • • Manufacturing costsarehighlyvariable. As aresult,thereareno FreezeCo hasthreekindsofcosts:labor, materials,andoverhead.Overall • • FreezeCo sellsdirectlytoitscustomers,mostlyresidentialmanagement The industryisledbyfourmajorplayers,includingFreezeCo.However, • Marketpriceshavenotchangedduringtheperiodinquestion. • Salesvolumehasbeenflatovertime. • Background Data Question: Why are profits declining? What canFreezeCo do? past. refrigerators. FreezeCohasnoticeditsprofitsdecliningintherecent Your client,FreezeCo,isoneoftheleadingmanufacturers 3. Refrigeratormanufacturer noticed anincreaseinthenumberoflarger modelsbeingsold. model andasmallermodel.Recently, FreezeCo’s salesdepartmenthas economies ofscaleproduction. increased. overhead hasnotunchanged,butoveralllaborandmaterialcostshave years, thoughtherehasbeenatrendtowardsbuyingasopposedtorentals. companies. This customermarkethasbeen quitestableoverthelastfew relatively stable. aggressive marketingcampaigns. As aresult,marketsharehasremained none oftheplayershavecreatedanysignificantnewproductsorstarted changed. Customersaremore interestedinbuyingthelarger refrigerator. has beenflat.However, itseemsthatthemarketforFreezeCoproducts has Customers – The customerbaseseemstobe stableoverall,assalesvolume www.vault.com/consulting Interactive Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 123 Customized for: Jessica ([email protected]) 124 • • • • Develop a newproduct–Sinceconsumersincreasinglywantlarger Increaseprices–Ifbuyersarebrandloyalandthereisflexibilitywithinthe • Additional recommendationsmightincludethefollowing: Addresssourcing–CouldFreezeCoachieveadditionaleconomies ofscale • • Overhaul theproductionsystem– The factthatFreezeCocan’t achieve Possible recommendationsincludethefollowing: refrigerators, FreezeCoprofitshavefallen. refrigerators tolarger refrigerators.Because margins arelowerforthelarger The intervieweeshouldconcludethattheproductmixisshiftingfromsmaller are changingtheirpurchasepatternsfromFreezeCoaccordingly. residential managementcompanieswhoareFreezeCo’s primarycustomers As itturnsout,peoplewhobuyhomespreferthelarger model,andthe materials thanthesmallerrefrigerators. more ofthelarger refrigerators,eachof whichrequiresmorelaborand constant. really isn’t afactorinFreezeCo’s decliningprofits.Marketsharehasbeen could garnerasubstantiallyhigher priceandgeneratehighermargins. refrigerators, FreezeCocould attempt todevelopanewlarge modelthat releasing an“updated”versionofthesamemodel. larger model.Itmightjustifytheslightpriceincreasebyaddingafeatureor contracts, FreezeCocouldconsiderincreasingitspricesslightly forthe based onvolumepurchasing. its suppliers,giventheshiftinmarketdemand,toobtaincheaper inputs in purchasingitsmaterials?Perhapsitcouldrenegotiate contracts with that thisislikelytobealong-termsolution. This wouldrequireresearchandanROIcalculation. The disadvantageis production systemsthatwouldallowforeconomiesofscaleproduction. economies ofscaleisaproblem.FreezeCoshouldinvestigatenew are increasingfromtheshiftinproductmix. FreezeCo hasnoeconomiesofscaleproduction,FreezeCo’s overallcosts Competition Capabilities Cost – L C I FreezeCo’s costpositionhasn’t changed.However, theyareselling A B R R A E E R R Y – The keypointhereistheproductionsystem.Since – The backgroundinformationindicatesthatcompetition Interactive Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat Thedrugisavailablethrough prescriptionthroughdoctors. • ThedrugisFDA-approved. • • The productiscompletelyunique. There arenoviablesubstitutesor Background data thisdrug? Are insurancecompanieslikelytoprovide coveragefor Question: DrugCoisconsideringpricingthedrugat$30 amonth. Alzheimer’s. expensive tothemthancoveringthecurrentmedical costsof Alzheimer’s, theyareconcernedthatcoveringthedrugwillbemore patients. As muchasinsurance companiesareinterestedinpreventing provide completecoverageforthemedicalbillsof Alzheimer’s is insurance. Assume, forthiscase,thatinsurancecompaniescurrently majorcomponentofthepharmaceuticalindustryinUnitedStates A whatsoever. reduces thechanceof Alzheimer’s. The drughasnosideeffects comes intheformofanoraltabletthat,iftakendaily, significantly recently inventedadrugthattreats Alzheimer’s Disease. The drug Your client,DrugCo, isaUnitedStates drugmanufacturer. Ithas 4. DrugInsurance doesn’t matter, aslong asyoustructureyourthinking. costs andthefirm’s resources.”Inotherwords,whatframeworkyouuse base. After that,I’dliketolookinternallyatthefirm,focusingontwoareas: outside ofthefirm. The keyareasherewould becompetitionandcustomer the FourC’s frameworkasfollows:“First,I’dliketolookexternally, or framework inawaythatisnaturalforyou.Forexample,youmightdisguise hearing yetanotherrecitationofthosedreadedC-words.Introduceyour covered allbases.However, yourinterviewermight notbeinterestedin Using frameworksliketheFourC’s isagreatwaytomakesureyou’ve Study notes Rideitout–Ifthemarketshiftistemporary, FreezeCocouldchoosetonot • competitors onthehorizon. addressed nonetheless. change itsproductionsystem. While thisisariskystrategy, itshouldbe www.vault.com/consulting Interactive Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 125 Customized for: Jessica ([email protected]) 126 Finally, weknowthat1/6ofallhighrisk individualshavehad Alzheimer’s • We knowthat 40%oftheseareconsideredhighrisk. Therefore, thereare • We knowthat20%areover50.So,there60million Americans whoare • Assumethereare300millionpersonsintheUnitedStates. • above: Here isthemarketsizingforhigh-riskindividuals,given assumptions interviewee canmakeanyassumptionsnecessary. above aspartofthesizing. As longastheassumptionsareclearlystated, might alsopushtheintervieweetomakeassumptionsfor the percentages In thiscase,theassumptionsforpercentagesaregiven,butinterviewer This isalsoagreatopportunitytowalkthroughsizingcalculationsoutloud! part oftheanalysis(thoughnotendgoal). This caseisagoodexample. entry, requirethecandidatetodoaback-of-the-envelopemarketsizingas calculation. Manycaseinterviews,particularlythoseregardingnewproduct the interviewershouldguideintervieweeindirectionofthis the caseintervieweetosizenumberofhigh-riskindividualsinUS,and covering theexpectedmedicalcostsofahigh-riskindividual. This requires company wouldbeindifferent between covering thedrugprescriptionand The goalofthecaseistodetermineapricepointatwhichaninsurance Suggested approach purposes.) (Note: thisdataisfictitiousandwascreated solelyforinstructional 20%oftheUSpopulationisover50. • Inthepast,1/6ofallhighrisk Americans havehad Alzheimer’s byage70. • 40%oftheUSpopulationover50isconsideredhighrisk. • • The potentialcustomersare Americans aged50andolderwhoare • Medical billsfor Alzheimer’s average$60,000. This iscurrentlyfully age 70. by age70,sowewouldexpect that4millionwouldhave Alzheimer’s by 24 millionhigh-riskindividuals. 50 andolder. considered “highrisk”for Alzheimer’s. to insureatreatmentmoreexpensivethatthis. covered byinsurancecompanies.Insurancecompaniesareunlikelytowant L C I A B R R A E E R R Y Interactive Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat We don’t wanttoexceedtotalcostof$40billionintoday’s dollars,or$80billion • has enoughinformationtofigurethisout. Given thisinformation,howshouldDrugCopricethedrug? The interviewee Follow-up question Given thecurrentprices,insuranceisunlikelytocoverdrug. Thereare24millionindividuals,andat$30amonthfor20years,thetotal • New Drug Theintervieweeshouldconsiderthetimevalueofmoney. Discounting20 • • Currently, theinsurancecompanyexpectstopayforall Alzheimer’s Current high-risk patientsfromage50to70. Alzheimer’s coverageforpatientsaged70yearsversusdrug The intervieweecannowwalkthroughthecalculationstocomparecurrent drug. significantly lowertocreateincentives forinsurancecompaniestocoverthe person. DependingonDrugCo’s coststructure,itmightwanttoevengo Therefore, DrugCoshouldpricethedrugatlessthan$14 permonth Dividing this by24millionpeople,wehave$166perpersonyear, or • (backing outthediscountfactorof today’s dollars.(Thediscountfactorhereis perpetuity, weconcludethatthedrugcoveragewouldcost$80.91billionin $172.80 billion. Assuming adiscountrateof10%forthis20-year cost wouldbe24millionx$30/month12months/year20years= billion.) things simple,andtheintervieweewouldarriveatatotalcostof$40 interviewer couldsuggestthatthe10%,20-yrdiscountfactoris1/6tomake years, assumingadiscountrateof10%,wecalculate$39.24billion.(The $240 billion. $60,000 perpatient,insurancecompanieswouldexpecttopayatotalof patients. We expectthat4millionwillbecome Alzheimer’s patients. At roughly $14dollarsamonthperperson. a year. www.vault.com/consulting 1 Interactive Cases Vault GuidetotheCaseInterview / 6 ) over20years. This equatesto $4billion — with 1 / 6 ). L C I A B R R A E E R R Y 127 Customized for: Jessica ([email protected]) 128 Acustomerischarged acommissionpercontractthatisinversely tiedtothe A • Oneordercanbeforany specifiednumberofcontracts. • customer canchoosetoexecuteand/orcleartradeswithagivenbroker. A • Thecompanyhasseveralrevenuesources: • Futures Limitedbrokersbuyandsellordersforcommodityfutures(e.g. • Background data Question: Why isFutures Limitedhavingprofitability problems? established forit. meeting thefinancialhurdlesthatitsparent,FuturesIncorporated,has over thepastfiveyears,andcompanyisnowindangerofnot brokerage servinginstitutionalinvestors.Netincomehasdeclined Your client,Futures Limited,isacommodityandfinancialfutures 5. BrokerageProfitability overseas sales? and consumers?Finally, howmuchofthecostcouldbecoveredthrough what portionofthedrugcostisabsorbedbyinsurancecompanies,DrugCo, regulatory edicts,buyer/supplierpower, andpublicpressure combinetoaffect make thedrugaffordable throughgovernmental action?Howwould companies beforcedtocoverthedrug?SowouldDrugCocompelled this casewouldbetoraisetheissueofpublicpolicy. Would insurance may beoutsidethescopeofspecificquery. An excellentwaytowrapup (interviewee) willalsoalwaysproactivelyconsiderbroaderimplicationsthat company wouldcoverthedrugat$30permonth,agoodconsultant While thegoalofthiscaseisspecificallytounderstandifaninsurance Study notes number ofcontractsintheorder (the“lotsize”): futures). wheat, oil,sugar)andfinancialfutures(e.g.S&P500future, interestrate – 200-lot order: 75centspercontract – 500-lot order:50centspercontract – Net interestincomefromcustomermargin deposits – Clearing (back-office processingoftrades) – Execution ofordersonexchanges L C I A B R R A E E R R Y Interactive Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat • highlight allofthepossiblefactorsthatcouldinfluenceprofit levels: This isastraightforwardprofitanalysis. The intervieweewillwantto Suggested approach The company’s salesforcehasbroughton10newcustomersoverthelast • Futures Limited’s topfivecustomershaveclosedtheiraccountsin thelast • Annual capitalinvestmenthasbeenatahistoricalhighforthecompanyin • Many derivatives exchangeshaveconvertedtoelectronic–asopposed • • The FederalReserveBoardhasbeenreducinginterestratestobattlea • The averageordersizeacrosstheinstitutionalderivativesbrokerage Theaverage numberofcontractsperorderhasdeclinedfrom100to62over • Total ordervolumeisunchanged. • Processinganorderinvolvesafixedamountofwork,independentthelot • • • customers havemaintainedaconstantaverageordersizeover theperiod. five years,butthesecustomerstendtotrade75contractsatatime. All other five years. Those customerstendedtoplace 500-lotorders. ensure connectivitytoglobalderivativesexchanges. processing system,neworderentrysoftware,andsystemupgradesto each ofthelastfiveyears. The company hasinvestedinanewback-office “open outcry”–tradinginrecentyears. squeezed aswell. recessionary economy;wheninterestratesgodown,absolutespreadsare industry isestimatedtobe120contracts. the pastfiveyears. size. changed? Have interestratespreadsnarrowed? Hasthemixoftypesorders Has ordervolume,contractvolumeornumberofcustomers dwindled? Revenue Fixed costs Variable costs – 10-lot order:$5percontract – 50-lot order:$1.50percontract – 100-lot order:$1percontract – Hastotalrevenuedecreased?thecompanyreducedprices? – Hasoverheadincreased? – Hasthecostof processingatradeincreased? www.vault.com/consulting Interactive Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 129 Customized for: Jessica ([email protected]) 130 • are threedriversoflowerprofitinFuturesLimited: Given theinterviewer’s answerstothese questions,wenowknowthatthere • • • • with newcustomerswhotrade with similarfrequency, butinsmallerlotsizes. customers, whotendedtotrade large lots.Ithasreplacedthosecustomers five yearsago. The company hassinceseenattritionamongitstop We canconcludethatFuturesLimitedhadahighlyconcentratedrevenuebase industry-wide. the capital costs.Let’s uncovertherootcauseofdecliningordersize.First, We nowunderstandthereasonfor narrowinginterestspreadsandhigher • operating line? depreciation increased? contributing asmuchtothetopline. are lower. decreased asaresultofthedecliningordersize. Thus, operatingmargins order @$5/contract=$50/order) Total executionandclearingrevenuehas lot sizedecreases.(500-lotorder@50cents/contract=$250/order;10-lot Limited’s pricingschedulereflectsatotalpriceperorderthatdeclinesasthe keyinsightisthatFutures variable costshaveremainedconstant. A Ltd. hashadtospendmoreandontechnologyinrecentyears. Narrowing interest spreads Taxes Extraordinary items Capital investment ihrcapitalcosts Higher elnn re size Declining order interviewee needstodetermineiftheproblemisinternalfirm,or • Can we lookatdataonhowaverageordersizehaschangedacross • IsordersizedecliningforallofFuturesLtd.’s customers? • Istheindustryasawholeseeingdecliningordersizes? different portionsofFuturesLimited’s customer base? L C – Hasthecompany’s taxliabilitychanged? I A B R R A E E R R Y – Havesignificantnewinvestmentsbeenmade?Has : Duetothemigrationelectronictrading,Futures : Sinceprocessingcostsareincurredperorder, total – Havetherebeenanyone-timecharges belowthe : This revenuestreamisnolonger Interactive Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat government –which,ingeneral, issimplytherightforapartybuild new countrybybiddingon andwinningaconcessionfromthe recovering itsinvestmentthrough tollcharges. Ittypicallyentersa DevCo specializesinbuilding andoperatingroadsbridges, Your client,DevCo,isan international infrastructuredeveloper. 6. BridgeFeasibilityStudy brokerage) isnotcentraltotheprofitabilityquestion. the companyisafuturesbrokerage(asopposedtomore familiarstock or processthatthehypotheticalcompanyemploys.Inthiscase, thefactthat key issuesathandandnotbecomedistractedorconfusedby thetechnology interviewees. The interviewerwantstotestyourabilityquicklygraspthe Sometimes acaseinterviewwilldiscussanindustrythatisunfamiliar tomost Study notes improvement. beginning with timeframe. The intervieweecouldrecommend astagedseriesofinitiatives, Note thateachofthesealternativesinvolvesadifferent implementation Expandingintonew, higher-margin servicelines. • Pre-emptanyadditionalattritionbyidentifyingwhytopcustomersleft and • • Evaluate outsourcingandpartneringalternativestofuturelarge-scale • Review alternativesformoreautomated(cheaper)processingofsmall • Incentivize customerbehaviorthatwillsupportprofitability–institute Seeknewcustomerswhohaveaneedtotradelarge lotsfrequently. • • Revise thepricingscheduletoreflectaconstantpriceperorder, company’s profittrend. These include: The intervieweecouldbeaskedtosuggestinitiativesreversethe Follow-up question improving problematicaspectsofthecustomerexperience. capital investmentintechnologyandtradingsystems. orders. minimum tradingactivitylevelswithfeesforfallingshort. independent oflotsize. suggestions forrealizingthemostimmediatebottom-line www.vault.com/consulting Interactive Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 131 Customized for: Jessica ([email protected]) 132 • Your subcontractor conductedafieldstudyandestimatedthefollowing Presently, 20,000vehiclestravelingbetweenthetwocitieseverydayusea • Thetollratemustbeinwholepesoincrements.(Allinformationgivenwill • Thebridgewillsupportvehicletraffic only. • Background data bid? Question: Howwouldyougoaboutdeterminingwhattollrateto terms ofatollratecharged pervehicle. Argentina toconnecttwocities. The governmentrequestsbidsin submitting acompetitivebidtobuildnewtollbridgeoverriverin and operateinfrastructureforasetperiodoftime.Currently, itis • Your• subcontractorhasestimatedlatentdemandatthreepricepoints,in Vehicles usingthefreebridgetravelanaverage of40milesperhour.• values oftimeforthe20,000vehiclescurrentlyusingfreebridge: non-toll bridge10milesdownriver. be intermsof Argentine pesos,denotedbythe$symbol) terms ofvehiclesperday(vpd): $1 tollrate:5,000vpd $2 tollrate:2,000vpd $3 tollrate:500vpd L C I A B R R A E Value ($/hour) E R R Y TOTAL 10.00 2.50 5.00 Interactive Cases Vault GuidetotheCaseInterview Number of VehiclesNumber 20,000 10,000 5,000 5,000 © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat )Dvre traffic 1) Diverted traffic fromtheexistingalternateroute,andlatentdemand. Let’s analyzethetwosourcesoftraffic volume onanewbridge:diversionof Secondly, theintervieweeneedtodeterminewhatpricecharge forusage • • First, theintervieweeneeds todeterminehowmanyvehiclescouldbe Answering thisquestionrequiresbothamarketsizingandpricinganalysis. Suggested approach The companychoosestousea20%discountratereflectboththeircost • There isprobablyadifference inthecostofgasforadrivertakingtoll • Assumenotaxes. • DevCowillownandoperatethebridgeinperpetuity. • • Annual operatingcostsinclude$5millioninfixedmaintenance,and8 Itwillcost$30milliontobuildthebridge. • win. investment, andthecompetitivebiddingprocesswherelowestbidwill of thebridge,takingintoaccountdemandelasticity, requiredreturnon expected tousethebridge. of capitalandtheriskinherentinthistypeproject. driver’s perspective?”) issue byasking, (Note tothe time, sonoadditionalcalculationsneedtobemadeaccountforgas. For thisanalysis,assumethatdifference isembeddedinthevalueof bridge versusthenon-tollbridge,sincedistancetraveledisdifferent. centavos pervehicleinvariablemaintenance. curve: the valueoftimeinformationprovided, wecangenerateadiscretedemand bridge savesdrivers½hour(20milesavoidedat40per hour). Given using thecloserbutmoreexpensivebridge. We cancalculatethatthenew driverwouldcomparethecostsandbenefitsof greater thanthetollrate. A choose tousethenewtollbridgeiftheircostsavingsfrom doingsois value oftime*½hoursavings) andwillusethenewbridge ~ $3tollrate:5,000vehicleshave costsavingsof$5pertrip($10/hour interviewer: youmightwanttopushintervieweeconsiderthis “What otherdifferences orissuesdoyou seefromthe – The keytothiscaseis to realizethatvehicleswill www.vault.com/consulting Interactive Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 133 Customized for: Jessica ([email protected]) 134 Now, givenour revenueestimate,let’s calculateourreturnoninvestment. is therevenue-maximizingtollrate. Because therevenueishighestwith$2tollrate,wecanconclude that$2 through thesecalculationsextremelyclearly): and latentdemand(theinterviewershouldensurethattheintervieweewalks revenue foreachtollrate,usingwhatweknowaboutbothdiverteddemand We cannowcalculatetherevenue-maximizing tollratebycalculatingthe 2) Latent demand and canbeuseddirectlyinourcalculations. estimates givenbythesubcontractorrepresentadiscretedemandcurve will supportroughestimatesoflatentdemandforuseanewbridge. The available ontheirownsideoftheriver. An interview-basedfieldstudy as accesstopeople,entertainment,orcommercialopportunitiesnot standpoint, butthebenefitsareevenlesstangiblethantimesavings,such built. The vehicledriveralsoperceives this decisionfromacost-benefit that donotpresentlycrosstheriverwouldsoafternewbridgeis 4) 3) 2) 1) • $1 tollrate:(5,000vpd+10,0005,000vpd)diverteddemand • $2 tollrate:(5,000vpd+10,000vpd)diverteddemand2,000 • $3 tollrate:5,000vpddiverteddemand+500 vpd latentdemand*$3 new bridgeatthispricepoint. trip ($2.50/hourvalueoftime*½hoursavings)andwillalsousethe ~ $1tollrate: An additional5,000vehicleshavecostsavingsof$1.25per the newbridgeatthispricepoint. per trip($5/hourvalueoftime*½hoursavings)andwillalsouse ~ $2tollrate: An additional10,000vehicleshavecostsavingsof$2.50 5,000 vpdlatentdemand*$1=$25,000/day latent demand*$2=$34,000/day = $16,500/day Net presentvalue=($6.9m/20%) –$30m=$4.5m Annual operatingincome=$12.4 m–$0.5m$5m=$6.9m $0.5m Annual variablecosts=17,000 vpd*365days$0.08/vehicle= Annual revenue=$34,000/day*365days$12.4million L C I A B R R A E E R R Y – Itismorecomplicatedtodeterminehowmanyvehicles Interactive Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat • • • • this scale. Costs contract termsshouldbeevaluatedwhenworkinginanemerging market. Political risk goods andservices? costs denominatedinthelocalcurrency, ordoesmaintenancerequireimported the pesotollratebeindexedtoUSdollar? Are thedriversofmaintenance Currency risk estimated. timecouldbeincorrectly volume couldchange,andthevalueofdrivers’ Demand include: Finally, asktheintervieweetodiscussrisksinvolvedinproject. These to enterinacompetitivebiddingprocess: Ask theintervieweetoaddressissuesinvolvedindeterminingwhattollrate Follow-up • An out-of-the-boxsuggestionistorecommendthatDevConegotiatea • If thetollratemustbeinwhole-pesoincrements,itislikelythatmost a bidof$2tollrate. projectifwewintheconcessionwith We seethatthisisapositiveNPV – Costoverrunsshouldalwaysbeaconcernwith project of expected. expectations, andcommittoloweringitifdemandwerehigherthan this scenario,DevCocouldraisetherateifdemandisbelow flexible tollrateschedulewiththegovernmenttooffload somerisk.In factors candifferentiate DevCofromthe other bidders. costs orhighervolume. Therefore, we shouldconsiderwhatother ateither$1or$3,onewouldhavetoassumesubstantiallylower NPV participants willsubmitthesamebidof$2.Inordertohaveapositive – Traffic volumecouldbelowerthanexpected.Bothoverallsystem – The probabilityofexpropriation orabrogationofconcession – IsDevCoborrowingtherequiredcapitalinUSdollars? Will www.vault.com/consulting Interactive Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 135 Customized for: Jessica ([email protected]) visited lately? job boardshaveyou How manyconsulting criteria ande-mailthemdirectly toyourinbox. and more.We’llmatch job listingswithyourinterestsand and customizeyoursearchbyareaofconsulting, experience Vault takesmatch-makingtothenextlevel:postyour resume VaultMatch ResumeDatabase openings thatyouwant.Nosurfingrequired. consulting, function,andexperiencelevel,find thejob consulting professionals.Targetyoursearch by areaof The mostcomprehensiveandconvenientjob board for Vault ConsultingJobBoard professionals. job searchtoolsforconsulting Use theInternet’smosttargeted (Thought so.) GUIDE INTERV CASE Customized for: Jessica ([email protected]) career message boards,expertresume reviews,theVaultJob Boardandmore. Visit Vaultat CASES PRESENTATION www.vault.com for insidercompanyprofiles, expertadvice, Customized for: Jessica ([email protected]) Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat hiring firmdata thatthetraditionalcaseinterview cannotprovide. The firm From thefirm’s perspective, thepresentationcaseinterviewcangive they aren’t stellaratcaseinterviews. make highlysuccessfulconsultants, yetaren’t gettingconsultingjobsbecause outstanding consultantaswell? Think aboutyourpeerswhoyoufeelwould you’d comeupwithabrilliantsolution? Wouldn’t that personmakean on theflyandinfrontofatenseclient,butwith10minutes alone toreason they cansynthesizethem. What ifyouweren’t sogreatatanalyzing acase data usingintuition;othersneedtohaveallofthefactsand numbers before people processinformationdifferently. Somepeopleare greatatprocessing If you’vetakenapersonalitytestlikeMyers-Briggs,youknow bynowthat on greatcandidateswhomightnotdowellatintheclassiccase interview. and adjustitasnecessary. Firmshaverealizedthattheymightbemissingout would havenormallydaysorweekstocreateanappropriate framework minutes. The necessarydatawouldneverbeavailablerightaway, andyou reality, youwillrarelyneedtosolveaclient’s problemsinthespaceoftwenty Cracking acaseonthespotisn’t something younormallydoonthejob;in in actualproblem-solving,itisalsoanimperfectassessmentmanyways. While thetraditionalcaseinterviewisgenerallyagoodindicatorofsuccess done withit? Where ismycaseinterview,andwhathaveyou individual level. for years.Itisinterestingtoseethatthetrendfinallymoving presentations withinthecontextofagroupdiscussionandjointpresentation As mentionedelsewhereinthisguide,someconsultingfirmshavebeenusing make youexplainatopictoyourinterviewersonthefly. a presentationaheadoftimeonthetopicyourchoice,andoneortwoeven and keyinsightsbasedonthedataprovided.Otherfirmsaskyoutoprepare complete asetofpresentationslidesbyhand,oftensupplyingtheconclusions short PowerPointdeckfordiscussioninanhour. Somefirmsaskyouto be handedapileofpaperstoreadthroughandinstructedputtogether The caseinterviewpresentationcouldtakemanydifferent forms. You might topic toasetofmultipleinterviewers. third roundinterviewrounds,candidatesmaybeasktopresentanddiscussa hybrid interviewintothemix:presentationcase. As apartofsecondor screening potentialconsultants,manyconsultingfirmsareincorporatinga While thetraditionalcaseinterviewremainstried-and-truemethodof www.vault.com/consulting Presentation Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 139 Customized for: Jessica ([email protected]) 140 dimensions orskillsthatcouldsurfaceforyoutobettermakeyourcase: thought throughthe“right”typesofproblems.Herearejustafewother – thinkingonyourfeet,havingstudiedandpracticedframeworks, questions outthere,letusboldlyargue thattheytestthesamesortsofthings candidate. While thereareawidevariety oftraditionalcaseinterview But thisdeparturefromthetraditionalcasecanalsobeaboonfor process, theyprobablywould. therefore costly)forfirmstoroundupthenumberofpeoplenecessarythis consulting firmswoulduseit.Indeed,ifitweren’t sotime-consuming(and the job. This issousefulaninterview formatthatyou’dthinkmost project. This tellsthefirmquiteabitmoreabouthowyouwouldactuallydo matter thelevel,nearlyallconsultantsdoatleastsomepresentingonevery draw someconclusions.Finally, thefirmseesyourpresentationskills;no situation, whereyouaregivendataorresearchsummariesandneedto than yourtypicalinterviewsituation.Italsoseesyouinamorejob with aclient,whichisgenerallyjustashigh-pressuresituation(ifnotmore) gets aslightlybettersenseofhowyoumightconductyourselfinteracting • • • • and playingwellinthesandbox, thiswillworkinyourfavor. review board.Ifyouareparticularly goodatbuildingteamconsensus interviewees tostructureand present arecommendationtothemock into allofthis;occasionally youwillneedtoworkwithother interview youdo. teaching skills,whereasduringsomeversionsofthepresentation case traditional caseinterviewyoudon’t getthechancetoshowoff your content orexplaincomplicatedtopicstoclients. Again, duringa aspect ofthisispresentationstructuring. and suchspeakingskillsarecrucialtoclientprojectwork. An important case interview. Somepeoplearereallygoodatmakingpresentations, during atraditionalcaseinterviewthatyougetpresentation a lotofdata? The presentationcaseformat couldmakeyoushine. minutes alone? What ifyouwerereally good atspottingtrendswithin exceptional atthinkingaboutinformationandprocessingitafterafew described above,whereyouweredecentatcaseinterviewsbut Team skills. Teaching ability. Presentation. Synthesizing research offline. L C I A B R R A E E R R Y Some firmsareusingthegroupinterviewformatmixed You alsodon’t gettheopportunitytopresentcontent Consultants areoftentheexpertswhohavetoteach Presentation Cases Vault GuidetotheCaseInterview Suppose youwerethesortofperson © 2007Vault Inc. Customized for: Jessica ([email protected]) Presentation Cases General TipsandTricksforAll insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat we diveintosomepractice: solve abusinessproblem. To thisend,herearesometipsandtricksbefore analyze (readingversuslistening),butattheendofday, youstillneedto the traditionalcaseinterview–different instructureandnatureofwhatyou Presentation caseinterviewsarethereforeattheheartofitall an extensionon spend someextratimeonthisoneandgothroughafull-blownexamplelater. By far, themostcommontypeofpresentationcaseisresearchcase. We’ll have foundavarietyofpresentationcaseinterviewtypes,including: In samplingasolidfistfulofrecentintervieweesforconsultingfirms,we Common types involved, especiallyyou. everyone intheprocessbetterinformed,andthat’s betterforeveryone All inall,wethinkthepresentationcaseinterviewisagoodthing.Itmakes the interviewprocess. And youmightgetsomeextrapointsforit. consultant. You mightaswellseewhatit’s liketodosomeofthemduring an interview. The factis,youaregoingtohavedoallofthesethingsasa The upshotisthatyoumighthavetodosomeorofallthesethingsduring • 3) Teach mesomething: 2) Complete thepresentation: Research case: 1) interviewers can putyouranswersintocontext. not, clearlystateyourassumed questionatthebeginningsoyour aren’t sure whatquestiontoanswer. Ifit’s notclear, asksomeone.If the interactionofothers. These aresometimesdangerouswhenyou presentation caseswhereyouneed togointoaroomandthinkwithout Make sure youare answeringtherightquestion. of yourchoice(ortheirs). insights. presentation thatcontainsthefindingsand/ordata,andyousupply Q&A. present yourfindingstoamockclientorprojectteam,completewith Study asetofclientmaterialsforhalfan hour, then www.vault.com/consulting Lecture orteachyourintervieweraboutatopic Presentation Cases Vault GuidetotheCaseInterview You aregivenapartially-complete — with L C I A B R R A E There are E R R Y 141 Customized for: Jessica ([email protected]) 142 Case Presentation CaseType1–Research or evenflipchartsandtape.It definitelyvaries.(Bereadytowriteneatly.) presentation onPowerPoint.Others willgiveyouacetateslidesandmarkers, In termsofactualpresentationmaterials,somefirmshave you mockupa information. You maybegivenanywherefromhalfanhourtosynthesizethis The materialsgivenoftenincludethefollowing: mock projectteamorclientboard. time toanalyzethematerialsandcreateashortpresentationdiscusswith where youreceiveasetofmaterialsandaregivensubstantialamount As mentionedbefore,themostcommontypeofpresentationcaseiskind Overview • • • Websites • Corporatepressreleases • Newspaperandjournalarticles • Industryresearch Visualization• ofdata,suchaspiecharts,linegraphs,stockpricehistory, • Time-series data,suchasrevenuesovertime slides ortalk. total amountoftime,andgiveyourselfthatmuchtimetoproducethe talk together. Work backwards:subtractthatamountoftimefromthe prior tocommencingyourpresentation. materials forsomereason,stateyourassumptionverymatter-of-factly audience. presumed role ofyour or barcharts Watch thetime! lastyt sals ha ftm orpresumed role andthe Always trytoestablishaheadoftimeyour L C I A B R R A E E R R Y Think abouthowmuchtimeyou’llneedtopullyour Presentation Cases Vault GuidetotheCaseInterview If itisnotclearbasedonthe © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat cases. That said,hereisageneralframeworkfortacklingresearchpresentation for productionandsticktoit! rather simpleonceyoufinishtheanalysis).Makeallocateplentyoftime answer thequestionandthendopresentationpartofit(whichwillbe a presentationbythetimeyouleavepreproom. We recommendyoufirst Before youstartanyresearchcase,realizethataregoingtohavecreate How toapproachit 4) Crack thecase. framework. 3) Build your three keysources of 2) Skim thematerialsandisolatetwoor 1) Clarify thequestion. question oruntilyouhitthetime limityoupreviouslysetforyourself. have asmuchinformation youfeelisnecessarytoanswerthe going tothekeysourcesyouidentified earlier. Work untilyoueither there toansweryourquestions, exceptyouansweryourquestionsby questions. Ifyouthinkaboutit, thisisjustlikehavingtheinterviewer lowering variablecosts. You havethisonenailedalready;nailithere. finding anoptimalprice/volumelevel,loweringfixedcosts, or increase revenueordecreasecosts,whichbegsthepossibilities of how toimproveprofits,startwithseeingyouwould either What doyouneedtoknowanswerthequestion?Ifquestion is in workingthroughthetraditionalcaseinterview. It’s thesamehere. presentation andalistofkeyinsightsculledfromtheotherdocuments. have asmallpileofdocumentstoprovidethemainsupportforyour isn’t –thisisakeyskillinbusiness. When you’redone,youshould says. You needtodeterminewhatinformationisrelevantand material. The keyhereistonotunderstand exactlywhateverything you firstspendseveralminutesdoingafastreviewofallthe but youalsomightbepinchedfortime.Ingeneral,werecommend you’re lookingfor. You mighthavetimetoreadthrougheverything, insight. your own. won’t be,soyou’llneedtobeprepared formulatethequestionon usually betoldwhatquestionyouneedtoanswer;sometimes steps? Beclearonwhatyourgoalis. We wouldguessthatyouwill create arecommendation?Summarizetheresearchandgivenext Now thatyou’veclarifiedthequestion,youknowwhat www.vault.com/consulting Work throughyourframeworkandanswer What isthegoalofanalysis? Are youto This isthepartyou’vealreadypreparedfor Presentation Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 143 Customized for: Jessica ([email protected]) 144 Research CaseExample:PureMeats through thegivenmaterialsand createahandwrittenslidepresentationusing of yourconversationwiththe board,youaretotake40minutesread the day, andtheywanttohearyourinitialthoughtsontheissues. Inadvance inroads intoPure’s marketshare. Today theBoardofDirectors isonsitefor about anewproductfromcompetitor, Gordon,whohasbeenmakingsteady prepackaged rawmeatforretaildistribution.Pure,itturnsout, isconcerned look attheattacheddocumentsforaclientnamedPureMeats, whomakes You aretoldtoimaginethatyouaconsultantwhohasjusttakenfirst are thenusheredintoaconferenceroomwiththefollowingmaterials: On yourinterviewday, youhaveafitinterviewwithoneofthepartners. You will playtheroleofboarddirectorsreceivingyourpresentation. will playtheroleofconsultant,andanumberseniorfirmexecutives round interviewswillinvolvepresenting. The HRpersonexplainsthatyou You havebeentoldinadvance overthephonebyHRthatoneoffinal The setup consultants pretendingtobeseniorexecutivesattheclientcompany handwritten slidepresentation,andpresentyourfindingstoapanelofsenior approximately 40minutestoreadthroughasetofmaterials,create interview withaleadingmanagementconsultingfirm,youaregiven In thiscomprehensivereal-lifeexampleofafinalroundresearchcase ) tutr n raeyu presentation. 5) Structure andcreate your • Dryerasemarkers • Blankacetatepagesthatcanbeusedonanoverheadprojector • Stack ofdocumentsonslide materials thatcanbeusedonanoverhead • Stack ofpaperdocuments(we’llgettotheseinasecond) projector nothing wrongwithnotes). (jot thoseonablankpieceofpapertoclutchduringyourtalk– envision yourselfinfrontoftheclientandthinkthroughkeyphrases executive summary. Also, besureyoudoatleastamentaldry-run– use a“pyramid”methodforstructuringyourtalk.Start withan best practicesforstructuringpresentationslater. Ourkeytypeshere L C I A B R R A E E R R Y Presentation Cases Vault GuidetotheCaseInterview We willtalkmoreabout © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat minutes. If yougetmoretimethanthat, great;ifnot,youwillneedall10ofthose point slidesandfiveminutesto thinkthroughyourpresentation).Stick toit. at theendtoputtogetheryourtalk(fiveminutes afewbullet This isalsotherighttimetoestablishtiming.Setasideatleast 10minutes First, let’s getorganized andinventoryourdocuments.(SeeFigures1-10.) Getting ready session. Board ofDirectors,andundergo aQ&A the materialsprovided. Afterwards, youwillpresentyourfindingstothe • Perceptualmapofbeefcompetitorsbasedoncustomerfocus groups. • Newspaper articleexplaininghowtheU.S.publichasbecome more • Graph oftotalU.S.retailmeatconsumptionovertime–beef,chicken, • Graph ofU.S.retailmeatconsumptionpercapitaovertime–beef, • Pure Meatsstockpricehistoryshowing almostperfectcorrelationwith • Summary ofacustomersegmentationanalysisdonebyanother • PiechartshowingPure’s percentageofsalesfromitsdifferent products. • Internal memofromaPureMeatsprocessingplant managertoHQ Tables• showingmarketshareoftheclientcompany(PureMeats) andits • Newspaper articledetailinghowGordonMeatsenteredtheretailbeef • Introductorypagedescribingthecaseinterviewsituation. beef. health-conscious inrecentyears,andisworriedaboutsaturated fatin and fish. chicken, fish. started stealingshare). the S&P. (NotenoprecipitousdropafterGordonenteredthemarketand consulting firm. lot ofidlecapacity. that withanotherplantcomingonlineinafewmonths,therewillbe stating thathehassome50%excesscapacityavailable,andpointingout competitors overtimefordifferent products: beef,chicken,andpork. beef. market lastyearandhashadamazingsuccesswiththeirpre-cooked www.vault.com/consulting Presentation Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 145 Customized for: Jessica ([email protected]) 146 can focusonwhatmatters. You canseenowthatit’s veryimportanttogetthequestionright!Nowyou to moveforward. Therefore, youaregoingto: should offer eitherahypothesisorsetofalternatives,plusnextstepsonhow going toreacharecommendationregardingwhatyoushould do aboutit. You out ifPureshouldbeworriedaboutGordon;however, youareprobablynot One otherthingtorecognizehere:youareprobablygoingbeablefigure market shareeverokay? We’ll addressthislater.) revenue. What aboutmarketshare?Notsure.(Quizquestion:isdeclining guess isthattheclientisn’t worriedabout profitsasmuchadropin You willneedtomakean assumption astowhatyourvaluemeasureis. Your threat toPure? You wouldneedtoseetwoconditions: the market? That is,underwhatconditionswouldGordonbeatruelong-term What doesitmeanto“assesstheviability”ofacompetitorthatisalreadyin Step 1:Clarifythequestion Let’s workthroughourfive-stepframework Approach materials. Notincludingthecover sheet,therearetensheetsofpaperinfront Now thatyouknowwhatyou’re lookingfor, youcandivedeeperintothe Step 2:Skimthe materials andisolatethekeysources ofinsight 2. Suggest (and discuss)possiblerecommendationswithoutevaluating 1. Answer thequestionofwhetherGordonposesarealthreat. • • presentation 5. Structure andcreate your 4. Crackthecase framework 3. Buildyour 2. Skimthematerialsandisolatekeysources ofinsight 1. Clarifythequestion better positionedthanPureandthistrendwillcontinue key segmentsorproducts Future situation: Current situation: them. L C I A B R R A E E R R Y Given marketdynamics,Gordonwillcontinuetobe Gordon hadstartedtoerodePure’s revenueinits Presentation Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) Pure, willreact.” bank. “Youhavetowonderhowtheothermarketplayers,especially Greg Rooke,anequityanalystatJonesandCompany,investment wanting tospendlesstimecooking,likelybecausetheyarebusy,”said “Gordon seemstohavetappedintoawidespreadphenomenonofpeople Pure’s customershavebeenthemajorsourceofGordon’s. Gordon alreadyhasamarketshareof27%theUSbeefmarket—and dominated bylong-timeleaderPureMeats.Afteralittleoveroneyear, expected thecompanytomakeinroadsintoanindustryheavily beef marketin2002withitsnovelpre-cookedproduct,few Milwaukee, WI(AP) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat cooks. Jotthisthoughtdownonyourpageofnotes. in arushwithbusylifestyle,butwouldn’t appealtochefsandtraditional Your intuitionshouldtellyouthatthisisprobablyagreatproductforpeople immediately thinktoyourself,“Sowhat? Who wouldbuysuchaproduct?” with apre-cookedbeefproductandseemstobedoingwell. You should Figure 1: one andseeifwecanfocusouranalysisabit. of you. This seemsprettyoverwhelming.Let’s addressthefiguresoneby The articleexcerptnotesthatGordonenteredthemarketin2002 Figure 1:Excerptfromarticleinthe – WhenGordonMeatCompanyenteredtheretail Door StreetJournal www.vault.com/consulting Presentation Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 147 Customized for: Jessica ([email protected]) 148 Share inBeef Share inBeef Share inBeef Share inPork Share inPork Share inPork 2003 Market 2003 Market 2003 Market 2002 Market 2002 Market 2002 Market 2001 Market 2001 Market 2001 Market Company Share in Share in Share in Chicken Chicken Chicken take alookatthisoneinmoredepth. Figure 2: Figure 2:MeatIndustryMarketShares2001-2003 L C I A B This isacomparisonofmarketshares. You willprobablywantto R R A E Meats E R 72% 52% 18% 20% 72% 18% 20% 19% 19% Pure R Y Street Meat 14% 15% 14% 15% 14% 15% 5% 4% 5% Presentation Cases Vault GuidetotheCaseInterview Cattle Tales 13% 12% 13% 12% 13% 12% 4% 3% 4% Gordon 27% 0% 0% 0% 0% 2% ------© 2007Vault Inc. All Others 19% 54% 54% 13% 55% 53% 17% 55% 53% Customized for: Jessica ([email protected]) (Attachments havebeendeleted) months, weestimatethatwillhavenearly70%idlecapacity. capacity available.Inaddition,withanotherplantcomingonlineinafew In summary,wehavedeterminedthatcurrently50%excess sheet. Pure Meatsprocessingplant.Ourfindingsareattachedtothiscover We havecompletedouranalysisoftheavailabilitycapacityat SUBJECT: Resultsofcapacitystudy FROM: KevinKlein,PureMeatProcessingPlantManager TO: PureMeatsHeadquarters insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat be concernedaboutanewcompetitor. Jotthepointdown. mainproductisbeef,soitwill revenues. The mainpointisthatPureMeats’ chicken, andpork,withbeefbeingitsprimaryproductatnearly80%of Figure 4: and moveon. a currentproduct.Notmuchmoretothisfigurethanthatpoint.Jotitdown manufacturing capacitytointroduceanewproductorincreaseproductionon Figure 3: Note: allPure Meatsproducts are packageduncookedforretail sale. Figure 4:PureMeatsSalesBreakdown2003 Figure 3:InternalMemofromPureMeats memo,thesalientpointofwhichisthatPureMeatshasenough A You canseethatPureMeats sellspackaged,uncookedbeef, 14% www.vault.com/consulting 6% 2% Presentation Cases Vault GuidetotheCaseInterview — with 78% Other Pork Chicken Beef L C I A B R R A E E R R Y 149 Customized for: Jessica ([email protected]) 150 P g r S B r i T c a G u e r e n o s a g -c d y u d c m m

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n h o t f * Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat Figure 6:LevelizedstockpricechangeforPureMeatsandS&P • Detailed 40-pageemployerprofilesontopemployerslikeMcKinsey, • • One-on-oneVaultCaseInterviewPrepwithconsulting experts • • The onlyjobboardontheWebdedicatedtoconsultingjobs– • Surveysofemployeesathundredsconsultingfirms to theVaultConsultingCareerChannel For moreinformationoncaseinterviewsandconsultingcareers,go BCG, Bain,Accentureandmore Vault ConsultingJobBoard The VaultCaseinterviewPracticeGuide www.vault.com/consulting than that. impacted toomuchbytheentranceofGordon. There’s notmuchmoretoit stockpricewasn’t the PureMeatsstocktracksS&P, andPureMeats’ Figure 6: Source: USDA There seemtobetwomainpointsthischart.Forthemostpart, 500 Index,2001-2003 www.vault.com/consulting Presentation Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 151 Customized for: Jessica ([email protected]) 152 Figure 7:USRetailConsumptionperCapitaofMeatProducts, skyrocketing. Fishisincreasingslightly. Keepthis. actually onthedecline,whilechickenconsumptionperpersonis Figure 7: Source: USDA L C I A B This seemshelpful.Itshowsthatbeefconsumptionperpersonis R R A E E R R Y 1982-2002 Presentation Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat Source: USDA the marketshares. go off inyourheadthatyoucanlinkthisfiguretoFigure2,whichcontained 8 andputFigure7backinthepile. Also, youshouldhearalittlewarningbell appropriately forpopulationgrowth.)Intheinterestoftime,let’s keepFigure segmented bymeattype.(It’s essentiallythepreviouschartscaled per head,becauseittellsyouthesizeoftotalmarketinpounds,as Figure 8: Figure 8:USRetailConsumptionofMeatProducts, Total U.S.consumptionisactuallymoreusefulthan www.vault.com/consulting 1982-2002 Presentation Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 153 Customized for: Jessica ([email protected]) 154 fat—and somewhatbyfish. supplanted largelybychicken—whichhasconsiderablylesssaturated Indeed, beefconsumptionhasbeenonthedeclineinrecentyears, public ishighlyawareoftheseissues.” lowering drug,isthetop-sellingdrugincountry,youknowthat professor atHarboredMedicalSchool.“WhenLipitor,acholesterol- “Heart diseaseratesareontherise,”saysDr.HalE.Walker,acardiology worried aboutsaturatedfatinbeef. health consciousinrecentyears.Inparticular,theUSpublicismore Omaha, NE(AP)–StudiesshowthattheUSpublichasbecomemore • Detailed 40-pageemployerprofilesontopemployerslikeMcKinsey, • • One-on-oneVaultCaseInterviewPrepwithconsulting experts • • The onlyjobboardontheWebdedicatedtoconsultingjobs– • Surveysofemployeesathundredsconsultingfirms to theVaultConsultingCareerChannel For moreinformationoncaseinterviewsandconsultingcareers,go BCG, Bain,Accentureandmore Vault ConsultingJobBoard The VaultCaseinterviewPracticeGuide www.vault.com/consulting the pointandmoveon. cholesterol thanbeef,chickenisbecomingverypopular(asfish).Jotdown becoming morehealthconscious,andbecausechickencontainslower Figure 9: L C I Figure 9:ArticlefromDoorStreetJournal A B R R This seemslikearationaleforthepreviouschart–peopleare A E E R R Y Presentation Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat Convenience on quality, whileGordonisallaboutconvenience.Savethis. have inferredthisbutlaysitout:inthebeefmarket,PureMeatsishuge along key, distinctdimensions.It’s thatsimple,anduseful. You could viewsofproducts perceptual mapdisplaysanddifferentiates customers’ you mayornothaveseenitinyourpsychologyclass.Inanutshell: you nodoubtsawitinyourmarketingclass.Ifyou’reattheundergrad level, Figure 10: Low Figure 10:ConsumerPerceptualMapfortheRetailBeef Meats Pure Have youeverseenaperceptualmapbefore?Ifyou’reanMBA, Street Meat Western Beef Cattle Tales www.vault.com/consulting Low quality High quality Market Presentation Cases Vault GuidetotheCaseInterview — with Gordon Convenience L High C I A B R R A E E R R Y 155 Customized for: Jessica ([email protected]) 156 • Companyresponse /potentialrecommendations • Externalsituation Here isonepossibleframework: into thechickenbusinessasahedge. superficially. Or youmightchoosetocomeupwithacreativehook,e.g.go You couldchoosetoeithergoindepthononethingorsummarizeeverything we aretryingtoanswer? This isagoodtimetocraftstrategyforyourself. benefit, Porters,etc. What kindofstructuremakessensegiventhequestion Earlier inthisbook,welearnedaboutdifferent kindsofframeworks–cost- targeted wayofworkingthroughtheinformation. little moreeducatednowaboutwhatmattersandyoucancreatea could havedonethispriortoStep 2,butaftergoingthroughStep 2,you’rea The pointofthisstepistohelpyouorganize yourthinking. You probably framework Step 3:Buildyour processing thisstuff. Much better!Now, pulloutafreshpieceofpaperandgettoworkon sheetofnoteswiththefollowingpoints: • A Four figures:2,5,8,and10.Onemorethanyouhadhoped,butitwillhave • You’ve beenthroughalloftheinformation,andhere’s whatyouhave: to do. – Competition: DoesGordon seemlikeathreattoourrevenueormarket – Marketdynamics:howisthe marketrespondingtoGordon? • PureMeatsishugeonquality, whileGordonisallaboutconvenience. • People arebecomingmorehealthconscious,andbecausechicken biggestmarketisbeef.(Figure4) • PureMeats’ • PureMeatscouldeasilydoubleproduction.(Figure3) • Gordon’s productisagreatforpeopleinrushwithbusy (as isfish). contains lowercholesterolthanbeef,chickenisbecomingverypopular cooks. (Figure1) lifestyle, butdoesn’t appealtothepurist chefsandtraditionalfamily position basedoncurrentdata? L C I A B R R A E E R R Y Presentation Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat (Bonus question:trythiscaseagainusingadifferent framework.) • Nextstep(timepermitting) • Externalsituation the questionheadon. You haveyourframework, youhavealloftheinformation.Nowlet’s tackle Step 4:Crackthecase – Measureagainstcapabilitiesandresources – Evaluatealternatives – Assess companycapabilitiesandresources – Defineandprioritizealternatives – What can wesayaboutGordonascompetition? – In termsofmarketdynamics,thereareatleastthreepointsnote. You– may seeothers. 3. Finally, chickenconsumptioniswellaheadofbeef According toFigure5,Gordon’s2. keysegmentforitsprecookedbeef It lookslikethemarketisresponding verywelltoGordon.Lookat 1. beef versusrawbeef;thisseemsreasonable. assumes thatittakeslesstimetoprepareamealusingprecooked product isthesmallbutfast-growing“busymom”segment. This assume thatGordonindeedhasstolenPure’s marketshare. the beefmarketisactuallynotgrowingverymuch.It’s safeto to bethecase?)Itturnsoutthatthisisnotcase;asperFigure 8, question: byhowmuchwouldthemarkethavehadtogrowfor this from 72%to52%butPure’s revenuestayedthesame?(Quick what ifthemarketgrewenoughsuchthatPure’s marketsharewent immediately assumethatGordontookoverPure’s marketshare,but trapwouldbeto an additional20pointsofmarketshareinbeef. A points to52%.Scantheotherrowsandyou’llseethatGordonhas as in2001,butthen2003Pure’s marketshareinbeefdropped20 market shareinFigure2.Pure’s marketsharein2002wasthesame for theswitchtochicken(health). can seethisveryclearlyinFigure 8.Figure9givessomerationale and iscontinuingtorisewhile beefconsumptionremainsflat. We www.vault.com/consulting Presentation Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 157 Customized for: Jessica ([email protected]) 158 • What shouldthePureMeatcompanyresponse be? – We canbrainstormalternatives. There aresomefairlystandard – Following ourframework,let’s– thinkthroughcompany capabilitiesand 3. Attempt tobuyGordon– acompetingproduct – 2. Offer 1. Donothing– make alaundrylist. alternatives thatwecanconsider. Canweruleanyoftheseout?Let’s .Atmtt ate withGordon– 4. Attempt topartner make alistofitems wewanttoaskabout resources. We actuallydon’t havemuchinformationonthisyet,solet’s out-of-the-box ideas– 6. Other thedeclineindemand thechickenmarkettocounter 5. Enter consider this. head-to-head withGordonusingacopyofitsproduct. We could 4. Therefore, Gordondoesappeartobealong-termthreatPure 3. Gordon’s successisespeciallytroublingforPureMeatsbecause Gordon hastakenoverthe“busymom”segment,whichisdefinitely 2. 1. Gordon doesappeartobealong-termthreat toPureMeat’s market question toraise. our companyupforsaletoGordon? great job,somaybeweshould hireher. Another idea:couldweoffer be buildorbuy–maybeanewbrand? and wedon’t knowhowsuchanentrywouldbeperceived.Entrycould beef for aren’t anysynergies to behad. beef productdoesn’t fittheshiftincustomerpreferences?Maybethere offer competingproducts.Ontheotherhand,isthissousefulifour L C appropriately. Meat’s marketpositioninbeef.PureMeatneedstoreact Pure issoheavilyconcentratedinbeef. segment?) does the“busymom”segmentexceed“traditionalgrandmother” growing fast.(Bonusquestion:basedonthesegrowthrates,when position inbeef. I A B R R A E E R R Y – This isagoodsuggestion. We don’t knowwhat’s involved, this seemslikeabadoption. We shouldrulethisout. Presentation Cases Vault GuidetotheCaseInterview a possibilityifwehavethecapital.It’s a Gordon’s marketingchiefisdoinga we coulddefinitelyconsidergoing a possibilitybecausewedon’t © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat • Next steps–you’veprobablyrun outoftimebynowandshouldget practices culled fromtheconsultingworld: presentation willlookdifferent. We suggestthatyoudofollowsomebest We’ve createdasampleversionofthepresentation.Obviously, your follows: blank sheetsofprinterpaper. The presentation mightbestructuredas First structureyourthoughts,thenpracticebuilding presentation on clean; yourinterviewersarejudgingstructureandclarityofthought. Everyone canscribblechickenscratchontoaslide.Itdoesn’t havetobe some peoplearefastatputtingtogetherPowerpointandothersnot. transparencies versusPowerpoint;it’s probablytoleveltheplayingfield,as uncommon forcompaniestomakeyoudothepresentationusing With tenorsominutesleft,it’s timetobuildtheshortpresentation.It’s not Step 5:Structure andcreate thepresentation what needstohappennext: cracking oncreatingthepresentation,buttakeaminuteandthinkthrough – Canyouthinkofothernextsteps?Jotthesedownquicklyandmoveon – Create amarketingplanthatincorporates distribution,channels,and – Assess companycapabilitiesandresources – Evaluatealternatives • Nextsteps • Alternatives • Situation(1-2slides) • Executivesummary target marketing 4. partnership, purchase,etc.? 2. into anewproduct? 1. 3. would wefinanceit? Cash situation te resources Other Capacity Management andshareholders – Dowehaveavailablecapacityifwanttobranchoff – ifwewantedtobuyGordon,coulddoit?How www.vault.com/consulting – dowehavetherightstaff? Presentation Cases Vault GuidetotheCaseInterview — with – wouldtheybeopento L C I A B R R A E E R R Y 159 Customized for: Jessica ([email protected]) 160 information asitcomesup. summary ofsituation,andalternatives. You canspeakabouttherestof Last thought:ifyouarepressedfortime,cangetbywithjusttwoslides: • • conversation: Directors meeting.Herearesomefinaltipsandguidelines forthe It’s gametime! The HRrepresentativeis walkingyoutothemockBoardof Notes ondeliveringthepresentation erayfrQ&A. Be ready for you tocomeupwitharecommendationafterthisframingstatement. think throughwherewewouldgofromhere.” The Boardshouldnotexpect over. I’dliketocommunicateasummaryofwhatI’velearnedthusfarand today. I’vereceived themarketresearchrecentlyandhavejustlookedit For example:“ThankyoutotheBoardformakingtime our discussion Framing iskey available forreference. your points,oraskforclarification. Haveyournotesandkeyexhibits discussion thanalecture. The Boardmaywanttodrilldownonsome of • Write bigenoughthat anaudiencemembercanreadtheslidefromafar. boxatthebottom ofaslidecouldbeeffective forconveyingakey • A Look forplaceswhereavisualcouldtellthestorybetter.• Noteourfirst • Sometimes ithelpstohavesubjecttagsoneachslide,e.g.situationor Bullet pointsoneachslideshouldsupportthetitle. Try• nottohave • The slidetitlesshouldallbecompletesentences. When readin Start• withyourexecutivesummary, soyouraudienceknowswhereyou “alternatives” slide.) question totheaudienceormaintakeawayofslides.(See convenience andsoa2x2showsthemarketdynamics. situation slide. The twokeymarketdimensionswerehealthinessand presentation. alternatives. This helpsyouraudience knowwhereyouareinthe more thanthreebulletsperpage. sequence, theyshouldtellyouthecompletestory. are headedandcantakeinsubsequentinformationappropriately. L C I A B R R A E E R R Y . Settheexpectationforwhatyou’regoingtotalkabout. Expect thatyourpresentation willbemorelikea Presentation Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat • We havebrainstormedanumberofalternativesthatwesuggest • Gordon’s producthasmadesignificantinroadsintoPure’smarket • Gordon’s pre-cookedbeef meetsagrowingmarketneedformore Pure Meatsandshouldcraftaresponse We shouldbeconcernedaboutGordonasaviablecompetitorto Executive Summary evaluating versusthecompanycapabilitiesasanextstep share inbeef convenient meatproduct like: Here’s whatyourfinalpresentationmightlook • • You’ve earnedthisopportunitytoshowyourstuff andyou’reready forit. like animportantconversationthatyou’vedonesomesolidprepfor. Relax! a slow, steadypacingofyourvoice. yourself forthingslikeeyecontact,smiles,posture,overalldemeanor, and thebasics. Remember - BeefhastraditionallybeenPure’slargestmarket There isabsolutelynoreasontobescared. Treat thepresentation www.vault.com/consulting Just likeinyourusualcaseinterview, monitor Presentation Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 161 Customized for: Jessica ([email protected]) 162 • Thechickenmarketremains open • Gordon’smarketshareincreasedfrom2%to27%in the sameperiod • From 2002 to2003,PureMeats’marketshareinbeefdroppedfrom market, butnotinthefast-growingchickenmarket. Gordon seemstohavecapitalizedonthistrend inthebeef Situation more convenientproducts. customer preferencesareshiftingbasedondemandforhealthier, Market researchsuggeststhatintheretailmeatmarket, Situation Convenient 72% to52% Less – Gordonhasnotcomeout withasimilarchickenproduct – Likely becauseitisahealthyalternativetobeef,chicken Because theoverallsizeof thebeefmarkethasremainedvery – consumption continuestoincrease substantially market shareinbeef flat overtime,itseemsthatGordonhastakenPure’s L C I A B R R A E E R R Y Beef (Pure) Uncooked Uncooked Chicken More Healthy Less Healthy Presentation Cases Vault GuidetotheCaseInterview Beef (Gordon) Precooked ? Convenient © 2007Vault Inc. More Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat We proposeaseriesofnextsteps. Next Steps Are thereotheralternativestheBoardfeelsweshouldconsider? There areanumberofpossibleresponses. Alternatives • Craftimplementationplan • Assesscompanycapabilitiesversusthesealternatives • Clarifyandevaluatealternatives • Otheralternatives • Highpriorityalternatives – PartnerwithGordon – BuyGordon – Donothing – Retain positioningwithrawmeatbutenterthe – CopyGordonwithapre-cookedbeefproduct chicken market www.vault.com/consulting Presentation Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 163 Customized for: Jessica ([email protected]) 164 the Presentation Presentation CaseType2–Complete Wells Incorporated Complete thePresentationExample: the “Additional InsightsforDiscussion”page. Goodluck! questions alongtheway. Haveyourfriendraise eachoftheissueslistedon your completedpresentation for yourfriend,allowinghimorhertoask insights aheadoftime.) After youhavefinishedyourwork,walkthrough solutions andpageofadditional insights.(Don’t lookatthesolutions or Your friendshouldreadthroughthefullsetofcasematerials, includingthe For evenbetterpractice,wesuggesthavingafriendplaytherole oftheclient. “Additional InsightsforDiscussion”aswell. solutions carefullytoseehowyoudid.Besurethink throughthe work throughthecase. When youarefinished,readthroughthesuggested suggest youphotocopythefollowingsevenpages,sitinaquiet room,and where youarerequiredtocompletetheslidesandderivekey insights. We On thenextfewpages,wehaveprovidedanexampleofapresentation case need to: situation. Duringthediscussionfollowingyourworksession,youwilllikely but thatyouareabletodemonstrateastronggraspoftheoverallclient For thesecases,itisvitallyimportantthatyounotonlycompletetheslides, research case. that aremoreinvolvedandrequirefurtherdepththanmostquestionsonthe distill informationintoconclusions.Italsomayinvolveanalysisquestions Unlike theresearchcase,thistypeofcasegenerallytestshowwellyoucan key insightswithamockclientorprojectteam. complete asetofslidesforclientpresentation,thendiscusstheresultsand An increasinglycommonvariationonthepresentationcaserequiresyouto • Discusspotentialrecommendations • Raisefurtherimplicationsfortheclientbeyondanalysis • State thekeyinsightsandshowwhatdataorcalculationssupportthose • Summarizetheclientsituation insights L C I A B R R A E E R R Y Presentation Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat Good luck! problem. Youwillbemeetingwiththeminapproximately 30minutes. presentation contentandotherissuesimportantto thebusiness team. Pleasebepreparedforadiscussionwithyourteam aroundthe You willbediscussingthispresentationinhalfanhour with yourclient and five. profitable. Pleasecompletethetestofthishypothesisonslidesfour the industry,priceswouldrise,andthenremainingshipwillbe if youretirefiveoftheships,therewillbelessornoexcesscapacityin suggested analternativemeansofraisingcapital.Hishypothesisisthat Part B: the followingthreeslidestocompleteanalysis. information containedinthefirstslide,thenfollowinstructionson slides, whichneedtobecompleted.Pleasereviewthebackground Part A: client discussionwithinthehour. analysis, andyouneedtofinishpullingtheinformationtogetherfora strategy. Yourteamhasconsolidatedafairamountofeconomic the oiltankerindustryasameansofcraftinganalternativedivestiture The clienthasengagedyourteamtoclarifytheeconomicstorybehind been notakerstobuytheships. profitability tobeafunctionofexcesscapacity;therefore,therehave profitability ofthesetankersisverylow.Buyersperceivelow collectively earnsteadyrevenuesof$450,000peryear.However, Based oncurrentdemandforoiltransportation,thetankers and isseekingtoselloffitsoiltankersinorderraisemoney. of oilforothercompanies.WellsInc.wantstoinvestinnewequipment medium-sized oiltankersthatareusedtotransportthousandsofbarrels Your clientisanoilcompanycalledWellsIncorporated.ownssix Case Interview:WellsIncorporated A summaryoftheindustryresearchappearsonnextfour After muchbrainstorming,thepartneronyourprojecthas www.vault.com/consulting Presentation Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 165 Customized for: Jessica ([email protected]) 166 • Oilshippingisa transport industry Part A:Backgroundinformationontheoil • All shipsintheindustryaresubjecttosamefeaturesand regulations – Aship’sdiscountrateovertimeis5% – Effectively, ashiplastsforever–thereisnodepreciationon – Variable costsaretheonlypertrip A ship’s ownerwillnotengageinoiltransportunlessatripis – – All shipsarecurrentlyregisteredwiththeOilTransport – Shipscanbesmall,medium,orlarge(seenextpage) – Each shipisindependentlyownedandcapableofexactly – Each tripearnsthesamerevenueperbarrel,whichissetby – Pricing isveryclosetothecostofsupplyformarginal – There isstrongcompetitionandlittledifferentiationamong ship these ships,andausedshipcostsexactlythesameas new at leastbreak-even. registered atanytimeforanominalfee. obligation toembarkontrips.Shipscanberetiredor demand. Registeredshipshavetheoptionbutnot Commission, whichtracksofficialoilshippingcapacityand one tripperyear and demand determining the supplier ships L C I A B R R A E E R R Y commodity market clearingprice industry Presentation Cases Vault GuidetotheCaseInterview that matchessupply © 2007Vault Inc. Customized for: Jessica ([email protected]) Price ($/barrel) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat should beabletodetermine the construct thesupplycurve for thisindustry.Whenyouaredone, barrel Note tocandidate: Clearing Price Part A:Supply,Demand,andMarket Part A:SupplyInformation–ShipData M S L S S i e a z m h d e r i

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0 d s ( $ s ) Customized for: Jessica ([email protected]) Something Presentation CaseType3–TeachMe insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat practices forgettingtheprocessrightareasfollows: other words,it’s lessaboutwhatyouteachthanhowit.Somebest These presentationcasesaremoreabouttheprocessthancontent.In might askyoutodo: interviewer howsomethingworks.Herearesomeactivitiesyour finaltwistonthepresentationcaseinterviewinvolvesexplainingtoyour A • • Explainacomplextopictoyourinterviewer • Complete apresentationthatcontainsthefindingsand/ordata–you • Prepareapresentationinadvanceandbereadytoanswerquestions • Teach yourintervieweraskill • • • • supply theinsights talk abouttoday? discussion withoutframingoftheconversation–whatarewegoingto show anexampleofthefinalproductupfront. motivation, ifyou’reteachingausefulskill,demonstratetheskillor This isaveryimportantcomponentofthesetup. As partofthe useful toknow? Why shouldyoulistento meandengageinadialogue? audience helpsthemfollowalong. roadmapforyour you’re goingtotalkabout,thenaboutit. A audience. Does thatmakesensetoyou? Try tobuildarelationshipwithyour seen/done thisbefore?Canyou thinkofawaythismightbeuseful? audience isgettingitandinterested. Ask questions–haveyou discuss thenuancesofittomakemoreinteresting. keep itatahighlevel.Ifyouareexplainingrelativelysimple topic, Introduce thetopicandobjective. Explain whythetopicisworthlearningabout. omnct h tutr fyu talk. Communicate thestructure ofyour Give therightlevelofdetail. ilgewt oraudience. Dialogue withyour www.vault.com/consulting Presentation Cases Vault GuidetotheCaseInterview If youareexplainingacomplextopic, Check intomakesurethatyour Be surenottojustplungeintoyour — with Tell theaudiencewhat Why wouldthisbe L C I A B R R A E E R R Y 173 Customized for: Jessica ([email protected]) 174 Creative ideas Music andart History andsocialissues How stuffworks Business topics preparation andoneortwotopicsyoucouldbereadytoteachonthespot. you takethetimenowtothinkthroughoneortwotopicscouldteachwith Below aresomeexamplesoftopicsyoucouldteachorexplain. We suggest • Doayogapose • Flipapenaroundyourfingers • Makeapaperanimalusingorigami • What isthe efficient travelpathfromoneplaceto another? • Howtoplaysmartbilliards • Learntodrawanimals • Musictheorybasics • Overviewofthedifferent artisticgenresorperiods • Explaindeconstructionismoranothercomplexcriticaltheory • Why iscollegetuitionincreasing? • Explainhow WWI started • ExplainthereasonswhySovietUnioncollapsed • The physicsofOlympiccurling • Howcarbondioxideproductionresultsinglobalwarming • Howdigitalradioworks • Howanairplanestaysintheair • Howelectricityisproduced • Howdoestheclinicaltrialworkfordrugdevelopment? • ShouldIrentorbuyahouse? • UseofPorter’s FiveForcestoanalyze an industry • Explainhowcarbondioxideresultsinglobalwarming • Howtoassesswhetherastockisovervalued • UseofBlackScholesequationforpricingaEuropeanoption L C I A B R R A E E R R Y Presentation Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) Difficult SituationCases insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat come upwithsomethingsimilartothefollowing: steps asapplicabletoanysituation? After afewminutes,you’llprobably the stepsyouneededtotakegetitresolved.Howwould describethese actual incidentsthathappenedtoyouandpretendbecoaching yourselfon How wouldyouapproachthesesituationsinreallife?Step outsideofsome problems ingeneral,thenpractice. prepare forcaseinterviews:thinkabouthowyouwould approach these interviewer? We recommendyoupreparefortheminthewaywould unstructured, scatteredanswers. Why createthisimpressionforyour focusing ontheusualcasesinstead. They runtheriskofcommunicating candidates shootfromthehiponsuchquestionsanddon’t prepareforthem, These areimportantsituationsandquestions.Mostconsulting Examples ofsuchsituationsare: situation likefallingrevenues,butachallenginginterpersonalsituation. interviewers areaskingquestionswherethecasedealsnotwithabusiness placing increasedemphasisonfitandinterpersonalskills. As aresult, As consultingfirmsstrivetocreatelesscutthroatworkingcultures,theyare a challengingorganizational situation. interviewee hadbeeninwhereshetoconfrontdifficult peopleorresolve give herabusinesscase.Instead,theytalkedmoreaboutsituationsthatthe four secondroundon-siteinterviews,twowerewithpartnerswhodidnot recentintervieweeataleadingstrategyconsultingfirmreportedthatofher A • Cook somethingcomplex(usediagramsand/orexplainthechemistry • Immediatelymove forwardwiththeappropriate • Determinewhatother • Assess the • Assess • Copingwithfamilyemergencies while on thejob • Dealingwithunethicalbehaviorbyaclient • Confronting aco-workerwhomseemstobenotgettingtheworkdone • Decideonthebestcourseof behind it) on yourproject situation www.vault.com/consulting information action Presentation Cases Vault GuidetotheCaseInterview you’ll needtodrawaconclusion towards resolvingtheissue — with communication L C I A B R R A E E R R Y 175 Customized for: Jessica ([email protected]) 176 You: Interviewer: You: should youdo? weightontheproject team. What colleagueispullingher don’t feelyour commented toyouonthedifferences in workstyleshehasobserved. You onedayonclientsite,the spending alotoftimeonthephone. After colleague seemstobecominginlateeveryday, leavingearly, and are workingnightanddayonavery demandingproject, whileyour associateonaproject. You havebecomefrustratedbecauseyou another You’re anassociateatMarathon Associates, andyouare workingwith Difficult SituationCase#1:WorkStyles situation, comeupwithanapproach,andgiveityourbestshot. these problemsasyouwouldtheclientissue:takeastepback,assess how youwillhandlethesesituationswhentheycomeupinreallife. Tackle while youpracticeansweringthesequestions,alsowinduppreparingfor that mightoccurduringyourfirstcoupleofyearsonthejob.Ourhopeis finalthoughtbeforewedivein:thecasescenariosallreflectrealsituations A even hardertocommunicatethanthoseregardingprofitandloss. solve. And givenhowhardtheyaretosolve,theirsolutionsprobably we needframeworksthemost.Inmanywaystheseareharderproblemsto solve personalsituations.Unfortunately, thoseareprobablytheoneswhere questions. Bythat,youprobablymeanweshouldn’t needframeworksto You mightwonderifitisreallynecessarytocreatea“framework”forsuch • Ifnecessary, proceedwith L C I A B R R A E E R R Y speak withmycolleagueassoon aspossible,beforeI already frustratedwiththesituation, Iwouldwantto on ourclient.Inthatcase,since youhavetoldmeIam hasn’t yet risen tothelevelofmakingabadimpression criticism ofeitheryou. differences inworkstyles,butdidn’t makeanyovert my fellowassociate’s workstyle? clarifying questions.Howunhappywastheclientabout mentioned thisissuetome.I’dlikeaskafew hours! However, Iamconcernedthatthe client actually challenging project–Icertainlydon’t mindthelong I see.I’mgladtohearthat.So, ifwehaveanissue,it Actually, theclientmerelycommentedon First ofall,Iamveryhappytobeworkingonsucha escalation Presentation Cases Vault GuidetotheCaseInterview to ahigherorexternalauthority © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat You: Interviewer: You: Interviewer: You: Interviewer: You: Interviewer: You: Interviewer: project siteuntil Ifinishtheday’s work,andyou tendto may havedifferent workstyles:Itendtostayatthe everyone else’s rolehasbeen. ItsoundslikeyouandI project, andIguessjusthaven’t beenclearonwhat perhaps? project site. Are youworkingalotofhoursfromhome are workinglonghoursaswell? in thedayIcandedicatetowork.Doyoufeelthat working 16-hourdays,andtherearen’t manymorehours the deadlines. say that.Idon’t thinkwe’llhaveanyproblem meeting deadlines, givenhowmanyhoursweareworking. concerned aboutourteambeingablemeetingtheproject judgmental waytostartwouldbesaythatI’m constructive,non- colleague’s comingsandgoings. A possible thatI’vesomehowmisinterpretedmy and I’llbringuptheissuedelicately. After all,it’s worked ontogether. relationship withmycolleague? as afirststep.Letmeaskyou:doIhavegoodworking I thinkit’s alwaysbesttosimplyaddresspeopledirectly enough acrisisyettoinvolvemyprojectmanager. Plus, Would youtalktoyourprojectmanagerfirst? up myconcerns. grab asandwichwithmeforlunchtomorrow, andbring build upanymorefrustration.MaybeIcanaskherto I’ve beenfeelinglikeI’mputting inalotofworkonthis Actually, yes,I am. Why doyouask? Hmm. Iknowwedon’t overlap toomanyhoursatthe Yes, butthat’s justtheway itgoesinconsulting. I’m certainlygladtohearthatvoteofconfidence. Let’s sayI’myourcolleague.surprisedwhenyou OK, thenIthinkit’s bestthatwesimplymeetforlunch, Let’s sayit’s neutral–thisisthefirstprojectyou’ve That’s aconsideration,butitsoundslikemightnotbe So, youaregoingtoconfrontyourassociatedirectly? www.vault.com/consulting Presentation Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 177 Customized for: Jessica ([email protected]) 178 his colleague’s workhoursover asandwich,heiscarefulnottosound appealing toworkwith? When ourintervieweeplaystheroleofasking about this oneliesinthenuancesof delivery–doyouseemfriendly, relaxed, eagerness togetthejob.Much ofthequalityananswertoaquestionlike opening herresponsewitha somewhat tongue-in-cheekreferencetoher The intervieweealsousedhumorjudiciouslyinherresponse to thisquestion, actually problematic. frustration describedinthecasequestion,colleague’s performanceisnot situation. Mostimportantly, sheallowedforthepossibilitythat,despite interviewee askedalotofquestionstofindoutmoreinformation aboutthe you diveintoanalyzingwhatbelievetobethecore issue. The case, it’s importanttolistallthepossiblereasonsforanobservedtrendbefore not tojumpanyconclusionsaboutthesituation.Justlike inabusiness The intervieweeprovidedagoodresponsetothisquestion. She wascareful You: Interviewer L C I A B R R OK,good.Icantellyouthatyourcolleague has worked : A E E R R Y her relationship. project siteorfromhome–afterall,itisherclientand preference onewayortheotheraboutusworkingat project manager, andmakesurethatshedoesn’t havea consider takingouragreed-uponworkstyleplantothe workload expectations. At thispoint,Imightalso with mycolleagueregardingworkstyleandshared boot? Mostimportantly, Iwouldtrytosetexpectations frustration, andhavetimetopickupmydrycleaning some aswell,soIdon’t buildup unwarranted work efficiency? ShouldIconsiderworking fromhome at theprojectsiteduringcertainhourstoincreaseour the day. Forexample,couldweagreetoworktogether two ofusworkingindifferent locationsforthemostof responsibilities, and(3)discusssomealternativestothe project plangoingforwardandadivisionof are basedonourpriorprojectworkstyle,(2)discussthe colleague: (1)understandwhattheclient’s expectations the situation? with thisclientforthepastyear. Howwouldyouresolve their preferenceisforouron-siteworkhours? worked withthisclientbefore,andifyouknowwhat work fromhomealot,Iguess.Canaskifyou’ve I wouldwanttotalkthroughafewmoreissueswiththe Presentation Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat You: Interviewer: You: Interviewer: You: What doyoudo? back production significantlyandlayoffhundreds ofemployees.” model. The results are allwrong. Actually, thebestalternativeistoscale inthe error office.Hesays,“Badnews.Ifoundamajor rushes intoyour associate usualmorningcoffeewhenthejunior You are enjoyingyour good news,andhadfollowedthate-mailupwithaphonecall. clientteamleadthattheanalysishadshown had already e-mailedyour outcome theclientteamleadhadbeenhopingfor. Infact,thepartner client toinvestmillionsofdollarsincapacityexpansion,whichwasthe his edits. The finalresults showedthatitwasworth$500milliontothe partner, andthenpolishupthepresentation with your presentation for to produce thefinancialanalysis, prepare aninitialdraftofthe afternoon. You andtheassociateworkedverylonghourslatenights executivemeetingthis and recommendations totheclientat asenior thefinalpresentation is onaplaneflyingacross thecountry todeliver associateandapartner. At thismoment,thepartner with amore junior Consulting,youare workingonaproject associateatKiller As asenior Difficult SituationCase#2:BadNews issues face-to-face. well youcanarticulateandcommunicatethesetypesofdelicateinterpersonal very interestednotonlyinyourtheoreticalapproachtothesituation,buthow interviewer inarealisticrole-playingexercise–yourislikely actually playingtheroleofcolleague.Bepreparedtoengageyour Notice thattheinterviewerswitchedfromplayingroleofto his answerwithadecisive,clearplanofaction. the interviewerratherthanjumpingtoconclusions,butmakessurewrapup passive-aggressive. Hespendsmostofthecasegatheringinformationfrom think thebasic approachistofirstunderstand the like totakeafewminutesgather mythoughts. make sureI’mclear. ( Great. ( Sure. Take yourtime. All right,letmeplaybackthesituationtoyou,just Yes, itdid.Scary, isn’t it? Wow. Didthatreallyhappen? www.vault.com/consulting Approximately oneminutegoesby Presentation Cases Vault GuidetotheCaseInterview — with Repeats aboveinformation. L C I A B R R A .) Okay, I E E R R Y ) I’d 179 Customized for: Jessica ([email protected]) 180 You: Interviewer: You: Interviewer: You: Interviewer: You: Interviewer: You: Interviewer: L C I A B R R A E E R R Y mail andclassify themas“urgent.” Iwouldn’t saythat him amessageonbothhiscell phone andhisworkvoice key stepistogetintouchwith the partner. Iwouldleave presentation isat3:00pm. at 10:30a.m.Hewillland2:00p.m. The client flight leglandsat9:45a.m.andhisconnectiontakesoff now andyoufindoutfromhisassistantthatfirst relative toflightconnectionsandtheclientpresentation? regarding mypartner’s flight.Howreachableishe, would alsoliketoknowsomelogisticsinformation the issue. figure itoutiftheassociatecalmlywalksyouthrough model onlyonceortwice,butyoushouldbeableto so you’reprettyfamiliar. You haveseenthisparticular with theassociate? enough inExcelsuchthatIcanwalkthroughthemodel How familiaramIwiththemodel,andconversant presentation ifwehaveto. figure outwhenandhowwewillupdatethefinal the partnersowecandiscusssituation,andIneedto logistics; forexample,Ineedtomakesurecanreach it does.Second,Ineedtohandlecommunicationand the modelindeedhasaproblemandIneedtoverifythat are twoissueshere.First,atthispoint,Idon’t knowthat partner andthentotheclient.Ihavesomequestions. situation, thenescalatetheissuehonestly, firsttothe Then let’s getmoving. As Imentionedbefore, Ithinka Yes, hehashiscellphonewithhim. Did hisassistantsayhehadcellphonewithhim? The partnerisflyingacrossthecountry. It’s 8:30a.m. Good, soIknowcanaddresstheproblemhands-on. You havebuiltsimilarmodels inthisindustrythepast, Let mestartaskingsomequestionsaboutthefirstissue. That seemsreasonable. I thinktheimportantthinghereistostaycalm. There Fire away. Presentation Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat Interviewer: You: Interviewer: You: Interviewer: You: Interviewer: it. terms ofworkschedule? ask: hasthisbeenaparticularly demandingprojectin more importantissueofwhatwedoaboutit.Letme There’s theissueofhowithappened,andthere’s the regarding howwecommunicatethistotheclient. communicate tothepartnerandhavesomeideas what? that thereisaproblemandtheassociateright.Now Then Icanaskgoodquestionsaboutthebughefound. how themodelworkssoIcanaskrightquestions. take afewminutestoexplainmejustenoughabout him. Beforehegoesrighttotheproblem,needs is probablypanickingatthispoint,andIneedtohelp associate, andwegothroughthemodel. The associate initiative tothinkaheadthisway. the plane. As theseniorassociate,Ishouldtake problem isthereornot,it’llbetoolateandhe’llon partner aheadoftime,bythetimewefigureoutif know there’s aproblemforsure? the office. flight, soitwouldbebestifhecalledmeatthatpointin us whenhewasintheairportawaitinghisconnecting that Iwascallingtoalerthimtheneedcheckinwith the modelwithhimandverifyit.Iwouldtellpartner model, andmynextstepistorigorouslyworkthrough me thestrongpossibilitythatwehaveabugin has happened,thattheassociatecommunicatedto there isdefinitelyaproblem.Iwouldsayexactlywhat Yes, buttheclientisprobablyonlynominallyawareof I wasafraidofthat.Nowneedtothinkabouthowwe Let’s saythatabouthalfanhourlater, youareconvinced Now welookintotheproblem.Isitdownwith Makes sense.Nowwhat? If Idon’t setuptheneedtocommunicate withthe Interesting. Butwhyevenbotherthepartnerifyoudon’t www.vault.com/consulting Presentation Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 181 Customized for: Jessica ([email protected]) 182 You: Interviewer: You: L C I A B R R A E E R R Y associate, andme.Ithinkwe canframethesituation it inthefuture. This needstoinvolvethepartner, the discuss howtheproblemoccurred andhowwecanavoid though tohaveateamfeedback sessiononthisto hard andmistakeshappen. I thinkitwouldcrucial, that weshouldbehonest. Also, wehavebeenworking focus –wefoundabug,mademistake,think approach. Iwouldtryveryhardtomaintaina“we” and ineffective totakeanythingotherthanateam-based been moreinvolvedinthemodeling.It’s veryunclear keep acloseenougheyeonus,perhapsIshouldhave we hadtoomuchworktodo,perhapsthepartnerdidn’t having abuginthemodel?Orfired,even? start withhonesty. are manypossibilitiesthatcouldsurface,butithasto final presentationhasbeenscheduledtooearly. There need tobehonestthatwemadeamistake.Perhapsthis to helpthemmaketherightdecision.Ialsothinkwe with theclient. This isbadnewsforthem, andwewant meeting ornot,Ithinkit’s clearweneedtobehonest postponing itentirely. then restructurethe3p.m.meetingorthinkabout the clientteamleadtogiveaheads-uponresults, would leaveittothepartnerhaveaone-on-onewith cancel thepresentation–whatwouldwetellthem?I follow-up discussion.I’mnotsureitmakessenseto as adiscussionoftheresultsthatwouldwarrant air, andweshouldreframetheclientpresentationtoday should redothefullanalysiswhilepartnerisin questions. Then Iwouldsuggestaforward plan. We information tounderstand,andIwouldallowhimask issues wefoundatahighlevelandgivehimjustenough changes theresultsdramatically. Iwouldexplainthe unfortunately wehavefoundabuginthemodelthat been workingveryhardonthisproject,and Well, it’s notnecessarilytheassociate’s fault.Perhaps Do youthinktheassociateneedstobereprimandedfor While it’s nottotallycleartomeifwecouldhavethe Here’s whatIsaytothepartnerwhenhecalls:wehave Presentation Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat You: Interviewer: You: Interviewer: You: Interviewer: boarded theplane, aboutwhatwefoundandhow we’re conversation withthepartner, probablyafterIhave redo thefinalpresentationslides, andIneedtohavea the associatetalkingaboutnext stepsandwho’s goingto it’s not. After thatIneedtospend afewminuteswith hopefully that’s enoughtime, thoughthere’s achance before myflightleavestounderstandtheproblem,and he’s ill.Isitwiththeassociateandworkfor20minutes to contactthepartnerputhimonalert,eventhough much higherpressuresituation. As before,Iwouldtry you havewithyou. I haveaccesstothefinalversionofmodel? and Ihaveafewhourstomyselfontheplane. Also, do partner. are thesameforyouastheywouldhavebeen situation, relativetomyflighttimes? First ofall,whenistheclientpresentationinthis change youranswer? happy aboutthis,especiallythelayoffs. Howdoesthis back production. You knowtheclientwon’t beatall that theanalysisshowsbestcourseistoscale away. When youreturntheassociate’s call,youlearn model resultsareincorrectandtopleasecallbackright associate hasleftyouanurgent message stating thatthe you checkyourcellphonemessagesandfindthatthe presentation. While waitingforyourconnecting flight, because thepartnerisillandcannotmake deliver theresultsofanalysis,youareonplane being intheoffice whilethepartnerisonplaneto change thesituationslightly. Supposethatinsteadof really treatitasalearningsituation. positively inretrospectonceweareoutofthefireand Okay. Ithinkmy answersstayverysimilarbutthisisa Yes, youhavethemodelonyourlaptopcomputer, which So Ihaveabout20minutestochatwiththeassociate, Same asbefore,it’s at3:00p.m. Assume theflighttimes Very interesting.Ithinkneedalittlemoreinformation. Great answers.Letmethrowinawrinklehereand www.vault.com/consulting Presentation Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 183 Customized for: Jessica ([email protected]) 184 learning showsmaturityandlong-term firmthinking. assumed responsibility. Finally, framingtheincidentintermsoffuture news. Shealsomaintaineda“we”focuswithoutblamingthe associate,and remained honestandhadnointerestinhidingmistakesorcovering upbad Most importanthereistheintegrityseniorassociate showed.She focus isonsettingupthedayforsuccessfulcommunicationand execution. they knewmore;intheabsenceofconcreteinformationon problem,the be aproblemandfocusesonmakingsureshecouldreachthe partnerwhen each junction.Inherfirstvoicemailtothepartner, shesaysthattheremight voice mail,shestressestheimportanceofclarityaboutstate ofthingsat team workswell.Beyondtheuseof“urgent” classificationfunctionin This isalsoagoodexampleofhowheighteningcommunicationwiththe walking throughthemodeltoensurenewresultsarevalid. communicate theissue,thenshesitsdownwithassociateandstarts highly proactiveaswell–forexample,shecallsthepartnerrightawayto work calmlyandfocusonasolution-orientedframethroughout.Sheis As farasthecontentofdiscussion,noticehowcandidateseemsto thoughts. always reasonabletotakeafewmomentscollectandstructureyour communication/logistics andcoreprobleminparallel).Rememberthatitis through thesituationandcomesupwithabasicframework(working solid effort. Onereasonisbecauseshe choosestotakehertimethink This isatoughquestionwithnorealrightanswer, andthecandidategivesa L C I A B R R A E E R R Y be evenmoreaction-oriented. I’m inthedriver’s seatinsteadofmypartner, Ineedto similar tomyreactioninthepreviousone.Butbecause the rightapproach. partner aswellforthisconversation. Again, honestyis these changes.Itwouldbehelpfultoconferenceinthe with theclientteamleadtogooverhowwewilladdress presentation. When Iland,needtohaveaprivatechat on theplanetorecreatemyportionoffinal going todealwithit. Then, Ihaveafewhourstowork In summary, myreactioninthissituationshouldbevery Presentation Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat You willwanttofocusonafewthingsintheseconversations: approach eachpartner. after themid-projectpresentationsoranothersimilarmilestone, then ten-week projects,thenyouprobablyneedtoaddressthesituation. Wait until all forthenexttwoweeks.Onotherhand,ifyouaremidwayinto short projects(fourweeks)thenyoumightjustwanttodealandgiveityour Consider timingwhenyouthinkaboutwhattodoit.Iftheseareboth term questionsforyou. be yourfirmculturetoworkextremelyhard,whichmightraisesomelong- two especiallydemandingpartnersandyoursituationisunique.Or, itcould then youknowit’s moreaboutyoursituation.Perhapsyouareworkingfor then youmayhavetochalkitupadjustmentperiod.Ifmarkedlydifferent, firm ayearoutofbusinessschoolabouttheirexperiences.Ifsimilartoyours, might wanttoasksomeofthemorejuniorconsultantswhohavebeenat is reallyjusthowitonthejobandyouaretakingawhiletoadjust. You school –perhapsitfeelslikeyouareworkingwaytoohard,butmaybethis Start withainquiryframe.Remember, thisisyourfirstjoboutofbusiness this veryissueinyourfirstyearonthejob. you getthisquestion,anddon’t besurprised ifyoufindyourselfdealingwith This isahighlytypicalsituationfornewconsultants–don’t besurprisedif nighters andweekends. What doyou do? to eachproject. You havebeenworkingextremely hard,includingall- you are ontwoprojects, yetyoufeellikeare more like75%allocated feeling completelyoverwhelmed.Supposedly, bothpartnersknowthat to eachproject. However, midwayintoeachproject youfindyourself time working ontwoprojects. You are supposedtoallocate50%ofyour at Austin ConsultingGroup, andyouare currentlyYou are anewMBA Difficult SituationCase#3:DoubleDuty • Frame yourconcernsattwolevels. At theprojectlevel,youare • Give examplesofhow the workwasoverwhelmingandaddedupto • Start withsomefeedbackonthepositiveaspectsofprojectfrom concerned about poorperformanceonboth.If thepartnerpushesback deteriorate yourperformancefor thisclient. At thefirmlevel,youare concerned thathavingtoomuch worktodoonthisprojectwill would looklikeandthereforeshowing thatyoudidmorethan“half.” more thantheallocated50%. Try suggestingtothe partnerwhat100% your perspective. www.vault.com/consulting Presentation Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 185 Customized for: Jessica ([email protected]) 186 into playhere: manager. Two well-establishedprinciplesofeffective feedbackmay come Ultimately, you aregoingtohaveinitiateaconversationwiththeproject this situation? interpersonal orpoliticalissuesthatcouldbecloudingpeople’s perceptionsin their assessmentoftheprojectmanageraccurate? Are thereany he knowntotakefeedbackwell?Howconcernedweretheclientsreally?Is What isyourreportingrelationshiptohim? What ishispersonality, andis information: What isyourpersonalrelationship totheprojectmanager? As withanycasequestion,startbyclarifyingthesituationandgatheringmore this situation? often takesmeetingsofftrackwithwildideas.Howwouldyouhandle bugsthem.He seemsdisorganizedand much theproject supervisor to fallapart.Membersoftheclientteamhaverecently mentionedhow showsupthingsseem project supervisor your work. However, whenever consultingfirm’s going really well–theclientisveryhappy withyour onaproject. Things are associateare workingtogether You andanother Difficult SituationCase#4:TheCrazyBoss • Feedback shouldalwaysbebasedonobservedfacts, andneverbe • Feedback shouldalwaysbegivenatanappropriatetimeandwithina • Thank thepartnerforhisorhertimeandunderstanding,reiterate • Suggest thatyouhaveweekly(orotherappropriate)checkpointsto Give concretesuggestionsonwhereyoucouldscalebackthework. The • framed inapersonalmanner. “Theclientexpressedconcerntome…” mutual feedbacksession. crunch week,waitforanatural breakintheprojectworkandsuggesta safe space.Ratherthanapproachyourprojectmanagerinthe heatof your commitmenttotheproject. make surethingsaregoingwellfromthepartner’s perspective. need tonegotiatealittlebit. partner mayreactwellbutalsomightresist.Inalllikelihoodyouwill could last. from theoutside,butyou’reveryconcernedabouthowmuchlongerthis and saysyouseemtobedoingjustfine,explainhowthatmaytrue L C I A B R R A E E R R Y Presentation Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat for them? Was oneofyouresponsible fortheanalyticsandother responsible exact peer? Are youtwoalerting eachotheraboutthechanges,andrationales responsibilities thatthetwoof youhavebeenassigned:isthispersonyour Start with betterunderstandingthesituationanddivision of cause majorheadaches. This isaverycommonissue,andanexampleofwheresmall changescan do? from graphs…Itisgettingveryaggravating. What doyou disappear and footnotes gofrom 10ptto12ptandbackagain;gridlinesappear thousandtoshowingextrazeroes; having a“k”abbreviation for person’s preferred styletotheother’s: numbersinsidetablesgofrom both changingthesameformatelementsbackandforth from one you makesomeformattingchangesaswell. The problem isthatyouare Each timethefilegoesfrom oneperson’s control totheothers,twoof the officeLAN–thatsummarizepiecesofanalysisyouhavebothdone. days, youhavebothbeenaddingslidesintothedeck–whichisstored on thepastseveral that involvescreating alargePowerPoint deck.For newassociateare bothworkingonastrategyproject You andanother Difficult SituationCase#5:FormattingWars with yourfirm. After all,thepartnerisalwaysultimatelyresponsibleforthatclient’s business satisfaction, youwouldbeobligedtoalsospeakwiththerelevantpartner. conversation withtheprojectmanagerdoesn’t resolvethingstoyour comments aboutthisissue.Consultingisallclientservice.Iftheinitial Nonetheless, youshouldtakecaretoexpressseriousconcernfortheclient’s not infactbe“wrong”behavior. perspectives onthesamesituation–whatseemslikeaproblemtoyoumay directly withtheprojectmanagertosolveproblem.Peoplehavedifferent not betotelltheprojectmanager’s supervisor, butinsteadtotryspeaking interpersonal workingrelationshipsaswell. Thus, yourfirstreactionshould to executeclientwork,andwouldexpectthatsametraitcarryoverinto supervisor. Generally, consultingfirmslookforindependentproblem-solvers overreact byimmediatelygoingovertheprojectmanager’s headtohis you isyourdirectsupervisorontheproject. You probablydon’t wantto The complicatingfactorhereisthatthepersonwhorequiresfeedbackfrom bothers mewhen…” or “I’veobservedthat…”isfarsuperiorto“You always…”or“It www.vault.com/consulting Presentation Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 187 Customized for: Jessica ([email protected]) 188 1. You arethebusinessanalyst workingonaclientprojectwith Additional PracticeQuestions –DifficultSituations guidance fortheteamastowhichwayyoushouldgooncertain issues. easily legiblepresentationthatreflectswellonyourfirm,so youwantsome to theprojectmanagerthatyourconcerniscreatingavisually consistent, are mostappropriateforthispresentationandclient. You wouldexplain Rather, youareaskingforherseasoned opinion onwhichformatstandards are notaskingyourprojectmanagertointerveneinaninterpersonal situation. the projectmanagerisafinesuggestion,providedyouframeit correctly. You If youcannoteasilycometoanagreementwithyourcolleague, approaching to beresponsibleforformattingandonecontentQ&A. interviewer thatanefficient solutiontothissituationisassignoneperson on acommonformattingpracticeforthispresentation. You cansuggesttothe colleague, andexplainwithfact-basedarguments whyit’s importanttoagree on yourpart.Findacalmandsafetimetobringuptheissuewith going totheprojectmanagerfirstrevealsalackofproblem-solvinginitiative The rightthingtodoisworkoutthissituationdirectlywithyourpeer– throughout thepresentationsothatitformsacohesivewhole. In thiscase,themostimportantissueiscreatingvisualconsistency colleague arebattlingover)thatthefirmmaynothaveanofficial policyon. However, therearecertainformattingissues(suchastheonesyouandyour review, standardsaboutfontsizesandamountoftextperpagevary. person asawalk-through,ordeliveredstand-alonereportfortheclient’s statement. Dependingonwhetherthepresentationwillbedeliveredin- “ink” possible,allinformationonagivenslideshouldsupporttheheader PowerPoint design:conveythemostinformationpossiblewithleast addition, principlesofinformationdesignsuggestbestpracticesfor PowerPoint outputs. As aresult,formattingisnon-trivialmatter. In clients isconveyedthroughtheformat,layout,andinformationdensityofits employees areaskedtouse.Muchofaconsultingfirm’s brandimagetothe PowerPoint slides,whichprobablyincludesamasterslidetemplatethatall Most consultingfirmshaveestablishedsomeformofformattingstandardsfor summary? important isthisdeliverable–aninformalinterimreport,afinalproject such thatthereisactuallya“rightanswer”onwhichformatcorrect?How for thePowerPointdevelopment?Doesyourfirmhaveformattingstandards a clientmanager. You arefindingthattheclientmanagercontinuestoask manager andapartner. The clientteamconsistsofa teamleadand L C I A B R R A E E R R Y Presentation Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat 3. You areanMBA-level consultantmanagingathird-yearundergraduate 2. At DEFPartners,youarealateralhirefrom ABC Consulting,afirm subsequent conversationswithboththepartnerandanalyst? back hiscareerdevelopmentonthisproject.”Howshouldyou handleyour because theanalyst“sharedwithhersomeconcernsabout youholding voice mailfromyourpartnerontheprojectsayingtostopby heroffice, presentation andtheExcelmodeling. This morning,yougetanurgent explain totheanalystthatyoudon’t thinktheanalystcouldjuggleboth know thatyoubothhavemorethanenoughworktodo,andeach timeyou to workonthepresentationpiece,forhisowncareerdevelopment. You numbers. Onseveraloccasions,theanalysthasassertedthathe wouldlike structure andputtogetherthepresentationwhileanalystcrunches Powerpoint presentation. Typically, themoreseniorconsultant(you)will analyst onaproject. The projectconsists ofExcelspreadsheetsanda DEF’s progress.Howdoyouhandlethissituation? last conferencecallyouheardtheclientdescribehowpleasedhewaswith time bybeingsoinefficient andyouare getting veryfrustrated,yetonthe Subsequent meetingsareverysimilar. You feelthatthisfirmiswasting addition thatsomeoftheteammembersdidn’t dotheiractionitems. next meetingrevealsmoreofthesamescattershotapproach,with partner isn’t documentingactionitemsthat peoplearesigningupfor. The formal projecttimeline,nooneistakingdiscussionnotes,andthesenior in youroffice, youareshockedtoseethat thereisnomeetingagenda, At yourfirstprojectmeetingatDEF, whichisbeingrunbyaseniorpartner known foritsinternalefficiency inrunning projectsforclientssmoothly. performance scaledback.Howdoyouhandlethissituation? performance onyourotherwork,butyoualsodon’t wanttheclienttosee incremental workfortheclientandfearthisisfinallycuttingintoyour the same. You areexhaustedfromseveralconsecutivenightsofdoingthe your teamis“goingtheextramile”andshelookingforwardtomoreof unaware ofthis. The ongoingfeedbackfromtheclientteamleadisthat into thenighttopullthistogether. Your partnerandprojectmanagerare make theclienthappy, youhavealwayscompliedandevenstayeduplate you individuallyforadditionalanalysisandinformation.Inaneffort to www.vault.com/consulting Presentation Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 189 Customized for: Jessica ([email protected]) 190 Consulting InterviewsbyPhone interviews, yousimplyneedto tellthemmoreexplicitly. to seeyourfaceknowwhatyou reallymean–or, asinthecasewithphone someone overthephoneandget greetedbysilence?Sometimespeopleneed impression overthephonethat youcouldinperson.Evertrytotellajoke us bynowhaverealized,isthatit’s incredibly difficult tomakethesame case question,andquestionsforyourinterviewer. The badnews,assomeof The basicinterviewformatforaphoneisthesame: fitquestions, Case interviewsbyphone on thephoneandrecruitercan’t seeyou.) be considered.(Hint:youcanwritethisoutaheadoftime. After all,youare communicate well,sobereadywiththeshowanswerastowhy youshould should becrystallizedintoaformthattherecruitercan captureand partner forevaluation;whatdoyouwantthosenotestosay? What yousay is fortherecruiterconductingphonescreentopassalongnotesa incisive versionofyourstory. Keepinmindthatthenextstepprocess You canprepareforthephone screenbythinkingthroughthehighlyconcise, interview questioncomeup. and whyyouareseekingthisposition,sowillrarelyhaveacase conduct phonescreens.Phonescreensareprimarilyaboutyourbackground candidates, sotheyrelyonHR(andoccasionallyjuniorconsultants)to senior managerandpartnersdon’t havetime tointerviewallofthequalified position thatisadvertisedhasswelledbyanorderofmagnitude.Consulting and thenumbersofresumesthathitrecruiter’s inboxforeachnew handling. Consultingjobshavebeenrelativelyscarceoverthelastfewyears, interviewing process. The primaryreason forthisstepseemstobevolume a relativelyrecentphenomenon(i.e.overthelastfewyears)inconsultant Having arecruiterconductaninitialphonescreenofcandidatesseemstobe Phone screeningbyHR a recruiter, followedbythecaseinterviewoverphone. likelihood bedealingwiththis. The firststepistypicallyaphonescreenwith interviewing aspartofanannualcampusrecruitingcycle,youwillinall discussing ishowtohandleinterviewsoverthephone.Ifyou’renot As timeschange,sodoesthewayconsultingfirmshire. Another trendworth L C I A B R R A E E R R Y Presentation Cases Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat Keep inthemindfollowingtipsfordoingcaseinterviewsbyphone. (Interesting, huh?)Overthephone,youdon’t getthebenefitofthisguidance. watching youtakenoteshelpsthemfollowyourframeworkbetter. going totalkaboutthenextmajorpoint.Inotherwords,visualaidof pointing) referstothe“outer”bucket. When yououtdent,theyknowyou’re indenting aswellandknowthatwhatyou’resaying(orwhereyourpenis bullet pointsforyourcasestructure;whenyouindent,theyarementally with mentalguidance.Forexample,theycanseeyoujottingdownthose you inyourin-personinterviewerbecauseareprovidingthe see andarethereforeaidedbythelayoutofwhatyou’rewriting? This helps may notbeabletoseeexactlywhatyou’rewritingonyourpage,buttheycan Here’s anotherthing:haveyouevernoticedthatyourin-personinterviewer • Prepare yourinterviewerforpausesinthe action. What ifyouneedto • Overexplain yourcalculations. To besafe,youneedtoextremely • Be verystraightforwardwithcommunication. Try toavoidhighly • Describe yourcasestructureindetail.Supposemain topics were set thelightexpectationofhow longhehastowait. prep yourinterviewerfor thinkingtimebutyoumightnotneedto question. Letmetaketenseconds toprocessthat.”Inperson,youwould take afewsecondstoponderquestion?Sayso.“That’s agood in person. size.” This isprobablyone level ofdetailgreaterthanyoumighthave people, whichis240people.Sowe’llusepeopleasour market to shiftcalculationmodeforasecond.Iwantthirtypercent of800 explicit aboutwhatyou’recalculating.Hereisanexample:“I’m going natured sarcasmmightworkface-to-facebutnotinaphoneinterview. nuanced commentsthatwouldbemoreeffective inperson.Good- for theinterviewertofollowyourthinking. over thephone;thatislevelofdetailyouwilllikelyneedinorder are essentiallytellingyourinterviewerhowtoreplicatestructure competition, andproductsseemtobethekeyareasfocuson.” You competition, I’dliketodiscussZ.So,recap,marketsize, products. Undermarketsize,I’dliketodiscussXand Y. Under “There arethreetopicsI’dliketoaddress:marketsize,competition,and beneath eachmaintopic. You mightexplainyourstructureasfollows: market size,competition,andproducts,withtwoorthreebulletpoints www.vault.com/consulting Presentation Cases Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 191 Securities |Putnam Investments | Qwest Communications | R.R. Donnelley & Sons Procter &Gamble Company |Proskauer Rose | Prudential Financial |Prudentia Bowes |Preston Gates&Ellis |PricewaterhouseCoopers |Principal Financial Group Health Systems |PeopleSoftPepsiCo |PfizerPharmacia |PillsburyWinthrop |Pitney Sutcliffe |PA Consulting|PNCFinancial Services|PPG Industries|PRTMPacifiCare Network |Novell |O’Melveny&Myers |Ogilvy&Mather |OracleOrrick,Herrington & Rubbermaid |NortelNetworks |NorthropGrummanNorthwestern MutualFinancia Brewing |MonitorGroup |MonsantoMorganStanleyMotorolaNBC |NestleNewel | Merck&Co.Merrill Lynch |MetropolitanLifeMicronTechnology |MicrosoftMiller Erickson |McDermott, Will&Emery|McGraw-HillMcKessonMcKinsey &Company Manpower |MarakonAssociates |MarathonOilMarriottMars&Company |McCann- Lockheed Martin|Logica |Lowe’sCompaniesLucentTechnologies |MBIMBNA Salmon Associates|L.E.K.ConsultingLatham &Watkins|LazardLehmanBrothers Kimberly-Clark Corporation|King&Spalding |Kinko’sKraftFoodsKrogerKurt Corporation |KaiserFoundationHealthPlan |KeaneKelloggCompanyKetchum Capital |JohnHancockFinancialJohnson& Johnson|ControlsKLA-Tencor Thompson |J.C.PenneyJ.P.MorganChase |JanneyMontgomeryScottJanus Paper Company|InterpublicGroupofCompanies |IntuitIrwinFinancialJ.Walter IKON OfficeSolutions|ITTIndustriesIngram Industries|IntegralIntelInternationa Depot |HoneywellHoulihanLokeyHoward & Zukin|HouseholdInternationalIBM Hearst Corporation|HertzHewitt Associates|Hewlett-PackardHome Hallmark |HartInterCivicHartfordFinancial ServicesGroup|HaverstickConsulting Thornton LLP|GuardianLifeInsuranceHCA |HSBCHaleandDorrHalliburton Georgia-Pacific |GlaxoSmithKlineGoldmanSachsGoodyearTire&RubberGrant Genentech |GeneralElectricCompanyMillsMotorsGenzyme Management |GallupOrganizationGannettCompanyGapIncGartnerGateway Financial |FordFoundationMotorCompanyGECapitalGabelliAsset Reserve BankofNewYork|FidelityInvestmentsFirstDataCorporationFleetBoston & Young|ExxonMobilFCBWorldwideFannieMaeFedExCorporationFedera Electronic DataSystems|EliLillyEntergyCorporationEnterpriseRent-A-CarErnst Eastman Kodak|EddieBauerEdgar,Dunn&CompanyElPasoCorporation Dow Jones|DresdnerKleinwortWassersteinDuracellDynegyInc.EarthLink Ballantine |DiamondClusterInternationalDigitasDimensionDataDowChemical Deloitte &Touche|ConsultingDelphiCorporationDeutscheBankDewey First Boston|D.E.ShawDavisPolk&WardwellDeanCompanyDellComputer Corporate ExecutiveBoard|Covington&BurlingCoxCommunicationsCreditSuisse Corporation |ConAgraCondeNastConsecoContinentalAirlinesCorning Comerica |CommerceBanCorpComputerAssociatesSciences Chance LLP|CloroxCompanyCoca-ColaColgate-PalmoliveComcast Brands International|ChubbGroupCiscoSystemsCitigroupClearChannelClifford Ernst &Young|CapitalOne|Cargill|CharlesSchwabChevronTexacoCorp.Chiquita Markets |CIGNACSXCorp|CVSCorporationCampbellSoupCompany|CapGemin International| BrownBrothersHarriman|BuckConsultants|CDICorp.|CIBCWorld Allen |BordersBostonConsultingGroupBristol-MyersSquibbBroadview BellSouth |BerkshireHathawayBertelsmannBestBuyBloombergBoeingBooz America |BankofNewYorkBaxterBayerBMWBearStearnsBearingPoint Automatic DataProcessing|BDOSeidmanBPBain&CompanyBankOneof Systems |AppleComputerAppliedMaterialsApriaHealthcareGroupAstraZeneca Power |AmericanExpressInternationalGroupManagement Inc. |Allen&OveryAllstateAltriaGroupAmericanAirlinesElectric | AccentureAdobeSystemsAdvancedMicroDevicesAgilentTechnologiesAlcoa 3M |A.T.KearneyABNAmroAOLTimeWarnerAT&TAXAAbbottLaboratories

Customized for: Jessica ([email protected]) Read whatEMPLOYEEShavetosayabout: THOUSANDS oftopemployers. work ataspecificemployer? • Hiringprocess • Diversity • Hours • Compensation • Workplaceculture Wondering whatit’sliketo Read employersurveys on Go towww.vault.com GUIDE INTERV CASE Customized for: Jessica ([email protected]) career message boards,expertresume reviews,theVaultJob Boardandmore. Visit Vaultat GUESSTIMATES www.vault.com for insidercompanyprofiles, expertadvice, Customized for: Jessica ([email protected]) Customized for: Jessica ([email protected]) “Guesstimate” CaseInterviews insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat due toconstraints ontime. Always worktowardafinalanswer, butdonot not evenbenecessarytocome up withadefinitiveresponselike“1,400,350,” Finally, rememberthatthereisnorightanswer forguesstimates.Itwilloften divide bythenumberofdaysin theyear.” 1,000,553 isthesameasamillion, andyoucandivideby350ifneedto former consultant.“You shouldrealizethatforthepurposesofaguesstimate, arriving atyouranswerinalogicalmanner. “Don’t beanal,”suggestsone through yourreasoningoutloud,sointerviewercan see thatyou’re Once youhavehadaminutetocomposeyourthoughts, be sureandgo gives yousomebreathingtimetothinkaboutamethodforanswering. This statementimmediatelyshowstheintervieweryouarestill incontroland “That isanintriguingquestion.MayIhaveamomenttothink itthrough?” Do notletyourselfstruggleverbally. You arefreetosaysomethinglike, hurt you.Itisextremelyimportantthatyoudonotloseyour cool. are visiblyshakenwhenpresentedwithaguesstimateorbrainteaser, itwill So, howdoyouapproachaguesstimatequestion?First,don’t panic.Ifyou business situationataclient. speak volumesaboutyourabilitytobeprofessionalwhenfacedwithasimilar outlandish situation.Howyoureacttothisquestionwhenpresentedwill questions istoevaluateyourpoiseandprofessionalismwhenfacingan the interviewerisexpecting.Rememberthatmainobjectiveofthese unsettled bythistypeofquestion,it’s nowonder. That isexactlythereaction This isanactualquestionusedinconsultinginterviews.Ifyouarealittle increasingly specificanalyses.Let’s lookatanexample: interviewer. Instead,youwilldrivetowardaconclusionthroughseriesof necessarily beusingaseriesofquestionstogatherfeedbackfromthe this situationbythinkingoutloud. The difference hereisthatyouwillnot will showcaseyourabilitytoanalyzeasituationandformconclusionsabout The approachtoguesstimatesisbasicallythesameasbusinesscases–you shake upanotherwisecalm,collectedcandidate. have toanswerinaninterviewsituation. They canbeso“off thewall”asto Guesstimate questionsareamongthemostunnervingyoumayever How manyping-pongballsfitina747? www.vault.com/consulting Guesstimates Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 195 Customized for: Jessica ([email protected]) 196 Acing Guesstimates something likethis: wants youtomaketheassumptions. Your verbaldialoguemightgo will beaseriesofquestions.Forthisexamplelet’s assumeyourinterviewer answer. Iftheinterviewerdoesprovideinformation,thenyourapproach refuses toprovideanyanswer, thenyouwillknowthatmustassumethe volume ofasinglepingpongball?”Iftheinterviewerdoesnotknowor brainteaser questionwithatoyourinterviewer, suchas,“Whatisthe have tomakeassumptions. Therefore, begin theanalysisofaguesstimateor whether yourinterviewerwillbeprovidinganydirectionoryou For anyguesstimateorbrainteaserquestionyouwillneedtounderstand pong ball. a 747 question, youknowthatarelookingforhowmanyping-pongballsfitin answer. Let’s lookatthisapproachincontext.Referringtooursample funnel. You beginbythinkingbroadly, thenslowlydrilldowntowardsthe The bestapproachforaguesstimateorbrainteaserquestionistothinkof track andseenoreasontokeepgoing. before youarefinished. They maysimplyrecognizethatyou’reontheright feel thatyouhavedoneapoorjobiftheinterviewermovesontoothertopics life easier, since theactualnumberis591personequivalents.) person-equivalents available.(You wouldberoundinga bit tomakeyour cockpit sincesomeonehasto flytheplane.Sothereareabout600 and 120person-volumesforthe remainingspace. We won’t includethe a 20-personequivalentonthe upperdeck. That’s anadditional 18,28, equivalent, andtheaislesisa50-personequivalentonlower deckand galleys isasix-personequivalent,bythelavatories two-person lower deckandoneontheupperdeck),thatspaceoccupied bythe assume therearethreegalleys,14lavatories,andaisles (twoonthe and aislesonthelowerdeckabout25seatsupper deck. Let’s Okay, soa747 has about400seatsinit,excludingthegalleys,lavatories, or 1,728cubicinches.) 6 cubicfeet,or average Now let’s assumethatalltheseatsinplaneareremoved. We’ll saythe Let’s assumethatthevolumeofaping-pongballisthreecubicinches. airplane. The firstthingyouneedtodetermineisthevolumeofping- L C I A B R R A person issixfeethigh,onefootwideanddeep. That’s E E R R Y 10,368 cubicinches.(Onefootis12x12x12inches, Guesstimates Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat estimate thenumberof American inhabitantsas300million. million inhabitantsintheUnitedStates, no interviewerwillflinchifyou to manipulate.Evenifyoujustreadastudythatstatesthereare295 You choosethenumbers, so pickniceroundnumbersthatareeasyforyou demonstrate youranalyticalabilities. the mathonpaper, infrontoftheinterviewer, whichwillfurther be writingdownthesenumbersasyoudevelopthem. Then youcando your head!Nooneexpectsyoutobeahumancalculator, soyoushould You mightbewondering how youwouldcalculateallthesenumbersin 7,257,600 balls. about 70percentofacubewhenpacked–andcutyouranswerto perfectly together. Eliminateacertainpercentage–spherescoveronly ball, a747couldhold10,368,000balls.However, spheres donotfit 31,104,000 cubicinchesofspaceavailable. At threecubicinchesper volume available. Three thousandx10,368 cubicinchesmeanswehave Therefore, intotalwehave3,000(or600+2,400)person-equivalents correct, justthatyouknowtheassumptionshouldbemade.) guesstimate. Rememberthatit’s notimportantthatthisassumptionbe (Obviously, thisassumption isthemostimportantfactorinthis would meanextraspaceis2,400person-equivalentsinvolume. plane holdsfourtimestheamountofextraspaceasitdoespeople,sothat head.Let’s assumethe compartments, andthespaceoverpassengers’ cargo andextraspace–thebellyholds,overheadluggage In additiontothehumanvolume,wehavetakeintoaccountall www.vault.com/consulting Guesstimates Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 197 Customized for: Jessica ([email protected]) 198 London, England. people in There areapproximatelyeightmillionpeopleinNewYorkCity,13 ForresterResearch estimatesthatby2004,$6.8trillionwillbespent • • Approximately50percentofallWebusersareEnglishspeakers. • Thereareover90millionpeopleonlineintheUnitedStates. • Thereareabout100millionhouseholdsintheUnitedStates. comparison, thereare1.2billionpeopleinChina. can roundupto300millionforthepurposesofguesstimates).By There areapproximately295millionpeopleintheUnitedStates(butyou basic stats. You’ll needtograbnumbersforguesstimatesquickly.Herearesome Quick guesstimatenumbers on e-commerceonline. is toderiveareasonable(andeasilymanipulated)figureforyour calculations. say isthesizeofmarketforporkrindsinUnitedStates?) The key here case questions,mostlyintheformofamarketsizing.(Andwhat wouldyou Not allguesstimatesarestand-alonequestions.Manycontained within In-case guesstimates percentage ofthemareblack. estimated thenumberofcarsin America, makesureyouestimatewhat determining thenumberofblackcarsinUnitedStates, onceyou’ve eliminate blockscoveredbyCentralPark(andotherparks).Ifyou’re figure outhowmanyblocksthereareinNew York City, rememberto Don’t forget toaddthe“extrastep”intoyourguesstimate. Ifyou’retryingto The extrastep Shanghai, 3.5millionpeopleinLosAngelesandseven L C I A B R R A E E R R Y Guesstimates Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) Practice GuesstimateQuestions insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat covers 100squarefeet,theneach houseneeds20gallons–andso10,000 year. Ifeachhousehas2,000 squarefeetofwallandeachgallonpaint about. Paintedevery10years, 500housesarebeingpaintedinanygiven houses, plusanother10percent, thentherearereally5,000housestoworry that halfthetownlivesinhouses ingroupsofthree,thenthereare4,500 27,000 (about1/10,000ofthepopulation).Ifyouusesame assumption The “startsmall”approach: are soldeachyear. (Don’t forget thatlaststep!) percent ofallhousesarewhite,then80milliongallonswhite housepaint your interviewerwhetheryoushouldincludeinnerwallsas well!)If80 (5 millionhousesx20gallons).(Note:Ifyouwanttobefancy, youcanask needs 20gallonsofpaint.So100millionpaintare soldperyear that theaveragehousehas2,000squarefeetofwalltocover, theneachhouse year. Assuming thatonegallonofpaintcovers100squarefeet ofwalland that numbereasytoworkwith),thenthereare5millionhousespaintedevery If housesarepaintedevery10years,onaverage(noticehowwedeftlymake about 50millionhouses. houses andusedforotherpurposesbesidesresidential.Sothereare houses intheUnitedStates. Let’s addanother10percenttothatforsecond The averagefamilysizeisaboutthreepeople,sotherewouldbe45million United States, perhapshalfofthemlive in houses(or135millionpeople). businesses, dependingonthequestion).Ifthereare270millionpeoplein basic assumptionthatthereare270millionpeopleintheU.S.(or25 The “startbig”approach: 1. Howmanygallonsofwhitehousepaintare soldintheU.S.everyyear? from theinterviewer. This setofquestionscanbepresentedaseitherassumptiveorwithfeedback assumptions. you do,besuretoperfectlyclearwhereandwhenaremaking if theywillprovideinformationoryouneedtomakeassumptions.If Remember toaskyourinterviewereachtimeyoubeginaguesstimateanswer if yourinterviewerdoesnotprovideanyadditionalinformation. ask thatyoumakenoassumptions,heremayhavetoassumptions is morevariationherethaninbusinesscases. Whereas inbusinesscaseswe The followingareexamplesofguesstimatesandsuggestedsolutions. There www.vault.com/consulting If you’renotsurewheretobegin,startwiththe You couldalsostartsmall,andtakeatownof Guesstimates Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 199 Customized for: Jessica ([email protected]) 200 To summarize: disposable diapers. or 30million.Sothereareatleastmillionpossibleconsumersof in China.Howmanyofthosekidsareundertheagetwo? About atenth, women havechildren. That meansthatthere areabout300millionchildren might be1.5children,onaverage,perfamily. Let’s saytwo-thirdsofChinese childbearing age.Now, theaveragefamilysizeinChinaisrestricted,soit Half arewomen,sothereabout300millionChinesewomenof young, afull600millionofthoseinhabitantsmightbechild-bearingage. are onebillionpeoplelivinginChina.BecausethepopulationofChinais Here’s agoodexampleofmarketsizing.First,youmightestimatethatthere disposablediapersinChina? 2. What isthesizeofmarketfor representative townsispossible. help, orevenconductingasmallsampleofthesecondcalculationinfew producers wouldbesmart,puttinginacalltoHUD’s statisticsarmcould on thejob,ifnecessary. Use yourcreativity–contactingmajorpaint Your interviewermaythenaskyouhowwouldactuallygetthatnumber, of thosearewhite.Multiplyby10,000–youhave80milliongallons. gallons ofhousepaintaresoldeachyearinyourtypicaltown.Perhaps8,000 L C I A B R R A E E R 30millionchildren 1/10underage2 = x 1.5children each = 300,000,000 200,000,000women with children x 2/3have children children = 300,000,000women of childbearingage x 1/2are women = x 60%childbearing age = 600,000,000 x people R Y 1 billionpeople Guesstimates Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat covers inManhattan.) question isalsosometimesused withestimatingthenumberofmanhole schools, etc. There maybeatotalof3,500payphonesinManhattan.(This phones. Nowestimatehowmanypayphonesexistinbars, restaurants, you lose300blocks,or200payphones. You havethefigureof2,800pay Central Park.SaythatParkis50streetsbysixavenues –thatmeans means 3,000payphones.Nowaddtheextrastepandsubtract thesizeof intersection indicatesablock,thenthereare4,500blocksin thecity. That 300 streetslong,thenthereareabout4,500intersections. Ifevery work.) Ifthereareabout15avenuesacrossManhattan,and iftheislandis blocks haveapayphone.(Remember, theinterviewerdidn’t saytheyhadto how manyblocksthereareinManhattan,andassumethat75 percentofall There aretwowaystohandlethisproblem.Firstofall,youcouldestimate 4. Howmanypayphonesare there ontheislandofManhattan? To summarize: eaten everymonth. would be120squareinches. Therefore, thereareabillionsquarefeetofpizza inches long,thenthesliceis30squareofpizza.Sofourpizzaslices month. Iftheaveragesliceofpizzaisperhapssixinchesatbaseand10 eats pizzatwiceamonth,andtwoslicesattime. That’s fourslicesa pizza? Let’s say200million.Nowlet’s saytheaveragepizza-eatingperson Take yourfigureof300millionpeoplein America. Howmanypeopleeat 3. How manysquare feetofpizzaare eatenintheUnited States each month? Your total:200millionsquare feetamonth. 144 inches),solet’s assumeonesquarefootperperson. Four piecesx30squareinches=120(onefootis The average American eatsfourslicesofpizzaamonth. 30 squareinches(heightxhalfthebase). The averagesliceofpizzaissixinchesatthebaseand10long= Perhaps 200millioneatpizza. There are300millionpeoplein America. www.vault.com/consulting Guesstimates Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 201 Customized for: Jessica ([email protected]) 202 you determinehowmanywomenarepregnantatanygiventime? Well: women (150million).Perhapshalfofthosearechildbearingage.Howdo The populationoftheUnitedStates is300 million(approximately).Halfare 6. Howmanychildren are borneverydayintheUnitedStates? To summarize: (on theaverage,thoughclearlysomedaysaremorepopularthanothers). weddings everyyear. Dividethatby365andyouget6,164weddingsperday is about150million,somultiply15,000by–andyouget2.25million given year?Maybe2percent? That’s 15,000.Now, thepopulationofJapan are ofmarriageableage?Let’s say750,000.Howmanygetmarriedina Try aground-upapproach.Incityof1million(Kyoto),howmanypeople 5. Howmanyweddingsare performedeachdayinJapan? Do theextrastep–roundupformultiplebirths,soperhaps12,000. Divide by365–yougetabout10,000babiesaday(actually, 10,273). 3.75 millionwomenarepregnanteveryyear. So awomanispregnantoneyearin20,or5percentofthetime. The averagewomanhastwochildren. Let’s saytheaveragespanofchildbearingforawomanis40years. 2,250,000/365 =6,164weddingsperday. 150 x15,000=2.25millionweddingsperyear. There are150millionpeopleinJapan. 750,000 x0.02=15,000marriageseveryyearinKyoto. 2 percentgetmarriedintheaverageyear. 750,000 areofmarriageableage. There are1millionpeopleinKyoto. L C I A B R R A E E R R Y Guesstimates Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat You couldreasonably makethe followingassumptions: interviewer isspeakingofstandard-sized bottlesofwine.) drinking purposes–cooking,forexample. Also clarifywhetherthe (Extra step:You maywishtoestimatehowmuchwineisusedfornon- Determine: week? 8. Howmanybottlesofwineare consumed intheUnitedStates each “floor” ofthemall,amountchangewouldobviouslyincrease. Also ask:Isthereafountaininthemall?Ifisconsideredtobe picked upimmediately, thatwouldbe$250worthofchange. be $500worthofchangeontheaveragefloor. Ifhalfofthatchangehasbeen the averagepersonwholoseschangeanickel. That meanstherewould let’s saythatifapersonisequallylikelytodroppenny, nickel,ordime,then carry fewerquarters,forexample,andaremorelikelytoretrievethem.So is theaveragelossofchange?Mostamountsareprobablysmall.People lose change?Ifonein50,say, dropsmoney(1,000peopleaday),howmuch thousand?Soifthereare50,000visitorstoamalldaily, howmany day? A mall –say, 50.Now, howmanypeopleentertheaveragestoreon the-box” thinking.First,estimatehowmanystoresthereareintheaverage It’s anexampleofaguesstimatethatisalsowaytotestcandidate’s “out-of- This seeminglysillyguesstimatewasreceivedbyajobseekeratMcKinsey. ofanaveragemall? 7. Howmuchchangewouldyoufindonthefloor 200 milliondrinkwine. Perhaps 220milliondrinkalcohol. 250 millionareadults. There areabout300millionpeopleintheUnitedStates. 5. Numberofglasseswineinanaveragebottle. 4. Average numberofglasseswine consumed perweek. 3. The numberofwinedrinkers. 2. The numberofadults. 1. The numberofpeopleintheUnitedStates. www.vault.com/consulting Guesstimates Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 203 Customized for: Jessica ([email protected]) 204 More Guesstimates… To summarize: Determine: 9. Howmanymen’s suitswere soldintheUnitedStates lastyear? This bringsyourtotalto85millionbottlesofwineconsumedperweek. another fivemillion. Estimate howmanybottlesofwineareusedforcooking–perhaps 80 millionbottlesofwineconsumedin America eachweek. About fiveglassesofwineintheaveragebottle. 400 millionglassesofwineconsumersperweek. The averagewinedrinkerdrinkstwoglassesofaweek. Assume everyemployedmanowns onesuit=100millionsuits. 150 millionx2/3=100million. Let’s saytwo-thirdsareemployed. Half aremen–so150million. up). The populationoftheUnitedStates: 270million(or300million,toround 6. Sumupthenumberandpresentyouranswer. 5. Assume (orask)anumber ofsuitsthatthosemennotemployedin 4. Determine howmanysuitstheaveragebusinessattireemployee Determine howmanymenareemployedinoccupationswhichrequire 3. 2. Cutthatinhalftogetthenumberofmen. 1. EstimatethepopulationofUnitedStates. business attirejobspurchasedforreligious,social,orotherreasons. wear, andsoon). would havepurchased(duetoweather, fashionchanges, cleanings, business attire. L C I A B R R A E E R R Y Guesstimates Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat Determine 11. Howmanygasstationsare there inLos Angeles? Determine: 10. Howmanytennisballsfitinaswimmingpool? 3. Howmanygasstationsareneededpercar? 2. What isthenumberofcarsinLos Angeles? What istheaverage 1. What isthepopulationofLos Angeles? You5. maywishtosubtractballsduestepsinthepoolandgradual 4. Calculate thenumberofballs bydividingthevolumeofpool Estimate thevolumeof swimming poolbasedonthedepth,length, 3. 2. What isthevolumeofatennisball? 1. What istheshapeanddepthofswimming pool? There are50millionsuitssoldeveryyearintheUnitedStates. every threeyears. How oftendoestheaveragesuit-ownerreplaceasuit?Perhapsonce 150 millionsuitsintheUnitedStates. additional suits=50millionsuits. If eachofthosemenhasanadditionaltwosuits,25millionx2 more thanonesuit. Estimate thataboutaquarterofmenareinfieldwheretheymustown number ofcarsperperson(includingcommuters)? upslope ofthepoolduetovaryingdepth(butaskfirst). the volumeoftennisball. and widthofthepool. : www.vault.com/consulting Guesstimates Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 205 Customized for: Jessica ([email protected]) 206 Determine: Here’s wheresomepriorknowledgecomesinhandy. 13. Estimatethetotalrevenues ofDisney’s Tarzan. What factorsdrivedemand? Determine: What factorsdrivedemand? 12. What istheannualsizeofgolfballmarketinUnitedStates? 1. What weremovieticketrevenuesinthe UnitedStates for • Isthepopulationofgolfers(dueto Tiger Woods andhisilk)expanding? • Howmanyareplanned? • HowmanygolfcoursesarebeingbuiltintheUnitedStates? What isthenumberofballsusedinanaveragegolfgame(and 4. 3. Howoftendoestheaveragegolfergolf? 2. What percentageofthepopulationgolfs? 1. What isthepopulationofUnitedStates? 4. What areDisney’s revenuesfromcrosslicensingagreements(dolls, 3. HowmuchdoesDisneymakefromvideosales? 2. What percentageofworldwidesalesis theU.S.revenue? that arelost)? posters, etc.)? L C I A B R R A E E R R Y Guesstimates Vault GuidetotheCaseInterview © 2007Vault Inc. Tarzan ? Customized for: Jessica ([email protected]) And TryTheseforMorePractice… insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat 0 hti h nulmre o peachesintheUnitedStates? 20. What istheannualmarketfor 19. Howmanybarbersare there inNewOrleans? 18. Howmanypeopleare cremated intheUnitedStates everyyear? 17. What isthesizeofpoultrymarket intheUnitedStates? they heldhands? 16. HowmanytimeswouldthepopulationofChinacircle theglobeif tablenapkinsintheUnitedStates? 15. What istheannualdemandfor 14. Howmanyred carsare there intheUnitedStates? www.vault.com/consulting Guesstimates Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 207 Customized for: Jessica ([email protected]) 208 • Detailed 40-pageemployerprofiles ontopemployerslikeMcKinsey, • • One-on-oneVaultCaseInterviewPrepwithconsultingexperts • • The onlyjobboardontheWebdedicatedtoconsultingjobs– • Surveysofemployeesathundredsconsultingfirms to theVaultConsultingCareerChannel For moreinformationoncaseinterviewsandconsultingcareers,go BCG, Bain,Accentureandmore Vault ConsultingJobBoard The VaultCaseinterviewPracticeGuide www.vault.com/consulting rdcdec eraround theworld? produced eachyear are 22. Howmanyhotel-sizebottlesofshampooandconditioner 21. What are therevenues ofthePlazaHotelinNew York City? L C I A B R R A E E R R Y Guesstimates Vault GuidetotheCaseInterview © 2007Vault Inc. GUIDE INTERV CASE Customized for: Jessica ([email protected]) career message boards,expertresume reviews,theVaultJob Boardandmore. Visit Vaultat BRAINTEASERS www.vault.com for insidercompanyprofiles, expertadvice, Customized for: Jessica ([email protected]) Customized for: Jessica ([email protected]) Brainteasers Remember… insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat and everyyearwehearaboutcandidatesgettingthem. Every yearconsultingfirmstellustheydiscouragetheuseofbrainteasers– complexity, butitisnotimportanttostartinanyparticularplace. You mayneedtobreakthe questiondownintoseveralpartsdependingonits ask directedquestionsaroundtheanswersyougetbackfrominterviewer. than that,youmayselectanystartingpointarecomfortablewithandthen gives youyourbrainteaser, especiallyifit’s mathematicalinnature.Other methodology. There isonesetrule,though: Take notesasyourinterviewer Brainteasers areveryunstructured,soitisdifficult tosuggestastep-by-step consultant. brainteasers aresometimesgiventotestyourpoiseunderstress,”saysone guesstimates aregiventocandidatestestreasoningskills,butbewarned– are expectedtoreasonoutcalmly, quicklyandlogically. “Casesand to askdirectedandrelevantquestions.Othersdohaveanswers,whichyou composure, yourabilitytodeconstructtheproblem,andfinally have nosetanswer. Instead,theinterviewerisassessingcreativity, interviewers) chestnut“Whyisamanholeround?”Someofthesequestions for halftheprice,whatwouldyoudo?”Or, perhaps,thatbeloved(by you weresellingatelevisionandyourneighborwastheidenticalset You mightbetakenabackwhenyourinterviewersuddenlyasksyou:“So,if www.vault.com/consulting Brainteasers Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 211 Customized for: Jessica ([email protected]) 212 Practice Brainteasers it off. Turn anotherswitchon. Then enter theroomandfeeltwobulbs elegant solution. Turn onelightbulbonforabouttwentyminutes. Then turn drill soyoucanpeekthrough thewall. There is,however, one especially can pulloutyourcellphoneand callapalforassistance.Runoutandbuy reacting negativelywillshootdownyourchances.Sobecreative. Ask ifyou box” thoughtpatterns.Staring indisbelief,whimperingfear, orotherwise This isaninvitationfromtheconsultingfirmtoexpressyour “out-of-the- which switchcontrols whichlightbulb? the room withthelightbulbsonlyonce.Howwouldyoudetermine which bulb. All lightsare off. You mayflickonlytwoswitchesandenter light bulbsinthenextroom. You mustdeterminewhichswitchcontrols 3. You are inaroom withthree lightswitches.Eachcontrols oneofthree to besureofeitherawhiteorblackmatchedpair. Don’t befooled!Eitherwhiteorblackwill do,soyouneedonlythreesocks tobeassured ofamatchedpair? drawer presentation! Howmanysocksmustyou pullfrom the terrible atyour you’lllook ofsocks,or engagement.) You mustputonamatchedpair suitcase.(It’s along-term have 11 whitesocksand10blackinyour hotelroom, anditispitchblack. You hasgoneoutinyour 2. The power transported. Onepersoncanrollit. round manholecover. And becauseit’s round,itcan bemoreeasily Looking atthis,itseemscornersareaproblem. You can’t cutyourselfona rotated thewrongway, soit’s safer. with. Also, aroundmanholecoverwon’t fallintoaholebecauseitwas round becausetheydon’t needtoberotated. There arenocornerstodeal You’d havetorotateitexactly therightway. Somanymanholecoversare aren’t manholecoverssquare?Itwould makeithardertofitwithacover. Why aremanholecoversround?Couldtherebeastructuralreason? Why loud whilesolvingthisbrainteaser! it. Here’s howto“solve”thisbrainteaser. Remember tospeakandreasonout though thisquestionhasbeenaroundforyears,intervieweesstillencounter The classicbrainteaser, straighttoyouviaMicrosoft(theoriginator).Even 1. Why are manholecoversround? L C I A B R R A E E R R Y Brainteasers Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat virtually everypieceofinformation youhavegainedfromoneweighingto how precioustheinformationgained fromaweighingis: You needtotransfer Secondly, ifyouthinkthroughthisproblem longenough,youwillrealize against four. against oneisobviouslynotagoodidea). Thus, thebestfirstweighingisfour want togaininformationaboutasmanyballspossible(so weighingone weighing sixagainstsix,youwillsimplyconfirmthisknowledge. Still, you You alreadyknowthatoneofthesideswillbeheavierthanother, andby information doesthisgiveyou?Itactuallygivesyounonew information. (six againstsix). This weighing involvesalloftheballs,butwhattype problem isthattheybelievethefirstweighingshouldinvolve alloftheballs For example,oneofthefirstmistakespeoplemakewhen examining this with eachweighing. problem likethis, weigh, say against each Start withthesimplestofobservations. The numberofballsyouweigh incidentally.) then we’lldiscussonesolution. First, This isaprettycomplexquestion,andthereareactuallymultiplesolutions. solid? itishollowor whether permitted three weighings.Canyouidentify theoddballanddetermine solidwhiletherest are hollow. Yourest are solid,or haveascale,andare hollowwhilethe thantherest. The oddballiseither lighter or heavier 5. You have12balls. All ofthemare identicalexceptone,whichiseither lake. water whenitispulledupandintheboatthanonbottomof – butitdoesn’t. Itrises,becasuetheanchor displacesalarger volumeof The intuitiveanswerformanyistosaythatthewaterlevelremainssame same? staythe levelinthelakerise,lower, or anchor. Doesthewater your dropped. You4. You pullup are inarowboat onalakewiththeanchor off. Usingallyoursenses–that’s thinkinglikeaconsultant! that areoff. The hotonewillbeattachedtotheswitchthatyoujustturned we’ll examinewhatthoughtprocessesaninterviewerislookingfor, and three ballsagainstfive,youarenotreceivinganyinformation.Ina other mustbeequal. Yeah, it’s obvious, butwhy?Becauseifyou you aretryingtoreceiveasmuchinformationpossible www.vault.com/consulting (ThisquestionisreportedlyinuseatMcKinsey, Brainteasers Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 213 Customized for: Jessica ([email protected]) 214 to benormal.So: gain thisinformationeasily? We canweighthemagainsttheballsweknow not weighed,butwedon’t knowwhether itisheavyorlight.Howcanwe If theballsonourfirstweighingbalance,weknowoddballisoneofthose Case A: If,onthefirstweighing,ballsbalance Step 1: other asSideB. andthe For simplicity’s sake,wewillrefertoonesideofthescaleasSide A Let’s lookatonesolution: can rotatetheballsfromonescaletoanother, youcanswitchtheballs,etc. won’t do. There areanumberofothertypesmovesyoucanmake– against eachother, andthentakinganothersetweighingthem,etc. This who workthroughthisproblemconsideronlyweighinganumberofballs Finally, rememberthatconsultantsloveout-of-the-boxthinking.Mostpeople this information. you’ve alsolearnedthattheeightballsonscalearenormal. Try touse give intotheimpulsetosimplyworkwiththoseballs.Inthisweighing, you! Nowyouknowthattheoddballisoneofunweighedfour. Butdon’t the next.Sayyouweighfouragainstfour, andthescalebalances.Lucky balls thatareknowntobenormalonSideB. Case A): Step 2(for the oddball,becauseweknow itisheavierthantheother. (Ifthescale unweighed istheoddballand heavy. Ifthe scale tilts,wecanidentify one. Ifthescalebalances, ballfromthegroupofthreethatwas Step 3b: II. ball isheavyorlight. the normalballs. With thisweighing,wedeterminewhethertheodd Step 3a: I. Weigh fourballsagainstothers. L C the finalunweighedball,isoddone. If onthissecondweighing,thescalebalancesagain,weknow that I on Side A. heavy.) We alsoknowthattheoddball isoneofthegroupthree light, butlet’s proceedwiththeassumptionthatoddballis the oddballisheavy. (IfittipstoSideB,weknowtheoddballis If onthissecondweighing,thescaletipstoSide A, weknowthat A B R R A E E R R Y Weigh oneoftheballsfromgroupthreeagainstanother Weigh thefinalunweighedball(theoddone)againstoneof Put threeoftheunweighedballsonSide A; putthree Brainteasers Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat strategy –andanultimatelysuccessful one. and smallergroupsofthree(usually eventuallydowntothreeballs)isagood normal. Oncethisisknown,we realizethatbreakingtheballsupintosmaller that arebeingweighedistheodd ball,weknowthattheunweighedballsare being weighed.Forexample,ifweknowthatoneoftheballs oftwogroups understanding thatinformationcanbegainedaboutballseven iftheyarenot Whew! or light). heavier thantheother(althoughwedon’t knowwhethertheoddballisheavy unweighed ballsarenormal,andthatoneofthesides,let’s saySide A, is one oftheeightballsthatwasweighed. We alsoknowthatthegroupoffour If theballsdonotbalanceonfirstweighing,weknowthatoddballis Case B:Iftheballsdonotbalanceonfirstweighing osntblne h alfo ieAistheoddone,andheavy. does notbalance,theballfromSide A balances, theballfromSideBisoddone,andlight. Ifthescale Step 3: removed fromthescale). andusethemtoreplacethreeballson Side B(whichare from Side A (theheavy side). Take thethreeballs them toreplacethreeballsonSide A CaseB): Step 2(for III. II. I. knowledge thattheoddballislight.) had tippedtoSideB,wewouldusethesamelogicalprocess,using As youcanseefromthissolution,oneofthekeystoproblem is 3b fromCase A. light. We canproceedwiththethirdweighingasdescribedinStep scale wastheoddone.Inthiscase,weknowthatballisalso If thescalebalances,weknowthatoneofballsremovedfrom weighing asdescribedinStep 3binCase A. B istheoddballandthatitheavy. We proceedwiththethird toSide side, weknowthatoneofthethreeballsmovedfromSide A If thescaletiltstootherside,sothatSideBisnowheavy the oddballisheavyorlight). than theunmovedballonSideB(thoughwedon’t knowwhether isheavier ball. We alsoknowthattheunmovedballfromSide A the scalethatwasnotshiftedinoursecondweighingisodd If thescaleremainssame,weknowthatoneoftwoballson eg h alfo ieAagainstanormalball.Ifthescale Weigh theballfromSide A www.vault.com/consulting Take threeballsfromtheunweighedgroupanduse Brainteasers Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 215 Customized for: Jessica ([email protected]) 216 you say?” The truthfulconsultantwill,ofcourse,answeryes(ifit’s the consultant: “IfIweretoaskyou ifthisdoorwasthecorrectone,whatwould will lietoyou. The importantthingistoworkinadoublenegative. Ask a Clearly, youcan’t justask a consultantwhichisthecorrectway–oneofthem isthecorrect one. What willyouask? decide whichdoor isfrom afirmthatalwayslies. You canaskonequestionto The other is aconsultant.Oneconsultantfrom afirmthatalwaystellsthetruth. leadstotheexit.Infront ofeachdoor the oneyouwant!)andother interview(that’s leadstoyour 8. You are facedwithtwodoors.Onedoor pour itintothefive-gallonjug. Ta-da. jug andpourintheonegallon. one gallonwillbeleftoverinthethree-gallonjug.Emptyout thefive-gallon Repeat. Becauseyoucanonlyputtwomoregallonsintothe five-gallon jug, Fill thethree-gallonjugwithwaterandpouritintofive-gallonjug. puzzle-based movieornot,youshouldfindthisbrainteaserprettysimple. says oneoutragedconsultant.Butwhetheryou’veseenthatgimmicky, “They gavethisquestionevenafter gallonsofwater. Howwillyoudoit? exactly four 7. You haveafive-gallonjugandthree-gallon jug. You mustobtain That numberofouncesisalsothetraitor. Guards! group ofcoinsshouldweigh,anddeterminehowmanyouncesyou’reshort. each toputthatnumberofcoinsontothescale.Calculatehowmuch which coin.Numbereachprinceandprincessfromoneto100. Then tell you mustfindawaytosomehow“mark”whichprinceorprincessdonates easy! You’ll needtofindanotherwaysolvethisdilemma. The keyisthat prince andprincess,yourinterviewerwilltellyouno–thatwouldbefartoo solution outloud).Firstofall,ifyouaskcanmarkacoinfromeach brainteaser circuit.Here’s howtotamethisproblem(andreasonits Various versionsofthispuzzlehavebeenmaking theroundson opportunity toflushoutthetraitor? do onetraditionalweighingofcoinsonascale.Howwillyouusethis –andthenstrikeat you! You are allowedto shewillbringyou hollowed outcoinsthisyear realm. Heor inyour learned there isatraitor of onehundred goldcoinsthatweighoneounceeach.Butyouhave kingdom. Everyyear, theprincesandprincessesmustbringyouabag 6. You are aking,withhundred princesandprincessesinyour L C I A B R R A E E R R Y Now justfillthethree-gallonjugagainand Brainteasers Vault GuidetotheCaseInterview Die Hard withaVengeance © 2007Vault Inc. came out!” Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat • Detailed 40-pageemployerprofilesontopemployerslikeMcKinsey, • • One-on-oneVaultCaseInterviewPrepwithconsulting experts • TheVaultCaseinterviewPracticeGuide • The onlyjobboardontheWebdedicatedtoconsultingjobs– • Surveysofemployeesathundredsconsultingfirms to theVaultConsultingCareerChannel For moreinformationoncaseinterviewsandconsultingcareers,go BCG, Bain,Accentureandmore Vault ConsultingJobBoard www.vault.com/consulting percent. is 49.5percent. Averaged, yourchanceofgrabbingablackmarbleis74.75 of pickingtheblackmarblewillbe100percent.Inotherone,yourchance in onejarandalltheothermarblesone.Injar, thechance another, yourchanceswillbe50/50. Your bestbetistoputoneblackmarble If youplacealltheblackmarblesinonejarandwhite distribution? youmakeyour black marbleafter oddsofchoosinga do youdistributethemarbles,andwhatare your oddsofchoosingablackmarble.How and youwishtomaximizeyour into whichtoplacethemarbles. You mustrandomlyselectamarble, 9. You have100blackmarblesandwhitemarbles. You havetwojars case, youshouldgotheoppositeway. way togo,whatwouldhesay?” The reasoningissimilar–exceptinthis Another solutionistoaskaconsultant:“IfIweretheotherguywhich yes. liar willbeforcedtolieaboutthefactthattheywouldsayno–andanswer ask theliarhowtheywouldanswerifyouaskedthemsamequestion, the liarifcorrectdoorisrightway, theliarwillanswerno.Butifyou correct one)orno(ifit’s not).Nowtakethelyingconsultant.Ifyouasked www.vault.com/consulting Brainteasers Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 217 Customized for: Jessica ([email protected]) visited lately? job boardshaveyou How manyconsulting criteria ande-mailthemdirectly toyourinbox. and more.We’llmatch job listingswithyourinterestsand and customizeyoursearchbyareaofconsulting, experience Vault takesmatch-makingtothenextlevel:postyour resume VaultMatch ResumeDatabase openings thatyouwant.Nosurfingrequired. consulting, function,andexperiencelevel,find thejob consulting professionals.Targetyoursearch by areaof The mostcomprehensiveandconvenientjob board for Vault ConsultingJobBoard professionals. job searchtoolsforconsulting Use theInternet’smosttargeted (Thought so.) GUIDE INTERV CASE Customized for: Jessica ([email protected]) career message boards,expertresume reviews,theVaultJob Boardandmore. Visit Vaultat ANALYSIS FINAL www.vault.com for insidercompanyprofiles, expertadvice, Customized for: Jessica ([email protected]) Customized for: Jessica ([email protected]) Final Analysis insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat interviews! be nervous(allinterviewerswerecandidatesonce),andcrushthosecase the betteryou’lldoandmorefunhave.Goodluck–practice,don’t more youenjoysolvingproblemsandusingyouranalyticcreativeability, these questions. Try tohavefunwiththechallengeofcaseinterview. The practicing andpreparing,youwillbewellequippedtomeetthedifficulty of every day. Ifyoubecomecomfortablewiththislineofquestioningby deductive reasoningpowerinwayswhichconsultantsareaskedtoperform case questionsstretchyourpoise,professionalism,analyticalabilities,and “Tell meaboutyourself,”and“Describeyourgreatestachievement.”But before. You mayhavepreparedwellforthestandardinterviewquestionslike Case questionscanbeverydisturbingifyouhaven’t encounteredthem www.vault.com/consulting Final Analysis Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 221 Customized for: Jessica ([email protected]) A L AERGUIDES CAREER VAULT GET THEINSIDESCOOPONTOPJOBS – SMARTMONEY MAGAZINE varnished scoop, check outVault” “To gettheun- get thejobstheywant. specific employerstohelpthem inside scooponindustriesand employees togivereadersthe interviews thousandsof Each year,Vaultsurveysand on careers. source ofinsiderinformation since 1997andarethepremier profiles havebeenpublished Vault guidesandemployer “Cliffs Notes – for Careers” FORBES MAGAZINE GUIDE INTERV CASE Customized for: Jessica ([email protected]) career message boards,expertresume reviews,theVaultJob Boardandmore. Visit Vaultat APPENDIX www.vault.com for insidercompanyprofiles, expertadvice, Customized for: Jessica ([email protected]) Customized for: Jessica ([email protected]) Consulting Glossary insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat tasks, andthenimplementingthe leaner, moreefficient process. client’s businessprocesses, eliminating unneededor“non-value-added” Business Process Re-engineering(BPR): is askedtosolvealogicproblem. Brainteaser: in). presentation (calledblankbecauseitdoesnotincludedatauntil analystsputit Blank slide: (such ascosts)againstothercompaniesintheindustry. Benchmarking: growth/share matrix. matrix: BCG higher themarketshare,profitability. [pronounced roachy])vs.relativemarketshare. The graphshowsthatthe profitability forthisgraphisreturnoncapitalemployed,or“ROCE” Bananagram: consulting termsthatconsultantsliketoflingaboutincaseinterviews: at). Followingisabasiclistthatcanraiseyourleveloffamiliaritywith something calleda“skillset”(forwhatit’s worth,thethingsthatyou’regood thus furtherpanickingthosewhowereunawarethattheypossessed Consultants oftenlapseintotheirownlingowhileconversingwithcivilians, Initial sketchonpaperforaslidetobeusedinconsultingcase typeofconsultinginterviewquestioninwhichthejobseeker A portfolioassessmenttooldevelopedbyBCG. Also calleda A graphshowingprofitability(thetypicalmeasureof A Measuring avalueorpracticeotherbusinessmeasure www.vault.com/consulting Appendix Vault GuidetotheCaseInterview — with BPR istheprocessofreviewing a L C I A B R R A E E R R Y 225 Customized for: Jessica ([email protected]) 226 called a“case”or“project.” Engagement: time. The other 20percentofyourtimemaynotbeworthit. 80/20 rule: from ahigh-level(bigpicture)view. Drilldown: DCF: (DiscountedCashFlow) service, andmarketingautomation. Usually focusesonsalesforceautomation,customerservice/call center, field gathering methodsusedtocollectinformationaboutaclient’s customers. RelationshipManagement(CRM): Customer time. used toreferonlythoseworktaskswhicharethemostimportantat desired result. This isthecriticalpath.Ineverydayconsultinglanguage,it core setoftasksthatmustoccurinorderfortheprocesstoproduce process. Ifyoueliminatethesenon-meaningfultasks,areleftwiththe issues. Taken away, theydonotdirectlyimpacttheendresultofbusiness related tomaintenanceoftheprocessoradministrativeandbookkeeping business processismadeupofaseriestasks.Somethesetasksare Critical path: core competencies. believe acompanyshouldenteronlythosebusinesseswhicharepartofits Core competencies: through phonelines.) technology, while customers maysomedaybeabletoplacetelephonecallsusingcable Convergence: firm” intheU.S.,thoughtermhaspickedupcurrencyU.S. Consultancy: (such asamerger, downsizingorrestructuring). which thefirmhelpsacompanycopewithperiodofsignificantchange Change management: analysts. composed ofonepartner(ordirector),consultant,andtwoormore Case team: L C I A B R R Getting 80percentoftheanswer firstwilltake20percentofyour A E Asking questionstogathermoredetailaboutasituation,usually Team thatworksonaconsultingprojectforclient.Usually E R R Y consultingassignment receivedbyaconsultingfirm. Also A typically Europeannameforwhatwecalla“consulting A This termcomesfromOperationsManagementtheory. Every The trendtowardindustriesuniting.(Forexample,cable TV telephone customersmaybeabletoreceivetelevision The areasinwhichacompanyexcels.Consultants One oftheservicesprovidedbyconsultingfirms,in . The presentvalueofafuturecashflow. Appendix Vault GuidetotheCaseInterview Term thatreferstothedata- © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat If Iwasstuckovernightwiththis personatO’Hareairport,wouldIhavefun? O’Hare test: project. to assesstheprofitabilityforaclient ofmakinganinvestmentorundertakinga NPV: (Netpresent value) good thing. information or Learning curve: advice itgivestoaclientcompanyisenacted. Implementation: investment; otherwise,thecompanyshouldnot. investment exceedsthis“hurdlerate,”thecompanyshould makethe Hurdle rate: “hoteling.” must calluptheoffice nearestthemto requestadesk. This iscalled assigned permanentoffices, justavoice mailextension.Eachweek,they Hoteling: describing asituationingeneraltermsorasanoverview. High-level view: Helicoptering: market foraparticularproductorservice)usingbasiccalculations. job seekerstomakeaneducatedestimateofsomething(oftenthesize Guesstimate: ocean. Consultantsarenotusuallythispoetic. rock andshellmatterreducedtofinegranulesovertimebytheactionof handful of business problem.Imagineahandfulofsand. At ahighlevelit’s simplya Granularity: 100th unit’s cost). production (e.g.acompany’s 200thunitofaproductcosts75percentthe company’s costsdeclinebyroughly25percentforeverydoublingin production increases.Oneassumptionusedbyconsultantsisthata Experience curve: streamline departmentsordivisionsofacompany. Enterprise Resource Planning(ERP): Consultants movearoundsomuchthatinsomefirmstheyarenot sand; atagranularlevelitisbitsofmanydifferent kindsof testconsultantsuseininterviewstoassesspersonality“fit.” A company’s costofcapital.Ingeneral,ifthereturnonan A typeofconsultinginterviewquestion.Guesstimatesrequire A This simplyreferstothebasicelementsthatmakeupa nutykoldenee o ae A“steep”curveisa industry knowledgeneededforacase. A See High-levelview. This isalsoreferredtoasa“50,000-footview.” Itrefersto The processbywhichaconsultingfirmensuresthatthe The rateatwhichaconsultantacquiresbackground The principlethatacompany’s costsdeclineasits www.vault.com/consulting . The sum of aseriesdiscountedcashflows.Used Appendix Vault GuidetotheCaseInterview — with Processes orsoftwarethathelp L C I A B R R A E E R R Y 227 Customized for: Jessica ([email protected]) 228 an areainwhichtheyarecurrently generatingzerorevenue(forexample, White spaceopportunity: Writing a deck: Workplan: value toapre-existingproductorwayofdoingthings. Value-added: obsolete businessmodelstonew, moreeffective designs. Value migration: quality, withzero tolerancefordefects. purpose orintentofproducingaproductoffering aserviceofthehighest Total Quality Management: creditors oremployees. situation. Mostcommonly, thestakeholdersinacaseareshareholders, Stakeholder: any engagementistoincreaseshareholdervalue. (ownership) inthecompany. The primarygoalofconsultantsinundertaking value: Shareholder financial elements,andoffice locations. to headcountreductions,butcanapplyplants,processes,technology, restructuring theelementsofacompany. This ismostoftenusedinreference Rightsize: operations, complete overhaul(andusuallydownsizing)ofacompany’s a strategies, Reengineering: is agrowing payroll, data better results.Examplesofprocessesthatarecommonlyoutsourcedinclude: hiring anoutsidevendortoperformthetask,oftenatalowercostandwith Outsourcing: Out-of-the-box thinking: McKinsey. said tobe“onthebeach”(notliterally). This expressionoriginatedat their workhoursdeclinedrastically. Consultantsbetweenassignmentsare On thebeach: L C I A B R R and practices. A E Also “downsize,”thisisjustakinder, friendliertermfor scheduleforcompletingaconsultingengagement. A trend amongcorporations. E processing, recruitmentanddocumentprocessing.Outsourcing R criticalpersonwhohasastakein theoutcomeofaparticular A R Y Used todefineaserviceorproductinmarketplacethatadds Taking aprocessnormallyperformedwithincompanyand For consultants,thesparetimebetweenassignments,when largely discreditedfadoftheearly1990s,whichadvocates A Preparing slidesforpresentations toclients. The flowofeconomicandshareholdervalueawayfrom The wealthofacompany’s stockholdersortheirequity Creativity. An opportunityforacompany to makemoneyin Also knownas TQM. Managementwiththe Appendix Vault GuidetotheCaseInterview © 2007Vault Inc. Customized for: Jessica ([email protected]) insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat entering anewgeographicmarket). launching anewproductline,licensinganexistingbrandortechnology, or www.vault.com/consulting Appendix Vault GuidetotheCaseInterview — with L C I A B R R A E E R R Y 229 Customized for: Jessica ([email protected]) 230 L C I A B R R A E E R R Y © 2007Vault Inc. Customized for: Jessica ([email protected]) About theAuthors insider firm profiles, messageboards, theVaultConsulting Job Boardandmore. Visit theVaultConsulting CareerChannelat to acareerinconsulting.Ericspent theoretical physicsmajorincollege,Eric Eric Chung: Mark Asher: School ofBusiness. is agraduateofHarvardCollegeandtheUniversityChicagoGraduate violinist, singer, songwriter, anddirectorofacappellasinginggroups.Eric specializing indecisionmakingunderuncertainty. Heisalsoanactive currently aconsultantwithStrategic Decisions Group,aboutiquefirm After spendingasummerduringbusinessschoolinterningat Accenture, heis communication skillstofirst-yearstudents. group andwasselectedtoteachafull-quarterclassonleadership firm. Duringbusinessschool,Ericwasactiveinthemanagementconsulting developed proprietaryaccountingandfinancialmanagementsystemsforthe Mark isaconsultantwithPricewaterhouseCoopers. Having spenthischildhoodasaquantjockandlater www.vault.com/consulting three yearsatGoldman is nowapplying — with his analytical Sachs, wherehe L C I A B R R A E E R R Y skills 231