You can also compare it against companies in the same industry to evaluate whether its financial performance is stronger or weaker. article for more detail on these types of cases and more.
Example: Our client is a fast-food retailer that has seen decreasing sales revenue over the past couple of years. Well ask our My Consulting Offer coaches and get back to you with answers.
For more information, see this article on, How to answer case studies using the 4-part approach, and. It is also referred to as gross sales or top line as it sits at the top of the income statement. EBITDA is calculated by subtracting operating expenses from the gross profit. In this example, the industry has annual revenues of $ 200 million. This will make it easier to identify what costs should be reduced or eliminated. So if the amount of cash generated by selling a product or service is important to your analysis, you should look at EBITDA. You will be given a packet of PowerPoint slides and time to review them. These costs are rarely part of case interviews. Show you are coachable by listening for feedback as you answer a case study interview question and using suggestions to steer you toward the right solution. We suggest your start your consulting case prep a few weeks before your interview. The capacity of equipment is the maximum output or units a piece of equipment can produce with the available resources over a set period of time.
If something is not clearthe clients product or industry, or the problem they want to solve ask. You should also refer back to the problem-solving structure you laid-out earlier in the interview to make sure your analysis is comprehensive. The hypothesis-driven approach is a common approach to solving problems in the consulting world because consultants dont want to waste time fully researching all possible solutions. The utilization rate of equipment can be calculated by the following formula: Utilization rate (%) =Actual output / Maximum output.
Well use this example to demonstrate all the formulas in this section. You can compare the profit margin of a company against its historical margins to evaluate whether its current performance is better or worse than past performance. The most common way companies make money is by selling a product or service for more than it costs to produce, thereby earning a profit. In a case interview, youll need to identify possible causes of the clients problem and then ask questions and do analysis to identify the root cause. Case questions can cover any industry and multiple different types of business problems, so youre unlikely to get lucky and know the answer.
These include selling, general and administrative (SGA) expenses, management salaries, depreciation and amortization.
Right now, you may be thinking to yourself that consulting interviews sound impossibly difficult. If she thought theyd sell less, they wouldnt enter the market. It is used in problem-solving to identify solutions that appropriately address the problem. If so, move onto the deeper dive into case interview prep below! In case interviews, you can use the break-even analysis to determine whether a client should make a certain investment, say in machinery or a new product line, based on how likely it is that theyll exceed the break-even threshold. You can assess whether a companys growth rate is strong by comparing it to other growth rates such as: Mature companies are likely to see single-digit growth rates unless they launch a very successful new product or they acquire a company. Market share (%) = $ 10 million / $ 200 million. In the income statement there are three types of costs: Income statements generally show 3 levels of profit (loss) or earnings: Gross Profit; Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA); and Net Profit. In business situations, it helps determine at which point the business, investment, or new product or service will become profitable. Ask for a moment to consider your approach to solving the clients problem. I do not understand why (2m-8m)/8m = 25%. This answer should be both persuasive and logical based on all the information gathered over the course of the interview. If something is not clearthe clients product or industry, or the problem they want to solve ask! meaning there is no loss or profit. For more information, see this article on, Multiple candidates are brought in to discuss a case together and then present their solution to an interviewer. They want your help in understanding what they can do to improve sales. In case interviews, you can use the break-even analysis to determine whether a client should make a certain investment, say in machinery or a new product line, based on how likely it is that theyll exceed the break-even threshold. An issue tree is used to break down complex problems into key components in a structured manner. Best practices are methods or techniques that are. It is used in problem-solving to identify solutions that appropriately address the problem. They would like to know if this is a good idea.. Turnover of store employees at Burgers R Us restaurants has increased over prior years. But attractive jobs are usually highly competitive, and thats definitely the case in management consulting. You can also compare it against companies in the same industry to evaluate whether its financial performance is stronger or weaker. Rebecca concluded the case with a direct answer to the case study interview question as it was initially asked. What is the potential revenue growth if they choose to expand into India?, A telecom operator is looking to diversify their presence in the U.S. and wants to enter the video streaming market. Revenue is the money generated from selling a product or service. Can you please explain the ROI formula? This is calculated by subtracting interest and tax from EBIT. For these questions, it is good to memorize a few facts that will help you make assumptions. Note you can combine both the formulas for faster calculation. My Consulting Offer has helped almost 85% of the people weve worked with get a job in management consulting. Read our article for more about MECE problem-solving. Part of what your interviewer is testing for is your quantitative skills, so they want to see that you can do calculations in your head or on paper. In particular, successful candidates know that consulting firms use a particular type of interview question the.
In fact, its best to develop your own structure for breaking down the problem as it shows you can solve a case without forcing a standard framework on the problem. For example, a client who is in logistics would like to reduce the cost of its operations by improving the efficiency of its processes, such as by reducing equipment downtime or scheduling deliveries according to time-saving routes.
For instance, in the example of a fast-food chain with declining sales, you should break sales down into price and unit volume to understand whether the client is not selling enough units of their products or whether prices have fallen (or both!). An income statement (or profit and loss statement or statement of revenue and expenses) is a record of a companys profit or loss over a specific period of time. But asking for this time will show the interviewer that youre carefully structuring your problem-solving approach. The term root cause is used to distinguish between symptoms of a problem, which may be obvious, and the underlying issue that needs to be solved, which may not be obvious.
To solve cases, you first need to understand broadly how companies make money. Mastering the structure phase of the interview is not as easy as the opening, but its critical to ensure you have the structured problem-solving approach that will lead you to the right answer to the case. This approach can be used to solve case interview questions where you first assume an answer to the case problem and check whether this is true or not through analysis. In the case, were given that the size of the market for US sports drinks is 8 billion gallons. This type of interview question mimics the analytic process a consultant might go through in a 3-month project, but it does it in 30 minutes, the time allowed in a typical interview. This can be done by increasing revenue of the current product/service line, by adding a new product/service line, or by selling to a new type of customer or in a new geography. If you walk into your first consulting interview without having practiced case study interviews beforehand, youre in for a painful experience. If it is not true, you revise your hypothesis. You dont want to get lost down one rabbit hole and ignore other important aspects of the problem. They want to move quickly to the most likely answer and then test whether it is or is not the best answer. For example, does the client have a good market size in the industry? Top consultancies offer competitive salaries and also invest significantly in employee development. Theres a lot to like about a career in consulting! Check out these topics: Thanks for turning to My Consulting Offer for advice on case interview prep. Management consulting jobs might pay well and provide the opportunity to pursue attractive careers, but if you dont like solving business problems, you probably wont like the work youll do as a consultant. MECE issue trees are considered the gold standard for problem-solving so this concept is very good to know. This typically describes how a company makes its products or services. See our article on virtual case interviews, for more info. Read our article for more about. Using the same example, imagine that the management tells you that in a 12-hour shift, the machine produces 50 units and there are two 45-minute breaks. The main thing that recruiters are looking for in case study interviews is whether or not theyd feel comfortable putting a candidate in front of a client. It will also give you time to find a couple friends or classmates who are also applying to consulting firms.
Otherwise, suggest the best place to start digging into the case. Competition for Jobs with Top Consulting Firms Is Fierce, so Preparation Is Essential. Investment banks, consumer marketing companies, and others use the case interview structure in their interview process. Return on investment (ROI) is a profitability metric that indicates how well an investment performed (or will perform). For example, entering a different geography, new demography, or new product/service line. It is a way of bucketing problems, ideas, or solutions with no overlapping between the buckets and with each item having a place in one bucket only (mutually exclusive), and with the buckets including all possible items relevant to the context (collectively exhaustive). For example: Customer segment Purchase frequency for items from coffee shops, Women under 30 4 times per week, purchase includes food item plus beverageMen under 30 2 times per week, purchase includes only beverageWomen 31 and over 4 times per month, purchase includes only beverageMen 31 and over 3 times per month, purchase includes only beverage. Market share is the size of the company in relation to the size of the industry in which it operates, where size is typically measured in annual revenues. Remember, this clarification is an important step in the process. It can be used in market entry cases because industries with a lot of small competitors are generally easier to enter than ones with only a few big competitors. Is the industry highly competitive? It is used to compare the size of a company to its competitors and the industry as a whole. Capacity (units) = 12 hours x (60 minutes per hour) / 10 minutes. The group case is also not a frequently used interview format. In business situations, it helps determine at which point the business, investment, or new product or service will become profitable. Consulting Case Prep Takes Time So Start Early, Learn How to Case Quickly by Mastering Each of the 4 Parts of the Case. Below, well go into more depth on how to address each of these 4 points in a case. When youre starting your consulting interview prep, its important to remember that the right answer is not simply a conclusion, but the methodical, the well-structured process used to reach the conclusion. Revenue is the total amount of money generated by a company from selling its products or services. For example, if our burger restaurant buys a grill to cook burgers on for $1,000 and expects it to last for 10 years, it would spread out the cost over that time period, $100 per year. Market-sizing questions typically appear in cases where clients want to grow or expand their business such as market entry or profitability cases. Where did that number come from? You can also use the concept of MECE when segmenting a market for example, if you are sizing a market and intend to lay out different purchasing behavior assumptions for different customer segments. Make sure the questions you ask the interviewer touch on all the key aspects of the problem you identified including the clients internal organization, the market for their product, and their competition. Cost optimization cases or questions can be part of a profitability case where a client is experiencing declining profitability or when a client wants to improve efficiency. I hope that helps!
For more information on business frameworks, you might want to become familiar with during your case study preparation, seeCase Interview Frameworks. How many cups of coffee does Starbucks sell in a day?Estimate the fleet size of Delta Airlines.Estimate market size for air-conditioners in New York.Estimate market size for an anti-smoking pill in the U.S.. If the interviewer suggests a place to start your analysis, follow their lead. A job at a management consulting firm will expose you to multiple different industries and types of business problems. Save my name, email, and website in this browser for the next time I comment. During this portion of the interview, you can ask any clarifying questions you need to. First, you would need to calculate the potential output. It raises questions such as: Here are some common business concepts that you need to know as you prepare for your interview. Instead, the interviewer wants to see that you can use simple math and logical deduction to build out an answer. Purchase frequency for items from coffee shops, 4 times per week, purchase includes food item plus beverage, 2 times per week, purchase includes only beverage, 4 times per month, purchase includes only beverage, 3 times per month, purchase includes only beverage, Note how in this example, everyone would fall into one customer segment and only one customer segment. based on some evidence. An executive might want to know that they could break even at 100,000 units sold because if she thought they could sell more than that, it would be profitable to enter the market. How can they capture a significant market share?, A renewable energy company that specializes in large equipment such as windmills wants to enter the retail market and sell smaller equipment directly to individual homes. What new product or service could they offer their customers? Youve made it to the end of our crash course on case interview prep. Break-even is the point at which the total revenue and total costs are equal, meaning there is no loss or profit at that point. You are not expected to know the exact answer to market-sizing questions. Top firms typically make offers to only about 1% of the people who apply.
The growth rate is calculated using the formula: To calculate the manufacturers revenue growth rate. Utilization rate is the percent of available time the equipment or machinery is actually used. Nailing the opening is probably the easiest part of case interview preparation. Shouldnt the formula just be (net profit)/(cost of investment)? In a case, this is mostly used in situations where a client would like to make their processes more efficient. This is a different way of looking at the same question that the breakeven formula asks: is it worth my while to make this investment? Solving complex, ambiguous problems is at the heart at what consultants do every day. The interviewer is looking to see that you know how to drive the analysis of a problem. This is the most typical case study interview format. During the conclusion, youll be assessed on whether you present a well thought-out solution based on the relevant facts of the case. For example, high. In a business situation, best practices are used to benchmark companies against the standard and can serve as a roadmap on how to improve the efficiency of their operations. If that happens you will not be moving forward to second round interviews no matter how elegant your analysis is. The formula was incorrect, and should be Profit/cost of investment. For example, a decline in sales volume is a symptom. What the 4 different formats for case interviews are. Do you enjoy solving the types of business problems asked in case interviews? The profit or loss is calculated by taking the revenues generated and subtracting the expenses incurred over the same period of time.
Example: Our client is a fast-food retailer that has seen decreasing sales revenue over the past couple of years. Well ask our My Consulting Offer coaches and get back to you with answers.
For more information, see this article on, How to answer case studies using the 4-part approach, and. It is also referred to as gross sales or top line as it sits at the top of the income statement. EBITDA is calculated by subtracting operating expenses from the gross profit. In this example, the industry has annual revenues of $ 200 million. This will make it easier to identify what costs should be reduced or eliminated. So if the amount of cash generated by selling a product or service is important to your analysis, you should look at EBITDA. You will be given a packet of PowerPoint slides and time to review them. These costs are rarely part of case interviews. Show you are coachable by listening for feedback as you answer a case study interview question and using suggestions to steer you toward the right solution. We suggest your start your consulting case prep a few weeks before your interview. The capacity of equipment is the maximum output or units a piece of equipment can produce with the available resources over a set period of time.
If something is not clearthe clients product or industry, or the problem they want to solve ask. You should also refer back to the problem-solving structure you laid-out earlier in the interview to make sure your analysis is comprehensive. The hypothesis-driven approach is a common approach to solving problems in the consulting world because consultants dont want to waste time fully researching all possible solutions. The utilization rate of equipment can be calculated by the following formula: Utilization rate (%) =Actual output / Maximum output. Well use this example to demonstrate all the formulas in this section. You can compare the profit margin of a company against its historical margins to evaluate whether its current performance is better or worse than past performance. The most common way companies make money is by selling a product or service for more than it costs to produce, thereby earning a profit. In a case interview, youll need to identify possible causes of the clients problem and then ask questions and do analysis to identify the root cause. Case questions can cover any industry and multiple different types of business problems, so youre unlikely to get lucky and know the answer.
These include selling, general and administrative (SGA) expenses, management salaries, depreciation and amortization. Right now, you may be thinking to yourself that consulting interviews sound impossibly difficult. If she thought theyd sell less, they wouldnt enter the market. It is used in problem-solving to identify solutions that appropriately address the problem. If so, move onto the deeper dive into case interview prep below! In case interviews, you can use the break-even analysis to determine whether a client should make a certain investment, say in machinery or a new product line, based on how likely it is that theyll exceed the break-even threshold. You can assess whether a companys growth rate is strong by comparing it to other growth rates such as: Mature companies are likely to see single-digit growth rates unless they launch a very successful new product or they acquire a company. Market share (%) = $ 10 million / $ 200 million. In the income statement there are three types of costs: Income statements generally show 3 levels of profit (loss) or earnings: Gross Profit; Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA); and Net Profit. In business situations, it helps determine at which point the business, investment, or new product or service will become profitable. Ask for a moment to consider your approach to solving the clients problem. I do not understand why (2m-8m)/8m = 25%. This answer should be both persuasive and logical based on all the information gathered over the course of the interview. If something is not clearthe clients product or industry, or the problem they want to solve ask! meaning there is no loss or profit. For more information, see this article on, Multiple candidates are brought in to discuss a case together and then present their solution to an interviewer. They want your help in understanding what they can do to improve sales. In case interviews, you can use the break-even analysis to determine whether a client should make a certain investment, say in machinery or a new product line, based on how likely it is that theyll exceed the break-even threshold. An issue tree is used to break down complex problems into key components in a structured manner. Best practices are methods or techniques that are. It is used in problem-solving to identify solutions that appropriately address the problem. They would like to know if this is a good idea.. Turnover of store employees at Burgers R Us restaurants has increased over prior years. But attractive jobs are usually highly competitive, and thats definitely the case in management consulting. You can also compare it against companies in the same industry to evaluate whether its financial performance is stronger or weaker. Rebecca concluded the case with a direct answer to the case study interview question as it was initially asked. What is the potential revenue growth if they choose to expand into India?, A telecom operator is looking to diversify their presence in the U.S. and wants to enter the video streaming market. Revenue is the money generated from selling a product or service. Can you please explain the ROI formula? This is calculated by subtracting interest and tax from EBIT. For these questions, it is good to memorize a few facts that will help you make assumptions. Note you can combine both the formulas for faster calculation. My Consulting Offer has helped almost 85% of the people weve worked with get a job in management consulting. Read our article for more about MECE problem-solving. Part of what your interviewer is testing for is your quantitative skills, so they want to see that you can do calculations in your head or on paper. In particular, successful candidates know that consulting firms use a particular type of interview question the.
In fact, its best to develop your own structure for breaking down the problem as it shows you can solve a case without forcing a standard framework on the problem. For example, a client who is in logistics would like to reduce the cost of its operations by improving the efficiency of its processes, such as by reducing equipment downtime or scheduling deliveries according to time-saving routes.
For instance, in the example of a fast-food chain with declining sales, you should break sales down into price and unit volume to understand whether the client is not selling enough units of their products or whether prices have fallen (or both!). An income statement (or profit and loss statement or statement of revenue and expenses) is a record of a companys profit or loss over a specific period of time. But asking for this time will show the interviewer that youre carefully structuring your problem-solving approach. The term root cause is used to distinguish between symptoms of a problem, which may be obvious, and the underlying issue that needs to be solved, which may not be obvious.
To solve cases, you first need to understand broadly how companies make money. Mastering the structure phase of the interview is not as easy as the opening, but its critical to ensure you have the structured problem-solving approach that will lead you to the right answer to the case. This approach can be used to solve case interview questions where you first assume an answer to the case problem and check whether this is true or not through analysis. In the case, were given that the size of the market for US sports drinks is 8 billion gallons. This type of interview question mimics the analytic process a consultant might go through in a 3-month project, but it does it in 30 minutes, the time allowed in a typical interview. This can be done by increasing revenue of the current product/service line, by adding a new product/service line, or by selling to a new type of customer or in a new geography. If you walk into your first consulting interview without having practiced case study interviews beforehand, youre in for a painful experience. If it is not true, you revise your hypothesis. You dont want to get lost down one rabbit hole and ignore other important aspects of the problem. They want to move quickly to the most likely answer and then test whether it is or is not the best answer. For example, does the client have a good market size in the industry? Top consultancies offer competitive salaries and also invest significantly in employee development. Theres a lot to like about a career in consulting! Check out these topics: Thanks for turning to My Consulting Offer for advice on case interview prep. Management consulting jobs might pay well and provide the opportunity to pursue attractive careers, but if you dont like solving business problems, you probably wont like the work youll do as a consultant. MECE issue trees are considered the gold standard for problem-solving so this concept is very good to know. This typically describes how a company makes its products or services. See our article on virtual case interviews, for more info. Read our article for more about. Using the same example, imagine that the management tells you that in a 12-hour shift, the machine produces 50 units and there are two 45-minute breaks. The main thing that recruiters are looking for in case study interviews is whether or not theyd feel comfortable putting a candidate in front of a client. It will also give you time to find a couple friends or classmates who are also applying to consulting firms. Otherwise, suggest the best place to start digging into the case. Competition for Jobs with Top Consulting Firms Is Fierce, so Preparation Is Essential. Investment banks, consumer marketing companies, and others use the case interview structure in their interview process. Return on investment (ROI) is a profitability metric that indicates how well an investment performed (or will perform). For example, entering a different geography, new demography, or new product/service line. It is a way of bucketing problems, ideas, or solutions with no overlapping between the buckets and with each item having a place in one bucket only (mutually exclusive), and with the buckets including all possible items relevant to the context (collectively exhaustive). For example: Customer segment Purchase frequency for items from coffee shops, Women under 30 4 times per week, purchase includes food item plus beverageMen under 30 2 times per week, purchase includes only beverageWomen 31 and over 4 times per month, purchase includes only beverageMen 31 and over 3 times per month, purchase includes only beverage. Market share is the size of the company in relation to the size of the industry in which it operates, where size is typically measured in annual revenues. Remember, this clarification is an important step in the process. It can be used in market entry cases because industries with a lot of small competitors are generally easier to enter than ones with only a few big competitors. Is the industry highly competitive? It is used to compare the size of a company to its competitors and the industry as a whole. Capacity (units) = 12 hours x (60 minutes per hour) / 10 minutes. The group case is also not a frequently used interview format. In business situations, it helps determine at which point the business, investment, or new product or service will become profitable. Consulting Case Prep Takes Time So Start Early, Learn How to Case Quickly by Mastering Each of the 4 Parts of the Case. Below, well go into more depth on how to address each of these 4 points in a case. When youre starting your consulting interview prep, its important to remember that the right answer is not simply a conclusion, but the methodical, the well-structured process used to reach the conclusion. Revenue is the total amount of money generated by a company from selling its products or services. For example, if our burger restaurant buys a grill to cook burgers on for $1,000 and expects it to last for 10 years, it would spread out the cost over that time period, $100 per year. Market-sizing questions typically appear in cases where clients want to grow or expand their business such as market entry or profitability cases. Where did that number come from? You can also use the concept of MECE when segmenting a market for example, if you are sizing a market and intend to lay out different purchasing behavior assumptions for different customer segments. Make sure the questions you ask the interviewer touch on all the key aspects of the problem you identified including the clients internal organization, the market for their product, and their competition. Cost optimization cases or questions can be part of a profitability case where a client is experiencing declining profitability or when a client wants to improve efficiency. I hope that helps!
For more information on business frameworks, you might want to become familiar with during your case study preparation, seeCase Interview Frameworks. How many cups of coffee does Starbucks sell in a day?Estimate the fleet size of Delta Airlines.Estimate market size for air-conditioners in New York.Estimate market size for an anti-smoking pill in the U.S.. If the interviewer suggests a place to start your analysis, follow their lead. A job at a management consulting firm will expose you to multiple different industries and types of business problems. Save my name, email, and website in this browser for the next time I comment. During this portion of the interview, you can ask any clarifying questions you need to. First, you would need to calculate the potential output. It raises questions such as: Here are some common business concepts that you need to know as you prepare for your interview. Instead, the interviewer wants to see that you can use simple math and logical deduction to build out an answer. Purchase frequency for items from coffee shops, 4 times per week, purchase includes food item plus beverage, 2 times per week, purchase includes only beverage, 4 times per month, purchase includes only beverage, 3 times per month, purchase includes only beverage, Note how in this example, everyone would fall into one customer segment and only one customer segment. based on some evidence. An executive might want to know that they could break even at 100,000 units sold because if she thought they could sell more than that, it would be profitable to enter the market. How can they capture a significant market share?, A renewable energy company that specializes in large equipment such as windmills wants to enter the retail market and sell smaller equipment directly to individual homes. What new product or service could they offer their customers? Youve made it to the end of our crash course on case interview prep. Break-even is the point at which the total revenue and total costs are equal, meaning there is no loss or profit at that point. You are not expected to know the exact answer to market-sizing questions. Top firms typically make offers to only about 1% of the people who apply.
The growth rate is calculated using the formula: To calculate the manufacturers revenue growth rate. Utilization rate is the percent of available time the equipment or machinery is actually used. Nailing the opening is probably the easiest part of case interview preparation. Shouldnt the formula just be (net profit)/(cost of investment)? In a case, this is mostly used in situations where a client would like to make their processes more efficient. This is a different way of looking at the same question that the breakeven formula asks: is it worth my while to make this investment? Solving complex, ambiguous problems is at the heart at what consultants do every day. The interviewer is looking to see that you know how to drive the analysis of a problem. This is the most typical case study interview format. During the conclusion, youll be assessed on whether you present a well thought-out solution based on the relevant facts of the case. For example, high. In a business situation, best practices are used to benchmark companies against the standard and can serve as a roadmap on how to improve the efficiency of their operations. If that happens you will not be moving forward to second round interviews no matter how elegant your analysis is. The formula was incorrect, and should be Profit/cost of investment. For example, a decline in sales volume is a symptom. What the 4 different formats for case interviews are. Do you enjoy solving the types of business problems asked in case interviews? The profit or loss is calculated by taking the revenues generated and subtracting the expenses incurred over the same period of time.