HKUST Casebook

HKUST MBA Casebook
2020 Edition
HKUST MBA Consulting Club

Intake 2019
HKUST MBA Programs
Overview
• This casebook is intended to be a collection of best practices gathered by

HKUST MBA Consulting Club as a resource for HKUST MBA students to
use to best prepare for a career in consulting. Specifically, the casebook will
give the basics for how to prepare for interviews in consulting firms, such
as how to prepare for fit/behavioural interviews and case interviews.
• The casebook will include tips on how to structure business problems in
an easily understood way as part of a consultant’s toolkit, although students
seeking roles outside consulting may find this resource useful as well.
• While this casebook recommends a series of best practices, be sure to
supplement the material found within this casebook with additional sources
found elsewhere and adopt a strategy that works best for yourself.
• Preparation through case practices is best done with a partner (or multiple
partners) who is highly motivated for consulting; the higher quality
feedback you receive, the more prepared you will be for the actual
interviews.
2
1. Hiring Timelines and Consulting Firms Page 4
2. Fit/Behavioural Interview Preparation Page 11
3. Case Interview Preparation Page 16
4. Example Frameworks Page 26

Table of
Contents 5. Industry Profiles Page 40
6. Practice Cases Page 48
7. Additional Resources Page 114
8. Acknowledgements Page 115

Hiring Timelines and Consulting Firms
Typical Hiring Timeline
Preparation should begin as soon as possible; candidates have a tight timeline concurrent with HKUST’s MBA program.
Interview Round 1 Interview Round 2

(end of Fall 1) (beginning/mid Fall 2)
• Fit interview
• Fit interview
• Case interviews (2–
• Long case interviews
3); short and long
(1–2) with senior Full-time or
ones possible
• Fit and case may be
managers and internship
usually partners
combined in some
cases
• “Weak spots” tested offer
TIMING IS IMPORTANT: Applications for top firms such as McKinsey can be due as
early as late September or early October.
5
Interview Rounds Description
Candidates should prepare according to the expectations of each round while demonstrating receptiveness to coaching.
• Interviews performed by Senior Consultants or Managers

• Two or three 45-minute interviews
Interview Round 1 • Case and fit interviews may be separate or combined
• “Weak spots” may be identified; e.g. skills that tested poorly or were not
tested thoroughly enough
• Interviews performed by Principals or Partners

• Two or three longer case interviews; “fit” may be tested again
Interview Round 2 • Focus given to “weak spots” identified during Round 1 and candidates’
ability to improve upon them
6
Consulting Firms – Big 3 Firms aka "MBB"
MBB are considered to be the most prestigious firms in the global management consulting industry.
Firm Scale Offering Progression Recruitment Other notes

• 30,000 employees • Change that Matters • Business Analyst • Online application • Up or out:
• 23 industries • Associate • Fall application for Employees are
• 11 business functions • Senior Associate MBA internships in promoted within a
• 130 cities
• Engagement Manager set time or must
• Generalist consultant or 6 summer
• Associate Principal leave
• 65 countries practice SMEs • Partner/Principal • Fit & case interviews
• Director
• 21,000 employees • Pioneer in business • Associate • Online application • Informal reputation
strategy • Consultant • Fall application for among Big 3 as
• 19 industries • Project Leader MBA internships in most people-
• 90 cities
• Principal focused
• 22 capabilities summer
• Partner
• 50 countries • Generalist consultant, • Fit & case interviews
specialist, or expert
• 10,500 employees • Helping changemakers • Associate Consultant • Online application • Smallest of Big 3;
define the future • Senior Asso. Consultant • Fall application for supportive culture
• 15 consulting services • Consultant MBA internships in promoted
• 58 offices
• Case Team Leader
• 6 business needs summer
• Manager
• 35 countries • Generalist consultant, or • Principal • Fit & case interviews
specialist • Partner
7
Consulting Firms – Large Global Players
The Big 4 gain reputation from their accounting services but have also become major players in the consulting field.

• 312,000 employees1 • Innovation, transformation & • Analyst/Associate • Online application • Largest among the
leadership • Consultant • Fall application for full- Big 4 and well know
• 763 offices1 • 22 industries • Senior Consultant time/ winter for for its consulting
• 14 consulting services • Manager arm
summer internship 2
• 150 countries1 • Specialist in one of the three • Senior Manager
• Director/Partner • Fit & case interviews
services
• 3,000 employees • Pragmatic navigators for complex • Associate • Online application • Have reputation as
global environment • Senior Associate • Fall application for full- focusing on private
• 49 cities • Senior Consultant
• 10 industries time/spring for summer equity projects
• Manager
• 29 countries • 4 key services • Senior Manager internship3
• Generalist consultant • Director • Fit & case interviews
• 219,281 employees1 • Change things • Associate • Online application & • Only one of the Big
• 23 industries • Senior Associate assessment 4 that has not
• 650 offices1 • Senior Consultant
• 9 business needs • Fall application for full- acquired a boutique
• Manager
• 155 countries1 • Generalist consultant, or • Senior Manager time3 strategy firm
specialist • Director/Partner • Fit & case interviews
• 3,000 employees • Capabilities-driven strategy • Associate • Online application • Known as close
• 15 industries • Senior Associate • Timeline varies by competitors with
• 75 offices • Manager
• 6 functions country MBB when bidding
• Director
• 48 countries • Generalist or specialist • Partner • Fit & case interviews projects
1 Inclusive of audit, assurance, tax, consulting and other services

2 General practice for HK office; summer internships are not offered in certain years 8
3 Practice for China office, recruitment timeline varied by office
Consulting Firms – Large Global Players (Cont’d)
Other global consulting firms are well respected in the industry with their own specialization.

• 505,000 employees • End-to-end transformation at • Analyst • Online application • Name often
speed & scale • Consultant • Timeline varies by associated with IT;
• 200 cities • Senior Consultant
• 19 industries country known for work
• Manager
• 55 countries • 5 practice areas • Senior Manager • Fit & case interviews flexibility
• Generalist or specialist • Managing Director
• 2,400 employees • Excellence, entrepreneurship, • Junior Consultant • Online application, • Largest Europe
empathy • Consultant case competition home grown
• 50 offices • Senior Consultant
• 13 industries • Project Manager • Fall application for consulting firm
• 35 countries • 5 business functions • Principal summer internship
• Generalist or specialist • Partner • Fit & case interviews
• 3,500 employees • Trusted advisor to the world’s • Business Analyst • Online application • Founded as a spin-
foremost org • Senior Business Analyst Fall/winter application off from McKinsey;
• 58 offices • 14 industries • Associate for summer internship strong focus on
• Manager
• 40 countries • 9 business needs • Principal • Fit & case interviews operations
• Generalist or specialist • Partner
• 5,000 employees • Accelerate breakthroughs • Consultant • Online application • Highly value
• 14 industries • Senior Consultant • Fall application for full- entrepreneurial
• 60 cities • Associate
• 11 capabilities time/summer internship spirit
• Engagement Manager
• 31 countries • Generalist or specialist • Principal (HK)
• Partner • Fit & case interviews
9
Consulting Firms – Niche Players with HKUST Relationship
HKUST maintains closed relationship with a number of boutique consulting firms through an extensive alumni network.

• 450 employees • Unlock uncommon growth in • Associate • Integrated
face of disruption • Senior Associate
• 12 offices • Engagement Manager consulting firm and
• 12 industries • Senior Engagement brand agency
• 6 countries • 4 solutions Manager
• Generalist or specialist • Partner
• 1,000 employees • Value by data • Analyst • Focus on data
• 8 industries • Consultant
• 14 offices • Senior Consultant consulting & digital
• 13 countries • 3 key services • Consulting Manager agency
• Generalist or specialist • Consulting Director • Online application, or
through career office
• 1,650 employees • Pioneer of Consulting 4.0 • Consultant • Known for their
• Senior Consultant portal
• 23 offices • 10 industries strength in financial
• Manager • Spring application for
• 11 services • Senior Manager service industry
• 16 countries • Generalist or specialist summer internship/ full-
• Director/Partner
time
• Unique business model • Associate • Fit & case interviews • Agile team of
• ~30-50 employees • 14 industries • Consultant consultants
• 6 services • Manager
• 4 cities/countries • Partner
• Generalist or specialist
• 1,235 employees • Independent provider of • Analyst • Known for their
strategic market research • Consultant industry report
• 15 offices • 33 industries • Senior Consultant covering over 30
• 14 countries • 11 services • Manager
• Director industries
• Generalist or specialist
10
Fit/Behavioural Interview Preparation
11
Fit/Behavioural Interview Preparation
Fit interviews assess a candidate’s ability to work in a team while representing the firm’s image to external stakeholders.
Fit interviews let firms evaluate if a candidate can adequately represent the firm.
Purpose • Consultants work in teams isolated from the rest of the office for long durations at a time.
Managers must feel they can work with candidates before one will be assigned onto a team.
• Consultants entering at the MBA level will typically have direct contact with clients and other
stakeholders; managers must trust candidates to uphold the firm’s image and reputation with
minimal guidance.
Candidates should understand that half of their application is based on their fit.
Approach
• Candidates should demonstrate they are affable, relatable, well-spoken, confident, driven,
entrepreneurial; any qualities that would be expected of a consultant from a client’s
perspective.
• Candidates should show how their experience demonstrates the traits a consultant needs and
how it is translatable to the work a consultant might encounter as part of their normal workday.
12
Fit/Behavioural Interview Preparation (Cont’d)
A consistent narrative of a candidate’s experience and journey demonstrates their ability to perform as a consultant.
Be able to communicate more than a cursory understanding of consulting and why you are a good fit. While
not all consultants spend their entire career in consulting, be able to demonstrate you can follow through
with a medium-term commitment (e.g. 2-5 years) in the industry.
Sample questions Suggestions for preparation

Tell me about yourself Have an elevator pitch (e.g. 1–2 mins max) with 3 themes about yourself that
summarizes your profile. Include different aspects of your life (e.g. professional,
educational, personal) to highlight. Do not simply regurgitate your resume.
Walk me through your resume Build a narrative between your experiences that leads you to a career in
consulting. Emphasis should be placed on the key skills a consultant will need
(e.g. project management, client engagement, data analysis, etc.)
Why do you want to do consulting? Have a genuine answer that demonstrates your drive and passion for
consulting. Even if you do not intend to stay in consulting, you should be able to
demonstrate why it would be worthwhile for a firm to invest in your training.
Why did you apply to this firm? Be prepared to show you clearly understand where the firm’s specialty is, and
what differences exist between this firm and other firms that are considered
peers. Include differences in work culture, career paths, and people.
13
Candidates’ personal stories highlight specific skills and behaviours that will be useful in a consulting setting.
CAR Framework
• Stories expressed as context-action-result will allow experiences to be shared in a structured and concise form.
• Having each story answer a specific question type will help ensure stories are relevant to the interview.
• Prepare multiple stories for each question type, in case a story does not resonate with an interviewer.
Story Skill/Experience Context Action Result
Unmonitored • Leadership Process previously • Mapped historical • Given ownership of
process • Entrepreneurship considered “trivial” data with output to process monitoring
• Influence without highly correlated with show correlation • Improvement gained
authority product output • Verified causation $2 million additional
with trial run revenue p.a.
Sudden departure of • Personnel conflict Subject matter expert • Reviewed past work • Deliverable finished
teammate • Impending deadline suddenly leaves team to replicate expertise on time to client
• Teamwork with one week left • Redistributed work • Approved to fast-
before deliverable due streams based on track training as new
team availability subject matter expert
Etc. Etc. Etc. Etc. Etc.
14
A breadth of stories illustrate a breadth of experience for scenarios that a consultant may encounter.
Example question types

General qualities Project management Client relationship Data analysis Internal operations
Leadership Competing priorities Irrational clients Numerical modeling Influence without
e.g. Can you provide e.g. How do you e.g. Imagine you had a e.g. Tell me a time authority
an example where you prioritize between two “client from hell”. What where you produced a e.g. How would you
took charge in an out- deliverables due at the is your strategy to quantitative model. convince your boss he
of-control situation? same time? manage them? What was the result? or she was wrong?
Teamwork Personnel conflict Expertise challenged Handling uncertainty Managing feedback
e.g. How do you keep e.g. How would you e.g. How do you e.g. What do you do if e.g. What do you do if
a team motivated on a address an underper- handle a client that your only data had you disagree with a
dull project? forming colleague? doubts your results? dubious accuracy? performance review?
Entrepreneurship Impending deadline Demanding clients Conflicting data Getting help
e.g. Can you describe e.g. What do you do if e.g. What do you do if e.g. How would you e.g. Tell me about a
a new initiative that you know you cannot a client asks you to do use inconsistent data time you asked for
was led by you? finish a task on time? extra work for them? between two sources? help. Did you get it?
This is not an exhaustive list; there are many more that can be asked.
15
Case Interview Preparation
16
Case Interview Preparation
Case interviews emphasize how a candidate can demonstrate a structured approach to problem solving.
Case interviews let firms evaluate how candidates solve problems within a given context.
• Candidates should have an underlying framework to demonstrate understanding of a business
Purpose case and the potential root causes of its problems.
• Candidates should “drive the case” by hypothesizing the most likely areas to explore and
make pertinent requests for data.
• Candidates should not attempt to “boil the ocean” by asking for all available information
without showing why it is needed; in a real consulting engagement such data requests cost
time and effort that should not be wasted.
Candidates should understand case interviews is a skill that must be practised and honed.
Approach
• Like any skill, case interview practices should be done regularly and with specific goal in mind
(e.g. focusing on a subset of skills each case).
• Candidates should seek other highly motivated and skilled casing partners (such as coaches
or alumni) who can give quality feedback; avoid situations of “blind leading the blind” when
inexperienced case partners give poor or irrelevant feedback.
17
Case Interview Flow
Case interviews follow a typical flow that lets candidates showcase their problem solving approach.
Typical Steps within a Case Interview

Prompt and
Brainstorming Concluding the
Clarifying Structure Analysis
Solutions Case
Questions
The case prompt Structure is provided Analysis will be Brainstorming may Cases end with a
introduces the case with a framework performed on data be required to quick (1–2 minute)
and sets the stage that categorizes discovered from the consider other parts summary of all the
for the problem. ways to approach a candidate’s of the case. candidate’s results
case. framework. and analyses.
Clarifying questions Categories in a The result or insight Solutions should still Recommendations
should provide framework should be should answer the be provided within a should be provided
further context and MECE: Mutually original question structured answer first with
help structure the exclusive and posed. framework. regards to the case
problem-solving collectively prompt.
approach. exhaustive.
18
Case Interview – Prompt and Clarifying Questions
Candidates should fully understand the problem presented to them before attempting to solve it.
Prompt and
Solutions Case
Questions
The Prompt
Clarifying Questions
• Case prompts briefly describe the problem at hand • The client’s intent should be understood and
and will usually include the client name and industry. summarized by restating their key question.
• Clarifying questions should focus on better
• Some prompts may not have a clear objective; understanding the problem at a high level, e.g. in
candidates will need to clarify the client’s intent. scope vs. out of scope, geographical limitations.
• The decision criteria should be understood as
• Candidates should repeat the main points of the much as possible, e.g. metrics, timeframes,
prompt to ensure the relevant data is properly acceptance thresholds.
captured. • Data-related requests should be relegated to after
a framework is in place.
19
Case Interview – Framework
A good framework provides structure by splitting the problem into organized categories for further analysis.
Prompt and
Solutions Case
Questions
Good frameworks should have: Good frameworks should not have:

Categories that are MECE: mutually Categories with unclear or overlapping
✓ exclusive, collectively exhaustive  topics (e.g. including both external factors
At least one level of detail, (e.g. customer and macroeconomic factors)
✓ segmentation or examples of revenue

streams)  Only superficial descriptions or deep
technical descriptions of categories
Too much breadth that covers irrelevant
✓ Enough breadth to cover all possibilities  topics
Evidence of insight or hypotheses Presumptions made using personal
✓ generated from the prompt or clarifying
questions
 experience that is not suggested from data
within the case
20
Case Interview – Analysis
Analysis should be performed in a clear, coherent, and structured manner to generate relevant insights.
Prompt and
Solutions Case
Questions
Structure Calculation Insight Contextualize
• Build a structure around • Ensure units of all data • Highlight (e.g. underline or • Allow yourself a “sanity
your known data and points are aligned (e.g. circle) the key result and/or check” within the context of
desired result, making a time, distance, area, orders conclusion of your analysis. the case: Does the result
note of assumptions made of magnitude) make sense?
(e.g. like an Excel sheet). • Determine what would this
• Round figures only when it • Ensure your result answers
• Communicate how you will mean for the case prompt:
makes sense (e.g. error the original question posed.
get what you need using would there be a logical
introduced is very small).
what you have. course of action?
21
Case Interview – Brainstorming Solutions
Potential solutions should be presented within a framework to demonstrate continual structured thinking.
Prompt and
Solutions Case
Questions
Brainstorming
Open-ended cases allow candidates to demonstrate Possible Frameworks
creativity for generating multiple potential solutions.
• Solutions suggested through brainstorming should • Internal vs. external

still be structured within a framework in some way.
• Monetary vs. non-monetary
• Possible brainstorming frameworks include referring
to the initial framework or categorizing by issue if
multiple issues were identified. • Short-term vs. long-term
• Even a simple binary classification will demonstrate

• Quick wins vs. complex aspirational targets
structure in categorizing the possible solutions.
22
Case Interview – Concluding the Case
Good conclusions neatly summarise all findings in a logical flow to quickly communicate only the important information.
Prompt and
Solutions Case
Questions
Give succinct conclusions as if the client Recommendation

• Your recommendation should answer the case prompt.
suddenly appeared (e.g. in an elevator, back
• Quantify the result to measure the impact (e.g. $5M p.a.).
from lunch, etc.)
Rationale
• Be answer first: State the recommendation • State your justification based on your analysis.
before going into any detail. • Include assumptions and key insights in rationale.
• Conclusions given should precisely and Risks

concisely summarise your analysis and • Include risks and unknowns that should be considered.
insights. • Sort risks (e.g. large to small) based on potential impact.
• The entire conclusion should not take longer Next Steps

than 1-2 minutes. • List what would be done next if this was a real project.
• Examples include risk assessment, due diligence, etc.
23
Case Interview Practice Strategy
Candidates should plan enough time to incrementally build their skills over diverse case types in a breadth of industries.
Not Quantity but Quality

Completing quality cases and receiving quality feedback is more important than simply
completing a lot of cases.
Not Frivolous but Focused

Candidates should practice with specific goals in mind and look for incremental
improvement instead of completing cases for the sake of completing them.
Not Familiarity but Diversity
≈ Candidates should expose themselves to different types of cases in various industries

rather than repeating common case types in familiar industries.
Not Sprint but Marathon

Significant time is required to practice the different types of cases. Candidates are unlikely
to get good results from “cramming” this skill before an interview.
24
Helpful Formulas
Knowing important formulas will speed up required calculations while revealing what additional information is needed.
Useful Formulas
• Profit = Revenue – Cost = (Volume x Price) – (FC + VC)
Volume x Cost/unit
• Profit margin = Profit / Revenue
• Return on Investment (ROI) = Annual Profit / Initial Investment
• Breakeven (Payback Period) = Initial Investment / Annual Profit
• Rule of 72: Years to Double Investment ≈ 72 / Rate of Return
• Inventory Turnover = COGS / Average Inventory (Beg Inventory + End Inventory) / 2
𝐶𝐹1 𝐶𝐹2 𝐶𝐹𝑛
• Discounted Cash Flow (DCF) = + +…+ ; 𝐶𝐹 = cash flow, 𝑖 = discount rate, 𝑛 = time period
(1+𝑖)1 (1+𝑖)2 (1+𝑖)𝑛
Calculation Tips
• Round numbers by + / - 10% (e.g. 365 days becomes 350, 52 weeks becomes 50)
• Handling large numbers by using labels (e.g. k, m, b) or scientific notation
• Factoring (e.g. 300 / 4 = 3 x 100 / 4)
• Expanding (e.g. 68 x 35 = 68 x (10 + 25) or (70 – 2) x 35)
• Growth rate (e.g. 10% then 20% growth = (1.1 x 1.2) – 1 )
25
Example Frameworks
26
Example Frameworks
Good frameworks identify the most pertinent information needed for a case while de-emphasizing everything else.
List of Common Frameworks

Company-level Industry-level
Sales & Marketing Strategy Operation Industry

• Profitability • 3Cs • Process • Porter’s Five Forces
• Marketing Mix (4Ps) • Growth Strategy Improvement (5Ms) • Value Chain
• Pricing • Portfolio Analysis • Reorganization
• Market Entry
• M&A
Important Notes on Frameworks

• Frameworks should be made as case-specific as possible; common frameworks should not be used as-is.
• Understand how to apply each framework instead of memorizing every framework available.
• Multiple frameworks are typically required to solve one case, unless the case is extremely straightforward.
• Do not announce that you will be using a given framework during the interview; outline the structure instead.
27
Profitability Framework
The profitability framework is the most commonly used business tool to identify the root causes of profitability issues.
Profitability Framework Application Examples

Profits
• Identify root causes of
profitability issues
• Identify revenue and cost
Revenues Costs drivers
• Analyze different revenue
segments
Variable • Weight between two options
Volume Price/unit Fixed cost
cost – cost & benefit analysis
Revenue segmentation Fixed cost examples:
examples: • Rent
• By product • Staff overhead
• By distribution channel Variable cost examples:
• By geography • Raw material
• By customer type • Direct labor
• Commission
28
Marketing Mix (4Ps) Framework
The 4Ps framework is useful to structure thoughts on marketing strategies for new and existing products/services.
Marketing Mix (4Ps) Framework Application Examples

Product Price
• Structure thoughts on
What are the characteristics At what price should the marketing strategies of
of the product/service? product be sold? products/services to:
• Customer need fulfilled • Customer perceived value − Reposition existing
• Usage • Competitor price products/services
• Competing • Customer price sensitivity
− Launch new
products/substitutes • Production cost
products/services
Place Promotion
Which channels should the Which promotion strategies
product be distributed? should be used?
• Possible channels (online, • Marketing message/value
offline) proposition
• Customer expectation • Type of media
• Sales team required? • Best time to promote
29
Pricing Framework
Companies can price their products/services based on cost, added value and competitor benchmarking.
Pricing Framework Application Examples

Cost-based Value-based Competitor-based
• Determine price of a new
• Fixed costs • Price of next best • Price of product or service
• Variables costs alternative substitutes from • Apply as one of the
Features that competitors
• Number of units elements for marketing mix
makes product • Value of our
sold (4Ps) framework
better than product vs.
• Target profits alternative substitutes
• Value of these
features
Overall strategy:
• Pricing strategy objective (e.g. high profitability, increase
market share)
• Take into account cross-sell/upsell opportunities
• Possibility to sell different versions of the same product
30
3Cs Strategic Framework
The 3Cs framework establishes the competitive position of the company relative to its customers and competitors.
3Cs Strategic Framework Application Examples

Customers Competition Company • Construct overall business
Who are the What are the What defines the strategy of a company
customers? competitive company? • Competitive advantage
• Customer dynamics? • Product offering analysis
demographics • Competitors’ • Identify targeted
• Profitability
(e.g. age, sex, value proposition product/market/customer
income) & brand • Core segments for the company
competencies
• Customer needs • Competitors’
market share & • Unique selling
• Customer point
segment size & growth
growth • Competitors’ • Financial
financial health performance &
• Customer price resources
sensitivity
31
Growth Strategy (Ansoff Matrix) Framework
The Ansoff matrix exhausts all possibilities of growth strategies that can be implemented by a company.
Growth Strategy (Ansoff Matrix) Framework Application Examples

Market
Existing New • Structure thinking of the
ways company can grow
(e.g. to increase customer
base, increase sales)
Existing
Market Market
Penetration Development • Identify growth strategy to
develop marketing mix
Product
Product
New
Diversification
Development
Growth can be achieved through organic vs. inorganic growth
32
Portfolio Analysis (GE-McKinsey Matrix) Framework
The GE-McKinsey Matrix helps to evaluate business portfolio and prioritize investments for multi-business corporations.
Portfolio Analysis (GE-McKinsey Matrix) Framework Application Examples
• Evaluate business portfolio

Build Invest to
High
Protect • Prioritize investment among

selectively build
different business units
within a company
Industry Attractiveness
Investment priority: • Assist in brand marketing

Medium
Expand or Manage for Build High and product management

harvest earnings selectively Medium
Low
Protect
Manage for
Low
Divest position &

earnings
refocus
Low Medium High

Competitive Strength of Business Unit
33
Market Entry Framework
The market entry framework is used decide whether a company should enter a new market or not and how.
Market Entry Framework Application Examples

Market Client Capability Financial
• Aid in making decision
• Market size & • Differences btw • Current financial whether to enter a new
growth client’s current & situation of the
market or not
• Market new market client
profitability • Is it the client’s • Cost to enter • Structure thinking around
• Product type first new market new market how to enter if entering a
• Competition entry? • Expected new market is rational
intensity • Have other revenues and
• Regulations companies ROI
entered?
Entry Strategy
• Timing of market entry (now vs. delayed)
• Speed of entry (test region vs. whole country)
• How to enter? (e.g. build own company, buy competitor, JV)
• Management approach (centralized vs. decentralized)
34
M&A Framework
The M&A framework is used when companies are looking to merge or acquire with other companies.
M&A Framework Application Examples

The Market The Target
• Aid decisions for a company
• Are both companies in the • Current & future financial whether to acquire or merge
same market? position with other companies
• Market size & growth • Important assets &
• Identify potential synergies
• Market profitability capabilities
for M&A
• Competition intensity • Quality of management team
• Market regulation • Culture of target vs. buyer • Identify acquisition rationale
The Buyer Synergies & Risks

• Acquisition rationale:
Undervalue, control, • Value of individual and
synergies combined entities
• Acquisition financing • Cost synergies
• Experience with other • Revenue synergies
acquisition • Risks of failure
• Right time to acquire
35
Process Improvement (5Ms) Framework
Understanding of basic operations management concept is necessary to solve process improvement cases.
Process Improvement (5Ms) Framework Application Examples

Man • Solve operational issues
(e.g. increasing speed of
machine or purchasing new
Measurement Machine ones, reducing queues,
increasing output)
• Identify cost reduction
initiatives
Materials Method
• Identify where the constraints/bottlenecks are for each element

(e.g. high cycle time, backlogs, high variability, error rate)
• Concepts to understand: Capacity & utilization, cycle time,
throughput time, Little’s Law, how to mitigate bottlenecks
(buffer, parallel process, speeding up)
36
Reorganization Framework
Reorganization framework involves both quantitative and qualitative analysis of an organization.
Reorganization Framework Application Examples

Diagnosis of Levers for Operational
• Company/organizational
current state improvements plan
restructuring
• By business unit or by • Identify levers • Relocate, • Apply as a part of post-
function to optimize change scope merger/acquisition
- No. of FTE (full-time structure of teams, or
strategies
equivalent) - Benchmark layoff
- Average salary & benefit against • Calculate
per FTE competitors opportunity
- Productivity KPIs per BU - Benchmark costs of each
• Organization structure against best in option
- Should not have teams class team/BU • Weight risks
that report to many and benefits of
reports each option
- Maximum size of teams
managed by one person
should not exceed 7
37
Porter’s Five Forces Framework
New and existing companies can use Porter’s Five Forces to assess industry dynamics and competitive landscape.
Porter’s Five Forces Threat of new Application Examples

entrants
• Regulation • Analyze industry and
• Capital requirement competitive environment for
• Economy of scale existing companies or new
• Network effects
entrants (market entry
Supplier Competitive Customer cases)
bargaining power Rivalry bargaining power • Justify decisions whether to
• Supplier concentration • No. of competitors & • Customer enter a new market
• Supplier switching market share concentration
cost • Product similarity • Price sensitivity
• Supplier differentiation • Switching cost • Information availability
Threat of
substitutes
• Potential substitutes
• Ease of substitution
• Customer propensity
to substitute
38
Value Chain Framework
Mapping a firm’s activities to its value chain reveals opportunities for value creation and identify competitive advantages.
Value Chain Framework (Simplified) Application Examples
• Breakdown firm’s activities

and processes
• Analyze specific activities
Input Production Output through which companies
can create value and
competitive advantages
• Suppliers • Manufacturing • Sales
• R&D channels
• Origination
• Logistics
• Design
• Marketing and
services
39
Industry Profiles
40
Industry Profiles
A basic understanding of common industries allows more specific and comprehensive frameworks to be built.
Industry Revenue drivers Cost drivers Other metrics Important considerations

Fast-moving • Price • Cost of goods sold • Price elasticity of • Product portfolio can add
consumer • Manufacturing demand sales (complementary
• Volume
goods products) or reduce them
• Packaging • # stock-keeping units (cannibalization)
(FMCG) • Complementary
• Storage/distribution (SKUs)
OR products
• Marketing • Private label brands lead
Consumer to commoditization of
packaged • R&D (new products)
products
goods (CPG) • Spoilage
• Traffic (foot or online) • Cost of goods sold • Same-store sales • E-commerce is disrupting
• Conversion rate • Labour brick-and-mortar stores.
• Sales per store area
(visits vs purchases) • Storage/warehousing (e.g. per m2) • Brand perception is key
Retail • Basket size (# items • Distribution/logistics differentiator among
• Inventory turnover competition.
purchased) • Rent and overhead
• Avg. price per item • Delivery • Seasonality plays a large
• After-sales service • Returns factor.
41
Industry Profiles (Cont’d)
In-depth knowledge about industries is not necessary as long as key drivers for business decisions are understood.

• Population incidence • R&D • Patent duration • ”Feast or famine”; high
(e.g. of disease or • Cost of goods sold upfront cost for R&D with
• %likelihood of
condition) high rate of failure from
Biotech/ • Manufacturing regulatory approval
• # Diagnosed patients clinical trials, but usually
pharma/life • Packaging (e.g. from Phase
• Dosage (# of units) lucrative end market.
sciences • Distribution/storage I/II/III clinical trials)
• Dosing frequency • Price pressure from
• Drug/treatment price • Marketing • Quality-adjusted life generics once patents
• Gov’t subsidies • Reimbursements year (QALY) expire.
• Third-party payer • Physician salaries • Bed capacity • Each country has own
collections (e.g. from (doctors and nurses) utilization payer model (e.g. NHS in
Healthcare insurance or gov’t) • Medical supplies UK vs. private in US).
providers • Mortality rate
• Co-payments • Insurance • Payment models are
(e.g. • # billing codes
• Patient direct • SG&A changing; e.g. fee-for-
hospitals,
payments (e.g. no • Overhead service vs capitation.
clinics)
insurance) • CapEx (hospitals • Telemedicine is fast
• Gov’t reimbursement and medical growing as a disruptor.
equipment)
42
Identifying the primary revenue and cost drivers in a particular industry will aid in data discovery for solving a case.

• Advertisements (for • R&D (e.g. coding) • Service level (e.g. • Software is very scalable;
free services) percent uptime, usu. low variable cost.
• Back-end hardware bandwidth) • Pricing models (IaaS,
Information • License/subscription PaaS, SaaS) shifting
• Product life/planned
(e.g. per user and/or • Labour
technology obsolescence fixed costs into var costs.
time period)
• Ecosystems used to lock-
• After-sales services in customers to
complementary products.
• Advertisements (for • Media production • Viewership or • Content is primary draw
free services) • Talent readership for customers.
• Subscriptions • Distribution • Rise of large players
• Ratings (e.g. for TV through diversification
Media and • Marketing
• Purchases (e.g. pay- or film)
entertainment • CapEx (e.g. studios, (e.g. Netflix), acquisition
per-view, physical
sets) (e.g. Disney, Tencent)
media)
• Commission and • Technology (e.g. AR/VR)
• Licenses royalties is enabling disruption.
43
Understanding key metrics and terminology helps build credibility even without having specific domain knowledge.

Upstream: Upstream: • Production (barrels) • Prices of oil futures react
• Crude oil prices • Exploration • Recoverable oil significantly according to
Midstream: • Drilling/Extraction announced production.
(barrels)
• Sales and purchase Midstream: The largest players are
Oil & gas agreement contract • Crude oil prices • Depletion rate OPEC, US, and Russia.
Downstream: • Storage/transport • Break-even point/
• Refined product Downstream: • Major oil markets: e.g.
payback period Brent, WTI (West Texas
prices (gas, fuel, oils, • Crude oil prices
plastic, lubricant, etc) • PP&E (e.g. refinery) • Carbon footprint Intermediate)
• Volume • Cost of goods sold • Lead time • Highly exposed to
• Price (usu. commodities) macroeconomic
• Capacity utilization conditions (e.g. GDP for
• Labour
Manufacturing • Overhead • Service level (e.g. consumer demand, tariffs
& industrials • Storage/distribution percent on-time and trade wars,
• Quality and defects delivery) commodity prices, labour
• CapEx/depreciation unionization)
• Inventory turnover
• Tariffs (for int’l trade)
44
Recognizing an industry’s major trends enables brainstorming for creative and relevant next steps for concluding a case.

• Fees (ticket price or • Fuel • Load factor (capacity • Partnerships (e.g. with
shipment fees) • Maintenance used over max hotels or other firms
Supply chain/ capacity) using other transportation
• Add’l spending (e.g. • Insurance
logistics/ modes) help differentiate
baggage fees, in- • Lease/depreciation
airline & • Range/distance from competition.
flight svc, tracking) • Labour
passenger
• Number of routes • Newer green tech may
transportation • Surcharges (e.g. • Port/gate fees
fuel, rebooking, rush • Tariffs (for shipping require retrofitting or
• Fuel efficiency replacement of fleets.
delivery) internationally)
-Average daily rate • Labour • Revenue per • Largest players have
(ADR) • Consumables available room multiple brands (e.g.
-Occupancy rate • Utilities/overhead (RevPAR) Marriott, Hilton, Accor)
Hospitality/ • Furniture and fixtures • Ratings (e.g. star • Seasonality plays a large
-Available room nights
tourism • Insurance system) factor.
-Additional spending • Franchise fees • Highly exposed to macro-
(e.g. room service, • Loyalty rewards economic conditions (e.g.
laundry, concierge) • Taxes consumer spending)
45
Acumen of representative industries is applicable to adjacent industries without significant loss of relevance.

• Interest from loans • Cost of borrowing • Reserve ratio • Net revenue typically the
• Fees (e.g. M&A, • IT (e-banking, back- • Fed funds rate interest spread between
asset management, end, security, etc.) borrowing and lending.
Banking/ commission) • Real estate • HIBOR • High net worth individuals
finance • Premiums • Bad debt • LIBOR are a priority segment.
• Loss on investment • Major disruptions from
• Labour fintech (e.g. blockchain,
• Marketing online-only banks, etc.)
• Investment returns • Investment expense • Discounted cash • Investors demand
• Labour flow (DCF) greater transparency
• Management fees
• Weighted average from PE funds to see
• Legal
• Actions that increase cost of capital performance.
Private equity/ revenue of acquired • Technical assistance (WACC) • The use of an
venture equity (e.g. identify • SG&A • Market capitalization
appropriate WACC can
capital efficiencies, new • Travel • Price–earnings ratio
vastly affect valuations.
management) (P/E ratio)
• Taxes • Comparables
46
Cheat Sheet
Fit/Behavioural Interview Case Interview

Fit questions Prompt+clarify
Sample questions Answers should include: Prompt Ask who/what/when/where/why.
Tell me about Three main traits/themes about you Key question Ask for scope, metrics, timeframes,
yourself (Professional, educational, personal) acceptance thresholds.
Walk me through Exp. w/ proj. mgmt, client engagemt, Structure
your resume data analysis Framework Keep categories relevant and MECE.
Why consulting? Drive+passion for consulting, why Depth Contextualize according to prompt.
invest in your training Analysis
Why this firm? Firm’s position, compare w/ peers, Structure Note assumptions .
specific career paths + specialties Calculation Track units and rounding accuracy.
Behavioural questions Insight Highlight key result to identify later.
CAR Framework stories: include context, action, results Contextualize Sanity check: does it make sense?
Sample topics Example questions Solutions
General qualities Leadership, entrepreneurship, Brainstorm Maintain structure within framework.
teamwork Conclusion
Project mgmt Work priority, time mgmt, ppl mgmt Recommendation Be answer first and quantify.
Client engagemt Bad client, challenge expertise Rationale State assumptions and key insights.
Quant analysis Modelling, bad data, uncertain src Risks List unknowns or uncertain data.
Internal ops Managing up, getting help, feedback Next steps List what would a client do next.
47
1. Choi Sun is Here Page 49
2. Qinghai Telecom Page 55
3. Riyadh Airport Metro Page 62
4. Locker Up! Page 72

Practice
Cases 5. Fragrant Harbour Page 81
6. Oriental Media Page 90
7. Firebird Sports Page 98
8. In You to Give Page 105

Case 1: Choi Sun is Here
49
Case 1: Choi Sun is Here (1/5)
For interviewer only
Case Overview Case Prompt

Case type: Profitability
Our client, Leung Kee, is a popular lunch-service-only cha chaan teng
Industry: Retail F&B, fintech
(Hong Kong-style café) in Quarry Bay, serving mostly office workers
Difficulty: Easy
and locals in the area. As a recently-established venue, Leung Kee is
Concepts tested: Operations
currently accepting only cash transactions. Leung Kee has been
management, financial
approached by Choi Sun Financials, a fledgling fintech company
modelling
focusing on providing streamlined financial transactions to small and
medium enterprises, with an offer to use their services. Is Choi Sun’s
Interviewer Guide offer a good idea?
The case asks for a relatively
Goal (to be asked by candidate): Leung Kee wants to know if the
straightforward yes/no decision
additional revenue generated in one year exceeds the annual costs of
but is intentionally incomplete
using Choi Sun’s services.
to allow for creativity from the
candidate.
50
Interviewer Guide Additional Information

Good candidate: Leung Kee:
• Establishes a basic • Opening hours 12 pm–2 pm, Mondays to Fridays, 50 weeks a year.
profitability framework. • Despite its short opening hours, the café is very popular, with
• Understands different queues forming before the café is opened each day and many
customer types should be disappointed customers still in queue turned away at closing.
handled separately.
Choi Sun’s services:
Better candidate: • Integrated point-of-sale terminal accepting major credit cards, EPS
• Identifies key drivers for (Electronic Payment Services), Octopus, Alipay, WeChat Pay, etc.
revenue and costs in a • Promises faster transaction speeds, convenience for customers.
framework customized to
payment services. Customers: Two major segments are served.
• Realizes Choi Sun’s value • Eat-in: Groups of 4–6 people seated at larger tables.
proposition is useful only • Take-out: Typically office workers taking lunch back to eat in office.
to the take-out customer • Given the choice, all customers will pay using non-cash methods
segment. (i.e. they will use the services provided by Choi Sun).
51
Interviewer Guide Required Data

Key insights: Current operations:
• The candidate should • Eat-in: Tables are seated for an average of 20 minutes.
quickly realize that 2% • Eat-in: There are 10 tables available for eating in.
($10) is used for eat-in • Take-out: Average transaction time is 60 seconds.
while $5 is used for take-
out. Choi Sun’s service specifications:
• Choi Sun’s services help • Trials at a similar cha chaan teng in Kwun Tong shows transaction
our client generate times can be reduced by 15 seconds on average.
additional revenue by • Choi Sun will charge the greater of 2% or HK$5 per transaction.
acquiring uncaptured • There is an annual fee of HK$50,000 that covers all necessary
customer demand. If time training, hardware, and maintenance.
permits, ask the candidate
to brainstorm other ways Average customer spend:
this demand can be • Eat-in: The average table bill is HK$500.
captured. • Take-out: The average customer order is HK$100.
52
Example potential calculation by customer segment:

Interviewer Guide
Eat-in Avg spend Fee/trans Tables/day Daily Annual • The scope of the project only provides
Base rev $500 60 $30k $7500k costs related to running Choi Sun’s
Var cost $10 $0.6k $150k services; no other operating costs have
Net $29.4k $7350k been provided.
Take-out Avg spend Fee/trans Orders/day Daily Annual • It is acceptable for a candidate to use
Base rev $100 120 $12k $3000k terminology such as “net profit”,
New rev $100 160 $16k $4000k “operating margin”, etc., however remind
Var cost $5 $0.8k $200k the candidate that typically other
Net $15.2k $3800k operating costs such as cost of goods
sold, salaries, etc. should be factored in
Total Annual for those terms to be accurate, even if
Base rev $10500k that data has not been provided.
New rev $11500k
Var cost $350k
Fix cost $50k
Net $600k
53
Recommendation Rationale
e.g. “My recommendation is for Leung Kee to e.g. “Using Choi Sun’s services would speed up
accept Choi Sun’s offer. Leung Kee would be able takeout transactions to capture unmet customer
to generate an additional HK$1,000,000 in revenue demand of up to 40 more orders per day. The
over HK$400,000 in costs, providing a net additional revenue generated less fees would pay
difference of HK$600,000.” back the annual subscription cost in 16 days.”
Risks Next Steps

e.g. “We don’t know what the operating margin of e.g. “For next steps, we could perform a margin
Leung Kee is; although additional revenue can be analysis to assess the impact on Leung Kee’s
generated, we don’t know how the overall overall profitability. In parallel, since there are
profitability would be affected. In addition, we are unserved customers each day, we could look at
assuming there are 40 additional customers we extending opening hours or expanding the
could serve each day; this might not be the case.” restaurant as other methods to capture these
customers.”
54
Case 2: Qinghai Telecom
55
Case 2: Qinghai Telecom (1/6)

Our client is a local land developer in Xining, the capital of Qinghai
Industry: IT, Telecom
province in western China. The latest project is a residential complex in
Difficulty: Medium
a relatively affluent area where the client has partnered with Qinghai
Concepts tested: Profitability,
Telecom, a local affiliate of a national telecom conglomerate that has
new business, financial
offered to provide cables into each residential unit for providing internet
modeling
access. Residents of the complex would thus be “locked” into becoming
customers for Qinghai Telecom. Our client and Qinghai Telecom have
Interviewer Guide agreed to evenly split both the costs of cable installation and the
revenues of the internet service. Qinghai Telecom is willing to provide
There are many potential ways
different types of cables to install, each that provides different quality
the revenue stream can be set
service. Our client wants to ensure they invest their capital wisely.
up. Let the candidate
Which type of cable should our client pick?
brainstorm possibilities through
their frameworks before
Goal (to be asked by candidate): Our client will pick the cable that
providing the details.
can provide the highest ROI over 3 years.
56

Good candidate: Cable choices
• Asks clarifying questions • Twisted pair: Data transmissions speeds of up to 1 gigabits per
to better understand the second. Most economical choice.
structure of the • Coaxial cable: Data transmission speeds of up to 80 gigabits per
partnership and revenue second. Highest performance choice.
streams • Installation time for all choices are negligible, but the whole complex
must use the same type of cable.
Better candidate: Residents
• Has a framework to know • There are 500 residential units in the complex.
exactly what numbers are • All residents have an assigned hukou and are unlikely to move out.
needed for calculation • Although the partnership ensures there are no competitors for
• Does not spend too much landline connections, adoption is not 100% guaranteed; residents
time with irrelevant that are dissatisfied with the service (either too expensive or too
information (e.g. technical slow) can choose not to register and instead access internet by
specifications) simply tethering off their smartphone plans instead.
57

Key insights: Internet plans
• The candidate should be • As residents are “locked in”, all units that register are charged a flat
able to easily find the fee for the whole year at the beginning of the year for unlimited use.
information they need via • If twisted pair cables are used, fee would be 4500 RMB / unit / year.
the profitability equation. • If coaxial cables are used, fee would be 8500 RMB / unit / year.
• All plans are viable; the • Assume 500 RMB / unit / year variable cost regardless of type.
candidate should
remember the key metric Registration rate
is ROI rather than NPV. • If twisted pair cables used, 50% of residents will register.
• The candidate should use • If coaxial cables used, 75% of residents will register.
the cost of capital as the
discount rate; steer the Installation costs
candidate back if the • Installing twisted pair cables in the building will cost 2 million RMB.
candidate tries something • Installing coaxial cables in the building will cost 5 million RMB.
more complicated. • The bank will help structure financing to attain 10% cost of capital.
58
Interviewer Guide New Prompt

Good candidate: Note: Interviewer should give the new prompt when the candidate
• Is not rattled by the appears more than halfway through calculations.
sudden new prompt, does
not lose composure with Qinghai Telecom just received word that they have been selected as a
the introduction of technology leader in the province by China’s Ministry of Industry and
additional information. Information Technology. As part of the Belt and Road Initiative, the MIIT
would like to bring fiber optic cable technology to the region and has
Better candidate: invited Qinghai Telecom to deploy it wherever it makes financial sense.
• Seamlessly incorporates Fiber optics has speeds up to 26,000 Gbps and will require 7.5 million
the new information into RMB of initial investment for installation payable immediately. However,
the existing framework it will take one year to physically get sufficient quantities of cables into
and calculations to arrive Qinghai. If used in the residential complex, each unit will be charged
at a conclusion. 20,500 RMB per year with an expected 60% registration rate. As part of
Belt and Road Initiative, the bank will help structure financing to achieve
5% cost of capital if the client would like to deploy fiber optics.
59
Example potential calculation by entire revenue stream
Cable type Init. invest Reg. rate Price VC Profit D/c rate Year 1 Year 2 Year 3 NPV ROI
Twisted pair 2,000k 50% 4.5k 0.5k 4k 10% 1,000k 900k 810k 710k 36%
Coaxial 5,000k 75% 8.5k 0.5k 8k 10% 3,000k 2,700k 2,430k 3,130k 63%
Fiber optic 7,500k 60% 20.5k 0.5k 20k 5% 0 5,700k 5,415k 3,615k 48%
Interviewer Guide
• The calculations should be tolerant to some rounding if the candidate feels is necessary. If the candidate
rounds, ask the candidate to track the magnitude of the rounding error as he or she proceeds through the
calculations.
• Discount rate calculations may be simplified to multiplying by 0.9 and 0.95 instead of dividing by 1.1 and 1.05.
• Astute candidates will note that, as both revenue and costs are split evenly between the client and Qinghai
Telecom and the target is ROI, when the costs and revenues split is factored in (if at all) will have no impact on
the final recommendation.
60
e.g. “My recommendation for the client is to use e.g. “The higher number of users in the building will
coaxial cables for the residential building. The make coaxial cable service better than twisted pair
structure of the partnership with Qinghai Telecom service, while fiber optics, despite its appeal, takes
will allow our client to generate an ROI of 63% over too long to deploy before it can generate a
3 years.” comparable ROI.”
Risks Next Steps

e.g. “Given the speed at which technology moves, e.g. “I would proceed with installing coaxial cables
there may be future innovations that can bring but will look for ways to segment residents to reach
down the cost of fiber optics in the future, or the last 25% of residents using differential pricing. I
alternatively, 5G improvements as a substitute may would also monitor technological trends such as 5G
render land line cable internet obsolete.” deployment that might disrupt the business model
between our client and Qinghai Telecom.”
61
Case 3: Riyadh Airport Metro
62
Case 3: Riyadh Airport Metro (1/9)

Case type: Investment Analysis
Our client is the Saudi Arabia Ministry of Infrastructure. They are
Industry: Infrastructure
planning the construction of a metro direct link connecting the
Difficulty: Medium
international airport to the Riyadh city center.
Concepts tested: Estimation
They already estimated the upfront investment for the engineering,
Question, Investment Analysis,
procurement and construction to be USD 2 billion, of which 60% to be
Payback Period
funded by the Saudi Arabia Sovereign Fund and 40% to be funded by
the Ministry of Infrastructure.
Interviewer Guide They called us to help them evaluate this potential investment.
The candidate should
Goal (to be asked by candidate): The Client wants to base their
understand, since the upfront
decision on the payback period of their part of the investment (the
investment is given, that she/he
40%), and they aim at a payback lower than 25 years.
needs to calculate revenues
and costs associated with the
infrastructure, in order to then
find the payback period.
63
For interviewer only – General Framework

Good candidate: The appropriate plan of action should be the following:
• Understands that needs to Calculate Revenues
calculate the yearly FCF • Number of passengers using the metro
(and profits can be a good • Price of a metro ticket
proxy for that) Calculate Fixed and Variable Costs
• Understands that needs a • Salaries
metric to evaluate the • Maintenance
investment (NPV, • Utilities
payback…) • Other, like ticketing, train cleaning, stations management
• Trains can be leased (operational cost) or bought (upfront
Better candidate: investment). In this case they will be bought, so shall be excluded
• Has a framework which Evaluate Investment
already goes one level • If candidate mentions other metrics (for example NPV), direct
down and lists the main candidate towards payback period
areas of analysis, as
shown on the right
64
For interviewer only – Estimation of People Using the Airport

Key insight: Candidate should identify the following tree for the estimation; if not,
• Candidate should realize lead candidate to that. Ask to estimate numbers for each item, to check
that the supply of people if reasonable, but then recommended numbers in parenthesis:
for the metro is given by • Number of flights per day
people who use the • Number of runways (4)
airport, so should start by • Frequency of flights per runway (1 every 5 mins)
estimating that number • Daily hours of operations (20)
• Passengers per flight (250)
Good candidate:
• Before starting to make Flights per day = 4 runways * 12 flight per runway per hour * 20 hours
assumptions and of operations per day = 960. Can round to 1000 flights per day.
calculations, creates a tree
with all the information Passengers per day = 1000 flights per day * 250 passengers per flight
needed = 250k passengers per day.
65
For interviewer only – Estimation of People Using the Metro Link

After candidate has brainstormed most of the means of transportation
Key insight: passengers using the airport could use, provide the following estimation
• Only a fraction of the by the Ministry of Transportation:
people using the airport
would use the metro. Means of Transportation Percentage
Taxi 20%
Ask the candidate to
brainstorm where the people Bus 20%
that use the airport could go Private Car 10%
and which transportation
Connecting Flights 10%
mean they could use
Rent a car 10%
Pick up by family/friend ?
Metro ?
66

• Next step is to estimate Candidate should identify the following tree for the estimation; if not,
the number of people lead candidate to that. When the candidate has identified it, recommend
picked up by family/friend to use the numbers in parenthesis:
• Brainstorm with candidate • Number of short-stay parking slot (150)
potential ways to estimate; • Utilization of the short-stay parking lot (80%)
easiest way is observe the • Duration of stay (15 min)
cars using the short stay • Number of people picked up (2)
parking • Daily hours of operations (20)
Good candidate:
• Before starting to make People picked up by family/friend per day = 150 parking slots * 80%
assumptions and utilization * 4 cars per slot per hour * 2 people picked up by one car * 20
calculations, creates a tree hours of operations per day = 19,200 people/day. Can round to 20k/day.
with all the information
needed
67
Example calculations
Interviewer Guide
• At this point the candidate Means of Transportation Number of daily users
can easily calculate the
number of people that Taxi 20% × 250k = 50k/day
would use the metro Bus 20% × 250k = 50k/day
• After that candidate can
calculate the annual Private Car 10% × 250k = 25k/day
revenues
• When asked, say to the Connecting Flights 10% × 250k = 25k/day
candidate that unit price of Rent a car 10% × 250k = 25k/day
a ticket is USD 5 and that
can assume 300 days per Pick up by family/friend (calculated previously) 20k/day
year for ease of
calculation Metro 55k/day
Annual revenues
55k/day × USD 5 × 300 days/year = USD 82.5M; can be rounded to USD 80M.
68
For interviewer only – Calculation of the Payback Period

• Candidate should move to Tell the candidate that, based on their experience, the Ministry expects
costs and finally to that the metro would have a profitability of 20%.
payback calculation
Yearly Profits = USD 80M * 20% = USD 16M/y, which can also
Good candidate: approximate the Free Cash Flow generated by the metro line.
• Should notice that she/he
is calculating profits and Payback = USD 800M initial investment / 16M yearly FCF = 50 years of
clarify that will use them payback (being USD 800M the 40% of the total upfront investment, as
as proxy for Free Cash stated in the prompt).
Flow
69

Key insights: Brainstorm with candidate about ways to reduce payback period:
• Candidate realizes that the • If candidate mentions about upfront investment, sat that Ministry is
payback period is well confident of their estimate;
beyond 25 years • If candidate mentions about costs, say that Ministry has a clear
Good candidate: understanding of operational costs, not much can be done there;
• Takes initiative and starts • If candidate mentions about price of ticket, say that Ministry cannot
to brainstorm ways to change price to be competitive with other means of transportation;
reduce payback period • If candidate mentions about increasing volume of passengers, say
Better candidate: that this is an interesting area to explore: how to increase the
• Realizes that 20% profit is number of people using the metro?
based on Ministry
experience, so costs Candidate should realize, or be helped to realize, that number of
cannot be reduced much, passengers using airport and fraction using metro is difficult to control.
need to act on revenues The key is that the airport-city link is direct. The only way to increase
passengers is to build intermediate stations in between.
70
e.g. “My recommendation for the Ministry is NOT to e.g. “The payback period for a direct link is 53
proceed with the construction of a direct metro link years, well above the limit of 25 years imposed by
from the Airport to Riyadh city center. Instead, the the Ministry. Upfront investment, operational costs
construction of a line with few intermediate stations and ticket price cannot be changed much, so we
should be investigated and evaluated.” need to act on volume of passengers using the
metro by adding a few new stations.”
Risks Next Steps

e.g. “Potential risks could be a less attractive metro e.g. “Next steps should be confirmation of the
link if it is not direct anymore; overestimation of estimated assumptions and an investigation of how
passengers using the metro; delays in the many and where to build the new stations,
construction, postponing the opening of the line.” consequent reassessment of the upfront
investment needed and additional revenues
generated.”
71
Case 4: Locker Up!
72
Case 4: Locker Up! (1/8)

Industry: Real estate
Our client is a real estate developer in Hong Kong owning several
Difficulty: Medium
shopping malls with high foot traffic in Central and Sheung Wan. The
Concepts tested: Profitability,
client wishes to build six banks of lockers in various locations for use by
brainstorming
local residents, tourists, and business owners in the malls owned by the
client. The client has asked us to maximize the profitability that can
be gained from these lockers.
Interviewer Guide
Goal (to be asked by candidate): The client is interested in ensuring
There is a strong brainstorming
the space for the lockers are best used to maximize the revenue that
component involved. The best
can be generated from them.
insight is given by asking the
relevant clarifying questions
early.
73

Good candidate: Banks of lockers:
• Can construct a basic • The six banks of lockers are essentially identical in size and
profitability tree from the capacity.
information provided. • Individual locker sizes vary, but are charged at the same rate.
• Little variation is expected in usage patterns between locations.
Better candidate: • There are 2000 lockers spread more or less evenly across the six
• Understands that for locations.
parking lots, there is likely
to be little variable costs Competition
associated and that • There are no nearby hotels that offer concierge services, gyms, or
increasing profitability any other commercial lockers available in the area.
would be mostly driven by
revenue.
74
Key insights Interview Guide

• The candidate would be Ask the candidate how they would segment users of the lockers (e.g.
able to calculate a hourly or monthly) and how they might produce relevant pricing (e.g.
straightforward revenue benchmarking from other locker services, customer surveys, etc.)
estimate. before showing them Exhibit 1.
• The expected usage of
700 lockers is far lower After a revenue figure is calculated, ask the candidate to brainstorm
than the 2000 locker any additional ways there could be to generate revenue.
capacity of the combined 6
locations.
75
For candidate when requested
Exhibit 1: Locker rates and user behaviour by duration of use
Duration Expected users Rates Usage
Tourists 600 lockers / day

Hourly $2 / hour ($10 maximum)
75% use less than 5 hours
Infrequent use residents (3 hour average)
Frequent use residents

Monthly $240 / month 100 monthly users
Business owners
76
Example calculation for total daily revenue
Duration Calculation Subtotal
600 lockers / day
Hourly 75% use 3 hrs = 450 lockers / day × 3 h / lockers × $2 / h = $2700 / day
25% use 5+ hrs = 150 / day × $10 / car = $1500 / day
Monthly 100 monthly passes × $240 per pass / 30 days = $800 / day
Total $5000 / day
Interviewer Guide
• Calculations should be kept as a daily revenue as much as possible.
77
Interviewer Guide Prompt 2

Key insights:
• Although the revenue per The client is considering using a locker validation system, where people
locker is reduced, the who patronize businesses in the commercial buildings can obtain
locker validation system validation to use the lockers without additional cost to the user. 1000
can increase the total users will be expected to use this new lockers validation system. Such
revenue generated. a system will cost the business $5 per validation, and will not only
• Businesses that use the replace the hourly system, but also reduce the monthly passes by 50.
locker validation will see Is this a good idea?
their business increase,
allowing more rent to be After the calculation is complete: Ask the candidate to brainstorm
collected by the client. other ways to use the locker space that would be considered excess
• Although the locker usage capacity. Any commercial use (e.g. converted into storefronts or kiosks,
has gone up, the new total advertising space, etc.) would immediately raise revenue while also
is still nowhere near the potentially increasing usage of the remaining lockers.
capacity of the 6 banks.
78
For interviewer only/For candidate when requested
Example calculation for new total daily revenue
System Calculation Subtotal
Validation 1000 validations × $5 / validation = $5000 / day
Monthly 50 monthly passes × $240 per pass / 30 days = $400 / day
Total $5400 / day
Interviewer Guide
• Calculations should be kept as a daily revenue as much as possible.
• After the calculation is complete: Ask the candidate to brainstorm other ways to use the locker space that
would be considered excess capacity. Any commercial use (e.g. converted into storefronts or kiosks, advertising
space, etc.) would immediately raise revenue while also potentially increasing usage of the remaining lockers.
79
e.g., “The banks of lockers can switch to a locker e.g., “The current capacity is far larger than the
validation system; this will generate $5400 daily number of users needing locker space. Switching to
revenue. Two banks of lockers can also be sold the validation system will attract more users overall
and repurposed to other commercial use such as and give us an additional $400 daily revenue. Even
storefronts or advertising space that can help then, there are two banks’ worth of excess capacity
provide additional usage to the remaining lots.” that can be repurposed to other commercial
purposes for more additional revenue.”
Risks Next Steps

e.g., “We would need to be sure that the current e.g., “I would look into identifying the businesses in
infrastructure for lockers can accept changing to a the area selling bulky or heavy items that stand to
validation system and ensure there are enough gain from using the validation system, as well as
interested businesses willing to offer locker seeing if there are new businesses that are willing
validation to produce the necessary volume of the to invest in advertising or using a new storefront for
lockers.” their commercial operations.”
80
Case 5: Fragrant Harbour
81
Case 5: Fragrant Harbour (1/8)

Case type: Turnaround
Fragrant Harbour (FH) Bank is a small bank operating in Hong Kong
Industry: Banking
serving mostly local consumers. It had recently found that the credit
Difficulty: Medium
card line of business had been losing a lot of customers. FH Bank
Concepts tested: Root cause
suspects the credit card application process may be to blame. The
analysis, process improvement,
COO of FH Bank has asked us to investigate this further: What in the
operations management
credit card application process is causing the most issue?
Interviewer Guide Goal (to be asked by candidate): FH Bank is specifically looking for
the root cause of the issue within the credit card application process
This case takes a deep dive
and potential solutions that may address them.
specifically into process
improvement. Questions about
competition, customers, etc.
should be deflected.
82

Good candidate: Process:
• Can list out several • The steps required for an application are provided in Exhibit 1.
potential reasons for the • Each step is required and must be performed sequentially.
problem without asking for • If applications have incorrect or missing information, they are sent
irrelevant information such back to the branch to call the customer to resubmit an application.
as revenue. • Regulations prohibit the digitization of applications for transferring.
Measurements:
Better candidate: • The average application at FH Bank takes 30 days to process.
• Neatly categorizes • The average application without errors or omissions takes 15 days
potential causes into a to process; this appears to be the industry average.
mutually exclusive and • 90% of first applications have at least one error or omission found
collectively exhaustive during the “Check application” step.
framework. People:
• All employees are following protocol for submitting applications.
• Branch employees are incentivised to maximize applications sent.
83
Interviewer Guide Additional Information (not necessary for solving case)

• The information provided Customer:
on this slide helps provide • Customers are pre-selected for invitation to apply based on past
a consistent answer to a relationship with bank; effectively anyone who is invited in the first
framework that might be place will be approved, given that applications sent are complete.
too broad. • Customers leave because they are frustrated with the bank service;
this can happen anytime after the application is first rejected.
• Candidates that consider Competition:
these categories should • Competitors have essentially identical application processes; the
realize very quickly there only discernable difference is that they can complete it faster.
is little data to support • Competitors are subject to the same regulations as FH Bank.
exploring further into them. Product:
• The credit card offered is essentially a commodity; there is nothing
unique about its credit limit, rewards programs, annual fees, etc.
• All phone or online channels for application invitations funnel back
to branch applications for regulatory purposes.
84
Interviewer Guide Interviewer Guide

Key insights: Potential recommendations:
• Applications are not In general, potential recommendations should align with addressing an
checked for accuracy/ identified root cause.
completeness until mid-
way into the process. • Have applications checked prior to sending them to head office, e.g.
• Branch employees are not by re-training branch staff to check for application completion
incentivised to submit through an updated protocol, or by having specialist staff at each
complete/error-free branch to verify applications.
applications to head office.
• Increased application time • Align incentives so that branch staff are rewarded based on
is likely due to applications increasing percentage of applications that do not need to be
being unnecessarily sent resubmitted, or at minimum eliminate incentive based on volume of
back and forth from the applications sent to head office.
branch to head office due
to errors or omissions.
85
Exhibit 1: Process flow for credit card application at Fragrant Harbour Bank
Invitation Mail
Notify Send
to apply at Complete application Check Make
decision credit card
branch application to head application decision
by mail by mail
office office
86
Interviewer Guide New Prompt

Good candidate:
• Derives the answer Note: Interviewer may skip this prompt if the interview appears to
through all the necessary be running overtime.
available data. Makes little
to no calculation errors. The current average decision time for one application is 25 minutes. If
the proposed changes can reduce the average decision time by 30
Better candidate: percent, and FH Bank receives 1300 applications per month, how many
• Walks through the hours of work time could be freed up for working on other tasks in one
calculations verbally to year?
ensure the steps are
clearly communicated.
Moves to calculation only
after the necessary
approach is set up.
87
Example potential calculation of hourly savings per year:
Improvement:
minutes minutes
25 × 30% = 7.5
application application
Hourly savings per year:

minutes applications months 1 hour hours
7.5 × 1300 × 12 × = 1950
application month year 60 minutes year
Interviewer Guide
• The candidate should pay attention to the units given and the units required.
• The calculation is not meant to be difficult but may be overwhelming unless the candidate looks for shortcuts to
simplify the required math.
88
e.g. “I recommend altering the credit card applica- e.g. “The current process shows an error rate of
tion process to have documents checked prior to 90%, where incomplete applications are sent back
sending to head office, while staff are retrained and to branches and significantly delaying approvals.
incentivized to send only complete applications. The proposed changes will both reduce the number
These changes can free up at least 1950 work of erroneous applications sent to head office, while
hours annually, helping reduce our current 30-day also making sure fewer erroneous applications are
application process closer to the 15-day average. created in the first place.”
Risks Next Steps

e.g. “There may be significant costs and time e.g. “I would investigate the incentive structure that
required with retraining relevant branch staff or would keep the average total compensation of the
placing qualified specialists in all branches to check branch staff to be similar but refocused towards
applications. In addition, the changing of the sending completed applications only. I would also
incentive structure may cause turnover among investigate the additional costs required to retrain
branch staff.” staff to implement the proposed process change.”
89
Case 6: Oriental Media
90
Case 6: Oriental Media (1/7)

Industry: Entertainment
Our client is Oriental Media (OM) Corporation, an entertainment media
Difficulty: Medium
group in Mainland China. In its most recent financial year, OM has a
Concepts tested: Diagnosis,
stable revenue of RMB 50 billion, however it has experienced a 20%
deal making, financial analysis
drop in profits. The client is concerned that this trend would
continue into the current year and has engaged our firm to help
chart a path back to future growth.
Interviewer Guide
This case would take a Goal (to be asked by candidate): The client would like to diagnose the
candidate through diagnosis, root cause of the drop in profits and identify ways to remedy the
problem solving and finally, problem.
decision making. Creativity and
sound judgement are required
to excel in this case.
91
Interviewer Guide Clarifying Information

Good candidate: Business: Oriental Media is in the business of TV media production.
Use of a profit-tree would help OM produces Chinese language serial dramas, infographics, and
the candidate diagnose the variety shows for sales and distribution to TV stations in China and Intl..
drop in profits.
Revenue, Cost of sales (COS), and Profits: COS increased by 5% in
Better candidate: the past year, in line with industry expectations, but sales revenue has
Recognize that all costs flat-lined. Net profit decreased 20% in the past year.
factors have been explained,
and therefore focus on Sales & Marketing (S&M), and Admin. Exp.: In the past year, OM
revenue. (i.e. Costs have authorized a 10% increase in S&M budget and implemented a cost-
increased in the past year, but cutting strategy that successfully kept admin. costs at the same level.
revenue has not grown.)
Competition: Due to competition from online content (i.e. BiliBili &
iQiyi), peers of OM have all reported lower profits in the past year.
92

Detailed financial performance Figures in RMB billions
can be given if asked but is
not required to solve the case. Year: 20x8 20x9 %
Revenue: 50 50 0.0
Brainstorming: Cost of sales: (20) (21) 5.0
Ask the candidate to identify Gross Profits: 30 29 (3.3)
driver(s) behind drop in profits
and suggest reasons to Sales & Marketing: (10) (11) 10.0
explain changes in revenue, Administrative: (10) (10) 0.0
COS, S&M and Admin. Exp.. Profits before Tax: 10 8 (20.0)
Next, suggest strategies to Taxation: (2.5) (2) (20.0)

grow revenue (i.e. M&A, Intl. Net Profit: 7.5 6 (20.0)
expansion, online media).
93
Interviewer Guide Additional Prompt (1)

There is no right answer, but The CEO has suggested that he would like to enter the online media
candidate should be able to industry in order to reach end-viewers directly, and he has identified a
explain their rationale. potential partner (ABC.co) to help him launch Oriental Media Online
(OMO). ABC.co will provide tech. and infrastructure, while OM will
Retain control: maintain provide content. A deal team has been assembled to enter discussions.
ownership and security
Entrust to ABC.co: leverage For each key term, do you propose that OM retain control, entrust to
on partner’s expertise ABC.co, or share control (i.e. joint or 50/50). Explain the rationale.
Share control: ideal for both
parties to value-add but can • Marketing & Advertising
lead to potential impasse • Customer ownership and information
Profit-sharing: better align • Platform interface and experience
interests of both parties;
shared risks and profits How should OM share profits of this new venture with ABC.co (if at all)?
94
Interviewer Guide Additional Prompt (2)

This is a calculation question, After discussion, both parties have agreed to joint decision making on
the candidate should draw all major aspects of the partnership and 50/50 profit sharing
their own conclusion on The CEO would like your help to evaluate whether to proceed with this
whether to “partner” or “build” partnership. The deal team has estimated that OM would require an
after they have compared net investment of RMB 1.5 billion to build OMO on their own.
profits under both scenarios.
Both scenarios: Annual revenue of RMB 5 billion
Better candidate: Partnership: Net profit margin of 10%
Financially inclined candidates Build: Net profit margin of 8%
would ask for WACC or
Discount Rate in order to WACC / Discount Rate (if asked): 10%
calculate incremental NPV.
Timing of cash flow (if asked): assume once-a-year at year-end
See next page for calculation.
95
Interviewer Guide Example Calculations

The two scenarios can be Method 1: Breakeven analysis
compared in terms of Annual Profit (Partnership) = 5b x 10% x 50% = RMB 250m
“breakeven” or “NPV”, Annual Profit (Build) = 5b x 8% = RMB 400m
however the candidate should Incremental Annual Profit = 400m – 250m = RMB 150m
recognize that neither result Investment required (Build) = RMB 1.5b
supports the “build” decision. Breakeven period = 1.5b / 150m = 10 years
Optional: ask the candidate to Method 2: NPV (perpetuity method)

suggest whether there are any NPV (Partnership) = 250m / 10% = RMB 2.5b
qualitative (non-financial) NPV (Build) = 400m / 10% - 1.5b = RMB 2.5b
factors that might affect the Incremental NPV = 2.5b - 2.5b = RMB 0
final decision. (i.e. speed to
market, implementation risks, The candidate should conclude that breakeven of 10 years is too
customization, etc.) long or that 0 NPV cannot justify a RMB 1.5 billion investment.
96
e.g. “I recommend that Oriental Media partner with e.g. “Partnership is the more prudent approach to
ABC.co to launch OM Online. The partnership can launch OMO. In comparison, it would take 10 years
potentially help OM to increase its profits by RMB to recover the cost to build OMO on our own.
250 million per annum without an initial outlay of Moreover, OM can build its own platform at a later
investments.” stage should OMO prove to be successful, but not
vice-versa.”
Risks Next Steps

e.g. “OM should consider whether OMO would e.g. “OM can conduct a consumer survey to gage
cannibalize the existing sales in TV media.” viewer reception towards OMO.”
e.g. “OM should consider whether its existing e.g. “Customary due diligence on the finance and
content is appropriate or whether they would need technology of ABC.co to ensure that they are able
to create new content for OMO.” to delivery on the proposed partnership.”
97
Case 7: Firebird Sports
Case 7: Firebird Sports (1/6)

Case type: Market entry
Our client, Firebird Sports, is a sports equipment manufacturer
Industry: FMCG, sports
headquartered in Hong Kong specializing in manufacturing shuttles
Difficulty: Hard
used for playing badminton, with production plants in various strategic
Concepts tested: Market
locations across the globe. Shuttles can be made with either feather or
entry, growth strategy,
nylon to give its characteristic tapered shape. Firebird currently
customer segmentation
manufactures only feather shuttles and is considering the introduction
of nylon shuttles to grow its business. Should Firebird produce nylon
Interviewer Guide shuttles, and how should they be introduced?
There is a lot of data given in
Goal (to be asked by candidate): Firebird Sports wishes to determine
the case. Let the candidate
which markets can produce a positive NPV in one year.
figure out what information is
important and why.
99

Good candidate: Product
• Understands this is a • Customers perceive all feather shuttles to be identical and all nylon
market entry question, will shuttles to be identical and will not switch based on brand alone.
need data on market size • Feather shuttles come in tubes of 10, nylon come in tubes of 6.
and competitive landscape • Feather shuttles are used exclusively at the professional level.
• Understands the purpose • Shuttles are played with until worn and discarded afterwards.
of segmenting customers Competition
Better candidate: • Competitors are constrained at their current production capacity.
• Understands that in a Company
mature market, growth can • Firebird can retrofit their current feather shuttle plants to additionally
only come at the expense make nylon shuttles, and can produce as many nylon shuttles as
of competition they can sell. Firebird’s plants can introduce the nylon shuttle into
• Understands that their markets immediately if given the go-ahead.
customers react to new Market
product offerings. • Assume all markets are stable and approaching maturity.
100

Key insights: Product
• Feather shuttles provide • A tube of feather shuttles: COGS $3, distributor stocking fee $2,
far more revenue than retail price $15. One tube lasts 1 play session.
nylon shuttles by 100-fold. • A tube of nylon shuttles : COGS $3, distributor stocking fee $2,
• Case is not just about retail price $15. One tube lasts 100 play sessions.
filling unmet demand, but • Retrofitting all of Firebird’s plants will cost $10 million. Assume all
also about avoiding plants must retrofit if decision to produce nylon shuttles is made.
cannibalization. Candidate Customers
should only focus on 3 major segments:
Firebird’s Regular/Casual • Competitive: Plays 300 sessions/year. Loyal to brand and shuttle
players and Competitor’s material. (0% switch rate, 0% cannibalization rate)
Casual players using • Regular: Plays 100 sessions/year. Loyal to brand, agnostic to
feather shuttles as only shuttle material. (0% switch rate, 50% cannibalization rate)
they will switch. • Casual: Plays 50 sessions/year. Agnostic to both brand and shuttle
material. (50% switch rate, 50% cannibalization rate)
101
Exhibit 1: Customer breakdown by region, segment, brand choice, and shuttle material choice
APAC Feather Nylon
Segment Firebird Competitors Unserved Firebird Competitors Unserved
Competitive 1,600,000 200,000 0 0 500 0
Regular 20,000,000 5,000,000 0 0 10,000 0
Casual 10,000,000 4,000,000 0 0 50,000 0
EMEA
Competitive 500,000 1,000,000 0 0 1,000 0
Regular 5,000,000 5,000,000 0 0 1,000,000 2,000,000
Casual 1,000,000 16,000,000 0 0 5,000,000 5,000,000
AMER
Competitive 200,000 500,000 0 0 1,000 0
Regular 0 4,000,000 0 0 2,000,000 500,000
Casual 0 6,000,000 0 0 15,000,000 500,000
102
Interviewer Guide
• Only the following segments matter: All Unserved using nylon (captured), Casual/Competitors using feather
(captured), Regular/Firebird using feather (cannibalized), Casual/Firebird using feather (cannibalized).
• From the average customer value per year, candidates should realize any cannibalization in feather need to be
made up 100-fold in nylon, which isn’t feasible in any of the markets.
• Not all calculations need to be done; unprofitable markets should be skipped as soon as recognized as such.
Example potential calculation on average customer value per year:

Segment Feather Retail COGS Dist. fee Margin Buy/year Total Nylon Margin Buy/year Total
Competitive $15 $3 $2 $10 300 $3000 $10 3 $30
Regular $15 $3 $2 $10 100 $1000 $10 1 $10
Casual $15 $3 $2 $10 50 $500 $10 0.5 $5
Example potential calculation on revenue potential of regional markets:
Region Captured Unserved Cas/Comp Total Cannibalized Reg/Fire Cas/Fire Total Grand Total
APAC $0 M $10 M $10 M $9,900 M $2,475 M $12,375 M -$12,365 M
EMEA $45 M $40 M $95 M $2,475 M $247.5 M $2,722.5 M -$2,637.5 M
AMER $7.5 M $15 M $22.5 M $0 M $0 M $0 M $22.5 M
103
e.g. “I recommend that Firebird produces the nylon e.g. “Launching the nylon shuttle in either the APAC
shuttle and launch it only in the AMER market. The or EMEA markets will result in unacceptably high
data shows that we can earn $22.5 million per year amounts of cannibalization, as our own customers
against a $10 million investment both from filling in the Regular and Casual segments will switch
unmet demand and taking customers in the Casual from using feather shuttles to nylon shuttles, which
segment using feather shuttles from competitors.” last much longer and will reduce our overall sales.”
Risks Next Steps

e.g. “As our primary new customers come from e.g. “I would explore additional investment
competitors, there may be pushback from opportunities that may be available. The growth
competitors who may introduce a nylon shuttle in opportunity is a very small portion of our current
APAC to steal our Casual segment customers revenue, and there may be other opportunities with
using feather shuttles. They will need time to first higher returns that are less risky.”
build production capacity before they can do so.”
104
Case 8: In You to Give
105
Case 8: In You to Give (1/8)

Case type: Pricing strategy
HemoTrue is a start-up working out of San Francisco in the US. Its sole
Industry: Biotech/life sciences
product is a blood product containing red blood cells (RBCs)
Difficulty: Hard
manufactured using in vitro stem cells that are otherwise functionally
Concepts tested: Value chain
identical to RBCs from donated blood. As a revolutionary new product,
analysis, value-based pricing
HemoTrue believes their product can completely disrupt and take over
the blood market in the US. The product is still two years away from
commercialization, but investors are interested to know what plans
Interviewer Guide HemoTrue has already made towards that goal. HemoTrue has hired us
to determine: What is a suitable price for their manufactured blood
The candidate will require
product?
understanding the value chain
before a suitable price based
Goal (to be asked by candidate): HemoTrue would like to charge the
on what the customer values
highest price for their product that their target customers would be
can be determined.
willing to pay when their product launches two years later.
106

The candidate should spend Current product (e.g. donated blood):
some time clarifying exactly • Blood has several major serotypes types according to the ABO
what the product does relative system (A, B, AB, O) and Rhesus system (positive or negative).
to what the market has. Despite O-negative type blood being the most versatile as the
Exhibit 1 can be shown even “universal donor” type, all donated RBC blood products are priced
before a framework is made to the same regardless of blood type.
help clarify where value can • Blood has a shelf life of 42 days; expired blood is discarded.
be added, and what the target • Identifying and recruiting suitable donors (e.g. with O-negative
customer is looking for. Let the blood) from specific geographies is typically very time-intensive.
candidate brainstorm who the HemoTrue’s Product:
customer is before revealing • The product is 100% functionally equivalent to donated biological
as hospitals/clinics. Do not blood; it is bona fide blood, not just a blood substitute.
explicitly tell the candidate • Blood is produced from an immortalized stem cell line from a donor
what the customer cares with O-negative blood type; this allows any amount of blood to be
about. created from anywhere with a short lead time.
107

Good candidate: Market:
• Understands and • The US blood market is mature with consolidation in blood centers
quantifies the value-add and healthcare providers (e.g. hospitals and clinics). Cost reduction
that HemoTrue’s product initiatives are common, and the entire process is operating lean.
has to the value chain for • Current blood products are priced using a cost-plus model; blood is
both blood centers and provided free from donors, and costs are added from testing,
hospitals/clinics. administration, and storage plus a small markup.
Competition and substitutes:
Better candidate: • There are no other products on the market with the same function;
• Realizes only the value- blood substitutes typically target niche uses such as resource-
add to customers (e.g. limited settings without full hospital support.
hospitals and clinics) are Value-Add:
relevant to pricing • Although blood is a commodity provided free of charge, HemoTrue
considerations. believes its product removes the costs of all testing, of oversupply,
and of undersupply that makes it attractive to customers..
108
Interviewer Guide Exhibit 1 description

Key insights: Donation:
• HemoTrue’s product is • Recruitment: Donors are contacted for giving blood donations.
positioned as a supplier • Eligibility screening: Donors are tested for general health (e.g.
for hospitals and clinics, wasn’t sick recently, did not engage in risky behaviours).
therefore a competitor to Production:
blood centers. • Testing: Blood type is determined and tested for pathogens.
• Processing: Blood is separated into RBCs, plasma, platelets, etc.
• Storage: Blood is stored on-site until used or expired. Ownership
(and thus cost responsibility) stay with blood centers until used.
Recipient:
• Compatibility testing: Recipient’s blood type is determined.
• Administration/monitoring: Blood is used, and results monitored.
Transfusion Outcome:
• Trace-back: Results are traced back according to source.
• Blood utilization review: Blood use is optimized for future operation.
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Exhibit 1: Product flow for blood from donation to transfusion

Donation Production Recipient Transfusion
outcome
Collection Storage until

• Recruitment • Testing decision to • Compatibility testing • Trace-back
• Eligibility • Processing transfuse • Blood administration • Blood
screening • Monitoring and utilization
follow-up review
Blood centers Hospitals and clinics

Location
Ownership
110

Key insights: Current market:
• As the customer, hospitals • A unit of blood on average costs $200, with regional variability.
and clinics do not care • There were 16 million units of transfused blood in the US last year.
about savings related to Cost of oversupply:
Donation, Production, or • Costs for expired blood effectively needs to be subsidised by the
Storage (e.g. cost of remaining blood.
oversupply). Only cost of • There were 400,000 units of expired blood in the US last year.
undersupply (e.g. causing Cost of undersupply:
delayed surgeries) and • Undersupply incurs a delayed elective surgery opportunity cost.
compatibility testing (blood • There were 5000 delayed elective surgeries last year from
type only) are relevant. insufficient blood.
• Each delayed surgery incurs an opportunity cost of $80,000.
Cost of testing:
• All tests performed by blood centers cost a combined $50.
• The blood type test performed at hospitals and clinics costs $10.
111
Example potential calculation of each value-add per unit of blood:

Market data Cost of undersupply
Cost of blood unit $200 Delayed surgeries 500
Units of transfused blood 16,000,000 Cost of a delayed surgery $80,000
Cost of oversupply Cost of all delayed surgeries $40,000,000
Units of expired blood 400,000 Cost subsidized per transfused unit $2.50
Cost of all expired blood $80,000,000 Recommendation
Cost subsidized per transfused unit $5 Market price, cost of blood unit $200
Cost of Testing Cost of undersupply $2.50
Cost of typing and pathogen test $50 Cost of blood typing $10
Cost of typing only $10 Recommended price per unit $212.50
Interviewer Guide
• The prevented cost of oversupply and cost of pathogen tests are not valued by the customer (e.g. hospitals and
clinics). Calculations for those costs are provided for illustrative purposes only.
112
e.g., “I would recommend a final price of up to e.g., “Certain other advantages of HemoTrue’s
$212.50 for HemoTrue’s product. This price product, such as the cost of oversupply and costs
captures the additional value from the costs related to pathogen testing, are not the
associated with undersupply of blood and responsibility of our customers, therefore it would
compatibility testing that can be prevented using not make sense to include them into the value-
HemoTrue’s product.” based price that we would charge.”
Risks Next Steps

e.g., “The product is launching two years from now, e.g., “HemoTrue could explore the price variability
assuming it can pass all necessary regulatory in different US regions; this could allow HemoTrue
hurdles. It would make sense to re-evaluate the to enact differential pricing and capture higher
value of the different benefits offered by margins from the regions that are willing to pay
HemoTrue’s product closer to launch to account for more for HemoTrue’s product.”
changes that might occur due to consolidation and
further cost-savings of the target customers.”
113
Additional resources
The best candidates utilize multiple resources to synthesize the approach that works best for themselves.
Recommended readings (not exhaustive)
Case Interview Secrets Interview Math Case in Point Crack the Case
Victor Cheng Lewis Lin Marc Cosentino David Ohrvall
CPD, career coaches, alumni, and fellow students are good additional resources
114
Acknowledgements
Success can only be attained by building upon the contributions of many towards a common goal.
HKUST MBA Consulting Club would like to acknowledge the following people
for their contributions to this casebook through providing content and/or writing
cases.
Alexander Ip Rasita Kriangkrairat Carmine Molinaro

HKUST MBA Intake 2018 HKUST MBA Intake 2018 HKUST MBA Intake 2019
Christopher Neo Melanie Wallinger Sai Srikar

HKUST MBA Intake 2019 HKUST MBA Intake 2019 HKUST MBA Intake 2019
115
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HKUST Casebook

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HKUST MBA Casebook

HKUST MBA Consulting Club

• This casebook is intended to be a collection of best practices gathered by

2. Fit/Behavioural Interview Preparation Page 11

3. Case Interview Preparation Page 16

4. Example Frameworks Page 26

6. Practice Cases Page 48

7. Additional Resources Page 114

8. Acknowledgements Page 115

Interview Round 1 Interview Round 2

• Interviews performed by Senior Consultants or Managers

• Interviews performed by Principals or Partners

Firm Scale Offering Progression Recruitment Other notes

Firm Scale Offering Progression Recruitment Other notes

1 Inclusive of audit, assurance, tax, consulting and other services

Firm Scale Offering Progression Recruitment Other notes

Firm Scale Offering Progression Recruitment Other notes

Sample questions Suggestions for preparation

Example question types

Typical Steps within a Case Interview

Good frameworks should have: Good frameworks should not have:

✓ segmentation or examples of revenue

Structure Calculation Insight Contextualize

• Solutions suggested through brainstorming should • Internal vs. external

• Even a simple binary classification will demonstrate

Give succinct conclusions as if the client Recommendation

• Conclusions given should precisely and Risks

• The entire conclusion should not take longer Next Steps

Not Quantity but Quality

Not Frivolous but Focused

Not Familiarity but Diversity

≈ Candidates should expose themselves to different types of cases in various industries

Not Sprint but Marathon

List of Common Frameworks

Sales & Marketing Strategy Operation Industry

Important Notes on Frameworks

Profitability Framework Application Examples

Marketing Mix (4Ps) Framework Application Examples

Pricing Framework Application Examples

3Cs Strategic Framework Application Examples

Growth Strategy (Ansoff Matrix) Framework Application Examples

Growth can be achieved through organic vs. inorganic growth

Portfolio Analysis (GE-McKinsey Matrix) Framework Application Examples

• Evaluate business portfolio

Protect • Prioritize investment among

Investment priority: • Assist in brand marketing

Expand or Manage for Build High and product management

Divest position &

Low Medium High

Market Entry Framework Application Examples

M&A Framework Application Examples

The Buyer Synergies & Risks

Process Improvement (5Ms) Framework Application Examples

• Identify where the constraints/bottlenecks are for each element

Reorganization Framework Application Examples

Porter’s Five Forces Threat of new Application Examples

Value Chain Framework (Simplified) Application Examples

• Breakdown firm’s activities

Industry Revenue drivers Cost drivers Other metrics Important considerations

Industry Revenue drivers Cost drivers Other metrics Important considerations

Industry Revenue drivers Cost drivers Other metrics Important considerations

Industry Revenue drivers Cost drivers Other metrics Important considerations

Industry Revenue drivers Cost drivers Other metrics Important considerations

Industry Revenue drivers Cost drivers Other metrics Important considerations