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What’s Your Greatest Strength?

What’s Your Greatest Strength?

Ah yes. The classic strengths and weaknesses interview question, a question that sinks many candidates’ chances of landing an offer. This particular interview question, and its complement - ‘What is your greatest weakness?’ - are particularly challenging for a lot of students, even postgrads, to answer, and it’s because many applicants don’t actually know what their interviewers are actually looking for. Well, look no further — in today’s post, we’ll unravel the best practices, tips, and tricks for acing this question. Next week, we’ll cover the “Weakness’ portion of this question, so stay tuned for that as well! First, here is what your interviewer is actually looking for: An idea of how self-perceptive // self-aware you are (you need that right balance of humility but confidence and self-esteem, tricky tricky) Insight as to whether your strengths align well with the job // role itself, and if you are a strong professional fit with in the position and wider team Everyone has a wealth of positive attributes, talents, and qualities worth talking about, but it’s crucial that you are selective when it comes to communicating your list of strengths. First, only focus on strengths that are relevant to the role. For instance, if you’re interviewing to be an investment banking analyst, it wouldn’t make sense to discuss your graphic or web design skills. Second, in some cases, you’ll be asked to share one strength. Other interviewers, however, may ask for multiple strengths. The best way to prepare is to select your “greatest” relevant // key strength, and then choose two to three additional attributes you can share if necessary. These additional qualities should be loosely related to your core strength insomuch as they are related to the job/position at hand. Meanwhile, if you aren’t sure about your strengths (because you suffer from a classic dose of impostor syndrome and feel like you’re not qualified for the role — by the way, YOU ARE), ask your friends, family, and mentors on what they see as your best qualities. If you have any formal written feedback - as a result of previous internships, part-time jobs, research projects, etc. - then these can be great resources as well. Best Practices When you’re thinking of examples of strengths, some key ones include: Entrepreneurial Collaborative problem-solving Creative problem-solving Empathetic problem-solving Passion (for the job/industry/company specifically) Adaptability Innovative There are other ones, like being ‘detail-oriented’ and ‘hard working,’ but honestly these kinds of qualities are not as differentiable as others. Anybody can say they’re detail-oriented, hard-working, respectful, honest, etc. Choosing strengths that a) are slightly rarer and b) come attached with amazing stories will elevate your candidacy and make you stand out from the crowd. Strengths can be skill-based or character-based. The ones shown above are character-based. Meanwhile, if your interviewer experts multiple strengths, provide multiple answers that is a mix of skill-based and character-based. Skill-based strengths allow you to directly align your technical experiences and skills with the job’s qualifications. When explaining technical strengths, it’s important to provide specific examples of how you’ve applied your strength to drive success for an organization. This shows the interviewer you have a thorough grasp of a primary requirement for the job and know how to apply this knowledge to real-life situations. Be sure to also tell a story, again using the STAR framework as a general guideline for structuring your thoughts and having a clearly defined beginning, middle, and end: “One of my greatest strengths in product marketing is my expertise in using a variety of analytic tools, such as Google Analytics and statistical programming languages like R and SQL. In my last role as a product marketer in XYZ startup, I noticed our marketing team wasn’t fully leveraging user data to make data-driven decisions. We didn’t know what times our users were most likely to engage with our site and blog, or how new users were directed to our site. We also had lower than average conversion rates - from site viewer to customer - and it was because we didn’t understand who our users were, their demographics or psychographics, or wants and needs. Because I was familiar with Google Analytics, I delved into metrics such as bounce rate, retention, site referrals, and more, and was able to find out that most of our active users were Gen Z, largely college students in college campuses, clustered in metropolitan areas in San Jose and San Francisco (as opposed to Berkeley and Oakland, like we previously thought). We were able to refine our marketing campaigns, target active users, and curate our language to fit the customer personas of our target users. We were able to increase sales by more than $50,000/year by improving customer acquisition and growing retention and conversion rates. Character-based strengths, on the other hand, are soft-skills that can apply to multiple roles but can be tailored to fit one position. Examples include interpersonal communication skills, problem-solving skills, and/or a strong work ethic. When sharing this kind of strength, be sure to use specific examples and stories of how you were able to leverage your strength to solve a challenge that’s relevant to the role for which you’re applying. Again, STAR - or some method of structure - is key here. “One of my greatest strengths is my perceptiveness. I grew up in a household of six and was constantly surrounded by family members, so I got pretty good at picking up when family members needed cheering up or alone time, when they needed help or when they didn’t, and when to ask for help versus knowing my family was very, very busy. This perceptiveness carried over in a number of roles, and one experience I’m particularly proud of is when I was elected the President of my community service-oriented student organization. I began my term in the Summer of 2020, at the height of COVID-19 when students like me were still uncertain whether school would be virtual or not, and if so, asking ourselves how student clubs like ours should adapt and operate? I also knew it was a very stressful time for my executive committee and general members — we all were dealing with the consequences of remote schooling and general uncertainty, and even though we all cared about the club I knew not everybody had the energy to innovate the club to make sure we could successfully recruit new members in the Fall and grow club operations. During Zoom meetings, I was able to quickly identify when my team members were angry, frustrated or stressed out, and address the problem on the spot - in private - after our weekly meetings were over. Despite how stressful that summer was, we were able to build a game-plan for virtually recruiting and onboarding 25 new members - a 20% increase from last semester - and growing our mentorship project (where we teach low-income, URM K-12 students in the Oakland school area virtually over Zoom) to a new partner school and >50 amazing new students. The best part — our club had a turnover rate of 0%, meaning we didn’t lose any members as we were COVID-proofing our club and transitioning to survive, no, thrive, in the new normal. The best answer is one that incorporates both skills and character-based strengths. You could talk about being entrepreneurial, for instance, and in your story you can mention key technical skills that are relevant to the internship // job at hand. As you’re preparing your response, here are some best practices to keep in mind: Be honest. Ensure your answer is sincere. Don’t make up strengths just because they fit the job description. This is your opportunity to showcase your real talents and show the interviewer why you’re the best candidate. Be prepared. Outline your speaking points ahead of time and practice them until you’re comfortable with your response. Prepare several, well-rehearsed responses to this question, because having an idea of what you’re going to say before your interview will help your answer sound more polished and natural. Tailor your answer to the position. Ensure that the strength you talk about is aligned with job // role. Be specific. Tell great stories, and hook your interviewer. Have them become invested in your experiences, so they can see the full weight of your strengths in action as you tie your skills + qualities with the job position and company itself. Not-So Best Practices Meanwhile, here are some things NOT TO DO as you’re thinking about answering this question: Be too casual or attempt humor in your response. And no, please don’t say humor as a strength (unless you’re applying to be a clown). Be too boastful in strengths or too frank in shortcomings. You need to hit the right mix of humility but also confidence. For people who come off as too humble: confidence comes with preparation. Practice rehearsing and communicating your responses, and record yourself. We often are too shy when interviewing on the spot, and it isn’t until when we play back the tape we realize we could have brought more energy and self-esteem to the game. Don’t feel like you’re unqualified to talk about your strengths. You are qualified. Your interviewer isn’t going to give you a second chance to prove yourself. Only you can. For people who come off as too confident: back every strength you bring to the table with concrete stories and experiences to tell, but don’t feel like you need to over-hype yourself. Record yourself, and err on the side of caution — if you feel off-put by your answer, then chances are your interviewer will feel so too. Make sure your tone is friendly and engaging, and qualify every strength with a meaningful story and experience. Confidence and humility are both double-edged swords, and both are key to landing the job/internship (and just being a solid human being in general). It’s a really hard balance to strike, and there are no actionably concrete best practices to employ when it comes to embodying that perfect mix of self-awareness and self-confidence. It comes with time, and it comes with practice. Example of Weak Responses: I have been told that I’m a very likeable person. If I’m ever on a flight, I love striking up a conversation with the person sitting next to me, for instance. I always end up learning so much about their life and their experiences – and it’s so interesting! I just make friends really easily. I’m sure this would be a great asset for your firm, especially given how teamwork and collaborative problem-solving skills are key qualities to thriving on the job. I believe I am a fantastic fit for this reason alone. I am the President of my consulting club, so I’m clearly well versed in leadership and management. I consider myself a natural-born leader, managing an organization of 40 elite undergraduate students ranging from all years and academic disciplines. We send members to great companies like yours every year, and it’s a testament to our strong organizational structure, mentorship, and leadership. I lead many workshops personally, so I know how to inspire team members but also teach them valuable skills as well. I was also previously a Project Manager and worked closely with our client, a multi-billion dollar tech company based in Silicon Valley, I’m sure you’ve heard of them, so I also know how to build meaningful relationships with key stakeholders. All in all, I consider my greatest strength to be my leadership skills and qualities, and it’s one I look forward to deploying in your team and firm in the near future. Right off the bat, these interview answers don’t provide a STORY. They outline a situation and task, but not an action and a result. Second, they’re not specific enough. They do a somewhat decent job at tying back the skill/quality to the job/role, but they need to go even deeper. Finally, their tone is a tad bit too aggressive. It’s good to be proud of your organization and experiences, but don’t take it to the next level. A student club is a student club, not the end-all be-all elite experience most students think it is. Also, you should be proud for the right reasons — don’t talk about corporate placement or other metrics that measure ‘prestige’. Focus on more impactful metrics, like the friendships and camaraderie you’ve built and the impact you’ve had on your community and fellow peers. Talk about mentorship and skills-building, about building a community that feels more like a family than a plain old student organization. These are great things to be proud of, and when you talk about these kinds of things you won’t come off as arrogant — you’ll come off as someone who genuinely cares about culture and community-building. And who wouldn’t want someone like that in their team?

How to Conduct Mock Case Interviews

How to Conduct Mock Case Interviews

When conducting mock interviews, make sure you’re practicing with someone you trust. Okay, let me rephrase that — make sure you practice with someone who can hold you accountable. For instance, I used to case all the time with my room-mates and close friends. Here’s the problem — we didn’t take it seriously. It was too easy to goof around, have fun with the process, and treat it lightly. To be perfectly honest, it was good practice to case in a more light-hearted manner. It helped me prepare to be more casual and upbeat in my actual cases, and treat my interview as more conversational and engaging than stiff and formal. That being said, it was absolutely terrible for my case discipline. When I asked mentors and upper class-mates to start casing me, I immediately picked up the slack. Their time was incredibly valuable, and I didn’t want to squander it without giving practice all I got. Mentors and upper class-mates, having gone through the process, are also quite possibly the best sources of advice and feedback you can get, short of casing with strangers working in consulting full-time. Many firms do have case interview workshops, and some even offer first round candidates 1:1 training with one of their consultants to walk through a mock case. Use these resources! Talk to any mentors or upper-classmates in clubs and student org’s you are part of to case you! On that note, to properly evaluate case interview performance, here are some sample rubrics that can help you think about structuring feedback and areas for improvement. First — the opening question. This is your first impression, your chance to impress your interviewer by asking key clarifying questions. Some cases jump straight to the point by asking upfront “how should the client move forward.” Other cases stop, and then the interviewer will pause to allow you to ask questions and recap the case. In the case of the latter, don’t worry too much about this scoring key. Focus on asking clarifying questions and understanding the situation. Second — the framework. You will spend the next 30 seconds or so quickly jotting down your framework for tackling the overall problem. The key is to provide 2 levels of analysis in each bucket (re: for revenues dig into prices/volumes then dig into segments by products / customers / geographies / etc.). Some case guides say top candidates have a ‘hypothesis’. This is something I didn’t really explore in my guide, because most candidates unconsciously use hypotheses anyway. Anytime you are asking for additional information, you are operating under a hypothesis (re: this data I’m asking for is key to solving the case). Besides, you won’t even be close to having all the context you need at the start of the case to suggest a hypothesis. That being said, you can certainly commit to a hypothesis (re: based on what we know, it appears increasing costs is driving our client’s decline in profits), and then go the extra mile for prompting the interviewer if the client has any data on costs over the past 5 years and go from there. In any case, the key here is to provide a highly structured, customized framework that is MECE and hits all the potential question areas in the case. On a side note, a real power move is to flip your paper around, look your interviewer in the eye, and walk them through your framework as they get to follow along by looking at your work. While this won’t be feasible given virtual recruiting and COVID-19, when in-person interviews become a thing (sigh, but maybe that’s never given the current state of affairs) keep this strategy on the back of your mind! Third — creative questions. Creative questions can happen in any order, such as directly after the framework or right before the synthesis (more common). Because creative questions are unstandardized, I can only tell you that the key mistake here is that candidates don’t tie back a specific question to the overarching question posed at the start of the case. Contextualize your analysis, provide the “So What,” and always loop back to the original problem posed. Fourth — quantitative questions. In a case, it is unquestionable that you will, at some point, be forced to calculate and quantitatively evaluate which strategy the client should take. Here are my quick thoughts — you are allowed one mistake per case, but you HAVE to immediately catch said mistake and fix it once an interviewer corrects you. You should also never spend more time in silence than you do while talking and walking your interviewer through your math and thought process. As soon as you’re given the problem, walk your interviewer through your strategy. Develop the formula needed to solve the problem (re: market sizing top-down formula, break-even equation, etc.) and verbalize it to your interviewer. Once you get the thumbs-up that you’re on the right track, do the math aloud. Especially as case interviews are becoming remote, it’s more important than ever to be able to clearly verbalize your thought process. If you don’t, your interviewer is 100% going to be lost in the case sauce, and they won’t be able to follow along with you in their own case. Fifth — the synthesis. Your synthesis needs to be ready-to-go on the spot, and should not last any longer than 1 minute. A little caveat at the end — a perfect score should include not only the elements below, but also a quick recap of possible risks present in your recommendation. Some other things to evaluate case interviewers on include: Overall Structure: A candidate’s ability to embed structure in every question in every prompt, as well as his or her ability to manage the flow of the case without getting lost and confused and connect certain parts of the case back to other sections Overall Problem-Solving: A candidate’s ability to quickly solve quantitative and qualitative problems, who is quick to realize they made a mistake and correct it without being told, and is focused on the overarching question and does not get easily sidetracked Overall Communication: A candidate’s ability to provide concise, articulate responses to each question, one who is confident but easy to work with and maintains a positive attitude even when under pressure, and is persuasive and compelling When providing feedback, you should do so on a line-by-line basis. Provide feedback on structure, on the second question, on the third, on the fourth, on the synthesis, vice versa. Then provide macro-level feedback — this includes structure, problem-solving, and communication. Record your interviews so you can play them back and see where you screwed up / where you are weak. And be sure to both be cased and case others! Being cased is great interviewing experience, but casing others puts you in the shoes of the interviewers themselves. You’ll begin to see the little things candidates can do during a case interview that make interviewers’ lives so, so much easier, and you’ll begin to see how you can adopt these best practices when it’s your turn to be cased. This is also great advice beyond consulting in general — when you interview others, you will begin to pick up key practices that separate bad candidates from good candidates from exceptional candidates. This is true in casing as well as behavioral interviews and other forms of technical interviews as well.

An Introduction To M&A Frameworks

An Introduction To M&A Frameworks

MERGERS & ACQUISITIONS (M&A) The M&A framework is used when companies are looking to acquire or merge with competitors. Examples of M&A type cases include: Our client is a multinational corporation that operates hypermarkets, discount department stores, and grocery stores. It is also considering acquiring an online furniture retailer, and wants us to determine if this is a good strategy or not. Our client is a U.S. agrochemical manufacturer that is considering acquiring a regional specialty chemical producer in Indonesia. Should they do so? First things first, the most important objective we need to understand is our client’s goal. What does this mean? Well, in some M&A cases the client is the acquirer, in others your client is the one who wants to be acquired. In the case of the former, we know that all acquirers are interested in increasing cash flow (re: increasing profits) after purchasing the business. However, their longer term plans may differ depending on the type of client you’re dealing with. A corporate acquirer (most common): a multinational firm or a portfolio holding company will own 100% of the target. Most plan to operate the target for a period of time, with plans to integrate it into current operations (re: improve supply chains/manufacturing/product development, acquire key talent/management, source new patents/technologies, enter new markets, etc.). Some acquirers may intend to strategically resell the target (re: acquire at a low cost, sell later at a higher price, and profit off the difference). Defensive acquisitions – buying a company to keep intellectual property from competitors – can occur as well. A financial acquirer (somewhat common): a private party or a private equity fund will own 100% of the new company. Their goal is usually to sell the company for a significant ROI to another private party or through an IPO. To do so, they will rarely integrate the target into anything – rather, they’ll strip out costs and pump cash to grow top-line revenues and profits. A financial investor (least common): a hedge fund will own a non-majority share of the new company. Their goal is to influence the value of the shares and sell them for a higher price than they purchased them for. Depending on the client’s goals, the direction of the case may vary widely. That being said, below is a general approach to how you should go about tackling an M&A case: Does the target company (re: company being acquired) operate in an attractive market? Is it a good market? What are the target company’s current capabilities? Is it a good company? Are there any potential alternatives? What are our client’s current capabilities? What is its acquisition rationale, financial situation, and M&A alternatives (re: JV/strategic alliance, grow organically as opposed through M&A, etc.) What are the synergies and risks via acquisition? Do synergies > risks? What should our client’s ‘post-acquisition’ strategy be? IS THIS A GOOD MARKET What are the characteristics of the market in which the target operates in? This is highly similar to the first part of a Market Entry framework, but you can add a little flair in your analysis by tailoring your language to fit M&A — consider both the client and the target company’s markets; they may operate in similar markets (horizontal monopoly), or they could be quite different (vertical monopoly). Market size — see market entry example. Market growth rates — see market entry example. Competitive landscape — see market entry example. Customers — see market entry example. Additional factors (PESTLE) — see market entry example. IS THIS A GOOD COMPANY How attractive is the target to be acquired? Key elements to consider include: current and future financial position of the target, important assets or capabilities owned by the target, quality of the target's management team, target / buyer culture fit, etc. In every case, the client is looking for upside potential – that’s never in question. What is in question, however, is how the client is seeking to achieve this when engaging in M&A. You’re thus usually looking at one of the scenarios below: First, the target company is a top performer – well-positioned, a brand leader, a hot up-and-coming upshot startup, etc. – and you know you’re going to make money on it. How would you be able to tell? There are 3 key indicators: You can clearly see revenue growth (historically and projected) You can see profits and/or profit margins growing (historically and projected) You can clearly identify its market share (and whether it’s growing or declining Alternatively, the target company isn’t attractive capability-wise but rather because it’s cheap. As the old investing adage “buy low, sell high” goes, in this scenario the target company has a lot of room for improvement, but the price the client would pay for it reflects its lackluster status. It’s not performing well now, but the client wants to know if it has the potential to perform well in the future. In this case, you will want to assess revenue, profit margin, and market share growth among comparable peer companies (re: target’s competitors), and then particularly focus on market share – is there a potential to increase the target company’s share of market? If so, then the target might be worth more in the future, and is therefore currently undervalued. Some other factors you may want to look into can include: Market position (re: market leader, 2nd place player, etc.) Customer Concentration (does a single customer account for most of the company’s revenues, or is concentration lower and more equalized) Supplier relationships (what is the company’s relationship with suppliers, how many suppliers does it work with, is it reliant on any of them, etc.) Barriers to Entry (how hard is it to enter this market/industry) Reputation and brand loyalty Product/regulatory/technology risks IS OUR CLIENT CAPABLE OF ACQUISITION The buyer: What's driving the buyer to make the acquisition? Key elements to consider include: acquisition rationale (e.g. is target undervalued, etc.), acquisition financing, buyer's acquisition experience, acquisition timing, etc. You want to understand if the client has the capabilities and financials in place to even execute an M&A deal in the first place. Why is it engaging in M&A? Has it already evaluated other alternatives - such as growing/building its business organically and/or engaging in joint ventures/strategic alliances - or has it only considered M&A? How does it plan to finance its acquisition strategy? Will it raise debt? If so, how does it intend to do so? What is the buyer’s acquisition experience? Is this its first time? You can spend the least amount of time in this section, as the M&A case - for the most part - will have you focus on industry analysis, target analysis, and synergy/risk analysis. On that note, let’s move on to the next section. DO THE SYNERGIES OUTWEIGH THE RISKS What is the combined entity’s synergies and risks? Key elements to consider include: value of individual and combined entities (re: does the combined total equal more than the sum of its individual parts), cost synergies (‘hard’ synergies), revenue synergies (‘soft’ synergies), and the M&A deal’s biggest risks of failure. HARD SYNERGIES (cost-based) Analyze headcount and identify any redundant staff members that can be eliminated (i.e. the new company doesn’t need two CFOs, two CMOs, etc.) Look for ways to consolidate vendors/suppliers and negotiate better terms with them (re: purchase goods/services at lower prices through bulk orders) Reduce head office or rent savings by combining offices Reduce costs by sharing resources that aren’t at 100% utilization (i.e. trucks, planes, transportation, factories, etc.) Geo-arbitrage: Reduce labor costs by hiring in other countries (if relevant) Shared Information Technology: Each company may have proprietary access to IT that would allow for operational efficiencies if applied in the other firm. Supply Chain Efficiencies: Similar to IT, if either company has access to better supply chain relationships, there may be cost savings that the merged firm can take advantage of (on both sides, for both acquirer and acquired) Improved Sales and Marketing: Better distribution sales and marketing channels may allow the merged firm to save on costs that were being expensed by each individual firm when they were separate Research and Development: Either firm may have had access to research and development efforts that, when applied to their counterpart firm, will allow for better development or room to cut costs in production without sacrificing quality Patents: If the acquirer used to pay the target firm a fee for access to its patent, a merge may transfer the right of that patent to the acquirer SOFT SYNERGIES (revenue-based) Patents: Similar to the cost-saving effect of a patent, access to patents or other IP may allow the merged firm to create more competitive products that produce higher revenue than if they were separate Complementary products: Both individual firms may have been producing complementary products pre-merger. These products can now be bundled in such a way to produce higher sales from their customers. Complementary geographies and customers: Merging two firms with varying geographies and customers may allow the merged firm to take advantage of the increased demographic access, generating higher revenues. Operating efficiency improvements from sharing “best practices” RISKS INHERENT IN M&A Differences in culture: culture conflicts are the most common reason for M&A failure. Employees are the core strength of a business, and if there is no cohesive integration and cooperation between the acquirer and the acquired, employees from the acquired company will leave the company en masse. Lack of transparent communication: the acquirer should clearly communicate the terms of the deal to the other acquired. One should fill the communication gaps and share all details pertaining to each firm’s market share, consumer base, product/service details, and relevant personnel. Miscalculation of asset value: many complex calculations are made in order to fairly value the target company. Even minor errors can lead to heavy losses, as the client may over-pay and thus suffer financially. Employee lay-offs: an inevitable consequence of M&A is mass lay-offs. An inability to assess the value of certain employees may lead to companies firing the wrong people, and keeping the redundant/low-performing ones instead. Legal Risks: anti-trust laws and regulations concerning M&A must be obeyed. If there are any discrepancies (re: courts rule that this is an illegal monopoly, the deal violates certain labor laws, etc.) then not only will the deal fall apart but the client will be thrust into intense legal scrutiny. Synergies don’t come through: cost/revenue synergies don’t manifest and the newly combined entity suffers from low performance even though the client paid a premium for acquiring the target company. WHAT IS OUR POST-ACQUISITION / EXIT STRATEGY A critical part of every M&A deal is the post-acquisition strategy. After the client buys the company, how will they make the acquisition pay back the investment they made and then some? Here, you’re evaluating the upside potential of the target– identifying areas the client should focus on and the numbers they can achieve. How can our client increase the target company’s value — can we increase prices, increase volumes sold, decrease variable/fixed costs, etc.? Exit Strategy — after the client has increased the value of the target company, what do they plan to do with it? Sell? IPO? Continue to operate? Spin-off? Expand?

An Introduction To Profitability Frameworks

An Introduction To Profitability Frameworks

PROFITABILITY This is the most common case type. Essentially, your goal is to understand what is driving decreasing profits, and whether that is a function of decreasing revenues or increasing costs. Once you determine the key driver, you can then use the data in the case to suggest strategies/recommendations for reversing the client’s situation. Some examples of ‘Profitability’ archetype cases include: Our client is a low-cost airline based in Singapore, serving 24 destinations in the Southeast Asian market.  Its profitability was strong until 2010, and has since seen a declining trend and is now just barely profitable.  The CEO would like you to determine what is causing their decline, and suggest a strategy to reverse this trend. The client is a market-leading, niche phone screen manufacturer based in Ohio. Profitability has remained steady, but the CEO has noticed from reading industry annual reports that two publicly-listed competing phone screen manufacturers have meaningfully higher profit margins and have also been increasing their top line (re: revenue). The CEO would like to understand what is driving such differences. When posed such questions, you may already be presented with valuable context clues. Is profit declining due to decreasing revenues, or increasing costs (or do we not know yet)? Is profit decline a client-specific issue, or an industry-wide phenomenon (or do we not know yet)? This is all crucial context, so take notes throughout the case. While Victor Cheng’s initial framework can help you get situated, you need to begin drilling deeper and deeper into the fundamentals of the case. While Victor notes that you should always segment, this still isn’t good enough. Thus, to ultimately ace this type of case, you need to be asking yourself these three questions (if they are otherwise unidentified at the start of the interview): Is profit decline a client-specific issue, or an industry-wide phenomenon? If it’s industry-wide, then competitors are also facing a similar issue, and for our client they may consider exiting the market. If it’s a client-specific issue, however, that leads us to our next two questions… Is profit declining because of decreasing revenues? Or is profit declining because of increasing costs? To answer these questions, our framework must address these two core areas - revenues and costs - along with other key areas - like competition and market dynamics, customers, cost structures, and more - to get to the bottom of what is driving our client’s unprofitability. REVENUES Let’s start with revenues. Simply put, revenue is ‘price x quantity’. When you’re solving the case, though, this is too reductionist an approach. For starters, understand what “price” means in the context of the case. In its simplest form, “revenue = average price x total quantity.” However, instead of looking at average prices you should be looking at prices - and therefore revenues - by product / customer / geography / etc. segments. Average prices don’t necessarily weight said segments appropriately – and many insights can be uncovered by drilling into particular groups. For instance, one product segment may be the key driver to declining revenues (re: lagging sales relative to other product segments), whereas another product segment is highly profitable and rapidly growing. Boom: case closed. On that note, revenue may not always segmented by product — if your client is a subscription-based company like Netflix, you should call price “total spend per customer” and then segment that based on subscription tiers. However, knowing the equation is only the beginning. Knowing what impacts revenue growth (and decline) is the key to acing the case. Here are some key questions you should be asking yourself to identify a particular case’s revenue drivers: PRICE Overall market demand - Is the product or service becoming a commodity with multiple providers offering identical options? Is fundamental demand declining for the product (i.e. typewriters, Blackberry phones, etc.)? Competitors – Are they driving price down by offering cheaper products or a comparable product for a cheaper price? Are cheap substitutes widely available? Customers – How much buying power do they have? Are they negotiating for lower prices through bulk discounts? QUANTITY: Overall market demand – Is it increasing or decreasing (re: is the demand for face masks increasing or decreasing?) If demand is decreasing, you can expect to see declining quantities sold across the whole market, both for the client and its competitors. (This would also affect prices – it would start a price war as competitors would fight for a shrinking pool of customers.) Competitors – Are competitors stealing customers (market share)? How so — are competitors offering a more attractive product or service? Customers – Are we meeting their needs? Have their needs changed, or have they found a competitor or substitute that better meets their needs? Are we missing out on targeting an attractive customer segment? Channels – Are we marketing and selling through channels that are relevant to our key segments (re: if our customer is buying shoes on the Internet and we have a retail store, we’re not selling through the right channel, and vice versa)? Depending on the situation of the case, you may or may not want to include the above factors in your framework. Some may be more relevant than others, and your job as a candidate is to demonstrate that you can efficiently hunt for the right data at the right time for the right client and the right situation. With that said, here is a general approach you can employ when setting up your framework for profitability/revenue-type cases (in some cases you may be told this data upfront, so apply these rules accordingly on a literal case-by-case basis: Request information on current sales volumes and pricing and historical volumes and pricing. If revenues have stayed the same over the years, then revenue is clearly not responsible for the client’s decline in profits. If revenues have decreased over the years, however, then it most certainly is. Request information on competitor revenue models (volume and pricing). This data will help you see if this is an industry-wide issue or a client-specific problem. It may also potentially tell you if the client is missing out on profitable business activity that its competitors are currently cashing in on. Identify “bang” areas (re: consulting slang for revenue streams that account for a large percent of total revenues and/or a large percentage of revenue growth). You can do this by analyzing key segments and identifying meaningful changes in their corresponding volumes and prices. Assess whether any changes could be made to improve overall Revenues, Revenues by segment, or Revenues per unit sold. Ways to increase prices: is the product sufficiently differentiated and unique to justify higher prices? Can we increase customer loyalty and stickiness? Do we have close competitors or substitutes that are cheaper than our suggested price hike (and will they take advantage of this)? Is our product price-elastic or price-inelastic? If price-elastic then we should lower prices to increase volume and revenues. If price-inelastic then we should increase prices to increase revenues. Ways to improve volumes: can we identify changing customer desires / demands and respond accordingly (re: product development / iteration)? Can we launch a massive marketing campaign to boost demand? Can we expand distribution channels, sales force and customer service teams, or production capacity? Would we be able to to make an acquisition or enter a joint venture? Can we assess which products/divisions have the largest growth opportunities and allocate our investments accordingly? EXPENSES Expenses, or costs, can be split into Fixed and Variable, where the sum of both is equal to “Total Costs.” Fixed Costs and Variable Costs can be defined as follows: FIXED COSTS Fixed Labor – Have salaries of management or required staff increased? Marketing – Has the client increased spend without seeing a related increase in sales? Is there an opportunity to use the marketing budget more effectively? Overhead (i.e., rent, utilities, administrative) – Are these increasing? Is there an opportunity to decrease spending without impacting operations? Interest/Depreciation (i.e., on mortgages, leases) – Are rates increasing? Has the client made a major capital investment? Other Fixed Costs (re: insurance, case-specific factors) – Are costs increasing? VARIABLE COSTS COGS (re: input costs) – Are costs rising due to market factors such as an increase in energy/raw material prices? Is there an opportunity to negotiate with suppliers or switch to lower cost options? Variable Labor – Are costs dependent on how much is produced/serviced? Have wages increased without a corresponding increase in price? Distribution Costs (re: fuel, shipping, etc.) – Are costs rising, perhaps due to changes in transportation (i.e. rising fuel prices)? Other Variable Costs (re: storage, variable utilities, packaging) – Are costs increasing? Have the client’s providers raised their prices? Again, depending on the situation of the case, you may or may not want to include the above factors in your framework. Here is a general approach to set up your framework for profitability/expense-type cases (in some cases you may be told this data upfront, so apply these accordingly): Gather current expense breakdown and historical expense breakdown. If costs have stayed the same over the years, then it is clearly not a key driver. Identify “bang” areas (re: expenses that account for a large % of the total). Bang areas are key drivers, and they’re the first ones on the budget cutting board to help the client cut costs, save money, and increase profits. You can accomplish by analyzing key Fixed and Variable expense components and identify any meaningful changes in expense areas over time. Request information on competitor cost structures from the interviewer to see where your client’s cost structure may be inefficient. Assess whether any expense areas could be cut with minimal or no impact on sales. If you cut down on costs but revenues correspondingly drop, then on net you aren’t seeing any returns on profits (which is what ultimately matters most!)

A Guide to The Synthesis/Recommendation in Case Interviews

A Guide to The Synthesis/Recommendation in Case Interviews

I can not understate how critical your synthesis is to acing the case. This is your final impression, your last stand. The synthesis can make or break your case — a good one can save even a disastrous interview. But conversely, a disastrous synthesis can eliminate your chances of moving on to the next stage - or converting your super day into an offer - even if everything else was spotless. Thankfully, the synthesis can be drilled down to a science. While other parts of the case - especially the framework/hypothesis stage, market sizing, and creative questions - can be a bit more of “art” than “science,” there are many concrete best practices at your disposal when you think about outlining, and ultimately communicating, your final recommendation. Anatomy of a Synthesis / Recommendation FIRST: Quickly play back the case question to the interviewer. Demonstrate that you know what the client’s main objective is. This should only take 1 sentence. SECOND: Immediately provide a clear + concise recommendation OR finding (depending on what the primary objective is). Ideally, this only takes 1 sentence (re: less than 10 seconds), unless there are 2 key objectives (which is possible, especially for profitability cases). A good synthesis always starts with an answer, not analysis. THIRD: List 3 supporting points that backup your conclusion. A standard case typically has 3-8 sub-questions, each corresponding to the findings and analysis you conducted throughout the case interview. If you have more than 3 possible arguments, pick the 3 that are strongest (re: most relevant). Your points should feel more like bullet points than paragraphs, and a good rule-of-thumb is to have your supporting arguments follow the wording of your initial framework (re: first, we identified that this is a good market because XYZ — second, we analyzed how we can succeed in this market — third, we determined how we should enter this market, vice versa). FOURTH: Conclude with next steps, which can either be practical next steps to implement your recommendation(s), identification of risks, and/or additional research to clarify what’s missing or further validate your recommendation. This is the most slept-on part of the synthesis — people often think the synthesis is just a recommendation, but it’s not. In the span of 30 minutes there is no conceivable way you solved all the client’s problems — this is intentional, as your interviewers purposely designed a case that is not meant to be completed by the end of the interview. In real consulting projects, your work is constantly punctuated by “next steps,” and you are constantly validating your hypotheses by collecting more and more data, iterating your findings, and strengthening your quantitative + qualitative analysis. Missing this note will likely lead to you getting dinged, even in the first round. Often times, first round interviews tend to be more lenient. A common piece of advice given to interviewees is to refine their synthesis and include risks/next steps. If you glossed over this in your first round but were extended a final round invitation, you can not miss this step again. If you do, you will not land the offer. Sample Syntheses / Final Recommendations Let’s go back to some of the cases earlier in this newsletter. Remember Chris’ Clothes? We took a look at their revenues and expenses over the past 5 years in bar graph form. Let’s say we’re wrapping up the case — here’s a sample of how (Prompt: Chris' Clothes has been experiencing declining profits over the past 5 years, and wants to reverse their financial situation): Chris' Clothes is unprofitable largely due to exponential decreases in costs, specifically in marketing and promotion. Based on our findings, we thus recommend cutting ineffective marketing strategies, such as traditional (and expensive), promotion tactics (re: tv and print advertising). First, as you can see in Exhibit 1, costs have increased twice as fast as sales over the past 5 years. Second, we took a deeper dive into Chris Clothes’ costs, and have found that fixed costs - as compared to variable costs - have skyrocketed in the same time frame. Third and finally, upon drilling deeper into fixed costs, we can see that spending on marketing has drastically increased. ROM (return on marketing) has actually decreased, as increased spending on marketing has not resulted in a corresponding increase in sales. With all this said, for next steps I suggest we immediately look into cost-effective marketing strategies. Some avenues for exploration include social media and how we can deliver targeted ads to target customers (instead of paying for generalized, expensive television ads that blanket the airwaves). One risk to consider, however, is brand leakage due to our new social media presence (re: companies active on social media are more open to customer scrutiny and therefore more likely to suffer from customer fall-out, so we need a dedicated + experienced social media team). Another risk to consider is how our client will perceive this recommendation — while finance might be overjoyed to cut costs, the marketing team will be unhappy that it’s budget is being cut (and re-allocated to a different team, like social media). Along with developing cost-effective marketing strategies, I believe we should also hold more meetings with Chris Clothes’ marketing team, evaluate if there’s an opportunity for social media marketing, and see if we can get everybody on board with our proposal before we fully commit to any one plan. How does this sound? This is one of the longer syntheses, and sometimes you need to be a bit more brief — for questions that have more than on key objective, it’s okay to have a longer conclusion. However, if your case is a bit more clear-cut, then your synthesis should be ~ 30 seconds as opposed to 1 minute and 30 seconds. Here is an example of a more ‘tight’ synthesis: XYZ [client] should acquire ABC. First, ABC operates in a fantastic market with little to no competitors, and has also been growing 15% for the past 5 years (*points to graph that communicates this finding). Second, ABC consistently launches new, popular products that generate excitement from Gen Z’ers, an increasingly critical customer segment. Third, the synergies outweigh the risks — soft synergies include a merging of best practices in R&D from ABC and sales and marketing from XYZ, as well as hard synergies such as reduced headcount and shared IT systems and facilities. Some risks to consider, however, is post-merger integration and potential loss of valuable talent. Some employees at ABC may not be happy with such rapid change — for next steps, I therefore suggest working with XYZ and ABC to craft a comprehensive memo that communicates the rationale for the acquisition and how the acquisition can benefit key ABC employees. How does this sound to you? Just as your first impression is key, so is your last one. Interviewers' perceptions of candidates are largely driven by two things: how the candidate initially introduced themselves, and how they concluded the interview. It's human nature to more easily remember the beginning and end of an event. So remember this --- a strong synthesis is crucial to passing the case. And a weak one will sink it.

'Creative' Problem-Solving Tactics in Case Interviews

'Creative' Problem-Solving Tactics in Case Interviews

Most of the questions you’ll be given in a case are relatively easy to prepare for — setting up the framework, sizing the market, calculating break-even points and identifying revenue / cost / profitability drivers, communicating your synthesis / concluding thoughts (which we’ll cover by the end of today!) are pretty standard exercises in the case interview. That being said, there are some questions that will be thrown your way that are - for lack of better words - more ‘creative’. You won’t be given data, graphs, or charts to help point you to a right direction — there may be some context from the case background, and you may be able to ask more for information, but in general these questions test your ability to adapt to maximum flexibility. Some examples include: How should our client think about marketing its new product to Millennial / Generation Z customers? How would this differ from other customer segments? What are your hypotheses on the major risks of integrating the R&D functions of client ABC and target company XYZ? The client has decided to add a new production line to increase capacity, but can only afford to add a line to one of their 5 facilities. What factors should they consider in selecting the adequate plant? The client likes your recommendation, and asks you and the team what her company should start doing tomorrow. As you can see, you can’t quite spam a ready-to-go framework and expect to provide a unique, differentiable, and stand-out response. To answer these kinds of questions, you’ll have to think outside-of-the-box. So what does that actually mean? In terms of actionable advice, here are some of my best practices: BEST PRACTICE 1: Even if the questions are ‘different’, there are a number of mini-structures you can employ to systematically reach a sound solution/recommendation. Here are some mini-frameworks you can employ if you’re in a rut… Marketing + Brand Strategy When given a marketing question, you can immediately think about the ‘4 P’s’ and how they can help you align your thoughts to the question at hand. Segment your customers — who are you really selling to? Which customers are the most valuable / lucrative? Which ones cost too much to maintain? Rethink your product — what are the characteristics of your target market? What are your competitors currently doing, and how can you differentiate yourself? What are the table stakes (must-have features to win over customers)? What are potential differentiators? Rethink your price — what are your customers’ price elasticities? Competitors’ prices? Substitutes? Is your product premium (differentiable) or a commodity (non-differentiable)? Rethink your place // sales channels — are you using the right channels? Rethink your promotion. Do your marketing strategies align with your market — ensure product image, attributes, and quality fulfill the needs of all consumers or niche segment, reaching desired market share. Ensure target price is consistent with other products in the market and the consumer’s expectations Promotion is the fourth ‘P’ that specifically focuses on how to actually develop and implement marketing campaigns. Promotion is synonymous with advertisement, with the fundamental idea being how one can best go-to-market and acquire customers. In general, you should think about how you can create a successful introductory marketing campaign, including advertising, pricing, and bundling promotions. Also be mindful of case-unique factors such as market share status (re: if you enjoy top 3 producer status operating under limited market fragmentation, it’s easier to position the brand as a top player in the market segment), and don't suggest anything too crazy for your client (re: if your client is an everyday shoe retailer, having Steph Curry as an athlete sponsor/partner doesn't make too much sense). You can also talk about how the client should react to competitive responses (re: advertising, pricing, distribution agreements), and ensure product positioning does not cannibalize your client’s other product segments. Note: In marketing, decreased demand for an existing product that occurs when its vendor releases a new or similar product is called “cannibalization.” This is a common risk case interviewers love hearing, so if this applies to you make sure you use the term! Risk Identification + Management Strategy Depending on the client and industry, risks will look different. No matter the case, however, there are always certain dimensions of risks you should look out for — competition will always be one, but you can also use the PESTLE framework: Political: think regulation, government intervention, and laws regarding antitrust (preventing and breaking up monopolies), consumer protection laws, labor laws and unionization, etc. Economical: think broader macro-economy (re: are we in a recession or an expansion, are we in an industry that is at greater risk for underperformance in a recessionary environment or a pandemic hahahahaha f*ck), interest rates (re: if interest rates are high then borrowing is expensive, and it will be difficult to engage in activity like M&A, launching new products, entering new markets, etc.) etc. If you want to be fancy, you can even include global economic conditions like trade wars, tariffs and sanctions, and more. You can hypothetically include this kind of analysis if, say, you are working with a Chinese client (and need to account for the case of a trade war). Sociocultural: think consumer behavior trends (re: Millennials/Gen Z’s moving away from fast food, sodas, and other ‘unhealthy’ food and drinks), pop culture trends, demographic trends, and more. Also think about cultural trends in your own client’s organization — how is culture changing within your client? Technological: think about how certain innovation may impact your client — perhaps they aren’t prepared for digitization (re: brick-and-mortar vs online sales / e-commerce, overly reliant on physical distribution, etc.). Legal: think lawsuits, patent protection/infringement, etc. This is a particularly critical risk area for pharmaceuticals and biotech companies — these companies are constantly researching and developing new drugs and have to secure FDA approval, undergo clinical trials, and ensure their products meet safety standards (and avoid being sued to oblivion by customers for malpractice). Environmental: think areas like sustainability (re: is your client on-track meeting energy conservation goals? Energy costs are running high, and failing to achieve sustainability can not only hurt brand image and reputation but also lead to higher running variable costs), climate change, pollution, etc. Competitive Analysis Strategy When asked why a competitor is out-competing your client, you should immediately think — how are they out-competing us in terms of revenues, and then costs? For revenues, think about the 4 P’s — are they out-competing us in product superiority/meeting customer’s requirements better (re: what are our customer’s buying requirements), pricing (are they under-pricing us and being perceived as a more affordable and attractive option, or over-pricing us and being perceived as a superior, premium quality good), distribution/place (are we not selling where our customers are), and/or promotion (is their marketing strategy more tailored, effective, or persuasive than ours, and if so why and how)? For costs, think about our client’s and competitors’ cost structures. Are we more inefficient in fixed costs or variable costs, and if so how and why? Handling ‘Next Step’ Strategies Although this is typically a question asked in the synthesis, you may be asked these types of questions in the middle of the case. When approaching this kind of question, think about how you would tailor your thoughts using some structures below: Finance // Allocate required resources for launch Communicate launch decision and timeline to Finance department Analyze upfront investment and ongoing profitability targets Secure resources required for initial investment and allocate to each department e.g., Marketing, Sales, Production, Distribution Marketing to start designing launch strategy Marketing // Design product identity, message, packaging, etc. Create advertising and promotional campaign Define any channel-specific considerations e.g., displays, alternative campaigns Prepare product communications for investors, customers, and consumers Operations // Begin product tests, production line design, and logistics. Create and test product Communicate and negotiate product characteristics and prices with suppliers Renegotiate supplier contracts for materials and supplies if necessary Increase capacity of the existing production line maybe building a new one Hire new people if needed Sales // Start sales funnel from awareness -> conversion -> purchase -> repeat loyalty Collaborate with marketing in defining message for retail outlets and consumers Design distribution strategy and allocate resources for new product Design and deliver product training for sales Communicate new product characteristics and targets to clients e.g., supermarkets, convenience stores, restaurants, sport clubs. Train sales reps, account executives, and customer service teams (if relevant) However, having neat frameworks won't always prepare you for the unexpected. Below are some more best practices to help you weather the storm and answer surprising questions. BEST PRACTICE 2: Put yourself in the client’s / customer’s shoes — when in doubt, try to think about things from your client’s perspective and your client’s customers’ perspective? If you are helping an airline achieve profitability, what would the finance team’s thoughts be? Sales? CMO? The pilots? The flight attendants? The passengers? Perspective shifting may help you unlock insights you otherwise would not consider. BEST PRACTICE 3: Draw upon your personal experience — from past experiences (re: student org’s, business/consulting/finance clubs, internships, part-time work, research, startups, community service), you may be more experienced in certain areas. Many club leaders have great personal experiences promoting their student org’s on-campus — these are things you can draw upon when talking about marketing campaigns and strategies. Or perhaps you worked on a particular project during a summer internship that taught you about a niche industry or function — if relevant, you can apply that in a case as well. This is a pretty non-actionable tip, however, since most cases are designed to eliminate the possibility of some candidates possessing superior industry/functional knowledge over others. BEST PRACTICE 4: Dig deeper into your initial structure — when in doubt, you can always go back to your initial framework and think about how you can drill even deeper into certain areas. In a profitability case, for instance, if the case is revenue-focused then you can honing in on price and volume. More specifically, given the unique parameters of the case given to you, you can begin developing more refined recommendations based on the industry, situation, and client capabilities.

Guide To Data Analysis & Interpretation in Case Interviews

Guide To Data Analysis & Interpretation in Case Interviews

A common type of question posed in case interviews is data interpretation and analysis. What typically happens is, during the framework/hypothesis phase, you talk about your initial thoughts and ask for more data on 'XYZ' (re: in a profitability case, you may want to dig deeper into revenues and ask for pricing/volume data, in a market entry case you may want to dig deeper into market size and shares, etc.). Upon asking for more data, the interviewer may smile and proceed to hand you some graphs. Regardless of case style - interviewee or interviewer led - analyzing data, graphs, and tables is a staple in the case interview process. There are three forms in which data can be presented to you in a case interview: Numerical data in a table form. Bar / pie charts w/ axes that indicate units and reference data points A mixture of tabular and graphical representation of data You will be tested and evaluated on the following: Analysis: Quickly understand the information presented in the exhibit. Depending on the case, you may be tasked with finding: what overall market size is, how much did revenues grow in the last year, which customer segments saw the greatest decreases in revenues, etc. Contextualization: Understand how this data fits with the overall context of the case, as well as the specific context of the current discussion / section of the case. Things to consider, depending on the case and situation, may include: is the market big enough, given our client’s existing operations? What do we know about the client that could explain the growth in revenue? Is the new competing product, which you previously discussed, potentially responsible for slowing down growth in a particular customer segment? Interpretation: Present your business insights, and continue the case in the right direction by asking relevant questions. Perhaps the data presented suggests that the new market is 5x larger than the client’s current market and faces fragmented competition — therefore, your hypothesis may be that this is a good market for your client to enter. In another data analysis question, you may see how certain products have disproportionately positively contributed to revenues, or that a new product launched by your client’s competitors is mostly responsible for decreasing your client’s market share in Segment X of customers. As you analyze the data, here are some best practices: Keep in mind the question you were asked when the interviewer handed you the exhibit. Also keep in mind the main question and objective, as stated at the very beginning of the case. You must be prepared to understand what the data is telling you, but also tie it back to the original question. What is driving your client’s unprofitability? Is this a good market / should we enter? Should we acquire target company ABC? How does the data help you answer a specific question, and then how does it tie back to the original prompt? Read the title of the exhibit, and then study the axes and units of the data (if examining charts). Reading the title will help buy you some time, and explaining what the axes mean in relation to the data will again help you understand what the data is trying to tell you. Example: As we can see, this exhibit is a bar chart that outlines Consumer Preferences for healthy non-alcholic beverages, sports drinks, and leisure beverages. In particular, this chart elucidates how consumers identify our new product in relation to our competitors Cool and O2Flavour. While ‘Cool’ is associated with health non-alcoholic beverages and ‘O2Flavour’ is associated with leisure beverages, consumers don’t identify them in the sports drink category. When considering launching our product, we should think about positioning ourselves as a sports drink, and appropriately target distribution channels such as sports events and athletic venues, and even partner with athletes to promote our products. Our next steps should be to discuss how we can position ourselves to best embody the sports drink identity, and how - from a marketing and promotion perspective - we can help our client best do so. What do you think? Figure out the most efficient approach to get to the final result. Of course, this depends on what graph you’re given, but in general it pays dividends to look at the delta, or change, in growth (positive or negative) from beginning to end. Example: As we can see, this exhibit is a bar chart that outlines Chris’ clothing sales and costs (revenues and expenses). In particular, the data elucidates how revenues and expenses have changed over the years. At first glance, it seems both have increased over the years. But is revenues increasing faster than costs? Let’s find out from Chris’ ‘retail’ perspective (wholesale and website sales are negligible, focus on what’s efficient, remember) — from 2011 to 2015, sales have increased from $500M to $550M, a 10% increase. In the same time frame, costs have increased $250M to $300M, a 20% increase. In other words, costs are increasing twice as fast as sales. This could be occurring for a number of reasons: variable costs such as COGS and raw materials (think fabrics, wool, cotton, etc.) might have increased over the years, labor or distribution have become more expensive, or fixed costs like expensive marketing campaigns, social media managers’ salaries, and general costs of administration have ballooned in the past 5 years. Our next steps should be to dig deeper into the expense side of the profitability equation, and identify key drivers of increasing costs. Do we have any data on how fixed and/or variable costs have changed over the past 5 years? Interpreting and communicating your insights to the interviewer The final and most important step is synthesizing all the analysis and business reasoning that you just completed, and presenting it to the interviewer in an effective manner. The following aspects should be taken care of while communicating the inferences to the interviewer: Hypothesis: Consulting is hypothesis-driven, and you should try to lead with a preliminary conclusion, backed by information you currently have, and can be verified by asking for more information. Ask for the further information needed to verify your hypothesis. Data: If you've been given numbers and made mathematical calculations, it makes sense to present the most important results to the interviewer, to show your comfort with numbers. Walk them through any calculations you have conducted --- especially in virtual interviews, where you can't easily share your notes, you must make sure you don't leave your interviewer in the dust, so to speak, and ensure they understand your math + thought processes. Clarity & Logic: The communication needs to be precise and logical. You have to explain the logic behind your conclusions. In general, it often helps to think aloud, so that the interviewer can follow your line of reasoning. You’ve seen these best practices play out in the examples above, so when casing be sure to employ these tips and tricks to stand out in your interview!

Useful Formulas, Equations, & Data-Points For Case Interviews

Useful Formulas, Equations, & Data-Points For Case Interviews

Market sizing is a common quantitative question in Market Entry cases. For Profitability cases, you instead are asked about the ‘Break-Even’ questions. Profit = Revenue (Price x Volume) – Costs (Fixed + Variable)
Breakeven is the point at which Costs = Revenue. It is usually quantified in number of units. To find the breakeven point, you can use 2 equations:
Breakeven units = Fixed Cost / Contribution Margin
Revenue (re: Price x Volume) – Costs (re: Fixed Cost + Variable Cost) = 0 The first break-even formula is more commonly used. Set breakeven units as ‘x’ (where your goal is to find ‘x’). Contribution Margin is equal to Revenue per product sold minus Variable Cost per product sold. By dividing Fixed Costs by Contribution Margin, you will be able to find the number of units the client needs to sell in order for Revenues to equal Costs, therefore breaking-even. AGAIN, reaching the break-even number is not what’s important — contextualizing, impacting, and communicating the “so what” of this number is what’s important. If the break-even number is 50 million (re: client needs to sell 50M units to reach zero in profits) and the client is a small-time manufacturer, then there is a clear problem. It can’t hit its break-even goals, which is a strong sign they should exit the business / product segment. If the break-even number is more reasonable, however, then this is encouraging — it means the client can achieve profitability with this product segment, and the numbers paint a sign that they should pursue launching said product. Here’s an example of what a break-even question might look like: Since the break-even point is 224 flights, it’s clear that our client is a profitable business (re: 420 expected flights > 224 break-even point ). This is a clear sign they should continue the business, as it is a robust one. Another key equation, ‘Elasticity’, is used to solve ‘Pricing’ cases. When determining a price that will optimize revenues and therefore profits, it’s important to note that, in some cases, decreasing the price will actually lead to optimal revenues. Identifying the elasticity of your client’s products is key, therefore, to solving their pricing questions. Some Quick Data Points to Note U.S. Population -> 300M, 320M, 330M, anywhere in this ball park (I personally use 320M, as it’s easier to play around with 25%’s) China Population -> 1B, 1.2B (for the same reason above) UK Population -> 60M World Population -> 6B, 7B Average Household Number -> 3 individuals per household Currency Conversions -> 1 USD = 7 RMB, 1 USD = 0.75 Pounds, 1 USD = 0.85 Euro’s Volume of a sphere = 4/3 π x the cube of its radius Volume of a cube = length x width x height Volume of a pyramid = 1/3 x base squared x height 5280 feet in a mile, 1000 meters in a kilometer A short city block is 1/8 of a mile, a long block is 1⁄4 mile A football field is 100 yards long

A Guide To Market Sizing

A Guide To Market Sizing

Casing is all about communication. So, um, what is math doing here? Unsurprisingly, candidates typically struggle the most with the quantitative/numerical portion of the case interview. And, surprise surprise, math is a pretty big part of consulting. Solving problems requires data. Lots and lots of data. And as an analyst, you’re doing most of the heavy lifting when it comes to data collection and analysis, modeling, and visualization. Quantitative questions come in 3 forms: estimation (re: market sizing), formulation (re: break-even, elasticity, etc.), and data analysis/interpretation (re: reading and analyzing graphs, which is sadly harder for most college students than one would think…). Meanwhile, underpinning all aspects of the quantitative side of casing is mental math, which has emerged to haunt college students who have sadly reverted back into elementary school levels of math. So, before we jump straight into market sizing, let's learn some quick tips and tricks to rapidly and accurately compute mental math questions (re: the building blocks of any quantitative-based question you can get in a case interview, like a market sizing problem). Mental Math Mental math, surprisingly or not, is tends to be the toughest part for candidates to overcome. I can teach you all the frameworks and structures you need to ace market sizing, break-even questions, etc. But it’s pretty hard to teach basic math… especially when you’re dealing with messy calculations and numbers in the billions and trillions. Below are three quick tips + tricks for you to practice when doing mental math — I promise you they will make your life a LOT easier when you have to calculate on the fly. Because just like in the SAT and ACT, acing math in the case isn’t just about getting to the right answer: it’s about getting to the right answer as quickly as possible. Your interviewer isn’t going to have all day, because the client isn’t going to have all day. They expect an answer, and they expect it now. A Primer on Market Sizing There are three types of market sizing questions, and they build off each other sequentially (so expect to hit all three when tackling market sizing): How many of <ABC> exist in a market? Your answer is measured as total units that exist in a market, and you should specify if you are looking for total units that exist in total (in perpetuity) / that are produced per year / etc. How big is the market for <ABC>? There are 2 sub-questions for this, either stated or implied: you are either looking for the number of units sold, or for the total value of units sold. The latter sub-question involves one extra step — upon finding the total number of units, you will need to multiple volume by price. In some market sizing questions you are evaluating multiple products - and therefore multiple volumes and prices - so multiply your numbers accordingly. The ultimate answer, then is measured in dollars/currency of sales in a given year. What is the opportunity if the client introduces <ABC> into the market? Upon reaching the total market size/value, this next question asks you to essentially estimate the client’s share-of-market. Multiple market size by client market share, and you will reach your answer. We will be covering how to identify a reasonable market share estimate in future sections. Some examples of market sizing questions include: “Our client is a national golf club manufacturer, and has observed declining profits over the past five years. They are looking to reverse their financial situation by entering new markets, and have asked you to determine whether or not they should expand to New York.” It stands to reason that identifying the number of golf balls sold on a yearly basis in New York will help you solve this larger question. On that note, your interviewer asks: “First, our client wants to know how big the golf club market in New York is. How do you go about solving this problem?” Now, before you get overwhelmed, remember the fundamental principle of consulting: break larger problems into smaller and smaller, and more manageable, chunks. As you break down these large, gargantuan problems, it’s just a matter of adding all the numbers together and reaching your conclusion. And in the next few sections, we’re going to cover exactly that. Before You Start Blasting… Market sizing questions are ALWAYS ambiguous, and a strong candidate is able to collect and ask for data in order to clarify said ambiguities. At the beginning of the case, you therefore must ask clarifying questions in order to accurately size your markets. Sometimes, this information is directly given to you. Other times, it won’t be and you’ll have to ask for it. Here are some to consider… #1: Clarify The Unit Of Measurement (Volume Or Value) Check with your interviewer if the measure you are estimating is ‘market volume’ (re: the number of units sold/year) or ‘market value’ (re: the market size in US dollars, or total revenues generated/year). If you give an estimate in dollars when your interviewer expects a market size in volume, you will fail your interview. Clarification is key! #2: Clarify The Timeframe Check if your estimate is for a specific time period. For instance, are you measuring market size by last quarter or by last year / this year? #3: Clarify The Geography It is highly unlikely you’ll have to estimate a global market. Rather, you are far likelier to estimate the size of a market for a specific region, such as the U.S., China, a state like California or New York, or a major city. Thus, if this context is not given to you, you must ask your interviewer for it. #4: Clarify The Product This is the most common question that needs clarifying, and it’s one many candidates fail to ask (and therefore fail the interview). Defining the product means thinking about product segmentation; for instance, if your interviewer is asking you to estimate the market size for smart phones, you should first be wondering if this includes all smartphones (re: iPhones, Android phones, Xiaomi, etc.) or just a particular brand / operating system. Without clarifying, you might be entirely answering the wrong question. Remember, it’s your responsibility to know what question you’re solving — a client won’t spend precious time babying you, it is your duty as a consultant to identify the key drivers, clarify the context, and solve the (right) problem. #5: Clarify The Customers Clarifying customers means identifying the target buyers of the product you are sizing. Think of segmenting customers by certain features/characteristics, such as: B2B vs B2C, age, income, gender, demographics, psychographics, etc. #6: Set The Stage for Your ‘So What’ Analysis This part may not quite make sense for you, but bear with me — when you reach the final ‘market size’, you still haven’t really answered the question. And if you just leave your interviewer with a number, you’ll have failed the interview. A number is only as valuable as its context — so what the market size is $250M, or $1.5B? Why does that matter for the client? In order to tell your client if the market size is a good number or a bad number, you need more data — what is the size of the market our client is currently in? What are our client’s current and historical revenues? What is their estimated share of this new market? If they can capture 33% of the new market, for instance, and that number is greater than their current/historical revenues, then entering the market - assuming the cost to enter said market isn’t ridiculously high - is very attractive. You may then propose to examine how expensive it would be to enter the new market, and evaluate if market entry is still viable (re: if cost of entry > revenues from entry, then the client should not enter the market unless over a certain period of time revenues > costs and the client will earn net profit from entry). Top-Down Market Sizing If you’re choosing the top-down approach, you’ll base your hypothesis on a large overall number, such as ‘population’ or ‘household’, and drill down from there. Another way to think about the top-down approach is to think of the issue as demand-based — you’re trying to identify the number of users/customers purchasing, say, golf balls (as per the hypothetical question above). Below is a useful framework for helping you think about how to employ a top-down approach: Let’s start with the “baseline.” Typically, you are expected to know some basic assumptions/facts such as the population of the United States, the size of the U.S. economy, etc. You will not, however, be expected to know more niche things, such as the population of New York (unless you’re from New York, you should know the population of your state and major metropolitan areas like NYC, SF, LA, etc.) or what percentage of New Yorkers are avid golfers. Once you’ve established your “baseline” (re: NY state’s population is ~ 20M, or roughly 6.5M households given average household sizes are 3 individuals), you need to multiply it by the “ratio,” or the portion of the “baseline” that is relevant to your market. One of the most popular ways of generating a “ratio” is via age, though you can also do it by income, geography, consumer behavior, etc. That being said, age is the most common. I personally use age groups 0-19 (25% of population), 20-39 (25%), 40-59 (25%), and 60+ (25%) which makes for a total population of 320M. Each group is composed of 80M people, and each age is is composed of 4M unique individuals (re: # of 20 year old’s is 4M, # of 1 year old’s is 4M, vice versa). If you assume a 50-50 gender split, this means there are 2M 10 year old males, 2M 20 year old females, etc. Using the golf example above, my goal is to multiply our baseline <New York’s population, 20M> by our ratio <% of New Yorkers that golf>. This will help us calculate the total market size for golf clubs sold in New York. Let’s assume regular golfers typically belong to an age range of 20 to +60. There are, of course, younger golfers under 20, but they are so few of them that - for simplicity’s sake - we can discount them altogether. This means our baseline is 15M individuals (e.g. 75% of 20M). Obviously, though, not every 20 year old is a golfer, nor is every +60 year old. To further segment our population, I’m going to apply an income based “ratio.” Since golf tends to be a sport frequented by upper middle to upper class families, I’m going to make a rough assumption that only the top economic 1% are regular golfers. Our baseline of 15M has now become 150,000. If you want to be more generous, you can assume that the top 2% are regular golfers, meaning our new market is 300,000. We have just identified the ‘Number of Customers’. Now, we must identify the ‘# of Units Purchased per Customer’, which can be found by identifying ‘frequency of purchase’ and ‘quantity per purchase’. Frequency of purchase refers to the average number of purchases in a given time period. Typically when valuing market size, we measure size by year. To then find frequency of purchase by year, we have to make some more basic assumptions: let’s assume a golf club, on average, lasts for 1 year. This makes your analysis easier, as frequency of purchase is ‘1’. If a golf club lasts 2 years, however, then the frequency of purchase is 0.5. Depending on the utilization rate and lifetime value of a product, frequency of purchase may not be relevant. If measuring the market size for chewing gum, for instance, frequency of purchase would be much higher as chewing gum is a one-time product (re: think about it as buying one gum pack/week, or 52/year). Next we need to find ‘quantity per purchase’. Every time a customer walks into the door, how many golf clubs do they actually buy? Again, to make things simple, we can assume that the average golfer in New York just buys one club per purchase. Now let’s multiply ‘frequency’ by ‘quantity’. If the average golfer buys one golf club every two years, that means they buy 0.5 golf clubs per year. 150,000 golf clubs are thus sold every year in New York (e.g. 300k * 0.5). But wait — we were tasked with finding market size, not the number of golf clubs sold. We thus need to multiply 150k by the average price per golf club. We can ask our interviewer at the start of the market sizing session if they have any facts or figures on golf club prices, but if they ask us to come up with our own figure, let’s assume the average price is $200. This results in a total market size of $30M USD. Case closed (?). BUT WAIT — we’re still not finished. Just because you’ve reached the final number doesn’t mean you’re finally done with the question. A number is only as valuable as its implication; in other words, so what? So what the market size is $30M USD? What does this mean for our client? Why should they care? Why does this matter? Is this a big market, or a small market? Is it attractive, or this number smaller than we expected? This is where asking for key data up-front at the beginning of the case is key — you should be asking how big your client’s current revenues are, which markets it currently operates in, and the sizes of said markets. For instance, if the New York market is worth $30M USD and the client currently operates in, say, Connecticut and Delaware (which separately are $2.5M, for $5M total), then entering New York is quite attractive. It’s also helpful to know what the competition is like in the new market — if New York is highly competitive, then the client won’t be able to reap the full benefits of the $30M market size. If there are little to no competitors, however, then entering New York is incredibly attractive. In order to determine if your market size is good or not, you have to be able to draw comparisons — without benchmarking your data with other data points (especially from your client’s historical records as well as their that of their competitors’), you won’t be able to impact the numbers you’ve found while market sizing. Some people also suggest you conduct a “sanity check” — in other words, is your number too high or too low? You can offer some reasons to suggest either how your estimate is likely higher than the actual number, lower, or just about right. Don’t cover all these scenarios. Just cover one, and provide your rationale. Perhaps one of your assumptions in the ratio/frequency/quantity/etc. portion of your analysis was overly generous. Or perhaps you under-estimated the number of youth golfers. My final note for this section is on price — in this hypothetical scenario, we assumed that all golf clubs share an average price. Some golfers might purchase premium golf clubs, however, while others may purchase cheaper, “value-based” versions. Others may just go for the discount (re: cheapest) option. To provide additional complexity and rigor in your analysis, you can segment the golfer population by price type and then make the calculations accordingly — this makes you look stronger, as you’re looking two steps ahead of most candidates, and your final answer is likely more reflective of the actual estimate than it otherwise could have been. My personal advice is to add complexity if and only if you are comfortable with it: if you introduce more complex calculations and you quickly get lost in a sauce of your own making, you’ve just screwed yourself out of the next round. That being said, if your analysis is overly simple, even if you aced your calculations you won’t come off as more impressive. You can risk it for the biscuit, as they say, but I personally suggest avoiding needless risk. That being said, I always segment baselines by price, and you should too — practice more and more, and you’ll soon find yourself handling more difficult calculations and market sizing questions in no time. Bottom-Up Market Sizing Another market sizing technique is called “Bottom-Up.” When you take the bottom-up approach, you isolate a single geography, store, unit, consumption pattern, or other micro-element of a larger population – then push the numbers up to a larger scale. One reason to use the bottom-up method over the top-down method is if you’re asked to measure the physical distribution of a product. For instance, in order to answer the question “How many pay-phones are there in Beijing,” it would be easier for you to estimate how many pay-phones there are in a city block, then multiply by the number of blocks in the whole city. If you used a top-down approach, you’d instead have to identify how many people live in London, how often they use pay-phones, how frequently pay-phones are used daily, etc. You can see how this is pretty cumbersome. Another tell-tale sign you should go bottom-up over top-down is if you’re measuring consumption (re: where you look at the number or amount of something “consumed” per day and then annualize it). For instance, in order to find out how many bags are lost in a year at SFO, or how much is spent on Starbucks in China, you should estimate the number of ‘occurrences daily’ (re: bags lost per day, customers served per day, etc.), and then multiply by the number of days the business is open. You may still need to factor value (re: average spend per Starbucks order), but that’s pretty easy to do. The bottom-up approach doesn’t make much sense for the golf club question — try thinking about how you would estimate the market size for golf clubs in New York (or alternatively, just give up right now, I don’t blame you LOL). Again, you should employ the bottom-up approach if you’re dealing with distribution and/or consumption. The top-down approach can be applied in any situation, but sometimes it’s more effective to go bottom-up (and vice versa). Using the “How much is spent on Starbucks in China every year” question as an example, let’s start with customer/product types. Starbucks sells a number of ‘products’, from coffee/tea/drinks to snacks/pastries and even merchandise like mugs, french presses, and sunglasses. For simplicity’s sake, let’s just focus on liquid consumables (drinks) and solid consumables (pastries, sandwiches, etc.). Now onto ‘frequency’ — how many purchases of drinks are made in an hour? How many purchases of food items are made in an hour? Let’s assume that, on average, a barista can serve 2 drinks and 1 food item every 5 minutes. This translates to 40 drinks and 20 food items every hour. Obviously, however, a barista is not constantly working — there will be periods of time where there are no customers, or at least are not serving a constant flow of customers. Let’s thus assume that, on average, a barista is only actively serving drinks/food ~75% of the time. This means that 30 drinks and 15 food items are served every hour. At this point, you should keep in mind that this is data for a single given Starbucks store — there are thousands of Starbucks in China alone, and to calculate the number of Starbucks in China would require yet another large, framework-inducing market sizing approach. Yay! Now onto ‘price’ — obviously there are different prices for different items. If we want to be basic, we can just assume an average drink price of $4 USD and average food item price of $8 USD (I’m using USD even though we’re valuing the Chinese Starbucks market because it’s a currency I am more familiar with, and we can just offer to convert to RMB later if the interviewer wants us to). Note that prices in China for Starbucks are different from America, as Starbucks is seen more as a luxury good in the former than the latter. Let’s assume that drinks’ prices are split between $2 for a small (short), $3 for medium (tall), $4 for a large (grande), and $5 for an extra large (venti). A majority of customers go for the grande — let’s assume 70% do. The rest are evenly split. This means the average drink price is $3.80 (e.g. $2.80+$.20+$.30+$.50 = $3.80 USD). Meanwhile, let’s assume that food items prices are split between $3 for a small pastry, $5 for a regular pastry, and $8 for a sandwich. 20% of customers go for a small pastry, another 20% for regular pastries, and the remaining 60% for sandwiches. This translates to an average food item price of $6.40 (e.g. $.60+$1+$4.80=$6.40 USD). Let’s not add prices quite yet — for now, let’s move onto ‘operation times’. If we assume Starbucks China operates 12 hours a day 7 days a week, and we assume there are 50 weeks/year (which we will assume for two reasons: first, because 50 is nicer to work with than 52, and second, because we want to account for holidays and potential sick leaves so we can afford to discount 14 days)… then Starbucks China operates 4200 hours every year (e.g. 12 * 7 * 50 = 84*50 = 4200 hours/year). Keep in mind this is for a single Starbucks — at this point, you might be gearing up for yet another market sizing odyssey, but your interviewer will likely stop you. You’ve already demonstrated your quantitative problem-solving skills and market sizing chops. They’ll likely just ask you to calculate a single Starbucks China store’s revenues, to which you’ll say: Given a single store operates for 4200 hours/year, and 30 drinks and 15 food items are served per hour, this means 126,000 drinks and 63,000 food items (the average of 4200*10 and 4200*20, so you don’t have to multiply 4200 by 15) are served every year. With an average drink price of $3.80 and food item price of $6.40, we multiply the corresponding numbers to achieve our answer. Since $3.80 and $6.40 aren’t pretty numbers, let’s round them to $4 and $6. It’s not perfect, with a 20 cent net difference, so we should keep in mind that our final answer is going to be a slight under-estimate. With that said, drink spend is $504,000 and food spend is $378,000. Combined, total Starbucks spend in China for a single store is $882,000 USD. The interviewer may then tell you there are approximately 4,000 Starbucks in China. This means total spend, as you quickly do the math, is $3,528M, or $3.528B USD. Sanity check time — is this number too high or too low, or just right? I personally believe this is an under-estimate — remember the 20 cent net difference in our price assumptions. Also remember that while our formula accounts for food and drinks, another bucket I previously talked about was Starbucks merchandise (re: mugs, sunglasses, etc.). We also highly simplified the Starbucks menu — perhaps there are China-only premium specialties that would have raised average customer orders, and therefore would have raised total customer spend in China. “So What” check time — we need to know how Starbuck China stacks up to Starbucks America and any other comparable regions. If smaller than the United States, then there is opportunity for growth — Starbucks has only 4k stores in China, and we can assume it has many more in the United States (in fact, there are ~15,000 in the U.S.).

An Introduction To Market Entry Frameworks

An Introduction To Market Entry Frameworks

MARKET ENTRY Another highly common case archetype, some examples of this type of case are: Our client is an online yoga apparel retailer looking to enter the UK market. The CEO would like your help in formulating an entry strategy. A high-end watch manufacturer is considering entering the Asia market. The CEO would like you to find out whether or not this is a good idea, and if so, what countries/regions his company should expand to first. When tackling a market entry case, your framework broadly needs to encompass these three core questions: Is this a good market? Does our client have the proper capabilities to enter said market? If the answer is yes to the above two questions, then what’s the best way for our client to ultimately enter said market? IS THIS A GOOD MARKET Here are some things for you to consider when mapping out your framework and plan-of-attack for a market entry type case: Overall market — What is the current market size? Is it highly fragmented (re: lots of small players, no clear market leader) or highly consolidated (re: few large players that control most of the market share)? What are its current and historical growth rates? Is market demand increasing/decreasing? If so, are certain segments growing/decreasing ? Any popular substitutes? What does the future of the market look like? PESTLE - PESTLE stands for Political, Economical, Sociocultural, Technological, Legal, and Environmental trends. Examples may include regulations and government intervention in the market (political), broader macroeconomic environment (re: recessions, trade wars, etc.), threat of lawsuits, human rights issues, and more. Some PESTLE trends are advantageous; others present threats to market success, so your job is to accordingly map these out on a case-by-case basis. Competitors — Who are they (intensity, frequency)? Have there been any new entrants (locally or from foreign regions/different verticals)? What’s our projected / potential / actual market share (by segment)? Is it changing? What are our competitors’ market shares? Have these changed over time? Have other [outside] competitors already entered the market? If so, how are they doing? Customers — What are their needs and are we addressing them? Are their needs, demographics, or regions shifting (or is one need, demographic, or region accounting for most of the shift)? What are their attitudes towards our product/brand/company? In the region we’re entering, are there any cultural attitudes towards foreign companies (re: do they like foreign companies, or are they more likely to favor local champions)? IS OUR CLIENT ABLE TO ENTER THE MARKET When assessing whether or not our client is even able to enter the market, we will now take a step back from external factors and look inwards to our client’s capabilities. Company — Is our client’s management team experienced or inexperienced in market entry? Are they considering hiring a new team in charge of this new territory? Product/Service — Does our client’s product/service have any differentiating factors that are attractive to these new customers? What are the prices of our client’s products? Are they more or less expensive than current market options? Channels — Which distribution channels does our client currently use? Are they able to use the same one if they enter this new market, or will they have to find a new distribution channel? How do they compare in pricing/penetration? Are there opportunities to shift share or introduce new channels? Financials — What is the current financial situation of our client? What is the cost to enter this market? What are some ongoing costs the client must consider as the price of maintaining market presence? Does our client have the budget/capacity to afford this strategy? What are expected revenues and ROI, and do they offset the risk of entering the market? Is our client willing to accept said risk? HOW SHOULD OUR CLIENT ENTER THE MARKET Once you’re able to determine that, yes, this is a fantastic market and that, yes, our client has all the internal capabilities needed to enter said market, your job is to determine how the client should enter this new market. Some things to consider when setting-up this part of the framework include: Approach to entry: do we enter organically, join a strategic alliance or joint venture, or acquire another competitor in the market? This is a tough question, and your findings to the questions below will help you answer this one. Check the links here for more analysis on when to pick one strategy over the other. Should we do a test-run in the region first (re: open pop-up shops, small experimental centers, etc.) and test the waters, or should we launch full-scale operations from the get-go? Timing: when should we enter the market? ASAP? Or do we need to collect more data lest we prematurely rush into a bad decision? Should we centralize company operations from HQ (re: if client is based in America and is entering India, then America HQ will control decisions made in India), or should we decentralize (re: have our own Indian team in charge of their territory, they still report to HQ but they generally call their own shots)? How much time/investment is required to enter the market? Customer mix/segmentation: which customers should we target first? Go-To-Market strategy: how should we position and market ourselves accordingly (think 4 P’s: Product, Price, Promotion, and Place)?

An Introduction To Frameworks

An Introduction To Frameworks

If you’re familiar with casing, then you’ll definitely be familiar with the term ‘frameworks’. For those of you newer to casing, though, frameworks are essentially analytical methodologies for approaching business problems. Huh, what — what does that even mean? To put it more simply, frameworks are easy-to-memorize, copy-paste techniques that allow you to break down business problems to their simplest elements. Profits is equal to revenues minus costs. Revenue is equal to volume (units of products sold) times price per product sold. Costs are fixed costs plus variable costs. Alex, I’ll take “No Shit Sherlock” for 800 please. Okay, okay, here’s the thing: possessing a basic understanding of frameworks won’t get you any points during the case interview. There are like, what, thousands of sites online that will teach you these copy-paste frameworks? Hundreds of books, like Victor Cheng’s Case Interview Secrets and Marc Cosentino’s Case In Point, that are mostly outdated relics of the early 2000’s and 2010’s era of case interviewing? Dozens of online “prep courses” that will teach you how to case (for a handsome fee of a ~ couple thousand dollars, like lol yeah no thanks)? The point is, everybody and their mom already has a basic understanding of how to apply frameworks. Just being a cookie-cutter, copy-paste candidate able to regurgitate simple frameworks (P=R-C, Porter’s Five Forces, 4 P’s of Marketing, 3 C’s, etc.) just isn’t going to cut it. So, here’s the million dollar question — how can we make ourselves stand out? Writing and communicating your framework is about hitting two things: breadth and depth. This is also known as MECE (re: mutually exclusive, collectively exhaustive). You want as much breadth as possible — are you hitting all the relevant elements present in the case, from company (product portfolio, culture, management, etc.) to customer (demographics, psychographics, etc.) and competition (frequency + intensity) to market (size, growth rate, barriers to entry) and “others” (government/regulatory environment, macroeconomic environment, sociocultural trends, etc.)? And you also need depth — you need to go at least two levels deep into your analysis, meaning if you’re talking about prices and volumes (one level) you need to be thinking about price and volumes by products, geographies, customers, etc. (two levels). In this next part of the post, I will thus be sharing my framework templates that aim to maximize breadth and depth in your initial structuring of the case. The 8 Archetypes of Cases There are 8 primary ‘archetypes’ of business situations that will pop up throughout your casing journey. While there may be other “unique” cases thrown your way, nearly every case (if you find one that doesn’t, send it to me, I’m collecting wack cases for a future guide!) will have its fundamental roots in the following categories: Profitability Optimization*: how can we make our company more profitable (re: revenue growth, cost cutting, margin optimization) Pricing Optimization: a sub-type of Profitability Optimization, here we focus on the revenue growth portion of the the overall profitability question Industry Landscape & Competitor Dynamics: how can we assess + evaluate the ‘characteristics’ of an industry and determine whether or not it is an attractive industry to enter, to ramp up, or potentially to exit. New Product or Project Launch: the client is developing a new product, and wants us to assess the feasibility of said product (re: would the product be profitable, is the market growing, what is competition like, etc.) Growth Plan/Strategy: the client wants to grow its business by growing a certain product’s sales, growing in a certain geographical region, increasing total sales, etc. Here we assess the viability of that specific strategy, and what it entails. Market Entry or Expansion*: the client is seeking to expand or enter into a new market (re: geographical region, a new customer segment, or both). Here we assess the viability of this strategy, and what it entails. Merger/Acquisition/Joint Venture*: the client wants to acquire another company. Your job is to evaluate whether or not this is a good idea. Start-Up/Early-Stage Venture: the client is an up-and-coming startup and wants advice on more atypical issues, such as team-building and constructing its management team, communicating with investors, launching go-to-market strategies and positioning its product, etc. For this type of case, expect to hit elements of the 7 cases above when solving it. Archetypes followed by an * at the end denote that they are the most common. Prepare for these the most, as the other ones tend to be a bit rarer. For the sake of efficiency, I will be conducting a deeper dive on the three most common case archetypes. If you would like to see my frameworks on the other sub-types, please comment below and - if there’s enough demand - I’ll write a special guide on how to crack them! PROFITABILITY This is the most common case type. Essentially, your goal is to understand what is driving decreasing profits, and whether that is a function of decreasing revenues or increasing costs. Once you determine the key driver, you can then use the data in the case to suggest strategies/recommendations for reversing the client’s situation. Some examples of ‘Profitability’ archetype cases include: Our client is a low-cost airline based in Singapore, serving 24 destinations in the Southeast Asian market.  Its profitability was strong until 2010, and has since seen a declining trend and is now just barely profitable.  The CEO would like you to determine what is causing their decline, and suggest a strategy to reverse this trend. The client is a market-leading, niche phone screen manufacturer based in Ohio. Profitability has remained steady, but the CEO has noticed from reading industry annual reports that two publicly-listed competing phone screen manufacturers have meaningfully higher profit margins and have also been increasing their top line (re: revenue). The CEO would like to understand what is driving such differences. When posed such questions, you may already be presented with valuable context clues. Is profit declining due to decreasing revenues, or increasing costs (or do we not know yet)? Is profit decline a client-specific issue, or an industry-wide phenomenon (or do we not know yet)? This is all crucial context, so take notes throughout the case. While Victor Cheng’s initial framework can help you get situated, you need to begin drilling deeper and deeper into the fundamentals of the case. While Victor notes that you should always segment, this still isn’t good enough. Thus, to ultimately ace this type of case, you need to be asking yourself these three questions (if they are otherwise unidentified at the start of the interview): Is profit decline a client-specific issue, or an industry-wide phenomenon? If it’s industry-wide, then competitors are also facing a similar issue, and for our client they may consider exiting the market. If it’s a client-specific issue, however, that leads us to our next two questions… Is profit declining because of decreasing revenues? Or is profit declining because of increasing costs? To answer these questions, our framework must address these two core areas - revenues and costs - along with other key areas - like competition and market dynamics, customers, cost structures, and more - to get to the bottom of what is driving our client’s unprofitability. REVENUES Let’s start with revenues. Simply put, revenue is ‘price x quantity’. When you’re solving the case, though, this is too reductionist an approach. For starters, understand what “price” means in the context of the case. In its simplest form, “revenue = average price x total quantity.” However, instead of looking at average prices you should be looking at prices - and therefore revenues - by product / customer / geography / etc. segments. Average prices don’t necessarily weight said segments appropriately – and many insights can be uncovered by drilling into particular groups. For instance, one product segment may be the key driver to declining revenues (re: lagging sales relative to other product segments), whereas another product segment is highly profitable and rapidly growing. Boom: case closed. On that note, revenue may not always segmented by product — if your client is a subscription-based company like Netflix, you should call price “total spend per customer” and then segment that based on subscription tiers. However, knowing the equation is only the beginning. Knowing what impacts revenue growth (and decline) is the key to acing the case. Here are some key questions you should be asking yourself to identify a particular case’s revenue drivers: PRICE Overall market demand - Is the product or service becoming a commodity with multiple providers offering identical options? Is fundamental demand declining for the product (i.e. typewriters, Blackberry phones, etc.)? Competitors – Are they driving price down by offering cheaper products or a comparable product for a cheaper price? Are cheap substitutes widely available? Customers – How much buying power do they have? Are they negotiating for lower prices through bulk discounts? QUANTITY: Overall market demand – Is it increasing or decreasing (re: is the demand for face masks increasing or decreasing?) If demand is decreasing, you can expect to see declining quantities sold across the whole market, both for the client and its competitors. (This would also affect prices – it would start a price war as competitors would fight for a shrinking pool of customers.) Competitors – Are competitors stealing customers (market share)? How so — are competitors offering a more attractive product or service? Customers – Are we meeting their needs? Have their needs changed, or have they found a competitor or substitute that better meets their needs? Are we missing out on targeting an attractive customer segment? Channels – Are we marketing and selling through channels that are relevant to our key segments (re: if our customer is buying shoes on the Internet and we have a retail store, we’re not selling through the right channel, and vice versa)? Depending on the situation of the case, you may or may not want to include the above factors in your framework. Some may be more relevant than others, and your job as a candidate is to demonstrate that you can efficiently hunt for the right data at the right time for the right client and the right situation. With that said, here is a general approach you can employ when setting up your framework for profitability/revenue-type cases (in some cases you may be told this data upfront, so apply these rules accordingly on a literal case-by-case basis: Request information on current sales volumes and pricing and historical volumes and pricing. If revenues have stayed the same over the years, then revenue is clearly not responsible for the client’s decline in profits. If revenues have decreased over the years, however, then it most certainly is. Request information on competitor revenue models (volume and pricing). This data will help you see if this is an industry-wide issue or a client-specific problem. It may also potentially tell you if the client is missing out on profitable business activity that its competitors are currently cashing in on. Identify “bang” areas (re: consulting slang for revenue streams that account for a large percent of total revenues and/or a large percentage of revenue growth). You can do this by analyzing key segments and identifying meaningful changes in their corresponding volumes and prices. Assess whether any changes could be made to improve overall Revenues, Revenues by segment, or Revenues per unit sold. Ways to increase prices: is the product sufficiently differentiated and unique to justify higher prices? Can we increase customer loyalty and stickiness? Do we have close competitors or substitutes that are cheaper than our suggested price hike (and will they take advantage of this)? Is our product price-elastic or price-inelastic? If price-elastic then we should lower prices to increase volume and revenues. If price-inelastic then we should increase prices to increase revenues. Ways to improve volumes: can we identify changing customer desires / demands and respond accordingly (re: product development / iteration)? Can we launch a massive marketing campaign to boost demand? Can we expand distribution channels, sales force and customer service teams, or production capacity? Would we be able to to make an acquisition or enter a joint venture? Can we assess which products/divisions have the largest growth opportunities and allocate our investments accordingly? EXPENSES Expenses, or costs, can be split into Fixed and Variable, where the sum of both is equal to “Total Costs.” Fixed Costs and Variable Costs can be defined as follows: FIXED COSTS Fixed Labor – Have salaries of management or required staff increased? Marketing – Has the client increased spend without seeing a related increase in sales? Is there an opportunity to use the marketing budget more effectively? Overhead (i.e., rent, utilities, administrative) – Are these increasing? Is there an opportunity to decrease spending without impacting operations? Interest/Depreciation (i.e., on mortgages, leases) – Are rates increasing? Has the client made a major capital investment? Other Fixed Costs (re: insurance, case-specific factors) – Are costs increasing? VARIABLE COSTS COGS (re: input costs) – Are costs rising due to market factors such as an increase in energy/raw material prices? Is there an opportunity to negotiate with suppliers or switch to lower cost options? Variable Labor – Are costs dependent on how much is produced/serviced? Have wages increased without a corresponding increase in price? Distribution Costs (re: fuel, shipping, etc.) – Are costs rising, perhaps due to changes in transportation (i.e. rising fuel prices)? Other Variable Costs (re: storage, variable utilities, packaging) – Are costs increasing? Have the client’s providers raised their prices? Again, depending on the situation of the case, you may or may not want to include the above factors in your framework. Here is a general approach to set up your framework for profitability/expense-type cases (in some cases you may be told this data upfront, so apply these accordingly): Gather current expense breakdown and historical expense breakdown. If costs have stayed the same over the years, then it is clearly not a key driver. Identify “bang” areas (re: expenses that account for a large % of the total). Bang areas are key drivers, and they’re the first ones on the budget cutting board to help the client cut costs, save money, and increase profits. You can accomplish by analyzing key Fixed and Variable expense components and identify any meaningful changes in expense areas over time. Request information on competitor cost structures from the interviewer to see where your client’s cost structure may be inefficient. Assess whether any expense areas could be cut with minimal or no impact on sales. If you cut down on costs but revenues correspondingly drop, then on net you aren’t seeing any returns on profits (which is what ultimately matters most!) Crafting ‘Bespoke’ Frameworks Just as every client is different from one another, so too are the solutions consultants must ideate and develop. Even if clients face similar issues (re: market entry, cutting costs, M&A, etc.), the nature of their industry, financial situation, competitive landscape, culture, and management team introduce so many new variables that a one-size-fits-all approach will never cut it. And clients don’t want to be treated the same; every client is unique, and therefore every consultant must be prepared to treat them as so. You need this mind-set when you tackle the case interview; you can’t spam the frameworks and expect to land an offer. You will need to tailor your framework to accommodate the unique situation you will be dealing with in your case. There unfortunately is no quick-and-easy solution for doing so, but here are some of my best practices for practicing and applying the right mind-set: You should still apply general frameworks such as the profitability, market entry, and M&A ones written above. They are good for helping you initially structure your thoughts and quickly identify the key drivers of the case. However, to make a ‘bespoke’ framework, don’t just copy frameworks: make your analysis and ‘buckets’ more specific to the language + situation of the case. For instance, variable costs for an e-commerce client vs a traditional retailer’s are going to be different. Fixed costs for an oil refinery are going to be different vs a social media startup’s. Be specific when you’re talking about the various elements/buckets that make up a framework — this applies when using a profitability, market entry, M&A, or any other framework. In every case, there are going to be key elements that need to be discussed: the client’s internal strengths and weaknesses (re: marketing, sales, R&D, management/leadership, culture, etc.) and the client’s external threats and opportunities (re: competition, market trends, wider economy, government regulation, etc.). That being said, you don’t need to list out all these factors. Some may be completely irrelevant, so all you have to do is highlight the relevant ones and bring them up when presenting your framework.

[3] Where do you see yourself in 5 years?

[3] Where do you see yourself in 5 years?

I’ve personally fielded this question a lot during final round interviews, especially in consulting and banking. I wouldn’t say you can expect to always face this question (unlike “Tell Me About Yourself” and other classic ringers), but it is definitely a question more senior-leaning interviewers tend to ask. Unfortunately, this isn’t the kind of interview where there are no “wrong” answers. There definitely are. But here’s the problem — the wrong answer depends on both the firm and the interviewer. Their reason behind the question isn’t to test your precognitive abilities but rather to see how well your answer lines up with the company’s long term goals. In industries like consulting and banking, retention is very low. Recent grads cycle in as junior analysts, and usually within two years they exit (re: this is also called “lateraling”) into other opportunities (re: Private Equity, Hedge Funds, MBA, internal strategy/business ops in a F500 or startup, etc.). In other spaces, however, you typically stay for much longer. That being said, Gen Z’s and Millennials tend to pivot from job to job, work to work, more frequently and more consistently than our Boomer and Gen X’er counterparts. This may be a concern for companies who want more ‘longevity’ in their workforce. Software Engineering is a great example — they want SWEs who can comfortably stay with the firm for the long run. It’s hard to consistently onboard good talent, and tech companies deliberately do everything they can - the free food, the perks, the amenities - to SUCK you in and make sure you don’t leave them. So, in a nutshell, DO your research. Are you applying to a firm that values longevity, in an industry where retention is a competitive advantage (re: accounting, software engineering, data science, UI/UX, etc.)? Or are you applying to a company / position that features high turnover (re: consulting, banking, etc.)? Either way, firms always value candidates who maturely think through their interests and career progression. They want to have confidence that there’s a good chance you - the star candidate that you are - have tremendous potential to stay for the long run, even if it is in a high turnover industry (nobody wants to hear that they’re a stepping stone, would you?). Once you’ve done your due diligence, there are still some general best practices to think about when structuring your answer and story. Demonstrate your enthusiasm for the job as an exciting next step for you. Most importantly, make it clear that you are motivated to take on this opportunity right now. Then proceed to actually answer the question. You want to make sure your passion and enthusiasm show. Think about how your goals fit with the job description. When crafting your answer, remember to carefully review the job posting. Consider which of the required skills and traits you already have and would like to strengthen and also those you’d like to gain more experience in. It can be helpful to look at the specifics of what the job entails and think about what it would mean to advance your knowledge and expertise in these areas over the next five years. Make sure your expectations align with what the employer can provide. Employers want to know that your goals align with the job they’re offering. For example, if you’re interviewing for an accounting associate role and eventually see yourself leading more complex accounting projects, that shows the interviewer you see yourself growing in this position in a way they can reasonably support you. Alternatively, if you’re interviewing for a marketing role and you want to be a UX designer or investment banker in five years, you most likely won’t be considered a good fit for the job. If you belong to the hypothetical latter category, don’t lie about your career goals. Focus your efforts on talking about learning more skills and building up valuable experience to explore opportunities in leading projects and people. You don’t have to be SPECIFIC — that’s a key thing a lot of candidates trip up on. Demonstrate a sense of ambition and drive. It can be difficult to know or even plan for what you will be doing in five years. Heck, I struggle to decide what I want to eat for lunch on the daily, let alone plan my next five -ten years. However, managers ultimately will select candidates who have a sense of how they want to grow and progress in their career. Drive and confidence are infectious qualities. And letting employers know your goals within this role is an effective tactic for demonstrating these qualities. That being said, while having grand ambitions can certainly be a positive character trait, it may not be appropriate to discuss all of them when answering this question if they aren’t relevant to the job. Again, you don’t have to be SPECIFIC — don’t list all your goals/objectives, only talk about the most important and relevant ones (managing projects/people/teams, learning more skills, working with bright people and learning from the best, etc.). Be sincerely interested in the role. Employers are often curious if your interests align with the position they’re offering. For instance, this could be a great time to highlight your plans to become an expert in your field by taking online courses or obtaining a relevant certification. Understanding your related passions and interests helps employers envision how you might contribute to the team in both the short and long term and it assures them that the role will provide a fulfilling experience for you. With that out of the way, here’s some soul-searching you’ll need to do and ask yourself before you begin prepping your answer for this interview question: Do you have realistic expectations for your career? Are you ambitious? And does this particular position align with your growth and goals overall? Where can this position realistically take you, and how does that path align with some of your broader professional goals? What DO you want to do? Be honest, no need to impress recruiters (yet). Figure out what that it is. And AGAIN, it doesn’t have to be SPECIFIC — it can be as vague as leading a team, designing an awesome new product/feature for your favorite startup/platform, or just having enough money to support yourself and your family. It can be that vague. Whatever it is, find it and identify it. Then you can worry about the next steps of highlighting concrete metrics of getting there. Finally, if you’re asked about your 10 year plans, I’d say the strategies are largely the same. 10 years is a longer time frame, so you’re allowed to be EVEN more abstract and general. You don’t need to be specific. Don’t feel pressured to offer details. On that note, here are some strong interview samples for you to draw inspiration from! Example of a Strong Response Well, I’m really excited by this position at XYZ Firm because in five years, I’d like to be seen as someone with deep expertise in the ABC (re: energy, tech, media, financial services, design, ad infinitum) sector, and I know that’s something that I’ll have an opportunity to do here. I’m also really excited to take on more managerial responsibilities in the next few years and potentially even take the lead on some projects. I’m already lucky enough to have the opportunity work with some amazing managers in this role, and so developing into a great manager and leader myself is something I’m really excited about. I’ve thought about this a lot. In these next few years I definitely want to be challenged – intellectually, professionally - in business. I want to get as broad of an experience as possible. And if I enjoy what I’m doing, and feel like each year brings new responsibilities, I can easily see myself continue down that road in this position, ideally in a more senior and/or managerial position as well. Some of my future goals for the next few years include leading a design team in a formal or informal capacity. I’m also excited about the prospect of working with product and event teams on developing innovative new processes—this is a natural fit with my XYZ background. I’d also like to further develop my skills in user experience to aid in creating more user-focused designs all around. Meanwhile, here are some things NOT DO DO: Sound over-eager about <JOB POSITION> as your only option Express a desire to be doing something very different (re: a completely different job/industry or something left-field) relative to the job/internship itself Demonstrate that you’re a “flight risk” by showing an unusual interest in options that are not related to the job/internship field in question in the near term (re: from consulting to theater production). Be WAY TOO SPECIFIC — like saying you’ll get promoted in two years, make XYZ position, “work hard and then become a managing partner in less than 8 years” kind of shtick. You don’t need that level of detail. And it’s pretty off-putting to hear someone so fresh and green to say that with such certainty. Ambition is good. Goals are good. But if you’re too specific, you will run the risk of setting goals that are overly ambitious and unrealistic given the scope of the job/internship and opportunity. From the interviewer’s perspective this is an automatic red flag. Don’t overthink it. You are NOT being evaluated based on how accurate you are (nobody has a crystal ball). All your answer needs to do is reassure the interviewer that you’re invested in this career path and position. Don’t be flaky. You can come across as flaky if you seem to have a million different ideas about what you want to do — or if you have zero concrete ideas about your future. In reality, yes, many good candidates are exploring different options or are still trying to figure it out. However, a job interview is not a session with your career coach. You want to give the impression that you’re focused and have a plan (even if it’s not the only plan you’re considering). Example of a Weak Response I plan to be the VP of Finance at a major firm with at least 10 direct reports, a company car, and a salary of 250K/year (plus options of course). Consulting is the only thing for me. In 5 years I plan to be a Manager and in 10 years I intend to make Partner. Well, I’m not sure. I’m thinking about law school or business school down the line. Maybe even medicine. I like to explore and keep my options open. You can see from the final example how being ‘flexible’ is actually a pretty big liability when tackling this specific interview question. In a nutshell, if you’re new to interviewing and want to get more prep in, I suggest writing down your response and going back to this post. Stress-test your answer by going down our checklist of best practices (and things to avoid) to make sure you’re hitting all the right notes (and skipping the wrong ones).