ccrack the case workshop review
TRANSCRIPT
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Workshop PreviewCrack the
Master the most feared part of theselective process at consultingcompanies
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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
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
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
No specificframework
Brainteasers
Why are gully covers round?
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Finance
HR
Others
No specificframework
Brainteasers
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
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
No specificframework
Brainteasers
Reduce costs
Pure MarketSizing
Market Sizingframework
Market entry New product
Operations strategy
Business turnaroundIncrease
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!
Industry analysis New business
Pricing &Valuation
Privateequity
M&A
M&A / PEframework
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Pure MarketSizing
Market Sizingframework
Pricing &Valuation
Privateequity
M&A
M&A / PEframework Supply &
Demand
Capacitychange
Capacity framework
Finance
HR
Others
No specificframework
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
Business turnaroundIncrease
salesCompetitive
response
Industry analysis New business
Market entry New product
BusinessSituation
framework
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Industry analysis New business
Pricing &Valuation
Privateequity
M&A
M&A / PEframework Supply &
Demand
Capacitychange
Capacity framework
Finance
HR
Others
No specificframework
Brainteasers
Reduce costs Operations strategy
Business turnaroundIncrease
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
Market Sizingframework
Market entry New product
Detaileddiscussion
after break!
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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%
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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
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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
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The commandments: Cracking the case
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
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The commandments: Cracking the case
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?
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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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