Case Interview Prep - Crack the Case Workshop

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Master the most feared part of the selective process at consulting companies

Case

Crack the Case – PrepLounge 2

Agenda of Training

• Theory Introduction - Cases & frameworks 7 commandments of a case interview: application

examples Market Sizing framework: impress your interviewer

applying the 3 golden rules The Profitability framework and an application example The “Core Three” framework: Customers

(+ market), Company (+ product), Competitors• Practice – PrepLounge.com


Cases & frameworks (simplified view)

Three main categories of cases:1. Market Sizing

– Always use the Market Sizing framework

2. Business Situations– 85% of the time: General Business Situation

framework– 15% of the time: M&A / PE or Capacity frameworks

3. Other cases types – No off-the-shelf frameworks


Cases & frameworks (detailed view)

Reduce costs

Pure Market Sizing

Market Sizingframework

Market entry New product

Operations strategy

Business turnaroundIncrease salesCompetitive response

Business Situation

framework

Industry analysis New business

Pricing & Valuation

Private equity M&A

M&A / PEframework Supply &

Demand

Capacity change

Capacity framework

Finance

HR

Others

No specific framework

Brainteasers


Reduce costs

Pure Market Sizing



Operations strategy


Business Situation

framework


Pricing & Valuation

Private equity M&A


Demand

Capacity change

Capacity framework


• Assess the financial health of Swatch

• How should Coca Cola define the salaries of their overhead?

• What economical consequences would a change in traffic direction in Britain have?

Finance

HR

Others


Brainteasers

• Why are gully covers round?• …


Finance

HR

Others


Brainteasers

Reduce costs

Pure Market Sizing



Operations strategy


Business Situation

framework


Pricing & Valuation

Private equity M&A

M&A / PEframework

Capacity framework

• For what price could Intel sell the i5 processor if they increased their units production by 25%?

• What is the best diamond extraction and commercialization volume per year for De Beers?Supply & Demand chart

Supply & Demand

Capacity change

Capacity framework


Supply & Demand

Capacity change

Capacity framework

Finance

HR

Others


Brainteasers

Reduce costs

Pure Market Sizing



Operations strategy


Business Situation

framework

M&A / PE framework

• How much is facebook worth?• Bain Capital wants to buy 10% of Dropbox for

US$300 million. Is that a good deal?• Should UPS really merge with TNT?• Should GM buy its windshield provider (vertical

integration)?Use Business

Situation framework

with focus on synergies!


Pricing & Valuation

Private equity M&A

M&A / PEframework


Pure Market Sizing


Pricing & Valuation

Private equity M&A


Demand

Capacity change

Capacity framework

Finance

HR

Others


Brainteasers

Business Situation framework

• C&A has been facing a steady decrease in sales…

Detailed discussion

after break!

• Henkel wants to diversify its business and enter the packaging industry. Is that a good idea?

Reduce costs Operations strategy




Business Situation

framework



Pricing & Valuation

Private equity M&A


Demand

Capacity change

Capacity framework

Finance

HR

Others


Brainteasers

Reduce costs Operations strategy


Business Situation

framework

Market Sizing framework

• How many golf balls fit in a Boing 747?• How many shoes are sold in Brazil per year?• What is the market of hearing aids in Europe?• For how much would you sell the Golden Gate

bridge?• How heavy is Manhattan?

Pure Market Sizing



Detailed discussion

after break!


The commandments: Opening the case

1. Listen actively– Fully concentrate!– Note down ALL information

2. Pause, paraphrase problem and clarify all questions– “So, if I understood it well, I’m the CEO of a company…”– Double check on objective: “Is reducing production

costs our only goal in this case?”– Don’t be afraid to ask: make sure you understood

the problem 100%


The commandments: Opening the case

3. Plan the solution structure (roadmap)– Ask for 1 minute to gather your thoughts– Identify case type and corresponding framework– Describe and draw framework for interviewer– Organize your notes (consultants are supposed to be

always “client-ready”)

+ point: You don’t need to call your structure a framework! Interviewers always complain that candidates force-

fit their cases into off-the-shelf frameworks

Profit

Revenue Costs-

Example: Profitability framework


The commandments: Cracking the case

4. Be answer-first– Always list a few possible hypotheses and set

out with one of them– Start with corresponding branch of framework– Refine/rebuild hypothesis as you find out more

Example: Coca-cola’s profit has been declining in the last 2 years.Hypotheses:

Profit

Revenue Costs-

Revenues have decreased Costs have increased Both

+ point: Use your general culture to help choose initial hypothesis



5. Keep structured throughout the case– Always refer to structure– Don’t jump around framework branches – Consistently explore branches and exclude them if

they are not relevant– Summarize findings when switching major branches– Be MECE!

Example: Coca-colaProfit

Revenue Costs-Answer first: Costs have increased

Raw material DistributionLabor Others

+ point: Mention that your structure is MECE



6. Gather data the right way– ALWAYS segment your data!– Proactively ask for relevant data – Don’t be too vague– Quantify whenever possible– Go for the trend (this year vs. last years)– Company-specific or industry-wide?


The commandments: Closing the case

7. Close the case properly– Ask for a minute to gather your thoughts

(and draw them up)– It’s all about actionable recommendations!– Choose a side and stand by it!– First conclusion/recommendation then justification– People like 3: give the interviewer 3 reasons!

Conclusion + recommendation

Reason 1

Reason 2

Reason 3

+ point: Always apply the pyramid principle (by Barbara Minto)


Market Sizing framework – the 3 golden rules

1. Always use a tree to structure your problem2. Find the trade-off between pragmatism and

accuracy3. Do sanity checks along the way


Always use a tree to structure your problem

• How structured you are, that’s what matters!• First the structure (downward from top) then

the numbers (upward from bottom)

1

Example: How many golf balls can you fit in a Jumbo?

# golf balls in Jumbo

Golf ball volume

(m3)

Jumbo volume

(m3)/ x Filling

constant

Radius 2

(m2) x π

Sectional area

(m2)

Length

(m)x

+ point: always explicitly write the

units of the variables being

estimated10 3

30

1500

Diameter3 (m3)

125.10-6

125.10-6 1.2

12M . 1.2 ≈ 14M

50


Find the trade-off between pragmatism and accuracy• Rounding numbers is an art that must be used• But… ask the interviewer if he’s fine with it!• Round some up and some down

2

+ point: if you are able to make the exact calculation, round up the answer instead of the inputs. Ex:

Right: 4 * 3.8 = 15.2 ≈ 15Wrong: 4 *3.8 ≈ 4 * 4 = 16


Find the trade-off between pragmatism and accuracy• Work with averages when the problem is

complicated enough, otherwise segment!• MECE is essential in segmentation• Don’t make implicit assumptions

2

Example: How many shoes are sold in Brazil per year?

# shoes/year in Brazil

+ point: try to segment in three categories.

Anyone can understand 3 categories, which is not

true for 4 or more

# shoes class B /

year

# shoes class A /

year

Class A population

# shoes / person /

year

+ # shoes class C /

year

x

+

Class B population

# shoes / person /

year

x … x …


Do sanity checks along the way

• Problems are not easy: you might make mistakes• Take a step back, be critical, use common sense• Do sanity checks for major branches

3

Example: How many people can stand together on an airport runway?

# people on runway

# people / m2

Runway area(m2)

x

Width(m)

Length (m)x

+ point: don’t worry if your check is off by 2

times. But do something if it’s off by

10 times or more

50 1,000

50,000 5

250,000


• Only profitability problem (quantitative focus)

• Only conceptual problem (qualitative focus)

• Combined problem (quantitative + qualitative)

Business Situation compound framework – 3 different combinations

Profitability framework

“Core Three” framework

Profitability framework

“Core Three” framework


• Profit: number 1 reason for consulting projects• Almost half of Business Situation cases start with

a profitability problem– Sales falling– Costs rising– Both

The Profitability framework and an application example

profit

costsrevenue -

revenue / unit

# units soldx variable

cost fixed cost+

cost / unit # units soldx

+ point: focus on isolating the problem by applying the

commandments


Actionable recommendations

Competitors

Company (+product)

Customers (+ market)

The “Core Three”: Customers (+ market), Company (+ product), Competitors• First and foremost the

customer: the company’s raison d’être

• The company and its products

• Competitors and competitive landscape

The “Core Three” framework

Insights


The “Core Three” – Customers (+market)

• Who are our customers?– How can we segment them?– How big are the segments? What is our

market share?– Customer concentration (bargain power)?

• What does the customer expect (per segment)?– Do we understand it?– Do we fulfill it?– Which distribution channels do they like?

• Is the market growing? Is it profitable?

Competitors

Company (+product)



The “Core Three” – Company (+product)

• What is our product?– Is it differentiated or a commodity?

What’s the pricing?– Can we cross-sell add-ons to it (bundles)?– Is there a substitute threat?– If portfolio: what does the BCG matrix look like?

• What is the client’s company?– What are the company’s core competences?– Which distribution channels are used?– What are the main cost blocks (use the value chain)? Is

there supplier concentration (bargain power)?– What are the company’s main assets (brand value, customer

loyalty) and liabilities (legal problems, debts)?

Competitors

Company (+product)



The “Core Three” – Competitors

• Who are our competitors?– How is the competition structured

(fragmented, monopoly, oligopoly etc.)?– How do they behave? Is there a price war?– Best practices: are they doing something better than

us? Do we do something better than them?• How does our cost structure compare with our

competitor’s?• Are there barriers to entry?• Is the market regulated? If so, how?

Competitors

Company (+product)


Now it’s your turn!

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Case Interview Prep - Crack the Case Workshop

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