How To Prepare For The Consulting Case Interview In Less Than A Week

so you want to break into Consulting but you don't know where to start with the case interview or you have an interview coming up and you want to be able to prep in a short period of time if that's the case then you came to the right spot welcome to Zia chairs if you're new to this channel I'm a Harvard Business School admit and an EXC consultant and in this video I want to distill to you the simplest Frameworks that you can use in your Consulting interview that can help you stand out and prep in

such a short period of time while it might take some time to perfect the consultant case interview my promise is that by the end of this video you will be better at case interviewing than when you started okay so let's talk about the agenda we're going to cover five core types of Consulting case interviews number one is profitability number two is Market entry number three is Market sizing number four mergers and acquisition and then number five other types of cases for each of these I want to cover a sample question that they might ask the

framework that you should use during the Consulting case interview and then a quick example or analysis to run with that framework I love nerding out on Frameworks so I hope you're are excited so let's get started starting off with the profitability cases here usually they tell you that there's a problem with profit and usually it is a company that has been performing very well in the past and right now in the past couple years they're not performing as well from a profit standpoint so they want your help in figuring out what's going on so in

this case you typically want to break it from a framework standpoint into revenues and and then costs under Revenue you can break it down even further into the price per unit times the number of units sold on the cost side you can break it into fixed costs and then variable costs ultimately what you want to ask is you want to ask for data points on how things used to be and then how things are now currently so that you can notice and see where there is the biggest amount of change so for example let's say

we have a bubble gum company that sells bubble gum and let say that they've been experiencing a decline in profitability over the past year so then when you break it into Revenue you notice that their revenue is $120 million and then their costs are $80 million last year though their revenue was $120 million but their cost was only $60 million so now by breaking it up you notice that it's not a revenue problem and instead it's a cost problem so then when I look at the cost and I break it down into fixed costs and

variable costs I notice that the fixed cost are stable so let's call it that it was $40 million in fixed costs but then their variable cost is what jumped up from $20 million to $40 million year-over-year so in digging further we realize that the reason why the variable cost went up considerably is because the supplier has changed year-over-year and now they're working with a different supplier of bubble gum so now their cost of the material or the cost of the bubble gum is much more expensive in order for them to go back into profitability they

should find a way to bring down their variable cost as low as it was either by changing suppliers or maybe by renegotiating the terms of the contract again this is very much a hypothetical example and very quickly diving into it but as you can see I'm going through the tree one by one looking at Revenue then looking at costs and then breaking it down even further trying to identify where the problem is now let's talk about Market entry the name and type of case says it all here you typically have a company that is is

trying to expand and enter a new market so for example I love to give the PepsiCo example let's say that PepsiCo only operates in the United States and they want to open up a new branch in Japan they've never sold Pepsi in Japan and they want to know whether it's a good idea in this case you want to break it into four parts first you want to look at the market size second you want to look at the market growth third you want to look at the potential share that you're able to get and then

fourth you want to look at the investment associated with that so let's look at an example and as a disclaimer all the numbers that I'm going to share are hypothetical examples they're absolutely wrong they're just to demonstrate um an example to you all so for Market size let's say that the total Market size of the you know beverage um Market is roughly $30 billion and the growth of the market is 10% so every single year the market is going to grow by 10% just between the these two pieces of information it seems to me that

the market seems to be attractive it's a big enough market and it's a market that's growing year-over-year in Japan now let's look at the potential share when you think about the potential share you want to understand what percentage of that market do you think you'll be able to get for sake of Simplicity let's say that based off of the competition and some analysis that you've done you think that you can get close to 10% market share in year 1 so in total you might be expecting $3 billion in Revenue because the total Market size is

30 billion you are going to get 10% share of that $30 billion market so you can expect 3 billion doll in Revenue now here when you think about it from a cost standpoint let's say it would cost us a100 billion to enter the Japanese market for whatever reason building the new Factory hiring people licenses in this specific case it doesn't seem to be worth it to enter the Japanese Market because it would take you almost 30 years 33 years to be exact in order for you to break even from this investment having said that let's

say it only costs I don't know1 billion to break into the market then for me I think that that could be quite the attractive um analysis to go into um the Japanese Market because you could break even in 3 years and then anything after 3 years would just be pure profit so again just to summarize this example notice how I went through each of my buckets of the framework got some data about it and then based off of the data that I received I'm making conclusions as to whether it's a good idea to enter the

market or not in this case the market size is great the market growth is great we can get enough potential share but then it really came down to the investment if the investment is too large then it may not be worth it to enter if the investment was on the smaller side it might be able to enter in this case when you think about the market entry cases they might actually give you different parts that you have to evaluate maybe the issue is not necessarily in the investment it might be in your potential share so

again just covering all of your grounds in each of those I think you'll be in a good position to answer the market entry [Music] [Applause] [Music] questions now on to my personal favorite which is Market sizing Market sizing is these cool questions that they ask you on like how many golf balls could you fit in the Empire State Building or how many students are there in the United States who are pursuing online degrees there are all sorts of questions about Market sizing and while they can be very daunting in the beginning if you can simplify

it and distill it into either a top- down approach or a Bottoms Up approach you'll be able to simplify the question and get to a close ballpark so what do I mean by top- down approach or Bottoms Up approach in the top- down approach you're starting with a large market and then you're distilling distilling distilling and funnel it down down until you get to the market that you're interested in so let's look at an example of the top down approach in this case I want to start all the way from the top and as I

said funnel down to the market so let's say I want to talk about the total number of students who are pursuing an online degree in the United States maybe I can start with a top bucket which is the total population of the United States for sake of Simplicity let's say it's 300 million now of the 300 million let's say that 20% of people are within the ages of 18 to 24 so now I'm down to my second layer which is approximately 20% of the population or 6 million people now let's say of the 6 million

people I have approximately half of them pursuing college degrees so 3 million people and then of the 3 million people another half of them are pursuing their degrees online so now I'm down to 1.5 million now notice how I started from a top- down large number like the population and then I made General assumptions that may or may not be correct but they're in the rough Ballpark and based off of those assumptions in that piece of logic I came down to approximately 1.5 million again these are all hypothetical numbers and you know you'd have to

do uh more robust assumptions in order to get to the right number but this is again just for demonstration purposes now the bottoms up approach would be a little bit different where you can look at you know a a certain statistic within your area or region and then be able to extrapolate it to a much larger um population so let's talk about about pharmacies for example how many pharmacies are there in the United States maybe you live in a place like myself um in Boston and in your area of say 100,000 people there is 100

pharmacies so then you can say okay for every 100,000 um people there's typically 100 pharmacies so for a population of a thousand you get one Pharmacy then you can use this ratio then to extrapolate to another city so let's say they ask you how many pharmacies are there in New York New York and New York has 8 million people now you know that for every thousand people there is one Pharmacy so you're going to take your 8 million and divide it by 1,000 to get the number of pharmacies in New York so that will get

you 8,000 pharmacies again in this case you are starting from a smaller population in your region in your area and then you're trying to extrapolate it to a much larger population I will say Market sizing is the one that has the most amount of nuance there is a lot of different types of cases that you can do and frankly it's probably one of the harder ones to prep for this is one where I'd say practice is probably your best bet um there's not a clear direct framework but if you try to apply the top down

or Bottoms Up approach in any of these you could get to the close ballpark but truly I think practice is the best for um Market sizing specifically all right mergers and Acquisitions or m&a this is basically when one company is trying to decide whether or not they should acquire another company so let's say that you have PepsiCo again and they are trying to decide whether they should buy this bottled water company here you want to look at three specific things first you want to look at the value of the Standalone company that you're trying to

acquire so when you acquire a company you want to know whether this company that you're acquiring is good on its own as a standalone solo business are their revenues good are they growing are they profitable so all that information should be um analyzed to understand whether this is a good solo company from there you want to look into it into the second bucket which is synergies synergies can come in two forms either cost synergies or revenue synergies and what we mean here by synergies is the total additional value that you can get is a combined

company for example from a cost Synergy standpoint you can reduce the number of headcount that you have in the company because now you are one merged company for example let's say that the bottled water company had a director of marketing and PepsiCo has the director of marketing now you only really need one person to run the marketing department for both companies so you can save the cost um from one of the directors of marketing but you can also have synergies on the revenue side so let's say that now you can package some of your sales

from the bottled water plus the PepsiCo into some large deal to one of your big retailers and you can you know upch charge and upsell on the price that's something that you would not have been able to do so this could be be additional synergistic um Revenue that you're getting um as like an additional benefit of acquiring the company so now once you look at synergies you go into the third piece and that is qualitative and quantitative considerations so on the quantitative side you want to look at the financials like how much does it cost

to acquire the company do we have the money to do so are we going to use debt are we going to use equity what is kind of the financial instruments that are going to go into this deal and then number two you want to also look at the Quality considerations so for example if you're a company like Pepsi and you want to go acquire a bottled water um company what does that mean for your brand are you going to be able to do marketing the same way are you going to be targeting the same people

these are all other qualitative considerations that may not necessarily Showcase in the numbers but are things that you just need to generally be aware of uh whenever you're doing a form of acquisition and again in your interview you don't have to be perfect and analyze every single piece usually you're going to focus on one of these buckets and they're going to dive deep into it so as long as you cover all of the grounds you're going to hit the point that they want to talk about and from there your conversation with your interviewer will take

you and guide you to the right place now these four types of interviews that we've spoken about would cover probably 80 to 90% of all types of interviews that you might get at McKenzie BCG Bane and even some of the other consulting firms but what if you don't get one of these four types of questions what if you get get something completely different like a I don't know a nonprofit case or you know an education specific case and something that you know maybe does not fit nicely into one of these four what do you do

here I like to use what is called the principal component analysis let's take a step back ultimately what a case interview is all about it is giving you a problem that you need to solve notice the emphasis on problem there is a problem that you need to uncover 70% of the case is you just figuring out what the problem is and then 30% of it is offering Solutions so if you're able to just identify where the problem is you're already more than half the way there and the way that you do that is through principal

component analysis which essentially is trying to divide all of the situation that you're in into call it a list of three to four buckets that could cause problems in the situation that you're in so think of it as let's say I have a University and the university is struggling with their brand this is not a profitability issue it's not Market entry it's not really an acquisition and there's no Market sizing so it's a different type of case it's a brand issue so I need to figure out what is the problem with their brand but what

is a university let me try to break the university into its principal component parts a university ultimately has professors it has programs it has has students and it has facilities and it has a curriculum those are kind of the five parts so that would be my framework I would put those five things as the five parts of my framework and I would try to analyze each one of these to see where the problem is is the problem in the students are the students not graduating are the students struggling with their courses and that's affecting the

brand are the students not excited about um attending the university maybe not maybe the issue is not in the students and instead it's the faculty maybe we are having issues with hiring we're not getting the highest quality faculty we're not getting faculty that's very famous that has done world-renowned research so maybe it's now on to moving on to number three maybe the issue could be in the facilities maybe the issue could be in the curriculum we're not teaching the right material we're not teaching upto-date curriculum notice how I basically turned this vague large problem into

something that can be broken down into just five simple parts and this is the beauty of consultant case interviewing if you don't know what to do even if you get a profitability case or a general type of case all you want to do is take a step back try to identify three to five buckets or categories where there's an issue and then go through each of them one by one if you're able to do that trust me you will be better than 90% of people who are case interviewing and with just additional practice additional ability

to analyze problems you will be almost 100% of the way there I hope this was helpful if you still have any questions please feel free to reach out to me directly I would love to connect and help you during your Consulting interviews now with that this was an ultimately simplified version of it I would highly recommend that you go in and practice practice practice the case interviews because there's no better way to get better at casing than actually doing the practice instead of just studying the Frameworks but again I hope that this was helpful and

I hope to talk to you all soon I'll catch you in the next one