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Transcript of Interview Workshop CY 2009_for Candidates
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Preparing for Your Interviews with
McKinsey
McKinsey & Company
CONFIDENTIAL
RY08
This report contains information that is confidential and proprietary toMcKinsey & Company and is solely for the use of McKinsey & Companypersonnel. No part of it may be used, circulated, quoted, or reproducedfor distribution outside McKinsey & Company. If you are not the
intended recipient of this report, you are hereby notified that the use,circulation, quoting, or reproducing of this report is strictly prohibited andmay be unlawful.
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Interview preparation
Sample Case 1
Sample Case 2
Suggested additional resources
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Thank you for your interest in McKinsey & Companywe are delighted toinvite you to interview with our Firm. We are excited about meeting with youand getting to know you better
When you interview with us, you will meet some of our consultants, andthese meetings will have 2 objectives:
Enable us to learn more about your skills and experiences so that wecan determine your suitability for a career at our Firm
Allow you to learn more about what we do and who we are, so thatyou can be more clear and confident in your career choices
We want you to realize your full potential in your interviews. This simple
guide is intended to help you prepare and provide tips to maximize yourinterview performance
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McKINSEY INTERVIEWING TECHNIQUES
Case One-on-one verbal case Focus on real-time problem solving
Personal ExperienceInterview
Background interview In-depth exploration of candidates experience and interest
in operations, focused on the individuals contributions inspecific situations
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WHAT ARE WE LOOKING FOR?
There are 4 key areas where we look for you to demonstrate your skills. Each of these areasis critical to success in the day-to-day work we do. We hire distinctive people, so we will lookfor outstanding potential in each of these areas during your interview:
Problem solvingMcKinsey consultants help clients solve tough problems in their businesses and implementthe solutions. This not only requires strong intellectual abilities and rigor, but it also requiresa good, practical sense of what works and what does not work in complex organizations
AchievingOur consultants constantly strive to deliver distinctive client service. To achieve this while
handling multiple stakeholders and often tight deadlines requires outstanding energy,determination, and judgment
Personal impactMcKinsey consultants work with a wide range of individuals in their day-to-day jobsDeveloping and implementing sound recommendations requires the involvement and supportof these individuals. Skills in interacting with people in sometimes tough situations are criticalto driving distinctive client impact
LeadershipLeading people and fostering effective teamwork are keys to success, both within McKinseyand, with our clients. McKinsey consultants need outstanding leadership skills in order todrive positive change in complex organizations
All of our consultants are well rounded individuals. They have a good mix of these skills andare fun to work with; these traits contribute to their success and are highly valued by our
clients. This is what makes them successful and valued by our clients. We will look for thesame mix of skills when we interview you.
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HOW DO I PREPARE FOR CASE STUDIES?
We believe the best way we can assess yourproblem solving skills is to discuss a typicalMcKinsey business problem with youwe call
this a case study. Our interviewers are trainedto use case studies which reflect the typicalproblem solving challenges faced by ourconsultants
You will be required to have a discussion withyour interviewer around a case study. Duringthis discussion the interviewer will assess
many things including: Structuring a tough, often ambiguous,
business problem Thinking about which issues are important in
the problem Dealing with process data (numerical and
otherwise)
Making conclusions and recommendingactions required to solve the problem Articulating your thoughts during an
interactive problem solving discussion
Case studies are broad, two-way discussions,rather than one-way tests. There is no perfectanswer. You will be assessed more on how you
go about dealing with the problem, rather thanon the specific answers
Some practice at case study discussions isrecommended, especially if you areinexperienced at interactive problem solving
discussions. There are many ways you canpractice. For example: Discuss some current business issues with
friends/colleagues. The financial press willoften contain articles that can prompt suchdiscussion. Try to think about what might bewrong and what you would do to fix it
Practice your numerical agility throughperforming some basic calculations in yourhead, especially if you have not done this ina while
Review recommendations for additionalresources listed in this document
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HOW DO I PREPARE FOR PERSONAL EXPERIENCE INTERVIEWS?
Personal Experience interviewsWhen we decided to invite you to interview, we wereimpressed by your achievements to date. However,it is not just your achievements that are important to
usit is also the skills you exhibited inaccomplishing those achievements
Our interviewers are trained to examine your pastaccomplishments, in depth, in order to determine ifthe skills you exhibited would position you well for asuccessful career at McKinsey. Therefore, you needto be prepared to discuss your most important pastexperiences in a detailed way, focusing on yourspecific role and describing the key actions thatwere critical to success
Be specific: When describing something to yourinterviewer, try not to generalize. For example, when youmake general statements like I talked to her and managedto get her to change her mind, that does not tell yourinterviewer a great deal about your skills. However, in thissituation, if you can describe to your interviewer, as best asyou can remember, exactly what you said and how youresponded to arguments, it will be much easier for yourinterviewer to see your skills
Focus on your own role: We know that many of thethings you have done in the past have involved otherpeople with whom you have worked. Of course, weappreciate thismuch of the work of a McKinsey
consultant involves working in teams. However, to help usunderstand yourspecific skills, try to focus on yourroleand youractions in anything you describe. For example,saying We presented the work to the committee does nothelp your interviewer understand what you did. Yourinterviewer wants to hear about your specific role and thespecific things you did during that presentation to thecommittee
Focus on the process: We use cases to assess problem
solving, so when describing something you are proud of,try not to focus too much on the problem solving challengeor simply the end result. Your interviewer wants to hearabout the process. For example, telling your interviewerthat you won a prestigious academic award does not helpthem understand your specific skills. Similarly, if youresolved challenges in a team by avoiding the team anddoing all the work yourself, this will not reassure yourinterviewer about your leadership ability, even though itmay have helped in getting the work completed
To prepare for this part of the interview you should
Prepare: Review the three skill areas ofAchievement, Personal Impact, and Leadershipasdescribed on page 4. Make sure you understandwhat they mean. Your interviewer will be interestedin looking at one or more of these three areas andwill want to discuss specific situations from your pastwhere you have had to use these skills. For each ofthese areas, have some examples in your mind oftimes when you have had to use these skills toovercome significant challenges. Choose examplesthat you remember well and can discuss in somedetail. Dont choose situations that were easy foryou, as these situations are unlikely to demonstrate
your true range of skills
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INTERVIEW DAY
We want you to enjoy interviewing with us and hope that in your interview process, you learn moreabout the work that we do. Here are some tips to ensure you get the most out of the day:
RelaxAlthough its easier said than done, you shouldtry your best to be relaxed and to enjoy the day.Our interviewers are friendly, fair, and fun andthey want you to succeed. You will performbetter if you are relaxed. Most of ourcandidates say they enjoy the discussion theyhave with their interviewers, whatever the
outcome
Be yourselfThere is no typical McKinsey hire we hirepeople from a wide variety of backgrounds. Beyourself in the interview. Do not try to behavedifferently from how you would normallybehave, and do not try to focus on what you
think we want to hear. If you behave asnaturally as possible, you will allow ourinterviewers to get the most accurateassessment of your skills
Take your timeDo not feel rushed at any point in the day. Inparticular, take your time during the interview. Ifyou respond to questions before having time tothink them through, you are less likely to respondwell. Ask your interviewer for a moment to think ifyou need it, and always ask them to clarifyanything you do not understandthis will not
affect how we evaluate your skills
Get something out of it for yourselfEnsure that you take time to find out what youneed. If you have burning questions aboutMcKinsey, or about consulting more broadly, askyour interviewers. Interviewers expect questionsfrom you in the interview
Again, we hope that you enjoy the experience of interviewing with McKinsey. We pride ourselves onour recruiting process and are constantly looking for feedback on how we can improve it. We will askyou for feedback when your interviews are complete, and we would appreciate your comments
Good luck!
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Interview preparation
Sample Case 1
Sample Case 2
Suggested additional resources
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CANDIDATE PREPARATION MATERIALS
This document is intended to help prepare you for the caseportion of a McKinsey & Company interview. Whileinterviewers at McKinsey have a good deal of flexibility increating the cases they use in an interview, we believe thatthe following case is a good example of the type of casemany of our interviewers use.
The example that follows is set up to teach you how toapproach a typical case. The italicized sections aredescriptions or instructions to help you navigate through thisdocument. The words in plain bold font are the descriptionsand questions an interviewer may give to you during the
interview. The sections in regular (non-bold) font arepossible answers.
MAGNA HEALTH
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CONTEXT
The interviewer will typically start the case by giving a brief overview of thecontext, ending with a question that is the problem definition. At the end of thedescription you will have an opportunity to ask any questions you might have
to clarify the information that has been provided to you.Our client is Magna Health, a health care company in the Midwest. It both insurespatients and provides health care services. Employers pay a fixed premium to Magnafor each of their employees in return for which Magna covers all necessary healthservices of the employee (ranging from physician care and medications tohospitalization).
Magna currently has 300,000 patients enrolled in its plan. It has 300 salariedphysician employees who provide a broad range of services to patients in 6 centers.These physicians represent a wide range of specialty areas, but not all areas. Whena patient needs medical treatment in a specialty area not covered by a Magnaphysician, he/she is referred outside of the Magna network for care, and Magna paysall referral costs on a fee-for-service basis. Magna does not own any hospitals itself,but instead contracts services from several local hospitals.
Over the past 6 months, Magna has been experiencing declining profitability. MagnasCEO has retained McKinsey to help determine what is causing the problem and howMagna might fix it.
How can Magna Health improve its financial situation?
MAGNA HEALTH
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QUESTION 1
In most McKinsey & Company cases, the interviewer will guide you through thecase with a series of questions that will allow you to display a full range of
problem solving skills. Below is a series of questions and potential answersthat will give you an idea of a typical case discussion
What key areas would you want to explore in order to understand Magnasdecline in profitability?
A good answer would include the following:
A very good answer might also include the following:
I would want to consider Magnas revenues and costs (variable and fixed). Inthinking about Magnas main cost components I would want to consideradministrative (or non-medical) and medical costs (e.g. hospital, drugs,outpatient care)
You may choose to dive deeper into the different costs, for example: Outpatient costs could be further split into internal physician costs versus
external referral costs Or you may decide to explore other factors that affect cost, for example: I would also want to understand how Magnas patient base
demographics/overall risk profile might affect medical costs
MAGNA HEALTH
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QUESTION 2
After reviewing the basics of Magnasbusiness, your team believes that one ofthe root causes of Magnasfinancial problems is how it manages medical costs,
particularly the cost of referrals to specialists outside its physician network.
Your team has gathered the following information on Magna and its primarycompetitor, Sunshine HMO
No. of patients
Average cost of referral
per member per monthDollars
Magna Health
Sunshine HMO
300,000
500,000
20
15
MAGNA HEALTH
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What are the most likely reasons that the average cost of referral at Magnais higher than at Sunshine? Remember you should feel free to offer
hypotheses and ask questions to clarify this information.
QUESTION 2 (CONTINUED)
A good answer would include the following:
A very good answer might also include the following:
Referral pricingMagna might be paying more than Sunshine for specialistservices (e.g., its outside contracts with oncologists might be at higher rates thanSunshines contracts)
Number of referralsMagnas physicians might have different practice patternsthan Sunshine physicians, i.e., they may be less comfortable treating heartdisease patients or have different training/protocols
Mix of specialtiesMagnas mix of specialties that require referrals (cardiology
and neurosurgery) are probably more expensive specialties (than cardiology andpsychiatry, Sunshines referral specialties)
Mix of patientsMagna has sicker or older (>65) patients (individuals >65 aremore likely to need medical care in the specialty areas outside of Magnasnetwork, particularly cardiology)
MAGNA HEALTH
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QUESTION 3
Magnas CEO has a hypothesis that Magna is paying too much incardiology referral costs for its patient population. He asks the McKinsey
team to look at Magnas cardiac patient population more closely and tellhim how many referrals he should expect on an annual basis. Assume thefollowing:
Magna has 300,000 patients in any one year 20% of its patients are age 65 or older In the U.S. patients with serious heart disease visit specialists (cardiologists) on
average 5 times per year
At this point you should realize that you need to know the difference inprevalence rate (percentage of the population that has a disease at any onepoint in time) of serious heart disease in the 65 and over population andthe less than 65 population. When you find that you need additionalinformation or clarification of the information you have received, youshould not hesitate to ask the interviewer. When asked, the interviewerwould provide you with the following data:
The prevalence rate of serious heart disease in the 65+ population is 30% The prevalence rate of serious heart disease in the under age 65 population is
10%
MAGNA HEALTH
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QUESTION 3 (CONTINUED)
A good answer is as follows:
Magna should expect 210,000 cardiac referrals annually based on its patientpopulation: 300,000 total patients 20% x 300,000 = 60,000 patients age 65+ 60,000 x 30% = 18,000 patients age 65+ with serious heart disease 18,000 x 5 = 90,000 referrals per year 240,000 Magna patients under the age of 65
240,000 patients x 10% = 24,000 patients under age 65 with serious heartdisease and 24,000 x 5 visits per year = 120,000 visits per year total
90,000 + 120,000 visits per year = 210,000 total Magna patient externalcardiology visits
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QUESTION 4
When the team tells Magnas CEO that based on Magnas patient population he should
expect about 210,000 cardiology referrals a year he exclaims, We currently pay for
300,000 annual cardiology referrals for our patient population!
A good answer is as follows:
The prevalence rate of heart disease in Magnas patient population is higher than average
The interviewer might ask a follow-on question at this point:
Why would a physician refer a patient who does not have serious heart disease to aspecialist?
A good answer would include the following:
Magnas primary care physicians are referring too many patients, including some who donot have serious heart disease to specialists
Patients are demanding referrals
Why might Magnas annual cardiology referrals be significantly higher than U.S.averages?
A very good answer might also include the following: Primary care physicians are not comfortable (e.g., they are poorly trained or inexperienced)
treating cardiac patients, even those with minor problems; they want to avoid malpractice suits Magna does not have clear guidelines on when physicians should be referring patients to
specialists (or if guidelines exist, physicians are not complying with them) There are no incentives or penalties to prevent physicians from referring patients with less
serious problems to specialists
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QUESTION 5
After some additional investigation, your team decides that changing thebehavior of Magnas primary care physicians has potential to reduce cardiac
referral costs while maintaining high quality care. The team believes thatintroducing some sort of incentive plan for physicians might help reduce thereferral rate. You propose the following pilot plan: Magna pays bonuses of $100,000 per year to each of the 10 primary care
physicians with the lowest cardiac referral rates consistent with good patientoutcomes.
Magna increases overall fees paid to primary care physicians to handle more oftheir patients basic cardiology needs. Overall fee increases would total $1 million
Part AHow many fewer cardiology referrals will Magna need to have in orderto recoup the cost of the pilot incentive plan? For simplicitys sake assume: The cost of a cardiology referral is $200 Magna currently has 300,000 cardiology referrals per year
A good answer is as follows
If the incentive plan reduces cardiology referrals by 3.3% or 10,000 referrals,Magna will recoup the cost of the incentive plan. One potential approach to thecalculation is as follows: $1 million + (10 * $100,000) = $2 million for incentive plan
$2 million/$200 =10,000 referrals 10,000 referrals/300,000 total referrals = 3.3% reduction would pay for
incentive program
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Part BYour team projects that the incentive plan has the potential to reducereferrals by 5% in its first year, and an additional 2% in its second year. If
these projections are correct, how much referral cost could Magna save intotal over the first 2 years of the incentive plan?
QUESTION 5 (CONTINUED)
A good answer is as follows:
Referral costs would be $4.14 million lower in the second year. Over the 2 yearsMagna would save $7.14 million. One potential approach to the calculation:
Year 1 Savings with Program 300,000 total referrals 5% reduction in referrals =15,000 referrals 15,000 x $200 = $3.0 million in savings in year 1
Year 2 Savings with Program 285,000 total referrals
2% reduction in referrals = 5,700 referrals 5,700 x $200 = $1.14 million in savings $3 + $1.14 = $4.14 million in savings
Total cumulative savings over 2 years = Year 1 + Year 2 savings = $3M + $4.14M= $7.14M
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QUESTION 6
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QUESTION 6
Your team presents its physician incentive proposal to Magnas CEO. The
CEO, in consultation with his Medical Director, agrees that this is feasible andsays that they will pilot it for cardiac referrals
At the end of the meeting the CEO says, I like the work youve done, but its
not enough to address our current financial situation. Physicians areprofessionals who care deeply about patient care and I think theres a limit to
how much cost we can expect to reduce utilizing financial incentivesexclusively. Besides cardiac financial incentive programs, what other ideas
should we consider to reduce the cost of Magnas specialist referrals?
Based on what we have discussed today, and any other ideas you might have,how would you respond to the CEO?
A good answer would include the following:
I would pursue additional ways to change physician behavior. For example: Provide training on how to treat patients with minor or stable medical problems Define and clarify medical guidelines for referrals (e.g., establish a medical
committee to define the difference between serious and minor heart disease) Institute peer review committee charged with approving a subset of referrals
(e.g., those that are considered high cost)
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QUESTION 6 MAGNA HEALTH
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QUESTION 6 (CONTINUED)
A good answer might also include the following:
Other ideas outside of changing physician behavior might include:
Spend time investigating outlier physicians (i.e., those who seem to referpatients to specialists at much higher rates than others) to determine howwidespread the referral problem is and whether simply focusing on a fewphysicians will dramatically reduce referral costs
Determine whether Magna can reduce referral costs in the other medical areaswhere it does not have specialists (i.e., neurosurgery)
Look at the contracts Magna has for specialist services to determine if it is payingtoo much relative to competitors Consider whether bringing cardiology, neurosurgery, and oncology specialists in-
house (i.e., within Magna) might reduce cost Educate patients Publicize physician referral rates
MAGNA HEALTH
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Interview preparation
Sample Case 1
Sample Case 2
Suggested additional resources
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CANDIDATE PREPARATION MATERIALS GREAT BURGER
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CANDIDATE PREPARATION MATERIALS
This document is intended to help prepare you for the caseportion of a McKinsey & Company interview. Whileinterviewers at McKinsey have a good deal of flexibility increating the cases they use in an interview, we believe thatthe following case is a good example of the type of casemany of our interviewers use
The example that follows is set up to teach you how toapproach a typical case. The italicized sections aredescriptions or instructions to help you navigate through thisdocument. The words in plain bold font are the descriptionsand questions an interviewer may give to you during the
interview. The sections in regular (nonbold) font are possibleanswers
GREAT BURGER
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CONTEXT GREAT BURGER
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CONTEXT
The interviewer will typically start the case by giving a brief overview of the context,ending with a question that is the problem definition. At the end of the description youwill have an opportunity to ask any questions you might have to clarify the information
that has been provided to you.Our client is Great Burger (GB), a fast food chain that competes headto-head with McDonalds,Wendys, Burger King, KFC, etc.
GB is the fourth largest fast food chain worldwide, measured by the number of stores inoperation. As most of its competitors do, GB offers food and combos for the3 largest meal occasions: breakfast, lunch, and dinner
Even though GB owns some of its stores, it operates under the franchising business model with85% of its stores owned by franchisees (individuals own and manage stores, pay franchise fee toGB, but major business decisions, e.g., menu, look of store, controlled by GB)
As part of its growth strategy GB has analyzed some potential acquisition targets includingHeavenly Donuts (HD), a growing doughnut producer with both a U.S. and international store
presence
HD operates under the franchising business model too, though a little bit differently than GB.While GB franchises restaurants, HD franchises areas or regions in which the franchisee isrequired to open a certain number of stores
GBs CEO has hired McKinsey to advise him on whether they should acquire HD
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QUESTIONS GREAT BURGER
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QUESTIONS
In most McKinsey & Company cases the interviewer will guide you throughthe case with a series of questions that will allow you to display a full rangeof problem solving skills. Below is a series of questions and potential
answers that will give you an idea of what a typical case discussion mightbe like
Question 1.What areas would you want to explore to determine whether GB shouldacquire HD?
A good answer would include the following:
A very good answer might also include the following:
There are a number of things I would want to look at here: I would want to consider what the value of Heavenly Donuts would be to
Great Burger I would also want to look at the strategic fit of the companies. Do they
complement each other? Can they achieve further benefits (or synergies)from combining their operations?
I would want to look at the cultural similarities/differences, to see if themanagement/employees of the companies would fit in well together
I would like to have a sense of how well positioned GB is to execute a mergerwith another company. Have they done this before?, for example
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QUESTION 1 (CONTINUED) GREAT BURGER
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QUESTION 1 (CONTINUED)
You m ay choo se to dive deeper into some of these issues, or your in terv iewer
may ask you to do th is , for example:
To understand the value of HD to GB, I would want to look at a number of things: Growth in market for doughnuts HDs past and projected future sales growth (break down into growth in number of
stores, and growth in same store sales) Competitionare there any other major national chains that are doing better than
HD in terms of growth/profit. What does this imply for future growth?
Profitability/profit margin Investment required to fund growth (capital investment to open new stores,working capital)
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QUESTION 2 GREAT BURGER
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QUESTION 2
The team started thinking about potential synergies that could be achievedby acquiring HD.
Here are some key facts on GB and HD
GREAT BURGER
Stores Total North America EuropeAsia
OtherAnnual growth in stores
5,0003,5001,000
400
10010%
1,0201,000
200
015%
Financials Total store sales ($ Millions) Parent company revenues ($ Millions) Key expenses (percent sales)
Cost of sales* Restaurant operating costs Restaurant property and equipment costs Corporate general and administrative costs
Profit as percent of sales Sales/store ($ Millions) Industry average ($ Millions)
5,5001,900
51244.6
86.31.10.9
700200
40268.515
4.90.70.8
GB HD
* Variable costs, mostly food costs
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QUESTION 2 (CONTINUED) GREAT BURGER
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QUESTION 2 (CONTINUED)
What potential synergies can you think of between GB and HD? For yourinformation, a synergy is an area where additional benefits can be capturedover and above the sum of the 2 companies (such as cost savings or
additional revenue)
A good answer would include the following:
A very good answer might also include the following:
In cost savings There may be an opportunity to save on General & Administrative Expenses
through combining management locations/functions There may be decreased Cost of Sales (per unit) because the companies are
purchasing greater volumes together In revenuesAdditional sales can be achieved through selling Donuts in GB storesAlso GB have a greater global presence which HD could leverage in order to
grow outside the U.S.
GB appears to manage their property and equipment costs better, which meansthat they may be able to transfer this skill to HD
Since GB has greater Sales per Store, they may have better skills in finding goodlocations for stores, and could transfer this skill to HD
Since GB is bigger, it probably has more investment capital available to help HDgrow at a more rapid rate
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QUESTION 3 GREAT BURGER
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QUESTION 3
The team thinks that, with synergies, it should be possible to double HDs U.S.
market share in the next 5 years, and that GBs access to capital will allow it to
expand the number of HD stores by 2.5 times. What sales per store will HD
require in 5 years in order for GB to achieve these goals? You should assume: Doughnut consumption per head in the U.S. is $10/year today, and is projected to
grow to $20/year in 5 years For ease of calculation, assume U.S. population is 300m Use any data from the earlier table that you need
A good answer is as fo l lows:
HD will require a sales per store of $1.2m Todays market share is $700m/$3b = ~25%. This is available from the earlier
table, and you are encouraged to make sensible, round estimates in a
calculation. Expected U.S. market in 5 years = $20 *300m = $6b If HD doubles todays market share, they will have a market share of 50%, so
their sales will be 50% x $6b = $3b They are also expected to have 2,500 stores (= 2.5 x 1,000) So sales per store = $3b / 2,500 = $1.2m
A very good observation to make is that this seems like a realistic growthtarget, because we are requiring stores sales to less than double, while we
already know that per head consumption of donuts is likely to double
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QUESTIONSQUESTION 4 GREAT BURGER
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Q Q
A good answer is as follows:
I would try to work out the incremental impact this move would have on profits. Todo this I would: Calculate the incremental revenues we would get from selling donuts in GB
stores (how many, at what price, etc.) Calculate the additional incremental costs that would be incurred from doing so
(for example, additional staff, additional training, additional marketing, additionaldistribution and purchasing costs)
I would also look at the additional store investment we would have to make (forexample, extra space, new equipment, etc.)
One of the synergies that the team thinks might have a big potential is theidea of increasing the businesses overall profitability by selling doughnuts
in GB stores. How would you assess the impact of this move on overallprofitability?
A good answer would also include: We should also investigate if the additional donut sales would mean lower sales of
traditional GB products. For example, breakfast products might be affected asmany people have donuts for breakfast. In case you are unfamiliar with the term,this concept is known as cannibalization
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QUESTION 5 GREAT BURGER
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What would be the incremental profit per store if we think we are going to sell50,000 doughnuts per store at a price of $2 per doughnut at a 60% margin witha cannibalization rate of 10% of GBs sales? Note that the cannibalization rate
is the percentage of GB products which we think will not be sold because theyhave been replaced by donut sales. Here is some additional information whichwill help you:
A good answer is as follows:
There will be $15,000 incremental profit per store: Donut sales will bring in an additional $60,000 in profit ($2 price x 50,000 x 60%
margin)
However, we will lose $45,000 in the original profit from GB sales (10%cannibalization rate x 300,000 products x $3 price x 50% margin)
Current units of GB sold per store 300,000 Sales price per unit $3 per unit Margin 50%
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You run into the CEO of GB in the hall. He asks you to summarize McKinseys
perspective so far on whether GB should acquire HD. Pretend I am the CEO what would you say?
A good answer would include the following:
Early findings lead us to believe acquiring HD would create significant value for GB,and that GB should acquire HD U.S. growth targets seem achievable given the expected growth in Donut
consumption in the U.S.
There are other opportunities to capture growth from international expansion ofHD
We also believe there are other potential revenue and cost synergies that theteam still needs to quantify
A very good answer might also include the following:
We believe HD can add $15,000 in additional profit per GB store simply by sellingdonuts in GB stores. This represents a ~25% increase in store profit from thismove alone
We will also provide you with recommendations on the price you should pay forHD, as well as any things you need to think about when considering integrating the2 companies
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Interview preparation
Sample Case 1
Sample Case 2
Suggested additional resources
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SUGGESTED ADDITIONAL RESOURCES
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Publications that may be of interest: Case in Point, Marc Cosentino The Wharton M.B.A. Case Interview Study Guide,
Volumes I and II McKinsey & Company: The WetFeet.com Insider
Guide Ace your Case: The Essential Management
Consulting Case WorkbookFocus on the Business Operations and Business
Strategy sections
15 Questions: More Practice to Help You Ace YourConsulting Case
So, You Want to Be A Management Consultant: TheEssential Guide to the Management ConsultingIndustry
Harvard Business School Management ConsultingCareer Guide
Online resources that may be of interest::www.vaultreports.com: Vault.com Guide to the Case Interview The Vault.com Career Guide to Consulting
www.consultingcentral.com www.casequestions.com www.wetfeet.com
Other publications that may be of interest:
Competitive Strategy: Techniques for AnalyzingIndustries and Competitors, Michael Porter True Professionalism, David H. Maister The McKinsey Way, Ethan M. Rasiel
Suggested resources
Preparation recommendations
Plan on spending at least 4 hours preparing for your interviews: Review thoroughly the materials sent to you
Consider reading one of the books suggested below if you feel that you need more practice Practice, practice, practice!!