About Case Interviews

What is a “Case Interview” anyway?

• Simulation of a business problem. Similar to what our associates encounter every

day.
• Series of open-ended questions. They’re designed to stimulate your conceptual,
quantitative, analytical and – most importantly – creative abilities.

There are several types of cases. Each designed to assess different skills.

• Classic Case:
o Should an organization add capacity?
o How should an organization react to a new competitor?
o Should an organization enter/exit a new/old market?
o Measures:
▪ Your broad functional skills
▪ Your big-picture perspective
▪ Your comfort with detail and analysis
• Special Case:
o Why are manhole covers round?
o What’s the estimated weight of a Boeing 747?
o What will interest rates do next?
o Measures:
▪ Your comfort with ambiguous business challenges
▪ Your level of creativity

What are we looking for?

• Logical skills
• Analytical/reasoning skills
• Conceptual problem-solving abilities
• Critical path thinking
• Flexibility

What do we mean by …

• Problem-solving ability?
o Can you identify the key issues of the case while accurately and
methodically reaching the solution?
• Critical path thinking?
o Can you use clues that build on each other while staying on track and
focusing on what’s relevant?
• Flexibility?
o Can you adapt your answers to a changing situation?

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About Case Interviews

What do you need to bring?

• Your logical business sense.

o • How do decreasing marginal costs affect profitability?
o • What effect will fixed costs have on the result?
• Your mathematical aptitude.
o From basic mathematics to …
▪ Algebra
▪ Probability
▪ Weighted averages
▪ Unit conversion
• Your strategic interpretation skills.
o Can you ...
▪ Interpret your answer’s impact?
▪ Assess alternatives?
▪ Keep a grasp on the “big picture” as well as the minor details?
• Your presentation skills.
o Can you ...
▪ Clearly state your thoughts and synthesize information?
▪ Explain how your answer changes in the face of changing
variables?
▪ Defend your answer?

You will be solving real-life problems with real-life objectives:

• Operational efficiency maximization

• Product profitability
• Market expansion/product development
• Financial decision making
• Profit maximization
• Breakeven points
• Strategic pricing and planning

What Case Interviews Are NOT:

• Not a means of intimidation

• Not the only deciding factor
• Not easy

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products, services, educational tools, or other information available through this site. Read additional disclosures.

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About Case Interviews

A Sample Case:

• Background Information
o You are a manager at a company that markets various products and
services and that is looking to diversify.
o You receive some information that indicates magazine publishing may be
interesting.
o You are considering developing a new magazine but are not sure how
profitable it might be.

What are some of the issues you must consider when evaluating the business?

• Things to consider
o Defining the target market
o Competition (# of competitors, fragmentation, brand name)
o Build off of core competencies
o Barriers to entry
o Business cycle stage
o Method of measuring viability
o Opportunity cost

The next step is to understand the economics of the business. What are the profit
drivers in the magazine publishing business?

• Main profit drivers of the publishing business include ...

Sources of Revenue Costs

• Subscriptions • Printing
• Newsstand sales • Distribution
• Advertising • Content development
• Customer lists • Marketing/promotions
• Internet

• Through some initial research you have been able to determine the following ...

o You can charge $25 for an annual subscription of 50 issues

o Let’s ignore newsstand sales for now
o You can generate $1 in advertising revenue per issue for each subscription
o Printing and distribution costs are $1 per copy per issue
o Content development costs run $1 million per year
o Let’s ignore marketing expenses for now

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About Case Interviews

How much profit will you generate a year from one incremental subscription?

Subscription revenue per year = $25

Advertising revenue per year = $50
$1/issue x 50 issues
Yearly production and distribution costs = $50
$1/issue x 50 issues
Profit from one incremental subscription = $25
$25 + $50 - $50

How many subscriptions do we need to sell to break even?

Profit (contribution margin) = $25 per subscription

Magazine content development = $1 million per year
Breakeven = $1 million/$25 = 40,000 subscriptions

What about marketing costs?

Your company has expertise in direct mail solicitation so you decide to use that
method to market your magazine.
Each piece of mail costs $.50.
You are able to achieve a 2% response rate.

How much does it cost you to sign up a subscriber?

Cost per subscriber calculation

Cost of mailing/response rate = cost to sign up one subscriber
$.50/2% = $25 per subscriber
Another way to calculate cost per subscriber:
Assume you mail offer to 100 people
Costs = $50 ($0.50 x 100 people)
Responders = 2 (2% of 100)
Cost per responder = $50/2 or $25

How will this affect your breakeven calculation?

New break even calculation

Old contribution margin – Marketing costs = New contribution margin
New contribution margin = $25 - $25 = $0
Ouch!

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products, services, educational tools, or other information available through this site. Read additional disclosures.

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About Case Interviews

What can we do to make this venture better?

Some possible considerations:

• Raise subscription prices
• Raise advertising rates
• Reduce production costs
• Increase response rate
• Make each response matter more; consider renewals and multi-year
subscriptions

Additional Case Interview Tips:

• Stay confident – stay cool

• Show enthusiasm – not frustration
• Be thorough – avoid mistakes
• Ask questions
• Show your stuff

Additional Case Interview Resources:

• Websites
o http://www.joinbain.com/apply-to-bain/interview-preparation/default.asp
has sample cases you can practice.
o www.casequestions.com is all about case interviews.

• Credit Card Terms:

o http://www.creditcards.com/credit-card-news/credit-card-glossary-terms-
first-credit-card.php

• Breakeven analysis:
o http://fast4cast.com/break-even-calculator.aspx
o http://accountingexplained.com/managerial/cvp-analysis/break-even-
point-equation-method

• Capital 1 Case:
o https://www.youtube.com/watch?v=4cDT5YZQwOs

• Consulting Terms:
o http://managementconsulted.com/core-content/dictionary/

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products, services, educational tools, or other information available through this site. Read additional disclosures.

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About Case Interviews

• Other Sites:
o http://www.acethecase.com/
o http://www.bcg.com/join_bcg/interview_prep/interactive_case/default.asp
x
o http://www.imahal.com/careers/management/interviews/interviews_case_t
actics.htm
o Leverage www.youtube.com and search “case interviews”

• Books
o Vault Guide To The Case Interview by Mark Asher, Eric Chung, and
The Staff of Vault
o Case In Point, Complete Case Interview Preparation by Marc P.
Cosentino

Capital One Confidential/ProprietaryCapital One does not provide, endorse, nor guarantee and is not liable for third party
products, services, educational tools, or other information available through this site. Read additional disclosures.

6 Updated 10/24/2011