cCrack the case workshop review

8/10/2019 cCrack the case workshop review

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Workshop PreviewCrack the

Master the most feared part of theselective process at consultingcompanies


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Crack the Case PrepLounge 2

Agenda of Training

Theory

Introduction - Cases & frameworks

7 commandments of a case interview: applicationexamples

Market Sizing framework: impress your interviewerapplying the 3 golden rules

The Profitability framework and an application example

The Core Three framework: Customers(+ market), Company (+ product), Competitors

Practice PrepLounge.com


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Cases & frameworks (simplified view)

Threemain categories of cases:

1. Market Sizing

Always use the Market Sizing framework

2. Business Situations

85% of the time: GeneralBusiness Situationframework

15% of the time: M&A / PE or Capacityframeworks

3. Other cases types

No off-the-shelf frameworks


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Cases & frameworks (detailed view)

Reduce costs

Pure MarketSizing

Market Sizingframework

Market entry New product

Operations strategy

Business turnaroundIncrease

salesCompetitive

response

BusinessSituation

framework

Industry analysis New business

Pricing &Valuation

Privateequity

M&A

M&A / PEframework Supply &

Demand

Capacitychange

Capacity framework

Finance

HR

Others

No specificframework

Brainteasers


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Reduce costs

Pure MarketSizing



Operations strategy


salesCompetitive

response

BusinessSituation

framework


Pricing &Valuation

Privateequity

M&A


Demand

Capacitychange

Capacity framework

No specific framework

Assess the financial health ofSwatch

How should Coca Cola definethe salaries of their overhead?

What economical consequenceswould a change in trafficdirection in Britain have?

Finance

HR

Others


Brainteasers

Why are gully covers round?


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Finance

HR

Others


Brainteasers

Reduce costs

Pure MarketSizing



Operations strategy


salesCompetitive

response

BusinessSituation

framework


Pricing &Valuation

Privateequity

M&A

M&A / PEframework

Capacity framework

For what price could Intel sell the i5 processor ifthey increased their units production by 25%?

What is the best diamond extraction andcommercialization volume per year for De Beers?

Supply &Demandchart

Supply &Demand

Capacitychange

Capacity framework


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Supply &Demand

Capacitychange

Capacity framework

Finance

HR

Others


Brainteasers

Reduce costs

Pure MarketSizing



Operations strategy


salesCompetitive

response

BusinessSituation

framework

M&A / PE framework

How much is facebook worth?

Bain Capital wants to buy 10% of Dropbox forUS$300 million. Is that a good deal?

Should UPS really merge with TNT? Should GM buy its windshield provider (vertical

integration)?

Use Business

Situationframework

with focus onsynergies!


Pricing &Valuation

Privateequity

M&A

M&A / PEframework



Pure MarketSizing


Pricing &Valuation

Privateequity

M&A


Demand

Capacitychange

Capacity framework

Finance

HR

Others


Brainteasers

Business Situation framework

C&A has been facing a steady decrease in sales

Detaileddiscussion

after break!

Henkel wants to diversify its business and enterthe packaging industry. Is that a good idea?

Reduce costs Operations strategy


salesCompetitive

response



BusinessSituation

framework




Pricing &Valuation

Privateequity

M&A


Demand

Capacitychange

Capacity framework

Finance

HR

Others


Brainteasers

Reduce costs Operations strategy


salesCompetitive

response

BusinessSituation

framework

Market Sizing framework

How many golf balls fit in a Boing 747?

How many shoes are sold in Brazil per year?

What is the market of hearing aids in Europe?

For how much would you sell the Golden Gatebridge?

How heavy is Manhattan?

Pure MarketSizing



Detaileddiscussion

after break!



The commandments: Opening the case

1. Listen actively Fully concentrate!

Note down ALLinformation

2. Pause, paraphrase problemand clarifyallquestions

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

Double check on objective: Is reducing productioncosts our only goal in this case?

Dont be afraid to ask: make sure you understoodthe problem 100%



The commandments: Opening the case

3. Planthe solution structure(roadmap) Ask for 1 minute to gather your thoughts

Identifycase type and corresponding framework

Describeand drawframework for interviewer

Organize your notes (consultants are supposed to bealways client-ready)

+ point: You dont need to call your

structure a framework! Interviewersalways complain that candidates force-fittheir cases into off-the-shelf frameworks

Profit

Revenue Costs-

Example: Profitability framework



The commandments: Cracking the case

4. Be answer-first Always lista few possible hypothesesand set

out with oneof them

Start with corresponding branch of framework

Refine/rebuild hypothesis as you find out more

Example: Coca-colasprofit has been declining in the last 2 years.Hypotheses:

Profit

Revenue Costs-

Revenues have decreased

Costs have increased Both

+ point: Use your general culture to helpchoose initial hypothesis




5. Keep structuredthroughout the case Always refer to structure

Dont jump around framework branches

Consistently explorebranches and excludethem if

they are not relevant

Summarize findings when switching major branches

Be MECE!

Example: Coca-cola

Profit

Revenue Costs-Answer first: Costs have increased

Rawmaterial

DistributionLabor Others

+ point: Mention thatyour structure is MECE




6. Gather data the rightway ALWAYS segment your data!

Proactively ask for relevant data

Dont be too vague

Quantifywhenever possible

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

Company-specific or industry-wide?



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 actionablerecommendations!

Choose a side and stand by it!

Firstconclusion/recommendation thenjustification

People like 3: give the interviewer 3 reasons!

Conclusion +recommendation

Reason1

Reason2

Reason3

+ point: Always apply the pyramidprinciple (by Barbara Minto)


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Market Sizing framework the 3 goldenrules

1. Always use a tree to structure your problem

2. Find the trade-offbetween pragmatism andaccuracy

3. Do sanity checks along the way


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Always use a tree to structure your problem

How structuredyou are, thats what matters!

First the structure (downward from top) thenthe numbers (upward from bottom)

1

Example: Howmany golf balls canyou fit in a Jumbo?

# golf ballsin Jumbo

Golf ballvolume(m3)

Jumbovolume(m3)

/ x Fillingconstant

Radius 2

(m2)x

Sectional area(m2)

Length(m)

x

+ point: alwaysexplicitly write the

units of thevariables being

estimated

10 3

30

1500

Diameter3(m3)

125.10-6

125.10-6

1.2

12M . 1.2 14M

50


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Find the trade-off between pragmatism andaccuracy

Rounding numbers is an art that must be used

But ask the interviewer if hes fine with it!

Round some up and some down

2

+ point:if you are able to make the exact calculation, roundup the answer instead of the inputs. Ex:

Right:4 * 3.8 = 15.2 15Wrong:4 *3.8 4 * 4 = 16


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Find the trade-off between pragmatism andaccuracy

Work with averages when the problem iscomplicated enough, otherwise segment!

MECEis essentialin segmentation

Dont make implicit assumptions

2

Example: How manyshoes are sold inBrazil per year?

# shoes/yearin Brazil

+ point: try to segment inthree categories. Anyone

can understand 3categories, which is not

true for 4 or more

# shoes

class B /year

# shoes

class A /year

Class Apopulation

# shoes

/ person

/ year

+# shoes

class C /year

x

+

Class Bpopulation

# shoes

/ person

/ year

x x


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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

3

Example: How manypeople can stand togetheron an airport runway?

# people onrunway

# people /m2

Runwayarea(m2)

x

Width(m)

Length(m)

x

+ point: dont worry ifyour check is off by 2

times. But dosomething if its off by

10 times or more

50 1,000

50,000 5

250,000


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Only profitability problem (quantitative focus)

Only conceptual problem (qualitative focus)

Combined problem (quantitative + qualitative)

Business Situation compound framework 3 different combinations

Profitabilityframework

Core Threeframework

Profitabilityframework

Core Threeframework


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Profit: number 1 reason for consulting projects

Almost half of Business Situation cases start witha profitability problem

Sales falling

Costs rising

Both

The Profitability framework and anapplication example

profit

costsrevenue -

revenue /unit

# unitssold

xvariable

costfixed cost+

cost / unit# units

soldx+ point: focus on isolating the problem

by applying the commandments


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Actionable recommendations

Competitors

Company(+product)

Customers(+ market)

The Core Three: Customers (+ market),Company (+ product), Competitors

First and foremost thecustomer: thecompanys raisondtre

The company and itsproducts

Competitorsandcompetitive landscape

The Core Three framework

Insights


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The Core Three Customers (+market)

Who are our customers? How can we segment them?

Howbig are the segments? What is ourmarketshare?

Customer concentration (bargain power)?

What does the customerexpect(per segment)?

Do we understandit?

Do we fulfillit?

Which distribution channels do they like?

Is the market growing? Is it profitable?

Competitors

Company(+product)

Customers(+ market)


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TheCore Three Company (+product)

What is our product? Is it differentiated or a commodity?

Whats the pricing?

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)? Isthere supplier concentration (bargain power)?

What are the companys main assets(brand value,customer loyalty) and liabilities(legal problems, debts)?

Competitors

Company(+product)

Customers(+ market)


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TheCore Three Competitors

Whoare our competitors? How isthe competitionstructured

(fragmented, monopoly, oligopoly etc.)?

How do they behave? Is there a price war?

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

How does our cost structure compare with ourcompetitors?

Are there barriers to entry?

Is the market regulated? If so, how?

Competitors

Company(+product)

Customers(+ market)


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cCrack the case workshop review