How to prepare for cases, Study Guides, Projects, Research of Business Strategy

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Case Interviews for

Corporates and

Consulting

MBA2022 - September 2020

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What are cases in corporate and consulting interviews

How to prepare for case interviews

What we will cover today

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Corporates

•^

How many people in the world are wearing Nike shoestoday?

-^

Our video streaming profits is dwindling. Help me figure outwhy this is happening.

-^

Do you think that we should sell fresh products?

-^

If you were tasked with launching the fresh flower deliveryservice, how would you price it?

-^

What do you think are the challenges with growing ourWomen’s business?

-^

How would you categorise the credit cards market in theUK? Do you think we should focus on more profitablemerchants or have a wider coverage?

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We currently don’t allow retailers to sell Product X on their e-commerce platform, just in brick-and-mortar stores. Shouldwe change this and allow them to do so or not?

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Would you recommend giving a % discount on Product Xduring Mothers’ Day sales? How would you evaluate this?

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We’re deciding whether to enter a new processing businessin Romania. How would you approach this?

Consulting Firms

•^

Your client is a top utility company. They are consideringacquiring a green energy supplier. Should the client gothrough with the acquisition?

-^

An oil exploration company is experiencing decliningmargins in Southeast Asia. How do you suggest weimprove profitability?

-^

An accessible bathroom manufacturer has 60% marketshare in Germany, and only 5% international. The boardwould like an expansion plan. How would you do this?

-^

Our client, a venture capital company, is consideringinvesting in a US start-up with the intention of bringing itsproduct, battery-operated home security cameras, to theUK. How would you price the product for the UK market andestimate the market size?

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The board of a global hotel company is consideringexpanding into boutique hotels. How would you evaluate thisidea and where would you start?

How interviewers ask case questions

More formal case prompt

-^

Simpler questions

-^

Internal strategy groups – similar to consulting

Internalstrategygroups

Corporates •

Market Sizing

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Pricing

-^

Product Strategy/Launch

-^

Profit Improvement

-^

New Market/Customers

-^

Reaction toCompetitor/Trends/Risks

Consulting Firms •^

Industry Analysis

-^

Merger & Acquisition

-^

Investment

-^

Organisation change

-^

Capacity Expansion

-^

Restructuring

Types of cases

Typically industry specific (but not guaranteed especiallyfor internal strategy groups)

Whole variety of industries

Interviewers want to see: •^

How you think and communicate

-^

Your skills, not sector knowledge Interviewers want to see: •^

How you think and communicate

-^

Your skills, not sector knowledge

Interviewers want to see: •^

How you think and communicate

-^

How interested you are in the role…through sector knowledge Interviewers want to see: •^

How you think and communicate

-^

How interested you are in the role…through sector knowledge

Sample case

Situation

“Vitamin Store” sells health and nutrition products

e.g. vitamins, dietary supplements, herbals.

Profits have been declining.

CEO wants to know why and what to do about it.

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Components of a case

Clarify

Structure

Analyse

Brainstorm

Recommend

Consulting Firms

•^

Confirm the scope

-^

Understand thebusiness model

-^

Clear unfamiliarterminology

-^

~1-3 mins Repeatanythingyou mayhave missed

Presenting your structure,

i.e. plan of action

Revenues

-^

Sales

-^

Prices

-^

Product mix

-^

Purchase size

-^

Volume

-^

Units sold

-^

Sales channels

-^

Purchase patterns

-^

Types of customer

Vitamin Store Profits

Internal

External

Costs

-^

Fixed costs

-^

Rent

-^

Labour

-^

Utilities

-^

IT

-^

Variable costs

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Inventory

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Logistics

-^

Marketing

Industry

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Industry growth

-^

Competitors

-^

Market share

-^

Customer segments

-^

Trends

-^

Legislation

Situation

“Vitamin Store” sells health andnutrition products e.g. vitamins,dietary supplements, herbals.Profits have been declining.CEO wants to know why and

what to do about it.

A note on frameworks

Frameworks are good starting points…

… but you must customise your structure to the case •^

Consulting is not about using off-the-shelf solutions

-^

Corporates want to see how you work and use resources to come up witha fit-for-purpose solution

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What it means to be hypothesis-driven (1)

Interviewer:

Your structure makes sense.Where would you like to start?

Standard answer “I’d like to look at industry growth first.Is there any data on this?” Hypothesis-driven Answer “Given the vitamins industry, there are more and morepeople who are focused on their health and are lookingfor products to supplement various needs and diets. Atthe same time, there are more players in the marketand many big chain grocery stores like Walmart havetheir supplement products. This could be squeezingVitamin Store’s profits. Therefore, I’d like to confirm ifthis is really the case.”

A.k.a. How do you test your gut feeling? •^

What is most relevant and imminent first? −^

Prioritise your buckets and analysis

-^

Explain your rationale −^

Avoid making grand statements that is not backed up

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What it means to be hypothesis-driven

(continued)

Interviewer:

Your assumption is right. There are more competitors now

that are hurting Vitamin Store

Answer “Okay, so new competitors are affecting VitaminStore’s profits. Unless there is anything else thatneeds to be discussed about the industry, I’d like tomove on to analysing the company’s profitability.As new competition probably hurts revenues,let’s look at that first.”

Use a process of elimination

to analyse and solve

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What it means to be hypothesis driven

(Example 3)

Non-hypothesis driven approach: “We know revenues have declined. I want to find out why: •^

Did customers change their preferences?

-^

Which segment has shown most decline in volume?

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Is there a price war in the industry?

-^

...etc, etc...” Hypothesis driven approach: Candidate:We know revenues have declined. This could be due to price or volume. Do weknow how these changed?Interviewer:Prices have remained constant. Volume has declined in line with revenue.Candidate:Since we know volume is the problem, this could be because the market size hascontracted or that the client's market share has been reduced. Do we know howeach of these have changed?Interviewer:The market size has remained the same, but our market share has reduced.

Revenues for a leading supermarket chain have been declining over

the last 10 years. How can we address this?

You solve the caseefficiently by askingrelevant questions

and connecting

dots quickly

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Components of a case

Clarify

Structure

Analyse

Brainstorm

Recommend

Consulting Firms

~1-3 mins

~2-3 mins

~15-20 mins

-^

Examine data,interpret charts,connect informationfrom exhibits

-^

Calculate e.g.revenues, profits,margins, marketsize, pricing, ROI,break-evens, NPV,IRR, etc.

-^

Lay out yourmethodology;present calculationsin a structured way

Always describe the “So What?”

What can you infer?

Interviewer:

Vitamin Store provided this

regarding store profits.What do you make of it?

Standard answer “There are quite a few stores with negative profitability,dragging down the chain’s overall profits”

“So what” implications answer “There are quite a few stores with negative profitability,dragging down the chain’s overall profits.This means:On the revenue side, we are losing customers tocompetition, e.g. Whole Foods or another health store.Perhaps the customer demographics in the area is notsuitable, or it could be a product mix issue.On the cost side, what could be driving down profitscould be rent, labour or inventory management.So part of the solution could be to improve profits forthese stores or shut them down.”

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Be organised in presenting

your calculations

Interviewer:

They’re considering a marketing strategytargeting 18-34 year old men. Current market share for this segment is 30% which they want to

increase to 35% with the marketing strategy. One in three men age 18-34 spends $10/month on

vitamins, with a profit margin of 40%. What would be the impact of this marketing

strategy on the bottom line?

Answer

Remember: •^

Simplify your maths: use estimates,shortcuts, percentages/fractions, etc.

-^

Link your calculations to numbers youhave discussed before

-^

Remember to answer the question

1) Need to figure out what’s the market size first

Price

Volume

$10/month ^ $120/year

Target Population: “US population is 300m, men is 50% so 150m peopleAssume average life expectancy is 75 years,18-34 years is 16 years, or

≈15 years

that’s ~1/5 or ~20% of 75 years ^

20% of 150m men is 30m men age 18- 1 in 3 men buy supplements: 1/3 of 30m men age 18-34 = 10m

Market size for this segment, men age 18-34:

10m x $120/year = $1,200m or $1.2bn per year

2) Current market share for Vitamin Store

for

this segment of 18-34 year old men is 30%;

30% of $1.2bn is $360m in revenues

Profit Impact

3) Increasing market share to 35%

with

the new marketing strategy:

5% of $1.2bn = $60m Revenues increase by $60m Improved total revenues = $420m

($360m + $60m = $420m)

Profit margin is 40%

40% of $60m

Profit impact: Increase of $24m

So What: “Given Vitamin Store’s revenues increase by $100m in the last two year,

a $60m revenue increase will be significant booster”