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Master the most feared part of the


selective process at consulting
companies

Agenda of Training

Theory
Introduction - Cases & frameworks
7 commandments of a case interview: application
examples
Market Sizing framework: impress your interviewer
applying the 3 golden rules
The Profitability framework and an application example

The Core Three framework: Customers


(+ market), Company (+ product), Competitors
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Cases & frameworks (simplified view)


Three main categories of cases:

1. Market Sizing
Always use the Market Sizing framework

2. Business Situations
85% of the time: General Business Situation
framework
15% of the time: M&A / PE or Capacity frameworks

3. Other cases types


No off-the-shelf frameworks

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Cases & frameworks (detailed view)


Market Sizing
framework
Business
Situation
framework

Pure Market
Sizing

Market entry

Competitive
response

Business turnaround

Operations strategy

Industry analysis

Pricing &
Valuation

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Finance

New product

Increase
sales

Reduce costs

M&A / PE
framework

No specific
framework

Private
equity

HR

Brainteasers
Others

Capacity framework

New business

Capacity
change

M&A

Supply &
Demand

No specific framework
Market Sizing
framework

Assess the financial health of


Pure Market
Swatch
Sizing

No specific
framework

Business
Situation
framework

How should Coca Cola


define
New
product
Market entry
the salaries of their overhead?
Competitive

Increase

Business turnaround
What
economical
response
sales consequences
would a change in traffic
Reduce costs
Operations strategy
direction
in Britain have?

Why are
gully
covers New
round?
Industry
analysis
business

M&A / PE
framework

Pricing &
Valuation

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Private
equity

M&A

Finance
HR

Brainteasers
Others

Capacity framework
Capacity
change

Supply &
Demand

Capacity framework
Market Sizing
framework

No specific

For what price could Intel sell theframework


i5 processor if
Pure Market
they increased their
Finance
Sizingunits production by 25%?
Business
Situation
framework

What is the best diamond


extraction and
HR
Brainteasers
New
product
Market entry
commercialization volume per year for De Beers?
Competitive
response
Supply
&

Increase
sales

Demand
chart Reduce costs

Business turnaround

Operations strategy

Industry analysis
M&A / PE
framework

Pricing &
Valuation

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Private
equity

Others

Capacity framework

New business

Capacity
change

M&A

Supply &
Demand

M&A / PE framework
Market Sizing
framework

How much is facebook worth?


Pure Market
Sizing

No specific
framework
Finance

Business
Bain Capital wants to buy 10% of Dropbox for
Situation
US$300 million. Is that
a good deal? HR
Brainteasers
framework
New product
Market entry

Should UPS really merge with TNT?


Competitive
response

Increase
sales

Business turnaround

Others

Should GM buy its windshield provider (vertical


integration)?
Reduce costs
Operations strategy

Capacity framework

Industry analysis
M&A / PE
framework

Pricing &
Valuation

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New business

Private
equity

M&A

Use Business
Capacity
Situation
change
framework
with focus on
Supply &
synergies!
Demand

Business Situation framework


Market Sizing
framework

No specific

C&A has been facing a steady decrease


framework in sales
Business
Situation
framework

Pure Market
Sizing

Market entry

Competitive
response

Increase
sales

Reduce costs

Industry analysis

Finance

New product

Business turnaround

Operations strategy

New business

HR

Brainteasers

Detailed
Others

discussion
after break!
Capacity framework
Capacity
change

M&A / PE
framework

Pricing & to diversify


Private
Supply
&
Henkel Valuation
wants
its
enter
M&Abusiness and
equity
Demand
the packaging industry. Is that a good idea?

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Market Sizing framework


Market Sizing
framework
Business
Situation
framework

Pure Market
Sizing

Market entry

New product

No specific
framework

Detailed
Finance
discussion
after break!
HR

Competitive
Increase
turnaround
How
many
golf
balls fit Business
in a Boing
747?
response
sales

Brainteasers

Others

How many
shoes are
sold in Brazil per year?
Reduce costs
Operations strategy

Capacity framework

What is the market of hearing aids in Europe?


Industry analysis

New business

Capacity
change

For how much would you sell the Golden Gate


M&A / PE
bridge? Pricing &
framework
Private
Supply &
M&A
Valuation

equity

How heavy is Manhattan?


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Demand

The commandments: Opening the case


1. Listen actively

Fully concentrate!

Note down ALL information

2. Pause, paraphrase problem and clarify all


questions

So, if I understood it well, Im the CEO of a company

Double check on objective: Is reducing production


costs our only goal in this case?

Dont be afraid to ask: make sure you understood


the problem 100%

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The commandments: Opening the case


3. Plan the solution structure (roadmap)

Ask for 1 minute to gather your thoughts

Identify case type and corresponding framework

Describe and draw framework for interviewer

Organize your notes (consultants are supposed to be


always client-ready)
Example: Profitability framework

+ point: You dont need to call your


structure a framework! Interviewers
always complain that candidates force-fit
their cases into off-the-shelf frameworks

Profit

Revenue

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Costs

11

The commandments: Cracking the case


4. Be answer-first

Always list a few possible hypotheses and set


out with one of them

Start with corresponding branch of framework

Refine/rebuild hypothesis as you find out more

Example: Coca-colas profit has been declining in the last 2 years.


Hypotheses:
Revenues have decreased

Profit

Costs have increased


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

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Revenue

Costs

12

The commandments: Cracking the case


5. Keep structured throughout the case

Always refer to structure

Dont jump around framework branches

Consistently explore branches and exclude them if


they are not relevant

Summarize findings when switching major branches

Be MECE!
Profit

Example: Coca-cola
Answer first: Costs have increased
+ point: Mention that
your structure is MECE

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Revenue

Raw
material

Labor

Costs

Distribution

Others

13

The commandments: Cracking the case


6. Gather data the right way

ALWAYS segment your data!

Proactively ask for relevant data

Dont be too vague

Quantify whenever possible

Go for the trend (this year vs. last years)

Company-specific or industry-wide?

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The commandments: Closing the case


7. Close the case properly

Ask for a minute to gather your thoughts


(and draw them up)

Its all about actionable recommendations!

Choose a side and stand by it!

First conclusion/recommendation then justification

People like 3: give the interviewer 3 reasons!


Conclusion +
recommendation

+ point: Always apply the pyramid


principle (by Barbara Minto)
Reason
1

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Reason
2

Reason
3

15

Market Sizing framework the 3 golden


rules
1. Always use a tree to structure your problem

2. Find the trade-off between pragmatism and


accuracy
3. Do sanity checks along the way

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Always use a tree to structure your problem


How structured you are, thats what matters!

First the structure (downward from top) then


the numbers (upward from bottom)
Example: How
many golf balls can
you fit in a Jumbo?

12M . 1.2 14M

Jumbo
volume
(m3)

1500

+ point: always
explicitly write the
units of the
variables being
estimated

Golf ball
volume
(m3)
125.10-6

30

Sectional area
(m2)

Length
(m)

50

Filling
constant
1.2

Diameter3
(m3)
125.10-6

10

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# golf balls
in Jumbo

Radius
(m2)

17

Find the trade-off between pragmatism and


accuracy
Rounding numbers is an art that must be used

But ask the interviewer if hes fine with it!


Round some up and some down
+ point: if you are able to make the exact calculation, round
up the answer instead of the inputs. Ex:
Right: 4 * 3.8 = 15.2 15
Wrong: 4 *3.8 4 * 4 = 16

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18

Find the trade-off between pragmatism and


accuracy
Work with averages when the problem is
complicated enough, otherwise segment!
MECE is essential in segmentation
Dont make implicit assumptions
Example: How many
shoes are sold in
Brazil per year?

+ point: try to segment in


three categories. Anyone
can understand 3
categories, which is not
true for 4 or more

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# shoes/year
in Brazil

# shoes
class A /
year

Class A
population

# shoes
/ person
/ year

# shoes
class B /
year

Class B
population

# shoes
/ person
/ year

# shoes
class C /
year

19

Do sanity checks along the way


Problems are not easy: you might make mistakes

Take a step back, be critical, use common sense


Do sanity checks for major branches
Example: How many
people can stand together
on an airport runway?

250,000

50,000

+ point: dont worry if


your check is off by 2
times. But do
something if its off by
10 times or more

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50

Width
(m)

# people on
runway

Runway
area
(m2)

Length
(m)

# people /
m2

1,000

20

Business Situation compound framework


3 different combinations
Only profitability problem (quantitative focus)
Profitability
framework

Only conceptual problem (qualitative focus)


Core Three
framework

Combined problem (quantitative + qualitative)


Profitability
framework

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Core Three
framework

21

The Profitability framework and an


application example
Profit: number 1 reason for consulting projects

Almost half of Business Situation cases start with


a profitability problem
Sales falling

profit

Costs rising
revenue

Both
revenue /
unit

+ point: focus on isolating the problem


by applying the commandments

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# units
sold

costs

variable
cost

cost / unit

fixed cost

# units
sold

22

The Core Three: Customers (+ market),


Company (+ product), Competitors
First and foremost the
customer: the
companys raison
dtre
The company and its
products
Competitors and
competitive landscape

The Core Three framework

Company
(+product)

Customers
(+ market)

Competitors

Insights

Actionable recommendations

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The Core Three Customers (+market)


Who are our customers?
How can we segment them?
How big are the segments? What is our
market share?

Customers
(+ market)
Company
(+product)

Competitors

Customer concentration (bargain power)?

What does the customer expect (per segment)?


Do we understand it?
Do we fulfill it?

Which distribution channels do they like?

Is the market growing? Is it profitable?

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The Core Three Company (+product)


What is our product?
Is it differentiated or a commodity?
Whats the pricing?

Customers
(+ market)
Company
(+product)

Competitors

Can we cross-sell add-ons to it (bundles)?


Is there a substitute threat?
If portfolio: what does the BCG matrix look like?

What is the clients company?


What are the companys core competences?
Which distribution channels are used?

What are the main cost blocks (use the value chain)? Is
there supplier concentration (bargain power)?
What are the companys main assets (brand value,
customer loyalty) and liabilities (legal problems, debts)?
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The Core Three Competitors


Who are our competitors?
How is the competition structured
(fragmented, monopoly, oligopoly etc.)?

Customers
(+ market)
Company
(+product)

Competitors

How do they behave? Is there a price war?


Best practices: are they doing something better than
us? Do we do something better than them?

How does our cost structure compare with our


competitors?
Are there barriers to entry?
Is the market regulated? If so, how?

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