what is a case study in consulting

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what is a case study in consulting

2022.07.31
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what is a case study in consulting

But asking for this time will show the interviewer that youre carefully structuring your problem-solving approach. Does the client have the capability to offer new products/services?

Hypotheses: Tentative answers to a problem or an assumption based on some evidence.

Are they knowledgeable, professional, and confident enough to work effectively with client staff and leaders? An income statement (or profit and loss statement or statement of revenue and expenses) is a record of a companys profit or loss over a specific period of time. This is also known as the bottom line as it sits at the bottom of the income statement. Market share (%) = $ 10 million / $ 200 million. For more information, see this article on, How to answer case studies using the 4-part approach, and. Also, we have an article on practicing your case interview math. This is not a common interview format but can be common for particular companies and offices. and they know what recruiters are looking for in answers. Or you may think that they sound like interesting business problems that youd enjoy solving. article for more detail on these types of cases and more. Its typically used to measure the financial health of a company. Stick with this aspect of case interview preparation until youre an expert at itit will pay off in your interviews. Nailing the opening is probably the easiest part of case interview preparation. In fact, its best to develop your own structure for breaking down the problem as it shows you can solve a case without forcing a standard framework on the problem.

For example, Porters Five Forces, Business Situation Framework or 3C&P (customer, competition, company, and product), and Supply & Demand among others. For example, a client who is in logistics would like to reduce the cost of its operations by improving the efficiency of its processes, such as by reducing equipment downtime or scheduling deliveries according to time-saving routes. The income statement has 3 major categories: Revenue, Expenses, and Profit or Loss. In case interviews, you can use the break-even analysis to determine whether a client should make a certain investment, say in machinery or a new product line, based on how likely it is that theyll exceed the break-even threshold. This type of interview question mimics the analytic process a consultant might go through in a 3-month project, but it does it in 30 minutes, the time allowed in a typical interview. meaning there is no loss or profit. .

This refers to the specific change of a variable within a specific period of time. Your answer should also include the next steps your client should undertake.

Break-even analysis: This is the calculation used to determine the point at which the total revenue and total costs are equal meaning there is no loss or profit. Are you passionate about pursuing consulting as a career? A Case Study Interview is a real-time problem-solving test used to screen candidates for their ability to succeed in consulting. This typically describes how a company makes its products or services. Its typically used to. If so, move onto the deeper dive into case interview prep below! Rebecca repeated back to the interviewer the type of business the client was in and and their business problem. You dont want to get lost down one rabbit hole and ignore other important aspects of the problem. First, you would need to calculate the potential output. Depreciation and amortization are non-cash expenses that reflect the value of big assets like machinery or buildings going down over time.

Read our article for more information on Issue Trees. An executive might want to know that they could break even at 100,000 units sold because if she thought they could sell more than that, it would be profitable to enter the market. You can ask relevant questions that will give you data on each aspect of the problem you identified in the structure section.

This refers to the specific change of a variable within a specific period of time. In a case, this is mostly used in situations where a client would like to make their processes more efficient. Save my name, email, and website in this browser for the next time I comment.

Remember, this clarification is an important step in the process. The case study interview is not as complex as it seems if you break it into 4 parts. Thanks for turning to My Consulting Offer for advice on case interview prep. MECE issue trees are considered the gold standard for problem-solving so this concept is very good to know. They want to move quickly to the most likely answer and then test whether it is or is not the best answer. For any specific case, youll want to make sure you understand how, The most common way companies make money is by, An income statement (or profit and loss statement or statement of revenue and expenses) is a record. Starting with more lead time is even better. Donations to Caring Hands are decreasing, straining the non-profits ability to help the families it targets. Key Questions to Ask Yourself Before Pursuing a Career in Consulting. For more information and examples, read our article on Market-sizing Cases. This is where you make sure you understand the clients problem. MECE issue trees are considered the gold standard for problem-solving so this concept is very good to know. It can be used to compare the profitability or efficiency of an investment or decide which of alternative investments to make. The growth rate is calculated using the formula: To calculate the manufacturers revenue growth rate. It will also give you time to find a couple friends or classmates who are also applying to consulting firms. Issue tree: This is a common approach in consulting used to solve complex problems. You should also be aware of the written and group interview formats so that if you get one during the interview process, youre not caught by surprise. If it is not true, you revise your hypothesis. You will be given a packet of PowerPoint slides and time to review them. This typically describes how a company makes its products or services.

. MECE: MECE stands for mutually exclusive and collectively exhaustive. Top consultancies offer competitive salaries and also invest significantly in employee development.

Best practices: Best practices are methods or techniques that are considered to be the working standards and guides in a given situation.

On the other hand, startup investors typically expect double- or triple-digit annual growth during a companys early years. Return on investment (ROI) is a profitability metric that indicates how well an investment performed (or will perform). For more information, read our article on Revenue Growth Cases. The case is presented as an open-ended question, often a problem that a specific type of business is facing, that an interviewer asks a candidate to solve. Other operating expenses for our burger restaurant would include things like advertising, the rent on the companys headquarters, and the salary of the CEO. You cant fix the symptom of declining sales volume until you identify the root cause behind the problem. Do they have the analytic skills to solve tough business problems?

For these questions, it is good to memorize a few facts that will help you make assumptions.

Your client, a manufacturer, is facing a decline in profits. . or Oliver Wyman, or with the consulting arms of the large accounting firms such as Deloitte, Accenture, PwC, Ernst & Young, or KPMG, we can help you get there. Growth rates can be used in assessing the financial performance of a company over time. An issue tree is used to break down complex problems into key components in a structured manner. Well use this example to demonstrate all the formulas in this section. In business situations, it helps determine at which point the business, investment, or new product or service will become profitable. If you still have questions on case interview prep, leave them in the comments below. Capacity (units) = 12 hours x (60 minutes per hour) / 10 minutes. High cost growth rates may be a sign that a company is having financial trouble. This will allow you to watch/read through a few consulting cases to get a sense for what to expect (continue to our case videos below for one example!) Right now, you may be thinking to yourself that consulting interviews sound impossibly difficult. The growth of the market or of competitors. It is a way of bucketing problems, ideas, or solutions with no overlapping between the buckets and with each item having a place in one bucket only (mutually exclusive), and with the buckets including all possible items relevant to the context (collectively exhaustive). Management consulting jobs might pay well and provide the opportunity to pursue attractive careers, but if you dont like solving business problems, you probably wont like the work youll do as a consultant. In the third part of the case study interview, youll dig in and. Were a team of more than 20 former McKinsey, Bain, and BCG consultants and recruiters (our average time in consulting is 13 years each) and we put together this guide to help you prepare for getting your consulting offer. The group case is also not a frequently used interview format.

This is calculated by subtracting interest and tax from EBIT. In this article, well help you prepare for management consulting interviews by answering the following questions: Well also provide tips and tricks that will help you to ace your case. If a product required a $50,000 investment in equipment (a fixed cost), sold for $5, and cost $4 per unit in variable costs, its breakeven would be: Managers may also look at the payback period on an investment or, in other words, how long it would take to earn back the cash required to enter a new business. Focus on career options that better meet your interests. Market-sizing questions typically appear in cases where clients want to grow or expand their business such as market entry or profitability cases. In a case interview, you can use the issue tree to break down the clients problem into manageable chunks or to break down a formula such as the profitability formula into key components. For a burger restaurant, for example, the COGS would include things like the meat, bun, and hourly labor of cooks, cashiers, and shift supervisors. Getting good at consulting interviews requires a lot of preparation. The hypothesis-driven approach is a common approach to solving problems in the consulting world because consultants dont want to waste time fully researching all possible solutions. We compare the 50 million gallon breakeven point to the 400 million gallon market size to see that we need to capture 12.5% market share. After Rebecca outlined her problem-solving approach, the interviewer told her that the client wanted to understand the beverage market and customer preferences to assess the potential success of the product launch. The hypothesis-driven approach is a common approach to solving problems in the consulting world because consultants dont want to waste time fully researching all possible solutions. I do not understand why (2m-8m)/8m = 25%. Get this right, and youll start each case off strong.

Before you commit to putting in the time required to prepare for the management consulting interview process, you should ask yourself if a career in management consulting is right for you. Profit margin indicates how many cents of profit the company generated for each dollar of sale. Also, we have tons of other resources to ensure you get an offer from a top management consulting firm. So 1 gallon is 8 bottles (or cans) manufactured by our client. During this portion of the interview, youll be assessed on whether you asked relevant questions, have well-reasoned insights into the client problem, and whether you could lead a case like this if you were hired by the firm. If something is not clearthe clients product or industry, or the problem they want to solve ask! Using the same example, imagine that the management tells you that in a 12-hour shift, the machine produces 50 units and there are two 45-minute breaks. In the math calculations of the analysis portion, why was it that there were 8 cans per gallon? In this section, we will review 4 common types of case interviews. It is also referred to as gross sales or top line as it sits at the top of the income statement. If that happens you will not be moving forward to second round interviews no matter how elegant your analysis is. Root causes: This is the core issue or main reason for a problem. Instead, the interviewer wants to see that you can use simple math and logical deduction to build out an answer. Rebecca concluded the case with a direct answer to the case study interview question as it was initially asked. To find out more on this, read our article on The Market Entry Framework. Take you time to nail this aspect of case interview preparation anyway as leaving your interviewer with a strong impression of your casing capabilities is important.

. This section covers the concepts non-business students need to become familiar with, such as: To solve cases, you first need to understand broadly how companies make money. Note you can combine both the formulas for faster calculation. After reading this, we hope congratulations is also what youll hear when you leave your final interviews. The candidate will break down the question into key parts and decide which part to probe first. Once you do, you can make the most appropriate recommendations for the client. What should the organization do to turn this around? But dont spend a lot of time on preparation for that type of interview unless youre informed youll have one. The root cause could be high prices, poor product quality, product unavailability, or any number of other issues. What would be the impact on revenue from expanding their offerings?, A regional fast-food chain, serving hamburgers and fries, is experiencing increasing demand outside of its main regions of operation and wants to expand. Some quick brainstorming is useful here, but also take a step back to maker sure you consider all aspects of the clients business, its customer demand, and the competition. But attractive jobs are usually highly competitive, and thats definitely the case in management consulting. For instance, in the example of a fast-food chain with declining sales, you should break sales down into price and unit volume to understand whether the client is not selling enough units of their products or whether prices have fallen (or both!).

To calculate the profit margin, first, you need to calculate company revenues as follows: You can now calculate the profit margin as follows: Profit margin = ($2 million / $10 million) x 100%.

Sales of drinks in Coffee Bean cafes are decreasing.

Were also given that the product size for drinks in this market are 16 ounces. Theres a lot to like about a career in consulting! The most common way companies make money is by selling a product or service for more than it costs to produce, thereby earning a profit. The capacity of equipment is the maximum output or units a piece of equipment can produce with the available resources over a set period of time. The interviewer then provided a chart with helpful data. Conversion: 1 US gallon = 128 ounces. You can also use the concept of MECE when segmenting a market for example, if you are sizing a market and intend to lay out different purchasing behavior assumptions for different customer segments. Can you please explain the ROI formula? Whether youre aiming for a job at one of the MBB firms (McKinsey, Bain, or BCG), with other consultancies such as AT Kearney, L.E.K. This is the ultimate measure of whether a companys activities are profitable during a certain time period when all costs are considered. My Consulting Offer has helped almost 85% of the people weve worked with get a job in management consulting. Part of what your interviewer is testing for is your quantitative skills, so they want to see that you can do calculations in your head or on paper. This will make it easier to identify what costs should be reduced or eliminated. This investment could be a new piece of equipment or a marketing campaign needed to create customer awareness of a new product.

Break-even is the point at which the total revenue and total costs are equal, meaning there is no loss or profit at that point. It is a way of bucketing problems, ideas, or solutions with no overlapping between the buckets and with each item having a place in one bucket only (mutually exclusive), and with the buckets including all possible items relevant to the context (collectively exhaustive). This work is a great launching pad for your career. Like the opening, mastering the conclusion is not difficult. How many cups of coffee does Starbucks sell in a day?Estimate the fleet size of Delta Airlines.Estimate market size for air-conditioners in New York.Estimate market size for an anti-smoking pill in the U.S.. In business situations, it helps determine at which point the business, investment, or new product or service will become profitable. It wants to know whether raising price or selling more units is a better path to growing revenue, and how to pursue it., A local theater house thinks there is an opportunity to expand their current offerings to the very loyal client base.

Top firms typically make offers to only about 1% of the people who apply. If youre on this page, youre probably considering a career in management consulting or are already in the middle of the interview process. Because of this, it can be helpful to sell incremental units even at a loss for a short period of time if it helps cover fixed costs. Or, perhaps solving business problems with smart, driven professionals sounds like its your dream job. This interview format is typically used in McKinsey cases. Break-even is typically used to help companies determine the minimum number of units that need to be sold to cover all the costs used to produce those units. In revenue growth cases, the client typically wants to grow their business. Could the company stagger employee breaks to get potential output up to 72 units from 63?

What ways would you recommend for them to reduce their costs?. This is calculated by subtracting COGS or the cost of sales from the total revenue generated. They could do this by building a new offering, buying another company, or partnering (joint venture) with another company that already offers what they want to sell.

You can also compare it against companies in the same industry to evaluate whether its financial performance is stronger or weaker. It raises questions such as: Here are some common business concepts that you need to know as you prepare for your interview. No one expects a recruit to know the answer to every thorny business issue right out of undergrad, or even right out of business school, but they do want someone who is willing and able to take suggestions and improve their analysis. A candidate is given an open-ended business problem to solve by an interviewer.

If you think that answering case interviews is not something that would come naturally to you, dont worry, youre not alone! What is the potential revenue growth if they choose to expand into India?, A telecom operator is looking to diversify their presence in the U.S. and wants to enter the video streaming market. But after they do, the interviewer will direct them to first address a particular aspect of the case. For example, a good place to start is the population of the U.S. or the population of a U.S. city (or country and city that you live in). Do you have a background in business principles or are you willing to invest the time it will take to develop one? Market share is the size of the company in relation to the size of the industry in which it operates, where size is typically measured in annual revenues. You need to balance doing consulting math calculations with interpreting data and make sure you cover all aspects of the problem you identified in the structure phase of the case. The profit or loss is calculated by taking the revenues generated and subtracting the expenses incurred over the same period of time. If the interviewer suggests a place to start your analysis, follow their lead. Management consulting firms are filled with smart, driven people working to solve hard business problems. In a business situation, best practices are used to benchmark companies against the standard and can serve as a roadmap on how to improve the efficiency of their operations. The term root cause is used to distinguish between symptoms of a problem, which may be obvious, and the underlying issue that needs to be solved, which may not be obvious. As with clarifying the question, this can feel awkward. If you walk into your first consulting interview without having practiced case study interviews beforehand, youre in for a painful experience. Note: In answering this question, I noticed that a UK gallon = 160 ounces, so if you are using UK gallons you will get a different answer! If the costs are higher than the revenue generated, then the company has made a loss. EBITDA is calculated by subtracting operating expenses from the gross profit. But you will need to learn some business basics to be able to crack case interviews. Competition for Jobs with Top Consulting Firms Is Fierce, so Preparation Is Essential. If you dont enjoy analyzing business cases, save yourself a lot of preparation time and frustration. Such as a pen, paper, calculator etc. In the income statement there are three types of costs: Income statements generally show 3 levels of profit (loss) or earnings: Gross Profit; Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA); and Net Profit. Ask for a moment to consider your approach to solving the clients problem. In the structure phase of the case interview, theres silence for several moments. Make sure the questions you ask the interviewer touch on all the key aspects of the problem you identified including the clients internal organization, the market for their product, and their competition.

Revenue is the total amount of money generated by a company from selling its products or services. We suggest your start your consulting case prep a few weeks before your interview. When youre starting your consulting interview prep, its important to remember that the right answer is not simply a conclusion, but the methodical, the well-structured process used to reach the conclusion. You can give each other mock case interviews and be even more prepared.