How to get into management consulting

How to get into consulting?Practical guide how to pass the case part

Management consultants are brutally efficientOnly 5% of candidates get accepted to consulting

You will learn how to solve cases during the job interview to increase your chances of

getting the job

Useful techniques that you should master

Market estimation cases

Sales and marketing cases

Strategic casesOperational cases

Recruitment process

In this presentation I will show 6 things

This presentation will help you land a job in consulting or as a business analyst

More cases you can find in my on-line course where I show step by step how to solve cases

Click to check my course

How to get into consulting –Management Consulting Cases

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The ideal consultant

The ideal consultant has some important characteristics that help him survive the hostile environment he is usually working in

Analytical mind

Good at structuring and simplifying problems

Good listener that can easily interact with people

Independent

Diligent and hard working

Resilient / Robust especially to stress

Good presentation skills

Open-minded

Computer literacy at least at average level

Recruitment Process

How does the recruitment process look like?

The recruitment process is pretty long and the chances are relatively small. Only 5% of those that take the math test get the offer

Math / Analytical

Interview with HR

interview with a

consultant

interview with a

consultant

interview with a

consultant

Last interview – Partner /

Director

100% 30% 25% 20% 15% 5%% of candidate that move to next phase

Important items in the CV

There are things that you look for when you are browsing through the CVs

Top universities

Top performer

Languages

Internships

Living / Studying abroad

Additional project i.e. student organizations

Computer literacy

Most management consulting workers are recruited from business schools or exact science departments

Business Schools and Department of Economics

% of all candidates

▪ 70%

% of all workers

▪ 50%

Exact science (math, physics, computer science

▪ 15% ▪ 30%

Medicine ▪ 5% ▪ 10%

Others ▪ 10% ▪ 10%

Types of questions that you may expect

There are 6 main types of questions you will get during the interviews

Market size estimation

Strategy cases

Logical math quizzes

Operations cases

Managing people cases

Alternative ways to get into consulting

Recruitment is not the only way that you can get into consulting

Comments% of candidates recruited

Direct recruitment to specific position

▪ Used especially by big consulting firms▪ 50-70%

Internships

▪ Helps you progress faster later

▪ Can require also formal recruiting but more lenient than the usual one

▪ 10-30%

Closer cooperation with students and student organizations

▪ You can help consulting firm organize in events, participate in them

▪ Bigger firms have their brand ambassadors on universities

▪ 10-30%

Closer cooperation with the universities

▪ You can get involved in the cooperation

▪ Usually helps you at least to get internship at the firm

▪ 10-30%

Useful Techniques that you should master before the

interview

Bottom-up approach

…the one you will for sure use is bottom-up approach where you go from single (typical) consumer to market research

▪ First you should imagine the typical users

▪ Then you should try to guess his consumption level

▪ By estimating the number of typical users you and their consumption level you get the rough size of the market

…sometimes it makes sense to divide markets in segments and estimate them separately (i.e. average and typical users, women and man, people in different age groups or segmentation by lifestyle)

Segment A

Segment B

…lets do a simple example. Imagine that you want to make an application for franchised restaurants

▪ You pick the sample group / area you want to estimate i.e. city (here Warsaw)

▪ You count the number of all restaurants in the area

▪ For the chosen area you count the franchising restaurants

▪ You check the population of the whole country – here Poland

▪ Assuming similar density as in Warsaw you scale up the number of franchised restaurants proportionally to the population

…to make you better at this method imagine you want to sell home made dog food….. First you have to estimate how many dogs they are…..

▪ First you should pick your sample – can be your friends or neighbors

▪ Next step is to calculate how many dogs they have

▪ Once you have the number also calculate how many households they are in the sample

▪ It is now enough to know how many households there are in the country

▪ And assuming similar proportion as in your sample you scale up the number of dogs

…with the number of dogs you just have to estimate the number of food eaten per year by average dog…..and you get to the size of the food market

▪ We have the number of dogs in the whole country. Now we have to get from here to the dog food

▪ This requires us to estimate additionally how much food would average dog eat per year

▪ In this way using annual average consumption per dog and the estimated number of dogs we are able to estimate how much food is eaten every year in the country

Lets sum up the bottom-up approach

▪Bottom-up approach enables you to estimate within one minutes the indicative size of the market

▪ It is very good for the B2C markets

▪For better estimation you should segment customers and increase the sample size

Top-down approach

When to use top-down approach?

▪You know the size of the whole market

▪You are interested in a specific segment of the market

▪Segment is big enough

▪You are thinking about niche strategy or low cost strategy (market re-segmenting)

For a change lets see how it would work with top-down approach

▪ You use the total market size to get to the size of the segment in which you are interested

▪ You have to use some sort of sample measure

▪ By applying the result from the sample you can get to the size of the segment in which you are interested

… let’s use the top-down approach to estimate the market for science fiction books sold in Poland….

▪ You use the total number of books sold in your country

▪ Then you go to the bookstore that belongs to the biggest chain of bookstore and check what percentage of the shelves are take by science fiction books

▪ If you use this proportion to the whole market you should get the rough estimation of the science fiction book segment

Backward reasoning

Imagine that you were supposed to say how much you have to spend to create a company that has revenue of $ 100 M dollar Imagine that you were supposed to say how much you have to

spend to create a company that has revenue of $ 100 M dollar

You could use for that the so called backward reasoning

CC: Flickr; Cycle Track

Imagine that you were supposed to say how much you have to spend to create a company that has revenue of $ 100 M dollar

Total Costs$ 400 M

Cost of 1 lead$ 2 K

# of leads200 K

% Conversion10%

x # of customers20 K

Average revenue per customer $ 5 K

Revenues $ 100 M

Compound effect

There are 2 types of compounding effect

Time related Operations related

▪ Even if the growth is small applied over long period of time gives big end-results

▪ A lot of small changes in many areas may produce a big end-results

# of customers Average revenue per customer

Revenues

+15%+20%

= 2,6 x StartStart x (1+10%)^10

Issue tree

Issue tree - general

Area of analysis

Area 1

Problem 1

Problem 2

Possible Reason 1

Possible Reason 2

Possible Reason 3

Possible Reason 4

Possible reasonsSuspected problemsAnalysis to be performed

Analysis 1

Analysis 2

Analysis 3

Analysis 4

Issue tree – example – chicken meat producer

Area of analysis

Transport

High costs of transport per ton of goods

Big level of waste and breakage in transport

Possible reasonsSuspected problemsAnalysis to be performed

Analysis of correlation between type of packaging and percentage of damaged

Analysis of time spent on the way and kilometers covered in that time

Analysis of designed routes, their length and the influence of possible changes

Analysis of fuel usage and kilometers covered by vehicles

Analysis of load carried on the way back

Badly designed routes

Too big fuel usage

No shipments on the way back

Low usage of resources

Badly designed method of packaging which makes the product prone to damage

Speed not adjusted to the product

Badly organized work and schedule of deliveries

Limitation on delivery time of finished goods

Analysis of level of overtime, daily organization of drivers work

Analysis of Clients’ preferences on delivery time

Opportunity tree

Gross Margin

% Gross Margin

% Front Margin

% Back Margin

# of transactions

Traffic

% conversion

▪ YouTube

▪ Ads on instagram

▪ Affiliation with bloggers

▪ Guest blogging

Opportunities

▪ Long form / Short form

▪ Reduction of delivery methods

▪ No account

▪ Emailing for people abandoning cart

▪ Upselling and Cross selling

▪ Free delivery for higher tickets

▪ Introduction of new categories

▪ Reducing number of suppliers

▪ Finding new suppliers

▪ Renegotiation

Cost drivers

Cost drivers are causing the cost to go or down

Cost of a Udemy course

Slide preparation

Recording and editing

# of slides

Cost of 1 hour

# of hours per 1 slide

# of lectures

Cost of 1 hour

# of minutes per 1 lecture

Lean manufacturing

* Sort,Set,Shine,Standardise,Sustain

** Total Productive Maintenance

*** Overall Equipment Efficiency

Kanban Kaizen Poka YokeProdukcja

gniazdowa

Zero defectsOEE***TPM**SMEDJust in time

Process

mapping

Continuous flow

managementStandaryzacja

pracyHeijitsu box

Lean Manufacturing is a philosophy of working with little waste and highest quality. It consists of many techniques that should be gradually mastered

Overall Labour Efficiency how much work there is in the work☺?

Workday

Time that you can devote

Time left for real workLack of work

No work due to organizational issues

Movement

Work well done

Liczba dostępnych

godzinlalka Stawka Godzinna

Dodatkowe przychody

Removing bottlenecks

Bottlenecks are dangerous as their hurt the efficiency of the whole system

What is the throughput of every system and where is the bottleneck?

Example 1

Example 2

5 10 20

Example 3

x Stage capacity

The are 4 rules that you should follow when it comes to bottlenecks

▪ Identify what is the bottleneck

▪ Increase its throughput by lowering the time needed for everything that goes through the bottleneck

▪ Add new resources to bottleneck

▪ Adjust everything to the bottleneck – so it works at the same pace

Imagine that you are working in a company working in a content marketing

Research topics for a post

Write a post Create illustrationEdit and modify

post, add illustration and schedule

20 5 7 10

# of post that can be done in a week by 1 person

▪ Speed up the writing process (faster typing, better tools, shortcuts for the most popular words)

20 8 7 10

10 9 10 10▪ Make the researcher do also par time

writing and making illustration

▪ We have almost doubled the production of post with the same resources

▪ The same principles would apply if all the activities were done only by you – in this case it would mean that you should not do too much research and illustration but rather improve the typing speed and match the number of illustration and researches to your capacity in writing

▪ If you have no impact on the process (you are one of the guys above just doing his own part and your boss does not want to listen to you then simply do less – identify the bottleneck and adjust your speed to his speed.

▪ On the other hand if you are the bottleneck then speed up because the whole team depends on you.

Market size estimation

Market size estimation -Introduction

In those sort of cases they want to check a few things

▪ Can you structure a problem?

▪ How do you behave when confronted by things that you know nothing about?

▪ How do you fill in the gaps?

▪ Your approach to analyzes?

I will show you few examples

I recommend going on your own through cases before seeing the solution

Go through the lecture with the tasks and questions

Pause the course for 5 minutes and try to solve the problem on your own as if you were in a real interview

Go to the next lecture with solution and go carefully through it

Before going to next lecture compare your answer with what I have shown in the solution

Proceed with the next case

TV sets market

Imagine that you were asked to estimate the market for TV sets

What is meant here by “the market”? Annual sales or total ownership?

What is included in the TV sets (i.e. monitors are in or not)?

Do you want the market estimation to be in volumes or in values?

Let’s start by finding the main drivers for TV sets. We assume that it depends on the number of families. If we have the number of families and the number of TV per family we an estimate how many TVs are owned

# of families

# of TV set per family

# of TV sets owned by all families

To get from TVs owned to the number of TVs bough every year we need to assume how often TV are replaced

# of families

# of years of usage of a TV sets

÷Number of TV sold during the year

Once we have the number of TV sold we can calculate the value of the market

# of families

Average price per TV

Value of TV sets sold during the year

If you do not know the number of families you can estimate it using the total number of people

# of families

Average price per TV

Value of TV sets sold during the year

Total population Average size of a family

Below how it would look like for Poland

10 M families in Poland

1 TV set per family

10 M TV sets owned

Every 4 years replacement of TV set

÷ 2.5 M of TV sets sold annually

USD 1 000 per TV SET

USD 2 500 M of sold TV sets

40 M people in Poland

4 people per family

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Sales and marketing cases-Introduction

In those sort of cases they want to check a few things about you:

▪ What is your general knowledge about sales and marketing?

▪ How analytical and goal-oriented you are when it comes to sales?

▪ How innovative you can be in sales / marketing?

▪ Are you a good sales / marketing person?

Sales channels comparison

Imagine that as a consultant you were asked to analyze your client situation-FMCG producer that is using different channels of distribution. How would you check whether his using the right mix channels

Own shops

Retail chains

E-commerce

Marketplaces

Wholesalers

How would you check whether his using the right mix channels

What “right means”?What metrics you should look at to decide on the

right mix?

What are the strategic goals?

What would you do – next steps?

How would you check whether his using the right mix channels

What “right means”?

▪ Right = the most profitable

▪ Right = the most profitable, still close to the structure market

What metrics you should look at to decide on the

right mix?

▪ Net margin per channel

▪ % Net margin per channel

▪ Market share of specific channel

▪ Number of customers or middlemen in a specific channel

▪ % of revenues in a specific channel generated by top 3 players

▪ Have higher share in channels experience high growth and have chances to become significant in the next 3 years

▪ Have higher share in channels that are not consolidated and the middlemen or the customer does not have significant purchasing power

▪ Step 1: Get the data on sales, COGS and direct and indirect channel costs

▪ Step 2: Calculate the profitability on all levels for all channels

▪ Step 3: Get the data on the market: % share of specific channel, number of players in the specific channel, % of revenues in a specific channel generated by top 3 players

▪ Step 4: Find out the strategic goals

▪ Step 5: Compare and decided on targeted mix of channel

Potential for growth -retailer

Imagine that you are retailer with 200 stores in the whole country.

Gdańsk

Szcecin

Bydgoszcz

Poznań

Wrocław

Katowice

Łódź

Kraków Rzeszów

Kielce

Lublin

Warszawa

Białystok

Gdynia-Sopot

Gliwice

Olsztyn

Zielona

Current number of stores

How you would estimate the potential for growth?

What “growth means”?

▪ Build new store

▪ Like For Like growth (LFL, L4L)

What metrics you should use to decided whether to

build a new store in a specific place or not?

▪ You should first establish the capture area for every type of store. It can be defined as an area or number of potential customers

▪ Define the expected profitability per store

▪ For every city you should calculate the number of stores at the saturation point

▪ Is the Retailer willing to sacrifice profitability just to capture more market share?

▪ What market share it aims at?

▪ What are his limitation in-terms of capex

▪ Step 1: Get the data on number of stores per city, population per city and data needed to calculate the saturation point (i.e. the minimal number of customers per store)

▪ Step 2: Calculate saturation point per every city

▪ Step 3: Compare the current number of shops with the saturation point

▪ Step 4: Decide on the basis of saturation point and strategic goals what to do

Below how we would calculate whether it makes sense to build a new store in a specific city

Total population in the city

Minimal number of population per shop

Number of shops at saturation point

Built new shops till saturation point if you have money

Don’t build any new shops in this location

If we were talking about Warsaw we could see the following picture

1 000 K people in Warsaw

We need at least 100 K per store

÷÷÷

We can build 4 new stores but we have money only for 2

We haven’t reached saturation point

Number of stores by provinces

Gdańsk

Szcecin

Bydgoszcz

Poznań

Wrocław

Katowice

Łódź

Kraków Rzeszów

Kielce

Lublin

Warszawa

Białystok

Gdynia-Sopot

Gliwice

Olsztyn

Zielona

Targeted number of stores

How to expand Retail brand

Imagine that you are a Retailers with 10 stores and very strong brand that are selling toys. How would you grow the business

Off-line retail chain Selling Toys

There are plenty of things you can do. Below some examples

Open more stores if below saturation point

Work on improving LFL

Introduce private label

Add new categories for kids i.e. Fashion

Enter new channels i.e. on-line

Grow by franchising your concept

Creating new formats i.e. Store in Store

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Strategy cases

KPIs for cinema

Imagine that you were responsible for managing the cinema. What KPIs metrics you would look at to see whether you are doing a good job?

You should first start by estimating the revenues of the cinema you are managing

# sold tickets

Average revenue per Ticket

Total revenuex

Average revenue per ticket depends on the price of the ticket as well as average additional purchase are people making

# sold tickets

Total revenuex

Average price per ticket

Average additional purchase per ticket

Number of sold tickets depends on the capacity of the cinema (number of potential seats) as well as the percentage utilization of this space

# sold tickets

Total revenuex

Total capacity in tickets

% Utilization

On the cost side we have rent and the salaries of the people

# sold tickets

Total revenue Total Costsx

% Utilization

People +

Salaries depend on the number of people and average wages

# sold tickets

% Utilization

People

# of People

Average wages

When we deduct from the revenues the costs we get roughly the EBITDA of the cinema that you manage

# sold tickets

EBITDA per cinema

% Utilization

People

# of People

Average wages

Once you have all the KPIs and you can start wondering how to increase the EBITDA of your cinema

# sold tickets

EBITDA per cinema

% Utilization

People

# of People

Average wages

IKEA Business model

IKEA is a well know brand selling furniture. On what do you think they make their money? Think about this and move to the next slide

IKEA has been very successful in implementing low cost model in furniture. Below how they did it

Model „big box” built outside the city center

Design

Consistent message

Diversified revenue streams

Operational excellence

Business scale

Retail

Acquisition

Activation

Retention

Revenue

Referral

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Math / Logical quizzes

9 balls

Imagine that you have 9 balls. One of them is slightly heavier. You have weights with scale that you can use 2 times

First you have to divide the balls in 3 groups

Group A

Group B

Group C

Then put two groups on the scale. Let’s imagine that you put Group A and Group B

Group A Group B

If the scale stay in balance it means that the heavier 1 ball is in group C

Group A Group B

If the scale is tilting at the group A side it means that the heavier ball is in group A

Group A

Group B

If the scale is tilting at the group B side it means that the heavier ball is in group B

Group AGroup B

Group A

Group B

Group C

Let’s assume that the scales were in balance. We get rid of group A and B. Every ball in group C gets its own unique number C1, C2, C3. We put C1 and C2 on the scales. If the scale remain in balance it means that C3 is heavier. If the scales tilt at whatever side the tilt is this will point to the heavier ball

To sum up we did it in 2 phases. In the 1st one we got rid of 6 balls. In the 2nd one we got the heavier ball out of three

Group A

Group B

Group C

C1 C2 C3

Phase 1 Phase 2

Operations cases

Content marketing agency -how to increase it's output?

Imagine that you are working in a company doing content marketing. How much post they can make and how you could improve it?

20 5 7 10

Imagine that you are working in a company working in a content marketing

20 5 7 10

▪ Speed up the writing process (faster typing, better tools, shortcuts for the most popular words)

20 8 7 10

10 9 10 10▪ Make the researcher do also par time

writing and making illustration

▪ We have almost doubled the production of post with the same resources

▪ The same principles would apply if all the activities were done only by you – in this case it would mean that you should not do too much research and illustration but rather improve the typing speed and match the number of illustration and researches to your capacity in writing

▪ If you have no impact on the process (you are one of the guys above just doing his own part and your boss does not want to listen to you then simply do less – identify the bottleneck and adjust your speed to his speed.

▪ On the other hand if you are the bottleneck then speed up because the whole team depends on you.

It will take you around 20 minutes to get to the cash till

Number of people in the queue

Time per 1 customer

Number of cash tilts

32 2.33

30 23 20.0

Time you will waitIn min

Number of people in the queue

Number of cash tilts

Time per 1 customer

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