Case Workshop Carnegie Mellon

8/8/2019 Case Workshop Carnegie Mellon

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CONSULTING AND CASE

INTERVIEW WORKSHOP

GSIA CONSULTING CLUB

October 6, 2001


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Agenda Before the Interview

Interview Summary Fit Interviews

Case Interviews

Frameworks


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What industries do they serve?

What specialty functions?

Who is the client? CEO or operational unit?

Where does the work take place? The office or the client

site?

How many projects does an associate work on at a time?One or two?

Do your research on the firm!!!


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Firm brochures available at COC

Firm web sites

HBS Career Guide: Management Consulting

Wet Feet Press So You Want To Be a ManagementConsultant [wetfeet.com]

Vault Reports Industry Guide: Management Consulting[vaultreports.com]

Many resources are available to do your research


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Other reference materials

Books

Vaults Guide to The Case Interviews

Vaults Guide to Finance Interviews

Martin Yates Knock Them Dead

Web Sites

Firm Web Sites

Vault & Wetfeet


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Consulting interviews typically last 45 minutes

2-5 5-10 20-25 2-5Time

(Minutes)

Total

45

Case Interview Q&AFit InterviewIntro

Case Interview Success Critical


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The Fit Interview


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Do not underestimate the importance of fit Every interview is a fit interview!

Go through your resume and have a story for each point

Practice answering key questions. Warm up for caseinterviews with a few:

Why consulting? Why you? Why this firm?

Tell me about xyz on your resume. What made you decide to do xyz?

What was the greatest challenge in accomplishing xyz?

Preparing for fit interviews


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The Case Interview


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Why case interviews ?

Snapshots of ConsultingEngagements

Simulate a typical situationbetween a clientand a consultant


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Recruiters look for three primary characteristics

Assess if thecandidate has

aptitude for

Problemsolving

Tolerance forambiguity

Communicationskills

Minimalskill sets aconsultantuses daily


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Case interviews evaluate far more than acandidates functional and technical skills

Skill Key Questions

Interpersonal skills

Communicationskills

Organizational skills

Strategic thinkingskills

Creativity skills

Analytical skills

Is the candidate relaxed and confident?

Is the candidate engaging? Is the candidate a good listener?Is the candidate asking insightful, clarifying questions?

I

s the candidate good at organizing the information provided?Is the candidate good at developing a framework for analyzingthe information? Is the candidate stating assumptionsclearly?

Is the candidate comfortable discussing the multifunctionalaspects of the case? Is the candidate examining theorganizational and cultural issues as well as the functional

and strategic? Is the candidate approaching the problem atthe right level of detail?

Is the candidate thinking creatively?

Is the candidate demonstrating analytical horsepower?


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TYPES OF CASE INTERVIEWS AND FRAMEWORKS


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The Cost-Revenue Model

Revenue Cost

Price Quantity Fixed VariableX ) ( + ) Price

discrimination Changes in

pricingstructure

Viability ofpricing overtime

Discounts orcouponing

Competitorspricing

Customersegmentation

New/existing Loyal/

switchers Channel

restrictions ortemporarydisturbances

Changingconsumerdemands

Capitalequipment

Land Buildings

Labor Materials Energy

Profit

(


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The Four CsMarket Positioning of

XYZ Company

Break downthe companys

cost structure Fixed Variable

Estimate thecompetitorscost structure

Understand

trends in coststructures

Segment thecompanys

customer base New/existing Loyal/

switchers Examinecompanyprofitability by

segment How much do

theypurchase?

At whatprice?

Identify majorcompetitors

Traditional Unexpected

substitutes What are thecompetitorsstrengths andweaknesses

Profits Costs

Investigatemarket share

Costs Customers Competitors

Identify relativechannel

leverage Sources of

advantage Sustain-

ability Impact of

channel

strategies onmarketpositioning

Channels


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What are theproductsdifferentiatingattributes?

Why does theconsumer purchase

this product?

Unique packaging Superior cleaning

power Affinity marketing

cool people drink

XX

How is the productdistributed toconsumers?

What new methodsof distribution arecoming available?

Retail store Warehouse store,

Sams Club Mail order Internet/electronic

distribution

What advertisingmedium is used tosell the product?

What is the mosteffective method ofgetting the word

out?

Newspaper versusTV versus radio ads

Retail placement aisle-end displays

New media?

How is this productpriced?

How are itscompetitors priced?

Value pricing/Every Day LowPrice

Premium pricing Price discrimination

The Four Ps

Product

Place

(Distribution) Promotion Price

How effective is this products marketing campaign?


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Porters Five Forces

Economies of scale Capital costs Cost advantage of existing

competitors Barriers to exit Patents

Barriers To Entry

Number and size ofcompetitors

Industry growth rate Product differentiation factors Industry margins/pricing

Market Rivalry

Relative price/value of thesubstitute compared toindustrys product

Cost of switching to substitute Buyers propensity to switch

Substitutes

Number and size of suppliers Switching costs/product

differentiation Availability of substitutes Possibility of forward

integration

Supplier Power

Significance of the purchaserelative to cost structure

Switching costs Purchase volume Threat of backward

integration

Buyer Power


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Value Chain

ServiceDistributionSalesMarketingManufacturingDesign andEngineering

Suppliers

CostQuality

Cycle TimeTechnology

Value Engineer.Research

DevelopmentTimetableInvestmenthurdlePrototyping

Costs (Labor,overhead, WIP,

Capacity)Process(Throughput,general flow,economies ofscale, yield, bestpractice,utilization, asset

base,technology)

ResearchPrice elasticity

PromotionChannels

Size of saleforce

LogisticsAgency systemsvs. in-houseCommissionstructureRetention/attrition levelsVolume vs.

profit

MarginsInventory turns

Level of supportLogisticsnetworkStructure ofnetworkDelivery/batchsizes

Response timeEnabling

technologyLaborrequirementsSatisfactionlevels


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Financial Analysis

Estimate Future Cash Flow

Revenues - Costs

Estimate Discount Rates

Look at comparables

Attain Net Present Value (NPV)

Discount future cash flows at appropriate discount rate

Consider Other Synergies

Reasons for go ahead despite negative NPV


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Brain Teasers

Know Some Basic Statistics

US Population: 250 mm

Households: 100 mm

Employed: 60%

Married: 60%

Ave Income: 30k per year

Income Distribution: $0-25k: 30%, $25-75K: 55%, $75k+:15%

Education: High School - 75%, Bachelors degree - 20%

(Note: All figures are estimates)

Elevator Question


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Five general types of cases

Investment/Divestment

IndustryAnalysis

MarketExpansion

PricingProfit

Improvement


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Industry analysis case studies

A manufacturer of automotive batteries is losing market shareand profitability is decreasing. What should the company do?

A leading manufacturer of automobiles is considering

acquiring a national rental car company. What factors areimportant in this decision?

A group of investors is considering building a 40,000-seatconcert pavilion in the Northwest suburbs. What factorsshould they consider?

A national provider of in-home health care services isconsidering purchasing a regional managed care facility with250 physicians. What factors should our client consider inmaking this decision?

Examples


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Industry analysis case studies

Key Points Candidate Should Explore Market

Competition

Customer/supplier relations

Barriers to entry/exit

Financials

Market size and segmentation Analyze product demand/trends Customer requirements

Analyze competitive economics Determine levels of

Product differentiation

Market integration Industry concentration

Evaluate negotiation power Identify substitutes Assess vertical integration

Evaluate companies entering/exiting

Determine competitor reaction to new entrant Analyze economies of scale Predict learning curve Research government regulations

Identify key financials Evaluate potential ROI Assess risk factors of industry

Determine fixed and variable costs


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Market expansion case studies

U.S. domestic express package company; both air and groundtransport capability. Over $7 billion in revenue. Highlyprofitable. European company suggests they form an alliance toprovide service between the U.S. and Europe. Should the cliententer the international market? If so, what should the clients

strategy be? How should revenues be split? European manufacture of confectionery products wants to enter

the U.S. market with premium product line. Should the clientconsider entering the U.S. market?

A national retailer has approached our client, a manufacturer offast-moving consumer products, and asked them to consider

manufacturing a private label product line for them. Themanufacturer is burdened with excess manufacturing capacity,so the proposal looks attractive. What factors shouldmanagement consider in making the decision?

Questions

MarketEntryCase

Studies


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Market expansion case studiesKey Points Candidate Should Explore

Size of market

Understand competitors

Analyze customer needs

Assess clients capabilities

Understand economics

Identify data sources for market size Understand growth trends

Identify current service providers Evaluate strengths/weaknesses Estimate competitors cost structure

Identify key customer segments and respectiveneeds

Identify gaps in current services Discuss cost-benefit trade-offs

Identify clients strengths and weaknesses Compare client capability to competition

Understand clients cost structure Determine potential competitive advantages

Project expected revenue and costs Estimate capital expenditures Perform sensitivity analyses


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Profitability case studies

The U.S. subsidiary of a French spring water bottler isexperiencing a drop in profits. Why?

A Japanese automotive components (brakes, shocks, struts)manufacturer with a 12% share of the U.S. market is experiencing

declining profits. 20% of the products are shipped in from Japanand 80% are manufactured in U.S. facilities. What might becausing the decline and what actions should be taken?

A company makes stairmasters, treadmills, etc. to sell to healthclubs. How can profits be increased?

Your client is a consumer products company. The board wants toknow if its advertising campaign for their new brand of chips hasbeen successful. How would you evaluate the campaignsperformance?

Examples


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Profitability case studies

Plant utilization Quality Economies of scale Distribution

Costs Fixed and variable Labor costs Suppliers Materials

Customers Price sensitivity Segmentation Cost-benefit trade-off

Competition Pricing Capacity

Basis of differentiation

Channels Relative leverage Market segmentation Strategy

Key Points Candidate Should Explore


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Pricing case studies

How should a major retailer price its services in the electronicand appliance service business?

Your client is a concert pavilion.R

evenues at performancesare declining. Given the concert pavilions goal is to maximizeexposure while covering costs, what should be done?

An inventor of a new athletic shoe wants to know: (1) What themarket is for his goods, and (2) how to produce it. What steps

should be taken?

Examples


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Pricing case studies

Identify the type of market Monopoly Oligopoly Perfect competition

Issues to address

Consider what the market will bear Think about the long-term effects of

pricing decisions Think how the competition will respond to

changes in pricing What is the elasticity of demand? Consider the

consumers sensitivity to price changes

Consider methods to create pricediscrimination

Consider using strategic tactics such ascreating loss leaders or traffic builders



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Investment cases

An automotive manufacturer is considering consolidating three ofits East Coast assembly plants into one location. What factorsshould it consider?

A German manufacturer of consumer products is considering

opening a manufacturing facility in Poland to meet EasternEuropes growing demand for its products. What factors shouldthe company consider?

A Midwest-based pharmaceutical company is considering openingdistribution warehouses on the West Coast to handle the growingWestern territory. What factors should it consider?

A company of chocolate and confectionery products isconsidering acquiring a regional soft drink manufacturer. Are thedistribution synergies sufficient enough to justify an acquisition?

Examples


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Investment cases

Sustainability of profits in segment

Market size and dynamics

Competitive position

Product differentiation and standards

Price dynamics

Distribution of costs



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Summary of advice...

Understand the objectives of the case interview; clarify issues ifnecessary

Use notes and take time to collect your thoughts

Use a standard methodology

Think top down big picture first Focus on identification of issues, developing and testing

hypotheses, and next steps, not just right answers

Use good communication skills state and revisit your

assumptions Be coachable and integrate feedback quickly

Be confident and relaxed

Read industry journals


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Q & A

Documents

Case Workshop Carnegie Mellon