Case Interview Workshop

16 September 2005

www.ibc.uiuc.edu

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Illinois Business Consulting (IBC)

“To establish IBC as a premier consulting organization managed by students, to deliver high quality solutions to client problems and to nurture future

consultants for the business world.”

Mission of Illinois Business Consulting:

Description of IBC:

An integral component of the College of Business, IBC is a student managed consulting organization. IBC performs 40-50 projects per year for Fortune 500, mid-sized, new venture and not-for-profit clients. The organization enables graduate students and select undergraduate students to apply their classroom learnings to real business issues.

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What is a case interview?

Simulation of a realistic situation between a client and a consultant, similar to a mini-business case

Typically found in later rounds of interviewing, as the process becomes more competitive

More likely to be used in interviews for consulting or finance-related positions (i.e. investment banking)

Usually part of a longer interview that includes fit and behavioral questions as well

Can range widely depending on the company

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Why do companies use case interviews?

Interpersonal skills: do you appear confident and comfortable? Communication skills: can you articulate your thoughts and do

you listen carefully? Organizational skills: can you see the broad picture and can

you identify an appropriate framework for your analysis? Strategic thinking skills: have you considered all the aspects of

the case and how your solution will affect the organization? Creativity skills: are you able to think “outside the box”? Analytical skills: can you identify the important data and explain

the implications it may have on the organization?

Case interviews evaluate much more than functional and technical skills.

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What are recruiters looking for?

Tolerance forambiguity

Communicationskills

Problemsolvingability

Recruiters will assess if you have the minimal skills necessary to succeed in the position.

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Types of case interview questions

Brain teasers Profitability or sales analysis New market or market expansion decision Value chain and/or organizational efficiency Organizational review or change Industry analysis Investment decision

There are a number of different types of case questions that you may encounter.

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Brain teasers

Objective: to understand how you think through a problem– Can you think logically? Does your approach make sense?

– Are you creative in your thought process? Example: How many McDonald’s hamburgers are sold in the

United States each day? How to handle it

– Estimate based on what you know

– Talk through your approach to demonstrate your logic

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Recommended approach to case questions

1. Listen closely to the client situation and the question(s) you are being asked to address.

2. Confirm your understanding of the case by paraphrasing the situation and question(s) back to the interviewer.

3. Select an approach to structure your analysis that focuses on the critical issues of the case.

4. Analyze the problem. Ask the interviewer focused questions to clarify your understanding of the situation.

5. Summarize your key observations and conclusions.

Be sure to follow a logical structure. Use the following approach to structure your response to the question:

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Structuring your response

In order to make sure you cover all relevant aspects of the case question, it is helpful to break down the question into a number of smaller questions you can address. You may want to begin by mapping out the issues that you want to address first, and then more thoroughly analyzing each area you identify.

Case question

Question A Question B Question C

Question 1 Question 2 Question 1 Question 2 Question 1 Question 2

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Profitability/sales analysis

Objective: to determine your understanding of what impacts profitability/sales– Do you understand how different financial statements are related and what

they can reveal about a company?– Can you tailor your analysis to the specified company or industry?

Example: A computer manufacturer is experiencing a decrease in profits. What should the company do?

How to handle it– Think through all aspects of the income statement (both revenues and

expenses)– Consider costs (fixed vs. variable, economies of scale, utilization, etc.),

customers (price sensitivity, segmentation, cost-benefit trade-off), competition (pricing, capacity, differentiation), channels (relative leverage, strategy)

– Remember to consider the market that the company is in – what are the market/industry trends?

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Example response structure

Why are profitsdecreasing?

Company Customers Market/Competition

Channels

Costs

Revenues

Capabilities

•Fixed vs. variable•Utilization•Economies of scale

Costs vs. benefits

Segmentation

Price sensitivity

Differentiation

Capacity

Pricing

Strategy

Relativeleverage

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New market/market expansion decision

Objective: to determine your understanding of what to consider when entering into or expanding in a market– How would you assess the attractiveness of the market? What market trends do

you expect?– Have you considered both the capabilities of the company and of the

competition? Does the company have a competitive advantage? Example: A fast food chain is considering adding delivery service to its

offerings. What should the company consider before implementing this decision?

How to handle it– Consider the size of the market and growth trends, the competition, customer

needs and desires, implications on the production process and the client’s capabilities, synergy with and/or potential cannibalism of current products, and the economics of the market

– If the case is more focused on marketing strategy, consider the 4P’s: product, promotion, price, and placement/distribution

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Value chain/organizational efficiency

Objective: to determine your understanding of the manufacturing process and the value chain– Can you identify the driving factors that affect efficiency in the specified

industry? Example: Congratulations, you were just hired as the manager of a

video rental store. How would you measure its efficiency? How to handle it

– Think through the value chain for this industry

– Manufacturing value chain includes suppliers, design & engineering, manufacturing, marketing, sales, distribution, service

– Consider the expenses, the production time, inventory turnover, product availability (down for repairs, etc.), seasonality of the business, number of employee sick days, employee turnover

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Organizational review or change

Objective: to determine your understanding of organizational design and internal management– What is the culture of the organization? How will changes affect the

employees and the organizational environment? – How does the internal organization compare with its competitors?

Example: Your client needs to cut 10% of its budget and plans to downsize in two major business units. What would you recommend they consider?

How to handle it– Think through the elements of organizational design– Consider the client’s business, the scope and timeline for the change, the

organizational culture (open to change, committed, etc.), major risk factors– Also consider what messages the company should send regarding the

changes to employees who are let go and those who are retained, as well as to customers and the media/public

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Industry analysis

Objective: to determine your understanding of what to consider when entering into a new industry– How would you assess the attractiveness of the industry? What are

the industry trends? Example: A computer retailer is considering offering technology

consulting services. They have asked you to assess the attractiveness of the industry and whether they should enter it.

How to handle it– Consider the attractiveness of the industry using a framework such as

Porter’s 5 Forces (substitutes, buyer power, supplier power, barriers to entry/exit, rivalry)

– Also think about the company’s capabilities and if the new industry would be synergistic with current products/services, and consider any potential partnerships

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Investment decision

Objective: to determine your understanding of what to consider when making a financial investment– What are the key drivers that will affect the profitability of the decision?

– How will this decision affect the company’s current operations? Example: A toy manufacturer is considering building a new plant in

Southwest Asia to take advantage of less expensive labor. What factors should management consider?

How to handle it– Think about the industry: market size and dynamics, future industry

trends, pricing dynamics, product differentiation and standards

– Think about the company: current position in the market, how the company is performing, distribution of costs

– Consider the competition: plans to expand, strength of competitors

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Case interviewing tips

Use the five-step recommended approach Think out loud to demonstrate your train of thought as you consider

the case question Use a framework to structure your response and let the interviewer

know that you are doing so Ask clarifying questions as you go to better understand the situation Make your assumptions clear to your interviewer There is no single right answer, but it is important to provide

rationale for your conclusions and to demonstrate a logical thought process

Take your time and do not rush to conclusions Practice case interviewing with others as much as you can because

the best way to prepare yourself is to practice

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How does it really work?

The case:

Whole Foods is considering opening a new store in Champaign-Urbana. The store would be located in southwest Champaign. Would you recommend that they move forward with the store opening?

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Example response structure

Should Whole Foodsopen a store inChampaign?

Industry Company Market/Competition

Industry trends

Market dynamics

Market size

Cost distribution

Current performance

Current position

Number/strengthof competitors

Plans forexpansion

Pricing dynamics

Differentiation

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Practice makes perfect

Pick a partner and take turns “cracking” the following cases… Case 1: Subway is considering implementing delivery service of its

products. They have asked for your advice. Would you recommend that they do so?

Case 2: Sears has been struggling to remain profitable over the last several years. They are seeking your help in determining how they can increase their profits. What do you recommend?

Case 3: Ford Motor Company has decided to close another U.S. plant and move its operations overseas to Asia. Ford management has asked you to assist with delivering the message to its workforce and the media. What would you recommend?

Case 4: Carle Foundation Hospital in Champaign wants to maximize its efficiency in response to concerns about rising health care costs. Management has asked you to help them determine their current efficiency level and how they might improve it. What would you recommend?

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Additional resources

Business Career Services – advice, resources, mock interviews Consulting firm websites – check the careers section

– www.bcg.com, www.mckinsey.com, www.bain.com Vault and Wet Feet publish various case interviewing guides Other business school websites

Sources for presentation content include www.bcg.com, www.bain.com, business.tepper.cmu.edu