McKinsey Crack a Case

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CASE INTERVIEW WORKSHOP


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1. Introduction

2. A good approach to case interviews

3. Preparation tips and hints

4. Breakout sessions

5. Drinks

TODAY’S AGENDA


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1. Introduction1. Introduction

2. A good approach to case interviews2. A good approach to case interviews

3. Preparation tips and hints3. Preparation tips and hints

4. Breakout sessions4. Breakout sessions

5. Drinks5. Drinks

TODAY’S AGENDA


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• To clarify what we are looking for in candidates

• To clarify what we are looking for in candidates

• To share with you what McKinsey considersa good approach to case interviews

• To share with you what McKinsey considersa good approach to case interviews

• To help you assess and improve your level of preparation for the upcoming interviews

• To help you assess and improve your level of preparation for the upcoming interviews

• To give you the opportunity to meet (more) McKinsey consultants

• To give you the opportunity to meet (more) McKinsey consultants

• To kick off the weekend with some drinks!• To kick off the weekend with some drinks!

WHY ARE WE HERE TODAY?


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Presence Communication Empathy

Presence Communication Empathy

Personal impact

Personal impact

Personal initiative Teamwork Entrepreneurship

Personal initiative Teamwork Entrepreneurship

LeadershipLeadership High standards

of excellence Energy level Persistence

High standards of excellence

Energy level Persistence

Drive & aspiration

Drive & aspiration

Problem solving

Problem solving

Intellectual capacity Practical orientation Quantitative comfort

Intellectual capacity Practical orientation Quantitative comfort

WHAT WE LOOK FOR IN INTERVIEWS


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Designed to measureDesigned to measure

• Problem solving

• Tolerance for ambiguity

• Communication skills

Description of business situationDescription of business situation

• Open-ended

• Usually taken from a real situation

WHAT IS A CASE?


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• Not unlike a consulting situation for new Associate

– Unfamiliar territory

– Real-time ‘thinking on your feet’

– Never enough facts or time

• No ‘right’ background for consulting

WHY DO WE USE CASES?


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PurposePurpose

• Broad functional skills

• Big-picture perspective

• Comfort with details, analysis

Classic casesClassic cases

• Why is the profitability of Company X declining?

• Impact on company of a consolidating industry?

• Should Company X add capacity?

• How should Company X react to a new competitor?

• Should Company X enter/exit a new/old market?

DIFFERENT TYPES OF CASES


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5. Drinks5. Drinks

TODAY’S AGENDA


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Synthesise findings into recommenda-tions

ConcludeConclude

Request information to test hypothesis

AnalyseAnalyse

Develop approach to solve problem

StructureStructureClarifyClarify

Ensure complete understanding of business issue

A GOOD APPROACH TO CASE INTERVIEWS


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• A car manufacturer has approached McKinsey with the following question:

“Our customers wait up to 8 months to receive their new car. On the other hand we have 8 months’ inventory. Something must be wrong with our processes, but we don’t know what. Can you help us find out why?”

• A car manufacturer has approached McKinsey with the following question:

“Our customers wait up to 8 months to receive their new car. On the other hand we have 8 months’ inventory. Something must be wrong with our processes, but we don’t know what. Can you help us find out why?”

• You are alone at the client site with the client’s project leader; he is keen to get your early thoughts on the subject

• You are alone at the client site with the client’s project leader; he is keen to get your early thoughts on the subject

• The engagement manager will arrive only tomorrow and you did not get a chance to talk to the partner to find out what his hypothesis is

• The engagement manager will arrive only tomorrow and you did not get a chance to talk to the partner to find out what his hypothesis is

CAR MANUFACTURER EXAMPLE


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ConcludeConcludeAnalyseAnalyseStructureStructureClarifyClarify

• Listen closely to problem definition


• Paraphrase to confirm problem statement

• Ask questions to improve understanding

• Pause to think


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Summarise understanding“If I understand you correctly, the problem is the following• Customers wait up to 8 months for their new car to be

delivered• The manufacturer has 8 months’ inventory

Why?”

Summarise understanding“If I understand you correctly, the problem is the following• Customers wait up to 8 months for their new car to be

delivered• The manufacturer has 8 months’ inventory

Why?”

Ask clarifying questions (you may make yourself notes)• “Is inventory finished products, parts before assembly or raw

material?”• “Is inventory sitting at the plant or at the car dealers?”• “Are car dealers independent?”• “Is 8 months customer waiting time calculated from car order

to delivery?”

Ask clarifying questions (you may make yourself notes)• “Is inventory finished products, parts before assembly or raw

material?”• “Is inventory sitting at the plant or at the car dealers?”• “Are car dealers independent?”• “Is 8 months customer waiting time calculated from car order

to delivery?”

Pause: Think!Pause: Think!

CASE EXAMPLE - CLARIFY


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• Describe your overall approach


* Mutually exclusive, comprehensively exhaustive

• Break the problem into discrete pieces (MECE*)

• State clear hypothesis

• Use framework – if appropriate


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Customer orders

Car inventory

Hypothesis

• Part of the 8 months’ customer maximum waiting time is due to logistics constraints and order processing inefficiencies

• Part of the 8 months’ customer maximum waiting time is due to logistics constraints and order processing inefficiencies

• Inventory is inevitable given current processes because production pattern of different car models is not related to demand

• Inventory is inevitable given current processes because production pattern of different car models is not related to demand

USE HYPOTHESIS AND STRUCTURETHE PROBLEM

Structure the problem

• Follow one car from manufacturing to delivery

• Follow one car from manufacturing to delivery

Manufac-turing

Manufac-turing

Inventory/transportInventory/transport DeliveryDelivery

• Composition of inventory

• Composition of inventory

• Follow one customer order from sale agreement to delivery

• Follow one customer order from sale agreement to delivery

Inventory/transportInventory/transport DeliveryDelivery

Agreesale

Agreesale

Locatecar

Locatecar

Manufac-turing

Manufac-turing


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InternalInternal

• Cost structure

• Value chain

• Processes

• Organisation

• Performance over time

ExternalExternal

• Customer demand

• Customer segments

• Industry structure

• Regulatory environment

STRUCTURING - EXTERNAL vs. INTERNAL


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• What are the competitive advantages of the company?

• What are costs compared to competitors’?• What is the split between fixed and variable?

• What is the level of competitive intensity in the industry?

• How are the products differentiated?• What substitutes exist?

CompanyCompany

CompetitionCompetition

CustomersCustomers • What segments exist?• How do they make purchase decisions?• What specific features do they look for?

STRUCTURING - 3Cs


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• Cost

• Channel

• Pricing

• Product

• Place

• Promotion

• Cost

• Quality

• Speed

• Supply

DistributionDistributionMarketingMarketingManufacturingManufacturingR&DR&D

• Product development

• Innovation

• Responsiveness

STRUCTURING – THE ‘BUSINESS SYSTEM’


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• Payables

• Long-term debt

• Other liabilities reserves

• Shareholders’ stock equity

– Common

– Retained earnings

Liabilities

Income statement

ProfitsProfits

RevenuesRevenues

CostsCosts

PricePrice

VolumeVolume

Fixed• SG&A

Fixed• SG&A

Variable• Labour• Materials

Variable• Labour• Materials

STRUCTURING - FINANCIAL STATEMENT

Balance sheet

Assets

• Cash

• Investment

• Receivables

• Inventories

• Property, plant, equipment


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Industry structure

Competitive positionCompetitive position

Us

Them

Us

Them

Barriers to exit

Barriers to exit

Barriersto entryBarriersto entry

Substitution threats

Substitution threats

SuppliersSuppliersCustomer

buying factors

Customer buying factors

External environment• Change in government regulations• Major economic shifts• Changing social concerns

External environment• Change in government regulations• Major economic shifts• Changing social concerns

STRUCTURING – PORTER FIVE FORCES


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• Walk the interviewer through your thinking

• Prioritise issues

• Ask relevant questions

• State findings for each analysis


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DeliveryDelivery

• Dealer check• Arrange

appointment• Deliver

UNDERSTAND ORDER PROCESSING - EXAMPLE

Further analysis• 5 options (2

possibilitiesper option)

• One combina-tion of options per batch

• 3 weeks transportation time

• 32 possibilities • Takes >7 month to complete one cycle

Transport/Transport/inventoryinventory

• Transport by ship• Cars shipped

once a week

Manufac-Manufac-turingturing

• Centralised in the U.S.• Done in

batches(1 week)

DealerDealeridentify caridentify car

• Local inventory• Factory

inventory• New build

required

Agree saleAgree sale

Process• Price• Car model• Options


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• Summarise the discussion

• Discuss trade-offs

• Develop overall recommendations

• Relate back to problem statement


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Propose actionable recommendationsPropose actionable recommendations

• Manufacture cars in smaller batches

• Propose fewer options• Move to dealer-fitted options

(whenever possible)• Introduce flexible

manufacturing system

SynthesiseSynthesise

(The 30 second elevator summary)

• “Your customers wait up to 8 month for their new car while you carry 8 month inventory because manufacturing of batches of car models is not related to demand– 5 options implies 32 models– Batches of 1 week implies 7

month cycle– Add 3 weeks transportation and

it makes 8 month maximum waiting time”

CONCLUDE


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5. Drinks5. Drinks

TODAY’S AGENDA


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HINTS . . . WHAT TO DO

• Relax!!

• Practice case problem solving before the interview

• Listen (take notes if you wish)

• Ask a few questions

• Structure, structure, structure

• Explain your thought process

• Work from hypotheses (guess a little)

• Gather and analyse key facts (80/20 rule)

• Push for a conclusion


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• Force a framework that does not fit

HINTS . . . WHAT NOT TO DO

• Jump to a conclusion without explaining your thought process

• Be sure you have ‘the answer’ and ignore signals/hints from the interviewer (the answer is obvious . . . )

• Wild horses ( . . . and I refuse to change my mind)

• Hide from the details (or the numbers)

• Get frustrated

• Do a post-mortem (in or after interview)


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• Show enthusiasm, interest

ENJOY!

• Go beyond the obvious

• Do not get stuck in cookie cutter analysis

• Build your skills/confidence to cover the basics competently (qualifiers)

• Real order winner is insight and originality

McKinsey Crack a Case

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